2009 Revenue and Capacity As a result of business 70.00 6.00 - PowerPoint PPT Presentation

2009 Revenue and Capacity • As a result of business 70.00 6.00 recovery, the utilization of 60.00 KCE group (excluding 5.00 KCEI) reached 95.48% in 50.00 Q4 2009 Millions of Sq.Ft 4.00 Millions of USD • A further increase in 40.00 3.00 demand in 2010 prompted 30.00 KCE group to reopen KCEI 2.00 in December 2009 20.00 • At the moment, KCEI is 1.00 operating at 85% utilization 10.00 0.00 0.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2008 2008 2008 2009 2009 2009 2009 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Sales(M.US$) Capacity(M.US$) Utilization 57.36% 68.51% 90.90% 95.48% Sales(M.sqft) Capacity(M.sqft)

Gross Margin • Gross profit for 4Q09 has 2,500 30.00% reached 24.65% • KCE expects its gross profit 25.00% 2,000 to remain at 23-24% for 2010 • Gross profit will vary 20.00% depending on copper price 1,500 Millions of Baht and foreign exchange rate, 15.00% mainly US-Baht • While copper price has 1,000 10.00% increased to about $7500 per ton and Baht has decreased 500 to 32.7 Baht per USD in 5.00% 1Q10, KCE gross margin remains stable due to an 0 0.00% increase in efficiency and cost 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 reduction Sales(Mil Baht) Cost of Sales(Mil Baht) Gross profit (%)

Net Income and EBIT Net profit EBIT 300.0 200.0 100.0 200.0 0.0 100.0 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 -100.0 0.0 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 -200.0 -100.0 -300.0 -200.0 -400.0 -300.0 -500.0 Exchange Hedging EBIT (Operating Income)* • Net income and EBIT have been gradually increasing from its lowest point in 4Q08 • Net income in 4Q09 has increased to a 9-year high of 162.4mil Baht, while EBIT reached 188.0mil Baht • The increase in net income is a result of KCE’s cost reduction program, an increase in more complex PCBs, and improved efficiency.

Liability Structure • Short-term loan reduced to 51% from 63% • Long-term loan increased from 8% to 19%

CAPEX FY2010 35 14.00% 30 12.00% Millions of USD 25 10.00% 20 8.00% 15 6.00% 10 4.00% 5 2.00% 0 0.00% Y2007 Y2008 Y2009 FY2010 Cap Ex(Mil US$) Cap Ex/Sales(%) • KCE plans to spend US$6.1mil in CAPEX • US$3.1mil will be spent on maintenance of CAPEX while the rest will be spent on production improvements • Total CAPEX for the Y2010 equals to approximately 2.5% of revenue. This figure is an increase from Y2009 of 1.7%

KCE Market Trends

Monthly Sales Order 25.00 2.50 20.00 2.00 2008 Financial Crisis Millions of Sq.Ft Millions of USD 15.00 1.50 10.00 1.00 5.00 0.50 0.00 0.00 US Dollars SqFt • After the 2008 Financial Crisis, KCE sales dropped drastically and reached the lowest point in January 2009 • Since January 2009, KCE’s order steadily increased by more than 110% • March 2010 order of $21mil can be viewed as a full recovery of KCE business (This number excludes a backlog of $1.5mil from Jan and Feb 10)

Revenue From New Customers 140.00 8.00% 7.00% 120.00 6.00% 100.00 Millions of USD 5.00% 80.00 4.00% 60.00 3.00% 40.00 2.00% 20.00 1.00% 0.00 0.00% H1 2008 H2 2008 H1 2009 H2 2009 Current Customer New customer % of Sales from new customer • During 2008 and first half of 2009, KCE acquired 16 new customers • New customers contributed to more than 7% of KCE’s revenue in H2 2009. Revenue from new customers grew from $3mil in H1 2009 to $7mil in H2 2009 • Revenue from these customers is expected to increase to roughly 15% of KCE’s 2010 revenue

Sales by Region • Recovery in PCB business is seen mostly in Asia and Europe Millions of USD • Sales in USA is still much lower than previously seen in 2008

Product Mix (US$) • KCE has successfully increased its high 2009 layer business Heatsink • 6 Layers increased from 17% of the 2% HDI SBU 8 Layers 5% business to 20% in 2009 1% and above • On the other hand, double sided and 4 2% Double layers businesses were reduced from 14% Sided 6 Layers 12% to 12% and from 60% to 58% respectively 20% 2008 8 Layers and SBU HDI Heatsink above 4 Layers 1% 4% 2% 2% 58% Double Sided 14% 6 Layers 17% 4 Layers 60%

KCE Strategy

Strategy 2009 2010 Focus: Operation Stream-lining Focus: Build Foundation for Future Area: expansion • Cost-cutting program Area: • Scrap-reduction program • Maintain and improve KCE’s Cost • Implementation of SAP and Scrap • HR Management program • Expand KCE’s presence in Japanese Market Results: • Leverage on KCE’s experience in • Lowest scrap in 3 years automotive • Gross margin of 24.7% • Increase R&D in high-technology • Completed 70% of all SAP PCBs systems • Increase KCE high-technology • Completed company-wide KPI and PCBs other HR management programs • Reduce gearing ratio and total D/E

Japanese Market • Japanese Market has always been the only N. America 3 market that KCE cannot penetrate China 1 • Due to financial crisis and depreciation of S.Korea 1 Japanese Yen, an opportunity was opened to W. Europe 3 KCE to expand our market share in Japan Japan 0 • KCE plans to open a sales office in Tokyo in Taiwan 0 2010 Rest of the world 2 2009 (Total US$37bn) 2013 (Total US$51bn) W. W. Europe, N. ROW, Europe, ROW, 2935 America, N. 5498 3434 7867 4488 America, South South 4016 Korea, Korea, 3683 Japan, 5413 6466 Japan, Taiwan, 6094 Taiwan, 2272 3297 Source: BPA Consulting Ltd *Numbers for individual region on this slide vary from numbers in China , China , slide 10 because these numbers 20215 are based on production location 12772 not company location. The totals are the same.

Automotive Market KCE’s Competitive Advantages Competitors Market Trends • More than 20 years of experience in automotive PCB 1. CMK 389 • Demand for • Strong relationship to Tier 1 2. Viasystem 181 automotive PCB is suppliers growing rapidly due • Rank #3 in the world for 3. KCE 133 to increase in automotive PCB suppliers 4. Meiko 133 electronics in (Based on 2008 figures) 5. Hitachi 115 automotive and the 6. Ruwel 91 market shift to hybrid car 7. AT&S 83 KCE Strategy • Expand KCE footprint in the automotive industry, especially Japanese automotive suppliers • Technology for Automotive PCBs has shifted to more complicated PCBs – get approval for complex PCB

SemiFlex T echnology Competitors Market Situation • Only a few PCB manufacturers has the capability to build the board • Towards the end of 2008, several European Advantages/Disadvantages of Semiflex PCB makers filed for • Much lower cost than full flexible PCBs Bankruptcy, as a result, • Most SemiFlex only allows 10-15 flexes some of our customers sent inquiries to KCE Current Customer regarding SemiFlex • A few of KCE customer has already approved PCBs KCE samples. These SemiFlex parts will be • After spending roughly in mass production in 2010 • A number of KCE’s large -account customers 6 months in R&D, KCE have approved KCE for SemiFlex production successfully built its first • More than 10 parts have been quoted while 5 SemiFlex PCBs parts are entering mass production in early 2010

Product Mix FY2013 (US$) • KCE will concentrate its resources in expanding high-technology PCB businesses • High layer PCBs (6 and more layers) are expected to grow from 22% to 38% Product Mix FY2013 • HDI, SemiFlex, and Sequential Build Up PCBs are expected to grow from 6% to 16% Semiflex Double and SBU Sided 9% 10% HDI 8 Layers 7% Double Product Mix 2009 and above Heatsink Sided 7% 2% SBU HDI 12% 1% 8 Layers 5% and 4 Layers above 36% 6 Layers 6 Layers 2% 20% 31% 4 Layers 58%

Debt-to-Equity Net Debt-to-Equity • KCE plans to reduce its 6000 3 Millions of Baht 5000 2.5 short-term and long-term 4000 2 debt from 5bn Baht to 4.3bn 3000 1.5 Baht in 2010 2000 1 • The reduction in short- 1000 0.5 0 0 term and long-term debt will Y2007 Y2008 Y2009 FY2010 result in a net debt-to-equity Net Debt Gearing ratio of 1.5 • Furthermore, KCE plans to Total Debt-to-Equity reduce its total debt from 8000 4 6.3bn Baht to 5.7bn baht Millions of Baht 6000 3 • The reduction in total debt will result in total debt-to- 4000 2 equity of 2.0 2000 1 0 0 Y2007 Y2008 Y2009 FY2010 TL DEBT D : E

KCE Outlook

Guidance FY 2010 • Revenue: ~US$240mil • Gross Margin: ~23% • Reduce D/E • Net D/E: <1.5 • Total D/E: <2.0 • CAPEX: ~US$6.1mil • Reduce Copper price risk and Exchange rate risk using options • Increase complex PCBs

FY2010 Product Mix (US$) • KCE forecasts its 6 layers PCB sales Product Mix FY2010 to increase from 20% to 23% while 4 Double SBU layers PCB will reduce from 58% to HDI Heatsink 8 Layers Sided 1% 56% 5% 1% and above 12% • Sales from other products should 2% remain stable 6 Layers 23% Product Mix 2009 Double SBU 4 Layers HDI 8 Layers Heatsink Sided 56% 1% 5% and above 2% 12% 2% 6 Layers 20% 4 Layers 58%

Thank you