Roadmap 2005 financial results, perspectives

Investor KitInvestor Kit

Roadmap 2006in

10 technological advances

1. One, Unique line of Portable Multimedia Players4 years, 4th generation

Price: $150 to $500, every $50Screen: 4 cm to 18cm Hard drive: 4 GB to 160 GB

High-end MPEG4 TV recorder• In/out RVB, S-Video, Composite…• 160 GB � 200 h � 120 films ready to take with you

Time-shifting to control live TV• Pause the channel you are watching• Next, resume the current channel• Rewind, slow motion, fast forward…

4th generation of portable video recorders• Series of patents pending

2. One, unique Digital Video Recording Station

for the entire product line

3. Control recordingsfrom the Electronic

Program Guide

The set-top box controls the DVRUtterly simple:

Using the set-top box remote control,Choose the program you wish to record in theon-line electronic program guide

200 million active set-top boxes:

Open market of +200 million set-top boxes worldwide

4. Transfer digital content directly from a set-top box DVR

1 film transfered to a portable video player in 3 minutes• 20 films stored on the DVR’s hard drive

EchoStar: 3 million Set-Top Box DVRs in 2006• 50% of US households to be equiped with a set-top box DVR before 2010

Technological challenge: guarantee the copy protection of thecontent First worldwide agreement with EchoStar in 2005

• Pilote program of 20,000 devices

Surf the Internet directly on the portable multimedia player• Internet and web mail

Download videos• Purchase VOD (Video On Demand) content from on-line stores

Display the Internet on a TV• Display and record from the Internet

Connect to home computers • Exchange all types of data with home PCs

5. WiFiat home

(wireless local network)

5. WiFi, on the move

to stay connected

My videos, my music, my photos, everywhere with me,but also…

Surf the Internet when connected to a “hot spot”• Built-in Internet browser

Download music and videos• Free or purchased on-line content

Access my emails• With Web Mail

(wireless local network)

6. TV over IP & WiFiat home

DSL TV directly on my ARCHOS, wireless

No need for a PC or set-top box• Watch TV anywere I want in the house

Automatically record from TV• From the on-line Electronic Program Guide

On the ARCHOS screen or on a TV• With the DVR Station

IPTV

(Internet Protocol on TV)

7. DTT on the go(Digital Terrestrial Television

• Portable digital TV receiver and recorder• Diversity reception system

• Reception tenfold inside buildings • Reception in a car• Pantents pending

• Next steps: • Integrate the antennas in the product• DVB-H, DMB…

8. Built-in GPS Navigation System

Portable multimedia player with integratedGPS

• Unlimited space for maps

When on the move, guidance andentertainment in your pocket

• Completely integrated, no visible antenna

In the car, guidance and entertainment• Music and videos

No more having to endure stuttered images on tiny smart phone screens

• Watch live TV comfortably anywhere I want, even on the move

Automatically record TV• In advance or live, everywhere, from integrated

Electronic Program guide

Outdoors with 3.5 GSM network, at home, withWiFi

• Seemlessly, no manipulation needed

9. TV over 3.5G GSM

When on the go, high-quality TV atmore than 2M bits/sec

10. Purchase on-line content,by WiFi or 3.5 GSM

directly from portable ARCHOS WiFi devices or 3.5G

Do not need a PC or a telephone• Purchase content using built-in Internet browser

Subscribe to pay services • Podcasting: automatically download content to an

ARCHOS• Pay TV

Windows Media DRM technology• Direct Licence Acquisition from Microsoft• Bi-party partnerships in discussion with each of the

principal VOD content providers

Video resolution: TV SD (720x480) � QVGA (320x240)Video quality: DVD � VHS Video formats: MPEG2/4, DivX, WMV, H264, Quicktime � QuicktimeRecording: Yes �Direct transfer from a set-top box DVR: Yes �Digital Terrestrial Television: Yes �WiFi Internet: Yes �TV over IP WiFi: Yes �TV over IP 3.5 GSM: Yes �GPS Navigation: Yes �On-line purchasing - no PC: Yes �

2x3x

?

$300 �

The multimedia content food chain

• A new era of VOD (Video On Demand) has begun• Each link in the multimedia food chain wants to sell VOD• It’s all about mobility, the target is the PMP (Portable Media Player) • Sources of content are multiplying: satellite, cable, DVB-T, ADSL, TV over IP,

TV over 3.5 GSM, DVB-H, DMB, WiMax, HSDPA…

ARCHOS has the industry’s most in-depth experience in Portable Multimedia Players and the technology

required for transporting content

Content Editor

Content Aggregator

ContentProvider

AccessProvider End-userContent

Creator

SearchEngine

Television from every possible source…

• The television is and will continue to be the number one source of multimedia content

• Technologies that transport television are multiplying • The TV and the PC are battling to be the center of the home

ARCHOS develops THE gateway between TV and Portable Media Players

satellite cable DVB-T ADSL 3.5 GSM

2005 Financial ResultsPerspectives

ARCHOS Business Model• Geography • Segment • P & L • Balance Sheet

ARCHOS Business Model

Next steps

0

10

20

30

40

50

60

70

80

ETATS-UNIS EUROPE ASIE

2005: + 77 % Growth versus 2004

ASIA11% USA

22%

EUROPE67%

+ 49 %

+ 76 %

+ 206 %

2005 growth by region (Net Sales – Ifrs)

% 2005 Turnover by region

2005: a year of transitionReinforced production capacity• Two new assembly plants in China and sub-contracting of final assembly and

repairs in Canon, in France

Optimized supplier score card• Wider supplier range, better quality, and more competitive prices

Focused operational improvement• Returns management, excess and obsolescence & logistics

Balanced mix & product range margin• XS line, Gmini & AV line

Improved working capital• Canon agreement, turnkey concept

Reinforced financial structure• EchoStar cash injection, relationships with banks, share price

Signing of strategic partnerships• To become the plateform of reference for cable operators; telecommunications

companies and content providers

Key figures (IFRS)

Expansion Structure Planification

2004Turnover58.3 M€

Gross Margin13M€@ 22%

Operating Expenses20M€

EBIT (7M€)

Break EvenTurnover 85 M€

Gross Margin22M€ @ 26%

Operating Expenses22M€

EBIT 0 M€

2005Turnover103 M€

Gross Margin27 M€26%

Operating expenses23.2 M€

EBIT+ 3.7 M€

2005: ARCHOS back to profit

34%

(€ 7.2M)

€ 3.7M

-€ 8m

-€ 6m

-€ 4m

-€ 2m

€ 0m

€ 2m

€ 4m

€ 6m

2004 2005

-0,80

-0,60

-0,40

-0,20

0,00

0,20

0,40

0,60

Operating expenses / revenue

23 %

EBIT

77 % Sales GrowthGross Margin improved by 210% or 14 M€Operating Expenses increased by 16% or 3 €

2005: Deploying strong operating leverage

M €

Net Sales

Gross Margin

Gross Margin (% sales)

Operating Expenses

Operating Expenses(% sales)

EBIT

EBIT( % SALES)

2005

IFRS

103.1

26.9

26.1%

23.2

22.5%..

3.7

3.6%

2004

IFRS

58.3

12.8

22.0%

20.0

34.3%..

- 7.2

- 12.3%

Variation

IFRS

+77%

210%

+4,1%

+16%

ns ....

+10.9

ns

2005

2ème Sem.

710

18.9

26.6%

13.3

18.7%....

+5.6

7.8%C

2004

2ème Sem.

38,6

8.8

22.6%

11.2

29.0%....

-2.4

- 6.2%

Variation

.

+84%

215%

+4,0%

+18.8%

ns....

+8.0

ns

+ 10.9 M€ EBIT

M€ 2004 2005

Fixed Assets 3.3 3.9Differed Taxes 8.8 8.3Inventory 14.0 (a) 31.3A/R 10.7 (b) 29.8

Cash on hand 1.9 (e) 9.1

Total 38.7 82.5

Equity 13.9 18.3EchoStar Conv 0 3.8Suppliers 14.9 (c) 40.7Other debts 7.0 (d) 16.6

Short term debt 2.9 (f) 2.9

Total 38.7 82.5

Working capital:

(a+b-c-d) : < 15 jours

Inventory: +17 M€• Activity increase & coverage of CNY• Logistic strategy: sea + Canon assembly

Cash variation: +7M €

Equity:+ 5M €• 25 % EchoStar Conversion• 1.2 net result

2005: Strong Balance Sheet Structure

17 000

25 000

3 400

12 000

4 200400

4 000 x 10

2005 2006

MP4 HD (>300€)

MP3 HD (200-300€)

MP3 flash nano (150-200€)

MP3 flash entry (<150€)

8 millions units(excluding flash)

16 million units : +100%

MP4 HD (>250€)

MP3 flash (150-250€)

2 %

17 %

14 %

68 %

10 %

30 %

60 %

Europe 2006 market expectedto double (x 10 in MP4)

K units

iPod Video self« cannibalisation »

Middle Term ARCHOS Business Model

Turnover 100%

Gross Margin 26% / 28%

R & D / Engineering - 6%

Sales & Marketing - 9%

G & A - 5%

Operating Margin 6% / 8%

-20%

4%

5%

0

40

80

120

160

2004 2005 20060,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

4,5%

5,0%

5,5%

6,0%

CA

REX

2006 Outlook (w/o partnerships)

« A managed growth, below the market trend will result in twofold increase in turnover over two years allowing ARCHOS to reach 8% EBIT versus revenue w/o EchoStar contribution»

M€ % sales

-12%

Enrich Product Portofolio

Provide Content

Improve Customers/ Distribution Paretto

Balance Geographical Coverage

Deploy solid Finance Structure

Balance Production

Diversify Sourcing Panel

“Continuing diversification & reducing risks whilst sustaining profitable growth”

Strategies for 2006

Continue to innovate, develop and launch cutting-edge new products in the portable multimedia space,

Improve profitability by reducing purchasing costs andoptimizing product life cycle

Expand Strategic Partnerships network within TV, Telco, Content Providers

International expansion

2005 Performances

Forward looking statementThis presentation contains forward-looking statements, including the statements regardingexpected gross margin, operating and net income, and tax rate range for Fiscal 2005, ourlong term financial business model, expected product introductions for Fiscal 2005, thecontinuing demand for our retail products, and for retail and OEM sales.

These forward-looking statements involve risks and uncertainties that could causeARCHOS performance to differ materially from that anticipated in these forward lookingstatements.

Factors that could cause actual results to differ materially include:Our ability to timely introduce successful products

The effect of pricing, product, marketing and other initiatives by our competitors and our reaction to them on our sales, gross margins and profitability

Our ability to match production to demand and to coordinate the worldwide manufacturing and distribution of our products in a timely and cost-effective manner

Our operations in China being adversely impacted by strains on Chinese energy, transportation, or other infrastructures

Changes in consumer purchasing trends

Changes in financing strategies

Fluctuations in exchange rates