Mr Ron Chan Tze-ngon, Chairman of TVH said: "The first half continued to be a period of challenge and rapid change, but we have managed to maintain our resilience in our core banking and education sectors, thanks to the China market savvy and niche expertise of our home grown team. While we will remain focused on our core advantages, we will constantly examine and forge new business opportunities to sustain our future growth."

IT solutions and systems integration arm TopAsia maintained its competitiveness in the banking and finance sector of China. The division managed to maintain a stable order book for repair and maintenance services to self-service banking facilities, amidst dropping demand from postal ATMP, and as several large clients had their facilities upgraded thereby substantially reducing repair and maintenance work. New clients including China Merchants Bank (CMB) Shenyang Branch and Bank of Communications Hangzhou Branch were successfully secured in the first half of the year.

At the annual tender of CMB, TopAsia secured the service provider qualification for Diebold automatic teller machines (ATMs), Siemens cash dispenser, and Siemens cash deposit machines (CDMs) and automatic enquiry machines (AEMs), therefore further strengthening the niche competitiveness of the division with the most prolific solutions in the CMB system.

TopAsia continued to cooperate closely with NCR and Diebold to clinch contracts for ATMs, CDMs and AEMs with Shanghai Bank, City Commercial Bank Hangzhou Branch and Taizhou Branch, Bank of China Jiangsu Branch, Postal Bureau of Hubei, CMB Branches in Lanzhou, Shanghai and Guangzhou. Two new contracts were secured from TopAsia' partnership with EMC ¡V the capacity expansion solution for Jiangsu Mobile Communications and the storage equipment contract for Fujian Development Bank.

TopAsia's cooperation with UTStarcom, the inventor of "Little Smart" (or Xiaolingtong) mobile services, continues to drive the market with a 15% growth in sales during the period, further strengthening the division's status as the designated provider for its IPTV peripherals.

In the reporting period, ChinaCast continued to be the Group's strategic satellite platform to permeate the education and training service sector in China, with the technological support of other TVH units. The division reported a 23.4% increase in net profit to RMB22.3 million during the first half, largely driven by a 21% growth in student enrollment for the university distance learning segment and satisfactory stable performance for the K-12 distance learning and educational content solutions segment. ChinaCast has also signed a joint venture with Tsinghua Tongfang Co. Ltd. adding 20,000 students in six universities to its university distance learning portfolio.

The enterprise networking products and services segment, which commenced marketing operations at the end of first quarter of 2004, is moving ahead steadily. The joint venture project for the development of a post office communication network in Hunan and other adjacent provinces is progressing well.

ChinaCast also entered into memorandum of understanding with several business and technology schools to deliver their educational programmes using ChinaCast's broadband satellite network.

ChinaCast will continue to expand its customer base in different industry sectors. The latest success was the entry into China's energy sector through an agreement with Liaoning Xinsheng Digital Technology to provide a satellite-based supervisory control and data acquisition solution for the Liaoning Rural Electricity project. There are also plans to extend the network to other provinces, such as Jilin and Inner Mongolia. The energy sector is set to be a key potential growth area for ChinaCast. The contract with Liaoning Xinsheng is expected to contribute to the Group's annual results.

The Group's software vehicle, 55%-owned Advanced Digital Technology (ADT), has won the tender for China Construction Bank's newly launched bancassurance services. In addition, the division also secured the tender to install a front end system for Shunde Rural Credit Society, marking its first inroad into the credit society segment.

Despite ADT's success in industry recognition and new projects, its core business ¡V system integration services and software development ¡V is beleaguered with a substantial influx of competitors into the marketplace. Fierce competition has been eroding ADT's pricing and gross profit margins for the past few years, and has put a severe strain on the supply of experienced and qualified professionals in the industry. The resulting high staff turnover rate at ADT inexorably undermined ADT's project delivery capacity. Another challenge that ADT has to cope with is the longer credit requirements from its major banking customers in China.

Mr Chan added: "As the operating environment of ADT becomes more difficult, the Group is considering various options as to the strategic development and future of ADT."

About TVH
Technology Venture Holdings Limited (TVH, HKEx: 61) is an information technology enabler focusing its systems-integration and software competencies on the banking, finance and newly emerged education and training sectors. It aspires to be a catalyst to facilitate the development of digital Asia by serving as a value-added bridge of advanced technology from developed economies and e-solutions demands in Asia.

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