In the reporting period, the Group received HK$1,760,000 in revenues for the sale of part of its properties at Macro Garden, Sheung Wan.

Mr Deng Wenyuan, Executive Director and Standing Vice President, Shenzhen High-Tech, said: "We will continue to drive our profitable growth on the two core business lines of property and technology operations. While we look to tap into the tremendous growth potential of the technology sector, we are also deriving stable income from property investment businesses to support the funding requirements of developing high-tech operations."

The Group participated in property investments on the mainland through the acquisition of 45% interests in Joy Value in March 2004. Deluxe property units at Shun Jing Yuan, Beijing, are ready for sale in the second half and are expected to generate increased revenues for the property business line.

Dawning Information Industry Company Limited is a prime brand name in high-performance computers and servers, and the one and only maker of UNIX/RISC servers in China. Intensified competition was witnessed during the first half but Dawning still succeeded in achieving satisfactory sales of HK$129,851,000, a 99.7% growth year on year, as a result of active business development and enhanced financial management control.

Prevailing fierce market competition had placed constant burdens on the division's profitability, leading to a decline in its gross margin. Dawning will continue ongoing initiatives to defend market lead in the education, oil and aerospace sectors, business re-engineering, and enhancement of distributorship programme and sales efficiency.

According to IDC's Enterprise Server Tracker published in March 2004, China's 13% growth remained pivotal to Greater China server market. Server spending increased in Asia Pacific (ex Japan) in 2003 on an annual basis for the first time since the dot.com meltdown. It expects growth momentum to sustain into 2004.

The division has developed a new 10,000-GFLOPS Dawning 4000A server with 2,560 units of 64-bit AMD Opteron CPUs and 40 mainframe cabinets, which is currently installed at the Shanghai Supercomputer Center. The latest World's TOP500 Supercomputers ranking rated Dawning 4000A in the 10th place, a first time inclusion of a PRC product in this US and Japan dominated list. Dawning 4000A compares favourably with US and Japanese high-performance servers in terms of size, power consumption and efficiency, and enjoys enormous cost advantage.

Mr Li Jun, President of Dawning Beijing added: "Dawning 4000A has been successfully deployed in weather forecast, oil exploration and earthshake data processing, nuclear energy utilization, motion physics, genetic studies and other scientific applications. Dawning has recorded cumulative sales of over 1,000 server systems, including export sales."

Dawning was recently conferred a "Technological Innovation" award in education servers and an "Application Excellence" award in UNIX servers in the 2004 choice of IT users survey organized by ZDNet.

Wuhan Jingke Electronic Co, Ltd has completed the relocation of production lines to Jingke Industrial Park with all facilities ready for full operation in the near future. The quartz production division had revenues of RMB3,450,000 in the past six months, a 87.5% increase as compared with RMB1,840,000 of the same period last year. The division still reported a loss due to increased depreciation expenses for new premises and equipment.

In the first half, the ophthalmology treatments division, China Vision Medical Development (Shenzhen) Co., Ltd. contributed HK$3,070,000 in revenues for the Group.

There was a decrease in property sales income in the period. Two units at Macro Garden, Sheung Wan were sold during the period bringing revenues of HK$1,760,000. The Group achieved occupancy rates of 75% and 95% respectively for La Residence in Shanghai and Dawning Tower in Shenzhen in the past six months, which were translated into a steady income of HK$8,825,000.

The Group continued to maintain a strong financial position with cash and bank balances of HK$93,613,000 (December 31, 2003: HK$416,465,000) as at June 30, 2004. Accounts receivables as of book closing date stood at HK$69,423,000 (December 31, 2003: HK$47,330,000). Current ratio was 3.52 (December 31, 2003: 2.74).

Financial Highlights

Six months ended June 30,
	2004	2003
	HK$ '000	HK$ '000
Turnover	157,462	91,436
Gross profit	32,988	21,690
Net profit/(loss) after tax	14,970	(39,009)
Basic earnings/(loss) per share	0.11 cent	(0.58) cent

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Shenzhen High-Tech Holdings Limited

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