PROVIEW is the world's fourth largest CRT display devices manufacturer, and ranking seventh in the LCD display category. During the financial year, the Group shipped some 6 million units of CRT monitors and 2 million units of LCD monitors respectively. Sales of LCD monitors contributed about 50.43% or HK$4.4billion to overall turnover, while sales of CRT monitors totaled 45.86% of group turnover or HK$4.0billion.

Mr Rowell Yang, Chairman and Managing Director of PROVIEW remarked: "Because of the shortage of TFT-LCD panels, prices for this component increased steadily throughout almost the entire financial year. Since TFT-LCD panel makers gave priority to a few OEM brand customers, it was a major challenge for LCD monitor manufacturers focusing on channel sales and regional ODM brand customers to obtain adequate supplies of these components. As a result, Group sales of LCD monitors experienced some constraint. On the CRT front, the demand was stronger than many industry surveys had forecast. Rising LCD monitor prices slowed the rate at which CRT monitors were replaced by LCD monitors. Thanks to market consolidation, our sales of CRT monitors this year recorded outstanding growth.

"As demand persisted, LCD panel makers began to invest in new fabs, resulting in over-capacities and price drops. The continued growth in demand, coupled with our Group's success in penetrating the OEM sector, is beginning to point to a significant growth in orders for LCD monitors in future."

Sales to America, Europe and Asia accounted for about 30.58%, 31.93% and 33.14% of the Group's net turnover respectively. Sales in the China region reached 20.62% of group turnover. Gross profit margin attributable to CRT monitor operations eased to 8.61%, mainly due to the acquisition of new ODM customers. The Group also offered more strategically competitive prices so as to increase its market share. Despite surging TFT-LCD panel prices, the gross profit margin for LCD monitor sales decreased slightly to 8.06%, mainly due to costs relating to enhance industrial design and in-house assembly of LCD panels.

The Group has set up a wholly owned subsidiary Moxell for the development, marketing and distribution of Motorola-branded consumer electronics products. During the year, Moxell did not engage in any trading activities, and hence made no contribution to group turnover. Moxell has positioned itself as a marketing and distribution company and will not conduct any manufacturing or research-and-development activities. During the year, Moxell disbursed HK$45 million on account of sales, marketing and administrative activities in relation to the Motorola-branded business, and this figure has been recorded as expenses in the Group's consolidated results.

"Our future strategy is to focus on both OEM and branded businesses with a view to achieving a healthy balance between output and gross margin. Our Group has paid a high price in the past year for our business diversification initiative, in particular as the strategic alliance with Motorola did not deliver anticipated results. In order to re-focus on our core monitor business, our group has replaced the original agreement with Motorola with a new brand patent contract that covers a reduced scope of branded monitor sales in Asia," said Mr Yang.

Research-and-development costs for the year amounted to HK$47million, of which HK$11 million was used for the development of display solutions, while HK$35 million was attributable to the development of digital technologies for products such as LCD and plasma TVs. The digital technology developed will be used both by Moxell for Motorola-branded products, and the Group's house-brand and other ODM products. However, as the digital TV market has not yet matured, shipments of such digital products, for house brands as well as ODM brands, were limited and made no significant contribution to group performance.

The Group has also invested about US$3.5million in expanding deflection yoke production capacity and panel-assembly lines during the year. The Group envisages using about US$ 5 million in improving and upgrading the existing machinery and equipment for the coming year.

As at June 30, 2004, the Group held cash, bank balances, and post dated bank drafts of approximately HK$1,015million (2003: HK$593 million) with total shareholder equity standing at HK$818 million (2003: HK$686 million). Inventories and trade and bills receivables increased to HK$2,605 million (2003: HK$1,243 million) and HK$1,318 million (2003: HK$1,132million) respectively. The significant increase in inventory was mainly attributable to the significant spurt in turnover in the months following the year-end. The Group restocked in view of growing LCD monitor sales. Inventory turnover days was 89 days compared with 63 days last year, but most of the inventories held as of June 30, 2004 were sold out as of the reporting date. Trade and bills receivables turnover days stood at 51 days (2003: 46 days), a slight increase which remains in line with the Group business plan.

The Group has made an allowance for bad and doubtful debts of HK$13 million in this year (2003: HK$17 million) and an allowance for obsolete inventories of HK$18 million (2003: HK$18 million). For more conservative, the Group is now using weighted average to calculate inventory cost, resulting in HK$13 million decline in inventory value for the year under review.

The Group's financial gearing, representing the ratio of total borrowings from banks and financial institutions to total assets, was 44.58% (2003: 37.94%).

Financial Highlights

	Year ended June 30,
	2004	2003
	HK$ '000	HK$ '000
Turnover	8,695,499	6,945,251
Profit from operations	254,935	183,768
Net profit attributable to shareholders	148,438	109,575
Basic earning per share	HK23.2 cents	HK17.2 cents
Interim dividend per share	HK2.8 cents	HK1.7 cents
Final dividend per share	HK1.2 cents	HK2.0 cents

About PROVIEW International
PROVIEW International Holdings Limited (SEHK: 334) is a world top-five display devices producer owning globally recognized house brands including PROVIEW and EMC. The Group commands a global retail-sales and distribution network covering 50 countries with strong leverage of its world-class manufacturing facilities in China, Taiwan and Brazil. It has an annual production capacity of 14 million units of CRT monitors and 6.4 million LCD monitors. For more information, please visit www.proview.com.

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PROVIEW International Holdings Limited

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