During the review period, an unprecedented decline in market demand for LCD panels and the resulting acute price drop of panels and end products, coupled with relatively high average inventory cost of the Group, resulted in a sharp decline in gross profit margin.
Mr Yang Long-san, Rowell, Chairman and Chief Executive Officer, PROVIEW noted: ¡§In facing such a severe economic environment, we will focus on several improvement plans and operational strategies, including the security of bank facility support. Our major manufacturing base in Shenzhen has obtained written promises from its banks of their continuous funding support to help us quickly get back to normal operations. Our long lasting relationships with suppliers also enable us to obtain stable and reliable material support despite the impact of the economic crisis. Our major suppliers have kept up their supply, and the major panel maker of the Group has agreed to provide continuous support to meet our production requirements.¡¨
In the face of severe economic headwinds ahead, PROVIEW has pursued to revive its business momentum by the introduction of a new product line ¡V ¡§MVP¡¨ or Multiple-Value Product, which combines the function of an LCD ¡§Monitor¡¨, LCD ¡§TV¡¨ and all-in-one ¡§PC¡¨. The Group has leveraged its 20-year experience in the display industry, particularly its core technologies in backlight modules, power supply and tooling, to successfully develop the highly cost-competitive MVP product line with very clear display, super light weight, and stylish ultra-slim industrial design.
Mr Yang continued to state that: ¡§Through the consistent hard work of our sales staff, many overseas and China domestic customers have responded positively to these products. We are confident MVP will bring new business opportunities, and inroads to the China market, which has not been affected much by the world¡¦s economic crisis. As MVP requires substantially fewer parts and components, this also allows the Group to have better stock control and to speed up inventory turnover.¡¨
As for the sales of two major businesses of the Group, flat panel digital TVs and LCD monitors, external market analysts are alert to the first ever decline expected in this year. The Group¡¦s sales of flat-panel digital TVs amounted to approximately HK$1.74 billion (2007: HK$5.10 billion) and LCD monitor sales brought in approximately HK$1.72 billion (2007: HK$5.56 billion) for the review period, a 66% and 69% decrease respectively period on period.
CRT monitor sales dropped by 63% to HK$150 million (2007: HK$410 million) as a result of the further decline in the global CRT monitor market. The Group expects that CRT monitors will be completely replaced by LCD monitors within the coming four to five years; hence, in order to release resources to develop other core businesses, the Group will scale down its existing production of CRT monitors in phases.
Major geographical markets of the Group during the review period included Asia, Western Europe and North America. In addition to seeking new business opportunities in emerging markets, including Eastern Europe, South America and the Middle East, the Group has spent further resources to enlarge its market share in Mainland China, which is considered a region supported by strong domestic demand and is expected to be less affected by the global economic turmoil.
To improve its financial structure, the Group is actively seeking strategic investors, both to help the Group bring in new funds to retain a strong financial position for its overall operation, and to help to enhance the Group¡¦s business operations and cement its operation bases.
As at December 31, 2008, the Group¡¦s cash and bank balances stood at approximately HK$630 million (June 30, 2008: HK$1.3 billion). Inventories were reduced to approximately HK$2.01 billion (June 30, 2008: HK$2.92 billion).
Financial Highlights
| Six months ended December 31, | ||
| 2008 | 2007 | |
| HK$ '000 | HK$ '000 | |
| Turnover | 3,901,746 | 11,156,126 |
| Flat-panel digital TVs | 1,741,333 | 5,088,935 |
| LCD monitors | 1,718,963 | 5,563,366 |
| CRT monitors | 151,425 | 410,363 |
| (Loss)/Profit before taxation | (1,327,734) | 95,090 |
| Net (loss)/profit attributable to equity holders of the Company | (1,311,430) | 80,281 |
| Basic (loss)/earnings per share | HK(169.87) cents | HK11.50 cents |
About PROVIEW International
PROVIEW International Holdings Limited (HKEx: 334) is the world¡¦s leading display devices producer. The Group commands a global sales and distribution network covering 50 countries with strong leverage of its world-class manufacturing facilities in China, Taiwan and Brazil. For more information, please visit www.proview.com.