During the financial year, orders from the Group’s major markets, including North America and Western Europe, diminished significantly. Contracted worldwide consumption has resulted in a significant drop in market prices of liquid crystal display (LCD) panels and finished products.
PROVIEW Chairman and Chief Executive Officer Mr. Rowell Yang Long-san explained: “Owing to a noticeable decrease in market prices of the main component, LCD panels, a significant loss was incurred on the Group’s inventory purchases at high prices. The Group’s cash flow was also materially affected by clients’ default in payment and the bankruptcy of two major customers in North America during the financial year. Since the fourth quarter of 2008, tightened funds have affected our supply chain and thus we failed to meet just-in-time delivery commitments, which resulted in default penalties. Since sales dropped significantly, the burden of fixed costs and financing interests has become relatively heavy. During the most difficult period, our primary manufacturing base in Shenzhen only managed to continue its operation with the assistance of the municipal government and the creditor banks.”
With the continuous granting of facilities by the banks, the Group expects business operation to gradually return to normal, at which time the banks may increase facility lines for expansion into new businesses, including the introduction of new MVP products and the exploration of new LED lighting business.
With an aim of reducing production costs, new MVP products are manufactured in a modularized approach, with a smaller number of parts, reduced process time, and simplified procurement and stocking management. The new MVP products developed by the Group were favorably received in the IFA Berlin show, leading to optimistic forecasts for future orders and sales for this line.
As the traditional LCD display industry matures and carries slim margins owing to keen competition, the Group is planning to enter into the higher-margin LED lighting sector. This business will be developed mainly by cooperative production with outsourced processing, so as to minimize demands on liquidity. A company has been established in Shenzhen to drive this new business line. Leveraging its strategic partners’ distribution channels in the PRC and financial support, the Group will first drive sales in China and then build inroads in global markets where it has prior operating experience. The Group is actively seeking to secure order commitment from customers in over ten cities. Production and preliminary sales are intended to commence in the first half of 2010 once the sales orders are secured.
Sales of flat-panel digital TVs and LCD monitors decreased 80% and 68% year-on-year respectively to HK$1.6 billion (2008: HK$8.0 billion) and HK$2.4 billion (2008: HK$7.6 billion). Cathode ray tube (CRT) monitor sales dropped by 94% to HK$73.5 million (2008: HK$1,283 million).
Sales to different geographical markets including Asia, Europe and North America accounted for about 44% (2008: 49%), 34% (2008: 16%) and 14% (2008: 25%) of the Group’s turnover respectively. In addition to seeking new business opportunities in emerging markets, the Group has spent further resources to enlarge its market share in Mainland China.
As at June 30, 2009, the Group held cash and bank balances (including pledged bank deposits) of approximately HK$272 million (2008: HK$1.3 billion). Trade and bills receivable decreased to HK$282 million (2008: HK$1.9 billion) because the Group improved its debt collection during the year.
Mr. Yang added: “As the Chief Executive Officer, I assume responsibility for the regrettable performance of the Group, and offer my apology to all shareholders. Nevertheless, I am still full of confidence in our future development, and I hope shareholders will patiently offer the management an opportunity to achieve a turnaround.”
Financial Highlights
| Year ended June 30, | ||
| 2009 | 2008 | |
| HK$'000 | HK$'000 | |
| Turnover | 4,454,891 | 17,394,950 |
 LCD monitors |
2,392,453 | 7,613,034 |
| CRT monitors |
73,461 | 1,282,514 |
| Flat-panel digital televisions |
1,630,236 | 7,995,475 |
| (Loss) before taxation | (2,920,895) | (50,082) |
| (Loss) attributable to equity holders | (2,905,391) | (61,642) |
| Basic (loss) per share | (376.34)cents | (8.36) cents |
| Interim dividend per share | Nil | Nil |
| Final dividend per share | Nil | Nil |
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.