| Highlights | 2005 | 2004 | Change |
| '000 |
'000 |
||
| STBs distributed (unit) | 1,010 | 323 | +212% |
| Revenue | HK$304,618 | HK$169,236 | +80% |
| Gross Profit | HK$74,617 | HK$49,036 | +52% |
| EBITDA before provisions | HK$9,049 | (HK$10,019) | |
| Net loss | (HK$39,734) | (HK$61,569) | -36% |
| Loss attributable to ordinary shareholders | (39,734) | (61,067) | -35% |
| Loss per share - basic | (HK$0.07) | (HK$0.13) | -46% |
DVN's strategy in promoting mass digitalization and in partnering with other manufacturers is helping to accelerate sales. Sales increased sharply in 2005 as DVN successfully implemented the mass digitalization model in Qingdao in which it has migrated the entire Qingdao CATV network to digital, a migration involving 600,000 analog subscribers. SARFT is now encouraging nationwide adoption of this model. In the Qingdao model, a win-win situation has been created. Subscribers do not need to pay for the set top box and have access to more higher quality programs and information. The broadcaster is able to charge higher fees, and potentially has the opportunity to generate substantial revenues from value added services in future. In addition, operators are more easily able to deal with defaulters. DVN, the supplier, generates significant revenues from the sales of set top boxes and has the potential to share in revenues generated from value added services.
Sales have also increased as DVN has made the decision to work with rather than compete with various manufacturers. It has therefore decided to license out its STBs to manufacturers in exchange for a royalty. While it will receive less profit per box than if it manufactured the box itself, DVN is able to sell more boxes in more territories by cooperating with manufacturers that have strong relationships in the territory.
1st quarter demand remains strong, with STBs increasing a further 108%. As evidence of DVN's progress towards profitability, during the first quarter of 2005, DVN manufactured or DVN STBs licensed to other manufacturers were distributed to 426,295 new subscribers, an increase of 108% compared to the first quarter of 2004, a pace that the company expects to maintain for the full year. Sales are expected to be particularly strong in Guangxi, where the province is planning on mass migrating its entire 3 million analog subscriber base to digital. DVN believes the market potential remains large as there are over 100 million cable subscribers in China, all of whom are required to migrate to digital within the next decade.
About DVN
DVN (Holdings) Limited (HKEx: 500) is the largest digital TV broadcasting systems integrator and terminal products provider in China. It operates R&D and after-sales services centres in Hong Kong, Shenzhen, Shanghai and Suzhou. It has so far installed more than 40 digital broadcasting systems in all 26 provinces, with its patented products extensively deployed. On the back of its digital TV broadcasting platform, the company is now seeking to develop and roll out a range of value-added solutions, including e-government, TV commerce, online games and TV SMS services.
DVN's set top box (STB) is well recognized in China for its quality and extensive usage. A nationwide survey report conducted by the Academy of Broadcasting Science, SARFT of China in 2002 ranked it the most widely adopted STB by TV operators in the country. In 2004, DVN received the "Best Set Top Box" award in the first Digital TV Public Survey, as well as a "Top Quality Brand" honour in the STB category in the first China Consumer Products Quality Survey. In 2005, DVN was further named by SARFT as one of the country's "Top Ten Broadcasting Enterprises". Based in Hong Kong and listed on the Stock Exchange of Hong Kong in 1989, DVN has been operating in the technology sector since 1982.
Issued by : Through :
DVN (Holdings) Limited
Susanna Chiu
tel: 2585 7310 / fax: 2511 5522
email: susannachiu@dvnholdings.com
URL : http://www.dvnholdings.com
t6.communications limited
Jenny Lee or Angus Ho
tel: 2511 8388 / fax: 2511 8238
email: enquiry-at-t6pr.com (use "@" to replace "-at-")
URL : http://www.t6pr.com