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Legend Group Limited 2003/04 Q1 Results Announcement Results Overview

Legend Group Limited 2003/04 Q1 Results Announcement Results Overview. Mr. Liu Chuanzhi Chairman August 6, 2003. Overview. Turnover for FY2003/04 Q1 reached HK$5.34 billion, an increase of 11.4% year on year EBITDA amounted to HK$307 million, grew 2.3% year on year from HK$300 million

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Legend Group Limited 2003/04 Q1 Results Announcement Results Overview

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  1. Legend Group Limited2003/04 Q1 Results AnnouncementResults Overview Mr. Liu Chuanzhi Chairman August 6, 2003

  2. Overview • Turnover for FY2003/04 Q1 reached HK$5.34 billion, an increase of 11.4% year on year • EBITDA amounted to HK$307 million, grew 2.3% year on year from HK$300 million • Profit attributable to shareholders increased by 3.9% year on year to HK$278 million • The Group’s gross margin improved from 15.49% to 15.63% • Net profit margin was 5.21%, compared to 5.59% of the same period of last year • Return on equity (ROE) was 6.5%, compared to 7.0% of the same period of last year

  3. Legend Group Limited2003/04 Q1 Results AnnouncementFinancial Review Ms. Mary Ma Senior Vice-President & Chief Financial Officer August 6, 2003

  4. 2003/04 Q1 Consolidated Profit & Loss Account

  5. 2003/04 Q1 Turnover Breakdown IT Service2.0% (0.8%) Contract Manufacturing3.9% (3.6%) Handheld Device7.5% (5.4%) Corporate IT 48.3% (52.0%) Consumer IT 38.3% (38.2%) Note 1: FY2002/03 Q1 figures are in brackets.

  6. Changes in Turnover Breakdown

  7. Changes in Profit Contribution Breakdown Note 2: Profit contribution for FY2002/03 and FY2003/04 before amortization of goodwill and gains on disposal of investment securities.

  8. Gross Margin Analysis Corporate IT ConsumerIT Handheld Device ITService Contract Manufacturing (Note 3) Group Note 3: Before elimination of inter-company transaction, the gross margin of contract manufacturing business is 8.0% (2002/03 Q1: 9.4%).

  9. Consolidated Balance Sheet

  10. Key Financial Figures

  11. Key Financial Figures

  12. Legend Group Limited2003/04 Q1 Results AnnouncementMarket and Business Review Mr. Yang Yuanqing President & Chief Executive Officer August 6, 2003

  13. Market Overview • China IT market in FY2003/04 Q1 was impacted by SARS outbreak • Corporate IT market was affected heavily • Business trips and promotion activities were restricted • Government focused on fighting SARS • School classes were suspended in some regions • Retail market (PC, handset and digital products stores) in epidemic regions was seriously impacted during April and May • China IT market continues to demonstrate great potential, PC unit shipment in April to June quarter is estimated to grow 10% YoY • SARS outbreak promoted IT applications, hence stimulated the sales of consumer PC, especially PC for schooling • 4 to 6 tier market maintains fast growth, yet lowered configurations and average selling price • Intensified competition in handset market continued, product upgrading time shortened • B/W screen handset inventory reduction caused more price pressure and lowered average profit level

  14. Business Review • Performed well during SARS period, achieved growth both in turnover and net profit • Corporate IT was seriously impacted by SARS, especially for education and government sectors, yet still recorded 3.3% and 8.5% growth in turnover and profit respectively • Consumer IT performed remarkably by leveraging competitive strengths and quick responses to the market, achieving 11.6% and 35.1% growth in turnover and net profit respectively • Advantages stood out in branding, 1+1 home specialty shop, call center and after sale services • Handset business grew 53.4% in turnover with the launch of new models and channel expansion • Gross margin lowered by both SARS and inventory reduction from competitors • IT service business showed positive results from business integration, the acquired businesses performed well and began to contribute profit • Possible lagging effect from SARS outbreak

  15. 3-Tier Business Strategies on Track Notebook 52.4% Consumer DT 24.5% Server 2.0% • Core business strongly outperformed the overall market • PCunit shipment grew 21.6% YoY, far better than market growth • PC market share increased QoQ and YoY • Majority of growth businesses and seed businesses performed in line with expectations • Notebook unit shipment grew 52.4% • IT service revenue grew 195.7% • Handheld device revenue grew 53.4% • Printer units grew 65.5% Commercial DT 15.7%

  16. Technology Innovation & Product Portfolio Optimization Launched in June Fengxing Tianjiao Launched in May Jiayue • Executed market segmentation strategy, rolled out customer-oriented/time-to-market products High-end users in large cities Enhanced share of replacement market General users /Quality buyers Principal product Low income families / Students Hot model; 30,000 units booked on its debut

  17. Promote Applications for Data and Communication Convergence Strengthens high end market position ET180 Improves gross margin G818 Develops new market Tianyi • Leverage on data processing advantage, strengthen self-developed capabilities • Released six new models with proprietary technologies, G818 is the first MMS handset among domestic vendors • Debuted high end PC-phoneET180 • Penetrate notebook market by rolling out new products with fashionable features such as wireless, wide screen, etc.

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