MULTIVISION INTELLIGENT SURVEILLANCE LIMITED

First Quarter Financial Statement And Dividend Announcement

PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF-YEAR AND FULL YEAR RESULTS

1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year


MULTIVISION INTELLIGENT SURVEILLANCE LIMITED
GROUP INCOME STATEMENT
FOR THE FIRST QUARTER ENDED 30 JUNE 2003
(Expressed in Hong Kong thousand dollars)



		Note	1st Qtr 2004 HK$'000	1st Qtr 2003 HK$'000
Turnover			26,422	13,582
Cost of sales			(9,193)	(6,682)
Gross profit			17,229	6,900
Other income			254	5
Distribution expenses			(2,466)	(1,525)
Administrative expenses			(2,838)	(1,263)
Product development costs			(3,309)	(967)
Profit from operations			8,870	3,150
Finance cost			(4)	(14)
Profit from ordinary activities before taxation			8,866	3,136
Taxation			(1,419)	(502)
Profit after taxation for the period			7,447	2,634



1(b)(i) A balance sheet (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year


MULTIVISION INTELLIGENT SURVEILLANCE LIMITED
BALANCE SHEET
AS AT 30 JUNE 2003
(Expressed in Hong Kong thousand dollars)




			Note	The Group HK$'000		The Company HK$'000
				As at 30.06.03	As at 31.03.03	As at 30.06.03	As at 31.03.03
Non-current assets
Investment in subsidiary				-	-	19,462	19,462
Fixed assets				1,881	1,474	-	-
Intangible assets				51,220	51,115	-	-
				53,101	52,589	19,462	19,462
Current assets
Inventories				5,209	4,493	-	-
Trade receivables (net)				27,578	25,670	-	-
Prepayments, deposits and other receivables				2,107	2,173	215	215
Amount due from subsidiary				-	-	58,831	58,831
Cash and cash equivalents				47,404	49,667	-	-
				82,298	82,003	59,046	59,046
Current liabilities
Obligations under hire purchase contract				122	133
Trade and other payable				2,932	10,958	139	139
Amount due to Directors				750	750	150	150
				3,804	11,841	289	289
Net current assets				78,494	70,162	58,757	58,757
Non-current liability
Obligation under hire purchase contract				-	22	-	-
Deferred taxation				6,177	4,758	-	-
Amount due to ultimate holding company				-	-	-	-
				6,177	4,780	-	-
Net assets				125,418	117,971	78,219	78,219
Representing:
Capital and reserves
Share capital				24,369	24,369	24,369	24,369
Contributed surplus				9,210	9,210	-	-
Share premium				54,000	54,000	54,000	54,000
Net profit/(loss)for period				7,447	25,320	-	(150)
Retained profits/(loss) b/f				30,392	5,072	(150)	-
				125,418	117,971	78,219	78,219



1(b)(ii) Aggregate amount of group's borrowings and debt securities

Amount repayable in one year or less, or on demand



As at 30/06/2003

As at 31/03/2003

Secured	Unsecured	Secured	Unsecured
HK$122,000	HK$0	HK$133,000	HK$0



Amount repayable after one year



As at 30/06/2003

As at 31/03/2003

Secured	Unsecured	Secured	Unsecured
HK$0	HK$0	HK$22,000	HK$0



Details of any collateral

N. A.



1(c) A cash flow statement (for the group), together with a comparative statement for the corresponding period of the immediately preceding financial year


MULTIVISION INTELLIGENT SURVEILLANCE LIMITED
GROUP CASH FLOW STATEMENT
FOR THE FIRST QUARTER ENDED 30 JUNE 2003
(Expressed in Hong Kong thousand dollars)




		Note	1st Qtr 2004 HK$'000	1st Qtr 2003 HK$'000
Operating activities
Profit from ordinary activities before taxation			8,866	3,136
Adjustment for:
Interest expenses			4	4
Interest income			(96)	-
Depreciation of fixed assets			164	105
Amortisation of intangible assets			3,309	968
Gain on disposal of fixed assets			-	(5)
Operating profit before changes in working capital			12,247	4,208
Changes in working capital
(Increase)/decrease in inventories			(716)	1,003
(Increase)/decrease in trade receivable			(1,908)	(7,208)
(Increase)/decrease in prepayment , deposits, and other receivable			66	(294)
(Decrease)/increase in trade and other payable			(8,026)	(4,723)
Increase in amounts due to directors			-	-
Cash generated from operations			1,663	(7,014)
Interest received			96	-
Interest paid			(4)	(4)
Net cash inflow/(outflow) from operating activities			1,755	(7,018)
Investing activities
Payment for purchase of fixed assets			(571)	(98)
Payment for development costs			(3,414)	(868)
Proceeds from sales of fixed assets			-	5
			(3,985)	(961)
Financing activities
Capital contributions			-	-
Repayment of principal under hire purchase contract			(33)	(33)
Issue of shares			-	-
Share issue expenses			-	-
Net cash inflow from financing activities			(33)	(33)
Net increase in cash and cash equivalents			(2,263)	(8,012)
Cash and cash equivalents at beginning of the year			49,667	10,908
Cash and cash equivalents at end of this period			47,404	2,896
An analysis of cash and cash equivalents in as follows:
Cash at bank and in hand			47,404	2,896




1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in equity other than those arising from capitalisation issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediately preceding financial year





The Group
		Share	Contributed	Statutory	Share	Other	Retained
		Capital	Surplus	Reserves	Premium	Reserves	Profits	Total
		HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
At 1 April 2003		24,369	9,210	0	54,000	0	30,392	117,971
Surrender of original shares as part of the Group's share capital restructuring
		-	-	-	-	-	-	-
Ordinary shares issued nil paid on incorporation and subsequently credited as fully paid as part of the Group's capital restructuring
		-	-	-	-	-	-	-
New shares issued for public subscription
		-	-	-	-	-	-	-
Share issue expenses		-	-	-	-	-	-	-
Net profit for the quarter		-	-	-	-	-	7,447	7,447
At 30 June 2003		24,369	9,210	-	54,000	0	37,839	125,418
The Company
		Share	Contributed	Statutory	Share	Other	Retained
		Capital	Surplus	Reserves	Premium	Reserves	Profits	Total
		HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000	HK$'000
At 1 April 2003		24,369	0	0	54,000	0	(150)	78,219
Ordinary shares issued nill paid on incorporation and subsequently credited as fully paid as part of the Group's capital restructuring
		-	-	-	-	-	-	-
New shares issued for public subscription
		-	-	-	-	-	-	-
Share issue expenses		-	-	-	-	-	-	-
Net profit for the year		-	-	-	-	-	-	-
At 30 June 2003		24,369	0	0	54,000	0	(150)	78,219



1(d)(ii) Details of any changes in the company's share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares or cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year

NIL


2. Whether the figures have been audited, or reviewed and in accordance with which standard (e.g. the Singapore Standard on Auditing 910 (Engagements to Review Financial Statements), or an equivalent standard)

These figures have not been audited nor reviewed.


3. Where the figures have been audited or reviewed, the auditors' report (including any qualifications or emphasis of matter)

Not applicable.


4. Whether the same accounting policies and methods of computation as in the issuer's most recently audited annual financial statements have been applied

The Group has adopted the same accounting policies and methods of computation in the financial statements for the current reporting period compared with the audited financial statements for the year ended 31 March 2003.


5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed, as well as the reasons for, and the effect of, the change

There are no changes in the accounting policies and methods of computation.



6. Earnings per ordinary share of the group for the current period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends

Earnings/(Loss) per ordinary share for the year after deducting any provision for preference dividends:
			FY 2004	FY 2003
Based on weighted average number of ordinary shares in issue (Please see note below)			2.14 HK cents	0.95 HK cents
On a fully diluted basis (Please see note below)			Not Applicable	Not Applicable

7. Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the (a) current period reported on and (b) immediately preceding financial year

			FY 2004	FY 2003
Net asset value for the Company per ordinary share based on existing issue share capital as at the end of the period on 30 June 2003			HK$0.22 per share	Not Applicable
Net asset value for the Group per ordinary share based on existing issue share capital as at the end of the period on 30 June 2003			HK$0.36 per share	HK$0.10 per share




8. A review of the performance of the group, to the extent necessary for a reasonable understanding of the group's business. The review must discuss any significant factors that affected the turnover, costs, and earnings of the group for the current financial period reported on, including (where applicable) seasonal or cyclical factors. It must also discuss any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on

Our turnover amounted to approxiamtely HK$26.4 million for the first quarter of FY2004, a growth rate of 1.95 times from that of approximately HK$13.6 million for the same period of FY2003. The growth in turnover was mainly due to the expansion of our distribution sales in major operational regions including Hong Kong, China and North America.

Our gross profit amounted to approximately HK$17.2 million for the first quarter of FY2004, a growth rate of 2.50 times from that of approximately HK$6.9 million for the same period of FY2003. Our averaged gross profit margin improved tremendously from 50.8% in the first quarter of FY2003 ended 30 June 2002 to 65.2% for the same quarter this year. This improvement was mainly due to (i) the decrease in our general cost of production as a result of economies of scale; (ii) the increase in sales of higher margin products such as the solution-based Netservers as a result of our aggressive marketing stratgies and the successful implementation of some reputable projects; (iii) the acquisition of a perpetual license of use of the application software driver contributed a significant cost savings in licensing cost.

Our distribution and administrative expenses together amounted to approximately HK$5.3 million for the first quarter of FY2004, a growth rate of approximately 1.90 times from that of approximately HK$2.8 million for the same period of FY2003. The increase was more or less in line with the corresponding increase in turnover as we have expanded our sales, administration as well as customer support manpower forces to cope with the expansion of our business, including the establishment of major branch offices in Singapore, China, Macau and the United States of America.

Our product development costs amounted to HK$3.3 million for the first quarter of FY2004, an increase of 3.42 times from that of approximately HK$1.0 million for the same period of FY2003. Such increase was mainly due to (i) the increase in the amortisation charge of capitalised product development costs which we incurred as a result of our continuous efforts in developing technologically advanced new products in order to maintain our competitive edge in the marketplace; and (ii) the amortisation charge on the acquisition costs of a perpetual license of use of the application software driver which, as explained above, brought us continuous economic benefits by enabling us to make very significant cost savings in licensing cost each year.

As a result of the above, our profit after taxation contributable to shareholders amounted to HK$7.4 million for the first quarter of FY2004, representing a growth rate of 2.83 times from that of HK$2.6 million for the same period of FY2003.


Our intangible assets amounted to HK$51.2 million at 30 June 2003 which is almost the same as the 31 March 2003 balance of HK$51.1 million.

Our inventories amounted to HK$5.2 million at 30 June 2003, an increase of 15.9% from that of HK$4.5 million at 31 March 2003. Such slight increase was mainly due to the need for keeping some more stock in anticipation for increase in July order delivery which was originally first quarter order being delayed or held up temporarily due to the outspread of the SARS in the region.

Our trade receivables also increased slightly from HK$25.7 million at 31 March 2003 to HK$27.6 million at 30 June 2003. Collection was still healthy during the first quarter of FY2004 except that we have agreed to extend an averaged of 15 more credit days to our business partners with excellent past settlement track records as they have encountered delays in the project implementations with their respective end-users due to the SARS problem. But situation seemed to have resumed normal since early August.

Our trade and other payable decreased by HK$8.0 million from HK$10.9 million at 31 March 2003 to Hk$2.9 million at 30 June 2003. This HK$8.0 million was the exact amount we settle as the last instalment payment for the acquisition of the perpetual license of use of our application software driver as mentioned above.

The Group's deferred tax liabilities increased by HK$1.4 million from that of HK$4.8 million at 31 March 2003 to that of HK$6.2 million at 30 June 2003 which represented the profits tax provision being made on the profit generated in the first quarter of FY2004.

There was no change to the Group's share capital and reserves position during the first quarter of FY2004 except for the contribution of approximately HK$7.4 million profit after tax to the shareholders.

Overall, we recorded a decrease in cash and cash equivalents of approximately HK$2.3 million for the first quarter of FY2004.




9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results

Not Applicable


10. A commentary at the date of the announcement of the competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months
The competitive environment will be intense as now more systems with hardware compression appear in the market. We have now released systems with both hardware compression and high image resolution. We are also extending our strategic alliances to more telecom operators so that our products can be bundled with broadband services. This will ensure a steady and stable growth of the Company in this highly competitive environment.



11. Dividend

(a) Current Financial Period Reported On

Any dividend declared for the current financial period reported on? None
(b) Corresponding Period of the Immediately Preceding Financial Year

Any dividend declared for the corresponding period of the immediately preceding financial year? None

(c) Date payable

Not applicable.


(d) Books closure date


Not applicable.


12. If no dividend has been declared/recommended, a statement to that effect
No dividend is declared/recommended for this period.

13. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer's most recently audited annual financial statements, with comparative information for the immediately preceding year




		The Group
		Turnover		Profit/(Loss) before taxation and interest
		HK$'000		HK$'000
		1st Qtr FY2004	1st Qtr FY20/03	1st Qtr FY2004	1st Qtr FY2003
By geographical location
Hong Kong		2,002	780	656	56
PRC		18,300	6,571	5,336	1,523
Taiwan		-	926	-	249
North America		5,699	4,383	2,862	957
Australia		72	603	4	233
Europe		98	80	5	30
Macau		4	-	-	-
Others		247	239	6	91
		26,422	13,582	8,869	3,139




14. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments

N.A.


15. A breakdown of sales

N.A.



16. A breakdown of the total annual dividend (in dollar value) for the issuer's latest full year and its previous full year

Total Annual Dividend (Refer to Para 16 of Appendix 7.2 for the required details)



	Latest Full Year ()	Previous Full Year ()
Ordinary	0	0
Preference	0	0
Total:	0	0

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