On the night of June 29^th, 2011, Skyworth Digital Holdings Co., Ltd. (stock code number at Stock Exchange of HK: 00751) released at Hong Kong its annual performance report for the 12 months spanning from April 1^st, 2010 to March 31^st, 2011. According to the report, in the complex and volatile market competition of 2010 fiscal year, Skyworth Digital has grasped the strategic direction, bring into play the systematic efficiency, thereby witnessing a constant and steady development of business performance and taking the lead among the industry in earning capacity. The business volume of the group has reached 24.339 billion HK dollars, up 6.9％ year upon year, having kept growing for five years in a row, with an average growing rate at 18％; the gross profit is 4.663 billion HK dollars and the profit is 1.281 billion HK dollars; as recommended by the board of the group, the yearly dividend is 0.14 HK dollars for each share, with a payout ratio at 30.5％.

    Mr. Zhang Xuebin, the executive chairman and CEO of Skyworth Digital Holdings Co., Ltd. expressed, “Last year, the market of consumption electronics was filled with variables and the complexity was beyond our expectation. Our group has dealt with the challenges calmly and made adjustments timely. Our core businesses including color TV, digital set top box and relevant business of liquid crystal devices have grown against the adverse situation. The overall business has kept growing and the turnover has kept lifting steadily. We have made quite a great achievement.”

    In 2010, the industry of color TV was going through a new round of product upgrade, with the rapid popularization of LED, potential accumulating of 3D TV, and intelligent TV has focused on the strategy of differentiation and gradually became one focus of the market. Under such a situation, Skyworth was facing great pressure. Through planning high-end 3D intelligent TV, consolidated the layout of LED product line, Skyworth has completed the transformation of LED, with LED taking up nearly 60％. Since the second quarter, the product competitiveness has improved significantly, with the cost under control and a distinct optimization period of channel networks; Skyworth has kept expanding new channels, enhanced the capacity of distribution and consolidated the long-term accumulated advantages in talents, mechanism, management, market and products; the overall operating efficiency has lifted up and the earning capacity has kept improving rapidly, thereby helping Skyworth take the dominant position within the industry. According to the results of market survey, the main business under the group, namely, TV sets has respectively ranked No. 1 and No. 2 as to the total sales volume and sales amount. The overall rate of gross profit has kept taking the lead in the industry, dropping a bit though.

    As the data of annual report indicates, the turnover of Skyworth Digital in domestic market occupies 91.1％ of the total turnover of the group, increasing by 6.8 percentage points. The Mainland China market was still the core force for the company’s growth. The sales amount reached 19.103 billion HK dollars, among which the color TV business occupied 86.4％ of the sale amount in domestic market, with the businesses of digital set top box and liquid crystal device respectively occupying 12.1％ and 0.5％. And the rest 1.0％ business amount was distributed in other products, including white home appliances, moulds, auto electronics, other electronic products and real estate.

Skyworth TV was unique and achieved distinct results in differentiated promotion. The differentiated E70RG series products based on internet technology and fitness sports platform has become the focus of the market, arousing a wave of fitness ports in the market of color TV. Customers have fully experienced the enjoyment and fitness brought by our products which have been well recognized and praised. Under the industrial background of serious homogenization among products, Skyworth has stood out to take the top place in the ranking list of individual product sales for a long time; E81, a series representing the high-definition all-in-one machine has enjoyed a good effect of joint marketing by signing partnership agreements with the radio and television departments of nearly 200 key cities nationwide; the rolling out of E92 series which is integrated with “non-blinking” 3D technology has enhanced the competitiveness of Skyworth 3D products, to provide customers with high quality and colorful enjoyment of audio-visual life. In this year, more than 6.26 million Skyworth flat-panel TV sets have been purchased by customers, among which, LED TV around 1.56 million sets, occupying 25％, up 23.2 percentage points compared with 2010.

    According to statistics conducted by AVC on 390 cities and 4,300 terminal stores in Mainland China, for the 12 months as of March 31^st, 2011, the market shares of Skyworth liquid crystal TV in sales volume and amount of Chinese market including domestic and foreign brands have grown by 15.8％ and 14.4％ respectively, continuing to be ranked No. 1 and No. 2. For the 5^th consecutive year, Skyworth has taken the first place in sales volume of color TV and sales amount of liquid crystal TV.

    Besides, the integration of Skyworth color TV sales in domestic and foreign markets has further optimized the manufacturing, research and development and resources of supply chains of color TV, and the operation quality of color TV export sales has got improved, thereby fulfilling the goal set for the entire year. At present, Skyworth has witnessed a great business expansion in such regions as India and Southeast Asia and has established the operation direction of its own brands.

    Yang Dongwen, executive director of Skyworth Digital’s board of directors, vice president of the group and the president of color TV business headquarter expressed, “In 2011/12 fiscal year, Skyworth will set a sales goal of color TV in domestic market at 7 million sets, up 9％ year on year, among which, LED TV 4 million sets, 3D TV 1.50 million sets. LED TV will grow by 150％ compared with last year, occupying 57％. And the annual sales goal of color TV in foreign markets will be 2 million sets, up 25％ year on year. Skyworth TV will enter a new stage of development.”

In the fiscal year of 2010, other relevant industries of Skyworth have enjoyed an excellent development momentum, all achieving rapid growth; the new industries have entered into the right track quickly and the transformation and reconstruction of old bases have gone quite well; distinct results have achieved as to investment in foreign countries.

    After long years of accumulation, Skyworth has formed increasingly great strength in the business of set top box. In 2010, it has occupied a market share of 20％ above in domestic market, with an annual sales volume exceeding ten million for the first time, thus becoming China’s largest manufacturer of set top box which has become a new core business of the group. In the fiscal year of 2010, Skyworth has earned a business amount of 2.676 billion HK dollars in domestic digital set top box, increasing by 125.6％ year on year; thanks to the flexible product combination and optimization of supply chain as well as successful marketing strategies, business amount of digital set top box in foreign markets is 1.02 billion HK dollars, up 43.7％. In American areas, the business amount grew strongly by 97.4％ while in European markets the growth rate is stable at 17.0％.

    Shi Chi, president of Skyworth Digital Set Top Box Business Department expressed, “Skyworth digital set top box business is expanding in full efforts the markets of second and third tier cities in China, plus the high-definition interaction upgrade at key cities and live telecast promotion in rural areas, the market size has become increasingly large, boosting the sale amount to double.”

    After five years of development, the business of Skyworth liquid crystal devices has become increasingly mature and strong. In this year, Skyworth liquid crystal devices have achieved a sales amount of 111 million HK dollars. Currently, Skyworth liquid crystal devices are equipped with the designing capacity of 47-inch below (including 47-inch) downright and edge lighting CCFL, LED backlight all-in-one machines integrated with light, engine, electricity and heat, and can also independently complete the capsulation of LED and backlight modules of LED, with a stable high level of product quality, not only to satisfy the needs of internal use, but also explore external business actively, thereby becoming a largest mobile phone screen supplier for internationally famous brands.

    The refrigerator plant of Skyworth Nanjing Electrical Appliance Technology was put into operation successfully, with the business going smooth; Shenzhen Semi-conductor Design Center laid the foundation stone, Guangzhou area cluster research and development trial and layout, aiming to grasp the highest point of OLED flat display and chip technology; projects of lighting and optronics are going smoothly to lay a solid foundation for the development of Skyworth in the future.

    Zhang Xuebin, chairman of the board and CEO of Skyworth expressed, Skyworth is an enterprise with great ambition. Facing the new decade of 21^st century, Skyworth has drawn up a strategic plan for the five year to earn 50 billion RMB. 2011 fiscal year is the fist year of 5-year plan, also a year full of challenges. However, we are fully convinced that Skyworth will grasp the opportunities with continuous innovation and will embrace a bright future.