• There are a number of key factors potentially inflencing the CPT industry, many of which are beyond our control
  • Speed of capacity reduction by competitors
  • Pricing strategy of alternative technology manufacturers
  • Evolution of consumer preferences regarding True Flat, Slim and 16x9
  • Retailers’ product offer strategy
    
    
• The 2005 Budget and Scenario 1 MTP (base case) is based on certain assumptions concerning the above factors, notably
  • Continuous price pressure in line with past historic trends (-8 to -12%), gradual capactiy reductions over 2005 to 2007, strong growth of LCD makers volumes (but limited cannibalization until 2007/08 due to ratio remaining above 2-2.5x), growing demand for Slim and 16x9, gradual shift to True Flat in line with past historic speed of evolution.
    
    
• Our Scenario 2 MTP is based on more rapid evolution of most of the trends above, i.e.
  • More significant over-capacity, more rapid switch to True Flat, stronger price pressures in the short term, particularly in the Curved segment, leading to more rapid rationalization of the industry, stronger competition from LCD manufacturers, impacting in particular the VLS and 16x9 segments.
    
    
• Obviously Scenario 1 is more favorable in the short term. Scenario 2 requires a stronger adaptation of our industrial strategy. In the mid term we believe that Darjeeling can deliver similar profitability and cash generation in both scenarios.

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