Tonic Industries Holdings Limited

[For Immediate Release]

Summary Turnover increased 10% to HK$1,378 million Profit up 28% to HK$23.8 million Revenue generated from the Home Appliance Division increased approximately 86% to HK$67 million The Group's gross margin increased from 6.1% to 6.3% The Board of Directors propose an interim dividend of HK1 cent per share

(Hong Kong, December 12, 2002)-- Leading audio-visual ODM and OEM manufacturer Tonic Industries Holdings Limited ("Tonic"/ the "Group") (Stock Code: 978) today announced its interim results for the six months ended September 30, 2002.

Tonic recorded a turnover of HK$1,378 million during the interim period, representing a 10% increment against the last corresponding period. Profit attributable to shareholders surged 28% to HK$23.8 million. Earnings per share were HK3.8 cents. The increase was mainly attributable to popular demand for the Group's new audio products, video phones, digital products, and home appliance products which have higher selling prices and likewise, higher profit margins.

The Board of Directors recommends an interim dividend of HK 1 cent per share for the six months ended 30 September 2002. (2001: HK0.5 cent)

Mr. Simon Ling, Chairman of Tonic, said, "The general market economy gradually recovered after the 911 events last year and consumers' confidence and spending have steadily increased after the second quarter this year. During the period, we have successfully developed high calibre products with new features that have satisfied customers' escalating demands. In view of the many new orders and enquiries that have been received in recent months, sales are expected to increase even further in the latter half of the financial year."

While the performances of the Audio and Video Divisions have improved, there has been continuous business growth in the Home Appliance Division. Turnover attributable to the Home Appliance Division increased approximately 86% to HK$67 million. Net profits also increased sharply by 37% for the period. Apart from products manufacturing, the Group is also involved in the design, research and development, mould manufacturing and direct marketing of these products. These comprehensive and integrated services enable the Group to earn higher profit margins.

To further fuel the growth momentum of the Home Appliance Division, the Group recently set up two marketing offices in Japan and the United States to carry out direct marketing of the Group's products. The Group expects the two offices to start generating business by the middle of next year.

Looking to the future, the Group will devote more resources into the digital products and the home appliance divisions to maximize profit. The capital expenditure for automated insertion machinery, new factory blocks and heavy oil electricity generators incurred in previous years have accommodated the increase in business demand in a very timely manner. These set up will meet further increases in business for the next two years and resources will therefore, be allocated to strengthen research and development in the two divisions and to produce new products with higher profit margins. The marketing department will also continue its aggressive expansion in the years to come.

Mr. Ling said, "Over the years, our objectives have always been to provide quality services to our customers through continuous improvement. With our relentless efforts, together with the use of advanced production techniques and equipment, we managed to manufacture products at a standard that exceeds the expectation of customers. We are confident that the turnover and profits attributable to shareholders will continue to improve in the years to come."

About Tonic Industries Holdings Limited

Tonic was listed on the Hong Kong Stock Exchange in October 1997. It engages mainly in the design, manufacture and marketing of a wide range of consumer AV products and home appliances. Products are sold on an ODM and/or OEM basis to overseas importers and manufacturers of well-known brandnames such as Alba, Bush, Emerson, GPX, Kenwood, Medion, Pioneer, Sanyo, Thomson, Zojirushi, Hamilton Beach, Morphy Richards and Russell Hobbs. Its production facilities located at Dongguan, the PRC, consist of a total production area of over 1,500,000 sq.ft.

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Tonic Industries Holdings Limited

This media release and the other corporate information of Tonic Group can also be accessed through the following websites:
http://www.tonic.com.hk or http://www.irasia.com/listco/hk/tonic

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