[For Immediate Release]

(Hong Kong, July 16, 2002)-- Leading audio-visual ODM and OEM manufacturer Tonic Industries Holdings Limited ("Tonic"/ the "Group") (Stock Code: 978) today announced its annual results for the year ended March 31, 2002.

During the year, Tonic recorded a turnover of HK$2,014 million, a decrease of 23% from last year. Net profit attributable to shareholders was HK$9.2 million, compared to HK$12.5 million recorded last year. However, attributable to the implementation of stringent cost control strategies and the development of new innovative products with higher profit margins, gross profit margin increased from 5.4% last year to 5.9%. Earnings per share were HK1.5 cents.

The Board of Directors recommended the payment of a final dividend of HK0.5 cent per share. (2001: HK0.5 cent). Together with the interim dividend of HK0.5 cent per share, the total dividend for the year will be HK1 cent. (2001: HK1.5 cents).

Mr. Simon Ling, Chairman of Tonic, said, "The economic downturn and 911 terrorist attacks in the United States has affected the consumer's confidence in spending and inevitably our business has been affected. However, we have been unrelenting in consolidating our production facilities, enhancing our product research and development capabilities and implementing a series of cost saving measures during the year. These initiatives have helped to increase our production capacity by at least 50% and effectively lowered our administrative expenses from HK$90 million in 2001 to HK$75 million. They also allowed us to equip ourselves to move ahead in developing digital products which are expected to dominate the market in the near future."

Sales for the digital products, such as Internet set-top boxes, DVD products, digital satellite receivers increased from HK$169 million last year to HK$539 million this year. Their contribution to the Group's turnover increased from 6.5% to 26.7%. The Group remains optimistic with the sales performance of the product stream, as there has been a strong rebound on the market demand for consumer electronics products in the last two months.

Mr Ling continued, "We are pleased to have secured orders for digital products from one of the Group's Japanese OEM customers. The orders of worth more than HK$500 million is due for the end of the year. We have also won two new customers, one from Germany and another from US during the year. These new business partnerships not only enlarged our client base, but are also expected to contribute to the Group's turnover in coming years. We are confidence that our sales record will reflect market trends."

Turning to the home appliances division, turnover has gone up a substantial 151% to HK$123 million. Turnover contributions to the Group rose from 2% last year to 6% this year. The Group's innovative products have been well received by the customers, in particular, in the European market.

Looking into the future, the Group will devote more resources into this division to maximize profit. It will strive to strengthen the research and development in the specialty area, and produce new products with higher profit margins. The marketing department will also undergo aggressive expansion with the addition of more staff and new sales offices will be set up.

For the audio product division, the Group will continue with its current business strategy of moving from traditionally analogue audio products to producing higher end digital products.

Mr. Ling said, "Our advance technological equipment, research and development facilities, as well as our cost efficient production capabilities in Dongguan, have stood us in good stead to cater to the escalating demand of digital products, and to capture market shares in Europe and the US. As the orders for the digital products and the home appliances are on the up trend, we are confidence that both divisions will generate higher returns to the Group in the coming year."

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, RCA, Sanyo, Thomson, Zojirushi, Hamilton Beach, Morphy Richards and Russell Hobbs.. Its production facilities located at Dongguan, the PRC, has 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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