CEC International Holdings Limited

(Hong Kong, July 31, 2001)-- Leading coils manufacturer CEC International Holdings Limited ("CEC" or the "Group") (Stock Code: 759) today announced its annual results for the year ended April 30, 2001. CEC attained a turnover of HK$347,004,000, representing a substantial increase of 28% over last year's turnover. Net profit for the year was HK$30,863,000, compared to the previous year's figure of HK$41,910,000.

Basic earnings per share were HK6.02 cents. The Board of Directors recommended the payment of a final dividend of HK1 cent per share. The proposed final dividend will be paid in cash with an option to receive new fully paid shares in lieu of cash in respect of part or all of such dividend. Additionally, the Directors have also recommended a bonus issue of new shares on the basis of one bonus share for every five existing shares held.

Mr Coils Lam, Chairman of CEC said, "We are delighted to report that our turnover achieved a satisfactory growth in the past year. This reflects our success in preserving and strengthening our market position in the electronics industry despite the adverse market conditions. In fact, our profit did not show corresponding growth of turnover due to the substantial capital expenditure on construction of new factory blocks, purchase of new and advanced machinery and the expansion of our R&D capabilities. While these large-scale capital investments have an immediate impact on short-term profitability, we strongly believe that all the initiatives are essential and vital in the building of even more promising growth for the Group."

For the financial year ended April 30, 2001, aggregate capital expenditure was over HK$223,000,000 for the addition of plant, machinery and equipment. These investments were financed with new long-term bank loans and finance lease arrangements of HK$88,325,000 and HK$56,794,000 respectively during the year. This has pushed up the interest expenses by 88.1% from HK$10,367,000 in the previous year to HK$19,499,000 for the current financial year. The Group's dedicated investment in enhancing its production infrastructure in the year under review, has also led to a 50.4% jump in depreciation of property, plant and equipment from HK$22,842,000 to HK$34,356,000 in the current year. As a result, earnings before interest, taxes, depreciation and amortization were HK$86,457,000, up 10.8% from last year, demonstrating the steady growth of CEC's core business.

Mr. Lam said, "The fiscal year 2000/2001 has been a year of investment for CEC. Realizing that the rapid development in information and technology will sustain global demand for high-quality and miniaturized electronic components, well into the future, we have taken the necessary steps to get well prepared for these changes. For example we have installed state-of-the-art automated production facilities to increase production capacity and capture emerging business opportunities. We are confident that CEC will experience both satisfactory and positive business growth in the years ahead."

With regard to production cost management, unfavorable developments in the petroleum market accounted for part of the drop in gross profit margins. On the other hand, the Group has taken prompt action to mitigate the impact on power generation costs with the installation of a new power conversion station for its factory in Zhongshan. Furthermore, at the end of the third quarter, CEC commenced the self-production of tubular ceramic capacitors, which are a key component of the Group's products, saving the cost of parts and helping to greatly improve CEC's gross profit margins.

In addition, with the continuing high-tech advances in electronic applications around the world, the evolution of ferrite materials, the core components of electronic devices such as inductors, line filters and EMI filters, etc., continues to play an indispensable role in sustaining these advances. Requirements for the permeability and operating frequency of ferrite materials are becoming more and more demanding. CEC has been successfully developing ferrite powders and ferrite cores to enhance ferrite material production techniques and processes, which have also successfully reduced the Group's production costs.

Looking ahead, with the impending accession of China to the World Trade Organisation, economic globalization will be the irresistible trend in the future. The development of a knowledge-based global economy, and the information and communications infrastructure to support this demand for international business applications, will once again be gathering momentum and impetus. In the electronic components market, it is generally believed that the information and communications revolution and steadily increasing number of electronic features found in electrical and electronic appliances will continue to be a key growth-driver in the demand for electronic components.

Mr Lam concluded, "We expect the electronic markets to rebound in the coming financial year. We will push ahead to enrich our product line and better serve the electronics market by launching the production of miniature multi-layer chip inductors. This family of inductive components, being complementary to the existing series of wire-wound chip inductors, caters to the different self-resonant frequencies required in electronic products such as MP3 players, mobile phones, cable modems, broadband network equipment and computers, etc. We have every confidence that without the need for further heavy investment, we can achieve promising business growth and further enlarge our product market share, bringing better return to our shareholders."

About CEC International:

CEC International was listed on The Stock Exchange of Hong Kong Limited on November 15, 1999. It is a reputable coil manufacturer, engaged in the design, development, manufacture and sale of a wide range of coils. CEC coils can be commonly found in IT products, telecommunication products, home appliances and audio-visual products, etc. Accredited with ISO 9001 certification in 1995, the Company also has more than 400 engineers and quality control staff for the assurance of product quality.

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http://www.0759.com

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