ZTE Reports 2004 Results

SHENZHEN, China -- ZTE Corporation (“ZTE” or the “Group”) (Stock code: 0763.HK 000063.SZ), China’s largest listed telecommunications manufacturer and leading wireless solutions provider, has announced record annual results for the year ended 31 December 2004.

This is the Group’s first results announcement since it was listed on the Main Board of the Hong Kong Stock Exchange (HKSE) in December 2004. Based on Hong Kong GAAP, the Group reported a turnover of RMB 21,200 million (approximately US$2,563 million) for the full year of 2004, representing an increase of 24.6% as compared to 2003. Profit attributable to shareholders increased to RMB 1,273 million, 23.8% higher than that in 2003. Weighted average earnings per share were approximately RMB 1.57. The Directors have recommended the payment of a final dividend of RMB 0.25 per share for the year ended 2004 (including tax).

Mr. Hou Weigui, Chairman of ZTE, said, “We are pleased to witness the Group’s substantial growth in the past year. We believe it is the result of the overall favourable development of the communications sector and also our own efforts towards realising the best operating results. The Group was successfully listed on the Main Board of the HKSE in December 2004, becoming the first A share listed company to do so. The successful listing marked a new milestone in our development: it has not only provided ZTE with access to the international capital market, but also drives us to practise the highest corporate governance standards and transparency.”

In 2004, ZTE has strengthened its development in the international market, aiming to capture opportunities as the global telecommunications sector recovered. It has established business relationships with over 60 countries around the world. Leveraging its competitive strengths, ZTE has reinforced its efforts to develop in rapidly growing emerging markets while aggressively exploring the international telecommunications service provider market. This has resulted in substantial revenue growth from the international market. Turnover from the international market increased by 133.5% over 2003 to reach RMB 4,575.6 million (approximately US$553.28 million), representing 21.5% of ZTE’s 2004 turnover. This not only marks a major growth driver for the Group in 2004, but also makes ZTE one of the fastest growing communications equipment enterprises in the world.

ZTE has strengthened its R&D to ensure its long-term competitiveness and continues to participate in compiling industry standards, expanding its international R&D base, and attracting and recruiting international technology experts.

Mr. Hou said, “As a high-tech enterprise, research and development is key to our success. We will continue to invest approximately 10% of our revenue into research and development each year and will focus on the accumulation and protection of intellectual property rights in the long run to ensure our sustainable development. In November 2004, we successfully developed the world’s smallest and lightest 3G mobile phone, proving yet again our strong R&D capability.”

Mr. Hou concluded, “Looking ahead, we will continue to adhere to our internationalisation strategy and strive for even better performance in the international market. We will remain committed to enhancing overall customer satisfaction and consolidating our competitiveness and market share through improving R&D management, implementing stringent quality control measures and improving operational efficiency. We expect to see steady growth in both the global and Chinese communications industry. We aim to grasp development opportunities arising from the demand for new technologies and new products in the communications sector, and thereby increase the value of the Group and yield good returns for our shareholders.”

ZTE Corp.