China Fiber Optic Announces 2011 Annual Results Revenue and Profit Surged 50.0% and 39.2% Respectively

HONG KONG, March 20, 2012 /PRNewswire-Asia/ --

Highlights

China Fiber Optic Network System Group Ltd. ("China Fiber Optic" or the "Company", together with its subsidiaries the "Group"; stock code: 3777), the largest manufacturer of fiber optic patch cords in China, today announces its annual results for the year ended December 31, 2011 (the "year under review").

During the year under review, the Group's revenue surged 50.0% compared to the same period last year to RMB1,257 million (2010: RMB838 million). Gross profit increased by 49.1% to RMB399 million (2010: RMB268 million). The Group's profit for the year saw a substantial increase of 39.2% to RMB253 million (2010: RMB182 million).

The Board has recommended not to declare final dividend for the year ended December 31, 2011. The Board believes that a clear dividend policy is important to our investors. Therefore the Board has resolved to adopt a policy of paying final dividend commencing fiscal year 2012.

Mr. Randy Hung, Executive Director and Chief Financial Officer of China Fiber Optic commented, "The global demand of fiber optic patch cords is no doubt in a growing trend. Global market size of fiber optic patch cords is now estimated to increase from USD2.69 billion in 2011 to USD4.58 billion by 2015. Growth drivers for our business will continue with the rising demand in the communication industry, in light of China's rapid deployments of FTTx, three-network integration and increase 3G wireless communication coverage."

During the year under review, increase in revenue was mostly contributed by sales to domestic customers. The Group's domestic sales significantly increased by 61.3% as its customers continue to build and upgrade their fiber optic networks. Domestic sales of fiber optic patch cords alone surged by 71.7% to RMB1.012 billion due to the continued surge in demand for fiber optic patch cords by telecom network operators and broadcasting and television network operators in China. Overseas sales consisted of fiber optic patch cords shipped to customers in Ireland and New Zealand was RMB221 million in 2011, representing an increase of 13.0% compared to last year.

For the production capacity, the Group completed the construction of the two new production lines of fiber optic patch cords by the end of 2011 to bring up production capacity by 35% to 12 million sets of fiber optic patch cords per annum. Subject to the availability of local labor, the Group will continue to further expand its production capacity in 2012 to up to 18 million set of fiber optic patch cords per annum, in order to meet the market demand.

In February 2011, China Telecom announced its "Broadband China, Optical Network City" strategy to increase FTTH subscribers by 30 million in 2011 alone, an increase of 300% from total subscribers obtained in the past five years before, and it will build fiber access network in all cities of China in the next three years. In addition, broadcast and television network operators are rushing to replace their network with fiber optics in the 54 cities announced for pilot trial of the "Integration of Three Networks" in preparation for the cessation of analogue television broadcast signal by the end of 2015. Demand for fiber optic patch cords from mobile network operators will also continue to increase as they keep expanding and upgrading their mobile networks and mobile base stations, the industry's prospects remain very encouraging. According to an independent market survey, China's market size for fiber optic patch cords in 2012 will increase by 22.7% to RMB4.48 billion. By 2015, it is estimated to reach RMB6.79 billion.

Mr. Randy Hung concluded, "Looking forward, the Group's believes the prospects of China's fiber optics communications industry are promising. According to the "Opinions to promote the construction of optical fiber broadband network" jointly issued by seven ministries of the Ministry of Industry and Information Technology in 2010, over RMB150 billion will be invested in fiber optical network construction between 2011 to 2013. China's 12th Five-Year Plan further reiterated that the country will promote broadband access in city areas and also accelerate broadband penetration in rural areas. Being the largest manufacturer of fiber optic patch cords in China, the Group is poised to benefit from the growing market demand in both domestic and overseas markets, and is aiming to become one of major providers of fiber optic patch cords in the world within the next five years."

About China Fiber Optic Network System Group Ltd.

China Fiber Optic Network System Group Ltd. is the largest manufacturers of fiber optic patch cords in China. The Group produces and sells a comprehensive portfolio of fiber optic patch cord products used in a variety of applications in the communications industry. According to an independent market survey, the Group's domestic market share of fiber optic patch cords accounted for 21.4% in 2011. Please visit Company's website at www.chinafiberoptic.com.

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