Centron (HKSE 1155) Announces 2013 Annual Results recorded a net profit of RMB6.87 million

- Stable Performance among Peers and Turns Profitable

- Positive Prospects on Mobile Network Coverage & Optimization & Digital Private Network Communications

Fiscal 2013 Highlights

• Stable Performance among the industry peers and turns deficits to profits - recorded a net profit of RMB6.87 million
• Excluding the impairment provisions related to Digital Terrestrial Television Broadcasting (DTTB) business, net profit would be RMB76.07 million
• Won tenders in TDLTE (4G) network construction from various provinces, related contracts continue to come in
• Successful realization of product commercialization in Digital Interphones (Digital Private Network Communications) - revenue of approx. RMB45.70 million was recorded for the first time
• Basic earnings per share is RMB0.91 cent

HONG KONG, April 1, 2014 /PRNewswire/ -- Centron Telecom International Holding Limited ("Centron" or "The Group", HKEx: 01155.HK), announced its annual results for the 12 months ended 31 December 2013 (the "year").

Centron successfully turned around from a net loss of RMB13.93 million in the 1H 2013 to positive earnings throughout the year, recording a net profit of RMB6.87 million. After deducting the impairment provisions related to Digital Terrestrial Television Broadcasting (DTTB) business, net profit would be RMB76.07 million. Centron achieved a turnover of RMB1,463 million (2012: RMB1,479 million), which was about the same level of last year. Basic earnings per share was RMB0.91 cent.

Mr. Dai Guoliang, Chairman of Centron, said, "Amid the entire communications industry downturn throughout the year, Centron is still able to buck the trend. Not only did the Group accomplish its business objectives, but it also turned deficit to profit ultimately, manifesting our capabilities in strategies making and business operation as well as efficient cost control. Although fierce competition still exists among the industry, we believe that the worst period has passed and it is about to usher in a stage of rebound. Looking forward, we will take conscious steps in transformation and innovation to keep up with the momentum. By taking advantage of superiority of the Group in various aspects, we will further enlarge our business scale and capture every opportunity to expand our market share amid great upsurge in 4G and inevitable trend of the analog-to-digital reform in private network communications."

Business Review

Higher Demand on Mobile Communications from 4G Network construction

As the largest source of the group's revenue, Mobile Communications Network Coverage & Optimisation Solution represented approximately 96.0% of the total revenue. With the actual release of 4G license at the end of 2013, where the chain sequence of network coverage & optimization is among the mid-to-end phase of network construction, orders for multi-mode digital signal distribution system, high performance RF devices, multi-mode and multi-frequency in-building distribution solutions of the Group increased significantly, although aggregate sales failed to increase from the release of 4G license. During the year, Centron has been shortlisted in related coverage projects of TDLTE network construction of various provinces and cities including Shandong, Fujian, Hebei, Shanxi, Guangdong and Beijing, etc., and won orders to provide a series of related products and services. As an industry leader to participate in the boom of 4G network construction, Centron has also implemented network coverage trial projects of 4G signal for telecom operators in several provinces.

With the continuance of TDLTE construction heat wave as well as the expectation for release of FDDLTE license in the future, the Group will maintain the competitive edges of hot products to cope with the upward trend of "integration" and "all-in-one" in the industry, and concentrate on the development of multi-frequency,

multi-mode, multi-network products  and solutions compatible with the modern network environment, so as to ensure simultaneous development with the industry and keep the current industry-leading position and ultimately, further expand its market share.

Digital Interphones (Digital Private Network Communications) Commercialized and Achieved Sales

In second half of 2013, the Group successfully commercialized its digital private network products technology which was invested in R&D and technology reserves for many years, by launching various products including terminals, systems and accessories, as well as overall solutions for commercial and industrial private network users. The contributed revenue of which reached approximately RMB45.70 million, which enhanced the confidence in the future business development of the Group. Digital private network communications, launched by the Group as a new business, has contributed tens of millions of sales revenue. It is believed that with the analog-to-digital progress of the digital private network communications and the construction of industrial informatization, market demand for digital private network communication will continue to increase. Meanwhile, it can foresee that the digital private network industry has a wide variety of applications and deep solution extension. It is believed that there will be a larger potential for domestic and foreign market to develop.

During the year, the Group also completed the construction of and successfully opened trial network for several projects and is constructing other cross-city large trial networks which are demonstrative and strategic for promotion of future business and set a foundation for realization of large scale sales.

Prudent Approach on Digital Terrestrial Television Broadcasting (DTTB)

In 2013, revenue from the digital television wireless network coverage business was RMB 13.20 million. Due to various reasons not limited to the industry and governmental policies, construction and investment in radio and television network have been temporarily reduced. In order to reduce risk and optimize resources allocation, the Group implemented an adjusted strategy by highly cautious on any investment of such business and related expenses, and starting to pursue recovery of the indebtedness actively, so as to maintained its industry-leading resources and advantages of DTTB business at the lowest cost. Meanwhile, in line with the development of other related opportunities arising in the market, the Group will consider the degree of involvement depending on the situation, and involve in national-standard digital terrestrial multimedia broadcast (DTMB) and satellite TV receiving and other services with cautiousness. During the year, the impairment provision of trade receivables for DTTB for 2013 was RMB44.60 million and the impairment provision of inventories amounted to RMB24.60 million.

Prospects: Optimistic towards 4G & Digital Private Network Communications

Looking ahead, in accordance with existing business and strategic direction, the Group will maintain its stability and take steady steps on transformation under growth drivers like 4G, user experience, network optimization, all-in-one construction and renovation, analog-to-digital reform, public safety and industrial informatization. With our objectives to transform moderately and innovate, the Group strives to improve the overall competitiveness to achieve steady development of the Group.

Riding on the good momentum of development of the digital interphones (digital private network communications), the Group will further develop and launch private network communications products and system applicable to various industries such as public security, forestry, civilian, port and transportation use in various domestic and foreign regions, so as to increase its sales volume as well as its industry influence. We believe that, while the market scale of digital private network communications in China has reached to tens of billion RMB, international digital private network communications market has reached to hundreds of billion RMB, the Group will achieve better results in this area in near future.

The Group will increase investment in research as telecom operators transform from extensive investment spending to efficiency control. By means of developing a range of market-leading strategies, innovative products and services in a continuous basis, the Group aims to provide more precise products positioning and one-stop solutions. Meanwhile, with our progressive technical reserves, commercialization to promote new businesses and the scale of sales, effective risk control can be achieved in the expansion process. The Group will be market-oriented, and constantly adjust and optimize business and product mix, and strive to maximize our profitability at minimum costs through stringent cost control and prudent project examination and approval system.

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