Comba Announced 2005 Annual Results

Comba Announces 2005 Annual Results

Successfully Become a Partner of Core Equipment Manufacturer in 3G

Strengthened Business Relationship with Mobile Operators

Financial Highlights

(21 April 2006 Hong Kong) Comba Telecom Systems Holdings Limited ( Comba or the Group ; stock code: 2342), China s No.1 integrated wireless solutions and sub-system provider, is pleased to announce its annual results for the year ended 31 December 2005.

For the year ended 31 December 2005, the Group s revenue amounted to HK$1,170,515,000, representing a year-on-year growth of 7%. Gross profit for the year dropped 16% to HK$474,326,000 as compared with HK$563,379,000 in 2004. Profit attributable to shareholders was HK$82,089,000, posting a decrease of 65% over that of the previous year.

Basic earnings per share was HK9.86 cents. The growth in revenue was mainly attributable to the continued wireless enhancement capital expenditure by the GSM mobile operators in the PRC in improving the quality of mobile networks. However, such increase was offset by the slowdown in the implementation of capital expenditure plans on wireless enhancement solutions in CDMA network in the PRC.

In addition, the downward trend in selling prices led to margin pressure and also imposed unfavourable impact on Comba s financial performance.

Revenue generated from China Mobile Group increase steadily by 19.0% and accounted for 54.1% of the Group s total revenue in 2005. During the year, revenue generated from the GSM network of China Unicom Group increased by 132.6% while revenue generated from its CDMA network decreased by 43.8%. Revenue from China Unicom Group accounted for 33.7% of the Group s total revenue in 2005, with GSM and DCMA accounting for 18.3% and 15.4% respectively.

By the end of 2005, Comba operated over 30 offices in the PRC, providing sales, project survey and design, project management, installation and maintenance services to its customers locally. China Mobile Group and China Unicom Group remained as its largest customers, Comba recorded remarkable revenue growth in the international market in 2005. During the year Comba also strengthened its leading position in wireless enhancement solutions market in the PRC by introducing various new products and solutions.

The Group has recently completed the construction of its new headquarters, located in Guangzhou Science City, Guangzhou, the PRC. The relocation of its R&D functions to the new headquarters is expected to take place by mid 2006. This will further increase the Group s production capacity in its existing facilities. Besides, the Group has set up an R&D centre in Silicon Valley, the US, enhancing its R&D capabilities in new product development, especially for multi-carrier power amplifier.

Looking ahead, despite the uncertain timing of 3G licence grant, the Group remains optimistic towards the promising prospects in the mobile market and has formulated a series of development strategies, with a view to capturing the immense potential of the 3G launch.

Regarding the Group s future development, Mr. Fok concluded, We believe the future development of the Group s 3G operations will generate significant impetus for business growth. While being well prepared for seizing the opportunities in 3G telecommunications market, the Group will continue to launch new wireless enhancement solutions, base station subsystems, antennas and the Digital Microwave Systems.

Furthermore, the Group proactively expands overseas business. Our diversification into the core equipment manufacturers market has broadened our customer base and created new revenue channels for the Group. By leveraging its solid foundation and the leading position in the 2G market, coupled with its advanced R&D capabilities and extensive sales and marketing efforts, the Group is well-poised to be benefiting from the launch of 3G services in the PRC and is committed to creating fruitful returns to shareholders.