Earnings per share reached RMB 1.13 with a YoY increase of 32.72%
Revenue from principal operations increased 45.66%
Net profits increased 32.72%

• Sound business development, as well as improved sales scale and market shares, enabled ZTE to maintain the leading position in the industry and market
• The globalization strategy achieved the historic progress with contracted sales of RMB 5,022 million (US$ 605 million), representing an increase of 100% over the previous year
• Revenue from principal operations amounted to RMB 16,036 million, with a YoY increase of 45.66%
• Net profits amounted to RMB 752 million, with a YoY increase of 32.72%Earnings per share reached RMB 1.13; Expected 2003 Dividend Policy: Stock Dividend 2 for 10 and Cash Dividend RMB 3 (including tax) for 10 shares.

[Based on the Company’s share capital as at December 31, 2003]

ZTE Corporation (000063) announced its Annual Report 2003 on April 10th, 2004. According to the report, ZTE generated earnings per share of RMB 1.13 for the whole year. During the year under review, ZTE recorded the revenue from principal operations of RMB 16,036.03 million, with a YoY increase of 45.66%; net profits of RMB 752.50 million, representing an increase of 32.72% over the adjusted net profits of the previous year. The net cash flow generating from the operating activities per share was RMB 1.71.

ZTE Corporation attaches great importance to the shareholders’ interests and returns. Taking into account the Company’s state of affairs, cash flow and future needs for sustainable business development, the profit distribution scheme for 2003 is to allot 2 shares for every 10 shares and distribute RMB 3 in cash (before tax) for every 10 shares to shareholders, based on the total share capital of 667,296,000 shares as at December 31 2003. To date, ZTE Corporation has implemented the share allotment or cash distribution schemes for three consecutive years. In the future, the Company will continue to strive for the long-term steady growth of profits and maximize good returns for shareholders.

The year 2003 witnessed the continued fast growth in the domestic telecom industry and the recovery in global telecom industry. With the accurate perception of the market, ZTE has formed the multi-level product systems to meet the requirements of various customers by leveraging its diversified products and market-oriented differentiated strategies. As a result, in addition to consolidating the market presence of traditional switching and access products, ZTE achieved the significant improvement in the sales and market shares of the products like PHS, CDMA and handsets.

In mobile communication area, ZTE has become a leading PHS equipment supplier in China. In 2003, ZTE captured more big orders in respect of PHS products;  besides the large-scale system expansion in Tianjin, Jiangsu, Shandong, Shanxi and Hunan, PHS products also achieved breakthroughs in the emerging markets like Shanghai and Beijing. Meanwhile, ZTE consolidated and strengthened the leading brand image of “Top Chinese CDMA Brand” for its CDMA mobile communication system products in China. ZTE further expanded its market shares in bidding for China Unicom’s Phase III network equipment and engineering project, and made great breakthroughs in certain new emerging markets. In 2003, ZTE’s GSM products entered the municipalities and provinces like Beijing, Shandong, Xinjiang and Hebei on a large scale.

In the past year, China Telecom and China Netcom invested heavily in the infrastructure network construction to implement their penetration plans, therefore, the domestic market needs for switching and access products will increase correspondingly. In view of this, the Company further strengthened the development of its strategic and disadvantaged markets, thus enabling the market shares of those products to go up steadily. In 2003, the Company’s Softswtich products were improved in terms of functionality, performance and quality, and have mature experience in commercial applications; ZTE’s Softswitch are ahead of other counterparts in China and keeping pace with the state-of-the-art technologies in the world.

As one of the leading DSL supplier in China, ZTE’s sales of data products have doubled over the previous year. At the same time, the sales of IP network products including routers, Ethernet switches and WLAN products also recorded the substantial increase in China.

As to mobile communication terminal products, handsets have become the new revenue-generating products for the Company. In 2003, the Company sold 4.6 million handsets (including GSM, CDMA and PCS), and achieved the revenue from principal operations of RMB 3,523.43 million, representing a significant increase over the previous period. With ZTE’s in-depth understanding of system equipment and the carriers’ operation, ZTE’s CDMA and PCS handsets enjoy priorities in the carriers’ mass procurement of handsets, demonstrating good performance in the market. In November 2003, ZTE invited the world famous artist Li Jet to be the image representative of ZTE handsets, greatly enhancing the market recognition of ZTE brand.

In addition, ZTE have made major technical breakthroughs in the R&D of UMTS, CDMA and handsets. ZTE successfully rolled out the first generation UMTS commercial system, and demonstrated the outstanding performance in the MTNET system tests of MII and the system tests of China Mobile.  These tests also proved that ZTE UMTS already had the capabilities of outfield trials and commercial applications. In respect of CDMA system, ZTE launched the industry-leading all-IP highly integrated base station, made the first EV-DO data call, and rolled out the GSM1X technology, enabling the Company’s CDMA products to stay ahead in China. 

In 2003, ZTE’s globalization strategy scored many breakthroughs, and achieved the contracted sales of US$605 million, with a year-on-year increase of 100%.

ZTE’s GSM, CDMA and switching products achieved historic breakthroughs. After years of technical accumulation and market development, ZTE’s GSM products consecutively won big orders in the countries like Pakistan, Nigeria, Ethiopia and Russia. Capitalizing on their mature commercial applications in China, good cost performance and branding advantages, ZTE’s CDMA products recorded good achievements in Algeria, India and Nigeria. As the traditional strong products, switches achieved the scale applications in the countries and regions like Pakistan. The sales of data and optical communication products went up steadily in international markets.

In 2004, the overseas markets and handsets will be the key growth engines for the Company to achieve sustainable steady development. The Company will prioritize the R&D of mobile communication, optical communication and NGN products, thus ensuring the sustainable competitiveness. In respect of the corporate management for 2004, under the guidance of synchronized development and maximizing the overall benefits, the Company will effectively utilize various internal resources and improve the work efficiency of the enterprise; in addition, the Company will adhere to the prudent financial policy to realize the intensive growth, striving to achieve the world-level enterprise excellence.

The statements contained in this document are based on ZTE Corporation Annual Report 2003 officially published on April 10, 2004. Those statements are only factual description of business, and do not constitute any investment recommendations and references.

As an A-share listed company in China, the Company has performed the information disclosure obligations in compliance with the relevant laws and regulations regarding the information disclosure of China Securities Regulatory Commission and Shenzhen Stock Exchange on which the Company is listed.

For further information relating to the risks, uncertainties and other factors, please see the highlights of Annual Report 2003 which were published on the designated information disclosure newspapers - Securities Times, China Securities Journal, Shanghai Securities News dated April 10, 2004 by the Company, and the full text of the Annual Report 2003 which were disclosed on the designated information disclosure website www.cninfo.com.cn.