(Hong Kong, May 13, 2003) --- Wafer Systems Limited ("Wafer Systems") (stock code: 8198), a leading network infrastructure solutions and services provider, today announced its 1st quarterly results for the three months ended 31st March, 2003.

The Group reported a 146% growth in turnover to HK$58.1 million, successfully turning around from a loss of HK$3.7 million in the corresponding period last year to report a profit of HK$1 million this year. Earnings per share was HK 0.36 cents. The Board does not recommend the payment of a quarterly dividend for the three months ended 31st March, 2003 (2002:Nil).

Chief Executive Officer of Wafer Systems, Mr. Ringo Chan said, "The situation in the telecommunications industry in Mainland China is improving with projects previously on hold being released. This market recovery together with the synergies generated by the growing scale of the Group's operations in Mainland China has resulted in an increase in both the Group's turnover and profit. During the review period, we have made a substantial effort to implement various cost control measures and have significantly reduced certain operating expenses This enabled us to achieve a net profit during the review period. "

Among the three core businesses, the network infrastructure business performed particularly well, with turnover surging 149% to HK$50.3 million, representing 87% of the Group's total turnover. The emergence of the Next Generation Network ("NGN") has generated tremendous business opportunities for the Group. In partnership with Cisco Systems ("Cisco"), the Group further secured an approximately HK$14.6 million contract from a well-known telecommunications player in Sichuan province to provide 2nd phrase NGN related infrastructure. This once again demonstrates the Group's ongoing customer satisfaction and excellent service capabilities. Moreover, the Group also successfully secured a contract of more than HK$15 million from Motorola to integrate its mobile telephone network with the Internet.

Apart from its work with Multinational Corporations ("MNCs"), Wafer Systems also possesses strong competitive advantages in network optimization & security solutions in Hong Kong. This has been highlighted by the new contracts obtained from a number of public and private institutions in Hong Kong, including the Hospital Authority, the Information Technology Services Department of Hong Kong Government, the Vocation Training Council, Bank of China and Hutchison Global Communications. These contracts further consolidate the Group's leading position in providing network optimization and security related solutions in Hong Kong.

As a result of the successfully penetration of the market for MNCs and leading domestic corporations, the contribution from Professional Services grew satisfactorily during the review period. Turnover from this sector increased 126% to HK$7.8 million as compared to the same period last year.

"The outbreak of the Sever Acute Respiratory Syndrome ("SARS") brings both challenges and opportunities to the Group. Although some infrastructure projects may be delayed due to business disruptions, we believe that our projects on hand will not be cancelled but may be delayed. However, as many corporations cancelled business trips during this critical period, the demand for video conferencing has surged. Enquiries received by the Group for these products and services have doubled," Mr. Chan added.

Looking ahead, the Group will continue its efforts to increase its penetration of both the MNCs and local domestic market. At the same time, its self-developed NextG IP Billing Software continues to receive positive feedback from the market. The Group successfully signed contracts with several telecommunication providers, located in Canada and Japan. This sophisticated software has helped the Group to expand its business scope internationally.

Additionally, the Group has been invited by Cisco to join its Service Provider Solutions Ecosystem (SPSE) program. Wafer Systems is the first Cisco partner in Hong Kong and China to receive this recognition under the solution category "Voice/Packet Telephony Application". This demonstrates that the Group's capabilities in research and development for NGN software and solutions have been recognized by Cisco.

"Leveraging this strong partnership together with our sophisticated products and services, Wafer Systems is well positioned to take advantage of the significant business opportunities generated by the emergence of NGN as the PRC enters the WTO. Balancing this situation, we are fully aware of the SARS outbreak in Mainland China which may lead to additional challenges and opportunities for us. Although SARS has not had any significant negative impact on the Group, management will continue to monitor the situation closely and will respond appropriately to market conditions," Mr. Chan concluded