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Vanda Systems announces 2003 interim results

Business flow returned after dip during SARS
Clean balance sheet to position for business growth
Accelerating revenue portfolio transformation to strive for higher margin

Hong Kong, December 29, 2003 - Vanda Systems and Communications Holdings Limited ("Vanda" or "the Group"), a Hong Kong publicly listed information technology solutions company (stock code: 757) and a member of Hutchison Whampoa Group, today announced interim results for the six months period ended September 2003.

For the period under review, under the effects of SARS and a general slowdown of economic activities in key operating regions of the Group, business volume has slowed down resulting in a 11.8% drop in group consolidated turnover of HK$420,990,000 as compared to same period last year. The Group reported a consolidated net loss attributable to shareholders of HK$55,585,000. Basic loss per share for the period is HK$0.0939. The Board of Directors does not recommend an interim dividend.

The loss was partly attributed to the non-cash provision made by the Group as part of its continuous efforts in adopting stringent accounting measures. The provision included a number of non-cash items such as provision for bad and doubtful debts, provision for impairment of long term investment and leasehold land and buildings and unrealized holding losses on other investments, totaling HK$23,154,000 At the same time, the Group has tightly controlled its internal costs to bring them in line with business across the region.

The Group's shareholder structure was much reinforced during the reporting period as both Hutchison International Limited and DBS Private Equity had fully converted their bonds issued by the Company and become Vanda's major shareholders, providing the Group with a stronger governance and new business potential.

During the period, the Group has made much progress in providing IT services, particularly in maintenance, security, storage and systems management, recording a growth in revenue. "These are encouraging results as the Group drives towards building competency in transforming our business portfolio to create value and sustainable profit growth," said Mr. Loh Tiak Koon, CEO of Vanda Group.

The Group's infrastructure solutions business in the region has reported a moderate growth of 1.4% to HK$173,017,000. Several contracts were signed with major clients in its Asean operations, including Unilever in Singapore, and International Exchange Bank and Super Value Inc. in the Philippines. The distribution and infrastructure services business accounted for 41.1% of the Group's total turnover and recorded a segment profit of HK$6,071,000.

Affected by the SARS and an overall sluggish IT market, turnover from systems integration and application solution services business fell 19.1% as compared to the corresponding period last year to HK$247,973,000, accounting for 58.9% of the Group's total turnover. The loss from this segment was HK$11,542,000.

Mr. Loh said that the effects of SARS are nonetheless short-lived. "The Group has seen a pick up of business flow in the latter part of the year. A number of sizeable contracts have been closed in the PRC with customers in the banking and finance as well as the government sectors, giving us reasons to believe that business is back on the right track."

Major contracts signed during the period included the Payment System Project for the People's Bank of China Headquarters; Network and Integration Project for Beijing Data Centre of the China Foreign Exchange, New Generation Integrated Business System for Kunming City Commercial Bank and Core Insurance System for Heng An Standard Life Insurance Co. In Hong Kong and Singapore, the Group also secured noteworthy contracts from enterprises including Sony Music, Textwood, ATV, SingTel and Union Overseas Bank.

In a bid to enhance its business portfolio, enlarge business offerings and provide value add services to customers, Vanda has made a number of business partners during the period. These included forming a strategic alliance with Business Object (BO), the world's leading business intelligence tools provider, entering into a close working relationship with MISYS, a renowned business solution provider, and signing an exclusive agreement with KEBA to market its self-service banking products in the PRC, such as ATM together with Vanda's after sales services and application solutions services.

Looking ahead, Mr. Loh said that the macro environment for IT industry will remain challenging. Hardware profit margin will continue to experience downward pressure and drop further as competition intensified. However, Vanda will benefit from customers' demand shift from hardware centric to service-driven IT market where the Group is already gaining presence.

"The Group regards building our IT service capabilities and business as our top priority and the way forward. Every effort will be made to accelerate our revenue portfolio transformation by aggressively building our business towards applications solutions to opt for higher profit margin."

"Vanda is now in a much stronger position with a clean balance sheet, positive net asset value and revenue growth potential."

"The Group has recently entered into agreements with Hutchison 3G UK Ltd. and Hutchison Whampoa IT Services S.á.r.l., both are subsidiaries of Hutchison, to set out the basis upon which certain computer software application services may be provided by the Company upon their request. Such co-operation with Hutchison will provide opportunities for the Group to enhance its revenue growth."

"With the strong support and commitment from our major shareholders together with our solid business base in China and Asean, we endeavor to drive business growth and transformation, manage costs and deliver tangible value for our clients and shareholders," Mr. Loh concluded.

- END -

About Vanda

Founded in 1982, Vanda Systems and Communications Holdings Limited is a listed company on the main board of the Stock Exchange of Hong Kong since 1995 ("Vanda", stock code: 757). A member of Hutchison Whampoa Group, Vanda is a leading IT solutions provider primarily engaged in the business of systems infrastructure and application solutions services.

Headquartered in Hong Kong, Vanda has an extensive geographical coverage with operations spanning Mainland China, Hong Kong, Macau and Southeast Asian countries including Singapore, Malaysia and the Philippines to the United Kingdom. In Mainland China, Vanda has a strong presence, operating 8 offices in key cities including Beijing, Changchun, Chengdu, Dalian, Guangzhou, Shanghai, Shenzhen and Wuhan.

Vanda is the market leader in China in the provision of systems integration and software applications services in the banking and finance sector. The Group has a client list of over 100 banking institutions. In Southeast Asia, Vanda has a reseller network of over 300 companies.

Vanda is a premier IT service provider in Asia and is the top three IBM's largest business partners in Asia. The group's diverse client base includes major banks, financial institutions, posts and telecommunications companies, utility companies and government departments.

For further information, please contact:

Vanda Systems and Communications Holdings Limited
Lyllian Poon / Candice Teng
Tel: 852 2197 2138 / 852 2197 2110
Fax: 852 2197 2333
Email: /

Weber Shandwick Hong Kong
Mike Wong / George Lau
Tel: 852 2533 9922 / 852 2533 9907
Fax: 852 2868 0224
Email: /