Audio Business Expanded Steadily; Actively Developed Global Market of Smart Products

Results Highlights (For the year ended 31 December 2019)

(1)      Mainly include smart
voice speakers, wireless speakers, soundbars, home theatres, and mini speakers

(2)     
Mainly include fabric covering for external sales, plastic injection
structural parts, speakers, wireless

modules, and other
components. The ancillary products of Guangdong Regency Optics-electron Co.,
Ltd., a subsidiary of the Group, began to be consolidated into the revenue of
ancillary products of the Group in the first quarter of 2019

(3)     
Mainly include smart plugs, smart gateways and other IoT products

(4)     
Mainly include DVD players, BD players, OTT set top boxes (STB), and
other products

*        The sales volume of certain
IoT related products in 2018 was reclassified to video products for the reason
of product form adjustment.

• Smart speakers, headphones, and soundbars businesses grew rapidly.
• Smart product business maintained growth, its proportion of the revenue
  generated to the total turnover increased to 16.3%.
• Ancillary product
  business which is ancillary to the smart product business grew rapidly, up 70.1% year-on-year to HK$786.6 million.
• Profit attributable to owners of the parent increased by 20.4% to HK$268.7
  million.
• The board of Directors proposed a final dividend of HK$0.35 per share.

HONG KONG,
CHINA - Media
OutReach - 24 March 2020 - Tonly Electronics Holdings Limited
("Tonly Electronics" or "the Group"; SEHK stock code: 01249) today announced
its audited annual results for the year ended 31 December 2019
("the year under review").

During the year under review, the Group endeavoured to
develop its audio product, smart product and ancillary product businesses,
among which products including smart speakers, headphones and soundbars grew
rapidly. The Group recorded a turnover of HK$8,146.6 million, representing a
year-on-year growth of 11.6%. Gross profit amounted to approximately HK$1,095.5
million, representing a year-on-year growth of 31.7%. Gross profit margin
increased by 2.0% from 11.4% in the same period last year to 13.4%, which was
attributable to the improvement of production efficiency as well as the
decrease in cost of raw materials. Profit attributable to the owners of the
holding company during the year under review increased by 20.4% year-on-year to
HK$268.7 million. The
board of Directors proposed a final dividend of HK$0.35 per share.

As the rapid growth in the global market of smart
products and the advantage of leading product technology and the initial market
layout, the smart product business of the Group maintained growth and the
proportion of the revenue generated by it to the total turnover of the Group
increased to 16.3%. Meanwhile, the ancillary product business which is
ancillary to the smart product business also benefited from the overall market
growth, especially in respect of precision plastic injection, structural parts
with new form and speaker units, all of which achieved remarkable results. In
addition, with the shipments of Bluetooth headphones of the Group maintaining
rapid growth, the Group has achieved large-scale shipments for TWS earphones
and enhanced its new technology development.

The Group has been committed to product R&D and
innovation. During the year under review, the Group's R&D expenses amounted
to HK$370.4 million, accounting for 4.5% of its total revenue. Moreover, the
Group maintained close cooperation with global internet enterprises, while screen-equipped
smart speaker jointly developed by the Group and its customers breaks the
limitation in respect of audio interaction function and content display and
allows smart products to acquire audio and visual abilities.

The Group used Huizhou Zhongkai as a core base and
moulding centre integrating research, production and sales. After the
commencement of operation of the new plant at Phase Two of Second Plant in
March 2019, not only solving the problem of decentralised production, certain
space was reserved for the production of new products as well, which were
beneficial to the enhancement of overall production efficiency. Huizhou
Tongqiao Industrial Park was forming a comprehensive industrial chain integrating
carpentry, speaker assembly, high-end wooden boxes, speakers, and plastic
injection. At the beginning of 2019, in order to enhance the overseas supply
chain capability and make use of the global resources, the Group purchased
industrial land of over one hundred thousand square meters in Vietnam to
establish its own overseas plant which the Group would strive to commence
operation in the second half of 2020. Furthermore, the Group continued to
increase the proportion of automated equipment, and strengthened the stability
of skilled workers to boost its per capita production efficiency and quality
steadily.

The outbreak of the novel coronavirus disease
("COVID-19") started from early 2020. Although the Group was affected to a
certain extent in respect of work resumption of employees, material supply and
increase in cost of raw material, the Group has been under normal management
and has fully resumed work maintained normal level of production and operation.
However, the pandemic has been spreading in Europe and America since March
2020. As the Group's major markets are in Europe and Americas, there will be
significant adverse effects on the Group's business if the European and
American markets slump or the countries implement closure of business premises
in view of the impact of the pandemic.

The management of Tonly Electronics stated, "Looking into the future, despite
uncertainties in the external economic environment, the Group will continue to
consolidate and strive to upgrade its position in the new audio market, focus
on the development of smart speakers, soundbar and headphone product businesses,
as well as strive for more business opportunities and find more new customers. The
Group is committed to explore new technologies, new products, and enhance its
productivity, in order to provide brand companies and customers with outstanding
quality products and services."

About Tonly Electronics

Tonly Electronics Holdings Limited (SEHK stock code:
01249), a high-tech smart products manufacturer with competitive industrial
advantages, is principally engaged in the research and development,
manufacturing and sales of audio and video products as well as wireless smart
interconnectivity products. It is also developing into smart business. The
Group is committed to becoming a one-stop smart loT solutions provider based on
the electroacoustic and wireless technologies. 

For
more information, please visit its website at www.tonlyele.com.