IDT Announces FY2011/2012 Annual Results

Microsoft Word - IDT_2012_AR_release_e_FINAL.docx

For Immediate Release

IDT International Announces FY2011/2012 Annual Results * * * Effective Cost Control Measures Leading to a Healthy Financial Position

(Hong Kong, 28 June 2012) - Consumer electronic products manufacturer and brand distributor IDT International Limited ("IDT International" or the "Group") (HKEx code: 167) announced its annual results for the year ended 31 March 2012.
Despite the high degree of uncertainties in economies around the world and persistent weak consumer sentiment, the Group recorded a total turnover of HK$1,597.1 million, only a slight decrease of 1.6% when compared to HK$1,623.6 million last year. With various unfavourable financial and political trends, the recovery of the global economy has lagged during the year. The revenues from Oregon Scientific ("OS") branded products amounted to HK$743.7 million, whilst the revenue of ODM/OEM products increased by 3% to HK$853.4 million.
Gross profit was HK$484.5 million, compared to HK$532.7 million last year. Overall gross margin dropped by 3 percentage points to 30%, which was mainly due to the changes in product and channel mix, rising labour and materials costs and sales of slow moving inventory with lower margins.
With stringent and effective cost controls in place, the operating expenses including other gains and losses, research and development costs, distribution and selling expenses and general administrative costs were reduced by 10% to HK$524.9 million, and the overall attributable loss was significantly reduced to HK$30.4 million, a 39% improvement compared to the loss in the previous year. The Group continued to maintain a healthy balance sheet with net cash position amounted to HK$145.5 million due to the improvement in supply chain management and account receivable collection.

A Summary of Business Review Oregon Scientific

Sales revenues from the OS brand were HK$743.7 million, representing 47% of the Group's total revenue, dropped by 6% compared to HK$791.7 million last year. The decrease was mainly attributable to the generally conservative consumer purchasing sentiment which leads to a sluggish market environment in the European and US markets. However, the performance in the Asia Pacific region, accounting for 22% of OS revenue, recorded a growth of 23% to HK$161.8 million, which is in line with the Group's strategy to focus on Asia Pacific market.
As part of restructuring our product mix, OS products will be regrouped and separated into different product categories, namely Time and Weather; Sports, Fitness & Health; Wellness and Beauty; Electronic Learning Products; and Others. The Time and Weather and Electronic Learning Products series, along with the former LCD product line, remain the core OS-branded product categories.

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During the year, OS' marketing strategy focuses on promoting its brand image guided by the "Smart Living" concept, which has been well-received by the markets. OS flagship stores in Hong Kong, China and Italy have been renovated to reflect its new design concept and reinforce this image. The Group was devoted to develop new and innovative products, leading the customers to a true appreciation of "Smart Living" and to further strengthen their product portfolio. Among all, Sports, Fitness & Health products are set to become one of the key product categories, while sales of Wellness & Beauty products will contribute significant sales growth in the future due to the strong growth momentum within Asia Pacific markets. One of the flagship products in the Wellness & Beauty category, the new NanoActiv Skin Restoring System, applying the advanced Nano-Cyclone Technology, has won the IF product design award (2012), the HKEIA award on innovations and technology (2012) and has been selected as one of the finalists in the Hong Kong Award for Industries (2012).
With the growing importance of e-commerce, OS will continue to invest in software applications to improve user interface and overall efficiency of the website and e-shop environment, so as to enhance product sales by effectively capturing the expanding opportunities in this channel. Following the successful customer services integration for USA, Australia and Asia, the integration for Europe will be implemented during the new financial year. The Group aims to bolster customer relations management by upgrading the standard of customer service and database management.

Value Manufacturing Services

Sales revenues contributed by the Value Manufacturing Services Division ("VMS") was HK$853.4 million, representing 53% of the Group's total revenue, up by 3% compared to HK$831.9 million achieved last year. The increase demonstrated the Group's strong technical competence, well managed manufacturing capabilities and excellent engineering support in new product development, which gained strong support from its ODM/OEM customers.
In terms of business performance by product category, LCD products recorded a growth of 15% to HK$592.4 million compared to last year despite pressures on prices, raw materials and rising manufacturing costs. Sales revenues of Electronic Learning Products also grew by 24% to HK$95.1 million riding on new product innovation leading to stronger customers' support. However, the sales revenues of Telecommunication and other products declined by 31% to HK$165.9 million due to the gradual elimination of low margin products.
In view of the increasing demand and wider awareness of an "Environmentally Friendly" and a "Smart Living" lifestyle, the Group forecasts strong growth in the Sports, Fitness and Health product category. The Group will continue to invest in developing the technology platforms for Healthcare, Energy Monitoring and Management products.

Dr Raymond Chan, Chairman and Group Chief Executive Officer of IDT International concluded, "In view of the sluggish economy with uncertain prospects, weakened consumer confidence due to the financial crisis in the EURO zone countries as well as the rising operating costs, the Group intends to continue our focus on execution of restructuring strategy and new business models, streamlining operating costs and maximizing product margins. Leveraging our strong business foundation and R&D capabilities, we are confident that the Group can further strengthen our fundamentals and thereby paving the way to capture the opportunities arising and maximise profitability once the market rebounds."

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About IDT International:

IDT International is a holding company whose shares are publicly listed on The Stock Exchange of Hong Kong Limited. Headquartered in Hong Kong, IDT International is engaged in the design, development, manufacture, sales and marketing of innovative consumer electronic products featuring state-of-the-art liquid crystal display and microprocessor technology. Its core businesses include LCD Consumer Electronic Products, Telecommunication Products and Electronic Learning Products. Marketing is undertaken globally through its sales and marketing offices in the US, Italy, the UK, Spain, France, Germany, Australia, Brazil, China, Japan and Hong Kong. Research and development resources have been established in both Hong Kong and China while its manufacturing facilities are centred in Xixiang, Shenzhen, China.

For more corporate and product information on the IDT Group and Oregon Scientific, please access our websites at http://www.idthk.comor http://www.oregonscientific.com

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