IDT Announces FY2013/2014 Annual Results

For Immediate Release

For Immediate Release

IDT International Announces FY2013/14 Annual Results * * * Effective Cost Control and Streamlining Measures Maintain Healthy Financial Position

(Hong Kong, 26 June 2014) - 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 2014.
Due to the continued slow recovery of the global economy, sluggish retail market and a conservative consumer attitude, the Group's total turnover decreased by 14.3% to HK$1,352.4 million, when compared to HK$1,578.2 million recorded last year.
Gross profit was HK$336.1 million, compared to HK$441.8 million last year. The loss for the year under review was HK$68.8 million, compared to the loss of HK$28.9 million recorded last year.
The Group continued to implement stringent cost controls and streamlining measures. Total operating expenses of the Group, including research and development, distribution and selling, and general administration amounted to HK$437.8 million, a significant reduction of 14.2% compared to HK$510.2 million of the previous year. The Group's net cash balances surged
153.7% to HK$139.8 million with decrease in total bank borrowing.

Business Review Oregon Scientific

Sales revenues from Oregon Scientific (OS) was $507.4 million, a reduction of 36.4% when compared with HK$797.9 million last year. The amount represented 37.5% of the Group's total sales. The decrease was mainly due to the sluggish retail market conditions in America and Europe, as well as the rising competition in children's tablet products.
In the Electronic Learning Products ("ELP") category, OS announced the launch of "MEEP! X2," the second generation of its kids' tablet "MEEP!". Due to the high competition in tablet products and the volatility of key component costs, the Group focused on distributing the products in Europe which offers higher margins and better trade terms, while limiting the sale in the American market. However, the severe price war has had a significant impact on the selling price and margins of the products, creating a big challenge for the ELP category business during the year.

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The Time & Weather ("T&W") category continued to be the key contributor in terms of sales revenue and margin to OS. The launch of new weather stations with Bluetooth Low Energy ("BLE") technology for connection to smart mobile devices has made OS the pioneer in this product category. For the Sport, Fitness and Health ("SFH") category, OS has expanded its range to BLE and Apps-enabled smart products, such as "Ssmart Talking Blood Pressure Monitor" which offers user convenience by displaying the data on smart devices via BLE technology with text in five languages. The Wellness & Beauty ("W&B") continues to be the focus of the Asia Pacific Region. During the year, OS launched a series of new aroma diffusers and also a beauty product line which have received positive feedback from customers.
OS has made aggressive marketing efforts to promote its e-commerce in China, America and Europe, while focusing on the growing e-commerce business in emerging markets. As for traditional sales channels, OS has developed pharmaceutical and telecom outlets through partnerships with strong multinational companies in these industries in Europe and Japan; and has also expanded its penetration into new geographic markets such as South Korea and the Middle East.
OS was recognised for its superior design and innovation with several international awards. The "Ssmart Dynamo" won the Hong Kong Electronic Industries Association ("HKEIA") Silver Award - Innovation and Technology, and the "ATC Chameleon Dual Lens Action Video Camera" won the Hong Kong Awards for Industries ("HKAI") Certificate of Merit - Consumer Product Design. OS was also honoured with the Gold Prize from the Point of Purchase Advertising International ("POPAI") for the design of the "MEEP!" point-of-sale display in France.
OS will continue to invest in developing innovative T&W products to strengthen its leadership of this product category; and a wider range of W&B products to enhance the wellbeing and lifestyle of consumers, especially in the Asian markets. It is committed to grow its retail e-commerce business by building a stronger website foundation with the support of multimedia and integrated marketing.

Value Manufacturing Services

Revenue from the Value Manufacturing Services Division ("VMS") increased by 8.3% to HK$845.0 million, accounting for 62.5% of the Group's total revenue, mainly contributed by sales of the SFH product category to its OEM and ODM customers.
With the Group's proven technical competence and engineering support in new product development, as well as its strong customer base, the sales from the SFH product category increased by 18.3% to HK$554.2 million and continued to be the largest product category, during the year under review as compared with last year.

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To maintain its competitiveness, VMS continued to focus on development and sales of higher margin products. On the other hand, stringent cost controls and efficiency and productivity improvement measures have been implemented to offset rising labour and operating costs in China. The VMS Division will continue to develop new SFH and healthcare products for its new customers to increase sales and profitability.

Dr Raymond Chan, Chairman and Group Chief Executive Officer of IDT International concluded, "We anticipate that the pace of economic recovery in the United States and the European countries will remain slow, therefore the Group will continue to expand further into new markets and new channels. We will strengthen our technological competence in Apps and smart devices connected solutions to tap the latest market potential while enhancing our e-commerce foundations and online marketing strategies to maximise and leverage its growth potential. By advancing in these directions based on our strong business foundation, we are confident and well positioned to capture opportunities to maximise profitability."

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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 a leader in the design, development, manufacturing, marketing and distribution of lifestyle products created through the application of innovative LCD, microprocessor and sensor applications with wireless technologies. Its core businesses include the Value Manufacturing Services and the Oregon Scientific-branded products, with major product categories including Sports, Fitness and Health, Electronic Learning, Time & Weather, Telecommunications and Wellness & Beauty. Marketing is globally managed through its marketing and distribution 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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