Annual Report

Transcription

Annual Report

OUR VISION
To create innovative consumer electronic products and
services that enhance people’s daily lives. Our core
competency is the application of state-of-the-art liquid
crystal display (LCD) and microprocessor technology. User
effectiveness is achieved through easy access to and
creative display of information.
OUR MISSION
IDT creates the highest value based on the most
innovative products and services and the constant
search for quality solutions, centred around userfriendliness and affordability.
IDT’s global presence is built upon the complementary
roles of own brands and private labels with singleminded dedication to reaching the best results for all
our customers and partners.
IDT is devoted to developing outstanding teams at all
levels of the organisation, dedicated to doing things
right the first time, and getting better every time.
Accomplishing this mission will drive our business towards
excellence and provide the highest levels of reward for our
customers, our people and our shareholders.
CONTENTS
2
Corporate Profile
4
Group Financial Summary
6
Corporate Information
7
Corporate Structure
8
Chairman's Statement
14
Operations Review
LCD
Consumer
Electronic
Products
Division
16
Telecommunications
Products
Division
18
20
Electronic
Learning
Products
Division
26
Employee Development and Social Responsibilities
1
28
Directors & Senior Management
34
Events of the Year
36
Awards
39
Directors’ Report
46
Corporate Governance Report
55
Auditors’ Report
56
Consolidated Income Statement
57
Balance Sheets
59
Consolidated Statement of Changes in Equity
IDT INTERNATIONAL LIMITED ANNUAL REPORT 2005
Digital
Media
Products
Division
CONTENTS
11
60
Consolidated Cash Flow Statement
62
Notes to the Financial Statements
CORPORATE
PROFILE
IDT
, established in 1977, is a
leader in the design, development,
manufacturing, marketing and
distribution of lifestyle consumer
electronic products through the
application of innovative LCD and
microprocessor technology under
four main categories: LCD consumer
electronic products;
telecommunications products;
electronic learning products and
CORPORATE PROFILE
digital media products.
Portland, US
Massachusetts, US
New York, US
For over 25 years, IDT's reputation
and corporate image have been
consistently developed in the
international markets. IDT's own
2
widely recognised in the world. Its
brand “Oregon Scientific” has been
innovative consumer electronic
products have gained high degree of
recognition and consumer confidence
for enhancing the people's quality
of living.
IDT International Limited was listed
on The Stock Exchange of Hong Kong
Limited in 1988. (Stock Code: 167)
In 1997, the LCD consumer electronic
products division became a separate
corporate entity whose shares were
listed on The Singapore Exchange
Securities Trading Limited.
Brazil
United
Kingdom
Germany
France
Beijing, China
Italy
Spain
Shanghai, China
Hong Kong, China
3
Singapore
Australia
IDT operates 13 wholly owned marketing and
distribution subsidiaries in 11 countries around
the world. Our business presence has been
established in over 35 countries through exclusive
distributors.
Shenzhen, China
CORPORATE PROFILE
Japan
GROUP FINANCIAL
SUMMARY
RESULTS
Year ended March 31
GROUP FINANCIAL SUMMARY
Turnover
2005
HK$’M
2004
HK$’M
2003
HK$’M
2002
HK$’M
2001
HK$’M
2,894.7
2,757.3
2,410.2
2,233.5
2,884.5
Profit from operations
Finance costs
Other non-operating income
Share of profits of associates
200.4
(12.9)
–
–
339.0
(5.2)
–
1.6
212.1
(3.4)
–
3.3
214.0
(1.5)
0.5
4.1
222.4
(4.3)
2.6
8.5
Profit before taxation
Taxation
187.5
(0.5)
335.4
(26.7)
212.0
(16.5)
217.1
(28.8)
229.2
(21.5)
Profit before minority interests
Minority interests
187.0
(57.0)
308.7
(57.9)
195.5
(42.2)
188.3
(53.6)
207.7
(68.8)
Net profit attributable to shareholders
130.0
250.8
153.3
134.7
138.9
Dividends
166.9
166.6
145.1
145.0
92.9
02
03
04
05
01
214.0
222.4
(HK$’M)
02
03
200.4
2,894.7
2,757.3
2,410.2
2,233.5
01
339.0
PROFIT FROM
OPERATIONS
(HK$’M)
212.1
TURNOVER
2,884.5
4
04
05
ASSETS AND LIABILITIES
2004
HK$’M
2003
HK$’M
2002
HK$’M
2001
HK$’M
Investment properties
Property, plant and equipment
Intangible assets
Goodwill
Interest in associates
Long-term bank deposits
Deferred tax assets
Current assets
Current liabilities
14.8
318.0
81.8
26.4
–
296.4
78.8
1,515.2
(839.3)
6.4
289.8
74.0
18.0
–
296.4
48.1
1,454.3
(642.7)
6.4
308.7
62.7
19.0
56.6
237.9
19.0
1,067.6
(383.5)
6.6
347.3
50.0
–
54.8
140.4
11.1
1,145.9
(283.9)
6.6
377.1
32.6
–
53.0
–
13.3
1,260.6
(355.0)
Total assets less current liabilities
1,492.1
1,544.3
1,394.4
1,472.2
1,388.2
Obligations under finance leases due after one year
Deferred tax liabilities
Minority interests
Shareholders’ funds
(0.2)
(26.9)
(271.9)
(0.1)
(27.8)
(276.1)
(0.1)
(20.8)
(244.1)
(0.2)
(18.3)
(328.2)
(0.1)
(13.6)
(311.3)
1,188.1
1,245.3
1,129.4
1,125.5
1,063.2
130.0
6.2
8.0
0.8
10.7
57.0
250.8
12.1
8.0
1.5
21.1
59.8
153.3
7.4
7.0
1.1
13.6
54.5
134.7
6.5
7.0
0.9
12.3
54.4
138.9
6.9
4.5
1.5
13.5
51.5
PERFORMANCE DATA
Net profit attributable to shareholders (HK$’M)
Earnings per share – basic (HK cents)
Dividends per share (HK cents)
Dividend cover (times)
Average return on shareholders’ funds (%)
Net assets per share (HK cents)
SHAREHOLDERS’
FUNDS
02
03
1,188.1
1,245.3
1,129.4
1,125.5
1,063.2
130.0
153.3
134.7
138.9
(HK$’M)
01
(HK$’M)
250.8
NET PROFIT
ATTRIBUTABLE TO
SHAREHOLDERS
04
05
01
02
03
04
05
5
2005
HK$’M
As at March 31
CORPORATE
INFORMATION
DIRECTORS
SOLICITORS
Executive:
Raymond Chan, Chairman & Chief Executive Officer
Alain Jacques Gilbert Li, Chief Financial Officer
Chan Pau Shiu Yeng, Shirley
Giuseppe Finocchiaro
Bermuda:
Conyers Dill & Pearman
Non-Executive:
Jack William Edouard Heuer
Lo Kai Yiu, Anthony*
Kao Ying Lun*
Jack Schmuckli*
Kenichi Ohmae*
Woo Chia Wei
Yoram (Jerry) Wind*
CORPORATE INFORMATION
SHARE REGISTRARS
Bermuda:
The Bank of Bermuda Limited
Bank of Bermuda Building
6 Front Street
Hamilton HM 11
Bermuda
Lo Kai Yiu, Anthony, Chairman
Kao Ying Lun
Hong Kong:
Secretaries Limited
Ground Floor
BEA Harbour View Centre
56 Gloucester Road
Wanchai
Hong Kong
NOMINATION COMMITTEE
BERMUDA REGISTERED OFFICE
Jack Schmuckli, Chairman
Kao Ying Lun
Clarendon House, Church Street
Hamilton HM 11
Bermuda
REMUNERATION COMMITTEE
HONG KONG PRINCIPAL PLACE
OF BUSINESS
* Independent Non-Executive Director
6
Hong Kong:
Baker & McKenzie
AUDIT COMMITTEE
Jack Schmuckli, Chairman
Kao Ying Lun
CERTIFIED ACCOUNTANT
Block C, 9th Floor, Kaiser Estate Phase 1
41 Man Yue Street
Hunghom, Kowloon
Hong Kong
Alain Jacques Gilbert Li
STOCK CODE
COMPANY SECRETARY
167
Yeung Yee Har
WEBSITE
PRINCIPAL BANKERS
The Hongkong and Shanghai Banking Corporation Limited
Citibank, N.A.
www.idthk.com
www.oregonscientific.com
INVESTOR RELATIONS CONSULTANT
AUDITORS
Deloitte Touche Tohmatsu
Strategic Financial Relations Limited
CORPORATE
STRUCTURE
LCD
Consumer
• Electronic
Products
IDT
Holdings
• (Singapore)
Limited
SINGAPORE
•
IDT
INTERNATIONAL
LIMITED
Telecommunications
Products
IDT
Communication
• Technology
Limited
•
•
Digital
Media
Products
IDT
Data
System
• Limited
BERMUDA
HONG KONG
•
Electronic
Learning
Products
IDT
Electronic
Products
• Limited
HONG KONG
OREGON
SCIENTIFIC
SALES &
•
MARKETING
OFFICES
Oregon
Scientific
Global
• Distribution
Limited
HONG KONG
IDT
MARKETING
• OFFICE AND
TRADING
COMPANY
IDT (Japan)
Limited
•
JAPAN
•
IPM
Concepts
Limited
HONG KONG
•
16 Sales &
Marketing
Offices
WORLDWIDE
7
PRODUCT
DIVISIONS
CORPORATE STRUCTURE
HONG KONG
CHAIRMAN’S
STATEMENT
INVESTING IN THE FUTURE :
ENHANCING OUR
BUSINESS MODEL
RAYMOND CHAN
CHAIRMAN’S STATEMENT
Chairman & Chief Executive Officer
Dear shareholders,
On behalf of the Board of
Directors, I am pleased to
present IDT International
8
Limited's annual report for
the year ended March 31,
2005.
The Group recorded an overall increase in turnover of 5% to HK$2,894.7 million in the year
ended March 31, 2005. Net profit for the year was HK$130.0 million.
The Group delivered growth in turnover for both our ODM/OEM and Oregon Scientific
businesses. Our core LCD Consumer Electronic Products division turned in strong results
for both ODM/OEM and Oregon Scientific, posting double-digit growth for both businesses.
During the year, the fast changing market environment also brought a number of challenges
for the Group. The challenges have been in our Telecommunications Products division and
Digital Media Products division. The Telecommunications Products division recorded a decline
in turnover in its key customer in the US market. The Digital Media Products division faced
an increasingly competitive market environment which was characterised by falling prices
and margin pressures as competitors fought to gain volume and market share at the expense
of profit to which we were not immune.
Nevertheless, we have invested in areas we believe will create long term value for our Group
namely research and development, distribution and marketing. These investments have
impacted our profitability for period but are expected to reap benefits in the years ahead.
INVESTING IN
THE FUTURE:
ENHANCING OUR
BUSINESS MODEL
We are continually striving to further our vision of creating unique world first products to
serve our ODM customers and our own Oregon Scientific brand. This year has been no
exception with a host of award winning products coming to the market from each of our
products divisions. With rapid changes in technology, trends in designs and consumer lifestyles
and needs, the Group must be confident, courageous and visionary whilst exercising financial
discipline in the investment choices we make. We are constantly reviewing our business
processes and strive to enhance our business model and drive efficiency in all aspects of our
operations. During the year we have undertaken a number of important strategic investments,
which we believe are fundamental to our development and will ultimately yield long term
benefits and returns.
In July 2004 we broke ground on our new Research and Development Centre (“R&D Centre”)
adjacent to our existing manufacturing facilities in Xixian, Shenzhen, China. The R&D Centre
which was completed in April 2005, enhances our existing research and development
capabilities and is the home for up to 500 research and development engineers. The R&D
we believe are essential to support the Group's operations and development.
We have continued to invest in developing the Oregon Scientific sales and distribution network.
This investment has taken the form of the new logo and packaging as well as point of sale
merchandising, all of which have been extremely well received. The Group has also invested
in new talent and headcounts to augment our ability to serve our trade partners and customers.
Centre will also house our IT facilities in China and provide additional training facilities which
The brand has seen substantial growth in Asia Pacific supported by our strategy of establishing
The Group has also recognised the need to improve our operational efficiency particularly in
the face of rising costs and working capital needs of the business. The key to driving efficiency
is to identify the key value drivers and inefficiencies in each part of the business and to
establish clear and effective processes that can enhance value creation. The Group has
therefore undertaken a project to implement an enterprise resource planning (ERP) system.
The system together with the knowledge base of our dedicated staff will provide the Group
with the necessary tools to support planning, rapid decision making, operational effectiveness
and improve our key performance indicators. I am pleased to report that the first roll out
have been accomplished successfully and within budget.
DIVIDENDS
Subject to the approval of the shareholders at the Annual General Meeting to be held on
August 26, 2005, the Directors recommend a final dividend of 5.0 HK cents (2004: 6.0 HK
cents) per share for the year which together with the interim dividend of 3.0 HK cents (2004:
2.0 HK cents) per share makes out total dividend of the year 8.0 HK cents (2004: 8.0 HK
cents) per share.
9
retail operations in conjunction with the development of our distributor base.
CHAIRMAN’S
STATEMENT
We are constantly reviewing our business processes
and strive to enhance our business model and
drive efficiency in all aspects of our operations.
OUTLOOK
Looking ahead to the coming year, the Group has identified a number of opportunities for
further growth and development. We will dedicate further efforts to enhancing the service
we provide to our existing and new customers. We expect the investments made in our Oregon
Scientific operations will drive the brand further in all three major regions. Internally, our
commitment to shaping a high-performance workforce will be bolstered by a number of
staff development initiatives and training programmes.
APPRECIATIONS
The year's results could not have been achieved without the dedication and commitment of
many individuals and groups. I would particularly like to express my appreciation to our
Board of Directors. Over the years, thanks to the Board's expertise and diligent governance,
we have met and often exceeded financial compliance guidelines and the policies and practices
we have in place have long attained the stringent standards demanded in today's corporate
10
environment. I would also like to extend my special thanks to our 7,650 employees worldwide
for their continuing dedication and indispensable contributions to our business success.
Finally, I would like to record my appreciation to all our business partners and customers for
their support and confidence in the Group.
I look forward with great optimism to many more years of working towards accomplishing
the Group’s vision and delivering continuing value to all our stakeholders.
Raymond Chan
May 26, 2005
Hong Kong
OPERATIONS
REVIEW
OVERVIEW
The Group's turnover reached a new record of HK$2,894.7
million, driven by a 14% increase in our core LCD Consumer
Electronic Products division and a 51% increase in the Digital
Media Products division. However the Telecommunications
Products division recorded a decline of 25% in turnover due to the
competitive market in the US, which accounts for its largest
customer. The Group launched a string of new award winning
products, and saw good growth coming from a number of its
newer markets including Asia Pacific, Brazil and Australia.
Turnover of the Group for the year ended March 31, 2005 was HK$2,894.7 million, representing
by 2% to HK$1,427.1 million, which accounted for 49% of the Group's turnover and ODM/
OEM sales increased by 8% to HK$1,467.6 million.
Gross profit decreased by 4% to HK$1,054.5 million while gross profit margin decreased
from 40% to 36%. The decrease in gross profit margin was attributable to two factors. One
OPERATIONS REVIEW
an increased of 5% from the previous financial year. Oregon Scientific branded sales increased
was the higher mix of ODM/OEM sales, namely 51% of turnover compared with 49% of turnover
last year. Another was the higher mix of Digital Media Products sales in ODM/OEM business,
namely 28% of ODM/OEM sales compared with 13% of ODM/OEM sales last year.
11
FINANCIAL
INFORMATION
OPERATIONS
REVIEW
FINANCIAL
INFORMATION
Profit from operations was HK$200.4 million, compared with HK$339.0 million last year.
(Continued)
R&D expenses increased by 10% to HK$109.7 million, selling expenses increased by 17% to
Total operating expenses increased by 13% to HK$902.3 million, representing 31% of sales.
HK$500.0 million and administrative expenses increased by 6% to HK$292.6 million. Whilst
maintaining sound control on administrative expenses, the Group strategically increased its
investments in staff costs and facilities of its product development and sales and marketing
operations to support future growth. As a percentage of sales, administrative and R&D
expenses were maintained at 10% and 4% respectively whereas selling expenses were 17%,
compared with 15% last year.
Profit attributable to shareholders for the year ended March 31, 2005 was HK$130.0 million,
representing a decrease of 48% as compared with last year.
OREGON
SCIENTIFIC
Oregon Scientific continued to build on the Group's strategy of establishing a unique lifestyle
electronic brand based on the fusion of technology, design and innovation in products that
OPERATIONS REVIEW
serve people's daily needs. The brand positioning and strategy was augmented in FY 2005 by
the launch of the new logo, packaging and merchandising hardware and software. The Group
has also established a matrix structure to address the many opportunities by business units/
divisions and channels and has invested in additional headcount to drive those opportunities
going forward. These initiatives have been necessary investments as the brand prepares to
move into its next phase.
12
SALES BY PRODUCT GROUP
14%
1%
20%
38%
21%
41%
20%
26%
19%
2004
LCD
TEL
2005
ELP
DMP
Others
OREGON
SCIENTIFIC
Following an impressive growth of 34% in FY 2004, Oregon Scientific achieved sales growth
(Continued)
recorded growth in LCD Consumer Electronic Products and Telecommunications Products
of 2% to reach HK$1,427.1 million, representing 49% of the group's turnover. The brand
of 13% and 3% respectively but saw a decline in Digital Media Products of 21% and Electronic
Learning Products of 4%.
Sales in Europe were the same as last year's level. Within the region, France and Spain
achieved sales growth in all Oregon Scientific branded products. On the other hand, both UK
and Germany were affected by the weakening economic conditions and internal organisational
restructuring. Italy recorded satisfactory growth in both Digital Media Products and Electronic
Learning Products, however, its strategic move from selling to distributors to direct selling
to retailers in some channels led to a decrease in LCD Consumer Electronic Products
business.
The US recorded an increase of 57% in LCD Consumer Electronic Products through its effort
in developing major retailer accounts this year. Its Digital Media Products and Electronic
Brazil achieved growth in the sales of all Oregon Scientific branded products and posted an
increase of 222% over last year's sales.
In Asia Pacific, total branded sales were up by 74%. Australia grew by 39% by increased
channel coverage for LCD Consumer Electronic Products and Digital Media Products whereas
OPERATIONS REVIEW
Learning Products sales were lower because of increased competition and pricing pressures.
Hong Kong, China and Singapore continued to build the brand by increasing the number of
SALES BY MARKET
17%
25%
40%
43%
37%
2004
Americas
38%
Europe
2005
Asia Pacific
13
retail stores from 3 to 12 during the year.
OPERATIONS REVIEW
OPERATIONS REVIEW
LCD CONSUMER ELECTRONIC
PRODUCTS DIVISION
14
The Group’s long tradition of innovation and pioneering products
in time and weather and now sports and fitness continues to
prove successful with increase in sales and operating profits.
The Group however is facing new entrants in the market and
increased competition and must continue to offer not only
each year under three categories, namely smart
timing devices, weather stations and sport &
fitness. With the appropriate collection of
products carefully mapped to customers’ needs
and tastes, the LCD Consumer Electronic
Products division has been focusing its efforts
on developing a market driven approach to
product development. The division has also invested resources in developing a collection of
child care products leveraging on its competence in sensing and wireless applications to
bring unique innovative functions. This new range will be launched in 2005 and has already
received favourable feedback from the Group’s trade partners.
The LCD Consumer Electronic Products division recorded sales of
HK$1,199.2 million, up 14% from last year. It accounted for 41% of the
Group’s turnover and remained the largest division of the Group.
Oregon Scientific branded sales accounted for 66% of the division’s
total sales for this year. Whilst the
branded sales in Europe were
l ow e r t h a n l a s t ye a r , t h e
significant growth in the US and
Asia Pacific delivered an overall
increase of 13% as compared with
last year. The division’s ODM/OEM sales also grew by
17% over last year as a result of more product offerings,
particularly in time and weather and sport and fitness
categories, to both new accounts and existing accounts.
15
The division develops over 150 new products
LCD CONSUMER ELECTRONIC PRODUCTS DIVISION
winning products but unrivalled services.
OPERATIONS REVIEW
OPERATIONS REVIEW
TELECOMMUNICATIONS
PRODUCTS DIVISION
16
The Group's Telecommunications Products division is committed
to developing state of the art products incorporating diverse
technologies and attractive designs to develop solutions that are
not only functional but easy to use and fitting the contemporary
lifestyles. The division has received a number of prestigious
awards for its products in the year including the lifestyle mirror
phone (the world first Cordless Phone with VFD display and a
new technologies, the division is also actively developing
solutions to meet the needs of business customers and
telecommunication service providers.
The division's main products are home based
analogue and digital cordless telephones,
PMR's (private mobile radios) and marine
radio products. The division has developed its
capability in VoIP (voice over internet protocol)
TELECOMMUNICATIONS PRODUCTS DIVISION
mirror LCD screen). Emphasising on quality and application of
a n d D E CT ( d i g i ta l e n h a n ce c o rd le ss
telecommunication) technologies in order to
these products in future.
The division's sales decreased by 25% to HK$542.2
million for the year and represented 19% of Group’s
turnover, down from 26% last year. During the year,
sales of the Oregon Scientific brand were HK$68.6
million, which accounted for 13% of the division's total
sales, up from 9% last year. The lower sales were due
to the fierce competition in the US
cordless phone market and less sales
to another major customer in the
telecommunication operator market.
However, encouraging growth was
achieved in transceiver product market
this year.
17
meet the expected growth in the market for
OPERATIONS REVIEW
OPERATIONS REVIEW
DIGITAL MEDIA
PRODUCTS DIVISION
18
The growing global market for digital imaging and digital music
devices is one that is fiercely contested by a number of
substantial and renowned players. Whilst the generic growth
and appeal of digital media products to consumers is widely
recognised so are the challenges which are characterised by fast
moving technology, falling market prices and shortage of key
components combined has created an environment where
profitability is a challenge for even the most highly recognised
The division has focused its efforts on developing unique
world first products that address specific consumer
needs and create differentiation in the market that rises
above the clutter of products which compete head to
head on technology and price alone. This philosophy
has enabled the division to launch products such as
the MP100 model which is the world’s smallest MP3
player with LCD display and the MP120 model, the world
DIGITAL MEDIA PRODUCTS DIVISION
brands and leading companies in the field.
first waterproof MP3 player. Many of the products have won praise from journalists and the
gained a number of important ODM customers, one of which has launched a disposable
digital camera that has immense potential in terms of addressable market, given its first
mover advantage in this market.
The division recorded sales of HK$582.3 million, representing 20% of the Group's turnover
and an increase of 51% from last year. Sales through Oregon Scientific accounted for 29% of
this division's sales, compared with 55% last year. On the other hand, ODM/OEM sales
recorded an increase of 140% to HK$413.7 million. The division was successful in providing
large volume of new products to some new major accounts. The new accounts accounted for
more than 3 quarters of ODM/OEM sales. However, the margin of Digital Media Products
was extremely competitive. Price erosions on digital
camera and MP3 player products were very significant
to meet with the competition. Consequently the sales
generated could not cover the cost base. The Group is
scaling the busines s to achieve right sizing,
consolidating its digital camera and MP3 player product
line up and planning to launch new product category to
turnaround the operating loss situation and return the
division to profit.
19
trade alike not to mention our end customers. In the area of digital imaging, the division has
OPERATIONS REVIEW
OPERATIONS REVIEW
ELECTRONIC LEARNING
PRODUCTS DIVISION
20
Recognising the enormous potential of electronic devices for
children’s education, the Group's Electronic Learning Products
division is committed to creating products that are stimulating,
interesting and fun for children to use. From laptops to
organisers to the innovative site 'safe-site.net' on Oregon
Scientific's web service, its range of products and services
provide a massive array of learning functions across all subjects.
advances in technology and in educational practices and trends.
The year under review has been a year of consolidation following rapid
growth in recent years. In addition to extending the Group's license with
Ferrari to learning products, the Group has been actively searching out
new licences. The division has successfully acquired the license to develop
electronic learning products under the Batman license which will be
launched in the new financial year.
The Electronic Learning Products division recorded sales of HK$563.5
ELECTRONIC LEARNING PRODUCTS DIVISION
The division is constantly updating its learning products to reflect
million for the year, representing 20% of the Group’s turnover and a
million, which accounted for 70% of the division's total sales. Both Oregon Scientific branded
sales and ODM/OEM were down by 4% respectively as compared with last year. The division
is planning for a number of new product launches this summer which have been receiving
very positive responses
f ro m
the
market.
Moreo ver, the Group is
confident that ODM/OEM
business will grow in the
new fiscal year through
d eve lo p m e n t o f n e w
accounts and more sales
generated from existing
accounts.
21
decrease of 4% from last year. Sales under the Oregon Scientific brand were HK$392.2
OPERATIONS
REVIEW
RESEARCH &
DEVELOPMENT
AND
MANUFACTURING
FACILITIES
Supported by over 500 product development
engineers and designers based in Hong Kong
and Xixian, Shenzhen, China serving all four
business divisions, the Group boasts a
consistent track record of over 150 product
l a u n c h e ve r y y e a r. B e s i d e s p ro d u c t
development, the R&D team also plays an
important part in improving and refining the
Group's production processes to speed up
time to market.
In the year under review, R&D investment of the Group was maintained at 4% of its total
sales as in the last two years. The investment reflected the Group's commitment to strengthen
its product development and engineering capabilities, retaining its leading edge in the industry.
To centralise its operation, the Group constructed a new building for its R&D in Xixian which
OPERATIONS REVIEW
was completed in April 2005. This 5-storey new R&D centre has a total floor area of
approximately 12,000 square metres featuring the most advanced design stands adjacent to
the existing factory buildings in Xixian. Funded entirely by the Group's internal resources, the
total investment costs for the R&D centre are approximately HK$54.7 million.
The Group sees investment in R&D as crucial for its continued success. The R&D team is
expected to assume yet a more active and prominent role as the Group continues to widen its
22
product portfolio.
Located in Xixian and meeting international standards at all
operation levels, the Group's consolidated manufacturing
facilities and the new R&D centre (“Xixian Facilities”) have
contributed significantly to effective costs control and
operational efficiencies of the Group. But that is not all, they
are also proof of the Group's commitment to providing the
best possible working environment for its staff.
Spreading over 85,000 square metres, Xixian Facilities are
centralised allowing the Group to fully control all and every
aspect of production and administration. Employing the latest
and best equipment and technology, the Group is able to
streamline operations hence significantly reduce costs in different areas in manufacturing
and transportation. Outsourcing to factories with outstanding track records helps improve
cost efficiencies and maintain competitiveness.
RESEARCH &
DEVELOPMENT
AND
MANUFACTURING
FACILITIES
Surface mounting, wire-bonding, precision plastic moulding, mould making and plastic
injection are fully integrated in-house at the Xixian Facilities allowing it better control on
production lead time, quality and costs. In preparation for the imposition of new regulations
in Europe on the Restriction on Hazardous Substances (RoHS), the Group's equipment is
already fully compliant with the requirements.
(Continued)
The Xixian Facilities also serve as a showcase of the Group's commitment to enhancing the
working conditions and welfare of its staff. Complements are often received from international
visitors who are impressed with both the state-of-the-art manufacturing facilities and the
working conditions for staff, notably the high standards of accommodation and leisure facilities.
OPERATIONS REVIEW
In the past year, a new staff canteen has been added to improve staff catering.
The Group's working capital at March 31, 2005 amounted to HK$675.9 million, down 17%
from last year. Compared with the balances at the end of last year, inventories and trade
receivables increased by 42% and 6% respectively whereas trade payable dropped by 15%.
The substantial increase in inventories was due to increase in work in progress to meet the
shipment of Digital Media Products division's ODM/OEM orders in April 2005 and higher
level of finished products in overseas sales offices to support the continuous development of
its market position in particular for LCD Consumer Electronic Products and to cater for
shorter delivery lead time requirement in the course of changing from distribution to selling
direct to retailers. The Group is proactively reviewing its entire supply chain and is
implementing measures to reduce the levels of inventory. These include sell-through analysis
to enhance inventory planning, rationalisation of product line up to optimise inventory holding
and global product launch to co-ordinate product development, production and sales and
marketing for more effective inventory control.
The Group generally finances its operations from internal cash flow. Net cash balances at
March 31, 2005 were HK$183.5 million, which was HK$461.5 million lower than the balances
recorded at the end of last year. The decrease in net cash balances was mainly due to the
increase in inventories and receivables.
23
FINANCIAL
RESOURCES AND
WORKING CAPITAL
OPERATIONS
REVIEW
FINANCIAL
RESOURCES AND
WORKING CAPITAL
The Group has sufficient financial resources to fund its operations, capital expenditure, current
(Continued)
The Group is funded entirely by equity and there is no secured or unsecured long-term debt.
investment needs and development plans.
Short-term bank borrowings of HK$420.2 million as at March 31, 2005, compared with
HK$184.8 million last year, were in relation to bills payable, import loans, revolving bank
loans used for currency hedging purposes and bank overdrafts.
Having considered the interest rate environment and capital needs, the Group had placed
HK$296.4 million on high yield deposits with financial institutions as at March 31, 2005, same
amount of last year. The average yield for these deposits was 4.5% per annum. These deposits
were placed with institutions with a minimum double A rating. These instruments do carry a
level of risk because interest earnings could be nil if certain conditions are met.
The Group's exposure to foreign currency mainly arises from the net cash flow and net working
capital translation of its overseas subsidiaries. Hedging of foreign currency exposures is
OPERATIONS REVIEW
actively done through natural hedges, forward contracts and options. As at March 31, 2005,
24
there were forward contracts in place to hedge against possible exchange losses from future
net cash flows. Speculative currency transactions are strictly prohibited. The management
of currency risk is centralised in the Group's headquarters in Hong Kong.
HUMAN
RESOURCES
As at March 31, 2005, the Group employed a total of approximately 7,650 employees (2004:
approximately 7,600 employees). The Group continues to maintain and upgrade the capabilities
of its workforce by providing them with adequate and regular training.
The Group fully recognises the importance of its employees who contribute significantly to
its success. The Group's employee remuneration packages are in line with industry norms,
which are subject to annual review. Bonuses are awarded to employees based on both
individual and the Group's overall performance each year. Other staff benefits include medical
insurance and mandatory provident fund. In Xixian, Shenzhen, China where the Group centres
its production facilities and research and development resources, staff welfare rates are set
with reference to the prevailing labour laws in China. Both the Company and its Singapore
listed subsidiary, IDT Holdings (Singapore) Limited, have employees' share option schemes,
which grant share options to selected eligible employees to reward them for their contributions
and to align their interests with that of the shareholders.
The Group has accomplished a series of milestones during the year which strengthened the
fundamentals of the Group for future growth.
With regards to the Oregon Scientific branded business, the Group invested in expanding its
overseas sales and marketing organisation. Hence, the Group has greater manpower and
facilities to develop more direct to retail channels, supported by a higher level of brand
awareness, more effective marketing approach, stronger effort to cultivate key accounts,
better visual merchandising of its products and more high traffic locations for point of sales.
The success in retail store strategy in Asia Pacific reinforces the Group's future direction in
rolling out retail store to US and Europe to support future growth in sales. The Group has
planned for a series of new product launches including Batman licensed electronic learning
products, audio products and youth electronic products.
The Group continues to strengthen its competence in ODM/OEM business by building up a
research and development centre in Xixian to cater for increased investment in engineering
resources and to provide an environment that has the best facilities and environment for
teams and new major accounts developed in this fiscal year, the Group will focus on further
developing the business of each of its product divisions.
OPERATIONS REVIEW
successful product development. Leveraging on the new facilities, strong product development
25
Alain J.G. Li
Executive Director & Chief Financial Officer
May 26, 2005
Hong Kong
PROSPECTS
EMPLOYEE DEVELOPMENT &
SOCIAL RESPONSIBILITIES
LEADERSHIP
DEVELOPMENT
IDT believes strong leadership enhances employee performance and drives business results
and growth. Developing leaders through comprehensive skill training and development
programmes to strengthen employees’ core competencies is one of the priorities of the
Company. The “Effective Manager Development Programme” (EMDP), designed for 60 senior
executives and managers commenced in February 2005. The programme consists of 6
modules including Managerial Leadership and Competence Development; Selection and
Interview Techniques; Performance Management and People Development; Coaching and
Motivation; Decision Making and Problem Solving; and Presentation and Communication.
EMPLOYEE DEVELOPMENT & SOCIAL RESPONSIBILITIES
Experienced executive training consultants are invited to conduct this development
programme at our training centre.
26
EMPLOYEE
TRAINING
A series of technical seminars conducted by experts in the industry and academic institutions
have been organised to nurture the technical competencies of our engineers. Other training
programmes include multi-skill worker training to improve productivity and WEEE (Waste
Electrical and Electronic Equipments) and RoHS (Restriction of Hazardous Substances)
knowledge, and English-language training for engineers of Xixian, Shenzhen, China and
Putonghua-language training for Hong Kong engineers to improve their language skills and
communication. SAP briefings and demonstrations are also conducted to ensure correct
implementation of the SAP system in the organisation.
EMPLOYEE
ASSISTANCE
PROGRAMME
The Employee Assistance Programme has been set up since 2004. Our Employee Relations
Manager provides consultation and counseling to employees who encounter personal
difficulties at work or at home. The objective of this programme is to enhance employee
problem-solving capacity and to help them deal with personal issues relating to self, work,
interpersonal relationship, marriage and family, etc. This service is completely confidential
and voluntary. Employees can make use of this channel to release their stress and express
their personal problems.
SOCIAL
RESPONSIBILITIES
IDT has supported numerous community programmes through donations and various kinds
of sponsorships including the Youth Outreach Bikathon, Community Chest Charity Dinner,
and UNICEF “Living Gift” Raffle Draw Campaign. Our senior management act as role models,
demonstrating their caring spirit to the community by having made personal donations to
various charitable organisations. They encourage
employees to participate in social activities and
fund raising campaigns such as the Hong Kong
Red Cross South Asia Relief Fund for tsunami
Association for the Physically Disabled, and the
Hong Kong Federation of Youth Groups to support
the sporting activities of the youths in Hong Kong.
EDUCATION
SPONSORSHIP
Each year, IDT and the Company’s senior management offer scholarships and sponsorships
to student projects, competitions and leadership programmes of the Hong Kong Polytechnic
University, providing students a chance to equip themselves with the right attitude and skills
to participate and become involved in real-world business projects.
In February 2005, a volunteer team made up of
employees and management from different
departments was established to participate in
27
different community activities and programmes
CARE FOR
COMMUNITY
EMPLOYEE DEVELOPMENT & SOCIAL RESPONSIBILITIES
victims and affected areas, the Hong Kong Sports
organised by social service organisations, such as
organising an Easter party for deprived children and
together with their family members, visited and
delivered food to the elderly living in squatter areas
before the Tuen Ng Festival. Our employees
contributed their time and effort in serving the needy
and showed their care for the community through
their voluntary work.
DIRECTORS &
SENIOR MANAGEMENT
RAYMOND CHAN
ALAIN JACQUES GILBERT LI
EXECUTIVE DIRECTORS
Chairman & Chief Executive Officer and a member of the Executive Committee, aged 56. Dr. Chan
founded the IDT business in 1977. He leads the management in setting the Group's mission and
objectives, develops the business and formulates marketing strategies. He is also the Chairman and
Chief Executive Officer of the Singapore listed subsidiary, IDT Holdings (Singapore) Limited. Dr. Chan
is a graduate of the Hong Kong Polytechnic in Electronics Engineering and has been conferred for a
degree of Doctor in Business Administration, honoris causa by The Hong Kong Polytechnic University
in November 2003. Dr. Chan has over 35 years' experience in the consumer electronics industry.
Before establishing the IDT business, he worked for multi-national semi-conductor companies in the
US and Hong Kong. Dr. Chan is an Executive Council Member and the Chairman of the Advisory
Committee on the Electronic and Information Engineering Department of The Hong Kong Polytechnic
University, a member of the Hong Kong Trade Development Council of Electronics/Electrical Appliances
Industry Advisory, the Honorary President of The Toys Manufacturers' Association of Hong Kong, Life
Patron of The Professional Validation Council of Hong Kong Industries, a member of both the Steering
Group on the Promotion of Innovation and Design and the Panel of Assessors for the Design Support
Programme (DSP) under the DesignSmart Initiative of Innovation and Technology Commission and a
member of the Board of Directors of The Applied Research Council, Commerce, Industry and
Technology Bureau.
ALAIN JACQUES
GILBERT LI
Executive Director and Chief Financial Officer and a member of the Executive Committee, aged 45.
Mr. Li joined the Group in April 2001. He oversees the corporate and finance matters of the Group and
ensures achievement of corporate objectives and business strategies and enhancement of corporate
governance. He is also an Executive Director and Chief Financial Officer of the Singapore listed
subsidiary, IDT Holdings (Singapore) Limited. Mr. Li holds a Bachelor degree in Economics and
Accountancy from the City University of London and is a fellow member of the Institute of Chartered
Accountants in England and Wales. He has extensive international experience in corporate finance
and business management and has lived and worked in the UK, Japan and France with a number of
mult-national companies. Mr. Li is a member of the Institute of Directors in the UK.
DIRECTORS & SENIOR MANAGEMENT
RAYMOND CHAN
28
GIUSEPPE FINOCCHIARO
CHAN PAU SHIU
YENG, SHIRLEY
Executive Director and a member of the Executive Committee, Nomination Committee and
Remuneration Committee, aged 56. Mrs. Chan is the wife of Dr. Raymond Chan and as a co-founder of
the Group, she has been involved in developing the IDT business since 1977. Mrs. Chan contributes in
setting the marketing strategies and increasing efficiency of operations. Her main responsibilities
are to support the marketing activities and administrative functions of the Group. She is also an
Executive Director of the Singapore listed subsidiary, IDT Holdings (Singapore) Limited. Mrs. Chan
holds a MBA degree from the University of Hull, UK and a Master of Arts degree in Communication
Management from the University of South Australia.
GIUSEPPE
FINOCCHIARO
Executive Director and a member of the Executive Committee, aged 48. Mr. Finocchiaro joined the
Group in 1993 and was appointed Executive Director of the Company in October 2003. He is the Managing
Director of Oregon Scientific Italia S.p.A. incorporated in Italy and Managing Director of Oregon Scientific
(Deutschland) GmbH and Huger Electronics GmbH, both incorporated in Germany. In addition, he is
the President of EMEA (Europe, Middle East and Africa) responsible for managing the Group’s business
operations in these regions. Mr. Finocchiaro holds an electronic diploma, and has over 27 years of
experience in electronic business. Prior to joining the Group, he spent 15 years at Texas Instruments.
CHAN PAU SHIU YENG, SHIRLEY
NON-EXECUTIVE DIRECTORS
JACK WILLIAM
EDOUARD HEUER
Non-Executive Director and a member of the Audit Committee, aged 72. Mr. Heuer joined the Group in
1983 and was an Executive Director of the Company involved actively in coordinating the Group's
European marketing activities and developing the extensive marketing offices network in Europe. In
April 2000, Mr. Heuer retired from his executive positions in the Group and continues to serve as a
Non-Executive Director of the Company, whereas he takes an advisory role and contributes to the
Group through his extensive business experience. In 2001, Mr. Heuer has become the Honorary
Chairman of TAG Heuer S.A.. He holds an electrical engineering degree from the Swiss Federal Institute
of Technology.
WOO CHIA WEI
Non-Executive Director, aged 67. Professor Woo was appointed in June 2002. He is Senior Advisor for
the Shui On Group, and President Emeritus and University Professor Emeritus at the Hong Kong
University of Science and Technology ("HKUST"). He holds Master and Ph.D. degrees in Physics from
Washington University in the US and taught at Northwestern University and the University of California
at San Diego, and was President of San Francisco State University from 1983 to 1988 before returning
to Hong Kong to found HKUST. He was the first person of Chinese ethnic origin to head a major
university in the US. Professor Woo is an honorary CBE (United Kingdom), and was awarded the Gold
Bauhinia Star by the Government of the Hong Kong Special Administrative Region ("HKSAR") and
"Chevalier de la Légion d'Honneur" by the Republic of France. He also serves on the Commission on
Strategic Development and the Council of Advisors on Innovation and Technology of the HKSAR, and
holds non-executive directorships in several other listed companies in Hong Kong.
29
DIRECTORS &
SENIOR MANAGEMENT
INDEPENDENT NON-EXECUTIVE DIRECTORS
LO KAI YIU,
ANTHONY
Independent Non-Executive Director and Chairman of the Audit Committee, aged 56. Mr. Lo has been
serving on the board of the Company since January 1991 and is also a Non-Executive Director of the
Company's Singapore listed subsidiary, IDT Holdings (Singapore) Limited. Mr. Lo is qualified as a
chartered accountant with the Institute of Chartered Accountants of Ontario, Canada and is a member
of the Hong Kong Institute of Certified Public Accountants. Mr. Lo has over 25 years of experience in
banking, finance and investments. He worked for a number of well known financial institutions including
serving as a managing director of Indosuez Asia Limited, HG Asia Limited and ABN Amro Asia Limited.
He has the relevant experience in internal controls and in preparing and auditing comparable financial
statements as well as experience in reviewing or analysing audited financial statements of public
companies. Mr. Lo is a founder and director of Advantage Limited, the holding company of consumer
finance companies under the PrimeCredit brandname. He serves on the board of a number of private
and publicly listed companies and close ended investment funds. Mr. Lo is a director of the Taiwan
Fund Inc. listed on the New York Stock Exchange, an independent non-executive director and the
audit committee chairman of Tristate Holdings Limited and an independent non-executive director of
Playmates Holdings Limited. Mr. Lo is a member of the Listing Committee of The Stock Exchange of
Hong Kong Limited since 1998.
KAO YING LUN
Independent Non-Executive Director and a member of the Audit Committee, Nomination Committee
and Remuneration Committee, aged 52. Mr. Kao was appointed in June 1997. He has over 26 years'
business and professional experience of which about 22 years have been gained in investment banking,
corporate finance and financial advisory fields. He sits on the board of a number of private/listed
companies. Mr. Kao holds an HBA Degree (Honours Business Administration Degree) from Richard
Ivey School of Business, The University of Western Ontario and is a Chartered Accountant qualified in
Canada.
JACK SCHMUCKLI
Independent Non-Executive Director and Chairman of the Nomination Committee and Remuneration
Committee, aged 65. Mr. Schmuckli was appointed in May 1999. He has over 30 years of professional
executive product marketing experience in the photographic and electronics industries. He had been
the Chairman and Chief Executive Officer of Sony Europe GmbH for 14 years and had also been an
executive member of the board of Sony Corporation, Tokyo. Mr. Schmuckli now holds several nonexecutive board memberships, mainly in Switzerland.
KENICHI OHMAE
Independent Non-Executive Director, aged 62. Dr. Ohmae was appointed in August 2001. He is a world
renowned management consultant and was selected as one of the five management gurus in the
world by The Economist in 1994. Dr. Ohmae received his Ph.D. in nuclear engineering from the
Massachusetts Institute of Technology and an honorary doctorate from Notre Dame University. He is
an expert in formulating creative strategies and developing organisational concepts for both the private
and public sectors. He is the founder and Managing Director of the Ohmae & Associates and before
that, had been a partner of McKinsey & Company, Inc., an international management consulting firm,
for 23 years.
YORAM (JERRY)
WIND
Independent Non-Executive Director, aged 67. Professor Wind was appointed in March 2005. He
holds a doctorate in marketing from the Stanford University in the US. He is The Lauder Professor
and Professor of Marketing at the Wharton School of the University of Pennsylvania. Professor Wind
is the founding director of the Wharton "think tank", The SEI Center for Advanced Studies in
Management and the founder and academic director of the Wharton Fellows program and founding
editor of Wharton School Publishing. Professor Wind is one of the most cited authors in marketing.
He is a regular contributor to the professional marketing literature and had contributed 21 books and
over 250 papers, articles and monographs encompassing the areas of marketing strategy, marketing
research, new product and market development, consumer and industrial buying behavior and
international marketing. Professor Wind has served as an advisor to many Fortune 500 firms and a
number of non-US multinationals in the financial services, pharmaceuticals, information and consumer
packaged goods industries. He is an active member of the major marketing and management science
professional associations, the Chancellor of the International Academy of Management and a frequent
lecturer in faculty seminars and executive programs in over 50 universities worldwide. Professor
Wind is a trustee of the Philadelphia Museum of Art, a member of the board of the American Friends
of The Interdisciplinary Center Herzliya (IDC) and an advisor of a number of start-ups.
30
LEONG MUN HOONG, LEON
PAUL MURPHY
CHENG CHING
President - LCD Consumer Electronic Products, aged 44. Mr. Leong joined the Group in June 1999. He
is responsible for managing the day-to-day operations and strategic direction and planning of the
LCD Consumer Electronic Products business of the Group operated separately under the Singapore
listed subsidiary, IDT Holdings (Singapore) Limited, in which Mr. Leong is a director of its key operating
subsidiary, IDT Technology Limited. Mr. Leong holds a Bachelor of Science degree in Industrial
Engineering obtained from the University of Tennessee, US and a Master degree in Business
Administration from the University of Warwick, UK. Prior to joining the Group, he was the Managing
Director of Strombecker (HK) Ltd.
PAUL MURPHY
President - Telecommunications Products division, aged 48. Mr. Murphy joined the Group in March
2005. He assumes full responsibilities for the performance of the telecommunications businesses
and provides strategic direction, daily operational leadership and organisational development of the
Telecommunications Products division of the Group. Mr. Murphy holds a Bachelor of Science degree
in Electronic Engineering from the Brighton University, UK and has over 20 years' extensive experience
in operational and global business management. Prior to joining the Group, Mr. Murphy was the Chief
Executive Officer of Elite Industrial Holdings Limited and the Managing Director of Vtech Holdings
Limited.
CHENG CHING
Executive Vice President - Group Manufacturing, aged 63. Mr. Cheng joined the Group in 1980. He is
responsible for managing the affairs of the manufacturing operations in The People's Republic of
China and overseeing expansion plans and requirements for factory and production facilities of the
Group. He is a director of Integrated Display Technology Limited. Mr. Cheng holds a Bachelor of Science
degree in Electronics Engineering from the National Taiwan University. Prior to joining the Group, he
held the position of quality control manager of a consumer electronics company for 10 years.
31
LEONG MUN HOONG,
LEON
SENIOR MANAGEMENT
DIRECTORS &
SENIOR MANAGEMENT
LING CHEUK FAI, RAYMOND
LI TUNG CHOI, DANIEL
SHAO KWOK KEUNG
LING CHEUK FAI,
RAYMOND
Executive Vice President - Electronic Learning Products, aged 47. Mr. Ling joined the Group in February
1998. He is responsible for the product planning and product management of the Electronic Learning
Products business of the Group. Mr. Ling holds a Bachelor degree in Marketing from Concordia
University of Canada. He has over 20 years of managing experience in toy and electronic products.
Prior to joining the Group, he was the Managing Director of RJP International Limited and General
Manager of Team Concepts Electronics Limited.
LI TUNG CHOI,
DANIEL
Executive Vice President - Group Human Resources, aged 47. Mr. Li joined the Group in September
2003. He is in-charge of the human resources and administrative function of the Group. Mr. Li graduated
from the Imperial College of Science & Technology, University of London, UK with a first Bachelor
degree in Mechanical Engineering in 1981 and he obtained a further degree of Master of Business
Administration from the City University, London, UK in 1982. Mr. Li is an accomplished professional in
human resources with more than 20 years experience working with global and Asia corporations.
Prior to joining IDT, Mr. Li worked for 2 years with Asia Netcom as their Human Resources &
Administration Director of South East Asia. Before that, he spent 5 years with the Dell Computer Asia
Ltd, his last position was Human Resources Director of Asia.
SHAO KWOK KEUNG
Group Financial Controller, aged 43. Mr. Shao joined the Group in June 2004. He is responsible for
statutory reporting, management accounting, compliance with accounting standards and listing
requirements, treasury, taxation and finance and accounting functions of head office as well as overseas
operating subsidiaries. Mr. Shao is a member of both the Hong Kong Institute of Certified Public
Accountants and the Association of Chartered Certified Accountants. He holds an Honours Diploma
in Accounting from the Hong Kong Baptist University and a MBA degree from the University of Warwick,
UK. Mr. Shao has 20 years of accounting and financial management experience in multi-national
companies and Hong Kong listed companies. Prior to joining IDT, Mr. Shao was the Chief Operating
Officer and Chief Financial Officer of Asia Wireless Pacific Limited.
32
PAUL ZIMMERMAN
LUCIANO KUBRUSLY
SHIGENOBU MORITA
President - Japan, aged 66. Mr. Morita has been the Representative Director of IDT (Japan) Limited
since 1991 and is responsible for managing the business and day-to-day operations of this wholly
owned subsidiary of the Company established in Japan. Mr. Morita had been appointed as an executive
director of the Company in August 1994 and retired in August 2004. Prior to joining the Group, he was
Director of Sales and Marketing of Casio, and then President of Murata, and then Managing Director
and Marketing Divisional Manager of Japan MID.
PAUL ZIMMERMAN
President - North America, aged 41. Mr. Zimmerman joined the Group in April 2003. He is responsible
for managing the Group's business operations in the North American market, and is the President
and Director of Oregon Scientific, Inc.. Mr. Zimmerman graduated from the University of Toronto,
Canada in Electrical Engineering and Computer Science and obtained his MBA degree from the
International Institute of Management Development (IMD), Switzerland. He has over 19 years'
experience in computing, communications and consumer electronics with leading corporations in the
US, Canada, South Korea, Singapore and Hong Kong. Prior to joining the Group, he was in senior
management roles with the Samsung Group in Korea and Cisco Systems in Singapore and Hong
Kong.
LUCIANO KUBRUSLY
President - Latin America, aged 35. Mr. Kubrusly joined the Group in December 2001, previously as
General Manager of Oregon Scientific in Brazil. He is now responsible for managing the Group's
business operations in the Latin American market, and is the officer in charge of the management of
Oregon Scientific Brasil Limitada. Mr. Kubrusly holds a Bachelor degree in Business Administration
from University FAAP in São Paulo, Brazil. He has over 12 years' experience in the sales and marketing
of technology products. Prior to joining the Group, he was the General Manager of Apple Computer
Brazil.
SHIGENOBU MORITA
33
EVENTS OF
THE YEAR
Sep 04
• New brand logo for Oregon
Scientific introduced
May 04
EVENTS OF THE YEAR
• Oregon Scientific featured
as one of the top 50 brands
in Italy
34
• Oregon Scientific
concept store opened at
Ocean Centre shopping
mall, Hong Kong
Jul 04
• Dr. Raymond Chan
interviewed by Wall Street
Reporter
Oct 04
• Top 500 Asia Entrepreneurs
by Yazhou Zhoukan, IDT
ranked 220 up from 307
Aug 04
Nov 04
• Oregon Scientific concept
store opened at Langham
Place shopping mall, Hong
Kong
• Grand opening of the first
Oregon Scientific concept
store at Suntec City Mall,
Singapore
• Grand opening of Oregon
Scientific concept store at
Times Square shopping
mall, Hong Kong
• Oregon Scientific products
exhibited in Hong Kong
Electronic Fair
• Promotional event for
electronic learning products
in Brazil
• Launch of Oregon Scientific
MP3 player products series
in the UK
store opened at City Plaza,
Shanghai, China
Mar 05
• IDT was the second runner
up of the "Overall Regional
Best-Managed Companies Medium Cap" by Asiamoney
Magazine.
Jan 05
exhibited in the Las Vegas
Consumer Electronics
Show in the US
store opened at New Town
Plaza shopping mall,
Hong Kong
stores opened at China
World shopping mall and
the Malls at Oriental
Plaza, Beijing, China
exhibited in International
Housewares Show in
Chicago, US
Apr 05
• Construction of the new
IDT R&D Centre in Xixian,
Shenzhen, China was
completed
35
• Oregon Scientific world first
products exhibited at
Suntec City Mall, Singapore
Feb 05
promotional event at Times
Square shopping mall,
Hong Kong
announced plans to
develop and market new
timing and weather
products leveraging
Microsoft's SPOT and
MSN direct service
exhibited in Fitness Expo in
Sydney, Australia
store opened at ifc mall and
The Arcade at Cyberport,
Hong Kong
• Oregon Scientific has been
awarded licenses from
Warner Bros. for the
production of Batman
line of electronic learning
products
EVENTS OF THE YEAR
Dec 04
AWARDS
IDT’
s commitment to
technological innovation coupled
with design flair has proved a
formula for high levels of customer
Award
2004 Hong Kong Awards
for Industry: Consumer
Product Design
Certificate of Merit
Federation of
Hong Kong Industries
satisfaction, and this has been
reflected in the numerous awards
and other recognitions received by
Award
Hong Kong’s
Industry High Flyers
Outstanding Branding
Performance Category
of Outstanding
Enterprises 2004
Hong Kong Business
Magazine
AWARDS
Brand
Oregon Scientific
36
CHINA & HONG KONG
the Group.
Award
The Best MP3 2004
DiGi Plus Weekly
Magazine
Product
Oregon Scientific VR636, MP210
Product
Oregon Scientific MP303, MP100, MP120
MP210, MP130
Award
Most Creative
Products of 2004
CCTV-2 in China
Product
Oregon Scientific MP210, MP120
Award
2004 Hong Kong Awards
for Industry: Consumer
Product Design
Certificate of Merit
Federation of
Hong Kong industries
Product
Oregon Scientific LS328
Preferred Choice
Educational Toys
of the Year
Creative Child Magazine
AUSTRALIA
Award
2004 Home Beautiful
Product of the Year
Awards
Home Beautiful
Magazine
Product
Oregon Scientific – Time
and Weather Collection
with Philippe Starck
AWARDS
Award
“Innovation” category in
PLUS X AWARD 2004
Media Society Networks
and Plugged
Product
Oregon Scientific MP100
37
Product
Barbie Interactive
Dictionary
Award
Most Random Place
to House an MP3 Player
The Telewest
Broadband Shinys
2004
Product
Oregon Scientific MP120
AWS888
: world first full colour weather station
MP100
: world’s smallest MP3 player
MP120
: world first waterproof MP3 player
MP210
: world first slimmest MP3 player with transparent LCD display
MP303 & MP130 : range of MP3 players
VR636
: world first slimmest digital voice recorder
LS328
: lifestyle mirror phone, the world first cordless phone with VFD
display and a mirror LCD screen
Award
Dr. Toy 100 Best
Children’s Products
Product
Oregon Scientific – Time
and Weather Collection
with Philippe Starck
UNITED KINGDOM
Product
Oregon Scientific MP100, MP120,
AWS888
Award
“Design” category in
PLUS X AWARD 2004
Media Society Networks
and Plugged
GERMANY
UNITED STATES
Award
Innovation Design
and Engineering
Showcase Honorees
International
Consumer
Electronics Show
2005 at Las Vegas
FINANCIAL REVIEW
FINANCIAL
REVIEW
38
DIRECTORS’
REPORT
The directors are pleased to present to the shareholders their annual report and audited financial statements of the Company and of the
Group for the financial year ended March 31, 2005.
PRINCIPAL ACTIVITIES
The Company acts as an investment holding company. Its principal subsidiaries are engaged in the design, development, manufacture,
sales and marketing of various consumer electronic products. Details of the principal activities of the Group’s subsidiaries are set out in
note 32 to the financial statements.
SEGMENT INFORMATION
Details of segment information are set out in note 4 to the financial statements.
RESULTS
The results of the Group for the year ended March 31, 2005 are set out in the consolidated income statement on page 56 and further
analysis is given in the accompanying notes to the financial statements.
DIVIDENDS
The directors of the Company have resolved to recommend at the forthcoming annual general meeting of the Company to be held on
August 26, 2005 a final dividend of 5.0 HK cents per share (2004: 6.0 HK cents per share) to be paid on or about September 8, 2005 to the
shareholders whose names appear on the register of members of the Company on August 26, 2005. The proposed final dividend,
together with the interim dividend already paid, will amount to total dividends of 8.0 HK cents per share for the year (2004: 8.0 HK cents
per share).
A summary of the results and of the assets and liabilities of the Group for the last five financial years is set out on page 4.
DIRECTORS’ REPORT
An interim dividend of 3.0 HK cents per share (2004: 2.0 HK cent per share) was paid to the shareholders of the Company on January 5,
2005.
SHARE CAPITAL
Details of movements in the share capital of the Company during the year are set out in note 23 to the financial statements.
Details of movements in reserves of the Group and of the Company during the year are set out in the consolidated statement of changes
in equity on page 59 and note 25 to the financial statements respectively.
INVESTMENT PROPERTIES
Details of the investment properties of the Group during the year are set out in note 11 to the financial statements.
PROPERTY, PLANT AND EQUIPMENT
During the year, the Group spent an aggregate amount of approximately HK$97.6 million on the acquisition of property, plant and
equipment for the purpose of business expansion.
Details of movements in property, plant and equipment of the Group during the year are set out in note 12 to the financial statements.
DONATIONS
During the year, the Group made charitable and other donations of HK$41,144 (2004: HK$211,812).
MAJOR CUSTOMERS AND SUPPLIERS
The aggregate percentage of purchases attributable to the Group’s five largest suppliers in the year accounted for less than 30% of the
Group’s purchases.
The aggregate percentage of turnover attributable to the Group’s five largest customers was approximately 23% of the Group’s turnover
and the percentage of turnover attributable to the Group’s largest customer was approximately 7% of the Group’s turnover for the year.
None of the directors, their associates or shareholders, who to the knowledge of the directors own more than 5% of the Company’s
share capital, had any interest in any of the five largest customers.
39
RESERVES
DIRECTORS’
REPORT
DIRECTORS
The directors of the Company who held office during the year and up to the date of this report are:
Executive:
Raymond Chan, Chairman & Chief Executive Officer
Alain Jacques Gilbert Li, Chief Financial Officer
Shigenobu Morita
(retired on August 18, 2004)
Non-Executive:
Lo Kai Yiu, Anthony*
Kao Ying Lun*
Jack Schmuckli*
Kenichi Ohmae*
Woo Chia Wei
Yoram (Jerry) Wind*
DIRECTORS’ REPORT
*
40
(appointed on March 21, 2005)
Independent Non-Executive Director
In accordance with Bye-law 97 of the Company’s Bye-laws, at each annual general meeting one-third of the directors for the time being,
or the number nearest to but not less than one-third, shall retire from office by rotation. The retiring directors shall be eligible for reelection.
At the forthcoming annual general meeting of the Company, Dr. Raymond Chan, Mr. Lo Kai Yiu, Anthony, Mr. Jack William Edouard
Heuer and Professor Woo Chia Wei will retire as directors by rotation in accordance with Bye-law 97 of the Bye-laws of the Company.
Dr. Raymond Chan, Mr. Lo Kai Yiu, Anthony and Professor Woo Chia Wei, all being eligible, offer themselves for re-election.
Mr. Jack William Edouard Heuer will retire at the forthcoming annual general meeting and does not offer himself for re-election.
Professor Yoram (Jerry) Wind, appointed by the Board on March 21, 2005, will retire at the forthcoming annual general meeting in
accordance with Bye-law 89 of the Bye-laws of the Company and, being eligible, offers himself for re-election.
The Company has received annual confirmation of independence from each of the independent non-executive directors pursuant to rule
3.13 of the Rules Governing the Listing of Securities (“Listing Rules”) on The Stock Exchange of Hong Kong Limited (“Stock Exchange”).
Up to and as at the date of this report, the Company still considers the independent non-executive directors to be independent.
DIRECTORS’ SERVICE CONTRACTS
Each of the non-executive directors has entered into a service contract with the Company for a term of three years, except for Mr. Jack
William Edouard Heuer, and is subject to retirement by rotation at the annual general meeting of the Company in accordance with the
Company’s Bye-laws, commencing from November 10, 2004 in the cases of Mr. Lo Kai Yiu, Anthony, Mr. Kao Ying Lun, Mr. Jack Schmuckli,
Dr. Kenichi Ohmae and Professor Woo Chia Wei and commencing from March 21, 2005 in the case of Professor Yoram (Jerry) Wind. Mr.
Jack William Edouard Heuer has entered into a service contract with the Company commencing from April 1, 2004 up to the conclusion
of the annual general meeting held in 2005. Under the said service contracts, each non-executive director is entitled to a fee of HK$200,000
per annum subject to such adjustments as the Board of the Company considers appropriate and the approval of the shareholders at
respective annual general meetings of the Company, which can be terminated by either party giving the other a three month’s written
notice.
Save as disclosed above, none of the director offering for re-election at the forthcoming annual general meeting has an unexpired
service contract which is not determinable by the Group within one year without payment of compensation, other than normal statutory
compensation.
DIRECTORS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE
There were no contracts of significance (as defined in Appendix 16 of the Listing Rules) to which the Company or any of its subsidiaries
was a party and in which a director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the
year or at any time during the year.
DIRECTORS’ INTERESTS IN SECURITIES
As at March 31, 2005, the interests and short positions of the directors and chief executives of the Company in the shares, underlying
shares and debentures of the Company or any of its associated corporation (within the meaning of Part XV of the Securities and Futures
Ordinance (“SFO”)) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO
(including interests or short positions which they were taken or deemed to have under the provisions of the SFO) or which were recorded
in the register required to be kept by the Company under section 352 of the SFO or as otherwise notified to the Company and the Stock
Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (“Model Code”) were as follows:
Family
interests
Corporate
interests
Total no.
of shares
% of the
issued
capital
66,132,919
244,956,920
(note 1)
842,275,225
(note 2)
1,153,365,064
55.32%
–
9,068,000
–
–
9,068,000
0.43%
1,000,000
(note 3)
73,964,526
908,408,144
(note 1)
170,992,394
(note 2)
1,153,365,064
55.32%
–
–
–
–
–
–
1,370,000
(note 3)
1,800,000
–
–
1,800,000
0.09%
–
Lo Kai Yiu, Anthony
1,424,439
–
–
1,424,439
0.07%
–
41
Name
Raymond Chan
Alain Jacques Gilbert Li
Chan Pau Shiu Yeng,
Shirley
Kao Ying Lun
–
–
–
–
–
–
Jack Schmuckli
1,846,000
–
–
1,846,000
0.09%
–
Kenichi Ohmae
–
–
–
–
–
–
Woo Chia Wei
–
–
–
–
–
–
Yoram (Jerry) Wind
–
–
–
–
–
–
All interests disclosed above represent long positions in the shares/underlying shares of the Company.
Notes:
(1)
Mrs. Chan Pau Shiu Yeng, Shirley is the spouse of Dr. Raymond Chan. The personal and corporate interests of Mrs. Chan Pau Shiu Yeng, Shirley are
disclosed as the family interests of Dr. Raymond Chan. The personal and corporate interests of Dr. Raymond Chan are disclosed as the family interests
of Mrs. Chan Pau Shiu Yeng, Shirley.
(2)
842,275,225 ordinary shares are held by Integrated Display Technology Limited, a company incorporated in the British Virgin Islands, which is wholly
owned by Dr. Raymond Chan. 170,992,394 ordinary shares are held by Raymax Time Company Limited, a company incorporated in the British Virgin
Islands, which is wholly owned by Mrs. Chan Pau Shiu Yeng, Shirley.
(3)
These represent the interests in underlying shares in respect of the share options granted by the Company and/or its associated corporation, the details
of which are set out in the sub-section entitled “Share Option Schemes” below.
Save as disclosed above, none of the directors or the chief executives of the Company or any of their associates had, as at March 31,
2005, any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations
(within the meaning of Part XV of the SFO) which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of
Part XV of the SFO (including interests or short positions which they were taken or deemed to have under the provisions of the SFO) or
which were recorded in the register required to be kept by the Company under section 352 of the SFO or as otherwise notified to the
Company and the Stock Exchange pursuant to the Model Code.
DIRECTORS’ REPORT
Personal
interests
Number of
underlying
shares held
under equity
derivatives
No. of shares held
DIRECTORS’
REPORT
SUBSTANTIAL SHAREHOLDERS
As at March 31, 2005, the following persons (other than the directors or the chief executives of the Company), had interests or short
positions in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company under
section 336 of the SFO or as otherwise notified to the Company were as follows:
Name
No. of
shares held
% of the issued
share capital
Integrated Display Technology Limited (note 1)
842,275,225
40.40%
Raymax Time Company Limited (note 2)
170,992,394
8.20%
All interests disclosed above represent long positions in the shares of the Company.
Notes:
(1)
Integrated Display Technology Limited, a company incorporated in the British Virgin Islands, is wholly owned by Dr. Raymond Chan. Such corporate
interests are also disclosed in the sub-section entitled “Directors’ Interests in Securities” above.
(2)
Raymax Time Company Limited, a company incorporated in the British Virgin Islands, is wholly owned by Mrs. Chan Pau Shiu Yeng, Shirley. Such
corporate interests are also disclosed in the sub-section entitled “Directors’ Interests in Securities” above.
DIRECTORS’ REPORT
Save as disclosed above, the Company had not been notified by any person (other than the directors or chief executives of the Company)
who had interests or short positions in the shares and underlying shares of the Company as at March 31, 2005 which were required to be
disclosed to the Company under Part XV of the SFO or which were recorded in the register required to be kept by the Company under
section 336 of the SFO.
SHARE OPTION SCHEMES
Particulars of outstanding options at the beginning and at the end of the financial year ended March 31, 2005 and options granted,
exercised, cancelled and lapsed during the period under each of the share option scheme adopted on September 28, 1993 (“1993 IDT
International Option Scheme”), share option scheme adopted on August 28, 2002 (“2002 IDT International Option Scheme”) and share
option scheme (“IDTS Option Scheme”) operated by IDT Holdings (Singapore) Limited, the subsidiary of the Company, were as follows:
(1)
1993 IDT International Option Scheme
Number of options
42
Participants
Directors
Alain Jacques
Gilbert Li
Employees
Date of
grant
(M/D/Y)
4.11.2002
Period
during which
options are
exercisable
(M/D/Y)
4.11.2004 to
4.10.2007
Outstanding
at 4.1.2004
Exercised
during
the year
Exercise
price
per share
HK$
Lapsed/
cancelled
during
the year
Outstanding
at 3.31.2005
1,000,000
1,000,000
0.6545
–
–
12.29.1998* 12.30.1999 to
12.29.2008
525,000*
–
0.509*
–
525,000*
12.29.1998* 12.30.2000 to
12.29.2008
552,000*
26,000
0.509*
1,000
525,000*
1,000
1,050,000
2,077,000
*
1,026,000
Share options granted on December 29, 1998 were adjusted in terms of number and exercise price owing to the three-for-four bonus issue of
shares made by the Company in August 1999.
No option was granted under the 1993 IDT International Option Scheme during the year.
The closing market price per share immediately before April 11, 2004 and November 18, 2004, the dates on which the share
options were exercised were HK$1.81 and HK$1.74 respectively.
The weighted average closing price of the shares immediately before the dates on which share options were exercised under the
1993 IDT International Option Scheme was HK$1.808 per share.
SHARE OPTION SCHEMES (continued)
Number of options
Directors
Alain Jacques
Gilbert Li
3.17.2003
3.17.2003
Giuseppe
Finocchiaro
2.28.2003
2.28.2003
6.25.2004
Employees
8.30.2002
10.18.2002
10.18.2002
4.1.2003
4.1.2003
5.21.2003
5.21.2003
8.12.2003
7.5.2004
7.5.2004
10.7.2004
10.7.2004
11.12.2004
11.12.2004
Outstanding
at 4.1.2004
Granted
during
the year
Exercised
during
the year
Exercise
price
per share
HK$
Lapsed/
cancelled
during Outstanding
the year at 3.31.2005
3.18.2005 to
3.16.2013
3.18.2007 to
3.16.2013
3.1.2005 to
2.27.2013
3.1.2007 to
2.27.2013
6.26.2005 to
6.25.2014
500,000
–
–
0.780
–
500,000
500,000
–
–
0.780
–
500,000
500,000
–
–
0.798
–
500,000
500,000
–
–
0.798
–
500,000
–
170,000
–
1.810
–
170,000
8.30.2004 to
8.29.2012
10.18.2003 to
10.17.2012
10.18.2005 to
10.17.2012
4.2.2004 to
4.1.2013
4.2.2005 to
4.1.2013
5.21.2005 to
5.20.2013
5.21.2006 to
5.20.2013
8.13.2004 to
8.12.2013
7.6.2006 to
7.5.2014
7.6.2007 to
7.5.2014
10.8.2006 to
10.7.2014
10.8.2007 to
10.7.2014
11.13.2005 to
11.12.2014
11.13.2007 to
11.12.2014
1,000,000
–
500,000
0.730
–
500,000
250,000
–
250,000
0.730
–
–
250,000
–
–
0.730
250,000
–
500,000
–
500,000
0.810
–
–
500,000
–
–
0.810
500,000
–
250,000
–
–
0.830
–
250,000
250,000
–
–
0.830
–
250,000
1,000,000
–
–
0.976
–
1,000,000
–
500,000
–
1.860
–
500,000
–
500,000
–
1.860
–
500,000
–
250,000
–
1.880
–
250,000
–
250,000
–
1.880
–
250,000
–
500,000
–
1.860
–
500,000
–
500,000
–
1.860
–
500,000
6,000,000
2,670,000
1,250,000
750,000
6,670,000
The closing market prices per share immediately before June 25, 2004, July 5, 2004, October 7, 2004 and November 12, 2004, the
dates on which the share options were granted, were HK$1.81, HK$1.85, HK$1.88 and HK$1.82 respectively.
The weighted average closing price of the shares immediately before the dates on which share options were granted under the
The closing market prices per share immediately before March 22, 2004, April 6, 2004 and September 10, 2004, the dates on
which the share options were exercised, were HK$1.83, HK$1.80 and HK$1.83 respectively.
DIRECTORS’ REPORT
Participants
Period
during which
Date of options are
grant exercisable
(M/D/Y)
(M/D/Y)
43
(2)
DIRECTORS’
REPORT
SHARE OPTION SCHEMES (continued)
(3)
IDTS Option Scheme
Number of options
Participants
Directors
Giuseppe
Finocchiaro
Date of
grant
(M/D/Y)
8.14.2000
8.14.2000
Employees
8.14.2000
8.14.2000
8.14.2000
8.15.2002 to
8.13.2005
8.15.2004 to
8.13.2005
8.15.2002 to
8.13.2005
8.15.2003 to
8.13.2005
8.15.2004 to
8.13.2005
1.13.2005 to
1.11.2006
Outstanding
at 4.1.2004
Exercised
during
the year
Exercise
price
per share
S$
Lapsed/
cancelled
during
the year
Outstanding
at 3.31.2005
100,000
–
2.149
–
100,000
100,000
–
2.149
–
100,000
672,500
165,000
2.149
–
507,500
200,000
–
2.149
–
200,000
572,500
50,000
2.149
15,000
507,500
30,000
–
1.424
–
30,000
1,675,000
215,000
15,000
1,445,000
The closing market prices per share immediately before August 4, 2004, October 25, 2004, November 24, 2004 and March 9, 2005,
the dates on which the share options were exercised were S$2.30, S$2.45, S$2.60 and S$2.31 respectively.
44
IDTS Option Scheme was S$2.443 per share.
DIRECTORS’ REPORT
1.12.2001
Period
during which
options are
exercisable
(M/D/Y)
No share option was granted under the IDTS Option Scheme during the year.
The directors consider it is not appropriate to disclose the value of the share options granted during the year under the 2002 IDT
International Option Scheme since any valuation of the share options would be subject to a number of assumptions that would be
subjective and uncertain. The directors believe that the evaluation of share options based upon speculative assumptions would
not be meaningful and would be misleading.
DIRECTORS’ RIGHT TO ACQUIRE SHARES OR DEBENTURES
Details of share options granted to or exercised by the directors of the Company during the year and their outstanding balances at
March 31, 2005 are set out in the sub-section entitled “Share Option Schemes” above and also in note 24 to the financial statements.
Save as disclosed, at no time during the year was the Company, or any of its subsidiaries, a party to any arrangements to enable the
directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body
corporate.
CONVERTIBLE SECURITIES, OPTIONS, WARRANTS OR SIMILAR RIGHTS
Save for the share options set out in the sub-section entitled “Share Option Schemes” above and also in note 24 to the financial statements,
the Company had no outstanding convertible securities, options, warrants or similar rights at March 31, 2005.
Other than the issue and exercise of share options pursuant to the share option schemes of the Company as explained above, there was
no issue or exercise of any convertible securities, options, warrants or similar rights of the Company during the year.
RETIREMENT BENEFITS SCHEMES
Details of the Group’s retirement schemes are set out in note 31 to the financial statements.
MODEL CODE FOR SECURITIES TRANSACTIONS
The Company has adopted a code of conduct regarding securities transactions by officers of the Group (the “Code”) on terms no less
exacting than the Model Code for Securities Transactions by Directors of Listed Companies contained in Appendix 10 of the Listing
Rules. Having made specific enquiry of all directors, they have confirmed that they fully complied with the required standards set out in
both the Model Code and the Code throughout the year ended March 31, 2005.
CORPORATE GOVERNANCE
In the opinion of the directors, the Company has complied with the Code of Best Practice as set out in Appendix 14 of the Listing Rules
(in force prior to January 1, 2005) throughout the nine months ended December 31, 2004, save and except that all non-executive directors
of the Company are not appointed for specific terms but they are subject to retirement by rotation at the annual general meeting of the
Company in accordance with the Bye-laws of the Company prior to November 10, 2004. Effective from November 10, 2004, each nonexecutive director has entered into a service contract with the Company for a fixed term not exceeding three years and is subject to
retirement by rotation at the annual general meeting of the Company in accordance with the Company’s Bye-laws. The said code has
been replaced by the Code on Corporate Governance Practices which came into effect on January 1, 2005. The report on the Group’s
corporate governance practices are set out in the Corporate Governance Report on pages 46 to 54 of this annual report.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES
During the year, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.
PRE-EMPTIVE RIGHTS
There are no provisions for pre-emptive rights under the Company’s Bye-laws or the laws in Bermuda which would oblige the Company
to offer new shares on a pro-rata basis to existing shareholders.
SUFFICIENCY OF PUBLIC FLOAT
According to the information that is publicly available to the Company and within the knowledge of the directors as at the latest practicable
date prior to the issue of this annual report, the percentage of the Company’s share which are in the hands of the public exceeds 25% of
the Company’s total number of issued shares throughout the year ended March 31, 2005.
AUDITORS
A resolution will be proposed at the forthcoming annual general meeting of the Company to re-appoint Messrs. Deloitte Touche Tohmatsu
as auditors.
On behalf of the Board of Directors
Raymond Chan
Hong Kong
May 26, 2005
Alain J.G. Li
45
The audit committee, comprising independent non-executive directors, Mr. Lo Kai Yiu, Anthony (Chairman) and Mr. Kao Ying Lun, and
non-executive director, Mr. Jack William Edouard Heuer, had reviewed with management the accounting principles and practices adopted
by the Group and discussed, among other things, auditing, internal control and financial reporting matters including the review of the
audited financial statements of the Group for the year ended March 31, 2005. The Audit Committee had also reviewed the annual results
of the Group for the year ended March 31, 2005 in conjunction with the Company’s external auditors.
DIRECTORS’ REPORT
AUDIT COMMITTEE
CORPORATE
GOVERNANCE REPORT
The Group is committed to achieving high standards of corporate governance to safeguard the interests of all shareholders and to
enhance corporate value and accountability. The Group has applied the principles and complied with most of the code provisions and
recommended best practices prescribed in the recently promulgated Code on Corporate Governance Practices (“CG Code”). This report
describes its corporate governance practices, explains the applications of the principles of the CG Code and deviations, if any.
1.
BOARD OF DIRECTORS
1.1
Board
1.1.1 The Board is responsible to the shareholders for leadership and control of the Company and is collectively responsible for
promoting the success of the Company and its businesses by directing and supervising the Company’s affairs.
CORPORATE GOVERNANCE REPORT
1.1.2 The Board focuses on overall strategies and policies with particular attention paid to the growth and financial performance
of the Group. The principle functions of the Board are to:
46
•
establish the strategic direction and development of the Group;
•
determine the broad policies, strategies and objectives of the Group;
•
approve annual budgets, major funding proposals, investment and divestment proposals;
•
oversee the processes for evaluating the adequacy of internal controls, risk management, financial reporting and
compliance;
•
approve the nominations of directors and appointment of key personnel; and
•
assume responsibility for corporate governance.
1.1.3 The Board delegates day-to-day operations of the Group to executive directors and senior management, while reserving
certain key matters for its approval. Decisions of the Board are communicated to the management through executive
directors who have attended at Board meetings and circulation of minutes of Board meetings to the management.
1.1.4 The Board has adopted a set of guidelines on matters that requires its approval to achieve a clear division of the responsibilities
of the Board and the management. Matters requiring the Board’s approval include, among others, all matters of strategic
importance, corporate governance practices, legal and regulatory compliance, internal control and risk management,
corporate strategy, operating and capital budgets, statutory financial reports, changes in Board members, major transactions
and investment commitments and remuneration policy of directors and senior management.
1.1.5 The Board conducts regular scheduled meetings on a quarterly basis. Ad-hoc meetings are convened when circumstances
require. Apart from the consents obtained through circulation of written resolutions of all Board members, the Board had
met 4 times during the financial year ended March 31, 2005 to consider, among other things, reviewing and approving the
quarterly, interim and annual results of the Group. Meetings via telephone or video-conference are permitted under the
Bye-Laws of the Company.
1.1.6 To maximise the effectiveness of the Board and to encourage active participation and contribution from Board members,
the Board has established executive committee, audit committee, nomination committee and remuneration committee
with specific terms of reference to assist in the execution of their duties. The terms of reference of each of the Board
committees are reviewed from time to time, as are the committees’ structure and memberships. A further description of
each of these committees is set out below. The Board committees adopt as far as practicable, the principles, procedures
and arrangements of the Board in relation to scheduling and conduct of meetings, notice of meetings and inclusion of
agenda items, recording and availability of minutes.
1.1.7 During the year, the Board delegated the responsibilities to enhance the Group’s corporate governance standards for
compliance of the CG Code to an ad-hoc corporate governance committee. The tasks of this committee was to identify
measures to be taken to ensure good corporate governance practices and procedures were established as far as compliance
with the CG Code is concerned. The committee was dissolved after its tasks had been accomplished.
1.1.8 The company secretary attends all Board/Board committees meetings. All Directors have access to the company secretary
who is responsible for ensuring that Board/Board committees procedures are observed and advising the Board/Board
committees on compliance matters.
1.1.9 All directors were given the opportunities to include matters to be discussed in the agenda of Board/Board committees
meetings. The company secretary is delegated with the responsibility to prepare these agendas and, where appropriate,
take into account any matters proposed by each director/committee member for inclusion in the agenda.
1.1.12 Directors are provided in a timely manner with complete, adequate explanation and information to enable them to make an
informed decision or assessment of Group’s performance, position and prospects and to discharge their duties and
responsibilities. In the case when the directors have queries, they are provided with the names and contact details of the
Group’s senior management for separate and independent access to them and they are able to obtain more information
than is volunteered by the management.
1.1.13 Other than in exceptional circumstances, an agenda accompanied by detailed board papers (prepared in such form and
quality as will enable the Board to make an informed decision on matters placed before it, including but not limited to,
background or explanatory information relating to matters to be brought before the Board and internal financial information
such as quarterly management accounts, forecasts and budgets with material variance between projections and actual
results explained) are circulated to all directors in a timely manner and at least three days before the date of scheduled
meeting.
1.1.14 The directors, to properly discharge their duties, are given access to independent professional advisers when necessary at
the expense of the Company.
1.1.15 If a substantial shareholder or a director has a conflict of interest in a matter to be considered by the Board which the Board
has determined to be material, the matter will be dealt with by holding a Board meeting or a meeting of a Board committee
set up for that purpose pursuant to a resolution passed in a Board Meeting. The Board will take into account the exceptions
to the general voting prohibition, as set out in the Rules Governing the Listing of Securities (the “Listing Rules”) on The
Stock Exchange of Hong Kong Limited (the “Stock Exchange”), in considering whether a substantial shareholder or a
director has a conflict of interest in a matter to be considered by the Board. If the relevant exceptions apply, such Board/
Board committees meeting need not be held.
1.1.16 The Group has arranged appropriate directors’ and officers’ liability insurance cover to indemnify directors of the Group
against all costs, charges, losses, expenses and liabilities incurred by the directors in the execution and discharge of his/
her duties or in relation thereto.
47
1.1.11 Minutes of Board/Board committees meetings are recorded in detail the matters considered by the participants of such
meetings and decisions reached, including concerns raised by directors or dissenting views expressed. Draft minutes are
circulated to relevant directors/committee members within a reasonable time after the meetings are held for comments
and before being approved by the Board/Board committees and taken as the true records of the proceedings of such
meetings at the immediate following meetings. They are kept by the company secretary of the Company and are open for
inspection at any reasonable time on reasonable notice by any director.
1.1.10 To address the competing time commitments of directors who sit on multiple boards, Board/Board committees meetings
dates are scheduled well in advance at the beginning of every calendar year. Notices of regular Board/Board committees
meetings are given at least 14 days before the meeting date. For all other Board/Board committees meetings, reasonable
notices are given.
CORPORATE
GOVERNANCE REPORT
1.2
Board Composition
1.2.1 The Board comprises eleven directors, of whom four are executive directors, two are non-executive directors and five are
independent non-executive directors. It includes a balanced composition of executive, non-executive and independent
directors so that there is a strong element of independence in the Board to exercise independent judgement. The nonexecutive directors are of sufficient caliber and number for their views to carry weight.
1.2.2 The attributes, skills and expertise among the existing directors are considered appropriate to effectively lead and control
the Group, taking into account the scope and nature of its operations. The directors have a mix of core competencies in
areas such as accounting and finance, business and management, industry knowledge and marketing strategies. The
experience and qualifications of directors and senior management are set out in the “Directors and Senior Management”
section on pages 28 to 33 of this annual report.
1.2.3 The Board considers that all of the independent non-executive directors are independent and has received from each of
them the annual confirmation of independence required by the Listing Rules.
1.2.4 Non-executive directors have the same duties of care and skill and fiduciary duties as executive directors. They are expressly
identified as such in all corporate communications that disclose the names of the directors of the Company. The functions
of non-executive directors include, but not limited to:
48
•
participating in Board meetings to bring in independent judgment to bear on issues of corporate strategy, corporate
performance, accountability, resources, key appointments and standard of conducts;
•
taking the lead where potential conflicts of interests arise;
•
serving on board committees, if invited; and
•
scrutinising the Group‘s performance in achieving agreed corporate goals and objectives, and monitoring the reporting
of performance.
1.2.5 Details of the membership of the Board (including the independent non-executive directors) and roles and functions of
directors are posted on the Company’s website and such information is updated whenever there are changes.
1.3
Appointment, Re-election and Removal
1.3.1 Appointment of new directors is a matter for consideration by the nomination committee. It reviews the profiles of the
candidates and makes recommendations to the Board on the appointment, re-nomination and retirement of directors.
1.3.2 At each annual general meeting (“AGM”), one-third of the directors are required to retire from office. The directors to retire
in every year shall be those appointed by the Board during the year and those who have been longest in office since their
last election or re-election. New directors appointed by the Board during the year shall retire and submit themselves for
re-election at the AGM immediately follow their appointment. The new directors shall not be taken into account in determining
the number of directors who are to retire by rotation at that AGM. Dr. Raymond Chan, Mr. Jack William Edouard Heuer,
Mr. Lo Kai Yiu, Anthony, Professor Woo Chia-Wei, being the longest in the office, will retire at the forthcoming AGM. Professor
Yoram (Jerry) Wind who was appointed during the year will retire at the forthcoming AGM. All retiring directors are eligible
for re-election.
1.3.3 Mr. Lo Kai Yiu, Anthony has served as independent non-executive director for more than nine years. He is neither connected
with any connected persons of the Group nor does he have any material interest in the Group’s business activities. The
Board considers Mr. Lo’s long directorship services will not interfere with the exercise of his independent judgement which
takes into account the best interests of the Group. The Board considers him to continue to be independent with reference to
all the guidance factors for assessing independence as set out in Rule 3.13 of the Listing Rules. The contribution of Mr. Lo
was recognised by the Board who has over all these years developed deep insights into the Group’s business and operations
and is therefore able to provide invaluable contribution to the Board as a whole. The Board considers retaining the services
of Mr. Lo as independent non-executive director would be in the best interest of the Group.
1.3.4 Non-executive directors are appointed for a fixed term not exceeding three years and are subject to retirement by rotation
and re-election by shareholders at AGM in accordance with the Company’s Bye-Laws.
1.3.5 The names and biographical details of the directors who will offer themselves for election or re-election at the next AGM
are set out in the circular to shareholders to assist shareholders in making an informed decision on their elections.
1.3.6 Newly appointed directors of the Company will receive induction and reference materials to enable him/her to familiarise
with Group’s history, mission, business operations and board and company policies. Each director is briefed and updated
from time to time to ensure that he/she has a proper understanding of the operations and business of the Group and that
he/she is fully aware of his/her responsibilities under statute and common law, the Listing Rules, applicable legal and
other regulatory requirements and the governance policies of the Company.
•
the Board functions effectively, and that all key and appropriate issues are properly briefed and discussed by the
Board in a timely manner;
•
good corporate governance practices and procedures are established and encourages all directors to make full and
active participation to the affairs of the Group; and
•
the Board acts in the best interests of the Group.
1.4.2 The role of chairman and chief executive officer of the Group rests on the same individual which deviates from the code
provision in the CG Code of not having a clear division of responsibilities. The Board is of the view that this has not
compromised accountability and independent decision-making for the following reasons:
•
the non-executive directors form the majority of the Board of which five out of a total of seven are independent; and
•
the independent directors actively challenge the assumptions and proposals of the management, both during and
outside of Board meetings through discussions with the chairman and among the directors via e-mail or telephone,
on pertinent issues affecting the affairs and business of the Group. This enables the Board to benefit from the objective
judgement from independent directors.
1.4.3 The executive chairman is one of the founders and a substantial shareholder of the Group and has considerable industry
experience. The Board is of the view that it is in the best interests of the Group to have an executive chairman so that the
Board, and in particular the non-executive directors, can have the benefit of a chairman who is knowledgeable about the
business of the Group and is most capable to guide discussions and brief the Board in a timely manner on pertinent issues
and developments to facilitate open dialogue between the Board and management. He is also motivated to contribute to the
growth and profitability of the Group.
1.4.4 The chairman from time to time meets with individual non-executive directors (including independent non-executive directors)
without the executive directors present. The chairman invites non-executive directors to present topics which they are
specialised in to the executive directors and management to ensure constructive relations among them.
1.5
Board Committee
1.5.1 Executive Committee (“EC”)
1.5.1.1 An EC of the Board has been established and comprises of all executive directors. The quorum necessary for
transaction of business is two.
1.5.1.2 The EC meets as and when required to oversee the day-to-day management of the Group and has all the general
powers of the Board except those matters specifically reserved for the Board.
Chairman and Chief Executive Officer
1.4.1 Dr. Raymond Chan assumes the role of both the chairman and the chief executive officer of the Company. While serving as
the chairman of the Group, Dr. Chan leads the Board and is responsible for the proceedings and workings of the Board. He
ensures that:
49
1.4
CORPORATE
GOVERNANCE REPORT
1.5.1.3 The principal duties of EC include:
•
to manage the business and investments by overseeing the Group’s operations, projects, assets and liabilities,
budgets, compliance obligations and financial performance in accordance with the policies and directives of
the Board;
•
to make recommendations to the Board as to the Group’s overall policies, strategies and financial objectives
in the development of its business and to ensure their implementation and execution; and
•
to provide leadership to staff and management and to nominate key personnel and ensure appropriate levels
of authority are delegated to them.
1.5.1.4 Three meetings of the EC were held during the year. All resolutions approved by the EC are reported to the Board at
quarterly Board meetings.
1.5.2 Nomination Committee (“NC”)
50
1.5.2.1 The NC has been established and comprises of a majority of independent non-executive directors, which meets at
least once a year. It is chaired by Mr. Jack Schmuckli and comprises two other members, namely Mr. Kao Ying Lun
and Mrs. Chan Pau Shiu Yeng, Shirley. All NC members, with the exception of Mrs. Chan Pau Shiu Yeng, Shirley, are
independent non-executive directors. The quorum necessary for the transaction of business is two.
1.5.2.2 The terms of reference of the NC are posted on the Company’s website. The principal functions of the NC include:
•
to make recommendations to the Board on all new appointments or re-appointments of directors, the
establishment of a succession plan for directors, in particular the chairman and chief executive officer and
the composition of the Board;
•
to identify and nominate qualified individuals, subject to the approval of the Board, to be additional directors
or to fill vacancy in the Board as and when they arise;
•
to review on an annual basis the Board structure, size and composition and the independent element of the
Board;
•
to develop the criteria for selection of directors; and
•
to assess the independence of independent non-executive directors.
1.5.2.3 The chairman of the NC will report to the Board on its proceedings and recommendations after each meeting.
1.5.2.4 The NC met twice in 2005 to review its terms of reference and schedule its future meetings and to consider the
suitability of the appointment of Professor Yoram (Jerry) Wind as independent non-executive director before
recommending his appointment to the Board.
1.5.3 Remuneration Committee (“RC”)
1.5.3.1 The RC is established, comprising a majority of independent non-executive directors, which meets at least once a
year. It is chaired by Mr. Jack Schmuckli and comprises two other members, namely Mr. Kao Ying Lun and Mrs.
Chan Pau Shiu Yeng, Shirley. All RC members, with the exception of Mrs. Chan Pau Shiu Yeng, Shirley, are independent
non-executive directors. The quorum necessary for the transaction of business shall be two.
1.5.3.2 The terms of reference of the RC are posted on the Company’s website. The RC consults the chairman and chief
executive officer about its proposals relating to the remuneration of other executive directors and have access to
professional advice if considered necessary. The principal functions include:
•
to recommend to the Board on the Company’s policies and structure for the remuneration of the directors
and senior management of the Group;
•
to determine the remuneration packages of all executive directors and senior management; and
•
to review and approve their performance-based remuneration.
1.5.3.3 The chairman of the RC will report to the Board on its proceedings and recommendations after each meeting.
1.5.3.4 The RC met twice in 2005 to review its terms of reference and schedule its future meetings and to consider the
terms of service contract of Professor Yoram (Jerry) Wind.
1.5.4 Audit Committee (“AC”)
1.5.4.1 The AC consists of three members, two independent non-executive directors, Mr. Lo Kai Yiu, Anthony (Chairman),
Mr. Kao Ying Lun and a non-executive director, Mr. Jack William Edouard Heuer. The Board is of the opinion that the
members of the AC have sufficient accounting and financial management expertise or experience to discharge
their duties.
to consider and recommend the appointment, re-appointment and removal of external auditor;
•
to approve the remuneration and terms of engagement of external auditor, any questions of resignation or
dismissal of that auditor;
•
to review and monitor external auditor’s independence and objectivity and the effectiveness of the audit
process in accordance with applicable standards;
•
to discuss with external auditor the nature and scope of the audit and reporting obligations before the audit
commences;
•
to develop and implement policy on the engagement of an external auditor to supply non-audit services and
to make recommendation of any measures for improvements to be taken;
•
to review the quarterly, interim and annual financial statements and the annual and the interim reports
before submission to the Board, focusing particularly on:
(i)
any changes in accounting policies and practices;
(ii)
major judgmental areas;
(iii)
significant adjustments resulting from audit;
(iv)
the going concern assumptions and any qualifications;
(v)
compliance with accounting standards; and
(vi)
compliance with the Listing Rules and other legal requirements in relation to financial reporting;
•
to review the Group’s financial controls, internal control and risk management systems and ensure that the
management has discharged its duty to have an effective internal control system;
•
to consider any findings of major investigations of internal control matters as delegated by the Board or on
its own initiative and management’s response;
•
to review the internal audit programme, ensure co-ordination between the internal and external auditors,
and ensure that the internal audit function is adequately resourced and has appropriate standing within the
Company and to review and monitor the effectiveness of the internal audit function;
•
to review the external auditor’s management letter, any material queries raised by the auditor to management
in respect of the accounting records, financial accounts or systems of control and management’s response
and to ensure that the Board will provide a timely response to the issues raised; and
•
to review the Group’s financial and accounting policies and practices.
51
•
1.5.4.2 The operations of the AC are regulated by its terms of reference which have been approved by the Board and is
subject to review by the Board from time to time. The terms of reference of the AC are posted on the Company’s
website. The major duties of AC include:
CORPORATE
GOVERNANCE REPORT
1.5.4.3 The AC has explicit authority to investigate into any matter under the scope of its duties and the authority to obtain
independent professional advice. It is given full access to and assistance from the management and reasonable
resources to discharge its duties properly. At least once annually, the AC meets the external and internal auditors
without the presence of the management.
1.5.4.4 The AC had met four times to review the quarterly, interim and annual results of the Group during the year ended
March 31, 2005. Full minutes of the AC are kept by the company secretary of the Company. Draft and finalised
minutes of the AC meetings are circulated to all members of the AC for their comment and records respectively, in
both cases within reasonable time after the conclusion of the meetings.
1.6
Securities Transactions by Officers
1.6.1 The Company has adopted a Code for Securities Transactions by Officers of the Group (the “Code”) on terms no less
exacting than the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”) contained in
Appendix 10 of the Listing Rules.
1.6.2 Having made specific enquiry of all directors, they have confirmed that they fully complied with the required standards set
out in both the Model Code and the Code throughout the year ended March 31, 2005.
1.6.3 Officers as defined in the Code who is deemed to be in possession of unpublished price sensitive information in the relation
to the Company or its shares are required to prohibit to deal in shares of the Company during the black-out period.
2
ACCOUNTABILITY AND AUDIT
2.1
Financial Reporting
2.1.1 The Board acknowledges its responsibility for preparing the accounts which give a true and fair view of the state of affairs
of the Company and of the Group on a going concern basis, with supporting assumptions or qualifications as necessary. In
preparing the accounts for the year ended March 31, 2005, the directors have selected suitable accounting policies and
applied them consistently and made judgements and estimates that are prudent and reasonable.
2.1.2 Management provides such explanation and information to the Board to enable it to make an informed assessment of the
financial and other information to be approved.
52
2.1.3 The Board endeavours to ensure a balanced, clear and understandable assessment of the Group’s position and prospects
to extends to the Group’s financial reporting including annual and interim reports, other price-sensitive announcements
and other financial disclosures required under the Listing Rules, and reports to regulators as well as to information required
to be disclosed pursuant to statutory requirements.
2.1.4 Starting from the financial year 2003, the Company publishes its financial results on a quarterly basis to enhance transparency
about its performance and to give details of the latest development of the Group in a timely manner. The Company has
announced its annual results within 2 months after financial year end date and announced its interim and quarterly results
within 45 days after the end of relevant periods.
2.2
Internal Controls
2.2.1 The Board is committed to managing business risks and maintaining a proper and effective systems of internal control to
safeguard the shareholders’ investment and the Group’s assets.
2.2.2 The Board, through the AC, has conducted quarterly reviews of the effectiveness of the Group’s system of internal control
covering all controls, including financial, operational and compliance controls, and risk management processes. The Board,
through the review of the AC, is satisfied that the Group has fully complied with the code provisions on internal controls
during the year under review as set forth in the CG Code.
2.2.3 The internal control system which includes a defined management structure with specified limits of authority, is designed
to:
•
help the achievement of business objectives, safeguard assets against unauthorised use or disposition;
•
ensure the maintenance of proper accounting records for the provision of reliable financial information for internal
use or for publication; and
•
ensure compliance with relevant legislation and regulations.
2.2.4 The internal control system is designed to provide reasonable, but not absolute, assurance of no material mis-statement
or loss and to manage rather than eliminate risks of failure in operational systems and achievement of the Group’s objectives.
A comprehensive monthly management reporting system is in place providing financial and operational performance
indicators to the management, and the relevant financial information for reporting and disclosure purpose. Variances
against budgets are analysed, and explained, and appropriate actions are taken, if necessary, to rectify deficiencies
noted;
•
System and procedures are in place to identify, measure, manage and control risks including legal, credit, market,
operational, environmental, behavioral and system risks that may have an impact on the Group; and
•
Group Internal Audit (“IA”) performs independent reviews of the risks and key controls to provide reasonable assurance
to the management and the AC that risks and controls have been adequately addressed.
2.2.6 IA plays an important role in monitoring the Group’s internal governance and strives to provide objective assurance to the
Board that a sound internal control system is maintained and operated by the management in compliance with agreed
processes and standards. To preserve the independence of the internal audit function, the Head of IA reports directly to the
AC on audit matters and to the chief executive officer on administrative matters.
2.2.7 Using a risk based approach audit, IA plans its internal audit projects annually in consultation with, but independent of,
management, and the audit plan is submitted to the AC for approval. Independent reviews of different financial, business
and functional operations and activities will be conducted with audit resources being focused on higher risk areas. Ad-hoc
reviews will also be conducted on areas of concern identified by the AC and the management.
2.2.8 Division/Department Heads will be notified of the deficiencies noted for rectification, and IA will follow up with the
implementation of audit recommendations on a quarterly basis. Significant internal control weaknesses are brought to the
attention of the AC and if necessary to the Board, and to the senior management for remedial actions.
2.2.9 To promote corporate governance and provide shareholders with timely information about the Group’s financial performance,
IA conducts quality assurance reviews of the interim financial reports. These quality assurance reviews provide an addition
level of assurance on the overall quality of the financial statements. The quality assurance reports conclude the accuracy
and reliability of the financial information prepared by management, and are circulated to the AC to facilitate its review
prior to making recommendations to the Board for approval.
2.3
Auditors’ remuneration
2.3.1 During the year, the fees paid to Deloitte Touche Tohmatsu, the Company’s external auditor for audit services of the Company
and its subsidiaries amounted to HK$4.2 million (2004:HK$3.1 million) and for non-audit related services, representing
mainly taxation services, amounted to HK$0.5 million (2004:HK$1.0 million).
3
COMMUNICATION WITH SHAREHOLDERS
3.1
The Company strives to convey to shareholders pertinent information in a clear, detailed, timely manner and on a regular
basis and to take into consideration their views and inputs, and address shareholders concerns. Their views are
communicated to the Board as a whole.
3.2
The Company communicates with its shareholders through the publication of annual and interim reports, press
announcement and release. All shareholders’ communications are also available on the Company’s website at www.idthk.com
and investor relations portal at www.irasia.com/listco/hk/idt/.
53
•
2.2.5 The key procedures that the Board established to provide effective internal controls are as follows:
CORPORATE
GOVERNANCE REPORT
The AGM provides a useful forum for shareholders to exchange views with the Board. The chairman of the Board as well as
chairmen of AC, NC and/or RC, or in their absence, members of the Board committees are available to answer shareholders’
questions.
3.4
Separate resolutions are proposed at general meetings on each substantially separate issue, including the election of
individual directors.
3.5
Details of the poll voting procedures and rights of shareholders to demand a poll are included in the circular to shareholders
dispatched together with this annual report.
INVESTOR RELATIONS
4.1
The Board recognised that effective communication to investors is the key to establish investor confidence and attracting
new investors.
4.2
Measures taken by the Group include:
4.2.1 Quarterly reporting
The Group has voluntarily adopted quarterly reporting commencing from the financial year April 1, 2003 onwards.
This is part of our effort to go beyond the Stock Exchange requirements and make the Group’s financial position as
transparent as possible to shareholders, potential investors and the general public. Annual and interim reports are
prepared and issued to all shareholders within the prescribed period stipulated by the Stock Exchange. All press and
results announcement and reports are posted on the Company’s website.
4
3.3
4.2.2 Media and analysts briefings
Briefings for media are held on the same day immediately after the quarterly, interim and annual results are released
via teletext. Briefings for analysts by way of presentation at luncheons, receptions or telephone conferences are
organised thereafter. During the briefings, the Group’s management provides an in-depth analysis of the Group’s
performances in respect of the relevant periods and ensures that the financial performance and accounts of the
Group are well understood. There is also ample opportunity for the analysts and media to ask questions and interact
with the executive directors and senior management.
54
4.2.3 Webcasts
All the results briefings are webcast and are subsequently archived on the Company’s website at www.idthk.com and
www.irasia.com/listco/hk/idt/, the investor relations portal.
4.2.4 Plant Visit
The Group also arranges factory plant visits for investment professionals to update them on the status of our continuous
improvements in production and R&D capabilities.
4.3
The Group regularly releases corporate information such as awards received, product launches and the latest news of the
Group’s developments on its Company’s website at www.idthk.com and investor relations portal at www.irasia.com/listco/
hk/idt/. The public are welcome to give their comments and make their enquiries through the Company’s website and the
management will provide their prompt response.
AUDITORS’
REPORT
TO THE SHAREHOLDERS OF IDT INTERNATIONAL LIMITED
(incorporated in Bermuda with limited liability)
We have audited the financial statements on pages 56 to 93 which have been prepared in accordance with accounting principles generally
accepted in Hong Kong.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
The Company’s directors are responsible for the preparation of financial statements which give a true and fair view. In preparing financial
statements which give a true and fair view it is fundamental that appropriate accounting policies are selected and applied consistently.
It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion solely
to you, as a body, in accordance with Section 90 of the Bermuda Companies Act, and for no other purpose. We do not assume responsibility
towards or accept liability to any other person for the contents of this report.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance as to whether the financial statements are free from material
misstatement. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
We believe that our audit provides a reasonable basis for our opinion.
OPINION
In our opinion the financial statements give a true and fair view of the state of affairs of the Company and the Group as at March 31, 2005
and of the profit and cash flows of the Group for the year then ended and have been properly prepared in accordance with the disclosure
requirements of the Hong Kong Companies Ordinance.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
May 26, 2005
55
We conducted our audit in accordance with Statements of Auditing Standards issued by the Hong Kong Institute of Certified Public
Accountants. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and judgments made by the directors in the preparation of the
financial statements, and of whether the accounting policies are appropriate to the circumstances of the Company and the Group,
consistently applied and adequately disclosed.
AUDITORS’ REPORT
BASIS OF OPINION
CONSOLIDATED
INCOME STATEMENT
FOR THE YEAR ENDED MARCH 31, 2005
Notes
Turnover
Cost of goods sold
4
Gross profit
Other operating income
Research and development costs
Distribution and selling expenses
Administrative expenses
CONSOLIDATED INCOME STATEMENT
Interest on bank and other borrowings wholly
repayable within five years
Share of profit of an associate
56
5
2005
HK$’M
2004
HK$’M
2,894.7
(1,840.2)
2,757.3
(1,661.4)
1,054.5
48.2
(109.7)
(500.0)
(292.6)
1,095.9
44.9
(99.7)
(425.7)
(276.4)
200.4
339.0
(12.9)
–
(5.2)
1.6
187.5
(0.5)
335.4
(26.7)
Minority interests
187.0
(57.0)
308.7
(57.9)
130.0
250.8
166.9
166.6
6.2 cents
12.1 cents
6.2 cents
12.0 cents
Taxation
Dividends
Earnings per share
– Basic
– Diluted
8
9
10
BALANCE
SHEETS
AT MARCH 31, 2005
Current assets
Inventories
Property held for resale
Trade and other receivables
Taxation recoverable
Dividend receivable
Bank balances and cash
Current liabilities
Trade and other payables
Bills payables
Obligations under finance
leases due within one year
Taxation payable
Short-term bank loans
Bank overdrafts
Notes
2005
HK$’M
2004
HK$’M
2005
HK$’M
2004
HK$’M
11
12
13
14
15
16
17
14.8
318.0
81.8
26.4
–
296.4
78.8
6.4
289.8
74.0
18.0
–
296.4
48.1
–
–
–
–
632.5
–
–
–
–
–
–
589.5
–
–
816.2
732.7
632.5
589.5
734.5
1.6
465.0
6.8
–
307.3
518.5
1.6
400.4
0.4
–
533.4
–
–
–
–
167.0
–
–
–
–
–
65.0
–
1,515.2
1,454.3
167.0
65.0
21
406.2
26.1
429.3
6.3
1.8
–
2.1
–
22
0.1
13.0
393.9
–
0.2
28.8
175.5
2.6
–
–
–
–
–
–
–
–
839.3
642.7
1.8
2.1
675.9
811.6
165.2
62.9
1,492.1
1,544.3
797.7
652.4
0.1
–
27.8
0.2
–
26.9
–
259.3
–
–
93.5
–
27.9
27.1
259.3
93.5
276.1
271.9
–
–
1,188.1
1,245.3
538.4
558.9
18
19
20
Net current assets
Total assets less current liabilities
Non-current liabilities
Obligations under finance
leases due after one year
Amounts due to subsidiaries
Minority interests
Net assets
22
17
BALANCE SHEETS
Non-current assets
Intangible assets
Goodwill
Interests in subsidiaries
Long-term bank deposits
Deferred tax assets
The Company
57
The Group
BALANCE
SHEETS
AT MARCH 31, 2005
The Group
Capital and reserves
Share capital
Reserves
Shareholders’ funds
The Company
Notes
2005
HK$’M
2004
HK$’M
2005
HK$’M
2004
HK$’M
23
25
208.5
979.6
208.2
1,037.1
208.5
329.9
208.2
350.7
1,188.1
1,245.3
538.4
558.9
BALANCE SHEETS
The financial statements on pages 56 to 93 were approved and authorised for issue by the Board of Directors on May 26, 2005 and are
signed on its behalf by:
58
Raymond Chan
Alain J.G. Li
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
Share
premium
HK$’M
Properties
revaluation
reserve
HK$’M
Capital
reserve
HK$’M
Translation
reserve
HK$’M
Revenue
reserve
HK$’M
Total
HK$’M
At April 1, 2003
Issue of shares
Exchange differences arising
from translation of financial
statements of overseas
operations not recognised in
the consolidated income
statement, net of minority
interests
Realised on disposal of an
associate
Net profit attributable to
shareholders
Dividends
207.2
1.0
63.6
3.8
27.9
–
3.7
–
5.7
–
821.3
–
1,129.4
4.8
–
–
–
–
2.8
–
2.8
–
–
–
3.2
(0.4)
–
2.8
–
–
–
–
–
–
–
–
–
–
At March 31, 2004
Issue of shares
Exchange differences arising
from translation of financial
statements of overseas
operations not recognised in
the consolidated income
statement, net of minority
interests
shareholders
Dividends
208.2
0.3
67.4
1.4
27.9
–
6.9
–
8.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
At March 31, 2005
208.5
68.8
27.9
6.9
6.8
(1.3)
250.8
(145.3)
926.8
–
–
130.0
(187.6)
869.2
The capital reserve of the Group comprises HK$17.7 million of negative goodwill offset by HK$10.8 million of goodwill.
250.8
(145.3)
1,245.3
1.7
(1.3)
130.0
(187.6)
1,188.1
59
Share
capital
HK$’M
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED
CASH FLOW STATEMENT
CONSOLIDATED CASH FLOW STATEMENT
60
2005
HK$’M
2004
HK$’M
187.5
335.4
(15.0)
12.9
–
(20.7)
5.2
(1.6)
65.2
37.8
1.1
2.9
(8.4)
9.7
(0.8)
–
63.8
36.7
1.0
3.6
–
3.6
(1.1)
(1.6)
(3.4)
(55.6)
289.5
(209.9)
(60.9)
(25.9)
19.9
–
368.7
(148.5)
2.6
111.0
(1.3)
(0.1)
Cash generated from operations
Hong Kong Profits Tax paid
Hong Kong Profits Tax refunded
Tax paid in other jurisdictions
12.7
(42.8)
1.0
(11.2)
332.4
(28.0)
–
(5.2)
Net cash (used in) from operating activities
(40.3)
299.2
Investing activities
Interest received
Dividend received from an associate
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Product development costs paid
Repurchase by a subsidiary of its own shares
Proceeds from disposal of an associate
Increase in long-term bank deposits
15.0
–
(97.6)
2.7
(55.3)
(24.6)
–
–
20.7
0.7
(46.3)
1.7
(51.6)
–
61.8
(58.5)
(159.8)
(71.5)
Operating activities
Adjustments for:
Interest income
Interest expenses
Depreciation and amortisation of property, plant
and equipment
Amortisation of intangible assets
Amortisation of goodwill
Loss on disposal of property, plant and equipment
Gain from fair value adjustment of investment properties
Write-off of product development costs
Gain on deemed partial disposal of a subsidiary
Gain on disposal of an associate
Effect of foreign exchange rate changes on
inter-company balances
Operating cash flows before movements in working capital
Increase in inventories
(Increase) decrease in trade and other receivables
(Decrease) increase in trade and other payables
Increase (decrease) in bills payables
Decrease in amount due to an associate
Net cash used in investing activities
CONSOLIDATED
CASH FLOW STATEMENT
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at April 1
Effect of foreign exchange rate changes
2004
HK$’M
(12.9)
(187.6)
(39.7)
1.7
2.2
(0.2)
576.9
(363.4)
(5.2)
(145.3)
(39.1)
4.8
9.0
(0.2)
452.7
(335.0)
(23.0)
(58.3)
(223.1)
169.4
530.8
353.4
(0.4)
8.0
Cash and cash equivalents at March 31
307.3
530.8
Analysis of the balances of cash and cash equivalents
Bank deposits, balances and cash
Bank overdrafts
603.7
–
829.8
(2.6)
603.7
(296.4)
827.2
(296.4)
307.3
530.8
Less: Long-term bank deposits
61
Financing activities
Interest paid
Dividends paid
Dividends paid to minority shareholders of subsidiaries
Proceeds from issue of shares
Capital contributed by minority shareholders of a subsidiary
Repayment of obligations under finance leases
Bank loans raised
Repayment of bank loans
2005
HK$’M
CONSOLIDATED CASH FLOW STATEMENT
NOTES TO THE
FINANCIAL STATEMENTS
1.
GENERAL
The Company is incorporated in Bermuda as an exempted company with limited liability. The shares of the Company are listed on
The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
The Company acts as an investment holding company while its subsidiaries are engaged in the design, development, manufacture,
sales and marketing of various consumer electronic products.
2.
ADOPTION OF NEW HONG KONG FINANCIAL REPORTING STANDARDS
NOTES TO THE FINANCIAL STATEMENTS
The Hong Kong Institute of Certified Public Accountants (the “HKICPA”) issued a number of new and revised Hong Kong Accounting
Standards (“HKAS”) and Hong Kong Financial Reporting Standards (“HKFRS”) (hereinafter collectively referred to as “new HKFRS”)
which are effective for accounting periods beginning on or after January 1, 2005. The Group has not early adopted these new
HKFRSs in the financial statements for the year ended March 31, 2005 except for the adoption of HKAS40 “Investment property”
(“HKAS 40”).
62
HKAS 40 introduces both cost model and fair value model for the measurement of investment property. Under the fair value
model, HKAS 40 requires fair value changes be recognised to the income statement in the period in which they arise. The Group
has elected to apply the fair value model in measuring its investment properties and recognises the fair value changes to the
income statement in the period in which they arise. As a result of the adoption of HKAS 40, the Group’s profit attributable to the
shareholders for the year ended March 31, 2005 included an amount of HK$8.4 million, representing the increase in fair value of
investment properties in the current period. There was no effect on the Group’s results for the prior accounting periods with
respect to the early adoption of HKAS 40.
For those new HKFRSs that the Group has not early adopted in the financial statements for the year ended March 31, 2005, the
Group has commenced considering the potential impact of those new HKFRSs but is not yet in a position to determine whether
those HKFRSs would have a significant impact on how its results of operations and financial position are prepared and presented.
Those HKFRSs may result in changes in the future as to how the results and financial position are prepared and presented.
3.
SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared under the historical cost convention, as modified for the revaluation of certain
properties, and in accordance with accounting principles generally accepted in Hong Kong. The principal accounting policies
adopted are as follows:
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to
March 31 each year.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of disposal respectively, as appropriate.
All significant inter-company transactions and balances within the Group are eliminated on consolidation.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the
identifiable assets and liabilities of a subsidiary at the date of acquisition.
Goodwill arising on acquisitions after April 1, 2001 is capitalised and amortised on a straight line basis over its useful economic
life, generally not exceeding 20 years. Goodwill arising on the acquisition of subsidiaries is presented separately in the balance
sheet.
Goodwill arising on acquisitions prior to April 1, 2001 continues to be held in reserves, and will be charged to the income statement
at the time of disposal of the relevant subsidiary, or at such time as the goodwill is determined to be impaired.
On disposal of a subsidiary, the attributable amount of unamortised goodwill or goodwill previously eliminated against reserves
at the time of acquisition is included in the determination of the gain or loss on disposal.
SIGNIFICANT ACCOUNTING POLICIES (continued)
Negative goodwill
Negative goodwill represents the excess of the Group’s interest in the fair value of the identifiable assets and liabilities of a
subsidiary at the date of acquisition over the cost of acquisition. Negative goodwill is released to income based on an analysis of
the circumstances from which the balance resulted.
Negative goodwill arising on acquisitions after April 1, 2001 is presented as a deduction from assets and will be released to
income based on an analysis of the circumstances from which the balance resulted.
Negative goodwill arising on acquisitions prior to April 1, 2001 continues to be held in reserves and will be credited to income at
the time of disposal of the relevant subsidiary.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any identified impairment loss.
Turnover
Turnover represents the net amounts received and receivable for goods sold by the Group to outside customers during the year.
Revenue recognition
Sales of goods are recognised when goods are delivered and title has passed.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the interest rate applicable.
Leases
Leases are classified as finance leases whenever the terms of the leases transfer substantially all the risks and rewards of
ownership of the leased assets to the Group. Assets held under finance leases are capitalised at their fair value at the date of
acquisition. Any outstanding principal portion of the leasing commitments is shown as an obligation of the Group. The finance
costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are
charged to the income statement over the period of the respective leases so as to produce a constant periodic rate of charge on
the remaining balances of the obligations for each accounting period.
All other leases are classified as operating leases and the rentals payable are charged to the income statement on a straight line
basis over the period of the respective leases.
Investment properties, which are properties held to earn rental income and/or for capital appreciation, are stated at fair value at
the balance sheet date. Gains or losses arising from changes in the fair value of investment properties are included in profit or
loss for the period in which they arise.
To the extent that the negative goodwill is attributable to losses or expenses anticipated at the date of acquisition, it is released to
income in the period in which those losses or expenses arise. The remaining negative goodwill is recognised as income on a
straight line basis over the remaining average useful life of the identifiable acquired depreciable assets. To the extent that such
negative goodwill exceeds the aggregate fair value of the acquired identifiable non-monetary assets, it is recognised in income
immediately.
63
3.
NOTES TO THE
3.
Property, plant and equipment, other than construction in progress, are stated at cost or valuation less depreciation and amortisation
and any identified impairment loss at the balance sheet date.
Advantage has been taken of the transitional relief provided by paragraph 80 of Statement of Standard Accounting Practice
(“SSAP”) No. 17 “Property, plant and equipment” issued by the HKICPA from the requirement to make regular revaluations of the
Group’s land and buildings which had been carried at revalued amounts prior to September 30, 1995, and accordingly no further
revaluation of land and buildings is carried out. In previous years, the revaluation increase arising on the revaluation of these
assets was credited to the revaluation reserve. Any future decreases in value of these assets will be dealt with as an expense to
the extent that they exceed the balance, if any, on the revaluation reserve relating to a previous revaluation of the same asset. On
the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred to revenue reserve.
The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in the income statement.
64
The cost of freehold land is not amortised while the cost or valuation of leasehold land is amortised over the remaining period of
the lease using the straight line method.
The cost or valuation of buildings is depreciated over 25 years using the straight line method.
Construction in progress is stated at cost which includes all development expenditure and other direct costs attributable to such
projects. It is not depreciated until completion of construction and the asset is put into use. Costs of completed construction
works are transferred to the appropriate categories of property, plant and equipment.
Depreciation is provided to write off the cost of other property, plant and equipment over their estimated useful lives, using the
reducing balance method, at the following rates per annum:
Furniture, fixtures and equipment
Motor vehicles
Plant and machinery
15% – 30%
20%
15% – 50%
Assets held under finance leases are depreciated on the same basis as assets owned by the Group or over the period of the
leases, if shorter.
Product development costs
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated asset arising from product development expenditure is recognised only if it is anticipated that the
development costs incurred on a clearly-defined project will be recovered through future commercial activity. The resultant asset
is amortised on a straight line basis over its estimated useful life not exceeding 2 years.
Where no internally-generated intangible asset can be recognised, product development expenditure is recognised as an expense
in the period in which it is incurred.
Patents and trademarks
Patents and trademarks are stated at cost less amortisation and any identified impairment loss. Amortisation is calculated on a
straight line basis over its estimated useful economic life not exceeding 5 years.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average method.
Property held for resale
Property held for resale is stated at the lower of cost and net realisable value. Cost represents net carrying value of the property
at the time when it was transferred from property, plant and equipment. Net realisable value represents the estimated selling
price in the ordinary course of business less the estimated costs necessary to make the sale.
Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised
as income immediately, unless the relevant asset is carried at a revalued amount under another SSAP, in which case the reversal
of the impairment loss is treated as a revaluation increase under that other SSAP.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
income statement items that are never taxable or deductible.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using
the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and
deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from
goodwill (or negative goodwill) or from the initial recognition (other than in a business combination) of other assets and liabilities
in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the
Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse
in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised.
Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity,
in which case the deferred tax is also dealt with in equity.
Impairment
At each balance sheet date, the Group reviews the carrying amounts of its assets to determine whether there is any indication
that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying
amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued amount under another SSAP, in which case the impairment loss is
treated as a revaluation decrease under that SSAP.
65
3.
NOTES TO THE
3.
Foreign currencies
Transactions in foreign currencies are translated at the rates ruling on the dates of the transactions. Monetary assets and liabilities
denominated in foreign currencies are re-translated at the rates ruling on the balance sheet date. Gains and losses arising on
translation are dealt with in the income statement.
The Group enters into foreign currency forward contracts to hedge specific foreign currency commitments and foreign currency
monetary assets and liabilities. Gains and losses on contracts that hedge specific foreign currency commitments are deferred
and are added to, or deducted from, the amount of the relevant transaction at the end of the period. Any gain or loss arising on
other forward contracts is taken to the income statement.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated at exchange rates prevailing on the
balance sheet date. Income and expense items are translated at the average exchange rates for the year. Exchange differences
arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised
as income or as expenses in the period in which the operation is disposed of.
66
4.
BUSINESS AND GEOGRAPHICAL SEGMENTS
(A)
Business segments
For management purposes, the Group is currently organised into five operating divisions – liquid crystal display (“LCD”)
consumer electronic products, telecommunications products, digital media products, electronic learning products and
other consumer electronic products. These divisions are the basis on which the Group reports its primary segment
information.
Principal activities are as follows:
LCD consumer
electronic products
–
design, development, manufacture, and sales and marketing of LCD consumer
electronic products
Telecommunications
products
–
design, development, manufacture, and sales and marketing of telecommunications
products
Digital media products
–
design, development, manufacture, and sales and marketing of digital media products
Electronic learning
products
–
design, development, manufacture, and sales and marketing of electronic learning
products
Other consumer
electronic products
–
design, development, manufacture, and sales and marketing of other consumer
electronic products
BUSINESS AND GEOGRAPHICAL SEGMENTS (continued)
Business segments (continued)
(i)
An analysis of the Group’s turnover and results by business segments is as follows:
LCD
consumer
electronic
products
HK$’M
Telecommunications
products
HK$’M
Digital
media
products
HK$’M
Electronic
learning
products
HK$’M
Other
consumer
electronic
products
HK$’M
Total
HK$’M
793.0
406.2
68.6
473.6
168.6
413.7
392.2
171.3
4.7
2.8
1,427.1
1,467.6
1,199.2
542.2
582.3
563.5
7.5
2,894.7
180.2
36.9
36.3
(0.1)
Year ended March 31, 2005
TURNOVER
Branded sales
OEM/ODM sales
Total
RESULTS
Segment results
(73.4)
179.9
Interest income
Unallocated corporate
income
15.0
Finance costs
200.4
(12.9)
Taxation
187.5
(0.5)
Minority interests
187.0
(57.0)
shareholders
130.0
5.5
TURNOVER
Branded sales
OEM/ODM sales
Total
RESULTS
Segment results
701.2
348.3
66.9
657.3
212.3
172.3
407.2
178.3
12.1
1.4
1,399.7
1,357.6
1,049.5
724.2
384.6
585.5
13.5
2,757.3
166.6
67.2
16.1
58.3
4.8
313.0
Interest income
Unallocated corporate income
20.7
5.3
Finance costs
339.0
(5.2)
1.6
Taxation
335.4
(26.7)
Minority interests
308.7
(57.9)
shareholders
250.8
(A)
67
4.
NOTES TO THE
4.
(A)
(ii)
An analysis of the Group’s balance sheet by principal activities is as follows:
LCD
consumer
electronic
products
HK$’M
Telecommunications
products
HK$’M
Digital
media
products
HK$’M
Electronic
learning
products
HK$’M
Other
consumer
electronic
products
HK$’M
Total
HK$’M
1,060.1
296.9
385.7
318.0
6.9
2,067.6
At March 31, 2005
ASSETS
Segment assets
Unallocated corporate assets
68
263.8
Consolidated total assets
LIABILITIES
Segment liabilities
2,331.4
141.4
69.8
131.9
58.8
0.6
402.5
liabilities
464.7
Consolidated total liabilities
867.2
At March 31, 2004
ASSETS
Segment assets
1,020.2
454.5
228.8
297.7
12.8
Unallocated corporate assets
173.0
Consolidated total assets
LIABILITIES
Segment liabilities
2,014.0
2,187.0
161.4
143.6
38.8
65.1
2.5
411.4
liabilities
258.4
Consolidated total liabilities
669.8
(iii) Other information
LCD
consumer
electronic
products
HK$’M
Telecommunications
products
HK$’M
Digital
media
products
HK$’M
Electronic
learning
products
HK$’M
Other
consumer
electronic
products
HK$’M
42.8
5.1
9.8
10.0
2.3
70.0
27.6
12.2
15.3
13.8
14.0
–
55.3
29.7
14.5
7.2
8.6
0.1
60.1
10.5
0.2
8.0
0.9
5.1
–
14.2
–
–
–
5.1
37.8
1.1
0.6
0.1
0.2
0.4
–
1.3
Total
HK$’M
Capital additions
– property, plant and
equipment
– business segments
– unallocated corporate items
– product development
costs
Depreciation and amortisation
equipment
– unallocated corporate
items
– intangible assets
– goodwill
Loss on disposal of property,
plant and equipment
items
Write-off of product
development costs
1.6
–
5.4
4.2
0.1
–
9.7
18.0
11.5
6.9
8.6
1.7
46.7
14.0
11.2
10.8
15.6
–
51.6
27.4
16.1
6.0
7.9
0.3
57.7
9.5
0.1
8.8
0.9
5.3
–
13.1
–
–
–
6.1
36.7
1.0
1.1
0.3
0.3
1.0
–
2.7
Capital additions
equipment
– product development
costs
Depreciation and amortisation
equipment
items
– intangible assets
– goodwill
Loss on disposal of property,
plant and equipment
items
Write-off of product
development costs
0.9
–
–
3.6
–
–
3.6
(A)
69
4.
NOTES TO THE
4.
(B)
Geographical segments
The Group’s operations are located in Hong Kong and other parts of Mainland China (the “PRC”), Europe, Americas
(representing United States of America and Latin America) and other Asia Pacific countries. In Hong Kong and other parts
of the PRC, the Group carried out its manufacturing and trading operations. The Group also operates marketing offices in
Europe, United States of America, Latin America and other Asia Pacific countries.
(i)
An analysis of the Group’s turnover by geographical market of its customers is as follows:
Turnover
Americas
Europe
Asia Pacific
70
(ii)
2005
HK$’M
2004
HK$’M
1,083.9
1,089.8
721.0
1,102.9
1,198.6
455.8
2,894.7
2,757.3
An analysis of the carrying amount of segment assets analysed by the geographical locations in which the assets are
located is as follows:
Segment assets
Additions to property,
plant and equipment
and product
development costs
2005
HK$’M
2004
HK$’M
2005
HK$’M
2004
HK$’M
Hong Kong and other parts of the PRC
Europe
Americas
Other Far East countries
1,430.6
552.3
224.2
45.5
1,568.7
408.0
133.7
28.5
135.5
7.9
6.8
2.7
85.5
9.8
2.3
0.7
Unallocated assets
2,252.6
78.8
2,138.9
48.1
152.9
–
98.3
–
2,331.4
2,187.0
152.9
98.3
PROFIT FROM OPERATIONS
2005
HK$’M
2004
HK$’M
Directors’ remuneration (note 6)
Other staff’s retirement benefits scheme contributions, net
of forfeited contributions of HK$0.1 million
(2004: HK$0.4 million)
Other staff costs
19.0
31.1
16.4
485.2
6.7
386.0
Less: Staff costs capitalised in product development cost
520.6
(34.6)
423.8
(27.1)
486.0
396.7
1.1
1.0
37.8
4.3
36.7
3.3
64.9
0.3
2.9
63.6
0.2
3.6
40.4
2.3
32.4
0.7
9.7
3.6
Amortisation of goodwill included in administrative expenses
Amortisation of product development costs included in
research and development costs
Auditors’ remuneration
Depreciation and amortisation of property, plant and equipment
– owned by the Group
– held under finance leases
Loss on disposal of property, plant and equipment
Operating lease rentals in respect of
– land and buildings
– office equipment and motor vehicles
Write-off of product development costs included in
research and development costs
Profit from operations has been arrived at after charging:
71
and after crediting:
Gain on deemed partial disposal of a subsidiary
Gain on disposal of an associate
Interest income
Mould construction income
Property rental income before deduction of negligible outgoings
Gain from fair value adjustment of investment properties
0.8
–
15.0
10.2
0.7
8.4
1.1
1.6
20.7
11.2
0.8
–
Included in the above directors’ remuneration were operating lease rentals of HK$1.0 million (2004: HK$1.0 million) paid in
respect of accommodation provided to a director.
5.
NOTES TO THE
6.
DIRECTORS’ REMUNERATION
2005
HK$’M
2004
HK$’M
0.5
0.4
1.0
0.5
0.6
1.4
1.9
2.5
14.9
0.3
1.1
14.5
12.3
1.0
16.3
27.8
Other emoluments of non-executive directors
– basic salaries and allowances
0.3
0.4
Other emoluments of independent non-executive directors
0.5
0.4
19.0
31.1
Directors’ fees
– executive
– non-executive
– independent non-executive
Other emoluments of executive directors
– bonus
– retirement benefits scheme contributions
The emoluments of the directors were within the following bands:
Number of director(s)
72
Up to HK$1,000,000
HK$2,000,001 to HK$2,500,000
HK$3,500,001 to HK$4,000,000
HK$4,000,001 to HK$4,500,000
HK$4,500,001 to HK$5,000,000
HK$5,000,001 to HK$5,500,000
HK$7,000,001 to HK$7,500,000
HK$9,000,001 to HK$9,500,000
2005
2004
7
2
2
–
1
–
–
–
6
1
–
1
–
1
1
1
During the year, no emoluments were paid by the Group to the five highest paid individuals (including directors and employees) as
an inducement to join or upon joining the Group or as compensation for loss of office. None of the directors has waived any
emoluments during the year.
7.
EMPLOYEES’ EMOLUMENTS
The aggregate emoluments of the five highest paid individuals included four (2004: four) executive directors of the Company,
whose emoluments are included in note 6 above. The emoluments of the remaining highest paid individual are as follows:
Basic salaries and allowances
Bonus
Retirement benefits scheme contributions
2005
HK$’M
2004
HK$’M
3.5
–
–
2.9
0.2
–
3.5
3.1
2005
HK$’M
2004
HK$’M
The emoluments were within the band of HK$3,000,001 to HK$3,500,000.
The charge comprises:
Taxation of the Company and its subsidiaries:
Hong Kong Profits Tax
– current year
– underprovision in prior years
Tax in other jurisdictions
– current year
– underprovision in prior years
Deferred taxation (note 17)
Share of Hong Kong Profits Tax of an associate
(24.2)
–
(37.7)
(1.1)
(2.5)
(2.9)
(8.8)
(0.2)
(29.6)
29.1
(47.8)
21.2
(0.5)
–
(26.6)
(0.1)
(0.5)
(26.7)
Hong Kong Profits Tax is calculated at 17.5% on the estimated assessable profit for the year.
Overseas taxation is calculated at the rates prevailing in the respective jurisdictions.
Pursuant to the laws and regulations in the PRC, certain Group’s PRC subsidiaries are entitled to exemption from PRC income tax
for two years commencing from their first profit-making year of operation and thereafter, these PRC subsidiaries will be entitled
to a 50% relief from PRC income tax for the following three years.
TAXATION
73
8.
NOTES TO THE
8.
TAXATION (continued)
The charge for the year is reconciled to the profit before taxation as follows:
2005
HK$’M
74
2004
HK$’M
%
187.5
Tax at the domestic income tax rate
Tax effect of expenses not deductible
for tax purposes
Tax effect of income not taxable for tax purposes
Tax effect of tax losses not recognised
Utilisation of tax losses previously not recognised
Tax effect of tax losses previously not recognised
Effect of different tax rates of subsidiaries
operating in other jurisdictions
Income tax on concessionary rates
Underprovision in prior years
Others
(32.8)
(17.5)
(58.7)
(17.5)
(6.2)
8.3
(6.9)
5.2
10.4
(3.3)
4.4
(3.7)
2.8
5.5
(8.8)
8.9
(6.0)
3.4
7.8
(2.6)
2.7
(1.8)
1.0
2.3
18.6
2.0
(2.9)
3.8
9.9
1.1
(1.5)
2.0
21.5
2.6
(1.3)
3.9
6.4
0.8
(0.4)
1.1
(0.5)
(0.3)
(26.7)
(8.0)
Tax effect and effective tax rate for the year
9.
%
335.4
DIVIDENDS
Interim dividend of 3.0 HK cents
(2004: 2.0 HK cents) per share
Proposed final dividend of 5.0 HK cents
(2004: 6.0 HK cents) per share
Additional final dividend for the prior
year due to exercise of share options
2005
HK$’M
2004
HK$’M
62.6
41.6
104.2
124.9
0.1
0.1
166.9
166.6
The amount of final dividend proposed for the year ended March 31, 2005 has been calculated with reference to 2,084,725,907
ordinary shares in issue as at the date of this report and are subject to approval by the shareholders in the forthcoming annual
general meeting. Accordingly, they are not recognised as liabilities.
10. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share for the year is based on the following data:
2005
HK$’M
2004
HK$’M
130.0
250.8
Earnings:
Effect of dilutive potential ordinary shares
– adjustment to the share of profits of a subsidiary based
on dilution of its earnings per share
(0.1)
Earnings for the purposes of diluted earnings per share
(0.2)
129.9
250.6
2005
2004
2,084,417,430
2,077,505,100
3,147,070
5,255,353
2,087,564,500
2,082,760,453
Number of ordinary shares:
Weighted average number of ordinary shares for the
purposes of basic earnings per share
Effect of dilutive potential ordinary shares
– share options
Weighted average number of ordinary shares for the
purposes of diluted earnings per share
Net profit attributable to shareholders and earnings for
the purposes of basic earnings per share
HK$’M
THE GROUP
VALUATION
At April 1, 2003 and March 31, 2004
Gain from fair value adjustment
At March 31, 2005
6.4
8.4
14.8
The investment properties which are rented out under operating leases were revalued at March 31, 2005 by BMI Appraisals
Limited, an independent firm of professional valuers, on an open market value basis.
The investment properties are situated in Hong Kong and are held under medium-term leases.
75
11. INVESTMENT PROPERTIES
NOTES TO THE
12. PROPERTY, PLANT AND EQUIPMENT
Land and
buildings
HK$’M
Furniture,
fixtures
and
equipment
HK$’M
Motor
vehicles
HK$’M
Plant and
machinery
HK$’M
Construction
in
progress
HK$’M
Total
HK$’M
THE GROUP
76
COST OR VALUATION
At April 1, 2004
Currency realignment
Additions
Disposals
72.4
1.2
–
–
256.2
1.9
41.0
(6.6)
15.4
0.2
2.6
(6.5)
277.3
–
37.9
(0.7)
–
–
16.1
–
621.3
3.3
97.6
(13.8)
At March 31, 2005
73.6
292.5
11.7
314.5
16.1
708.4
16.2
292.5
11.7
314.5
16.1
651.0
49.3
8.1
–
–
–
–
–
–
–
–
49.3
8.1
73.6
292.5
11.7
314.5
16.1
708.4
DEPRECIATION AND
AMORTISATION
At April 1, 2004
Provided for the year
Eliminated on disposals
20.8
0.4
3.7
–
142.2
1.4
31.6
(3.2)
9.6
0.1
1.5
(4.6)
158.9
–
28.4
(0.4)
–
–
–
–
331.5
1.9
65.2
(8.2)
At March 31, 2005
24.9
172.0
6.6
186.9
–
390.4
NET BOOK VALUES
At March 31, 2005
48.7
120.5
5.1
127.6
16.1
318.0
At March 31, 2004
51.6
114.0
5.8
118.4
–
289.8
Comprising:
At cost
At valuation
– 1993
– 1994
The net book value of the Group’s property interests comprise:
The Group
Properties held under medium-term leases in Hong Kong
Freehold properties situated outside Hong Kong
2005
HK$’M
2004
HK$’M
35.0
13.7
36.6
15.0
48.7
51.6
12. PROPERTY, PLANT AND EQUIPMENT (continued)
If the Group’s land and buildings had not been revalued, they would have been included in these financial statements at historic
cost less accumulated depreciation and amortisation of HK$26.0 million (2004: HK$27.9 million).
At the balance sheet date, the net book value of property, plant and equipment held under finance leases was HK$0.2 million
(2004: HK$0.5 million).
13. INTANGIBLE ASSETS
Product
development
costs
HK$’M
Patents and
trademarks
HK$’M
Total
HK$’M
157.1
51.6
(3.6)
1.7
–
–
158.8
51.6
(3.6)
At March 31, 2004
Additions
Write-off
205.1
55.3
(43.7)
1.7
–
–
206.8
55.3
(43.7)
At March 31, 2005
216.7
1.7
218.4
AMORTISATION
At April 1, 2003
Amortised for the year
94.4
36.7
1.7
–
96.1
36.7
At March 31, 2004
Eliminated on write-off
131.1
37.8
(34.0)
1.7
–
–
132.8
37.8
(34.0)
At March 31, 2005
134.9
1.7
136.6
CARRYING VALUES
At March 31, 2005
81.8
–
81.8
At March 31, 2004
74.0
–
74.0
The product development costs are amortised on a straight line basis over its estimated useful economic life of 2 years.
77
COST
At April 1, 2003
Additions
Write-off
THE GROUP
NOTES TO THE
14. GOODWILL
HK$’M
THE GROUP
COST
At April 1, 2003 and March 31, 2004
Arising on deemed acquisition of additional interest in a subsidiary
19.1
9.5
At March 31, 2005
28.6
AMORTISATION
At April 1, 2003
0.1
1.0
At March 31, 2004
1.1
1.1
At March 31, 2005
2.2
CARRYING VALUE
At March 31, 2005
26.4
At March 31, 2004
18.0
The goodwill is amortised on a straight line basis over its estimated useful economic life of 20 years.
15. INTERESTS IN SUBSIDIARIES
The Company
78
Unlisted investments, at cost
Amounts due from subsidiaries
2005
HK$’M
2004
HK$’M
204.8
427.7
204.8
384.7
632.5
589.5
Details of the Company’s principal subsidiaries at March 31, 2005 are set out in note 32.
16. LONG-TERM BANK DEPOSITS
The Group
2005 & 2004
HK$’M
Deposits placed with
– AAA-rated* institution
– AA1-rated* institution
156.0
140.4
296.4
*
According to Moody’s Investors Service.
16. LONG-TERM BANK DEPOSITS (continued)
The balance represents US dollar denominated high-yield deposits placed with financial institutions with a tenor of ten years or
less. These deposits carry a level of risk where interest to be earned from the deposits could be zero if certain conditions based
on formulae linked to London Inter-Bank Offered Rate or New York City Inter-Bank Offered Rates are met.
17. DEFERRED TAXATION
The following are the major deferred tax liabilities and assets recognised and movements thereon during the current and prior
reporting periods:
At March 31, 2004
(Charge) credit to income
for the year
At March 31, 2005
(8.2)
–
(11.0)
–
(1.7)
(1.8)
(9.9)
–
(12.8)
–
(3.2)
(1.0)
(13.1)
(13.8)
(5.9)
–
–
(5.9)
–
–
(5.9)
Tax
losses
HK’M
Unrealised
profits on
inventories
HK’M
Others
HK$’M
10.0
1.4
9.9
–
3.4
0.4
(1.8)
1.8
7.4
15.1
2.2
21.2
18.8
0.6
25.0
–
6.0
0.1
21.2
0.7
23.9
11.9
(2.5)
29.1
43.3
36.9
3.6
51.0
Total
HK$’M
For the purpose of balance sheet presentation, certain deferred tax assets and liabilities have been offset. The following is the
analysis of the deferred tax balances for financial reporting purposes:
The Group
2005
HK$’M
Deferred tax assets
2004
HK$’M
78.8
(27.8)
48.1
(26.9)
51.0
21.2
At the balance sheet date, the Group has unutilised tax losses of HK$262.6 million (2004: HK$204.7 million) available for offset
against future profits. A deferred tax asset has been recognised in respect of HK$158.1 million (2004: HK$55.7 million) of such
losses. No deferred tax asset has been recognised in respect of the remaining HK$104.5 million (2004: HK$149.0 million) due to
the unpredictability of future profit streams. Included in the unrecognised tax losses are losses of HK$19.4 million (2004: HK$32.9
million) that will expire in the years of 2006 to 2010 (2004: 2007 to 2016). Other losses may be carried forward indefinitely.
The Company has no significant unprovided deferred taxation for the year or at the balance sheet date.
THE GROUP
At April 1, 2003
(Charge) credit to income
for the year
Revaluation
of
properties
HK’M
79
Accelerated
Product
tax development
depreciation
costs
HK’M
HK’M
NOTES TO THE
18. INVENTORIES
The Group
Raw materials
Work in progress
Finished goods
2005
HK$’M
2004
HK$’M
128.8
60.2
545.5
169.9
38.6
310.0
734.5
518.5
19. PROPERTY HELD FOR RESALE
The property held for resale which is situated in the PRC is held under a long-term property ownership certificate.
80
20. TRADE AND OTHER RECEIVABLES
The Group allows its trade customers a credit period normally ranging from letter of credit at sight to 60 days open account to
customers with long business relationship and strong financial position.
The Group
2005
HK$’M
2004
HK$’M
Not yet due
Overdue less than 30 days
Overdue 31 to 90 days
Overdue more than 90 days
287.9
32.4
19.8
12.5
264.1
38.7
17.5
11.1
Other receivables
352.6
112.4
331.4
69.0
465.0
400.4
The following is an aged analysis of trade receivables
at the balance sheet date:
21. TRADE AND OTHER PAYABLES
The Group
2005
HK$’M
2004
HK$’M
Not yet due
Overdue less than 30 days
Overdue 31 to 90 days
Overdue more than 90 days
140.9
50.6
6.5
6.8
159.7
63.3
10.6
7.2
Other payables
204.8
201.4
240.8
188.5
406.2
429.3
22. OBLIGATIONS UNDER FINANCE LEASES
The Group
Minimum
lease payments
2005
2004
HK$’M
HK$’M
Present value
of minimum
lease payments
2005
2004
HK$’M
HK$’M
The following is an aged analysis of trade payables
at the balance sheet date:
Amount payable under finance leases:
0.1
0.1
0.2
0.2
0.1
0.1
0.2
0.2
Less: Future finance charges
0.2
–
0.4
–
0.2
–
0.4
–
Present value of obligations under finance leases
0.2
0.4
0.2
0.4
Less: Amount due within one year shown under
current liabilities
0.1
0.2
Amount due after one year
0.1
0.2
81
Within one year
Between one and two years
NOTES TO THE
23. SHARE CAPITAL
Number
of shares
82
Amount
HK$’M
Authorised:
At April 1, 2003, March 31, 2004 and March 31, 2005
– ordinary shares of HK$0.10 each
– ordinary shares of US$0.10 each
3,500,000,000
10,000
350.0
–
Issued and fully paid:
Ordinary shares of HK$0.10 each
– at April 1, 2003
– exercise of share options
2,072,048,407
10,401,500
207.2
1.0
– at March 31, 2004
– exercise of share options
2,082,449,907
2,276,000
208.2
0.3
– at March 31, 2005
2,084,725,907
208.5
During the year, 26,000, 500,000, 750,000 and 1,000,000 share options were exercised at a subscription price of HK$0.509 per
share, HK$0.810 per share, 0.730 per share and 0.6545 per share respectively, resulting in aggregate the issue of 2,276,000
ordinary shares of HK$0.10 each in the Company.
All the shares which were issued during the year rank pari passu with the then existing shares in all respects.
24. SHARE OPTION SCHEMES
The Group offers share options to attract, motivate and retain key employees who contribute to the growth of the Group.
At the special general meeting held on August 28, 2002, the Company adopted a new share option scheme (“2002 IDT International
Option Scheme”) and terminated its old share option scheme adopted previously on September 28, 1993 (“1993 IDT International
Option Scheme”).
The Company’s subsidiary, IDT Holdings (Singapore) Limited (“IDTS”), has operated a share option scheme (referred to as the
“IDTS Option Scheme”) in the year.
The terms of each option scheme are described below:
(A)
The 1993 IDT International Option Scheme was adopted on September 28, 1993 and terminated on August 28, 2002.
Pursuant to this scheme, the board of directors of the Company offered to grant options to selected eligible participants,
including full-time employees and full-time executive directors of the Company or any of its subsidiaries. Upon termination,
no further options shall be granted under this scheme but in all other aspects, the provisions of the 1993 IDT International
Option Scheme shall remain in force and all options granted prior to its termination shall continue to be valid and exercisable
in accordance with the provisions thereof.
The maximum number of the Company’s shares in respect of which options were issued under the 1993 IDT International
Option Scheme (together with any shares of the Company in respect of which options were outstanding) does not at any
time, when aggregated with any of the Company’s shares subject to any other share option schemes, exceed 10% of the
issued share capital of the Company (excluding any shares of the Company issued upon the exercise of options granted).
The maximum number of the Company’s shares in respect of which options were granted to an eligible participant did not
exceed 25% of the maximum aggregate number of the Company’s shares subject to this scheme, and the aggregate exercise
price in respect of all options granted to an eligible participant did not exceed an amount equal to 6 times the gross basic
annual salary of such participant.
24. SHARE OPTION SCHEMES (continued)
1993 IDT International Option Scheme (continued)
The exercise price for an option granted under the 1993 IDT International Option Scheme was at 85% of the average of the
closing prices of the Company’s shares for the five trading days immediately preceding the date of offer of such option or
the nominal value of a share, whichever was the higher.
An offer for grant of option under this scheme was accepted not later than 28 days after the date of offer, and HK$1 was
paid as consideration on acceptance. Options granted under this scheme may be exercised during the period commencing
on a date not earlier than the expiry of 6 calendar months after the commencement date (which is the date upon which such
option was deemed to be granted and accepted) and expiring on the expiry date (which is ten years after the date of offer of
such option).
The movements of share options under the 1993 IDT International Option Scheme during the year ended March 31, 2004
and the balances at March 31, 2004 are set out below:
Exercise
price
per share
HK$
Outstanding
at
4.1.2003 Reclassification
Participants
Date of grant Exercisable period
(M/D/Y)
(M/D/Y)
Directors
12.29.1998
12.29.1998
8.30.2001
4.11.2002
12.30.1999 to 12.29.2008
12.30.2000 to 12.29.2008
3.13.2002 to 8.30.2011
4.11.2004 to 4.10.2007
0.509
0.509
0.453
0.6545
218,750
218,750
9,000,000
1,000,000
437,500
437,500
–
–
Employees
12.29.1998
12.29.1998
1.12.2001
12.30.1999 to 12.29.2008
12.30.2000 to 12.29.2008
1.13.2005 to 1.12.2011
0.509
0.509
0.525
964,000
1,077,000
150,000
(437,500 )
(437,500 )
–
12,628,500
–
Exercised
during
the year
Lapsed/
cancelled
during
the year
Outstanding
at
3.31.2004
–
–
–
–
–
–
–
1,000,000
(656,250)
(656,250)
(9,000,000)
–
(1,500)
(87,500)
–
–
–
(150,000)
525,000
552,000
–
(10,401,500)
(150,000)
2,077,000
Number of share options
Participants
Date of grant
(M/D/Y)
Exercisable period
(M/D/Y)
Directors
4.11.2002
4.11.2004 to 4.10.2007
Employees
12.29.1998
12.29.1998
12.30.1999 to 12.29.2008
12.30.2000 to 12.29.2008
Exercised
during
the year
Lapsed/
cancelled
during
the year
Outstanding
at
3.31.2005
–
–
Exercise
price
per share
HK$
Outstanding
at
4.1.2004
0.6545
1,000,000
(1,000,000)
0.509
0.509
525,000
552,000
–
(26,000)
–
(1,000)
525,000
525,000
2,077,000
(1,026,000)
(1,000)
1,050,000
The number of options vested as at April 1, 2003, March 31, 2004 and March 31, 2005 was 11,478,500, 1,077,000 and 1,050,000
respectively.
The market prices of shares of the Company at the dates of exercise of share options during the year ended March 31, 2005
was at a range of HK$1.74 to HK$1.81 (2004: HK$0.94 to HK$1.10) per share.
83
(A)
NOTES TO THE
(B)
The 2002 IDT International Option Scheme was adopted on August 28, 2002 and will continue in operation for a maximum
of ten years from such date.
Pursuant to this scheme, the board of directors of the Company or its authorised committee shall offer to grant options to
selected eligible participants who may be employees, officers, agents, consultants or representatives, including executive
or non-executive directors and independent non-executive directors, of the Company or any of its subsidiaries who satisfy
the selection criteria prescribed by the rules of such scheme.
The limit on the total number of shares which may be issued upon exercise of all outstanding options granted and yet to be
exercised under the 2002 IDT International Option Scheme, together with all outstanding options granted and yet to be
exercised under any other share option scheme(s) of the Company, must not exceed 30% of the number of the Company’s
issued shares from time to time. Subject always to the aforesaid overall 30% limit, the total number of shares which may be
issued upon exercise of all options to be granted, together with all options to be granted under other share option scheme(s)
of the Company, must not exceed 207,179,540 shares, representing 10% of the issued share capital of the Company as at
August 28, 2002, the adoption date of the 2002 IDT International Option Scheme. Such 10% limit may be refreshed or
exceeded if approved by shareholders in general meeting subject always to the aforesaid overall 30% limit.
84
The total number of the Company’s shares issued and which may be issued upon exercise of all options granted to a
participant in any 12-month period immediately preceding the date of grant shall not exceed 1% of the number of shares in
issue as at date of such grant. If the grant of options is offered to a substantial shareholder or an independent non-executive
director of the Company or any of their respective associates, the total number of the Company’s shares issued and which
may be issued to such participant upon exercise of all options granted in any 12-month period up to and including the date
of grant shall not exceed 0.1% of the number of shares then in issue and having an aggregate value in excess of HK$5,000,000.
The subscription price for an option granted under the 2002 IDT International Option Scheme shall be the highest of (i) the
closing price of the Company’s shares on the date of grant; (ii) the average closing price of the shares for the five business
days immediately preceding the date of grant; and (iii) the nominal value of a share.
An offer for grant of an option under this scheme must be accepted within 28 days from the date of offer, and HK$1 is
payable as consideration on acceptance. An option shall be exercisable during the period as determined by the board of
directors of the Company or its authorised committee, which shall commence on a date after the expiry of a 6-month
period after the date of grant and not exceed 10 years from the date of such grant.
Exercise
price
per share
HK$
Outstanding
at
Participants
Date of grant
(M/D/Y)
Exercisable period
(M/D/Y)
Directors
2.28.2003
2.28.2003
3.17.2003
3.17.2003
3.1.2005 to 2.27.2013
3.1.2007 to 2.27.2013
3.18.2005 to 3.16.2013
3.18.2007 to 3.16.2013
0.798
0.798
0.780
0.780
–
–
500,000
500,000
Employees
8.30.2002
10.18.2002
10.18.2002
2.28.2003
2.28.2003
4.1.2003
4.1.2003
5.21.2003
5.21.2003
8.12.2003
8.30.2004 to 8.29.2012
10.18.2003 to 10.17.2012
10.18.2005 to 10.17.2012
3.1.2005 to 2.27.2013
3.1.2007 to 2.27.2013
4.2.2004 to 4.1.2013
4.2.2005 to 4.1.2013
5.21.2005 to 5.20.2013
5.21.2006 to 5.20.2013
8.13.2004 to 8.12.2013
0.730
0.730
0.730
0.798
0.798
0.810
0.810
0.830
0.830
0.976
1,000,000
250,000
250,000
500,000
500,000
–
–
–
–
–
3,500,000
500,000
500,000
–
–
–
–
–
(500,000)
(500,000)
–
–
–
–
–
–
Nominal consideration for options granted during the year ended March 31, 2004 was received.
Granted
during
the year
Outstanding
at
3.31.2004
–
–
–
–
500,000
500,000
500,000
500,000
–
–
–
–
–
500,000
500,000
250,000
250,000
1,000,000
1,000,000
250,000
250,000
–
–
500,000
500,000
250,000
250,000
1,000,000
2,500,000
6,000,000
2002 IDT International Option Scheme (continued)
Exercise
price
per share
HK$
Outstanding
at
4.1.2004
Granted
during
the year
Exercised
during
the year
Lapsed/
cancelled
during
the year
Outstanding
at
3.31.2005
–
–
–
–
–
–
–
–
–
–
500,000
500,000
500,000
500,000
170,000
Participants
Date of grant Exercisable period
(M/D/Y)
(M/D/Y)
Directors
2.28.2003
2.28.2003
3.17.2003
3.17.2003
6.25.2004
3.1.2005 to 2.27.2013
3.1.2007 to 2.27.2013
3.18.2005 to 3.16.2013
3.18.2007 to 3.16.2013
6.26.2005 to 6.25.2014
0.798
0.798
0.780
0.780
1.810
500,000
500,000
500,000
500,000
–
–
–
–
–
170,000
Employees
8.30.2002
10.18.2002
10.18.2002
4.1.2003
4.1.2003
5.21.2003
5.21.2003
8.12.2003
7.5.2004
7.5.2004
10.7.2004
10.7.2004
11.12.2004
11.12.2004
8.30.2004 to 8.29.2012
10.18.2003 to 10.17.2012
10.18.2005 to 10.17.2012
4.2.2004 to 4.1.2013
4.2.2005 to 4.1.2013
5.21.2005 to 5.20.2013
5.21.2006 to 5.20.2013
8.13.2004 to 8.12.2013
7.6.2006 to 7.5.2014
7.6.2007 to 7.5.2014
10.8.2006 to 10.7.2014
10.8.2007 to 10.7.2014
11.13.2005 to 11.12.2014
11.13.2007 to 11.12.2014
0.730
0.730
0.730
0.810
0.810
0.830
0.830
0.976
1.860
1.860
1.880
1.880
1.860
1.860
1,000,000
250,000
250,000
500,000
500,000
250,000
250,000
1,000,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500,000
500,000
250,000
250,000
500,000
500,000
(500,000)
(250,000)
–
(500,000)
–
–
–
–
–
–
–
–
–
–
–
–
(250,000)
–
(500,000)
–
–
–
–
–
–
–
–
–
500,000
–
–
–
–
250,000
250,000
1,000,000
500,000
500,000
250,000
250,000
500,000
500,000
6,000,000
2,670,000
(1,250,000)
(750,000)
6,670,000
Nominal consideration for options granted during the year ended March 31, 2005 was received.
The number of options vested as at April 1, 2003, March 31, 2004 and March 31, 2005 was nil, 250,000 and 2,500,000
respectively.
The market prices of shares of the Company at the dates of exercise of share options during the year ended March 31, 2005
was at a range of HK$1.78 to HK$1.84 (2004: Nil).
85
(B)
NOTES TO THE
(C)
IDTS Option Scheme
The IDTS Option Scheme was adopted on August 12, 1998 and will continue in operation for a maximum of ten years from
such date.
Pursuant to this scheme, the committee (“IDTS Committee”) appointed by the board of directors of IDTS shall offer to grant
options to selected eligible participants who may include full-time employees of IDTS and its subsidiaries (“IDTS Group”)
and confirmed full-time employees of the Company and its subsidiaries not employed under the IDTS Group but who are
involved in providing management services to the IDTS Group; and in both cases, the participants must have been in fulltime employment for at least one year on or prior to the date of the grant of an option and are of the rank of supervisor (or
equivalent rank) or above. A director of IDTS who satisfies the aforesaid criteria may only be granted an option if such grant
of option and the related issue and allotment of shares of IDTS (“IDTS Shares”) are approved by the shareholders of IDTS.
Substantial shareholders of IDTS (as defined in the Companies Act of Singapore) are not eligible to participate in the IDTS
Option Scheme.
86
The maximum number of IDTS Shares in respect of which options may be granted under the IDTS Option Scheme, when
aggregated with any IDTS Shares subject to any other share option schemes of IDTS, shall not exceed 10% of the total
issued share capital of IDTS from time to time. The total number of IDTS Shares in respect of which options may be granted
to an eligible participant shall not exceed 25% of the total number of IDTS Shares in respect of which options may be
granted under the IDTS Option Scheme. Not more than 50% of the total number of IDTS Shares in respect of which options
may be granted under the IDTS Option Scheme may be granted to the executive directors of IDTS, general managers and
staff of equivalent rank and above.
The subscription price for an option granted under the IDTS Option Scheme shall be the higher of (i) a price to be determined
by the IDTS Committee, such price being not less than 85% of the average of the last dealt prices of the IDTS Shares (“IDTS
Market Price”) on the Singapore Exchange Securities Trading Limited (“SGX-ST”) for the five consecutive trading days
immediately preceding the date of grant; and (ii) the nominal value of a IDTS Share. In compliance with the requirements of
Chapter 17 of the Rules Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”), no option was
granted with a subscription price set at a discount to the IDTS Market Price since September 1, 2001.
An offer for grant of an option under this scheme must be accepted within 30 days from the date of offer, and HK$1 is
payable as consideration on acceptance. A granted option shall be exercisable during the period commencing after the first
anniversary of the date of grant (or such later date as the IDTS Committee may determine) and expiring on the date
immediately preceding the fifth anniversary of the date of such grant.
Whilst the IDTS Option Scheme is subject to its scheme rules and the listing rules of the SGX-ST, the requirements under
Chapter 17 of the Listing Rules, if more onerous, shall apply.
IDTS Option Scheme (continued)
The movements of the share options under the IDTS Option Scheme during the year ended March 31, 2004 and the balances
at March 31, 2004 are set out below:
Outstanding
at
Participants
Date of grant
(M/D/Y)
Exercisable period
(M/D/Y)
Directors
12.29.1998
12.29.1998
12.29.1998
8.14.2000
8.14.2000
12.30.1999 to 12.28.2003
12.30.2000 to 12.28.2003
12.30.2000 to 12.28.2003
8.15.2002 to 8.13.2005
8.15.2004 to 8.13.2005
US$0.616
US$0.616
US$0.616
S$2.149
S$2.149
125,000
125,000
–
–
–
–
–
65,000
100,000
100,000
Other employees 12.29.1998
12.29.1998
8.14.2000
8.14.2000
8.14.2000
1.12.2001
1.12.2001
12.30.1999 to 12.28.2003
12.30.2000 to 12.28.2003
8.15.2002 to 8.13.2005
8.15.2003 to 8.13.2005
8.15.2004 to 8.13.2005
1.13.2003 to 1.11.2006
1.13.2005 to 1.11.2006
US$0.616
US$0.616
S$2.149
S$2.149
S$2.149
S$1.424
S$1.424
233,750
1,447,250
772,500
200,000
672,500
155,000
155,000
–
(65,000 )
(100,000 )
–
(100,000 )
–
–
3,886,000
–
Exercised
during
the year
Lapsed/
cancelled
during
the year
Outstanding
at
3.31.2004
(125,000)
(125,000)
–
–
–
–
–
(65,000 )
–
–
–
–
–
100,000
100,000
(175,500)
(1,252,250 )
–
–
–
(155,000)
–
(58,250 )
(130,000)
–
–
–
–
(125,000)
–
–
672,500
200,000
572,500
–
30,000
(1,832,750 )
(378,250)
1,675,000
The movements of the share options under the IDTS Option Scheme during the year ended March 31, 2005 and the balances
at March 31, 2005 are set out below:
Exercise
price
per share
S$
Outstanding
at
4.1.2004
Exercised
during
the year
Lapsed/
Cancelled
during
the year
Outstanding
at
3.31.2005
–
–
–
–
100,000
100,000
Participants
Date of grant
(M/D/Y)
Exercisable period
(M/D/Y)
Directors
8.14.2000
8.14.2000
8.15.2002 to 8.13.2005
8.15.2004 to 8.13.2005
2.149
2.149
100,000
100,000
Other employees
8.14.2000
8.14.2000
8.14.2000
1.12.2001
8.15.2002 to 8.13.2005
8.15.2003 to 8.13.2005
8.15.2004 to 8.13.2005
1.13.2005 to 1.11.2006
2.149
2.149
2.149
1.424
672,500
200,000
572,500
30,000
(165,000)
–
(50,000)
–
–
–
(15,000)
–
507,500
200,000
507,500
30,000
1,675,000
(215,000)
(15,000)
1,445,000
Exercise
price
per share
87
(C)
NOTES TO THE
(C)
IDTS Option Scheme (continued)
The number of options vested as at April 1, 2003, March 31, 2004 and March 31, 2005 was 2,858,500, 972,500 and 1,445,000
respectively.
The market price of shares of IDTS at the date of exercise of share options during the year ended March 31, 2005 was at a
range of HK$10.52 to HK$12.23 (2004: HK$6.643 to HK$9.149) per share.
The financial impact of share options granted is not recorded in the respective company’s balance sheet until such time as the
options are exercised, and no charge is recognised in the income statement in respect of the value of options granted in the year.
Upon the exercise of the share options, the resulting shares issued are recorded by the respective company as additional share
capital at the nominal value of the shares, and the excess of the exercise price per share over the nominal value of the shares is
recorded by the respective company in the share premium account. Options which lapse or are cancelled prior to their exercise
date are deleted from the register of outstanding options.
25. RESERVES
88
Share
premium
HK$’M
Contributed
surplus
HK$’M
Retained
profits
HK$’M
THE COMPANY
At April 1, 2003
Premium arising on issue of shares
Dividends
63.6
3.8
–
–
126.2
–
–
–
240.8
–
61.6
(145.3)
430.6
3.8
61.6
(145.3)
At March 31, 2004
Premium arising on issue of shares
Dividends
67.4
1.4
–
–
126.2
–
–
–
157.1
–
165.4
(187.6)
350.7
1.4
165.4
(187.6)
At March 31, 2005
68.8
126.2
134.9
329.9
Total
HK$’M
The contributed surplus of the Company represents the difference between the aggregate net assets of the subsidiaries acquired
by the Company under the group reorganisation in 1990 and the nominal amount of the Company’s shares issued for the acquisition,
less the amount capitalised as a result of the bonus issue of shares in 2000.
In addition to retained profits, under the Companies Act 1981 of Bermuda (as amended), contributed surplus is also available for
distribution to shareholders. However, a company cannot declare or pay a dividend, or make a distribution out of contributed
surplus, if:
(a)
the Company is, or would after the payment be, unable to pay its liabilities as they become due; or
(b)
the realisable value of the Company’s assets would thereby be less than the aggregate of its liabilities and its issued share
capital and share premium accounts.
In the opinion of the directors, the Company’s reserves available for distribution to shareholders as at March 31, 2005 was HK$261.1
million (2004: HK$283.3 million), which comprises the aggregate of contributed surplus and retained profits of the Company.
26. MAJOR NON-CASH TRANSACTIONS
In 2004, the Group entered into a finance lease in respect of property, plant and equipment with a total capital value at the
inception of the lease of HK$0.4 million.
27. OPERATING LEASE ARRANGEMENTS
At the balance sheet date, the Group was committed to make the following future minimum lease payments under non-cancellable
operating leases which fall due as follows:
Land and buildings
Within one year
In the second to fifth year inclusive
After five years
Office equipment and motor vehicles
Within one year
2005
HK$’M
2004
HK$’M
36.5
76.8
4.8
30.3
64.8
15.5
118.1
110.6
1.8
2.7
0.9
1.0
4.5
1.9
At the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments in respect of
investment properties rented out:
The Group
The Group
2004
HK$’M
0.1
–
0.7
0.1
0.1
0.8
The Company had no operating lease commitments at the balance sheet date.
28. CAPITAL COMMITMENTS
The Group
Capital expenditure in respect of acquisition of
property, plant and equipment
– authorised but not contracted for
– contracted for but not provided in the financial statements
The Company had no capital commitments at the balance sheet date.
2005
HK$’M
2004
HK$’M
13.2
2.6
91.8
7.5
15.8
99.3
89
Within one year
2005
HK$’M
NOTES TO THE
29. CONTINGENT LIABILITIES
At the balance sheet date, the Company has given guarantees to the extent of HK$416.8 million (2004: HK$172.1 million) to
certain banks to secure the credit facilities granted to its subsidiaries.
30. FORWARD CONTRACT COMMITMENTS
At the balance sheet date, the Group has the following outstanding forward contract commitments:
The Group
2005
2004
EUR 35,315,474
GBP 6,320,000
AUD 4,789,000
US$63,347,495
EUR2,500,000
GBP1,000,000
–
US$4,987,510
Principal amounts of forward contracts held for
hedging purposes against trading transactions
and monetary assets and liabilities:
90
Sales of Euro
Sales of Great Britain Pounds
Sales of Australian Dollars
Purchases of United States Dollars
The Company had no forward contract commitments at the balance sheet date.
31. RETIREMENT BENEFITS SCHEMES
The Group principally operates defined contribution retirement schemes for all qualifying employees, including directors. The
assets of the schemes are held separately from those of the Group in funds under the control of independent trustees.
The retirement scheme cost represents contributions payable to the funds by the Group at rates specified in the rules of the
schemes. Where there are employees who leave the schemes prior to vesting fully in the contributions, the contributions payable
by the Group are reduced by the amount of forfeited contributions.
The Group operates a Mandatory Provident Fund Scheme (the “MPF” Scheme) for all qualifying employees in Hong Kong. All
qualifying employees are required to participate in the MPF Scheme. Mandatory benefits are being provided under the MPF
Scheme.
The employees of the Company’s PRC subsidiaries are members of the state-managed retirement benefits scheme operated by
the PRC government. The Company’s PRC subsidiaries are required to contribute a certain percentage of their payroll to the
retirement benefits scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefits scheme
is to make the required contributions under the scheme.
32. PRINCIPAL SUBSIDIARIES
Details of the Company’s principal subsidiaries, all of which are wholly-owned by the Company except for those subsidiaries
within the LCD consumer electronic products business division are 63% owned by the Company, at March 31, 2005 are as follows:
Name of subsidiary
Place of
incorporation/
establishment
Nominal value
of issued
ordinary share/
registered capital
Principal activities
Singapore
S$35,122,525
Investment holding
Exact-Time Company Limited
Hong Kong
HK$2
Manufacture of consumer
electronic products and plastic
parts and provision of surface
mount technology assembly
services
展科電子（深圳）有限公司**
(Cheer Win Electronics
(Shenzhen) Co. Ltd.)
PRC
US$420,000
Manufacture and sales of
consumer electronic products
Huger Electronics GmbH
Germany
DM3,500,000*
Marketing and distribution of
IDT Technology Limited
Hong Kong
HK$2
Trading of consumer electronic
products
Rich Win Electronics Limited
Hong Kong
HK$2
products
King Win Electronics
Limited
Hong Kong
HK$20
electronic products
IDT Data System Limited
Hong Kong
HK$2
products
IDT Sonicvision Limited
Hong Kong
HK$100
products
Ming Win Electronics Limited
Hong Kong
HK$2
electronic products
IDT Electronic Products
Limited
Hong Kong
HK$2
products
Digital media products business
Electronic learning products business
91
IDT Holdings (Singapore)
Limited
LCD consumer electronic products business
NOTES TO THE
32. PRINCIPAL SUBSIDIARIES (continued)
Place of
incorporation/
establishment
Nominal value
of issued
ordinary share/
registered capital
萬威電訊（深圳）有限公司
(Integrated Display Technology
Telecommunications
(Shenzhen) Co., Ltd.)**
PRC
RMB11,000,000
Manufacture and sales of
telecommunication products
Super Win Electronics
Limited
Hong Kong
HK$2
Manufacture of
telecommunication products
IDT Communication
Technology Limited
Hong Kong
HK$2
Trading of telecommunication
products
Tekcom Industries Limited
Hong Kong
HK$10,000
Trading of telecommunication
products
Oregon Scientific Asia Pacific
Limited
Hong Kong
HK$2
Oregon Scientific Australia
Pty Limited
Australia
A$6,010,000
Oregon Scientific Brasil Ltda
Brazil
BRL120,000
Oregon Scientific (Deutschland)
GmbH
Germany
DM2,550,000
Oregon Scientific France
S.A.R.L.
France
EUR3,500,000
Oregon Scientific Global
Distribution Limited
Hong Kong
HK$2
Oregon Scientific Ibérica, S.A.
Spain
EUR300,000
Oregon Scientific Italia
S.p.A.
Italy
EUR2,156,000
Oregon Scientific South East Asia
Pte. Limited
Singapore
S$100,000
Name of subsidiary
Telecommunications products business
92
Sales and distribution business
32. PRINCIPAL SUBSIDIARIES (continued)
Name of subsidiary
Place of
incorporation/
establishment
Nominal value
of issued
ordinary share/
registered capital
Oregon Scientific (U.K.)
Limited
United
Kingdom
GBP2,400,002
Oregon Scientific, Inc.
United States
of America
US$2,060,000
歐西亞貿易（上海）有限公司**
(Oregon Scientific Enterprise
(Shanghai) Limited)
PRC
US$1,100,000
歐西亞商貿（北京）有限公司**
(Oregon Scientific Trading
(Beijing) Co. Ltd.)
PRC
US$900,000
IDT (Japan) Limited
Japan
JPY30,000,000
products
IPM Concepts Limited
Hong Kong
HK$2
products
Integrated Display Technology
Limited
Hong Kong
HK$6,000,000
Provision of group
administrative services
萬威電子科技（深圳）有限公司**
IDT Electronics Technology
(Shenzhen) Company Limited)
PRC
US$5,300,000
Provision of group research and
development services
Sales and distribution business (continued)
Corporate
Huger Electronics GmbH has paid-up surplus of DM1,800,000 in addition to the issued share capital of DM3,500,000.
**
These are wholly foreign owned enterprises established in the PRC.
Except for Exact-Time Company Limited, King Win Electronics Limited, Ming Win Electronics Limited and Super Win Electronics
Limited which operate in the PRC and the investment holding companies which have no definite place of operation, all of the
above subsidiaries operate principally in their respective place of incorporation/establishment.
The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affect the results or assets
of the Group. To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.
None of the subsidiaries had any debt securities outstanding at the end of the year, or at any time during the year.
*
93
OFFICES &
FACILITIES
Hong Kong Headquarters
IDT International Limited
Integrated Display Technology Limited
Block C, 9/F., Kaiser Estate Phase 1,
41 Man Yue Street,
Hunghom, Kowloon,
Hong Kong
Tel: 852 2764 7873
Fax: 852 2765 6620
Email: [email protected]
Website: www.idthk.com
PRC – manufacturing facilities
IDT R&D Centre
Xixian Chentian Industrial Estate,
Xixian Town, Bao An County,
Shenzhen, PRC
Tel: 86 755 2793 6857
Fax: 86 755 2793 6897
Oregon Scientific France S.A.R.L.
1/3 Avenue Francis de Pressense,
93200 Saint Denis, France
Tel: 33 1 5593 2688
Fax: 33 1 5593 2699
Website: www.oregonscientific.fr
Oregon Scientific (Deutschland) GmbH
Huger Electronics GmbH
Siemensstraβe 1,
63263 Neu-Isenburg,
Germany
Tel: 49 6102 7985 0
Fax: 49 6102 7985 344
Website: www.oregonscientific.de
NORTH AMERICA
OFFICES AND FACILITIES
EUROPE
European Headquarters
Oregon Scientific Italia S.p.A.
Centro Direzionale Colleoni, Palazzo
Taurus 2, Viale Colleoni, 3
20041 Agrate Brianza (MI), Italy
Tel: 39 039 656 181
Fax: 39 039 643 3111
Website: www.oregonscientific.it
Oregon Scientific Ibérica, S.A.
C/Caléndula, 95 Edificio O. Miniparc II,
La Moraleja, 28109 Alcobendas,
Madrid, Spain
Tel: 34 91 650 3795
Fax: 34 91 650 3856
Website: www.oregonscientific.es
Oregon Scientific (U.K.) Limited
Unit 1, The Switchback,
Gardner Road, Maidenhead,
Berkshire SL6 7RJ, UK
Tel: 44 1 628 580 154
Fax: 44 1 628 634 981
Website: www.oregonscientific.co.uk
Portland Office
19861 SW 95th Place,
Tualatin, OR 97062, USA
Tel: 1 503 783 5100
Fax: 1 503 691 6208
Website: www2.oregonscientific.com
New York Showroom
Suite 757, 200 Fifth Avenue,
New York, New York 10010, USA
Tel: 1 212 647 1608
Fax: 1 212 647 0241
Massachusetts Office
200 Friberg Parkway, Suite 1010,
Westborough, MA 01581, USA
Tel: 1 508 475 0030
Fax: 1 508 519 0078
ASIA PACIFIC
Oregon Scientific Global Distribution Limited
Block C, 9/F., Kaiser Estate,
41 Man Yue Street,
Hunghom, Kowloon,
Hong Kong
Tel: 852 2764 7182
Fax: 852 2765 7435
Website: www.oregonscientific.com
Oregon Scientific Enterprise (Shanghai) Limited
（Officially known as 歐西亞貿易（上海）有限公司）
18F, Harbour Ring Huangpu Centre,
No. 98 Liu He Road,
Shanghai 200001, PRC
Tel: 86 21 6350 7072
Fax: 86 21 6350 7074
Oregon Scientific Trading (Beijing) Co., Ltd
（Officially known as 歐西亞商貿（北京）有限公司）
Room 1602-1604, Yingjia Centre,
No. 10B, Dong San Huan Mid. Road,
Chaoyang District,
Beijing, 100022, PRC
Tel: 86 10 6567 6353
Fax: 86 10 6567 6700
Oregon Scientific Australia Pty Limited
Level 1, 73 York Street,
Sydney NSW 2000,
Australia
Tel: 61 2 8297 4700
Fax: 61 2 9262 2700
Website: www.oregonscientific.com.au
Oregon Scientific (Japan) Limited
IDT (Japan) Limited
Yuemu Building, 8/F., 1-14-5, Higashi Ueno,
Taito-ku, Tokyo 110-0015, Japan
Tel: 81 3 3837 3791
Fax: 81 3 3837 3980
OFFICES AND FACILITIES
Oregon Scientific Brasil Limitada
R. Arizona, 1366 8th Floor, Conjunto 82,
Brooklin Novo, São Paulo-SP,
04567-003, Brazil
Tel: 55 11 5103 9800
Fax: 55 11 5103 9810
Website: www.oregonscientific.com.br
Oregon Scientific South East Asia Pte. Limited
250 North Bridge Road,
#31-01 Raffles City Tower,
Singapore 179101
Tel: 65 6535 1226
Fax: 65 6334 5008
LATIN AMERICA

Annual Report

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