NTEEP Announces 2008 Q2 Results

Q2 2008: Sales up 93.0%, Operating income up 15.7% and EPS at 0.97 US cent

HONG KONG, Aug. 4 /Xinhua-PRNewswire/ -- Nam Tai Electronic and Electrical Products Limited (“NTEEP” or “the Company”) (Stock code: 2633), an electronics manufacturing and design services provider, today announced the unaudited consolidated results of the Company and its subsidiaries (the “Group”) for the second quarter of 2008 and the six months ended 30 June 2008 respectively.

During the three months ended 30 June 2008, the Group recorded sales of US$146.2 million, representing an increase of 93.0%. Sales of the TCA segment (Zastron business unit) and LCDP segment (Jetup business unit) for the second quarter of 2008 decreased by 48.0% and 6.1% respectively when compared with the same period of 2007. These two business segments, TCA (Zastron business unit) and LCDP (Jetup business unit), acquired under the Reorganization contributed sales of US$72.8 million. As compared with the same period last year, sales of CECP segment (NTEEP business unit) decreased by 3.1%, which was mainly due to the significant decrease in sales of mobile phone accessories, offset by the increase in sales of home entertainment devices.

Gross profit for the three months ended 30 June 2008 increased by 61.9% from US$13.4 million to US$21.7 million as compared with the same period last year, primarily driven by the results of TCA and LCDP segments which had not been included in the same period last year as the Reorganization was completed only on 31 December 2007.

As compared with the same period last year, operating income for the three months ended 30 June 2008 increased by 15.7% while profit for the period attributable to the equity holders of the Company for the three months ended 30 June 2008 decreased by 66.6% because the profit for the period attributable to the equity holders of the Company of the same period last year included the gain on disposal of investment in TCL Corp.

For the six months ended 30 June 2008, sales of the Group increased by approximately 124.9% from US$130.3 million to US$293.0 million when compared with the same period last year. Gross profit and operating income increased by approximately 88.3% and 49.3% respectively as compared with the same period last year. For the same reasons as stated in the paragraph above, profit attributable to the equity holders of the Company for the interim period of year 2008 decreased by approximately 46.7% as compared with the same period last year.

According to the pro forma information mentioned in note (f) of Key Highlights, if the impact of the one-off transaction about the gain on disposal of investment in TCL Corp. and impairment loss on goodwill had been excluded, EBITDA for the second quarter and the first half year of 2008 would have increased by 43.2% and 77.8% respectively as compared with the same period last year. Furthermore, if the Reorganization had been completed on 1 January 2007, on an unaudited basis, total group sales for the second quarter of 2007 would have been US$197.4 million, operating income and EBITDA (the impact of the one-off transactions mentioned above was excluded) would have been US$14.5 million and US$20.8 million respectively. Compared with this unaudited pro forma information for the second quarter of 2007, sales for the second quarter of 2008 would have decreased by 26.0%, operating income and EBITDA would have decreased by 18.9% and 12.7% respectively. The unaudited information is for illustrative purposes only and is not necessarily an indication of sales and results of operations of the Group that actually would have been achieved had the Reorganization been completed on 1 January 2007, nor is it intended to be a projection of future results.

Recent global adverse economic conditions (which, we believe, have been primarily driven by the sub-prime crisis in the US) aggravated the Company’s results in the past quarter and may exacerbate the difficult business environment we currently face and could result in negative effects on our results of operations over the next several quarters. Additionally, we also face issues such as the continuing appreciation of the exchange rate of Renminbi against US dollar, the effects of changing tax and labour laws in the PRC, shortages of electricity supply and increases in overhead expenses resulting from inflation.

To respond to the challenges surfacing from the current business environment, management has continued to focus efforts to optimize operating efficiencies by realigning production capacity to higher margin product offerings and has sought to diversify the Company’s customer base. Management believes that the Company has begun to realize limited benefits from the Company’s simpler organizational structure implemented at the beginning of 2008, which management believes has fostered, and will continue to foster a more efficient and effective exchange of know-how and technology among our group companies, reduced overhead costs and facilitated stronger management controls.

During the second quarter of 2008, the foundation of the first of the Company’s planned new factories in Wuxi in the Jiangsu Province of China was completed and the Company had, according to its schedule, selected a contractor for the mechanical and electrical construction required for the expansion project. Management is optimistic that the Company will be in a position to begin mass production at the new Wuxi facility in early to mid-2009.

About NTEEP

For more information about NTEEP, please visit its website at http://www.namtaieep.com . For more information about Nam Tai Electronics, Inc., please visit its website at http://www.namtai.com .

Nam Tai Electronic & Electrical Products Limited

2008 Q2 Results Key Highlights

(In thousands of US Dollars, except as otherwise stated)

Quarterly Results(a) Half-year Results(a)

Q2 2008 Q2 2007 YoY 1H 2008 1H 2007 YoY

(%) (%)

Sales

(Revenue)(b) 146,168 75,732 93.0 293,006 130,293 124.9

Gross

Profit 21,712 13,412 61.9 42,016 22,312 88.3

% of sales 14.9% 17.7% 14.3% 17.1%

Operating

income(c) 11,723 10,133 15.7 23,330 15,631 49.3

% of sales 8.0% 13.4% 8.0% 12.0%

Per share

(US cents) 1.33 1.15 15.7 2.65 1.77 49.7

Profit for

the period

attributable

to equity

holders of

the Company(d) 8,560 25,602 (66.6) 17,082 32,073 (46.7)

% of sales 5.9% 33.8% 5.8% 24.6%

Basic

earnings

per share

(US cent(s)) 0.97 2.90 (66.6) 1.94 3.64 (46.7)

Diluted

earnings

per share

(US cent(s)) 0.97 2.90 (66.6) 1.94 3.64 (46.7)

Weighted

average

number of

shares

(‘000)

Basic 881,671 881,671 881,671 881,671

Diluted(e) 881,671 881,671 881,671 881,671

Notes:

(a) Results in the first and second quarters of 2008 included the results

of Consumer Electronic and Communication Products (“CECP”) business

segment (“NTEEP business unit”), Telecommunication Component

Assembly (“TCA”) business segment (“Zastron business unit”) and

Liquid Crystal Display (“LCD”) Products (“LCDP”) business segment

(“Jetup business unit”) upon the completion of reorganization of Nam

Tai Electronics, Inc. (NYSE stock code: NTE) (“NTEI”) and its

subsidiaries on 31 December 2007 (the “Reorganization”). Results in

the first and second quarters of 2007 included the results of CECP

business segment only.

(b) Included sales from the TCA business segment and the LCDP business

segment in the sum of US$150.1 million in the first half year of 2008.

TCA business segment and LCDP business segment became part of the

Group upon the completion of Reorganization. If such sales had been

excluded, sales of the Group would have increased by 9.7% as compared

with the first half year of 2007.

(c) Operating income = gross profit + other income - other expenses -

selling and distribution costs - administrative expenses - research

and development expenses.

(d) Included (i) a gain of US$43.8 million in the second quarter of 2007

on disposal of the investment in TCL Corporation (“TCL Corp.”); and

(ii) a non-cash impairment loss of US$24.3 million in the second

quarter of 2007 on goodwill arising from the Group’s acquisition of

Namtek Group (comprising Namtek Japan Company Limited and Shenzhen

Namtek Co., Ltd. (“Namtek Shenzhen”) in May 2005.

(e) Excluded outstanding share options of 22,135,000 which had not been

exercised as at 30 June 2008 (as at 30 June 2007: 14,520,000). These

outstanding share options consist of (i) 2,720,000 share options under

the Pre-IPO Share Option Scheme adopted on 22 March 2004; and (ii)

19,415,000 share options granted to several directors and certain

employees of the Group on 5 February 2008 under the Share Option

Scheme adopted on 8 April 2004. The exercise period and exercise

price of these newly granted share options are from 5 February 2008 to

4 February 2011 and HK$1.85 per share, respectively.

(f) If the Reorganization had been completed on 1 January 2007, the

unaudited pro forma financial information of the Enlarged NTEEP

(including Zastron business unit and Jetup business unit) for the

second quarter and the first half year of 2007 (which is for

illustration purposes only) would be as follows:

(In thousands of US Dollars, except otherwise stated)

Q2 2008 Q2 2007 Q2 2008 Q2 2007 Q2 2008

unaudited unaudited results Enlarged results

financial financial versus NTEEP’s versus

results results Q2 2007 unaudited Q2 2007

results pro forma unaudited

(%) financial pro forma

results results (%)

Sales

(Revenue) 146,168 75,732 93.0 197,414 (26.0)

Operating

income 11,723 10,133 15.7 14,458 (18.9)

EBITDA(g) 18,194 12,706 43.2 20,830 (12.7)

Basic

earnings

per share(US

cent(s))(g) 0.97 0.69 40.6 1.23 (21.1)

1H 2008 1H 2007 1H 2008 1H 2007 1H 2008

unaudited unaudited results Enlarged results

financial financial versus NTEEP’s un versus 1H

results results 1H 2007 audited 2007

results pro forma unaudited

(%) financial pro forma

results results (%)

Sales

(Revenue) 293,006 130,293 124.9 388,240 (24.5)

Operating

income 23,330 15,631 49.3 23,241 0.4

EBITDA(g) 36,277 20,407 77.8 35,370 2.6

Basic

earnings

per share(US

cents)(g) 1.94 1.43 35.7 2.42 (19.8)

(g) The one-off transactions mentioned in Note (d) above had been excluded

in the calculation of EBITDA and basic earnings per share.

For more information, please contact:

Wong Long Kee

Tel: +852-2263-1065

Fax: +852-2263-1223

Email: lkwong@namtai.com.hk