ZNDT Zindart Limited ADS (MM)

Zindart Limited (NASDAQ:ZNDT) today announced results of operations for the fiscal year ended March 31, 2005. Zindart announced that revenues for the fiscal year ended March 31, 2005 were $43.2 million, compared to $49.7 million for the previous year ended March 31, 2004. Net loss for the year ended March 31, 2005 was $7.1 million, or $0.75 per share, compared to a loss of $5.3 million, or $0.60 per share, in the previous year. Due to the planned sale of the Zindart Manufacturing division, the revenues for both fiscal 2005 and fiscal 2004 reported above reflect only the results of Zindart's Corgi operating division. Operating results of Zindart Manufacturing division and Hua Yang Printing have been reclassified in Zindart's financial statements and reported as losses from discontinued operations for both fiscal 2005 and fiscal 2004. Losses from discontinued operations, net of tax, were $115,000 in fiscal 2005 and $1.5 million in fiscal 2004. Zindart announced that several facets of its balance sheet have improved, as a function of the company's focus on working capital management. The ratio of cash and cash equivalents to current liabilities of continuing operations as of March 31, 2005 was 0.61, up from 0.04 as of March 31, 2004. The company's current ratio (the ratio of current assets to current liabilities) at year-end was 1.55, a 32 percent improvement compared to 1.17 at the end of fiscal 2004. "While volatile conditions in the toy and collectibles markets caused revenues to fall short of targets, we made advances on the strategy we set out four years ago," said Peter Gardiner, Chairman, Zindart. "We have stayed focused on increasing the intrinsic value of the company for our shareholders over the long term," "During this very difficult period, solid working capital management has allowed us to invest in new product development, and we have several innovative new lines from Corgi Classics shipping to mass retailers for the holiday season," Gardiner continued. "We are now free of any long-term debt, and our global marketing strategy is starting to have a beneficial impact on sales." In March 2005, Zindart's Board of Directors resolved to sell the company's Zindart Manufacturing division. "Negotiations are underway and an update on the sale effort will be announced as soon as discussions have concluded and/or a definitive agreement for the sale has been executed by the parties," Gardiner said. In May 2004, the company sold its Hua Yang operating unit for $24 million, less debt of $10 million, thereby strengthening the balance sheet through the sale of a non-strategic asset, generating approximately $14 million of cash. Other positive improvements to the balance sheet since Gardiner assumed control of the company five years ago include the paying off of the company's long-term debt, a reduction of $18 million. "Marketing and sales personnel have been located in local markets worldwide. This has resulted in the acquisition of new customers for each region in fiscal 2005, including several of the big five mass merchandisers in the U.S., which control a major portion of the consumer goods retail market. Orders from the bigger chains are starting to grow," Gardiner said. During fiscal year 2005, Zindart installed new top management at Corgi, the company's branded die-cast collectible vehicles unit. After reviewing the company's status, Corgi CEO George Volanakis, a former senior executive with Hasbro, quickly began initiating change, including acquiring more highly visible product licenses and investing in the development of new product lines. Successes to date include the introduction of a line of 12 high quality, authentically produced Batman(TM) vehicles that hit stores this summer in time to take advantage of Warner Bros.' promotional activities for its new movie, "Batman Begins," starring Christian Bale as Bruce Wayne/Batman, Michael Caine, Liam Neeson and Katie Holmes. Volanakis also authorized the development of several new product lines to broaden Corgi into the toy market. For the holiday season, Corgi will be selling Streakerz,(TM) a line of micro racing cars that speed around their own miniature track at high speeds. Special wheels give the toy cars better traction on Corgi's action track sets. In addition to the basic set, Corgi will sell extra Streakerz cars in a blister pack - perfect for a stocking stuffer. "While maintaining operating expenses near previous levels, George has managed to make significant investments in new products," Gardiner said. "These products, combined with new marketing strategies, are expected to improve fiscal year 2006 sales in both the U.K. and U.S., even in a difficult toy environment. I am pleased to say that customer reaction to these new products has been encouraging." Zindart's 20-F (2005 Annual Report) is available on Zindart's website, at http://www.zindart.com. About Zindart Zindart's current divisions include Corgi Classics Limited and Zindart Manufacturing, which is classified as discontinued. Corgi Classics Limited develops and markets high-quality lines of die-cast collectible products sold through retail channels in Europe, Canada, Mexico, the United States and elsewhere. Zindart Manufacturing provides both product design and high quality turnkey manufacturing for multi-national companies requiring rapid, high-volume production of intricate die-cast and plastic promotional items, collectibles and gift items. Founded in 1978, Zindart is based in Hong Kong with offices in the United States and the United Kingdom. Zindart has a website at www.zindart.com. Collectors can find more information at www.corgiclassics.com or by calling 1-800-800 CORGI. Certain statements in this release are forward-looking. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, in addition to those discussed above and without limitation, changes in market demand for Zindart's products, changes in economic conditions, dependence on certain customers and other risks described in the company's annual report on Form 20-F for the fiscal year ended March 31, 2005. The company undertakes no obligation to revise these forward-looking statements to reflect subsequent events or circumstances.