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Review of Operations
The ELP business recorded a strong performance in
the financial year 2005. Revenue rose significantly by
approximately 1.2 times or 115.1% to US$281.1
million following the well-executed roll out of the
award-winning V.Smile TV Learning System. Supported
by effective and efficient operations, profitability
rebounded sharply. During the financial year 2005, the
ELP business accounted for 27.5% of Group revenue,
compared to 14.3% in the financial year 2004.
VTech Holdings Ltd Annual Report 2005 13
V.Smile won top industry awards in FY2005
United States
• Best Overall Toy of the Year
• Best Educational Toy
of the Year
Germany
• Toy Innovations Award
2005 - Learning Category
United Kingdom
• Electronic Learning
Toy of the Year
Successfully Rebuilding
US Sales
The successful launch of V.Sm ile has
allowed the business to rebuild sales and
regain lost shelf space gradually in the US
market, while further strengthening its
leadership position in Europe. In the
financial year 2005, revenue from the
North American market rebounded sharply
by more than 3 times or 328.1% to
US$108.3 million, accounting for 38.5% of
total ELP revenue, com pared to 19.4% of
total ELP revenue in the financial year
2004. Revenue from the European market
also showed a robust increase of 60.3% to
US$160.0 million, accounting for 56.9% of
total ELP revenue.
Successful Start for V.Smile
The V.Sm ile TV Learning System is a
dynamic video game platform for children
aged 3-7, comprising a console that plugs
into a television together with
interchangeable software cartridges. The
product hit the shelves in August 2004
with a total of 10 "Smartridges", including
popular children's characters from four
licensors: Disney, Marvel, Joester Loria
Group - American Greetings and
Warner Brothers.
The response to V.Smile from both the
trade and consumers has been
overwhelmingly positive, making it a "star"
in the ELP market worldwide. Not only
have the consoles sold in greater volumes
than our initial forecasts, but the ratio
of Sm artridges to consoles has also
been higher.
V.Smile won more than 20 awards globally
during the financial year 2005, including
the "Best Educational Toy of the Year" and
the "Best Overall Toy of the Year" from the
US Toy Industry Association; as well as the
"Toy Innovations Award 2005 - Learning
Category" at the Nurem berg International
Toy Fair. These are recognised as the top
industry aw ards worldwide.
The success of V.Smile reflects its well
thought-through product design and
attractive software, which is educational,
fun, highly interactive and animated.
The system provides the same fun
videogaming experience for pre-school
children as that enjoyed by older children,
while parents are assured of content that
is neither violent nor inappropriate in
other ways.
ELP Revenue by Region