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Letter to Shareholders
Write & Learn ArtboardTM
telecommunication products business to
be im proved in the financial year 2006.
Revenue, however, is expected to suffer in
the short term and will not return to a
grow th path until the financial year 2007,
when the revamped products hit the
shelves in the US market in early 2006. This
is despite further expansion in Europe,
which will support sales.
We expect the strong m om entum for the
ELP business to continue in the financial
year 2006. We will develop and expand the
V.Smile product range, which provides a
good platform for future growth. Although
competing products are beginning to
appear, we believe we have a head start in
product awareness and that V.Smile offers
the superior interactivity and software
choice which will allow it to remain the
market leader. We will invest further in
R&D to increase the number and variety of
Smartridges, and continue to negotiate
license agreements to expand our
portfolio of children's characters. We will
also continue to invest in our traditional
product lines and to support all our
products with the prom otional dollars
required to make them compelling from a
marketing perspective.
The global EMS industry is still in an
uptrend and is expected to deliver further
grow th in the financial year 2006. VTech's
CMS business is well positioned to take
advantage of this favourable situation to
deliver top and bottom line growth, given
its stable customer base and efficient
operations. The programme to meet RoHS
requirements w ill continue to be a m ajor
focus and new market segments will be
developed. Input costs are forecast to
rem ain stable, although manufacturing
costs will rise as a result of RoHS. The CMS
business will work to maintain margins
through strict cost control and working
closely with material suppliers.
Finally, I would like to thank my fellow
directors and senior management, as well
as all VTech employees for their
commitm ent to ensuring continued
improvem ent for the Group. My
appreciation also goes out to our
shareholders, bankers and business
partners for their invaluable support.
Looking ahead, I believe VTech has an
improved cost structure, enhanced
product ranges and the right management
to allow the Group to capitalise on its core
competencies to achieve continued
progress, and bring solid long-term returns
to shareholders.
Allan WONG Chi Yun
Chairman
Hong Kong, 22nd June 2005
VTech Holdings Ltd Annual Report 2005 05
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