Vtech 2007 Annual Report Download - page 15

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VTech Holdings Ltd
Annual Report 2007 13
Switching mode power supplies
and professional audio equipment
continued to be the leading
product categories, accounting for
28.2% and 27.7% of total CMS
revenue respectively, followed by
communications products and home
appliances. Europe remained the
leading source of revenue, representing
48.4% of total CMS revenue, followed
by North America at 36.6% and Asia
Pacifi c at 15.0%.
To cope with the growing demand, the
business added a new factory building
at its existing plant in Liaobu town,
Dongguan city. The new facility will
increase the capacity of the business by
some 50% and will begin operations in
the second quarter of the fi nancial
year 2008.
While adding capacity to cater for
business growth, the business moved
aggressively to counter the effects of
cost pressures. Materials prices rose
sharply and unlike in previous years,
the Group was unable to offset these
rises through improved contract terms
with material suppliers. Additional cost
pressures came from the continued rise
in the Renminbi and wages in southern
China. These factors were largely offset
by economies of scale and improved
productivity. Among the improvements,
a realignment of production reduced
the manufacturing cycle time,
lowering overtime payments, electricity
consumption and equipment downtime.
Efforts were also made to improve
service levels, despite the surge in
production volumes and cost controls.
Order processing time was improved
by 50%. Outgoing quality level, as
measured by failures per million units
of output (ppm), improved to within
a range of 250 – 750 ppm. The
business received four awards from its
customers in the fi eld of professional
audio equipment, communications
products and medical products during
the fi nancial year 2007, in recognition
of its outstanding service and the high
level of support given to the customers’
business development.
US$ million
CMS REVENUE
IN LAST 5 YEARS
250
200
150
100
50
0
94.7
03
97.3
04
128.4
05
158.2
06
233.1
07
The CMS business
received four awards
from its customers,
in recognition of its
outstanding service.
05VtechReviewofOperations(E)1313 2007/7/511:39:44PM