Vtech 2008 Annual Report Download

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output-Vtech AR 2008_Eng_cover.iB-C B-Coutput-Vtech AR 2008_Eng_cover.iB-C B-C 2008/7/11 上午 11:20:562008/7/11 上午 11:20:56

Table of contents

  • Page 1

  • Page 2
    ... - Electronic Learning Products Review of Operations - Contract Manufacturing Services Corporate Affairs Year in Review Corporate Governance Report Directors and Senior Management Report of the Directors Independent Auditor's Report Consolidated Financial Statements Notes to the Financial Statements...

  • Page 3
    ....2% 15.8% 31.8% 1,552.0 583.0 228.9 237.6 215.7 1,463.8 540.0 194.0 201.5 182.9 6.0% 8.0% 18.0% 17.9% 17.9% Compound Annual Growth Rate 14.1% Group Revenue in Last 5 Years 58.4% 44.5% Dividends per Share in Last 5 Years Earnings per Share in Last 5 Years VTech Holdings Ltd Annual Report 2008 1

  • Page 4
    ... reported record revenue and profit, and we were able to expand net profit margin for a third consecutive year." ns in M a rk ct et du Sh Pr o are Growth Drivers a ion rat Ope Ex pa nsi on lE xc ell enc e c hi p gra Geo + Profit Attributable to Shareholders 17.9% 2 VTech Holdings...

  • Page 5
    ... added three new members to the V.Smile family to augment the basic console. The CMS business achieved record revenue for the fourth consecutive year and we are increasingly raising our profile in the electronic manufacturing services industry. The business was able to mitigate the impact of cost...

  • Page 6
    ... of V.Smile, which brought a new dimension to the ELP business, we are working to create other new categories that can become major growth drivers. One of the new product lines to be launched during the financial year 2009 is KidiCreativeâ„¢, which offers high-tech creative play for children. The...

  • Page 7
    ... OTHERS 2.5% US$37.7 million Group Revenue by Product Line (2008) Total US$1,552.0 million Telecommunication Products Contract Manufacturing Services US$248.3 million Electronic Learning Products US$615.7 million US$688.0 million 44.3% 16.0% 39.7% VTech Holdings Ltd Annual Report 2008 5

  • Page 8
    ... operational efficiency in the manufacturing process, better product engineering and higher productivity, the Group was able to improve the gross profit margin in the financial year 2008, although all businesses continued to suffer from the impact of rising labour costs in China, the appreciation of...

  • Page 9
    ... reported for the financial year 2007. The net assets per share increased by 29.2% from US$1.44 to US$1.86. WORKING CAPITAL As at 31st March 2008 and 2007 All figures are in US$ million unless stated otherwise 2008 2007 Stocks Average stocks as a percentage of Group revenue Turnover days Trade...

  • Page 10
    ... communication device, they are a stylish lifestyle accessory. Perfect Blending of Design and Technology IS6110 The industry's first instant messaging cordless phone TEL Revenue by Region (2008) TEL Revenue in Last 5 Years Total US$688.0 million NORTH AMERICA EUROPE 26.2% US$180.3 million ASIA...

  • Page 11
    ... DECT 6.0 cordless phone, which allows users to customise handsets with their own graphics. Our new V.Style series also created a new trend and standard in stores, offering high-end industrial design cordless telephones to consumers. Revenue for the financial year 2008 at the TEL business rose...

  • Page 12
    ...40.7%, compared to 51.0% in the previous financial year. Nonetheless, the V.Smile console and cartridges continued to be the top selling platform items in the electronic preschool category in the United Kingdom, France and Germany in the calendar year 2007. 10 VTech Holdings Ltd Annual Report 2008

  • Page 13
    ... typing and mouse manipulation to children as young as three years old. Both V-Motion and Cyber Pocket include V.LinkTM, a USB drive that connects children to VTech's secure online sites to unlock bonus games and track their learning progress. These new V.Smile products are also compatible with the...

  • Page 14
    ... good control over quality and cost. Our service quality is evidenced by the numerous supplier awards we receive every year. We make every effort to mitigate the effect of cost increases through economies of scale and leveraging the Group's procurement power. 12 VTech Holdings Ltd Annual Report...

  • Page 15
    .... The business accounted for 16.0% of Group revenue, against 15.9% in the previous financial year. The growth was mainly driven by new customers in the areas of professional audio equipment and radio frequency products. With a strong commitment to providing high quality and exible services to medium...

  • Page 16
    ... the latest products and marketing initiatives of the Group's businesses. Up-to-date information on the Group's development, financial data and stock information are available at the corporate website www.vtech.com. All key information can be downloaded. 14 VTech Holdings Ltd Annual Report 2008

  • Page 17
    ..., VTech focuses on initiatives supporting education, innovation and technology. During the financial year 2008, we again supported Business of Design Week as well as charity sales and blood donations organised by the Red Cross in Hong Kong. We also supported work in rural areas of mainland China...

  • Page 18
    ... return and revenue growth. Kidizoom Camera and Dora TV Globe each won "Toy of the Year 2007" awards in the Netherlands. CONTRACT MANUFACTURING SERVICES VTech Communications Limited received an award for the "Round Table Project" from a communications product customer. 16 VTech Holdings...

  • Page 19
    ... 07 ELECTRONIC LEARNING PRODUCTS V.Smile TV Learning System received the "Prima Baby Reader Awards" in the United Kingdom. Kidizoom Camera and Whiz Kid both won the "iParenting Media Awards" in the United States. March 08 TELECOMMUNICATION PRODUCTS VTech Communications, Inc. received the "Best Buy...

  • Page 20
    ... GOVERNANCE REPORT CORPORATE GOVERNANCE PRACTICES VTech Holdings Limited is incorporated in Bermuda. The Company has its primary share listing on The Stock Exchange of Hong Kong Limited ("the Hong Kong Stock Exchange") and London Stock Exchange Plc. The primary corporate governance rules applicable...

  • Page 21
    ...to the financial statements. Risk Management Committee The Risk Management Committee, comprising the executive directors, held two meetings during the year to review the Group's risk management and internal control systems. RESPONSIBILITIES IN RESPECT OF FINANCIAL STATEMENTS The Board is responsible...

  • Page 22
    ...Li & Fung Limited. Edwin YING Lin Kwan, aged 55, Executive Director and Group Chief Operating Officer, holds BSc (ME) from the University of Hong Kong. He joined the Group in 1986 as Chief Mechanical Engineer, left the Group as Chief Executive Officer of Electronic Learning Products business in 2004...

  • Page 23
    ...DELANY holds a Bachelor Degree in Marketing and Financial Management from the University of South Africa & Damlein College. Gordon CHOW, aged 52, President of VTech Technologies Canada Ltd, is responsible for both the Telecommunication Products and Electronic Learning Products business in Canada. He...

  • Page 24
    ... Services business in the Japan market including project management, manufacturing, quality assurance, engineering and materials functions. Mr. CHAN joined VTech in 1996, with 12 years prior experience in EMS industry. Mr. CHAN holds a Bachelor degree of Electronics Engineering from the Hong Kong...

  • Page 25
    ... in 1994 and has held management positions in a number of areas including internal audit and financial control of the Group. She holds an MBA degree from Manchester Business School, UK, a Master of Science degree in Information Systems from Hong Kong Polytechnic University and a Bachelor of Laws...

  • Page 26
    REPORT OF THE DIRECTORS RESERVES Movements in the reserves of the Group and the Company during the year are set out in note 18 to the financial statements. DONATIONS During the year, the Group made charitable and other donations in aggregate of US$145,000. DIRECTORS The directors who held office ...

  • Page 27
    ...associated corporations (within the meaning of Part XV of the SFO) which were required to be recorded in the register kept by the Company pursuant to Part XV of the SFO or notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Codes for Securities Transactions by Directors of...

  • Page 28
    ... a general mandate authorizing the directors to effect repurchases of the Company's own shares up to a limit of 10% of the shares in issue as at that date. PURCHASE, SALE OR REDEMPTION OF LISTED SHARES The Company has not redeemed any of its shares during the year. Neither the Company nor any of its...

  • Page 29
    ...Kong Standard on Related Services 4400 "Engagements to Perform Agreed-Upon Procedures Regarding Financial Information" issued by the Hong Kong Institute of Certified Public Accountants. The auditors have reported their factual findings on these procedures to the Board and confirmed that for the year...

  • Page 30
    ...International Accounting Standards Board and the disclosure requirements of the Hong Kong Companies Ordinance and the Bermuda Companies Act 1981. KPMG Certified Public Accountants 8th Floor, Prince's Building 10 Chater Road Central, Hong Kong 3rd July 2008 28 VTech Holdings Ltd Annual Report 2008

  • Page 31
    ... 8.5 Approved and authorised for issue by the Board of Directors on 3rd July 2008. 21.2 215.7 (127.9) 452.3 9.5 182.9 (155.3) 343.3 Allan WONG Chi Yun Director PANG King Fai Director The notes on pages 30 to 52 form part of these financial statements. VTech Holdings Ltd Annual Report 2008 29

  • Page 32
    ... of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Bermuda Companies Act 1981. The International Accounting Standards Board has issued a number of new and revised...

  • Page 33
    .... Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control...

  • Page 34
    ... Moulds Lease term 10 to 30 years or lease term, if shorter 3 to 5 years 3 to 7 years 1 year Income statements of foreign entities are translated into the Group's reporting currency at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions and balance...

  • Page 35
    ...statement. N Stocks Stocks are stated at the lower of cost and net realisable value. Cost is calculated on the weighted average or the first-infirst-out basis, and comprises materials, direct labour and an appropriate share of production overheads. Net realisable value is the estimated selling price...

  • Page 36
    ...of the Company's shares. The equity amount is recognised in the capital reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to revenue reserves). (ii) (iii) 34 VTech Holdings Ltd Annual Report 2008

  • Page 37
    ... expose it to financial risks of changes in foreign currency exchange rates and interest rates. The Group uses foreign exchange forward contracts to hedge certain exposures. The use of financial derivatives is governed by the Group's policies approved by the Board of Directors, which provide written...

  • Page 38
    ... of telecommunication and electronic products. Asia Pacific - the Group is headquartered in the Hong Kong Special Administrative Region ("Hong Kong SAR") and the Group's principal manufacturing operations are located in mainland China. Year ended 31st March 2008 North America US$ million Europe US...

  • Page 39
    ... services - tax services - other services Operating leases charges: minimum lease payments - land and buildings - others Cost of inventories Provision for stock obsolescence Provision for doubtful debts Royalties Exchange gain Forward contracts: fair value losses on cash ow hedges transferred from...

  • Page 40
    ...follows: 2008 US$ million 2007 US$ million On 27th February 2008, the Hong Kong SAR Government announced a proposed reduction in the profit tax rate from 17.5% to 16.5% applicable to the operations in Hong Kong with effect from the year of assessment 2008/09. Accordingly, the provision for deferred...

  • Page 41
    ... in issue during the year after adjusting for the number of dilutive potential ordinary shares under the employee share option scheme. 7 TANGIBLE ASSETS 2008 million 2007 million Weighted average number of ordinary shares at 31st March Effect of deemed issue of shares under the Company's share...

  • Page 42
    NOTES TO THE FINANCIAL STATEMENTS 7 TANGIBLE ASSETS (CONTINUED) Land and buildings comprise: Freehold land and buildings and long-term leasehold buildings US$ million Short-term leasehold buildings US$ million Total US$ million Cost or valuation At 1st April 2006 Transfer between categories ...

  • Page 43
    ... Unlisted investments, at cost 0.1 0.1 Trade debtors (Net of provision for doubtful debts of US$9.7 million (2007: US$12.5 million)) Other debtors and prepayments Pension assets 182.2 44.5 2.5 229.2 178.7 22.6 2.1 203.4 16 (ii) 0.1 0.2 0.1 0.2 VTech Holdings Ltd Annual Report 2008 41

  • Page 44
    ...are mature within one year from the balance sheet date. 14 CREDITORS AND ACCRUALS 2008 US$ million 2007 US$ million 13 The majority of the Group's sales are on letter of credit and on open credit with varying terms of 30 to 90 days. Certain open credit sales are covered by credit insurance or bank...

  • Page 45
    ...: Equities Bonds Cash and others The principal actuarial assumptions used for accounting purposes were: Discount rate Expected return on plan assets Future salary increases 70.0% 24.0% 6.0% 100.0% 75.9% 17.3% 6.8% 100.0% 2.8% 7.0% 5.0% 4.3% 7.0% 5.0% VTech Holdings Ltd Annual Report 2008 43

  • Page 46
    ... the further restrictions in the Hong Kong Listing Rules concerning grant of options to substantial shareholders, the maximum entitlement for any one eligible employee is that the total number of shares issued and to be issued upon exercise of options granted and to be granted in any 12-month period...

  • Page 47
    ... such options were deemed to be granted and accepted. An aggregate of 1,965,000 share options were exercised at the exercise price of HK$15.0 per share during the financial year. The weighted average closing prices of the shares of the Company immediately before the dates on which the options were...

  • Page 48
    ... can continue to provide returns for shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost. The Group actively and regularly reviews and manages its capital structure to maintain...

  • Page 49
    ...'s deposits and cash are placed with major financial institutions. Trade debtors are presented net of the allowance for doubtful debts. Credit risk with respect to trade debtors is limited due to the large number of customers comprising the Group's customer base and their dispersion across different...

  • Page 50
    ...) at 31st March on open forward foreign exchange contracts which hedge anticipated future foreign currency sales and purchases will be transferred from the hedging reserve to the consolidated income statement when the forecast sales and purchases occur, at various dates between 1 month to 6 months...

  • Page 51
    ... This is mainly attributable to the Group's exposure to interest rate changes on its variable rate income-earning financial assets. (d) Liquidity risk Cash management of the Company and wholly-owned subsidiaries of the Group are substantially centralised at the Group level. The Group's policy is to...

  • Page 52
    NOTES TO THE FINANCIAL STATEMENTS 20 COMMITMENTS (CONTINUED) The Group has entered into agreements with an independent third party in the People's Republic of China ("PRC") to lease factory premises in Houjie, Dongguan comprising several factory buildings. There are a number of leases which expire ...

  • Page 53
    ... paid issued share capital Principal activity Incorporated and operating in Hong Kong: VTech Communications Limited Ordinary HK$1,000 Deferred HK$5,000,000 Ordinary HK$5,000,000 *100 Design, manufacture and sale of electronic equipment Design, manufacture and distribution of electronic products...

  • Page 54
    ... financial statements the International Accounting Standard Board has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 31st March 2008 and which have not been adopted in these financial statements. 52 VTech Holdings Ltd Annual Report...

  • Page 55
    ... prepayments Financial assets ... Consolidated income statement for the year ended 31st March...share (US cents) 915.2 49.9 (3.6) 46.3 20.5 1,022.0 63.7 (6.8) 56.9 25.2 1,204.6 140.1 (11.3) 128.8 54.9 1,463.8 201.5 (18.6) 182.9 76.6 1,552.0 237.6 (21.9) 215.7 89.4 VTech Holdings Ltd Annual Report...

  • Page 56
    ... OFFICE 23rd Floor, Tai Ping Industrial Centre Block 1, 57 Ting Kok Road Tai Po New Territories Hong Kong PRINCIPAL BANKERS The Hongkong and Shanghai Banking Corporation Limited Hang Seng Bank Limited Standard Chartered Bank AUDITORS KPMG Certified Public Accountants Hong Kong 54 VTech Holdings...

  • Page 57
    ...com INVESTOR RELATIONS CONTACT Corporate Communications Department 23rd Floor, Tai Ping Industrial Centre Block 1, 57 Ting Kok Road Tai Po New Territories Hong Kong Tel: (852) 2680 1000 Fax: (852) 2680 1788 Email: [email protected] WEBSITE www.vtech.com www.irasia.com/listco/hk/vtech UK...

  • Page 58
    ... OF COMPANIES HEAD OFFICE VTech Holdings Limited 23rd Floor, Tai Ping Industrial Centre Block 1, 57 Ting Kok Road Tai Po, New Territories Hong Kong Tel: (852) 2680 1000 Fax: (852) 2680 1300 Website: http://www.vtech.com Email: [email protected] REGIONAL OFFICES Canada VTech Technologies...

  • Page 59
    ... Lilian Tang Design Limited • Typeset and Printed by RR Donnelley Roman Financial A Chinese translation of the annual report may be obtained on request from Computershare Hong Kong Investor Services Limited, Room 1712-16, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong. If there is...

  • Page 60