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2 VTech Holdings Ltd Annual Report 2011
Letter to Shareholders
“I am pleased to report that VTech
continued to implement its growth strategy
in the financial year 2011, which enabled us
to achieve record revenue.”
Dear Shareholders,
I am pleased to report that VTech continued to implement
its growth strategy in the financial year 2011, which
enabled us to achieve record revenue.
In telecommunication (TEL) products, we maintained
our leadership position in the US and expanded our
presence in the rest of the world. In electronic learning
products (ELPs), we successfully launched two new
platform products in North America and parts of Europe,
which has laid an important foundation for future
growth. Contract manufacturing services (CMS) again
outperformed the global electronic manufacturing
services (EMS) market and delivered record revenue, as
we benefited from the recovery in the global economy.
Our superior performance as a supplier also allowed us to
gain new customers and additional business from existing
customers in all regions.
Despite the solid growth in revenue, the profitability of
the Group was affected by a significant increase in the
cost of materials and labour. This was compounded with
the appreciation of the Renminbi, higher promotional
costs for new ELP launches and a change in product
mix. These challenges notwithstanding, their impacts
have been alleviated through operational efficiency
gains, product design optimisation and other cost
control measures.
Results and Dividend
Group revenue for the year ended 31 March 2011 rose
by 11.8% over the previous financial year to US$1,712.8
million. Profit attributable to shareholders of the Company
declined by 2.2% to US$202.0 million. The decline in profit
was mainly attributable to the decrease in gross margin,
as we faced higher costs of materials, rising labour costs,
Renminbi appreciation, increased promotional expenses
and a change in product mix during the financial year.