Vtech 2001 Annual Report Download - page 17

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VTech Holdings Ltd Annual Report 2001
15
telecommunication products where VTech occupies
a niche that allows us to command better margin.
As part of the Group-wide restructuring, VTech
merged the multimedia communication business
unit into contract manufacturing services. The
majority of this unit’s revenue derives from the
manufacture of set-top boxes on an OEM basis and
hence presents obvious synergies. The merger will
save operational costs by restructuring various
functions and eliminating overlap.
Our contract manufacturing services
continue to show steady growth, on the
back of VTech’s reputation and know-how
in manufacturing telecommunication products.
Turnover increased by 90.6% over the financial year
2000 to US$127.1 million. As a result, total turnover
at the contract manufacturing services and
multimedia communication products units rose
50.0% to US$208.2 million.
North America is still the major market for our contract
manufacturing services, accounting for 45.9% of
turnover. Our growing reputation for reliability in both
the quality of our production and our ability to meet
deadlines, even in the most difficult market
environment, is being rewarded with an expanding
base of major clients. The business focus of the unit
is directed towards the manufacture of
u ring
Production costs of the multimedia communication
products increased due to initial set up costs at
our Mexico facility. We hired consultants to study
the validity of the business model, incurring
professional fees. We also made full provision for
the components inventory of our DVD venture,
which has been discontinued.
Review of Operations
VTech Holdings Ltd Annual Report 2001