Vtech 2004 Annual Report Download

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Table of contents

  • Page 1

  • Page 2
    6ONSGNSR . 1 2 -, -1 -3 .- 6OQPOQDSG >QOHKLG :GSSGQ SO @JDQGJOLFGQR ;GRRDIG HQOM 7GPTSW 6JDKQMDN ;DNDIGMGNS 7KRETRRKON DNF 5NDLWRKR ?GUKGV OH =PGQDSKONR CGDQ KN ?GUKGV 6OQPOQDSG 5HHDKQR 7KQGESOQR DNF @GNKOQ ;DNDIGMGNS .0 .3 .4 /, /0 02 03 ?GPOQS OH SJG 7KQGESOQR ?GPOQS OH SJG 9NFGPGNFGNS ...

  • Page 3
    ... and cordless phones in North America and a leading supplier of electronic learning products in North America and Europe. It also provides highly sought-after contract manufacturing services. VTech is a pioneer in the establishment of China-based manufacturing facilities and sells its products via...

  • Page 4
    ...cordless phones under both AT&T and VTech brands, also recorded significant growth during the financial year. As a result of the substantial increase in sales of both AT&T and VTech branded products, VTech continues to be the largest supplier of corded and cordless VTech Holdings Ltd Annual Report...

  • Page 5
    ... during the financial year 2004. The new electronic learning product lines for 2004 achieved a breakthrough when in October 2003 we launched the TV Learning System, V.Smile, a first of its kind TV game console that combines education and entertainment for children Strong Financial Position The...

  • Page 6
    ... financial year 2005 appears broadly conducive to a further increase in revenue, profit and earnings per share Group CEO role since 1st January 2004. In addition to this, we appointed Dr. King F. Pang to a new position of Chief Technology Officer in February 2004. VTech Holdings Ltd Annual Report...

  • Page 7
    ... participation in trade fairs, as well as increased investment in business development and product design support for customers. Performance will be underpinned by new product launches, such as the AT&T branded E-line of 2.4GHz and 5.8GHz cordless phones which was introduced in April 2004. New data...

  • Page 8
    ... consumer products in the market. To increase brand awareness and market penetration in China, we are partnering with Beijing San Chen Blue Cat Toy Co., Ltd to codevelop the Chinese electronic learning products market using new "Blue Cat • VTech" branded products VTech Holdings Ltd Annual Report...

  • Page 9
    ... electronic learning products and 10.6% from contract manufacturing services. Group Revenue by Region % 2004 US$ million North America continues to be the Group's largest market segment. Revenue from this market accounted for 74.5% of the Group revenue for the financial year 2004. Europe and Asia...

  • Page 10
    ... directors have proposed a final dividend of US7.0 cents per share, which will be aggregated to US$15.8 million. Total dividend for the year amounted to US10.0 cents per share, representing an increase of US6.5 cents or 1.8 times from the previous year. (160) VTech Holdings Ltd Annual Report 2004

  • Page 11
    ... increased from 63 days to 69 days. The trade debtors balance as at 31st March 2004 was US$137.6 million, an increase of 11.9% as compared to that reported for the previous financial year. The turnover days fell from 71 days in the previous financial year to 60 days in financial year 2004. Working...

  • Page 12
    ... during the financial year, we remained the largest provider of corded and cordless phones in North America. Europe was also a key growth driver for the business, as the telecommunication products business aggressively expanded Innovation Drives Growth VTech Holdings Ltd Annual Report 2004

  • Page 13
    ... during the financial year 2004. This resulted in an increased number of new products launched in time for the Spring 2004 modular resets of key North American retail customers and further supported our expansion in Europe. Overall, R&D expenditure for the telecommunication products business rose by...

  • Page 14
    ...learning products segments in Europe. These segments are: Electronic Infant Toys, Electronic Preschool Toys and Electronic Learning Aids. 161.9 130.7 overseas marketing experts and our R&D professionals, design engineering and product development teams, located in Hong Kong SAR and mainland China...

  • Page 15
    .... The benefits of our new approach to R&D are readily evidenced in the completely revamped 2004 products line-up. In October 2003, we launched the industry's first TV Learning System, V.Smile, specifically designed for children between the age of 3-7 years old. V.Smile offers to "turn game time into...

  • Page 16
    ... as flexible and price competitive services to customers. The well-diversified nature of the contract manufacturing services business supported its stable development. Geographically, 46.0% of sales was generated from customers in Europe, 00 01 02 03 04 VTech Holdings Ltd Annual Report 2004

  • Page 17
    ... production of automotive parts and medical equipment. Orders in these segments from existing customers accounted for only a small portion of contract manufacturing services revenue in the financial year 2004, but marketing " Our ability to deliver quality products, as well as flexible and price...

  • Page 18
    ... in the September 2003 "Top Contract Manufacturers" issue. Oct 2003 The newly developed TV Learning System, V.Smile, received an encouraging response from major trade customers in the US at its first preview. VTech delivered the world's most advanced 5.8GHz cordless phone handset, i5801, with full...

  • Page 19
    ... position in telecommunication and electronic learning products businesses. VTech formally unveiled its highly anticipated V.Smile TV Learning System and the 2004 products line-up at trade fairs in Germany, the UK and the US. V.Smile TV Learning System TURN GAME TIME INTO BRAIN TIME With licensed...

  • Page 20
    ... corporate website www.vtech.com provides up-to-date investor information, including press releases, event calendar, stock exchange announcements and "pdf" versions of the annual and interim reports. EMPLOYEE RELATIONS The people who work at VTech, from our factory floor through senior management...

  • Page 21
    ... at universities and colleges in Hong Kong and Canada, giving them the opportunity to gain real-life experience of the world of work. During the financial year, over 30 students took advantage of the programme. Donations in Mainland China VTech's pioneering work in electronic learning products was...

  • Page 22
    .... The information systems in place are designed to ensure that the financial report is reliable. The Chief Compliance Officer will assist the Risk Management Committee to review these controls independently and evaluate their adequacy, effectiveness and compliance. CORPORATE GOVERNANCE VTech is...

  • Page 23
    ..., he worked with Macy's Department Store in New York, USA. Mr. TIEN is an active member in Hong Kong community affairs, holding posts like Chairman of the Standing Committee on Language Education and Research; Vice Chairman of the Employee Retraining Board and member of the Education Commission. Mr...

  • Page 24
    ... from City University, Hong Kong and an MBA degree from Strathclyde Business School, UK. James D. PALMER, aged 38, President of VTech Communications, Inc., is responsible for the Telecommunication Products Business marketing/brand management, product management and sales activities in North America...

  • Page 25
    ... contract manufacturing services. Before joining VTech in 2000, Mr. YUNG had 18 years of experience in electronic manufacturing. He holds a Bachelor of Science degree in Electrical Engineering from the University of Hong Kong. VTech Holdings Ltd Annual Report 2004 Directors and Senior Management

  • Page 26
    ..., she worked in Canada as a senior systems manager in a commercial bank and a telecommunication company. Ms. WONG holds a Bachelor of Commerce degree from Queen's University, and is a member of the Certified Management Accountant (CMA) in Canada and the Hong Kong Computer Society. The directors have...

  • Page 27
    ... annual general meeting. The Company received confirmation of independence in respect of the year ended 31st March 2004 from each of the independent non-executive directors pursuant to Rule 3.13 of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing...

  • Page 28
    ... to Paragraphs 16.13 to 16.17 of the UK Listing Rules. DIRECTORS' INTERESTS IN CONTRACTS Save as the transaction described under the paragraph headed "Connected Transaction", no contracts of significance in relation to the Group's business to which the Company or its subsidiaries was a party and in...

  • Page 29
    ...11 to 9.14 of the UK Listing Rules. MANAGEMENT CONTRACTS No contracts concerning the management and administration of the whole or any substantial part of the business of the Company were entered into or existed during the year. SECURITIES PURCHASE ARRANGEMENTS At the annual general meeting held on...

  • Page 30
    ... annual general meeting of the Company. A resolution for the re-appointment of KPMG as auditors of the Company will be proposed at the forthcoming annual general meeting of the Company. By Order of the Board Allan WONG Chi Yun Chairman Hong Kong, 29th June 2004 VTech Holdings Ltd Annual Report...

  • Page 31
    ... for issue by the Board of Directors on 29th June 2004 0.1 46.3 (11.3) 162.6 0.7 40.8 (3.4 ) 127.5 Allan WONG Chi Yun Director Albert LEE Wai Kuen Director The notes on pages 30 to 46 form part of these financial statements. VTech Holdings Ltd Annual Report 2004 Consolidated Financial...

  • Page 32
    ... The Stock Exchange of Hong Kong Limited and the Bermuda Companies Act 1981. These financial statements are prepared on a historical cost basis as modified by the revaluation of certain properties. The accounting policies have been consistently applied by the Group and are consistent with those used...

  • Page 33
    ... review the carrying value and adjustment is made where there has been a material change. The valuations are on an open market value basis and are incorporated in the annual financial statements. Increases in valuation are VTech Holdings Ltd Annual Report 2004 Principal Accounting Policies

  • Page 34
    ..., direct labour and an appropriate share of production overheads. Net realisable value is the estimated selling price in the ordinary course of business, less estimates of costs of completion and selling expenses. (ii) Assets held for sale are stated at anticipated realisable value. O TRADE DEBTORS...

  • Page 35
    ... contribution retirement schemes throughout the world, including Hong Kong, and a defined benefit retirement scheme in Hong Kong. The assets of all schemes are held separately from those of the Company and its subsidiaries. VTech Holdings Ltd Annual Report 2004 Principal Accounting Policies

  • Page 36
    ...received and receivable for sale of goods and rendering of services to third parties. The principal activity of the Group is the design, manufacture and distribution of consumer electronic products. The telecommunication and electronic products business is the principal business segment of the Group...

  • Page 37
    ...electronic products. Europe - the operations are principally the distribution of telecommunication and electronic products. Asia Pacific - the Group is headquartered in the Hong Kong SAR and the Group's principal manufacturing operations are located in mainland China. Staff related costs - salaries...

  • Page 38
    ... 2004. 2003 US$ million Salaries, allowances and benefits in kind Bonuses Contribution to retirement benefit schemes Deemed profit on share option exercise Inducement for joining the Group Compensation for loss of office 0.8 1.1 - - - - 1.9 0.9 1.2 - - - - 2.1 VTech Holdings Ltd Annual Report...

  • Page 39
    ... which were last revalued by independent valuers as at 31st March 2003. The carrying value of these properties in US dollars as at 31st March 2004 is changed due to the effect of changes in exchange rates. VTech Holdings Ltd Annual Report 2004 Notes to the Financial Statements

  • Page 40
    ... of the related tax benefit through future taxable profits is probable. Deferred tax assets of US$47.6 million (2003: US$63.2 million) arising from unused tax losses of US$145.0 million (2003: US$213.5 million) have not been recognised at the end of the year. VTech Holdings Ltd Annual Report 2004

  • Page 41
    ...137.6 54.5 41.6 10.2 16.7 123.0 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 guarantees. VTech Holdings Ltd Annual Report 2004 Notes to the Financial Statements

  • Page 42
    ... during the year were calculated based on advice from Watson Wyatt Hong Kong Limited ("Watson Wyatt"), independent actuaries and consultants. The Scheme is valued annually. The latest actuarial valuation was completed by Watson Wyatt as at 31st March 2004 using the projected unit credit method. For...

  • Page 43
    ... any time, subject to shareholders' approval and the issue of a circular. The Company may also seek separate shareholders' approval for granting options beyond the 10% limit to eligible employees specifically identified by the Company, subject to shareholders' VTech Holdings Ltd Annual Report 2004...

  • Page 44
    ... vested to the grantees when the grantees reach 60 years of age. Note 3: Following the exercise of 100,000 options in March 2004, 100,000 new ordinary shares were issued and allotted in April 2004. The closing price of the Company's shares traded on The Stock Exchange of Hong Kong Limited...

  • Page 45
    ...2000 issued by the Company to AT&T Corp. ("AT&T") as part of a trademark licence agreement between the Company and AT&T pursuant to which AT&T granted the Company the exclusive right to use the AT&T brand for 10 years in connection with the manufacture and sale of wireless telephones and accessories...

  • Page 46
    ... deposits 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 industries...

  • Page 47
    ...the financial year ended 31 March 2004, certain whollyowned subsidiaries of the Group (the "licensees") entered into certain licensing agreements with various third party licensors for the granting of certain rights to use the relevant cartoon characters into the Group's electronic learning products...

  • Page 48
    ...the British Virgin Islands and operating in the People's Republic of China: * Asian Luck Limited US$1 *100 Manufacture of electronic & telecommunication products Indirectly held by subsidiary companies Incorporated and operating in Canada: VTech Electronics Canada Ltd. C$1 *100 Sale of electronic...

  • Page 49
    ... activities before taxation for the year ended 31st March 2001 included US$110.4 million of restructuring and impairment charges in respect of the Group's restructuring plan launched in March 2001. Details of the plan has been provided in the Annual Report 2001. VTech Holdings Ltd Annual Report 2004...

  • Page 50
    ... House Church Street Hamilton HM11 Bermuda ADR DEPOSITARY PRINCIPAL OFFICE 23rd Floor, Tai Ping Industrial Centre Block 1, 57 Ting Kok Road Tai Po New Territories Hong Kong The Bank of New York 101 Barclay Street 22nd Floor-West New York N.Y. 10286 U.S.A. VTech Holdings Ltd Annual Report 2004

  • Page 51
    ... VTech Electronics Europe plc Napier Court Abingdon Science Park Abingdon, Oxon, OX14 3YT Tel : (44) 1235 555545 Fax : (44) 1235 546804 website: http://www.vtechuk.com email: [email protected] United States VTech Electronics North America, L.L.C. 1155 West Dundee, Suite 130 Arlington Heights IL...

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