Vtech 2005 Annual Report Download - page 17

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Review of Operations
VTech Holdings Ltd Annual Report 2005 15
Master Minds
- Ages 6 to 7 or 8
2004 Titles
Learnin’ Wheels
Mickey Mouse
2005 Titles
Aladdin
Batman
Cinderella
Spider-Man II
SpongeBob Squarepants
Zayzoo
Early Learners
- Ages 3 to 5
2004 Titles
Alphabet Park
Care Bears
The Lion King
Winnie the Pooh
2005 Titles
Barney
Bob the Builder
Blue’s Clues
Elmo’s World
The Wiggles
Thomas & Friends
Junior Thinkers
- Ages 4 to 6
2004 Titles
Little Red Riding Hood
Scooby-Doo
Spider-Man & Friends
The Little Merm aid
2005 Titles
Dora the Explorer
Finding Nemo
Sesame Street
Toy Story 2
Art Studio
V.Smile Smartridge Library
Well-executed television, public relations
and point-of-sale campaigns were also key
factors in the success as they effectively
conveyed the excitement, learning
benefits and features to children, parents,
other potential purchasers and influencers.
Trade confidence in VTech was enhanced,
providing a good foundation for future
grow th. Support from the licensors in both
software developm ent and marketing was
also crucial to the outperformance.
In February 2005, the business announced
the launch of the handheld version,
V.Smile Pocket, using the same
Smartridges. VTech also introduced 17
new Smartridges that included popular
children's characters from existing and
new licensors, namely HIT Entertainment,
Nickelodeon and Sesame Street, adding
further avenues of growth to this
product platform .
Growth in Traditional Product
Lines
Alongside the stunning success of V.Smile,
the traditional product lines recorded
respectable growth in revenue in both
North America and Europe. In the financial
year 2005, the Group continued to invest
in strengthening the traditional product
lines w ith a focus on the grow ing infant
and pre-school categories. VTech remains
committed to providing a broad portfolio
of ELPs to consum ers that combine
learning and fun in new and exciting ways.
Effective Cost Control
In addition to the sales increase, effective
cost control contributed to the substantial
rise in profitabilit y for the ELP business. In
particular, the Group faced the pressure
of higher resin prices, which was
mitigated by the adoption of multiple
cavity moulding that enhanced
operational efficiency.
Development of New Markets
During the financial year 2005, progress
was made in developing new markets
such as Scandinavia, where initial sales
were small but encouraging. The China
market remains under development and
progress has been relatively slow due to its
fragmented nature, different cultural
attitudes towards education and
comparatively low average income levels.