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VTech Holdings Ltd Annual Report 2006 03
Letter to Shareholders
“I am pleased to report that profit
attributable to shareholders for the
financial year 2006 rose to US$128.8
million, the highest achieved in our
nearly 30 years of operations.”
Dear Shareholders,
I am pleased to report that profit
attributable to shareholders for the
financial year 2006 rose to US$128.8
million, the highest achieved in our
nearly 30 years of operations. This
excellent result was supported by
record performances from our
Electronic Learning Products (ELP) and
Contract Manufacturing Services (CMS)
businesses, as well as the successful
turnaround in profitability of the
Telecommunication Products (TEL)
business, as we rationalised its
US operations.
Results
Revenue for the Group increased by
17.9% over the financial year 2005 to
US$1,204.6 million. Profit attributable to
shareholders increased by 126.4% to
US$128.8 million. Earnings per share
increased by 117.9% to US54.9 cents.
The continued increase in profitability,
together with the Group’s very strong
balance sheet, has allowed the Board of
Directors to propose a final dividend of
US26.0 cents per share, giving a total
dividend for the year of US32.0 cents
per share, as compared to US13.0 cents
per share for the financial year 2005.
Operations
In the financial year 2005, we began
to re-engineer the entire US operations
of the TEL business, in response to a
decline in revenue. During the financial
year 2006 we continued this process,
in particular focusing on making
the supply chain more efficient,
discontinuing unprofitable businesses,
strengthening marketing and developing
an entirely new range of cordless
phones that is much more in tune with
the needs of our customers and
consumers. As a result of these efforts,
profitability of the US operations has
recovered. This is despite a fall in revenue
as we streamlined the product lines.
In Europe, by contrast, we continued to
make significant progress in growing
our revenue, as we leveraged our close
relationships with Original Design
Manufacturing (ODM) customers, who
are major fixed line telephone operators
and leading brand names in the region.
This, together with inroads made into
new markets such as Scandinavia and
Eastern Europe, saw our sales increase
in Europe rise by 49.4%, to account for
28.3% of the total TEL revenue.
Profit Attributable to Shareholders
in Last 5 Years
US$ million
02 03 04 05 06
11.2
40.8 46.3
56.9
128.8
0
25
50
75
100
125
150
+126.4%
Allan WONG Chi Yun, Chairman