Vtech 2007 Annual Report Download - page 7

VTech Holdings Ltd
Annual Report 2007 5
REVENUE
The Group revenue for the year ended
31st March 2007 increased by 21.5%
over the previous fi nancial year to
US$1,463.8 million as a result of an
increase in revenue from its three
core businesses.
The TEL business recorded a 11.1%
increase in revenue to US$660.6
million. This performance was mainly
driven by strong sales of 5.8GHz
cordless phones and a range of AT&T
2.4GHz products using proprietary
technology developed in-house for
the North American market, which
helped increase revenues from this
market by 26.3% or US$107.0 million
compared with the previous fi nancial
year. Revenue from the European
market, however, decreased by 25.1%
or US$42.3 million over the previous
fi nancial year because the market
had suffered from excess inventory, a
situation that affected all suppliers.
The ELP business had another excellent
year with considerable growth in
revenue, achieving a 26.2% year-on-
year increase to US$570.1 million.
The growth was attributable to good
performance from all ELP product
ranges. The growth in revenue
from traditional products range was
especially strong. The V.Smile product
range also continued to grow. Sales
of the basic V.Smile met management
expectations, while the introduction of
the well-received V.Smile Baby in the
fi rst half of the fi nancial year 2007 and
the launch of V.Flash in later part of the
fi nancial year, together with the rising
sales of software drove sales higher
compared to the previous fi nancial year.
For the CMS business, the strategy of
providing a one-stop shop EMS service
to small and medium sized customers
continued to be successful, and the
business achieved signifi cant growth
in revenue of 47.3% over the previous
60.2%
US$880.9 million
North America
3.5%
US$51.4 million
Asia Pacific
2.2%
US$31.7 million
Others
100.0%
US$1,463.8 million
Total
34.1%
US$499.8 million
Europe
GROUP REVENUE BY PRODUCT LINE
2007
%US$ million
Telecommunication Products 45.1 660.6
Electronic Learning Products 39.0 570.1
Contract Manufacturing Services 15.9 233.1
Total 100.0 1,463.8
GROUP REVENUE BY REGION (2007)
fi nancial year, reaching US$233.1
million. The growth came mainly from
increased orders from existing customers
with demand particularly strong in the
areas of switching mode power supplies,
professional audio equipment and
industrial printing categories.
The Group’s revenue from its three core
businesses was: 45.1% from the TEL
business, 39.0% from the ELP business
and 15.9% from the CMS business.
North America continues to be the
largest market for the Group. Revenue
from this market accounted for 60.2%
of Group revenue for the fi nancial
year 2007. Europe and Asia Pacifi c
accounted for 34.1% and 3.5%
respectively. This change in the relative
contribution of the three regions mainly
refl ects the sales increase from all of the
Group’s businesses in North America,
which more than offset the sales
reduction at the TEL business in Europe
while the ELP and CMS businesses also
achieved satisfactory growth in Europe.
GROSS PROFIT/MARGIN
The gross profi t for the fi nancial year
2007 was US$540.0 million, an increase
of US$93.3 million compared to the
US$446.7 million recorded in the
previous fi nancial year. Gross margin for
the year declined slightly from 37.1%
to 36.9%. Although all businesses
suffered from the negative impacts of
rising labour costs, high raw material
prices and the appreciation of
the Renminbi during the fi nancial year
2007, the Group was able to maintain
gross profi t margin as management
implemented measures
to improve operational effi ciency and
raise productivity.
Management Discussion and Analysis
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