Vtech 2010 Annual Report Download - page 4

02 VTech Holdings Ltd Annual Report 2010
Letter to Shareholders
Dear Shareholders,
I am pleased to report that VTech has
successfully managed our businesses
through the adverse economic
conditions prevailing in the fi nancial
year 2010. In addition to achieving an
increase in revenue, we delivered a
proportionally higher growth in profi t.
In the US, the market share of our
telecommunication (TEL) products
grew further. Sales of contract
manufacturing services (CMS)
increased despite the decline in the
global electronic manufacturing
services (EMS) market. We also
achieved good growth across the
board in Asia Pacifi c.
Our track record for product
innovation continues. We launched a
new telephony system for small and
medium sized business (SMB), which
has been well received. For electronic
learning products (ELPs), we have
recently delivered two new platform
products to the market and they have
received strong support from our
retail customers.
Results and Dividend
Group revenue for the year ended
31 March 2010 rose by 5.8% over
the previous fi nancial year, to
US$1,532.3 million. Profi t attributable
to shareholders of the Company
grew strongly, by 44.2%, to US$206.5
million. The proportionally higher
profi t is mainly attributable to
eff ective spending on advertising and
promotions for ELPs, as well as better
foreign exchange risk management.
Basic earnings per share increased
by 43.1% to US83.7 cents, compared
to US58.5 cents in the fi nancial year
2009. The Board of Directors (the
Board) has proposed a fi nal dividend
of US62.0 cents per ordinary share.
Together with the interim dividend of
US16.0 cents per ordinary share, this
gives a total dividend for the year of
US78.0 cents per ordinary share, an
increase of 47.2% over the previous
fi nancial year.
Segment Results
North America, our largest market,
was an important contributor to our
strong results. Despite the severe
downturn in the US, we managed to
increase revenue in the region. TEL
products and CMS performed well,
countering a decline in sales of ELPs.
Our TEL products continued to
lead the market in product design,
innovative features and competitive
pricing. Capitalising on the exit of
a major competitor towards the
end of the calendar year 2008, we
boosted our estimated share of
the US corded and cordless phone
market to almost 50%. With the
launch of our AT&T branded SMB
telephony systems, we have also
opened a major new area of growth
in North America. These systems are
ideal for small and medium sized
offi ces, as well as for facilities such as
warehouses and distribution centres.
A sharp improvement in the second
half saw CMS revenue in North
America increase for the full fi nancial
year, buoyed by increased sales of
professional audio equipment to both
existing and new customers. Sales
of ELPs were impacted by unstable
economic conditions in the region,
where we had strategically delayed
the launch of a major new platform
product.
Revenue from Europe was aff ected
by the weak economy. Despite a
sales rebound in the second half
as customers began to restock, TEL
products experienced a sales decline
for the full fi nancial year. Sales of
ELPs in the region also decreased,
mainly due to the decrease in sales
of platform products. CMS saw lower
demand for switching mode power
supplies and wireless products, which
off set gains in professional audio
equipment.
I am pleased to report that VTech has
successfully managed our businesses through
the adverse economic conditions prevailing
in the fi nancial year 2010. In addition to
achieving an increase in revenue, we delivered
a proportionally higher growth in profi t.