Vtech 2010 Annual Report Download - page 6

04 VTech Holdings Ltd Annual Report 2010
Letter to Shareholders
sales are gradually building up. We
are currently selling these products
through value added resellers, and
we are also recruiting distributors
through our “SMB Partner Program”.
In Europe, despite the uncertainty of
the economic situation, we expect
TEL products to resume growth in
the fi nancial year 2011. Most of our
existing customers are giving us
more orders. VTech is steadily gaining
market share in Germany as a result
of the Deutsche Telekom agreement.
Additionally, while volumes are still
small compared to cordless phones,
we have been shipping an increasing
number of integrated access devices
(IADs). This provides further impetus
to sales growth.
For ELPs, we expect platform
products to return to growth in
North America, while momentum for
standalone products will continue.
The two new platform products
launched this fi nancial year, V.Reader
and MobiGo, have been well received
by the trade. V.Reader is an animated
e-book system for children aged
three to seven. With a 4.3 inch colour
display, stories come to life on
V.Reader through narration, music,
animation and interactions. MobiGo
is a handheld educational gaming
system for children aged three to
eight. With its colour touch screen
and slide-open keyboard, MobiGo
puts the world of educational fun at
children’s fi ngertips. Both products
have been on retail shelves since
June and will benefi t from extensive
media support. Growth in standalone
products will be supported by
extensive line-ups of infant and
pre-school items. These are being
led by additions to the successful
Jungle Gym line, a new category of
bath toys, as well as strong licensed
pre-school products.
In Europe, the introduction of new
standalone and platform products is
expected to stimulate sales. MobiGo
will be introduced in most European
markets between late summer and
fall, while V.Reader will appear in the
UK in the summer. As we receive
European currencies for domestic
sales in Europe, a decline in their
values would aff ect our revenue
and profi tability in US Dollar terms.
Consequently, growth will be diffi cult
to achieve for this fi nancial year.
The global EMS industry is forecast
to remain on an uptrend in the
fi nancial year 2011 and our CMS will
continue to outperform the market.
With an established reputation in the
professional audio industry, we expect
to gain additional business from
both existing and new customers in
North America and Europe. Switching
mode power supplies will see growth
opportunities in the new business
areas of solar power inverters and
electric vehicle chargers.
Customers are increasingly aware
of the eff orts we have made in
improving the working conditions
for our workforce. The operations of
CMS are in full compliance with the
international standards SA8000 and
OHSAS18000. These certifi cations
demonstrate the commitment of CMS
in the areas of social accountability
and occupational health & safety.
This commitment diff erentiates
CMS from the competition and will
enhance our growth prospects in the
coming years.
Asia Pacifi c and Other Regions
Asia Pacifi c is likely to lead the way
among other regions and we are
planning to introduce TEL products to
the Chinese market. We also expect
increased contributions from the
Telstra arrangement in Australia.
For ELPs, we have set up a new team
to develop products specifi cally for
mainland China. These products will
hit the shelves by the end of this
calendar year. We will continue to
step up our eff orts in other Asia Pacifi c
markets, notably Australia and Japan.
For CMS, we see good opportunities
to build on our success in solid
state lighting for the Japanese
market. As the performance of the
LED light bulbs is superior to that
of conventional light bulbs, we are
seeing rapid consumer adoption of
the new technology. As a result of
keen competition in this emerging
business segment, tremendous price
erosion is expected in the next few
years. CMS will work closely with
our customer to accelerate cost
reductions through new product
designs and process automation, so
as to improve profi t margins through
the strong partnership.
Conclusion
Our ability to make further progress
across our businesses in the face
of very diffi cult market conditions
testifi es to the strength of the Group.
I would like to thank my fellow
directors, senior management and
all staff for their support in meeting
the challenges. I also thank all of
our suppliers, business partners and
customers, whose close co-operation
has helped to make the year a
successful one.
VTech is a company with strong
R&D, market leadership position, a
strong balance sheet and a highly
effi cient operation. We will continue
to focus on product innovation and
geographical expansion to deliver
growth, while managing costs and
risks to enhance profi tability.
Allan WONG Chi Yun
Chairman
Hong Kong, 14 June 2010