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8 VTech Holdings Ltd Annual Report 2011
Operating Profit and Operating
Profit Margin in Last 5 Years
US$ million %
50
0
250
4
100 8
150 12
200 16
0
20
07
Operating profit (US$ million)
194.0
08
228.9
09
154.3
10
224.1
11
218.7
13.3
14.7
10.7
14.6
12.8
Operating profit margin (%)
Dividend per Share in Last 5 Years
* Include a special dividend of US30.0 cents per ordinary share
US cents
20
40
60
80
0
100
07
80.0*
08
63.0
09
53.0
10
78.0
11
78.0
US cents
20
40
60
80
0
100
Earnings per Share in Last 5 Years
07
76.6
08
89.4
09
58.5
10
83.7
11
81.5
US$ million
10
20
30
40
50
60
0
70
Group R&D Expenditure
in Last 5 Years
07
45.2
08
51.3
09
56.9
10
56.8
11
56.8
Management Discussion and Analysis
Operating Profit/Margin
The operating profit for the year
ended 31 March 2011 was US$218.7
million, a decrease of US$5.4 million
or 2.4% over the previous financial
year. The operating profit margin also
dropped from 14.6% in the previous
financial year to 12.8% during the
financial year. The ratio of EBITDA to
revenue in the financial year 2011
was 14.7% against 17.0% recorded
in the previous financial year.
The decrease partly reflected the
decrease in gross profit margin and
higher selling and distribution costs.
Selling and distribution costs rose by
16.5% from US$207.3 million in the
previous financial year to US$241.6
million in the financial year 2011. The
increase was mainly attributable to
increased spending on advertising
and promotional activities by the
Group and higher royalty payments
to licensors for the use of popular
cartoon characters for certain
ELPs during the financial year. As a
percentage of Group revenue, selling
and distribution costs increased from
13.5% in the previous financial year
to 14.1% in the financial year 2011.
Administrative and other operating
expenses fell from US$71.2 million
in the previous financial year to
US$49.8 million in the financial year
2011. This was mainly attributable
to lower legal and professional costs
during the financial year. With better
foreign exchange risk management,
the net exchange gain arising from
the Group’s global operations in
the ordinary course of business was
US$1.8 million in the financial year
2011. This contrasted with the minimal
exchange loss recorded in previous
financial year. Administrative and other
operating expenses as a percentage of
Group revenue decreased from 4.6%
in the previous financial year to 2.9%
during the financial year.
During the financial year 2011,
the research and development
expense was US$56.8 million, the
same as the previous financial year.
Research and development expense
as a percentage of Group revenue
decreased from 3.7% in the previous
financial year to 3.3% in the financial
year 2011.
Profit attributable
to shareholders and
Dividends
The profit attributable to
shareholders of the Company for
the year ended 31 March 2011 was
US$202.0 million, a decrease of
US$4.5 million as compared to the
previous financial year.
Basic earnings per share for the
year ended 31 March 2011 were
US81.5 cents as compared to
US83.7 cents in the previous financial
year. During the financial year, the
Group declared and paid an interim
dividend of US16.0 cents per share,
which aggregated to US$39.7 million.
The Directors have proposed a
final dividend of US62.0 cents per
share, which will aggregate to
US$153.9 million.