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HKSE : 303
ANNUAL REPORT 2012
Vech046_E.indb 2 12年6月6日 下午5:25

Table of contents

  • Page 1
    HKSE : 303 ANNUAL REPORT 2012

  • Page 2
    ..., Europe and Asia Pacific. Apart from the well-known VTech brand, the Group is licensed to design, manufacture and distribute AT&T branded wireline telephones and accessories, as well as Telstra branded fixed line telephones in Australia. Shares of VTech Holdings Limited are listed on The Stock...

  • Page 3
    ... 11 12 08 09 10 11 12 08 09 10 11 12 0 Gross profit (US$ million) Gross profit margin (%) Profit attributable to shareholders of the Company (US$ million) Net profit margin (%) VTech Holdings Ltd Annual Report 2012 1

  • Page 4
    .... Sales of our residential phones are expected to recover, as we gain market share via new product line ups. These include a new Connect to Cellâ„¢ system with high definition voice quality, user-friendly cell phone registration as well as smartphone Operations In the financial year 2012, rising...

  • Page 5
    ... further consolidation of the supplier base by our wireless headset customer. Business in switching mode power supplies should stabilise, though the market for solar power inverters may remain under pressure. Marine radios, a new product category we added in the financial year 2012, will see rapid...

  • Page 6
    ... market leadership over the decades. 1,784.5 million US dollars of Group sales in FY2012 3 AC B No.1 cordless phone and ELP manufacturer worldwide VTech products sold every second 90 4 VTech Holdings Ltd Annual Report 2012 More than 33,000 employees globally markets selling VTech products

  • Page 7
    ... products following the full launch of InnoTab, an educational tablet for children in October 2011. Revenue from CMS rose by 7.8% to US$179.7 million. Professional audio equipment and internet phones for office use were major growth drivers. Higher sales of commercial solid-state lighting also...

  • Page 8
    ...from 12.8% to 11.7%. The ratio of EBITDA to revenue in the financial year 2012 also decreased from 14.7% to 13.3%. Selling and distribution costs rose by 5.5% from US$241.6 million in the previous financial year to US$255.0 million in the 08 09 10 11 12 6 VTech Holdings Ltd Annual Report 2012

  • Page 9
    ... level was primarily to cater for increased demand for the Group's products in the first quarter of the financial year 2013. Furthermore, we had arranged early production of the Group's products in order to better utilise the Group's production capacities. VTech Holdings Ltd Annual Report 2012 7

  • Page 10
    Telecommunication Products Residential Cordless Phones SynJ Small Business Phone System 8 VTech Holdings Ltd Annual Report 2012

  • Page 11
    ...we bring the world great new technology applications that enhance people's lives, including our most recent innovations Connect to Cell, video on Digital Enhanced Cordless Telecommunications (DECT) platform and high definition voice quality. 4 Renowned Brands Our TEL products now sell under four of...

  • Page 12
    ... technologies to develop innovative and educational toys, helping kids develop all the way through fun and smart play. Cogsley, an educational robot toy for pre-schoolers Switch & Go Dinos, a line of toys that transform between dinosaurs and vehicles 10 VTech Holdings Ltd Annual Report 2012

  • Page 13
    MobiGo 2, a touch learning system with motion play Alphabet Activity Cube, a versatile, interactive cube for infants VTech Holdings Ltd Annual Report 2012 11

  • Page 14
    Contract Manufacturing Services Switching Mode Power Supply 12 VTech Holdings Ltd Annual Report 2012

  • Page 15
    .... Strong Reputation Professional audio, switching mode power supplies, wireless products and solid-state lighting are our major product categories. Our excellent know-how and strong reputation in these areas enable us to gain new customers every year. Outperformance Our CMS sales have more than...

  • Page 16
    ... learning • Grade school learning - Platform products • InnoTab Learning App Tablet • V.Reader Interactive e-Reading System • MobiGo Touch Learning System • Games & e-book cartridges • Download apps B 36.8% Contract Manufacturing Services VTech provides one-stop shop...

  • Page 17
    ...$94.1 million Revenue in Other Regions by Product Line for the year ended 31 March 2012 TEL Products 320 281.3 248.3 240 260.6 68.0% US$46.0 million 160 80 ELPs CMS 30.8% US$20.8 million 08 09 10 11 12 1.2% US$0.8 million Total: 0 US$67.6 million VTech Holdings Ltd Annual Report 2012 15

  • Page 18
    ...year ended 31 March US$ million North America Europe Asia Pacific Other Regions Total 2012 903.5 719.3 94.1 67.6 1,784.5 2011 874.9 667.6 98.2 72.1 1,712.8 Change 3.3% 7.7% -4.2% -6.2% 4.2% Shipped 45 million handsets and over 38 million ELPs worldwide 16 VTech Holdings Ltd Annual Report 2012

  • Page 19
    ...school products were offset by lower sales of infant products. Revenue from CMS in North America grew by 7.8% during the financial year 2012 to US$179.7 million. Professional audio equipment and internet phones for office use were major growth drivers. Higher sales of commercial solid-state lighting...

  • Page 20
    ... with telephone operators, major brand names and distributors in the region, we achieved further gains in market share. During the financial year 2012, VTech became the number one manufacturer of cordless phones in Western Europe, with a 29% market share3. We also began supplying hotel phones in...

  • Page 21
    ...$47.0 million. We achieved higher sales of medical and wireless products. This was, however, offset by significantly lower orders for LED light bulbs, as our Japanese customer faced very keen competition. During the financial year, we gained a new Japanese customer in marine radio, who was attracted...

  • Page 22
    ... New DECT Baby Monitors In February 2012, the Group launched a new line of highly functional and affordable baby monitors. The video model uses the Group's proprietary technologies, which allow digital video transmission up to nine frames per second over the DECT platform. Product Excellence VTech...

  • Page 23
    ... by Children's Technology Review. It was also named one of the "10 Cool Toys" for Christmas by the Toy Retailers Association in the UK. Storio Storio was highly successful in Europe and garnered a number of prestigious awards in the financial year 2012, including: • "Grand Prix du Jouet 2011" in...

  • Page 24
    Corporate Social Responsibility 22 VTech Holdings Ltd Annual Report 2012

  • Page 25
    VTech's Corporate Social Responsibility (CSR) effort focuses on the four core areas of environment, community, shareholders and employees. VTech Holdings Ltd Annual Report 2012 23

  • Page 26
    ... and components, VTech takes care to use only responsible suppliers and we work with them to reduce environmental impacts in their operations. All suppliers to our TEL and ELP operations are required to sign a supplier CSR agreement, specifying CSR related 24 VTech Holdings Ltd Annual Report 2012

  • Page 27
    ... than through Hong Kong. This helps to reduce carbon emissions and the consumption of resources. We take care to schedule incoming raw materials and outgoing product on the same transport, to reduce waste, and work with customers to consolidate orders. Our CMS operation uses recyclable aluminum...

  • Page 28
    ... campaign organised by the Hong Kong Red Cross, helping to save lives. Service and Support As in previous years, in 2011 VTech sponsored the Hong Kong Business of Design Week and Hong Kong Awards for Industry, to encourage innovation in our home region. 26 VTech Holdings Ltd Annual Report 2012

  • Page 29
    ... important financial information. Up-to-date information on the Group's developments, financial data and stock information can be found at the corporate website www.vtech.com. All key information is available electronically. • Corporate Governance VTech is committed to good corporate governance...

  • Page 30
    Corporate Social Responsibility Employees VTech cares for its employees and understands that good staff relations and a motivated workforce play a vital role in the Group's success. levels, through channels such as the website, internal newsletter and meetings to communicate plans and policies. ...

  • Page 31
    Corporate Governance Report Corporate Governance Practices VTech Holdings Limited is incorporated in Bermuda and has its shares listed on The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The corporate governance rules applicable to the Company are the Corporate Governance Code (the "...

  • Page 32
    ... professionals on accounting, taxation and Listing Rules to Directors and relevant staff. On 23 May 2012 (the date of this Annual Report), the Audit Committee met to review the audited Group financial statements and reports for the year ended 31 March 2012 in conjunction with the Company's external...

  • Page 33
    ... and timely access to balanced and understandable information about the Company, in order to enable the shareholders to exercise their rights in an informed manner, and to allow the shareholders and the investment community to engage actively with the Company. VTech Holdings Ltd Annual Report 2012...

  • Page 34
    ... University, USA and an MBA degree from Harvard Business School. Mr. TIEN is the Chairman and founder of the G2000 Group which started its business back in 1979. Before starting up G2000, he worked with Macy's Department Store in New York, USA. Mr. TIEN is an active member in Hong Kong community...

  • Page 35
    ... in Asia, Europe and South Africa. He also has 10 years of experience in developing supply chain systems with leading corporations in North America including The Stanley Works, Inc. Mr. DELANY holds a Bachelor Degree in Marketing and Financial Management from the University of South Africa & Damlein...

  • Page 36
    ... address in Hong Kong will receive the equivalent amount in Hong Kong dollars which will be calculated at the rate of exchange as quoted to the Company by The Hongkong and Shanghai Banking Corporation Limited at its mid rate of exchange prevailing on 17 July 2012. Directors' Service Contracts...

  • Page 37
    ... associated corporations (within the meaning of Part XV of the SFO) which were required to be recorded in the register kept by the Company pursuant to Section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code. VTech Holdings Ltd Annual Report 2012...

  • Page 38
    ...the customers and the suppliers noted above. Public Float Based on the information publicly available, the Company has maintained at least 25% of the total issued share capital of the Company to be held by the public at all times during the year ended 31 March 2012 and up to the date of this report...

  • Page 39
    ... plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. KPMG Certified Public Accountants 8th Floor, Prince's Building 10 Chater Road Central, Hong Kong 23 May 2012 VTech Holdings Ltd Annual Report 2012 37

  • Page 40
    ... PANG King Fai Director The notes and principal accounting policies on pages 41 to 65 form part of these financial statements. Details of dividends payable to shareholders of the Company attributable to the profit for the year are set out in note 5. 38 VTech Holdings Ltd Annual Report 2012

  • Page 41
    ...17(c) 5 6.3 (2.7) (194.5) (190.9) 2.5 (66.6) 243.1 176.5 6.8 - (193.6) (186.8) 7.8 46.2 196.9 243.1 Allan WONG Chi Yun Director PANG King Fai Director The notes and principal accounting policies on pages 41 to 65 form part of these financial statements. VTech Holdings Ltd Annual Report 2012 39

  • Page 42
    ... of the current year Shares issued under share option scheme Equity-settled share based payments Capital injection Acquisition ...6.3 2.0 (2.7) 1.8 556.2 The notes and principal accounting policies on pages 41 to 65 form part of these financial statements. 40 VTech Holdings Ltd Annual Report 2012

  • Page 43
    ...These financial statements also comply with the disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"). The IASB has issued certain new and...

  • Page 44
    ... sale of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer. Revenue is stated net of sales taxes, returns, rebates and discounts, after eliminating sales within the Group. Revenue from the provision of services is recognised when the services...

  • Page 45
    ... is considered doubtful but not remote are recorded using an allowance account. When the Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade debtors directly and any amounts held in the allowance account relating to that debt are reversed...

  • Page 46
    ... attributable transaction costs. Subsequently, other investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are recognised in the balance sheet at cost less impairment losses (see note (K)). 44 VTech Holdings Ltd Annual Report 2012

  • Page 47
    ...if, and only if, the Group has the legally enforceable right to set off current tax assets against current tax liabilities. S Employee Benefits The Group operates a number of defined contribution retirement schemes throughout the world, including Hong Kong, and a defined benefit retirement scheme...

  • Page 48
    ... date, the Group revises its estimates of the number of shares of the Company granted under the Share Purchase Scheme ("Awarded Shares") that are expected to ultimately vest. Any resulting adjustment to the cumulative fair value recognised in prior years is charged/ credited to employee share-based...

  • Page 49
    ... located in North America, Europe, Asia Pacific and elsewhere are set out in the table below. Each of the above reportable segments primarily derive their revenue from the sale of telecommunication products, electronic learning products and products from contract manufacturing services to customers...

  • Page 50
    ...single external customer. This revenue is attributable to the North America segment. Details of concentrations of credit risk of the Group are set out in note 19(a). 2 Operating Profit Operating profit is arrived at after charging/(crediting) the following: 2012 Note US$ million Staff related costs...

  • Page 51
    ...- 1,333,000 1,397,001 - 1,461,000 - 1 1 - 2 2011 Individuals 1 - - 1 2 During the years ended 31 March 2011 and 31 March 2012, there were no amounts paid to directors and individuals for compensation for loss of office and inducement for joining the Group. VTech Holdings Ltd Annual Report 2012 49

  • Page 52
    ... 2012 Note US$ million Interim dividend of US16.0 cents (2011: US16.0 cents) per share declared and paid Final dividend of US60.0 cents (2011: US62.0 cents) per share proposed after the balance sheet date 2011 US$ million 18 39.9 39.7 18 149.7 153.9 50 VTech Holdings Ltd Annual Report 2012

  • Page 53
    ...6.9 - - - - 6.9 - - - - 6.9 - - Land and Leasehold buildings improvements US$ million US$ million Cost or valuation At 1 April 2010 Additions Disposals... March 2012 Net book value at 31 March 2012 Net book value ....0 119.4 - 119.4 6.9 - 6.9 459.8 28.1 487.9 VTech Holdings Ltd Annual Report 2012 51

  • Page 54
    ... (2011: US$1.6 million) have been recognised in other comprehensive income for the year ended 31 March 2012 and accumulated in the property revaluation reserve of the Group (note 18(c)), net of deferred tax (note 10(b)). 2011 US$ million 8.4 13.3 21.7 52 VTech Holdings Ltd Annual Report 2012

  • Page 55
    ...sites in the PRC. 2011 US$ million 4.9 (0.1) 0.2 5.0 5.0 2 5.0 (0.1) 0.2 5.1 5.1 9 Investments 2012 US$ million (i) (ii) Associates Share...relating to prior years (20.2) 16.7 (3.5) (0.2) (3.7) 2012... 2012 US$ million 4.3 1.6 5.9 (0.1) (5.1) (0.6) (5.8) 0.1 VTech Holdings Ltd Annual Report 2012 53

  • Page 56
    ... Work in progress Finished goods 82.1 35.1 122.0 239.2 2011 US$ million 73.5 29.5 126.8 229.8 The majority of the Group's sales are on letter of credit and on open credit with varying terms of 30 to 90 days. Certain open credit sales are covered by credit insurance or bank guarantees. Stocks...

  • Page 57
    ... with the terms of the sales. A provision is recognised for expected return claims, which included cost of repairing or replacing defective goods, loss of margin and cost of materials scrapped, based on past experience of the level of repairs and returns. VTech Holdings Ltd Annual Report 2012 55

  • Page 58
    ... the Group during the year were calculated based on advice from Watson Wyatt Hong Kong Limited, a Towers Watson company ("Towers Watson"), independent actuaries and consultants. The Scheme is valued annually. The latest actuarial valuation was completed by Towers Watson as at 31 March 2012 using the...

  • Page 59
    ..., at any time during the 10 years from the date of adoption of the 2011 Scheme, to grant options to employees and officers of any member of the Group to subscribe for shares of the Company at prices to be determined by the Directors in accordance with the requirements of the Listing Rules. The...

  • Page 60
    ... statement are determined using the Black-Scholes option pricing model based on the following assumptions: 17 April 2008 (Note 1) Fair value of each share option as of the date of grant Closing price at the date of grant Exercise price Expected volatility Annual risk-free interest rate Expected...

  • Page 61
    ... can continue to provide returns for shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost. The Group actively and regularly reviews and manages its capital structure to maintain...

  • Page 62
    ...cash are placed with major financial institutions with sound credit ratings. Trade debtors are presented net of the allowance for doubtful debts. Credit risk with respect to trade debtors is limited due to the large number of customers comprising the Group's customer base and their dispersion across...

  • Page 63
    ... lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term. The following tables detail the remaining contractual maturities at the balance sheet date of the Group's derivative and non-derivative financial liabilities, which are based...

  • Page 64
    ... "licensees") entered into certain licensing agreements with various third party licensors for the granting of certain rights to use the relevant cartoon characters in the Group's electronic learning products. Under these licensing agreements, the licensees are required to make royalty payments to...

  • Page 65
    ...: VTech Telecommunications (Australia) Pty Limited Incorporated/established and operating in Canada: VTech Technologies Canada Ltd. Incorporated/established and operating in France: VTech Electronics Europe S.A.S. Incorporated/established and operating in Germany: VTech Electronics Europe GmbH VTech...

  • Page 66
    ... and operating policies of the VTech Share Purchase Scheme Trust and it can derive benefits from the services of the employees who have been awarded share of the Company under the Shares Purchase Scheme through their continued employment with the Group. 64 VTech Holdings Ltd Annual Report 2012

  • Page 67
    ... to be available for use. The Group reviews annually their estimated useful lives, based on factors that include asset utilisation, internal technical evaluation, technological changes, environmental and anticipated use of the assets tempered by related industry benchmark information. It is possible...

  • Page 68
    ...the year Attributable to: Shareholders of the Company Non-controlling interests Profit for the year Basic earnings per share (US cents) 1,552.0 237.6 ....8 220.3 (19.1) 201.2 202.0 (0.8) 201.2 81.5 2012 US$ million 1,784.5 211.6 (19.7) 191.9 191.9 - 191.9 77.0 66 VTech Holdings Ltd Annual Report 2012

  • Page 69
    Corporate Information Board of Directors Executive Directors Allan WONG Chi Yun (Chairman and Group Chief Executive Officer) PANG King Fai Andy LEUNG Hon Kwong Registered Office Clarendon House 2 Church Street Hamilton HM11 Bermuda Independent Non-executive Directors William FUNG Kwok Lun Denis ...

  • Page 70
    ...Po, New Territories Hong Kong Tel: (852) 2680 1000 Fax: (852) 2680 1788 Email: [email protected] 100 shares 249,489,133 shares Share Information Board lot Issued shares as at 31 March 2012 Website www.vtech.com/investors/stock-info Dividend Dividend per ordinary share for the financial...

  • Page 71
    VTech Group of Companies Head Office VTech Holdings Limited 23rd Floor, Tai Ping Industrial Centre Block 1, 57 Ting Kok Road Tai Po, New Territories Hong Kong Tel: (852) 2680 1000 Fax: (852) 2680 1300 Website: www.vtech.com Email: [email protected] Germany VTech Electronics Europe GmbH ...

  • Page 72
    VTech Holdings Ltd (Incorporated in Bermuda with limited liability) 23rd Floor, Tai Ping Industrial Centre, Block 1 57 Ting Kok Road, Tai Po, New Territories, Hong Kong Tel: (852) 2680 1000 Fax: (852) 2680 1300 Email: [email protected] www.vtech.com