Page 5 - VTech Holdings Limited 2014/2015 Interim Report

Chairman’s Statement

CMS revenue in Asia Pacific grew 23.1% to US$26.6 million, We are expecting a slight decline in ELPs sales in the full financial

buoyed by higher sales of solid-state lighting, marine radio
year. Sales of platform products will continue to be challenging
and medical and health products. The robust growth in solid- in light of the keen competition in the children’s tablet market.
state lighting was driven by additional orders arising from the InnoTab MAX, the Group’s new Android-based flagship

Youth Olympic Games in Nanjing, China. Higher sales of marine educational tablet that is now on the shelves in the US, Canada,
radios were due to good sell-through of a customer’s products. the UK and France, aims to recapture some of the market share
Increased sales of medical and health products were supported lost to the commoditised consumer electronics tablets. A strong

by a customer’s new product launch.
performance from Kidizoom Smartwatch is expected for the
remainder of the financial year.

Standalone products will continue to perform well, with the Revenue in Asia Pacific by Product Line
for the six months ended 30 September 2014
momentum behind infant products, the Go! Go! Smart Wheels
and Go! Go! Smart Animals lines carrying into the second half of Electronic Learning Telecommunication
the financial year. In addition, a strong line-up of new standalone Products
Products
20.6%
36.2%
products will start to reach the markets in Spring 2015. This US$12.7 million
US$22.3 million
includes Go! Go! Smart FriendsM, a range of colourful playsets
and characters that infuse traditional role-play with MagicPointM Contract Manufacturing
Services
technology.
43.2%
US$26.6 million
The positive momentum in TEL products is expected to carry

into the second half of the financial year, driven by higher
shipment of commercial phones and other telecommunication Total: US$61.6 million
products. The Group’s baby monitors have achieved strong
growth since VTech entered the field and new models will

be introduced during the second half of the financial year.
Other Regions
New connected homeM devices based on the DECT ULE (Ultra Other Regions include Latin America, the Middle East and Africa.
Low Energy) standard will join the Group’s growing range of Group revenue from Other Regions was down 8.0% to US$28.7
million, representing 3.2% of Group revenue.
other telecommunication products, alongside new CAT-iq
handsets. In the fourth quarter of the financial year, a high-end
integrated access device will be shipped to a new customer. ELPs revenue in Other Regions declined by 5.7% to US$10.0
million, as growth in Africa was offset by lower sales in the
This product supports VDSL vectoring and dual band 802.11ac.
Sales of residential phones are forecast to hold steady despite a Middle East and Latin America.
declining market, as VTech continues to gain market share and
TEL products revenue in Other Regions fell by 8.9% to US$18.4
expand geographically.
million. Higher sales in the Middle East were offset by lower sales
CMS is also expected to achieve growth for the full financial in Latin America and Africa.
year 2015. In the category of professional audio equipment, the

reduction in orders from one customer will be partially offset
CMS revenue in Other Regions was US$0.3 million, as compared
by higher orders from others in this category. Sales to existing to US$0.4 million in the same period last year.
customers in switching mode power supplies, wireless headsets

and solid-state lighting will increase, while new customers will Revenue in Other Regions by Product Line
add stimulus to growth. The new CMS factory building, which for the six months ended 30 September 2014
will raise manufacturing capacity by 25%, is making good
Electronic Learning Telecommunication
progress and will commence operation as planned in the middle Products
Products
of the calendar year 2015.
34.9%
64.1%

US$10.0 million
US$18.4 million
It has been a solid start to the financial year. Looking ahead, Contract Manufacturing
the Group will continue to focus on the development of Services
innovative products, gains in market share, expanding our 1.0%
presence geographically and achieving operational excellence
US$0.3 million
to generate sustainable returns for shareholders.

Total: US$28.7 million

Outlook

Allan WONG Chi Yun
Economic recovery in the US is expected to continue, while

Chairman
the economies of Western Europe will remain weak. In this
environment, the Group is targeting a modest revenue growth
Hong Kong, 11 November 2014
for the full financial year 2015, with a stable gross margin.

VTech Holdings Limited 2014/2015 Interim Report 3