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VTech Holdings Ltd2009/2010 Interim Results Announcement
25th November 2009
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Shereen Tong
Group Chief Financial Officer
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Financial Highlights
34.6%74.8100.7Operating Profit
33.0%68.891.5Profit Attributable to Equity Shareholders
31.9%28.237.2Basic Earnings per Share (US cents)
Changes20082009(US$ M)
5.2%778.5738.0Revenue
For the six months ended 30th September
3.4%263.4254.5Gross Profit
Interim Dividend per Share (US cents) 33.3%12.016.0
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Revenue by Region
Total 738.0 100.0 778.5 5.2%
28.1Others 3.8 31.1 9.6%
Europe 30.5 298.3 24.4%225.6
North America 441.8 59.9 417.8 5.7%
Asia Pacific 42.5 5.8 31.3 35.8%
For the six months ended 30th September
% Change20082009(US$ M)
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Working Capital
Stocks 197.8 207.3
Stocks Turnover Days 98 days 95 days
Trade Debtors 338.7
Trade Debtors Turnover Days 55 days 62 days
280.4
30/09/0830/09/09(US$ M)
128.0
67 days
154.0
73 days
31/03/09
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Deposits and Cash 229.9 143.7
Less: Total Interest Bearing Liabilities
Net Cash Position 229.9 143.7
- -
30/09/0830/09/09(US$ M)
Liquidity Position
Currency-linked Deposits with Principal Protected - 19.3
229.9 163.0
287.2
287.2
-
31/03/09
4.9
292.1
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Allan Wong
Chairman and Group CEO
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North America
TEL289.4 (65.5%)
ELP103.6 (23.5%)
CMS48.8 (11.0%)
• Revenue up 5.7% to US$441.8
million, 59.9% of Group revenue
• Growth was driven by higher
TEL sales
• TEL revenue up 31.6% to
US$289.4 million, due to:
− Higher sales of branded products
− Supply chain excellence
− Market share gains, as a major
competitor exited the market
Revenue by Product Line (US$ million)
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North America (continued)
TEL289.4 (65.5%)
ELP103.6 (23.5%)
CMS48.8 (11.0%)
• ELP revenue down by 25.1% to
US$103.6 million
− Emphasised value because of weak
economy
− Delayed the launch of a major new
platform
− Poor sentiment led to lower ASPs and
revenue
− Standalone products outperformed
platform products
• CMS revenue down by 18.0% to
US$48.8 million
− Tough comparison with strong 1HFY09
− Lower orders across the board
Revenue by Product Line (US$ million)
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Europe
TEL76.9 (34.1%)
ELP95.4 (42.3%)
CMS53.3 (23.6%)
• Revenue down by 24.4% to
US$225.6 million, 30.5% of Group
revenue
• Sales decline was due to lower
sales of TEL products, ELPs and
CMS
• TEL revenue down by 24.4% to
US$76.9 million, due to:
− Reduced orders from customers
− Tough comparison with strong
1HFY09
Revenue by Product Line (US$ million)
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Europe (continued)
TEL76.9 (34.1%)
ELP95.4 (42.3%)
CMS53.3 (23.6%)
• ELP revenue down by 26.1% to
US$95.4 million
− Declining consumer spending and lower ASPs
− Standalone products outperformed
platform products
• CMS revenue down by 21.0% to
US$53.3 million
− Lower sales in power supplies and wireless products
− Tough comparison with strong 1HFY09
Revenue by Product Line (US$ million)
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Asia Pacific
TEL8.1 (19.1%)
ELP10.3 (24.2%)
CMS24.1 (56.7%)
• Revenue up 35.8% to US$42.5
million, 5.8% of Group revenue
• AP outperformed other markets due
to higher sales in all product lines
• TEL revenue rose by 9.5% to
US$8.1 million
• ELP revenue increased by 18.4% to
US$10.3 million
• CMS showed strongest growth in AP,
with revenue growing by 58.6% to
US$24.1 million, due to:
− Increasing sales in solid state lighting
Revenue by Product Line (US$ million)
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Other Regions
TEL16.2 (57.6%)
ELP11.8 (42.0%)
CMS0.1 (0.4%)
• Revenue down by 9.6% to
US$28.1 million, 3.8% of Group
revenue
• Other regions comprise mainly
markets in:
- Latin America
- Middle East
- Africa
• Sales drop was due to lower sales
of TEL products and ELPs
• TEL revenue down by 5.8% to
US$16.2 million
• ELP revenue declined by 15.1% to
US$11.8 million
Revenue by Product Line (US$ million)
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King Pang
Group President
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Proven Strategy
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Proven Strategy
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Technology Roadmap - TEL Products
� Landline & mobile convergence
� Enterprise products� IAD
� Corded and cordless phones
� Strong industrial design
� Enhanced user interface
CY2009 CY2010
Core Product Line
Design & Tech Innovation
New Product Categories
� More enterprise products
� Corded and cordless phones
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Technology Roadmap - ELPs
Core Product Core Product
LineLine
Design & Tech Design & Tech
InnovationInnovation
New Product New Product
CategoriesCategories
CY2009CY2009 CY2010CY2010
� Jungle Gym
� Learning & exercise� Reading
� Standalone products� Platform products
� Video technologies� Wireless technologies
New New
PlatformPlatform
ProductsProducts
ExpandedExpanded
StandaloneStandalone
LineLine
� Wireless connectivity� User interface
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1919
Proven Strategy
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2020
Gains in Market Share
Industry consolidation
• Major competitor exited
• Weak competition +
Market leader
• No. 1 player in the US
• Strong core product lines
• New product categories
Market VTech
Further gains in market share for TEL products Further gains in market share for TEL products
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Proven Strategy
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Asia Pacific
Geographic Expansion
Other Regions
Asia Pacific + other markets = Less than 10% of Group sales
Potential to grow
9.6%(3.8% of group sales)
35.8%(5.8% of group sales)
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2323
Proven Strategy
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Operational Excellence
Good cost control + Efficient operations
Selling & Distribution Costsas Percentage of Group Sales%
0
5
10
15
20
25
15.114.515.115.7
13.1
2005 2006 2007 2008 2009
Administrative & Other Operating Expensesas Percentage of Group Sales*%
0
1
2
3
4
5
6
7
4.13.94.13.94.7
2005 2006 2007 2008 2009
For the six months ended 30th September
*Excluding the effect of exchange differences
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2525
Outlook
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Outlook – Overview
• Expect consumer sentiment to remain
subdued through holiday season
• Top line growth will not be easy to
achieve
• Profitability is expected to be higher
year on year
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2727
Outlook – North America & Europe
TEL products
• North American sales to perform well
− Market share gains
− Boost from recently introduced cordless, enterprise phone products
• European sales to pick up
− Orders from existing customers return to normal levels
− Full range of “T-Home / VTech”products on shelves
− Increasing shipments of IADs
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2828
Outlook – North America & Europe
ELPs
• Have planned for challenging holiday season
• Rich line up of new products for CY2010
− Includes new platform products
− Received uniform enthusiastic receptions
CMS
• Economies stabilising
• Expect sales to pick up in 2H
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Outlook – Asia Pacific & Other Regions
TEL products
• Benefit from Telstra deal in Australia
• Expand our presence in other markets
ELPs
• Growing demand for electronic toys and
educational products
CMS
• Good opportunities in solid state lighting
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3030
Conclusion
VTech is a company with market leadership position, a strong
balance sheet and a highly efficient operation…..
…We are well positioned to take advantage of the recovery
in the global economy
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Thank You