VTech Holdings Ltd2011/2012 Interim Results Announcement

16 November 2011

2

Shereen TongGroup Chief Financial Officer

3

Financial Highlights

-5.8%102.296.3Operating Profit

-5.4%93.688.5Profit Attributable to Shareholders of the Company

-5.8%37.835.6Basic Earnings per Share (US cents)

Changes20102011(US$ M)

5.4%813.9858.1Revenue

For the six months ended 30 September

-0.3%261.9261.0Gross Profit

Interim Dividend per Share (US cents) 16.016.0 --

Gross Profit Margin %

Net Profit Margin %

Operating Profit Margin %

-1.2% pts11.5%10.3%

-1.4% pts12.6%11.2%

-1.8% pts32.2%30.4%

4

Revenue by Region

Total 858.1 100.0 813.9 5.4%

42.7Others 5.0 42.6 0.2%

Europe 39.2 298.6 12.7%336.5

North America 431.2 50.2 421.6 2.3%

Asia Pacific 47.7 5.6 51.1 -6.7%

% Change20102011(US$ M)

For the six months ended 30 September

5

Working Capital

Stocks 320.2 296.8

Stocks Turnover Days 108 days 119 days

Trade Debtors 323.6

Trade Debtors Turnover Days 58 days 60 days

339.5

30/09/1030/09/11(US$ M)

229.8

85 days

198.8

63 days

31/03/11

6

Deposits and Cash 128.5 181.1

30/09/1030/09/11(US$ M)

Liquidity Position

Total Borrowings - -

128.5 181.1

333.1

31/03/11

-

333.1Net Cash Position

7

King PangGroup President

8

Rising costs - the biggest challenge in 1H:

• Higher raw materials prices

• Further wage increases in China

• RMB appreciation

Operations Review - Costs

Price increase + cost reduction + efficiency enhancement

to counteract cost increases

9

North America

• Revenue up 2.3% to US$431.2 million, 50.2% of Group revenue

• Higher revenue from CMS offset slight revenue decreases from TEL products and ELPs

• TEL revenue down 0.7% to US$220.2 million

− The decrease reflects the maturity of the market and low level of new housing starts

− Maintained No.1 position in US

− Made good inroads into SMB and hotel phone segments

Revenue by Product Line (US$ million)

TEL220.2(-0.7%)

ELPs115.4(-2.8%)

CMS95.6(+17.9%)

10

North America (continued)

• ELP revenue down 2.8% to US$115.4 million

− Lower shipment of V.Reader

− InnoTab revenue has not been recognised in 1H

− Revenue from standalone products was flat

• CMS revenue increased by 17.9% to US$95.6 million

− Professional audio equipment was a major growth driver

− Higher sales of telecommunication products and commercial solid state lighting also supported growth

Revenue by Product Line (US$ million)

TEL220.2(-0.7%)

ELPs115.4(-2.8%)

CMS95.6(+17.9%)

1111

Europe• Revenue up 12.7% to US$336.5

million, 39.2% of Group revenue

• All product lines posted growth

• TEL revenue up 3.6% to US$115.4 million

− Growth was driven by increased orders from existing customers

− Germany and France posted the strongest growth

− Attained No. 1 cordless phone manufacturer in Western Europe

Revenue by Product Line (US$ million)

TEL115.4(+3.6%)

ELPs124.6(+15.2%)

CMS96.5(+22.2%)

1212

Europe (continued)

• ELP revenue up 15.2% to US$124.6 million

− Growth was driven by both platform and standalone products

− France, Germany and the Benelux countries turned in the best results

− Shipment in UK was down, primarily due to carried-forward inventory at some retailers

• CMS revenue up 22.2% to US$96.5 million

− Switching mode power supplies were especially strong

− Professional audio equipment and wireless headsets also saw increased orders

Revenue by Product Line (US$ million)

TEL115.4(+3.6%)

ELPs124.6(+15.2%)

CMS96.5(+22.2%)

131313

Asia Pacific• Revenue down 6.7% to US$47.7

million, 5.6% of Group revenue

• TEL revenue decreased by 12.3% to US$14.2 million, primarily due to weakness in the Japanese market

• ELP revenue rose by 7.1% to US$10.5 million, driven by growth in South-East Asian countries and China.

• CMS revenue declined by 8.4% to US$23.0 million, mainly due to lower orders for LED light bulbs, offsetting higher sales from handheld radiation detectors and medical equipment

Revenue by Product Line (US$ million)

TEL14.2(-12.3%)

ELPs10.5(+7.1%)

CMS23.0(-8.4%)

1414

Other Regions• Revenue up 0.2% to US$42.7

million, 5.0% of Group revenue

• Growth in Latin America was balanced by declines in the Middle East and Africa

• Revenue from TEL products fell by 12.3% to US$27.0 million

• Revenue from ELPs rose by 30.8% to US$15.3 million

Revenue by Product Line (US$ million)

TEL27.0(-12.3%)

ELPs15.3(+30.8%)

CMS0.4(+300.0%)

15

Growth Strategy

1616

Growth StrategyGeographic Expansion

• AP + other regions = 10.6% of Group sales

• China is our focus

• ELPs: Expanding steadily in China

• TEL: Will sell AT&T phones in China in 4QFY12

Gains inMarket Share

• World’s No. 1 cordless phone manufacturer

• World’s No. 1 ELP supplier

• CMS growth out-paces global EMS market

• New SMB & hotel phones

• InnoTab for US & UK

• Storio & MobiGo for key EU markets

• Strong product pipeline in 2012

Product Innovation

Operational Excellence

• Tight cost control

• Efficient operations

• SG&A: % of Group revenue continued to drop (15.9% in 1HFY12 vs 16.2% in 1HFY11)

Operating Cost

1717

Our Strengths

Excellent R&D

Strong Balance Sheet

Market Leadership Position

TEL -No.1 Global Manufacturer Efficient Operations

1818

Allan WongChairman and Group CEO

19

Outlook - Overview

• Global economy is highly uncertain

− Economic growth in the US likely to remain sluggish

− Consumer confidence in Europe is weakening

• Cautiously optimistic of achieving top line growth in 2H

• Margins could at least stabilise, as there are signs that cost pressures are abating

20

Outlook - Overview

• Continue to explore every avenue to improve margins:

− Stepping up automation

− Product design optimisation

− Tight cost control

2121

Outlook

• Remain positive for TEL products

• North America – Increasing sales of SMB and hotel phones should offset some of the sales decline in home cordless phones

• Europe – Revenue and market share will grow, with both existing and new customers

• Asia Pacific – Sales will pick up in Japan and we will start selling AT&T branded fixed line telephones in China in 4QFY12

• Other regions – Sales will improve as Middle East and South America return to growth path

2222

Outlook

• Planning for year-on-year growth for ELPs across all our major markets

• North America – Stepped up actions to bolster holiday sales; solid contributions from InnoTab in 2H

• Europe – Good performance of Storio, MobiGo, Kidi-series and other standalone products will continue; UK will return to a growth path

• Asia Pacific – Growth will continue in 2H; biggest challenge in Australia

2323

Outlook

• CMS will continue to outperform the global EMS market

• Professional audio – Will continue to add new customers because of excellent know-how and strong reputation

• Wireless headsets – Expect further growth due to proliferation of Unified Communications

• Switching mode power supplies – Business will remain stable

• Solid state lighting – Growth in commercial solid state lighting will not be sufficient to offset the decline in LED light bulbs for consumers

24

Conclusion

• While we are optimistic of delivering top line growth, profitability will remain challenging

• However, Group’s margins are showing an improving trend

• VTech is well-positioned to grow even more strongly once the global economy enters a sustained period of recovery

2525

Thank You