(Source: PRNewswire)HONG KONG, June 15 /PRNewswire-Asia-FirstCall/ -- VTech Holdings Ltd (HKSE: 303; ADR: VTKHY) today announced its annual results for the year ended 31st March 2009, reporting lower revenue and profit. Despite this, the Group's balance sheet remains strong with the net cash position as at 31st March 2009 increased from US$285.4 million to US$287.2 million.

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Group revenue for the year ended 31st March 2009 decreased by 6.7% over the previous financial year to US$1,448.2 million. Profit attributable to shareholders declined by 33.6% to US$143.2 million. The decrease in profit was mainly due to lower sales, increased price promotions and an exchange loss of US$27.6 million arising from the Group's global operations in the ordinary course of business, as the Euro and Sterling weakened sharply against the US dollar. Excluding the impact of exchange differences, profit attributable to shareholders decreased by 16.7% over the previous financial year.

Basic earnings per share decreased by 34.6% to US58.5 cents, compared to US89.4 cents in the financial year 2008. A final dividend of US41.0 cents per ordinary share was proposed, as compared to US51.0 cents per ordinary share in the previous financial year.

"To respond to the sudden change in market conditions, VTech moved swiftly to step up retail level promotions to stimulate sales. Although margins were affected, it enabled VTech to end the full year with lower inventory than last year. In addition, our balance sheet remains strong, with our net cash position slightly ahead of the previous financial year. Our decisive and aggressive action enabled us to establish a solid financial position from which to move forward," said Mr. Allan Wong, Chairman and Group CEO of VTech Holdings Limited.

Telecommunication Products (TEL) Business Strengthens Leadership Position

Revenue for the financial year 2009 at the TEL business declined 9.8% over the previous financial year to US$620.7 million. The business accounted for 42.9% of Group revenue, against 44.3% in the previous financial year. The decline was mainly due to the poor market conditions in the United States, following the onset of problems in the global credit markets.

As in the financial year 2008, sales to Europe, Asia Pacific and other markets, where VTech mainly operates an ODM business, continued to expand. Sales to Europe rose by 7.4% to US$193.7 million, equivalent to 31.2% of total TEL revenue. VTech's market share continued to grow, as customers placed more orders owing to its strong cash position and the weakening of other suppliers. In September 2008, VTech signed an exclusive supplier agreement with Deutsche Telekom AG (Deutsche Telekom) and the co-branded "T-Home/ VTech" products began shipping in January 2009.

Sales to Asia Pacific and other markets grew 38.5% and 40.5% to US$14.4 million and US$28.8 million respectively. VTech has made good progress in penetrating into Latin America, Middle East, Australia and India, demonstrating the success of the Group's strategy of geographic expansion.

Sales to North America, where VTech operates a branded business, declined by 19.5% to US$383.8 million and it accounted for 61.8% of total TEL revenue. The decline in sales was attributable to slowing demand and a reduction of inventories by retailers, in anticipation of an uncertain US economy.

Despite the weak economic conditions, both the VTech and AT&T brands performed well and the Group continued to increase its market share, maintaining the number one position in the US cordless phone market. VTech DECT 6.0 models for warehouse clubs sold well, while the AT&T DECT 6.0 products with Bluetooth technology outperformed the competition, as their Bluetooth feature became highly regarded by consumers.

A new product category, AT&T cordless headsets, was introduced in October last year. These products have been well received by the market, although shipments have so far been on a modest scale.

Electronic Learning Products (ELP) Business Led by Standalone Products

The ELP business saw revenue decrease by 7.9% to US$566.9 million. This is equivalent to 39.1% of total Group revenue, as compared to 39.7% in the previous financial year. After a solid first half, the financial year witnessed a rapid and severe deterioration of the global economy in the second half. This led to softening of consumer demand, and necessitated aggressive retail level promotions.

North America and Europe were the markets most affected by the slowdown.