VTECH HOLDINGS(HK:00303)2020-06-05 09:11Financial Performance - For the fiscal year ending March 31, 2020, the group's revenue was $2,165.5 million, reflecting a 0.2% increase from the previous year[4]. - Gross profit increased by 4.3% to $663.6 million, resulting in a gross margin of 30.6%, up from 29.4% in the previous year[4][11]. - Profit attributable to shareholders rose by 11.3% to $190.7 million, driven by lower costs contributing to higher gross profit[10]. - Basic earnings per share increased by 11.0% to 75.7 cents, compared to 68.2 cents in the previous fiscal year[10]. - Operating profit grew by 13.7% to $219.7 million, with an operating margin of 10.1%, up from 8.9%[4]. - The group generated cash from operations amounting to $263.5 million, a decrease of 3.6% from the previous year[4]. - The net cash position increased by 2.3% to $242.5 million as of March 31, 2020, compared to $237.0 million in the previous year[33]. - Total operating expenses rose by 0.2% to $449.8 million, maintaining a ratio of 20.8% of total revenue[24]. - The effective tax rate decreased from 10.9% to 10.2%, primarily due to tax refunds from U.S. operations[28]. - The company reported a net profit margin of 12%, an increase from 10% in the prior year[167]. Dividends and Shareholder Returns - The board proposed a final dividend of 36.0 cents per share, bringing the total dividend for the year to 53.0 cents, a decrease of 20.9% from the previous year's 67.0 cents[10]. - The dividend payout ratio for the fiscal year 2020 was 70.0%, down from 98.4% in the previous fiscal year[116]. - The group reported a mid-term dividend of 17.0 cents per share, consistent with the previous year, and proposed a final dividend of 36.0 cents per share for the year ending March 31, 2020, down from 50.0 cents the previous year[175]. Market Performance and Sales - The group experienced sales growth in Europe and the Asia-Pacific region, which offset declines in North America and other areas[10]. - The revenue for the electronic learning products business experienced slight growth in the fiscal year 2020, driven by increased sales in North America and the Asia-Pacific region, offsetting declines in Europe and other areas[13]. - The sales decline for telecommunications products slowed, with the group maintaining its position as the largest home phone manufacturer in the U.S.[14]. - The group expanded its market share in the U.S. and solidified its leadership position in the infant and preschool electronic learning toy market[13]. - The company plans to expand its market presence in Asia, targeting a 30% increase in market share over the next two years[167]. Research and Development - Research and development expenses increased by 5.8% to $81.7 million, indicating a continued investment in product innovation[4]. - The company is investing $50 million in research and development for new technologies aimed at enhancing user experience[167]. - The group plans to accelerate product development and launch more innovative products to strengthen market leadership[16]. Sustainability and Community Engagement - The group’s sustainable development efforts have been acknowledged with an AA rating from MSCI and inclusion in the FTSE4Good Global Index[75]. - VTech has established a five-year sustainable development plan for 2021 to 2025, focusing on using more sustainable materials and enhancing environmentally friendly practices in its supply chain[87]. - The company has donated baby monitors to hospitals in North America and surgical masks to hospitals in Dongguan, China, as part of its community support during the pandemic[86]. - The group has invested over 23,000 hours in volunteer services during the fiscal year 2020, indicating a commitment to community engagement[76]. Corporate Governance - The board consists of 3 executive directors, 1 non-executive director, and 4 independent non-executive directors, ensuring a diverse range of skills and experience[129]. - The company has adhered to the corporate governance code as per the Hong Kong Stock Exchange, with a notable exception regarding the separation of the roles of Chairman and CEO[128]. - The audit committee is responsible for overseeing financial reporting, risk management, and compliance with applicable laws and regulations[143]. - The company has established a comprehensive management framework to ensure compliance with applicable laws and regulations, as well as best practices in corporate governance[99]. Risk Management - The company has implemented a business continuity management plan to identify and mitigate operational risks, enhancing resilience during disruptions such as the COVID-19 pandemic[99]. - The risk management and sustainability committee has identified key operational risks, including economic and operational risks related to the COVID-19 pandemic[149]. - The company has established a risk register that is reviewed biannually, documenting key risks and corresponding mitigation measures[162]. Audit and Financial Reporting - The independent auditor, KPMG, audited the consolidated financial statements and confirmed they fairly reflect the group's financial position as of March 31, 2020[193]. - The audit committee assists the board in overseeing the financial reporting process of the company[198]. - The auditor's report aims to provide reasonable assurance that the consolidated financial statements are free from material misstatement due to fraud or error[200]. Employee Engagement and Training - Employee training hours increased by 9.5% compared to the previous fiscal year[109]. - The company is committed to providing a supportive and healthy work environment for employees, promoting continuous learning and development[95]. - The average health and safety training hours per employee increased, with no recorded fatalities from workplace injuries[109].