Vtech Holdings Ld
26 March 2001
VTech Holdings Limited
(Incorporated in Bermuda with limited liability)
The Board of Directors (the 'Board') of VTech Holdings Limited (the
'Company', which together with its subsidiaries are collectively known as the
'Group') wishes to inform the shareholders of the Company that the Group is
expected to record a substantial loss for the year ending 31st March, 2001.
Shareholders of the Company and investors should in view of the above exercise
caution when dealing in the shares of the Company.
The Company's interim results announcement dated 29th November, 2000 recorded
an unsatisfactory profit performance for the six months ended 30th September,
2000 with only a profit attributable to shareholders of US$0.8 million as
compared to US$26.4 million for the same corresponding period for the previous
year. Since that date the Group's telecommunications business has suffered
substantial losses. The other principal businesses of the Group, electronic
learning products, information appliances and other electronic products have
not improved significantly since that date. As a result, the Group is
expected to record a substantial operating loss for the year ending 31st
The majority of the losses relate to exceptional items currently estimated at
approximately US$133 million as at the date of this announcement (subject to
audit) resulting from:-
-The acquisition on 31st March, 2000 of Lucent Technologies Inc's ('Lucent')
consumer wired telephone business.
-Non-recurring operating losses.
-Consolidation and restructuring costs.
-Adjustments to certain intangible assets, including goodwill and know-how.
The Directors believe that the Group's under-performance, which is due
primarily to the losses incurred in conjunction with the business acquired
from Lucent, will not be recurring and it is anticipated that the Group's
overall performance will improve in next financial year. This belief is based
on the fact the Group has now made a full evaluation as to the needs and
requirements of the wired telephone business acquired from Lucent and that the
Board will be implementing the steps set out below. The Company is confident
that its overall consumer telephone business is a sound and viable business
and that its performance will be enhanced by the following business decisions
which are being implemented:-
- Re-organisation of the telecommunications business management team.
- Streamlining the operations of the wired telephone business acquired from
- Re-formatting the business model for the wired telephone business acquired
The Group, which is the world's largest manufacturer of cordless telephones
and electronic learning products, believes that both these businesses will
show substantially improved performance in the future. Its contract
manufacturing services unit has continued to grow and show improved
performance. Its e-business related services, which are a long term
investment and do not yet contribute to the results of the Group, will be
down-sized and re-organised to achieve synergies with other Group companies.
The Group's corporate services function has been streamlined to improve its
The Group will continue to trade on a normal commercial basis. The principal
bankers of the Group appreciate the current situation and have indicated that
they will continue to support the businesses of the Group.
As the Group's results for the year ending 31st March, 2001 have not yet been
finalised, the Board is not able to quantify the final financial implications
or give the exact amount of losses at this stage. The Group will publish such
results in its 2001 annual report as soon as practicable after the end of the
Shareholders of the Company and investors should in the view of the above
exercise caution when dealing in the shares of the Company.
By Order of the Board
Allan WONG Chi Yun
Hong Kong, 26th March, 2001