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Sept 2012

Represented by:

www.HTConsultingServices.com

About the VTech Group

2 Shenzhen 2008 QingYuan 2005 LiaoBu 1997 HouJie 1985

• Headquartered in HKG since 1976

• Listed in HKG (HKSE:303)

• Factories in HouJie, LiaoBu & QingYuan, R&D Center in SZ

• Operations in 11 countries and regions

Locations

Employees

• 37,000 Employees Worldwide

• 1,500 R&D Professionals & Engineers

Financials

• Financially Strong & Reputation for High Quality

• 3 Divisions : Phones, Electronic Learning Products & CMS

• $1,858M in Revenue in Fiscal 2013

• $892.4M for Interim Result Fiscal 2014 (2% Growth)

VTech Corporate Structure

3

4

Group Financial Performance – FY14

The Group Turnover in the Past 5 Years

1,5321,713 1,784 1,858 1,899

0

600

1,200

1,800

2,400

FY10 FY11 FY12 FY13 FY14

0

200

400

600

800

Sales by Companies US$M

Phone

ELP

CMS

FY11 FY12 FY13 FY14

Phone 727.5 706.3 666.4 626.9

ELP 594.9 657.1 731.3 778.6

CMS 390.4 421.1 460.3 493.4

Key Financial Highlights

US$M FY13 FY14

Sales 1,858.0 1,898.9

Operating Profit 224.7 226.1

Profit Before Tax 226.4 227.5

R&D Expenses 57.1 58.0

Cash on Hand 308.6 322.9

Dividend per Share (US$ Cents) 80.0 80.0

No. of Employee 34,800 30,900

Geographic Sales Distribution FY14

50.1%41.7%

2.5%5.7% N. America

Europe

Asia Pacific

Other

Sustainability

5

• Product Design for the environment

• Produce products in a sustainable manner

• Deliver products in an energy-efficient manner

Workplace Quality

• Committed to provide a supportive, safety, health

and pleasant workplace for our people

• Corporate policy of human and labor rights

Community Investment

Sustainable Operating Practices

• Product Quality Assurance

• Supply Chain Management

• Code of Conduct

• As a responsible company, we use our skills and

resources to support the communities in a variety

of ways

CSR 5 Themes

Employees

Health & Safety

Environment Management

System

Ethics

Environmental Protection

Protecting Our Client’s Patents and IP

6

IP as the most valuable Asset

• We fully recognize the importance of the IP & Patent Protection

• VTech VTE & ELP have the same IP Protection Interest

• See our Web Site Statement and Details

Our Procedures to protect IP

• NDA or General Confidentiality Agreement

• Tightly Controlled Documentation and Copying of Doc’s

• Access on an “As needed Basis”

• Continuous Training of our Employees

• Return of all files after the completion of a Project

History and Forward Looking

The Result

• Our Customers and potential Clients are fully protected

• Our four Buildings as Technology Protection in Projects

• No History of any IP Violation since our Existence

• Ongoing IP & Patent Awareness Training

7

a) Growth by Organic

b) Focus on Non-Consumers Type Products

c) Customers Focus

The Strategy Business Mission

Be the preferred business partner of selected customer segment in the EMS Industry

CEO

Support Unit SBU2 SBU3SBU1

CEO

Support Unit SBU2 SBU3SBU1

Business Strategy of CMS

The Core Competence & Competitive Edge

Core Competence – Stable mid to senior level staffs with good knowledge in

EMS business with skill in how to run an efficient operation with quality.

Competitive Edges – Outstanding technology know how in manufacturing

professional audio products, strong financial backup by the Group and right size

to serve selected customers segment.

8

CMS Sales Distribution – FY14

FY14A

39.3%

51.0%

6.8% 2.9%

USA Europe Japan Other

Sales Growth in CMS

FY09A $261M 5%

FY10A $281M 8%

FY11A $390M 39%

FY12A $421M 8%

FY13A $460M 9%

FY14A $493M 8%

Product Types FY13 A FY14A

Pro Audio 36% 40%

Power Supplies 16% 14%

LED 9% 8%

Wireless 17% 18%

Industrial Products 6% 3%

Home Appliances 5% 5%

Communications 6% 7%

Medical 5% 5%

Total 100% 100%

FY13A FY14A

Biggest 20.0% 21.9%

Top 5 59.0% 60.7%

Top 10 74.0% 74.6%

Products in VTech CMS

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Pro Audio / MI

LED Telecom

Medical & Health Power Supply

UK Austria US US UK

US Japan US US US

US

Japan Norway Norway

Denmark

CMS Program Management

10

Material / Production

Planning Group

* PMC – MC confirm

materials status from

new order & checking

Leadtime, MOQ and

Excess.

* PMC – PC confirm

production planning and

delivery schedule.

Technical Support

Group

* Project leader from

DE who handle

technical issues

directly with

customers.

* Mechanical

engineers who

responsible for

mechanical parts of

projects and report to

project leader.

Purchasing

Group

* Handling costing,

alternative parts &

quotations directly

to PMT, material

delivery schedule

confirmation in

between PMC

department.

Quality Assurance

Group

*Handling all of quality

issues:

* Failure analysis /

corrective action

follow-up

* Reliabilities testing /

evaluation follow-up

* Incoming / Outgoing

materials quality

control

Logistics

Group

* Arrange

import and

export for

VTech and

customers.

Program Manager

PMC Material / Production Planner

DE & ME Engineer

PUR Sourcing Buyer

IQC / QA Engineer

Logistics Supervisor

PMT Officer

PMT Group

* Preparation of

quotation.

* Order process

confirmation.

* Carry out the

procedure and co-

ordination of the

activities.

* Payment issues

between

customer.

CMS Manufacturing Capabilities

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CMS

• 650K Sq. Ft. manufacturing areas

• SMT, Thru-Hole, RoHS, REACH,

• ISO9001, ISO14001, ISO13485, TS16949, ISO18001, SA8000

• ANSI ESD S20.20 for all production floors

Manufacturing Capabilities

• 19 Fuji SMT Lines, State-of-the-Art Equipment

• ICT, AOI, ATE, FAT

• Chip on Board in Class 1,000 Clean Room

• Class 10,000 Clean Room for precise products

• Burn-in Chambers, X-Ray Inspection, Automation process

Plastics in VTech

Special Processes & Testing

• Conformal Coating, Burn-In

• Reliability life tests e.g. drop test, high/low temp cycle

• In-House Mfg. and Tooling

• 400 Injection Molding Stations, Up to 850 Tons

• Over-Molding, Mechanical

Manufacturing Facilities

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B6 B7

Canteen &

Entertainment

Dormitory

Production Plant –

Phones

Production Plant –

CMS

B5 B8 B9

FY11

Actual

FY12

Actual

FY13

Actual

FY14

Actual

FY15

Plan

Manufacturing Area (M2) 51,000 58,000 65,000 65,000 65,000

Cell Line (lines) 198 201 280 263 263

Wave Soldering (lines) 15 16 18 18 21

SMT (lines) 17 19 19 19 21

Auto Insertion (units) 8 9 10 11 12

• B9 set up will likely happen in FY15 in view of current

business forecast

CMS Manufacturing Capacity Planning

Automated PCB Assembly & Test

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Robotic VR Insertion Auto Switch Press Fitting Selective Soldering

Robotic Soldering Auto Screw Fastening Auto PCBA Testing

• Dedicated automation team

• Deployment of self-developed & off-the-shelf automation

Products Assembly

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Applicability

• Mid to high volume production

• Small to mid size products

• Low product / process complexity

Benefits

• Eliminate WIP staging

• Cycled time balanced to takt time

Applicability

• Mid volume production,

• Mid to large size products

• Mid product / process complexity

Benefits

• Eliminate batch queuing

• Quick changer over

• Maintain single-piece flow on larger

products

Applicability

• Low to mid volume production,

• Mid to large size products

• High product / process complexity

Benefits

• Attention to details on sub-module

assemblies

• Simplify final assembly & increase first

pass for complicated box build

Single-Piece-Flow Line Work Cell Work Bench

• Options to apply several lean manufacturing flows

• Improvement under high mix low volume environment in labor efficiency, inventory control, floor space, cycle

time & process handling is possible

15

Outgoing Quality

Assurance

System and Process audit

Vendor Rating System & Improvement Program

Material planning (MRP) &

PO release

Customer request & PO review

Manufacturing Process control

Material received

Vendors

Quality & Environment System

ISO9001 ISO14001 ANSI/ESD S20.20 TS16949

In-process Quality Control

IQC

Outgoing Quality

Assurance

VTech Tracking System Identification & Traceability

Product barcode system

Material barcode system

Customer

ISO13485

Statistical Techniques

Equipment

Control

Customer

ISO18001

Storage, Packaging & Delivery

Production

Inspection & Test

Quality Management System

– Quality System Model

SA8000

R&D Support and Design Support

16

Our Support Includes:

• Product Design, ID Support, Cost-Down Re-design

• Electronics including Hardware & Software Design

• Mechanical, Structural & Assembly Design

• PCB Re-design, Upgrades and Re-spin

• Convert a Conceptual Product into Volume Production

Typical Applications and Competence

• HW & SW developments for MCU, MPU, ARM processors, etc.

• Drivers and Embedded System Development

• RF, Wireless, Audio, Consumer Electronics, Medical, Telecom,

Energy-Star & Saving

• Convert an Electronic Schematic to PCB Gerber Data

Resources

NPI

• Design for Manufacturability (DFM)

• Sample Production and Design Verification & Validation

• Next Generation Design, Cost Reduction, Spec Upgrades

• Design Awarded R&D Group located in Shenzhen

• Professional Audio Test Lab

• Effective & Accurate Design Simulation Software

• Approx. 40 Engineers & Technicians support design professionally

17

Pro Audio Test Laboratory Facilities

Acoustic Room

Listening Room

Accreditation

• South China National Centre of Metrology

Features

• Test Frequency 200Hz-20KHz

• Background noise 28dB or below

• Sound isolation 55dB in average

• Parametric testing

• ISO3745-2003 standard

Accreditation

• South China National Centre of Metrology

Features

• Test Frequency 125Hz-8KHz

• Background noise 28dB or below

• Sound isolation 55dB in average

• Parametric, Functional & Listening testing

• ITU-R BS.11161-1 standard

• VTech R&D Center Audio Test Laboratory with its state-of-art equipments allows audio product testing to be

carried out in house with a shorter turnaround time

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Thank You!