Sept. 2016 Presented by: Rolf Seichter, HTCS, LLC 1 About the - - PowerPoint PPT Presentation

INNOVATION BEYOND TECHNOLOGY

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• Sept. 2016

CONTRACT MANUFACTURING DIVISION

Presented by: Rolf Seichter, HTCS, LLC

About the VTech Group

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• 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

• 29,500 Employees Worldwide
• 1,500 R&D Professionals & Engineers

Financials

• Financially Strong & Reputation for High Quality
• 3 Divisions : Phones, Electronic Learning Products & CMS
• $1,856.5M in Revenue in Fiscal Year 2016

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US$M FY12 FY13 FY14 FY15 FY16 Phone 706.3 666.4 626.9 651.5 585.0 ELP 657.1 731.3 778.6 703.3 692.3 CMS 421.1 460.3 493.4 525.0 579.2

FY16 Sales Distribution by Geography

47.3% 42.9% 6.9% 2.9%

• N. America

Europe Asia Pacific Other 1,784 1,858 1,899 1880 1,857 1,500 1,600 1,700 1,800 1,900 2,000 FY12 FY13 FY14 FY15 FY16

Group Turnover in the Past 5 Years, US$M

US$M FY14 FY15 FY16 Sales 1,898.9 1,879.8 1856.5 Operating Profit 226.6 220.1 202.3 Profit Before Tax 228.0 221.7 203.1 R&D Expenses 58.0 56.1 56.3 Cash on Hand 322.9 294.2 273

• No. of Employee

30,900 29,500 27,400

Sales by Companies, US$M Group Financial Highlights

FY16 Group Financial Performance

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93 95 97 128 158 233 248 261 281 390 421 460 493 525 579 650 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Sales (USD’M)

Actual Projection

4th 3-Y Plan 3rd 3-Y Plan 2nd 3-Y Plan 1st 3-Y Plan

CMS Annual Sales Trend and Projection

26th

among the world’s top 50 EMS providers in MMI

14th

consecutive year of sales growth

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FY16 Major New Product Line Up

Pro Audio Hearable Power Supplies LED Home Appliances

North America

$192.5 million

(33.2%)

Asia Pacific

$52.7 million

(9.1%)

Europe

$334.0 million

(57.7%)

579.2

million

Smart Meter Display Coffee Maker Vehicle Battery Charger Calibrated LED Lighting Ultra Low Noise 96kHz Digital Mixer In-ear Wireless Smart Headphones

Pro Audio 36% Hearable 20% Power Supplies 15% LED 4% Home Appliance 5% Industrial 8% Communications 6% Medical 5% Automotive 1%

FY16 CMS Sales Distribution

6 The Strategy

• Growth by Organic with Selective Acquisition
• China Plus One
• Customers Focus

CEO Support Unit SBU2 SBU3 SBU1 CEO

Business Support Units

SBU2 SBU3 SBU1

Business Mission Be the preferred business partner of selected customer segment in the EMS Industry Core Competence & Competitive Edge

• Core Competence – Stable middle to senior level staffs with good

knowledge in EMS business with skill in serving our customer well.

• Competitive Edges – Niche in manufacturing professional audio

products, strong financial backup by the Group and right size to serve selected customers segment.

Business Strategy of CMS

CMS Manufacturing Capabilities

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CMS

• 5 buildings with over 85K Sq. M. Manufacturing Area
• SMT, Thru-Hole, RoHS, REACH,
• ISO9001, ISO14001, ISO13485, TS16949, ISO18001, SA8000
• ANSI ESD S20.20 for all production floors

Manufacturing Capabilities

• 24 Fuji SMT Lines, State-of-the-Art Equipment
• In-housed design and fabrication for 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, Conformal Coating
• Reliability life tests e.g. drop test, high/low temp cycle

Plastics in VTech

• In-House Manufacturing and Tooling for plastics
• 2 Plastic Factories in HouJie and QingYuan
• 2 Automatic Spraying Lines in QingYuan factory
• 400 Plastic Injection Molding Stations, Up to 850 Tons
• Over-Molding Technologies

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CMS Metal Capability (Acquisition of Kenny Products)

Kenny Products:

• Established in 1979 with 600 Employees, 25,000 Sq. Meter Factory area
• One Stop Service: Tooling Design & Making, Stamping, NC-Punching &

Bending, Secondary Process and Surface Treatment Stamping Facility:

• 90 sets Press Machines, up to 650 Tons
• 40 sets Stamping Robotic arms
• Stamp Types: Robotic Stamping Lines, Progressive,

Single-Stamping, Transfer and Hydraulic. NC Facility:

• 4 sets NC-Punching Machines
• 4 sets NC-Bending Machines
• Satisfy High-Mix Low-Volume Orders

Secondary Process – Welding Facility:

• Assembly services catering to functional or appearance

related requirement

• Laser Welding, Stud Welding, Robotic Arc Welding

Machines

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CMS Metal Capability (Acquisition of Kenny Products)

Surface Treatment Facility:

• Automatic wet painting line & powder coating line in Class 100K
• Silkscreen printing and pad printing workshop
• Facilities fulfill environmental regulations

Quality Management Systems & Quality Control:

• Accredited with ISO9001:2008 and

ISO/TS16949 Certificates by BSI

• CMM
• RoHS Tester
• Hardness Tester
• Salt-Spray Tester
• 3D Vision Projector
• Fisherscope X-ray System

Products Categories:

• Professional Audio Equipment, Home Appliance, Computing Electronics,

Office Automation, Power Supply Units and Automotive Products.

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Outgoing Quality Assurance

System and Process audit Vendor Rating System & Improvement Program Material planning

(ERP in SAP) &

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 SA8000

Quality Management System

Protecting Our Client’s Patents and IP

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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

Our sustainability vision is to design, manufacture and supply innovative and high quality products in a manner that minimizes any impact on the environment, while creating sustainable value for our stakeholders and the communities.

Sustainability

1) Product Responsibility & Innovation 2) Environmental Protection 3) Workplace Quality 4) Sustainable Operating Practices 5) Community Investment 12

R&D Engineering and Design Support

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R&D Design Services Include

• Product Design, ID Support, Cost-Down Re-design
• Electronics including Hardware & Software Design
• Mechanical, Structural & Assembly Design
• Schematic and PCB Layout Design
• Packaging Design (Gift Box, Clamshell, Export Carton, etc)

Typical Applications and Competence

• HW & SW developments for MCU, MPU, DSP, etc.
• Drivers and Embedded System Applications
• RF, Wireless, Audio, Consumer Electronics, Medical, Health Care,

Telecomm, LED Lighting,

• Prototype, Testing and Agency Approval

Resources New Product Introduction - NPI

• Design for Manufacturability (DFM)
• Sample Production and Design Verification & Validation
• Selection of Low Cost Components
• Located in Nanshan, Shenzhen
• Professional Audio Test Lab
• CAD & Simulation Software e.g. ProE, Solidworks, FloEFD
• 40 Engineers & Technicians support design professionally

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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

Audio Test Laboratory

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Thank You!