RNS Number:9605B
Vtech Holdings Limited
13 August 2007



                               VTech Holdings Limited

                (incorporated in Bermuda with limited liability)

                               (Stock Code : VTH)


                        Continuing Connected Transaction


On 10th August 2007, VCL, being an indirectly wholly owned subsidiary of the
Company, and Ality entered into the Manufacturing Agreement which constitutes a
continuing connected transaction (the "Transaction") of the Company under Rule
14A.34 of the Listing Rules and shall be disclosed by way of an announcement.


Brief details of the Transaction will also be disclosed in the Company's
subsequent published annual report and accounts for each of the relevant
financial years ending 31st March 2008, 2009 and 2010 in accordance with the
requirements under the Listing Rules.


I.     The Transaction


On 10th August 2007, VCL as manufacturer entered into the Manufacturing
Agreement with Ality as purchaser. The principal terms of the Manufacturing
Agreement are as follows:


Date            :  10th August 2007

Purchaser       :  Ality

Manufacturer    :  VCL

Terms           :  Initial term of 24 months commencing from 10th August 2007

Services        :  VCL agrees to manufacture and supply to Ality, and
                   Ality agrees to purchase from VCL, the products subject to 
                   the terms and conditions contained in the Manufacturing 
                   Agreement.

Annual Caps     :  For the periods from 1st August 2007 to 31st March 2008, 
                   from 1st April 2008 to 31st March 2009 and from 1st April 
                   2009 to 9th August 2009 (end of the initial term of the 
                   Manufacturing Agreement), the Annual Caps shall be US$3.69 
                   million (equivalent to approximately HK$28.68 million),
                   US$6.59 million (equivalent to approximately HK$51.25
                   million) and US$3.28 million (equivalent to approximately 
                   HK$25.19 million) respectively.


Ality is a company which is wholly owned by Mr. William WONG Yee Lai. Mr.
William WONG Yee Lai is the son of Mr. Allan WONG Chi Yun, who is a director,
chief executive and substantial shareholder holding 38.90% of the entire issued
share capital of the Company.  Ality is therefore a connected person of the
Company as ascribed by the Listing Rules and the Manufacturing Agreement
constitutes a continuing connected transaction under the Listing Rules.


The ordinary business of VCL includes providing OEM and ODM contract
manufacturing services of electronic products to global customers.  Ality
engages the design and sales of certain electronic products and shall require
VCL to provide contract manufacturing services. The purchase amount of the
products will be settled by open credit with personal guarantee of Mr. William
WONG Yee Lai.


The Annual Cap is based on the expected annual purchase amount for the periods
from 1st August 2007 to 31st March 2008, from 1st April 2008 to 31st March 2009
and from 1st April 2009 to 9th August 2009 (end of the initial term of the
Manufacturing Agreement), whereas the expected annual purchase amount paid by
Ality to VCL for the products supplied during the periods under the
Manufacturing Agreement shall not exceed US$3.69 million (equivalent to
approximately HK$28.68 million), US$6.59 million (equivalent to approximately
HK$51.25 million) and US$3.28 million (equivalent to approximately HK$25.19
million) respectively.  The expected annual purchase amount (being the
forecasted annual total quantity of products manufactured by VCL and supplied to
Ality under Manufacturing Agreement) is calculated and determined based on the
expected price per product unit and the forecasted annual sales of the existing
products of Ality and are at market rates. Previous transactions over the past
twelve months in respect of the manufacture and supply by VCL to Ality of
certain electronic products amounted to US$1.18 million (equivalent to
approximately HK$9.18 million). Such transactions are not required to be
aggregated under Rule 14A.25 of the Listing Rules.


II.    Reasons for the Manufacturing Agreement


The Transaction is conducted in the ordinary and usual course of business of VCL
and is on normal commercial terms. VCL has assessed the business volume, profit
margin, manufacturing capacity and technology competence when entering the
Manufacturing Agreement.  The Board (including all independent non-executive
directors) are of the view that the Manufacturing Agreement is entered into upon
normal commercial terms which are fair and reasonable and is in the interest of
the Company and its independent shareholders as a whole as it will increase the
revenue and profit of VCL and widen the customer base. The Board also considers
that the Manufacturing Agreement is entered in the usual and ordinary course of
business of the Company and the Annual Caps represent fair and reasonable
calculations as per the forecasted annual sales of the existing products of
Ality.


III.   General


The Group is principally engaged in the business of the design, manufacture and
distribution of electronic learning products and telecommunication products.  It
also provides contract manufacturing services.


Based on the annual cap, the relevant percentage ratios applicable to the
aggregate purchase price under the Manufacturing Agreement exceed 0.1% but are
less than 2.5% of the applicable percentage ratios of the Company under Rule
14A.34 of the Listing Rules and accordingly, no independent shareholders'
approval is required.  Details of the Transaction shall be disclosed by way of
an announcement and are to be included in the Company's subsequent published
annual report and accounts of each of the relevant financial years in accordance
with Rules 14A.45 and 14A.46 of the Listing Rules.


As at the date of this announcement, the Board of Directors of the Company
comprises:


Executive Directors                    :   Allan WONG Chi Yun
                                           Edwin YING Lin Kwan
                                           PANG King Fai


Independent Non-executive Directors    :   Raymond CH'IEN Kuo Fung
                                           William FUNG Kwok Lun
                                           Michael TIEN Puk Sun
                                           Patrick WANG Shui Chung


Definitions:


Unless otherwise defines, the following terms used in this announcement shall
have the following meanings:


"Ality"                      Ality Limited, a company incorporated in Hong Kong, 
                             which is wholly owned by Mr. William WONG Yee Lai;

"Allan WONG Chi Yun"         Mr. Allan WONG Chi Yun, a director, chief executive 
                             and substantial shareholder holding 38.90% of the 
                             entire issued share capital of the Company;

"Board"                      the board of directors of the Company;

"Company"                    VTech Holdings Limited, a company incorporated in 
                             Bermuda, the shares of which are listed on The 
                             Stock Exchange of Hong Kong Limited and The London 
                             Stock Exchange plc;

"Group"                      the Company and its subsidiaries;

"Listing Rules"              The Rules Governing the Listing of Securities on 
                             The Stock Exchange of Hong Kong Limited;

"Manufacturing Agreement"    manufacturing agreement dated 10th August 2007
                             entered between VCL and Ality Limited;

"VCL"                        VTech Communications Limited, a company 
                             incorporated in Hong Kong, being the indirectly 
                             wholly owned subsidiary of the Company;

"William WONG Yee Lai"       Mr. William WONG Yee Lai, the son of Mr. Allan
                             WONG Chi Yun.




By Order of the Board

VTech Holdings Limited
CHANG Yu Wai
Company Secretary




Hong Kong, 13th August 2007


Website:    http://www.vtech.com

                http://www.irasia.com/listco/hk/vtech


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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