Good afternoon, ladies and gentlemen, and welcome to all our viewers online. Today, VTech Holdings Limited is announcing its results for the year-end 31st of March 2025. Let me introduce our management. Mr. King Pang, Executive Director and Group President; Mr. Allan Wong, Chairman and Group CEO of VTech Holdings; Mr. Andy Leung, Executive Director and CEO of Contract Manufacturing Services; and Ms. Shereen Tong, Group Chief Financial Officer.
First of all, Ms. Tong will present the group financial performance. Next, Mr. Leung will talk about the cost and U.S. tariffs and review the group's operations in North America and Europe. Mr. Pang will then cover the rest of the segment results and give management outlook for the coming year. We will finish our presentation with a Q&A session.
Now may I invite Ms. Tong to open today's presentation. Ms. Tong, please?
Thank you, Grace. Good afternoon, ladies and gentlemen, and all viewers online. First of all, I would like to share with you the financial highlights of the group for the year ended 31st of March 2025 compared with the last financial year. As we see on this slide, the revenue of the group increased by 1.5% to USD 2,177.2 million. The higher group revenue was mainly due to the increase in revenue in Europe and other regions, which offset the lower sales in North America and Asia Pacific. The gross profit of the group increased by 8.2% to USD 686.8 million and our gross profit margin also improved from 29.6% to 31.5%.
The increase in gross profit and gross profit margin was mainly due to the lower cost of materials, favorable change in product mix as well as the gross profit contributed by Gigaset after the acquisition of its asset on April 5, 2024. These offset the higher direct labor costs and manufacturing overheads as a percentage of the group's revenue, increased the tariff on goods imported into the U.S. as well as the higher freight charges.
Our operating profit reduced by 3.8% to USD 188.7 million and our operating profit margin also reduced about 9.1% to 8.7%. The lower operating profit and operating profit margin were mainly due to the inclusion of the operations of Gigaset during the financial year 2025 and the increased spending on the advertising and promotional activities of our electronic learning products and telecom products compared with the last financial year.
Our profit attributable to shareholders reduced by 5.9% to USD 156.8 million, and our net profit margin also reduced from 7.8% to 7.2%. As a result, our basic earnings per share reduced by 6.1% to USD 0.62 and our Board of Directors has proposed a final dividend of USD 0.44 bringing the total dividend per share for the year to USD 0.61.
Turning to the revenue by region. Our sales in North America reduced by 3.2% to USD 893.1 million. The decline in revenue was due to the lower sales of our telecom products and contract manufacturing services, which offset the higher sales of our electronic learning products. Europe became the largest market of the group, accounting for 44.1% of the group's revenue. Our sales in European markets rose by 8.2% to USD 960.7 million. It was mainly due to the higher sales of our telecom products following the acquisitions of the asset from Gigaset, which offset the lower sales of our electronic learning products and contract manufacturing services.
In Asia Pacific region, the revenue of the group reduced by 5.3% to USD 300.9 million. It was due to the lower sales of all our 3 product lines. Other regions include Latin America, Middle East and Africa. The gross revenue in other regions increased by 31.6% to USD 22.5 million. The increase in sales in other regions was due to the higher sales of our electronic learning products and telecom products.
Our stock balance as of 31st of March 2025, increased about USD 348 million to USD 360.8 million. And our stock turnover days also increased about 101 days to 106 days. The highest stock balance was mainly due to the early productions of the gross products in order to better utilize the group's production capacity. Our trade debtors balance as of 31st of March 2025 increased from USD 224.6 million to USD 267.8 million. Our trade debtors turnover days, however, reduced from 60 days to 56 days. The higher trade debtors balance was mainly due to the increase in revenue in the fourth quarter of the financial year 2025 compared with the same period of the last year.
Our financial positions remain very strong. We are debt free and our net cash balance as of 31st of March 2025, increased from USD 322.1 million to USD 335.6 million, an increase of 4.2% compared with the last financial year. That's all of my presentation. I will now invite Mr. Andy Leung to share with you our operation review. Mr. Leung, please.
Thank you, Shereen. Once again, a sincere welcome to all of you joining us today. We will begin our review of operations by looking at costs. The group gross profit margin in the financial year 2025 rose to 31.5% as compared with 29.6% in the financial year 2024. This was due to 3 major factors. Cost of material was lower as material price declined. There was a positive change in the product mix and there was a gross profit contribution from Gigaset. These factors offset several negative developments. Direct labor costs and manufacturing overheads rose as a result of expansion of factory workforce following the integration of workers at the Gigaset factory in Germany. The group also ramped up production and increased inventory level to optimize capacity utilization at its production facilities, further increasing direct labor costs and manufacturing overheads.
Costs were further increased by higher freight costs and tariff costs as compared with the previous financial years. This impact offset the effect of depreciation of the Renminbi and further improvement in productivities. Beginning in 2018, the U.S. introduced a series of tariffs for goods made in China. In response we have been diversifying our manufacturing footprint starting in the same year with our first facility outside China in Muar, Malaysia. The expansion has continued with the acquisition of the additional facility in Penang, Malaysia in 2020 and in Tecate, Mexico in 2021. The acquisition of Gigaset in 2024 extend the manufacturing operation to Bocholt, Germany. In 2025, U.S. tariff have been expanded to cover imports from really all countries with additional tariffs targeting Chinese goods. Faced with this uncertainty, we are accelerating the relocation of our production of U.S. bound product away from China.
The migration started with CMS in 2018, followed by Telecommunication products in 2020. We are aiming -- the transfer of ELP products is now in progress. We are aiming to complete the transfer of our production of U.S. bound product away from China within 2026.
We turn now to the review of our operations, beginning with North America. Group revenue in North America decreased by 3.2% to USD 893.1 million in the financial year 2025. As higher sales of ELP were offset by decline in Telecommunication products and CMS. North America has become the second largest market accounting for 41% of Group revenue. ELPs revenue in North America increased by 7% to USD 444.9 million. Sales growth in both the U.S. and Canada as the toy market stabilized in the calendar year 2024. We were able to take full advantage of this improvement as the new leadership team successfully implement our revitalized sales and marketing strategy, boosting growth.
Both stand-alone and platform product, registered higher sales and VTech strengthened its leadership position in electronic learning toys from infancy through toddler to preschool in the U.S. in the calendar year 2024. In Canada, sales also grew as VTech branded products achieved higher sales and VTech regained its #1 position in the infant, toddler and preschool toy category in the calendar year 2024.
There were higher sales of standalone products for both the VTech and LeapFrog products. LeapFrog saw higher sales of infant, toddler and preschool products, eco-friendly toys and the Magic Adventures series, with the successful rollout of the Magic Adventures Binoculars, contributing additional revenue. This offset lower sales of LeapLand Adventures.
For VTech, growth in preschool products, the Kidi line and the KidiZoom camera offset lower sales of infant and toddler products, the Go! Go! Smart family of products, Switch & Go Dinos and Marble Rush.
In Platform products, both the LeapFrog and VTech brand registered higher sales. Default sales were pushed higher by children educational tablets, interactive reading system and Magic Adventures growth. Subscriptions to LeapFrog Academy, however, post a decline.
At VTech, sales of Touch & Learn Activity Desk increased and a new generation of smart watches, KidiZoom Smartwatches DX4 boosted sales of this popular product line. These increases offset a decline of KidiBuzz. Telecommunication product revenue in North America fell by 11% to USD 178.8 million in the financial year 2025 as sales in all three product category declines. Sales of residential phones were lower as the U.S. residential phone market saw further contraction. Despite this, we remained the #1 U.S. cordless phone brand. We also achieved success in expanding sell-through online channels.
Commercial phone, smart -- commercial phones and smartphones experienced a decline in sales, despite growth in hotel phones and headsets. Orders for SIP phones fell as a customer lost market share in the face of strong competition. This offset the good performance of hotel phones, where VTech gained market share. Sales in the category were boosted by a new series of competitively priced models with sleek styling that was launched during the financial year, as well as increasing sales of thermostats for hotel phone -- for hotel channel. Headsets also reported modest growth as the customer increased orders.
Other telecommunication products posted a sales decrease. Sales of baby monitors contracted as competition rose. On the other hand, those of CareLine residential phones fell due to weak demand. This offset -- this offset modest growth in IAD as a customer increased orders. Nonetheless, VTech retained its position as the #1 baby monitor brand in the U.S. and Canada during the financial year 2025.
CMS sales in North America decreased by 11.9% to USD 269.4 million in the financial year 2025. These were lower sales of professional -- these were lower sales of professional audio equipment, solid-state lighting and IoT products despite gaining a new customer. This offset higher sales of industrial products.
Professional audio equipment reported lower sales as a slow economy led to a drop in end user demand, resulting in the sales decreases for power amplifiers and audio mixers. Over-inventory at a key customer led to a reduction in order for professional loud speakers. Solid-state lighting experienced a decline as the number of projects fell because of the slowing economy. IoT products reported lower sales as a customer experienced a financial issue. This offset gains from the new order for smart basketball hoop game consoles.
Industrial products posted growth as a sales contribution from a new customer in smart water leakage detectors offset a decline in PCBA for the coin and note recognition machines.
During the financial year, our CMS facility in Mexico became fully operational offsetting full term -- offering full-turnkey EMS capacity capability to customers. We have been assisting customers affected by the new U.S. tariff policy to transfer their production there.
Turning now to Europe. Group revenue increased by 8.2% to USD 960.7 million in the financial year 2025, as higher sales of telecommunication products offset decline for ELP and CMS. Europe has become VTech's largest market, accounting for 44.1% of the Group revenue.
ELP revenue in Europe fell by 2.7% to USD 307.0 million, with declines in both stand-alone and platform products. Sales declined in France, Germany and Benelux countries, affected by slow economic growth and a weak Euro. This offset rises in U.K., where there was a sales increase at a major retailer and Spain, where we saw higher sales at our key customers. In Italy, sales continued to grow following the establishment of a sales office in the country in 2023. In calendar year 2024, VTech remained the #1 infant and toddler toy manufacturer in France, the U.K., Germany, Spain, Belgium and Netherlands.
In the stand-alone category, growth in the LeapFrog brand was offset by the decline for VTech. At LeapFrog, infant and toddler products saw higher sales, boosted by the successful launch of Magic Adventures Binoculars. Sales of eco-friendly toys were stable, while those of preschool products and the LeapLand Adventures declined. VTech achieved higher sales of infant, toddler and preschool product as well as the Kidi line. However, these gains were insufficient to compensate for lower sales of the Toot! Toot! family of products, KidiZoom cameras, Marble Rush, electronic learning aids and Switch & Go Dinos.
For platform products, growth in LeapFrog was offset by a decline for VTech. And LeapFrog, sales of Magic Adventures Globe were higher, while those of interactive reading systems remained stable. For VTech, sales of children educational tablets, KidiZoom Smartwatch, the KidiCom range and Touch & Learn Activity Desk were all lower.
Revenue from telecommunication products in Europe increased by 173.3% (sic) [ 173.8% ] to USD 211.4 million in the financial year 2025. Residential phones, commercial phones and smartphones as well as other telecommunication products all recorded sales increases.
Residential phones saw sales move higher. The growth was driven by revenue contribution from Gigaset, following the acquisition of the assets of Gigaset on the April 5, 2024 as well as increased sales of branded phones in the U.K. The Gigaset brand performed especially well in Germany, Austria, Switzerland and Belgium. This allowing it to maintain its leadership position in the European Residential DECT phones market. In the U.K. VTech branded cordless phones continues to make good progress as the Group broadened its distribution channel and achieved a higher sales through a major e-retailer.
The category of commercial phones and smartphones also recorded growth. This was mainly due to the consolidation of Gigaset revenue, comprising mainly sales of a Gigaset's multicell DECT system, augmented by those of smartphones, which is a new category for VTech. Hotel phones also reported higher sales. These increases offset a decline for Snom branded SIP phones. Sales of hotel phones increased. We added new distribution channels and expanded into more European markets. Sales of Snom branded SIP phones declined. However, as they were affected by the slow market conditions.
Other telecommunication products posted higher sales. Growth in baby monitor offset decline in CAT-iq headset and CareLine residential phones. Higher sales of baby monitors were driven by good performance in the U.K. and France. Sales of CAT-iq headsets and CareLine residential phones were affected by lower orders from ODM customers due to lower end-user demand. During the financial year 2025, VTech retained its position as the #1 baby monitor brand in the U.K.
CMS revenue in Europe fell by 10.7% to USD 442.3 million. Lower sales of professional audio equipment, hearables, communication products and smart energy storage systems offset higher sales of IoT products and automotive products. Sales of home appliances and medical and health products were stable.
In professional audio equipment, sales of home audio interface product were lower. This resulted from weak market demand and an unsuccessful new product launch by a customer. Hearables sales decreased as the customer lost market share. Sales of communication products were affected by lower order for wireless routers as the customer overstocked inventory prior to the moving production to a new location. Smart energy storage systems were impacted by the removal of subsidies by the Swedish government and higher competition.
On the positive side, IoT products grew on rising order for Internet-connected thermostats and air conditioning controls, as the customer successfully increased sales by selling directly to the businesses. Sales of automotive products also increased with order for electric vehicle chargers rising as VTech gained market share.
I will now turn things over to King.
Thank you, Andy. Group revenue in Asia Pacific fell by 5.3% to USD 300 million in the financial year 2025. The region accounted for 13.8% of group revenue. Sales declined for all 3 product lines. ELP's revenue decreased by 2.3% to USD 68.8 million. Sales declined in Australia, Hong Kong and South Korea, offsetting growth in China. In Australia, increase for the VTech brand was offset by a decrease for LeapFrog, resulting in a slight overall sales decline.
Nonetheless, for calendar year 2024, VTech retains its position as Australia's #1 manufacturer for electronic learning toys from infancy through toddler to preschool. Sales in Hong Kong fell due to lower shipments to a key customer in South Korea, an underperforming distributor led to the decline. In China, online sales growth offset decline in off-line channels.
Telecommunication products revenue in Asia Pacific dropped by 12.2% to USD 18.7 million, owing to lower sales in Australia and Japan. In Australia, sales declined due to lower sales of residential phones and baby monitors. In Japan, reduced orders from residential phone ODM customers resulted in lower sales.
CMS sales in Asia Pacific decreased by 5.6% to USD 213 million. Sales were lower for professional audio equipment, communication products, and medical and health products. Professional audio equipment was affected by a slowdown in the market for DJ equipment. In communication products, orders for marine radios fell as customer continued to transfer production back in-house to Japan. Medical and health products declined on lower orders for diagnostic ultrasound systems as customer lost market share in China. Nonetheless, the group did acquire new customers in China in the areas of cooking robots and smart rings.
Revenue for other regions rose by 13.6% (sic) [ 31.6% ] to USD 22.5 million in the financial year 2025. The increase was due to higher sales of ELPs and telecommunication products. Other regions, which comprises Latin America, the Middle East and Africa accounted for 1.1% of group revenue.
ELPs revenue in Other Regions increased by 6.9% to USD 9.3 million. Growth in Latin America and the Middle East offset decline in Africa. Telecommunication products revenue in Other Regions rose by 57% to USD 13.2 million. This includes sales contributions from Gigaset. The increase was attributable to sales growth in Latin America and the Middle East, offsetting decrease in Africa. CMS revenue in Other Regions was material in the financial year 2025.
We now turn to our outlook for the financial year 2026. Looking ahead, the challenges to global manufacturing posed by U.S. tariff policy intensified. VTech's vertical integration and global manufacturing footprint enable it to remain resilient in evolving tariff situation. Our strong financial position and fully integrated operations across Asia, Europe and the Americas, enable effective and rapid realignment of our supply chain. Our diverse product lines, respected brands and robust global sales network provide impetus for global growth.
To mitigate impacts from tariffs, we are accelerating the relocation of product -- production of U.S. bound products to Malaysia, Mexico and Germany. In the U.S., some tariff costs will be passed on through higher prices. The group is also putting extra effort on expansions in emerging markets. The volatile U.S. tariff situation and the negative economic outlook are impacted group's revenue, which is now forecast to decline in the financial year 2026. Customers are now exercising extra caution in placing orders. Meanwhile, with rising retail prices U.S. customers are increasingly scaling down discretionary purchases.
Group profit margin is projected to be largely stable. Cost of materials is likely to remain little changed, owing to weak global demand. Labor costs and manufacturing overheads are forecast to be higher as wages at the Group's manufacturing facilities have recently increased. Logistic costs are also expected to rise. These cost increases along with the increased tariff costs will be offset by higher prices, more favorable product mix and stronger European currencies.
Moving now to our businesses. ELP's revenue is expected to decline due to U.S. tariffs. Sales outside the U.S. are anticipated to increase, but will be offset by a decline in the U.S. market. This notwithstanding, the group is targeting growth in market share globally. Stand-alone products will be driven by expansions of the core learning category, licensed products portfolio and the Kidi line. Platform products will be strengthened by a brand-new motion-based learning platform, a revamped interactive reading system and a new generation of Touch & Learn Activity Desk.
Sales of telecommunication products are forecast to grow in the financial year 2026, driven by the synergies with Gigaset. A new range of DECT phones is under development targeting the high-end residential phones segment. The commercial phones and smartphones lineup will be augmented with a new series of Gigaset single-cell DECT phones as well as new Gigaset smartphones designed for government bodies and institutions with stringent privacy and security requirements. These products will reach their respective channels in the second quarter of financial year 2026.
The group's leadership in baby monitors will be strengthened by the addition of models with AI features, available by September 2025. Geographically, the group will invest in developing markets for its telecommunication products in Eastern Europe, capitalizing on Gigaset's well-established distribution network across Europe. Expansion will be driven by new product lines tailored to these markets.
In light of a generally weak global economy and rising geopolitical uncertainty, CMS revenue is projected to decrease. This is despite the accomplishment ensuring ourselves and our customers from the effects of U.S. tariffs. With a high degree of uncertainty on global economy and political development, customers are exercising much higher conservatism with the orders. We are diligently supporting affected customers in transferring their production to our facilities in Malaysia and Mexico where the rollout of Industry 4.0 will raise productivity levels.
To keep pace with demand, further expansion of the facilities in Muar, Malaysia is being planned. We will also build on our recent success in acquiring customers in China and offer more design support to customers.
Thank you. This concludes our presentation. We look forward to answering your questions.
[Operator Instructions] We will start with questions in the room. [Operator Instructions]
It's [ Clifford ] from [indiscernible]. Just a couple of questions on the manufacturing side. Could you give us an idea of the manufacturing capacity now in China, Malaysia, Mexico and Germany. And then how would you comment on like the efficiency of these compared to your manufacturing base in China.
Maybe I can answer this question. We have manufacturing sites in Malaysia, Mexico and Germany. The total capacity roughly is about 25% currently of our total manufacturing capacity. And we are increasing the manufacturing capacity in particular, in Malaysia and also in Malaysia Penang to accommodate more manufacturing for the telephones and also for the toys. So we are also expanding the Muar plant also. So by the time everything is fully finished. We expect the total capacity should reach over 30%.
And just a relative...
Obviously, the most efficient manufacturing site is China followed by Malaysia and Mexico. And then Germany is also comparable to China as far as efficiency goes because of the high automation we have implemented in our plant in Germany.
So when you say Malaysia is a bit lower, is it like percentage like us...
Single digit difference.
Single digit, okay. Sorry, my second question is just on tariff. I understand it's moving part. But can you just give us an idea of like there's a first stage of the compromise being announced. Could you give us an idea like -- kind of like what damage has been done and then as we move forward, what are the key things that you're monitoring to and where certain milestones where if they don't agree on certain things, then further damage can be done. Just a bit of color on how we read the whole situation.
Okay. Of course, this is a guessing game because I think very few people can predict what would happen to the ultimate tariff. VTech is well positioned as a manufacturer because we are vertically integrated and we have a global manufacturing sites. So we are well positioned to add more resilience to all these changing tariffs. Of course, the history is the tariff from China going to the U.S. has been at 145% and then recently it has been reduced to 30%, Malaysia was at 24%, and then they have a 90 days period of reducing the tariff from Malaysia and for that reason, other countries to 10% for 90 days. So as you can see, the whole tariff situation is evolving.
I think the good news is VTech is resilient in the sense that we can move around our manufacturing in response to the tariff situation. Currently, we are relocating part of the manufacturing of goods from China to U.S. to Malaysia to enjoy -- not enjoy, but to actually take advantage of the lower tariff as compared to China. We are also relocating some of the telephone products to Germany too.
As I said earlier, the efficiency in Germany is also quite good. So we are monitoring the situation, the tariff situation minute by minute, and then, of course, nobody can predict what would happen. I think the -- we are in the best position as far as other peers is concerned because we are -- first of all, we're vertically integrated because we do our manufacturing ourselves rather than outsourcing to other manufacturers. So we can actually plan the material, plan the manufacturing CapEx much more easier than other manufacturers who rely on outside suppliers.
As to your last question of what things we can -- we are monitoring. There are so many things that we -- so many moving parts. Tariff, of course, is the one thing. The Sino-U.S. relationship, the talks between China and the U.S. shipping situation because shipping is also a bottleneck because of the evolving tariff because if you change from -- change the tariff from 145% to 30%, then there's a window for shipments from China to the U.S. and then there's a sudden tightening of the freight going to the U.S. So all these are situations that we are looking at.
We will now take questions from online viewers. The first question comes from Erik Lau of Citi.
Yes. Sorry, I'm out of time. Can I have 2 questions. The first one -- sorry, I didn't hear you clearly. Right now, what percentage of the total production facilities from China, sorry, I didn't get it.
Currently, it's 25%, but we are in the process of moving manufacturing from China to Malaysia. So by the time the move will be fully finished, it will be 30% to 35% of our total capacity will be outside China.
Okay. Now it's -- okay, [indiscernible] China, 25%. Okay. By that time, it will rise to [ 45%, ] right?
Yes.
Okay. By that time means, say when? So when will this ratio to [ 45% ] from [indiscernible] China?
Within fiscal 2026.
Okay. Got it. Then my next question is any sales mix, given China was once 145% because probably it doesn't make sense to ship your products, right, from China to the U.S. So can we get idea so how much sales miss over that period?
It's not a sales miss, but we halted all shipments from China going to the U.S. We still have enough inventories in the U.S. to last until June. So there isn't any sales missed and then the plan is after June, we will supplement the shipments from Malaysia. So the plan is there will not be any sales missed. It's only for delaying shipments going to the U.S.
Okay. Got it. So back to the tariff question. China, say by FY '26, China will account for [ 45% ], but which is still, say, around 6% point miss compared with 41% of sales to the U.S. So I mean, we cannot got rid with all U.S. product from China, right? We still have some product made in China for the U.S. market even by FY '26.
Well, by the time, our goal is to be able to ship the remaining from China, provided the tariff will not be 145%. So that's the plan. So we don't have to ship everything to the U.S. from Malaysia. There will be certain portions coming from China. So at this tariff rate, 30%, this is possible.
Okay. For say, assume 30% tariff in China. So, a, is what kind of the products still make in China, I think even after FY '26? And b, is how new and customer split this tariff bill 30%?
Everything is still under negotiation with the customer. There will definitely be price increased. So to what proportion and to what amount is still an ongoing negotiation.
Okay. Got it. Sir, my last question is, you assume the gross margin stable for FY '26, but say any cost related to tariffs. I don't know, maybe, I have -- we have to book more warehouse because of inventory pile up in the U.S., blah, blah, blah. Actually, how much margin impact you think for FY '26 in relation to tariff?
It's hard to quantify. There probably won't be any margin hit. Those expenses are below the margin line. Whether they are higher shipping costs, whether there's higher warehouse costs or any inefficiency relating to the relocation. These are all very fluid at this point. We don't -- it's hard to quantify.
Yes. We will answer the question in the room.
Hello. This is Darren from Chartwell. So I have 2 questions. So earlier in the presentation, I saw that on the SG&A level, we have a little bit of margin drag from Gigaset. So just wondering whether we can expect this to reverse in the coming year or whether that will be a bit challenging. I see that we have some new telecom products coming out. So I imagine that would require some development or promotion expense.
Just want to see how our OpEx ratios will be affected in the coming year as it relates to Gigaset and then finally, we are -- I see that we're expanding capacity overseas and we're also trying to relocate a bunch of our orders from China. So will there be any change in our CapEx moving forward?
I'll let Shereen Tong to answer your question.
So for the inclusion of the Gigaset related business after the acquisition of the asset in early April, last year. Well, the Gigaset has contributed both the gross profit and also the SG&A. But at the end, there is a net profit contribution to the whole group because we are -- after we acquired the assets, we also hired people, including the workers, the labor as well as those kind of selling people. So in terms of GP and net profit, there are also contributions -- positive contributions to the group in financial year 2025.
As for the relocations regarding the CapEx. So for FY '25, the CapEx is talking about USD 52 million, mainly including the acquisition of the fixed asset, more tangible assets from Gigaset. And next year, we expect the CapEx is talk about USD 42 million, including the renovation leasehold improvement as well as the plant and machinery for the whole group, including Malaysia as well as the other, say, manufacturing sites.
We will answer the questions from the online viewers again. [Operator Instructions] The next question come from [indiscernible] Lewis, please go ahead.
Regarding your advantage of an integrated manufacturer and the challenges with tariffs, how do you see the development of market share in toys and phones in the U.S. That's my first question. Second question regarding toys. Would the relocation of production be in time to assure product delivery out of Malaysia for Christmas season. Yes -- certainly, LeapFrog Academy, that would be a service that is not affected by tariffs. How is LeapFrog Academy doing? And are there any initiatives to boost this business?
Okay. King will answer this question.
Well, thank you for your questions, Lewis. Let me answer your favorite question first, LFA. It's -- suffice it to say that it's not a focus at the time -- for the time being. So we are still running the online education contents but we have not been driving subscriber growth. It is very much, if you remember, dependent on the sales of tablets. Tablet sales during the bulk of fiscal 2025 has not -- were not extremely high, but we did have a very good Christmas season for tablets. So after the 3 or 6 months depends on the -- which retailer, the subscriber bought the tablet. We expect some of them to turn to paid subscribers. So it remains to be seen.
Your second question pertains to toys delivery schedule. What we should know is that we fulfill our customers in the U.S. either through direct import or through domestic shipments. Okay. So we have been able through the inventories that we had built up in the beginning of the year to fulfill the domestic shipments. Some import shipments were indeed delayed. So since Sunday night -- our colleagues have been on the phone almost nonstop trying to get it. The products are there, trying to get containers and shipment schedules to ship them to U.S. as quickly as possible. And I do not want to speak for the retailers. I believe the major retailers in the U.S., at least for toys, were planning for a later than normal store set.
Okay. Store set typically starts in late June, early July, they were actually planning late July and almost August. But now with the change of event, instead of stopping shipments, everyone is trying to rush as much as possible to the U.S. during this 90 days as possible. So we may be back to July store set. We don't know. Market share in toys, we -- last year, we actually gained market share in the U.S.
Shereen, I think we've pretty much been steady, right?
Yes.
Yes. And as far as 2025 is concerned, we're actually planning on gaining market share. Because the tariff issue, the shipment problems is not just affecting us, it affects everyone. So we just move the -- and like we've heard from the Chairman, we actually feel that we are a little bit more disadvantaged in situations like this than our competitors.
Yes, we will answer the question from the room again.
Half a year ago, I remember that we have plans to bring Gigaset's new products, such as the, I remember, multi-cells products to the U.S. Have these new business strategy change with whatever is going on with the tariff? Just want to get some comments from you?
We -- the plan to bring our multi-cell in which Gigaset is a leader in multi-cell tech. To bring the mult-cell to the U.S., the plan has not changed. The tariff largely don't affect us because multi-cell are being manufactured in Germany. So it's true that there may be additional certain percentage, but definitely it's not a percentage as high as we have seen with China. So that plan is still going on.
Just a very quick follow-up questions about the Gigaset acquisition. Have we fully consolidated everything in terms of -- and are we actually satisfied with the efficiency and the performance from the new Gigaset business?
The short answer is yes. The integration was going as planned, although we have spent a lot of efforts in trying to integrate the team, the people and our business into the Gigaset. It has been performing better than we have originally anticipated. Bear in mind last year, we basically only have about 7, 8 months of business because the first few months is almost nothing. So this year will be a much better year because we have a full year of operation.
Thank you, and thank you for keeping the very consistent high payout ratio to shareholders.
Yes. That's all we have the time for. We come to the end of today's presentation. Thank you for joining us today.
Thank you very much.
