Good afternoon, ladies and gentlemen. Today, VTech Holdings Limited is announcing its annual results for the year ended 31st of March 2020. Due to COVID-19, this year, we are holding the presentation by live webcast from our head office in Hong Kong. Let me introduce the management here. From the left, 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 reveal the group's operations. Then Mr. Pang will give the management outlook for this financial year. We will finish our presentation with a Q&A session. Please submit your question anytime through a text box at the lower right-hand corner of your screen. Now, may I invite Ms. Tong to open today's presentation. Ms. Tong, please.
Thank you, Grace. Good afternoon, ladies and gentlemen, and our viewers online. First of all, I'd like to share with you the financial highlights of the group for the year ended 31st of March 2020, compared with the same period of the last year. As you see from the slide, the revenue of the group rose by 0.2% to $2,165.5 million. The increase in revenue was mainly driven by the higher sales in Europe and Asia Pacific, which offset the decrease in revenue in North America and other regions. The gross profit of the group rose by 4.3% to $663.6 million, and our gross profit margin also increased from 29.4% to 30.6%.
The increase in operating gross profit and gross profit margin was mainly due to the lower material prices, while direct labor costs and manufacturing overheads benefited from the depreciation of the renminbi against the U.S. dollar. Our operating profit rose by 13.7% to $219.7 million, and our operating profit margin also increased from 8.9% to 10.1%. The increase in operating profit and operating profit margin was mainly due to the increase in gross profit on a gross profit margin, which offset the increase in total operating expenses. The operating profit for the FY 2020 also included a fair value gain of $5.9 million on an investment in a company that designs and distributes integrated circuit products, while the gain on disposal of tangible assets of $5.9 million was recorded in the last financial year.
Our profit attributable to shareholder rose by 11.3% to $119.7 million. Our net profit margin also increased from 7.9%- 8.8%. As a result, our basic earning per share rose by 11% to $0.757. Our board of directors has proposed a final dividend of $0.36, bringing the total dividend per share for the year to $0.53. Turning to the revenue by region. North America remains the largest market cap of the group, accounting for 45.7% of the group's revenue. Our sales in North America reduced by 0.5% to $989.6 million. The decrease in revenue was mainly due to the lower sales of our telecom products and Contract Manufacturing Services, which offset the higher sales of our Electronic Learning Product. Our sales to European market rose by 0.4% to $886.3 million.
The increase in revenue was mainly due to the higher sales of our Contract Manufacturing Services, which offset the lower sales of our Electronic Learning Products and telecom products. In Asia Pacific region, the revenue of the group rose by 4.3% to $259.4 million. The increase in revenue was due to the increase in sales of our Electronic Learning Products and Contract Manufacturing Services, which offset the lower sales of our telecom product. Other regions include Latin America, Middle East, and Africa. The gross revenue in other region reduced by 15.9% to $30.2 million. The decrease in sales was mainly due to the decrease in sales of our telecom product and Electronic Learning Product, which offset the higher sales of our Contract Manufacturing Services. Our stock balance as at March 31, 2020 increased from $369.9 million- $372.6 million.
Our stock turnover days also increased from 100 days to 102 days. The highest stock level was mainly due to the reduction of shipment arising from the outbreak of COVID-19. In addition, many of the group's suppliers in mainland China did not resume productions immediately following the extended Chinese New Year holiday, leading to the disruption in the supply chain and the shipment of the group's product.
Our trade debtor balance as at March 31, 2020 reduced from $263 million- $221.5 million. Our trade debtor turnover days also reduced from 65 days to 63 days. Our financial positions remain very strong. We are debt-free, and our net cash balance as at March 31, 2020 compared with the same period of last year increased from $227 million- $242.5 million. 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, and good afternoon to you all. Thank you very much indeed for joining us. I will now take you through the review of our operation. I will start with the impact of the COVID-19. As for many business, the COVID-19 pandemic have caused disruption to VTech in both supply and demand for products. On the supply side, in Mainland China, the long Chinese New Year holiday in January 2020 was extended. Factories were required to resume work in phases. Furthermore, many suppliers there extended their shutdowns, causing interruption to material supply in February and March. In Malaysia, production at our facility for CMS customers ceased from mid-March 2020, when the country imposed a movement control order to lower the spread of the virus. With the easing of lockdown measures, our production capacity in Mainland China and Malaysia began returning to normal in April.
On the demand side, most of the group's major markets have been in different levels of lockdown since late January 2020, adversely affecting shipment across all our business. Looking at cost, we can see that the group's gross profit margin in the fiscal year 2020 increased to 30.6% from 29.4% in the previous fiscal year. Material prices were lower and direct labor costs benefited from the depreciation of the renminbi. Manufacturing overhead remained stable. Tensions on trade between the U.S. and China remain with us. On January 15, 2020, a phase one trade deal was signed between China and the U.S. A 15% tariff that was imposed on VTech residential cordless telephones from September 1, 2019, was reduced to 7.5% effective February 14, 2020. A number of the group's CMS customers have also been affected by the tariffs, ranging from 7.5% to 25%.
As of today, all but a few ELP are exempt from the U.S. tariff. Now, let us turn to the details of our operation, starting from North America. Group revenue in North America decreased by 0.5% to $989.6 million in the fiscal year 2020. Higher sales of ELP were insufficient to offset lower revenue of telecommunication products and CMS. North America remained the largest market of VTech, accounting for 45.7% of the group's revenue. ELP revenue in North America rose by 3.6% to $493.7 million, driven by higher sales of both LeapFrog and VTech standalone products. The group gained market share overall, mainly due to the strong performance in Canada, where VTech overtook the competition to become the number one supplier in infants and toddler toys category.
As a result, we strengthened our leadership as the number one manufacturer of electronic learning toys from infancy through toddler and preschool in the U.S. and Canada. In standalone products, the growth of LeapFrog learning toys was particularly robust. The brand benefited from higher sales of infants, toddler, and preschool products as retailers increased sell space. Good sell through of items carrying offers educational value, especially LeapFrog Learning Friends 100 Words Book and 2-in-1 LeapTop Touch, saw boosted growth. The newly launched interactive building set, LeapBuilders, saw solid sell as retailers gave support to the range. For the VTech brands, preschool products and the KidiZoom line achieved higher sales, driven by the success of items such as Myla the Magical Unicorn, PJ Masks Learning Watch, and KidiZoom karaoke machine. This growth offset decline in infants and toddler products, KidiZoom camera, and the Go! Go! Smart family of products.
In platform products, both LeapFrog and VTech brand registered lower sales. LeapFrog saw a further decline in sales of children educational tablet, offsetting the contribution from the newly launched handheld gaming system, RockIt Twist, and Magic Adventures Globe. During the FY 2020, the lineup of LeapFrog reading platform was expanded through the introduction of LeapStart Go. The latest version is a slim, easy-to-hold stylus that triggers video and audio response, helping children aged between four to eight years old to learn. As a result, sales of the LeapFrog reading system were stable, reinforcing the group dominance in the reading category. For the VTech brand, lower sales of KidiBuzz offset higher sales of KidiZoom Smartwatch and Touch & Learn Activity Desk. Our partnership with Netflix and animated series, "Go! Go! Cory Carson," premiered in January 2020. The response has been good.
A range of playsets and vehicles based on the "Go! Go! Cory Carson" characters reached the shelf in the U.S. in March 2020. LeapFrog Academy is steadily growing its subscriber base. Once again, our ELP won numerous awards from the industry and consumer organization. Among those key ones, in the U.S., five VTech LeapFrog products were final listed for the 2020 Toy of the Year Award. We have two products inside the list of Walmart's Top Rated by Kids in 2019. In Canada, we also have products named to Walmart's list of Top Toys for 2019. Telecommunication product revenue in North America declined by 7.4% to $243.9 million, with lower sales of residential phone, commercial phone, and other telecommunication products. In residential phones, sales contributed to decrease as the fixed-line telephone market contracts further.
However, the rate of decline moderated as the group became exclusive supplier to a key U.S. retailer. In FY 2020, VTech gained market share and maintained our number one position in the U.S. residential phones market. For commercial phones and other telecommunication products, sales of SMB phone, hotel phone, headset, and baby monitors were lower, offsetting growth in voice-over-IP phone and conference phone. Our ranges of SMB phone have reached the end of its life cycle, leading to a reduction in sales. Hotel phone faced the pressure of a very competitive marketplace. Sales of headset product fell because of an existing customer with excess inventory. This was partially offset by a new customer's launch of a mobile phone station. Baby monitor experienced an overall sales decline as the number of customer reduced orders.
Nonetheless, in the FY 2020, VTech gained market share and retained our position as the number one baby monitor brand in the U.S. and Canada. The group award-winning Snom product contributed to the overall growth in voice-over-IP phone. CMS revenue in North America was 1% lower at $252 million. The decrease resulted mainly from the growth in professional audio equipment and medical and health products being offset by lower sales of industrial and communication products. Professional audio equipment growth as a backlog of orders for a customer clear as a result of an improvement in the material supply. Another customer increased order as it benefited from a new product launch. Growth in medical and health products was driven by higher sales of hearing aids. This came as the customer decided to transfer part of its in-house production of finished product, rather than just PCB assembly, to VTech.
Sales of industrial products fell on lower orders for note-counting machines and electronic locks. Sales of communication products declined as the customer's product reached the end of its life cycle. The solid-state lighting business, meanwhile, remained stable. Turning now to Europe, Group revenue increased by 0.4% to $886.3 million in the FY 2020, as higher CMS sales offset lower revenue from both ELP and telecommunication products. Europe was VTech's second-largest market, accounting for 40.9% of the group revenue. ELP in Europe declined by 3% to $333.3 million. The European market was affected by the weakness of the European currency, the lingering effect of the Toys R Us bankruptcy, and the financial difficulty faced by smaller retailers in the region. Sales of both standalone and platform products were lower. Despite this, VTech remained the number one infants and toddler toys manufacturer in France, the U.K., Germany, Spain, and Belgium.
In standalone products, sales of VTech brands product were down. Lower sales of infants and toddler product, the Toot-Toot Family product, and the KidiZoom line offset growth in preschool product, KidiZoom camera, and Switch & Go Dino. A new range of interactive animal playset called ZoomiZooz was introduced to the key markets in Europe and was well-received. Sales of LeapFrog standalone product increased, led by rising sales of infants, toddler, and preschool products. BlaBla Blocks, which is the name we use in Europe for LeapBuilders, saw sales decrease. Platform product recorded sales decreases. Higher sales of LeapFrog product were insufficient to compensate the lower sales of VTech products. In the LeapFrog brand, growth was driven by new product launches, including Magic Adventures Globe, RockIt Twist, and LeapStart Go. This offset sales decline in children's educational tablet and the LeapFrog reading system.
The sales decline for VTech platform product was led by lower sales of children's educational tablet, KidiZoom Smartwatch, and KidiCom Max. Sales of Touch & Learn Activity Desk remained steady. Revenue from telecommunication product in Europe decreased by 6% to $112.5 million in the FY 2020. Sales of residential phone continued to decline, offsetting the growth of commercial phone and other telecommunication products. Residential phone saw sales decline due to the continuous contraction of the fixed-line telephone market, and as a result of reduced order from a number of existing customers. The sales growth in commercial phone and other telecommunication products was mainly driven by CAT-iq headset and CareLine ranges. Sales of CAT-iq headset were boosted by addition of a new customer in Germany and the start of shipment to a major telecommunication operator in the U.K.
The CareLine ranges saw increased order from several existing customers. Conference phone recorded modest growth. The voice-over-IP phone, baby monitors, and hotel phone business were stable, but sales of IADs were lower as the customer reduced orders. CMS revenue in Europe grew by 5% to $440.5 million, with sales increase in most of the major product line. Hearables benefited from the good sell-through of existing product and a new project launch at a major customer. The growth of professional audio equipment was supported by a backlog of order for a major customer being cleared and another new generation of product seeing strong demand. Sales of Internet of Things products, such as internet-connected smart thermostat and air conditioning controls, grew as the customer shifted all production to VTech. There was also stable demand for smart meters.
Medical and health products saw revenue growth from hearing aid. This was a result following the decision by the customer to allow VTech to manufacture finished product, rather than only handle PCB assembly. A new customer in the field of hair removal products added to the growth. Home appliance sales rose, and market demand improved from key customers. In communication products, production of network router for an existing customer was ramped up. Switching mode power supplies, however, registered a sale decline as expected. Next, Asia Pacific. Group revenue increased by 4.3% to $259.4 million in fiscal year 2020, as higher sales of ELP and CMS offset lower sales of telecommunication products. The Asia Pacific region rose to account for 12% of the group revenue. Revenue from ELP in Asia Pacific rose by 2.5% to $83.2 million, led by the growth in Australia, Korea, and Japan.
In Australia, the group benefited from the broader listing and more sales space at major retailer, all of which support strong sell-through for both VTech and Vifon branded products. Growth in Korea was driven by higher sales of Vifon products. In Japan, the group benefits from the relaunch of the VTech brand in a major toys retailer. In mainland China, sales declined due to the outbreak of COVID-19 in the final quarter of the fiscal year 2020, resulting in the lower sales in offline channels. The group footprint in the Asian market was strengthened by opening a VTech flagship toy store on lazada.com in Malaysia. Telecommunication product revenue in Asia Pacific declined by 21.2% to $27.9 million, with decreases in most of the market within the regions. Sales rose in Hong Kong, driven by increased order for IAD from an existing customer.
In Australia, sales fell and lower sales of residential phone offset higher sales of baby monitors. Sales in Japan were affected by a customer's financial situation. Excess inventory at one customer led to lower sales in Malaysia. CMS revenue in Asia Pacific increased by 12.3% to $148.3 million. Higher sales of professional audio equipment was able to offset decline in medical and health products, home appliance, and communication products. Growth in professional audio equipment came with a full year sale contribution from DJ equipment business, against an eight-month contribution in the fiscal year 2019. Medical and health product were affected by decline in order for diagnostic ultrasound system. Slow market demand result in sales decline for home appliance. Sales of communication product fell as a global marine radio customer began a transition to a new generation of products.
Finally, group revenue in other regions, comprising Latin America, the Middle East and Africa, declined by 15.9% to $30.2 million in fiscal year 2020. Other regions account for 1.4% of the group revenue. ELP and telecommunication products saw sales decrease. CMS registered growth. ELP revenue in other region declined by 6.9% to $12.1 million. Higher sales in Middle East were offset by lower sales in Latin America and Africa. Telecommunication product revenue in other region decreased by 23.5% to $16.6 million. The decline was attributable to sales decrease in Latin America, the Middle East and Africa. CMS revenue in other regions was $1.5 million in the fiscal year 2020 as compared to $1.2 million in the previous fiscal year. Thank you. I will now hand over to King for the outlook.
Thank you, Andy. Good afternoon, ladies and gentlemen. The COVID-19 outbreak has and continues to cause unprecedented disruptions around the world, creating uncertainty in our outlook for the fiscal year 2021. As we speak, the group's key markets are still in various stages of lockdown. Demand has been impacted, resulting in lower orders. Consequently, revenues from all our businesses for the fiscal year 2021 are expected to decrease. To mitigate the resulting impact, we are strengthening cost control as well as focusing on cash and liquidity. We will streamline our operations and slow new CapEx. Inventory management is being tightened. Credit control and accounts receivable are closely monitored, especially for accounts with liquidity concerns. The outbreak has accelerated the shift to online purchases.
To capture the immediate opportunities and better align ourselves to the long-term trend, we are strengthening our sales and marketing efforts on e-tailers and other online channels. As always, for the future and to consolidate our market leadership, we will speed up product development and increase our pipeline of innovative products to the markets. Let's now take a closer look at our three businesses. First, ELPs. The group will focus on strengthening our market position through new product and expansion in Asia Pacific. In standalone products, new infant, toddler, and preschool products are being rolled out under the VTech and LeapFrog brands. Myla's Sparkling Friends, in addition to our offering in the robotics category for girls, will be launched in the U.S. in autumn 2020. It consists of a range of fantastical creatures that talk, sing, and light up in different colors.
The successful KidiZoom line will be augmented with KidiZoom Creator Cam, a high-definition video camera kit that offers editing capabilities for the young YouTubers. The LeapBuilders line will be joined by new SKUs featuring characters from the popular Blue's Clues & You!. In platform products, we introduce a new generation of KidiBuzz, which is being marketed in our European markets under the name KidiCom Max. In Asia Pacific, we are stepping up efforts to drive sales on online channels in mainland China. At the same time, we are increasing our penetration in Japan and Malaysia through channel expansion and broader product listings. Next, telecommunication products. The high-definition video baby monitors and super long-range residential cordless phones launched during the second half of the fiscal year 2020 will make a full fiscal year's revenue contribution.
A new line of voice-over-IP phones under the Snom brand will be rolled out, driving revenue growth in commercial telephones. A newly designed series of hotel phones based on SIP and PSTN technologies will be introduced to regain market share. Antibacteria technology will be applied to our hotel phones and Snom-branded business phones, enhancing their product appeal. A new baby monitor employing cutting-edge technology and with an accompanying baby care app will be launched to strengthen VTech's lead in the U.S. and Canada in this category. Finally, new IADs supporting the latest Wi-Fi 6 standard will be shipped during the fiscal year 2021. CMS. As markets suffer the impacts of COVID-19 lockdown, we have seen customers revising their orders. This results in demand uncertainties for our products.
To create new avenues for our CMS business, a new product introduction center is expected to open in the second quarter of the FY 2021 in the group's research and development center in Shenzhen, mainland China. It aims to capture new businesses from the many startups in this technology hub. Further strengthening our strategy of production base rationalization, in December 2019, we signed an agreement to acquire a second manufacturing facility in Malaysia.
It comprises over half a million square feet of buildings in Penang. The new facility is expected to commence operation by the end of the FY 2021. It will be used to manufacture ELPs and telecommunication products for the U.S. market. Meanwhile, our existing CMS facilities in Muar in Malaysia will be expanded in two phases, adding 50% of capacity upon completion. When all these come to fruition, our Malaysian manufacturing facilities will account for about 25% of group's total production capacity. Thank you. This completes our presentation. We now look forward to answering your questions.
Thank you, Mr. Pang. We will begin the Q&A session. I will read out the questions, and we will try to answer as many questions as we can. The first two questions come from Christina of HSBC. First, could you comment on online sales momentum for ELP and the contribution mix of the online sales in the U.S. and Europe? The second question is, could you also share more light on the recent raw material costs? Are they increasing due to shortage? Thanks.
Thank you for the question, Christina. I would direct the first questions to King for the ELP online sales momentum.
Online sales, as we reported, has been increasing. In Q4 of this past fiscal 2020, it's been especially helped because both of the brick-and-mortar stores are either being closed or are limited to essential goods. This is especially true in the U.S., in China, and in certain European countries. As I'm sure most of us know, there is at least one European country in which a major online e-tailer is still fighting the government to resume their normal business. I think the second question in regards to contribution of online business to our U.S. and Europe business.
Okay.
Regarding the second question about raw material cost. In our last financial year, FY 2020, we saw raw material prices was decreasing. Even though after the outbreak of the COVID-19, we see the shortage, but in terms of pricing, we don't see there is any, say, material increase in prices, mainly because the overall demand of the components, especially for the raw material, electronic components. We don't see the demand is increasing, but just a short-term shortage, especially right after the outbreak of the COVID-19. In the coming years, we don't think the raw material price will go back to an increasing trend.
Thank you, Shereen. This one come from Eric from Citi. "Dear management, thanks for presentation. Can you update how was the sales performance in the first quarter of the financial year 2021 on year-on-year basis? How's the order visibility amid COVID-19 impacts for the financial year 2021? Which quarter will be the trough for the financial year 2021?
Okay. Thank you, Eric. I cannot disclose the exact sales figures. The sales performance for first quarter 2021 is still ongoing until end of June. But so far, because of the lockdown of the COVID-19, the sales are down as compared to the same period last year. To your second questions, the order visibility for fiscal 2021 amid of the COVID-19, frankly, it's really hard to predict at this point when the COVID-19 will be over. So, until that is known, it's really hard to predict what the order looks like.
But one thing is for sure, the orders for this coming fiscal year will definitely be lower. I think as to how much lower, we really don't know for sure. Your question is, which quarter will be the lowest for fiscal 2021? We hope the first quarter will be the lowest, provided if the lockdown will gradually be released in the second quarter and third quarter onwards. But until that happens, I cannot say for sure. Thank you.
Thank you, Mr. Wong. The next questions come from Integra Capital. How will the trend towards work from home impact the telephony business? How are we positioning the business?
The work from home has actually had some positive impact to our telephone business. Not only the telephone business, it also benefits the ELP business as well, as people now stay more at home. They are actually buying more of the toy products. For telephone products, we have a whole line of telephone products cater for home offices, and we are seeing positive sale results, mainly through online on those products. Your second question is how are we positioning the business. The telephone business is mainly divided into two main areas. One is residential phones. About half of our telephone business and the residential phone business is on a structural decline.
On the previous fiscal year, we actually have been doing quite well, although we still see some decline in the residential phone business, but we have gained market share in the U.S., and hence, the decline in our residential phone was actually slower than the overall residential phone decline. As far as the new businesses, which consists of approximately another half of our telephone business, certain sector has been doing well. We have been launching new products in a number of areas. The Snom, we have been launching new products, and we are seeing positive results. On the baby monitor in particular, the new line of products we have launched last year has been received positively, so we are seeing also positive sales results. Also on the Hugg Head IQ headsets, these are also doing well.
We believe that, again if you ask me for prediction for this year, what will the sales performance, I frankly cannot say in the middle of the COVID-19 crisis. But the restructuring of the telephone business is generally positive, and I can safely say that although we may still see decline for this sector in this fiscal year, I hope it will be slower.
Thank you, Mr. Wong. The next one is from Carlton from Daiwa Capital Markets. He has three questions. First one: our cash position remains strong at year-end. Why was the dividend payout ratio reduced? What will need to be seen for the payout ratio to return to near 100%? His second question is: what is the order visibility now? Roughly how much orders have declined in April and May? His third question is: how much revenues are we doing in China? Will we consider adopting new retail methods, such as live streaming, to boost online sales?
Let me answer the first and second questions. It's true that our cash position is still strong at year-end. However, the outlook is really very uncertain. I can tell you that the uncertainty we are facing, in my 45 year in business is probably I've never seen anything like this. As a responsible management, we would like to conserve a little more cash in the company just in case we have some really rough time going forward. And also, we may also see some good opportunities for expansion also. So we are reducing the dividend payout from 99% last year to 70%, again, just as a conservative measure.
We believe that once we have seen more visibility going forward, that is the COVID-19 crisis is over or we have seen some vaccines on the way, then we are in a much better position to say when we are able to go back to paying out all our earnings. As to the order visibility now, as I said in my earlier questions, it's really hard to say. I really don't have any certainty in order visibility. The second question, how much order have declined in April and May? I cannot disclose exact figures, but we certainly have seen a significant decrease in orders. The third question, I would give it to King to answer.
We normally don't break out a specific country, but I think we have also shared in the past, our China revenue is a little below 5% of total group revenue. I think there was a question about are we doing live streaming? The answer is yes. We are doing live streaming on our Tmall flagship store. We are working with distributors who have a lineup of KOLs who are doing live streaming to sell our products on their live streaming channel. It's a booming channel for online e-commerce in China, and we're taking full advantage of it.
Thank you, King. The next question is from Luke Kim, GCIS Limited. How are ELP sales in China in April 2020 compared to April 2019?
King.
It is down.
Thank you, King. The next question is from Timothy of CLSA. He has three questions. The first one, how are the recent business performance by segments? His second question is, has the online sales helped us? What's the percentage of online sales currently and in the FY 2020? His third question is, any chance our 100% payout ratio to be affected in the FY 2021?
Well, again, we cannot disclose individual business performance at this point. As King said, all our business sector are down. I can probably say that the CMS is slightly a little more down than the other ELP and telephone division. That's all I can say. Number two is, has online sales helped us? Most definitely. We are seeing increase in online sales as percentage of our total sales, in particular during the lockdown periods from the online retailers. What's the percentage of online sales current financial year 20? Our figure is, how about you?
I don't have it in my head.
Yeah.
But we more or less track the percentage of online sales for toys in the countries. It differs from countries to countries. Some Europe countries have very high percentages, like Germany, where we tracked it. That's all that I can say at this point.
Any chance of 100% payout ratio to be affected in financial 2021? Again, as I said, if the COVID-19 crisis can be over in hopefully the second or third quarter, I think the chance of going back to a higher payout ratio is pretty high.
Thank you, Mr. Wong. The next question is from Walden from Haitong International. Mr. Wong has addressed the first question, what is the dividend policy for the coming year? Mr. Wong can talk more about it. The second question is, how is the situation in April and May 2020? When do you expect things to resume normal?
If you can tell me when the COVID-19 crisis can be over, I will be able to tell you when things can get back to normal. April and May of this fiscal year is down. Is all I can say.
Thank you, Mr. Wong. Due to time constraint, we can only answer two more questions. The second last questions come from Henrietta from the Somerset Capital. What are the monthly cash costs running at currently, and how much have these been cut?
Okay. Maybe Shereen, if you understand what the question means, our cost. That means our-
Cost of money.
Our cost.
Yeah.
Our overheads, maybe expense
I guess you are talking about, since we are talking about we will strengthen our expenses spending as well as our CapEx spending. So, you are talking about how much cost on monthly basis that we are seeing is being cut. I can tell you that at this point in time, we are very conservative about all those, say, expenses, especially those fixed overhead. Because when we foresee that in the upcoming years, the COVID-19 situation is still very uncertain. So we are very conservative regarding the monies that we need to spend, including those, say, fixed overhead as well as the capital expenditure.
But at this point in time, when you are talking about how much that we are seeing the cost is or has been cut, we do not have the solid figures. But in our forecast figures versus our original budget, we can see that the forecast figure, especially at the actual result of the April and May, those expenses has been less than what we have originally budgeted because of the uncertain situations that the whole world is now facing. I hope I can answer you this question.
Thank you, Shereen. The last questions come from Son of Capital Group. Can you please comment on segmental margin by electronic learning products, telecom products, and Contract Manufacturing Services, and how they change year-on-year?
We generally do not give out exact margins, but we usually give you a range. The ELPs are between 40%-50% gross margin. Telephone is between 20%-30%. CMS is around 10%-20%. Now, how has this changed in year-on-year? In fact, as you can see from our previous fiscal year, our gross margin percentage have actually improved due to lower cost of material. We are probably seeing the same thing this year, that material cost will again be low because of the crisis and because of lower demand. However, the big uncertainty is on sales. But as far as margin is concerned, I think this particular year, we do not see a huge pressure on our margins.
Thank you, Mr. Wong. This concludes today's presentation. Thank you very much for joining us.
Thank you.
Thank you.