Good afternoon, ladies and gentlemen, and welcome to all our viewers online. Today, VTech Holdings Limited is announcing its results for the year ended 31st March 2016. For your reference, the webcast of this announcement, accompanied by the presentation you will see shortly, will be available on VTech's website starting at 10:30 P.M. this evening, Hong Kong time.
Here to present the results on my left are 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's financial performance. Next, Mr. Leung will reveal the group's operations. Mr. Pang will then talk about our recent acquisition of LeapFrog and give the management's 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, Karina. Good afternoon, ladies and gentlemen, and all the viewers online. First of all, I would like to share with you the financial highlights of the group for the year end 31st of March 2016, compared with the same period of the last year. As you see from the slide, the revenue of the group reduced by 1.2% to $1,856.5 million.
The decrease in revenue was mainly driven by the lower sales in North America and Europe, which offset the increase in revenue in Asia Pacific and other regions. The strong U.S. dollar also depressed the group's reported revenue in the financial year 2016. Our gross profit reduced by 4.55% to $583.3 million, and our gross profit margin also reduced from 32.5% to 31.4%. The decrease in both gross profit and gross profit margin was mainly due to the depreciation of the foreign currencies against U.S.
dollar and the change in product mix. Cost of materials as percentage of the group's revenue was also higher due to these factors, although the material cost decreased slightly during the financial year 2016. Our manufacturing overheads also increased over the last financial year owing to the higher wages and production capacity. Our direct labor costs, however, were lower despite the higher wages in China during the financial year.
It was mainly due to the group's continuous efforts to reduce workforce through automations and process improvement. Our operating profit reduced by 8.1% to $202.3 million, and our operating profit margin also reduced from 11.7% to 10.9%. The decrease in both operating profit and operating profit margin was mainly due to the decrease in gross profit and gross profit margin, which offset the reduction in total operating expenses in dollar amount and as percentage of the group's revenue.
The decrease in total operating expenses was mainly due to the decreased spending on the group's advertising and promotional activities, and the lower royalty payments for the licensed product, which offset the higher administrative expenses, including the provision expenses related to the data breach due to the cyber attack.
Our profit attributable to shareholders reduced by 8.4% to $181.4 million, and our net profit margin also reduced from 10.5% to 9.8%. As a result, our basic earning per share reduced by 8.5% to $0.722 . Our board of directors has proposed a final dividend of $0.25 , bringing the total dividend per share for the year to $0.42 . It also represents a reduction in dividend payout ratio from 98.9% to 58.2% in order to fund our acquisition of the LeapFrog business. Turning to the revenue by region.
North America remains the largest market of the group, accounting for 47.3% of the group's revenue. Our sales in North America reduced by 2.4% to $878.3 million. The decrease in revenue was mainly due to the lower sales of our telecom products, which offset the increase in revenue of our electronic learning products and Contract Manufacturing Services.
Our sales to European market dropped by 2% to $795.9 million. The sales decline in Europe was driven by the lower sales of our telecom products and electronic learning products, which offset the increase in revenue of our Contract Manufacturing Services. In Asia Pacific region, the revenue of the group rose by 9.7% to $129 million. The increase in revenue was due to the increase in sales of our electronic learning products and Contract Manufacturing Services, which offset the decrease in revenue of our telecom products.
Other regions include Latin America, Middle East and Africa. The group's revenue in other region increased by 5.8% to $53.3 million. The increase in sales in other regions was mainly due to the higher sales of our telecom product and Contract Manufacturing Services, which offset the decrease in revenue of our electronic learning products.
Our stock balance as at March 31, 2016 reduced by 1.7% to $285.4 million, and our stock turnover days also shortened from 96 days to 93 days. Our trade debtors balance as at March 31, 2016 increased by 3.8% to $230.3 million. Our trade debtors turnover day also increased from 57 days to 63 days. Our overdue balance greater than 30 days, however, only accounted for 2.2% of the group's gross trade debtors as at March 31, 2016. Our financial position remains very strong.
We were debt-free, and our net cash balance as at March 31, 2016 reduced by 7.2% to $273 million from the last financial year. The reduction in net cash balance was mainly due to the decrease in cash generated from operating activities and the increase in purchase of the tangible asset. That's all of my presentation. May I now invite Mr. Andy Leung to share with you our operations review. Mr. Leung, please.
Thank you, Shereen. Looking first at cost. Looking first at cost, they represent a mixed picture in the fiscal year 2016. The gross profit margin declined year-on-year, lastly because of strong headwind from foreign exchange movement and the change in product mix. Because of this factor, cost of material as a percentage of group revenue was higher, even those material costs were lower. Direct labor cost declined as the number of workers was reduced by 9.9% year-on-year.
Manufacturing overhead increased, however, owing to wages inflation in mainland China and the opening of additional CMS manufacturing facility in July 2015. Our results were affected by the data breach, which occurred as a result of cyber attack on VTech database in November 2015. During the attack, an unauthorized party accessed database containing personal information from users of Learning Lodge, the Planet VTech website, and the Kid Connect service.
As a result, Learning Lodge was offline for several weeks during the key holiday period. We are strongly committed to protecting our customer data. With the assistance of one of the world-leading cybersecurity team, we have taken steps to strengthen data protection on Learning Lodge and its connected service. We have also worked with law enforcement agency to recover stolen customer data and to ensure that copy of the information that was disseminated to two other parties, who were a journalist and a cybersecurity consultant, had been destroyed or taken offline, held securely, and not disseminated further.
Looking now at the operation as such. I will begin, as usual, with the North America. Group revenue in North America declined by 2.4% to $878.3 million. In the fiscal year 2016, as lower telecommunication product revenue offset higher sales of ELPs and CMS. North America remained VTech largest market, accounting for 47.3% of the group revenue. ELP revenue in North America increased by 4.8% to $314.4 million, and was led by higher sales of standalone products.
In the calendar year 2015, VTech maintained its position as the number one manufacturer of electronic learning toys from infancy through toddler and preschool in the United States. In standalone products, growth was driven by the core infant, toddler, and preschool category, as well as our Go! Go! Smart family of products.
More recently introduced items such as Kidizoom Action Cam, Baby Amaze, and Fizzy added incremental growth. In the platform product, there was good growth in Kidizoom smartwatch range, but this could not offset declining sales of InnoTab educational tablets and related software. This market has continued to contract and competition remains keen. The cyber attack on Learning Lodge and other VTech websites also impact sales.
The second-generation smartwatch, Kidizoom Smartwatch DX, hit the shelf in the U.S. in August 2015, had performed strongly. We also roll out InnoTV, an educational TV gaming system designed for preschool in the U.S. in October last year. Telecommunication product revenue in North America decreased by 10.7% to $371.4 million. While growth in commercial phone and other telecommunication product continues, this was not sufficient to offset the declining sales of the residential phone.
Residential phone declined due to the continuous contraction of the fixed line telephone market. Nonetheless, we maintain our leading position in the U.S. residential phone market and increase our product placement among those retailers. Sales of commercial phone and other telecommunication product continues to rise. Baby monitors pose the strongest growth, driven by good sell-through of video model and additional product placement.
Sales of commercial phone also growth, supported by demand for our new range of four-line small business phone system, which have been well received by the market. The VTech brand, ErisStation, a conference phone with wireless microphone, and ErisTerminal, the SIP-based business phone system, saw sales increase as we expand distribution channel and product gained solid traction in the market.
The revenue from CMS in North America increased by 4.9% to $192.5 million, as higher sales of professional audio equipment, industrial product, and home appliance offset lower sales from solid-state lighting, communication, medical and health products. Sales of professional audio equipment achieved good growth, owing to a number of positive factors. The major customer increased order after resolving excess inventory issues. Several other customer saw higher demand for their products, and VTech strong reputation also attract new professional audio equipment customer during the fiscal year.
Industrial product benefit from supplier consolidation by customer, while home appliance receive more order from existing clients. Solid-state lighting, however, were affected by a fall in demand for the customer products. Lower sales of communication product were record from a few existing customer. The reason for this were overstocking, poor market response, and the end of product life cycle.
The reduction in revenue from medical and health product was due to the change in outsourcing policy of one customer. Turning now to Europe. The group revenue in Europe decreased by 2% to $795.9 million in fiscal year 2016, as lower sales of both telecommunication product and ELP offset an increase in CMS revenue. Europe was VTech second-largest market, accounting for 42.9% of group revenue. ELP revenue in Europe fell by 10.2% to $325.5 million. The decline in U.S. dollar terms was driven by the depreciation of the European currency.
Among the group key Western European market, sales in France, the U.K., Germany, and Spain, grew slightly in local currency terms. Despite the tough foreign exchange environment, VTech gained further market share in calendar year 2015, strengthening the position as the number one infant and toddler toys manufacturer in France, the U.K., and Germany.
The group also maintained its number one position in preschool electronic learning in France, Germany, and Spain. Standalone product saw a decrease in sales. Core infant, toddler, and preschool learning product, as well as Switch & Go Dino, record sales decline. However, there was growth in Toot-Toot family product and Little Love, while Kidizoom Action Cam and Fizzy brought additional revenue. Looking at platform products. Sales of InnoTab and Storio children educational tablet and software contract further.
The market has continued to decline and competition remain keen, while the cyber attack have a negative impact on sales. Although sales of Kidizoom Smartwatch also experienced a slight decrease, the range continues to win industrial awards. In late September last year, our new multifunction handheld device, DigiGo, hit the shelf in our key European market, giving children a handy device for text messaging, picture, video, and music.
I'm pleased to say that it had been well-received. The 5-inch Storio Max tablet, which were launched in France and Germany, have also enjoyed success. Revenue from telecommunication product in Europe decreased by 13.3% to $136.4 million. The sales in commercial phone and other telecommunication product was unable to offset fully decline in sales of residential phone. Sales of residential phone decreased as the fixed line telephone market contract.
This was compounded by weak euro, which reduced the purchasing power of group customer, leading to a further decline in sales. In contrast, commercial phone and other telecommunication product post good growth. Baby monitor was the best performing sector, driven by higher sales of video models. CAT-iq headset registered a sale increase, benefiting from their first full year sale contribution.
Sales of IAD also grow as customer began shipment of a new generation of products. Finally, in addition to our well-established ODM business in Europe, during the fiscal year, we started selling ErisTerminal and ErisStation under the VTech brand in few selected European market, and we have been achieving steady growth in both product line. CMS revenue in Europe increased by 14.3% to 334 million, with sales rising in all product category.
Professional audio equipment benefit from being given more project by existing customer, while new customer also make a sale contribution. Sales of hearable trend higher as VTech grows revenue share with a major existing customer, while new customer offering the world first wireless smart earphone ramp up order as well.
Despite the change in ownership of our customer, switched-mode power supply experience is temporarily boost in sales. Sales of home appliance rose owing to more order from existing customer. Group revenue in Asia Pacific increased by 9.7% to $ 129 million in the fiscal year 2016, as higher sales of ELP and CMS offset a decline in telecommunication product. Asia Pacific represents 6.9% of the group revenue. Revenue from ELP in Asia Pacific was up by 57.9% to $ 40.9 million, mainly driven by growth in China, Australia, and Japan.
In China, there was a strong demand for our core infant and toddler product, Switch & Go Dino and Go! Go! Smart Wheels. Growth was further supported by the expansion of our distribution channel and higher online sales. Sales in Australia increased significantly, and we completed the first full fiscal year of conducting sales and marketing through our own local office. The revenue growth in Japan was mainly attributed to the launch of Kidizoom smartwatch in that market. Telecommunication product revenue in Asia Pacific declined by 16.3% to $ 36 million.
Sales growth in India, Taiwan, and Hong Kong only partially compensated for lower sale in Australia, Japan, and China. CMS revenue in Asia Pacific rose by 7% to $ 52.1 million and was primarily driven by higher sales of home appliance, hearable, and professional audio equipment. Finally, other regions, which are Latin America, the Middle East, and Africa.
Here, revenue grew by 5.8% to $ 53.3 million in the fiscal year 2016. Other region account for 2.9% of the group revenue. ELP revenue in other region decreased by 22.3% to $ 11.5 million, as higher sales in Middle East and Africa were offset by lower sales in Latin America. Telecommunication product revenue in other region increased by 17.4% to $ 41.2 million. Growth was mainly attributed to a sale increase in the Middle East as shipment of IAD rose, offsetting lower sale in Latin America. CMS revenue in other region was $ 0.6 million as compared to $ 0.5 million in the previous fiscal years. Thank you. That conclude my part, and I will now hand over to King. King, please.
Thank you, Andy. Good afternoon, ladies and gentlemen. Greetings to our online viewers. Let me start by sharing a few comments regarding LeapFrog. As many of you are aware, VTech recently acquired LeapFrog Enterprises, Inc. The acquisition was effected by way of a tender offer announced in February this year. The consideration was approximately $72 million, financed through internal resources.
The acquisition was completed on the 4th of April this year, with LeapFrog becoming an indirect wholly-owned subsidiary of VTech. As you can see in this table, LeapFrog complements VTech in brand, geographic strength, product mix, skill sets, and operations. Looking at the two brands, VTech is a stronger brand in Europe. LeapFrog has a stronger educational brand image in the U.S. In terms of sales coverage, VTech is stronger in Europe. LeapFrog is more U.S.-focused. On products, VTech performs well in standalone products.
LeapFrog is stronger in platform products in English-speaking countries. In the area of talents, VTech excels in technology and engineering, whereas LeapFrog has an edge in content development, backed by a strong educational team. Finally, in operations, VTech's manufacturing is done in-house, whereas LeapFrog's manufacturing is completely outsourced. I will now turn to our outlook for fiscal year 2017.
First, we expect the group's revenue to be higher in financial year 2017. Profitability, however, will be impacted by the integration of LeapFrog, which is expected to make a negative contribution during this financial year. Material cost is expected to be largely stable. Labor cost and manufacturing overhead are expected to rise moderately. As always, to offset cost increases, we continue to invest in and work on automation, process improvement, and product optimization. Onto our businesses. Looking first at ELP.
Here, revenue is forecast to grow due to a number of positive factors. First, the acquisition of LeapFrog will result in an immediate sales contribution. Adding to that, sales of VTech-branded standalone products are expected to increase further. The successful Baby and Go! Go! Smart Wheels lines will be expanded this year. The award-winning Go! Go! Smart Friends will see the introduction of a princess-themed line, as you can see on the table. It combines traditional role-play with cutting-edge technology, providing a multi-sensory learning experience.
In the category of nurturing dolls, on the heels of the excellent market momentum created in 2015, additional new products will be introduced for the Little Love, or in the U.S., the Baby Amaze ranges. In our bread and butter core infant, toddler, and preschool learning products, as always, a slew of new products will be launched.
They will be augmented by the introduction of a number of new LeapFrog-branded learning toys. Geographically, VTech's ELP sales in China and Australia will continue to grow further, supported by expanded sales and marketing efforts, new product launches, and the continued growth of our online business in China. Next, platform business. With combined VTech and LeapFrog offerings, sales of our platform products are expected to grow year-on-year.
In the VTech-branded line, Touch & Learn Activity Desk Deluxe, of which there is a sample there, a three-in-one learning desk designed for children aged between two and five, will be launched globally during the current calendar year. DigiGo, the handy communication device for children, which was launched in Europe in fall 2015 and well received, will be rolled out in the U.S. market this year.
For wearables, Kidizoom Smartwatch DX, our second-generation smartwatch for children, will be launched in the group's key European markets later this year. This follows the successful rollout in the U.S. in 2015. For the LeapFrog-branded line, a new multi-activity learning platform will hit retailer shelves in summer. Unfortunately, the product is still under embargo, so I'm not at liberty to share any more details here. It will contribute to overall platform product business.
Last but far from being the least, tablets. The combined LeapFrog and VTech offerings will give the group a strong presence in the children's education tablet category. Turning now to telecommunication products. The telecommunication products business is expected to improve, propelled by higher sales of commercial phones and other telecommunication products. The momentum in baby monitor is expected to continue, driven by global product launches, new sales channels, and geographic expansion.
Sales of CAT-iq handsets will continue to increase, riding on a shift from PSTN to Voice over IP technology. ErisTerminal. ErisTerminal is gaining customer acceptance and market attention. New models with enhanced features will be rolled out to the U.S. market in the second half of the financial year, augmented by a significant new project that was recently secured in Korea. ErisStation. ErisStation will benefit from wider distribution.
Additionally, new SIP-based models designed for large conference rooms will be introduced in the U.S. market. The group's wireless monitoring system is expected to add incremental sales. Turning now to residential phones. The decline in sales of residential phones, unfortunately, is expected to continue, but we expect it to moderate. In the U.S., the group aims to capture more market share by growing online sales and introducing new products with enhanced Connect to Cell features.
In Europe, the business is expected to stabilize. Higher sales in Australia and Japan will support growth in Asia Pacific. Finally, on Contract Manufacturing Services. Higher sales are forecast for CMS. Professional audio equipment will grow further as VTech's strong reputation attracts new customers, and a new design support approach secures new projects.
As category leaders, our existing customers are expecting further growth in their respective businesses, resulting in additional orders for us. In hearables, we are targeting business growth, especially in the area of miniaturized electronic devices. Industrial products will grow as we continue to benefit from a supply consolidation by a customer. However, for switched-mode power supplies, the change of ownership of a customer creates some uncertainty for us.
Also on CMS, I'm pleased to announce that the group has signed an agreement to acquire assets from a third party. This will allow CMS to expand its vertical integration, as well as securing the supply of high-precision metal tooling and parts. Contribution from this acquisition will start in the fourth quarter of the current financial year. This concludes our presentation