Good afternoon, ladies and gentlemen, and welcome to all of our viewers online. Today, VTech Holdings Limited is announcing its interim results for the six months ended 30 September 2017. 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 Fai 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 review the group's operations. Mr. Pang will then 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?
Thank you, Corina. 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 six months ended, 30 September 2017, compared with the same period of the last year. As you see from the slide, the revenue of the group rose by 5.8% to $1,039.7 million.
The increase in revenue was mainly driven by the higher sales in North America, Europe, and Asia Pacific, which offset the lower sales in other regions. The gross profit of the group rose by 6.9% to $335.4 million. And our gross profit margin also increased from 31.9% to 32.3%. The increase in gross profit and gross profit margin was mainly due to the gross profit contribution from LeapFrog and Snom, and the depreciation of the renminbi against the US dollar during the period.
Cost of materials as a percentage of the group's revenue, was also lower than the same period of the last year, which was mainly due to the change in product mix, offsetting the higher material prices. As for the direct labour cost and manufacturing overhead as percentage of the group's revenue, they were also lower than the same period of the last year, as the group continued to reduce workforce through optimization and process improvement.
Our operating profit rose by 44.8% to $114.8 million. And our operating profit margin also increased from 8.1% to 11%. The improvement in operating profit and operating profit margin was mainly due to the increase in gross profit and gross profit margin, and the reduction in operating expenses as the restructuring costs associated with the integration of LeapFrog were incurred in the same period of the last year.
Our spending on advertising and promotional activities was also lower than the same period of the last year. Our profit attributable to shareholders rose by 45.1% to $103.6 million. Our net profit margin also increased from 7.3% to 10%. As a result, our basic earnings per share rose by 45.1% to $0.412. Our board of directors has declared an interim dividend per share of $0.17. Turning to the revenue by region. North America remains the largest market of the group, accounting for 48% of the group's revenue. The group's revenue in North America rose by 5.3% to $499.7 million. The increase in revenue was mainly due to the higher sales of our electronic learning products and contract manufacturing services, which offset the lower sales of our telecom products. Our sales to European market rose by 0.3% to $413.7 million.
The sales growth in Europe was driven by the higher sales of our electronic learning products and telecom products, which offset the decrease in revenue of our contract manufacturing services. In the Asia Pacific region, the revenue of the group rose by 43.9% to $100.6 million. The increase in revenue was due to the increase in sales of all our three product lines. Other regions include Latin America, Middle East, and Africa.
The group's revenue in other region reduced by 1.2% to $25.7 million. The decrease in sales in other regions was mainly due to the lower sales of our telecom products, which offset the higher sales of our electronic learning products and contract manufacturing services. Our stock balance as at 30 September 2017 increased from $319.5 million to $456.9 million compared with the same period of the last year.
Our stock turnover days also increased from 110 days to 128 days. The increase in stock level was mainly to cater for the higher demand of the group's product in the second half of the financial year, the increase in in-house production after the acquisitions of LeapFrog and Snom, and the temporary suspension of the shipments to Toys "R" Us after its bankruptcy protection filing in the U.S. and Canada.
Our trade debtors balance as at 30 September 2017 increased from $423.1 million to $462.9 million compared with the same period of the last year. Our trade debtors turnover days also increased from 60 days to 64 days. The increase in trade debtors balance was mainly due to the increase in sales in the first half of the financial year compared with the same period of the last year. Our financial position remain s very strong.
Our net cash balance as at 30 September 2017, was $89.7 million, including a loan of $1.6 million from Snom. That's all of my presentation. I will now invite Mr. Andy Leung to share with you our operations review. Mr. Leung, please.
Thank you, Shereen. Looking first at the cost side of our operation. The group's gross profit margin in the first six months of the financial year 2018, rose from 31.9% to 32.3%. The improvement was mainly due to a more favorable product mix, a positive currency impact, and productivity gains, despite an increase in material prices. During the period, the group has successfully brought most of the LeapFrog and Snom products in-house for manufacture. Turning now to our operations. Beginning with North America. Group revenue in North America increased by 5.3% to US$499.7 million in the first six months of the fiscal year 2018. Sales of electronic learning products and contract manufacturing services were higher, offsetting lower sales from telecommunication products. North America was our largest market, accounting for 48% of the group revenue.
ELP revenue in North America rose by 2.6% to $192.4 million, driven by higher sales of both standalone and platform products. For the first nine months of the calendar year 2017, the group maintained its position as the number one manufacturer of electronic learning toys from infancy through toddler and preschool in the U.S. Revenue growth was, however, negatively impacted by the filing for bankruptcy protection in the U.S. and Canada by TRU, which occurred on September 18 this year.
Our sales to the retailer up to the day of the filing were covered by credit insurance. After the filing, shipment were no longer covered, and so we suspend temporarily pending negotiation of new terms. We make every effort to support our long-term business partners and have worked closely with TRU to ensure the right product will be delivered to consumers in the run-up to the holiday season.
One of our strategy in the financial year 2018 had been to grow the LeapFrog standalone toys business. By launching more learning toys under LeapFrog brand, this strategy has seen initial success in the first half. A number of the infants and preschool products performed particular well. This include both new and classic item. For instance, 2-in-1 LeapTop Touch, Mr. Pencil's Scribble & Write, Scoot & Learn Ice Cream Cart, as well as My Pal Scout & Violet. Scoot & Learn Ice Cream Cart was featured in The Toy Insider's Hot 20 list of the hottest toy of the season. In retail standalone products, there were higher sales of preschool product and the KidiZoom camera range, which offsets decline in the infant category and the Go! Go! Smart family of products.
Among the success, Pop-a-Balls Drop & Pop Ball Pit was included in Walmart's Chosen by Kids Top Toy list, while the All-Weather KidiZoom Action Cam 180 was named in The Toy Insider 12th Annual Holiday Gift Guide, together with the new GearZooz Roll & Roar Animal Train. Despite a decline in overall Go! Go! Smart sales, several new products were well received by the market. Go! Go! Smart Wheels Race & Play Adventure Park make the elite Hot 20 list at The Toy Insider. During the period, we also brought our product innovation to the outdoor tricycle category with the 4-in-1 Stroll & Grow Tek Trike. Among platform product, the KidiZoom Smartwatch range remained a growth driver.
The older model continued to sell well, while the launch of the first generation KidiZoom Smartwatch featuring dual cameras and a new Star Wars film version added to the momentum.
Touch and Learn Activity Desk Deluxe and the LeapStart interactive learning system, which were both launched in August last year, continues to perform well. In August, we introduced an updated LeapStart system with an enhanced stylus and additional titles, including licensed books. This product was included in The Toy Insider 12th Annual Holidays Gift Guide.
A new children's communication device called KidiBuzz also hit the U.S. shelf. During the period, the group launched LeapPad Ultimate to replace LeapPad Platinum, while LeapFrog Epic was updated with the new Academy Eddition. Despite this new launch, sales of children educational tablet decreased in line with the overall decline of the market. Adding a new dimension to the group offerings, the LeapFrog Academy was launched in major English-speaking country in August. This is a subscription-based guide learning system for children aged 3 to 6 years.
Designed by educational expert, it currently offer cover 1,000 curriculum-based activities. Teleproduct revenue in North America decreased by 8.5% to $166.6 million. As continuous growth in commercial phone and other telecommunication product was unable to offset a further sale decline in residential phone, which reflect the ongoing contraction of the fixed line telephone market. Nonetheless, Vtech maintains its leadership position in the U.S. residential phone market. Commercial phone and other telecommunication product post growth, driven by higher sales of headsets, small to medium-sized business phone, voice over IP phone, and conference phone. Sales of headset rose on the popularity of the Bluetooth model, specifically designed for the professional trucker market. The growth of voice over IP phone was mainly coming from the contribution of Snom, the German company we acquired in November last year.
The Vtech ErisStation, a conference phone with wireless microphone, achieved a sales increase as new channel were developed. Hotel phone sales were stable, while baby monitor saw a slight sales decline as customer delay project launch to the second half of the fiscal years. Despite this, the market continues to respond well to the Group two new baby monitor products.
One featuring a video camera with interchangeable standard and wide angle lenses. The other, a Wi-Fi remote access high definition camera with local viewer. CMS revenue in North America increased sharply by 34.4% to $140.7 million. As higher sales of professional audio equipment, solid state lighting, and industrial product offset a decline in communication product. Sales of professional audio equipment record significant growth. The growth was mainly driven by higher sales of new active speaker launched by an existing customer.
A recovery of order from another existing customer as it worked through an excess inventory issue that have impact to order in the previous financial year also contribute to the growth. Sales of solid state lighting improved as an existing customer transfer production of the product line to Vtech. Industrial products also post solid growth as we gain order for printed circuit board assembly for industrial printer and load counting device.
Sales of communication product, however, registered a decline as a client's product line reached the end of its life cycle. Sales of home appliance were stable during the period. Turning to Europe. Group revenue increased by 0.3% to $413.7 million in the first six months of the financial year 2018, as higher sales of ELP and telecommunication product offset a decline at CMS. Europe remain Vtech second largest market, accounting for 39.8% of the group revenue.
ELP revenue in Europe rose by 7.8% to $155.7 million , with growth in both standalone and platform products. Geographically, all the group key Western European market, namely France, U.K., Germany, the Benelux, and Spain, record sales increase. In the first nine months of the calendar year 2017, Vtech strengthened its position as the number one infants and toddler toy manufacturer in France, U.K., Germany, Spain, and Belgium.
Growth in standalone product was driven by higher sales of both Vtech and LeapFrog infants and preschool product. The KidiZoom camera range, as well as the Kidi and Little Love lines. Those offset lower sales of the Toot-Toot family of products. During the first six months of the fiscal year 2018, Vtech ELP garnered many awards in Europe. KidiZoom was included in the top 10 toys for Christmas 2017 at Amazon in the U.K.
In France, Vtech won four 2017 Grand Prix du Jouet Award presented by La Revue des Jouets magazine. Little Love Puppy Pal was named the Toy of the Year 2017 and Best Special Feature Doll. KidiZoom GearZooz Roll & Roar Animal Train was named the Best Educational Toddler Toys. Platform product sales in Europe increased during the first half of the fiscal year 2018, driven by KidiZoom Smartwatch, DigiGo, and LeapStart.
The second generation KidiZoom Smartwatch DX, which was launched in all key Western European markets in the second half of the previous fiscal year, continues to perform well. Growth was supported by the new Star Wars from KidiZoom Smartwatch and KidiCom Max, which is the new version of DigiGo. Sales of children's educational tablet record a decline. Revenue from telecommunications products in Europe increased by 10.3% to $69.5 million .
Higher sales of commercial phone and other telecommunications product offset lower sales of residential phone. Growth in voice over IP phone was the main reason for the sales increase, as we consolidate the first full six months sales of Snom business. Baby monitors were another factor behind the growth due to good selling through and increased orders from existing and new customers. Sales of CAT-iq headsets also rose as the group secured more orders from the existing customer and began to sell Vtech brand CAT-iq headset into the Swiss market. IADs saw sales increase to existing and new customers, while hotel phones achieved good growth. Sales of residential phones continues to decline as the fixed-line telephone market contracts further. CMS revenue in Europe decreased by 8.5% to $188.5 million .
The decrease was mainly due to the fall in sales of switching mode power supply, as a change in ownership resulted in a customer to begin moving production back in-house. Sales of professional audio equipment and hearables retreated slightly. The decline in sales of professional audio equipment was due to a product being phased out by an existing customer. Keen competition in the wireless headset market explained lower sales of hearables. Despite this, sales of industrial products and medical and health saw an increase. Growth for industrial products was due to the revenue growth by smart meter for the U.K. market. Utility suppliers are encouraging households to install the device to track their energy consumption pattern, supported by government policy. Meanwhile, the group ramped up order of hearing aid to a European customer, driving growth in medical and health products.
Group revenue in Asia Pacific rose by 43.9% to $100.6 million in the first six months of the fiscal year 2018, with higher sales in all three product lines. Asia Pacific represents 9.7% of the group revenue. Revenue from ELP in Asia Pacific rose by 43.4% to $35 million. We are seeing growth in mainland China, Australia, South Korea, and Hong Kong. In mainland China, we benefit from new product launch, channel expansion, and increased marketing effort. In Australia and South Korea, the growth products achieve broader listing, while more promotion drove sales higher in Hong Kong. Increased sales of LeapFrog brand product in other Asia-Pacific market also contribute to the overall growth.
Telecommunication product revenue in Asia-Pacific rose by 30.7% to $21.7 million, driven by higher sales in Japan and Hong Kong. In Japan, we secure more project and order from an existing customer.
In Hong Kong, Vtech is supplying telecommunication device to a leading local broadband service provider, driving sales of IAD and CAT-iq headset. Sales in Australia saw decline despite increased sales of our baby monitor, which were insufficient to offset lower sales of residential phone. CMS revenue in Asia-Pacific increased by 51.9% to $43.9 million. Higher sales of medical and health product, professional audio, hearables, and communication product offset lower sales of solid state lighting and home appliance. The sales contribute from newly acquired high precision metal parts business added to the growth. Medical and health product gained momentum as the group ramp up shipment of diagnostic ultrasonic system to its Japanese customer. Professional audio equipment posts higher sales as our existing customer sold more product to mainland China. Sales growth in hearables was driven by order from one new customer.
Communication product performed well as we start producing digital version of a marine radio for an existing customer. Sales of solid state lighting and home appliance, however, record decline as customer face keen competition. Group revenue in other region, which comprise Latin America, the Middle East, and Africa, decreased by 1.2% to $25.7 million in the first six months. Lower sales of telecommunication product offset higher sales of ELP and CMS. Other regions accounted for 2.5% of the group revenue. ELP revenue in the other region rose by 12.8% to USD 10.6 million, as higher sales in Middle East compensate for lower sales in Latin America and Africa. Telecommunication product revenue in this market decreased by 10.5% to $14.5 million. The decline was due to lower sales in Latin America, which offsets growth in the Middle East and Africa.
CMS revenue in other region was $0.6 million in the first six months of the fiscal year as compared to $0.4 million in the corresponding period of the last fiscal year. That concludes my presentation. Thank you very much. I now hand over to King for outlook.
Thank you, Andy. Good afternoon, ladies and gentlemen. Looking ahead, group revenue for the financial year 2018 is expected to increase. Sales of telecommunication products are anticipated to pick up in the second half, and a good momentum behind CMS is forecast to continue. As for ELPs, sales for the full financial year are difficult to gauge at this point, as there is uncertainty regarding the level of shipment in the second half to Toys "R" Us , one of group's top five customers. Consequently, the trend in gross margin is also difficult to predict.
ELPs. Despite the near-term uncertainty, the group continues to see good demand for its ELPs. In stand-alone products, the LeapFrog portfolio has been strengthened with the introduction of a broad range of learning toys. Vtech-branded infant and toddler products, as well as KidiZoom camera range, are well received and gaining market share.
Platform products will benefit from the strong sell-through of new generations of the KidiZoom Smartwatch and LeapStart, as well as the newly introduced children's communications device, KidiBuzz. Subscription to LeapFrog Academy is expected to grow in the second half, driven by strong marketing and as more LeapFrog Epic Academy Edition tablets get into the hands of children during the holiday season. Geographically, Asia-Pacific will continue to outperform. In China, the relaxation of the one-child policy has increased the size of our target market for baby and infant products. In Australia and South Korea, broader listing will continue to drive sales growth. Turning next to telecommunications products. Sales of telecommunication products are expected to recover in the second half, resulting in full-year growth. Sales growth of the commercial phones and other telecommunication products is expected to continue, offsetting a further decline in residential phones.
For commercial phones, two key new voice over IP phones have been introduced by Snom. One features a large, full-color LCD screen. The other has a high-resolution second screen for programmable function keys. Conference phones will benefit from the introduction of new Snom models, and as more sales channels are being developed. Sales of hotel phones will also grow. Previously delayed models will come to fruition, and a new boutique range catering to the demand for smaller handsets will be launched. The strong momentum of handsets for professional truckers is expected to continue. Two new headset models for the business market will also be launched later in the financial year. Sales of our popular baby monitors will see growth due to increased retail shelf placement. Sales of CAT-iq phones, handsets and IADs will grow as a result of increased orders from both existing and new customers. Finally, CMS.
CMS is forecast for strong growth for the full year, and this is despite a slow overall EMS market in the first half of the calendar year. Sales are expected to rise due to increasing orders from existing customers in professional audio, in hearables, in industrial products, in solid-state lighting, as well as in medical and health products. This will offset a further decline in switching mode power supplies. Additionally, there will be a full-year sales contribution from the high-precision metal parts business the group acquired last year. To position CMS for further growth, the group plans to migrate towards Industry 4.0, in which machines are augmented with web connectivity. They are connected to an intelligent system that visualizes the entire production chain and makes autonomous decisions.
By embracing this concept, our CMS will continue to achieve excellence in manufacturing, resulting in lower cost, higher productivity, and better time to market for our customers. This conclude our presentation.