09:30     VTECH HOLDINGS<00303> - Announcement (1)                            

    The Stock Exchange of Hong Kong Limited takes no responsibility for       
    the contents of this announcement, makes no representation as to its      
    accuracy or completeness and expressly disclaims any liability            
    whatsoever for any loss howsoever arising from or in reliance upon        
    the whole or any part of the contents of this announcement.               
                                                                              
    VTech Holdings Limited                                                    
    (Incorporated in Bermuda with limited liability)                          
    (Stock Code: 303)                                                         
                                                                              
    Connected Transaction                                                     
                                                                              
    On 6 April 2005, the Company and Aldenham entered into the Lease which    
    constitutes a continuing connected transaction (the ``Transaction'')      
    of the Company under Rule 14A.34 of the Listing Rules and shall be        
    disclosed by way of an announcement.                                      
                                                                              
    Brief details of the Transaction will also be disclosed in the            
    Company's subsequent published annual report and accounts for each        
    of the relevant financial years ending 31 March 2006 and 2007 in          
    accordance with the requirements under the Listing Rules.                 
                                                                              
    I.   The Transaction                                                      
                                                                              
    On 6 April 2005, the Company as tenant entered into the Lease with        
    Aldenham as landlord. The principal terms of the Lease remain the same    
    as those in the Previous Lease and are as follows:                        
                                                                              
    Date : 6 April 2005                                                       
                                                                              
    Landlord : Aldenham                                                       
                                                                              
    Tenant : The Company                                                      
                                                                              
    Premises : approximately 5,673 square feet of 29th and 30th Floors,       
    12 Bowen Road, Hong Villa, Hong Kong                                      
                                                                              
    Terms : 2 years commencing 1 April 2005 and expiring on 31 March 2007     
                                                                              
    Rent : HK$250,000 per month (inclusive of rates and management fees)      
    in the aggregate amount of HK$6,000,000                                   
                                                                              
    Aldenham is a wholly indirect subsidiary of a trust in which the family   
    members of Mr. Allan WONG Chi Yun, a director, chief executive and        
    substantial shareholder holding 40.10% of the entire issued share         
    capital of the Company, are the beneficiaries. Aldenham is therefore      
    a connected person of the Company as ascribed by the Listing Rules        
    and the Lease constitutes a continuing connected transaction under        
    the Listing Rules.                                                        
                                                                              
    The Board (including all independent non-executive directors) are of      
    the view that the Lease is entered into upon normal commercial terms      
    which are fair and reasonable and is in the interest of the Company       
    and its independent shareholders. The rental was determined by            
    reference to a valuation report conducted by an independent qualified     
    surveyor when the Premises were leased to the Company in 2003 and also    
    by having regards to informal enquiries made by the Company as to the     
    rental prices in the current rental market for premises similar to        
    the Premises. The current rental amount is the same amount as that        
    paid for during the term of the Previous Lease executed in 2003.          
                                                                              
    II.   Reasons for the Lease                                               
                                                                              
    The Premises were leased for the purposes of providing housing to Mr.     
    Allan WONG Chi Yun in accordance with the terms of his service contract.  
    Mr. Allan WONG Chi Yun's service contract provides that the Company       
    shall pay for him the monthly rental of his residence during the          
    continuance of his service with the Company. The entering into of the     
    Lease shall not additionally increase the total emoluments entitled       
    by Mr. Allan WONG Chi Yun but is an incentive used for the retention      
    of his service as an employee of the Company.                             
                                                                              
    III.   General                                                            
                                                                              
    The Group is principally engaged in the business of the design,           
    manufacture and distribution of electronic learning products and          
    telecommunication products.