Vtech 2001 Annual Report Download - page 18

16
Businesse s
Other
Mobile Phones
Our mobile phone business is still in the development
stage, following our acquisition of UK-based Sensei
in September 2000. As we have decided to close
the R&D centre in the UK as part of our overall
restructuring, we have fully written off the
intangible assets purchased as part of the Sensei
acquisition, including writing down the older GSM
components inventory.
e-Business Related Services
During the financial year 2001, losses on investment
in new businesses, including losses from our Internet-
service provider (ISP) in the US have adversely
affected our performance for the year.
The change in market sentiment has affected our
intention, announced in October 2000, to spin off
VTech’s eLearning business, which combines
physical and virtual methods of delivering high quality
learning. Although we have postponed the initial
public offering, we continue to make progress in this
business. In February 2001, we entered into a
strategic alliance with Longman Hong Kong
Education, to provide a new e-Education channel for
schools and students via the Internet. Losses were
incurred from this business during the year.
As part of the restructuring, we are now scaling down
our e-Business investments and re-organizing them,
to focus more on achieving synergies with other group
companies. Our business-to-business website,
Chinacommercer.com, which we launched in
October 2000 and the co-operative agreement with
South China University of Technology to form
SCVTech, an application services provider and
consulting firm, offer the prospect of exploiting
opportunities in the e-commerce software market in
China, in particular providing “one-stop” e-commerce
solution for business in mainland China. The cost of
these investments expensed in the year was US$0.7
million.
Corporate Affairs
Liquidity and Financial Resources
Net cash outflow from operating activities during the
year increased by US$49.6 million over last year’s
US$10.3 million net cash inflow. This was mainly resulted
from the decrease in operating profit and change in
working capital.
The acquisition of the Lucent consumer telephone
business increased the Group’s long-term borrowings
to US$136.9 million, which represented 169.6% of the
capital employed, as compared to 57.0% last year. Total
interest bearing liabilities increased from US$185.9
million to US$249.6 million.
In line with our restructuring plan, we expect our debt
position to improve in the financial year 2002 being
achieved from rapidly improving cost structure of all our
operations and sale of certain assets as described in
note 14 to the financial statements. A majority of the
Group’s borrowings are on a floating rate basis except
for term loans of US$7.0 million which interest is
charged on fixed rates.
The maturity profile of indebtedness is contained in note
17 to the financial statements. A small portion of the
borrowings are secured against land and buildings. With
cash on hand and available banking facilities at year
end, the Group has adequate working capital to meet
its future working capital requirements.
Review of Operations