Vtech 2003 Annual Report Download - page 15

Annual Report 2003 13
Management Discussion and Analysis
NUMBER OF EMPLOYEES
As at 31st March 2003 2003 2002
Manufacturing 12,113 12,739
Non-manufacturing 1,447 1,512
Total employees at the end of the year 13,560 14,251
Average for the year 15,600 16,104
LIQUIDITY AND FINANCIAL RESOURCES
As at 31st March 2003
All figures are in US$ million except those stated otherwise 2003 2002
Cash 70.4 63.3
Less:Total interest bearing liabilities (2.7) (95.8 )
Net cash/ (debt) position 67.7 (32.5)
Gross debt to shareholders' funds 2.1% 107.2%
Net debt to shareholders' funds N/A 36.4%
CAPITAL EXPENDITURE During the year, the
Group invested US$14.1 million in plant,
machinery, equipment and other tangible
assets.This was financed primarily from
internal resources.
compared to 72.9% at 31st March 2002.
A majority of the Group’s borrowings are
denominated in Euro and are on a fixed
rate basis.
Of the amount of indebtness as at 31st
March 2003, US$0.5 million was repayable
within one year; US$0.5 million was
repayable between one and two years;
US$0.7 million was repayable between two
and five years and US$1.0 million was
repayable after five years. A small portion
of the borrowings is secured against land
and buildings, which amounts to
approximately US$2.5 million.
With cash on hand and available banking
facilities at the year ended 31st March
2003, the Group has adequate financial
resources to meet its future working capital
requirements.Approximately 80% of cash
and deposits are denominated in United
States dollars and 10% are denominated
in United Kingdom Sterling and Euro.
LIQUIDITY AND FINANCIAL RESOURCES The
Group’s financial position continued to
improve. As at 31st March 2003, the Group
had net cash of US$67.7 million compared
with net debt of US$32.5 million as at
31st March 2002. Net cash inflow from
operating activities during the year
amounted to US$110.6 million,
representing a decrease of US$36.2 million
over last year’s US$146.8 million. The net
receipt from settlement of the lawsuit filed
against Lucent contributed US$34.0 million
of cash to the Group.
Total interest bearing liabilities decreased
from US$95.8 million at 31st March 2002
to US$2.7 million at the end of the financial
year 2003.The gross debt to shareholders’
funds ratio improved from 107.2% to 2.1%.
Long-term borrowings decreased from
US$65.2 million to US$2.2 million, which
represents 1.7% of shareholders’funds as
TREASURY POLICIES The objective of the
Group’s treasury policies is to manage its
exposure to fluctuation in foreign currency
exchange rates and interest rates on its
interest bearing loans. It is our policy not
to engage in speculative activities. Forward
foreign exchange contracts and interest rate
swaps were used to hedge certain
exposures.
MATERIAL LEGAL PROCEEDINGS On 7th June
2002, the Group and Lucent settled the
lawsuit filed by the Group against Lucent
in January 2001 in a mutually satisfactory
manner.There was no admission of
wrongdoing by either party. Under the
terms of the settlement, Lucent has agreed
to adjust the purchase price of the
acquisition downward by US$50.0 million,
such amount has been fully settled in cash.
After settling its claims against Lucent,
the Group commenced litigation against
PricewaterhouseCoopers LLP (“PwC”)on
28th February 2003 in relation to PwC's
alleged malpractice and breach of duty
and fraud in representing the Group
concerning the acquisition of part of the
Lucent Consumer Telephone Business in
March 2000.
Certain subsidiaries of the Group are
involved in litigation arising from their
normal business. None of the above
proceedings are regarded as material
litigation.
EMPLOYEES As at 31st March 2003, the
Group had approximately 13,500
employees.The Group has established an
incentive bonus scheme and a share option
scheme for its employees, in which the
benefits are determined based on the
performance of the Group and individual
employees.