VTech Holdings is spinning off its online education and information technology (IT) training businesses - VTech eLearning Holdings - as an incentive for managers to lift their game and grow the business. 'This [online education and IT training business] is not our core business, it is only a very minor business for our group,' said the consumer electronics manufacturer's managing director, finance, William Ho Mook-lam. 'The major reason for spinning off this business is to appreciate and reward several key staff for their contribution on developing the online learning business.' Mr Ho said that through the listing of VTech eLearning, some key staff members of the online education business, such as David Mak Wing-kwong, the founder and director of the unit, would be able to realise the valuation of their interest in the business. The listing would allow the eLearning unit to gain a marketable valuation, which VTech believed would encourage key staff by giving them a bigger incentive to expand the business. The listing would also allow VTech to raise additional funds for financing eLearning's expansion plans. 'We can spend more on marketing and technical support, and expand the eLearning business beyond Hong Kong if we can raise money from the market,' Mr Ho said. He was not concerned the sluggish market sentiment might affect the scale and pricing of the pending spin-off as the company was very flexible on the listing plan. 'If we can raise more money from the market, we can expand [the eLearning business] more aggressively,' Mr Ho said. 'If not, we can still do it gradually.' As part of a reorganisation leading up to the GEM listing, VTech would transfer the online education business - VTech ABC.com - and the IT training business from its 70 per cent-owned subsidiary, VTech Computers Systems (VTCS), to VTech eLearning, the future listing vehicle. David Mak, who has a 30 per cent stake in VTCS, would transfer his interest to VTech in exchange for an 8 per cent holding in eLearning, the company said. VTCS, which is mainly involved in online education and IT training, posted an audited loss of HK$10.6 million for the year to March 31. As of that date, the company had net deficits of HK$19.95 million. VTech recorded a net profit of US$45 million during the year, down from US$82.1 million a year earlier.