Cordless-telephone maker VTech Holdings will make further provisions in the second half in relation to its restructuring. Chairman Allan Wong Chi-yun's statement yesterday contrasted with comments he made to analysts in November, when the company announced its first-half results. As it booked provisions of US$9.9 million for the first half, Mr Wong said VTech did not expect to book additional provisions. At least four brokerages - Nomura, SG, SBI E2-Capital and ABN Amro - quoted VTech's management in their November research reports as saying no further provisions were expected. Since the first-half results announcement, VTech's share price has risen 103 per cent - closing at HK$8.90 yesterday. Investors have speculated on the company's recovery from its record loss of US$215 million in the year to March 31 last year. In September, it traded as low as HK$2. In June last year, when VTech announced the record loss, Mr Wong said he expected additional provisions of about US$20 million would be required for the year to March 31 this year. Yesterday, he said the expected second-half provisioning was due mainly to provisions that could not be booked last year, a longer than expected restructuring and the closure of certain operations. The September 11 attacks in the United States delayed the sale of a Mexico factory and also resulted in higher maintenance costs. He would not reveal the size of the provisions, but said the company would still 'certainly' be able to book a net profit for the year to March 31. In the first half, it had a net profit of US$3.3 million. Mr Wong said VTech's debt-to-equity ratio had fallen to below 100 per cent. It was 148 per cent on September 30, down from 240 per cent on March 31. According to brokerage UBS Warburg, when the ratio falls below 100 per cent, VTech is entitled to a one percentage point interest penalty saving and the right to resume dividend payments. The penalty and dividend payment restriction were terms of a loan covenant with creditors. Mr Wong said VTech was still negotiating with Lucent Technologies, which sold it US$113.32 million worth of loss-making phone-making operations in March 2000. VTech is seeking damages of US$300 million in a lawsuit against Lucent. Mr Wong said VTech hoped to reach an out-of-court settlement by the middle of the year. Meanwhile, he said, VTech had recently launched the world's first 5.8 gigahertz cordless phones, which had better voice clarity and came with multiple handsets. Prices were 40 per cent to 50 per cent higher than the 2.4 gigahertz models. Mr Wong rejected speculation VTech would co-operate with computer-maker Legend Holdings on mainland distribution of phone products, but said VTech was studying the feasibility of selling its products on the mainland to retailers such as Wal-Mart and Carrefour. VTech hopes that within five years its mainland sales will account for 15 per cent of total sales.