66 VTech Holdings Limited
Annual Report 2014
Notes to the Financial Statements
21 Investment in Subsidiaries and Amounts
due from/(to) Subsidiaries
(Continued)
(c) Controlled structured entity
VTech controls a structured entity which operates in Hong Kong,
particulars of which are as follows:
Structured entity
Principal activities
VTech Share Purchase
Scheme Trust
Purchase, administering and holding
shares of the Company for the Share
Purchase Scheme for the benefit of
eligible VTech employees
(note 16(c))
As the VTech Share Purchase Scheme Trust (the “Trust”) is set up
solely for the purpose of purchasing, administrating and holding
shares of the Company for the Share Purchase Scheme (note 16(c)),
the Company controls the Trust pursuant to the trust deed and
rules related to the Trust to direct the relevant activities of the Trust
and it has the ability to use its power over the Trust to affect its
exposure for returns.
22 Material Related Party Transactions
Remuneration for key management personnel of the Group,
including amounts paid to the Directors of the Company and
the five highest paid individuals, is disclosed in note 3 to the
financial statements.
23 Possible Impact of Amendments, New
Standards and Interpretations Issued but
not yet Effective for the Annual Accounting
Period ended 31 March 2014
Up to the date of issue of these financial statements, the IASB
has issued a number of amendments, new standards and new
interpretations which are not yet effective for the accounting
period ended 31 March 2014 and which have not been adopted in
these financial statements.
Of these developments, the following relate to matters that may
be relevant to the Group’s operations and financial statements:
Effective for
accounting
periods
beginning
on or after
Amendments to IAS 32,
Financial instruments:
Presentation – Offsetting financial assets and
financial liabilities
1 January 2014
Amendments IAS 36,
Recoverable amounts
disclosure for non-financial assets
1 January 2014
Amendments IAS 39,
Novation of derivatives and
continuation of hedging accounting
1 January 2014
Amendments to IFRS 10,
Consolidated financial
statements,
IFRS 12,
Disclosure of interests in
other entities and
IAS 27,
Separate financial
statements “Investment entities”
1 January 2014
IFRIC 21,
Levies
1 January 2014
The Group is in the process of making an assessment of what the
impact of these amendments is expected to be in the period of
initial application. So far it has concluded that the adoption of
them is unlikely to have a significant impact on the consolidated
financial statements.
24 Accounting Estimates and Judgements
The presentation of financial statements in conformity with
IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets, liabilities, income and expenses.
Notes 15, 16 and 18 contain information about the assumptions
and their risk factors relating to pension scheme obligations, fair
value of share options granted and financial instruments. Other key
sources of estimation uncertainty are as follows:
Provision for defective goods returns
The Group recognises provision for expected return claims,
which included cost of repairing or replacing defective goods,
loss of margin and cost of materials scrapped, based on past
experience of the level of repairs and returns. The Group uses
all available information in determining an amount that is a
reasonable approximation of the costs including estimates based
on reasonable historical information and supportable assumptions.
Changes in these estimates could have a significant impact on
the provision and could result in additional charges or reversal of
provision in future years.
Estimated useful lives of tangible assets
The Group estimates the useful lives of tangible assets based on
the periods over which the assets are expected to be available
for use. The Group reviews annually their estimated useful lives,
based on factors that include asset utilisation, internal technical
evaluation, technological changes, environmental and anticipated
use of the assets tempered by related industry benchmark
information. It is possible that future results of operation could be
materially affected by changes in these estimates brought about
by changes in factors mentioned. A reduction in the estimated
useful lives of tangible assets would increase depreciation charges
and decrease non-current assets.
Impairment of assets
The Group reviews internal and external sources of information
at each balance sheet date to identify indications that assets
may be impaired or an impairment loss previously recognised no
longer exists or may have decreased. The Group estimates the
asset’s recoverable amount when any such indication exists. The
recoverable amount of an asset, or of the cash-generating unit to
which it belongs, is the greater of its fair value less costs to sell and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of time value of
money and these risks specific to the assets. The preparation
of projected future cash flows involves the estimation of future
revenue and operating costs which are based on reasonable
assumptions supported by information available to the Group.
Changes in the estimates would result in additional impairment
provisions or reversal of impairment in future years.
Deferred tax assets
The Group reviews the carrying amounts of deferred taxes at each
balance sheet date and consider the amount of deferred tax assets
to the extent that it is no longer probable that sufficient taxable
income will be available to allow all or part of the deferred tax
assets to be utilised. However, there is no assurance that the Group
will generate sufficient taxable income to allow all or part of its
deferred tax assets to be utilised.
