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Notes to the Financial Statements
41
VTech Holdings Ltd Annual Report 2005
1 Segment Information (continued)
Secondary reporting format — geographical
segments Although the Group’s business segments are
managed on a worldwide basis, they principally operate in the
following geographical areas:
North America — the operations are principally the distribution
of telecommunication and electronic products.
Europe — the operations are principally the distribution of
telecommunication and electronic products.
Asia Pacific — the Group is headquartered in the Hong Kong
Special Administrative Region and the Group’s principal
manufacturing operations are located in mainland China.
Operating Operating
Revenue Revenue profit/(loss) profit/(loss)
2005 2004 2005 2004
US$ million US$ million US$ million US$ million
North America 621.1 681.8 19.7 43.7
Europe 336.0 200.3 33.2 8.4
Asia Pacific 45.9 23.4 5.2 (5.8)
Others 19.0 9.7 4.6 3.2
1,022.0 915.2 62.7 49.5
-Capital Capital Total Total
expenditure expenditure assets assets
2005 2004 2005 2004
US$ million US$ million US$ million US$ million
North America 0.7 2.5 131.3 142.1
Europe 0.3 0.3 67.2 54.1
Asia Pacific 20.5 16.7 284.1 216.8
Others ——0.8 9.2
21.5 19.5 483.4 422.2
2 Operating Profit
The operating profit is arrived at after charging/(crediting) the
following:
2005 2004
Note US$ million US$ million
Staff related costs
— salaries and wages 103.9 95.5
— pension costs: defined
contribution schemes 17 1.9 1.7
— pension costs: defined
benefit scheme 17 1.2 1.5
— severance payments 2.3 2.3
Depreciation charges 9
— owned assets 18.1 17.8
— leased assets 0.1 0.1
Amortisation of leasehold land
payments 10 —0.1
Loss on disposal of tangible
assets —1.9
Gain on disposal of subsidiaries (1.0) (1.1)
Gain on disposal of assets
held for sale (0.8) —
Auditors’ remuneration 0.6 0.5
Operating leases
— land and buildings 9.9 11.2
— others 2.9 1.7
Provision for stock obsolescence (0.7) 6.9
Provision for doubtful debts —(1.8)
Royalties 19.0 12.3
Exchange gain (6.4) (8.6)
Forward contracts: fair value
losses on cash flow hedges
transferred from hedging
reserve 20 3.1 3.6
3 Net Receipts from an Indemnification Claim
In September 2004, the Group and Lucent Technologies Inc.
(“Lucent”) agreed to settle a claim made by the Group relating
to certain indemnifications previously provided by Lucent and
Lucent Technologies Consumer Products, L.P. in connection with
the acquisition by the Group of certain assets and liabilities of
Lucent’s Wired Consumer Products Business in 2000.
Net receipts of US$6.7 million, after deducting incidental
expenses, were received by the Group pursuant to this
settlement and were credited to the consolidated income
statement during the year ended 31st March 2005.