Vtech 2011 Annual Report Download - page 63

VTech Holdings Ltd Annual Report 2011 61
23 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.
In the normal course of business and on normal commercial
terms, the Group undertakes certain transactions with its
associates. None of these transactions were material to the
Group’s results.
24 Comparative Figures
As a result of the application of improvements to IFRSs 2009,
certain comparative figures including the tangible assets and
leasehold land payments have been reclassified to conform to
current year’s presentation. Further details of these developments
are disclosed in note (B).
25 Possible Impact of Amendments, New
Standards and Interpretations Issued
but not yet Effective for the Annual
Accounting Period ended 31 March 2011
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 2011 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
Improvements to IFRSs 2010 1 July 2010 or
1 January 2011
IAS 24 (revised), Related Party Disclosures 1 January 2011
IFRS 9, Financial Instruments 1 January 2013
The Group is in the process of making an assessment of
what the impact of these amendments, new standards and
new Interpretations is expected to be in the period of initial
application. So far it has concluded that while the adoption of
them may result in new or amended disclosures, it is unlikely to
have a significant impact on the Group’s results of operations and
financial position.
26 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 16, 17 and 19 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.