Vtech 2004 Annual Report Download - page 32

Principal
Accounting
Policies
VTech Holdings Ltd Annual Report 2004
30
Consolidated Financial Statements/
Principal Accounting Policies
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31st March 2004
2004 2003
Note
US$ million US$ million
Operating activities
Operating profit 49.5 59.5
Depreciation charges 2
17.9 24.1
Amortisation of leasehold
land payments 2
0.1 0.1
Impairment of leasehold
land payments 2
— 0.2
Loss on disposal of tangible
assets and leasehold land 2
1.9 1.4
Gain on disposal of subsidiaries 2
(1.1) —
Gain on settlement of a lawsuit
— (34.0)
(Increase)/decrease in stocks
(12.1) 10.4
(Increase)/decrease in debtors
and prepayments
(14.0) 25.4
Increase/(decrease) in creditors
and accruals
28.9 (7.7)
Increase in provisions
— 1.2
Cash generated from operations 71.1 80.6
Net proceeds on settlement
of a lawsuit
— 34.0
Interest received
0.7 1.2
Interest paid
(0.3) (2.2)
Taxes paid
(6.3) (3.0)
Net cash generated from
operating activities 65.2
110.6
Investing activities
Proceeds from disposal of tangible
assets and leasehold land
1.3 1.9
Proceeds from disposal of
assets held for sale
— 7.7
Proceeds from disposal of subsidiaries
1.1 —
Purchase of tangible assets 8
(19.5) (14.1)
Net cash used in investing activities (17.1) (4.5)
Financing activities
Net repayment of borrowings (0.1) (92.9)
Dividends paid 6
(11.3) (3.4)
Dividend paid to minority shareholder
(0.8) (0.1)
Net cash used in financing activities (12.2) (96.4)
Effect of exchange rate changes (1.1) (2.4)
Increase in cash and cash equivalents 34.8 7.3
Cash and cash equivalents
at beginning of the year
70.4 63.1
Cash and cash equivalents
at end of the year 105.2
70.4
Analysis of the balance of cash
and cash equivalents
Cash at bank and deposits 105.2 70.4
The notes on pages 30 to 46 form part of these financial statements.
A BASIS OF PREPARATION The accompanying financial
statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) promulgated by the
International Accounting Standards Board. IFRS includes
International Accounting Standards (“IAS”) and related
Interpretations. These financial statements also comply with the
disclosure requirements of the Hong Kong Companies Ordinance
and the applicable disclosure provisions of the Rules Governing the
Listing of Securities on The Stock Exchange of Hong Kong Limited
and the Bermuda Companies Act 1981.
These financial statements are prepared on a historical cost basis as
modified by the revaluation of certain properties.
The accounting policies have been consistently applied by the
Group and are consistent with those used in the previous year.
The preparation of the financial statements in accordance with IFRS
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the year. Actual results could differ from these estimates.
The Company was incorporated in Bermuda. In view of the
international nature of the Group’s operations, the financial
statements are presented in United States Dollars, rounded to the
nearest million.
The Group’s separable segments are set out in note 1 to the
financial statements.
B BASIS OF CONSOLIDATION The consolidated financial
statements include the financial statements of the Company and
its subsidiaries together with the Group’s share of the results and
retained post acquisition reserves of its associates under the equity
method of accounting drawn up for the year ended 31st March. All
significant inter-company balances and transactions and any
unrealised gains arising from inter-company transactions are
eliminated on consolidation.
Subsidiaries are those entities controlled by the Company. Control
exists when the Company has the power, directly or indirectly, to
govern the financial and operating policies of an entity so as to
obtain benefits from its activities. The financial statements of
subsidiaries are included in the consolidated financial statements
from the date that control effectively commences until the date
that control effectively ceases, and the share attributable to
minority interests is deducted from or added to profit after
taxation. Investments in subsidiaries are stated at cost less
impairment losses (see note K) in the Company’s balance sheet.
Associates are those entities, not being subsidiaries, in which the
Group exercises significant influence, but not control, over the
financial and operating policies. The consolidated financial
statements include the Group’s share of the total recognised gains
and losses of associates under the equity method, from the date