Vtech 2005 Annual Report Download - page 52

Notes to the Financial Statements
50 VTech Holdings Ltd Annual Report 2005
20 Reserves
Group Company
2005 2004 2005 2004
Note US$ million US$ million US$ million US$ million
Share premium 74.4 74.3 74.4 74.3
Other properties
revaluation reserve 6.1 6.1 ——
Revenue reserve 116.4 77.6 90.4 41.3
Exchange reserve (4.9 ) (6.7 ) (1.2 ) (1.2 )
Hedging reserve ————
192.0 151.3 163.6 114.4
An analysis of
movements in reserves
is set out below:
Share premium
Brought forward 74.3 74.3 74.3 74.3
Exercise of share options 0.1 —0.1 —
Carried forward 74.4 74.3 74.4 74.3
Other properties
revaluation reserve
Brought forward 6.1 6.8 ——
Disposal of properties
previously revalued —(0.7 ) ——
Carried forward 6.1 6.1 ——
Revenue reserve
Brought forward 77.6 41.9 41.3 46.3
Profit attributable
to shareholders 56.9 46.3 67.2 6.3
Final dividend in respect
of the previous year 7 (15.8 ) (4.5 ) (15.8 ) (4.5 )
Interim dividend in
respect of
the current year 7 (2.3 ) (6.8 ) (2.3 ) (6.8 )
Disposal of properties
previously revalued —0.7 ——
Carried forward 116.4 77.6 90.4 41.3
Exchange reserve
Brought forward (6.7 ) (6.8 ) (1.2 ) (1.2 )
Exchange translation
differences 1.8 0.1 ——
Carried forward (4.9 ) (6.7 ) (1.2 ) (1.2 )
Hedging reserve
Brought forward ————
Transfer to income
statement 2 3.1 3.6 ——
Fair value losses on
hedging during
the year (3.1 ) (3.6 ) ——
Carried forward ————
The consolidated profit attributable to shareholders includes a
profit of US$67.2 million (2004: US$6.3 million) which has been
dealt with in the financial statements of the Company.
Reserves of the Company available for distribution to
shareholders amounted to US$90.4 million (2004:US$41.3
million).
21 Financial Instruments
The Group enters into foreign exchange contracts and interest
rate swaps to hedge certain exposures on fluctuations of
foreign currency exchange rates and interest rates respectively.
The Group does not use derivative financial instruments for
speculative purposes.
Credit risk Financial assets which potentially subject the
Group to credit risk consist principally of cash, short-term
deposits and trade debtors. The Group’s cash equivalents and
short-term deposits are placed with major financial institutions.
Trade debtors are presented net of the allowance for doubtful
debts. Credit risk with respect to trade debtors is limited due to
the large number of customers comprising the Group’s
customer base and their dispersion across different industries
and geographical areas. Accordingly, the Group has no
significant concentration of credit risk. In addition, credit risks
are mitigated by the use of insurance plans.
The Group manages these risks by monitoring credit ratings and
limiting the aggregate risk to any individual counterparty.
Foreign exchange risk The Group enters into foreign
exchange contracts in order to manage its exposure to
fluctuations in foreign currency exchange rates on specific
transactions. Foreign exchange contracts are matched with
anticipated future cash flows in foreign currencies, primarily
from sales.
Interest rate risk The Group’s income and operating cash
flows are affected by the change in market interest rates in
relation to its interest-bearing loans. The Group uses interest
rate swaps as cash flow hedges of future interest payments to
convert certain borrowings from floating rates to fixed rates.