Vtech 2009 Annual Report Download - page 34

32 VTech Holdings Ltd Annual Report 2009
REPORT OF THE DIRECTORS
SHARE OPTION SCHEME
The Company operates a share option scheme for the
purposes of providing incentives and rewards to eligible
participants who contribute to the success of the Group’s
operations. Eligible participants of these share option
schemes include executive directors and employees of
the Company and its subsidiaries. On 10th August 2001,
the Company adopted a share option scheme (the “2001
Scheme”) under which the directors may, at their discretion,
at any time during the 10 years from the date of adoption of
the 2001 Scheme, invite employees of the Company and any
subsidiaries of the Group, including executive directors (but
excluding non-executive directors) to take up shares of the
Company in accordance with the terms of the 2001 Scheme.
Details of the 2001 Scheme are set out in note 18 to the
financial statements.
CONTINUING CONNECTED TRANSACTIONS
During the year ended 31st March 2009, the Group had the
following continuing connected transactions under
Rule 14A.34 of the Listing Rules, details of which are set
out below:
(A) On 11th April 2007, the Company as tenant renewed
a lease (the “Lease”) with Aldenham Company Limited
(“Aldenham”) as landlord for the lease of the
premises situated at Bowen Road, Hong Kong for
2 years commencing 1st April 2007 and expiring on
31st March 2009 at a monthly rental of HK$250,000 for
the purpose of providing housing to Dr. Allan
WONG Chi Yun (“Dr. WONG”), a director, chief
executive and a substantial shareholder of the
Company. Aldenham is an indirect wholly owned
subsidiary of a trust in which the family members of
Dr. WONG are beneficiaries. Aldenham is therefore a
connected person of the Company as ascribed by the
Listing Rules and the Lease constituted a continuing
connected transaction under Rule 14A.34 of the Listing
Rules.
(B) On 10th August 2007, VTech Communications Limited,
an indirect wholly owned subsidiary of the Company as
manufacturer, and Ality Limited (“Ality”) as purchaser
entered into a Manufacturing Agreement for an initial
term of 24 months commencing on 10th August 2007
with the Annual Caps of HK$51.25 million for the year
ended 31st March 2009. Ality is a company which is
wholly owned by Mr. William WONG Yee Lai, the son of
Dr. WONG. Ality is therefore a connected person of the
Company.
The independent non-executive directors of the Company
have reviewed the continuing connected transactions and
confirmed that the transactions have been (i) entered into
in the ordinary and usual course of business of the Group;
(ii) either on normal commercial terms or terms no less
favourable to the Group than terms available to or from
independent third parties; and (iii) in accordance with the
relevant agreements governing them on terms that are fair
and reasonable and in the interests of the shareholders of
the Company as a whole.
Pursuant to Rule 14A.38 of the Listing Rules, the Company
has engaged the auditors of the Company to perform certain
factual finding procedures in respect of the continuing
connected transactions of the Group in accordance
with the Hong Kong Standard on Related Services 4400
“Engagements to Perform Agreed-Upon Procedures
Regarding Financial Information” issued by the Hong Kong
Institute of Certified Public Accountants. The auditors have
reported their factual findings on these procedures to
the Board and confirmed that for the year ended
31st March 2009, the continuing connected transactions
(i) have received the approval of the Board; and (ii) have
charged for the price in accordance with the pricing
terms set out in the relevant agreement governing such
transactions or where the related agreement did not clearly
specify a price, were consistent with the price charged
for comparable transactions that were identified by
management; and (iii) have been entered into in accordance
with the relevant agreements governing the transactions,
and (iv) have not exceeded the cap amounts disclosed in the
respective announcements.
The Company renewed the Lease on 31st March 2009 for
another three years commencing on 1st April 2009 with the
same principal terms of the Lease as described above. Since
the total rental value payable by the Company under the
Lease represents less than 0.1% of the applicable percentage
ratios of the Company under Rule 14A.33 of the Listing
Rules, the Lease constitutes an exempted continuing
connected transaction and no disclosure or independent
shareholders’ approval is required.
AUDITORS
The financial statements have been audited by KPMG,
who retire and, being eligible, offer themselves for
re-appointment at the forthcoming annual general meeting
of the Company. A resolution for the re-appointment of
KPMG as auditors of the Company will be proposed at the
forthcoming annual general meeting of the Company.
By Order of the Board
Allan WONG Chi Yun
Chairman
Hong Kong, 15th June 2009