Vtech 2010 Annual Report Download - page 65

VTech Holdings Ltd Annual Report 2010 63
of the legal counsel, it is too early to evaluate the outcome of
these claims and provisions have been made only to the extent
that the amounts can be reliably estimated. Certain subsidiaries
of the Group are involved in litigation arising in the ordinary
course of their respective businesses.
Having reviewed outstanding claims and taking into account
legal advice received, the directors are of the opinion that even if
the claims are found to be valid, there will be no material adverse
effect on the financial position of the Group.
As at 31 March 2010, there were contingent liabilities in respect
of guarantees given by the Company on behalf of subsidiaries
relating to overdrafts, short term loans and credit facilities of
up to US$233.9 million (2009: US$233.4 million). The Company
has not recognised any deferred income for the guarantees
given in respect of borrowings and other banking facilities for
subsidiaries as their fair value cannot be reliably measured and
their transaction price was US$Nil.
As at the balance sheet date, the Directors do not consider it is
probable that a claim will be made against the Company under
any of the guarantees.
22 Litigation
Certain subsidiaries of the Group were engaged in litigation with
Motorola Inc. (“Motorola”) related to infringement of six patents
asserted against the Group in the United States District Court
for the Eastern District of Texas, the United States of America. In
January 2010, the Group entered into a settlement and license
agreement with Motorola and the litigation against the Group
was dismissed accordingly. The resulting settlement and licence
fees together with the legal and professional costs incurred
have been charged to the consolidated income statement and
included in the administrative and other operating expenses.
Under the terms of the confidential agreement, the Group and
Motorola are obliged not to disclose the amount of the resulting
settlement and license fees as such information is considered
to be commercially sensitive. The Directors do not consider that
the settlement of this litigation gave rise to any material adverse
impact to the financial position of the Group.
23 Contingent Liabilities
The directors have been advised that certain accusations of
infringements of patents, trademarks and tradenames have been
lodged against the Company and its subsidiaries. In the opinion
24 Principal Subsidiaries
(a) The amounts due from/(to) subsidiaries are unsecured, interest free and have no fixed terms of repayment.
(b) Details of the Company’s interest in those subsidiaries which materially affect the results or assets of the Group as at 31 March
2010 are set out below:
Percentage of
Fully paid issued interest held by
Name of subsidiary share capital the Group Principal activity
Incorporated/established and operating in Hong Kong:
VTech Communications Limited Ordinary HK$1,000 *100 Design, manufacture and
Deferred HK$5,000,000 sale of electronic products
VTech Electronics Limited Ordinary HK$5,000,000 *100 Design, manufacture and
distribution of electronic
products
VTech Telecommunications Limited Ordinary HK$1,000 *100 Design, manufacture
Deferred HK$5,000,000 and distribution of
telecommunication products
Perseus Investments Limited Ordinary HK$1,000 100 Property holding
Deferred HK$1,000
Valentia Investment Limited Ordinary HK$1,000 100 Property holding
Deferred HK$1,000
Incorporated/established and operating in Australia:
VTech Telecommunications (Australia) Pty Limited AUD 1 *100 Sale of telecommunication
products
Incorporated/established and operating in Canada:
VTech Technologies Canada Limited Class A CAD5,000 *100 Sale of telecommunication
Class B CAD195,000 *100 and electronic products