Vtech 2015 Annual Report Download - page 72

VTech Holdings Limited Annual Report 2015
Notes to the Financial Statements
70
21 Investments in Subsidiaries and Amounts
due from/(to) Subsidiaries (Continued)
(c) Controlled structured entity
VTech controls a structured entity which operates in Hong Kong,
particulars of which are as follows:
Structured entity Principal activities
VTech Share Purchase
Scheme Trust
Purchase, administering and
holding shares of the Company
for the Share Purchase Scheme
for the benefit of eligible VTech
employees (note 16(c))
As the VTech Share Purchase Scheme Trust (the “Trust”) is set up
solely for the purpose of purchasing, administering and holding
shares of the Company for the Share Purchase Scheme (note 16(c)),
the Company controls the Trust pursuant to the trust deed and
rules related to the Trust to direct the relevant activities of the Trust
and it has the ability to use its power over the Trust to affect its
exposure for returns.
22 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.
23 Possible Impact of Amendments, New
Standards and Interpretations Issued but
not yet Effective for the Annual Accounting
Period ended 31 March 2015
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 2015 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
Amendments to IAS 19, Employee benefits –
Defined benefit plans: Employee contributions 1 July 2014
Annual improvements to IFRSs 2010-2012 cycle 1 July 2014
Annual improvements to IFRSs 2011-2013 cycle 1 July 2014
Annual improvements to IFRSs 2012-2014 cycle 1 January 2016
Amendments to IAS 16, Property, plant and
equipment, and IAS 38, Intangible assets,
Clarification of acceptable methods of
depreciation and amortization 1 January 2016
IFRS 15, Revenue from contracts with customers 1 January 2017
IFRS 9, Financial instruments (2014) 1 January 2018
The Group is in the process of making an assessment of what
the impact of these amendments is expected to be in the
period of initial application. So far it has concluded that the
adoption of them is unlikely to have a significant impact on the
consolidated financial statements.
24 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 15, 16 and 18 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 considers the amount of deferred
tax assets to the extent that it is probable that sufficient taxable
income will be available to allow 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.