e8vkza
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): November 1, 2010
UNIVERSAL ELECTRONICS INC.
(Exact name of Registrant as specified in its charter)
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Delaware
(State or other jurisdiction
of incorporation or organization)
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0-21044
(Commission File No.)
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33-0204817
(I.R.S. Employer
Identification No.) |
6101 Gateway Drive
Cypress, California 90630
(Address of principal executive offices, with Zip Code)
(714) 820-1000
(Registrants telephone number, including area code):
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
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Item 9.01 |
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Financial Statements and Exhibits |
EXPLANATORY NOTE: On November 4, 2010, Universal Electronics Inc. filed a Current Report on Form
8-K (the Current Report) under Items 1.01, 2.01, 3.02 and 9.01 to report the completion of its
acquisition of Enson Assets Limited (Enson). The purpose of this Amendment to the Current Report
is to amend and restate Item 9.01 in its entirety and to file the financial statements and pro
forma information required by Item 9.01 or Form 8-K. This Form 8-K/A does not amend any other
Items of the Form 8-K as originally filed.
(a) Financial Statements of Businesses Acquired
The historical unaudited condensed consolidated financial statements of Enson as of and for the six
months ended September 30, 2010 and 2009, as well as the historical audited consolidated financial
statements of Enson as of and for the years ended March 31, 2010, 2009 and 2008, and the related
notes, are filed as Exhibit 99.1 and are incorporated herein by reference.
(b) Pro Forma Financial Information
Unaudited pro forma combined condensed financial statements of Universal Electronics Inc. and Enson
as of and for the nine months ended September 30, 2010, and unaudited pro forma combined condensed
financial statements of Universal Electronics Inc. and Enson for the year ended December 31, 2009,
and the related notes, with respect to the transaction referred to above are filed as Exhibit 99.2
and are incorporated herein by reference.
(c) Exhibits. The following exhibits are furnished with this report.
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23.1 |
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Consent of Deloitte Touche Tohmatsu, Independent Auditors. |
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99.1 |
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Historical unaudited condensed consolidated financial statements of
Enson Assets Limited as of and for the six months ended September 30,
2010 and 2009, as well as historical audited consolidated financial
statements of Enson Assets Limited as of and for the years ended March
31, 2010, 2009 and 2008. |
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99.2 |
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Unaudited pro forma combined condensed financial statements of
Universal Electronics Inc. and Enson Assets Limited as of and for the
nine months ended September 30, 2010, and unaudited pro forma
combined condensed financial statements of Universal Electronics Inc.
and Enson Assets Limited for the year ended December 31, 2009. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Universal Electronics Inc.
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Date: January 18, 2011 |
By: |
/s/ Bryan Hackworth
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Bryan Hackworth |
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Chief Financial Officer
(Principal Accounting Officer) |
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exv23w1
Exhibit 23.1
Independent Auditors Consent
We consent to the incorporation by reference in Registration Statements Nos. No. 33-66426, No.
333-09021, No. 333-23985, No. 333-91101, No. 333-95715, No. 333-47378, No. 333-103038, No.
333-117782, No. 333-149926 of Universal Electronics Inc. on Form S-8 of our report dated 18 January
2011, relating to the consolidated financial statements of Enson Assets Limited and its
subsidiaries as of 31 March 2008, 2009 and 2010 and the years then ended appearing in this Current
Report on Form 8-K/A of Universal Electronics Inc..
Deloitte Touche Tohmatsu
Hong Kong
18 January 2011
exv99w1
Exhibit 99.1
ENSON ASSETS LIMITED
INDEX
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Page |
Unaudited Condensed Consolidated Statements of Comprehensive Income |
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1 |
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Unaudited Condensed Consolidated Statements of Financial Position |
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2 |
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Unaudited Condensed Consolidated Statements of Changes in Equity |
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3 |
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Unaudited Condensed Consolidated Statements of Cash Flows |
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4 |
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Notes to the Unaudited Condensed Consolidated Financial Statements |
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5 |
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ENSON ASSETS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2010 (UNAUDITED)
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Six Months Ended September 30, |
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2009 |
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2010 |
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HK$'000 |
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HK$'000 |
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Revenues |
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603,973 |
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792,404 |
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Cost of revenues |
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(468,873 |
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(592,241 |
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Gross profit |
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135,100 |
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200,163 |
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Investment income |
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185 |
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711 |
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Other income |
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4,714 |
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1,954 |
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Administrative expenses |
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(29,095 |
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(31,101 |
) |
Distribution expenses |
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(10,509 |
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(13,239 |
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Research and development costs |
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(6,093 |
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(10,438 |
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Other expenses |
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(201 |
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(213 |
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Other gains and losses |
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352 |
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(694 |
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Finance costs interest on bank borrowings
wholly repayable within five years |
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(263 |
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(323 |
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Profit before tax |
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94,190 |
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146,820 |
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Taxation expense |
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(15,930 |
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(30,264 |
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Profit for
the period and attributable to the owners
of the Company |
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78,260 |
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116,556 |
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Other comprehensive income |
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Exchange difference arising on translation of
foreign operations |
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139 |
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3,199 |
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Total comprehensive income for the period and
attributable to the owners of the Company |
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78,399 |
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119,755 |
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1
ENSON ASSETS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AT MARCH 31, 2010 AND SEPTEMBER 30, 2010 (UNAUDITED)
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March 31, |
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September 30, |
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2010 |
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2010 |
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HK$'000 |
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HK$'000 |
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Non-current assets |
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Property, plant and equipment |
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343,885 |
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337,807 |
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Buildings under construction |
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7,548 |
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Prepaid lease payments |
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3,894 |
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3,911 |
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Club debenture |
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885 |
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885 |
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Deposit on property, plant and equipment acquisition |
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1,840 |
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3,218 |
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Deferred tax assets |
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22,034 |
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21,847 |
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372,538 |
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375,216 |
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Current assets |
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Inventories |
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149,995 |
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181,275 |
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Trade receivables, deposits and prepayments |
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205,798 |
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314,538 |
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Prepaid lease payments |
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82 |
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90 |
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Loan to a related company |
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93,166 |
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Amounts due from related companies |
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433 |
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Amount due from holding company |
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52 |
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9,984 |
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Derivative financial instruments |
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1,101 |
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495 |
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Cash and cash equivalents |
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183,682 |
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185,573 |
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634,309 |
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691,955 |
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Current liabilities |
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Trade creditors and accrued charges |
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343,971 |
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380,403 |
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Bills payable |
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17,341 |
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21,529 |
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Amount due to a director |
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1,804 |
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Amount due to a related company |
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6,119 |
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10,104 |
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Derivative financial instruments |
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633 |
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125 |
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Bank borrowings due within one year |
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16,421 |
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12,316 |
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Tax payable |
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29,396 |
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44,499 |
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415,685 |
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468,976 |
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Net current assets |
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218,624 |
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222,979 |
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Total assets less current liabilities |
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591,162 |
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598,195 |
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Non-current liability |
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Deferred tax liabilities |
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7,442 |
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14,687 |
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Net assets |
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583,720 |
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583,508 |
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Capital and reserves |
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Share capital |
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470 |
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470 |
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Reserves |
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583,250 |
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583,038 |
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Equity attributable to equity holders of the Company |
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583,720 |
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583,508 |
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2
ENSON ASSETS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2010 (UNAUDITED)
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Share |
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Share |
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Statutory |
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Translation |
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Accumulated |
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capital |
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premium |
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reserve |
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reserve |
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profits |
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Total |
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HK$'000 |
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HK$'000 |
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HK$'000 |
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HK$'000 |
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HK$'000 |
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HK$ |
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Balance at April 1, 2009 |
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470 |
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81,747 |
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15,388 |
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(4,004 |
) |
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337,107 |
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430,708 |
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Profit for the period |
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78,260 |
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78,260 |
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Exchange differences arising on
translation
of foreign operations |
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139 |
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139 |
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Total comprehensive income for the period |
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139 |
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78,260 |
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78,399 |
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Balance at September 30, 2009 |
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470 |
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81,747 |
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15,388 |
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(3,865 |
) |
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415,367 |
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509,107 |
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Balance at April 1, 2010 |
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470 |
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81,747 |
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23,383 |
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(3,727 |
) |
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481,847 |
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583,720 |
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Profit for the period |
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116,556 |
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116,556 |
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Exchange differences arising on
translation
of foreign operations |
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3,199 |
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3,199 |
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Total comprehensive income for the period |
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3,199 |
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116,556 |
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119,755 |
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Dividends paid |
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(119,967 |
) |
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(119,967 |
) |
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Balance at September 30, 2010 |
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470 |
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81,747 |
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23,383 |
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(528 |
) |
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478,436 |
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583,508 |
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3
ENSON ASSETS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2010 (UNAUDITED)
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Six Months Ended |
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September 30, |
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2009 |
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2010 |
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HK$'000 |
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HK$'000 |
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Cash provided by operating activities: |
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Net cash from operating activities |
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74,011 |
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65,560 |
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Cash used for investing activities: |
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Repayment from related company |
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1,500 |
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93,166 |
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Purchase of property, plant and equipment |
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(9,662 |
) |
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(14,870 |
) |
Advance to holding company |
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(9,932 |
) |
Payment of building under construction |
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(1,939 |
) |
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(7,548 |
) |
Other investing cash flows |
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2,485 |
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(155 |
) |
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Net cash (used for) from investing activities |
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(7,616 |
) |
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60,661 |
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Cash used for financing activities: |
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Dividends paid |
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(119,967 |
) |
Repayment of bank loans |
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(4,106 |
) |
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(4,105 |
) |
Repayment to a director |
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(1,804 |
) |
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Net cash used for financing activities |
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(4,106 |
) |
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(125,876 |
) |
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Effect of exchange rate changes on cash |
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15 |
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1,546 |
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Net increase in cash and cash equivalents |
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62,304 |
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|
1,891 |
|
Cash and cash equivalents at beginning of period |
|
|
110,504 |
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|
|
183,682 |
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Cash and cash equivalents at end of period |
|
|
172,808 |
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|
185,573 |
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4
ENSON ASSETS LIMITED
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with International Accounting Standards (IAS) 34 Interim Financial Reporting issued
by the International Accounting Standards Board (IASB). In the opinion of management, the
accompanying unaudited condensed consolidated financial statements reflect all adjustments
consisting only of normal recurring adjustments which are necessary for a fair presentation of
financial results of such periods. As used herein, the terms Group, we, us and our refer
to Enson Assets Limited and its subsidiaries, unless the context indicates to the contrary.
Purpose of consolidated financial statements
These unaudited condensed consolidated financial statements have been prepared for the special
purpose of filing with the United States Securities and Exchange Commission in compliance with Rule
3-05 of Regulation S-X and Form 8-K under the Securities Exchange Act of 1934. This filing
requirement is based on the Company being a significant business acquired by Universal Electronics
Inc. (UEI).
2. Principal Accounting Policies
The accompanying unaudited condensed consolidated financial statements have been prepared on the
historical cost basis, except for certain financial instruments, which are measured at fair values.
The accounting policies used in the unaudited condensed consolidated financial statements are
consistent with those followed on the Companys annual consolidated financial statements for the
years ended March 31, 2008, 2009 and 2010, except for the adoption of new and revised International
Financial Reporting Standards (IFRS) issued by the IASB which are effective for the Group for
accounting periods beginning on or after April 1, 2010. The adoption of the new and revised IFRS
had no material impact on the Groups results and financial position for the current or prior
periods.
The Group has not early applied new and revised standards, amendments or interpretations that have
been issued but are not yet effective. The directors of the Company anticipate that, except for
IFRS 9 Financial Instruments, the application of other new and revised standards, amendments or
interpretations will have no material impact on the results and the financial position of the
Group.
IFRS 9 Financial Instruments introduces new requirements for the classification and measurement of
financial assets and will be effective from 1 January 2013, with earlier application permitted. The
standard requires all recognised financial assets that are within the scope of IAS 39 Financial
Instruments: Recognition and Measurement to be measured at either amortised cost or fair value.
Specifically, debt investments that (i) are held within a business model whose objective is to
collect the contractual cash flows and (ii) have contractual cash flows that are solely payments of
principal and interest on the principal outstanding are generally measured at amortised cost. All
other debt investments and equity investments are measured at fair value. The application of IFRS 9
might affect the classification and measurement of the Groups financial assets.
5
3. Profit before tax
Profit before tax has been arrived at after charging (crediting):
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Six Months Ended |
|
|
|
September 30, |
|
|
|
2009 |
|
|
2010 |
|
|
|
HK$'000 |
|
|
HK$'000 |
|
Allowance for inventories |
|
|
|
|
|
|
412 |
|
Depreciation |
|
|
24,844 |
|
|
|
26,220 |
|
Amortisation of prepaid lease payments |
|
|
13 |
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|
|
46 |
|
|
|
|
|
|
|
|
Total depreciation and amortisation |
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|
24,857 |
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|
26,266 |
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|
4. Taxation expense
The Group utilises the estimated annual effective tax rate to determine the provision for income
taxes for interim periods. The income tax provision is computed by taking the estimated annual
effective tax rate and multiplying it by the year-to-date pre-tax book income. The Group recorded
income tax expense of approximately HK$15.9 million and HK$30.3 million for the six months ended
September 30, 2009 and 2010, respectively. The effective tax rate was 16.9% and 20.6% during the
six months ended September 30, 2009 and 2010, respectively.
5. Dividend
In June 2010, the Group paid a cash dividend in the amount of approximately HK$120.0 million to the
shareholders.
6. Movements in Property, Plant and Equipment and Buildings under Construction
During the period, the Group spent approximately HK$11.6 million and HK$22.4 million for the six
months ended September 30, 2009 and 2010, respectively on acquisition of property, plant and
equipment and buildings under construction.
7. Inventories
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
September 30, |
|
|
|
2010 |
|
|
2010 |
|
|
|
HK$'000 |
|
|
HK$'000 |
|
Raw materials |
|
|
85,019 |
|
|
|
99,680 |
|
Work in process |
|
|
34,042 |
|
|
|
33,920 |
|
Finished goods |
|
|
30,934 |
|
|
|
47,675 |
|
|
|
|
|
|
|
|
Inventories, net |
|
|
149,995 |
|
|
|
181,275 |
|
|
|
|
|
|
|
|
6
8. Trade Receivables, Deposits and Prepayments
Trade receivables, deposits and prepayments consisted of the following on March 31, 2010 and
September 30, 2010:
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
September 30, |
|
|
|
2010 |
|
|
2010 |
|
|
|
HK$'000 |
|
|
HK$'000 |
|
Trade receivables |
|
$ |
197,026 |
|
|
|
300,242 |
|
Less: Allowance for bad and doubtful debts |
|
|
(1,496 |
) |
|
|
(1,500 |
) |
|
|
|
|
|
|
|
Total Trade receivables |
|
|
195,530 |
|
|
|
298,742 |
|
Other receivables, deposits and prepayments |
|
|
10,268 |
|
|
|
15,796 |
|
|
|
|
|
|
|
|
Trade receivables, deposits and prepayments |
|
|
205,798 |
|
|
|
314,538 |
|
|
|
|
|
|
|
|
9. Loan to a Related Party
The loan to a related party at March 31, 2010 represents the loan to New Reward Limited denominated
in United States dollars (USD). The loan was neither past due nor impaired, and no history of
default was noted. The loan was unsecured, bore interest at Hong Kong Interbank Offered Rate
(HIBOR) plus 1.75% per annum and was fully payable by January 6, 2011. The loan was fully paid on
June 2010. New Reward Limited was related to the Group, as a director of the Company was also a
director of and has beneficial interest in this company as at March 31, 2010.
10. Amounts Due from Related Companies
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
September 30, |
|
|
|
2010 |
|
|
2010 |
|
|
|
HK$'000 |
|
|
HK$'000 |
|
Name of company |
|
|
|
|
|
|
|
|
Gemstar Asia Limited |
|
|
24 |
|
|
|
|
|
New Reward Limited |
|
|
409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433 |
|
|
|
|
|
|
|
|
|
|
|
|
The amounts due from related parties are unsecured, interest free and repayable on demand and
mainly represent interest receivable for loan to a related company. These companies are related to
the Group as certain directors of the Company are also directors of and have beneficial interests
in these companies.
11. Trade Creditors and Accrued Charges
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
September 30, |
|
|
|
2010 |
|
|
2010 |
|
|
|
HK$'000 |
|
|
HK$'000 |
|
Trade payables |
|
|
132,606 |
|
|
|
152,433 |
|
Accrual for social security contribution |
|
|
116,458 |
|
|
|
125,245 |
|
Accrual for long service payment |
|
|
23,295 |
|
|
|
21,281 |
|
Accrual charges |
|
|
55,560 |
|
|
|
65,527 |
|
Receipt in advance |
|
|
16,052 |
|
|
|
15,917 |
|
|
|
|
|
|
|
|
Total trade creditors and accrued charges |
|
|
343,971 |
|
|
|
380,403 |
|
|
|
|
|
|
|
|
12. Amount Due to a Director
The amount due to a director was unsecured, interest free and repayable on demand. The amount has
been fully repaid in May 2010.
7
13. Amount Due to a Related Party
The amount due to a related party at March 31, 2010 and September 30, 2010 represent amount
due to Hangzhou Youcheng Electron Co., Ltd. for purchases made from this company. The amount is
unsecured and interest free. A director of the Company has beneficial interest in this company.
14. Derivatives Financial Instruments
The following table provides an analysis of financial instruments that are measured subsequent to
initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair
value is observable.
|
|
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
market for identical assets or liabilities. |
|
|
Level 2 fair value measurements are those derived from inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e.
as prices) or indirectly (i.e. derived from prices). |
|
|
Level 3 fair value measurements are those derived from valuation techniques that include
inputs for the asset or liability that are not based on observable market data (unobservable
inputs). |
The Groups financial assets at FVTPL and financial liabilities at FVTPL consist of foreign
currency forward contracts and are categorized into Level 2. There has been no transfer between
Level 1 and Level 2 of the financial instruments at FVTPL throughout the six months ended September
30, 2009 and 2010 and the details are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
September 30, |
Description |
|
Category |
|
2010 |
|
2010 |
|
|
|
|
HK$'000 |
|
HK$'000 |
Financial assets at FVTPL |
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
Level 2
|
|
|
1,101 |
|
|
|
495 |
|
Financial liabilities at FVTPL |
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts
|
|
Level 2
|
|
|
633 |
|
|
|
125 |
|
15. Capital Commitments
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
September 30, |
|
|
|
2010 |
|
|
2010 |
|
|
|
HK$'000 |
|
|
HK$'000 |
|
Contracted for but not provided in the
consolidated financial statements
in respect of acquisition of property,
plant and equipment |
|
|
8,173 |
|
|
|
66,446 |
|
Authorised but not contracted for
in the consolidated financial statements
in respect of acquisition of
property, plant and equipment |
|
|
19,927 |
|
|
|
383,936 |
|
|
|
|
|
|
|
|
Total capital commitments |
|
|
28,100 |
|
|
|
450,382 |
|
|
|
|
|
|
|
|
8
16. Operating Lease Commitments
At the end of the reporting period, the Group had commitments for future minimum lease payments
under non-cancellable operating leases which fall due as follows:
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
September 30, |
|
|
|
2010 |
|
|
2010 |
|
|
|
HK$'000 |
|
|
HK$'000 |
|
Within one year |
|
|
622 |
|
|
|
229 |
|
|
|
|
|
|
|
|
Operating lease payments represented rentals payable by the Group for certain of its office
properties. Leases negotiated for one to two years and rental was fixed during the lease
term.
9
17. Related Party Transactions
Same as disclosed elsewhere, the Group also entered into the following significant transactions
with related companies during the six months ended September 30, 2009 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
|
|
|
September 30, |
Name of related company |
|
Note |
|
Nature of transactions |
|
2009 |
|
2010 |
|
|
|
|
|
|
HK$'000 |
|
HK$'000 |
Hangzhou Youcheng Electron Co. Ltd. |
|
(i) |
|
Purchases |
|
|
20,773 |
|
|
|
27,211 |
|
New Reward Limited |
|
(i) |
|
Interest income |
|
|
|
|
|
|
298 |
|
Guangzhou Newshengtong Technology Co., Ltd. |
|
(i) |
|
Software maintenance |
|
|
7 |
|
|
|
7 |
|
|
|
|
|
expenses |
|
|
|
|
|
|
|
|
|
|
|
Note: |
|
(i) |
|
Certain directors of the Company are also directors of and have beneficial
interests in these companies. |
At March 31, 2010 and September 30, 2010, a director of the Company has provided personal
guarantee of HK$109,500,000 and HK$109,500,000, respectively to banks in respect of general
facilities granted to a subsidiary. Such personal guarantee has been reduced to
approximately HK$100,500,000 at the date of this report.
Compensation of key management personnel
The remuneration of key management members of the Group during the six months ended
September 30, 2009 and 2010 was as follows:
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2010 |
|
|
|
HK$'000 |
|
|
HK$'000 |
|
Short-term benefits |
|
|
1,027 |
|
|
|
1,459 |
|
|
|
|
|
|
|
|
The remuneration of executives is determined by the directors of the Company having regard
to the performance of individuals and market trends.
18. Events After The Reporting Period
The unaudited condensed consolidated financial statements were approved and authorised for issuance
by the board of directors on January 18, 2011. The following events occurred subsequent to
September 30, 2010:
On November 3, 2010, CG International Holdings Limited entered into an agreement with UEI Hong Kong
Private Limited, a wholly owned subsidiary of UEI, to dispose of its entire 100% interest in the
Company to UEI Hong Kong Private Limited, for a total consideration of approximately US$125.8
million, to be satisfied in cash and UEIs common stock. The transaction was consummated as of
November 3, 2010.
10
ENSON ASSETS LIMITED
(Incorporated in the British Virgin Islands with
limited liability)
Report and Consolidated Financial Statements
For the years ended 31 March, 2008, 2009 and 2010
ENSON ASSETS LIMITED
REPORT AND CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 MARCH, 2008, 2009 AND 2010
|
|
|
|
|
CONTENTS |
|
PAGE(S) |
INDEPENDENT AUDITORS REPORT |
|
|
1 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|
|
2 |
|
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION |
|
|
3 |
|
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY |
|
|
4 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
|
5 |
|
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
|
|
6 - 43 |
|
INDEPENDENT AUDITORS REPORT
TO THE DIRECTORS OF ENSON ASSETS LIMITED
(Incorporated in the British Virgin Islands with limited liability)
We have audited the accompanying consolidated statements of financial position of Enson
Assets Limited (the Company) and its subsidiaries (the Group) as of 31 March 2008, 2009
and 2010, and the related consolidated statements of comprehensive income, changes in
equity, and cash flows for the years then ended, all expressed in Hong Kong dollars. These
financial statements are the responsibility of the Groups management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes consideration of internal control over financial reporting
as a basis for designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Groups internal
control over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material
respects, the financial position of the Group as of 31 March 2008, 2009, and 2010, and the
results of their operations and their cash flows for the years then ended in conformity with
International Financial Reporting Standards as issued by the International Accounting
Standards Board.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong, 18 January 2011
- 1 -
ENSON ASSETS LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 31 MARCH, 2008, 2009 AND 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES |
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
|
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Revenues |
|
|
5 |
|
|
|
1,036,670,252 |
|
|
|
1,037,699,713 |
|
|
|
1,164,233,090 |
|
Cost of revenues |
|
|
|
|
|
|
(845,566,646 |
) |
|
|
(895,902,559 |
) |
|
|
(899,188,232 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
|
|
|
|
191,103,606 |
|
|
|
141,797,154 |
|
|
|
265,044,858 |
|
Investment income |
|
|
6 |
|
|
|
1,750,673 |
|
|
|
1,424,227 |
|
|
|
951,166 |
|
Other income |
|
|
7 |
|
|
|
7,362,398 |
|
|
|
17,061,301 |
|
|
|
24,845,894 |
|
Administrative expenses |
|
|
|
|
|
|
(49,766,230 |
) |
|
|
(59,641,627 |
) |
|
|
(63,195,210 |
) |
Distribution expenses |
|
|
|
|
|
|
(25,302,234 |
) |
|
|
(20,853,933 |
) |
|
|
(22,170,008 |
) |
Research and development costs |
|
|
9 |
|
|
|
(14,480,741 |
) |
|
|
(15,249,844 |
) |
|
|
(16,363,469 |
) |
Other expenses |
|
|
|
|
|
|
(11,286,200 |
) |
|
|
(2,130,820 |
) |
|
|
(402,724 |
) |
Other gains and losses |
|
|
8 |
|
|
|
16,181,770 |
|
|
|
5,523,003 |
|
|
|
1,558,946 |
|
Finance costs interest on bank borrowings
wholly repayable within five years |
|
|
|
|
|
|
(4,256,898 |
) |
|
|
(2,220,682 |
) |
|
|
(539,221 |
) |
Loss on disposal of interest in a subsidiary |
|
|
|
|
|
|
(445,652 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
9 |
|
|
|
110,860,492 |
|
|
|
65,708,779 |
|
|
|
189,730,232 |
|
Taxation expense |
|
|
10 |
|
|
|
(18,023,552 |
) |
|
|
(6,894,275 |
) |
|
|
(36,994,448 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year and attributable to the owners
of the Company |
|
|
|
|
|
|
92,836,940 |
|
|
|
58,814,504 |
|
|
|
152,735,784 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange difference arising on translation of
foreign operations |
|
|
|
|
|
|
(1,910,050 |
) |
|
|
(1,108,215 |
) |
|
|
276,828 |
|
Exchange difference realised upon disposal of
interest in a subsidiary |
|
|
|
|
|
|
(247,473 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,157,523 |
) |
|
|
(1,108,215 |
) |
|
|
276,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year and
attributable to the owners of the Company |
|
|
|
|
|
|
90,679,417 |
|
|
|
57,706,289 |
|
|
|
153,012,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 2 -
ENSON ASSETS LIMITED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 31 MARCH 2008, 2009 AND 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES |
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
|
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
11 |
|
|
|
317,905,419 |
|
|
|
338,423,031 |
|
|
|
343,884,984 |
|
Buildings under construction |
|
|
12 |
|
|
|
2,295,981 |
|
|
|
9,041,951 |
|
|
|
|
|
Prepaid lease payments |
|
|
13 |
|
|
|
998,583 |
|
|
|
1,241,414 |
|
|
|
3,894,186 |
|
Club debenture |
|
|
14 |
|
|
|
885,000 |
|
|
|
885,000 |
|
|
|
885,000 |
|
Deposit on property, plant and equipment acquisition |
|
|
|
|
|
|
8,213,516 |
|
|
|
3,001,209 |
|
|
|
1,839,729 |
|
Deferred tax assets |
|
|
15 |
|
|
|
22,991,974 |
|
|
|
27,947,036 |
|
|
|
22,034,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
353,290,473 |
|
|
|
380,539,641 |
|
|
|
372,538,394 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
16 |
|
|
|
127,880,885 |
|
|
|
85,698,647 |
|
|
|
149,995,066 |
|
Trade receivables, deposits and prepayments |
|
|
17 |
|
|
|
171,828,798 |
|
|
|
162,125,376 |
|
|
|
205,797,409 |
|
Prepaid lease payments |
|
|
13 |
|
|
|
19,416 |
|
|
|
26,780 |
|
|
|
81,460 |
|
Loan to a related company |
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
93,165,600 |
|
Amounts due from related companies |
|
|
19 |
|
|
|
1,547,382 |
|
|
|
1,550,631 |
|
|
|
433,315 |
|
Amount due from holding company |
|
|
33 |
|
|
|
|
|
|
|
|
|
|
|
52,332 |
|
Derivative financial instruments |
|
|
20 |
|
|
|
3,667,863 |
|
|
|
1,529,352 |
|
|
|
1,101,342 |
|
Short-term bank deposits |
|
|
21 |
|
|
|
46,465,467 |
|
|
|
58,128,750 |
|
|
|
17,060,965 |
|
Bank balances and cash |
|
|
21 |
|
|
|
55,870,626 |
|
|
|
52,375,747 |
|
|
|
166,621,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
407,280,437 |
|
|
|
361,435,283 |
|
|
|
634,308,957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade creditors and accrued charges |
|
|
22 |
|
|
|
259,375,489 |
|
|
|
260,104,761 |
|
|
|
343,970,695 |
|
Bills payable |
|
|
22 |
|
|
|
10,059,279 |
|
|
|
5,573,562 |
|
|
|
17,340,339 |
|
Amount due to a director |
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
1,804,400 |
|
Amount due to a related company |
|
|
24 |
|
|
|
|
|
|
|
3,991,423 |
|
|
|
6,119,448 |
|
Derivative financial instruments |
|
|
20 |
|
|
|
3,167,855 |
|
|
|
1,074,946 |
|
|
|
633,277 |
|
Bank borrowings due within one year |
|
|
25 |
|
|
|
92,042,105 |
|
|
|
24,631,579 |
|
|
|
16,421,053 |
|
Tax payable |
|
|
|
|
|
|
15,471,585 |
|
|
|
7,967,767 |
|
|
|
29,395,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,116,313 |
|
|
|
303,344,038 |
|
|
|
415,684,853 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net current assets |
|
|
|
|
|
|
27,164,124 |
|
|
|
58,091,245 |
|
|
|
218,624,104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets less current liabilities |
|
|
|
|
|
|
380,454,597 |
|
|
|
438,630,886 |
|
|
|
591,162,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liability |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
15 |
|
|
|
7,453,000 |
|
|
|
7,923,000 |
|
|
|
7,442,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets |
|
|
|
|
|
|
373,001,597 |
|
|
|
430,707,886 |
|
|
|
583,720,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
26 |
|
|
|
469,755 |
|
|
|
469,755 |
|
|
|
469,755 |
|
Reserves |
|
|
|
|
|
|
372,531,842 |
|
|
|
430,238,131 |
|
|
|
583,250,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to equity holders of the Company |
|
|
|
|
|
|
373,001,597 |
|
|
|
430,707,886 |
|
|
|
583,720,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 3 -
ENSON ASSETS LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED 31 MARCH, 2008, 2009 AND 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share |
|
|
Share |
|
|
Statutory |
|
|
Translation |
|
|
Accumulated |
|
|
|
|
|
|
capital |
|
|
premium |
|
|
reserve |
|
|
reserve |
|
|
profits |
|
|
Total |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Balance at 1 April 2007 |
|
|
469,755 |
|
|
|
81,746,638 |
|
|
|
6,656,268 |
|
|
|
(738,442 |
) |
|
|
194,187,961 |
|
|
|
282,322,180 |
|
Profit for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,836,940 |
|
|
|
92,836,940 |
|
Exchange differences arising on translation
of foreign operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,910,050 |
) |
|
|
|
|
|
|
(1,910,050 |
) |
Realised upon disposal of interest in a subsidiary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(247,473 |
) |
|
|
|
|
|
|
(247,473 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,157,523 |
) |
|
|
92,836,940 |
|
|
|
90,679,417 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer |
|
|
|
|
|
|
|
|
|
|
3,816,211 |
|
|
|
|
|
|
|
(3,816,211 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 March 2008 and 1 April 2008 |
|
|
469,755 |
|
|
|
81,746,638 |
|
|
|
10,472,479 |
|
|
|
(2,895,965 |
) |
|
|
283,208,690 |
|
|
|
373,001,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,814,504 |
|
|
|
58,814,504 |
|
Exchange differences arising on translation
of foreign operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,108,215 |
) |
|
|
|
|
|
|
(1,108,215 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,108,215 |
) |
|
|
58,814,504 |
|
|
|
57,706,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer |
|
|
|
|
|
|
|
|
|
|
4,915,606 |
|
|
|
|
|
|
|
(4,915,606 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 March 2009 and 1 April 2009 |
|
|
469,755 |
|
|
|
81,746,638 |
|
|
|
15,388,085 |
|
|
|
(4,004,180 |
) |
|
|
337,107,588 |
|
|
|
430,707,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
152,735,784 |
|
|
|
152,735,784 |
|
Exchange differences arising on translation
of foreign operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276,828 |
|
|
|
|
|
|
|
276,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276,828 |
|
|
|
152,735,784 |
|
|
|
153,012,612 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transfer |
|
|
|
|
|
|
|
|
|
|
7,995,655 |
|
|
|
|
|
|
|
(7,995,655 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 March 2010 |
|
|
469,755 |
|
|
|
81,746,638 |
|
|
|
23,383,740 |
|
|
|
(3,727,352 |
) |
|
|
481,847,717 |
|
|
|
583,720,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory reserve which consists of appropriations from the profit after taxation of the
subsidiaries established in Peoples Republic of China (the PRC), forms part of shareholders
equity of the PRC subsidiaries. In accordance with the PRC Company Law and the Articles of
Association of the PRC subsidiaries, these PRC subsidiaries are required to appropriate an amount
equal to a minimum of 10% of their profits after taxation each year to a statutory reserve.
- 4 -
ENSON ASSETS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED 31 MARCH, 2008, 2009 AND 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE |
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
|
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
110,860,492 |
|
|
|
65,708,779 |
|
|
|
189,730,232 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
33,809,283 |
|
|
|
46,902,341 |
|
|
|
50,385,472 |
|
Allowance for inventories |
|
|
|
|
|
|
11,072,802 |
|
|
|
7,214,932 |
|
|
|
2,522,564 |
|
Allowance for bad and doubtful debts |
|
|
|
|
|
|
10,704,550 |
|
|
|
1,635,410 |
|
|
|
|
|
Unrealised exchange gain |
|
|
|
|
|
|
(8,008,195 |
) |
|
|
(667,867 |
) |
|
|
(152,745 |
) |
Interest on bank borrowings wholly repayable within five years |
|
|
|
|
|
|
4,256,898 |
|
|
|
2,220,682 |
|
|
|
539,221 |
|
Loss on disposal of interest in a subsidiary |
|
|
|
|
|
|
445,652 |
|
|
|
|
|
|
|
|
|
Amortisation of prepaid lease payments |
|
|
|
|
|
|
20,042 |
|
|
|
22,161 |
|
|
|
26,293 |
|
Investment income |
|
|
|
|
|
|
(1,750,673 |
) |
|
|
(1,424,227 |
) |
|
|
(951,166 |
) |
Gain on disposal of property, plant and equipment |
|
|
|
|
|
|
(72,554 |
) |
|
|
(66,427 |
) |
|
|
(460,078 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating cash flows before movements in working capital |
|
|
|
|
|
|
161,338,297 |
|
|
|
121,545,784 |
|
|
|
241,639,793 |
|
(Increase) decrease in inventories |
|
|
|
|
|
|
(52,957,240 |
) |
|
|
37,536,823 |
|
|
|
(66,570,363 |
) |
(Increase) decrease in trade receivables, deposits and prepayments |
|
|
|
|
|
|
(52,413,845 |
) |
|
|
7,841,280 |
|
|
|
(43,645,298 |
) |
Decrease in bills receivable |
|
|
|
|
|
|
1,074,326 |
|
|
|
|
|
|
|
|
|
(Increase) decrease in derivative financial instrument assets |
|
|
|
|
|
|
(3,667,863 |
) |
|
|
2,138,511 |
|
|
|
428,010 |
|
Increase (decrease) in trade creditors and accrued charges |
|
|
|
|
|
|
78,603,760 |
|
|
|
(10,104,900 |
) |
|
|
83,038,018 |
|
Increase (decrease) in bills payable |
|
|
|
|
|
|
3,883,510 |
|
|
|
(4,485,717 |
) |
|
|
11,766,777 |
|
Increase in amount due to a related company |
|
|
|
|
|
|
|
|
|
|
3,991,423 |
|
|
|
2,115,313 |
|
Increase (decrease) in derivative financial
instruments liabilities |
|
|
|
|
|
|
3,167,855 |
|
|
|
(2,092,909 |
) |
|
|
(441,669 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash generated from operations |
|
|
|
|
|
|
139,028,800 |
|
|
|
156,370,295 |
|
|
|
228,330,581 |
|
Income taxes paid |
|
|
|
|
|
|
(10,620,550 |
) |
|
|
(18,584,530 |
) |
|
|
(10,077,207 |
) |
Interest paid |
|
|
|
|
|
|
(4,256,898 |
) |
|
|
(2,220,682 |
) |
|
|
(539,221 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
124,151,352 |
|
|
|
135,565,083 |
|
|
|
217,714,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan advance to a related company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(93,165,600 |
) |
Purchase of property, plant and equipment |
|
|
|
|
|
|
(81,049,035 |
) |
|
|
(49,801,460 |
) |
|
|
(31,755,814 |
) |
Payment of buildings under construction |
|
|
|
|
|
|
(38,959,978 |
) |
|
|
(10,346,884 |
) |
|
|
(11,309,687 |
) |
Payment of prepaid lease payments |
|
|
|
|
|
|
|
|
|
|
(249,433 |
) |
|
|
(2,729,754 |
) |
Payment of deposit paid for property, plant and
equipment acquisition |
|
|
|
|
|
|
(8,213,516 |
) |
|
|
(3,001,209 |
) |
|
|
(1,839,729 |
) |
Interest received |
|
|
|
|
|
|
1,750,673 |
|
|
|
1,424,227 |
|
|
|
951,166 |
|
Proceeds from disposal of property, plant and equipment |
|
|
|
|
|
|
921,793 |
|
|
|
82,765 |
|
|
|
555,817 |
|
Disposal of interest in a subsidiary |
|
|
29 |
|
|
|
(2,130,864 |
) |
|
|
734,000 |
|
|
|
|
|
Repayment from (advance to) related companies |
|
|
|
|
|
|
215,187 |
|
|
|
(3,249 |
) |
|
|
1,117,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN INVESTING ACTIVITIES |
|
|
|
|
|
|
(127,465,740 |
) |
|
|
(61,161,243 |
) |
|
|
(138,176,285 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of bank loans |
|
|
|
|
|
|
(12,957,895 |
) |
|
|
(67,410,526 |
) |
|
|
(8,210,526 |
) |
Advance from a director |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,804,400 |
|
New bank loan raised |
|
|
|
|
|
|
60,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FROM (USED IN) FINANCING ACTIVITIES |
|
|
|
|
|
|
47,042,105 |
|
|
|
(67,410,526 |
) |
|
|
(6,406,126 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
43,727,717 |
|
|
|
6,993,314 |
|
|
|
73,131,742 |
|
CASH AND CASH EQUIVALENTS AT 1ST APRIL |
|
|
|
|
|
|
57,044,784 |
|
|
|
102,336,093 |
|
|
|
110,504,497 |
|
EFFECT OF FOREIGN EXCHANGE RATE CHANGES |
|
|
|
|
|
|
1,563,592 |
|
|
|
1,175,090 |
|
|
|
46,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT 31ST MARCH |
|
|
|
|
|
|
102,336,093 |
|
|
|
110,504,497 |
|
|
|
183,682,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANALYSIS OF THE BALANCES OF CASH AND
CASH EQUIVALENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term bank deposits |
|
|
|
|
|
|
46,465,467 |
|
|
|
58,128,750 |
|
|
|
17,060,965 |
|
Bank balances and cash |
|
|
|
|
|
|
55,870,626 |
|
|
|
52,375,747 |
|
|
|
166,621,468 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,336,093 |
|
|
|
110,504,497 |
|
|
|
183,682,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 5 -
ENSON ASSETS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 MARCH, 2008, 2009 AND 2010
The Company is a private limited company incorporated in the British Virgin Islands (BVI)
with its registered office at P.O. Box 71, Craigmuir Chambers, Road Town, Tortola, British
Virgin Islands. The address of principal place of business is located at Unit A, 15/F,
Gemston Tower, 23 Man Lok Street, Hung Hom, Kowloon, Hong Kong. Prior to 3 November 2010,
its immediate and ultimate holding company is CG International Holdings Limited (CG
International), a private limited liability company incorporated in Cayman Islands. On 3
November 2010, CG International sold its entire interest in the Company to UEI Hong Kong
Private Limited, a limited liability company incorporated in Hong Kong and a wholly owned
subsidiary of Universal Electronics Inc. (UEI). UEI is a company incorporated under the
laws of the State of Delaware in the United States of America and UEI has became the
Companys ultimate holding company since then.
The principal activity of the Company is investment holding. The principal activities of
its subsidiaries are set out in note 34.
The consolidated financial statements are presented in Hong Kong dollars (HK$), which is
different from the functional currency of the Company, which is in United States dollars.
Purpose of consolidated financial statements
These consolidated financial statements have been prepared for the special purpose of filing
with the United States Securities and Exchange Commission in compliance with Rule 3-05 of
Regulation S-X and Form 8-K under the Securities Exchange Act of 1934. This filing
requirement is based on the Company being a significant business acquired by UEI.
2. |
|
APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs) |
The International Accounting Standards Board (IASB) has issued a number of new and revised
International Accounting Standards (IASs), International Financial Reporting Standards
(IFRSs), amendments and related Interpretations (IFRICs) (hereinafter collectively
referred to as the new IFRSs) which are effective for the Company and its subsidiaries
(collectively referred to as the Group) financial year beginning on 1 April 2009. For the
purpose of preparing and presenting the financial statements, the Group has consistently
adopted all these new IFRSs which are effective for the accounting period beginning on 1
April 2009 and throughout the years ended 31 March 2008, 2009 and 2010.
- 6 -
ENSON ASSETS LIMITED
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)
continued
At the date of issue of these financial statements, the IASB has issued the following new
and revised standards, amendment and interpretations which are not yet effective during the
years ended 31 March 2008, 2009 and 2010. The Group has not early adopted these standards,
amendments and interpretations in the preparation of the financial statements for the years
ended 31 March 2008, 2009 and 2010.
|
|
|
IFRSs (Amendments)
|
|
Amendments to IFRS 5 as part of Improvements to
IFRSs 20081 |
IFRSs (Amendments)
|
|
Improvements to IFRSs April 20092 |
IFRSs (Amendments)
|
|
Improvements to IFRSs 20103 |
IAS 24 (Revised)
|
|
Related Party Disclosures7 |
IAS 27 (Revised)
|
|
Consolidated and Separate Financial Statements1 |
IAS 32 (Amendments)
|
|
Classification of Rights Issues5 |
IAS 39 (Amendments)
|
|
Eligible Hedged Items1 |
IFRS 1 (Amendments)
|
|
Additional Exemptions for First-time Adopters4 |
IFRS 1 (Amendments)
|
|
Limited Exemption from Comparative IFRS 7
Disclosures for First-time Adopters6 |
IFRS 1 (Amendments)
|
|
Severe Hyperinflation and Removal of Fixed Dates
for First-time
Adopters9 |
IFRS 7 (Amendments)
|
|
Disclosures Transfers of Financial Assets9 |
IFRS 2 (Amendments)
|
|
Group Cash-settled Share-based Payment Transactions4 |
IFRS 3 (Revised)
|
|
Business Combinations1 |
IFRS 9
|
|
Financial Instruments8 |
IAS 12 (Amendments)
|
|
Deferred Tax: Recovery of Underlying Assets10 |
IFRS 14 (Amendment)
|
|
Prepayments of a Minimum Funding Requirement7 |
IFRIC 17
|
|
Distributions of Non-cash Assets to Owners1 |
IFRIC 19
|
|
Extinguishing Financial Liabilities with Equity
Instruments6 |
|
|
|
1 |
|
Effective for annual periods beginning on or after 1 July 2009 |
|
2 |
|
Amendments that are effective for annual periods beginning on or after 1 July 2009 and
1 January 2010, as appropriate |
|
3 |
|
Effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as
appropriate |
|
4 |
|
Effective for annual periods beginning on or after 1 January 2010 |
|
5 |
|
Effective for annual periods beginning on or after 1 February 2010 |
|
6 |
|
Effective for annual periods beginning on or after 1 July 2010 |
|
7 |
|
Effective for annual periods beginning on or after 1 January 2011 |
|
8 |
|
Effective for annual periods beginning on or after 1 January 2013 |
|
9 |
|
Effective for annual periods beginning on or after 1 July 2011 |
|
10 |
|
Effective for annual periods beginning on or after 1 January 2012 |
The application of IFRS 3 (Revised) may affect the Groups accounting for business
combination for which the acquisition date is on or after 1 April 2010. IAS 27 (Revised)
will affect the accounting treatment for changes in the Groups ownership interest in a
subsidiary.
- 7 -
ENSON ASSETS LIMITED
2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSs)
continued
IFRS 9 Financial Instruments introduces new requirements for the classification and
measurement of financial assets and financial liabilities and will be effective from 1
January 2013, with earlier application permitted. The Standard requires all recognised
financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and
Measurement to be measured at either amortised cost or fair value. Specifically, debt
investments that (i) are held within a business model whose objective is to collect the
contractual cash flows and (ii) have contractual cash flows that are solely payments of
principal and interest on the principal outstanding are generally measured at amortised
cost. All other debt investments and equity investments are measured at fair value. The
application of IFRS 9 might affect the classification and measurement of the Groups
financial assets.
In relation to financial liabilities, the significant change relates to financial
liabilities that are designated as at fair value through profit or loss. Specifically,
under IFRS 9, for financial liabilities that are designated as at fair value through profit
or loss, the amount of change in the fair value of the financial liability that is
attributable to changes in the credit risk of that liability is presented in other
comprehensive income, unless the presentation of the effects of changes in the liabilitys
credit risk in other comprehensive income would create or enlarge an accounting mismatch in
profit or loss. Changes in fair value attributable to a financial liabilitys credit risk
are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire
amount of the change in the fair value of the financial liability designated as at fair
value through profit or loss was presented in profit or loss.
The directors of the Company anticipate that the application of the other new and revised
standards, amendments or interpretations will have no material impact on the consolidated
financial statements.
3. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared on the historical cost basis,
except for certain financial instruments, which are measured at fair values, as explained in
the accounting policies set out below.
The consolidated financial statements have been prepared in accordance with the following
accounting policies which conform to IFRSs.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company
and entities controlled by the Company (its subsidiaries). Control is achieved where the
Company has the power to govern the financial and operating policies of an entity so as to
obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the
consolidated statement of comprehensive income from the effective date of acquisition and up
to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring
their accounting policies into line with those used by other members of the Group.
All intra-group transactions, balances, income and expenses are eliminated in full on
consolidation.
- 8 -
ENSON ASSETS LIMITED
3. |
|
SIGNIFICANT ACCOUNTING POLICIES continued |
Revenue recognition
Revenue is measured at fair value of the consideration received or receivable and represents
amounts receivable for goods sold and service provided in the normal course of business, net
of discount and sales related tax.
Revenue from sales of goods is recognised when goods are delivered, title has passed, there
is persuasive evidence of an arrangement, the sales price is fixed or determinable and
collectability is reasonably assured.
Tooling income is recognised when services are provided and accepted by customers.
Interest income from a financial asset is recognised when it is probable that the economic
benefits will flow to the Group and the amount of revenue can be measured reliably.
Interest income from a financial asset is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable, which is the rate that
exactly discounts the estimated future cash receipts through the expected life of the
financial asset to that assets net carrying amount on initial recognition.
Property, plant and equipment
Property, plant and equipment including land and buildings held for use in the production
are stated at cost less subsequent accumulated depreciation and accumulated impairment
losses, if any.
Depreciation is recognised so as to write off the cost of items of property, plant and
equipment over their estimated useful lives and after taking into account of their estimated
residual value, using the straight-line method. The estimated useful lives, residual values
and depreciation method are reviewed at the end of each reporting period, with the effect of
any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected to arise from the continued use of the asset. Any gain or
loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognised in profit or loss.
Leasehold land and buildings under development for future owner-occupied purpose
When the leasehold land and buildings are in the course of development for production or for
administrative purposes, the leasehold land component is classified as a prepaid lease
payment and amortised over a straight-line basis over the lease term. During the
construction period, the amortisation charge provided for the leasehold land is included as
part of costs of buildings under construction. Buildings under construction are carried at
cost, less any identified impairment losses. Depreciation of buildings commences when they
are available for use (i.e. when they are in the location and condition necessary for them
to be capable of operating in the manner intended by management).
- 9 -
ENSON ASSETS LIMITED
3. SIGNIFICANT ACCOUNTING POLICIES continued
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to
get ready for their intended use or sale, are added to the cost of those assets until such
time as the assets are substantially ready for their intended use or sale. Investment
income earned on the temporary investment of specific borrowings pending their expenditure
on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the year in which they are
incurred.
Leasing
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other leases are
classified as operating leases.
The Group as lessee
Operating lease payments are recognised as an expense on a straight-line basis over the
lease term, except where another systematic basis is more representative of the time pattern
in which economic benefits from the leased asset are consumed. Contingent rentals arising
under operating leases are recognised as an expense in the period in which they are
incurred.
In the event that lease incentives are received to enter into
operating leases, such incentives are recognised as a liability. The
aggregate benefit of incentives is recognised as a reduction of rental
expense on a straight-line basis, except where another systematic
basis is more representative of the time pattern in which economic
benefits from the leased asset are consumed.
Leasehold land and building
The land and building elements of a lease of land and building are
considered separately for the purpose of lease classification, unless
the lease payments cannot be allocated reliably between the land and
building elements, in which case, the entire lease is generally
treated as a finance lease and accounted for as property, plant and
equipment. To the extent the allocation of the lease payments can be
made reliably, leasehold interests in land are accounted for as
operating leases and amortised over the lease term on a straight-line
basis.
Foreign currencies
In preparing the financial statements of each individual group entity,
transactions in currencies other than the functional currency of that
entity (foreign currencies) are recorded in the respective functional
currency (i.e. the currency of the primary economic environment in
which the entity operates) at the rates of exchanges prevailing on the
dates of the transactions. At the end of the reporting period,
monetary items denominated in foreign currencies are retranslated at
the rates prevailing at that date. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not
retranslated.
- 10 -
ENSON ASSETS LIMITED
3. SIGNIFICANT ACCOUNTING POLICIES continued
Foreign currencies continued
Exchange differences arising on the settlement of monetary items, and on the re-translation
of monetary items, are recognised in profit or loss in the period in which they arise.
For the purposes of presenting the consolidated financial statements, the assets and
liabilities of the Groups foreign operations are translated into the presentation currency
of the Group (i.e. Hong Kong dollars) at the rate of exchange prevailing at the end of the
reporting period, and their income and expenses are translated at the average exchange rates
for the year, unless exchange rates fluctuate significantly during the year, in which case,
the exchange rates prevailing at the dates of transactions are used. Exchange differences
arising, if any, are recognised in other comprehensive income and accumulated in equity
under the heading the translation reserve. Such exchange differences are reclassified to
profit or loss in the period in which the foreign operation is disposed.
Research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is
incurred.
Retirement benefits costs
Payments to the Groups defined contribution retirement benefit plans, including Mandatory
Provident Fund Scheme and state-managed retirement benefit schemes, are charged as an
expense when employees have rendered services entitling them to the contributions.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs
from profit as reported in the consolidated statement of comprehensive income because it
excludes items of income and expense that are taxable or deductible in other years and it
further excludes items that are never taxable nor deductible. The Groups liability for
current tax is calculated using tax rates that have been enacted or substantively enacted by
the end of the reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets
and liabilities in the consolidated financial statements and the corresponding tax bases
used in the computation of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax assets are generally
recognised for all deductible temporary difference to the extent that it is probable that
taxable profits will be available against which those deductible temporary differences can
be utilised. Such assets and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects neither the taxable profit nor
the accounting profit.
- 11 -
ENSON ASSETS LIMITED
3. SIGNIFICANT ACCOUNTING POLICIES continued
Taxation continued
Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiaries except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not reverse in
the foreseeable future. Deferred tax assets arising from deductible temporary differences
associated with such investments are only recognised to the extent that it is probable that
there will be sufficient taxable profits against which to utilise the benefits of the
temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of the reporting period
and reduced to the extent that it is no longer probable that sufficient taxable profit will
be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply
in the period in which the liability is settled or the asset is realised, based on tax rate
(and tax laws) that have been enacted or substantively enacted by the end of the reporting
period. The measurement of deferred tax liabilities and assets reflects the tax
consequences that would follow from the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is recognised in profit or loss, except when it relates to items that are
recognised in other comprehensive income or directly in equity, in which case the deferred
tax is also recognised in other comprehensive income or directly in equity respectively.
Club debenture
Club debenture is related to a membership club for indefinite term. The balance is stated
at cost, less any identified impairment losses.
Impairment loss on tangible and intangible assets
At the end of the reporting period, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have
suffered an impairment loss. If such indication exists, the recoverable amount of an asset
is estimated in order to determine the extent of impairment loss, if any.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the
carrying amount of the asset is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset in prior years. A reversal of an impairment
loss is recognised as income immediately.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated
using the weighted average method.
- 12 -
ENSON ASSETS LIMITED
3. SIGNIFICANT ACCOUNTING POLICIES continued
Financial instruments
Financial assets and financial liabilities are recognised in the consolidated statement of
financial position when a group entity becomes a party to the contractual provisions of the
instrument. Financial assets and financial liabilities are initially measured at fair
value. Transaction costs that are directly attributable to the acquisition or issue of
financial assets and financial liabilities (other than financial assets at fair value
through profit or loss (FVTPL)) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets at FVTPL are
recognised immediately in profit or loss.
Financial assets
The Groups financial assets are classified into financial assets at FVTPL and loans and
receivables. All regular way purchases or sales of financial assets are recognised and
derecognised on a trade date basis. Regular way purchases or sales are purchases or sales
of financial assets that require delivery of assets within the time frame established by
regulation or convention in the marketplace. The accounting policies adopted in respect of
each category of financial assets are set out below.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial
asset and of allocating interest income over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash receipts through the expected
life of the financial asset, or, where appropriate, a shorter period to the net carrying
amount on initial recognition.
Interest income is recognised on an effective interest basis for debt instruments other than
those financial assets recognised as at FVTPL, of which interest income is included in net
gains or losses.
Financial assets at fair value through profit or loss
The Groups financial assets at FVTPL are financial assets held for trading.
A financial asset is classified as held for trading if:
|
|
it has been acquired principally for the purpose of selling in the near future; or |
|
|
|
it is a part of an identified portfolio of financial instruments that the Group
manages together and has a recent actual pattern of short-term profit-taking; or |
|
|
|
it is a derivative that is not designated and effective as a hedging instrument. |
Financial assets at FVTPL are measured at fair value, with changes in fair value arising
from remeasurements recognised directly in profit or loss in the period in which they arise.
- 13 -
ENSON ASSETS LIMITED
3. SIGNIFICANT ACCOUNTING POLICIES continued
Financial instruments continued
Financial assets - continued
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Subsequent to initial recognition, loans
and receivables (including trade receivables, other receivables, loan to a related company,
amounts due from related companies, amount due from holding company, short term bank
deposits and bank balances and cash) are carried at amortised cost using the effective
interest method, less any identified impairment losses (see accounting policy on impairment
of financial assets below).
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at
the end of the reporting period. Financial assets are impaired where there is objective
evidence that, as a result of one or more events that occurred after the initial recognition
of the financial asset, the estimated future cash flows of the financial assets have been
affected.
For loans and receivables, objective evidence of impairment could include:
|
|
significant financial difficulty of the issuer or counterparty; or |
|
|
|
breach of contract, such as default or delinquency in interest or principal
payments; or |
|
|
|
it becoming probable that the borrower will enter bankruptcy or financial
re-organisation. |
For certain categories of financial asset, such as trade receivables, that are assessed not
to be impaired individually are subsequently assessed for impairment on a collective basis.
Objective evidence of impairment for a portfolio of receivables could include the Groups
past experience of collecting payments, an increase in the number of delayed payments in the
portfolio past the average credit period, observable changes in economic conditions that
correlate with default on receivables and the financial performance of the customers.
For financial assets carried at amortised cost, an impairment loss is recognised in profit
or loss when there is objective evidence that the asset is impaired, and is measured as the
difference between the assets carrying amount and the present value of the estimated future
cash flows discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for
all financial assets with the exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. Changes in the carrying amount of the
allowance account are recognised in profit or loss. When a trade receivable is considered
uncollectible, it is written off against the allowance account. Subsequent recoveries of
amounts previously written off are credited to profit or loss.
For financial assets carried at amortised cost, if, in a subsequent period, the amount of
impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment losses was recognised, the previously recognised impairment loss is
reversed through profit or loss to the extent that the carrying amount of the asset at the
date the impairment is reversed does not exceed what the amortised cost would have been had
the impairment not been recognised.
- 14 -
ENSON ASSETS LIMITED
3. SIGNIFICANT ACCOUNTING POLICIES continued
Financial instruments continued
Financial liabilities and equity
Financial liabilities and equity instruments issued by a group entity are classified according to the substance of the
contractual arrangements entered into and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of
its liabilities. The Groups financial liabilities are generally classified into financial liabilities at FVTPL and other
financial liabilities. The accounting policies adopted in respect of financial liabilities and equity instruments are set
out below.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant periods. The effective interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the financial liability, or where appropriate, a shorter period to the
net carrying amount on initial recognition.
Interest expense is recognised on an effective interest basis for debt instruments other than those financial liabilities
classified as at FVTPL, of which interest expense is included in net gains or losses.
Financial liabilities at fair value through profit or loss
The Groups financial liabilities at FVTPL are financial liabilities held for trading.
A financial liability is classified as held for trading if:
|
|
it has been incurred principally for the purpose of repurchasing in the near future;
or |
|
|
|
it is a part of an identified portfolio of financial instruments that the Group
manages together and has a recent actual pattern of short-term profit-taking; or |
|
|
|
it is a derivative that is not designated and effective as a hedging instrument. |
Financial liabilities at FVTPL are measured at fair value, with changes in fair value
arising on remeasurement recognised directly in profit or loss in the period in which they
arise.
Other financial liabilities
Other financial liabilities including trade payables, bills payable, amount due to a
director, amount due to a related company and bank borrowings are subsequently measured at
amortised cost, using the effective interest method.
Equity instruments
Equity instruments issued by the Group are recorded at the proceeds received, net of direct
issue costs.
- 15 -
ENSON ASSETS LIMITED
3. SIGNIFICANT ACCOUNTING POLICIES continued
Financial instruments continued
Derivative financial instruments
Derivatives are initially recognised at fair value at the date a derivative contract is
entered into and are subsequently remeasured to their fair value at the end of the reporting
period. The resulting gain or loss is recognised in profit or loss immediately unless the
derivative is designated and effective as a hedging instrument, in which event the timing of
the recognition in profit or loss depends on the nature of the hedge relationship.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the assets
expire or, the financial assets are transferred and the Group has transferred substantially
all the risks and rewards of ownership of the financial assets. On derecognition of a
financial asset in its entirety, the difference between the assets carrying amount and the
sum of the consideration received and receivable and the cumulative gain or loss that had
been recognised in other comprehensive income and accumulated in equity is recognised in
profit or loss.
Financial liabilities are derecognised when the obligation specified in the relevant
contract is discharged, cancelled or expires. The difference between the carrying amount of
the financial liability derecognised and the consideration paid and payable is recognised in
profit or loss.
4. KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Groups accounting policies, which are described in note 3, the
directors of the Company are required to make estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other sources. The
estimates and associated assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the
revision affects only that period, or in the period of the revision and future periods if
the revision affects both current and future periods.
The following are the key assumptions concerning the future, and other key sources of
estimation uncertainty at the end of the reporting period, that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year.
- 16 -
ENSON ASSETS LIMITED
4. KEY SOURCES OF ESTIMATION UNCERTAINTY continued
Allowance for trade receivables
An allowance for bad and doubtful debts is made when there is objective evidence of
impairment. A considerable amount of judgment is required in assessing the ultimate
realisation of these receivables including current creditworthiness and the past collection
history of each customer. If the financial condition of customers of the Group was to
deteriorate resulting in an impairment of their ability to make payments, additional
allowances may be required. The Groups carrying value of trade receivables as at 31 March
2008, 2009 and 2010 was HK$162,179,605, HK$152,490,658 and HK$195,529,853, respectively (net
of allowance for bad and doubtful debts as at 31 March 2008, 2009 and 2010 of HK$10,704,550,
HK$2,527,542 and HK$1,495,623, respectively).
Inventory valuation method and impairment
Inventory is valued at the lower of cost and net realisable value. Cost is determined using
the weighted average method. Market price is generally the merchandise selling price quoted
from the market of similar items. The Group reviews its inventory levels in order to
identify slow-moving and obsolete inventories, where the Group identifies items of inventory
having a market price lower than its carrying amount, the Group estimates the amount of
inventory loss as allowance for slow-moving inventories. Where the estimated amount of
allowance for slow-moving inventories are higher than expected, the Group could be required
to change the recorded value of its inventories. The Groups carrying value of inventory as
at 31 March 2008, 2009 and 2010 was HK$127,880,885, HK$85,698,647 and HK$149,995,066,
respectively.
Depreciation
The Group depreciates the property, plant and equipment over their estimated useful lives,
using straight-line method, at the rates ranging from 4% to 331/3% per
annum. The estimated useful lives that the Group depreciates the property, plant and
equipment reflect the directors estimate of the periods that the Group intends to derive
future economic benefits from the use of the assets. For any instance where this evaluation
process indicates impairment, the appropriate assets carrying values are written down to
the recoverable amount and the amount of the write-down is charged against the profit or
loss. The Groups carrying value of property, plant and equipment as at 31 March 2008, 2009
and 2010 was HK$317,905,419, HK$338,423,031 and HK$343,884,984, respectively.
5. REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Sales of remote control units |
|
|
998,273,391 |
|
|
|
987,068,270 |
|
|
|
1,115,098,137 |
|
Tooling income and others |
|
|
38,396,861 |
|
|
|
50,631,443 |
|
|
|
49,134,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,036,670,252 |
|
|
|
1,037,699,713 |
|
|
|
1,164,233,090 |
|
|
|
|
|
|
|
|
|
|
|
- 17 -
ENSON ASSETS LIMITED
6. INVESTMENT INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Interest income on: |
|
|
|
|
|
|
|
|
|
|
|
|
Short-term bank deposits and bank balances |
|
|
1,750,673 |
|
|
|
1,424,227 |
|
|
|
542,472 |
|
Loan interest income from a related company |
|
|
|
|
|
|
|
|
|
|
408,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,750,673 |
|
|
|
1,424,227 |
|
|
|
951,166 |
|
|
|
|
|
|
|
|
|
|
|
7. OTHER INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
An analysis of the Groups other income
is as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
Sales of other materials |
|
|
3,211,302 |
|
|
|
9,803,346 |
|
|
|
4,879,859 |
|
Sample sales |
|
|
1,849,505 |
|
|
|
4,168,420 |
|
|
|
5,722,358 |
|
Administration income from related
companies (note a) |
|
|
|
|
|
|
|
|
|
|
8,236,800 |
|
Service income from a related company
(note b) |
|
|
|
|
|
|
|
|
|
|
1,287,000 |
|
Sundry income |
|
|
2,301,591 |
|
|
|
3,089,535 |
|
|
|
4,719,877 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,362,398 |
|
|
|
17,061,301 |
|
|
|
24,845,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes: |
|
|
|
a. |
|
Administration income of HK$8,236,800 represents income received from Gemstar
Manufacturing Holdings Limited (GMHL) and its subsidiaries (collectively GMHL
Group) for administrative services provided to GMHL Group from year 1999 to 2009 that
are confirmed and settled by both parties in December 2009. |
|
b. |
|
Service income of HK$1,287,000 represents income received from Antares Holding
Limited (Antares), a wholly owned subsidiary of GMHL, for services provided to
Antares from year 2004 to 2007 that are confirmed and settled by both parties in
December 2009. |
These companies are related to the Group as certain directors of the Company are also
directors of and have beneficial interests in these companies.
8. OTHER GAINS AND LOSSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Net exchange gain |
|
|
15,609,208 |
|
|
|
5,502,178 |
|
|
|
1,085,209 |
|
Gain on disposal of property, plant and
equipment |
|
|
72,554 |
|
|
|
66,427 |
|
|
|
460,078 |
|
Net fair value change of derivative financial
instruments
- - FVTPL |
|
|
500,008 |
|
|
|
(45,602 |
) |
|
|
13,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,181,770 |
|
|
|
5,523,003 |
|
|
|
1,558,946 |
|
|
|
|
|
|
|
|
|
|
|
- 18 -
ENSON ASSETS LIMITED
9. PROFIT BEFORE TAX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Profit before tax has been arrived at after
charging (crediting): |
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for inventories (included in cost
of sales) |
|
|
11,072,802 |
|
|
|
7,214,932 |
|
|
|
2,522,564 |
|
Allowance for bad and doubtful debts
(included in other expenses) |
|
|
10,704,550 |
|
|
|
1,635,410 |
|
|
|
|
|
Cost of inventories recognised as an expense |
|
|
845,566,646 |
|
|
|
895,902,559 |
|
|
|
899,188,232 |
|
Minimum lease payments paid in respect
of rented premises |
|
|
1,075,459 |
|
|
|
909,435 |
|
|
|
820,992 |
|
Research and development costs recognised
as an expense (note a) |
|
|
14,480,741 |
|
|
|
15,249,844 |
|
|
|
16,363,469 |
|
Depreciation |
|
|
33,809,283 |
|
|
|
46,902,341 |
|
|
|
50,385,472 |
|
Amortisation of prepaid lease payments |
|
|
20,042 |
|
|
|
22,161 |
|
|
|
26,293 |
|
|
|
|
|
|
|
|
|
|
|
Total depreciation and amortisation |
|
|
33,829,325 |
|
|
|
46,924,502 |
|
|
|
50,411,765 |
|
Directors remuneration: |
|
|
|
|
|
|
|
|
|
|
|
|
Fees |
|
|
|
|
|
|
|
|
|
|
|
|
Others |
|
|
1,395,000 |
|
|
|
2,410,400 |
|
|
|
4,602,400 |
|
Retirement benefit scheme contributions |
|
|
12,000 |
|
|
|
12,000 |
|
|
|
12,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,407,000 |
|
|
|
2,422,400 |
|
|
|
4,614,400 |
|
Other staff costs |
|
|
189,711,536 |
|
|
|
214,472,465 |
|
|
|
246,474,654 |
|
Retirement benefit scheme contributions
(excluding directors) |
|
|
17,700,102 |
|
|
|
14,900,740 |
|
|
|
16,460,746 |
|
|
|
|
|
|
|
|
|
|
|
Total staff costs |
|
|
208,818,638 |
|
|
|
231,795,605 |
|
|
|
267,549,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: |
|
|
|
a. |
|
Included in research and development costs for the three years ended 31 March
2008, 2009 and 2010 are other staff costs of approximately HK$13,020,513, HK$13,584,105
and HK$14,636,968, respectively. The Group did not capitalise any research and
development expenditure during the years ended 31 March 2008, 2009 and 2010. |
- 19 -
ENSON ASSETS LIMITED
10. TAXATION EXPENSE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
The charge comprises: |
|
|
|
|
|
|
|
|
|
|
|
|
Current tax: |
|
|
|
|
|
|
|
|
|
|
|
|
Hong Kong |
|
|
11,798,000 |
|
|
|
4,875,000 |
|
|
|
21,439,672 |
|
Other jurisdictions |
|
|
2,924,915 |
|
|
|
4,158,332 |
|
|
|
10,032,112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,722,915 |
|
|
|
9,033,332 |
|
|
|
31,471,784 |
|
|
|
|
|
|
|
|
|
|
|
Underprovision in prior years |
|
|
5,259,120 |
|
|
|
2,003,933 |
|
|
|
33,297 |
|
|
|
|
|
|
|
|
|
|
|
Deferred taxation (note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
Current year |
|
|
(3,026,812 |
) |
|
|
(3,717,104 |
) |
|
|
(3,122,969 |
) |
Attributable to a change in tax rate |
|
|
1,068,329 |
|
|
|
(425,886 |
) |
|
|
8,612,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,958,483 |
) |
|
|
(4,142,990 |
) |
|
|
5,489,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,023,552 |
|
|
|
6,894,275 |
|
|
|
36,994,448 |
|
|
|
|
|
|
|
|
|
|
|
Hong Kong Profits Tax was calculated at 17.5%, of the estimated assessable profit for the
year ended 31 March 2008.
On 26 June 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008 which
reduced corporate profits tax rate from 17.5% to 16.5% effective from the year of assessment
2008/2009. Therefore, Hong Kong Profits Tax is calculated at 16.5% of the estimated
assessable profit for the years ended 31 March 2009 and 2010. The deferred tax balance as
at 1 April 2008 has been adjusted to reflect the tax rates that are expected to apply to the
respective periods when the asset is realised or the liability is settled.
On 16 March 2007, the PRC promulgated the Law of the PRC on Enterprise Income Tax (the New
Law) by Order No. 63 of the President of the PRC. On 6 December 2007, the State Council of
the PRC issued Implementation Regulations of the New Law. The New Law and Implementation
Regulations changed the tax rate from 33% to 25% for certain subsidiaries from 1 January
2008. The deferred tax balance as at 31 March 2008 has been adjusted to reflect the tax
rates that are expected to apply to the respective periods when the asset is realised or the
liability is settled.
Gemstar Technology (Yangzhou) Co. Ltd. (GTY) is a wholly foreign invested entity of
manufacturing nature. In accordance with Foreign Enterprise Income Tax (FEIT) Laws in
PRC, GTY was approved to be exempted from FEIT for two years starting from its first profit
making year since its establishment and followed by a 50% tax relief for the next three
years. GTY first profit making year was 2007. GTY is therefore exempted from FEIT for the
year ended 31 March 2008 and from 1 April 2008 to 31 December 2008 and subject to a reduced
tax rate of 12.5% from 1 January 2009 to 31 March 2010.
- 20 -
ENSON ASSETS LIMITED
10. TAXATION EXPENSE continued
Gemstar Technology (China) Co. Ltd. (GTC) is a wholly foreign invested entity
of manufacturing nature. GTC was qualified as export-oriented enterprise in year
ended 31 December 2007 and is eligible for a tax concession at a reduced tax rate
of 12% for that year. In November 2009, GTC was awarded the certificate of
Hi-Technology Enterprise and is entitled to enjoy a reduced tax rate of 15% from
1 January 2009 to 31 December 2011. The applicable income tax rates of GTC are
as follows:
|
|
|
For the year ended 31 March 2008:
|
|
12% from 1 April 2007 to 31 December 2007
25% from 1 January 2008 to 31 March 2008 |
For the year ended 31 March 2009:
|
|
25% from 1 April 2008 to 31 December 2008
15% from 1 January 2009 to 31 March 2009 |
For the years ended 31 March, 2010:
|
|
15% |
Taxation arising in other jurisdictions is calculated at the rates prevailing in the
relevant jurisdictions.
Taxation expense for the year can be reconciled to the profit before tax in the consolidated statement of comprehensive
income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Profit before tax |
|
|
110,860,492 |
|
|
|
65,708,779 |
|
|
|
189,730,232 |
|
|
|
|
|
|
|
|
|
|
|
Tax at Hong Kong Profits Tax calculated at 17.5% for 2008 and 16.5% for 2009 and 2010 |
|
|
19,400,586 |
|
|
|
10,841,949 |
|
|
|
31,305,488 |
|
Tax effect of expenses not deductible for tax purposes |
|
|
996,134 |
|
|
|
|
|
|
|
108,176 |
|
Tax effect of income not taxable for tax purposes |
|
|
(545,804 |
) |
|
|
(563,807 |
) |
|
|
(439,940 |
) |
Underprovision in prior years |
|
|
5,259,120 |
|
|
|
2,003,933 |
|
|
|
33,297 |
|
Tax effect of tax losses not recognised |
|
|
228,903 |
|
|
|
319,101 |
|
|
|
357,111 |
|
Effect of change in future tax rate on deferred tax assets and liabilities recognised |
|
|
1,068,329 |
|
|
|
(425,886 |
) |
|
|
8,612,336 |
|
Effect of different tax rates of subsidiaries operating in the PRC |
|
|
1,179,179 |
|
|
|
4,597,167 |
|
|
|
8,122,236 |
|
Tax effect of tax exemption and tax concession granted to subsidiaries operating in the PRC |
|
|
(8,779,285 |
) |
|
|
(8,967,528 |
) |
|
|
(12,079,784 |
) |
Increase in deferred tax liability resulting from PRC withholding tax |
|
|
|
|
|
|
|
|
|
|
697,000 |
|
Others |
|
|
(783,610 |
) |
|
|
(910,654 |
) |
|
|
278,528 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense for the year |
|
|
18,023,552 |
|
|
|
6,894,275 |
|
|
|
36,994,448 |
|
|
|
|
|
|
|
|
|
|
|
Details of deferred taxation are set out in note 15.
- 21 -
ENSON ASSETS LIMITED
11. PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leasehold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
land and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
factory |
|
|
|
|
|
|
Furniture |
|
|
|
|
|
|
|
|
|
|
Machinery, |
|
|
|
|
|
|
premises in |
|
|
Leasehold |
|
|
and |
|
|
Office |
|
|
Motor |
|
|
equipment |
|
|
|
|
|
|
the PRC |
|
|
improvements |
|
|
fixtures |
|
|
equipment |
|
|
vehicles |
|
|
and moulds |
|
|
Total |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
COST |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2007 |
|
|
112,415,810 |
|
|
|
37,382,048 |
|
|
|
1,538,459 |
|
|
|
11,044,146 |
|
|
|
1,407,220 |
|
|
|
131,649,549 |
|
|
|
295,437,232 |
|
Transfer from buildings
under construction |
|
|
51,076,504 |
|
|
|
11,432,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,508,971 |
|
Additions |
|
|
|
|
|
|
9,817,473 |
|
|
|
916,224 |
|
|
|
4,012,608 |
|
|
|
458,774 |
|
|
|
65,843,956 |
|
|
|
81,049,035 |
|
Disposals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(784,843 |
) |
|
|
(144,140 |
) |
|
|
(6,879,563 |
) |
|
|
(7,808,546 |
) |
Eliminated on disposal of a
subsidiary (note 29) |
|
|
|
|
|
|
(35,978 |
) |
|
|
(51,739 |
) |
|
|
(114,176 |
) |
|
|
|
|
|
|
|
|
|
|
(201,893 |
) |
Currency realignment |
|
|
10,968,614 |
|
|
|
3,568,914 |
|
|
|
22,090 |
|
|
|
631,817 |
|
|
|
135,450 |
|
|
|
9,515,270 |
|
|
|
24,842,155 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008
and
1 April 2008 |
|
|
174,460,928 |
|
|
|
62,164,924 |
|
|
|
2,425,034 |
|
|
|
14,789,552 |
|
|
|
1,857,304 |
|
|
|
200,129,212 |
|
|
|
455,826,954 |
|
Transfer from buildings
under construction |
|
|
|
|
|
|
2,183,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,469,226 |
|
|
|
3,652,718 |
|
Additions |
|
|
1,969,726 |
|
|
|
13,290,174 |
|
|
|
175,635 |
|
|
|
4,508,284 |
|
|
|
766,243 |
|
|
|
37,304,914 |
|
|
|
58,014,976 |
|
Disposals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,705,467 |
) |
|
|
(19,000 |
) |
|
|
(4,818,034 |
) |
|
|
(6,542,501 |
) |
Currency realignment |
|
|
3,936,248 |
|
|
|
1,384,545 |
|
|
|
24,655 |
|
|
|
204,343 |
|
|
|
41,477 |
|
|
|
2,810,758 |
|
|
|
8,402,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2009 and
1 April 2009 |
|
|
180,366,902 |
|
|
|
79,023,135 |
|
|
|
2,625,324 |
|
|
|
17,796,712 |
|
|
|
2,646,024 |
|
|
|
236,896,076 |
|
|
|
519,354,173 |
|
Transfer from buildings
under construction |
|
|
18,246,116 |
|
|
|
2,134,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,380,433 |
|
Additions |
|
|
|
|
|
|
1,880,710 |
|
|
|
400,933 |
|
|
|
2,188,052 |
|
|
|
1,294,913 |
|
|
|
28,992,415 |
|
|
|
34,757,023 |
|
Disposals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,184,525 |
) |
|
|
(742,560 |
) |
|
|
(5,226,473 |
) |
|
|
(7,153,558 |
) |
Currency realignment |
|
|
574,417 |
|
|
|
249,120 |
|
|
|
4,118 |
|
|
|
39,124 |
|
|
|
8,427 |
|
|
|
458,227 |
|
|
|
1,333,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2010 |
|
|
199,187,435 |
|
|
|
83,287,282 |
|
|
|
3,030,375 |
|
|
|
18,839,363 |
|
|
|
3,206,804 |
|
|
|
261,120,245 |
|
|
|
568,671,504 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEPRECIATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 April 2007 |
|
|
26,250,235 |
|
|
|
10,910,323 |
|
|
|
1,250,179 |
|
|
|
4,638,762 |
|
|
|
886,667 |
|
|
|
57,235,679 |
|
|
|
101,171,845 |
|
Provided for the year |
|
|
5,281,001 |
|
|
|
5,728,091 |
|
|
|
147,714 |
|
|
|
2,306,832 |
|
|
|
230,872 |
|
|
|
20,114,773 |
|
|
|
33,809,283 |
|
Eliminated on disposals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(784,843 |
) |
|
|
(86,484 |
) |
|
|
(6,087,980 |
) |
|
|
(6,959,307 |
) |
Eliminated on disposal of a
subsidiary (note 29) |
|
|
|
|
|
|
(29,982 |
) |
|
|
(13,389 |
) |
|
|
(65,531 |
) |
|
|
|
|
|
|
|
|
|
|
(108,902 |
) |
Currency realignment |
|
|
2,895,626 |
|
|
|
1,354,694 |
|
|
|
8,141 |
|
|
|
383,366 |
|
|
|
99,276 |
|
|
|
5,267,513 |
|
|
|
10,008,616 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008
and
1 April 2008 |
|
|
34,426,862 |
|
|
|
17,963,126 |
|
|
|
1,392,645 |
|
|
|
6,478,586 |
|
|
|
1,130,331 |
|
|
|
76,529,985 |
|
|
|
137,921,535 |
|
Provided for the year |
|
|
7,165,709 |
|
|
|
8,721,211 |
|
|
|
152,969 |
|
|
|
3,084,674 |
|
|
|
378,823 |
|
|
|
27,398,955 |
|
|
|
46,902,341 |
|
Eliminated on disposals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,689,129 |
) |
|
|
(19,000 |
) |
|
|
(4,818,034 |
) |
|
|
(6,526,163 |
) |
Currency realignment |
|
|
791,374 |
|
|
|
405,601 |
|
|
|
2,776 |
|
|
|
94,319 |
|
|
|
25,848 |
|
|
|
1,313,511 |
|
|
|
2,633,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2009 and
1 April 2009 |
|
|
42,383,945 |
|
|
|
27,089,938 |
|
|
|
1,548,390 |
|
|
|
7,968,450 |
|
|
|
1,516,002 |
|
|
|
100,424,417 |
|
|
|
180,931,142 |
|
Provided for the year |
|
|
7,406,635 |
|
|
|
9,876,427 |
|
|
|
185,951 |
|
|
|
3,379,703 |
|
|
|
441,250 |
|
|
|
29,095,506 |
|
|
|
50,385,472 |
|
Eliminated on disposals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,161,967 |
) |
|
|
(702,046 |
) |
|
|
(5,193,806 |
) |
|
|
(7,057,819 |
) |
Currency realignment |
|
|
148,460 |
|
|
|
101,762 |
|
|
|
1,147 |
|
|
|
21,813 |
|
|
|
5,578 |
|
|
|
248,965 |
|
|
|
527,725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2010 |
|
|
49,939,040 |
|
|
|
37,068,127 |
|
|
|
1,735,488 |
|
|
|
10,207,999 |
|
|
|
1,260,784 |
|
|
|
124,575,082 |
|
|
|
224,786,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CARRYING VALUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008 |
|
|
140,034,066 |
|
|
|
44,201,798 |
|
|
|
1,032,389 |
|
|
|
8,310,966 |
|
|
|
726,973 |
|
|
|
123,599,227 |
|
|
|
317,905,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2009 |
|
|
137,982,957 |
|
|
|
51,933,197 |
|
|
|
1,076,934 |
|
|
|
9,828,262 |
|
|
|
1,130,022 |
|
|
|
136,471,659 |
|
|
|
338,423,031 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2010 |
|
|
149,248,395 |
|
|
|
46,219,155 |
|
|
|
1,294,887 |
|
|
|
8,631,364 |
|
|
|
1,946,020 |
|
|
|
136,545,163 |
|
|
|
343,884,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 22 -
ENSON ASSETS LIMITED
11. PROPERTY, PLANT AND EQUIPMENT continued
The above items of property, plant and equipment are depreciated on a straight-line basis at
the following rates per annum, after taking into account of their estimate residual value.
|
|
|
|
|
Leasehold land and factory premises
in the PRC
|
|
Over the shorter of the term of lease or 25 years
|
Leasehold improvements
|
|
Over the shorter of the term of lease or 25 years
|
Furniture and fixtures
|
|
121/2% |
Office equipment
|
|
20% |
Motor vehicles
|
|
20% |
Machinery, equipment and moulds
|
|
121/2% to 331/3%
|
At 31 March 2008, 2009 and 2010, the Group did not obtain relevant building ownership
certificates for its leasehold land and factory premises in the PRC with carrying amount of
approximately HK$644,215, HK$1,965,257 and HK$1,689,334, respectively. In addition, as at
31 March 2008, 2009 and 2010, certain of the Groups leasehold land and factory premises in
the PRC with carrying amount of approximately HK$88,814,371, HK$8,316,598 and HK$18,421,487,
respectively are located on area without obtaining relevant land use right certificate.
12. BUILDINGS UNDER CONSTRUCTION
|
|
|
|
|
|
|
HK$ |
|
COST |
|
|
|
|
At 1 April 2007 |
|
|
23,547,411 |
|
Additions |
|
|
38,959,978 |
|
Transfer to property, plant and equipment |
|
|
(62,508,971 |
) |
Currency realignment |
|
|
2,297,563 |
|
|
|
|
|
At 31 March 2008 and 1 April 2008 |
|
|
2,295,981 |
|
Additions |
|
|
10,346,884 |
|
Transfer to property, plant and equipment |
|
|
(3,652,718 |
) |
Currency realignment |
|
|
51,804 |
|
|
|
|
|
At 31 March 2009 and 1 April 2009 |
|
|
9,041,951 |
|
Additions |
|
|
11,309,687 |
|
Transfer to property, plant and equipment |
|
|
(20,380,433 |
) |
Currency realignment |
|
|
28,795 |
|
|
|
|
|
At 31 March 2010 |
|
|
|
|
|
|
|
|
- 23 -
ENSON ASSETS LIMITED |
|
13. |
|
PREPAID LEASE PAYMENTS |
The Groups prepaid lease payments are located in the PRC.
At 31 March 2008, 2009 and 2010, the Group did not obtain relevant land use right certificates for its
leasehold land in the PRC with carrying amount of approximately HK$1,017,999, HK$292,809 and
HK$2,846,620, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Analysed for reporting purposes as: |
|
|
|
|
|
|
|
|
|
|
|
|
Current asset |
|
|
19,416 |
|
|
|
26,780 |
|
|
|
81,460 |
|
Non-current asset |
|
|
998,583 |
|
|
|
1,241,414 |
|
|
|
3,894,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,017,999 |
|
|
|
1,268,194 |
|
|
|
3,975,646 |
|
|
|
|
|
|
|
|
|
|
|
14. CLUB DEBENTURE
|
|
|
|
|
|
|
2008, 2009 & 2010 |
|
|
|
HK$ |
|
At cost |
|
|
885,000 |
|
|
|
|
|
Club debenture is tested for impairment annually and whenever there is an indication that it
may be impaired. The directors of the Company are of the opinion that no impairment loss
was identified for years ended 31 March 2008, 2009 and 2010 by reference to the market
value.
15. DEFERRED TAXATION
The following is the analysis of the deferred tax balances for financial reporting purposes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Deferred tax assets |
|
|
22,991,974 |
|
|
|
27,947,036 |
|
|
|
22,034,495 |
|
Deferred tax liabilities |
|
|
(7,453,000 |
) |
|
|
(7,923,000 |
) |
|
|
(7,442,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
15,538,974 |
|
|
|
20,024,036 |
|
|
|
14,592,495 |
|
|
|
|
|
|
|
|
|
|
|
- 24 -
ENSON ASSETS LIMITED
15. DEFERRED TAXATION continued
The following are the major deferred tax assets (liabilities) recognised and movements
thereon during the years ended 31 March 2008, 2009 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrual on |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
social security |
|
|
|
|
|
|
|
|
Accelerated |
|
|
|
|
|
contribution |
|
Undistributed |
|
|
|
|
|
|
tax |
|
|
|
|
|
and long |
|
profits of |
|
|
|
|
|
|
depreciation |
|
Tax losses |
|
service payment |
|
subsidiaries |
|
Others |
|
Total |
|
|
HK$ |
|
HK$ |
|
HK$ |
|
HK$ |
|
HK$ |
|
HK$ |
At 1 April 2007
|
|
|
(2,382,000 |
) |
|
|
1,116,000 |
|
|
|
10,340,648 |
|
|
|
|
|
|
|
3,379,352 |
|
|
|
12,454,000 |
|
Effect of change in tax rate
|
|
|
21,322 |
|
|
|
|
|
|
|
(889,000 |
) |
|
|
|
|
|
|
(200,651 |
) |
|
|
(1,068,329 |
) |
(Charge) credit to profit or loss
|
|
|
(4,002,322 |
) |
|
|
(1,116,000 |
) |
|
|
7,333,862 |
|
|
|
|
|
|
|
811,272 |
|
|
|
3,026,812 |
|
Currency realignment
|
|
|
|
|
|
|
|
|
|
|
1,126,491 |
|
|
|
|
|
|
|
|
|
|
|
1,126,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008 and 1 April 2008
|
|
|
(6,363,000 |
) |
|
|
|
|
|
|
17,912,001 |
|
|
|
|
|
|
|
3,989,973 |
|
|
|
15,538,974 |
|
Effect of change in tax rate
|
|
|
425,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
425,886 |
|
(Charge) credit to profit or loss
|
|
|
(846,591 |
) |
|
|
|
|
|
|
4,897,611 |
|
|
|
|
|
|
|
(333,916 |
) |
|
|
3,717,104 |
|
Currency realignment
|
|
|
(724 |
) |
|
|
|
|
|
|
308,388 |
|
|
|
|
|
|
|
34,408 |
|
|
|
342,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2009 and 1 April 2009
|
|
|
(6,784,429 |
) |
|
|
|
|
|
|
23,118,000 |
|
|
|
|
|
|
|
3,690,465 |
|
|
|
20,024,036 |
|
Effect of change in tax rate
|
|
|
(356,000 |
) |
|
|
|
|
|
|
(6,986,800 |
) |
|
|
|
|
|
|
(1,269,536 |
) |
|
|
(8,612,336 |
) |
Credit (charge) to profit or loss
|
|
|
1,490,473 |
|
|
|
|
|
|
|
3,020,305 |
|
|
|
(697,000 |
) |
|
|
(690,809 |
) |
|
|
3,122,969 |
|
Currency realignment
|
|
|
1,477 |
|
|
|
|
|
|
|
51,046 |
|
|
|
|
|
|
|
5,303 |
|
|
|
57,826 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2010
|
|
|
(5,648,479 |
) |
|
|
|
|
|
|
19,202,551 |
|
|
|
(697,000 |
) |
|
|
1,735,423 |
|
|
|
14,592,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008, 2009 and 2010, the Group had unused tax losses of approximately HK$1,785,000, HK$3,684,000 and HK$5,864,000, respectively available for offset against
future taxable profits. No deferred tax asset has been recognised due to the unpredictability of future profit streams. All tax losses may be carried forward
indefinitely.
16. INVENTORIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Raw materials |
|
|
69,953,985 |
|
|
|
39,559,508 |
|
|
|
85,018,910 |
|
Work in progress |
|
|
34,468,085 |
|
|
|
23,864,020 |
|
|
|
34,041,901 |
|
Finished goods |
|
|
23,458,815 |
|
|
|
22,275,119 |
|
|
|
30,934,255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127,880,885 |
|
|
|
85,698,647 |
|
|
|
149,995,066 |
|
|
|
|
|
|
|
|
|
|
|
- 25 -
ENSON ASSETS LIMITED
17. TRADE RECEIVABLES, DEPOSITS AND PREPAYMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2009 |
|
2010 |
|
|
HK$ |
|
HK$ |
|
HK$ |
Trade receivables
|
|
|
172,884,155 |
|
|
|
155,018,200 |
|
|
|
197,025,476 |
|
Less: allowance for bad and doubtful debts
|
|
|
(10,704,550 |
) |
|
|
(2,527,542 |
) |
|
|
(1,495,623 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total trade receivables
|
|
|
162,179,605 |
|
|
|
152,490,658 |
|
|
|
195,529,853 |
|
Other receivables, deposits and prepayments
|
|
|
9,649,193 |
|
|
|
9,634,718 |
|
|
|
10,267,556 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
171,828,798 |
|
|
|
162,125,376 |
|
|
|
205,797,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group allows an average credit period of 38 days, 40 days and 40 days to customers
during the three years ended 31 March 2008, 2009 and 2010, respectively.
Before accepting any new customer, the Group has assessed the potential customers credit
quality and defined credit limits by customer. Limits attributed to customers are reviewed
once a year, and the Group reviews the repayment history of receivables by each customer
with reference to the payment terms stated in contracts to determine the recoverability of a
trade receivable. In the opinion of the directors of the Company, 60%, 84% and 77% of the
trade receivables as at 31 March 2008, 2009 and 2010 that are neither past due nor impaired
have good credit quality at the end of the reporting period with reference to past
settlement history.
Included in the Groups trade receivables balance as at 31 March 2008, 2009 and 2010 are
debtors with an aggregate carrying amount of approximately HK$65,347,426, HK$23,852,017 and
HK$44,849,996, respectively which are past due at the end of the reporting period for which
the Group has no impairment loss, because historical experience is that the receivables are
generally recoverable as supported by on-going settlements by customers. The Group does not
hold any collateral over these balances.
Aging of trade receivables presented based on invoiced date which are past due but not
impaired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
0 - 30 days |
|
|
|
|
|
|
|
|
|
|
76,575 |
|
31 - 60 days |
|
|
26,586,432 |
|
|
|
1,953,570 |
|
|
|
22,426,182 |
|
61 - 90 days |
|
|
18,888,083 |
|
|
|
17,406,525 |
|
|
|
17,727,819 |
|
Over 90 days |
|
|
19,872,911 |
|
|
|
4,491,922 |
|
|
|
4,609,420 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
65,347,426 |
|
|
|
23,852,017 |
|
|
|
44,839,996 |
|
|
|
|
|
|
|
|
|
|
|
The Group performed assessment on individual trade receivables and recognised an allowance
on specific balances.
- 26 -
ENSON ASSETS LIMITED
17. TRADE RECEIVABLES, DEPOSITS AND PREPAYMENTS continued
Movement in the allowance for bad and doubtful debts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Balance at beginning of the year |
|
|
17,389 |
|
|
|
10,704,550 |
|
|
|
2,527,542 |
|
Impairment losses recognised |
|
|
10,704,550 |
|
|
|
1,635,410 |
|
|
|
|
|
Written off during the year |
|
|
(17,389 |
) |
|
|
(9,812,418 |
) |
|
|
(1,031,919 |
) |
|
|
|
|
|
|
|
|
|
|
Balance at end of the year |
|
|
10,704,550 |
|
|
|
2,527,542 |
|
|
|
1,495,623 |
|
|
|
|
|
|
|
|
|
|
|
Included in the allowance for doubtful debts as at 31 March 2008, 2009 and 2010 are
individually impaired trade receivables with an aggregate balance of approximately
HK$10,704,550, HK$2,527,542 and HK$1,495,623, respectively, of which the Group has chased
for settlements from customers but the amounts remained unsettled. The Group does not hold
any collateral over these balances.
18. LOAN TO A RELATED COMPANY
The amount as at 31 March 2010 represents the loan to New Reward Limited denominated in
United States dollars (USD). The Group has assessed the credit quality of the related
company before providing the loan to a related company. The loan to a related company was
neither past due nor impaired and no history of default was noted. The loan is unsecured,
bearing interest at Hong Kong Interbank Offered Rate (HIBOR) plus 1.75% per annum and
fully payable by 6 January 2011. This company is related to the Group as a director of the
Company is also a director of and has beneficial interest in this company. Effective
interest rate per annum at 31 March 2010 is 1.88%. The amount has been fully repaid in June
2010.
19. AMOUNTS DUE FROM RELATED COMPANIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Name of company |
|
|
|
|
|
|
|
|
|
|
|
|
Gemstar Manufacturing Holdings Limited |
|
|
1,529,857 |
|
|
|
1,532,105 |
|
|
|
|
|
Gemstar Asia Limited |
|
|
17,525 |
|
|
|
18,526 |
|
|
|
24,621 |
|
New Reward Limited |
|
|
|
|
|
|
|
|
|
|
408,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,547,382 |
|
|
|
1,550,631 |
|
|
|
433,315 |
|
|
|
|
|
|
|
|
|
|
|
The Group has assessed the credit quality of the amounts due from related companies before
providing the advances to the related companies. The amounts were neither past due nor
impaired and no history of default were noted. The amounts are unsecured, interest free and
repayable on demand. These companies are related to the Group as certain directors of the
Company are also directors of and have beneficial interests in these companies.
- 27 -
ENSON ASSETS LIMITED
20. DERIVATIVE FINANCIAL INSTRUMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Other financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts at net
settlement (not under hedge accounting) |
|
|
3,667,863 |
|
|
|
1,529,352 |
|
|
|
1,101,342 |
|
|
|
|
|
|
|
|
|
|
|
Other financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts at net
settlement (not under hedge accounting) |
|
|
3,167,855 |
|
|
|
1,074,946 |
|
|
|
633,277 |
|
|
|
|
|
|
|
|
|
|
|
At 31 March 2008, 2009 and 2010, the Group has outstanding forward foreign exchange
contracts entered into to buy/sell a specified notional amount of USD at a specified
exchange rate.
31 March 2008
Financial assets
|
|
|
|
|
Notional amount |
|
Maturity date |
|
Exchange rate |
Eight contracts with total
purchase of approximately
RMB55,809,000 and
sell USD7,600,000 at
the date of settlement
|
|
From 18 April 2008
to 18 July 2008
|
|
Range from USD1 to
RMB7.2682 and USD1
to RMB7.4847 |
Financial liabilities
|
|
|
|
|
Notional amount |
|
Maturity date |
|
Exchange rate |
Six contracts with total
purchase of USD7,600,000
and sell approximately
RMB55,118,000 at the
date of settlement
|
|
From 18 April 2008
to 18 July 2008
|
|
Range from USD1 to
RMB7.2002 and USD1
to RMB7.3247 |
31 March 2009
Financial assets
|
|
|
|
|
Notional amount |
|
Maturity date |
|
Exchange rate |
Four contracts with total
purchase of USD10,000,000
and sell approximately
RMB65,565,000
at the date of settlement
|
|
From 3 April 2009
to 9 July 2009
|
|
Range from USD1 to
RMB6.5240 and USD1
to RMB6.6212 |
- 28 -
ENSON ASSETS LIMITED
20. DERIVATIVE FINANCIAL INSTRUMENTS continued
31 March 2009 - continued
Financial liabilities
|
|
|
|
|
Notional amount |
|
Maturity date |
|
Exchange rate |
Four contracts with total
purchase of approximately
RMB33,253,000 and
sell USD5,000,000
at the date of settlement
|
|
From 1 April 2009
to 7 July 2009
|
|
Range from USD1 to
RMB6.6307 and USD1
to RMB6.6935 |
31 March 2010
Financial assets
|
|
|
|
|
Notional amount |
|
Maturity date |
|
Exchange rate |
Twenty-six contracts with total
purchase of USD26,000,000
and sell approximately
RMB175,155,000
at the date of settlement
|
|
From 1 April 2010
to 24 February 2011
|
|
Range from USD1 to
RMB6.6224 to USD1
to RMB6.8140 |
Financial liabilities
|
|
|
|
|
Notional amount |
|
Maturity date |
|
Exchange rate |
Twenty-six contracts with total
purchase of approximately
RMB176,559,000 and
sell USD26,000,000
at the date of settlement
|
|
From 1 April 2010
to 22 February 2011
|
|
Range from USD1 to
RMB6.7233 to USD1
to RMB6.8490 |
At 31 March 2008, 2009 and 2010, the fair value of the Groups foreign currency derivative
financial instruments are measured using quoted forward exchange rates and yield curves
derived from quoted interest rates matching maturities of the contracts.
21. SHORT-TERM BANK DEPOSITS AND BANK BALANCES AND CASH
Short-term bank deposits represented time deposits made by the Group which are between seven
days to three months depending on the immediate cash requirement of the Group, and such
deposit carry interest at market rates. Bank balances of the Group earn interest at
floating rates based on the daily bank deposit market rate.
- 29 -
ENSON ASSETS LIMITED
22. TRADE PAYABLES AND ACCRUED CHARGES/BILLS PAYABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Trade payables |
|
|
111,364,231 |
|
|
|
93,714,820 |
|
|
|
132,605,902 |
|
Accrual for social security contribution |
|
|
72,290,000 |
|
|
|
93,724,000 |
|
|
|
116,458,000 |
|
Accrual for long service payment |
|
|
11,758,949 |
|
|
|
19,029,965 |
|
|
|
23,295,171 |
|
Accrual charges |
|
|
50,051,111 |
|
|
|
43,574,895 |
|
|
|
55,560,130 |
|
Receipt in advance |
|
|
13,911,198 |
|
|
|
10,061,081 |
|
|
|
16,051,492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
259,375,489 |
|
|
|
260,104,761 |
|
|
|
343,970,695 |
|
|
|
|
|
|
|
|
|
|
|
The average credit period on purchases of goods is 60 days. The Group has financial risk
management policies in place to ensure that all payables are within the credit time frame.
Bills payable as at 31 March 2008, 2009 and 2010 are aged within 90 days.
23. |
|
AMOUNT DUE TO A DIRECTOR |
The amount due to a director is unsecured, interest free and repayable on demand. |
24. |
|
AMOUNT DUE TO A RELATED COMPANY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Name of the company |
|
|
|
|
|
|
|
|
|
|
|
|
Hangzhou Youcheng Electron Co., Ltd.
|
|
|
|
|
|
|
3,991,423 |
|
|
|
6,119,448 |
|
|
|
|
|
|
|
|
|
|
|
The amount represents purchases made from the above related party and is unsecured and
interest free. A director of GTC and GTY is also director of and has beneficial interests
in this company.
The credit period is 30 days.
25. BANK BORROWINGS
Borrowings comprises:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective interest rate |
|
|
Carrying amount |
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Floating rate borrowings |
|
|
5.06 |
% |
|
|
2.89 |
% |
|
|
2.03 |
% |
|
|
92,042,105 |
|
|
|
24,631,579 |
|
|
|
16,421,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayable on demand |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,042,105 |
|
|
|
24,631,579 |
|
|
|
16,421,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 30 -
ENSON ASSETS LIMITED
25. BANK BORROWINGS continued
The bank borrowings are variable-rate borrowings denominated in Hong Kong dollars which
carry interest at a premium plus Hong Kong Interbank Offered Rate per annum for the years
ended 31 March 2008, 2009 and 2010.
At the end of the reporting period, the Group has the following undrawn borrowing
facilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Floating rate expiring beyond one year |
|
|
63,940,721 |
|
|
|
121,226,438 |
|
|
|
98,659,661 |
|
|
|
|
|
|
|
|
|
|
|
26. SHARE CAPITAL
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
|
|
|
|
of shares |
|
|
Share capital |
|
|
|
2008, 2009 |
|
|
2008, 2009 |
|
|
|
& 2010 |
|
|
& 2010 |
|
|
|
US$ |
|
|
US$ |
|
Ordinary shares of USD1 each |
|
|
|
|
|
|
|
|
Authorised |
|
|
80,000 |
|
|
|
80,000 |
|
|
|
|
|
|
|
|
Issued and fully paid |
|
|
60,225 |
|
|
|
60,225 |
|
|
|
|
|
|
|
|
Shown in the financial statements as |
|
|
|
|
|
HK$ |
469,755 |
|
|
|
|
|
|
|
|
|
27. CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in the Group will be able to continue
as a going concern while maximising the return to shareholders through the optimisation of
the debt and equity balance. The Groups overall strategy remains unchanged throughout the
reported years. The capital structure of the Group consists of cash and cash equivalents
and equity attributable to equity holders of the Company, comprising issued share capital,
reserves and accumulated profits.
The directors of the Company review the capital structure on an annual basis. As part of
this review, the directors consider the cost of capital and the risks associated with each
class of capital. Based on recommendations of the directors, the Group will balance its
overall capital structure through the payment of dividends, new share issues as well as the
issue of new debt.
- 31 -
ENSON ASSETS LIMITED
28. FINANCIAL INSTRUMENTS
28a. Categories of financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Financial assets |
|
|
|
|
|
|
|
|
|
|
|
|
FVTPL derivative financial instruments |
|
|
3,667,863 |
|
|
|
1,529,352 |
|
|
|
1,101,342 |
|
Loans and receivables (including cash and cash equivalents) |
|
|
267,130,743 |
|
|
|
264,576,842 |
|
|
|
481,720,186 |
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
FVTPL derivative financial instruments |
|
|
3,167,855 |
|
|
|
1,074,946 |
|
|
|
633,277 |
|
Amortised cost |
|
|
213,465,615 |
|
|
|
127,911,384 |
|
|
|
174,291,142 |
|
|
|
|
|
|
|
|
|
|
|
28b. Financial risk management objectives and policies
The Groups major financial instruments include trade receivables, other receivables,
loan to a related company, amounts due from related companies, amount due from
holding company, derivative financial instruments, short-term bank deposits, bank
balances and cash, trade payables, bills payable, amount due to a director, amount
due to a related company, and bank borrowings. Details of these financial
instruments are disclosed in respective notes. The risks associated with these
financial instruments and the policies on how to mitigate these risks are set out
below. The management manages and monitors these exposures to ensure appropriate
measures are implemented on a timely and effective manner.
There has been no significant change to the Groups exposure to market risks and
manner in which it mange and measure the risks.
Market risk
Currency risk
The Group has foreign currency sales and purchases and certain bank balances, trade
receivables and trade payables that are denominated in foreign currencies, which
expose the Group to foreign currency risk. During the year 2008, 2009 and 2010,
approximately 2.5%, 2.1% and 0.2% of the Groups sales are denominated in currencies
other than the functional currency of the relevant group entity making the sale,
whilst approximately 78.3%, 86.3% and 81.2% of costs are denominated in currencies
other than the functional currency of the relevant group entity.
- 32 -
ENSON ASSETS LIMITED
28. FINANCIAL INSTRUMENTS continued
28b. Financial risk management objectives and policies continued
Market risk - continued
Currency risk continued
The carrying amounts of the Groups foreign currency denominated monetary assets and
monetary liabilities at the reporting date are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
HK |
|
$ |
5,157,526 |
|
|
|
4,675,311 |
|
|
|
3,167,338 |
|
Japanese Yen (JPY) |
|
|
638,079 |
|
|
|
644,046 |
|
|
|
738,975 |
|
European dollar (EURO) |
|
|
5,832,583 |
|
|
|
4,894,818 |
|
|
|
5,010,224 |
|
RMB |
|
|
|
|
|
|
16,417 |
|
|
|
5,682 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
HK$ |
|
|
(163,105,427 |
) |
|
|
(61,455,747 |
) |
|
|
(69,247,432 |
) |
JPY |
|
|
(40,820 |
) |
|
|
(3,467,870 |
) |
|
|
(6,240,461 |
) |
Euro |
|
|
|
|
|
|
|
|
|
|
(31,449 |
) |
|
|
|
|
|
|
|
|
|
|
HK$ monetary assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Trade and other receivables |
|
|
1,658,880 |
|
|
|
587,520 |
|
|
|
893,963 |
|
Amounts due from related companies |
|
|
1,547,382 |
|
|
|
1,550,631 |
|
|
|
433,315 |
|
Bank balances and cash |
|
|
1,951,264 |
|
|
|
2,537,160 |
|
|
|
1,840,060 |
|
Trade and other payables |
|
|
(61,004,043 |
) |
|
|
(35,862,969 |
) |
|
|
(43,090,104 |
) |
Bills payable |
|
|
(10,059,279 |
) |
|
|
(961,199 |
) |
|
|
(7,931,875 |
) |
Amount due to a director |
|
|
|
|
|
|
|
|
|
|
(1,804,400 |
) |
Bank borrowings |
|
|
(92,042,105 |
) |
|
|
(24,631,579 |
) |
|
|
(16,421,053 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(157,947,901 |
) |
|
|
(56,780,436 |
) |
|
|
(66,080,094 |
) |
|
|
|
|
|
|
|
|
|
|
JPY monetary assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Bank balances and cash |
|
|
638,079 |
|
|
|
644,046 |
|
|
|
737,799 |
|
Trade and other receivables |
|
|
|
|
|
|
|
|
|
|
1,176 |
|
Trade and other payables |
|
|
(40,820 |
) |
|
|
(42,930 |
) |
|
|
|
|
Bills payable |
|
|
|
|
|
|
(3,424,940 |
) |
|
|
(6,240,461 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
597,259 |
|
|
|
(2,823,824 |
) |
|
|
(5,501,486 |
) |
|
|
|
|
|
|
|
|
|
|
- 33 -
ENSON ASSETS LIMITED
28. FINANCIAL INSTRUMENTS continued
28b. Financial risk management objectives and policies continued
Market risk - continued
Currency risk continued
Euro monetary assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Short-term bank deposits |
|
|
5,224,047 |
|
|
|
|
|
|
|
|
|
Bank balances and cash |
|
|
608,536 |
|
|
|
4,894,818 |
|
|
|
5,010,224 |
|
Trade and other payables |
|
|
|
|
|
|
|
|
|
|
(31,449 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
5,832,583 |
|
|
|
4,894,818 |
|
|
|
4,978,775 |
|
|
|
|
|
|
|
|
|
|
|
RMB monetary assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Bank balances and cash |
|
|
|
|
|
|
16,417 |
|
|
|
5,682 |
|
|
|
|
|
|
|
|
|
|
|
The Group currently does not have a foreign currency hedging policy. However, the
management monitors foreign exchange exposure by closely monitoring the movement of
the relevant foreign currency rates and will enter into foreign currency options or
forward contracts, when and where appropriate.
Sensitivity analysis
As HK$ is pegged against the USD under the linked exchange rate system, the Groups
exposure to HK$ exchange rate risk is minimal. The Group is mainly exposed to the
fluctuations in JPY, Euro and RMB against USD.
The following table details the Groups sensitivity to a 5% increase and decrease in
functional currency of the respective group entity against the relevant foreign
currencies. 5% is the sensitivity rate used when reporting foreign currency risk
internally to key management personnel and represents managements assessment of the
reasonably possible change in foreign exchange rates. The sensitivity analysis
includes outstanding foreign currency denominated monetary items and adjusts their
translation at the end of the reporting period for a 5% change in foreign currency
rates at the end of each reporting period. A positive number below indicates an
increase in profit when the USD strengthen 5% against the relevant currencies. For a
5% weakening of the USD against the relevant currencies, there would be an equal and
opposite impact on the post-tax profit.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JPY |
|
|
Euro |
|
|
RMB |
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Profit or loss |
|
|
(24,995 |
) |
|
|
126,369 |
|
|
|
221,984 |
|
|
|
(244,094 |
) |
|
|
(219,043 |
) |
|
|
(200,894 |
) |
|
|
|
|
|
|
(735 |
) |
|
|
(229 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 34 -
ENSON ASSETS LIMITED
28. FINANCIAL INSTRUMENTS continued
28b. Financial risk management objectives and policies continued
Market risk - continued
Currency risk continued
The Group has outstanding forward foreign exchange contracts entered into to buy/sell
a specified notional amount of USD/RMB at a specified exchange rate. If the foreign
exchange rate of the respective forward foreign exchange contracts had been
higher/lower by 2% at the end of each reporting period and all other variables were
held constant, the Groups post-tax profit for the three years ended 31 March 2008,
2009 and 2010 would increase/decrease by approximately HK$15,310, HK$732,693 and
HK$34,211, respectively.
Cash flow interest rate risk
The Group is exposed to cash flow interest rate risk in relation to the variable-rate
loan to a related company, variable-rate bank deposits and bank borrowings (see note
18, 21 and 25 for details).
The Groups exposure to interest rates on financial liabilities are detailed in the
liquidity risk management section of this note. The Groups cash flow interest rate
risk is mainly concentrated on the fluctuation of HIBOR arising from the bank
borrowings.
Sensitivity analysis
The sensitivity analysis below have been determined based on the exposure to interest
rates for loan to a related company and variable-rate bank borrowings at the end of
the reporting period. No sensitivity is presented for variable-rate bank deposits
and bank balances as the impact are insignificant. For variable-rate loan to a
related company and bank borrowings, the analysis is prepared assuming the relevant
amount outstanding at the end of reporting period was outstanding for the whole year.
A 50 basis point increase or decrease is used when reporting interest rate risk to
key management personnel and represents managements assessment of the reasonably
possible change in interest rates.
If interest rates had been 50 basis points higher/lower and all other variables were
held constant, the Groups post-tax profit for the three years ended 31 March 2008,
2009 and 2010 would decrease/increase by approximately HK$385,196, HK$110,226 and
HK$309,664, respectively.
- 35 -
ENSON ASSETS LIMITED
28. FINANCIAL INSTRUMENTS continued
28b. Financial risk management objectives and policies continued
Credit risk
The Groups maximum exposure to credit risk in the event of the counterparties
failure to perform their obligations as at 31 March 2008, 2009 and 2010 in relation
to each class of recognised financial assets is the carrying amount of those assets
as stated in the consolidated statement of financial position. In order to minimise
the credit risk, the management of the Group has delegated a team responsible for
determination of credit limits, credit approvals and other monitoring procedures to
ensure that follow-up action is taken to recover overdue debts. In addition, the
Group reviews the recoverable amount of each individual debt at each of the reporting
period to ensure that adequate impairment losses are made for irrecoverable amounts.
In this regard, the directors of the Company consider that the Groups credit risk is
significantly reduced.
The credit risk for bank deposits and bank balances exposed is considered minimal as
such amounts are placed with banks with good credit ratings.
The Group has concentration of credit risk on the Groups trade receivables as the
Group does not have large numbers of customers. The Group are concentrated in one
industry sectors, namely the sales of remote control units. The outstanding balance
of the five largest customers which are international well known companies and also
engaged in the business of sales of electronic products, represented approximately
61.2%, 88.9% and 83.7% of the trade receivables of the Group as at 31 March 2008,
2009 and 2010, respectively.
In order to minimise the credit risk, management continuously monitors the level of
exposure to ensure that follow-up actions and/or corrective actions are taken
promptly to lower the risk exposure or to recover overdue balances.
Other than concentration of credit risk on liquid funds which are deposited with
several banks with high credit ratings, amounts due from related companies which are
with several of the Groups related companies, and loan to a related company, and
save as disclosed elsewhere in the consolidated financial statements, the Group does
not have any other significant concentration of credit risk.
- 36 -
ENSON ASSETS LIMITED
28. FINANCIAL INSTRUMENTS continued
28b. Financial risk management objectives and policies continued
Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of
cash and cash equivalents deemed adequate by the management to finance the Groups
operations and mitigate the effects of fluctuation in cash flows.
The following table details the Groups remaining contractual maturity for its
financial liabilities based on the agreed repayment terms. The table has been drawn
up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the Group can be required to pay. The table includes both
interest and principal cash flows. To the extent that interest flows are floating
rate, the undiscounted amount is derived from interest rate curve at the end of the
reporting periods.
Liquidity and interest risk tables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
3 months |
|
|
Total |
|
|
|
|
|
|
effective |
|
|
Less than |
|
|
to |
|
|
undiscounted |
|
|
Carrying |
|
|
|
interest rate |
|
|
3 months |
|
|
1 year |
|
|
cash flows |
|
|
amount |
|
|
|
% |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
|
|
|
|
111,364,231 |
|
|
|
|
|
|
|
111,364,231 |
|
|
|
111,364,231 |
|
Bills payable |
|
|
|
|
|
|
10,059,279 |
|
|
|
|
|
|
|
10,059,279 |
|
|
|
10,059,279 |
|
Bank borrowings |
|
|
5.06 |
|
|
|
92,042,105 |
|
|
|
|
|
|
|
92,042,105 |
|
|
|
92,042,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
213,465,615 |
|
|
|
|
|
|
|
213,465,615 |
|
|
|
213,465,615 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives net settlement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
|
|
|
|
|
2,231,387 |
|
|
|
936,468 |
|
|
|
3,167,855 |
|
|
|
3,167,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
3 months |
|
|
Total |
|
|
|
|
|
|
effective |
|
|
Less than |
|
|
to |
|
|
undiscounted |
|
|
Carrying |
|
|
|
interest rate |
|
|
3 months |
|
|
1 year |
|
|
cash flows |
|
|
amount |
|
|
|
% |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade creditors |
|
|
|
|
|
|
89,169,093 |
|
|
|
4,545,727 |
|
|
|
93,714,820 |
|
|
|
93,714,820 |
|
Bills payable |
|
|
|
|
|
|
5,573,562 |
|
|
|
|
|
|
|
5,573,562 |
|
|
|
5,573,562 |
|
Amount due to a related company |
|
|
|
|
|
|
3,991,423 |
|
|
|
|
|
|
|
3,991,423 |
|
|
|
3,991,423 |
|
Bank borrowings |
|
|
2.89 |
|
|
|
24,631,579 |
|
|
|
|
|
|
|
24,631,579 |
|
|
|
24,631,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123,365,657 |
|
|
|
4,545,727 |
|
|
|
127,911,384 |
|
|
|
127,911,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives net settlement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
|
|
|
|
|
715,766 |
|
|
|
359,180 |
|
|
|
1,074,946 |
|
|
|
1,074,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 37 -
ENSON ASSETS LIMITED
28. FINANCIAL INSTRUMENTS continued
28b. Financial risk management objectives and policies continued
Liquidity risk continued
Liquidity and interest risk tables continued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
average |
|
|
|
|
|
3 months |
|
|
Total |
|
|
|
|
|
|
effective |
|
|
Less than |
|
|
to |
|
|
undiscounted |
|
|
Carrying |
|
|
|
interest rate |
|
|
3 months |
|
|
1 year |
|
|
cash flows |
|
|
amount |
|
|
|
% |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
|
|
|
|
126,964,893 |
|
|
|
5,641,009 |
|
|
|
132,605,902 |
|
|
|
132,605,902 |
|
Bills payable |
|
|
|
|
|
|
17,340,339 |
|
|
|
|
|
|
|
17,340,339 |
|
|
|
17,340,339 |
|
Amount due to a director |
|
|
|
|
|
|
1,804,400 |
|
|
|
|
|
|
|
1,804,400 |
|
|
|
1,804,400 |
|
Amount due to a related company |
|
|
|
|
|
|
6,119,448 |
|
|
|
|
|
|
|
6,119,448 |
|
|
|
6,119,448 |
|
Bank borrowings |
|
|
2.03 |
|
|
|
16,421,053 |
|
|
|
|
|
|
|
16,421,053 |
|
|
|
16,421,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,650,133 |
|
|
|
5,641,009 |
|
|
|
174,291,142 |
|
|
|
174,291,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives net settlement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange forward contracts |
|
|
|
|
|
|
126,045 |
|
|
|
507,232 |
|
|
|
633,277 |
|
|
|
633,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28c. Fair value
The fair value of financial assets and financial liabilities are determined as follows:
|
|
the fair value of financial assets and financial liabilities (excluding
derivative instruments) are determined in accordance with generally accepted
pricing models based on discounted cash flow analysis. |
|
|
The fair value of foreign currency forward contracts is estimated using
quoted forward exchange rates and yield curves derived from quoted interest
rates matching maturities of the contracts. |
The directors consider that the carrying amounts of financial assets and financial
liabilities recorded at amortised cost in the consolidated financial statements
approximate to their fair values.
- 38 -
ENSON ASSETS LIMITED
28. FINANCIAL INSTRUMENTS continued
28c. Fair value continued
Fair value measurements recognised in the consolidated statement of financial
position
The following table provides an analysis of financial instruments that are measured
subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on
the degree to which the fair value is observable.
|
|
Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active market for identical assets or liabilities. |
|
|
Level 2 fair value measurements are those derived from inputs other than
quoted prices included within Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices). |
|
|
Level 3 fair value measurements are those derived from valuation techniques
that include inputs for the asset or liability that are not based on observable
market data (unobservable inputs). |
The Groups financial assets at FVTPL and financial liabilities at FVTPL consist of
foreign currency forward contracts and are categorized into Level 2. There has been
no transfer between Level 1 and Level 2 of the financial instruments at FVTPL
throughout the years ended 31 March 2008, 2009 and 2010 and the details are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
|
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Financial assets at FVTPL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts |
|
Level 2 |
|
|
3,667,863 |
|
|
|
1,529,352 |
|
|
|
1,101,342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities at FVTPL |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts |
|
Level 2 |
|
|
3,167,855 |
|
|
|
1,074,946 |
|
|
|
633,277 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 39 -
ENSON ASSETS LIMITED
29. DISPOSAL OF A SUBSIDIARY
In January 2008, the Group disposed of its 100% equity interest in CG Japan Limited to
an independent third party for a consideration of HK$734,000 (equivalent to JPY10,000,000).
|
|
|
|
|
|
|
2008 |
|
|
|
HK$ |
|
NET ASSETS DISPOSED OF |
|
|
|
|
Property, plant and equipment |
|
|
92,991 |
|
Other receivables and prepayments |
|
|
768,317 |
|
Bank balances and cash |
|
|
2,130,864 |
|
Other payables and accruals |
|
|
(1,565,047 |
) |
|
|
|
|
|
|
|
1,427,125 |
|
Release on exchange reserve |
|
|
(247,473 |
) |
Loss on disposal |
|
|
(445,652 |
) |
|
|
|
|
Total consideration |
|
|
734,000 |
|
|
|
|
|
Satisfied by: |
|
|
|
|
Receivables from disposal of a subsidiary |
|
|
734,000 |
|
|
|
|
|
Net cash outflow arising on disposal |
|
|
|
|
Cash consideration |
|
|
|
|
Bank balances and cash disposed of |
|
|
(2,130,864 |
) |
|
|
|
|
|
|
|
(2,130,864 |
) |
|
|
|
|
The subsidiary disposed of during the year ended 31 March 2008 has had no significant impact
to the Groups results and cash flows during that year.
30. CAPITAL COMMITMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Contracted for but not provided in the
consolidated financial statements
in respect of acquisition of property,
plant and equipment |
|
|
10,449,000 |
|
|
|
11,089,491 |
|
|
|
8,172,928 |
|
Authorised but not contracted for
in the consolidated financial statements
in respect of acquisition of
property, plant and equipment |
|
|
11,852,129 |
|
|
|
8,901,814 |
|
|
|
19,926,771 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,301,129 |
|
|
|
19,991,305 |
|
|
|
28,099,699 |
|
|
|
|
|
|
|
|
|
|
|
- 40 -
ENSON ASSETS LIMITED
31. OPERATING LEASE COMMITMENTS
At the end of the reporting period, the Group had commitments for future minimum lease
payments under non-cancellable operating leases which fall due as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Within one year |
|
|
710,543 |
|
|
|
621,642 |
|
|
|
621,642 |
|
|
|
|
|
|
|
|
|
|
|
Operating lease payments represented rentals payable by the Group for certain of its office
properties. Leases negotiated for one to two years and rental was fixed during the lease
term.
32. PROVIDENT FUND SCHEMES
The Group has retirement schemes covering a substantial portion of its employees in Hong
Kong. The principal schemes are defined contribution schemes. The assets of these schemes
are held separately from those of the Group in funds under the control of independent
trustees.
With effect from 1 December 2000, the Group joined a Mandatory Provident Fund Scheme (MPF
Scheme) for all its new employees in Hong Kong employed therefrom or existing employees
wishing to join the MPF Scheme. The MPF Scheme is registered with the Mandatory Provident
Fund Scheme Authority under the Mandatory Provident Fund Schemes Ordinance. The assets of
the MPF Scheme are held separately from those of the Group in funds under the control of an
independent trustee. Under the rules of the MPF Scheme, the employer and its employees are
required to make contributions to the MPF Scheme at 5% of relevant payroll cost or at
maximum HK$1,000. The only obligation of the Group in respect of MPF Scheme is to make the
required contributions under the MPF Scheme.
The employees of the Groups subsidiaries in the PRC participated in the state-managed
retirement benefit scheme operated by the government of the PRC. The subsidiaries are
required to contribute certain percentage of their payroll costs to the retirement benefit
scheme to fund the benefits. The obligation of the Group with respect to the retirement
benefit scheme is to make the specified contributions.
For the year ended 31 March 2008, 2009 and 2010, the amounts charged to profit or loss
represent contributions paid or payable to schemes by the Group of approximately
HK$17,712,000, HK$14,913,000 and HK$16,473,000, respectively.
At 31 March 2008, 2009 and 2010, the Group does not have any forfeited contributions, which
arose upon employees leaving the retirement benefit schemes and which are available to
reduce the contributions payable in future years.
- 41 -
ENSON ASSETS LIMITED
33. RELATED PARTY TRANSACTIONS
Same as disclosed elsewhere and apart from details of the balances with related parties
disclosed in the consolidated statement of financial position on page 3 and in notes 18, 19,
23 and 24, the Group also entered into the following significant transactions with related
companies during the years ended 31 March 2008, 2009 and 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of related company |
|
Note |
|
Nature of transactions |
|
2008 |
|
2009 |
|
2010 |
|
|
|
|
|
|
HK$ |
|
HK$ |
|
HK$ |
Hangzhou Youcheng Electron
Co. Ltd.
|
|
(i)
|
|
Purchases
|
|
|
|
|
|
|
12,659,389 |
|
|
|
41,057,679 |
|
Gemstar Manufacture Holding
|
|
(i)
|
|
Administration income
|
|
|
|
|
|
|
|
|
|
|
8,236,800 |
|
Limited and its subsidiaries
|
|
|
|
Service income
|
|
|
|
|
|
|
|
|
|
|
1,287,000 |
|
New Reward Limited
|
|
(i)
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
408,694 |
|
Guangzhou Newshengtong
Technology Co., Ltd.
|
|
(i)
|
|
Software maintenance
expenses
|
|
|
6,256 |
|
|
|
6,789 |
|
|
|
6,812 |
|
|
|
(i)
|
|
Purchase of software
|
|
|
46,924 |
|
|
|
|
|
|
|
|
|
|
|
|
Note: |
|
(i) |
|
Certain directors of the Company are also directors of and have beneficial
interests in these companies. |
At 31 March 2008, 2009 and 2010, a director of the Company has provided personal guarantee of HK$109,500,000 to banks in
respect of general facilities granted to a subsidiary. Such personal guarantee has been reduced to approximately
HK$107,000,000 subsequent to 31 March 2010.
Amount due from holding company is unsecured, interest free and repayable on demand.
Compensation of key management personnel
The remuneration of key management members of the Group during the year was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
2009 |
|
|
2010 |
|
|
|
HK$ |
|
|
HK$ |
|
|
HK$ |
|
Short-term benefits |
|
|
3,509,000 |
|
|
|
4,197,000 |
|
|
|
7,296,000 |
|
|
|
|
|
|
|
|
|
|
|
The remuneration of executives is determined by the directors of the Company having regard
to the performance of individuals and market trends.
- 42 -
ENSON ASSETS LIMITED
34. PARTICULARS OF PRINCIPAL SUBSIDIARIES OF THE COMPANY
Particulars of the Companys subsidiaries as at 31 March 2008, 2009 and 2010 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Place |
|
Proportion of nominal |
|
|
|
|
and date of |
|
value of issued capital/ |
|
|
|
|
incorporation/ |
|
registered capital held |
|
Principal |
Name of subsidiary |
|
establishment |
|
by the Company |
|
registration activities |
|
|
|
|
Directly |
|
Indirectly |
|
|
CG Asia Limited
|
|
British Virgin
Islands (BVI)
25 June 2004
|
|
|
|
|
|
|
100 |
% |
|
Holding of patent |
CG Group Limited
|
|
BVI
25 June 2004
|
|
|
100 |
% |
|
|
|
|
|
Investment holding |
C.G. Development
Limited
|
|
Hong Kong
7 April 1989
|
|
|
100 |
% |
|
|
|
|
|
Investment holding
and trading of
electronic products |
C.G. Technology Limited
|
|
Hong Kong
28 April 1989
|
|
|
100 |
% |
|
|
|
|
|
Provision of engineering
consultancy service |
C. G. Timepiece Limited
|
|
Hong Kong
2 June 2004
|
|
|
|
|
|
|
100 |
% |
|
Trading of electronic
products |
Gemstar Polyfirst Limited
|
|
Hong Kong
3 November 1989
|
|
|
100 |
% |
|
|
|
|
|
Holding of club
debenture |
GTC
|
|
PRC
15 August 1992
|
|
|
|
|
|
|
100 |
% |
|
Manufacturing and
trading of
electronic products |
GTY
|
|
PRC
16 December 2004
|
|
|
|
|
|
|
100 |
% |
|
Manufacturing and
trading of
electronic products |
35. EVENTS AFTER THE REPORTING PERIOD
The consolidated financial statements were approved and authorised for issued by the Board
of Directors on 18 January 2011. The following events occurred subsequent to 31 March 2010:
On 3 November 2010, CG International entered into an agreement with UEI Hong Kong Private
Limited, a wholly owned subsidiary of UEI, to dispose of its entire 100% interest in the
Company to UEI Hong Kong Private Limited, for a total consideration of approximately
US$125.8 million, to be satisfied in cash and UEIs common stock. The transaction was
consummated as of 3 November 2010.
- 43 -
exv99w2
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
On November 3, 2010, the Companys subsidiary, UEI Hong Kong Private Limited, entered into an
agreement to acquire all of the issued shares in the capital of Enson Assets Limited (Enson), a
limited liability company organized under the Laws of the British Virgin Islands, for total
consideration of approximately $125.8 million, in cash and Universal Electronics, Inc. (UEI)
common stock (the Acquisition). The Acquisition was consummated pursuant to a Stock Purchase
Agreement, dated as of November 3, 2010, among Universal Electronics Inc., UEI Hong Kong Private
Limited and CG International Holdings Limited, a closely-held exempted company incorporated in the
Cayman Islands.
The following unaudited pro forma combined condensed balance sheet as of September 30, 2010 and the
unaudited pro forma combined condensed income statement for the year ended December 31, 2009 and
the nine months ended September 30, 2010 are based on the historical financial statements of UEI
and Enson, after adjusting for the effects of the Acquisition, as well as the assumptions and
adjustments described in the accompanying notes to the unaudited pro forma combined condensed
financial statements. Certain reclassifications were made to the Enson consolidated financial
statements to conform them to UEIs presentation. In addition, Ensons consolidated financial
statements, from which these pro forma financial statements are derived, were prepared in
accordance with International Financial Reporting Standards (IFRS), as issued by the
International Accounting Standards Board, which did not significantly differ from U.S. GAAP.
The unaudited pro forma combined condensed balance sheet combines UEIs historical unaudited
consolidated balance sheet as of September 30, 2010 with Ensons historical unaudited consolidated
balance sheet as of September 30, 2010. UEI and Enson had different fiscal year ends. Accordingly,
the unaudited pro forma combined condensed income statement for the year ended December 31, 2009
combines UEIs historical audited consolidated income statement for the year ended December 31,
2009 with Ensons historical audited consolidated income statement for the year ended March 31,
2010. The unaudited pro forma combined condensed income statement for the nine months ended
September 30, 2010 combines UEIs historical unaudited consolidated income statement for the nine
months ended September 30, 2010 with Ensons historical unaudited consolidated income statement
based on a consecutive nine month period ended September 30, 2010.
The unaudited combined condensed pro forma balance sheet as of September 30, 2010 is presented as
if the Acquisition and the related financing occurred on September 30, 2010. The unaudited pro
forma combined condensed income statement for the year ended December 31, 2009 and the unaudited
pro forma combined condensed income statement for the nine months ended September 30, 2010 are
presented as if the Acquisition and the financing had taken place on January 1, 2009 and January 1,
2010, respectively.
The Acquisition has been accounted for under the acquisition method of accounting. Under the
acquisition method of accounting, we are required to measure the identifiable assets acquired and
liabilities assumed at their acquisition date fair values, with limited exceptions. Goodwill is
recognized as of the acquisition date, and is the excess of the consideration transferred and the
net of the acquisition date amounts of identifiable assets acquired and liabilities assumed.
The unaudited pro forma combined condensed financial statements have been prepared for illustrative
purposes only and are not necessarily indicative of the consolidated financial position or income
statement in future periods or the results that actually would have been realized had UEI and Enson
been a combined company during the respective periods presented. The unaudited pro forma combined
condensed financial statements, including the notes thereto, should be read in conjunction with
UEIs historical consolidated financial statements included in its 2009 annual report on Form 10-K
filed on March 15, 2010, Current Report on Form 8-K filed on November 4, 2010 and in its Form 10-Q
for the nine months ended September 30, 2010 filed on November 9, 2010, as well as Ensons
historical consolidated financial statements included as Exhibit 99.1 in this Current Report on
Form 8-K/A.
1
UNIVERSAL ELECTRONICS INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 2010
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enson |
|
|
UEI |
|
|
Proforma |
|
|
|
|
Pro Forma |
|
|
|
(U.S. GAAP) |
|
|
(U.S. GAAP) |
|
|
Adjustments |
|
|
Note 2 |
|
Combined |
|
|
|
(HK$) * |
|
|
(US$) |
|
|
(US$) |
|
|
(US$) |
|
|
|
|
(US$) |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
185,573 |
|
|
$ |
23,939 |
|
|
$ |
23,447 |
|
|
$ |
536 |
|
|
(a) |
|
$ |
47,922 |
|
Term deposit |
|
|
|
|
|
|
|
|
|
|
49,536 |
|
|
|
(49,536 |
) |
|
(a) |
|
|
|
|
Accounts receivable, net |
|
|
320,944 |
|
|
|
41,402 |
|
|
|
57,990 |
|
|
|
(9,104 |
) |
|
(b) |
|
|
90,288 |
|
Inventories, net |
|
|
181,275 |
|
|
|
23,384 |
|
|
|
44,615 |
|
|
|
(528 |
) |
|
(b) (c) |
|
|
67,471 |
|
Prepaid expenses and other
current assets |
|
|
4,163 |
|
|
|
537 |
|
|
|
1,594 |
|
|
|
60 |
|
|
(c) |
|
|
2,191 |
|
Income tax receivable |
|
|
|
|
|
|
|
|
|
|
480 |
|
|
|
|
|
|
|
|
|
480 |
|
Deferred income taxes |
|
|
|
|
|
|
|
|
|
|
2,938 |
|
|
|
|
|
|
|
|
|
2,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
691,955 |
|
|
|
89,262 |
|
|
|
180,600 |
|
|
|
(58,572 |
) |
|
|
|
|
211,290 |
|
Property, plant and equipment, net |
|
|
348,573 |
|
|
|
44,966 |
|
|
|
10,913 |
|
|
|
20,484 |
|
|
(c) |
|
|
76,363 |
|
Goodwill |
|
|
|
|
|
|
|
|
|
|
13,609 |
|
|
|
16,466 |
|
|
(d) |
|
|
30,075 |
|
Intangible assets, net |
|
|
|
|
|
|
|
|
|
|
11,323 |
|
|
|
25,700 |
|
|
(e) |
|
|
37,023 |
|
Other assets |
|
|
4,796 |
|
|
|
619 |
|
|
|
757 |
|
|
|
2,662 |
|
|
(c) |
|
|
4,038 |
|
Deferred income taxes |
|
|
21,847 |
|
|
|
2,818 |
|
|
|
7,853 |
|
|
|
|
|
|
|
|
|
10,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
1,067,171 |
|
|
$ |
137,665 |
|
|
$ |
225,055 |
|
|
$ |
6,740 |
|
|
|
|
$ |
369,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
176,352 |
|
|
$ |
22,750 |
|
|
$ |
30,969 |
|
|
$ |
(9,104 |
) |
|
(b) |
|
$ |
44,615 |
|
Accrued sales discounts,
rebates and royalties |
|
|
|
|
|
|
|
|
|
|
6,692 |
|
|
|
|
|
|
|
|
|
6,692 |
|
Accrued income taxes |
|
|
44,499 |
|
|
|
5,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
5,740 |
|
Accrued compensation |
|
|
161,134 |
|
|
|
20,786 |
|
|
|
5,650 |
|
|
|
|
|
|
|
|
|
26,436 |
|
Other accrued expenses |
|
|
53,146 |
|
|
|
6,856 |
|
|
|
6,088 |
|
|
|
5,874 |
|
|
(f) |
|
|
18,818 |
|
Notes payable |
|
|
33,845 |
|
|
|
4,366 |
|
|
|
|
|
|
|
41,000 |
|
|
(g) |
|
|
45,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
468,976 |
|
|
|
60,498 |
|
|
|
49,399 |
|
|
|
37,770 |
|
|
|
|
|
147,667 |
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
|
14,687 |
|
|
|
1,894 |
|
|
|
159 |
|
|
|
9,965 |
|
|
(c) |
|
|
12,018 |
|
Income tax payable |
|
|
|
|
|
|
|
|
|
|
1,348 |
|
|
|
|
|
|
|
|
|
1,348 |
|
Notes payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other long-term liabilities |
|
|
|
|
|
|
|
|
|
|
78 |
|
|
|
|
|
|
|
|
|
78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
483,663 |
|
|
|
62,392 |
|
|
|
50,984 |
|
|
|
47,735 |
|
|
|
|
|
161,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
|
|
|
|
|
|
|
|
193 |
|
|
|
15 |
|
|
(h) |
|
|
208 |
|
Paid-in capital |
|
|
82,217 |
|
|
|
10,606 |
|
|
|
133,078 |
|
|
|
20,142 |
|
|
(i) |
|
|
163,826 |
|
Accumulated other comprehensive
(loss) income |
|
|
(528 |
) |
|
|
(68 |
) |
|
|
(168 |
) |
|
|
68 |
|
|
(j) |
|
|
(168 |
) |
Retained earnings |
|
|
501,819 |
|
|
|
64,735 |
|
|
|
130,304 |
|
|
|
(61,220 |
) |
|
(c) (j) |
|
|
133,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
583,508 |
|
|
|
75,273 |
|
|
|
263,407 |
|
|
|
(40,995 |
) |
|
|
|
|
297,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less cost of common stock in
treasury |
|
|
|
|
|
|
|
|
|
|
(89,336 |
) |
|
|
|
|
|
|
|
|
(89,336 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
583,508 |
|
|
|
75,273 |
|
|
|
174,071 |
|
|
|
(40,995 |
) |
|
|
|
|
208,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders equity |
|
$ |
1,067,171 |
|
|
$ |
137,665 |
|
|
$ |
225,055 |
|
|
$ |
6,740 |
|
|
|
|
$ |
369,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
The Enson amounts included in the pro forma combined condensed balance sheet were translated into
U.S. dollars using an exchange rate of 0.129 U.S. dollars per Hong Kong dollar, which was the
representative exchange rate on September 30, 2010. |
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
2
PRO FORMA COMBINED CONDENSED INCOME STATEMENT
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enson |
|
|
UEI |
|
|
|
|
|
|
|
|
|
|
|
(U.S. GAAP) |
|
|
(U.S. GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ended |
|
|
|
|
|
|
|
|
|
|
|
For the Fiscal Year Ended |
|
|
December 31, |
|
|
Proforma |
|
|
|
|
Pro Forma |
|
|
|
March 31, 2010 |
|
|
2009 |
|
|
Adjustments |
|
|
Note 2 |
|
Combined |
|
|
|
(HK$) * |
|
|
(US$) |
|
|
(US$) |
|
|
(US$) |
|
|
|
|
(US$) |
|
Net sales |
|
$ |
1,164,233 |
|
|
$ |
150,186 |
|
|
$ |
317,550 |
|
|
$ |
(45,311 |
) |
|
(b) |
|
$ |
422,425 |
|
Cost of sales |
|
|
899,188 |
|
|
|
115,995 |
|
|
|
215,938 |
|
|
|
(42,067 |
) |
|
(b) (k) |
|
|
289,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
265,045 |
|
|
|
34,191 |
|
|
|
101,612 |
|
|
|
(3,244 |
) |
|
|
|
|
132,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
16,363 |
|
|
|
2,111 |
|
|
|
8,691 |
|
|
|
|
|
|
|
|
|
10,802 |
|
Selling, general and
administrative expenses |
|
|
86,068 |
|
|
|
11,103 |
|
|
|
70,974 |
|
|
|
2,815 |
|
|
(l) |
|
|
84,892 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
162,614 |
|
|
|
20,977 |
|
|
|
21,947 |
|
|
|
(6,059 |
) |
|
|
|
|
36,865 |
|
Interest income(expense), net |
|
|
412 |
|
|
|
53 |
|
|
|
471 |
|
|
|
(559 |
) |
|
(m) |
|
|
(35 |
) |
Other income (expense), net |
|
|
26,705 |
|
|
|
3,445 |
|
|
|
(241 |
) |
|
|
|
|
|
|
|
|
3,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for
income taxes |
|
|
189,731 |
|
|
|
24,475 |
|
|
|
22,177 |
|
|
|
(6,618 |
) |
|
|
|
|
40,034 |
|
Provision for income taxes |
|
|
(36,994 |
) |
|
|
(4,772 |
) |
|
|
(7,502 |
) |
|
|
(328 |
) |
|
(n) |
|
|
(12,602 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
152,737 |
|
|
$ |
19,703 |
|
|
$ |
14,675 |
|
|
$ |
(6,946 |
) |
|
|
|
$ |
27,432 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
$ |
1.07 |
|
|
|
|
|
|
|
|
$ |
1.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
$ |
1.05 |
|
|
|
|
|
|
|
|
$ |
1.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing
earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
13,667 |
|
|
|
|
|
|
|
|
|
15,127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
13,971 |
|
|
|
|
|
|
|
|
|
15,431 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
The Enson amounts included in the pro forma combined condensed income statement were translated
into U.S. dollars using an exchange rate of 0.129 U.S. dollars per Hong Kong dollar, which was
the average of the representative exchange rates for twelve months ended March 31, 2010. |
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
3
PRO FORMA COMBINED CONDENSED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enson |
|
|
UEI |
|
|
Proforma |
|
|
|
|
Pro Forma |
|
|
|
(U.S. GAAP) |
|
|
(U.S. GAAP) |
|
|
Adjustments |
|
|
Notes |
|
Combined |
|
|
|
(HK$) * |
|
|
(US$) |
|
|
(US$) |
|
|
(US$) |
|
|
|
|
(US$) |
|
Net sales |
|
$ |
1,082,669 |
|
|
$ |
139,664 |
|
|
$ |
229,275 |
|
|
$ |
(29,874 |
) |
|
(b) |
|
$ |
339,065 |
|
Cost of sales |
|
|
824,471 |
|
|
|
106,357 |
|
|
|
154,068 |
|
|
|
(27,383 |
) |
|
(b) (k) |
|
|
233,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
258,198 |
|
|
|
33,307 |
|
|
|
75,207 |
|
|
|
(2,491 |
) |
|
|
|
|
106,023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
16,455 |
|
|
|
2,123 |
|
|
|
7,944 |
|
|
|
|
|
|
|
|
|
10,067 |
|
Selling, general and
administrative expenses |
|
|
67,471 |
|
|
|
8,704 |
|
|
|
50,694 |
|
|
|
2,120 |
|
|
(l) |
|
|
61,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
174,272 |
|
|
|
22,480 |
|
|
|
16,569 |
|
|
|
(4,611 |
) |
|
|
|
|
34,438 |
|
Interest income (expense), net |
|
|
892 |
|
|
|
115 |
|
|
|
99 |
|
|
|
(439 |
) |
|
(m) |
|
|
(225 |
) |
Other income, net |
|
|
7,852 |
|
|
|
1,013 |
|
|
|
62 |
|
|
|
|
|
|
|
|
|
1,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before provision for
income taxes |
|
|
183,016 |
|
|
|
23,608 |
|
|
|
16,730 |
|
|
|
(5,050 |
) |
|
|
|
|
35,288 |
|
Provision for income taxes |
|
|
(34,144 |
) |
|
|
(4,405 |
) |
|
|
(5,415 |
) |
|
|
(166 |
) |
|
(n) |
|
|
(9,986 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
148,872 |
|
|
$ |
19,203 |
|
|
$ |
11,315 |
|
|
$ |
(5,216 |
) |
|
|
|
$ |
25,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
$ |
0.83 |
|
|
|
|
|
|
|
|
$ |
1.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
$ |
0.81 |
|
|
|
|
|
|
|
|
$ |
1.65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing
earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
13,572 |
|
|
|
|
|
|
|
|
|
15,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
|
|
13,897 |
|
|
|
|
|
|
|
|
|
15,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
|
The Enson amounts included in the pro forma combined condensed income statement were translated
into U.S. dollars using an exchange rate of 0.129 U.S. dollar per Hong Kong dollar, which was
the average of the representative exchange rates for nine months ended September 30, 2010. |
See Notes to Unaudited Pro Forma Combined Condensed Financial Statements.
4
Note 1: Preliminary Purchase Price Allocation
The unaudited pro forma combined condensed consolidated financial statements have been prepared to
demonstrate the financial effect of the Acquisition of Enson, which was accounted for under the
acquisition method of accounting. The aggregate amount of consideration paid by UEI to acquire
Enson was $125.8 million in cash and stock. The consideration transferred consisted of $95.0
million in cash and 1,460,000 of newly issued shares of UEI common stock. A total of $5.0 million
of the purchase price was held back at the closing to provide for any additional payments required
by Ensons former owners as a result of Ensons failure to meet both a net asset target and an
earnings target.
Under the acquisition method of accounting, the total estimated purchase price was allocated to the
Enson net tangible and intangible assets acquired and liabilities assumed based on their estimated
fair values as of November 4, 2010, the Acquisition date. Based on managements preliminary
valuation of the fair value of tangible and intangible assets acquired and liabilities assumed,
which are based on estimates and assumptions that are subject to change, the preliminary estimated
purchase price is allocated as follows (in thousands):
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
Average |
|
Preliminary |
|
|
|
Estimated Lives |
|
Fair Value |
|
|
|
|
Cash &
cash equivalents |
|
|
|
$ |
20,877 |
|
Inventories |
|
|
|
|
23,600 |
|
Accounts receivable |
|
|
|
|
36,071 |
|
Prepaid
expenses and
other current assets |
|
|
|
|
2,016 |
|
Property, plant and equipment |
|
23 years |
|
|
68,700 |
|
Deferred
income taxes |
|
|
|
|
2,980 |
|
Other assets |
|
|
|
|
1,426 |
|
Interest bearing liabilities |
|
|
|
|
(2,780 |
) |
Non-interest bearing liabilities |
|
|
|
|
(69,294 |
) |
|
|
|
|
|
|
Net tangible assets acquired |
|
|
|
|
83,596 |
|
Customer relationships |
|
10 years |
|
|
23,300 |
|
Trademark and trade name |
|
10 years |
|
|
2,400 |
|
Goodwill |
|
|
|
|
16,466 |
|
|
|
|
|
|
|
Total estimated purchase price |
|
|
|
$ |
125,762 |
|
|
|
|
|
|
|
Prior to the end of the measurement period for finalizing the purchase price allocation, if
information becomes available which would indicate adjustments are required to the purchase price
allocation, such adjustments will be included in the purchase price allocation retrospectively.
Intangible Assets Subject to Amortization
Of the total estimated purchase price, $83.6 million has been allocated to net tangible assets
acquired, and $25.7 million has been allocated to intangible assets acquired. The
intangible assets consist of $23.3 million assigned to customer relationships and
$2.4 million assigned to trademark and trade name.
The value assigned to Ensons customer relationships intangible asset was
determined utilizing the income approach, discounting the estimated cash flows associated with the
existing customers as of the Enson Acquisition date taking into consideration estimated attrition
of this existing customer base. UEI expects to amortize the value of Ensons customer relationships
on a straight-line basis over an estimated life of ten years. Amortization of customer
relationships is not deductible for tax purposes.
5
The value assigned to Ensons trademark and trade name intangible asset was
determined utilizing the income approach, discounting the future estimated cash flows associated
with the trade mark and trade name. UEI expects to amortize the value of Ensons trademark and
trade name on a straight-line basis over an estimated life of ten years. Amortization of trademark
and trade name is not deductible for tax purposes.
Goodwill
Goodwill represents the excess of the cost (purchase price) over the estimated fair value of
identifiable tangible and intangible assets acquired. Goodwill from this transaction of $16.5
million will not be amortized, but will be analyzed for impairment at least on an annual basis in
accordance with U.S. GAAP. We review our goodwill for impairment annually as of December 31 and
whenever events or changes in circumstances indicate that an impairment loss may have occurred. Of
the total goodwill recorded, none is expected to be deductible for tax purposes.
The goodwill recognized is attributable to the following value we received from the Acquisition:
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Enson should increase the Companys market position in the strategically important
consumer electronics market with its historic strength with leading Japanese customers. The
Company has not historically been well positioned in this market. |
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Enson currently produces approximately one-third of the Companys volume,
therefore, the Company may decrease third party supplier purchases. In addition, Enson has
available manufacturing capacity, which may provide it the ability to increase utilization of
its existing factories. |
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The Company may utilize Ensons in-place management and personnel to assist in
implementing its plan to place more operations, logistics, quality, program management,
engineering, sales, and marketing personnel in the Asia region. |
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Ensons full line of remotes, from dedicated to higher-end universal, should
assist the Company to further penetrate the growing Asian and Latin American subscription
broadcasting markets. The lower subscriber revenue in these markets can cause them to begin
with lower-cost dedicated remotes and to later transition to universal remote controls. |
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Acquiring Enson should allow the Company to gain purchasing economies. |
Acquisition Costs
We recognized $0.7 million of total acquisition costs related to the Enson transaction in selling,
general and administrative expenses during the year ended December 31, 2010. The acquisition costs
consisted primarily of legal and investment banking services. Such acquisition costs have not been
included in the pro forma combined income statements.
Note 2: Pro Forma Adjustments
Pro forma adjustments are made primarily to reflect the estimated purchase price of the
Acquisition, to adjust Ensons tangible assets, intangible assets and liabilities to a preliminary
estimate of the fair values of those assets and liabilities, and to reflect the amortization
expense related to the intangible assets.
The specific pro forma adjustments included in the unaudited pro forma financial statements are as
follows:
a) |
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Prior to the acquisition we had a $49.5 million term deposit at Wells Fargo Bank. We elected
to liquidate this term deposit account to assist us with the funding of the acquisition. This
adjustment is to reflect the liquidation of the term deposit and the payment of $49.0 million
in cash towards the purchase consideration. |
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b) |
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To eliminate intercompany transactions and balances between Enson and UEI. |
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c) |
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To reflect the fair value of assets acquired and liabilities assumed as if the acquisition
date was September 30, 2010. The adjustment is equal to the difference between the fair value
identified in the valuation (see Note 1) and the net book value at September 30, 2010. |
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d) |
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To recognize goodwill of $16.5 million related to the Acquisition. |
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e) |
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To reflect the fair value of the customer relationships estimated as $23.3 million and the
fair value of the trademark and trade name estimated as $2.4 million. |
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f) |
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This adjustment reflects the $5.0 million of the purchase price which was held back at the
closing, the accrual of transaction costs and costs associated with the
Acquisition of $0.6 million, and the current portion of the
deferred tax liability established as a result of the purchase price
accounting. |
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g) |
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This adjustment adds the $6.0 million withdrawn from our Credit Facility and the $35 million
Term Loan balances incurred to fund a portion of the purchase consideration. Related to this
acquisition, UEI amended and restated its existing credit agreement with U.S. Bank. The
amendments added a new $35 million secured Term Loan for the purpose of financing a portion of
the Acquisition. In addition, UEIs existing $15 million unsecured Credit Facility was
increased to $20 million and the expiration date was extended from October 31, 2011 to
November 1, 2012. Under the Term Loan, UEI may elect to pay interest based on the banks prime
rate or LIBOR plus a fixed margin of 1.5%. The Term Loan maturity is November 1, 2011. |
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h) |
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To adjust the common stock balance for the 1,460,000 shares of UEI common stock issued in
connection with the Acquisition. Such shares were valued based on the average of the high and
low trades of UEI common stock on November 4, 2010. |
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i) |
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To eliminate Ensons paid-in capital of
$10.6 million and to reflect the issuance of 1,460,000 shares
of common stock valued at $30.7 million in connection with the
Acquisition. |
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j) |
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To eliminate Ensons other comprehensive income and retained earnings. |
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k) |
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To reflect the depreciation effects caused by the purchase accounting fair value adjustments
to property, plant and equipment, net, which amounted to $0.9 million
and $0.7 million for the twelve months ended December 31, 2009 and
nine months ended September 30, 2010, respectively. In addition, to reflect the cost of goods sold effect
of the write-up of inventories, net to fair value of $1.6 million as
a result of the purchase accounting for the twelve months ended
December 31, 2009 and the nine months ended September 30, 2010. |
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l) |
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To reflect the amortization of intangible assets acquired of $1.9 million and $2.6 million
for the nine months ended September 30, 2010 and the twelve months ended December 31, 2009,
respectively. To reflect the depreciation effects caused by the purchase accounting fair value
adjustments to property, plant and equipment, net. |
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m) |
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To record the interest expense related to the US Bank Term Loan and secured Credit Facility
which was obtained for the purpose of funding the Acquisition. This interest expense
adjustment for the Term Loan was calculated assuming the minimum required principle payments
were made in accordance with the agreement and utilizing the interest rate in effect at the
Acquisition date (1.8%). The balance on the secured Credit Facility was outstanding for 37
days, as the balance was paid in full on December 10, 2010. The interest expense adjustment
for the secured Credit Facility was the actual interest expense incurred. |
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n) |
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To reflect the effect of the pro forma income statement adjustments on the provision for
income taxes. The recognized intangible assets are not expected to be deductible for tax
purposes; however we have included some tax effects with this adjustment for the amortization
of the deferred tax liability associated with the acquisition. |
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The unaudited pro forma combined condensed consolidated financial statements do not include
adjustments for liabilities related to business integration activities related to the Acquisition,
as management is in the process of assessing what, if any, future actions are necessary. However,
liabilities ultimately may be recorded for costs
associated with business integration activities related to the Acquisition in our
consolidated financial statements.
UEI has not identified any material pre-Acquisition contingencies where the related asset,
liability or impairment is probable and the amount of the asset, liability or impairment can be
reasonably estimated.
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