3. SINTESIS
3.1. Programa de Espacios y Necesidades
On the Adoption Date, the Company adopted the Share Purchase Scheme, which is a share incentive award scheme for the purpose of incentivising employees and attracting suitable personnel for the continuous development of the Group. Eligible participants of the Share Purchase Scheme include Directors, officers and employees of any member of the Group as the Remuneration Committee may determine or approve. The Awarded Shares will be the existing shares, which will be purchased on the Stock Exchange by the independent trustee with funds provided by the Company, and will be awarded in such manner as the Remuneration Committee may determine or approve. The maximum number of shares that can be held by the trustee under the Share Purchase Scheme is limited to 3% of the issued share capital of the Company from time to time (excluding shares which have already been transferred to employees on vesting). The Share Purchase Scheme shall be valid and effective for a term of 20 years from the Adoption Date. The Awarded Shares will be granted to the eligible
participants subject to the applicable conditions and vesting period as determined by the Remuneration Committee.
On 26 March 2013, the Company further adopted an Addendum to the Share Purchase Scheme for the French Subplan. The Awarded Shares will be granted to the eligible French employees pursuant to the Share Purchase Scheme and the French Subplan. The vesting period applicable under the French Subplan shall not be less than 2 years following the date of the award and a further 2 years sales restriction period as calculated from the date of the Awarded Shares being transferred to the eligible French employees.
During the year ended 31 March 2013, 79,400 shares (2012: 244,000 shares) were acquired on the Stock Exchange pursuant to the Share Purchase Scheme. The total amount paid to acquire the shares during the financial year was US$0.9 million (2012: US$2.7 million).
16 Share Capital, Share Options and Share Purchase Scheme
(Continued)(b) Share Options
(Continued)Share option expenses charged to the consolidated income statement are determined using the Black-Scholes option pricing model based on the following assumptions:
Date of grant
17 April 2008 17 April 2008 9 April 2010
(Note 1) (Note 1) (Note 2)
Fair value of each share option as of the date of grant HK$5.76 HK$5.95 HK$22.12 Closing price at the date of grant HK$40.1 HK$40.1 HK$85.1 Exercise price HK$41.07 HK$41.07 HK$85.35
Expected volatility 43.33% 43.33% 54.24%
Annual risk-free interest rate 1.56% 1.88% 0.99% Expected average life of options 2.5 years 3.5 years 2.5 years Expected dividend yield (Note 3) 10.3% 10.3% 5.22% Exercisable period 23 April 2010 to
22 April 2012 23 April 2011 to 22 April 2013 12 April 2012 to 3 May 2014
Notes:
(1) The volatility measured at the standard deviation of expected share price returns is based on statistical analysis of daily share prices over the two years immediately preceding the grant date.
(2) The volatility measured at the standard deviation of expected share price returns is based on statistical analysis of daily share prices over the three years immediately preceding the grant date.
(3) Expected dividend yield is based on historical dividends over one year prior to the grant date. (4) Changes in the subjective input assumptions could significantly affect the fair value estimate.
64 VTech Holdings LtdAnnual Report 2013
Notes to the Financial Statements
16 Share Capital, Share Options and Share
Purchase Scheme
(Continued)(d) Capital Management
The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, by pricing products and services commensurately with the level of risk and by securing access to finance at a reasonable cost.
The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher shareholder returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.
17 Reserves
(a) The Group
Details of the movements in reserves of the Group during the years ended 31 March 2012 and 31 March 2013 are set out in the consolidated statement of changes in equity.
(b) The Company
Shares held for Share
Share Share purchase Exchange Capital Revenue Total capital premium Scheme reserve reserve reserve equity Note US$ million US$ million US$ million US$ million US$ million US$ million US$ million At 1 April 2011 12.4 121.1 – (1.2) 3.1 199.7 335.1 Changes in equity for the year ended
31 March 2012 Comprehensive income
Profit for the year – – – – – 227.2 227.2 Total comprehensive income for the year – – – – – 227.2 227.2 Final dividend in respect of the previous year – – – – – (154.6) (154.6) Interim dividend in respect of the current year 5 – – – – – (39.9) (39.9) Shares issued under share option scheme 16(a) 0.1 6.2 – – – – 6.3 Equity–settled share based payments – 0.9 – – 1.1 – 2.0 Shares purchased for Share Purchase Scheme 16(c) – – (2.7) – – – (2.7) Vesting of shares of Share Purchase Scheme 16(c) – – 1.8 – – – 1.8 At 31 March 2012 and 1 April 2012 12.5 128.2 (0.9) (1.2) 4.2 232.4 375.2 Changes in equity for the year ended
31 March 2013 Comprehensive income
Profit for the year – – – – – 188.2 188.2 Total comprehensive income for the year – – – – – 188.2 188.2 Final dividend in respect of the previous year 5 – – – – – (150.2) (150.2) Interim dividend in respect of the current year 5 – – – – – (40.1) (40.1) Shares issued under share option scheme 16(a) – 8.4 – – – – 8.4 Equity-settled share based payments – 2.0 – – (2.0) – – Shares purchased for Share Purchase Scheme 16(c) – – (0.9) – – – (0.9) Vesting of shares of Share Purchase Scheme 16(c) – – 0.9 – – – 0.9 At 31 March 2013 12.5 138.6 (0.9) (1.2) 2.2 230.3 381.5
The consolidated profit attributable to shareholders includes a profit of US$188.2 million (2012: US$227.2 million) which has been dealt with in the financial statements of the Company.
Reserves of the Company available for distribution to shareholders amounted to US$230.3 million (2012: US$232.4 million).
The Group has no bank borrowings as at 31 March 2013 (2012: $nil). Adjusted capital comprises all components of equity less
unaccrued proposed dividends.
In order to monitor its capital structure, the Group may adjust the amount of dividends to be paid to shareholders, issue new shares, return capital to shareholders or raise new debt financing. The adjusted capital at 31 March 2012 and 31 March 2013 is as follows:
The Group The Company 2013 2012 2013 2012 US$ million US$ million US$ million US$ million Total equity 572.3 556.2 381.5 375.2 Less: Proposed
dividends (160.2) (149.7) (160.2) (149.7) 412.1 406.5 221.3 225.5
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
(i) Exposure to currency risk
The Group enters into forward foreign exchange contracts in order to manage its exposure to fluctuations in foreign currency exchange rates on recognised assets and liabilities. As at 31 March 2013, the notional principal amounts of these outstanding forward foreign exchange contracts were US$7.9 million (2012: US$13.9 million) with net positive fair value of US$0.1 million (2012: US$Nil) recognised as derivative financial instruments.
In addition, the Group uses forward foreign exchange contracts to hedge the exchange rate fluctuation for the purchase of RMB in respect of highly probable forecast transactions for the Group’s PRC operations. Forward foreign exchange contracts are matched with anticipated future cash flows. As at 31 March 2013, the notional principal amounts of the outstanding forward foreign exchange contracts for hedging highly probable forecast transactions were US$197.7 million (2012: US$152.0 million) with net positive fair value of US$2.4 million (2012: positive US$1.4 million) recognised as derivative financial instruments.
All of the forward foreign exchange contracts have maturities of less than one year after the balance sheet date.
The Group does not anticipate any material adverse effect on its financial position resulting from its involvement in these financial instruments, nor does it anticipate non-performance by any of its counterparties.
(ii) Sensitivity analysis
A sensitivity analysis was performed at 31 March 2013 to measure the instantaneous change in the Group’s profit after tax and total equity that would arise if foreign exchange rates to which the Group has significant exposure at the balance sheet date had changed at that date, assuming all other risk variables remained constant. In this respect, it is assumed that the pegged rate between HKD and USD would be materially unaffected by any changes in movement in value of the USD against other currencies. Management estimated that a 5% appreciation/depreciation of EUR, GBP, CAD, JPY and AUD against USD would not have a material effect on the Group’s profit after taxation and equity attributable to shareholders for the years ended 31 March 2012 and 31 March 2013.
The sensitivity analysis performed represents an aggregation of the instantaneous effects on each of the Group entities’ profit after tax and total equity measured in the respective functional currencies. The sensitivity analysis assumes that the change in foreign exchange rates had been applied to re-measure those recognised assets or liabilities held by the Group which expose the Group to foreign currency risk at the balance sheet date, including inter- company payables and receivables within the Group which are denominated in a currency other than the functional currencies of the lender or the borrower. The analysis excludes differences that would result from the translation of the financial statements of foreign operations into the Group’s presentation currency. The analysis is performed on the same basis for 2012.