2006 - TCL Communication Technology Holdings Limited

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TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED Notes to Financial Statements 31 December 2006 9. PROFIT/(LOSS) BEFORE TAX The Group’s profit/(loss) before tax is arrived at after charging/(crediting): 2006 2005 Notes HK$’000 HK$’000 Cost of inventories sold* 4,720,309 5,618,840 Depreciation 16 97,801 113,240 Prepaid land lease recognised 17 587 548 Amortisation of intangible assets 18 6,475 22,416 Brand management fee/TCL Brand Common Fund 4,744 10,155 Minimum lease payments under operating leases in respect of land and buildings 20,619 23,966 Auditors’ remuneration 3,201 2,864 Employee benefits expense (including directors’ remuneration (note 11)): Salaries and wages 318,576 663,132 Equity-settled share option expense 15,997 7,737 Pension scheme contributions Defined contribution scheme 266 29,304 Defined benefit schemes (454) (40,349) 334,385 659,824 Impairment loss/(write back) of trade receivables** (26,119) 32,609 Write-back of impairment loss on other receivables (18,056) – Write-back of inventory obsolescence and net realisable value (10,573) (42,882) Product warranty provisions 27 102,502 156,470 (Gain)/loss on disposal of items of property, plant & equipment (19,293) 6,072 * The write-back of inventory obsolescence and net realisable value is included in “cost of sales” on the face of the consolidated income statement, ** Impairment loss/(write back) of trade receivables is mainly made for the Group’s customers operating in the PRC. 10. FINANCE COSTS Group 2006 2005 HK$’000 HK$’000 Interest on bank loans, and other loans wholly repayable within five years 17,445 12,613 Interest on convertible notes 5,553 2,373 Interest on discounted notes and factored trade receivables* 6,120 5,881 29,118 20,867 * The effective interest rates of discounted notes and factored trade receivables are 0.14% per month and 0.16% per month respectively. 76 Annual Report 2006
TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED Notes to Financial Statements 31 December 2006 11. DIRECTORS’ REMUNERATION AND FIVE HIGHEST PAID EMPLOYEES Directors’ remuneration for the year, disclosed pursuant to the Listing Rules and Section 161 of the Hong Kong Companies Ordinance, are as follows: Group 2006 2005 HK$’000 HK$’000 Fees 1,195 1,623 Other emoluments: Salaries, allowances and benefits in kind 1,460 2,875 Employee share option benefits 2,824 2,073 Pension scheme contributions 24 70 5,503 6,641 During 2005 and 2006, certain directors were granted share options, in respect of their services to the Group, under the share option scheme of the Company, further details of which are set out in note 33 to the financial statements and the director’s report. The fair value of such options, which has been recognised to income statement over the vesting period, was determined as at the date of the grant and the amount included in the financial statements for the current year is included in the above directors’ remuneration disclosures. (a) Independent non-executive directors The fees paid to independent non-executive directors during the year were as follows: 2006 2005 HK$’000 HK$’000 Mr. Shi Cuiming 180 180 Mr. Wang Chongju 180 180 Mr. Lau Siu Ki 180 180 540 540 During 2005 and 2006, all independent non-executive directors were granted share options, in respect of their services to the Group, under the share options scheme of the Company, further details of which are set out in note 33 to the financial statements. The fair value of such options and other share option granted to the independent non-executive directors, which has been recognised to income statement over the vesting period was determined as at the date of the grant and the amount of HK$147,000 (2005: HK$90,000) recognised in the income statement for the current year is included in the above directors’ remuneration disclosures. Annual Report 2006 77
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2006 - TCL Communication Technology Holdings Limited

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