11. Taxation (Charge) Creditopen
2011
2010
US$’000
US$’000
Current tax:
Hong Kong profits tax
(1,275)
(608)
Underprovision in prior years
(1,440)
(1,411)
(2,715)
(2,019)
Overseas taxation
(14,876)
(18,840)
Overprovision in prior years
8,753
795
(6,123)
(18,045)
Deferred tax (Note 47):
Current year
(404)
20,134
(9,242)
70

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for the year.

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

The tax (charges) credits for the year are reconciled as follows:

2011
2011
2010
2010
US$’000
%
US$’000
%
Profit before taxation
160,174
95,691
Tax at Hong Kong Profits Tax rate
(26,429)
16.5%
(15,789)
16.5%
Effect of different tax rates of subsidiaries operating in other jurisdictions
36,301
(22.7%)
23,096
(24.1%)
Tax effect of expenses not deductible for tax purposes
(9,529)
6.0%
(4,499)
4.7%
Tax effect of income not taxable for tax purposes
9,876
(6.2%)
5,930
(6.2%)
Tax effect of deductible temporary differences not recognised
(27,685)
17.3%
(13,895)
14.5%
Recognition of temporary differences previously not recognised
983
(0.6%)
6,182
(6.5%)
Over (underprovision) in respect of prior years
7,313
(4.6%)
(616)
0.6%
Others
(72)
0.1%
(339)
0.4%
Tax (charge) credit for the year
(9,242)
5.8%
70
(0.1%)

Details of deferred tax are set out in Note 47.

12. Profit for the Yearopen
2011 2010
US$’000 US$’000
Profit for the year has been arrived at after charging (crediting):

Amortisation of intangible assets 49,084 42,391
Auditors’ remuneration 3,369 3,126
Amortisation of lease prepayments 765 733
Fair value loss (gain) on held-for-trading investments 2,444 (397)
Fair value loss (gain) on foreign currency forward contracts 3,314 (5,674)
Fair value loss on interest rate swap 2,425 2,781
Fair value loss (gain) on a warrant 330 (552)
Depreciation and amortisation on property, plant and equipment
Owned assets
66,977 67,269
Assets held under finance leases
2,920 3,101
Impairment loss on trade receivables 2,992 5,724
Impairment loss on available-for-sale investments 1,713
(Gain) loss on disposal of property, plant and equipment (4,990) 678
Net exchange loss 672 2,956
Operating lease expenses recognised in respect of:
Premises
24,959 23,943
Motor vehicles
12,343 11,704
Plant and machinery
4,191 4,774
Other assets
3,931 4,137
Unconditional government grants 252 863
Write down of intangible assets 11
Write down of inventories 8,259 11,072
Staff costs
Directors’ remuneration
Fees
176 160
Other emoluments
18,786 10,993
18,962 11,153
Other staff costs
398,330 385,763
Retirement benefits scheme contributions
(other than those included in the Directors’ emoluments)
Defined contribution plans
3,282 (1,221)
Defined benefit plans (Note 46)
6,958 8,335
427,532 404,030

Staff costs disclosed above do not include an amount of US$67,434,000 (2010: US$57,162,000) relating to research and development activities.

13. Director’s Emolumentsopen

The emoluments paid or payable to each of the 11 (2010: 11) directors were as follows:

For the year ended December 31, 2011

Other emoluments
Fees
Basic salaries and allowances
Contributions to retirement benefits schemes
Bonus paid
Share-based payments
Total
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Mr Horst Julius Pudwill
1,557
2
2,051
141
3,751
Mr Joseph Galli Jr
1,200
2
7,900
42
9,144
Mr Kin Wah Chan
634
2
226
42
904
Mr Chi Chung Chan
633
2
235
42
912
Mr Stephan Horst Pudwill
296
2
88
42
428
Prof Roy Chi Ping Chung BBS JP
16
661
1
2,558(Note)
25
3,261
Mr Vincent Ting Kau Cheung
32
22
46
100
Mr Joel Arthur Schleicher
32
38
46
116
Mr Christopher Patrick Langley OBE
32
25
46
103
Mr Manfred Kuhlmann
32
42
46
120
Mr Peter David Sullivan
32
45
46
123
Total
176
5,153
11
13,058
564
18,962

Note: Amount shown above included a retirement gratuity

For the year ended December 31, 2010

Other emoluments
Fees
Basic salaries and allowances
Contributions to retirement benefits schemes
Bonus paid
Share-based payments
Total
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
Mr Horst Julius Pudwill
1,557
2
1,718
92
3,369
Mr Joseph Galli Jr
1,200
2
2,400
134
3,736
Mr Kin Wah Chan
617
2
173
134
926
Mr Chi Chung Chan
617
2
176
134
929
Mr Stephan Horst Pudwill
234
2
37
134
407
Prof Roy Chi Ping Chung BBS JP
844
2
231
80
1,157
Mr Vincent Ting Kau Cheung
32
24
54
110
Mr Joel Arthur Schleicher
32
48
54
134
Mr Christopher Patrick Langley OBE
32
45
54
131
Mr Manfred Kuhlmann
32
45
54
131
Mr Peter David Sullivan
32
37
54
123
Total
160
5,268
12
4,735
978
11,153

The bonuses paid were based on performance of the Group.

14. Employees’ Emolumentsopen

Of the five individuals with the highest emoluments in the Group, three (2010: five) were directors of the Company whose emoluments are included in Note 13 above. The emoluments of the remaining two (2010: zero) individuals for the year ended December 31, 2011 were as follows:

2011
2010
US$’000
US$’000
Basic salaries and allowances
982
Contributions to retirement benefits schemes
64
Bonus paid
909
Other benefit
842
Share-based payments
57
2,854

The emoluments of these two (2010: zero) highest paid individuals for the year ended December 31, 2011 were within the following band:

No. of persons
US$ 2011 2010
1,000,001 to 1,500,000 1
1,500,001 to 2,000,000 1

During each of the two years ended December 31, 2011 and 2010, no emoluments have been paid by the Group to the five highest paid individuals, including directors, as an inducement to join or upon joining the Group or as compensation for loss of office. No director has waived any emoluments during those years.

15. Dividendsopen
2011
2010
US$’000
US$’000
Dividends recognised as distributions during the year:
Final dividend paid:
2010: HK6.25 cents (approximately US0.80 cent)
(2009: HK4.50 cents (approximately US0.58 cent)) per share
12,907
9,266
Interim dividend paid:
2011: HK5.00 cents (approximately US0.64 cent)
(2010: HK3.75 cents (approximately US0.48 cent)) per share
10,347
7,722
23,254
16,988

The final dividend of HK7.75 cents (approximately US1.00 cent) per share in respect of the year ended December 31, 2011 (2010: final dividend of HK6.25 cents (approximately US0.80 cent) per share in respect of the year ended December 31, 2010) has been proposed by the directors and is subject to approval by the shareholders in the Annual General Meeting.

16. Earnings per Shareopen

The calculation of the basic and diluted earnings per share attributable to Owners of the Company is based on the following data:

2011
2010
US$’000
US$’000
Earnings for the purpose of basic and diluted earnings per share:
Profit for the year attributable to Owners of the Company
150,826
94,890
Effect of dilutive potential ordinary shares:
Effective interest on convertible bonds
18,040
Earnings for the purpose of diluted earnings per share
168,866
94,890
Weighted average number of ordinary shares for the purpose of basic earnings per share
1,605,594,626
1,601,053,496
Effect of dilutive potential ordinary shares:
Share options
3,391,650
963,952
Convertible bonds
223,557,000
Weighted average number of ordinary shares for
the purpose of diluted earnings per share
1,832,543,276
1,602,017,448

The computation of diluted earnings per share for the year ended December 31, 2010 does not assume the conversion of the Company’s convertible bonds since their exercise would result in an increase in earnings per share and does not assume the exercise of certain of the Company’s outstanding share options when the exercise price of those options was higher than the average market price for shares for both 2011 and 2010.

17. Property, Plant and Equipmentopen
Freehold land and buildings outside Hong Kong (note) Leasehold improvements Office equipment, furniture and fixtures Plant and machinery Motor vehicles Moulds and tooling Vessels Construction in progress Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
The Group
Cost
At January 1, 2010 152,617 46,686 137,674 246,455 4,476 254,546 1,078 10,355 853,887
Currency realignment (2,267) 659 (715) (2,820) 1 (4,752) 173 (9,721)
Additions 19,439 1,082 5,350 12,887 643 13,110 2,289 38,168 92,968
Acquisition of subsidiaries / business 167 5 172
Disposals (16) (4,421) (5,758) (24,251) (417) (12,234) (1,078) (2) (48,177)
Reclassification 1,247 2,455 2,663 583 26 3,297 (10,271)
At December 31, 2010 171,020 46,461 139,214 233,021 4,734 253,967 2,289 38,423 889,129
Currency realignment (511) 907 16 1,325 (61) 396 9 362 2,443
Additions 1,630 12,279 15,709 709 16,879 48,235 95,441
Disposals (28,320) (1,394) (10,335) (58,088) (797) (70,078) (508) (169,520)
Reclassification 473 4,362 3,259 4,483 89 12,272 (24,938)
At December 31, 2011 142,662 51,966 144,433 196,450 4,674 213,436 2,298 61,574 817,493
Depreciation
At January 1, 2010 52,559 13,887 104,924 173,377 3,149 186,895 1,073 535,864
Currency realignment (1,513) 64 (907) (3,466) (22) (4,611) (10,455)
Provided for the year 5,845 3,918 12,191 16,824 648 30,677 267 70,370
Eliminated on disposals (16) (3,316) (5,662) (23,552) (334) (12,133) (1,074) (46,087)
At December 31, 2010 56,875 14,553 110,546 163,183 3,441 200,828 266 549,692
Currency realignment (351) 132 (86) (90) (12) (315) 1 (721)
Provided for the year 5,426 5,827 12,287 15,033 654 30,211 459 69,897
Eliminated on disposals (22,174) (1,351) (9,157) (57,999) (708) (70,068) (161,457)
At December 31, 2011 39,776 19,161 113,590 120,127 3,375 160,656 726 457,411
Carrying amounts
At December 31, 2011 102,886 32,805 30,843 76,323 1,299 52,780 1,572 61,574 360,082
At December 31, 2010 114,145 31,908 28,668 69,838 1,293 53,139 2,023 38,423 339,437

Note: Buildings with carrying amount of US$22,460,000 are erected on leasehold land that is presented as lease prepayments on the consolidated statement of financial position.

Buildings outside Hong Kong
Leasehold improvements
Office equipment, furniture and fixtures
Plant and machinery
Motor vehicles
Moulds and tooling
Total
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
The Company
Cost
At January 1, 2010
3,998
3,136
11,247
6,047
690
10,095
35,213
Additions
24
1,194
20
13
613
1,864
Disposals
(7)
(12)
(40)
(56)
(64)
(179)
At December 31, 2010
3,998
3,153
12,429
6,027
647
10,644
36,898
Additions
533
533
Disposals
(245)
(342)
(1,512)
(83)
(1,050)
(3,232)
Transfer (to) from subsidiaries
(79)
(1,161)
83
(4,343)
(5,500)
At December 31, 2011
3,998
2,908
12,541
3,354
647
5,251
28,699
Depreciation
At January 1, 2010
1,799
2,841
9,543
4,004
476
7,115
25,778
Provided for the year
160
239
946
885
138
1,528
3,896
Eliminated on disposals
(6)
(12)
(40)
(56)
(64)
(178)
At December 31, 2010
1,959
3,074
10,477
4,849
558
8,579
29,496
Provided for the year
152
33
946
490
89
1,710
Eliminated on disposals
(239)
(342)
(1,512)
(83)
(1,050)
(3,226)
Transfer (to) from subsidiaries
(37)
(823)
83
(2,278)
(3,055)
At December 31, 2011
2,111
2,868
11,044
3,004
647
5,251
24,925
Carrying amounts
At December 31, 2011
1,887
40
1,497
350
3,774
At December 31, 2010
2,039
79
1,952
1,178
89
2,065
7,402

The above property, plant and equipment, other than construction in progress, are depreciated on a straight-line basis, at the following rates per annum:

Freehold land Nil
Buildings
215% - 623%
Leasehold improvements 623% - 25%
Office equipment, furniture and fixtures 10% - 3313%
Plant and machinery 9% - 33%
Motor vehicles 10% - 33%
Moulds and tooling 18% - 3313%
Vessels 20%

The net book values of properties shown above comprise:

The Group
The Company
2011
2010
2011
2010
US$’000
US$’000
US$’000
US$’000
Land and buildings are situated outside Hong Kong and are analysed as follows:


Freehold
80,426
90,361
Medium-term lease
22,460
23,784
1,887
2,039
102,886
114,145
1,887
2,039

The net book values of the Group’s and the Company’s property, plant and equipment include amounts of approximately US$5,922,000 and nil respectively (2010: US$8,061,000 and US$37,000 respectively) in respect of assets held under finance leases.

The gross carrying amount of the Group’s and the Company’s property, plant and equipment include amounts of approximately US$233,721,000 and US$19,997,000 (2010: US$307,911,000 and US$19,096,000) respectively in respect of fully depreciated property, plant and equipment that is still in use.

18. Lease Prepaymentsopen

The Group

US$’000
Cost
At January 1, 2010 36,394
Currency realignment 1,323
Disposals (396)
At December 31, 2010 37,321
Currency realignment 1,827
At December 31, 2011 39,148
Amortisation
At January 1, 2010 1,063
Currency realignment 50
Provided for the year 733
At December 31, 2010 1,846
Currency realignment 105
Provided for the year 765
At December 31, 2011 2,716
Carrying amounts
At December 31, 2011 36,432
At December 31, 2010 35,475

All lease prepayments are medium-term leases outside Hong Kong.

19. Goodwillopen

The Group

US$’000
At January 1, 2010 521,088
Currency realignment (402)
Arising on acquisition of subsidiaries/business 9,198
At December 31, 2010 529,884
Currency realignment 972
At December 31, 2011 530,856

Particulars regarding impairment testing of goodwill are disclosed in Note 21.

20. Intangible Assets open

Deferred
development
cost
Patents Trademarks Manufacturing
know-how
Retailer and
service relationships
Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
The Group



Cost





At January 1, 2010 198,848 32,450 191,069 450 6,467 429,284
Currency realignment 296 82 633 2 17 1,030
Additions 51,575 1,661 30 53,266
Written off in the year (43) (4) (47)
Acquisition of subsidiaries/business 2,194 4,777 269 7,240
At December 31, 2010 252,913 38,927 191,997 452 6,484 490,773
Currency realignment 1,502 111 373 1 16 2,003
Additions 61,784 4,344 66,128
Written off in the year (463) (107) (570)
At December 31, 2011 315,736 43,275 192,370 453 6,500 558,334
Amortisation





At January 1, 2010 71,960 16,242 5,750 450 647 95,049
Currency realignment (88) 31 3 2 1 (51)
Provided for the year 37,164 3,805 1,097 325 42,391
Eliminated on write off (43) (4) (47)
At December 31, 2010 109,036 20,035 6,846 452 973 137,342
Currency realignment 1,098 64 27 1 2 1,192
Provided for the year 43,722 3,913 1,124 325 49,084
Eliminated on write off (452) (107) (559)
At December 31, 2011 153,404 23,905 7,997 453 1,300 187,059
Carrying Amounts





At December 31, 2011 162,332 19,370 184,373 5,200 371,275
At December 31, 2010 143,877 18,892 185,151 5,511 353,431

Deferred
development
costs
Patents Total

US$’000 US$’000 US$’000
The Company


Cost


At January 1, 2010 70,808 6,700 77,508
Additions 83 83
Transfer to subsidiaries (83) (83)
At December 31, 2010 and December 31, 2011 70,808 6,700 77,508
Amortisation


At January 1, 2010 30,313 6,693 37,006
Provided for the year 14,311 3 14,314
At December 31, 2010 44,624 6,696 51,320
Provided for the year 11,476 2 11,478
At December 31, 2011 56,100 6,698 62,798
Carrying Amounts
At December 31, 2011 14,708 2 14,710
At December 31, 2010 26,184 4 26,188

The retailer and service relationships were acquired through business combinations which related to the relationships with retailers and service centres.

Deferred development costs are internally generated.

Included in trademarks of the Group, US$177,555,000 (2010: US$177,197,000) are trademarks with an indefinite useful life, considered by the management of the Group as having an indefinite useful life because they are expected to contribute to net cash inflows indefinitely. The trademarks will not be amortised until their useful life is determined to be finite. Instead they will be tested for impairment annually or whenever there is an indication that they may be impaired. Particulars of the impairment testing are disclosed in Note 21.

The above intangible assets, other than trademarks with indefinite useful lives, are amortised on a straight-line basis, at the following rates per annum:

Deferred development costs 20% - 3313%
Patents 10% - 25%
Trademarks with finite useful lives 623% - 25%
Retailer and service relationships 5%