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)

Delaware (State or other jurisdiction of incorporation or organization)		0-21044 (Commission File No.)		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
(Registrant’s 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:

o		Written communications pursuant to Rule 425 under the Securities Act

o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

 

 

Item 9.01		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.

	23.1			Consent of Deloitte Touche Tohmatsu, Independent Auditors.
	99.1			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.
	99.2			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.

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

Exhibit 99.1

ENSON ASSETS LIMITED

INDEX

		Page
Unaudited Condensed Consolidated Statements of Comprehensive Income			1
Unaudited Condensed Consolidated Statements of Financial Position			2
Unaudited Condensed Consolidated Statements of Changes in Equity			3
Unaudited Condensed Consolidated Statements of Cash Flows			4
Notes to the Unaudited Condensed Consolidated Financial Statements			5

ENSON ASSETS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2010 (UNAUDITED)

		Six Months Ended September 30,
		2009				2010
		HK$'000				HK$'000
Revenues			603,973				792,404
Cost of revenues			(468,873	)			(592,241	)
Gross profit			135,100				200,163
Investment income			185				711
Other income			4,714				1,954
Administrative expenses			(29,095	)			(31,101	)
Distribution expenses			(10,509	)			(13,239	)
Research and development costs			(6,093	)			(10,438	)
Other expenses			(201	)			(213	)
Other gains and losses			352				(694	)
Finance costs — interest on bank borrowings wholly repayable within five years			(263	)			(323	)
Profit before tax			94,190				146,820
Taxation expense			(15,930	)			(30,264	)
Profit for the period and attributable to the owners of the Company			78,260				116,556
Other comprehensive income
Exchange difference arising on translation of foreign operations			139				3,199
Total comprehensive income for the period and attributable to the owners of the Company			78,399				119,755

ENSON ASSETS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AT MARCH 31, 2010 AND SEPTEMBER 30, 2010 (UNAUDITED)

		March 31,				September 30,
		2010				2010
		HK$'000				HK$'000
Non-current assets
Property, plant and equipment			343,885				337,807
Buildings under construction			—				7,548
Prepaid lease payments			3,894				3,911
Club debenture			885				885
Deposit on property, plant and equipment acquisition			1,840				3,218
Deferred tax assets			22,034				21,847
			372,538				375,216
Current assets
Inventories			149,995				181,275
Trade receivables, deposits and prepayments			205,798				314,538
Prepaid lease payments			82				90
Loan to a related company			93,166				—
Amounts due from related companies			433				—
Amount due from holding company			52				9,984
Derivative financial instruments			1,101				495
Cash and cash equivalents			183,682				185,573
			634,309				691,955
Current liabilities
Trade creditors and accrued charges			343,971				380,403
Bills payable			17,341				21,529
Amount due to a director			1,804				—
Amount due to a related company			6,119				10,104
Derivative financial instruments			633				125
Bank borrowings — due within one year			16,421				12,316
Tax payable			29,396				44,499
			415,685				468,976
Net current assets			218,624				222,979
Total assets less current liabilities			591,162				598,195
Non-current liability
Deferred tax liabilities			7,442				14,687
Net assets			583,720				583,508
Capital and reserves
Share capital			470				470
Reserves			583,250				583,038
Equity attributable to equity holders of the Company			583,720				583,508

ENSON ASSETS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2010 (UNAUDITED)

		Share				Share				Statutory				Translation				Accumulated
		capital				premium				reserve				reserve				profits				Total
		HK$'000				HK$'000				HK$'000				HK$'000				HK$'000				HK$
Balance at April 1, 2009			470				81,747				15,388				(4,004	)			337,107				430,708
Profit for the period			—				—				—				—				78,260				78,260
Exchange differences arising on translation of foreign operations			—				—				—				139				—				139
Total comprehensive income for the period			—				—				—				139				78,260				78,399
Balance at September 30, 2009			470				81,747				15,388				(3,865	)			415,367				509,107
Balance at April 1, 2010			470				81,747				23,383				(3,727	)			481,847				583,720
Profit for the period			—				—				—				—				116,556				116,556
Exchange differences arising on translation of foreign operations			—				—				—				3,199				—				3,199
Total comprehensive income for the period			—				—				—				3,199				116,556				119,755
Dividends paid			—				—				—				—				(119,967	)			(119,967	)
Balance at September 30, 2010			470				81,747				23,383				(528	)			478,436				583,508

ENSON ASSETS LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2009 AND 2010 (UNAUDITED)

		Six Months Ended
		September 30,
		2009				2010
		HK$'000				HK$'000
Cash provided by operating activities:
Net cash from operating activities			74,011				65,560
Cash used for investing activities:
Repayment from related company			1,500				93,166
Purchase of property, plant and equipment			(9,662	)			(14,870	)
Advance to holding company			—				(9,932	)
Payment of building under construction			(1,939	)			(7,548	)
Other investing cash flows			2,485				(155	)
Net cash (used for) from investing activities			(7,616	)			60,661
Cash used for financing activities:
Dividends paid			—				(119,967	)
Repayment of bank loans			(4,106	)			(4,105	)
Repayment to a director			—				(1,804	)
Net cash used for financing activities			(4,106	)			(125,876	)
Effect of exchange rate changes on cash			15				1,546
Net increase in cash and cash equivalents			62,304				1,891
Cash and cash equivalents at beginning of period			110,504				183,682
Cash and cash equivalents at end of period			172,808				185,573

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 Company’s 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 Group’s 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 Group’s financial assets.

3. Profit before tax

Profit before tax has been arrived at after charging (crediting):

		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				46
Total depreciation and amortisation			24,857				26,266

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

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.

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 Group’s 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

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.

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

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 UEI’s common stock. The transaction was consummated as of November 3, 2010.

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 AUDITOR’S 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 AUDITOR’S 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 Group’s 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 Group’s 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

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

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

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 People’s 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.

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

ENSON ASSETS LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 MARCH, 2008, 2009 AND 2010

1.

GENERAL

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 Company’s 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.

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

The application of IFRS 3 (Revised) may affect the Group’s 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 Group’s ownership interest in a subsidiary.

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 Group’s 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 liability’s 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 liability’s 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.

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 asset’s 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).

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.

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 Group’s 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 Group’s 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 Group’s 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.

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.

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 Group’s 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 Group’s 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.

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 Group’s 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 asset’s 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.

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 Group’s 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 Group’s 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.

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 asset’s 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 Group’s 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.

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 Group’s 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 Group’s 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 asset’s carrying values are written down to the recoverable amount and the amount of the write-down is charged against the profit or loss. The Group’s 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

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 Group’s 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

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

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