3
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS CONTINUED¡
(f) Pension costs
The Group operates several defined benefit plans. Pension costs for defined benefit plans are assessed using the projected
unit credit method in accordance with Hong Kong Accounting Standards (“HKAS”) 19 (2011), Employee Benefits. Under this
method, the cost of providing pensions is charged to consolidated income statement so as to spread the regular cost over
the future service lives of employees in accordance with the advice of the actuaries who carry out a valuation of the plans.
The pension obligation is measured at the present value of the estimated future cash outflows using interest rates determined
by reference to market yields at the end of the reporting period based on high quality corporate bonds with currency and
term similar to the estimated term of benefit obligations.
Remeasurements arising from defined benefit plans are recognised in other comprehensive income in the year in which they
occur and reflected immediately in retained profit. Remeasurements comprise actuarial gains and losses, the return on plan
assets (excluding amounts included in net interest on the net defined benefit liability/asset) and any change in the e
ect of
the asset ceiling (excluding amounts included in net interest on the net defined benefit liability/asset).
Management appointed actuaries to carry out a full valuation of these pension plans to determine the pension obligations
that are required to be disclosed and accounted for in the financial statements in accordance with the HKFRS requirements.
The actuaries use assumptions and estimates in determining the fair value of the defined benefit plans and evaluate and
update these assumptions on an annual basis. Judgements are required to determine the principal actuarial assumptions to
determine the present value of defined benefit obligations and service costs. Changes to the principal actuarial assumptions
can significantly a
ect the present value of plan obligations and service costs in future periods.
(g) Tax
The Group is subject to income taxes in di
erent jurisdictions. Significant judgements are required in determining the
provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on
estimates of whether additional taxes will be due. Where the final tax outcome of these matters is di
erent from the amounts
that were previously recorded, such di
erences will impact the income tax and deferred tax provisions in the period in which
such determination is made.
Deferred tax is provided in full, using the liability method, on temporary di
erences arising between the tax bases of assets
and liabilities and their carrying values in the financial statements. Deferred tax assets are recognised for unused tax losses
carried forward to the extent it is probable that future taxable profits will be available against which the unused tax losses
can be utilised, based on all available evidence. Recognition primarily involves judgements regarding the future financial
performance of the particular legal entity or tax group in which the deferred tax asset has been recognised. A variety of
other factors are also evaluated in considering whether there is convincing evidence that it is probable that some portion
or all of the deferred tax assets will ultimately be realised, such as the existence of taxable temporary di
erences, group
relief, tax planning strategies and the periods in which estimated tax losses can be utilised. The carrying amount of deferred
tax assets and related financial models and budgets are reviewed at the end of the reporting period and to the extent that
there is insu¢cient convincing evidence that su¢cient taxable profits will be available within the utilisation periods to allow
utilisation of the carry forward tax losses, the asset balance will be reduced and charged to the income statement.
Notes to the
Financial Statements
OPTIMISING FOR THE FUTURE
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