Mandarin Oriental International Limited - Mandarin Oriental Hotel ...

P Deferred tax
Deferred tax is provided, using the liability method, for all temporary differences arising between the tax bases of
assets and liabilities and their carrying values.
Provision for deferred tax is made on the revaluation of certain non-current assets and, in relation to acquisitions,
on the difference between the fair values of the net assets acquired and their tax base. Deferred tax is provided on
temporary differences associated with investments in subsidiary undertakings, associates and joint ventures, 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 relating to the carry forward of unused tax losses are recognized to the extent that it is probable
that future taxable profit will be available against which the unused tax losses can be utilized.
Q Employee benefits
i) Pension obligations
The Group operates a number of defined benefit and defined contribution plans, the assets of which are held in
trustee administered funds.
Pension accounting costs for defined benefit plans are assessed using the projected unit credit method. Under
this method, the costs of providing pensions are charged to the consolidated profit and loss account spreading
the regular cost over the service lives of employees in accordance with the advice of qualified actuaries, who
carry out a full valuation of major plans every year. The pension obligations are measured as the present value
of the estimated future cash outflows by reference to market yields on high quality corporate bonds which
have terms to maturity approximating the terms of the related liability. Plan assets are measured at fair value.
Actuarial gains and losses are recognized in full in the year in which they occur, outside the consolidated profit
and loss account, in the consolidated statement of recognized income and expense.
The Group’s total contributions relating to the defined contribution plans are charged to the consolidated
profit and loss account in the year to which they relate.
ii) Share-based compensation
The Group has a Senior Executive Share Incentive Scheme in order to provide selected executives with options
to purchase ordinary shares in the Company.
The fair value of the employee services received in exchange for the grant of the options in respect of options
granted after 7th November 2002 is recognized as an expense. The total amount to be expensed over the
vesting period is determined by reference to the fair value of the options granted. At each balance sheet date,
the Group revises its estimates of the number of options that are expected to become exercisable. The impact
of the revision of original estimates, if any, is recognized in the consolidated profit and loss account.
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