Mandarin Oriental International Limited - Mandarin Oriental Hotel ...
Mandarin Oriental International Limited - Mandarin Oriental Hotel ...
Mandarin Oriental International Limited - Mandarin Oriental Hotel ...
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U Derivative financial instruments continued<br />
Certain derivative transactions, while providing effective economic hedges under the Group’s risk management<br />
policies, do not qualify for hedge accounting under the specific rules in IAS 39. Changes in the fair value of any<br />
derivative instruments that do not qualify for hedge accounting under IAS 39 are recognized immediately in the<br />
consolidated profit and loss account.<br />
Hedges of net investments in foreign entities are accounted for on a similar basis to that used for cash flow hedges.<br />
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in exchange<br />
reserves; the gain or loss relating to the ineffective portion is recognized immediately in the consolidated profit and<br />
loss account.<br />
The fair value of derivatives which are designated and qualified as effective hedges are classified as non-current<br />
assets or liabilities if the remaining maturities of the hedged assets or liabilities are greater than twelve months after<br />
the balance sheet date.<br />
V Earnings per share<br />
Basic earnings per share are calculated on profit attributable to shareholders and on the weighted average number<br />
of shares in issue during the year. The weighted average number excludes the shares held by the Trustee under<br />
the Senior Executive Share Incentive Schemes. For the purpose of calculating diluted earnings per share, profit<br />
attributable to shareholders is adjusted for the effects of the conversion of dilutive potential ordinary shares, and<br />
the weighted average number of shares is adjusted for the number of shares which are deemed to be issued for<br />
no consideration under the Senior Executive Share Incentive Schemes based on the average share price during<br />
the year.<br />
W Financial guarantee contracts<br />
Financial guarantee contracts under which the Group accepts significant risk from a third party by agreeing to<br />
compensate that party on the occurrence of a specified uncertain future event are accounted for in a manner<br />
similar to insurance contracts. Provisions are recognized when it is probable that the Group has obligations under<br />
such guarantees and an outflow of resources embodying economic benefits will be required to settle the obligations.<br />
Annual Report 2008 39