Annual Report 2011 - Mandarin Oriental Hotel Group

11 Loans receivable
Annual Report 2011 57
2011 2010
US$m US$m
At 1st January 4.7 3.1
Exchange differences 0.5 (0.3 )
Addition – 2.8
Repayment (3.4 ) –
Provision (1.8 ) (0.9 )
At 31st December – 4.7
As at 31st December 2011, full provision has been made against the loans receivable balance.
The balances as at 31st December 2010 comprised (i) a mezzanine loan of US$3.0 million, with repayment on or before
31st December 2011 against which a full provision has been made; (ii) a loan of US$1.7 million, bearing interest at
EURO LIBOR+4% with repayment on or before 12th September 2011 against which a provision of US$0.9 million
has been made; (iii) a loan of US$2.4 million, bearing interest at EURO LIBOR+2% with repayment on or before
31st December 2016; and (iv) a loan of US$1.5 million, bearing interest at 10% with repayment on or before
31st December 2016. The carrying amount of the loans receivable approximates their fair values.
12 Pension plans
The Group has a number of defined benefit pension plans, covering all the main territories in which it operates with the
major plans relating to employees in Hong Kong and South East Asia. Most of the pension plans are final salary defined
benefit plans and are funded. The assets of the funded plans are held independently of the Group’s assets in separate
trustee administered funds. The Group’s major plans are valued by independent actuaries annually using the projected
unit credit method.
The principal actuarial assumptions used for accounting purposes at 31st December are as follows:
2011 2010
Weighted Weighted
average average
% %
Discount rate applied to pension obligations 4.5 4.9
Expected return on plan assets 7.5 7.5
Future salary increases 5.0 5.0
The expected return on plan assets is determined on the basis of long-term average returns on global equities of 3.8%
to 11.4% per annum and global bonds of 2.8% to 4.4% per annum, and the long-term benchmark allocation of assets
between equities and bonds in each plan.