NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
Financial Statements
99
Annual Report 2014
2.
Significant accounting policies
(continued)
2.19 Income taxes (continued)
(ii)
based on the tax consequence that will follow from the manner in which the Group expects, at the
balance sheet date, to recover or settle the carrying amounts of its assets and liabilities, except
for investment properties. Investment property measured at fair value is presumed to be recovered
entirely through sale.
Current and deferred income tax are recognised as income or expense in profit or loss, except to the extent
that the tax arises from a business combination or a transaction which is recognised directly in equity.
Deferred tax arising from a business combination is adjusted against goodwill on acquisition.
2.20 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events; it is more likely than not that an outflow of resources will be required to settle the obligation; and
the amount has been reliably estimated. Provisions are not recognised for future operating losses.
The Group recognises the estimated liability to repair or replace products still under warranty at the balance
sheet date. This provision is calculated based on estimates by technical engineers and historical experience
of the level of repairs and replacements.
Other provisions are measured at the present value of the expenditure expected to be required to settle
the obligation using a pre-tax discount rate that reflects the current market assessment of the time value of
money and the risks specific to the obligation. The increase in the provision due to the passage of time is
recognised in profit or loss as finance expense.
Changes in the estimated timing or amount of the expenditure or discount rate are recognised in profit or
loss when the changes arise.
2.21 Employee compensation
Employee benefits are recognised as an expense, unless the cost qualifies to be capitalised as an asset.
(a)
Defined contribution plans
Defined contribution plans are post-employment benefit plans under which the Group pays fixed
contributions into separate entities such as the Central Provident Fund and social security plans in
the People’s Republic of China (“PRC”) on a mandatory, contractual or voluntary basis. The Group
has no further payment obligations once the contributions have been paid.
(b)
Employee leave entitlements
Employee entitlements to annual leave are recognised when they accrue to employees. A provision
is made for the estimated liability for annual leave as a result of services rendered by employees up
to the balance sheet date.
(c)
Share-based compensation
The Group operates an equity-settled, share-based compensation plan. The value of the employee
services received in exchange for the grant of the options is recognised as an expense with a
corresponding increase in the share option reserve over the vesting period. The total amount to
be recognised over the vesting period is determined by reference to the fair value of the options
granted on the date of the grant. Non-market vesting conditions are included in the estimation of
the number of shares under option that are expected to become exercisable on the vesting date. At
each balance sheet date, the Group revises its estimates of the number of shares under options that
are expected to become exercisable on the vesting date and recognises the impact of the revision of
the estimates in profit or loss, with a corresponding adjustment to the share option reserve over the
remaining vesting period.
