2020 INTEGRATED REPORT

142 | PPS INTEGRATED REPORT 2020 GROUP ACCOUNTING POLICIES (CONTINUED) 13. DEFERRED TAXATION Deferred tax is provided, using the liability method, on temporary differences arising between the tax value of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is not recognised on initial recognition of the assets and liabilities where it does not impact either accounting or taxable profit. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. For Investment Property measured at fair value, deferred tax is provided at rates applicable to capital gains. The principal temporary differences arise from the revaluation of financial assets held at fair value through profit or loss and provisions. Deferred tax assets relating to the carry forward of unutilised tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the tax losses can be utilised. Deferred tax liabilities and assets are not discounted. 14. EMPLOYEE BENEFITS 14.1 Pension/retirement obligations The Group provides for retirement benefits of employees by means of a defined contribution pension and provident fund. The assets are held in separate funds controlled by trustees appointed by the Group and employees. 14.2 Post-retirement medical obligations The Group provides for the unfunded post-retirement healthcare benefits of a small number of retirees, their spouses and dependents. For past service of employees, the Group recognises and provides for the actuarially determined present value of post-retirement medical aid employer contributions on an accrual basis using interest rates with reference to the market yield of government bonds at reporting date. An independent actuary performs valuations of the defined benefit obligation, annually at reporting date, using the projected unit credit method to determine the present value of its post-retirement medical obligations and related current and past service costs. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited in the Statement of Profit or Loss and Other Comprehensive Income in the period in which they arise. 14.3 Termination benefits Termination benefits are recognised as an expense in the Statement of Profit or Loss and Other Comprehensive Income and a liability in the statement of financial position when the Group has a present obligation relating to termination. 14.4 Leave pay provision The Group recognises employees’ rights to annual leave entitlement in respect of past service accumulated at reporting date. 14.5 Management bonuses Management bonuses are recognised as an expense in staff costs as incurred when it is probable that the economic benefits will be paid and the amount can be reliably measured. Management bonuses arise as a result of a contractual obligation, but the amount of the bonus is at the discretion of the employer. 14.6 Long-term incentive and retention schemes The long-term incentive scheme concluded in 2020. The retention scheme is in place for qualifying employees. The entitlement to these benefits is based on the employee remaining in service of the Group for a period of three to five years, depending on the scheme. The present value of the long-term incentive scheme is determined by discounting the estimated cash flows using an appropriate bond yield curve as at the reporting date, applying the projected unit credit method. The growth of the benefit under the retention scheme is based on the five-year rolling historical average return of the PPS Profit-Share Account.