Annual Report 2021

CHINA MERCHANTS PORT HOLDINGS COMPANY LIMITED 124 Notes to the Consolidated Financial Statements For the year ended 31 December 2021 3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED) 3.2 Key sources of estimation uncertainty (continued) Deferred tax asset As at 31 December 2021, a deferred tax asset of HK$95 million (2020: HK$145 million) in relation to unused tax losses has been recognised in the consolidated statement of financial position. No deferred tax asset has been recognised on the tax losses of HK$2,286 million (2020: HK$2,076 million) due to the unpredictability of future profit streams. The realisability of the deferred tax asset mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future, which is a key source of estimation uncertainty. In cases where the actual future taxable profits generated are less or more than expected, or change in facts and circumstances which result in revision of future taxable profits estimation, a material reversal or further recognition of deferred tax assets may arise, which would be recognised in profit or loss for the period in which such a reversal or further recognition takes place. Useful lives of property, plant and equipment The management of the Group determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. It could change significantly as a result of technical innovations and expected actions by competitors or potential competitors in response to changes in market demands. The management will increase the depreciation charge where useful lives are less than previously estimated lives, or will write down or write off technically obsolete or non-strategic assets that have been abandoned or sold.