MANAGEMENT’S DISCUSSION & ANALYSIS (CONT’D) 7.  Critical Accounting Estimates Impairment of Non-Financial Assets Income Taxes Share-Based Payments Future Employee Benefits Fair Value of Financial Instruments Where the fair value of financial assets and financial liabilities  recorded in the statement of financial position cannot be derived  from active markets, their fair value is determined using valuation  techniques including the discounted cash flow model. The inputs  to these models are taken from observable markets where possible,  but where this is not feasible, a degree of estimation is required in  establishing fair values. The estimates include considerations of  inputs such as liquidity risk, credit risk and volatility. Changes in  Significant judgment is required in determining the global  provision for taxation. There are transactions and calculations  during the ordinary course of business for which the ultimate tax  determination is uncertain. The Company maintains provisions for  uncertain tax positions that it believes appropriately reflect its risk  with respect to tax matters under active discussion, audit, dispute  or appeal with tax authorities, or which are otherwise considered to  involve uncertainty. These provisions for uncertain tax positions  are made using the best estimate of the amount expected to be  paid based on a qualitative assessment of all relevant factors. The  Company reviews the adequacy of these provisions at each balance  sheet date. However, it is possible that at some future date an  additional liability could result from audits by taxing authorities.  Where the final tax outcome of these matters is different from the  amounts that were initially recorded, such differences will affect  the tax provisions in the period in which such determination  is made. Estimation of income taxes includes evaluating the recoverability  of deferred tax assets based on an assessment of the Company’s  ability to utilize the underlying future tax deductions against  future taxable income before they expire. The Company’s  assessment is based upon existing tax laws and estimates of future  taxable income. If the assessment of the Company’s ability to  utilize the underlying future tax deductions changes, the Company  would be required to recognize more or fewer of the tax deductions  as assets, which would decrease or increase the income tax  expense in the period in which this is determined. Income taxes in reporting periods are accrued, to the extent  practicable, based on current taxes expected to be paid or  recovered for the year, and deferred taxes applicable in respect of  the temporary differences that will reverse in subsequent periods.  The tax rates and tax laws used to compute the amounts are those  that are enacted or substantively enacted at the reporting date in  the countries where the Company operates and generates  taxable income. currency in which the benefits will be paid and that have terms to  maturity approximating the terms of the related pension liability. Determination of benefit expense requires assumptions such as  the expected return on assets available to fund pension  obligations, the discount rate to measure obligations, the projected  age of employees upon retirement, the expected rate of future  compensation and the expected mortality rate of pensioners. For  the purpose of calculating the expected return on plan assets, the  assets are valued at fair value. Actual results will differ from results  which are estimated based on assumptions. See  note 14  to the  Consolidated Financial Statements for certain assumptions made  with respect to future employee benefits. The preparation of the Company’s financial statements requires  management to make critical judgments, estimates and  assumptions that affect the reported amounts of revenues,  expenses, assets and liabilities, and the disclosure of contingent  liabilities, at the reporting date. On an ongoing basis, management  evaluates its judgments, estimates and assumptions using  historical experience and various other factors it believes to be  reasonable under the given circumstances. Actual outcomes may  differ from these estimates under different assumptions and  conditions that could require a material adjustment to the reported  carrying amounts in the future. The most significant estimates made by management include the following: At each balance sheet date, the Company reviews the carrying  amounts of its property, plant and equipment and intangible assets  to determine whether there is any indication that those assets are  impaired. Individual assets are grouped together as a cash  generating unit (“CGU”) for impairment assessment purposes at  the lowest level at which there are identifiable cash flows that are  independent from other Company assets. The Company’s CGUs  and goodwill are tested for impairment annually and at other times  when indicators of impairment arise. The manner in which the  Company identified its CGUs is disclosed in  note 5  to the  Consolidated Financial Statements. When calculations to determine the recoverable amount of the  CGU are undertaken, management must estimate the expected  future cash flows from the individual asset or CGU and choose a suitable discount rate in order to calculate the present value of those cash flows. Further details, including a sensitivity analysis  of key assumptions, are given in  note 5  to the Consolidated  Financial Statements. The Company measures the cost of cash-settled transactions with  employees initially at fair value at the grant date; the liability is  re-measured at each balance sheet date with changes in fair value  recognized in profit or loss. The Company measures the cost of equity-settled transactions  with employees by reference to the fair value of the equity  instruments at the date at which they are granted. Estimating fair  value for share-based payment transactions requires  determination of the most appropriate valuation model, which is  dependent on the terms and conditions of the grant. This estimate  also requires determination of the most appropriate inputs to the  valuation model including the expected life of the share option,  volatility and dividend yield and making assumptions about them.  The assumptions and models used for estimating fair value for  share-based payment transactions are disclosed in  note 18  to the  Consolidated Financial Statements. The present value of the defined benefit obligation is determined  by discounting the estimated future cash outflows using interest  rates of high-quality corporate bonds that are denominated in the  44 HIGH LINER FOODS INCORPORATED