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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
19 Intangible assets (continued)
As explained in Note 5, the Group uses geographical segment as its primary segment for reporting segment information. For
the purposes of impairment testing, goodwill and trademarks and trade names with indefinite useful lives are allocated to the
Group’s cash-generating units (CGUs). The carrying amounts of goodwill and trademarks and trade names with indefinite useful
lives as at March 31, 2008 are presented below:
Americas
Europe, Middle
East and Africa
Asia Pacific
(excluding
Greater China) Greater China Total
US$’million US$’million US$’million US$’million US$’million
Goodwill 364 102 152 679 1,297
Trademarks and trade names 107 30 45 198 380
The recoverable amount of a CGU is determined based on fair value less costs to sell. These assessments use cash flow
projections based on financial budgets approved by management covering a 5-year period with a terminal value related to the
future earnings potential of the CGU beyond the next five years. Future cash flows are discounted at the rate of 11 percent
(2007: 13 percent). This growth rate does not exceed the long-term average growth rate for the business in which the CGU
operates.
The directors are of the view that there was no evidence of impairment of goodwill and trademarks and trade names as at
March 31, 2008 arising from the review.
These assumptions have been used for the analysis of each CGU within the geographical segment.
Management determined budgeted gross margins based on past performance and its expectations for the market development.
The weighted average growth rates used are consistent with the forecasts included in industry reports. The discount rates are
pre-tax and reflect specific risks relating to the relevant segments.
A one percentage point increase or decrease in the discount rate would result in a decrease or increase in the recoverable
amount of 13 percent respectively. A one percentage point increase or decrease in forecasted growth rates would result in
an increase or decrease in the recoverable amount of 3 percent respectively. A one percentage point increase or decrease in
forecasted operating margins would result in an increase or decrease in the recoverable amount of 25 percent respectively.
20 Subsidiaries
(a) Investments in subsidiaries
Company
2008 2007
US$’000 US$’000
Unlisted investments, at cost 1,187,893 1,145,721
A summary of the principal subsidiaries of the Company is set out in Note 38.
(b) Amounts due from/(to) subsidiaries
The amounts are interest-free, unsecured and have no fixed terms of repayment.
Lenovo Group Limited • Annual Report 2007/08
118