Lenovo 2008 Annual Report Download - page 137

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36 Notes to the consolidated cash flow statement
Reconciliation of profit before taxation to net cash generated from operations
2008 2007
US$’000 US$’000
Profit before taxation 512,850 154,551
Share of profits of associated companies (124) (1,869)
Finance income (52,048) (26,329)
Depreciation of property, plant and equipment and amortization of
prepaid lease payments 88,025 67, 819
Amortization of intangible assets and share-based compensation 180,641 141,838
Loss/(gain) on disposal of property, plant and equipment 8,299 (1,726)
Loss on disposal of intangible assets 7,210 –
Impairment of assets 2,530 8,990
Fair value change on warrants –171
Gain on disposal of investments (19,791) (17,348)
Decrease in inventories (152,473) (26,18 0)
Increase in trade receivables, notes receivable, deposits,
prepayments and other receivables (463,631) (174,151)
Increase in trade payables, notes payable, provisions,
accruals and other payables 981,950 363,833
Finance costs 38,366 35,133
Net cash generated from operations 1,131,804 524,732
37 Retirement benefit obligations
Group
2008 2007
US$’000 US$’000
Pension obligation included in other non-current liabilities (Note 29)
Pension benefits 77,264 95,970
Post-employment medical benefits 8,226 6,978
85,490 102,948
Expensed in income statement
Pension benefits 6,931 22,399
Post-employment medical benefits 1,253 4,411
8,184 26,810
On the acquisition of the personal computer business of IBM, the Group assumed a cash balance pension liability for substantially
all former IBM employees in Japan, and final salary defined benefit obligations for selected employees in other countries.
In the United States, the Group operates a final-salary pension plan that covers approximately 25% of all employees. These
were former participants in the IBM US pension plan. In addition, the Group operates a supplemental defined benefit plan that
covers certain executives transferred from IBM and is intended to provide benefits in excess of certain US tax and labour law
limits that apply to the pension plan. Both plans are frozen to new participation. However, benefits continue to accrue.
In Germany, the Group operates a hybrid plan that contains both a defined contribution feature and a defined benefit feature
that contains a final-pay formula. This plan is closed to new entrants.
Participant benefits under the Group plans depend on the provisions of the former IBM plan under which the participant had
been covered. The Group’s major plans are valued by qualified actuaries annually using the projected unit credit method.
Lenovo Group Limited • Annual Report 2007/08 135