Lenovo 2012 Annual Report Download - page 172

2011/12 Annual Report Lenovo Group Limited
170
NOTES TO THE FINANCIAL STATEMENTS
36 Retirement benefit obligations (continued)
(c) Additional information on post-employment benefits (pension and medical) (continued)
Summary of pensions and post-retirement medical benefits of the Group:
2012 2011 2010 2009 2008
US$’000 US$’000 US$’000 US$’000 US$’000
Present value of defined benefit obligations 435,760 255,673 239,566 210,613 220,650
Fair value of plan assets 230,942 180,803 158,699 142,613 135,160
Deficit 204,818 74,870 80,867 68,000 85,490
Actuarial losses/(gains) arising on plan assets 1,786 3,642 (386) 6,023 (11,384)
Actuarial losses/(gains) arising on plan liabilities 35,751 3,548 11,226 (13,048) 10,081
37,537 7,190 10,840 (7,025) (1,303)
The amounts recognized in the consolidated income statement are as follows:
Pension Medical
2012 2011 2012 2011
US$’000 US$’000 US$’000 US$’000
Current service cost 14,296 7,655 577 551
Past service cost (9) 14 ––
Interest cost 10,611 7,406 958 828
Expected return on plan assets (6,548) (5,197) (202) (179)
Curtailment losses –––(94)
Total expense recognized in the
consolidated income statement 18,350 9,878 1,333 1,106
(d) The Company does not have any pension plan or post-employment medical benefits plan.
37 Business combinations
During the year, the Group completed two business combination activities aiming at expanding the Group’s existing scale of
operations and to enlarge the Group’s market share.
On July 1, 2011, the Group completed the formation of a joint venture company to own and operate the Group’s and NEC’s
respectivepersonalcomputerbusinessesinJapan(the“NECJV”)pursuanttothebusinesscombinationagreementdated
January 27, 2011. Immediately following completion, the Group and NEC respectively owns 51% and 49% of the issued
share capital of NEC JV.
On July 29, 2011, the Group acquired 51.89% of the issued share capital of Medion, a publicly traded German stock
corporation listed on the Frankfurt am Main stock exchange. Medion is the parent company of the Medion group which is
an enterprise in the retail and service business for consumer electronic products, such as notebooks, PCs, TVs, audio and
mobile telecommunication. Thereafter, the Group acquired another 9.43% of the issued share capital in Medion through
a takeover offer pursuant to the German Securities Acquisition and Takeover Act. Immediately following the lapse of the
takeover offer period, the Group owns 61.32% of the issued share capital in Medion.
The Group’s business combination activities involve post-acquisition performance-based contingent considerations. HKFRS
3(Revised)“BusinessCombinations”requirestherecognitionofthefairvalueofthosecontingentconsiderationsasoftheir
respective dates of business combination as part of the consideration transferred in exchange for the acquired subsidiaries/
businesses. These fair value measurements require, among other things, significant estimation of post-acquisition performance
of the acquired subsidiaries/businesses and significant judgment on time value of money. Contingent considerations shall
be re-measured at their fair value resulting from events or factors emerge after the date of business combination, with any
resulting gain or loss recognized in the consolidated income statement in accordance with HKFRS 3 (Revised).
HKAS27“ConsolidatedandSeparateFinancialStatements”(asamendedin2008)requiresthattheproportionsallocated
to the parent and non-controlling interests are determined on the basis of present ownership interests. The two business
combination activities completed during the year involve arrangements on the transfer of ownership interest with the
respective shareholders of NEC JV and Medion and have been accounted for in accordance with HKAS 27.
The estimated total consideration for the two business combination activities is approximately US$1,208 million, including
cash and the Company’s shares as consideration shares.