Lenovo 2013 Annual Report Download - page 157

2012/13 Annual Report Lenovo Group Limited 155
17 Intangible assets (continued)
(c) Impairment tests for goodwill and intangible assets with indefinite useful lives
As explained in Note 1, the Group underwent an organizational structure change under which the intangible assets
have been reallocated to the CGU affected using a relative value approach in accordance with HKAS 36 “Impairment of
assets”.
The carrying amounts of goodwill and trademarks and trade names with indefinite useful lives are presented below:
China APLA EMEA
North
America Total
US$ million US$ million US$ million US$ million US$ million
At March 31, 2013
Goodwill 1,123 789 261 231 2,404
Trademarks and trade names 209 79 113 60 461
China REM *
North
America West Europe
Japan,
Australia,
New Zealand Total
US$ million US$ million US$ million US$ million US$ million US$ million
At March 31, 2012
Goodwill 1,101 167 160 242 611 2,281
Trademarks and trade names 209 64 58 110 14 455
* Includes Africa, Asia Pacific, Central/Eastern Europe, Hong Kong, India, Korea, Middle East, Pakistan, Russia, Taiwan, Turkey and
Latin America.
(i) On December 26, 2012, the Group completed the acquisition of the entire issued share capital of Stoneware, Inc.
(“Stoneware”) (Note 37). The corresponding goodwill is calculated at US$36 million. The goodwill is attributable to
the significant synergies expected to arise in connection with the Group’s strategic objectives to extend the global
reach of the existing cloud-computing offerings and to develop this technology beyond the current government-
focused and education-focused offerings into more consumer-focused offerings over time. The goodwill has been
allocated to the North America and EMEA market segments.
(ii) On December 29, 2012, the Group completed the formation of a strategic partnership with EMC Corporation
(“EMC”) (Note 37). The strategic partnership consists of three business components, namely server alliance,
storage OEM/reseller relationship and formation of a joint venture company (“EMC JV”) with EMC to develop
network-attached storage products. The goodwill arising from this acquisition is calculated at US$52 million.
The goodwill is primarily attributable to the significant synergies expected to arise in connection with the Group’s
commitment to provide a complete range of products for the commercial customers. The goodwill has been
allocated to the North America and China market segments.
(iii) On January 2, 2013, the Group completed the acquisitions of the entire interests in Digibrás Indústria do Brasil
S.A., Digiboard Eletrônica da Amazônia Ltda., and Dual Mix Comércio de Eletrônicos Ltda., (collectively “CCE”),
companies incorporated in Brazil (Note 37). The goodwill arising from these acquisitions is calculated at US$114
million. The goodwill is primarily attributable to the significant synergies expected to arise in connection with the
Group’s commitment to its core personal computer business and CCE’s strong market position in Brazil. The entire
amount of goodwill has been allocated to the APLA market segment.
The Group completed its annual impairment test for goodwill allocated to the Group’s various CGUs by comparing their
recoverable amounts to their carrying amounts as at the reporting date. The recoverable amount of a CGU is determined
based on value in use. These assessments use pre-tax cash flow projections based on financial budgets approved by
management covering a 5-year period with a terminal value related to the future cash flow of the CGU beyond the five-
year period extrapolated using the estimated growth rates stated below. The estimated growth rates adopted do not
exceed the long-term average growth rates for the businesses in which the CGU operates.