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NOTES TO THE FINANCIAL STATEMENTS
Lenovo Group Limited 2012/13 Annual Report
156
17 Intangible assets (continued)
(c) Impairment tests for goodwill and intangible assets with indefinite useful lives (continued)
Future cash flows are discounted at the rate of 11% (2012: 11%) across all CGUs. The estimated growth rates used for
value-in-use calculations are as follows:
2013 2012
China 9% 11.5%
APLA -1% N/A
EMEA -2% N/A
North America -1% 1.0%
REM N/A 7.3%
West Europe N/A (1.9%)
Japan, Australia, New Zealand N/A 0.2%
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.
The directors are of the view that there was no evidence of impairment of goodwill and trademarks and trade names as
at March 31, 2013 arising from the review (2012: Nil).
The Group has performed a sensitivity analysis on key assumptions used for the annual impairment test for goodwill.
Except for APLA in 2013 and JANZ in 2012, a reasonably possible change in key assumptions used in the impairment
test for goodwill would not cause any CGU’s carrying amount to exceed its respective recoverable amount. As at March
31 2013, the recoverable amount for APLA calculated based on value in use exceeded carrying value by US$409
million. Had APLA’s forecasted operating margin been 0.8 percentage point lower than management’s estimates, the
APLA’s remaining headroom would be removed.
As at March 31, 2012, the recoverable amount for JANZ calculated based on value in use exceeded carrying value
by US$149 million. Had JANZ’s forecasted operating margin been 0.65 percentage point lower than management’s
estimates, the JANZ’s remaining headroom would be removed.
18 Subsidiaries
(a) Investments in subsidiaries
Company
2013 2012
US$’000 US$’000
Unlisted investments, at cost 2,807,103 2,472,880
A summary of the principal subsidiaries of the Company is set out in Note 39.
(b) Amounts due from/to subsidiaries
The amounts are interest-free, unsecured and have no fixed terms of repayment.