Lenovo 2013 Annual Report Download - page 180

NOTES TO THE FINANCIAL STATEMENTS
Lenovo Group Limited 2012/13 Annual Report
178
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:
2013 2012 2011 2010 2009
US$’000 US$’000 US$’000 US$’000 US$’000
Present value of defined benefit obligations 445,183 435,760 255,673 239,566 210,613
Fair value of plan assets 281,300 230,942 180,803 158,699 142,613
Deficit 163,883 204,818 74,870 80,867 68,000
Actuarial (gains)/losses arising on plan assets (7,840) 1,786 3,642 (386) 6,023
Actuarial losses/(gains) arising on plan liabilities 25,014 35,751 3,548 11,226 (13,048)
17,174 37,537 7,190 10,840 (7,025)
The amounts recognized in the consolidated income statement are as follows:
Pension Medical
2013 2012 2013 2012
US$’000 US$’000 US$’000 US$’000
Current service cost 16,233 14,296 522 577
Past service cost 2,031 (9) ––
Interest cost 10,407 10,611 707 958
Expected return on plan assets (5,904) (6,548) (174) (202)
Curtailment losses (166) –––
Total expense recognized in the
consolidated income statement 22,601 18,350 1,055 1,333
(d) The Company does not have any pension plan or post-employment medical benefits plan.
37 Business combinations
During the year, the Group completed three business combination activities aiming at expanding the Group’s existing scale of
operations and to enlarge the Group’s market share.
On December 26, 2012, the Group acquired 100% of the issued share capital of Stoneware, a company incorporated in the
United States. Stoneware is a company in the business of development and sale of cloud computing related software.
On December 29, 2012, the Group completed the formation of a strategic partnership with EMC which consists of three
business components, namely server alliance, storage OEM/reseller relationship and formation of joint venture company with
EMC to develop network-attached storage products. Immediately following completion, the Group and EMC respectively
owns 51% and 49% of the issued share capital of EMC JV.
On January 2, 2013, the Group acquired the entire equity interests in CCE, companies incorporated in Brazil. CCE is
principally engaged in the manufacturing and marketing of personal computers and consumer electronics.
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 which 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 joint venture
agreement with EMC involves an arrangement on the transfer of ownership interest with EMC under call and put options
granted to the Company and EMC respectively, and has been accounted for in accordance with HKAS 27.
The estimated total consideration for the business combination activities completed during the year is approximately US$219
million, including cash and the Company’s shares as consideration shares.