Lenovo 2014 Annual Report Download - page 134

132 Lenovo Group Limited 2013/14 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
1 General information and basis of preparation (continued)
The adoption of these new and revised standards and amendments to existing standards is not expected to have material
impact on the Group’s financial statements.
Changes in presentation
Effective April 1, 2013 the Group has re-organized its structure into two end-to-end business groups (Lenovo Business Group
and Think Business Group), which enhances the Group’s capabilities in both efficiency and innovation. As part of the Group re-
organization, the Group redistributes certain global operation functions to directly align with the respective business groups. The
re-organization of the global operation functions enables each of the geographical segments to directly control their businesses
through closely aligned supply chain, services, marketing and other functions that directly report into the geography instead of
part of the corporate global operations.
Certain overhead costs that were included as part of the cost of sales in the previous years have now been reclassified to
administrative expenses. Management considers the current reclassification is more appropriate and consistent with industry
practice.
The Group has also re-aligned its geographical segments whereby Latin America that was previously part of Asia Pacific/Latin
America (“APLA”) has been spun off and combined with North America, transforming into a new Americas region. The Group’s
original geographic structure had achieved rapid business growth through the alignment of its strategic direction and business
acquisitions. The new geographical structure is in recognition that the Group’s stronger infrastructure in the Latin America aligns
the Group’s strategy to expand across the entire Americas region.
The comparative information has been reclassified to conform to the presentation of current organizational structure and
allocation basis.
2 Significant accounting policies
The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated.
(a) Subsidiaries
(i) Consolidation
The consolidated financial statements include the financial statements of the Company and all of its subsidiaries
made up to March 31.
Subsidiaries are all entities (including special purpose entities) over which the Group is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity generally accompanying a shareholding of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether
the Group controls another entity. The Group also assesses existence of control where it does not have more than
50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-
facto control may arise from circumstances where it does not have more than 50% of the voting power but is able
to govern the financial and operating policies by virtue of de-facto control such as enhanced minority rights or
contractual terms between shareholders, etc.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
Inter-company transactions, balances, income and expenses on transactions are eliminated. Profits and losses
resulting from inter-company transactions that are recognized in assets are also eliminated.
Adjustments have been made to the financial statements of subsidiaries when necessary to align their accounting
policies to ensure consistency with the policies adopted by the Group.
For subsidiaries which adopted December 31 as their financial year end date for statutory reporting purposes, their
financial statements for the years ended March 31, 2013 and 2014 have been used for the preparation of the Group’s
consolidated financial statements.