0175 Geely Automobile Holdings Limited Annual Report 2011

Annual Report 2011Geely Automobile Holdings LimitedNOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTSFor the year ended 31 December 201117. Prepaid Land Lease Payments2011 2010RMB’000RMB’000The Group’s prepaid land lease payments comprise:Outside Hong Kong, held on:– Leases of between 10 to 50 years 1,517,157 1,401,483Analysed for reporting purposes as:Current assets 37,582 33,782Non-current assets 1,479,575 1,367,7011,517,157 1,401,483Opening net carrying amount 1,401,483 1,200,795Additions 27,559 27,465Acquisition of subsidiaries 194,003 212,833Disposals (77,445) (5,927)Annual charges of prepaid land lease payments (28,443) (33,683)Closing net carrying amount 1,517,157 1,401,483Certain of the Group’s prepaid land lease payments have been pledged to secure borrowings granted to theGroup (notes 26(a) and 26(e)) and to the Company’s ultimate holding company (note 35(c)).18. Goodwill2011 2010RMB’000RMB’000Carrying amountArising on acquisition of subsidiaries 6,222 6,222Goodwill is allocated to the cash generating unit of manufacturing of complete knock down kits in Lanzhou. Therecoverable amount of goodwill was determined based on value-in-use calculations, using an annual cash flowbudget plan covering a five-year period with a long-term average growth rate of 12% (2010: 15%) per annumfor the operation. A pre-tax discount factor of 6% (2010: 6%) per annum was applied in the value in use model.The key assumptions include stable profit margins, which have been determined based on the expectations formarket share after taking into consideration current economic environment and market forecast. The directorsbelieve that any reasonably possible change in the key assumptions on which the recoverable amount is basedwould not cause the carrying amount of the unit to exceed the aggregate recoverable amount.93