Lenovo 2010 Annual Report Download - page 27

2009/10 Annual Report Lenovo Group Limited
25
2010 2009
At March 31 US$ million US$ million
Bank deposits and cash and cash equivalents 2,439 1,863
Less: total borrowings (495) (685)
1,944 1,178
The Group adopts a consistent hedging policy for business transactions to reduce the risk of currency fluctuation
arising from daily operations. At March 31, 2010, the Group had commitments in respect of outstanding forward
foreign exchange contracts amounting to US$2,641 million (2009: US$1,964 million).
The Group’s forward foreign exchange contracts are either used to hedge a percentage of future intercompany
transactions which are highly probable, or used as fair value hedges for the identified assets and liabilities.
On May 17, 2005, the Company issued 2,730,000 convertible preferred shares at the stated value of HK$1,000
per share and unlisted warrants to subscribe for 237,417,474 ordinary shares of the Company for an aggregate
cash consideration of approximately US$350 million. The convertible preferred shares bear a fixed cumulative
preferential cash dividend, payable quarterly, at the rate of 4.5 percent per annum on the stated value of each
convertible preferred share. The convertible preferred shares are redeemable, in whole or in part, at a price equal
to the issue price together with accrued and unpaid dividends at the option of the Company or the convertible
preferred shareholders at any time after the maturity date at May 17, 2012. The warrant holders are entitled to
subscribe for 237,417,474 shares in the Company at HK$2.725 per share.
On September 9, 2009 and February 11, 2010, 621,250 and 384,582 convertible preferred shares were converted
into 227,981,647 and 141,131,005 voting ordinary shares respectively. At March 31, 2010, the outstanding
number of convertible preferred shares was 769,167.
On September 9, 2009, 63,502,788 warrants were exercised pursuant to which the remaining 173,914,686
warrants were repurchased by the Company at a unit price of HK$0.995 on the same day.
CONTINGENT LIABILITIES
The Group, in the ordinary course of its business, is involved in various other claims, suits, investigations, and legal
proceedings that arise from time to time. Although the Group does not expect that the outcome in any of these
other legal proceedings, individually or collectively, will have a material adverse effect on its financial position or
results of operations, litigation is inherently unpredictable. Therefore, the Group could incur judgments or enter into
settlements of claims that could adversely affect its operating results or cash flows in a particular period.
HUMAN RESOURCES
At March 31, 2010, the Group had a total of 22,205 (2009: 22,511) employees.
The Group implements remuneration policy, bonus and long-term incentive schemes with reference to the
performance of the Group and individual employees. The Group also provides benefits such as insurance, medical
and retirement funds to employees to sustain competitiveness of the Group.