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2010/11 Annual Report Lenovo Group Limited 129
34 Commitments
(a) Commitments arising from business combination
On January 27, 2011, the Company entered into a business combination agreement (“Agreement”) with NEC
Corporation (“NEC”). Pursuant to the Agreement, the Company and NEC agreed to establish a joint venture company
(“JVCo”) to own and operate their respective personal computer business in Japan. The Company will pay NEC an
amount equal to US$175 million which will be satisfied by an issue of the Company’s ordinary shares to NEC. The
agreement contains provisions on adjustments made to working capital which will be satisfied in cash. Immediately
following the completion, the Company and NEC will own 51% and 49% respectively of the issued share capital of
JVCo.
Pursuant to the Agreement, both the Company and NEC are respectively granted call and put options which entitle the
Company to purchase from NEC or NEC to sell to the Company the 49% NEC’s equity interests in JVCo. Both options
will be exercisable following the fifth anniversary of the date of completion.
(b) Capital commitments
Except as disclosed in Note 34(a) above, at March 31, 2011, the Group had the following other capital commitments:
2011 2010
US$’000 US$’000
Contracted but not provided for:
– Property, plant and equipment 4,662 3,235
– Intangible assets 8,525 17,182
– IT consulting services –1,163
13,187 21,580
Authorized but not contracted for:
– Property, plant and equipment 22,782 37,386
– Intangible assets –67,602
22,782 104,988
At March 31, 2011, the Company did not have any capital commitments (2010: Nil) other than as disclosed in Note (a)
above.
(c) Commitments under operating leases
The future aggregate minimum lease payments in respect of land and buildings under non-cancelable operating leases
of the group are as follows:
2011 2010
US$’000 US$’000
Not later than one year 36,267 35,960
Later than one year but not later than five years 94,409 77,218
Later than five years 44,268 50,796
174,944 163,974
At March 31, 2011, the Company did not have any operating lease commitments (2010: Nil)