Lenovo 2011 Annual Report Download - page 67

2010/11 Annual Report Lenovo Group Limited
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DIRECTORS’ REPORT
Defined Contribution Plans (continued)
United Kingdom (“UK”) – Lenovo Savings Plan
UK regular, full-time and part-time employees are eligible to participate in the Lenovo Stakeholders Plan, which is a tax-qualified
defined contribution “stakeholder” plan. For employees hired after April 30, 2005, the Company contributes 6.7% of an employee’s
eligible salary to the employee’s pension account each year until he/she is 35, and then contributes 8.7% of salary after that age.
The Employer Contributions are dependent on Employee paying no less that 3% of salary to the same fund.
Prior employees of IBM receive Company contributions varying from 6.7% to 30% of eligible compensation depending on their
service and the prior IBM plan they participated in.
Canada – Defined Contribution Pension Plan
Canadian regular, full-time and part-time employees are eligible to participate in the Defined Contribution Pension Plan, which is a
tax-qualified defined contribution plan. The Company contributes 3% to 6% of the employee’s eligible compensation, depending on
years of service. All contributions are made in cash, in accordance with the participants’ investment elections.
Hong Kong – Mandatory Provident Fund
The Group operates a Mandatory Provident Fund Scheme for all qualified employees employed in Hong Kong. They are required to
contribute 5 percent of their compensations (subject to the ceiling under the requirements set out in the Mandatory Provident Fund
legislation). The employer’s contribution will increase from 5 percent to 7.5 percent and 10 percent respectively after completion
of five and ten years of service by the relevant employees. Details of the cost charged to the income statement and forfeited
contributions are set out in note 36.
Facility Agreement with Covenant on Controlling Shareholder
The Company entered into a facility agreement with a syndicate of banks on February 2, 2011 (the “Facility Agreement”) for a term
loan facility of up to USD500 million (the “Facility”). The final maturity date of the Facility will fall on the date which is 60 months
after February 2, 2011. The Facility Agreement includes, inter alia, terms to the effect that it will be an event of default if Legend
Holdings Limited, the controlling shareholder of the Company: (i) is not or ceases to be the direct or indirect beneficial owner
of 20% or more of the issued share capital of the Company; or (ii) is not or ceases to be the single largest shareholder of the
Company.
Continuing Connected Transactions
On March 31, 2009, the Company entered into a Master Services Agreement with 聯想移動通信科技有限公司 (Lenovo Mobile
Communication Technology Ltd.) (“Lenovo Mobile”) in respect of the sharing of office spaces, provision of logistic, administrative
and information technology services by the Group to Legend Holdings Limited, its subsidiaries and associates for a term of three
years commencing from April 1, 2009 and expiring on March 31, 2012. The annual cap amount of the transactions for each of
the three financial years ending March 31, 2012 is HK$25,000,000. Legend Holdings Limited is a controlling shareholder of the
Company and thus a connected person of the Company within the meaning of the Listing Rules. Details of this Master Services
Agreement are set out in the Company’s announcement dated March 31, 2009.
In accordance with rule 14A.37 of the Listing Rules, the independent non-executive directors of the Company reviewed the
continuing connected transactions in the paragraph above and confirmed that the transactions were entered into:
(i) In the ordinary and usual course of business of the Group;
(ii) Either on normal commercial terms or on terms no less favourable to the Group than terms available to or from (as
appropriate) independent third parties; and
(iii) In accordance with the relevant agreement governing them on terms that were fair and reasonable and in the interests of the
shareholders of the Group as a whole.
Pursuant to Rule 14A.38 of the Listing Rules, the Company’s auditor was engaged to report on the Group’s continuing connected
transactions in accordance with Hong Kong Standard on Assurance Engagements 3000 “Assurance Engagements Other Than
Audits or Reviews of Historical Financial Information” and with reference to Practice Note 740 “Auditor’s Letter on Continuing
Connected Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified Public Accountants.
The auditor has issued an unqualified letter containing findings and conclusions in respect of the continuing connected transactions
disclosed by the Group in the paragraph above in accordance with paragraph 14A.38 of the Listing Rules. A copy of the auditor’s
letter has been provided by the Company to the Stock Exchange.