Lenovo 2012 Annual Report Download - page 100

2011/12 Annual Report Lenovo Group Limited
98
DIRECTORS’ REPORT
Defined Contribution Plans (continued)
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 compensation (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 35.
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US$500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 in the
Company.
Continuing Connected Transactions
(I) Continuing connected transactions with Legend Holdings Limited and its associates
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.) 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 ended March 31, 2012 is HK$25,000,000. Legend Holdings Limited is a controlling shareholder of
the Company and thus a connected person 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.
(II) Continuing connected transactions with NEC and its associates
On January 27, 2011, the Company entered into a Business Combination Agreement with, amongst others, NEC Corporation
(“NEC”,togetherwithitssubsidiariesthe“NECGroup”),pursuanttowhichtheCompanyandNECagreedtoestablishLenovo
NECHoldingsB.V.(“JVCo”,togetherwithitssubsidiariesthe“JVCoGroup”)toownandoperatetheirrespectivepersonal
computer businesses in Japan.
AtorpriortoclosingoftheBusinessCombinationAgreementonJuly1,2011(“the“ClosingDate”),NECorothermembers
oftheNECGroupenteredintovariousagreements(the“CCTAgreements”)withtheCompany,theJVCoorothermembers
of the JVCo Group in respect of the provision of certain services and products to or by the JVCo Group to facilitate the
operation of its personal computer business in Japan. Details of the CCT Agreements are set out in the announcement dated
April 21, 2011 and the circular issued by the Company to the shareholders on May 11, 2011.
Upon the Closing Date, JVCo became an indirect non wholly-owned subsidiary of the Company. As NEC is a substantial
shareholder of the JVCo and therefore, a connected person of the Company, the transactions contemplated under the CCT
Agreements constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules. The CCT
Agreements were approved by the independent shareholders at an extraordinary general meeting of the Company on May 27,
2011 and are subject to reporting requirements under the Listing Rules.