Lenovo 2012 Annual Report Download - page 30

MANAGEMENT’S DISCUSSION & ANALYSIS
2011/12 Annual Report Lenovo Group Limited
28
The Group entered into a 5-Year loan facility agreement with a bank of US$300 million on July 17, 2009. The facility has
not been utilized as at March 31, 2012 (2011: Nil).
In addition, the Group entered into another 5-Year loan facility agreement with syndicated banks for US$500 million on
February 2, 2011. The facility has not been utilized as at March 31, 2012 (2011: Nil).
The Group has also arranged other short-term credit facilities. At March 31, 2012, the Group’s total available credit facilities
amounted to US$6,642 million (2011: US$5,570 million), of which US$362 million (2011: US$331 million) was in trade lines,
US$521 million (2011: US$475 million) in short-term and revolving money market facilities and US$5,759 million (2011:
US$4,764 million) in forward foreign exchange contracts. At March 31, 2012, the amounts drawn down were US$220
million (2011: US$201 million) in trade lines, US$4,720 million (2011: US$3,190 million) being used for the forward foreign
exchange contracts; and US$63 million (2011: US$72 million) in short-term bank loans.
At March 31, 2012, the Group’s outstanding bank loans represented the short-term bank loans of US$63 million (2011:
US$72 million). When compared with total equity of US$2,448 million (2011: US$1,835 million), the Group’s gearing ratio
was 0.03 (2011: 0.15). The net cash position of the Group at March 31, 2012 is US$4,108 million (2011: US$2,725
million).
The Group is confident that all the loan facilities on hand can meet the funding requirements of the Group’s operations and
business development.
At March 31
2012
US$ million
2011
US$ million
Bank deposits and cash and cash equivalents 4,171 2,997
Less: total borrowings (63) (272)
4,108 2,725
The Group adopts a consistent hedging policy for business transactions to reduce the risk of currency fluctuation arising
from daily operations. At March 31, 2012, the Group had commitments in respect of outstanding forward foreign exchange
contracts amounting to US$4,720 million (2011: US$3,190 million).
The Group’s forward foreign exchange contracts are either used to hedge a percentage of future transactions which are
highly probable, or used as fair value hedges for identified assets and liabilities.
CONTINGENT LIABILITIES
The Group, in the ordinary course of its business, is involved in various 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, 2012, the Group had approximately 27,000 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.