Lenovo 2015 Annual Report Download - page 192

190 Lenovo Group Limited 2014/15 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
27 BORROWINGS (continued)
Except for short-term loans of US$54 million with collateral at the same amount recorded as trade receivables, all the
borrowings are unsecured and the effective annual interest rates at March 31, 2015 are as follows:
United States dollar Other currencies
2015 2014 2015 2014
Term loans 1.73% 2.24% N/A 8%
Short-term loans 0%-3% 0%-5.0% 0%-15.17% 0%-12.87%
28 OTHER NON-CURRENT LIABILITIES
2015 2014
US$’000 US$’000
Contingent considerations (i) 270,196 307,183
Deferred considerations (i) 1,394,941 2,151
Guaranteed dividend to non-controlling
shareholders of a subsidiary (ii) 9,605 18,922
Environmental restoration (Note 26(b)) 14,082 17,559
Written put option liability (iii) 219,317 217,157
Government incentives and grants received in advance (iv) 118,371 143,778
Deferred rent liabilities 127,954 –
Others 285,969 138,164
2,440,435 844,914
Notes:
(i) Pursuant to the completion of business combinations, the Group is required to pay in cash to the then respective shareholders/sellers
contingent considerations with reference to certain performance indicators as written in the respective agreements with those then
shareholders/sellers; and deferred consideration. Accordingly, non-current liabilities in respect of the present values of contingent and
deferred considerations have been recognized. The contingent considerations are subsequently re-measured at their fair values as a
result of change in the expected performance at each balance sheet date, with any resulting gain or loss recognized in the consolidated
income statement. Deferred consideration is subsequently measured at amortized cost.
As at March 31, 2015, the potential undiscounted amounts of future payments in respect of the contingent and deferred considerations
that the Group could be required to make to the then respective shareholders/sellers under the arrangements are as follows:
Joint venture with NEC Corporation Nil – US$325 million
Joint venture with EMC Corporation US$39 – US$59 million
Stoneware Nil – US$48 million
CCE Nil – BRL400 million
Google Inc. US$1,500 million
With reference to the performance indicators, if their actual performances had been 10% higher/lower than their respective expected
performances, contingent considerations would have been increased/decreased by approximately US$4 million and US$30 million
respectively with the corresponding loss/gain recognized in consolidated income statement.
(ii) Following the acquisition of Medion on July 29, 2011, Lenovo Germany Holding GmbH (“Lenovo Germany”), an indirect wholly-owned
subsidiary of the Company and the immediate holding company of Medion entered into a domination and profit and loss transfer
agreement (the “Domination Agreement”) with Medion on October 25, 2011. Pursuant to the Domination Agreement, Lenovo Germany
has guaranteed to the non-controlling shareholders of Medion an annual guaranteed pre-tax dividend amounting to EUR0.82 per share
for each fiscal year. The Domination Agreement became effective on January 3, 2012 and is terminable by either Lenovo Germany or
Medion after March 31, 2017. Accordingly, a non-current liability in respect of future guaranteed dividend has been recognized. The
corresponding amount stated at its discounted value on the date of acquisition of Medion was charged to retained earnings in equity.