Lenovo 2015 Annual Report Download - page 193

191
2014/15 Annual Report Lenovo Group Limited
NOTES TO THE FINANCIAL STATEMENTS
28 OTHER NON-CURRENT LIABILITIES (continued)
Notes: (continued)
(iii) Pursuant to the joint venture agreement entered into between the Company and Compal Electronics, Inc. (“Compal”) to establish a joint
venture company (“JV Co”) to manufacture notebook computer products and related parts, the Company and Compal are respectively
granted call and put options which entitle the Company to purchase from Compal and Compal to sell to the Company the 49% Compal’s
interests in the JV Co. The call and put options will be exercisable at any time after October 1, 2019 and October 1, 2017 respectively.
The exercise price for the call and put options will be determined in accordance with the joint venture agreement, and up to a maximum
of US$750 million.
The financial liability that may become payable under the put option is initially recognized at fair value within other non-current liabilities
with a corresponding charge directly to equity, as a put option written on non-controlling interest.
The put option liability shall be re-measured at its fair value resulting from the change in the expected performance of the JV Co at each
balance sheet date, with any resulting gain or loss recognized in the consolidated income statement. If the actual performance of JV Co
had been 10% higher/lower than its expected performances, the written put option liability would have been increased/decreased by
approximately US$4 million with the corresponding loss/gain recognized in consolidated income statement.
In the event that the put option lapses unexercised, the liability will be derecognized with a corresponding adjustment to equity.
(iv) Government incentives and grants received in advance by certain group companies included in other non-current liabilities are mainly
related to research and development projects and construction of property, plant and equipment. These group companies are obliged to
fulfill certain conditions under the terms of the government incentives and grants. The government incentive and grants are credited to
the income statement upon fulfillment of those conditions.
29 SHARE CAPITAL
2015 2014
Number of
shares US$’000
Number of
shares US$’000
Issued and fully paid:
Voting ordinary shares:
At the beginning of the year 10,406,375,509 1,650,101 10,439,152,059 33,465
Issue of ordinary shares 701,107,215 1,039,396 – –
Exercise of share options 1,172,000 385 18,277,450 816
Repurchase of shares – – (51,054,000) (164)
Transfer from share premium and share
redemption reserve (Note 30) – – –1,615,984
At the end of the year 11,108,654,724 2,689,882 10,406,375,509 1,650,101
An entirely new Companies Ordinance (Cap.622) (“new CO”) that came into effect on March 3, 2014. The new CO abolishes
authorized share capital, par value, share premium, and share redemption reserve, in respect of the share capital of Hong
Kong companies. As a result, the amounts of share premium and share redemption reserve of the Company were transferred
to the share capital.