Lenovo 2016 Annual Report Download - page 157

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2015/16 Annual Report Lenovo Group Limited
CONTINUING CONNECTED TRANSACTIONS (continued)
(ii) Continuing connected transactions with Compal Electronics, Inc. and its associates
In 2012, the Company and Compal Electronics, Inc. (“Compal”, together with its affiliates the “Compal Group”)
set up a joint venture company, LC Future Center Limited (“LCFC”) which is owned as to 51% by the Company
and 49% by Compal. Compal is therefore a connected person of the Company at subsidiary level. Before Compal
became a connected person of the Company, the Group and Compal Group had entered into certain master
agreements in relation to (i) the supply of components from the Group to the Compal Group; and (ii) the purchase
of products and services from the Compal Group by the Group. These transactions have been conducted on a
continuing and recurring basis.
LCFC has been a subsidiary of the Company since incorporation and the Company had relied on the insignificant
subsidiary exemption set out in Chapter 14A of the Listing Rules in respect of the transactions conducted under
certain agreements (the “Existing CCT Agreements”, as defined in the announcement dated May 22, 2015).
However, based on the financial statements of the Company for the financial year ended March 31, 2015, the assets
and revenue of LCFC accounted for more than 10% of those of the Company, and thus the Company is no longer
able to rely on the insignificant subsidiary exception set out in rule 14A.09(1) of the Listing Rules. Accordingly,
the Existing CCT Agreements and the transactions contemplated thereunder constitute continuing connected
transactions of the Company under the Listing Rules and are subject to annual review and reporting requirements.
Details of the Existing CCT Agreements are set out below:
OEM Components Purchase Agreement
Date: June 20, 2006
Parties: Lenovo (Singapore) Pte. Ltd., a wholly-owned subsidiary of the Company and
Compal
Services provided/received: The Group shall supply certain components (including but not limited to, electronic
components and/or assemblies specified by Compal) to the Compal Group.
Annual cap: (i) 22/5/2015 – 31/3/2016
The estimated value of the transactions will not exceed US$16,000 million in
aggregate under the Existing CCT Agreements or will not exceed US$8,000
million under OEM Components Purchase Agreement
(ii) 1/4/2016 – 31/3/2017
The estimated value of the transactions will not exceed US$16,000 million in
aggregate under the Existing CCT Agreements or will not exceed US$8,000
million under OEM Components Purchase Agreement