Lenovo 2016 Annual Report Download - page 222

220 Lenovo Group Limited 2015/16 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
26 PROVISIONS, OTHER PAYABLES AND ACCRUALS (continued)
The Group records its warranty liability at the time of sales based on estimated costs. Warranty claims are
reasonably predictable based on historical failure rate information. The warranty accrual is reviewed quarterly
to verify it properly reflects the outstanding obligation over the warranty period. Certain of these costs are
reimbursable from the suppliers in accordance with the terms of relevant arrangements with them.
The Group records its environmental restoration provision at the time of sales based on estimated costs of
environmentally-sound disposal of waste electrical and electronic equipment upon return from end-customers and
with reference to the historical or projected future return rate. The environmental restoration provision is reviewed
at least annually to assess its adequacy to meet the Group’s obligation.
Restructuring costs provision mainly comprises lease termination obligations and employee termination payments,
arising from a series of restructuring actions to reduce costs and enhance operational efficiency. The Group
records its restructuring costs provision when it has a present legal or constructive obligation as a result of
restructuring actions.
27 BORROWINGS
2016
US$’000
2015
US$’000
Current liabilities
Short-term loans (i) 745,815 1,168,274
Non-current liabilities
Term loan (ii) 396,365 395,043
Long term notes (iii) 2,108,747 1,490,805
2,505,112 1,885,848
3,250,927 3,054,122
Notes:
(i) Short-term loans primarily comprised a US$1,200 million 5-year loan facility (comprising US$800 million short term) entered
into in December 2013 which has been utilized to the extent of US$400 million as at March 31, 2016 (2015: US$700 million);
and a US$300 million 5-year loan facility entered into in May 2015 which has been utilized to the extent of US$300 million as at
March 31, 2016. The majority of the short-term bank loans are denominated in United States dollar.
(ii) Term loan comprised a US$1,200 million 5-year loan facility (comprising US$800 million short term) entered into in December
2013 which has been drawn down to the extent of US$400 million as at March 31, 2016 (2015: US$400 million).
(iii) On May 8, 2014, the Group completed the issuance of 5-Year US$1.5 billion notes bearing annual interest at 4.7% due in May
2019; and on June 10, 2015, the Group completed the issuance of 5-Year RMB4 billion notes bearing annual interest at 4.95%
due in June 2020. The proceeds would be used for general corporate purposes including working capital, and to fund any
acquisition activities.