Lenovo 2016 Annual Report Download - page 224

222 Lenovo Group Limited 2015/16 Annual Report
NOTES TO THE FINANCIAL STATEMENTS
28 OTHER NON-CURRENT LIABILITIES
2016
US$’000
2015
US$’000
Contingent considerations (i) –270,196
Deferred considerations (i) 1,383,555 1,361,800
Guaranteed dividend to non-controlling shareholders of a subsidiary (ii) 8,195 9,605
Environmental restoration (Note 26(b)) 6,073 14,082
Written put option liability (iii) 221,499 219,317
Government incentives and grants received in advance (iv) 144,919 118,371
Deferred rent liabilities 112,934 127,954
Others 275,403 285,978
2,152,578 2,407,303
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, current and 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.
All contingent considerations have been included in other payables and accruals as at March 31, 2016.
As at March 31, 2016, 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$309 million
Stoneware Nil – US$48 million
Google Inc. US$1,448 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 AG (“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.