Lenovo 2016 Annual Report Download - page 225

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2015/16 Annual Report Lenovo Group Limited
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
increased/decreased by approximately US$4 million with the corresponding loss/gain recognized in consolidated income
statement.
In the event that the put option lapses unexercised, the liability will be derecognized with a corresponding adjustment to
equity.
(iv) Government incentives and grants received in advance by certain group companies included in other non-current liabilities
are mainly related to research and development projects and construction of property, plant and equipment. These Group
companies are obliged to fulfill certain conditions under the terms of the government incentives and grants. The government
incentive and grants are credited to the income statement upon fulfillment of those conditions.
29 SHARE CAPITAL
2016 2015
Number of
shares US$’000
Number of
shares US$’000
Issued and fully paid:
Voting ordinary shares:
At the beginning of the year 11,108,654,724 2,689,882 10,406,375,509 1,650,101
Issue of ordinary shares – – 701,107,215 1,039,396
Exercise of share options – – 1,172,000 385
At the end of the year 11,108,654,724 2,689,882 11,108,654,724 2,689,882
(a) Long-term incentive program
A performance-related long-term incentive program was approved on May 26, 2005 for the purpose of
rewarding and motivating directors, executives and top-performing employees of the Company and its
subsidiaries (the “Participants”). The long-term incentive program is designed to enable the Company to
attract and retain the best available personnel, and encourage and motivate Participants to work towards
enhancing the value of the Company and its shares by aligning their interests with those of the shareholders
of the Company.
The Company also approved a share-based compensation package for non-executive directors.