Lenovo 2016 Annual Report Download - page 39

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2015/16 Annual Report Lenovo Group Limited
Deposits, prepayments and other receivables
Majority of other receivables of the Group are amounts due from subcontractors for part components
sold in the ordinary course of business. Decrease is in line with the decrease in activities during the fourth
quarter of current year.
Non-current liabilities
2016
US$’000
2015
US$’000
Borrowings 2,505,112 1,885,848
Warranty provision 290,857 338,700
Deferred revenue 532,780 550,205
Retirement benefit obligations 442,874 410,118
Deferred income tax liabilities 222,679 249,823
Other non-current liabilities 2,152,578 2,407,303
6,146,880 5,841,997
Borrowings
Borrowings (classified as non-current) increased by US$619 million is mainly due to 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.
Warranty provision
The Group records warranty liabilities at the time of sale for the estimated costs that will be incurred
under its basic limited warranty. The specific warranty terms and conditions vary depending upon the
product and the country in which it was sold, but generally includes technical support, repair parts and
labor associated with warranty repair and service actions. The period ranges from one to three years.
The aggregate current and non-current amount of warranty provision decreased by 15 percent is mainly
contributed by the Group’s continuous cost enhancement on warranty repair and service actions. The
Group reevaluates its estimates on a quarterly basis to assess the adequacy of its recorded warranty
liabilities and adjusts the amounts as necessary.
Retirement benefit obligations
The Group operates various pension schemes. The schemes are generally funded through payments to
insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The
Group has both defined benefit and defined contribution plans.
Deferred income tax liabilities
Deferred income tax liabilities comprise withholding tax on undistributed earnings, tax liabilities on
upward valuation of intangibles arising from business combinations and accelerated tax depreciation.