Lenovo Group Limited 2024/25 Annual Report

HKD COUNTER STOCK CODE 992

RMB COUNTER STOCK CODE 80992

Financial highlights

Chairman and CEO statement

Lenovo management team

Management’s discussion and analysis

Corporate governance report

Audit committee report

Compensation committee report

Directors’ report

Independent auditor’s report

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated cash flow statement

Consolidated statement of changes in equity

Notes to the financial statements

Five-year financial summary

Corporate information

About Lenovo

Lenovo

is a US$69 billion revenue global technology powerhouse, ranked #248

in the Fortune Global 500, and serving millions of customers every day

in 180 markets. Focused on a bold vision to deliver Smarter Technology

for All, Lenovo has built on its success as the world’s largest PC company

with a full-stack portfolio of AI-enabled, AI-ready, and AI-optimized

devices (PCs, workstations, smartphones, tablets), infrastructure (server,

storage, edge, high performance computing and software defined

infrastructure), software, solutions, and services. Lenovo’s continued

investment in world-changing innovation is building a more equitable,

trustworthy, and smarter future for everyone, everywhere. Lenovo is

listed on the Stock Exchange of Hong Kong under Lenovo Group Limited (HKSE:

992) (ADR: LNVGY). To find out more visit https://www.lenovo.com, and

read about the latest news via our StoryHub.

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Lenovo or “Lenovo Group” or the “Group” refers to Lenovo Group Limited together with its subsidiaries. Lenovo

Group Limited (“The Company”) is the ultimate holding company of Lenovo Group. As a holding company,

it does not design, develop, manufacture, or distribute products or services, or control any activities of the

Company’s subsidiaries in the design, development, manufacture, or distribution of products or services.

Enabling easier

management of IT

carbon emissions

Scan to learn more

Active in Brazil for over 70 years, PepsiCo

Brasil operates more than 100 sales and

distribution centers, nine factories, and

an extensive technology park. Each year,

PepsiCo Brasil refreshes around 1,000

PCs across the business—and, in line

with efforts to reduce its environmental

impact, PepsiCo Brasil uses Lenovo CO

Offset Services to efficiently manage CO

emissions from its IT solutions.

With carbon credits going to support

Gold Standard® and United Nations

verified climate action projects around

the world, PepsiCo Brasil can efficiently

manage its CO

emissions from IT and

help reduce its environmental impact.

"Lenovo CO

Offset is an important service that

helps our IT team contribute to managing the

impact of our business on the environment.”

Renato Gaido,

Senior Information

Technology Manager, PepsiCo Brasil

Lenovo Group Limited 2024/25 Annual Report

Financial

highlights

For the year ended March 31

2025

US$ million

2024

US$ million

Year-on-year

change

Group results

Revenue

69,077

56,864

21%

Gross profit

11,098

9,803

13%

Gross profit margin (%)

16.1

17.2

(1.1) pts

Operating expenses

(8,934)

(7,797)

15%

Expense-to-revenue ratio (%)

12.9

13.7

(0.8) pts

Pre-tax income

1,481

1,365

Pre-tax income margin (%)

2.1

2.4

(0.3) pts

Profit attributable to equity holders

of the Company

1,384

1,011

37%

EPS — basic (US cents)

11.30

8.41

2.89

EPS — diluted (US cents)

10.62

8.05

2.57

Interim dividend per share (HK cents)

8.5

0.5

Final dividend per share (HK cents)

30.5

0.5

Total dividend per share (HK cents)

Group results (non-HKFRS measures)

EBITDA

3,874

3,697

EBITDA margin (%)

5.6

6.5

(0.9) pts

Non-HKFRS operating profit

2,454

2,013

22%

Non-HKFRS profit before taxation

1,815

1,400

30%

Non-HKFRS profit for the year

1,504

1,120

34%

Non-HKFRS profit attributable to equity holders

of the Company

1,441

1,060

36%

Non-HKFRS net profit margin (%)

2.1

1.9

0.2 pts

Cash and working capital

Bank deposits and cash and cash equivalents

4,817

3,626

33%

Total borrowings

(5,368)

(3,620)

48%

Net (debt)/cash

(551)

(557)

Cash conversion cycle (days)

(4)

Note:

Subject to shareholders’ approval at the forthcoming annual general meeting.

Lenovo Group Limited 2024/25 Annual Report

Key business

highlights

. Source IDC: Worldwide No.

in the overall PC market with

% market share in FY

. Source IDC: Worldwide No.

in the Windows based AI PC market with a

% market share in FY

. Source IDC: Worldwide No.

in the global smartphone market (excluding China) by revenue in Q

. Lenovo’s latest innovations at CES

2025

. Source: bit.ly/

kwavbr

. ALAT is wholly owned by Public Investment Fund (PIF), which is one of the largest sovereign wealth funds globally

Net Profit

(Non-HKFRS)

$1.4B

+36% YoY

margin improvement in all 3

business groups

Highest Historical Revenue

$69.1B

+21% YoY

Neptune™ Liquid Cooling Solutions

Revenue

+68%

YoY

100+ innovation patents

Strategic Partnership with ALAT

$2B

zero-coupon convertible bonds

Smartphone

#4 Global

(excl. PRC)

Innovation

Awards at CES

#1 PC Globally

23.7% market share

#1 Windows

AI PC

vendor globally

Scan to learn more

Smarter

solutions on

the frontlines

Médecins Sans Frontières, also known

as Doctors Without Borders – (MSF)

Operational Center Geneva (OCG) is

non-governmental organization (NGO)

that delivers medical assistance to

people affected by armed conflict,

natural and man-made disasters, and

other emergency situations. The NGO

elevates the performance and security of

essential IT services with rugged Lenovo

ThinkSystem SE350 Edge servers, helping

field teams work more effectively and

deliver vital assistance to those who need

it most.

Lenovo Group Limited 2024/25 Annual Report

Chairman

& CEO Statement

As we conclude another successful fiscal year, I am proud

to reflect on the significant strides we’ve made in advancing

our vision of Smarter AI for All, while delivering strong

performance and relentless innovation. Celebrating 20

years of going global and entering the fifth decade of our

journey, we are uniquely well positioned to harness the

transformative power of AI and pursue a new era of growth.

Lenovo Group Limited 2024/25 Annual Report

One of Lenovo’s Best Years Ever

I am pleased to report that Lenovo just concluded one

of the best years in our history. Despite global political

and economic turbulence, we achieved substantial

revenue growth and increased profit

significantly year

on year. Even more, we strengthened our commitment

to innovation and kept raising the bar for operational

excellence.

Our smart devices business continued to lead the global

PC market with increased competitive advantage

and expanded rapidly and profitably in the global

smartphone market. Our smart infrastructure business

delivered hypergrowth, achieved breakeven in the

second half of the fiscal year, and is now turning into a

sustainably profitable business, driven by strong growth

in both cloud service provider segment and enterprise/

SMB segment. Additionally, our solutions and services

business delivered high growth and high profitability,

building new horizontal and vertical AI solutions while

unleashing Lenovo Hybrid AI Advantage.

Key to these successes is our commitment to

operational

excellence

, notably our unique ODM+ model, combining

in-house manufacturing with outsourced production to

give us cost competitiveness and better customization.

It also allows us to learn from industry best practices and

adopt the most advanced technologies and processes.

Our distinctive Global/Local model leverages global

resources in capital, talent, supply chain, manufacturing

as well as research and development, while delivering

the last mile of local sales, marketing, fulfillment, and

services to customers in 180 markets. This model helps

drive higher customer satisfaction, robust compliance,

deep community engagement, and more secure and

resilient operations.

Another critical factor behind our successful year is our

increased investment in

innovation

with a clear focus

on hybrid AI. In personal AI, Lenovo is already leading

the global AI PC race, introducing advanced AI agents

and innovative form factors that wowed the industry.

In enterprise AI, we have launched AI servers and

continued to lead the market with our Neptune liquid

cooling solutions. And Lenovo’s Hybrid AI Advantage

combines hybrid infrastructure, model factory, and agent

platform with AI services and applications to deliver

value to enterprise customers.

Lenovo Group Limited 2024/25 Annual Report

Chairman & CEO statement

Embracing Lenovo’s AI Decade

Looking ahead, I believe our fifth decade will be

Lenovo’s AI decade

Lenovo remains committed to a future defined by

hybrid AI

— integrating public, personal, and enterprise

AI to meet customer needs in terms of effectiveness,

efficiency, responsiveness, security and privacy

protection, and sustainability.

Our milestone AI PC product has transformed personal

computing into personalized AI. And the upcoming

generation will soon feature significantly improved on-

device AI inferencing capabilities. But we don’t stop

here. We are driving the next level of breakthroughs with

personal super AI agent, which features new capabilities

in perception and interaction, cognition and decisions,

and autonomy and evolution, creating a secure and

private AI experience for users and taking them one step

closer to personal AI twins.

In enterprise AI, Lenovo continues expanding hybrid

infrastructure by combining client devices, edge

computing, networks, and hybrid cloud environments.

This structure streamlines data collection, storage,

processing, and deployment of trained AI models.

Utilizing enterprise data, Lenovo develops functional and

vertical solutions through our model factory and agent

platform. When we put all these capabilities together,

and meet the requirements of security, compliance

and AI governance, we now have Lenovo Hybrid AI

Advantage. By fully unleashing the capabilities built

under Lenovo Hybrid AI Advantage, Lenovo has a

mission of building a variety of AI applications — or

“domain AI agents” — for all types of enterprises and

organizations. And collectively, all these domain AI

agents within an enterprise will form an enterprise

super AI agent. Furthermore, we are building enterprise

super AI agents, either as digital assistants or robots,

to command domain AI agents to access enterprise

knowledge, perform reasoning, orchestrate tasks and

proactively execute jobs, thus making enterprise AI twins

a much closer reality.

Lenovo Group Limited 2024/25 Annual Report

New Partnerships, Bigger Opportunities

Adding to this excitement are our new partnerships.

Lenovo’s recently announced Alat partnership is opening

doors for us to pursue growth in Saudi Arabia and the

Middle East/Africa region, while expanding our global

footprint and adding resilience into our supply chain.

Even more, built upon the success with our F1

partnership, Lenovo is now the official technology

partner for FIFA. Between F1 and FIFA, Lenovo powers

the most technologically advanced and popular sports

in the entire world — the perfect opportunity to show

the world what our technology and solutions can do.

This is a truly exciting time for Lenovo. Twenty years

after our first step of going global, we have built a unique

model that has proven to work at uncertain times. It will

guide to navigate any contextual challenges. With our

operational excellence, commitment to innovation, and

diverse and unified One Lenovo team around the world, I

am confident that our best days are yet to come, and we

will turn our vision into reality.

Yuanqing Yang

Chairman and CEO

Lenovo

Lenovo Group Limited 2024/25 Annual Report

Lenovo

management

team

Yang Yuanqing

Chairman and

Chief Executive Oﬃcer

Gao Lan

Senior Vice President

and Human Resources

David C. Carroll

Senior Vice President

and Chief Legal

and Corporate

Responsibility Oﬃcer

Tolga Kurtoglu

Senior Vice President

and Chief Technology

Oﬃcer

Winston Cheng

Senior Vice President

and Chief Financial

Oﬃcer

Liu Jun

Executive Vice President

and President of the China

Geography

Qiao Jian

Senior Vice President

and Chief Strategy Oﬃcer

and Chief Marketing

Oﬃcer

Lenovo Group Limited 2024/25 Annual Report

Matthew Zielinski

Executive Vice President

and President of the

International Sales

Organization

Che Min (Jammi) Tu

Senior Vice President

and Group Operations

Oﬃcer

Ken Wong

Executive Vice President

and President of the

Solutions & Services Group

Ashley Gorakhpurwalla

Executive Vice President

and President of the

Infrastructure Solutions

Group

Luca Rossi

Executive Vice

President and President

of the Intelligent

Devices Group

George He

Senior Vice President and

President of Lenovo Capital

and Incubator Group

Scan to learn more

Lenovo Group Limited 2024/25 Annual Report

Lenovo X MSG

Family kickoff

powerhouse

partnership

Partnering with Lenovo and Motorola, the

MSG Family of Companies is pushing the

boundaries of innovation in sports and

entertainment across their portfolio. As

part of the multi-year partnership, Lenovo

is an Official Partner of Madison Square

Garden, the Christmas Spectacular

Starring the Radio City Rockettes, and

the professional sports franchises the

New York Knicks and New York Rangers,

and receives brand inclusion across MSG

Networks. Motorola is an Official Partner

of Madison Square Garden, the New York

Knicks and New York Rangers.

The cornerstone of the partnership

between the MSG Family of Companies

and Lenovo is community engagement

– with initiatives focused on small

businesses and community organizations

through programming with both the

New York Knicks and the Christmas

Spectacular Starring the Radio City

Rockettes. The multi-faceted Motorola

partnership is anchored in high profile,

in-venue assets – specifically as the

exclusive title partner of Madison Square

Garden’s famed Celebrity Row.

LENOVO, THINKAGILE, and XClarity are trademarks of Lenovo. All other

Management’s

discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Business review and outlook

Highlights

For the fiscal year ended March 31, 2025, Lenovo (the

Group) delivered solid financial results. The Group’s profit

attributable to equity holders increased by 37 percent

year-on-year, and revenue grew 21 percent to US$69

billion, marking its second highest annual sales. All three

Business Groups - Infrastructure Solutions Group (ISG),

Solutions and Services Group (SSG), and Intelligent

Devices Group (IDG) - achieved double-digit top-line

growth, with strong profit expansion for IDG and SSG

and significant loss reduction for ISG, fueled by Lenovo’s

emphasis on Hybrid AI, operational excellence, and

strategic execution.

The Group’s investments in building a comprehensive full-

stack AI portfolio, spanning infrastructure, edge devices

and services, were instrumental in seizing new market

opportunities. ISG, SSG and Smartphone delivered record-

breaking sales, reflecting the success of newly enriched

Hybrid AI offerings and continued strength in current

business franchises. IDG achieved double-digit year-on-

year revenue growth on higher market share and rising

premium sales in both PCs and smartphones. The Group

achieved balanced growth across regions, with Asia

Pacific, China, EMEA (Europe, Middle East, and Africa),

and Americas contributing 19 to 34 percent to total

revenue. In response to a complex and challenging trade

regulatory landscape, Lenovo has implemented strategic

measures to fortify its global operations, enhance business

agility, and ensure long-term growth.

Advancing overall profitability remains Lenovo’s top

priority, with all three Business Groups reporting improved

segment margins by harnessing their unique strengths

to drive efficiency and profitability. Non-HKFRS net

profit, which the Group believes is indicative of the core

operating results by excluding certain items, grew 36

percent year-on-year to US$1.4 billion. On an HKFRS

basis, profit attributable to equity holders, increased by 37

percent year-on-year to US$1.4 billion.

In the fiscal fourth quarter, our strategic partnership with

PIF/Alat took an important step forward as we gained

overwhelming shareholder support and obtained all

regulatory approvals to close on this landmark transaction.

Upon conversion, PIF/Alat will be the largest sovereign

wealth fund in the shareholder base. The successful

issuance of the US$2 billion zero-coupon convertible

bonds (CBs) to Alat and the US$212 million of warrants

marks a significant milestone, enabling the Group to

broaden its shareholder base, expand its global presence,

diversify its manufacturing footprint, and capture

substantial growth opportunities in the Middle East and

Africa regions.

Lenovo Group Limited 2024/25 Annual Report

These achievements underscore the Group’s commitment

to innovation. R&D spending rose 13 percent year-on-

year to US$2.3 billion. The Group made notable progress

in Personal AI, one of the two foundational aspects of

Hybrid AI, expanding from hardware design to advanced

software applications and services. The launch of the

“AI Now” agent enabled the creation of an ecosystem of

“One AI, multiple devices.” In Enterprise AI, the company

developed AI Super Agents for enterprises and smart

cities under the Hybrid AI Advantage solution, which

combined ISG’s full-stack capabilities and SSG’s AI library

to accelerate customers’ intelligent transformation.

The cash conversion cycle has increased by six days year-

on-year, primarily driven by longer inventory days. Higher

level of inventory is required in response to increased

demand, new product launches, and sales mix favoring

fast-growing ISG business. In particular, the high-growth AI

server business demanded costly components including

GPUs, leading to higher inventory balance.

The Group’s steadfast focus on corporate governance

and sustainability earned wide recognition. For the third

consecutive year, the Group secured an AAA rating in

the MSCI ESG Ratings and was included for the third

time in the annual CDP A List for Climate, highlighting its

commitment to environmental transparency and climate

action.

Group Financial Performance

The Group reported a 21 percent year-on-year sales

growth to US$69 billion, the second highest in its history.

Contributing to this was ISG’s 63 percent revenue growth,

driven by robust server orders, renewed enterprise

demand, and new customer acquisition. Meanwhile, SSG

saw a 13 percent year-on-year revenue increase to a new

record, propelled by strong demand for DWS (Digital

Workplace Solutions) and AI-powered solutions. IDG

achieved a 13 percent year-on-year sales increase, with

PC revenue benefiting from global market share gains,

revitalized commercial sales, and premium products,

including new AI PCs. Notably, its smartphone business

continued to secure market share in key markets, including

Asia Pacific and Europe. While Lenovo remains a leader

in the PC market, its diversification efforts have paid off,

with non-PC revenue accounting for 47 percent of total

revenue across the three Business Groups.

Record-high Non-PC Revenue Contribution

1,2

2025

Others

Smartphone

Infrastructure

Services

PC: 53%

Non-PC: 47%, +5 pts YoY

Notes:

Revenue before eliminations.

Non-PC revenue includes revenues from SSG, ISG and non-PC

part of IDG.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Customer expansion in the cloud segment remained a key

priority for ISG. The Group has successfully onboarded

major customers with high revenue potential, supported

by robust cloud investments and upgrades to customers’

aging server infrastructure. This achievement highlights

ISG’s effective and focused approach to scaling its

cloud business through a unique ODM+ (Original Design

Manufacturing) model. The cloud segment not only

achieved profitability but also more than tripled its revenue

over the past five years, now contributing a double-digit

share to Group sales.

ISG returned to profitability in the second half of the fiscal

year under review, thanks to enhanced profit contributions

from cloud and enterprise segments. The Business Group

reported a US$180 million year-on-year loss reduction,

while its annual operating loss came to US$69 million,

consisting of a US$73 million first-half loss offset by a

US$4 million second-half profit. Looking ahead, long-

term demand for Enterprise AI infrastructure is expected

to further global market expansion, as emerging AI use

cases demand higher processing capabilities. ISG will

continue to invest in innovations while implementing cost

optimization measures, including streamlining its structure,

fostering go-to-market partnerships, and enhancing

channel capabilities through portfolio optimization.

Solutions & Services Group (SSG)

SSG, a growth engine for the Group, delivered record

revenue and profit for the fourth consecutive year.

Revenue and segment profit continued to grow double-

digits, up 13 and 15 percent year-on-year, respectively.

SSG’s operating margin expanded by 42 basis points to

21.1 percent, topping all Business Groups.

Among SSG’s three operating segments, Managed

Services and Project & Solution Services reported

year-on-year revenue growth of 24 percent and 20

percent, respectively, raising their contribution to SSG

by 4 percentage points to 58 percent. These segments

benefited from rising popularity of Device-as-a-Service (DaaS)

and Hybrid Cloud, as well as the Group’s AI-powered

solutions, including an enterprise AI agent platform for a

leading dairy client.

Support Services sales grew 3 percent, trailing behind

the corresponding hardware sales increase during the

period under review, reflecting a natural time lag between

hardware sales and their subsequent impact on service

revenue. Nevertheless, Support Service bookings saw

high-single-digit recovery, mirroring the rise in hardware

sales and supporting future growth.

The Group’s non-HKFRS and HKFRS net profit grew 36

and 37 percent, respectively, with all three Business Groups

contributing incrementally. ISG returned to profitability in

the second half of the year after reversing earlier losses,

with a strategic focus on addressing rapidly growing cloud

demand. IDG achieved high profitability within its historical

upper range and retained industry leadership, despite an

unexpected negative tariff impact in the last part of the

fiscal year. SSG upheld a 21 percent operating margin,

contributing 33 percent of the combined segment profit

across all Business Groups.

Performance by Product Business Group

Intelligent Devices Group (IDG)

IDG, encompassing PCs, tablets, smartphones, and other

smart devices, achieved a 13 percent revenue increase

and a 14 percent segment profit growth during the fiscal

year. In a steadily recovering PC market, IDG expanded

its global share by 0.8 percentage points year-on-year

to a 23.7 percent, with strong performances in both

commercial and consumer segments. A robust enterprise

refresh cycle boosted commercial segment sales by

11 percent year-on-year, while rising premium product

sales lifted average selling prices. Consumer PC revenue

delivered double-digit growth, of which gaming PCs

surged over 13 percent, reinforcing IDG’s global leadership

in the segment.

Embracing the Personal AI trend within the broader

Hybrid AI landscape, IDG leveraged innovative hardware

and proprietary software to solidify its market leadership.

As AI PCs emerged a market standard, the company’s

cutting-edge solutions are poised to redefine the future

of computing, showcasing the transformative potential of

Agentic AI.

IDG’s innovation efforts also bolstered non-PC sales,

particularly within the smartphone segment where its

popular premium models led to a record premium mix,

boosting both market share and average selling prices.

Motorola-branded revenue experienced double-digit

growth year-on-year, with strengths in regional markets

including Asia Pacific (ex-China) and EMEA. Motorola’s

share surpassed 6 percent in global ex-China smartphone

markets setting a new milestone.

Infrastructure Solutions Group (ISG)

ISG achieved a 63 percent year-on-year revenue growth

during the fiscal year, fueled by a more diversified

customer portfolio, revitalized enterprise business,

expanded non-accelerated server sales, and strong

adoption of AI-optimized infrastructure products including

advanced liquid-cooling technology.

Lenovo Group Limited 2024/25 Annual Report

Outlook and Strategic Highlights

Lenovo leverages its experience to navigate market

uncertainties, achieving consistent growth through

operational excellence and innovation. These strengths

are essential to capitalizing on the expanding Hybrid AI

market, which is expected to grow despite economic

fluctuations. Future investments will bolster Lenovo’s

leadership and drive sustained growth in a dynamic

tech landscape. Advanced global operations and

manufacturing initiatives will enhance resilience against

market shifts, ensuring agility and sustainable growth.

IDG’s latest AI-powered innovations are redefining next-

generation devices, including AI PCs. AI NOW intelligent

agent offers fast, secure on-device AI features using

heterogeneous computing. ThinkShield filters harmful

content for a safe environment, while Smart Connect

enables seamless data management across multiple

devices. Technologies like Lenovo Creator Zone and

Lenovo Learning Zone strengthen IDG’s global leadership

in the AI PCs. Legion Space optimizes gaming device

synchronization across its ecosystem. In smartphones,

Motorola’s premium Razr and Edge models enhance moto

ai capabilities with Large Action Models.

ISG drives on innovation, diversification, and operational

excellence to strengthen its leadership in Hybrid AI

while achieving sustainable growth and profitability. It

collaborates with ecosystem partners to develop advanced

AI solutions for AI-driven applications and traditional

compute workloads. Its ODM+ business model, featuring

liquid-cooling technology, supports diversification into

areas such as storage while expands growth in cloud

business and enterprise opportunities.

SSG leverages its hardware expertise to offer cost-

effective AI-powered IT services. It integrates AI into key

offerings including Digital Workplace, Hybrid Cloud, and

Sustainability solutions, creating impactful and resilient

solutions. SSG’s AI Fast Start services helps enterprises

quickly adopt AI with access to proven use cases and

expert guidance.

Geographic Performance

With a global presence across 180 markets, Lenovo

leverages its diversified market exposure to achieve

balanced growth across all geographical markets. In Asia

Pacific, excluding China, revenue rose 29 percent year-

on-year, driven by strong momentum across all Business

Groups. IDG’s targeted initiatives aimed at enhancing

market penetration boded well with Japan’s Windows 11

refresh, growing interest in gaming PCs, and smartphone

market share gains. ISG witnessed strong demand for

its industry-leading liquid cooling technology, while SSG

benefited from growing demand for DaaS and IaaS

(Infrastructure-as-a-Service).

In China, sales surged by 26 percent year-on-year, mainly

fueled by ISG’s market share gains through an enhanced

infrastructure portfolio. PC sales in the SMB segment

recovered strongly, showcasing the Group’s resilient

efforts in driving premium sales. Additionally, SSG secured

multiple DaaS case wins to deliver AI solutions to industry-

leading customers.

In the Americas, the Group’s revenue climbed by 19

percent year-on-year. ISG delivered robust growth,

underscoring its core strengths in meeting large customer

demand for AI GPU solutions with leading liquid-cooling

technology. Premium smartphones and PCs continued to

drive market share gains for IDG. SSG saw high growth in

Hybrid Cloud Services including IaaS.

The EMEA market experienced a 16 percent year-on-

year sales increase, with IDG and SSG maintaining strong

momentum. Within IDG, market share gains in multiple

European countries for PCs and smartphones were a

strong growth catalyst. SSG signed its largest-ever DWS

services contract in the region and saw strong momentum

on ESG services including ARS (Asset Recovery Service).

ISG thrived on heightened demand from major cloud

customers, who are building local data centers to meet

booming demand and regional data security regulations.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

FY24/25 validated the foresight and effectiveness of our

strategy. Lenovo today stands on a more solid and future-

ready foundation.

We are the pioneer in Hybrid AI

All business groups are on positive trajectory — with

core business expanding leadership, growth engines

scaling, and transformation business delivering

profitable growth

We extended strategically significant partnerships, e.g.,

our partnership with Alat, further strengthening our

global/local model

Our foundational pillars for long-term success —

global supply chain, R&D, Digitalization, and One

Lenovo — are stronger than ever

Looking ahead, we face macro environment uncertainties

and a volatile geopolitical landscape. However, we are

confident that with our solid foundations, we are well-

positioned to navigate external uncertainties and stay

competitive to lead in the Hybrid AI era.

Human resources

By the end of FY2024/25, the Group had a headcount of

approximately 72,000 worldwide. The Group implements

remuneration policy, bonus, employee share purchase

plan and long-term incentive scheme with reference to

the performance of the Group and individual employees.

The Group also provides benefits such as insurance,

medical and retirement funds to employees to sustain

competitiveness of the Group.

Corporate strategy highlights

Guided by our mission to be the Leader and Enabler of

Intelligent Transformation, Lenovo has deepened our

“3S strategy” (Smart IoT, Smart Infrastructure, Smart

Solutions), incorporating AI in our corporate strategy.

Our strategic foresight and operational excellence proved

highly effective. We not only delivered robust performance

in FY24/25, but also established Lenovo as an industry

pioneer in Hybrid AI.

In Smart IoT, we further expanded our leadership position

with our innovative product design and operational

excellence. Lenovo is clearly leading in AI PC, not only in

terms of market share, but also by establishing 5-feature

AI PC standard. 5-feature AI PCs with a personal

intelligent agent, compressed local LLM, heterogenous

computing, security protection, and an AI ecosystem.

In MBG, we continued to execute our three-year growth

plan, achieving #5 position outside China in the 2H

with robust growth momentum throughout the year.

Building on this foundation, we will build “One Personal

AI, multiple devices” to achieve seamless cross-device,

cross-ecosystem AI experience. Smart Connect will be the

key enabler, seamlessly bridging the global ecosystems

of Windows, Android, and iOS to deliver a unified, cross-

device AI experience.

In Smart Infrastructure, our strategy to leverage our ODM+

model to scale Cloud Service Provider segment (CSP) and

empower Enterprise and Small-Medium Business segment

(ESMB) has proven highly effective. In the past year, we

have turned the business to profitable and delivered

hypergrowth. At the same time, we continued to lead in

critical AI technology such as the Neptune liquid cooling,

which will enable us to capture the rising AI infrastructure

demand.

Smart Solutions continued to serve as the key margin

contributor, delivering high-margin and solid growth

throughout the year. Our strategy of building Horizontal

Building Blocks has brought profitable growth across

DWS, Hybrid Cloud, and Sustainability. We launched

Hybrid AI Advantage, a suite of Enterprise AI solutions,

which will help us to capitalize on Enterprise Hybrid AI

growth.

Lenovo Group Limited 2024/25 Annual Report

These risks are not exhaustive. Like all global enterprises,

Lenovo is also exposed to general business risks not

individually detailed here. Furthermore, the nature and

significance of risks may evolve over time due to changes

in market conditions, technology, regulatory requirements,

or the Group’s global operations.

These risks are embedded within Lenovo’s broader

governance, compliance, and internal control frameworks,

ensuring they are proactively identified, assessed, and

managed at all levels of the organization.

Lenovo group material risks

Effective risk management is essential to Lenovo Group’s

long-term success, particularly in today’s dynamic and

increasingly complex business environment.

This section highlights the key risks the Group considers

material — those that could significantly affect its

operations, financial performance, or strategic objectives.

Each risk includes a summary of its potential impact and

the mitigation strategies the Group has in place.

Risk Description

Key Risk Mitigations

Strategic Risks

Competition

Lenovo operates in a highly competitive industry

characterized by rapid technological advances in

hardware, software and services, as well as evolving

customer preferences. The Group faces strong

competition in product offerings, pricing, and innovation

from both established players and new market entrants.

Failure to differentiate effectively or respond to

competitive pressures could adversely affect market

share and profitability.

The Group closely monitors market trends and

competitive dynamics. It invests in research and

development (R&D) to enhance product innovation and

differentiation, broadens its portfolio of products and

services, strengthens brand positioning, and prioritizes

customer experience to support business growth.

Innovation

Continual innovation is critical to Lenovo’s

competitiveness and long-term growth. In an

environment of fast-moving technology, the inability to

introduce new products in a timely and cost-effective

manner, or to meet evolving customer needs, may

weaken the Group’s market position and constrain

future revenue growth. Rapid advancements in

Artificial Intelligence (AI) further intensifies competitive

pressures, requiring Lenovo to innovate at scale to

remain a leader in an increasingly intelligent technology

ecosystem.

Innovation is embedded in Lenovo’s strategy and

supported by sustained R&D investment and a focus

on delivering solutions that reflect real-world customer

needs. The Group’s Service-led Transformation and 3S

strategy (Smart IoT, Smart Infrastructure and Smart

Verticals) guide product innovation and intelligent

transformation across its solutions and business

operations. This integrated approach enables Lenovo to

deliver value-added, future-ready offerings aligned with

evolving customer needs. Strategic partnerships further

enhance the Group’s innovation capabilities.

In response to the rapid expansion and immense

potential of the global AI market, Lenovo has built a

strong portfolio of AI-enabled products and solutions

and is advancing its long-term strategic vision, “Smarter

AI for All”, through significant investments and a

focused commitment to delivering transparent, secure,

and personalized AI solutions. This vision is underpinned

by Lenovo’s Hybrid AI strategy, which integrates AI

across Lenovo’s portfolio—from client to edge, to

cloud and network—enhancing product functionality,

competitiveness, and customer value.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

Strategic Risks

Business Transformation

Lenovo is undergoing a strategic evolution toward

Intelligent Transformation — shifting from a traditional

hardware-centric business to a solutions- and services-

led, and also incorporating AI into our corporate

strategy. This transformation spans new business

models, organization structures, and value creation

across Smart IoT, Smart Infrastructure, and Smart

Verticals. The scale and complexity of this shift

introduce risks related to execution consistency, change

management, and the ability to scale new capabilities

globally. Additional challenges may arise in aligning

people, processes and systems to support evolving

customer needs and business priorities.

Lenovo’s transformation is anchored in its services-

led approach and 3S strategy, which guide business

model evolution and operational integration. Effective

execution is supported through clear strategic

prioritization, cross-functional coordination, and

targeted investment in leadership, systems, and

capabilities. Robust IT governance enables scalable,

secure, and integrated systems that align with

transformation goals. The Group’s enterprise-wide

AI strategy further enhances efficiency, decision-

making, and digital enablement. Together, these efforts

strengthen Lenovo’s agility, operational resilience, and

ability to deliver long-term growth.

Mergers and Acquisitions (M&A)

From time to time, Lenovo undertakes mergers or

acquisitions to complement its business strategy.

However, potential acquisitions involve risks related to

adverse economic conditions, volatile capital markets,

regulatory uncertainty, and geopolitical developments.

Insufficient due diligence can lead to overvaluation,

integration challenges, or failure to realize anticipated

synergies. This could potentially impact financial

performance, including through goodwill or intangible

asset impairments.

Lenovo conducts rigorous due diligence to evaluate

strategic fit and financial viability. All transactions are

subject to a formal approval process. Post-acquisition

reviews are conducted periodically to monitor the

integration and performance of these investments.

For additional detail, see “Notes to the Financial

Statements” (pages 208–210) and “Key Audit Matters”

(page 167).

Global Operating Environment

Lenovo’s global operations expose the Group to a broad range

of external uncertainties, including macroeconomic

volatility, geopolitical tensions, evolving regulatory

environments, and public health or environmental

events.

Geopolitical risks, such as cross-border trade

restrictions, export controls, data localization mandates,

and changing diplomatic or security relations, may

disrupt Lenovo’s global supply chain, limit access to key

markets, or affect its ability to operate efficiently across

jurisdictions.

These factors can increase operational costs, dampen

customer demand, or delay business execution. In some

cases, external risks may also amplify challenges in

strategic areas such as M&A, investment planning, or

organizational structure.

Lenovo Group has diversified its geographical footprint

to reduce exposure to any single market. It monitors

global economic, political, and regulatory developments

to anticipate and respond to emerging risks in its

operating environment.

The Group incorporates geopolitical and

macroeconomic factors into its strategic planning,

market prioritization, and supply chain decisions.

Mitigation efforts related to external uncertainties

are also embedded in other areas of Lenovo’s risk

management program, such as business continuity

planning, regulatory compliance, supply chain

diversification, and cybersecurity, which are detailed

elsewhere in this risk section.

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

General Legal, Regulatory & Compliance

Lenovo operates in a broad range of jurisdictions and

is subject to diverse and evolving legal and regulatory

requirements. Additionally, the global regulatory

environment is increasingly complex. New laws,

heightened enforcement, or changes in government

policy may affect Lenovo's ability to operate efficiently,

serve customers, or manage supplier relationships.

Non-compliance, whether due to error or misconduct,

could lead to financial penalties, operational disruptions,

reputational damage, or regulatory restrictions.

While not exhaustive, the following examples reflect

some of the most significant legal and compliance risks

currently monitored by the Group:

•

Compliance with anti-bribery and anti-corruption

laws, including the actions of employees and third-

party representatives;

•

Risks related to ethical breaches or misconduct,

including conflicts of interest, fraud, or violations

of the Lenovo Code of Conduct;

•

Trade compliance, including adherence to

import/export laws and restrictions across key

jurisdictions such as the U.S. and China;

•

Adherence to product safety and certification

requirements, and legal obligations governing the

sale and distribution of products and services;

•

Privacy and data protection risks, including the

collection, processing, transfer, and safeguarding

of personal, proprietary, and device-level data;

•

Compliance with competition and antitrust laws;

•

Alignment with ESG-related regulations and

disclosure standards;

The Group actively manages these legal and regulatory

risks through a comprehensive compliance framework

led by the Legal department in collaboration with key

stakeholders across the organization.

Key elements of this framework include:

•

Ethics and compliance culture: Development

and maintenance of a strong compliance culture

supported by robust policies, procedures, and

mandatory training on Lenovo's Code of Conduct.

•

Whistleblowing and investigations:

Implementation of Lenovo's Whistleblowing and

Investigations Policy, providing clear protocols for

raising, reviewing, and investigating concerns or

suspected misconduct.

•

Third-party due diligence and contract oversight:

Risk-based due diligence is conducted before

entering business relationships with third parties,

alongside effective contract management

practices to help ensure compliance across

engagements.

•

Data and AI governance: Strong privacy, security,

data protection, and AI governance frameworks-

including policies, processes, and training-

to ensure the responsible use, transfer, and

safeguarding of proprietary, personal, and device-

level data.

•

Regulatory monitoring: Ongoing monitoring of

legal and regulatory developments to ensure

compliance with applicable laws and evolving

requirements.

•

Governance and oversight: Compliance activities

are subject to oversight by Lenovo’s executive

leadership and relevant Board committees,

supported by internal assurance functions such as

Internal Audit and Enterprise Risk Management.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

General Legal, Regulatory & Compliance

Artificial Intelligence (AI) Compliance

Artificial Intelligence (AI) is fundamentally reshaping

the global technology landscape. As the use of AI

accelerates, governments and regulators worldwide

are focused on how these technologies are developed,

deployed and governed.

In this rapidly evolving environment, the Group

faces risks related to the alignment of the usage of

AI in products, services and internal operations with

emerging laws, standards, and ethical expectations.

Non-compliance may lead to loss of market access,

legal or regulatory sanctions, reputational damage, or

reduced customer trust and adoption.

The Group recognizes that realizing its “Smarter AI

for All” vision depends on the responsible, ethical, and

secure development, deployment, and use of AI. To

support this, Lenovo is committed to structured conduct

standards for employees, centralized governance

and oversight, and transparency in the development,

deployment, sale and internal use of AI technologies.

Foundational AI governance and compliance practices

are in place across the organization. The Group is

now advancing toward a unified, enterprise-wide

governance framework, led by the Chief Security and AI

Officer in collaboration with the Legal team and other

key stakeholders. This initiative ensures alignment with

global standards and Lenovo’s principles for responsible

AI.

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

Operational Risks

Supply Chain Management

Lenovo Group operates a highly complex, global supply

chain involving multiple tiers of suppliers and both

Lenovo owned and third-party operated manufacturing

sites. The Group’s operational performance depends

on the seamless execution of critical functions such

as demand forecasting, production planning, order

fulfilment, and inventory management.

Despite its global presence, certain Lenovo supply or

production activities remain regionally concentrated,

increasing sensitivity to localized disruptions. In

addition, reliance on a limited number of component

suppliers may constrain flexibility during periods of

supply shortages.

Potential disruption may arise from a range of factors,

including:

•

Natural disasters, pandemics, or damage to

manufacturing or logistics facilities;

•

Supplier financial instability;

•

Regional conflicts, cyberattacks, or other security

threats;

•

Regulatory changes, such as evolving global trade

tariffs or governmental export controls.

These events may require substantial time and cost

to recover from. If alternative sourcing cannot be

secured on favorable terms while maintaining legal and

regulatory compliance, Lenovo’s revenue, profitability,

and competitive position may be adversely affected.

In addition, Lenovo’s global supply chain is exposed to

Environmental, Social, and Governance (ESG) risks that

may arise from the practices of both direct and indirect

suppliers. These risks include climate-related disruptions,

natural resource depletion, and labor or human

rights violations. Suppliers operating in jurisdictions

with less robust legal or regulatory standards may

fail to meet the expectations or requirements of the

markets Lenovo serves, creating compliance gaps and

reputational exposure. Non-compliance by any supplier

— particularly in areas related to responsible sourcing or

labor practices — could disrupt supply continuity, lead

to regulatory penalties, or impair the Group’s license

to operate. ESG considerations are also increasingly

important in customer procurement decisions. A failure

to meet evolving expectations related to environmental

impact, ethical sourcing, or supplier conduct may result

in loss of business or diminished brand equity.

The Group actively manages risks associated with its

complex global supply chain through a combination

of strategic sourcing, operational planning, regulatory

compliance, and ESG oversight. Included in this

is a robust and mature Global Supply Chain Risk

Management program that continuously monitors

external developments, identifies emerging risks or

shifts in the risk environment, and develops dynamic

mitigation strategies. This program supports cross-

functional collaboration and informs decision-making

across procurement, manufacturing, logistics, and

compliance functions.

To mitigate concentration risk, Lenovo diversifies

its supplier base and global production footprint,

minimizing reliance on sole or single-source suppliers.

Physical resilience is reinforced through ongoing

investment in risk-engineered improvements at key

manufacturing sites.

Business continuity is supported through

comprehensive disaster recovery planning and scenario-

based risk assessments, aimed at reducing the impact

of regional disruptions such as natural disasters or

geopolitical instability.

Lenovo is also deeply committed to embedding ESG

principles across its end-to-end supply chain. Supplier

compliance with labor, environmental, health and safety,

and ethical standards is supported by formal policies,

contractual requirements, and monitoring systems. The

Group is a member of the Responsible Business Alliance

(RBA), actively promotes RBA standards throughout

multiple tiers of its supply chain, and conducts

independent audits to validate compliance.

To strengthen ESG due diligence, Lenovo has integrated

the EcoVadis ESG Risk Management Platform and

Supplier ESG Management Module into its digital

supplier management system. This platform helps

assess supplier performance, identify risk areas,

recommend improvements, and track year-over-year

progress toward enhanced ESG outcomes.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

Operational Risks

Product Quality

Lenovo offers complex products and services, so

maintaining high standards of quality is critical to its

reputation, customer loyalty, and long-term success.

A failure to uphold effective quality management

across research and development, manufacturing, and

the supply chain could materially affect the Group’s

brand, operations, and financial performance. Product

quality issues may result in costly recalls, production

disruptions, or increased warranty, repair, and

replacement expenses. Such issues may also negatively

impact customer satisfaction and market confidence.

In addition, Lenovo may face product liability claims if

the use of its products causes bodily injury, property

damage, or other loss — regardless of fault. Defending

such claims may require substantial time and resources,

and any adverse judgments could result in significant

financial penalties or reputational harm.

Lenovo continuously enhances its quality processes

to ensure consistent performance across the product

lifecycle. The Group’s Quality Management System (QMS)

is certified to the ISO 9001:2015 standard by external

certification bodies, reinforcing its commitment to

global quality benchmarks.

The QMS supports efficient operations, drives customer

satisfaction, and signals to customers and stakeholders

that Lenovo maintains robust and standardized quality

assurance practices. These processes span product

development, manufacturing, and post-sales support,

helping to reduce defect rates, manage quality-related

risks, and strengthen brand trust.

Intellectual Property (IP)

Lenovo Group faces IP risks both from failing to

adequately protect its own innovations and from

exposure to third-party infringement claims.

Insufficient protection of Lenovo’s proprietary

technologies could lead to the loss of exclusive rights,

weakening the commercial value of its innovations.

Conversely, the Group may face increased costs from

licensing demands by patent holders, legal fees to

defend against infringement claims, or settlements and

damage awards.

Adverse judgments in IP disputes may also lead to

injunctions or exclusion orders that restrict Lenovo’s

ability to sell or distribute products in certain

jurisdictions. In some cases, the Group may need

to modify product designs or adjust supply chain

arrangements, which could strain customer or partner

relationships. Infringement findings may also harm

Lenovo’s brand and market credibility.

The Group takes a proactive and multi-layered approach

to managing intellectual property risks. It implements

legal protections for its innovations, including securing

patents, registering trademarks and copyrights, and

safeguarding trade secrets. It also applies appropriate

licensing strategies and regularly monitors the validity

and value of its IP assets.

The IP team in Legal works closely with Lenovo’s

business groups to align patent filings with strategic

R&D priorities and competitive positioning. The Group

also obtains IP indemnification from suppliers or

transfers IP responsibility where appropriate to manage

third-party risk exposure.

Lenovo maintains an IP litigation defense strategy

and actively leverages its patent portfolio, where

appropriate, to mitigate costs and strengthen its

negotiating position. Additionally, the Group engages

in industry collaboration to advocate for reforms that

promote a more balanced and cost-effective global

patent system.

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

Operational Risks

Information, Product & Cybersecurity

Lenovo faces growing risks related to cybersecurity,

data privacy, and the integrity of its IT infrastructure

and products. These risks are driven by increased

digitization, the rise of artificial intelligence, and the

growing scale and sophistication of threats from

cybercriminals, nation-state actors, and other malicious

entities.

Cyber threats may target Lenovo’s enterprise systems,

cloud infrastructure, product ecosystem, or third-party

suppliers. This is particularly relevant to Lenovo’s cloud

and services businesses, which process, store, and

transmit large volumes of sensitive customer, employee,

and operational data. The use of AI across Lenovo’s

offerings, while accelerating innovation, also increases

exposure to AI-enabled attacks that are more adaptive

and automated.

Lenovo collects and manages personally identifiable

information (PII) and other sensitive data across its

global operations. The Group is subject to a range of

data privacy laws and security regulations that govern

the collection, use, cross-border transfer, and retention

of such information. Depending on the jurisdiction,

Lenovo may be required to notify individuals or

regulators in the event of a security breach or

vulnerability.

Product security is also a critical concern. Hardware,

operating systems, software, and applications, whether

developed internally or sourced from third parties, may

contain bugs or hidden vulnerabilities that interfere

with system performance or introduce security risks.

Lenovo’s complex global supply chain adds further

exposure, including the potential for malicious code

to be introduced through third-party components or

software.

Finally, a significant security incident, whether due to a

cyberattack, data breach, or product vulnerability, could

result in regulatory penalties, operational disruption,

reputational damage, legal liability, or financial loss.

Lenovo maintains a comprehensive cybersecurity and

information protection program designed to safeguard

its operations, products, data, and customers against

evolving threats.

Key elements of this program include:

•

Cybersecurity governance and controls: Lenovo

has established a global cybersecurity risk

governance framework aligned with industry

standards and leading control frameworks.

This includes policies, procedures, and incident

response protocols, as well as business continuity

programs. The Group is ISO 27001:2022 certified

for information security in its Global IT Network,

and ISO 22301:2019 certified for business

continuity.

•

Threat detection and response: Lenovo

continuously enhances its cybersecurity practices

through advanced technical controls, threat

intelligence services, AI-based countermeasures,

and real-time risk evaluation. These capabilities

support rapid response to emerging threats and

strengthen organizational resilience.

•

Regulatory and compliance adherence: Lenovo

complies with global laws, regulations, and

industry standards relating to AI, privacy,

information security, and product security. This

includes adherence to contractual obligations with

customers and partners.

•

Product and data security standards: The Group

enforces policies and processes to ensure that its

hardware, software, and applications — whether

developed in-house or procured from third parties

— meet robust security and data protection

standards.

•

Secure product lifecycle management: Security

is embedded throughout the product lifecycle,

from supplier code reviews and third-party

risk assessments to post-release vulnerability

management. This approach helps ensure

the delivery of safe and secure products,

limits customer exposure, and supports rapid

remediation when issues are identified.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

Operational Risks

Human Capital Management

Lenovo’s long-term success depends on its ability to

attract, develop, retain, and motivate a high-performing,

diverse workforce. As the Group continues to execute

its “Smarter AI for All” vision and 3S strategy, human

capital remains a critical enabler of innovation,

operational execution, and strategic transformation.

The dynamic nature of global labor markets, coupled

with heightened competition for specialized talent,

presents challenges in sourcing and maintaining skilled

professionals across various regions.

Moreover, the evolving regulatory landscape,

particularly concerning diversity and inclusion practices

and pay transparency in various jurisdictions across the

world, necessitates continuous adaptation to ensure

compliance and uphold Lenovo's commitment to fair

and inclusive employment practices.

Lenovo continuously enhances its Employer Value

Proposition (EVP) to attract, engage, and retain talent

aligned with the Group’s intelligent transformation.

The Group promotes its focus on AI and innovation

internally and externally to strengthen brand recognition

and attract candidates with emerging skill sets.

A Group-wide workforce planning process supports

the Group’s ability to meet evolving business demands

and strategic objectives. This includes expanding talent

acquisition capabilities and enhancing recruitment

expertise, particularly in AI and advanced technology

domains. Lenovo also invests in enterprise-wide talent

and leadership development programs to build internal

capabilities and maintain a strong leadership pipeline.

Compensation and benefits programs are regularly

reviewed to ensure they remain competitive,

performance-driven, and adaptable to an increasingly

diverse global workforce.

To address evolving regulatory requirements —

particularly in relation to pay equity, transparency,

and non-discrimination — Lenovo establishes cross-

functional task forces and engages Legal to guide

compliance strategies. The Group conducts mandated

pay equity analyses, produces required reporting, and

monitors regulatory developments across jurisdictions

to ensure alignment with local laws and global

expectations.

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

Financial Risks

As a global enterprise, Lenovo is exposed to a range of

financial risks that could materially affect its financial

condition, operating performance, or strategic flexibility.

These include financial reporting risks, liquidity and

credit risks, foreign exchange volatility, and tax-related

uncertainties.

Lenovo has established a comprehensive financial

risk management program designed to minimize the

potential adverse impacts of financial market volatility

on the Group’s financial performance and strategic

objectives. The program incorporates structured

processes, oversight mechanisms, and controls to

manage exposure across key areas such as financial

reporting, liquidity, credit, foreign exchange and

taxation.

For further detail, refer to the “Notes to the Financial

Statements” (pages 242–249).

Financial Reporting

Lenovo is subject to complex and evolving financial

reporting requirements across jurisdictions. These

include the application of accounting standards, the use

of significant management judgments and estimates,

and the need to maintain effective internal controls

over financial reporting. Failure to maintain compliance

or transparency in financial reporting may result in

regulatory scrutiny, restatements, or reputational harm.

Lenovo maintains a robust internal control framework

to ensure the accuracy, integrity, and timeliness of

its financial reporting. This includes compliance with

International Financial Reporting Standards (IFRS)

and other applicable accounting and regulatory

requirements across jurisdictions in which the Group

operates.

The Group regularly reviews and enhances its

accounting policies and financial reporting processes,

including the use of qualified finance professionals

and external advisors where appropriate. Key financial

estimates and judgments are subject to formal review

and governance, including oversight by Lenovo’s Audit

Committee. Internal Audit and Finance teams conduct

periodic risk assessments and control testing to

monitor the effectiveness of financial reporting controls.

Remediation efforts are implemented promptly in

response to identified control deficiencies.

Liquidity and Credit Risk

Adverse economic conditions, financial market

disruptions, or geopolitical events may negatively affect

Lenovo’s cash flows and working capital. The Group may

experience delays or defaults in receivables collection

due to customer financial stress. In some cases, trade

credit insurance capacity may be reduced or withdrawn,

increasing Lenovo’s exposure to uninsured credit losses.

Volatility in the capital markets could limit the availability

or increase the cost of external funding, potentially

constraining investment or operational flexibility.

Lenovo actively manages liquidity and credit risk

through centralized treasury operations, supported by

robust cash flow forecasting, global funding strategies,

and disciplined credit management practices.

The Group closely monitors market conditions and

funding opportunities to maintain financial flexibility and

ensure timely access to capital. It maintains diversified

funding sources, including committed credit facilities

and access to public debt markets.

Customer credit risk is managed through formal credit

policies, ongoing review of receivables performance,

and strengthened collection capabilities. Lenovo

leverages internal risk assessments and third-party data

to evaluate customer creditworthiness and adjust credit

terms accordingly.

To mitigate the risk of customer default, Lenovo works

proactively with brokers and insurers to maintain trade

credit insurance coverage, particularly in times of

economic volatility.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Risk Description

Key Risk Mitigations

Financial Risks

Foreign Exchange Risk

Lenovo operates in multiple international markets and

is exposed to foreign currency risk from transactions,

assets, liabilities, and investments denominated in

currencies other than the functional currency. Persistent

macroeconomic uncertainty and geopolitical tensions

have kept exchange rate volatility elevated. Ongoing

fluctuations in foreign exchange markets may continue

to affect the Group’s financial performance.

Lenovo manages foreign exchange risk through a

centralized treasury function, guided by a Group-

wide hedging policy. Currency exposures are actively

monitored, with hedging strategies dynamically

adjusted within policy parameters in response to market

developments.

Tax Management

Lenovo operates across multiple tax jurisdictions and

is subject to ongoing changes in local and international

tax regulations. Evolving interpretations and new

legislation may introduce ambiguity or increase the

complexity of tax compliance. Changes in tax rules

could affect Lenovo’s effective tax rate, tax liabilities,

and the value of tax-related assets.

The recognition of deferred tax assets is dependent on

the Group’s ability to generate sufficient future taxable

profits. A deterioration in business performance or

significant changes in forecasted profitability could

result in the write-down of deferred tax assets, leading

to a negative impact on earnings.

Lenovo closely monitors both business developments

and the global tax environment to ensure the

appropriate application of tax rules and to mitigate risks

where possible. The Group maintains a centralized tax

governance structure supported by internal expertise

and external advisors to manage compliance across

multiple jurisdictions.

Lenovo proactively assesses the potential impact of

regulatory changes, evaluates its tax positions, and

implements controls to ensure the accuracy and

timeliness of tax filings. The Group also conducts

periodic reviews to validate the recoverability of

deferred tax assets based on current and projected

business performance.

In addition, Lenovo leverages technology-enabled tax

systems to support compliance efficiency and regularly

engages with tax authorities to maintain alignment on

complex or evolving tax matters.

For additional detail, refer to the “Notes to the Financial

Statements” (pages 191–193 and 212–215) and “Key

Audit Matters” (page 168).

Lenovo Group Limited 2024/25 Annual Report

Lenovo’s locations included in the EMS scope are audited

internally as well as externally by certification bodies. Our

EMS focus areas include:

•

Climate change mitigation programs

•

Environmentally conscious products program and its

focus on the energy efficiency of products

•

Environmentally preferred materials programs to

drive the use of recycled and renewable materials in

our products and packaging and support a transition

to a circular economy

•

Environmentally sound operations at our

manufacturing facilities

•

Global supply chain environmental programs

Through Lenovo’s ISO 14001:2015 certified EMS program,

we conduct a Significant Environmental Aspect (SEA)

evaluation annually. This process evaluates the significant

or material environmental aspects while identifying

risks and opportunities that may impact the business

or operations. To manage the SEAs, we establish

relevant environmental objectives and targets with Key

Performance Indicators addressing site operations,

products, and global supply chain functions. The

objectives and targets are monitored and measured for

progress semi-annually as part of Lenovo’s ISO 14001:2015

certified EMS. Lenovo’s performance against the FY

2024/25 environmental objectives and targets will be

published in the FY 2024/25 ESG Report.

Environment

Lenovo’s programs in this area are based on a

foundation of our commitment to strong environmental

stewardship and continued compliance. This includes

compliance with regulatory requirements and voluntary

standards established by associations and the standards

organizations to which Lenovo subscribes. Lenovo’s

Environmental Affairs Policy is the cornerstone for

compliance across global operations, employees, and

contractors performing work on behalf of Lenovo. This

policy forms the foundation for Lenovo’s ISO 14001:2015

certified Environmental Management System (EMS),

which includes processes for evaluating legal and

voluntary requirements and ensuring compliance across

Lenovo’s global design, development, and manufacturing

operations (including distribution, fulfillment, and internal

repair operations).

It is Lenovo’s goal to leverage our EMS to help address

and mitigate some of the most significant environmental

challenges facing us as a global organization. Other

benefits of the EMS include achieving results consistent

with environmental leadership and ensuring Lenovo is

vigilant in protecting the environment across all of our

operations worldwide.

Climate Change

Governance

At Lenovo, we recognize that climate change is a serious threat and as such, we address it

at the highest levels of our organization. At least annually the Board of Directors is briefed

on climate strategy and progress towards our climate change mitigation goals. Lenovo’s

Chief Legal and Corporate Responsibility Officer provides executive leadership for

Lenovo’s Environmental, Social and Governance (ESG) position, including climate change

programs. In addition, the ESG Executive Oversight Committee (EOC) provides strategic

direction and facilitates the coordination of ESG efforts across Lenovo, including the

company’s climate change strategy. The ESG EOC is comprised of senior management

from across the business and functional areas and is chartered to promote a culture that

encourages strong ESG performance, including compliance and leadership activities.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Strategy

Lenovo identified physical as well as transition climate-related risks and opportunities

that can impact our business strategy and financial planning. These include, for example,

regulations, technology, reputation, consumer behavior, or extreme weather events. To

start understanding how our identified physical and transition risks and opportunities

could impact our overall business, Lenovo performed exploratory climate-related scenario

analysis by using the GeSI-CDP Scenario Analysis Toolkit which is based on the Task Force

on Climate-related Financial Disclosures requirements and guidance on scenario analysis.

The results helped to identify gaps, including financial implications and the involvement of

cross-function teams.

Lenovo’s Climate and Energy Policy forms the foundation of our climate change strategy

which focuses on five key areas where we can demonstrate influence in driving emissions

reductions and support for a global transition to a low-carbon economy:

—

internal operations

—

energy suppliers and their operational emissions

—

supply chain

—

customers

—

government, non-profit organizations, and the public

Risk Management

The significant risks associated with climate change are identified and evaluated as part

of two main processes within Lenovo’s business management systems. These include its

Group Risk Management and Control (GRMC) process and its annual climate-related risks

and opportunities assessment. Additionally, Lenovo considers climate change as part of

the ESG materiality assessment process. These processes help us identify relevant climate-

related risks and opportunities.

Metrics and Targets

We established near-term science-based emissions reduction targets, which were

validated by the Science Based Targets initiative (SBTi) in June 2020 and again in January

2023. Our scope 1 and 2 emissions reduction targets are consistent with limiting warming

to 1.5°C, the most ambitious goal of the Paris Agreement, and our scope 3 emissions

reduction targets meet ambitious criteria in accordance with the Science Based Targets

initiative (SBTi) methodology and are in line with current best practices. We annually

disclose our scope 1, 2, and 3 emissions and progress towards our emission reduction

targets in our ESG Report. Our long-term emissions reduction targets have been validated

against SBTi’s Corporate Net-Zero Standard, and Lenovo is committed to achieving net-

zero greenhouse gas emissions by 2050.

Lenovo has responded to the SBTi’s urgent call for

corporate climate action by committing to align with 1.5°C

and net-zero through the Business Ambition for 1.5°C

campaign and we became part of the United Nations

Framework Convention on Climate Change (UNFCCC)

Race to Zero campaign. In January 2023, Lenovo

announced its SBTi validated target to reach net-zero

greenhouse gas (GHG) emissions by 2050. Lenovo’s net-

zero target is to achieve a 90 percent reduction across

Scope 1, 2, and 3 emissions. Lenovo’s long-term 2050 net-

zero target coincides with its near-term, SBTi-validated

2030 emissions reduction targets. In September 2023,

Lenovo joined the UN Global Compact Forward Faster

initiative to accelerate private sector action towards the

SDGs, specifically committing to the climate action and

water resilience targets within the initiative.

By working with SBTi and aligning to their Net-Zero

Standard, which is also the world’s first framework for

corporate net-zero target setting, Lenovo is taking a

scientific, collaborative, and accountable approach to

reducing emissions. Aligning goals to the SBTi helps hold

companies accountable for their emissions reduction.

Without aligning to SBTi, it is difficult to validate or know

when a net-zero target is reached.

Lenovo’s mature ISO 14001 EMS gives Lenovo a strong

framework on which to set annual targets to help drive

progress towards its 2030 and 2050 SBTi goals.

Lenovo Group Limited 2024/25 Annual Report

Compliance with environmental

laws and regulations

Lenovo actively engages with a wide variety of

stakeholders to safeguard compliance with applicable laws

and regulations where our products are manufactured,

marketed and sold. The Global ESG and Regulatory

Compliance (GESG&RC) Organization supports a

culture of compliance by working with a global network

of focal points (FP) in the geographies, development

organizations, and key functional areas, as well as with

external partners. We use reliable and established

processes that conform with the latest applicable laws and

regulations and ensure overall effectiveness. The diagram

below details the process for ensuring environmental

compliance for our products and practices.

For more information about our identification process

and assessment of climate-related risks and opportunities,

metrics, and actions to address climate change,

please read our response to the CDP Climate Change

questionnaire available at www.cdp.net.

Lenovo recognizes the increasing demand for

transparency with climate-related risks and opportunities

disclosures. Investors and other stakeholders are focused

on corporate disclosures regarding the physical and

transition risks associated with climate change and related

financial impacts. Lenovo’s annual ESG Report complies

with the Rules Governing the Listing of Securities on

The Stock Exchange of Hong Kong Limited (the “Stock

Exchange”), references the Global Reporting Initiative (GRI)

Standards, and addresses the needs of many Lenovo

stakeholders. The reporting requirements that Lenovo

follows broadly correspond with the recommendations

of the Financial Stability Board’s Task Force on Climate-

related Financial Disclosures (TCFD). Lenovo continues

its efforts in providing accurate and meaningful climate-

related financial disclosures in line with TCFD framework.

Process for establishing, monitoring, and maintaining environmental compliance

Inputs

Contracted consultancies

FPs communicate changes and

provide training where needed

Inputs

Regional, country and Business Unit FPs

monitor their areas of responsibility and

provide input to GESG&RC

Inputs

Industry/trade seminars & publications,

regulatory tracking services, etc.

Standards, specifications, & procedures reviewed

and updated as required by change and/or

annually at a minimum

Location Environmental FPs monitor

emerging issues

FPs update documents & communicate

identified requirements to impacted

organizations

Organizations integrate requirements

into operational procedures. FPs assure

permitting requirements met

GESG&RC and network of Geo FPs

monitor emerging issues

GESG&RC updates global specifications &

communicates identified requirements to

impacted organizations

Organizations integrate requirements into

product specifications, new product designs

and Business Unit operational requirements

Product

Location

Inputs

Information on changes to

activities, products & requirements

from Environmental FPs

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

•

The

Nomination and governance committee

oversees the corporate policies and practices

about governance and compliance with legal and

regulatory requirements

Other Committees

•

The

Executive Ethics Committee

provides executive-

level oversight and guidance to the ECO

•

The

Investigation Oversight Committee

works

closely with the ECO to oversee the Group’s internal

investigation process and speak up initiatives

•

The

Regional Ethics and Compliance Committee

provides the ECO with global support, perspective

and insight

Business practices

Lenovo is committed to conducting business legally,

ethically, and with integrity. Lenovo’s Code of Conduct

mandates compliance with applicable laws in markets

where it conducts business. Its policies strongly support

ethical and responsible business practices, including, but

not limited to areas such as anti-bribery and corruption,

data privacy, anti-competitive practices and fair

competition, trade compliance, intellectual property, and

more.

Anti-Bribery and Corruption

Lenovo has zero tolerance for bribery and corruption.

Lenovo complies with the anti-bribery and corruption laws

in every jurisdiction where we conduct business. Lenovo’s

Global Anti-Bribery and Corruption Policy, along with

our Global Gift, Entertainment, Corporate Hospitality and

Travel Policy, reinforce provisions in the Code and provide

additional guidance regarding compliance with global

anti- bribery and corruption laws and regulations. The

policies stress that Lenovo will not directly or indirectly

solicit, offer, promise, authorize, provide, or accept

anything of value to any person, including government

officials, to influence action, inaction or to secure an

improper advantage as defined by applicable laws.

Anti-Competitive Practices and Fair Competition

Lenovo competes for business ethically and lawfully.

Lenovo’s Code and policy on anti-competitive practices

and fair competition sets out fundamental principles

to serve as guidelines for employees in complying with

the competition laws in every jurisdiction where Lenovo

operates. In particular, the policies strictly prohibit

employees from engaging in anti-competitive practices,

including entering into an agreement or discussion that

would result in setting prices, limiting the availability of

goods or services on the market, or agreeing to boycott a

customer or supplier.

Lenovo and its business partners obtain the environmental

and regulatory certifications that are required to legally sell

its products where they are marketed and sold. Lenovo

relies on internal and external subject matter experts, third-

party labs, internal tools and processes to evaluate and

confirm product compliance before shipment. In addition

to environmental compliance, areas of review include but

are not limited to, electromagnetic compatibility (EMC),

safety, technology and trade controls, and wireless.

Ethics and compliance with

relevant laws and regulations

Lenovo is committed to conducting business legally,

ethically, and with integrity. Ethics and integrity serve as

the foundation of all Lenovo’s business practices. Results

from our most recent ‘Lenovo Listens’ survey highlight

one of the Company’s greatest strengths: ethical business

practices. We recognize our success hinges on our

steadfast commitment to these values. This commitment

is reinforced among the workforce through Lenovo’s core

values, which emphasize the significance of “Teamwork

with Integrity and Trust,” one of Lenovo’s four fundamental

cultural tenets.

Our Ethics and Compliance Office (ECO) was established

to foster a culture that is committed to implementing

these values. The ECO works in partnership with

stakeholders across the globe to promote legal and ethical

operations. The ECO actively raises awareness about the

importance of ethical and compliant business practices to

Lenovo and serves a critical role in providing employees

with the information, resources, and training they need to

make informed ethical decisions. The ECO also oversees

Lenovo’s Code of Conduct (Code), which establishes clear

expectations for employee compliance with Lenovo’s

policies related to lawful and ethical business conduct.

Lenovo’s Code reflects our culture of trust and integrity

and holds employees accountable for their behavior and

helps employees determine when and where to seek

advice. Lenovo’s Code, policies, and related awareness and

training materials are provided electronically and through

periodic communications. Specifically, Lenovo’s new hires

are required to take Code training. In order to successfully

complete the training, all employees are required to

provide attestation of their adherence to the Code and

Lenovo policies. The Code training covers various topics,

including, conflicts of interest, insider trading, anti-bribery

and corruption, anti-competitive practices and fair

competition, insider trading, anti-money laundering, and

international trade compliance.

The ECO is supported by the following committees:

Board Committees

•

The

Audit committee

is annually briefed by the ECO

on matters including the adequacy of resources for

ESG reporting

Lenovo Group Limited 2024/25 Annual Report

•

Providing contractual support to ensure that

risks associated with any dataflows are covered

by appropriate supplier, customer, and partner

contractual terms; includes assisting the Lenovo

Global Contract Team (GCT) in its efforts to apply

contract templates and improve privacy and

security-focused contract exhibits

•

Providing early input to product and services

development teams by incorporating privacy

checkpoints into formal development plans, including

privacy impact assessments, and conducting pre-

launch privacy compliance reviews of products,

software, services, websites, marketing programs,

internal systems, and supplier relationships

•

Publishing transparent website and product privacy

statements that describe Lenovo’s data practices

and choices for individuals

•

Responding to requests from individuals to access,

review, correct, amend, or delete their personal

information

•

Coordinating Lenovo’s response to law enforcement

and other government requests for personal, user, or

device identifiable data

•

Developing and delivering live and virtual privacy-

focused training programs and working closely

with the Chief Security Office (CSO), Corporate

Infrastructure Security Office (CISO), and product

security teams to timely identify and respond to

information incidents

•

Maintaining an internal Global Privacy & Data

Protection Program website for the Lenovo

Community that serves as a resource containing

policies, training, news, analysis, and additional

guidance on a host of privacy and data protection

areas of concern

Raising questions or concerns

Lenovo is committed to fostering a speak up culture,

where employees, contractors, and business partners

are empowered to speak up on anything that appears

unethical, illegal, or suspicious. Lenovo has established

clear processes and various reporting channels for

raising questions or reporting concerns. Employees

are encouraged to raise concerns to their managers,

Human Resources, the ECO, Internal Audit, or the Legal

Department about any potential issues including, but not

limited to, those known about or suspected:

•

Fraud by or against Lenovo

•

Bribery or Corruption

•

Unethical business conduct

•

Violation of legal or regulatory requirements

•

Substantial and specific danger to health and safety

•

Violation of Lenovo’s corporate policies and

guidelines, particularly the Code of Conduct

Intellectual Property

Lenovo values intellectual property as it innovates for the

future. Lenovo expects employees to protect intellectual

property and to respect the intellectual property rights

of other companies and individuals. Lenovo secures

its intellectual property by using patents, copyrights,

trademarks, confidential information, related contract

rights, and other applicable forms of legal protection.

Trade Compliance

Lenovo is fully committed to complying with all applicable

global trade laws and regulations in the markets where it

conducts business. This includes adherence to customs

and import regulations, export controls, economic

sanctions, and anti-boycott regulations as mandated by

relevant authorities in each jurisdiction.

All employees are expected to uphold Lenovo’s Code

of Conduct and Global Trade Compliance Policy, which

define the requirements for maintaining compliance

with these laws and regulations. Lenovo also requires its

business partners to comply with applicable global trade

laws and regulations pursuant to its Partner Code of

Conduct.

Additionally, Lenovo is Customs-Trade Partnership Against

Terrorism (CTPAT) certified and a member of the CTPAT

Trade Compliance program, demonstrating Lenovo’s

commitment to supply chain security and regulatory

compliance.

Privacy & Data Protection

Lenovo recognizes the great importance of privacy to

individuals everywhere — customers, website visitors,

product users, employees — everyone. The responsible use

and protection of personal and other information under

Lenovo’s care is a core value. To ensure adherence to

Lenovo’s privacy and data protection policies, principles,

and processes, Lenovo maintains a global Privacy & Data

Protection Program led by the Legal Department and a

cross-functional Privacy Working Group comprised of

key partners drawn from Information Security, Product

Security, Product Development, Marketing, E-Commerce,

Service and Repair, Human Resources, and other groups.

Key elements of Lenovo’s approach to responsibly using

and protecting information of concern include:

•

Monitoring privacy and data protection legal and

regulatory trends, advising senior leadership, and

improving Lenovo’s privacy and data protection

practices

•

Harmonizing global privacy and data protection

requirements into a corporate-wide Privacy Policy,

Privacy Standard, and set of Guiding Privacy

Principles intended to drive how Lenovo handles

personal, user, device and certain other identifiable

information, including developing and updating

Lenovo privacy controls and processes

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Stakeholder engagement is facilitated in several ways,

including:

•

Direct customer interaction via market surveys and

focus groups

•

Employee surveys and focused training

•

Supplier audits, conferences, and quarterly business

reviews

•

Regular webinars and meetings with industry trade

groups on regulatory and other issues

•

Community partnerships in Lenovo’s priority markets

•

Social media, StoryHub, press release, webcast

•

Responding to investors, analysts, and non-

governmental organization (NGO) surveys and

inquiries

Stakeholder engagement

Lenovo actively manages its relationships with customers,

employees, suppliers, investors, regulators, members

of the communities in which it operates, and other

stakeholders who may be impacted by the organization’s

ESG performance and whose actions can affect the

organization’s value.

Direct and indirect stakeholder engagement is conducted

through regular business practices or through interactions

that target key stakeholders.

Lenovo also provides formal, confidential ways to report

concerns, ask questions, or request guidance in person, by

email, or through the LenovoLine, a confidential reporting

system that is accessible 24 hours a day, seven days a

week by secure website, mobile app (IOS or Android)

or by telephone. Where allowed by law, employees may

report concerns about business practices anonymously.

LenovoLine

Lenovo’s

Confidential

Ethics &

Compliance Reporting

Line

hours

day,

days

a week

Ask

a question or

raise

a concern about

any

conduct that may violate our Code, seems

unethical,

illegal

suspicious.

Make a confidential report

You may remain anonymous where allowed by law.

For

a list

phone

numbers

location

report

online:

https://lenovo.whispli.com/speakup

Email Ethics

and Compliance at

ethics@lenovo.com,

visit

Lenovo MyHub

for

information.

Employees are encouraged to use the LenovoLine,

Lenovo’s confidential ethics and compliance reporting

line, to raise concerns or questions. The LenovoLine is also

accessible by scanning the QR code.

Lenovo takes all allegations and concerns seriously. Lenovo

maintains a Whistleblowing and Investigations Policy

outlining the process by which concerns can be raised,

are reviewed, and are investigated. Lenovo also has an

oversight body, the Investigations Oversight Committee (IOC),

to ensure concerns raised are appropriately investigated

and addressed.

Investors

Supply

Chain

Board of

Directors

Employees

Local

Communities

Regulators/

Legislators

Customers

Advocacy

Groups

Industry

Associations

Lenovo Group Limited 2024/25 Annual Report

With operations and supply chains that extend around the

world, we are uniquely positioned to support the global

collective impact of business by aligning our practices to

a sustainable and inclusive future. Since 2009, Lenovo has

continued its role as a signatory supporter to the United

Nations Global Compact (UNGC), a globally recognized

platform that provides a blueprint for businesses that want

to achieve a more sustainable future for all. As a business

participant in the UNGC, we strive to demonstrate

continuous improvements by aligning our operations

and practices with the ten principles of the UNGC. The

principles promote a value system that supports the

fundamental responsibilities in the areas of human rights,

labor, environment, and anti-corruption in the markets

where we operate.

As we aim to integrate these values and principles

wherever we conduct business, we are also making

meaningful contributions to people and the planet and

setting the stage for long-term success. This dedication

begins at the top with the support and endorsement of

our Chairman and CEO, Mr. Yang Yuanqing. Lenovo is

proud to be recognized by professionals and prominent

programs worldwide as we demonstrate leadership in

corporate ESG practices. The information below contains

a selection of Lenovo’s FY 2024/25 ESG achievements. A

detailed review of Lenovo’s FY 2024/25 ESG performance

is published in our ESG Report.

Lenovo also engages with stakeholders through targeted

campaigns that support our social investment objectives

that include but are not limited to:

•

Love on Global Month of Service: September 2024

marked Lenovo’s eighth annual Love on Global

Month of Service, engaging employees in 62

offices around the world to make a positive impact

in their communities. Projects aligned to Lenovo

Foundation’s mission to empower under represented

populations with access to technology and STEM

education. Whether it’s the number of volunteers,

volunteer hours, participating offices, or beneficiaries,

the project has grown every year since 2017.

•

AI for Social Impact: This year Lenovo philanthropy

created the AI for Social Impact initiative which

works to connect non-profits with education and

resources so that they can harness AI to enhance

their missions. As part of the initiative, AI for Social

Impact webinars were created to share Lenovo’s AI

expertise with non-profits through free webinars

shared with Lenovo partners and on non-profit

websites. Lenovo is also partnering with Tech to the

Rescue to offer the AI for Social Impact Lab, focusing

on the areas of climate change and education, and

giving non-profits the resources to develop and

deploy AI solutions that enhance their missions.

In addition to these and other formal stakeholder

interactions, we collaborate with industry associations

from time to time. The external perspectives provide

opportunities to adopt best practices and knowledge that

may help to assess our commitments and progress in key

ESG-related areas.

Key ESG recognitions and accomplishments

Environmental

Lenovo scored in the leadership band by CDP for climate change (A) and water security (A–) for 2024. This is the

sixth year in a row Lenovo has been in the leadership band for climate (A– or A). For its A, Lenovo also earned a spot

on CDP’s 2024 Corporate A list for Climate which highlights Lenovo’s commitment to environmental transparency

and comprehensive disclosure.

In addition, EcoVadis recognized Lenovo as a Leader in Carbon Management, achieving the highest ranking in its

category with a best-in-class greenhouse gas (GHG) management system and strong ambition for decarbonization.

Multiple Lenovo initiatives were recipients of 2024 SEAL Business Sustainability Awards, an environmental program

that honors organizations that demonstrate strong leadership, innovation, and commitment to sustainable business

practices. Lenovo’s International Supply Chain Organization (ISCC) won the SEAL Environmental Initiative Award for

Transform Trash to Treasure, its innovative parts-harvesting program. The SEAL Sustainable Innovation Award was

presented to the newly launched Lenovo Intelligent Sustainability Solutions Advisor (LISSA). This AI-powered engine

informs IT sustainability strategies through data intelligence. The Lenovo Neptune™ liquid cooling technology won

in the SEAL Sustainable Product Award category and Lenovo’s Reduced Carbon Transport Service, an offering that

gives enterprise customers opportunities to purchase sustainable aviation fuel credits, won the SEAL Sustainable

Service Award.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Social

Lenovo was recognized as a “2024 Best Workplace for Disability Inclusion” by the Disability Equality Index in the

US, the UK and Brazil. The index recognizes companies for demonstrating leading disability inclusion practices and

committing to an inclusive culture. These factors are validated through visible support from company leadership,

accessible workplace and employment practices, community engagement initiatives, and supplier programs.

In 2024, Lenovo received its highest score in the annual Workplace Pride Global Benchmark. In addition to

recognition from Workplace Pride, Lenovo was included in the Human Rights Campaign Foundation’s 2025

Corporate Equality Index for the seventh year, highlighting its commitment to inclusion.

Lenovo was included in the inaugural list of America’s Dream Employers for 2025 by Forbes, in partnership

with Statista. This recognition is a testament to the inclusive culture, the purposeful approach, and the positive

environment that Lenovo fosters for its global employee base. Lenovo has received similar recognitions for being an

employer of choice. In January 2024, employees voted Lenovo to be one of Glassdoor’s Best Places to Work.

Governance

Lenovo was presented the Gold Award in the Most Sustainable Companies and Organizations (MSCO) section (H-share

companies and other Mainland enterprise category) by The Hong Kong Institute of Certified Public Accountants (HKICPA)’s

2024 Best Corporate Governance and ESG Awards. This is the twelfth consecutive year Lenovo has received awards

from the HKICPA.

Lenovo was included in the 2024 Hang Seng Corporate Sustainability Index with an AA score. Among the 550 Hong

Kong-listed companies, Lenovo received the strongest score in the IT industry for its environmental achievements.

Lenovo was honored to receive both the Corporate Governance and ESG Excellence Awards from the Chamber of

Hong Kong Listed Companies (CHKLC).

Lenovo was awarded the Platinum Medal by EcoVadis, a leading global provider of business sustainability ratings.

With a score of 85/100, this recognition places Lenovo in the top 1% of all companies rated worldwide by EcoVadis.

In 2024, Lenovo maintained a rating of AAA (on a scale of AAA-CCC) in the MSCI ESG Ratings assessment.

Lenovo Group Limited 2024/25 Annual Report

Training & Development

We have enhanced our management and leadership

development programs to provide support for managers

during their leadership progression at Lenovo by offering

specific training and development experiences, for

example Executive Presence Workshop (EPW), Director

Leadership Enhancement Program (DLEP), Coaching

With Impact (CWI), Leading In Matrix Environment (LIME),

etc at key points in their careers.

Lenovo also places a high priority on executive leaders

development, bringing senior leaders together once a year

to share best practices, learn from external experts and

drive strategic alignment across the enterprise through

Global Leadership Team (GLT), Excelling Leadership In

Transformation Era (ELITE) and Striving Excellence in

Executive Director (SEED).

We are Lenovo

The “We Are Lenovo” cultural values of Serving Our

Customers, Innovation, Entrepreneurship, and Teamwork

with Integrity & Trust are the foundation of our business

strategy. These values guide our operations, decision-

making, and interactions with customers.

Employment Performance and Compensation

Lenovo continues to leverage its performance

management and compensation programs to reinforce

a strong commitment to excellence in business

achievements and customer experience. This approach

includes annual goal setting and review, continuous

feedback for development, the calibration of individual

ratings across organizations to ensure a fair assessment,

and the recognition of individual and team performance.

The performance management approach drives business

objectives, while career development enables employees

to grow and succeed through challenging and exciting

work. The Lenovo Compensation Philosophy emphasizes

our focus on competitive compensation for performance

that reflects the unique status of the local market where

employees are based and supports flexibility in the design

of business specific programs within a consistent – Lenovo

Compensation framework.

Organizational & Talent Management

“Integrity, Learning Ability, Persistence and Ambition

are not only the fundamental for success in career

development, but also the compulsory talent requirement

in Lenovo. Only if you have these four elements you can

grow up into a big tree!”

– Yuanqing Yang

Lenovo uses Tree model to vividly describe our talent

concept. The growing big tree symbolizes lofty ambitions;

the Leaves represent learning ability, continuously

acquiring new knowledge and mastering new skills; the

Trunk represents persistence, tenacity and perseverance;

the Root represents fundamental of human being –

integrity.

Lenovo’s long-term organization and talent strategy

remains steadily focused on hiring and engaging

world-class talent, building global organization and

talent capabilities and skills, and fostering an inclusive

environment where people can thrive at their full potential.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Financial highlights

Results

For the year ended March 31

2025

US$’000

2024

US$’000

Revenue

69,076,968

56,863,784

Gross profit

11,097,610

9,803,183

Gross profit margin

16.1%

17.2%

Operating expenses

(8,933,457 )

(7,797,399)

Operating profit

2,164,153

2,005,784

Other non-operating income/(expenses) — net

(683,283 )

(640,330)

Profit before taxation

1,480,870

1,365,454

Profit for the year

1,461,952

1,102,312

Profit attributable to equity holders of the Company

1,384,445

1,010,506

Earnings per share attributable to equity holders of the Company

(US cents)

— Basic

11.30

8.41

— Diluted

10.62

8.05

EBITDA

3,873,533

3,696,511

Non-HKFRS operating profit

2,454,124

2,012,910

Non-HKFRS profit before taxation

1,815,110

1,399,930

Non-HKFRS profit for the year

1,503,757

1,120,451

Non-HKFRS profit attributable to equity holders of the Company

1,441,291

1,060,177

Dividend per ordinary share (HK cents)

— Interim dividend

8.5

— Proposed final dividend

30.5

Lenovo Group Limited 2024/25 Annual Report

For the year ended March 31, 2025, the Group achieved total sales of approximately US$69,077 million. When compared

to last year, profit attributable to equity holders for the year increased by US$373 million to approximately US$1,384

million, gross profit margin eroded by 1.1 percentage points to 16.1 percent mainly due to lower profitability in ISG

business. Some organizational changes have been made to support the Group’s future business planning and the growth

of its global business, which resulted in one-time income tax credit of US$282 million, primarily derived from deferred tax

credit. Basic and diluted earnings per share were US11.30 cents and US10.62 cents, representing an increase of US2.89

cents and US2.57 cents respectively. Net profit margin rose by 0.2 percentage points to 2 percent.

Further analyses of sales by segment are set out in Business Review and Outlook.

Analysis of operating expenses by function for the years ended March 31, 2025 and 2024 is as follows:

2025

US$’000

2024

US$’000

Selling and distribution expenses

(3,584,534)

(3,308,889)

Administrative expenses

(2,822,604)

(2,491,839)

Research and development expenses

(2,288,204)

(2,027,532)

Other operating income/(expenses) — net

(238,115)

30,861

(8,933,457)

(7,797,399)

Operating expenses for the year increased by 15 percent as compared with last year. Employee benefit costs increased

by US$469 million mainly due to increase in performance-based bonus and sales commissions. During the year, the

Group recorded assets impairment and write-off of US$123 million (2024: US$40 million). Advertising and promotional

expenses increased by US$192 million for new product launch and special campaigns. The Group recorded fair value

loss on derivative financial liabilities relating to warrants of US$118 million (2024: nil). Fair value gain from strategic

investments amounted to US$60 million (2024: US$153 million), reflecting the change in value of the Group’s portfolio.

Currency fluctuations presented a challenge to the Group, resulting in a net exchange loss of US$21 million (2024: US$74

million). Last year, the Group recorded gain on remeasurement of a written put option liability of US$143 million.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Key expenses by nature comprise:

2025

US$’000

2024

US$’000

Depreciation of property, plant and equipment

(199,762 )

(209,777)

Depreciation of right-of-use assets

(96,283 )

(134,959)

Amortization of intangible assets, excluding internal use software

(151,419 )

(211,965)

Impairment and write-off of property, plant and equipment

–

(10,474)

Impairment and write-off of intangible assets

(123,140 )

(29,745)

Employee benefit costs, including

(4,837,162 )

(4,368,317)

— long-term incentive awards

(290,245 )

(277,574)

— severance and related costs

(21,541 )

(54,991)

Rental expenses

(12,570 )

(7,536)

Net foreign exchange loss

(21,467 )

(73,915)

Advertising and promotional expenses

(1,070,447 )

(877,955)

Legal, professional and consulting expenses

(412,448 )

(289,569)

Information technology expenses, including

(385,538 )

(347,305)

— amortization of internal use software

(240,242 )

(196,815)

Increase in loss allowance of trade receivables

(106,576 )

(105,644)

Unused amounts of loss allowance of trade receivables reversed

57,623

39,040

Research and development related laboratory testing, services

and supplies

(422,427 )

(355,148)

Loss on disposal of property, plant and equipment

(3,596 )

(3,479)

Loss on disposal of intangible assets

(2,954 )

(25)

Loss on disposal of construction-in-progress

(535 )

(13,827)

Fair value gain on financial assets at fair value through

profit or loss

59,552

153,113

Fair value loss on derivative financial liabilities relating to

warrants

(118,275)

–

Gain on remeasurement of a written put option liability

–

143,430

Gain on deemed disposal of a subsidiary

22,627

–

Gain on disposal of interest in associates

–

Impairment of interest in an associate

–

(6,690)

Others

(1,108,660 )

(1,086,664)

(8,933,457 )

(7,797,399)

Lenovo Group Limited 2024/25 Annual Report

Other non-operating income/(expenses) — net for the years ended March 31, 2025 and 2024 comprise:

2025

US$’000

2024

US$’000

Finance income

109,964

148,134

Finance costs

(773,269)

(762,805)

Share of losses of associates and joint ventures

(19,978)

(25,659)

(683,283)

(640,330)

Finance income mainly represents interest on bank deposits.

Finance costs for the year slightly increased by 1 percent as compared with last year. The increase is mainly attributable

to the increase in interest on bank loans and overdrafts of US$8 million and interest on convertible bonds of US$16

million, partly offset by decrease in factoring costs of US$8 million and interest on notes of US$4 million.

Share of losses of associates and joint ventures primarily represents operating losses arising from principal business

activities of respective associates and joint ventures.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

The Group adopts segments by business group as the reporting format. Segments by business group comprise

Intelligent Devices Group (“IDG”), Infrastructure Solutions Group (“ISG”) and Solutions and Services Group (“SSG”).

Revenue and operating profit/(loss) for reportable segments are as follows:

2025

2024

Revenue

US$’000

Operating

profit/(loss)

US$’000

Revenue

US$’000

Operating

profit/(loss)

US$’000

IDG

50,534,350

3,622,559

44,599,450

3,180,761

ISG

14,523,268

(68,501 )

8,921,929

(248,260)

SSG

8,457,084

1,784,832

7,472,310

1,545,465

Total

73,514,702

5,338,890

60,993,689

4,477,966

Eliminations

(4,437,734 )

(1,421,467 )

(4,129,905)

(1,314,362)

69,076,968

3,917,423

56,863,784

3,163,604

Unallocated:

Headquarters and corporate income/

(expenses) — net

(1,733,060 )

(1,339,370)

Restructuring costs

–

(46,000)

Depreciation and amortization

(437,179)

(449,551)

Impairment and write-off of property,

plant and equipment

–

(10,474)

Impairment and write-off of intangible

assets

(114,478 )

(24,723)

Finance income

85,306

132,183

Finance costs

(181,502 )

(323,141)

Share of losses of associates and joint

ventures

(22,242 )

(27,822)

(Loss)/gain on disposal of property,

plant and equipment

(4,108 )

550

Fair value gain on financial assets at

fair value through profit or loss

58,777

150,681

Fair value loss on derivative financial

liabilities relating to warrants

(118,275)

–

Gain on remeasurement of a written put

option liability

–

143,430

Gain on deemed disposal of a subsidiary

22,627

–

Impairment of interest in an associate

–

(6,690)

Dividend income

7,581

2,777

Consolidated profit before taxation

1,480,870

1,365,454

Lenovo Group Limited 2024/25 Annual Report

Headquarters and corporate income/(expenses) — net for the year comprise various expenses, after appropriate

allocation to business groups, of US$1,733 million (2024: US$1,339 million) such as employee benefit costs, legal,

professional and consulting expenses, and research and technology expenses. The increase is primarily in relation to the

increase in employee benefit costs driven by performance-based bonus, increase in legal, professional and consulting

expenses; advertising and promotional expenses; and provision for claims, partly offset by the decrease in net foreign

exchange loss as compared with last year.

Use of non-HKFRS measure

To supplement Lenovo’s consolidated financial statements prepared and presented in accordance with HKFRS

Accounting Standards (“HKFRS”), we utilize non-HKFRS adjusted profit as an additional financial measure.

We define adjusted profit as profit for the year by excluding (i) net fair value changes on financial assets at fair value

through profit or loss, (ii) amortization of intangible assets resulting from mergers and acquisitions, (iii) mergers and

acquisitions related charges, (iv) gain on deemed disposal of a subsidiary, (v) impairment and write-off of intangible assets, (vi)

one-time income tax credit, (vii) restructuring and other charges, (viii) gain on remeasurement of a written put option

liability, (ix) fair value change on derivative financial liabilities relating to warrants, and (x) notional interest of convertible

bonds, and the corresponding income tax effects, if any.

More specifically, management excludes each of those items mentioned above for the following reasons:

—

Lenovo recognizes fair value gains or losses from its strategic investments. The change in fair value included

revaluation gains or losses on new investment rounds on unlisted holdings and mark-to-market gains or losses

on listed holdings. Lenovo excludes this item for the purposes of calculating the non-HKFRS measure to facilitate

a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating

performance in other periods.

—

Lenovo incurs charges related to the amortization of intangible assets resulting from mergers and acquisitions.

Those charges are included in Lenovo’s net profit prepared under HKFRS. Such charges are significantly impacted

by the timing and magnitude of Lenovo’s acquisitions and any related impairment charges. Consequently, Lenovo

excludes these charges for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful

evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods.

—

Lenovo incurs cost related to its mergers and acquisitions, which it would not have otherwise incurred as part of its

operations. The charges are direct expenses such as third-party professional and legal fees, and integration-related

costs, as well as non-cash adjustments to the fair value of certain acquired assets. These charges related to mergers

and acquisitions are inconsistent in amount and frequency and are significantly impacted by the timing and

nature of the transactions. Management believes that eliminating such expenses for the purposes of calculating

the non-HKFRS measure facilitates a more meaningful evaluation of Lenovo’s current operating performance and

comparisons to operating performance in other periods.

—

Lenovo recognizes gain on deemed disposal of a subsidiary. Such gains or losses are inconsistent in amount and

frequency and are significantly impacted by the timing and nature of the transactions. Lenovo excludes this item

for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s

current operating performance and comparisons to operating performance in other periods.

—

Lenovo records impairment and write-off of intangible assets, which are inconsistent in amount and frequency.

Lenovo excludes these charges for the purposes of calculating the non-HKFRS measure to facilitate a more

meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in

other periods.

—

Lenovo recognizes one-time income tax credit, primarily derived from deferred tax credit, which is non-recurring

in nature. During the year, some organizational changes have been made to support the Group’s future business

planning and the growth of its global business, which resulted in one-time income tax credit. Lenovo excludes this

item for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s

current operating performance and comparisons to operating performance in other periods.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

—

Lenovo incurs restructuring and other charges that are (i) costs associated with restructuring plans which are

related to employee separation from service; and (ii) other charges, which include non-recurring costs for assets

impairment and write-off. Lenovo excludes these restructuring and other charges for the purposes of calculating

the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s current operating performance and

comparisons to operating performance in other periods.

—

Lenovo recognizes gain on remeasurement of a written put option liability based on the latest assessment.

Lenovo excludes this gain for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful

evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods.

—

Lenovo recognizes fair value change on derivative financial liabilities relating to warrants. Lenovo excludes this item

for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s

current operating performance and comparisons to operating performance in other periods.

—

Lenovo incurs notional interest of convertible bonds, which is non-cash in nature. Lenovo excludes these charges

for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s

current operating performance and comparisons to operating performance in other periods.

This non-HKFRS financial measure is not computed in accordance with, or as an alternative to, HKFRS. Management

uses this non-HKFRS financial measure for the purposes of evaluating Lenovo’s historical and prospective financial

performance. Management believes that excluding the items mentioned above for this non-HKFRS financial measure

allows management to better understand Lenovo’s consolidated financial performance in relation to its operating results,

as management does not believe that the excluded items are reflective of ongoing operating results.

However, the use of this particular non-HKFRS measure has limitations as an analytical tool, and should not be

considered in isolation from, or as a substitute for analysis of, the results of operations or financial conditions as reported

under HKFRS. In addition, this non-HKFRS financial measure may be defined differently from similar terms used by other

companies and therefore may not be comparable to similar measures used by other companies.

Lenovo Group Limited 2024/25 Annual Report

Reconciliations of the non-HKFRS financial measure to the most directly comparable HKFRS financial measure are

included in the tables below.

Year ended March 31, 2025

Operating

profit

US$’000

Profit before

taxation

US$’000

Profit for

the year

US$’000

Profit

attributable

to equity

holders

US$’000

As reported

2,164,153

1,480,870

1,461,952

1,384,445

Non-HKFRS adjustments

Net fair value changes on financial assets

at fair value through profit or loss

(59,552 )

(44,530 )

(29,489 )

Amortization of intangible assets

resulting from mergers and acquisitions

130,735

135,467

106,616

Gain on deemed disposal of a subsidiary

(22,627 )

(19,233 )

Impairment and write-off of intangible

assets

123,140

One-time income tax credit

–

(282,000 )

Fair value loss on derivative financial

liabilities relating to warrants

118,275

Notional interest of convertible bonds

–

39,537

Non-HKFRS

2,454,124

1,815,110

1,503,757

1,441,291

Year ended March 31, 2024

Operating

profit

US$’000

Profit before

taxation

US$’000

Profit for

the year

US$’000

Profit

attributable

to equity

holders

US$’000

As reported

2,005,784

1,365,454

1,102,312

1,010,506

Non-HKFRS adjustments

Net fair value changes on financial assets

at fair value through profit or loss

(153,113)

(127,309)

(95,777)

Amortization of intangible assets

resulting from mergers and acquisitions

169,407

174,139

137,353

Mergers and acquisitions related charges

2,048

2,352

Restructuring and other charges

132,214

132,368

127,013

Gain on remeasurement of a written put

option liability

(143,430)

Notional interest of convertible bonds

–

22,160

Non-HKFRS

2,012,910

1,399,930

1,120,451

1,060,177

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Financial position

The Group’s major balance sheet items are set out below:

Non-current assets

2025

US$’000

2024

US$’000

Property, plant and equipment

2,026,280

2,010,178

Right-of-use assets

592,340

571,305

Construction-in-progress

282,309

337,648

Intangible assets

8,232,977

8,345,407

Interests in associates and joint ventures

315,704

318,803

Deferred income tax assets

3,055,905

2,633,302

Financial assets at fair value through profit or loss

1,464,384

1,393,666

Financial assets at fair value through other comprehensive income

45,382

55,973

Other non-current assets

311,448

397,489

16,326,729

16,063,771

Property, plant and equipment

Property, plant and equipment comprise mainly the Group’s freehold land and buildings, leasehold improvements, plant

and machinery, furniture and fixtures, office equipment, equipment held for lease and motor vehicles. The slight increase

is mainly attributable to the Group’s investments in equipment held for lease, office equipment and plant and machinery,

transfer of completed assets from construction-in-progress, to cope with business growth; partly offset by current year

depreciation.

Right-of-use assets

Right-of-use assets comprise mainly the land use rights in respect of the manufacturing sites and headquarters in the

Mainland of China (“Chinese Mainland”), and leases of land and buildings for manufacturing sites and offices in Chinese

Mainland and overseas. The 4 percent increase is mainly attributable to lease renewals and new leases entered into

during the year, partly offset by current year depreciation and lease contracts terminated during the year.

Construction-in-progress

Construction-in-progress comprise mainly the Group’s investments in manufacturing sites and office buildings, internal

use software and research and development laboratories. Internal use software mainly comprises online platform

development and system enhancement for business operations. The 16 percent decrease is mainly attributable to

transfer of completed assets to property, plant and equipment and intangible assets, partly offset by further investments

in internal use software, technology and buildings under construction during the year.

Lenovo Group Limited 2024/25 Annual Report

Intangible assets

Intangible assets comprise goodwill and other intangible assets including trademarks and trade names, customer

relationships, patents and technology, internal use software and exclusive rights. The slight decrease is mainly due to

current year amortization and exchange adjustments, partly offset by additional investments in patents and technology

and transfer of completed internal use software and patent and technology from construction-in-progress to cope with

the growth of business.

The Group completed the impairment test for goodwill allocated to the Group’s various cash generating units (“CGUs”)

by comparing their recoverable amounts to their carrying amounts as at the reporting date. The recoverable amount

of a CGU is determined based on value in use. These assessments use pre-tax cash flow projections based on financial

budgets approved by management covering a five-year period with a terminal value related to the future cash flow of

the CGU extrapolated using constant projection of cash flows beyond the five-year period. The directors are of the view

that there was no indication of impairment of goodwill based on impairment tests performed.

Interests in associates and joint ventures

Interests in associates and joint ventures comprise the share of net assets of and loan to associates and joint ventures.

The slight decrease is mainly attributable to the share of losses and exchange adjustments, partly offset by additional

investments during the year.

Deferred income tax assets

Deferred income tax assets amounted to US$3,056 million as at year end, representing an increase of 16 percent, which

is mainly attributable to temporary differences in relation to tax depreciation allowance, provisions and accruals and

deferred revenue arising in the normal course of business, partly offset by utilization and reversal of tax losses. Deferred

income tax assets are recognized to the extent that realization of the related tax benefit through the future taxable

profits is probable.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss increased by 5 percent during the year, which is mainly attributable to

additional investments and net fair value gain recognized, partly offset by disposal of certain financial assets.

Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income decreased by 19 percent during the year, which is

mainly attributable to net fair value loss recognized.

Current assets

2025

US$’000

2024

US$’000

Inventories

7,923,804

6,702,677

Trade and notes receivables

10,506,610

8,147,695

Derivative financial assets

53,690

69,568

Deposits, prepayments and other receivables

4,223,658

3,782,366

Income tax recoverable

379,590

359,491

Bank deposits

88,607

65,555

Cash and cash equivalents

4,728,124

3,559,831

27,904,083

22,687,183

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Inventories

The Group’s inventories comprise raw materials and work-in-progress, finished goods and service parts where raw

materials and work-in-progress accounted for 50 percent of total inventories. The Group’s inventories purchase and

production plan are primarily based on expectations on market demand. The 18 percent increase is mainly attributable

to the higher raw materials inventory level in anticipation of the change in market demand.

Trade and notes receivables

Trade and notes receivables increased by 29 percent which is attributable to the increase in sales in the fourth quarter

of current year over the corresponding period of last year. The Group has a credit policy in place and exposures to these

credit risks are monitored on an ongoing basis. Majority of trade receivables are aged within 30 days based on invoice

date.

Derivative financial assets

Derivatives relate to foreign currency forward contracts that are designated as hedges for the fair value of recognized

assets or liabilities or a firm commitment, or of highly probable forecast transactions. Derivatives are initially recognized

at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair values.

Deposits, prepayments and other receivables

Deposits, prepayments and other receivables mainly comprise amounts due from subcontractors for components

delivered in the ordinary course of business and other tax receivables. The 12 percent increase is mainly attributable

to the increase in amounts due from subcontractors as a result of more business activities during the fourth quarter of

current year than in the corresponding period of last year.

Cash and cash equivalents

The 33 percent increase is mainly attributable to net cash generated from operating and financing activities, partly offset

by net cash used in investing activities. The working capital management enables the Group to maintain sufficient cash

to meet operational, financing and investing needs.

Total equity

2025

US$’000

2024

US$’000

Share capital

3,500,987

Reserves and others

3,158,930

2,580,200

6,659,917

6,081,187

Total equity

Reserves and others increased from US$2,580 million to US$3,159 million which is mainly due to profit for the year,

share-based compensation credited to reserves, issue of convertible bonds and capital contribution from non-controlling

interests, partly offset by dividends payment, purchase of shares by employee share trusts, vesting of shares under long-

term incentive program and exchange adjustments.

Lenovo Group Limited 2024/25 Annual Report

Non-current liabilities

2025

US$’000

2024

US$’000

Borrowings

4,337,806

3,569,229

Warranty provision

159,400

161,261

Deferred revenue

1,628,942

1,436,484

Retirement benefit obligations

220,784

241,402

Deferred income tax liabilities

270,268

447,523

Derivative financial liabilities

241,778

–

Other non-current liabilities

717,784

754,705

7,576,762

6,610,604

Borrowings

Borrowings (classified as non-current) increased by US$769 million which is mainly attributable to the issuance of

US$2,000 million 2028 Convertible Bonds, partly offset by the reclassification of the US$965 million 2025 Notes from

non-current to current as it will be due within the next 12 months after the year end.

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 labour associated with warranty repair and service

actions. The period ranges from one to three years. The Group revalues its estimates on a quarterly basis to assess the

adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Deferred revenue

Deferred revenue (classified as non-current) primarily relates to the Group’s unfulfilled performance obligations over

extended warranty services at the reporting date for which consideration has been received. The 13% increase is mainly

due to increase in business activities during the year.

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 amounted to US$270 million as at year end, representing a decrease of 40%, which is

mainly attributable to the withholding tax on undistributed earnings, accelerated tax depreciation, tax liabilities on right-

of-use assets and upward valuation of intangibles arising from business combination.

Derivative financial liabilities

Derivative financial liabilities (classified as non-current) represent the warrants issued by the Company during the year.

Derivatives are initially recognized at fair value on the date that the warrant contract is entered into and are subsequently

re-measured at fair values.

Other non-current liabilities

Other non-current liabilities mainly comprise liabilities arising from long-term lease liabilities, deferred consideration and

government incentives and grants received in advance. The 5 percent decrease is mainly due to the reclassification of

written put option liabilities and payables from non-current to current as it will be due within the next 12 months after the

year end.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

Current liabilities

2025

US$’000

2024

US$’000

Trade and notes payables

11,978,933

10,505,427

Derivative financial liabilities

197,196

42,555

Other payables and accruals

13,904,384

12,751,775

Provisions

852,593

920,950

Deferred revenue

1,565,459

1,512,645

Income tax payable

465,216

275,380

Borrowings

1,030,352

50,431

29,994,133

26,059,163

Trade and notes payables

The increase in trade and notes payables by 14 percent is mainly attributable to the increase in business activities in the

fourth quarter of current year over the corresponding period of last year.

Derivative financial liabilities

Derivatives financial liabilities (classified as current) relate to warrants issued by the Company during the year and

foreign currency forward contracts that are designated as hedges for the fair value of recognized assets or liabilities or a

firm commitment, or of highly probable forecast transactions. Derivatives are initially recognized at fair value on the date

a derivative contract is entered into and are subsequently re-measured at fair values.

Other payables and accruals

Other payables and accruals mainly comprise the obligations to pay for finished goods and services that have been

acquired in the ordinary course of business from subcontractors; allowance for billing adjustments relating primarily

to allowance for future volume discounts, price protection, rebates, and customer sales returns; accruals for salaries,

commission and bonus and lease liabilities. The increase of 9% is mainly attributable to the increase in accruals for

salaries, commission and bonus, accruals driven by increase in business activities, and the reclassification of non-current

written put option liability to current, partly offset by decrease in allowance for billing adjustments.

Provisions

Provisions comprise warranty provision (due within one year), environmental restoration and restructuring provisions.

The 7 percent decrease is driven by the settlement of restructuring provision during the year.

Deferred revenue

Deferred revenue (classified as current) primarily relates to the Group’s unfulfilled performance obligations over

extended warranty services at the reporting date for which consideration has been received.

Borrowings

Borrowings (classified as current) increased by US$980 million which is mainly attributable to the reclassification of the

2025 Notes from non-current to current as it will due within the next 12 months after the year end.

Lenovo Group Limited 2024/25 Annual Report

Capital expenditure

The Group incurred capital expenditure of US$1,151 million (2024: US$1,286 million) during the year ended March 31,

2025, mainly for the acquisition of property, plant and equipment, additions to construction-in-progress and intangible

assets. The lower capital expenditure incurred in current year is mainly attributable to less investments in patent and

technology, buildings and intangible assets under construction, offset by more investments in equipment held for lease.

Contingent liabilities

The Group, in the ordinary course of its business, is involved in various claims, suits, investigations, and legal proceedings

that arise from time to time. Although the Group does not expect that the outcome in any of these legal proceedings,

individually or collectively, will have a material adverse effect on its financial position or results of operations, litigation

is inherently unpredictable. Therefore, the Group could incur judgments or enter into settlements of claims that could

adversely affect its operating results or cash flows in a particular period.

Liquidity and financial resources

At March 31, 2025, total assets of the Group amounted to US$44,231 million (2024: US$38,751 million), which were

financed by equity attributable to owners of the Company of US$6,069 million (2024: US$5,583 million), other non-

controlling interests (net of put option written on non-controlling interests) of US$591 million (2024: US$498 million),

and total liabilities of US$37,571 million (2024: US$32,670 million). At March 31, 2025, the current ratio of the Group was 0.93

(2024: 0.87).

At March 31, 2025, bank deposits and cash and cash equivalents totaling US$4,817 million (2024: US$3,626 million)

analyzed by major currency are as follows:

2025

2024

US dollar

43.6

25.5

Renminbi

21.2

27.3

Japanese Yen

8.4

10.8

Euro

5.7

6.2

Australian dollar

1.2

2.7

Other currencies

19.9

27.5

Total

100.0

The Group adopts a conservative policy to invest the surplus cash generated from operations. At March 31, 2025, 68

(2024: 90) percent of cash are bank deposits, and 32 (2024: 10) percent are investments in liquid money market funds

of investment grade.

Management’s discussion & analysis

Lenovo Group Limited 2024/25 Annual Report

The Group has consistently maintained a very liquid position, along with abundant banking facilities standing by for

future business development. The Group has also entered into factoring arrangements in the ordinary course of business

to improve its balance sheet efficiency.

The Group has the following banking facilities:

Principal

amount

US$ million

Utilized amount

at March 31,

Type

Date of agreement

Term

2025

US$ million

2024

US$ million

Revolving loan facility

May 12, 2020

300

5 years

N/A (Note)

–

Revolving loan facility

May 14, 2020

200

5 years

N/A (Note)

–

Revolving loan facility

July 4, 2022

2,000

5 years

–

Revolving loan facility

December 22, 2023

500

1 year

N/A

–

Revolving loan facility

January 19, 2024

500

1 year

N/A

–

Revolving loan facility

March 11, 2025

500

1 year

–

N/A

Revolving loan facility

March 12, 2025

350

1 year

–

N/A

Note: The revolving loan facilities were cancelled on May 14, 2024.

The Group has also arranged other short-term credit facilities as follows:

Total available amount

at March 31,

Utilized amount

at March 31,

Credit facilities

2025

US$ million

2024

US$ million

2025

US$ million

2024

US$ million

Trade lines

6,200

4,676

4,370

2,861

Short-term money market facilities

3,194

1,926

Forward foreign exchange contracts

16,009

11,588

15,982

11,555

Lenovo Group Limited 2024/25 Annual Report

Apart from the above facilities, notes and convertible bonds issued by the Group and outstanding at March 31, 2025 are

as follows. Further details of borrowings are set out in Note 24 to the financial statements.

Issue date

Principal

amount

Term

Interest

rate/

dividend

per annum Due date

Use of proceeds

2025 Notes

April 24, 2020

and May 12,

2020

US$965

million

5 years

5.875%

April 2025

For repayment of previous

Notes and general corporate

purposes

2030 Notes

November 2,

2020

US$900

million

10 years

3.421%

November 2030

For repurchase of perpetual

securities and previous Notes

2028 Notes

July 27, 2022

US$600

million

5.5 years

5.831%

January 2028

For repayment of previous

Notes and general corporate

purposes

2032 Notes

July 27, 2022

US$563

million

10 years

6.536%

July 2032

For financing of eligible projects

under the Green Finance

Framework

2029 Convertible

Bonds

August 26, 2022

US$675

million

7 years

2.5%

August 2029

For repayment of previous

convertible bonds and

general corporate purposes

2028 Convertible

Bonds

January 8, 2025

US$2,000

million

3 years

January 2028

For repayment of existing

debts and general corporate

purposes

Net (debt)/cash position and gearing ratio of the Group at March 31, 2025 and 2024 are as follows:

2025

US$ million

2024

US$ million

Bank deposits and cash and cash equivalents

4,817

3,626

Borrowings

— Short-term loans

— Notes

3,015

3,013

— Convertible bonds

2,288

557

Net (debt)/cash position

(551 )

Total equity

6,660

6,081

Gearing ratio (Borrowings divided by total equity)

0.81

0.60

The Group is confident that the facilities on hand can meet the funding requirements of the Group’s operations and

business development. The Group is in full compliance with all the banking covenants.

The Group adopts a consistent hedging policy for business transactions to reduce the risk of currency fluctuation

arising from daily operations. At March 31, 2025, the Group had commitments in respect of outstanding forward foreign

exchange contracts amounting to US$15,982 million (2024: US$11,555 million). The Group’s forward foreign exchange

contracts are either used to hedge a percentage of future transactions which are highly probable, or used as fair value

hedges for identified assets and liabilities.

Lenovo Group Limited 2024/25 Annual Report

Lenovo and InCor

develop TRAdA,

an AI platform for

advanced arrhythmia

detection

Lenovo, in partnership with the

Instituto do Coração – InCor HCFMUSP

– the largest cardiology hospital

in Latin America – announces the

launch of TRAdA (from portuguese

Telemonitoramento Remoto Assistido

de Arritmia), an innovative platform that

assists in the identification of arrhythmia

events. It leverages the power of artificial

intelligence in a wearable IoT device for

real-time heart monitoring.

In Brazil, over 20 million people suffer

from some form of cardiac arrhythmia,

a condition responsible for more than

320,000 sudden deaths each year

in the country, according to data

from the Sociedade Brasileira de

Arritmias Cardíacas (SOBRAC). This

makes effective monitoring and early

intervention crucial. Through a discreet

and comfortable wearable device,

TRAdA continuously monitors heartbeats

and the heart’s electrical signals, using

advanced AI algorithms to identify

potential arrhythmia events in real time.

During telemonitoring, critical alerts are

sent to a designated monitoring panel,

allowing healthcare professionals to have

an overall view of the patient and to

intervene quickly and efficiently.

Through its commitment to scientific

rigor, technological innovation, and a

patient-centered approach, Lenovo aims

to revolutionize arrhythmia detection and

treatment, saving lives and improving

the quality of life for millions of people

worldwide.

“Innovation in healthcare is not just about

new ideas, products, and solutions, but

also about how we can integrate them

into patient care and overcome present

challenges of patient engagement in their

treatment journey, such as the remote

monitoring of physiological parameters

that identify potential arrhythmias. If

these events are diagnosed more quickly,

preventive and corrective actions can

be taken early, ultimately resulting in

greater patient safety. This is one of

the key motivators for this partnership

with Lenovo – to create collaborative

bridges that foster synergistic innovation”

comments TRAdA project lead

researcher, Prof. Fabio B. Jatene, VP of

InCor and coordinator of InovaInCor.

Lenovo Group Limited 2024/25 Annual Report

Corporate

governance report

Corporate

governance

principles and

structure

• Compliance

with corporate

governance code

• Governance

structure

• Corporate culture

Leadership

How the Board leads from

the front

• Board composition,

roles and key

features

• Board diversity and

tenure

• Nomination,

appointment and

election

• Directors’ securities

transactions

• Induction and

continuous

professional

development

• Remuneration of

directors and senior

management

• Company secretary

Effectiveness

How the Board operates

• Board’s responsibilities

and delegation to

management

• Board process

• Board activities

• Board committees

• Board and Board

committees’

effectiveness review

Accountability

and audit

How the Board fulfils its

oversight responsibilities

• Financial reporting

• Risk management and

internal control

• External auditor

Investor relations

How we maintain relations

with our investors

• Communications with

investors

• Market recognition

• Index recognition

Shareholders

How we communicate with

our shareholders and their

rights

• Communications with

shareholders

• Shareholders’ rights

• Dividend policy

• Shareholders

information

• Shareholding structure

Key stock

information

• Listing information

• Market capitalization

• Share price from

April 1, 2024 to

March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

The Board also appointed Mr. John Lawson Thornton, who

succeeded Mr. William O. Grabe (“Mr. Grabe”), as the lead

independent director (the “Lead Independent Director”)

with effect from February 21, 2025, with broad authorities

and responsibilities. Such authorities and responsibilities

include serving as chairman of the Nomination and

Governance Committee meeting and/or the Board

meeting considering the combined roles of Chairman

and CEO; in consultation with all other Board members,

to assess the performance of the Chairman and/or CEO;

calls and chair meeting(s) with all non-executive directors

at least once a year on matters deemed appropriate and

provide feedback to the Chairman and/or CEO; and serves

a key role in the Board evaluation process. Accordingly,

the Board believes that the current Board structure with

combined roles of Chairman and CEO, the appointment of

Lead Independent Director and a majority of independent

non-executive directors provide an effective check and

balance of powers and authorizations between the Board

and the management of the Company.

In relation to the recommended best practices in the

CG Code, the Company published quarterly financial

results and business reviews in addition to interim and

annual results. Quarterly financial results enhanced the

shareholders’ ability to assess the performance, financial

position and prospects of the Company. The quarterly

financial results were prepared using the accounting

standards consistent with the policies applied to the

interim and annual financial statements.

Corporate governance

principles and structure

The board of directors (the “Board”) and the management

of Lenovo Group Limited (the “Company”, together with

its subsidiaries, “Lenovo”, “Lenovo Group” or the “Group”)

strive to attain and uphold a high standard of corporate

governance and to maintain sound and well-established

corporate governance practices for the interest of

shareholders and other stakeholders including, but not

limited to, employees, customers, suppliers and the

general public. The Group abides strictly by the governing

laws and regulations of the jurisdictions where it operates

and observes the applicable guidelines and rules issued

by regulatory authorities. It regularly undertakes review of

its corporate governance system to ensure it is in line with

international and local best practices.

Compliance with corporate governance code

Throughout the financial year ended March 31, 2025

(“FY2024/25”), the Company has complied with the code

provisions of the Corporate Governance Code (the “CG

Code”) as set out in Appendix C1 to the Rules Governing

the Listing of Securities on the Stock Exchange of Hong

Kong Limited (“Listing Rules”), and where appropriate,

met the recommended best practices in the CG Code,

with the exception that the roles of the chairman of the

Board (the “Chairman”) and the chief executive officer of

the Company (the “CEO”) have not been segregated as

required by code provision C.2.1 of the CG Code.

The Board has reviewed the organization human resources

planning of the Group and is of the opinion that for the

vesting of the roles of Chairman and the CEO in Mr. Yang

Yuanqing (“Mr. Yang”) is appropriate and beneficial to the

Group as it provides consistency of the strategy execution

and stability of the operations of the Group. The Board

comprising a majority of independent non-executive

directors meets regularly on a quarterly basis to review

the operations of the Group led by Mr. Yang.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

The Board has established a clear governance structure as set out in the below diagram and the overall approach has

been designed to support and work within the Group’s organizational structure to ensure the accountability, fairness and

transparency in how the Group runs and communicates with its stakeholders as well as to meet the future challenges.

Key matters

reserved to the

Board decision

•

The Board has adopted a

schedule of key matters

relating to strategy,

finance and corporate

governance which are for

decision by

the Board.

•

Such key matters

reserved by the Board

for decision are set out in

the table on page 81.

Board

committees

structure

•

The Board has

delegated authority

for its key governance

functions to three

Board committees,

namely Audit

Committee,

Compensation

Committee and

Nomination and

Governance Committee

(the “Board

Committees”), with the

responsibilities outlined

on page 87.

•

Details of the activities

and decisions taken by

the Board Committees

during the year are

shown in the relevant

committees’ reports.

CEO,

Lenovo Executive Committee and

delegated authorities

The CEO

•

manages the business in line with the strategy agreed by the Board

and is accountable to it. Details of the responsibilities of CEO are set

out on page 62;

•

is supported by the Lenovo Executive Committee, which is a

management committee comprising the CEO and all senior

management and helps to implement strategy and manage

operational performance; and

•

delegates certain management decisions to specific individuals and

management through authority framework adopted by the Group.

The CEO Advisory Council

•

comprises external experts from various areas (the “Specialized

Areas”), including geopolitics, economics, cybersecurity and

Environmental, Social and Governance (“ESG”); and

•

advises the CEO and senior management on strategic and

operational issues in key areas, among others, the Specialized Areas.

ESG Executive Oversight Committee

•

is a committee chaired by the Chief Legal and Corporate

Responsibility Officer and comprising senior management from

across the business and functional units;

•

is chartered to promote Lenovo culture that encourages strong ESG

performance; and

•

provides strategic direction and facilitates the coordination of ESG

efforts across the Group.

Governance structure

Shareholders and other stakeholders

More details, Pages 107 to 112

Board of Directors

More details, Pages 62 to 86

Company

Secretary

More details,

Page 80

Audit

Committee

More details,

Pages 115 to 121

Internal

Audit

Risk

Management

and Internal

Control

ESG

Executive

Oversight

Committee

CEO

Advisory

Council

Lenovo

Executive

Committee

Senior

Management

Compensation

Committee

More details,

Pages 122 to 136

Nomination and

Governance

Committee

More details,

Pages 88 to 90

Chief Executive

Officer

More details,

Page 62

Lenovo Group Limited 2024/25 Annual Report

Corporate culture

“We Are Lenovo” is Lenovo’s culture and the way Lenovo work together as one team. “We do what we say. We own

what we do. We wow our customers.” is the essence of Lenovo’s culture. The cultural values are the guiding principles

for all Lenovo employees to collaborate and excel together by implementing strategies in achieving Lenovo’s vision and

mission.

Throughout FY2024/25, Lenovo strengthened its global culture engagement initiatives through employee-shared

culture stories, Big Bang Forums, the Innovation Series, and Hackathon events. These efforts helped employees embody

Lenovo’s cultural values in their daily work and contribute meaningfully to Lenovo’s business transformation. Culture-

focused discussions were also into leadership dialogues to strengthen alignment with Lenovo’s business strategies. The

“We Are Lenovo” culture is consistently communicated and embedded across new employee onboarding, leadership

development, and corporate events.

To ensure the alignment of Lenovo’s culture, vision, mission, values and strategy, regular Board meeting is held every

quarter. In FY2024/25, the Board reviewed the annual achievements and discussed the next year corporate strategy

in February 2025. Further, reports from the CEO and the Chief Financial Officer (the “CFO”) (“CEO and CFO Report”)

are submitted and presented to the Board in quarterly Board meetings to monitor and evaluate the progress of critical

strategic initiatives and quarterly performance of Lenovo. For more information about Lenovo’s culture and the 3S

Strategy with strategic achievements during FY2024/25, please refer to Lenovo’s “

Explore Career Opportunities

”

website, the “Chairman & CEO statement” and “Management’s discussion & analysis” sections of this annual report

respectively.

Vision

Mission

“We Are Lenovo” Culture

Strategy

Smarter

Technology for

All

Be the Leader and

Enabler of Intelligent

Transformation

3S (Smart IOT,

Smart Infrastructure,

Smart Solutions) Strategy

We Do What We Say.

We Own What We Do.

We Wow our Customers.

Serving our Customers

Entrepreneurship

Innovation

Teamwork with Integrity & Trust

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Leadership

Key

Audit Committee

Compensation Committee

Nomination and Governance Committee

Committee Chairman

Notes:

On February 20, 2025, the Board approved the following:

The appointment of Mr. John Lawson Thornton as the successor of Mr. William O. Grabe as the Lead Independent Director with effect from February 21, 2025.

The appointment of Mr. Gordon Robert Halyburton Orr as the Chairman of Compensation Committee with effect from February 21, 2025.

The appointment of Mr. Wong Wai Ming and Ms. Laura Green Quatela as non-executive directors of the Company with effect from April 1, 2025.

Board composition, roles and key features

As of the date of this annual report, there are 12 Board members consisting of one executive director, four non-executive

directors and seven independent non-executive directors. The Board has a coherent framework with clearly defined

responsibilities and accountabilities designed to safeguard and enhance long-term shareholder values and provide

a robust platform to realise the strategy of the Group. A summary of responsibilities of leadership of the Company,

including directors and CEO, is set out in the diagram below.

Non-executive directors

Independent non-executive directors:

Mr. John Lawson Thornton

Mr. Gordon Robert Halyburton Orr

Note 2

Mr. Woo Chin Wan Raymond

Ms. Yang Lan

Ms. Cher Wang Hsiueh Hong

Professor Xue Lan

Mr. Kasper Bo Roersted (alias Kasper Bo Rorsted)

Non-executive directors:

Mr. Zhu Linan

Mr. Zhao John Huan

Mr. Wong Wai Ming

Note 3

Ms. Laura Green Quatela

Note 3

• Participate in Board meetings to bring an independent judgement

on issues of strategy, policy, performance, accountability, resources,

key appointments and standards of conduct

• Take the lead where potential conflicts of interests arise

• Scrutinise the Group’s performance in achieving agreed corporate

goals and objectives, and monitor performance reporting

• Make a positive contribution to the development of the Group’s

strategy and policies through independent, constructive and

informed comments

• Ensure to align Lenovo culture with its vision, mission, values and

strategy, and ensures that all directors acting with integrity, lead by

example, and promoting the desired culture. Such culture should

instil and continually reinforce across Lenovo values of acting

lawfully, ethically and responsibly

• Engage with senior management and other relevant parties to

ensure that various concerns and issues relevant to the management

and oversight of business and operations of the Group are properly

addressed

Chief executive officer

Mr. Yang Yuanqing

• Formulates and recommends the strategy of the Group to the

Board

• Executes the strategy agreed by the Board

• Makes and implements operational decisions and manages the

business day-to-day

• Leads the business and the management team

Chairman

Mr. Yang Yuanqing

• Leads the Board in the strategy determination and the objectives

achievement

• Leads the Board to align Lenovo culture with its vision, mission,

values and strategy and ensures that all directors acting with

integrity, lead by example, and promoting the desired culture

• Provides leadership and manages the Board to ensure that all

directors are properly briefed on issues arising at Board meetings

and receive adequate, complete and reliable information in a

timely manner

• Approves the agendas for Board meetings, taking full account of

the issues and concerns of Board members

• Facilitates and encourages active engagement of Board

members by drawing on directors’ skills, experience and

knowledge

• Ensures good corporate governance practices and procedures

are established and effective communications with shareholders

and other stakeholders

Lead independent director

Mr. John Lawson Thornton

Note 1

• Serves as chairman of the Nomination and Governance

Committee meeting and/or the Board meeting whenever

considering the combined roles of the Chairman and CEO

• In consultation with all other board members, assess of the

performance of the Chairman and/or CEO

• Calls and chairs meeting(s) with all non-executive directors at

least once a year on matters deemed appropriate and provides

feedbacks to the Chairman and/or CEO

• Serves a key role in the Board evaluation process

• Responds directly to questions and comments from shareholders

and other stakeholders of the Company that are directed to the

Lead Independent Director or to the independent non-executive

directors as a group, when appropriate

• Ensures his availability for consultation and direct communication,

when appropriate, if requested by major shareholders of the

Company

• Performs other duties as the Board may designate

Lenovo Group Limited 2024/25 Annual Report

Key features of the Board

Diversity

The Board has a balance of gender, ethnicity, cultural background and skills with a mix of regional

and industry experience.

Independence

The current composition of the Board exceeds the requirements under rules 3.10 and 3.10A of

the Listing Rules, as a majority of its members are independent non-executive directors, thus

exhibiting a strong independent element which enhances independent judgement.

An independent non-executive director of the Company, Mr. John Lawson Thornton, was

appointed as the Lead Independent Director for enhancing corporate governance of the

Company. The roles and responsibilities of the Lead Independent Director are set out on page 62

of this annual report.

Relationship among directors

The following directors serve on the board of directors of the below substantial shareholders

as defined under the Securities and Future Ordinance (Chapter 571 of the Laws of Hong Kong)

(“SFO”) and recorded in the Company’s register of interests maintained under the SFO. Details of

shareholdings of such substantial shareholders are set out on page 112 of this annual report and

pages 151 to 156 under Directors’ report of this annual report.

•

Mr. Zhu Linan and Mr. Zhao John Huan, non-executive directors of the Company, also serve

as directors of Legend Holdings Corporation

•

Mr. Yang Yuanqing, the Chairman and executive director of the Company, and Mr. Wong Wai

Ming, a non-executive director of the Company, are also directors of Sureinvest Holdings

Limited

To the best knowledge of the Board members, there is no other relationship among the members

of the Board as of the date of this annual report except for the relationships (including financial,

business, family, and other material and relevant relationships) as mentioned in the biographies of

directors set out on pages 144 to 147 of this annual report.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Board diversity and tenure

The structure, size and composition (including but not limited to gender, age, skills, experiences and tenure of service) of

the Board will be reviewed from time to time regularly by the Nomination and Governance Committee to ensure that the

Board has a balance of skills and expertise for providing effective leadership to the Company and meeting the needs of

the Group.

The Board adopted a board diversity policy (the “Board Diversity Policy”) aiming to set out the Company’s commitment

to fostering a corporate culture that embraces diversity on the Board. A summary of the Board Diversity Policy including

the views and measurable objectives is set out on page 66 of this annual report.

The following diagram illustrates the diversity profile and the skill matrix of the Board as at the date of this annual report

while the detailed biographies of the directors are set out on pages 144 to 147 of this annual report.

Above 65 (5)

55-60 (2)

61-65 (5)

Independent

non-executive directors (7)

Executive

director (1)

Non-executive directors (4)

Age

Gender

Designation

Male (9)

Female (3)

Lenovo Group Limited 2024/25 Annual Report

Strategic planning

(10)

Investor relations

(5)

Information technology

industry

(10)

Global operation

(10)

Legal/Regulatory &

compliance

ESG

Marketing/Advertising/Research

and development (R&D)

(5)

(3)

Risk management/Internal control (5)

Financial/Accounting/Auditing (2)

Capital market/Equity investment (5)

Transactions (Mergers and acquisitions) (9)

Finance

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Board diversity policy

The Board values diversity as a factor in selecting candidates to serve on the Board and believes that the diversity which

exists in its composition provides significant benefits to the Board and the Company and forms an important part of the

nomination policy (the “Nomination Policy”) as adopted by the Board.

The Board believes that a key success factor of an effective Board is that it comprises a range and balance of skills,

experience, knowledge and independence, with individuals that work as a team. The adoption of Board Diversity Policy

is to ensure that diversity in its broadest sense continues to remain a feature of the Board. All Board appointments are

made on merit, in the context of the skills, experience and gender diversity, the Board as a whole requires being effective.

The details of the appointment process are disclosed on page 69 of this annual report.

The Nomination and Governance Committee has been delegated with the responsibilities for the review of the Board

Diversity Policy, among others, the implementation and effectiveness thereof, on an annual basis. During FY2024/25, the

Nomination and Governance Committee reviewed the below measurable objectives and the progress in achieving these

objectives:

Measurable objectives

Progress for achieving objectives

Objective 1

Consider candidates for

appointment as directors from

a wide pool of candidates with

different backgrounds, skills,

experience and perspectives that

would complement the existing

Board’s diversity

• For FY2024/25, the female representation at Board

level was 20% (i.e. two female directors out of 10

directors), which reached the target of 20% female

Board targeting to satisfy by FY2025/26 as set by

the Board in 2022

• In FY2024/25, the Board has appointed two

non-executive directors comprising one female and

one male with effect from April 1, 2025 pursuant to

the Nomination Policy and the Board Diversity Policy

• Following the above-mentioned appointment of non-

executive directors with effect from April 1, 2025, the

female representation at Board level has reached 25%

• In the ordinary course of the Board succession

process, with on-going search for appropriate

candidates to be appointed as independent non-

executive directors for enhancing independence

element and further adding diversity to the existing

Board

Objective 2

Report annually against the

objectives and other initiatives

taking place within the Group which

promote diversity

• The Board evaluation process includes an assessment

of the Board’s diversity helping to objectively

consider the Board composition and effectiveness

• Ongoing annually

Objective 3

Report annually on the outcome of

the composition and structure of

the Board as well as any issues and

challenges the Board is facing when

considering its diverse combination

• Make use of the Board evaluation process as an

important means of monitoring the progress

• Remain committed to getting the right balance of

the composition of the Board and work towards

understanding and managing some of the

challenges the Group faces in the global information

technology sector, particularly in internet, mobile,

data center, software, cloud, services and solutions,

telecommunications, artificial intelligence areas and

ESG

• Ongoing annually

Lenovo Group Limited 2024/25 Annual Report

Workforce inclusion

As a global technology leader, Lenovo’s workplace inclusion programs and initiatives drive our business forward.

Lenovo understands that inclusion is vital for innovation and seeks to create a workplace where everyone feels valued,

respected, and can reach their full potential. Lenovo has offered programs and opportunities to promote understanding

and inclusion across its global workforce for nearly 20 years. These include special trainings designed to help individuals

develop across every phase of their career, from individual contributor to management, as well as guidance for bias

mitigation with hiring managers. After meeting and exceeding 2020 executive representation goals, Lenovo continues to

advance inclusion from top executive ranks to product development teams and early career hiring efforts. Currently with

25% executive representation of women, an industry-leading 29% representation of women on technical teams, and 36%

representation of women in its global workforce, Lenovo is persistently working towards fair and inclusive workforce

recruitment and advancement.

Lenovo also fosters an array of employee resource groups around the world, promoting understanding and inclusion

for specific segments of the workforce across gender, cultural background and ability. Lenovo’s inclusive culture has

extended to its products through the Inclusive Product Design Office (IPDO), which seeks to integrate feedback from

all consumer segments early in product development. By FY2025/26, the IPDO will have reviewed 75% of Lenovo’s

products to ensure they are inclusive, no matter a user’s background or ability. Lenovo is a signatory of the United

Nations Women Empowerment Principles and has been recognized as a Best Place to Work for people with disabilities in

the United States, Brazil, and the United Kingdom in 2024. With employees in more than 60 countries serving customers

across 180 markets, Lenovo is reliant on the principles of mutual respect and inclusion and the unique strength these

cultural values provide to its global business.

Senior management diversity

With support of a diversified management team is also essential to the effectiveness of the Board. As at the date of this

annual report, the Group’s senior management has a balance of diversity, among others, gender and age as illustrated in

the following diagram. For further details of the senior management, please refer to their biographies set out on pages

148 to 150 of this annual report.

Gender

Male (10)

Female (2)

Above 60 (1)

51-60 (9)

Age

41-50 (2)

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Tenure

In accordance with the articles of association of the Company (the “Articles of Association”), all directors are subject

to retirement by rotation. At each annual general meeting, one-third of the directors for the time being shall retire from

office. The retiring directors shall be eligible for re-election. New appointments either to fill a casual vacancy or as an

addition to the Board are subject to re-election by shareholders of the Company at the next following annual general

meeting of the Company. The chart below shows the tenure of the Board members as of the date of this annual report.

2020

2025

Percentage of new members

Over the period from January 2020 to May 2025

58.3%

7/12 members

5/7 members

2/4 members

Board

Independent non-executive directors

Non-executive directors

71.4%

50%

Tenure of Board members

Over 9 years (4)

3-9 years (2)

Below 3 years (6)

All non-executive directors (including independent non-executive directors) have entered into letters of appointment

with the Company for a term of three years. Their terms of appointment shall be subject to retirement from office by

rotation and re-election at the annual general meeting in accordance with the Articles of Association.

The Company agreed that the independence of directors is an important principle of the Company. In line with the best

practices on corporate governance, the Board adopted the principle (the “Principle”) that each term of an independent

non-executive director of the Company shall not be more than three years and shall, subject to re-election by

shareholders at any subsequent annual general meeting of the Company, be renewable for additional three-year terms

up to a maximum of nine years. At the recommendation of the Nomination and Governance Committee, the Board may

invite an independent non-executive director to serve for an additional three-year term extending up to a total of 12

years subject to re-election at any subsequent annual general meeting of the Company.

In accordance with the Articles of Association, Mr. Yang Yuanqing, Mr. Zhu Linan, Mr. Woo Chin Wan Raymond and Ms.

Yang Lan will retire, and Mr. Wong Wai Ming and Ms. Laura Green Quatela appointed during the year will hold office until

the forthcoming annual general meeting to be held on July 17, 2025 (“2025 Annual General Meeting”), and each being

eligible, will offer themselves for re-election at the 2025 Annual General Meeting.

Refreshment of the Board

The Board’s diversity and the Group’s long-term success are addressed by refreshing the composition of the Board.

As part of the Company’s continuing efforts to the Board refreshment, the Board has appointed two non-executive

directors with strategic mind and solid experience in finance, operation, sustainability and legal, particularly in the

current complex legal geopolitical landscape, related to the information technology industry in FY2024/25. Not only

the Board refreshment adds value to the Board from the balance of skills, knowledge, experience and gender diversity

perspectives, but also ensure the Board remains agile and well-equipped to address the Group’s future by adopting

effective long-term strategy. The diagram below shows how the Board has been refreshed since January 2020.

Lenovo Group Limited 2024/25 Annual Report

Evaluation of the

Board composition and

establishment of desired

criteria for prospective

directors

Identification of

candidates

Evaluation of

suitability of

candidates

Meeting with

candidates

Final deliberation by

the Nomination and

Governance Committee

Recommendation

to the Board for

approval

Nomination, appointment and election

Nomination policy

The Nomination Policy guides the Nomination and Governance Committee and the Board on nomination of candidates

for the Board. This policy sets out the selection criteria, tenure, election/re-election requirements and nomination

procedure, details of which are set out below.

Nomination and appointment process

The Board recognises the need to ensure the Board and senior management are always well resourced, with the suitable

people in terms of skills and experience to deliver the Group’s strategy.

There is a formal and transparent procedure for the appointment of new directors to the Board, the primary

responsibility of which has been delegated to the Nomination and Governance Committee. The Nomination and

Governance Committee is chaired by an independent non-executive director and composed of the Chairman (also the

executive director), one non-executive director and two other independent non-executive directors. This composition

ensures that any decisions made are impartial and are in the best interest of the Company.

The Nomination and Governance Committee’s assessment of the candidates includes, but not limited to, the

independence under the Listing Rules, consideration of the relevant knowledge and diversity of backgrounds, gender,

skills, experience and perspectives that would complement the existing Board.

The Nomination and Governance Committee also ensures that candidates satisfy the requisite skills, experience and core

competencies, commensurate with the position as directors of a listed company. The nomination process involves the

following six stages:

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Independence

The independent non-executive directors do not participate in the day-to-day management of the Group and do

not engage in any business dealing or other relationships with the Group (other than in situations permitted by the

applicable regulations) in order to ensure that they remain truly capable of exercising independent judgement and act in

the best interests of the Company and its shareholders.

Each of the independent non-executive directors has made a confirmation of independence to the Company. On

May 21, 2025, the Nomination and Governance Committee conducted an annual review of the independence of all

independent non-executive directors of the Company for FY2024/25. Having taken into account the factors as set out

in rule 3.13 of the Listing Rules in assessing the independence of independent non-executive directors, the Nomination

and Governance Committee (with the relevant committee member abstaining from voting on the resolutions concerning

his/her own independence) concluded that all of the independent non-executive directors satisfied the criteria of

independence as set out in the Listing Rules. With support of the Nomination and Governance Committee’s review on

the independence of all the independent non-executive directors through the independence assessment process as set

out on page 71, the Company confirmed that all the independent non-executive directors are independent.

The Nomination and Governance Committee affirmed that all independent non-executive directors of the Company

provided a strong independent element on the Board, were free from any business or other relationship which could

materially interfere with the exercise of their judgement, and remained independent for FY2024/25 and as of the date of

this annual report. The diagram below shows the independence weighting of the Board and the Board Committees as of

the date of this annual report.

Independence weighting

Key

59%

33%

Board

Compensation Committee

60%

20%

Audit Committee

Nomination and Governance Committee

67%

33%

75%

25%

INED

NED

Lenovo Group Limited 2024/25 Annual Report

Independence assessment

Before and on appointment

•

Nomination and Governance Committee will evaluate the suitability of the candidates, including

an assessment of their independence and their skills, and nominate for the appointment for the

Board’s consideration and approval.

•

The proposed new independent non-executive director is required to confirm with the Company

pursuant to the requirements under the rule 3.13 of the Listing Rules.

Ongoing process

•

Each of the independent non-executive directors is required to inform the Company and the

Stock Exchange as soon as practicable if there is any subsequent change of circumstances which

may affect his/her independence.

•

The independent non-executive directors are required to confirm with the Company whether he/

she has any financial, business, family or other material/relevant relationship with each other on a

semi-annual basis.

•

All directors have continuing obligation to update the Company on any changes to their other

appointments which will be reviewed by the Company.

Annual assessment

•

Each of the independent non-executive directors is requested to confirm with the Company his/

her independence having regard to the criteria under rule 3.13 of the Listing Rules.

•

Nomination and Governance Committee assesses and reviews the independence of independent

non-executive directors annually.

Mechanisms for ensuring independent views and input

Pursuant to the Listing Rules, mechanism(s) should be established to ensure independent views and input are available

to the Board. Having reviewed the implementation and effectiveness and taking into account the following channels,

it was considered that the Company had in place mechanisms which remain effective to ensure a strong independent

element on the Board:

•

The Board comprises a majority of independent non-executive directors, representing 59% of the Board as at the

date of this report.

•

The appointment of Lead Independent Director with broad authorities and responsibilities, among others, calls and

chairs meetings with all non-executive directors without management and executive director present at least once

a year. During FY2024/25, the Lead Independent Director and chairmen of the Board Committees met all other

non-executive directors without management at executive sessions held after the respective board meetings and

committee meetings, where applicable.

•

All independent non-executive directors share their views and opinions through regular quarterly meetings at which

heads of core divisions and particular business units would be invited to join such meetings and business segments

performance from core business divisions are presented.

•

Independent non-executive directors are authorised to seek independent professional advice at the Company’s

expense, to perform their responsibilities, if necessary.

•

The Chairman has one-to-one meeting with each independent non-executive director who shares their views with

the Chairman directly.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Conflicts of interest

Directors have a statutory duty to avoid situations in

which they have or may have interests that conflict with

those of the Company. The Board has a set procedure and

guidance to deal with the actual or potential conflicts of

interests of directors as follows:

•

The Board deals with each appointment on its

individual merit and takes into consideration all the

circumstances.

•

Prior to taking additional responsibilities or external

appointments, directors are obliged to ensure that

they will be able to meet the time commitment

expected of them in their role at the Company and

do not have any potential conflicts that may arise

when taking up a position with another company.

•

Decisions regarding transactions with directors and

their related parties are always dealt with by other

directors, such as matter regarding remuneration

of the executive director is handled by the

Compensation Committee.

•

Under the Articles of Association, directors are also

required to declare their direct or indirect interests,

if any, in any proposal, transaction, arrangement

or contract that is significant in relation to the

Company’s business and the director’s interest or his/

her associate’s interest or the interest of the entity

connected with the director is material.

All potential conflicts of interest will be recorded, which

are reviewed on an annual basis by the Nomination and

Governance Committee to ensure that the procedures are

working effectively.

Commitments

All directors are committed to devote sufficient time and

attention to the affairs of the Company. Directors are given

guidelines on their time commitments to the affairs of the

Company and corresponding confirmations were received

from the directors in their letters of appointment. Directors

have also disclosed to the Company the number and

nature of offices held in Hong Kong and/or overseas listed

public companies or organisations and other significant

commitments, with their positions at the public companies

or organisations and the estimated time involved in each

year in such positions. Directors notify the Company in a

timely manner and bi-annually confirm to the Company

of any changes of such information. The chart below

shows the number of directorship of the directors with

other listed public companies as of the date of this annual

report.

With respect to those directors who stand for election or

re-election at 2025 Annual General Meeting, all of their

directorships held in listed public companies in the past

three years are also set out in the circular accompanying

the notice of the 2025 Annual General Meeting.

Share ownership

The Board has adopted stock ownership guidelines for

non-employee directors. The Board believes that share

ownership aligns the interests of its directors with the

long-term interests of the shareholders and further

promotes the Company’s commitment to sound corporate

governance. In general, these guidelines require non-

employee directors to maintain a certain level of equity

awards granted to them for so long as they are directors

of the Company.

Directorship with other listed public companies

3-5 (3)

0-2 (9)

Lenovo Group Limited 2024/25 Annual Report

Directors’ securities transactions

The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”)

set out in Appendix C3 to the Listing Rules from time to time and devised based on the principles of the Model Code

a comprehensive and operative company policy to govern securities transactions by directors of the Company. All

directors of the Company have confirmed, after specific enquiry, their compliance with the required standard during

FY2024/25.

The Company has also adopted its own trading in securities policy applicable to designated senior management of the

Group which is on terms no less exacting than the required standard as set out in the Model Code.

Induction and continuous professional development

Directors shall keep abreast of regulatory developments and changes in order to effectively perform their responsibilities

and to ensure understanding of his/her responsibilities and obligations as a director under the Listing Rules and the

relevant regulatory requirements.

As illustrated in the below diagram, not only the Company provides the induction program to the new directors, but also

regularly review and agree with each director on his/her training needs for keeping him/her updated with key business

developments and to enhance his/her effectiveness in performing the director’s responsibilities.

Induction

program

Continuous

professional

development

program

Director’s roles and

responsibilities

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Following appointment

Meetings with Chairman,

directors and senior

management from across

the business

To ensure that the director

has a proper understanding

of the culture, strategies and

the operations of the Group

Provision of briefing and

presentation from senior

executives and visit to

business operations

To ensure that the director

has a proper understanding

of the operations of the

Group and its development

Continuous

professional development

program

To ensure that the director

keeps abreast of new

laws, regulations and/or

developments in business

that are relevant to the roles

as a director of the Company

Induction program for new directors

Upon joining the Company, directors are provided with a

bespoke induction program to further their understanding

of the nature of the Group, its business and the markets

in which the Group operates, and also enhance their

knowledge of the Group, its operation and staff. Induction

program is tailored to each new director, depending on

the experience and background of the director. Normally,

a comprehensive, formal and tailored induction program

covers, amongst other things, the following:

Directors are also provided with an induction handbook

which is designed to provide the Board members with

information regarding the roles of directors and committee

members, where applicable, annual agendas of the Board

and Board Committees, and general information about the

respective Board Committee of the Company, to make the

most of their time on the Board and Board Committee(s).

Before appointment

Provision of training from external lawyer

To ensure the director is fully aware of his/her responsibilities,

obligations and duties of a director of a company listed on the

Hong Kong Stock Exchange under the Listing Rules and

other applicable regulatory requirements

On appointment

Provision of directors’ induction handbook

To ensure that the director has a proper understanding of the operations,

business and governance policies of the Group

Lenovo Group Limited 2024/25 Annual Report

Continuous professional development program

Lenovo believes great leadership starts with continuous learning. Directors and senior executives are provided with

a comprehensive professional development program every year – designed to sharpen their expertise, deepen their

understanding of the Group and industry, and keep them at the forefront of innovation. The program includes but not

limited to the following:

•

engaging presentations by senior executives and external experts on the latest trends in technology, corporate

strategy, ESG matters, corporate governance, risk management, and key legal and regulatory updates;

•

interactive site visits across Lenovo’s global campuses and factories, giving leaders a firsthand look at the Group’s

operations and supply chain; and

•

focused discussions on critical industry topics to drive strategic thinking.

During the year, our directors and senior executives were invited to attend professional development activities as follows:

Events

To deepen directors’ understanding of Lenovo’s culture and its alignment with Lenovo’s values, vision, and

strategy, directors were invited to attend the

Global Leadership Team (GLT) Annual Meeting

(the “GLT

Meeting”) in September 2024, in Wuzhen, China. The theme of the meeting was “Smarter AI for All”. There were

dynamic discussions on critical topics, including AI Strategy and Implementation, AI Governance, Leadership in

the AI Era. Beyond strategic discussions, directors actively participated in team-building activities, collaborating

closely with Lenovo’s senior leaders across different functions. These interactions strengthened cross-functional

alignment and reinforced a shared commitment to Lenovo’s long-term success.

The GLT Meeting provided a valuable platform for directors to exchange insights with senior management on key

challenges, gain deeper clarity on how Lenovo’s corporate strategy aligns with culture and vision, and enhance

collaboration with senior management. By fostering open dialogue and hands-on engagement, the event

ensured directors remain well-equipped to guide Lenovo’s future in an evolving world.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

During FY2024/25, Lenovo launched

Lenovo Tech World

under the theme “Smart AI for All” across global locations,

including Seattle, Washington, United States, showcasing latest innovations like AI PCs and Neptune™ Liquid Cooling

technology and strategic initiatives driving Lenovo’s AI vision. The event featured keynotes from global tech leaders

on AI, computing and industry trends, insights on collaborative innovation with partners and customers. Directors

who participated in the event gained valuable insights on market trends, Lenovo’s innovative approaches to industry

challenges, and strategic initiatives driving sustainable growth. These engagements strengthened their ability to

provide informed oversight of Lenovo’s technology advancement and long-term corporate vision.

In January 2025, Lenovo accelerated its business development strategy by becoming a

Global Partner of Formula

1®

– the world’s most prestigious motorsport. This high-performance alliance showcases our technological

leadership through cutting-edge solutions powering F1’s race operations both on the track and remotely. Directors

who attended multiple Grand Prix, including

Chinese Title Race

in April 2024, gained strategic insights into how

Lenovo’s smarter technology provides seamless tech integration to, and enhance, the world’s fastest sport, as well

as the Group’s collaborative ecosystem with a global partner.

Lenovo Group Limited 2024/25 Annual Report

Site visits and product demonstrations

In FY2024/25, directors participated in immersive site visits to key Lenovo facilities including Motorola’s Chicago

laboratory, Hefei’s LCFC factory, and Shenzhen plant.

These visits featured hands-on demonstrations of Motorola’s AI-powered devices and Lenovo’s evolving PC,

mobile, server innovations. Through these engagements, directors gained firsthand exposure to Lenovo’s

innovative products and ideas and cutting-edge smart manufacturing ecosystem and capabilities – from Lenovo’s

heritage to future vision, from production lines to ESG initiatives. The experiences provided directors with

tangible insights into how innovation and operational excellence drive Lenovo’s strategic objectives.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Industry congress

Lenovo operates in an industry that is rapidly changing in terms of market trends, consumer preferences and

technologies. In order to keep directors updated with the latest technologies and products development in the

industry, directors were invited to attend Consumer Electronic Show (CES) in Las Vegas in January 2025 and

Mobile World Congress (MWC) in Barcelona in March 2025. These two events provided the best product reviews,

demonstrations and displays that showcase the technologies leveraging the power of AI both from the Group and

other market players.

Furthermore, to facilitate the stakeholders’ understanding, including directors and customers on how Lenovo

embraces the business opportunities in this dynamic market and satisfies the customer needs, our Chairman

presented at MWC on key topics: Hybrid AI Defines Our Era, Personal AI, Enterprise AI and AI for Good.

Lenovo Group Limited 2024/25 Annual Report

Expert briefings and seminars

The Company has arranged in-house expert briefings and seminars for directors to keep them abreast of the

affairs relating to the Group. The directors are also encouraged to attend relevant external professional programs

at the Company’s expense to keep abreast of issues facing the changing business environment in which the

Group operates.

During FY2024/25, the Company arranged external and in-house expert briefings and seminars for directors,

featuring deep-dive discussions on topics such as AI, investment and growth opportunities in India, global

logistics networks, corporate strategy updates and regulatory updates. Anti-bribery and corruption training was

also provided to update directors on the latest worldwide regulations that are relevant to the Group during the

year.

Regulatory updates

Directors are updated on a continuing basis by the Company Secretary on any new regulations and guidelines, as

well as any amendments thereto issued by the Stock Exchange and other regulatory authorities, particularly the

effects of such new or amended regulations and guidelines on directors, the Company and the Group.

In addition, director’s induction handbook which contains organization structure, Board policies, corporate rules

and policies, and other legal reference information will be updated regularly and made available on internal

electronic platform of the Company for directors’ review.

All directors are required to provide the Company with their training records on an annual basis and such records

are maintained by the Company Secretary for regular review by the Nomination and Governance Committee.

The Nomination and Governance Committee will, on a continuing basis, evaluate and determine the training and

development needs of the directors, particularly on relevant new laws and regulations and essential practices for

effective corporate governance, to enable the directors to sustain their active participation in Board deliberations and

effectively discharge their duties.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Directors have provided the Company with a record of the training they received during FY2024/25. In addition to

attending meetings and review of relevant materials provided by senior management, the directors have also attended

professional trainings provided by the Company and external professional parties, where applicable, the relevant details

are set out as follows:

Type of training

Name of directors

Reading regulatory

updates/corporate policies

Attending experts

briefing/seminar/conference

relevant to the Group’s

business or director’s duties

Executive director

Mr. Yang Yuanqing

Non-executive directors

Mr. Zhu Linan

Mr. Zhao John Huan

Mr. Wong Wai Ming

Note 1

N/A

Ms. Laura Green Quatela

Note 1

N/A

Independent non-executive directors

Mr. John Lawson Thornton

Mr. Gordon Robert Halyburton Orr

Mr. Woo Chin Wan Raymond

Ms. Yang Lan

Ms. Cher Wang Hsiueh Hong

Professor Xue Lan

Mr. Kasper Bo Roersted

Mr. William O. Grabe

Note 2

Mr. William Tudor Brown

Note 2

Notes:

Appointment took effect on April 1, 2025. Provision of training records for FY2024/25 to the Company is not applicable.

Resigned on February 21, 2025.

Remuneration of directors and senior management

A formal and transparent procedure for fixing the

remuneration packages of directors and senior

management is in place. Details of remuneration policies,

remuneration payable to senior management and other

relevant information are set out in the Compensation

Committee report of this annual report on pages 122 to

136.

Company secretary

The Company Secretary, Ms. Lam Ngan Ling (“Ms. Lam”)

plays an important role in supporting the Board, including

being responsible for facilitating the Board process, as well

as communications among Board members and the Board

with shareholders and management. During FY2024/25,

Ms. Lam undertook appropriate professional training to

update her skills and knowledge.

Lenovo Group Limited 2024/25 Annual Report

Effectiveness

Board’s responsibilities and delegation to

management

The Company is controlled through the Board who

is responsible for steering the success of the Group

by overseeing the overall strategy and directing and

supervising its affairs in a responsible and effective

manner. The Board also sets the Group’s core values

and adopts proper standards to ensure that the Group

operates with integrity and complies with the relevant

rules and regulations.

The Company has a formal schedule of matters

specifically reserved to the Board and those delegated

to management. The Board reserves for its responsibility

to oversee the management of the Company and

its business. Key matters reserved for the Board are

summarized in the table below:

The Board has given clear directions to management as to

the matters that must be approved by the Board before

decisions are made on behalf of the Company or entering

into any commitments on behalf of the Group.

The Board delegates the daily operations and

administration function of the Group, including the

following, to the management under the leadership of the

CEO:

•

implementation of the strategy and direction

determined by the Board;

•

operation of the Group’s businesses;

•

preparation of financial statements and operating

budgets; and

•

compliance with applicable laws and regulations.

The aforesaid arrangements will be reviewed periodically

to ensure that they remain appropriate to the Group’s

needs.

Key matters reserved for the Board’s approval

Group strategy and

management

• Formulation of the Group’s

strategy and long-term

objectives

• Approval of changes to capital

structure

• Approval of major capital and

equity transactions

• Approval of major disposals

and acquisitions

Board membership and

committees

• Appointment to the Board and

Board Committees

• Setting, review and

amendments (where

necessary) to the terms

of reference of Board

Committees

Corporate governance and sustainability

Financial

• Approval of the Group’s

financial statements and

results announcements

• Recommendation on

appointment or re-appointment

of external auditor

• Recommendation or

declaration of dividend

• Monitoring the Group’s

businesses against plan and

budget

• Review of the performance of Board and Board

Committees

• Approval of shareholder communications, circular

and notices of meetings

• Review of ESG practices of the Group and

approval of ESG report of the Company

• Review of and/or approval of certain policies of

the Group, including:

– Nomination Policy

– Code of Conduct

– Board Diversity Policy

– Dividend policy (the “Dividend Policy”)

– Continuous disclosures policy (the “Continuous

Disclosures Policy”)

– Shareholders communication policy (the

“Shareholders Communication Policy”)

– Lenovo Whistleblowing and Investigations Policy

– Lenovo Anti-Bribery and Corruption Policy

– Mechanisms to ensure independent views and input

are available to the Board

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Board process

The Board recognises the importance of providing timely and appropriate information to directors so as to enable them

to make informed decisions and to perform their duties and responsibilities effectively.

Board meetings

Regular Board meetings

Other Board meetings

Meeting dates are set two years in advance

• To facilitate maximum attendance of directors

Other Board meetings

• To consider ad hoc matters

Convene Board meetings

• To give not less than seven day’s

notice generally

Dispatch Board papers to

directors

• To dispatch for not less than three

days (or other reasonable period)

before the meeting

• If appropriate, one-on-one briefing

offered to each director prior to the

meeting

Dispatch Board papers to directors

• To dispatch agenda and supporting documents seven days,

with updated financial information three days (or other

reasonable period), prior to the meeting

• To circulate board papers via electronic platform in timely

and secured manner

The Board meets at least four times a year at

approximately quarterly intervals

• To review financial performance, strategy and operations

Meeting agenda and notice

• To finalize by the Chairman in consultation with Board

members

• To give not less than 30-day’s notice

Board minutes

• To record minutes in sufficient detail of the matters considered by the Board and the decisions made

• To circulate them to the Board members for comments and keep them duly in minute books for inspection

Board minutes

• To record minutes in sufficient detail of the matters considered by the Board and the decisions made

• To circulate them to the Board members for comments and keep them duly in minute books for inspection

Lenovo Group Limited 2024/25 Annual Report

Other key features of Board process

Timely updates

and discussion

The directors are supplied in a timely manner with all relevant meeting

documentation and financial information to assist them in discharge of

their duties. Monthly updates of the financial performance of the Group are

furnished to the Board between regular Board Meetings.

In addition to standing agenda items, “deep-dive” topics would be included

and discussed, where applicable. During FY2024/25, “deep-dive” presentations

included, among others, the Group’s specific strategy, special projects and

change in Board compositions.

On top of the quarterly regular Board (earnings) meetings, board meetings

focusing on the Group’s strategy would also be held before or after the regular

Board (earnings) meetings whenever necessary.

Senior Management are invited to attend Board meetings, where

appropriate, to report on matters relating to their areas of responsibility; to

brief the directors about recommendations they submitted for the Board’s

consideration; and to furnish additional relevant information or explanation,

particularly with respect to complex and technical issues tabled to the Board.

Executive sessions

As a good corporate governance practice, separate executive sessions were

arranged for (i) the Chairman to meet with independent non-executive

directors in the absence of management; and (ii) the Lead Independent

Director to meet with other non-executive directors in the absence of

executive director and management to discuss matters relating to any issue or

matters such persons would like to raise.

Professional advice

All directors have direct access to the Chief Legal and Corporate Responsibility

Officer and the Company Secretary of the Company who are responsible

for advising the Board on corporate governance, ESG, legal and compliance

issues.

Written procedures are in place for directors to seek, at the Company’s expense,

independent professional advice in performing directors’ duties.

Access to information

All directors were provided with a tablet and/or a notebook to gain access to

meeting materials of the Board and Board Committee meetings through an

electronic platform.

Communication with

senior management

To enhance the communication between directors and senior management

and understand management planning and strategy of the Group, directors

and senior management are invited to attend Lenovo’s GLT Meeting and

various continuous development activities with active discussion and close

collaboration among the participants. Senior management are also invited to

attend Board meetings and report relevant corporate and strategic matters

of the Group to the Board and supplement additional information on the

reporting items whenever necessary.

Indemnification

and insurance

As permitted by the Articles of Association, a director or a former director of

the Company may be indemnified out of the Company’s assets against any

liability incurred by the director to a person other than the Company or an

associated company of the Company that attaches to such director in his/her

capacity as a director of the Company, to the extent permitted by law.

The Company has also taken out and maintained directors’ and officers’ liability

insurance throughout the year, which provides appropriate cover for certain

legal actions brought against its directors and officers.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Board agendas

Board agendas are structured to assist the Board in

achieving its goal and to support and advise senior

management on the delivery of the Group’s strategy

within a transparent governance framework.

The diagram below shows the key focus areas for the

Board, which appear as items on the Board’s agenda at

relevant times throughout FY2024/25. Concentrated

discussion of these items assists the Board in making

the most appropriate decision based on the long-term

opportunities for the business.

Financial and operational performance

• CEO and CFO Reports

• Financial and operational updates

• Annual budget

• Treasury items

Governance and sustainability

• Review and discussion of the corporate policies,

practices of governance and sustainability matters

• Board and Board Committees’ effectiveness review

• Board diversity and succession planning

• Board and Board Committee composition

• Board Committees’ reports

• Update on ESG matter and review of ESG report

• Update on trade compliance and regulation

• Anti-bribery and corruption training

Strategy and risks

• Discussion of main strategic issues relating to

business groups, geographic and structural areas

• Review of processes and controls for strategic

and operational risks

• Government relations and trade updates

Others

• Update on corporate matters such as changes in

organization structure

• Organization human resources planning

• Renewal of continuing and connected transactions

• Ad hoc projects

Lenovo Group Limited 2024/25 Annual Report

Main agendas during FY2024/25

During FY2024/25, a total of eight Board meetings were

held, of which four regular Board meetings primarily

reviewed quarterly business performance and strategy

execution, two Board meetings focused on reviewing

corporate and business strategies, and other key topics

significantly influencing the Group’s development, and the

remaining two for seeking the Board’s approval on ad hoc

projects. As a global technology company, we held Board

meetings in hybrid or in-person formats in Hong Kong

S.A.R. of China and Chicago, the United States. The below

chart provides an overview of how the Board allocated its

agenda time during the year.

FY2024/25

FY2023/24

Financial and operational performance

33%

39%

Strategies and risks

20%

29%

Governance, sustainability, training & Board

Committees’ reports

27%

22%

Other matters (including ad hoc projects

and human resources matters)

20%

10%

20%

27%

33%

Allocation of agenda time

20%

Directors are expected to attend all meetings of the Board

and the Committees on which they serve and to devote

sufficient time to the Company to perform their duties.

Where directors are unable to attend a meeting, they

receive papers for that meeting and also are given the

opportunity to raise any issues with the chairmen of the

meetings in advance of the meetings.

At each scheduled regular Board meeting, the Board

receives updates from the CEO and the CFO on the

financial and operational performance of the Group and

any specific developments in their areas of the businesses

for which they are directly responsible and of which the

Board should be aware. Chairmen of the respective Board

Committees would also report on matters discussed and/

or approved at the relevant Board Committees’ meetings

held prior to the Board meetings. Meetings are structured

so as to allow for consideration and debate of all matters.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

The main matters and areas that the Board reviewed and considered at its meetings during FY2024/25 were as follows:

2024

2025

May

June

August

November

February

Financial and operational

performance

• CEO and CFO Report

• Results announcement

• Annual/interim report

• Final/interim dividend

• Annual general meeting items,

among others, general mandate to

buy back shares and to issue shares,

re-election of directors and notice of

annual general meeting

• Re-appointment of external auditor

• FY2025/26 budget plan

Strategic and risks

• Corporate strategy

• Government relations and trade updates

Governance and sustainability

• Anti-bribery and corruption training

• Board composition, diversity and Board

evaluation report (if any)

• ESG Update

• ESG Report

• GLT Meeting and Tech World Debrief

• Report from Audit Committee

• Report from Nomination and Governance

Committee

• Report from Compensation Committee

• Report from CEO Advisory Council

Others

• Organization human resources planning

• Renewal of continuing connected

transactions

Ad hoc project

Executive session

Lenovo Group Limited 2024/25 Annual Report

Board committees

As at the date of this annual report, the Company has

maintained the Board Committees with key responsibilities

set out below extracted from the respective terms of

reference, which are posted on the Group’s website and

Hong Kong Exchanges and Clearing Limited’s website (the

“HKEx’s website”). The terms of reference of the Board

Committees align with the prevailing requirements of the

CG Code.

The Board may also establish ad hoc committees to

approve specific projects as needed. When required,

the Board will form an independent board committee

comprising the independent non-executive directors to

review and approve transactions that normally require

Board approval.

All Board Committees follow the same principles and

procedures as those of the Board and are provided with

sufficient resources to perform their duties. The Board

Committees will report to the Board on a regular basis,

including their decisions or recommendations to the

Board. The member list of the Board Committees is also

posted on the Group’s website and HKEx’s website.

Board of Directors

Key responsibilities

• Set strategy, vision, mission and values, leveraging

with the corporate culture

• Provide leadership of the Company and direction

for management

• Collective responsibility and accountability to

shareholders for the long term success of the

Group

• Review the performance of management, the

operating and financial performance as well as ESG

performance of the Group

Audit Committee

Key responsibilities

• Assist the Board in carrying out its oversight

responsibilities in relation to financial and ESG

reporting, risk management and internal control,

and in maintaining an appropriate relationship with

external auditors

Compensation Committee

Key responsibilities

• Assist the Board in assessing and making

recommendation on the compensation policy;

responsible for the assessment of the performance

of the Chairman of the Board and/or CEO; and to

determine the compensation level and package

for the Chairman of the Board and/or CEO, other

directors and senior management

Nomination and

Governance Committee

Key responsibilities

• Assist the Board in overseeing Board organization

and composition, succession planning, developing

and reviewing the corporate governance principles

and policies and responsible for the review and

assessment of the combined roles of the Chairman

and CEO and the independence of independent

non-executive directors

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Audit Committee

The Audit Committee is delegated by the Board to perform its duties within its terms of reference. Details of the Audit

committee, including its membership, responsibilities and work done during FY2024/25, are summarized in the Audit

Committee report as stated on pages 115 to 121 of this annual report.

Compensation Committee

The Compensation Committee is delegated by the Board to perform its duties within its terms of reference. Details of the

Compensation Committee, including its membership, responsibilities and work done during FY2024/25, are summarized

in the Compensation Committee report as stated on pages 122 to 136 of this annual report.

Nomination and Governance Committee

The Nomination and Governance Committee (referred to as the “Committee” in this section) consists of the following

members as at the date of this annual report:

More information on the skills and experience of the members of the Committee is available in the directors’ biographies

set out on pages 144 to 147 of this annual report.

In addition to the Committee members, the regular attendees at the Committee’s meetings include:

Note:

Ms. Laura Green Quatela was appointed as a member of the Committee with effect from April 1, 2025.

Professor Xue Lan

(Chairman)

Independent

non-executive director

Mr. Yang Yuanqing

(Member)

Chairman, CEO and

executive director

Mr. John Lawson

Thornton

(Member)

Independent

non-executive director

and Lead Independent

Director

Ms. Yang Lan

(Member)

Independent

non-executive director

Ms. Laura Green

Quatela

Note

(Member)

Non-executive director

Chief Legal

and Corporate

Responsibility

Officer

Company

Secretary

Lenovo Group Limited 2024/25 Annual Report

Key features

•

The Committee’s terms of reference which clearly

deal with its membership, authority, duties and

frequency of meetings are published on the Group’s

website and HKEx’s website.

•

The Committee is provided with sufficient resources

to perform its duties.

•

The Committee is authorised to obtain outside

legal or other independent professional advice on

performing its duties at the Company’s expense.

•

Chief Legal and Corporate Responsibility Officer

and Company Secretary are invited to attend the

Committee meetings in order to provide insight and

enhance the Committee’s awareness of corporate

governance issues and developments.

•

The Chairman and CEO, being a member of the

Committee, is required to excuse himself from the

agenda items relating to succession planning of the

Chairman and/or CEO and the arrangement of the

combination of the roles of the Chairman and CEO.

Responsibilities

The Committee is delegated by the Board with

responsibilities to perform its duties within its terms of

reference, among others, the following:

•

Reviewing the composition of the Board and Board

Committees to ensure they are properly constituted

and balanced in terms of skills, experience and

diversity;

•

Making recommendation to the Board on succession

planning for directors and CEO;

•

Reviewing and assessing the independence of

Independent non-executive directors pursuant to the

requirements under the Listing Rules;

•

Monitoring corporate governance issues and

developments to ensure that the Company is in line

with the international best practices;

•

Reviewing the policies and practices on corporate

governance, and the compliance with legal and

regulatory requirements of the Company;

•

Reviewing and determining the director induction

and continuous professional development programs;

and

•

Reviewing and supporting the Board on the Board

and Board Committees’ evaluation and monitoring

the progress of the implementation actions.

FY2024/25

FY2023/24

Board and Board Committees’ compositions

25%

19%

Assessment of combination of the roles of

the Chairman and CEO

16%

Corporate governance

60%

41%

Board and Board Committees’ evaluation

and follow-up actions

Others

16%

60%

25%

Main agendas during FY2024/25

In FY2024/25, the Committee held two meetings. The attendance records of the Committee’s members are disclosed on

page 92 in this annual report and the chart below provides an overview of how the Committee allocated its agenda.

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

The main matters and areas that the Committee reviewed and considered during FY2024/25 were as follows:

2024

2025

Matters / Areas

May

November

February

Board and Board Committees’

compositions

• Reviewed, discussed and

recommended the Board on the

composition of the Board and

Board Committees, among others,

female representation of the Board,

appointment of members of the

Board and Board Committees.

• Discussed the requirements of

candidates and identified potential

candidates as new board members

from the perspectives of gender,

skills, knowledge, qualifications and

experience.

• Reviewed and discussed the progress

against Board diversity targets.

• Reviewed the progress on the

numerical target and timeline set

for achieving gender diversity of the

Board.

Review of the combined roles

of the Chairman and CEO

• Reviewed the arrangement of same

person acting as Chairman and CEO

for FY2023/24.

Corporate governance

• Reviewed the compliance with the

CG Code and the related corporate

governance disclosures in 2023/24

annual report and 2024/25 interim

report.

• Reviewed and assessed the

independence of independent non-

executive directors and affirmed

the Committee’s view over their

independence.

• Reviewed and discussed

the continuous professional

development programs for the

directors of the Company and senior

executives of the Group.

• Reviewed the policies and

practices on corporate governance,

including but not limited to Board

Diversity Policy, Dividend Policy,

Nomination Policy and Shareholders

Communication Policy, and on the

compliance with legal and regulatory

requirements of the Group.

Board and Board Committees’

evaluation

• Discussed and followed-up on the

evaluation results and feedback

from directors relating to the Board

evaluation.

Lenovo Group Limited 2024/25 Annual Report

Board meetings, Board Committee meetings and general meetings

The following diagram illustrates the number of the Board, Board Committee meetings and general meetings held

during FY2024/25.

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

B(S)

B(E)

NGC

AGM

B(S)

Board meeting (Strategy session)

Compensation Committee meeting

B(E)

Board meeting (Earnings session)

NGC

Nomination and Governance Committee meeting

Board meeting (Special)

AGM

Annual General Meeting

General Meeting

Audit Committee meeting

Key

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Directors’ attendance

During FY2024/25, the overall attendance rate of directors at Board and Board Committee meetings was about 92.3%

(2023/24: 93.8%). Details of the attendance of each director at the Board meeting, Board Committee meetings and

general meeting (attended/held) during FY2024/25 are set out in below table:

Meetings attended/held

Name of directors

Board

(Notes 1 & 2)

Audit

Committee

(Notes 1 & 3)

Compensation

Committee

(Note 1)

Nomination

and

Governance

Committee

(Notes 1 & 4)

General

Meetings

(Notes 3 & 5)

Executive director

Mr. Yang Yuanqing

(Chairman and CEO)

8/8

–

2/2

Non-executive directors

Mr. Zhu Linan

(Note 6)

5/8

–

0/2

Mr. Zhao John Huan

(Note 7)

7/8

–

3/4

–

0/2

Mr. Wong Wai Ming

(Note 8)

–

Ms. Laura Green Quatela

(Note 9)

–

Independent non-executive directors

Mr. John Lawson Thornton

(Lead Independent Director)

8/8

–

2/2

Mr. Gordon Robert Halyburton Orr

8/8

4/4

–

2/2

Mr. Woo Chin Wan Raymond

8/8

4/4

–

2/2

Ms. Yang Lan

(Note 10)

7/8

–

2/2

1/2

Ms. Cher Wang Hsiueh Hong

8/8

–

1/2

Professor Xue Lan

8/8

–

2/2

Mr. Kasper Bo Roersted

8/8

4/4

–

2/2

Mr. William O. Grabe

(Note 11)

8/8

–

0/4

2/2

Mr. William Tudor Brown

(Note 12)

7/8

4/4

–

2/2

Notes:

Attendance represents actual attendance relative to the number of meetings a director was entitled to attend.

The Board held four regular earnings meetings, two strategy meetings and two special meetings during the year.

Representatives of the external auditor participated in every Audit Committee meeting and the general meetings held during the year.

For corporate governance reasons, Mr. Yang Yuanqing excused himself from the agenda item relating to assessment of combination of the roles of

Chairman and CEO during the Nomination and Governance Committee meeting to avoid a conflict of interest.

The Company held the annual general meeting on July 18, 2024 (“2024 Annual General Meeting”) and a general meeting on September 12, 2024 (“2024

General Meeting”).

Due to illness, Mr. Zhu Linan was unable to attend the three Board meetings held on May 23, 2024, February 19 and 20, 2025.

Due to unexpected flight delays on February 18 and 19, 2025, Mr. Zhao John Huan was in transit and unable to attend the meetings on both dates.

On February 20, 2025, Mr. Wong Wai Ming was appointed as a non-executive director and a member of Audit Committee of the Company with effect

from April 1, 2025.

On February 20, 2025, Ms. Laura Green Quatela was appointed as a non-executive director and a member of Nomination and Governance Committee

of the Company with effect from April 1, 2025.

10.

Due to a prior business commitment before receipt of the notice of the special Board meeting held on June 26, 2024, Ms. Yang Lan was unable to join

that special Board meeting.

11.

Mr. William O. Grabe resigned as an independent non-executive director and ceased serving as the Lead Independent Director, a member of the

Compensation Committee and the Nomination and Governance Committee of the Company with effect from February 21, 2025. Eight Board

meetings, four Compensation Committee meetings and two Nomination and Governance Committee meetings were held during the year before his

resignation.

12.

Mr. William Tudor Brown resigned as an independent non-executive director and ceased serving as the chairman of the Compensation Committee and

a member of Audit Committee of the Company with effect from February 21, 2025. Eight Board meetings, four Compensation Committee meetings

and four Audit Committee meetings were held during the year before his resignation.

Lenovo Group Limited 2024/25 Annual Report

Board and Board Committees’ effectiveness review

The Board is aware of the importance of continually assessing its own performance in support of the leadership of the

Group. The Board has a formal process, supported by the Nomination and Governance Committee and led by the Lead

Independent Director, for the evaluation of the performance of the Board and Board Committees, to ensure that they

continue to act effectively and efficiently and to fulfill their respective duties. The process involves the following ways:

Succession planning

The Board is ultimately responsible for succession planning for directorships and key management roles. With the

support of the Nomination and Governance Committee, the structure, size, composition and succession planning are

regularly reviewed to ensure that the successors for key roles are identified and their performance is also assessed.

Further, the Board would consider and approve the appointment of Board and Board Committee members based on the

recommendations from the Nomination and Governance Committee. The Board has satisfied itself that the appropriate

plan has been in place for orderly succession to the Board as well as procedures to ensure an appropriate balance of

skills on the Board and its committees.

During FY2024/25, the Board and the Nomination and Governance Committee had discussed and reviewed Board

composition and succession planning. As part of the succession planning, the following changes in Board and Board

committee composition were taken in place during the year:

•

Professor Xue Lan was appointed as the chairman of the Committee in place of Mr. Yang Yuanqing with effect from

May 24, 2024.

•

Mr. William O. Grabe resigned as an independent non-executive director and ceased serving as the Lead

Independent Director of the Company, a member of the Compensation Committee and the Nomination and

Governance Committee of the Company with effect from February 21, 2025.

•

Mr. William Tudor Brown resigned as an independent non-executive director and ceased serving as the chairman of

the Compensation Committee and a member of the Audit Committee of the Company with effect from February

21, 2025.

•

Mr. John Lawson Thornton was appointed as the Lead Independent Director of the Company, succeeding Mr. William O.

Grabe, with effect from February 21, 2025.

•

Mr. Gordon Robert Halyburton Orr was appointed as the Chairman of the Compensation Committee of the

Company succeeding Mr. William Tudor Brown, with effect from February 21, 2025.

•

Mr. Wong Wai Ming (“Mr. Wong”) was appointed as a non-executive director of the Company and a member of the

Audit Committee of the Company with effect from April 1, 2025.

•

Ms. Laura Green Quatela (“Ms. Quatela”) was appointed as a non-executive director of the Company and a member

of the Nomination and Governance Committee of the Company with effect from April 1, 2025.

Mr. Wong and Ms. Quatela confirmed that prior to the effective date of their appointments and on March 25, 2025,

they have obtained the legal advice as referred to under Rule 3.09D of the Listing Rules and also understood his/her

obligations, duties and responsibilities of a director of a company listed on the Stock Exchange under the Listing Rules.

Evaluation

Re-election by Shareholders

Succession Planning

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Evaluation

The Board believes that the evaluation is helpful and provides a valuable opportunity for continuous improvement. The

objectives of the evaluation were to build on the improvements made since the last evaluation, thereby improving the

collective contribution of the Board as a whole and also the competence and effectiveness of each individual director. As

agreed by the Board members, the evaluation is conducted every two years.

The Lead Independent Director is delegated with authority to lead in the Board evaluation process. The Lead

Independent Director in consultation with the Chairman and other Committee members and supported by the Chief

Legal and Corporate Responsibility Officer and the Company Secretary, will procure the circulation of a comprehensive

electronic questionnaire for completion by all directors, the aim of which is to evaluate the performance and

effectiveness of the Board and its committees.

The evaluation on the Board and Board Committee’s effectiveness and the scope of evaluation are as follows:

•

Board role and responsibilities

•

Board and Board Committee composition and structure

•

Board conduct, Board processes and their effectiveness

•

Board contributions

•

Strategic and operational oversight

•

Professional development

•

Succession planning

•

Communications with management

•

Communications with shareholders and stakeholders

Evaluation process

The evaluation process involves the following three stages:

Evaluation results

A consolidated report of the outputs from the evaluation will be prepared and submitted to the Board for review by the

Nomination and Governance Committee. The results of the evaluation and the implementation or action plan will be

thoroughly discussed, considered and approved at a Board meeting.

Re-election by shareholders

Pursuant to the Articles of Association, one-third of the number of directors for the time being shall retire from office

at each annual general meeting. The retiring directors shall be eligible for re-election. New appointments either to fill a

casual vacancy or as an addition to the Board are also subject to re-election by shareholders at the next following annual

general meeting of the Company. The Nomination and Governance Committee has conducted a review of each director

seeking re-election. The sufficient biographical and other information on those directors seeking re-election are provided

in the annual report and the circular to enable shareholders to make an informed decision.

Stage 1

Determine the scope

• Determine the Board

and Board Committees

as the scope of

evaluation

Determine the

approach

• Conduct the evaluation

by completing a

comprehensive

questionnaire

Stage 2

Discuss and review

the results

• Prepare the draft results report

• Discuss the draft results report between

the Lead Independent Director and the

Chairmen of Board Committees

• Review the results report by the

Nomination and Governance

Committee

• Finalize the results report

• Report to the Board in a manner that

did not identify individuals’ specific

responses, ensuring that these

responses could be as open, frank and

informative as possible

Stage 3

Action plan agreed

• Conclude and agree among

Board members on the

proposed implementation or

action plan upon review of

the evaluation results

Monitor and follow-up

meetings

• Monitor the progress of the

implementation or action

taken semi-annually

• Report back to the Board on

the progress by Nomination

and Governance Committee

Lenovo Group Limited 2024/25 Annual Report

Accountability and audit

Financial reporting

The Board acknowledges its responsibility for presenting

a balanced, clear and comprehensive assessment of the

Group’s performance, position and prospects. The Board is

also responsible for the preparation of financial statements

for each financial year which gives a true and fair view of

the state of affairs of the Group on going concern basis

while the external auditor’s responsibilities to shareholders

are set out in the Independent Auditor’s Report on pages

166 to 170 of this annual report.

The practices of the Company for publication of financial

results and the related reports are set out below:

Annual results

•

Announce within two months

•

Publish the annual report

within about one month

following the annual results

announcement

Interim results

•

Announce within about 1.5

months

•

Publish the interim report

within about 15 days

following the interim results

announcement

Quarterly results

•

Announce within about eight

weeks following quarter end,

depending on timing of festive

holidays

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

Risk management and internal control

At Lenovo, risk is defined as a potential action, event or circumstance that could positively or negatively impact the

Group’s ability to meet its business strategies and objectives. As an inherent part of doing business, risk must be properly

understood and managed to ensure the Group’s continued business success.

To support sustainable business value creation, Lenovo has adopted a comprehensive risk management and internal

control framework based on the “Three Lines of Defense” model. This framework is overseen by Lenovo’s Board of

Directors, with support from the Audit Committee, which monitors key business risks and evaluates the design and

operating effectiveness of the Group’s risk management and internal controls systems.

Lenovo Executive

Committee

(LEC)

Internal Audit

Line of Defense

Business

Management

Governing body: Board of Directors / Audit Committee

Alignment, Communication, Coordination & Collaboration

Owner: Management

Own & manage risk to achieve organizational objectives

External Audit & Regulators

Support Functions,

e.g., Legal, HR,

Finance, Enterprise

Risk Management, etc.

Lenovo Group Limited 2024/25 Annual Report

Responsible for overall governance of Lenovo’s risk management

and internal control systems.

Oversees and monitors the effectiveness of the risk management

and internal control systems through delegation to the Audit

Committee and regular engagement with management on the

Group’s strategies, objectives, and risk-related matters.

Sets the overall tone and expectations for identifying, mitigating,

and monitoring significant business risks across the Group.

Designs, implements, and reviews the Group’s risk management

framework to ensure it remains effective and fit to purpose.

Highlights key risks to the Audit Committee, and reports on status

of actions taken to strengthen risk management.

Establishes Group-wide policies and guidelines where appropriate,

to drive consistency and accountability.

Delegated by the Board to assess the effectiveness of the Group’s

risk management and internal control systems.

Receives regular reports from management and Internal Audit on

the design and operation of the Group’s risk management and

control systems.

Evaluates the adequacy and effectiveness of the internal audit

function, including its audit plans, scope and execution.

Reviews the Group’s enterprise risk management approach,

including processes to identify, assess and report risks, as well as

associated mitigation activities and action plans.

Identifies and prioritizes risks, implements mitigation measures,

and monitors execution within their area of responsibility.

Appoints Risk Management (RM) liaisons to collaborate closely

with the Enterprise Risk Management (ERM) team.

Provides quarterly management disclosure and financial

certifications as part of the Group’s quarter-close process.

Lenovo Executive

Committee

Audit Committee

Business Management

Governance & Oversight

First Line – Own & manage risk to

achieve organizational objectives

Board

Lenovo Group Limited 2024/25 Annual Report

Corporate governance report

This risk management and internal control framework is designed to manage, rather than eliminate, the risk of failing

to achieve business objectives. Accordingly, it provides reasonable, rather than absolute, assurance against material

misstatement or loss. The framework helps improve risk-related communication with management, supports impact

assessments, and enables the coordinated implementation of mitigation measures.

While the Three Lines of Defense model defines roles and responsibilities, Lenovo also adopts the Committee of

Sponsoring Organizations of the Treadway Commission (COSO) framework to provide a structured process for

identifying, assessing, managing, and monitoring risks. This framework is comprised of the following key components:

Facilitates the design, implementation, review, and continuous

improvement of the Group’s risk management framework, in

support of Lenovo management.

Coordinates the enterprise-wide risk assessment process and

provides periodic reports on key risks, mitigation activities and

action plans to the Audit Committee.

Leads risk management projects to drive continuous improvement

in the Group’s risk management practices.

Supports the Audit Committee by providing independent,

objective assurance, advisory and internal investigation services

that add value and enhance the Group’s operations.

Uses a risk-based approach to assess whether Lenovo’s system of

risk management, control, compliance, and governance processes,

as designed and represented by management, are adequate and

operating effectively.

Conducts independent investigations regarding certain types of

fraud allegations and potential violations of the Group’s Code of

Conduct (“the Code”) and other company policies.

Provides expertise, support, monitoring, and insight to management

on risk related matters within their areas of responsibility.

Enterprise Risk

Management

(ERM)

Internal Audit (IA)

Support Functions

such as Legal, HR,

Finance

Second Line –

Support Functions

Third Line –

Independent Assurance

Information and

Communication:

Ensures relevant

information is

identified, captured,

and communicated

in a timely and

effective manner to

support informed

decision making

and achievement of

business objectives.

Control

Environment:

Sets the foundation

for internal

control through

management’s

operating philosophy,

integrity, ethical

values, and the

organization’s

risk appetite and

commitment to

accountability.

Risk

Assessment:

Identifies potential

risks and evaluates

their likelihood

and impact on

the Group’s ability

to achieve its

objectives.

Monitoring:

Evaluates the

effectiveness of

internal controls

and drives

improvements as

needed to respond

to changing risks

and conditions.

Control

Activities:

Policies and

procedures to help

ensure that risk-

mitigation activities

are executed

effectively and

Group objectives

are achieved.

Lenovo Group Limited 2024/25 Annual Report

Risk assessment

Lenovo’s Board and management recognize that risk management is a shared responsibility across the Group, and

is most effective when business functions are directly accountable for identifying and managing risks within their

areas. Rather than being treated as a standalone exercise, risk assessment is integrated into the Group’s strategic and

operational planning processes across all major business functions. As part of these planning activities, each function is

required to identify and assess material risks that may affect the achievement of business objectives. These risks include

strategic, operational, financial, compliance, and emerging risks. The ERM team consolidates and analyzes these risks to

develop an integrated enterprise risk profile, aligns key themes and priorities with senior management, and presents the

results to the Audit Committee for oversight and discussion. Examples of these risks include:

The risk assessment program is enterprise-wide,

covering one hundred percent (100%) of the Group’s

operational sites annually. In addition, a mid-year review is

conducted to assess changes in the external and internal

environment, with corresponding updates to the risk

profile as necessary. Through this program, management

develops a holistic view of the Group’s enterprise risk

portfolio by facilitating risk assessments across business

units and functions, conducting targeted reviews and

integrating insights from specialized areas such as legal,

compliance, cybersecurity, and finance. Risks requiring

focused attention are categorized and prioritized, with

formal response plans developed and monitored by

management.

Within this framework, management is responsible for

setting the appropriate tone from the top, conducting

risk assessments as noted above, and owning the design,

implementation and maintenance of internal controls.

Functional areas such as Finance, Legal, and Human

Resources support these efforts by providing subject-

matter expertise and operational guidance.

The Board and the Audit Committee oversee the actions

of management and monitor the effectiveness of

established controls, supported by the assurance provided

through Internal Audit and the independent external

auditor.

Further details on Lenovo’s key risks can be found under

“Material Risks of the Group” on pages 21 to 30.

Internal control activities and monitoring

The Group’s robust system of internal controls is

supported by clearly defined corporate policies and

procedures that are well-documented and communicated

across the Group. These policies serve as the foundation

for the Group’s key operational guidelines and standards,

ensuring consistency and accountability throughout the

organization.

Complementing this framework, is the Group’s strong

corporate culture based on a foundation of ethical

business conduct. The Group’s Code of Conduct (the “Code”)

is the cornerstone of this culture, reflecting the Group’s

commitment to operating legally, ethically, and with

integrity. The Code outlines clear expectations for legal

and ethical business conduct and compliance with the

Group’s policies. While it does not detail every applicable

law or process, the Code provides guidance on when

and how to seek additional guidance or report potential

concerns.

Legal,

Regulatory,

Ethics

& Compliance

Financial

Geopolitical

Safety & Health

Business

Continuity

Environmental,

Social &

Governance

(ESG)

Industry

Trends

Reputation

Competition

Supply Chain

Lenovo Group Limited 2024/25 Annual Report

100

Corporate governance report

Reporting Ethical Concerns

The Group recognizes that a culture of compliance, where

employees feel empowered to raise concerns, is essential

to the success of its internal control system. To support

this, the Group provides a confidential and anonymous

reporting mechanism (known as the LenovoLine) for

raising concerns or reporting suspected misconduct.

These reporting procedures are governed by the Lenovo

Whistleblowing and Investigations Policy which outlines

how concerns can be raised, reviewed, and investigated.

The Group is committed to maintaining the confidentiality

of reports and thoroughly investigating all alleged

misconduct. The Group does not tolerate retaliation

against individuals who report potential issues or raise

concern in good faith, cooperate with an investigation

or audit, or refuse to participate in activities that violate

the Code, laws or company policies. To ensure effective

oversight, the Group has established the Investigation

Oversight Committee (IOC) to review the handling and

resolution of all reported concerns and potential violations

of the Code.

To further strengthen reporting accessibility, the Group’s

third-party whistleblowing and hotline provider, Whispli,

offers an enhanced reporting platform that allows web-

based and telephonic submissions in multiple languages.

Key features include mobile reporting (iOS and Android),

real-time translation, and a secure chat feature that allows

for anonymous, ongoing dialog between reporters and

investigators.

To promote awareness, the Group provides regular

training and communication on the internal investigation

process and to encourage employees to speak up

without fear of retaliation. In FY 2024/25, training on

Whistleblowing and Investigations was integrated into

Lenovo’s mandatory e-Learning Code training described

earlier. Additional awareness efforts include detailed

LenovoLine instructions, quarterly IOC communications

summarizing investigation insights (with no identifying

information), computer lock screen messages, posters,

and other internal communications.

Another key feature of the Group’s internal control system

is the execution of key control self-assessments performed

by management. These assessments help provide

reasonable assurance that internal controls are operating

effectively and that any identified weaknesses are

addressed promptly. Specific control owners with subject

matter expertise are designated within the business to

support the design, execution, and monitoring of these

controls.

Finally, in alignment with the Group’s commitment to

financial integrity, relevant senior executives certify

quarterly the accuracy and completeness of the quarterly

financial statements and confirm that key internal controls

are operating effectively.

The Code is available in multiple languages on the Group’s

website. To reinforce its principles, the Group requires

mandatory training on the Code and related policies,

and any violation of the Code is treated as a serious

matter. Failure to follow the Code, or violation of the

policies described in the Code, can result in disciplinary

action, including termination of employment or business

relationships.

The Group has also developed and implemented

numerous policies to provide more detailed guidance to

employees on compliance with rules and laws, including

those related to the prevention and detection of bribery

and corruption. These include the Global Anti-Bribery

and Corruption Policy, a Conflicts of Interest Policy, and

a Global Gift, Entertainment, Corporate Hospitality and

Travel Policy.

The Group has a zero-tolerance stance on bribery and

corruption, and complies fully with anti-bribery and

corruption laws in the jurisdictions in which it operates.

The Group’s policies reinforce provisions in the Code and

provide additional guidance regarding compliance with

global anti-bribery and corruption laws and regulations.

The policies stress that Lenovo will not directly or

indirectly solicit, offer, promise, authorize, provide,

or accept anything of value to any person, including

government officials, to influence action, inactions or to

secure an improper advantage as defined by applicable

laws.

Bribery and corruption risks are assessed annually as part

of the Group’s Enterprise Risk Management Program to

ensure the Group’s internal controls are adequate and

effective.

To ensure a broad understanding of these requirements,

the Group provides comprehensive training on anti-

bribery and corruption. In FY 2024/25, this training was

integrated into the mandatory Code training delivered

through eLearning, resulting in a 99% completion rate

among employees with access to the eLearning platform.

New employees also receive Code training that includes

anti-bribery and corruption topics. Finally, the Board and

Senior Leadership Team are provided a facilitator-led

training session on anti-bribery and corruption.

The Group also expects its business partners to uphold

the same ethical standards and comply with applicable

anti-bribery and corruption laws and regulations. All

business partners are subject to the Group’s Partner

Code of Conduct and Global Anti-Bribery and Corruption

Policy, which includes requirements for anti-bribery

and corruption due diligence on any business partner

identified as presenting elevated bribery and corruption

risks to the organization. The Group actively monitors its

business partners to identify and address potential areas

of concern or inquiries regarding bribery and corruption.

Lenovo Group Limited 2024/25 Annual Report

101

the Audit Committee and administratively to the Chief

Financial Officer. The Chief Auditor is also authorized

to communicate directly with the Chairman of the

Board, the Chairman of the Audit Committee and other

Board members as necessary. Internal Audit maintains

a comprehensive quality assurance and improvement

program, aligned with the International Standards for

the Professional Practice of Internal Auditing issued by

the Institute of Internal Auditors. In addition, the Audit

Committee periodically commissions an independent,

external quality review of the Internal Audit function.

Internal Audit operates on a rolling six-month audit

planning cycle, allowing the function to remain agile

and responsive to emerging risks and changes in the

business environment. Each cycle begins with a risk

assessment informed by input from process owners,

the ERM team, senior executives, the external auditor,

Ethics & Compliance, and the Board. The resulting audit

plan prioritizes areas of significant risk and is approved

by the Audit Committee. The Committee receives

quarterly updates on plan execution, key findings, and

any necessary adjustments to reflect evolving priorities.

Internal Audit also conducts ad hoc reviews at the request

of management or the Audit Committee, as needed.

In FY2024/25, Internal Audit issued multiple reports

covering key operational and financial areas across

the Group. It tracks management’s implementation of

corrective actions and reports progress quarterly to the

Audit Committee. Reporting also includes significant

control issues identified by Internal Audit to ensure full

visibility into the status of the Group’s control environment.

As noted previously, Internal Audit is responsible for

investigating certain types of misconduct allegations

or potential violations of policies. These investigations

are conducted in coordination with Legal, Ethics &

Compliance, Human Resources, Security, and other

relevant experts. Results, required actions, and progress

updates are reported to management and the Audit

Committee.

Board Review and Confirmation of Effectiveness

The Board, supported by the Audit Committee, regularly

reviews the effectiveness of the Group’s risk management

and internal control system. This review encompasses

all material risks, including ESG risks, and relevant

key controls across financial, operational, information

technology, and compliance areas. The Board is not aware

of any significant areas of concern which may affect the

shareholders. The Board confirms that the Group has fully

complied with the Corporate Governance Code provisions

relating to internal control and is not aware of any

significant areas of concern that may affect shareholders.

Inside information

Regarding procedures and internal controls for the

handling and dissemination of inside information, the

Group:

(i)

is aware of the Company’s disclosure obligations

under the SFO and the Listing Rules and the

overriding principle under the SFO that inside

information must be announced immediately unless

exemption avails under the safe harbour rule provided

therein;

(ii)

conducts its affairs with close regard to the applicable

laws and regulations prevailing in Hong Kong S.A.R.

of China and all other applicable laws, rules and

regulations;

(iii)

has included in the Code a strict prohibition on the

unauthorized use of non-public or inside information;

(iv)

has established a Continuous Disclosure Policy along

with its guidance notes for monitoring, reporting and

disseminating inside information to our shareholders,

investors, analysts and media. These policy and

guidance notes also identify who are the Group’s

authorized spokespersons and their responsibilities

for communications with stakeholders; and

(v)

has communicated to all relevant staff regarding the

implementation of the Continuous Disclosure Policy

and the relevant trainings are also provided.

Risk management oversight

To support the Audit Committee in its oversight

responsibilities, the Group maintains an independent,

global Internal Audit function. Internal Audit provides

objective assurance that the system of internal controls is

effective and operating as intended.

The mission of Internal Audit is to provide the Board and

management with:

•

Independent and objective assessment of the Group’s

internal control system;

•

Guidance to stakeholders on improving risk

management;

•

Proactive support to improve the Group’s control

posture; and

•

Independent investigations into certain allegations

of fraud and violations of the Code and other Group

policies.

To fulfill this mission, Internal Audit has unrestricted

access to all operations, records, data, systems,

property, and personnel across the Group. To preserve

independence, the Chief Auditor reports functionally to

Lenovo Group Limited 2024/25 Annual Report

102

Corporate governance report

External auditor

Independence of external auditor

The Group’s external auditor is PricewaterhouseCoopers

(“PwC”), who is remunerated mainly for its audit services

provided to the Group. The Company has adopted a

policy on engagement of the external auditor for non-

assurance services, under which the external auditor is

required to comply with the independence requirements

under the Code of Ethics for Professional Accountants

issued by the Hong Kong Institute of Certified Public

Accountants. The external auditor may provide certain

non-assurance services to the Group given that these do

not involve any management or decision making functions

for and on behalf of the Group; do not perform any self-

assessments; and do not act in an advocacy role for the

Group. Certain types of non-assurance services have been

pre-concurred in the policy and separate concurrence by

the Audit Committee is required if the proposed services

have not been pre-concurred or the value of such non-

assurance services above US$320,000.

During FY2024/25, PwC provided audit and non-audit

services (including tax, non-tax and other assurance

services) to the Group.

Remuneration of external auditor

The fees paid or payable to PwC for audit and non-audit

services for FY2024/25 and the comparative figures for

the financial year ended March 31, 2024 are as follows:

Nature of services

FY2024/25

US$ million

FY2023/24

US$ million

Audit services

10.9

9.9

Non-audit services

— Tax

0.1

— Non-tax

0.1

0.2

— Other assurance

0.3

Total

11.4

10.5

Lenovo Group Limited 2024/25 Annual Report

103

Quarterly IR Communications

Results Announcements

The senior management presented the annual and

quarterly earnings results through webcasts, conference

calls, social media, and face-to-face meetings with

international and domestic shareholders, investors, and

analysts. The various communication channels enhanced

the capital market’s understanding with regard to the

Group’s business strategy, development tactics, and

competitive edge.

Post-Results Non-Deal Roadshows and Key Investor

Meetings

The IR and senior management attend a Non-Deal

Roadshows (“NDR”) to meet with current and potential

investors in each quarter. In FY2024/25, Lenovo arranged

physical NDRs in the US, UK, Continental Europe, Hong

Kong S.A.R. of China and Taipei to meet with investors and

analysts from those regions. Other virtual NDRs were also

arranged with investors from other parts of Asia and etc.

The IR team also conducted one-on-one meetings with

key investors and continued its efforts to build effective

communication channels with the investment community.

Communications on ESG Initiatives

To foster understanding of Lenovo’s ESG initiatives by

the investment community, Lenovo conducts active

communication with ESG rating agencies and funds, with

ESG mandates regularly and upon request.

Investor Conferences

To maintain active communications with institutional

investors around the world, the senior management

participated in the following investor conferences held by

major international investment banks.

Investor relations

Communications with investors

The Company is devoted to providing transparent and

clear communications with investors and analysts to help

them form a better understanding of the Group’s business

development and future prospects.

Shareholders communication policy

The Company has adopted a Shareholders Communication

Policy to ensure that the investment community is

provided with timely and equal access to fair, balanced

and understandable information on the Group’s financial

performance, corporate strategies and ESG initiatives.

The policy also sets forth various communication

channels through which senior management and the

Investor Relations (“IR”) can conduct ongoing dialogs

with investors and analysts on business strategy and also

address market concerns about the Group. The policy can

be accessed through Lenovo’s

IR website

Investor Engagement and Communications

Investors and analysts can have direct communication

with the Chairman and Chief Executive Officer, the Chief

Financial Officer and other senior management on a

quarterly basis through effective communication channels

set out in the Shareholders’ Communication Policy. These

include investor conferences, non-deal roadshows, one on-

one/group meetings, and company visits. The IR is also

poised to provide relevant public information to investors

and analysts to support the appropriate valuation of the

Company’s equity.

During FY2024/25, the Company held nearly 700

meetings with institutional investors and analysts,

mainly from the Asia Pacific region, UK, Europe and

North America. Some key channels during the year are

highlighted below:

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Corporate governance report

Investor conferences attended in FY2024/25

Date

Conference

Location

2025

January 8

CES Investor Tour

Las Vegas

January 15

CES for Analysts call with Luca Rossi

Virtual

February 24–25

Lenovo Hong Kong NDR

Hong Kong S.A.R.

February 26–28

Lenovo MEA NDR

Dubai

March 5

Hong Kong Tech World SSG Group Investor Lunch

Hong Kong S.A.R.

March 5

HSBC Asset Management China Insight Event London

London

March 17

BofA Asia Tech Conference Taipei

Taipei

March 24–28

Post-results EU & US NDR

Virtual

2024

March 7

Lenovo SSG Investor Group Lunch Hong Kong

Hong Kong S.A.R.

March 19–20

2024 Merrill Lynch APAC TMT Conference

Taipei

May 28–31

Lenovo US NDR

New York

June 4

Morgan Stanley Computex Investor Meeting

Taipei

June 5

BofA-Lenovo Investor Luncheon

Taipei

June 13–14

Lenovo Hong Kong NDR

Hong Kong S.A.R.

August 26–27

Lenovo Singapore NDR

Singapore

September 2–5

Lenovo Europe NDR

London and Paris

November 15–20

Lenovo US NDR

New York

November 20–21

Morgan Stanley AP Summit Singapore

Singapore

November 26–27

Merrill Lynch Internet & AI Conference Hong Kong

Hong Kong S.A.R.

Lenovo Group Limited 2024/25 Annual Report

105

Effectiveness of the Shareholders communication

policy

The Company’s Shareholders Communication Policy

has set out clear guidelines and standards in relation to

communicating with the investment community. During

FY2024/25, the Company received a variety of awards

from different organizers in recognition of its efforts

to facilitate open and effective communication. The

Company was included as a constituent stock on the Hang

Seng Index — Hong Kong’s benchmark stock gauge — in

March 2022, demonstrating the market’s confidence in

Lenovo, which is built on the Company’s continuous open

communication strategies.

Market recognition

•

Lenovo’s MSCI ESG rating was upgraded to AAA,

the highest tier, recognizing its leadership in

managing ESG risks and opportunities. This upgrade

underscores advancements in sustainable supply

chain practices, diversity initiatives, and climate

change strategies.

•

Gold Award in the Most Sustainable Companies/

Organizations category by the Hong Kong Institute

of Certified Public Accountants and received Awards

of Excellence in Corporate Governance and ESG

at the Hong Kong Corporate Governance and ESG

Excellence Awards 2024.

•

HKIRA 9th Investor Relations Awards — Certificate of

Excellence

•

MWC 2025 Awards, Accolades & Honors

Index recognition

Lenovo has always been well recognized by the capital

markets and the Company is currently a constituent stock

of many indices. Below are some of the key ones:

•

Hang Seng Index

•

Hang Seng China Enterprises Index

•

Hang Seng TECH Index

•

Bloomberg World Large & Mid Cap Price Return

Index

•

Hang Seng Composite Index

•

Bloomberg ESG Data Index

•

Bloomberg Emerging Markets Large & Mid Cap Price

Return Index

•

Bloomberg China Large & Mid Cap Price Return Index

USD

•

Mirae Asset China Tech Top 10 Index

•

Bloomberg World Large, Mid & Small Cap Price

Return Index

•

Bloomberg APAC Large & Mid Cap Price Return

Index

•

FTSE Developed ex US All Cap Net Tax (US RIC)

Index

•

Hang Seng Stock Connect Hong Kong Index

•

Hang Seng Index — Commerce & Industry

•

Bloomberg Asia Emerging Markets Large & Mid Cap

Price Return Index

•

Bloomberg APAC ex Japan Large & Mid Cap Price

Return Index

•

S&P Global BMI (US Dollar)

•

Bloomberg World ex US Large & Mid Cap Price

Return Index

•

Solactive ISS ESG Screened Paris Aligned Global

Markets Index NTR

•

Gender Equality Score Total Coverage Index

•

Solactive China AI Tech Top 10 Index PR

Lenovo Group Limited 2024/25 Annual Report

106

Corporate governance report

You can also follow other Lenovo channels at:

Lenovo values comments from shareholders and

analysts. Some renowned analysts would be invited to

the Company’s Board meeting and communicate directly

with Board members on their market views of Lenovo

and market outlook. The IR also conveys messages to

the Board on a quarterly basis on information including

sellside consensus, the target price of the Company’s

shares, report summaries and questions and feedback

collected from meetings with the investment community.

IR webpage, newsletters and social media

A regularly updated

IR website

provides easy access to

the public with information about the Company, including

the Company’s financial reports, results announcements

and other statutory publications, presentation materials,

press releases, major corporate news, financial calendars

and dividend announcements. IR’s contact details can also

be found on the page for those wish to contact the IR.

Investor relations contact details

Investor Relations Team

Lenovo Group Limited

23rd Floor, Lincoln House, Taikoo Place,

979 King’s Road, Quarry Bay,

Hong Kong SAR, China

Telephone: (852) 2590 0228

Facsimile: (852) 2516 5384

Email: ir@lenovo.com

Shareholders can also request to be added to the

Company’s investor database to receive newsletters and

news of major corporate developments sent out by the IR

team on a regular basis, or simply follow Lenovo Investor

Relations.

Please search for our WeChat ID: Lenovo_IR or use

WeChat to scan the QR codes below for our WeChat

account, WeChat Channel, and Weibo.

Lenovo_IR

Scan the QR code below

in WeChat app

Lenovo Group Limited 2024/25 Annual Report

107

formal communication channels with shareholders

and other stakeholders for ensuring fair disclosure

and comprehensive and transparent reporting of the

Group’s performance and activities. The Nomination and

Governance Committee of the Company reviews the

Shareholders Communication Policy on an annual basis

and considers that the Shareholders Communication

Policy was properly implemented during FY2024/25 and

was effective with these multiple channels in place to

promote two-way communication and active engagement

with shareholders.

Shareholders

Communications with shareholders

The Company is committed to safeguard shareholders’

interests and believes that effective communication

with shareholders and other stakeholders is essential for

enhancing investor relations and investor understanding

of the business performance and strategies of the

Group. To achieve this, the Company has established the

Shareholders Communication Policy setting out various

Constructive use of the general meetings

General meetings of the Company are the primary forum

for communication by the Company with its shareholders,

who are welcome to actively participate at the meetings.

Notice of the general meeting and related papers are

sent to shareholders at least 21 days prior to the date

of the annual general meeting and at least 14 days prior

to the date of other general meetings respectively. The

information sent to shareholders includes but is not limited

to a summary of the business to be covered at the general

meetings, where a separate resolution is prepared for each

substantive matter.

The Company encourages shareholders to participate in

general meetings as it provides a valuable opportunity for

shareholders to conduct dialogs with the directors and

senior management and further discuss the Group’s affairs,

among others, its financial and operational performance,

social sustainability, future plans, and commitments with

shareholders. Moreover, a question and answer session

is offered at each general meeting to facilitate direct

communication between stakeholders and the Company.

During FY2024/25, the Company held two general

meetings (“General Meetings”), which are the 2024

Annual General Meeting and the 2024 General Meeting.

Similar to the arrangement of annual general meetings

held in recent years, the General Meetings were held in

hybrid form, at which shareholders of the Company could

attend in person or through an online platform with live

video broadcast where they could express their views

and exercise their voting cast vote in real-time. Further

details of the General Meetings are set out in the following

paragraphs.

Communication channels

with shareholders and other stakeholders

Teleconferences

and webcasts

for analysts and

media briefings

Publication of

financial reports,

announcements,

circulars and

press releases

Shareholders’

meetings

Investment

community

communications

such as roadshow,

site visits and

analyst roundtable

events

The

Group’s

website

Lenovo Group Limited 2024/25 Annual Report

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Corporate governance report

2024 Annual General Meeting

The 2024 Annual General Meeting was one of the most important events in the Group’s calendar. The Group’s

latest products and smart AI technology were showcased to facilitate understanding of the Company’s

shareholders on the current business and product development of the Group. The Chairmen of the Board and

Board Committee, the Lead Independent Director, directors of the Company, the Chief Financial Officer, the

Chief Legal and Corporate Responsibility Officer, the Company Secretary and representatives of the external

auditor, PwC, had attended the 2024 Annual General Meeting and actively participated in the meeting and

communicated with shareholders of the Company.

Lenovo Group Limited 2024/25 Annual Report

109

Separate resolutions on the following matters were proposed to shareholders for approval and the voting results of

which resolved at the 2024 Annual General Meeting are available on the

Group’s website

and

HKEx’s website

Matters resolved at the 2024 Annual General Meeting

Note

Receipt of the audited consolidated financial statements and the reports of the directors and

the independent auditor

Declaration of final dividend

Re-election of retiring directors and authorization of the Board to fix directors’ fees

Re-appointment of PwC as the Company’s auditor and authorization of the Board to fix

auditor’s remuneration

Granting of the general mandate to issue shares not exceeding 20% of the aggregate number

of shares in issue

Granting the general mandate to buy back shares not exceeding 10% of the aggregate

number of shares in issue

Extending the general mandate to the directors to issue new shares by adding the number of

shares bought back

Note: The full text of the resolutions is set out in the notice of the 2024 Annual General Meeting.

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Corporate governance report

2024 General Meeting

As disclosed in the Company’s circular dated August 19, 2024 (the “Circular”), the 2024 General Meeting was held

for the purpose of considering and approving the following matters

Note 1

and the related ordinary resolutions

Note 2

were submitted to the Company’s shareholders for approval.

the Warrants Subscription Agreement and contemplated the thereunder, transactions including granting a

specific mandate to the directors of the Company for the issue of the Warrants, and the allotment and issue

of the Warrant Shares; and

the CB Subscription Agreement and contemplated thereunder, transactions including granting a specific

mandate to the directors of the Company for the issue of the Convertible Bonds, and the allotment and issue

of the Conversion Shares.

The transactions contemplated thereunder the above-mentioned agreements were significant for the Group’s

future development, including geographical diversification into the MEA region. Stakeholders, including but not

limited to the Chairmen of the Board and Board Committees, the Lead Independent Director, senior management,

company secretary, the auditor, and independent financial advisor actively participated in the meeting. The

stakeholders were briefed about the transactions and interacted with each other for understanding of the

transactions.

The relevant ordinary resolutions were approved by the shareholders of the Company and the related voting results of

the above-mentioned matters the 2024 General Meeting are available on the

Group’s website

and

HKEx’s website

Notes:

Unless otherwise specified, capitalized terms used under this sub-section shall have the same meanings as those defined in the Circular.

The full text of the resolutions is set out in the notice of the 2024 General Meeting dated August 19, 2024.

2025 Annual General Meeting

The 2025 Annual General Meeting will also be a hybrid meeting and is expected to be held on July 17, 2025. Details of

the 2025 Annual General Meeting will be set out in the notice of the 2025 Annual General Meeting, which constitutes

part of a circular to shareholders and will be dispatched, together with this annual report, to the shareholders of the

Company pursuant to the Listing Rules requirements.

Lenovo Group Limited 2024/25 Annual Report

111

Shareholders’ rights

Procedures for convening a general meeting

Shareholder(s) representing at least 5% of the total voting

rights of the Company of all the shareholders having a

right to vote at general meetings may, in accordance

with the requirements and procedures set out in the

Companies Ordinance (Chapter 622 of the Laws of Hong

Kong) (the “Companies Ordinance”), request the Board

to convene a general meeting by requisition, by stating

the general nature of the business to be dealt at a general

meeting and depositing the signed requisition at the

registered office of the Company for the attention of the

Company Secretary in hard copy form.

Procedures for putting forward proposals at an

annual general meeting

(a) Shareholder(s) representing at least 2.5% of the total

voting rights of all the shareholders of the Company

having a right to vote on the resolution at the annual

general meeting; or (b) at least 50 shareholders having

a right to vote on the resolution at the annual general

meeting may, in accordance with the requirements

and procedures set out in the Companies Ordinance,

requisition for the circulation of resolutions to be moved

at annual general meetings and circulation of statements

of not more than 1,000 words with respect to the matter

referred to in the proposed resolution. Such written

request must (i) state the resolution and be signed by all

the requisitionists in one or more documents in like form;

and (ii) be deposited in hard copy form at the registered

office of the Company for the attention of the Company

Secretary not less than six weeks before the annual

general meeting; or if later, the time at which notice is

given of that annual general meeting.

The detailed procedures for shareholders to convene

and put forward proposals at an annual general meeting

or general meeting, including proposing a person other

than a retiring director for election as a director are set

out in the “Corporate Governance” section of the Group’s

website. Shareholders may send their enquiries requiring

the Board’s attention to the Company at the registered

address of the Company.

Constitutional documents

Rights of the shareholders are also provided under the

Articles of Association. During FY2024/25, there are no

changes in the Articles of Association. An up to date

consolidated version of the Articles of Association is

available on the Group’s website and the HKEx’s website.

Dissemination of Corporate Communication

Shareholders may, at any time, free of charge ask for

printed form of corporate communications (in English

and/or Chinese), and change the choice of language

and/or means of receipt of the Company’s corporate

communication, details of which is on the Group’s investor

relations website.

Dividend policy

The Company adopted the Dividend Policy of providing

shareholders with sustainable dividends on a semi-annual

basis. The level of dividends shall be determined in line

with the growth in the Company’s consolidated profits

attributable to shareholders of the relevant financial

period (after adjustments for restructuring or other one-

off non-cash items, if any) after considering the factors

including the Group’s operations, business plans and

strategies, cash flows, financial conditions, operating and

capital requirements and other contractual or regulatory

restrictions. Whilst the Company does not intend to set

any pre-determined dividend distribution ratio in order to

allow for financial flexibility, the Company endeavors to

strike a proper balance between shareholders’ interests

and prudent capital management.

Shareholders information

Details of shareholders information of the Company as at

March 31, 2025 are as follows:

Details of registered shareholders by domicile

According to the register of members of the Company as

of March 31, 2025, there were 655 registered shareholders,

of the whom 98% had their registered addresses in Hong

Kong S.A.R. of China and the remaining were in Mainland

China, the United Kingdom, Canada and Macau S.A.R.

of China. However, the actual number of shareholders in

the ordinary shares of the Company may be larger, as a

substantial portion of the shares are held through HKSCC

Nominees Limited under

Note 1

the domicile of Hong Kong S.A.R.

of China.

Details of shareholders by category

According to the best available data from an external research company, the shareholders of the Company comprised

institutional and non-institutional investors, including, private investors, related parties (such as substantial shareholders,

directors and employees of the Company). The table below summarizes the types of shareholders of the Company.

Type

Number of shares held

Percentage of the total

number of shares in issue

Note 2

Institutional investors

Note 3

4,743,930,208

38.24%

Non-institutional investors

– Private investors

Note 4

1,219,712,447

9.83%

– Related parties

Note 5

4,452,904,529

35.90%

– Others

Note 6

1,988,112,118

16.03%

Total

12,404,659,302

100%

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Corporate governance report

Details of institutional shareholders by domicile

With reference to the institutional investors disclosed above, there were 619 institutional shareholders, whose geographical

composition is as follows:

Domicile

Number of

institutional

shareholders

Percentage of

total number

of institutional

shareholders

Number of

shares held

Percentage

of the total

number of shares

in issue

Note 2

Hong Kong S.A.R. of China

11.31%

1,117,937,258

9.01%

United Kingdom and Ireland

12.76%

684,371,927

5.52%

Europe (excluding United

Kingdom and Ireland)

151

24.39%

533,777,202

4.30%

America

171

27.63%

1,857,634,583

14.97%

Asia (excluding Hong Kong S.A.R.

of China)

136

21.97%

510,543,335

4.12%

Rest of World

1.94%

39,665,903

0.32%

Subtotal of institutional

shareholders

619

100%

4,743,930,208

38.24%

Notes:

The registered shareholders in Hong Kong S.A.R. of China includes HKSCC Nominees Limited, which holds approximately 82.72% of all the issued

ordinary shares of the Company.

The approximate percentages were compiled based on the 12,404,659,302 ordinary shares of the Company in issue as at March 31, 2025.

Institutional investors usually refer financial institutions providing products such as superannuation, investments and insurance.

Private investors refer to individuals who acquire shares of the listed company directly through the market or through a public offering. This does not

include individuals whose investments are made through mutual funds that hold the shares of the Company.

Related parties refer to corporate or individual investors that add value to investments they make through industry and personal ties, which can assist

companies in raising additional capital as well as provide assistance in the marketing and sales process.

Others include among other parties, brokers, custodians and nominees.

Shareholding structure

The shareholding structure of the Company as of March 31, 2025 is illustrated as follows:

Legend Holdings Corporation

Note 1

Mr. Yang

Note 2

Other directors

Note 3

Others

Note 4

0.11%

31.41%

62.54%

5.94%

Notes:

The approximate percentage of shareholding was calculated based on the 12,404,659,302 ordinary shares of the Company in issue as at March 31, 2025.

The approximate percentages of shareholding of Legend Holdings Corporation, Mr. Yang and other directors were calculated based on the issued

ordinary shares of the Company in which such shareholders have personal/beneficial and corporate interests (where applicable) as disclosed under

the respective sections of “directors’ and chief executive’s interests” and “substantial shareholders’ and other persons’ interests” of this Annual Report

on pages 151 to 156. The shareholders’ interests in the underlying shares of the Company as disclosed in the aforesaid sections of the Annual Report,

were not included in the shareholding calculation illustrated in the diagram above.

Other directors refer to the directors of the Company excluding Mr. Yang.

Others refer to shareholders of the Company holding issued ordinary shares of the Company not disclosed above.

Lenovo Group Limited 2024/25 Annual Report

113

Key stock information

Listing information

The Company’s shares are listed on the Stock Exchange

and traded in the United States through an American

Depositary Receipt (ADR) Level 1 Programme.

Market capitalization

As at March 31, 2025, the market capitalization of the

shares of the Company was approximately HK$130 billion,

based on the total number of 12,404,659,302 shares of the

Company and the closing price of HK$10.48 per share.

The daily average number of traded shares of the

Company was approximately 66.60 million shares in

FY2024/25. The highest closing price for the share was

HK$13.60 per share on February 21, 2025 and the lowest

was HK$8.12 per share on April 22, 2024.

Ordinary Shares (as at March 31, 2025)

Listing

Stock Exchange

Stock code

HKD Counter Stock Code: 992

RMB Counter Stock Code: 80992

Board lot size

2,000 shares

Ordinary shares outstanding as of March 31, 2025

12,404,659,302 shares

Market capitalization as of March 31, 2025

HK$130 billion

(approximately US$16.75 billion)

American Depositary Receipts Level I Program

Ordinary share to ADR

20:1

Stock code

LNVGY

Basic Earnings per Share

Basic earnings per share for FY2024/25

US11.3 cents

Dividend per Share

Dividend per ordinary share for FY2024/25

— Interim

HK8.5 cents

— Final

Note

HK30.5 cents

Note: Subject to shareholders’ approval at the 2025 Annual General Meeting.

Lenovo Group Limited 2024/25 Annual Report

114

Corporate governance report

Share price from April 1, 2024 to March 31, 2025

During FY2024/25, the Company’s share price underperformed Hang Seng Index (HSI) by 19.5%.

100

120

140

160

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan

Feb

Mar

(Source: Nasdaq)

Hang Seng Index (HSI)

Lenovo Group Limited (992-HKG)

36.5%

17.0%

The investor relations values and is eager to hear suggestions and comments from shareholders and investors. For

enquiries from institutional investors and equity analysts, please contact ir@lenovo.com.

Lenovo Group Limited 2024/25 Annual Report

115

Audit committee report

Audit Committee

The audit committee (the “Audit Committee”) of the board of directors (the “Board”) of Lenovo Group Limited (the “Company”)

has been established since 1999. The Audit Committee is comprised of the following members as at the date of this

annual report:

Mr. Woo, being the chairman of the Audit Committee, has appropriate professional qualifications and experience in

accounting or related financial management expertise as required under the Rules Governing the Listing of Securities

on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). More information on the skills and experience of

the members of Audit Committee may be found in the directors’ biographies set out on pages 144 to 147 of this annual

report.

In addition to the members, regular attendees at the Audit Committee meetings are:

Note:

Mr. Wong Wai MIng was appointed as a member of the Audit Committee with effect from April 1, 2025.

Mr. Woo Chin Wan

Raymond

(Chairman)

Independent

Non-executive

Director

Mr. Gordon Robert

Halyburton Orr

(Member)

Independent

Non-executive

Director

Mr. Kasper Bo

Roersted

(Member)

Independent

Non-executive

Director

Mr. Wong

Wai Ming

Note

(Member)

Non-executive

Director

Chief Financial

Officer

Chief Legal

and Corporate

Responsibility

Officer

Vice President –

Group Controller

Vice President –

Investor Relations

Chief Auditor

Company

Secretary

Group Chief

Accountant

Vice President –

Treasury

Representatives

of external

auditor

Lenovo Group Limited 2024/25 Annual Report

116

Audit committee report

Responsibilities

The Audit Committee is delegated by the Board with responsibilities to provide an independent review of the financial

reporting, and assess the effectiveness of risk management and internal control systems. It also reviews the adequacy of

the Company’s internal audit function and manages the Company’s relationship with PricewaterhouseCoopers (“PwC”),

the external auditor. The main responsibilities of the Audit Committee can be grouped into different areas as follows:

Audit Committee

Main areas of oversight

Risk Management

and Internal Control

• Effectiveness of

risk management

and internal

control systems

• Internal audit

plan and scope of

the internal audit

work

• Analysis of main

areas of risk

• Adequacy and

efficiency of

internal audit

function

External

Audit

• Appointment or

re-appointment

of external

auditor and their

remuneration

• Scope and status

of the audit work

• Areas of key

audit focus

• Independence

and performance

of external

auditor

Others

• Tax and treasury

matters

• Key litigation and

legal exposures

• Compliance with

ethical rules and

concerns

• Adequacy of

resources for ESG

reporting

Financial

Reporting

• The quality and

acceptability

of accounting

policies and

practices

• The clarity of

the disclosures

and compliance

with financial

reporting

standards

• Material areas in

which significant

judgements have

been applied

Lenovo Group Limited 2024/25 Annual Report

117

Key Features

• The Audit Committee’s terms of reference which clearly deal with its membership, authority, duties

and frequency of meetings are published on the websites of the Company and its subsidiaries

(collectively, the “Group”) and Hong Kong Exchanges and Clearing Limited.

• The Audit Committee meets with external auditor, Chief Financial Officer, Chief Legal and

Corporate Responsibility Officer, Chief Auditor and management of the accounting and financial

reporting functions of the Company at least four times a year at quarterly intervals and is provided

with sufficient resources to perform its duties.

• The Audit Committee is authorised to obtain outside legal or other independent professional

advice in performing its duties at the Company’s expense.

• Separate executive sessions were arranged for the Audit Committee to meet with (i) external

auditor and (ii) Chief Auditor and Chief Legal and Corporate Responsibility Officer, both in the

absence of management to discuss matters relating to any issues arising from the audit and any

other matters such persons would like to raise.

• Other management from the business is also invited to attend certain meetings from time to

time in order to provide insights and enhance the Audit Committee’s awareness of key issues and

developments.

• External auditor, Chief Auditor and Chief Legal and Corporate Responsibility Officer have direct

access to the Audit Committee should they wish to raise any concerns outside formal meetings.

• In addition to standing agenda items, the Audit Committee may also request to discuss on

particular “deep-dive” topics.

• The chairman will report back to the Board after each of the Audit Committee meetings on its

decisions or recommendations.

• The Company Secretary will circulate a list of follow-up actions together with the minutes of the

last meeting to management and the Audit Committee within a reasonable time after such meeting

is held.

Lenovo Group Limited 2024/25 Annual Report

118

Audit committee report

Main agendas during FY2024/25

The work of the Audit Committee follows an agreed annual work plan and principally falls under three main areas:

financial reporting; risk management and internal control; the oversight of external audit and the management of the

Company’s relationship with PwC, the external auditor. The timetable of the Audit Committee for FY2024/25 is set out in

the below diagram.

Specific items

2024

2025

May

August

November

February

Review of Annual/Interim/Quarterly results

• reports to the Audit Committee from Chief Financial

Officer, Chief Legal and Corporate Responsibility Officer,

Chief Auditor and external auditor

• results announcement

• annual report incorporating directors’ report, corporate

governance report and financial statements

• interim report

Review of enterprise risk management (“ERM”)

Review of the performance and independence of external

auditor

Review of annual agenda of the Audit Committee

Meeting with external auditor in the absence of management

Meeting with Chief Auditor and Chief Legal and Corporate

Responsibility Officer in the absence of management

Review of the Ethics and Compliance program of the Group

Review of adequacy of resources, staff qualifications

and experience, training programmes and budget

• accounting, internal audit and financial reporting function

• ESG performance and reporting

Recommendations to the board

• annual/interim/quarterly results, annual/interim report

and related results announcement

• re-appointment of external auditor

Standing items

Risk management

and internal

control

• Internal audit planning

methodology/

approach

• Summary of internal

audit and

investigations

• Internal control of the

Group including key

control issues

• Enterprise risk

management

External

audit

• Audit plan and status

of the audit work

• Significant

accounting matters

and auditing matters

• Non-audit services

provided by the

external auditor

• Continuing connected

transactions

Others

• Minutes of previous

meeting

• Reports on actions

taken or status of

follow-up items

arose from previous

meetings

• Particular “deep-

dive” topics

Financial

reporting

• Key accounting

items

• Key assumptions,

judgements and

estimates

• Key litigation and

legal exposures

Lenovo Group Limited 2024/25 Annual Report

119

In FY2024/25, the Audit Committee held four meetings, with all members in attendance at each meeting. The

attendance record of the Audit Committee’s members is set out in the Corporate governance report on page 92 and the

chart below shows how the Audit Committee allocated its agenda time during FY2024/25.

Allocation of agenda time

FY2024/25

FY2023/24

Financial reporting

38%

37%

Risk management and internal control and

compliance

30%

36%

Other matters

21%

Note 1

12%

Note 2

External audit

12%

15%

12%

21%

38%

30%

At each meeting, the Audit Committee received reports and presentations on key financial reporting, internal control and

audit matters from management, who attended the meetings to report on significant issues and responded to queries

raised by the Audit Committee. The main matters and areas that the Audit Committee reviewed and considered at its

four meetings during the year and how the Audit Committee discharges its responsibilities were as follows:

Financial reporting

With the support of the external auditor, the Audit

Committee assessed whether suitable accounting policies

had been adopted, whether management had made

appropriate estimates and judgements and whether

disclosures were in compliance with the financial reporting

standards. The Audit Committee:

•

reviewed and recommended to the Board for

approval of financial results of the Group after

discussion with the management and external auditor

for:

(a)

audited annual results of the Group for the year

ended March 31, 2024, together with the related

annual results announcement and the annual

report incorporating the directors’ report and

corporate governance report;

(b)

unaudited interim results of the Group for the six

months ended September 30, 2024, together

with the related interim results announcement

and the interim report; and quarterly results

for the three months ended June 30, 2024

and for the nine months ended December

31, 2024, together with its respective results

announcements;

•

received reports from, and met with, external auditor

and internal auditor to discuss the scope of their

review and findings;

•

reviewed the impairment assessment of goodwill and

other intangible assets with indefinite useful lives; and

•

reviewed and discussed with management on

significant judgements and key assumptions together

with presentational and disclosure issues associated

with accounting standards and interpretive guidance

affecting the Group’s financial statements and

financial results announcements; items reviewed and

discussed included:

(a)

net current liabilities position and deferred

income tax assets;

(b)

the accounting treatment for material

transactions and projects;

(c)

the accounting treatment for the Group’s

goodwill; and

(d)

the accounting provisions and treatments for

deferred tax assets, inventories, and employees

benefit plans.

Notes:

Other matters include Tax, ESG compliance, cyber security, artificial intelligence governance and digital transformation.

Other matters include Tax, ESG compliance and digital transformation.

Lenovo Group Limited 2024/25 Annual Report

120

Audit committee report

•

reviewed and considered the external auditor’s audit

plan and scope for FY2024/25;

•

reviewed the auditor’s report for the financial year

ended March 31, 2024 together with the key audit

matters and related audit procedures;

•

assessed the external auditor’s independence and

objectivity including a review of the non-audit

services provided by the external auditor;

•

evaluated the performance of PwC and

recommended to the Board for approval of the

re-appointment of PwC as the external auditor of the

Group for the financial year ended March 31, 2024;

and

•

reviewed the annual reporting of continuing

connected transactions provided by the external

auditor.

Others

During FY2024/25, the Audit Committee also reviewed,

among others:

•

the reports from Chief Legal and Corporate

Responsibility Officer regarding key litigations and

other legal matters of the Group;

•

the Ethics and Compliance program including the

training initiatives, Lenovo Anti-Bribery & Corruption

Policy and Lenovo Whistleblowing & Investigations

Policy of the Group for employees to raise

concerns about possible improprieties in financial

reporting, internal control or other matters, and the

enhancements to this program;

•

updates on ESG compliance and disclosure evolution;

•

updates on tax model and compliance;

•

updates on cyber/information security and artificial

intelligence governance;

•

the Audit Committee report for incorporating into the

annual report for FY2023/24; and

•

the annual agenda of the Audit Committee for

FY2024/25.

Risk management and internal control

To discharge the responsibility of reviewing and monitoring

the effectiveness of the Group’s risk management and

internal control systems, the Audit Committee received

regular reports from the Chief Auditor and if required from

management, including legal and other business units. At

each meeting, the Audit Committee reviewed the process

for identifying, assessing and reporting key risks and

control issues of the Group. The Audit Committee:

•

discussed the semi-annual internal audit plan of the

Group to ensure adequate scope, coverage over the

activities of the Group and the resource requirements

of internal audit to carry out its functions;

•

reviewed the effectiveness of the internal control

system (including the adequacy of resources, staff

qualification and experience, training programmes

and budget of the Group’s accounting, internal audit,

financial reporting function, as well as those relating

to ESG performance and reporting) operating in the

Group and reviewed the corrective actions taken by

management;

•

reviewed half-yearly the ERM of the Group including

ERM approach, enterprise risk universe, external

environmental scan, risk assessment, top risks,

mitigation activities and actions and next steps;

•

reviewed the summary of the management letter

point of the Group and reviewed the actions/

processes undertaken by the Group;

•

reviewed the risk assessment of litigation cases of the

Group; and

•

reviewed, assessed and approved the Internal Audit

Charter periodically.

External audit

To discharge the responsibility of overseeing the Board’s

relationship with the external auditor and monitoring

the external auditor’s performance, objectivity and

independence and also the effectiveness of the audit

process, the Audit Committee:

•

reviewed and considered the external auditor’s

statutory audit scope and results for FY2023/24,

including the letter of representation to be given

by the Board in respect of the financial year ended

March 31, 2024;

Lenovo Group Limited 2024/25 Annual Report

121

Recommendation for

re-appointment of the external

auditor

The Audit Committee recognizes the importance

of maintaining the independence of the external

auditor. Consistent with its terms of reference, the

Audit Committee has evaluated PwC’s qualifications,

performance, and independence, including that of the

lead audit partner. The Company has established a

policy pursuant to which certain types of non-assurance

services have been pre-concurred in the policy and

separate concurrence by the Audit Committee is

required if the proposed services have not been pre-

concurred or the value of such non-assurance services is

above US$320,000. This policy is more fully described

in the corporate governance report on page 102. The

Audit Committee has concluded that provision of the

non-assurance services described in that section was

compatible with maintaining the independence of PwC.

In addition, PwC has provided the Audit Committee an

independence statement confirming that for FY2024/25

and thereafter to the date of this annual report, they

are independent of the Group in accordance with the

independence requirements of the Hong Kong Institute of

Certified Public Accountants.

Based on the review and discussions referred to above,

the Audit Committee was satisfied with the external

auditor’s work, its independence and objectivity, and

therefore recommended to the Board the re-appointment

of PwC as the Group’s external auditor for the financial

year ending March 31, 2026 for shareholders’ approval at

the forthcoming annual general meeting to be held on

July 17, 2025.

Priorities for FY2025/26

Looking ahead, the priorities of the Audit Committee for

the FY2025/26 are:

•

To stay focused on high standard financial

accounting and reporting, audit quality, effective risk

management and internal control;

•

To stay updated on the developments and impacts of

data security, product security, cybersecurity, artificial

intelligence and regulatory compliance; and

•

To remain vigilant on the impacts of the business

conditions on the Group under ongoing geopolitical

and macroeconomic impacts.

Review of FY2024/25 financial

results

At the meeting held on May 21, 2025, the Audit

Committee:

•

reviewed the key accounting judgements and policies

adopted by the Group and confirmed that these

are appropriate. The significant areas of judgement

identified by the Audit Committee, in conjunction

with management and the external auditor, together

with a number of other areas that the Audit

Committee deemed to be significant in the context of

the consolidated financial statements of the Group for

FY2024/25 are set out in the Independent Auditor’s

Report on pages 166 to 170;

•

after discussion with management and the external

auditor, and having considered the Group’s financial

position, the Audit Committee was satisfied that the

Group and the Company had adequate resources to

continue in operational existence for the foreseeable

future and confirmed to the Board that it was

appropriate for the consolidated financial statements

of the Group for FY2024/25 to be prepared on a

going concern basis; and

•

reviewed the consolidated financial statements of

the Group for FY2024/25 in conjunction with the

narrative sections of this annual report. The Audit

Committee was satisfied that, taken as a whole,

this annual report presented a balanced, clear

and comprehensible assessment of the Group’s

performance, position and prospects.

Based on the reviews and discussions referred to above,

the Audit Committee recommended to the Board the

approval of the audited consolidated financial statements

of the Group for FY2024/25 together with the related

annual results announcement and this annual report

incorporating the directors’ report and corporate

governance report.

Review of risk management and

internal control systems

The Group’s internal control system covers every activity

and transaction. Within this framework, management

performs periodic enterprise wide risk assessments and

continuously monitors and reports the progress of action

plans to address the key risks. Further information about

the risk management and internal control framework and

control processes are set out in the corporate governance

report on pages 96 to 101.

Based on the information and confirmation received from

management, external auditor and internal auditor, the

Audit Committee concluded that for FY2024/25, the

Group’s risk management and internal control systems

were adequate and effective. The Audit Committee also

confirmed that the Group had, in FY2024/25, satisfactorily

complied with the code provisions on risk management

and internal control as set forth in the Corporate

Governance Code in Appendix C1 to the Listing Rules.

Lenovo Group Limited 2024/25 Annual Report

122

Compensation

committee report

Compensation Committee

The compensation committee (the “Compensation Committee”) of the board of directors (the “Board”) of Lenovo

Group Limited (the “Company”) as of the date of this annual report is comprised of three members, all of whom are non-

executive directors of the Company (the “Non-executive Directors”) and majority of whom including the Compensation

Committee chairman are independent non-executive directors of the Company (the “Independent Non-executive

Directors”).

The members who held office as at the date of this annual report are:

More information on the skills and experience of the members of the Compensation Committee may be found in the

directors’ biographies set out on pages 144 to 147 of this annual report.

In addition to the members, regular attendees at the Compensation Committee are:

Mr. Gordon Robert

Halyburton Orr

Note

(Chairman)

Independent

Non-executive

Director

Mr. Kasper

Bo Roersted

(Member)

Independent

Non-executive

Director

Mr. Zhao John

Huan

(Member)

Non-executive

Director

Chairman

of the Board

and CEO

Vice President of

Global Rewards

Company

Secretary

Senior Vice

President of

Human Resources

Executive Director

of Executive

Compensation and

Share Plans, and

Global Mobility

Representatives

of independent

HR Consulting

Firm

Note

Mr. Gordon Robert Halyburton Orr was appointed as the chairman of the Compensation Committee with effect from February 21, 2025.

Lenovo Group Limited 2024/25 Annual Report

123

Responsibilities

The Compensation Committee is delegated by the Board with the following responsibilities:

•

establish a formal and transparent procedure for developing compensation policy for all Directors and senior

management;

•

approve the amount and forms of compensation to be provided to all Directors and senior management;

•

review and assess the performance of Chairman of the Board and Chief Executive Officer;

•

review the incentive compensation arrangements to determine whether they encourage excessive risk-taking,

and evaluate compensation policies and practices that could mitigate any such risk, and also encourage pay for

performance;

•

evaluate the need for, and provisions of severance arrangements for our senior management;

•

review and approve matters relating to the share schemes; and

•

review the recommendation from independent professional adviser on the compensation of Non-executive

Directors.

Key Features

The Compensation Committee’s terms of reference which clearly deal with its membership, authority, duties and

frequency of meetings are published on the websites of the Company and its subsidiaries (collectively, the “Group”)

and Hong Kong Exchanges and Clearing Limited.

The Compensation Committee meets with management and external independent professional adviser on a timely

basis and is provided with sufficient resources to perform its duties.

The Compensation Committee is authorised to obtain outside independent professional advice in performing its

duties at the Company’s expense.

The Compensation Committee shall ensure that no director is involved in deciding his or her own individual

compensation.

Separate executive sessions were arranged for the Compensation Committee to meet with its independent

consultant in the absence of executive director and management to discuss matters relating to any issues and any

other matters such persons would like to raise.

The chairman will report back to the Board after each of the Compensation Committee meeting regarding decisions

or recommendations.

Summary of work in FY2024/25

In the financial year ended March 31, 2025 (“FY2024/25”), the Compensation Committee held four meetings. The

attendance record of the Compensation Committee’s members is set out in the Corporate governance report on page 92.

The main matters and areas that the Compensation Committee reviewed and considered at its four meetings during the

year were as follows:

Review of company and market information

•

reviewed the overall compensation strategy;

•

reviewed and approved the peer group used for compensation benchmarking for the CEO, senior management,

and Non-executive Directors;

•

reviewed the market positioning of CEO and senior management compensation including pay levels and mix;

•

reviewed the compensation trends, remuneration practices and regulatory developments in the technology

industry;

Lenovo Group Limited 2024/25 Annual Report

124

Compensation committee report

Compensation program

•

reviewed the CEO pay and performance evaluation process;

•

reviewed and approved FY2024/25 Performance Bonus plan;

•

reviewed and approved FY2024/25 Long Term Incentive (“LTI”) plan, including key plan features such as award

vehicles, performance metrics, grant and vesting schedules, and LTI budget for the entire company;

•

reviewed and approved FY2024/25 target compensation level, and actual incentive pay-out for Chairman and CEO,

and senior management;

•

reviewed the holding power and share ownership positions of both senior management and Non-executive

Directors;

•

reviewed the analysis and recommendations from an independent consultant on FY2024/25 Non-executive

Directors’ fee arrangement;

•

reviewed Employee Stock Purchase Program;

Others

•

reviewed the Compensation Committee report for incorporating into the annual report for FY2023/24; and

•

reviewed and approved the annual agenda of the Compensation Committee for FY2024/25.

Compensation policy

Overall principles

Lenovo recognizes the importance of attracting and retaining top talent and is strongly committed to effective

corporate governance. Consistent with this philosophy, the Company has a formal, transparent and performance-driven

compensation policy covering its directors, senior management and general employees.

Lenovo’s compensation framework is designed to align with the Company’s business strategy, attract and retain top

talent, reinforce the Company’s pay-for-performance culture, as well as reflecting market practices of leading global

technology firms, particularly Lenovo’s closest competitors.

The Compensation Committee regularly reviews Lenovo’s compensation practices to ensure they adhere to the following

five core principles and objectives.

Non-executive directors

The Compensation Committee regularly reviews the compensation programs for the Non-executive Directors to

ensure its appropriateness considering the Non-executive Directors’ time commitment, workload, job requirements and

responsibilities versus Lenovo’s peer companies and the broader market. Details of the current package and the review

carried out in this financial year are set out in the section headed “Remuneration Reviews” below.

Pay for Performance

Strong linkage between

financial success, individual

performance and employee

reward

Flexibility

Adjust to diverse businesses

and talent markets

Pay competitively

within the defined

market

Reflect the unique status of

the local market where the

executive is located, so as to

enable the Company to

attract and retain talent

Balance short and

long-term focus

Drive both short- and

long-term performance of

the Company

Support effective

corporate governance

practices

Lenovo Group Limited 2024/25 Annual Report

125

LTI Program

The Group operates a LTI Program which was adopted by

the Company in 2005 and amended in 2008, 2016 and

2022 respectively. The purpose of the LTI Program is to

attract, retain, reward and motivate executive and Non-

executive Directors, senior management, consultants and

selected top-performing employees of the Group (the

“Participants”), while reinforcing direct alignment with

shareholders’ interests. Unless terminated earlier by the

Company, the LTI Program will remain active for a term of

10 years from its adoption at the shareholders’ meeting

held on July 9, 2019.

Under the LTI Program, the Company maintains two

types of equity-based compensation vehicles: (i) share

appreciation rights, and (ii) restricted share units. These

vehicles are described in more detail below.

Fixed compensation

Fixed compensation includes base salary, allowances and

benefits-in-kind (e.g. medical, dental and life insurance,

etc.). Base salary and allowances are set and reviewed

annually for each position, reflecting the executive’s

responsibility, experience, competitive market positioning

for comparable positions, as well as the Company’s

performance and individual contribution to the business.

Allowances, if any, are provided to facilitate temporary and

permanent staff relocations. Benefits-in-kind are reviewed

regularly taking into consideration relevant industry and

local market practices.

Performance bonus

The Chairman/CEO and senior management are eligible

to receive performance bonuses. These bonuses are

determined by evaluating the business performance

through selected financial and non-financial metrics which

may be measured at the Group, relevant business groups

and/or geography levels, as well as individual performance

contributions.

Chairman/CEO and senior management

To ensure Lenovo’s compensation for the Chairman/CEO and senior management reflect the policy and principles

described above, the Compensation Committee considers a number of relevant factors in the determination of their

compensation. Such factors include salary and total compensation paid by peer companies, job responsibilities and

scopes, the Company’s business performance and individual performance.

The compensation structure of Lenovo’s Chairman/CEO and senior management consists of base salaries, allowances,

performance-based bonuses, LTI, retirement benefits, and benefits-in-kind. These components and their mix are

described below.

The Chairman/CEO pay mix chart reflects FY2024/25 emoluments disclosed in note 8 to the financial statements. The

senior management pay mix chart reflects average FY2024/25 emolument including accounting cost of the LTI awards.

Chairman/CEO pay mix

Senior Management pay mix (average)

Fixed

Compensation

Performance

Bonus

LTI

Fixed

Compensation

Performance

Bonus

LTI

32%

27%

22%

46%

65%

Lenovo Group Limited 2024/25 Annual Report

126

Compensation committee report

There is no specific limit on the maximum number of SARs

and RSUs which may be granted to each Participant under

the SAR and RSU plans. The RSU program remains valid

within its term until termination by the Board. The validity

and enforceability of any awards made before the date of

termination shall not be affected by such termination.

The number of units awarded under the LTI Program

is reviewed annually, considering each individual’s

contribution to the long-term performance of the

Company, the Group’s performance, and the competitive

market positioning of Participants’ total compensation

packages. In certain circumstances, awards under the LTI

Program may be granted to support strategic new hires.

In FY2024/25, the LTI Program continues to operate

through purchasing existing shares from the market, and

the Company did not issue any new shares under the LTI

Program.

Retirement benefits

The Company operates a number of retirement schemes

for its employees, including executive directors and senior

management. These schemes are reviewed regularly and

are intended to deliver benefit levels that are consistent

with local market practices. Details of the retirement

schemes are set out in the directors’ report on pages 156 to 159.

General employees

By end of this financial year, the Group had a headcount of

approximately 72,000 worldwide.

Lenovo believes that employees are its most important

strategic resource and recognizes that each employee

must be valued as an individual and treated fairly and

equitably. Lenovo’s compensation philosophy supports

this value and targets compensation competitively within

the relevant competitive market, with significant upside

for achieving exceptional performance. Lenovo seeks to

identify and reward exceptional performance in ways that

sends clear messages about the Company’s priorities and

values.

(i)

Share Appreciation Rights (“SARs”)

SARs entitle the holders to receive the increase in

the Company’s share price above a predetermined

level. SARs are typically subject to a vesting schedule

of up to three years. Once vested, Participants will

be given up to seven years from SAR grant date to

exercise the units, subject to adjustments if they leave

the Company. The exercise price is set as the closing

share price on each grant date, and SAR value per

unit is determined based on Black Scholes valuation

model, with inputs including closing price on grant

date, share price volatility and average dividend yield

in the past three years, the expected risk-free rate

over the vesting period etc.

The Company reserves the right to settle awards

under the SAR Program in cash or in ordinary shares

at its discretion. The Company has created and

funded a trust to pay shares to eligible recipients.

(ii)

Restricted Share Units (“RSUs”)

Each RSU is equivalent to the value of one ordinary

share of the Company, and is granted to eligible

recipients at no cost. The grant price is set as the 10-

day average closing price prior to the grant date.

RSUs are typically subject to a vesting schedule of up

to three years. Once vested, each RSU is converted

to an ordinary share, or its cash equivalent. Dividends

are typically not paid on RSUs before the vesting

date.

The Company reserves the right to settle awards

under the RSU Program in cash or in ordinary shares

at its discretion. Additionally, the Company has

established and funded a trust to deliver shares to

eligible recipients.

Similar to senior management, employees at Lenovo are eligible for fixed compensation including base salary, allowances

and benefits-in-kind. Eligible employees would also receive performance bonus based on individual, business group and/

or geographies, and company performance. In addition, selected top-performing employees are eligible to participate in

the LTI Program which is delivered in RSUs.

Total

compensation

for general

employees

Fixed

compensation

Performance

bonus

Restricted

share units

Lenovo Group Limited 2024/25 Annual Report

127

FY2024/25 non-executive director fee review

In May 2024, the Compensation Committee engaged an

independent international compensation consulting firm

to conduct an analysis of the compensation package of

the non-executive directors. Following recommendations

from the independent consulting firm, the Board approved

maintaining the current fee structure for board members

with no changes.

Final recommendations as subsequently approved by the

Board (comprising executive director of the Company

only) based on the delegation from shareholders of the

Company are summarized in the table below:

Remuneration reviews

The Compensation Committee regularly reviews the

Company’s compensation programs to ensure alignment

with its stated objectives as well as competitiveness

in the talent market. Typically, reviews for base salary,

performance bonus, and LTI award are conducted on an

annual basis. Non-executive Directors’ fees are reviewed

for alignment with market practice on an annual basis as

well.

Compensation element

FY2024/25

(US$)

FY2023/24

(US$)

Cash retainer

100,000

(approximately

HK$780,000)

100,000

LTI award

240,000

(approximately

HK$1,872,000)

240,000

Total remuneration

340,000

(approximately

HK$2,652,000)

340,000

The LTI award is delivered in RSUs, which can be settled in either Lenovo shares or cash equivalent upon vesting. RSUs are subject to a three-year

vesting period and are otherwise subject to the same terms and conditions of the RSU scheme described above.

The Board also considered and approved the independent consulting firm’s recommendation on introducing retainers

for committee members and the Chairman of Nomination and Governance Committee, for recognizing non-executive

directors’ services as per below:

Compensation element

FY2024/25

(US$)

FY2023/24

(US$)

Lead Independent Director

35,000

(approximately

HK$273,000)

35,000

Chairman of Audit Committee

35,000

(approximately

HK$273,000)

35,000

Chairman of Compensation Committee

25,000

(approximately

HK$195,000)

25,000

Chairman of Nomination and Governance Committee

20,000

(approximately

HK$156,000)

nil

Member of Audit Committee

15,000

(approximately

HK$117,000)

nil

Member of Compensation Committee

15,000

(approximately

HK$117,000)

nil

Member of Nomination and Governance Committee

12,250

(approximately

HK$95,550)

nil

Lenovo Group Limited 2024/25 Annual Report

128

Compensation committee report

LTI Program

The most recent full cycle of LTI awards including both

SARs and RSUs was made in June 2024. The next cycle of

LTI awards including SARs and RSUs is expected to be in

June 2025.

Selected executives, including the Chairman/CEO and

senior management, received LTI awards based on

Company’s and individual’s performance achievement

during a 2-year performance period.

Employee Share Purchase Plan

The Company launched an employee share purchase

plan (the “Plan”) since October 2016, aim at encouraging

share ownership by the general employee. Under the

Plan, eligible employees receive one matching restricted

share unit for every four ordinary shares of the Company

purchased through qualified employee contributions. The

matching restricted share units are subject to a vesting

period of up to two years. Executive and Non-executive

Directors, as well as senior management of the Company,

are not eligible to participate in the Plan.

Same as prior years, the Plan operates by purchasing

existing shares from the market, and the Company has not

issued any new shares under this Plan.

Further details of the compensation of the Non-executive

Directors are included in note 8 to the financial statements.

SAR and RSU awards outstanding for Non-executive

Directors as of March 31, 2025 under this scheme are

presented in the “Long-Term Incentive Scheme” section of

this report.

FY2024/25 chairman/CEO and senior

management review

Fixed compensation

As a part of its annual review process, the Compensation

Committee engaged an independent international

compensation consulting firm to review base salary, and

Target Total Direct Compensation for the Chairman/CEO

and senior management in May 2024.

Based on the assessment, it is recommended to maintain

the base salary for the Chairman/CEO at RMB9,516,800

(approximately US$1,331,664) . Base salaries for selected

senior management increased by 2% on average to adjust

for role changes and market movement in respective

countries.

Performance bonus

Chairman/CEO and senior management’s FY2024/25

performance bonus pay-outs were approved at the May

2025 Compensation Committee meeting. Final bonus

pay-outs for Chairman/CEO and senior management

were determined based on overall pre-tax income, total

revenue, services and software revenue, and customer

experience delivered in FY2024/25 as well as individual

performance.

Remuneration of senior management

The remuneration of senior management fell within the following bands for the year ended March 31, 2025:

Remuneration bands

Number of senior

management

US$3,000,000 to US$6,000,000

US$6,000,001 to US$9,000,000

Lenovo Group Limited 2024/25 Annual Report

129

Emoluments of directors for FY2024/25 and five

highest paid individuals

Details of the emoluments of directors and the five highest

paid individuals are set out in note 8 to the financial

statements.

FY2024/25 employees review

Fixed compensation

Each year, management conducts a market review to

ensure fixed compensation changes are aligned and

competitive with market trends. The review incorporates

input from several external survey providers and formal

assessments of individual performance.

LTI Program

For FY2024/25, 24.4% of eligible employees received an award under the LTI Program.

Final bonus

payout

Target bonus

Performance

unit score

Individual

performance

modifier

Performance bonus

Performance bonus for general employees is based

on individual performance and performance of their

respective business unit or “Performance Groups”. For

FY2024/25, there were a total of approximately 110

different Performance Units within the Company each

with its unique performance metrics and targets, which

consist of a financial component, services and software

component and a customer experience component.

For FY2024/25 performance bonus, mid-year progress

payment was made for general employees in December

2024, and full payment based on annual business

outcomes will be trued-up in June 2025 based on

approved final bonus funding.

Lenovo Group Limited 2024/25 Annual Report

130

Compensation committee report

Long Term Incentive Program

The movements in the share awards of the Executive and Non-executive Directors during the financial year ended March

31 , 2025 are as follows:

Name

Award type

Date of grant

(mm.dd.yyyy)

Effective

price

(HK$)

Closing price

of the shares

immediately

before the date

the awards

were granted

(HK$)

The fair value

of awards at

the date of

grant

(HK$)

Weighted average

closing price of the

shares immediately

before the dates

the awards were

exercised or vested

(HK$)

Mr. Yang Yuanqing

SAR

2019

–

SAR

2020

–

SAR

2022

–

SAR

2023

–

SAR

2024

297

260

–

SAR

2024

588

672

–

RSU

2021

–

RSU

2022

–

RSU

2022

–

RSU

2023

–

RSU

2023

–

RSU

2024

445

897

RSU

2024

883

004

–

Mr. Zhu Linan

RSU

2021

–

RSU

2022

257

–

RSU

2023

003

–

RSU

2024

567

866

139

–

Mr. Zhao John Huan

SAR

2018

–

RSU

2021

–

RSU

2022

257

–

RSU

2023

003

–

RSU

2024

567

866

139

–

Mr. John Lawson

Thornton

RSU

2023

003

–

RSU

2024

567

866

139

–

Mr. Woo Chin Wan

Raymond

RSU

2021

–

RSU

2022

257

–

RSU

2023

003

–

RSU

2024

567

866

139

–

Mr. Gordon Robert

Halyburton Orr

RSU

2021

–

RSU

2022

257

–

RSU

2023

003

–

RSU

2024

567

866

139

–

Lenovo Group Limited 2024/25 Annual Report

131

Number of units

As at

April 1, 2024

(unvested)

New grant

during the

year

Vested

during the

year

Exercised

during the

year

As at

March 31, 2025

(unvested)

Total

outstanding

as at

March 31, 2025

(Note 1)

Vesting period

(mm.dd.yyyy)

–

451

149

2020

2022

–

048

055

2021

2023

705

901

–

911

776

–

794

125

705

901

2024

2026

356

097

–

290

073

–

066

024

356

097

2024

2026

–

692

871

153

681

–

539

190

692

871

2024

2026

–

729

265

–

729

265

729

265

2025

2027

862

516

–

862

516

–

2022

2024

987

562

–

987

562

987

562

2025

751

138

–

271

497

–

479

641

479

641

2024

2026

638

283

–

538

643

–

099

640

099

640

2024

2026

046

821

–

046

821

046

821

2026

–

641

094

957

085

–

684

009

684

009

2024

2026

–

548

310

–

548

310

548

310

2025

2027

602

–

602

–

2022

2024

200

713

–

100

357

–

100

356

100

356

2023

2025

234

547

–

182

–

156

365

156

365

2024

2026

–

195

060

–

195

060

195

060

2025

2027

–

125

232

–

2019

2021

602

–

602

–

2022

2024

200

713

–

100

357

–

100

356

100

356

2023

2025

234

547

–

182

–

156

365

156

365

2024

2026

–

195

060

–

195

060

195

060

2025

2027

175

911

–

637

–

117

274

117

274

2024

2026

–

195

060

–

195

060

195

060

2025

2027

602

–

602

–

2022

2024

200

713

–

100

357

–

100

356

100

356

2023

2025

234

547

–

182

–

156

365

156

365

2024

2026

–

195

060

–

195

060

195

060

2025

2027

602

–

602

–

2022

2024

200

713

–

100

356

–

100

357

100

357

2023

2025

234

547

–

182

–

156

365

156

365

2024

2026

–

195

060

–

195

060

195

060

2025

2027

Lenovo Group Limited 2024/25 Annual Report

132

Compensation committee report

Name

Award type

Date of grant

(mm.dd.yyyy)

Effective

price

(HK$)

Closing price

of the shares

immediately

before the date

the awards

were granted

(HK$)

The fair value

of awards at

the date of

grant

(HK$)

Weighted average

closing price of the

shares immediately

before the dates

the awards were

exercised or vested

(HK$)

Ms. Yang Lan

RSU

2021

–

RSU

2022

257

–

RSU

2022

094

–

RSU

2023

003

–

RSU

2023

003

–

RSU

2024

567

866

139

–

RSU

2024

567

583

166

–

Ms. Cher Wang Hsiueh

Hong

RSU

2022

–

RSU

2023

003

–

RSU

2024

567

866

139

–

Professor Xue Lan

RSU

2022

257

–

RSU

2023

003

–

RSU

2024

567

866

139

–

Mr. Kasper Bo Roersted

RSU

2024

567

332

674

–

Mr. William O. Grabe

(resigned on

February

2025

)

SAR

2017

–

SAR

2018

–

RSU

2021

–

RSU

2022

257

–

RSU

2023

003

–

RSU

2024

567

866

139

RSU (Deferral)

2024

567

262

423

RSU (Deferral)

2024

567

291

583

RSU (Deferral)

2024

240

339

191

Mr. William Tudor Brown

(resigned on

February

2025

)

RSU

2021

–

RSU

2022

257

–

RSU

2023

003

–

RSU

2024

567

866

139

Note 1:

Total outstanding number of units includes vested but unexercised SAR units, and unvested SAR units and/or unvested RSU units.

Note 2:

A distribution with respect to these RSUs shall be awarded on the first business day of the quarter following the earlier of the date of cessation of

directorship with the Company and an unforeseeable emergency.

Note 3: Exercise period for SARs is seven years from the date of grant.

Note 4: No units were lapsed/nullified and cancelled during the period.

Long Term Incentive Program

(continued)

Lenovo Group Limited 2024/25 Annual Report

133

Number of units

As at

April 1, 2024

(unvested)

New grant

during the

year

Vested

during the

year

Exercised

during the

year

As at

March 31, 2025

(unvested)

Total

outstanding

as at

March 31, 2025

(Note 1)

Vesting period

(mm.dd.yyyy)

602

–

602

–

2022

2024

200

713

–

100

357

–

100

356

100

356

2023

2025

407

–

203

–

204

2023

2025

234

547

–

182

–

156

365

156

365

2024

2026

296

–

432

–

864

2024

2026

–

195

060

–

195

060

195

060

2025

2027

–

956

–

956

2025

2027

198

469

–

234

–

235

2023

2025

234

547

–

182

–

156

365

156

365

2024

2026

–

195

060

–

195

060

195

060

2025

2027

200

713

–

100

357

–

100

356

100

356

2023

2025

234

547

–

182

–

156

365

156

365

2024

2026

–

195

060

–

195

060

195

060

2025

2027

–

243

825

–

243

825

243

825

2025

2027

–

955

316

–

2018

2020

–

125

232

2019

2021

602

–

602

–

2022

2024

200

713

–

200

713

–

2023

2025

234

547

–

234

547

–

2024

2026

–

195

060

195

060

–

2025

2027

–

430

–

Note

–

478

–

Note

–

709

–

Note

602

–

602

–

2022

2024

200

713

–

200

713

–

2023

2025

234

547

–

234

547

–

2024

2026

–

195

060

195

060

–

2025

2027

Lenovo Group Limited 2024/25 Annual Report

134

Compensation committee report

Name

Award type

Financial year of

award grant date

Effective

price

(HK$)

Closing price

of the shares

immediately

before the date

the awards were

granted

(HK$)

The fair value of

awards at the

date of grant

(HK$)

Weighted average

closing price of the

shares immediately

before the dates

the awards were

exercised or vested

(HK$)

Five highest paid individuals

(excluding one director, who is

the CEO of the Company)

SAR

044

301

RSU

155

698

175

Other executives and selected

employees

SAR

176

885

690

RSU

841

490

228

Other eligible participants

SAR

562

531

RSU

079

462

Note 1:

Vesting period for SARs and RSUs is between the first and the third anniversary of the grant date.

Note 2:

Exercise period for SARs is seven years from the date of grant.

Note 3:

SARs and RSUs granted in FY24/25 are calculated based on a 2-year performance period (FY22/23 and FY23/24).

Long Term Incentive Program

(continued)

The movements in the share awards of other eligible participants during the year ended March 31, 2025 are as follows:

Lenovo Group Limited 2024/25 Annual Report

135

Number of units

As at

April 1, 2024

(unvested)

New grant

during the

period

Vested

during the

period

Exercised

during the

period

Lapsed/nullified

during the

period

Cancelled

during the

period

As at

March 31, 2025

(unvested)

000

377

497

377

497

835

106

267

905

860

043

567

201

905

993

610

770

970

519

295

223

766

486

232

199

534

287

669

894

669

894

126

017

100

685

025

332

305

311

510

852

794

459

172

256

725

602

446

654

476

649

346

264

556

648

308

565

476

813

747

800

473

431

947

466

274

369

372

202

929

631

464

482

442

571

948

534

376

887

538

921

571

647

749

534

835

543

993

839

913

991

404

092

403

764

328

100

582

382

443

156

505

073

721

210

176

031

119

907

163

824

177

044

165

297

523

712

262

450

208

161

135

053

254

531

183

879

008

555

446

643

329

231

329

231

569

543

174

586

688

284

418

404

299

446

563

544

227

725

653

195

956

346

627

951

433

940

753

645

095

684

538

796

722

617

551

159

225

478

590

701

896

734

615

171

281

563

543

202

422

455

067

121

053

626

187

197

243

288

899

243

044

666

132

541

742

227

793

311

597

003

Lenovo Group Limited 2024/25 Annual Report

136

Compensation committee report

Claw back policy

Lenovo maintains a claw back policy for selected

executives, including the Chairman/CEO and senior

management. The policy states that in the event of a

restatement of the Company’s previously issued financial

statements as a result of errors, omission, fraud or non-

compliance, the Board may, in its discretion, attempt to

recover all or a portion of compensation, with respect to

any financial year in which the Company’s financial results

are negatively affected by such restatement.

Other shareholder oriented

features

Stock ownership guidelines

Lenovo maintains stock ownership guidelines for selected

executives, including the Chairman/CEO and senior

management. The guidelines help to align executives

with shareholders and focus executives on the long-term

performance of Lenovo by requiring certain levels of

share ownership. The guidelines (expressed as a multiple

of base salary) vary by role and level and are expected

to be achieved within five years of becoming an eligible

executive. If the guidelines are not achieved, executives

are required to retain a minimum portion of vested

shares delivered through Lenovo’s incentive plans until

the guidelines are met. The guidelines are then expected

to be maintained throughout the executives’ remaining

employment. As of the financial year end, 82% of senior

management met the target ownership level. After the

June 2025 LTI grant, this will rise to 92%, with only one

executive still in the 5-year ownership buildup period.

Additionally, the Non-executive Directors are subject to

similar guidelines, seven of them are in full compliance,

and the rest are still within the 5-year share ownership

guidelines building up period.

Lenovo Group Limited 2024/25 Annual Report

137

Directors’ report

138

Independent auditor’s report

166

Consolidated income statement

171

Consolidated statement of comprehensive income

172

Consolidated balance sheet

173

Consolidated cash flow statement

175

Consolidated statement of changes in equity

177

Notes to the financial statements

179

Five-year financial summary

267

Corporate information

268

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

138

The directors of Lenovo Group Limited (the “Company”) submit their report together with the audited consolidated

financial statements of the Company and its subsidiaries (collectively the “Group”) for the year ended March 31, 2025.

Principal business and geographical analysis of operations

The principal activity of the Company is investment holding. The activities of its principal subsidiaries are set out in note

36 to the financial statements.

Details of the analyses of the Group’s performance for the year by operating segment are set out in note 3 to the

financial statements.

Business review

A discussion and analysis of the activities as required by Schedule 5 to the Companies Ordinance (Chapter 622 of the

Laws of Hong Kong), including a fair review of the business and a discussion of the principal risks and uncertainties

facing the Group, particulars of important events affecting the Group that have occurred since the end of the financial

year 2024, and an indication of likely future development in the Group’s business, can be found in the “Five-year financial

summary”, “Chairman & CEO statement” and “Management’s discussion & analysis” sections of this annual report. These

discussions form part of this directors’ report.

Results and appropriations

The results of the Group for the year are set out in the consolidated income statement on page 171 of this annual report.

The state of affairs of the Group and of the Company as at March 31, 2025 is set out in the consolidated balance sheet on

pages 173 and 174 of this annual report and the balance sheet of the Company in note 35(a) to the financial statements

respectively.

The cash flows of the Group for the year are set out in the consolidated cash flow statement on pages 175 and 176 of this

annual report.

An interim dividend of HK8.5 cents (2024: HK8.0 cents) per ordinary share of the Company (“Share”), amounting to a

total of approximately US$135.5 million (2024: approximately US$124.3 million), was paid to shareholders during the year.

The Board has resolved to recommend the payment of a final dividend of HK30.5 cents per Share for the year ended

March 31, 2025 (2024: HK30.0 cents). Subject to shareholders’ approval at the forthcoming annual general meeting of

the Company to be held on July 17, 2025 (“AGM”), the proposed final dividend will be payable on August 13, 2025 to the

shareholders whose names appear on the register of members of the Company on or about August 1, 2025.

For the purposes of determining shareholders’ eligibility to attend and vote at the AGM, and entitlement to the proposed

final dividend, the register of members of the Company will be closed. Details of such closures are set out below:

(i)

For determining shareholders’ eligibility to attend and vote at the AGM:

Latest time to lodge transfer documents for registration

4:30 p.m. on July 10, 2025

Closure of register of members

From July 11 to July 17, 2025

Record date

July 11, 2025

(ii)

For determining shareholders’ entitlement to the proposed final dividend:

Latest time to lodge transfer documents for registration

4:30 p.m. on July 31, 2025

Closure of register of members

August 1, 2025

Record date

August 1, 2025

During the above closure periods, no transfer of Shares will be registered. To be eligible to attend and vote at the AGM,

and to qualify for the proposed final dividend, all properly completed transfer documents accompanied by the relevant

share certificates must be lodged for registration with the Company’s share registrar, Tricor Investor Services Limited, at 17/F,

Far East Finance Centre, 16 Harcourt Road, Hong Kong not later than the aforementioned latest times.

Lenovo Group Limited 2024/25 Annual Report

139

Five-year financial summary

A summary of the results for the year and of the assets and liabilities of the Group as at March 31, 2025 and for the last

four financial years are set out on page 267 of this annual report.

Distributable reserves

As at March 31, 2025, the distributable reserves of the Company amounted to US$1,747,166,000 (2024: US$1,784,540,000).

Bank borrowings

Particulars of bank borrowings as at March 31, 2025 are set out in note 24 to the financial statements.

Donations

Charitable and other donations made by the Group during the year amounted to US$11,942,000 (2024: US$11,410,000).

Share capital

Details of movement of share capital of the Company during the year are set out in note 28 to the financial statements.

Convertible bonds

On August 26, 2022, the Company issued US$675,000,000 2.50% convertible bonds due 2029 (the “2029 Convertible

Bonds”), which are listed on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), to professional

investors. The market price of the Shares on August 18, 2022, being the closing price of the Shares on the date on which

the terms of the 2029 Convertible Bonds were determined, was HK$6.99 per Share. The 2029 Convertible Bonds,

assuming full conversion at the adjusted conversion price of HK$8.95 per Share, are convertible into 591,171,787 Shares

(the “2029 Conversion Shares”), representing (i) approximately 4.77% of the issued share capital of the Company as at

March 31, 2025; and (ii) approximately 4.55% of the issued share capital of the Company, as enlarged by the issuance of

the 2029 Conversion Shares (assuming there will be no other changes in the share capital of the Company). As at March

31, 2025, the total outstanding principal amount of the 2029 Convertible Bonds was US$675,000,000.

Please refer to note 24 to the financial statements and the announcements of the Company dated August 17, 2022,

August 18, 2022, August 26, 2022, August 29, 2022 and January 8, 2025 for further details about the 2029 Convertible

Bonds.

On January 8, 2025, the Company issued US$2,000,000,000 zero coupon convertible bonds due 2028 to Alat

International Investments Company (“Alat”), a wholly-owned subsidiary of Alat Technologies Company (the “Alat

Convertible Bonds”). The market price of the Shares on May 27, 2024, being the closing price of the Shares on the

trading day immediately prior to the date of the bond subscription agreement, was HK$12.04 per Share. The issuance of

the Alat Convertible Bonds is part of the strategic collaboration, where the Company can facilitate refinancing activities

and generate stable interest savings annually, while also greatly enhancing the Company’s financial and operational

flexibility and speed to market. The gross proceeds from the issuance were US$2,000,000,000, which have been and

will be used for debt refinancing and general working capital usage. US$965 million was utilized as at March 31, 2025 and

US$1,035 million remains unutilized. The balance is expected to be fully utilized by 2026. The Alat Convertible Bonds,

assuming full conversion at the adjusted conversion price of HK$10.02 per Share, are convertible into 1,559,181,636 Shares

(the “Alat Conversion Shares”), representing (i) approximately 12.57% of the issued share capital of the Company as at

March 31, 2025; and (ii) approximately 11.17% of the issued share capital of the Company, as enlarged by the issuance of

the Alat Conversion Shares (assuming there will be no other changes in the share capital of the Company). As at March

31, 2025, the total outstanding principal amount of the Alat Convertible Bonds was US$2,000,000,000. Pursuant to the

terms and conditions of the Alat Convertible Bonds, the Alat Convertible Bonds can only be converted into Shares upon

maturity and can only be redeemed prior to maturity upon occurrence of certain redemption events.

Please refer to note 24 to the financial statements and the announcements of the Company dated May 29, 2024 and January 8,

2025 and the Company’s circular dated August 19, 2024 for further details about the Alat Convertible Bonds and the

reasons and benefits for the issuance.

There had not been any conversion of the 2029 Convertible Bonds and the Alat Convertible Bonds, and no redemption

right had been exercised by the Company in respect of the 2029 Convertible Bonds and the Alat Convertible Bonds for

the financial year ended March 31, 2025.

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

140

Convertible bonds

(continued)

Assuming the 2029 Convertible Bonds and the Alat Convertible Bonds were fully converted on March 31, 2025, the

shareholding of the Company immediately before and after the full conversion of the 2029 Convertible Bonds and the

Alat Convertible Bonds are set out below for illustration purposes:

Shareholders

Shareholding immediately before

conversion of any of the 2029

Convertible Bonds and the Alat

Convertible Bonds

Upon full conversion of the 2029

Convertible Bonds at the adjusted

conversion price

Upon full conversion of the Alat

Convertible Bonds at the adjusted

conversion price

Number of

Approximate

% of the total

issued share

capital

Number of

Approximate

% of the total

issued share

capital

Number of

Approximate

% of the total

issued share

capital

Legend Holdings Corporation

(1)

2,867,636,724

23.12%

2,867,636,724

22.07%

2,867,636,724

20.54%

Legion Elite Limited

(2)

480,000,000

3.87%

480,000,000

3.69%

480,000,000

3.44%

Kind Jasper Limited

(3)

548,263,805

4.42%

548,263,805

4.22%

548,263,805

3.93%

Directors of the Company

(4)

749,873,830

6.05%

749,873,830

5.77%

749,873,830

5.37%

Subscribers of the 2029

Convertible Bonds

–

591,171,787

4.55%

–

Alat

–

1,559,181,636

11.17%

Other public shareholders

7,758,884,943

62.54%

7,758,884,943

59.70%

7,758,884,943

55.56%

Total

12,404,659,302

100.00%

12,995,831,089

100.00%

13,963,840,938

100.00%

Notes:

(1)

Legend Holdings Corporation (“Legend Holdings”), a joint-stock company incorporated with limited liability in the People’s Republic of China and the

H shares of which are listed on the Stock Exchange (stock code: 03396).

(2)

Legion Elite Limited (“Legion Elite”), a company incorporated in the British Virgin Islands and a wholly owned subsidiary of Right Lane Limited (“Right

Lane”). Right Lane is a company incorporated in Hong Kong with limited liability and a wholly owned subsidiary of Legend Holdings.

(3)

Kind Jasper Limited (“Kind Jasper”), a company incorporated in the British Virgin Islands and a wholly owned subsidiary of Right Lane.

(4)

Include the corporate interest of directors but without taking into account of the interests in the underlying Shares.

Based on the cash and cash equivalents as at March 31, 2025 and the cash flow from operating activities of the

Company, the Company has the ability to meet its redemption obligation under the 2029 Convertible Bonds and the

Alat Convertible Bonds.

The analysis of the Company’s share price at which it would be equally financially advantageous for the relevant

bondholders to convert the 2029 Convertible Bonds and the Alat Convertible Bonds based on their implied rate of

return at a range of dates in the future are as follows:

2029 Convertible Bonds

Conversion date

Company’s

share price

Implied rate

of return of

bondholders

HK$

September 30, 2025

8.22

March 31, 2026

8.31

Lenovo Group Limited 2024/25 Annual Report

141

Convertible bonds

(continued)

Alat Convertible Bonds

Subject to the terms and conditions of the Alat Convertible Bonds, it would be equally financially advantageous for the

bondholder of Alat Convertible Bonds to convert or redeem the convertible securities thereunder based on the implied

internal rate of return thereof, when the Company’s share price approximates to the conversion price in the future.

Warrants

On January 8, 2025, the Company issued 1,150,000,000 warrants (the “Warrants”) at the issue price of HK$1.43 per

Warrant to Sureinvest Holdings Limited (“Sureinvest”), an entity wholly owned by Mr. Yang Yuanqing (a connected

person of the Company), Wisdom Summit Limited, the investment holding vehicle for certain management members

of the Company (which include connected persons of the Company at subsidiary level), as well as certain independent

professional investors. The market price of the Shares on May 27, 2024, being the closing price of the Shares on the

trading day immediately prior to May 28, 2024 (being the date on which the Board approved the indicative principal

terms of the Warrants), was HK$12.04 per Share. The issuance of the Warrants is part of the strategic collaboration,

where it supports the strategic initiatives of the Company. The gross proceeds from the issuance were HK$1,645 million

(approximately US$212 million), which will be used for business expansion in the Middle East and Africa region. None

of the proceeds was utilized as at March 31, 2025 and it is expected that the proceeds will be fully utilized by 2026 for

business expansion in the Middle East and Africa region. Assuming the full exercise of the Warrants at the initial exercise

price of HK$12.31 per Share, it would provide the Company with up to an additional capital of approximately US$1.8

billion to further strengthen its equity base. The Company aims to use 40% of the proceeds for further expansion of the

Company’s operation (including future potential acquisition opportunities), 50% of proceeds for investment in research

and development and artificial intelligence and 10% of the proceeds for general working capital purposes to meet daily

operational business needs, such as supply chain investments.

Assuming the full exercise of the Warrants at the initial exercise price of HK$12.31 per Share, it will result in the issue of 1,150,000,000

Shares (the “Warrant Shares”), representing (i) approximately 9.27% of the issued share capital of the Company as at

March 31, 2025; and (ii) approximately 8.48% of the issued share capital of the Company, as enlarged by the issuance of

the Warrant Shares (assuming there will be no other changes in the share capital of the Company).

Please refer to note 25 to the financial statements and the announcements of the Company dated May 29, 2024, July 15,

2024 and January 8, 2025 and the Company’s circular dated August 19, 2024 for further details about the Warrants and

the reasons and benefits for the issuance.

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

142

Debentures

Save as disclosed, there had not been any issuance, purchase, redemption or cancellation of debentures by the

Company during the year ended March 31, 2025.

Equity-linked agreements

No equity-linked agreements were entered into during the year, save for the long-term incentive program described in

this report.

Subsidiaries, associates and joint ventures

Particulars of the Company’s principal subsidiaries, associates and joint ventures as at March 31, 2025 are set out in notes

36 and 15 to the financial statements respectively.

Management contracts

No contracts concerning the management and administration of the whole or any substantial part of the business of the

Company were entered into or existed during the year.

Major customers and suppliers

During the year, the Group sold less than 26% of its goods and services to its five largest customers. The percentages of

purchases for the year attributable to the Group’s major suppliers are as follows:

The largest supplier

13%

Five largest suppliers combined

37%

None of the directors of the Company, their close associates or any shareholder (which to the knowledge of the directors

own more than 5% of the number of issued shares of the Company) had an interest in the major suppliers noted above.

Purchase, sale or redemption of the company’s listed securities

Save as disclosed above and the respective trustee of the long-term incentive program and the employee share

purchase plan of the Company purchased a total of 203,502,684 Shares from the market for award to employees upon

vesting, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed

securities during the year ended March 31, 2025. Details of these program and plan are set out under sections headed

“LTI Program” and “Employee Share Purchase Plan” in the Compensation committee report on page 125 and page 128

respectively of this annual report.

Lenovo Group Limited 2024/25 Annual Report

143

Directors

The directors during the year and up to the date of this report are:

Chairman and executive director

Mr. Yang Yuanqing

Non-executive directors

Mr. Zhu Linan

Mr. Zhao John Huan

Mr. Wong Wai Ming (appointed with effect from April 1, 2025)

Ms. Laura Green Quatela (appointed with effect from April 1, 2025)

Independent non-executive directors

Mr. John Lawson Thornton

Mr. Gordon Robert Halyburton Orr

Mr. Woo Chin Wan Raymond

Ms. Yang Lan

Ms. Cher Wang Hsiueh Hong

Professor Xue Lan

Mr. Kasper Bo Roersted (alias Kasper Bo Rorsted)

Mr. William O. Grabe (resigned on February 21, 2025)

Mr. William Tudor Brown (resigned on February 21, 2025)

In accordance with article 95 of the Company’s articles of association, Mr. Wong Wai Ming and Ms. Laura Green Quatela

who were appointed as directors during the year, shall hold office until the forthcoming AGM and, being eligible, offer

themselves for re-election.

In accordance with article 107 of the Company’s articles of association, Mr. Yang Yuanqing, Mr. Zhu Linan, Mr. Woo Chin

Wan Raymond and Ms. Yang Lan will retire by rotation at the AGM and, being eligible, offer themselves for re-election.

The Company has received from each of the independent non-executive directors an annual confirmation of their

independence having regard to the criteria under rule 3.13 of the Rules Governing the Listing of Securities on the

Stock Exchange (the “Listing Rules”). The nomination and governance committee of the Company has duly reviewed

the independence of each of these directors. The Company has determined and confirmed that all independent

non-executive directors satisfied the independence requirement set out in rule 3.13 of the Listing Rules and remain

independent.

The list of directors who have served on the boards of directors of the subsidiaries of the Company during the year

ended March 31, 2025 or during the period from April 1, 2025 to the date of this report is available on the Group’s website

(https://investor.lenovo.com/en/publications/list_directors.php).

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

144

Biography of directors and senior management

Honorary Chairman

Mr. Liu Chuanzhi

, 81, has been the Honorary Chairman and Senior Advisor of the Company since November 3, 2011.

Mr. Liu is the founder of the Group and held the positions of executive director, non-executive director and chairman

of the Board at different times from 1993 until his resignation from the Board on November 3, 2011. As our Honorary

Chairman, Mr. Liu is not a director or an officer of the Company or of any subsidiary of the Company, and does not have

any management role in the Company or any of its subsidiaries. He graduated from the Radar Navigation Department of

People’s Liberation Army Institute of Telecommunication Engineering (

中國人民解放軍軍事電信工程學院雷達導航系

) (now

known as Xidian University) in China in 1966 and has substantial experiences in corporate management.

Biography of directors

Chairman and executive director

Mr. Yang Yuanqing

, 60, is the Chairman of the Board, Chief Executive Officer and an executive director of the Company.

He is also a director and a shareholder of Sureinvest which holds interests in the issued Shares of the Company. Mr. Yang

assumed the duties of Chief Executive Officer of the Company on February 5, 2009. Prior to that, he was the chairman

of the Board from April 30, 2005. Before taking up the office as chairman, Mr. Yang was the chief executive officer and

has been an executive director of the Company since December 16, 1997.

Mr. Yang has more than 30 years of experience in the field of ICT industry. Under his leadership, Lenovo has become not

only a leading global PC company, but also built diversified growth engines including servers, storage, smartphones, as

well as digital and intelligent solutions and services. Mr. Yang holds a Master’s degree from the Department of Computer

Science at the University of Science and Technology of China, and a Bachelor’s degree in Computer Science and

Engineering from Shanghai Jiao Tong University. Mr. Yang is currently an independent director of Baidu, Inc. (NASDAQ

and HKSE listed) and was an independent director of Taikang Insurance Group Inc.

Non-executive directors

Mr. Zhu Linan

, 62, has been a non-executive director of the Company since April 30, 2005. Mr. Zhu graduated with

a master’s degree in electronic engineering from Shanghai Jiao Tong University and has more than 20 years of

management experience. He was previously a senior vice president of the Group. Mr. Zhu has been re-designated as a

non-executive director of Legend Holdings (HKSE listed), a company holding substantial interests in the issued Shares of

the Company, with effect from January 1, 2020 and prior to that, he was executive director, president and member of the

executive committee of Legend Holdings.

Mr. Zhao John Huan

, 62, has been a non-executive director of the Company since November 3, 2011. Mr. Zhao holds a

master’s degree in business administration from the Kellogg School of Management at Northwestern University, dual

master’s degrees in electric engineering and physics from Northern Illinois University and a bachelor’s degree in physics

from Nanjing University. He has been re-designated as a non-executive director of Legend Holdings (HKSE listed), a

company holding substantial interests in the issued Shares of the Company, with effect from January 1, 2020 and prior to

that, he was an executive director, executive vice president and member of executive committee of Legend Holdings. He

is also the chairman of Hony Capital Limited.

In addition, Mr. Zhao currently holds the following positions: the chairman of the board and executive director of Best

Food Holding Company Limited and Goldstream Investment Limited

金涌投資有限公司

(formerly known as “International

Elite Ltd.”) and the chairman of the board and non-executive director of Hony Media Group (formerly known as “Huayi

Tencent Entertainment Company Limited”) (all HKSE listed).

Mr. Zhao was previously a non-executive director of Zoomlion Heavy Industry Science and Technology Co., Ltd.

中聯重

科股份有限公司

(HKSE and Shenzhen Stock Exchange listed), Eros STX Global Corporation (New York Stock Exchange

“NYSE” listed), Shanghai Jin Jiang International Hotels Company Limited

上海錦江國際酒店股份有限公司

(Shanghai

Stock Exchange listed), ENN Natural Gas Co., Ltd.

新奧天然氣股份有限公司

(Shanghai Stock Exchange listed), Simcere

Pharmaceutical Group Limited, and China Glass Holdings Limited (both HKSE listed).

Lenovo Group Limited 2024/25 Annual Report

145

Biography of directors and senior management

(continued)

Biography of directors

(continued)

Non-executive directors

(continued)

Mr. Wong Wai Ming

, 67, has been a non-executive director of the Company since April 1, 2025. He was an Executive

Vice President and the chief financial officer of the Group and retired from the roles with effect from March 31, 2025,

after serving the Group as chief financial officer for over 17 years. He was a member of certain internal committees of

the Group and a director of certain subsidiaries of the Company prior to the appointment as a non-executive director

of the Company. Currently, Mr. Wong is the deputy chairman of the supervisory board of Medion AG (a subsidiary of

the Company and delisted from Frankfurt Stock Exchange in January 2025) and a director of Sureinvest which holds

interest in the issued Shares of the Company. Mr. Wong was an independent non-executive director of the Company

from March 30, 1999 to May 23, 2007, prior to his appointment as the chief financial officer of the Group on July 15, 2007.

Prior to joining the Group, he was an investment banker for more than 15 years and also held various senior management

positions in listed companies in Hong Kong, including his appointment as an independent non-executive director of

China Unicom (Hong Kong) Limited from January 19, 2006 to April 10, 2024. Mr. Wong obtained a bachelor’s degree in

management sciences from the Victoria University of Manchester in the United Kingdom. He is a member of the Hong

Kong Institute of Certified Public Accountants and the Institute of Chartered Accountants in England and Wales.

Ms. Laura Green Quatela

, 67, has been a non-executive director of the Company since April 1, 2025. She was a Senior

Vice President and Chief Legal Officer (subsequently re-designated as Chief Legal and Corporate Responsibility Officer

in January 2023) of the Group since October 2016 and has retired from the roles with effect from March 31, 2025. Ms.

Quatela was responsible for the Group’s legal, IP, government relations and ESG (environmental, social and governance)

matters globally. She was a member of certain internal committees of the Group and a director of subsidiary(ies) of the

Company.

Before joining the Group, Ms. Quatela had a 15-year career with Eastman Kodak Company (“Kodak”) holding a broad

range of leadership positions including Chief Intellectual Property Officer, General Counsel, Senior Vice President, Co-

Chief Operating Officer and President of the company. She had responsibility for licensing Kodak’s technology, patents

and trademarks and leading Kodak’s consumer film, photographic paper, retail photo kiosk, event imaging and OLED

businesses. Prior to joining Kodak, Ms. Quatela worked for Clover Capital Management, Inc., SASIB Railway GRS, and

Bausch & Lomb. In private law practice, she was a defense litigator specializing in mass tort cases. Ms. Quatela is a

graduate of Denison University, B.A., International Politics and Case Western Reserve University School of Law, J.D.,

where she was inducted into the Society of Benchers. The Financial Times named her among the Top 20 GCs in the

World in June 2021. In November 2021, she was inducted into the IP Hall of Fame as a joint winner of IAM’s Inaugural Q.

Todd Dickinson Award. She is on the Board of Trustees/Governors of Case Western Reserve University and Genesee

Valley Club. Ms. Quatela is conversant in Mandarin.

Independent non-executive directors

Mr. John Lawson Thornton

, 71, was appointed as an independent non-executive director of the Company on August

18, 2023 and was appointed as the lead independent director of the Company on February 21, 2025. Mr. Thornton is

currently the chairman of Barrick Gold Corporation (Toronto Stock Exchange and NYSE listed). He is also the lead

independent director of Ford Motor Company (New York Stock Exchange listed).

Mr. Thornton is chairman of RedBird Capital Partners, a private investment firm, and non-executive chairman of

PineBridge Investments, a global asset manager. Mr. Thornton is also the lead director of both Divergent Technologies

Inc., a digital advanced manufacturing company, and Avathon, Inc., an industrial artificial intelligence company.

Mr. Thornton is a professor and director of Tsinghua University’s Global Leadership Program, and an advisory board

member of Tsinghua’s School of Economics and Management and its School of Public Policy and Management. Mr.

Thornton is co-chair of the Asia Society, chairman emeritus of the Brookings Institution in Washington, D.C., and is also

on the advisory boards or board of trustees of the China Investment Corporation (CIC), China Securities Regulatory

Commission, King Abdullah University of Science and Technology, McKinsey Advisory Council, Schwarzman Scholars,

and the African Leadership Academy.

Mr. Thornton joined Goldman Sachs in 1980 and retired as president and director of The Goldman Sachs Group, Inc.

in 2003. He also previously served as chairman of Goldman Sachs Asia and as co-chief executive of Goldman Sachs

International, overseeing the firm’s business in Europe, the Middle East, and Africa. Mr. Thornton was a director of AltC

Acquisition Corp. (currently known as “Oklo Inc.”) (NYSE listed).

Mr. Thornton holds a Bachelor of Arts in history from Harvard College, a Bachelor of Arts and Master of Arts in

jurisprudence from Oxford University and a Master’s degree in public and private management from the Yale School of

Management.

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

146

Biography of directors and senior management

(continued)

Biography of directors

(continued)

Independent non-executive directors

(continued)

Mr. Gordon Robert Halyburton Orr

, 62, was re-designated as an independent non-executive director of the Company

on September 1, 2016. Prior to that, he was a non-executive director of the Company since September 2015. He holds

a Master of Arts degree in Engineering Science from Oxford University, United Kingdom and a Master of Business

Administration degree from Harvard University.

Mr. Orr joined McKinsey & Company (“McKinsey”) in 1986 and held a broad range of senior positions in McKinsey until his

retirement in August 2015. During the years with McKinsey, he was Greater China Managing Partner and subsequently

Senior Partner (1999-2015), Managing Partner of McKinsey Asia (2008-2014) and Member of McKinsey’s global

Operating Committee (2008-2015). He also served on McKinsey’s Global Shareholder’s Board (2003-2015) and chaired

the Governance and Risk Committee.

In the past 20 years, Mr. Orr has served a broad range of clients in Asia, with primary focus on China and technology

related sectors across Asia. Mr. Orr is currently an independent non-executive director of Swire Pacific Limited and Meituan (formerly

known as “Meituan Dianping”) (both HKSE listed) and a non-executive director of Fidelity China Special Situations PLC

(London Stock Exchange “LSE” listed). He is also the chairman of the audit committee and a member of the corporate

governance committee of Meituan. Mr. Orr currently is a board member of EQT AB (listed on the Nasdaq Stockholm).

He was previously a vice chairman of the China-Britain Business Council and an independent non-executive director of

Sondrel (Holdings) plc (LSE listed).

Mr. Woo Chin Wan Raymond

, 70, has been an independent non-executive director of the Company since February 22,

2019. Mr. Woo is a retired partner of Ernst & Young (“EY”). Before his retirement in June 2015, he had held various senior

positions with EY in the Greater China area. He was a director and the general manager of EY Hua Ming CPA, a member

of EY’s Greater China Leadership Team, and the managing partner of EY’s Greater China Operations. He has more than

30 years of professional experience, specializing in audit, corporate restructuring, IPO, risk management, and mergers

and acquisitions. Mr. Woo is a Hong Kong Certified Public Accountant. He obtained his master’s degree in Business

Administration from York University (Canada) in 1982. Mr. Woo was previously an independent non-executive director of

Bank of Communications Co., Ltd. (HKSE listed).

Ms. Yang Lan

, 57, has been an independent non-executive director of the Company since May 15, 2020. Ms. Yang is

currently a broadcast journalist and media entrepreneur with more than 30 years’ experience in the industry. She is

the chairperson of Sun Media Group and Sun Future Art Education Foundation. Sun Media Group is a leading media

company with synthetic communication and marketing capabilities. Its business spans across media, education, art,

tourism, exhibitions, and more. The group is highly regarded in the industry for its high-quality content, women’s

empowerment and lifestyle communities, as well as branding services to business and cities. It has played a significant

role in facilitating cultural exchanges between China and the world and the promotion of sustainable development. Sun

Future Art Education Foundation is a non-profit organization aiming to promote the development of children’s aesthetic

education. Ms. Yang obtained her bachelor’s degree in English Language & Literature from Beijing Foreign Studies

University, China in 1990 and her master’s degree in International Affairs from Columbia University, the United States of

America in 1996.

Prior to that, she was a creator, executive producer and anchor of talk show series “Yang Lan Studio” (now known as “Yang

Lan One on One”) which has become China’s longest-running in-depth talk show with more than 1,200 interviews with

movers and shapers around the world. Ms. Yang has in-depth researches, delivered documentary series and published

a book on Artificial Intelligence. She is currently a global ambassador and international board member for the Special

Olympics Movement. She served as the presenter for Beijing’s bid for both the 2008 Olympic Games and 2022 Olympic

Winter Games and the Goodwill Ambassador for 2010 Shanghai Expo. She was the Vice-Chairman of China Charity

Alliance from 2013 to 2024. Ms. Yang was ranked among The World’s 100 Most Powerful Women by Forbes.

Lenovo Group Limited 2024/25 Annual Report

147

Biography of directors and senior management

(continued)

Biography of directors

(continued)

Independent non-executive directors

(continued)

Ms. Cher Wang Hsiueh Hong

, 66, has been an independent non-executive director of the Company since June 20, 2022.

Ms. Wang is the co-founder and chairwoman of HTC Corporation

宏達國際電子股份有限公司

(Taiwan Stock Exchange

listed) and has established a number of successful Information & Communication Technology related businesses, with

over 40 years’ experience in the industry. Ms. Wang obtained her bachelor’s degree in Political Economy of Industrial

Societies at the University of California, Berkeley in 1982.

Ms. Wang co-founded HTC Corporation in 1997, which pioneered the smartphone market and was first to market with

key technologies such as the touch interface, Android integration and wireless technologies, and has expanded its vision

to include cutting-edge experiences like virtual reality with the HTC VIVE systems, advanced 5G platforms and the

VIVERSE immersive internet. Ms. Wang also founded VIA Technologies, Inc.

威盛電子股份有限公司

in 1992 (Taiwan Stock

Exchange listed), a leading developer of computing platforms connecting businesses to advanced Artificial Intelligence

(AI), Internet of Things (IoT), and computer vision technology for transportation, industrial, smart city, and data center

applications. She was chairwoman and is currently a director of VIA Technologies, Inc.. Prior to these, Ms. Wang was

the general manager of the PC division at First International Computer, Inc.,

大眾電腦股份有限公司

and helped drive the

business unit into the lucrative motherboard market.

Ms. Wang is currently a director of Formosa Plastics Corporation

台灣塑膠工業股份有限公司

, Xander International

Corporation

建達國際股份有限公司

, VIA Labs, Inc.

威鋒電子股份有限公司

and VIA Technologies, Inc.

威盛電子股份有限公司

(all

Taiwan Stock Exchange listed).

Professor Xue Lan

, 65, has been an independent non-executive director of the Company since June 20, 2022. Prof. Xue

is currently a professor at Tsinghua University, with teaching and research interests in Public Policy and Management,

Science and Technology Policy, Crisis Management and Global Governance. He is the Dean of Schwarzman College

and the Dean of Institute for AI International Governance (I-AIIG) of Tsinghua University. He also serves as a director of

China Institute for Science and Technology Policy, and a co-director of Global Institute for Sustainable Development

Goals at Tsinghua University. He is a co-convener of the Discipline Evaluation Group (Public Administration) of the

Academic Degrees Committee of the State Council. He is also an Adjunct Professor of Engineering and Public Policy at

Carnegie Mellon University, a non-resident Senior Fellow of the Brookings Institution, a board member of the Sustainable

Development Solutions Network (SDSN) Association, and a member of the United Nations Committee of Experts on

Public Administration (CEPA).

Prof. Xue is currently an independent non-executive director of SenseTime Group Inc. (HKSE listed) and Neusoft

Corporation

東軟集團股份有限公司

(Shanghai Stock Exchange listed). He is serving as the vice chairman of the board of

Chinese Association of Science and Science & Technology Policy (the CASSSP)

中國科學學與科技政策研究會

, the chair of

the National Expert Committee on New Generation of Artificial Intelligence Governance

國家新一代人工智能治理專業委員

會

and a member of the Standing Committee of the China Association for Science and Technology.

Prof. Xue obtained his bachelor’s degree in optics and fine mechanics from the Changchun Institute of Optics and Fine

Mechanics

長春光學精密機械學院

(currently known as Changchun University of Science and Technology

長春理工大學

)

in January 1982. He obtained a Master of Science degree from the State University of New York at Stony Brook in

December 1987. He further received a master of Science degree and a Ph.D. degree in engineering and public policy

from Carnegie Mellon University in May 1989 and December 1991, respectively.

Mr. Kasper Bo Roersted (alias Kasper Bo Rorsted)

, 63, was appointed as an independent non-executive director of the

Company on February 23, 2024. Mr. Roersted is currently an independent director and a member of the Nomination

Committee, the Remuneration Committee and the Energy Transition Committee (formerly known as “Environmental,

Social and Governance Committee”) of A.P. Møller — Mærsk A/S (Nasdaq Stock Exchange listed), and a member of the

Supervisory Board and the Innovation and Finance Committee of Siemens AG (Frankfurt Stock Exchange listed).

Mr. Roersted was an executive board member and the Chief Executive Officer of adidas AG (Frankfurt Stock Exchange

listed), the Chief Executive Officer of Henkel AG & Co. KGaA (Frankfurt Stock Exchange listed) and a board member of

Nestlé S.A. (SIX Swiss Exchange listed) and a senior advisor to the private equity team of KKR & Co. Inc. (NYSE listed).

Mr. Roersted holds a Diploma in International Business Studies from the Niels Brock Copenhagen Business College,

Denmark and completed a series of executive programs in Harvard Business School, the United States of America.

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

148

Biography of directors and senior management

(continued)

Biography of senior management

Mr. David C. Carroll

, 57, joined the Group since the acquisition of Motorola in 2014 and is currently Senior Vice President

of the Group and the Chief Legal and Corporate Responsibility Officer (“CLO”) responsible for the Group’s legal, IP,

government relations and ESG (environmental, social and governance) matters globally. Before promoting as the CLO

on April 1, 2025, Mr. Carroll has served as both General Counsel for Motorola Business Group and more recently as

General Counsel for the Intelligent Devices Group and Group Operations, as well as supporting Trademarks & Marketing,

Data Privacy and Security, and has also run the Global Brand Licensing business. Mr. Carroll is a three-time Lenovo

Excellence Award winner, earning both an individual Leadership Excellence Award and two Team Excellence Awards for

his outstanding contributions to Lenovo. Before joining Lenovo, Mr. Carroll practiced in-house at Sears and the Amway

Corporation, where he specialized in marketing and advertising law. Mr. Carroll holds a bachelor’s degree in Philosophy

from the University of Illinois and earned his law degree from Northwestern University School of Law in Chicago. Mr.

Carroll is a well-known, proven, and respected leader at the Group and brings over 30 years of valuable institutional

knowledge together with a focus on creativity and collaboration.

Mr. Cheng Shao-min Winston

, 52, is the Senior Vice President and Chief Financial Officer of the Group. He oversees

the group’s global financial operations, as well as corporate development and M&A, corporate finance, and investor

relations. Before joining the Group, Mr. Cheng was the Global Co-Head of Technology, Media and Telecom, Investment

Banking at The Hongkong and Shanghai Banking Corporation Limited (“HSBC”). Prior to joining HSBC, he was President

International and a member of the group investment committee at JD.com.

With over 20 years of experience in investment banking, Mr. Cheng has held senior leadership roles, including Managing

Director and Head of Asia TMT Investment Banking at Bank of America Merrill Lynch, and Head of Asia Technology

Investment Banking and the Head of Asia Consumer Retail Investment Banking at Goldman Sachs. He began his

career with Salomon Brothers and spent over a decade at Citigroup. He was based in New York, Palo Alto and Hong

Kong. In addition to his executive roles, Mr. Cheng has extensive global leadership experience in the technology sector

having served as board director of Arizon RFID, GoTo (Formerly GoJek), Tiki.com and TCL Electronics (formerly TCL

Multimedia), as well as an industry investor and advisor. Mr. Cheng holds a double Bachelor of Arts in Economics and

Chinese Language from the University of California, Berkeley.

Ms. Gao Lan

, 59, joined the Group in 2009 and is currently the Senior Vice President of Human Resources of the

Company, responsible for human resources, organizational development, global talent, compensation and benefits, as

well as nurturing the Company’s culture. Prior to this, Ms. Gao held several Vice President roles leading the HR functions

of many teams, including Emerging Markets Group, APLA & China Geography, People & Organization Capability

Development and HR Strategy & Operations. Before joining the Group, Ms. Gao held senior positions in HR in various

multinational companies. Ms. Gao holds a bachelor’s degree of science from Nankai University, studied M.Phil. degree

from Cambridge University in the UK, completed human resource management course at the Western Management

Institute of Beijing and the Leadership Excellence for Business HR Program at Stanford University in the US.

Mr. Ashley Gorakhpurwalla

, 56, joined the Group in 2024 and is currently Executive Vice President of the Group,

President of the Infrastructure Solutions Group (ISG). He oversees Lenovo’s global business, focused on driving

intelligent transformation with AI-ready infrastructure that goes beyond the data center from edge to cloud.

Before joining the Group, he was Executive Vice President and General Manager, HDD at Western Digital Corporation.

Prior to joining Western Digital Corporation, Mr. Gorakhpurwalla served as President and General Manager of Servers and

Infrastructure Systems at Dell Technologies. With over 30 years of technology industry experience, Mr. Gorakhpurwalla

is widely known in the enterprise data center business as a strong leader dedicated to delivering exceptional business

results. Mr. Gorakhpurwalla holds a Bachelor of Science in electrical engineering from Texas A&M University — Kingsville.

Mr. He Zhiqiang

, 62, joined the Group in 1986 and is currently the Senior Vice President of the Group and President of

Lenovo Capital and Incubator Group. This group is responsible for driving innovation through investment in startups,

spinning off new businesses and exploring new technologies. Prior to that, Mr. He held various leadership positions in the

Group including the President of Cloud Services Business Group and was the Chief Technology Officer overseeing the

Group’s Research & Technology initiatives and systems. Mr. He holds a bachelor’s degree in computer communication

from Beijing University of Posts and Telecommunications and a master’s degree in computer engineering from the

Institute of Computing Technology of the Chinese Academy of Sciences.

Lenovo Group Limited 2024/25 Annual Report

149

Biography of directors and senior management

(continued)

Biography of senior management

(continued)

Dr. Tolga Kurtoglu

, 49, is currently Senior Vice President, Chief Technology Officer, and Lenovo Technology Committee

Vice-Chair of the Group. Dr. Kurtoglu leads Lenovo’s corporate technology strategy and R&D planning & governance.

Additionally, he leads Lenovo Research with focuses on AI, computing for smart devices and infrastructure, wireless

communications, metaverse and robotics.

Dr. Kurtoglu is a seasoned technology leader with deep expertise in business and innovation strategy. Prior to joining

the Group in July 2024, he served in various roles such as chief executive officer and chief technology officer in leading

organizations focusing on technology strategy, corporate innovation and incubation, and new business creation —

including HP, Inc., Xerox, Palo Alto Research Center, and Dell Computer.

Dr. Kurtoglu has numerous patents and publications in the fields of automation and machine intelligence, fault tolerant

system design, and 3D/digital manufacturing. He brings over two decades of tech industry experience. During this

tenure, he oversaw the transition of more than 40 innovations from lab to the market through various commercialization

strategies, including new product introductions, spin-offs, and partnerships with major corporations.

Dr. Kurtoglu holds a MSc in Mechanical Engineering from Carnegie Mellon; and a PhD in Mechanical Engineering, from

the University of Texas-Austin.

Mr. Liu Jun

, 56, joined the Group in 1993. He is currently the Executive Vice President and President of Lenovo China,

responsible for leading the China business platform and sales across all three Lenovo business groups through an

integrated go-to-market strategy. Prior to this position, he held various leadership roles at Lenovo, including Senior Vice

President of the Group, President of the Mobile Business Group, President of the Product Group, President of the Global

Consumer Group, President of Global Supply Chain, Chief Operating Officer of Lenovo China, the President of Planning

and Operations Systems, President of the Consumer IT Business Group.

Mr. Liu has achieved success in many fields. He has successfully led Lenovo in multiple product innovations (such as the

world’s first home computer, the world’s first Internet computer, and the world’s first AI PC with five major features). He

has continuously innovated business models (creating the Lenovo consumer business chain retail model, developing the

important Lenovo model “Dual-Mode Approach” (transactional and relationship models) which has been operated to

this day, and establishing an industry-leading direct-to-customer model). He has constantly pioneered new businesses (leading

Lenovo’s Global Consumer Group to expand from China to over 100 countries and regions worldwide, successfully

completing the Motorola acquisition and leading Lenovo’s smartphone business to the top three globally, and being the

first to build the service business as a new growth engine, achieving the second market position in China).

Mr. Liu holds a bachelor’s degree in Automation and an EMBA both from Tsinghua University. He has also completed

senior executive management programs at Harvard University and Stanford University.

Ms. Qiao Jian

, 57, joined the Group in 1990 and is currently the Senior Vice President, Chief Strategy Officer and

Chief Marketing Officer of the Group, overseeing Lenovo’s strategy and planning, global brand, marketing and

communications. Before that, Ms. Qiao was Co-President of the Mobile Business Group focusing on Lenovo’s Mobile

business in China. Prior to that, Ms. Qiao was the Senior Vice President of Human Resources. Ms. Qiao held various senior

positions in the Group including Senior Vice President of Strategy and Planning and Vice President of Human Resources

— both before and after the acquisition of IBM’s PC Division. Ms. Qiao has extensive experience in strategy, marketing

and branding, and human resources, business management. She holds a bachelor’s degree in management science from

Fudan University and holds an EMBA from the China Europe International Business School.

Mr. Luca Rossi

, 52, joined the Group in 2015 and is currently an Executive Vice President of the Group and the President

of the Intelligent Devices Group overseeing the Group’s global business in PCs, smartphones, tablets, workstations and

other products including AI devices, software, and commercial solutions. Prior to this role, he served as President of the

Europe Middle East Africa (EMEA) and Latin America (LATAM) geographies, leading the PC, smartphone, tablet and

server businesses. Before joining Lenovo, Mr. Rossi held numerous global leadership roles in Europe including president

of EMEA of Acer, leading the consumer business and the product business of Packard Bell and general manager of Asus

Europe. Mr. Rossi started his career as a 19-year-old entrepreneur setting up an Italian systems integrator under the Geo

Microsystems brand. Mr. Rossi holds a diploma in accounting and studied in Bocconi University.

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

150

Biography of directors and senior management

(continued)

Biography of senior management

(continued)

Mr. Che Min (Jammi) Tu

, 53, joined the Group in 2012 and is currently the Senior Vice President and Group Operations

Officer of the Group, where he is responsible for driving Lenovo’s operational excellence and improving efficiency across

the One Lenovo Operation by working across the numerous business groups to identify synergies and to standardize

and streamline processes. Prior to this role, he was Chief Operating Officer of Lenovo’s Intelligent Devices Group (IDG)

— playing a crucial role in leading that organization to record performance — and Chief Financial Officer (CFO) for the

Europe Middle East Africa (EMEA) region. Before joining Lenovo, Mr. Tu was the CFO of Acer Inc. (Acer) from 2009 to

2011, where he also held numerous leadership roles, including Treasury Director, CFO of EMEA, and special assistant to

the Chief Executive Officer. Mr. Tu holds an MBA from the University of Manchester.

Mr. Ken Wong

, 51, is the Executive Vice President of Lenovo and global President of the Group’s Solutions & Services Group (“SSG”).

Mr. Wong has been instrumental in spearheading the Group’s transformation globally from a hardware and infrastructure

only company, to a full-fledged solutions and services powerhouse. He has accelerated the Group’s strategy in offering

high-value offerings such as digital workplace, hybrid cloud, sustainability, and AI solutions.

In 2021, Mr. Wong was appointed to lead the newly formed SSG, a cornerstone of Lenovo’s service-led transformation.

Building on his success leading Lenovo’s Asia Pacific PCs and Smart Devices business and his strategic leadership as

Chairman of NEC Lenovo Japan Group and Fujitsu Client Computing Limited, Mr. Wong brought deep operational and

global expertise to the role.

Under his leadership, SSG has grown rapidly, and evolved into a business unit that anchors Lenovo’s shift from a

hardware leader to a full-stack technology solutions provider. Today, he continues to drive this momentum by leading

Lenovo’s Hybrid AI strategy — advancing full-stack AI capabilities that help organizations overcome adoption barriers

and achieve results.

An IT industry veteran, Mr. Wong has been with Lenovo for nearly two decades and has played a pivotal role in shaping

Lenovo’s global corporate strategy through his earlier leadership roles. In addition, he is actively serving the technology

community in Hong Kong, and currently serves as a board member at the Hong Kong Cyberport Management

Company, and Vice President (Greater China Affairs) on the Council of the Hong Kong Computer Society.

Mr. Wong graduated from The University of Hong Kong with a bachelor of Engineering in computer science and has an

Executive MBA jointly awarded by The University of Hong Kong, Columbia University and the London Business School.

Mr. Matthew Zielinski

, 46, joined the Group in 2018 and is currently an Executive Vice President of the Group and

President of the International Sales Organization (ISO) of the Group, responsible for driving revenue and profit growth

across all Lenovo businesses while modernizing Lenovo’s go-to-market strategy to support the Group’s transformation

as a full stack technology solutions provider. He leads the ISO geographies, namely Asia Pacific, Japan, EMEA, Latin

America and North America. Prior to that, he served as the President of the North America Intelligent Devices Group (IDG)

where he was responsible for sales, daily operations, growth and profitability for the United States and Canada. Prior to

joining Lenovo, he was the corporate vice president and general manager, head of worldwide OEM sales at AMD. He was

responsible for leading AMD’s end-to-end efforts for all strategic OEMs, as well as global responsibility for end-user sales

through all consumer and commercial routes to market. Mr. Zielinski holds a bachelor of Science in Engineering degree in

electrical engineering from the University of Michigan.

Directors’ service contracts

There is no service contract, which is not determinable by the Company within one year without payment of compensation (other

than statutory compensation), in respect of any director proposed for re-election at the AGM.

Lenovo Group Limited 2024/25 Annual Report

151

Directors’ material interests in transactions, arrangements or contracts

No other transactions, arrangements or contracts that is significant in relation to the Group’s business to which the

Company, its holding company, any of its subsidiaries or fellow subsidiaries was a party and in which a director of the

Company or his or her connected entities had a material interest, whether directly or indirectly, subsisted at the end of

the year or at any time during the year.

Directors’ indemnities and insurance

As permitted by the articles of association of the Company, a director or a former director of the Company may

be indemnified out of the Company’s assets against any liability incurred by the director to a person other than the

Company or an associated company of the Company that attaches to such director in his or her capacity as a director of

the Company, to the extent permitted by law. Such permitted indemnity provision is in force throughout the year and up

to the date of this report.

The Company has also taken out and maintained directors’ and officers’ liability insurance throughout the year, which

provides appropriate cover for certain legal actions brought against its directors and officers.

Directors’ and chief executive’s interests

As at March 31, 2025, the interests and short positions of the directors and chief executive of the Company in the shares,

underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV

of the Securities and Futures Ordinance (“SFO”)) as recorded in the register maintained by the Company under section

352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for

Securities Transactions by Directors of Listed Issuers (the “Model Code”) in the Listing Rules were as follows:

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

152

Directors’ and chief executive’s interests

(continued)

(i)

Interests in the shares and underlying shares of the Company

Capacity and number of shares/

underlying shares held

Name of director

Interests in

shares/

underlying

(Note 1)

Personal

interests

Corporate

interests

A concert

party to an

agreement

to buy shares

described in

s.317(1)(a)

of SFO

Aggregate

long position

Approximate

percentage

of interests

(Note 2)

Mr. Yang

Ordinary shares

179,633,040

557,004,000

–

736,637,040

Yuanqing

(Note 3)

Share awards

220,829,321

–

220,829,321

Warrants

–

273,200,000

4,731,098,290

5,004,298,290

5,961,764,651

48.06%

Mr. Zhu Linan

Ordinary shares

3,645,025

–

3,645,025

Share awards

451,781

–

451,781

4,096,806

0.03%

Mr. Zhao John

Ordinary shares

3,542,767

–

3,542,767

Huan

Share awards

451,781

–

451,781

3,994,548

0.03%

Mr. John Lawson

Ordinary shares

59,171

–

59,171

Thornton

Share awards

312,334

–

312,334

371,505

0.00%

Mr. Gordon Robert

Ordinary shares

3,270,726

–

3,270,726

Halyburton Orr

Share awards

451,782

–

451,782

3,722,508

0.03%

Mr. Woo Chin Wan

Ordinary shares

1,234,958

–

1,234,958

Raymond

Share awards

451,781

–

451,781

1,686,739

0.01%

Ms. Yang Lan

Ordinary shares

922,273

–

922,273

Share awards

593,805

–

593,805

1,516,078

0.01%

Ms. Cher Wang

Ordinary shares

282,975

–

282,975

Hsiueh Hong

Share awards

450,660

–

450,660

733,635

0.01%

Professor Xue Lan

Ordinary shares

278,895

–

278,895

Share awards

451,781

–

451,781

730,676

0.01%

Mr. Kasper Bo

Ordinary shares

–

Roersted

Share awards

243,825

–

243,825

0.00%

Lenovo Group Limited 2024/25 Annual Report

153

Directors’ and chief executive’s interests

(continued)

(ii)

Interests in shares and underlying shares of the associated corporations of the Company

Name of

director

Name of associated

corporations

Long position/

short position

Capacity/

nature of

interests

Number and

class of shares/

underlying

shares/registered

capital held

Approximate

percentage

of interests

(Note 5)

Mr. Yang

Yuanqing

SHAREit Technology

Holdings Inc.

Long position

Interest of

corporation

controlled

4,996,633 Series A

preferred shares

16.06%

陽光雨露信息技術服務

(北京）有限公司

Long position

Interest of

corporation

controlled

Registered capital

of RMB157,500

0.32%

北京平安聯想智慧醫

療信息技術有限公司

(formerly known as

北京聯想智慧醫療信息

技術有限公司

)

Long position

Beneficial

owner

Registered capital

of RMB2,400,000

1.25%

北京聯想雲科技有限公司

Long position

Beneficial

owner

Registered capital

of RMB1,199,900

5.74%

北京聯想雲計算有限公司

Long position

Beneficial

owner

Registered capital

of RMB2,000,100

5.74%

國民認證科技(重慶）

有限公司

(formerly

known as

國民認證

科技(北京）有限公司

)

Long position

Beneficial

owner

Registered capital

of RMB1,097,144

3.29%

廣東聯想懂的通信

有限公司

Long position

Beneficial

owner

Registered capital

of RMB2,584,615

2.56%

新陽光（天津）技術服務

有限公司

Long position

Beneficial

owner

Registered capital

of RMB157,500

0.32%

聯想教育科技（北京）

有限公司

Long position

Beneficial

owner

Registered capital

of RMB1,000,000

2.00%

鼎道智聯（北京）科技

有限公司

Long position

Beneficial

owner

Registered capital

of RMB2,100,000

1.05%

聯晟智達（海南）供應鏈

管理有限責任公司

Long position

Beneficial

owner

Registered capital

of RMB490,918

1.29%

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

154

Directors’ and chief executive’s interests

(continued)

Notes:

Share awards represent underlying shares convertible into ordinary shares. Details of share awards are set out under the section headed “LTI

Program” in the Compensation committee report.

The approximate percentage of interests is based on the shares/underlying shares comprising the interests held as a percentage of the total

number of shares in issue of the Company of the same class immediately after the relevant event and as recorded in the register maintained

under section 352 of the SFO.

The shares are held by Sureinvest in which Mr. Yang Yuanqing holds more than one-third of the voting power at its general meetings. Therefore,

Mr. Yang is taken to have an interest in 557,004,000 shares under the SFO and such interest is also reported under the below section headed “Substantial

shareholders’ and other persons’ interests”.

Mr. Wong Wai Ming and Ms. Laura Green Quatela were appointed as non-executive directors of the Company with effect from April 1, 2025. Mr.

Wong was interested in 63,517,293 shares and 32,035,270 underlying shares and Ms. Quatela was interested in 18,936,230 shares and 30,101,260

underlying shares as at April 1, 2025, as recorded in the register maintained by the Company under section 352 of the SFO.

The approximate percentage of interests is based on the shares comprising the interests held as a percentage of the total number of shares

in issue of the associated corporation of the same class immediately after the relevant event and as recorded in the register maintained under

section 352 of the SFO.

Save as disclosed above, as at March 31, 2025, none of the directors or chief executive of the Company or their

associates had any interests or short positions in the shares, underlying shares or debentures of the Company or any

of its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register maintained by the

Company under section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to

the Model Code.

Directors’ rights to acquire shares or debentures

Under the long-term incentive program of the Company, the Board or the trustee of the program shall select the employees (including

but not limited to the directors) of the Group for participation in the program, and determine the number of shares to be

awarded.

Details of the movements in the share awards for the year ended March 31, 2025 are set out under the section headed “Long-Term

Incentive Scheme” in the Compensation committee report and in the note 7 to the financial statements.

Save as disclosed in the sections headed “Directors’ and chief executive’s interests” of this report, and “Long-Term

Incentive Program” of the Compensation committee report, at no time during the year ended March 31, 2025 was

the Company or a specified undertaking of the Company a party to any arrangements to enable the directors of the

Company to acquire benefits by means of acquisition of shares in, or debentures of, the Company or any other body

corporate.

Lenovo Group Limited 2024/25 Annual Report

155

Substantial shareholders’ and other persons’ interests

As at March 31, 2025, within the knowledge of the directors, the following corporations (other than the directors and

chief executive of the Company as disclosed above) had or deemed or taken to have interests or short positions in

the shares and/or underlying shares of the Company which were required to be disclosed to the Company under the

provisions of Divisions 2 and 3 of Part XV of the SFO, or which were as recorded in the register required to be kept under

section 336 of the SFO:

Capacity and number of shares/

underlying shares held

Name

Long

position/

short position

Beneficial

owner

Corporate

interests

A concert

party to an

agreement

to buy shares

described in

s.317(1)(a)

of SFO

Aggregate

long/short

position

Approximate

percentage

of interests

(Note 1)

Legend Holdings Corporation

(Notes 2, 3 and 4)

Long position

2,867,636,724

1,028,263,805

2,107,466,361

6,003,366,890

48.39%

Right Lane Limited

Long position

–

1,028,263,805

–

1,028,263,805

8.29%

Kind Jasper Limited

Long position

548,263,805

–

548,263,805

4.42%

Legion Elite Limited

Long position

480,000,000

–

480,000,000

3.87%

Sureinvest Holdings Limited

(Notes 4 and 5)

Long position

830,204,000

–

5,173,162,890

6,003,366,890

48.39%

Eastern Score Limited (Note 4)

Long position

326,000,000

–

5,677,366,890

6,003,366,890

48.39%

Wu To Hing (Note 4)

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Wisdom Summit Limited

Long position

221,600,000

–

5,781,766,890

6,003,366,890

48.39%

Huntkey (Hong Kong) Enterprise

Group Limited (Note 4)

Long position

108,600,000

–

5,894,766,890

6,003,366,890

48.39%

Asiamax Development Limited

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Luo Jiankun

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Compal Electronics, Inc. (Note 4)

Long position

48,900,000

–

5,954,466,890

6,003,366,890

48.39%

Wistron Corporation (Note 4)

Long position

48,900,000

–

5,954,466,890

6,003,366,890

48.39%

Lite-On Electronics H.K. Limited

(Note 4)

Long position

48,000,000

–

5,955,366,890

6,003,366,890

48.39%

Lite-On Technology Corporation

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Inditeck Technology Hong Kong

Limited (Note 4)

Long position

32,600,000

–

5,970,766,890

6,003,366,890

48.39%

Haiqin Telecom Hong Kong Limited

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Huaqin Technology Co. Ltd

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Mason Vap Investment Limited

(Note 4)

Long position

27,500,000

–

5,975,866,890

6,003,366,890

48.39%

Huajun Wang Ltd.

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Wang Huajun

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Chicony Electronics Co., Ltd. (Note 4)

Long position

5,000,000

–

5,998,366,890

6,003,366,890

48.39%

Vestion Equity GmbH & Co. KG (Note 4)

Long position

7,000,000

–

5,996,366,890

6,003,366,890

48.39%

Vestion Verwaltungs und

Beteiligungsgesellschaft mbH

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Gerhard Brachmann

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Waterwood Acquisition Corporation

(Note 4)

Long position

2,700,000

–

6,000,666,890

6,003,366,890

48.39%

Lau Wai Kit

Long position

–

6,003,366,890

–

6,003,366,890

48.39%

Alat Technologies Company (Note 6)

Long position

–

1,559,181,636

–

1,559,181,636

12.57%

Public Investment Fund (Note 6)

Long position

–

1,559,181,636

–

1,559,181,636

12.57%

BlackRock, Inc.

Long position

–

638,822,462

–

638,822,462

5.15%

Short position

–

8,588,000

–

8,588,000

(Note 7)

0.07%

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

156

Substantial shareholders’ and other persons’ interests

(continued)

Notes:

The percentages were complied based on the 12,404,659,302 ordinary shares of the Company in issue as at March 31, 2025.

Kind Jasper is wholly-owned by Right Lane, which is in turn wholly-owned by Legend Holdings. By virtue of the SFO, Right Lane and Legend Holdings

are deemed to be interested in the 548,263,805 ordinary shares held by Kind Jasper.

Legion Elite is wholly-owned by Right Lane, which is in turn wholly-owned by Legend Holdings. By virtue of the SFO, Right Lane and Legend Holdings

are deemed to be interested in the 480,000,000 ordinary shares held by Legion Elite.

Pursuant to the terms of the warrants subscription agreement, all the warrant subscribers undertook to be subject to certain restrictions on the

disposal of their respective Warrants and the underlying Warrant Shares. As such, each of the warrant subscribers became a member of a concert

party group. For further details, please refer to the Company’s circular dated August 19, 2024. For the avoidance of doubt, the Warrants issued by the

Company do not carry any voting right until and unless the Warrant Shares are issued as a result of the exercise of Warrants.

Mr. Yang Yuanqing holds more than one-third of the voting power at general meetings of Sureinvest. Accordingly, Mr. Yang is deemed to have interests

in those shares of the Company held by Sureinvest under the SFO.

On January 8, 2025, the Company issued US$2,000,000,000 zero coupon convertible bonds due 2028 to a wholly-owned subsidiary of Alat

Technologies Company (“Alat Technologies”). Upon maturity and assuming full conversion of the zero-coupon convertible bonds at the initial

conversion price of HK$10.02 per share, the convertible bonds can be convertible into 1,559,181,636 ordinary shares of the Company. Alat International

Investments Company (“Alat International”) is wholly-owned by Alat Technologies, which is in turn wholly-owned by Public Investment Fund (“PI

Fund”). By virtue of the SFO, Alat Technologies and PI Fund are deemed to be interested in the 1,559,181,636 ordinary shares held by Alat International.

The interests include underlying shares as follows:

Cash settled unlisted equity derivatives

Name

Long position

Short position

BlackRock, Inc.

9,646,000

8,458,000

Listed derivatives – Convertible instruments

Long position

Short position

2,189,525

–

Save as disclosed above, as at March 31, 2025, no other persons (other than the directors and chief executive of the

Company, whose interests are set out in the above section headed “Directors’ and chief executive’s interests”) had any

interests or short positions in the shares and/or underlying shares of the Company as recorded in the register required to

be kept by the Company under section 336 of the SFO.

Retirement scheme arrangements

The Group contributes toward retirement income protection for its employees through the provision of defined

benefit pension plans, defined contribution plans, and/or contributions to various public retirement schemes in certain

jurisdictions. These benefits form an important part of the Group’s total compensation and benefits program that is

designed to attract and retain highly skilled and talented employees.

Defined benefit pensions plans

Chinese Mainland — Retirement Schemes

The Group participates in respective local municipal government retirement schemes in the mainland of China (“Chinese

Mainland”) whereby it is required to make an annual contribution of no more than 20% of three times the monthly

average salaries as set out by the local municipal government each year. The local municipal governments undertake to

assume the retirement benefit obligations of all retirees of the qualified employees in the Chinese Mainland. In July 2006,

the Group has established a supplemental retirement program for its employees in Chinese Mainland. This is a defined

contribution plan, with voluntary employee participation.

In addition to the above, the Group has defined benefit and/or defined contribution plans that cover substantially all

regular employees, and supplemental retirement plans that cover certain executives. Information on the principal pension

plans sponsored by the Group is summarized in this section.

Lenovo Group Limited 2024/25 Annual Report

157

Retirement scheme arrangements

(continued)

Defined benefit pensions plans

(continued)

United States of America (“US”) — Lenovo Pension Plan

The Group provides US regular, full-time and part-time employees who were employed by IBM prior to being hired by

the Group and who were members of the IBM Personal Pension Plan (“PPP”) with non-contributory defined benefit

pension benefits via the Lenovo Pension Plan. As of December 31, 2015, the plan was frozen.

The Lenovo Pension Plan consists of a tax-qualified plan and a non-tax-qualified (non-qualified) plan. The qualified plan

is funded by the Group contributions to an irrevocable trust fund, which is held for the sole benefit of participants and

beneficiaries. The non-qualified plan, which provides benefits in excess of US Internal Revenue Service limitations for tax-

qualified plans, is unfunded.

Pension benefits are calculated using a five-year average final pay formula that determines benefits based on a

participant’s salary and years of service, including prior service with IBM. The benefit is reduced by the amount of the

IBM PPP benefit accrued to May 1, 2005, which will be paid by IBM’s trust.

For the year ended March 31, 2025, an amount of US$1,375,125 was charged to the consolidated income statement with

respect to the qualified and non-qualified plans.

The principal results of the most recent actuarial valuation of the plan at March 31, 2025 were as follows:

•

The actuarial valuation was prepared by Fidelity. The actuaries involved are fully qualified under the requirements of

US law.

•

The actuarial method used was the Projected Unit Credit Cost method and the principal actuarial assumptions

were:

—

Discount rate:

5.20%

—

Expected return on plan assets:

5.10%

—

Future salary increases:

N/A

•

The qualified plan was 78% funded at the actuarial valuation date.

•

There was a net liability of US$15,271,332 under the qualified plan for this reason at the actuarial valuation date.

Japan — Pension Plan

The Group operates a hybrid plan that consists of a defined contribution up to the annual tax-deductible limit plus a cash

balance plan with contributions of 7% of pay. The plan is funded by the Group contributions to a qualified pension fund,

which is held for the sole benefit of participants and beneficiaries.

For the year ended March 31, 2025, an amount of JPY828,893,375 was charged to the consolidated income statement

with respect to this plan.

The principal results of the most recent actuarial valuation of the plan at March 31, 2025 were the following:

•

The actuarial valuation was prepared by JP Actuary Consulting Co., Ltd.. The actuaries involved are fully qualified

under the requirements of Japanese law.

•

The actuarial method used was the Projected Unit Credit Cost method and the principal actuarial assumptions

were:

—

Discount rate:

2.30%–2.60%

—

Expected return on plan assets:

2.10%

—

Future salary increases:

Age-group based

•

The plan was 93% funded at the actuarial valuation date.

•

There was a net liability of JPY1,869,049,436 under this plan at the actuarial valuation date.

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

158

Retirement scheme arrangements

(continued)

Defined benefit pensions plans

(continued)

Germany — Pension Plan

The Group operates a hybrid plan that provides a defined contribution for some participants and a final pay defined

benefit for other participants, depending on which former IBM plan they were in. The Group also operates a closed

defined benefit plan for ex-Motorola Mobility employees.

Employees hired by IBM before January 1, 1992 have a defined benefit based on a final pay formula. Employees hired

from 1992 to 1999 have a combination of a defined benefit based on a final pay formula and a defined contribution plan

with employee required contributions of 7% of pay above the social security ceiling and a 100% company match.

Employees hired in or after 2000 have a combination of a cash balance plan with an employer contribution of 2.95% of

pay below the social security ceiling, and a voluntary defined contribution plan where employees can contribute specific

amounts through salary sacrifice. Employees of Motorola Mobility have a defined benefit based on a final pay formula.

The plan is partially funded by the Group and employee contributions to an insured support fund with DBV-Winterthur

up to the maximum tax-deductible limits. In line with standard practice in Germany, the remainder is unfunded (book

reserve).

For the year ended March 31, 2025, an amount of EUR4,305,914 was charged to the consolidated income statement with

respect to this plan.

The principal results of the most recent actuarial valuation of the plan at March 31, 2025 were as follows:

•

The actuarial valuation was prepared by Kern, Mauch & Kollegen (Motorola Mobility valuation prepared by Willis

Towers Watson). The actuaries involved are fully qualified under German law.

•

The actuarial method used was the Projected Unit Credit Cost method and the principal actuarial assumptions

were:

—

Discount rate:

3.90%

—

Future salary increases:

Age-group based

—

Future pension increases:

2.00%

•

The plans were 41% funded at the actuarial valuation date.

•

There was a net liability of EUR91,717,249 under this plan at the actuarial valuation date.

Lenovo Group Limited 2024/25 Annual Report

159

Retirement scheme arrangements

(continued)

Defined contribution plans

US Lenovo Savings Plan

US regular, full-time and part-time employees of Lenovo (United States) Inc., including employees of Motorola Mobility

LLC, are eligible to participate in the Lenovo Savings Plan, which is a tax-qualified defined contribution plan under

section 401(k) of the Internal Revenue Code of the United States. The Motorola Mobility 401(k) Plan merged into the

Lenovo Savings Plan effective December 31, 2015. The Group matches 100% of the employee’s contribution up to the first 6%

of the employee’s eligible compensation. Employee contributions are voluntary. All contributions, including the Group

match, are made in cash, in accordance with the participants’ investment elections. The Group match is immediately

vested.

US Lenovo Executive Deferred Compensation Plan

The Group also maintains an unfunded, non-qualified, defined contribution plan, the Lenovo Executive Deferred

Compensation Plan, which allows eligible executives to defer compensation, and to receive the Group matching

contributions, with respect to amounts in excess of Internal Revenue Service limits for tax-qualified plans. Compensation

deferred under the plan, as well as the Group matching contributions are recorded as liabilities.

Deferred compensation amounts may be directed by participants into an account that replicates the return that would

be received had the amounts been invested in similar Lenovo Savings Plan investment options. The Group matching

contributions, are directed to participant accounts and fluctuate based on changes in the stock prices of the underlying

investment portfolio.

United Kingdom (“UK”) — Lenovo Stakeholders Plan

UK regular, full-time, part-time and fixed term Lenovo contract employees are eligible to participate in the Lenovo

Stakeholders Plan, which is a tax-qualified defined contribution “stakeholder” plan. The Group contributes 8.7% of an

employee’s eligible salary to the employee’s pension account each year and the employer contributions are dependent

on employee contributing no less than 3% of their salary to the same fund.

Canada — Defined Contribution Pension Plan

Canadian regular, full-time and part-time employees are eligible to participate in the Defined Contribution Pension Plan,

which is a tax-qualified defined contribution plan. The Group contributes 4% of the employee’s eligible compensation,

in addition the Group matches 50% of the employee’s contribution up to the first 4% of the employee’s eligible

compensation. All contributions are made in cash, in accordance with the participants’ investment elections. Employee

contributions are voluntary.

Hong Kong S.A.R. of China — Mandatory Provident Fund

The Group operates a Mandatory Provident Fund Scheme for all qualified employees employed in Hong Kong S.A.R. of

China. They are required to contribute 5% of their compensation (subject to the monthly ceiling under the requirements

set out in the Mandatory Provident Fund legislation, currently HK$1,500). The employer’s contribution will increase

from 5% to 7.5% and 10% respectively after completion of five, five to nine years, and ten years of service by the relevant

employees.

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

160

Continuing connected transactions

During the year, the Group conducted continuing connected transactions with Fujitsu Limited (“Fujitsu”) and its affiliates (together,

“Fujitsu Group”), being connected persons (as defined in the Listing Rules) of the Company, which are required to be

disclosed pursuant to rules 14A.49 and 14A.71 of the Listing Rules.

Fujitsu Client Computing Limited (“FCCL”) is a joint venture company held as to 51% by the Company (through Lenovo

International Coöperatief U.A.) and 44% by Fujitsu to engage in the business of personal computers and their related

products pursuant to the Joint Venture Agreement entered into between the Company and amongst others, Fujitsu

dated November 2, 2017 and became effective on May 2, 2018 (the “Completion Date”).

At or prior to the Completion Date, Fujitsu Group entered into various agreements (the “Fujitsu CCT Agreements”) with

FCCL in respect of the provision of certain services and products to or by FCCL to facilitate the operation of its personal

computer business in Japan. Details of the Fujitsu CCT Agreements are set out in the announcement published by the

Company on May 2, 2018.

Upon the Completion Date, FCCL has become an indirect non-wholly-owned subsidiary of the Company. Fujitsu is a

connected person of the Company at the subsidiary level by virtue of Fujitsu being a substantial shareholder of FCCL,

whose shareholding in FCCL increased from 44% to 49% following the acquisition of FCCL’s shares from a third party in

2023. The transactions contemplated under the Fujitsu CCT Agreements constitute continuing connected transactions

of the Company under Chapter 14A of the Listing Rules and are subject to reporting requirements under the Listing

Rules.

On February 21, 2020, the annual caps of the Secondment Agreement, the Manufacturing Agreement (FIT) and the

Fujitsu Trademark and Brand License Agreement (all of which form part of the Fujitsu CCT Agreements), for the four

financial years ended March 31, 2020, 2021, 2022 and 2023 were revised. Details of such revision of annual caps are set

out in the announcement dated February 21, 2020.

On January 16, 2023, FCCL exercised its option to extend the term of the Fujitsu Trademark and Brand License

Agreement to May 2, 2026 by providing a notice of extension to Fujitsu and on March 31, 2023, the annual caps of such

agreement were set for the financial years ended March 31, 2024 and March 31, 2025 and the financial year ending March

31, 2026.

On March 31, 2023, the terms of Transitional Services Agreement, Secondment Agreement, the Manufacturing Agreement (FIT)

and Sales and Distribution Agreement (the “Other 2023 Renewed Fujitsu CCT Agreements”, together with the Fujitsu

Trademark and Brand License Agreement, the “2023 Renewed Fujitsu CCT Agreements”) were extended to May 2,

2024 by entering into side letters between FCCL and the respective parties to the Other 2023 Renewed Fujitsu CCT

Agreements and the annual caps of the Other 2023 Renewed Fujitsu CCT Agreements were set for the financial

year ended March 31, 2024. Details of the renewal of the 2023 Renewed Fujitsu CCT Agreements are set out in the

announcement dated March 31, 2023.

On March 28, 2024, the terms of Other 2023 Renewed Fujitsu CCT Agreements were extended to May 2, 2025 by

entering into side letters between FCCL and the respective parties to the Other 2023 Renewed Fujitsu CCT Agreements

and the annual caps of the Other 2023 Renewed Fujitsu CCT Agreements were set for the financial year ended March

31, 2025. Details of the renewal of the Other 2023 Renewed Fujitsu CCT Agreements are set out in the announcement

dated March 28, 2024.

On October 31, 2024, the Company entered into a new secondment agreement with Fujitsu (“New Secondment

Agreement”) as a de minimis transaction for a term of three years, regarding secondment of employees from members

of Fujitsu Group to FCCL, on the same terms and conditions as applied to the Secondment Agreement, which expired

on May 2, 2025 and was not renewed upon expiry. On February 28, 2025, the annual caps of the New Secondment

Agreement were set for the financial year ended March 31, 2025, two financial years ending March 31, 2026 and March 31,

2027 and the seven months ending October 31, 2027.

On February 28, 2025, the annual caps of the Manufacturing Agreement (FIT) and the Sales and Distribution Agreement

(all of which form part of the 2023 Renewed Fujitsu CCT Agreements), for the financial year ended March 31, 2025 were

revised (the “Revision”) in light of the strong performance of FCCL’s business in FY2024/25. In addition, the terms of

the Transitional Services Agreement, the Manufacturing Agreement (FIT) and Sales and Distribution Agreement (the

“2025 Renewed Fujitsu CCT Agreements”) were extended to May 2, 2026 by entering into side letters between FCCL

and the respective parties and the annual caps of the 2025 Renewed Fujitsu CCT Agreements were set for the financial

year ending March 31, 2026. Details of the Revision, renewal of the 2025 Renewed Fujitsu CCT Agreements and the New

Secondment Agreement are set out in the announcement dated February 28, 2025.

Save as the revisions mentioned above, other agreements forming the remaining part of the 2023 Renewed Fujitsu CCT

Agreements were not renewed.

Lenovo Group Limited 2024/25 Annual Report

161

Continuing connected transactions

(continued)

Details of such continuing connected transactions contemplated under the 2023 Renewed Fujitsu CCT Agreements and

the New Secondment Agreement conducted by the Group with Fujitsu Group during the year are set out as follows:

(i)

Transitional Services Agreement

Date:

May 2, 2018 with side letters entered on March 31, 2023, March 28, 2024 and

February 28, 2025 respectively

Parties:

FCCL and Fujitsu

Services provided/received:

Transitional services provided by Fujitsu to FCCL and vice versa including research

and development of hardware and software, sales and marketing, information

technology support, development and management, customer care support,

quality control, manufacturing support, supply chain management, procurement

and corporate management.

Term:

The term commenced from May 2, 2018 and expired on May 2, 2023, which was

subsequently extended to May 2, 2024, May 2, 2025 and May 2, 2026 by entering

into side letters on March 31, 2023, March 28, 2024 and February 28, 2025

respectively due to mutual development needs and goals of the Company and

Fujitsu.

The term may be extended under the same terms and conditions by mutual

agreement between the parties.

Annual cap:

Expenses incurred from the use of services provided by Fujitsu to FCCL:

1/4/2024 – 31/3/2025: JPY6,442 million (approximately US$42.8 million)

(Note 1)

1/4/2025 – 31/3/2026: JPY6,161 million (approximately US$41.1 million)

(Note 2)

Incomes generated for services to Fujitsu by FCCL:

1/4/2024 – 31/3/2025: JPY514 million (approximately US$3.4 million)

(Note 1)

1/4/2025 – 31/3/2026: JPY426 million (approximately US$2.8 million)

(Note 2)

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

162

Continuing connected transactions

(continued)

(ii)

Secondment Agreement

Date:

May 2, 2018 with side letters entered on March 31, 2023 and March 28, 2024

respectively

Parties:

FCCL and Fujitsu

Services provided/received:

Secondment by Fujitsu to FCCL of certain employees of Fujitsu.

Term:

The term commenced from May 2, 2018 and expired on May 2, 2023, which was

subsequently extended to May 2, 2024 and May 2, 2025 by entering into side letters

on March 31, 2023 and March 28, 2024 respectively due to mutual development

needs and goals of the Company and Fujitsu.

Annual cap:

Expenses incurred from the use of services provided by Fujitsu to FCCL:

1/4/2024 – 31/3/2025: JPY55 million (approximately US$0.4 million)

(Note 1)

(iii) Manufacturing Agreement (FIT)

(Note 3)

Date:

May 2, 2018 with side letters entered on March 31, 2023, March 28, 2024 and

February 28, 2025 respectively

Parties:

FCCL and Fujitsu Isotec Limited (“FIT”)

Services provided/received:

FIT agreed to provide manufacturing services to FCCL. FCCL agreed to provide

component sourcing services to FIT.

Term:

The term commenced from May 2, 2018 and expired on May 2, 2023, which was

subsequently extended to May 2, 2024, May 2, 2025 and May 2, 2026 by entering

into side letters on March 31, 2023, March 28, 2024 and February 28, 2025

respectively due to mutual development needs and goals of the Company and

Fujitsu.

The term may be extended under the same terms and conditions by mutual

agreement between the parties.

Annual cap:

Expenses incurred from the use of services provided by FIT to FCCL:

1/4/2024 – 31/3/2025: Revised from JPY386 million (approximately US$2.6 million)

(Note 1)

to JPY470 million (approximately US$3.1 million)

(Note 2)

1/4/2025 – 31/3/2026: JPY503 million (approximately US$3.4 million)

(Note 2)

Lenovo Group Limited 2024/25 Annual Report

163

Continuing connected transactions

(continued)

(iv) Sales and Distribution Agreement

Date:

May 2, 2018 with side letters entered on March 31, 2023, March 28, 2024 and

February 28, 2025 respectively

Parties:

FCCL and Fujitsu

Services provided/received:

FCCL agreed to supply Fujitsu-branded products and such other products as

agreed between the parties and services to Fujitsu.

Term:

The term commenced from May 2, 2018 and expired on May 2, 2023, which was

subsequently extended to May 2, 2024, May 2, 2025 and May 2, 2026 by entering

into side letters on March 31, 2023, March 28, 2024 and February 28, 2025

respectively due to mutual development needs and goals of the Company and

Fujitsu.

The term may be extended under the same terms and conditions by mutual

agreement between the parties.

Annual cap:

Incomes generated for services to Fujitsu by FCCL:

1/4/2024 – 31/3/2025: Revised from JPY151,561 million (approximately US$1,006.2

million)

(Note 1)

to JPY196,900 million (approximately US$1,314.1 million)

(Note 2)

1/4/2025 – 31/3/2026: JPY239,980 million (approximately US$1,601.6 million)

(Note 2)

(v)

Fujitsu Trademark and Brand License Agreement

Date:

May 2, 2018 with a notice of extension on January 16, 2023

Parties:

FCCL and Fujitsu

Services provided/received:

Fujitsu granted FCCL licenses to use Fujitsu name and trademarks.

Term:

The term commenced from May 2, 2018 and expired on May 2, 2023, which was

subsequently extended to May 2, 2026 following the exercise of option by FCCL

by providing a notice of extension to Fujitsu on January 16, 2023 due to mutual

development needs and goals of the Company and Fujitsu.

The term may be extended under the same terms and conditions by mutual

agreement between the parties.

Annual cap:

Royalty payable to Fujitsu:

1/4/2024 – 31/3/2025: JPY685 million (approximately US$5.2 million)

(Note 4)

1/4/2025 – 31/3/2026: JPY639 million (approximately US$4.9 million)

(Note 4)

Directors’ report

Lenovo Group Limited 2024/25 Annual Report

164

Continuing connected transactions

(continued)

(vi) New Secondment Agreement

Date:

October 31, 2024

Parties:

FCCL and Fujitsu

Services provided/received:

Secondment by Fujitsu to FCCL of certain employees of Fujitsu.

Term:

The term commenced from November 1, 2024 and will be expired on October 31,

2027.

Annual cap:

Expenses incurred from the use of services provided by Fujitsu to FCCL:

1/11/2024 – 31/3/2025: JPY100 million (approximately US$0.7 million)

(Note 2)

1/4/2025 – 31/3/2026: JPY161 million (approximately US$1.1 million)

(Note 2)

1/4/2026 – 31/3/2027: JPY162 million (approximately US$1.1 million)

(Note 2)

1/4/2027 – 31/10/2027: JPY96 million (approximately US$0.6 million)

(Note 2)

Notes:

The translation of Japanese yen into United States dollars is based on the exchange rate of JPY1.00 to US$0.006639 for information purposes only.

The translation of Japanese yen into United States dollars is based on the exchange rate of JPY1.00 to US$0.006674 for information purposes only.

FCCL ceased and did not provide any component sourcing services to FIT under the Manufacturing Agreement (FIT) for the financial year ended

March 31, 2025.

The translation of Japanese yen into United States dollars is based on the exchange rate of JPY1.00 to US$0.007645 for information purposes only.

Full details of the above continuing connected transactions are set out in the announcements published by the Company

on November 2, 2017, May 2, 2018, February 21, 2020, March 31, 2023, March 28, 2024 and February 28, 2025 and on the

websites of the Group and Hong Kong Exchanges and Clearing Limited.

In accordance with rule 14A.55 of the Listing Rules, the independent non-executive directors of the Company reviewed

the continuing connected transactions as mentioned above and confirmed that the transactions were entered into:

(1)

in the ordinary and usual course of business of the Group;

(2)

on normal commercial terms or better; and

(3)

according to the relevant agreement governing them on terms that are fair and reasonable and in the interests of

the shareholders of the Group as a whole.

Pursuant to rule 14A.56 of the Listing Rules, the Company’s external auditor, PricewaterhouseCoopers (“PwC”) was

engaged to report on the Group’s continuing connected transactions in accordance with Hong Kong Standard on

Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial

Information” and with reference to Practice Note 740 (Revised) “Auditor’s Letter on Continuing Connected Transactions

under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified Public Accountants. PwC has issued

an unqualified letter containing findings and conclusions in respect of the continuing connected transactions disclosed

by the Group in the paragraph above in accordance with rule 14A.56 of the Listing Rules.

Lenovo Group Limited 2024/25 Annual Report

165

Significant related party transactions

During the year, the Group entered into certain transactions with parties regarded as “related parties” under applicable

accounting principles. Details of the significant related party transactions undertaken in the normal course of business

are set out in note 34 to the financial statements. None of these transactions constitutes a discloseable connected

transaction as defined under the Listing Rules.

Auditor

The financial statements for the year have been audited by PwC who retire and, being eligible, offer themselves for re-

appointment.

Public float

Based on the information that is publicly available to the Company and within the knowledge of the directors of the

Company, as at the date of this report, there is sufficient public float of more than 25% of the Company’s total number of

issued shares as required under the Listing Rules.

On behalf of the Board

Yang Yuanqing

Chairman and Chief Executive Officer

May 22, 2025

Independent auditor’s report

Lenovo Group Limited 2024/25 Annual Report

166

Independent auditor’s report

To the members of Lenovo Group Limited

(incorporated in Hong Kong with limited liability)

Opinion

What we have audited

The consolidated financial statements of Lenovo Group Limited (the “Company”) and its subsidiaries (the “Group”),

which are set out on pages 171 to 266, comprise:

•

the consolidated balance sheet as at March 31, 2025;

•

the consolidated income statement for the year then ended;

•

the consolidated statement of comprehensive income for the year then ended;

•

the consolidated statement of changes in equity for the year then ended;

•

the consolidated cash flow statement for the year then ended; and

•

the notes to the consolidated financial statements, comprising material accounting policy information and other

explanatory information.

Our opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the

Group as at March 31, 2025, and of its consolidated financial performance and its consolidated cash flows for the year

then ended in accordance with HKFRS Accounting Standards as issued by the Hong Kong Institute of Certified Public

Accountants (“HKICPA”) and have been properly prepared in compliance with the Hong Kong Companies Ordinance.

Basis for opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) as issued by the HKICPA.

Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the

Consolidated Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“the

Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the

consolidated financial statements of the current period. These matters were addressed in the context of our audit of

the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate

opinion on these matters.

Lenovo Group Limited 2024/25 Annual Report

167

Key audit matters

(continued)

Key audit matters identified in our audit are summarised as follows:

•

Impairment assessment of goodwill and other intangible assets with indefinite useful lives

•

Recognition of deferred income tax assets

Key audit matter

How our audit addressed the key audit matter

Impairment assessment of goodwill and other

intangible assets with indefinite useful lives

Refer to note 14 to the consolidated financial

statements

As at March 31, 2025, the Group had goodwill and

other intangible assets with indefinite useful lives

totaling US$6,118 million. The Group tests at least

annually whether goodwill and other intangible assets

that have indefinite useful lives have suffered any

impairment.

For the purpose of assessing impairment, assets

are grouped at the lowest level for which there are

separately identified cash flows cash generating units

(“CGUs”). The recoverable amount of each CGU was

determined based on value in use calculations using

cash flow projections.

We focused on the impairment of goodwill and other

intangible assets with indefinite useful lives because

the estimation of recoverable amount is subject to

high degree of estimation uncertainty. The inherent

risk in relation to the impairment of goodwill and

other intangible assets with indefinite useful lives is

considered significant due to significant management

judgement to appropriately identify CGUs and to

determine the key assumptions, including revenue

growth rates, operating margins and discount rates.

Management are of the view that there was no

evidence of impairment of goodwill or other intangible

assets with indefinite useful lives as at March 31, 2025.

Our procedures in relation to the Group’s impairment

assessment included:

•

Assessing the value in use calculation methodology

adopted by management.

•

Understanding management’s controls and processes for

determining the recoverable amount and assessing

the inherent risk of material misstatement by

considering the degree of estimation uncertainty and

the judgement involved in determining assumptions

to be applied.

•

Assessing management’s identification of CGUs

based on the Group’s accounting policies and our

understanding of the Group’s business.

•

Challenging the reasonableness of key assumptions

such as revenue growth rates, operating margins and

discount rates with reference to the business and

industry circumstances.

•

Reconciling input data to supporting evidence, such

as approved forecasts of future profits and strategic

plans.

•

Considering the reasonableness of the forecasts of

future profits and strategic plans by comparing them

against past results achieved.

•

Assessing management’s sensitivity analysis around

the key assumptions, to ascertain the extent to which

adverse changes, both individually or in aggregate,

might impact on the outcome of the impairment

assessment of the goodwill and other intangible

assets with indefinite useful lives.

We found the judgements made by management in

relation to the impairment assessment to be supportable

based on the available evidence.

Independent auditor’s report

Lenovo Group Limited 2024/25 Annual Report

168

Key audit matters

(continued)

Key audit matter

How our audit addressed the key audit matter

Recognition of deferred income tax assets

Refer to note 16 to the consolidated financial

statements

As at March 31, 2025, the Group had deferred income

tax assets of US$3,056 million.

Deferred income tax assets are recognized to the

extent that it is probable that future taxable profit will

be available against which the temporary differences

can be utilized.

Deferred income tax is determined using tax rates (and

laws) that have been enacted or substantively enacted

by the balance sheet date and expected to apply when

the related deferred tax income asset is realized.

We focused on the recognition of deferred income tax

assets because the estimation of future taxable profit

is subject to high degree of estimation uncertainty.

The inherent risk in relation to the recognition of

deferred income tax assets is considered significant

due to significant management judgement regarding

the future financial performance of the entity in which

the deferred income tax asset has been recognized. A

number of factors are evaluated in considering whether

there is evidence that it is probable the deferred

income tax assets will be realized, including whether

there will be sufficient taxable profits available during

the utilization periods, existence of taxable temporary

differences, group relief and tax planning strategies.

Management has performed its assessment on the

recognition of these deferred income tax assets

and considers that the realization of these assets is

probable as at March 31, 2025.

Our procedures in relation to the recognition of deferred

income tax assets included:

•

Understanding management’s controls and processes for

the recognition of deferred income tax assets and

assessing the inherent risk of material misstatement

by considering the degree of estimation uncertainty

and the judgement involved in determining

assumptions to be applied.

•

Evaluating management’s assessment as to whether

there will be sufficient taxable profits in future

periods by reference to forecasts of future profits/

strategic plans and future reversals of taxable

temporary differences to support the recognition of

deferred income tax assets.

•

Assessing the underlying assumptions used in

management’s approved forecasts of future profits

such as revenue growth rates and operating margins

by comparison to historical results and future

strategic and tax plans and with reference to the

business and industry circumstances.

•

Testing management’s reconciliations of forecast

profits to forecast taxable profits to supporting

evidence on a sample basis.

•

Validating available tax losses, including the

respective expiry periods to tax returns and tax

correspondence of the relevant subsidiaries.

•

Testing the calculation of deferred income tax assets

by reference to tax rates enacted or substantively

enacted by the balance sheet date.

We found the judgements made by management in

relation to recognition of deferred income tax assets to be

supportable based on the available evidence.

Lenovo Group Limited 2024/25 Annual Report

169

Other information

The directors of the Company are responsible for the other information. The other information comprises all of the

information included in the annual report other than the consolidated financial statements and our auditor’s report

thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any

form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial

statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we

are required to report that fact. We have nothing to report in this regard.

Responsibilities of directors and the audit committee for the consolidated financial statements

The directors of the Company are responsible for the preparation of the consolidated financial statements that give

a true and fair view in accordance with HKFRS Accounting Standards as issued by the HKICPA and the Hong Kong

Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible for assessing the Group’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern

basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic

alternative but to do so.

The Audit Committee is responsible for overseeing the Group’s financial reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

We report our opinion solely to you, as a body, in accordance with Section 405 of the Hong Kong Companies Ordinance,

and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the

contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted

in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud

or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence

the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain professional scepticism

throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient

and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting

from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

Group’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and

related disclosures made by the directors.

Independent auditor’s report

Lenovo Group Limited 2024/25 Annual Report

170

Auditor’s responsibilities for the audit of the consolidated financial statements

(continued)

•

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on

the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast

significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty

exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated

financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the

audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the

Group to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the

disclosures, and whether the consolidated financial statements represent the underlying transactions and events in

a manner that achieves fair presentation.

•

Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information

of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial

statements. We are responsible for the direction, supervision and review of the audit work performed for purposes

of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit

and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements

regarding independence, and to communicate with them all relationships and other matters that may reasonably be

thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance

in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We

describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or

when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because

the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such

communication.

The engagement partner on the audit resulting in this independent auditor’s report is Shia Yuen Yee (practising

certificate number: P05129).

PricewaterhouseCoopers

Certified Public Accountants

Hong Kong, May 22, 2025

Consolidated income statement

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

171

Note

2025

US$’000

2024

US$’000

Revenue

69,076,968

56,863,784

Cost of sales

(57,979,358)

(47,060,601)

Gross profit

11,097,610

9,803,183

Selling and distribution expenses

(3,584,534 )

(3,308,889)

Administrative expenses

(2,822,604 )

(2,491,839)

Research and development expenses

(2,288,204)

(2,027,532)

Other operating income/(expenses) — net

(238,115)

30,861

Operating profit

2,164,153

2,005,784

Finance income

5(a)

109,964

148,134

Finance costs

5(b)

(773,269 )

(762,805)

Share of losses of associates and joint ventures

(19,978 )

(25,659)

Profit before taxation

1,480,870

1,365,454

Taxation

(18,918 )

(263,142)

Profit for the year

1,461,952

1,102,312

Profit attributable to:

Equity holders of the Company

1,384,445

1,010,506

Other non-controlling interests

77,507

91,806

1,461,952

1,102,312

Earnings per share attributable to equity holders of the

Company

Basic

9(a)

US11.30 cents

US8.41 cents

Diluted

9(b)

US10.62 cents

US8.05 cents

Consolidated statement of comprehensive income

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

172

Note

2025

US$’000

2024

US$’000

Profit for the year

1,461,952

1,102,312

Other comprehensive income/(loss):

Items that will not be reclassified to profit or loss

Remeasurements of post-employment benefit obligations,

net of taxes

6, 27

5,561

(6,674)

Fair value change on financial assets at fair value through

other comprehensive income, net of taxes

6, 17

(11,369 )

(7,802)

Items that have been reclassified or may be subsequently

reclassified to profit or loss

Fair value change on cash flow hedges from foreign

exchange forward contracts, net of taxes

— Fair value gain, net of taxes

80,174

143,653

— Reclassified to consolidated income statement

(182,314 )

(92,356)

Currency translation differences

(377,729 )

(366,849)

Other comprehensive loss for the year

(485,677)

(330,028)

Total comprehensive income for the year

976,275

772,284

Total comprehensive income attributable to:

Equity holders of the Company

893,258

718,173

Other non-controlling interests

83,017

54,111

976,275

772,284

Consolidated balance sheet

At March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

173

Note

2025

US$’000

2024

US$’000

Non-current assets

Property, plant and equipment

2,026,280

2,010,178

Right-of-use assets

592,340

571,305

Construction-in-progress

282,309

337,648

Intangible assets

8,232,977

8,345,407

Interests in associates and joint ventures

315,704

318,803

Deferred income tax assets

3,055,905

2,633,302

Financial assets at fair value through profit or loss

1,464,384

1,393,666

Financial assets at fair value through other comprehensive

income

45,382

55,973

Other non-current assets

311,448

397,489

16,326,729

16,063,771

Current assets

Inventories

7,923,804

6,702,677

Trade and notes receivables

19(a)

10,506,610

8,147,695

Derivative financial assets

53,690

69,568

Deposits, prepayments and other receivables

19(c)

4,223,658

3,782,366

Income tax recoverable

379,590

359,491

Bank deposits

88,607

65,555

Cash and cash equivalents

4,728,124

3,559,831

27,904,083

22,687,183

Total assets

44,230,812

38,750,954

Consolidated balance sheet

At March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

174

Note

2025

US$’000

2024

US$’000

Share capital

3,500,987

Reserves

2,568,000

2,081,606

Equity attributable to owners of the Company

6,068,987

5,582,593

Other non-controlling interests

1,138,283

1,045,947

Put option written on non-controlling interests

22(b)

(547,353 )

(547,353)

Total equity

6,659,917

6,081,187

Non-current liabilities

Borrowings

4,337,806

3,569,229

Warranty provision

159,400

161,261

Deferred revenue

1,628,942

1,436,484

Retirement benefit obligations

220,784

241,402

Deferred income tax liabilities

270,268

447,523

Derivative financial liabilities

241,778

–

Other non-current liabilities

717,784

754,705

7,576,762

6,610,604

Current liabilities

Trade and notes payables

11,978,933

10,505,427

Derivative financial liabilities

197,196

42,555

Other payables and accruals

13,904,384

12,751,775

Provisions

852,593

920,950

Deferred revenue

1,565,459

1,512,645

Income tax payable

465,216

275,380

Borrowings

1,030,352

50,431

29,994,133

26,059,163

Total liabilities

37,570,895

32,669,767

Total equity and liabilities

44,230,812

38,750,954

On behalf of the Board

Yang Yuanqing

Wong Wai Ming

Chairman and Chief Executive Officer

Director

Consolidated cash flow statement

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

175

Note

2025

US$’000

2024

US$’000

Cash flows from operating activities

Net cash generated from operations

31(a)

2,312,940

3,368,939

Interest paid

(725,686 )

(744,049)

Tax paid

(487,432 )

(613,899)

Net cash generated from operating activities

1,099,822

2,010,991

Cash flows from investing activities

Purchase of property, plant and equipment

(352,979 )

(275,096)

Sale of property, plant and equipment

38,918

28,010

Acquisition of businesses, net of cash acquired

31(c)

(1,537 )

(135,059)

Interests acquired in associates

(8,917 )

(12,378)

Deemed disposal of a subsidiary, net of cash disposed

(14,272)

–

Loans to an associate and a joint venture

(26,564 )

(6,738)

Repayment of loans to an associate and a joint venture

29,971

30,563

Payment for construction-in-progress

(313,499 )

(454,681)

Payment for intangible assets

(484,674 )

(556,120)

Purchase of financial assets at fair value through profit or loss

(155,775 )

(179,192)

Purchase of financial assets at fair value through other

comprehensive income

(14)

–

Net proceeds from sale of financial assets at fair value through

profit or loss

138,041

124,314

Net proceeds from disposal of interest in an associate

–

313

(Increase)/decrease in bank deposits

(23,052 )

5,608

Dividends received

8,114

2,933

Interest received

109,964

144,073

Net cash used in investing activities

(1,056,275)

(1,283,450)

Consolidated cash flow statement

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

176

Note

2025

US$’000

2024

US$’000

Cash flows from financing activities

31(b)

Capital contribution from other non-controlling interests

91,783

112,646

Distribution to other non-controlling interests

(12,516 )

(8,868)

Purchase of shares by employee share trusts

(252,389 )

(469,955)

Acquisition of additional interest in a subsidiary

(12,861 )

(76,722)

Principal elements of lease payments

(121,071 )

(134,545)

Dividends paid

(608,351)

(583,273)

Dividends paid to other non-controlling interests

(59,286 )

(36,995)

Proceeds from issue of warrants

211,652

–

Proceeds from issue of convertible bonds

2,000,000

–

Issuing cost of convertible bonds

(20,192 )

–

Proceeds from loans

17,014,380

11,792,697

Repayments of loans

(17,041,262 )

(11,799,007)

Repurchase of notes

–

(132,083)

Net cash generated from/(used in) financing activities

1,189,887

(1,336,105)

Increase/(decrease) in cash and cash equivalents

1,233,434

(608,564)

Effect of foreign exchange rate changes

(65,141)

(81,690)

Cash and cash equivalents at the beginning of the year

3,559,831

4,250,085

Cash and cash equivalents at the end of the year

4,728,124

3,559,831

Consolidated statement of changes in equity

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

177

Attributable to equity holders of the Company

capital

US$’000

Investment

revaluation

reserve

US$’000

Employee

trusts

US$’000

Share-based

compensation

reserve

US$’000

Hedging

reserve

US$’000

Exchange

reserve

US$’000

Other

reserves

US$’000

Retained

earnings

US$’000

Other

non-

controlling

interests

US$’000

Put option

written on

non-

controlling

interests

US$’000

Total

US$’000

At April 1, 2023

3,282,318

(60,860)

(153,385)

(344,218)

(9,154)

(2,096,441)

163,411

4,805,919

1,006,784

(547,353)

6,047,021

Profit for the year

–

1,010,506

91,806

–

1,102,312

Other comprehensive (loss)/income

–

(7,802)

–

51,297

(329,154)

–

(6,674)

(37,695)

–

(330,028)

Total comprehensive (loss)/income

for the year

–

(7,802)

–

51,297

(329,154)

–

1,003,832

54,111

–

772,284

Transfer to statutory reserve

–

19,370

(19,370)

–

Acquisition of subsidiaries

–

(3,462)

–

(3,462)

Vesting of shares under long-term

incentive program

–

415,853

(579,749)

–

(163,896)

Deferred tax in relation to long-term

incentive program

–

(6,487)

–

(6,487)

Settlement of bonus through long-

term incentive program

–

2,445

–

2,445

Share-based compensation

–

277,574

–

277,574

Purchase of shares by employee

share trusts

–

(469,955)

–

(469,955)

Dividends paid

–

(583,273)

–

(583,273)

Dividends paid to other

non-controlling interests

–

(36,995)

–

(36,995)

Capital contribution from other

non-controlling interests

–

6,844

–

106,008

–

112,852

Distribution to other non-controlling

interests

–

(8,868)

–

(8,868)

Change of ownership of subsidiaries

without loss of control

–

(5,091)

–

(71,631)

–

(76,722)

Conversion of convertible bonds

218,669

–

218,669

At March 31, 2024

3,500,987

(68,662)

(207,487)

(650,435)

42,143

(2,425,595)

184,534

5,207,108

1,045,947

(547,353)

6,081,187

Consolidated statement of changes in equity

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

178

Attributable to equity holders of the Company

capital

US$’000

Investment

revaluation

reserve

US$’000

Employee

trusts

US$’000

Share-based

compensation

reserve

US$’000

Hedging

reserve

US$’000

Exchange

reserve

US$’000

Other

reserves

US$’000

Retained

earnings

US$’000

Other

non-

controlling

interests

US$’000

Put option

written on

non-

controlling

interests

US$’000

Total

US$’000

At April 1, 2024

3,500,987

(68,662)

(207,487

)

(650,435

)

42,143

(2,425,595

)

184,534

5,207,108

1,045,947

(547,353

)

6,081,187

Profit for the year

–

1,384,445

77,507

–

1,461,952

Other comprehensive (loss)/income

–

(11,369

)

–

(102,140)

(383,239

)

–

5,561

5,510

–

(485,677)

Total comprehensive (loss)/income

for the year

–

(11,369

)

–

(102,140)

(383,239

)

–

1,390,006

83,017

–

976,275

Transfer to statutory reserve

–

16,895

(16,895

)

–

Deemed disposal of a subsidiary

–

(13,513)

(135)

–

(718

)

–

(14,366)

Transfer of investment revaluation

reserve upon disposal of financial

assets at fair value through

other comprehensive income to

retained earnings

–

290

–

(290)

–

Vesting of shares under long-term

incentive program

–

318,524

(448,422

)

–

(129,898)

Deferred tax in relation to long-term

incentive program

–

5,322

–

5,322

Settlement of bonus through long-

term incentive program

–

561

–

561

Share-based compensation

–

290,245

–

290,245

Purchase of shares by employee

share trusts

–

(252,389

)

–

(252,389)

Dividends paid

–

(608,351

)

–

(608,351)

Dividends paid to other

non-controlling interests

–

(59,286

)

–

(59,286)

Capital contribution from other

non-controlling interests

–

13,067

–

92,319

–

105,386

Distribution to other non-controlling

interests

–

(12,516

)

–

(12,516)

Change of ownership of subsidiaries

without loss of control

–

(2,381

)

–

(10,480

)

–

(12,861)

Issue of convertible bonds

(Note 24(c))

–

290,608

–

290,608

At March 31, 2025

3,500,987

(79,741

)

(141,352

)

(802,729

)

(59,997)

(2,822,347

)

502,588

5,971,578

1,138,283

(547,353

)

6,659,917

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

179

General information and basis of preparation

Lenovo Group Limited (the “Company”) and its subsidiaries (together, the “Group”) develop, manufacture and

market reliable, high-quality, secure and easy-to-use technology products and services. Its product lines include

legendary Think-branded commercial personal computers and Idea-branded consumer personal computers, as well

as servers, workstations, and a family of mobile internet devices, including tablets and smartphones.

The Company is a limited liability company incorporated in Hong Kong S.A.R. of China. The address of its registered

office is 23rd Floor, Lincoln House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong S.A.R. of China. The

Company has its primary listing on The Stock Exchange of Hong Kong Limited.

The consolidated financial statements have been prepared in accordance with HKFRS Accounting Standards

(“HKFRS”). The consolidated financial statements have been prepared under the historical cost convention except

that plan assets under defined benefit pension plans and certain financial assets and financial liabilities are stated

at fair values, as explained in the material accounting policies set out in relevant notes to the consolidated financial

statements.

The preparation of the consolidated financial statements in conformity with HKFRS requires the use of certain

critical accounting estimates. It also requires management to exercise its judgment in the process of applying the

Group’s accounting policies. Estimates and judgments used in preparing the financial statements are continually

evaluated and are based on historical experience and other factors, including expectations of future events that may

have a financial impact on the entity and that are believed to be reasonable under the circumstances. The resulting

accounting estimates will, by definition, seldom equal the related actual results. The areas involving a higher degree

of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial

statements, are disclosed in relevant notes to the consolidated financial statements.

Changes in accounting policies and disclosures

Interpretation and amendments to existing standards adopted by the Group

The following interpretation and amendments to existing standards became applicable for the current year. The

Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting

these interpretation and amendments to existing standards.

—

Hong Kong Interpretation 5 (Revised), Presentation of financial statements — Classification by the borrower of

a term loan that contains a repayment on demand clause

—

Amendments to HKAS 1, Classification of liabilities as current or non-current

—

Amendments to HKAS 1, Non-current liabilities with covenants

—

Amendments to HKFRS 16, Lease liability in a sale and leaseback

—

Amendments to HKAS 7 and HKFRS 7, Supplier finance arrangements

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

180

General information and basis of preparation

(continued)

Changes in accounting policies and disclosures

(continued)

New and amendments to standards in issue not yet effective

The following new standards, amendments and improvements to standards, which may be applicable to the Group,

have been issued but are not effective for the year ended March 31, 2025 and have not been early adopted:

Effective for annual

periods beginning

on or after

Amendments to HKAS 21, Lack of exchangeability

April 1, 2025

Amendments to HKFRS 9 and HKFRS 7, Amendments to the classification and

measurement of financial instruments

April 1, 2026

Amendments to HKFRS 9 and HKFRS 7, Contracts referencing nature-dependent

electricity

April 1, 2026

Annual improvements to HKFRS accounting standards — Volume 11

April 1, 2026

HKFRS 18, Presentation and disclosure in financial statements

April 1, 2027

Amendments to HKFRS 10 and HKAS 28, Sale or contribution of assets

between an investor and its associate or joint venture

Date to be determined

HKFRS 18 will replace HKAS 1 Presentation of financial statements, introducing new requirements that will help

to achieve comparability of the financial performance of similar entities and provide more relevant information

and transparency to users. Even though HKFRS 18 will not impact the recognition or measurement of items in the

financial statements, its impacts on presentation and disclosure are expected to be pervasive. The Group will apply

the new standard from its mandatory effective date of April 1, 2027. Retrospective application is required, and so the

comparative information for the financial year ending March 31, 2027 will be restated in accordance with HKFRS 18.

Except for the abovementioned changes in presentation and disclosure, the application of new and amendments to

standards is not expected to have a material impact on the consolidated financial statements of the Group.

Material accounting policies

Other than the material accounting policies included in corresponding notes to the consolidated financial

statements, the material accounting policies adopted in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

(a)

Principles of consolidation and equity accounting

(i)

Subsidiaries

The consolidated financial statements include the financial statements of the Company and all of its

subsidiaries made up to March 31.

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group

controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement

with the entity and has the ability to affect those returns through its power to direct the activities of the

entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are

deconsolidated from the date that control ceases.

The Group operates certain businesses in the Mainland of China (“Chinese Mainland”) through the variable

interest entities (“VIE”), whose equity interests are held by certain key management personnel of the

Group. The Group obtained control over these VIEs by entering into a series of contractual arrangement

with the legal shareholders who are also referred to as nominee shareholders. These nominee shareholders

are the legal owners of the VIEs. However, the rights of those nominee shareholders have been transferred

to the Group through the contractual arrangements.

Lenovo Group Limited 2024/25 Annual Report

181

Material accounting policies

(continued)

(a)

Principles of consolidation and equity accounting

(continued)

(i)

Subsidiaries

(continued)

The contractual arrangements that are used to control the VIEs include loan agreements, powers of

attorney, exclusive consultation service agreements, exclusive business cooperation agreement, equity

pledge agreements and exclusive option agreements. Management concluded that the Group, through the

contractual arrangements, has the power to direct the activities that most significantly impact the VIEs’

economic performance, bears the risks of and enjoys the rewards normally associated with the ownership

of the VIEs, and therefore the Group is the ultimate primary beneficiary of these VIEs. Consequently, the

financial results of the VIEs were included in the Group’s consolidated financial statements accordingly.

The acquisition method of accounting is used to account for business combinations by the Group.

Inter-company transactions, balances and unrealized gains on transactions between Group companies

are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an

impairment of the transferred asset.

Adjustments have been made to the financial statements of subsidiaries when necessary to align their

accounting policies to ensure consistency with the policies adopted by the Group.

For subsidiaries which adopted December 31 as their financial year end date for statutory reporting

purposes, their financial statements for the years ended March 31, 2025 and 2024 have been used for the

preparation of the Group’s consolidated financial statements.

(ii)

Business combinations

The Group applies the acquisition method to account for business combinations. The consideration

transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities

incurred to the former owners of the acquiree and the equity interests issued by the Group. Identifiable

assets acquired and liabilities and contingent liabilities assumed in a business combination are measured

initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in

the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s

proportionate share of the recognized amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquirer’s previously held equity interest in the

acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-

measurement are recognized in profit or loss.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred, amount of

any non-controlling interest in the acquiree and acquisition-date fair value of any previous equity interest

in the acquiree over the fair value of the net identifiable assets acquired and liabilities assumed (Note

14). If it is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized

directly in the consolidated income statement.

Critical accounting estimates and judgments

The Group applies the acquisition method to account for business combinations, which requires the

Group to record assets acquired and liabilities assumed at their fair values on the date of acquisition.

Significant judgment is used to estimate the fair values of the assets and liabilities acquired, including

estimating future cash flows from the acquired business, determining appropriate discount rates, asset

lives and other assumptions.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

182

Material accounting policies

(continued)

(a)

Principles of consolidation and equity accounting

(continued)

(iii) Changes in ownership interests

The Group treats transactions with non-controlling interests that do not result in a loss of control as

transactions with equity owners of the Group. A change in ownership interest results in an adjustment

between the carrying amounts of the controlling and non-controlling interests to reflect their relative

interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling

interests and any consideration paid or received is recognized in a separate reserve within equity

attributable to owners of the Company.

When the Group ceases to consolidate or equity account for an investment because of a loss of control,

joint control or significant influence, any retained interest in the entity is re-measured to its fair value

with the change in carrying amount recognized in profit or loss. This fair value becomes the initial

carrying amount for the purposes of subsequent accounting for the retained interest as an associate,

joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive

income in respect of that entity are accounted for as if the Group had directly disposed of the related

assets or liabilities. This may mean that amounts previously recognized in other comprehensive income

are reclassified to profit or loss or transferred to another category of equity as specified/permitted by

applicable HKFRSs.

If the ownership interest in a joint venture or an associate is reduced but joint control or significant

influence is retained, only a proportionate share of the amounts previously recognized in other

comprehensive income are reclassified to profit or loss where appropriate.

(iv) Separate financial statements

Investments in subsidiaries in the Company’s balance sheet are accounted for at cost less impairment.

The results of subsidiaries are accounted for by the Company on the basis of dividends received and

receivable.

Impairment testing of the investments in subsidiaries is required upon receiving dividends from these

investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the

dividend is declared or if the carrying amount of the investment in the separate financial statements

exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including

goodwill.

(v)

Associates and joint arrangements

Associates are entities over which the Group has significant influence but not control, generally

accompanying a shareholding of between 20% and 50% of the voting rights.

Investments in joint arrangements are classified as either joint operations or joint ventures depending

on the contractual rights and obligations of each investor, rather than the legal structures of the joint

arrangements. The Group has assessed the nature of its joint arrangements and applied HKFRS 11 in

preparing the consolidated financial statements.

(A) Associates and joint ventures

Interests in associates and joint ventures are accounted for using the equity method of accounting

and are initially recognized at cost. The Group’s interests in associates and joint ventures include

goodwill identified on acquisition, net of any accumulated impairment losses.

The Group’s share of its associates’ and joint ventures’ post-acquisition profits or losses is

recognized in the consolidated income statement, and its share of post-acquisition movements in

other comprehensive income or loss is recognized in other comprehensive income or loss with a

corresponding adjustment to the carrying amount of the investment. When the Group’s share of

losses in an associate or a joint venture equals or exceeds its interest in the associate or the joint

venture including any other unsecured receivables, the Group does not recognize further losses,

unless it has incurred legal or constructive obligations or made payments on behalf of the associate

or the joint venture.

Lenovo Group Limited 2024/25 Annual Report

183

Material accounting policies

(continued)

(a)

Principles of consolidation and equity accounting

(continued)

(v)

Associates and joint arrangements

(continued)

(A) Associates and joint ventures (continued)

The Group determines at each reporting date whether there is any objective evidence that the

investment in the associate and joint venture is impaired. If this is the case, the Group calculates

the amount of impairment as the difference between the recoverable amount of the associate or

joint venture and its carrying value and recognizes the amount adjacent to share of profit/(loss) of

associates and joint ventures in the consolidated income statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its

associates or joint ventures are recognized in the Group’s consolidated financial statements only to

the extent of unrelated investor’s interests in the associates or the joint ventures. Unrealized losses are

eliminated unless the transaction provides evidence of an impairment of the assets transferred.

Accounting policies of associates and joint ventures have been changed where necessary to ensure

consistency with the policies adopted by the Group.

For associates and joint ventures which adopted December 31 as their financial year end date for

statutory reporting purposes, their financial statements for the years ended March 31, 2025 and 2024

have been used for the preparation of the Group’s consolidated financial statements.

(B) Joint operation

Joint operations arise where the investors have rights to the assets and obligations for the liabilities

of an arrangement. Investments in joint operations are accounted for such that each joint operator

recognizes its assets (including its share of any assets jointly held), its liabilities (including its share of

any liabilities incurred jointly), its revenue (including its share of revenue from the sale of the output

by the joint operation) and its expenses (including its share of any expenses incurred jointly). Each

joint operator accounts for the assets and liabilities, as well as revenues and expenses, relating to its

interest in the joint operation in accordance with the applicable standards.

(b) Translation of foreign currencies

(i)

Items included in the financial statements of each of the Group’s entities are measured using the currency

of the primary economic environment in which the entity operates (the “functional currency”). The

financial statements of the Company and of the Group are presented in United States dollars, which is the

Company’s functional and the Group’s presentation currency.

(ii)

Foreign currency transactions are translated into the functional currency using the exchange rates at

the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such

transactions and from the translation of monetary assets and liabilities denominated in foreign currencies

at year end exchange rates are generally recognized in the consolidated income statement. They are

deferred in equity if they are related to qualifying cash flow hedges.

All foreign exchange gains and losses that relate to monetary assets and liabilities denominated in foreign

currency are presented in the consolidated income statement within “Other operating income/(expenses)

— net”.

Non-monetary items that are measured at fair value in a foreign currency are translated using the

exchange rates at the date when the fair value was determined. Translation differences on financial

assets and liabilities carried at fair value are as part of the fair value gain or loss. For example, translation

differences on non-monetary assets and liabilities such as equities held at fair value through profit or loss (“FVPL”)

are recognized in the consolidated income statement as part of the fair value gain or loss and translation

differences on non-monetary assets such as equities classified as fair value through other comprehensive

income (“FVOCI”) are recognized in other comprehensive income or loss.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

184

Material accounting policies

(continued)

(b) Translation of foreign currencies

(continued)

(iii)

The results and financial position of all the group entities that have a functional currency different from the

Group’s presentation currency are translated into the presentation currency as follows:

—

assets and liabilities for each balance sheet presented are translated at the closing rate at the date of

that balance sheet;

—

income and expenses for each income statement are translated at average exchange rates (unless

this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the

transaction dates, in which case income and expenses are translated at the rates on the dates of the

transactions); and

—

all resulting exchange differences are recognized in other comprehensive income or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets

and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising are

recognized in other comprehensive income or loss and included in the exchange reserve in equity.

(iv)

On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign

operation, or a disposal involving loss of control over a subsidiary, loss of joint control of a joint venture,

or loss of significant influence over an associate that includes a foreign operation), all of the exchange

differences accumulated in equity in respect of that operation attributable to the equity holders of the

Company are reclassified to the consolidated income statement.

In the case of a partial disposal that does not result in the Group losing control over a subsidiary that

includes a foreign operation, the proportionate share of the accumulated exchange differences are re-

attributed to non-controlling interests and are not recognized in the consolidated income statement. For

all other partial disposals (that is, reductions in the Group’s ownership interest in an associate or a joint

venture that do not result in the Group losing significant influence or joint control), the proportionate share

of the accumulated exchange differences is reclassified to the consolidated income statement.

Lenovo Group Limited 2024/25 Annual Report

185

Segment information

Accounting policy

(a)

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief

operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources

and assessing performance of the operating segments, has been identified as the Lenovo Executive

Committee (the “LEC”) that makes strategic decisions.

(b) Sale of goods and provision of services

Revenue from sale of hardware, software, peripherals and mobile devices and the provision of services is

recognized when control over such products or services is transferred to the customer at the amount of

promised consideration to which the Group is expected to be entitled, excluding those amounts collected

on behalf of third parties. Revenue excludes value-added tax, an allowance for estimated returns, rebates

and discounts.

The Group enters into different shipping terms with customers. Control of hardware, software, peripherals

and mobile devices is transferred when delivery has occurred. Delivery is generally considered as occurred

once the goods are shipped. For certain transactions that the Group retains control during the course of

shipment, the Group defers the recognition of revenue and cost of such products until they are delivered

to the designated locations. The Group’s obligation to repair or replace faulty products under the standard

warranty terms is recognized as a provision.

Control of systems integration service, information technology technical service and extended warranty

service is transferred over time during the contract period or when services are rendered.

The Group recognizes revenue on a gross or net basis depending on whether the Group is acting as a

principal or an agent in the transaction.

No element of financing is deemed present as the sales are made with a credit term of 0 – 120 days, which

is consistent with market practice. A receivable is recognized when the goods or services are delivered and

consideration is unconditional because only the passage of time is required before the payment is due.

(c)

Dividend income

Dividend income is recognized when the right to receive payment is established.

(d) Lease revenue

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or

an operating lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards

incidental to the ownership of an underlying assets to the lessee. If this is not the case, the lease is classified

as an operating lease.

On commencement of finance leases, the Group recognizes profit up-front, and amounts due from the

customer under the lease contract are recognized as finance lease receivables on the consolidated balance

sheet. Interest income is recognized over the term of the lease based on the effective interest method.

Lease revenue under operating leases is recognized in equal instalments over the periods covered by the

lease term. Lease incentives granted are recognized in profit or loss as an integral part of the aggregate

net lease payments receivable. Variable lease payments that do not depend on an index or a rate are

recognized as lease revenue in the accounting period in which they are earned.

When a contract contains lease and non-lease components, the Group allocates the consideration in the

contract to each component on a relative stand-alone selling price basis.

The equipment held for lease are presented within “Property, plant and equipment” in the consolidated

balance sheet in accordance with Note 11.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

186

Segment information

(continued)

Critical accounting estimates and judgments

Application of various accounting principles related to the measurement and recognition of revenue requires

the Group to make judgments and estimates. Specifically, complex arrangements with non-standard terms

and conditions may require significant contract interpretation to determine the appropriate accounting,

including whether the deliverables specified in a multiple element arrangement should be treated as separate

performance obligations. Other significant judgments include determining whether the Group or a reseller is

acting as the principal in a transaction and whether separate contracts are considered part of one arrangement.

The Group sells products to channels. Sales through channels are primarily made under agreements allowing

for volume discounts, price protection and rebates, and marketing development funds. The Group monitors the

channel inventory level with reference to historical data. Revenue recognition is also impacted by the Group’s

ability to estimate volume discounts, price protection and rebates, and marketing development funds. The

Group considers various factors, including review of specific transactions, historical experience, market and

economic conditions and channel inventory level when calculating these provisions and allowances (Note 22).

Revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur.

Revenue from sale of goods is recognized when the control of the goods is transferred to customers, which are

generally occurred upon shipment. For certain transactions that the Group retains control during the course of

shipment, the Group defers the recognition of revenue and cost of such products until they are delivered to the

designated locations.

Management has determined the operating segments based on the reports reviewed by the LEC, that are used to

make strategic decisions. Segments by business group comprise Intelligent Devices Group (“IDG”), Infrastructure

Solutions Group (“ISG”) and Solutions and Services Group (“SSG”).

The LEC assesses the performance of the operating segments based on a measure of operating profit/loss. This

measurement basis excludes the effects of non-cash merger and acquisition related accounting charges and non-

recurring expenses such as restructuring costs from the business groups. The measurement basis also excludes

the effects of allocation from headquarters certain income and expenses such as fair value change of financial

instruments and disposal gain/loss of property, plant and equipment that are from activities driven by headquarters

and centralized functions. Certain finance income and costs are allocated to business groups when they are directly

attributed to their business activities.

Lenovo Group Limited 2024/25 Annual Report

187

Segment information

(continued)

(a)

Revenue and operating profit/(loss) for reportable segments

2025

2024

Revenue

US$’000

Operating

profit/(loss)

US$’000

Revenue

US$’000

Operating

profit/(loss)

US$’000

IDG

50,534,350

3,622,559

44,599,450

3,180,761

ISG

14,523,268

(68,501)

8,921,929

(248,260)

SSG

8,457,084

1,784,832

7,472,310

1,545,465

Total

73,514,702

5,338,890

60,993,689

4,477,966

Eliminations

(4,437,734)

(1,421,467)

(4,129,905)

(1,314,362)

69,076,968

3,917,423

56,863,784

3,163,604

Unallocated:

Headquarters and corporate income/

(expenses) — net

(1,733,060 )

(1,339,370)

Restructuring costs

–

(46,000)

Depreciation and amortization

(437,179)

(449,551)

Impairment and write-off of property,

plant and equipment

–

(10,474)

Impairment and write-off of intangible

assets

(114,478 )

(24,723)

Finance income

85,306

132,183

Finance costs

(181,502 )

(323,141)

Share of losses of associates and joint

ventures

(22,242 )

(27,822)

(Loss)/gain on disposal of property, plant

and equipment

(4,108 )

550

Fair value gain on financial assets at FVPL

58,777

150,681

Fair value loss on derivative financial

liabilities relating to warrants

(118,275 )

–

Gain on remeasurement of a written put

option liability

–

143,430

Gain on deemed disposal of a subsidiary

22,627

–

Impairment of interest in an associate

–

(6,690)

Dividend income

7,581

2,777

Consolidated profit before taxation

1,480,870

1,365,454

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

188

Segment information

(continued)

(b) Analysis of revenue by geography

2025

US$’000

2024

US$’000

China

15,901,218

12,578,275

Asia Pacific (“AP”)

12,942,052

10,028,732

Europe-Middle East-Africa (“EMEA”)

16,936,250

14,640,785

Americas (“AG”)

23,297,448

19,615,992

69,076,968

56,863,784

(c)

Analysis of revenue by timing of revenue recognition

2025

US$’000

2024

US$’000

Point in time

66,028,793

53,802,468

Over time

2,779,104

2,897,504

Lease revenue

269,071

163,812

69,076,968

56,863,784

(d) Revenue recognized in relation to deferred revenue and receipt in advance

Deferred revenue and receipt in advance (included in “Other payables and accruals”) amounting to

US$3,580,044,000 (2024: US$3,145,851,000) mainly relate to the Group’s unfulfilled performance obligations

for extended warranty service for which consideration has been received at the reporting date. Revenue

is recognized in the period when the performance obligations are fulfilled. US$1,709,367,000 (2024:

US$1,780,441,000) was recognized as revenue during the year that was included in such balance at the

beginning of the year.

(e)

Transaction price allocated to the remaining performance obligations

The following table includes revenue expected to be recognized in the future mainly related to performance

obligations for extended warranty service that are unsatisfied or partially unsatisfied at the reporting date.

2025

US$’000

2024

US$’000

Within one year

2,166,337

1,919,190

More than one year

2,371,060

2,019,627

4,537,397

3,938,817

(f)

Other segment information

IDG

ISG

SSG

Total

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

Depreciation and

amortization

716,066

737,499

248,622

206,034

17,268

20,069

981,956

963,602

Finance income

19,735

12,184

3,059

2,814

1,864

953

24,658

15,951

Finance costs

334,089

293,499

254,816

144,083

2,862

2,082

591,767

439,664

The total of non-current assets other than financial instruments, deferred income tax assets and post-

employment benefit assets (there are no rights arising under insurance contracts) located in the Chinese

Mainland and other countries is US$4,999,355,000 (2024: US$5,327,891,000) and US$6,761,703,000 (2024:

US$6,652,939,000) respectively.

Lenovo Group Limited 2024/25 Annual Report

189

Operating profit

Operating profit is stated after charging/(crediting) the following:

2025

US$’000

2024

US$’000

Depreciation of property, plant and equipment (Note 11)

453,861

428,472

Depreciation of right-of-use assets (Note 12)

115,965

151,899

Amortization of intangible assets (Note 14)

849,309

832,782

Impairment and write-off of property, plant and equipment (Note 11)

–

10,474

Impairment and write-off of intangible assets (Note 14)

123,140

29,745

Employee benefit costs (Note 7)

6,220,476

5,571,043

Cost of inventories sold

54,802,676

43,877,276

(Reversal of allowance)/allowance for inventories included

in cost of sales

(62,123)

114,569

Auditor’s remuneration (Note)

— Audit services

12,848

11,991

— Non-audit services

480

669

Rental expenses

15,816

11,641

Government grants (Note 26(b))

(98,578 )

(93,338)

Net foreign exchange loss

21,467

73,915

Net gain on foreign exchange forward contracts for cash flow

hedges reclassified from equity

(182,314 )

(92,356)

Increase in loss allowance of trade receivables (Note 19(a))

106,576

105,644

Unused amounts of loss allowance of trade receivables reversed

(Note 19(a))

(57,623)

(39,040)

Loss on disposal of property, plant and equipment

3,596

3,479

Loss on disposal of intangible assets

2,954

Loss on disposal of construction-in-progress

535

13,827

Fair value gain on financial assets at FVPL

(59,552 )

(153,113)

Fair value loss on derivative financial liabilities relating to warrants

118,275

–

Gain on remeasurement of a written put option liability (Note 22(b))

–

(143,430)

Gain on deemed disposal of a subsidiary

(22,627)

–

Gain on disposal of interest in associates

–

(12)

Impairment of interest in an associate

–

6,690

Note: Included in the above audit services fee, US$10,940,000 (2024: US$9,900,000) is paid or payable to the Company’s auditor.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

190

Finance income and costs

(a)

Finance income

Accounting policy

Interest income is recognized using the effective interest method. When a receivable is impaired, the Group

reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted

at the original effective interest rate of the instrument, and continues unwinding the discount as interest

income. Interest income on impaired receivables is recognized using the original effective interest rate.

2025

US$’000

2024

US$’000

Interest on bank deposits

83,997

112,274

Net gain on repayment of notes

–

4,061

Interest on money market funds

8,625

22,410

Interest income on finance lease

17,342

9,389

109,964

148,134

(b) Finance costs

Accounting policy

All borrowing costs are recognized in profit or loss in the period in which they are incurred.

2025

US$’000

2024

US$’000

Interest on bank loans and overdrafts

57,730

49,263

Interest on convertible bonds

58,580

42,914

Interest on notes

161,678

165,957

Interest on lease liabilities

13,953

14,627

Factoring costs

476,525

484,802

Interest on written put option liabilities

1,654

2,442

Others

3,149

2,800

773,269

762,805

Lenovo Group Limited 2024/25 Annual Report

191

Taxation

Accounting policy

The tax expense for the year comprises current and deferred income tax (Note 16).

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at

the balance sheet date in the countries where the Company and its subsidiaries, joint ventures and associates

operate and generate taxable income. Management periodically evaluates positions taken in tax returns with

respect to situations in which applicable tax regulation is subject to interpretation and considers whether it

is probable that a taxation authority will accept an uncertain tax treatment. It establishes provisions where

appropriate on the basis of amounts expected to be paid to the tax authorities.

Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in

other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive

income or directly in equity, respectively.

Critical accounting estimates and judgments

The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining

the worldwide provision for income taxes. There are certain transactions and calculations for which the ultimate

tax determination is uncertain during the ordinary course of business. The tax liabilities recognized are based on

management’s assessment of the likely outcome taking into consideration precedent tax ruling in the relevant

jurisdiction.

The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes

will be due.

Where the final tax outcome of these matters is different from the amounts that were initially recorded, such

differences will impact the income tax provisions and deferred income tax assets and liabilities in the period in

which such determination is made.

The amount of taxation in the consolidated income statement represents:

2025

US$’000

2024

US$’000

Current tax

— Profits tax in Hong Kong S.A.R. of China

33,093

61,752

— Taxation outside Hong Kong S.A.R. of China

584,217

391,787

Deferred tax (Note 16)

Credit for the year

(598,392)

(190,397)

18,918

263,142

Profits tax in Hong Kong S.A.R. of China has been provided for at the rate of 16.5% (2024: 16.5%) on the estimated

assessable profit for the year. Taxation outside Hong Kong S.A.R. of China represents income and irrecoverable

withholding taxes of subsidiaries operating in the Chinese Mainland and overseas, calculated at rates applicable in

the respective jurisdictions.

The Group has been granted certain tax concessions by tax authorities in the Chinese Mainland and overseas

whereby the subsidiaries operating in the respective jurisdictions are entitled to tax concessions.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

192

Taxation

(continued)

The differences between the Group’s expected tax charge, calculated at the domestic rates applicable to the

countries concerned, and the Group’s tax charge for the year are as follows:

2025

US$’000

2024

US$’000

Profit before taxation

1,480,870

1,365,454

Tax calculated at domestic rates applicable

in countries concerned

354,212

273,509

Income not subject to taxation

(431,278)

(333,945)

Expenses not deductible for taxation purposes

258,211

258,051

Recognition/utilization of previously unrecognized

temporary differences/tax losses

(75,366)

(76,434)

Deferred income tax assets not recognized

185,207

190,700

Tax impact of reorganization (Note)

(282,000)

–

Under/(over)-provision in prior years

9,932

(48,739)

18,918

263,142

Note: During the year ended March 31, 2025, some organizational changes have been made to support the Group’s future business planning and the

growth of its global business, which resulted in one-time income tax credit of US$282 million, primarily derived from deferred tax credit.

The weighted average applicable tax rate for the year was 23.9% (2024: 20.0%). The increase is caused by changes

in tax concessions and profitability of the Group’s subsidiaries in respective countries they are operating.

Organization for Economic Co-operation and Development (“OECD”) Pillar Two model rules

The Group is within the scope of the OECD Pillar Two model rules. Pillar Two legislation was enacted in some

jurisdictions in which some subsidiaries of the Group are incorporated, and have come into effect from January

1, 2024. Under the legislation, the Group is liable to pay a top-up tax for the difference between the Global Anti-

Base Erosion Proposal effective tax rate for each jurisdiction and the 15% minimum rate pursuant to the Charging

Provisions of Pillar Two Rules.

The Group has conducted an impact assessment of the Pillar Two transitional safe harbour rules and the full Pillar

Two rules and made necessary tax provisions to reflect the impact of Pillar Two legislation.

The Group applies the exception to recognizing and disclosing information about deferred tax assets and liabilities

related to Pillar Two income taxes, as provided in the amendments to HKAS 12 issued in July 2023.

Lenovo Group Limited 2024/25 Annual Report

193

Taxation

(continued)

The tax charge relating to components of other comprehensive income is as follows:

2025

2024

Before tax

US$’000

Tax charge

US$’000

After tax

US$’000

Before tax

US$’000

Tax charge

US$’000

After tax

US$’000

Fair value change on

financial assets at FVOCI

(11,360)

(9)

(11,369)

(7,712)

(90)

(7,802)

Fair value change on

cash flow hedges

(102,140)

–

(102,140)

51,297

–

51,297

Remeasurements of

post-employment benefit

obligations (Note 27)

5,561

–

5,561

(6,674)

–

(6,674)

Currency translation

differences

(377,729)

–

(377,729)

(366,849)

–

(366,849)

Other comprehensive loss

(485,668)

(9)

(485,677)

(329,938)

(90)

(330,028)

Deferred tax (Note 16)

(9)

(90)

Employee benefit costs

Accounting policy

(a)

Pension schemes

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 plans (Note 27) and defined contribution plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a

separate entity. The Group pays contributions to publicly or privately administered pension insurance plans

on a mandatory, contractual or voluntary basis. The Group has no legal or constructive obligations to pay

further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to

employee service in the current and prior periods. The contributions are recognized as employee benefit

expense when they are due and are reduced by employer’s portion of voluntary contributions forfeited by

those employees who leave the scheme prior to vesting fully. Prepaid contributions are recognized as an

asset to the extent that a cash refund or a reduction in the future payments is available.

The Group’s contributions to local municipal government retirement schemes in connection with retirement

benefit schemes in the Chinese Mainland are expensed as incurred. The local municipal governments in the

Chinese Mainland assume the retirement benefit obligations of the qualified employees.

(b) Long-term incentive program

The Group operates a long-term incentive program to recognize employees’ individual and collective

contributions, and includes two types of awards, namely share appreciation rights and restricted share

units (“Long-term Incentive Awards”). The Company reserves the right, at its discretion, to pay the award

in cash or ordinary shares of the Company. The fair value of the employee services received in exchange for

the grant of the Long-term Incentive Awards is recognized as employee benefit expense. The total amount

to be expensed over the vesting period is determined by reference to the fair value of the Long-term

Incentive Awards granted, including any market performance conditions (for example, an entity’s share

price); excluding the impact of any service and non-market performance vesting conditions (for example,

profitability and sales growth targets); and including the impact of non-vesting conditions. Non-market

performance and service conditions are included in assumptions about the number of Long-term Incentive

Awards that are expected to become exercisable/vested. The total expense is recognized over the vesting

period, which is the period over which all of the specified vesting conditions are to be satisfied.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

194

Employee benefit costs

(continued)

Accounting policy

(continued)

(b) Long-term incentive program

(continued)

At each balance sheet date, the Group revises its estimates of the number of Long-term Incentive Awards

that are expected to become exercisable. It recognizes the impact of the revision of original estimates, if

any, in the consolidated income statement, with a corresponding adjustment to share-based compensation

reserve under equity.

Employee share trusts are established for the purposes of awarding shares to eligible employees under the

long-term incentive program. The employee share trusts are administered by independent trustees and are

funded by the Group’s cash contributions and recorded as purchase of shares by employee share trusts, an

equity component. The administrator of the employee share trusts buys the Company’s shares in the open

market for award to employees upon vesting.

Upon vesting, the corresponding amounts in the share-based compensation reserve will be transferred to

share capital for new allotment of shares to employees, or to the employee share trusts for shares awarded

to employees by the employee share trusts.

(c)

Termination benefit

Termination benefits are payable when employment is terminated by the Group before the normal

retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits.

The Group recognizes termination benefits at the earlier of the following dates: (a) when the Group can no

longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring

that is within the scope of HKAS 37 and involves the payment of termination benefits. In the case of an

offer made to encourage voluntary redundancy, the termination benefits are measured based on the

number of employees expected to accept the offer. Benefits falling due more than 12 months after the

balance sheet date are discounted to their present value.

2025

US$’000

2024

US$’000

Wages and salaries, including severance and

related costs of US$21,541,000 (2024: US$54,991,000)

4,837,355

4,281,038

Long-term incentive awards granted

290,245

277,574

Social security costs

400,146

391,171

Pension costs

— Defined contribution plans

332,317

319,272

— Defined benefit plans (Note 27)

18,372

23,059

Others

342,041

278,929

6,220,476

5,571,043

The Group contributes to respective local municipal government retirement schemes which are available to all

qualified employees in the Chinese Mainland. Contributions to these schemes are calculated with reference to the

monthly average salaries as set out by the local municipal government.

The Group participates in various defined contribution schemes, either voluntary or mandatory, for all qualified

employees. The assets of those defined contribution schemes are held separately from those of the Group in

independently administered funds.

The Group also contributes to certain defined benefit pension schemes, details of which are set out in Note 27.

Lenovo Group Limited 2024/25 Annual Report

195

Employee benefit costs

(continued)

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.

Under the long-term incentive program, the Company may grant awards, at its discretion, using any of the two

types of equity-based compensation: (a) share appreciation rights and (b) restricted share units, which are

described below:

(a)

Share appreciation rights (“SARs”)

An SAR entitles the holder to receive the appreciation in value of the Company’s share price above a

predetermined level.

(b) Restricted share units (“RSUs”)

An RSU equals to the value of one ordinary share of the Company. Once vested, an RSU is converted to an

ordinary share.

Under the two types of compensation, the Company reserves the right, at its discretion, to settle the award in cash

or ordinary shares of the Company.

Movements in the number of units of award granted during the year and their related weighted average fair values

are as follows:

Number of units

SARs

RSUs

Outstanding at April 1, 2023

406,548,313

466,579,356

Granted during the year

100,422,928

247,119,181

Vested during the year

(257,053,733)

(301,023,379)

Cancelled during the year

(9,454,907)

(16,705,054)

Outstanding at March 31, 2024

240,462,601

395,970,104

Granted during the year

72,476,952

194,141,722

Vested during the year

(169,276,272 )

(256,409,652 )

Cancelled during the year

(11,523,350 )

(17,649,103 )

Outstanding at March 31, 2025

132,139,931

316,053,071

Average fair value at grant date per unit (HK$)

— At March 31, 2024

1.84

7.69

— At March 31, 2025

2.57

9.58

The fair values of the SARs awarded under the long-term incentive program were calculated by applying a Black-

Scholes pricing model. For the year ended March 31, 2025, the model inputs were the fair value (i.e. market value) of

the Company’s shares at the grant date, taking into account the expected volatility of 42.91 to 43.05 percent (2024:

40.30 percent), expected dividends during the vesting periods of 3.35 percent (2024: 5.10 percent), contractual life of 3.90

to 4.40 years (2024: 4.40 years), and a risk-free interest rate of 3.68 to 3.77 percent (2024: 3.47 percent).

The remaining vesting periods of the awards under the long-term incentive program at March 31, 2025 ranged from 0.15

to 2.92 years (2024: 0.14 to 2.92 years).

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

196

Emoluments of directors and highest paid individuals

(a)

Directors’ and senior management’s emoluments

Directors’ emoluments comprise payments by the Group to directors of the Company in connection with the

management of the affairs of the Company and its subsidiaries. The remuneration of each director and the

chief executive who is also a director, for the years ended March 31, 2025 and 2024 is set out below:

2025

Name of director

Fees

US$’000

Salaries

US$’000

Discretionary

bonuses

(i)

US$’000

Long-term

incentive

awards

(ii)

US$’000

Retirement

payments

and

employer’s

contribution

to pension

schemes

US$’000

Other

benefits

in-kind

US$’000

Total

US$’000

Executive director

Mr. Yang Yuanqing (CEO)

–

1,331

5,904

14,598

497

22,386

Non-executive directors

Mr. Zhu Linan

100

–

232

–

332

Mr. Zhao John Huan

111

–

232

–

343

Independent non-executive

directors

Mr. William O. Grabe

145

–

489

–

634

Mr. William Tudor Brown

156

–

489

–

645

Mr. Gordon Robert

Halyburton Orr

123

–

232

–

355

Mr. Woo Chin Wan

Raymond

135

–

232

–

367

Ms. Yang Lan

109

–

300

–

409

Professor Xue Lan

115

–

221

–

336

Ms. Cher Wang Hsiueh

Hong

100

–

227

–

327

Mr. John Lawson Thornton

109

–

146

–

255

Mr. Kasper Bo Roersted

108

–

184

1,311

1,331

5,904

17,474

497

26,573

Lenovo Group Limited 2024/25 Annual Report

197

Emoluments of directors and highest paid individuals

(continued)

(a)

Directors’ and senior management’s emoluments

(continued)

2024

Name of director

Fees

US$’000

Salaries

US$’000

Discretionary

bonuses

(i)

US$’000

Long-term

incentive

awards

(ii)

US$’000

Retirement

payments

and

employer’s

contribution

to pension

schemes

US$’000

Other

benefits

in-kind

US$’000

Total

US$’000

Executive director

Mr. Yang Yuanqing (CEO)

–

1,332

5,148

11,950

133

854

19,417

Non-executive directors

Mr. Zhu Linan

100

–

224

–

324

Mr. Zhao John Huan

100

–

224

–

324

Independent non-executive

directors

Mr. William O. Grabe

135

–

224

–

359

Mr. William Tudor Brown

125

–

224

–

349

Mr. Yang Chih-Yuan Jerry

–

473

–

561

Mr. Gordon Robert

Halyburton Orr

100

–

224

–

324

Mr. Woo Chin Wan

Raymond

135

–

224

–

359

Ms. Yang Lan

100

–

281

–

381

Professor Xue Lan

100

–

168

–

268

Ms. Cher Wang Hsiueh

Hong

100

–

181

–

281

Mr. John Lawson Thornton

–

Mr. Kasper Bo Roersted

–

1,120

1,332

5,148

14,443

133

854

23,030

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

198

Emoluments of directors and highest paid individuals

(continued)

(a)

Directors’ and senior management’s emoluments

(continued)

Notes:

(i)

Figures shown in the table above represent discretionary bonuses receivable at March 31, 2025 and 2024 in connection with the

performance bonuses for the respective two financial years then ended.

(ii)

Details of the long-term incentive program of the Company are set out in Note 7. The fair value of the employee services received in

exchange for the grant of the long-term incentive awards is recognized as an expense. The total amount to be amortized over the vesting

period is determined by reference to the fair value of the long-term incentive awards at the date of grant. The amounts disclosed above

represent the amortized amounts for the years ended March 31, 2025 and 2024.

(iii)

Mr. William O. Grabe has elected to defer his receipt of the cash of director’s fee into fully vested share units under the long-term incentive

program (Note 7) for the first half of the year ended March 31, 2025 and for the year ended March 31, 2024.

(iv)

During the years ended March 31, 2025 and 2024, annual pension payment of US$1.5 million was made to Mr. Liu Chuanzhi, a retired

director.

(v)

Mr. William O. Grabe and Mr. William Tudor Brown were resigned as independent non-executive directors on February 21, 2025.

(vi)

Mr. John Lawson Thornton was appointed as an independent non-executive director on August 18, 2023.

(vii)

Mr. Yang Chih-Yuan Jerry was resigned as an independent non-executive director on November 16, 2023.

(viii)

Mr. Kasper Bo Roersted (alias Kasper Bo Rorsted) was appointed as an independent non-executive director on February 23, 2024.

During the year, no retirement benefits, payments or benefits in respect of termination of directors’ services

were paid or made, directly or indirectly, to the directors; nor any are payable (2024: nil). No consideration was

provided to or receivable by third parties for making available directors’ service (2024: nil). There are no loans,

quasi-loans or other dealings in favour of the directors, their controlled body corporate and connected entities (2024:

nil).

No director of the Company had a material interest, directly or indirectly, in any significant transactions,

arrangements and contracts in relation to the Company’s business to which the Company was or is a party that

subsisted at the end of the year or at any time during the year (2024: nil).

(b) Five highest paid individuals

The five individuals whose emoluments were the highest in the Group for the year include one (2024: one)

director, who is the CEO of the Group, whose emoluments are reflected in the analysis presented above. The

emoluments of the remaining four (2024: four) individuals during the year are as follows:

2025

US$’000

2024

US$’000

Basic salaries, allowances, and other benefits-in-kind (i)

7,000

5,797

Discretionary bonuses (ii)

9,146

6,205

Long-term incentive awards (iii)

13,293

19,085

Retirement payments and employer’s contribution

to pension schemes

478

459

29,917

31,546

Notes:

(i)

Basic salaries, allowances, and other benefits-in-kind include an inducement fee of US$2.8 million for the year ended March 31, 2025. This

fee is subject to a claw-back, which may be up to 100%, depending on certain conditions within the first two years of employment.

(ii)

Figures shown in the table above represent discretionary bonuses receivable at March 31, 2025 and 2024 in connection with the

performance bonuses for the respective two financial years then ended.

(iii)

Details of the long-term incentive program of the Company are set out in Note 7. The fair value of the employee services received in

exchange for the grant of the long-term incentive awards is recognized as an expense. The total amount to be amortized over the vesting

period is determined by reference to the fair value of the long-term incentive awards at the date of grant. The amounts disclosed above

represent the amortized amounts for the years ended March 31, 2025 and 2024.

Lenovo Group Limited 2024/25 Annual Report

199

Emoluments of directors and highest paid individuals

(continued)

(b) Five highest paid individuals

(continued)

The emoluments fell within the following bands:

Number of individuals

2025

2024

Emolument bands

US$6,416,234 — US$6,480,395

–

US$7,122,020 — US$7,186,181

–

US$7,186,182 — US$7,250,343

–

US$7,571,156 — US$7,635,317

–

US$7,891,968 — US$7,956,129

–

US$8,020,292 — US$8,084,454

–

US$8,212,779 — US$8,276,941

–

US$8,790,240 — US$8,854,402

–

Earnings per share

(a)

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by

the weighted average number of ordinary shares in issue during the year after adjusting shares held by the

employee share trusts for the purposes of awarding shares to eligible employees under the long-term incentive

program.

2025

2024

Weighted average number of ordinary shares in issue

12,404,659,302

12,214,994,626

Adjustment for shares held by employee share trusts

(150,624,455)

(192,498,286)

Weighted average number of ordinary shares used as the

denominator in calculating basic earnings per share

12,254,034,847

12,022,496,340

2025

US$’000

2024

US$’000

Profit attributable to equity holders of the Company

used in calculating basic earnings per share

1,384,445

1,010,506

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

200

Earnings per share

(continued)

(b) Diluted

The calculation of the diluted earnings per share is based on the profit attributable to equity holders of the

Company, adjusted to reflect the impact from any dilutive potential ordinary shares that would have been

outstanding, as appropriate. The weighted average number of ordinary shares used in calculating diluted

earnings per share is the weighted average number of ordinary shares, as used in the basic earnings per

share calculation, and the weighted average number of ordinary shares assumed to have been issued at no

consideration on the deemed exercise or conversion of all dilutive potential ordinary shares into ordinary

shares.

The Group has four (2024: three) categories of potential ordinary shares, namely long-term incentive awards,

warrants, put option written on non-controlling interests and convertible bonds (2024: long-term incentive

awards, put option written on non-controlling interests and convertible bonds). Long-term incentive awards

and convertible bonds were dilutive for the years ended March 31, 2025 and 2024. Warrants were anti-dilutive

for the year ended March 31, 2025. Put option written on non-controlling interests were anti-dilutive for the

years ended March 31, 2025 and 2024.

2025

2024

Weighted average number of ordinary shares used as

the denominator in calculating basic earnings per share

12,254,034,847

12,022,496,340

Adjustment for long-term incentive awards

409,681,272

232,535,133

Adjustment for convertible bonds

928,245,369

739,193,667

Weighted average number of ordinary shares used as

the denominator in calculating diluted earnings per share

13,591,961,488

12,994,225,140

2025

US$’000

2024

US$’000

Profit attributable to equity holders of the Company

used in calculating basic earnings per share

1,384,445

1,010,506

Adjustment for interest on convertible bonds, net of tax

58,580

35,833

Profit attributable to equity holders of the Company

used in calculating diluted earnings per share

1,443,025

1,046,339

Dividends

Accounting policy

Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s and Company’s

financial statements in the period in which the dividends are approved by the Company’s shareholders in case

of final dividend and by the Company’s directors in case of interim dividend.

2025

US$’000

2024

US$’000

Interim dividend of HK8.5 cents (2024: HK8 cents)

per ordinary share, paid on December 12, 2024

135,518

124,319

Proposed final dividend — HK30.5 cents (2024: HK30 cents)

per ordinary share

483,338

476,821

618,856

601,140

Lenovo Group Limited 2024/25 Annual Report

201

Property, plant and equipment

Accounting policy

Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated

impairment losses.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,

only when it is probable that future economic benefits associated with the item will flow to the Group and the

cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate

asset is derecognized when replaced. All other repairs and maintenance are charged in the consolidated income

statement during the financial period in which they are incurred.

Investment properties are shown within “Property, plant and equipment” for the building portion and “Right-of-

use assets” for the leasehold land portion (Note 12) on the consolidated balance sheet. Investment properties,

principally office buildings, are held for long-term rental yields and are not occupied by the Group. They are

carried at historical cost less accumulated depreciation. All freehold lands are located outside Hong Kong S.A.R.

of China and are not depreciated.

Depreciation on property, plant and equipment and investment properties are calculated using the straight-line

method to allocate their costs to their estimated residual values over the shorter of unexpired periods of the

leases or their estimated useful lives to the Group. The principal annual rates used for this purpose are:

Buildings, buildings related equipment and leasehold improvements

2% – 10%

Plant and machinery

Tooling equipment

50% – 100%

Other machinery

14% – 20%

Furniture and fixtures

20% – 25%

Office equipment

20% – 33%

Equipment held for lease

Over the lease term

Motor vehicles

20%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

The assets are tested for impairment whenever events or changes in circumstances indicate that the carrying

amount may not be recoverable. An asset’s carrying amount is written down immediately to its recoverable

amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gain or loss on disposal of the asset is the difference between the net sales proceeds and the carrying amount

of the relevant asset, and is recognized within “Other operating income/(expenses) — net” in the consolidated

income statement.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

202

Property, plant and equipment

(continued)

Freehold

land and

buildings

Leasehold

improvements

Plant and

machinery

Furniture

and

fixtures

Office

equipment

Equipment

held for

lease

Motor

vehicles

Total

US$’000

At April 1, 2023

Cost

1,202,352

570,169

1,148,567

167,324

837,246

159,932

13,843

4,099,433

Accumulated depreciation

and impairment losses

206,412

393,821

817,124

111,312

532,644

26,056

5,607

2,092,976

Net book amount

995,940

176,348

331,443

56,012

304,602

133,876

8,236

2,006,457

Year ended March 31, 2024

Opening net book amount

995,940

176,348

331,443

56,012

304,602

133,876

8,236

2,006,457

Exchange adjustment

(41,355 )

(6,204)

(5,709)

(2,877)

(20,702)

(3,656)

(522)

(81,025)

Acquisition of businesses

8,092

–

2,443

430

424

67,721

–

79,110

Additions

8,783

26,933

100,543

3,711

79,667

88,443

4,175

312,255

Transfers

82,118

33,781

36,843

2,245

8,807

–

163,816

Disposals

(1,276)

(521)

(3,699)

(941)

(10,136)

(14,637)

(279)

(31,489)

Depreciation

(38,020)

(48,967)

(134,599)

(26,362)

(101,375)

(76,521)

(2,628)

(428,472)

Impairment and write-off

–

(8,623 )

–

(1,851 )

–

(10,474)

Closing net book amount

1,014,282

181,370

318,642

32,218

259,436

195,226

9,004

2,010,178

At March 31, 2024

Cost

1,246,851

615,987

1,245,921

147,112

818,629

284,758

15,444

4,374,702

Accumulated depreciation

and impairment losses

232,569

434,617

927,279

114,894

559,193

89,532

6,440

2,364,524

Net book amount

1,014,282

181,370

318,642

32,218

259,436

195,226

9,004

2,010,178

Year ended March 31, 2025

Opening net book amount

1,014,282

181,370

318,642

32,218

259,436

195,226

9,004

2,010,178

Exchange adjustment

(6,871)

(844)

(773)

(187)

(1,253)

(599)

(888)

(11,415)

Deemed disposal of

a subsidiary

–

(1)

(81)

–

(83)

Additions

20,470

21,738

106,141

2,282

116,661

155,167

4,181

426,640

Transfers

22,039

12,905

47,961

3,457

10,900

–

97,335

Disposals

(2,697)

(2,073)

(23,047)

(469)

(6,681)

(7,237)

(310)

(42,514)

Depreciation

(36,198)

(51,808)

(138,082)

(8,644)

(110,988)

(105,282)

(2,859)

(453,861)

Closing net book amount

1,011,025

161,288

310,841

28,656

267,994

237,275

9,201

2,026,280

At March 31, 2025

Cost

1,278,093

634,513

1,226,414

145,104

854,152

410,302

17,232

4,565,810

Accumulated depreciation

and impairment losses

267,068

473,225

915,573

116,448

586,158

173,027

8,031

2,539,530

Net book amount

1,011,025

161,288

310,841

28,656

267,994

237,275

9,201

2,026,280

Note: At March 31, 2025, included in “Freehold land and buildings” are the building portion of the investment properties of US$95,578,000 (2024:

US$107,766,000) where the right-of-use assets for the leasehold land portion of US$96,255,000 (2024: US$117,087,000) are included in “Right-of-use

assets” (Note 12). The fair value of the investment properties at March 31, 2025 is US$277,449,000 (2024: US$335,395,000).

Lenovo Group Limited 2024/25 Annual Report

203

Right-of-use assets

Accounting policy

Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased

asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost.

The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of

interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the

shorter of the asset’s useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include

the net present value of the following lease payments:

—

fixed payments (including in-substance fixed payments), less any lease incentives receivable;

—

variable lease payments that are based on an index or a rate;

—

amounts expected to be payable by the lessee under residual value guarantees;

—

the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

—

payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,

the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the

funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and

conditions.

Some property leases contain variable payment terms that are linked to sales generated from stores. There is

a wide range of sales percentages applied. Variable payment terms are used for a variety of reasons, including

minimizing the fixed costs base for newly established stores. Variable lease payments that depend on sales are

recognized as a profit or loss in the period in which the event or condition that triggers those payments occurs.

Right-of-use assets are measured at cost comprising the following:

—

the amount of the initial measurement of lease liabilities;

—

any lease payments made at or before the commencement date less any lease incentives received;

—

any initial direct costs; and

—

restoration costs.

Payments associated with leases of low-value assets are recognized on a straight-line basis as an expense in the

consolidated income statement. Low-value assets mainly comprise office equipment.

The Group’s right-of-use assets include interest in leasehold land and building and prepaid lease payments for

leasehold land. Prepaid lease payments represent the payments for land use rights held by the Group in the

Chinese Mainland under term leases between 10 to 50 years. Rental contracts for leasehold land and building

are typically made for fixed periods of 1 to 25 years. Lease terms are negotiated on an individual basis and

contain a wide range of different terms and conditions. The lease agreements do not impose any covenants,

but leased assets may not be used as security for borrowing purposes.

Lease liabilities are presented within “Other payables and accruals” (for current portion) and “Other non-current

liabilities” (for non-current portion) in the consolidated balance sheet.

2025

US$’000

2024

US$’000

At the beginning of the year

571,305

659,360

Exchange adjustment

(5,430 )

(20,266)

Acquisition of businesses

–

1,440

Deemed disposal of a subsidiary

(305)

–

Additions

180,908

102,835

Disposals

(38,173 )

(20,165)

Depreciation

(115,965 )

(151,899)

At the end of the year

592,340

571,305

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

204

Construction-in-progress

Accounting policy

Construction-in-progress represents buildings, plant and machinery and internal use software under

construction and pending installation and is stated at historical cost, less any accumulated impairment losses.

Historical cost comprises all direct and indirect costs of acquisition or construction or installation of buildings,

plant and machinery or internal use software as well as interest expenses and exchange differences on the

related funds borrowed during the construction, installation and testing periods and prior to the date when

the assets were available for use. Assets that are not yet available for use are not subject to depreciation or

amortization and are tested annually for impairment. On completion, the carrying values of the buildings, plant

and machinery or internal use software are transferred from construction-in-progress to property, plant and

equipment or intangible assets.

The assets are tested for impairment whenever events or changes in circumstances indicate that the carrying

amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying

amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs

of disposal and value in use.

Gain or loss on disposal of construction-in-progress is the difference between the net sales proceeds and the

carrying amount of the relevant asset, and is recognized within “Other operating income/(expenses) — net” in

the consolidated income statement.

Property, plant and

equipment

Intangible assets

Total

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

At the beginning of the year

80,042

103,372

257,606

534,675

337,648

638,047

Exchange adjustment

(110)

(7,314)

(1,039)

(15,477)

(1,149)

(22,791)

Disposals

(465)

(26)

(70)

(13,801)

(535)

(13,827)

Additions

85,607

147,826

227,892

306,855

313,499

454,681

Transfers

(97,335)

(163,816)

(269,819)

(554,646)

(367,154)

(718,462)

At the end of the year

67,739

80,042

214,570

257,606

282,309

337,648

Lenovo Group Limited 2024/25 Annual Report

205

Intangible assets

Accounting policy

(a)

Goodwill

Goodwill represents the excess of the consideration of an acquisition transferred, amount of any non-

controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest

in the acquired entity over the Group’s interests in the fair value of the acquiree’s identifiable assets

acquired and liabilities assumed at the acquisition date. Goodwill on acquisitions of subsidiaries is included

in intangible assets. Goodwill on acquisitions of associates and joint ventures is included in interests in

associates and joint ventures.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each

of the cash-generating units (“CGU”), or groups of CGUs, that is expected to benefit from the synergies

of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest

level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is

monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in

circumstances indicate a potential impairment. The carrying value of goodwill is compared to the

recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment

is recognized immediately as an expense and is not subsequently reversed.

(b) Trademarks and trade names

Separately acquired trademarks and trade names are shown at historical cost. Trademarks and trade

names acquired in a business combination are recognized at fair value at the acquisition date.

Trademarks and trade names that have an indefinite useful life are tested annually for impairment and

carried at cost less accumulated impairment losses. They are considered to have an indefinite useful

life as there is no foreseeable limit to the period over which they are expected to generate net cash

inflows. Trademarks and trade names that have a definite useful life are carried at cost less accumulated

amortization.

(c)

Internal use software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring

to use the specific software.

Development costs that are directly attributable to the design and testing of identifiable and unique

software controlled by the Group are recognized as intangible assets when the following criteria are met:

—

it is technically feasible to complete the software so that it will be available for use;

—

management intends to complete the software and use or sell it;

—

there is an ability to use or sell the software;

—

it can be demonstrated how the software will generate probable future economic benefits;

—

adequate technical, financial and other resources to complete the development and to use or sell the

software are available; and

—

the expenditure attributable to the software during its development can be reliably measured.

Development costs include the employee costs incurred as a result of developing software and an

appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognized as an expense as incurred.

Development costs previously recognized as an expense are not recognized as an asset in a subsequent

period.

Costs associated with maintaining computer software are recognized as an expense as incurred.

Acquired computer software licenses costs and computer software development costs are carried at cost

less accumulated amortization.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

206

Intangible assets

(continued)

Accounting policy

(continued)

(d) Customer relationships

Customer relationships acquired in a business combination are recognized at fair value at the acquisition

date. Customer relationships have a definite useful life and are carried at cost less accumulated

amortization.

(e)

Patents and technology

Expenditure on acquired patents and technology is capitalized at historical cost upon acquisition and is

carried at cost less accumulated amortization.

(f)

Exclusive rights

An exclusive right acquired in a business combination is recognized at fair value at the acquisition date. An

exclusive right has a definite useful life and is carried at cost less accumulated amortization.

The Group amortizes intangible assets with definite useful lives using the straight-line method over the following

periods:

Trademarks and trade names

not more than 10 years

Internal use software

not more than 8 years

Customer relationships

not more than 15 years

Patents and technology

not more than 10 years

Exclusive rights

not more than 15 years

Impairment of intangible assets with definite useful lives

Intangible assets with definite useful lives are tested for impairment whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for

the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is

the higher of an asset’s fair value less costs of disposal and value in use.

Lenovo Group Limited 2024/25 Annual Report

207

Intangible assets

(continued)

(a)

Goodwill

(b)

US$’000

Trademarks

and trade

names

(b)

US$’000

Internal use

software

US$’000

Customer

relationships

US$’000

Patents and

technology

(c)

US$’000

Exclusive

rights

US$’000

Total

US$’000

At April 1, 2023

Cost

4,997,218

1,323,642

2,060,132

1,563,650

3,755,488

53,426

13,753,556

Accumulated amortization

and impairment losses

–

39,012

1,637,493

1,115,035

2,680,450

14,452

5,486,442

Net book amount

4,997,218

1,284,630

422,639

448,615

1,075,038

38,974

8,267,114

Year ended March 31, 2024

Opening net book amount

4,997,218

1,284,630

422,639

448,615

1,075,038

38,974

8,267,114

Exchange adjustment

(125,451 )

(558 )

(9,664)

(2,881 )

(4,097 )

(475 )

(143,126)

Acquisition of businesses

32,508

9,700

2,342

–

4,100

–

48,650

Additions

–

23,962

–

456,713

–

480,675

Transfers

–

401,178

–

153,468

–

554,646

Disposals

–

(25)

–

(25)

Amortization

–

(4,493 )

(227,444 )

(145,986 )

(451,630 )

(3,229 )

(832,782 )

Impairment and write-off

(Note)

–

(5,231)

–

(24,514 )

–

(29,745)

Closing net book amount

4,904,275

1,289,279

607,757

299,748

1,209,078

35,270

8,345,407

At March 31, 2024

Cost

4,904,275

1,332,817

2,411,980

1,538,011

4,337,870

52,741

14,577,694

Accumulated amortization

and impairment losses

–

43,538

1,804,223

1,238,263

3,128,792

17,471

6,232,287

Net book amount

4,904,275

1,289,279

607,757

299,748

1,209,078

35,270

8,345,407

Year ended March 31, 2025

Opening net book amount

4,904,275

1,289,279

607,757

299,748

1,209,078

35,270

8,345,407

Exchange adjustment

(57,137)

(470)

(154)

(350)

(176)

(135)

(58,422)

Acquisition of businesses

4,034

–

4,034

Additions

–

13,009

–

634,533

–

647,542

Transfers

–

216,434

–

53,385

–

269,819

Disposals

–

(2,555)

–

(399)

–

(2,954)

Amortization

–

(4,201)

(250,329)

(110,912)

(480,156)

(3,711)

(849,309)

Impairment and write-off

(Note)

–

(123,140)

–

(123,140)

Closing net book amount

4,851,172

1,284,608

584,162

188,486

1,293,125

31,424

8,232,977

At March 31, 2025

Cost

4,851,172

1,332,603

2,609,841

1,529,956

4,979,273

52,502

15,355,347

Accumulated amortization

and impairment losses

–

47,995

2,025,679

1,341,470

3,686,148

21,078

7,122,370

Net book amount

4,851,172

1,284,608

584,162

188,486

1,293,125

31,424

8,232,977

Note: During the year ended March 31, 2025, impairment and write-off of intangible assets of US$123,140,000 (2024: US$29,745,000) is

recognized as the carrying amount of the assets exceeds the value in use.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

208

Intangible assets

(continued)

(a)

(continued)

Amortization of US$457,648,000 (2024: US$424,000,000), US$6,089,000 (2024: US$6,163,000),

US$322,368,000 (2024: US$333,697,000) and US$63,204,000 (2024: US$68,922,000) are included in “Cost

of sales”, “Selling and distribution expenses”, “Administrative expenses” and “Research and development

expenses” in the consolidated income statement respectively.

The carrying amounts of goodwill and trademarks and trade names with indefinite useful lives are presented

below:

China

US$ million

EMEA

US$ million

Total

US$ million

At March 31, 2025

Goodwill

— IDG

905

493

286

1,558

3,242

— ISG

468

132

344

1,003

— SSG (Note)

N/A

606

Trademarks and trade names with

indefinite useful lives

— IDG

182

122

480

839

— ISG

162

123

370

— SSG (Note)

N/A

At March 31, 2024

Goodwill

— IDG

911

488

287

1,611

3,297

— ISG

472

132

341

1,004

— SSG (Note)

N/A

603

Trademarks and trade names with

indefinite useful lives

— IDG

182

121

480

837

— ISG

162

123

370

— SSG (Note)

N/A

Note: SSG is monitored as a whole and there is no allocation to geography or market.

(b) Impairment tests for goodwill and intangible assets with indefinite useful lives

Accounting policy

Assets that have an indefinite useful life are tested annually for impairment. An impairment loss is

recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The

recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes

of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable

cash flows (CGUs).

Lenovo Group Limited 2024/25 Annual Report

209

Intangible assets

(continued)

(b) Impairment tests for goodwill and intangible assets with indefinite useful lives

(continued)

Critical accounting estimates and judgments

The Group tests at least annually whether goodwill and other assets that have indefinite useful lives have

suffered any impairment. The recoverable amounts of an asset or a CGU have been determined based on

value-in-use calculations. These calculations require the use of estimates.

The value-in-use calculations use cash flow projection based on financial budgets approved by

management covering a five-year period with a terminal value related to the future cash flows extrapolated

using constant projection of cash flows beyond the five-year period. There are a number of assumptions

and estimates involved for the preparation of cash flow projections for the period covered by the approved

budget and the estimated terminal value. Key assumptions include the revenue growth rates, operating

margins and discount rates with reference to the business and industry circumstances.

Management prepared the financial budgets reflecting actual and prior year performance and market

development expectations. Judgment is required to determine key assumptions adopted in the cash

flow projections and changes to key assumptions can significantly affect these cash flow projections and

therefore the results of the impairment reviews.

The Group completed its annual impairment test for goodwill allocated to the Group’s various CGUs by

comparing their recoverable amounts to their carrying amounts at the reporting date. The recoverable amount

of a CGU is determined based on value in use. These assessments use pre-tax cash flow projections based on

financial budgets approved by management covering a five-year period with a terminal value related to the

future cash flow of the CGU extrapolated using constant projection of cash flows beyond the five-year period.

The estimated growth rates adopted do not exceed the long-term average growth rates for the businesses in

which the CGU operates.

Future cash flows are discounted at the pre-tax rate of 13% to 14%, 14% to 17% and 18% for IDG, ISG and SSG

respectively (2024: 13% to 14%, 14% to 18% and 18% respectively). The estimated compound annual growth

rates of revenue used for value-in-use calculations under the five-year financial budgets period are as follows:

2025

2024

IDG

ISG

SSG

IDG

ISG

SSG

China

13%

N/A

20%

N/A

15%

N/A

22%

N/A

EMEA

N/A

11%

N/A

13%

N/A

16%

N/A

SSG

N/A

11%

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

210

Intangible assets

(continued)

(b) Impairment tests for goodwill and intangible assets with indefinite useful lives

(continued)

Management determined budgeted gross margins based on past performance and its expectations for the

market development. Key assumptions include the revenue growth rates, operating margins and discount rates

with reference to the business and industry circumstances for the purpose of goodwill impairment test. The

discount rates are pre-tax and reflect specific risks relating to the relevant segments.

The directors are of the view that there was no impairment of goodwill and trademarks and trade names with

indefinite useful lives based on impairment tests performed at March 31, 2025 (2024: nil).

The Group has performed a sensitivity analysis on key assumptions used for the annual impairment test for

goodwill. Except for ISG’s China and ISG’s AP, a reasonably possible change in key assumptions used in the

impairment test for goodwill would not cause any CGU’s carrying amount to exceed its respective recoverable

amount. At March 31, 2025, the recoverable amount for ISG’s China and ISG’s AP (calculated based on

value in use) exceeded carrying value by US$275 million (2024: US$209 million) and US$78 million (2024:

US$96 million) respectively. Had the forecasted compound annual growth rate of ISG’s China and ISG’s AP

been 4.7 percentage point lower (2024: 3.5 percentage point lower) and 4.0 percentage point lower (2024:

4.6 percentage point lower) than management’s estimates, its remaining headroom would be removed

respectively.

(c)

At March 31, 2025, patents and technology of US$234,795,000 (2024: US$245,291,000) is under development.

Interests in associates and joint ventures

2025

US$’000

2024

US$’000

Share of net assets

— Associates

208,737

181,031

— Joint ventures

62,945

93,551

271,682

274,582

Loans to

— A joint venture (a)

44,022

44,221

44,022

44,221

Interests in associates and joint ventures (b)

315,704

318,803

Notes:

(a)

The loan forms an integral part of the Group’s equity investment in the joint venture and is recognized as such.

(b)

At March 31, 2025 and 2024, there is no unrecognized share of losses, commitments and contingent liabilities.

Lenovo Group Limited 2024/25 Annual Report

211

Interests in associates and joint ventures

(continued)

The following is a list of the principal associates and joint ventures:

Place of incorporation/

establishment

Interest held

Company name

2025

2024

Principal activities

Associates

北京閃聯雲視信息技術有限公司

(Beijing Tivicloud Technologies Ltd.) (ii)

Chinese Mainland

23.7%

Distribution and development

of IT technology

茄子技術控股有限公司

(SHAREit Technology Holdings Inc.) (ii)

Cayman Islands

37.3%

Software development

北京平安聯想智慧醫療信息技術有限公司

(Beijing Pingan Lenovo Healthcare

Information Technology Limited) (ii)

Chinese Mainland

25.4%

Development of hospital

and regional healthcare

information system

北京聯想協同科技有限公司

(Beijing Lenovo Collaboration

Technologies Company. Ltd) (ii)

Chinese Mainland

33.0%

Distribution and development

of IT technology

天津聯博基業科技發展有限公司

(Tianjin Lianbo Foundation Technology

Development Co., Limited) (ii)

Chinese Mainland

39.0%

Distribution and development

of IT technology

PCCW Network Services Limited

British Virgin Islands

20.0%

Investment holding

鼎道智聯（北京）科技有限公司

(Ding (Beijing) Intelligent Technology Co.

Ltd) (ii), (iii)

Chinese Mainland

40.0%

53.3%

Distribution and development

of IT technology, services

and software

AleveR Robotics Limited

Cayman Islands

11.6%

N/A

Distribution and development

of IT technology

Joint Ventures

聯想新視界

(

北京

)

科技有限公司

(Lenovo New Vision (Beijing) Technology

Co., Limited) (ii)

Chinese Mainland

37.7%

Software development

深圳市浦瑞置業有限公司

(Shenzhen Purui Real Estate Co., Limited)

(ii)

Chinese Mainland

50.0%

Commercial property

operation and

management

Notes:

(i)

Majority of the above associates and joint ventures operate principally in their respective places of incorporation or establishment.

(ii)

The English name of the company is a direct translation or transliteration of its Chinese registered name.

(iii)

The company was reclassified from a subsidiary to an associate upon deemed disposal during the year.

The following sets out the aggregate amount of the Group’s share of associates and joint ventures:

2025

US$’000

2024

US$’000

Share of losses of associates

3,264

10,035

Share of losses of joint ventures

16,714

15,624

19,978

25,659

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

212

Deferred income tax assets and liabilities

Accounting policy

Deferred income tax is recognized, using the liability method, on temporary differences arising between the

tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax

liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also

not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business

combination that at the time of the transaction affects neither accounting nor taxable profit or loss and does

not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using

tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are

expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is

settled.

Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be

available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, joint ventures

and associates, except for deferred income tax liability where the timing of the reversal of the temporary

difference is controlled by the Group and it is probable that the temporary difference will not reverse in the

foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current

tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income

taxes levied by the same tax authority on either the taxable entity or different taxable entities where there is an

intention to settle the balances on a net basis.

Critical accounting estimates and judgments

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the

tax bases of assets and liabilities and their carrying values in the financial statements.

Deferred income tax assets are mainly recognized for temporary differences such as warranty provision,

accrued sales rebates, bonus accruals, and other accrued expenses, and unused tax losses carried forward

to the extent it is probable that future taxable profits will be available against which deductible temporary

differences and the unused tax losses can be utilized, based on all available evidence. Recognition primarily

involves judgment regarding the future financial performance of the particular legal entity or tax group in which

the deferred income tax asset has been recognized. A variety of other factors are also evaluated in considering

whether there is convincing evidence that it is probable that some portion or all of the deferred income tax

assets will ultimately be realized, such as the existence of taxable temporary differences, group relief, tax

planning strategies and the periods in which estimated tax losses can be utilized. The carrying amount of

deferred income tax assets and related financial models and budgets are reviewed at each balance sheet date

and to the extent that there is insufficient convincing evidence that sufficient taxable profits will be available

within the utilization periods to allow utilization of the carry forward tax losses, the asset balance will be

reduced and the difference charged to the consolidated income statement.

Lenovo Group Limited 2024/25 Annual Report

213

Deferred income tax assets and liabilities

(continued)

Deferred income tax is calculated in full on temporary differences under the liability method using the rates

applicable in the respective jurisdictions.

Deferred income tax assets and liabilities are netted off when the taxes relate to the same tax authority and

where offsetting is legally enforceable. The following amounts, determined after appropriate offsetting, are shown

separately on the consolidated balance sheet:

2025

US$’000

2024

US$’000

Deferred income tax assets:

Recoverable within 12 months

1,419,303

1,135,149

Recoverable after 12 months

1,636,602

1,498,153

3,055,905

2,633,302

Deferred income tax liabilities:

Settled after 12 months

(270,268)

(447,523)

Net deferred income tax assets

2,785,637

2,185,779

The movements in the net deferred income tax assets are as follows:

2025

US$’000

2024

US$’000

At the beginning of the year

2,185,779

2,035,593

Reclassification and exchange adjustment

(3,847)

(28,547)

Credited to consolidated income statement (Note 6)

598,392

190,397

Charged to other comprehensive income (Note 6)

(9)

(90)

Credited/(charged) to share-based compensation reserve

5,322

(6,487)

Acquisition of businesses

–

(5,087)

At the end of the year

2,785,637

2,185,779

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

214

Deferred income tax assets and liabilities

(continued)

(a)

The movements in deferred income tax assets (prior to offsetting of balances within the same tax jurisdiction),

analyzed by major component, during the year are as follows:

Provisions

and accruals

Tax losses

Tax

depreciation

allowance

Deferred

revenue

Share-

based

payment

Lease

liabilities

Total

US$’000

At April 1, 2023

677,842

1,396,232

134,478

222,769

46,640

59,406

2,537,367

Reclassification and

exchange adjustment

(7,320)

7,299

(15,636)

(2,932)

(93)

(3,430)

(22,112)

(Charged)/credited to

consolidated income

statement

(65,629)

34,299

170,342

20,933

(4,891)

6,573

161,627

Charged to share-based

compensation reserve

–

(6,487)

–

(6,487)

Acquisition of businesses

10,519

–

10,519

At March 31, 2024

615,412

1,437,830

289,184

240,770

35,169

62,549

2,680,914

Reclassification and

exchange adjustment

37,432

(27,413)

(19,350)

(2,938)

(2,605)

9,172

(5,702)

Credited/(charged) to

consolidated income

statement

136,508

(370,180)

907,917

13,747

(3,590)

(10,810)

673,592

Credited to share-based

compensation reserve

–

5,322

–

5,322

At March 31, 2025

789,352

1,040,237

1,177,751

251,579

34,296

60,911

3,354,126

Deferred income tax assets are recognized for deductible temporary differences and tax losses carried forward

to the extent that realization of the related tax benefit through the future taxable profits is probable.

At March 31, 2025, the Group did not recognize deferred income tax assets in respect of deductible

temporary differences of US$2,777,429,000 (2024: US$2,618,834,000) and tax losses of US$3,229,464,000

(2024: US$2,810,140,000) that can be carried forward against future taxable income, of which, tax losses of

US$1,959,261,000 (2024: US$1,748,044,000) can be carried forward indefinitely. The remaining balances of tax

losses will expire as follows:

2025

US$’000

2024

US$’000

Expiring in

— 2024

–

170,627

— 2025

60,135

61,724

— 2026

37,580

51,646

— 2027

166,810

146,096

— 2028

294,189

306,294

— 2029

213,267

298,117

— 2030

431,924

–

— 2032

2,712

6,763

— 2033

581

1,566

— 2034 and thereafter

63,005

19,263

1,270,203

1,062,096

Lenovo Group Limited 2024/25 Annual Report

215

Deferred income tax assets and liabilities

(continued)

(b)

The movements in deferred income tax liabilities (prior to offsetting of balances within the same tax

jurisdiction), analyzed by major component, during the year are as follows:

Intangible

valuation

US$’000

Undistributed

earnings

US$’000

Property

valuation

US$’000

Accelerated

tax

depreciation

US$’000

Right-of-

use assets

US$’000

Others

US$’000

Total

US$’000

At April 1, 2023

81,665

117,878

2,843

184,535

57,240

57,613

501,774

Reclassification and

exchange adjustment

(1,116)

(658)

(199)

8,269

(1,110)

1,249

6,435

(Credited)/charged to

consolidated income

statement

(22,608)

1,325

1,198

(18,998)

8,810

1,503

(28,770)

Charged to other

comprehensive income

–

Acquisition of businesses

4,775

–

10,831

–

15,606

At March 31, 2024

62,716

118,545

3,842

184,637

64,940

60,455

495,135

Reclassification and

exchange adjustment

(2,839)

300

(2,050)

(5,983)

9,293

(576)

(1,855)

(Credited)/charged to

consolidated income

statement

(10,858)

682

–

103,578

(15,117)

(3,085)

75,200

Charged to other

comprehensive income

–

At March 31, 2025

49,019

119,527

1,792

282,232

59,116

56,803

568,489

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

216

Financial assets

(a)

Financial assets at FVPL

2025

US$’000

2024

US$’000

At the beginning of the year

1,393,666

1,233,969

Exchange adjustment

(6,568 )

(48,294 )

Fair value change recognized in profit or loss

59,552

153,113

Additions

155,775

179,192

Disposals

(138,041 )

(124,314 )

At the end of the year

1,464,384

1,393,666

Listed equity securities:

— In Hong Kong S.A.R. of China

26,910

24,874

— Outside Hong Kong S.A.R. of China

236,885

241,992

263,795

266,866

Unlisted equity securities

1,200,589

1,126,800

1,464,384

1,393,666

(b) Financial assets at FVOCI

2025

US$’000

2024

US$’000

At the beginning of the year

55,973

66,178

Exchange adjustment

755

(2,493 )

Fair value change recognized in other comprehensive income

(11,360 )

(7,712)

Additions

–

At the end of the year

45,382

55,973

Listed equity securities:

— In Hong Kong S.A.R. of China

5,389

8,931

— Outside Hong Kong S.A.R. of China

25,724

28,814

31,113

37,745

Unlisted equity securities

14,269

18,228

45,382

55,973

Lenovo Group Limited 2024/25 Annual Report

217

Inventories

Accounting policy

Inventories are stated at the lower of cost and net realizable value. Cost is determined on a weighted average

basis. The cost of finished goods (except for trading products) and work-in-progress comprises direct materials,

direct labour and an attributable proportion of production overheads. For trading products, cost represents

invoiced value on purchases, less purchase returns and discounts. Net realizable value is the estimated selling

price in the ordinary course of business less the estimated costs of completion and the estimated costs

necessary to make the sale.

2025

US$’000

2024

US$’000

Raw materials and work-in-progress

3,995,173

3,857,581

Finished goods

3,320,441

2,265,554

Service parts

608,190

579,542

7,923,804

6,702,677

Receivables

Accounting policy

Trade receivables are amounts due from customers for merchandise sold or services performed in the ordinary

course of business. Majority of other receivables are amounts due from subcontractors for components

sold in the ordinary course of business. Trade receivables are recognized initially at transaction price that is

unconditional unless they contain significant financing components, when they are recognized at fair value, and

subsequently measured at FVOCI, less loss allowance.

For trade receivables, the Group applies the simplified approach required by HKFRS 9, which requires expected

lifetime losses to be recognized from initial recognition of the receivables. To measure the expected credit

losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.

Impairment losses on trade receivables are recognized in the consolidated income statement. Subsequent

recoveries of amounts previously written off are credited against the same line item.

Other receivables are recognized initially at fair value and subsequently measured at amortized cost using the

effective interest method, less provision for impairment.

If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle of

the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

(a)

Details of trade and notes receivables are as follows:

2025

US$’000

2024

US$’000

Trade receivables

10,446,068

8,130,697

Notes receivable

60,542

16,998

10,506,610

8,147,695

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

218

Receivables

(continued)

(a)

(continued)

Customers are generally granted credit terms ranging from 0 to 120 days. Ageing analysis of trade receivables

of the Group at the balance sheet date, based on invoice date, is as follows:

2025

US$’000

2024

US$’000

0 – 30 days

7,832,619

6,185,814

31 – 60 days

1,542,382

1,080,594

61 – 90 days

398,285

235,405

Over 90 days

839,886

761,651

10,613,172

8,263,464

Less: loss allowance

(167,104 )

(132,767)

Trade receivables — net

10,446,068

8,130,697

At March 31, 2025, trade receivables, net of loss allowance, of US$879,681,000 (2024: US$915,714,000) were

past due. The ageing of these receivables, based on due date, is as follows:

2025

US$’000

2024

US$’000

Within 30 days

445,354

486,984

31 – 60 days

189,241

178,430

61 – 90 days

83,515

61,662

Over 90 days

161,571

188,638

879,681

915,714

Movements in the loss allowance of trade receivables are as follows:

2025

US$’000

2024

US$’000

At the beginning of the year

132,767

104,823

Exchange adjustment

161

(3,171)

Increase in loss allowance recognized in profit or loss

106,576

105,644

Uncollectible receivables written off

(14,777 )

(35,489)

Unused amounts reversed in profit or loss

(57,623 )

(39,040)

At the end of the year

167,104

132,767

(b)

Notes receivable of the Group are bank accepted notes mainly with maturity dates within six months.

Lenovo Group Limited 2024/25 Annual Report

219

Receivables

(continued)

(c)

Details of deposits, prepayments and other receivables are as follows:

2025

US$’000

2024

US$’000

Deposits

26,779

52,852

Other receivables

2,874,521

2,429,511

Prepayments

1,322,358

1,300,003

4,223,658

3,782,366

Note: Other receivables mainly comprise amounts due from subcontractors for components delivered in the ordinary course of business.

(d)

The carrying amounts of trade and notes receivables, deposits and other receivables approximate their

fair values. The maximum exposure to credit risk at the balance sheet date is the fair value of each class of

receivable mentioned above.

Bank deposits and cash and cash equivalents

Accounting policy

For the purposes of the consolidated cash flow statement, cash and cash equivalents mainly comprise cash on

hand, deposits held at call with banks, other short-term highly liquid investments that are readily convertible to

known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

Bank overdrafts are shown within borrowings in current liabilities on the consolidated balance sheet.

Bank balances subjected to restrictions that result in such balances would no longer meet the definition of cash

are presented as restricted bank balances in the consolidated balance sheet.

2025

US$’000

2024

US$’000

Bank deposits

— original maturity between three to twelve months

31,461

7,571

— restricted bank balances

57,146

57,984

88,607

65,555

Cash and cash equivalents

— cash at bank and in hand

3,234,351

3,206,279

— money market funds

1,493,773

353,552

4,728,124

3,559,831

4,816,731

3,625,386

Maximum exposure to credit risk

4,816,731

3,625,386

Effective annual interest rates

0%–14.25%

0%–10.75%

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

220

Trade and notes payables

Accounting policy

Trade and notes payables are obligations to pay for components or services that have been acquired in the

ordinary course of business from suppliers. Trade and notes payables are recognized initially at fair value and

subsequently measured at amortized cost using the effective interest method.

Trade and notes payables are classified as current liabilities if payment is due within one year or less (or in the

normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

The Group has established supplier finance arrangements with several financial institutions, in collaboration with

its suppliers, to facilitate efficient payment processing of supplier invoices. These arrangements enable suppliers

and subcontractors to receive either on-time or early payment from the related invoice due date, providing

them with improved liquidity and cash flow management. At the same time, the Group benefits from a higher

degree of flexibility in managing its liquidity. In determining whether the liabilities to the financial institutions

under these arrangements are presented separately from trade and notes payables, and other payables (Note

22) in the consolidated balance sheet, management considers whether the nature and function of these

liabilities are substantially different from trade and notes payables, and other payables. The Group classifies

financial liabilities that arise from supplier finance arrangements within trade and notes payables, and other

payables in the consolidated balance sheet. For the purpose of presenting consolidated cash flow statement,

cash flow related to the liabilities arising from supplier finance arrangements that are classified as trade and

notes payables, and other payables are still part of the working capital used in the Group’s principal revenue

generating activities and presented as arising from operating activities.

(a)

Details of trade and notes payables are as follows:

2025

US$’000

2024

US$’000

Trade payables

8,561,393

8,473,990

Notes payable

3,417,540

2,031,437

11,978,933

10,505,427

Ageing analysis of trade payables of the Group at the balance sheet date, based on invoice date, is as follows:

2025

US$’000

2024

US$’000

0 – 30 days

4,527,503

5,201,965

31 – 60 days

2,465,757

2,002,588

61 – 90 days

898,452

643,980

Over 90 days

669,681

625,457

8,561,393

8,473,990

(b)

At March 31, 2025, certain balances amounted to US$111,331,000 and US$3,275,421,000 (2024: nil and

US$1,913,114,000) are under supplier finance arrangements and included in trade payables and notes payable,

respectively, of which suppliers have already received payment from the relevant financial institutions. The

range of payment due dates for such supplier finance arrangements are 60 to 145 days after the invoice date,

which is similar with the range of payment due dates for comparable trade and notes payables that are not

part of the supplier finance arrangements.

(c)

Notes payable of the Group are mainly repayable within three months.

(d)

The carrying amounts of trade and notes payables approximate their fair values.

Lenovo Group Limited 2024/25 Annual Report

221

Other payables and accruals

Accounting policy

Other payables and accruals mainly comprise the obligations to pay for finished goods and services that have

been acquired in the ordinary course of business from subcontractors.

Allowance for billing adjustments relates primarily to allowances for future volume discounts, price protection,

rebates, and customer sales returns, details of which are set out in Note 3.

The potential cash payments related to put options issued by the Group over the equity of a subsidiary are

accounted for as financial liabilities. The amount that may become payable under the option on exercise is

initially recognized at present value of redemption amount as a written put option liability with a corresponding

charge directly to equity. A written put option liability is subsequently re-measured as a result of the change

in the expected performance at each balance sheet date, with any resulting gain or loss recognized in the

consolidated income statement. In the event that the option expires unexercised, the written put option liability

is derecognized with a corresponding adjustment to equity.

Details of other payables and accruals are as follows:

2025

US$’000

2024

US$’000

Accruals

4,391,239

3,327,359

Allowance for billing adjustments

2,152,336

2,277,947

Written put option liabilities (b)

303,099

253,482

Other payables (c)

6,962,738

6,791,407

Lease liabilities

94,972

101,580

13,904,384

12,751,775

Notes:

(a)

The carrying amounts of other payables and accruals approximate their fair values.

(b)

(i)

Pursuant to the joint venture agreement entered into between the Company and Fujitsu Limited (“Fujitsu”), the Company and Fujitsu are

respectively granted call and put options which entitle the Company to purchase from Fujitsu and Development Bank of Japan (“DBJ”), or

Fujitsu and DBJ to sell to the Company, the 49% interest in Fujitsu Client Computing Limited and its subsidiaries (together “FCCL”). Both

options are exercisable at March 31, 2025 and 2024. The exercise price for the call and put options will be determined based on the fair

value of the 49% interest as of the day of exercising the option.

(ii) During the year ended March 31, 2019, Hefei Zhi Ju Sheng Bao Equity Investment Co., Ltd (“ZJSB”) acquired the 49% interest in a joint

venture company (“JV Co”) from Compal Electronics, Inc. The Company and ZJSB respectively own 51% and 49% of the interest in the

JV Co. Pursuant to the option agreement entered into between a wholly owned subsidiary of the Group and Hefei Yuan Jia Start-up

Investment LLP (“Yuan Jia”), which holds 99.31% interest in ZJSB, the Group and Yuan Jia are respectively granted call and put options

which entitle the Group to purchase from Yuan Jia, or Yuan Jia to sell to the Group, the 99.31% interest in ZJSB.

During the option exercise period, Yuan Jia notified the Group of its intention to exercise its put option. On December 28, 2021, ZJSB, Yuan

Jia and the Group entered into an agreement pursuant to which ZJSB transferred 39% interest in the JV Co to the Group at an exercise

price of RMB1,895 million (approximately US$297 million). Upon completion on January 10, 2022, the Company and ZJSB respectively

owns 90% and 10% of the interest in the JV Co.

Yuan Jia continues to hold 99.31% interest in ZJSB and is subject to a new option agreement entered into on January 11, 2022 whereby

the Group and Yuan Jia are respectively granted call and put options which entitle the Group to purchase from Yuan Jia, or Yuan Jia to

sell to the Group, the 99.31% interest in ZJSB. The call and put options will be exercisable after 54 months and from the 48 months to the

54 months respectively from the date of the new option agreement. The exercise price for the call and put options will be determined in

accordance with the new option agreement, and up to a maximum of RMB500 million (approximately US$69 million). At March 31, 2025,

the written put option liabilities to Yuan Jia has been reclassified to current liabilities as the written put option will be exercisable within the

next twelve months.

The financial liability that may become payable under the put option is initially recognized at present value of redemption amount within “Other

non-current liabilities” with a corresponding charge directly to equity, as a put option written on non-controlling interest.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

222

Other payables and accruals

(continued)

Notes

(continued)

(b)

(continued)

The put option liability shall be re-measured as a result of the change in the expected performance at each balance sheet date, with any

resulting gain or loss recognized in the consolidated income statement (Note 4). In the event that the put option lapses unexercised, the liability

will be derecognized with a corresponding adjustment to equity.

(c)

At March 31, 2025, certain balances amounted to US$1,180,060,000 (2024: US$1,533,201,000) are under supplier finance arrangements and

included in other payables, of which subcontractors have already received payment from the relevant financial institutions. The range of

payment due dates for such supplier finance arrangements are 60 to 145 days after the invoice date, which is similar with the range of payment

due dates for comparable other payables that are not part of the supplier finance arrangements.

Provisions

Accounting policy

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is

determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of

an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the

obligation using a pre-tax discount rate that reflects current market assessments of the time value of money

and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as

interest expense.

(a)

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 Group

reevaluates its estimates on a quarterly basis to assess the adequacy of its recorded warranty liabilities and

adjusts the amounts as necessary.

(b) Other provisions

Provisions for environmental restoration, restructuring costs and legal claims are recognized when: the

Group has a present legal or constructive obligation as a result of past events; it is probable that an

outflow of resources will be required to settle the obligation; and the amount has been reliably estimated.

Restructuring costs provision comprises lease termination penalties and employee termination payments.

Provisions are not recognized for future operating losses.

Critical accounting estimates and judgments

Warranty provision is based on the estimated cost of product warranties when revenue is recognized. Factors

that affect the Group’s warranty liability include the number of sold units currently under warranty, historical

and anticipated rates of warranty claims on those units, and cost per claim to satisfy our warranty obligation.

The estimation basis is reviewed on an on-going basis and revised where appropriate. Certain of these costs

are reimbursable from the suppliers in accordance with the terms of relevant arrangements with the suppliers.

These amounts are recognized as a separate asset, to the extent of the amount of the provision made, when it

is virtually certain that reimbursement will be received if the Group settles the obligation.

Lenovo Group Limited 2024/25 Annual Report

223

Provisions

(continued)

The components of provisions of the Group are as follows:

Warranty

US$’000

Environmental

restoration

US$’000

Restructuring

US$’000

Total

US$’000

Year ended March 31, 2024

At the beginning of the year

1,051,839

26,084

162,577

1,240,500

Exchange adjustment

(25,797)

(2,703)

(521)

(29,021)

Provisions made

660,534

18,051

54,991

733,576

Amounts utilized

(716,985)

(16,096)

(108,108)

(841,189)

969,591

25,336

108,939

1,103,866

Long-term portion classified as

non-current liabilities

(161,261)

(21,655)

–

(182,916)

At the end of the year

808,330

3,681

108,939

920,950

Year ended March 31, 2025

At the beginning of the year

969,591

25,336

108,939

1,103,866

Exchange adjustment

(6,690 )

(313 )

546

(6,457 )

Provisions made

725,885

16,443

–

742,328

Amounts utilized

(718,097 )

(14,935 )

(71,553 )

(804,585 )

970,689

26,531

37,932

1,035,152

Long-term portion classified as

non-current liabilities

(159,400 )

(23,159 )

–

(182,559 )

At the end of the year

811,289

3,372

37,932

852,593

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 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.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

224

Borrowings

Accounting policy

Borrowings are recognized initially at fair value, net of transaction costs incurred. Transaction costs are

incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or financial

liability, including fees and commissions paid to agents, advisers, brokers and dealers, levies by regulatory

agencies and securities exchanges, and transfer taxes and duties. Borrowings are subsequently stated at

amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is

recognized in the consolidated income statement over the period of the borrowings using the effective interest

method.

The fair value of the liability portion of a convertible bond is determined using a market interest rate for

an equivalent non-convertible bond. This amount is recorded as a liability on an amortized cost basis until

extinguished on conversion or maturity of the bonds. The remainder of the proceeds is allocated to the

conversion option. This is recognized and included in shareholders’ equity, net of income tax effects.

Borrowings are classified as current liabilities unless, at the balance sheet date, the Group has a right to defer

settlement of the liability for at least 12 months after the balance sheet date.

2025

US$’000

2024

US$’000

Current liabilities

Short-term loans (a)

65,364

50,431

Notes (b)

964,988

–

1,030,352

50,431

Non-current liabilities

Notes (b)

2,050,271

3,012,637

Convertible bonds (c)

2,287,535

556,592

4,337,806

3,569,229

5,368,158

3,619,660

Notes:

(a)

Majority of the short-term loans are denominated in United States dollars. At March 31, 2025, the Group has total revolving and short-term loan

facilities of US$6,044 million (2024: US$5,426 million) which has been utilized to the extent of US$62 million (2024: US$41 million).

Lenovo Group Limited 2024/25 Annual Report

225

Borrowings

(continued)

Notes: (continued)

(b)

Details of the outstanding notes are as follows:

Issue date

Outstanding

principal amount

Term

Interest rate

per annum

Due date

2025

US$’000

2024

US$’000

April 24, 2020 and May 12, 2020

US$965 million

5 years

5.875%

April 2025

964,988

964,798

November 2, 2020

US$900 million

10 years

3.421%

November 2030

895,032

894,145

July 27, 2022

US$600 million

5.5 years

5.831%

January 2028

596,607

595,587

July 27, 2022

US$563 million

10 years

6.536%

July 2032

558,632

558,107

3,015,259

3,012,637

(c)

Details of the outstanding convertible bonds are as follows:

Issue date

Outstanding

principal amount

Term

Interest rate

per annum

Due date

2025

US$’000

2024

US$’000

August 26, 2022 (i)

US$675 million

7 years

2.5%

August 2029

576,812

556,592

January 8, 2025 (ii)

US$2,000 million

3 years

January 2028

1,710,723

–

2,287,535

556,592

(i)

On August 26, 2022, the Company completed the issuance of 7-Year US$675 million convertible bonds bearing annual interest at 2.5%

due in August 2029 (“the 2029 Convertible Bonds”) to the bondholders. The proceeds were used to repay previous convertible bonds

and for general corporate purposes. The bondholders have the right, at any time on or after 41 days after the date of issue and up to the

10th day prior to the maturity date, to convert part or all of the outstanding principal amount of the 2029 Convertible Bonds into ordinary

shares of the Company at a conversion price of HK$9.94 per share, subject to adjustments. The conversion price was adjusted to HK$8.95

per share effective on January 8, 2025. Assuming full conversion of the 2029 Convertible Bonds at the conversion price of HK$8.95 per

share, the 2029 Convertible Bonds will be convertible into 591,171,787 shares.

The outstanding principal amount of the 2029 Convertible Bonds is repayable by the Company upon the maturity of the 2029 Convertible

Bonds on August 26, 2029 if not previously redeemed, converted or purchased and cancelled. On August 26, 2026, the bondholders will

have the right, at the bondholders’ option, to require the Company to redeem part or all of the 2029 Convertible Bonds at their principal

amount.

At any time after September 9, 2026 and prior to August 26, 2029, the Company will have the right to redeem in whole, but not in part,

the 2029 Convertible Bonds for the time being outstanding at their principal amount upon occurrence of certain specified conditions.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

226

Borrowings

(continued)

Notes: (continued)

(c)

(continued)

(ii)

On January 8, 2025, the Company completed the issuance of 3-Year US$2,000 million zero-coupon convertible bonds due in January

2028 (“the 2028 Convertible Bonds”) to the bondholder, subject to three months extension upon occurrence of specified condition. The

proceeds were used to repay the existing debts and for general corporate purposes. The bondholder has the right, at any time up to 15

calendar days prior to the maturity date, to convert part or all of the outstanding principal amount of the 2028 Convertible Bonds into

ordinary shares of the Company at a conversion price of HK$10.02 per share, subject to adjustments. The conversion shall take place

on the maturity date. Assuming full conversion of the 2028 Convertible Bonds at the conversion price of HK$10.02 per share, the 2028

Convertible Bonds will be convertible into 1,559,181,636 shares.

The liability and equity components of the 2028 Convertible Bonds on initial recognition are presented as follows:

US$’000

Face value of the convertible bonds on the issue date

2,000,000

Less: transaction costs

(20,192)

Net proceeds

1,979,808

Less: equity component

(290,608)

Liability component on initial recognition

1,689,200

The outstanding principal amount of the 2028 Convertible Bonds is repayable by the Company upon the maturity of the 2028 Convertible

Bonds on January 8, 2028 if not previously redeemed or converted. At any time prior to the maturity date, the bondholder will have the

right to require the Company to redeem all of the 2028 Convertible Bonds at their principal amount or plus interest of 4.5% per annum

upon occurrence of certain specified conditions.

The initial fair value of the liability portion of the convertible bonds was determined using a market interest rate for an equivalent non-convertible

bond at the issue date. The liability is subsequently recognized on an amortized cost basis until extinguished on conversion, redemption or

maturity of the bonds. The remainder of the proceeds was allocated to the conversion option and recognized in shareholders’ equity, net of

income tax, and not subsequently remeasured.

The Group expects that it will be able to meet its redemption obligations based on the financial position of the Group had conversion of the

2029 Convertible Bonds and 2028 Convertible Bonds not exercised on maturity.

Lenovo Group Limited 2024/25 Annual Report

227

Borrowings

(continued)

At March 31, 2025 and 2024, the Group’s borrowings were repayable as follows:

2025

US$’000

2024

US$’000

Within 1 year

1,030,352

50,431

Over 1 to 2 years

–

964,798

Over 2 to 5 years

2,884,142

595,587

Over 5 years

1,453,664

2,008,844

5,368,158

3,619,660

The fair values of the notes and convertible bonds at March 31, 2025 were US$3,013 million and US$2,681 million

respectively (2024: US$2,954 million and US$827 million respectively). The carrying amounts of other borrowings

are either at fair value or approximate their fair values as the impact of discounting is not significant.

Total bank facilities of the Group at March 31, 2025 and 2024 are as follows:

Total available amounts

Utilized amounts

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

Revolving loans

2,850,000

3,500,000

–

Short-term money market facilities

3,193,522

1,925,683

62,433

41,300

Forward foreign exchange contracts

16,008,524

11,587,905

15,982,263

11,554,595

Trade lines

6,199,943

4,676,387

4,369,806

2,861,146

28,251,989

21,689,975

20,414,502

14,457,041

All borrowings are unsecured and the effective annual interest rates at March 31, 2025 and 2024 are as follows:

United States dollar

2025

2024

Short-term loans and notes

0.99%-6.63%

3.29%–10.02%

Convertible bonds

5.65%-6.07%

6.07%

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

228

Derivative financial liabilities

Accounting policy

Derivative financial liabilities include derivatives relate to foreign currency forward contracts (see Note 29 for

accounting policy) and warrants issued by the Company.

Warrants issued by the Company are classified as financial liabilities at fair value through profit or loss as

the warrants give the Company a choice over how it is settled upon the exercise of subscription right of the

warrants. The warrants are subsequently re-measured at each balance sheet date, with any resulting gain or loss

recognized in the consolidated income statement. When determining the classification of warrants as current or

non-current, the Group considers the date at which the holders could demand settlement. Warrants that can be

exercised within 12 months after the balance sheet date are classified as current at balance sheet date.

On January 8, 2025, an aggregate of 1,150,000,000 warrants have been fully subscribed and issued with gross

proceeds of HK$1,645 million (approximately US$212 million).

Subject to the terms of the warrants, including the transfer and exercise limit in respect of each 12-month period

from the issue date, the warrants holders have the right, at any time up to January 8, 2028, which may be extended

by three months, to subscribe for the Company’s shares at an initial subscription price of HK$12.31 per share, subject

to adjustments. The Company has the option to satisfy such exercise rights by allotment and issue of the Company’s

shares, or through cash payments, which is determined with reference to the market price of the Company’s shares.

The warrants issued by the Company are initially recognized as financial liabilities at FVPL and are subsequently re-

measured at each balance sheet date, with any resulting gain or loss recognized as “other operating income/(expenses)

— net” in the consolidated income statement. The valuation methodology and inputs used are disclosed in Note

30(d).

At March 31, 2025, the current and non-current derivative financial liabilities relating to warrants amounted to

US$87,919,000 and US$241,778,000, respectively.

Details of derivatives relate to foreign currency forward contracts (included in derivative financial instruments) are

disclosed in Note 29 and Note 30.

Lenovo Group Limited 2024/25 Annual Report

229

Other non-current liabilities

Accounting policy

Grants from the government are recognized at their fair value where there is a reasonable assurance that the

grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are deferred and recognized within “Other operating income/(expenses)

— net” in the consolidated income statement over the period necessary to match them with the costs that they

are intended to compensate.

Government grants relating to property, plant and equipment are included in “Other non-current liabilities” as

deferred government grants and are credited to the consolidated income statement on a straight-line basis

over the expected lives of the related assets.

Details of other non-current liabilities are as follows:

2025

US$’000

2024

US$’000

Deferred consideration (a)

25,072

Written put option liability (Note 22(b)(ii))

–

44,251

Lease liabilities

269,828

240,449

Environmental restoration (Note 23)

23,159

21,655

Government incentives and grants received in advance (b)

98,350

101,095

Others

301,375

322,183

717,784

754,705

Notes:

(a)

Pursuant to the joint venture agreement entered into with NEC Corporation, the Group is required to pay in cash to NEC Corporation deferred

consideration. At March 31, 2025, the potential undiscounted amount of future payment in respect of the deferred consideration that the Group

could be required to make amounted to US$25 million (2024: US$25 million).

(b)

Government incentives and grants received in advance by certain group companies included in “Other non-current liabilities” mainly relate

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 incentives and grants, upon fulfillment of those

conditions, are credited to the consolidated income statement immediately or recognized on a straight-line basis over the expected life of the

related assets.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

230

Retirement benefit obligations

Accounting policy

(a)

Pension 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.

A defined benefit plan is a pension plan which defines an amount of pension benefit that an employee

will receive on retirement, usually dependent on one or more factors such as age, years of service and

compensation.

The liability recognized in the consolidated balance sheet in respect of defined benefit pension plans is

the present value of the defined benefit obligation at the balance sheet date less the fair value of plan

assets. Significant portion of the defined benefit obligation is calculated annually by independent actuaries

using the projected unit credit method. The present value of the defined benefit obligation is determined

by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds

that are denominated in the currency in which the benefits will be paid, and that have terms to maturity

approximating to the terms of the related pension obligation. In countries where there is no deep market in

such bonds, the market rates on government bonds are used.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit

obligation and the fair value of plan assets. This cost is included in employee benefit expense in the

consolidated income statement.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions

are recognized in other comprehensive income or loss in the year in which they arise. They are included

in retained earnings in the consolidated statement of changes in equity and in the consolidated balance

sheet.

Certain defined benefit schemes require employees to contribute to reduce the cost of the benefits to the

Group. Contributions from employees are linked to service and hence, the contributions reduce service

cost. The Group attributes the contributions from employees to periods of service on a straight-line basis.

Changes in the present value of the defined benefit obligation resulting from plan amendments or

curtailments are recognized immediately in profit or loss as past service costs.

(b) Post-employment medical benefits

The Group operates a number of post-employment medical benefit schemes, the largest being in the

United States. The entitlement to these benefits is usually conditional on the employee remaining in

service up to retirement age and the completion of a minimum service period. The expected costs of these

benefits are accrued over the period of employment using an accounting methodology similar to that for

defined benefit pension plans. Actuarial gains and losses arising from experience adjustments and changes

in actuarial assumptions are recognized in other comprehensive income or loss in the year in which they

arise. The obligations of these schemes in the United States are valued annually by independent qualified

actuaries.

Critical accounting estimates and judgments

Pension and other post-retirement benefit costs and obligations are dependent on various assumptions. The

Group’s major assumptions primarily relate to discount rate, expected return on assets, and salary growth. In

determining the discount rate, the Group references market yields at the balance sheet date on high quality

corporate bonds. The currency and term of the bonds are consistent with the currency and estimated term of

the benefit obligations being valued. The expected return on plan assets is based on market expectations for

returns over the life of the related assets and obligations. The salary growth assumptions reflect the Group’s

long-term actual experience and future and near-term outlook. Actual results that differ from the assumptions

are generally recognized in the year they occur.

Lenovo Group Limited 2024/25 Annual Report

231

Retirement benefit obligations

(continued)

2025

US$’000

2024

US$’000

Pension obligation included in non-current liabilities

Pension benefits

191,561

212,841

Post-employment medical benefits

29,223

28,561

220,784

241,402

Expensed in consolidated income statement

Pension benefits (Note 7)

18,372

23,059

Post-employment medical benefits

1,562

1,498

19,934

24,557

Remeasurements for:

Defined pension benefits

(5,922)

5,740

Post-employment medical benefits

361

934

(5,561)

6,674

The Group’s largest pension liabilities are now in Germany. The Group operates a sectionalized plan that has both

defined contribution and defined benefit features in Germany, including benefits based on a final pay formula. This

plan is closed to new entrants. The defined benefit plan for Motorola Mobility in Germany does not have employees,

but a large number of retirees and former employees with benefits fully vested but have yet to reach retirement

age.

The Group continues to maintain significant pension liabilities in Japan, where a cash balance benefit is provided for

substantially all employees.

In the US, the defined benefit plan is closed to new entrants, and now covers only less than 1% of employees. There

is also a supplemental defined benefit plan that covers certain executives.

The Group also operates final salary defined benefit plans in a number of countries as a result of past acquisitions.

The Group’s plans are valued by qualified actuaries annually using the projected unit credit method.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged

or credited to other comprehensive income in the year in which they arise.

(a)

Pension benefits

The amounts recognized in the consolidated balance sheet are determined as follows:

2025

US$’000

2024

US$’000

Present value of funded obligations

444,455

451,205

Fair value of plan assets

(383,508)

(373,512)

Deficit of funded plans

60,947

77,693

Present value of unfunded obligations

130,614

135,148

Liability in the consolidated balance sheet

191,561

212,841

Representing:

Pension benefits obligation

191,561

212,841

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

232

Retirement benefit obligations

(continued)

(a)

Pension benefits

(continued)

The principal actuarial assumptions used are as follows:

2025

2024

Discount rate

1.1%-5.2%

1.5%–5.1%

Future salary increases

0%-3.5%

0%–5.4%

Future pension increases

0%-2.0%

0%–2.5%

Life expectancy for male aged 60

Life expectancy for female aged 60

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

Impact on

defined benefit obligation

2025

Change in

assumption

Increase in

assumption

Decrease in

assumption

Discount rate

0.5%

Decrease by 5.4%

Increase by 5.9%

Salary growth rate

0.5%

Increase by 0.8%

Decrease by 0.8%

Pension growth rate

0.5%

Increase by 3.5%

Decrease by 3.3%

Life expectancy

1 year

Increase by 1.1%

Decrease by 1.4%

Impact on

defined benefit obligation

2024

Change in

assumption

Increase in

assumption

Decrease in

assumption

Discount rate

0.5%

Decrease by 5.6%

Increase by 6.2%

Salary growth rate

0.5%

Increase by 1.0%

Decrease by 0.9%

Pension growth rate

0.5%

Increase by 3.7%

Decrease by 3.5%

Life expectancy

1 year

Increase by 1.4%

Decrease by 1.4%

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions

constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.

When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same

method (present value of the defined benefit obligation calculated with the projected unit credit method

at the balance sheet date) has been applied as when calculating the pension liability recognized within the

consolidated balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to

the previous year.

Lenovo Group Limited 2024/25 Annual Report

233

Retirement benefit obligations

(continued)

(b) Post-employment medical benefits

The Group operates a number of post-employment medical benefit schemes, principally in the US. The method

of accounting, assumptions and the frequency of valuations are similar to those used for defined benefit

pension schemes.

The US plan (Lenovo Future Health Account Plan) is currently an unfunded plan, and benefits to eligible

retirees and dependents will be made through general assets.

As post-employment medical benefits plan made no agreements on future benefit level changes, the changes

in future medical cost trend rates have no effect on the liabilities for post-employment medical benefits.

The liability recognized in the consolidated balance sheet of US$29,223,000 (2024: US$28,561,000) represents

the present value of unfunded obligations.

(c)

Additional information on post-employment benefits (pension and medical)

Plan assets of the Group comprise:

2025

2024

Quoted

US$’000

Unquoted

US$’000

Total

US$’000

Quoted

US$’000

Unquoted

US$’000

Total

US$’000

Pension plan

Equity instruments

Information technology

1,324

–

1,324

1,429

–

1,429

Energy

254

–

254

234

–

234

Manufacturing

3,467

–

3,467

2,026

–

2,026

Others

11,708

–

11,708

10,420

–

10,420

16,753

–

16,753

14,109

–

14,109

Debt instruments

Government

56,632

–

56,632

58,423

–

58,423

Corporate bonds

(investment grade)

63,660

–

63,660

61,439

–

61,439

Corporate bonds

(Non-investment grade)

57,756

–

57,756

57,916

–

57,916

178,048

–

178,048

177,778

–

177,778

Others

Property

–

29,313

–

23,449

Qualifying insurance policies

–

44,529

–

49,951

Cash and cash equivalents

10,410

–

10,410

7,048

–

7,048

Investment funds

–

83,317

–

77,328

Structured bonds

–

16,990

–

19,519

Others

–

4,148

–

4,330

10,410

178,297

188,707

7,048

174,577

181,625

205,211

178,297

383,508

198,935

174,577

373,512

The long term strategic asset allocations of the plans are set and reviewed from time to time by the plans’

trustees taking into account the membership, liability profile and the liquidity requirements of the plans.

The weighted average duration of the defined benefit obligation is 11.62 years (2024: 12.04 years).

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

234

Retirement benefit obligations

(continued)

(c)

Additional information on post-employment benefits (pension and medical)

(continued)

Expected maturity analysis of undiscounted pension and post-employments medical benefits:

Less than

a year

US$’000

Between

1–2 years

US$’000

Between

2–5 years

US$’000

Over

5 years

US$’000

Total

US$’000

At March 31, 2025

Pension benefits

29,351

32,673

97,487

731,011

890,522

Post-employment medical benefits

1,718

1,925

6,887

37,644

48,174

Total

31,069

34,598

104,374

768,655

938,696

At March 31, 2024

Pension benefits

28,815

28,610

94,889

741,916

894,230

Post-employment medical benefits

1,555

1,747

14,200

38,671

56,173

Total

30,370

30,357

109,089

780,587

950,403

Pension and medical plan assets do not include any of the Company’s ordinary shares or US real estate

occupied by the Group (2024: nil).

Reconciliation of fair value of plan assets of the Group:

Pension

Medical

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

Opening fair value

373,512

367,224

–

Exchange adjustment

(459 )

(20,973)

(15)

Interest income

13,231

11,371

Remeasurements:

Experience (loss)/gain

(11,125)

3,764

–

Contributions by the employer

26,285

31,329

1,276

1,110

Contributions by plan participants

1,956

1,349

–

Benefits paid

(19,892)

(20,552)

(1,299)

(1,143)

Closing fair value

383,508

373,512

–

Actual return on plan assets

2,106

15,135

Contributions of US$17,701,000 are estimated to be made for the year ending March 31, 2026.

Lenovo Group Limited 2024/25 Annual Report

235

Retirement benefit obligations

(continued)

(c)

Additional information on post-employment benefits (pension and medical)

(continued)

Reconciliation of movements in present value of defined benefit obligation of the Group:

Pension

Medical

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

Opening defined benefit obligation

586,353

597,181

28,561

27,287

Exchange adjustment

(3,815)

(30,959)

–

(32)

Current service cost

12,218

15,007

178

226

Past service cost

337

1,231

–

Interest cost

19,254

18,427

1,422

1,289

Remeasurements:

(Gain)/loss from changes in

demographic assumptions

(33)

(326)

(55)

(Gain)/loss changes in

financial assumptions

(21,455)

405

(1,107)

Experience loss

4,441

9,425

332

2,038

Contributions by plan participants

1,415

1,337

–

Benefits paid

(23,440)

(25,140)

(1,299)

(1,143)

Curtailment gain

(206)

(235)

–

Closing defined benefit obligation

575,069

586,353

29,223

28,561

During the year, benefits of US$3,548,000 were settled directly by the Group (2024: US$4,588,000).

Summary of pensions and post-retirement medical benefits of the Group:

2025

US$’000

2024

US$’000

2023

US$’000

2022

US$’000

2021

US$’000

Present value of defined

benefit obligation

604,292

614,914

624,468

750,069

876,077

Fair value of plan assets

383,508

373,512

367,224

409,527

444,172

Deficit

220,784

241,402

257,244

340,542

431,905

Actuarial losses/(gains) arising

on plan assets

11,125

(3,764)

35,788

17,780

(6,196)

Actuarial (gains)/losses arising

on plan liabilities

(16,686)

10,438

(94,312)

(75,974)

(29,539)

(5,561)

6,674

(58,524)

(58,194)

(35,735)

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

236

Retirement benefit obligations

(continued)

(c)

Additional information on post-employment benefits (pension and medical)

(continued)

The amounts recognized in the consolidated income statement are as follows:

Pension

Medical

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

Current service cost

12,218

15,007

178

226

Past service cost

337

1,231

–

Interest cost

19,254

18,427

1,422

1,289

Interest income

(13,231)

(11,371)

(38)

(17)

Curtailment gain

(206)

(235)

–

Total expense recognized

in the consolidated

income statement

18,372

23,059

1,562

1,498

Share capital

Accounting policy

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,

net of tax, from the proceeds.

Where any group company purchases the Company’s equity share capital, the consideration paid, including

any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the

Company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently

reissued, any consideration received (net of any directly attributable incremental transaction costs and the

related income tax effects) is included in equity attributable to the Company’s equity holders.

2025

2024

Number

of shares

US$’000

Number

of shares

US$’000

Issued and fully paid:

Voting ordinary shares:

At the beginning of the year

12,404,659,302

3,500,987

12,128,130,291

3,282,318

Conversion of convertible bonds

–

276,529,011

218,669

At the end of the year

12,404,659,302

3,500,987

12,404,659,302

3,500,987

Lenovo Group Limited 2024/25 Annual Report

237

Financial instruments by category

Accounting policy

Financial assets

(a)

Classification

The Group classifies its financial assets in the following measurement categories:

—

those to be measured subsequently at fair value (either through other comprehensive income or

through profit or loss), and

—

those to be measured at amortized cost.

The classification depends on the Group’s business model for managing the financial assets and the

contractual terms of the cash flows.

For assets measured at fair value, gains and losses will either be recorded in profit or loss or other

comprehensive income. For investments in equity instruments that are not held for trading, this will depend

on whether the Group has made an irrevocable election at the time of initial recognition to account for the

equity investments at FVOCI.

The Group reclassifies debt investments when and only when its business model for managing those

assets changes.

(b)

Recognition and derecognition

Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the

Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive

cash flows from the financial assets have expired or have been transferred and the Group has transferred

substantially all the risks and rewards of ownership.

(c)

Measurement

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial

asset not at FVPL, transaction costs that are directly attributable to the acquisition of the financial asset.

Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

Financial assets with embedded derivatives are considered in their entirety when determining whether

their cash flows are solely payment of principal and interest.

(i)

Debt instruments

Subsequent measurement of debt instruments depends on the Group’s business model for managing

the assets and the cash flow characteristics of the assets. There are three measurement categories

into which the Group classifies its debt instruments:

—

Amortized cost: Assets that are held for collection of contractual cash flows where those cash

flows represent solely payments of principal and interest are measured at amortized cost. Interest

income from these financial assets, impairment losses, foreign exchange gains and losses, and

gain or loss arising on derecognition are recognized directly in profit or loss.

—

FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial

assets, where the assets’ cash flows represent solely payments of principal and interest, are

measured at FVOCI. Movements in the carrying amount are taken through other comprehensive

income, except for the recognition of impairment losses, interest income and foreign exchange

gains and losses which are recognized in profit or loss. When the financial asset is derecognized,

the cumulative gain or loss previously recognized in other comprehensive income is reclassified

from equity to profit or loss.

—

FVPL: Assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. A

gain or loss on a debt investment that is subsequently measured at FVPL is recognized in profit

or loss in the period in which it arises.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

238

Financial instruments by category

(continued)

Accounting policy

(continued)

Financial assets

(continued)

(c)

Measurement (continued)

(ii)

Equity instruments

The Group subsequently measures all equity investments at fair value. Where the Group’s

management has elected to present fair value gains and losses on equity investments in other

comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit

or loss following the derecognition of the investment. Dividends from such investments continue to be

recognized in profit or loss when the Group’s right to receive payments is established. On disposal of

these equity investments, any related balance within the investment revaluation reserve is reclassified

to retained earnings. Changes in the fair value of financial assets at FVPL are recognized in profit or

loss as applicable.

Financial assets at FVOCI comprise equity investments which are not held for trading, and which the

Group has irrevocably elected at initial recognition to recognize in this category. These are strategic

investments and the Group considers this classification to be more relevant.

Financial assets at FVPL comprise equity investments which are held for trading, and which the Group

has not elected to recognize fair value gains and losses through other comprehensive income.

Details on how the fair value of financial instruments is determined are disclosed in Note 30(d).

Impairment of financial assets

The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments

carried at amortized cost and FVOCI. The impairment methodology applied depends on whether there has

been a significant increase in credit risk.

Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are

subsequently re-measured at their fair values at each balance sheet date. The accounting for subsequent

changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the

nature of the item being hedged. The Group designates certain derivatives as either: (i) hedges of the fair value

of recognized assets or liabilities or a firm commitment (fair value hedge) or (ii) hedges of a particular risk

associated with the cash flows of recognized assets and liabilities and highly probable forecast transactions (cash

flow hedges).

The Group documents at the inception of the transaction the relationship between hedging instruments

and hedged items, as well as its risk management objectives and strategy for undertaking various hedging

transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of

whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair

values or cash flows of hedged items.

Lenovo Group Limited 2024/25 Annual Report

239

Financial instruments by category

(continued)

Accounting policy

(continued)

Derivative financial instruments and hedging activities

(continued)

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining

maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining

maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or

liability.

(a)

Fair value hedge

Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recorded

in the consolidated income statement, together with any changes in the fair value of the hedged asset or

liability that are attributable to the hedged risk.

(b)

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualified as

cash flow hedges is recognized in other comprehensive income or loss. The gain or loss relating to the

ineffective portion is recognized immediately in the consolidated income statement.

Amounts accumulated in equity are reclassified to the consolidated income statement in the periods when

the hedged item affects profit or loss (for example, when the forecast sale or purchase that is hedged

takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate

borrowings is recognized in the consolidated income statement within “Finance costs”. The gain or loss

relating to the ineffective portion is recognized within “Other operating income/(expenses) — net” in the

consolidated income statement.

When a hedging instrument expires, or is sold or terminated, or when a hedge no longer meets the criteria

for hedge accounting, any cumulative gains or losses on the hedging instrument that has been recognized

in other comprehensive income from the period when the hedge was effective shall remain separately in

equity until the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the

cumulative gains or losses on the hedging instrument that has been recognized in other comprehensive

income from the period when the hedge was effective shall be reclassified from equity to the consolidated

income statement immediately.

(c)

Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any

derivative instruments that do not qualify for hedge accounting are recognized immediately in the

consolidated income statement.

Critical accounting estimates and judgments

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter

derivatives) is determined by using valuation techniques. The Group uses its judgment to select a variety of

methods and make assumptions that are mainly based on market conditions existing at each balance sheet

date.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

240

Financial instruments by category

(continued)

Financial

assets at

amortized

cost

US$’000

Financial

assets at

FVPL

US$’000

Derivatives

used for

hedging

US$’000

Financial

assets at

FVOCI

(non-

recycling)

US$’000

Other

financial

assets at

FVOCI

(recycling)

US$’000

Total

US$’000

Assets

At March 31, 2025

Financial assets at FVPL

–

1,464,384

–

1,464,384

Financial assets at FVOCI

–

45,382

–

45,382

Other non-current assets

248,777

–

248,777

Trade and notes receivables

60,542

–

10,446,068

10,506,610

Derivative financial assets

–

53,690

–

53,690

Deposits and other receivables

2,746,721

–

2,746,721

Bank deposits

88,607

–

88,607

Cash and cash equivalents

4,728,124

–

4,728,124

7,872,771

1,464,384

53,690

45,382

10,446,068

19,882,295

At March 31, 2024

Financial assets at FVPL

–

1,393,666

–

1,393,666

Financial assets at FVOCI

–

55,973

–

55,973

Other non-current assets

365,640

–

365,640

Trade and notes receivables

16,998

–

8,130,697

8,147,695

Derivative financial assets

–

69,568

–

69,568

Deposits and other receivables

2,347,121

–

2,347,121

Bank deposits

65,555

–

65,555

Cash and cash equivalents

3,559,831

–

3,559,831

6,355,145

1,393,666

69,568

55,973

8,130,697

16,005,049

Lenovo Group Limited 2024/25 Annual Report

241

Financial instruments by category

(continued)

Financial

liabilities at

amortized

cost

US$’000

Derivatives

used for

hedging

US$’000

Derivatives

at FVPL

US$’000

Total

US$’000

Liabilities

At March 31, 2025

Trade and notes payables

11,978,933

–

11,978,933

Derivative financial liabilities

–

109,277

329,697

438,974

Other payables and accruals

10,503,181

–

10,503,181

Lease liabilities

364,800

–

364,800

Borrowings

5,368,158

–

5,368,158

Deferred consideration

25,072

–

25,072

Written put option liabilities

303,099

–

303,099

Others

301,375

–

301,375

28,844,618

109,277

329,697

29,283,592

At March 31, 2024

Trade and notes payables

10,505,427

–

10,505,427

Derivative financial liabilities

–

42,555

–

42,555

Other payables and accruals

9,552,604

–

9,552,604

Lease liabilities

342,029

–

342,029

Borrowings

3,619,660

–

3,619,660

Deferred consideration

25,072

–

25,072

Written put option liabilities

297,733

–

297,733

Others

322,183

–

322,183

24,664,708

42,555

–

24,707,263

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

242

Financial risk management

The Group’s activities expose it to a variety of financial risks, such as market risk (including foreign currency risk,

cash flow interest rate risk and price risk), credit risk, and liquidity risk. The Group’s overall financial risk management

program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on

the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.

Financial risk management is carried out by the centralized treasury department (“Group Treasury”).

(a)

Financial risk factors

(i)

Foreign currency risk

The Group operates internationally and is exposed to foreign currency risk arising from various currency

exposures, primarily with respect to United States dollar, Renminbi and Euro. Foreign currency risk arises

from future commercial transactions, recognized assets and liabilities and net investment in foreign

operations denominated in a currency that is not the group companies’ functional currency.

Management has set up a policy to require group companies to manage their foreign currency risk against

their functional currency. The Group’s forward foreign currency contracts are either used to hedge a

percentage of anticipated cash flows (mainly export sales and purchase of inventories) which are highly

probable, or used as fair value hedges for the identified assets and liabilities.

For segment reporting purposes, external hedge contracts on assets, liabilities or future transactions are

designated to each operating segment, as appropriate.

The following tables detail the Group’s exposure at the balance sheet date to currency risk arising from

recognized assets or liabilities denominated in a currency other than the functional currency of the entity

to which they relate, except for the currency risk between United States dollar and Hong Kong dollar given

the two currencies are under the linked exchange rate system. For presentation purposes, the amounts of

the exposure are shown in United States dollar, translated using the spot rate at the balance sheet date.

Differences resulting from the translation of the financial statements of foreign operations into the Group’s

presentation currency are excluded.

2025

2024

United

States

dollar

US$’000

Renminbi

US$’000

Euro

US$’000

United

States

dollar

US$’000

Renminbi

US$’000

Euro

US$’000

Trade and other receivables

716,915

20,488

182,482

725,286

9,155

164,159

Bank deposits and cash

and cash equivalents

51,284

51,879

106,073

108,167

87,364

171,657

Trade and other payables

(590,815)

(73,663)

(107,042)

(479,478)

(9,851)

(92,222)

Intercompany balances

before elimination

1,838,813

4,611,989

(401,751)

1,297,061

3,250,149

(696,053)

Gross exposure

2,016,197

4,610,693

(220,238)

1,651,036

3,336,817

(452,459)

Notional amounts of forward

exchange contracts used

as economic hedges

2,645,733

263,551

291,687

2,079,772

597,298

523,050

Net exposure

4,661,930

4,874,244

71,449

3,730,808

3,934,115

70,591

Lenovo Group Limited 2024/25 Annual Report

243

Financial risk management

(continued)

(a)

Financial risk factors

(continued)

(ii)

Cash flow interest rate risk

The Group’s interest rate risk generally arises from short-term and long-term borrowings denominated

in United States dollar. It is the Group’s policy to mitigate interest rate risk through the use of appropriate

interest rate hedging instruments when necessary. Generally, the Group manages its cash flow interest rate

risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of

converting borrowings from floating rates to fixed rates. Under the interest rate swaps, the Group agrees

with other parties to settle the difference between cash flow arising from fixed contract rates and floating-

rate interest of the notional amounts at specified intervals (primarily quarterly).

The Group participates in various trade financing programs. The Group is exposed to fluctuation of

interest rates of all the currencies covered by those programs.

(iii) Price risk

The Group’s exposure to equity securities price risk arises from investments held by the Group and

classified in the consolidated balance sheet either as financial assets at FVPL (Note 17(a)) or FVOCI (Note

17(b)).

To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio.

Diversification of the portfolio is done in accordance with the limits set by the Group.

The Group’s listed equity investments are determined based on respective quoted market prices. The fair

value of unlisted equity investments is determined based on valuation techniques, please refer to Note

30(d) for details.

(iv) Credit risk

Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, derivative

financial instruments, notes receivable, other receivables and deposits with banks and financial institutions,

as well as credit exposures to customers and subcontractors, including outstanding receivables and

committed transactions.

For banks and other financial institutions, the Group controls its credit risk through monitoring their credit

rating and setting approved counterparty credit limits that are regularly reviewed.

The Group has no significant concentration of customer credit risk. The Group has a credit policy in place

and exposures to these credit risks are monitored on an ongoing basis. No credit limits were exceeded by

any customers and subcontractors during the reporting period, and management does not expect any

significant losses from non-performance by these counterparties.

Except for trade receivables, the Group measures the loss allowance equal to 12 months expected credit

loss, unless when there has been a significant increase in credit risk since initial recognition, the Group

recognizes lifetime expected credit loss. The expected credit loss was minimal.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

244

Financial risk management

(continued)

(a)

Financial risk factors

(continued)

(iv) Credit risk

(continued)

The Group applies the simplified approach to provide for expected credit losses prescribed by HKFRS

9, which requires the use of the lifetime expected credit loss provision for all trade receivables. To

measure the expected credit losses, trade receivables have been grouped based on the shared credit

risk characteristics and days past due. The gross carrying amount of the trade receivables and the loss

allowance analyzed by ageing band are set out below:

Gross

carrying

amount

US$’000

Loss

allowance

US$’000

Expected

credit

loss rate

At March 31, 2025

Not past due

9,583,585

(17,198 )

Past due less than 31 days

445,630

(276 )

Past due within 31 to 60 days

189,349

(108 )

Past due within 61 to 90 days

83,704

(189 )

Past due over 90 days

310,904

(149,333 )

48%

10,613,172

(167,104 )

At March 31, 2024

Not past due

7,246,766

(31,783)

Past due less than 31 days

487,343

(359)

Past due within 31 to 60 days

178,547

(117)

Past due within 61 to 90 days

62,326

(664)

Past due over 90 days

288,482

(99,844)

35%

8,263,464

(132,767)

(v)

Liquidity risk

Cash flow forecasting at least for next twelve months of the Group is performed by Group Treasury.

It monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to

meet operational, financing and investing needs while maintaining sufficient headroom on its undrawn

committed borrowing facilities (Note 24) at all times so that the Group does not breach borrowing

limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into

consideration the Group’s debt financing plans, net current liabilities position, covenant compliance,

compliance with internal balance sheet ratio targets and, if applicable, external regulatory or legal

requirements, for example, currency restrictions.

Surplus cash held by the operating entities over and above balances required for working capital

management are transferred to Group Treasury. Group Treasury invests surplus cash in interest bearing

current accounts, time deposits, money market funds and marketable securities, choosing instruments

with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by

the above-mentioned forecasts. At the balance sheet date, the Group held money market funds of

US$1,493,773,000 (2024: US$353,552,000) (Note 20).

As detailed in Notes 21 and 22, the Group utilizes supplier finance arrangements as part of its working

capital strategy to enhance operational flexibility. These arrangements are established with multiple

financial institutions, all of which are in sound financial health. This arrangement enables the Group to

centralize the payment of trade and notes payables, as well as other payables, to the financial institutions

instead of making individual payments to each supplier and subcontractor. Since the amounts involved are

distributed across various financial institutions, management has determined that the likelihood of these

arrangements becoming unavailable is remote and the current structure does not represent a material

concentration of liquidity risk to the Group.

Lenovo Group Limited 2024/25 Annual Report

245

Financial risk management

(continued)

(a)

Financial risk factors

(continued)

(v)

Liquidity risk

(continued)

The tables below analyze the Group’s non-derivative financial liabilities and derivative financial liabilities

into relevant maturity groupings based on the remaining periods at the balance sheet date to the

contractual maturity dates. Derivative financial liabilities are included in the analysis if their contractual

maturities are essential for an understanding of the timing of the cash flows. The amounts disclosed in the

tables are the contractual undiscounted cash outflows/(inflows).

Repayable

on demand

or 3 months

or less

US$’000

Over

3 months

to 1 year

US$’000

Over

1 to 3

years

US$’000

Over

3 to 5

years

US$’000

Over

5 years

US$’000

Total

US$’000

At March 31, 2025

Borrowings

1,036,424

119,038

2,835,236

835,657

1,567,701

6,394,056

Trade, notes and other payables

and accruals

21,167,447

1,314,667

–

22,482,114

Deferred consideration

–

25,072

–

25,072

Written put option liabilities

256,852

49,221

–

306,073

Lease liabilities

31,920

88,342

183,072

70,264

36,466

410,064

Others

–

229,022

20,998

51,355

301,375

Derivatives settled in net:

Forward foreign exchange

contracts

707

–

707

Derivatives settled in gross:

Forward foreign exchange

contracts

— outflow

12,343,419

1,514,555

–

13,857,974

— inflow

(12,282,766)

(1,520,618)

–

(13,803,384)

At March 31, 2024

Borrowings

21,187

210,657

1,210,193

805,524

2,335,798

4,583,359

Trade, notes and other payables

and accruals

18,168,239

1,889,792

–

20,058,031

Deferred consideration

–

25,072

–

25,072

Written put option liabilities

253,482

–

49,452

–

302,934

Lease liabilities

36,013

96,358

166,189

78,986

32,302

409,848

Others

–

224,297

87,095

10,791

322,183

Derivatives settled in gross:

Forward foreign exchange

contracts

— outflow

9,217,616

603,633

–

9,821,249

— inflow

(9,229,714)

(612,837)

–

(9,842,551)

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

246

Financial risk management

(continued)

(b) Market risk sensitivity analysis

HKFRS 7 “Financial instruments: Disclosures” requires the disclosure of a sensitivity analysis for market risks

that show the effects of a hypothetical change in the relevant market risk variable to which the Group is

exposed to at the balance sheet date on profit or loss and total equity.

The sensitivity analysis for each type of market risks does not reflect inter-dependencies between risk variables.

The sensitivity analysis assumes that a hypothetical change of the relevant risk variable had occurred at the

balance sheet date and had been applied to the relevant risk variable in existence on that date. The bases and

assumptions adopted in the preparation of the analyses will by definition, seldom equal to the related actual

results.

The disclosure of the sensitivity analysis on market risks is solely for compliance with HKFRS 7 disclosure

requirements in respect of financial instruments, and are for illustration purposes only; and it should be noted

that the hypothetical amounts so generated do not represent a projection of likely future events and profits or

losses of the Group.

(i)

Foreign currency exchange rate sensitivity analysis

At March 31, 2025, if United States dollar had weakened/strengthened by one percent against the major

currencies with all other variables held constant, pre-tax profit for the year would have been US$2.8 million

higher/lower (2024: US$2.7 million higher/lower), mainly as a result of foreign exchange gains/losses on

translation of unhedged portion of receivable and payable balances.

The analysis above is based on the assumption that United States dollar weakened or strengthened

against all other currencies in the same direction and magnitude, but it may not be necessarily true in

reality.

(ii)

Interest rate sensitivity analysis

At March 31, 2025, the Group’s short term borrowings at variable rate do not have significant impact on

pre-tax profit for the year if interest rate on borrowings had been 25 basis points higher/lower with all

other variable held constant (2024: do not have significant impact).

(iii) Price risk sensitivity analysis

The table below summarizes the impact of increase/decrease of the quoted market prices of listed equity

investments and the prices of unlisted equity investments on the Group’s pre-tax profit and equity for the

year. The analysis is based on the assumption that the fair value of the equity investments had increased/

decreased by 5% with all other variables held constant.

Impact on pre-tax profit

Pre-tax impact on other

components of equity

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

Increase by 5%

73,219

69,683

2,269

2,799

Decrease by 5%

(73,219 )

(69,683)

(2,269 )

(2,799)

Lenovo Group Limited 2024/25 Annual Report

247

Financial risk management

(continued)

(c)

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going

concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an

optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to

shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of gearing ratio. This ratio is

calculated as total borrowings (including current and non-current borrowings) divided by total equity. The

Group’s strategy remains unchanged and the gearing ratios and net (debt)/cash position of the Group at

March 31, 2025 and 2024 are as follows:

2025

US$ million

2024

US$ million

Bank deposits and cash and cash equivalents

4,817

3,626

Less: total borrowings

(5,368)

(3,620)

Net (debt)/cash position

(551)

Total equity

6,660

6,081

Gearing ratio

0.81

0.60

(d) Fair value estimation

The table below analyzes financial instruments carried at fair value defined under different levels as follows:

—

Level 1

Quoted prices (unadjusted) in active markets for identical assets or liabilities.

—

Level 2

Inputs other than quoted prices included within Level 1 that are observable for the asset or

liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

—

Level 3

Inputs for the asset or liability that are not based on observable market data (that is,

unobservable inputs).

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance

sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange,

dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and

regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial

assets held by the Group is the current bid price. The quoted market price already incorporates the market’s

assumptions with respect to changes in economic climate such as rising interest rates and inflation, as well as

changes due to environmental, social and governance risk (“ESG risk”). These instruments are included in Level 1.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter

derivatives) is determined by using valuation techniques. These valuation techniques maximize the use of

observable market data where it is available and rely as little as possible on entity specific estimates. If all

significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

This is the case for unlisted equity securities and for instruments where ESG risk gives rise to a significant

unobservable adjustment.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

248

Financial risk management

(continued)

(d) Fair value estimation

(continued)

Specific valuation techniques used to value financial instruments include:

—

The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows

based on observable yield curves.

—

The fair value of forward foreign exchange contracts is determined using quoted forward exchange rates

at the balance sheet date, with the resulting value discounted back to present value.

—

Other techniques, such as estimated discounted cash flows and recent transaction for similar instruments,

are used to determine fair value for the remaining financial instruments.

The following table presents the assets and liabilities that are measured at fair value at March 31, 2025 and

2024.

2025

2024

Level 1

US$’000

Level 2

US$’000

Level 3

US$’000

Total

US$’000

Level 1

US$’000

Level 2

US$’000

Level 3

US$’000

Total

US$’000

Assets

Financial assets at FVPL

Listed equity investments

156,001

–

107,794

263,795

110,573

–

156,293

266,866

Unlisted equity investments

–

1,200,589

–

1,126,800

Financial assets at FVOCI

Listed equity investments

31,113

–

31,113

37,745

–

37,745

Unlisted equity investments

–

14,269

–

18,228

Trade receivables

–

10,446,068

–

10,446,068

–

8,130,697

–

8,130,697

Derivative financial assets

–

53,690

–

53,690

–

69,568

–

69,568

187,114 10,499,758

1,322,652 12,009,524

148,318

8,200,265

1,301,321

9,649,904

Liabilities

Derivative financial liabilities

–

109,277

329,697

438,974

–

42,555

–

42,555

–

109,277

329,697

438,974

–

42,555

–

42,555

Lenovo Group Limited 2024/25 Annual Report

249

Financial risk management

(continued)

(d) Fair value estimation

(continued)

The movements in the financial assets and liabilities included in Level 3 fair value hierarchy for the years ended

March 31, 2025 and 2024 are as follows:

Equity securities

Financial assets at FVPL

Financial assets at FVOCI

2025

US$’000

2024

US$’000

2025

US$’000

2024

US$’000

At the beginning of the year

1,283,093

1,053,541

18,228

21,152

Exchange adjustment

(6,834 )

(42,544)

(43 )

(448)

Fair value change recognized

in other comprehensive income

–

(3,930 )

(2,476)

Fair value change recognized

in profit or loss

(49,853 )

167,267

–

Transfer to Level 1

(51,765 )

(53,512)

–

Additions

155,775

179,192

–

Disposals

(22,033 )

(20,851)

–

At the end of the year

1,308,383

1,283,093

14,269

18,228

The Level 3 equity securities are valued primarily based on the latest available financial statements. The Group

may make adjustments to the value based on considerations such as the value date of the net assets value

provided, cash flows since the latest value date, geographic and sector exposures, market movements and the

basis of accounting of the underlying equity securities. A reasonable possible change in key assumptions used

in the fair value measurement of equity securities would not result in any significant potential financial impact.

During the year ended March 31, 2025, four (2024: three) investments which were categorized as Level 3 have

listed their equity shares on the exchanges or removed certain sales restrictions. With the published price

quotations in active markets, related fair value measurement was transferred from Level 3 to Level 1.

Derivative financial liabilities relating to warrants

2025

US$’000

2024

US$’000

At the beginning of the year

–

Exchange adjustment

(230)

–

Additions

211,652

–

Fair value change recognized in profit or loss

118,275

–

At the end of the year

329,697

–

Valuations of warrants that do not have a quoted price are performed using Black-Scholes model with

unobservable inputs including risk-free interest rate of 3.3% and expected volatility of 36.7%. If the risk-free

interest rate increased/decreased by 0.5%, the fair value of warrants would have been increased/decreased by

approximately US$9 million and US$7 million respectively, while if the expected volatility increased/decreased

by 0.5%, the fair value of warrants would have been increased/decreased by approximately US$6 million and

US$4 million respectively, with the corresponding loss/gain recognized in the consolidated income statement.

(e)

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the consolidated balance sheet when

there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a

net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be

contingent on future events and must be enforceable in the normal course of business and in the event of

default, insolvency or bankruptcy of the company or the counterparty.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

250

Note to the consolidated cash flow statement

(a)

Reconciliation of profit before taxation to net cash generated from operations

2025

US$’000

2024

US$’000

Profit before taxation

1,480,870

1,365,454

Share of losses of associates and joint ventures

19,978

25,659

Finance income

(109,964)

(148,134)

Finance costs

773,269

762,805

Depreciation of property, plant and equipment

453,861

428,472

Depreciation of right-of-use assets

115,965

151,899

Amortization of intangible assets

849,309

832,782

Impairment and write-off of property, plant and equipment

–

10,474

Impairment and write-off of intangible assets

123,140

29,745

Impairment of interest in an associate

–

6,690

Share-based compensation

290,245

277,574

Loss on disposal of property, plant and equipment

3,596

3,479

Loss on disposal of intangible assets

2,954

Loss on disposal of construction-in-progress

535

13,827

Gain on disposal of interest in associates

–

(12)

Gain on deemed disposal of a subsidiary

(22,627)

–

Fair value change on financial instruments

(19,541)

(755)

Fair value change on financial assets at FVPL

(59,552)

(153,113)

Fair value loss on derivative financial liabilities relating to warrants

118,275

–

Gain on remeasurement of a written put option liability

–

(143,430)

Dividend income

(8,114)

(2,933)

Increase in inventories

(1,356,853)

(360,686)

Increase in trade and notes receivables, deposits, prepayments

and other receivables

(2,952,138)

(190,928)

Increase in trade and notes payables, provisions, other payables

and accruals

2,562,146

401,076

Effect of foreign exchange rate changes

47,586

58,969

Net cash generated from operations

2,312,940

3,368,939

Lenovo Group Limited 2024/25 Annual Report

251

Note to the consolidated cash flow statement

(continued)

(b) Reconciliation of financing liabilities

This section sets out an analysis of financing liabilities and the movements in financing liabilities for the years

presented.

Financing liabilities

2025

US$’000

2024

US$’000

Short-term loans — current

65,364

50,431

Notes — current

964,988

–

Notes — non-current

2,050,271

3,012,637

Convertible bonds — non-current

2,287,535

556,592

Derivative financial liabilities relating to warrants — current

87,919

–

Derivative financial liabilities relating to warrants — non-current

241,778

–

Lease liabilities — current

94,972

101,580

Lease liabilities — non-current

269,828

240,449

6,062,655

3,961,689

Short-term loans — variable interest rates

36,415

43,423

Short-term loans — fixed interest rates

28,949

7,008

Notes — fixed interest rates

3,015,259

3,012,637

Convertible bonds — fixed interest rates

2,287,535

556,592

Derivative financial liabilities relating to warrants —

non-interest bearing

329,697

–

Lease liabilities — fixed interest rates

364,800

342,029

6,062,655

3,961,689

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

252

Note to the consolidated cash flow statement

(continued)

(b) Reconciliation of financing liabilities

(continued)

Short-term

loans

current

Notes

current

Notes

non-

current

Convertible

bonds

current

Convertible

bonds

non-current

Derivative

financial

liabilities

relating to

warrants

current

Derivative

financial

liabilities

relating to

warrants

non-current

Lease

liabilities

current

Lease

liabilities

non-

current

Total

US$’000

Financing liabilities at April 1,

2023

57,032

–

3,146,148

214,584

537,030

–

123,719

280,837

4,359,350

Proceeds from borrowings

11,792,697

–

11,792,697

Repayments/repurchase of

borrowings

(11,799,007)

–

(132,083)

–

(11,931,090)

Conversion of convertible bonds

–

(218,669)

–

(218,669)

Reclassification

–

96,859

(96,859)

–

Principal elements of lease

payments

–

(134,545)

–

(134,545)

Foreign exchange adjustments

(295)

–

(1,465)

(7,039)

(8,799)

Other non-cash movements

–

(1,428)

4,085

19,562

–

17,012

63,510

102,745

Financing liabilities at March 31,

2024

50,431

–

3,012,637

–

556,592

–

101,580

240,449

3,961,689

Proceeds from borrowings

17,014,380

–

2,000,000

–

19,014,380

Proceeds from issue of warrants

–

56,440

155,212

–

211,652

Repayments of borrowings

(17,041,262)

–

(17,041,262)

Issuing cost of borrowings

–

(20,192)

–

(20,192)

Reclassification

–

964,814

(964,814)

–

92,620

(92,620)

–

Principal elements of lease

payments

–

(121,071)

–

(121,071)

Foreign exchange adjustments

41,815

–

(61)

(169)

(1,044)

(7,863)

32,678

Equity component for issue of

convertible bonds

–

(290,608)

–

(290,608)

Other non-cash movements

–

174

2,448

–

41,743

31,540

86,735

22,887

129,862

315,389

Financing liabilities at March 31,

2025

65,364

964,988

2,050,271

–

2,287,535

87,919

241,778

94,972

269,828

6,062,655

(c)

Cash outflow to acquire businesses, net of cash acquired

2025

US$’000

2024

US$’000

Cash consideration paid

1,537

151,870

Less: cash and cash equivalents acquired

–

(16,811)

Net cash outflow — investing activities

1,537

135,059

Lenovo Group Limited 2024/25 Annual Report

253

Capital commitments

Apart from disclosed elsewhere in these financial statements, on March 31, 2025 and 2024, the Group had the

following other capital commitments:

2025

US$’000

2024

US$’000

Contracted but not provided for:

— Property, plant and equipment

89,648

151,716

— Intangible assets

1,298

3,216

— Investment in financial assets

17,951

17,454

108,897

172,386

Contingent liabilities

Accounting policy

A contingent liability is a possible obligation that arises from past events and whose existence will only be

confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the

control of the Group. It can also be a present obligation arising from past events that is not recognized because

it is not probable that outflow of economic resources will be required or the amount of obligation cannot be

measured reliably.

A contingent liability is not recognized but is disclosed in the notes to the financial statements. When a change

in the probability of an outflow occurs so that the outflow is probable, it will then be recognized as a provision.

The Group, in the ordinary course of its business, is involved in various claims, suits, investigations, and legal

proceedings that arise from time to time. Although the Group does not expect that the outcome in any of these

legal proceedings, individually or collectively, will have a material adverse effect on its financial position or results

of operations, litigation is inherently unpredictable. Therefore, the Group could incur judgments or enter into

settlements of claims that could adversely affect its operating results or cash flows in a particular period.

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

254

Significant related party transactions

Accounting policy

A related party transaction is a transfer of resources, services or obligations between the Group and a related

party of the Group, regardless of whether a price is charged.

(a)

A person, or a close member of that person’s family, is related to the Group if that person:

—

has control or joint control over the Group;

—

has significant influence over the Group; or

—

is a member of the key management personnel of the Group or the Group’s parent.

(b)

An entity is related to the Group if any of the following conditions applies:

—

The entity and the Group are members of the same group (which means that each parent, subsidiary

and fellow subsidiary is related to the others).

—

One entity is an associate or joint venture of the other entity (or an associate or joint venture of a

member of a group of which the other entity is a member).

—

Both entities are joint ventures of the same third party.

—

One entity is a joint venture of a third entity and the other entity is an associate of the third party.

—

The entity is a post-employment benefit plan for the benefit of employees of either the Group or an

entity related to the Group.

—

The entity is controlled or jointly controlled by a person identified in (a) above.

—

A person, or a close member of that person’s family, who has control or joint control over the Group,

has significant influence over the entity or is a member of the key management personnel of the entity (or

of a parent of the entity).

—

The entity, or any member of a group of which it is a part, provides key management personnel

services to the Group or to the Group’s parent.

Lenovo Group Limited 2024/25 Annual Report

255

Significant related party transactions

(continued)

(a)

The Group had the following significant related party transactions in the normal course of business during the

year:

2025

US$’000

2024

US$’000

閃聯信息技術工程中心有限公司

(IGRS Engineering Lab Limited) (an associate) (i)

— Purchase of goods

3,217

7,219

異能者(南京)電子科技有限公司

(Superman (Nanjing) Electronic Technology Limited)

(an associate) (i)

— Purchase of goods

–

7,260

— Sale of goods

–

482

浙江恆雲智聯數字科技有限公司

(Zhejiang Hengyun Zhilian Digital Technology Co., Ltd.)

(a former associate, equity interest was sold to a third party

on December 28, 2023) (i)

— Purchase of goods

–

18,975

— Sale of goods

–

PCCW Solutions Limited (a subsidiary of an associate)

— Provision of services

75,270

84,220

— Services received

1,423

4,162

天津聯博基業科技發展有限公司

(Tianjin Lianbo Foundation Technology Development Co.,

Limited) (an associate and its subsidiary) (i)

— Loans granted

77,612

85,455

Note:

(i)

The English name of the company is a direct translation or transliteration of its Chinese registered name.

(b) Key management compensation

Details on key management compensation are set out below. The emoluments shown below include one (2024:

one) director and twelve (2024: twelve) senior management during the year.

2025

US$’000

2024

US$’000

Basic salaries, allowances, and other benefits-in-kind

15,542

13,372

Discretionary bonuses

26,760

19,490

Long-term incentive awards

45,100

49,644

Retirement payments and employer’s contribution

to pension schemes

1,061

1,292

88,463

83,798

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

256

Balance sheet and movement of reserves of the Company

(a)

Balance sheet of the Company

At March 31,

2025

US$’000

2024

US$’000

Non-current assets

Property, plant and equipment

156

200

Right-of-use assets

2,800

619

Intangible assets

Interest in an associate

103,851

Investments in subsidiaries

14,881,038

14,389,781

Financial assets at FVPL

43,253

40,286

Financial assets at FVOCI

7,259

16,219

Other non-current assets

669

664

15,039,030

14,551,634

Current assets

Derivative financial assets

295

–

Deposits, prepayments and other receivables

216,389

216,685

Amounts due from subsidiaries

8,951,173

8,010,112

Income tax recoverable

4,564

Cash and cash equivalents

15,107

30,994

9,187,528

8,262,355

Total assets

24,226,558

22,813,989

Lenovo Group Limited 2024/25 Annual Report

257

Balance sheet and movement of reserves of the Company

(continued)

(a)

Balance sheet of the Company

(continued)

At March 31,

2025

US$’000

2024

US$’000

Share capital

3,500,987

Reserves (Note 35(b))

1,365,282

1,278,676

Total equity

4,866,269

4,779,663

Non-current liabilities

Derivative financial liabilities

241,778

–

Borrowings

4,337,806

3,569,229

Deferred income tax liabilities

1,266

1,669

Other non-current liabilities

27,298

25,576

4,608,148

3,596,474

Current liabilities

Derivative financial liabilities

87,919

Other payables and accruals

107,103

104,204

Borrowings

964,988

–

Amounts due to subsidiaries

13,592,131

14,333,605

14,752,141

14,437,852

Total liabilities

19,360,289

18,034,326

Total equity and liabilities

24,226,558

22,813,989

On behalf of the Board

Yang Yuanqing

Wong Wai Ming

Chairman and Chief Executive Officer

Director

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

258

Balance sheet and movement of reserves of the Company

(continued)

(b) Movement of reserves of the Company

The changes in the reserves of the Company during the years ended March 31, 2025 and 2024 are as follows:

Investment

revaluation

reserve

US$’000

Share-

based

compensation

reserve

US$’000

Exchange

reserve

US$’000

Other

reserves

US$’000

Retained

earnings

US$’000

Total

US$’000

At April 1, 2023

(18,496)

(355,383)

10,204

165,608

1,659,991

1,461,924

Profit for the year

–

716,142

Other comprehensive loss

(8,067)

–

(8,067)

Total comprehensive (loss)/

income for the year

(8,067)

–

716,142

708,075

Vesting of shares under

long-term incentive program

–

(579,749)

–

– (579,749 )

Settlement of bonus through

long-term incentive program

–

2,445

–

2,445

Share-based compensation

–

277,574

–

277,574

Dividends paid

–

(591,593)

At March 31, 2024

(26,563)

(655,113)

10,204

165,608

1,784,540

1,278,676

Profit for the year

–

575,795

Other comprehensive loss

(9,012)

–

(9,012)

Total comprehensive (loss)/

income for the year

(9,012)

–

575,795

566,783

Vesting of shares under long-

term incentive program

–

(448,422

)

–

(448,422)

Settlement of bonus through

long-term incentive program

–

561

–

561

Share-based compensation

–

290,245

–

290,245

Issue of convertible bonds

–

290,608

–

290,608

Dividends paid

–

(613,169)

At March 31, 2025

(35,575)

(812,729)

10,204

456,216

1,747,166

1,365,282

Lenovo Group Limited 2024/25 Annual Report

259

Principal subsidiaries

The following includes the principal subsidiaries directly or indirectly held by the Company and, in the opinion of

the directors, are significant to the results of the year or form a substantial portion of the net assets of the Group.

The directors consider that giving details of other subsidiaries would result in particulars of excessive length.

Company name

Place of

incorporation/

establishment

Issued and fully

paid up capital/

registered capital

Percentage of issued

share capital held

Principal activities

2025

2024

Held directly:

聯想

(

北京

)

有限公司

(Lenovo (Beijing) Limited)

(wholly foreign-owned

enterprise)

Chinese Mainland

HK$5,650,000,000

100%

Manufacturing and

distribution of IT products

and provision of IT services

聯想

(

上海

)

有限公司

(Lenovo (Shanghai) Co., Ltd.)

(wholly foreign-owned

enterprise)

Chinese Mainland

HK$1,546,000,000

100%

Distribution of IT products

and provision of IT services

Held indirectly:

Fujitsu Client Computing Limited

Japan

JPY400,000,000

51%

Manufacturing and

distribution of IT products

聯寶

(

合肥

)

電子科技有限公司

(LCFC (Hefei) Electronics

Technology Co., Ltd.)

(wholly foreign-owned

enterprise)

Chinese Mainland

US$265,000,000

90%

Manufacturing and

distribution of IT products

Lenovo (Asia Pacific) Limited

Hong Kong S.A.R.

of China

HK$3,045,209,504.92

100%

Investment holding and

distribution of IT products

北京聯想軟件有限公司

(Beijing Lenovo Software

Limited)

(wholly foreign-owned

enterprise)

Chinese Mainland

HK$5,000,000

100%

Provision of IT services and

distribution of IT products

Lenovo (Australia & New Zealand)

Pty Limited

Australia

AUD45,860,993.40

100%

Distribution of IT products

Lenovo (Belgium) BV

Belgium

EUR639,099.20

100%

Investment holding and

distribution of IT products

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

260

Company name

Place of

incorporation/

establishment

Issued and fully

paid up capital/

registered capital

Percentage of issued

share capital held

Principal activities

2025

2024

聯想

(

北京

)

信息技術有限公司

(Lenovo (Beijing) Information

Technology Limited)

(wholly foreign-owned

enterprise)

Chinese Mainland

US$272,300,000

100%

Investment holding and

distribution of IT products

聯想

(

北京

)

電子科技有限公司

(Lenovo (Beijing) Electronic

Technology Limited)

Chinese Mainland

RMB150,000,000

100%

Distribution of IT products

and provision of IT services

Lenovo (Canada) Inc.

Canada

CAD100

100%

Distribution of IT products

Lenovo Computer Limited

Hong Kong S.A.R.

of China

HK$2

100%

Procurement agency and

distribution of IT products

Lenovo (Danmark) ApS

Denmark

DKK126,000

100%

Distribution of IT products

Lenovo (Deutschland) GmbH

Germany

EUR25,100

100%

Distribution of IT products

Lenovo Enterprise Solutions

(Singapore) Pte. Ltd.

Singapore

SGD55,958,592

100%

Manufacturing and

wholesaling of computers,

computer hardware and

peripheral equipment

Lenovo Enterprise Solutions LLC

Japan

JPY50,000,000

100%

Distribution of IT products

Lenovo Enterprise Technology

Company Limited

Hong Kong S.A.R.

of China

US$1,499,999,496

100%

Investment holding and

distribution of IT products

and data management

solution

Lenovo (France) SAS

France

EUR1,837,000

100%

Distribution of IT products

Lenovo HK Services Limited

Hong Kong S.A.R.

of China

HK$2

100%

Provision of business

planning, management,

global supply chain,

finance and accounting,

and administration support

services

Principal subsidiaries

(continued)

Lenovo Group Limited 2024/25 Annual Report

261

Company name

Place of

incorporation/

establishment

Issued and fully

paid up capital/

registered capital

Percentage of issued

share capital held

Principal activities

2025

2024

Lenovo Global Technology

(Asia Pacific) Limited

Hong Kong S.A.R.

of China

US$2,128,924.89

100%

Investment holding and

distribution of IT products

Lenovo Global Technology HK

Limited

Hong Kong S.A.R.

of China

US$10,000,001

100%

Procurement agency and

distribution of IT products

Lenovo Global Technology

(Hong Kong) Distribution Limited

Hong Kong S.A.R.

of China

US$1

100%

Distribution of IT products

Lenovo Global Technologies

International Limited

Hong Kong S.A.R.

of China

US$1,342,072,637

100%

Investment holding and

intellectual properties

Lenovo Global Technology

(United States) Inc.

United States

US$10

100%

Distribution of IT products

and provision of IT services

Lenovo (Hong Kong) Limited

Hong Kong S.A.R.

of China

HK$74,256,023

100%

Distribution of IT products

惠陽聯想電子工業有限公司

(Lenovo (Huiyang) Electronic

Industrial Co., Ltd.)

(wholly foreign-owned

enterprise)

Chinese Mainland

HK$31,955,500

100%

Manufacturing and

distribution of IT products

Lenovo (India) Private Limited

India

INR8,607,471,514

100%

Manufacturing and

distribution of IT products

聯想信息產品

(

深圳

)

有限公司

(Lenovo Information Products

(Shenzhen) Co. Ltd.)

(limited liability company

(wholly-owned entity))

Chinese Mainland

RMB643,966,800

100%

Manufacturing and

distribution of IT products

Lenovo (Israel) Ltd.

Israel

ILS132,853.12

100%

Distribution of IT products

Lenovo (Italy) S.r.l

Italy

EUR100,000

100%

Distribution of IT products

Lenovo Japan LLC

Japan

JPY100,000,000

95.10%

(iv)

95.10%

(iv)

Distribution of IT products

Principal subsidiaries

(continued)

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

262

Company name

Place of

incorporation/

establishment

Issued and fully

paid up capital/

registered capital

Percentage of issued

share capital held

Principal activities

2025

2024

Lenovo Korea LLC

Korea

KRW3,580,940,000

100%

Wholesale and retail trade

of computer, peripheral

equipment and software

Lenovo Mexico, S. de R.L. de C.V.

Mexico

MXN3,426,638,114

100%

Distribution of IT products

摩托羅拉移動通信技術有限公司

(Motorola Mobile Communication

Technology Ltd.)

(foreign-investment enterprise

wholly-owned entity)

Chinese Mainland

RMB187,500,000

100%

Manufacturing and

distribution of IT products

and provision of IT services

摩托羅拉

(

武漢

)

移動技術通信有限公司

(Motorola (Wuhan) Mobility

Technologies Communication

Company Limited)

(foreign-investment enterprise

wholly-owned entity)

Chinese Mainland

RMB60,000,000

100%

Manufacturing of mobile

products

聯想凌拓科技有限公司

(Lenovo NetApp Technology

Limited)

(Chinese-foreign equity joint

venture)

Chinese Mainland

US$10,000,000

51%

Delivering IT products and

data management solution

Lenovo PC HK Limited

Hong Kong S.A.R.

of China

HK$2,377,934,829.50

(ordinary shares) and

HK$1,000,000

(non-voting deferred

shares)

100%

Procurement agency and

distribution of IT products

Lenovo PC International Limited

Hong Kong S.A.R.

of China

HK$4,758,857,785

100%

Intellectual properties

Lenovo (Schweiz) GmbH

Switzerland

CHF2,000,000

100%

Manufacturing and

distribution of IT products

Lenovo (Singapore) Pte. Ltd.

Singapore

SGD5,855,010,233.74

100%

Manufacturing and

wholesaling of computers,

computer hardware and

peripheral equipment

Principal subsidiaries

(continued)

Lenovo Group Limited 2024/25 Annual Report

263

Company name

Place of

incorporation/

establishment

Issued and fully

paid up capital/

registered capital

Percentage of issued

share capital held

Principal activities

2025

2024

Lenovo (South Africa) (Pty) Ltd

South Africa

ZAR177,500

100%

Distribution and marketing of

IT products

Lenovo (Spain), S.L.U.

Spain

EUR37,475,456.40

100%

Distribution of IT products

Lenovo (Sweden) AB

Sweden

SEK200,000

100%

Distribution of IT products

聯想系統集成

(

深圳

)

有限公司

(Lenovo Systems Technology

Company Limited)

(limited liability company

(wholly-owned entity))

Chinese Mainland

RMB263,407,660

100%

Manufacturing and

distribution of IT products

Lenovo Technology

(United Kingdom) Limited

United Kingdom

GBP8,629,511

100%

Distribution of IT products

Lenovo Technology B.V.

Netherlands

EUR20,000

100%

Investment holding

Lenovo Technology Sdn. Bhd.

Malaysia

MYR1,000,000

100%

Retail sale of computers,

computer equipment and

supplies

Lenovo Tecnologia (Brasil) Ltda

Brazil

BRL7,650,940,307

100%

Manufacturing and

distribution of IT products

Lenovo (Thailand) Limited

Thailand

THB252,000,000

100%

Distribution of IT products

as well as mobile phone,

smartphone and tablet,

server and storage

Lenovo (United States) Inc.

United States

US$1

100%

Distribution of IT products

Lenovo (Venezuela), SA

Venezuela

VEB0

100%

Distribution of IT products

Principal subsidiaries

(continued)

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

264

Company name

Place of

incorporation/

establishment

Issued and fully

paid up capital/

registered capital

Percentage of issued

share capital held

Principal activities

2025

2024

聯想

(

西安

)

有限公司

(Lenovo (Xian) Limited)

(Chinese-foreign equity

joint venture)

Chinese Mainland

RMB10,000,000

100%

Distribution of IT products

and provision of IT services

Medion AG

Germany

EUR48,418,400

100%

(iii)

90.50%

(iii)

Retail and service

business for consumer

electronic products and

complementary digital

services

Motorola Mobility Comércio de

Produtos Eletronicos Ltda.

Brazil

BRL756,663,401

100%

Distribution of

communication products,

developer, owner,

licensor and seller of

communications hardware

and software

Motorola Mobility International

Sales LLC

United States

–

100%

Holding company

Motorola Mobility LLC

United States

–

100%

Developer, owner,

licensor and seller of

communications hardware

and software

NEC Personal Computers, Ltd.

Japan

JPY500,000,000

95.10%

(iv)

95.10%

(iv)

Manufacturing and

distribution of IT products

深圳聯想海外控股有限公司

(Shenzhen Lenovo

Overseas Holdings Limited)

(wholly-foreign owned

enterprise)

Chinese Mainland

US$804,020,300

100%

Investment management

Shimane Fujitsu Limited

Japan

JPY450,000,000

51%

Manufacturing and

distribution of IT products

Stoneware, Inc.

United States

US$0.1

100%

Development and distribution

of IT products

Principal subsidiaries

(continued)

Lenovo Group Limited 2024/25 Annual Report

265

Company name

Place of

incorporation/

establishment

Issued and fully

paid up capital/

registered capital

Percentage of issued

share capital held

Principal activities

2025

2024

陽光雨露信息技術服務

(

北京

)

有限公司

(Sunny Information

Technology Service, Inc.)

(Chinese-foreign equity

joint venture)

Chinese Mainland

RMB50,000,000

47.25%

Maintenance of electronic

equipment (including

repair services for

computer hardware and

software systems), and

provision of IT outsourcing

and systems integration

services

Edgebricks Pte. Limited

Singapore

SGD10

87%

90%

Development of software

and applications

Notes:

(i)

All the above subsidiaries operate principally in their respective places of incorporation or establishment.

(ii)

All the Chinese Mainland subsidiaries are limited liability companies. They have adopted December 31 as their financial year end date for

statutory reporting purposes. For the preparation of the consolidated financial statements, financial statements of these Chinese Mainland

subsidiaries for the years ended March 31, 2025 and 2024 have been used.

(iii)

Medion AG was a publicly traded German stock corporation listed on the Frankfurt am Main stock exchange and has been delisted in January

2025. The percentage of issued capital held is equivalent to 100% (2024: approximately 98.21%) including treasury shares.

(iv)

At March 31, 2025 and 2024, the Group held 95.10% in the ordinary shares of Lenovo NEC Holdings B.V., the immediate holding company of

Lenovo Japan LLC and NEC Personal Computers, Ltd., while the remaining 4.90% ordinary shares and 42,700 deferred shares of Lenovo NEC

Holdings B.V. were held by NEC Corporation.

(v)

The company whose English name ends with a “1” is a direct transliteration of its Chinese registered name.

Principal subsidiaries

(continued)

Notes to the financial statements

For the year ended March 31, 2025

Lenovo Group Limited 2024/25 Annual Report

266

Principal subsidiaries

(continued)

Material non-controlling interests

Set out below is the summarized financial information of FCCL and its subsidiaries. The amounts disclosed are

before inter-company eliminations with other companies of the Group.

2025

US$’000

2024

US$’000

Revenue

1,660,459

1,766,130

Profit for the year

115,095

116,981

Other comprehensive income/(loss)

7,491

(68,638)

Total comprehensive income

122,586

48,343

Net assets

Non-current assets

134,474

145,675

Current assets

880,597

888,486

Current liabilities

(298,594)

(390,328)

Non-current liabilities

(48,353)

(49,691)

668,124

594,142

Cash flows

Net cash generated from operating activities

72,669

134,785

Net cash used in investing activities

(14,202)

(29,284)

Net cash used in financing activities

(4,522)

(4,822)

Effect of foreign exchange rate changes

5,094

(31,599)

Cash and cash equivalents at the beginning of the year

301,889

232,809

Cash and cash equivalents at the end of the year

360,928

301,889

Approval of financial statements

The financial statements were approved by the board of directors on May 22, 2025.

Five-year financial summary

Lenovo Group Limited 2024/25 Annual Report

267

Condensed consolidated income statement

2025

US$’000

2024

US$’000

2023

US$’000

2022

US$’000

2021

US$’000

Revenue

69,076,968

56,863,784

61,946,854

71,618,216

60,742,312

Profit before taxation

1,480,870

1,365,454

2,135,987

2,767,731

1,774,198

Taxation

(18,918)

(263,142)

(455,156)

(622,399)

(461,199)

Profit for the year

1,461,952

1,102,312

1,680,831

2,145,332

1,312,999

Profit attributable to:

Equity holders of the Company

1,384,445

1,010,506

1,607,722

2,029,818

1,178,307

Perpetual securities holders

–

32,532

Other non-controlling interests

77,507

91,806

73,109

115,514

102,160

1,461,952

1,102,312

1,680,831

2,145,332

1,312,999

Earnings per share attributable to

equity holders of the Company

(US cents)

Basic

11.30

8.41

13.50

17.45

9.54

Diluted

10.62

8.05

12.74

15.77

8.91

Condensed consolidated balance sheet

2025

US$’000

2024

US$’000

2023

US$’000

2022

US$’000

2021

US$’000

Non-current assets

16,326,729

16,063,771

15,979,204

15,513,581

14,655,279

Current assets

27,904,083

22,687,183

22,940,853

28,996,863

23,335,352

Total assets

44,230,812

38,750,954

38,920,057

44,510,444

37,990,631

Non-current liabilities

7,576,762

6,610,604

6,779,679

6,357,008

7,008,461

Current liabilities

29,994,133

26,059,163

26,093,357

32,758,735

27,371,637

Total liabilities

37,570,895

32,669,767

32,873,036

39,115,743

34,380,098

Net assets

6,659,917

6,081,187

6,047,021

5,394,701

3,610,533

Corporate information

Lenovo Group Limited 2024/25 Annual Report

268

Honorary Chairman

Mr. Liu Chuanzhi

Board of Directors

Chairman and executive director

Mr. Yang Yuanqing

Non-executive directors

Mr. Zhu Linan

Mr. Zhao John Huan

Mr. Wong Wai Ming

Ms. Laura Green Quatela

Independent non-executive directors

Mr. John Lawson Thornton

Mr. Gordon Robert Halyburton Orr

Mr. Woo Chin Wan Raymond

Ms. Yang Lan

Ms. Cher Wang Hsiueh Hong

Professor Xue Lan

Mr. Kasper Bo Roersted (alias Kasper Bo Rorsted)

Chief Financial Officer

Mr. Wong Wai Ming

(retired on March 31, 2025)

Mr. Cheng Shao-min Winston

(appointed on April 1, 2025)

Company Secretary

Ms. Lam Ngan Ling

Registered Office

23rd Floor, Lincoln House, Taikoo Place,

979 King’s Road, Quarry Bay, Hong Kong

Principal Bankers

Bank of China

BNP Paribas

Citibank, N.A.

DBS Bank Ltd.

Independent Auditor

PricewaterhouseCoopers

Certified Public Accountants and

Registered Public Interest Entity Auditor

22nd Floor, Prince’s Building

Central, Hong Kong

Share Registrar

Tricor Investor Services Limited

17/F, Far East Finance Centre

16 Harcourt Road, Hong Kong

American Depositary Receipts

(Depositary and Registrar)

Citibank, N.A.

26th Floor, 388 Greenwich Street

New York, NY 10013, USA

Stock Codes

Hong Kong Stock Exchange:

— HKD Counter

992

— RMB Counter

80992

American Depositary Receipts:

LNVGY

Website

www.lenovo.com

www.lenovo.com

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Lenovo Annual Report

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