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1、Lenovo Group Limited 聯想集團有限公司|2024/25 Interim Report 中期報告Lenovo Group Limited 2024/25 Interim ReportHKD COUNTER STOCK CODE 992RMB COUNTER STOCK CODE 80992Smarter uses AI to create new ways to communicate.At CES 2024,global technology leader Lenovo1,assistive technology non-profit the Scott-Morgan Fo

2、undation,and AI-generated video innovator DeepBrain AI revealed a hyper-realistic AI avatar dedicated to preserving the voice,personality,and physical mannerisms of someone with a degenerative disease.The groundbreaking avatar,created with DeepBrain AI technology and spearheaded by Lenovo,opens new

3、pathways for applying generative AI to accessibility challenges and helps advance Lenovos vision of AI for all.As part of an ongoing collaboration with the Scott-Morgan Foundation,Lenovo proposed developing an AI-powered avatar to leap past traditional voice synthesis and transform communication and

4、 connection for people with severe disabilities.The Foundation invited Erin Taylor,a 24-year-old woman recently diagnosed with amyotrophic lateral sclerosis(ALS),a neurodegenerative disorder that typically leads to full-body paralysis,to participate and help pilot a proof of concept for assistive co

5、mmunication.Lenovo then approached DeepBrain AI,a leader in next-gen avatars and a Lenovo AI Innovator partner,to use its generative AI technology.Sponsored by Lenovo,the DeepBrain AI team captured a detailed full-body video of Taylor in its California studio.The video became the foundational data f

6、or her new AI avatar,debuted at CES 2024,and offering 96 percent true-to-life accuracy.1.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 n

7、ot design,develop,manufacture,or distribute products or services,or control any activities of the Companys subsidiaries in the design,development,manufacture,or distribution of products or services.CMYCMMYCYCMYKDivider graphic.pdf 1 24/9/2024 上午9:33Lenovo uses AI and machine learning to build an ult

8、ra-resilient supply chain.Sudden global events such as the COVID-19 pandemic and the 2021 Suez Canal obstruction have shown just how vulnerable supply chains can be to disruption.To preempt and mitigate supply chain risks in global markets,Lenovo created Supply Chain Intelligence(SCI)an AI-powered s

9、olution that continuously analyzes supply chain data to identify potential issues and resolve them in real time.Using AI and machine learning technology,SCI continuously analyzes supply chain data to identify potential issues and propose solutions in real time.To date,we have integrated more than 80

10、0 individual data sources with SCI,which comprises almost 80%of all the data inputs that make up the Lenovo supply chain.Each day,SCI performs over 1,500 data-related tasksrevealing hidden insights that would be practically impossible for a human to uncover.“SCI helps me to drive quick,effective,and

11、 smart decisions by consolidating all the supply chain data into one platform.”Helen Li,Executive Director,PC Commodity Supply,Planning,Inventory Management and Strategic Planning,Global Supply Chain,Lenovo.When Lenovo customers order online,integration with SCI provides real-time delivery estimates

12、 based on the availability of components.SCI also surfaces smart logistics insights,providing accurate visibility into the status and location of orders in the logistics network.SCI has contributed to a 4.8%revenue increase and boosted on-time-in-full delivery performance by 5%.In fact,SCI has helpe

13、d Lenovo to reduce manufacturing and logistics costs by around 20%while simultaneously boosting service levels in these areas.Using AI-powered innovations such as SCI,Lenovo is shaping an advanced approach to supply chain managementand by deploying the solution in your organization,you can transform

14、 your approach too.Consolidated income statementLenovo Group Limited 2024/25 Interim Report 3Note 3 months ended September 30,2024(unaudited)US$000 6 months ended September 30,2024(unaudited)US$000 3 months ended September 30,2023(unaudited)US$000 6 months ended September 30,2023(unaudited)US$000Rev

15、enue217,850,09433,297,15014,409,78627,309,713Cost of sales(15,054,344)(27,941,551)(11,888,026)(22,536,048)Gross profit2,795,7505,355,5992,521,7604,773,665Selling and distribution expenses(867,707)(1,703,318)(791,923)(1,591,084)Administrative expenses(747,000)(1,397,457)(637,704)(1,234,613)Research a

16、nd development expenses(547,528)(1,023,523)(498,211)(949,242)Other operating income/(expenses)net17,084(86,233)(79,922)(94,651)Operating profit3650,5991,145,068514,000904,075Finance income4(a)28,74555,15042,32382,496Finance costs4(b)(199,130)(399,507)(190,378)(387,804)Share of losses of associates a

17、nd joint ventures(7,028)(14,530)(8,326)(13,021)Profit before taxation473,186786,181357,619585,746Taxation5(89,910)(149,410)(68,566)(113,279)Profit for the period383,276636,771289,053472,467Profit attributable to:Equity holders of the Company358,532601,897249,240425,766 Other non-controlling interest

18、s24,74434,87439,81346,701383,276636,771289,053472,467Earnings per share attributable to equity holders of the Company Basic6(a)US2.92 centsUS4.91 centsUS2.09 centsUS3.57 cents Diluted 6(b)US2.78 centsUS4.71 centsUS1.99 centsUS3.43 centsDividend7135,518124,319Consolidated statement of comprehensive i

19、ncomeLenovo Group Limited 2024/25 Interim Report 4 3 months ended September 30,2024(unaudited)US$0006 months ended September 30,2024(unaudited)US$0003 months ended September 30,2023(unaudited)US$0006 months ended September 30,2023(unaudited)US$000Profit for the period383,276636,771289,053472,467Othe

20、r comprehensive income/(loss):Items that will not be reclassified to profit or lossRemeasurements of post-employment benefit obligations,net of taxes4797Fair value change on financial assets at fair value through other comprehensive income,net of taxes(3,201)(5,342)(1,187)(24)Items that have been re

21、classified or may be subsequently reclassified to profit or lossFair value change on cash flow hedges from foreign exchange forward contracts,net of taxes Fair value(loss)/gain,net of taxes(206,895)(124,120)96,225152,735 Reclassified to consolidated income statement60,775(5,128)(57,084)(65,875)Curre

22、ncy translation differences321,213912(92,172)(329,993)Other comprehensive income/(loss)for the period171,892(133,631)(54,218)(243,060)Total comprehensive income for the period555,168503,140234,835229,407Total comprehensive income attributable to:Equity holders of the Company493,387447,439204,116215,

23、934Other non-controlling interests61,78155,70130,71913,473555,168503,140234,835229,407Consolidated balance sheetLenovo Group Limited 2024/25 Interim Report 5NoteSeptember 30,2024(unaudited)US$000March 31,2024(audited)US$000Non-current assetsProperty,plant and equipment82,020,3332,010,178Right-of-use

24、 assets540,354571,305Construction-in-progress332,460337,648Intangible assets88,257,7338,345,407Interests in associates and joint ventures319,557318,803Deferred income tax assets82,796,6032,633,302Financial assets at fair value through profit or loss1,470,5971,393,666Financial assets at fair value th

25、rough other comprehensive income52,89955,973Other non-current assets467,297397,48916,257,83316,063,771Current assetsInventories99,118,8166,702,677Trade and notes receivables10(a)9,476,3198,147,695Derivative financial assets29,89369,568Deposits,prepayments and other receivables114,901,2363,782,366Inc

26、ome tax recoverable441,038359,491Bank deposits60,23465,555Cash and cash equivalents4,178,9153,559,83128,206,45122,687,183Total assets44,464,28438,750,954Consolidated balance sheetLenovo Group Limited 2024/25 Interim Report 6NoteSeptember 30,2024(unaudited)US$000March 31,2024(audited)US$000Share capi

27、tal153,500,9873,500,987Reserves1,976,3652,081,606Equity attributable to owners of the Company5,477,3525,582,593Other non-controlling interests1,161,5181,045,947Put option written on non-controlling interests12(a),13(b)(547,353)(547,353)Total equity6,091,5176,081,187Non-current liabilitiesBorrowings1

28、42,615,6963,569,229Warranty provision12(b)157,005161,261Deferred revenue1,556,9711,436,484Retirement benefit obligations246,951241,402Deferred income tax liabilities453,053447,523Other non-current liabilities13661,040754,7055,690,7166,610,604Current liabilitiesTrade and notes payables 10(b)14,229,35

29、010,505,427Derivative financial liabilities130,02242,555Other payables and accruals12(a)14,385,68812,751,775Provisions12(b)870,977920,950Deferred revenue1,556,4701,512,645Income tax payable481,649275,380Borrowings141,027,89550,43132,682,05126,059,163Total liabilities38,372,76732,669,767Total equity

30、and liabilities44,464,28438,750,954Consolidated cash flow statementLenovo Group Limited 2024/25 Interim Report 7Note6 months ended September 30,2024(unaudited)US$0006 months ended September 30,2023(unaudited)US$000Cash flows from operating activitiesNet cash generated from operations16(a)2,322,7111,

31、811,768Interest paid(384,652)(378,370)Tax paid(159,973)(329,847)Net cash generated from operating activities1,778,0861,103,551Cash flows from investing activitiesPurchase of property,plant and equipment(167,551)(129,091)Sale of property,plant and equipment12,56919,122Acquisition of businesses,net of

32、 cash acquired(1,537)(122,367)Interest acquired in associates(6,435)(12,324)Deemed disposal of a subsidiary,net of cash disposed(14,272)Loan to an associate and a joint venture(9,984)(1,093)Repayment of loan to an associate and a joint venture15,56230,563Payment for construction-in-progress(139,216)

33、(237,371)Payment for intangible assets(243,546)(310,243)Purchase of financial assets at fair value through profit or loss(65,415)(94,618)Net proceeds from sale of financial assets at fair value through profit or loss32,698100,316Decrease in bank deposits5,3219,184Dividends received1,960745Interest r

34、eceived55,15078,435Net cash used in investing activities(524,696)(668,742)Consolidated cash flow statementLenovo Group Limited 2024/25 Interim Report 8Note6 months ended September 30,2024(unaudited)US$0006 months ended September 30,2023(unaudited)US$000Cash flows from financing activities 16(b)Capit

35、al contribution from other non-controlling interests 77,75576,471Distribution to other non-controlling interests(4,250)(5,319)Contribution to employee share trusts(167,398)(291,670)Acquisition of additional interest in a subsidiary(76,722)Principal elements of lease payments(62,258)(61,797)Dividends

36、 paid(474,331)(458,771)Dividends paid to other non-controlling interests(12,917)(10,528)Proceeds from loans 6,609,0532,516,056Repayments of loans(6,639,913)(2,494,689)Repurchase of notes(51,277)Net cash used in financing activities(674,259)(858,246)Increase/(decrease)in cash and cash equivalents579,

37、131(423,437)Effect of foreign exchange rate changes39,953(89,664)Cash and cash equivalents at the beginning of the period3,559,8314,250,085Cash and cash equivalents at the end of the period4,178,9153,736,984Consolidated statement of changes in equityLenovo Group Limited 2024/25 Interim Report 9Attri

38、butable to equity holders of the CompanyShare capital (unaudited)US$000Investment revaluation reserve (unaudited)US$000Employee share trusts (unaudited)US$000Share-based compensation reserve (unaudited)US$000Hedging reserve (unaudited)US$000Exchange reserve (unaudited)US$000Other reserves (unaudited

39、)US$000Retained earnings (unaudited)US$000Other non-controlling interests (unaudited)US$000Put option written on non-controlling interests(unaudited)US$000Total(unaudited)US$000At April 1,20243,500,987(68,662)(207,487)(650,435)42,143(2,425,595)184,5345,207,1081,045,947(547,353)6,081,187Profit for th

40、e period601,89734,874636,771Other comprehensive(loss)/income (5,342)(129,248)(19,915)4720,827(133,631)Total comprehensive(loss)/income for the period(5,342)(129,248)(19,915)601,94455,701503,140Transfer to statutory reserve15,476(15,476)Deemed disposal of a subsidiary15,219(135)(718)14,366Vesting of

41、shares under long-term incentive program190,670(267,454)(76,784)Deferred tax in relation to long-term incentive program11,47011,470Settlement of bonus through long-term incentive program561561Share-based compensation138,742138,742Contribution to employee share trusts(167,398)(167,398)Dividends paid(

42、474,331)(474,331)Dividends paid to other non-controlling interests(12,917)(12,917)Capital contribution from other non-controlling interests(24)77,75577,731Distribution to other non-controlling interests(4,250)(4,250)At September 30,20243,500,987(74,004)(184,215)(767,116)(87,105)(2,430,291)199,8515,3

43、19,2451,161,518(547,353)6,091,517At April 1,20233,282,318(60,860)(153,385)(344,218)(9,154)(2,096,441)163,4114,805,9191,006,784(547,353)6,047,021Profit for the period425,76646,701 472,467Other comprehensive(loss)/income (24)86,860(296,765)97(33,228)(243,060)Total comprehensive(loss)/income for the pe

44、riod(24)86,860(296,765)425,86313,473229,407Transfer to statutory reserve19,370(19,370)Acquisition of subsidiaries(2,285)(2,285)Vesting of shares under long-term incentive program236,824(321,923)(85,099)Deferred tax in relation to long-term incentive program4,4434,443Settlement of bonus through long-

45、term incentive program2,4452,445Share-based compensation149,089149,089Contribution to employee share trusts(291,670)(291,670)Dividends paid(458,771)(458,771)Dividends paid to other non-controlling interests(10,528)(10,528)Capital contribution from other non-controlling interests8,31568,15676,471Dist

46、ribution to other non-controlling interests(5,319)(5,319)Change of ownership of subsidiaries without loss of control(5,091)(71,631)(76,722)At September 30,20233,282,318(60,884)(208,231)(510,164)77,706(2,393,206)186,0054,753,641998,650(547,353)5,578,482NotesLenovo Group Limited 2024/25 Interim Report

47、 101 GENERAL INFORMATION AND BASIS OF PREPARATIONThe financial information relating to the year ended March 31,2024 included in the FY2024/25 interim report does not constitute the Companys statutory annual consolidated financial statements for that year but is derived from those consolidated financ

48、ial statements.Further information relating to these statutory consolidated financial statements required to be disclosed in accordance with section 436 of the Hong Kong Companies Ordinance is as follows:The Company has delivered the consolidated financial statements for the year ended March 31,2024

49、 to the Registrar of Companies as required by section 662(3)of,and Part 3 of Schedule 6 to,the Hong Kong Companies Ordinance.The Companys auditor has reported on those consolidated financial statements of the Group.The auditors report was unqualified;did not include a reference to any matters to whi

50、ch the auditor drew attention by way of emphasis without qualifying its report;and did not contain a statement under sections 406(2),407(2)or(3)of the Hong Kong Companies Ordinance.Basis of preparationThe financial information presented above and notes thereto are extracted from the Groups consolida

51、ted financial statements and presented in accordance with Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.The Board is responsible for the preparation of the Groups consolidated financial statements.The consolidated financial statements have be

52、en prepared in accordance with Hong Kong Financial Reporting Standards.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 v

53、alues.The accounting policies adopted are consistent with those of the previous financial year.The following interpretation and amendments to existing standards became applicable for the current reporting period.The Group did not have to change its accounting policies or make retrospective adjustmen

54、ts 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

55、 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 arrangements2 SEGMENT INFORMATIONManagement has determined the operating segments based on the reports

56、reviewed by the Lenovo Executive Committee(the“LEC”),the chief operating decision-maker,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”).Lenovo Group Limited 202

57、4/25 Interim Report 112 SEGMENT INFORMATION(continued)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 re

58、structuring 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 headquar

59、ters and centralized functions.Certain finance income and costs are allocated to business groups when they are directly attributed to their business activities.(a)Revenue and operating profit/(loss)for reportable segments6 months ended September 30,20246 months ended September 30,2023 Revenue US$000

60、Operating profit/(loss)US$000 Revenue US$000Operating profit/(loss)US$000IDG24,935,7001,818,36321,775,1711,496,550ISG6,465,167(73,002)3,915,525(113,855)SSG4,049,892838,3193,631,308744,511Total35,450,7592,583,68029,322,0042,127,206Eliminations(2,153,609)(677,006)(2,012,291)(629,201)33,297,1501,906,67

61、427,309,7131,498,005Unallocated:Headquarters and corporate income/(expenses)net(739,413)(679,684)Depreciation and amortization(233,681)(214,778)Impairment and write-off of intangible assets(67,052)Finance income45,53877,055Finance costs(143,057)(157,137)Share of losses of associates and joint ventur

62、es(14,256)(14,522)Loss on disposal of property,plant and equipment(386)(577)Fair value gain on financial assets at fair value through profit or loss7,68076,784Gain on deemed disposal of a subsidiary22,627Dividend income1,507600Consolidated profit before taxation786,181585,746NotesLenovo Group Limite

63、d 2024/25 Interim Report 122 SEGMENT INFORMATION(continued)(b)Analysis of revenue by geography6 months ended September 30,2024 US$0006 months ended September 30,2023 US$000China7,728,3266,148,651Asia Pacific(“AP”)6,095,1254,768,515Europe-Middle East-Africa(“EMEA”)8,110,0576,627,738Americas(“AG”)11,3

64、63,6429,764,80933,297,15027,309,713(c)Analysis of revenue by timing of revenue recognition6 months ended September 30,2024 US$0006 months ended September 30,2023 US$000Point in time31,897,44725,865,372Over time1,399,7031,444,34133,297,15027,309,713(d)Other segment informationIDGISGSSGTotal2024 US$00

65、02023 US$0002024 US$0002023 US$0002024 US$0002023 US$0002024 US$0002023 US$000For the six months ended September 30Depreciation and amortization339,727363,048120,26698,6517,86210,854467,855472,553Finance income8,3473,4301,2091,283567289,6125,441Finance costs147,819159,560107,82370,275808832256,45023

66、0,667Lenovo Group Limited 2024/25 Interim Report 132 SEGMENT INFORMATION(continued)(e)The directors review goodwill and trademarks and trade names with indefinite useful lives with an aggregate amount of US$6,238 million(March 31,2024:US$6,169 million).The carrying amounts of goodwill and trademarks

67、 and trade names with indefinite useful lives are presented below:At September 30,2024China US$millionAP US$millionEMEA US$millionAG US$millionTotal US$millionGoodwill IDG 9315142961,5883,329 ISG482136683411,027 SSG(Note)N/AN/AN/AN/A613Trademarks and trade names with indefinite useful lives IDG18254

68、124480840 ISG1625431123370 SSG(Note)N/AN/AN/AN/A59At March 31,2024China US$millionAP US$millionEMEA US$millionAG US$millionTotal US$millionGoodwill IDG 9114882871,6113,297 ISG472132593411,004 SSG(Note)N/AN/AN/AN/A603Trademarks and trade names with indefinite useful lives IDG18254121480837 ISG1625431

69、123370 SSG(Note)N/AN/AN/AN/A58Note:SSG is monitored as a whole and there is no allocation to geography or market.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 September 30,2024

70、(March 31,2024:nil).NotesLenovo Group Limited 2024/25 Interim Report 143 OPERATING PROFITOperating profit is stated after charging/(crediting)the following:3 months ended September 30,2024 US$0006 months ended September 30,2024 US$0003 months ended September 30,2023 US$0006 months ended September 30

71、,2023 US$000Depreciation of property,plant and equipment114,240221,563101,344203,245Depreciation of right-of-use assets27,36756,28939,28380,400Amortization of intangible assets213,572423,684207,109403,686Impairment and write-off of intangible assets20,00067,052Employee benefit costs,including1,571,4

72、752,982,5041,356,9142,765,976 long-term incentive awards76,873138,74280,456149,089Rental expenses 5,7199,8035,6427,662(Gain)/loss on disposal of property,plant and equipment(177)(1,141)1,6851,117Loss on disposal of intangible assets43012124Loss on disposal of construction-in-progress5,7699,856Fair v

73、alue gain on financial assets at fair value through profit or loss(20,492)(9,153)(46,203)(76,784)Gain on deemed disposal of a subsidiary(22,627)Lenovo Group Limited 2024/25 Interim Report 154 FINANCE INCOME AND COSTS(a)Finance income3 months ended September 30,2024 US$0006 months ended September 30,

74、2024 US$0003 months ended September 30,2023 US$0006 months ended September 30,2023 US$000Interest on bank deposits 21,90942,79129,82862,424Net gain on repayment of notes4,0614,061Interest on money market funds3,0025,2726,02712,270Interest income on finance lease3,8347,0872,4073,74128,74555,15042,323

75、82,496(b)Finance costs3 months ended September 30,2024 US$0006 months ended September 30,2024 US$0003 months ended September 30,2023 US$0006 months ended September 30,2023 US$000Interest on bank loans and overdrafts10,57326,9504,54714,595Interest on convertible bonds9,32118,51312,52824,915Interest o

76、n notes40,60980,93442,27784,794Interest on lease liabilities 3,1876,3273,8797,755Factoring costs134,088264,328125,971251,902Interest on written put option liabilities5611,1025181,345Others7911,3536582,498199,130399,507190,378387,804NotesLenovo Group Limited 2024/25 Interim Report 165 TAXATIONThe amo

77、unt of taxation in the consolidated income statement represents:3 months ended September 30,2024 US$0006 months ended September 30,2024 US$0003 months ended September 30,2023 US$0006 months ended September 30,2023 US$000Current taxProfits tax in Hong Kong S.A.R.of China21,12747,29633,05265,215Taxati

78、on outside Hong Kong S.A.R.of China119,030227,33362,055122,721Deferred taxCredit for the period(50,247)(125,219)(26,541)(74,657)89,910149,41068,566113,279Profits tax in Hong Kong S.A.R.of China has been provided for at the rate of 16.5%(2023/24:16.5%)on the estimated assessable profit for the period

79、.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.6 EARNINGS PER SHARE(a)BasicBasic earnings per share is calculated by dividin

80、g the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period after adjusting shares held by employee share trusts for the purposes of awarding shares to eligible employees under the long-term incentive program.3 months ended

81、September 30,20246 months ended September 30,20243 months ended September 30,20236 months ended September 30,2023Weighted average number of ordinary shares in issue12,404,659,30212,404,659,30212,128,130,29112,128,130,291Adjustment for shares held by employee share trusts(106,724,885)(139,503,853)(21

82、1,431,729)(208,045,599)Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share12,297,934,41712,265,155,44911,916,698,56211,920,084,6923 months ended September 30,2024 US$0006 months ended September 30,2024 US$0003 months ended September 30,2023 US$0

83、006 months ended September 30,2023 US$000Profit attributable to equity holders of the Company used in calculating basic earnings per share358,532601,897249,240425,766Lenovo Group Limited 2024/25 Interim Report 176 EARNINGS PER SHARE(continued)(b)DilutedThe calculation of the diluted earnings per sha

84、re 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 weig

85、hted 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

86、has three(2023/24:three)categories of potential ordinary shares,namely long-term incentive awards,put option written on non-controlling interests and convertible bonds(2023/24:long-term incentive awards,put option written on non-controlling interests and convertible bonds).Long-term incentive awards

87、 and convertible bonds were dilutive for the three and six months ended September 30,2024 and 2023.Put option written on non-controlling interests were anti-dilutive for the three and six months ended September 30,2024 and 2023.3 months ended September 30,20246 months ended September 30,20243 months

88、 ended September 30,20236 months ended September 30,2023Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share12,297,934,41712,265,155,44911,916,698,56211,920,084,692Adjustment for long-term incentive awards283,424,132284,419,123315,212,468298,558,

89、503Adjustment for convertible bonds575,746,156568,749,499826,771,889815,671,810Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share13,157,104,70513,118,324,07113,058,682,91913,034,315,0053 months ended September 30,2024 US$0006 months ended Sep

90、tember 30,2024 US$0003 months ended September 30,2023 US$0006 months ended September 30,2023 US$000Profit attributable to equity holders of the Company used in calculating basic earnings per share358,532601,897249,240425,766Adjustment for interest on convertible bonds,net of tax7,78315,45910,46120,8

91、04Profit attributable to equity holders of the Company used in calculating diluted earnings per share366,315617,356259,701446,570NotesLenovo Group Limited 2024/25 Interim Report 187 DIVIDEND6 months ended September 30,2024 US$0006 months ended September 30,2023 US$000Interim dividend,declared after

92、period end HK8.5 cents(2023/24:HK8.0 cents)per ordinary share135,518124,3198 NON-CURRENT ASSETSAnalysis of the movements in major non-current assets is as follows:Property,plant and equipment US$000Intangible assets US$000Deferred income tax assets US$000Year ended March 31,2024At the beginning of t

93、he year2,006,4578,267,1142,537,367Reclassification and exchange adjustment(81,025)(143,126)(22,112)Acquisition of businesses79,11048,65010,519Additions312,255480,675Transfers163,816554,646Disposals(31,489)(25)Depreciation/amortization(428,472)(832,782)Impairment and write-off(10,474)(29,745)Credited

94、 to consolidated income statement161,627Charged to share-based compensation reserve(6,487)At the end of the year2,010,1788,345,4072,680,914Six months ended September 30,2024At the beginning of the period2,010,1788,345,4072,680,914Reclassification and exchange adjustment32,91788,07980,096Acquisition

95、of businesses4,034Deemed disposal of a subsidiary(83)Additions188,968180,503Transfers21,344130,747Disposals(11,428)(301)Depreciation/amortization(221,563)(423,684)Impairment and write-off(67,052)Credited to consolidated income statement142,072Credited to share-based compensation reserve11,470At the

96、end of the period2,020,3338,257,7332,914,552Lenovo Group Limited 2024/25 Interim Report 198 NON-CURRENT ASSETS(continued)The movements in deferred income tax assets presented above are prior to offsetting of balances within the same jurisdiction.Deferred income tax assets and liabilities are netted

97、off when the taxes relate to the same tax authority and where offsetting is legally enforceable.The amounts shown in the consolidated balance sheet are determined after appropriate offset.9 INVENTORIESSeptember 30,2024 US$000March 31,2024 US$000Raw materials and work-in-progress5,094,3813,857,581Fin

98、ished goods3,408,4542,265,554Service parts615,981579,5429,118,8166,702,67710 TRADE AND NOTES RECEIVABLES AND TRADE AND NOTES PAYABLES(a)Details of trade and notes receivables are as follows:September 30,2024 US$000March 31,2024 US$000Trade receivables 9,449,8298,130,697Notes receivable26,49016,9989,

99、476,3198,147,695Customers are generally granted credit term 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:September 30,2024 US$000March 31,2024 US$0000 30 days6,870,5766,185,81431 60 days1,467,6871,080,59461

100、 90 days459,937235,405Over 90 days815,424761,6519,613,6248,263,464Less:loss allowance(163,795)(132,767)Trade receivables net9,449,8298,130,697NotesLenovo Group Limited 2024/25 Interim Report 2010 TRADE AND NOTES RECEIVABLES AND TRADE AND NOTES PAYABLES(continued)(a)(continued)At September 30,2024,tr

101、ade receivables,net of loss allowance,of US$969,108,000(March 31,2024:US$915,714,000)were past due.The ageing of these receivables,based on due date,is as follows:September 30,2024 US$000March 31,2024 US$000Within 30 days502,432486,98431 60 days99,847178,43061 90 days94,83661,662Over 90 days271,9931

102、88,638969,108915,714Movements in the loss allowance of trade receivables are as follows:6 months ended September 30,2024 US$000Year ended March 31,2024 US$000At the beginning of the period/year132,767104,823Exchange adjustment515(3,171)Increase in loss allowance recognized in profit or loss51,818105

103、,644Uncollectible receivables written off(10,378)(35,489)Unused amounts reversed in profit or loss(10,927)(39,040)At the end of the period/year163,795132,767Notes receivable of the Group are bank accepted notes mainly with maturity dates within six months.(b)Details of trade and notes payables are a

104、s follows:September 30,2024 US$000March 31,2024 US$000Trade payables 10,595,8238,473,990Notes payable3,633,5272,031,43714,229,35010,505,427Lenovo Group Limited 2024/25 Interim Report 2110 TRADE AND NOTES RECEIVABLES AND TRADE AND NOTES PAYABLES(continued)(b)(continued)Ageing analysis of trade payabl

105、es of the Group at the balance sheet date,based on invoice date,is as follows:September 30,2024 US$000March 31,2024 US$0000 30 days6,703,6395,201,96531 60 days2,407,0172,002,58861 90 days1,029,251643,980Over 90 days455,916625,45710,595,8238,473,990Notes payable of the Group are mainly repayable with

106、in three months.11 DEPOSITS,PREPAYMENTS AND OTHER RECEIVABLESDetails of deposits,prepayments and other receivables are as follows:September 30,2024 US$000March 31,2024 US$000Deposits54,23652,852Other receivables3,514,5522,429,511Prepayments 1,332,4481,300,0034,901,2363,782,366Other receivables mainl

107、y comprise amounts due from subcontractors for components delivered in the ordinary course of business.NotesLenovo Group Limited 2024/25 Interim Report 2212 PROVISIONS,OTHER PAYABLES AND ACCRUALS(a)Details of other payables and accruals are as follows:September 30,2024 US$000March 31,2024 US$000Accr

108、uals3,885,9583,327,359Allowance for billing adjustments(i)2,218,7402,277,947Written put option liability(ii)268,955253,482Other payables(iii)7,919,8416,791,407Lease liabilities92,194101,58014,385,68812,751,775Notes:(i)Allowance for billing adjustments relates primarily to allowances for future volum

109、e discounts,price protection,rebates,and customer sales returns.(ii)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 Dev

110、elopment 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 September 30,2024.The exercise price for the call and put options will be determined based on the fair valu

111、e of the 49%interest as of the day of exercising the option.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 o

112、n non-controlling interest.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.In the event that the put option lapses unexercised,the liability

113、will be derecognized with a corresponding adjustment to equity.(iii)Majority of other payables are obligations to pay for finished goods and services that have been acquired in the ordinary course of business from subcontractors.(iv)The carrying amounts of other payables and accruals approximate the

114、ir fair values.Lenovo Group Limited 2024/25 Interim Report 2312 PROVISIONS,OTHER PAYABLES AND ACCRUALS(continued)(b)The components of provisions are as follows:Warranty US$000Environmental restoration US$000Restructuring US$000Total US$000Year ended March 31,2024At the beginning of the year1,051,839

115、 26,084 162,577 1,240,500Exchange adjustment(25,797)(2,703)(521)(29,021)Provisions made660,53418,05154,991733,576Amounts utilized(716,985)(16,096)(108,108)(841,189)969,59125,336108,9391,103,866Long-term portion classified as non-current liabilities(161,261)(21,655)(182,916)At the end of the year808,

116、3303,681108,939920,950Six months ended September 30,2024At the beginning of the period969,59125,336108,9391,103,866Exchange adjustment5,9931,4244697,886Provisions made340,1536,847347,000Amounts utilized(350,339)(7,431)(49,797)(407,567)965,39826,17659,6111,051,185Long-term portion classified as non-c

117、urrent liabilities(157,005)(23,203)(180,208)At the end of the period808,3932,97359,611870,977The 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

118、 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 base

119、d 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

120、 the Groups 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 obliga

121、tion as a result of restructuring actions.NotesLenovo Group Limited 2024/25 Interim Report 2413 OTHER NON-CURRENT LIABILITIESDetails of other non-current liabilities are as follows:September 30,2024 US$000March 31,2024 US$000Deferred consideration(a)25,07225,072Written put option liability(b)46,6894

122、4,251Lease liabilities 215,035240,449Environmental restoration(Note 12(b)23,20321,655Government incentives and grants received in advance(c)82,495101,095Others268,546322,183661,040754,705Notes:(a)Pursuant to the joint venture agreement entered into with NEC Corporation,the Group is required to pay i

123、n cash to NEC Corporation deferred consideration.At September 30,2024,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(March 31,2024:US$25 million).(b)During the year ended March 31,2019,He

124、fei 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 o

125、f 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 e

126、xercise 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 mill

127、ion).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 cal

128、l 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 pri

129、ce 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$71 million).The financial liability that may become payable under the put option is initially recognized at present value of redemption amount within

130、other non-current liabilities with a corresponding charge directly to equity,as a put option written on non-controlling interest.The put option liability shall be re-measured as a result of the change in the expected performance at each balance sheet date,with any resulting gain or loss recognized i

131、n the consolidated income statement.In the event that the put option lapses unexercised,the liability will be derecognized with a corresponding adjustment to equity.(c)Government incentives and grants received in advance by certain group companies included in other non-current liabilities mainly rel

132、ate 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

133、the consolidated income statement immediately or recognized on a straight-line basis over the expected life of the related assets.Lenovo Group Limited 2024/25 Interim Report 2514 BORROWINGSSeptember 30,2024 US$000March 31,2024 US$000Current liabilitiesShort-term loans(a)63,00250,431Notes(b)964,8931,

134、027,89550,431Non-current liabilitiesNotes(b)2,049,0573,012,637Convertible bonds(c)566,639556,5922,615,6963,569,2293,643,5913,619,660Notes:(a)Majority of the short-term loans are denominated in United States dollars.At September 30,2024,the Group has total revolving and short-term loan facilities of

135、US$5,204 million(March 31,2024:US$5,426 million)which has been utilized to the extent of US$25 million(March 31,2024:US$41 million).(b)Details of the outstanding notes are as follows:Issue dateOutstanding principal amountTermInterest rate per annumDue dateSeptember 30,2024 US$000March 31,2024 US$000

136、April 24,2020 and May 12,2020US$965 million5 years5.875%April 2025964,893964,798November 2,2020 US$900 million10 years3.421%November 2030894,589894,145July 27,2022 US$600 million5.5 years5.831%January 2028596,098595,587July 27,2022 US$563 million10 years6.536%July 2032558,370558,1073,013,9503,012,63

137、7(c)Details of the outstanding convertible bonds are as follows:Issue dateOutstanding principal amountTermInterest rate per annumDue dateSeptember 30,2024 US$000March 31,2024 US$000August 26,2022 US$675 million7 years2.5%August 2029566,639556,592NotesLenovo Group Limited 2024/25 Interim Report 2614

138、BORROWINGS(continued)Notes:(continued)(c)(continued)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 b

139、onds 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 Compan

140、y at a conversion price of HK$9.94 per share,subject to adjustments.The conversion price was adjusted to HK$9.06 per share effective on August 3,2024.Assuming full conversion of the 2029 Convertible Bonds at the conversion price of HK$9.06 per share,the 2029 Convertible Bonds will be convertible int

141、o 583,994,205 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 t

142、he 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 o

143、utstanding at their principal amount 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

144、on an amortized cost basis until extinguished on conversion 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 redempt

145、ion obligations based on the financial position of the Group had conversion of the 2029 Convertible Bonds not exercised on maturity.The exposure of all the borrowings of the Group to interest rate changes and the contractual repricing dates at September 30,2024 and March 31,2024 are as follows:Septe

146、mber 30,2024 US$000March 31,2024 US$000Within 1 year1,027,89550,431Over 1 to 2 years964,798Over 2 to 5 years1,162,737595,587Over 5 years1,452,9592,008,8443,643,5913,619,66015 SHARE CAPITALSeptember 30,2024March 31,2024Number of sharesUS$000Number of sharesUS$000Issued and fully paid:Voting ordinary

147、shares:At the beginning of the period/year12,404,659,3023,500,98712,128,130,2913,282,318Conversion of convertible bonds276,529,011218,669At the end of the period/year12,404,659,3023,500,98712,404,659,3023,500,987Lenovo Group Limited 2024/25 Interim Report 2716 NOTE TO THE CONSOLIDATED CASH FLOW STAT

148、EMENT(a)Reconciliation of profit before taxation to net cash generated from operations6 months ended September 30,2024 US$0006 months ended September 30,2023 US$000Profit before taxation786,181585,746Share of losses of associates and joint ventures14,53013,021Finance income(55,150)(82,496)Finance co

149、sts399,507387,804Depreciation of property,plant and equipment221,563203,245Depreciation of right-of-use assets56,28980,400Amortization of intangible assets 423,684403,686Impairment and write-off of intangible assets67,052Share-based compensation138,742149,089(Gain)/loss on disposal of property,plant

150、 and equipment(1,141)1,117Loss on disposal of intangible assets30124Loss on disposal of construction-in-progress9,856Gain on deemed disposal of a subsidiary(22,627)Fair value change on financial instruments(2,106)(25,045)Fair value change on financial assets at fair value through profit or loss(9,15

151、3)(76,784)Dividend income(1,960)(745)(Increase)/decrease in inventories(2,437,556)186,538Increase in trade and notes receivables,deposits,prepayments and other receivables(2,523,657)(1,130,421)Increase in trade and notes payables,provisions,other payables and accruals5,406,076948,772Effect of foreig

152、n exchange rate changes(137,864)157,961Net cash generated from operations2,322,7111,811,768NotesLenovo Group Limited 2024/25 Interim Report 2816 NOTE TO THE CONSOLIDATED CASH FLOW STATEMENT(continued)(b)Reconciliation of financing liabilitiesThis section sets out an analysis of financing liabilities

153、 and the movements in financing liabilities for the period/year presented.Financing liabilities September 30,2024 US$000March 31,2024 US$000Short-term loans current 63,00250,431Notes current964,893Notes non-current 2,049,0573,012,637Convertible bonds non-current566,639556,592Lease liabilities curren

154、t92,194101,580Lease liabilities non-current215,035240,4493,950,8203,961,689Short-term loans variable interest rates60,79743,423Short-term loans fixed interest rates2,2057,008Notes fixed interest rates3,013,9503,012,637Convertible bonds fixed interest rates566,639556,592Lease liabilities fixed intere

155、st rates307,229342,0293,950,8203,961,689Lenovo Group Limited 2024/25 Interim Report 2916 NOTE TO THE CONSOLIDATED CASH FLOW STATEMENT(continued)(b)Reconciliation of financing liabilities(continued)Short-term loans current US$000Notes current US$000Notes non-current US$000Convertible bonds current US

156、$000Convertible bonds non-current US$000Lease liabilities current US$000Lease liabilities non-current US$000Total US$000Financing liabilities at April 1,202357,0323,146,148214,584537,030123,719280,8374,359,350Proceeds from borrowings11,792,69711,792,697Repayments/repurchase of borrowings(11,799,007)

157、(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 movements4(1,428)4,08519,56217,01263,510102,745Financing liabilities at Marc

158、h 31,202450,4313,012,637556,592101,580240,4493,961,689Financing liabilities at April 1,202450,4313,012,637556,592101,580240,4493,961,689Proceeds from borrowings6,609,0536,609,053Repayments of borrowings(6,639,913)(6,639,913)Reclassification 964,814(964,814)42,171(42,171)Principal elements of lease p

159、ayments(62,258)(62,258)Foreign exchange adjustments43,4311,319(1,273)43,477Other non-cash movements791,23410,0479,38218,03038,772Financing liabilities at September 30,202463,002964,8932,049,057566,63992,194215,0353,950,820NotesLenovo Group Limited 2024/25 Interim Report 3017 CAPITAL COMMITMENTSThe G

160、roup had the following capital commitments:September 30,2024 US$000March 31,2024 US$000Contracted but not provided for:Property,plant and equipment114,467151,716 Intangible assets5,8303,216 Investment in financial assets18,29317,454138,590172,38618 CONTINGENT LIABILITIESThe Group,in the ordinary cou

161、rse 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 o

162、r 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.Lenovo Group Limited 2024/25 Interim Report 31FINANCIAL REVIEWResultsFor

163、 the six months ended September 30,2024 and 20236 months endedSeptember 30,2024US$0006 months endedSeptember 30,2023US$000Revenue33,297,15027,309,713Gross profit5,355,5994,773,665Gross profit margin16.1%17.5%Operating expenses(4,210,531)(3,869,590)Operating profit1,145,068904,075Other non-operating

164、income/(expenses)net(358,887)(318,329)Profit before taxation786,181585,746Profit for the period636,771472,467Profit attributable to equity holders of the Company601,897425,766Earnings per share attributable to equity holders of the Company(US cents)Basic4.913.57 Diluted4.713.43EBITDA1,985,3461,740,4

165、95Non-HKFRS operating profit1,264,408913,863Non-HKFRS profit before taxation907,887598,204Non-HKFRS profit for the period747,479478,625Non-HKFRS profit attributable to equity holders of the Company718,882463,429Dividend per ordinary share(HK cents)Interim dividend8.58.0Lenovo Group Limited 2024/25 I

166、nterim Report 32FINANCIAL REVIEW(continued)Results(continued)For the six months ended September 30,2024,the Group achieved total sales of approximately US$33,297 million.When compared to the corresponding period of last year,profit attributable to equity holders for the period increased by US$176 mi

167、llion to approximately US$602 million,gross profit margin eroded by 1.4 percentage points to 16.1 percent mainly due to lower profitability in ISG business.Basic and diluted earnings per share were US4.91 cents and US4.71 cents,representing an increase of US1.34 cents and US1.28 cents respectively.N

168、et profit margin rose by 0.2 percentage points to 1.8 percent.Further analyses of sales by segment are set out in Business Review and Outlook.Analysis of operating expenses by function for the six months ended September 30,2024 and 2023 is as follows:6 months endedSeptember 30,2024US$0006 months end

169、edSeptember 30,2023US$000Selling and distribution expenses(1,703,318)(1,591,084)Administrative expenses(1,397,457)(1,234,613)Research and development expenses(1,023,523)(949,242)Other operating income/(expenses)net(86,233)(94,651)(4,210,531)(3,869,590)Operating expenses for the period increased by 9

170、 percent as compared with the corresponding period of last year.Employee benefit costs increased by US$137 million mainly due to increase in performance-based bonus and sales commissions.During the period,the Group recorded assets impairment and write-off of US$67 million.Advertising and promotional

171、 expenses increased by US$72 million for new product launch and special campaigns.The Group recorded fair value gain from strategic investments amounted to US$9 million(2023/24:US$77 million),reflecting the change in value of the Groups portfolio.Currency fluctuations presented a challenge to the Gr

172、oup,resulting in a net exchange loss of US$9 million(2023/24:US$64 million).Lenovo Group Limited 2024/25 Interim Report 33FINANCIAL REVIEW(continued)Results(continued)Key expenses by nature comprise:6 months endedSeptember 30,2024US$0006 months endedSeptember 30,2023US$000Depreciation of property,pl

173、ant and equipment(100,470)(105,763)Depreciation of right-of-use assets(47,916)(71,733)Amortization of intangible assets,excluding internal use software(86,127)(109,583)Impairment and write-off of intangible assets(67,052)Employee benefit costs,including(2,299,426)(2,162,474)long-term incentive award

174、s(138,742)(149,089)Rental expenses(6,233)(3,727)Net foreign exchange loss(9,330)(63,887)Advertising and promotional expenses(477,215)(405,076)Legal,professional and consulting expenses(202,719)(121,599)Information technology expenses,including(198,941)(164,986)amortization of internal use software(1

175、20,141)(88,018)Increase in loss allowance of trade receivables(51,818)(26,493)Unused amounts of loss allowance of trade receivables reversed10,92719,066Research and development related laboratory testing,services and supplies(157,551)(125,797)Gain/(loss)on disposal of property,plant and equipment1,1

176、41(1,117)Loss on disposal of intangible assets(301)(24)Loss on disposal of construction-in-progress(9,856)Fair value gain on financial assets at fair value through profit or loss9,15376,784Gain on deemed disposal of a subsidiary22,627Others(549,280)(593,325)(4,210,531)(3,869,590)Lenovo Group Limited

177、 2024/25 Interim Report 34FINANCIAL REVIEW(continued)Results(continued)Other non-operating income/(expenses)net for the six months ended September 30,2024 and 2023 comprise:6 months endedSeptember 30,2024US$0006 months endedSeptember 30,2023US$000Finance income55,15082,496Finance costs(399,507)(387,

178、804)Share of losses of associates and joint ventures(14,530)(13,021)(358,887)(318,329)Finance income mainly represents interest on bank deposits.Finance costs for the period increased by 3 percent as compared with the corresponding period of last year.The increase is mainly attributable to the incre

179、ase in interest on bank loans and overdrafts of US$12 million and factoring cost of US$12 million,partly offset by decrease in interest on notes of US$4 million and interest on convertible bonds of US$6 million.Share of losses of associates and joint ventures primarily represents operating losses ar

180、ising from principal business activities of respective associates and joint ventures.Lenovo Group Limited 2024/25 Interim Report 35FINANCIAL REVIEW(continued)Results(continued)The Group adopts segments by business group as the reporting format.Segments by business group comprise Intelligent Devices

181、Group(“IDG”),Infrastructure Solutions Group(“ISG”)and Solutions and Services Group(“SSG”).Revenue and operating profit/(loss)for reportable segments are as follows:6 months ended September 30,20246 months ended September 30,2023Revenue US$000Operating profit/(loss)US$000Revenue US$000Operating profi

182、t/(loss)US$000IDG24,935,7001,818,36321,775,1711,496,550ISG6,465,167(73,002)3,915,525(113,855)SSG4,049,892838,3193,631,308744,511Total35,450,7592,583,68029,322,0042,127,206Eliminations(2,153,609)(677,006)(2,012,291)(629,201)33,297,1501,906,67427,309,7131,498,005Unallocated:Headquarters and corporate

183、income/(expenses)net(739,413)(679,684)Depreciation and amortization(233,681)(214,778)Impairment and write-off of intangible assets(67,052)Finance income45,53877,055Finance costs(143,057)(157,137)Share of losses of associates and joint ventures(14,256)(14,522)Loss on disposal of property,plant and eq

184、uipment(386)(577)Fair value gain on financial assets at fair value through profit or loss7,68076,784Gain on deemed disposal of a subsidiary22,627Dividend income1,507600Consolidated profit before taxation786,181585,746Headquarters and corporate income/(expenses)net for the period comprise various exp

185、enses,after appropriate allocation to business groups,of US$739 million(2023/24:US$680 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 perf

186、ormance-based bonus,partly offset by the decrease in net foreign exchange loss as compared with the corresponding period of last year.Lenovo Group Limited 2024/25 Interim Report 36FINANCIAL REVIEW(continued)Use of non-HKFRS measureTo supplement Lenovos consolidated financial statements prepared and

187、presented in accordance with Hong Kong Financial Reporting Standards(“HKFRS”),we utilize non-HKFRS adjusted profit as an additional financial measure.We define adjusted profit as profit for the period by excluding(i)net fair value changes on financial assets at fair value through profit or loss,(ii)

188、amortization of intangible assets resulting from mergers and acquisitions,(iii)mergers and acquisitions related charges,(iv)gain on deemed disposal of a subsidiary,and(v)impairment and write-off of intangible assets,and the corresponding income tax effects,if any.More specifically,management exclude

189、s 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 holding

190、s.Lenovo excludes this item for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovos current operating performance and comparisons to operating performance in other periods.Lenovo incurs charges related to the amortization of intangible assets resul

191、ting from mergers and acquisitions.Those charges are included in Lenovos net profit prepared under HKFRS.Such charges are significantly impacted by the timing and magnitude of Lenovos acquisitions and any related impairment charges.Consequently,Lenovo excludes these charges for the purposes of calcu

192、lating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovos 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.T

193、he 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 i

194、mpacted 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 Lenovos current operating performance and comparisons to operating performance in other periods.Le

195、novo 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 meani

196、ngful evaluation of Lenovos current operating performance and comparisons to operating performance in other periods.Lenovo records impairment and write-off of intangible assets,which are non-recurring in nature.Lenovo excludes these charges for the purposes of calculating the non-HKFRS measure to fa

197、cilitate a more meaningful evaluation of Lenovos current operating performance and comparisons to operating performance in other periods.Lenovo Group Limited 2024/25 Interim Report 37FINANCIAL REVIEW(continued)Use of non-HKFRS measure(continued)This non-HKFRS financial measure is not computed in acc

198、ordance with,or as an alternative to,HKFRS.Management uses this non-HKFRS financial measure for the purposes of evaluating Lenovos historical and prospective financial performance.Management believes that excluding the items mentioned above for this non-HKFRS financial measure allows management to b

199、etter understand Lenovos 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 no

200、t 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 sim

201、ilar measures used by other companies.Reconciliations of the non-HKFRS financial measure to the most directly comparable HKFRS financial measure are included in the tables below.Six months ended September 30,2024Operating profit US$000Profit before taxation US$000Profit for the period US$000Profit a

202、ttributable to equity holders US$000As reportedNon-HKFRS adjustments1,145,068786,181636,771601,897Net fair value changes on financial assets at fair value through profit or loss(9,153)(9,153)(5,261)1,016Amortization of intangible assets resulting from mergers and acquisitions84,06886,43468,15068,150

203、Gain on deemed disposal of a subsidiary(22,627)(22,627)(19,233)(19,233)Impairment and write-off of intangible assets67,05267,05267,05267,052Non-HKFRS1,264,408907,887747,479718,882Lenovo Group Limited 2024/25 Interim Report 38FINANCIAL REVIEW(continued)Use of non-HKFRS measure(continued)Six months en

204、ded September 30,2023Operating profit US$000Profit before taxation US$000Profit for the period US$000Profit attributable to equity holders US$000As reportedNon-HKFRS adjustments904,075585,746472,467425,766Net fair value changes on financial assets at fair value through profit or loss(76,784)(76,784)

205、(64,759)(33,254)Amortization of intangible assets resulting from mergers and acquisitions84,52486,89068,56568,565Mergers and acquisitions related charges2,0482,3522,3522,352Non-HKFRS913,863598,204478,625463,429Financial PositionThe Groups major balance sheet items are set out below:Non-current asset

206、sSeptember 30,2024 US$000March 31,2024 US$000Property,plant and equipment2,020,3332,010,178Right-of-use assets540,354571,305Construction-in-progress332,460337,648Intangible assets8,257,7338,345,407Interests in associates and joint ventures319,557318,803Deferred income tax assets2,796,6032,633,302Fin

207、ancial assets at fair value through profit or loss1,470,5971,393,666Financial assets at fair value through other comprehensive income52,89955,973Other non-current assets467,297397,48916,257,83316,063,771Lenovo Group Limited 2024/25 Interim Report 39FINANCIAL REVIEW(continued)Financial Position(conti

208、nued)Property,plant and equipmentProperty,plant and equipment comprise mainly the Groups 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 Groups

209、 investments in plant and machinery,equipment held for lease and office equipment,transfer of completed assets from construction-in-progress,to cope with business growth;and exchange adjustments;partly offset by current period depreciation.Right-of-use assetsRight-of-use assets comprise mainly the l

210、and 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 5 percent decrease is mainly attributable to current period depreciation,partly

211、 offset by lease renewals and new leases entered into during the period.Construction-in-progressConstruction-in-progress comprise mainly the Groups investments in manufacturing sites and office buildings,internal use software and research and development laboratories.Internal use software mainly com

212、prises online platform development and system enhancement for business operations.The slight decrease is mainly attributable to transfer of completed assets to property,plant and equipment and intangible assets,partly offset by further investment in internal use software,technology and buildings und

213、er construction during the period.Intangible assetsIntangible 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 period amortiz

214、ation,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 and exchange adjustments.The Group completed the impairment test for goodwill allocated

215、to the Groups 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

216、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 perf

217、ormed.Interests in associates and joint venturesInterests in associates and joint ventures comprise the share of net assets of and loan to joint ventures.The slight increase is mainly attributable to additional investment during the period,and partly offset by the share of losses.Deferred income tax

218、 assetsDeferred income tax assets amounted to US$2,797 million as at period end,representing an increase of 6 percent,which is mainly attributable to tax losses and temporary differences in relation to share-based payment,provisions and accruals,tax depreciation allowance and deferred revenue arisin

219、g in the normal course of business.Deferred income tax assets are recognized to the extent that realization of the related tax benefit through the future taxable profits is probable.Lenovo Group Limited 2024/25 Interim Report 40FINANCIAL REVIEW(continued)Financial Position(continued)Financial assets

220、 at fair value through profit or lossFinancial assets at fair value through profit or loss increased by 6 percent during the period,which is mainly attributable to additional investments,exchange adjustments and net fair value gain recognized,partly offset by disposal of certain financial assets.Fin

221、ancial assets at fair value through other comprehensive incomeFinancial assets at fair value through other comprehensive income decreased by 5 percent during the period,which is mainly attributable to net fair value loss recognized,partly offset by exchange adjustments.Current assetsSeptember 30,202

222、4 US$000March 31,2024 US$000Inventories9,118,8166,702,677Trade and notes receivables9,476,3198,147,695Derivative financial assets29,89369,568Deposits,prepayments and other receivables4,901,2363,782,366Income tax recoverable441,038359,491Bank deposits60,23465,555Cash and cash equivalents4,178,9153,55

223、9,83128,206,45122,687,183InventoriesThe Groups inventories comprise raw materials and work-in-progress,finished goods and service parts where raw materials and work-in-progress accounted for 56 percent of total inventories.The Groups inventories purchase and production plan are primarily based on ex

224、pectations on market demand.The 36 percent increase is mainly attributable to the higher raw materials and finished goods inventory level in anticipation of the change in market demand.Trade and notes receivablesTrade and notes receivables increased by 16 percent which is attributable to the increas

225、e in sales in the second quarter of current period over the fourth quarter 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

226、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 enter

227、ed into and are subsequently re-measured at their fair values.Lenovo Group Limited 2024/25 Interim Report 41FINANCIAL REVIEW(continued)Financial Position(continued)Deposits,prepayments and other receivablesDeposits,prepayments and other receivables mainly comprise amounts due from subcontractors for

228、 components delivered in the ordinary course of business and other tax receivables.The 30 percent increase is mainly attributable to the increase in amounts due from subcontractors as a result of more business activities during the second quarter of current period than in the fourth quarter of last

229、year.Cash and cash equivalentsThe 17 percent increase is mainly attributable to net cash generated from operating activities,partly offset by net cash used in investing activities and financing activities.The working capital management enables the Group to maintain sufficient cash to meet operationa

230、l,financing and investing needs.Total equitySeptember 30,2024 US$000March 31,2024 US$000Share capital3,500,9873,500,987Reserves and others2,590,5302,580,2006,091,5176,081,187Total equityReserves and others increased from US$2,580 million to US$2,591 million which is mainly due to profit for the peri

231、od,share-based compensation credited to reserves and capital contribution from other non-controlling interests,partly offset by dividends payment,contribution to employee share trusts and vesting of shares under long-term incentive program.Non-current liabilitiesSeptember 30,2024 US$000March 31,2024

232、 US$000Borrowings2,615,6963,569,229Warranty provision157,005161,261Deferred revenue1,556,9711,436,484Retirement benefit obligations246,951241,402Deferred income tax liabilities453,053447,523Other non-current liabilities661,040754,7055,690,7166,610,604BorrowingsBorrowings(classified as non-current)de

233、creased by US$954 million which is mainly attributable to the reclassification of the 2025 Notes from non-current to current as it will be due within the next 12 months after the period end.Lenovo Group Limited 2024/25 Interim Report 42FINANCIAL REVIEW(continued)Financial Position(continued)Warranty

234、 provisionThe 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

235、,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 revenueDeferred reven

236、ue(classified as non-current)primarily relates to the Groups unfulfilled performance obligations over extended warranty services at the reporting date for which consideration has been received.Retirement benefit obligationsThe Group operates various pension schemes.The schemes are generally funded t

237、hrough 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 liabilitiesDeferred income tax liabilities comprise withholding tax on undistributed earnings,tax l

238、iabilities on upward valuation of intangibles arising from business combination and accelerated tax depreciation.Other non-current liabilitiesOther non-current liabilities mainly comprise liabilities arising from long-term lease liabilities,deferred consideration and government incentives and grants

239、 received in advance.The 12 percent decrease is mainly due to the reclassification of lease liabilities,government grants and payables from non-current to current as it will be due within the next 12 months after the period end.Current liabilitiesSeptember 30,2024 US$000March 31,2024 US$000Trade and

240、 notes payables14,229,35010,505,427Derivative financial liabilities130,02242,555Other payables and accruals14,385,68812,751,775Provisions870,977920,950Deferred revenue1,556,4701,512,645Income tax payable481,649275,380Borrowings1,027,89550,43132,682,05126,059,163Lenovo Group Limited 2024/25 Interim R

241、eport 43FINANCIAL REVIEW(continued)Financial Position(continued)Trade and notes payablesThe increase in trade and notes payables by 35 percent is mainly attributable to the increase in business activities in the second quarter of current period over the fourth quarter of last year.Derivative financi

242、al liabilitiesDerivatives 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 con

243、tract is entered into and are subsequently re-measured at their fair values.Other payables and accrualsOther 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 billi

244、ng 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 13 percent is mainly attributable to the increase in payables to subcontractors,driven by in

245、crease in business activities in the second quarter of current period over the fourth quarter of last year.ProvisionsProvisions comprise warranty provision(due within one year),environmental restoration and restructuring provisions.The 5 percent decrease is driven by the decrease in warranty provisi

246、on due to higher utilization and the settlement of restructuring provision during the period.Deferred revenueDeferred revenue(classified as current)primarily relates to the Groups unfulfilled performance obligations over extended warranty services at the reporting date for which consideration has be

247、en received.BorrowingsBorrowings(classified as current)increased by US$977 million which is mainly attributable to the reclassification of the 2025 Notes from non-current to current as it will be due within the next 12 months after the period end.Capital ExpenditureThe Group incurred capital expendi

248、ture of US$550 million(2023/24:US$677 million)during the six months ended September 30,2024,mainly for the acquisition of property,plant and equipment,additions to construction-in-progress and intangible assets.The lower capital expenditure incurred in current period is mainly attributable to less i

249、nvestments in patent and technology and intangible assets under construction.Lenovo Group Limited 2024/25 Interim Report 44FINANCIAL REVIEW(continued)Liquidity and Financial ResourcesAt September 30,2024,total assets of the Group amounted to US$44,464 million(March 31,2024:US$38,751 million),which w

250、ere financed by equity attributable to owners of the Company of US$5,477 million(March 31,2024:US$5,583 million),other non-controlling interests(net of put option written on non-controlling interests)of US$614 million(March 31,2024:US$498 million),and total liabilities of US$38,373 million(March 31,

251、2024:US$32,670 million).At September 30,2024,the current ratio of the Group was 0.86(March 31,2024:0.87).At September 30,2024,bank deposits and cash and cash equivalents totaling US$4,239 million(March 31,2024:US$3,626 million)analyzed by major currency are as follows:September 30,2024%March 31,2024

252、%US dollar33.025.5Renminbi29.227.3Japanese Yen11.610.8Euro3.06.2Australian dollar3.12.7Other currencies20.127.5Total100.0100.0The Group adopts a conservative policy to invest the surplus cash generated from operations.At September 30,2024,80(March 31,2024:90)percent of cash are bank deposits,and 20(

253、March 31,2024:10)percent are investments in liquid money market funds of investment grade.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 ordi

254、nary course of business to improve its balance sheet efficiency.The Group has the following banking facilities:Utilized amount atTypeDate of agreementPrincipal amount US$millionTermSeptember 30,2024 US$millionMarch 31,2024 US$millionRevolving loan facilityMay 12,20203005 yearsN/A(Note)Revolving loan

255、 facilityMay 14,20202005 yearsN/A(Note)Revolving loan facilityJuly 4,20222,0005 yearsRevolving loan facilityDecember 22,20235001 yearRevolving loan facilityJanuary 19,20245001 yearNote:The revolving loan facilities were cancelled on May 14,2024.Lenovo Group Limited 2024/25 Interim Report 45FINANCIAL

256、 REVIEW(continued)Liquidity and Financial Resources(continued)The Group has also arranged other short-term credit facilities as follows:Total available amount atUtilized amount atCredit facilitiesSeptember 30,2024 US$millionMarch 31,2024 US$millionSeptember 30,2024 US$millionMarch 31,2024 US$million

257、Trade lines6,9054,6764,7692,861Short-term money market facilities2,2041,9262541Forward foreign exchange contracts12,86111,58812,83111,555Apart from the above facilities,notes and convertible bonds issued by the Group and outstanding at September 30,2024 are as follows.Further details of borrowings a

258、re set out in Note 14 to the Financial Information.Issue datePrincipal amountTermInterest rate/dividend Due date Use of proceeds2025 NotesApril 24,2020 and May 12,2020US$965 million5 years5.875%April 2025 For repayment of previous Notes and general corporate purposes2030 NotesNovember 2,2020US$900 m

259、illion10 years3.421%November 2030 For repurchase of perpetual securities and previous Notes2028 NotesJuly 27,2022US$600 million5.5 years5.831%January 2028 For repayment of previous Notes and general corporate purposes2032 NotesJuly 27,2022US$563 million10 years6.536%July 2032 For financing of eligib

260、le projects under the Green Finance Framework2029 Convertible BondsAugust 26,2022US$675 million7 years2.5%August 2029 For repayment of previous convertible bonds and general corporate purposesLenovo Group Limited 2024/25 Interim Report 46FINANCIAL REVIEW(continued)Liquidity and Financial Resources(c

261、ontinued)Net cash position and gearing ratio of the Group at September 30 and March 31,2024 are as follows:September 30,2024 US$millionMarch 31,2024 US$millionBank deposits and cash and cash equivalents4,2393,626Borrowings Short-term loans6350 Notes3,0143,013 Convertible bonds567557Net cash position

262、5956Total equity6,0916,081Gearing ratio(Borrowings divided by total equity)0.600.60The Group is confident that the facilities on hand can meet the funding requirements of the Groups operations and business development.The Group is in full compliance with all the banking covenants.The Group adopts a

263、consistent hedging policy for business transactions to reduce the risk of currency fluctuation arising from daily operations.At September 30,2024,the Group had commitments in respect of outstanding forward foreign exchange contracts amounting to US$12,831 million(March 31,2024:US$11,555 million).The

264、 Groups 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 Interim Report 47BUSINESS REVIEW AND OUTLOOKHighlightsDuring the six month

265、s ended September 30,2024,Lenovo(the Group)achieved several new performance records.Group revenue surged 22 percent year-on-year,reaching US$33.3 billion,while profit attributable to equity holders increased at an even faster pace of 41 percent.For the first time in three years,all three business gr

266、oups have achieved robust double-digit revenue growth simultaneously.The Group has been building a comprehensive full-stack AI(Artificial Intelligence)portfolio,ranging from infrastructure to edge devices and services,positioning itself as a sector leader amid the AI paradigm shift.To bolster these

267、critical AI advancements,research and development(R&D)expenses increased by 8 percent year-on-year.The Groups non-PC segment rose to a record 46 percent of total revenue across its three business groups,underscoring growth opportunities beyond the core PC business.Revenue of Infrastructure Solutions

268、 Group(ISG)surged by 65 percent year-on-year,reaching US$6.5 billion for the first time in its operating history.Its cloud customers are investing heavily in infrastructure to enable AI.This growth,along with a recovering enterprise business,has elevated ISGs market position to No.5 globally and No.

269、3 in China,according to the latest third-party research data.Solutions and Services Group(SSG)s revenue increased by 12 percent year-on-year to US$4.0 billion,driven by robust demand for its as-a-Service and AI-powered solutions.SSGs segment profit accounted for 32 percent of the combined segment pr

270、ofit across the three business groups.The Group continued to expand its recurring revenue base,with deferred revenue reaching a record US$3.1 billion.Intelligent Devices Group(IDG)has offered a comprehensive AI PC portfolio for both consumer and commercial segments.The Group is investing in its vibr

271、ant AI application ecosystem and central to this effort,IDG has developed its own personal AI agents customized for different markets.IDGs revenue grew by 15 percent,with its five-feature AI PCs equipped with personal intelligent agent reaching 14 percent of total notebook shipments in China in the

272、second fiscal quarter,the only geographical market and period where these new PCs were widely available.In smartphone,IDG delivered high double-digit revenue growth,with its market share expanding year-on-year for more than a year,fueled by hypergrowth in Asia Pacific,EMEA,and North America.Free cas

273、h flow was enhanced by US$801 million year-on-year during the first fiscal half-year period,on strength of business recovery and improved profitability.As a result,net cash position amounted to US$595 million at the end of the period.The Group has been consistently recognized for its steadfast dedic

274、ation to corporate governance and sustainability and has retained AA rating in the 2024 Hang Seng Corporate Sustainability Index.With respect to environmental responsibility,the Lenovo Intelligent Sustainability Solutions Advisor(LISSA),a newly launched AI-powered advisory platform,has won the SEAL

275、Sustainable Innovation Award,while its Neptune liquid cooling technology was honored with the BIG Sustainability Product of the Year Award.These various milestones highlight the Groups balanced focus on sustainability and strategic excellence across its diverse growth engines.The Groups shareholders

276、 have approved the strategic business transactions,including the issuance of a US$2.0 billion zero coupon convertible bond to Alat,and 1.15 billion warrants.These transactions aim to raise funds to accelerate the Groups growth and transformation initiatives.Alats involvement is expected to diversify

277、 the Groups global supply chain and broaden its presence in the MEA region.Lenovo Group Limited 2024/25 Interim Report 48BUSINESS REVIEW AND OUTLOOK(continued)Group Financial PerformanceThe Group has shown accelerated performance across revenue,pre-tax income,and profit attributable to equity holder

278、s during the period under review.The Group capitalized on demand tailwinds to drive a 22 percent growth in Group revenue.The successful execution of its share gain strategy resulted in double-digit revenue growth across all three business groups.During the period under review,IDG and SSG improved th

279、eir segment margins by 42 and 20 basis points year-on-year,respectively.Despite ISGs success in reducing losses by 36 percent year-on-year,challenges to segment performance remain and in response to this,management has put in place a profitability recovery plan to drive further improvements.Manageme

280、nt effectively controlled the Groups expenses,leading to a reduction of operating expense-to-revenue ratio by 1.6 percentage points year-on-year to 12.6 percent.Profit attributable to equity holders increased by 41 percent,while non-HKFRS(Hong Kong Financial Reporting Standards)measures indicated ev

281、en stronger gains,with a 55 percent leap in net profit.Lenovo Group Limited 2024/25 Interim Report 49BUSINESS REVIEW AND OUTLOOK(continued)Performance by Product Business GroupIntelligent Devices Group(IDG)IDG,encompassing the PC,tablet,smartphone,and other smart device businesses,reported better-th

282、an-expected revenue growth of 15 percent in the period under review.IDG expanded its leading position in the PC market,further widening the gap with its top two competitors.Commercial revenue growth remained robust,and the consumer tailwinds derived from successful game title launches,including Blac

283、k Myth:Wukong,translated into strong double-digit boost in revenue of gaming models,leading to a demand shift towards higher value-added models within the consumer mix.IDG has unveiled a suite of AI products,including AI PC models equipped with cutting-edge silicon technology,designed to deliver ind

284、ustry-leading performance alongside unparalleled personalization,productivity and security.During the period under review,two versions of personal AI agents were introduced utilizing natural language interactions and the users personal knowledge base.Together with other proprietary AI software capab

285、ilities,these innovations have positioned the Group to capitalize on the rapidly growing demand for AI computing.The success of these innovations has also strengthened non-PC revenue,with the most significant success derived from the smartphone segment.Under the Motorola brand,smartphone revenue gre

286、w at a strong double-digit rate year-on-year,thanks to the growing popularity of its attractive foldable phone designs as a way to supercharge its go-to-market strategy.Lenovo Group Limited 2024/25 Interim Report 50BUSINESS REVIEW AND OUTLOOK(continued)Performance by Product Business Group(continued

287、)Infrastructure Solutions Group(ISG)Surging AI investments,coupled with a recovering enterprise business,has driven a 65 percent year-on-year revenue growth for ISG during the period under review.ISGs comprehensive AI product portfolio and improved time-to-market have led to a robust pipeline and a

288、steady increase in confirmed orders.In addition,to address the heightened power demands posed by the use of more advanced GPUs,ISG has leveraged its expertise in liquid-cooling technology from HPC(High-Performance Computing)and repurposed its patented Neptune liquid-cooled solutions for AI GPU serve

289、rs to attract new orders.Non-compute revenue,including storage and HPC,maintained a strong growth trajectory and accounted for 33 percent of ISGs top line.ISGs share of global storage revenue continued to increase year-on-year,according to the latest third-party data.As the dominant player in the gl

290、obal market,HPC achieved record revenue during the first fiscal half-year by winning more orders from key customers,including DreamWorks,Max Planck,Korea Meteorological Administration and Karlsruhe Institute of Technology.Due to high investment requirements for AI servers and lower profitability pro

291、file in the fast-growing cloud business,losses remained at US$73 million in the first half of the fiscal year.ISG will continue to execute its performance improvement plan through simplifying portfolio,improving operations,and diversifying cloud customers.Lenovo Group Limited 2024/25 Interim Report

292、51BUSINESS REVIEW AND OUTLOOK(continued)Performance by Product Business Group(continued)Solutions&Services Group(SSG)SSG reported revenue of US$4.0 billion in the first half of the fiscal year,up 12 percent year-on-year.Operating profit also increased by 13 percent year-on-year to US$838 million,sus

293、taining a high operating margin of 21 percent.Managed Services reported a 19 percent year-on-year revenue growth.The TCV(Total Contract Value)for both DaaS(Device-as-a-Service)and IaaS(Infrastructure-as-a-Service)increased by strong double digits,reinforcing a robust long-term growth trajectory.Proj

294、ect&Solution Services revenue rose 19 percent year-on-year,supported by the Groups AI powered solutions,including GenAI-powered avatars,smart factory IoT,and smart warehousing solutions.Support Service revenue growth moderated to 3 percent year-on-year,reflecting a natural time lag between hardware

295、revenue and their impact on service revenue.However,Support Service bookings have increased for a year,in line with recent hardware revenue growth,indicating a positive outlook for revenue recovery.Geographic PerformanceWith an expansive global footprint across 180 markets,the Group has effectively

296、leveraged its diversified market exposure to achieve sustained revenue growth across regions.For the first fiscal half-year period,all operating regions reported double-digit year-on-year revenue growth.Revenue in China grew 26 percent,as the Group continued to realize premium-to-market growth in PC

297、.Premium products,including AI and gaming PCs,delivered strong growth,partially owing to Chinas recent economic stimulus packages.Infrastructure and services also exhibited strength,benefiting from new customer acquisitions and AI-powered vertical solutions.Revenue growth in Asia Pacific(AP,excludin

298、g China),EMEA and Americas for the first fiscal half-year period was 28 percent,22 percent,and 16 percent,respectively.Two common market highlights stood out across all regions:strong smartphone revenue and premium PC growth.In AP,smartphone revenue registered triple-digit growth,particularly in Ind

299、ia and Japan,driven by the success of the premium products Edge and Razr.The Group continued to gain market share in smartphone in select EMEA countries,while in North America,the Razr has been the best-selling foldable phone in the prepaid market for the first fiscal half-year period.Within the pre

300、mium PC segment,gaming laptops played a significant role in driving revenue growth.The LOQ sub-brand of gaming laptops,known for its strong design features and appeal to a broader gaming community,helped bolster gaming PC market share across the regions.Other specific regional drivers include strong

301、 commercial PC revenue in Japan,supported by Win11 upgrades and digital transformation trends,aiding growth in AP.Demand for infrastructure products from cloud customers further contributed to the North Americas strong performance.Lenovo Group Limited 2024/25 Interim Report 52BUSINESS REVIEW AND OUT

302、LOOK(continued)OutlookThe Group has realigned to deliver AI technology that enhances quality of life,promotes sustainability,and boosts enterprise productivity.To achieve optimal productivity gains,enterprises are likely to need to build private clouds for AI training and inferencing using proprieta

303、ry enterprise data.As data security becomes essential,enterprise Hybrid AI requires seamless integration in both cloud and edge environments.The Group aims to leverage this shift by providing personal and enterprise AI twins while establishing itself as a key infrastructure supplier.IDG has unveiled

304、 the latest lineup of next-generation AI PCs,while enhancing components and software to support strong average selling prices and sustainable profitability.AI NOW,the Groups personalized intelligent agent supported by heterogeneous computing,provides fast and secure on-device AI features.ThinkShield

305、,the Groups security solution,ensures a secure environment by filtering out harmful text and images.The“one personal AI,multiple devices”approach,featuring Smart Connect,facilitates centralized data management across various devices,creating a seamless and secure user experience.Alongside other prop

306、rietary technologies including Lenovo Creator Zone and Lenovo Learning Zone,the Group is well-positioned for global leadership in the AI PC segment.IDGs smartphone business is rapidly growing,particularly with its premium Motorola Razr and Edge lineups,leveraging Large Action Models to enhance moto

307、ai capabilities.ISGs Hybrid AI strategy revolves around designing and deploying next-generation AI solutions in partnership with Nvidia,AMD,and Intel.With a balanced focus on revenue and profitability,ISG provides over 80 AI-optimized products,from edge devices to 8-GPU LLM servers.The Enterprise&Sm

308、all-and-Medium Business(ESMB)segment will also target growth in AI-powered edge,Hybrid Cloud,High-Performance Computing,and telco/communication solutions,while the Cloud Service Provider(CSP)segment utilizes an ODM+business model to drive innovative solutions.ISGs Neptune liquid-cooling technology r

309、emains a global leader in datacenter cooling,with its sixth-generation model supporting AI workloads in a sustainable way.SSGs AI Fast Start service provides customizable solutions from Lenovo AI Library,enabling rapid development of generative AI applications using customer data.SSG will also embed

310、 AI functions into existing service offerings,including Digital Workplace,Hybrid Cloud,and Sustainability solutions.Lenovo Group Limited 2024/25 Interim Report 53BUSINESS REVIEW AND OUTLOOK(continued)Strategic HighlightsEnvisioning a future of Smarter AI for All,the Group remains at the forefront of

311、 Intelligent Transformation to capture growth opportunities across devices,infrastructure,and services.The multi-year growth opportunities have propelled the Group to accelerate AI development through focused R&D investment.Robust innovation,together with the pursuit of profitability growth,will con

312、tinue to be the key to enhancing the Groups competitiveness in next-generation product design and solutions.By leveraging its Services business as a structural growth engine,the Group aims to strengthen its end-to-end service solutions,particularly its TruScale as-a-Service portfolio,which addresses

313、 customer pain points in hybrid work,multi-cloud management,and cybersecurity.As a responsible corporate,the Group prides itself on setting high standards and making every effort to mitigate the environmental impact of its operations as the business strides towards achieving net zero emissions by 20

314、50.To capitalize on growing ESG awareness,management will broaden its sustainability initiatives.This includes incorporating innovative ESG features,such as a CO2 offset service and Reduced Carbon Transit,into the Groups service offerings to help customers achieve their ESG goals.Lenovo Group Limite

315、d 2024/25 Interim Report 54HUMAN RESOURCESAt September 30,2024,the Group had a headcount of approximately 70,200 worldwide.The Group implements a remuneration policy that includes base salary,bonus,an employee share purchase plan and long-term incentive program with reference to the performance of t

316、he Group and individual employees.The Group also provides benefits such as insurance,medical coverage,and retirement funds to maintain its competitive position.The Company launched an employee share purchase plan(the“Plan”)in October 2016,aimed at encouraging share ownership by the general employees

317、.Under the Plan,eligible employees receive one matching restricted share unit(“RSUs”)for every four ordinary shares of the Company purchased through qualified employee contributions.The matching RSUs are subject to a vesting period of up to two years.Executive and non-executive directors,as well as

318、senior management of the Company,are not eligible to participate in the Plan.Same as in prior years,the Plan operates by purchasing existing shares from the market,and the Company has not issued any new shares under the Plan.DIRECTORS RIGHTS TO ACQUIRE SHARES OR DEBENTURESLong Term Incentive Program

319、The Group operates a Long Term Incentive Program(“LTI Program”)which was initially 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

320、 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.U

321、nder the LTI Program,the Group 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.(i)Share Appreciation Rights(“SARs”)SARs entitle the holders to receive the increase in the Companys s

322、hare 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 sh

323、are 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 the average dividend yield over the past three years,the risk-free rate over the vesting period etc.The Company reserv

324、es the right to settle awards under the SAR program in cash or in ordinary shares at its discretion.The Company has established and funded a trust to deliver shares to eligible recipients.(ii)Restricted Share Units(“RSUs”)Each RSU is equivalent to the value of one ordinary share of the Company,and i

325、s granted to eligible recipients at no cost.The grant price is set as the 10-day average closing price prior to 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 p

326、aid on RSUs before the vesting date.The Company reserves the right to settle awards under the RSU program in cash or ordinary shares at its discretion.Additionally,the Company has established and funded a trust to deliver shares to eligible recipients.Lenovo Group Limited 2024/25 Interim Report 55DI

327、RECTORS RIGHTS TO ACQUIRE SHARES OR DEBENTURES(continued)Long Term Incentive Program(continued)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

328、 board of directors of the Company(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 individuals contribution to the long-term

329、 performance of the Company,the Groups overall 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.During the six months ended September 30,2024,the LTI Prog

330、ram continues to operate through purchasing existing shares from the market,and the Company did not issue any new shares under the Program.Lenovo Group Limited 2024/25 Interim Report Lenovo Group Limited 2024/25 Interim Report 5657DIRECTORS RIGHTS TO ACQUIRE SHARES OR DEBENTURES(continued)Long Term

331、Incentive Program(continued)The movements in the share awards of the executive and non-executive directors during the six months ended September 30,2024 are as follows:Number of unitsNameAward typeDate of grant(mm.dd.yyyy)Effective price(HK$)Closing price of the shares immediately before the date th

332、e 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$)As at April 1,2024(unvested)New grant during the periodVested during the periodExercised during the periodAs a

333、t September 30,2024(unvested)Total outstandingas at September 30,2024(Note 1)Vesting period(mm.dd.yyyy)Mr.Yang YuanqingSAR06.03.20195.79 79,451,149 06.03.2020 06.03.2022SAR06.01.20204.22 76,048,055 06.01.2021 06.01.2023SAR06.20.20227.34 30,705,901 12,794,125 17,911,776 30,705,901 06.01.2024 06.01.2026SAR06.01.20237.46 7,356,097 3,064,549 4,291,548 7,356,097 06.01.2024 06.01.2026SAR06.03.202411.34