Lenovo : FY2023/24 Annual Results Annual Report

HKD COUNTER STOCK CODE 992

RMB COUNTER STOCK CODE 80992

Lenovo Group Limited 2023/24 Annual Report

About Lenovo

Lenovo1 is a US$57 billion revenue global technology powerhouse, ranked #217 in the Fortune Global 500, and serving millions of customers every day in 180 markets. Focused on a bold vision to deliver Smarter Technology for All, Lenovo has built on its success as the world's largest PC company with a pocket-to cloud portfolio of AI-enabled,AI-ready, and AI-optimized devices (PCs, workstations, smartphones, tablets), infrastructure (server, storage, edge, high performance computing and software defined infrastructure), software, solutions, and services. Lenovo's continued investment in world-changing innovation is building a more equitable, trustworthy, and smarter future for everyone, everywhere. Lenovo Group Limited is listed on the Hong Kong stock exchange (HKSE: 992) (ADR: LNVGY). To find out more visit https://www.lenovo.com, and read about the latest news via our StoryHub.

Table of content

Financial highlights	4
Chairman & CEO Statement	8
Lenovo management team	10
Management's discussion & analysis	14
Corporate governance report	60
Audit committee report	115
Compensation committee report	122
Directors' report	138
Independent auditor's report	166
Consolidated income statement	171
Consolidated statement of comprehensive income	172
Consolidated balance sheet	173
Consolidated cash flow statement	175
Consolidated statement of changes in equity	177
Notes to the financial statements	179
Five-year financial summary	267
Corporate information	268

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 not design, develop, manufacture, or distribute products or services, or control any activities of the Company's subsidiaries in the design, development, manufacture, or distribution of products or services.

Smarter technology. Seamless collaboration. Spectacular race.

Formula 1® racing is the pinnacle of motorsport with a global audience of hundreds of millions. From the fans watching the Grand PrixTM to the drivers piloting some of the most sophisticated machinery on four wheels, Lenovo plays a key role in the Formula 1 technology infrastructure.

"Innovation is embedded in everything we do," explains Pete Samara, Director of Strategic Technical Ventures at Formula 1. "From the car to the track, to the broadcast and digital products, innovation has to be at the heart of everything we do every single day."

To keep the organization's many moving parts running smoothly, the experts at Formula 1 partnered with Lenovo for an IT infrastructure that can withstand the breakneck pace of innovation.

Lenovo tech infrastructure helps put data in the hands of the drivers and their teams instantly, through trackside devices and supports data collection with its servers.

But in addition to the drivers, the fans themselves are also able to directly benefit from that track-generated data, as Lenovo technology connects the track to the Media

• Technology Centre that display the data in real-time as on-screen graphics for the fans watching the race.

Another key way Lenovo supports Formula 1 is in the organization's efforts to improve sustainability in motorsports through Lenovo's Asset Recovery Services. Lenovo ARS helps F1 develop and implement

a sustainable disposition strategy for technology hardware that the organization cycles through.

By relying on Lenovo ARS, F1 was able to offset some of the cost of a technology refresh as well as guarantee security through secure and reliable data destruction. In addition, the initiative furthers the organization's sustainability goals by recycling tech in a more socially and environmentally responsible way.

The F1 FORMULA 1 logo, F1 logo, F1, FORMULA 1, FIA FORMULA ONE WORLD CHAMPIONSHIP, GRAND PRIX and related marks are trademarks of Formula One Licensing BV, a Formula 1 company.

Financial highlights

	2024	2023	Year-on-year
For the year ended March 31	US$ million	US$ million	Change
Group Results
Revenue	56,864	61,947	(8)%
Gross profit	9,803	10,501	(7)%
Gross profit margin (%)	17.2	17.0	0.2 pts
Operating expenses	(7,797)	(7,832)	(0)%
Expense-to-revenue ratio (%)	13.7	12.6	1.1 pts
EBITDA	3,697	4,358	(15)%
Pre-tax income	1,365	2,136	(36)%
Pre-tax income margin (%)	2.4	3.4	(1.0) pts
Profit attributable to equity holders
of the Company	1,011	1,608	(37)%
EPS - basic (US cents)	8.41	13.50	(5.09)
EPS - diluted (US cents)	8.05	12.74	(4.69)
Interim dividend per share (HK cents)	8	8	-
Final dividend per share (HK cents)1	30	30	-
Total dividend per share (HK cents)	38	38	-
Cash and Working Capital
Bank deposits and cash and cash equivalents	3,626	4,321	(16)%
Total borrowings	(3,620)	(3,955)	(8)%
Net cash	6	366	(98)%
Cash conversion cycle (days)	(4)	(2)	(2)

Note:

1 Subject to shareholders' approval at the forthcoming annual general meeting.

4 Lenovo Group Limited 2023/24 Annual Report

Revenue Analysis by Business Group*	Revenue Analysis by Geography
for the year ended March 31	for the year ended March 31

			24%			22%
75%		73%	17%			18%
			25%			%
					26
%		15%	34%			34%
15		12%
10%
2023		2024	2023			2024
IDG	ISG	SSG	China	AP	EMEA	AG

• Revenue before eliminations

EBITDA	Profit Attributable to
for the year ended March 31 (US$ million)	Equity Holders of the Company
	for the year ended March 31 (US$ million)

		4,714	4,358				2,030
	3,532			3,697				1,608
2,667						1,178			1,011
					665
2020	2021	2022	2023	2024	2020	2021	2022	2023	2024

Lenovo Group Limited 2023/24 Annual Report

5

Smarter uses AI to create new ways to communicate.

At CES 2024, global technology leader Lenovo, assistive technology non-profit the Scott-Morgan Foundation, 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 pathways for applying generative AI to accessibility challenges and helps advance Lenovo's 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 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 communication.

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 for her new AI avatar, debuted at CES 2024, and offering 96 percent true-to-life accuracy.

Chairman

& CEO Statement

As we close another fiscal year, I am pleased to share with you the important progress we have made in our transformation as well as our vision and plans to embrace the AI era to deliver the next wave of growth and innovation.

8 Lenovo Group Limited 2023/24 Annual Report