Earnings release
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1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. Lenovo Group Limited 聯想集團有限公司 (Incorporated in Hong Kong with limited liability) (HKD Counter Stock Code: 992 / RMB Counter Stock Code: 80992) FY2025/26 THIRD QUARTER RESULTS ANNOUNCEMENT THIRD QUARTER RESULTS The board of directors (the “Board”) of Lenovo Group Limited (the “Company”) announces the unaudited results of the Company and its subsidiaries (the “Group”) for the three and nine months ended December 31, 2025 together with comparative figures for the corresponding period of last year, as follows: FINANCIAL HIGHLIGHTS • Group revenue increased by 18 percent year -on-year, reaching a record high of US$22 billion. Adjusted profit attributable to equity holders, excluding the impact of one -time restructuring charges, non -cash fair value gain on warrants, notional interest on convertible bonds, and other non -cash items, grew to US$589 million, up 36 percent year-on-year • AI-related revenues, accounting for 32 percent of Group’s total revenue, grew by 72 percent year -on-year; All three business groups revenue achieved double-digit year-on-year growth • IDG reported a 14 percent increase in revenue and a 15 percent increase in operating profit year -on-year. The PC business further strengthened its global leadership position, achieving a market share of 25.3 percent, marking the second consecutive quarter and as the only vendor surpassing one -quarter of the global PC market in three decades. Smartphone volume and activation reached record highs, with key sales geographies growing above market rate • ISG delivered a record quarterly revenue with a year-on-year growth of 31 percent, along with sequentially improved operating performance. AI server revenue posted high double -digit growth year -on-year, supported by a robust pipeline of US$15.5 billion. Restructuring program in progress to accelerate ISG’s return to sustained and improving profitability, targeting annualized net savings of over US$200 million through FY28/29 • SSG revenue and operating profit increased by 18 percent and 30 percent year -on-year, respectively. The revenue mix of Managed Services and Project & Solutions reached 59.9 percent of SSG, supported by accelerated TruScale DaaS and IaaS and notable customer wins • New products and solutions unveiled at TechWorld @CES 2026 won a record 212 awards, expanding the Group’s product portfolio and reinforcing its innovation leadership in global AI ecosystem 3 months ended December 31, 2025 (unaudited) 9 months ended December 31, 2025 (unaudited) 3 months ended December 31, 2024 (unaudited) 9 months ended December 31, 2024 (unaudited) Year-on-year change 3 months ended December 31 9 months ended December 31 US$ million US$ million US$ million US$ million Revenue 22,204 61,486 18,796 52,093 18% 18% Gross profit 3,349 9,270 2,959 8,315 13% 11% Gross profit margin 15.1% 15.1% 15.7% 16.0% (0.6) pts (0.9) pts Operating expenses (2,401) (6,894) (2,271) (6,482) 6% 6% Operating profit 948 2,376 688 1,833 38% 30% Other non-operating income/(expenses) – net (130) (441) (171) (530) (24)% (17)% Profit before taxation 818 1,935 517 1,303 58% 48% Profit for the period 648 1,566 701 1,338 (8)% 17% Profit attributable to equity holders of the Company 546 1,391 693 1,295 (21)% 7% Earnings per share attributable to equity holders of the Company Basic US4.44 cents US11.33 cents US5.66 cents US10.56 cents US(1.22) cents US0.77 cents Diluted US3.90 cents US10.10 cents US5.35 cents US10.06 cents US(1.45) cents US0.04 cents Non-HKFRS measures Adjusted operating profit 903 2,290 708 1,973 28% 16% Adjusted profit before taxation 803 1,937 544 1,461 48% 33% Adjusted profit for the period 605 1,551 450 1,207 34% 29% Adjusted profit attributable to equity holders of the Company 589 1,490 435 1,163 36% 28%
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2 BUSINESS REVIEW AND OUTLOOK Group Highlights Lenovo (the Group) achieved a solid financial performance during the third quarter ended December 31, 2025. Group revenue increased 18 percent year-on-year, reaching a record high of US$22 billion, with all three business groups achieving double-digit year-on-year growth. AI-related revenues1 grew by 72 percent year-on- year, accounting for 32 percent of group total revenue. Adjusted profit attributable to equity holders for the quarter reached US$589 million, growing at 36 percent year-on-year, doubling the growth of revenues. Reported profit attributable to equity holders was US$546 million. Key adjustments to the reported figure include one-time restructuring charges of US$285 million, income tax credit of US$45 million, non‑cash fair value gains on warrants of US$186 million, notional interest on convertible bonds of US$29 million, and other non-cash adjustments of US$40 million. Adjusted net margin expanded by 34 bps, reaching 2.7 percent, demonstrating operating leverage, efficiency gains, and a higher revenue contribution from premium product and services offerings. Despite a challenging operating environment characterized by ongoing tariff uncertainties and rising component cost due to supply and demand imbalances, the Group has demonstrated exceptional operating resilience, generating solid revenue and profit growth against this macro backdrop. All three business groups - Infrastructure Solutions Group (ISG), Solutions and Services Group (SSG), and Intelligent Devices Group (IDG) - delivered strong quarterly results. IDG expanded its undisputed leadership in the global PC market, further expanding its market share gap with the second-largest player year-on-year. In the past 3 decades, the Group is the only PC vendor to surpass one -quarter global market share for two consecutive quarters. Smartphones achieved record volume and activation with its M oto brand, and year -on- year revenue growth exceeded the market rate in key sales geographies. ISG achieved a record Q3 revenue of US$5.2 billion with operating performance improving sequentially. Demand for AI servers remained solid, experiencing high double -digit year -on-year revenue growth and supported by a robust pipeline of US$15.5 billion. Furthermore, ISG expanded its customer base, bringing CSP revenue to a record high, and witnessed hypergrowth growth in Neptune liquid-cooling revenue. ISG’s restructuring announced in this quarter is a crucial step to realign the cost structure and accelerate the transformation towards sustained, improving profitability. Through portfolio optimization and workforce upskilling, ISG is well-positioned to capture the long-term, multi-year growth trends— especially as AI demand shifts from training to inferencing. The transformation program sets a clear path for ISG to return to profitability as early as the fourth fiscal quarter of FY25/26, and targets to ac hieve more than US$200 million annualized net savings through FY28/29, driven by productivity gains and cost savings. SSG maintained strong growth momentum with revenue growing at 18 percent year -on-year, marking its nineteenth consecutive quarter of double‑digit year-on-year revenue growth. Operating margin reached 22 .5 percent, near historical high. Managed Services and Project & Solutions revenue mix increased to 59.9 percent of SSG, driven by accelerating growth from TruScale DaaS and IaaS, as well as notable customer wins. Research and development expenses were maintained at 3 percent of group revenue, fueling the continuous investment in enhancing AI capabilities across all portfolios. At Tech World @CES 2026, the group successfully unveiled its latest new product launch and won a record high of 212 awards, showcasing the industry’s broadest product portfolio at scale and lead with innovat ion for the global AI ecosystem. One of the key launches was Qira—a unified, cross-platform personal AI super-agent that brings the “One Personal AI, Multiple Devices” vision to life. Qira is a unified entry point for LLMs to engage directly with end users and serves as the intelligence layer across the Lenovo ecosystem — a user’s personal assistant and AI twin across devices, capable of executing tasks using both on -device and cloud AI and continuously learning from user context while maintaining privacy by design. In Enterprise AI, the group’s long-standing leadership in high-performance computing spanning infrastructure, data, as well as integrated services and solutions —positions the Group for sustained long -term growth throughout the AI industry value chain. 1 AI related revenue definition: AI Devices: PCs and Smartphones equipped with neural processing unit (NPU); AI Server: Mainstream + GPU / 4-way GPU Servers / 8-Way GPU Servers; AI service: Services that enable customer to build, scale & manage AI.
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3 Operating cash flow in the third fiscal quarter reached US$952 million, driven by strong revenue growth and disciplined working capital management. Free cash flow increased to US$451 million, providing solid support for growth initiatives and capex investment across all business groups. Adjusted net finance costs declined year- on-year, reflecting effective liquidity and working capital management as well as lower market interest rates. Performance by Business Group Intelligent Devices Group The Intelligent Devices Group (IDG), which includes PCs, tablets, smartphones, and other smart devices, delivered strong results in Q3 FY25/26. Revenue increased by 14 percent year-on-year, while operating profits rose by 15 percent year-on-year, reflecting solid execution and sustained demand across categories. IDG strengthened its global leadership across consumer and commercial segments, through innovations, differentiated offerings and disciplined strategic executions. The PC business achieved a market share of 25.3 percent globally, representing a 1.0 percentage point share increase year-on-year. Lenovo is the only PC vendor in the past three decades to surpass one -quarter global market share for two consecutive quarters. This achievement was driven by high double -digit year-on-year revenue growth in AI PCs, a balanced portfolio across commercial and consumer, as well as a strong global presence that captured the Window EOS upgrade and PC replacement cycle tailwind. Profitability in PCs, tablets and other smart devices remained resilient, supported by higher average selling prices and margin uplift from its premium PCs, AI PCs, gaming PCs and Non -PC adjacencies. Non -PC adjacencies2 delivered high double-digit revenue growth with a clear margin uplift, further improving overall mix and earnings quality. The Group’s smartphone business delivered record volume and activation with its Moto brand, achieving above market growth in key regions, supported by positive premium devices launch including Motorola Razr fold, and Motorola signature. Record activation was led by particularly strong Motorola edge performance. Monetization revenue grew by 53 percent year -on-year, driven by application revenue -sharing partnerships and higher AI adoption, while continuously driving investments to expand our mobile business globally. In addition to the debut of Qira at CES 2026, other new products launch included enhanced Lenovo Aura Edition experiences with smarter, and targeted AI-power innovations. In smartphone, the introduction of two premium smartphones—Motorola razr fold, the Group’s first book -style foldable phone, and Motorola signature, establishing a new ultra -premium franchise —was met with positive market feedback, highlighting strong demand for differentiated design, innovation, and user experience. Infrastructure Solutions Group The Infrastructure Solutions Group (ISG) delivered record revenue and accelerated AI growth in Q3 FY25/26. ISG delivered record quarterly revenue of US$5.2 billion, up 31 percent year -on-year. Growth was driven by record CSP revenue from an expanding custo mer base, ongoing Enterprise and SMB transformation. ISG reported an operating loss of US$11 million, representing a sequential improvement of US$21 million. Operating performance is expected to continue to improve and achieve breakeven by the end of FY25/26. In the third quarter, ISG deployed a restructuring program, incurring a one-time charge of US$285 million. This initiative is a critical step to realign the cost structure by streamlining the product portfolio, upskilling the workforce, and driving sustained productivity improvements. With this program, ISG is expected to accelerate the return to profitability in the next fiscal year and deliver annualized net savings of more than US$200 million through FY28/29. ISG remains well-positioned to capture long-term growth opportunities, particularly as AI demand shifts from training to inferencing. The AI infrastructure market opportunity is expected to triple by 2028, driven by continued hyperscale training buildouts and accelerating inference adoption across both CSP and Enterprise and SMB segments— supported by sustained investment in AI-ready infrastructure and IT modernization. In the third fiscal quarter, the AI server business achieved high double -digit year-on-year revenue growth, supported by a robust pipeline, and the deployment of the rack -scale solution based on the NVIDIA GB300 NVL72 design. Neptune liquid -cooling revenue grew 300 percent year -on-year, reflecting strong customer adoption and reinforcing ISG’s leadership in energy-efficient, next-generation infrastructure. 2 Non-PC adjacencies include services, visuals, accessories, PCSD software and tablets.
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4 At Tech World 2026 @CES, Lenovo expanded ISG’s portfolio of AI-optimized inferencing systems designed to turn trained models into real-time business outcomes, strengthening its competitive position in high-growth enterprise AI infrastructure. The launch of a gigawatt-scale AI factory program, built on a fully liquid-cooled, next-generation architecture, is accelerating hybrid AI adoption at scale. In parallel, Lenovo’s Neptune liquid-cooling deployment with Formula 1 reinforced ISG’s long -term value creatio n as customers scale increasingly complex AI and data workloads. Solutions & Services Group The Solutions & Services Group (SSG) delivered another strong quarter, with revenue growing 18 percent year-on-year in Q3 FY25/26, marking SSG’s nineteenth consecutive period of double -digit year-on-year revenue growth. Operating margin expanded to 22.5 percent, near a historical high, driving operating profit growth by 30 percent year -on-year. Managed Services and Project & Solutions revenue mix reached 59.9 percent. A key growth factor driving SSG’s strong momentum is the expanding revenue mix of Managed Services and Project & Solutions. Through these business segments, SSG is strategically positioned in the fastest growing areas in IT services industry, capturing a total addressable market of US$360 billion3. In areas such as Digital Workplace Services, Hybrid Cloud, AI and Sustainability, SSG is growing twice faster than the market growth rate. Support Services delivered solid double -digit revenue growth, driven by the adoption of premium -attached services and a resilient penetration rate. TruScale momentum accelerated across both DaaS and IaaS. SSG has secured its largest TruScale IaaS deal globally with Sharon AI, an Australia-based AI infrastructure provider. In DaaS, large -deal momentum continued, represented by Shiseido’s deployment of thousands of Lenovo ThinkPad devices across eight Asia-Pacific markets, enhancing frontline productivity while offsetting two tons of CO₂. Project & Solution Services saw improved delivery and strong traction in AI-optimized portfolios and strategic partnerships. Lenovo and FIFA launched Football AI Pro, an AI -powered enterprise knowledge assistant built on Lenovo AI Factory, delivering real-time analytics at the FIFA World Cup 2026™. Leveraging the Lenovo Hybrid AI Advantage™, SSG provides the architecture and governance for enterprise- grade deployment, while its xIQ AI native delivery platforms streamline telemetry, workflow coordination, and optimization across hybrid cloud and Digital Workplace environments. This approach a ccelerates customers’ time to value and offers a secure, practical pathway to scaling enterprise AI adoption. Geographic Performance Lenovo operates across 180 markets, leveraging its diversified presence to deliver balanced growth globally. In the Q3 FY25/26, Asia Pacific, China, EMEA, and the Americas each contributed between 1 7 percent and 34 percent of consolidated revenue. Asia Pacific (excluding China) delivered 8 percent year -on-year revenue growth, driven by broad -based momentum across all business groups. IDG strengthened market leadership on solid commercial demand, while smartphones expanded in Vietnam and Indonesia and a higher premium mix. ISG gained enterprise momentum on rising Neo -cloud deployments and storage penetration, and SSG scaled AI -driven solutions with notable TruScale wins across the geo. China delivered resilient growth in Q3 FY25/26, with revenue up 15 percent year-on-year despite supply-chain pressures, supported AIPC penetration reaching near 20 percent. ISG benefited from strong Enterprise and SMB execution and solid CSP momentum under pinned by multi-year cloud demand visibility. SSG accelerated its solutions and as-a-service momentum, driven by expanding adoption of AI-driven offerings through the Lenovo Hybrid AI Advantage and TruScale demand. In the Americas, revenue rose 25 percent year -on-year in Q3 FY25/26, driven by strong performance across IDG, ISG, and SSG. IDG extended market share gains on a commercial rebound, solid consumer demand, and continued e-commerce growth. ISG benefited from sustained demand for AI servers, HPC, and storage, while SSG advanced momentum through TruScale DaaS and IaaS. 3 Source: IDC, Gartner, and Canalys
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5 EMEA revenue increased by 20 percent year-on-year in Q3 FY25/26, supported by accelerated momentum. The region sustained its #1 PC market position for the 15th consecutive quarter, while MBG delivered robust performance with double -digit shipment growth ac ross key markets including Poland, the UK, Spain, and Portugal. SSG strengthened regional profitability through advanced support services and solid growth in DaaS and IaaS offerings. Outlook and Strategic Highlights Following a strong third-quarter performance and building on the strategic momentum from Tech World @CES, the Group is committed to execute with focused and disciplined strategy. Under the Hybrid AI framework, the Group is well positioned to drive sustained, profitable growth for our stakeholders with even greater resilience and execution strength. By leveraging its deep expertise and operational agility, the Group strives to navigate market volatility while delivering a consistent performance and shareholder returns.
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6 FINANCIAL REVIEW Results for the nine months ended December 31, 2025 9 months ended December 31, 2025 (unaudited) 9 months ended December 31, 2024 (unaudited) Year-on-year change US$ million US$ million Revenue 61,486 52,093 18% Gross profit 9,270 8,315 11% Gross profit margin 15.1% 16.0% (0.9) pts Operating expenses (6,894) (6,482) 6% Operating profit 2,376 1,833 30% Other non-operating income/(expenses) – net (441) (530) (17)% Profit before taxation 1,935 1,303 48% Profit for the period 1,566 1,338 17% Profit attributable to equity holders of the Company 1,391 1,295 7% Earnings per share attributable to equity holders of the Company Basic US11.33 cents US10.56 cents US0.77 cents Diluted US10.10 cents US10.06 cents US0.04 cents For the nine months ended December 31, 2025, the Group achieved total sales of approximately US$ 61,486 million. When compared to the corresponding period of last year, gross profit margin eroded by 0.9 percentage points to 15.1 percent mainly due to the change in product mix and the lower profitability in ISG business; profit attributable to equity holders for the period increased by US$96 million to approximately US$1,391 million. Basic and diluted earnings per share were US11.33 cents and US10.10 cents, representing an increase of US0.77 cents and US0.04 cents respectively. Net profit margin attributable to equity holders of the Company eroded by 0.2 percentage points to 2.3 percent. Further analyses of sales by segment are set out in Business Review and Outlook. Analysis of operating expenses by function for the nine months ended December 31, 2025 and 2024 is as follows: 9 months ended December 31, 2025 9 months ended December 31, 2024 US$’000 US$’000 Selling and distribution expenses (2,977,823) (2,657,049) Administrative expenses (2,207,575) (2,108,387) Research and development expenses (1,742,513) (1,644,312) Other operating income/(expenses) – net 33,975 (72,470) (6,893,936) (6,482,218)
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7 Operating expenses for the period increased by 6 percent as compared with the corresponding period of last year. In the third quarter, ISG executed restructuring actions to accelerate portfolio optimization, workforce upskilling, and productivity and efficiency enhancements, resulting in restructuring charges of US$285 million (2024/25: nil). These charges primarily comprised the impairment of intangible assets and construction -in- progress, and severance costs. Employee benefit costs increased by US$ 467 million due to increase in headcount, severance costs, long-term incentive awards , performance-based bonus and sales commission s. Advertising and promotional expenses increased by US$ 125 million for new product launch and special campaigns. The Group recorded fair value gain on derivative financial liabilities relating to warrants of US$191 million (2024/25: nil). Fair value gain from strategic investments amounted to US$ 246 million (2024/25: US$41 million), reflecting the change in value of the Group’s portfolio. Currency fluctuations presented a challenge to the Group, resulting in a net exchange loss of US$ 45 million ( 2024/25: US$18 million). Key expenses by nature comprise: 9 months ended December 31, 2025 9 months ended December 31, 2024 US$’000 US$’000 Depreciation of property, plant and equipment (153,628) (150,166) Depreciation of right-of-use assets (73,148) (72,323) Amortization of intangible assets, excluding internal use software (72,314) (122,621) Impairment and write-off of intangible assets (233,372) (90,734) Impairment and write-off of construction-in-progress (3,258) - Write-off of property, plant and equipment (23) - Employee benefit costs, including (3,994,444) (3,527,291) - long-term incentive awards (251,566) (211,614) - severance and related costs (78,340) - Rental expenses (12,896) (9,912) Net foreign exchange loss (44,912) (17,955) Advertising and promotional expenses (916,253) (791,592) Legal, professional and consulting expenses (314,981) (323,485) Information technology expenses, including (263,153) (283,531) - amortization of internal use software (164,561) (183,156) Increase in loss allowance of trade receivables (61,612) (74,856) Unused amounts of loss allowance of trade receivables reversed 26,988 21,915 Increase in loss allowance of lease receivables (11,612) (3,292) Research and development related laboratory testing, services and supplies (344,727) (269,669) (Loss)/gain on disposal of property, plant and equipment (1,860) 38 Loss on disposal of intangible assets (812) (301) Loss on disposal of construction-in-progress (385) (122) Fair value gain on financial assets at fair value through profit or loss 245,623 40,761 Fair value gain on derivative financial liabilities relating to warrants 190,802 - Dilution gain on interest in an associate 432 - Gain on disposal of interest in associates 826 - Gain on deemed disposal of a subsidiary - 22,627 Others (855,217) (829,709) (6,893,936) (6,482,218) Other non -operating income/(expenses) – net for the nine months ended December 31 , 2025 and 2024 comprise: 9 months ended December 31, 2025 9 months ended December 31, 2024 US$’000 US$’000 Finance income 83,783 82,443 Finance costs (515,776) (592,121) Share of losses of associates and joint ventures (9,621) (19,922) (441,614) (529,600)
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8 Finance income mainly represents interest on bank deposits. Finance costs for the period decreased by 13 percent as compared with the corresponding period of last year. The decrease is mainly attributable to the decrease in interest on bank loans and overdrafts of US$17 million, interest on notes of US$39 million and factoring costs of US$104 million, partly offset by increase in interest on convertible bonds of US$75 million. Share of losses of associates and joint ventures primarily represents operating losses arising from principal business activities of respective associates and joint ventures. The Group adopts segments by business group as the reporting format. Segments by business group comprise Intelligent Devices Group (“IDG”), Infrastructure Solutions Group (“ISG”) and Solutions and Services Group (“SSG”). Revenue and operating profit/(loss) for reportable segments are as follows: 9 months ended December 31, 2025 9 months ended December 31, 2024 Revenue Operating profit/(loss) Revenue Operating profit/(loss) US$’000 US$’000 US$’000 US$’000 IDG 44,321,686 3,204,549 38,719,957 2,818,218 ISG 13,553,079 (128,408) 10,403,645 (72,000) SSG 7,465,738 1,668,006 6,306,755 1,297,741 Total 65,340,503 4,744,147 55,430,357 4,043,959 Eliminations (3,854,278) (1,318,038) (3,336,927) (1,049,675) 61,486,225 3,426,109 52,093,430 2,994,284 Unallocated: Headquarters and corporate income/(expenses) – net (1,413,618) (1,205,161) Depreciation and amortization (279,789) (342,665) Impairment and write-off of intangible assets (216,272) (90,734) Impairment of construction-in-progress (3,137) - Finance income 74,958 65,379 Finance costs (76,425) (162,930) Share of losses of associates and joint ventures (12,505) (18,253) Loss on disposal of property, plant and equipment (545) (3,782) Fair value gain on financial assets at fair value through profit or loss 241,336 39,610 Fair value gain on derivative financial liabilities relating to warrants 190,802 - Gain on deemed disposal of a subsidiary - 22,627 Dilution gain on interest in an associate 432 - Gain on disposal of interest in an associate 99 - Dividend income 3,129 4,797 Consolidated profit before taxation 1,934,574 1,303,172 Headquarters and corporate income/(expenses) – net for the period comprise various expenses, after appropriate allocation s to business groups, of US$ 1,414 million ( 2024/25: US$ 1,205 million) such as employee benefit costs, legal, professional and consulting expenses, and research and technology expenses. The increase primarily arises from higher employee benefit costs , driven by performance-based bonus and severance costs associated with the restructuring. The increase also reflects higher advertising and promotional expenses, as well as a larger net foreign exchange loss compared to the corresponding period of last year.
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9 Third Quarter 2025/26 compared to Third Quarter 2024/25 3 months ended December 31, 2025 (unaudited) 3 months ended December 31, 2024 (unaudited) Year-on-year change US$ million US$ million Revenue 22,204 18,796 18% Gross profit 3,349 2,959 13% Gross profit margin 15.1% 15.7% (0.6) pts Operating expenses (2,401) (2,271) 6% Operating profit 948 688 38% Other non-operating income/(expenses) – net (130) (171) (24)% Profit before taxation 818 517 58% Profit for the period 648 701 (8)% Profit attributable to equity holders of the Company 546 693 (21)% Earnings per share attributable to equity holders of the Company Basic US4.44 cents US5.66 cents US(1.22) cents Diluted US3.90 cents US5.35 cents US(1.45) cents For the three months ended December 31, 2025, the Group achieved total sales of approximately US$22,204 million. When compared to the corresponding period of last year, gross profit margin eroded by 0.6 percentage points to 15.1 percent mainly due to the change in product mix and the lower profitability in ISG business; profit attributable to equity holders for the period decreased by US$147 million to approximately US$546 million. Basic and diluted earnings per share were US 4.44 cents and US 3.90 cents, representing a decrease of US1.22 cents and US1.45 cents respectively. Net profit margin attributable to equity holders of the Company eroded by 1.2 percentage points to 2.5 percent. Analysis of operating expenses by function for the three months ended December 31, 2025 and 2024 is as follows: 3 months ended December 31, 2025 3 months ended December 31, 2024 US$’000 US$’000 Selling and distribution expenses (1,059,293) (953,731) Administrative expenses (729,019) (710,930) Research and development expenses (637,727) (620,789) Other operating income/(expenses) – net 25,481 13,763 (2,400,558) (2,271,687)
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10 Operating expenses for the period increased by 6 percent as compared with the corresponding period of last year. During the period, ISG executed restructuring actions to accelerate portfolio optimization, workforce upskilling, and productivity and efficiency enhancements, resulting in restructuring charges of US$285 million (2024/25: nil). These charges primarily comprised the impairment of intangible assets and construction -in- progress, and severance costs . Employee benefit costs increased by US$ 138 million due to increase in headcount, severance costs, long-term incentive awards and sales commissions. The Group recorded fair value gain on derivative financial liabilities relating to warrants of US$ 186 million (2024/25: nil). Fair value gain from strategic investments amounted to US$ 160 million (2024/25: US$32 million), reflecting the change in value of the Group’s portfolio. Currency fluctuations presented a challenge to the Group, resulting in a net exchange loss of US$15 million (2024/25: US$9 million). Key expenses by nature comprise: 3 months ended December 31, 2025 3 months ended December 31, 2024 US$’000 US$’000 Depreciation of property, plant and equipment (51,863) (49,696) Depreciation of right-of-use assets (25,361) (24,407) Amortization of intangible assets, excluding internal use software (25,344) (36,494) Impairment and write-off of intangible assets (216,272) (23,682) Impairment of construction-in-progress (3,137) - Employee benefit costs, including (1,366,190) (1,227,865) - long-term incentive awards (89,324) (72,872) - severance and related costs (54,783) - Rental expenses (3,097) (3,679) Net foreign exchange loss (14,930) (8,625) Advertising and promotional expenses (311,724) (314,377) Legal, professional and consulting expenses (121,394) (120,766) Information technology expenses, including (86,894) (84,590) - amortization of internal use software (53,498) (63,015) Increase in loss allowance of trade receivables (22,734) (25,837) Unused amounts of loss allowance of trade receivables reversed 11,698 10,988 Increase in loss allowance of lease receivables (3,429) (493) Research and development related laboratory testing, services and supplies (155,639) (112,118) Gain/(loss) on disposal of property, plant and equipment 1,017 (1,103) Loss on disposal of intangible assets (681) - Loss on disposal of construction-in-progress - (122) Fair value gain on financial assets at fair value through profit or loss 159,842 31,608 Fair value gain on derivative financial liabilities relating to warrants 186,201 - Others (350,627) (280,429) (2,400,558) (2,271,687) Other non -operating income/(expenses) – net for the three months ended December 31 , 2025 and 2024 comprise: 3 months ended December 31, 2025 3 months ended December 31, 2024 US$’000 US$’000 Finance income 28,962 27,293 Finance costs (158,628) (192,614) Share of losses of associates and joint ventures (607) (5,392) (130,273) (170,713) Finance income mainly represents interest on bank deposits. Finance costs for the period decreased by 18 percent as compared with the corresponding period of last year. The decrease is mainly attributable to the decrease in interest on bank loans and overdrafts of US$ 9 million, interest on notes of US$14 million and factoring costs of US$41 million, partly offset by increase in interest on convertible bonds of US$25 million.
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11 Share of losses of associates and joint ventures primarily represents operating losses arising from principal business activities of respective associates and joint ventures. The Group adopts segments by business group as the reporting format. Segments by business group comprise IDG, ISG and SSG. Revenue and operating profit/(loss) for reportable segments are as follows: 3 months ended December 31, 2025 3 months ended December 31, 2024 Revenue Operating profit/(loss) Revenue Operating profit US$’000 US$’000 US$’000 US$’000 IDG 15,755,128 1,153,333 13,784,257 999,855 ISG 5,175,787 (10,853) 3,938,478 1,002 SSG 2,652,196 596,189 2,256,863 459,422 Total 23,583,111 1,738,669 19,979,598 1,460,279 Eliminations (1,378,777) (473,058) (1,183,318) (372,669) 22,204,334 1,265,611 18,796,280 1,087,610 Unallocated: Headquarters and corporate income/(expenses) – net (493,925) (465,748) Depreciation and amortization (93,387) (108,984) Impairment and write-off of intangible assets (216,272) (23,682) Impairment of construction-in-progress (3,137) - Finance income 27,534 19,841 Finance costs (10,855) (19,873) Share of losses of associates and joint ventures (4,239) (3,997) Gain/(loss) on disposal of property, plant and equipment 551 (3,396) Fair value gain on financial assets at fair value through profit or loss 159,199 31,930 Fair value gain on derivative financial liabilities relating to warrants 186,201 - Dividend income 904 3,290 Consolidated profit before taxation 818,185 516,991 Headquarters and corporate income/(expenses) – net for the period comprise various expenses, after appropriate allocations to business groups, of US$494 million (2024/25: US$466 million) such as employee benefit costs, legal, professional and consulting expenses, and research and technology expenses. The increase primarily arises from higher employee benefit costs , driven by severance costs associate d with the restructuring. Use of non-HKFRS measure To supplement Lenovo’s consolidated financial statements prepared and presented in accordance with HKFRS Accounting Standards (“HKFRS”), we utilize non-HKFRS adjusted profit as an additional financial measure. We define adjusted profit as profit for the period by excluding (i) net fair value changes on financial assets at fair value through profit or loss, (ii) amortization of intangible assets resulting from mergers and acquisitions, (iii) gain on deemed disposal of a subsidiary, (iv) impairment and write-off of intangible assets, property, plant and equipment and construction-in-progress, (v) fair value change on derivative financial liabilities relating to warrants, ( vi) notional interest o n convertible bonds , (vii) dilution gain on interest in an associate , (viii) restructuring charges, and (ix) one-time income tax credit; and the corresponding income tax effects, if any.
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12 More specifically, management excludes each of those items mentioned above for the following reasons: (i) Lenovo recognizes fair value gains or losses from its strategic investments. The change in fair value included revaluation gains or losses on new investment rounds on unlisted holdings and mark -to-market gains or losses on listed holdings. Lenovo excludes this item for the purposes of calculating the non - HKFRS measure to facilitate a more meaningful evaluation of Lenovo ’s current operating performance and comparisons to operating performance in other periods. (ii) Lenovo incurs charges related to the amortization of intangible assets resulting from mergers and acquisitions. Those charges are included in Lenovo’s net profit prepared under HKFRS. Such charges are significantly impacted by the timing and magnitude of Lenovo’s acquisitions and any related impairment charges. Consequently, Lenovo excludes these charges for the purposes of calculating the non -HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods. (iii) Lenovo recognizes gain on deemed disposal of a subsidiary. Such gains or losses are inconsistent in amount and frequency and are significantly impacted by the timing and nature of the transactions. Lenovo excludes this item for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods. (iv) Lenovo records impairment and write -off of intangible assets , property, plant and equipment and construction-in-progress, which are inconsistent in amount and frequency. Lenovo excludes these charges for the purposes of calculating the non -HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods. (v) Lenovo recognizes fair value change on derivative financial liabilities relating to warrants. Lenovo excludes this item for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods. (vi) Lenovo incurs notional interest on convertible bonds, which is non-cash in nature. Lenovo excludes these charges for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods. (vii) Lenovo recognizes dilution gain on interest in an associate. Such gains or losses are inconsistent in amount and frequency and are significantly impacted by the timing and nature of the transactions. Lenovo excludes this item for the purposes of calculating the non-HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods. (viii) Lenovo incurs restructuring charges that are primarily costs associated with restructuring plans which are related to employee separation from service and non -recurring costs for assets impairment. Lenovo excludes these charges for the purposes of calculating the non -HKFRS measure to facilitate a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods. (ix) Lenovo recognizes one -time income tax credit, which is non -recurring in nature. Some organizational changes have been made to support the Group’s future business planning and the growth of its global business, which resulted in one -time income tax credit. Lenovo excludes this item for the purposes of calculating the non -HKFRS measure t o facilitate a more meaningful evaluation of Lenovo’s current operating performance and comparisons to operating performance in other periods. This non -HKFRS financial measure is not computed in accordance with, or as an alternative to, HKFRS. Management uses this non-HKFRS financial measure for the purposes of evaluating Lenovo’s historical and prospective financial performance. Management belie ves that excluding the items mentioned above for this non-HKFRS financial measure allows management to better understand Lenovo’s consolidated financial performance in relation to its operating results, as management does not believe that the excluded item s are reflective of ongoing operating results.
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13 However, the use of this particular non -HKFRS measure has limitations as an analytical tool, and should not be considered in isolation from, or as a substitute for analysis of, the results of operations or financial conditions as reported under HKFRS. In addition, this non -HKFRS financial measure may be defined differently from similar terms used by other companies and therefore may not be comparable to similar measures used by other companies. Reconciliations of the non -HKFRS financial measure to the most directly comparable HKFRS financial measure are included in the tables below. Nine months ended December 31, 2025 Operating profit (unaudited) Profit before taxation (unaudited) Profit for the period (unaudited) Profit attributable to equity holders (unaudited) US$’000 US$’000 US$’000 US$’000 As reported 2,376,188 1,934,574 1,565,812 1,391,145 Non-HKFRS adjustments Net fair value changes on financial assets at fair value through profit or loss (245,623) (245,623) (206,359) (92,676) Amortization of intangible assets resulting from mergers and acquisitions 49,020 52,569 41,057 41,057 Write-off of intangible assets, property, plant and equipment and construction-in- progress 17,244 17,244 17,244 17,244 Fair value gain on derivative financial liabilities relating to warrants (190,802) (190,802) (190,802) (190,802) Notional interest on convertible bonds - 85,122 85,122 85,122 Dilution gain on interest in an associate (432) (432) (432) (432) Restructuring charges 284,823 284,823 284,823 284,823 One-time income tax credit - - (45,482) (45,482) Adjusted 2,290,418 1,937,475 1,550,983 1,489,999 Nine months ended December 31, 2024 Operating profit (unaudited) Profit before taxation (unaudited) Profit for the period (unaudited) Profit attributable to equity holders (unaudited) US$’000 US$’000 US$’000 US$’000 As reported 1,832,772 1,303,172 1,337,534 1,294,567 Non-HKFRS adjustments Net fair value changes on financial assets at fair value through profit or loss (40,761) (40,761) (28,623) (29,725) Amortization of intangible assets resulting from mergers and acquisitions 112,766 116,315 94,203 94,203 Gain on deemed disposal of a subsidiary (22,627) (22,627) (19,233) (19,233) Impairment and write-off of intangible assets 90,734 90,734 90,734 90,734 Notional interest on convertible bonds - 14,337 14,337 14,337 One-time income tax credit - - (282,000) (282,000) Adjusted 1,972,884 1,461,170 1,206,952 1,162,883
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14 Three months ended December 31, 2025 Operating profit (unaudited) Profit before taxation (unaudited) Profit for the period (unaudited) Profit attributable to equity holders (unaudited) US$’000 US$’000 US$’000 US$’000 As reported 948,458 818,185 647,970 545,536 Non-HKFRS adjustments Net fair value changes on financial assets at fair value through profit or loss (159,842) (159,842) (138,342) (52,183) Amortization of intangible assets resulting from mergers and acquisitions 16,195 17,378 13,586 13,586 Fair value gain on derivative financial liabilities relating to warrants (186,201) (186,201) (186,201) (186,201) Notional interest on convertible bonds - 28,831 28,831 28,831 Restructuring charges 284,823 284,823 284,823 284,823 One-time income tax credit - - (45,482) (45,482) Adjusted 903,433 803,174 605,185 588,910 Three months ended December 31, 2024 Operating profit (unaudited) Profit before taxation (unaudited) Profit for the period (unaudited) Profit attributable to equity holders (unaudited) US$’000 US$’000 US$’000 US$’000 As reported 687,704 516,991 700,763 692,670 Non-HKFRS adjustments Net fair value changes on financial assets at fair value through profit or loss (31,608) (31,608) (23,362) (30,741) Amortization of intangible assets resulting from mergers and acquisitions 28,698 29,881 26,053 26,053 Impairment of intangible assets 23,682 23,682 23,682 23,682 Notional interest on convertible bonds - 4,837 4,837 4,837 One-time income tax credit - - (282,000) (282,000) Adjusted 708,476 543,783 449,973 434,501 Capital Expenditure The Group incurred capital expenditure of US$ 1,366 million ( 2024/25: US$ 899 million) during the nine months ended December 31, 2025, mainly for the acquisition of property, plant and equipment, additions to construction-in-progress and intangible assets. The higher capital expenditure incurred in current period is mainly attributable to more investments in patent and technology, assets under construction, equipment held for lease and plant and machinery. Liquidity and Financial Resources At December 31, 2025, total assets of the Group amounted to US$52,632 million (March 31, 2025: US$44,231 million), which were financed by equity attributable to owners of the Company of US$ 7,072 million (March 31, 2025: US$6,069 million), other non -controlling interests (net of put option written on non -controlling interests) of US$ 774 million (March 31, 2025: US$591 million), and total liabilities of US$ 44,786 million (March 31, 2025: US$37,571 million). At December 31, 2025, the current ratio of the Group was 0.96 (March 31, 2025: 0.93).
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15 At December 31, 2025, bank deposits and cash and cash equivalents totaling US$5,335 million (March 31, 2025: US$4,817 million) analyzed by major currency are as follows: December 31, 2025 March 31, 2025 % % US dollar 47.5 43.6 Renminbi 20.5 21.2 Japanese Yen 9.3 8.4 Euro 1.6 5.7 Australian dollar 0.2 1.2 Other currencies 20.9 19.9 Total 100.0 100.0 The Group adopts a conservative policy to invest the surplus cash generated from operations. At December 31, 2025, 66 percent (March 31, 2025: 68 percent) of cash are bank deposits, and 34 percent (March 31, 2025: 32 percent) are investments in liquid money market funds of investment grade. The Group has consistently maintained a very liquid position, along with abundant banking facilities standing by for future business development. The Group has also entered into factoring arrangements in the ordinary course of business to improve its balance sheet efficiency. The Group has the following banking facilities: Utilized amount at Type Date of agreement Principal amount Term December 31, 2025 March 31, 2025 US$ million US$ million US$ million Revolving loan facility July 4, 2022 2,000 5 years - - Revolving loan facility March 11, 2025 500 1 year 150 - Revolving loan facility March 12, 2025 350 1 year - - The Group has also arranged other short-term credit facilities as follows: Total available amount at Utilized amount at Credit facilities December 31, 2025 March 31, 2025 December 31, 2025 March 31, 2025 US$ million US$ million US$ million US$ million Trade lines 6,710 6,200 4,529 4,370 Short-term money market facilities 3,628 3,194 43 62 Forward foreign exchange contracts 16,296 16,009 16,269 15,982 Apart from the above facilities, notes and convertible bonds issued by the Group and outstanding at December 31, 2025 are as follows. Further details of borrowings are set out in Note 12 to the Financial Information. Issue date Principal amount Term Interest rate/ dividend per annum Due date Use of proceeds 2030 Notes November 2, 2020 US$900 million 10 years 3.421% November 2030 For repurchase of perpetual securities and previous Notes 2028 Notes July 27, 2022 US$600 million 5.5 years 5.831% January 2028 For repayment of previous Notes and general corporate purposes 2032 Notes July 27, 2022 US$563 million 10 years 6.536% July 2032 For financing of eligible projects under the Green Finance Framework 2029 Convertible Bonds August 26, 2022 US$675 million 7 years 2.5% August 2029 For repayment of previous convertible bonds and general corporate purposes 2028 Convertible Bonds January 8, 2025 US$2,000 million 3 years 0% January 2028 For repayment of existing debts and general corporate purposes
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16 Net cash/(debt) position and gearing ratio of the Group at December 31, 2025 and March 31, 202 5 are as follows: December 31, 2025 US$ million March 31, 2025 US$ million Bank deposits and cash and cash equivalents 5,335 4,817 Borrowings - Short-term loans 196 65 - Notes 2,052 3,015 - Convertible bonds 2,377 2,288 Net cash/(debt) position 710 (551) Total equity 7,846 6,660 Gearing ratio (Borrowings divided by total equity) 0.59 0.81 The Group is confident that the facilities on hand can meet the funding requirements of the Group’s operations and business development. The Group is in full compliance with all the banking covenants. The Group adopts a consistent hedging policy for business transactions to reduce the risk of currency fluctuation arising from daily operations. At December 31, 2025, the Group had commitments in respect of outstanding forward foreign exchange contracts amounting to US$ 16,269 million ( March 31, 2025: US$15,982 million). The Group’s forward foreign exchange contracts are either used to hedge a percentage of future transactions which are highly probable, or used as fair value hedges for identified assets and liabilities. Contingent Liabilities The Group, in the ordinary course of its business, is involved in various claims, suits, investigations, and legal proceedings that arise from time to time. Although the Group does not expect that the outcome in any of these legal proceedings, individually or collectively, will have a material adverse effect on its financial position or results of operations, litigation is inherently unpredictable. Therefore, the Group could incur judgments or enter into settlements of claims that could adversely affect its operating results or cash flows in a particular period.
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17 FINANCIAL INFORMATION CONSOLIDATED INCOME STATEMENT 3 months ended December 31, 2025 (unaudited) 9 months ended December 31, 2025 (unaudited) 3 months ended December 31, 2024 (unaudited) 9 months ended December 31, 2024 (unaudited) Note US$’000 US$’000 US$’000 US$’000 Revenue 2 22,204,334 61,486,225 18,796,280 52,093,430 Cost of sales (18,855,318) (52,216,101) (15,836,889) (43,778,440) Gross profit 3,349,016 9,270,124 2,959,391 8,314,990 Selling and distribution expenses (1,059,293) (2,977,823) (953,731) (2,657,049) Administrative expenses (729,019) (2,207,575) (710,930) (2,108,387) Research and development expenses (637,727) (1,742,513) (620,789) (1,644,312) Other operating income/(expenses) - net 25,481 33,975 13,763 (72,470) Operating profit 3 948,458 2,376,188 687,704 1,832,772 Finance income 4(a) 28,962 83,783 27,293 82,443 Finance costs 4(b) (158,628) (515,776) (192,614) (592,121) Share of losses of associates and joint ventures (607) (9,621) (5,392) (19,922) Profit before taxation 818,185 1,934,574 516,991 1,303,172 Taxation 5 (170,215) (368,762) 183,772 34,362 Profit for the period 647,970 1,565,812 700,763 1,337,534 Profit attributable to: Equity holders of the Company 545,536 1,391,145 692,670 1,294,567 Other non-controlling interests 102,434 174,667 8,093 42,967 647,970 1,565,812 700,763 1,337,534 Earnings per share attributable to equity holders of the Company Basic 6(a) US4.44 cents US11.33 cents US5.66 cents US10.56 cents Diluted 6(b) US3.90 cents US10.10 cents US5.35 cents US10.06 cents
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18 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 3 months ended December 31, 2025 (unaudited) 9 months ended December 31, 2025 (unaudited) 3 months ended December 31, 2024 (unaudited) 9 months ended December 31, 2024 (unaudited) US$’000 US$’000 US$’000 US$’000 Profit for the period 647,970 1,565,812 700,763 1,337,534 Other comprehensive (loss)/income: Items that will not be reclassified to profit or loss Remeasurements of post-employment benefit obligations, net of taxes (3,375) (2,192) (1,110) (1,063) Fair value change on financial assets at fair value through other comprehensive income, net of taxes 1,027 6,233 (4,450) (9,792) Items that have been reclassified or may be subsequently reclassified to profit or loss Fair value change on cash flow hedges from foreign exchange forward contracts, net of taxes - Fair value gain/(loss), net of taxes 39,772 (224,898) 342,109 217,989 - Reclassified to consolidated income statement (47,023) 281,762 (123,285) (128,413) Currency translation differences 23,101 348,570 (686,762) (685,850) Other comprehensive income/(loss) for the period 13,502 409,475 (473,498) (607,129) Total comprehensive income for the period 661,472 1,975,287 227,265 730,405 Total comprehensive income attributable to: Equity holders of the Company 580,071 1,819,353 250,759 698,198 Other non-controlling interests 81,401 155,934 (23,494) 32,207 661,472 1,975,287 227,265 730,405
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19 CONSOLIDATED BALANCE SHEET December 31, 2025 March 31, 2025 (unaudited) (audited) Note US$’000 US$’000 Non-current assets Property, plant and equipment 2,211,820 2,026,280 Right-of-use assets 658,089 592,340 Construction-in-progress 450,323 282,309 Intangible assets 7,921,672 8,232,977 Interests in associates and joint ventures 319,027 315,704 Deferred income tax assets 3,408,620 3,055,905 Financial assets at fair value through profit or loss 1,838,542 1,464,384 Financial assets at fair value through other comprehensive income 53,296 45,382 Other non-current assets 333,150 311,448 17,194,539 16,326,729 Current assets Inventories 7 9,076,551 7,923,804 Trade, lease and notes receivables 8(a) 14,070,144 10,506,610 Derivative financial assets 49,637 53,690 Deposits, prepayments and other receivables 9 6,439,876 4,223,658 Income tax recoverable 465,958 379,590 Bank deposits 114,268 88,607 Cash and cash equivalents 5,221,410 4,728,124 35,437,844 27,904,083 Total assets 52,632,383 44,230,812
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20 CONSOLIDATED BALANCE SHEET (CONTINUED) December 31, 2025 March 31, 2025 (unaudited) (audited) Note US$’000 US$’000 Share capital 14 3,500,987 3,500,987 Reserves 3,570,579 2,568,000 Equity attributable to owners of the Company 7,071,566 6,068,987 Other non-controlling interests 1,321,864 1,138,283 Put option written on non-controlling interests 10(a) (547,353) (547,353) Total equity 7,846,077 6,659,917 Non-current liabilities Borrowings 12 4,429,549 4,337,806 Warranty provision 10(b) 162,721 159,400 Deferred revenue 1,901,304 1,628,942 Retirement benefit obligations 212,454 220,784 Deferred income tax liabilities 314,522 270,268 Derivative financial liabilities 13 100,768 241,778 Other non-current liabilities 11 774,568 717,784 7,895,886 7,576,762 Current liabilities Trade and notes payables 8(b) 16,726,976 11,978,933 Derivative financial liabilities 13 102,903 197,196 Other payables and accruals 10(a) 16,179,512 13,904,384 Provisions 10(b) 964,755 852,593 Deferred revenue 1,877,817 1,565,459 Income tax payable 842,758 465,216 Borrowings 12 195,699 1,030,352 36,890,420 29,994,133 Total liabilities 44,786,306 37,570,895 Total equity and liabilities 52,632,383 44,230,812
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21 CONSOLIDATED CASH FLOW STATEMENT 9 months ended December 31, 2025 (unaudited) 9 months ended December 31, 2024 (unaudited) Note US$’000 US$’000 Cash flows from operating activities Net cash generated from operations 15(a) 4,539,895 2,943,310 Interest paid (429,878) (567,508) Tax paid (396,143) (253,602) Net cash generated from operating activities 3,713,874 2,122,200 Cash flows from investing activities Purchase of property, plant and equipment (441,550) (258,302) Sale of property, plant and equipment 34,360 26,538 Acquisition of businesses, net of cash acquired - (1,537) Interests acquired in associates (4,247) (8,365) Deemed disposal of a subsidiary, net of cash disposed - (14,272) Loans to an associate and a joint venture (34,207) (18,647) Repayment of loan to an associate 12,087 19,283 Payment for construction-in-progress (426,501) (222,795) Payment for intangible assets (497,648) (418,148) Purchase of financial assets at fair value through profit or loss (185,615) (93,095) Purchase of financial assets at fair value through other comprehensive income - (14) Net proceeds from sale of financial assets at fair value through profit or loss 107,600 112,723 Net proceeds from disposal of interest in associates 4,144 - Increase in bank deposits (25,661) (70,989) Dividends received 3,682 5,250 Interest received 83,783 82,443 Net cash used in investing activities (1,369,773) (859,927) Cash flows from financing activities 15(b) Capital contribution from other non-controlling interests 72,845 78,016 Distribution to other non-controlling interests (3,506) (7,288) Purchase of shares by employee share trusts (404,342) (246,422) Principal elements of lease payments (81,376) (91,936) Dividends paid (612,512) (608,351) Dividends paid to other non-controlling interests (18,534) (29,517) Proceeds from warrants subscription - 115,584 Proceeds from loans 10,289,362 13,646,690 Repayments of loans (10,163,813) (13,630,163) Repayment of notes (965,000) - Net cash used in financing activities (1,886,876) (773,387) Increase in cash and cash equivalents 457,225 488,886 Effect of foreign exchange rate changes 36,061 (114,269) Cash and cash equivalents at the beginning of the period 4,728,124 3,559,831 Cash and cash equivalents at the end of the period 5,221,410 3,934,448
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22 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attributable to equity holders of the Company Share capital Investment revaluation reserve Employee share trusts Share -based compensation reserve Hedging reserve Exchange reserve Other reserves Retained earnings Other non - controlling interests Put option written on non - controlling interests Total (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 At April 1, 2025 3,500,987 (79,741) (141,352) (802,729) (59,997) (2,822,347) 502,588 5,971,578 1,138,283 (547,353) 6,659,917 Profit for the period – – – – – – – 1,391,145 174,667 – 1,565,812 Other comprehensive income/(loss) – 6,233 – – 56,864 367,303 – (2,192) (18,733) – 409,475 ``` Total comprehensive income for the period – 6,233 – – 56,864 367,303 – 1,388,953 155,934 – 1,975,287 Transfer to statutory reserve – – – – – – 21,813 (21,813) – – – Transfer of investment revaluation reserve upon disposal of financial assets at fair value through other comprehensive income to retained earnings – 10,988 – – – – – (10,988) – – – Vesting of shares under long-term incentive program – – 243,835 (308,575) – – – – – – (64,740) Deferred tax in relation to long-term incentive program – – – 183 – – – – – – 183 Settlement of bonus through long-term incentive program – – – 13,071 – – – – – – 13,071 Share-based compensation – – – 251,566 – – – – – – 251,566 Purchase of shares by employee share trusts – – (404,342) – – – – – – – (404,342) Dividends paid – – – – – – – (612,512) – – (612,512) Dividends paid to other non-controlling interests – – – – – – – – (18,534) – (18,534) Capital contribution from other non-controlling interests – – – – – – – – 49,687 – 49,687 Distribution to other non-controlling interests – – – – – – – – (3,506) – (3,506) At December 31, 2025 3,500,987 (62,520) (301,859) (846,484) (3,133) (2,455,044) 524,401 6,715,218 1,321,864 (547,353) 7,846,077 At April 1, 2024 3,500,987 (68,662) (207,487) (650,435) 42,143 (2,425,595) 184,534 5,207,108 1,045,947 (547,353) 6,081,187 Profit for the period – – – – – – – 1,294,567 42,967 – 1,337,534 Other comprehensive (loss)/income – (9,792) – – 89,576 (675,090) – (1,063) (10,760) – (607,129) Total comprehensive (loss)/income for the period – (9,792) – – 89,576 (675,090) – 1,293,504 32,207 – 730,405 Transfer to statutory reserve – – – – – – 16,895 (16,895) – – – Deemed disposal of a subsidiary – – – – – 15,219 (135) – (718) – 14,366 Vesting of shares under long-term incentive program – – 238,661 (331,801) – – – – – – (93,140) Deferred tax in relation to long-term incentive program – – – 9,824 – – – – – – 9,824 Settlement of bonus through long-term incentive program – – – 561 – – – – – – 561 Share-based compensation – – – 211,614 – – – – – – 211,614 Purchase of shares by employee share trusts – – (246,422) – – – – – – – (246,422) Dividends paid – – – – – – – (608,351) – – (608,351) Dividends paid to other non-controlling interests – – – – – – – – (29,517) – (29,517) Capital contribution from other non-controlling interests – – – – – – 6,125 – 71,606 – 77,731 Distribution to other non-controlling interests – – – – – – – – (7,288) – (7,288) At December 31, 2024 3,500,987 (78,454) (215,248) (760,237) 131,719 (3,085,466) 207,419 5,875,366 1,112,237 (547,353) 6,140,970
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23 Notes 1 General information and basis of preparation The financial information relating to the year ended March 31, 2025 included in the FY2025/26 third quarter results announcement does not constitute the Company’s statutory annual consolidated financial statements for that year but is derived from those consolidated financial statements. Further information relating to these statutory consolidated financial statements required to b e 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, 2025 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 Company’s auditor has reported on those consolidated financial statements of the Group. The auditor’s report was unqualified; did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its repor t; and did not contain a statement under sections 406(2), 407(2) or (3) of the Hong Kong Companies Ordinance. Basis of preparation The financial information presented above and notes thereto are extracted from the Group’s consolidated 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 Group’s consolidated financial statements. The consolidated financial statements have been prepared in accordance with HKFRS Accounting 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 values. The accounting policies adopted are consistent with those of the previous financial year. The following amendments to existing standard became applicable for the current reporting period. The Group did not have to change its accounting policies or make ret rospective adjustments as a result of adopting these amendments to existing standard. - Amendments to HKAS 21, Lack of exchangeability 2 Segment information Management has determined the operating segments based on the reports 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 Dev ices Group (“IDG”), Infrastructure Solutions Group (“ISG”) and Solutions and Services Group (“SSG”). The LEC assesses the performance of the operating segments based on a measure of operating profit/loss. This measurement basis excludes the effects of non -cash merger and acquisition related accounting charges and non-recurring expenses such as restructuring costs from the business groups. The measurement basis also excludes the effects of allocation from headquarters certain income and expenses such as fair value change of financial instruments and disposal gain/loss of property, plant and equipment that a re from activities driven by headquarters and centralized functions. Certain finance income and costs are allocated to business groups when they are directly attributed to their business activities.
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24 (a) Revenue and operating profit/(loss) for reportable segments 9 months ended December 31, 2025 9 months ended December 31, 2024 Revenue Operating profit/(loss) Revenue Operating profit/(loss) US$’000 US$’000 US$’000 US$’000 IDG 44,321,686 3,204,549 38,719,957 2,818,218 ISG 13,553,079 (128,408) 10,403,645 (72,000) SSG 7,465,738 1,668,006 6,306,755 1,297,741 Total 65,340,503 4,744,147 55,430,357 4,043,959 Eliminations (3,854,278) (1,318,038) (3,336,927) (1,049,675) 61,486,225 3,426,109 52,093,430 2,994,284 Unallocated: Headquarters and corporate income/(expenses) – net (1,413,618) (1,205,161) Depreciation and amortization (279,789) (342,665) Impairment and write-off of intangible assets (216,272) (90,734) Impairment of construction-in-progress (3,137) - Finance income 74,958 65,379 Finance costs (76,425) (162,930) Share of losses of associates and joint ventures (12,505) (18,253) Loss on disposal of property, plant and equipment (545) (3,782) Fair value gain on financial assets at fair value through profit or loss 241,336 39,610 Fair value gain on derivative financial liabilities relating to warrants 190,802 - Gain on deemed disposal of a subsidiary - 22,627 Dilution gain on interest in an associate 432 - Gain on disposal of interest in an associate 99 - Dividend income 3,129 4,797 Consolidated profit before taxation 1,934,574 1,303,172 (b) Analysis of revenue by geography 9 months ended December 31, 2025 9 months ended December 31, 2024 US$’000 US$’000 China 14,782,751 12,278,045 Asia Pacific (“AP”) 11,708,546 9,596,693 Europe-Middle East-Africa (“EMEA”) 14,635,698 12,778,167 Americas (“AG”) 20,359,230 17,440,525 61,486,225 52,093,430 (c) Analysis of revenue by timing of revenue recognition 9 months ended December 31, 2025 9 months ended December 31, 2024 US$’000 US$’000 Point in time 58,709,026 49,917,873 Over time 2,510,848 1,990,492 Lease revenue 266,351 185,065 61,486,225 52,093,430
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25 (d) Other segment information IDG ISG SSG Total 2025 2024 2025 2024 2025 2024 2025 2024 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 For the nine months ended December 31 Depreciation and amortization 561,710 538,699 229,409 184,318 13,850 12,512 804,969 735,529 Finance income 7,633 13,579 206 2,234 986 1,251 8,825 17,064 Finance costs 255,888 249,243 181,498 178,148 1,965 1,800 439,351 429,191 (e) The directors review goodwill and trademarks and trade names with indefinite useful lives with an aggregate amount of US$6,204 million (March 31, 2025: US$6,118 million). The carrying amounts of goodwill and trademarks and trade names with indefinite useful lives are presented below: At December 31, 2025 China US$ million AP US$ million EMEA US$ million AG US$ million Total US$ million Goodwill - IDG 935 477 305 1,576 3,293 - ISG 489 127 66 349 1,031 - SSG (Note) N/A N/A N/A N/A 609 Trademarks and trade names with indefinite useful lives - IDG 182 55 126 480 843 - ISG 162 54 31 123 370 - SSG (Note) N/A N/A N/A N/A 58 At March 31, 2025 China US$ million AP US$ million EMEA US$ million AG US$ million Total US$ million Goodwill - IDG 905 493 286 1,558 3,242 - ISG 468 132 59 344 1,003 - SSG (Note) N/A N/A N/A N/A 606 Trademarks and trade names with indefinite useful lives - IDG 182 55 122 480 839 - ISG 162 54 31 123 370 - SSG (Note) N/A N/A N/A N/A 58 Note: 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 December 31, 2025 (March 31, 2025: nil).
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26 3 Operating profit Operating profit is stated after charging/(crediting) the following: 3 months ended December 31, 2025 9 months ended December 31, 2025 3 months ended December 31, 2024 9 months ended December 31, 2024 US$’000 US$’000 US$’000 US$’000 Depreciation of property, plant and equipment 136,332 380,884 117,504 339,067 Depreciation of right-of-use assets 30,656 89,168 30,884 87,173 Amortization of intangible assets 214,743 614,706 228,270 651,954 Impairment and write-off of intangible assets 216,272 233,372 23,682 90,734 Impairment and write-off of construction-in-progress 3,137 3,258 - - Write-off of property, plant and equipment - 23 - - Employee benefit costs, including 1,701,456 4,999,450 1,582,569 4,565,073 – long-term incentive awards 89,324 251,566 72,872 211,614 – severance and related costs 54,783 78,340 - - Rental expenses 3,210 16,228 1,282 11,085 (Gain)/loss on disposal of property, plant and equipment (1,017) 1,860 1,103 (38) Loss on disposal of intangible assets 681 812 - 301 Loss on disposal of construction-in-progress - 385 122 122 Fair value gain on financial assets at fair value through profit or loss (159,842) (245,623) (31,608) (40,761) Fair value gain on derivative financial liabilities relating to warrants (186,201) (190,802) - - Dilution gain on interest in an associate - (432) - - Gain on disposal of interest in associates - (826) - - Gain on deemed disposal of a subsidiary - - - (22,627) 4 Finance income and costs (a) Finance income 3 months ended December 31, 2025 9 months ended December 31, 2025 3 months ended December 31, 2024 9 months ended December 31, 2024 US$’000 US$’000 US$’000 US$’000 Interest on bank deposits 24,806 70,865 21,187 63,978 Interest on money market funds 4,156 12,918 1,359 6,631 Interest income on finance lease - - 4,747 11,834 28,962 83,783 27,293 82,443
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27 (b) Finance costs 3 months ended December 31, 2025 9 months ended December 31, 2025 3 months ended December 31, 2024 9 months ended December 31, 2024 US$’000 US$’000 US$’000 US$’000 Interest on bank loans and overdrafts 13,551 31,959 22,085 49,035 Interest on convertible bonds 34,649 102,566 9,338 27,851 Interest on notes 26,324 82,698 40,680 121,614 Interest on lease liabilities 5,738 16,891 4,307 10,634 Factoring costs 74,799 275,936 115,652 379,980 Interest on written put option liabilities 599 1,757 552 1,654 Others 2,968 3,969 - 1,353 158,628 515,776 192,614 592,121 5 Taxation The amount of taxation in the consolidated income statement represents: 3 months ended December 31, 2025 9 months ended December 31, 2025 3 months ended December 31, 2024 9 months ended December 31, 2024 US$’000 US$’000 US$’000 US$’000 Current tax Profits tax in Hong Kong S.A.R. of China (10,870) (33,898) (25,195) 22,101 Taxation outside Hong Kong S.A.R. of China 461,958 702,833 213,637 440,970 Deferred tax Credit for the period (280,873) (300,173) (372,214) (497,433) 170,215 368,762 (183,772) (34,362) Profits tax in Hong Kong S.A.R. of China has been provided for at the rate of 16.5% (2024/25: 16.5%) on the estimated assessable profit for the period . 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.
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28 6 Earnings per share (a) Basic Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the 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 December 31, 2025 9 months ended December 31, 2025 3 months ended December 31, 2024 9 months ended December 31, 2024 Weighted average number of ordinary shares in issue 12,404,659,302 12,404,659,302 12,404,659,302 12,404,659,302 Adjustment for shares held by employee share trusts (116,670,961) (123,102,448) (162,422,866) (147,171,304) Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 12,287,988,341 12,281,556,854 12,242,236,436 12,257,487,998 3 months ended December 31, 2025 9 months ended December 31, 2025 3 months ended December 31, 2024 9 months ended December 31, 2024 US$’000 US$’000 US$’000 US$’000 Profit attributable to equity holders of the Company used in calculating basic earnings per share 545,536 1,391,145 692,670 1,294,567 (b) Diluted The calculation of the diluted earnings per share is based on the profit attributable to equity holders of the Company, adjusted to reflect the impact from any dilutive potential ordinary shares that would have been outstanding, as appropriate. The weighte d average number of ordinary shares used in calculating diluted earnings per share is the weighted average number of ordinary shares, as used in the basic earnings per share calculation, and the weighted average number of ordinary shares assumed to have be en issued at no consideration on the deemed exercise or conversion of all dilutive potential ordinary shares into ordinary shares. The Group has four (2024/25: three) categories of potential ordinary shares, namely long-term incentive awards, warrants, put option written on non -controlling interests and convertible bonds (2024/25: long-term incentive awards, put option written on non -controlling interests and convertible bonds). Long-term incentive awards and convertible bonds were dilutive for the three and nine months ended December 31, 2025 and 2024 . Warrants were anti -dilutive for the three and nine months ended December 31, 2025. Put option written on non-controlling interests were anti-dilutive for the three and nine months ended December 31, 2025 and 2024.
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29 3 months ended December 31, 2025 9 months ended December 31, 2025 3 months ended December 31, 2024 9 months ended December 31, 2024 Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 12,287,988,341 12,281,556,854 12,242,236,436 12,257,487,998 Adjustment for long-term incentive awards 380,150,495 357,064,811 274,397,896 273,697,918 Adjustment for convertible bonds 2,220,882,398 2,150,353,424 583,994,205 573,849,546 Weighted average number of ordinary shares used as the denominator in calculating diluted earnings per share 14,889,021,234 14,788,975,089 13,100,628,537 13,105,035,462 3 months ended December 31, 2025 9 months ended December 31, 2025 3 months ended December 31, 2024 9 months ended December 31, 2024 US$’000 US$’000 US$’000 US$’000 Profit attributable to equity holders of the Company used in calculating basic earnings per share 545,536 1,391,145 692,670 1,294,567 Adjustment for interest on convertible bonds, net of tax 34,649 102,566 7,797 23,256 Profit attributable to equity holders of the Company used in calculating diluted earnings per share 580,185 1,493,711 700,467 1,317,823 7 Inventories December 31, 2025 March 31, 2025 US$’000 US$’000 Raw materials and work-in-progress 4,989,476 3,995,173 Finished goods 3,540,702 3,320,441 Service parts 546,373 608,190 9,076,551 7,923,804 8 Trade, lease and notes receivables and trade and notes payables (a) Details of trade, lease and notes receivables are as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 Trade receivables 13,755,699 10,257,738 Lease receivables (Note) 249,305 188,330 Notes receivable 65,140 60,542 14,070,144 10,506,610 Note: At December 31, 2025, non -current portion of lease receivables of US$198,601,000 (March 31, 2025: US$170,987,000) is included in other non-current assets.
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30 Customers are generally granted credit term ranging from 0 to 120 days. Ageing analysis of trade receivables of the Group at the balance sheet date, based on invoice date, is as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 0 – 30 days 10,018,179 7,641,864 31 – 60 days 2,056,369 1,542,382 61 – 90 days 795,921 398,285 Over 90 days 1,074,810 839,886 13,945,279 10,422,417 Less: loss allowance (189,580) (164,679) Trade receivables – net 13,755,699 10,257,738 At December 31, 2025, trade receivables, net of loss allowance, of US$1,041,648,000 (March 31, 2025: US$879,681,000) were past due. The ageing of these receivables, based on due date, is as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 Within 30 days 550,232 445,354 31 – 60 days 162,071 189,241 61 – 90 days 115,932 83,515 Over 90 days 213,413 161,571 1,041,648 879,681 Movements in the loss allowance of trade and lease receivables are as follows: Trade receivables Lease receivables Total US$’000 US$’000 US$’000 Year ended March 31, 2025 At the beginning of the year 132,095 672 132,767 Exchange adjustment 161 - 161 Increase in loss allowance recognized in profit or loss 102,905 3,671 106,576 Uncollectible receivables written off (12,859) (1,918) (14,777) Unused amounts reversed in profit or loss (57,623) - (57,623) At the end of the year 164,679 2,425 167,104 Nine months ended December 31, 2025 At the beginning of the period 164,679 2,425 167,104 Exchange adjustment 1,299 147 1,446 Increase in loss allowance recognized in profit or loss 61,612 11,612 73,224 Uncollectible receivables written off (11,022) - (11,022) Unused amounts reversed in profit or loss (26,988) - (26,988) At the end of the period 189,580 14,184 203,764 At December 31, 2025, included in the loss allowance of lease receivables are current portion of US$5,234,000 (March 31, 2025: US$1,504,000) and non-current portion of US$8,950,000 (March 31, 2025: US$921,000).
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31 Notes receivable of the Group are bank accepted notes mainly with maturity dates within six months. (b) Details of trade and notes payables are as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 Trade payables 13,398,137 8,561,393 Notes payable 3,328,839 3,417,540 16,726,976 11,978,933 Ageing analysis of trade payables of the Group at the balance sheet date, based on invoice date, is as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 0 – 30 days 7,628,119 4,527,503 31 – 60 days 3,395,761 2,465,757 61 – 90 days 1,609,439 898,452 Over 90 days 764,818 669,681 13,398,137 8,561,393 Notes payable of the Group are mainly repayable within three months. 9 Deposits, prepayments and other receivables Details of deposits, prepayments and other receivables are as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 Deposits 38,714 26,779 Other receivables 4,880,448 2,874,521 Prepayments 1,520,714 1,322,358 6,439,876 4,223,658 Other receivables mainly comprise amounts due from subcontractors for components delivered in the ordinary course of business. 10 Provisions, other payables and accruals (a) Details of other payables and accruals are as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 Accruals 4,477,792 4,391,239 Allowance for billing adjustments (i) 3,107,282 2,152,336 Written put option liability (ii) 294,694 303,099 Other payables (iii) 8,196,116 6,962,738 Lease liabilities 103,628 94,972 16,179,512 13,904,384
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32 Notes: (i) Allowance for billing adjustments relates primarily to allowances for future volume 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 Development Bank of Japan (“DBJ”), or Fujitsu and DBJ to sell to the Company, the 49% interest in Fujitsu Client Computing Limited and its subsidiaries (together “FCCL”). Fujitsu currently owns 49% interest in FCCL. Both options are exercisable at December 31, 2025 and March 31, 2025. The exercise price for the call and put options will be determined based on the fair value of the 49% interest as of the day of exercising the option. - During the year ended March 31, 2019, Hefei Zhi Ju Sheng Bao Equity Investment Co., Ltd (“ZJSB”) acquired the 49% interest in a joint venture company (“JV Co”) from Compal Electronics, Inc. The Company and ZJSB respectively own 51% and 49% of the interest in the JV Co. Pursuant to the option agreement entered into between a wholly owned subsidiary of the Group and Hefei Yuan Jia Start -up Investment LLP (“Yuan Jia”), which holds 99.31% interest in ZJSB, the Group and Yuan Jia are respectively granted call a nd put options which entitle the Group to purchase from Yuan Jia, or Yuan Jia to sell to the Group, the 99.31% interest in ZJSB. During the option exercise period, Yuan Jia notified the Group of its intention to exercise its put option. On December 28, 2021, ZJSB, Yuan Jia and the Group entered into an agreement pursuant to which ZJSB transferred 39% interest in the JV Co to the Group at an exercise price of RMB1,895 million (approximately US$271 million). Upon completion on January 10, 2022, the Company and ZJSB respectively own 90% and 10% of the interest in the JV Co. Yuan Jia continues to hold 99.31% interest in ZJSB and is subject to a new option agreement entered into on January 11, 2022 whereby the Group and Yuan Jia are respectively granted call and put options which entitle the Group to purchase from Yuan Jia, or Yuan Jia to sell to the Group, the 99.31% interest in ZJSB. The call and put options will be exercisable after 54 months and from the 48 months to the 54 months respectively from the date of the new option agreement. The exercise price for the call and put options will be determined in accordance with the new option agreement, and up to a maximum of RMB500 million (approximately US$72 million). At December 31, 2025, the written put option liabilities to Yuan Jia is classified as current liabilities as the written put option will be exercisable within the next twelve months. The financial liability that may become payable under the put option is initially recognized at present value of redemption amount within other non -current liabilities with a corresponding charge directly to equity, as a put option written on non - controlling interest. The put option liability shall be re -measured as a result of the change in the expected performance at each balance sheet date, with any resulting gain or loss recognized in the consolidated income statement. In the event that the put option lapses unexercised, the liability will be derecognized with a corresponding adjustment to equity. (iii) Majority of other payables are obligations to pay for finished goods and services that have been acquired in the ordinary course of business from subcontractors. (iv) The carrying amounts of other payables and accruals approximate their fair values.
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33 (b) The components of provisions are as follows: Warranty Environmental restoration Restructuring Total US$’000 US$’000 US$’000 US$’000 Year ended March 31, 2025 At the beginning of the year 969,591 25,336 108,939 1,103,866 Exchange adjustment (6,690) (313) 546 (6,457) Provisions made 725,885 16,443 - 742,328 Amounts utilized (718,097) (14,935) (71,553) (804,585) 970,689 26,531 37,932 1,035,152 Long-term portion classified as non-current liabilities (159,400) (23,159) - (182,559) At the end of the year 811,289 3,372 37,932 852,593 Nine months ended December 31, 2025 At the beginning of the period 970,689 26,531 37,932 1,035,152 Exchange adjustment 11,411 (1,096) 671 10,986 Provisions made 655,226 18,595 54,783 728,604 Amounts utilized (585,827) (16,294) (22,840) (624,961) 1,051,499 27,736 70,546 1,149,781 Long-term portion classified as non-current liabilities (162,721) (22,305) - (185,026) At the end of the period 888,778 5,431 70,546 964,755 The Group records its warranty liability at the time of sales based on estimated costs. Warranty claims are reasonably predictable based on historical failure rate information. The warranty accrual is reviewed quarterly to verify it properly reflects the outstanding obligation over the warranty period. Certain of these costs are reimbursable from the suppliers in accordance with the terms of relevant arrangements with them. The Group records its environmental restoration provision at the time of sales based on estimated costs of environmentally-sound disposal of waste electrical and electronic equipment upon return from end-customers and with reference to the historical or projected future return rate. The environmental restoration provision is reviewed at least annually to assess its adequacy to meet the Group’s obligation. Restructuring costs provision mainly comprises employee termination payments, arising from a series of restructuring actions to reduce costs and enhance operational efficiency. The Group records its restructuring costs provision when it has a present legal or constructive obligation as a result of restructuring actions. 11 Other non-current liabilities Details of other non-current liabilities are as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 Deferred consideration (a) 25,072 25,072 Lease liabilities 323,592 269,828 Environmental restoration (Note 10(b)) 22,305 23,159 Government incentives and grants received in advance (b) 118,774 98,350 Others 284,825 301,375 774,568 717,784
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34 Notes: (a) Pursuant to the joint venture agreement entered into with NEC Corporation, the Group is required to pay in cash to NEC Corporation deferred consideration. At December 31, 2025, the potential undiscounted amount of future payment in respect of the deferred consideration that the Group could be required to make amounted to US$25 million (March 31, 2025: US$25 million). (b) Government incentives and grants received in advance by certain group companies included in other non -current liabilities mainly relate to research and development projects and construction of property, plant and equipment. These group companies are oblige d to fulfill certain conditions under the terms of the government incentives and grants. The government incentives and grants, upon fulfillment of those conditions, are credited to the consolidated income statement immediately or recognized on a straight-line basis over the expected life of the related assets. 12 Borrowings December 31, 2025 March 31, 2025 US$’000 US$’000 Current liabilities Short-term loans (a) 195,699 65,364 Notes (b) - 964,988 195,699 1,030,352 Non-current liabilities Notes (b) 2,052,107 2,050,271 Convertible bonds (c) 2,377,442 2,287,535 4,429,549 4,337,806 4,625,248 5,368,158 Notes: (a) Majority of the short -term loans are denominated in United States dollars. At December 31, 2025, the Group has total revolving and short-term loan facilities of US$6,478 million (March 31, 2025: US$6,044 million) which has been utilized to the extent of US$193 million (March 31, 2025: US$62 million). (b) Details of the outstanding notes are as follows: Issue date Outstanding principal amount Term Interest rate per annum Due date December 31, 2025 US$’000 March 31, 2025 US$’000 April 24, 2020 and May 12, 2020 US$965 million 5 years 5.875% April 2025 - 964,988 November 2, 2020 US$900 million 10 years 3.421% November 2030 895,702 895,032 July 27, 2022 US$600 million 5.5 years 5.831% January 2028 597,376 596,607 July 27, 2022 US$563 million 10 years 6.536% July 2032 559,029 558,632 2,052,107 3,015,259
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35 (c) Details of the outstanding convertible bonds are as follows: Issue date Outstanding principal amount Term Interest rate per annum Due date December 31, 2025 US$’000 March 31, 2025 US$’000 August 26, 2022 (i) US$675 million 7 years 2.5% August 2029 592,529 576,812 January 8, 2025 (ii) US$2,000 million 3 years 0% January 2028 1,784,913 1,710,723 2,377,442 2,287,535 (i) On August 26, 2022, the Company completed the issuance of 7 -Year US$675 million convertible bonds bearing annual interest at 2.5% due in August 2029 (“the 2029 Convertible Bonds”) to the bondholders. The proceeds were used to repay previous convertible bonds and for general corporate purposes. The bondholders have the right, at any time on or after 41 days after the date of issue and up to the 10th day prior to the maturity date, to convert part or all of the outstanding principal amount of the 2029 Convertible Bonds into ordinary shares of the Company at a conversion price of HK$9.94 per share, subject to adjustments. The conversion price was adjusted to HK$8.67 per share effective on August 2, 202 5. Assuming full conversion of the 2029 Convertible Bonds at the conversion price of HK$8.67 per share, the 2029 Convertible Bonds will be convertible into 610,263,840 shares. The outstanding principal amount of the 2029 Convertible Bonds is repayable by the Company upon the maturity of the 2029 Convertible Bonds on August 26, 2029 if not previously redeemed, converted or purchased and cancelled. On August 26, 2026, the bondholders will have the right, at the bondholders’ option, to require the Company to redeem part or all of the 2029 Convertible Bonds at their principal amount. At any time after September 9, 2026 and prior to August 26, 2029, the Company will have the right to redeem in whole, but not in part, the 2029 Convertible Bonds for the time being outstanding at their principal amount upon occurrence of certain specified conditions. (ii) On January 8, 2025, the Company completed the issuance of 3-Year US$2,000 million zero- coupon convertible bonds due in January 2028 (“the 2028 Convertible Bonds”) to the bondholder, subject to three months extension upon occurrence of specified condition. The proceeds were used to repay the existing debts and for general corporate purposes. The bondholder has the right, at any time up to 15 calendar days prior to the maturity date, to convert part or all of the outstanding principal amount of the 2028 Convertible Bonds into ordinary shares of the Company at a conversion price of HK$ 10.02 per share, subject to adjustments. The conversion price was adjusted to HK$9.70 per share effective on August 2, 2025. The conversion shall take place on the maturity date. Assuming full conversion of the 2028 Convertible Bonds at the conversion price of HK$9.70 per share, the 2028 Convertible Bonds will be convertible into 1,610,618,556 shares. The outstanding principal amount of the 2028 Convertible Bonds is repayable by the Company upon the maturity of the 2028 Convertible Bonds on January 8, 2028 if not previously redeemed or converted. At any time prior to the maturity date, the bondholder will have the right to require the Company to redeem all of the 2028 Convertible Bonds at their principal amount or plus interest of 4.5 % per annum upon occurrence of certain specified conditions. The initial fair value of the liability portion of the convertible bonds was determined using a market interest rate for an equivalent non -convertible bond at the issue date. The liability is subsequently recognized on an amortized cost basis until extinguished on conversion, redemption or maturity of the bonds. The remainder of the proceeds was allocated to the conversion option and recognized in shareholders’ equity, net of income tax, and not subsequently remeasured. The Group expects that it will be able to meet its redemption obligations based on the financial position of the Group had conversion of the 2029 Convertible Bonds and 2028 Convertible Bonds not exercised on maturity.
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36 At December 31, 2025 and March 31, 2025, the Group’s borrowings were repayable as follows: December 31, 2025 March 31, 2025 US$’000 US$’000 Within 1 year 195,699 1,030,352 Over 2 to 5 years 3,870,520 2,884,142 Over 5 years 559,029 1,453,664 4,625,248 5,368,158 13 Derivative financial liabilities December 31, 2025 March 31, 2025 US$’000 US$’000 Current liabilities Foreign currency forward and option contracts 66,261 109,277 Warrants (Note) 36,642 87,919 102,903 197,196 Non-current liabilities Warrants (Note) 100,768 241,778 203,671 438,974 Note: On January 8, 2025, an aggregate of 1,150,000,000 warrants have been fully subscribed and issued with gross proceeds of HK$1,645 million (approximately US$212 million). Subject to the terms of the warrants , including the transfer and exercise limit in respect of each 12 - month period from the issue date, the warrants holders have the right, at any time up to January 8, 2028, which may be extended by three months, to subscribe for the Company’s shares at an initial subscription price of HK$12.31 per share, subject to adjustments. The subscription price was adjusted to HK$11.92 per share effective on August 2, 2025. The Company has the option to satisfy such exercise rights by allotment and issue of the Company’ s shares, or through cash payments, which is determined with reference to the market price of the Company’s shares. The warrants issued by the Company are initially recognized as financial liabilities at fair value through profit or loss and are subsequently re -measured at each balance sheet date, with any resulting gain or loss recognized as “other operating income/(expenses) — net” in the consolidated income statement. The fair value of the warrant derivative liabilities as of December 31, 2025, after recognizing fair value gain of US$ 190,802,000 (March 31, 2025: fair value loss of US$118,275,000), amounted to US$137,410,000 (March 31, 2025: US$329,697,000). 14 Share capital December 31, 2025 March 31, 2025 Number of shares US$’000 Number of shares US$’000 Issued and fully paid: Voting ordinary shares: At the beginning and end of the period/year 12,404,659,302 3,500,987 12,404,659,302 3,500,987
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37 15 Note to the consolidated cash flow statement (a) Reconciliation of profit before taxation to net cash generated from operations 9 months ended December 31, 2025 9 months ended December 31, 2024 US$’000 US$’000 Profit before taxation 1,934,574 1,303,172 Share of losses of associates and joint ventures 9,621 19,922 Finance income (83,783) (82,443) Finance costs 515,776 592,121 Depreciation of property, plant and equipment 380,884 339,067 Depreciation of right-of-use assets 89,168 87,173 Amortization of intangible assets 614,706 651,954 Write-off of property, plant and equipment 23 - Impairment and write-off of construction-in-progress 3,258 - Impairment and write-off of intangible assets 233,372 90,734 Allowance/(reversal of allowance) for inventories 85,088 (71,575) Increase in loss allowance of trade receivables 61,612 74,856 Unused amounts of loss allowance of trade receivables reversed (26,988) (21,915) Increase in loss allowance of lease receivables 11,612 3,292 Share-based compensation 251,566 211,614 Loss/(gain) on disposal of property, plant and equipment 1,860 (38) Loss on disposal of intangible assets 812 301 Loss on disposal of construction-in-progress 385 122 Gain on deemed disposal of a subsidiary - (22,627) Gain on disposal of interest in associates (826) - Dilution gain on interest in an associate (432) - Fair value change on financial instruments 17,901 (42,360) Fair value change on financial assets at fair value through profit or loss (245,623) (40,761) Fair value gain on derivative financial liabilities relating to warrants (190,802) - Dividend income (3,682) (5,250) Increase in inventories (1,225,039) (2,413,493) Increase in trade, lease and notes receivables, deposits, prepayments and other receivables (5,493,355) (2,687,681) Increase in trade and notes payables, provisions, other payables and accruals 7,587,696 5,209,491 Effect of foreign exchange rate changes 10,511 (252,366) Net cash generated from operations 4,539,895 2,943,310
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38 (b) Reconciliation of financing liabilities This section sets out an analysis of financing liabilities and the movements in financing liabilities for the period/year presented. Financing liabilities December 31, 2025 US$’000 March 31, 2025 US$’000 Short-term loans – current 195,699 65,364 Notes – current - 964,988 Notes – non-current 2,052,107 2,050,271 Convertible bonds – non-current 2,377,442 2,287,535 Derivative financial liabilities relating to warrants – current 36,642 87,919 Derivative financial liabilities relating to warrants – non-current 100,768 241,778 Lease liabilities – current 103,628 94,972 Lease liabilities – non-current 323,592 269,828 5,189,878 6,062,655 Short-term loans – variable interest rates 184,809 36,415 Short-term loans – fixed interest rates 10,890 28,949 Notes – fixed interest rates 2,052,107 3,015,259 Convertible bonds – fixed interest rates 2,377,442 2,287,535 Derivative financial liabilities relating to warrants – non-interest bearing 137,410 329,697 Lease liabilities – fixed interest rates 427,220 364,800 5,189,878 6,062,655 Short-term loans current Notes current Notes non-current Convertible bonds non-current Derivative financial liabilities relating to warrants current Derivative financial liabilities relating to warrants non-current Lease liabilities current Lease liabilities non-current Total US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Financing liabilities at April 1, 2024 50,431 - 3,012,637 556,592 - - 101,580 240,449 3,961,689 Proceeds from borrowings 17,014,380 - - 2,000,000 - - - - 19,014,380 Proceeds from issue of warrants - - - - 56,440 155,212 - - 211,652 Repayments of borrowings (17,041,262) - - - - - - - (17,041,262) Issuing cost of borrowings - - - (20,192) - - - - (20,192) Reclassification - 964,814 (964,814) - - - 92,620 (92,620) - Principal elements of lease payments - - - - - - (121,071) - (121,071) Foreign exchange adjustments 41,815 - - - (61) (169) (1,044) (7,863) 32,678 Equity component for issue of convertible bonds - - - (290,608) - - - - (290,608) Other non-cash movements - 174 2,448 41,743 31,540 86,735 22,887 129,862 315,389 Financing liabilities at March 31, 202 5 65,364 964,988 2,050,271 2,287,535 87,919 241,778 94,972 269,828 6,062,655 Financing liabilities at April 1, 2025 65,364 964,988 2,050,271 2,287,535 87,919 241,778 94,972 269,828 6,062,655 Proceeds from borrowings 10,289,362 - - - - - - - 10,289,362 Repayments of borrowings (10,163,813) (965,000) - - - - - - (11,128,813) Reclassification - - - - - - 68,105 (68,105) - Principal elements of lease payments - - - - - - (81,376) - (81,376) Foreign exchange adjustments 4,786 - - - (396) (1,089) 2,311 5,925 11,537 Other non-cash movements - 12 1,836 89,907 (50,881) (139,921) 19,616 115,944 36,513 Financing liabilities at December 31, 2025 195,699 - 2,052,107 2,377,442 36,642 100,768 103,628 323,592 5,189,878
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39 PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES Save as the respective trustee of the long-term incentive program and the employee share purchase plan of the Company purchased a total of 326,320,464 shares from the market for award to employees upon vesting, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the nine months ended December 31, 2025. Details of these program and plan are set out in the 2025/26 Interim Report of the Company. REVIEW BY AUDIT COMMITTEE The Audit Committee of the Company has reviewed the unaudited financial results of the Group for the nine months ended December 31, 2025. It meets regularly with the management, the external auditor and the internal audit personnel to discuss the accounting principles and practices adopted by the Group and internal control and financial reporting matters. Currently, the Audit Committ ee comprises three independent non -executive directors and one non -executive director, including Mr. Woo Chin Wan Raymond, bei ng the Chairman, Mr. Gordon Robert Halyburton Orr, Mr. Kasper Bo Roersted and Mr. Wong Wai Ming. COMPLIANCE WITH CORPORATE GOVERNANCE CODE During the nine months ended December 31, 2025, the Company has complied with the code provisions of the Corporate Governance Code (the “CG Code”) as set out in Appendix C1 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), except that the roles of the chairman of the Board (the “Chairman”) and the chief executive officer of the Company (the “CEO”) have not been segregated as required by code provision C.2.1 of the CG Code. The Board has reviewed the Group’s organization human resources planning and considers that combining the roles of Chairman and CEO by Mr. Yang Yuanqing (“Mr. Yang”) is appropriate and beneficial to the Group as it provides consistency of the strategy execution and stability of the operations. The Board, comprising a majority of independent non -executive directors, meets regularly on a quarterly basis to review the Group’s operations led by Mr. Yang. The Board also appointed Mr. John Lawson Thornton as the lead independent director (the “Lead Independent Director”) with broad authorities and responsibilities. Such authorities and responsibilities include serving as chairman of the Nomination and Governance Committee meeting and/or the Board meeting considering the combined roles of Chairman and CEO; in consultation with all other Board members, to prepare an assessment of the performance of the Chairman and/or CEO; calls and chair meeting(s) with all non-executive directors at least once a year on matters deemed appropriate and provide feedback to the Chairman and/or CEO; and serves a key role in the Board evaluation process. Accordingly, the Board believes that the current Board structure with combined roles of Chairman and CEO, the appointment of Lead Independent Director and a majority of independent non-executive directors provide an effective check and balance of power between the Board and the management of the Company. By Order of the Board Yang Yuanqing Chairman and Chief Executive Officer February 12, 2026 As at the date of this announcement, the executive director is Mr. Yang Yuanqing; the non -executive directors are Mr. Zhu Linan, Mr. Zhao John Huan, Mr. Wong Wai Ming, Ms. Laura Green Quatela and Mr. Amit Midha; and the independent non-executive directors are Mr. John Lawson Thornton, Mr. Gordon Robert Halyburton Orr, Mr. Woo Chin Wan Raymond, Ms. Yang Lan, Ms. Cher Wang Hsiueh Hong, Professor Xue Lan and Mr. Kasper Bo Roersted (alias Kasper Bo Rorsted).