— Revenue of HK$103.6 billion, up 359% in FY2005/06

— Full-year EBITDA (excluding restructuring charges) of HK$3.0 billion,
up 154%

— Full-year pre-tax income (excluding restructuring charges) of HK$1.2
billion, up 7%

— Full-year profit attributable to shareholders (including
restructuring charges) of HK$173 million

— Full-year basic EPS of 1.97 HK cents (including restructuring
charges) versus 14.99 HK cents in FY2004/05

— Net cash reserves of HK$6.1 billion (as of March 31, 2006)

Lenovo Group today reported results for the fiscal fourth quarter and
full year ended March 31, 2006. For the fourth quarter, consolidated revenue
increased 417 percent year over year to HK$24.4 billion, driven by continued
strong performance in China and the May 2005 acquisition of IBM’s Personal
Computing Division. PC shipments for the combined company grew 11 percent year
over year. Excluding restructuring charges taken in the fourth quarter,
pre-tax income declined during the same period to a loss of HK$317 million,
due to normal seasonal pressure on profitability, combined with investments
made in new products and the launch of the Lenovo brand worldwide. Net cash
reserves as of March 31, 2006, totaled HK$6.1 billion. Lenovo’s board of
directors has proposed a final dividend of 2.8 HK cents per share.

In March 2006, Lenovo announced an action plan to enhance responsiveness
to customers in all of its markets, strengthen Lenovo’s global competitive
position, and increase operational efficiency. As a result, Lenovo’s reported
results reflect a restructuring charge relating to the plan of approximately
US$70 million, or HK$543 million, taken in the fourth fiscal quarter which
ended March 31, 2006. Reflecting that restructuring charge, Lenovo reported a
loss attributable to shareholders of HK$903 million and basic earnings per
share for the fourth quarter 2005/06 of (10.16) Hong Kong cents.

“The Board is pleased that Lenovo has met its first-year integration
objectives for a smooth transition, stability in the business, and
profitability in our international operations,” said Yang Yuanqing, Lenovo’s
chairman. “We’ve continued to prove the advantages of our dual business model
in China as we gained share profitably. At the same time, we’ve retained key
customers from the acquired IBM PCD business and begun the next phase of our

“Looking forward, we expect to realize the great potential of this
company by leveraging the complementary strengths of the combined businesses.
In China, we will sustain our strong momentum by further refining the
relationship side of our dual business model, using the expertise from the
acquired business. At the same time – using the expertise from legacy Lenovo –
we will build the transaction side of our model outside of China to capitalize
upon the significant opportunities in the high-growth SMB and emerging markets
while enhancing our relationship business with a tightly integrated end-to-end
management system,” said Mr. Yang.

William J. Amelio, Lenovo’s president and chief executive officer, said,
“Lenovo is a great business with innovative products and a disciplined
operating plan. We are sharply focused on taking the steps now that we believe
will make us successful and more profitable over the long term: improving our
operating efficiency, building brand awareness, and expanding our dual
business model.
“We’re making steady progress, and we are very pleased with our
accomplishments over the past year. We have confidence in our ability to take
the appropriate measures for sustainable, profitable growth. We will grow and
win by excelling in innovation, superior customer satisfaction, and
operational excellence,” Mr. Amelio said.


— In Greater China, Lenovo’s leadership position was further
strengthened by robust PC shipments in the fourth quarter. Shipments to
mainland China were up 31 percent, ahead of the market, solidifying Lenovo’s
leadership position in the PC market. As a result, consolidated revenue for
the fourth quarter totaled HK$8.4 billion, or 35 percent of the Company’s
total revenue, while operating profit was HK$402 million for the same period.

Operating results for the following geographic segments exclude the
restructuring charge taken in the fourth fiscal quarter.

— Lenovo PC shipments in the Americas were flat year over year.
Consolidated revenue in the Americas totaled HK$7.4 billion in the fourth
quarter, or 30 percent of total revenue, and the segment reported an operating
loss of HK$252 million.

— Shipments for the Asia Pacific business (excluding Greater China)
declined 5 percent. Consolidated revenue in Asia Pacific totaled HK$3.5
billion in the fourth quarter, or 14 percent of total revenue; and the segment
delivered an operating profit of HK$62 million.

— In the Europe, Middle East and Africa region (EMEA), shipments
declined 3 percent. EMEA delivered consolidated revenue of HK$5.1 billion in
the fourth quarter, or 21 percent of total revenue, and an operating loss of
HK$87 million.


— Lenovo’s Notebook shipments in the March quarter were up 14 percent
year over year, reaching record high levels, driven by the Company’s leading
share of the China market. The segment’s consolidated revenue was HK$12.5
billion, or 51 percent, of the Company’s total revenue.

— Lenovo’s Desktop business also posted record shipments in the March
quarter, with growth of 9 percent year over year. Consolidated revenue for the
desktop PC segment was HK$10.4 billion, or 43 percent of the overall total

— Lenovo’s Mobile Handset business (conducted primarily in China)
reported shipments of mobile handsets increased 122 percent in the fourth
quarter, driving segment revenue of HK$1.2 billion, up 109 percent year over


For the 2005/06 fiscal year, consolidated revenue increased 359 percent
year over year to HK$103.6 billion. Lenovo’s PC shipments grew 11 percent year
over year. In the same period, pre-tax income (excluding restructuring charges
taken in the fourth quarter) grew 7 percent to HK$1.2 billion.
Reflecting the restructuring charges taken in the fourth quarter, Lenovo
reported full-year profit attributable to shareholders of HK$173 million and
basic earnings per share for the full 2005/06 fiscal year of 1.97 Hong Kong
cents versus 14.99 Hong Kong cents for the 2004/05 fiscal year.