Lenovo 2016 Annual Report Download - page 19

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2015/16 Annual Report Lenovo Group Limited
three-year promissory note issued as part of the transaction
to acquire Motorola Mobility. Excluding the restructuring costs
and one time charges totaling US$923 million and non-cash
M&A accounting charges, the Group’s run rate profit before
taxation was US$976 million, against US$1,139 million of
previous fiscal year. This decline was mainly due to slower PC
demand and product transition of the Group’s smartphone
business. The decisive actions the Group took in fiscal quarter
two to realign the business has started to show benefits in the
second half of the fiscal year, and the Group’s cost structure
in the second half was enhanced with profitability improved.
Including the restructuring costs, one time charges and
non-cash M&A accounting charges, the Group reported a loss
before taxation of US$277 million, versus profit before taxation
of US$971 million in last fiscal year. The Group’s net loss was
US$128 million, versus net income of US$829 million of last
fiscal year.
Amid the softer-than-expected markets and product transition
the Group that has been undergoing for its smartphone
product portfolio, the Group’s revenue in the fiscal quarter four
recorded a decline of 19 percent year-on-year. Nevertheless,
the Group realized the restructuring savings as planned, and
the more efficient cost structure helped improve its profit
and margin. For the fiscal quarter four ended March 31, 2016,
the Group’s profit before taxation increased by 86 percent
to US$193 million. Excluding the non-cash M&A accounting
charges of US$77 million, the profit before taxation was
US$270 million, increased by 37 percent year-on-year. The
Group’s net income also increased by 80 percent to US$180
million.