（於開曼群島註冊成立之有限公司） （股份代號：2878） 有關 香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準 確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產 生或因倚賴該等內容而引致的任何損失承擔任何責任。 測試服務框架協議之 持續關連交易 測試服務框架協議 於2024年12月20日（交易時段後），晶門科技（本公司之全資附屬公司）與北京确安訂立 測試服務框架協議，據此，北京确安同意於2024年12月20日至2026年12月31日期間向晶 門科技提供IC相關測試服務。 上市規則涵義 於本公告日期，華大持有706,066,000股股份，佔本公司已發行股份總數約28.27%，因 此為本公司的主要股東。由於北京确安為中國電子（華大的控股公司）的30%控股公司， 其為華大的聯營公司。因此，北京确安為本公司的關連人士，而根據上市規則第14A章， 測試服務框架協議項下擬進行的交易構成本公司的持續關連交易。 由於測試服務框架協議項下最高年度上限的一個或多個適用百分比率超過0.1%但全部低 於5%，故根據上市規則第14A章，測試服務框架協議項下擬進行的交易須遵守 ...

[Corporate Profile](index=3&type=section&id=Corporate%20Profile) This section provides an overview of the company's business, vision, and its leading position in display and touch IC solutions [Business Overview and Vision](index=3&type=section&id=2.1%20Business%20Overview%20and%20Vision) The company is a leading fabless semiconductor group designing, developing, and selling IC products and system solutions for various display and touch applications - The company is a leading semiconductor group specializing in the design, development, and sale of integrated circuit chip products and system solutions[2](index=2&type=chunk) - Products are widely applied in smartphones, tablets, TVs/monitors, laptops, wearables, electronic shelf labels, healthcare, smart home, and industrial devices[2](index=2&type=chunk) - The company's vision is to provide ultimate chip solutions for every display system[3](index=3&type=chunk) [Financial Highlights](index=4&type=section&id=Financial%20Highlights) This section summarizes the company's key financial performance and position, highlighting revenue and profit declines but stable financial health [Key Financial Performance and Position](index=4&type=section&id=3.1%20Key%20Financial%20Performance%20and%20Position) For the six months ended June 30, 2024, the company experienced significant declines in revenue and profit, yet maintained a robust financial position with increased total assets and shareholder equity 2024 H1 Key Financial Data | Indicator | June 30, 2024 (US$ million) | June 30, 2023 (US$ million) | Change Percentage (%) | | :--- | :--- | :--- | :--- | | **Performance** | | | | | Sales | 61.9 | 85.3 | -27.4% | | Gross Profit | 19.8 | 27.9 | -29.0% | | Gross Margin (%) | 32.0 | 32.7 | -0.7% point | | Net Profit Attributable to Owners of the Company | 7.5 | 13.2 | -43.3% | | Earnings Per Share (US cents) | 0.30 | 0.53 | -43.4% | | **Financial Position** | | | | | Total Assets | 171.4 | 157.4 (Dec 31, 2023) | 8.9% | | Shareholders' Equity | 134.4 | 126.9 (Dec 31, 2023) | 5.9% | | **Financial Ratios** | | | | | Current Ratio | 4.59 | 4.96 (Dec 31, 2023) | | | Debt-to-Equity Ratio | 0.009 | 0.013 (Dec 31, 2023) | | - The Board does not recommend the declaration of an interim dividend for the six months ended June 30, 2024[5](index=5&type=chunk)[7](index=7&type=chunk) [Interim Condensed Consolidated Statement of Profit or Loss](index=5&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) This section presents the company's consolidated profit or loss for the first half of 2024, showing a decline in revenue and net profit [Consolidated Profit or Loss for H1 2024](index=5&type=section&id=4.1%20Consolidated%20Profit%20or%20Loss%20for%20H1%202024) For the six months ended June 30, 2024, the company's revenue was US$61,915 thousand, a 27.4% decrease year-on-year, with gross profit at US$19,843 thousand and net profit at US$7,471 thousand Interim Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Indicator | 2024 (US$'000) | 2023 (US$'000) | | :--- | :--- | :--- | | Sales | 61,915 | 85,334 | | Cost of Sales | (42,072) | (57,393) | | **Gross Profit** | **19,843** | **27,941** | | Research and Development Costs | (7,999) | (10,591) | | Selling and Distribution Expenses | (1,858) | (1,272) | | Administrative Expenses | (4,601) | (3,771) | | Other Income and Gains – Net | 18 | 32 | | Investment Income – Net | 2,096 | 902 | | Share of Profit/(Loss) of Associates | 58 | (76) | | Profit Before Tax | 7,557 | 13,165 | | Income Tax Expense | (86) | – | | **Profit for the Period** | **7,471** | **13,165** | | Profit Attributable to Owners of the Company | 7,471 | 13,165 | | Basic Earnings Per Share (US cents) | 0.30 | 0.53 | | Diluted Earnings Per Share (US cents) | 0.30 | 0.53 | [Interim Condensed Consolidated Statement of Comprehensive Income](index=6&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) This section details the company's comprehensive income for the first half of 2024, showing profit for the period and other comprehensive income components [Consolidated Comprehensive Income for H1 2024](index=6&type=section&id=5.1%20Consolidated%20Comprehensive%20Income%20for%20H1%202024) For the six months ended June 30, 2024, profit for the period was US$7,471 thousand, with total comprehensive income of US$7,473 thousand, primarily due to exchange differences on translating foreign operations Interim Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Indicator | 2024 (US$'000) | 2023 (US$'000) | | :--- | :--- | :--- | | Profit for the Period | 7,471 | 13,165 | | Other Comprehensive Income/(Loss) | | | | – Exchange differences on translating foreign operations | 2 | (2,434) | | **Total Comprehensive Income for the Period** | **7,473** | **10,731** | | Attributable to Owners of the Company | 7,473 | 10,731 | [Interim Condensed Consolidated Statement of Financial Position](index=7&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section presents the company's consolidated financial position as of June 30, 2024, detailing assets, liabilities, and equity [Consolidated Financial Position as at June 30, 2024](index=7&type=section&id=6.1%20Consolidated%20Financial%20Position%20as%20at%20June%2030%2C%202024) As of June 30, 2024, the company's total assets were US$171,401 thousand, with current assets accounting for US$160,076 thousand, reflecting a robust financial foundation with increased shareholder equity Interim Condensed Consolidated Statement of Financial Position (As at June 30) | Indicator | 2024 (US$'000) | December 31, 2023 (US$'000) | | :--- | :--- | :--- | | **Non-current Assets** | | | | Property, Plant and Equipment | 5,854 | 4,836 | | Right-of-use Assets | 3,084 | 1,391 | | Investments in Associates | 819 | 761 | | Equity Investments at Fair Value Through Other Comprehensive Income | 1,161 | 1,161 | | Other Receivables, Prepayments and Deposits | 407 | 679 | | **Total Non-current Assets** | **11,325** | **8,828** | | **Current Assets** | | | | Inventories | 28,102 | 27,920 | | Trade and Other Receivables, Prepayments and Deposits | 29,905 | 31,817 | | Pledged Bank Deposits | 6,000 | 6,000 | | Cash and Cash Equivalents | 96,069 | 80,339 | | Financial Assets at Fair Value Through Profit or Loss | – | 2,522 | | **Total Current Assets** | **160,076** | **148,598** | | **Current Liabilities** | | | | Trade and Other Payables | 32,101 | 26,908 | | Interest-bearing Bank Loans | 1,261 | 1,657 | | Lease Liabilities | 1,021 | 985 | | Tax Payable | 492 | 424 | | **Total Current Liabilities** | **34,875** | **29,974** | | **Net Current Assets** | **125,201** | **118,624** | | **Total Assets Less Current Liabilities** | **136,526** | **127,452** | | **Non-current Liabilities** | | | | Lease Liabilities | 2,118 | 521 | | **Total Non-current Liabilities** | **2,118** | **521** | | **Net Assets** | **134,408** | **126,931** | | **Equity** | | | | Issued Capital | 32,166 | 32,166 | | Reserves | 102,307 | 94,830 | | Non-controlling Interests | (65) | (65) | | **Total Equity** | **134,408** | **126,931** | [Interim Condensed Consolidated Statement of Changes in Equity](index=8&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section outlines the consolidated changes in equity for the first half of 2024, showing the movement of equity attributable to owners of the company [Consolidated Changes in Equity for H1 2024](index=8&type=section&id=7.1%20Consolidated%20Changes%20in%20Equity%20for%20H1%202024) For the six months ended June 30, 2024, equity attributable to owners of the company increased from US$126,996 thousand to US$134,473 thousand, primarily driven by profit for the period and exchange differences Interim Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | Issued Capital (US$'000) | Share Premium (US$'000) | Merger Reserve (US$'000) | Exchange Reserve (US$'000) | Equity Compensation Scheme Reserve (US$'000) | Fair Value Reserve (US$'000) | Other Reserves (US$'000) | (Accumulated Losses)/Retained Profits (US$'000) | Total Equity Attributable to Owners of the Company (US$'000) | Non-controlling Interests (US$'000) | Total Equity (US$'000) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | As at January 1, 2024 | 32,166 | 78,032 | 2,082 | (2,541) | 18,647 | 1,019 | 230 | (2,299) | 126,996 | (65) | 126,931 | | Profit for the Period | - | - | - | - | - | - | - | 7,471 | 7,471 | - | 7,471 | | Other Comprehensive Income – Exchange Differences | - | - | - | 2 | - | - | - | - | 2 | - | 2 | | **Total Comprehensive Income for the Period** | - | - | - | **2** | - | - | - | **7,471** | **7,473** | - | **7,473** | | Equity Compensation Scheme | - | 60 | - | - | (384) | - | - | 384 | 60 | - | 60 | | As at June 30, 2024 | 32,166 | 78,092 | 2,082 | (2,539) | 18,263 | 1,019 | 230 | 5,556 | 134,473 | (65) | 134,408 | [Interim Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section presents the company's consolidated cash flows for the first half of 2024, detailing cash generated from operating, investing, and financing activities [Consolidated Cash Flows for H1 2024](index=9&type=section&id=8.1%20Consolidated%20Cash%20Flows%20for%20H1%202024) For the six months ended June 30, 2024, net cash generated from operating activities was US$14,031 thousand, from investing activities was US$2,876 thousand, and net cash used in financing activities was US$1,150 thousand, resulting in a significant increase in cash and cash equivalents at period-end Interim Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2024 (US$'000) | 2023 (US$'000) | | :--- | :--- | :--- | | Net Cash Flows from Operating Activities | 14,031 | 28,724 | | Net Cash Flows from Investing Activities | 2,876 | 229 | | Net Cash Flows Used in Financing Activities | (1,150) | (2,091) | | Net Increase in Cash and Cash Equivalents | 15,757 | 26,862 | | Cash and Cash Equivalents at Beginning of Period | 80,339 | 45,556 | | Effect of Exchange Rate Changes, Net | (27) | (1,544) | | **Cash and Cash Equivalents at End of Period** | **96,069** | **70,874** | [Notes to the Interim Condensed Consolidated Financial Information](index=10&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) This section provides detailed notes to the interim condensed consolidated financial information, covering general information, basis of preparation, and significant accounting policies [General Information](index=10&type=section&id=9.1%20General%20Information) Solomon Systech Limited and its subsidiaries are a fabless semiconductor group specializing in designing, developing, and selling IC products and system solutions for various display and touch applications, incorporated in the Cayman Islands and listed on the HKEX - Solomon Systech Limited and its subsidiaries are a fabless semiconductor group specializing in the design, development, and sale of integrated circuit chip products and system solutions[18](index=18&type=chunk)[21](index=21&type=chunk) - Products are widely applied in smartphones, tablets, TVs/monitors, laptops, electronic shelf labels, wearables, healthcare equipment, smart home devices, and industrial equipment[18](index=18&type=chunk)[21](index=21&type=chunk) - The company was incorporated in the Cayman Islands on November 21, 2003, listed on the Main Board of the HKEX since April 8, 2004, and this interim financial information is presented in US dollars[19](index=19&type=chunk)[21](index=21&type=chunk) [Basis of Preparation](index=10&type=section&id=9.2%20Basis%20of%20Preparation) The interim condensed consolidated financial information for the six months ended June 30, 2024, is unaudited and prepared in accordance with HKAS 34, to be read in conjunction with the company's 2023 annual financial statements - The interim condensed consolidated financial information has been prepared in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" issued by the Hong Kong Institute of Certified Public Accountants[20](index=20&type=chunk)[21](index=21&type=chunk) - This financial information is unaudited and should be read in conjunction with the company's consolidated financial statements for the year ended December 31, 2023[20](index=20&type=chunk)[21](index=21&type=chunk) [Material Accounting Policies](index=11&type=section&id=9.3%20Material%20Accounting%20Policies) The accounting policies adopted in this period are consistent with those of the 2023 consolidated financial statements, with no material impact from the initial adoption of revised HKFRS standards - Accounting policies are consistent with those adopted in the consolidated financial statements for the year ended December 31, 2023, except for the initial adoption of revised Hong Kong Financial Reporting Standards[22](index=22&type=chunk)[24](index=24&type=chunk) - The initially adopted amendments include HKAS 1 (Classification of Liabilities and Non-current Liabilities with Covenants), HKFRS 16 (Lease Liability in a Sale and Leaseback), and HKAS 7 and HKFRS 7 (Supplier Finance Arrangements)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - After assessment, these amendments had no impact on the Group's financial position or performance[26](index=26&type=chunk)[28](index=28&type=chunk) [Fair Value and Fair Value Hierarchy of Financial Instruments](index=13&type=section&id=9.4%20Fair%20Value%20and%20Fair%20Value%20Hierarchy%20of%20Financial%20Instruments) The Group's financial instrument fair value measurements are primarily concentrated in Level 2, with no transfers between levels during the period Fair Value of Financial Assets (US$'000) | Financial Assets | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Equity Investments at Fair Value Through Other Comprehensive Income | 1,161 | 1,161 | | Financial Assets at Fair Value Through Profit or Loss | – | 2,522 | | **Total** | **1,161** | **3,683** | - Management has assessed that the fair values of short-term financial instruments such as cash and cash equivalents, pledged bank deposits, trade receivables, and trade payables approximate their carrying amounts[31](index=31&type=chunk) Assets Measured at Fair Value Hierarchy (June 30, 2024, US$'000) | Assets | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Investments at Fair Value Through Other Comprehensive Income | – | 1,161 | – | 1,161 | - For the six months ended June 30, 2024, there were no transfers between Level 1 and Level 2 fair value measurements, and no transfers into or out of Level 3 financial assets[34](index=34&type=chunk)[36](index=36&type=chunk) [Segment Information and Disaggregation of Revenue](index=16&type=section&id=9.5%20Segment%20Information%20and%20Disaggregation%20of%20Revenue) The Group operates in a single segment, designing, developing, and selling IC products and system solutions, with H1 2024 revenue of US$61,915 thousand primarily from Hong Kong, Europe, Taiwan, and Japan - The Group has consistently operated in a single operating segment, which is the design, development, and sale of proprietary IC products and system solutions[37](index=37&type=chunk)[40](index=40&type=chunk) Revenue from Contracts with Customers by Geographical Market (US$'000) | Region | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Hong Kong | 36,878 | 46,427 | | Mainland China | 2,007 | 1,917 | | Taiwan | 8,538 | 9,899 | | Japan | 2,339 | 11,968 | | Europe | 11,891 | 12,600 | | Korea | 101 | 121 | | Southeast Asia | 29 | 124 | | United States | 31 | 2,113 | | Others | 101 | 165 | | **Total** | **61,915** | **85,334** | Revenue from Contracts with Customers by Product Type (US$'000) | Product Type | H1 2024 | H1 2023 | | :--- | :--- | :--- | | New Display ICs | 36,385 | 39,847 | | OLED Display ICs | 8,843 | 9,290 | | Mobile Display and Mobile Touch ICs | 9,826 | 33,177 | | Large Display ICs | 6,861 | 3,020 | | **Total** | **61,915** | **85,334** | - For the six months ended June 30, 2024, the largest and second largest customers were located in Hong Kong and Europe, with sales of **US$27,630,000** and **US$10,588,000** respectively, each accounting for over **10%** of the Group's total sales[48](index=48&type=chunk)[49](index=49&type=chunk) [Profit before tax](index=18&type=section&id=9.6%20Profit%20before%20tax) The Group's profit before tax for the six months ended June 30, 2024, was US$7,557 thousand, with cost of sales at US$44,323 thousand and a net reversal of provision for obsolete inventory of US$2,542 thousand Profit Before Tax Components (US$'000) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Cost of Sales | 44,323 | 55,926 | | Net (Reversal of Provision)/Provision for Obsolete or Slow-moving Inventories | (2,542) | 1,127 | | Depreciation of Property, Plant and Equipment | 760 | 710 | | Depreciation of Right-of-use Assets | 723 | 659 | | Exchange Differences, Net | (319) | (1,564) | [Finance income – net](index=19&type=section&id=9.7%20Finance%20income%20%E2%80%93%20net) For the six months ended June 30, 2024, the Group recorded net finance income of US$2,096 thousand, primarily from interest income offset by interest expenses on bank loans and lease liabilities Finance Income – Net (US$'000) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Interest Income | 2,132 | 934 | | Interest Expense on Bank Loans | (1) | – | | Interest Expense on Lease Liabilities | (35) | (32) | | **Total** | **2,096** | **902** | [Income tax](index=19&type=section&id=9.8%20Income%20tax) The Group's total income tax expense for the six months ended June 30, 2024, was US$86 thousand, mainly current tax in other jurisdictions, with no Hong Kong profits tax provision due to available tax losses - The Group made no provision for Hong Kong profits tax due to available tax losses carried forward from previous years to offset assessable profits[53](index=53&type=chunk)[54](index=54&type=chunk) Income Tax Expense (US$'000) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Current – Other Jurisdictions – Current Period Expense | 86 | – | | **Total Income Tax Expense for the Period** | **86** | **–** | [Earnings per share](index=19&type=section&id=9.9%20Earnings%20per%20share) For the six months ended June 30, 2024, both basic and diluted earnings per share attributable to owners of the company were 0.30 US cents, a decrease from 0.53 US cents in the prior year - Basic earnings per share were **0.30 US cents**, calculated based on profit attributable to owners of the company of **US$7,471,000** and a weighted average of **2,495,652,351** ordinary shares outstanding[56](index=56&type=chunk)[57](index=57&type=chunk) - Diluted earnings per share were **0.30 US cents**, adjusted for all potentially dilutive ordinary shares during the period, with no dilutive effect in H1 2024[58](index=58&type=chunk)[59](index=59&type=chunk) [Dividend](index=20&type=section&id=9.10%20Dividend) The Board resolved not to declare an interim dividend for the six months ended June 30, 2024, consistent with the prior year - The Board resolved not to declare an interim dividend for the six months ended June 30, 2024 (six months ended June 30, 2023: nil)[60](index=60&type=chunk)[61](index=61&type=chunk) [Trade and other receivables, prepayments and deposits](index=21&type=section&id=9.11%20Trade%20and%20other%20receivables%2C%20prepayments%20and%20deposits) As of June 30, 2024, the Group's net trade receivables increased to US$18,947 thousand, with the majority aged 1-30 days, and impairment provisions rising to US$322 thousand Trade and Other Receivables, Prepayments and Deposits (US$'000) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Trade Receivables – Net | 18,947 | 17,292 | | Other Receivables, Prepayments and Deposits | 10,878 | 14,344 | | Prepayments to Related Parties | 96 | 221 | | Impairment Provision | (16) | (40) | | **Total** | **30,312** | **32,496** | Ageing Analysis of Trade Receivables (US$'000) | Ageing | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | 1–30 Days | 12,279 | 12,102 | | 31–60 Days | 3,417 | 2,430 | | 61–90 Days | 1,779 | 1,257 | | 91–180 Days | 1,472 | 1,197 | | Over 360 Days | – | 306 | | **Total** | **18,947** | **17,292** | Movement in Impairment Provision for Trade Receivables (US$'000) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | At Beginning of Period/Year | 123 | 214 | | Impairment Provision/Reversal of Impairment | 199 | (91) | | **At End of Period/Year** | **322** | **123** | [Trade and other payables](index=22&type=section&id=9.12%20Trade%20and%20other%20payables) As of June 30, 2024, the Group's total trade and other payables increased to US$32,101 thousand, with trade payables of US$14,284 thousand primarily aged within 1-90 days Trade and Other Payables (US$'000) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Trade Payables | 14,284 | 8,610 | | Accrued Expenses and Other Payables | 12,959 | 13,140 | | Contract Liabilities | 3,386 | 3,282 | | Contract Liabilities to Related Parties | 202 | 456 | | Refund Liabilities | 1,270 | 1,420 | | **Total** | **32,101** | **26,908** | Ageing Analysis of Trade Payables (US$'000) | Ageing | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | 1–30 Days | 4,693 | 3,891 | | 31–60 Days | 4,473 | 3,529 | | 61–90 Days | 4,766 | 765 | | Over 90 Days | 352 | 425 | | **Total** | **14,284** | **8,610** | [Issued capital](index=23&type=section&id=9.13%20Issued%20capital) As of June 30, 2024, the company's authorized share capital was 5,000,000,000 ordinary shares of HKD0.10 each, with 2,495,652,351 shares issued and fully paid, totaling US$32,166 thousand, with no share options exercised during the period Issued Capital (US$'000) | Item | June 30, 2024 (Number of Shares) | June 30, 2024 (US$'000) | December 31, 2023 (Number of Shares) | December 31, 2023 (US$'000) | | :--- | :--- | :--- | :--- | :--- | | Authorized: Ordinary Shares of HKD0.10 each | 5,000,000,000 | 64,433 | 5,000,000,000 | 64,433 | | Issued and Fully Paid: At January 1 | 2,495,652,351 | 32,166 | 2,494,352,351 | 32,149 | | Exercise of Share Options | – | – | 1,300,000 | 17 | | **At End of Period/Year** | **2,495,652,351** | **32,166** | **2,495,652,351** | **32,166** | - No share options were exercised during the period ended June 30, 2024[70](index=70&type=chunk) [Equity compensation scheme](index=24&type=section&id=9.14%20Equity%20compensation%20scheme) The company adopted a share option scheme in 2013 to incentivize participants, with 19,240,000 unexercised share options as of June 30, 2024, representing 0.77% of total issued shares - The company adopted the 2013 Share Option Scheme on May 28, 2013, to provide participants with an opportunity to acquire shares and encourage collaboration to enhance company value[71](index=71&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) Movements in 2013 Share Option Scheme (Number of Share Options, in thousands) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | At Beginning of Period/Year | 29,600 | 27,150 | | Granted During Period/Year | – | 5,900 | | Exercised During Period/Year | – | (1,300) | | Cancelled/Lapsed During Period/Year | (10,360) | (2,150) | | **At End of Period/Year** | **19,240** | **29,600** | | Weighted Average Exercise Price (HKD) | 0.612 | 0.684 | - At the end of the reporting period, the total number of exercisable share options under the 2013 Share Option Scheme was **18,990,000** (December 31, 2023: **28,850,000**)[74](index=74&type=chunk)[75](index=75&type=chunk) - As of June 30, 2024, a total of **19,240,000** valid share options remained unexercised, representing **0.77%** of the company's total issued shares[177](index=177&type=chunk) [Capital commitments](index=28&type=section&id=9.15%20Capital%20commitments) As of June 30, 2024, the Group had contracted but unprovided capital expenditure of US$596 thousand, primarily for property, plant, and equipment Capital Commitments (US$'000) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Property, Plant and Equipment | 596 | 2,297 | - Save as disclosed above, there were no other significant capital commitments[77](index=77&type=chunk) [Related parties transactions](index=28&type=section&id=9.16%20Related%20parties%20transactions) The Group engaged in various related party transactions with China Electronics Corporation (CEC) and its subsidiaries/associates, including IC product sales and leasing services, with changes in related party receivables and contract liabilities balances - China Electronics Corporation (CEC), through its subsidiary Huada Semiconductor Co, Ltd, holds approximately **28.3%** of the company's issued shares, making it a substantial shareholder[78](index=78&type=chunk) Related Party Transactions (US$'000) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Sales: Subsidiaries of CEC | 27,630 | 32,566 | | Sales: Associates of CEC | 303 | 591 | | Lease Service Fees: Subsidiaries of CEC | 15 | 17 | Year-end Balances Arising from Sales/Purchases (US$'000) | Item | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Trade Receivables: Subsidiaries of CEC | 4,679 | 4,856 | | Trade Receivables: Associates of CEC | 86 | 82 | | Prepayments: Subsidiaries of CEC | 96 | 221 | | Contract Liabilities: Subsidiaries of CEC | 202 | 456 | Remuneration of Key Management Personnel (US$'000) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Salaries, Allowances, Bonuses and Other Benefits | 1,125 | 1,116 | | Contributions to Pension Schemes | 22 | 25 | | Equity-settled Share-based Payments | – | 83 | | **Total Remuneration Paid to Key Management Personnel** | **1,147** | **1,224** | [Independent Review Report](index=31&type=section&id=Independent%20Review%20Report) This section presents the independent review report, outlining the auditor's conclusion on the interim financial information [Auditor's Conclusion on Interim Financial Information](index=31&type=section&id=10.1%20Auditor%27s%20Conclusion%20on%20Interim%20Financial%20Information) Ernst & Young has reviewed the company's interim financial information in accordance with HKSRE 2410 and found no matters suggesting it was not prepared in all material respects according to HKAS 34 - Independent auditor Ernst & Young has reviewed the interim financial information in accordance with Hong Kong Standard on Review Engagements 2410[87](index=87&type=chunk)[90](index=90&type=chunk) - The scope of a review is substantially less than an audit, and therefore no audit opinion is expressed[87](index=87&type=chunk)[90](index=90&type=chunk) - Based on the review, nothing has come to their attention that causes them to believe the interim financial information is not prepared, in all material respects, in accordance with HKAS 34[88](index=88&type=chunk)[91](index=91&type=chunk) [Chief Executive Officer's Message](index=33&type=section&id=Chief%20Executive%20Officer%27s%20Message) This section provides the CEO's message, covering the company's performance in H1 2024, market opportunities, product innovation, and future strategies [H1 2024 Performance Overview](index=33&type=section&id=11.1%20H1%202024%20Performance%20Overview) In H1 2024, the company faced global economic challenges and weak consumer electronics demand, leading to a short-term decline in sales and profit, though shipments increased sequentially from H2 2023 - The global economy faces severe challenges, with persistent inflation, high interest rates, and geopolitical tensions pressuring growth, while weak domestic demand in China impacts consumer electronics[93](index=93&type=chunk)[95](index=95&type=chunk) - Inventory adjustments in the semiconductor industry are nearing completion, with supply and demand gradually rebalancing[93](index=93&type=chunk)[95](index=95&type=chunk) H1 2024 Key Performance Indicators | Indicator | H1 2024 | H1 2023 | YoY Change | H2 2023 | QoQ Change (vs 2023 H2) | | :--- | :--- | :--- | :--- | :--- | :--- | | Shipments | Approx 170 million units | Approx 176.5 million units | -3.7% | Approx 159.5 million units | +6.6% | | Sales Revenue | US$61.9 million | US$85.3 million | -27.4% | | | | Net Profit Attributable to Owners of the Company | US$7.5 million | US$13.2 million | -43.3% | | Significant growth | [Business Foundation & Market Opportunities](index=34&type=section&id=11.2%20Business%20Foundation%20%26%20Market%20Opportunities) The company flexibly adjusted its product portfolio, benefiting from China's home appliance subsidy policy, leading to a doubling of large display IC revenue and significant growth in OLED display IC shipments - Benefiting from China's home appliance subsidy policy, large display IC product revenue more than **doubled** year-on-year[98](index=98&type=chunk)[101](index=101&type=chunk) - OLED display IC shipments increased by nearly **30%** quarter-on-quarter compared to H2 2023, driven by market opportunity capture and high-demand electronic product iterations[98](index=98&type=chunk)[101](index=101&type=chunk) - Shipments of new display IC bistable display products continued stable growth, but gross margin and average selling price of three-color display labels (E4) were affected by market competition and the anticipated launch of next-generation four-color displays (E5)[99](index=99&type=chunk)[101](index=101&type=chunk) - Mobile display and mobile touch IC product shipments experienced a significant decline due to the continued weakness in the personal consumer market[99](index=99&type=chunk)[101](index=101&type=chunk) [Continuous Product Innovation & Future Prospects](index=34&type=section&id=11.3%20Continuous%20Product%20Innovation%20%26%20Future%20Prospects) The company continues to invest in R&D for high-value-added new products, expanding into new markets like automotive and large e-paper, with several new products nearing mass production or market launch - For new display ICs, small-sized four-color display labels are nearing trial production, expected to drive both volume and price increases upon mass production[100](index=100&type=chunk)[102](index=102&type=chunk) - OLED display ICs will expand into smart home solutions and IoT demand, with IC products supporting transparent PMOLED displays already developed[102](index=102&type=chunk) - For mobile display and mobile touch ICs, a human-machine interface display platform co-developed with TFT-LCD panel manufacturers will enter mass production in H2, and mini-LED backlight solutions are being developed for automotive applications by 2025[103](index=103&type=chunk) - Large display ICs have achieved mass production for several mainstream new products with major display manufacturers and have been authorized to develop next-generation P2P high-speed transmission interface display driver ICs, with project initiation expected in Q3[104](index=104&type=chunk) - Development of automotive driver IC solutions has commenced, targeting mass production for mainstream Chinese automotive systems by 2025[104](index=104&type=chunk) - In the medium and large e-paper market, large quantities of full-color e-paper notebook and e-reader driver IC sets have been shipped, with international brand end products expected in H2[105](index=105&type=chunk)[106](index=106&type=chunk) [Future Outlook and Strategies](index=36&type=section&id=11.4%20Future%20Outlook%20and%20Strategies) The company anticipates continued global economic uncertainty and price pressure in consumer electronics in H2, focusing on R&D for high-value-added products and expanding into emerging applications like automotive and large e-paper - The global economic outlook for H2 remains uncertain, with high interest rates, trade frictions, and policy variables continuing to impact personal electronic consumption, leading to short-term price pressure on products[107](index=107&type=chunk)[110](index=110&type=chunk) - Wafer foundries are expected to maintain stable prices in H2[107](index=107&type=chunk)[110](index=110&type=chunk) - The company will continue to invest in R&D for high-value-added new products, consolidate its market leadership, and actively expand into emerging application areas such as automotive devices and medium-to-large e-paper[108](index=108&type=chunk)[110](index=110&type=chunk) - The company will closely monitor market changes, flexibly adjust its product portfolio, and focus on technological advancements to maintain its competitive edge[108](index=108&type=chunk)[110](index=110&type=chunk) [Management Discussion and Analysis](index=37&type=section&id=Management%20Discussion%20and%20Analysis) This section provides management's discussion and analysis of the company's business and financial performance, including a review of operations, outlook, and financial results [Business Review](index=37&type=section&id=12.1%20Business%20Review) In H1 2024, global economic slowdown and weak consumer electronics demand impacted the company, though semiconductor inventory destocking neared completion, with varied performance across product lines [Overall Business Performance](index=37&type=section&id=12.1.1%20Overall%20Business%20Performance) In H1 2024, global economic growth slowed, impacting consumer electronics demand in China, while semiconductor inventory destocking neared completion, leading to a 3.7% YoY decline in shipments but a 6.6% QoQ increase - Global economic growth remains in deceleration, with the Chinese market significantly impacting consumer electronic product demand due to real estate contraction and weak domestic demand[111](index=111&type=chunk)[114](index=114&type=chunk) - Overall industry inventory destocking is nearing completion, with market supply and demand gradually balancing; wafer foundries' price reductions from last year have reflected in the period, easing cost pressure[111](index=111&type=chunk)[114](index=114&type=chunk) H1 2024 Shipments and Sales Revenue | Indicator | H1 2024 | H1 2023 | YoY Change | H2 2023 | QoQ Change (vs 2023 H2) | | :--- | :--- | :--- | :--- | :--- | :--- | | Shipments | Approx 170 million units | 176.5 million units | -3.7% | 159.5 million units | +6.6% | | Sales Revenue | US$61.9 million | US$85.3 million | -27.4% | | | [New Display ICs](index=37&type=section&id=12.1.2%20New%20Display%20ICs) New Display ICs, primarily bistable display products like electronic shelf labels, saw stable shipment growth but reduced revenue due to lower average selling prices from market competition and the transition to four-color display technology - New Display IC products primarily refer to bistable display products, with stable shipment growth during the period[115](index=115&type=chunk)[116](index=116&type=chunk)[119](index=119&type=chunk) - Due to retailers awaiting the launch of new generation four-color displays (E5) and market competition, the average selling price of three-color display labels (E4) decreased, leading to reduced revenue[116](index=116&type=chunk)[119](index=119&type=chunk) - The company supports E Ink's development of Spectra™ 3100 display IC solutions for electronic shelf labels and retail signage, successfully achieving four-color display[116](index=116&type=chunk)[119](index=119&type=chunk) - Small-sized four-color display labels are expected to undergo trial production soon, with mass production anticipated to drive both volume and price increases in the New Display IC segment[116](index=116&type=chunk)[119](index=119&type=chunk) - Medium and large-sized e-paper related display IC products will be reclassified under the Large Display IC business[118](index=118&type=chunk)[119](index=119&type=chunk) [OLED Display ICs](index=39&type=section&id=12.1.3%20OLED%20Display%20ICs) The Group, as the world's largest PMOLED display driver IC manufacturer, saw OLED display IC shipments remain flat YoY but significantly increase QoQ, driven by market opportunities and high-demand product iterations - The Group is the world's largest PMOLED display driver IC manufacturer, holding a dominant market share by shipment volume during the period[120](index=120&type=chunk)[122](index=122&type=chunk) - OLED display IC shipments remained largely flat year-on-year but increased significantly by nearly **30%** compared to H2 2023, primarily due to the Group's timely capture of market opportunities and iterations of individual high-demand electronic products[120](index=120&type=chunk)[122](index=122&type=chunk) - The company launched a series of price-competitive icon ICs suitable for 1 to 4-inch displays, helping to expand the large panel market for smart home appliances[121](index=121&type=chunk)[122](index=122&type=chunk) - Newly developed IC products supporting transparent PMOLED displays, with their end products launched during the period, can be applied in transparent display applications such as diving masks[121](index=121&type=chunk)[122](index=122&type=chunk) - In 2023, the company launched the world's first small-sized passive micro-LED display driver IC – SSD2363, and is actively engaging with various customers to apply this product to high-value projects such as automotive devices[123](index=123&type=chunk)[126](index=126&type=chunk) [Mobile Display and Mobile Touch ICs](index=40&type=section&id=12.1.4%20Mobile%20Display%20and%20Mobile%20Touch%20ICs) Due to persistent weakness in the personal consumer market, particularly in game controller IC sales, the Group's mobile display and mobile touch IC product shipments and revenue significantly declined - During the period, due to the continued weakness in the personal consumer market, especially affecting game controller IC sales, the Group's mobile display and mobile touch IC product shipments and revenue significantly declined[124](index=124&type=chunk)[127](index=127&type=chunk) - The Group is jointly developing a human-machine interface display platform with several leading small and medium-sized TFT-LCD display panel manufacturers, with mass production expected in H2[125](index=125&type=chunk)[127](index=127&type=chunk) - The company is developing mini-LED backlight solutions, with the FPGA development platform completed, and standard IC development to follow, with products expected to launch in 2025 for automotive applications[128](index=128&type=chunk) [Large Display ICs](index=41&type=section&id=12.1.5%20Large%20Display%20ICs) Benefiting from China's home appliance subsidy policy, Large Display IC product shipments and revenue more than doubled year-on-year, with new product mass production and development in automotive and e-paper markets - During the period, benefiting from a series of home appliance subsidy policies introduced by China at the end of 2023, Large Display IC product shipments and revenue more than **doubled** compared to the same period last year[130](index=130&type=chunk)[131](index=131&type=chunk) - The company collaborated with major display panel manufacturers to mass produce several mainstream new products for international end brands, including high refresh rate gaming monitors and smart TVs[132](index=132&type=chunk)[135](index=135&type=chunk) - The company was authorized by a major Chinese display panel manufacturer to develop next-generation P2P high-speed transmission interface display driver ICs, with the project expected to commence in Q3 of this year[132](index=132&type=chunk)[135](index=135&type=chunk) - Development of automotive driver IC solutions has officially begun, targeting mass production by 2025 for mainstream Chinese automotive systems[133](index=133&type=chunk)[135](index=135&type=chunk) - In the medium and large e-paper market, large quantities of full-color e-paper notebook and e-reader driver IC sets have been shipped, with international brand end products expected in H2[134](index=134&type=chunk)[135](index=135&type=chunk) [Outlook](index=43&type=section&id=12.2%20Outlook) The company anticipates continued global economic uncertainty and price pressure in H2, focusing on developing high-value-added products and expanding into emerging applications like automotive and large e-paper to ensure competitiveness - Global inflation, trade frictions, and policy uncertainties will keep interest rates high, impacting personal consumption expenditure, with products still facing short-term price pressure[136](index=136&type=chunk)[139](index=139&type=chunk) - Wafer foundries are expected to maintain original prices or decrease them in H2, with a low chance of price increases[136](index=136&type=chunk)[139](index=139&type=chunk) - The Group will allocate more resources to developing high-value-added new products to strengthen its capabilities and prepare for economic recovery[137](index=137&type=chunk)[139](index=139&type=chunk) - The Group will actively expand into emerging application areas such as automotive devices and medium-to-large e-paper, believing automotive devices hold significant market potential[138](index=138&type=chunk)[139](index=139&type=chunk) - The company will continue to closely monitor market changes, flexibly adjust its product strategy, and focus on improving technology to ensure its competitiveness[138](index=138&type=chunk)[139](index=139&type=chunk) [Financial Review](index=44&type=section&id=12.3%20Financial%20Review) The Group's H1 2024 revenue and gross profit declined due to high inflation and the e-shelf label technology transition, but strong liquidity was maintained, with increased cash and cash equivalents [Revenue and Results Overview](index=44&type=section&id=12.3.1%20Revenue%20and%20Results%20Overview) The Group's H1 2024 revenue decreased by 27.4% to US$61.9 million, with gross profit at US$19.8 million and a gross margin of 32.0%, primarily due to high inflation and strategic inventory clearance during the e-shelf label technology transition H1 2024 Revenue and Results Overview | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | | Revenue | US$61.9 million | US$85.3 million | -27.4% | | Gross Profit | US$19.8 million | US$27.9 million | -29.0% | | Gross Margin | 32.0% | 32.7% | -0.7% point | | Selling and Distribution Expenses | US$1.9 million | | +46.1% | | Administrative Expenses | US$4.6 million | | +22% | | R&D Costs | US$8.0 million | US$10.6 million | -24.5% | | R&D Costs as % of Total Sales | 12.9% | 12.4% | +0.5% point | | Net Profit Attributable to Owners of the Company | US$7.5 million | US$13.2 million | -43.2% | | Interim Dividend | Not recommended | Nil | | - The decrease in sales revenue and gross profit was primarily due to the impact of high inflation on consumer electronic product demand and the strategic clearance of E4 IC inventory during the transition from three-color (E4) to four-color (E5) electronic shelf label technology, leading to lower average selling prices[140](index=140&type=chunk)[142](index=142&type=chunk) [Liquidity and Financial Resource](index=45&type=section&id=12.3.2%20Liquidity%20and%20Financial%20Resource) Despite a year-on-year decrease in net profit attributable to owners of the company in H1 2024, it remained higher than H2 2023, demonstrating strong liquidity with a current ratio of 4.59 and increased interest income - Net profit attributable to owners of the company in H1 2024 remained higher than H2 2023, primarily due to better product development strategies and stringent cost control measures[143](index=143&type=chunk)[144](index=144&type=chunk) Liquidity Position (US$'000) | Indicator | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Current Assets | 160,076 | 148,598 | | Current Liabilities | 34,875 | 29,974 | | Net Current Assets | 125,201 | 118,624 | | Current Ratio | 4.59 | 4.96 | | Interest Income | 2,132 (H1 2024) | 934 (H1 2023) | [Treasury Management](index=46&type=section&id=12.3.3%20Treasury%20Management) The Group's internal treasury review team actively monitors its investment portfolio to enhance returns on cash reserves, with total cash and pledged bank deposits increasing to US$102.1 million, primarily invested in bank deposits - The Group has an internal treasury review team responsible for implementing treasury management policies, reviewing the overall investment portfolio, and regularly monitoring investment performance to enhance returns on cash reserves[148](index=148&type=chunk)[152](index=152&type=chunk) - As of June 30, 2024, cash and cash equivalents and pledged bank deposits totaled **US$102.1 million**, an increase of **US$15.7 million**[149](index=149&type=chunk)[152](index=152&type=chunk) - Of this, **US$6.0 million** denominated in US dollars is pledged to banks for financing operating purposes[149](index=149&type=chunk)[152](index=152&type=chunk) - The Group's major receivables and payables are settled in US dollars, and no derivative instruments are used to hedge its operational foreign exchange risks[151](index=151&type=chunk)[152](index=152&type=chunk) [Capital Expenditure and Contingent Liabilities](index=47&type=section&id=12.3.4%20Capital%20Expenditure%20and%20Contingent%20Liabilities) In H1 2024, the Group's capital expenditure was US$1,778,000, with contracted but unprovided capital expenditure of US$596,000 as of June 30, and no other significant capital commitments or contingent liabilities Capital Expenditure and Commitments (US$'000) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Capital Expenditure | 1,778 | 122 | | Contracted but Unprovided Capital Expenditure (as of June 30) | 596 | 2,300 (Dec 31, 2023) | - Save as disclosed above, the Group had no other significant capital commitments or contingent liabilities[153](index=153&type=chunk)[157](index=157&type=chunk) [Acquisition and Disposal of Material Subsidiaries and Associates](index=47&type=section&id=12.3.5%20Acquisition%20and%20Disposal%20of%20Material%20Subsidiaries%20and%20Associates) During the review period, the Group did not acquire or dispose of any material subsidiaries or associates - During the review period, the Group did not acquire or dispose of any material subsidiaries or associates[154](index=154&type=chunk)[158](index=158&type=chunk) [Charge of Assets](index=47&type=section&id=12.3.6%20Charge%20of%20Assets) As of June 30, 2024, pledged bank deposits amounting to US$6.0 million were pledged to banks for securing bank facilities - As of June 30, 2024, pledged bank deposits amounting to **US$6.0 million** (December 31, 2023: **US$6.0 million**) were pledged to banks for securing bank facilities[155](index=155&type=chunk)[159](index=159&type=chunk) [Human Resources and Remuneration Policy](index=47&type=section&id=12.3.7%20Human%20Resources%20and%20Remuneration%20Policy) As of June 30, 2024, the Group had 309 employees, with a 12.6% decrease in staff costs due to lower bonuses, and remuneration policies based on individual performance - As of June 30, 2024, the Group had **309** employees, with approximately **37%** based at the Hong Kong head office and the remainder in Mainland China and Taiwan[156](index=156&type=chunk)[160](index=160&type=chunk) - Employee salaries and other benefits expenses decreased by **12.6%** to approximately **US$11.1 million**, primarily due to lower bonuses resulting from reduced profits in the previous year[156](index=156&type=chunk)[160](index=160&type=chunk) - Remuneration policy is determined based on individual employee performance, offering provident funds, pension schemes, medical and other insurance, and discretionary bonuses[156](index=156&type=chunk)[160](index=160&type=chunk) [Directors' Interests](index=48&type=section&id=Directors%27%20Interests) This section details the interests of directors and the chief executive in the company's shares and share options as of June 30, 2024 [Directors' and Chief Executive's Interests in Shares and Share Options](index=48&type=section&id=13.1%20Directors%27%20and%20Chief%20Executive%27s%20Interests%20in%20Shares%20and%20Share%20Options) As of June 30, 2024, Executive Director Mr. Wang Huazhi held 5,600,000 ordinary shares and 6,000,000 share options, representing 0.46% of the issued share capital, with no directors exercising share options during the period Directors' and Chief Executive's Interests in Ordinary Shares and Share Options of the Company (As at June 30, 2024) | Director Name | Nature of Interest | Number of Shares Held | Number of Share Options Held | Total | Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | | Dr. Chan Ching Ho, Independent Non-executive Director | Beneficial Owner | – | 1,600,000 (ii) | 1,600,000 | 0.06% | | Mr. Wang Huazhi, Executive Director | Beneficial Owner | 5,600,000 | 6,000,000 (iii) | 11,600,000 | 0.46% | - At no time during the period did any Director or Chief Executive (including their spouses and children under 18) own, or were granted, or exercised any rights to subscribe for shares of the company or its associated corporations required to be disclosed under the SFO[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [Substantial Shareholders' Interests](index=50&type=section&id=Substantial%20Shareholders%27%20Interests) This section outlines the interests of substantial shareholders in the company's shares as of June 30, 2024 [Interests of Substantial Shareholders](index=50&type=section&id=14.1%20Interests%20of%20Substantial%20Shareholders) As of June 30, 2024, Huada Semiconductor Co, Ltd, China Electronics Corporation, and China Electronics Information Industry Group Co, Ltd (CEC) each held a long position of 706,066,000 ordinary shares, representing 28.29% of the company's issued share capital Interests of Substantial Shareholders in Ordinary Shares of the Company (As at June 30, 2024) | Shareholder Name | Capacity | Nature of Interest | Number of Shares Held | Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | | Huada Semiconductor Co, Ltd | Beneficial Owner | Long Position | 706,066,000 | 28.29% | | China Electronics Corporation | Interest of Controlled Corporation | Long Position | 706,066,000 | 28.29% | | China Electronics Information Industry Group Co, Ltd | Interest of Controlled Corporation | Long Position | 706,066,000 | 28.29% | - China Electronics Information Industry Group Co, Ltd (CEC) is a state-owned electronic information technology enterprise group directly managed by the central government of the People's Republic of China[170](index=170&type=chunk)[171](index=171&type=chunk) [Share Option Scheme](index=51&type=section&id=Share%20Option%20Scheme) This section provides an overview of the company's share option scheme, including its objectives, terms, and details of share option movements [Scheme Overview](index=51&type=section&id=15.1%20Scheme%20Overview) The company adopted the 2013 Share Option Scheme on May 28, 2013, for a 10-year term, to incentivize participants by offering opportunities to acquire company shares and enhance company value - The company adopted the 2013 Share Option Scheme on May 28, 2013, for a term of **10 years**, aiming to provide participants with an opportunity to acquire shares and encourage collaboration to enhance the company's value for the benefit of the company and its shareholders as a whole[173](index=173&type=chunk)[174](index=174&type=chunk)[176](index=176&type=chunk) - Under the scheme, the total number of shares that may be issued shall not exceed **10%** of the company's issued share capital at the date of approval of the scheme or **30%** of the company's issued share capital from time to time[174](index=174&type=chunk)[176](index=176&type=chunk) - The total number of shares of the company issued and to be issued upon exercise of share options granted to any participant in any 12-month period shall not exceed **1%** of the company's issued shares[175](index=175&type=chunk)[176](index=176&type=chunk) [Share Option Details and Movements](index=51&type=section&id=15.2%20Share%20Option%20Details%20and%20Movements) The subscription price for share options is determined by the Board, not less than the higher of the closing price on the grant date or the average closing price of the preceding five business days - The subscription price for share options shall be the higher of: (a) the closing price of the shares as stated in the daily quotation sheet of the Stock Exchange on the date of grant; and (b) the average closing price of the shares as stated in the daily quotation sheets of the Stock Exchange for the five business days immediately preceding the date of grant[176](index=176&type=chunk) - As the 2013 Share Option Scheme expired on May 27, 2023, no share options were granted during the review period[177](index=177&type=chunk) - As of June 30, 2024, a total of **19,240,000** valid share options remained unexercised, entitling holders to subscribe for **19,240,000** shares of the company, representing **0.77%** of the company's total issued shares[177](index=177&type=chunk) Movements in 2013 Share Option Scheme (Number of Share Options, in thousands) | Item | Held at January 1, 2024 | Granted During Period | Exercised During Period | Cancelled/Lapsed During Period | Held at June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total | 29,600 | – | – | (10,360) | 19,240 | [Share Option Valuation](index=55&type=section&id=15.3%20Share%20Option%20Valuation) The company uses a binomial pricing model to calculate the fair value of granted share options, with key parameters including grant date, share price, exercise price, expected life, volatility, risk-free rate, and dividend yield - The company uses a binomial pricing model ("Model") to calculate the fair value of granted share options[184](index=184&type=chunk)[186](index=186&type=chunk) Key Parameters for Share Option Valuation (Granted in 2023) | Parameter | Granted on May 25, 2023 | Granted on March 24, 2023 | | :--- | :--- | :--- | | Number of Share Options Granted (in thousands) | 5,400 | 500 | | Total Value of Share Options – US$ equivalent (thousands) | 114 | 14 | | Share Price at Grant Date (HKD) | 0.455 | 0.500 | | Exercise Price (HKD) | 0.463 | 0.546 | | Expected Life of Share Options (Years) | 2 | 3-4 | | Annual Volatility | 76.9% | 77.2%-83.6% | | Risk-free Rate | 3.64% | 2.78%-2.84% | | Dividend Yield | 2.33% | 2.33% | - The calculated fair value has inherent subjectivity and uncertainty due to given assumptions and the limitations of the model itself[186](index=186&type=chunk) [Corporate Governance and Supplementary Information](index=56&type=section&id=Corporate%20Governance%20and%20Supplementary%20Information) This section covers the company's adherence to corporate governance codes, review of financial information, and investor relations activities [Compliance with Corporate Governance Code](index=56&type=section&id=16.1%20Compliance%20with%20Corporate%20Governance%20Code) For the six months ended June 30, 2024, the company consistently complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules - For the six months ended June 30, 2024, the company consistently complied with all applicable code provisions of the Corporate Governance Code as set out in Appendix C1 of the Listing Rules[187](index=187&type=chunk) [Compliance with the Model Code](index=56&type=section&id=16.2%20Compliance%20with%20the%20Model%20Code) The company maintains written guidelines for securities transactions by directors and relevant employees, which are no less exacting than the Model Code, and all directors confirmed compliance during the period - The company maintains written guidelines for securities transactions by directors and relevant employees, with terms no less exacting than the required standards set out in Appendix C3 of the Listing Rules[187](index=187&type=chunk) - All directors confirmed compliance with these guidelines for the six months ended June 30, 2024, and the company is unaware of any non-compliance by relevant employees with the Model Code[187](index=187&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Shares](index=56&type=section&id=16.3%20Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Shares) During the six months ended June 30, 2024, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed shares - During the six months ended June 30, 2024, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed shares[187](index=187&type=chunk) [Review of Interim Condensed Consolidated Financial Information](index=56&type=section&id=16.4%20Review%20of%20Interim%20Condensed%20Consolidated%20Financial%20Information) The unaudited interim condensed consolidated financial information has been reviewed by management and the audit committee, and by the company's independent auditor, Ernst & Young, in accordance with HKSRE 2410 - The unaudited interim condensed consolidated financial information has been reviewed by management in conjunction with the audit committee[187](index=187&type=chunk) - This information has been reviewed by the company's independent auditor, Ernst & Young, in accordance with Hong Kong Standard on Review Engagements 2410[187](index=187&type=chunk) [Investor Relations and Communications](index=57&type=section&id=16.5%20Investor%20Relations%20and%20Communications) The Group actively communicates with investors, including institutional investors, sell-side analysts, and retail investors, holding conference calls in H1 2024, with shareholders able to access the latest information via the company website - The Group adopts a proactive approach to communicate with the investing public, including institutional investors, sell-side analysts, and retail investors[188](index=188&type=chunk)[190](index=190&type=chunk) - In H1 2024, the Group continued to hold conference calls with investors and analysts[188](index=188&type=chunk)[190](index=190&type=chunk) - Shareholders can access the latest information on the Group's website (www.solomon-systech.com) from time to time[188](index=188&type=chunk)[190](index=190&type=chunk) [Publication of Interim Results on the Stock Exchange's Website and the Company's Website](index=57&type=section&id=16.6%20Publication%20of%20Interim%20Results%20on%20the%20Stock%20Exchange%27s%20Website%20and%20the%20Company%27s%20Website) The company published all interim financial and related information for the Group, as required by the Listing Rules, on the Stock Exchange's website and its own website on August 22, 2024 - The company published all interim financial and related information for the Group, as required by the Listing Rules, on the Stock Exchange's website (www.hkexnews.hk) and its own website (www.solomon-systech.com) on August 22, 2024[189](index=189&type=chunk)[191](index=191&type=chunk) [Definitions and Glossary](index=58&type=section&id=Definitions%20and%20Glossary) This section provides definitions of key terms and abbreviations used in the report to aid reader comprehension [Key Terms and Abbreviations](index=58&type=section&id=17.1%20Key%20Terms%20and%20Abbreviations) This chapter provides definitions of key terms and abbreviations used in the report to help readers understand the financial report content [Corporate and Shareholder Information](index=60&type=section&id=Corporate%20and%20Shareholder%20Information) This section provides general corporate and shareholder-related information, including financial calendar, listing details, and contact information [General Corporate Information](index=60&type=section&id=18.1%20General%20Corporate%20Information) This chapter provides the company's financial calendar, share listing information, issued shares, share registrar, independent auditor, legal counsel, board members, authorized representatives, company secretary, qualified accountant, corporate communications/investor relations contact, head office address, and company website - The financial year-end is December 31, with interim results announced on August 22, 2024[194](index=194&type=chunk) - Shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited under stock code **2878**, with a trading unit of **2,000** shares and trading currency in HKD[194](index=194&type=chunk) - As of June 30, 2024, the number of issued shares was **2,495,652,351**[194](index=194&type=chunk) - The company has independent auditor Ernst & Young and legal counsel Loeb & Loeb LLP[194](index=194&type=chunk)[195](index=195&type=chunk) - Board members include Executive Director Mr. Wang Huazhi (Chief Executive Officer), Non-executive Directors Mr. Ma Yuchuan (Chairman), Mr. Wang Hui, and Ms. Liu Fei, and Independent Non-executive Directors Mr. Chan Chi Kwong, Dr. Chan Ching Ho, and Dr. Kwok Hoi Sing[196](index=196&type=chunk) - The company's head office is located at Hong Kong Science Park, with corporate communications/investor relations email at ir@solomon-systech.com[196](index=196&type=chunk)

Share Option Scheme - The 2013 Share Option Scheme was adopted on May 28, 2013, and will expire on May 27, 2023, with no further options to be granted under this scheme[1] - A total of 5,900,000 share options were granted during the year ended December 31, 2023, representing 0.024% of the weighted average number of shares issued in 2023[1] - As of December 31, 2023, there were 29,600,000 unexercised share options, which can be converted into 29,600,000 shares, accounting for 1.19% of the total issued shares[2] - The share options granted to directors and senior management did not have any performance targets attached[2] Continuing Connected Transactions - The annual caps for continuing connected transactions under the 2024 product sales and distribution agreement are set at $65 million, $75 million, and $85 million for the three years ending December 31, 2026[3]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完整性 亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內容而引致 的任何損失承擔任何責任。 （於開曼群島註冊成立之有限公司） （股份代號：2878） 截至2024年6月30日止6個月 中期業績公告 | --- | |----------| | | | | | | | | | 百萬美元 | | | 1 中期業績 晶門半導體有限公司（統稱「本公司」）的董事宣佈本公司及其附屬公司（統稱「本集團」）截至2024年 6月30日止6個月的未經審核簡明綜合中期業績連同上年度同期的比較數字列載如下： 中期簡明綜合損益表 截至2024年6月30日止6個月 | --- | --- | --- | --- | |----------------------------------------------|-------|--------------------------------|---------------| | | | 未經審核 \n6 月 30 日止 \n2024 | 6 個月 \n2023 | | | ...

Financial Performance - Total assets as of December 31, 2023, were US$157.4 million, a decrease of 0.5% from US$158.3 million in 2022[16]. - Shareholders' funds increased by 16.3% to US$126.9 million in 2023, up from US$109.2 million in 2022[16]. - The current ratio improved to 4.96 in 2023, compared to 3.02 in 2022, indicating better short-term financial health[24]. - In 2023, the shipment volume increased by 7.4% year-on-year to approximately 336 million units, despite a 19.8% decrease in sales revenue to US$153.2 million due to price reductions[41]. - Profit attributable to owners decreased by 30.1% year-on-year to US$19.4 million, with earnings per share at 0.8 US cents[41]. - Revenue for 2023 was US$153.2 million, a decrease of 19.8% from US$190.8 million in 2022[159]. - Gross profit for 2023 was US$46.3 million, down 29.2% from US$65.5 million in 2022[159]. - Gross margin decreased to 30.3% in 2023, down 4.0 percentage points from 34.3% in 2022[159]. - The Group's net profit attributable to shareholders decreased by 30.1% year-on-year to $19.4 million, with earnings per share at $0.008[55]. Market Trends and Projections - The semiconductor industry is expected to see a recovery in the second half of 2024, with IDC predicting a 14% growth in the Asia-Pacific market[26]. - The global Electronic Shelf Label (ESL) market is projected to reach US$1.73 billion in 2024, driven by retail trends and ESG considerations[29]. - The semiconductor market is anticipated to bottom out in 2024, with the Group maintaining a cautious optimism based on its strong R&D capabilities and diversified product portfolio[34]. - The Group anticipates a market recovery in the second half of 2024 as inventory levels improve and consumer electronics demand rebounds[70]. - The macroeconomic environment remains uncertain with weak demand growth, but wafer fabs have started to lower average prices, which is expected to positively impact the Group's gross profit in 2024[110]. Product Development and Innovations - Solomon Systech continues to lead in Passive Matrix OLED (PMOLED) display ICs, enhancing display performance while reducing system power consumption[21]. - The company offers a range of custom IC solutions, leveraging over 20 years of experience in display IC development[11]. - Solomon Systech's MiniLED/µLED display driver solutions are tailored for high-resolution devices, addressing growing market demand[11]. - The Group launched the world's first small-sized passive matrix micro-LED display driver IC – SSD2363 in 2023, reinforcing its leading position in the PMOLED display driver IC market[33]. - The Group's new icon IC products, launched in 2023, cover displays up to 4 inches and are expected to enhance market share in large-panel smart home appliances[37]. - The Group's new four-color display IC solution for the Spectra™ 3100 platform was launched in the second half of 2023, with mass production of large display applications expected to start in H1 2024[60]. - The Group is developing automotive driver IC solutions, targeting mass production in Q4 2024 for major automotive systems in Mainland China[52]. - The Group's new display IC solutions are being developed for various applications, including gaming monitors and smart TVs, with a focus on high refresh rates and resolution[95]. - The Group's bistable display technology offers high contrast, wide viewing angles, and power savings, making it suitable for low-power-consuming monitors[151]. - The Group's PMOLED drivers employ a proprietary driving scheme to reduce power consumption and enhance display performance, making them ideal for portable devices[143]. Operational Highlights - The Group's delivery volume grew by 7.4% year-on-year, reaching approximately 336 million units, despite a 19.8% decrease in sales revenue to $153.2 million due to falling product prices[55]. - The average selling price of new display IC products dropped, impacting revenue, as sales of three-color display labels slowed due to retailers waiting for the launch of four-color displays[84]. - The overall inventory level of the industry decreased by approximately 42% compared to the end of the previous year, helping to reduce operating risks[81]. - The Group's mini-LED backlight solution is actively being marketed for specific applications across various fields[50]. - The Group is committed to expanding the application of IC products to areas such as translators and large retail signage applications, aligning with the global trend towards energy-efficient displays[127]. Employee and Corporate Governance - As of December 31, 2023, the Group had a total workforce of 302 employees, with approximately 87% holding a bachelor's degree or above and 34% holding a master's degree or higher[119]. - The company dedicated over 10,354 man-hours to training and development in 2023, focusing on both technical and soft skills[167]. - The company emphasizes employee well-being, providing health insurance and promoting a healthy work-life balance[168]. - The Company has taken appropriate insurance cover to indemnify its Directors against possible claims and liabilities arising out of the Group's business and activities[192]. - The Board has scheduled to meet at least four times a year, allowing for open discussion on strategy, operational and financial performance, and internal control[194]. - The Company Secretary is responsible for distributing detailed documents to the Directors prior to Board meetings to ensure informed decision-making[195].

Financial Performance - Revenue decreased by 19.8% to $153.2 million[2] - Gross profit was $46.3 million, down 29.2%[2] - Gross margin decreased by 4.0 percentage points to 30.3%[2] - Net profit attributable to shareholders was $19.4 million, a decline of 30.1%[2] - Earnings per share were $0.8 (6.2 HK cents)[2] - Total comprehensive income for the year was $17.4 million, down from $25.1 million[8] - The group's pre-tax profit for 2023 was $19,443,000, a decrease of 30.3% from $27,833,000 in 2022[41] - The company's revenue decreased by approximately 19.8% to $153.2 million in 2023, down from $190.8 million in 2022[71] - Net profit attributable to shareholders was $19.4 million, a decrease of about 30.1% compared to $27.8 million in 2022, with earnings per share of $0.8, down by $0.3 from the previous year[71][77] - Gross profit for the period was $46.3 million, with a gross margin of 30.3%, down from $65.5 million and 34.3% in 2022[72] - Total expenses for the year were approximately $30.2 million, a decrease of 23.9% from $39.7 million in 2022[74] - Research and development costs were $17.8 million, down 34.2% from $27.1 million in 2022, representing 11.6% of sales compared to 14.2% in the previous year[74] Assets and Equity - Non-current assets totaled $8.8 million, down from $12.1 million[10] - Current assets increased to $148.6 million from $146.1 million[10] - Total equity attributable to shareholders was $126.9 million, up from $109.2 million[10] - Non-current assets in Hong Kong, China, and Taiwan totaled $6,988,000 in 2023, down from $9,359,000 in 2022[25] - The total amount of accounts receivable and other receivables was $32,496,000 in 2023, down from $49,425,000 in 2022[44] - The group’s contract liabilities decreased to $3,738,000 in 2023 from $10,570,000 in 2022, primarily due to a reduction in advance payments received[52] - Cash and cash equivalents totaled $86.3 million, up from $51.6 million in 2022, with no significant borrowings apart from a $1.7 million loan from a subsidiary[83] Dividends and Shareholder Returns - The board does not recommend a final dividend for the year ending December 31, 2023[2] - The group did not declare or pay dividends for the years ended December 31, 2023, and 2022[41] - The company did not recommend the payment of a final dividend for the year[99] Operational Highlights - The company operates a single business segment focused on the design, development, and sale of proprietary IC products and system solutions[20] - The company has a diverse customer base, with significant sales in Hong Kong, mainland China, Taiwan, the US, Japan, and Europe[21] - The company received various government subsidies for R&D projects during the year, totaling $902,000, compared to $2,002,000 in 2022[34] - Interest income from bank loans increased to $2,547,000 in 2023, compared to $363,000 in 2022[35] - The average selling price of new display IC products decreased due to market competition and the transition to new generation products, impacting revenue[56] - The group’s overall inventory decreased by approximately 42% compared to the end of the previous year, reducing operational risks[54] - The company plans to continue focusing on developing high-value products that meet market demand despite slower-than-expected market recovery[70] Employee and Governance - As of December 31, 2023, the group had a total of 302 employees, with approximately 37% based in Hong Kong and the remainder in mainland China and Taiwan[94] - Employee salaries and benefits decreased from approximately $24.9 million in 2022 to about $22.1 million, a reduction of 11%, primarily due to a decline in average employee numbers[94] - The audit committee reviewed the group's full-year performance for the year ending December 31, 2023[97] - Ernst & Young confirmed that the preliminary financial results were consistent with the group's draft financial statements for the year[98] - The company has adhered to the corporate governance code and standards for securities transactions by directors throughout the year[96] - There were no purchases, sales, or redemptions of the company's listed shares by the company or its subsidiaries during the year[95] Product Development and Innovation - The company launched the world's first small-size passive micro-LED display driver IC, SSD2363, suitable for displays of 3 inches or below, targeting high-brightness applications in wearables, home appliances, and industrial uses[66] - The shipment volume of new display IC products showed stable growth, driven by the introduction of four-color display labels in Q4 2023, enhancing the company's position in the electronic shelf label market[61] - The company is actively developing large-size display driver IC solutions for commercial displays, high-end gaming monitors, and smart TVs, with new products expected to enter mass production in Q3 2024[65] - The company has initiated strategic cooperation with a major display manufacturer in Shenzhen to develop automotive driver IC solutions, aiming for mass production in Q4 2024[65] - The company is expanding its product applications into large color electronic retail signage, with plans for mass production of displays over 20 inches in size expected in H1 2024[67] - The company received the 2023 EE Awards Asia for the SSD2363, recognizing it as the "Product Award - Best MCU/Driver IC (Asia)" for its innovative micro-LED technology[68] - The company is focusing on energy-efficient display solutions, aligning with global sustainability trends, and aims to transition to multi-color and large-size displays[62] - The company is collaborating with international e-book brands to launch full-color e-book readers, with display IC shipments expected to grow continuously in 2024[67] - The company is enhancing its product portfolio with various mobile display and touch IC solutions, including MIPI bridge ICs and display control ICs, to support a wide range of consumer and industrial products[64] - The company is committed to R&D collaboration to accelerate entry into target markets, leveraging its technological advantages and extensive intellectual property[66]

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責， 對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告全部或任 何部份內容而產生或因倚賴該等內容而引致的任何損失承擔任何責任。 （於開曼群島註冊成立之有限公司） （股份代號：2878） 有關2022年年報的補充公告 茲提述晶門半導體有限公司（「本公司」）於2023年4月27日刊發截至2022年12月31日 止年度之年報（「2022年年報」）。除文義另有指明者外，本公告所用詞彙與2022年 年報所用者具有相同涵義。 董事會就2013購股權計劃提供以下補充資料： (a) 截至2022年12月31日止年度授出購股權之詳情如下： 授出購股權 價值 公平值 數目 （以千位計） （以千位計） （以千位計） （美元） （港元） ...

Share Options - As of June 30, 2023, the weighted average exercise price of unexercised share options was HK$0.684, with a total of 30,150,000 options remaining[3]. - During the period, 1,300,000 share options were exercised at a weighted average subscription price of HK$0.2181, generating approximately US$37,000 in cash before expenses[15]. - The company granted 5,900,000 share options during the period at an average exercise price of HK$0.470[3]. - The average closing price of the company's ordinary shares on the exercise date of share options was HK$0.49[37]. - The company had 354,297 dilutive share options outstanding for the six months ended June 30, 2023, compared to 1,283,976 in the same period of 2022[27]. - The total number of share options granted during the year is 30,150 thousand units[200]. - The total number of share options exercised during the year is 5,900 thousand units[200]. - The total number of share options lapsed/forfeited during the year is 1,300 thousand units[200]. - The total number of share options held as of June 30, 2023 is 27,150 thousand units[200]. - The exercise price per share for options granted on June 22, 2022 is HK$0.530[200]. - The exercise price per share for options granted on March 24, 2023 is HK$0.546[200]. - The exercise price per share for options granted on May 25, 2023 is HK$0.463[200]. - The vesting period for options granted on June 22, 2022 is from June 22, 2022 to June 21, 2023[200]. - The exercise period for options granted on May 25, 2023 is from May 25, 2023 to May 25, 2025[200]. - The total number of share options held on June 30, 2023 is 30,150 thousand units[200]. Financial Performance - Revenue for the six months ended June 30, 2023, was US$85.3 million, a decrease of 21.4% compared to US$108.5 million in the same period of 2022[63]. - Gross profit for the same period was US$27.9 million, down 33.8% from US$42.2 million year-over-year[63]. - Profit attributable to owners of the parent was US$13.2 million, reflecting a decline of 39.5% from US$21.8 million in the prior year[63]. - Earnings per share decreased to 0.53 US cents, a drop of 39.1% compared to 0.87 US cents in the previous year[63]. - Profit before tax decreased to $13,165,000, a decline of 39.5% from $21,771,000 in the previous year[66]. - Profit for the period was $13,165,000, compared to $21,758,000 in the same period last year, representing a decrease of 39.5%[67]. - Total comprehensive income for the period was $10,731,000, down from $21,871,000, a decrease of 51.0%[67]. - The profit for the period ending June 30, 2023, is reported at US$13.165 million, compared to US$21.760 million for the same period in 2022, indicating a decrease of approximately 39.5%[97]. Assets and Liabilities - Total assets increased to US$160.2 million, a slight rise of 1.2% from US$158.3 million at the end of 2022[62]. - Shareholders' funds rose to US$120.2 million, marking a 10.1% increase from US$109.2 million at the end of 2022[62]. - Cash and cash equivalents at the end of the period were US$70.874 million, up from US$46.420 million in the previous year[54]. - Total current assets increased to $151,435,000 from $146,126,000, reflecting a growth of 3.5%[69]. - Net current assets rose to $111,800,000, compared to $97,739,000, indicating an increase of 14.3%[69]. - Total assets less current liabilities amounted to $120,575,000, up from $109,876,000, a growth of 9.5%[69]. - The total liabilities related to contracts decreased from US$6,346,000 at the end of 2022 to US$5,773,000 as of June 30, 2023[9]. - Trade payables as of June 30, 2023, amounted to US$13,935,000, a decrease from US$15,807,000 as of December 31, 2022[9]. - The ageing analysis of trade payables showed that 1-30 days overdue payables were US$7,715,000, while those overdue by 61-90 days were US$1,311,000[13]. - Trade receivables as of June 30, 2023, amounted to US$17,678,000, down from US$19,227,000 as of December 31, 2022, reflecting a decrease of approximately 8.06%[33]. - The impairment provision for trade receivables was US$173,000 as of June 30, 2023, slightly improved from US$214,000 in the previous year[33]. - The company reported a reversal of impairment losses of US$41,000 during the period[7]. Dividends - No interim dividend was declared for the six months ended June 30, 2023, consistent with the previous year[30]. - The company does not recommend the payment of an interim dividend for the six months ended June 30, 2023[64]. - The company did not declare or pay any dividends for the year ended December 31, 2022[28]. Market Performance - Sales in Hong Kong and Mainland China amounted to US$46,427,000, down from US$62,675,000, reflecting a decline of 26%[132]. - The Group's sales in Taiwan decreased by 47.3% to US$9,899,000 from US$18,734,000[132]. - Sales in Japan increased by 31.1% to US$11,968,000 compared to US$9,092,000 in the previous year[132]. - The Group's sales in Europe rose by 65.5% to US$12,600,000 from US$7,618,000[132]. - Revenue from new display ICs was US$39,847,000, down from US$49,731,000 in the previous year, representing a decline of 19.0%[156]. - The largest customer contributed US$32,566,000 in sales, accounting for over 10% of the Group's total revenue, compared to US$43,146,000 from the largest customer in the same period last year[159]. Financial Management - The current ratio improved to 3.82 from 3.02, indicating better short-term financial stability[44]. - The debt to equity ratio remained low at 0.00, down from 0.013, reflecting a strong equity position[44]. - The fair value of financial instruments approximates their carrying amounts due to their short-term nature, indicating effective liquidity management[94]. - The Group's cash and cash equivalents, along with other financial assets, have been assessed to have fair values closely aligned with their carrying amounts, ensuring stability in financial reporting[94]. - The Group has not identified any significant impact on its financial position or performance due to the recent accounting policy changes[88]. - The Group did not make any provision for Hong Kong profits tax due to available tax losses from prior years[179]. Operational Insights - The company specializes in the design, development, and sales of integrated circuits for various display applications, indicating ongoing focus on innovation and market expansion[74]. - The Group has maintained a single operating segment focused on the design, development, and sales of proprietary IC products and system solutions[148]. - The Group's operating segments are assessed by the Executive Director and senior management to allocate resources effectively[126]. - The Group has applied amendments to HKAS 1 and HKAS 12 since January 1, 2023, which are expected to impact annual consolidated financial statements but did not affect interim financial information[111][115]. - The Group has adopted new and revised HKFRSs, including HKFRS 17 for insurance contracts, which may impact future financial reporting[108].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不負責，對其準確性或完整性 亦不發表任何聲明，並明確表示，概不對因本公告全部或任何部份內容而產生或因倚賴該等內容而引致 的任何損失承擔任何責任。 （於開曼群島註冊成立之有限公司） （股份代號：2878） 截至2023年6月30日止6個月 中期業績公告 財務摘要 • 銷售額下跌約21.4%至85.3百萬美元 • 毛利為27.9百萬美元，毛利率為32.7% • 本公司擁有人應佔期內溢利淨額為13.2百萬美元 • 每股盈利為0.53美仙（等同於4.11港仙） ...

Financial Performance - In 2022, the Group's sales revenue grew by 13.5% to US$190.8 million, and profit attributable to owners of the parent increased by 16.8% to US$27.8 million[25]. - In 2022, the Group's sales revenue increased by 13.5% to $190.8 million, with a profit attributable to shareholders rising by 16.8% to $27.8 million[29]. - Revenue for 2022 was US$190.8 million, representing a 13.5% increase from US$168.1 million in 2021[48]. - Gross profit decreased to US$65.5 million in 2022, down 2.7% from US$67.3 million in 2021, resulting in a gross margin decline of 5.7 percentage points to 34.3%[48]. - The Group's earnings per share increased by 10% to $0.011 in the reporting year[29]. - Shareholders' funds rose by 26.0% to US$109.2 million in 2022, up from US$86.7 million in 2021[63]. - Total assets as of December 31, 2022, were US$158.3 million, a 13.2% increase from US$139.9 million in 2021[63]. - The current ratio improved to 3.02 in 2022 from 2.35 in 2021, indicating better short-term financial health[63]. Market Trends and Challenges - The semiconductor market is expected to shrink further in 2023 due to declining demand for chips in smartphones and personal computers[20]. - The semiconductor industry entered a destocking phase in the second half of 2022, with expectations for the global chip market to shrink further in 2023 due to declining demand for semiconductors in smartphones and personal computers[31]. - The consumer electronics market is expected to face short-term growth challenges due to weakened consumer demand and the rebound effect from the previous overheating of the electronics industry[131]. - The semiconductor industry is projected to continue de-stocking in the first half of 2023, with more opportunities for downstream collaboration in product development anticipated in the second half as COVID-19 restrictions ease in mainland China[141]. Product Development and Innovation - The Group commenced mass production of Active Matrix Electrophoretic Display (AMEPD) driver ICs for Advanced Color e-Paper (ACeP) products in 2022, with a launch of Spectra™ 3100 scheduled for 2023[2]. - The Group launched the IC-SSD2363, the world's first small-sized passive matrix micro-LED display driver, in Q1 2023, targeting applications in wearable devices and home appliances[3]. - The Group's new generation electronic ink platform, Spectra™ 3100, is expected to launch in 2023, enhancing growth potential for new display IC business[90]. - The Group is co-developing a human interface display platform targeting mass production in the second half of 2023[102]. - The Group continues to expand its product portfolio by launching new PMOLED display ICs with built-in Character ROMs[42]. - The Group's large display IC solutions support applications in monitors, notebooks, and large-size TVs across various resolutions including HD, FHD, QHD, and UHD 4K/8K[46]. - The Group is preparing to capitalize on the global economic recovery, actively seeking opportunities despite ongoing market challenges[140]. - The Group emphasizes the importance of novel product development to keep pace with rapid technological advancements and market trends[106]. - The Group plans to focus on developing AR and VR products to capture opportunities in the Metaverse[111]. Strategic Focus and Market Position - The Group remains the world's largest manufacturer of display driver ICs for PMOLED display products, maintaining a dominant market share in terms of units shipped in 2022[30]. - The Group has strategically adjusted its product mix to focus on high-demand areas such as electronic shelf labels, smart home products, and industrial applications[30]. - The Group aims to enhance its R&D capabilities and diversify its product portfolio to capture opportunities arising from the digital economy[11]. - The Group has secured orders for game controller ICs and MIPI Bridge ICs to be delivered in 2024, ensuring stable income and cash flow[10]. - The demand for game console controller ICs is rapidly increasing, with successful manufacturing orders secured into 2024, contributing significantly to the Group's sustainable revenue base[104]. - Solomon Systech is shifting resources towards smart home devices and industrial appliances in response to favorable demand in these sectors[79]. Cost Management and Pricing Strategy - The Group adjusted the average unit price of some products in 2022 to maintain competitiveness amid changing market conditions[25]. - The average selling price of some products was adjusted in 2022 to maintain competitiveness amid market changes[29]. - The Group adjusted the average selling price of its products in response to rising raw material prices and production costs[98]. - Despite the easing of supply chain issues and chip shortages, raw material costs remain under pressure, prompting the Group to focus on cost control and the development of high value-added products[139]. Corporate Governance - The Remuneration Committee confirmed the remuneration policy for Executive Directors and reviewed their performance in 2022[171]. - The Nomination Committee consists of one Non-executive Director and three Independent Non-executive Directors, ensuring a majority of independent members[172]. - The Remuneration Committee meets at least once a year to review and approve compensation arrangements for Executive Directors and senior management[190]. - The remuneration bands for Executive Directors include 3 individuals earning up to HK$1,000,000, 4 earning between HK$1,500,001 and HK$2,000,000, 1 earning between HK$2,000,001 and HK$2,500,000, and 1 earning between HK$5,500,001 and HK$6,000,000[193]. - The Board has adopted a nomination policy to ensure a balance of skills, experience, and diversity among Directors[197]. - The Group is currently revisiting accounting policy disclosures to ensure consistency with amendments to HKAS 1 effective from January 1, 2023[200].