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中电华大科技(00085) - 2019 - 中期财报
CE HUADA TECHCE HUADA TECH(HK:00085)2019-09-27 10:49

Corporate Information The report provides essential company details, including board members, committee structures, and key contacts - The report provides fundamental company information, including board members, committee composition, company secretary, registered office, principal Hong Kong office, investor relations contacts, principal bankers, share registrar, independent auditor (EY), and legal advisors89 Consolidated Financial Statements This section presents the company's consolidated financial statements, including profit or loss, comprehensive income, financial position, equity changes, and cash flows Consolidated Statement of Profit or Loss Revenue decreased by 7.4% to HK$909 million, with profit attributable to equity holders falling 7.5% to HK$72.23 million, while gross margin slightly improved to 33.0% Consolidated Statement of Profit or Loss Summary (For the six months ended June 30) | Indicator | 2019 (HK$ thousands) | 2018 (HK$ thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 908,572 | 981,034 | -7.4% | | Gross Profit | 300,050 | 318,583 | -5.8% | | Gross Margin | 33.0% | 32.5% | +0.5pp | | Operating Profit | 107,453 | 117,109 | -8.2% | | Profit for the Period | 73,125 | 79,992 | -8.6% | | Profit Attributable to Equity Holders | 72,231 | 78,080 | -7.5% | | Basic Earnings Per Share (HK cents) | 3.56 | 3.85 | -7.5% | Consolidated Statement of Comprehensive Income Total comprehensive income for the period turned profitable at HK$58.55 million, primarily due to a significant reduction in exchange differences on financial statement translation Consolidated Statement of Comprehensive Income Summary (For the six months ended June 30) | Indicator | 2019 (HK$ thousands) | 2018 (HK$ thousands) | | :--- | :--- | :--- | | Profit for the Period | 73,125 | 79,992 | | Exchange Differences on Translation of Financial Statements | (14,572) | (107,731) | | Total Comprehensive Income for the Period | 58,553 | (27,739) | Consolidated Statement of Financial Position Total assets increased slightly to HK$5.041 billion, while total liabilities remained stable at HK$3.039 billion, with total equity rising to HK$2.002 billion Consolidated Statement of Financial Position Summary | Indicator | June 30, 2019 (HK$ thousands) | December 31, 2018 (HK$ thousands) | | :--- | :--- | :--- | | Total Assets | 5,041,286 | 4,969,091 | | Non-current Assets | 2,922,507 | 3,133,608 | | Current Assets | 2,118,779 | 1,835,483 | | Total Liabilities | 3,038,883 | 3,027,908 | | Non-current Liabilities | 77,644 | 24,511 | | Current Liabilities | 2,961,239 | 3,003,397 | | Total Equity | 2,002,403 | 1,941,183 | - As of June 30, 2019, the Group's current liabilities exceeded current assets by HK$842 million, primarily due to HK$2.286 billion in short-term bank and other borrowings24 Condensed Consolidated Statement of Changes in Equity Total equity increased to HK$2.002 billion, driven by the adoption of HKFRS 16 and comprehensive income, partially offset by dividend payments - Opening total equity was HK$1.941 billion, adjusted to HK$1.984 billion after adopting HKFRS 1619 - Total comprehensive income for the period was HK$58.55 million, and dividends paid amounted to HK$40.59 million, resulting in a closing total equity of HK$2.002 billion19 Consolidated Statement of Cash Flows Net cash outflow from operating activities expanded to HK$219 million, while cash and cash equivalents decreased to HK$230 million by period-end Consolidated Statement of Cash Flows Summary (For the six months ended June 30) | Indicator | 2019 (HK$ thousands) | 2018 (HK$ thousands) | | :--- | :--- | :--- | | Net Cash Flow Used in Operating Activities | (218,960) | (142,820) | | Net Cash Flow From Investing Activities | 76,462 | 27,320 | | Net Cash Flow (Used in)/From Financing Activities | (1,361) | 43,067 | | Net Decrease in Cash and Cash Equivalents | (143,859) | (72,433) | | Cash and Cash Equivalents at End of Period | 230,217 | 299,367 | Notes to the Condensed Consolidated Interim Financial Statements This section details the significant accounting policies, revenue, segment information, profit before taxation, investments in associates, and related party transactions Principal Accounting Policies The Group adopted HKFRS 16 "Leases" for the first time, resulting in the recognition of right-of-use assets and lease liabilities with a retrospective adjustment to retained earnings - The Group first adopted HKFRS 16 'Leases' on January 1, 2019, applying the retrospective approach with cumulative effects adjusted to opening retained earnings2831 Impact of Adopting HKFRS 16 as of January 1, 2019 | Item | Increase (HK$ thousands) | | :--- | :--- | | Right-of-use assets | 2,614 | | Investment in associates | 43,322 | | Lease liabilities | 2,672 | | Retained profits | 43,264 | Revenue and Segment Information All revenue is derived from integrated circuit product sales, recognized at a point in time, with no segment or geographical information presented due to single operating segment and primary operations in China - All of the Group's revenue is derived from the sale of integrated circuit products, totaling HK$909 million in the first half of 201951 - The Group's business is considered a single operating segment, with its primary market and assets located in China, thus no segment or geographical information is provided52 Profit Before Taxation Research and development costs slightly decreased to HK$106 million, while inventory provisions significantly reduced to HK$1.05 million from HK$14.86 million in the prior year - For the six months ended June 30, 2019, the Group's R&D costs were HK$106 million (2018: HK$109 million), representing 11.7% of revenue5859108 - Inventory provisions for the period significantly decreased to HK$1.05 million from HK$14.86 million in the prior year5859 Investment in Associates The Group's investment in associates totaled HK$2.647 billion, with its share of results from associates amounting to HK$16.88 million - The Group's investment in associates had a period-end balance of HK$2.647 billion, a slight decrease from the opening balance of HK$2.666 billion70 - The Group's significant associate is China Electronics Optics Valley Union (CEOVU), listed in Hong Kong, with the Group's share of its results being HK$16.88 million (2018: HK$13.25 million)7073109 Related Party Transactions and Balances The Group engaged in significant transactions with its ultimate holding company, China Electronics Corporation (CEC), and its jointly controlled entities, including sales, purchases, interest expenses, and rental income, with substantial balances outstanding at period-end Significant Related Party Transactions (For the six months ended June 30) | Transacting Party | Transaction Type | 2019 (HK$ thousands) | 2018 (HK$ thousands) | | :--- | :--- | :--- | :--- | | China Electronics Corporation (CEC) | Interest expense | 1,529 | 1,580 | | | Guarantee fees | 5,471 | 5,805 | | Companies jointly controlled by CEC | Sales of products | 72,968 | 98,156 | | | Purchase of goods and services | 59,050 | 405,577 | - As of June 30, 2019, significant balances with related parties (CEC and its jointly controlled companies) included borrowings of HK$68.21 million, deposits of HK$352 million, and trade receivables of HK$85.78 million92 Report on Review of Condensed Consolidated Interim Financial Information This section presents the independent auditor's review report on the condensed consolidated interim financial information Auditor's Conclusion Independent auditor Ernst & Young concluded that nothing came to their attention to suggest the interim financial information was not prepared in accordance with HKAS 34 - Independent auditor Ernst & Young issued an unqualified review conclusion on this interim financial report101102 Management Discussion and Analysis This section provides management's perspective on the Group's business performance, outlook, and financial position for the period Business Review Total sales volume decreased by 3.9% and revenue by 7.4% to HK$909 million due to market competition, while gross margin improved to 33.0% through cost control - Sales volume of financial card and social security card chips increased due to rising demand for domestic financial card chips and the launch of third-generation social security cards107 - Intensified market price competition led to a 3.9% decrease in total sales volume and a 7.4% decrease in revenue107 - Overall gross margin improved from 32.5% to 33.0% through cost control measures, including accelerating new product launches and enhancing production efficiency108 Outlook The smart card chip market is expected to stabilize with increasing competition and price pressure, while the Group focuses on IoT security chip development and new application areas - The smart card chip market is expected to enter a stable development phase, but with intensified competition and downward pressure on product prices109 - The Group's strategic focus will be on strengthening the development of IoT security chips and expanding applications in smart cities, smart homes, and connected vehicles109 Financial Review The Group held HK$230 million in cash, with net current liabilities of HK$842 million, and a capital gearing ratio of 47.6%, supported by HK$2.001 billion in unutilized committed borrowing facilities Key Financial Ratios | Indicator | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Cash and Cash Equivalents | HK$230 million | HK$376 million | | Bank and Other Borrowings | HK$2.286 billion | HK$2.295 billion | | Net Current Liabilities | HK$842 million | HK$1.168 billion | | Capital Gearing Ratio | 47.6% | 48.5% | - The Group has HK$2.001 billion in unutilized committed borrowing facilities, providing liquidity support110 Other Information This section covers directors' and shareholders' interests and the company's corporate governance practices Directors' and Shareholders' Interests The ultimate holding company, China Electronics Corporation (CEC), indirectly held 59.42% of the company's shares, with certain non-executive directors also holding minor stakes Major Shareholder Holdings (As of June 30, 2019) | Shareholder Name | Number of Shares Held | Percentage of Holding | | :--- | :--- | :--- | | Huada Semiconductor Co., Ltd. | 1,206,180,000 | 59.42% | | China Electronics Corporation (CEC) | 1,206,180,000 | 59.42% | - Non-executive Director and Chairman Mr. Dong Haoran held 4,672,420 shares (0.23%), and Non-executive Director Ms. Liu Jinmei held 197,250 shares (0.01%)112 Corporate Governance The company maintains high corporate governance standards, complying with all applicable code provisions, and its audit committee has reviewed the interim financial statements - The company complied with all applicable provisions of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules for the six months ended June 30, 2019118 - The Audit Committee under the Board of Directors has reviewed the Group's unaudited condensed consolidated interim financial statements120122