华虹半导体(01347) - 2025 - 中期财报

Corporate Overview Provides definitions of key entities and terms, along with fundamental corporate information including registration, business activities, and ultimate parent company Definitions This report provides definitions of key terms to ensure consistent understanding of the company, group, subsidiaries, and relevant markets and regulations - Key entities such as "Company," "Group," "HHGrace," and "Hua Hong Manufacturing," along with geographical and market terms like "China," "HKEX," and "STAR Market," are defined in the report[4] Corporate Information Hua Hong Semiconductor Limited, incorporated in Hong Kong in 2005, primarily engages in investment holding, with its subsidiaries focusing on semiconductor product manufacturing and trading; the ultimate parent company is Shanghai SASAC; this section lists basic corporate information including board members, committees, auditors, principal bankers, share registrars, registered office, and principal places of business - The company primarily engages in semiconductor product manufacturing and trading, with its ultimate parent company being Shanghai SASAC[139][140][141] Basic Corporate Information | Indicator | Details | | :--- | :--- | | Company Name | Hua Hong Semiconductor Limited | | Place of Registration | Hong Kong | | Date of Registration | January 21, 2005 | | Principal Activities | Investment Holding (Company Level), Semiconductor Product Manufacturing and Trading (Group Level) | | Ultimate Parent Company | Shanghai State-owned Assets Supervision and Administration Commission (Shanghai SASAC) | | HKEX Stock Code | 01347 | | SSE STAR Market Stock Code | 688347 | Key Financials Summary Presents a concise overview of the company's key financial performance indicators for the first half of 2025, highlighting revenue, gross margin, and profit changes Key Financial Highlights In the first half of 2025, the company's revenue reached $1.107 billion, an 18.0% year-on-year increase, but gross margin decreased from 29.9% in H1 2024 to 10.1%, and profit attributable to owners of the parent significantly declined by 69.6% to $11.7 million Key Financial Indicators for H1 2025 | Indicator | H1 2025 (Million USD) | H1 2024 (Million USD) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 1,107.0 | 938.5 | +18.0% | | Gross Margin | 10.1% | 29.9% | -19.8 percentage points | | Profit Attributable to Owners of the Parent | 11.7 | 38.5 | -69.6% | | Earnings Per Share (USD) | 0.007 | 0.022 | -68.2% | Management Discussion & Analysis Provides an in-depth analysis of the company's financial performance, status, and cash flows, along with insights into business operations, strategic investments, and future outlook Financial Performance In the first half of 2025, the company's revenue increased by 18.0% to $1.107 billion, and gross profit grew by 40.0% to $111.6 million, but increased administrative expenses, other expenses, and income tax expenses, coupled with reduced profits from associates, led to a 26.7% expansion in loss for the period to $85 million H1 2025 Key Financial Performance (vs. H1 2024) | Indicator | H1 2025 (Thousand USD) | H1 2024 (Thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,107,002 | 938,510 | 18.0% | | Cost of Sales | (995,394) | (858,815) | 15.9% | | Gross Profit | 111,608 | 79,695 | 40.0% | | Other Income and Gains | 59,916 | 71,095 | (15.7)% | | Selling and Distribution Expenses | (4,844) | (4,770) | 1.6% | | Administrative Expenses | (190,183) | (164,078) | 15.9% | | Other Expenses | (17,300) | (13,813) | 25.2% | | Finance Costs | (41,551) | (49,432) | (15.9)% | | Share of Profits of Associates | 1,243 | 2,805 | (55.7)% | | Loss Before Tax | (81,111) | (78,498) | 3.3% | | Income Tax (Expense)/Credit | (3,852) | 11,464 | (133.6)% | | Loss for the Period | (84,963) | (67,034) | 26.7% | | Attributable to Owners of the Parent | 11,702 | 38,491 | (69.6)% | Revenue Revenue increased significantly in the first half of 2025, primarily driven by higher wafer shipments - Revenue increased by 18.0% year-on-year to $1.107 billion, primarily driven by an increase in wafer shipments[20] Cost of Sales Cost of sales rose due to increased wafer shipments and higher depreciation costs - Cost of sales increased by 15.9% to $995.4 million, mainly due to higher wafer shipments and increased depreciation costs[21] Gross Profit Gross profit improved significantly, benefiting from enhanced production line utilization despite rising depreciation - Gross profit increased by 40.0% to $111.6 million, primarily benefiting from improved production line utilization, though partially offset by rising depreciation costs[22] Other Income and Gains Other income and gains decreased, mainly due to lower interest income, partially mitigated by increased government subsidies - Other income and gains decreased by 15.7% to $59.9 million, primarily due to lower interest income, partially offset by increased government subsidies[23] Administrative Expenses Administrative expenses increased, primarily driven by higher engineering wafer expenditures - Administrative expenses increased by 15.9% to $190.2 million, primarily due to higher engineering wafer expenditures[24] Other Expenses Other expenses rose, mainly influenced by increased foreign exchange losses - Other expenses increased by 25.2% to $17.3 million, primarily due to higher foreign exchange losses[25] Finance Costs Finance costs decreased, mainly attributable to lower interest rates on bank borrowings - Finance costs decreased by 15.9% to $41.6 million, primarily due to lower interest rates on bank borrowings[26] Share of Profits of Associates Share of profits from associates declined, reflecting a decrease in their profitability - Share of profits from associates decreased by 55.7% to $1.2 million, reflecting a decline in the profitability of associates[27] Income Tax (Expense)/Credit Income tax shifted from a credit to an expense, mainly due to reduced reversal of dividend withholding tax - Income tax shifted from a $11.5 million credit in H1 2024 to a $3.9 million expense in H1 2025, primarily due to a reduced reversal of dividend withholding tax[28] Loss for the Period The loss for the period expanded due to the combined impact of various financial factors - Considering the combined impact of various factors, the loss for the period expanded by 26.7% to $85 million[29] Financial Status As of June 30, 2025, the company's total net assets slightly decreased by 0.4% to $8.8736 billion; total non-current assets grew by 4.7%, driven by increases in property, plant, and equipment and investment properties; total current assets declined by 8.4%, mainly due to a decrease in cash and cash equivalents; and total current liabilities decreased by 9.7%, primarily due to reduced trade payables and payables for capital expenditures H1 2025 Financial Position Overview (vs. End of 2024) | Indicator | June 30, 2025 (Thousand USD) | December 31, 2024 (Thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Non-current Assets | 6,892,127 | 6,582,605 | 4.7% | | Total Current Assets | 5,344,953 | 5,832,503 | (8.4)% | | Total Current Liabilities | 1,410,798 | 1,562,238 | (9.7)% | | Total Non-current Liabilities | 1,952,639 | 1,946,251 | 0.3% | | Net Assets | 8,873,643 | 8,906,619 | (0.4)% | Investment Properties Investment properties increased, indicating the company's expansion in this asset category - Investment properties increased by 33.1% to $218.5 million, reflecting the company's expansion in investment properties[31][32] Due from Related Parties Amounts due from related parties decreased, primarily due to a reduction in trade receivables - Amounts due from related parties decreased by 21.6% to $14.4 million, mainly due to a reduction in trade receivables[31][33] Other Current Assets Other current assets increased, primarily driven by a rise in input VAT credit - Other current assets increased by 15.1% to $674.2 million, primarily driven by an increase in input VAT credit[31][34] Cash and Cash Equivalents Cash and cash equivalents decreased, with specific reasons requiring reference to the cash flow analysis - Cash and cash equivalents decreased by 13.7% to $3.8469 billion, with specific reasons requiring reference to the cash flow analysis[31][35] Trade Payables Financial Status Trade payables decreased, mainly due to a reduction in amounts owed to suppliers - Trade payables decreased by 11.7% to $263.4 million, mainly due to a reduction in amounts owed to suppliers[31][36] Other Current Liabilities Other current liabilities decreased, primarily due to a reduction in payables for capital expenditures - Other current liabilities decreased by 19.4% to $738.5 million, primarily due to a reduction in payables for capital expenditures[31][37] Interest-bearing Bank Borrowings Total interest-bearing bank borrowings increased slightly - Total interest-bearing bank borrowings increased by 3.5% to $2.2753 billion[38] Lease Liabilities Lease liabilities decreased, mainly due to payments made on lease obligations - Lease liabilities decreased by 16.8% to $15 million, primarily due to payments made on lease obligations[31][39] Deferred Tax Liabilities Deferred tax liabilities significantly decreased, mainly due to the reversal of dividend withholding tax provisions from 2024 - Deferred tax liabilities significantly decreased by 66.8% to $3.6 million, primarily due to the reversal of dividend withholding tax provisions from 2024[31][40] Cash Flow In the first half of 2025, net cash flow from operating activities significantly increased by 59.8% to $219.8 million, but net cash outflow from investing activities surged by 86.8% to $879.8 million, and net cash flow from financing activities sharply declined by 97.2% to $34 million, resulting in a net decrease of $626.1 million in cash and cash equivalents at period-end H1 2025 Cash Flow Overview (vs. H1 2024) | Indicator | H1 2025 (Thousand USD) | H1 2024 (Thousand USD) | Change (%) | | :--- | :--- | :--- | :--- | | Net Cash Flows Generated from Operating Activities | 219,816 | 137,550 | 59.8% | | Net Cash Flows Used in Investing Activities | (879,847) | (470,924) | 86.8% | | Net Cash Flows Generated from Financing Activities | 33,952 | 1,206,061 | (97.2)% | | Net (Decrease)/Increase in Cash and Cash Equivalents | (626,079) | 872,687 | (171.7)% | | Cash and Cash Equivalents at End of Period | 3,846,900 | 6,423,866 | (40.1)% | Net Cash Flows Generated from Operating Activities Net cash flow from operating activities increased, primarily driven by higher revenue from customers - Net cash flow from operating activities increased by 59.8% to $219.8 million, primarily driven by higher revenue from customers[43] Net Cash Flows Used in Investing Activities Net cash outflow from investing activities significantly increased, mainly due to capital investments and investments in associates - Net cash outflow from investing activities significantly increased by 86.8% to $879.8 million, primarily used for capital investments and investments in associates[44] Net Cash Flows Generated from Financing Activities Net cash flow from financing activities sharply declined, mainly due to bank loan repayments nearly offsetting new borrowings and higher interest payments - Net cash flow from financing activities sharply declined by 97.2% to $34 million, primarily due to bank loan repayments nearly offsetting new borrowings and higher interest payments[45] Financial Resources and Liquidity The company adopts prudent cash and financial management strategies, primarily funding operations through internal cash flow and bank loans; as of June 30, 2025, cash and bank balances were approximately $3.8469 billion, a $612.2 million decrease from the end of 2024; the company is committed to improving financing practices, with a slight increase in total bank borrowings - The company primarily funds its operations through internally generated cash flows and bank loans, and regularly monitors its liquidity needs[46][47] - The capital management objective is to maintain going concern ability and maximize shareholder value, with no changes to capital management objectives, policies, or procedures as of June 30, 2025[48] Financial Resources Cash and bank balances decreased in the first half of 2025 compared to the end of 2024 - As of June 30, 2025, cash and bank balances were approximately $3.8469 billion, a $612.2 million decrease from the end of 2024[46] Liquidity The company's policy is to regularly monitor liquidity needs to ensure sufficient cash reserves and financing commitments - The company's policy is to regularly monitor current and anticipated liquidity needs to ensure sufficient cash reserves and adequate financing commitments from major financial institutions[47] Capital Management Capital management aims to maintain going concern ability and maximize shareholder value - The primary objective of capital management is to maintain going concern ability and a sound capital ratio to support business operations and maximize shareholder value[48] Bank Loans Total bank borrowings increased, with most loans denominated in RMB and a significant portion in USD Bank Loan Structure (Thousand USD) | Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Current Portion | 341,313 | 280,704 | | Non-current Portion | 1,933,971 | 1,917,235 | | Total | 2,275,284 | 2,197,939 | | Of which: Secured | 2,051,100 | 2,192,598 | | Of which: Unsecured | 224,200 | 226,565 | - Total bank borrowings increased by 3.5% to $2.2753 billion, with most borrowings denominated in RMB and a $666.7 million portion denominated in USD[49] Charges on Group Assets The book value of pledged assets increased, primarily driven by property, plant, and equipment Book Value of Pledged Assets (Thousand USD) | Asset Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property, Plant and Equipment | 2,303,423 | 2,064,974 | | Investment Properties | 53,203 | – | | Right-of-use Assets | 38,005 | 47,069 | | Completed Properties Held for Sale | 221,661 | – | | Properties Under Development | – | 90,275 | | Total | 2,616,292 | 2,202,318 | Exposure to Fluctuations in Exchange Rates The company faces transactional foreign exchange risk, with a portion of sales and borrowings denominated in non-functional currencies - The company faces transactional foreign exchange risk, with approximately 18% of sales and $532 million of interest-bearing bank borrowings denominated in non-functional currencies[52][53] - A 5% appreciation or depreciation of the USD against the RMB would result in a fluctuation of approximately $1.2 million in profit before tax[54] - The company currently does not engage in foreign exchange hedging, but management will continue to monitor and consider appropriate measures[55] Contingent Liabilities As of June 30, 2025, the Group had no contingent liabilities - As of June 30, 2025, the Group had no contingent liabilities[56] RMB Share Issue The company was listed on the Shanghai Stock Exchange STAR Market on August 7, 2023, issuing 407.75 million ordinary shares and raising net proceeds of RMB 20.9207 billion; the proceeds are primarily allocated to the Hua Hong Manufacturing (Wuxi) project, 8-inch fab optimization, specialty process technology R&D, and working capital, with no significant changes or delays in use - The company was listed on the Shanghai Stock Exchange STAR Market on August 7, 2023, issuing a total of 407,750,000 ordinary shares[57] Planned Use of Proceeds from RMB Share Issue (Thousand RMB) | Planned Use | Committed Investment Amount | Unutilized Cumulative Amount as of June 30, 2025 | Estimated Time of Use | | :--- | :--- | :--- | :--- | | Hua Hong Manufacturing (Wuxi) Project | 12,500,000 | 133,837 | Before end of 2025 | | 8-inch Fab Optimization and Upgrade Project | 2,000,000 | 1,713,418 | Before end of 2025 | | Specialty Process Technology Innovation R&D Project | 2,500,000 | 1,714,429 | Before end of 2026 | | Replenishment of Working Capital | 1,000,000 | 0 | Not Applicable | - There have been no significant changes or delays in the use of proceeds, and the over-raised funds of RMB 2.921 billion will also be used for the Group's principal business in accordance with relevant regulations[59][60] Business Review In the first half of 2025, the global semiconductor market continued to grow, with the company's 8-inch and 12-inch production lines operating at full capacity, leveraging leading technology platforms and customer relationships; the Hua Hong Manufacturing project (Fab 9) achieved mass production and contributed to sales; the company made significant progress in analog and power management, embedded non-volatile memory, standalone non-volatile memory, and power device platforms, while strengthening ecological supply chain construction and capacity expansion - In the first half of 2025, global semiconductor sales reached $366.7 billion, an approximate 16% year-on-year increase, with sustained demand in application areas such as new energy vehicles and power devices[62] - The company's 8-inch and 12-inch production lines are operating at full capacity, and the Hua Hong Manufacturing project (Fab 9) has achieved mass production and contributed to the company's sales, with both sales and shipments maintaining a year-on-year and quarter-on-quarter growth trend[63] - The analog and power management platform performed exceptionally, with 55nm eFlash MCU products in the embedded non-volatile memory platform and 48nm NOR Flash products in the standalone non-volatile memory platform both entering mass production[64] - In power devices, the deep trench super junction MOSFET platform achieved double-digit revenue growth, 12-inch platinum (Pt) process development was completed, and Super IGBT technology in the Insulated Gate Bipolar Transistor (IGBT) platform entered mass production and promotion[64] - The company continues to advance ecological cooperation with customers in the automotive, high-end home appliance, and new energy sectors, and anticipates initiating the second phase of Fab 9 capacity deployment ahead of schedule by the end of 2025[65][66] - Looking ahead to the second half, the company will continue to leverage its "8-inch + 12-inch" specialty process advantages, enhance R&D capabilities, accelerate capacity expansion, and promote the "China for China" strategy for overseas customers[67] Significant Investment and Future Plans As of June 30, 2025, the company held no significant investments; future plans include a potential acquisition of equity in Shanghai Huali Microelectronics Corporation, but this transaction is subject to uncertainties and requires approval from the board, shareholders, and regulatory authorities - As of June 30, 2025, the company held no significant investments (valued at 5% or more of the company's total assets)[68] - The company is preparing for a potential acquisition of equity in Shanghai Huali Microelectronics Corporation, but the finalization of this transaction is uncertain and requires approval from the board, shareholders, and competent regulatory authorities[69] Interim Consolidated Financial Information Presents the interim condensed consolidated financial statements, including the profit or loss, comprehensive income, financial position, changes in equity, and cash flows for the period Interim Condensed Consolidated Statement of Profit or Loss In the first half of 2025, the company reported revenue of $1.107 billion, gross profit of $111.6 million, a loss for the period of $85 million, profit attributable to owners of the parent of $11.7 million, and basic and diluted earnings per share of $0.007 H1 2025 Interim Condensed Consolidated Statement of Profit or Loss Summary (Thousand USD) | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Revenue | 1,107,002 | 938,510 | | Gross Profit | 111,608 | 79,695 | | Loss for the Period | (84,963) | (67,034) | | Attributable to Owners of the Parent | 11,702 | 38,491 | | Basic Earnings Per Share (USD) | 0.007 | 0.022 | Interim Condensed Consolidated Statement of Comprehensive Income In the first half of 2025, the loss for the period was $85 million, but other comprehensive income of $35.1 million from foreign exchange differences on translating overseas operations narrowed the total comprehensive loss for the period to $49.8 million H1 2025 Interim Condensed Consolidated Statement of Comprehensive Income Summary (Thousand USD) | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Loss for the Period | (84,963) | (67,034) | | Exchange Differences on Translating Overseas Operations | 35,116 | (49,338) | | Total Comprehensive Loss for the Period | (49,847) | (116,743) | | Attributable to Owners of the Parent | 36,005 | 3,062 | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2025, the company's total non-current assets were $6.8921 billion, total current assets were $5.3450 billion, total current liabilities were $1.4108 billion, and net assets were $8.8736 billion June 30, 2025 Interim Condensed Consolidated Statement of Financial Position Summary (Thousand USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Non-current Assets | 6,892,127 | 6,582,605 | | Total Current Assets | 5,344,953 | 5,832,503 | | Total Current Liabilities | 1,410,798 | 1,562,238 | | Total Non-current Liabilities | 1,952,639 | 1,946,251 | | Net Assets | 8,873,643 | 8,906,619 | | Total Equity Attributable to Owners of the Parent | 6,299,902 | 6,247,026 | Interim Condensed Consolidated Statement of Changes in Equity As of June 30, 2025, total equity attributable to owners of the parent was $6.2999 billion, an increase from the beginning of the period, mainly influenced by profit for the period and shares issued upon exercise of share options, while non-controlling interests decreased H1 2025 Interim Condensed Consolidated Statement of Changes in Equity Summary (Thousand USD) | Indicator | January 1, 2025 | June 30, 2025 | | :--- | :--- | :--- | | Total Equity Attributable to Owners of the Parent | 6,247,026 | 6,299,902 | | Non-controlling Interests | 2,659,593 | 2,573,741 | | Total Equity | 8,906,619 | 8,873,643 | - The exercise of share options resulted in an increase in share capital of $22.398 million[134] Interim Condensed Consolidated Statement of Cash Flows In the first half of 2025, net cash flow from operating activities was $219.8 million, net cash outflow from investing activities was $879.8 million, and net cash flow from financing activities was $34 million, resulting in cash and cash equivalents of $3.8469 billion at period-end, a decrease from the beginning of the period H1 2025 Interim Condensed Consolidated Statement of Cash Flows Summary (Thousand USD) | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash Flows Generated from Operating Activities | 219,816 | 137,550 | | Net Cash Flows Used in Investing Activities | (879,847) | (470,924) | | Net Cash Flows Generated from Financing Activities | 33,952 | 1,206,061 | | Net (Decrease)/Increase in Cash and Cash Equivalents | (626,079) | 872,687 | | Cash and Cash Equivalents at End of Period | 3,846,900 | 6,423,866 | Notes to Interim Financial Information Provides detailed notes to the interim condensed consolidated financial information, covering corporate details, accounting policies, segment data, revenue, expenses, and other financial disclosures Corporate Information Notes Hua Hong Semiconductor Limited, incorporated in Hong Kong on January 21, 2005, primarily engages in investment holding, with its subsidiaries focusing on semiconductor product manufacturing and trading; the ultimate parent company is Shanghai SASAC; this section also details the registered places, percentage of equity interest held by the company, and principal business activities of the Group's major subsidiaries - The company and its subsidiaries primarily engage in semiconductor product manufacturing and trading, with the ultimate parent company being Shanghai SASAC[139][140][141] Major Subsidiary Information | Subsidiary Name | Place of Registration | Equity Interest Held by the Company | Principal Business Activities | | :--- | :--- | :--- | :--- | | HHGrace | China/Mainland China | 100% | Semiconductor Product Production and Sales | | Hua Hong Wuxi | China/Mainland China | 51% (22.2% direct, 28.8% indirect) | Semiconductor Product Production and Sales | | Hua Hong Manufacturing Wuxi | China/Mainland China | 51% (21.9% direct, 29.1% indirect) | Semiconductor Product Production and Sales | Basis of Preparation and Changes in Accounting Policies The interim condensed consolidated financial information is prepared in accordance with HKAS 34 and should be read in conjunction with the 2024 annual consolidated financial statements; amendments to Hong Kong Financial Reporting Standards (such as HKAS 21 amendments) adopted for the first time in this period had no significant financial impact on the Group's financial information - The interim condensed consolidated financial information has been prepared in accordance with HongAS 34 "Interim Financial Reporting" and should be read in conjunction with the Group's annual consolidated financial statements for the year ended December 31, 2024[144] - The revised Hong Kong Financial Reporting Standards (including the amendment to HKAS 21 "Lack of Exchangeability") adopted for the first time in this period had no significant financial impact on the Group's interim condensed consolidated financial information[148][149][151][152] Operating Segment Information For management purposes, the Group is organized into a single business unit primarily comprising the manufacturing and sale of semiconductor products; this section presents geographical revenue by customer location, showing that China (including Hong Kong) is the company's largest revenue source - The Group is organized as a single business unit, primarily comprising the manufacturing and sale of semiconductor products, and therefore no segment analysis is presented[153] Revenue by Customer Location (Thousand USD) | Region | H1 2025 | H1 2024 | | :--- | :--- | :--- | | China (including Hong Kong) | 912,132 | 751,214 | | North America | 109,434 | 93,070 | | Asia (excluding China) | 55,471 | 55,314 | | Europe | 29,965 | 38,912 | | Total | 1,107,002 | 938,510 | Revenue and Other Income and Gains Notes In the first half of 2025, all of the company's revenue from customer contracts, totaling $1.107 billion, was derived from semiconductor product sales; other income and gains amounted to $59.9 million, primarily comprising interest income and government subsidies Revenue and Other Income and Gains Analysis (Thousand USD) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Sale of Goods (Semiconductor Products) | 1,107,002 | 938,510 | | Rental Income from Operating Leases of Investment Properties | 6,973 | 7,118 | | Interest Income | 30,913 | 54,808 | | Government Grants | 21,096 | 8,577 | | Others | 934 | 592 | | Total Other Income and Gains | 59,916 | 71,095 | Loss Before Tax Notes The Group's loss before tax is arrived at after deducting items such as cost of inventories sold, inventory write-downs, impairment of trade receivables, and net foreign exchange differences Loss Before Tax Adjustments (Thousand USD) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Cost of Inventories Sold | 995,394 | 858,815 | | Inventory Write-down/(Reversal of Write-down) | 5,098 | (8,237) | | Impairment/(Reversal of Impairment) of Trade Receivables | 1,132 | (438) | | Net Foreign Exchange Differences | (17,263) | 13,770 | Income Tax Notes The Group faces varying income tax rates across different jurisdictions; mainland China subsidiaries are subject to a statutory tax rate of 25%, but HHGrace and Hua Hong Wuxi, as "High and New Technology Enterprises," enjoy a preferential tax rate of 15%; Hua Hong Wuxi and Hua Hong Manufacturing Wuxi also benefit from a five-year tax exemption followed by a five-year 50% tax reduction, though their tax holiday periods have not yet commenced due to accumulated losses; the Group has applied the temporary exception for Pillar Two income taxes and is assessing its potential impact - Mainland China subsidiaries are subject to a 25% corporate income tax rate, but High and New Technology Enterprises (such as HHGrace and Hua Hong Wuxi) enjoy a 15% preferential tax rate[165][166] - Hua Hong Wuxi and Hua Hong Manufacturing Wuxi enjoy a five-year tax exemption followed by a five-year 50% tax reduction, but their tax holiday periods have not yet commenced[167] - The Group has applied the temporary exception for Pillar Two income taxes and is assessing its future potential impact on the financial statements[174][175][176] Major Components of Income Tax Expense/(Credit) (Thousand USD) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Current Income Tax Expense – China | 11,911 | 15,035 | | Current Income Tax Expense – Other Regions | 21 | 2 | | Deferred Tax | (8,080) | (26,501) | | Total Income Tax Expense/(Credit) | 3,852 | (11,464) | Dividends Notes In the first half of 2025, the company neither declared nor paid dividends; in the first half of 2024, the company declared and paid a final dividend of $28.876 million, with an additional $7.357 million in declared but unpaid final dividends Dividend Information (Thousand USD) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Final Dividend Declared and Paid | – | 28,876 | | Final Dividend Declared but Not Paid | – | 7,357 | | Total | – | 36,233 | Earnings Per Share Attributable to Ordinary Equity Holders of the Parent In the first half of 2025, basic and diluted earnings per share attributable to ordinary equity holders of the parent were both $0.007, a significant decrease from $0.022 in the first half of 2024 Earnings Per Share Calculation (USD) | Indicator | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Profit Attributable to Ordinary Equity Holders of the Parent for Basic EPS Calculation (Thousand USD) | 11,702 | 38,491 | | Weighted Average Number of Ordinary Shares Issued for Basic EPS Calculation | 1,724,087,447 | 1,716,776,029 | | Basic Earnings Per Share | 0.007 | 0.022 | | Weighted Average Number of Ordinary Shares for Dilutive Effect of Share Options | 5,439,856 | 2,674,676 | | Diluted Earnings Per Share | 0.007 | 0.022 | Property, Plant and Equipment Notes In the first half of 2025, the Group's cost of additions to property, plant, and equipment was $611.2 million, and depreciation expense was $344.0 million - In the first half of 2025, the cost of additions to property, plant, and equipment was $611.2 million, an increase from $511.8 million in the first half of 2024[188] - Depreciation expense for the period was $344.0 million, an increase from $258.5 million in the first half of 2024[188] Completed Properties Held For Sale And Properties Under Development In the first half of 2025, properties with a cost of $221.7 million were reclassified from properties under development to completed properties held for sale, as they were completed and obtained sales permits - Properties with a cost of $221.7 million were reclassified from properties under development to completed properties held for sale, reflecting project completion and obtaining sales permits[186] Trade And Notes Receivables As of June 30, 2025, total trade and notes receivables amounted to $264.3 million, a slight decrease from the end of 2024, with the majority of amounts being not yet due Aging Analysis of Trade and Notes Receivables (Thousand USD) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Not yet due | 252,740 | 248,527 | | Overdue less than 3 months | 8,382 | 19,571 | | Overdue 3 to 6 months | 3,207 | 2,363 | | Total | 264,329 | 270,461 | Trade Payables Notes As of June 30, 2025, total trade payables amounted to $263.4 million, a decrease from the end of 2024, with most payables due within one month Aging Analysis of Trade Payables (Thousand USD) | Aging | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 1 month | 135,476 | 151,190 | | Over 1 month but within 3 months | 33,643 | 70,474 | | Over 3 months but within 6 months | 63,089 | 16,758 | | Over 6 months but within 12 months | 17,815 | 22,776 | | Over 12 months | 13,329 | 37,174 | | Total | 263,352 | 298,372 | - Trade payables are unsecured, non-interest-bearing, and typically settled within 30 to 60 days[194] Share Capital Notes As of June 30, 2025, the company's total issued shares were 1,727,079,598, with share capital amounting to $4.9609 billion, an increase from the beginning of the period, primarily due to shares issued upon the exercise of share options Share Capital Movement (Thousand USD) | Date | Number of Issued Shares | Share Capital Amount | | :--- | :--- | :--- | | January 1, 2025 | 1,718,468,815 | 4,938,457 | | Shares Issued Upon Exercise of Share Options | 8,610,783 | 22,398 | | June 30, 2025 | 1,727,079,598 | 4,960,855 | Commitments As of June 30, 2025, the Group's contracted but unprovided capital commitments for property, plant, and equipment amounted to $376.8 million, a significant decrease from $1.1876 billion at the end of 2024 Contracted but Unprovided Capital Commitments (Thousand USD) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property, Plant and Equipment | 376,826 | 1,187,570 | Related Party Transactions The Group engages in multiple related party transactions with Hua Hong Group, its subsidiaries, and associates, including sales and purchases of goods, rental income, service fees, and expenses paid on behalf of related parties; as of June 30, 2025, amounts due from related parties were $14.4 million, and amounts due to related parties were $8.56 million - The Group has extensive related party transactions with its parent company, Hua Hong Group, its subsidiaries, and associates[198][200][201] - Related party transactions include sales of goods to related parties, purchases of goods from related parties, rental income from related parties, service fees charged by related parties, and expenses paid on behalf of related parties[202] Name and relationship This section lists the names and relationships of parties related to the Group - This section lists the names of parties with related party relationships with the Group and their relationships, primarily including Hua Hong Group and its subsidiaries, as well as the Group's associates[200] Related party transactions details Details of major related party transactions for the first half of 2025 are presented H1 2025 Major Related Party Transactions (Thousand USD) | Transaction Type | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Sales of Goods to Related Parties | 860 | 9,505 | | Purchases of Goods from Related Parties | 23,100 | 17,071 | | Rental Income from Related Parties | 6,979 | 7,016 | | Service Fees Charged by Related Parties | 287 | 288 | | Expenses Paid on Behalf of Related Parties | 13,170 | 13,585 | Outstanding balances with related parties Outstanding balances with related parties as of June 30, 2025, are detailed, including amounts due from and to key related entities Outstanding Balances with Related Parties (Thousand USD) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Amounts Due from Related Parties | 14,360 | 18,324 | | Shanghai Huali | 12,556 | 10,074 | | Hua Hong Zhi Xin | 1,804 | 8,250 | | Total Amounts Due to Related Parties | 8,560 | 9,125 | | Hong Ri | 5,963 | 6,455 | | Shanghai Huali | 2,348 | 2,445 | Compensation of key management personnel of the Group Compensation for key management personnel of the Group for the first half of 2025 is detailed Key Management Personnel Compensation (Thousand USD) | Item | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Short-term Employee Benefits | 2,164 | 2,282 | | Contributions to Pension Schemes | 96 | 101 | | Equity-settled Share Option Expenses | – | 11 | | Total Compensation | 2,260 | 2,394 | Fair Value and Fair Value Hierarchy of Financial Instruments The fair value measurement of the Group's financial instruments uses market-based valuation techniques and is categorized into different levels based on observable and unobservable input data; the fair value of unlisted equity investments is primarily measured using Level 3 (significant unobservable inputs), with valuation multiples and illiquidity discounts as key inputs - The fair value measurement of financial instruments is the responsibility of the finance department and is reviewed and approved by the Chief Financial Officer[211] - The fair value of unlisted equity investments is estimated using market-based valuation techniques, based on assumptions not supported by observable market prices or rates[212] Fair Value Overview Presents a comparison of the carrying amounts and fair values of selected financial instruments Carrying Amounts and Fair Values of Financial Instruments (Thousand USD) | Item | June 30, 2025 Carrying Amount | June 30, 2025 Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Fair Value | | :--- | :--- | :--- | :--- | :--- | | Equity Instruments Designated at FVTOCI | 290,515 | 290,515 | 289,311 | 289,311 | | Interest-bearing Bank Borrowings (Non-current) | 1,933,971 | 1,866,445 | 1,917,235 | 1,910,907 | Fair Value Hierarchy Financial assets measured at fair value are categorized into a hierarchy based on the observability of valuation inputs Fair Value Hierarchy of Financial Assets Measured at Fair Value (June 30, 2025, Thousand USD) | Item | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | Equity Instruments Designated at FVTOCI | – | 17,462 | 273,053 | 290,515 | - Level 3 fair value measurements primarily rely on unobservable inputs such as industry average price-to-book/price-to-sales multiples and illiquidity discounts[221][224] - During the period, there were no transfers between Level 1 and Level 2 fair value measurements for financial assets and liabilities, and no transfers into or out of Level 3[218] Share Option Scheme Notes The company has a share option scheme designed to incentivize eligible participants who contribute to the Group's development; as of June 30, 2025, a total of 10,722,269 share options remained unexercised Share Option Movement | Item | Number of Share Options 2025 | Number of Share Options 2024 | | :--- | :--- | :--- | | Unexercised as of January 1 | 19,337,302 | 21,421,849 | | Exercised during the period | (8,610,783) | (739,451) | | Forfeited during the period | (4,250) | (204,426) | | Unexercised as of June 30 | 10,722,269 | 20,477,972 | Event After The Reporting Period As of the approval date of the interim condensed consolidated financial information, no significant events after the reporting period had occurred for the Group - As of the approval date of the interim condensed consolidated financial information, no significant events after the reporting period had occurred for the Group[229] Approval Of The Interim Condensed Consolidated Financial Information The interim condensed consolidated financial information was approved and authorized for issue by the Board of Directors on August 28, 2025 - The interim condensed consolidated financial information was approved and authorized for issue by the Board of Directors on August 28, 2025[230][232] Other Disclosures Provides additional disclosures on share option schemes, directors' and substantial shareholders' interests, securities transactions, gearing ratio, employee policies, corporate governance, and audit committee review Share Option Scheme Details The company's share option scheme adopted on September 1, 2015, expired on September 1, 2022, with no new share options granted thereafter; as of June 30, 2025, 10,722,269 share options remained unexercised, representing approximately 0.62% of the company's issued shares - The company's share option scheme adopted on September 1, 2015, expired on September 1, 2022, and no further share options may be granted from that date[234] - As of June 30, 2025, the company had a total of 10,722,269 unexercised share options under the share option scheme, representing approximately 0.62% of the company's issued shares on that date[234][235] Details of Unexercised Share Options as of June 30, 2025 | Participant Category | Number of Share Options | Vesting Period | Exercise Period | Exercise Price (HKD) | | :--- | :--- | :--- | :--- | :--- | | Director (Mr. Tang Junjun) | 437,500 | Note 1 | Note 5 | 18.400 | | Other Employees (Granted in 2018) | 9,566,099 | Note 3 | Note 7 | 15.056 | | Other Employees (Granted in 2019) | 718,670 | Note 4 | Note 8 | 17.952 | Directors and Chief Executive Interests in Shares As of June 30, 2025, among the company's directors and chief executive, Mr. Tang Junjun held a long position of 448,500 relevant shares, representing 0.03% of total interests, including 437,500 shares under share options and 11,000 A shares Directors' Share Interests (June 30, 2025) | Director Name | Capacity | Number of Relevant Shares Held in Long Position | Approximate Percentage of Interest | | :--- | :--- | :--- | :--- | | Mr. Tang Junjun | Beneficial Owner | 448,500 | 0.03% | - Mr. Tang Junjun's interests include a long position of 437,500 relevant shares under share options and 11,000 A shares of the company[245][246] Substantial Shareholders' Ownership in Shares As of June 30, 2025, substantial shareholders, excluding directors, included Shanghai Hua Hong International Co., Ltd. (20.13%), Shanghai Hua Hong (Group) Co., Ltd. (20.13% direct and 0.07% indirect), and Shanghai Alliance Investment Ltd. (indirectly holding 10.95% through subsidiaries) Substantial Shareholders' Share Interests (June 30, 2025) | Substantial Shareholder | Capacity and Nature of Interest | Number of Shares Held | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Shanghai Hua Hong International Co., Ltd. | Legal and Beneficial Owner | 347,605,650 | 20.13% | | Shanghai Hua Hong (Group) Co., Ltd. | Interest of Controlled Corporation | 347,605,650 | 20.13% | | Shanghai Hua Hong (Group) Co., Ltd. | Legal and Beneficial Owner | 1,198,517 | 0.07% | | Sino-Alliance International, Ltd. | Legal and Beneficial Owner | 160,545,541 | 9.30% | | Shanghai Alliance Investment Ltd. | Interest of Controlled Corporation | 188,961,147 | 10.95% | - Hua Hong Group is the company's parent company, and Shanghai Alliance Investment Ltd. indirectly holds interests in the company through two wholly-owned subsidiaries (including Sino-Alliance International)[250][255] Purchase, Sale or Redemption of Securities For the six-month period ended June 30, 2025, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - Neither the company nor any of its subsidiaries engaged in any purchase, sale, or redemption of listed securities during the reporting period[252][254] Gearing Ratio As of June 30, 2025, the Group's gearing ratio was -8.32%, an improvement from -14.94% as of December 31, 2024 Gearing Ratio | Date | Ratio | | :--- | :--- | | June 30, 2025 | -8.32% | | December 31, 2024 | -14.94% | - The gearing ratio is calculated as net debt divided by total equity plus net debt, where net debt includes trade payables, other payables and accrued expenses, interest-bearing bank borrowings, lease liabilities, and amounts due to related parties, less cash and cash equivalents[256] Employees and Remuneration Policies As of June 30, 2025, the company had approximately 7,400 employees globally, an increase from 6,700 as of June 30, 2024; the company's remuneration policy is regularly reviewed and determined with reference to market competitiveness, company performance, and individual performance - As of June 30, 2025, the company had approximately 7,400 employees in China and overseas, an increase of approximately 10.4% from June 30, 2024[257] - The company's remuneration policy is regularly reviewed and determined with reference to market competitiveness analysis, company performance, and employee competencies and job performance[257] Compliance with Non-Competition and Right of First Refusal Deeds As of June 30, 2025, the company reviewed statements from controlling shareholders Hua Hong Group, Shanghai Alliance, and Yidian Group regarding compliance with non-competition and right of first refusal deeds, and independent non-executive directors confirmed that all undertakings have been complied with - The company has reviewed the undertakings from controlling shareholders Hua Hong Group, Shanghai Alliance, and Yidian Group regarding compliance with non-competition and right of first refusal deeds[261][262] - The independent non-executive directors have reviewed the compliance and confirmed that all undertakings under the non-competition and right of first refusal deeds have been complied with by the relevant contracting parties[262] Corporate Governance The company is committed to maintaining a high level of corporate governance to safeguard shareholders' interests and enhance corporate value and accountability; the Board believes that the company has complied with the Corporate Governance Code set out in Appendix C1 of the Listing Rules for the six-month period ended June 30, 2025 - The company is committed to maintaining a high level of corporate governance to safeguard shareholders' interests and enhance corporate value and accountability[263][267] - The Board believes that the company has complied with the code provisions in the Corporate Governance Code set out in Appendix C1 of the Listing Rules for the six-month period ended June 30, 2025[268] Code of Conduct for Securities Transactions by Directors The company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than those required by the Model Code; all directors have confirmed compliance with this code for the six-month period ended June 30, 2025 - The company has adopted a code of conduct for directors' securities transactions, with terms no less exacting than those required by the Model Code[264] - All directors have confirmed their compliance with the required standards set out in the Model Code for the six-month period ended June 30, 2025[269] Sufficiency of Public Float As of the date of this report, based on publicly available information and to the best of the directors' knowledge, the company has maintained the prescribed public float required by the Listing Rules - As of the date of this report, based on publicly available information and to the best of the directors' knowledge, the company has maintained the prescribed public float required by the Listing Rules[265][270] Audit Committee The Audit Committee has reviewed and approved the Group's unaudited results for the six-month period ended June 30, 2025, and has discussed with management the accounting principles and practices adopted by the Group, internal controls, and financial reporting matters - The Audit Committee has reviewed and approved the Group's unaudited results for the six-month period ended June 30, 2025, and has discussed accounting principles, internal controls, and financial reporting matters with management[272][274] Publication of Interim Report The interim report for the six-month period ended June 30, 2025, containing information required by Appendix D2 of the Listing Rules, will be dispatched to shareholders and published on the HKEX website (www.hkexnews.hk) and the company's website (www.huahonggrace.com) in due course - The interim report will be published on the HKEX website and the company's website as required[273][275]