中电华大科技(00085) - 2025 - 中期财报

Corporate Information Board of Directors and Committees This section outlines the composition of the company's Board of Directors, including executive, non-executive, and independent non-executive directors, as well as members of the Audit and Remuneration and Nomination Committees - The Chairman of the Board is Sun Jie, and the Vice Chairman and Managing Director is Chang Feng[5] - The Chairman of the Audit Committee is Chen Qichang, and the Chairman of the Remuneration and Nomination Committee is Qiu Hongsheng[5] Company Details and Contacts This section provides essential company information, including registered and principal Hong Kong offices, investor relations contacts, stock code, principal bankers, share registrar, independent auditor, and legal advisors - The company's stock code is 00085[7][9] - The independent auditor is Mazars CPA Limited[8][9] - Investor relations contact number is (852) 2598 9088, and the website is **www.cecht.com.cn**[7](index=7&type=chunk)[8] Condensed Consolidated Statement of Profit or Loss For the six months ended June 30, 2025, the Group experienced a significant decline in both revenue and profit attributable to equity holders, reflecting challenging market conditions Key Data from Condensed Consolidated Statement of Profit or Loss (For the six months ended June 30) | Metric | 2025 (HK$'000) | 2024 (HK$'000) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,112,346 | 1,360,635 | -18.2% | | Cost of sales | (698,249) | (793,267) | -12.0% | | Gross profit | 414,097 | 567,368 | -27.0% | | Operating profit | 151,391 | 354,569 | -57.3% | | Profit before taxation | 145,586 | 343,015 | -57.5% | | Profit for the period | 140,108 | 308,772 | -54.6% | | Profit attributable to equity holders of the Company | 138,560 | 309,545 | -55.2% | | Basic earnings per share (HK cents) | 6.83 | 15.25 | -55.2% | Condensed Consolidated Statement of Comprehensive Income Total comprehensive income for the period significantly decreased, primarily due to lower profit for the period, despite a positive shift in exchange differences Key Data from Condensed Consolidated Statement of Comprehensive Income (For the six months ended June 30) | Metric | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Profit for the period | 140,108 | 308,772 | | Exchange differences on translation of financial statements | 31,568 | (12,116) | | Exchange differences on translation of the Company's financial statements | 8,032 | (3,528) | | Total comprehensive income for the period | 179,708 | 293,128 | | Total comprehensive income attributable to equity holders of the Company | 178,160 | 294,066 | Condensed Consolidated Statement of Financial Position As of June 30, 2025, the Group's total assets slightly increased, cash and cash equivalents significantly rose, while total equity remained stable and total liabilities saw a minor increase Key Data from Condensed Consolidated Statement of Financial Position | Metric | June 30, 2025 (HK$'000) | December 31, 2024 (HK$'000) | | :--- | :--- | :--- | | Total assets | 4,232,865 | 4,174,001 | | Non-current assets | 944,204 | 1,067,587 | | Current assets | 3,288,661 | 3,106,414 | | Inventories | 833,025 | 847,662 | | Trade and other receivables (current) | 695,140 | 525,949 | | Cash and cash equivalents | 1,027,579 | 743,036 | | Total equity | 2,468,046 | 2,471,026 | | Total liabilities | 1,764,819 | 1,702,975 | | Non-current liabilities | 70,106 | 160,170 | | Current liabilities | 1,694,713 | 1,542,805 | Condensed Consolidated Statement of Changes in Equity Total equity slightly decreased during the period, mainly due to the dividend distribution at the end of 2024, partially offset by total comprehensive income for the period Overview of Changes in Equity (For the six months ended June 30) | Metric | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Total equity at January 1 | 2,471,026 | 2,146,221 | | Total comprehensive income | 179,708 | 293,128 | | Dividends for the year ended December 31 | (182,688) | (213,137) | | Total equity at June 30 | 2,468,046 | 2,226,212 | Condensed Consolidated Statement of Cash Flows The Group's net increase in cash and cash equivalents was primarily driven by a significant rise in cash flows from investing activities, despite a decrease in cash flows from operating activities Key Data from Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Metric | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Net cash flows from operating activities | 25,505 | 146,006 | | Net cash flows from investing activities | 282,863 | 134,059 | | Net cash flows used in financing activities | (11,237) | (22,057) | | Net increase in cash and cash equivalents | 297,131 | 258,008 | | Cash and cash equivalents at end of period | 1,027,579 | 1,375,327 | - Net cash flows from investing activities significantly increased, primarily due to a HK$298,810 thousand decrease in fixed deposits and restricted cash[23] Notes to the Condensed Consolidated Interim Financial Statements 1 Basis of preparation These condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and Appendix D2 of the Listing Rules, using the historical cost convention, with no significant impact from new accounting standards adoption - The financial statements comply with HKAS 34 'Interim Financial Reporting' and the disclosure requirements of Appendix D2 of the Listing Rules[26][31] - Prepared using the historical cost convention, with modifications for investment properties measured at fair value[28][32] - The adoption of new or revised HKFRSs had no significant impact on the Group's results and financial position[30][33] 3 Fair value estimation The Group's investment properties, primarily Beijing office buildings and parking spaces, are measured at fair value (Level 3), with their total value slightly increasing due to exchange differences, despite a small loss from fair value changes during the period Fair Value Changes of Investment Properties (HK$'000) | Metric | June 30, 2025 | January 1, 2025 | | :--- | :--- | :--- | | Total investment properties | 42,706 | 42,177 | | Exchange differences | 650 | - | | Fair value changes | (121) | - | - Office buildings are valued using the direct comparison approach, while parking spaces are valued using the income approach[36] 4 Revenue and segment information The Group's revenue primarily derives from integrated circuit product sales and services, with almost all revenue and non-current assets concentrated in mainland China, thus reported as a single operating segment Revenue Sources (For the six months ended June 30) | Revenue Source | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Sales of integrated circuit products and provision of services | 1,112,346 | 1,360,635 | - The majority of the Group's revenue is from the sale of goods, recognized when control of the goods is transferred to customers[39][42] - The Group's operations are managed as a single segment, with nearly 100% of revenue and over 90% of non-current assets located in mainland China[41][44] 5 Other income – net Net other income decreased this period, mainly due to a significant reduction in government grants and a loss from fair value changes of investment properties Other Income – Net (For the six months ended June 30) | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Government grants from ordinary activities | 16,539 | 36,650 | | Fair value changes of investment properties | (121) | (5,352) | | Interest income | 18,617 | 19,652 | | Rental income | 1,223 | – | | Others | 238 | 1,377 | | Total | 36,496 | 52,327 | 6 Finance costs – net Net finance costs decreased this period, primarily due to lower interest expenses on borrowings and interest expenses arising from deposits received Finance Costs – Net (For the six months ended June 30) | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Interest expense on borrowings | 7,389 | 9,774 | | Interest expense on lease liabilities | 699 | 943 | | Interest expense arising from deposits received | 3,873 | 8,813 | | Interest income from cash and cash equivalents | (2,723) | (4,337) | | Interest income arising from deposits paid | (3,542) | (4,265) | | Finance costs – net | 5,696 | 10,928 | 7 Profit before taxation Profit before taxation was significantly impacted by increased employee benefit expenses, R&D costs, depreciation, and amortization, despite a reversal of inventory provisions Deductions from Profit Before Taxation (For the six months ended June 30) | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Depreciation of property, plant and equipment | 10,962 | 6,525 | | Depreciation of right-of-use assets | 11,475 | 11,515 | | Amortisation of intangible assets | 23,071 | 18,854 | | Inventories (reversal of provision)/provision | (9,132) | 10,288 | | Employee benefit expenses | 187,575 | 162,506 | - Research and development costs recognized as expenses and included in administrative expenses amounted to HK$222,909 thousand (2024: HK$183,250 thousand), primarily comprising employee costs and material costs[55] 8 Taxation Total taxation for the period significantly decreased, mainly due to reduced PRC corporate income tax and lower withholding income tax on undistributed profits, with some subsidiaries benefiting from preferential tax rates Taxation Components (For the six months ended June 30) | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | PRC corporate income tax | (5,594) | 22,442 | | Deferred taxation | 11,072 | 11,801 | | Withholding income tax on undistributed profits | 4,793 | 11,435 | | Total taxation | 5,478 | 34,243 | - Huada Electronic and Huahong enjoy preferential tax rates of 10% and 15% respectively, qualifying as 'integrated circuit design enterprises within national planning layout' and 'high-tech enterprises'[62] 9 Dividend The Board of Directors resolved not to declare any dividend for the six months ended June 30, 2025 - The Board of Directors resolved not to declare any dividend for the six months ended June 30, 2025 (2024: nil)[59][61] 10 Basic earnings per share Basic earnings per share significantly decreased due to lower profit attributable to equity holders of the Company, and no diluted earnings per share were presented as there were no potential dilutive ordinary shares Basic Earnings Per Share Calculation (For the six months ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Profit for the period attributable to equity holders of the Company (HK$'000) | 138,560 | 309,545 | | Weighted average number of ordinary shares in issue | 2,029,872,000 | 2,029,872,000 | | Basic earnings per share (HK cents) | 6.83 | 15.25 | - No diluted earnings per share were disclosed as the Company had no outstanding potential dilutive ordinary shares[66][68] 11 Property, plant and equipment Additions to property, plant and equipment significantly decreased during the period compared to the same period last year Additions to Property, Plant and Equipment (For the six months ended June 30) | Item | 2025 (HK$'000) | 2024 (HK$'000) | | :--- | :--- | :--- | | Additions to property, plant and equipment | 7,538 | 17,827 | 12 Trade and other receivables The Group's trade receivables, net of impairment loss provisions, significantly increased, with the largest increase observed in receivables aged 61 to 180 days Ageing Analysis of Trade Receivables (HK$'000) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 30 days | 160,636 | 120,825 | | 31 to 60 days | 44,221 | 117,591 | | 61 to 180 days | 306,032 | 108,846 | | Over 180 days and within 1 year | 831 | 93 | | Over 1 year | 1,116 | 2,811 | | Total | 512,836 | 350,166 | - The majority of the Group's sales are on credit terms of 30 to 180 days[70] 13 Trade and other payables The Group's total trade payables increased, with a significant rise in payables aged over 60 days Ageing Analysis of Trade Payables (HK$'000) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Within 30 days | 138,781 | 182,969 | | 31 to 60 days | 54,102 | 130,117 | | Over 60 days | 367,716 | 103,783 | | Total | 560,599 | 416,869 | 14 Contingent liabilities As of June 30, 2025, the Group had no significant contingent liabilities - As of June 30, 2025, the Group had no significant contingent liabilities (December 31, 2024: nil)[74][75] 15 Related party transactions and balances The Group engaged in several significant related party transactions and maintained balances with its ultimate holding company, China Electronics Corporation, and its commonly controlled entities, mostly unsecured and interest-free, except for cash and deposits and borrowings Significant Transactions with China Electronics Corporation and its Controlled Entities (For the six months ended June 30, HK$'000) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Sales of products and services | 116,309 | 143,033 | | Purchases of products and services | 98,719 | 88,047 | | Interest income | 7,004 | 7,217 | | Interest expense | 7,184 | 9,150 | | Property management fees | 3,837 | 3,443 | | Maximum daily balance of financial assistance provided to the Group | 68,993 | 31,918 | | Maximum daily balance of deposits placed by the Group | 737,933 | 742,709 | Significant Balances with China Electronics Corporation and its Controlled Entities (HK$'000) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trade receivables | 26,932 | 29,107 | | Cash and deposits | 697,208 | 734,653 | | Trade payables | 109,167 | 86,710 | | Shareholder loans | 318,000 | 313,161 | | Entrusted loans from ultimate holding company | 65,841 | 64,859 | - Related party borrowings are unsecured and bear interest at a weighted average annual rate of 3.8%[83] - Key management personnel remuneration increased to HK$2,971 thousand (2024: HK$1,358 thousand)[87] Report on Review of Interim Financial Statements Independent auditor Mazars CPA Limited reviewed the Group's condensed consolidated interim financial statements, concluding they were prepared in all material respects in accordance with HKAS 34 - The review was performed by Mazars CPA Limited[97] - The review concluded that the condensed consolidated interim financial statements are prepared in all material respects in accordance with HKAS 34[94][96] - The scope of a review is substantially less than an audit, thus no audit opinion was expressed[93][95] Management Discussion and Analysis Business Review The Group faced severe challenges in the smart card and security chip market in H1 2025, leading to significant declines in revenue and profit, yet increased R&D investment and achieved growth in secure master control chips and identification products Performance Overview (For the six months ended June 30) | Metric | 2025 (HK$ Million) | 2024 (HK$ Million) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,112.3 | 1,360.6 | -18.2% | | Profit attributable to equity holders of the Company | 138.6 | 309.5 | -55.2% | | Basic earnings per share (HK cents) | 6.83 | 15.25 | -55.2% | - Global smart card and security chip market demand was sluggish, with intense domestic and international competition leading to significant product price drops[100][102][103][106] - Sales volume of secure master control chips and identification products significantly increased year-on-year, while sales of secure SE chips, financial card chips, and third-generation social security card chips decreased[100][102] - Research and development costs increased by 14.3% to HK$222.9 million (2024: HK$183.3 million), accounting for 20.0% of revenue (2024: 13.5%)[107][110] - Looking ahead, market demand is expected to remain challenging, but increasing security needs for smart devices and eSIM application promotion will bring new opportunities, prompting the Group to actively expand its customer base to consolidate market position[108][111] - The Board of Directors resolved not to declare any dividend for the six months ended June 30, 2025[109][112] Financial Review The Group maintains a prudent treasury policy, meeting working capital needs primarily through internal resources and borrowings, ending the period with increased cash and cash equivalents, a net cash position, and no pledged assets, significant capital commitments, or contingent liabilities Financial Position Overview (HK$ Million) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | 1,027.6 | 743.0 | | Bank and other borrowings | 383.8 | 378.0 | | Undrawn committed borrowing facilities | 955.5 | - | - 94.5% of cash and cash equivalents are denominated in RMB[113][116] - All bank and other borrowings are due within one year, unsecured, and bear fixed interest rates[114][116] - The Group was in a net cash position as of June 30, 2025, and December 31, 2024[118][123] - The Group has not pledged any assets for its borrowings, nor does it have any significant unfulfilled capital commitments or contingent liabilities[115][117][119][123] Employee and Remuneration Policies As of June 30, 2025, the Group employed approximately 450 staff, mostly in mainland China, implementing stringent recruitment, performance evaluation, and performance-based remuneration policies, alongside multi-level training programs - As of June 30, 2025, the Group employed approximately 450 staff, mostly working in mainland China[120][124] - Employee benefit expenses for the period amounted to HK$187.6 million[120][124] - Remuneration policy is generally in line with industry practice, determined by performance and experience, regularly reviewed, with bonuses linked to Group and individual performance[121][124] - Employee training is structured into company-level, department-level, and individual levels, focusing on general applicability, professional knowledge, and skill enhancement[122][124] Other Information Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures As of June 30, 2025, only Executive Director Mr. Chang Feng held a small interest in the Company's ordinary shares, with no other directors or chief executives having declarable interests or short positions - Executive Director Mr. Chang Feng beneficially held a long position interest in 28,000 ordinary shares of the Company, representing 0.01% of the issued share capital[125][127] - Save as disclosed above, no other directors or chief executive had any interests or short positions required to be recorded in the register[125][127] Directors' Rights to Acquire Shares or Debentures For the six months ended June 30, 2025, neither the Company, its holding company, nor any of its subsidiaries entered into any arrangements enabling directors or their close associates to acquire benefits by purchasing shares or debentures of the Company or other bodies corporate - The Company had not entered into any arrangements enabling directors or their close associates to acquire benefits by purchasing shares or debentures[126][128] Shareholders with Notifiable Interests As of June 30, 2025, several entities held 5% or more of the Company's issued share capital, with Huada Semiconductor Co., Ltd. and its ultimate parent China Electronics Corporation being significant shareholders Shareholders with Notifiable Interests (As of June 30, 2025) | Name of Interest Holder | Capacity | Number of Shares Held or Attributable | Percentage of Shareholding | | :--- | :--- | :--- | :--- | | China Electronics Corporation (BVI) Holdings Company Limited | Beneficial owner | 812,500,000 | 40.03% | | Huada Semiconductor Co., Ltd. | Beneficial owner and interest in corporations controlled by Huada Semiconductor | 1,206,180,000 | 59.42% | | China Electronics Corporation Limited | Interest in corporations controlled by China Electronics | 1,206,180,000 | 59.42% | | China Electronics Corporation | Interest in corporations controlled by China Electronics Corporation | 1,206,180,000 | 59.42% | - All disclosed interests represent long positions in the Company's shares[131][135] Purchase, Sale or Redemption of Securities For the six months ended June 30, 2025, neither the Company nor any of its subsidiaries repurchased, sold, or redeemed any of the Company's securities - Neither the Company nor any of its subsidiaries repurchased or sold any of the Company's securities, nor did the Company redeem any of its securities[132][136] Corporate Governance Code The Company is committed to best corporate governance practices and confirmed compliance with all applicable code provisions of the Corporate Governance Code for the six months ended June 30, 2025 - The Company complied with all applicable code provisions of the Corporate Governance Code for the six months ended June 30, 2025[133][137] The Model Code for Securities Transactions by Directors All directors confirmed compliance with the required standards set out in the Model Code for Securities Transactions by Directors for the six months ended June 30, 2025 - All directors confirmed compliance with the required standards set out in the Model Code for Securities Transactions by Directors[134][138] Audit Committee The Audit Committee under the Board of Directors reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025 - The Audit Committee reviewed the Group's unaudited condensed consolidated interim financial statements for the six months ended June 30, 2025[139][141] Changes in Directors' Particulars Ms. Huang Yaping was appointed as an independent director of Shenzhen Qianfenyi Intelligent Technology Co., Ltd. in May 2025 - Ms. Huang Yaping was appointed as an independent director of Shenzhen Qianfenyi Intelligent Technology Co., Ltd. in May 2025[140][142]