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SMIC Reports 2013 Third Quarter Results

Semiconductor Manufacturing International Corporation
2013-10-22 22:25 10642

All currency figures stated in this report are in US Dollars unless stated otherwise.

The Company started to prepare consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS") in 2012's Annual Report. A ll prior period information has been reclassified to conform to IFRS presentation.


SHANGHAI, Oct. 22, 2013 /PRNewswire/ -- Semiconductor Manufacturing International Corporation (NYSE: SMI; SEHK: 981) ("SMIC" or the "Company"), one of the leading semiconductor foundries in the world, today announced its consolidated results of operations for the three months ended September 30, 2013.

Third Quarter 2013 Highlights:

  • Revenue including wafer shipments from Wuhan Xinxin was $534.3 million in 3Q13, an increase of 15.8% year over year, and down 1.3% quarter over quarter.
  • Non-GAAP revenue excluding wafer shipments from Wuhan Xinxin was $503.7 million in 3Q13, an increase of 21.7%year over year, and up 0.4% quarter over quarter.
  • Revenues from China-based customers increased to 42.1% of overall revenue in 3Q13, an all-time high, compared to 35.3% in 3Q12 and 40.9% in 2Q13.
  • Gross margin including wafer shipments from Wuhan Xinxin was 21.0% in 3Q13, compared to 27.5% in 3Q12 and 25.0% in 2Q13.
  • Non-GAAP gross margin excluding wafer shipments from Wuhan Xinxin was 22.1% in 3Q13, compared to 30.4% in 3Q12 and 26.7% in 2Q13.
  • Profit attributable to SMIC was $42.5 million in 3Q13, compared to $12.0 million in 3Q12 and $75.4 million in 2Q13.

Fourth Quarter 2013 Guidance:

The following statements are forward looking statements which are based on current expectations and which involve risks and uncertainties, some of which are set forth under "Safe Harbor Statements" below.

  • Excluding wafer shipments from Wuhan Xinxin which SMIC began gradually phasing out in 3Q13, non-GAAP revenue is expected to be flat to down 4.5% quarter over quarter.
  • Revenue including wafer shipments from Wuhan Xinxin is expected to be down 4.5% to down 9% quarter over quarter.
  • Non-GAAP gross margin excluding wafer shipments from Wuhan Xinxin is expected to range from 19.0% to 22.0%.
  • Gross margin including wafer shipments from Wuhan Xinxin is expected to range from 18.5% to 21.5%.
  • Non-GAAP operating expenses excluding the effect of foreign exchange, employee bonus accrual, funding of R&D contracts from the government and gain from the disposal of living quarters are expected to range from $80.0 million to $84.0 million.

Dr. Tzu-Yin Chiu, SMIC's Chief Executive Officer and Executive Director, commented, "SMIC has achieved another good quarter. Revenue excluding Wuhan wafer shipment was $503.7 million in the third quarter of 2013, representing a robust year over year growth of 21.7% and a sequential growth of 0.4%. Total revenue including Wuhan wafer shipments declined 1.3% sequentially as we exit our relationship with Wuhan Xinxin. I'm also pleased that we made $42.5 million in profit attributable to SMIC, which is our sixth consecutive quarter of positive profit. 
 
I am happy to announce that 40nm wafer revenue grew 50.3% sequentially to 15.7% of total wafer revenue. This growth was mainly driven by smartphone related products. Meanwhile, 40nm new tape outs grew significantly in the second half of this year, driven by both consumer and communications products like smartphones, set-top box, IPTV, and tablets. As a result, we are targeting strong growth for 40nm next year.
 
During the quarter, demand for our differentiated applications continued to be strong, especially in the areas of power management, CIS, and EEPROM. Revenue from our differentiated applications, specifically PMIC, CIS, and EEPROM, grew over 50% year over year in 3Q2013 compared to 3Q2012. 
 
We target another full year of record high revenue in 2013 with sustainable profitability and growth as our priority. Looking into 2014, we aim to outgrow the industry average again. We have a number of exciting opportunities ahead of us. 1) Our 40nm ramp up will continue. 2) Our 28nm technology is coming on line. 3) Our embedded Non-Volatile Memory (e-NVM) is finding wide spread customer acceptance. 4) A number of other differentiated technologies will be rolling out in 2014. And lastly, our new capacity for high-end and mature technology is coming on line. It will be an exciting 2014."

Conference Call / Webcast Announcement

Date: October 23, 2013

 

Time: 8:30 a.m. Shanghai time

 

Dial-in numbers and pass code:

 

 

China

 

400-620-8038 

 

(Pass code: SMIC)

 

Hong Kong 

 

852-2475-0994 

 

(Pass code: SMIC)

 

Taiwan 

 

886-2-2650-7825 

 

(Pass code: SMIC)

 

United States, New York

 

1-845-675-0437

 

(Pass code: SMIC)

 

The call will be webcast live with audio at http://www.smics.com/eng/investors/ir_presentations.php or http://www.media-server.com/m/p/k3yzasi5.

An archived version of the webcast, along with an electronic copy of this news release will be available on the SMIC website for a period of 12 months following the webcast.

About SMIC

Semiconductor Manufacturing International Corporation ("SMIC"; NYSE: SMI; SEHK: 981) is one of the leading semiconductor foundries in the world and the largest and most advanced foundry in mainland China, providing integrated circuit (IC) foundry and technology services at 0.35-micron to 40-nanometer. Headquartered in Shanghai, China, SMIC has a 300mm wafer fabrication facility (fab) and a 200mm mega-fab in Shanghai, a 300mm mega-fab in Beijing, a 200mm fab in Tianjin, and a 200mm fab project under development in Shenzhen. SMIC also has customer service and marketing offices in the U.S., Europe, Japan, and Taiwan, and a representative office in Hong Kong.

For more information, please visit www.smics.com.

Safe Harbor Statements

(Under the Private Securities Litigation Reform Act of 1995)

This press release contains, in addition to historical information, "forward-looking statements" within the meaning of the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, including statements under "Fourth Quarter 2013 Guidance" and in the last paragraph of the quote of SMIC's Chief Executive Officer, as well as the statements regarding future 2013 capital expenditures are based on SMIC's current assumptions, expectations and projections about future events. SMIC uses words like "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements involve significant risks, both known and unknown, uncertainties and other factors that may cause SMIC's actual performance, financial condition or results of operations to be materially different from those suggested by the forward-looking statements including, among others, risks associated with the global economic slowdown, orders or judgments from pending litigation and financial stability in end markets.

Investors should consider the information contained in SMIC's filings with the U.S. Securities and Exchange Commission (SEC), including its annual report on 20-F filed with the SEC on April 15, 2013, especially the consolidated financial statements, and such other documents that SMIC may file with the SEC or The Hong Kong Stock Exchange Limited ("SEHK") from time to time, including current reports on Form 6-K. Other unknown or unpredictable factors also could have material adverse effects on SMIC's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Except as may be required by law, SMIC undertakes no obligation and does not intend to update any forward-looking statement, whether as a result of new information, future events or otherwise.

About Non-Generally Accepted Accounting Principles ("Non-GAAP") Financial Measures

To supplement SMIC's consolidated financial results presented in accordance with IFRS, SMIC uses in this press release measures of operating results that are adjusted to exclude wafer shipments from Wuhan Xinxin Semiconductor Manufacturing Corporation ("Wuhan Xinxin"), which SMIC began gradually phasing out in 3Q13. This earnings release includes non-GAAP revenue, non-GAAP cost of sales and non-GAAP gross margin. It also includes fourth quarter 2013 guidance for non-GAAP revenues and non-GAAP gross margin, which exclude such shipments, and for non-GAAP operating expenses, which is adjusted to exclude the effect of foreign exchange, employee bonus accrual, funding of R&D contracts from the government and gain from the disposal of living quarters. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS.

SMIC believes that use of these non-GAAP financial measures facilitates investors' and management's comparisons to SMIC's historical performance. The Company's management regularly uses these non-GAAP financial measures to understand, manage and evaluate the Company's business and make financial and operational decisions.

The accompanying table has more information and reconciliations of each non-GAAP financial measure to its most directly comparable GAAP financial measure. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.

Contact:

Investor Relations

 

+86-21-3861-0000 ext. 12804

 

ir@smics.com

 

Summary of Third Quarter 2013 Operating Results

 

Amounts in US$ thousands, except for EPS and operating data

 

 

 

3Q13

 

2Q13

 

QoQ

 

3Q12

 

YoY

 

Revenue

 

534,256

 

541,302

 

-1.3%

 

461,168

 

15.8%

 

Cost of sales

 

(422,274)

 

(406,075)

 

4.0%

 

(334,347)

 

26.3%

 

Gross profit

 

111,982

 

135,227

 

-17.2%

 

126,821

 

-11.7%

 

Operating expenses

 

(63,447)

 

(56,095)

 

13.1%

 

(106,455)

 

-40.4%

 

Profit from operations

 

48,535

 

79,132

 

-38.7%

 

20,366

 

138.3%

 

Other expense, net

 

(4,681)

 

(3,292)

 

42.2%

 

(7,335)

 

-36.2%

 

Profit before tax

 

43,854

 

75,840

 

-42.2%

 

13,031

 

236.5%

 

Income tax expenses

 

(914)

 

(510)

 

79.2%

 

(1,112)

 

-17.8%

 

Profit for the period

 

42,940

 

75,330

 

-43.0%

 

11,919

 

260.3%

 

Other comprehensive income:

 
 
 
 
 
 

Exchange differences on

   translating foreign operations

 

77

 

278

 

-72.3%

 

258

 

-70.2%

 

Total comprehensive income 

   for the period

 

43,017

 

75,608

 

-43.1%

 

12,177

 

253.3%

 

 
 
 
 
 
 

Profit attributable to SMIC

 

42,491

 

75,401

 

-43.6%

 

11,966

 

255.1%

 

 
 
 
 
 
 

Gross margin

 

21.0%

 

25.0%

 

-

 

27.5%

 

-

 

 
 
 
 
 
 

Earnings per ordinary share 
(basic and diluted)(1)

 

0.00

 

0.00

 

-

 

0.00

 

-

 

Earnings per ADS (basic and

diluted)

 

0.07

 

0.12

 

-

 

0.02

 

-

 

 
 
 
 
 
 

Wafers shipped (in 8"

equivalent wafers)

 

653,090

 

687,651

 

-5.0%

 

605,543

 

7.9%

 

 
 
 
 
 
 

Capacity utilization(2)

 

88.2%

 

98.5%

 

-

 

92.0%

 

-

 

 

Note:

 

(1) Based on weighted average ordinary shares of 32,084 million (basic) and 32,355 million (diluted) in 3Q13, 32,051 million (basic) and 32,312 million (diluted) in 2Q13, and 31,983 million (basic) and 31,993 million (diluted) in 3Q12.

 

(2) Based on total equivalent wafers out divided by estimated total quarterly capacity.

 
  • Revenue decreased to $534.3 million in 3Q13, down 1.3% QoQ from $541.3 million in 2Q13, mainly due to a decrease of revenue generated by shipments from Wuhan Xinxin. The Company began phasing out wafer shipments from Wuhan Xinxin in 3Q13.
  • Non-GAAP revenue excluding wafer shipments from Wuhan Xinxin was $503.7 million in 3Q13, compared to $501.8 million in 2Q13.
  • Cost of sales increased to $422.3 million in 3Q13, up 4.0% QoQ from $406.1 million in 2Q13.
  • Gross profit was $112.0 million in 3Q13, a decrease of 17.2% QoQ from $135.2 million in 2Q13.
  • Gross margin was 21.0% in 3Q13, down from 25.0% in 2Q13 primarily due to lower fab utilization in 3Q13 and product mix change.
  • Non-GAAP gross margin excluding wafer shipments from Wuhan Xinxin was 22.1% in 3Q13, down from 26.7% in 2Q13.
  • Operating expenses increased to $63.4 million in 3Q13, an increase of 13.1% QoQ from $56.1 million in 2Q13, mainly due to the reasons stated in Operating Expenses (Income) Analysis below.
 

Analysis of Revenue

 

 

Revenue Analysis

 
 
 
 

By Application

 

3Q13

 

2Q13

 

3Q12

 

Computer

 

1.8%

 

1.5%

 

1.5%

 

Communications

 

44.4%

 

45.6%

 

46.7%

 

Consumer

 

43.9%

 

45.3%

 

43.1%

 

Others

 

9.9%

 

7.6%

 

8.7%

 

By Service Type

 

3Q13

 

2Q13

 

3Q12

 

Wafers

 

93.8%

 

96.2%

 

94.9%

 

Mask making, testing, others

 

6.2%

 

3.8%

 

5.1%

 

By Customer Type

 

3Q13

 

2Q13

 

3Q12

 

Fabless semiconductor companies

 

87.7%

 

87.7%

 

86.8%

 

Integrated device manufacturers (IDM)

 

5.5%

 

7.0%

 

8.8%

 

System companies and others

 

6.8%

 

5.3%

 

4.4%

 

By Geography

 

3Q13

 

2Q13

 

3Q12

 

North America

 

46.0%

 

48.3%

 

55.2%

 

China(1)

 

42.1%

 

40.9%

 

35.3%

 

Eurasia(2)

 

11.9%

 

10.8%

 

9.5%

 

Wafer Revenue Analysis

 
 
 
 

By Technology (logic, memory only)

 

3Q13

 

2Q13

 

3Q12

 

40/45 nm

 

15.7%

 

10.0%

 

0.8%

 

55/65 nm

 

27.1%

 

30.9%

 

34.8%

 

90 nm

 

4.7%

 

4.6%

 

9.4%

 

0.13 micrometers

 

10.1%

 

10.5%

 

11.8%

 

0.15/0.18 micrometers

 

38.4%

 

40.1%

 

37.5%

 

0.25/0.35 micrometers

 

4.0%

 

3.9%

 

5.7%

 

 

Note:

 

(1) Including Hong Kong, but excluding Taiwan

 

(2) Excluding China

 

Capacity*

 

 

Fab / (Wafer Size)

 

3Q13

 

2Q13

 

Shanghai Mega Fab (8")

 

90,000

 

90,000

 

Shanghai 12-inch Fab (12")

 

24,750

 

18,000

 

Beijing Mega Fab (12")

 

81,000

 

81,000

 

Tianjin Fab (8")

 

36,000

 

34,500

 

Total monthly wafer fabrication capacity

 

231,750

 

223,500

 

 

Note:

 

* Wafers per month at the end of the period in 8" equivalent wafers, calculated on a 30-day basis for comparison purposes

 
  • Monthly capacity increased to 231,750 8-inch equivalent wafers in 3Q13 from 223,500 8-inch equivalent wafers in 2Q13, primarily due to the expansion of capacity in our Shanghai 12-inch fab.
 

Shipment and Utilization

 

 

8" equivalent wafers

 

3Q13

 

2Q13

 

QoQ

 

3Q12

 

YoY

 

Wafer shipments

 

653,090

 

687,651

 

-5.0%

 

605,543

 

7.9%

 

Utilization rate(1)

 

88.2%

 

98.5%

 

-

 

92.0%

 

-

 

 

Note:

 

(1) Based on total equivalent wafers out divided by estimated total quarterly capacity.

 

Detailed Financial Analysis

 

Gross Profit Analysis

 

 

Amounts in US$ thousands

 

3Q13

 

2Q13

 

QoQ

 

3Q12

 

YoY

 

Cost of sales

 

422,274

 

406,075

 

4.0%

 

334,347

 

26.3%

 

Depreciation

 

126,433

 

107,759

 

17.3%

 

93,258

 

35.6%

 

Other manufacturing costs

 

294,374

 

295,840

 

-0.5%

 

240,620

 

22.3%

 

Share-based compensation

 

1,467

 

2,476

 

-40.8%

 

469

 

212.8%

 

Gross profit

 

111,982

 

135,227

 

-17.2%

 

126,821

 

-11.7%

 

Gross margin

 

21.0%

 

25.0%

 

-

 

27.5%

 

-

 

 
  • Cost of sales was $422.3 million in 3Q13, up 4.0% QoQ from $406.1 million in 2Q13.
  • Depreciation within the cost of sales increased to $126.4 million in 3Q13, compared to $107.8 million in 2Q13.
  • Other manufacturing costs within the cost of sales decreased to $294.4 million in 3Q13, compared to $295.8 million in 2Q13.
  • Gross profit was $112.0 million in 3Q13, a decrease of 17.2% QoQ from $135.2 million in 2Q13.
  • Gross margin was 21.0% in 3Q13, down from 25.0% in 2Q13 primarily due to lower fab utilization in 3Q13 and product mix change.
 

Operating Expenses (Income) Analysis

 

 

Amounts in US$ thousands

 

3Q13

 

2Q13

 

QoQ

 

3Q12

 

YoY

 

Operating expenses

 

63,447

 

56,095

 

13.1%

 

106,455

 

-40.4%

 

Research and development

 

37,564

 

36,736

 

2.3%

 

72,945

 

-48.5%

 

General and administrative

 

24,718

 

42,636

 

-42.0%

 

24,859

 

-0.6%

 

Selling and marketing

 

9,324

 

9,775

 

-4.6%

 

8,178

 

14.0%

 

Other operating expense (income)

 

(8,159)

 

(33,052)

 

-75.3%

 

473

 

-

 

 
  • R&D expenses increased to $37.6 million in 3Q13, compared to $36.7 million in 2Q13. The increase was primarily due to an $6.8 million increase in R&D expenses associated with higher R&D activities from quarter to quarter, partially offset by a $6.0 million increase in funding of R&D contracts from the government, which was $9.0 million in 3Q13, compared to $3.0 million in 2Q13.
  • General and administrative expenses decreased to $24.7 million in 3Q13, down 42.0% QoQ from $42.6 million in 2Q13, mainly due to a decrease of employee bonus accrual in 3Q13.
  • Other operating income was $8.2 million in 3Q13, compared to $33.1 million in 2Q13, and consisted mainly of the gain arising from the disposal of part of the Company-owned living quarters in Shanghai. This 75.3% decrease from 2Q13 was mainly due to a one-time gain recorded in 2Q13 arising from the disposal of the Company's total ownership interest in SMIC (Wuhan) Development Corporation.
 

Other Income (expense), Net

 

 

Amounts in US$ thousands

 

3Q13

 

2Q13

 

QoQ

 

3Q12

 

YoY

 

Other income (expense), net

 

(4,681)

 

(3,292)

 

42.2%

 

(7,335)

 

-36.2%

 

Interest income

 

1,394

 

936

 

48.9%

 

1,088

 

28.1%

 

Finance costs

 

(8,673)

 

(9,080)

 

-4.5%

 

(11,150)

 

-22.2%

 

Foreign exchange gains or losses

 

2,404

 

2,949

 

-18.5%

 

1,405

 

71.1%

 

Other gains or losses

 

(357)

 

1,126

 

-

 

537

 

-

 

Share of profits of associates

 

551

 

777

 

-29.1%

 

785

 

-29.8%

 

 
  • The change of other gains or losses was mainly due to a decrease of revenue from our schools as a result of summer vacation.
 

Depreciation and Amortization

 

 

Amounts in US$ thousands

 

3Q13

 

2Q13

 

QoQ

 

3Q12

 

YoY

 

Depreciation and amortization

 

136,725

 

135,712

 

0.7%

 

143,219

 

-4.5%

 

Liquidity

 

 

Amounts in US$ thousands

 

3Q13

 

2Q13

 

Cash and bank balances

 

473,507

 

262,955

 

Restricted cash

 

195,813

 

214,430

 

Other financial assets

 

2,574

 

2,881

 

Trade and other receivables

 

396,108

 

472,426

 

Prepaid operating expenses

 

48,383

 

57,231

 

Inventories

 

289,954

 

308,328

 

Assets classified as held-for-sale

 

210

 

922

 

Total current assets

 

1,406,549

 

1,319,173

 

 
 
 

Current tax liabilities

 

85

 

143

 

Other financial liabilities

 

10

 

107

 

Promissory notes

 

14,895

 

14,791

 

Accrued liabilities

 

105,497

 

104,678

 

Deferred government grant

 

17,833

 

26,924

 

Borrowings

 

548,385

 

586,425

 

Trade and other payables

 

402,827

 

537,003

 

Total current liabilities

 

1,089,532

 

1,270,071

 

 
 
 

Cash Ratio

 

0.4x

 

0.2x

 

Quick Ratio

 

1.0x

 

0.8x

 

Current Ratio

 

1.3x

 

1.0x

 

Capital Structure

 

 

Amounts in US$ thousands

 

3Q13

 

2Q13

 

Cash and bank balances

 

473,507

 

262,955

 

Restricted cash

 

195,813

 

214,430

 

 
 
 

Current portion of promissory notes

 

14,895

 

14,791

 

 
 
 

Short-term borrowings

 

548,385

 

586,425

 

Long-term borrowings

 

553,435

 

474,692

 

Total debt

 

1,101,820

 

1,061,117

 

 
 
 

Equity

 

2,559,381

 

2,403,738

 

 
 
 

Total debt to equity ratio(1)

 

43.1%

 

44.1%

 

 

Note:

 

(1) Total debt divided by equity, total debt including short-term and long-term borrowings.

 

Cash and bank balances increased to $473.5 million in 3Q13, up 80.1% QoQ from $263.0 million in

2Q13 primarily because 1) of the receipt of $108.0 million in cash as partial capital contribution for the

joint venture company established in Beijing from the other shareholders of the joint venture and

2) the Company drew down some of the bank borrowings during 3Q13.

 

Cash Flow

 

 

Amounts in US$ thousands

 

3Q13

 

2Q13

 

Net cash from operating activities

 

269,581

 

108,360

 

Net cash used in investing activities

 

(213,133)

 

(242,559)

 

Net cash from financing activities

 

154,045

 

104,167

 

Effect of exchange rate changes

 

59

 

55

 

Net change in cash

 

210,552

 

(29,977)

 

Capex Summary

  • Capital expenditures for 3Q13 were $169.3 million.
  • The planned 2013 capital expenditure for our foundry operation is $675 million.
  • The 2013 planned capital expenditure does not account for additional expenditures for the joint venture company in Beijing, which was established in July 2013. The joint venture company will principally engage in, among other things, the testing, development, design, manufacturing, packaging and sale of integrated circuits.
  • In addition, we have budgeted capital expenditures of another $130 million in 2013 for the construction of living quarters for employees as part of the Company's employee retention program. We plan to either rent out or sell these living quarter units to employees in the future.

Recent Highlights and Announcements

Please visit SMIC's website at http://www.smics.com/eng/press/press_releases.php and http://www.smics.com/eng/investors/ir_filings.phpfor further details regarding the recent announcements.

Semiconductor Manufacturing International Corporation

 

CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE INCOME

 

(In US$ thousands except share data)

 

 

 
 

For the three months ended

 

 
 

September 30, 2013

 
 

June 30, 2013

 

 
 

(Unaudited)

 
 

(Unaudited)

 

 
 
 
 
 

Revenue

 
 

534,256

 
 

541,302

 

Cost of sales

 
 

(422,274)

 
 

(406,075)

 

Gross profit

 
 

111,982

 
 

135,227

 

Research and development

 
 

(37,564)

 
 

(36,736)

 

General and administration expenses

 
 

(24,718)

 
 

(42,636)

 

Sales and marketing expenses

 
 

(9,324)

 
 

(9,775)

 

Other operating income

 
 

8,159

 
 

33,052

 

Profit from operation

 
 

48,535

 
 

79,132

 

Other expense, net

 
 

(4,681)

 
 

(3,292)

 

Profit before tax

 
 

43,854

 
 

75,840

 

Income tax expense

 
 

(914)

 
 

(510)

 

Profit for the period

 
 

42,940

 
 

75,330

 

Other comprehensive income

 
 
 
 
 

Item that may be reclassified subsequently to profit or loss

 
 
 
 
 

Exchange differences on translating foreign operations

 
 

77

 
 

278

 

Total comprehensive income for the period

 
 

43,017

 
 

75,608

 

Profit for the period attributable to:

 
 
 
 
 

Owners of the Company

 
 

42,491

 
 

75,401

 

Non-controlling interests

 
 

449

 
 

(71)

 

 
 

42,940

 
 

75,330

 

Total comprehensive income for the period attributable to:

 
 
 
 
 

Owners of the Company

 
 

42,568

 
 

75,679

 

Non-controlling interests

 
 

449

 
 

(71)

 

 
 

43,017

 
 

75,608

 

 
 
 
 
 

Earnings per share attributable to Semiconductor Manufacturing
       International Corporation ordinary shareholders, basic and diluted

 
 

0.00

 
 

0.00

 

Earnings per ADS attributable to Semiconductor Manufacturing
       International Corporation ordinary ADS holders, basic and diluted

 
 

0.07

 
 

0.12

 

 
 
 
 
 

Shares used in calculating basic earnings per share

 
 

32,083,651,959

 
 

32,051,257,487

 

Shares used in calculating diluted earnings per share

 
 

32,354,552,218

 
 

32,311,620,628

 

 
 
 
 
 

Reconciliations of Non-GAAP Financial Measures to Comparable

GAAP Measures(1)

 
 
 
 
 

Non-GAAP revenue

 
 

503,669

 
 

501,844

 

Non-GAAP cost of sales

 
 

(392,407)

 
 

(367,610)

 

Non-GAAP gross margin

 
 

22.1%

 
 

26.7%

 

 

Note:

 

(1) SMIC defines non-GAAP revenue, non-GAAP cost of sales and non-GAAP gross margin, which are non-GAAP financial measures, as revenue, cost of sales and gross margin, in each case excluding wafer shipments from Wuhan Xinxin. SMIC reviews non-GAAP financial measures together with revenue, cost of sales and gross margin to understand, manage and evaluate its business and make financial and operational decisions. The Company also believe it is useful supplemental information for investors and analysts to assess its operating performance without the effect of wafer shipments from Wuhan Xinxin, which were not output through its production capacity. SMIC announced in March 2013 that it had ceased to manage and operate the 300mm wafer fab in Wuhan owned by Wuhan Xinxin, and began gradually phasing out wafer shipments from Wuhan Xinxin in 3Q13. However, the use of non-GAAP financial measures has material limitations as an analytical tool. One of the limitations of using non-GAAP financial measures is that they does not include all items that impact our net profit for the period. In addition, because non-GAAP financial measures are not calculated in the same manner by all companies, they may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measure in isolation from or as an alternative to revenue, cost of sales and gross margin prepared in accordance with IFRS.

 

The following table sets forth the reconciliation of each of non-GAAP revenue, non-GAAP cost of sales and non-GAAP gross margin to its most directly comparable financial measure presented in accordance with IFRS, for the periods indicated.

Semiconductor Manufacturing International Corporation

 

CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND COMPREHENSIVE INCOME

 

(In US$ thousands)

 

 

 
 

For the three months ended

 

 
 

September 30, 2013

 
 

June 30, 2013

 
 

September 30, 2012

 

 
 

(Unaudited)

 
 

(Unaudited)

 
 

(Unaudited)

 

Revenue

 
 

534,256

 
 

541,302

 
 

461,168

 

Revenue from Wuhan Xinxin

 
 

(30,587)

 
 

(39,458)

 
 

(47,391)

 

Non-GAAP revenue

 
 

503,669

 
 

501,844

 
 

413,777

 

 
 
 
 
 
 
 

Cost of sales

 
 

(422,274)

 
 

(406,075)

 
 

(334,347)

 

Cost of sales of Wuhan Xinxin

 
 

29,867

 
 

38,465

 
 

46,204

 

Non-GAAP cost of sales

 
 

(392,407)

 
 

(367,610)

 
 

(288,143)

 

 
 
 
 
 
 
 

Gross margin

 
 

21.0%

 
 

25.0%

 
 

27.5%

 

Non-GAAP gross margin

 
 

22.1%

 
 

26.7%

 
 

30.4%

 

Semiconductor Manufacturing International Corporation

 

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

(In US$ thousands)

 

 

 
 

As of

 

 
 

September 30, 2013

 
 

June 30, 2013

 

 
 

(Unaudited)

 
 

(Unaudited)

 

ASSETS

 
 
 
 
 

Non-current assets

 
 
 
 
 

Property, plant and equipment

 
 

2,558,563

 
 

2,523,893

 

Prepaid land use right

 
 

123,974

 
 

124,818

 

Intangible assets

 
 

227,380

 
 

228,898

 

Investments in associates

 
 

23,758

 
 

23,189

 

Deferred tax assets

 
 

43,889

 
 

43,802

 

Other assets

 
 

36,969

 
 

37,926

 

Total non-current assets

 
 

3,014,533

 
 

2,982,526

 

Current assets

 
 
 
 
 

Inventories

 
 

289,954

 
 

308,328

 

Prepaid operating expenses

 
 

48,383

 
 

57,231

 

Trade and other receivables

 
 

396,108

 
 

472,426

 

Other financial assets

 
 

2,574

 
 

2,881

 

Restricted cash

 
 

195,813

 
 

214,430

 

Cash and bank balances

 
 

473,507

 
 

262,955

 

 
 

1,406,339

 
 

1,318,251

 

Assets classified as held-for-sale

 
 

210

 
 

922

 

Total current assets

 
 

1,406,549

 
 

1,319,173

 

TOTAL ASSETS

 
 

4,421,082

 
 

4,301,699

 

 
 
 
 
 

EQUITY AND LIABILITIES

 
 
 
 
 

Capital and reserves

 
 
 
 
 

Ordinary shares, $0.0004 par value, 50,000,000,000 shares

authorized, 32,088,989,727 and 32,075,631,400 shares issued and 
         outstanding at September 30, 2013 and June 30, 2013, respectively

 
 

12,836

 
 

12,830

 

Share premium

 
 

4,088,854

 
 

4,088,071

 

Reserves

 
 

56,993

 
 

53,079

 

Accumulated deficit

 
 

(1,708,540)

 
 

(1,751,031)

 

Equity attributable to owners of the Company

 
 

2,450,143

 
 

2,402,949

 

Non-controlling interests

 
 

109,238

 
 

789

 

Total equity

 
 

2,559,381

 
 

2,403,738

 

Non-current liabilities

 
 
 
 
 

Borrowings

 
 

553,435

 
 

474,692

 

Deferred tax liabilities

 
 

207

 
 

257

 

Deferred government grant

 
 

213,098

 
 

147,952

 

Long-term financial liabilities

 
 

5,429

 
 

4,989

 

Total non-current liabilities

 
 

772,169

 
 

627,890

 

Current liabilities

 
 
 
 
 

Trade and other payables

 
 

402,827

 
 

537,003

 

Borrowings

 
 

548,385

 
 

586,425

 

Deferred government grant(1)

 
 

17,833

 
 

26,924

 

Accrued liabilities

 
 

105,497

 
 

104,678

 

Promissory notes

 
 

14,895

 
 

14,791

 

Other financial liabilities

 
 

10

 
 

107

 

Current tax liabilities

 
 

85

 
 

143

 

Total current liabilities

 
 

1,089,532

 
 

1,270,071

 

Total liabilities

 
 

1,861,701

 
 

1,897,961

 

TOTAL EQUITY AND LIABILITIES

 
 

4,421,082

 
 

4,301,699

 

 

Note:

 

(1) The Company made a reclassification of part of non-current deferred government grant to current liability as of June 30, 2013.

 

Semiconductor Manufacturing International Corporation

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

(In $US thousands)

 

 
 

For the three months ended

 

 
 

September 30, 2013

 
 

June 30, 2013

 

 
 

(Unaudited)

 
 

(Unaudited)

 

Cash flow from operating activities

 
 
 
 
 

Profit for the period

 
 

42,940

 
 

75,330

 

Depreciation and amortization

 
 

136,725

 
 

135,712

 

Share of profits of associates

 
 

(551)

 
 

(777)

 

Changes in working capital and others

 
 

90,467

 
 

(101,905)

 

Net cash from operating activities

 
 

269,581

 
 

108,360

 

 
 
 
 
 

Cash flow from investing activities:

 
 
 
 
 

Payments for property, plant and equipment

 
 

(255,561)

 
 

(188,008)

 

Payments for intangible assets

 
 

(9,414)

 
 

(14,914)

 

Payments for land use right

 
 

-

 
 

(61,391)

 

Proceeds from disposal of property, plant and equipment and intangible

assets

 
 

15,140

 
 

7,553

 

Changes in restricted cash relating to investing activities

 
 

7,305

 
 

(12,721)

 

Payments to acquire financial assets

 
 

(5,225)

 
 

(2,852)

 

Proceeds on sale of financial assets

 
 

5,518

 
 

1,215

 

Proceeds from disposal of subsidiary

 
 

29,104

 
 

28,639

 

Others

 
 

-

 
 

(80)

 

Net cash used in investing activities

 
 

(213,133)

 
 

(242,559)

 

 
 
 
 
 

Cash flow from financing activities:

 
 
 
 
 

Proceeds from borrowings

 
 

434,170

 
 

306,939

 

Repayment of borrowings

 
 

(388,671)

 
 

(189,323)

 

Repayment of promissory notes

 
 

-

 
 

(15,000)

 

Proceeds from exercise of employee stock options

 
 

546

 
 

1,551

 

Proceeds from non-controlling interests

 
 

108,000

 
 

-

 

Net cash from financing activities

 
 

154,045

 
 

104,167

 

 
 
 
 
 

Effects of exchange rate changes on the balance of cash held in foreign

currencies

 
 

59

 
 

55

 

 
 
 
 
 

Net increase (decrease) in cash and bank balances

 
 

210,552

 
 

(29,977)

 

 
 
 
 
 

Cash and bank balances, beginning of period

 
 

262,955

 
 

292,932

 

 
 
 
 
 

Cash and bank balances, end of period

 
 

473,507

 
 

262,955

 
Source: Semiconductor Manufacturing International Corporation
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