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SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION

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Semiconductor Manufacturing 'l : SMIC REPORTS UNAUDITED RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2019

02/13/2020 | 04:46am EDT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.

SEMICONDUCTOR MANUFACTURING INTERNATIONAL CORPORATION

中 芯 國 際 集 成 電 路 製 造 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

(STOCK CODE: 0981)

SMIC REPORTS UNAUDITED RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2019

  • Revenue was $839.4 million in 4Q19, an increase of 2.8% QoQ from $816.5 million in 3Q19, compared to $787.6 million in 4Q18. Excluding the contribution from the Avezzano 200mm fab in 3Q19 and 4Q18, revenue in 4Q19 was increased by 4.6% QoQ from $802.8 million in 3Q19 and 13.8% YoY from $737.6 million in 4Q18.
  • Gross profit was $199.4 million in 4Q19, an increase of 17.4% QoQ from $169.8 million in 3Q19 and 48.7% YoY from $134.1 million in 4Q18.
  • Gross margin was 23.8% in 4Q19, compared to 20.8% in 3Q19, 17.0% in 4Q18.

Set out below is a copy of the full text of the press release by the Company and its subsidiaries (the "Group") on February 13, 2020, in relation to its unaudited results for the three months ended December 31, 2019.

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

The consolidated financial information is prepared in accordance with International Financial Reporting Standards ("IFRS") and is presented in accordance with IFRS unless otherwise stated below.

Shanghai, China - February 13, 2020. Semiconductor Manufacturing International Corporation (SEHK: 981; OTCQX: SMICY) ("SMIC", the "Company" or "our"), one of the leading semiconductor foundries in the world, today announced its consolidated results of operations for the three months ended December 31, 2019.

- 1 -

2020 First Quarter Guidance

The following statements are forward looking statements based on current expectations and involved risks and uncertainties, some of which are set forth under "Forward-Looking Statements" below. The Company expects:

  • Revenue to increase by 0% to 2% QoQ.
  • Gross margin to range from 21% to 23%.
  • Non-IFRSoperating expenses, excluding the effect of employee bonus accrual, government funding, impairment loss of tangible and intangible assets, gain or loss on the disposal of machinery and equipment, and gain from the disposal of living quarters, to range from $294 million to $300 million.
  • Non-controllinginterests of our majority-owned subsidiaries to range from $17 million net profit to $19 million net profit.

Dr. Zhao Haijun and Dr. Liang Mong Song, SMIC's Co-Chief Executive Officers commented, "Although there were many uncertain external factors in 2019, with the efforts and support of colleagues and customers, the company's operations have gradually improved, and our annual goals have been achieved. Among them, revenue from our China region accounted for 65% of our total revenue in the fourth quarter of 2019, representing a sequential increase of 11% and a year-on-year increase of 21%. In addition, our first generation of FinFET, 14nm, entered mass production, contributing 1% of wafer revenue for the quarter.

In 2020, SMIC will resume a period of growth. At present, the first quarter revenue is better than seasonal. In response to customers' market demand, a new round of capital expenditure plans will be deployed, and capacity will gradually expand. In terms of business strategy, we will continue to expand mature process offerings and maintain our leadership in certain segments. In particular, demand for CMOS image sensors, power management, etc. remains strong. We are solidifying our fundamental capabilities on advanced technology, diversifying our customer engagement, and transitioning technology development into income generation. We also expect our first generation of FinFET to steadily ramp up, and our second generation of FinFET to continue customer engagement.

As a fundamental part of the Chinese semiconductor industry, we focus on expanding and improving our product portfolio offerings, expanding our target markets, and serving our increasingly mature customers in seizing the growing market opportunities."

- 2 -

Conference Call / Webcast Announcement

Date: February 14, 2020

Time: 8:30 a.m. Beijing time

Dial-in numbers:

Mainland China

+86 400-620-8038

(Pass code: SMIC)

Hong Kong, China

+852

3018-6771

(Pass code: SMIC)

Taiwan, China

+886

2-5572-3895

(Pass code: SMIC)

United States

+1 845-675-0437

(Pass code: SMIC)

The call will be webcast live with audio at:

http://www.smics.com/en/site/company_activityor https://edge.media-server.com/mmc/p/ookahtor.

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"; SEHK: 981; OTCQX: SMICY), one of the leading foundries in the world, is Mainland China's most advanced and largest foundry, broadest in technology coverage, and most comprehensive in semiconductor manufacturing services. SMIC provides integrated circuit (IC) foundry and technology services on process nodes from 0.35 micron to 14 nanometer. Headquartered in Shanghai, China, SMIC has an international manufacturing and service base. In China, SMIC has a 300mm wafer fabrication facility (fab), a 200mm fab and a majority-ownedjoint-venture 300mm fab for advanced nodes (under construction) in Shanghai; a 300mm fab and a majority-owned 300mm fab for advanced nodes in Beijing; 200mm fabs in Tianjin and Shenzhen; and a majority-ownedjoint-venture 300mm bumping facility in Jiangyin. SMIC also has marketing and customer service offices in the U.S., Europe, Japan, and Taiwan China, and a representative office in Hong Kong China.

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

Forward-Looking Statements

This press release contains, in addition to historical information, forward-looking statements. These forward-looking statements, including statements under "First Quarter 2020 Guidance", "Capex Summary" and the statements contained in the quotes of our Co-Chief Executive Officers are based on SMIC's current assumptions, expectations, beliefs, plans, objectives, and projections about future events or performance. SMIC uses words like "believe," "anticipate," "intend," "estimate," "expect," "project," "target, "going forward", "continue", "ought to", "may", "seek", "should", "plan", "could", "vision", "goals", "aim", "aspire", "objective", "schedules", "outlook" and similar expressions to identify forward looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessary estimates reflecting judgment of SMIC's senior management and 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 cyclicality and market conditions in the semiconductor industry, intense competition in the semiconductor industry, SMIC's reliance on a small number of customers, timely wafer acceptance by SMIC's customers, timely introduction of new technologies, SMIC's ability to ramp new products into volume, supply and demand for semiconductor foundry services, industry overcapacity, shortages in equipment, components and raw materials, availability of manufacturing capacity, financial stability in end markets, orders or judgments from pending litigation, intensive intellectual property litigation in the semiconductor industry, general economic conditions and fluctuations in currency exchange rates.

- 3 -

In addition to the information contained in this press release, you should also consider the information contained in our other filings with The Hong Kong Stock Exchange Limited ("SEHK") from time to time. Other unknown or unpredictable factors also could have material adverse effects on our 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 required by applicable laws, SMIC undertakes no obligation and does not intend to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events after the date on which such statement is made or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or otherwise.

About Non-International Financial Reporting Standards ("non-IFRS") Financial Measures

To supplement SMIC's consolidated financial results presented in accordance with IFRS, SMIC uses in this press release non-IFRS measures of operating results that are adjusted to exclude finance cost, depreciation and amortization, income tax benefits and expenses, the effect of employee bonus accrual, government funding, impairment loss of tangible and intangible assets, gain or loss on the disposal of machinery and equipment and gain from the disposal of living quarters. This earnings release also includes first quarter 2020 guidance for non-IFRS operating expenses. The presentation of non-IFRS 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. This earnings release includes EBITDA, EBITDA margin and non-IFRS operating expenses which consist of total operating expenses as adjusted to exclude the effect of employee bonus accrual, government funding, impairment loss of tangible and intangible assets, gain or loss on the disposal of machinery and equipment and gain from the disposal of living quarters. These non-IFRS financial measures are not calculated or presented in accordance with, and are not alternatives or substitutes for financial measures prepared in accordance with IFRS, and should be read only in conjunction with the Group's financial measures prepared in accordance with IFRS. The Group's non-IFRS financial measures may be different from similarly-titlednon-IFRS financial measures used by other companies.

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

The accompanying table has more information and reconciliations of each non-IFRS financial measure to its most directly comparable IFRS financial measure. A reconciliation of non-IFRS guidance measures to corresponding IFRS measures is not available on a forward-looking basis because the effect of these adjustment items excluded for the purpose of non-IFRS operating expenses guidance are subject to some unpredictable conditions that cannot be estimated with reasonable certainty.

- 4 -

Summary of Fourth Quarter 2019 Operating Results

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

4Q19

3Q19

QoQ

4Q18

YoY

Revenue

839,439

816,452

2.8%

787,565

6.6%

Cost of sales

(640,023)

(646,637)

-1.0%

(653,440)

-2.1%

Gross profit

199,416

169,815

17.4%

134,125

48.7%

Operating expenses

(179,271)

(122,665)

46.1%

(175,055)

2.4%

Profit (loss) from operations

20,145

47,150

-57.3%

(40,930)

-

Other income, net

67,395

41,537

62.3%

43,473

55.0%

Profit before tax

87,540

88,687

-1.3%

2,543

3,342.4%

Income tax (expense) benefit

(11,866)

(4,061)

192.2%

8,332

-

Profit for the period

75,674

84,626

-10.6%

10,875

595.9%

Other comprehensive income (loss):

Exchange differences on translating

2,942

(20,032)

-

(7,601)

-

foreign operations

Cash flow hedges

6,573

(10,617)

-

461

1,325.8%

Actuarial gains and losses on defined

-

-

-

(758)

-

benefit plans

Total comprehensive income

85,189

53,977

57.8%

2,977

2,761.6%

for the period

Profit (loss) for the period attributable to:

SMIC

88,735

115,135

-22.9%

26,520

234.6%

Non-controlling interests

(13,061)

(30,509)

-57.2%

(15,645)

-16.5%

Profit for the period

75,674

84,626

-10.6%

10,875

595.9%

Gross margin

23.8%

20.8%

17.0%

Earnings per ordinary share(1)

Basic

$0.02

$0.02

$0.00

Diluted

$0.02

$0.02

$0.00

Earnings per ADS(2)

Basic

$0.08

$0.11

$0.02

Diluted

$0.08

$0.10

$0.02

Wafers shipped (in 8" equivalent wafers)

1,339,400

1,315,443

1.8%

1,217,690

10.0%

Capacity utilization(3)

98.8%

97.0%

89.9%

Note:

  1. Based on weighted average ordinary shares of 5,055 million (basic) and 5,788 million (diluted) in 4Q19, 5,052 million (basic) and 5,784 million (diluted) in 3Q19, and 5,039 million (basic) and 5,058 million (diluted) in 4Q18.
  2. Each ADS represents 5 ordinary shares.
  3. Based on total equivalent wafers out divided by estimated total quarterly capacity.

- 5 -

  • Revenue was $839.4 million in 4Q19, an increase of 2.8% QoQ from $816.5 million in 3Q19. Excluding the contribution from the Avezzano 200mm fab in 3Q19, revenue in 4Q19 increased by 4.6% QoQ from $802.8 million in 3Q19. Revenue increased in 4Q19 mainly due to the increase of wafer shipment.
  • Cost of sales was $640.0 million in 4Q19, compared to $646.6 million in 3Q19. Cost of sales decreased in 4Q19 mainly due to the product-mix change and the adjustment of production plan.
  • Gross profit was $199.4 million in 4Q19, an increase of 17.4% QoQ from $169.8 million in 3Q19. Gross profit increased in 4Q19 due to the total impact of the increase of capacity utilization, the product-mix change and the adjustment of production plan.
  • Gross margin was 23.8% in 4Q19, compared to 20.8% in 3Q19.
  • Operating expenses were $179.3 million in 4Q19, an increase of 46.1% QoQ from $122.7 million in 3Q19, mainly due to the reasons stated in Operating Expenses (Income) Analysisbelow.
  • Other income (expense), net was $67.4 million gain in 4Q19, as compared to $41.5 million gain in 3Q19. The change was mainly due to the reasons stated in Other Income (Expense), Netbelow.
  • Exchange differences on translating foreign operations were $2.9 million gain in 4Q19 and $20.0 million losses in 3Q19. The change was mainly due to the translation difference from the subsidiaries and associates using RMB as the functional currency caused by the appreciation of RMB against USD in 4Q19.
  • Non-controllinginterests were $13.1 million losses in 4Q19, as compared to $30.5 million losses in 3Q19, mainly due to the decreased loss in some majority-owned subsidiaries in 4Q19.

- 6 -

Analysis of Revenue

Revenue Analysis

By Application

4Q19

3Q19

4Q18

Computer

5.5%

5.6%

6.4%

Communications

44.4%

46.1%

44.7%

Consumer

38.1%

34.9%

32.1%

Auto/Industrial

3.1%

4.8%

8.0%

Others

8.9%

8.6%

8.8%

By Service Type

4Q19

3Q19

4Q18

Wafers

91.6%

92.5%

93.2%

Mask making, testing, others

8.4%

7.5%

6.8%

By Geography

4Q19

3Q19

4Q18

United States(1)

22.2%

24.7%

31.7%

Mainland China and Hong Kong

65.1%

60.5%

57.5%

Eurasia(2)

12.7%

14.8%

10.8%

Wafer Revenue Analysis

By Technology

4Q19

3Q19

4Q18

14 nm

1.0%

-

-

28 nm

5.0%

4.3%

5.4%

40/45 nm

16.2%

18.5%

20.3%

55/65 nm

31.0%

29.3%

23.0%

90 nm

1.5%

1.3%

1.7%

0.11/0.13 µm

6.2%

6.6%

7.3%

0.15/0.18 µm

35.0%

35.8%

38.7%

0.25/0.35 µm

4.1%

4.2%

3.6%

Note:

  1. Presenting the revenue to those companies whose headquarters are in the United States, but ultimately selling and shipping the products to their global customers.
  2. Excluding Mainland China and Hong Kong.

- 7 -

Capacity*

Fab

4Q19

3Q19

Shanghai 200mm fab

115,000

112,000

Shanghai 300mm fab

4,500

18,000

Beijing 300mm fab

117,000

112,500

Tianjin 200mm fab

58,000

58,000

Shenzhen 200mm fab

55,000

52,000

Shenzhen 300mm fab

-

6,750

Majority-owned Beijing 300mm fab

92,250

84,600

Majority-owned Shanghai 300mm fab

6,750

-

Total monthly wafer fabrication capacity

448,500

443,850

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 was 448,500 8-inch equivalent wafers in 4Q19 from 443,850 8-inch equivalent wafers in 3Q19, primarily due to the net impact of the new capacity of majority-owned Shanghai 300mm fab and the adjustment of production plan in 4Q19.

Shipment and Utilization

8" equivalent wafers

4Q19

3Q19

QoQ

4Q18

YoY

Wafer shipments

1,339,400

1,315,443

1.8%

1,217,690

10.0%

Utilization rate(1)

98.8%

97.0%

-

89.9%

-

Note:

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

Detailed Financial Analysis

Gross Profit

Amounts in US$ thousands

4Q19

3Q19

QoQ

4Q18

YoY

Cost of sales

640,023

646,637

-1.0%

653,440

-2.1%

Depreciation and amortization

198,536

201,476

-1.5%

216,588

-8.3%

Other manufacturing costs

441,020

444,692

-0.8%

436,152

1.1%

Share-based compensation

467

469

-0.4%

700

-33.3%

Gross profit

199,416

169,815

17.4%

134,125

48.7%

Gross margin

23.8%

20.8%

-

17.0%

-

  • Depreciation and amortization in the cost of sales was $198.5 million in 4Q19, compared to $201.5 million in 3Q19, mainly due to the product-mix change and the adjustment of production plan in 4Q19.

- 8 -

Operating Expenses (Income)

Amounts in US$ thousands

4Q19

3Q19

QoQ

4Q18

YoY

Operating expenses

179,271

122,665

46.1%

175,055

2.4%

Research and development

169,871

185,019

-8.2%

185,079

-8.2%

General and administrative

77,157

70,041

10.2%

50,003

54.3%

Selling and marketing

5,273

5,900

-10.6%

7,701

-31.5%

Net impairment losses (reversal)

(2,381)

1,752

-

(90)

2,545.6%

recognized on financial assets

Other operating income

(70,649)

(140,047)

-49.6%

(67,638)

4.5%

  • Research and development expenses decreased to $169.9 million in 4Q19, compared to $185.0 million in 3Q19. The change was mainly due to less R&D activities in 4Q19.
  • The change in other operating income was mainly due to 1) the gain on disposal of subsidiaries amounting to $81.4 million in 3Q19 and no gain on disposal of subsidiaries occurred in 4Q19 and 2) government funding of $71.8 million in 4Q19, compared to $58.3 million in 3Q19.

Other Income (Expense), Net

Amounts in US$ thousands

4Q19

3Q19

QoQ

4Q18

YoY

Other income, net

67,395

41,537

62.3%

43,473

55.0%

Interest income

35,867

36,810

-2.6%

20,155

78.0%

Finance costs

(16,808)

(15,187)

10.7%

(8,320)

102.0%

Foreign exchange gains (losses)

4,118

(248)

-

(5,545)

-

Other gains, net

32,075

594

5,299.8%

15,802

103.0%

Share of gain of investment

12,143

19,568

-37.9%

21,381

-43.2%

accounted for using equity method

  • Foreign exchange losses were mainly due to the net impact of cash flow hedging and the appreciation of RMB against USD in 4Q19. Foreign monetary assets mainly consist of cash and cash equivalent and trade and other receivables in RMB. Foreign monetary liabilities mainly consist of borrowings, medium-term notes, short-term notes and trade and other payables in RMB.
  • The increase in other gains, net in 4Q19 was mainly caused by the fair value change of the investments in equity securities recognized as financial assets at fair value through profit or loss.
  • The change in share of gain of investment accounted for using equity method was due to the less gain on the investments in associates and joint ventures in 4Q19. Certain associates and joint ventures of the Group are investment funds with a number of portfolio investments, fair value change of which resulted in the change in share of gain of investment accounted for using equity method in 4Q19.

- 9 -

Depreciation and Amortization

Amounts in US$ thousands

4Q19

3Q19

QoQ

4Q18

YoY

Depreciation and amortization

285,997

279,622

2.3%

253,290

12.9%

Liquidity

Amounts in US$ thousands

4Q19

3Q19

Inventories

628,885

645,821

Prepayment and prepaid operating

expenses

34,256

42,869

Trade and other receivables

836,143

1,498,375

Financial assets at fair value

through profit or loss

42,985

37,850

Financial assets at amortized cost

2,276,370

2,612,702

Derivative financial instruments

-

28,154

Restricted cash

804,547

833,502

Cash and cash equivalent

2,238,840

1,182,479

Assets classified as held-for-sale

11,815

14,229

Total current assets

6,873,841

6,895,981

Trade and other payables

1,034,079

925,155

Contract liabilities

92,333

86,269

Borrowings

562,833

338,479

Lease liabilities

80,651

72,277

Bonds payable

-

500,000

Convertible bonds

630,428

-

Short-term notes

286,512

494,833

Deferred government funding

329,545

330,839

Accrued liabilities

151,178

147,455

Derivative financial instruments

4,782

2,296

Other financial liabilities

11,747

11,593

Current tax liabilities

3,210

3,916

Other liabilities

17,901

17,461

Total current liabilities

3,205,199

2,930,573

Cash ratio(1)

0.7x

0.4x

Quick ratio(2)

1.9x

2.1x

Current ratio(3)

2.1x

2.4x

Note:

  1. Cash and cash equivalent divided by total current liabilities.
  2. Current assets excluding inventories divided by total current liabilities.
  3. Total current assets divided by total current liabilities.

- 10 -

Capital Structure

Amounts in US$ thousands

4Q19

3Q19

Cash and cash equivalent

2,238,840

1,182,479

Financial assets at fair value

42,985

37,850

through profit or loss - current(1)

Financial assets at amortized cost(2)

2,276,370

2,612,702

Total current financial assets, cash

4,558,195

3,833,031

and cash equivalent

Short-term borrowings

562,833

338,479

Long-term borrowings

2,003,836

2,179,017

Lease liabilities

247,732

215,246

Short-term notes

286,512

494,833

Medium-term notes

214,193

211,314

Convertible bonds

630,428

430,399

Corporate bonds

-

500,000

Total debt

3,945,534

4,369,288

Net debt(3)

536,257

(612,661)

Equity

10,197,862

9,643,923

Total debt to equity ratio(4)

38.7%

45.3%

Net debt to equity ratio(5)

-6.0%

5.6%

Note:

  1. Mainly contain financial products sold by bank.
  2. Mainly contain bank deposits over 3 months.
  3. Total debt minus total current financial assets, cash and cash equivalent.
  4. Total debt divided by equity.
  5. Net debt divided by equity.

Cash Flow

Amounts in US$ thousands

4Q19

3Q19

Net cash from operating activities

345,037

317,765

Net cash from (used in) investing activities

235,898

(367,320)

Net cash from (used in) financing activities

462,110

(264,235)

Effect of exchange rate changes

13,316

(28,362)

Cash and cash equivalent of

-

6,053

disposal group held-for-sale

Net change in cash and cash equivalent

1,056,361

(336,099)

Capex Summary

  • Capital expenditures were $491.9 million in 4Q19, compared to $189.7 million in 3Q19.
  • The 2019 capital expenditures for foundry operations were $2.0 billion, of which $1.2 billion and $0.2 billion were spent for the expansion of capacity in our majority-owned Shanghai 300mm fab and the majority-owned Beijing 300mm fab, respectively. The 2019 capital expenditures for non-foundry operations were $121.8 million primarily for the construction of employees' living quarters.
  • The planned 2020 capital expenditures for foundry operations are approximately $3.1 billion, of which $2.0 billion and $0.5 billion are expected to be spent on the equipment and facility in the majority-owned Shanghai 300mm fab and the majority-owned Beijing 300mm fab, respectively. The planned 2020 capital expenditures for non-foundry operations are approximately $59.9 million, mainly for the construction of employee's living quarters.
    • 11 -

Recent Highlights and Announcements

  • Voluntary Announcement Donation of RMB10 Million to Support the Frontline to Fight the Novel Coronavirus Epidemic (2020-2-7)
  • Discloseable Transactions Purchases Made Pursuant to the Commercial Terms Agreement and Purchase Orders (2020-1-24)
  • Notice of Extraordinary General Meeting (2020-1-20)
  • Closure of Register of Members (2020-1-20)
  • Notification Letter for Registered Shareholders (2020-1-20)
  • Notification Letter and Request Form for Non-registered Shareholders (2020-1-20)
  • Form of Proxy for use at the Extraordinary General Meeting to be Held on 13 February 2020 (2020-1-20)
  • Circular - (1) Continuing Connected Transactions in relation to SMSC Framework Agreement and
    (2) Revision of the Existing Annual Caps for Continuing Connected Transactions in relation to SMNC Framework Agreement and (3) Connected Transactions in relation to Proposed Grant of Restricted Share Units to a Non-Executive Director and Two Independent Non-Executive Directors and (4) Notice of Extraordinary General Meeting (2020-1-20)
  • Notification of Board Meeting (2020-1-10)
  • Continuing Connected Transactions in relation to SJ Cayman Framework Agreement (2019-12- 27)
  • Connected Transaction Capital Contribution in Semiconductor Technology Innovation Center (Beijing) Co., Ltd (2019-12-23)
  • Completion of the Issue of US$200 Million Zero Coupon Convertible Bonds Due 2022 to be Consolidated and Form a Single Series with the Existing US$450 Million Zero Coupon Convertible Bonds Due 2022 (2019-12-10)
  • Continuing Connected Transactions in relation to SMSC Framework Agreement (2019-12-6)
  • Revision of the Existing Annual Cap for Continuing Connected Transactions in relation to SMNC Framework Agreement (2019-12-6)
  • Compensation Committee Charter (2019-12-2)
  • Grant of Options (2019-11-26)
  • Proposed Issue of US$200 Million Zero Coupon Convertible Bonds Due 2022 to be Consolidated and Form a Single Series with the Existing Us$450 Million Zero Coupon Convertible Bonds Due 2022 (2) Pre-Emptive Right of Datang (3) Pre-Emptive Right of China IC Fund (2019-11-19)
  • SMIC Reports Unaudited Results for the Three Months ended September 30, 2019 (2019-11-12)
  • Notification of Board Meeting (2019-10-10)

Please visit SMIC's website at

http://www.smics.com/en/site/newsand http://www.smics.com/en/site/comapny_statutoryDocuments

for further details regarding the recent announcements.

- 12 -

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(In US$ thousands except share data)

For the three months ended

December 31, 2019

September 30, 2019

(Unaudited)

(Unaudited)

Revenue

839,439

816,452

Cost of sales

(640,023)

(646,637)

Gross profit

199,416

169,815

Research and development expenses

(169,871)

(185,019)

General and administration expenses

(77,157)

(70,041)

Sales and marketing expenses

(5,273)

(5,900)

Net impairment losses reversal (recognized) on financial assets

2,381

(1,752)

Other operating income, net

70,649

140,047

Operating expenses

(179,271)

(122,665)

Profit from operations

20,145

47,150

Other income, net

67,395

41,537

Profit before tax

87,540

88,687

Income tax expense

(11,866)

(4,061)

Profit for the period

75,674

84,626

Other comprehensive income (loss):

Item that may be reclassified subsequently to profit or loss

Exchange differences on translating foreign operations

2,942

(20,032)

Cash flow hedges

6,573

(10,617)

Total comprehensive income for the period

85,189

53,977

Profit (loss) for the period attributable to:

Owners of the Company

88,735

115,135

Non-controlling interests

(13,061)

(30,509)

75,674

84,626

Total comprehensive income (loss) for the period

attributable to:

Owners of the Company

98,250

84,650

Non-controlling interests

(13,061)

(30,673)

85,189

53,977

Earnings per ordinary share

Basic

$0.02

$0.02

Diluted

$0.02

$0.02

Earnings per ADS

Basic

$0.08

$0.11

Diluted

$0.08

$0.10

Shares used in calculating basic earnings per share

5,054,740,322

5,052,100,294

Shares used in calculating diluted earnings per share

5,788,398,121

5,783,614,489

Reconciliations of Non-IFRS Financial Measures to

Comparable IFRS Measures

Non-IFRS operating expenses(1)

(248,129)

(256,587)

EBITDA(2)

390,345

383,496

EBITDA margin(2)

46.5%

47.0%

- 13 -

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(In US$ thousands except share data)

Note:

  1. Non-IFRSoperating expenses are defined as operating expenses adjusted to exclude the effect of employee bonus accrual, government funding, gain on the disposal of subsidiaries, gain or loss on the disposal of machinery and equipment and gain from the disposal of living quarters. SMIC reviews non-IFRS operating expenses together with operating expenses to understand, manage and evaluate its business and make financial and operational decisions. The Group also believes it is useful supplemental information for investors and analysts to assess its operating performance. However, the use of non-IFRS financial measures has material limitations as an analytical tool. One of the limitations of using non-IFRS financial measures is that they do not include all items that impact our net profit for the period. In addition, because non-IFRS financial measures are not calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider the non-IFRS operating expenses in isolation from or as an alternative to operating expenses prepared in accordance with IFRS.
    The following table sets forth the reconciliation of the non-IFRS operating expenses to its most directly comparable financial measure presented in accordance with IFRS, for the periods indicated.

For the three months ended

December 31, 2019

September 30, 2019

December 31, 2018

(Unaudited)

(Unaudited)

(Unaudited)

Operating expenses

(179,271)

(122,665)

(175,055)

Employee bonus accrued

1,789

6,125

720

Government funding

(71,839)

(58,309)

(57,469)

Impairment loss of tangible and

2,948

-

8,789

intangible assets

Gain on the disposal of

-

(81,377)

-

subsidiaries

(Gain) loss on the disposal of

(1,516)

242

(19,150)

machinery and equipment

Gain on the disposal of

(240)

(603)

(747)

living quarters

Non-IFRS operating expenses

(248,129)

(256,587)

(242,912)

- 14 -

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(In US$ thousands except share data)

  1. EBITDA is defined as profit for the period excluding the impact of the finance cost, depreciation and amortization, and income tax benefit and expense. EBITDA margin is defined as EBITDA divided by revenue. SMIC uses EBITDA margin as a measure of operating performance; for planning purposes, including the preparation of the
    Group's annual operating budget; to allocate resources to enhance the financial performance of the Group's business; to evaluate the effectiveness of the Group's business strategies; and in communications with SMIC's board of directors concerning the Group's financial performance. Although EBITDA is widely used by investors to measure a company's operating performance without regard to items, such as net finance cost, income tax benefit and expense and depreciation and amortization that can vary substantially from company to company depending upon their respective financing structures and accounting policies, the book values of their assets, their capital structures and the methods by which their assets were acquired, EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Group's results of operations as reported under IFRS. Some of these limitations are: it does not reflect the Group's capital expenditures or future requirements for capital expenditures or other contractual commitments; it does not reflect changes in, or cash requirements for, the Group's working capital needs; it does not reflect finance cost; it does not reflect cash requirements for income taxes; that, although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and these measures do not reflect any cash requirements for these replacements; and that other companies in SMIC's industry may calculate these measures differently than SMIC does, limiting their usefulness as comparative measures.
    The following table sets forth the reconciliation of EBITDA and EBITDA margin to their most directly comparable financial measures presented in accordance with IFRS, for the periods indicated.

For the three months ended

December 31, 2019

September 30, 2019

December 31, 2018

(Unaudited)

(Unaudited)

(Unaudited)

Profit for the period

75,674

84,626

10,875

Finance costs

16,808

15,187

8,320

Depreciation and amortization

285,997

279,622

253,290

Income tax expense

11,866

4,061

(8,332)

EBITDA

390,345

383,496

264,153

Profit margin

9.0%

10.4%

1.4%

EBITDA margin

46.5%

47.0%

33.5%

- 15 -

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(In US$ thousands)

As of

December 31, 2019

September 30, 2019

(Unaudited)

(Unaudited)

ASSETS

Non-current assets

Property, plant and equipment

7,757,247

7,531,408

Right-of-use assets

238,603

206,441

Land use right

138,264

138,176

Intangible assets

96,943

101,827

Investments in associates

1,139,317

1,124,819

Investments in joint ventures

27,117

31,918

Deferred tax assets

62,975

46,647

Financial assets at fair value through profit or loss

90,067

54,096

Derivative financial instruments

1,872

1,253

Other assets

11,574

21,809

Total non-current assets

9,563,979

9,258,394

Current assets

Inventories

628,885

645,821

Prepayment and prepaid operating expenses

34,256

42,869

Trade and other receivables

836,143

1,498,375

Financial assets at fair value through profit or loss

42,985

37,850

Financial assets at amortized cost

2,276,370

2,612,702

Derivative financial instruments

-

28,154

Restricted cash

804,547

833,502

Cash and cash equivalent

2,238,840

1,182,479

6,862,026

6,881,752

Assets classified as held-for-sale

11,815

14,229

Total current assets

6,873,841

6,895,981

TOTAL ASSETS

16,437,820

16,154,375

- 16 -

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(In US$ thousands)

As of

December 31, 2019

September 30, 2019

(Unaudited)

(Unaudited)

EQUITY AND LIABILITIES

Capital and reserves

Ordinary shares

$0.004 par value, 10,000,000,000 shares authorized,

20,227

20,214

5,056,868,912 and 5,053,576,956 shares outstanding at

December 31, 2019 and September 30, 2019, respectively

Share premium

5,011,915

5,007,817

Reserves

86,749

50,628

Retained earnings

550,506

467,420

Equity attributable to owners of the Company

5,669,397

5,546,079

Perpetual subordinated convertible securities

563,848

563,848

Non-controlling interests

3,964,617

3,533,996

Total equity

10,197,862

9,643,923

Non-current liabilities

Borrowings

2,003,836

2,179,017

Lease liabilities

167,081

142,969

Convertible bonds

-

430,399

Medium-term notes

214,193

211,314

Deferred tax liabilities

34,360

8,649

Deferred government funding

535,266

500,614

Derivative financial instruments

58,243

84,050

Other liabilities

21,780

22,867

Total non-current liabilities

3,034,759

3,579,879

Current liabilities

Trade and other payables

1,034,079

925,155

Contract liabilities

92,333

86,269

Borrowings

562,833

338,479

Lease liabilities

80,651

72,277

Bonds payable

-

500,000

Convertible bonds

630,428

-

Short-term notes

286,512

494,833

Deferred government funding

329,545

330,839

Accrued liabilities

151,178

147,455

Derivative financial instruments

4,782

2,296

Other financial liabilities

11,747

11,593

Current tax liabilities

3,210

3,916

Other liabilities

17,901

17,461

Total current liabilities

3,205,199

2,930,573

Total liabilities

6,239,958

6,510,452

TOTAL EQUITY AND LIABILITIES

16,437,820

16,154,375

- 17 -

Semiconductor Manufacturing International Corporation

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In US$ thousands)

For the three months ended

December 31, 2019

September 30, 2019

(Unaudited)

(Unaudited)

Cash flow from operating activities:

Profit for the period

75,674

84,626

Depreciation and amortization

285,997

279,622

Share of gain of investment accounted for using

(12,142)

(19,568)

equity method

Changes in working capital and others

(4,492)

(26,915)

Net cash from operating activities

345,037

317,765

Cash flow from investing activities:

Payments to acquire financial assets at fair value through

(50,076)

(19,528)

profit or loss

Proceeds from sale of financial assets at fair value through

20,772

6,192

profit or loss

Payments to acquire financial assets at amortized cost

(979,849)

(708,177)

Proceeds from maturity of financial assets at amortized cost

1,350,248

593,379

Payments for property, plant and equipment

(328,885)

(387,652)

Net proceeds after netting off land appreciation tax from disposal of

5,450

609

property, plant and equipment and assets classified as held-for-sale

Payments for intangible assets

(5,305)

(630)

Payments for deposit to acquire land use right

(1,287)

-

Net cash outflow for deconsolidation of subsidiaries

-

(3,065)

Proceeds from disposal of subsidiaries

76,716

86,049

Proceeds from release of restricted cash relating to investing

148,700

76,306

activities

Payments to acquire non-controlling interests

(586)

(11,564)

Distributions received from joint ventures and associates

-

761

Net cash used in investing activities

235,898

(367,320)

Cash flow from financing activities:

Proceeds from borrowings

100,000

437,793

Repayment of borrowings

(73,836)

(470,318)

Principal elements of lease payments

(24,635)

(24,200)

Repayment of bonds

-

(500,000)

Proceeds from issuance of convertible bonds

229,680

-

Proceeds from issuance of short-term notes

212,074

290,958

Repayment of short-term notes

(426,485)

-

Proceeds from exercise of employee stock options

2,795

1,532

Proceeds from non-controlling interests - capital contribution

448,167

-

Distribution paid to perpetual subordinated convertible securities holders

(5,650)

-

Net cash from financing activities

462,110

(264,235)

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

13,316

(28,362)

foreign currencies

Cash and cash equivalent of disposal group held-for-sale

-

6,053

Net increase (decrease) in cash and cash equivalent

1,056,361

(336,099)

Cash and cash equivalent, beginning of period

1,182,479

1,518,578

Cash and cash equivalent, end of period

2,238,840

1,182,479

- 18 -

By order of the Board

Semiconductor Manufacturing International Corporation

Dr. Gao Yonggang

Executive Director, Chief Financial Officer and Joint Company Secretary

Shanghai, February 13, 2020

As at the date of this announcement, the directors of the Company are:

Executive Directors

ZHOU Zixue (Chairman)

ZHAO Haijun (Co-Chief Executive Officer)

LIANG Mong Song (Co-Chief Executive Officer)

GAO Yonggang (Chief Financial Officer and Joint Company Secretary)

Non-executive Directors

CHEN Shanzhi

ZHOU Jie

REN Kai

LU Jun

TONG Guohua

Independent Non-executive Directors

William Tudor BROWN

CONG Jingsheng Jason

LAU Lawrence Juen-Yee

FAN Ren Da Anthony

YOUNG Kwang Leei

* For identification purposes only

- 19 -

Disclaimer

SMIC - Semiconductor Manufacturing International Corporation published this content on 13 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 February 2020 09:45:04 UTC


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Net income 2021 741 M - -
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P/E ratio 2021 273x
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Number of Analysts 24
Last Close Price 25,55 $
Average target price 3,19 $
Spread / Average Target -87,5%
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Managers and Directors
Hai Jun Zhao Co-Chief Executive Officer & Executive Director
Meng Song Liang Co-Chief Executive Officer & Executive Director
Yong Gang Gao CFO, Secretary, Executive Director & EVP
Zi Xue Zhou Chairman
Mei Sheng Zhou Executive VP-Technology Research & Development
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