*EPS calculation is based on the adjusted weighted average number of ordinary shares in issue for the year (2005: 2,445,135,773 and 2004 restated: 2,204,501,037)

• Sales reached US$394 million, a growth of 28% as a result of strong unit shipment growth of the Group's new display ICs products

• Net profit rose to US$76 million, an increase of 32% year-on-year 

• Net profit margin improved to 19.3% from 18.8% 

• Earnings per share was 3.12 US cents (24.3 HK cents), an increase of 19% year-on-year 

• The Board proposed a final dividend per share of 15 HK cents. Total annual dividend per share of the year amounted to 19 HK cents

(Hong Kong - 13 March 2006) - Solomon Systech (International) Limited ("Solomon Systech" or the "Group", SEHK: 2878) achieved a record year in 2005, reporting an increase in sales, net profit and market share.

For the year ended 31 December 2005, the Group's proprietary IC solutions and innovative new products helped to boost its market share. Its sales for the year increased by 28% to US$394 million (HK$3,064 million). Net profit grew 32% to US$76 million (HK$593 million). Basic earnings per share were 3.12 US cents (24.3 HK cents), an increase of 19% year-on-year. The Board of Directors proposed to pay a final dividend of 15 HK cents per share.

The Group maintained a healthy financial position with net cash at year-end of US$161 million. It had no borrowings as at 31 December 2005.

The Group's Managing Director, Mr. Humphrey Leung, said, "I am most pleased to report that we have achieved record financial results in 2005. We continued to be a leading player in the global mobile display ICs market. Our unit shipment grew by 68% year-on-year, with total number of display ICs shipped reaching 263 million units. This was particularly notable given the 14% growth of the mobile phone markets. The increased mobile display ICs shipment boosted our global market share to over 20%. Our spectacular growth of business was driven by our mobile-TFT ("m-TFT") and OLED display ICs which were increasingly popular among many world leading mobile phones and MP3 players. A 70% increase in number of new IC product launched also helped to capture more business."

During the year under review, the Group's monochrome STN display ICs shipment slightly declined by 3.8% due to migration from black-and-white display to color display in the industry. Shipment of color STN display ICs grew by 61.6% as a result of more new products launched, dedicated customer support, right pricing and optimum time-to-market. The Group's m-TFT display ICs, used commercially in top brand mobile phones saw an astounding growth of 372%. Thanks to the 3-digit growth of global MP3 players market, the shipment of the Group's OLED display ICs grew by 187%.

"Besides sustained business growth in the mobile display area, the Group also made headway in large display and new display ICs. We commenced mass production of large display ICs for use in notebook computers and PC monitors. Furthermore, we signed a marketing agreement with Kopin Corporation, a Boston-based technology company, to sell the plug-and-play binocular display modules using microdisplay technology. We are seeing strong growth prospects for these business areas and we believe the Group's proprietary IC design and development capability gives it a clear edge in the fast-moving consumer electronics market."
 

Despite the blended average selling price of the Group's products dropped to US$1.50 for 2005 due to product mix and pricing pressure exerted at the end-customer level, the Group could still maintain a gross profit margin of 30%. The book to bill ratio for 2005 stood at 0.93.

Research and Development expenses amounted to roughly US$18 million in 2005. 27 new products went to production last year. In terms of wafers technology used for products under development, the Group employs a range of fine technologies from 0.13µm to 0.6µm, depending on the cost-performance measure and specific application requirements.

Outlook for 2006 
The Group remains optimistic about its business outlook in the coming year, and will strategically expand its product offerings to high-growth segments of the display sector.

On the mobile display front, the Group will work closely with top global brands to increase market share for its m-TFT display ICs. As such, its m-TFT display ICs is expected to be outperforming the market growth. OLED display ICs will be another trophy product for the Group in 2006. The Group currently has a 40% plus share of global OLED display IC market. The Group is confident that it will continue to benefit from the high growth of OLED-driven consumer electronic products, such as mobile phones, MP3, MP4, mini-disc players, and other large volume applications.

In terms of large display business, the Group aims to broaden its product offerings, and will ship both gate and source driver ICs for notebook computers, PC monitors as well as LCD TVs. The total worth of the large display driver ICs market is estimated at more than US$2.5 billion a year. This is a large enough market for the Group to line up more resources for the purpose of gaining market share and achieving continuous revenue growth.

The Group also sees positive business prospects for its new display ICs as more applications are being developed in areas such as mobile entertainment, cellular accessories and portable 3-D gaming for microdisplay, and ultra-thin devices like label tag for flexible or bistable displays.

Another strategic focus for the Group in 2006 is the development of display system ICs. Display system ICs are used to complement display panel ICs and enrich the image, graphics or functionality of a display. Currently, display system ICs consist of graphics controller, image processor, mobile phone audio chipset, multi-format audio decoder, multimedia processor, timing controller and interface peripheral chipset.

"Our business expansion will bring more growth opportunities to the Group and will provide our global customers with total display IC solutions," concluded Mr. Leung.