Investor Relations

Solomon Systech Announces FY2007 Interim Results

Sales Amounted to US$103M (HK$805M) Net Profit at US$9.8M (HK$76.3M)



Six months ended 30 June






HK$’m equivalent


HK$’m equivalent


103.4 804.5 149.4 1,159.5

Gross Profit

25.0 194.2 37.0 286.7
Gross Profit Margin 24.1% 25%
Net Profit 9.8 76.3 17.9 138.8

Net Profit Margin

9.5% 12%

Total Assets


1,718.2 230.2 1,786.4

Shareholders’ Funds


1,387.6 180.1 1,397.7

EPS, Basic*

 0.40 US cent

 3.1 HK cents

0.73 US cent

5.7 HK cents

EPS, Diluted*

 0.39 US cent

 3.0 HK cents

0.72 US cent

 5.6 HK cents

DPS, Interim

 0.13 US cent

 1.0 HK cents

0.26 US cent

2.0 HK cents


* EPS calculation is based on the weighted average number of shares for the period

  • Unit shipment was close to 100 million units
  • Sales amounted to US$103.4 million 
  • Net profit was US$9.8 million 
  • Basic earnings per share was 0.40 US cent (3.1 HK cents)
  • The Board resolved to declare an interim dividend per share of 1.0 HK cent (0.13 US cent) 
  • Book to bill ratio at 30 Jun 2007 was 0.67
  • Global market share in mobile phone display ICs ranged between 13-15%

(Hong Kong – 6 September 2007) – Solomon Systech (International) Limited (“Solomon Systech” or “the Group”; SEHK: 2878) today announced its interim results for FY2007. For the six months ended 30 June 2007, Solomon Systech reported a sales amount of US$103.4 million (HK$804.5 million). The decrease in sales was mainly due to the drop in shipment quantity and product prices.


Through altering product mix, internal cost reduction measures and on-going prices discussion with contract manufacturers, the Group managed to offset part of the pressure from product price erosion on its gross margin. The Group’s gross profit was US$25.0 million (HK$194.2 million), representing a gross margin of 24.1%. Its net profit was US$9.8 million (HK$76.3 million) and net profit margin was 9.5%. Basic earnings per share was 0.40 US cent per share (3.1 HK cents per share).


In light of the Group’s earnings and healthy financial position with net cash at US$153.8 million, the Board of Directors resolved to declare an interim dividend of 1.0 HK cent per share for the six months ended 30 June 2007.


Total shipment of display ICs in the review period was 99 million units. The shipment of monochrome STN and color STN (“CSTN”) display ICs decreased as demand of the mobile phone market has been shifting gradually towards mobile TFT (“m-TFT”) display ICs. Shipment of m-TFT display ICs grew a solid 42%, reflecting the migration of design-in activities of the product family into mass production. OLED display ICs also showed a growth as the OLED display market became more stable and the display technology continued to find new applications. As for bistable display ICs, shipment has been steady since it was introduced in 2H 2006. In the first half year, the Group also shipped small volume of display system ICs and large display TFT driver ICs.


 During the review period, the Group’s total shipment of display ICs was 99 million units.


Units Shipped (million) 1H 2007 1H 2006 Growth
Monochrome STN   18 23 -22%
Color STN  41 81 -49%
m-TFT  17 12 42%
OLED 13 8 63%
Bistable 9 +%
Miscellaneous 1 1  0%
Total 99 125 -21%
Note: Miscellaneous includes image processors, graphic controller, MIPI ICs, microdisplay ICs, large display and others


In the past six months, the Group had spent approximately US$9.2 million on research and development. Its R&D team has been turning out new products using advanced wafer technologies as fine as 0.13µm. Apart from working hard and making progress on delivering new leading ICs, the Group also managed to expand its customer base. The Group will continue to push for product diversification and provide fast turnkey solutions to customers.


The Group’s Managing Director, Mr. Humphrey Leung, said, “In the first half of this year, we increased our R&D expenses by 17% because R&D should drive our future growth. We understand that technology in market place changes fast and our continuous effort in R&D to develop new products is critical to address the latest market needs and expand our business to new customers.” Mr. Leung continued, “Instead, we imposed discretionary control to lower S&GA expense and maintained the operating expenses at the same level.”


Outlook 2H 2007 

For its mobile display business, as the cost of m-TFT modules becomes more competitive, demand for monochrome display ICs and CSTN display ICs will continue to decline. The Group is aware that there will be an expected shortage of m-TFT LCD panel supply in the industry in the coming six months. Such shortage will affect the growth of m-TFT display ICs as well. In order to assure long term growth, the Group will continue to diversify its m-TFT business through (i) creating strategic alliances with panel makers, (ii) introducing new generation driver IC products with MIPI high speed interface and (iii) supporting more display resolution formats for product application diversification.


As for OLED display ICs, the market will continue to be stable in the second half, with major business opportunities arising as a result of (i) OLED display technology becoming more mature for mass production and (ii) of the rising demand for new applications, such as Bluetooth headset, mobile phone main display, OLED mobile phone keypads and notebook sub display. The Group continues to be the leader in the OLED display ICs market.


The Group has a positive view in bistable display ICs, which is constantly finding new applications. Apart from E-paper mobile phone application, it started shipping products to customers for memory card application in the first half of 2007 and has also developed a dedicated bistable driver IC for electronic shelf label application which is ready for testing and scheduled for mass production by the end of this year.

For display system, a key, high performance multimedia SoC (system on chip) introduced in 2Q 2007 is expected to create more opportunities for the Group to work with strategic alliances to capture high volume mobile applications. With early leadership in MIPI (Mobile Industry Processor Interface), the Group’s high-speed mobile interface business has started to develop new generation driver ICs and display system controllers in collaborations with top tier industry players.


“The business environment will continue to be challenging in the second half of 2007. However, we have been making progress in a number of areas and developing new ICs using advanced technologies for diversifying market applications and customers. We are optimistic about our long-term business growth,” concluded Mr. Leung.


Solomon Systech (International) Limited
Condensed Consolidated Interim Income Statement
For the Six Months ended 30 June 2007

Six months ended 30 June

  2007   2006
  US$’000   US$’000
Sales 103,420   149,415
Cost of sales (78,461)   (112,464)
Gross Profit 24,959   36,951
Other gain-net 650   139
Research and development costs (9,210)   (7,882)
Selling and distribution expenses (1,550)   (1,728)
Administrative expenses (6,964)   (8,658)
Other operating expenses        (16)          (15)
Operating profit 7,869   18,807
Interest income 3,979   3,198
Finance costs (1)   (1)
Share of result of an associated companies        (159)          (400)
Profit before taxation 11,688   21,604
Taxation     (1,879)       (3,712)
Profit attributable to shareholders    9,809       17,892
Dividends   3,184        6,467
Earnings per share (US cents)      
Basic        0.40            0.73
– Diluted        0.39            0.72


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