Solomon Systech Announces FY2009 Annual Results
Return To Profitability Through Diversifying Business
Financial Highlights:
|
For the year ended 31 December |
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|
2009 |
2008 |
|||||||
|
US$’m |
HK$’m equivalent |
US$’m |
HK$’m equivalent |
|||||
| Sales |
61.8 |
479.2 |
92.8 |
719.3 |
||||
| Gross Profit |
20.4 |
158.0 |
16.9 |
131.1 |
||||
| Gross Profit Margin |
33.0% |
18.2% |
||||||
| Net Profit/(Loss) |
0.7 |
5.3 |
(23.4) |
(181.3) |
||||
|
|
|
|
|
|||||
| Total Assets |
150.2 |
1,164.1 |
162.3 |
1,258.2 |
||||
| Shareholders’ Funds |
135.8 |
1,052.7 |
143.8 |
1,114.4 |
||||
|
|
|
|
|
|||||
| Earnings/(Loss) Per Share, Basic |
0.03 US cent |
0.2 HK cent |
(0.97) US cent |
(7.5) HK cents |
||||
| Earnings/(Loss) Per Share, Diluted |
0.03 US cent |
0.2 HK cent |
(0.96) US cent |
(7.4) HK cents |
||||
| DPS, Final |
0.13 US cent |
1.0 HK cent |
0.39 US cent |
3.0 HK cents |
||||
| DPS, Total |
0.13 US cent |
1.0 HK cent |
0.39 US cent |
3.0 HK cents |
||||
- Display IC shipment reached 93 million units (shipment quantity in the second half of the year increased by 29% over the first half)
- The Group remained its leading position in OLED IC market with IC shipment increased to over 30 million units
- Display System IC shipment increased by more than twofold and successfully entered new market segment of pico-projector applications
- Book to bill ratio for the year ended 31 December 2009 was close to 1.0
- Prospect alignment with China customers for new opportunities in large display and LED backlight business for LCD TV market
- The Board proposed a final dividend per share of 1 HK cent
(Hong Kong – 20 April 2010) – Solomon Systech (International) Limited (“Solomon Systech” or “the Group”; SEHK: 2878) announced its annual results for the year ended 31 December 2009 (“FY2009”). In facing adversity of a very challenging market situation throughout the year in 2009, the Group has successfully overcome the difficult times through strategic diversification of its business with more high-end products and value-added solutions which provided a new customer base and access to an expanded market.
In FY2009, the Group’s sales was US$61.8 million (2008: US$92.8 million). The decline was mainly due to (1) the global financial crisis which drove down demand in early 2009; (2) average selling price erosion; and (3) slower than expected market development of the Group’s new businesses.
Gross profit was US$20.4 million, up by 21% compared with last year (2008: US$16.9 million). The Group’s gross profit margin rose to 33.0% from 18.2% in 2008. The increase in gross profit and gross profit margin were due to change of product mix to higher margin products, and the selling off of approximately US$2.5 million inventory for which provisions were made in previous years. The Group managed to turn around from a loss making position in 2008 to profitability in 2009. Profit attributable to the equity holders of the Company in 2009 amounted to US$0.7 million (2008 loss: US$23.4 million). The Board of Directors proposed to declare a final dividend of 1 HK cent (2008: 3 HK cents) per share, translating into a dividend yield of 1.9% based on the average daily closing price of HK$0.538 for 2009.
The Group’s Managing Director, Mr. Humphrey Leung, said, “We strategically diversify our business, bring in new customers and address different new market applications, which have made contribution to the overall sales and profit margin. We also boosted our manufacturing productivity through product yield improvement and full utilization of our own manufacturing assets. We managed to cut our total expenses by 27% in 2009 through the implementation of an array of expense control and belt tightening measures. We also protected our financial assets in a prudent manner. All these actions resulted in a return of the Group to profitability in 2009 despite a lower sales revenue over 2008.”
Business Review
During FY2009, the Group shipped a total of 93 million display IC units (2008: 115 million units). Decrease in the total unit shipment of Mobile Display was mainly affected by the slow demand for mobile handsets during the year. Touch panel ICs were at the initial shipment stage. For Advanced Display business unit, OLED display IC shipment increased to over 30 million units, as its technology continued to expand into new applications. The shipment of new display ICs fluctuated because market adaptation of the emerging applications remained slow in 2009. Display System IC shipment increased by more than twofold to 2.5 million units as it gradually picked up in the system solution business. The Group’s Green Power business also shipped an initial volume of LED driver IC and LED power module in 2009.
| Units Shipped (million) |
2009 |
2008 |
Change |
| Mobile Display |
55.5 |
81.1 |
-32% |
| Advanced Display |
34.6 |
32.4 |
7% |
| Display System Solution |
2.5 |
0.8 |
213% |
| Green Power |
0.1 |
0 |
>100% |
| Miscellaneous |
0.0 |
0.4 |
-99% |
| Total |
92.7 |
114.7 |
-19% |
Mobile Display: Monochrome STN, Color STN, m-TFT LCD Driver IC and Touch Panel IC
Advanced Display: OLED Driver IC and New Display IC
Display System Solution: Multimedia Processor, Image Processor, Graphic Controller and MIPI IC
Green Power: LED Driver IC and LED Power Module
To enhance business development and customer relations, the Group strengthened relationship with leading customers and top-tier end-product manufacturers from China, Europe, Japan, Korea and Taiwan during the year for Display IC business. Regarding System Solution business, working in alignment with independent design house (“IDHs”), the Group offers timely and total system solutions to original design manufacturers (“ODMs”). The Group has successfully generated new business with its display system solutions such as a notable design-win in pico-projector applications from a top-tier brand name customer. Furthermore, the Green Power unit provides lighting system solutions to the emerging green power market including LED lighting (indoor and outdoor) and LED backlight unit. In collaboration with lighting system design houses, the Group was able to enlarge its total solutions offering and broaden its customer base for emerging market applications during the year.
The Group spent roughly US$14.3 million on research & development in 2009, representing about 55% of the total expenses in 2009 and 23% of sales for the year. The Group’s R&D team continually designs products using various wafer technologies as advanced as 90nm.
Prospects
Solomon Systech intends to continue our march forward by delivering innovative industrial-leading ICs, new system solutions for emerging high-growth applications, expanding its customer base and further developing its business in the emerging China market. The Group will keep on diversifying its product portfolio and provide fast turnkey solutions to customers.
Display IC Business
Mobile Display
Aligning with the market changes, the Mobile Display business unit continues to develop new generation display IC products with competitive features and support more display resolution formats. New products such as capacitive and resistive touch panel controllers, WVGA TFT driver controllers and high definition (“HD”) TFT driver controllers are examples of new ICs with competitive edges to compete in the market.
In 2010, touch panel technology will be the new driver for bringing in new business. The Group will continue to advance the technology and introduce cutting-edge products related to touch panel applications in order to tap this great potential in the market.
Advanced Display
The Advanced Display business unit groups together OLED Display product and New Display product families.
For OLED Display, the Group continues to be the leader in the PMOLED display IC market. The market for OLED display ICs in general is expected to maintain steady growth in 2010, taking into account that the increasing maturity of the OLED display technology for mass production and the fact that OLED display continues to expand into new applications targeting different market segments. The Group also continues to develop AMOLED display ICs with leading panel makers.
For the New Display, the Group maintains a positive view on the potential of ICs for this emerging business as more applications recognize the value of the new display technology, of which e-paper display is perhaps the best known kind. The Group continues to provide different varieties of IC solutions to cater for the requirements of different new display technologies such as electrophoretic, cholesteric and other bistable displays.
Large Display
As large display manufacturing begins booming in China, a dedicated team will move in a new Beijing office in 2010 which will continue the product development of LCD driver ICs and work closely with the Green Power business unit on LED backlight solutions to provide local support to major LCD customers in China.
System Solution Business
Display System Solution
The Group expects volume shipments continue for the segment in 2010 with the continual design-wins for new display controller products. The MIPI-related business is expected to continue to have more design-win projects for mass production in 2010. The Group also believes the high-performance MagusCoreTM multimedia system solution is poised to capture the market and will help to accelerate development of its business in China.
The Display System Solution business unit also has a strong competence in design, development and integration of advanced wireless communication technology and devices. With its current MDTV platform solution, the unit continues to expand its total system solutions for other high-volume applications such as pico-projectors, eBooks and Android-based mobile internet devices.
Green Power
The Group sees the booming market of solid state lighting and signage industry, for the environmental friendly concern as well as for features enhancement in large display applications. The Group will continue to expand its product portfolio in 2010, with more value-added LED driver ICs and LED power modules, while also developing new LED backlight solutions for supporting large display applications such as LCD TV, LCD monitors and notebook computers.
“Global market demand shows signs of recovery but the global supply chain capacity will become tight in 2010 when the market demand picks up faster than the supply. We will have to manage the supply chain capacity and product delivery lead time in order to capture the market opportunity,” continued Mr. Leung. “After all, we have strong belief in the continuous growing electronics market. Thus, we will focus on speeding up our product and market development for new businesses for revenue generation and we will dedicate more strategic effort to expand our business in the booming China market.”
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Solomon Systech (International) Limited |
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|
|
2009 |
2008 |
|
Sales |
61,832 |
92,813 |
|
Cost of sales |
(41,449) |
(75,891) |
|
Gross profit |
20,383 |
16,922 |
|
Other income |
1,382 |
653 |
|
Other gain/(loss) – net |
3,412 |
(5,116) |
|
Research and development costs |
(14,259) |
(19,327) |
|
Selling and distribution expenses |
(3,266) |
(3,682) |
|
Administrative expenses |
(8,449) |
(12,630) |
|
Other operating expenses |
(1,032) |
(4,671) |
|
Operating loss |
(1,829) |
(27,851) |
|
Interest income |
2,104 |
4,603 |
|
Finance costs |
(15) |
(1) |
|
Share of results of associated companies |
(791) |
(432) |
|
Loss before income tax |
(531) |
(23,681) |
|
Income tax credit |
1,216 |
283 |
|
Profit/(loss) for the year |
685 |
(23,398) |
|
Attributable to: |
|
|
|
– The equity holders of the Company |
684 |
(23,408) |
|
– Minority interest |
1 |
10 |
|
|
685 |
(23,398) |
|
Earnings/(loss) per share for profit/(loss) attributable to the equity holders of the Company: |
|
|
|
– Basic |
0.03 |
(0.97) |
|
– Diluted |
0.03 |
(0.96) |
|
|
|
|
|
Dividend |
3,158 |
9,466 |