Solomon Systech Announces FY2010 Interim Results

Diversified Product Portfolio Captures Strong Market Demand 　

Financial Highlights:

 

	For the Six Months Ended 30 June				YoY Change
	2010		2009
	(US$’ m)	(HK$’ m equivalent)	(US$’ m)	(HK$’ m equivalent)
Sales	38.0	294.6	26.7	206.6	42%
Gross Profit	11.2	86.9	7.4	57.7	51%
Gross Profit Margin	29.5%		27.9%		1.6% pt
Loss in respect of the principal business	2.9	22.3	5.7	44.5	(49%)
Loss per Share	0.16 US cent	1.24 HK cents	0.1 US cent	0.75 HK cent	66%
Dividend per Share	Nil	Nil	Nil	Nil

 

During the review period, the Group has been actively engaged with leading customers and top-tier end-product manufacturers in China, Europe, Japan, Korea, Taiwan and USA to support them with the best products and to develop the next generation solutions with new competitive features. Besides, several top-tier brands’ advanced pico-projectors were successfully launched into the market using the Group’s MagusCore^TM multimedia system solution. The Green Power segment provides LED lighting system and backlight units. In collaboration with lighting system design houses, the Group was able to enlarge its total solutions offerings and broaden its customer base for emerging market applications. The leading-edge technology in the system-on-chip solutions of the Group has also reinforced its business relationships with existing customers while attracting new key customers.

The Group’s research and development costs were approximately US$7.3 million (HK$56.3 million) during the period. The commitment to R&D continues to bear fruit as the Group has filed two patents for operating capacitive touch panel and image compression technology in different regions including the US, China, Taiwan, Korea and Europe.

 

Prospects

To fulfill the expected strong market demand in the second half of 2010 and the greater willingness of customers to place long term orders, the Group continues to work closely with its foundry partners and manage the supply chain efficiently. The Group will also keep diversifying its product portfolio and to provide complete turnkey solutions to customers.

 

Display IC Businesses

For Mobile Display ICs, the Group believes there is a huge market potential for high-end products such as smart phones and mobile internet devices (“MID”) that come with high definition (“HD”), medium size display and multi-touch functions. Hence, this unit should continue to develop new generation display IC products to support higher display resolution and bigger display size, including multi-touch panel controllers for 5″, 7″ or bigger displays and TFT driver controllers for WVGA and HD display. This unit has also started the development of new display ICs to support the next generation 3D display.

 

For Advanced Display, the Group believes the market for OLED display ICs and e-paper display ICs in general is expected to carry on its stable growth in the 2H 2010. The Group continues to be the leader in the Passive Matrix OLED (“PMOLED”) display IC market and further expands its capability to OLED Lighting in order to capture new market opportunities. The Group also develops Active Matrix OLED (“AMOLED”) display ICs with leading panel makers. While for its new display ICs, the Group is shipping production quantities for electronic shelf label applications and the design-in work is to continue in 2H 2010 involving e-signage, portable storage devices, mobile phone indices, mobile decorative displays, e-cards, and more.

As large display manufacturing begins blooming in China, a dedicated team has been set up for Large Display business unit and moved its operation to our new Beijing Technology and Business Center. New products to support its business partners in large display are under development and should be ready for customer qualification in 2H 2010. The team intends to work closely with the Green Power business unit on LED backlight solutions to provide local support to major LCD customers in China and Asia

 

System Solution Businesses

For Display System Solution business, the Group expects increase in volume shipment for the segment in 2H 2010 with the continuous design-wins for its new display controller and the MIPI IC. The Group continues to expand its product offering on the high-performance MagusCore ^TM  multimedia system-on-chip solution through the launch of 3rd generation of multimedia chip, thereby gaining new business. In 2H 2010, the Group intends to further promote the capability of MagusCore^TM,aiming at Android-based applications for the 3CC – Converged Communication, Cloud Computing and Consumer Content – enabling more advanced high volume applications such as eBooks, MID and 3D TV. The Group believes the MagusCore^TM system solution is poised to capture the market segment and help to accelerate development of its business. To seize a potentially booming opportunity from the market for Android-based devices, the unit is also working on building its technical capabilities in Android mobile system solutions.

 

The Green Power business is still at its initial stage of development and has considerable room for to grow and expand. Therefore, the Group keeps working on new products and market development in 2H 2010 with more value-added LED driver ICs and LED power modules, and also LED backlight solutions for supporting large display applications such as LCD TVs, LCD monitors and notebook computers.

 

“We will continue delivering innovative industry-leading ICs, launching new system-on-chip solutions for emerging high-growth display and multimedia applications, expanding our customer base and further developing our business in the emerging China market for higher value-added products.” concluded Mr. Leung.

 

Solomon Systech (International) Limited Condensed Consolidated Interim Income Statement For the six months ended 30 June 2010
	Unaudited
	For the six months ended 30 June
	2010 US$’000	2009 US$’000
Sales	38,018	26,663
Cost of sales	(26,799)	(19,218)
Gross profit	11,219	7,445
Other income	196	852
Other gain/(loss) – net	(946)	1,415
Research and development costs	(7,259)	(6,866)
Selling and distribution expenses	(1,932)	(1,582)
Administrative expenses	(4,905)	(4,743)
Other operating expenses	(680)	(1,105)
Operating loss	(4,307)	(4,584)
Interest income	633	1,388
Finance costs	(7)	—
Share of results of associated companies	(260)	(390)
Loss before income tax	(3,941)	(3,586)
Income tax (expense)/credit	(2)	1,256
Loss for the period	(3,943)	(2,330)
Attributable to:
–   Equity holders of the Company	(3,943)	(2,331)
–    Non-controlling interest	—	1
	(3,943)	(2,330)
Loss per share for loss attributable to the equity holders of the Company: (expressed in US cent per share)
–    Basic	(0.16)	(0.10)
–    Diluted	(0.16)	(0.10)
Dividend	—	—