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Disclaimer This presentation does not constitute an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation or is unlawful without compliance with any registration, filing or other requirements. The statements contained in this presentation that are not historical facts are forward-looking statements. These forward-looking statements are based on current expectations, estimates and projections about the financial markets in which Solomon Systech (International) Limited (the Group ) will invest, and the beliefs and assumptions of the Group. Words such as "expects", "targeted", "anticipates", "should", "intends", "plans", "believes", "seeks", "estimates", "forecasts", "projects", variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and returns may differ materially from what is expressed or forecasted in such forward-looking statements. We caution readers not to place undue reliance on these statements as a number of important factors could cause the actual results to differ materially from the expectations expressed in such forwardlooking statements. These factors include, but are not limited to changes in economic conditions; changes in the level of capital investment; success of business and operating initiatives; changes in the regulatory environment; fluctuations in interest and exchange rates; the outcome of litigation; changes in political and economic stability; government actions; and natural phenomena such as floods, earthquakes and hurricanes. Other unknown or unpredictable factors could cause actual results or performance to differ materially from those in the forward-looking statements contained in this presentation. We caution that the foregoing list of important factors is not exhaustive.
Agenda Highlights Financial Review Business Review Outlook P. 3
Highlights Financial Review Business Review Outlook P. 4
Highlights Sales amounted to US$55.2 million Gross profit was US$21.0 million Gross margin was 38.1% Net profit was US$1.3 million (2012 loss: US$1.4 million) Basic earnings per share was 0.42 HK cent Book-to-bill ratio for the year was 0.86 The Board resolved not to propose any final dividend for the year ended 31 December 2013 P. 5
Highlights Financial Review Business Review Outlook P. 6
Financial Review - Profit and Loss (US$ million) 2013 2012 Remarks Sales 55.2 65.1 15% Gross profit Gross margin 21.0 38.1% 25.1 38.6% 17% Maintained Net profit/(loss) 1.3 (1.4) Returned to Profitability (HK cent) Basic earnings/(loss) per share 0.42 (0.43) Dividends per share Nil Nil Book-to-bill ratio 0.86 1.07 P. 7
Financial Review - Financial Remarks Key Factors Sales US$55.2m ( 12: US$65.1m) Unit Shipments: down 12% YOY Blended ASP: down 4% YOY Gross Profit US$21.0m ( 12: US$25.1m) Gross margin: 38.1% ( 12: 38.6%) Total Operating Expenses US$25.1m ( 12: US$25.6m) R&D costs: US$13.9m ( 12: US$14.2m) S&D expenses: US$3.1m ( 12: US$3.1m) Admin expenses: US$8.1m ( 12: US$8.3m) Finance Income Net Profit US$3.9m ( 12: US$5.7m) US$1.3m ( 12: loss US$1.4m) Treasury income: US$3.0m ( 12: US$2.2m) Net unrealizable gain from treasury investment: US$0.9m ( 12: US$3.8m) P. 8
Financial Review - Balance Sheet As at 31 Dec (US$ million) 2013 2012 YoY Total assets 129.0 131.0-2% Total borrowings 0.5 0.6-16% Shareholders funds 117.8 115.9 +2% Net cash 32.9 38.4-14% (HK cents) Shareholders funds per share 37 37 Net cash per share 10 12 P. 9
Financial Review Net Cash Analysis 2013 vs 2012 Net Cash@31 Dec: US$32.9m ( 13) vs $38.4 ( 12) Major Cash Inflow US$ Major Cash Outflow US$ Interest and Dividend Received +3.1m Treasury Investment -6.8m Disposal of Fixed Assets +0.9m Net Cash Used in Operating Activities -2.4m Others +0.3m Capital Expenditure -0.6m P. 10
Highlights Financial Review Business Review Outlook P. 11
Business Review Strive for Innovation Innovation for Growth New products in 2013: HD LCD display drivers Touch panel controllers MIPI display interface controllers AMEPD display drivers AM/PMOLED display drivers Enhanced Quality and Speed of New Product Development Streamlined NPI process Added resources Enhanced design capabilities P. 12
Business Review Strive for Excellence Enhanced Foundation for Growth Reinforced organization efficiency: Restructured core business units Regrouped product lines Optimized resources Strengthened customer outreach: Expanded sales & marketing team Improved field engineering support P. 13
Business Review Highlights of Design-wins Smartphones / Tablets Smart Devices Smartphones Electronics Shelf Labels Healthcare Products Wearable Healthcare & Fitness Devices LCD e-writer Optical Viewfinder LTE Mobile Hotspot Tablets IP Cam Security Camcorder Baby Monitor Fish Finder Smart Watches LCD TV Smart TVs P. 14
Business Review Blended Average Selling Price 2013 blended ASP: US$0.61, down ~4% YoY ( 12: US$0.63) P. 15
Business Review Product Shipments Total unit shipments in 2013 ~ 91million units P. 16
Business Review 2013 Performance Mobile Display New TFT LCD display drivers: scored design wins for HD smartphones Metal Oxide TFT LCD display drivers: started pilot shipment In-cell Touch TFT LCD display drivers: undergoing qualification Unit shipment reduced due to decreased demand for lower resolution applications Mobile System Enriched portfolios with new products Touch panel controllers: scored design wins for smartphones and tablets MIPI high speed display interface controllers: scored design wins with global tablets Graphic controllers: scored design wins for smartphones and various smart devices Decreased unit shipment due to inventory adjustment in market P. 17
Business Review 2013 Performance Advanced Display Increased unit shipment E-paper: Launched new AMEPD display drivers and scored design wins OLED: Enhanced portfolio & diversified applications Scored design wins with various smart devices Launched qhd display driver for China s 1 st AMOLED panels Large Display New high resolution TFT display drivers: 31.5 TVs: completed qualifications and started mass production 18.5 HD monitors & 21.5 FHD monitors: undergoing qualifications Reduced unit shipment due to inventory adjustment in market & fluctuating demand P. 18
Highlights Financial Review Business Review Outlook P. 19
Outlook Smartphones/Tablets Mobile Display Mobile System High Resolution TFT LCD Display Drivers HD720/WXGA TFT LCD display drivers: ramp up shipment Metal Oxide TFT LCD display drivers: start mass production In-cell Touch TFT LCD display drivers: complete qualification and start mass production More new products: for FHD display panels Touch Panel Controllers Ramp up shipment in smartphone application market Launch new products: dual touch & Windows 8 applications MIPI High Speed Display Interface Controllers Ramp up shipment in FHD display application market Launch new products: edp interface controllers Advanced Display AMOLED Develop higher resolution AMOLED driver controllers: target China smartphone market. P. 20
Outlook Smart TV Large Display For 31.5 LCD TV Continue mass production For 18.5 HD monitors & 21.5 FHD monitors Complete qualification and start mass production Explore New Opportunities Continuous outreach for more new business opportunities in China P. 21
Outlook Smart Devices Advanced Display Electronic Shelf Labels Launch higher resolution AMEPD drivers Develop segment-type EPD drivers Other Smart Devices Wearable Devices Various display solutions to capture growing markets: Smart watches Healthcare & fitness devices OLED Lighting Develop OLED lighting ICs Others Launch more new PMOLED drivers to target: Ultra high brightness outdoor OLED display VFD direct replacement P. 22
Summary Overall Global economy recovering and market confidence growing Good market potential for target smart display applications Remain cautiously optimistic Gross Profit Margin Operating Expenses Stay in line with industry Continue monitoring & investing to boost focused product applications 2014 Focus Strive to continue to achieve growth leveraging growing market confidence Strategies: Target high growth, high volume smart display applications Boost new product introduction to get more design wins P. 23
Thank You Solomon Systech (International) Limited Stock code: 2878 www.solomon-systech.com