Operation & Financial Review


The Group recorded revenue of US$731.4 million for the financial year FY2020, a decrease of 8% compared to US$791.6 million in FY2019.

Revenue of the Group recovered to US$417.1 million in 2H 2020 from US$314.3 million in 1H 2020 reflecting the recovery of electronic components distribution activities in China, the first of the major economies in the world to recover from the COVID-19 pandemic, as well as early fruits of the Company’s strategic shift as cited in the Chairman’s message.

Revenue from electronic components distribution business declined by 11% to US$669.1 million, due mainly to two factors: i) termination of the distribution business with Texas Instruments (“TI”) since the end of 2018, which impacted sales in all markets in Asia which the Group operates; ii) the disruptions caused by the COVID-19 pandemic, especially in 1H 2020.

Excluding the decline in turnover as a result of the TI termination, revenue for the electronic components distribution business segment for FY2020 would have increased by 2%, largely driven by the recovery of manufacturing activities in China following business and economic disruptions in 1H 2020 due to the COVID-19 pandemic, as well as the Group’s ongoing business recovery efforts.

Revenue from the consumer products distribution business increased 44% to US$52.7 million on the back of higher sales in Malaysia amid increased demand for teleconferencing and computer accessories as a result of the movement control order imposed by the Malaysian government. The increase was offset by lower sales in the Singapore market as overall consumer spending was dampened by the circuit breaker measures imposed by the Singapore government.

Turnover for other businesses improved from US$4.7 million in FY2019 to US$9.6 million, contributed mainly by new sales made by two Singapore subsidiaries that are involved in trading and distribution of global fast-moving consumer goods.

Profit Margins

Overall gross profit margin in FY2020 declined to 6.3% from 6.8% in FY2019, due to lower margins achieved by the electronic components distribution and consumer products distribution businesses as a result of keen competition in the Group’s operating environment, exacerbated by the impact on businesses due to the COVID-19 pandemic.

Other Operating Income

Other operating income decreased by US$14.4 million or 44% to US$18.6 million, mainly due to US$25.4 million in relation to the transfer of the TI distribution business being recorded in FY2019 and with lower gain on sale and fair value gain on financial assets, at fair value through profit or loss totalling US$2.0 million.

The decrease was partially offset by a one-off reversal of debts totalling US$4.8 million due to a previous shareholder and shareholders of Singapore subsidiaries, government grants of US$1.7 million received by the Group in FY2020 and write-back of allowance for inventory obsolescence of US$3.0 million (FY2019: Allowance for inventory obsolescence of US$7.3 million included in Other Operating Expenses) and higher net currency translation gain of US$2.1 million.


Distribution expenses decreased by US$2.9 million, or 8%, mainly due to lower staff and related costs, in line with cost containment measures implemented by the Group to mitigate the impact of COVID-19 pandemic. The decrease was offset by higher freight and handling charges, and storage charges resulting from costs increase due to the COVID-19 pandemic.

Administrative expenses decreased by US$2.3 million or 24%, mainly due to lower staff-related costs, bank charges, donations, and professional and legal fees.

Finance expenses decreased by US$3.7 million or 41%. The decrease was mainly due to lower interest rates across all trade facilities in FY2020 compared with FY2019.

Other operating expenses decreased by US$8.5 million or 30%, mainly due to lower staff and related costs of US$1.6 million, loss allowance on trade and non-trade receivables of US$1.5 million, fair value loss on derivative financial instruments of US$0.5 million, and a write-back of allowance for inventory obsolescence in FY2020 of US$3.0 million (included in Other Operating Income) as opposed to an allowance for inventory obsolescence of US$7.3 million in FY2019. There was also no impairment loss on investment in joint venture in FY2020 (FY2019: impairment loss of US$1.5 million) and fair value loss on convertible bond in 2H 2020 (2H 2019: fair value loss of US$0.7 million). The decrease was partially offset by higher impairment losses on goodwill arising from acquisition of subsidiaries of US$2.2 million and inventories written off of US$2.3 million.

Associated Companies and Joint Venture

The Group’s 19.90%-owned Otsaw Digital Pte. Ltd. (“Otsaw”) and 30.56%-owned Stars Tea & Coffee Asia Pte. Ltd. (“Stars Tea & Coffee”) acquired in March 2020 and August 2020, respectively, contributed mainly to the loss of US$251,000 as their current sales are unable to cover their operating expenses. The Group shared a profit of US$54,000 (FY2019: share of profit of US$554,000) from 19.02%-owned Taiwan listed Bull Will Co., Ltd. and shared a loss of US$30,000 (FY2019: share of profit of US$89,000) from 20%-owned Indonesia listed PT Sentral Mitra Informatika.

The Group did not recognise losses in 27.5%-owned Musang Durians Frozen Food (M) Sdn. Bhd. and 44.59%-owned Lierda Serial China Limited in FY2020 as it had fully impaired these investments in FY2019.

Net Profit

Net profit after tax for 2H 2020 rose to US$4.7 million (2H 2019: US$2.6 million), reversing sharply from a loss of US$4.5 million in 1H 2020, which bore the full impact of the COVID-19 disruptions to business activities as well as supply chains.

For the full year of FY2020, the Group reported a net profit after tax of US$0.3 million as compared to a net profit after tax of US$8.0 million in FY2019 mainly due to lower gross profit earned as a result of lower sales and gross profit margin offset by lower overall expenses. (The net profit after tax for FY2019 included a US$25.4 million received/receivable in relation to the transfer of TI distribution business.)


As of 31 December 2020, the Group had US$64.7 million in cash and cash equivalents, compared to US$47.1 million as of 31 December 2019.

Trade and other receivables increased by US$19.1 million (net of factored trade receivables), mainly attributed to the higher sales achieved by the electronic components distribution subsidiaries and the Malaysia consumer products distribution subsidiary in 2H2020. A reduction in other receivables in the Group’s Singapore electronic components distribution subsidiary as it received its final amount in relation to the transfer of TI distribution business in 1H2020, partially offset the higher trade receivables in FY2020. Average turnover days for trade receivables declined to 72 in FY2020 from 87 in FY2019.

Inventories decreased by US$12.4 million, mainly due to lower inventories held by the Group’s Hong Kong and Singapore electronic components distribution subsidiaries from more prudent and stringent inventory management and aggressive clearance of older inventories. The decrease is partially offset by higher inventories held by the Group’s South Korea and Taiwan electronic components distribution subsidiaries as they secured new product lines in FY2020.

Investments in associated companies increased by US$2.7 million mainly due to investment in 19.90%-owned Otsaw and 30.56%-owned Stars Tea & Coffee amounting to US$2.8 million and US$0.3 million, respectively, in FY2020.

Property, plant and equipment decreased by US$1.5 million, mainly due to depreciation charges amounting to US$3.7 million and reclassification of an office unit owned by a China subsidiary amounting to US$0.5 million to investment properties. The decrease is offset by an increase in right-of-use assets (included in property, plant and equipment) of US$0.6 million, additions of US$0.6 million to property, plant and equipment and a currency translation gain of about US$1.5 million in FY2020.


Trade and other payables decreased by US$3.8 million, mainly due to lower other payables in FY2020. Higher trade payables due to an increase in purchases by the South Korea and Taiwan electronic components distribution subsidiaries and the Singapore and Thailand consumer products distribution subsidiaries partially offset the decrease in trade and other payables. Average payment days for trade payables decreased to 37 in FY2020 from 40 in FY2019.

Borrowings increased by US$7.9 million, mainly due to additional borrowings by the Group’s Singapore, South Korea and Hong Kong electronic components distribution subsidiaries to finance an increase in working capital requirements in line with an increase in sales. The increase was partially offset by lower borrowings from the Group’s Taiwan electronic components distribution subsidiary as it utilised more of its non-recourse factoring facilities and borrowing from the Company to finance its working capital requirements and a waiver of loan of the Company from a previous shareholder of a Singapore subsidiary. The non-current portion of a term loan of the Company amounting to US$5.9 million payable on 31 May 2021, was reclassified to current borrowings as of 31 December 2020. Included in current borrowings in FY2020 is an interest-bearing loan amounting to S$5.0 million (US$3.8 million) from the Company’s substantial shareholder, Mr Goi Seng Hui which was fully repaid subsequent to FY2020.

Share Capital

Serial System’s total number of issued shares as of 31 December 2020 was 895,841,914 (excluding treasury shares of 9,946,000), unchanged from the same period a year earlier.