Serial System Limited Annual Report 2014

8/20/2019 Serial System Limited Annual Report 2014

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CONTENTS

Extensive Distribution Network

Product Line Cards

Chairman’s Statement

Other Businesses

Group Structure

Management Team

02

03

04

05

06

08

10

13

19

20

21

22

24

27

42

By moving forwardand thinking forward,Serial System helps itspartners to be morecompetitive in the marketplace,

today and in the future


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PROFILE

more than 6,000, spanning a diverse Texas Instruments, ON Semiconductor, Semiconductors.

Cambodia, China, Hong Kong, India,

needs better to reduce time-to-market component to success.

and other demand-creation activities.

accessories, photo accessories, printeraccessories, timepieces and items suchas CPUs, motherboards, hard-disk drives.

partners to be more competitive in the

OUR MISSION

To provide a wealth of growthopportunities for our stakeholders.

Towards our partnersWe provide market insights to our

our customers, we provide innovative

best at work, grooming them to be

Towards our shareholders

Towards our community

OUR VALUESProgressiveness

Empowerment decisions.

Teamwork

OUR VISION


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NETWORK

SINGAPOREHEADQUARTER

MALAYSIA

THAILANDVIETNAM

CAMBODIA

HONG KONGTAIWAN

JAPANSOUTH KOREA

CHINA

INDIA

INDONESIA

AUSTRALIA

UNITEDARAB

EMIRATES

PHILIPPINES

01. SINGAPORE

02. AUSTRALIA

03. BANGLADESH

04. CAMBODIA

05. CHINA Shanghai, Suzhou, Wuhan, Wuxi

Dongguan, Guangzhou, Huizhou,

06. HONG KONG

13. SOUTH KOREA

14. TAIWAN Hsinchu, Taichung, Taipei

15. THAILAND Bangkok, Chiang Mai

16. UNITED ARAB EMIRATESDubai

17. VIETNAM

Hanoi, Ho Chi Minh

07. INDIA

08. INDONESIAJakarta

09. JAPAN

10. KAZAKHSTAN

11. MALAYSIA

12. PHILIPPINES


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CARDS


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0

5

10

15

20

25

30

35

HIGHLIGHTS

0

200

400

600

800

1000

1200

2012 2013 2014

658.1

817.1

1036.1

0

20

40

60

80

100

2012 2013 2014

62.6

73.5

90.4

Revenue

2012 2013 2014

18.922.0

30.80

EBITDA

0

5

10

15

20

to Equity Holders

2012 2013 2014

7.9

11.2

16.1

16%South East Asia

and India

12%South Korea

5%Taiwan

3%Japan

China

and India

South Korea

Taiwan

Japan

Hong Kong

55%Hong Kong

9%China


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2014US$’000

2013US$’000

2012US$’000

Capital Employed

52,192 58,385 64,521

425,204 343,476 267,150

122,234 109,962 104,538

13.64 12.27 11.67

Net Debts 120,150 97,865 56,312

Share Capital

72,648 72,648 72,626

905,788 905,788 905,508

(9,946) (9,946) (9,946)

895,842 895,842 895,562

Earnings and Dividend per Share

Earnings per Share (United States cents)(1) 1.80 1.25 0.88

Dividend per Share (Singapore cent) 1.05 0.79 0.52

(2) 8.0 6.3 5.0

Ratios

1.18 1.27 1.44

67 62 61

33 32 33

32 30 41

66 60 69

0.98 0.89 0.54

(1)

(2)


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Financial Performance

considering the higher turnover andintense competition.

to 13.64 U.S. cents as at 31 December December 2013.

New Chapter of Growth- Extending OurNetwork To The Next Level

products.

Dear Shareholders,

improvement in margins, and executed Both underscore our deep commitment

Business Review

macro-economic environment and expected to continue growing. This and more sensors are embedded in cars,

trends, chipmakers are turning to more customers in 17 countries is attractive

STATEMENT

Dato’ Sri Dr. Goh Bak Heng BBM

Executive Chairman & Group CEO

Having crossed the upon our strong corecompetencies, theGroup is entering anew stage of growth toextend our network tothe next level


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IT accessories, photo accessories and add items such as CPUs, motherboards,hard-disk drives.

Emirates, Kazakhstan, Cambodia and

chain to expand our distribution and

Other Corporate Developments

deepened our penetration into theautomotive market through the (Shanghai) Co. Ltd. in China. The

with high gross and net margins,

Accolade

companies that have demonstrated

Dividend

distributed in September 2014. The

Singapore cent.

Outlook

to improve revenue and economies

Appreciation

their dedication, drive and contributions support.

Dato’ Sri Dr. Derek Goh Bak Heng BBMMarch 2015


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10

management improvements.

segment remains the Group’s core

distribution business was at US$23.1

market competition there. South-East

Gross Margins

Korea and Taiwan subsidiaries which

and transportation costs to support

Operations &Financial Review

Background

competitive edge in this market.

and margin-accretive three-pronged

Financial Performance


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Annual Report 2014 11

and reducing the overlap of resourcessuch as warehousing and administrationto improve revenue and economies ofscale.

Other Businesses

SPL Holdings (Australia) Pty Ltd, anewly acquired 20%-owned associated

company in the Australia-based laundryservicing business which adopts cutting- FY2014.

The Group’s share of loss in Bull Will Co.,Ltd, a 29.01%-owned associated companylisted on the Over-The-Counter SecuritiesExchange in Taiwan, was US$0.6 millionin FY2014 as compared to US$0.4 millionin FY2013. The loss, despite achievinghigher sales in FY2014, was mainly due to

Serial Multivision Pte. Ltd., a whollyowned subsidiary in the outdooradvertising media and hospitalitysolutions business, recorded higheradvertising income of US$1.7 millioncompared to US$1.5 million in FY2013. Itshospitality solutions business recordedrevenue of US$0.8 million compared toUS$1.3 million in FY2013. Serial Multivisionincurred a loss of US$0.3 million for theyear under review as compared to a loss

of US$0.1 million recorded in FY2013. Theloss was mainly attributable to lower hospitality solutions business.

Principal Suppliers

The Group continues to be a topelectronic components distributor in leading suppliers around the globewith well-established names, such asTexas Instruments, ON Semiconductor,Avago Technologies, TE Connectivity,Advanced Micro Devices and OSRAMOpto Semiconductors.

Subsequent to the year end, theGroup’s wholly owned subsidiary, SerialMicroelectronics Pte Ltd was appointedby Fairchild Semiconductor, a leadingglobal supplier of high performancepower semiconductor solutions, asdistributor for all Fairchild products andsolutions.

Finished Consumer ProductsDistribution

During the year, the Group took a majordecision to extend its distribution building on its strong network andprocesses in handling electronicscomponents for over 25 years. Towardsthis end, we completed the acquisitionof the entire distribution and tradingentity of SGX-listed GSH CorporationLimited (since renamed “Serial I-Techgroup”) and a 49%-equity stake inAchieva Technology Pte. Ltd. (“Achieva

Technology”), the distribution andtrading entity of SGX-listed AchievaLimited. Subsequent to the year end, theGroup entered into two conditional salesand purchase agreements to acquire 70%of the issued and paid-up share capital ofHydra & Thermal Pte. Ltd. as well as theentire issued and paid-up share capital ofSwift Value Business Pte. Ltd.

For FY2014, the Group’s share of loss inAchieva Technology was US$0.2 million.The loss was mainly due to currency

The Group intends to integrate thesupply chain and operations of bothAchieva Technology and Serial I-Techgroup, which will involve cutting costs

Contract Sterilization Services Pte Ltdis a wholly owned subsidiary engagedin the assembly, sterilization anddistribution of heart-lung packs for use incardiopulmonary bypass procedures andother medical component accessories.Contract Sterilization Services recordedan increase in revenue of US$0.4 millionto US$3.9 million in FY2014 compared toUS$3.5 million in FY2013 mainly due to

increase in sales to existing customers. million for the year under reviewcompared to US$0.6 million in FY2013 due to increased production costs.


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12

the Group’s Hong Kong and Singapore

average credit period extended to itsSingapore, South Korea and Taiwancustomers. Increased borrowings I-Tech group amounted to about US$10.6

Share Capital

Earnings and Net Assets Per Share

per share improved to 13.64 US cents

under construction, and additions

Financial Position

Current Assets

customers in Taiwan and South Korea.

Singapore and South Korea subsidiaries inventories due to increase in their

Non-current Assets


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BUSINESSESBul l Wil l Co . , Ltd(Taiwan Stock Code 6259)

Over-The-Counter Securities Exchange in Taiwan

discrete components. These components are smartphones, notebooks, servers, air-

Choke

One of Bull Will’s Three Manufacturing Plants in Huizhou, China


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14

Serial Multivision Pte. Ltd.

Northpoint Shopping Center


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Contract Sterilization Services Pte Ltd

customers’ stringent demands.

this strategic position in commitment to meet the stringent

Products Range

Customized Heart Lung Pack - use


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16

photographic and timepiece products.

strong business networks spanning

across emerging markets in Vietnam,

on its strengths in marketing and its in the emerging markets.

Serial I-Tech (Far East) Pte Ltd


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Achieva Technology Pte. Ltd.


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18

SPL Holdings (Australia) Pty Ltd

wear, to its customers.


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•

•

•

•

STRUCTURE

•

•

Serial System Ltd

Consumer Products & Other Businesses

(1)

SCE Enterprise Pte. Ltd.

(1)

(2)

(2)

•

•

•

Consumer Products Other Businesses

(1) Investment holding and trading, and rental of properties(2) Electronic components distribution


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20

Serial System Employee Share OptionScheme 2014

(Chairman) Dato’ Sri Dr. Derek Goh Bak Heng BBM

Company Secretary

8 Ubi View #05-01

Singapore 408554

Singapore 089758

CORPORATE INFORMATION

2014 1st Quarter & 2nd Quarter

09 April 2014 26 April 2014 19 May 2014

2014 3rd Quarter & 4th Quarter11 August 2014

2015 1st Quarter & 2nd Quarter 13 April 2015 29 April 2015 02 June 2015

Board of Directors

Dato’ Sri Dr. Derek Goh Bak Heng BBM (Executive Chairman & Group CEO)Mr. Peter Ho I Chin Mr. Goi Kok Neng Ben Audit Committee

Nominating Committee

Dato’ Sri Dr. Derek Goh Bak Heng BBM

Remuneration Committee

(Chairman)

Dato’ Sri Dr. Derek Goh Bak HengBBM

Auditors

Moore Stephens LLP Singapore 079903

Mr. Christopher Bruce Johnson

Principal Bankers

Group Limited

BNP Paribas CIMB Bank Berhad CTBC Bank Co., LtdDBS Bank LtdHang Seng Bank Limited Shinhan BankSumitomo Mitsui Banking CorporationTaipei Fubon BankThe Hongkong and Shanghai BankingCorporation Limited United Overseas Bank Limited


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programmes and organizations in

S$578,000 (US$446,000) to various

pioneer generation and to nurture and

Education Programs

contributed S$50,000 (U$39,000) Fund. The S$10,000 cash donation Education.

to various organisations and

2014.

Visit to Tai Pei Old Folks Home


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22

DIRECTORS

Committee and Nominating Committee.

In 1996, Dr. Goh won the “Entrepreneur

and Medium Enterprises on 29 March2000. In 2004, Dr. Goh was awarded the Honours 2010. In 2010, Dr. Goh won Group Pte Ltd and in 2011, he won the

Dato’ Sri Dr. Derek Goh Bak Heng BBM

Executive Chairman & Group CEO

Peter Ho I Chin

Executive Director

corporations. Ltd.


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Tan Lye Heng Paul

Non-Executive & Independent Director

Huat Corporation Ltd.

Ltd.

Ravindran s/o Ramasamy


Nominating Committee.

& Partners.


Committee.

Limited, Sim Lian Group Limited, Sheng

both Hwa Chong Institution and Hwa partner in Gibson, Dunn & Crutcher LLP,

Goi Kok Neng Ben

Non-Executive Director

2005 to 2009. Mr. Goi started his career

and operations.


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24

TEAM

management team in executing strategies to achieve the

Derek Goh

Sean GohSenior Vice President Marketing

Sidney ThongVice PresidentCorporate IT &

Alex Wui

SERIAL SYSTEM LTD


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distribution business.

Adrian Chu

2004 as its Operations and Logistics Director. He was Management in October 2009.

Ng Teck ChengSenior Vice President Management

SERIAL MICROELECTRONICS PTE LTD

distribution business in Japan and Taiwan.

William LowVice PresidentJapan & Taiwan

October 2012 as its Vice President.

Chow Tak LiangVice President


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26

Korea.

Kim Sang YeolPresident South Korea

Hong Kong and China.

Kong.

Lawrence HoPresident Hong Kong & China

Jesse JengPresident Taiwan

Peter Ho Taiwan

COUNTRY HEADS


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1. Board Matters

Name of Director Date ofappointment

Date of lastre-election

Main Board

Audit

Committee

Nominating

Committee

Remuneration

Committee

Status Position Position Position Position

Derek Goh Bak Heng(1)26 October

199826 October

1998

Non-independent

ExecutiveChairman &Group CEO

- Member Member

Peter Ho I Chin(2)

2009

Non-independent

Member - - -

16 June 2011

Lead IndependentMember Chairman Member Member

REPORT


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28

1. Board Matters (continued) (continued) (continued)

(continued)

appointment

Main Board

Committee

Nominating

Committee

Committee

Status Position Position Position Position

2001

IndependentMember Member Member Chairman

30 December

2002

Independent

Member Member Chairman Member

Goi Kok Neng Ben(3)

Non-IndependentMember - - -

(1) Appointed Group Managing Director on 1 March 2001 and is not subjected to retirement by rotation pursuant to Serial System Ltd’s Articles of Association

(2)Executive Chairman and Group CEO of Bull Will Co., Ltd, a 29.01% owned associated company of Serial System Ltd(3)Son of Goi Seng Hui, a substantial shareholder of Serial System Ltd

Board

CommitteeNominatingCommittee

Committee

6 4 1 2

Derek Goh Bak Heng 6 1 2

Peter Ho I Chin 5

6 4 1 2

6 4 1 2

6 4 1 2

Goi Kok Neng Ben 6

NA – Not Applicable

• • • • • • • •


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1. Board Matters (continued) (continued) (continued)

2. Board composition and guidancePrinciple 2: Independent element on the Board


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2. Board composition and guidance (continued)Principle 2: Independent element on the Board (continued)

business.

management as and when the need arose.

3.

meetings.


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4. Principle 4: Formal and transparent process for the appointment of directors to the Board

CEO


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4. (continued)Principle 4: Formal and transparent process for the appointment of directors to the Board (continued)

above.

5. Board Performance

be made.

6. Access to information

access to the Management.

Group’s businesses.

directors.


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7. Remuneration MattersPrinciple 7: Procedures for developing remuneration policies

Goh Bak Heng.

the need arises.

8. Level and mix of remunerationPrinciple 8: Level and mix of remuneration


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8. Level and mix of remuneration (continued)Principle 8: Level and mix of remuneration (continued)

under the 2014 Scheme.

directors without being excessive to the extent that their independence might be compromised.


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9. Disclosure on remunerationPrinciple 9: Disclosure on remuneration

Executive DirectorsDirectors’

Fees(1)

(2) and(3)

IncentiveBonus

(S$)

Derek Goh Bak Heng 2.0 32.5 64.7 0.8 1,915,891

Peter Ho I Chin(4) 100.0 - - - 39,000

Non-Executive & Independent Directors

100.0100.0100.0

---

---

---

42,00042,00042,000

Non-Executive Director

Goi Kok Neng Ben 100.0 - - - 39,000

(1) Accrued for Year 2014(2) Includes employer’s CPF contribution(3) Annual wage supplement of one-month salary(4) Remunerated in Bull Will Co., Ltd

(1)

S$500,000 to S$749,999 2

S$250,000 to S$499,999 3(2)

(1) Includes executives of overseas subsidiaries(2) Includes remuneration payable to Sean Goh Su Teng, who is the cousin of Derek Goh Bak Heng, the Executive Chairman and CEO of the Company


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9. Disclosure on remuneration (continued)Principle 9: Disclosure on remuneration (continued)

10. prospects

11. Risk Management and Internal Controls Principle 11: Risk management and internal controls


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11. Risk Management and Internal Controls (continued)Principle 11: Risk management and internal controls (continued)

operations.

time being.

12. Audit Committee

• reviews interested person transactions

appointment or re-appointment


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12. Audit Committee (continued) (continued)

13. Internal Audit Principle 13: Internal audit

the Group.


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13. Internal Audit (continued)Principle 13: Internal audit (continued)

to its operations.

14. Principle 14: Shareholders rights

15. Communication with shareholders Principle 15: Communication with shareholders


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15. Communication with shareholders (continued)Principle 15: Communication with shareholders (continued)

16. Conduct of Shareholder Meetings Principle 16: Conduct of shareholder meetings


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Other corporate governance matters

Dealing in securities

Interested person transactions

Compliance with The Code of Corporate Governance


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42 Serial System Ltd

FINANCIAL CONTENTS

Directors’ Report

Statement by Directors

Independent Auditors’ Report to the Members ofSerial System Ltd

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Balance Sheets

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Financial Statements

Additional Requirements of Singapore ExchangeSecurities Trading Limited’s Listing Manual

Statistics of Shareholdings

Notice of Annual General Meeting

Notice of Books Closure and Dividend Payment Date

Appendix 1 - The Proposed Renewal of the ShareBuyback Mandate

Proxy Form - Annual General Meeting

43

48

49

50

51

52

53

55

57

149

151

152

156

157

185


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SERIAL SYSTEM LTDAND ITS SUBSIDIARIES


DIRECTORS’ REPORTFor the financial year ended 31 December 2014

The directors present their report to the members together with the audited consolidated financial statements of the Group

for the financial year ended 31 December 2014 and the balance sheet of the Company as at 31 December 2014.

Directors

The directors of the Company in office at the date of this report are:

Derek Goh Bak Heng

Peter Ho I Chin

Tan Lye Heng Paul


Lee Teck Leng Robson

Goi Kok Neng Ben

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object

was to enable the directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the

Company or any other body corporate, other than as disclosed under “Share Options” in this report.

Directors’ interests in shares or debentures

(a) According to the register of directors’ shareholdings, the interests of the directors holding office at the beginning and

end of the financial year in the issued share capital of the Company and related corporations were as follows:

Holdings registered in

name of director or nominees

At 21.1.2015 At 31.12.2014 At 1.1.2014

The Company

(Number of ordinary shares)

Derek Goh Bak Heng 347,838,698 347,838,698 333,897,698

Peter Ho I Chin 500,000 500,000 500,000

Tan Lye Heng Paul 197,000 197,000 100,000

(b) None of the directors holding office at the end of the financial year had share options to subscribe for ordinary shares of

the Company granted pursuant to the Serial System Employee Share Option Scheme 2014.


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Directors’ interests in shares or debentures (continued)

(c) Dr. Derek Goh Bak Heng, who by virtue of his interest of not less than 20% of the issued share capital of the Company, is

deemed to have an interest in the whole of the issued share capital of the Company’s wholly owned subsidiaries and in

the following partially owned subsidiaries of the Group:

Holdings in which a director

is deemed to have an interest

At 31.12.2014 At 1.1.2014

Agricola Pte. Ltd.

(Number of ordinary shares) 40,000 40,000

Serial Microelectronics (HK) Limited

(Number of ordinary shares of HK$1 each) 27,300,000 27,300,000

Serial Microelectronics Inc.

(Number of ordinary shares of NT$10 each) 5,348,250 5,348,250

Serial Microelectronics Korea Limited

(Number of common stocks of KRW 5,000 each) 19,640 19,640

Serial AMSC Microelectronics Co., Ltd

(Number of ordinary shares of JPY 50,000 each) 4,200 4,200

Serial Microelectronics (Shenzhen) Co., Ltd

(Capital contribution in HK$) 64,885,417 64,885,417

Serial Design Limited

(Number of ordinary shares of HK$1 each) 9,100 9,100

PT. Serial Microelectronics Indonesia(Number of ordinary shares of US$1 each) 99,000 99,000

TeamPal Enterprise Corp.

(Number of ordinary shares of NT$10 each) 2,865,000 2,865,000

New Chinese Corporation

(Number of ordinary share of US$1 each) 0.955 0.955

Bridge Electronics (Shenzhen) Co., Ltd

(Capital contribution in US$) 143,250 143,250

Nippon Denka Serial Pte. Ltd.

(Number of ordinary shares) 60,000 60,000

Serial GIS Pte. Ltd.

(Number of ordinary shares) 325,000 -

Serial Automotive Limited

(Number of ordinary shares of HK$1 each) 5,460 -

Serial Vision Limited

(Number of ordinary shares of HK$1 each) 5,005 -

Serial Automotive (Shanghai) Co., Ltd

(Capital contribution in RMB) 546,000 -

Serial Multivision (Thailand) Company Limited

(Number of ordinary shares of THB100 each) - 3,185


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Directors’ contractual benefits

Since the end of the previous financial year, no director has received or become entitled to receive a benefit by reason of a

contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a

company in which he has a substantial financial interest, except as disclosed in the financial statements and in this report.

Share options

(a) Serial System Employee Share Option Scheme 2014 (the “2014 Scheme”)

The 2014 Scheme was approved by the shareholders at the Extraordinary General Meeting of the Company held on

26 April 2014. It replaced the previous Serial System Executives Share Option Scheme (the “2004 Scheme”), which

expired on 29 January 2014. Any share options granted and accepted under the 2004 Scheme have been fully exercised

upon expiry of the 2004 Scheme on 29 January 2014.

Under the 2014 Scheme, share options are granted to the following persons at the absolute discretion of the 2014

Scheme’s Committee (the “Committee”):

(i) confirmed full-time employees of the Company and its subsidiaries who have attained the age of 21 years on or

before the date of grant of the share options;

(ii) executive directors of the Company;

(iii) non-executive directors of the Company; and

(iv) employees who qualify under (i) above and are seconded to an associated company or a company outside the

Group in which the Company and/or Group has an equity interest, and who, in the absolute discretion of the

Committee is selected to participate in the 2014 Scheme.

For the purpose of paragraph (iv) above, the secondment of an employee to another company shall not be regarded as

a break in his employment or his having ceased employment as a full-time employee of the Group by reason only of such

secondment.

For non-incentive share options, the exercise price of the granted share options is to be determined by the Committee,

in its absolute discretion, at a price equal to the average of the last dealt prices of the Company on the Singapore

Exchange Securities Trading Limited (“SGX-ST”) for a period of five consecutive trading days (“Market Price”)

immediately prior to the date of offer of the share options.

For incentive share options, share options are granted at a price which is set at a discount to the Market Price, provided

that the maximum discount shall not exceed 20% of the Market Price; and the shareholders of the Company in a general

meeting have authorised, in a separate resolution, the making of offers and grants of such share options under the 2014

Scheme at a discount not exceeding the maximum discount as aforesaid.

The share options are vested one month after the date of offer of the share options. Once the share options are vested,

they are exercisable for a term of 10 years, and for non-executive directors of the Company, for a term of 5 years, or

such other terms determined by the Committee or prescribed under any relevant law, regulation or rule of the SGX-ST

from time to time.

There is no restriction to the eligibility of any persons to whom the share options have been granted, to participate in

other share option or share incentive schemes implemented by the Company, subsidiaries or associated companies.

Particulars of the share options granted in the preceding financial years under the previous schemes were set out in the

Directors’ Reports for the respective financial years.

There were no share options granted pursuant to the 2014 Scheme during the financial year ended 31 December 2014.

During the financial year ended 31 December 2013, 280,000 ordinary shares of the Company were allotted and issue by

virtue of the exercise of share options.



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Share options (continued)

(b) Outstanding share options

There are no share options outstanding at the end of the financial year ended 31 December 2014.

(c) Other information required by SGX-ST

Pursuant to clause 852(1) of the Listing Manual of the SGX-ST, in addition to information disclosed elsewhere in this

report, the directors report that:

(i) the members of the Committee administering the 2014 Scheme are Ravindran s/o Ramasamy (Chairman), Tan Lye

Heng Paul, Lee Teck Leng Robson and Derek Goh Bak Heng.

(ii) there were no outstanding share options granted to and exercised by directors of the Company during the

financial year.

(iii) no share options have been granted to controlling shareholders of the Company or their associates, directorsand employees of the parent company (as defined in the Listing Manual of the SGX-ST) and its subsidiaries and

no employee has received 5% or more of the total number of share options available under the 2014 Scheme

during the financial year.

(iv) no other director or employee of the Company and its subsidiaries (as defined in the Listing Manual of the

SGX-ST) has received 5% or more of the total number of share options available to all directors and employees of

the Company and its subsidiaries under the 2014 scheme during the financial year.

(v) no share options were granted at a discount during the financial year.

Audit Committee

The members of the Audit Committee at the end of the financial year were as follows:

Tan Lye Heng Paul (Chairman)


Lee Teck Leng Robson

The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Chapter 50.

In performing those functions, the Committee:

and any matters which the external auditors wish to discuss;

Companies Act, SGX-ST’s Listing Rules, and other regulatory requirements;

control system;

resolution; and

appointment or re-appointment.

The Audit Committee has full access to and cooperation of the Management. It also has full discretion to invite any director or

member of the Management to its meetings as well as reasonable resources to enable it to discharge its functions properly.



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Audit Committee (continued)

The Audit Committee is satisfied with the independence and objectivity of the external auditors. The Board of Directors

with the nomination of the Audit Committee has recommended that the independent auditors, Moore Stephens LLP, Public

Accountants and Chartered Accountants, be nominated for re-appointment as external auditors at the forthcoming AnnualGeneral Meeting of the Company.

The Audit Committee confirms that it has undertaken a review of all non-audit services provided by the external auditors and is

satisfied that such services would not, in the Audit Committee’s opinion, affect the independence of the external auditors.

The Board, with the concurrence of the Audit Committee, is of the view that the system of internal controls were adequate as

at the end of the financial year to address financial, operational and compliance risks, which the Group considers relevant and

material to its operations.

Independent auditors

Moore Stephens LLP, Public Accountants and Chartered Accountants, have expressed their willingness to accept re-appointment as independent auditors.

On behalf of the Board of Directors

DEREK GOH BAK HENG TAN LYE HENG PAULDirector Director

24 March 2015



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In the opinion of the directors,

(a) the balance sheet of the Company and the consolidated financial statements of the Group as set out on pages 50 to 148

are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group at 31 December

2014 and of the results of the business, changes in equity and cash flows of the Group for the financial year then ended;and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as

and when they fall due.

On behalf of the Board of Directors

DEREK GOH BAK HENG TAN LYE HENG PAUL

Director Director

24 March 2015

STATEMENT BY DIRECTORSFor the financial year ended 31 December 2014


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We have audited the accompanying financial statements of Serial System Ltd (the “Company”) and its subsidiaries

(the “Group”), as set out on pages 50 to 148, which comprise the balance sheets of the Group and of the Company as at

31 December 2014, the consolidated income statement, consolidated statement of comprehensive income, consolidated

statement of changes in equity and consolidated cash flow statement of the Group for the financial year then ended, and a

summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the

provisions of the Singapore Companies Act, Chapter 50 (the “Act”) and Singapore Financial Reporting Standards, and for

devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets

are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are

recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain

accountability of assets.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in

accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and

plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal controls relevant to the entity’s preparation of financial statements that give a true and fair view in order

to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies usedand the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the

financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn

up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view

of the state of affairs of the Group and of the Company as at 31 December 2014 and the results, changes in equity and cash

flows of the Group for the financial year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries

incorporated in Singapore of which we are the auditors, have been properly kept in accordance with the provisions of the Act.

Moore Stephens LLP

Public Accountants and Chartered Accountants

Singapore

24 March 2015

INDEPENDENT AUDITORS’ REPORTTo The Members of Serial System LtdFor the financial year ended 31 December 2014


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Note 2014 2013

US$’000 US$’000

Sales 5 1,036,062 817,051

Cost of sales 6 (945,705) (743,527)

Gross profit 90,357 73,524

Other income 5 7,468 6,904

Expenses:

Distribution 6 (43,228) (36,642)

Administrative 6 (11,055) (10,837)

Finance 8 (4,586) (3,185) Other 6 (17,867) (14,943)

Total expenses (76,736) (65,607)

21,089 14,821

Share of result of associated companies (net of income tax) 18 (232) (424)

Profit before income tax 6 20,857 14,397

Income tax expense 9 (4,708) (3,002)

Profit for the year 16,149 11,395

Profit attributable to:

Equity holders of the Company 16,085 11,206

Non-controlling interests 34 64 189

16,149 11,395

Earnings per share attributable to

equity holders of the Company:

Basic 10 1.80 cents 1.25 cents

Diluted 10 1.80 cents 1.25 cents

The accompanying notes form an integral part of these financial statements

CONSOLIDATED INCOME STATEMENTFor the financial year ended 31 December 2014


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Note 2014 2013

US$’000 US$’000

Profit for the year 16,149 11,395

Other comprehensive income/(loss):

Items that will not be reclassified subsequently to profit or loss:

Defined benefit plans’ actuarial gain/(losses) 28 57 (236)

Share of an associated company’s other comprehensive income 18 835 -

892 (236)

Items that may be reclassified subsequently to profit or loss:

Net loss on fair value changes on financial asset, available-for-sale 17 (763) (894)Fair value changes on disposal of financial asset, available-for-sale reclassified

to profit or loss 31 1,657 -

Net changes in revaluation reserve 31 59 -

Currency translation differences 32 (1,737) 554

(784) (340)

Other comprehensive income/(loss) for the financial year, net of tax 108 (576)

Total comprehensive income for the financial year 16,257 10,819

Total comprehensive income attributable to:

Equity holders of the Company 16,188 10,605

Non-controlling interests 34 69 214

16,257 10,819


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the financial year ended 31 December 2014


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The Group The CompanyNote 2014 2013 2014 2013

US$’000 US$’000 US$’000 US$’000ASSETS

Current assetsCash and cash equivalents 11 58,297 40,548 2,420 1,026Trade and other receivables 12 184,661 165,909 15,278 16,370Inventories 13 98,599 67,925 - -Financial assets, at fair value through profit or loss 14 1,259 61 - -Other current assets 15 4,968 2,601 67 116

347,784 277,044 17,765 17,512Non-current assetsFinancial assets, at fair value through profit or loss 14 13 1,297 - -Loans and receivables 16 1,000 - 40,625 41,757Financial assets, available-for-sale 17 1,324 5,182 - -Investments in associated companies 18 17,373 6,097 6,682 6,626Investments in subsidiaries 19 - - 53,558 52,883

Property, plant and equipment 20 37,862 36,009 336 346Investment properties 21 7,660 6,392 - -Intangible assets 22 9,472 9,066 521 588Other assets 23 1,966 1,834 - -Deferred income tax assets 29 750 555 - -

77,420 66,432 101,722 102,200

Total assets 425,204 343,476 119,487 119,712

LIABILITIESCurrent liabilitiesTrade and other payables 24 120,351 92,473 5,221 3,088Current income tax liabilities 9 3,344 1,478 186 78Redemption liability 25 - 410 - -

Borrowings 26 171,897 124,298 6,783 2,964295,592 218,659 12,190 6,130

Non-current liabilitiesOther payable 24 - - 4,524 4,683Borrowings 26 6,550 14,115 - 7,079Defined benefit plans liabilities 28 656 651 - -Deferred income tax liabilities 29 172 89 - -

7,378 14,855 4,524 11,762

Total liabilities 302,970 233,514 16,714 17,892

NET ASSETS 122,234 109,962 102,773 101,820

EQUITYCapital and reserves attributable to equity holders

of the CompanyShare capital 30 72,648 72,648 72,648 72,648Treasury shares 30 (736) (736) (736) (736)Capital reserve 31 1,015 180 180 180Defined benefit plans reserve 31 (367) (424) - -Fair value reserve 31 - (894) - -Revaluation reserve 31 59 - - -Other reserve 31 (715) (410) - -Currency translation reserve 32 4,283 6,025 17,589 17,589Retained earnings 33 42,847 31,051 13,092 12,139

119,034 107,440 102,773 101,820

Non-controlling interests 34 3,200 2,522 - -

TOTAL EQUITY 122,234 109,962 102,773 101,820


BALANCE SHEETSAs at 31 December 2014


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S E R I A L S Y S T E M L T D

A N D I T S S U B S I D I A R I E S

A t t r i b u t a b l e t o e q u i t y h o l d e r s o f t h e C o m p a n y

S h a r e

T r e a s u r y

C a p i t a l

D e f i n e d

b e n e f i t p l a n s

F a i r v a l u e

R e v a l u a t i o n

O t h e r

C u r r e n c y

t r a n s l a t i o n

R e t a i n e d

T o t a l

a t t r i b u t a b

l e

t o e q u i t y

h o l d e r s o

f

N o n -

c o n t r o l l i n g

T o t a l

N o t e

c a p i t a l

s h a r e s

r e s e r v e

r e s e r v e

r e s e r v e

r e s e r v e

r e s e r v e

r e s e r v e

e a r n i n g s

t h e C o m p a n y

i n t e r e s t s

e q u i t y

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

B a l a n c e a t 1 J a n u a r y 2 0 1 4

7 2 , 6 4 8

( 7 3 6 )

1 8 0

( 4 2 4 )

( 8 9 4 )

-

( 4 1 0 )

6 , 0 2 5

3 1 , 0 5 1

1 0 7 , 4 4 0

2 , 5 2 2

1 0 9 , 9

6 2

P r o f i t f o r t h e y e a r

-

-

-

-

-

-

-

-

1 6 , 0

8 5

1 6 , 0

8 5

6 4

1 6 , 1 4 9

O t h e r c o m p r e h e

n s i v e i n c o m e / ( l o s s ) :

D e f i n e d b e n e f i t p l a n s ’ a c t u a r i a l g a i n

-

-

-

5 7

-

-

-

-

-

5 7

-

5 7

S h a r e o f a n a s s o

c i a t e d c o m p a n y ’ s o t h e r

c o m p r e h e n s i v

e i n c o m e

-

-

8 3 5

-

-

-

-

-

-

8 3 5

-

8 3 5

N e t l o s s o n f a i r v

a l u e c h a n g e s o n f i n a n c i a l a s s e t ,

a v a i l a b l e - f o r - s

a l e

-

-

-

-

( 7 6 3 )

-

-

-

-

( 7 6 3

)

-

( 7 6 3 )

F a i r v a l u e c h a n g e s o n d i s p o s a l o f f i n a n c i a l a s s e t ,

a v a i l a b l e - f o r - s

a l e r e c l a s s i f i e d t o p r o f i t o r l o s s

-

-

-

-

1 , 6 5 7

-

-

-

-

1 , 6 5 7

-

1 , 6 5 7

N e t c h a n g e s i n r e v a l u a t i o n r e s e r v e

-

-

-

-

-

5 9

-

-

-

5 9

-

5 9

C u r r e n c y t r a n s l a t i o n d i f f e r e n c e s

-

-

-

-

-

-

-

( 1 , 7 4 2 )

-

( 1 , 7 4 2

)

5

( 1 , 7 3 7 )


n s i v e i n c o m e / ( l o s s )

f o r t h e f i n a n c i a l y e a r , n e t o f t a x

-

-

8 3 5

5 7

8 9 4

5 9

-

( 1 , 7 4 2 )

-

1 0 3

5

1 0 8

T o t a l c o m p r e h e n s i v e i n c o m e / ( l o s s ) f o r t h e f i n a n c i a l y e a r

-

-

8 3 5

5 7

8 9 4

5 9

-

( 1 , 7 4 2 )

1 6 , 0

8 5

1 6 , 1

8 8

6 9

1 6 , 2 5 7

C o n t r i b u t i o n s b y

a n d d i s t r i b u t i o n s t o o w n e r s :

M o v e m e n t i n o p

t i o n t o a c q u i r e n o n - c o n t r o l l i n g

i n t e r e s t o f a s u b s i d i a r y

2 5

-

-

-

-

-

-

4 1 0

-

-

4 1 0

-

4 1 0

O n e - t i e r t a x - e x e m p t f i n a l c a s h d i v i d e n d f o r y e a r 2 0 1 3

3 5

-

-

-

-

-

-

-

-

( 2 , 1 3 9 )

( 2 , 1 3 9

)

-

( 2 , 1 3 9 )

O n e - t i e r t a x - e x e m

p t i n t e r i m c a s h d i v i d e n d f o r y e a r 2 0 1 4

3 5

-

-

-

-

-

-

-

-

( 2 , 1 5 0 )

( 2 , 1 5 0

)

-

( 2 , 1 5 0 )

T o t a l c o n t r i b u t i o

n s b y a n d d i s t r i b u t i o n s t o o w n e r s

-

-

-

-

-

-

4 1 0

-

( 4 , 2

8 9 )

( 3 , 8 7 9

)

-

( 3 , 8 7 9 )

O t h e r s :

I n v e s t m e n t i n s u

b s i d i a r i e s b y n o n - c o n t r o l l i n g i n t e r e s t s

3 4

-

-

-

-

-

-

-

-

-

-

1 7 2

1 7 2

A c q u i s i t i o n o f a d

d i t i o n a l i n t e r e s t s i n a s u b s i d i a r y f r o m

n o n - c o n t r o l l i n

g i n t e r e s t s

3 4

-

-

-

-

-

-

( 7 1 5 )

-

-

( 7 1 5

)

6 9 5

( 2 0 )

C l o s u r e o f a s u b s i d i a r y

3 4

-

-

-

-

-

-

-

-

-

-

4

4

D i v i d e n d s p a i d t o n o n - c o n t r o l l i n g i n t e r e s t

3 4

-

-

-

-

-

-

-

-

-

-

( 2 6 2 )

( 2 6 2 )

T o t a l o t h e r s

-

-

-

-

-

-

( 7 1 5 )

-

-

( 7 1 5

)

6 0 9

( 1 0 6 )

B a l a n c e a t 3 1 D e

c e m b e r 2 0 1 4

7 2 , 6 4 8

( 7 3 6 )

1 , 0 1 5

( 3 6 7 )

-

5 9

( 7 1 5 )

4 , 2

8 3

4 2 , 8 4 7

1 1 9 , 0 3 4

3 , 2 0 0

1 2 2 , 2 3 4

T h e a c c o m p a n

y i n g n o t e s f o r m a

n i n t e g r a l p a r t o f t h e

s e f i n a n c i a l s t a t e m e n t s

C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y

F o r t h e f i n a

n c i a l y e a r e n d e d 3 1 D e c e m b e

r 2 0 1 4

5 3

S e r i a l S y s t e m L t d


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S E R I A L S Y S T E M L T D

A N D I T S S U B S I D I A R I E S

5 4

S e r i a l S y s t e m L t d

A t t r i b u t a b l e t o e q u i t y h o l d e r s o f t h e C o m p a n y

S h a r e

T r e a s u r y

S h a r e

o p t i o n

C a p i t a l

D e f i n e d

b e n e f i t p l a n s

F a i r v a l u e

O t h e r

C u r r e n c y

t r a n s l a t i o n

R e t a i n e d

T o t a l

a t t r i b u t a b

l e

t o e q u i t y

h o l d e r s o

f

N o n -

c o n t r o l l i n g

T o t a l

N o t e

c a p i t a l

s h a r e s

r e s e r v e

r e s e r v e

r e s e r v e

r e s e r v e

r e s e r v e

r e s e r v e

e a r n i n g s

t h e C o m p a n y

i n t e r e s t s

e q u i t y

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

U S $ ’ 0 0 0

B a l a n c e a t 1 J a n u a r y 2 0 1 3

7 2 , 6 2 6

( 7 3 6 )

5

1 8 0

( 1 8 8 )

-

-

5 , 4 9 6

2 5 , 4 9 7

1 0 2 , 8

8 0

1 , 6 5 8

1 0 4 , 5 3 8

P r o f i t f o r t h e y e a r

-

-

-

-

-

-

-

-

1 1 , 2 0 6

1 1 , 2 0 6

1 8 9

1 1 , 3 9 5


n s i v e ( l o s s ) / i n c o m e :

D e f i n e d b e n e f i t p l a n s ’ a c t u a r i a l l o s s e s

-

-

-

-

( 2 3 6 )

-

-

-

-

( 2 3 6

)

-

( 2 3 6 )

N e t l o s s o n f a i r v

a l u e c h a n g e s o n

f i n a n c i a l a s s e t , a v a i l a b l e - f o r - s a l e

-

-

-

-

-

( 8 9 4 )

-

-

-

( 8 9 4

)

-

( 8 9 4 )

C u r r e n c y t r a n s l a t i o n d i f f e r e n c e s

-

-

-

-

-

-

-

5 2 9

-

5 2 9

2 5

5 5 4


n s i v e ( l o s s ) / i n c o m e f o r t h e f i n a n c i a l

y e a r , n e t o f t a

x

-

-

-

-

( 2 3 6 )

( 8 9 4 )

-

5 2 9

-

( 6 0 1

)

2 5

( 5 7 6 )

T o t a l c o m p r e h e n s i v e ( l o s s ) / i n c o m e f o r t h e f i n a n c i a l y e a r

-

-

-

-

( 2 3 6 )

( 8 9 4 )

-

5 2 9

1 1 , 2 0 6

1 0 , 6 0 5

2 1 4

1 0 , 8 1 9

C o n t r i b u t i o n s b y

a n d d i s t r i b u t i o n s t o o w n e r s :

O p t i o n t o a c q u i r

e n o n - c o n t r o l l i n g i n t e r e s t o f a

s u b s i d i a r y

2 5

-

-

-

-

-

-

( 4 1 0 )

-

-

( 4 1 0

)

-

( 4 1 0 )

O n e - t i e r t a x - e x e m p t f i n a l c a s h d i v i d e n d f o r y e a r 2 0 1 2

3 5

-

-

-

-

-

-

-

-

( 2 , 1 7 8 )

( 2 , 1 7 8

)

-

( 2 , 1 7 8 )

O n e - t i e r t a x - e x e m

p t i n t e r

Serial System Limited Annual Report 2014

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Transcript of Serial System Limited Annual Report 2014