Dear Shareholders,

I am pleased to present a commendable scorecard for FY2021. It has been a truly eventful and significant year. Eventful, because shortly after losing a major supplier, we entered a second year of the COVID-19 pandemic with many disruptions experienced worldwide. Significant, because despite these challenges, we have demonstrated the efficacy of our turnaround strategy over the past two to three years.

We have built a stronger foundation that involves expanding supplier and customer networks, growing our consumer products division and improving internal efficiencies. Indeed, Serial System has built and emerged with greater resilience.

As a result of our efforts, we saw a decisive turnaround during the year, with net profits increasing 4,168% year-on-year to US$11.1 million on the back of higher revenue, while the global shortage of chips has increased margins for our business.


The Group recorded revenue of US$895.9 million for FY2021, an increase of 22% compared to US$731.4 million in FY2020.

Revenue from the electronic components distribution business increased 22% to US$814.6 million, propelled by higher demand for semiconductors, particularly in Hong Kong and China. Globally, the shortage of chips and supply chain disruptions affected manufacturing activity, which in turn led to some firms rushing to stockpile high-demand chips, contributing to better performance. The Group’s extensive product portfolio and strong presence in Asia also aided in better performance. Turnover in South Korea, also improved, mainly due to contribution from two new product lines.

Revenue from the consumer products distribution business increased 40% to US$73.6 million, attributed mainly to the Group’s Malaysian subsidiary, which recorded higher sales of PC and gaming peripherals in Malaysia amid work-from-home measures. Sales contribution by a newly-incorporated subsidiary in Japan also boosted revenue within this segment.

Revenue for other businesses decreased 20% to US$7.7 million, attributable mainly to lower sales in the trading and distribution of fast-moving consumer goods in the United States. The decrease was partially mitigated by higher sales of fast-moving consumer goods in Singapore, medical devices assembly and distribution, as well as hospitality and healthcare solutions.

Profit Margins

Overall gross profit margin in FY2021 increased to 8.1% from 6.3% in FY2020. This reflected increasing demand for the Group’s electronic components and consumer products amid the global chip shortage.

Other Operating Income

Other operating income decreased by US$5.6 million or 30% to US$12.9 million, mainly due to a one-off gain on reversal of other borrowings/other payables totalling US$4.8 million due to a previous shareholder/shareholders of Singapore subsidiaries in FY2020, foreign exchange loss (included in “Other Operating Expenses”) of US$0.2 million in FY2021 as opposed to a foreign exchange gain of US$2.4 million in FY2020 and lower pandemic relief-related government grants of US$1.2 million in FY2021.

The decrease was partially offset by higher fair value gain on financial assets, at fair value through profit or loss totalling US$1.9m and commission and service income of U$1.0 million.


Distribution expenses increased by US$9.5 million or 29% to US$42.6 million, mainly due to higher staff and related costs, sales commission, freight and handling charges and trade credit insurance costs associated with the electronic components distribution business.

Administrative expenses increased by US$1.7 million or 24% to US$8.8 million, mainly due to higher staff-related costs and professional fees associated with the electronic components distribution business.

Other operating expenses decreased by US$3.0 million or 15% to US$16.8 million. There was no impairment on goodwill arising from the acquisition of subsidiaries in FY2021 (FY2020: impairment loss of US$4.2 million), and lower depreciation charges of US$0.9 million and inventories written off of US$0.9 million contributed mainly to the decrease in other operating expenses. The decrease was partially offset by a higher loss allowance on trade and other receivables of US$1.4 million and staff and related costs of US$1.4 million.

Associated Companies

The Group’s associated companies contributed to a total loss of US$658,000 (FY2020: total loss of US$251,000) as their sales were unable to cover their operating expenses in FY2021.

Net Profit

Net profit after tax for FY2021 rose sharply to US$11.1 million from US$0.3 million in FY2020, mainly due to higher gross profit on the back of higher sales and improved gross profit margin. The strategies to streamline operations and diversify the Group’s supplier base and product portfolio in response to the challenges of the U.S.-China “tech-war” and the pandemic have contributed to a leaner operating model which resulted in better margin efficiency. Total expenses as a percentage of revenue declined to 8.2% in FY2021 from 8.9% in FY2020 as a result of these cost and operational efficiency measures.

Share Capital

Serial System’s total number of issued shares as of 31 December 2021 was 904,841,914 (excluding treasury shares of 946,000). On 13 July 2021, the Company sold 9 million ordinary shares in the capital of the Company from its treasury shares by way of placement to three unrelated corporations at a placement price of S$0.15 per share totalling S$1.35 million The Company’s treasury shares were reduced from 9,946,000 ordinary shares to 946,000 ordinary shares following the placement.


As of 31 December 2021, the Group has US$51.0 million in cash and cash equivalents, compared to US$64.7 million as of 31 December 2020.

Trade and other receivables increased by US$23.0 million (net of factored trade receivables), mainly attributed to higher sales achieved by the Group’s electronic components distribution subsidiaries in Hong Kong and China. Average turnover days for trade receivables declined to 65 in FY2021 from 72 in FY2020.

Inventories increased by US$26.0 million mainly due to higher purchases by the Group’s electronic components distribution subsidiaries in Hong Kong and China in anticipation of higher sales and certain suppliers prolonging the lead time for the delivery of certain high demand semiconductor components amid the global chip shortage.

Financial assets, at fair value through profit or loss (current assets) decreased by US$5.2 million, mainly due to the reduction in a reclassification from trade receivables by US$5.1 million to US$10.7 million (FY2020: reclassification from trade receivables of US$15.8 million). This was due to lower utilisation of the non-recourse factoring bank facilities by the Group’s Hong Kong electronic components distribution subsidiary in FY2021 when compared to FY2020.

Financial assets, at fair value through profit or loss (non-current assets) increased by US$4.0 million, mainly due to investment of US$1.7 million in a Thailand unlisted entity and investments in certain Singapore and Sweden unlisted entities totalling US$2.1 million.


Trade and other payables decreased by US$16.0 million, mainly attributed to lower trade payables due to shorter payment terms to certain suppliers of the Group’s Singapore electronic components distribution subsidiary and decrease in other payables due to the termination of a non-recourse bank factoring programme with a bank for the electronic components distribution entities. Average payment days for trade payables decreased to 30 in FY2021 from 37 in FY2020.

Borrowings increased by US$46.9 million, mainly due to additional borrowings by the Group’s Hong Kong, Singapore and Taiwan electronic components distribution subsidiaries and Malaysia consumer products distribution subsidiary to finance the increase in working capital requirements.

The Company’s current portion of a secured term loan amounting to US$5.9 million was reclassified to non-current borrowings as of 31 December 2021 upon extension of the expiry of the term loan from 31 May 2021 to 31 May 2023. Included in the Company’s current borrowings was an interest-bearing loan amounting to S$5.0 million (US$3.7 million) [31 December 2020: S$5.0 million (US$3.8 million)] from the Company’s substantial shareholder, Mr. Goi Seng Hui.

Looking Ahead

Notwithstanding the turnaround in performance, we are mindful of fresh challenges in the operating landscape. As I write these words, the world is watching with anxiety the conflict in Ukraine, among other geopolitical uncertainties. The rise in oil and gas prices will also trigger inflation and economic uncertainty while supply chain disruptions are still significant. That said, after two years of disruption due to the pandemic, many businesses are keen to revive activity. In particular, the semiconductor sector is seeing growing demand, as emerging technologies such as 5G, data centres, electric vehicles require higher power chips as well as memory storage.

We remain optimistic on our outlook, as we build upon our foundation to expand our portfolio of products, increasing our customer and supplier base, while optimising our operational efficiency. By offering differentiated value to stakeholders during these challenging times, we build their trust and confidence. Each crisis has made us stronger and this is no different. We remain committed to our quest to enhance shareholder value.


I would like to take this opportunity to convey my sincere appreciation to our customers, suppliers, business partners, employees, and last but not least, our shareholders for their faith in Serial System’s long-term vision through this difficult time.

To show our appreciation to our shareholders, the Board of Directors has proposed a final cash dividend of 0.45 Singapore cent per share. Combined with the interim cash dividend payout of 0.22 Singapore cent a share, we expect to distribute 0.67 Singapore cent per share for FY2021.

Dato’ Seri Dr. Derek Goh Bak Heng BBM(L)
Group Chief Executive Officer
March 2022