Semiconductors/Components Distribution (continued)

Serial Microelectronics (HK) Limited, a 91% Hong Kong subsidiary and its wholly owned subsidiary, Serial Microelectronics (Shenzhen) Co., Ltd (SMHK Group) improved its turnover by 16% to $318.1 million as the China market continued to maintain growth in FY2009. The SMHK Group recorded net profit attributable to shareholders of $2.9 million. FY2008 net profit and turnover were $3.9 million and $274.1 million respectively. The lower profit was a result of lower gross profit margin achieved due to continued intense competition in the China market and an impairment charge of $0.4 million made for a financial asset, available-for-sale. SMHK presently has an extensive distribution network of 22 offices in key cities of China.

Serial Microelectronics Korea Co., Limited (SMKR), a 98.2% South Korean subsidiary achieved a turnover of $32.9 million and net profit attributable to shareholders of $3.1 million in FY2009. This compared to a turnover of $34.1 million and loss of $0.3 million in FY2008. The loss in FY2008 was mainly due to a currency loss of $3.6 million arising from the depreciation of Korean Won against United States dollar.

In August 2009, the Group acquired an additional 2% interest in Unitron Tech Co., Limited (Unitron), a South Korean subsidiary from a minority shareholder. The Group’s interest in Unitron was increased to 83%. Unitron recorded a turnover of $35.4 million in FY2009 as compared to $34.1 million in FY2008. Unitron’s loss attributable to shareholders was $0.5 million as compared to a loss of $0.9 million in FY2008. The loss in FY2009 was mainly attributable to lower commission income earned and a goodwill impairment charge of $0.8 million. Unitron booked a small currency gain of about $12,000 as compared to a currency loss of $1.2 million in FY2008.

Serial Microelectronics Inc. (SMTW), a 82.5% Taiwan subsidiary posted a turnover of $20.0 million in FY2009, a decline of 29% as compared to a turnover of $28.2 million in FY2008. The lower turnover was mainly due to loss of orders from a major customer whose business has been adversely affected by the financial and economic crisis. SMTW reported a loss attributable to shareholders of $2.0 million versus a profit of $0.8 million in FY2008. The loss in FY2009 was mainly due to trade receivable allowances amounting to $2.0 million made for certain customers who had delayed in making payment to the Company and a goodwill impairment charge of $0.5 million.

In May 2009, SMPL acquired the business of distributing certain electronic product range manufactured by Texas Instruments in Taiwan, Republic of China for a total consideration of about $4.9 million. The total consideration included product solutions, customers’ design registrations, customers’ assignments and business backlogs. The business acquisition is in line with the Group’s strategy to expand into the markets of Taiwan and the People’s Republic of China, increase the Group’s product range and customer base, and strengthen the Group’s position as a distributor of Texas Instruments. This product distribution right was assigned by SMPL to SMHK and SMTW.

In October 2009, SMPL’s distribution rights for Tyco Electronics were extended from South East Asia to include Greater China and South Korea. With Tyco Electronics’ product breadth and brand strength and SMPL’s extensive distribution network and customer base in Greater China and South Korea, the Group is confident it will be able to grow Tyco Electronics business in this region.

The Group continues to be a top semiconductors/components distributor in the Asia Pacific region. Our suppliers include well-established names such as Texas Instruments, Telegent Systems (HK) Ltd, ON Semiconductor, Analog Devices Inc., Tyco Electronics, Avago Technologies International, CSR Plc, OSRAM Opto Semiconductors, Silicon Storage Technology Ltd, NXP Semiconductors Singapore and Micron Semiconductor Asia.


Bull Will Co., Ltd

The Group’s interest in Bull Will Co., Ltd (Bull Will), a company listed on the Over-The-Counter Securities Exchange in Taiwan was increased from 33.3% to 34.5% as at 31 December 2009. The increase was due to the subscription of 6.5 million new placement shares at NT$6.50 per share. The Group shared a profit of $0.2 million in Bull Will as compared to a loss of $0.5 million in FY2008. The better performance in FY2009 was due mainly to higher sales and gross profit achieved.


Serial Multivision Pte Ltd

In November 2009, the Group invested a 65% interest in Serial Multivision Pte Ltd (Serial Multivision), a newly incorporated Singapore company.

Serial Multivision secured a contract in March 2010 as the exclusive outdoor media wall (LED) operator to manage and market Asia’s largest commercial LED advertising platforms for Grand Park Orchard along Orchard Road. The media wall is located at a very strategic location on Singapore’s popular shopping district (Orchard Road and Bideford Road Junction) with constant high pedestrian and vehicular traffic, an ideal platform for featuring news headlines, major events in Singapore such as National Day or Formula One races and festivities happening throughout the year.

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