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 39% to $441.3 million as the China market continued to maintain growth in FY2010. The improvement in turnover was partially contributed from the business acquisition of certain electronic product range manufactured by Texas Instruments which the Group acquired in May 2009. The SMHK Group recorded net profit attributable to shareholders of $8.5 million. FY2009 net profit and turnover were $2.9 million and $318.1 million respectively. The significantly higher profit was a result of higher gross profit and margin achieved from increased revenue. SMHK presently has an extensive distribution network of 27 offices in key cities of China.

Serial Microelectronics Korea Co., Limited (SMKR), a 98.2% South Korean subsidiary achieved a turnover of $51.9 million and net profit attributable to shareholders of $1.9 million in FY2010. This compared to a turnover of $32.9 million and net profit of $3.1 million in FY2009. The lower profit in FY2010 was mainly due to a goodwill impairment charge of $1.4 million provided for the investment in SMKR.

Unitron Tech Co., Limited (Unitron), a 83% South Korean subsidiary recorded a turnover of $44.0 million in FY2010 as compared to $35.4 million in FY2009. Unitron turned into profit of $0.8 million as compared to loss attributable to shareholders of $0.5 million in FY2009 mainly due to higher gross profit and margin earned on increased revenue. In FY2009, the loss was attributable mainly to a goodwill impairment charge of $0.8 million.

Serial Microelectronics Inc. (SMTW), a 82.5% Taiwan subsidiary posted a turnover of $34.3 million in FY2010, an improvement of 71% as compared to a turnover of $20.0 million in FY2009. The higher turnover achieved was mainly due to contribution from business acquisition of certain electronic product range manufactured by Texas Instruments which the Group acquired in May 2009 and new product lines. SMTW reported a smallish net profit attributable to shareholders of $68,000 reversing from a loss of $2.0 million in FY2009. The smallish net profit achieved in FY2010 was mainly due to investment made on human capital to strengthen its existing team in anticipation of increased businesses with its key suppliers. In FY2009, the loss 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.

The Group continues to be a top electronic components distributor in the Asia Pacific region. Our suppliers include well-established names such as Texas Instruments, ON Semiconductor, TE Connectivity, Avago Technologies, Inc., Micron Semiconductor Products, Inc., Analog Devices B.V., Telegent Systems (Hong Kong) Limited, Ramtron International Corporation, Cambridge Silicon Radio Limited, Delta Electronics, Inc., Silicon Motion, Inc., Hisilicon Technologies Co., Ltd, TT Electronics, OSRAM Opto Semiconductors, Littelfuse and Lelon Electronics Corp. In FY2010, the Group added austriamicrosystems AG, Walsin Technology Corp., Telechips Inc., and Gigadevice Semiconductor (HK) Limited to its list of suppliers.

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 34.5% to 34.8% as at 31 December 2010. The increase was due to the subscription of 2.7 million new placement shares at NT$9.23 ($0.41) per share. The Group shared a profit of $0.4 million in Bull Will as compared to $0.2 million in FY2009. The better performance in FY2010 was due mainly to higher sales and gross profit achieved as Bull Will sold more product ranges to its existing customers. The Group made a dilution gain of $0.3 million in FY2010 arising from new shares issue and the exercise of share options by employees of Bull Will during FY2010.


Serial Multivision Pte Ltd

Serial Multivision Pte. Ltd. (SMV), a 65% Singapore subsidiary incorporated in November 2009, commenced commercial operation of its LED advertising media wall at Grand Park Orchard@Knightsbridge, Singapore in September 2010. SMV earned advertising income of $0.7 million and incurred a small loss of $0.1 million due to interest costs and depreciation expenses in FY2010.

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