4Q’2019 AND FY2019 RESULTS PRESENTATION€¦ · RESULTS PRESENTATION Wednesday, 26 February 2020. 2 2 AGENDA By moving forward and thinking forward, Serial System helps its partners

1

1

4Q’2019 AND FY2019

RESULTS PRESENTATIONWednesday, 26 February 2020

2

2

AGENDA

By moving forward and thinking

forward,

Serial System helps its partners to be

more competitive in the marketplace,

today and in the future

CORPORATE OVERVIEW

FINANCIAL RESULTS

OUTLOOK & STRATEGIES

3

3Your Integral Component to Success

CORPORATE OVERVIEW

4


One of Asia Pacific’s

largest electronic distribution

networks

Wide product range and diversified

customer portfolio

One of the largest electronic

components distributor

listed on SGX

Total Shares: 896 million

Free Float: 39%Market Capitalisation: S$67M

(As at 25 Feb 2020)

Dividend yield: 2-22% p.a. over 10 years

(FY2019: 4.3%)P/B: 0.33 PE: 5.95

SERIAL SYSTEM AT A GLANCE

FY2019 FY2018

Hong Kong 50% 61%

China 12% 11%

South Asia 26% 17%

South Korea 4% 5%

Taiwan 8% 6%

100% 100%

FY2019 FY2018

South

Asia 100% 100%

SERIAL

SYSTEM

listed in

Singapore

in 1997

Consumer Products

(5%)*

Electronic Components

(95%)*

* Group Revenue

5


Supporting a network of global brands, Serial System is a leading distributor of electronic components in Asia and a dealer

for a variety of consumer products. It is also a strategic investor in businesses in healthcare and managed print services.

EXTENSIVE NETWORK & DIVERSIFIED BUSINESS

Electronic ComponentsDistribution

Consumer ProductsDistribution

Managed PrintServices

Hospitality and Healthcare Solutions

Medical DevicesAssemblyand Distribution

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… more than 90 Franchised Product Lines in Serial Group

PARTNERING LEADING SUPPLIERSElectronic Components Distribution

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PARTNERING LEADING SUPPLIERSConsumer Products Distribution

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CONSUMER PRODUCTS DISTRIBUTION

• The Group’s 100%-owned subsidiary: Achieva Technology Sdn. Bhd.

• Major suppliers include AMD and Intel.

• Achieva Technology works closely with partner brands to both fulfil their distribution needs and to create a one-stop solution for their customer needs in both end-user and enterprise markets.

• In the modern e-commerce market, Achieva Technology already maintains key channels on online platforms such as Qoo10 and Lazada.

Achieva Technology Group

• The Group’s 100%-owned subsidiary: Swift-Value Business Pte. Ltd.

• Major suppliers include Hewlett-Packard (HP), Epson and Canon. Also the authorized reseller of products from major brands such as Fuji Xerox, Samsung, Oki and Panasonic.

• Swift-Value is the largest HP printer supplies distributor, having captured over 45% of the Singapore market. They keep their top spot by maintaining close relationships with hundreds of customers, ranging from heartland operators to large retail superstores such as Popular.

• Providing fast and value-added service and having the ability to retain customer loyalties help Swift-Value offers an extensive and consistent network for their suppliers and partner brands.

Swift-Value Business Pte. Ltd.

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• Started in 2014, Singapore-based Print-IQ is 91.43% owned by Serial System

• Provides managed print services and maintains and distributes copiers and printers

• Premier partner for HP copiers

• Partner for top 3D printer brand, Ultimaker

CONSUMER PRODUCTS DISTRIBUTIONManaged Print Services

Under the managed print services business model, companies outsource their printing, scanning and copying functions, as well as the management of the equipment, to external service providers like Print-IQ and PT SMI. This reduces their operating costs and wastage.

• Set up in 2008, PT SMI is 20% owned by Serial System since November 2018

• Listed on Development Board of Indonesia Stock Exchange

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10Your Integral Component to Success 10

OTHER BUSINESSESPart of Group’s diversification into investment holding of high-margin companies

• Core businesses: Hospitality and Healthcare solutions

• Hospitality solutions: Build based on a core venue management application suite known asVenue360.

• Leading edge modules within Venue360: Electronic meal ordering system (eMOS), IntelligenceRoom Infotainment Solution, Digital Media Content Management System, and IncidentTracking and Reporting System.

• Clients: Khoo Teck Puat Hospital, Ng Teng Fong General Hospital, Jurong Community Hospital,Changi General Hospital, Institute of Mental Health, St Andrew’s Hospital, Gleneagles Hospital,Mount Elizabeth Orchard, Parkway East Hospital, Parkway Mount Elizabeth Novena, YishunCommunity Hospital, Sengkang Hospital, Sengkang Community Hospital and AlexandraIntegrated Health.

Serial MultiVision Pte. Ltd. (100%-stake)

• Assembly and distribution of medical devices

• Offers full range of standard and customised perfusion tubingpacks marketed over the Asia-Pacific region: • Customized Heart Lung Pack• Blood Cardioplegia Set• Angio Pack• Sterile Procedural Pack • SurgiAid ® Collagen Wound Dressing

• Company is ISO 13485-certified and its perfusion products bear the coveted CE certification mark.

Contract Sterilization Services Pte Ltd (100%-stake)

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FINANCIAL RESULTS

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US$’000 4Q2019 4Q2018 Change (%) FY2019 FY2018 Change (%)

Sales 175,773 327,617 (46) 791,637 1,527,107 (48)

Gross Profit 12,399 23,387 (47) 54,191 118,609 (54)

Gross Profit Margin (%) 7.1 7.1 0 pt 6.8 7.8 (1.0 pt)

Net Profit After Tax(Attributable to equity holders of the Company)

603 156 287 8,032 17,655 (55)

EPS - fully diluted (US cents)(1) 0.07 0.02 250 0.90 1.97 (54)

NAV per share (US cents)(2) 31/12/2019: 15.55 31/12/2018: 15.26

(1) Earnings per ordinary share on a fully diluted basis are computed by dividing net profit attributable to equity holders of the Company by the weighted average number of shares in

issue during the period of 895,841,914 (4Q2018/ FY2018: 895,841,914) after adjusting assumed conversion of all potential dilutive ordinary shares.

(2) Net assets value per ordinary share as at 31 December 2019 and 31 December 2018 is calculated based on the net assets value attributable to the equity holders of the Company

as at the end of the respective period and the respective aggregate number of ordinary shares of 895,841,914.

SNAPSHOT OF 4Q2019 & FY2019 PERFORMANCE

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• Revenue of US$175.8M in 4Q2019, a decrease of 46% from US$327.6M in 4Q2018

• Mainly due to the termination of the distribution business with Texas Instruments (“TI”)

• Excluding the impact of decline in turnover due to TI termination, turnover for the electronic components distribution business would have

increased by 14%, despite the pro-longed trade tensions between China and United States which have affected demand in China and Hong Kong.

The increase was due to higher sales for certain existing product lines and contribution from new product lines as the Group realigned its

resources to grow these product lines following TI termination

• Consumer products distribution sales also declined marginally by 2% to US$9.4M mainly due to weak demand in the Singapore market in which

the Group operates in and the Group’s continued rationalisation and exit of of non-profitable products.

The lower turnover in Singapore was cushioned by higher turnover achieved in the Malaysia market mainly due to increased sales for certain

existing product lines and contribution for new product lines in 4Q2019

• Gross profit margin remained the same at 7.1% in 4Q2019

• Higher gross profit margin earned by the Group’s Hong Kong electronic components distribution subsidiary mitigated the impact of lower margin

achieved by the other subsidiaries in the electronic components distribution and consumer products distribution businesses, as a result of keen

market competition in their markets

• NPAT increased by 287% to US$603,000 in 4Q2019 from US$156,000 in 4Q2018

4Q2019 HIGHLIGHTS

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• Revenue of US$791.6M in FY2019, a decrease of 48% from US$1.53B in FY2018

• Mainly due to the termination of the distribution business with Texas Instruments (“TI”) which has impacted sales in all markets in Asia

• Excluding the impact of decline in turnover due to TI termination and discontinuation of a product line in March 2018, turnover for the electronic

components distribution business would have increased by 14%. This was attributable to the Group’s on-going efforts to grow its existing

product lines and contribution from new product lines which the Group secured post-TI termination, despite the trade tensions between China

and United States which have dampened overall market sentiment

• Consumer products distribution sales also declined 33% to US$36.6M due to weak demand and keen competition in the markets (Singapore and

Malaysia) in which the Group operates, and the Group’s continued rationalisation and exit of non-profitable products

• Gross profit margin declined to 6.8% in FY2019 from 7.8% in FY2018

• Lower margins achieved by the electronic components distribution and consumer products distribution businesses resulting from keen market

competition in a challenging environment

• NPAT decreased by 55% to US$8.0M in FY2019 from US$17.7M in FY2018

FY2019 HIGHLIGHTS

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-

200

400

600

800

1,000

1,200

1,400

1,600

44 92

186 184 183 228

315 354

382

545

616 658

817

1,036

1,222

1,403

1,492 1,527

792

405.2 408.7 385.6 327.6

229.9 201.4 184.6 175.8

Revenue (US$' million)

2%

-48%

REVENUE GROWTH TRENDSERIAL SYSTEM GROUP

6%

15%

18%

27%

24%

7%

13%

43%

8%

-46%

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PROFITABILITY

33.4

50.7

57.5 62.6

73.5

90.4 91.5

97.4

105.1

118.6

54.2

31.4 33.6

30.2

23.4

16.7 13.4 11.7

12.4

8.7%

9.3%9.3% 9.5%

9.0% 8.7%

7.5% 6.9%7.0%

7.8%

6.8%

7.7%

8.2%7.8%

7.1% 7.3%

6.7% 6.3%

7.1%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Gross Profit & Gross Profit Margin(US$' million)

GP GP%

17%

1%

6%

-54%

23%

8%

13%

52%

13%

9%-47%

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PROFITABILITY

5.1

12.0

10.1

7.9

11.2

16.1

11.0

4.6

9.6

17.7

8.0

5.2

2.0

10.3

0.2

3.2

2.3 2.0

0.6

1.3%

2.2%

1.6%

1.2%1.4%

1.6%

0.9%

0.3%

0.6%

1.2%

1.0%

1.3%

0.5%

2.7%

0.1%

1.4%

1.1% 1.1%

0.3%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0


Net Profit & Net Profit Margin(US$' million)

Net Profit Net Profit Margin (%)

-21%

133%

-16%

41%

44%

-31%

-59%

110%

85%

-55%

287%

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PROFITABILITY

8.8

20.2 19.9 18.9

22.0

30.8

26.0

23.5

26.1

43.2

19.6

11.1

8.1

20.3

3.7

6.5 5.5 4.8

2.8

-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0


EBITDA (US$' million)

-5%

130%

-2%

17%

40%

-16%

-9%

11%

65%

-55%

-24%

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FINANCIAL POSITION

173.8

218.3 211.5

277.0

347.8

382.6

430.6

468.6 458.5

332.2

120.7

147.5 147.0

218.7

295.6

324.1

372.0

397.5 371.5

230.7

1.4 1.5

1.4

1.3

1.2

1.2

1.2 1.2

1.2

1.4

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

-

100.0

200.0

300.0

400.0

500.0

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Maintaining Healthy Current Ratio

Current Assets Current liabilities Current Ratio

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FINANCIAL POSITION

86.5

98.7 104.5 110.0

122.2 119.4

124.8

145.0 144.5 147.2

37.6

71.2

56.3

97.9

120.2

138.0 139.3

166.5

155.9

82.3

43%

72%

54%

89%

98%

116%112%

115%

108%

56%

0%

20%

40%

60%

80%

100%

120%

140%

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0


Net Gearing Ratio

Shareholders' Equity Net Borrowings Net Gearing Ratio

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FINANCIAL POSITION

38

55 61

62 67

53 49

51

54

87

31

36

33

32 33

33

33 35

29

40 44

51

41

30 32

38 40

42

41

66

51

70 69

60 66

58 56

58

66

113

25

35

45

55

65

75

85

95

105

115

125


Cash Conversion Cycle (days)

Trade Receivable Turnover (days) Trade Payable Turnover (days) Inventory Turnover (days) Cash Conversion Cycle (days)

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DIVIDEND YIELD

- 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

0.33

0.13

0.28

0.30

0.22

0.24

0.30

0.35

0.18

0.29

0.40

0.22

0.16

0.25

1.00

0.25

0.38

0.67

0.33

0.30

0.30

0.75

0.50

0.17

0.46

0.46

0.13

Interim Special Final

8.9%

8.5%

6.1%

7.9%

5.0%

6.3%

8.0%

6.3%

2.4%

4.6%

21.9%

4.3%

Singapore

Cents

Total Dividend Payout

(In Cent (SGD))

(Interim & Final) each year

23


OUTLOOK & STRATEGIES

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Uncertainties

? Greater uncertainty in the global market due to ongoing U.S.-China trade tensions, as well as the COVID-19 outbreak

? Global economic slowdown and keen market competition

Bright spots

New applications in IoT, AI, mobility services and autonomous vehicles

Greater deployment of 5G technology

INDUSTRY OUTLOOK

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• Offices of the Group’s China subsidiaries based in Beijing and Shenzhen and Shanghai have

obtained government approvals to resume work as of 17 February 2020 and 24 February 2020

• Exploring new partnership opportunities with suppliers and revenue streams for the Group’s

electronic components distribution business subsequent to TI termination

• Continue to review its operations to boost efficiency and reduce costs, and be vigilant in

managing its inventories and trade credit in light of the challenging envirnoment

GROUP OUTLOOK

27


The presentation herein may contain forward-looking statements by the management of Serial System Ltd (“Serial System”) that pertain to expectations for financial performance of future periods versus past periods.

Forward–looking statements involve certain risks and uncertainties because they relate to future events. Actual results may vary materially from those targeted, expected or projected due to several factors. Such factors are, among others, general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures as well as changes in tax regimes and regulatory developments. Such statements are not and should not be construed as management’s representation on the future performance of Serial System. Therefore, the actual performance of Serial System may differ significantly from expressions provided herein.

This presentation does not constitute an invitation or an offer to sell, or solicitation of an offer to buy any securities in connection with, any contract or commitment whatsoever.

This presentation has been prepared exclusively for the parties presently being invited for the purposes of discussion. Information contained in this presentation does not constitute a prospectus or offering circular in whole or in part.

Thank You

4Q’2019 AND FY2019 RESULTS PRESENTATION€¦ · RESULTS PRESENTATION Wednesday, 26 February 2020. 2 2 AGENDA By moving forward and thinking forward, Serial System helps its partners

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