Financial Statements and Related Announcement : Half Yearly Results

SERIAL SYSTEM LTD

Company Registration No.: 199202071D (Incorporated in Singapore on 22 April 1992)

Unaudited Second Quarter and Half Year Financial Statement and Dividend Announcement for the Period Ended 30 June 2019

PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF- YEAR AND FULL YEAR RESULTS

1(a)(i) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year.

			The Group
	Second Quarter			Year-To-Date
	2Q2019	2Q2018			30/06/2019	30/06/2018
Note	US$'000	US$'000			US$'000	US$'000
Sales	201,367	408,703	-51%		431,252	813,923	-47%
Cost of sales	(187,956)	(375,095)	-50%		(401,166)	(748,922)	-46%
Gross profit	13,411	33,608	-60%		30,086	65,001	-54%
Gross profit margin	6.7%	8.2%	-1.5 pt	7.0%	8.0%	-1.0 pt
Other income:
Other operating income	9,435	(137)	NM	17,488	2,806	523%

Expenses:

Distribution		(10,471)	(13,259)	-21%
Administrative		(2,440)	(4,460)	-45%
Finance		(2,324)	(3,329)	-30%
Other:
Loss allowance on trade and other receivables		(212)	(453)	-53%
Other operating		(5,563)	(7,766)	-28%
Total expenses		(21,010)	(29,267)	-28%
		1,836	4,204	-56%
Share of results of associated companies
(after income tax)		365	(59)	NM
Share of loss of joint venture
(after income tax)		(165)	(15)	1,000%
Profit before income tax	1	2,036	4,130	-51%
Income tax expense	2	(204)	(1,873)	-89%
Profit after income tax		1,832	2,257	-19%
Attributable to:
Equity holders of the Company		2,251	2,042	10%
Non-controlling interests		(419)	215	NM
		1,832	2,257	-19%

(20,391)	(27,368)	-25%
(4,884)	(9,042)	-46%
(5,419)	(6,409)	-15%
(469)	(1,231)	-62%
(12,305)	(10,955)	12%
(43,468)	(55,005)	-21%
4,106	12,802	-68%
385	(288)	NM
(205)	(78)	163%
4,286	12,436	-66%
67	(4,148)	NM
4,353	8,288	-47%
5,429	7,232	-25%
(1,076)	1,056	NM
4,353	8,288	-47%

1

Notes :
1. Profit before income tax
					The Group
		Second Quarter				Year-To-Date
		2Q2019	2Q2018		30/06/2019	30/06/2018
		US$'000	US$'000	%			US$'000	US$'000	%
Profit from operations is arrived at after
charging/(crediting):-
a.	Depreciation and amortisation	1,231	731	68	2,586	1,469	76
b.	Amortisation of distribution rights	4	3	33	7	7	-
c.	Gain on closure of a subsidiary	(14)	-	NM	(14)	-	NM
d.	Loss on disposal of property, plant and
	equipment	-	1	NM	-	9	NM

1. Fair value (gain)/loss on financial assets, at fair

value through profit or loss

(521)

1,166

NM

(1,012)

1,165

NM

1. Gain on sale of financial assets, at fair value

through profit or loss

(598)

-

NM

(952)

(25)

3,708

1. Dividend income from financial assets, at fair

value through profit or loss

(45)

(47)

-4

(45)

(47)

-4

1. Impairment losses on goodwill arising from

acquisition of subsidiaries

540

600

-10

940

900

4

1. Impairment loss on investment in an associated

	company	-	1,500	NM	-	1,500	NM
j.	Currency translation loss/(gain) (net)	754	1,972	-62	(241)	331	NM
k.	Loss/(gain) on derivative financial instruments	104	(47)	NM	97	(272)	NM
l.	Loss allowance on trade receivables	212	318	-33	469	716	-34
m.	Loss allowance on other receivables	-	135	NM	-	515	NM
n.	Allowance/(write-back) of allowance for
	inventory obsolescence	945	347	172	3,082	(884)	NM
o.	Write-off of inventories	22	14	57	23	54	-57
p.	Hong Kong IPO expenses	-	957	NM	-	2,019	NM
q.	Consideration in relation to transfer of TI
	distribution business to an authorized
	distributor	(7,621)	-	NM	(12,683)	-	NM
r.	Interest income	(570)	(477)	19	(1,168)	(989)	18
		2Q2019	2Q2018		30/06/2019	30/06/2018
2. Income tax expense	US$'000	US$'000	%		US$'000	US$'000	%
	Under/(over) provision in preceding financial
	years
	- Current income tax	60	15	300	(304)	215	NM
	- Deferred income tax	21	-	NM		-	-	NM
		81	15	440		(304)	215	NM

NM - Not Meaningful

2

1(a)(ii) A statement of comprehensive income for the Group together with a comparative statement for the corresponding period of the immediately preceding financial year

				The Group
		Second Quarter			Year-To-Date
		2Q2019	2Q2018		30/06/2019	30/06/2018
		US$'000 US$'000			US$'000	US$'000
Net profit after income tax	1,832	2,257	-19%	4,353	8,288	-47%
Other comprehensive (loss)/income for the period:
Items that will not be reclassified subsequently to
profit or loss:
Share of associated company's other comprehensive loss	(14)	-	NM		(14)	-	NM
		(14)	-	NM	(14)	-	NM
Items that may be reclassified subsequently to profit
or loss:
Share of associated companies' other comprehensive
income/(loss)	31	(183)	NM	46	(286)	NM
Share of joint venture's other comprehensive
(loss)/income	(5)	(156)	-97%	4	(44)	NM
Currency translation differences	(1,002)	(4,947)	-80%		334	(2,363)	NM
		(976)	(5,286)	-82%		384	(2,693)	NM
Other comprehensive (loss)/income for the period	(990)	(5,286)	-81%		370	(2,693)	NM
Total comprehensive income/(loss) for the period	842	(3,029)	NM	4,723	5,595	-16%
Total comprehensive income/(loss) attributable to:
Equity holders of the Company	1,339	(3,049)	NM	5,600	4,394	27%
Non-controlling interests	(497)	20	NM		(877)	1,201	NM
		842	(3,029)	NM		4,723	5,595	-16%

NM - Not Meaningful

3

1(b)(i) A statement of financial position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year.

		The Group	The Company
		30/06/2019	31/12/2018	30/06/2019	31/12/2018
		US$'000	US$'000	US$'000	US$'000
ASSETS
Current assets
Cash and cash equivalents	46,924	59,180	7,693	8,057
Trade and other receivables	139,643	181,161	18,980	18,418
Inventories	113,068	144,995	-	-
Financial assets, at fair value through profit or loss	35,654	70,953	-	-
Other current assets	2,368	2,232	545	261
		337,657	458,521	27,218	26,736
Non-current assets
Income tax recoverable	1,667	1,667	-	-
Loans and other receivables	-	-	38,491	34,970
Financial assets, at fair value through profit or loss	3,486	3,506	-	-
Financial assets, at fair value through other comprehensive income	594	1,995	-	-
Investments in associated companies	4,159	3,742	1,390	1,390
Investment in joint venture	1,614	1,815	-	-
Investments in subsidiaries	-	-	68,653	68,653
Property, plant and equipment	34,039	35,323	624	720
Investment properties	4,351	4,402	-	-
Right-of-use assets(1)	3,468	-	-	-
Intangible assets	8,266	9,062	139	58
Other assets	518	566	-	-
Deferred income tax assets	490	481	-	-
		62,652	62,559	109,297	105,791
Total Assets	400,309	521,080	136,515	132,527
LIABILITIES
Current liabilities
Trade and other payables	102,430	156,621	21,496	13,766
Current income tax liabilities	2,382	3,438	145	163
Borrowings(1)	135,698	211,443	54	6,496
		240,510	371,502	21,695	20,425
Non-current liabilities
Other payables	-	-	11,544	12,028
Borrowings(1)	12,186	3,594	6,096	208
Defined benefit plans liabilities	962	863	-	-
Deferred income tax liabilities	662	660	288	288
		13,810	5,117	17,928	12,524
Total Liabilities	254,320	376,619	39,623	32,949
Net Assets		145,989	144,461	96,892	99,578

4

	The Group	The Company
	30/06/2019	31/12/2018	30/06/2019	31/12/2018
	US$'000	US$'000	US$'000	US$'000
EQUITY
Capital and reserves attributable to the equity holders of
the Company
Share capital	72,648	72,648	72,648	72,648
Treasury shares	(736)	(736)	(736)	(736)
Capital reserve	1,276	1,276	180	180
Defined benefit plans reserve	(206)	(206)	-	-
Fair value reserve	(742)	(742)	-	-
Revaluation reserve	45	59	-	-
Other reserve	(765)	(765)	-	-
Currency translation reserve	4,979	4,794	-	-
Retained earnings (1)	62,634	60,401	24,800	27,486
	139,133	136,729	96,892	99,578
Non-controlling interests	6,856	7,732	-	-
Total Equity	145,989	144,461	96,892	99,578

1. The effect on adoption of the SFRS(I) 16 has resulted in an increase in right-of-use assets of approximately US$4,755,000, an increase in lease liabilities of US$4,925,000 (included in current borrowings of US$2,292,000 and non-current borrowings of US$2,633,000), with a corresponding decrease in retained earnings of US$170,000 as at 1 January 2019 (see Section 5 below). The right-of-use assets and lease liabilities were further reduced by US$1,287,000 and US$1,255,000 respectively in 1H2019.

1(b)(ii) Aggregate amount of group's borrowings and debt securities.

Amount repayable in one year or less, or on demand

30/06/2019	31/12/2018
Secured	Unsecured	Secured	Unsecured
US$'000	US$'000	US$'000	US$'000
5,568	130,130	8,811	202,632
Amount repayable after one year
30/06/2019	31/12/2018
Secured	Unsecured	Secured	Unsecured
US$'000	US$'000	US$'000	US$'000
9,278	2,908	3,594	-

5