Strength & Stability - ECS Holdings Limited
Strength & Stability - ECS Holdings Limited
Strength & Stability - ECS Holdings Limited
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<strong>ECS</strong> HOLDINGS LIMITED<br />
Annual Report 2008<br />
<strong>Strength</strong> & <strong>Stability</strong>
Vision:<br />
To be the leading provider of ICT products<br />
and value-added services. We strive for<br />
sustainable growth to achieve optimum returns<br />
to shareholders.<br />
Mission:<br />
To be the preferred supplier of choice for ICT<br />
products and value-added services by building<br />
strong customer relationships.<br />
To sustain our entrepreneurial growth by<br />
expanding our business regionally.<br />
To bring the best-of-breed ICT products and<br />
services to enhance the competitiveness of our<br />
customers’ businesses.<br />
Contents<br />
Corporate Profile p. 01<br />
Chairman’s Message p. 04<br />
CEO’s Message p. 10<br />
Corporate Information p. 14<br />
Financial Highlights p. 15<br />
Board of Directors p. 20<br />
Senior Management p. 23<br />
Milestones p. 26<br />
Group Structure p. 28<br />
Financial Contents p. 29
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong> (“<strong>ECS</strong>” or “the Group”) is a leading<br />
Information and Communications Technology (“ICT”)<br />
products and services provider that was established in 1985<br />
and listed on the SGX Mainboard in 2001.<br />
<strong>ECS</strong> is a well-recognised provider of ICT products and<br />
services with three main businesses, namely Enterprise<br />
Systems, IT Services and Distribution. With a network<br />
of more than 18,000 active channel partners across<br />
China, Thailand, Malaysia, Singapore, Indonesia and<br />
the Philippines, <strong>ECS</strong> is well-positioned to be a regional<br />
partner of choice suitable for any global-leading<br />
MNC ICT brand vendor tapping Asia Pacific’s ICT<br />
spending growth.<br />
Leading global brand names like Hewlett-Packard<br />
(“HP”), Apple, Microsoft, Sun Microsystems, IBM,<br />
Oracle and EMC leverage on <strong>ECS</strong>’ extensive channel<br />
partner network to distribute their products across<br />
the region.<br />
The Group’s Enterprise Systems business aims to give<br />
MNCs, local government and domestic companies<br />
a competitive edge over their peers by designing,<br />
installing and implementing IT infrastructure. <strong>ECS</strong>’<br />
IT Services business provides a comprehensive range of<br />
professional, technical support and training services.<br />
In 2007, the Group’s strategies acquired an additional<br />
dimension when Hong Kong based and HKSE-listed<br />
VST <strong>Holdings</strong>, a leading distributor of IT components<br />
in China bought a 52.5% controlling stake in <strong>ECS</strong> from<br />
certain <strong>ECS</strong> substantial shareholders.<br />
The resultant union between <strong>ECS</strong>’ downstream regional<br />
distribution of end-user ICT products and VST’s strong<br />
upstream component distribution business and market<br />
leadership in China, created a combined entity that<br />
intends to be a leading full-range Asian ICT distributor.<br />
The transaction makes VST <strong>ECS</strong>’ single largest<br />
shareholder.<br />
The Group has a consistent track record of profitability<br />
and a management that is focused on operational<br />
excellence to achieve sustainable profit growth and to<br />
enhance shareholder returns.<br />
<strong>ECS</strong>’ Distribution business leverages on a wellestablished<br />
and highly efficient logistical and IT<br />
infrastructure to distribute fast-moving products in<br />
the most efficient manner.<br />
Corporate<br />
Profile<br />
Annual Report 2008<br />
p.<br />
01
<strong>Strength</strong>ening our Assets<br />
We believe our relentless effort in pursuing margin enhancement initiatives and<br />
operational efficiency has strengthened our foundation. Notwithstanding the current<br />
economic challenges, we are committed towards continuing to strengthen these<br />
advantages to achieve even greater success moving forward.<br />
p.<br />
02 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Annual Report 2008<br />
p.<br />
03
“While our overriding business<br />
objectives this year continued to<br />
be driven by our own ongoing<br />
margin enhancement initiatives<br />
started more than three years ago,<br />
FY2008 was another exciting year<br />
that strengthened the Group’s<br />
business foundation.”<br />
Mr Li Jia Lin<br />
Chairman<br />
Chairman’s<br />
Message<br />
p.<br />
04 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Dear Stakeholders<br />
I am pleased to present to you our FY2008 annual<br />
report which chronicles another stellar performance,<br />
underscoring the efficacy of <strong>ECS</strong>’ margins accretive growth<br />
strategies and more significantly, our agility to adjust to<br />
changing economic circumstances.<br />
Having resumed our listed status on the Singapore Exchange<br />
in August 2008 since the completion of the VST transaction,<br />
I am happy to report that the transition in <strong>ECS</strong>’ controlling<br />
shareholding did not impact <strong>ECS</strong>’ exemplary track record<br />
of operations and performance. Our relationships with our<br />
vendors, customers and bankers remain strong.<br />
While our overriding business objectives this year continued to<br />
be driven by our own ongoing margin enhancement initiatives<br />
started more than three years ago, FY2008 was another exciting<br />
year that strengthened the Group’s business foundation.<br />
We believe that our widened product range, enlarged<br />
distribution network and enhanced operational efficiency<br />
will place us in good stead to compete in an increasingly<br />
challenging business environment that the world is poised for<br />
over the next few quarters.<br />
These efforts had continued to gain momentum even before<br />
the current financial crisis deepened during the second half of<br />
calendar year 2008, as we sharpened our focus on improving<br />
internal efficiencies including generating positive operating<br />
cash flow through better management of working capital and<br />
more effective management of financial resources.<br />
Notwithstanding the impact of the ongoing financial crisis in<br />
the countries in which we operate, for the financial year ended<br />
31 December 2008 (“FY2008”) the Group continued to break<br />
new records across different parameters.<br />
Accordingly in FY2008, net profit attributable to equity<br />
holders rose 25.8% to $29.4 million.<br />
Concurrently, FY2008 net profit growth continued to outstrip<br />
FY2008 revenue growth as the Group consciously tried to<br />
enhance operating performance with revenue growth an<br />
important but secondary priority.<br />
For the period under review, operating profit increased 22.9%<br />
to $52.2 million from $42.5 million even as revenue rose<br />
slightly by 5.8% to $2.9 billion from $2.8 billion. <strong>ECS</strong>’ revenue<br />
performance in FY2008 would have been better by about 11.6%<br />
had it not been for a one-time effect of a currency translation.<br />
In line with our resolve to strengthen our long–term prospects,<br />
we conscientiously focused on controlling costs. Consequently<br />
profit margins continued their upward trend, operating<br />
cash flows and cash position also strengthened considerably<br />
compared to a year ago.<br />
Having intensified our focus on cash management in view<br />
of the declining financial conditions worldwide, as at 31<br />
December 2008, <strong>ECS</strong> generated a positive operating cash flow<br />
of $16.4 million, up from $7.2 million at 31 December 2007.<br />
Due to the improved operating cash flow, net gearing improved<br />
to 0.60 times from 0.68 times a year ago.<br />
Earnings per share (“EPS”), on a fully diluted basis,<br />
correspondingly rose to 8.0 cents versus 6.4 cents in FY2007<br />
while net asset value (“NAV”) per share increased to 65.09 cents<br />
as at 31 December 2008 versus 58.20 cents a year ago.<br />
I am happy to report that comparing by business division, our<br />
on-going initiatives to enhance the Group’s sales mix in line<br />
with market fundamentals have continued to pay off.<br />
Revenue from higher-margin Enterprise Systems, comprising<br />
servers, networking products and enterprise software, grew<br />
17.5% while net profit rose 31.5%.<br />
On a geographical market basis, North Asia led the growth in<br />
profitability with a 47.6% growth in profit before interest and<br />
taxation (“PBIT”) buoyed by sales of higher-margin enterprise<br />
software, networking products and servers.<br />
While these strategies were undertaken to maximise our leverage<br />
on opportunities that we believe will strengthen our long-term<br />
growth prospects, this process is by no means complete.<br />
Most significantly, FY2008 represents our on-going smooth and<br />
successful integration with VST.<br />
Chairman’s<br />
Message<br />
Annual Report 2008<br />
p.<br />
05
Outlook<br />
I am very pleased that <strong>ECS</strong> has continued to deliver commendable<br />
results in spite of softer consumer spending amid the global<br />
financial uncertainty.<br />
Having successfully integrated management and operation<br />
styles along with our new parent VST, in FY2009 we can look<br />
forward to giving more shape to our product and geographical<br />
expansion plans.<br />
However, we will be mindful of the global economic trends as<br />
they unfold and consider our steps well before proceeding.<br />
As the near-term outlook for the global economic and IT<br />
industry continues to be uncertain and notwithstanding the<br />
challenges in the external environment, we will continue to<br />
further strengthen internal competencies which, in turn,<br />
will safeguard longer-term growth opportunities when<br />
markets recover.<br />
While improving working capital management and cash flow<br />
will be key initiatives over the next few quarters, <strong>ECS</strong> will<br />
additionally look into other operational factors including<br />
human resource and technological improvements.<br />
Looking ahead, despite the anticipated slowdown in demand<br />
for ICT products in 2009, the Directors are confident that in<br />
FY2009, <strong>ECS</strong> will still be profitable.<br />
Having said that, with a 25-year long track record and<br />
experience in the regional ICT market, we have weathered<br />
many storms before and I am confident that <strong>ECS</strong> will emerge<br />
stronger after this global financial crisis as well.<br />
Given our strong vendor base, wide channel network and<br />
experienced local management teams, we believe that we<br />
will be positioned advantageously when the future outlook<br />
becomes clearer.<br />
Dividend Payment and Appreciation<br />
On behalf of my fellow Directors, I once again thank you,<br />
our shareholders, for your loyal support of the Group even as<br />
we continue our transformation. For FY2008, the Directors<br />
have proposed a first and final dividend of 2.7 cents per share<br />
(tax exempt).<br />
I would also like to express my sincere appreciation to all our<br />
customers, technology partners and business associates without<br />
whom our success would not have been possible.<br />
Additionally, I would like to thank management and staff for<br />
their relentless hard work that helped <strong>ECS</strong> achieve our growth<br />
plan and build a strong business.<br />
Last but the least, I would like to thank my fellow Directors<br />
for their pioneering direction and invaluable guidance that has<br />
made the milestone achievements of FY2008 possible.<br />
Mr Li Jia lin<br />
Chairman<br />
6 April 2009<br />
While the Directors recognise that these countries will not be<br />
immune to the spillover of the ongoing global financial crisis, I<br />
also believe that <strong>ECS</strong> has put in place a firm foundation for the<br />
Group’s growth strategy.<br />
Chairman’s<br />
Message<br />
p.<br />
06 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Annual Report 2008<br />
p.<br />
07
Targeted Expansion<br />
Asia presents vast potential and opportunities for the Group’s expansion.<br />
By strategically developing both new markets as well as complementary business categories,<br />
<strong>ECS</strong> is committed to enhancing our corporate positioning and shareholder value.<br />
p.<br />
08 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Annual Report 2008<br />
p.<br />
09
“Continued margins enhancement<br />
and improved cash management<br />
led <strong>ECS</strong> to generate not only<br />
strong profit and margins growth<br />
but also stronger cash flow.”<br />
Mr Tay Eng Hoe<br />
Group CEO<br />
p.<br />
10<br />
CEO’s<br />
Message<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
AN OVERVIEW<br />
FY2008 distinguishes itself as a year that witnessed <strong>ECS</strong>’ ongoing<br />
margins accretive growth initiatives gaining momentum.<br />
These efforts which were put in place a few years ago, continued<br />
unabated throughout FY2008 even though <strong>ECS</strong> relisted its<br />
shares on the Singapore Exchange only in August.<br />
During the period under review, our conscious commitment<br />
to enhance operating performance with revenue growth an<br />
important but secondary priority saw net profit growth continue<br />
to outstrip revenue growth.<br />
But most importantly, our improving bottomline and margins<br />
for the year under review, even after the current financial<br />
crisis deepened during the second half of calendar year 2008,<br />
demonstrated our agility to adapt to challenging economic<br />
circumstances and uncertainties.<br />
Realising our limited control over these externalities, we<br />
sharpened focus on improving internal efficiencies including<br />
generating positive operating cash flow through better<br />
management of working capital and more effective management<br />
of financial resources.<br />
Continued margins enhancement and improved cash<br />
management led <strong>ECS</strong> to generate not only strong profit and<br />
margins growth but also stronger cash flow. This is particularly<br />
significant in view of deteriorating financial conditions<br />
worldwide.<br />
In fact, these two initiatives will continue to be pivotal to our<br />
growth strategy over the next few quarters.<br />
Financial And Operations Review<br />
In FY2008 <strong>ECS</strong>’ net profit attributable to equity holders<br />
rose 25.8% to $29.4 million from $23.4 million in FY2007<br />
propelled by continued margins enhancement and improved<br />
cash management.<br />
The Group’s sustained efforts to enhance operating performance<br />
with revenue growth an important but secondary objective saw<br />
operating profit increase 22.9% to $52.2 million from $42.5<br />
million even though revenue inched up slightly by 5.8% to<br />
$2.9 billion from $2.8 billion over the comparative period.<br />
Consequently, net profit before interest and tax (“PBIT”) rose<br />
19.6% to $41.4 million from $34.6 million.<br />
Concurrently gross and operating margins increased to 5.1%<br />
from 4.8% and to 1.8% from 1.5% respectively, over the<br />
comparative periods.<br />
Despite the slight revenue growth, the Group’s total operating<br />
expenses increased by 6.5% to $102.1 million from $95.9<br />
million as we stepped up sales particularly in the higher margin<br />
enterprise systems business segment.<br />
Due to increases in interest rates, our finance costs also rose<br />
30.0% to $11.4 million from $8.7 million. Current and<br />
non-current bank borrowings rose 4.9% to $193.2 million<br />
from $184.2 million.<br />
Notwithstanding the challenges in the external environment,<br />
throughout the year, the Group retained focus on improving<br />
financial health by generating strong profit and margin growth<br />
as well as stronger cash flow.<br />
As at 31 December 2008, <strong>ECS</strong> generated a positive operating<br />
cash flow of $16.4 million, up from $7.2 million as at 31<br />
December 2007. We also continued to further reduce accounts<br />
receivable days to 43.6 days from 47.8 days during the period<br />
under review.<br />
CEO’s<br />
Message<br />
Annual Report 2008<br />
p.<br />
11
Tighter credit control and shorter cash cycles also led to<br />
significant improvements in working capital. As at 31 December<br />
2008, <strong>ECS</strong>’ cash and cash equivalents were $49.5 million, up<br />
from $39.4 million a year ago. Net gearing improved to 0.60<br />
times from 0.68 times.<br />
As a result of these efforts, FY2008 earnings per share (“EPS”),<br />
on a fully diluted basis, correspondingly rose to 8.0 cents from<br />
6.4 cents while net asset value (“NAV”) per share increased to<br />
65.09 cents from 58.20 cents a year ago.<br />
Review By Business Segments<br />
Enterprise Systems<br />
Enterprise Systems continued to be the Group’s growth driver<br />
in FY2008 even as global economic volatility began to dampen<br />
ICT spending rates in the region as <strong>ECS</strong> reiterated its ongoing<br />
strategy to continue pursuing bottomline and margins growth.<br />
Consequently in FY2008, <strong>ECS</strong>’ higher margins’ Enterprise<br />
Systems segment grew by 17.5% to $1.1 billion from $964.3<br />
million mainly driven by higher sales of servers, networking<br />
products and enterprise software in the Group’s mainstay<br />
North Asia market as well as some Southeast Asian markets.<br />
At the same time, PBIT from this segment strongly increased<br />
by 31.5% to $26.4 million from $20.1 million.<br />
Distribution<br />
In line with the slowdown in demand for consumer ICT<br />
products, in FY2008 our Distribution sales managed to sustain<br />
themselves within the $1.7 billion range to dip only slightly by<br />
0.6%. Encouragingly, Distribution PBIT grew 19.6% to $23.9<br />
million from $20.0 million again propelled by better margins<br />
mix of products.<br />
Review By Geographical Markets<br />
<strong>ECS</strong>’ ongoing pursuit of country-specific business thrusts<br />
continued to reap results and both North Asia and Southeast<br />
Asia continued to deliver revenue and PBIT growth.<br />
North Asia<br />
Led by sustained business ICT infrastructure spending in first<br />
and second tier cities which continued throughout FY2008,<br />
North Asia revenue grew 5.8% to $1.5 billion from $1.4<br />
billion. PBIT grew 47.6% to $25.3 million from $17.2 million<br />
over the comparative periods.<br />
Southeast Asia<br />
During the year under review, sales of both consumer electronics<br />
especially notebooks and enterprise products in Malaysia,<br />
Indonesia and the Philippines rose 5.7% to $1.43 billion<br />
from $1.36 billion while PBIT grew 6.4% to $26.9 million<br />
from $25.3 million; Southeast Asia continues to be the major<br />
contributor to Group PBIT.<br />
Outlook<br />
While <strong>ECS</strong> has put a solid foundation into place, we are<br />
cognizant of the fact that at least the near-term outlook for<br />
the global economy and the global ICT industry continues to<br />
be uncertain. The countries in our region will not be immune<br />
from the spillover effect of this scenario.<br />
In a revised statement in December 2008, technology sector<br />
analyst IDC, said that it anticipates IT spending in the region<br />
to fall to US$195.6 billion in 2009 from the US$201.4<br />
billion it had forecast in July 2008. IDC added that strategic<br />
investments in IT will remain critical in achieving further<br />
efficiency and productivity gains, and driving longer term<br />
growth of businesses.<br />
As these external developments remain out of our control, as<br />
in the past, we prefer to adopt a prudent business approach<br />
by taking the opportunity to further enhance our business<br />
fundamentals during trying times.<br />
<strong>ECS</strong> recognises the importance of strengthening internal<br />
competencies that have placed us in good stead even as the<br />
economic challenges began to manifest themselves in our<br />
industry during the last few months of FY2008.<br />
p.<br />
12<br />
CEO’s<br />
Message<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
We believe that by honing these operating and financial<br />
efficiencies, <strong>ECS</strong> will be able to capitalise on the longer-term<br />
growth opportunities when markets eventually recover.<br />
Firstly, we intend to enhance operating cash flow and working<br />
capital. This will help us to reduce our debt and funding costs,<br />
thereby strengthening our balance sheet.<br />
Secondly, we will work on strengthening internal business<br />
processes like credit control to make operations more<br />
cost-effective.<br />
Finally, we plan to also implement tactical human resource<br />
and technological improvements that will further scale up our<br />
operational efficiencies.<br />
Looking further ahead, despite the anticipated slowdown in<br />
demand for ICT products in 2009, the Directors are confident<br />
that in FY2009, <strong>ECS</strong> will still remain profitable.<br />
In Appreciation<br />
Once again, <strong>ECS</strong> has delivered an excellent set of results despite<br />
the operating uncertainties that dampened global business<br />
sentiments during the latter part of FY2008.<br />
Once again, <strong>ECS</strong> has delivered<br />
an excellent set of results despite<br />
the operating uncertainties<br />
that dampened global business<br />
sentiments during the latter part<br />
of FY2008.<br />
I must commend my fellow management team and staff for<br />
their relentess determination and hard work which has helped<br />
us to make major strides externally and internally.<br />
To my fellow Board members, I would like thank you for your<br />
valuable input that has steered <strong>ECS</strong> onto a solid path for many<br />
more future successes.<br />
<strong>ECS</strong> is on a new threshold and our newly strengthened<br />
fundamentals auger well for the vast opportunities that lie<br />
ahead of us when the global economy comes back on track.<br />
Tay Eng Hoe<br />
Group Chief Executive Officer & Executive Director<br />
6 April 2009<br />
CEO’s<br />
Message<br />
Annual Report 2008<br />
p.<br />
13
Board of Directors<br />
Mr Li Jia Lin (Chairman, Non-Executive Director)<br />
Mr Liu Wei (Vice Chairman, Non-Executive Director)<br />
Mr Tay Eng Hoe (Group Chief Executive Officer)<br />
Mr Narong Intanate (Executive Director)<br />
Mr Foo Sen Chin (Executive Director)<br />
Mr Leong Horn Kee (Independent Director)<br />
Mr Tan Hup Foi (Independent Director)<br />
Mr Koh Soo Keong (Independent Director)<br />
Audit Committee<br />
Mr Leong Horn Kee (Chairman)<br />
Mr Tan Hup Foi<br />
Mr Koh Soo Keong<br />
Compensation Committee<br />
Mr Koh Soo Keong (Chairman)<br />
Mr Leong Horn Kee<br />
Mr Tan Hup Foi<br />
Nominating Committee<br />
Mr Tan Hup Foi (Chairman)<br />
Mr Leong Horn Kee<br />
Mr Koh Soo Keong<br />
Mr Tay Eng Hoe<br />
Senior Management at<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong><br />
Mr Tay Eng Hoe (Group Chief Executive Officer)<br />
Mr Foong Kam Tho (Group Chief Operating Officer)<br />
Mr Eddie Foo Toon Ee<br />
(Group Chief Financial Officer)<br />
Mr Foo Sen Chin (Group Human Resource Director)<br />
Mr Lim Tow Cheng<br />
(Senior Vice President, Business Development)<br />
Mr Eugene Tan Teck Thye<br />
(Group Financial Controller)<br />
Mr Newman Li (Senior Internal Audit Manager)<br />
Senior Management at <strong>ECS</strong><br />
<strong>Holdings</strong> <strong>Limited</strong>’s subsidiaries<br />
Mr Foong Kam Tho (Chief Executive Officer)<br />
<strong>ECS</strong> Technology (China) <strong>Limited</strong><br />
Mr Somsak Pejthaveeporndej (President)<br />
The Value Systems Co., Ltd.<br />
Mr Foo Sen Chin (Managing Director)<br />
<strong>ECS</strong> KUSH Sdn Bhd<br />
Mr Sebastian Chong (President)<br />
<strong>ECS</strong> Computers (Asia) Pte Ltd<br />
Mr Nana Juhana Osay (Executive Director)<br />
PT <strong>ECS</strong> Indo Jaya<br />
Mr Jimmy Go (President)<br />
MSI-<strong>ECS</strong> Phils., Inc.<br />
Auditors<br />
KPMG<br />
Certified Public Accountants<br />
16 Raffles Quay #22-00<br />
Hong Leong Building<br />
Singapore 048581<br />
Partner-in-charge : Tran Phuoc<br />
(Since FY2006)<br />
Registrar<br />
M&C Services Private <strong>Limited</strong><br />
138 Robinson Road #17-00<br />
The Corporate Office, Singapore 068906<br />
Registered Office<br />
19 Kallang Avenue #07-153<br />
Singapore 339410<br />
Principal Bankers<br />
DBS Bank Ltd<br />
KBC Bank N.V.<br />
Malayan Banking Berhad<br />
Oversea-Chinese Banking Corporation<br />
Rabobank International<br />
Standard Chartered Bank<br />
Sumitomo Mitsui Banking Corporation<br />
United Overseas Bank <strong>Limited</strong><br />
Company Secretary<br />
Eddie Foo Toon Ee, CPA<br />
<strong>ECS</strong> Offices<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong><br />
19 Kallang Avenue #07-153<br />
Singapore 339410<br />
Website : www.ecs.com.sg<br />
<strong>ECS</strong> Technology (China) <strong>Limited</strong><br />
PCI Building, No. 50 Jianzhong Road<br />
Tianhe Software Park<br />
Guangzhou, P.R.C. (510665)<br />
Branches in Beijing, Chengdu, Fuzhou, Guangzhou,<br />
Hangzhou, Hong Kong, Jinan, Nanjing, Nanning,<br />
Shanghai, Shenyang, Shenzhen, Wuhan, Xi’an<br />
Website : www.ecschina.com<br />
The Value Systems Co., Ltd.<br />
34th Floor, Charn Issara Tower 2<br />
2922/328-331 New Petchburi Road<br />
Bangkapi, Huay-Kwang<br />
Bangkok 10320, Thailand<br />
Branches in Bangkok, Chiang Mai, Hat Yai,<br />
Khon Kaen, Nakhon Ratchasima, Phitsanulok,<br />
Phuket, Rayong, Surat Thani<br />
Website : www.value.co.th<br />
<strong>ECS</strong> KUSH Sdn Bhd<br />
Lot 3, Jalan Teknologi 3/5,<br />
Taman Sains Selangor,<br />
Kota Damansara<br />
47810 Petaling Jaya,<br />
Selangor, Malaysia<br />
Branches in Penang, Petaling Jaya<br />
Websites : www.ecsm.com.my<br />
<strong>ECS</strong> Computers (Asia) Pte Ltd<br />
19 Kallang Avenue #07-153<br />
Singapore 339410<br />
Website : www.ecs.com.sg<br />
<strong>ECS</strong> Indo Pte Ltd<br />
19 Kallang Avenue #06-151<br />
Singapore 339410<br />
Branches in Bandung, Jakarta, Medan,<br />
Surabaya, Yogyakarta<br />
Website : www.ecsindo.com<br />
MSI-<strong>ECS</strong> Phils., Inc.<br />
Topy II Bldg, #3 Economia St.,<br />
Libis, Quezon City, Philippines 1110<br />
Branches in Manila, Cebu<br />
Website : www.msi-ecs.com.ph<br />
p.<br />
14<br />
Corporate<br />
Information<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Stroll down memory lane and re-live<br />
<strong>ECS</strong>’ winning performance over<br />
the years. On the record, <strong>ECS</strong> has<br />
consistently surpassed itself to deliver<br />
greater value for both stakeholders<br />
and partners.<br />
REVENUE ($ million)<br />
2,949.9<br />
2,789.4<br />
2,339.3<br />
2,036.3<br />
1,865.7<br />
FY 04 FY 05 FY 06 FY 07 FY 08<br />
Financial<br />
Highlights<br />
Annual Report 2008<br />
p.<br />
15
Revenue By Business Segment ($ million)<br />
3,500<br />
3,000<br />
2,500<br />
2,000<br />
1,500<br />
1,000<br />
500<br />
1,865.7<br />
24.9<br />
1,215.2<br />
625.6<br />
2,036.3<br />
22.0<br />
1,233.2<br />
781.1<br />
2,339.3<br />
23.2<br />
1,416.0<br />
900.1<br />
2,789.4<br />
32.2<br />
1,792.9<br />
964.3<br />
2,949.9<br />
33.6<br />
1,783.0<br />
1,133.3<br />
Legend<br />
Total<br />
IT Services<br />
Distribution<br />
0<br />
FY 04 FY 05 FY 06 FY 07 FY 08<br />
Enterprise Systems<br />
Profitability ($ million)<br />
60<br />
Revenue by geographical segment ($ million)<br />
45<br />
30<br />
15<br />
0<br />
Legend<br />
13.5<br />
19.1<br />
22.5<br />
17.3<br />
20.1<br />
27.0<br />
23.4<br />
34.6<br />
29.4<br />
41.4<br />
FY 04 FY 05 FY 06 FY 07 FY 08<br />
North Asia<br />
1,515.6<br />
South East Asia<br />
1,434.3<br />
Net profit attributable<br />
to equity holders<br />
Profit from<br />
operations before tax<br />
p.<br />
16<br />
Financial<br />
Highlights<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
SHAREHOLDERS’ EQUITY ($ million)<br />
Dividends Per Share (cents)<br />
2.7<br />
237.8<br />
212.7<br />
190.1<br />
174.2<br />
158.7<br />
1.5<br />
1.4<br />
0.8<br />
FY 04 FY 05 FY 06 FY 07 FY 08<br />
FY 04 FY 05 FY 06 FY 07 FY 08<br />
RETURN on EQUITY (%)<br />
15<br />
RETURN ON CAPITAL EMPLOYED (%)<br />
18<br />
14<br />
15<br />
13<br />
12<br />
11<br />
10<br />
8.8<br />
10.4<br />
11.0<br />
11.6<br />
13.0<br />
12<br />
9<br />
6<br />
3<br />
8.1 8.4<br />
9.1<br />
10.0<br />
11.7<br />
0<br />
FY 04 FY 05 FY 06 FY 07 FY 08<br />
0<br />
FY 04 FY 05 FY 06 FY 07 FY 08<br />
Financial<br />
Highlights<br />
Annual Report 2008<br />
p.<br />
17
Geared for Sustained Future Growth<br />
With the unleashed potential from our transformation to a complete ICT products<br />
and services provider, the synergies from our union with VST will accelerate the Group<br />
to the next level of growth.<br />
p.<br />
18<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Annual Report 2008<br />
p.<br />
19
1.<br />
2.<br />
3.<br />
4.<br />
5.<br />
6.<br />
7.<br />
8.<br />
p.<br />
20<br />
Board of<br />
Directors<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
1. CHAIRMAN<br />
Mr Li Jia Lin was appointed Chairman of the Board on 31<br />
December 2007. Mr Li is also the Chairman and Chief Executive<br />
Officer and an Executive Director of VST <strong>Holdings</strong> <strong>Limited</strong>.<br />
Mr Li is also the Director of VST Group <strong>Limited</strong> (BVI) and<br />
VST Computers (H.K.) <strong>Limited</strong> respectively. He is responsible<br />
for the overall management and strategic positioning of the<br />
Group. Mr Li graduated from Tsinghua University of the People’s<br />
Republic of China with a Degree of Bachelor of Engineering in<br />
1983 and a Master Degree in Management Engineering in 1986.<br />
2. VICE Chairman<br />
Mr Liu Wei was appointed Vice Chairman of the Company on<br />
3 December 2001 and is currently a director of <strong>ECS</strong> Technology<br />
(China) <strong>Limited</strong>, our subsidiary in China. Mr Liu is one of the<br />
founding members of Pacific City International <strong>Holdings</strong> <strong>Limited</strong><br />
and has more than 18 years of experience in the IT industry in<br />
China. Mr Liu has assumed the positions of Vice Chairman<br />
of Guangdong CAD and Executive Chairman of Guangdong<br />
Academy of Electronics, and is a member of Guangzhou People’s<br />
Congress. In recognition of his contributions and achievements,<br />
Mr Liu had received many awards from the Chinese Government<br />
and Industry Publications including, “Top 10 Economic<br />
Contributors” by the Ministry of Information Industry of China<br />
in 2006, “Ten Best New Entrepreneurs in Guangdong” and<br />
“Guangdong Outstanding Entrepreneur of Private Enterprise”<br />
by the Guangdong Government in 2006. He was recognised in<br />
2004 as one of the top 10 IT leaders in China and was recipient<br />
of the “Outstanding Enterprise Contribution Award” in 2003.<br />
Mr Liu was awarded China Channel Permanent Achievement<br />
Medal by Computer Business News in 2002 and was also listed<br />
by Computer World as IT Fortune Top 50 in 2001. Mr Liu<br />
graduated with a Bachelor’s degree in Applied Mechanics from<br />
the Zhongshan University, PRC.<br />
3. GROUP Chief Executive Officer<br />
Mr Tay Eng Hoe was appointed the Executive Director of<br />
the Company on 1 April 2000 and he is also the Group Chief<br />
Executive Officer of the Company. Mr Tay is the founder of<br />
the <strong>ECS</strong> Group and also <strong>ECS</strong> Computers (Asia) Pte Ltd, our<br />
Singapore subsidiary. He brings with him more than 20 years of<br />
experience in the IT business. Mr Tay is an Executive Director<br />
of VST <strong>Holdings</strong> <strong>Limited</strong>. In August 2005, he was conferred<br />
the Public Service Medal by the President of the Republic of<br />
Singapore in recognition for his public services to the country.<br />
Mr Tay holds a Bachelor of Science (Honours) degree from the<br />
LaTrobe University and a Master of Business Administration<br />
from the University of Melbourne.<br />
4. Executive Director<br />
Mr Narong Intanate is the founder and Executive Chairman<br />
of The Value Systems Co., Ltd., our subsidiary, since 1988.<br />
He is actively involved in the management of The Value<br />
Systems Co., Ltd. and plays a pivotal role in steering the<br />
strategic direction of The Value Systems. He was appointed<br />
as an Executive Director of the Company on 15 December<br />
2000 and he is currently an advisor of the Hatyai University.<br />
He holds a Bachelor of Science in Business Administration<br />
and a Master of Business Administration from California State<br />
University. Prior to forming The Value Systems Co., Ltd.,<br />
he was the Marketing Manager of Sahaviriya Infortech<br />
Computers Co., Ltd. from 1982 to 1983 and the Marketing<br />
Director of Sahaviriya OA from 1983 to 1988.<br />
Board of<br />
Directors<br />
Annual Report 2008<br />
p.<br />
21
5. Executive Director<br />
Mr Foo Sen Chin was appointed as an Executive Director on<br />
15 December 2000 and is concurrently the Group Human<br />
Resource Director of the Company. He is also the Managing<br />
Director and founder of <strong>ECS</strong> KUSH Sdn Bhd, our subsidiary.<br />
Mr Foo plays a pivotal role in steering the strategic direction<br />
of <strong>ECS</strong> KUSH Sdn Bhd. His responsibilities include the<br />
development of its long term business goals, overall operation<br />
and administrative management of <strong>ECS</strong> KUSH. Prior to<br />
joining our Group, he was the General Manager of a computer<br />
bureau services company in Kuala Lumpur before forming<br />
<strong>ECS</strong> KUSH Sdn Bhd (formerly known as K.U. Sistems Sdn<br />
Bhd) in 1985. Mr Foo is an advisor to the current Council of<br />
PIKOM, Association of Computer and Multimedia Industry<br />
of Malaysia. Mr Foo has a Bachelor of Science degree in<br />
Electrical and Electronic Engineering from the University of<br />
Birmingham, UK and he also holds a Master’s degree in Business<br />
Administration from the Cranfield School of Management in<br />
the United Kingdom.<br />
6. Non-Executive Independent Director<br />
Mr Leong Horn Kee was appointed as an Independent<br />
Director on 15 December 2000, and currently serves as the<br />
Chairman of the Audit Committee and a member of the<br />
Nominating and Compensation Committees. He is currently<br />
the Chairman/CEO of CapitalCorp Partners Pte Ltd. Mr Leong<br />
was a Member of Parliament for 22 years. He has extensive work<br />
experience in the public sector in the Ministries of Finance and<br />
Trade & Industry, and in the private sector in venture capital,<br />
merchant banking, corporate investments, hotels and property<br />
development. Mr Leong is appointed Singapore’s Non-Resident<br />
Ambassador to Mexico and a member of the Security Industry<br />
Council in 2006. He holds a Bachelor of Technology (Honours)<br />
degree in Production Engineering from Loughborough<br />
University, UK; an Economics (Honours) degree from the<br />
University of London, UK; and an MBA from INSEAD,<br />
France. In 2008, he completed a degree in Chinese Language and<br />
Literature from Beijing Normal University, China.<br />
7. Non-Executive Independent Director<br />
Mr Tan Hup Foi was appointed as an Independent Director<br />
on 7 February 2006, and currently serves as Chairman of<br />
the Nominating Committee and a member of the Audit and<br />
Compensation Committees. He was the Chief Executive of<br />
Trans-Island Bus Services Ltd from 1994 to 2005 and also the<br />
Deputy President of SMRT Corporation Ltd from 2003 to<br />
2005. Mr Tan is known internationally as the Honorary Vice<br />
President of the International Association of Public Transport<br />
(UITP) and Honorary Chairman of UITP Asia Pacific<br />
Division. Mr Tan is the Chairman of Ngee Ann Polytechnic<br />
Council and a Board member of Singapore Corporation of<br />
Rehabilitative Enterprises (SCORE). He was awarded the<br />
Bintang Bakti Masyarakat (Public Service Star) and the Pingat<br />
Bakti Masyarakat (Public Service Medal) by the President of<br />
Singapore in 2008 and 1996 respectively. Mr Tan graduated<br />
from Monash University in Australia with a First Class<br />
Honours degree in Mechanical Engineering in 1974 and he<br />
obtained a Master of Science (Industrial Engineering) degree<br />
from University of Singapore in 1979.<br />
8. Non-Executive Independent Director<br />
Mr Koh Soo Keong was appointed as an Independent Director<br />
on 11 February 2008, and currently serves as Chairman of the<br />
Compensation Committee and a member of the Audit and<br />
Nominating Committees. Mr Koh was, until April 2007, the<br />
Chief Executive Officer and President of Toll Asia Pte Ltd,<br />
formerly SembCorp Logistics Ltd (SembLog) which was acquired<br />
by Toll in May 2006. Currently, he is the Managing Director<br />
of EcoSave Pte Ltd. With over 20 years of experience in the<br />
logistics industry, he has helmed SembLog and its preceding<br />
companies since 1986. He is a board member of four other<br />
publicly listed companies and the Chairman of the Agri-Food<br />
and Veterinary Authority of Singapore. He holds a Bachelor of<br />
Engineering (Honours), a Master of Business Administration<br />
and a Postgraduate Diploma in Business Law from the National<br />
University of Singapore.<br />
p.<br />
22<br />
Board of<br />
Directors<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
1.<br />
2.<br />
3.<br />
4.<br />
5.<br />
6. 7. 8.<br />
9.<br />
10.<br />
11.<br />
Senior<br />
Management<br />
Annual Report 2008<br />
p.<br />
23
1. Group Chief Executive Officer<br />
Mr Tay Eng Hoe was appointed the Executive Director of<br />
the Company on 1 April 2000 and he is also the Group Chief<br />
Executive Officer of the Company. Mr Tay is the founder of<br />
the <strong>ECS</strong> Group and also <strong>ECS</strong> Computers (Asia) Pte Ltd, our<br />
Singapore subsidiary. He brings with him more than 20 years of<br />
experience in the IT business. Mr Tay is an Executive Director<br />
of VST <strong>Holdings</strong> <strong>Limited</strong>. In August 2005, he was conferred<br />
the Public Service Medal by the President of the Republic of<br />
Singapore in recognition for his public services to the country.<br />
Mr Tay holds a Bachelor of Science (Honours) degree from the<br />
LaTrobe University and a Master of Business Administration<br />
from the University of Melbourne.<br />
2. Group Chief Operating Officer,<br />
Chief Executive Officer (<strong>ECS</strong> China)<br />
Mr Foong Kam Tho was appointed as Group Chief Operating<br />
Officer of <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong> with effect from 1 January<br />
2008. He is responsible for the overall operational management<br />
of the Group including setting business strategies and building<br />
long-term customers and partners’ relationships. Mr Foong is<br />
concurrently the Chief Executive Officer of <strong>ECS</strong> China and<br />
was formerly the President of <strong>ECS</strong> Computers (Asia) Pte Ltd.<br />
He joined <strong>ECS</strong> Computers (Asia) Pte Ltd in 1985 and had<br />
more than 20 years experience in the IT industry. Mr Foong<br />
holds a Bachelor of Science degree (Computer Science) from<br />
the National University of Singapore.<br />
3. Group Chief Financial Officer<br />
Mr Eddie Foo is the Group Chief Financial Officer of the<br />
Company and is concurrently the Group Company Secretary.<br />
Mr Foo is responsible for the corporate finance and treasury,<br />
reporting, accounts, tax, information technology and risk<br />
management of <strong>ECS</strong> <strong>Holdings</strong> and is also a director on the boards<br />
of various <strong>ECS</strong> companies. Mr Foo has more than 14 years of<br />
financial management and audit experience in multinational<br />
and public accounting firms. Prior to serving as Group Chief<br />
Financial Officer, Mr Foo was the Group Financial Controller of<br />
the Company. Mr Foo holds a Bachelor degree in Accountancy<br />
from the Nanyang Technological University and is a member of<br />
the Institute of Certified Public Accountants of Singapore.<br />
4. Senior Vice President,<br />
Business Development<br />
Mr Lim Tow Cheng was appointed Senior Vice President,<br />
Business Development on 18 October 2005. He is responsible<br />
for managing the regional expansion strategy and for identifying<br />
new business opportunities for the Group. In addition, he also<br />
looks after investor relations. Mr Lim has more than 20 years of<br />
experience in senior management positions in the IT industry.<br />
Prior to joining the Group, Mr Lim was the Director for South<br />
Asia of Western Digital and has previously worked with Digiland<br />
International <strong>Limited</strong> for more than 8 years, holding several<br />
senior management positions, including as Chief Executive<br />
Officer. Mr Lim has an Honours Degree in Economics from<br />
the National University of Singapore.<br />
5. Group Financial Controller<br />
Mr Eugene Tan was appointed as Group Financial Controller<br />
of the Company on 1 March 2008. He is responsible for the<br />
financial management of the Group, which covers accounting,<br />
treasury, tax, financial control and reporting. Prior to his<br />
appointment as Group Financial Controller, Mr Tan was the<br />
Vice President, Finance of <strong>ECS</strong> Computers (Asia) Pte Ltd, the<br />
wholly-owned Singapore subsidiary of <strong>ECS</strong> <strong>Holdings</strong> Ltd. Prior<br />
to joining the Group, Mr Tan worked for KPMG Singapore as a<br />
senior auditor. Mr Tan holds a Bachelor degree in Accountancy<br />
& Economics from the University of Reading.<br />
6. SENIOR Internal AUDIT MANAGER<br />
Mr Newman Li is the Senior Manager, Group Internal Audit<br />
of the Company. He is a member of CPA China and has more<br />
than 10 years of financial and audit experience. Prior to joining<br />
the Group, he worked for Foshan Power Construction Group<br />
Co. Ltd in 1998 and Guangdong Telecom in 2004. Mr Li holds<br />
a Bachelor degree in Accountancy from the Tianjin University<br />
of Commerce and was appointed to his current position since<br />
May 2008.<br />
p.<br />
24<br />
Senior<br />
Management<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
7. President (The Value Systems Co., Ltd.)<br />
Mr Somsak Pejthaveeporndej was appointed as the President<br />
of The Value Systems Co., Ltd on 1 February 2009 and he<br />
is responsible for the overall operational management of The<br />
Value Systems. He has been with our Group since 1988 and<br />
was formerly involved in managing the Enterprise Systems &<br />
ICT Services division. He has more than 20 years experience in<br />
the IT industry. Prior to joining our Group, he was employed<br />
as a technical manager by Sun Shine Co., Ltd. between 1981<br />
to 1984, followed by Sahaviriya Telecom Co., Ltd. between<br />
1984 to 1988. He holds a Bachelor of Science degree majoring<br />
in electronics from Rajamangala University of Technology<br />
Krungthep, Thailand, and a Mini MBA from The Faculty of<br />
Commerce and Accountancy, Chulalongkorn University.<br />
8. Managing Director (<strong>ECS</strong> KUSH Sdn Bhd)<br />
Mr Foo Sen Chin was appointed as an Executive Director on<br />
15 December 2000 and is concurrently the Group Human<br />
Resource Director of the Company. He is also the Managing<br />
Director and founder of <strong>ECS</strong> KUSH Sdn Bhd, our subsidiary.<br />
Mr Foo plays a pivotal role in steering the strategic direction<br />
of <strong>ECS</strong> KUSH Sdn Bhd. His responsibilities include the<br />
development of its long term business goals, overall operation<br />
and administrative management of <strong>ECS</strong> KUSH. Prior to<br />
joining our Group, he was the General Manager of a computer<br />
bureau services company in Kuala Lumpur before forming<br />
<strong>ECS</strong> KUSH Sdn Bhd (formerly known as K.U. Sistems Sdn<br />
Bhd) in 1985. Mr Foo is an advisor to the current Council of<br />
PIKOM, Association of Computer and Multimedia Industry<br />
of Malaysia. Mr Foo has a Bachelor of Science degree in<br />
Electrical and Electronic Engineering from the University of<br />
Birmingham, UK and he also holds a Master’s degree in Business<br />
Administration from the Cranfield School of Management in<br />
the United Kingdom.<br />
9. President (<strong>ECS</strong> Computers (Asia) Pte Ltd)<br />
Mr Sebastian Chong is the President of <strong>ECS</strong> Computers<br />
(Asia) Pte Ltd, the wholly-owned Singapore subsidiary of <strong>ECS</strong><br />
<strong>Holdings</strong> Ltd. Mr Chong joined <strong>ECS</strong> in 1990 and has 18<br />
years of experience in the IT industry. He oversees the sales and<br />
operations of the commercial, consumer and retail segments<br />
of <strong>ECS</strong> Singapore. Mr Chong is also responsible for business<br />
development, business strategy and building of long term<br />
relationships with vendors, channels and partners.<br />
10. Executive Director (PT <strong>ECS</strong> Indo Jaya)<br />
Mr Nana Juhana Osay is the Executive Director of PT <strong>ECS</strong><br />
Indo Jaya. He is responsible for overseeing <strong>ECS</strong> Indonesian<br />
operations and has over 15 years experience in the IT industry.<br />
Mr Osay was formerly Secretary General for Indonesia Computer<br />
Business Association, a position he held from 1999 to 2005.<br />
Mr Osay was educated in the Bandung Institute of Technology<br />
from 1976 to 1981.<br />
11. President (MSI-<strong>ECS</strong> Phils, Inc)<br />
Mr Jimmy Go is the founder and President of MSI-<strong>ECS</strong> Phils.,<br />
Inc. He has more than 25 years of experience in the IT industry<br />
in the Philippines. He started in the IT industry way back in<br />
1982 after graduating from college selling Fujitsu & Apple<br />
computers. He currently holds a Bachelor degree in Electronics<br />
& Communication Engineering from De La Salle University<br />
with an award of Magna Cum Laude and Post Graduate degree<br />
of Masters in Business Administration in Ateneo de Manila<br />
University. Mr. Go was also the past President of COMDDAP<br />
(Computer Manufacturers, Distributors & Dealers Association<br />
of the Philippines). In 1998, Mr Go was named President and<br />
CEO of MSI-Digiland. He was instrumental in growing the<br />
business of MSI in the Philippines making it one of the biggest<br />
IT distributors in the country in less than 5 years.<br />
Senior<br />
Management<br />
Annual Report 2008<br />
p.<br />
25
2008 HIGHLIGHTS<br />
January - March<br />
• The Value Systems held “<strong>ECS</strong> Bus Rally” on the Occasion of<br />
its 20th Anniversary<br />
• The Value Systems hosted “Thank You Party” for Partners on<br />
the Occasion of its 20th Anniversary<br />
• <strong>ECS</strong> Astar Sdn Bhd was Appointed as Distributor for Nortel<br />
• <strong>ECS</strong> Astar Sdn Bhd was Apppointed as Distributor for<br />
HP Procurve<br />
April - June<br />
• The Value Systems was Appointed as Distributor for<br />
Fujitsu Scanners<br />
• The Value Systems Inaugurated “The Fairy Tale Project II”<br />
on Occasion of its 20th Anniversary<br />
• <strong>ECS</strong> Indo Jaya was Appointed as Distributor for Extreme<br />
Networks<br />
• <strong>ECS</strong> Computers (Asia) Pte Ltd was Appointed as Distributor<br />
for OKI<br />
• <strong>ECS</strong> (China) was Appointed as Distributor for Commercial<br />
Products of EMC<br />
• <strong>ECS</strong>(China) was Appointed as Distributor for O2<br />
• <strong>ECS</strong>(China) was Appointed as Distributor for of Huawei /<br />
Symantec Blade Server<br />
July – September<br />
• The Value Systems was Appointed as Distributor for SRAN<br />
(Security Revolution Analysis Network)<br />
• The Value Systems Established Arts & Culture Campaign on<br />
the Occasion of its 20th Anniversary<br />
• <strong>ECS</strong> Astar Sdn Bhd was Appointed as Distributor for<br />
Extreme Network<br />
• <strong>ECS</strong> Computers (Asia) Pte Ltd was Appointed as Distributor<br />
for TriActive<br />
• <strong>ECS</strong> Computers (Asia) Pte Ltd was Appointed as Distributor<br />
for Intermec<br />
• <strong>ECS</strong> (China) was Appointed as Distributor for Fujitsu<br />
Enterprise Series Platform Products<br />
• <strong>ECS</strong>(China) was Appointed as Distributor for Novell<br />
October – December<br />
• <strong>ECS</strong> Indo Jaya was Appointed as Distributor for Intermec<br />
• The Value Systems was Appointed as Distributor for Red Hat<br />
• The Value Systems was Appointed as Distributor for VMware<br />
• The Value Systems Established <strong>ECS</strong> Tree Planting II<br />
Campaign<br />
• <strong>ECS</strong> Pericomp Sdn Bhd was Appointed as Distributor<br />
for Intermec<br />
• <strong>ECS</strong> Pericomp Sdn Bhd was Appointed as Distributor for<br />
EMC Storage<br />
• <strong>ECS</strong> Pericomp Sdn Bhd was Appointed as Distributor for<br />
Blue Coat<br />
• <strong>ECS</strong> Computers (Asia) Pte Ltd was Appointed as Distributor<br />
for Adobe<br />
p.<br />
26<br />
Milestones<br />
Highlights & Awards<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
2008 AWARDS<br />
Group<br />
• <strong>ECS</strong> <strong>Holdings</strong> Ranked 19th in Singapore International<br />
100 Award<br />
China<br />
• <strong>ECS</strong> China Awarded 2nd in Top 100 IT Distribution Firms<br />
by CBINEWS<br />
• <strong>ECS</strong> China Awarded 2nd in Top 100 Distribution Firms by<br />
China Computer Magazine<br />
• Samsung – Top Performing Notebook Distributor FY08<br />
• H3C – Best Network Distributor 2008<br />
• H3C – Top Wholesaler for Integrated Services in Q2/Q3/Q4<br />
& FY08<br />
Thailand<br />
• HP – Top Performing Partner for HP Business Critical Server<br />
– HP Integrity Solution (HP Partner Connect Achievers<br />
Club 2008)<br />
• Symantec – Top Performing Distributor FY 2008<br />
• Symantec – Distribution Partner for Symantec Partner<br />
Program 2009<br />
Malaysia<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Best Wholesaler Of The<br />
Year for Consumer Category FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Wholesaler for<br />
Commercial Storage Works FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Wholesaler Industry<br />
Standard Servers FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Wholesaler for HP<br />
Services FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Wholesaler for<br />
Consumer Imaging & Printing FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Valued Added<br />
Distributor Award FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Master Parts Reseller<br />
of the year Award 2008<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Event Service<br />
Contributor FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Upfront Volume<br />
Services Contributor FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Upfront Value<br />
Service Contributor FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Best Authorized Support<br />
Partner Program FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Best Overall HP Services<br />
Partner Champion FY08<br />
• HP – <strong>ECS</strong> Astar Sdn Bhd Awarded Top Performing Master<br />
Part Reseller in Asia Pacific Replacement Parts business<br />
Singapore<br />
• Achievement as a Singapore 1000 Company 2008<br />
• HP - Awarded as a Distinguished Partner of Hewlett-Packard<br />
Singapore (Sales) Pte Ltd (January-December 2008)<br />
• Sun Microsystems - Asia South Platinum Award FY08<br />
• Sun Microsystems - Asia South, Partner of the Year, SPA<br />
CDP Category, FY08<br />
• Fuji-Xerox - Recognition for Being part of Fuji-Xerox<br />
Printers One Million Record Sales 2004 – 2008<br />
Indonesia<br />
• Cisco – The Best Services Sales Distributor 2008<br />
• Cisco – The Best System Engineer Distributor 2008<br />
• Cisco – Distributor of the Year 2008<br />
• Microsoft – In Recognition of Technological Excellence &<br />
Impact on Customer through Microsoft Product & Services<br />
2008 - 2009<br />
The Philippines<br />
• Acer – ePinnacle Award for Most Outstanding Master ASP<br />
• HP – Outstanding IWS / InkJet Distributor of the Year<br />
• HP – Outstanding SWD / Server Storage Distributor of<br />
the Year<br />
• HP – Outstanding Product Manager of the Year<br />
• Oracle – Value-added Distributor of the Year (Technology)<br />
• Oracle – Partner Sales Representative of the Year<br />
(Technology)<br />
• EMC – Channel Partner of the Year<br />
• EMC – Pre-sales Engineer of the Year<br />
Milestones<br />
Highlights & Awards<br />
Annual Report 2008<br />
p.<br />
27
<strong>ECS</strong> HOLDINGS LIMITED<br />
THAILAND<br />
SINGAPORE CHINA MALAYSIA INDONESIA PHILIPPINES<br />
The Value<br />
Systems Co., Ltd.<br />
100%<br />
<strong>ECS</strong> Computers<br />
(Asia) Pte Ltd<br />
100%<br />
<strong>ECS</strong> Technology<br />
(China) <strong>Limited</strong><br />
100%<br />
<strong>ECS</strong> KUSH<br />
Sdn Bhd<br />
60%<br />
<strong>ECS</strong> Indo<br />
Pte Ltd<br />
90%<br />
<strong>ECS</strong> Infocom<br />
(Phils) Pte. Ltd.<br />
100%<br />
Pacific City<br />
(Asia Pacific) Pte Ltd<br />
100%<br />
<strong>ECS</strong> Technology<br />
(Guangzhou) Co., Ltd<br />
100%<br />
<strong>ECS</strong> KU<br />
Sdn Bhd<br />
100%<br />
PT <strong>ECS</strong><br />
Indo Jaya<br />
100%<br />
MSI-<strong>ECS</strong><br />
Phils., Inc.<br />
49.99%<br />
<strong>ECS</strong> Technology<br />
Co., Ltd<br />
100%<br />
<strong>ECS</strong> Astar<br />
Sdn Bhd<br />
100%<br />
<strong>ECS</strong> International Trading<br />
(Shanghai) Co., <strong>Limited</strong><br />
100%<br />
<strong>ECS</strong> ICT<br />
Sdn Bhd<br />
99%<br />
<strong>ECS</strong> China Technology<br />
(Shanghai) Co., <strong>Limited</strong><br />
100%<br />
<strong>ECS</strong> Pericomp<br />
Sdn Bhd<br />
80%<br />
p.<br />
28<br />
Group<br />
Structure<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Financial Contents<br />
Corporate Governance Statement p. 30<br />
Directors’ Report p. 38<br />
Statement by Directors p. 43<br />
Independent Auditors’ Report p. 44<br />
Balance Sheets p. 46<br />
Consolidated Income Statement p. 47<br />
Consolidated Statement of Changes in Equity p. 48<br />
Consolidated Cash Flow Statement p. 50<br />
Notes to the Financial Statements p. 52<br />
Shareholdings Statistics p. 98<br />
Substantial Shareholders p. 99<br />
Notice of Annual General Meeting p. 100<br />
Proxy Form
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong> (the “Company”) is committed to comply with the Code of Corporate Governance 2005 issued by the Corporate<br />
Governance Committee. It believes in maintaining a high standard of corporate governance and has put in place policies and practices that<br />
will help to protect its shareholders’ interest and enhance long term shareholder value. This report describes the main corporate governance<br />
practices that are adopted by the Company.<br />
(A) BOARD MATTERS<br />
The Board’s Conduct of its Affairs<br />
Principle 1 :<br />
Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible<br />
for the success of the company. The Board works with Management to achieve this and the Management remains accountable<br />
to the Board.<br />
The Board’s role is to:<br />
a) provide entrepreneurial leadership, set strategic aims, and ensure that the necessary financial and human resources are in place for the<br />
company to meet its objectives;<br />
b) establish a framework of prudent and effective controls which enables risk to be assessed and managed;<br />
c) review management performance; and<br />
d) set the company’s values and standards, and ensure that obligations to shareholders and others are understood and met.<br />
The Board meets to consider the following, without limitation, corporate events and/or actions:<br />
a) approval of quarterly results announcements;<br />
b) approval of annual report and accounts;<br />
c) declaration of interim dividend and proposal of final dividends;<br />
d) approval of corporate strategy;<br />
e) authorisation of major transactions;<br />
f) review and approval of annual budgets;<br />
g) compensation of senior management personnel; and<br />
h) convening of shareholders’ meetings.<br />
All directors must objectively take decisions in the interests of the Company.<br />
The Board has delegated the day-to-day management and running of the Company to the management headed by our Group Chief<br />
Executive Officer (“Group CEO”) and Executive Director, Mr Tay Eng Hoe, while reserving certain key issues and policies for its approval.<br />
Additionally, to facilitate effective management, certain functions have been delegated to the following sub-committees, each of which has<br />
its own written terms of reference:<br />
a) the Nominating Committee;<br />
b) the Compensation Committee; and<br />
c) the Audit Committee.<br />
Newly-appointed directors are given briefings by the Management on the Group’s activities and its strategic directions. Changes to<br />
regulations and accounting standards are monitored closely by Management. To keep pace with regulatory changes, where these changes<br />
have an important bearing on the Company’s or directors’ disclosure obligations, directors are briefed either during Board meetings or at<br />
specially convened sessions conducted by professionals.<br />
p.<br />
30<br />
Corporate<br />
Governance Statement<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
The Board intends to hold about four meetings each year and shall also hold informal meetings regularly. The Company’s Articles of<br />
Association provide for telephonic and videoconference meetings. The number of Board meetings held since the date of the last annual<br />
report, as well as the attendance of every Board member at those meetings is as follows:<br />
DIRECTORS’ ATTENDANCE AT BOARD MEETINGS<br />
Board Member<br />
Board<br />
No. of Meetings Attended<br />
Li Jia Lin (appointed on 31 December 2007) 4 3<br />
Liu Wei 4 3<br />
Tay Eng Hoe 4 4<br />
Narong Intanate 4 4<br />
Foo Sen Chin 4 4<br />
Leong Horn Kee 4 4<br />
Tan Hup Foi 4 4<br />
Koh Soo Keong (appointed on 11 February 2008) 4 4<br />
Board Composition and Guidance<br />
Principle 2 :<br />
There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate<br />
affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to<br />
dominate the Board’s decision making.<br />
The Board comprises eight directors of which five are non-executive directors (including three independent directors) and three executive<br />
directors. The Company places great importance on the quality of its Board of Directors. The Group achieves this by appointing to its<br />
Board highly respected individuals and prominent leaders in their respective professions. The Board comprises individuals with proven<br />
track record in the public and/or corporate sector, and each is a highly respected member of the business community. As a group, they<br />
provide core competencies such as accounting or finance, business or management experience, industry knowledge, strategic planning and<br />
customer-based experience or knowledge. Key information regarding the directors is given in the Board of Directors section on pages 20 to<br />
22 of the annual report.<br />
Chairman and Chief Executive Officer<br />
Principle 3 :<br />
There should be a clear division of responsibilities at the top of the company - the working of the Board and the executive<br />
responsibility of the company’s business - which will ensure a balance of power and authority, such that no one individual<br />
represents a considerable concentration of power.<br />
Mr Li Jia Lin, a non-executive director, is the Chairman of the Company and Mr Tay Eng Hoe is the Group CEO. They each perform separate<br />
functions to ensure that there is an appropriate balance of power and authority, and that accountability and independent decision-making<br />
are not compromised. The Chairman is responsible for the functioning of the Board. The Group CEO has full executive responsibilities<br />
over the running of the Group's business, the business direction and operational decisions of the Group. No individual or small group of<br />
individuals dominate the Board's decision making process.<br />
Corporate<br />
Governance Statement<br />
Annual Report 2008<br />
p.<br />
31
Board Membership & Board Performance<br />
Principle 4 :<br />
Principle 5 :<br />
There should be a formal and transparent process for the appointment of new directors to the Board.<br />
There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the<br />
effectiveness of the Board.<br />
The Nominating Committee was formed on 6 January 2003 and comprises four directors, including three independent directors, Mr Tan<br />
Hup Foi, Mr Leong Horn Kee, Mr Koh Soo Keong and one executive director, Mr Tay Eng Hoe. Mr Tan Hup Foi is the Chairman of the<br />
Nominating Committee.<br />
The role of the Nominating Committee is to perform the following functions:<br />
a) identifies and reviews all nominations for Board appointments and re-nominations of directors;<br />
b) assesses the effectiveness of the Board as a whole and the contribution by each individual director to the effectiveness of the Board;<br />
and<br />
c) determines whether or not a Director is independent.<br />
In accordance with the Company’s Articles of Association, at each Annual General Meeting, one-third of the Board shall retire from office<br />
by rotation provided that no director holding office as Managing or Joint Managing Director shall be subject to retirement by rotation or<br />
be taken into account in determining the number of directors to retire.<br />
Access to Information<br />
Principle 6 :<br />
In order to fulfil their responsibilities, board members should be provided with complete, adequate and timely information<br />
prior to board meetings and on an on-going basis.<br />
All directors are provided with complete, adequate and timely information prior to meeting and on a regular basis to enable them to perform<br />
their roles properly. All directors have separate and independent access to senior management and the company secretary. The company<br />
secretary has defined roles and responsibilities and attends all Board and sub-committee meetings of the Company. Should directors,<br />
whether as a group or individually, need independent professional advice in the furtherance of their duties, cost of such professional advice<br />
will be borne by the Company.<br />
B) REMUNERATION MATTERS<br />
Procedures for Developing Remuneration Policies<br />
Principle 7 :<br />
There should be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director<br />
should be involved in deciding his own remuneration.<br />
The Compensation Committee oversees the general compensation of employees of our Group with a goal to motivate, recruit and retain<br />
employees and directors through competitive compensation and progressive policies. In particular, the Compensation Committee is<br />
responsible for overseeing our employee profit sharing scheme as well as the share incentives, including the <strong>ECS</strong> Share Option Scheme I,<br />
<strong>ECS</strong> Share Option Scheme II and <strong>ECS</strong> Performance Shares Scheme. The Compensation Committee of the Board comprises Mr Koh Soo<br />
Keong, Mr Leong Horn Kee, and Mr Tan Hup Foi. Mr Koh Soo Keong is the Chairman of the Compensation Committee.<br />
p.<br />
32<br />
Corporate<br />
Governance Statement<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Level and Mix of Remuneration; Disclosure of Remuneration<br />
Principle 8 :<br />
Principle 9 :<br />
The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company<br />
successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive<br />
directors’ remuneration should be structured so as to link rewards to corporate and individual performance.<br />
Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for<br />
setting remuneration, in the company’s annual report. It should also provide disclosure in relation to its remuneration policies<br />
to enable investors to understand the link between remuneration paid to directors and key executives, and performance.<br />
The Group’s remuneration policy is to provide a competitive remuneration package so as to attract, retain and motivate directors and senior<br />
management of the required experience and expertise to run the Group successfully. In setting remuneration packages for executive directors<br />
and senior management of the Group, the pay and employment conditions within the industry and in comparable companies are taken<br />
into consideration.<br />
The compensation package of the Group’s executive directors including its Group CEO and senior management consists of salary, allowances,<br />
share options and bonuses which are conditional upon meeting certain performance targets.<br />
Non-executive directors have remuneration packages which consist of a directors’ fee component and a share option component pursuant<br />
to the Company’s Share Option Scheme. The directors’ fee policy is based on a scale of fees divided into basic retainer fees as a director and<br />
additional fees for serving on board committees. Directors’ fees for non-executive directors are subject to the approval of shareholders at the<br />
Annual General Meeting. The report on directors’ remuneration is given below:<br />
Summary compensation table for the year ended 31 December 2008<br />
Salary<br />
%<br />
Bonus<br />
%<br />
Fees<br />
%<br />
Allowances<br />
and other<br />
Benefits<br />
%<br />
Name of Director<br />
$1,000,000 to below $1,250,000<br />
Tay Eng Hoe 50 49 – 1 100<br />
$750,000 to below $1,000,000<br />
- – – – – –<br />
$500,000 to below $750,000<br />
Narong Intanate 37 53 – 10 100<br />
Foo Sen Chin 28 61 – 11 100<br />
$250,000 to below $500,000<br />
- – – – – –<br />
Below $250,000<br />
Li Jia Lin – – – – –<br />
Liu Wei 100 – – – 100<br />
Leong Horn Kee – – 100 – 100<br />
Tan Hup Foi – – 100 – 100<br />
Koh Soo Keong – – – – –<br />
Total<br />
%<br />
Corporate<br />
Governance Statement<br />
Annual Report 2008<br />
p.<br />
33
Executives’ Remuneration<br />
Rather than setting out the names of the top five key executives who are not also directors of the Company, we have shown a Group-wide<br />
cross-section of executive remuneration by number of employees earning $100,000 upwards in bands of $250,000 below. This should give<br />
a macro view of the remuneration pattern in the Group, while maintaining confidentiality of staff remuneration matters.<br />
NO. OF EXECUTIVES IN REMUNERATION BANDS<br />
Total Compensation<br />
(S$)<br />
No. of<br />
Employees<br />
(Note 1)<br />
Total Variable<br />
Compensation<br />
(Note 2)<br />
Total Fixed<br />
Compensation<br />
(Note 3)<br />
Total<br />
Remuneration<br />
$100,000 to $249,999 24 $1,735,944 $1,942,618 $3,678,562<br />
$250,000 to $499,999 8 $1,547,384 $1,704,997 $3,252,381<br />
$500,000 to $749,999 2 $ 718,594 $ 365,913 $1,084,507<br />
Total 34 $4,001,922 $4,013,528 $8,015,450<br />
Notes :<br />
1. Including employees in local and overseas subsidiaries<br />
2. Sales commission, bonus and other statutory contributions<br />
3. Inclusive salaries, AWS, related CPF and other statutory contributions, allowances and fringe-benefits.<br />
There are no employees in the Group who are immediate family members of a director or the Group CEO.<br />
C) ACCOUNTABILITY AND AUDIT<br />
Accountability<br />
Principle 10 : The Board should present a balanced and understandable assessment of the company’s performance, position and<br />
prospects.<br />
In presenting the annual financial statements and quarterly announcements to shareholders, it is the aim of the Board to provide the<br />
shareholders with a detailed analysis, explanation and assessment of the Group’s financial position and prospects. On a quarterly basis, Board<br />
members are provided with business and financial reports comparing actual performance with budget and with prior year comparisons with<br />
highlights on key business indicators and any significant business development. In addition, the Group CEO communicates regularly with<br />
Board members through informal meetings and phone calls with appropriate updates on Company developments.<br />
p.<br />
34<br />
Corporate<br />
Governance Statement<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Audit Committee<br />
Principle 11 : The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and<br />
duties.<br />
The Audit Committee comprises three members, of which all members, including the Chairman, are independent. The members of the<br />
Audit Committee at the date of this report are:<br />
Leong Horn Kee<br />
Tan Hup Foi<br />
Koh Soo Keong<br />
Chairman<br />
Member<br />
Member<br />
The Audit Committee meets periodically to perform the following functions:-<br />
a) reviewing the quarterly, half-yearly and annual financial statements before recommending them to the Board for approval;<br />
b) reviewing interested person transactions (as defined in Chapter 9 of the Listing Manual (“Listing Manual”) of the Singapore Exchange<br />
Securities Trading <strong>Limited</strong> (“SGX-ST”), including such transactions conducted under the shareholders' general mandate previously<br />
obtained;<br />
c) reviewing with external auditors the audit plan, their evaluation of the systems of internal controls, their annual reports and their<br />
management letters and management’s response;<br />
d) reviewing and recommending to the Board the re-appointment of the external auditors, taking into consideration the non-audit services<br />
rendered by the external auditors and being satisfied that the nature and extent of such services will not prejudice the independence and<br />
objectivity of the external auditors;<br />
e) reviewing the scope of internal audit procedures and the results and effectiveness of the internal audit; and<br />
f) considering other matters as requested by the Board.<br />
The Audit Committee has full access to and co-operation of the Company's management and the internal auditors and has full discretion to<br />
invite any director or executive officer to attend its meetings. The auditors, both internal and external, have unrestricted access to the Audit<br />
Committee. Reasonable resources have been made available to the Audit Committee to enable them to discharge their duties.<br />
The Audit Committee held five meetings since the date of the last annual report. The Audit Committee reviewed the Interested Person<br />
Transactions for the year ended 31 December 2008 in accordance with the terms of the Shareholders' Mandate for such transactions as were<br />
approved on 30 April 2008. Interested Person Transactions with a total value of $13.9 million were examined and the Audit Committee<br />
is of the opinion that the said transactions were carried out on prevailing commercial terms and did not prejudice the interest of the<br />
shareholders of the Company.<br />
The Audit Committee had reviewed and confirmed that the methods and procedures for determining the transaction prices relating to<br />
Interested Person Transactions have not changed since the last shareholders' approval. The Audit Committee also confirms that the methods<br />
and procedures are sufficient to ensure that the transactions will be carried out on normal terms and will not be prejudicial to the interests<br />
of the Company and its minority shareholders.<br />
Corporate<br />
Governance Statement<br />
Annual Report 2008<br />
p.<br />
35
The Audit Committee had reviewed the non-audit services provided by the external auditors and is satisfied with the independence of the<br />
auditors. The Audit Committee has recommended to the Board that the auditors, KPMG LLP, be nominated for re-appointment at the<br />
forthcoming Annual General Meeting of the Company.<br />
Meetings and attendance are as follows:<br />
Board<br />
No. of Meetings Attended<br />
Name of Director<br />
Leong Horn Kee (Chairman) 5 5<br />
Tan Hup Foi 5 5<br />
Koh Soo Keong 5 5<br />
Internal Controls<br />
Principle 12 : The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’<br />
investment and the company’s assets.<br />
The Board acknowledges that it is responsible for the Group’s system of internal control. It believes that in the absence of any evidence to<br />
the contrary and from due enquiry, the system of internal controls that has been maintained by the Group throughout the financial year is<br />
adequate to meet the needs of the Group in its current business environment. However, the Board notes that the system of internal controls<br />
is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not<br />
absolute assurance against material misstatements or loss.<br />
Internal Audit<br />
Principle 13 : The Company should establish an internal audit function that is independent of the activities it audits.<br />
The Group has an internal audit department which is independent of the activities it audits. It performs financial audits, implements<br />
operational and compliance controls. The Internal Auditor reports primarily to the Chairman of the Audit Committee and administratively<br />
to the Group CEO. The Internal Auditor plans its internal audit work in consultation with, but independent of, Management, and its<br />
yearly plan is submitted to the Audit Committee for approval at the beginning of each year. The Internal Auditor reports to the Audit<br />
Committee quarterly regarding its findings. The Audit Committee also meets with the Internal Auditor at least once during the year without<br />
the presence of Management. The Audit Committee also ensures that the internal audit function is adequately resourced, and will review<br />
annually the adequacy of the internal audit function.<br />
The internal auditors are expected to meet or exceed the standards set by nationally or internationally recognised professional bodies<br />
including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.<br />
p.<br />
36<br />
Corporate<br />
Governance Statement<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
D) COMMUNICATION WITH SHAREHOLDERS<br />
Principle 14 : Companies should engage in regular, effective and fair communication with shareholders.<br />
Principle 15 : Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to<br />
communicate their views on various matters affecting the company.<br />
The Group does not practice selective disclosure. In line with continuous obligations of the Group pursuant to the Listing Manual and the<br />
Companies Act, Chapter 50, of Singapore, the Board’s policy is that all shareholders are informed of all major developments of the Group.<br />
Price-sensitive information is released publicly, and quarterly results and annual reports are announced or issued within the mandatory<br />
period and are available on the Group’s website. Thereafter, a briefing by Management is held jointly for the media and analysts every half<br />
yearly. All shareholders of the Group receive the annual report and notice of Annual General Meeting. Shareholders are encouraged to attend<br />
the Annual General Meeting to ensure a high level of accountability and to stay informed of the Group’s strategy and goals.<br />
E) INTERESTED PARTY TRANSACTIONS<br />
The Group has adopted an internal policy in respect of any transactions with interested persons and has procedures established for the review<br />
and approval of the Group’s Interested Party Transactions (“IPT”).<br />
Pursuant to Rule 907 of the Listing Manual, the Group has the following IPTs entered into during the financial year, together with the<br />
corresponding aggregate value of the IPTs entered into with the same interested person, are disclosed as follows:<br />
Name of Interested Person<br />
(A) Transactions for the sale of goods and<br />
services with Vnet Capital Co., Ltd<br />
and its subsidiaries<br />
(B) Transactions for the sale of goods and<br />
services with Guangzhou<br />
Jia Dou Ji Tuan Co Ltd and<br />
its subsidiaries<br />
Aggregate value of all IPTs during<br />
the financial year under review<br />
(excluding transactions less than<br />
$100,000 and transactions conducted<br />
under shareholders’ mandate pursuant to<br />
Rule 920 of Listing Manual of SGX-ST)<br />
Aggregate value of all IPTs conducted<br />
under shareholders’ mandate<br />
pursuant to Rule 920 of Listing<br />
Manual of SGX-ST (excluding<br />
transactions less than $100,000)<br />
– $2,033,141<br />
– $424,948<br />
Corporate<br />
Governance Statement<br />
Annual Report 2008<br />
p.<br />
37
We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial<br />
year ended 31 December 2008.<br />
Directors<br />
The directors in office at the date of this report are as follows:-<br />
Li Jia Lin<br />
(Chairman)<br />
Liu Wei<br />
(Vice-Chairman)<br />
Tay Eng Hoe<br />
(Group Chief Executive Officer)<br />
Narong Intanate<br />
Foo Sen Chin<br />
Leong Horn Kee<br />
Tan Hup Foi<br />
Koh Soo Keong (Appointed on 11 February 2008)<br />
Directors’ Interests<br />
According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), no director<br />
who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company or of related<br />
corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year.<br />
Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose objects are, or one of<br />
whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the<br />
Company or any other body corporate.<br />
Since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the<br />
Company or a related corporation with the director, or with a firm of which he is a member or with a company in which he has a substantial<br />
financial interest.<br />
There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January<br />
2009.<br />
Except as disclosed under the “Share Options” section of this report, neither at the end of, nor at any time during the financial year, was<br />
the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire<br />
benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.<br />
During the financial year, the Company and certain of its subsidiaries have, in the normal course of business entered into transactions with<br />
companies in which Mr Narong Intanate and Mr Liu Wei have an interest. These transactions include the purchase and sale of information<br />
technology products and services of $15,231,472 (2007: $2,115,875) and $13,836,284 (2007: $10,840,896) respectively and are carried<br />
out on normal commercial terms.<br />
However, the directors have not received nor will they be entitled to receive any benefits arising out of these transactions other than those<br />
which they may be entitled to as shareholders of those companies or as a member of the firm.<br />
p.<br />
38<br />
Directors’<br />
Report<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Directors’ Interests (Cont’d)<br />
Except as disclosed above and in note 32 to the financial statements, since the end of the last financial year, no director has received or<br />
become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm<br />
of which he is a member or with a company in which he has a substantial financial interest.<br />
Share Options<br />
(a)<br />
Share Option Scheme<br />
The <strong>ECS</strong> Share Option Scheme II (“Scheme II”) was approved and adopted by its members at an Extraordinary General Meeting<br />
held on 13 December 2000. Scheme II provides an opportunity for employees and directors, including non-executive directors,<br />
of the Group who have contributed significantly to the growth and performance of the Group to participate in the equity of the<br />
Company.<br />
The above scheme is administered by the Compensation Committee (the “Committee”) which comprises the following directors:-<br />
Koh Soo Keong (Chairman)<br />
Leong Horn Kee<br />
Tan Hup Foi<br />
Details of Scheme II were set out in the Directors’ Report for the year ended 31 December 2000.<br />
(b)<br />
Options Granted<br />
During the financial year, no option was granted under Scheme II.<br />
(c)<br />
Issue of Shares Under Option<br />
In 2007, the Company issued a total of 1,761,000 ordinary shares of $0.10 each fully paid at par for cash upon the exercise of options<br />
granted under Scheme II.<br />
(d)<br />
Unissued Shares under Option<br />
At the end of the financial year, there are no unissued shares under the share option schemes of the Company.<br />
Directors’<br />
Report<br />
Annual Report 2008<br />
p.<br />
39
Share Options (Cont’d)<br />
The details of options granted and exercised are as follows:-<br />
Name of Participants<br />
Options<br />
Granted<br />
Aggregate<br />
Options<br />
Granted<br />
Aggregate<br />
Options<br />
Exercised<br />
Aggregate<br />
Options<br />
Forfeited/<br />
Lapsed<br />
Aggregate<br />
Options<br />
Outstanding<br />
[1] [2] [3] [4] [5]<br />
Executive directors<br />
- Tay Eng Hoe - 4,976,000 (2,226,000) (2,750,000) -<br />
- Narong Intanate - 9,506,000 (8,906,000) (600,000) -<br />
- Foo Sen Chin - 3,860,000 (3,340,000) (520,000) -<br />
Non-executive directors<br />
- Leong Horn Kee - 278,000 - (278,000) -<br />
- Koh Soo Keong<br />
(appointed on 11 February 2008) - 120,000 - (120,000) -<br />
Former directors<br />
- Wong Heng Chong - 1,713,000 (1,113,000) (600,000) -<br />
- Lin Chien - 128,000 - (128,000) -<br />
- Chay Yee Meng - 188,000 - (188,000) -<br />
- Teo Ek Tor - 130,000 - (130,000) -<br />
- Wang Fangmin - 50,000 - (50,000) -<br />
- Hsieh Fu Hua - 88,000 - (88,000) -<br />
- Lee Suet Fern - 258,000 - (258,000) -<br />
Employees (including executive officers)<br />
- Foong Kam Tho - 8,629,000 (6,679,000) (1,950,000) -<br />
- Other employees - 23,292,000 - (23,292,000) -<br />
- 53,216,000 (22,264,000) (30,952,000) -<br />
[1] Options granted during the financial year under review.<br />
[2] Aggregate options granted since commencement of the schemes to the end of the financial year under review.<br />
[3] Aggregate options exercised since commencement of the schemes to the end of the financial year under review.<br />
[4] Aggregate options lapsed since commencement of the schemes to the end of the financial year under review.<br />
[5] Aggregate options outstanding as at end of the financial year under review.<br />
p.<br />
40<br />
Directors’<br />
Report<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Share Options (Cont’d)<br />
Except as disclosed, since the commencement of the option schemes:-<br />
(i)<br />
(ii)<br />
(iii)<br />
no option has been granted to the controlling shareholders of the Company or their associates;<br />
no participant under the schemes has been granted 5% or more of the total options available under the schemes; and<br />
no option has been granted to employees of subsidiaries under the schemes.<br />
The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any right to participate in any<br />
share issue of any other company.<br />
Except as disclosed above, there were:-<br />
(i)<br />
(ii)<br />
(iii)<br />
no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries;<br />
no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; and<br />
no unissued shares of the Company or its subsidiaries under option at the end of the financial year.<br />
<strong>ECS</strong> Performance Share Scheme<br />
The <strong>ECS</strong> Performance Share Scheme (the “Scheme”) was approved at the Company’s Extraordinary General Meeting held on 1 December<br />
2006. The Scheme is administered by the Compensation Committee which comprises the Non-Executive Directors Messrs Koh Soo<br />
Keong, Leong Horn Kee and Tan Hup Foi.<br />
Group Executives who have attained the age of 21 years on or before the date of grant of the Award (as defined below), Group Executive<br />
Directors and Non-Executive Directors are eligible to participate in the Scheme (“Participants”). The Scheme is to reward Participants by<br />
award of existing Shares held as treasury shares in the Company (“Awards”), which are given free of charge to the Participants according to<br />
the extent to which their performance targets set under the Scheme are achieved at the end of a specified performance period.<br />
Since the commencement of the Scheme, no Awards have been granted.<br />
Audit Committee<br />
The members of the Audit Committee during the year and at the date of this report are:-<br />
Leong Horn Kee<br />
Tan Hup Foi<br />
Koh Soo Keong<br />
(Chairman, Independent director)<br />
(Independent director)<br />
(Independent director)<br />
The Audit Committee performs the functions specified by section 201B of the Companies Act, the SGX Listing Manual and the Code of<br />
Corporate Governance.<br />
Directors’<br />
Report<br />
Annual Report 2008<br />
p.<br />
41
Audit Committee (Cont’d)<br />
The Audit Committee held five meetings since the last directors’ report. In performing its functions, the Audit Committee met with the<br />
Company’s external and internal auditors to discuss the scope of their work and the results of their examination and evaluation of the<br />
Company’s internal accounting control system.<br />
The Audit Committee also reviewed the following:-<br />
• Assistance provided by the Company’s officers to the internal and external auditors;<br />
• Quarterly financial information and annual financial statements of the Group and the Company prior to their submission to the<br />
directors of the Company for adoption; and<br />
• Interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange).<br />
The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority<br />
and discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment<br />
of the external auditors and reviews the level of audit and non-audit fees.<br />
The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of<br />
Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the<br />
Company.<br />
Auditors<br />
The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.<br />
On behalf of the Board of Directors<br />
Li Jia Lin<br />
Director<br />
Tay Eng Hoe<br />
Director<br />
27 February 2009<br />
p.<br />
42<br />
Directors’<br />
Report<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
In our opinion:<br />
(a)<br />
(b)<br />
the financial statements set out on pages 46 to 97 are drawn up so as to give a true and fair view of the state of affairs of the Group and<br />
of the Company as at 31 December 2008 and of the results, changes in equity and cash flows of the Group for the year ended on that<br />
date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards;<br />
and<br />
at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they<br />
fall due.<br />
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.<br />
On behalf of the Board of Directors<br />
Li Jia Lin<br />
Director<br />
Tay Eng Hoe<br />
Director<br />
27 February 2009<br />
Statement by<br />
Directors<br />
Annual Report 2008<br />
p.<br />
43
Members of the Company<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong><br />
We have audited the financial statements of <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong> (the Company) and its subsidiaries (the Group), which comprise the<br />
balance sheets of the Group and the Company as at 31 December 2008, the income statement, statement of changes in equity and cash<br />
flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set<br />
out on pages 46 to 97.<br />
Management’s responsibility for the financial statements<br />
Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the<br />
Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes:<br />
(a)<br />
(b)<br />
(c)<br />
devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are<br />
safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded<br />
as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of<br />
assets;<br />
selecting and applying appropriate accounting policies; and<br />
making accounting estimates that are reasonable in the circumstances.<br />
Auditors’ responsibility<br />
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with<br />
Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to<br />
obtain reasonable assurance whether the financial statements are free from material misstatement.<br />
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The<br />
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial<br />
statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s<br />
preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances,<br />
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the<br />
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the<br />
overall presentation of the financial statements.<br />
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.<br />
p.<br />
44<br />
Independent<br />
Auditors’ Report<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Opinion<br />
In our opinion:<br />
(a)<br />
(b)<br />
the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with<br />
the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group<br />
and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group for the year ended on<br />
that date; and<br />
the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore<br />
of which we are the auditors have been properly kept in accordance with the provisions of the Act.<br />
KPMG LLP<br />
Public Accountants and<br />
Certified Public Accountants<br />
Singapore<br />
27 February 2009<br />
Independent<br />
Auditors’ Report<br />
Annual Report 2008<br />
p.<br />
45
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Non-Current Assets<br />
Property, plant and equipment 3 10,918 10,599 225 198<br />
Goodwill on consolidation 4 33,522 33,522 - -<br />
Subsidiaries 5 - - 174,374 107,774<br />
Interest in associate 6 7,284 7,019 - -<br />
Other financial assets 7 303 718 151 151<br />
Deferred tax assets 8 4,257 2,314 - -<br />
56,284 54,172 174,750 108,123<br />
Current Assets<br />
Inventories 9 175,292 163,094 - -<br />
Trade and other receivables 10 444,662 428,890 46,697 82,014<br />
Cash and cash equivalents 14 50,518 39,425 2,087 470<br />
670,472 631,409 48,784 82,484<br />
Total Assets 726,756 685,581 223,534 190,607<br />
Equity Attributable to Equity Holders of the Company<br />
Share capital 15 112,815 112,815 112,815 112,815<br />
Reserves 16 124,986 99,838 20,741 11,907<br />
237,801 212,653 133,556 124,722<br />
Minority Interests 14,285 10,983 - -<br />
Total Equity 252,086 223,636 133,556 124,722<br />
Non-Current Liabilities<br />
Financial liabilities 18 66,818 5 66,600 -<br />
Deferred income 19 978 968 - -<br />
Deferred tax liabilities 8 886 308 27 27<br />
68,682 1,281 66,627 27<br />
Current Liabilities<br />
Financial liabilities 18 126,596 190,533 20,660 62,790<br />
Deferred income 19 556 302 - -<br />
Trade and other payables 20 275,424 267,111 2,594 2,964<br />
Current tax payable 3,412 2,718 97 104<br />
405,988 460,664 23,351 65,858<br />
Total Liabilities 474,670 461,945 89,978 65,885<br />
Total Equity and Liabilities 726,756 685,581 223,534 190,607<br />
p.<br />
46<br />
Balance<br />
Sheets<br />
As at 31 December 2008<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong><br />
.<br />
The accompanying notes form an integral part of these financial statements.
Note 2008 2007<br />
$’000 $’000<br />
Revenue 22 2,949,871 2,789,415<br />
Cost of sales (2,800,395) (2,655,162)<br />
Gross profit 149,476 134,253<br />
Other income 4,915 4,176<br />
Selling and distribution expenses (60,057) (55,023)<br />
General and administrative expenses (42,090) (40,893)<br />
Profit from operations 23 52,244 42,513<br />
Finance costs 24 (11,350) (8,730)<br />
Share of profit of associate, net of tax 492 825<br />
Profit before income tax 41,386 34,608<br />
Income tax expense 25 (8,115) (8,445)<br />
Profit for the year 33,271 26,163<br />
Attributable to:<br />
Equity holders of the Company 29,386 23,352<br />
Minority interests 3,885 2,811<br />
33,271 26,163<br />
Earnings per share 26<br />
- Basic 8.0 cents 6.4 cents<br />
- Fully diluted 8.0 cents 6.4 cents<br />
.<br />
The accompanying notes form an integral part of these financial statements.<br />
Consolidated<br />
Income Statement<br />
Year Ended 31 December 2008<br />
Annual Report 2008<br />
p.<br />
47
Total<br />
attributable<br />
to equity<br />
Share Dividend General<br />
Currency<br />
translation Accumulated<br />
holders<br />
of the Minority<br />
capital reserve reserve reserve profits Company interests Total<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
2007<br />
At 1 January 2007 112,016 5,655 - (5,623) 78,007 190,055 8,248 198,303<br />
Transfer of reserves - - 669 - (669) - - -<br />
Translation differences relating<br />
to financial statements of<br />
subsidiaries - - - 3,903 - 3,903 (76) 3,827<br />
Net gains/(losses) recognised<br />
directly in equity - - - 3,903 - 3,903 (76) 3,827<br />
Net profit for the year - - - - 23,352 23,352 2,811 26,163<br />
Total recognised income and<br />
expense for the year - - - 3,903 23,352 27,255 2,735 29,990<br />
Issue of shares 799 - - - - 799 - 799<br />
Final tax-exempt one-tier<br />
dividends paid at 1.50 cents per<br />
share for 2006 - (5,456) - - - (5,456) - (5,456)<br />
Proposed tax-exempt one-tier<br />
dividends of 1.50 cents per<br />
share for 2007 - 5,480 - - (5,480) - - -<br />
At 31 December 2007 112,815 5,679 669 (1,720) 95,210 212,653 10,983 223,636<br />
p.<br />
48<br />
The accompanying notes form an integral part of these financial statements.<br />
Consolidated Statement of<br />
Changes in Equity<br />
Year Ended 31 December 2008<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Total<br />
attributable<br />
to equity<br />
Share<br />
capital<br />
Dividend<br />
reserve<br />
General<br />
reserve<br />
Currency<br />
translation<br />
reserve<br />
Accumulated<br />
profits<br />
holders<br />
of the<br />
Company<br />
Minority<br />
interests Total<br />
$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
2008<br />
At 1 January 2008 112,815 5,679 669 (1,720) 95,210 212,653 10,983 223,636<br />
Transfer of reserves - - 1,754 (7) (1,747) - - -<br />
Translation differences relating<br />
to financial statements of<br />
subsidiaries - - - 1,250 (8) 1,242 (583) 659<br />
Net gains/(losses) recognised<br />
directly in equity - - - 1,250 (8) 1,242 (583) 659<br />
Net profit for the year - - - - 29,386 29,386 3,885 33,271<br />
Total recognised income and<br />
expense for the year - - - 1,250 29,378 30,628 3,302 33,930<br />
Reversal of dividend reserve - (199) - - 199 - - -<br />
Final tax-exempt one-tier<br />
dividends paid at 1.50 cents per<br />
share for 2007 - (5,480) - - - (5,480) - (5,480)<br />
Proposed tax-exempt one-tier<br />
dividends of 2.70 cents per<br />
share for 2008 - 9,865 - - (9,865) - - -<br />
At 31 December 2008 112,815 9,865 2,423 (477) 113,175 237,801 14,285 252,086<br />
The accompanying notes form an integral part of these financial statements.<br />
Consolidated Statement of<br />
Changes in Equity<br />
Year Ended 31 December 2008<br />
Annual Report 2008<br />
p.<br />
49
Note 2008 2007<br />
$’000 $’000<br />
Operating Activities<br />
Profit before income tax 41,386 34,608<br />
Adjustments for:<br />
Share of profit of associate (492) (825)<br />
Net fair value changes on financial instruments - 3,533<br />
Depreciation of property, plant and equipment 2,915 3,416<br />
Loss on disposal of property, plant and equipment 171 54<br />
Gain on disposal of other assets (286) -<br />
Finance costs 11,350 8,730<br />
Interest income (272) (477)<br />
Negative goodwill arising from additional investment in subsidiary - (55)<br />
Fair value loss/(gain) on call option 102 (756)<br />
Operating profit before working capital changes 54,874 48,228<br />
Changes in working capital:<br />
Inventories (14,050) (39,707)<br />
Trade and other receivables (21,386) (75,266)<br />
Trade and other payables 5,871 81,623<br />
Cash generated from operations 25,309 14,878<br />
Income taxes paid (8,944) (7,649)<br />
Cash flows from operating activities 16,365 7,229<br />
Investing Activities<br />
Interest received 272 477<br />
Purchases of property, plant and equipment (3,514) (3,411)<br />
Proceeds from disposal of property, plant and equipment 29 88<br />
Purchase of other assets (17) -<br />
Proceeds from sale of other assets 674 -<br />
Cash flows used in investing activities (2,556) (2,846)<br />
p.<br />
50<br />
The accompanying notes form an integral part of these financial statements.<br />
Consolidated Cash<br />
Flow Statement<br />
Year Ended 31 December 2008<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Note 2008 2007<br />
$’000 $’000<br />
Financing Activities<br />
Interest paid (11,430) (9,367)<br />
Proceeds from issue of shares - 799<br />
Proceeds from bank loans/trade financing 697,339 802,540<br />
Repayment of bank loans/trade financing (684,782) (782,304)<br />
Payment of finance lease instalments (43) (26)<br />
Dividends paid to equity holders of the Company (5,480) (5,456)<br />
Repayment of loans from minority shareholders of a subsidiary (13) (4,563)<br />
Repayment of loan to associate 1,253 4,605<br />
Cash flows (used in)/from financing activities (3,156) 6,228<br />
Net increase in cash and cash equivalents 10,653 10,611<br />
Cash and cash equivalents at beginning of the year 39,425 29,381<br />
Effect of exchange rate changes on balances held in foreign currencies (576) (567)<br />
Cash and cash equivalents at end of the year 14 49,502 39,425<br />
The accompanying notes form an integral part of these financial statements.<br />
Consolidated Cash<br />
Flow Statement<br />
Year Ended 31 December 2008<br />
Annual Report 2008<br />
p.<br />
51
The financial statements were authorised for issue by the directors on 27 February 2009.<br />
1 Domicile and Activities<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong> (the “Company”) is incorporated in the Republic of Singapore and has its registered office at 19 Kallang<br />
Avenue, #07-153, Singapore 339410.<br />
The principal activities of the Company are those relating to investment holding and the distribution of information technology<br />
products. The principal activities of the subsidiaries are set out in note 5 to the financial statements.<br />
The immediate and ultimate holding company is VST <strong>Holdings</strong> <strong>Limited</strong>, a company incorporated in the Cayman Islands.<br />
The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group”) and the Group’s<br />
interests in associates.<br />
2 Summary of Significant Accounting Policies<br />
2.1 Basis of Preparation<br />
The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS).<br />
The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities as<br />
described below.<br />
The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial information<br />
presented in Singapore dollars has been rounded to the nearest thousand, unless stated otherwise.<br />
The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions<br />
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results<br />
may differ from these estimates.<br />
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the<br />
period in which the estimates are revised and in any future periods affected.<br />
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies<br />
that have the most significant effect on the amounts recognised in the financial statements are described in note 4 on the assumptions<br />
relating to recoverable amount of goodwill.<br />
The accounting policies used by the Group have been applied consistently to all periods presented in these financial statements.<br />
p.<br />
52<br />
Notes to the to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
2 Summary of Significant Accounting Policies (Cont’D)<br />
2.2 Consolidation<br />
Business combinations<br />
Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the<br />
assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to<br />
the acquisition.<br />
The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of<br />
acquisition is credited to the income statement in the period of the acquisition.<br />
Subsidiaries<br />
Subsidiaries are entities controlled by the Group. Control exists when the power to govern, directly or indirectly, the financial and<br />
operating policies of a company so as to obtain benefits from its activities. In assessing control, potential voting rights that presently<br />
are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements<br />
from the date that control commences until the date that control ceases.<br />
Minority interests represent the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company,<br />
whether directly or indirectly through subsidiaries. Minority interests are presented in the consolidated balance sheet within equity,<br />
separately from equity attributable to the equity shareholders of the Company. Minority interests in the results of the Group are<br />
presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority<br />
interests and the equity shareholders of the Company.<br />
Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses<br />
applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to,<br />
and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is<br />
allocated all such profits until the minority share of losses previously absorbed by the Group has been recovered.<br />
Associates<br />
Associates are those entities in which the Group has significant influence, but not control, over financial and operating policies.<br />
Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.<br />
Associates are accounted for using the equity method. The consolidated financial statements include the Group’s share of income,<br />
expenses and equity movements of associates after adjustments to align the accounting policies with those of the Group, from the<br />
date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds<br />
its interest in an associate, the carrying amount of that interest (including any long-term investments) is reduced to zero and the<br />
recognition of further losses is discontinued except to the extent that the Group has an obligation or made payments on behalf of<br />
the associate.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
53
2 Summary of Significant Accounting Policies (Cont’D)<br />
2.2 Consolidation (Cont’d)<br />
Transactions eliminated on consolidation<br />
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in<br />
preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the<br />
investment to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains,<br />
but only to the extent that there is no evidence of impairment.<br />
Accounting for subsidiaries and associates by the Company<br />
Investments in subsidiaries and associates are stated in the Company’s balance sheet at cost less accumulated impairment losses.<br />
2.3 Foreign Currencies<br />
Foreign currency transactions<br />
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the<br />
date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the<br />
functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies<br />
that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was<br />
determined.<br />
Foreign currency differences arising on retranslation are recognised in the income statement, except for differences arising on the<br />
retranslation of monetary items that in substance form part of the Group’s net investment in a foreign operation (see below) and<br />
available-for-sale equity instruments.<br />
Foreign operations<br />
The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date.<br />
The income and expenses of foreign operations are translated to Singapore dollars at exchange rates prevailing at the dates of the<br />
transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2006 are<br />
treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2006, the<br />
exchange rates at the date of acquisition were used.<br />
Foreign currency differences are recognised in the foreign currency translation reserve. When a foreign operation is disposed of, in<br />
part or in full, the relevant amount in the foreign exchange translation reserve is transferred to the income statement.<br />
Net investment in foreign subsidiaries and associates<br />
Exchange differences arising from monetary items that in substance form part of the Company’s net investment in foreign operations<br />
are recognised in the Company’s income statement. Such exchange differences are reclassified to equity in the consolidated financial<br />
statements. When the foreign operation is disposed of, the cumulative amount in equity is transferred to the income statement.<br />
p.<br />
54<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
2 Summary of Significant Accounting Policies (Cont’D)<br />
2.4 Property, Plant and Equipment<br />
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.<br />
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the<br />
cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended<br />
use, and the cost of dismantling and removing the items and restoring the site on which they are located.<br />
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major<br />
components) of property, plant and equipment.<br />
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is<br />
probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The<br />
costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.<br />
Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the differences<br />
between the net disposal proceeds and the carrying amount of the item and are recognised in the income statement on the date of<br />
retirement or disposal.<br />
Except for assets under construction, depreciation is recognised in the income statement on a straight-line basis over the estimated<br />
useful lives (or lease term, if shorter) of each part of an item of property, plant and equipment.<br />
The estimated useful lives are as follows: -<br />
Freehold building - 50 years<br />
Leasehold improvements - 10 years<br />
Office equipment - 5 years<br />
Furniture and fittings - 5 years<br />
Computers - 5 years<br />
Motor vehicles - 5 years<br />
Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.<br />
Fully depreciated assets are retained in the financial statements until they are no longer in use.<br />
2.5 Goodwill on Consolidation<br />
Goodwill<br />
Acquisitions occurring between 1 January 2001 and 31 December 2004<br />
Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets and<br />
liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible assets.<br />
Goodwill was stated at cost from the date of initial recognition and amortised over its estimated useful life of not more than 20 years.<br />
On 1 January 2005, the Group discontinued amortisation of this goodwill. The remaining goodwill balance is subject to testing for<br />
impairment, as described in note 2.8.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
55
2 Summary of Significant Accounting Policies (Cont’D)<br />
2.5 Goodwill on Consolidation (Cont’d)<br />
Goodwill (Cont’d)<br />
Acquisitions on or after 1 January 2005<br />
Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets,<br />
liabilities and contingent liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible<br />
assets.<br />
Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in note 2.8.<br />
Negative goodwill arising on the acquisition of controlled subsidiaries and associates represents the excess of the Group’s share of the<br />
fair value of identifiable assets and liabilities acquired over the cost of the acquisition. Negative goodwill is accounted for as follows:<br />
- for acquisitions before 1 January 2005, negative goodwill is credited to a capital reserve;<br />
- on 1 January 2005, the negative goodwill in the capital reserve was derecognised by crediting accumulated profits; and<br />
- for acquisitions on or after 1 January 2005, to the extent that negative goodwill relates to an expectation of future losses and<br />
expenses that are identified in the plan of acquisition and can be measured reliably, but which have not yet been recognised, it is<br />
recognised in the consolidated income statement when the future losses and expenses are recognised. Any remaining negative<br />
goodwill is recognised immediately in the consolidated income statement.<br />
Acquisitions of minority interest<br />
Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additional investment<br />
over the carrying amount of the net assets acquired at the date of exchange.<br />
2.6 Financial Instruments<br />
Non-derivative financial instruments<br />
Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents,<br />
financial liabilities, and trade and other payables.<br />
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss,<br />
any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as<br />
described below.<br />
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are<br />
derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial<br />
asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases<br />
and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset.<br />
Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.<br />
p.<br />
56<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
2 Summary of Significant Accounting Policies (Cont’D)<br />
2.6 Financial Instruments (Cont’d)<br />
Non-derivative financial instruments (Cont’d)<br />
Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on demand and that form<br />
an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the<br />
statement of cash flows.<br />
Available-for-sale financial assets<br />
The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they<br />
are measured at fair value and changes therein, other than for impairment losses and foreign exchange gains and losses on availablefor-sale<br />
monetary items (see note 2.3), are recognised directly in equity. When an investment is derecognised, the cumulative gain or<br />
loss in equity is transferred to the income statement.<br />
Equity securities available-for-sale which do not have a quoted market price in an active market and whose fair value cannot be<br />
reliably measured are stated at cost less impairment losses which, in the opinion of the directors, are other than temporary.<br />
Others<br />
Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment<br />
losses.<br />
Derivative financial instruments and hedging activities<br />
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives<br />
are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and<br />
the embedded derivates are not closely related, a separate instrument with the same terms as the embedded derivative would meet the<br />
definition of a derivative, and the combined instrument is not measured at fair value through profit or loss.<br />
Derivative financial instruments are recognised initially at fair value; attributable transaction costs are recognised in the income<br />
statement when incurred. Subsequent to initial recognition, derivative financial instruments are measured at fair value. The gain or<br />
loss on remeasurement to fair value is recognised immediately in the income statement. However, where derivatives qualify for hedge<br />
accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged as described below.<br />
The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance<br />
sheet date, taking into account current interest rates and the current credit-worthiness of the swap counterparties. The fair value of<br />
forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
57
2 Summary of Significant Accounting Policies (Cont’d)<br />
2.6 Financial Instruments (Cont’d)<br />
Derivative financial instruments and hedging activities (Cont’d)<br />
Cash flow hedges<br />
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to<br />
the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the income<br />
statement.<br />
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge<br />
accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast<br />
transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying<br />
amount of the asset when it is recognised. In other cases, the amount recognised in equity is transferred to the income statement in<br />
the same period that the hedged item affects the income statement.<br />
Impairment of financial assets<br />
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial<br />
asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated<br />
future cash flows of that asset.<br />
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying<br />
amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss<br />
in respect of an available-for-use financial asset is calculated by reference to its current fair value.<br />
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed<br />
collectively in groups that share similar credit risk characteristics.<br />
All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale financial asset<br />
recognised previously in equity is transferred to the income statement.<br />
Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are not reversed through<br />
the income statement. Any subsequent increase in the fair value of such assets is recognised directly in equity.<br />
Share capital<br />
Ordinary shares are classified as equity.<br />
Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net<br />
of any tax effects.<br />
Where share capital recognised as equity is repurchased (treasury shares), the amount of the consideration paid, including directly<br />
attributable costs, is presented as a deduction from equity. Where such shares are subsequently reissued, sold or cancelled, the<br />
consideration received is recognised as a change in equity. No gain or loss is recognised in the income statement.<br />
p.<br />
58<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
2 Summary of Significant Accounting Policies (Cont’d)<br />
2.7 Leases<br />
When entities within the group are lessees of a finance lease<br />
Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon<br />
initial recognition, property, plant and equipment acquired through finance leases are capitalised at the lower of their fair value and<br />
the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with<br />
the accounting policy applicable to that asset.<br />
Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments are apportioned between finance<br />
expense and reduction of the lease liability. The finance expense is allocated to each period during the lease term so as to produce a<br />
constant periodic rate of interest on the remaining balance of the liability.<br />
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the<br />
lease adjustment is confirmed.<br />
At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even though the<br />
arrangement is not in the legal form of a lease.<br />
When entities within the group are lessees of an operating lease<br />
Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement<br />
on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part<br />
of the total lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they<br />
are incurred.<br />
2.8 Impairment – non-financial assets<br />
The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any<br />
indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, recoverable<br />
amount is estimated at each reporting date, and as when indicators of impairment are identified.<br />
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A<br />
cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets<br />
and groups. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating<br />
units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount<br />
of the other assets in the unit (group of units) on a pro rata basis.<br />
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In<br />
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects<br />
current market assessments of the time value of money and the risks specific to the asset or cash-generating unit.<br />
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods<br />
are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed<br />
if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the<br />
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or<br />
amortisation, if no impairment loss had been recognised.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
59
2 Summary of Significant Accounting Policies (Cont’d)<br />
2.9 Inventories<br />
Inventories are stated at the lower of cost and net realisable value.<br />
Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs<br />
incurred in bringing the inventories to their present location and condition.<br />
Work-in-progress is stated at cost incurred plus attributable profits. Cost includes direct materials, sub-contracted costs, an appropriate<br />
share of production overheads based on normal operating capacity and other related costs incurred. Progress billings received and<br />
receivable are shown as a deduction from the value of work-in-progress. Provision is made for anticipated losses on uncompleted<br />
projects when foreseeable.<br />
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the<br />
estimated costs necessary to make the sale. In arriving at net realisable value, due allowance is made for all obsolete and slow moving<br />
inventories.<br />
2.10 Dividends<br />
Dividends on ordinary shares are recognised as a liability in the period in which it is declared.<br />
2.11 Employee Benefits<br />
Defined contribution plans<br />
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as<br />
incurred.<br />
Short-term employee benefits<br />
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.<br />
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has<br />
a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation<br />
can be estimated reliably.<br />
Share-based payments<br />
The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is<br />
recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread<br />
over the vesting period. At each balance sheet date, the Company revises its estimates of the number of options that are expected<br />
to become exercisable. It recognises the impact of the revision of original estimates in employee expense and in a corresponding<br />
adjustment to equity over the remaining vesting period.<br />
The proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised.<br />
p.<br />
60<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
2 Summary of Significant Accounting Policies (Cont’d)<br />
2.12 Financial Guarantee Contracts<br />
Financial guarantee contracts are regarded as insurance contracts under which the Group accepts significant insurance risk from a<br />
third party by agreeing to compensate that party on the occurrence of a specified uncertain future event. Provisions are recognised<br />
when it is probable that the guarantee will be called upon and an outflow of resources embodying economic benefits will be required<br />
to settle the obligations.<br />
2.13 Revenue Recognition<br />
Sale of goods<br />
Revenue from the sale of goods which encompasses distribution of e-enabling infrastructure and IT products is measured at the<br />
fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue<br />
is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration<br />
is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management<br />
involvement with the goods, and the amount of revenue can be measured reliably.<br />
Transfers of risks and rewards vary depending on the individual terms of the contract of sale. For sales of IT products, transfer usually<br />
occurs when the product is received at the customer’s warehouse; however, for some international shipments, transfer occurs upon<br />
loading of the goods on to the relevant carrier.<br />
Service fees<br />
Fees from service maintenance contracts are recognised over the period of the contract.<br />
Project revenue<br />
Revenue on projects is recognised in the income statement based on the percentage of completion method, measured by reference to<br />
the percentage of contract costs incurred to date to estimated total contract costs for the contract.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
61
2 Summary of Significant Accounting Policies (Cont’D)<br />
2.14 Finance Income and Expenses<br />
Finance income comprises interest income, dividend income, gains on the disposal of available-for-sale financial assets and gains<br />
on hedging instruments that are recognised in the income statement. Interest income is recognised as it accrues, using the effective<br />
interest method. Dividend income is recognised on the date that the Group’s right to receive payment is established, which in the<br />
case of quoted securities is the ex-dividend date.<br />
Finance expenses comprise interest expense on borrowings, impairment losses recognised on financial assets, and losses on hedging<br />
instruments that are recognised in the income statement. All borrowing costs are recognised in the income statement using the<br />
effective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or<br />
production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale.<br />
Foreign currency gains and losses are reported on a net basis.<br />
2.15 Income Tax Expense<br />
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the<br />
extent that it relates to items recognised directly in equity, in which case it is recognised in equity.<br />
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the<br />
reporting date, and any adjustment to tax payable in respect of prior years.<br />
Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of<br />
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for<br />
the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction<br />
that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in<br />
subsidiaries and joint ventures to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is<br />
measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have<br />
been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable<br />
right to offset current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable<br />
entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and<br />
liabilities will be realised simultaneously.<br />
A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which the<br />
temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is<br />
no longer probable that the related tax benefit will be realised.<br />
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of<br />
the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not be reversed in the<br />
foreseeable future.<br />
p.<br />
62<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
3 Property, Plant and Equipment<br />
Freehold Leasehold Office Furniture<br />
Motor<br />
Assets<br />
under<br />
Building Improvements Equipment and Fittings Computers Vehicles Construction Total<br />
Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
At 1 January 2007 1,596 1,977 2,251 1,463 14,061 1,537 383 23,268<br />
Additions 9 389 227 161 1,745 220 660 3,411<br />
Disposals - (65) (30) (60) (1,093) (181) - (1,429)<br />
Transfers/<br />
Reclassifications - (22) (780) 106 1,011 (79) (236) -<br />
Translation adjustment 22 9 93 177 583 11 48 943<br />
At 31 December 2007 1,627 2,288 1,761 1,847 16,307 1,508 855 26,193<br />
Additions 102 148 401 384 2,093 346 279 3,753<br />
Disposals - - (246) (243) (2,662) (23) - (3,174)<br />
Transfers/<br />
Reclassifications - - - - 58 - (58) -<br />
Translation adjustment (86) 130 (123) (175) (161) 1 (88) (502)<br />
At 31 December 2008 1,643 2,566 1,793 1,813 15,635 1,832 988 26,270<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
63
3 Property, Plant and Equipment (Cont’d)<br />
Freehold Leasehold Office Furniture<br />
Motor<br />
Assets<br />
under<br />
Building Improvements Equipment and Fittings Computers Vehicles Construction Total<br />
Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Accumulated<br />
Depreciation<br />
At 1 January 2007 199 952 1,331 660 9,027 776 - 12,945<br />
Depreciation charge for<br />
the year 49 214 133 281 2,475 264 - 3,416<br />
Disposals - (1) (30) (50) (1,025) (181) - (1,287)<br />
Transfers/<br />
Reclassifications - (11) (152) 11 152 - - -<br />
Translation adjustment 6 2 73 98 333 8 - 520<br />
At 31 December 2007 254 1,156 1,355 1,000 10,962 867 - 15,594<br />
Depreciation charge for<br />
the year 50 269 152 256 1,921 267 - 2,915<br />
Disposals - - (246) (141) (2,577) (10) - (2,974)<br />
Transfers/<br />
Reclassifications - - - - - - - -<br />
Translation adjustment (26) 95 (98) (115) (40) 1 - (183)<br />
At 31 December 2008 278 1,520 1,163 1,000 10,266 1,125 - 15,352<br />
Carrying Amount<br />
At 1 January 2007 1,397 1,025 920 803 5,034 761 383 10,323<br />
At 31 December 2007 1,373 1,132 406 847 5,345 641 855 10,599<br />
At 31 December 2008 1,365 1,046 630 813 5,369 707 988 10,918<br />
The net carrying amount of property, plant and equipment under finance leases as at 31 December 2008 was $269,000 (2007:<br />
$27,000).<br />
p.<br />
64<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
3 Property, Plant and Equipment (Cont’d)<br />
Leasehold Office Furniture<br />
Improvements Equipment and Fittings Computers Total<br />
Company $’000 $’000 $’000 $’000 $’000<br />
Cost<br />
At 1 January 2007 191 10 22 76 299<br />
Additions - - - 118 118<br />
Disposals - - - (4) (4)<br />
At 31 December 2007 191 10 22 190 413<br />
Additions - 1 - 83 84<br />
Disposals - - - - -<br />
At 31 December 2008 191 11 22 273 497<br />
Accumulated Depreciation<br />
At 1 January 2007 94 10 21 59 184<br />
Depreciation charge for the year 19 - 1 15 35<br />
Disposals - - - (4) (4)<br />
At 31 December 2007 113 10 22 70 215<br />
Depreciation charge for the year 19 - - 38 57<br />
Disposals - - - - -<br />
At 31 December 2008 132 10 22 108 272<br />
Carrying Amount<br />
At 1 January 2007 97 - 1 17 115<br />
At 31 December 2007 78 - - 120 198<br />
At 31 December 2008 59 1 - 165 225<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
65
4 Goodwill on Consolidation<br />
2008 2007<br />
$’000 $’000<br />
Goodwill on consolidation 33,522 33,522<br />
Impairment testing for goodwill<br />
For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating unit (CGU) in a group of subsidiaries in<br />
the same geographical location with similar principal activities.<br />
The recoverable amount of each CGU is based on its value-in-use. Value-in-use is determined by discounting the future cash flows<br />
generated from the continuing use of the unit and is based on the following key assumptions:<br />
• Cash flows were projected based on actual operating results and the five-year business plan.<br />
• The anticipated annual revenue growth included in the cash flow projections ranges from 9.7% to 13.5% per annum for the<br />
years 2009 to 2013, giving an average annual growth in revenue of 11.4%.<br />
• A pre-tax discount rate of 7.8% (2007: 8.5%) per annum was used. The discount rate used reflects the risk-free rate and the<br />
premium for specific risks relating to the business unit.<br />
• Terminal value was not considered.<br />
The values assigned to the key assumptions represent management’s assessment of future trends in the IT industry and are based on<br />
both external sources and internal sources and both past performance (historical data) and its expectations for market development.<br />
Group management believes that any reasonably possible changes in the above key assumptions applied are not likely to materially<br />
cause the recoverable amount to be lower than its carrying amount.<br />
p.<br />
66<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
5 Subsidiaries<br />
Company<br />
Note 2008 2007<br />
$’000 $’000<br />
Unquoted equity shares, at cost 100,258 100,258<br />
Quasi-equity loans to subsidiaries, at cost (a) 7,516 7,516<br />
Loan to subsidiary (b) 66,600 -<br />
174,374 107,774<br />
(a)<br />
The loans to subsidiaries are unsecured and interest-free. The settlement of these loans is neither planned nor likely to occur<br />
in the foreseeable future. As these loans are, in substance, part of the Company’s net investments in the subsidiaries, the loans<br />
are stated at cost.<br />
(b) The loan to subsidiary is unsecured, repayable on 17 January 2011 and bears interest at rates ranging from 4.174% to 4.555%<br />
per annum.<br />
Details of the subsidiaries held directly by the Company are set out below.<br />
Name of Company<br />
Principal Activities<br />
Country of<br />
Incorporation/<br />
Business<br />
Group’s Effective<br />
Equity Interest<br />
2008 2007<br />
% %<br />
<strong>ECS</strong> Computers<br />
(Asia) Pte Ltd<br />
<strong>ECS</strong> Indo Pte Ltd<br />
The Value Systems Co., Ltd<br />
Provider of information technology<br />
products and services for IT infrastructure<br />
Distributor of information technology<br />
products<br />
Provider of information technology<br />
products and services for IT infrastructure<br />
Singapore 100 100<br />
Singapore 90 90<br />
Thailand 100 100<br />
<strong>ECS</strong> KUSH Sdn Bhd Investment holding Malaysia 60 60<br />
<strong>ECS</strong> Technology (China)<br />
<strong>Limited</strong><br />
Investment holding, provider of<br />
information technology products and<br />
services for IT infrastructure<br />
Hong Kong 100 100<br />
EC Sure <strong>Holdings</strong> (Thailand)<br />
Co., Ltd<br />
<strong>ECS</strong> Infocom (Phils)<br />
Pte. Ltd.<br />
Investment holding Thailand 99.9 99.9<br />
Investment holding Singapore 100 100<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
67
5 Subsidiaries (Cont’d)<br />
Details of the significant subsidiaries held by the direct subsidiaries of the Company are set out below.<br />
Name of Company<br />
Principal Activities<br />
Country of<br />
Incorporation/<br />
Business<br />
Group’s Effective<br />
Equity Interest<br />
2008 2007<br />
% %<br />
Subsidiaries of <strong>ECS</strong> Computers (Asia) Pte Ltd<br />
Pacific City (Asia Pacific) Pte Ltd<br />
Retail of information technology<br />
products, IT equipment and<br />
accessories<br />
Singapore 100 100<br />
Subsidiary of <strong>ECS</strong> Indo Pte Ltd<br />
PT <strong>ECS</strong> Indo Jaya<br />
Distributor of information technology<br />
products<br />
Indonesia 90 90<br />
Subsidiaries of <strong>ECS</strong> KUSH Sdn Bhd<br />
<strong>ECS</strong> Pericomp Sdn Bhd )<br />
)<br />
)<br />
Provider of information technology<br />
products and services for IT<br />
infrastructure<br />
Malaysia 48 48<br />
<strong>ECS</strong> Astar Sdn Bhd ) Malaysia 60 60<br />
Subsidiaries of <strong>ECS</strong> Technology (China) <strong>Limited</strong><br />
<strong>ECS</strong> International Trading (Shanghai)<br />
Co., <strong>Limited</strong> (a) )<br />
)<br />
)<br />
Provider of information technology<br />
products and services for IT<br />
infrastructure<br />
People’s<br />
Republic<br />
of China<br />
100 100<br />
<strong>ECS</strong> China Technology (Shanghai)<br />
Co., Ltd (a) )<br />
)<br />
)<br />
People’s<br />
Republic<br />
of China<br />
100 100<br />
(a)<br />
Audited by other member firms of KPMG International for consolidation purposes.<br />
KPMG LLP Singapore is the auditor of all the Singapore incorporated subsidiaries. Other member firms of KPMG International are<br />
auditors of the significant foreign-incorporated subsidiaries.<br />
p.<br />
68<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
6 Interest in Associate<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Investment in associate, at equity-accounted value 6,618 6,271<br />
Loan to associate 666 748<br />
7,284 7,019<br />
The loan to the associate is denominated in United States dollars, unsecured and interest-free. Settlement is neither planned nor likely<br />
to occur in the foreseeable future. As this loan is, in substance, part of the Company’s net investment in the associate, it is stated at<br />
cost.<br />
Details of the associate, which is audited by Pelayo Teodoro Santamaria & Co., are as follows:<br />
Name of associate<br />
Country of<br />
incorporation<br />
Effective equity<br />
held by the Group<br />
2008 2007<br />
MSI-<strong>ECS</strong> Phils., Inc. Philippines 49.99% 49.99%<br />
The summarised financial information below relating to the associate is not adjusted for the percentage of ownership held by the<br />
Group.<br />
2008 2007<br />
$’000 $’000<br />
Revenue 126,911 163,933<br />
Profit after taxation 695 1,066<br />
Total assets 44,451 51,480<br />
Total liabilities 31,257 37,398<br />
7 Other Financial Assets<br />
Group<br />
Company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Available-for-sale<br />
Unquoted equity investments, at cost - 432 - -<br />
Club memberships, at cost 292 275 140 140<br />
Others 11 11 11 11<br />
303 718 151 151<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
69
8 Deferred Tax<br />
Movements in deferred tax assets and liabilities during the year are as follows:-<br />
At<br />
Recognised<br />
in income<br />
statement Translation At<br />
Over<br />
provided in<br />
Recognised<br />
in income<br />
statement Translation At<br />
1/1/2007 (note 25) adjustment 31/12/2007 prior years (note 25) adjustment 31/12/2008<br />
Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000<br />
Deferred Tax Assets<br />
Provisions 1,987 107 220 2,314 (39) 2,208 (226) 4,257<br />
Deferred Tax<br />
Liabilities<br />
Accelerated tax<br />
depreciation (398) 13 77 (308) (47) (538) 7 (886)<br />
Company<br />
Deferred Tax<br />
Liabilities<br />
Accelerated tax<br />
depreciation (27) - - (27) - - - (27)<br />
9 Inventories<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Trading inventories 161,816 149,917<br />
Goods in transit 21,214 17,819<br />
183,030 167,736<br />
Allowance for obsolete inventories (7,738) (4,642)<br />
175,292 163,094<br />
Comprises:-<br />
Inventories, at cost 21,214 17,819<br />
Inventories, at net realisable value 154,078 145,275<br />
175,292 163,094<br />
Cost of sales represents trading inventories and changes in work-in-progress recognised in income statement during the year.<br />
p.<br />
70<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
10 Trade and Other Receivables<br />
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Trade receivables 11 384,672 403,457 - -<br />
Deposits, prepayments and other receivables 12 59,667 23,857 69 40<br />
Amount due from related corporations 13 323 1,576 46,628 81,974<br />
444,662 428,890 46,697 82,014<br />
11 Trade Receivables<br />
Group<br />
Company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Trade receivables 374,721 370,534 - -<br />
Bills receivable - 218 - -<br />
Amounts due from affiliated companies 21,116 40,977 - -<br />
395,837 411,729 - -<br />
Allowance for doubtful receivables (11,165) (8,272) - -<br />
384,672 403,457 - -<br />
An affiliated company is a company, other than a related corporation, which directly or indirectly through one or more intermediaries,<br />
is under common significant influence.<br />
The maximum exposure credit risk for trade receivables at the balance sheet date by geographic region is:<br />
Group<br />
Company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
North Asia 210,845 202,483 - -<br />
South East Asia 173,827 200,974 - -<br />
384,672 403,457 - -<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
71
11 Trade Receivables (Cont’d)<br />
The maximum exposure credit risk for trade receivables at the balance sheet date by type of customer is:<br />
Group<br />
Company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Value added resellers 120,549 105,907 - -<br />
System integrators 45,105 39,455 - -<br />
Direct accounts 171,236 199,824 - -<br />
Retailers 41,508 33,809 - -<br />
Others 6,274 24,462 - -<br />
384,672 403,457 - -<br />
Impairment losses<br />
The aging of trade receivables at the balance sheet date is:<br />
Group<br />
Company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Gross<br />
Not past due 280,996 252,464 - -<br />
Past due 0 – 30 days 71,061 106,933 - -<br />
Past due 31 – 120 days 31,906 41,727 - -<br />
Past due 121 – 365 days 5,596 2,793 - -<br />
More than one year 6,278 7,812 - -<br />
395,837 411,729 - -<br />
Impairment losses<br />
Not past due (4) - - -<br />
Past due 0 – 30 days (233) (233) - -<br />
Past due 31 – 120 days (663) (296) - -<br />
Past due 121 – 365 days (3,987) (135) - -<br />
More than one year (6,278) (7,608) - -<br />
(11,165) (8,272) - -<br />
p.<br />
72<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
11 Trade Receivables (Cont’d)<br />
The change in impairment losses in respect of trade receivables during the year is as follows:<br />
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
At 1 January 8,272 8,884 - -<br />
Utilised during the year (1,547) (4,333) - -<br />
Impairment loss recognised 23(b) 4,773 3,151 - -<br />
Translation differences on consolidation (333) 570 - -<br />
At 31 December 11,165 8,272 - -<br />
Based on historical default rates, the Group believes that no further impairment allowance is necessary in respect of trade receivables<br />
not past due as at 31 December 2008. These receivables are mainly arising with customers that have a good record with the Group.<br />
12 Deposits, Prepayments and Other Receivables<br />
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Deposits 1,620 913 - -<br />
Prepayments 53,346 14,953 59 26<br />
Recoverables 2,563 3,169 - 14<br />
Tax recoverables 33 - - -<br />
Other receivables 1,452 4,066 10 -<br />
Call option (a) 653 756 - -<br />
10 59,667 23,857 69 40<br />
(a)<br />
On 4 January 2006, a subsidiary entered into a call option agreement with a shareholder of the associate for US$1 cash<br />
consideration which will entitle the subsidiary to acquire additional 10% equity interest in the associate. The call option is<br />
exercisable beginning 4 July 2008 and ending on the date falling three years thereafter, unless otherwise further extended by<br />
the shareholder in writing, at an option price equivalent to US$450,000. The fair value of the call option as at balance sheet<br />
date has been recognised as an option asset with its corresponding change in fair value during the year recognised in the income<br />
statement.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
73
13 Amounts Due from/to Related Corporations<br />
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Amounts due from subsidiaries -<br />
Non-trade receivables - - 2,481 2,145<br />
Loans receivable (current) - - 43,824 78,253<br />
- - 46,305 80,398<br />
Amounts due from associate -<br />
Non-trade receivables 323 1,576 323 1,576<br />
10 323 1,576 46,628 81,974<br />
Amounts due to subsidiaries -<br />
Non-trade payables - - 478 535<br />
20 - - 478 535<br />
The loans due from subsidiaries are unsecured, repayable on demand and bear interest at rates ranging from 1.96% to 6.73% (2007:<br />
2.64% to 7.75%) per annum; and<br />
The non-trade balances are unsecured, interest-free and repayable on demand.<br />
There is no allowance made for doubtful receivables arising from the outstanding balances.<br />
14 Cash and Cash Equivalents<br />
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Cash at bank and in hand 50,518 39,425 2,087 470<br />
Bank overdrafts 18 (1,016) - - -<br />
Cash and cash equivalents in cash flow statement 49,502 39,425 2,087 470<br />
The weighted average effective interest rates per annum relating to cash and cash equivalents, excluding bank overdrafts, at the balance<br />
sheet date for the Group range from 0.3% to 3.0% (2007: 0.5% to 2.0%) per annum. Interest rates reprice at monthly intervals.<br />
p.<br />
74<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
15 Share Capital<br />
Group and Company<br />
No. of shares<br />
2008 2007<br />
’000 ’000<br />
Issued and fully paid:<br />
At 1 January 365,360 363,599<br />
Issue of shares - 1,761<br />
At 31 December 365,360 365,360<br />
In 2007, the Group has issued share options under its <strong>ECS</strong> Share Option Scheme II.<br />
At 31 December 2008, there were nil (2007: 110,000) outstanding share options of unissued ordinary shares of the Company<br />
granted under the <strong>ECS</strong> Share Option Scheme II.<br />
Capital Management<br />
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain<br />
future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating<br />
income divided by total shareholders’ equity excluding minority interest. The Board also monitors the level of dividends to ordinary<br />
shareholders.<br />
The Group has a share buy-back mandate to purchase its own shares on the market; the timing of these purchases depends on market<br />
prices. Primarily, the shares purchased are intended to be used for issuing shares under the Group’s share option programme. Buy<br />
and sell decisions are made on a specific transaction basis by the Board. No shares have been purchased to date.<br />
There were no changes in the Group’s approach to capital management during the year.<br />
The Group is subject to externally imposed capital requirements which involve financial covenants relating to consolidated tangible<br />
net worth as stipulated by its bankers in respect of credit facilities. The Group ensures its compliance by monitoring such financial<br />
covenants on a regular basis.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
75
16 Reserves<br />
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Currency translation reserve (a) (477) (1,720) - -<br />
Dividend reserve (b) 9,865 5,679 9,865 5,679<br />
General reserve (c) 2,423 669 - -<br />
Accumulated profits 113,175 95,210 10,876 6,228<br />
124,986 99,838 20,741 11,907<br />
(a)<br />
Currency Translation Reserve<br />
The currency translation reserve of the Group comprises foreign exchange differences arising from the translation of the<br />
financial statements of foreign entities.<br />
(b)<br />
Dividend Reserve<br />
The dividend reserve of the Group represents dividends proposed which are subject to approval of the shareholders at a general<br />
meeting.<br />
(c)<br />
General Reserve<br />
According to the current People’s Republic of China (“PRC”) Company Law, the PRC subsidiaries of the Group are required<br />
to transfer 10% of their profit after taxation to statutory surplus reserve until the surplus reserve balance reaches 50% of the<br />
registered capital. For the purpose of calculating the amount to be transferred to reserve, the profit after taxation is the amount<br />
determined under PRC accounting standards. The amount of transfer to this reserve has to be made before profit distribution<br />
to shareholders.<br />
p.<br />
76<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
17 Equity Compensation Benefits<br />
The <strong>ECS</strong> Share Option Scheme II (“Scheme II”) was approved and adopted by its members at an Extraordinary General Meeting<br />
held on 13 December 2000. Scheme II provides an opportunity for employees and directors, including non-executive directors,<br />
of the Group who have contributed significantly to the growth and performance of the Group to participate in the equity of the<br />
Company.<br />
The above scheme is administered by the Compensation Committee (the “Committee”) which comprises the following directors:-<br />
Koh Soo Keong (Chairman)<br />
Leong Horn Kee<br />
Tan Hup Foi<br />
Information regarding the scheme is set out below:-<br />
Scheme II<br />
(a)<br />
The exercise price of the options exercisable pursuant to Scheme II is set either at:<br />
- a price equal to the average of the last dealt price for the three consecutive trading days immediately preceding the grant<br />
of the option; or<br />
- a discount to the market price not exceeding 20% of the market price in respect of that option.<br />
(b)<br />
(c)<br />
Options granted are exercisable at any time after the first anniversary of the grant date and in the case of options with exercise<br />
price set at a discount, at any time after the second anniversary of date of grant. Options granted to employees and executive<br />
directors are exercisable up to the tenth anniversary of date of grant and those granted to non-executive directors are exercisable<br />
up to the fifth anniversary of the date of grant.<br />
The scheme will continue to be in force at the discretion of the Committee, subject to a maximum period of 10 years<br />
commencing 13 December 2000.<br />
At 31 December 2008, details of the options granted under the Company’s option schemes for unissued ordinary shares of the<br />
Company were as follows:-<br />
Date of<br />
grant of<br />
options<br />
Exercise<br />
price<br />
Options<br />
outstanding<br />
1 Jan 2008<br />
Options<br />
exercised<br />
Options<br />
forfeited<br />
or lapsed<br />
Options<br />
outstanding<br />
31 Dec 2008<br />
Options<br />
vested<br />
1 Jan 2008<br />
Options<br />
vested<br />
31 Dec 2008<br />
Exercise<br />
period<br />
Scheme II:<br />
2002 $0.72 110,000 - (110,000) - 110,000 -<br />
11/03/2003 to<br />
10/03/2012<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
77
18 Financial Liabilities<br />
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Non-current liabilities<br />
Unsecured bank loans 18(a) 66,600 - 66,600 -<br />
Finance lease liabilities 218 5 - -<br />
66,818 5 66,600 -<br />
Current liabilities<br />
Unsecured bank overdrafts 14 1,016 - - -<br />
Unsecured trade financing 25,621 29,902 - -<br />
Unsecured bank loans 18(a) 99,955 154,280 20,660 62,790<br />
Finance lease liabilities 4 22 - -<br />
Derivative liabilities - 6,329 - -<br />
126,596 190,533 20,660 62,790<br />
Total financial liabilities 193,414 190,538 87,260 62,790<br />
(a)<br />
A negative pledge has been given in respect of all of the assets of certain subsidiaries with a total net book value at 31 December<br />
2008 of $220,546,617 (2007: $129,404,784).<br />
Finance Lease Liabilities<br />
At 31 December, the Group has obligations under finance leases that are payable as follows:<br />
Principal Interest Payments<br />
$’000 $’000 $’000<br />
2008<br />
Repayable within 1 year 4 - 4<br />
Repayable after 1 year but within 5 years 218 79 297<br />
222 79 301<br />
2007<br />
Repayable within 1 year 22 2 24<br />
Repayable after 1 year but within 5 years 5 2 7<br />
27 4 31<br />
p.<br />
78<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
18 Financial Liabilities (Cont’d)<br />
Terms and conditions of all other interest-bearing liabilities are as follows:<br />
Nominal 2008 2007<br />
interest<br />
rate<br />
Year of<br />
maturity<br />
Face<br />
value<br />
Carrying<br />
amount<br />
Face<br />
value<br />
Carrying<br />
amount<br />
$’000 $’000 $’000 $’000<br />
Group<br />
Unsecured bank loans and trade<br />
financing<br />
- S$ floating rate 1.19% - 6.73% 2009 14,500 14,500 7,000 7,000<br />
- US$ floating rate 1.19% - 8.10% 2009 – 2011 99,938 99,938 82,042 82,042<br />
- RMB floating rate 4.50% - 7.52% 2009 28,604 28,604 26,358 26,358<br />
- THB floating rate 3.13% - 5.66% 2009 23,220 23,220 37,872 37,872<br />
- RM floating rate 4.87% - 8.05% 2009 25,914 25,914 30,910 30,910<br />
192,176 192,176 184,182 184,182<br />
Unsecured bank overdrafts 7.00% - 8.05% 2009 1,016 1,016 - -<br />
US$ finance lease liabilities 10.00% 2009 – 2012 222 222 27 27<br />
Derivative liabilities - - - - 6,329 6,329<br />
193,414 193,414 190,538 190,538<br />
Company<br />
Unsecured bank loans<br />
- S$ floating rate loans 1.71% - 3.56% 2009 2,500 2,500 4,500 4,500<br />
- US$ floating rate loans 1.19% - 6.91% 2009 84,760 84,760 58,290 58,290<br />
87,260 87,260 62,790 62,790<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
79
18 Financial Liabilities (Cont’d)<br />
Liquidity Risk<br />
The following are the contractual undiscounted cash outflows of financial liabilities, including interest payments and excluding the<br />
impact of netting agreements:<br />
Cash flows<br />
Carrying<br />
amount<br />
Contractual<br />
cash flows<br />
Within<br />
1 year<br />
Between<br />
1 to 5 years<br />
Group $’000 $’000 $’000 $’000<br />
2008<br />
Non-derivative financial liabilities<br />
Unsecured bank overdrafts 1,016 (1,016) (1,016) -<br />
Unsecured trade financing 25,621 (25,621) (25,621) -<br />
Unsecured bank loans 166,555 (171,505) (102,052) (69,453)<br />
Finance lease liabilities 222 (222) (4) (218)<br />
Trade and other payables* 241,827 (241,827) (241,827) -<br />
435,241 (440,191) (370,520) (69,671)<br />
2007<br />
Non-derivative financial liabilities<br />
Unsecured trade financing 29,902 (29,902) (29,902) -<br />
Unsecured bank loans 154,280 (154,796) (154,796) -<br />
Finance lease liabilities 27 (27) (22) (5)<br />
Trade and other payables* 233,088 (233,088) (233,088) -<br />
Derivative financial liabilities<br />
Forward exchange contracts used for hedging 6,329 (6,329) (6,329) -<br />
423,626 (424,142) (424,137) (5)<br />
* excludes accrued operating expenses<br />
p.<br />
80<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
18 Financial Liabilities (Cont’d)<br />
Cash flows<br />
Carrying<br />
amount<br />
Contractual<br />
cash flows<br />
Within<br />
1 year<br />
Between<br />
1 to 5 years<br />
Company $’000 $’000 $’000 $’000<br />
2008<br />
Non-derivative financial liabilities<br />
Unsecured bank loans 87,260 (92,269) (22,816) (69,453)<br />
Trade and other payables* 478 (478) (478) -<br />
87,738 (92,747) (23,294) (69,453)<br />
2007<br />
Non-derivative financial liabilities<br />
Unsecured bank loans 62,790 (63,000) (63,000) -<br />
Trade and other payables* 792 (792) (792) -<br />
63,582 (63,792) (63,792) -<br />
* excludes accrued operating expenses<br />
19 Deferred Income<br />
Deferred income relates to fees billed in advance on service maintenance contracts and consists of:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Current portion 556 302<br />
Non-current portion 978 968<br />
1,534 1,270<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
81
20 Trade and Other Payables<br />
Group<br />
Company<br />
Note 2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Trade payables 230,638 217,631 - -<br />
Accruals and other payables 21 44,786 49,480 2,116 2,429<br />
Amounts due to subsidiaries 13 - - 478 535<br />
275,424 267,111 2,594 2,964<br />
21 Accruals and Other Payables<br />
Group<br />
Company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Accrued operating expenses 33,597 34,023 2,116 2,172<br />
Deposits received 5,851 10,718 - -<br />
Other payables 5,338 3,062 - 257<br />
Interest payables - 1,677 - -<br />
44,786 49,480 2,116 2,429<br />
22 Revenue<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Sale of IT products 2,916,291 2,757,195<br />
IT services 33,580 32,220<br />
2,949,871 2,789,415<br />
Transactions within the Group have been excluded in arriving at revenue for the Group.<br />
p.<br />
82<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
23 Profit from Operations<br />
The following items have been included in arriving at profit from operations:-<br />
(a)<br />
Staff Costs<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Wages and salaries 52,321 49,651<br />
Contributions to defined contribution plans 4,096 4,792<br />
56,417 54,443<br />
(b)<br />
Other Expenses/(Income)<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Exchange gains (net) (987) (1,054)<br />
Interest income<br />
- banks (272) (217)<br />
- associate - (260)<br />
Allowances made for<br />
- obsolete inventories 4,225 1,323<br />
- doubtful trade receivables 4,773 3,151<br />
Directors’ fees 207 341<br />
Inventories written back (466) (315)<br />
Bad debts written off net of bad debts recovered 127 -<br />
Loss on disposal of property, plant and equipment 171 54<br />
Non-audit fees to auditors of the Company 23 9<br />
Negative goodwill arising from additional investment in subsidiary - (55)<br />
Net fair value changes on financial instruments - 3,533<br />
Fair value loss/(gain) on call option 102 (756)<br />
Operating lease expenses 5,163 4,624<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
83
24 Finance Costs<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Interest paid and payable on<br />
- bank overdrafts 29 20<br />
- finance leases 10 4<br />
- short-term loans 11,311 8,706<br />
11,350 8,730<br />
25 Income Tax Expense<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Tax Expense<br />
Current tax expense<br />
- Current year 9,881 7,872<br />
- (Over)/under provided in prior years (96) 693<br />
9,785 8,565<br />
Deferred tax expense<br />
- Movements in temporary differences (1,584) (117)<br />
- Changes in tax rates - (17)<br />
- (Over)/under provided in prior years (86) 14<br />
(1,670) (120)<br />
Income tax expense for the year 8,115 8,445<br />
Reconciliation of Effective Tax Rate<br />
Profit before tax 41,386 34,608<br />
p.<br />
84<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong><br />
Income tax at 18% 7,450 6,229<br />
Non-deductible expenses 508 992<br />
Tax rebate/relief/exemption - (78)<br />
Income not subject to tax (84) (165)<br />
Effect of different tax rates in foreign jurisdictions 804 894<br />
Recognition of previously unrecognised tax losses - 50<br />
(Over)/under provided in prior years (182) 707<br />
Utilisation of previously unrecognised tax losses (528) -<br />
Others 147 (184)<br />
Income tax expense for the year 8,115 8,445
26 Earnings per Share<br />
Group<br />
2008 2007<br />
Basic earnings per share is based on:-<br />
Net profit for the year ($’000) 29,386 23,352<br />
Number of shares outstanding at the beginning of the year (’000) 365,360 363,599<br />
Weighted average number of shares issued during the year (’000) - 974<br />
Weighted average number of shares in issue during the year (’000) 365,360 364,573<br />
For the purpose of calculation of the diluted earnings per ordinary share, the weighted average number of ordinary shares in issue<br />
during the year is adjusted to take into account the dilutive effect arising from the dilutive share options, with the potential ordinary<br />
shares weighted for the period outstanding:<br />
Number of Shares<br />
2008 2007<br />
’000 ’000<br />
Weighted average number of shares used in calculation of basic earnings per share 365,360 364,573<br />
Weighted average number of dilutive potential ordinary shares - 9,422<br />
Number of shares that would have been issued at fair value - (7,877)<br />
Weighted average number of ordinary shares (diluted) 365,360 366,118<br />
In 2007, 110,000 ordinary shares at exercise price of $0.72 per share were outstanding but were not included in the computation of<br />
diluted earnings per share because those options were anti-dilutive.<br />
27 Segment Information<br />
A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment),<br />
or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and<br />
rewards that are different from those of other segments.<br />
Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business<br />
segments, is based on the Group’s management and internal reporting structure.<br />
Inter-segment pricing is determined on an arm’s length basis.<br />
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable<br />
basis. Unallocated items mainly comprise interest-earning assets and related revenue, interest in the associate, interest-bearing loans,<br />
borrowings and related expenses, income tax assets and liabilities, negative goodwill and corporate assets and expenses.<br />
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for<br />
more than one period.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
85
27 Segment Information (Cont’d)<br />
The main business segments of the Group are the following:-<br />
Segments<br />
Enterprise systems<br />
IT services<br />
Distribution<br />
Principal Activities<br />
Provider of enterprise systems tools (middleware, operating systems, Unix/NT servers, databases, storage<br />
and security products) for IT infrastructure.<br />
IT infrastructure design and implementation, training, maintenance and support services.<br />
Distribution of IT products (desktop PCs, notebooks, handhelds, printers, etc) for the commercial and<br />
consumer markets.<br />
Enterprise<br />
Systems IT Services Distribution Consolidated<br />
Revenue $’000 $’000 $’000 $’000<br />
2008<br />
Total revenue from external customers 1,133,338 33,580 1,782,953 2,949,871<br />
Segment results 26,437 1,874 23,933 52,244<br />
Share of associate’s profit 492<br />
Net fair value changes on financial Instruments -<br />
Finance costs (11,350)<br />
Unallocated negative goodwill -<br />
Taxation (8,115)<br />
Profit from ordinary activities after taxation 33,271<br />
Minority interests (3,885)<br />
Net profit for the year 29,386<br />
p.<br />
86<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
27 Segment Information (Cont’d)<br />
Revenue<br />
Enterprise<br />
Systems IT Services Distribution Consolidated<br />
$’000 $’000 $’000 $’000<br />
2007<br />
Total revenue from external customers 964,334 32,220 1,792,861 2,789,415<br />
Segment results 22,416 2,423 21,152 45,991<br />
Share of associate’s profit 825<br />
Net fair value changes on financial instruments (3,533)<br />
Finance costs (8,730)<br />
Unallocated negative goodwill 55<br />
Taxation (8,445)<br />
Profit from ordinary activities after taxation 26,163<br />
Minority interests (2,811)<br />
Net profit for the year 23,352<br />
Assets and Liabilities<br />
2008<br />
Segment assets 223,604 26,194 354,606 604,404<br />
Unallocated assets -<br />
Tax assets 4,257<br />
Others 118,095<br />
Total assets 726,756<br />
Segment liabilities 113,898 2,760 160,300 276,958<br />
Unallocated liabilities -<br />
Tax liabilities 4,298<br />
Financial liabilities 193,414<br />
Total liabilities 474,670<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
87
27 Segment Information (Cont’d)<br />
Assets and Liabilities (Cont’d)<br />
Enterprise<br />
Systems IT Services Distribution Consolidated<br />
$’000 $’000 $’000 $’000<br />
2007<br />
Segment assets 199,847 27,211 383,613 610,671<br />
Unallocated assets -<br />
Tax assets 2,314<br />
Others 72,596<br />
Total assets 685,581<br />
Segment liabilities 98,983 3,452 165,946 268,381<br />
Unallocated liabilities -<br />
Tax liabilities 3,026<br />
Financial liabilities 190,538<br />
Total liabilities 461,945<br />
Capital Expenditure<br />
2008<br />
Capital expenditure 1,308 56 2,389 3,753<br />
2007<br />
Capital expenditure 900 60 2,451 3,411<br />
Significant Non-Cash Expenses<br />
2008<br />
Depreciation of property, plant and equipment 1,120 33 1,762 2,915<br />
2007<br />
Depreciation of property, plant and equipment 1,181 39 2,196 3,416<br />
p.<br />
88<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
28 Geographical Segments (Group)<br />
The Group operates principally in Singapore, Thailand, Malaysia, Indonesia and China. In presenting information on the basis of<br />
geographic segments, segment revenue is based on the geographic location of operations. Segment assets are based on the geographic<br />
location of the assets.<br />
North Asia South East Asia Consolidated<br />
$’000 $’000 $’000<br />
2008<br />
Total revenue from external customers 1,515,564 1,434,307 2,949,871<br />
Segment assets 310,615 293,789 604,404<br />
Segment liabilities 169,268 107,690 276,958<br />
Capital expenditure 1,203 2,550 3,753<br />
2007<br />
Total revenue from external customers 1,432,078 1,357,337 2,789,415<br />
Segment assets 289,579 321,092 610,671<br />
Segment liabilities 149,306 119,075 268,381<br />
Capital expenditure 523 2,888 3,411<br />
29 Financial Risk Management<br />
Overview<br />
Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable<br />
balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s<br />
risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and<br />
systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.<br />
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures<br />
and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee<br />
is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management<br />
controls and procedures, the results of which are reported to the Audit Committee.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
89
29 Financial Risk Management (Cont’d)<br />
Credit Risk (Group)<br />
The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis.<br />
Credit evaluations are performed on all customers requiring credit over a certain amount. If the customers are independently rated,<br />
these ratings are used. Otherwise, the credit quality of customers is assessed after taking into account its financial position and past<br />
experience with the customers.<br />
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other<br />
receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures.<br />
The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that<br />
no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to<br />
the allowance account is written off against the carrying amount of the impaired financial asset.<br />
Cash and fixed deposits are placed with banks and financial institutions which are regulated.<br />
Liquidity Risk<br />
The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance<br />
the Group’s operations and to mitigate the effects of fluctuations in cash flows. Typically the Group ensures that it has sufficient<br />
cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this<br />
excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.<br />
In addition, as at 31 December 2008, the Group maintains various lines of credit amounting to $434 million, of these, $353 million<br />
of the credit facilities are unsecured.<br />
Market Risk<br />
Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices will affect the<br />
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and<br />
control market risk exposures within acceptable parameters, while optimising the return on risk.<br />
Foreign Currency Risk<br />
The Group incurs foreign currency risk mainly from foreign currency denominated sales, purchases and borrowings that are<br />
denominated in currencies other than the various functional currencies of Group entities. The currencies giving rise to this risk<br />
are primarily the United States dollar (“USD”), Thai Baht (“THB”), Chinese Renminbi (“RMB”) and Ringgit Malaysia (“RM”).<br />
Movements in their exchange rates against the Singapore dollar could result in the Group incurring foreign exchange losses/gains.<br />
The Group recognises that any significant fluctuations in the USD dollar may affect the Group’s foreign currency risk. As a result, the<br />
Group actively monitors its exposure and uses forward foreign exchange contracts and currency swaps to hedge against USD dollar<br />
exposures, as and when necessary and where possible.<br />
In view of the nature of the Group’s business which spans several countries, foreign exchange risks will continue to be an integral<br />
aspect of the Group’s risk profile in the future.<br />
p.<br />
90<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
29 Financial Risk Management (Cont’d)<br />
Foreign Currency Risk (Cont’d)<br />
At 31 December, the Group has outstanding forward exchange contracts with a total notional amount of approximately $15,369,000<br />
(2007: $12,158,000). In 2007, the Group also entered into a hybrid swap contract to hedge against US dollar exposure and floating<br />
rate interest risks, with notional principal value of US$40,000,000 which commenced in 2005 and has expired in 28 January 2008.<br />
Exposure to currency risk<br />
The Group’s financial assets and liabilities are denominated in the following currencies:<br />
SGD USD RMB THB RM Others<br />
$’000 $’000 $’000 $’000 $’000 $’000<br />
2008<br />
Trade receivables 31,268 36,248 200,439 65,628 50,890 199<br />
Loan receivable from associate 323 666 - - - -<br />
Unsecured bank loans/trade financing (14,500) (99,938) (28,604) (23,800) (26,350) -<br />
Trade payables (15,129) (31,384) (141,901) (21,434) (20,773) (17)<br />
Forward exchange contracts and hybrid<br />
swap - - - (7,450) (7,919) -<br />
1,962 (94,408) 29,934 12,944 (4,152) 182<br />
2007<br />
Trade receivables 44,252 40,576 200,113 68,026 50,274 216<br />
Loan receivable from associate 1,576 748 - - - -<br />
Unsecured bank loans/trade financing (7,000) (82,042) (26,358) (37,872) (30,910) -<br />
Trade payables (30,577) (34,290) (111,645) (15,902) (25,217) -<br />
Forward exchange contracts and hybrid<br />
swap - 58,000 - (4,574) (7,584) -<br />
8,251 (17,008) 62,110 9,678 (13,437) 216<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
91
29 Financial Risk Management (Cont’d)<br />
Foreign Currency Risk (Cont’d)<br />
Sensitivity analysis<br />
A 1% strengthening of the Singapore dollar against financial assets and liabilities denominated in the following currencies other than<br />
the functional currencies of Group entities at 31 December would have increased/(decreased) profit before tax by the amounts shown<br />
below. This analysis assumes that all other variables, in particular interest rates, remain constant.<br />
Income statement<br />
2008 2007<br />
$’000 $’000<br />
USD 944 170<br />
RMB (299) (621)<br />
THB (129) (97)<br />
RM 42 134<br />
A 1% weakening of the Singapore dollar against the above currencies, would have had the equal but opposite effect on the above<br />
currencies to the amounts shown above, on the basis that all other variables remain constant.<br />
Interest Rate Risk<br />
The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s debt obligations. The Group<br />
manages some of its exposure to floating rate interest by entering into a hybrid swap as described above.<br />
Sensitivity analysis<br />
An increase of 100 bps in the interest rate at the balance sheet date would decrease profit in the income statement by the amounts<br />
shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.<br />
Increase/(Decrease)<br />
2008 2007<br />
$’000 $’000<br />
Hybrid swap - 580<br />
Financial liabilities (1,932) (1,842)<br />
(1,932) (1,262)<br />
A decrease of 100 bps in the interest rate would have had the equal but opposite effect on the above financial instruments to the<br />
amounts shown above, on the basis that all other variables remain constant.<br />
p.<br />
92<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
29 Financial Risk Management (Cont’d)<br />
Fair Values<br />
The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the<br />
Group and Company.<br />
Derivatives<br />
The fair value of forward exchange contracts is based on their quoted market price, if available. If a quoted market price is not<br />
available, fair value is estimated by discounting the difference between the contractual forward price and the current forward price for<br />
the residual period to maturity of the contract using a risk-free interest rate (based on government bonds).<br />
The fair value of the hybrid swap is based on a broker quote. The quote is tested for reasonableness by discounting estimated<br />
future cash flows based on the terms and maturity of the contract and using market interest rates for a similar instrument at the<br />
measurement date.<br />
Other financial assets<br />
It is not practicable to estimate the fair value of the Group’s long-term unquoted equity investments because of the lack of quoted<br />
market prices.<br />
Other short term financial assets and liabilities<br />
The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables,<br />
cash and cash equivalents, and trade and other payables) approximate their fair values because of the short period to maturity. All<br />
other financial assets and liabilities are discounted to determine their fair values.<br />
Financial liabilities<br />
2008 2007<br />
Carrying<br />
amount<br />
Fair<br />
value<br />
Carrying<br />
amount<br />
Fair<br />
value<br />
$’000 $’000 $’000 $’000<br />
Group<br />
Unsecured bank overdrafts 1,016 1,016 - -<br />
Unsecured trade financing 25,621 25,621 29,902 29,902<br />
Unsecured bank loan 166,555 166,555 154,280 154,280<br />
Finance lease liabilities 222 222 27 27<br />
Derivative liabilities - - 6,329 6,329<br />
193,414 193,414 190,538 190,538<br />
Company<br />
Unsecured bank loans 87,260 87,260 62,790 62,790<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
93
30 Commitments<br />
Operating Lease Commitments<br />
At 31 December, the Group has commitments for future minimum lease payments under non-cancellable operating leases as<br />
follows:-<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Payable:<br />
Within 1 year 4,723 3,580<br />
After 1 year but within 5 years 4,951 5,306<br />
9,674 8,886<br />
The Group leases office premises and warehouse facilities under operating leases. The leases typically run for an initial period of three<br />
years, with an option to renew the lease after that date.<br />
31 Contingent Liabilities (Unsecured)<br />
Guarantees Issued<br />
At 31 December, there were contingent liabilities in respect of the following:-<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
Guarantees given to suppliers by the Company in respect of credit facilities extended to certain subsidiaries amounted to<br />
$187,084,000 (2007: $150,388,000), of which the amount utilised was $56,174,000 (2007: $45,900,000). The guarantees<br />
are renewed on a yearly basis.<br />
Guarantees given to financial institutions by the Company in respect of credit facilities extended to certain subsidiaries<br />
amounted to $199,746,000 (2007: $156,016,000), of which the amount utilised was $74,494,000 (2007: $97,522,000).<br />
The guarantees are renewed on a yearly basis.<br />
Guarantees given to financial institutions by the subsidiaries in respect of credit facilities extended to the Company amounted<br />
to $81,400,000 (2007: $87,000,000), of which $81,400,000 (2007: $58,290,000) had been utilised.<br />
A claim was made on a subsidiary, The Value Systems Co., Ltd, which was named as a second defendant in a law suit for<br />
copyright infringement amounting to Baht 170 million (equivalent to $7 million). The Central Intellectual Property and<br />
International Trade Court of Thailand has ruled that the company was not liable for the damages claimed by the plaintiff.<br />
Although the plaintiff has filed an appeal, based on legal opinion obtained, the directors are of the view that the claim has no<br />
merit and accordingly, no provision for the claim is required.<br />
The Group has accounted for these corporate guarantees as insurance contracts. There are no terms and conditions attached to the<br />
guarantee contracts that would have a material effect on the amount, timing and uncertainty of the Company’s future cash flows.<br />
The Company has undertaken to provide continuing financial support to certain subsidiaries to enable them to continue to operate<br />
as going concerns and to meet their obligations as and when they fall due.<br />
p.<br />
94<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
32 Related Parties<br />
Transactions with directors and other key management personnel<br />
Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and<br />
controlling the activities of the Group. The directors and directors of subsidiaries and members of the management team are<br />
considered as key management of the Group.<br />
Key management personnel compensation comprises remuneration of directors and other key management personnel as follows:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Directors of the Company<br />
- Short-term employment benefits 2,271 2,218<br />
- Other long-term benefits 94 71<br />
Directors of the subsidiaries<br />
- Short-term employment benefits 2,379 2,713<br />
- Other long-term benefits 121 117<br />
Executive officers<br />
- Short-term employment benefits 1,387 961<br />
- Other long-term benefits 23 23<br />
6,275 6,103<br />
During the year, the Company and certain of its subsidiaries have, in the normal course of business entered into the following<br />
transactions with companies in which certain directors have interests:<br />
Group<br />
2008 2007<br />
$’000 $’000<br />
Purchase of information technology products 15,231 2,116<br />
Sales of information technology products 13,836 10,841<br />
Legal professional services fees - 92<br />
Consultancy services - 161<br />
The directors and other key management personnel participate in the Company’s share option plans, the terms and conditions of<br />
which are stated in note 17. There are no options granted, exercised for the year ended 31 December 2008 or outstanding at 31<br />
December 2008.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
95
32 Related Parties (Cont’d)<br />
Other Related Party Transactions<br />
For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly<br />
or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice<br />
versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be<br />
individuals or other entities.<br />
During the financial year, there were the following significant transactions with related parties, based on terms agreed by the<br />
parties:-<br />
Group<br />
Company<br />
2008 2007 2008 2007<br />
$’000 $’000 $’000 $’000<br />
Subsidiaries<br />
- sales - - - 81<br />
- purchases - - - 81<br />
- interest paid - - 369 646<br />
Affiliates<br />
- sales 110,770 23,799 - -<br />
33 Accounting Estimates and Judgement<br />
Management discussed with the Audit Committee the development, selection and disclosure of the Group’s and the Company’s<br />
critical accounting policies and estimates and the application of these policies and estimates.<br />
Key source of estimates uncertainty<br />
Note 4 contains information about the assumptions and their risk factors relating to goodwill impairment.<br />
p.<br />
96<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
34 New Accounting Standards and Interpretations Not Yet Adopted<br />
The Group has not applied the following accounting standards (including its consequential amendments) and interpretations that<br />
have been issued as of the balance sheet date but are not yet effective:<br />
FRS 1 (revised 2008)<br />
FRS 23 (revised)<br />
FRS 32<br />
FRS 108<br />
INT FRS 111<br />
INT FRS 113<br />
INT FRS 116<br />
Amendments to FRS 1 (revised 2008)<br />
Amendments to FRS 102<br />
Presentation of Financial Statements<br />
Borrowing Costs<br />
Amendments relating to puttable financial instruments and obligations arising on<br />
liquidation<br />
Operating Segments<br />
FRS 102 - Group and Treasury Share Transactions<br />
Customer Loyalty Programmes<br />
Hedges of a Net Investment in a Foreign Operation<br />
Amendments relating to puttable financial instruments and obligations arising on<br />
liquidation<br />
Amendments relating to vesting conditions and cancellation<br />
FRS 23 will become effective for financial statements for the year ending 31 December 2009. FRS 23 removes the option to<br />
expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or<br />
production of a qualifying asset as part of the cost of that asset. This standard does not have any material impact on the recognition<br />
and measurement of the Group’s financial statements.<br />
FRS 108 will become effective for financial statements for the year ending 31 December 2009. FRS 108, which replaces FRS 14<br />
Segment Reporting, requires identification and reporting of operating segments based on internal reports that are regularly reviewed<br />
by the Group’s chief operating decision maker in order to allocate resources to the segment and assess its performance. Currently, the<br />
Group represents segment information in respect of its business and geographical segments (see notes 27 and 28). Under FRS 108,<br />
the Group will present segment in respect of its operating segments.<br />
Other than the changes in disclosures relating to FRS 108, the initial application of these standards and interpretations is not expected<br />
to have any material impact on the Group’s financial statements. The Group has not considered the impact of accounting standards<br />
issued after the balance sheet date.<br />
Notes to the<br />
Financial Statements<br />
These notes form an integral part of the financial statements.<br />
Annual Report 2008<br />
p.<br />
97
Class of shares – Ordinary shares<br />
Voting rights – On a show of hands : One vote for each member<br />
– On poll : One vote for each ordinary share<br />
ANALYSIS OF SHAREHOLDINGS<br />
Range of Shareholdings No. of Shareholders % No. of Shares %<br />
1 – 999 8 1.59 3,081 0.00<br />
1,000 – 10,000 389 77.03 2,076,000 0.57<br />
10,001 – 1,000,000 100 19.80 3,686,000 1.01<br />
1,000,001 and above 8 1.58 359,595,093 98.42<br />
505 100.00 365,360,174 100.00<br />
Based on information available to the Company as at 16 March 2009, 10.34% of the issued ordinary shares of the Company is held by the<br />
public and therefore Rule 723 of the Listing Manual is complied with.<br />
TOP 20 SHAREHOLDERS<br />
No. Name of Shareholder No. of Shares %<br />
1 Raffles Nominees Pte Ltd 327,595,093 89.66<br />
2 Thomas Tan Soon Seng (Thomas Chen Shuncheng) 7,400,000 2.03<br />
3 Tat Hong Capital Pte Ltd 6,600,000 1.81<br />
4 Ng Chwee Cheng 6,200,000 1.70<br />
5 Phillips Securities Pte Ltd 4,800,000 1.31<br />
6 HSBC (Singapore) Nominees Pte Ltd 4,400,000 1.20<br />
7 Ng Siew Ban (Huang Xiuwan) 1,500,000 0.41<br />
8 Ong Tiew Siam 1,100,000 0.30<br />
9 DBS Nominees Pte Ltd 251,000 0.07<br />
10 Sim Sok Koon 200,000 0.05<br />
11 United Overseas Bank Nominees Pte Ltd 187,000 0.05<br />
12 OCBC Nominees Singapore Pte Ltd 120,000 0.03<br />
13 Pui Cheng Wui 120,000 0.03<br />
14 Chee Swee Cheng Investments Pte Ltd 100,000 0.03<br />
15 Circular Leasing Pte Ltd 100,000 0.03<br />
16 Yap Kheok Joo 100,000 0.03<br />
17 Estate Of Lim Chin Beng @ Seow Chong Beng Deceased 90,000 0.02<br />
18 Tan Tiong Eng 84,000 0.02<br />
19 Chan Chee Seng 80,000 0.02<br />
20 Lee Cheng Cheong Edward 80,000 0.02<br />
361,107,093 98.82<br />
p.<br />
98<br />
Shareholdings<br />
Statistics<br />
As at 16 March 2009<br />
<strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
SUBSTANTIAL SHAREHOLDERS<br />
Number of shares<br />
registered in the name of the<br />
substantial shareholder<br />
Number of shares in which<br />
substantial shareholder is<br />
deemed to have an interest<br />
Name of Substantial<br />
Shareholder<br />
Total<br />
Percentage<br />
(%)<br />
VST <strong>Holdings</strong> <strong>Limited</strong> – 327,580,093 (1) 327,580,093 89.66<br />
L&L <strong>Limited</strong> – 327,580,093 (1) 327,580,093 89.66<br />
Notes :<br />
(1)<br />
Deemed interest through Raffles Nominees Pte Ltd<br />
Substantial<br />
Shareholders<br />
As at 16 March 2009<br />
Annual Report 2008<br />
p.<br />
99
<strong>ECS</strong> HOLDINGS LIMITED<br />
(Incorporated in the Republic of Singapore)<br />
Company Registration No. 199804760R<br />
NOTICE IS HEREBY GIVEN that the Eleventh Annual General Meeting of the Company will be held at 19 Kallang Avenue #07-153<br />
Singapore 339410 on Thursday, 30 April 2009 at 10.00 a.m. to transact the following business :-<br />
Ordinary Business<br />
1 To receive and adopt the Directors’ Report and Audited Accounts for the financial year ended 31 December 2008 and the Auditors’<br />
Report thereon. [Resolution 1]<br />
2 To declare a one-tier tax exempt first and final dividend of 2.7 cents per ordinary share for the year ended 31 December 2008.<br />
[Resolution 2]<br />
3 (a) To re-elect Mr Tan Hup Foi who is retiring in accordance with Article 91 of the Company’s Articles of Association, as Director<br />
of the Company.<br />
[Resolution 3(a)]<br />
Note: Mr Tan Hup Foi if re-elected, will remain as the Chairman of the Company’s Nominating Committee, and member of the Audit<br />
Committee and Compensation Committee and will be considered as an independent director for the purposes of Rule 704(8) of the<br />
Listing Manual of the Singapore Exchange Securities Trading <strong>Limited</strong> (“Listing Manual”).<br />
(b)<br />
(c)<br />
To re-elect Mr Narong Intanate who is retiring in accordance with Article 91 of the Company’s Articles of Association, as<br />
Director of the Company.<br />
[Resolution 3(b)]<br />
To note that Mr Liu Wei who is retiring in accordance with Article 91 of the Company’s Articles of Association, as Director of<br />
the Company, will not stand for re-election.<br />
Note: Mr Liu Wei, a Non-Executive Director of the Company, will cease to be the Vice-Chairman of the Company.<br />
4 To re-appoint KPMG LLP as Auditors and to authorise the Directors to fix their remuneration. [Resolution 4]<br />
5 To approve the payment of Directors’ Fees of $189,000.00 for the year ended 31 December 2008. (2007: $348,000.00).<br />
[Resolution 5]<br />
Special Business<br />
6 To consider and, if thought fit, to pass the following as Ordinary Resolutions, with or without modifications:-<br />
(a)<br />
THAT pursuant to Section 161 of the Companies Act, Cap. 50 (the “Act”) and the listing rules of the Singapore Exchange<br />
Securities Trading <strong>Limited</strong> (the “SGX-ST”), authority be and is hereby given to the Directors to:-<br />
(i)<br />
(ii)<br />
issue shares in the capital of the Company whether by way of bonus issue, rights issue or otherwise; and/or<br />
make or grant offers, agreements or options (collectively “Instruments”) that might or would require shares to be issued,<br />
including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments<br />
convertible into shares; and/or<br />
Notice of Annual<br />
General Meeting<br />
p.<br />
100 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong><br />
(iii) issue additional Instruments convertible into shares arising from adjustments made to the number of Instruments;
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may, in their absolute<br />
discretion, deem fit; and (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares<br />
in pursuance of any Instrument made or granted by the Directors while this Resolution was in force,<br />
provided that:<br />
(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of any<br />
Instruments made or granted pursuant to this Resolution):<br />
(a)<br />
(b)<br />
shall not exceed 50% of the total number of issued shares in the capital of the Company excluding treasury shares (as<br />
calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other<br />
than on a pro rata basis to shareholders of the Company shall not exceed 20% of the total number of issued shares in<br />
the capital of the Company excluding treasury shares (as calculated in accordance with sub-paragraph (2) below); and<br />
the 50% limit in sub-paragraph (a) above may be increased to 100% for issues of shares and/or Instruments by way of<br />
renounceable rights issue where shareholders of the Company are entitled to participate in the same on a pro rata basis;<br />
(2) (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate<br />
number of shares that may be issued under sub-paragraphs (1)(a) and (1)(b) above, the percentage of issued shares shall<br />
be based on the total number of issued shares in the capital of the Company excluding treasury shares at the time this<br />
Resolution is passed, after adjusting for:<br />
(a)<br />
(b)<br />
(c)<br />
new shares arising from the conversion or exercise of any convertible securities;<br />
new shares arising from the exercise of share options or vesting of share awards which are outstanding or subsisting at<br />
the time this Resolution is passed, provide that the aforesaid share options or share awards were granted in compliance<br />
with Part VIII of Chapter 8 of the Listing Manual; and<br />
any subsequent bonus issue or consolidation or subdivision of shares;<br />
(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing<br />
Manual for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association<br />
for the time being of the Company; and<br />
(4) (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in<br />
force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general<br />
meeting of the Company is required by law to be held, whichever is the earlier.<br />
[See Explanatory Note (i)]<br />
[Resolution 6(a)]<br />
(b)<br />
THAT, subject to the grant of the share issue mandate proposed to be tabled as Resolution 6(a) above and pursuant to the terms<br />
and conditions of the share issue mandate, notwithstanding Rule 811 of the Listing Manual, the Directors of the Company be<br />
and are hereby authorised to issue new shares of the Company to subscribers or placees under a share placement, undertaken on<br />
a non pro rata basis, at a discount of up to 20% to the weighted average price for trades done on the SGX-ST for the full market<br />
day on which the placement agreement or subscription agreement is signed, PROVIDED THAT, if trading in the Company’s<br />
shares is not available for a full market day, the weighted average price shall be based on trades done on the preceding market day<br />
up to the time the placement agreement or subscription agreement is signed.<br />
[See Explanatory Note (ii)]<br />
[Resolution 6(b)]<br />
Notice of Annual<br />
General Meeting<br />
Annual Report 2008<br />
p.<br />
101
(c)<br />
(d)<br />
That the Directors be and are hereby authorised to offer and grant options in accordance with the provisions of the <strong>ECS</strong> Share<br />
Option Scheme II (the “<strong>ECS</strong> Share Option Scheme II”), and to allot and issue from time to time such number of shares in the<br />
capital of the Company as may be required to be issued pursuant to the exercise of the options under the <strong>ECS</strong> Share Option<br />
Scheme II provided always that the aggregate number of ordinary shares to be issued pursuant to the <strong>ECS</strong> Share Option Scheme<br />
II shall not exceed fifteen per cent of the total number of issued shares in the capital of the Company from time to time.<br />
[See Explanatory Note (iii)]<br />
[Resolution 6(c)]<br />
That for the purposes of Chapter 9 of the Listing Manual:<br />
(i)<br />
(ii)<br />
the Shareholders’ General Mandate for the Company, its subsidiaries and associated companies or any of them to enter into<br />
any of the transactions falling within the types or categories of interested person transactions as described in section 3.1<br />
(Interested Person Transactions) of the Appendix A with Guangzhou Jia Dou Ji Tuan Co., <strong>Limited</strong> and its subsidiaries be and<br />
is hereby approved, provided that such transactions are entered into on an arm’s length basis, on normal commercial terms<br />
and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of the<br />
Appendix A;<br />
the aforesaid Shareholders’ General Mandate shall, unless earlier revoked or varied by the Company in general meeting,<br />
continue in force until the next annual general meeting of the Company; and<br />
(iii) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things<br />
(including, without limitation, executing all such documents and approving any amendment, alteration or modification to<br />
any document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect to the<br />
aforesaid Shareholders’ General Mandate and/or this Resolution 6(d).<br />
[See Explanatory Note (iv)]<br />
[Resolution 6(d)]<br />
(e)<br />
That for the purposes of Chapter 9 of the Listing Manual:<br />
(i)<br />
(ii)<br />
the Shareholders’ General Mandate for the Company, its subsidiaries and associated companies or any of them to enter<br />
into any of the transactions falling within the types or categories of interested person transactions as described in section<br />
3.1 (Interested Person Transactions) of the Appendix A with Netband Consulting Co., Ltd, Vnet Capital Co., Ltd, Vnet<br />
Capital International Co., Ltd., Thai Incubator.Com Co., Ltd and/or Vintcom Technology Co., Ltd. (as the case may be),<br />
be and is hereby approved, provided that such transactions are entered into on an arm’s length basis, on normal commercial<br />
terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures)<br />
of the Appendix A;<br />
the aforesaid Shareholders’ General Mandate shall, unless earlier revoked or varied by the Company in general meeting,<br />
continue in force until the next annual general meeting of the Company; and<br />
(iii) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things<br />
(including, without limitation, executing all such documents and approving any amendment, alteration or modification to<br />
any document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect to<br />
the aforesaid Shareholders’ General Mandate and/or this Resolution 6(e).<br />
[See Explanatory Note (iv)]<br />
[Resolution 6(e)]<br />
(f)<br />
That:<br />
(i)<br />
for the purposes of the Companies Act, the exercise by the Directors of the Company of all the powers of the Company to<br />
purchase or otherwise acquire the ordinary shares in the capital of the Company not exceeding in aggregate the Prescribed<br />
Limit (as hereafter defined), at such price(s) as may be determined by the Directors of the Company from time to time up<br />
to the Maximum Price (as hereafter defined), whether by way of:<br />
Notice of Annual<br />
General Meeting<br />
p.<br />
102 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
(a)<br />
(b)<br />
market purchases (each a “Market Purchase”) on the Singapore Exchange Securities Trading <strong>Limited</strong> (“SGX-ST”);<br />
and/or<br />
off-market purchases (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with<br />
any equal access schemes as may be determined or formulated by the Directors of the Company as they consider fit,<br />
which schemes shall satisfy all the conditions prescribed by the Companies Act, and otherwise in accordance with all<br />
other provisions of the Companies Act and listing rules of the SGX-ST as may for the time being be applicable, be<br />
and is hereby authorised and approved generally and unconditionally (the “Share Buyback Mandate”);<br />
(ii)<br />
unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company<br />
pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the<br />
period commencing from the passing of this Resolution and expiring on the earlier of:<br />
(a)<br />
(b)<br />
(c)<br />
the date on which the next annual general meeting of the Company is held or required by law to be held;<br />
the date on which the share buybacks are carried out to the full extent mandated; or<br />
the date on which the authority contained in the Share Buyback Mandate is varied or revoked;<br />
(iii) in this Resolution:<br />
“Prescribed Limit” means 10% of the issued ordinary share capital of the Company as at the date of passing of this<br />
Resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the<br />
applicable provisions of the Companies Act, at any time during the Relevant Period, in which event the issued ordinary<br />
share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered<br />
(excluding any treasury shares that may be held by the Company from time to time);<br />
“Relevant Period” means the period commencing from the date on which the last this AGM was is held and expiring on the<br />
date the next AGM is held or is required by law to be held, whichever is the earlier, after the date of this Resolution; and<br />
“Maximum Price” in relation to a share to be purchased, means an amount (excluding brokerage, stamp duties, applicable<br />
goods and services tax and other related expenses) not exceeding:<br />
(i)<br />
(ii)<br />
in the case of a Market Purchase : 105% of the Average Closing Price;<br />
in the case of an Off-Market Purchase : 120% of the Highest Last Dealt Price,<br />
where:<br />
“Average Closing Price” means the average of the closing market prices of a share over the last five market days, on which<br />
transactions in the shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any<br />
corporate action that occurs after the relevant 5-day period;<br />
“Highest Last Dealt Price” means the highest price transacted for a share as recorded on the market day on which<br />
there were trades in the shares immediately preceding the day of the making of the offer pursuant to the Off-Market<br />
Purchase; and<br />
“day of the making of the offer” means the day on which the Company announces its intention to make an offer for<br />
the purchase of shares from shareholders of the Company stating the purchase price (which shall not be more than the<br />
Maximum Price calculated on the foregoing basis) for each share and the relevant terms of the equal access scheme for<br />
effecting the Off- Market Purchase; and<br />
Notice of Annual<br />
General Meeting<br />
Annual Report 2008<br />
p.<br />
103
(iv) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including<br />
executing such documents as may be required) as they may consider expedient or necessary to give effect to the transactions<br />
contemplated by this Resolution.<br />
[See Explanatory Note (v)]<br />
[Resolution 6(f)]<br />
7 To transact any other business that may be properly transacted at an annual general meeting. [Resolution 7]<br />
By Order of the Board<br />
Eddie Foo Toon Ee<br />
Company Secretary<br />
Singapore<br />
14 April 2009<br />
Explanatory Notes :<br />
(i) Resolution 6(a), if passed, will authorise the Directors to issue shares in the capital of the Company and to make or grant Instruments<br />
(such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such Instruments, up to a number not<br />
exceeding (i) 50% of the total number of issued shares in the capital of the Company, of which up to 20% may be issued other than<br />
on a pro rata basis to shareholders and (ii) the aforesaid limit of 50% may be increased to 100% for issue of shares and/or Instruments<br />
by way of renounceable rights issue where shareholders of the Company are entitled to participate in the same on a pro rata basis. For<br />
the purpose of determining the aggregate number of shares that may be issued, the percentage of issued shares shall be based on the<br />
total number of issued shares excluding treasury shares in the capital of the Company at the time that Resolution 6(a) is passed, after<br />
adjusting for (a) new shares arising from the conversion or exercise of any convertible securities, (b) new shares arising from the exercise<br />
of share options or vesting of share awards which are outstanding or subsisting at the time that Resolution 6(a) is passed, provided<br />
that the aforesaid share options or share awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual, (c) any<br />
subsequent bonus issue or consolidation or subdivision or shares.<br />
The authority for undertaking pro rata renounceable rights issues of up to 100% of the Company’s issued share capital is proposed<br />
pursuant to the SGX-ST’s news release of 19 February 2009 which, inter alia, introduced further measures to accelerate and facilitate<br />
the fund raising efforts of listed issuers. If Resolution 6(a) is approved, a renounceable rights issue made pursuant to the mandate is<br />
conditional upon the Company:-<br />
• making periodic announcements on the use of the proceeds as and when the funds are materially disbursed; and<br />
• providing a status report on the use of proceeds in the annual report.<br />
Resolution 6(a), if passed, will provide the Directors with an opportunity to raise funds and avoid prolonged market exposure by<br />
reducing the time taken for shareholders’ approval, in the event such need arises. The risk to minority shareholders’ interests are<br />
mitigated as all shareholders have equal opportunities to participate and can dispose of their entitlements through trading of nil-paid<br />
rights if they do not wish to subscribe for their rights shares pursuant to any renounceable rights issue.<br />
Notice of Annual<br />
General Meeting<br />
p.<br />
104 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
(ii)<br />
Resolution 6(b), if passed, will authorise the Directors to issue new shares in pursuance of the share issue mandate granted under<br />
Resolution 6(a), to subscribers or placees, on a non pro rata basis, at a discount of not more than 20% to the weighted average price<br />
for trades done on the SGX-ST for the full market day on which the placement or subscription agreement is signed.<br />
The maximum discount of 20% is proposed pursuant to the SGX-ST’s news release of 19 February 2009 which, inter alia, introduced<br />
further measures to accelerate and facilitate the fund raising efforts of listed issuers.<br />
(iii) Resolution 6(c), if passed, will authorise the Directors to offer and grant options and to allot and issue shares pursuant to the <strong>ECS</strong> Share<br />
Option Scheme II, provided that the aggregate number of shares issued pursuant to the <strong>ECS</strong> Share Option Scheme II shall not exceed<br />
fifteen (15) per cent of the total number of issued shares in the capital of the Company from time to time.<br />
(iv) Resolutions 6(d) and 6(e), if passed, will authorise the Company, its subsidiaries and associated companies, from the date of the annual<br />
general meeting until the conclusion of the next annual general meeting, to enter into interested person transactions with certain<br />
interested persons of the Company, its subsidiaries and/or associated companies. Each of such mandates shall, unless revoked or varied<br />
by the Company in general meeting, continue in force until the next annual general meeting of the Company. For further details on<br />
the interested person transactions and interested persons referred to, please see the appendices Appendix A to this Notice.<br />
(v)<br />
Resolution 6(f), if passed, will renew effective up to the next annual general meeting (unless earlier revoked or varied by the Company<br />
in general meeting) the Share Buy-back Mandate for the Company to purchase or acquire its ordinary shares. The amount of financing<br />
required for the Company to purchase or acquire its ordinary shares, and the impact on the Company’s financial position, cannot be<br />
ascertained as at the date of the Notice of Annual General Meeting as these will depend on the number of ordinary shares purchased or<br />
acquired and the price at which such ordinary shares were purchased or acquired. For further details on the Share Buyback Mandate,<br />
please see Appendix B to this Notice.<br />
Proxies :<br />
A member entitled to attend and vote at the annual general meeting may appoint not more than two proxies to attend and vote on his behalf<br />
and where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be<br />
specified in the form of proxy. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at<br />
the office of the Company’s Share Registrar, M & C Services Private <strong>Limited</strong>, 138 Robinson Road #17-00, The Corporate Office, Singapore<br />
068906, not less than forty-eight hours before the time set for the holding of the annual general meeting.<br />
NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATE<br />
NOTICE IS ALSO HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on 9<br />
May 2009, for the purpose of determining the members’ entitlements to the dividend to be proposed at the Annual General Meeting<br />
of the Company to be held on 30 April 2009. Duly completed registrable transfers in respect of shares in the Company received up to<br />
the close of business at 5.00 p.m. on 8 May 2009 by the Company’s Share Registrar, M & C Services Private <strong>Limited</strong>, will be registered<br />
to determine members’ entitlements to such dividend. Members whose securities accounts with The Central Depository (Pte) Ltd are<br />
credited with shares in the Company as at 5.00 p.m. on 8 May 2009 will be entitled to such proposed dividend.<br />
The proposed dividend, if approved at the Annual General Meeting, will be paid on 22 May 2009.<br />
Notice of Annual<br />
General Meeting<br />
Annual Report 2008<br />
p.<br />
105
p.<br />
106 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong><br />
This page is intentionally left blank.
Proxy Form<br />
Annual General Meeting<br />
<strong>ECS</strong> HOLDINGS LIMITED<br />
(Incorporated in the Republic of Singapore)<br />
Company Registration No. 199804760R<br />
Important:<br />
1. For investors who have used their CPF monies to buy the Company’s shares, the Annual Report is forwarded to<br />
them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.<br />
2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used<br />
or purported to be used by them.<br />
3. CPF Investors who wish to attend the Annual General Meeting as OBSERVERS have to submit their requests<br />
through their respective Agent banks so that their Agent banks may register with the Company Secretary of <strong>ECS</strong><br />
<strong>Holdings</strong> <strong>Limited</strong> not less than 48 hours before the time appointed for holding the meeting.<br />
I/We _____________________________________________________________________________________________________________________<br />
of________________________________________________________________________________________________________________________<br />
being a member/members of <strong>ECS</strong> HOLDINGS LIMITED hereby appoint<br />
Name Address NRIC /Passport Number Proportion of Shareholdings(%)<br />
and/or (delete as appropriate)<br />
as my/our proxy/proxies to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of <strong>ECS</strong> HOLDINGS LIMITED<br />
to be held at 19 Kallang Avenue #07-153 Singapore 339410 on 30 April 2009 at 10.00 a.m. and at any adjournment thereof.<br />
(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutions as set out in the Notice of<br />
Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter<br />
arising at the Annual General Meeting.)<br />
No ORDINARY RESOLUTIONS FOR AGAINST<br />
1.<br />
Ordinary Business:<br />
Adoption of Reports and Accounts<br />
2. Declaration of a one–tier tax exempt first and final dividend of 2.7 cents per ordinary share for the year ended<br />
31 December 2008<br />
3. Re-election of Directors :<br />
(a) Mr Tan Hup Foi<br />
(b) Mr Narong Intanate<br />
4. Re-appointment of Auditors<br />
5. Approval of Directors’ Fees of S$189,000/- for the year ended 31 December 2008<br />
6.<br />
Special Business<br />
(a) Authority for Directors to issue shares pursuant to Section 161 of the Companies Act, Cap. 50<br />
(b) Authority to issue shares priced at a discount of up to 20% for placement exercise<br />
(c) Authority for Directors to offer and grant options and allot shares pursuant to the <strong>ECS</strong> Share Option Scheme II<br />
(d) To approve the proposed renewal of the Shareholders’ General Mandate for Interested Person Transactions with<br />
Guangzhou Jia Dou Ji Tuan Co., <strong>Limited</strong> and its subsidiaries<br />
(e) To approve the proposed renewal of the Shareholders’ General Mandate for Interested Person Transaction with<br />
Netband Consulting Co., Ltd, Vnet Capital Co., Ltd, Vnet Capital International, Thai Incubator.Com Co., Ltd<br />
and/or Vintcom Technology Co., Ltd.<br />
(f) To approve the proposed renewal of the Share Buy-back Mandate<br />
7. Any other ordinary business<br />
Dated this __________ day of __________ 2009.<br />
Total Number of Shares Held:<br />
______________________________________<br />
Signature(s) of member(s) or Common Seal<br />
IMPORTANT : PLEASE READ NOTES OVERLEAF
Notes :-<br />
1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A<br />
of the Companies Act, Cap. 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you<br />
should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the<br />
Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name<br />
in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by<br />
you.<br />
2 A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote<br />
on his behalf. A proxy need not be a member of the Company.<br />
3 Where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the<br />
form of proxy, failing which, the appointment shall be deemed to be in the alternative.<br />
4 The instrument appointing a proxy must be deposited at the office of the Share Registrar of the Company, M&C Services Private <strong>Limited</strong> at 138<br />
Robinson Road #17-00, The Corporate Office, Singapore 068906, not less than forty-eight (48) hours before the time appointed for the holding of the<br />
Annual General Meeting.<br />
5 The instrument appointing a proxy must be signed by the appointor or his attorney. Where the instrument appointing a proxy is given by a corporation,<br />
it must be given either under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation.<br />
6. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof<br />
must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.<br />
7. A corporation which is a member may by a resolution of its directors or other governing body authorise such person as it thinks fit to act as its<br />
representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Cap. 50.<br />
General:<br />
The Company shall be entitled to reject an instrument of proxy if it is incomplete, improperly completed or illegible or where the true intentions of the<br />
appointor are not ascertainable from the instructions of the appointor specified in the instrument of proxy. In addition, in the case of shares entered in the<br />
Depository Register, the Company may reject an instrument of proxy lodged if the member, being the appointor, is not shown to have shares entered against<br />
his name in the Depository Register as at forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting, as certified by The<br />
Central Depository (Pte) <strong>Limited</strong> to the Company.