Strength & Stability - ECS Holdings Limited

AN OVERVIEW
FY2008 distinguishes itself as a year that witnessed ECS’ ongoing
margins accretive growth initiatives gaining momentum.
These efforts which were put in place a few years ago, continued
unabated throughout FY2008 even though ECS relisted its
shares on the Singapore Exchange only in August.
During the period under review, our conscious commitment
to enhance operating performance with revenue growth an
important but secondary priority saw net profit growth continue
to outstrip revenue growth.
But most importantly, our improving bottomline and margins
for the year under review, even after the current financial
crisis deepened during the second half of calendar year 2008,
demonstrated our agility to adapt to challenging economic
circumstances and uncertainties.
Realising our limited control over these externalities, we
sharpened focus on improving internal efficiencies including
generating positive operating cash flow through better
management of working capital and more effective management
of financial resources.
Continued margins enhancement and improved cash
management led ECS to generate not only strong profit and
margins growth but also stronger cash flow. This is particularly
significant in view of deteriorating financial conditions
worldwide.
In fact, these two initiatives will continue to be pivotal to our
growth strategy over the next few quarters.
Financial And Operations Review
In FY2008 ECS’ net profit attributable to equity holders
rose 25.8% to $29.4 million from $23.4 million in FY2007
propelled by continued margins enhancement and improved
cash management.
The Group’s sustained efforts to enhance operating performance
with revenue growth an important but secondary objective saw
operating profit increase 22.9% to $52.2 million from $42.5
million even though revenue inched up slightly by 5.8% to
$2.9 billion from $2.8 billion over the comparative period.
Consequently, net profit before interest and tax (“PBIT”) rose
19.6% to $41.4 million from $34.6 million.
Concurrently gross and operating margins increased to 5.1%
from 4.8% and to 1.8% from 1.5% respectively, over the
comparative periods.
Despite the slight revenue growth, the Group’s total operating
expenses increased by 6.5% to $102.1 million from $95.9
million as we stepped up sales particularly in the higher margin
enterprise systems business segment.
Due to increases in interest rates, our finance costs also rose
30.0% to $11.4 million from $8.7 million. Current and
non-current bank borrowings rose 4.9% to $193.2 million
from $184.2 million.
Notwithstanding the challenges in the external environment,
throughout the year, the Group retained focus on improving
financial health by generating strong profit and margin growth
as well as stronger cash flow.
As at 31 December 2008, ECS generated a positive operating
cash flow of $16.4 million, up from $7.2 million as at 31
December 2007. We also continued to further reduce accounts
receivable days to 43.6 days from 47.8 days during the period
under review.
CEO’s
Message
Annual Report 2008
p.
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