“While our overriding business objectives this year continued to be driven by our own ongoing margin enhancement initiatives started more than three years ago, FY2008 was another exciting year that strengthened the Group’s business foundation.” Mr Li Jia Lin Chairman Chairman’s Message p. 04 <strong>ECS</strong> <strong>Holdings</strong> <strong>Limited</strong>
Dear Stakeholders I am pleased to present to you our FY2008 annual report which chronicles another stellar performance, underscoring the efficacy of <strong>ECS</strong>’ margins accretive growth strategies and more significantly, our agility to adjust to changing economic circumstances. Having resumed our listed status on the Singapore Exchange in August 2008 since the completion of the VST transaction, I am happy to report that the transition in <strong>ECS</strong>’ controlling shareholding did not impact <strong>ECS</strong>’ exemplary track record of operations and performance. Our relationships with our vendors, customers and bankers remain strong. While our overriding business objectives this year continued to be driven by our own ongoing margin enhancement initiatives started more than three years ago, FY2008 was another exciting year that strengthened the Group’s business foundation. We believe that our widened product range, enlarged distribution network and enhanced operational efficiency will place us in good stead to compete in an increasingly challenging business environment that the world is poised for over the next few quarters. These efforts had continued to gain momentum even before the current financial crisis deepened during the second half of calendar year 2008, as we sharpened our focus on improving internal efficiencies including generating positive operating cash flow through better management of working capital and more effective management of financial resources. Notwithstanding the impact of the ongoing financial crisis in the countries in which we operate, for the financial year ended 31 December 2008 (“FY2008”) the Group continued to break new records across different parameters. Accordingly in FY2008, net profit attributable to equity holders rose 25.8% to $29.4 million. Concurrently, FY2008 net profit growth continued to outstrip FY2008 revenue growth as the Group consciously tried to enhance operating performance with revenue growth an important but secondary priority. For the period under review, operating profit increased 22.9% to $52.2 million from $42.5 million even as revenue rose slightly by 5.8% to $2.9 billion from $2.8 billion. <strong>ECS</strong>’ revenue performance in FY2008 would have been better by about 11.6% had it not been for a one-time effect of a currency translation. In line with our resolve to strengthen our long–term prospects, we conscientiously focused on controlling costs. Consequently profit margins continued their upward trend, operating cash flows and cash position also strengthened considerably compared to a year ago. Having intensified our focus on cash management in view of the declining financial conditions worldwide, as at 31 December 2008, <strong>ECS</strong> generated a positive operating cash flow of $16.4 million, up from $7.2 million at 31 December 2007. Due to the improved operating cash flow, net gearing improved to 0.60 times from 0.68 times a year ago. Earnings per share (“EPS”), on a fully diluted basis, correspondingly rose to 8.0 cents versus 6.4 cents in FY2007 while net asset value (“NAV”) per share increased to 65.09 cents as at 31 December 2008 versus 58.20 cents a year ago. I am happy to report that comparing by business division, our on-going initiatives to enhance the Group’s sales mix in line with market fundamentals have continued to pay off. Revenue from higher-margin Enterprise Systems, comprising servers, networking products and enterprise software, grew 17.5% while net profit rose 31.5%. On a geographical market basis, North Asia led the growth in profitability with a 47.6% growth in profit before interest and taxation (“PBIT”) buoyed by sales of higher-margin enterprise software, networking products and servers. While these strategies were undertaken to maximise our leverage on opportunities that we believe will strengthen our long-term growth prospects, this process is by no means complete. Most significantly, FY2008 represents our on-going smooth and successful integration with VST. Chairman’s Message Annual Report 2008 p. 05
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