Strength & Stability - ECS Holdings Limited

Dear Stakeholders
I am pleased to present to you our FY2008 annual
report which chronicles another stellar performance,
underscoring the efficacy of ECS’ 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 ECS’ controlling
shareholding did not impact ECS’ 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. ECS’ 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, ECS 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