2 billioN - ECS Holdings Limited

Contents04. Corporate Information05. Note from the Editor12. Chairman’s Message14. Tay’s For Partnership:An exclusive with the CEO0620. Board of Directors24. Senior Management26. 2005 Highlights27. 2005 Awards28. Group Structure0830. Corporate Governance38. Financial Report10

teamwork ECS HOLDINGs LIMITED Annual Report 2005

Nothing moves untileveryone is ready. Therally team is as good asits weakest link. No onewants to be that link,yet someone will alwaysfind a reason to do better.Revving up for the startexcites everyone in ECS.The collective preparationand anticipation isvery often the fun andreward in itself.Keep GoingECS HOLDINGs LIMITED Annual Report 2005

CorporateInformationBoard of DirectorsMr Lin Chien (Chairman, Independent Director)Mr Seah Moon Ming (Vice-Chairman, appointedon 3 January 2005)Mr Liu Wei (Vice-Chairman)Mr Tay Eng Hoe (Group Chief Executive Officer)Mr Narong Intanate (Executive Director)Mr Foo Sen Chin (Executive Director)Mr Chay Yee Meng (Independent Director)Mr Leong Horn Kee (Independent Director)Mrs Lee Suet Fern (Independent Director)Mr Teo Ek Tor (Independent Director)Mr Chang Yew Kong (Non-Executive Director,appointed on 9 May 2005)Mr Tan Hup Foi (Independent Director,appointed on 7 February 2006)Audit CommitteeMr Leong Horn Kee (Chairman)Mrs Lee Suet FernMr Teo Ek TorMr Chay Yee MengMr Tan Hup FoiCompensation CommitteeMr Teo Ek Tor (Chairman)Mr Lin ChienMr Chang Yew KongNominating CommitteeMrs Lee Suet Fern (Chairman)Mr Tay Eng HoeMr Leong Horn KeeMr Chay Yee MengMr Chang Yew KongAuditorKPMGCertified Public Accountants16 Raffles Quay #22-00Hong Leong Building, Singapore 048581Partner-in-chargeMs Lee Tuck Ngor, Adeline (Since FY2001)RegistrarM&C Services Private Limited138 Robinson Road #17-00The Corporate Office, Singapore 068906Registered Office19 Kallang Avenue #07-153Singapore 339410Senior Management atECS Holdings Limited:Mr Tay Eng HoeGroup Chief Executive OfficerMr Jansen EkGroup Chief Operating OfficerMr Wong Heng ChongGroup Chief Financial OfficerMr Lim Tow ChengSenior Vice President, Business DevelopmentMr Eddie Foo Toon EeGroup Financial ControllerMr Adrian Chong Yew FuiGroup Internal Audit ManagerSenior Management atECS Holding Limited’s subsidiaries:Mr Foong Kam ThoPresidentECS Computers (Asia) LimitedMr Liu Wei +Chief Executive OfficerECS Technology (China) LimitedMr Narong IntanatePresidentThe Value Systems Co., LtdMr Foo Sen ChinManaging DirectorECS Kush Sdn BhdMr Lim Tow ChengChief Executive Officer (Acting)ECS Indo Pte. Ltd.Mr Nana Juhana OsayExecutive DirectorPT ECS Indo JayaMr Jimmy GoPresidentMSI-ECS Phils., Inc.Principal BankersStandard Chartered BankThe Development Bank of SingaporeOversea-Chinese Banking CorporationMalayan Banking BerhadUnited Overseas Bank LimitedCompany SecretaryEddie Foo Toon Ee, CPA+ Mr Foong Kam Tho was appointed CEO of ECS Chinaeffective from 1st January, 2006 (See also page 24) ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingNote fromThe EditorMr Jansen Ek Group Chief Operating OfficerFrom a company with a turnover of $530 million in 2001 with presence inthree countries, we have gained enormous strides to become a truly regionalgroup with operations in six countries, breaking the $2 billion mark in salesin 2005.This fourfold surge in four years is nothing short of a formidable feat in anextremely competitive industry. In many ways ECS is akin to a top-notchFormula 1 team. With a power-charged spirit of achievement coupled withteamwork, drive and endurance — these are the very factors integral to F1victory — we have raced towards business excellence.Success has inspired us to stay the course, but at the core of it all, it is peoplethat have driven our focus — our staff, partners, associates, customersand shareholders. We conduct our day-to-day business with the maxim“Technology is a tool...people make the difference” in mind. In all that we do,we seek to add value to their lives and businesses.We’ve done well to cross the finish line in 2005 triumphantly. But we knowthe race has only begun. We have set our sights farther and wider in the daysahead. We will keep going — and keep on winning.ECS HOLDING LIMITED Annual Report 2005

drive ECS HOLDINGs LIMITED Annual Report 2005

Lest it seems thecircuit is but one man’sglory, let it be knownthat like fine prose theintoxicating allure ofunbridled speed on thetracks is the result of awhole ecosystem of pureadrenaline. Pure drive.In ECS, we believe thebest defence is offence.Instead of waiting forchallenges to overtakeus, we drive head on intothe fearless zone andsurmount the frontiersof our imagination.Keep GoingECS HOLDINGs LIMITED Annual Report 2005

endurance ECS HOLDINGs LIMITED Annual Report 2005

It is not over until itis over. The race doesnot end until it does.While sheer grit canovercome the mostformidable odds, doubtslikewise can overtakethe enfeebled mind, nomatter how momentarythe lapse. Such is thesport’s magic. It goesalmost without sayingthat it is a tense marketout there, dynamic andrelentless. Yet ECS hasscarcely been drawntowards the easier route.Since Day 1, we havestayed the course, badeour time, and kept ourlead. Anything lessis inconceivable.Keep GoingECS HOLDINGs LIMITED Annual Report 2005

achievemen10 ECS HOLDINGs LIMITED Annual Report 2005

The end of a rally,regardless of the results,is always greeted withmutual recognition forhaving done the bestgiven the changingcircumstances. It is alsothe moment to raiseone’s hand and proclaim:“I will be back”. Workingwith the world’s best inECS is a continuum ofrallies. It just goes on.It simply gets better.tKeep GoingECS HOLDINGs LIMITED Annual Report 200511

Chairman’sMessageECS’s profitability in 2005 outpaced2004’s by $3.9m to $17.3m ingroup net profit after tax andminority interest. Earnings pershare raced to 4.9 cents from 3.8 centsin 2004. These are due to the efforts ofmanagement, staff, and vendors, of whomI am deeply appreciative.Achieving growth in a very competitiveenvironment is no easy task but, beingranked 14 th in the inaugural SingaporeInternational 100 Ranking of companies withthe highest overseas revenue demonstratesthat success can be achieved if we stayfocused, committed, and loyal to ourpartners, customers, and stakeholders.ECS is run like a finely-tuned Formula1 (F1) racing car. A successful F1 teamneeds high-tech engineering, preciseexecution, disciplined teamwork, and anunderstanding of risk versus reward. Wehave a deep knowledge of the ICT sector,an extensive network across key marketsin the Asia Pacific, a cohesive team and theability to act at the right time.Every F1 team needs solid sponsors’backing. Vendors want to deal with strongregional players and that’s what we are– amongst the top 3 distributors in everycountry where we have a presence. Withour latest acquisition of a stake in MSI-ECS in the Philippines, where we seean ICT sector poised for good growth,we have over 17,000 channel partnersand 32 offices in six countries.A major regional player needs anextensive network. So we keepstrengthening our geographicalreach for wider pan-Asian coverageto better serve our customers.Like F1, the barriers of entry arevery high, few have succeededin the highest echelons of ICTdistribution.More than just track record,financial resources and theman at the steering wheel,there remains a whole host ofsupport that keeps the competitive enginerevving in top form regardless of externalconditions. This is the amazing effort of acomplete team.That is why a world-class driver requiresdedicated teamwork to achieve perfection ina race. Likewise, in managing a group – themanagement team needs support to maketough decisions in a highly competitiveoperating environment.The Group expects to do well, delivering onwhat we have committed to achieve. I amconfident that we are on the right track withour geographical expansion, consolidationof our China operations, and move towardsthe higher-margin Enterprise Systems andAccessories businesses.Already a $2 billion group by sales, we willcontinue to work our capital and assetsmore efficiently and manage costs. Weare on track to rev up earnings quality andincrease shareholder value.In our planned succession for our Chinaoperations, our Vice-Chairman, Liu Wei,has been promoted to Chairman of ECSTechnology China. Mr Foong Kam Tho waspromoted to Chief Executive Officer.We welcome Mr Tan Hup Foi to the Boardas an independent director. He replacesMr Wang Fangmin, whom we thank for hissterling service.We strive to look for ways to improve overallreturns to shareholders. With our consistentand improved profit performance in 2005,we are proposing to reward shareholderswith a one-tier tax exempt dividend of 1.4cents per share for the year compared to 0.8cents in 2004.Again, I want to thank shareholders,management, and staff for their continuedsupport, without which ECS cannotsuccessfully perform.Lin ChienChairmanApril 200612 ECS HOLDINGs LIMITED Annual Report 2005

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Tay’s forPartnership:an exclusive with the CEOOverviewIt was an invigorating year for ECS as wecrossed 2005’s finish line with a record ofover $2.0 billion in revenue. The marketenvironment remains challenging but webenefited from the ongoing build-out ofour pan-Asia network.Our ability to capture greater vendorand customer mindshare helped usgained market share, even as theregional Information & CommunicationsTechnology (ICT) supply chain continues toconsolidate.Our profit record is the culminationof our team’s in-depth marketknowledge, careful planning, andprecise execution of a focusedstrategy, honed through yearsof operating in Asia Pacific.Ever alert to growthopportunities, we acceleratedour move up the value-addedchain, with encouraging earlyresults. Our concerted pushinto China’s EnterpriseSystems business segmentand the Accessoriessegment in Singaporecontributed positively.I am pleased to reportECS delivered again bymaintaining our unbrokenprofit record, with 2005group net profit attributableto shareholders hitting $17.3million. Net tangible assetsper share leapt to 38.7 cents,against 35.5 cents in 2004. Returnon shareholders’ equity also rose to10.4% from 8.8%.Operational ReviewEnterprise SystemsEnterprise Systems’ sales were 2005’skey revenue and earnings drivers, withrevenue growing a robust 24.9% to$781.1 million on strong demand forenterprise servers, software and networkinfrastructure products. Contribution toGroup revenue rose to 38.4% in 2005, from33.5% in 2004, while the share of profitbefore interest and tax (PBIT) increasedto 49.8%, from 40.8%.Taking advantage of buoyant corporatedemand, to improve profitability, we shiftedgears in China, pushing aggressivelyinto the higher-margin Enterprise Systemsbusiness segment. Our success significantlyboosted Enterprise Systems’ 2005performance, with its PBIT roaring 42.1%to $14.9 million, from $10.5 million in 2004.DistributionDistribution sales improved marginallyby 1.5% to $1.23 billion in 2005. Growthmoderated due mainly to our plannedmove away from the lower-margindistribution business in China. However,the strong 28.0% surge in South EastAsia’s sales more than offset China’ssales decline. In particular, Malaysia andThailand exceeded expectations with salesup 59.9% and 30.3%, respectively.Digital consumer electronics, the fastestgrowingproduct segment in 2005,contributed some in excess of 10% to Grouprevenue. Our success with iPod openedup opportunities with other vendors andproducts. New products added during theyear, such as HP iPAQ smartphone, O2 PDAphone, etc, also boosted our network’srevenue yield. The Group continues to beon the look out for exciting new productsthat enhance our consumer electronicproduct offerings.14 ECS HOLDINGs LIMITED Annual Report 2005

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Revenue ByBusiness Segment ($M)Revenue ($M)‘021,185.3‘031,422.8‘041,865.7‘052,036.3DistributionEnterprise SystemsIT Services1,233.2781.122.0Revenue ByGeographical Segment ($M)IT ServicesPerformance for the IT Services segmentwas rather mixed. Revenue for China rose,as the Group secured more EnterpriseSystems’ sales, but declined in Singaporeprimarily due to a lack of major projectsin 2005. Singapore’s 2004 performancewas boosted by a couple of majorregional projects. Despite the competitiveenvironment, Malaysia and Thailandreported steady IT services revenue fromrecurrent contracts.During 2005, the Group invested andbuilt up the infrastructure and trainingprocesses, to enhance and support theknowledge and expertise of the servicesteams in the various countries. Inparticular, the Group is positioning itsteam to capture the rising demand for ITservices in China.Geographical market reviewSouth East AsiaSouth East Asia overtook China for thefirst time to contribute 50.2% to 2005’srevenue. South East Asia’s revenue grew22.7% to $1.02 billion, underpinned bythe strong resurgence in distributionsales growth in Malaysia, Indonesia, andThailand. South East Asia also contributedto a higher share of 2005’s PBIT at 55.2%.MalaysiaMalaysia was the star performer in2005, with revenue revving 50.1% against2004. The supply chain consolidationstrengthened our partnership withleading PC vendors and we gained marketshare. Demand was particularly strongfor desktops, notebooks, and printersupplies that drove the 59.9% surge inDistribution sales.South East AsiaNorth Asia1,022.81,013.5AccessoriesAfter a successful pilot run in 1H05,we officially launched our accessoriesbusiness in Singapore in mid 2005. Fromaccessories bundling via existing dealersfor Apple iPod, we expanded to otherPDAs, phones, and PC accessories. The2H’s results were very heartening witha fourfold revenue leap and a positivecontribution to Group earnings.We are excited about this business’ growthprospects. The regional market (excludingChina) is currently fragmented and thereare no dominant players as yet. With ourextensive network, we are well positionedto capture more market share from thegrowing market in the next three years.Enterprise Systems also did well with31.9% rise in revenue. Several majorprojects for the Ministry of Education,Government Audit Department, NationalRegistration Department, and NationalDefence Department were completedduring the year.SingaporeRevenue improved by 6.3%, underpinned,by 13.0% growth in Enterprise Systemssales. Market condition remainedcompetitive. To enhance our revenue yieldand profitability, we extended our agency’sbreadth and depth during the year. Usingnew, expanded channels in the audio/visualand telecom segment, from our successwith the iPod’s launch in 2004, we pushed16 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingRevenue By Business Segment ($M)Profitability ($M)21.322.5‘02‘03474.1 683.5 27.71,185.3569.8 833.0 20.01,422.814.29.719.113.517.3625.6 1,215.2 24.9‘04‘05EnterpriseSystems1,865.7781.1 1,233.2 22.0DistributionITServices2,036.3more products through, including the newAccessories business. Opening Appleservice centers and HP parts distributioncenter are initiatives to enhance our valueaddedservices.ThailandThailand had a slow start to 2005 asthere were fewer government projects.This affected the Enterprise Systemssales. But, overall revenue grew 17.8% onstrong Distribution sales growth of 30.3%,boosted by expanded product offeringssuch as O2 PDA phones, Nokia, NetApp,and Oracle.IndonesiaIndonesia strengthened its infrastructureand regional coverage outside itstraditional Jakarta stronghold, with keyfocus in the Surabaya and Yogyakarta.We were recognized by Cisco as the BestDistributor for 2005, and appointed by HPto be the top distributor for consumerproducts in Indonesia. Strong corporatedemand, across a broad spectrum ofindustries, boosted overall revenuegrowth of 35.4%.North AsiaLast year was challenging but rewardingfor our China operations. The team’ssteadfast execution of the business shiftto focus on Enterprise Systems led to a31.6% surge in Enterprise Systems’ sales.Overall revenue for North Asia eased 1.8%to $1.01 billion, arising from a declinein Distribution sales as we scaled backlower-margin consumer ICT products.6.3‘02 ‘03 ‘04 ‘05Profit Before TaxProfit After TaxMarket consolidation following the mergerof one of our key PC and notebook vendorsalso affected our China Distribution salesin the first half of 2005. Demand hadbottomed out by the end of third quarter,with firm recovery in the fourth quarter.One positive development was therevaluation of the renminbi in 2H05 thatboosted our profitability. The improvementin revenue mix, coupled with positivecurrency effect, lifted PBIT margins forNorth Asia to 1.3% in 2005, up from 0.9%in 2004.Financial ReviewKey operating efficiencies and financereturns broadly improved in 2005. A betterrevenue mix stabilized the gross marginabout 4.7%, similar to levels achieved in2004.We diligently kept a tight rein on expenditurebut continued to invest in selected areaswhich are crucial to sustaining earningsgrowth. As we added headcounts to pushaggressively into the Enterprise Sector,especially in China, operating expensesrose by 12.1% to $71.0 million, but stillat a low 3.5% of sales, marginally higherthan 2004’s 3.4%. However, we were ableto keep our overheads low as a result fromthe significant economies of scale – whichis a critical success factor in our business.Net profit margin rose to 0.9% in 2005, upfrom 0.7% in 2004.Working capital remained a key focus areafor management. Net gearing ratio stoodat 0.8x, compared with 0.7x in 2004.ECS HOLDINGs LIMITED Annual Report 200517

Keep GoingProfitFocus on increasingour revenue yieldand shareholders’ returnImproveProfitabilityGrow highvalue-addedproduct businessGeographicand channelexpansionImprove ChinaContributionContinue efficientmanagement ofworking capital andlower costGrow servicesbusinessStrategic DirectionsOutlook – The Next CircuitFor 2006, management will stay focused onenhancing profitability. We are adopting athree-pronged approach to improve profitsand returns:Harvest the value ofour extensive regional networkIn January 2006, we acquired a 50% equitystake in MSI, the No. 2 ICT distributor inthe Philippines. The deal strengthenedour leading position in Asia Pacific, as wenow cover six countries in 32 cities. Whilewe still seek to expand geographically, ourpriority is to maximize the revenue streamfrom our existing network.Leading vendors value our extensivenetwork of over 17,000 partners acrossthe ICT, audio/visual, and telco channelsfor their market breadth and depth.We are able to support vendors in theircommercial and consumer productofferings region-wide.Enhance profitability viaimproved product mixWe will keep accelerating the shift inChina’s business mix to better-marginedproducts and services by building on thegrowing demand for Enterprise Systemsthere. With the addition of Huawei-3Comin November 2005, we lined up aggressiveinitiatives to capture the growing networkand communications market.The Group has scored well with digitalconsumer electronic products such asiPod, Smart-phones and PDA phones. Wesee good regional opportunities to expandand scale our portfolio of new and excitingproducts in this fast-growing segment ofthe ICT market.We are excited about our Accessoriesbusiness prospects. Our 2006 focus is tobuild a strong brand name and expand ourregional markets – Malaysia, Indonesiaand Thailand in 1H06, China in 2H06. Weare confident of replicating our Singaporesuccess in the other regional markets.Increase operating andfinancial efficienciesOur management will spare no effortsto improve productivity and operatingefficiency. We will persevere in improvingon our capital management to boostreturns to shareholders.We are committed to our mission to createshareholder value via medium and longterm strategic initiatives. The industry hasmany challenges but we see opportunitiestoo and we are optimistic that 2006 will beanother good year.I applaud our staff for a job well done andtheir unwavering dedication to the Group’ssuccess. My heartfelt thanks to our vendors,customers, and shareholders for theircontinuous support. We look forward tosharing the podium for many more years.Tay Eng HoeGroup CEOApril 2006ECS HOLDINGs LIMITED Annual Report 200519

1 2Board of directors341. Mr Lin ChienMr Lin Chien was appointed Chairman of the Board on 1 October 1998and is also a member of the Compensation Committee. He was theExecutive Vice President of Solectron Corporation and was President,Solectron Asia/Pacific, a position he held until 31 March 2004. Mr Linbegan his career with General Instruments of Taiwan, specializing inthe areas of production, quality and engineering. Mr Lin previouslyworked for SCI Systems (now known as Sanmina-SCI), where he wasresponsible for leading the company’s expansion into Asia and foundedSCI’s Singapore site in 1984. He was Chief Executive Officer of NatsteelElectronics from 1993 to 2001 and was instrumental in transformingNatsteel Electronics into the sixth largest contract manufacturer inthe world. Natsteel Electronics was acquired by Solectron Corporationin 2001. Mr Lin is also the Chairman of Mototech Co and AlliedIntegrated Patterning Corporation. Mr Lin is also a director of Hi-PInternational Limited, which is listed on Singapore Exchange SecuritiesTrading Limited. He holds a Bachelor of Science degree in ElectricalEngineering from the Taipei Institute of Technology.2. Mr Seah Moon MingMr Seah Moon Ming was appointed Vice Chairman of the Company on 3January 2005. He is Deputy CEO of Singapore Technologies EngineeringLimited, overseeing the Electronics and Land Systems sectors ofbusiness. He is concurrently President, Singapore TechnologiesElectronics Ltd, a position he has held since 8 December 1997 afterserving as Managing Director from 1 July 1997. He is Chairman of iDirect,Inc, Guizhou Jonyang Kinetics Co., Ltd and Unicorn Pte Ltd. He is alsoVice Chairman of Trek 2000 Limited. Mr Seah holds a Master of Sciencein Electrical Engineering, with distinction, from the Naval PostgraduateSchool, USA. Mr Seah is Adjunct Professor to the National University ofSingapore’s Entrepreneurship Centre and Deputy Chairman of the Boardof Governors of Temasek Polytechnic as well as a Fellow of the Institutionof Engineers Singapore. He is also a member of the International AdvisoryPanel of the National Information & Communications Technology,Australia; an Executive Council member of the China Council for thePromotion of International Trade and a member of the Network IndiaSteering Committee of International Enterprise Singapore.3. Mr Liu WeiMr Liu Wei was appointed Vice Chairman of the Company on 3December 2001 and is currently the Chairman of ECS Technology(China) Limited, our subsidiary in China. Mr Liu is one of the foundingmembers of Pacific City International Holdings Limited, a substantialshareholder of the Company and has more than 16 years of experiencein the IT industry in China. Mr Liu has assumed the positions of ViceChairman of Guangdong CAD and Executive Chairman of GuangdongAcademy of Electronics, and is a member of Guangzhou People’sCongress. In recognition of his contributions and achievements,Mr Liu had received many awards from the Guangzhou Governmentand Industry Publications including, “Ten Best Young Achievers” by theGuangzhou Government in 1998 and was listed by Computer World asIT Fortune Top 50 by Computer World in 2001. He was awarded ChinaChannel Permanent Achievement Medal by Computer Business Newsin 2002. He was recipient of the “Outstanding Enterprise ContributionAward” in 2003 and was recognized in 2004 as one of the top 10 ITleaders in China. Mr Liu graduated with a Bachelor’s degree in AppliedMechanics from the Zhongshan University, PRC.4. Mr Tay Eng HoeMr Tay Eng Hoe was appointed the Executive Director of the Company on1 April 2000. He is also the Group Chief Executive Officer of the Companyand a member of the Nominating Committee. Mr Tay is the founder ofECS Computers (Asia) Pte Ltd, our Singapore subsidiary and bringstogether with him more than 20 years of experience in the IT Distributionbusiness. Mr Tay is a Non-Executive Director of AusGroup Limited andsits on the Boards of various companies and government statutoryorganizations and is also actively involved in charitable organizations.He sits on the Board of International Enterprise Singapore and is also amember of their Audit Committee. He is also a councillor of the SingaporeInfocomm Technology Federation. Mr Tay is a member of the Committeeon Industry & Development of the Singapore Corporation of RehabilitativeEnterprise (SCORE) as well as a member of the Mechanical EngineeringAdvisory Committee of the Ngee Ann Polytechnic. Mr Tay was conferredthe Pingat Bakti Masyarakat (PBM) by the President of Singapore in2005. Mr Tay holds a Bachelor of Science (Honours) degree from La-Trobe University and a Master of Business Administration degree fromMelbourne University.20 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going87565. Mr Narong IntanateMr Narong Intanate is the founder and President of The Value SystemsCo., Ltd., our subsidiary, since 1988. He is actively involved in themanagement of The Value Systems Co., Ltd. and plays a pivotal role insteering the strategic direction of The Value Systems. He was appointedas an Executive Director of the Company on 15 December 2000. He isan advisor of the Hatyai University and the Srinakharinwirot UniversitySecondary Demonstration School, Prasarnmit. He holds a Bachelorof Science in Business Administration and a Master of BusinessAdministration from California State University. Prior to forming TheValue Systems Co., Ltd., he was the Marketing Manager of SahaviriyaInfortech Computers Co., Ltd. from 1982 to 1983 and the MarketingDirector of Sahaviriya OA from 1983 to 1988.6. Mr Foo Sen ChinMr Foo Sen Chin was appointed as an Executive Director on 15December 2000. He is also the Managing Director and founder of ECSKush Sdn Bhd, our subsidiary. Mr Foo plays a pivotal role in steeringthe strategic direction of ECS Kush Sdn Bhd. His responsibilitiesinclude the development of its long term business goals, overalloperation and administrative management of ECS Kush. Prior tojoining our Group, he was the General Manager of a computer bureauservices company in Kuala Lumpur before forming ECS KU Sdn Bhd(formerly known as K.U. Sistems Sdn Bhd) in 1985. Mr Foo has aBachelor of Science degree in Electrical and Electronic Engineeringfrom the University of Birmingham, UK and he also holds a Master’sdegree in Business Administration from the Cranfield School ofManagement in the United Kingdom.7. Mr Chay Yee MengMr Chay Yee Meng is an Independent Director of our Company and amember of the Audit Committee. He was appointed as a Director ofour Company on 1 October 1998 and was one of the founding directorsof the Company. He is also Director of ECS Computers (Asia) Pte Ltd,The Value Systems Co., Ltd., and ECS Kush Sdn Bhd. In addition, MrChay is currently Deputy Chairman & CEO of Infowave Pte Ltd andChairman of the Audit Committee of Trek 2000 Ltd. He holds a Bachelorof Accountancy degree from Nanyang University. He was a Directorand Chief Financial Officer of Natsteel Electronics Ltd / SolectronTechnology Singapore Pte Ltd from 1993 to 2002. Mr Chay became aDirector of National Kidney Foundation since 17 January 2006.8. Mr Leong Horn KeeMr Leong Horn Kee, was appointed as an Independent Director on15 December 2000, and currently serves as Chairman of the AuditCommittee and a member of the Nominating Committee. He iscurrently the Chief Operating Officer and Executive Director of FarEast Organization. Mr Leong is a Member of Parliament and Chairmanof Parliament’s Public Accounts Committee. Mr Leong has beenappointed Singapore’s Non-Resident Ambassador to Mexico in 2006.He graduated with a Bachelor of Technology in Production Engineeringfrom Loughborough University in the United Kingdom. He also holdsan Economics degree from the University of London and a Masters inBusiness Administration from INSEAD, France.ECS HOLDINGs LIMITED Annual Report 200521

Board of directors10119129. Mrs Lee Suet FernMrs Lee Suet Fern is an Independent Director of our Company andcurrently serves as Chairman of the Nominating Committee and amember of the Audit Committee. She was appointed a Director ofour Company on 15 December 2000. She is a practising advocate andsolicitor of the Supreme Court of Singapore and works at StamfordLaw Corporation as its Senior Director. She has extensive experienceas a corporate law practitioner in Singapore and London and serveson the boards of listed companies as well as professional and otherorganisations. She qualified as a barrister-at-law at Gray’s Inn, Londonand graduated from Cambridge University with a double first in law.10. Mr Teo Ek TorMr Teo Ek Tor joined the Board on 4 March 2002 and became thean Independent Director on 6 January 2003. He is Chairman of theCompensation Committee and a member of the Audit Committee.Mr Teo is the Managing Partner of PrimePartners Asset ManagementPte Ltd which manages private-equity funds. He has over 25 yearsof experience in investment banking in Asia. Mr Teo has contributedto and been instrumental in the building up of two major regionalinvestment banking groups – Morgan Grenfell Asia (1980-1993) andBNP Prime Peregrine (between 1994-1999). Mr Teo is a graduate ofthe University of Western Ontario, with an Honours degree in BusinessAdministration.11. Mr Chang Yew KongMr Chang Yew Kong was appointed as a Non-Executive Director on9 May 2005 and is a member of the Nominating and CompensationCommittees. He is currently President, ST Electronics (Info-SoftwareSystems) Pte Ltd, a wholly-owned subsidiary of ST Electronics. MrChang graduated from the then University of Singapore with a Bachelorof Electrical Engineering (First Class Honours) in 1978. He completedhis Masters in Engineering and a Diploma in Business Administrationin the National University of Singapore in 1982 and 1984 respectivelyand attended the Stanford-NUS Executive Program. He served in theDefence Science Organisation/MINDEF and Data General Singaporebefore joining Singapore Technologies. He worked in various seniormanagement positions in Singapore Computer Systems Ltd from1987 to 1996.12. Mr Tan Hup FoiMr Tan Hup Foi was appointed as an Independent Director on7 February 2006, and currently serves as member of the AuditCommittee. He was the Chief Executive of Trans-Island Bus Services Ltdfrom 1994 to 2005 and also the Deputy president of SMRT CorporationLtd from 2003 to 2005. Mr Tan is known internationally as the HonoraryVice President of the International Association of Public Transport.Mr Tan is the Chairman of Ngee Ann Polytechnic and also the Chairmanof Industrial & Services Cooperative Society Ltd as well as a Boardmember of the National Environment Agency. He was awarded thePingat Bakti Masyarakat (The Public Service Medal) by the Presidentof Singapore in1996. Mr Tan graduated from Monash University inAustralia with a First Class Honours degree in Mechanical Engineeringin 1974 and he obtained a Master of Science (Industrial Engineering)degree from University of Singapore in 1979.22 ECS HOLDINGs LIMITED Annual Report 2005

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Senior Management(Country CEOs)From left to right: Mr Foo Sen Chin, Mr Nana Juhana Osay, Mr Liu Wei, Mr Narong Intanate, Mr Foong Kam Tho, Mr Jimmy Go & Mr Tay Eng HoeMr Tay Eng Hoe (please refer to page 20 for his profile)Mr Liu Wei (please refer to page 20 for his profile)Mr Narong Intanate (please refer to page 21 for his profile)Mr Foo Sen Chin (please refer to page 21 for his profile)Mr Foong Kam ThoMr Foong Kam Tho is the President of ECS Computers (Asia) Pte Ltd,our subsidiary. He joined ECS Computers (Asia) Pte Ltd in 1985 andhas had more than 20 years experience in the industry. Mr Foongholds a Bachelor of Science degree (Computer Science) from theNational University of Singapore. Mr Foong was posted as Senior VicePresident of ECS China, focusing on the value added business unit inNovember 2003. He was promoted to Chief Executive Officer of ECSChina effective from 1 January 2006.Mr Nana Juhana OsayMr Nana Juhana Osay is the Executive Director of PT ECS Indo Jaya.He is responsible for overseeing ECS Indonesian operations and hasover 15 years experience in the IT industry. Mr Osay was appointedSecretary General for Indonesia Computer Business Association, aposition he held since 1999. Mr Osay was educated in the BandungInstitute of Technology from 1976 to 1981.Mr Jimmy GoMr Jimmy Go is the founder and President of MSI-ECS Phils. Inc. Hehas more than 23 years of experience in the Information Technologyindustry in the Philippines. He started the IT industry way back in 1982after graduating from College selling Fujitsu & Apple computers. Hecurrently holds a Bachelor degree in Electronics & CommunicationEngineering from De La Salle University with an award of MagnaCum Laude and Post Graduate degree of Masters in BusinessAdministration in Ateneo de Manila University. Mr Go was also thepast President of COMDDAP (Computer Manufacturers, Distributors& Dealers Association of the Philippines). In 1998, Mr Go was namedPresident and CEO of MSI-Digiland. He was instrumental in growingthe business of MSI in the Philippines making it one of the biggest I.T.distributor in the country in less than 5 years.24 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingSenior Management(Corporate Headquarters)From left to right: Mr Eddie Foo, Mr Lim Tow Cheng, Mr Wong Heng Chong, Mr Jansen Ek, Mr Adrian Chong & Mr Tay Eng HoeMr Tay Eng Hoe (please refer to page 20 for his profile)Mr Wong Heng ChongMr Wong Heng Chong is the Group Chief Financial Officer of theCompany. Mr Wong is a member of The Institute of CharteredAccountants in Australia and holds a diploma in Management Studiesfrom the University of Chicago Graduate School of Business. Prior tojoining the Group, he was an Executive Director of Boustead SingaporeLimited. He was also a Director and the group financial controller ofQAF Limited. Prior to joining QAF Limited, he was a Director and GroupGeneral Manager of Sunshine Allied Investments Limited (now knownas Network Foods International Limited).Mr Jansen EkMr Jansen Ek was appointed Group Chief Operating Officer on 17January 2002. He is responsible for the overall operational managementof the Group including setting business strategies and building longtermcustomers, partners and employee’s relationships. Mr Ek hasmore than 20 years of experience in the IT industry. Prior to joining theGroup, Mr Ek was the Vice-President of Silicon Graphics Inc and hasworked with Hewlett-Packard Company for 21 years, holding varioussenior management positions. Mr Ek holds a Bachelor of Engineering(Honours) from the University of Singapore.has previously worked with Digiland International Ltd for more than8 years, holding several senior management positions, including asChief Executive Officer. Mr. Lim has an Honours Degree in Economicsfrom the National University of Singapore.Mr Eddie FooMr Eddie Foo is the Group Financial Controller and is also the CompanySecretary of the Group. He is responsible for the financial managementof the Group, which covers accounting, treasury, tax, financial controland reporting. Prior to joining the Group, Mr Foo worked for Dell asits Regional Controller. Mr Foo holds a degree in Accountancy from theNanyang Technological University and is a member of the Institute ofCertified Public Accountants in Singapore.Mr Adrian ChongMr Adrian Chong is the Group Internal Audit Manager of the Company. Heis a member of CPA Australia and a member of The Institute of InternalAuditors. Prior to joining the Group, he joined Natsteel Electronics Ltdin 1998 and was seconded to Guangzhou as the Finance Manager ofthe joint venture between Pacific City International Holdings Ltd andSolectron Asia in 2000. The joint venture was subsequently acquired bythe Company as the current ECS China, and Mr Chong was appointedto his current position since January 2002.Mr Lim Tow ChengMr Lim Tow Cheng was appointed Senior Vice President, BusinessDevelopment on 18 October 2005. He is responsible for managingthe regional expansion strategy and for identifying new businessopportunities of the Group. Mr Lim has more than 20 years ofexperience in the trade and IT senior management. Prior to joining theGroup, Mr Lim was the Director for South Asia of Western Digital andECS HOLDINGs LIMITED Annual Report 200525

2005HighlightsJanuary - March• The Value Systems appointed Distributor for BEA Systems products in Thailand• The Value Systems opened 10 th branch of Service Center in Rayong ProvinceApril - June• The Value Systems appointed Distributor for LG products in Thailand• The Value Systems appointed Distributor for Motorola Two-Way radio products in Thailand• ECS Pericomp appointed Distributor for Motorola• ECS Astar appointed Distributor for Huawei-3ComJuly - September• The Value Systems appointed Distributor for Panda Software products in Thailand• The Value Systems appointed Distributor for O2 products in Thailand• ECS Pericomp appointed Distributor for BEA, Juniper and Red Hat• ECS Astar appointed Distributor for Linksys and Samsung• ECS Singapore appointed Exclusive Distributor for HP PDA phones• ECS Singapore appointed Distributor for OKIOctober - December• The Value Systems appointed Distributor for Socomec Unitrio UPS products in Thailand• The Value Systems appointed as Distributor for Lenovo products in Thailand• ECS Indo appointed Distributor for HP’s imaging and printing consumer products and services• ECS China appointed Distributor for Huawei-3Com networking products• ECS Singapore appointed Distributor for Quest Software• ECS Singapore commissioned HP Spare Parts business• ECS Singapore commissioned Apple Service Center26 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going2005AwardsRegional• Ranked 6 th Fastest Growing Tech Companies by ZDNetAsia Top Tech Index• Apple Top Regional Partner (Asia)• BEA Distributor of the Year, FY05, ASEANSingapore• Top 14 th amongst companies in inaugural SingaporeInternational 100 ranking• Top 25 th fastest growing companies in Singapore byDP Information Group• Fuji-Xerox Achievement of Breakthrough Sales for Phaser3116 / Docuprint C525 in Singapore for FY2004/05• HP Top Commercial Growth Partner 1st Half FY 2005• HP Top Consumer Growth Partner 1st Half FY 2005• HP Top Enterprise Growth Partner 1st Half FY 2005• HP Top Overall Growth Contributor 1st Half FY 2005• HP Top Enterprise Revenue Contribution 1st Half FY 2005• Oracle Value Added Distributor of the Year• Top Platform Partner for Sun/Oracle• Top Platform Partner for HP/OracleMalaysia• HP Top Wholesaler for Commercial Portables• HP Top Master Parts Reseller for South East Asia• HP Top CIP (Consumer Imaging Printing) Wholesaler FY2005• HP Top Supplies Wholesaler FY2005• HP Best Wholesaler of the Year FY2005• SUN Top Channel Development Partner• IBM Top Software Partner• Huawei Top Distributor FY2005• Lexmark Outstanding Performance Annual DistributorThailand• HP Business Critical Systems Excellence Award 2005• HP Best Performance Award 2H05 of Imaging andPrinting Group Business• HP Best Performance Award 2H05 of Personal SystemsGroup Business• Microsoft Partner Excellence Award 2005• The Professional Services Team won the 2nd Runner UpTech Mastermind in APAC from Cisco in 2005China• HP Commercial PC Top Distributor FY 2005• HP Commercial Computer Peripheral EquipmentTop Contribution FY2005• HP Top Linearity Growth Program• D-Link Top Distributor FY2005• IBM Long Period Service Partner• IBM Asia Pacific Business Partner• China Second Distributor by China Information Worldin April 2005• Second Distributor of China by Computer Partner World• China Yearly Distributor chosen by Computer Partner World• China 2 nd Largest Distributor by Smart Partners• China Computer Times awards ECS China with “2005 ITDeployment Achievement Award”• “Enterprise contributing to the development of Chinainformation industry for the past 20 years” - awarded byChina Department of Information Industry• Top 100 Best Administered Enterprises awarded by Talents,Beijing Youth Report, Phoenix TV and Sina.comIndonesia• Cisco Best Distributor 2005ECS HOLDINGs LIMITED Annual Report 200527

GroupStructureECS Holdings LimitedThailandSingaporeChinaMalaysiaIndonesiaPhilippinesThe ValueSystems Co., LtdECS Computers(Asia) Pte LtdECS Technology(China) LimitedECS KushSdn BhdECS IndoPte LtdECS Infocom(Phils) Pte Ltd100%100%100%60%60%100%Astar Technology(S) Pte Ltd100%ECS Technology(Guangzhou)Co., Ltd100%ECS PericompSdn Bhd80%PT ECSIndo Jaya100%MSI-ECSPhils., Inc50%ECS TechnologyCo., Ltd100%ECS KUSdn Bhd100%ECS InternationalTrading (Shanghai)Co., Limited100%ECS ChinaTechnology (Shanghai)Co., Limited100%ECS AstarSdn Bhd100%ECS ICTSdn Bhd70%PCS TradingLimited100%28 ECS HOLDINGs LIMITED Annual Report 2005

Board Membership & Board PerformanceCorporateGovernance Statement(CON’T)Principle 4 :Principle 5 :There should be a formal and transparent process for the appointment of new directors to the Board. As aprinciple of good corporate governance, all directors should be required to submit themselves for re-nominationand re-election at regular intervals.There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by eachdirector to the effectiveness of the Board.The Nominating Committee was formed on 6 January 2003 and comprises five directors, including 3 independent directors, Mrs LeeSuet Fern, Mr Leong Horn Kee, and Mr Chay Yee Meng, 1 non-executive director, Mr Chang Yew Kong, and 1 executive director, MrTay Eng Hoe. Mrs Lee Suet Fern is the Chairman of the Nominating Committee.The role of the Nominating Committee is to perform the following functions:a) identifies and reviews all nominations for Board appointments and re-nominations of directors;b) assesses the effectiveness of the Board as a whole and the contribution by each individual director to the effectiveness of theBoard; andc) determines whether or not a Director is independent.In accordance with the Company’s Articles of Association, at each Annual General Meeting, one-third of the Board shall retire fromoffice by rotation provided that no Director holding office as Managing or Joint Managing Director shall be subject to retirement byrotation or be taken into account in determining the number of Directors to retire.Access to InformationPrinciple 6 :In order to fulfil their responsibilities, board members should be provided with complete, adequate and timelyinformation prior to board meetings and on an on-going basis.All directors are provided with complete, adequate and timely information prior to meeting and on a regular basis to enable them toperform their roles properly. All directors have separate and independent access to senior management and the company secretary.Should directors, whether as a group or individually, need independent professional advice in the furtherance of their duties, cost ofsuch professional advice will be borne by the Company.(B)REMUNERATION MATTERSProcedures for Developing Remuneration PoliciesPrinciple 7 :There should be a formal and transparent procedure for fixing the remuneration packages of individual directors.No director should be involved in deciding his own remuneration.The Compensation Committee oversees the general compensation of employees of our Group with a goal to motivate, recruit andretain employees and directors through competitive compensation and progressive policies. In particular, the CompensationCommittee is responsible for overseeing our employee profit sharing scheme as well as the share incentives, including the ECSShare Option Scheme I and ECS Share Option Scheme II. The Compensation Committee of the Board comprises Mr Teo Ek Tor, MrLin Chien, and Mr Chang Yew Kong. Mr Teo Ek Tor is the Chairman of the Compensation Committee.Level and Mix of Remuneration; Disclosure of RemunerationPrinciple 8 :The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run thecompany successfully but companies should avoid paying more for this purpose. A proportion of the remuneration,especially that of executive directors, should be linked to performance.32 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingCorporateGovernance Statement(CON’T)Principle 9 :Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and theprocedure for setting remuneration, in the company’s annual report.The Group’s remuneration policy is to provide a competitive remuneration package so as to attract, retain and motivate directors andsenior management of the required experience and expertise to run the Group successfully. In setting remuneration packages forexecutive directors and senior management of the Group, the pay and employment conditions within the industry and in comparablecompanies are taken into consideration.The compensation package of the Group’s executive directors including its Group CEO and senior management consists of salary,allowances, share options and bonuses which are conditional upon meeting certain performance targets.Non-executive directors have remuneration packages which consist of a directors’ fee component and a share option componentpursuant to the Company’s Share Option Scheme. The directors’ fee policy is based on a scale of fees divided into basic retainerfees as a director and additional fees for serving on board committees. Directors’ fees for non-executive directors are subject to theapproval of shareholders at the Annual General Meeting. The report on directors’ remuneration is given below:Summary compensation table for the year ended 31 December 2005Name of DirectorSalary%Bonus%Fees%Allowances andother Benefits%Total%$750,000 to below $1,000,000Tay Eng Hoe$500,000 to below $750,000Narong Intanate$250,000 to below $500,000Foo Sen ChinWang FangminBelow $250,000Liu WeiLin ChienChay Yee MengLeong Horn KeeLee Suet FernTeo Ek TorSeah Moon MingChang Yew Kong5243649895-------384923-----------1--1001001001001001001001081225-------100100100100100100100100100100100100Executives’ RemunerationRather than setting out the names of the top five key executives who are not also directors of the Company, we have shown a Groupwidecross-section of executive remuneration by number of employees earning $100,000 upwards in bands of $250,000 below. Thisshould give a macro view of the remuneration pattern in the Group, while maintaining confidentiality of staff remuneration matters.ECS HOLDINGs LIMITED Annual Report 200533

CorporateGovernance Statement(CON’T)NO. OF EXECUTIVES IN REMUNERATION BANDSTotal CompensationNo. of Employees(Note 1)Total VariableCompensation(Note 2)Total FixedCompensation(Note 3)Total Remuneration$100,000 to $249,999$250,000 to $499,999$500,000 to $749,9991531$ 607,736$ 717,547$ 137,710$1,656,441$ 602,549$ 422,729$2,264,177$1,320,096$ 560,439Total19$1,462,993$2,681,719$4,144,712Notes :1. Including employees in local and overseas subsidiaries2. Sales commission, bonus and other statutory contributions3. Inclusive salaries, AWS, related CPF and other statutory contributions, allowances and fringe-benefits.There are no employees in the Group who are immediate family members of a director or the Group CEO.(C)ACCOUNTABILITY AND AUDITAccountabilityPrinciple 10 :The Board should present a balanced and understandable assessment of the company’s performance,position and prospects.In presenting the annual financial statements and quarterly announcements to shareholders, it is the aim of the Board to provide theshareholders with a detailed analysis, explanation and assessment of the Group’s financial position and prospects. On a quarterlybasis, Board members are provided with business and financial reports comparing actual performance with budget and with prior yearcomparisons with highlights on key business indicators and any significant business development. In addition, the Group CEO communicatesregularly with Board members through informal meetings and phone calls with appropriate updates on Company developments.AUDIT COMMITTEEPrinciple 11 :The Board should establish an Audit Committee (“AC”) with written terms of reference which clearly set out itsauthority and duties.The Audit Committee comprises five members, of which all members, including the Chairman, are independent. The members ofthe Audit Committee at the date of this report are :Leong Horn KeeLee Suet FernTeo Ek TorChay Yee MengTan Hup FoiChairmanMemberMemberMemberMember34 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingCorporateGovernance Statement(CON’T)The Audit Committee meets periodically to perform the following functions:-a) reviewing the quarterly, half-yearly and annual financial statements before recommending them to the Board for approval;b) reviewing interested person transactions (as defined in Chapter 9 of the Listing Manual of the SGX-ST), including such transactionsconducted under the shareholders’ general mandate previously obtained;c) reviewing with external auditors the audit plan, their evaluation of the systems of internal controls, their annual reports and theirmanagement letters and management’s response;d) reviewing and recommending to the Board the re-appointment of the external auditors, taking into consideration the non-auditservices rendered by the external auditors and being satisfied that the nature and extent of such services will not prejudice theindependence and objectivity of the external auditors;e) reviewing the scope of internal audit procedures and the results of the internal audit; andf) considering other matters as requested by the Board.The Audit Committee has full access to and co-operation of the Company’s management and the internal auditors and has full discretionto invite any Director or executive officer to attend its meetings. The auditors, both internal and external, have unrestricted access to theAudit Committee. Reasonable resources have been made available to the Audit Committee to enable them to discharge their duties.The Audit Committee held four meetings since the date of the last annual report. The Audit Committee reviewed the InterestedPerson Transactions for the year ended 31 December 2005 in accordance with the terms of the Shareholders’ Mandates for suchtransactions as were approved on 28 April 2005. Interested Person Transactions with a total value of $33.4 million were examinedand the Audit Committee is of the opinion that the said transactions were carried out on prevailing commercial terms and did notprejudice the interest of the shareholders of the Company.The Audit Committee had reviewed and confirmed that the methods and procedures for determining the transaction prices relatingto Interested Person Transactions have not changed since the last shareholders’ approval. The Audit Committee also confirmsthat the methods and procedures are sufficient to ensure that the transactions will be carried out on normal terms and will not beprejudicial to the interests of the Company and its minority shareholders.The Audit Committee had reviewed the non-audit services provided by the external auditors and is satisfied with the independenceof the auditors. The Audit Committee has recommended to the Board that the auditors, KPMG, be nominated for re-appointment atthe forthcoming Annual General Meeting of the Company.Meetings and attendance are as follows:Audit CommitteeName of DirectorLeong Horn Kee (Chairman)Lee Suet FernTeo Ek TorChay Yee MengTan Hup FoiNo. Of Meetings44444Attended4442-ECS HOLDINGs LIMITED Annual Report 200535

Internal Controls and Internal AuditCorporateGovernance Statement(CON’T)Principle 12 :The Board should ensure that the Management maintains a sound system of internal controls to safeguard theshareholders’ investment and the company’s assets.The Board acknowledges that it is responsible for the Group’s system of internal control. It believes that in the absence of anyevidence to the contrary and from due enquiry, the system of internal controls that has been maintained by the Group throughoutthe financial year is adequate to meet the needs of the Group in its current business environment. However, the Board notes that thesystem of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives, and canprovide only reasonable and not absolute assurance against material misstatements or loss.The Internal Auditor plans its internal audit work in consultation with, but independent of Management, and its yearly plan issubmitted to the Audit Committee for approval at the beginning of each year. The Internal Auditor reports to the Audit Committeequarterly regarding its findings. The Audit Committee also meets with the internal auditor at least once during the year without thepresence of Management.Principle 13 :The Company should establish an internal audit function that is independent of the activities it audits.The Group has an internal audit department which is independent of the activities it audits. It performs financial audits,implements operational and compliance controls. The internal auditor reports primarily to the Chairman of the Audit Committeeand administratively to the Group CEO. The internal auditors are expected to meet or exceed the standards set by nationally orinternationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by TheInstitute of Internal Auditors.(D)COMMUNICATION WITH SHAREHOLDERSPrinciple 14 :Principle 15 :Companies should engage in regular, effective and fair communication with shareholders.Companies should encourage greater shareholder participation at AGMs, and allow shareholders theopportunity to communicate their views on various matters affecting the company.The Group does not practice selective disclosure. In line with continuous obligations of the Group pursuant to the SGX-ST’s ListingRules and the Companies Act, Chapter 50, the Board’s policy is that all shareholders are informed of all major developments of theGroup. Price-sensitive information is released publicly, and quarterly results and annual reports are announced or issued withinthe mandatory period and are available on the Group’s website. Thereafter, a briefing by Management is held jointly for the mediaand analysts every half yearly. All shareholders of the Group receive the annual report and notice of Annual General Meeting.Shareholders are encouraged to attend the Annual General Meeting to ensure a high level of accountability and to stay informed ofthe Group’s strategy and goals.(E)SECURITIES TRANSACTIONSThe Company has issued a policy on dealings in the securities of the Company to its Directors and Management, set out theimplications of insider trading and guidance on such dealings. It has adopted the Best Practices Guide on Dealings in Securitiesissued by SGX-ST.36 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingCorporateGovernance Statement(CON’T)(F)INTERESTED PARTY TRANSACTIONSThe Group has adopted an internal policy in respect of any transactions with interested persons and has procedures established forthe review and approval of the Group’s Interested Party Transactions (“IPT”).Pursuant to Rule 907 of the Listing Manual of the Singapore Stock Exchange Securities Trading Limited (the “Listing Manual”), theGroup has the following IPTs entered into during the financial year, together with the corresponding aggregate value of the IPTsentered into with the same interested person, are disclosed as follows:Name of Interested PersonAggregate value of all IPTs during thefinancial year under review (excludingtransactions less than $100,000and transactions conducted undershareholders’ mandate pursuant to Rule920 of Listing Manual of SGX-ST)Aggregate value of all IPTsconducted under shareholders’mandate pursuant to Rule 920 ofListing Manual of SGX-ST (excludingtransactions less than $100,000)(A) Transactions for the sale of goodsand services with SingaporeTelecommunications Ltd and itssubsidiaries-$7,755,544(B) Transactions for the sale of goodsand services with Starhub Ltd andits subsidiaries-$2,014,670(C) Transactions for the sale of goodsand services with SingaporeComputer Systems Ltd and itssubsidiaries-$ 828,819(D) Transactions for the sale of goodsand services with SingaporeTechnologies Engineering Ltd andits subsidiaries and associates-$ 826,954(E) Transactions for the sale of goodsand services with GuangzhouJia Dou Ji Tuan Co Ltd and itssubsidiaries-$ 1,618,413(F) Transactions for the saleof goods and services withTemasek Holdings Pte Ltd and itssubsidiaries-$1,051,277ECS HOLDINGs LIMITED Annual Report 200537

ECS Holdings Limited and its SubsidiariesDirector’s ReportYear ended 31 December 2005We are pleased to submit this annual report to the members of the Company together with the audited financial statements for thefinancial year ended 31 December 2005.DirectorsThe directors in office at the date of this report are as follows:-Lin Chien (Chairman)Seah Moon Ming (Vice-Chairman, appointed on 3 January 2005)Liu Wei(Vice-Chairman)Tay Eng Hoe (Chief Executive Officer)Narong IntanateFoo Sen ChinChay Yee MengLeong Horn KeeLee Suet FernTeo Ek TorChang Yew Kong (Appointed on 9 May 2005)Tan Hup Foi (Appointed on 7 February 2006)Directors’ InterestsAccording to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50, particulars ofinterests of directors who held office at the end of the financial year in shares and share options in the Company are as follows:-Holdings in the nameof the director,spouse or infant childrenOther holdings in whichthe director is deemedto have an interestCompanyOrdinary shares of $0.10 each fully paidAt beginningAt beginningof the year/of the year/date of At end date of At endappointment of the year appointment of the yearLin Chien 3,950,000 3,950,000 - -Seah Moon Ming (appointed on 3 January 2005) 200,000 200,000 100,000 100,000Liu Wei 3,166,285 3,166,285 28,500,000 28,500,000Tay Eng Hoe 24,189,481 39,302,481 14,000,000 -Narong Intanate 4,238,746 12,026,746 12,788,000 5,000,000Foo Sen Chin 125,000 3,465,000 957,000 957,000Chay Yee Meng 450,000 450,000 - -Wang Fangmin (resigned on 3 January 2006) 1,456,886 1,456,886 - -Lee Suet Fern - 200,000 - -38 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesDirector’s ReportYear ended 31 December 2005Holdings in the nameof the director,spouse or infant childrenOther holdings in whichthe director is deemedto have an interestAt beginningAt beginningof the year/of the year/date of At end date of At endappointment of the year appointment of the yearOptions to subscribe for ordinary shares of $0.10 eachLin Chien- Exercisable between 3/9/2002 and 2/9/2006at $0.51 per share 128,000 128,000 - -Tay Eng Hoe- Exercisable between 21/12/2002 and 20/12/2005at $0.10 per share 1,113,000 - - -- Exercisable between 11/3/2004 and 10/3/2012at $0.60 per share 2,500,000 2,500,000 - -- Exercisable between 27/6/2004 and 26/6/2013at $0.41 per share 250,000 250,000 - -Narong Intanate- Exercisable between 3/9/2002 and 2/9/2011at $0.51 per share 400,000 400,000 - -- Exercisable between 27/6/2004 and 26/6/2013at $0.41 per share 200,000 200,000 - -Foo Sen Chin- Exercisable between 21/12/2001 and 20/12/2005at $0.10 per share 1,670,000 - - -- Exercisable between 21/12/2002 and 20/12/2005at $0.10 per share 1,670,000 - - -- Exercisable between 3/9/2002 and 2/9/2011at $0.51 per share 400,000 400,000 - -- Exercisable between 27/6/2004 and 26/6/2013at $0.41 per share 120,000 120,000 - -Chay Yee Meng- Exercisable between 3/9/2002 and 2/9/2006at $0.51 per share 88,000 88,000 - -- Exercisable between 27/6/2004 and 26/6/2008at $0.41 per share 100,000 100,000 - -Leong Horn Kee- Exercisable between 3/9/2002 and 2/9/2006at $0.51 per share 128,000 128,000 - -- Exercisable between 27/6/2004 and 26/6/2008at $0.41 per share 150,000 150,000 - -Lee Suet Fern- Exercisable between 3/9/2002 and 2/9/2006at $0.51 per share 108,000 108,000 - -- Exercisable between 27/6/2004 and 26/6/2008at $0.41 per share 150,000 150,000 - -Wang Fangmin (resigned on 3 January 2006)- Exercisable between 27/6/2004 and 26/6/2013at $0.41 per share 50,000 50,000 - -Teo Ek Tor- Exercisable between 27/6/2004 and 26/6/2008at $0.41 per share 130,000 130,000 - -ECS HOLDINGs LIMITED Annual Report 200539

ECS Holdings Limited and its SubsidiariesDirector’s ReportYear ended 31 December 2005Except as disclosed above, no director who held office at the end of the financial year had interests in shares, debentures, warrantsor share options of the Company or of related corporations either at the beginning of the financial year, or date of appointment iflater, or at the end of the financial year.There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January2006.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 the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Companyto acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.During the financial year, the Company and certain of its subsidiaries have, in the normal course of business entered into transactionswith companies in which certain directors of the Company, Mr Tay Eng Hoe, Mr Narong Intanate, Mr Liu Wei and Mr Wang Fangminhave an interest. These transactions include the purchase and sale of information technology products and services of $598,578(2004: $4,111,188) and $4,703,188 (2004: $3,697,263) respectively and are carried out on normal commercial terms.In addition, professional services, amounting to $34,000 (2004: $90,000) were provided to the Company by a firm in which Mrs LeeSuet Fern is a member. Consultancy services, amounting to $73,000 (2004: nil) were provided to the Company by a firm in which MrTeo Ek Tor has an interest.However, the directors have not received nor will they be entitled to receive any benefits arising out of these transactions other thanthose to which they may be entitled to as shareholders of those companies or as a member of the firm.Except as disclosed above and in note 23 and 29 to the financial statements, since the end of the last financial year, no director hasreceived or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with thedirector or with a firm of which he is a member or with a company in which he has a substantial financial interest.Share Options(a)Share Option SchemesThe ECS Share Option Scheme I (“Scheme I”) was approved and adopted by its members at an Extraordinary General Meetingheld on 13 December 2000 to grant one-time share options to certain eligible directors and executives of the Company inrecognition of their contribution to the growth and performance of the Company.The ECS Share Option Scheme II (“Scheme II”) was approved and adopted by its members at an Extraordinary General Meetingheld on 13 December 2000. Scheme II provides an opportunity for employees and directors, including non-executive directors,of the Group who have contributed significantly to the growth and performance of the Group to participate in the equity of theCompany.The above schemes are administered by the Compensation Committee (the “Committee”) which comprises the followingdirectors:-Teo Ek Tor (Chairman)Lin ChienChang Yew KongDetails of Scheme I and Scheme II were set out in the Directors’ Report for the year ended 31 December 2000.40 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesDirector’s ReportYear ended 31 December 2005(b)(c)(d)Options GrantedDuring the financial year, no option was granted under Scheme II.Issue of Shares Under OptionDuring the financial year, the Company issued a total of 8,351,000 (2004: 8,906,000) ordinary shares of $0.10 each fullypaid at par for cash upon the exercise of options granted under Scheme I. There was no exercise of options granted underScheme II.Unissued Shares under OptionAt the end of the financial year, unissued shares under the share option schemes of the Company were as follows:-Date of Grant Exercise Price Number of Optionsof Option Per Share Exercise Period Option Holders OutstandingScheme INILScheme II03/09/2001 $0.51 03/09/2002 to 02/09/2006 4 452,00003/09/2001 $0.51 03/09/2002 to 02/09/2011 147 8,756,00011/03/2002 $0.72 11/03/2003 to 10/03/2012 131 4,672,00024/01/2002 $0.55 24/01/2004 to 23/01/2012 2 1,100,00011/03/2002 $0.60 11/03/2004 to 10/03/2012 2 3,500,00027/06/2003 $0.41 27/06/2004 to 26/06/2008 4 530,00027/06/2003 $0.41 27/06/2004 to 26/06/2013 203 6,231,000Total outstanding at 31 December 2005 493 25,241,000ECS HOLDINGs LIMITED Annual Report 200541

ECS Holdings Limited and its SubsidiariesDirector’s ReportYear ended 31 December 2005The details of options granted and exercised are as follows:-Aggregate Aggregate Aggregate AggregateName of Options Options Options Options OptionsParticipants Granted Granted Exercised Lapsed Outstanding[1] [2] [3] [4] [5]Executive directors- Tay Eng Hoe - 4,976,000 (2,226,000) - 2,750,000 *- Narong Intanate - 9,506,000 (8,906,000) - 600,000- Foo Sen Chin - 3,860,000 (3,340,000) - 520,000Non-executive directors- Lin Chien - 128,000 - - 128,000- Chay Yee Meng - 188,000 - - 188,000- Leong Horn Kee - 278,000 - - 278,000- Lee Suet Fern - 258,000 - - 258,000- Teo Ek Tor - 130,000 - - 130,000Former directors- Wong Heng Chong - 1,713,000 (1,113,000) - 600,000- Koh Soo Keong - 120,000 - (120,000) -- Wang Fangmin - 50,000 - - 50,000- Hsieh Fu Hua - 88,000 - (88,000) -Employees (includingexecutive officers)- Foong Kam Tho - 8,629,000 (6,679,000) - 1,950,000 *- Other employees - 23,292,000 - (5,503,000) 17,789,000- 53,216,000 (22,264,000) (5,711,000) 25,241,000* Represents 5% or more of total number of options available under the schemes.[1] Options granted during the financial year under review.[2] Aggregate options granted since commencement of the schemes to the end of the financial year under review.[3] Aggregate options exercised since commencement of the schemes to the end of the financial year under review.[4] Aggregate options lapsed since commencement of the schemes to the end of the financial year under review.[5] Aggregate options outstanding as at end of the financial year under review.Except as disclosed, since the commencement of the option schemes:-(i) no option has been granted to the controlling shareholders of the Company or their associates;(ii) no participant under the schemes has been granted 5% or more of the total options available under the schemes; and(iii) no option has been granted to employees of subsidiaries under the schemes.The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any right to participate inany share issue of any other company.42 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesDirector’s ReportYear ended 31 December 2005Except as disclosed above, there were:-(i) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or itssubsidiaries;(ii) no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; and(iii) no unissued shares of the Company or its subsidiaries under option at the end of the financial year.Audit CommitteeThe members of the Audit Committee during the year and at the date of this report are:-Leong Horn KeeLee Suet FernTeo Ek TorChay Yee MengTan Hup Foi(Chairman, Independent director)(Independent director)(Independent director)(Independent director)(Independent director)The Audit Committee performs the functions specified by section 201B of the Companies Act, the Listing Manual and the BestPractices Guide of the Singapore Exchange and the Code of Corporate Governance.The Audit Committee held four meetings since the last directors’ report. In performing its functions, the Audit Committee met withthe Company’s external and internal auditors to discuss the scope of their work and the results of their examination and evaluationof the Company’s internal accounting control system.The Audit Committee also reviewed the following:-• Assistance provided by the Company’s officers to the internal and external auditors;• Financial statements of the Group and of the Company prior to their submission to the directors of the Company for adoption;and• Interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange).The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has fullauthority and discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends theappointment of the external auditors and reviews the level of audit and non-audit fees.The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Boardof Directors that the auditors, KPMG, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting ofthe Company.ECS HOLDINGs LIMITED Annual Report 200543

ECS Holdings Limited and its SubsidiariesDirector’s ReportYear ended 31 December 2005AuditorsThe auditors, KPMG, have indicated their willingness to accept re-appointment.On behalf of the Board of DirectorsLin ChienDirectorTay Eng HoeDirectorSingapore21 February 200644 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesStatement by DirectorsYear ended 31 December 2005In our opinion:(a)(b)the financial statements set out on pages 47 to 85 are drawn up so as to give a true and fair view of the state of affairs of theGroup and of the Company as at 31 December 2005 and of the results and changes in equity of the Group and of the Companyand cash flows of the Group for the year ended on that date; andat the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and whenthey fall due.The Board of Directors has, on the date of this statement, authorised these financial statements for issue.On behalf of the Board of DirectorsLin ChienDirectorTay Eng HoeDirectorSingapore21 February 2006ECS HOLDINGs LIMITED Annual Report 200545

Auditors’ ReportWe have audited the accompanying financial statements of ECS Holdings Limited for the year ended 31 December 2005 as set outon pages 47 to 85. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express anopinion on these financial statements based on our audit.We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financialstatement presentation. We believe that our audit provides a reasonable basis for our opinion.In our opinion:-(a)(b)the consolidated financial statements of the Group and the balance sheet, profit and loss account and statement of changes inequity of the Company are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the “Act”) andSingapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company asat 31 December 2005 and of the results, changes in equity and cash flows of the Group and of the results and changes in equityof the Company for the year ended on that date; andthe accounting and other records required by the Act to be kept by the Company and by the subsidiaries incorporated in Singaporehave been properly kept in accordance with the provisions of the Act.KPMGCertified Public AccountantsSingapore21 February 200646 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesBalance SheetsAs at 31 December 2005GroupCompanyNote 2005 2004 2005 2004$’000 $’000 $’000 $’000Non-Current AssetsProperty, plant and equipment 3 11,651 10,916 147 170Subsidiaries 4 - - 87,008 87,008Other financial assets 5 695 634 201 140Amount due from a subsidiary 12 - - 66,600 -Goodwill on consolidation 6 33,522 32,635 - -Deferred tax assets 7 958 875 - -46,826 45,060 153,956 87,318Current AssetsInventories 8 124,870 132,295 - -Trade and other receivables 9 360,331 281,505 47,864 110,399Cash and bank balances 53,723 58,374 2,414 649538,924 472,174 50,278 111,048Current LiabilitiesBank overdrafts (unsecured) 50 260 - -Trade and other payables 13 197,098 171,690 3,179 1,377Current portion of- deferred income 15 264 741 - -- interest bearing bank loans 16 132,883 172,262 16,650 82,000- obligations under finance leases 17 22 22 - -Preference shares 18 84 82 - -Current tax payable 1,934 2,058 - -332,335 347,115 19,829 83,377Net Current Assets 206,589 125,059 30,449 27,671253,415 170,119 184,405 114,989Non-Current LiabilitiesDeferred income 15 239 313 - -Interest bearing bank loans 16 66,654 93 66,600 -Obligations under finance leases 17 43 65 - -Loans due to minority shareholdersof a subsidiary 19 4,269 4,205 - -Deferred tax liabilities 7 436 527 27 2771,641 5,203 66,627 27Net Assets 181,774 164,916 117,778 114,962Equity Attributable toEquity Holders of the ParentShare capital 20 36,360 35,525 36,360 35,525Reserves 21 137,825 123,134 81,418 79,437174,185 158,659 117,778 114,962Minority Interests 7,589 6,257 - -Total Equity 181,774 164,916 117,778 114,962The accompanying notes form an integral part of these financial statements.ECS HOLDINGs LIMITED Annual Report 200547

ECS Holdings Limited and its SubsidiariesProfit And Loss accountsYear ended 31 December 2005GroupCompanyNote 2005 2004 2005 2004$’000 $’000 $’000 $’000Revenue 22 2,036,278 1,865,658 7,656 7,215Cost of sales (1,940,966) (1,778,172) (1,034) (3,581)Gross profit 95,312 87,486 6,622 3,634Other income 5,529 1,462 4,879 3,088Selling and distribution expenses (42,006) (34,989) (274) (251)General and administrative expenses (28,953) (28,316) (933) (797)Profit from operations 23 29,882 25,643 10,294 5,674Finance costs 24 (7,398) (6,527) (4,321) (2,623)Profit from ordinary activitiesbefore taxation 22,484 19,116 5,973 3,051Taxation 26 (3,887) (4,133) (1,150) (579)Profit for the year 18,597 14,983 4,823 2,472Attributable to:Equity holders of the parent 17,313 13,463 4,823 2,472Minority interests 1,284 1,520 - -18,597 14,983 4,823 2,472Earnings per share 27- Basic 4.9 cents 3.8 cents- Fully diluted 4.8 cents 3.7 centsThe accompanying notes form an integral part of these financial statements.48 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesStatements ofChanges in EquityYear ended 31 December 2005GroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Share Capital -At 1 January 35,525 34,634 35,525 34,634Issue of shares 835 891 835 891At 31 December 36,360 35,525 36,360 35,525Dividend Reserve -At 1 January 2,938 1,167 2,938 1,167Final tax-exempt one-tier dividends paid of0.8 cents per share (2004: 0.4 cents pershare less tax at 20%) (2,842) (1,138) (2,842) (1,138)Proposed tax-exempt one-tier dividends of1.4 cents per share (2004: 0.8 cents per share) 5,100 2,909 5,100 2,909At 31 December 5,196 2,938 5,196 2,938Share Premium -At 1 January and 31 December 75,656 75,656 75,656 75,656Accumulated Profits -At 1 January 50,405 39,851 843 1,280Effect of adopting FRS 103 (note 6) 887 - - -At 1 January (restated) 51,292 39,851 843 1,280Net profit for the year 17,313 13,463 4,823 2,472Proposed dividends of- 0.8 cents per share (tax exempt one-tier) - (2,909) - (2,909)- 1.4 cents per share (tax exempt one-tier) (5,100) - (5,100) -At 31 December 63,505 50,405 566 843Currency Translation Reserve -At 1 January (5,865) (2,881) - -Exchange differences on translation of netassets of foreign subsidiaries 1,189 (2,984) - -At 31 December (4,676) (5,865) - -Hedging Reserve -At 1 January - - - -Net fair value changes on cashflow hedge (1,856) - - -At 31 December (1,856) - - -Total Attributable toEquity Holders of the Parent carried forward 174,185 158,659 117,778 114,962The accompanying notes form an integral part of these financial statements.ECS HOLDINGs LIMITED Annual Report 200549

ECS Holdings Limited and its SubsidiariesStatements ofChanges in EquityYear ended 31 December 2005GroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Total Attributable toEquity Holders of the Parent brought forward 174,185 158,659 117,778 114,962Minority Interests -At 1 January 6,257 4,679 - -Net profit for the year 1,284 1,520 - -Acquisition of subsidiary - 400 - -Dividends paid to minority shareholders (162) - - -Exchange differences on translation of netassets of foreign subsidiaries 210 (342) - -At 31 December 7,589 6,257 - -Total Equity 181,774 164,916 117,778 114,962The accompanying notes form an integral part of these financial statements.50 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesStatement ofCAsh FlowsYear ended 31 December 2005Group2005 2004$’000 $’000Operating ActivitiesProfit from ordinary activities before taxation 22,484 19,116Adjustments for:Allowances made/(write back) for- obsolete inventories (816) 1,033- doubtful trade receivables 2,733 1,824Amortisation of goodwill - 2,717Bad debts written off (60) -Depreciation of property, plant and equipment 3,574 3,311(Gain)/Loss on disposal of property, plant and equipment (4) 36Interest expense 7,398 6,527Interest income (1,113) (838)Inventories written off 289 829Operating profit before working capital changes 34,485 34,555Changes in working capital:Inventories 9,602 59,414Trade and other receivables (78,048) (129,385)Trade and other payables 18,711 16,775Cash generated from operations (15,250) (18,641)Income taxes paid (4,216) (3,834)Cash flows from operating activities (19,466) (22,475)Investing ActivitiesInterest received 1,113 838Contribution from minority shareholders - 400Purchases of property, plant and equipment (4,141) (2,148)Proceeds from disposal of property, plant and equipment 61 36Purchase of other assets (61) -Cash flows from investing activities (3,028) (874)Financing ActivitiesInterest paid (5,224) (5,476)Proceeds from issue of shares 835 891Proceeds from bank loans 27,038 38,372Repayment of bank loans (2,277) (3,256)Payment of finance lease instalments (22) (27)Dividends paid (2,842) (1,138)Dividends paid to minority shareholders (162) -Loans from minority shareholders of a subsidiary - 4,205Repayment of shareholder’s loan - (6,560)Cashflows from other financing activities - 113Cash flows from financing activities 17,346 27,124The accompanying notes form an integral part of these financial statements.ECS HOLDINGs LIMITED Annual Report 200551

ECS Holdings Limited and its SubsidiariesStatement ofCAsh FlowsYear ended 31 December 2005Group2005 2004$’000 $’000Net (decrease)/increase in cash and cash equivalents (5,148) 3,775Cash and cash equivalents at beginning of the year 58,114 55,988Effect of exchange rate changes on balances held inforeign currencies 707 (1,649)Cash and cash equivalents at end of the year 53,673 58,114Comprising:-Cash and bank balances 53,723 58,374Bank overdrafts (50) (260)53,673 58,114The accompanying notes form an integral part of these financial statements.52 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingThese notes form an integral part of the financial statements.The financial statements were authorised for issue by the directors on 21 February 2006.1 Domicile and ActivitiesECS Holdings Limited (the “Company”) is incorporated in the Republic of Singapore and has its registered office at 19 KallangAvenue, #07-153, Singapore 339410.The principal activities of the Company are those relating to investment holding and the distribution of information technologyproducts. The principal activities of the subsidiaries are set out in note 4 to the financial statements.The consolidated financial statements relate to the Company and its subsidiaries (referred to as the “Group”).2 Summary of Significant Accounting Policies2.1 Basis of PreparationECS Holdings Limited and its SubsidariesNotes to TheFinancial StatementsYear ended 31 December 2005The financial statements are prepared in accordance with Singapore Financial Reporting Standards (FRS) including relatedInterpretations promulgated by the Council on Corporate Disclosure and Governance.In 2005, the Group adopted the following new/revised FRSs which are relevant to its operations:FRS 1 (revised)FRS 2 (revised)FRS 8 (revised)FRS 10 (revised)FRS 16 (revised)FRS 17 (revised)FRS 21 (revised)FRS 24 (revised)FRS 27 (revised)FRS 28 (revised)FRS 32 (revised)FRS 33 (revised)FRS 36 (revised)FRS 38 (revised)FRS 39 (revised)FRS 102FRS 103FRS 105Presentation of Financial StatementsInventoriesAccounting Policies, Changes in Accounting Estimates and ErrorsEvents After the Balance Sheet DateProperty, Plant and EquipmentLeasesThe Effects of Changes in Foreign Exchange RatesRelated Party DisclosuresConsolidated and Separate Financial StatementsInvestment in AssociatesFinancial Instruments: Disclosure and PresentationEarnings Per ShareImpairment of AssetsIntangible AssetsFinancial Instruments: Recognition and MeasurementShare-based PaymentBusiness CombinationsNon-Current Assets Held for Sale and Discontinued OperationsExcept as disclosed in note 6 to the financial statements, the adoption of the new/revised FRS in 2005 has not resulted inany adjustment to comparatives or the opening balances of accumulated profits for the Group or the Company nor havesignificant impact on results for the year.The financial statements are presented in Singapore dollars and rounded to the nearest thousand, unless otherwise stated. Theyare prepared on the historical cost basis except for certain financial assets and financial liabilities which are stated at fair value.The preparation of financial statements in conformity with FRS requires management to make judgements, estimates andassumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Theestimates and associated assumptions are based on historical experience and various other factors that are believed to bereasonable under the circumstances, the results of which form the basis of making the judgements about carrying amountsof assets and liabilities that are not readily apparent from other sources.ECS HOLDINGs LIMITED Annual Report 200553

ECS Holdings Limited and its SubsidariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimate is revised, if the revision affects only that period, or in the period of the revisionand future periods, if the revision affects both current and future periods.FRSs yet to be adoptedCertain new accounting standards and interpretations have been published that are mandatory for accounting periodsbeginning on or after 1 January 2006. The Company has assessed those standards and interpretations issued as of balancesheet date. The initial application of these standards and interpretations are not expected to have material impact on theCompany’s financial statements.The Group has not considered the impact of accounting standards issued after the balance sheet date.2.2 Functional CurrencyThe functional currency of the Company is the Singapore dollar. As the income and receipts from investing activities andexpenses are denominated primarily in Singapore dollars, the Directors are of the opinion that the Singapore dollar reflectsthe economic substance of the underlying events and circumstances relevant to the Company.2.3 ConsolidationSubsidiaries are companies controlled by the Company. Control exists when the Company has the power, directly or indirectly,to govern the financial and operating policies of a company so as to obtain benefits from its activities.Investments in subsidiaries are stated in the Company’s balance sheet at cost less impairment losses. The financialstatements of subsidiaries are included in the consolidated financial statements from the date that control commences untilthe date that control ceases.Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair valueof the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directlyattributable to the acquisition.The difference between the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilitiesand the cost of acquisition is accounted for in accordance with note 2.6.2.4 Foreign CurrenciesForeign Currency TransactionsTransactions in foreign currencies are translated at foreign exchange rates ruling at the dates of the transactions. Monetaryassets and liabilities denominated in foreign currencies at the balance sheet date are translated into Singapore dollars atforeign exchange rate ruling at that date. Foreign exchange differences arising from translation are recognised in the profitand loss account. Non-monetary assets and liabilities measured at cost in a foreign currency are translated using exchangerates at the date of the transaction. Non-monetary assets and liabilities measured at fair value in foreign currencies aretranslated to Singapore dollars at foreign exchange rates ruling at the dates the fair value was determined.Foreign OperationsAssets and liabilities of foreign operations, including goodwill and fair value adjustments arising on the acquisition of foreignoperations, are translated to Singapore dollars for consolidation at the rates of exchange ruling at the balance sheet date.Revenue and expenses of foreign operations are translated at exchange rates ruling at the dates of the transactions. Exchangedifferences arising on translation are recognised directly in equity. On disposal, accumulated translation differences arerecognised in the consolidated profit and loss account as part of the gain or loss on sale.54 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going2.5 Property, Plant and EquipmentOwned AssetsECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.Leased AssetsProperty, plant and equipment acquired through finance leases are capitalised at the lower of its fair value and the presentvalue of the minimum lease payments at the inception of the lease, less accumulated depreciation and impairment losses.Lease payments are apportioned between finance charges and reductions of the lease liability so as to achieve a constant rateof interest on the remaining balance of the liability. Finance charges are charged directly against the profit and loss account.Capitalised leased assets are depreciated over the shorter of the economic useful life of the asset and the lease term.DisposalsGains or losses arising from the retirement or disposal of property, plant and equipment are determined as the differencebetween the estimated net disposal proceeds and the carrying amount of the asset and are recognised in the profit and lossaccount on the date of retirement or disposal.DepreciationDepreciation is provided on the straight-line basis so as to write off items of property, plant and equipment over theirestimated useful lives as follows :-Freehold building - 50 yearsLeasehold improvements - 10 yearsOffice equipment - 5 yearsFurniture and fittings - 5 yearsComputers - 5 yearsMotor vehicles - 5 yearsNo depreciation is provided on assets under construction.The useful lives and residual values, if not insignificant, are reassessed annually.2.6 Goodwill on ConsolidationGoodwill/Negative GoodwillGoodwill in a business combination represents the excess of the cost of acquisition over the fair value of the Group’s shareof the identifiable net assets acquired. Goodwill is stated at cost less impairment losses. Goodwill on the acquisition ofsubsidiaries is presented as intangible assets. Goodwill is tested for impairment on an annual basis as described in note 6.Negative goodwill arising in business combination represents the excess of the net fair value of identifiable net assets,liabilities and contingent liabilities recognised over the cost of acquisition and is recognised immediately in the profit andloss account.Goodwill/Negative Goodwill Previously Written Off Against ReservesGoodwill that has previously been taken to reserves is not taken to the profit and loss account when (a) the business isdisposed or (b) the goodwill is impaired. Similarly, negative goodwill that has previously been taken to reserves is not takento the profit and loss account when the business is disposed of.ECS HOLDINGs LIMITED Annual Report 200555

2.7 Other Financial AssetsECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)Equity financial instruments held by the Group are classified as being available-for-sale and are stated at fair value, with anyresultant gain or loss being recognised directly in equity. The exceptions are impairment losses and foreign exchange gainsand losses, which are recognised in the profit and loss account. When these investments are derecognised, the cumulativegain or loss previously recognised directly in equity is recognised in the profit and loss account.The fair value of financial instruments classified as available-for-sale is determined as the quoted bid price at the balancesheet date. Financial instruments classified as available-for-sale investments are recognised by the Group on the date itcommits to purchase the investments, and derecognised on the date a sale is committed.Equity securities available for sale which do not have a quoted market price in an active market and whose fair valuecannot be reliably measured are stated at cost less impairment losses which, in the opinion of the directors, are other thantemporary.2.8 DerivativesDerivative financial instruments are used to manage exposures to foreign exchange and interest rate risks arising fromoperational, financing and investment activities. Derivative financial instruments are not used for trading purposes. However,derivatives that do not qualify for hedge accounting are accounted for as trading instruments.Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative financialinstruments are remeasured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in theprofit and loss account. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or lossdepends on the nature of the item being hedged as described in note 2.9.2.9 HedgingCash Flow HedgesWhere a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset orliability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrumentis recognised directly in equity. When the forecast transaction subsequently results in the recognition of a non-financialasset or non-financial liability, the associated cumulative gain or loss is removed from equity and included in the initial costor other carrying amount of the non-financial asset or liability. If a hedge of a forecast transaction subsequently results inthe recognition of a financial asset or financial liability, the associated gains and losses that were recognised directly in equityare reclassified into the profit and loss account in the same period or periods during which the asset acquired or liabilityassumed affects the profit and loss account (i.e. when interest income or expense is recognised). For other cash flow hedges,the associated cumulative gain or loss is removed from equity and recognised in the profit and loss account in the sameperiod or periods during which the hedged forecast transaction affects the profit and loss account. The ineffective part ofany gain or loss is recognised immediately in the profit and loss account.When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedgerelationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remainsin equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is nolonger expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in theprofit and loss account.56 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)2.10 InventoriesInventories are stated at the lower of cost and net realisable value.Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion andother costs incurred in bringing the inventories to their present location and condition.Work-in-progress is stated at cost incurred plus attributable profits. Cost includes direct materials, sub-contracted costsand other related costs incurred. Progress billings received and receivable are shown as a deduction from the value of workin-progress.Provision is made for anticipated losses on uncompleted projects when foreseeable.2.11 Cash and Cash EquivalentsCash and cash equivalents comprise cash balances and bank deposits. For the purpose of the statement of cash flows, cashand cash equivalents are presented net of bank overdrafts which are repayable on demand and which form an integral partof the Group’s cash management.2.12 ImpairmentThe carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is anyindication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment lossis recognised whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss is charged tothe profit and loss account.2.13 Liabilities and Interest-Bearing BorrowingsInterest-bearing liabilities are recognised initially at cost less attributable transaction costs. Subsequent to initialrecognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption valuebeing recognised in the profit and loss account over the period of the borrowings on an effective interest basis.2.14 Employee Share OptionsThe share option programme allows the Group employees to acquire shares of the Company. The fair value of options grantedis recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date andspread over the period during which the employees become unconditionally entitled to the options. At each balance sheetdate, the company revises its estimates of the number of options that are expected to become exercisable. It recognisesthe impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over theremaining vesting period.The proceeds received net of any directly attributable transactions costs are credited to share capital (nominal value) andshare premium when the options are exercised.2.15 Deferred TaxDeferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assetsand liabilities and their carrying amounts in the financial statements. Temporary differences are not recognised for goodwillnot deductible for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxableprofit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carryingamount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available against which thetemporary differences can be utilised.ECS HOLDINGs LIMITED Annual Report 200557

2.16 Revenue RecognitionSale of GoodsECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)Revenue on sale of goods, which encompasses distribution of enterprise systems and IT products, is recognised when thesignificant risks and rewards of ownership have been transferred to the buyer. Revenue excludes goods and services taxes,and other sales taxes, and is arrived at after deduction of trade discounts. No revenue is recognised if there are significantuncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.Service FeesFees from maintenance service contracts are recognised over the period of the contract.Project RevenueRevenue on projects is recognised in the profit and loss account based on the percentage of completion method.DividendsDividend income is recognised in the profit and loss account when the Company’s right to receive payment is established.Interest IncomeInterest income from bank deposits is accrued on a time-apportioned basis.2.17 Operating LeasesWhere the Group has the use of assets under operating leases, payments made under the leases are recognised in the profitand loss account on a straight line basis over the term of the lease. Lease incentive received are recognised in the profit andloss account as an integral part of the total lease payments made.2.18 Finance CostsInterest expense and similar charges are expensed in the profit and loss account in the period in which they are incurred.The interest component of finance lease payments is recognised in the profit and loss account using the effective interestrate method.58 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)3 Property, Plant and EquipmentFreehold Leasehold Office Furniture Motor Assets underBuilding Improvements Equipment and Fittings Computers Vehicles Construction TotalGroup $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000CostAt 1 January 2004 1,642 1,026 1,090 1,090 11,626 795 48 17,317Additions - 177 436 165 1,045 293 243 2,359Disposals - - (29) (16) (100) (55) - (200)Transfers - - - 1 10 74 (85) -Translation adjustment (118) (20) (100) (60) (203) (48) (90) (639)At 31 December 2004 1,524 1,183 1,397 1,180 12,378 1,059 116 18,837At 1 January 2005 1,524 1,183 1,397 1,180 12,378 1,059 116 18,837Additions - 645 494 267 1,701 407 627 4,141Disposals - (21) (10) (217) (197) (23) - (468)Transfers - - - 241 189 - (430) -Translation adjustment 63 15 64 10 240 36 - 428At 31 December 2005 1,587 1,822 1,945 1,481 14,311 1,479 313 22,938Accumulated DepreciationAt 1 January 2004 88 349 255 449 3,545 357 - 5,043Depreciation charge for the year 48 190 382 218 2,261 212 - 3,311Disposals - - (22) (16) (90) (2) - (130)Translation adjustment (24) (11) (86) (28) (123) (31) - (303)At 31 December 2004 112 528 529 623 5,593 536 - 7,921At 1 January 2005 112 528 529 623 5,593 536 - 7,921Depreciation charge for the year 45 246 415 258 2,365 245 - 3,574Disposals - (3) (6) (212) (175) (15) - (411)Translation adjustment 14 8 50 10 97 24 - 203At 31 December 2005 171 779 988 679 7,880 790 - 11,287ECS HOLDINGs LIMITED Annual Report 200559

ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)3 Property, Plant and Equipment (con’t)Freehold Leasehold Office Furniture Motor Assets underBuilding Improvements Equipment and Fittings Computers Vehicles Construction TotalGroup $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000Carrying AmountAt 1 January 2004 1,554 677 835 641 8,081 438 48 12,274At 31 December 2004 1,412 655 868 557 6,785 523 116 10,916At 1 January 2005 1,412 655 868 557 6,785 523 116 10,916At 31 December 2005 1,416 1,043 957 802 6,431 689 313 11,651The net book value of property, plant and equipment of the Group includes assets held under finance leases with a carrying value of $129,600 (2004: $172,800).The freehold building of the Group with carrying value of $1,416,000 (2004: $1,412,000) is pledged as security for banking facilities granted.60 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)3 Property, Plant and Equipment (con’t)CompanyLeasehold Office FurnitureImprovements equipment and Fittings Computers Total$’000 $’000 $’000 $’000 $’000CostAt 1 January 2004 191 10 22 61 284Additions - - - 3 3At 31 December 2004 191 10 22 64 287At 1 January 2005 191 10 22 64 287Additions - - - 11 11At 31 December 2005 191 10 22 75 298Accumulated DepreciationAt 1 January 2004 37 5 8 32 82Depreciation charge for the year 19 2 5 9 35At 31 December 2004 56 7 13 41 117At 1 January 2005 56 7 13 41 117Depreciation charge for the year 19 2 4 9 34At 31 December 2005 75 9 17 50 151Carrying AmountAt 1 January 2004 154 5 14 29 202At 31 December 2004 135 3 9 23 170At 1 January 2005 135 3 9 23 170At 31 December 2005 116 1 5 25 1474 SubsidiariesCompany2005 2004$’000 $’000Unquoted equity shares, at cost 87,008 87,008On 15 January 2004, a subsidiary, ECS Indo Pte Ltd entered into a call option agreement with its affiliated company to acquire100% equity interest in the affiliated company. The call option, which was initially exercisable within a 10-year period from15 January 2006 at an option price of US$2 million has, subsequent to year end, been mutually agreed between the parties tobe revised to be exercisable within a 10-year period from 15 January 2008.ECS HOLDINGs LIMITED Annual Report 200561

4 Subsidiaries (con’t)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)Details of the subsidiaries directly held by the Company are set out below.Group’s Effective Cost ofPlace of Equity Interest InvestmentIncorporation/Name of Company Principal Activities Business 2005 2004 2005 2004% % $ $ECS Computers Provider of information(Asia) Pte Ltd (a) technology products and Singapore 100 100 5,924 5,924services for IT infrastructureECS Indo Pte Ltd (a) Distributor of information Singapore 60 60 600 600technology productsThe Value Systems Co., Provider of information Thailand 100 100 5,054 5,054Ltd (b)technology products andservices for IT infrastructureECS KUSH Sdn Bhd (c) Investment holding Malaysia 60 60 2,832 2,832ECS Technology Investment holding, provider(China) Limited (d) of information technology Hong Kong 100 100 72,588 72,588products and services for ITinfrastructureEC Sure Holdings Investment holding Thailand 99.9 99.9 10 10(Thailand) Co., Ltd (g)Details of the subsidiaries held by the direct subsidiaries of the Group are set out below.87,008 87,008Group’s EffectiveCountry ofEquity InterestIncorporation/Name of Company Principal Activities Business 2005 2004% %Subsidiaries of ECS Computers (Asia) Pte LtdAstar Technology (S) Pte. Ltd. (a) Inactive Singapore 100 100Isan System Pte. Ltd. (a) Provision and distribution Singapore 100 100of information technologyproducts and general tradingof IT equipmentSubsidiary of ECS Indo Pte LtdPT ECS Indo Jaya (g) Distributor of information Indonesia 60 60technology products62 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going4 Subsidiaries (con’t)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)Group’s EffectiveCountry ofEquity InterestIncorporation/Name of Company Principal Activities Business 2005 2004% %Subsidiaries of ECS KUSH Sdn BhdECS KU Sdn Bhd (c) ) Provider of information Malaysia 60 60) technology products and) services for IT infrastructure)ECS Pericomp Sdn Bhd (c) ) Malaysia 48 48)ECS Astar Sdn Bhd (c) ) Malaysia 60 60ECS ICT Sdn Bhd (c) Inactive Malaysia 42 42Subsidiaries of ECS Technology (China) LimitedECS Technology Company Ltd (e) ) Provider of information People’s 100 100) technology products and Republic) services for IT infrastructure of China)ECS Technology (Guangzhou) ) People’s 100 100Co., Ltd (e) ) Republic) of China)ECS International Trading ) People’s 100 100(Shanghai) Co., Limited (e) ) Republic) of China)ECS Technology (Shanghai) ) People’s 100 100Co., Ltd (e) ) Republic) of China)PCS Trading Limited (f) ) British 100 100) Virgin) IslandsECS IT Services (China) Limited (f) Inactive Hong Kong 100 100(a)(b)(c)(d)(e)(f)(g)Audited by KPMG Singapore.Audited by KPMG Thailand.Audited by KPMG Malaysia.Audited by KPMG Hong Kong.Audited by KPMG People’s Republic of China for consolidation purposes.Not required to be audited.Audited by a local CPA firm. Not a significant subsidiary as defined under Clause 713 of SGX-ST Listing Manual.ECS HOLDINGs LIMITED Annual Report 200563

5 Other Financial AssetsECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)GroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Available for saleUnquoted equity investments, at cost 369 369 - -Club memberships, at cost 265 265 140 140Others 61 - 61 -695 634 201 1406 Goodwill on ConsolidationGroupAccumulated CarryingCost Amortisation Amount$’000 $’000 $’000At 1 January 2004 40,762 5,410 35,352Amortisation during the year - 2,717 2,717At 31 December 2004, as previously stated 40,762 8,127 32,635Effect of adopting FRS 103 (7,240) (8,127) 887At 31 December 2004, restated 33,522 - 33,522At 1 January and 31 December 2005 33,522 - 33,522With the adoption of FRS 103 Business Combinations, goodwill is stated at cost less accumulated impairment losses andis no longer amortised. Instead, goodwill impairment is tested annually, or when circumstances change, indicating thatgoodwill might be impaired. Negative goodwill is recognised immediately in the profit and loss account, instead of beingsystematically amortised over its useful life. This has resulted in the derecognition of negative goodwill and an increase ofaccumulated profits for the Group as at 1 January 2005 by $887,000.Had there not been a change in accounting policy, the net profit attributable to shareholders for the financial year ended 31December 2005 would decrease by $2,717,000 as follows:Group2005$’000Goodwill amortisation which would be charged to the profit and loss account (2,784)Negative goodwill amortisation which would be credited to the profit and loss account 67(2,717)Goodwill is allocated to the Group’s cash-generating unit (CGU) in a group of subsidiaries in the same geographical locationwith similar principal activities. The recoverable amount of a CGU is determined based on value-in-use calculations. Thesecalculations use cash flow projections based on financial budgets prepared by management covering a five-year period.64 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going6 Goodwill on Consolidation (con’t)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)The key assumptions used for the value-in-use calculations were as follows:%Average sales growth rate 13.8Average net profits before interest and tax 1.3Discount rate 3.5The management determined the budgeted gross margin based on past performance and its expectation for marketdevelopment. The compounded average growth rate used is consistent with the forecast included in industry reports. Thediscount rate used is pre-tax and reflect specific risks relating to the business segment.7 Deferred TaxationMovements in deferred tax assets and liabilities during the year were as follows:-Credit/(Charge)to profit andAt loss account Translation At1/1/2005 (note 26) adjustment 31/12/2005Group $’000 $’000 $’000 $’000Deferred Tax AssetsProvisions 875 89 (6) 958Deferred Tax LiabilitiesAccelerated tax depreciation (527) 101 (10) (436)CompanyDeferred Tax LiabilitiesAccelerated tax depreciation (27) - - (27)As at 31 December 2005, the Group had no tax losses (2004: $2,160,000) which are available for carry forward and set offagainst future taxable income subject to agreement by the tax authority and compliance with tax regulations prevailing in thecountry in which the subsidiary incurring the loss operates. Deferred tax assets have not been recognised in respect of thetax losses in accordance with the Group’s accounting policy as set out in note 2.15.ECS HOLDINGs LIMITED Annual Report 200565

ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)8 InventoriesGroup2005 2004$’000 $’000At cost and at net realisable value-Trading inventories 122,858 125,992Work-in-progress (208) 253Goods in transit 5,969 10,746128,619 136,991Allowance for obsolete inventory (3,749) (4,696)124,870 132,295Comprises:-Inventories, at cost 5,761 10,999Inventories, at net realisable value 119,109 121,296124,870 132,295Work-in-progress comprises:-Work-in-progress, at cost 5,150 5,150Attributable profits 392 2785,542 5,428Progress payments received and receivable (5,750) (5,175)(208) 2539 Trade and Other ReceivablesNote Group Company2005 2004 2005 2004$’000 $’000 $’000 $’000Trade receivables 10 352,582 274,270 67 68Deposits, prepaymentsand other receivables 11 7,749 7,235 576 310Amounts due from subsidiaries 12 - - 47,221 110,021360,331 281,505 47,864 110,39910 Trade ReceivablesGroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Trade receivables 330,482 272,889 67 68Bills receivable 18,445 - - -Amounts due from affiliated companies 9,386 5,876 - -358,313 278,765 67 68Allowance for doubtful receivables (5,731) (4,495) - -352,582 274,270 67 68An affiliated company is a company, other than a related corporation, which directly or indirectly through one or moreintermediaries is under common significant influence.66 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)11 Deposits, Prepayments and Other ReceivablesGroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Deposits 1,114 1,053 - -Prepayments 3,597 3,245 144 16Recoverables 1,271 638 7 -Tax recoverables 847 252 342 209Other receivables 920 2,047 83 857,749 7,235 576 31012 Amounts Due from/to SubsidiariesAmounts due from -Note 2005 2004$’000 $’000Trade receivables 651 143Non-trade receivables 8,657 7,725Loans receivable (current) 37,913 102,1539 47,221 110,021Loans receivable (non-current) 66,600 -113,821 110,021Amounts due to -Trade payables 167 36Non-trade payables 616 -13 783 36Transactions with subsidiaries are unsecured and priced on an arms’ length basis. The loans due from subsidiaries areunsecured and bore interest at 2.6% to 5% (2004: 1.4% to 5%) per annum. The current loans receivable are repayable ondemand and the non-current loans receivable are repayable on 28 January 2008. The non-trade balances are unsecured,interest-free and are repayable on demand.There is no allowance made for doubtful debts arising from the outstanding balances.13 Trade and Other PayablesNote Group Company2005 2004 2005 2004$’000 $’000 $’000 $’000Trade payables 163,007 135,264 - -Accruals and other payables 14 32,235 36,426 2,396 1,341Amounts due to subsidiaries 12 - - 783 36Derivative liability 31 1,856 - - -197,098 171,690 3,179 1,377ECS HOLDINGs LIMITED Annual Report 200567

ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)14 Accruals and Other PayablesGroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Accrued operating expenses 22,995 17,534 2,363 1,316Deposits received 6,688 15,387 - -Other payables 2,552 3,505 33 2532,235 36,426 2,396 1,34115 Deferred IncomeDeferred income relates to fees billed in advance on service maintenance contracts and consists of:-Group2005 2004$’000 $’000Current portion 264 741Non-current portion 239 313503 1,05416 Interest-Bearing Bank LoansGroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Secured -Term loan 722 148 - -Unsecured -Term loans 162,073 159,006 83,250 82,000Trade financing 36,742 13,201 - -199,537 172,355 83,250 82,000Repayable:-Within 1 year 132,883 172,262 16,650 82,000After 1 year but within 5 years 66,654 93 66,600 -199,537 172,355 83,250 82,000(a)(b)The secured bank facilities of the Group bore interest at 4.9% (2004: 7.25% to 7.50%) per annum and are secured by afixed charge over the freehold building of a subsidiary. In addition, the facilities are jointly and severally guaranteed bycertain directors of certain subsidiaries.The unsecured bank facilities of the Group bore interest at rates ranging from 1.77% to 5.8% (2004: 1.41% to 5.22%) perannum. A negative pledge has been given in respect of the entire assets of certain subsidiaries.68 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going17 Obligations Under Finance LeasesECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)Payments Interest PrincipalGroup $’000 $’000 $’0002005Repayable:-Within 1 year 24 2 22After 1 year but within 5 years 48 5 4372 7 652004Repayable:-Within 1 year 24 2 22After 1 year but within 5 years 72 7 6596 9 87Information on interest rates and the Group’s exposure to interest rate and currency risks are set out in note 31.18 Preference SharesGroup2005 2004$’000 $’00025 Class A-1 Non-Cumulative Redeemable 42 41Preference Shares of US$1 each15 Class A-2 Non-Cumulative Redeemable 26 25Preference Shares of US$1 each10 Class B Non-Cumulative Redeemable 16 16Preference Shares of US$1 each84 82The principal terms of the RPS are contained in the Articles of Association of a subsidiary are summarised as follows:(a) The issuer of the RPS may at any time redeem any or all of the RPS (including, but not exceeding, the premium paid onsubscription) by giving not less than 30 days prior notice in writing to the holders of the RPS to be redeemed;(b) The holders of RPS are not entitled to participate in the profits or assets of the issuer nor shall they confer a right toparticipate in any issue of ordinary shares in the capital of the issuer;(c) The holders of RPS shall have the right to receive non-cumulative preferential dividends as recommended by the directors;(d) Upon the winding up of the subsidiary, the holder of the preference shares have the right to the repayment of the capitalpaid up and premium paid on the RPS in the following priority:-i) Class A-1 RPS holder shall rank senior to the holders of the subsidiary’s ordinary shares, Class A-2 RPS and Class BRPS;ii) Class A-2 RPS holder shall rank senior to the holders of the subsidiary’s ordinary shares and Class B RPS;iii) Class B RPS holder shall rank senior to the holders of the subsidiary’s ordinary shares.ECS HOLDINGs LIMITED Annual Report 200569

ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)19 Loans Due to Minority Shareholders of a SubsidiaryThe loans due to minority shareholders of a subsidiary bore interest at 5% (2004: 5%) per annum and are not repayable withinthe next 12 months. The loans are subordinated to the repayment of bank loans of the subsidiary.20 Share CapitalNo. of Shares2005 2004 2005 2004$’000 $’000 $’000 $’000Authorised:Ordinary shares of $0.10 each 500,000 500,000 50,000 50,000Issued and fully paid:At 1 January 355,248 346,342 35,525 34,634Issue of shares 8,351 8,906 835 891At 31 December 363,599 355,248 36,360 35,525During the year, the Company issued a total of 8,351,000 ordinary shares of $0.10 each fully paid at par for cash upon theexercise of share options granted under the Company’s share option plans.At 31 December 2005, options for 25,241,000 (2004: 35,223,000) unissued ordinary shares of $0.10 each of the Companygranted under the ECS Share Option Scheme II were outstanding.21 ReservesGroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Share premium 75,656 75,656 75,656 75,656Accumulated profits 63,505 50,405 566 843Currency translation reserve (4,676) (5,865) - -Dividend reserve 5,196 2,938 5,196 2,938Hedging reserve (1,856) - - -137,825 123,134 81,418 79,437Movements in reserves for the Group and the Company are set out in the statements of changes in equity.(a) Share PremiumThe application of the share premium account is governed by Section 69 of the Companies Act, Chapter 50.(b) Currency Translation ReserveThe currency translation reserve of the Group comprises foreign exchange differences arising from the translation of thefinancial statements of foreign entities.(c) Dividend ReserveThe dividend reserve of the Group represents dividends proposed which are subject to approval of the shareholders at ageneral meeting.70 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going21 Reserves (con’t)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)(d) Hedging ReserveThe hedging reserve relates to variability in future cash flows effectively hedged as at balance sheet date which will bereleased to profit and loss in subsequent periods.22 RevenueGroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Sale of IT products 2,014,253 1,833,671 1,039 3,615IT services 22,025 31,987 - -Dividend from subsidiaries - - 6,617 3,6002,036,278 1,865,658 7,656 7,215Transactions within the Group have been excluded in arriving at revenue for the Group.23 Profit from OperationsThe following items have been included in arriving at profit from operations:-GroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Other IncomeExchange gains (net) 3,046 214 - -Interest income- banks 1,113 838 3,868 2,381- subsidiaries - - 968 690Others 1,370 410 43 175,529 1,462 4,879 3,088Staff CostsWages and salaries 38,656 33,456 113 97Contributions to defined contribution plans 3,514 3,051 11 1142,170 36,507 124 108Remuneration of Key ManagementPersonnelDirectors of the Company- Short-term employment benefits 1,972 1,879 - -- Other long-term benefits 72 51 - -Executive officers- Short-term employment benefits 1,115 846 - -- Other long-term benefits 51 51 - -3,210 2,827 - -Number of employees as at 31 December 1,685 1,479 1 1ECS HOLDINGs LIMITED Annual Report 200571

ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)23 Profit from Operations (con’t)GroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Other (Income)/ExpensesAmortisation of goodwill (note 6) - 2,717 - -Allowances made/(write back) for- obsolete inventories (816) 1,033 - -- doubtful trade receivables 2,733 1,824 - -Audit fees- auditors of the Company- current year 82 73 48 35- other auditors- current year 178 163 - -- prior year - 16 - -Bad debts recovered (trade) (60) - - -Depreciation of property, plantand equipment (note 3) 3,574 3,311 34 35Directors’ fees 274 225 267 225Directors’ remuneration – directors ofsubsidiaries 970 410 - -Exchange losses - - 102 20Inventories written off 289 829 - -(Gain)/Loss on disposal of property, plantand equipment (4) 36 - -Non-audit fees- auditors of the Company 42 13 - 8- other auditors - 8 - -Operating lease expenses 3,900 3,547 - -Professional fees paid to a firm in which adirector is a member 34 90 34 7Consultancy fees paid to a firm in which adirector has an interest 73 - 73 -24 Finance CostsGroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Interest paid and payable on- bank overdrafts 14 36 - -- finance leases 2 3 - -- short-term loans 7,382 6,488 3,884 2,411- loan from subsidiary - - 437 2127,398 6,527 4,321 2,62372 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going25 Directors’ RemunerationECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)The remuneration of the Company’s directors fall within the following remuneration bands:-Numbers of Directors2005 2004Non-Non-Executive Executive Executive ExecutiveDirectors Directors Directors Directors$750,000 to $1,000,000 1 - - -$500,000 to $749,999 1 - - -$250,000 to $499,999 2 - 3 -Below $250,000 1 7 3 65 7 6 626 TaxationGroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Tax ExpenseCurrent tax expense- Current year 3,909 4,313 1,150 606- Under/(over) provided in prior years 168 10 - (31)4,077 4,323 1,150 575Deferred tax expense- Movements in temporary differences (89) (130) - 4- Under/(over) provided in prior years (101) (60) - -(190) (190) - 4Tax expense for the year 3,887 4,133 1,150 579Reconciliation of Effective Tax RateProfit before tax 22,484 19,116 5,972 3,051Income tax at 20% (2004: 20%)4,497 3,823 1,194 610Non-deductible expenses 157 751 4 -Tax rebate/relief/exemption (71) (38) (11) (11)Income not subject to tax (58) - (48) -Effect of different tax rates in foreign jurisdictions (510) (824) - -Deferred tax benefits not recognised - 432 - -Utilisation of tax losses previously not recognised (141) - - -Under/(over) provision of tax 67 (50) - (31)Others (54) 39 11 11Tax expense for the year 3,887 4,133 1,150 579ECS HOLDINGs LIMITED Annual Report 200573

ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)27 Earnings per ShareGroup2005 2004$’000 $’000Basic earnings per share is based on:-Net profit for the year ($’000) 17,313 13,463Number of shares outstanding at thebeginning of the year (’000) 355,248 346,342Weighted average number of sharesissued during the year (’000) 696 6,680Weighted average number of shares in issueduring the year (’000) 355,944 353,022In calculating fully diluted earnings per share, the weighted average number of ordinary shares in issue during the year isadjusted for the effects of all dilutive potential ordinary shares:Number of Shares2005 2004’000 ’000Weighted average number of shares used incalculation of basic earnings per share 355,944 353,022Weighted average number of dilutivepotential ordinary shares 7,655 11,249Number of shares that would have beenissued at fair value (2,577) (3,733)Weighted average number of ordinaryshares (diluted) 361,022 360,53874 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going28 Equity Compensation BenefitsECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)The ECS Share Option Scheme I (“Scheme I”) was approved and adopted by its members at an Extraordinary General Meetingheld on 13 December 2000 to grant one-time share options to certain eligible directors and executives of the Company inrecognition of their contribution to the growth and performance of the Company.The ECS Share Option Scheme II (“Scheme II”) was approved and adopted by its members at an Extraordinary GeneralMeeting held on 13 December 2000. Scheme II provides an opportunity for employees and directors, including non-executivedirectors, of the Group who have contributed significantly to the growth and performance of the Group to participate in theequity of the Company.The above schemes are administered by the Compensation Committee (the “Committee”) which comprises the followingdirectors:-Teo Ek Tor (Chairman)Lin ChienChang Yew KongInformation regarding the schemes are set out below:-Scheme I(a) The exercise price of the options exercisable pursuant to Scheme I is the par value of the share.(b) Options granted are exercisable after the first anniversary but before the fifth anniversary of the grant date, subject to thefollowing:-- up to 50% of the shares in respect of which option is granted may be exercised within the 12 month period after thefirst anniversary of the date of grant of the option; and- the balance of the shares in respect of which option is granted may be exercised at any time after the expiry of theaforesaid 12 month period.Scheme II(a) The exercise price of the options exercisable pursuant to Scheme II is set either at:- a price equal to the average of the last dealt price for the three consecutive trading days immediately preceding thegrant of the option; or- a discount to the market price not exceeding 20% of the market price in respect of that option.(b) Options granted are exercisable at any time after the first anniversary of the grant date and in the case of options withexercise price set at a discount, at any time after the second anniversary of date of grant. Options granted to employeesand executive directors are exercisable up to the tenth anniversary of date of grant and those granted to non-executivedirectors are exercisable up to the fifth anniversary of the date of grant.(c) The scheme will continue to be in force at the discretion of the Committee, subject to a maximum period of 10 yearscommencing 13 December 2000.ECS HOLDINGs LIMITED Annual Report 200575

ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)At 31 December 2005, details of the options granted under the Company’s option schemes for unissued ordinary shares of $0.10 each of the Company were as follows:-Options Options Options Options OptionsDate of Exercise outstanding Options cancelled outstanding vested vestedgrant of options price 1 Jan 2005 exercised or lapsed 31 Dec 2005 1 Jan 2005 31 Dec 2005 Exercise periodScheme I:2000 $0.10 1,672,000 (1,672,000) - - 1,672,000 - 21/12/2001 to 20/12/20052000 $0.10 6,679,000 (6,679,000) - - 6,679,000 - 21/12/2002 to 20/12/2005Scheme II:2001 $0.51 452,000 - - 452,000 452,000 452,000 03/09/2002 to 02/09/20062001 $0.51 9,483,000 - (727,000) 8,756,000 9,483,000 8,756,000 03/09/2002 to 02/09/20112002 $0.72 4,882,000 - (210,000) 4,672,000 4,882,000 4,672,000 11/03/2003 to 10/03/20122003 $0.55 1,100,000 - - 1,100,000 1,100,000 1,100,000 24/01/2004 to 23/01/20122003 $0.60 3,500,000 - - 3,500,000 3,500,000 3,500,000 11/03/2004 to 10/03/20122003 $0.41 650,000 - (120,000) 530,000 650,000 530,000 27/06/2004 to 26/06/20082003 $0.41 6,805,000 - (574,000) 6,231,000 6,805,000 6,231,000 27/06/2004 to 26/06/201335,223,000 (8,351,000) (1,631,000) 25,241,000 35,223,000 25,241,000During the year, a total of 8,351,000 ordinary shares of $0.10 each were issued fully paid at par for cash upon the exercise of share options. The proceeds of $835,100 were creditedto share capital. The market price of the shares at the date of issue pursuant to the exercise of share options was $0.30 per share.At 1 January 2005, the adoption of FRS 102 has not resulted in any adjustments to comparatives or the opening balances of accumulated profits of the Group or the Company as theshare options had vested prior to the adoption of FRS 102.76 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going29 Related Party TransactionsDefinition of Related PartiesECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability,directly or indirectly, to control the party or exercise significant influence over the party in making the financial and operatingdecisions, or vice versa, or where the Group and the party are subject to common control or common significant influence.Related parties may be individuals or other entities.Transactions with Directors and other key management personnelTotal directors’ remuneration is disclosed in note 23 and 25.During the financial year, the Company and certain of its subsidiaries have, in the normal course of business entered intotransactions with companies in which certain directors of the Company, Mr Tay Eng Hoe, Mr Narong Intanate, Mr Liu Wei andMr Wang Fangmin have an interest. These transactions include the purchase and sale of information technology productsand services of $598,578 (2004: $4,111,188) and $4,703,188 (2004: $3,697,263) respectively and are carried out on normalcommercial terms.In addition, professional services, amounting to $34,000 (2004: $90,000) were provided to the Company by a firm in whichMrs Lee Suet Fern is a member. Consultancy services, amounting to $73,000 (2004: nil) were provided to the Company by afirm in which Mr Teo Ek Tor has an interest.The directors and other key management personnel participate in the Company’s share option plans, the terms andconditions of which are stated in note 28. Details of options granted, exercised and outstanding at 31 December 2005 are setout below:-Options Options Optionsoutstanding Options cancelled outstandingName of key management personnel 1 Jan 2005 exercised or lapsed 31 Dec 2005Executive directors- Tay Eng Hoe 3,863,000 (1,113,000) - 2,750,000- Narong Intanate 600,000 - - 600,000- Foo Sen Chin 3,860,000 (3,340,000) 520,000Non-executive directors- Lin Chien 128,000 - - 128,000- Chay Yee Meng 188,000 - - 188,000- Leong Horn Kee 278,000 - - 278,000- Lee Suet Fern 258,000 - - 258,000- Teo Ek Tor 130,000 - - 130,000Former directors- Koh Soo Keong 120,000 - (120,000) -- Wong Heng Chong 1,157,000 (557,000) - 600,000- Wang Fangmin 50,000 - - 50,000Balance carried forward 10,632,000 (5,010,000) (120,000) 5,502,000ECS HOLDINGs LIMITED Annual Report 200577

29 Related Party Transactions (con’t)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)NumberNumberof options Aggregate Options of optionsoutstanding options cancelled outstandingName of key management personnel 1 Jan 2005 exercised or lapsed 31 Dec 2005Balance brought forward 10,632,000 (5,010,000) (120,000) 5,502,000Executive officers- Foong Kam Tho 5,291,000 (3,341,000) - 1,950,000- Jansen Ek Boo Ong 1,200,000 - - 1,200,000- Wang Lixin 250,000 - - 250,000- Soong Jan Hsung 165,000 - - 165,000- Somsak Pejthavaeeporndej 870,000 - - 870,000- Chong Cher Kwang 490,000 - - 490,00018,898,000 (8,351,000) (120,000) 10,427,000Other Related Party TransactionsDuring the financial year, there were the following significant transactions with related parties, based on terms agreed bythe parties:-GroupCompany2005 2004 2005 2004$’000 $’000 $’000 $’000Subsidiaries- sales - - 1,039 3,586- purchases - - 1,034 3,588- interest paid - - 506 212Affiliates- sales 28,013 6,430 - -- purchases - 5,042 - -30 Operating Lease CommitmentsAt 31 December, the Group have commitments for future minimum lease payments under non-cancellable operating leasesas follows:-Ggroup2005 2004$’000 $’000Payable:Within 1 year 1,813 2,760After 1 year but within 5 years 3,802 4,019After 5 years 145 35,760 6,782The Group leases office premises and warehouse facilities under operating leases. The leases typically run for an initialperiod of three years, with an option to renew the lease after that date.78 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going31 Financial Risk ManagementECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)Financial Risk Management Objectives and PoliciesExposure to credit, interest rate and currency risk arises in the normal course of the Group’s business. The Group hasestablished risk management policies and guidelines which set out its overall business strategies, its tolerance of risk andits general risk management philosophy and has established processes to monitor and control the hedging of transactionsin a timely and accurate manner. Such established policies are reviewed annually by the Group’s management, and periodicreviews are undertaken to ensure that the Group’s policy guidelines are adhered to.Credit RiskManagement has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluationsare performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect offinancial assets.Investments and transactions involving derivative financial instruments are allowed only with counterparties that are of highcredit quality. As such, management does not expect any counterparty to fail to meet their obligations.Interest Rate RiskThe Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s debt obligations. The Groupmanages some of its exposure to floating rate interest by entering into fixed rate interest swaps which are denominated inUnited States dollars.Effective Interest RatesIn respect of interest-bearing financial liabilities, the following table indicates their effective interest rates at balance sheetdate and the periods in which they reprice:-Fixed interestrate maturingEffective Floating Within 1 to 5interest rate interest 1 year years TotalGroup % $’000 $’000 $’000 $’0002005Financial LiabilitiesSecured term loan 4.9% 722 - - 722Unsecured term loans/trade financing 1.77% to 5.8% 198,815 - - 198,815- effect of interest rate swaps (3.95%) (66,600) - 66,600 -Bank overdrafts 5.75% to 7.75% 50 - - 50Finance lease 2.3% - 22 43 65132,987 22 66,643 199,6522004Financial LiabilitiesSecured term loan 7.25% to 7.5% 148 - - 148Unsecured term loans/trade financing 1.41% to 5.22% 172,207 - - 172,207- effect of interest rate swaps (1.579%) (41,000) 41,000 - -Bank overdrafts 7.25% to 7.5% 260 - - 260Finance lease 4.38% - 22 65 87131,615 41,022 65 172,702ECS HOLDINGs LIMITED Annual Report 200579

31 Financial Risk Management (con’t)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)Fixed interestrate maturingEffective Floating Within 1 to 5interest rate interest 1 year years TotalCompany % $’000 $’000 $’000 $’0002005Financial AssetsLoans to subsidiaries 2.63% to 5.258% 104,513 - - 104,513Financial LiabilitiesUnsecured term loans 2.702% to 5.258% 83,250 - - 83,25021,263 - - 21,2632004Financial AssetsLoans to subsidiaries 1.4% to 5% 102,153 - - 102,153Financial LiabilitiesUnsecured term loans 2.52% to 3.35% 82,000 - - 82,000- Effect of interest rate swaps (1.579%) (41,000) 41,000 - -61,153 41,000 - 20,153Foreign Currency RiskThe Group incurs foreign currency risk mainly from foreign currency denominated sales, purchases and operating expenses.While there is a certain extent of natural hedge between sales receipts and purchases, any significant fluctuation in the USdollar, Thai Baht, Ringgit Malaysia against the Singapore dollar could result in the Group incurring foreign exchange losses/gains. Any significant fluctuations in the US dollar against the Renminbi could also result in an exposure to its Chinesesubsidiaries.The Group recognises that any significant fluctuations in US dollar may affect the Group’s foreign currency risk. As a result,the Group actively monitors its exposure and uses forward foreign exchange contracts and currency swap to hedge againstUS dollar exposures, as and when necessary and where possible.In view of the nature of the Group’s business which spans several countries, foreign exchange risks will continue to be anintegral aspect of the Group’s risk profile in the future.Cash Flow HedgeDuring the financial year, the Group entered into a hybrid swap instrument (the “Swap”) to hedge the Group’s exposuresarising from:• foreign exchange risk in relation to highly probable forecasted sales transactions denominated in Renminbi ; and• interest rate risk in relation to US dollar Singapore Inter Bank Offering Rates (“USD SIBOR”) interest-bearing US dollarloans up to cap of 6%.80 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going31 Financial Risk Management (con’t)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)The Group has established the hedging relationships as cash flow hedges and have recognised the fair value changes on theeffective portion of the Swap amounting to $1,856,000 at 31 December 2005 on the balance sheet as a derivative liability. Thecorresponding amount is recognised in the hedging reserve until the earliest of:(a) the realisation of the forecasted sales transactions; or(b) the repayment or termination of the interest-bearing loans; or(c) USD SIBOR exceeding 6%.Sensitivity AnalysisIn managing its interest rate and currency risks, the Group aims to reduce the impact of short-term fluctuations on theGroup’s earnings. Over the longer term, however, any prolonged adverse changes in foreign exchange and interest rateswould have an impact on consolidated earnings.At 31 December 2005, it is estimated that a general increase of one percentage point in interest rates would decrease theGroup’s profit before tax by approximately $2 million (2004: $1.7 million).At 31 December 2005, it is estimated that a general increase of one percentage point in value of Singapore dollars againstother foreign currencies would decrease the Group’s profit before tax by approximately $243,000 (2004: $266,000). Forwardexchange contracts have been included in this calculation.Fair ValuesInterest-bearing loans and borrowingsThe interest-bearing loans and borrowings are based on market rates.Other financial assetsIt is not practicable to estimate the fair value of the Group’s long-term unquoted equity investments because of the lack ofquoted market prices and the inability to estimate fair value without incurring excessive costs.Other current financial assets and liabilitiesThe notional amounts of financial assets and liabilities with a maturity of less than one year (including trade and otherreceivables, cash and cash equivalents, and trade and other payables) are assumed to approximate their fair values.ECS HOLDINGs LIMITED Annual Report 200581

32 Contingent LiabilitiesECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)At 31 December 2005, there were contingent liabilities in respect of the following:-(a) Guarantees given to suppliers by the Company in respect of credit facilities extended to certain subsidiaries amounted to$143,606,000 (2004: $147,320,000), of which the amount utilised was $43,495,000 (2004: $48,655,000).(b) Guarantees given to financial institutions by the Company in respect of credit facilities extended to certain subsidiariesamounted to $145,956,000 (2004: $169,572,000), of which the amount utilised was $76,254,000 (2004: $55,792,000).(c) Guarantees given to financial institutions by the subsidiaries in respect of credit facilities extended to the Companyamounted to $100 million (2004: $82 million), of which $83 million (2004: $82 million) had been utilised.(d) Guarantees given by a subsidiary to a bank for trade financing facilities extended to a third party in respect of import andexport services provided to its subsidiaries in China amounted to $10,323,000 (2004: $9,906,000).(e) Claim made on a subsidiary, The Value Systems Co., Ltd., as a second defendant in a law suit for copyright infringementamounted to Baht 170 million (equivalent to $7 million). The court has ruled that The Value Systems was not liable for thedamages claimed by the Plaintiff. Although the Plaintiff has filed an appeal, the Directors maintain that the claim has nomerit.33 Business Segments (Group)A segment is a distinguishable component of the Group that is engaged either in providing products or services (businesssegment), or in providing products or services within a particular economic environment (geographical segment), which issubject to risks and rewards that are different from those of other segments.Segment information is presented in respect of the Group’s business and geographical segments. The primary format,business segments, is based on the Group’s management and internal reporting structure.Inter-segment pricing is determined on an arm’s length basis.Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocatedon a reasonable basis. Unallocated items mainly comprise income-earning assets and revenue, interest-bearing loans,borrowings and expenses, and corporate assets and expenses.Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to beused for more than one period.The main business segment of the Group comprises the following:-SegmentsEnterprise systemsIT servicesDistributionPrincipal ActivitiesProvider of enterprise systems tools (middleware, operating systems, Unix/NT servers,databases, storage and security products) for IT infrastructure.IT infrastructure design and implementation, training, maintenance and support services.Distribution of IT products (desktop PCs, notebooks, handhelds, printers, etc) for thecommercial and consumer markets.82 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going33 Business Segments (Group) (con’t)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)RevenueEnterpriseSystems IT Services Distribution Consolidated$’000 $’000 $’000 $’0002005Total revenue from external customers 781,098 22,025 1,233,155 2,036,278Segment results 14,881 2,022 12,979 29,882Finance costs (7,398)Taxation (3,887)Profit from ordinary activities after taxation 18,597Minority interests (1,284)Net profit for the year 17,3132004Total revenue from external customers 625,586 24,925 1,215,147 1,865,658Segment results 10,475 2,281 12,887 25,643Finance costs (6,527)Taxation (4,133)Profit from ordinary activities after taxation 14,983Minority interests (1,520)Net profit for the year 13,463Assets and Liabilities2005Segment assets 203,796 4,935 313,927 522,658Unallocated assets -Tax assets 958Others 62,134Total assets 585,750Segment liabilities 147,488 5,985 247,984 401,457Unallocated liabilities -Tax liabilities 2,370Others 149Total liabilities 403,976ECS HOLDINGs LIMITED Annual Report 200583

ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)33 Business Segments (Group) (con’t)2004EnterpriseSystems IT Services Distribution Consolidated$’000 $’000 $’000 $’000Segment assets 148,951 5,600 295,565 450,116Unallocated assets -Tax assets 875Others 66,243Total assets 517,234Segment liabilities 114,868 8,044 226,652 349,564Unallocated liabilities -Tax liabilities 2,585Others 169Total liabilities 352,318Capital Expenditure2005Capital expenditure 1,304 66 2,771 4,1412004Capital expenditure 742 49 1,568 2,359Significant Non-Cash Expenses2005Depreciation of property, plantand equipment 1,371 39 2,164 3,5742004Amortisation of goodwill 1,081 - 1,636 2,717Depreciation of property, plantand equipment 1,110 44 2,157 3,3112,191 44 3,793 6,02884 ECS HOLDINGs LIMITED Annual Report 2005

Keep Going34 Geographical Segments (Group)ECS Holdings Limited and its SubsidiariesNotes to TheFinancial StatementsYear ended 31 December 2005 (con’t)The Group operates principally in Singapore, Thailand, Malaysia, Indonesia and China. In presenting information on the basisof geographic segments, segment revenue is based on the geographic location of operations. Segment assets are based onthe geographic location of the assets.North Asia South East Asia Consolidated$’000 $’000 $’0002005Total revenue from external customers 1,013,521 1,022,757 2,036,278Segment assets 259,219 263,439 522,658Segment liabilities 154,836 246,621 401,457Capital expenditure 1,003 3,138 4,1412004Total revenue from external customers 1,032,121 833,537 1,865,658Segment assets 220,543 229,573 450,116Segment liabilities 125,906 223,658 349,564Capital expenditure 554 1,805 2,35935 Subsequent EventsOn 4 January 2006, the Company acquired approximately 50% interest in the equity of an associate, MSI Digiland Phils., Inc,(“MSI”) for a cash consideration of approximately $3.7 million. The Company also entered into a call and put option agreementwith the shareholders of MSI pursuant to which the Company was granted a right to purchase an additional 309,707 shares inMSI, thereby increasing the Company’s interest in MSI to 60% of the entire issued and paid-up capital of MSI. The call optionis exercisable within a three year period commencing 3 July 2006.The Company incorporated ECS Infocom (Phils) Pte Ltd, a wholly owned subsidiary of the Company, to hold its interest in theshare capital of MSI on 4 January 2006.36 Accounting Estimates and JudgementManagement discussed with the Audit Committee the development, selection and disclosure of the Group and the Company’scritical accounting policies and estimates and the application of these policies and estimates.Key sources of estimation uncertaintyNote 6 contains information about the assumptions and their risk factors relating to goodwill impairment. Note 31 containsinformation about the assumptions relating to hedge accountingECS HOLDINGs LIMITED Annual Report 200585

ShareholdingStatisticsAs at 14 March 2006Issued and fully paid-upClass of sharesVoting rights- S$112,015,707.58- Ordinary shares- On a show of hands : One vote for each memberOn poll: One vote for each ordinary shareANALYSIS OF SHAREHOLDINGSRange of Shareholdings No. of Shareholders % No. of Shares %1 - 999 5 0.14 1,195 0.001,000 - 10,000 1,816 50.87 12,022,577 3.3110,001 - 1,000,000 1,721 48.21 89,671,562 24.661,000,001 and above 28 0.78 261,903,840 72.03Total: 3,570 100.00 363,599,174 100.00Shareholdings Held in Hands of PublicBased on information available to the Company as at 14 March 2006, 46.07% of the issued ordinary shares of the Company is held bythe public and therefore Rule 723 of the Listing Manual is complied with.TOP 20 SHAREHOLDERSNo. Name No. of Shares %1 ST Electronics (Info-Software Systems) Pte Ltd 75,840,978 20.862 Citibank Nominees Singapore Pte Ltd 37,803,171 10.403 DBS Nominees Pte Ltd 21,542,519 5.924 Mayban Nominees (S) Pte Ltd 20,920,000 5.755 United Overseas Bank Nominees Pte Ltd 14,548,000 4.006 Raffles Nominees Pte Ltd 11,382,000 3.137 Oversea Chinese Bank Nominees Pte Ltd 9,000,000 2.488 Tay Eng Hoe 8,302,481 2.289 Trek 2000 International Ltd 7,397,117 2.0310 Phillip Securities Pte Ltd 6,714,000 1.8511 Kim Eng Securities Pte. Ltd. 5,401,000 1.4912 UOB Kay Hian Pte Ltd 5,075,000 1.4013 ABN Amro Nominees Singapore Pte Ltd 5,000,000 1.3814 Foong Kam Tho 4,217,000 1.1615 Lin Chien 3,950,000 1.0916 DBS Vickers Securities (S) Pte Ltd 3,351,000 0.9217 OCBC Securities Private Ltd 3,222,000 0.8918 Morgan Stanley Asia (S) Securities Pte Ltd 2,513,000 0.6919 See Beng Lian Janice 2,340,000 0.6420 Narong Intanate 2,026,746 0.56Total: 250,546,012 68.9286 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingSubstantialShareholdersAs at 14 March 2006Number of shares Number of shares TotalName of substantial shareholder registered in the in which substantial Percentagename of the shareholder is (%)substantial deemed to haveshareholderan interestTemasek Holdings (Private) Limited - 75,840,978 (1) 75,840,978 20.86ST Electronics (Info-Software Systems) Pte Ltd 75,840,978 - 75,840,978 20.86Singapore Technologies Electronics Limited - 75,840,978 (1) 75,840,978 20.86Singapore Technologies Engineering Ltd - 75,840,978 (1) 75,840,978 20.86Tay Eng Hoe 39,302,481 - 39,302,481 10.81Liu Wei 3,166,285 28,500,000 (2) 31,666,285 8.71Pacific City International Holdings Limited 28,500,000 - 28,500,000 7.84Glorious Success Limited 18,518,519 - 18,518,519 5.09Prime Enterprise II, L.P. - 18,518,519 (3) 18,518,519 5.09PrimePartners Asset Management Pte Ltd - 18,518,519 (3) 18,518,519 5.09PrimePartners Asset Inc. - 18,518,519 (3) 18,518,519 5.09Notes :-(1)Deemed interest through ST Electronics (Info-Software Systems) Pte Ltd(2)Deemed interest through Pacific City International Holdings Limited(3)Deemed interest through Glorious Success LimitedECS HOLDINGs LIMITED Annual Report 200587

ECS Holdings Limited(Incorporated in the Republic of SingaporeCompany Registration No. 199804760RNotice of Annual General MeetingNOTICE IS HEREBY GIVEN that the Eighth Annual General Meeting of the Company will be held at 19 Kallang Avenue #07-153Singapore 339410 on 19 April 2006 at 9.30 a.m. to transact the following business :-Ordinary Business1 To receive and adopt the Directors’ Report and Audited Accounts for the financial year ended31 December 2005 and the Auditors’ Report thereon. [Resolution 1]2 To declare a one-tier tax exempt first and final dividend of 1.4 cents per ordinary share for the year ended 31 December 2005.[Resolution 2]3 (a) To re-elect Mrs Lee Suet Fern who is retiring in accordance with Article 91 of the Company’s Articles of Association, asDirector of the Company.[Resolution 3(a)]Note : Mrs Lee Suet Fern, if re-elected, will remain as a member of the Company’s Audit Committee and the Chairman ofthe Nominating Committee and will be considered as an independent director for the purposes of Rule 704(8) of theListing Manual of the Singapore Exchange Securities Trading Limited (“Listing Manual”).(b) To re-elect Mr Leong Horn Kee who is retiring in accordance with Article 91 of the Company’s Articles of Association, asDirector of the Company.[Resolution 3(b)]Note : Mr Leong Horn Kee, if re-elected, will remain as the Chairman of the Company’s Audit Committee and a member ofthe Nominating Committee and will be considered as an independent director for the purposes of Rule 704(8) of theListing Manual of the Singapore Exchange Securities Trading Limited (“Listing Manual”).(c)To re-elect Mr Foo Sen Chin who is retiring in accordance with Article 91 of the Company’s Articles of Association, asDirector of the Company.[Resolution 3(c)](d) To re-elect Mr Chang Yew Kong who is retiring in accordance with Article 97 of the Company’s Articles of Association, asDirector of the Company.[Resolution 3(d)]Note : Mr Chang Yew Kong, if re-elected, will remain as a member of the Company’s Nominating and CompensationCommittee.(e) To re-elect Mr Tan Hup Foi who is retiring in accordance with Article 97 of the Company’s Articles of Association, asDirector of the Company.[Resolution 3(e)]Note : Mr Tan Hup Foi, if re-elected, will remain as a member of the Company’s Audit Committee and will be considered asan independent director for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange SecuritiesTrading Limited (“Listing Manual”).4 To re-appoint KPMG as Auditors and to authorise the Directors to fix their remuneration.[Resolution 4]5 To approve the payment of Directors’ Fees of S$267,000/- for the year ended 31 December 2005. (2004: S$223,000/-)[Resolution 5]88 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited(Incorporated in the Republic of SingaporeCompany Registration No. 199804760RNotice of Annual General Meeting(CON’T)Special Business6 To consider and, if thought fit, to pass the following as Ordinary Resolutions, with or without modifications:-(a) That pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange Securities TradingLimited (“SGX-ST”), authority be and is hereby given to the Directors of the Company to allot and issue whether by way ofrights, bonus or otherwise (i) shares; (ii) convertible securities; (iii) additional convertible securities (where an adjustment tothe number of convertible securities to which a holder is originally entitled to is necessary as a result of any rights, bonus orother capitalisation issues by the Company), notwithstanding that such authority may have ceased to be in force at the timesuch additional convertible securities are issued, provided that the adjustment does not give the holder of the convertiblesecurities a benefit that a shareholder does not receive); and/or (iv) shares arising from the conversion of securities in (ii) andadditional convertible securities in (iii) above, notwithstanding that such authority may have ceased to be in force at the timethe shares are to be issued, and any such issue may be made at any time and upon such terms and conditions and for suchpurposes and to such persons as the Directors may in their absolute discretion deem fit PROVIDED THAT(i) the aggregate number of shares and convertible securities to be issued pursuant to this resolution shall not exceed 50%of the issued share capital of the Company, of which the aggregate number of shares and convertible securities issuedother than on a pro rata basis to existing shareholders of the Company shall not exceed 20% of the issued share capitalof the Company; and(ii) subject to such manner of calculation as may be prescribed by the SGX-ST, for the purpose of this resolution, thepercentage of the issued share capital shall be based on the Company’s issued share capital at the time this resolution ispassed, after adjusting for:(a) new shares arising from the conversion or exercise of convertible securities;(b) new shares arising from the exercise of share options which are outstanding or subsisting at the time this resolutionis passed, provided that the aforesaid options were granted in compliance with Part VIII of Chapter 8 of the ListingManual; and(c) any subsequent consolidation or subdivision of the Company’s shares,and, further, unless revoked or varied by the Company in general meeting, the authority conferred by this resolution shallcontinue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annualgeneral meeting of the Company is required by law to be held, whichever is the earlier.[See Explanatory Note (i)][Resolution 6(a)](b) That the Directors be and are hereby authorised to offer and grant options in accordance with the provisions of the ECSShare Option Scheme II (the “Scheme II”), and to allot and issue from time to time such number of shares in the capital of theCompany as may be required to be issued pursuant to the exercise of the options under the Scheme II provided always thatthe aggregate number of ordinary shares to be issued pursuant to the Scheme II shall not exceed fifteen per cent of the totalissued share capital of the Company from time to time.[See Explanatory Note (ii)][Resolution 6(b)]ECS HOLDINGs LIMITED Annual Report 200589

ECS Holdings Limited(Incorporated in the Republic of SingaporeCompany Registration No. 199804760RNotice of Annual General Meeting(CON’T)(c) That for the purposes of Chapter 9 of the Listing Manual:(i) the Shareholders’ Mandate for the Company, its subsidiaries and associated companies or any of them to enter into anyof the transactions falling within the types or categories of interested person transactions as described on pages 6 to 7 ofthe appendix to this Notice (the “Appendix”) with Temasek Holdings (Private) Limited, Singapore Technologies EngineeringLtd and their associates be and is hereby approved, provided that such transactions are entered into on an arm’s lengthbasis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set outon pages 8 to 9 of the Appendix;(ii) the aforesaid Shareholders’ Mandate shall, unless earlier revoked or varied by the Company in general meeting, continuein force until the next Annual General Meeting of the Company; and(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(including, without limitation, executing all such documents and approving any amendment, alteration or modification toany document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect tothe aforesaid Shareholders’ Mandate and/or this Resolution 6(c).[See Explanatory Note (iii)][Resolution 6(c)](d) That for the purposes of Chapter 9 of the Listing Manual:(i) the Shareholders’ General Mandate for the Company, its subsidiaries and associated companies or any of them toenter into any of the transactions falling within the types or categories of interested person transactions as describedon pages 6 to 7 of the Appendix with Guangzhou Jia Dou Ji Tuan Co., Limited and its subsidiaries be and is herebyapproved, provided that such transactions are entered into on an arm’s length basis, on normal commercial termsand in accordance with the guidelines for interested person transactions as set out on pages 8 to 9 of the Appendix;(ii) the aforesaid Shareholders’ General Mandate shall, unless earlier revoked or varied by the Company in general meeting,continue in force until the next Annual General Meeting of the Company; and(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(including, without limitation, executing all such documents and approving any amendment, alteration or modification toany document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect tothe aforesaid Shareholders’ General Mandate and/or this Resolution 6(d).[See Explanatory Note (iii)][Resolution 6(d)](e) That for the purposes of Chapter 9 of the Listing Manual:(i) the Shareholders’ General Mandate for the Company, its subsidiaries and associated companies or any of them to enterinto any of the transactions falling within the types or categories of interested person transactions as described onpages 6 to 7 of the Appendix with Netband Consulting Co Ltd, Vnet Capital Co., Ltd, Vnet Capital International, ThaiIncubator.Com Co., Ltd and/or Vintcom Technology Co., Ltd. (as the case may be), be and is hereby approved, providedthat such transactions are entered into on an arm’s length basis, on normal commercial terms and in accordance with theguidelines for interested person transactions as set out on pages 8 to 9 of the Appendix;90 ECS HOLDINGs LIMITED Annual Report 2005

Keep GoingECS Holdings Limited(Incorporated in the Republic of SingaporeCompany Registration No. 199804760RNotice of Annual General Meeting(CON’T)(ii) the aforesaid Shareholders’ General Mandate shall, unless earlier revoked or varied by the Company in general meeting,continue in force until the next Annual General Meeting of the Company; and(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(including, without limitation, executing all such documents and approving any amendment, alteration or modification toany document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect tothe aforesaid Shareholders’ General Mandate and/or this Resolution 6(e).[See Explanatory Note (iii)][Resolution 6(e)]7 To transact any other business that may be properly transacted at an Annual General Meeting.[Resolution 7]By Order of the BoardEddie Foo Toon EeCompany SecretarySingapore3 April 2006ECS HOLDINGs LIMITED Annual Report 200591

ECS Holdings Limited(Incorporated in the Republic of SingaporeCompany Registration No. 199804760RNotice of Annual General Meeting(CON’T)Explanatory Notes :(i) Resolution 6(a), if passed, will authorise the Directors of the Company to allot and issue shares and convertible securitiesin the capital of the Company up to an amount not exceeding fifty (50) per cent of the Company’s issued share capital with anaggregate sub-limit of twenty (20) per cent of the Company’s share capital issued other than on a pro rata basis to shareholdersof the Company. The Company cannot rely on the authority given under Resolution 6(a) for an issue of convertible securitiesif the maximum number of shares to be issued upon conversion cannot be determined at the time of issue of the convertiblesecurities.(ii) Resolution 6(b), if passed, will authorise the Directors to offer and grant options and to allot and issue shares pursuant to the ECSShare Option Scheme II, provided that the aggregate number of shares issued pursuant to the ECS Share Option Scheme II shallnot exceed fifteen (15) per cent of the total issued share capital of the Company from time to time.(iii) Resolutions 6(c), 6(d) and 6(e), if passed, will authorise the Company, its subsidiaries and associated companies, from the date ofthe Annual General Meeting until the conclusion of the next Annual General Meeting, to enter into interested person transactionswith certain interested persons of the Company, its subsidiaries and/or associated companies. Each of such mandates shall,unless revoked or varied by the Company in general meeting, continue in force until the next Annual General Meeting of theCompany. For further details on the interested person transactions and interested persons referred to, please see the appendicesto this Notice.Notes :A member entitled to attend and vote at the Annual General Meeting may appoint not more than two proxies to attend and vote onhis behalf and where a member appoints more than one proxy, the proportion of the shareholding concerned to be representedby each proxy shall be specified in the form of proxy. A proxy need not be a member of the Company. The instrument appointinga proxy must be deposited at the office of the Company’s Share Registrar, M & C Services Private Limited, 138 Robinson Road#17-00, The Corporate Office, Singapore 068906, not less than forty-eight hours before the time set for the holding of the AnnualGeneral Meeting.NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATENOTICE IS ALSO HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on 28 April2006, for the purpose of determining the members’ entitlements to the dividend to be proposed at the Annual General Meeting of theCompany to be held on 19 April 2006. Duly completed registrable transfers in respect of shares in the Company received up to theclose of business at 5.00 p.m. on 27 April 2006 by the Company’s Share Registrar, M & C Services Private Limited, will be registeredto determine members’ entitlements to such dividend. Members whose securities accounts with The Central Depository (Pte) Ltdare credited with shares in the Company as at 5.00 p.m. on 27 April 2006 will be entitled to such proposed dividend.The proposed dividend, if approved at the Annual General Meeting, will be paid on 11 May 2006.92 ECS HOLDINGs LIMITED Annual Report 2005

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ProxY formAnnual General MeetingECS HOLDINGS LIMITED(Incorporated in the Republic of Singapore)Company Registration No. 199804760RImportant:1. For investors who have used their CPF monies to buy the Company’sshares, the Annual Report is forwarded to them at the request of theirCPF Approved Nominees and is sent solely FOR INFORMATION ONLY.2. This Proxy Form is not valid for use by CPF investors and shall beineffective for all intents and purposes if used or purported to be usedby them.3 CPF Investors who wish to attend the Annual General Meeting asOBSERVERS have to submit their requests through their respectiveAgent banks so that their Agent banks may register with the CompanySecretary of ECS Holdings Limited not less than 48 hours before thetime appointed for holding the meeting.I/Weofbeing a member/members of ECS HOLDINGS LIMITED hereby appoint(Name)(Address)Name Address NRIC/Passport Proportion ofNumber Shareholdings (%)and/or (delete as appropriate)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 ECS HOLDINGSLIMITED to be held at Blk 19 Kallang Avenue #07-153 Singapore 339410 on 19 April 2006 at 9.30 a.m. and at any adjournment thereof.(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 theNotice of 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 willon any other matter arising at the Annual General Meeting.)NO ORDINARY RESOLUTIONS FOR AGAINSTOrdinary Business :1. Adoption of Reports and Accounts2. Declaration of a one–tier tax exempt first and final dividend of 1.4 cents per ordinaryshare for the year ended 31 December 20053. Re-election of Directors:(a) Mrs Lee Suet Fern(b) Mr Leong Horn Kee(c) Mr Foo Sen Chin(d) Mr Chang Yew Kong(e) Mr Tan Hup Foi4. Re-appointment of Auditors5. Approval of Directors’ Fees of S$267,000 for the year ended 31 December 2005Special Business6. (a) Authority for Directors to issue shares pursuant to Section 161 of theCompanies Act, Cap. 50(b) Authority of Directors to offer and grant options and allot shares pursuant to the ECSShare Option Scheme II(c) To approve the proposed renewal of the Shareholders’ Mandate for Interested PersonTransactions with Singapore Technologies Engineering Ltd and its associates(d) To approve the proposed renewal of the Shareholder’s General Mandate for InterestedPerson Transactions with Guangzhou Jia Dou Ji Tuan Co., Limited and its subsidiaries(e) To approve the proposed renewal of the Shareholders’ General Mandate for InterestedPerson Transactions with Netband Consulting Co Ltd, Vnet Capital Co., Ltd, VnetCapital International, Thai Incubator.Com Co., Ltd and/or Vintcom Technology Co., Ltd.7. Any other ordinary businessDated this day of 2006.Total Number of Shares Held:Signature(s) of member(s) or Common SealIMPORTANT :-PLEASE READ NOTES OVERLEAF

ProxY form (CON’T)Notes :-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 of the Companies Act, Cap. 50), you should insert that number of shares. If you have sharesregistered in your name in the Register of Members, you should insert that number of shares. If you have shares enteredagainst your name in the Depository Register and shares registered in your name in the Register of Members, you shouldinsert the aggregate number of shares entered against your name in the Depository Register and registered in your name inthe Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate toall the shares held by you.2 A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than twoproxies, whether a member or not, to attend and vote instead of him.3 Where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by eachproxy shall be specified in the form of proxy.4 The instrument appointing a proxy must be deposited at the office of the Share Registrar of the Company, M&C ServicesPrivate Limited at 138 Robinson Road #17-00, The Corporate Office, Singapore 068906, not less than forty-eight (48) hoursbefore the time appointed for the holding of the Annual General Meeting.5 The instrument appointing a proxy must be signed by the appointor or his attorney. Where the instrument appointing aproxy is given by a corporation, it must be given either under its common seal or signed on its behalf by an attorney or a dulyauthorised officer of the corporation.6. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorneyor a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy,failing which the instrument may be treated as invalid.7. A corporation which is a member may by a resolution of its directors or other governing body authorise such person as itthinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act,Cap. 50.General:The Company shall be entitled to reject an instrument of proxy if it is incomplete, improperly completed or illegible or where thetrue intentions of the 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 Depository Register, the Company may reject an instrument of proxy lodged if themember, being the appointor, is not shown to have shares entered against 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 Central Depository (Pte) Limitedto the Company.

ECS OfficesECS Holdings LimitedBlk 19 Kallang Avenue#07-153Singapore 339410Tel : (65) 6299 9433Website : www.ecs.com.sgECS Computers (Asia) Pte LtdBlk 19 Kallang Avenue#07-153Singapore 339410Tel : (65) 6299 9433Website : www.ecs.com.sgECS Kush Sdn Bhd107 Block C Glomac Business Centre10 Jalan SS6/1 Kelana Jaya 47301Petaling Jaya, MalaysiaBranches in Penang, Kuala LumpurTel : (603) 7804 5800Website : www.ecsm.com.myECS Technology (China) LimitedPCI Building, No. 50 Jianzhong RoadTianhe Software ParkGuangzhou, P.R.C 510665Branches in Beijing, Chengdu,Guangzhou, Hong Kong, Shanghai,Shenyang, Shenzhen, Wuhan, Xi’anTel : (8620) 8552 9888Website : www.ecschina.comThe Value Systems Co., Ltd.34 th Floor, Charn Issara Tower 22922/328-331 New Petchburi RoadBangkapi, Huay-KwangBangkok 10320, ThailandBranches in Bangkok, Chiangmai,Hadyai, Khon-Kan, Nakornrachasima,Pitsanulok, Phuket, Rayong, SuranthaneeTel : (66) 2308 2900Website : www.value.co.thECS Indo Pte LtdBlk 19 Kallang Avenue#06-151,Singapore 339410Branches in Balikpapan, Bandung,Denpasar, Jakarta, Semarang, Solo,Surabaya, Ujung Pandang, YogyakartaTel : (6221) 584 5550Website : www.harrisma.comMSI-ECS Phils., Inc.Topy II Bldg, #3 Economia St.,Libis, Quezon City,Philippines 1110Branches in Cebu, ManilaTel : (632) 688 3333Website : www.msi-ecs.com.ph