ECS Holdings 2010 Annual Report

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ECS HOLDINGS LIMITED
annual report 2010
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Corporate Profile
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Chairmans Statement
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CEOs Statement
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Board of Directors
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Vision
To be a Premier Asia-Pacific ICT Company that thinks globally but acts locally, excelling in all our business segments to deliver optimal value to our stakeholders.
Senior Management
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Corporate Executives
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Mission
To be the preferred supplier of choice for ICT products and value-added services by building strong customer relationships. To sustain our entrepreneurial growth by seeking new markets & businesses. To bring the best-of-breed ICT products and services to enhance the competitiveness of our customers businesses.
Group Structure
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Corporate Information
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Financial Highlights
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2010 Awards
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2010 Milestones
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Corporate Governance Statement

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Directors Report
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Statement by Directors
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Independent Auditors Report

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Financial Statements
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Shareholdings Statistics
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Notice of Annual General Meeting
CORPORATE PROFILE
ECS is a well-recognised provider of ICT products and services with three main businesses, namely Enterprise Systems, IT Services and Distribution. With a network of more than 23,000 active channel partners across China, Thailand, Malaysia, Singapore, Indonesia and the Philippines, ECS is well-positioned to be a regional partner of choice suitable for any global-leading ICT brand vendor tapping Asia Pacifics ICT spending growth. Leading global brand names like Hewlett-Packard (HP), Apple, Dell, Lenovo, Microsoft, IBM, Oracle and EMC leverage on ECS extensive channel partner network to distribute their products across the region. The Groups Enterprise Systems business aims to give MNCs, local government and domestic companies a competitive edge over their peers by designing, installing and implementing IT infrastructure. ECS IT Services business provides a comprehensive range of professional, technical support and training services. ECS Distribution business leverages on a well-established and highly-efficient logistical and IT infrastructure to distribute fastmoving products in the most efficient manner. The Group has a consistent track record of profitability and a management that is focused on operational excellence to achieve sustainable profit growth and to enhance shareholder returns.
ECS HOLDINGS LIMITED | annual report 2010
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enterprise in sync
As we widen our distribution reach, we continue to synchronise our business processes across geographical regions for greater operational efficiency. The results are a stronger balance sheet, a more robust network and more dynamic support for our channel partners and vendors.
growth in step
We extend our distribution footprint in growth markets and expand our product range and service offerings in tandem with emerging technologies and trends. Our agility in anticipating and meeting changing market demands has served us well, continuously driving profit growth and stakeholder value.
future in sight
Foresight, experience and acumen from astute leadership enable us to distil market possibilities. Even as we seize todays opportunities, our sight is firmly set on the future. We proactively invest in our people to harness their full potential and nurture our next generation of leaders.
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CHAIRMANS STATEMENT
Strengthening assets, leveraging value
Dear Shareholders, It gives me great pleasure to present to you ECS annual report for the financial year ended 31 December 2010 (FY2010), a year that has witnessed the beginning of several transformational strategies, all of which have an important role to play in our corporate evolution as a leading regional ICT company. First and foremost, I would like to express my sincere gratitude to you, our loyal shareholders, for your kind patience and support during the transition of leadership. There have been significant changes in ECS topmost leadership; with me returning to the position of Group Non-executive Chairman and my fellow founding Board member, Mr Narong Intanate taking over as Group CEO. We respect Mr Lis decision to relinquish his position as Group Non-executive Chairman to attend to personal matters and thank him for his guidance over the last 4 years. Similarly, we thank Mr Mao Xiangqian for his contribution as acting Group CEO during our transition in FY2009 and he will now be able to return his focus to leading our China operations, which continues to be our single largest market.
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As part of the pioneering team of ECS, Narong and I look forward to earmarking renewed corporate and business initiatives that will enable ECS to exploit new opportunities in the regional ICT industry that is seeing stronger demand for consumer IT products and increased corporate IT spending. Some of these efforts have already started paying off and our stellar FY2010 financial performance can be attributed to a combination of our continuing focus on highermargin products, product enhancement, internal operational and financial efficiencies and recovery of regional economies. Hence FY2010 saw ECS propose its highestever final dividend of 3.6 cents per ordinary share in FY2010 as compared to 3.0 cents per ordinary share a year earlier as the Group continued to register bottom line expansion with a record FY2010 net profit attributable to shareholders of $53.0 million from $38.2 million in FY2009. Concurrently FY2010 gross margin improved to 5.0% compared to 4.9% in FY2009 despite a 5.1% decline in FY2010 revenue to $3.1 billion as compared to $3.3 billion in FY2009; the lower FY2010 revenue being a consequence of deconsolidation of revenue from our Malaysian associate, ECS ICT Berhad. Excluding the effect of the revenues of ECS ICT Berhad, and adjusting for currency translation effects, the Groups revenue for FY2010 would have grown by 14.8% year-onyear on higher sales of consumer printers, notebooks, supplies and tablets such as Apple iPads.
Additionally, in line with ECS continuing financial efficiencies, tighter credit control and shorter cash cycles led to significant improvements in the Groups working capital position which in turn helped our cash position. While this performance is encouraging, ECS believes that it must push itself up to the next level of growth so that it can spread its reach across as much as possible of the ICT growth expected in the region over the next few years. With leading industry analyst, IDC predicting that the Asia Pacific region, excluding Japan (APeJ), which saw growth of 13% last year, will see another 10% increase in 2011. (http:// www.idg.com/www/pr.nsf/0/14FD296F1791 438E852578320054102A), ECS has started to sharpen its ongoing margins-accretive initiatives both externally and internally. On the business front, we have started adjusting our portfolio to concentrate on emerging technologies and service offerings from existing and new vendors that will increase our revenue and profitability, a strategy, if executed well, can help us corner significant market share. The recently secured distribution rights by our China subsidiary from Apple to distribute its two iconic products, the iPad and iPhone within China are a crucial component of this strategy. Presently, as we work towards replicating this agreement to our other markets, I am delighted to update that ECS has successfully signed many other regional distributorships by other ICT vendors, key among them notebooks by Lenovo and more recently, servers and notebooks by Dell.
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Additionally, ECS also sees opportunities in the demand for mobile device accessories and has already started deepening its partnership with Japanese manufacturer, Buffalo, to distribute their products and accessories in the five ASEAN countries where ECS is the authorised distributor. In this way, our 23,000 channel partner network across 6 regional countries gives the Group added advantages from increasing economies of scale and ECS intends to adopt similar go-to-market strategies and engage more strategic vendors regionally to increase efficiency. At the same time, the Group will be growing this regional network, especially in the high-growth markets of Indonesia and China where the IT penetration rate is still low and there is scope for growth and expansion in the emerging fourth and fifth-tier cities of these countries. ECS will also be on the lookout for suitable partners to grow into new markets like India and Vietnam, both of which have been on our radar for some time now and which are some of the regions fastest growing markets. Internally, ECS has also outlined a plan for standardising core operational processes so that we can achieve better business synergies across different geographical entities.
On behalf of my fellow Directors, I once again thank you, our shareholders, for your loyal support of the Group. I would also like to express my sincere appreciation to our channel partners, vendors, technology partners and business associates without whom our success would not have been possible. I would also like to thank the management and staff for their unstinting dedication and hard work. With these strategies already in place, ECS anticipates its growth would continue to be strong in the years to come and we look forward to the continuing participation of all our stakeholders during that time. Mr Tay Eng Hoe Chairman 16 March 2011
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CEOS STATEMENT
Dear Shareholders, In FY2010, ECS ongoing new business and corporate strategies yielded positive growth both across the diverse geographies as well as business segments in which it operates. As a result, FY2010 saw the Group report a record high net profit of $53.0 million, up from $38.2 million in FY2009. Concurrently, ECS also proposed a first and final dividend of 3.6 cents its highest ever.
Financial and Operations Review: In FY2010, ECS net profit attributable to shareholders rose 38.8% to a record $53.0 million from $38.2 million in FY2009, propelled by the Groups continuing focus on highermargin products and efficiency measures as regional economies rebounded. Significantly, this performance was achieved despite a 5.1% decline in FY2010 revenue to $3.1 billion as compared to $3.3 billion in FY2009. The Groups lower revenue in FY2010 was due to the deconsolidation of revenue from its Malaysian subsidiary, ECS ICT Berhad (which was listed on 15 April 2010 on the mainboard of Bursa Malaysia Securities Berhad). Concurrently, the Groups FY2010 gross margin improved to 5.0% compared to 4.9% in FY2009. Excluding the effect of the revenues of ECS ICT Berhad, and adjusting for currency translation effects, ECS revenue for FY2010 would have grown by 14.8% year-on-year driven by higher sales of consumer printers, notebooks, supplies and tablets such as Apple iPads. During FY2010, the Group carried on with
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ongoing financial efficiencies. As a result of tighter credit control and shorter cash cycles, the Groups working capital position strengthened. Working capital days were further reduced to 35.1 days for the 12 months ended 31 December 2010 from 35.9 days a year ago. Consequently, the Group generated a strong positive operating cash flow of $21.3 million in 4Q10 as compared to a negative operating cash flow of $11.8 million in 4Q09. As at 31 December 2010, ECS cash and cash equivalents were $92.5 million, up significantly from $51.1 million as at 31 December 2009. Due to the improved operating cash flow and profitability, net gearing was reduced to 0.45 times as at 31 December 2010 from 0.48 times as at 31 December 2009. As a result of these efforts, earnings per share (EPS), on a fully diluted basis, correspondingly rose to 14.51 cents in FY2010 versus 10.45 cents in FY2009 while net asset value (NAV) per share increased to 81.18 cents as at 31 December 2010 versus 71.03 cents as at 31 December 2009.
Distribution: Riding on the recovery in consumer spending that emerged during the second half of 2010, ECS strengthened its product portfolio with the addition of emerging products that are in demand, such as iPads and tablets. In FY2010, our Distribution segment remained as our growth driver, contributing about $1.9 billion or 62.5% to FY2010 revenue. This growth is mainly driven by consumer printing and imaging products, and mobile devices such as iPads.
Enterprise Systems: Enterprise Systems also grew well due to a strong surge in pent-up enterprise demand which coincided with additional enterprise products and recovery in corporate spending on IT infrastructure. Contributed mainly by networking and storage products, the Enterprise Systems segment accounted for $1.1 billion or 36.7% of revenue in FY2010, up from 36.5% in FY2009.
Review by Geographical Markets: Geographically both North Asia and Southeast Asia continued on their growth path.
Review by Business Segments: Coinciding with the continuing upsurge in IT spending, the adjustments we have been making to our product portfolio to leverage on emerging technologies and products from existing and new vendors have benefited our business performance across all segments.
North Asia: North Asia remained as ECS single largest market at $1.8 billion in FY2010, up from $1.7 billion in FY2009. The 5.6% increase in revenue is mainly contributed by higher sales of printers, consumables and networking products. Sales of Apples iPad in the last quarter of 2010 also contributed to this growth.
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Southeast Asia: Revenue contribution from Southeast Asia decreased by 16.6%. Excluding currency translation effect and the deconsolidation of ECS ICT Berhad, ECS Holdings associate company that was listed on the mainboard of Bursa Malaysia on 15 April 2010, revenue would have grown 18.4%, contributed mainly by the higher sales of notebooks and desktops in Thailand and Indonesia.
ECS also sees opportunities in the demand for mobile device accessories for growing its Distribution business. We have started working with Japanese accessories manufacturer Buffalo to expand its portfolio of products in the five ASEAN countries ECS operate in. Moving forward, the Group seeks to adopt a similar go-to-market strategy and engage vendors regionally instead of on a standalonecountry basis to increase efficiency and economies of scale. This will be complemented by geographical expansion particularly in the high-growth markets of Indonesia and China, where many of our vendors also want to grow. In addition, India and Vietnam are also on our agenda for expansion as one cannot ignore the tremendous potential that both these economies present. We will update shareholders when these plans materialise. Last but not the least, to support these expansion plans, ECS will continue in its efforts to carry on improving internal efficiencies, such as its cost-efficient operational framework, working capital management programmes, as well as core operational processes. I am confident these strategies will position us for future successes.
Outlook: Our ongoing growth initiatives have been successful in diversifying our revenue base while simultaneously boosting profitability and establishing a cost-effective operational framework. Moving forward, we anticipate increased synergies from our business and corporate growth efforts. On the product front, our portfolio has been suitably revamped with numerous new consumer and enterprise products that have been dominating global technology. This has already started driving up our sales portfolios across both business and geographical segments. The two consecutive contracts that our China subsidiary secured from Apple to distribute the iPad and iPhone in China during the last quarter of FY2010 will hopefully be replicated to other countries in the Group. In line with this, ECS has also recently signed regional agreements for notebooks by Lenovo and for servers and notebooks by Dell. The impact of these key wins should be felt more substantially from FY2011 onwards.
Mr Narong Intanate 16 March 2011

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Group Chief Executive Officer
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BOARD OF DIRECTORS
01.Mr
Tay Eng Hoe
02.
Mr Narong Intanate
Mr Tay Eng Hoe was appointed the Non-Executive Chairman of the Group on 27 September 2010. He is the founder of ECS Holdings Limited and also the immediate past Group Chief Executive Officer. Mr Tay has been a Director of the Group since 1 April 2001. He brings with him more than 28 years of experience in the IT industry. Mr Tay is also a Director and Vice Chairman of VST Holdings Limited, the parent company of ECS Holdings Limited. In August 2005, he was conferred the Public Service Medal by the President of the Republic of Singapore in recognition for his public service to the country. Mr Tay holds a Bachelor of Science (Honours) degree from the LaTrobe University and a Master of Business Administration from the University of Melbourne.
03.Mr
Foo Sen Chin
Mr Narong Intanate was appointed the Group Chief Executive Officer of ECS Holdings Limited and also to the Board of the ECS subsidiaries on 1 July 2010. He was formerly an Executive Director of the Company an appointment on 15 December 2000. Mr Intanate is actively involved in the management of the subsidiaries and associate companies under the ECS Group and plays a pivotal role in steering the strategic direction of the Group. He is the founder and Executive Chairman of The Value Systems Co., Ltd., our subsidiary, since 1988. Mr Intanate is currently an advisor of the Hatyai University. He holds a Bachelor of Science in Business Administration and a Master of Business Administration from California State University. Prior to forming The Value Systems Co., Ltd., he was the Marketing Manager of Sahaviriya Infortech Computers Co., Ltd. from 1982 to 1983 and the Marketing Director of Sahaviriya OA from 1983 to 1988.
Mr Foo Sen Chin was appointed as a Director on 15 December 2000 and is concurrently the Advisor to Group Human Resources of the Company. He is also the Managing Director and founder of ECS ICT Berhad, our associate company which is listed on the Main Board of Bursa Malaysia Securities Berhad. Mr Foo plays a pivotal role in steering the strategic direction of ECS ICT Berhad. His responsibilities include the development of its long term business goals, overall operation and administrative management of ECS ICT Berhad. Prior to joining our Group, he was the General Manager of a computer bureau services company in Kuala Lumpur before forming ECS KU Sdn Bhd (formerly known as K.U. Sistems Sdn Bhd) in 1985. Mr Foo is an advisor to the current Council of PIKOM, Association of Computer and Multimedia Industry of Malaysia. He has a Bachelor of Science degree in Electrical and Electronic Engineering from the University of Birmingham, UK and he also holds a Masters degree in Business Administration from the Cranfield School of Management in the United Kingdom.
04.
Mr Mao Xiangqian
Mr Mao Xiangqian was appointed as Executive Director of the Company on 3 May 2010 and is also concurrently the Chief Executive Officer of ECS Technology (China) Limited, a principal subsidiary of ECS Holdings Limited. He has more than twenty years of experience in Chinas ICT industry. Prior to joining the Group, Mr Mao served as the Senior Vice President of Digital China Holdings Limited, one of Chinas leading ICT distributor, and was President of Digital China Technology Limited, which is the distribution business division of Digital China Holdings Limited. Prior to Digital China, Mr Mao spent ten years with the Lenovo Group. Mr Mao holds a Bachelor of Science (Machine Building and Automation) degree and a Master of Science (Modal Analysis) from Tianjin University as well as an Executive MBA Degree from China Europe International Business School.
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05.
Mr Leong Horn Kee
06.
Mr Tan Hup Foi
Mr Leong Horn Kee was appointed as an Independent Director on 15 December 2000, and currently serves as the Chairman of the Audit Committee and a member of the Nominating and Compensation Committees. He is currently the Chairman/CEO of CapitalCorp Partners Pte Ltd. Mr Leong was a Member of Parliament for 22 years. He has wide work experience in the public sector in the Ministries of Finance and Trade & Industry, and in the private sector in venture capital, merchant banking, corporate investments, hotels and property development. Mr Leong is currently Singapores Non-Resident Ambassador to Mexico and a member of the Securities Industry Council. He holds a degree (Honours) in Production Engineering from Loughborough University, UK; a degree (Honours) in Economics from the University of London, UK; a degree in Chinese Language and Literature from Beijing Normal University, China; an MBA degree from Insead, France, and a Master in Business Research from the University of Western Australia.
Mr Tan Hup Foi was appointed as an Independent Director on 7 February 2006, and currently serves as Chairman of the Nominating Committee and a member of the Audit and Compensation Committees. He was the Chief Executive of Trans-Island Bus Services Ltd from 1994 to 2005 and also the Deputy President of SMRT Corporation Ltd from 2003 to 2005. Mr Tan is known internationally as the Honorary Vice President of the International Association of Public Transport (UITP) and Honorary Chairman of UITP Asia-Pacific Division. Mr Tan is the Chairman of Ngee Ann Polytechnic Council. He was awarded the Bintang Bakti Masyarakat (Public Service Star) in 2008 and the Pingat Bakti Masyarakat (Public Service Medal) in 1996 by the President of Singapore. Mr Tan graduated from Monash University in Australia with a First Class Honours degree in Mechanical Engineering in 1974 and he obtained a Master of Science (Industrial Engineering) degree from University of Singapore in 1979.
07.
Mr Koh Soo Keong
08.
Mr Ong Wei Hiam
Mr Koh Soo Keong was appointed as an Independent Director on 11 February 2008, and currently serves as Chairman of the Compensation Committee and a member of the Audit and Nominating Committees. Mr Koh was, until April 2007, the Chief Executive Officer and President of Toll Asia Pte Ltd, formerly SembCorp Logistics Ltd (SembLog) which was acquired by Toll in May 2006. Currently, he is the CEO of KS Distribution Pte Ltd. With over 20 years of experience in the logistics industry, he had helmed SembLog and its preceding companies since 1986. He is a board member of four other publicly listed companies and the Chairman of the Agri-Food and Veterinary Authority of Singapore. He holds a Bachelor of Engineering (Honours), a Master of Business Administration and a Postgraduate Diploma in Business Law from the National University of Singapore.
Mr Ong Wei Hiam was appointed as Non-Executive Director of the Company on 3 May 2010. Mr Ong is the Group Chief Financial Officer and Executive Director of VST Holdings Limited, the parent company of ECS Holdings Limited. Mr Ong holds a Bachelor Degree in Economics from University College London and a Master Degree in Analysis, Design & Management of Information Systems from the London School of Economics and Political Science. He is a Fellow of the Institute of Chartered Accountants in England and Wales, and Fellow of the Hong Kong Institute of Certified Public Accountants. Prior to joining the VST Group, Mr Ong served in a senior position at PricewaterhouseCoopers and has extensive working experience in London and Hong Kong.
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SENIOR MANAGEMENT
01.
Mr Narong Intanate
02.
Mr Eddie Foo
03.
Mr Lim Tow Cheng
Mr Narong Intanate was appointed the Group Chief Executive Officer of ECS Holdings Limited and also to the Board of the ECS subsidiaries on 1 July 2010. He was formerly an Executive Director of the Company an appointment on 15 December 2000. Mr Intanate is actively involved in the management of the subsidiaries and associate companies under the ECS Group and plays a pivotal role in steering the strategic direction of the Group. He is the founder and Executive Chairman of The Value Systems Co., Ltd., our subsidiary, since 1988. Mr Intanate is currently an advisor of the Hatyai University. He holds a Bachelor of Science in Business Administration and a Master of Business Administration from California State University. Prior to forming The Value Systems Co., Ltd., he was the Marketing Manager of Sahaviriya Infortech Computers Co., Ltd. from 1982 to 1983 and the Marketing Director of Sahaviriya OA from 1983 to 1988.
Mr Eddie Foo is the Group Chief Financial Officer of the Company and is concurrently the Group Company Secretary. Mr Foo is responsible for the Groups overall financial strategy and management, corporate finance and treasury management, tax, and investor relations of ECS Holdings, and is also a director on the boards of various ECS companies. Mr Foo has several years of financial management and audit experience in multinational companies and public accounting firms. Prior to serving as Group Chief Financial Officer, Mr Foo was the Group Financial Controller of the Company. Mr Foo holds a Bachelor degree in Accountancy from the Nanyang Technological University and is a member of the Institute of Certified Public Accountants of Singapore.
Mr Lim Tow Cheng was appointed Senior Vice President, Business Development on 18 October 2005. He is responsible for managing the regional expansion strategy and for identifying new business opportunities for the Group. Mr Lim has more than 20 years of experience in senior management positions in the IT industry. Prior to joining the Group, Mr Lim was the Director for South Asia of Western Digital and has previously worked with Digiland International Limited for more than 8 years, holding several senior management positions, including as Chief Executive Officer. Mr Lim has an Honours Degree in Economics from the National University of Singapore.
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04.
Mr Mao Xiangqian
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Mr Mao Xiangqian was appointed as Executive Director of the Company on 3 May 2010 and is also concurrently the Chief Executive Officer of ECS Technology (China) Limited, a principal subsidiary of ECS Holdings Limited. He has more than 20 years of experience in Chinas ICT industry. Prior to joining the Group, Mr Mao served as the Senior Vice President of Digital China Holdings Limited, one of Chinas leading ICT distributor, and was President of Digital China Technology Limited, which is the distribution business division of Digital China Holdings Limited. Prior to Digital China, Mr Mao spent 10 years with the Lenovo Group. Mr Mao holds a Bachelor of Science (Machine Building and Automation) degree and a Master of Science (Modal Analysis) from Tianjin University as well as an Executive MBA Degree from China Europe International Business School.
Mr Somsak Pejthaveeporndej
06. Mr
Foo Sen Chin
Mr Somsak Pejthaveeporndej was appointed as the President of The Value Systems Co., Ltd., our wholly-owned subsidiary, on 1 February 2009. He is responsible for the overall management of The Value Systems and has been with our Group since 1988. Mr Pethaveeporndej was formerly responsible for managing the Enterprise Systems & ICT Services Division of The Value Systems. He has more than 20 years of experience in the IT industry. Prior to joining our Group, he was employed as a technical manager by Sun Shine Co., Ltd. from 1981 to 1984, followed by Sahaviriya Telecom Co., Ltd. from 1984 to 1988. He holds a Bachelor of Science degree majoring in electronics from Rajamangala University of Technology Krungthep, Thailand, and a Mini MBA from The Faculty of Commerce and Accountancy, Chulalongkorn University.
Mr Foo Sen Chin was appointed as a Director on 15 December 2000 and is concurrently the Advisor to the Group Human Resources of the Company. He is also the Managing Director and founder of ECS ICT Berhad, our associate company which is listed on the Main Board of Bursa Malaysia Securities Berhad. Mr Foo plays a pivotal role in steering the strategic direction of ECS ICT Berhad. His responsibilities include the development of its long term business goals, overall operation and administrative management of ECS ICT Berhad. Prior to joining our Group, he was the General Manager of a computer bureau services company in Kuala Lumpur before forming ECS KU Sdn Bhd (formerly known as K.U. Sistems Sdn Bhd) in 1985. Mr Foo is an advisor to the current Council of PIKOM, Association of Computer and Multimedia Industry of Malaysia. He has a Bachelor of Science degree in Electrical and Electronic Engineering from the University of Birmingham, UK and he also holds a Masters degree in Business Administration from the Cranfield School of Management in the United Kingdom.
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07.
Mr Sebastian Chong
08.
Ms Lina Choo
09.
Mr Jimmy Go
Mr Sebastian Chong is the President of ECS Computers (Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Limited. Mr Chong joined ECS in 1990 and has 20 years of experience in the IT industry. He is responsible for strategic direction, overall management, including the sales and operations of the commercial, consumer and retail segments of ECS Singapore. Mr Chong is also responsible for business development, business strategy and building of long term relationships with vendors, channels and partners.
Ms Lina Choo was appointed as Executive Director of PT ECS Indo Jaya in April 2009. She joined ECS in September 2007 and is responsible for overseeing the financial management of ECS Indonesia. Ms Choo has more than 15 years experience in financial management in various companies, of which over 10 years was in the IT industry. Prior to joining ECS Indonesia, she worked with Natsteel Electronics in Singapore as an accountant before returning to Indonesia to work as Finance Manager for Diebold Indonesia and subsequently, Datacraft Indonesia. Ms Choo holds a Bachelor degree in Accountancy from the University of HKBP Nommensen.
Mr Jimmy Go is the founder and President of MSI-ECS Phils., Inc., our associate company. He has more than 25 years of experience in the IT industry in the Philippines. Mr Go started in the IT industry way back in 1982 after graduating from college selling Fujitsu & Apple computers. He currently holds a Bachelor degree in Electronics & Communication Engineering from De La Salle University with an award of Magna Cum Laude and Post Graduate degree of Masters in Business Administration in Ateneo de Manila University. Mr Go was also the past President of COMDDAP (Computer Manufacturers, Distributors & Dealers Association of the Philippines). In 1998, Mr. Go was named President and CEO of MSI-Digiland. He was instrumental in growing the business of MSI in the Philippines, making it one of the biggest IT distributors in the country in less than 5 years.
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CORPORATE EXECUTIVES
01.
Mr Eugene Tan
02.
Ms Peggy Leong-Yeo
03.
Mr Newman Li
Mr Eugene Tan was appointed as Group Financial Controller of the Company on 1 March 2008. He is responsible for the financial management of the Group, which covers accounting, treasury, tax, financial control and reporting. Prior to his appointment as Group Financial Controller, Mr Tan was the Vice President, Finance of ECS Computers (Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Limited. Prior to joining the Group, Mr Tan worked for KPMG Singapore as a senior auditor. Mr Tan holds a Bachelor degree in Accountancy & Economics from the University of Reading.
Ms Peggy Leong-Yeo is the Vice President of Group Human Resources for ECS Holdings Limited. Her main responsibility is to establish HR strategies for the Group and to strengthen the Groups human capital. This includes redefining leading-edge performance management and development practices to support leadership succession planning. She provides leadership and tactical support in formulation, implementation and review of HR policies in key HR areas to support the Groups strategic intent to ensure alignment and adoption of best practices. She has more than 20 years of Human Resources experience behind her, occupying management and senior management positions with Siemens, a global multinational company. Ms Leong-Yeo was instrumental in achieving for Siemens the prestigious Work Life Balance Excellence Award, the Workplace Health Promotion Award and the People Developer Award for several years. She holds a Diploma in Administrative Management from The Institute of Administrative Management in UK and a Master in Business Administration from the University of Birmingham, United Kingdom.
Mr Newman Li is the Senior Manager, Group Internal Audit of the Company. He is a member of CPA China and has more than 10 years of financial and audit experience. Prior to joining the Group, he worked for Foshan Power Construction Group Co. Ltd in 1998 and Guangdong Telecom in 2004. Mr Li holds a Bachelor degree in Accountancy from the Tianjin University of Commerce and was appointed to his current position since May 2008.
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04.
Ms Lim Yok Yen
05.
Mr Tang Kin Meng
06.
Mr Paul Chong
Ms Lim Yok Yen is the Regional Business Controller of ECS Holdings Limited. She is responsible for financial planning and analysis, budgeting, forecasting as well as providing decision support and partnering the business on analysis to support the Groups business growth strategy. Ms Lim is also responsible for all channel finance activities including credit management, working capital requirements and planning with vendor finance teams and internal business units. Prior to joining ECS in April 2008, she was a Group Accountant in a public listed company in Singapore where she handled Group reporting and treasury planning. Ms Lim has more than 13 years of experience in financial accounting and group reporting in the freight forwarding industry and companies listed on Singapore Exchange. Ms Lim is a Certified Public Accountant and also a member of Association of Chartered Certified Accountants (ACCA) since 2001.
Mr Tang Kin Meng is the MIS and IT Technical Adviser to the Group. He assists corporate management in overseeing and advising on IT policies, standardisation practices and technology refresh programs for the ECS Group. Prior to his appointment in August 2008, he was the Senior Vice President of the IT Services Support Business in ECS Computers (Asia) Pte Ltd, the Groups wholly-owned Singapore subsidiary. Mr Tang joined ECS in April 1998 and was instrumental in building a variety of IT services and delivery programs for the company. He was awarded the ASEAN Partner SE Manager of the Year by Sun Microsystems in 2000 for his role in managing the deployment of the IT infrastructure for Starhubs Data Center. Prior to ECS, Mr Tang has worked for Fujitsu as a Division Manager from 1992 to 1998, and as a software specialist based in Tokyo, Japan from 1992 to 1998 for NEC Corporation. He holds a Diploma and Graduate Diploma in Business Administration from the Australian Institute of Business Administration and was a Fellow Member of the Institute. Mr Tang was also a Professional Member of the British Computer Society. While lecturing in Ngee Ann Polytechnic from 1978 to 1986, he was granted a scholarship to the City University, London where he obtained the specialist Post Graduate Diploma in Business Systems and Design in 1981.
Mr Paul Chong is the Group PR Manager of ECS Holdings Limited and also concurrently, the Vice President, Marketing of ECS Computers (Asia) Pte Ltd, the Groups wholly-owned Singapore subsidiary. As Group PR Manager, Mr Chong is responsible for the Groups branding and communication programs, publicity, corporate affairs and internal communication between management and employees. In his role as Vice President, Marketing, Mr Chong is responsible for providing comprehensive marketing communications solutions such as direct marketing programs, promotions, events, seminars, tradeshows and advertising. Prior to joining the ECS Group in 1997, Mr Chong worked for six years in the public sector of Singapore handling national IT initiatives and training and development programs. Mr Chong holds a bachelor degree in Business Administration from the National University of Singapore and a Master of Business Administration Degree from the University of Western Australia.
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group structure
CHINA
ECS Technology (China) Limited 100% ECS Technology (Guangzhou) Co., Ltd 100% ECS Technology Co., Ltd 100% ECS (Shanghai) Management Co., Ltd 100% ECS China Technology (Shanghai) Co., Limited 100% EIT info-tech Limited 100% ECS Technology (HK) Co., Limited 100%
THAILAND
The Value Systems Co., Ltd. 100%
MALAYSIA
ECS ICT Berhad 41% ECS KU Sdn Bhd 100% ECS Astar Sdn Bhd 100% ECS KUSH Sdn Bhd 100% ECS Pericomp Sdn Bhd 100%
SINGAPORE
ECS Computers (Asia) Pte Ltd 100% Pacific City (Asia Pacific) Pte Ltd 100% ECS Enterprise Solutions Pte Ltd 100%
INDONESIA
ECS Indo Pte Ltd 89% PT ECS Indo Jaya 100% synergy in motion
PHILIPPINES
ECS Infocom (Phils) Pte. Ltd. 100% MSI-ECS Phils., Inc 49.99%
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corporate information
Board of Directors Mr Tay Eng Hoe (Chairman, Non-Executive Director) Mr Narong Intanate (Executive Director) Mr Foo Sen Chin (Non-Executive Director) Mr Leong Horn Kee (Independent Director) Mr Tan Hup Foi (Independent Director) Mr Koh Soo Keong (Independent Director) Mr Mao Xiangqian (Executive Director, appointed on 3 May 2010) Mr Ong Wei Hiam (Non-Executive Director, appointed on 3 May 2010) Audit Committee
Mr Leong Horn Kee (Chairman) Mr Tan Hup Foi Mr Koh Soo Keong
Registered Office
19 Kallang Avenue #07-153 Singapore 339410
Principal Bankers
ANZ Bank Citibank N.A. DBS Bank Ltd KBC Bank N.V. Malayan Banking Berhad Oversea-Chinese Banking Corporation Standard Chartered Bank Sumitomo Mitsui Banking Corporation United Overseas Bank Limited
Compensation Committee Mr Koh Soo Keong (Chairman)

Mr Mr Leong Horn Kee Mr Tan Hup Foi
Company Secretary
Mr Eddie Foo Toon Ee, CPA
ECS Offices
ECS Holdings Limited 19 Kallang Avenue #07-153 Singapore 339410 Website : www.ecs.com.sg ECS Technology (China) Limited 6/7F, Wanliuyicheng Building, No.11 Changchunqiao Road, Haidian District, Beijing, P.R.C(100089) Branches in Beijing, Chengdu, Guangzhou, Hong Kong, Shanghai, Shenyang, Shenzhen, Wuhan, Xian Website : www.ecschina.com The Value Systems Co., Ltd. 21st Floor, Serm-Mit Tower 159/35 Sukhumvit 21 Road (Asok) North Klongtoey, Wattana Bangkok 10110, Thailand Branches in Bangkok, Chiang Mai, Hat Yai, Khon Kaen, Nakhon Ratchasima, Phitsanulok, Phuket, Rayong, Surat Thani Website : www.value.co.th ECS ICT Berhad Lot 3, Jalan Teknologi 3/5 Taman Sains Selangor, Kota Damansara Selangor, Malaysia Branches in Johor Bahru, Kota Kinabalu, Kuantan, Kuching, Penang, Petaling Jaya Websites : www.ecsm.com.my ECS Computers (Asia) Pte Ltd 19 Kallang Avenue #07-153 Singapore 339410 Website : www.ecs.com.sg PT ECS Indo Jaya Ruko Mangga Dua Square Blok E 34-37 Jl. Gunung Sahari Raya No.1 Jakarta Utara 14420, Indonesia Branches in Bali, Bandung, Jakarta, Makassar, Medan, Palembang, Semarang, Surabaya, Yogyakarta Website : www.ecsindo.com MSI-ECS Phils., Inc. Topy II Bldg, #3 Economia St., Libis, Quezon City, Philippines 1110 Branches in Cebu, Davao, Manila Website : www.msi-ecs.com.ph
Nominating Committee Mr Tan Hup Foi (Chairman)

Mr Leong Horn Kee Mr Koh Soo Keong Mr Tay Eng Hoe
Senior Management at ECS Holdings Limited Mr Narong Intanate (Group Chief Executive Officer) Mr Eddie Foo Toon Ee (Group Chief Financial Officer) Mr Lim Tow Cheng (Senior Vice President, Business Development) Senior Management at ECS Holdings Limiteds Subsidiaries and Associate Companies Mr Mao Xiangqian (Chief Executive Officer) ECS Technology (China) Limited
Mr Somsak Pejthaveeporndej (President) The Value Systems Co., Ltd. Mr Foo Sen Chin (Managing Director) ECS ICT Berhad Mr Sebastian Chong (President) ECS Computers (Asia) Pte Ltd Ms Lina Choo (Executive Director) PT ECS Indo Jaya Mr Jimmy Go (President) MSI-ECS Phils., Inc.
Corporate Executives Mr Eugene Tan (Group Financial Controller) Ms Peggy Leong-Yeo (Vice President ,Group Human Resources) Mr Newman Li (Senior Manager, Group Internal Audit) Ms Lim Yok Yen (Regional Business Controller) Mr Tang Kin Meng (Group MIS Advisor) Mr Paul Chong (Group PR Manager) Auditors
KPMG LLP Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 Partner-in-charge : Mr Tran Phuoc (Since FY2006)
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Registrar
M&C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore 068906
financiaL HigHLigHts
REVENUE (S$ million)
4000 3,252.0 #3,085.4 3500 2,789.4 3000 2,339.3 2500 2000 1500 1000 500 0 FY 06 FY 07 FY 08 FY 09 FY10 # Due to deconsolidation of the Groups associate company, ECS ICT Berhad which was listed on the main market of Bursa Malaysia on 15 April, 2010
REVENUE BY BUSINESS SEGMENT (S$ million)

4000 3,252.0 3500 2,789.4 3000 2,339.3 2500 2000 1500 1000 500 0 FY 06 FY 07 FY 08 FY 09 FY 10 900.1 964.3 1,133.3 1,187.9 1,132.5 1,416.0 1,792.9 #3,085.4
2,949.9
2,949.9
29.9
33.6
24.5
32.2
23.2 1,783.0 2,034.2 1,928.4
Enterprise Systems
Distribution
IT Services
# Due to deconsolidation of the Groups associate company, ECS ICT Berhad which was listed on the main market of Bursa Malaysia on 15 April, 2010
PROFITABILITY (S$ million)

80 70 60 50 40 23.4 30 20 10 0 FY 06 FY 07 FY 08 FY 09 FY10 Net Profit Attributable to Equity Holders 20.1 29.4 38.2
REVENUE BY GEOGRAPHICAL SEGMENT (S$ million)
SHAREHOLDERS EQUITY (S$ million)

400 350 300 296.6
200 150
Southeast Asia 1,306.4
100 50 0 FY 06 FY 07 FY 08 FY 09 FY10
190.1
North Asia 1,779.0
212.7
250
237.8
259.5
53.0
DIVIDENDS PER SHARE (cents)

4 3.6 3.5 3.0 3 2.5 2 1.5 1.5 1.5 1 0.5 0 FY 06 FY 07 FY 08 FY 09 FY10
RETURN ON EQUITY (%)

24 19.1 21 18 13.0 15 11.6 12 9 6 3 0 FY 06 FY 07 FY 08 FY 09 FY10 11.0 15.4
RETURN ON CAPITAL EMPLOYED (%)

24 21 18 15 10.0 12 9 6 3 0 FY 06 FY 07 FY 08 FY 09 FY10 9.1 11.7 12.2
15.3
2.7
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2010 awarDs
COUNTRY
ECS Holdings ECS Holdings ECS China ECS China ECS China ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Indonesia ECS Indonesia ECS Indonesia ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines
AWARDED BY
DP Information DP Information CBI News China Computer Magazine Microsoft Cisco Systems Microsoft Sun Microsystems Symantec Symantec AutoCad LT Buffalo HP HP ESSN HP ESSN HP ESSN HP PSG HP PSG HP TSG Printronix IBM Lenovo Lenovo Oracle Oracle Lenovo Lenovo Cisco Cisco Hewlett-Packard Acer HP HP HP HP HP HP Lenovo Lenovo Lenovo Lenovo Lenovo Lenovo Lenovo Oracle
AWARD
S1000 - Ranked 20th for Top Public-listed Company Ranked by Sales Turnover S1000 - Ranked 104th for Top Company Ranked by Sales Turnover ECS China Awarded 2nd in Top 100 IT Distribution Firms by CBINEWS ECS China Awarded 2nd in Top 100 Distribution Firms by China Computer Magazine The Fastest Growing Award In Microsoft Authorized Distributors 2010 Top Distributor Of The Year 2009 Microsoft Distribution Partner of the Year FY2010 RISE! Award Top Symantec Performing Distributor Award FY2010 Top Value Added Distributor Asia South Region FY10 Highest Over Achievement Distributor Best Sales Growth Award Top Performing Partner Sales Representative - HP Attach Services The C.E.O. Award Industry Standard Servers - Top Wholesaler StorageWorks - Top Wholesaler Significant Contribution - Wholesaler HP Consumer Desktop & Notebook PC Commercial Workstation Top Wholesaler Top Performing Master Parts Reseller for Asia Pacific, Replacement Parts Business Most Significant Business Improvement 2010 Significant Growth Software Group - Value Added Distributor Winner - T1 Distributor, ThinkPad Challenge Award Top Distributor of the Year 2010 - Key Account Business System Dsitributor Partner of the Year FY10 Value-Added Distributor Partner of the Year FY10 Winner - T1 Distributor, ThinkPad Challenge Award Top Distributor of the Year 2010 - Key Account Business The Best Distributor FY10 The Best Services Strategic Distributor FY10 The Best PSG Channel Coverage Wholesaler 1H 2010 Best in Growth Award (Consumer Products) HP PSG Wholesaler of the Year - Commercial Business (FY 2010) HP SWD Wholesaler of the Year (FY 2010) IWS (Inkjet) Wholesaler of the Year Award HP PSG (PC & Notebook) Wholesaler of the Year Award HP ISS (Server) Wholesaler of the Year Award Product Manager of the Year Award Distributor of the Year Award - Commercial PM of the Year Award Commercial PM of the Year Award - Consumer Distributor Sales Representative of the Year Award - Commercial System Engineer of the Year Award - Commercial 100% Achievement Award - Commercial Distributor of the Year award - SMB Category Value Added Distributor of the Year
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2010 miLestones
COUNTRY
ECS China ECS China ECS China ECS China ECS Malaysia ECS China ECS China ECS China ECS Thailand
MONTH
Jan - Mar 10 Jan - Mar 10 Jan - Mar 10 Jan - Mar 10 Jan - Mar 10 Apr - Jun 10 Apr - Jun 10 Apr - Jun 10 Apr - Jun 10
DESCRIPTION OF MILESTONE
ECS China Appointed as Distributor for Lenovo ECS China Appointed as Distributor for Infortrend ECS China Appointed as Distributor for Motorola ECS China Appointed as Distributor for Roucore ECS Astar Sdn Bhd Appointed as Distributor for ASUS ECS China Appointed as Distributor for Dvision ECS China Appointed as Distributor for Fluke ECS China Appointed as Distributor for Tandberg The Value Systems established the Corporate Social Responsibility campaign of The Fairy Tale Project IV at Banplaiklongnoi School, Krathum Baen District, Samut Sakhon province The Value Systems Appointed as Distributor for IronPort ECS Astar Sdn Bhd Appointed as Distributor for Bakbone ECS Pericomp Sdn Bhd Appointed as Distributor for Fujitsu Listing of ECS ICT Berhad on the Main Market of Bursa Malaysia Securities Berhad ECS Singapore Appointed as Distributor for Huawei Symantec ECS Singapore Appointed as Distributor for Stratus ECS Indonesia Appointed as Distributor for APC ECS Indonesia Appointed as Distributor for Belkin ECS Philippines Appointed as Distributor for Samsung Notebook Appointment of Mr Narong Intanate as Group Chief Executive Officer US$89M Syndicated Loan Appointment of Mr Tay Eng Hoe as Chairman ECS China Appointed as Distributor for Buffalo ECS China Appointed as Distributor for Greenplum The Value Systems Appointed as Distributor for Canon The Value Systems Appointed as Distributor for Emerson ECS Astar Sdn Bhd and ECS Pericomp Appointed as Distributor for APC ECS Singapore Appointed as Distributor for Promethean ECS Singapore Appointed as Distributor for APC ECS Philippines Appointed as Distributor for Microsoft Hardware ECS Proposed TDR ECS China Appointed as Distributor for Apple iPad ECS China Appointed as Distributor for Apple iPhone ECS China Appointed as Distributor for Epson ECS China Appointed as Distributor for Wescom ECS China Appointed as Distributor for Cisco ECS China Appointed as Distributor for SafeNet ECS China Appointed as Distributor for Found ECS China Appointed as Distributor for ZTE The Value Systems established the Corporate Social Responsibility campaign of The Tree Planting Project IV at Suan Pachumchon Moo 1 Community Forest, Phra Pradaeng district, Samut Prakan province. The Value Systems Appointed as Distributor for Fortinet The Value Systems Appointed as Distributor for Extreme Network The Value Systems Appointed as Distributor for Dell The Company held a Recycling Day campaign at its premise to promote the principle of Reduce, Reuse and Recycle ECS Astar Sdn Bhd Appointed Exclusive Distributor of YTL Communications 4G Devices ECS Singapore Appointed as Distributor for Dell ECS Singapore Appointed as Distributor for Lexmark ECS Singapore Appointed as Distributor for Trend Micro ECS Indonesia Appointed as Distributor for Lenovo ECS Philippines Appointed as Distributor for Belkin ECS Philippines Appointed as Distributor for Oracle Sun ECS Philippines Appointed as Distributor for Dell
ECS Thailand ECS Malaysia ECS Malaysia ECS Malaysia ECS Singapore ECS Singapore ECS Indonesia ECS Indonesia ECS Philippines ECS Holdings ECS Holdings ECS Holdings ECS China ECS China ECS Thailand ECS Thailand ECS Malaysia ECS Singapore ECS Singapore ECS Philippines ECS Holdings ECS China ECS China ECS China ECS China ECS China ECS China ECS China ECS China ECS Thailand
Apr - Jun 10 Apr - Jun 10 Apr - Jun 10 Apr - Jun 10 Apr - Jun 10 Apr - Jun 10 Apr - Jun 10 Apr - Jun 10 Apr - Jun 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Jul - Sep 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10
ECS Malaysia ECS Singapore ECS Singapore ECS Singapore ECS Indonesia ECS Philippines ECS Philippines ECS Philippines
Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10
ECS Thailand ECS Thailand ECS Thailand ECS Malaysia
Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10
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corporate governance statement

ECS Holdings Limited (the Company) is committed to comply with the Code of Corporate Governance 2005 issued by the Corporate Governance Committee. It believes in maintaining a high standard of corporate governance and has put in place policies and practices that will help to protect its shareholders interest and enhance long term shareholder value. This report describes the main corporate governance practices that are adopted by the Company.
(A) BOARD MATTERS

The Boards Conduct of its Affairs Principle 1 : Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board.
The Boards role is to: a) b) c) d) provide entrepreneurial leadership, set strategic aims, and ensure that the necessary financial and human resources are in place for the company to meet its objectives; establish a framework of prudent and effective controls which enables risk to be assessed and managed; review management performance; and set the companys values and standards, and ensure that obligations to shareholders and others are understood and met.
The Board meets to consider the following, without limitation, corporate events and/or actions: a) b) c) d) e) f) g) h) approval of quarterly results announcements; approval of annual report and accounts; declaration of interim dividend and proposal of final dividends; approval of corporate strategy; authorisation of major transactions; review and approval of annual budgets; compensation of senior management personnel; and convening of shareholders meetings.
All directors must objectively take decisions in the interests of the Company. The Board has delegated the day-to-day management and running of the Company to the management headed by our Group Chief Executive Officer (Group CEO), while reserving certain key issues and policies for its approval. Additionally, to facilitate effective management, certain functions have been delegated to the following sub-committees, each of which has its own written terms of reference: a) the Nominating Committee; b) the Compensation Committee; and c) the Audit Committee. Newly-appointed directors are given briefings by the Management on the Groups activities and its strategic directions. Changes to regulations and accounting standards are monitored closely by Management. To keep pace with regulatory changes, where these changes have an important bearing on the Companys or directors disclosure obligations, directors are briefed either during Board meetings or at specially convened sessions conducted by professionals.
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The Board intends to hold about four meetings each year and shall also hold informal meetings regularly. The Companys Articles of Association provide for telephonic and videoconference meetings. The number of Board meetings held since the date of the last annual report, as well as the attendance of every Board member at those meetings is as follows: DIRECTORS ATTENDANCE AT BOARD MEETINGS Board
Board Member Tay Eng Hoe Narong Intanate Foo Sen Chin Leong Horn Kee Koh Soo Keong Tan Hup Foi Mao Xiangqian (appointed on 3 May 2010) Ong Wei Hiam (appointed on 3 May 2010) Li Jia Lin (resigned on 27 September 2010) Board Composition and Guidance Principle 2 :
No. Of Meetings 5 5 5 5 5 5 5 5 3
Attended 5 5 5 5 5 5 5 5 3
There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Boards decision making.
The Board comprises eight directors of which six are non-executive directors (including three independent directors) and two executive directors. The Company places great importance on the quality of its Board of Directors. The Group achieves this by appointing to its Board highly respected individuals and prominent leaders in their respective professions. The Board comprises individuals with proven track record in the public and/or corporate sector, and each is a highly respected member of the business community. As a group, they provide core competencies such as accounting or finance, business or management experience, industry knowledge, strategic planning and customer-based experience or knowledge. Key information regarding the directors is given in the Board of Directors section on pages 14 to 15 of the annual report. Chairman and Chief Executive Officer Principle 3 : There should be a clear division of responsibilities at the top of the company - the working of the Board and the executive responsibility of the companys business - which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.
Mr Tay Eng Hoe, a non-executive director, was appointed as the Chairman of the Company on 27 September 2010. Mr Narong Intanate was appointed as Group CEO with effect from 1 July 2010. The Chairman and the Group CEO each perform separate functions to ensure that there is an appropriate balance of power and authority, and that accountability and independent decision-making are not compromised. The Chairman is responsible for the functioning of the Board. The Group CEO has full executive responsibilities over the running of the Groups business, the business direction and operational decisions of the Group. No individual or small group of individuals dominate the Boards decision making process.
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Board Membership & Board Performance Principle 4 : There should be a formal and transparent process for the appointment of new directors to the Board. There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.
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Principle 5 :
The Nominating Committee was formed on 6 January 2003 and comprises four directors, including three independent directors, Mr Tan Hup Foi, Mr Leong Horn Kee, Mr Koh Soo Keong and one non-executive director, Mr Tay Eng Hoe. Mr Tan Hup Foi is the Chairman of the Nominating Committee. The role of the Nominating Committee is to perform the following functions: a) b) c) identifies and reviews all nominations for Board appointments and re-nominations of directors; assesses the effectiveness of the Board as a whole and the contribution by each individual director to the effectiveness of the Board; and determines whether or not a Director is independent.
In accordance with the Companys Articles of Association, at each Annual General Meeting, one-third of the Board shall retire from office by rotation provided that no director holding office as Managing or Joint Managing Director shall be subject to retirement by rotation or be taken into account in determining the number of directors to retire. Access to Information Principle 6 : In order to fulfil their responsibilities, board members should be provided with complete, adequate and timely information 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 to perform their roles properly. All directors have separate and independent access to senior management and the company secretary. The company secretary has defined roles and responsibilities and attends all Board and sub-committee meetings of the Company. Should directors, whether as a group or individually, need independent professional advice in the furtherance of their duties, cost of such professional advice will be borne by the Company.
(B) REMUNERATION MATTERS

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Procedures for Developing Remuneration Policies Principle 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 and retain employees and directors through competitive compensation and progressive policies. In particular, the Compensation Committee is responsible for overseeing our employee profit sharing scheme as well as the share incentives, including the ECS Share Option Scheme I, ECS Share Option Scheme II and ECS Performance Shares Scheme. The Compensation Committee of the Board comprises Mr Koh Soo Keong, Mr Leong Horn Kee, and Mr Tan Hup Foi. Mr Koh Soo Keong is the Chairman of the Compensation Committee.

Level and Mix of Remuneration; Disclosure of Remuneration Principle 8 : The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors remuneration should be structured so as to link rewards to corporate and individual performance. Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the companys annual report. It should also provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.
Principle 9 :
The Groups remuneration policy is to provide a competitive remuneration package so as to attract, retain and motivate directors and senior management of the required experience and expertise to run the Group successfully. In setting remuneration packages for executive directors and senior management of the Group, the pay and employment conditions within the industry and in comparable companies are taken into consideration. The compensation package of the Groups 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 component pursuant to the Companys Share Option Scheme. The directors fee policy is based on a scale of fees divided into basic retainer fees as a director and additional fees for serving on board committees. Directors fees for non-executive directors are subject to the approval of shareholders at the Annual General Meeting. The report on directors remuneration is given below: SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED 31 DECEMBER 2010 Salary % 24 31 21 58 Bonus % 72 64 68 39 Fees % 100 100 100 100 Allowances and other Benefits % 4 5 11 3 Total % 100 100 100
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Name of Director $1,000,000 to below $2,500,000 Tay Eng Hoe $500,000 to below $1,000,000 Narong Intanate Foo Sen Chin Mao Xiangqian Below $500,000 Li Jia Lin Leong Horn Kee Tan Hup Foi Koh Soo Keong Ong Wei Hiam
100 100 100 100 100 -
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Rather than setting out the names of the top five key executives who are not also directors of the Company, we have shown a Group-wide cross-section of executive remuneration by number of employees earning $100,000 upwards in bands of $250,000 below. This should give a macro view of the remuneration pattern in the Group, while maintaining confidentiality of staff remuneration matters. NO. OF EXECUTIVES IN REMUNERATION BANDS No. of Employees (Note 1) 12 9 5 26 Total Fixed Compensation (Note 2) $1,579,078 $2,036,328 $1,279,348 $4,894,754 Total Variable Compensation (Note 3) $175,500 $1,836,882 $1,658,488 $3,670,870 Total Remuneration $1,754,578 $3,873,210 $2,937,836 $8,565,624
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Total Compensation (S$) $100,000 to $249,999 $250,000 to $499,999 $500,000 to $749,999 Total Notes : 1. 2. 3.
Including employees in local and overseas subsidiaries. Inclusive of salaries, AWS, related CPF and other statutory contributions, allowances and fringe-benefits. Sales commission, bonus and other statutory contributions.
There are no employees in the Group who are immediate family members of a director or the Group CEO.
(C) ACCOUNTABILITY AND AUDIT

Accountability Principle 10 : The Board should present a balanced and understandable assessment of the companys performance, position and prospects.
In presenting the annual financial statements and quarterly announcements to shareholders, it is the aim of the Board to provide the shareholders with a detailed analysis, explanation and assessment of the Groups financial position and prospects. On a quarterly basis, Board members are provided with business and financial reports comparing actual performance with budget and with prior year comparisons with highlights on key business indicators and any significant business development. In addition, the Group CEO communicates regularly with Board members through informal meetings and phone calls with appropriate updates on Company developments.
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Audit Committee Principle 11 : The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.
The Audit Committee comprises three members, of which all members, including the Chairman, are independent. The members of the Audit Committee at the date of this report are: Leong Horn Kee Tan Hup Foi Koh Soo Keong Chairman Member Member

The Audit Committee meets periodically to perform the following functions:a) b) reviewing the quarterly, half-yearly and annual financial statements before recommending them to the Board for approval; reviewing interested person transactions (as defined in Chapter 9 of the Listing Manual (Listing Manual) of the Singapore Exchange Securities Trading Limited (SGX-ST), including such transactions conducted under the shareholders general mandate previously obtained; reviewing with external auditors the audit plan, their evaluation of the systems of internal controls, their annual reports and their management letters and managements response; reviewing and recommending to the Board the re-appointment of the external auditors, taking into consideration the non-audit services rendered by the external auditors and being satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors; reviewing the scope of internal audit procedures and the results and effectiveness of the internal audit; and considering other matters as requested by the Board.
c) d)
e) f)
The Audit Committee has full access to and co-operation of the Companys management and the internal auditors and has full discretion to invite any director or executive officer to attend its meetings. The auditors, both internal and external, have unrestricted access to the Audit 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 Interested Person Transactions for the year ended 31 December 2010 in accordance with the terms of the Shareholders Mandate for such transactions as were approved on 30 April 2010. Interested Person Transactions with a total value of $23.6 million were examined and the Audit Committee is of the opinion that the said transactions were carried out on prevailing commercial terms and did not prejudice 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 relating to Interested Person Transactions have not changed since the last shareholders approval. The Audit Committee also confirms that the methods and procedures are sufficient to ensure that the transactions will be carried out on normal terms and will not be prejudicial 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 independence of the auditors. The Audit Committee has recommended to the Board that the auditors, KPMG LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. Meetings and attendance are as follows:
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Audit Committee Name of Director Leong Horn Kee (Chairman) Tan Hup Foi Koh Soo Keong No. Of Meetings 4 4 4 Attended 4 4 4
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Internal Controls Principle 12 : The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders investment and the companys assets.
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The Board acknowledges that it is responsible for the Groups system of internal control. It believes that in the absence of any evidence to the contrary and from due enquiry, the system of internal controls that has been maintained by the Group throughout the financial year is adequate to meet the needs of the Group in its current business environment. However, the Board notes that the system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatements or loss. Internal Audit 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 Committee and administratively to the Group CEO. The Internal Auditor plans its internal audit work in consultation with, but independent of, Management, and its yearly plan is submitted to the Audit Committee for approval at the beginning of each year. The Internal Auditor reports to the Audit Committee quarterly regarding its findings. The Audit Committee also meets with the Internal Auditor at least once during the year without the presence of Management. The Audit Committee also ensures that the internal audit function is adequately resourced, and will review annually the adequacy of the internal audit function. The internal auditors are expected to meet or exceed the standards set by nationally or internationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.
(D) COMMUNICATION WITH SHAREHOLDERS

Principle 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 the opportunity 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 Listing Manual and the Companies Act, Chapter 50, of Singapore, the Boards policy is that all shareholders are informed of all major developments of the Group. Price-sensitive information is released publicly, and quarterly results and annual reports are announced or issued within the mandatory period and are available on the Groups website. Thereafter, a briefing by Management is held jointly for the media and 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 of the Groups strategy and goals.
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(E) DEALING IN SECURITIES
The Company has adopted its own internal Code of Best Practices on Securities Transactions (Code) with regard to dealings in the Companys shares by its directors and executives. It emphasizes that the law on insider dealing is applicable at all times, notwithstanding that the Code provides certain window periods for directors and executives to deal in the shares of the Company. The Code also enables the Company to monitor such share transactions by requiring directors and executives to report to the Company whenever they deal in the Companys shares. In the opinion of the directors, the Company has complied with the Best Practices stipulated in Listing Manual Rule 1207 (18) of the SGX-ST Listing Manual.
(F) INTERESTED PARTY TRANSACTIONS

The Group has adopted an internal policy in respect of any transactions with interested persons and has procedures established for the review and approval of the Groups Interested Party Transactions (IPT). Pursuant to Rule 907 of the Listing Manual, the Group has the following IPTs entered into during the financial year, together with the corresponding aggregate value of the IPTs entered into with the same interested person, are disclosed as follows: Aggregate value of all IPTs during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders mandate pursuant to Rule 920 of Listing Manual of SGX-ST) Aggregate value of all IPTs conducted under shareholders mandate pursuant to Rule 920 of Listing Manual of SGX-ST (excluding transactions less than $100,000)
Name of Interested Person
Transactions for the sale of goods and services with Vnet Capital Co., Ltd and its subsidiaries
$313,743
$9,413,050
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Directors report
We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2010. Directors The directors in office at the date of this report are as follows:Tay Eng Hoe Narong Intanate Foo Sen Chin Leong Horn Kee Tan Hup Foi Koh Soo Keong Mao Xiangqian Ong Wei Hiam Directors interests According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants or share options of the Company and in related corporations (other than wholly-owned subsidiaries) are as follows: Holdings at beginning of the year/date of appointment (Appointed on 3 May 2010) (Appointed on 3 May 2010)
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Name of director and corporation in which interests are held ECS Holdings Limited options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2021
Holdings at end of the year
Narong Intanate Foo Sen Chin Mao Xiangqian ECS Holdings Limited synergy in motion
1,500,000 300,000 900,000
options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2016 700,000 400,000 400,000 400,000 300,000
Tay Eng Hoe Leong Horn Kee Koh Soo Keong Tan Hup Foi Ong Wei Hiam
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year or date of appointment if later, or at the end of the financial year. 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 Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2011.
Directors report
During the financial year, certain of its subsidiaries have, in the normal course of business entered into transactions with companies in which Mr Li Jia Lin (resigned on 27 September 2010) and Mr Narong Intanate have an interest. These transactions include the purchase and sale of information technology products and services of $611,877 (2009: $8,349,686) and $22,365,842 (2009: $11,784,004) respectively and are carried out on normal commercial terms. In addition, rental of office premises of $646,651 (2009: $641,498) was paid during the year to a firm in which Mr Foo Sen Chin is a shareholder. However, the directors have not received nor will they be entitled to receive any benefits arising out of these transactions other than those 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 34 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest. Share options The Company (a) Share option scheme The ECS Share Option Scheme II (Scheme II) was approved and adopted by its members at an Extraordinary General Meeting held 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 the Company. The above scheme is administered by the Compensation Committee (the Committee) which comprises the following directors:Koh Soo Keong (Chairman) Leong Horn Kee Tan Hup Foi Details of Scheme II were set out in the Directors Report for the year ended 31 December 2000. (b) Options granted
(c)
Issue of shares under option During the financial year, there is no issuance of shares under the share option scheme of the Company.
(d)
Unissued shares under option Exercise price per share $0.550 $0.550 Exercise period 15/10/2011 to 15/10/2016 15/10/2011 to 15/10/2021 Number of option holders at 31 December 2010 5 54 Options outstanding at 31 December 2010 2,200,000 11,570,000
Date of grant of options 15/10/2010 15/10/2010
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On 15 October 2010, the Group granted 13,770,000 share options pursuant to the rules of the ECS Share Option Scheme II. The options have an exercise price of $0.550 per share; a vesting period of 1 year from date of grant; and can be exercised within 5 years from date of grant for non-executive directors and 10 years from date of grant for executive directors and employees.
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Directors report
The details of options granted and exercised are as follows:Aggregate Options forfeited/ lapsed [4]
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Name of participants Executive directors - Narong Intanate - Foo Sen Chin - Mao Xiangqian Non-executive directors - Tay Eng Hoe - Leong Horn Kee - Koh Soo Keong - Tan Hup Foi - Ong Wei Hiam Former directors - Wong Heng Chong - Lin Chien - Chay Yee Meng - Teo Ek Tor - Wang Fangmin - Hsieh Fu Hua - Lee Suet Fern Employees (including executive officers) - Foong Kam Tho - Other employees
Options granted [1]
Aggregate Options granted [2]
Aggregate Options exercised [3]
Aggregate Options outstanding [5]
1,500,000 300,000 900,000
11,006,000 4,160,000 900,000
(8,906,000) (3,340,000) -
(600,000) (520,000) -
1,500,000 300,000 900,000
700,000 400,000 400,000 400,000 300,000
5,676,000 678,000 520,000 400,000 300,000
(2,226,000) -
(2,750,000) (278,000) (120,000) -
700,000 400,000 400,000 400,000 300,000
1,713,000 128,000 188,000 130,000 50,000 88,000 258,000
(1,113,000) -
(600,000) (128,000) (188,000) (130,000) (50,000) (88,000) (258,000)
8,870,000 13,770,000
8,629,000 32,162,000 66,986,000
(6,679,000) (22,264,000)
(1,950,000) (23,292,000) (30,952,000)
8,870,000 13,770,000
synergy in motion
[1] [2] [3] [4] [5]
Options granted during the financial year under review. Aggregate options granted since commencement of the schemes to the end of the financial year under review. Aggregate options exercised since commencement of the schemes to the end of the financial year under review. Aggregate options lapsed since commencement of the schemes to the end of the financial year under review. Aggregate options outstanding as at end of the financial year under review.
Except as disclosed, since the commencement of the option schemes:(i) (ii) (iii) no option has been granted to the controlling shareholder of the Company or their associates; no participant under the schemes has been granted 5% or more of the total options available under the schemes; and 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 holding, to any rights to participate in any share issue of any other company.
Directors report
ECS Indo Pte Ltd (a) Options granted On 16 October 2009, the subsidiary granted 450,000 share options to a minority shareholder and four senior employees of the subsidiary. Each option is, upon full payment of the exercise price, convertible into one new ordinary share of the company. The options are exercisable at any time within 3 years from the grant date and are settled by physical delivery of shares. (b) Issue of shares under option During the financial year, there were no issuance of shares under the share option scheme of the company. (c) Unissued shares under option Number of option holders at 31 December 2010 5 Options outstanding at 31 December 2010 425,215
Date of grant of options 16/10/2009
Exercise price per share US$1.8156
Exercise period 16/10/2009 to 16/10/2012
Except as disclosed above, there were:(i) (ii) (iii) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; and no unissued shares of the Company or its subsidiaries under option at the end of the financial year.
ECS Performance Share Scheme The ECS Performance Share Scheme (the Scheme) was approved at the Companys Extraordinary General Meeting held on 1 December 2006. The Scheme is administered by the Compensation Committee which comprises the Non-Executive Directors Messrs Koh Soo Keong, Leong Horn Kee and Tan Hup Foi. Group Executives who have attained the age of 21 years on or before the date of grant of the Award (as defined below), Group Executive Directors and Non-Executive Directors are eligible to participate in the Scheme (Participants). The Scheme is to reward Participants by award of existing Shares held as treasury shares in the Company (Awards), which are given free of charge to the Participants according to the extent to which their performance targets set under the Scheme are achieved at the end of a specified performance period.
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Since the commencement of the Scheme, no Awards have been granted.
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Directors report
Audit committee The members of the Audit Committee during the year and at the date of this report are:Leong Horn Kee Tan Hup Foi Koh Soo Keong (Chairman, Independent director) (Independent director) (Independent director)
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The Audit Committee performs the functions specified by section 201B of the Companies Act, the SGX Listing Manual 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 with the Companys external and internal auditors to discuss the scope of their work and the results of their examination and evaluation of the Companys internal accounting control system. The Audit Committee also reviewed the following: Assistance provided by the Companys officers to the internal and external auditors; Quarterly financial information and annual financial statements of the Group and 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 full authority and discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment 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 Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company.
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Directors report
Auditors The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.
On behalf of the Board of Directors
Narong Intanate Director
Tay Eng Hoe Director
10 March 2011
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statement by Directors
In our opinion: (a) the financial statements set out on pages 42 to 83 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and of the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
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(b)
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
On behalf of the Board of Directors
Narong Intanate Director
Tay Eng Hoe Director
10 March 2011
synergy in motion
inDepenDent auDitors report

Members of the Company ECS Holdings Limited Report on the financial statements We have audited the accompanying financial statements of ECS Holdings Limited (the Company) and its subsidiaries (the Group), which comprise the statement of financial position of the Group and the Company as at 31 December 2010, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Group for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 42 to 83. Managements responsibility for the financial statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements of the Group and the statement of financial position of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and the results, changes in equity and cash flows of the Group for the year ended on that date. Report on other legal and regulatory requirements In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
KPMG LLP Public Accountants and Certified Public Accountants Singapore 10 March 2011
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financiaL statements
Statement of financial position As at 31 December 2010 Group Note Non-current assets Property, plant and equipment Intangible assets Subsidiaries Interest in associates Club memberships Deferred tax assets Current assets Inventories Trade and other receivables Cash and cash equivalents 9 10 13 207,763 554,637 92,500 854,900 Total assets Equity attributable to owners of the Company Share capital Reserves Non-controlling interests Total equity Non-current liabilities Financial liabilities 17 18 8 101,506 570 2,367 104,443 Current liabilities Financial liabilities Deferred income Trade and other payables Current tax payable Total liabilities Total equity and liabilities 17 18 19 128,954 872 405,402 7,164 542,392 646,835 944,522 113,841 358 409,706 6,704 530,609 596,702 873,415 8,354 8,499 250 17,103 118,368 255,657 17,377 7,786 125 25,288 88,540 227,244 63,373 840 1,880 66,093 101,238 27 101,265 63,225 27 63,252 Deferred income Deferred tax liabilities 14 15 112,815 183,779 296,594 1,093 297,687 112,815 146,713 259,528 17,185 276,713 112,815 24,474 137,289 137,289 112,815 25,889 138,704 138,704 944,522 217,718 548,542 51,117 817,377 873,415 37,076 8,833 45,909 255,657 53,526 2,354 55,880 227,244 8 4 5 6 7 7,583 33,522 41,585 6,932 89,622 8,284 33,522 7,323 290 6,619 56,038 248 206,180 3,320 209,748 225 170,999 140 171,364 2010 $000 2009 $000 2010 $000 Company 2009 $000
synergy in motion
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The accompanying notes form an integral part of these financial statements.
Consolidated statement of comprehensive income Year ended 31 December 2010 2010 $000 3,085,373 (2,930,254) 155,119 19,389 (65,104) (39,700) 23 24 69,704 (8,621) 5,982 67,065 25 (12,895) 54,170 2009 $000 3,252,024 (3,093,367) 158,657 6,083 (63,750) (39,705) 61,285 (5,307) 1,195 57,173 (14,049) 43,124
Note Revenue Cost of sales Gross profit Other income Selling and distribution expenses General and administrative expenses Profit from operations Finance costs Share of profit of associates, net of tax Profit before income tax Income tax expense Profit for the year Other comprehensive income Exchange loss on translation of net assets of foreign subsidiaries Reclassification of foreign currency reserve on dilution and partial disposal of a subsidiary Share of foreign currency translation differences of associates Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit attributable to: Owners of the Company Non-controlling interests Profit for the year Total comprehensive income attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the year Earnings per share - Basic - Fully diluted 26 26 22
(3,291) (534) (809) (4,634) 49,536
(7,351) (34) (7,385) 35,739
52,998 1,172 54,170
38,181 4,943 43,124
48,012 1,524 49,536
31,223 4,516 35,739
14.51 cents 14.48 cents
10.50 cents 10.50 cents
synergy in motion
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synergy in motion
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Consolidated statement of changes in equity
Year ended 31 December 2010
Group
Share capital $000 Total $000
Dividend reserve $000
General reserve $000
Currency translation Accumulated reserve profits $000 $000 Total equity $000
Noncontrolling interests $000
2009 9,865 (6,958) 38,181 31,223 (34) (34) (6,924) (6,924) 38,181 38,181 4,943 (427) 4,516 2,423 (477) 113,175 237,801 14,285 252,086 43,124 (7,351) (34) 35,739
At 1 January 2009
112,815
Total comprehensive income for the year
Profit for the year
Effects of translation foreign operations
Share of foreign currency translation differences of associates
Transactions with owners of the Company, recognised directly in equity
Contributions by and distributions to owners of the Company (9,865) 10,961 1,096 10,961 1,352 3,775 (7,435) 1,352 (1,352) 369 (10,961) (11,944) 139,412
Transfer to general reserve
369 (9,865) (9,496) 259,528
41 221 (1,878) (1,616) 17,185
410 221 (9,865) (1,878) (11,112) 276,713
Share-based payment transactions
Issue of shares to non-controlling interests
Final tax-exempt one-tier dividends paid at 2.7 cents per share for 2008
Proposed tax-exempt one-tier dividends of 3.0 cents per share for 2009
Dividend payable to non-controlling interests
Total contributions by and distributions to owners
At 31 December 2009
112,815
Consolidated statement of changes in equity
Year ended 31 December 2010
Group
Share capital $000 Total $000
Dividend reserve $000
General reserve $000
Currency translation Accumulated reserve profits $000 $000 Total equity $000
Noncontrolling interests $000
2010 10,961 (4,986) 52,998 (809) (809) 48,012 (534) (534) (3,643) (3,643) 352 1,524 52,998 52,998 1,172 3,775 (7,435) 139,412 259,528 17,185 276,713 54,170 (3,291) (534) (809) 49,536
At 1 January 2010
112,815
Profit for the year
Effects of translation of net assets of foreign subsidiaries
Realisation of foreign currency reserve on dilution and partial disposal of a subsidiary
Share of foreign currency translation differences of associates
Transactions with owners of the Company, recognised directly in equity
Contributions by and distributions to owners of the Company (10,961) 13,153 2,192 13,153 1,377 5,152 (12,421) 1,377 -
Transfer to general reserve
(1,377) 15 (13,153) (14,515) 177,895
15 (10,961) (10,946) 296,594
(17,616) (17,616) 1,093
15 (10,961) (17,616) (28,562) 297,687
Share-based payment transactions
Final tax-exempt one-tier dividends paid at 3.0 cents per share for 2009
Proposed tax-exempt one-tier dividends of 3.6 cents per share for 2010
Effect of dilution and partial disposal of a subsidiary to an associate
Total contributions by and distributions to owners
At 31 December 2010
112,815
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Consolidated statement of cash flows Year ended 31 December 2010 Note Cash flows from operating activities Profit before income tax Adjustments for: Share of profit of associates Net fair value loss on financial instruments Depreciation of property, plant and equipment Property, plant and equipment written off Other assets written off Loss/(gain) on disposal of property, plant and equipment Gain on dilution and partial disposal of a subsidiary to an associate Fair value adjustment of remaining interests in an associate Finance costs Interest income Equity-settled share-based payment Changes in working capital: Inventories Trade and other receivables Trade and other payables Cash generated from operations Income taxes paid Net cash (used in)/from operating activities Cash flows from investing activities Interest received Purchase of additional interests in an associate Purchases of property, plant and equipment Proceeds from disposal of property, plant and equipment Cash outflow upon dilution and partial disposal of a subsidiary to an associate Proceeds from sale of other assets Dividend received from associates Loan to associate Net cash (used in)/from investing activities Cash flows from financing activities Interest paid Proceeds from bank loans/trade financing Repayment of bank loans/trade financing Payment of finance lease instalments Dividends paid to equity holders of the Company Issue of shares to non-controlling interests Dividend paid to non-controlling interests of a subsidiary Net cash from/(used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of exchange rate fluctuations on cash held Cash and cash equivalents at 31 December 2010 $000 67,065 2009 $000 57,173
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23 4 23 23 23 23 23 24 23 23
(5,982) 4,381 2,235 140 54 (4,569) (8,051) 8,621 (955) 15 62,954 (34,111) (90,447) 71,927 10,323 (11,325) (1,002)
(1,195) 1,880 2,828 6 13 (45) 5,307 (646) 410 65,731 (49,152) (120,291) 145,150 41,438 (12,149) 29,289
955 (647) (2,757) 67 29 (5,723) 125 1,691 (6,801) (13,090)
646 (1,854) 1,534 326
synergy in motion
(7,979) 857,385 (779,277) (119) (10,961) (1,810) 57,239 43,147 51,117 (1,764) 92,500
(6,357) 577,377 (587,933) (69) (9,865) 221 (68) (26,694) 2,921 49,502 (1,306) 51,117
13
Notes to the financial statements These notes form an integral part of the financial statements. The financial statements were authorised for issue by the Board of Directors on 10 March 2011.
1.
Domicile and activities

ECS Holdings Limited (the Company) is incorporated in the Republic of Singapore and has its registered office at 19 Kallang Avenue, #07-153, Singapore 339410. The financial statements of the Company as of and for the year ended 31 December 2010 comprise the Company and its subsidiaries (together referred to as the Group and individually as Group entities) and the Groups interest in associates. The principal activities of the Company are those relating to investment holding and the distribution of information technology products. The principal activities of the subsidiaries are set out in note 6 to the financial statements. The immediate and ultimate holding company is VST Holdings Limited, a company incorporated in the Cayman Islands.
2.
(a)
Basis of preparation
Statement of compliance The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS).
(b)
Basis of measurement The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities as described below.
(c)
Functional and presentation currency The financial statements are presented in Singapore dollars which is the Companys functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless stated otherwise.
(d)
Use of estimates and judgements

synergy in motion
The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements, assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is described in notes 5 and 7.
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(e) Changes in accounting policies (i) Accounting for business combinations From 1 January 2010, the Group has applied FRS 103 Business Combinations (2009) in accounting for business combinations. Business combinations are now accounted for using the acquisition method as at the acquisition date (see note 3(a)(i)). Previously, business combinations were accounted for under the purchase method. The cost of an acquisition was measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. The excess of the Groups interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition was credited to profit or loss in the period of the acquisition. For business acquisitions that were achieved in stages, any existing equity interests in the acquiree were not re-measured to their fair value. Contingent consideration was recognised as an adjustment to the cost of acquisition only when it was probable and can be measured reliably. The change in accounting policy has been applied prospectively to new business combinations occurring on or after 1 January 2010 and has no material impact on earnings per share for 2009. (ii) Accounting for acquisitions of non-controlling interests and loss of control of a subsidiary From 1 January 2010, the Group has applied FRS 27 (revised) Consolidated and Separate Financial Statements in accounting for acquisitions of non-controlling interests and loss of control of a subsidiary (see note 3(iv) and 3(v) respectively). The change in accounting policy has been applied prospectively. Previously, goodwill arising on the acquisition of non-controlling interests in a subsidiary has been recognised, and represented the excess of the cost of the additional investment over the carrying amount of the interest in the net assets acquired at the date of the transaction. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains interest in the previous subsidiary, then such interest is measured at fair value. No re-measurement of remaining interests upon the loss of control was previously required. The impact of this change is set out in note 29.
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3.
Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented these consolidated financial statements, and have been applied consistently by Group entities, except as explained in note 2(e), which addresses changes in accounting policies. (a) Basis of consolidation
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(i)
Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss.
(i) Business combinations (Contd) When share-based payment awards (replacement awards) are required to be exchanged for awards held by the acquirees employees (acquirees awards) and relate to past services, then all or a portion of the amount of the acquirers replacement awards is included in measuring the consideration transferred in the business combination. This determination is based on the market-based value of the replacement awards compared with the market-based value of the acquirees awards and the extent to which the replacement awards relate to past and/or future service. (ii) Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the noncontrolling interests to have a deficit balance. (iii) Investments in associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies of these entities. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Investments in associates are accounted for using the equity method (equity-accounted investees) and are recognised initially at cost. The cost of the investments includes transaction costs. The consolidated financial statements include the Groups share of the profit or loss and other comprehensive income of the equity-accounted investees, after adjustments to align the accounting policies of the equity-accounted investees with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. (iv) Acquisition of non-controlling interests Acquisitions of non-controlling interests are accounted for as transactions with owners in their capacity as owners and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. (v) Loss of control Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained. (vi) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Groups interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (vii) Accounting for subsidiaries and associates Investments in subsidiaries and associates are stated in the Companys statement of financial position at cost less accumulated impairment losses.
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(b) (i) Foreign currencies Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in the profit and loss. (ii) Foreign operations The assets and liabilities of foreign operations, excluding goodwill and fair value adjustments arising on acquisition, are translated to Singapore dollars at exchange rates at the end of the reporting period. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2005 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2005, the exchange rates at the date of acquisition were used. Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the profit or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate that includes a foreign operation while retaining significant influence, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation. These are recognised in other comprehensive income, and are presented in the translation reserve equity. (c) Financial instruments
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synergy in motion
(i)
Non-derivative financial assets The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Non-derivative financial assets comprise loans and receivables.
Loans and receivables Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. Loans and receivables comprise cash and cash equivalents and trade and other receivables. Cash and cash equivalents comprise cash balances and bank deposits. (ii) Non-derivative financial liabilities The Group initially recognises subordinated liabilities on the date that they are originated. All other financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. The Group classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method. Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade and other payables. Bank overdrafts that are repayable on demand and form an integral part of the Groups cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. (iii) Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the reserve for own share account. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in non-distributable capital reserve. (iv) Derivative financial instruments The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss. Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognised in profit or loss. The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the statement of financial position date, taking into account current interest rates and the current credit-worthiness of the swap counterparties. The fair value of forward exchange contracts is their quoted market price at the statement of financial position date, being the present value of the quoted forward price.
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(v) Financial guarantee contracts Financial guarantee contracts are regarded as insurance contracts under which the Group accepts significant insurance risk from a third party by agreeing to compensate that party on the occurrence of a specified uncertain future event. Provisions are recognised when it is probable that the guarantee will be called upon and an outflow of resources embodying economic benefits will be required to settle the obligations. (d) Property, plant and equipment (i)
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Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for its intended use the cost of dismantling and removing the items and restoring the site on which they are located and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net within other income/other expenses in profit or loss.
(ii)
Subsequent costs The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred.
(iii) Depreciation Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each component of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term. Assets under construction are not depreciated. The estimated useful lives are as follows: Freehold building Leasehold improvements Office equipment Furniture and fittings Computers Motor vehicles 50 years 10 years 5 years 5 years 5 years 5 years
synergy in motion
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate.
(e) Intangible assets (i) Goodwill Goodwill represents the excess of: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted investee. (ii) Negative goodwill Negative goodwill arising on the acquisition of controlled subsidiaries and associates represents the excess of the Groups share of the fair value of identifiable assets and liabilities acquired over the cost of the acquisition. To the extent that negative goodwill relates to an expectation of future losses and expenses that are identified in the plan of acquisition and can be measured reliably, but which have not yet been recognised, it is recognised in the profit and loss when the future losses and expenses are recognised. Any remaining negative goodwill is recognised immediately in the profit and loss. (f) Leased assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognised in the Groups statement of financial position. (g) Inventories Inventories are measured 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 and other costs incurred in bringing the inventories to their present location and condition. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. In arriving at net realisable value, due allowance is made for all obsolete and slow moving inventories. (h) Impairment
(i)
Non-derivative financial assets A financial asset not carried at fair value through profit or loss is assessed at the end of each reporting period to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
synergy in motion
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(i) Non-derivative financial assets (Contd) Objective evidence that financial assets (including equity securities) are impaired can include default or delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment status of borrowers or issuers in the Group, economic conditions that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. Loans and receivables The Group considers evidence of impairment for loans and receivables at both a specific asset and collective level. All individually significant loans and receivables are assessed for specific impairment. All individually significant receivables found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables that are not individually significant are collectively assessed for impairment by grouping together loans and receivables with similar risk characteristics. In assessing collective impairment, the Group uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for managements judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows, discounted at the assets original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables. Interest on the impaired asset continues to be recognised. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. (ii) Non-financial assets The carrying amounts of the Groups non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash-generating unit (CGU) exceeds its recoverable amount. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU. Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination. The Groups corporate assets do not generate separate cash inflows and are utilised by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of units) on a pro rata basis.
synergy in motion
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(ii) Non-financial assets (Contd) An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Goodwill that forms part of the carrying amount of an investment in an associate is not recognised separately, and therefore is not tested for impairment separately. Instead, the entire amount of the investment in an associate is tested for impairment as a single asset when there is objective evidence that the investment in an associate may be impaired. (i) Dividends Dividends on ordinary shares are recognised as a liability in the period in which it is declared. (j) Employee benefits
(i)
Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.
(ii) Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. (iii) Share-based payments The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and nonmarket vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an expense with a corresponding increase in liabilities, over the period that the employees unconditionally become entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in profit or loss.
(k)
Revenue recognition (i) Goods sold Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with
synergy in motion
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(i) Goods sold (Contd) the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised. The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement. For sales of IT products, transfer usually occurs when the product is received at the customers warehouse; however, for some international shipments, transfer occurs upon loading of the goods on to the relevant carrier. (ii) Service fees Fees from service maintenance contracts are recognised over the period of the contract. (l) Government grants Jobs credit scheme Cash grants received from the government in relation to the Jobs Credit Scheme are recognised upon receipt. Such grants are provided to defray the wage costs incurred by the Group and are offset against staff costs in the financial statements. (m) Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. Determining whether an arrangement contains a lease At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right to control the use of the underlying asset. At inception or upon reassessment of the arrangement, the Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently, the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Groups incremental borrowing rate. (n) Finance costs Finance costs comprise interest expense on borrowings that are recognised in profit or loss. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method. (o) Income tax Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
synergy in motion
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(o) Income tax (Contd) Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; temporary differences related to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; and taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (p) Earnings per share The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees. (q) Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups other components. All operating segments operating results are reviewed regularly by the Groups CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Companys headquarters), head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill. (r) New standards and interpretations not adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2010, and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group.
synergy in motion
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synergy in motion
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4.
Property, plant and equipment
Group 1,793 298 (349) (2) (36) 1,704 360 (35) (796) 31 1,264 1,163 235 (328) (2) (26) 1,042 124 (31) (329) 18 824 630 662 440 813 1,168 1,149 5,369 4,120 3,280 1,000 367 (168) 36 (40) 1,195 300 (309) (231) 29 984 10,266 1,643 (1,678) (33) (386) 9,812 1,309 (857) (1,644) (107) 8,513 1,125 240 (217) 24 (34) 1,138 199 (56) (528) (9) 744 707 595 710 988 982 1,084 1,813 404 (190) 390 (54) 2,363 305 (315) (665) 426 19 2,133 15,635 878 (1,747) (312) (522) 13,932 974 (917) (2,128) 45 (113) 11,793 1,832 233 (347) 69 (54) 1,733 450 (107) (594) (28) 1,454 988 115 (100) (21) 982 549 (471) 24 1,084 26,270 1,940 (4,177) (799) 23,234 3,101 (1,374) (4,183) (128) 20,650 15,352 2,828 (2,682) (548) 14,950 2,235 (1,253) (2,732) (133) 13,067 10,918 8,284 7,583
Freehold building $000 Computers $000 Total $000
Leasehold improvements $000
Office equipment $000
Furniture and fittings $000
Motor vehicles $000
Assets under construction $000
Cost At 1 January 2009 Additions Disposals/written off Transfers/reclassifications Translation adjustment At 31 December 2009 Additions Disposals/written off Dilution of a subsidiary to an associate Transfers/reclassifications Translation adjustment At 31 December 2010
1,643 (1,449) (47) (48) 99 (4) 95
2,566 12 (95) 2 (64) 2,421 463 (57) 2,827
Accumulated depreciation At 1 January 2009 Depreciation charge for the year Disposals/written off Transfers/reclassifications Translation adjustment At 31 December 2009 Depreciation charge for the year Disposals/written off Dilution of a subsidiary to an associate Translation adjustment At 31 December 2010
278 35 (266) (27) (14) 6 5 11
1,520 308 (25) 2 (48) 1,757 298 (64) 1,991
Carrying amount At 1 January 2009 At 31 December 2009 At 31 December 2010
1,365 93 84
1,046 664 836
The net carrying amount of property, plant and equipment under finance leases as at 31 December 2010 was $553,000 (2009: $286,000).
4. Property, plant and equipment (Contd) Leasehold Office improvements equipment $000 $000 Furniture and fittings $000 Computers $000 Motor vehicles $000 Total $000
Company Cost At 1 January 2009 Additions At 31 December 2009 Additions Disposal At 31 December 2010 Accumulated depreciation At 1 January 2009 Depreciation charge for the year At 31 December 2009 Depreciation charge for the year Disposal At 31 December 2010 Carrying amount At 1 January 2009 At 31 December 2009 At 31 December 2010
191 191 81 272
11 11 4 15
22 22 3 25
273 70 343 35 378
25 (25) -
497 70 567 148 (25) 690
132 19 151 34 185
10 1 11 1 12
22 22 22
108 50 158 65 223
15 (15) -
272 70 342 115 (15) 442
59 40 87
1 3
165 185 155
225 225 248
5.
Intangible assets Group 2010 $000 Goodwill on consolidation 33,522 2009 $000
synergy in motion
33,522
Impairment testing for goodwill For the purpose of impairment testing, goodwill is allocated to the Groups cash-generating unit (CGU) of ECS Technology (China) Limited group of companies being a group of entities operating in the same geographical location with similar principal activities. The recoverable amount of each CGU is based on its value-in-use. Value-in-use is determined by discounting the future cash flows generated from the continuing use of the unit and is based on the following key assumptions: Cash flows were projected based on actual operating results and the five-year business plan. The anticipated annual revenue growth included in the cash flow projections ranges from 12.3% to 14.5% (2009: 8.6% to 13.1%) per annum for the years 2011 to 2015 (2009: 2010 to 2014), giving an average annual growth in revenue of 13.1% (2009: 11.8%).
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5. Intangible assets (Contd) A pre-tax discount rate of 7.3% (2009: 7.2%) per annum was used. The discount rate used reflects the risk-free rate and the premium for specific risks relating to the business unit. Terminal value was not considered.
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The values assigned to the key assumptions represent managements assessment of future trends in the IT industry and are based on both external sources and internal sources and both past performance (historical data) and its expectations for market development. Group management believes that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount.
6.
Subsidiaries Company 2010 2009 $000 $000 97,426 (a) (b) 7,516 101,238 206,180 (a) 100,258 7,516 63,225 170,999
Note Unquoted equity shares, at cost Quasi-equity loans to subsidiaries, at cost Loans to subsidiaries
The quasi-equity loans to subsidiaries are unsecured and interest-free. The settlement of these loans is neither planned nor likely to occur in the foreseeable future. As these loans are, in substance, part of the Companys net investments in the subsidiaries, the loans are stated at cost. The loans to subsidiaries are unsecured, repayable on 16 September 2013 (2009: 17 January 2011) and bear interest at 3.49% (2009: 2.29% to 4.50%) per annum.
(b)
Details of the significant subsidiaries are set out below. Groups effective equity interest 2010 2009 % % 100 100
Name of company ECS Computers (Asia) Pte Ltd
Principal activities Provider of information technology products and services for IT infrastructure Distributor of information technology products
Country of incorporation/ business Singapore
synergy in motion
ECS Indo Pte Ltd
Singapore
89.12
89.12
The Value Systems Co., Ltd (a) Provider of information technology products and services for IT infrastructure ECS ICT Berhad (a) ECS Technology (China) (a) Limited Investment holding Investment holding, provider of information technology products and services for IT infrastructure Investment holding Investment holding
Thailand
100
100
Malaysia Hong Kong
100
60 100
EC Sure Holdings (Thailand) Co., Ltd ECS Infocom (Phils) Pte. Ltd.
Thailand Singapore
99.9 100
99.9 100
6. Subsidiaries (Contd) Details of the significant subsidiaries are set out below. Country of incorporation/ business Groups effective equity interest 2010 2009
Name of company
Principal activities
Subsidiaries of ECS Computers (Asia) Pte Ltd Pacific City (Asia Pacific) Pte Ltd Retail of information technology products, IT equipment and accessories Provider of information technology products and services for IT infrastructure Singapore 100 100
ECS Enterprise Solutions Pte Ltd
Singapore
100
100
Subsidiary of ECS Indo Pte Ltd PT ECS Indo Jaya (a) Distributor of information technology products Indonesia 89.12 89.12
Subsidiaries of ECS Technology (China) Limited ECS (Shanghai) Management Co., Ltd (formerly ECS International Trading (Shanghai) Co., Ltd) (a) ECS China Technology (Shanghai) Co., Ltd
(a)
Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure
Peoples Republic of China Peoples Republic of China Hong Kong
100
100
100
100
EIT info-tech Limited (a)
100
100
ECS Technology (HK) (a) Co., Limited
Hong Kong
100
100
(a)
Audited by other member firms of KPMG International for consolidation purposes.
KPMG LLP Singapore is the auditor of all the Singapore incorporated subsidiaries.
7.
Interest in associates Group 2010 $000 Investment in associates Loan to associate 41,000 585 41,585 2009 $000 6,691 632 7,323 2010 $000 3,320 3,320 Company 2009 $000 -
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7. Interest in associates (Contd) The loan to an associate is denominated in United States dollars, unsecured and interest-free. Settlement is neither planned nor likely to occur in the foreseeable future. As this loan is, in substance, part of the Companys net investment in the associate, it is stated at cost. Details of the associates are as follows: Country of incorporation Effective equity held by the Group 2010 MSI-ECS Phils., Inc. ECS ICT Berhad (ECSB) * Pelayo Teodoro Santamaria & Co. KPMG Malaysia Philippines Malaysia 49.99% 41% 2009 49.99% -*
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Name of associate
Audited by
Previously held by the Group as a 60% owned subsidiary.
ECSB is listed on the Main Market of Bursa Malaysia Securities. Based on its closing price at the reporting date, the fair value of the Groups investment in ECSB is $27,495,000. MSI-ECS Phils., Inc. is not listed. Included in the investment in ECSB is goodwill on acquisition and customer relationships amounting to $6,388,000 and $4,157,000 respectively. These amounts have been determined based on a fair valuation of ECSBs identifiable net assets in accordance with the requirement of FRS 28. The intangible asset relating to customer relationships is amortised over an estimated useful life of 5 years. The summarised financial information below relating to the associates are not adjusted for the percentage of ownership held by the Group. 2010 $000 Revenue Profit after taxation Total assets Total liabilities Impairment testing for investment in an associate As the market value of the Groups shareholding in ECSB at reporting date is below the carrying value of the Groups investment in ECSB, management performed an impairment assessment to determine the recoverable value of its investment in ECSB. The recoverable amount of ECSB is based on its value-in-use. Value-in-use is determined by discounting the future cash flows generated from the continuing use of ECSB and is based on the following key assumptions: Cash flows are projected based on actual operating results and expected growth anticipated by the Group. The anticipated annual revenue growth included in the cash flow projections ranges from 10.1% to 15.5% per annum for the years 2011 to 2015, giving an average annual growth in revenue of 11.3%. A pre-tax discount rate of 13.8% per annum was used. The discount rate used reflects the risk-free rate and a premium for specific risks relating to ECSB. Terminal value was based on ECSBs discounted net asset value at the end of the projection period. 711,266 15,153 176,491 98,954 2009 $000 171,650 1,838 54,006 40,953
synergy in motion
The values assigned to the key assumptions represent managements assessment of future trends in the IT industry and are based on both external sources and internal sources and both past performance (historical data) and its expectations for market development. Group management believes that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount.
8.
Deferred tax
Movements in deferred tax assets and liabilities during the year are as follows:-
Group
At 1/1/2009 $000
Overprovided in prior years $000
Recognised in income statement (note 25) $000 Translation adjustment $000 At 31/12/2009 $000 Change in tax rates $000 Translation adjustment $000 At 31/12/2010 $000
Recognised in income statement (note 25) $000
Dilution of a subsidiary to an associate $000
Deferred tax assets (119) 6,619 160 994 (615) (226) 6,932
Provisions
4,257
36
2,445
Deferred tax liabilities 29 (1,880) (677) 67 123 (2,367)
Accelerated tax depreciation
(886)
31
(1,054)
Company
Deferred tax liabilities (27) (27)
Accelerated tax depreciation
(27)
synergy in motion
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9. Inventories Group 2010 $000 Trading inventories Goods in transit Allowance for obsolete inventories Comprises:Inventories, at cost Inventories, at net realisable value 36,697 171,066 207,763 30,308 187,410 217,718 177,606 36,697 214,303 (6,540) 207,763 2009 $000 195,314 30,308 225,622 (7,904) 217,718
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Costs of sales amounted to $3,034,600,000 (2009: $3,177,793,000) represent trading inventories recognised in profit for the year.
10. Trade and other receivables Group Note Trade receivables Bills receivable Amounts due from affiliated companies Allowance for doubtful receivables Amount due from related corporations Deposits and other receivables Loans and receivables Prepayments 11 12 2010 $000 515,154 3,632 8,182 526,968 (14,140) 512,828 8,315 521,143
synergy in motion
Company 2009 $000 2010 $000 36,648 36,648 2 36,650 426 37,076 2009 $000 53,416 53,416 31 53,447 79 53,526
484,190 5,208 21,463 510,861 (11,812) 499,049 1,472 500,521 10,948 511,469 37,073 548,542
14,790 535,933 18,704 554,637
An affiliated company is a company, other than a related corporation, which directly or indirectly through one or more intermediaries, is under common significant influence. The Group and the Companys exposure to credit, currency and interest rate risks, and impairment losses related to trade and other receivables are disclosed in note 21.
11. Amounts due from/to related corporations Group Note Amounts due from subsidiaries Dividend receivable Non-trade receivables Loans receivable (current) Amounts due from associate Dividend receivable Non-trade receivables Loans receivable 1,514 6,801 8,315 10 Amounts due to subsidiaries Non-trade payables Loans payable 19 29 5,070 5,099 1,959 1,405 3,364 8,315 846 626 1,472 1,472 1,514 6,801 8,315 36,648 626 626 53,416 9,250 3,875 15,208 28,333 17,913 4,478 30,399 52,790 2010 $000 2009 $000 2010 $000 Company 2009 $000
The loans due from subsidiaries and associate are unsecured, repayable on demand and bear interest at rates ranging from 1.93% to 10.00% (2009: 2.04% to 5.50%) per annum. The non-trade balances are unsecured, interest-free and repayable on demand. The loans payable are unsecured, bear interest at 1.64% to 4.44% (2009: 2.25% to 4.78%) per annum and are repayable on demand. There is no allowance made for doubtful receivables arising from the outstanding balances.
12. Deposits, prepayments and other receivables Group Note Deposits Recoverables Tax recoverables Other receivables Call option Deposits and other receivables (a) (a) 10 2010 $000 3,493 1,459 4,960 3,899 979 14,790 2009 $000 1,586 4,908 2,362 1,419 673 10,948 Company
synergy in motion
2010 $000 2 2
2009 $000 15 16 31
On 4 January 2006, a subsidiary entered into a call option agreement with a shareholder of the associate for US$1 cash consideration which will entitle the subsidiary to acquire additional 10% equity interest in the associate. The call option is exercisable beginning 4 July 2008 and ending on the date falling three years thereafter, unless otherwise further extended by the shareholder in writing, at an option price equivalent to US$450,000. The fair value of the call option as at the reporting date has been recognised as an option asset with its corresponding change in fair value during the year recognised in the income statement.
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13. Cash and cash equivalents Group Company
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2010 $000 Cash at bank and in hand Fixed deposits Cash and cash equivalents 88,768 3,732 92,500
2009 $000 51,117 51,117
2010 $000
2009 $000 2,354 2,354
8,833 8,833
The weighted average effective interest rates per annum relating to cash and cash equivalents, excluding bank overdrafts, at the reporting date for the Group range from 0.10% to 1.35% (2009: 0.10% to 1.17%) per annum. Interest rates reprice at weekly to monthly intervals. The Group and the Companys exposure to currency risks are disclosed in note 21.
14. Share capital Group and Company
2010 000 Issued and fully paid, with no par value: At 1 January and 31 December
No. of shares
2009 000
365,360
365,360
All shares rank equally with regards to the Companys residual assets. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company. The Group issued share options during the year (see note 16).
15. Reserves Group Company
Note
synergy in motion
2010 $000 (12,421) 13,153 5,152 177,895 183,779
2009 $000
2010 $000 13,153 11,321 24,474
2009 $000 -
Currency translation reserve Dividend reserve General reserve Accumulated profits
(a) (b) (c)
(7,435) 10,961 3,775 139,412 146,713
10,961 14,928 25,889
(a)
Currency translation reserve The currency translation reserve of the Group comprises foreign exchange differences arising from the translation of the financial statements of foreign operations.
(b)
Dividend reserve The dividend reserve of the Group represents dividends proposed which are subject to approval of the shareholders at a general meeting.
15. Reserves (Contd) (c) General reserve According to the current Peoples Republic of China (PRC) Company Law, the PRC subsidiaries of the Group are required to transfer 10% of their profit after taxation to statutory surplus reserve until the surplus reserve balance reaches 50% of the registered capital. For the purpose of calculating the amount to be transferred to reserve, the profit after taxation is the amount determined under PRC accounting standards. The amount of transfer to this reserve has to be made before profit distribution to shareholders. Legal reserve is set up under the provision of the Civil and Commercial Code of Thailand, which requires that a company shall allocate not less than 5% of its net profit appropriated for payment of dividend to a reserve account (legal reserve) upon each dividend distribution, until the balance reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.
16. Equity compensation benefits The Company The ECS Share Option Scheme II (Scheme II) was approved and adopted by its members at an Extraordinary General Meeting held 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 the Company. The above scheme is administered by the Compensation Committee (the Committee) which comprises the following directors:Koh Soo Keong (Chairman) Leong Horn Kee Tan Hup Foi Information regarding the scheme is set out below:Scheme II (a) The exercise price of the options exercisable pursuant to Scheme II is set either at: (b) a price equal to the average of the last dealt price for the three consecutive trading days immediately preceding the grant of the option; or a discount to the market price not exceeding 20% of the market price in respect of that option.
(c)
The scheme will continue to be in force at the discretion of the Committee, subject to a maximum period of 10 years commencing 13 December 2000.
On 15 October 2010, the Group granted 13,770,000 share options pursuant to the rules of the ECS Share Option Scheme II. The options have an exercise price of $0.550 per share; a vesting period of 1 year from date of grant; and can be exercised within 5 years from date of grant for non-executive directors and 10 years from date of grant for executive directors and employees.
synergy in motion
Options granted are exercisable at any time after the first anniversary of the grant date and in the case of options with exercise price set at a discount, at any time after the second anniversary of date of grant. Options granted to employees and executive directors are exercisable up to the tenth anniversary of date of grant and those granted to non-executive directors are exercisable up to the fifth anniversary of the date of grant.
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16. Equity compensation benefits (Contd) At 31 December 2010, details of the options granted were as follows:Options Options Options Exercise outstanding at forfeited outstanding at price per 1 January Options Options or 31 December share 2010 granted exercised lapsed 2010
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Date of grant of options Executive directors and employees 15/10/2010 Non-executive directors 15/10/2010
Exercise period
$0.550
11,570,000
11,570,000
15/10/2011 to 15/10/2021
$0.550
2,200,000
2,200,000
15/10/2011 to 15/10/2016
The fair value of the employee share options is measured using quoted share price on measurement date and exercise price of the instrument. ECS Indo Pte Ltd On 16 October 2009, the subsidiary granted 120,000 share options to four senior employees of a subsidiary. Each option is, upon full payment of the exercise price, convertible into one new ordinary share of the company. The options are exercisable at any time within 3 years from the grant date and are settled by physical delivery of shares. At 31 December 2010, details of the options granted to senior employees were as follows:Options Options Exercise outstanding at Options outstanding at price per 1 January Options Options forfeited 31 December share 2010 granted exercised or lapsed 2010 US$1.8156 113,392 113,392
Date of grant of options 16/10/2009
Exercise period 16/10/2009 to 16/10/2012
The fair value of such equity-settled share based payments was determined based on adjusted market comparables.
synergy in motion
17. Financial liabilities Group Company
Note Non-current liabilities Unsecured bank loans Finance lease liabilities Current liabilities Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities Total financial liabilities
2010 $000 101,238 268 101,506 45,641 77,518 167 5,628 128,954 230,460
2009 $000
2010 $000 101,238 101,238 2,763 5,591 8,354 109,592
2009 $000
63,225 148 63,373 26,027 85,828 81 1,905 113,841 177,214
63,225 63,225 15,550 1,827 17,377 80,602
(a)
17. Financial liabilities (Contd) (a) A negative pledge has been given in respect of all of the assets of certain subsidiaries with a total net book value at 31 December 2010 of $256,220,889 (2009: $245,541,073). Included in unsecured bank loans is a syndicated loan amounting to $104 million (2009: $77 million). The syndicated loan bears interest at 1.70% to 2.99% (2009: 2.29% to 4.50%) per annum. The short term portion of the syndicated loan amounted to $2,762,500 (2009:$14,050,000) and is repayable on 17 March 2011 (2009: 17 January 2010). The long term portion of the syndicated loan amounted to $101,237,500 (2009: $63,225,000) and is due on 30 August 2013 (2009: 17 January 2011). The loans are guaranteed by certain subsidiaries. Finance lease liabilities At 31 December, the Group has obligations under finance leases that are payable as follows: Principal $000 2010 Repayable within 1 year Repayable after 1 year but within 5 years 167 268 435 2009 Repayable within 1 year Repayable after 1 year but within 5 years 81 148 229 Terms and debt repayment schedule Terms and conditions of financial liabilities are as follows: Nominal Currency Group Unsecured bank loans and trade financing - floating rate - floating rate - floating rate - floating rate - floating rate Finance lease liabilities Derivative liabilities SGD USD RMB THB RM IDR 1.29% - 1.45% 4.86% - 5.10% 1.88% - 2.20% 7.00% 2011 2011 2011 2011 - 2014 1,524 162,774 26,903 33,196 224,397 546 5,628 230,571 Company Unsecured bank loans - floating rate - floating rate Derivative liabilities USD 2.99% 2013 104,001 104,001 5,591 109,592 104,001 104,001 5,591 109,592 1,500 77,275 78,775 1,827 80,602 1,500 77,275 78,775 1,827 80,602 1,524 162,774 26,903 33,196 224,397 435 5,628 230,460 9,200 96,577 25,720 22,386 21,197 175,080 297 1,905 177,282 9,200 25,720 22,386 21,197 175,080 229 1,905 177,214 1.34% - 3.91% 2011 2013 96,577 interest rate 31 December 2010 31 December 2009 Face Carrying value amount $000 $000 25 43 68 106 191 297 44 67 111 211 335 546 Interest $000 Payments $000
Year of maturity
Face Carrying value amount $000 $000
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18. Deferred income Deferred income relates to fees billed in advance on service maintenance contracts and consists of: Group
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2010 $000 Current portion Non-current portion 872 570 1,442
2009 $000 358 840 1,198
19. Trade and other payables Group Company
Note Trade payables Accruals and other payables Amounts due to subsidiaries 20 11
2010 $000 373,520 31,882 405,402
2009 $000
2010 $000 3,400 5,099 8,499
2009 $000 4,422 3,364 7,786
359,400 50,306 409,706
The Group and the Companys exposure to liquidity and currency risks related to trade and other payables is disclosed in note 21.
20. Accruals and other payables Group Company
2010 $000 Accrued operating expenses Deposits received Dividend payable to minority shareholders Other payables Interest payables
synergy in motion
2009 $000 5,655 1,810 5,216 547
2010 $000 2,440 122 838 3,400
2009 $000 4,273 149 4,422
20,464 5,172 5,057 1,189 31,882
37,078
50,306
21. Financial instruments Credit risk The maximum amount of financial assets, representing the maximum exposure to credit risk, at the reporting date was: Group Company
2010 $000 Non-current loans to subsidiaries Loans and receivables Cash and cash equivalents 535,933 92,500 628,433
2009 $000 -
2010 $000 101,238 36,650 8,833 146,721
2009 $000
63,225 53,447 2,354 119,026
511,469 51,117 562,586
21. Financial instruments (Contd) The maximum exposure to credit risk for loans and receivables at the reporting date by geographic region was: Group Company
2010 $000 China Thailand Malaysia Singapore Indonesia Philippines 331,118 109,575 45,022 41,903 8,315 535,933
2009 $000
2010 $000 36,650 36,650
2009 $000 -
251,405 92,143 72,394 41,788 52,267 1,472 511,469
53,447 53,447
The maximum exposure to credit risk for loans and receivables at the reporting date by type of customer was: Group Company
2010 $000 Value added resellers System integrators Direct accounts Retailers Others 59,092 97,187 42,112 205,849 131,693 535,933 Impairment losses The aging of loans and receivables at the reporting date was:
2009 $000
2010 $000 36,650 36,650
2009 $000 -
52,706 76,056 45,932 173,184 163,591 511,469
53,447 53,447
Group 2010 $000 Gross Not past due Past due 0 30 days Past due 31 120 days Past due 121 365 days More than one year Impairment losses Not past due Past due 0 30 days Past due 31 120 days Past due 121 365 days More than one year (1,254) (4,973) (7,913) (14,140) (1,161) (1,683) (8,968) (11,812) 429,320 72,959 27,195 11,884 8,715 550,073 392,033 90,487 25,746 3,637 11,378 523,281 36,650 36,650 2009 $000 2010 $000
Company 2009 $000 53,447 53,447 synergy in motion

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21. Financial instruments (Contd) The movements in the allowance for impairment in respect of loans and receivables during the year were as follows: Group Company
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Note At 1 January Utilised during the year Allowances made during the year Dilution of subsidiary to an associate Translation differences on consolidation At 31 December
2010 $000 11,812 (243) 3,589 (628) (390) 14,140
2009 $000
2010 $000 -
2009 $000 -
23(b)
11,165 (1,358) 2,530 (525) 11,812
Based on historical default rates, the Group believes that no further impairment allowance is necessary in respect of loans and receivables as at 31 December 2010 and 2009. These receivables are mainly arising with customers that have a good record with the Group. Liquidity risk The following are the contractual maturities of financial liabilities, including estimated interest payments: Cash flows Carrying amount $000 Group 2010 Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities - Inflow - Outflow Trade and other payables 2009 Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities - Inflow - Outflow Trade and other payables Company 2010 Unsecured bank loans Derivative liabilities - Outflow Trade and other payables 2009 Unsecured bank loans Derivative liabilities - Outflow Trade and other payables 104,001 5,591 8,499 118,091 78,775 1,827 7,786 88,388 (113,118) (5,591) (8,499) (127,208) (79,594) (1,827) (7,786) (89,207) (5,835) (5,591) (8,499) (19,925) (15,654) (1,827) (7,786) (25,267) (107,283) (107,283) (63,940) (63,940) 45,641 178,756 435 5,628 405,402 635,862 26,027 149,053 229 1,905 409,706 586,920 (45,641) (188,492) (435) 15,404 (21,032) (405,402) (645,598) (26,027) (150,183) (229) 33,967 (35,872) (409,706) (588,050) (45,641) (81,209) (167) 15,404 (21,032) (405,402) (538,047) (26,027) (86,243) (81) 33,967 (35,872) (409,706) (523,962) (107,283) (268) (107,551) (63,940) (148) (64,088) Contractual cash flows $000 Within 1 year $000 Between 1 to 5 years $000
synergy in motion
It is not expected that the cash flow included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
21. Financial instruments (Contd) Exposure to currency risk The Groups exposure to foreign currency risk based on notional amounts was as follows: 2010 2009
USD $000 Group Loans and receivables Cash and cash equivalents Unsecured bank loans/trade financing Trade and other payables Forward exchange contracts and hybrid swaps Loans receivable from associates Finance lease liabilities 76,670 10,243 (114,722) (77,111) 112,904 585 8,569
IDR $000
PHP $000 6,801 6,801 2010
USD $000 12,455 8,157 (85,424) (42,232) 110,115 632 3,703
IDR $000 2,861 157 (56) (229) 2,733 2009
7,860 1,026 (7,249) (215) (435) 987
USD $000 Company Loan receivables non-current current Cash and cash equivalents Unsecured bank loans/trade financing Forward exchange contracts and hybrid swaps
PHP $000
USD $000
101,238 8,095 3,898 (104,001) 97,500 106,730
6,801 6,801
63,225 27,401 2,154 (77,275) 77,275 92,780
Sensitivity analysis A 1% strengthening of the Singapore dollar against the above currencies at 31 December would have increased/(decreased) profit or loss before tax by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for 2009. Group Company
2010 $000 USD IDR PHP (86) (10) (68)
2009 $000 742 (27) -
2010 $000 (1,067) (68)
2009 $000 (15) -
A 1% weakening of the Singapore dollar against the above currencies at 31 December would have had the following effect as shown below, on the basis that all other variables remain constant. Group Company
2010 $000 USD IDR PHP
Profit or loss
2009 $000 31 27 -
2010 $000
Profit or loss
2009 $000 928 -
86 10 68
1,067 68
synergy in motion
Profit or loss
Profit or loss
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21. Financial instruments (Contd) Interest rate risk The Groups exposure to market risk for changes in interest rates relates primarily to the Groups debt obligations. The Group manages some of its exposure to floating rate interest by entering into interest rate swaps and hybrid swaps. At reporting date, the interest rate profile for the interest-bearing financial instruments was: Group Carrying amount 2010 2009 $000 $000 Fixed rate instruments Financial liabilities Variable rate instruments Financial assets Financial liabilities (435) (229) Company Carrying amount 2010 2009 $000 $000 -
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6,801 (230,025) (223,224)
(176,985) (176,985)
123,247 (114,662) 8,585
93,624 (82,007) 11,617
Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss. Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased/ (decreased) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2009. Group Profit or loss Group 31 December 2010 Variable rate instruments Interest rate swaps and hybrid swaps Cash flow sensitivity (net) 31 December 2009 Variable rate instruments Interest rate swaps and hybrid swaps Cash flow sensitivity (net) Fair values The carrying amounts of the Group and the Companys financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2010. Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1 : quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2 : inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs). 100 bp increase $000 (2,232) 1,338 (894) 100 bp decrease $000 2,232 (1,338) 894 Company Profit or loss 100 bp increase $000 86 1,338 1,424 100 bp decrease $000 (86) (1,338) (1,424)
synergy in motion
(1,546) 984 (562)
1,546 (984) 562
116 984 1,100
(116) (984) (1,100)
21. Financial instruments (Contd) Group 31 December 2010 Derivative liabilities 31 December 2009 Derivative liabilities Level 1 $000 Level 2 $000 (5,628) Level 3 $000 Total $000 (5,628)
Level 1 $000 -
(1,905) Level 2 $000 (5,591)
Level 3 $000 -
(1,905) Total $000 (5,591)
Company 31 December 2010 Derivative liabilities 31 December 2009 Derivative liabilities
(1,827)
(1,827)
22. Revenue Group
2010 $000 Sale of IT products IT services 3,060,912 24,461 3,085,373
2009 $000
3,222,173 29,851 3,252,024
Transactions within the Group have been excluded in arriving at revenue for the Group.
23. Profit from operations The following items have been included in arriving at profit from operations:(a) Staff costs 2010 $000 Wages and salaries Contributions to defined contribution plans Government grants Jobs Credit Scheme, offset against wages and salaries 51,733 7,346 (99) 58,980
Group
56,118 6,577 (567) 62,128
(b)
Other expenses/(income) 2010 $000
Group
2009 $000 879 (344) (302) 763 2,530
Exchange (gains)/ loss, net Interest income - banks - associate Allowances made for - obsolete inventories - doubtful trade receivables
(1,403) (326) (629) 340 3,589
synergy in motion
2009 $000
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23. Profit from operations (Contd) Group
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2010 $000 Gain on dilution and partial disposal of a subsidiary to an associate Fair value adjustment of remaining interest in an associate Directors fees Inventories written off Bad debts written off/(back), net Loss/(gain) on disposal of property, plant and equipment Equity-settled share-based payment Property, plant and equipment written-off Non-audit fees to auditors of the Company Net fair value loss on financial instruments Operating lease expenses Other asset written off (4,569) (8,051) 264 24 209 54 15 54 4,381 5,698 140
2009 $000 190 1,017 (284) (45) 410 6 110 1,880 5,927 13
24. Finance costs Group 2010 $000 Recognised in profit for the year Interest paid and payable on - bank overdrafts - finance leases - short-term loans 2009 $000
6 42 8,573 8,621
9 25 5,273 5,307
25. Income tax expense Group
2010 $000
synergy in motion
2009 $000
Tax expense Current tax expense - Current year - (Over)/under provided in prior years Deferred tax expense - Movements in temporary differences - Changes in tax rates - Over provided in prior years
13,876 (504) 13,372 (317) (160) (477) 12,895
15,303 204 15,507 (1,306) (85) (67) (1,458) 14,049
Income tax expense for the year
25. Income tax expense (Contd) Group
2010 $000 Reconciliation of effective tax rate Profit before tax Income tax at 17% (2009: 17%) Non-deductible expenses Income not subject to tax Effect of different tax rates in foreign jurisdictions Changes in tax rates (Over)/under provided in prior years Utilisation of previously unrecognised tax losses Withholding taxes on profits from PRC subsidiaries Share of profit of associates, net of tax Others Income tax expense for the year 67,065 11,401 1,563 (2,517) 3,346 (160) (504) (142) 677 (1,017) 248 12,895
2009 $000
57,173 9,719 1,209 (1,127) 3,180 (85) 137 (133) 1,208 (203) 144 14,049
26. Earnings per share Group
2010 Basic earnings per share is based on:Net profit for the year ($000) Number of shares outstanding at the beginning of the year (000) Weighted average number of shares issued during the year (000) Weighted average number of shares in issue during the year (000) 52,998 365,360 365,360
2009
38,181 365,360 365,360
For the purpose of calculation of the diluted earnings per ordinary share, the weighted average number of ordinary shares in issue during the year is adjusted to take into account the dilutive effect arising from the dilutive share options, with the potential ordinary shares weighted for the period outstanding: Number of shares 2010 2009 000 000 Weighted average number of shares used in calculation of basic earnings per share Weighted average number of dilutive potential ordinary shares Weighted average number of ordinary shares (diluted) 365,360 3,443 368,803 365,360 365,360
27. Operating segments A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment information is presented in respect of the Groups business and geographical segments. The primary format, business segments, is based on the Groups management and internal reporting structure.
synergy in motion
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27. Operating segments (Contd) Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assets and related revenue, interest in the associate, interest-bearing loans, borrowings and related expenses, income tax assets and liabilities, negative goodwill and corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period. The main business segments of the Group are the following:Segments Enterprise systems IT services Distribution Principal activities Provider 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 the commercial and consumer markets.
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Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Groups CEO. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Enterprise Systems 2010 2009 $000 $000 External revenue 1,132,511 1,187,926 Depreciation and amortisation (820) (1,033) Reportable segment profit before interest and tax 30,326 28,816 Reportable segment assets 283,659 273,463 Capital expenditure 922 633 Reportable segment liabilities 157,933 148,793 IT Services 2010 2009 $000 $000 24,461 (18) Distribution 2010 2009 $000 $000 Consolidated 2010 2009 $000 $000
29,851 1,928,401 2,034,247 3,085,373 3,252,024 (26) (1,397) (1,769) (2,235) (2,828)
1,161 5,103 38 2,373
1,848 6,550 31 3,014
25,597 472,934 2,140 246,536
30,621 478,559 1,276 259,096
57,084 761,696 3,100 406,842
61,285 758,572 1,940 410,903
Reconciliations of reportable segments profit or loss, assets and liabilities and other material items
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2010 $000 Profit or loss Total profit for reportable segments Unallocated amounts: - Finance costs - Gain on dilution and partial disposal of a subsidiary to an associate - Fair value adjustment of remaining interest in an associate Share of profit of associate Consolidated profit before tax Assets Total assets for reportable segments Other assets Investments in associate Other unallocated amounts Consolidated total assets Liabilities Total liabilities for reportable segments Other unallocated amounts Consolidated total liabilities 57,084 (8,621) 4,569 8,051 5,982 67,065 761,696 41,585 141,241 944,522 406,842 239,993 646,835
2009 $000 61,285 (5,307) 1,195 57,173 758,572 290 7,323 107,230 873,415 410,903 185,799 596,702
28. Geographical segments The Group operates principally in North Asia and South East Asia including Singapore. In presenting information on the basis of geographic segments, segment revenue is based on the geographic location of operations. Segment assets are based on the geographic location of the assets. Revenue Non-current assets 2010 2009 $000 $000 35,904 4,085 1,116 41,105 35,906 4,626 1,564 42,096
2010 $000 North Asia South East Asia (excluding Singapore) Singapore 1,779,031 998,414 307,928 3,085,373
2009 $000
1,685,235 1,285,327 281,462 3,252,024
29. Dilution and partial disposal of a subsidiary to an associate On 15 April 2010, the Groups subsidiary, ECSB issued 28,000,000 new ordinary shares at RM1.46 per share in connection with its listing on the Main Market of Bursa Malaysia Securities. On the same day, the Group disposed 7,200,000 shares in ECSB at the same price. The Groups interest in ECSB was reduced to 40% and ECSB ceased to be a subsidiary. Recognised values on acquisition $000 1,451 34,881 5,543 26 611 68,138 10,226 (52,015) (21,841) (1,375) (1,436) (2,658) 41,551 (16,620)
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Pre-acquisition carrying amounts $000 Net assets disposed and deemed disposed Property, plant and equipment Inventories Intangible assets Club membership Deferred tax assets Trade and other receivables Cash and cash equivalents Trade and other payables Financial liabilities Current tax payable Deferred tax liabilities Non-controlling interests of subsidiary Net identifiable assets (100%) Non-controlling interests (40%) Groups share of net identifiable assets (60%) De-recognition of translation reserves Gain on disposal and dilution of equity shareholdings in ECSB Deemed goodwill on acquisition Transfer of remaining 40% interest in net assets to interest in associates Consideration received for disposal of shares in ECSB, satisfied in cash Cash disposed Net cash outflow 1,451 34,881 26 611 68,138 10,226 (52,015) (21,841) (1,375) (50) (2,658) 37,394
Fair value adjustments $000 5,543 (1,386) 4,157
24,931 (534) 4,569 6,388 (30,851) 4,503 (10,226) (5,723)
In accordance with the adoption of FRS 27 set out in note 2(e)(ii), the Group re-measured its remaining interests in ECSB at fair value upon losing control on 15 April 2010. This resulted in an increase of the Groups other income and profit before tax by $8,051,000 in 2010. Correspondingly, earning per share for the current year increased by 2.2 cents. Subsequent to 15 April 2010, the Group acquired another 1,222,500 shares in ECSB for a cash consideration of $647,000, thereby increasing its interest in the associate by 1% to 41% as at 31 December 2010.
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30. Determination of fair values A number of the Groups accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods or as disclosed in the notes specific to that asset or liability. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (i) Inventories The fair value of inventories is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories. (ii) Trade and other receivables The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. (iii) Derivatives The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds). The fair value of interest rate swaps is based on broker quotes. These quotes are tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of each contract and using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take into account of the credit risk of the Group entity and counterparty when appropriate. (iv) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases, the market rate of interest is determined by reference to similar lease agreements.
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31. Financial risk management Overview Risk management is integral to the whole business of the Group. The management continually monitors the Groups risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Groups activities.
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The Audit Committee oversees how management monitors compliance with the Groups risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. Credit risk The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. If the customers are independently rated, these ratings are used. Otherwise, the credit quality of customers is assessed after taking into account its financial position and past experience with the customers. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures.
31. Financial risk management (Contd) The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. Cash and fixed deposits are placed with banks and financial institutions which are regulated. Liquidity risk The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Groups operations and to mitigate the effects of fluctuations in cash flows. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition, as at the reporting date, the Group maintains various lines of credit, amounting to $599 million (2009: $410 million), of which $483 million (2009: $333 million) are uncommitted. Market risk Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates will affect the Groups income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Foreign currency risk The Group incurs foreign currency risk mainly from foreign currency denominated sales, purchases and borrowings that are denominated in currencies other than the various functional currencies of Group entities. The currencies giving rise to this risk are primarily the United States dollar (USD), Philipines Peso (PHP) and Indonesian Rupiah (IDR). Movements in their exchange rates against the Singapore dollar could result in the Group incurring foreign exchange losses/gains. The Group recognises that any significant fluctuations in the USD dollar may affect the Groups foreign currency risk. As a result, the Group actively monitors its exposure and uses forward foreign exchange contracts and hybrid swaps to hedge against USD dollar exposures, as and when necessary and where possible. In view of the nature of the Groups business which spans several countries, foreign exchange risks will continue to be an integral aspect of the Groups risk profile in the future.
The Group hedges its exposure to changes in interest rates on certain borrowings by entering into interest rate swaps and hybrid swaps. Capital management The Boards policy is to maintain a sound capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders equity excluding minority interest. The Board also monitors the level of dividends to ordinary shareholders. The Group has a share buy-back mandate to purchase its own shares on the market; the timing of these purchases depends on market prices. Primarily, the shares purchased are intended to be used for issuing shares under the Groups share option programme. Buy and sell decisions are made on a specific transaction basis by the Board. No shares have been purchased to date. There were no changes in the Groups approach to capital management during the year.
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Interest rate risk
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32. Commitments Operating lease commitments At 31 December, the Group has commitments for future minimum lease payments under non-cancellable operating leases as follows:Group
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2010 $000 Payable: Within 1 year After 1 year but within 5 years 3,686 3,877 7,563
2009 $000 4,637 3,393 8,030
The Group leases office premises and warehouse facilities under operating leases. The leases typically run for an initial period of three years, with an option to renew the lease after that date.
33. Contingent liabilities (unsecured) Guarantees issued At 31 December, 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 and associates amounted to $299,038,000 (2009: $203,064,000), of which the amount utilised was $130,217,000 (2009: $90,777,000). The guarantees are renewed on a yearly basis; and Guarantees given to financial institutions by the Company in respect of credit facilities extended to certain subsidiaries and associates amounted to $225,847,000 (2009: $177,017,000), of which the amount utilised was $84,297,000 (2009: $75,135,000). The guarantees are renewed on a yearly basis. The Company has accounted for these corporate guarantees as insurance contracts. There are no terms and conditions attached to the guarantee contracts that would have a material effect on the amount, timing and uncertainty of the Groups future cash flows. The Company has undertaken to provide continuing financial support to certain subsidiaries to enable them to continue to operate as going concerns and to meet their obligations as and when they fall due.
(b)
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34. Related parties
Transactions with directors and other key management personnel
Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group. The directors and directors of subsidiaries and members of the management team are considered as key management of the Group.
34. Related parties (Contd) Key management personnel compensation comprises remuneration of directors and other key management personnel as follows: Group Company 2009 $000 1,493 6 732 19 316 8 2,574
2010 $000 Directors of the Company - Short-term employment benefits - Other long-term benefits Directors of the subsidiaries - Short-term employment benefits - Other long-term benefits Executive officers - Short-term employment benefits - Other long-term benefits 3,948 34 2,255 43 2,983 51 9,314
2009 $000
2010 $000 2,323 5 922 20 3,270
2,883 102 2,465 121 2,989 57 8,617
During the year, certain of its subsidiaries have, in the normal course of business entered into the following transactions with companies in which certain directors have interests: Group 2010 $000 Purchase of information technology products and services Sales of information technology products and services Rental of office premises 612 22,366 647 2009 $000 8,350 11,784 641
The directors and other key management personnel participate in the Companys share option plans, the terms and conditions of which are stated in note 16. Other related party transactions 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 financial and operating decisions, 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. Other than disclosed elsewhere in the financial statements, during the financial year, there were the following significant transactions with related parties, based on terms agreed by the parties:Group 2010 $000 Subsidiaries - interest expense - interest income - management fee income - dividend income Affiliate - sales Associates - interest income - service fee income - management fee income - dividend income 2009 $000 2010 $000 (418) 3,532 2,680 9,237 Company 2009 $000 (1,009) 3,764 2,678 18,527
48,998
78,771
629 476 987 845
552 -
629 476 987 845
552 -
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sHareHoLDings statistics
as at 15 marcH 2011
Class of shares Voting rights - Ordinary shares - On a show of hands : One vote for each member On poll : One vote for each ordinary share
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ANALYSIS OF SHAREHOLDINGS Range of Shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above No. of Shareholders 8 382 231 4 625 % 1.28 61.12 36.96 0.64 100.00 No. of Shares 2,285 2,077,000 18,187,796 345,093,093 365,360,174 % 0.00 0.57 4.98 94.45 100.00
Based on information available to the Company as at 15 March 2011, 10.34% of the issued ordinary shares of the Company are held by the public and therefore Rule 723 of the Listing Manual is complied with. TOP 20 SHAREHOLDERS
No. Name of Shareholder 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

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No. of Shares 328,078,093 12,506,000 2,814,000 1,695,000 790,000 754,000 750,000 723,000 641,000 628,796 619,000 500,000 483,000 437,000 424,000 388,000 363,000 308,000 300,000 257,000 353,458,889
% 89.80 3.42 0.77 0.46 0.22 0.21 0.21 0.20 0.18 0.17 0.17 0.14 0.13 0.12 0.12 0.11 0.10 0.08 0.08 0.07 96.76
Raffles Nominees (Pte) Ltd Citibank Nominees Singapore Pte Ltd DBS Nominees Pte Ltd UOB Kay Hian Pte Ltd Koh Seng Chuah Phillip Securities Pte Ltd Mayban Nominees (S) Pte Ltd United Overseas Bank Nominees Pte Ltd Chew Beng Hock Kim Eng Securities Pte. Ltd. See Lop Fu James @ Shi Lap Fu James Vision Capital Private Limited DBSN Services Pte Ltd HSBC (Singapore) Nominees Pte Ltd OCBC Securities Private Ltd Foo Seck Huat Liew Chee Kong Habacus Trading Co Pte Ltd Lim Meng Seng DBS Vickers Securities (S) Pte Ltd
17 18 19 20
SUBSTANTIAL SHAREHOLDERS Number of shares Number of shares registered in the name in which substantial Name of substantial of the substantial shareholder is deemed shareholder Shareholder to have an interest VST Holdings Limited L&L Limited 327,580,093(1) 327,580,093
(1)
Total 327,580,093 327,580,093
Percentage (%) 89.66 89.66
Notes : (1) Deemed interest through Raffles Nominees Pte Ltd
notice of annuaL generaL meeting

ECS HOLDINGS LIMITED (Incorporated in the Republic of Singapore) Company Registration No. 199804760R
NOTICE IS HEREBY GIVEN that the Thirteenth Annual General Meeting of the Company will be held at 19 Kallang Avenue #07-153 Singapore 339410 on Thursday, 21 April 2011 at 4.00 p.m. to transact the following business :-
ORDINARY BUSINESS 1 To receive and adopt the Directors Report and Audited Accounts for the financial year ended 31 December 2010 and the Auditors Report thereon. [Resolution 1] To declare a one-tier tax exempt first and final dividend of 3.6 cents per ordinary share for the year ended 31 December 2010. [Resolution 2] (a) To re-elect Mr Koh Soo Keong who is retiring in accordance with Article 91 of the Companys Articles of Association, as Director of the Company. [Resolution 3(a)]
Note:Mr Koh Soo Keong if re-elected, will remain as the Chairman of the Companys Compensation Committee, and a member of the Nominating Committee and Audit Committee and will be considered as an independent director for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited (Listing Manual). (b) To re-elect Mr Narong Intanate who is retiring in accordance with Article 91 of the Companys Articles of Association, as Director of the Company. [Resolution 3(b)] To re-elect Mr Mao Xiangqian who is retiring in accordance with Article 97 of the Companys Articles of Association, as Director of the Company. [Resolution 3(c)] To re-elect Mr Ong Wei Hiam who is retiring in accordance with Article 97 of the Companys Articles of Association, as Director of the Company. [Resolution 3(d)]
(c)
(d)
4 5
To re-appoint KPMG LLP as Auditors and to authorise the Directors to fix their remuneration. [Resolution 4] To approve the payment of Directors Fees of $263,750.00 for the year ended 31 December 2010. (2009: $190,000.00). [Resolution 5]
SPECIAL BUSINESS 6 To approve the payment of a consultancy fee of $120,000.00 per annum, payable on a monthly basis in equal instalments, to Mr Tay Eng Hoe, our Non-Executive Chairman, for services rendered or to be rendered by him to the Company for the financial year ending 31 December 2011. [Resolution 6]
[See Explanatory Note (i)] 7
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 (the Act) and the listing rules of the Singapore Exchange Securities Trading Limited (the SGX-ST), authority be and is hereby given to the Directors to:-
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(i) issue shares in the capital of the Company whether by way of bonus issue, rights issue or otherwise; and/or make or grant offers, agreements or options (collectively Instruments) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares; and/or issue additional Instruments convertible into shares arising from adjustments made to the number of Instruments, at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may, in their absolute discretion, deem fit; and (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force, provided that: (1) the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of any Instruments made or granted pursuant to this Resolution) shall not exceed 50% of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed 20% of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with sub-paragraph (2) below); (subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under paragraph (1) above, the percentage of issued shares shall be based on the total number of issued shares in the capital of the Company excluding treasury shares at the time this Resolution is passed, after adjusting for: (A) (B) new shares arising from the conversion or exercise of any convertible securities; new shares arising from the exercise of share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed, provided that the aforesaid share options or share awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual; and (ii)
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(iii)
(2)
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(C) any subsequent bonus issue or consolidation or subdivision of shares; (3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and (unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier. [Resolution 7(a)]
(4)
[See Explanatory Note (ii)]

(b) 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 enter into any of the transactions falling within the types or categories of interested person transactions as described in section 3.1 (Interested Person Transactions) of Appendix A with VST Holdings Limited, its subsidiaries and/or its associates be and is hereby approved, provided that such transactions are entered into on an arms length basis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of Appendix A; 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 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 to any document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect to the aforesaid Shareholders General Mandate and/or this Resolution 7(b). [Resolution 7(b)]
(ii)
(iii)
[See Explanatory Note (iii)] (c) 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 enter into any of the transactions falling within the types or categories of interested person transactions as described in section 3.1 (Interested Person Transactions) of Appendix A with Netband Consulting Co., Ltd, Vnet Capital Co., Ltd, Vnet Capital International Co., Ltd, Thai Incubator Dot Com Co., Ltd, Vintcom Technology Co., Ltd, Copperwired Co., Ltd, Anchor Solutions Co., Ltd, NTN Solution Ltd, Copperwired-N Co., Ltd, Koan Co., Ltd, and/or other associates of Mr. Narong Intanate, a Director of the Company (as the case may be), be and is hereby approved, provided that such transactions are entered into on an arms length basis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of Appendix A; 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
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(ii)
(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 to any document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect to the aforesaid Shareholders General Mandate and/or this Resolution 7(c). [Resolution 7(c)]
[See Explanatory Note (iii)] (d) That: (i)
for the purposes of the Act, the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire the ordinary shares in the capital of the Company not exceeding in aggregate the Prescribed Limit (as hereafter defined), at such price(s) as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of:
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(a) (b) market purchases (each a Market Purchase) on the SGX-ST; and/or off-market purchases (each an Off-Market Purchase) effected otherwise than on the SGX-ST in accordance with any equal access schemes as may be determined or formulated by the Directors of the Company as they consider fit, which schemes shall satisfy all the conditions prescribed by the Act, and otherwise in accordance with all other provisions of the Act and listing rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the Share Buyback Mandate);
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(ii)
unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earlier of: (a) the date on which the next annual general meeting of the Company is held or required by law to be held; the date on which the share buybacks are carried out to the full extent mandated; or the date on which the authority contained in the Share Buyback Mandate is varied or revoked;
(b) (c)
(iii)
in this Resolution: Prescribed Limit means 10% of the issued ordinary share capital of the Company as at the date of passing of this Resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Act, at any time during the Relevant Period, in which event the issued ordinary share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered (excluding any treasury shares that may be held by the Company from time to time); Relevant Period means the period commencing from the date on which this AGM is held and expiring on the date the next AGM is held or is required by law to be held, whichever is the earlier, after the date of this Resolution; and Maximum Price in relation to a share to be purchased, means an amount (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) not exceeding: (i) (ii) in the case of a Market Purchase: 105% of the Average Closing Price; in the case of an Off-Market Purchase: 120% of the Highest Last Dealt Price,
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where:

Average Closing Price means the average of the closing market prices of a share over the last five market days, on which transactions in the shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant 5-day period; Highest Last Dealt Price means the highest price transacted for a share as recorded on the market day on which there were trades in the shares immediately preceding the day of the making of the offer pursuant to the Off-Market Purchase; and day of the making of the offer means the day on which the Company announces its intention to make an offer for the purchase of shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each share and the relevant terms of the equal access scheme for effecting the OffMarket Purchase; and (iv) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated by this Resolution. [See Explanatory Note (iv)] 8 [Resolution 7(d)]
To transact any other business that may be properly transacted at an annual general meeting. [Resolution 8]
By Order of the Board Eddie Foo Toon Ee Company Secretary Singapore 5 April 2011 Explanatory Notes: (i) Pursuant to a consultancy agreement dated 1 January 2011, Mr Tay Eng Hoe has been engaged to provide the Company with consultancy services, such services to be rendered in the course of the financial year ending 31 December 2011. Under this arrangement, Mr Tay is entitled to a consultancy fee of S$120,000.00 per annum to be paid monthly in equal instalments. Resolution 7(a), if passed, will authorise the Directors to issue shares in the capital of the Company and to make or grant Instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such Instruments, up to a number not exceeding 50% of the total number of issued shares in the capital of the Company, of which up to 20% may be issued other than on a pro rata basis to shareholders. For the purpose of determining the aggregate number of shares that may be issued, the percentage of issued shares shall be based on the total number of issued shares excluding treasury shares in the capital of the Company at the time that Resolution 7(a) is passed, after adjusting for (a) new shares arising from the conversion or exercise of any convertible securities, (b) new shares arising from the exercise of share options or vesting of share awards which are outstanding or subsisting at the time that Resolution 7(a) is passed, provided that the aforesaid share options or share awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual, (c) any subsequent bonus issue or consolidation or subdivision or shares.
(ii)
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(iii) Resolutions 7(b) and 7(c), if passed, will authorise the Company, its subsidiaries and associated companies, from the date of the annual general meeting until the conclusion of the next annual general meeting, to enter into interested person transactions with 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 the Company. For further details on the interested person transactions and interested persons referred to, please see Appendix A to this Notice.
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(iv) Resolution 7(d), if passed, will renew effective up to the next annual general meeting of the Company (unless earlier revoked or varied by the Company in general meeting) the Share Buyback Mandate for the Company to purchase or acquire its ordinary shares. The amount of financing required for the Company to purchase or acquire its ordinary shares, and the impact on the Companys financial position, cannot be ascertained as at the date of this Notice of Annual General Meeting as these will depend on the number of ordinary shares purchased or acquired and the price at which such ordinary shares were purchased or acquired. For further details on the Share Buyback Mandate, please see Appendix B to this Notice.
Proxies : A member entitled to attend and vote at the annual general meeting may appoint not more than two proxies to attend and vote on his behalf and where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the office of the Companys 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 annual general meeting.
NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATE NOTICE IS ALSO HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on 30 April 2011, for the purpose of determining the members entitlements to the dividend to be proposed at the Annual General Meeting of the Company to be held on 21 April 2011. Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. on 29 April 2011 by the Companys Share Registrar, M & C Services Private Limited, will be registered to determine members entitlements to such dividend. Members whose securities accounts with The Central Depository (Pte) Ltd are credited with shares in the Company as at 5.00 p.m. on 29 April 2011 will be entitled to such proposed dividend. The proposed dividend, if approved at the Annual General Meeting, will be paid on 20 May 2011.
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annuaL generaL meeting

ECS HOLDINGS LIMITED (Incorporated in the Republic of Singapore) Company Registration No. 199804760R I/We of
being a member/members of ECS HOLDINGS LIMITED hereby appoint Name Address NRIC/Passport Number Proportion of 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 HOLDINGS LIMITED to be held at 19 Kallang Avenue #07-153 Singapore 339410 on 21 April 2011 at 4.00 p.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 the Notice 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 will on any other matter arising at the Annual General Meeting.) NO ORDINARY RESOLUTIONS FOR AGAINST
Ordinary Business :
1. 2. 3. Adoption of Reports and Accounts Declaration of a onetier tax exempt first and final dividend of 3.6 cents per ordinary share for the year ended 31 December 2010 Re-election of Directors : (a) Mr Koh Soo Keong (a) Mr Narong Intanate (a) Mr Mao Xiangqian (a) Mr Ong Wei Hiam Re-appointment of Auditors Approval of Directors Fees of S$263,750/- for the year ended 31 December 2010
4. 5. 6. 7.
Special Business
Approval of payment of consultancy fees to Mr Tay Eng Hoe, Non-executive Chairman of the Company (a) Authority for Directors to issue shares pursuant to Section 161 of the Companies Act, Cap. 50 and the listing rules of the Singapore Exchange Securities Trading Limited (b) To approve the proposed renewal of the Shareholders General Mandate for Interested Person Transactions with VST Holdings Limited, its subsidiaries and/ or associates (c) To approve the proposed renewal of the Shareholders General Mandate for Interested Person Transactions with Netband Consulting Co., Ltd, Vnet Capital Co., Ltd, Vnet Capital International Co., Ltd, Thai Incubator Dot Com Co., Ltd, Vintcom Technology Co., Ltd, Copperwired Co., Ltd, Anchor Solutions Co., Ltd, NTN Solution Ltd, Copperwired-N Co., Ltd, Koan Co., Ltd, and/or other associates of Mr Narong Intanate, a Director of the Company (d) To approve the proposed renewal of the Share Buy-back Mandate Any other ordinary business
8.
Dated this
day of
2011.
Total Number of Shares Held: Signature(s) of member(s) or Common Seal IMPORTANT : PLEASE READ NOTES OVERLEAF
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p ag e 91
proXy form
Important: 1. For investors who have used their CPF monies to buy the Companys shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. 3. CPF Investors who wish to attend the Annual General Meeting as OBSERVERS have to submit their requests through their respective Agent banks so that their Agent banks may register with the Company Secretary ofECS Holdings Limited not less than 48 hours before the time appointed for holding the meeting.
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 shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company. Where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy, failing which, the appointment shall be deemed to be in the alternative. The instrument appointing a proxy must be deposited at the office of the Share Registrar of the Company, M&C Services Private Limited at 138 Robinson Road #17-00, The Corporate Office, Singapore 068906, not less than forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting. The instrument appointing a proxy must be signed by the appointor or his attorney. Where the instrument appointing a proxy is given by a corporation, it must be given either under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.
2.
3.
4.
5.
6.
7.
A corporation which is a member may by a resolution of its directors or other governing body authorise such person as it thinks fit to act as its 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 the true 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 the member, 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) Limited to the Company.

(Incorporated in The Republic of Singapore) Co. Reg. No.: 199804760R 19 Kallang Avenue #07-153 Singapore 339410 Phone : +65 6299 9433 Fax : +65 6291 3912 Website: www.ecs.com.sg

ECS Holdings 2010 Annual Report

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ECS HOLDINGS LIMITED

annual report 2010

Corporate Governance Statement

Independent Auditors Report

Notice of Annual General Meeting

ECS HOLDINGS LIMITED | annual report 2010

ECS HOLDINGS LIMITED | annual report 2010

ECS HOLDINGS LIMITED | annual report 2010

ECS HOLDINGS LIMITED | annual report 2010

ECS HOLDINGS LIMITED | annual report 2010

Mr Narong Intanate 16 March 2011

Group Chief Executive Officer

Tay Eng Hoe

Foo Sen Chin

ECS HOLDINGS LIMITED | annual report 2010

Mr Leong Horn Kee

Mr Tan Hup Foi

Mr Koh Soo Keong

Mr Ong Wei Hiam

ECS HOLDINGS LIMITED | annual report 2010

Mr Lim Tow Cheng

ECS HOLDINGS LIMITED | annual report 2010

Foo Sen Chin

ECS HOLDINGS LIMITED | annual report 2010

ECS HOLDINGS LIMITED | annual report 2010

ECS HOLDINGS LIMITED | annual report 2010

Ms Lim Yok Yen

Mr Tang Kin Meng

ECS HOLDINGS LIMITED | annual report 2010

Compensation Committee Mr Koh Soo Keong (Chairman)

Nominating Committee Mr Tan Hup Foi (Chairman)

ECS HOLDINGS LIMITED | annual report 2010

REVENUE BY BUSINESS SEGMENT (S$ million)

23.2 1,783.0 2,034.2 1,928.4

PROFITABILITY (S$ million)

REVENUE BY GEOGRAPHICAL SEGMENT (S$ million)

SHAREHOLDERS EQUITY (S$ million)

Southeast Asia 1,306.4

North Asia 1,779.0

DIVIDENDS PER SHARE (cents)

RETURN ON EQUITY (%)

RETURN ON CAPITAL EMPLOYED (%)

ECS HOLDINGS LIMITED | annual report 2010

ECS HOLDINGS LIMITED | annual report 2010

ECS HOLDINGS LIMITED | annual report 2010

ECS Thailand ECS Thailand ECS Thailand ECS Malaysia

Oct - Dec 10 Oct - Dec 10 Oct - Dec 10 Oct - Dec 10

corporate governance statement

(A) BOARD MATTERS

ECS HOLDINGS LIMITED | annual report 2010

corporate governance statement

ECS HOLDINGS LIMITED | annual report 2010

corporate governance statement

(B) REMUNERATION MATTERS

ECS HOLDINGS LIMITED | annual report 2010

corporate governance statement

100 100 100 100 100 -

corporate governance statement

(C) ACCOUNTABILITY AND AUDIT

ECS HOLDINGS LIMITED | annual report 2010

corporate governance statement

corporate governance statement