ECS Holdings 2011 Annual Report

BRING IT ON
ECS HOLDINGS LIMITED ANNUAL REPORT 2011
As an established player in the industry, ECS has remained steadfast in the face of economic uncertainties. It has seen and outlast market turmoils. It will do so again and again, emerging stronger every time. In Asia, it has been growing. It is positioned to prevail even more brilliantly when the global economic tide turns.
As ECS goes about its business, it demonstrates a distinct character. This character has vision, courage, integrity, professionalism and notably, joy. The company will not be daunted by challenges; it welcomes them and emerges stronger from them, with a smile. This character forms ECS brand DNA. This years annual report theme BRING IT ON lights up ECS core brand values as a foremost IT distribution company. It portrays ECS resolve to take on challenges, harness partnerships and reap from opportunities - all done with gusto and derring-do. And yet always with joy. As ECS embraces challenges, it responds by bringing on its brand values - Shining, Nurturing, Committing and Growing. The brand values are the companys pledge to do the best for quality, employees, partners and progress continuously. All these qualities are embraced with a collegial and fun mood, as shown in the images in the annual report. Current IT applications such as QR code and augmented reality provide a bridge from the print version of this annual report to the companys digital presence. The presence of current and cutting-edge finished electronic products serve to reiterate ECS commitment to the IT distribution industry. As ECS surmounts challenges and engender more growth, it lights up businesses and end consumers lives as an IT distributor by bringing information technology to them. The annual report closes with an open invitation on the back cover to LAP IT UP - referring to challenges and opportunities, partnerships and achievements - in character with the ECS brand. Just as ECS can BRING IT ON by shining, nurturing, committing and growing, so can every stakeholder shine, nurture, commit and grow. Just LAP IT UP.
VISION
To be a Premier Asia-Pacific To be the preferred ICT Company that thinks supplier of choice for globally but acts locally, ICT products and valueexcelling in all our business added services by segments to deliver optimal building strong customer value to our stakeholders. relationships. To sustain our entrepreneurial growth by seeking new markets & businesses. To bring the best-ofbreed ICT products and services to enhance the competitiveness of our customers businesses. CONTENTS
14 // Chairmans Statement 22 // Senior Management 30 // Corporate Information 34 // Financial Highlights 37 // Corporate Governance Statement 16 // CEOs Statement 26 // Corporate Executives 32 // Regional Network 35 // 2011 Awards 19 // Board of Directors 29 // Group Structure 33 // Business Model 36 // 2011 Milestones
MISSION
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BRING IT ON
SHINE
We aim to be the brightest star, to be the leader in the industry by continuously and consistently offering the best and constantly pursuing excellence. Our professionalism and work ethic becomes the pillar in everything we do. It is our promise to add value for every single stakeholder. This is our pledge for quality.
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BRING IT ON
NURTURE
We believe that people are full of potential and every single person contributes to the organisations strength. Within ECS, there will always be opportunities to learn, develop oneself and make personal progress. We encourage a learning organisation, and take every single employee as a part of our family. This is our pledge for our people.
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BRING IT ON
COMMIT
ECS is here for long term relationship. We realise that our stakeholders are our partners. We create trust and partnership. We put importance in delivering our promises to every stakeholder. We are doing business with trusted friends and colleagues. This is our pledge for dedication.
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BRING IT ON
GROW
Our simple ambition is to evolve and grow. We are driven to provide the best, to expand ourselves through organic growth or acquisition. We understand the industry, the customers and our own capability to make the right strategic moves to create value for the whole organisation. This is our pledge for progression.
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BRING IT ON
THE YEAR IN REVIEW
ECS HOLDINGS LIMITED
ANNUAL REPORT 2011
Mr Tay Eng Hoe Chairman
ANNUAL REPORT 2011
Mr Narong Intanate Group Chief Executive Officer
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ANNUAL REPORT 2011
CHAIRMANS STATEMENT
... the Group continued to improve internal operational and costs efficiency, in line with the strategies set in motion several years ago. As a result of these efforts, operating cash flow increased significantly, while total operating expenses as a percentage of revenue improved further to 3.2% in FY2011 compared to 3.4% a year earlier.
ANNUAL REPORT 2011
CHAIRMANS STATEMENT
Dear Shareholders, It gives me great pleasure to present to you ECS annual report for the financial year ended 31 December 2011 (FY2011). While FY2010 was a year in which we benefited from the pent-up demand following the 2008-2009 financial crisis due to the U.S. subprime problem, the year under review was marked by fresh uncertainty emanating from the Eurozone debt crisis; supply chain disruptions to the electronics sector due to the earthquake and tsunami in Japan and the floods in Thailand; and the uncertainty resulting from an announcement, later rescinded, by HP a major principal that it was planning to spin off its Personal Systems Group. Despite these challenges, the Groups FY2011 revenue increased 16.9% to $3.61 billion compared to FY2010. However, net profit after tax declined 26.0% to $39.2 million from $53.0 million due to several factors. The first is the absence of the one-off exceptional gain of $12.6 million from the disposal and dilution of ECS ICT Berhad of Malaysia in FY2010. Excluding the exceptional gain, the net profit for FY2011 decreased 2.8% compared to FY2010. During the year under review, the Group continued to improve internal operational and costs efficiency, in line with the strategies set in motion several years ago. As a result of these efforts, operating cash flow increased significantly, while total operating expenses as a percentage of revenue improved further to 3.2% in FY2011 compared to 3.4% a year earlier. Dividend In view of the Groups financial performance against the challenging backdrop outlined above, the Board of Directors has proposed a first and final dividend of 2.2 cents per ordinary share. Corporate Developments After assessing the market conditions globally and in Taiwan, the Directors have decided not to proceed with an earlier proposal to issue and list Taiwan Depository Receipts. Mr Li Jia Lin (an indirect shareholder and former Chairman of the Board) was appointed Chairman to the respective boards of directors of the Groups wholly owned ECS Technology (China) Limited, and its subsidiaries with effect from 22 November 2011. Outlook The economic uncertainty and supply chain disruptions will impact spending on technology products in the coming months. Amidst the challenging conditions, we will continue to improve our internal efficiencies such as working capital cycle and reducing costs while focusing on growing our share of the higher-margin Enterprise Systems business. Appreciation and Acknowledgement On behalf of my fellow Directors, I wish to thank our customers, channel partners, vendors, technology partners, banks and business associates for their support; the management and staff for their dedication and hard work despite the challenging conditions; and our shareholders for their loyal support.
Mr Tay Eng Hoe Chairman 28 March 2012
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ANNUAL REPORT 2011
CEOS STATEMENT
Despite the various challenges, ECS achieved 16.9% growth in revenue to $3.61 billion from $3.09 billion in FY2010. This growth was mainly attributed to the 38.1% growth in the Distribution segment, driven by increased sales of media tablets, desktops and notebooks, consumer printers and imaging devices.
ANNUAL REPORT 2011
CEOS STATEMENT
Dear Shareholders, The year under review was marked by various challenges including the European debt crisis and the severe flooding in Thailand which affected the supply chain of the electronics sector. Financial and Operations Review Despite the various challenges, ECS achieved 16.9% growth in revenue to $3.61 billion from $3.09 billion in FY2010. This growth was mainly attributed to the 38.1% growth in the Distribution segment, driven by increased sales of media tablets, desktops and notebooks, consumer printers and imaging devices. Notwithstanding the deconsolidation of ECS ICT Berhad which was completed on 15 April 2010, the Group exceeded the $3.25 billion revenue achieved in FY2009 by 11.1%. Our FY2011 sales were propelled by additions to our product portfolio base, including Apple, Dell, and Lenovo, since FY2010. However, the Groups net profit attributable to shareholders declined 26.0% to $39.2 million from $53.0 million in FY2010 (performance that year had included a one-off exceptional gain of S$12.6 million from the disposal/dilution of a 20%-stake in ECS Malaysian subsidiary). Other factors included higher finance costs from increased bank borrowings and higher interest rates, particularly in China. Excluding the exceptional gain, the Groups FY2011 net profit reflects a decrease of 2.8% compared to FY2010. The Groups gross profit increased by 7.9% to S$167.3 million from S$155.1 million a year ago, mainly due to the revenue growth of S$521.8 million. Gross margin was lower at 4.6% as compared to 5.0% in FY2010 due to change in product mix with higher volume of lower-margin distribution sales. This was further reduced by higher provisions for stock obsolescence and lower early payment discounts and rebates.
The Group continued to implement efforts to improve operational and financial efficiencies in FY2011. As a result, the Groups working capital position strengthened with the generation of $44.7 million cash from operating activities compared to negative $1.0 million in FY2010, mainly due to tighter credit control and improved cash cycles. As a result, cash and cash equivalents increased by $38.9 million to $131.4 million as at 31 December 2011 from $92.5 million as at 31 December 2010. Consequently, the Groups net gearing ratio improved to 0.34 times as at 31 December 2011 from 0.45 times a year earlier. Earnings per share (EPS) was 10.74 cents in FY2011 from 14.51 cents in FY2010 while net asset value (NAV) per share increased to 89.37 cents as at 31 December 2011 from 81.18 cents as at 31 December 2010. The Group has proposed a first and final dividend of 2.2 cents per share. Review by Business Segments In view of the continued growth in IT spending, the Group expanded its product portfolio to leverage on emerging technologies and products from existing and new vendors. This has helped to improve the performance of our business segments. Distribution With the inclusion of new products in our portfolio, ECS strengthened its Distribution segment which remained the main revenue driver. In FY2011, this segment contributed $2.66 billion or 73.8% of total revenue, up by 38.1% from $1.93 billion in FY2010. This growth is mainly driven by higher sales of media tablets, desktops, imaging devices and consumer printers.
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ANNUAL REPORT 2011
CEOS STATEMENT
Enterprise Systems Following the pent-up demand in FY2010, the enterprise product portfolio in FY2011 was relatively weaker. Enterprise Systems segment accounted for $0.92 billion or 25.4% of revenue in FY2011 (FY2010: $1.13 billion) as IT infrastructure tools, such as servers, databases and storage products, experienced slower demand. Review by Geographical Markets Geographically both North Asia and Southeast Asia continued on their growth paths. North Asia In FY2011, North Asia was the main revenue growth driver as it grew 30.9% to $2.33 billion from $1.78 billion in FY2010 mainly due to stronger sales of media tablets, desktops, printers and notebooks in distribution segment. The Group also greatly benefitted from the nation-wide distribution rights for Apples iPad and iPhone in China clinched by ECS in the last quarter of FY2010. North Asia remains ECS single largest market, contributing 64.6% of the total revenue. Southeast Asia Revenue contribution from Southeast Asia experienced a marginal decrease of 2.1% to $1.28 billion in FY2011 from $1.31 billion in FY2010 as growth was limited by flooding in Thailand. The revenue in FY2010 also included the deconsolidated ECS ICT Berhads revenue in the first quarter. If not for the deconsolidation, revenue would have been up by 8.6% due to higher sales for notebooks, desktops and networking hardware in Singapore and Thailand.
Outlook We continue to gain traction in our initiatives to diversify our revenue base while improving 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, we have extended our portfolio to new vendors including Apple, Lenovo and Dell, contributing to the revenue increase this year. We hope to clinch more new products from existing vendors to deepen the relationship. Going forward, the Group will focus on growing higher-margin Enterprise Systems business. We will also continue to adopt a similar go-to-market strategy and engage vendors regionally instead of on a standalone-country basis to increase efficiency and economies of scale. Lastly, ECS will continue to focus on operating costs management and improve working capital cycles, as well as efforts to carry on improving internal efficiencies and core operational processes.
Mr Narong Intanate Group Chief Executive Officer 28 March 2012
ANNUAL REPORT 2011
BOARD OF DIRECTORS
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ANNUAL REPORT 2011
BOARD OF DIRECTORS
01. Mr Tay Eng Hoe Mr Tay Eng Hoe was appointed the Non-Executive Chairman of the Group on 27 September 2010. He was the founder of ECS Holdings Limited and also formerly the 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.
02. Mr Narong Intanate 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 is an Executive Director of the Company, an appointment held since 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.
03. Mr Foo Sen Chin 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 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 President 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.
ANNUAL REPORT 2011
BOARD OF DIRECTORS
05. Mr Leong Horn Kee 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.
07. Mr Koh Soo Keong 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. With over 20 years of experience in the logistics industry, he had helmed SembLog and its preceding companies since 1986. He is currently the Managing Director of EcoSave Pte Ltd. He is also the Chairman of the Agri-Food & Veterinary Authority of Singapore and Ascendas Funds Management (S) Ltd (managing Ascendas-REITs). He is a board member of four other publicly listed companies. 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.
06. Mr Tan Hup Foi 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. He was also the Chairman of Ngee Ann Polytechnic Council from 2004 to 2011. 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. 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.
08. Mr Ong Wei Hiam 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 Bachelors degree in Economics from University College London and a Masters 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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ANNUAL REPORT 2011
SENIOR MANAGEMENT
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SENIOR MANAGEMENT
01. Mr Narong Intanate 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 is an Executive Director of the Company, an appointment held since 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. 03. Ms Ge Hong Ms Ge Hong is the Group Chief Information Officer of the Company. Her main responsibility is in leading the development of an IT blueprint for the Groups business and service delivery to support the Groups vision and sustainable growth. An experienced solution and management consultant, she has more than 16 years of global experience in enterprise resource planning and business process reengineering. Prior to ECS, Ms Ge was in leading organisations like IBM, SAP, Accenture in consulting roles at the senior level, serving major MNC clients like Warner Bros., Owens Corning, Mercedes Benz, Good Year, DuPont, LTV Steel as well as US government agencies including IRS and NASA. Some of her major recent achievements include leading the transition management for Warner Bros and an outsourcing project for Capgemini. Ms Ge holds a Bachelors degree from Beijing University, China and two Master degrees one in Accountancy and Financial Information System, and the other in Public Administration from Cleveland State University, USA.
02. Mr Eddie Foo 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 Bachelors degree in Accountancy from the Nanyang Technological University and is a member of the Institute of Certified Public Accountants of Singapore.
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SENIOR MANAGEMENT
04. Mr Lim Tow Cheng Mr Lim Tow Cheng was appointed as the Executive Vice President, Group Business Development on 18 October 2005. Mr Lim is responsible for managing the regional expansion strategy and for identifying new business opportunities for the Group. He 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.
05. Mr Mao Xiangqian Mr Mao Xiangqian was appointed as Executive Director of the Company on 3 May 2010 and is also concurrently the President 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.
06. Mr Somsak Pejthaveeporndej 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 Pejthaveeporndej was formerly responsible for managing the Enterprise Systems & ICT Services Division of The Value Systems. He has more than 20 years 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.
ANNUAL REPORT 2011
SENIOR MANAGEMENT
07. Mr Foo Sen Chin 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.
09. Ms Lina Choo 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 Bachelors degree in Accountancy from the University of HKBP Nommensen.
08. Mr Sebastian Chong 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 over 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.
10. Mr Jimmy Go 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 Bachelors 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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ANNUAL REPORT 2011
CORPORATE EXECUTIVES
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01. Mr Eugene Tan Mr Eugene Tan is the Senior Vice President, Group Finance of ECS Holdings Limited since 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 current appointment, 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 Bachelors degree in Accountancy & Economics from the University of Reading. 02. Ms Peggy Leong-Yeo Ms Peggy Leong-Yeo is the Senior Vice President, Group Human Resources for ECS Holdings Limited. Her main responsibilities are to establish HR strategies for the Group and to strengthen the Groups human capital, which 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 working with a global multinational company. 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.
03. Mr Newman Li Mr Newman Li is the Vice President, 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 Bachelors 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 Ms Lim Yok Yen is the Vice President, Group Finance of ECS Holdings Limited. She is responsible for financial planning and analysis, budgeting, forecasting as well as working with partners and management 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.
05. Mr Paul Chong Mr Paul Chong is the Assistant Vice President, Group Public Relations of ECS Holdings Limited and concurrently, the Vice President, Marketing of ECS Computers (Asia) Pte Ltd, the Groups wholly-owned Singapore subsidiary. In his role for Group Public Relations, Mr Chong is responsible for the Groups branding and communication programs, publicity, corporate affairs and internal communication between management and employees. As Vice President, Marketing, he 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 6 years in the public sector of Singapore handling national IT initiatives and training and development programs. Mr Chong holds a Bachelors degree in Business Administration from the National University of Singapore and a Master of Business Administration degree from the University of Western Australia.
ANNUAL REPORT 2011
GROUP STRUCTURE
ECS Technology (China) Limited 100%
CHINA
THAILAND
The Value Systems Co., Ltd. 100%
MALAYSIA
ECS ICT Berhad 41%
ECS Computers (Asia) Pte Ltd 100%
SINGAPORE
INDONESIA
ECS Indo Pte Ltd 89%
PHILIPPINES
ECS Infocom (Phils) Pte. Ltd. 100%
ECS Vietnam Company Limited 100%
VIETNAM
ECS Beijing Chuang Yue Technology Co., Ltd 100%
ECS KU Sdn Bhd 100%
Pacific City (Asia Pacific) Pte Ltd 100%
PT ECS Indo Jaya 100%
MSI-ECS Phils., Inc. 49.99%
ECS (Shanghai) Management Co., Ltd 100%
ECS Astar Sdn Bhd 100%
ECS China Technology (Shanghai) Co., Limited 100%
ECS KUSH Sdn Bhd 100%
ECS Enterprise Solutions Pte Ltd 100%
ECS Technology (Guangzhou) Co., Ltd 100%
ECS Pericomp Sdn Bhd 100%
ECS Technology Co., Ltd 100%
EIT info-tech Limited 100%
ECS Technology (HK) Co., Limited 100%
ECS Chongqing Marketing & Payment Co., Ltd. 100%
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ANNUAL REPORT 2011
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 Mr Ong Wei Hiam // Non-Executive Director Audit Committee Mr Leong Horn Kee // Chairman Mr Tan Hup Foi Mr Koh Soo Keong Compensation Committee Mr Koh Soo Keong // Chairman Mr Leong Horn Kee Mr Tan Hup Foi Nominating Committee Mr Tan Hup Foi // Chairman Mr Leong Horn Kee Mr Koh Soo Keong Mr Tay Eng Hoe Investment Committee Mr Leong Horn Kee // Chairman Mr Foo Sen Chin Mr Tan Hup Foi Mr Ong Wei Hiam Senior Management at ECS Holdings Limited Mr Narong Intanate // Group Chief Executive Officer Mr Eddie Foo Toon Ee // Group Chief Financial Officer Ms Ge Hong // Group Chief Information Officer Mr Lim Tow Cheng // Executive Vice President, Business Development Senior Management at ECS Holdings Limiteds Subsidiaries and Associate Companies Mr Mao Xiangqian // President 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 // Senior Vice President, Group Finance Ms Peggy Leong-Yeo // Senior Vice President, Group Human Resources Mr Newman Li // Vice President, Group Internal Audit Ms Lim Yok Yen // Vice President, Group Finance Mr Paul Chong // Assistant Vice President, Group Public Relations Auditors KPMG LLP Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 Partner-in-charge : Ms Chu Sook Fun (Since FY2011)
ANNUAL REPORT 2011
CORPORATE INFORMATION
Registrar M&C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore 068906 Registered Office 8 Temasek Boulevard #34-02 Suntec Tower Three Singapore 038988 Principal Bankers ANZ Bank Citibank N.A. DBS Bank Ltd KBC Bank N.V. Oversea-Chinese Banking Corporation Standard Chartered Bank Sumitomo Mitsui Banking Corporation United Overseas Bank Limited Company Secretary Mr Eddie Foo Toon Ee, CPA ECS Offices ECS Holdings Limited 8 Temasek Boulevard #34-02 Suntec Tower Three Singapore 038988 Website : www.ecs.com.sg ECS Technology (China) Limited 6/7F, Wanliuyicheng Building, No.11 Changchunqiao Road, Haidian District, Beijing, P.R.C (100089) Offices in Beijing, Changchun, Changsha, Chengdu, Chongqing, Dalian, Fuzhou, Guangzhou, Guiyang, Harbin, Hefei, Hong Kong, Huhehaote Jinan, Kunming, Lanzhou, Nanchang, Nanjing, Nanning, Ningbo, Qingdao, Shanghai, Shenzhen, Shenyang, Shijiazhuang, Taiyuan, Tianjin, Urumqi, Wuhan, Xiamen, Xian, Zhengzhou 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 Offices 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 47810 Petaling Jaya, Selangor, Malaysia Offices 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 Komplek Mangga Dua Square Blok E 34-37 Jl. Gunung Sahari Raya No.1 Jakarta Utara 14420, Indonesia Offices in Balikpapan, 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, 1110, Philippines Offices in Cebu, Davao, Manila Website : www.msi-ecs.com.ph
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ANNUAL REPORT 2011
REGIONAL NETWORK
PT ECS Indo Jaya MSI-ECS Phils., Inc. ECS Holdings Limited (Listed on SGX) ECS Computers (Asia) Pte Ltd ECS ICT Berhad ECS Vietnam Company Limited The Value Systems Co., Ltd. ECS Technology (China) Limited
ANNUAL REPORT 2011
BUSINESS MODEL
ICT Vendors Value Products

Servers Storage Application Software & Middleware Networking & Communication
Economies of Scale for Better Pricing and Aggregation
Single Source Supplier
Complete Solution
ECS
Aggregator of Best-of-Breed IT Products: Convenient One-Stop Supplier Channel Development and Management Volume Aggregator Efficient Inventory Management to ensure timely delivery Financial Credit Support to Resellers/IT Partners Consultancy/ Implementation Managed Services Post-Sales/ Maintenance Support Professional Services Training/Certification Logistical Services
Channel Partners
Corporate Resellers System Integrators Application Providers Retailers ISVs Superstores Developers
End Users
Corporates Manufacturing Industry Government Service Industry Telcos & Service Providers Emerging Industry SME Home /SOHO Consumer & Lifestyle
Volume Products
Notebooks Desktops Printers & Imaging Devices Mobility Devices Printing Supplies Accessories & Options Productivity Software
After Sales Support
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ANNUAL REPORT 2011
FINANCIAL HIGHLIGHTS
REVENUE (S$ million) $
3,850 3,607.2 3,300 3,252.0 2,789.4 2,949.9 3,085.4 2,750 2,200 1,650 1,100 550 0 FY07 FY08 FY09 FY10 FY11
REVENUE BY BUSINESS SEGMENT (S$ million) $

3,850 3,300 2,750 2,200 1,650 1,100 550 0 FY07 964.3 FY08 1,133.3 FY09 Distribution 1,187.9 FY10 1,132.5 FY11 IT Services 916.0 1,792.9 1,783.0 2,034.2 1,928.4 2,663.0 2,789.4 32.2 2,949.9 33.6 3,252.0 29.9 3,085.4 24.5 3,607.2 28.2
Enterprise Systems
PROFITABILITY (S$ million) $

70 60 50 53.0 40 38.2 30 23.4 29.4 20 10 0 FY07 FY08 FY09 FY10 FY11
REVENUE BY GEOGRAPHICAL SEGMENT $ (S$ million)
SHAREHOLDERS EQUITY $ (S$ million)

350 326.5 FY11 FY11 13.8 300 259.5 FY09 FY09 12.2 FY10 296.6 FY10 15.3 FY07 10.0 FY08 11.7 250
39.2
150 100 Southeast Asia 1,278.7 50 0
Net Prot Attributable to Equity Holders
FY07
212.7
FY08
DIVIDENDS PER SHARE (cents)

3.5 3 2.5 2.7 2 1.5 1 0.5 0 FY07 FY08 FY09 FY10 FY11 1.5 3.0 3.6
RETURN ON EQUITY (%)

21 18 15 19.1
RETURN ON CAPITAL EMPLOYED (%)

21 18 15 12 12.6 9 6 3 0
2.2
12 11.6 9 6 3 0 FY07 FY08 13.0
FY09
15.4
FY10
FY11
237.8
North Asia 2,328.5
200
ANNUAL REPORT 2011
2011 AWARDS
Country ECS Holdings ECS Holdings ECS China ECS China ECS China ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia 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 Awarded by DP Information DP Information FLUKE HP Intel HP HP HP Intermec Oracle Symantec HP HP HP HP Oracle HP HP IBM Lenovo Buffalo Cisco Cisco Acer Acer Acer Acer Acer EMC HP HP HP IBM Oracle Award S1000 - Ranked 22nd for Top Public-Listed Company by Sales Turnover Singapore International 100 - Ranked Top 15 by Overseas Revenue Best Distributor Partner of 2011 Distributor Partner of the Year 2011 Excellent Distributor of Intel Software (China Area) - 2011 Best Distributor - Outstanding Enterprise Business Product Selling 2011 Best Distributor - HP Software 2011 Best Distributor - Outstanding Overall TS Achievement 2011 Distributor of the Year 2011 Partner of the Year 2011 Top Symantec Performing Distributor FY2011 Top Master Part Reseller - Technology Services (2011) Top Services Contract Specialist - Technology Services (2011) Top Wholesaler - HP Storage Division Broadbase Category (2011) Top Wholesaler - Storage Division (2011) Partner of the Year FY11 - Value Added Distributor 1H11 Best Performing Distributor (Partner-Led Business) Top Wholesaler of the Year 2011 - IPG Singapore Asia Pacific Software Distributor 2011 Top Distributor of the Year 2011 - Relationship Segment Best Sales Growth 2011 Best Distributor FY 2011 Best Service Sales Distributor FY 2011 Distributor of the Year, Consumer Sales Notebooks and UMPC (2011) Distributor of the Year, Consumer Sales Projectors (2011) Most Outstanding Master Authorized Service Partner of the Year (2011) Product Manager of the Year - Consumer Notebooks (2011) Product Manager of the Year Projectors (2011) Distributor of the Year 2011 IPG Distributor of the Year 2011 Top Distributor - Highest Growth 2011 IPG IWS System Sales Distributor 2011 Top Volume Partner Distributor for 2011 Value-Added Distributor of the Year 2011
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ANNUAL REPORT 2011
2011 MILESTONES
Country ECS Thailand ECS Thailand Month Jan - Mar 11 Apr - Jun 11 Description of Milestone Apppointed as Distributor for Lexmark The Value Systems established the Corporate Social Responsibility Campaign of The Fairy Tale Project V at Watprachanart School, Nakhonchaisri District, Nakhonpathom Province Appointed as Distributor for Symantec Cloud Appointed as Distributor for Huawei Technology Appointed as Dells Strategic Authorised Distributor for Dell Commercial & Consumer Products Appointed as Lenovos Distributor for Consumer & SMB ECS ICT Berhad nominated as one of the companies in The Edge Billion Ringgit Club Opening of technology centre facility in Malaysia for Oracle Exadata Database machine located in main office. Appointed as Distributor for Trek Appointed as Distributor for InFocus Appointed as Distributor for Serena Software Appointed as Distributor for Dell Streak Appointed as Distributor for HP Networking Appointed as Distributor for Huawei Appointed as Distributor for Hitachi Data Systems Appointed as Distributor for Proofpoint Appointed as Distributor for WatchGuard Appointed as Distributor for Decision Appointed as Distributor for Huawei Consumer Appointed as Distributor for Fujitsu Appointed as Distributor for Dell Appointed as Distributor for Huawei Appointed as Distributor for Fortinet Appointed as Distributor for ASUS
ECS Thailand ECS Thailand ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Indonesia ECS Indonesia ECS Indonesia ECS Philippines ECS Philippines
Apr - Jun 11 Jul - Sep 11 Jan - Mar 11 Apr - Jun 11 Jul - Sep 11 Oct - Dec 12 Jan - Mar 11 Jan - Mar 11 Apr - Jun 11 Apr - Jun 11 Apr - Jun 11 Jul - Sep 11 Jul - Sep 11 Jul - Sep 11 Oct - Dec 12 Oct - Dec 12 Oct - Dec 12 Jan - Mar 2011 Jan - Mar 2011 Jul - Sept 2011 Jan - Mar 11 Jan - Mar 11
ANNUAL REPORT 2011
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 long-term success of the company. The Board works with Management to achieve this objective and the Management remains accountable to the Board.
The Boards role is to: a) b) c) d) e) f) 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 risks to be assessed and managed, including safeguarding of shareholders interests and the companys assets; review management performance; identify the key stakeholder groups and recognise that their perceptions affect the companys reputation; and set the companys values and standards, and ensure that obligations to shareholders and other stakeholders are understood and met; consider sustainability issues, e.g. environmental and social factors, as part of its strategic formulation.
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) b) c) d) the Nominating Committee; the Compensation Committee; the Audit Committee; and the Investment 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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ANNUAL REPORT 2011

The Board intends to hold four meetings each year and shall also hold informal meetings as and when necessary. 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 No. of Meetings Attended 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 4 5
Board Member Tay Eng Hoe Narong Intanate Foo Sen Chin Leong Horn Kee Koh Soo Keong Tan Hup Foi Mao Xiangqian Ong Wei Hiam Board Composition and Guidance Principle 2:
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 and substantial shareholders. 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 records 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 19 to 21 of the annual report. Chairman and Chief Executive Officer Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the companys business. No one individual should represent 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. Board Membership & Board Performance Principle 4: Principle 5: There should be a formal and transparent process for the appointment and re-election of directors to the Board. There should be a formal annual assessment of the effectiveness of the Board as a whole and its committees and the contribution by each director to the effectiveness of the Board.
ANNUAL REPORT 2011

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) d) e) f) g) 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; determine whether or not a Director is independent; review of board succession plans for directors, in particular, the Chairman and for the CEO; the development of a process for evaluation of the performance of the Board, its committees and directors; the review of training programs for the Board; and the appointment and re-election of directors.
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 so as to enable them to make informed decisions to discharge their duties and responsibilities as directors.
All directors are provided with complete, adequate and timely information prior to meetings and on a regular basis to enable them to perform their roles properly. Directors are entitled to request additional information as needed to make informed decisions. 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, the cost of such professional advice will be borne by the Company. (B) REMUNERATION MATTERS 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 or her 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 and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate the (a) directors to provide good stewardship of company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.
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ANNUAL REPORT 2011

Principle 9: Every 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 management personnel, and performance.
The Groups remuneration policy is to provide a competitive remuneration package so as to attract, retain and motivate directors and senior management with 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 2011 Allowances and other Benefits %
Name of Director $1,000,000 to below $2,000,000 Narong Intanate $500,000 to below $1,000,000 Mao Xiangqian Below $500,000 Tay Eng Hoe Foo Sen Chin Leong Horn Kee Tan Hup Foi Koh Soo Keong Ong Wei Hiam Executives Remuneration
Salary %
Bonus %
Fees %
Total %
17
80
100
49
48
100
100 100 100 100 100 100
100 100 100 100 100 100
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.
ANNUAL REPORT 2011

NO. OF EXECUTIVES IN REMUNERATION BANDS No. of Employees (Note 1) 11 7 3 21 Total Fixed Compensation (Note 2) $1,581,519 $1,788,120 $610,005 $3,979,644 Total Variable Compensation (Note 3) $132,932 $1,228,790 $1,361,173 $2,722,895 Total Remuneration
Total Compensation (S$) $100,000 to $249,999 $250,000 to $499,999 $500,000 to $749,999 Total Notes: 1. 2. 3.
$1,714,451 $3,016,910 $1,971,178 $6,702,539
Including employees in local and overseas subsidiaries. Inclusive 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. Risk Management and Internal Controls Principle 11: The Board is responsible for the governance of risk. The Board should ensure that the Management maintains a sound system of risk management and internal controls to safeguard the shareholders interests and the companys assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives. The Board acknowledges that it is responsible for the Groups system of internal control and strives to maintain a robust and effective system of internal controls to address any financial, operational or compliance risks. It is the opinion of the Board with the concurrence of the AC that, in the absence of evidence to the contrary, the system of internal controls maintained by the Company and in place throughout the financial year 2011, provides reasonable, but not absolute, assurance against material financial misstatements or loss, and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulations and best practices, and the identification and containment of financial, business and compliance risks. The Board notes that all internal control systems contain inherent limitations and no system of internal controls could provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities.
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ANNUAL REPORT 2011

Audit Committee Principle 12: 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; reviewing any suspected fraud or irregularity, or suspected infringement of any Singapore laws or regulations or rules of the SGX-ST or any other regulatory authority in Singapore, which has or is likely to have a material impact on the Groups operating results or financial position, and reporting such matters to the Board; and considering other matters as requested by the Board.
c)
d)
e) f)
g)
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 4 meetings since the date of the last annual report. The Audit Committee reviewed the Interested Person Transactions for the year ended 31 December 2011 in accordance with the terms of the Shareholders Mandate for such transactions as were approved on 21 April 2011. Interested Person Transactions with a total value of $20.6 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, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.
ANNUAL REPORT 2011

Meetings and attendance are as follows: No. of Meetings 4 4 4 Audit Committee Attended 4 4 4
Name of Director Leong Horn Kee (Chairman) Tan Hup Foi Koh Soo Keong Internal Audit
Principle 13 : The Company should establish an effective internal audit function that is adequately resourced and 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 Audit Committee approves the hiring, removal, evaluation and compensation of the head of the internal audit department. 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 has access to all the Companys documents, records, properties and personnel and 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 carry out their function according to 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. Investment Committee The Investment Committee is chaired by the independent and non-executive director, Mr Leong Horn Kee. The members of the Committee comprise Mr Foo Sen Chin, Mr Tan Hup Foi and Mr Ong Wei Hiam. The Investment Committee meets periodically to perform the following functions:a) b) c) to review and recommend investment policy guidelines and capital expenditure plans to the Board; to review investment risk management policies; to evaluate and recommend any proposed investments, divestments, geographical expansion, mergers and acquisitions, joint ventures for Boards approval; and to review and monitor performance, forecast and business plan of investments.
d)
The Investment Committee held 3 meetings since the date of the last annual report.
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ANNUAL REPORT 2011

(D) COMMUNICATION WITH SHAREHOLDERS Principle 14 : Companies should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders rights, and continually review and update such governance arrangements. Principle 15 : Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective and fair communication with shareholders. Principle 16 : Companies should encourage greater shareholder participation at general meetings of shareholders, 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. (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. In addition, pursuant to Rule 728 of the Listing Manual, where any borrowings or loans of the Company or its subsidiaries contains any provisions which makes reference to the shareholding interest of any controlling shareholder(s), the Company will obtain an undertaking from such controlling shareholder(s) to notify the Company, as soon as it becomes aware, of any share pledging arrangements relating to these shares and of any event which may result in a breach of the Companys loan provisions. (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 Aggregate value of all IPTs conducted transactions conducted under shareholders under shareholders mandate pursuant mandate pursuant to Rule 920 of to Rule 920 of Listing Manual of SGX-ST Listing Manual of SGX-ST) (excluding transactions less than $100,000) N/A S$4,764,928
Name of Interested Person Transactions for the sale of goods and services with Vnet Capital Co., Ltd and its subsidiaries
FINANCIAL CONTENTS
46 // Directors Report 51 // Statement by Directors 52 // Independent Auditors Report 53 // Statement of Financial Position 54 // Consolidated Statement of Comprehensive Income 55 // Consolidated Statement of Changes In Equity 57 // Consolidated Statement of Cash Flows 58 // Notes to the Financial Statements 100 // Shareholdings Statistics 101 // Notice of Annual General Meeting
ANNUAL REPORT 2011
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 2011. 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 Holdings at end of the year
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 15/10/2020 Narong Intanate Mao Xiangqian Foo Sen Chin ECS Holdings Limited - options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2015 Tay Eng Hoe Leong Horn Kee Koh Soo Keong Tan Hup Foi Ong Wei Hiam
1,500,000 900,000 300,000
1,500,000 900,000 300,000
700,000 400,000 400,000 400,000 300,000
700,000 400,000 400,000 400,000 300,000
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 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 2012. During the financial year, certain of its subsidiaries have, in the normal course of business entered into transactions with companies in which Mr Narong Intanate has an interest. These transactions include the purchase and sale of information technology products and services amounted to $394,548 (2010: $611,877) and $19,908,337 (2010: $22,365,842) respectively and are carried out on normal commercial terms.
ANNUAL REPORT 2011
DIRECTORS REPORT
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 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. Issue of shares under option During the financial year, there is no issuance of shares under the share option scheme of the Company. Unissued shares under option
Number of option holders at 31 December 2011 Options outstanding at 31 December 2011
(c)
(d)
Date of grant of options 15/10/2010 15/10/2010
Exercise price per share $0.550 $0.550
Exercise period 15/10/2011 to 15/10/2015 15/10/2011 to 15/10/2020
5 48
2,200,000 10,650,000
46 47
ANNUAL REPORT 2011
DIRECTORS REPORT
Share options (contd) The Company (contd) (d) Unissued shares under option (contd) The details of options granted and exercised are as follows:-
Name of participant Executive directors - Narong Intanate - Mao Xiangqian Non-executive directors - Tay Eng Hoe - Foo Sen Chin - 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 forfeited/ lapsed [4]
Aggregate options outstanding [5
11,006,000 900,000
(8,906,000) -
(600,000) -
1,500,000 900,000
5,676,000 4,160,000 678,000 520,000 400,000 300,000
(2,226,000) (3,340,000) -
(2,750,000) (520,000) (278,000) (120,000) -
700,000 300,000 400,000 400,000 400,000 300,000
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)
8,629,000 32,162,000 66,986,000
(6,679,000) (22,264,000)
(1,950,000) (24,212,000) (31,872,000)
7,950,000 12,850,000
[1] Options granted during the financial year under review.
[2] Aggregate options granted since commencement of the schemes to the end of the financial year under review. [4] Aggregate options lapsed since commencement of the schemes to the end of the financial year under review. [5] Aggregate options outstanding as at end of the financial year under review.
[3] Aggregate options exercised since commencement of the schemes to the end of the financial year under review.
Except as disclosed, since the commencement of the option schemes:(i) no option has been granted to the controlling shareholder of the Company or their associates; (ii) no participant under the schemes has been granted 5% or more of the total options available under the schemes; and (iii) no option has been granted to employees of subsidiaries under the schemes. The options granted by the Company do not entitle the holders of the options, by virtue of such holding, to any rights to participate in any share issue of any other company.
ANNUAL REPORT 2011
DIRECTORS REPORT
Share options (contd) 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. Issue of shares under option During the financial year, there were no issuance of shares under the share option scheme of the company. Unissued shares under option
Number of option holders at 31 December 2011 Options outstanding at 31 December 2011
(b)
(c)
Date of grant of options 16/10/2009
Exercise price per share US$1.8156
Exercise period 16/10/2009 to 16/10/2012
425,215
Except as disclosed above, there were:(i) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; (ii) no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; and (iii) no unissued shares of the Company or its subsidiaries under option at the end of the financial year. 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. Since the commencement of the Scheme, no Awards have been granted. Audit committee The members of the Audit Committee during the year and at the date of this report are:Leong Horn Kee (Chairman, Independent director) Tan Hup Foi (Independent director) Koh Soo Keong (Independent director) 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.
48 49
ANNUAL REPORT 2011
DIRECTORS REPORT
Audit committee (contd) 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. 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
9 March 2012
ANNUAL REPORT 2011
STATEMENT BY DIRECTORS
In our opinion: (a) the financial statements set out on pages 53 to 99 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 2011 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.
(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
9 March 2012
50 51
ANNUAL REPORT 2011
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 2011, 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 53 to 99. 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 2011 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 9 March 2012
ANNUAL REPORT 2011
STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2011
Note Non-current assets Property, plant and equipment Intangible assets Subsidiaries Interest in associates Deferred expenses Deferred tax assets 2011 $000 Group 2010 $000 2011 $000 Company 2010 $000
4 5 6 7 18 8
9,981 33,522 46,329 3,320 8,298 101,450
7,583 33,522 41,585 6,932 89,622
111 189,442 3,320 192,873
248 206,180 3,320 209,748
Current assets Inventories Trade and other receivables Deferred expenses Cash and cash equivalents
9 10 18 13
231,749 552,608 2,493 131,397 918,247 1,019,697
207,763 554,637 92,500 854,900 944,522
29,994 19,628 49,622 242,495
37,076 8,833 45,909 255,657
Total assets Equity attributable to owners of the Company Share capital Reserves Non-controlling interests Total equity Non-current liabilities Financial liabilities Deferred income Deferred tax liabilities Current liabilities Financial liabilities Deferred income Trade and other payables Current tax payable Total liabilities Total equity and liabilities
14 15
112,815 213,724 326,539 1,303 327,842
112,815 183,779 296,594 1,093 297,687
112,815 17,977 130,792 130,792
112,815 24,474 137,289 137,289
17 18 8
101,340 3,938 2,913 108,191 141,341 3,154 431,243 7,926 583,664 691,855 1,019,697
101,506 570 2,367 104,443 128,954 872 405,402 7,164 542,392 646,835 944,522
101,238 27 101,265 1,313 8,895 230 10,438 111,703 242,495
101,238 27 101,265 8,354 8,499 250 17,103 118,368 255,657
17 18 19
The accompanying notes form an integral part of these financial statements.
52 53
ANNUAL REPORT 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 31 DECEMBER 2011
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 gain/(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 22 2011 $000 3,607,165 (3,439,869) 167,296 9,323 (79,487) (36,965) 60,167 (14,927) 6,917 52,157 (12,738) 39,419 2010 $000 3,085,373 (2,930,254) 155,119 19,389 (65,104) (39,700) 69,704 (8,621) 5,982 67,065 (12,895) 54,170
23 24
25
4,357 (522) 3,835 43,254
(3,291) (534) (809) (4,634) 49,536
39,230 189 39,419
52,998 1,172 54,170
43,044 210 43,254
48,012 1,524 49,536
26 26
10.74 cents 10.65 cents
14.51 cents 14.48 cents
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Group 112,815 (809) (4,986) 52,998 (534) (534) (809) 48,012 (3,643) 52,998 52,998 (3,643) 10,961 3,775 (7,435) 139,412 259,528
Share capital $000 Total $000 17,185 1,172 352 1,524
Dividend reserve $000
General reserve $000
Currency translation reserve $000 Accumulated profits $000
Noncontrolling interests $000
Total equity $000 276,713 54,170 (3,291) (534) (809) 49,536

ANNUAL REPORT 2011
At 1 January 2010 Total comprehensive income for the year 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 Total comprehensive income for the year
112,815 2,192 13,153 1,377 5,152 13,153 (10,961) (12,421)
1,377 -
(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
Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Transfer to general reserve 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
54
55
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Group 112,815 (522) 3,814 39,230 (522) 43,044 4,336 39,230 39,230 4,336 13,153 5,152 (12,421) 177,895 296,594 1,093 189 21 210
Share capital $000 Total $000
Dividend reserve $000
General reserve $000
Currency translation reserve $000 Accumulated profits $000
Noncontrolling interests $000
Total equity $000 297,687 39,419 4,357 (522) 43,254

ANNUAL REPORT 2011
At 1 January 2011 Total comprehensive income for the year Profit for the year Effects of translation of net assets of foreign subsidiaries Share of foreign currency translation differences of associates Total comprehensive income for the year
112,815 8,038 (5,115) 8,038 1,310 6,462 (8,607) (13,153) -
1,310 -
(1,310) 54 (8,038) (9,294) 207,831
54 (13,153) (13,099) 326,539
1,303
54 (13,153) (13,099) 327,842
Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Transfer to general reserve Share-based payment transactions Final tax-exempt one-tier dividends paid at 3.6 cents per share for 2010 Proposed tax-exempt one-tier dividends of 2.2 cents per share for 2011 Total contributions by and distributions to owners At 31 December 2011
ANNUAL REPORT 2011
CONSOLIDATED STATEMENT OF CASH FLOWS

Note Cash flows from operating activities Profit before income tax Adjustments for: Share of profit of associates Net fair value (gain)/loss on financial instruments Depreciation of property, plant and equipment Property, plant and equipment written off Other assets written off Loss 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 from/(used in) 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 received from/(to) associate Net cash from/(used in) 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 Dividends paid to equity holders of the Company Dividend paid to non-controlling interests of a subsidiary Net cash (used in)/from 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 2011 $000 2010 $000
52,157
67,065
23 4 23 23 23 23 23 24 23 23
(6,917) (1,260) 2,190 175 17 14,927 (704) 54 60,639 (25,684) (14,577) 37,170 57,548 (12,860) 44,688
(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)
29
704 (4,910) 83 807 6,801 3,485
955 (647) (2,757) 67 (5,723) 125 1,691 (6,801) (13,090)
(14,579) 898,308 (879,597) (200) (13,153) (9,221) 38,952 92,500 (55) 131,397
(7,979) 857,385 (779,277) (119) (10,961) (1,810) 57,239 43,147 51,117 (1,764) 92,500
13

56 57
ANNUAL REPORT 2011
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 9 March 2012. 1 Domicile and activities ECS Holdings Limited (the Company) is incorporated in the Republic of Singapore and has its registered office at 8 Temasek Boulevard, #34-02, Suntec Tower Three, Singapore 038988. The financial statements of the Company as of and for the year ended 31 December 2011 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 Basis of preparation (a) Statement of compliance The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS). 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. 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 otherwise stated. Use of estimates and judgements 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. (e) Changes in accounting policies Identification of related party relationships and related party disclosures From 1 January 2011, the Company has applied the revised FRS 24 Related Party Disclosures (2010) to identify parties that are related to the Company and to determine the disclosures to be made on transactions and outstanding balances, including commitments, between the Company and its related parties. FRS 24 (2010) improved the definition of a related party in order to eliminate inconsistencies and ensure symmetrical identification of relationships between two parties. The adoption of FRS 24 (2010) has resulted in additional parties being identified as related to the Company. Transactions and outstanding balances, including commitments, with these related parties for the current and comparative years have been disclosed accordingly in note 34 to the financial statements.
(b)
(c)
(d)
ANNUAL REPORT 2011

2 Basis of preparation (contd) (e) Changes in accounting policies (contd) The adoption of FRS 24 (2010) affects only the disclosures made in the financial statements. There is no financial effect on the results of the financial position of the Company for the current and previous financial years. 3 Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in 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 (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. For non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the acquirees net assets in the event of liquidation, the Group elects on a transaction-by-transaction basis whether to measure them at fair value, or at the non-controlling interests proportionate share of the recognised amounts of the acquires identifiable net assets, at the acquisition date. All other non-controlling interests are measured at acquisition-date fair value or when applicable, on the basis specified in another standard. 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 non-controlling interests to have a deficit balance.
58 59
ANNUAL REPORT 2011

3 Significant accounting policies (contd) (a) Basis of consolidation (contd) (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. Any difference between the adjustment to non-controlling interests and the fair value of consideration paid is recognised directly in equity and presented as part of equity attributable to owners of the Company. (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. (b) Foreign currencies (i) 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. The reporting currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-
ANNUAL REPORT 2011

3 Significant accounting policies (contd) (b) Foreign currencies (contd) (i) Foreign currency transactions (contd) 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 or 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 (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.
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3 Significant accounting policies (contd) (c) Financial instruments (contd) (i) Non-derivative financial assets (contd) 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.
ANNUAL REPORT 2011

3 Significant accounting policies (contd) (c) Financial instruments (contd) (iv) Derivative financial instruments (contd) 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. (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) 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.
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ANNUAL REPORT 2011

3 Significant accounting policies (contd) (d) Property, plant and equipment (contd) (iii) Depreciation (contd) The estimated useful lives are as follows: Freehold building 50 years Leasehold improvements 10 years Office equipment 5 years Furniture and fittings 5 years Computers 5 years Motor vehicles 5 years 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. (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.
ANNUAL REPORT 2011

3 Significant accounting policies (contd) (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. 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.
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ANNUAL REPORT 2011

3 Significant accounting policies (contd) (h) Impairment (contd) (ii) Non-financial assets (contd) 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. 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 non-market 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.
ANNUAL REPORT 2011

3 Significant accounting policies (contd) (j) Employee benefits (contd) (iii) Share-based payments (contd) 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 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) 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.
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ANNUAL REPORT 2011

3 Significant accounting policies (contd) (m) 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. (n) 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. 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. In the ordinary course of business, there are many transactions and calculations for which the ultimate tax treatment is uncertain. Therefore, the Company recognises tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognised when the Company believes certain positions may be fully sustained upon review by tax authority, despite the Companys belief that its tax return positions are supportable. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors including interpretations of tax law and prior experience. The assessment relies on estimates and assumptions and may involve a series of multifaceted judgments about future events. New information may become available that causes the Company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact tax expense in the period that such a determination is made.
ANNUAL REPORT 2011

3 Significant accounting policies (contd) (o) 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. (p) 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. (q) 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 2011, 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.
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Property, plant and equipment
Group
Freehold building $000 Computers $000
Leasehold improvements $000
Office equipment $000
Furniture and fittings $000
Motor vehicles $000
Assets under construction $000
Total $000
ANNUAL REPORT 2011
Cost At 1 January 2010 Additions Disposals/written off Dilution of a subsidiary to an associate Transfers/reclassifications Translation adjustment At 31 December 2010 Additions Disposals/written off Transfers/reclassifications Translation adjustment At 31 December 2011 99 (4) 95 512 18 625 2,421 463 (57) 2,827 676 (273) 497 (77) 3,650 1,704 360 (35) (796) 31 1,264 291 (35) 95 (42) 1,573 2,363 305 (315) (665) 426 19 2,133 589 (110) 336 (57) 2,891 13,932 974 (917) (2,128) 45 (113) 11,793 1,414 (1,122) 949 36 13,070 1,733 450 (107) (594) (28) 1,454 124 (78) 15 1,515 982 549 (471) 24 1,084 1,304 (1,877) (45) 466
23,234 3,101 (1,374) (4,183) (128) 20,650 4,910 (1,618) (152) 23,790
Accumulated depreciation At 1 January 2010 Depreciation charge for the year Disposals/written off Dilution of a subsidiary to an associate Translation adjustment At 31 December 2010 Depreciation charge for the year Disposals/written off Translation adjustment At 31 December 2011 6 5 11 16 1 28 1,757 298 (64) 1,991 341 (202) (94) 2,036 1,042 124 (31) (329) 18 824 142 (26) (25) 915 1,195 300 (309) (231) 29 984 290 (105) (39) 1,130
9,812 1,309 (857) (1,644) (107) 8,513 1,216 (981) 39 8,787
1,138 199 (56) (528) (9) 744 185 (30) 14 913
14,950 2,235 (1,253) (2,732) (133) 13,067 2,190 (1,344) (104) 13,809
Carrying amount At 1 January 2010 At 31 December 2010 At 31 December 2011 93 84 597 664 836 1,614
662 440 658
1,168 1,149 1,761
4,120 3,280 4,283
595 710 602
982 1,084 466
8,284 7,583 9,981
The net carrying amount of property, plant and equipment under finance leases as at 31 December 2011 was $362,000 (2010: $553,000).
ANNUAL REPORT 2011

4 Property, plant and equipment (contd) Leasehold improvements $000 Office equipment $000 Furniture and fittings $000 Computers $000 Motor vehicles $000 Total $000
Company Cost At 1 January 2010 Additions Disposal/write off At 31 December 2010 Additions Disposal/write off At 31 December 2011 Accumulated depreciation At 1 January 2010 Depreciation charge for the year Disposal/write off At 31 December 2010 Depreciation charge for the year Disposal/write off At 31 December 2011 Carrying amount At 1 January 2010 At 31 December 2010 At 31 December 2011 5 Intangible assets
191 81 272 23 (273) 22
11 4 15 13 (11) 17
22 3 25 31 (24) 32
343 35 378 41 (345) 74
25 (25) -
567 148 (25) 690 108 (653) 145
151 34 185 19 (202) 2
11 1 12 4 (11) 5
22 22 4 (22) 4
158 65 223 43 (243) 23
15 (15) -
342 115 (15) 442 70 (478) 34
40 87 20
3 12
3 28
185 155 51
225 248 111
2011 $000 Goodwill on consolidation Impairment testing for goodwill 33,522
Group
2010 $000
33,522
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 (2.9%) to 18.6% (2010: 8.6% to 13.1%) per annum for the years 2012 to 2016 (2010: 2011 to 2015), giving an average annual growth in revenue of 12.4% (2010: 13.1%). A pre-tax discount rate of 11.2% (2010: 7.3%) 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.
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.
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ANNUAL REPORT 2011

6 Subsidiaries Company 2011 2010 $000 $000 97,426 7,516 84,500 189,442 97,426 7,516 101,238 206,180
Note Unquoted equity shares, at cost Quasi-equity loans to subsidiaries, at cost Loans to subsidiaries
(a) (b)
(a)
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 30 August 2013 (2010: 30 August 2013) and bear interest at 3.47% to 3.52% (2010: 3.49%) per annum.
(b)
Details of the significant subsidiaries are set out below. Groups effective equity interest 2011 2010 % % 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 Provider of information technology products and services for IT infrastructure Investment holding, provider of information technology products and services for IT infrastructure Investment holding
Country of incorporation/business Singapore
ECS Indo Pte Ltd
Singapore
89.12
89.12
The Value Systems Co., Ltd (a)
Thailand
100
100
ECS Technology (China) Limited (a)
Hong Kong
100
100
EC Sure Holdings (Thailand) Co., Ltd ECS Infocom (Phils) Pte. Ltd. ECS Vietnam Company Limited 1
Thailand
99.9
99.9
Investment holding Trading of information and communications technology products and services
Singapore Vietnam
100 100
100 -
ANNUAL REPORT 2011

6 Subsidiaries (contd) Details of the significant subsidiaries are set out below. Country of incorporation/ business Groups effective equity interest 2011 2010 % %
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 Provider of information technology products (formerly ECS International Trading and services for IT infrastructure (Shanghai) Co., Ltd) (a) ECS China Technology (Shanghai) Co., Ltd (a) Provider of information technology products and services for IT infrastructure Peoples Republic of China Peoples Republic of China Peoples Republic of China Hong Kong 100 100
100
100
ECS Beijing Chuang Yue Technology Co., Ltd (a)2
Provider of information technology products and services for IT infrastructure
100
EIT info-tech Limited (a)
Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure
100
100
ECS Technology (HK) (a) Co., Limited

1
Hong Kong
100
100
On 28 December 2011, the Company incorporated a wholly owned subsidiary, ECS Vietnam Company Limited. The Company has a commitment to inject a total of $129,000 within 12 months after the issuance of investment certificate. On 14 November 2011, ECS Technology (China) Limited, a wholly owned subsidiary of the Company, has incorporated a wholly owned subsidiary, ECS Beijing Chuang Yue Technology Co., Ltd. On 17 February 2012, the subsidiary has injected a capital of $1,280,000. Audited by other member firms of KPMG International for consolidation purposes.
(a)
KPMG LLP Singapore is the auditor of all the Singapore incorporated subsidiaries.
72 73
ANNUAL REPORT 2011

7 Interest in associates 2011 $000 Investment in associates Loan to associate 45,744 585 46,329 Group 2010 $000 41,000 585 41,585 Company 2011 2010 $000 $000 3,320 3,320 3,320 3,320
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 Philippines Malaysia Effective equity held by the Group 2011 2010 49.99% 41% 49.99% 41%
Name of associate MSI-ECS Phils., Inc. ECS ICT Berhad (ECSB)
Audited by Pelayo Teodoro Santamaria & Co. KPMG Malaysia
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 $25,227,000 (2010: 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 amounting to $333,000 (2010: $249,000). The summarised financial information below relating to the associates are not adjusted for the percentage of ownership held by the Group. 2011 $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. 774,474 15,053 200,423 111,127 2010 $000 711,266 15,153 176,491 98,954
ANNUAL REPORT 2011

7 Interest in associates (contd) Impairment testing for investment in an associate (contd) 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 7.7% to 10.2% per annum (2010: 10.1% to 15.5% per annum) for the years 2012 to 2016 (2010: 2011 to 2015), giving an average annual growth in revenue of 8.6% (2010: 11.3%). A pre-tax discount rate of 15.6% (2010: 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 estimated using a growth rate of 3.5%.
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 Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The amounts determined after appropriate offsetting are included in the balance sheet as follows: 2011 $000 Group Provisions Accelerated tax depreciation Deferred tax assets/(liabilities) Set off of tax Net deferred tax assets/(liabilities) Company Accelerated tax depreciation Deferred tax assets/(liabilities) Set off of tax Net deferred tax assets/(liabilities) Assets 2010 $000 Liabilities 2011 2010 $000 $000
8,298 8,298 8,298
6,932 6,932 6,932
(2,913) (2,913) (2,913)
(2,367) (2,367) (2,367)
(27) (27) (27)
(27) (27) (27)
74 75
Deferred tax (contd)
Movements in deferred tax assets and liabilities during the year are as follows:-
At 1/1/2010 $000
Change in tax rates $000
Recognised Dilution of in profit a subsidiary or loss to an (note 25) associate $000 $000 Translation adjustment $000 At 31/12/2010 $000 Change in tax rates $000 Translation adjustment $000
Recognised in profit or loss (note 25) $000
At 31/12/2011 $000
ANNUAL REPORT 2011
Group Deferred tax assets Provisions 160 994 (615) (226) 6,932 (490) 1,979
6,619
(123)
8,298
Deferred tax liabilities Accelerated tax depreciation (677) 67 123 (2,367) -
(1,880)
(545)
(1)
(2,913)
Company Deferred tax liabilities Accelerated tax depreciation (27)
(27)
(27)
ANNUAL REPORT 2011

9 Inventories 2011 $000 Trading inventories Goods in transit Allowance for obsolete inventories Comprises:Inventories, at cost Inventories, at net realisable value 209,330 31,635 240,965 (9,216) 231,749 31,635 200,114 231,749 Group
2010 $000
177,606 36,697 214,303 (6,540) 207,763 36,697 171,066 207,763
In 2011, changes in trading inventories recognised as cost of sales amounted to $3,557,148,000 (2010: $3,034,600,000). 10 Trade and other receivables 2011 $000 495,040 14,852 18,769 528,661 (19,440) 509,221 2,196 511,417 17,487 528,904 23,704 552,608 Group 2010 $000 Company 2011 2010 $000 $000 29,802 29,802 107 29,909 85 29,994 36,648 36,648 2 36,650 426 37,076
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
515,154 3,632 8,182 526,968 (14,140) 512,828 8,315 521,143 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.
76 77
ANNUAL REPORT 2011

11 Amounts due from/to related corporations 2011 $000 Group 2010 $000 Company 2011 2010 $000 $000
Note Amounts due from subsidiaries Dividend receivable Non-trade receivables Loans receivable Amounts due from associate Non-trade receivables Loans receivable 10 Amounts due to subsidiaries Non-trade payables Loans payable 19
2,196 2,196 2,196
1,514 6,801 8,315 8,315
7,419 4,751 15,436 27,606 2,196 2,196 29,802
9,250 3,875 15,208 28,333 1,514 6,801 8,315 36,648
375 5,200 5,575
29 5,070 5,099
The loans due from subsidiaries and associate are unsecured, repayable on demand and bear interest at rates ranging from 2.04% to 6.5% (2010: 1.93% to 10.00%) per annum. The non-trade balances are unsecured, interest-free and repayable on demand. The loans payable are unsecured, bear interest at 1.57% to 3.36% (2010: 1.64% to 4.44%) 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 2011 $000 2,258 4,142 6,860 2,964 1,263 17,487 Group 2010 $000 3,493 1,459 4,960 3,899 979 14,790 Company 2011 2010 $000 $000 105 2 107 2 2
Note Deposits Recoverables Tax recoverables Other receivables Call option Deposits and other receivables (a)
(a) 10
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. On 1 May 2011, the shareholders agreed to defer the commencement date of the call option period to sixty months from 4 January 2006 and ending on the date falling three years thereafter, unless otherwise further extended by the shareholder in writing. 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 profit or loss.
ANNUAL REPORT 2011

13 Cash and cash equivalents 2011 $000 Cash at bank and in hand Fixed deposits Cash and cash equivalents 116,611 14,786 131,397 Group 2010 $000 88,768 3,732 92,500 Company 2011 2010 $000 $000 9,228 10,400 19,628 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 0.05% to 1.49% (2010: 0.10% to 1.35%) 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 No. of shares 2011 2010 000 000 Issued and fully paid, with no par value: At 1 January and 31 December
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. 15 Reserves 2011 $000 (8,607) 8,038 6,462 207,831 213,724 Group 2010 $000 Company 2011 2010 $000 $000 8,038 9,939 17,977 13,153 11,321 24,474
Note Currency translation reserve Dividend reserve General reserve Accumulated profits (a) (b) (c)
(12,421) 13,153 5,152 177,895 183,779
(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. Dividend reserve The dividend reserve of the Group represents dividends proposed which are subject to approval of the shareholders at a general meeting. 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.
78 79
(b)
(c)
ANNUAL REPORT 2011

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: - 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. 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. 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.
(b)
(c)
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. At 31 December 2011, details of the options granted were as follows:Options outstanding at 1 January 2011 11,570,000 2,200,000 Options outstanding at 31 December 2011 10,650,000 2,200,000
Date of grant of options 15/10/2010 15/10/2010
Exercise price per share $0.550 $0.550
Options granted -
Options exercised -
Options forfeited or lapsed (920,000) -
Exercise period 15/10/2011 to 15/10/2020 15/10/2011 to 15/10/2015
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.
ANNUAL REPORT 2011

16 Equity compensation benefits (contd) At 31 December 2011, details of the options granted to senior employees were as follows:Options outstanding at 1 January 2011 113,392 Options outstanding at 31 December 2011 113,392
Date of grant of options
Exercise price per share
Options granted -
Options exercised -
Options forfeited or lapsed -
Exercise period 16/10/2009 to 16/10/2012
16/10/2009 US$1.8156
The fair value of such equity-settled share based payments was determined based on adjusted market comparables. 17 Financial liabilities Note Non-current liabilities Unsecured bank loans Finance lease liabilities Current liabilities Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities 2011 $000
Group
2010 $000
Company 2011 2010 $000 $000
101,238 102 101,340 35,271 105,055 133 882 141,341 242,681
101,238 268 101,506 45,641 77,518 167 5,628 128,954 230,460
101,238 101,238 1,313 1,313 102,551
101,238 101,238 2,763 5,591 8,354 109,592
(a)
Total financial liabilities (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 2011 of $282,248,000 (2010: $256,221,000).
Included in unsecured bank loans is a syndicated loan amounting to $101,238,000 (2010: $104,001,000). The syndicated loan bears interest at 2.88% to 3.02% (2010: 1.70% to 2.99%) per annum. The long term portion of the syndicated loan amounted to $101,238,000 (2010: $101,238,000) and is due on 30 August 2013 (2010: 30 August 2013). 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 2011 Repayable within 1 year Repayable after 1 year but within 5 years 2010 Repayable within 1 year Repayable after 1 year but within 5 years Interest $000 Payments $000
133 102 235 167 268 435
34 25 59 44 67 111
167 127 294 211 335 546
80 81
ANNUAL REPORT 2011

17 Financial liabilities (contd) Terms and debt repayment schedule Terms and conditions of financial liabilities are as follows: Nominal interest rate Year of maturity 31 December 2011 Face Carrying value Amount $000 $000 31 December 2010 Face Carrying value amount $000 $000
Currency
Group Unsecured bank loans and trade financing - floating rate - floating rate - floating rate - floating rate - floating rate Finance lease liabilities Derivative liabilities
SGD 2% - 2.2% USD 1.60% - 6.05% RMB 6.41% - 8.87% THB 3.8% IDR 10.45% IDR 7.00% -
2012 2012 2013 2012 2012 2012 2012 - 2014 -
6,208 173,695 35,281 22,140 4,240 241,564 294 882 242,740
6,208 173,695 35,281 22,140 4,240 241,564 235 882 242,681
1,524 162,774 26,903 33,196 224,397 546 5,628 230,571
1,524 162,774 26,903 33,196 224,397 435 5,628 230,460
Company Unsecured bank loans - floating rate Derivative liabilities
USD 2.88% - 3.02% -
2013 -
101,238 101,238 1,313 102,551
101,238 101,238 1,313 102,551
104,001 104,001 5,591 109,592
104,001 104,001 5,591 109,592
18
Deferred income and expenses Deferred income and expenses relate to fees billed/paid in advance on service maintenance contracts and consist of: 2011 $000 Deferred income Current portion Non-current portion Group 2010 $000
3,154 3,938 7,092
872 570 1,442
Deferred expenses Current portion Non-current portion
2,493 3,320 5,813
ANNUAL REPORT 2011

19 Trade and other payables Note Trade payables Accruals and other payables Amounts due to subsidiaries 2011 $000 390,831 40,412 431,243 Group Company 2011 2010 $000 $000 3,320 5,575 8,895 3,400 5,099 8,499
2010 $000
20 11
373,520 31,882 405,402
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 2011 $000 Accrued operating expenses Deposits received Other payables Interest payables 18,116 13,895 6,864 1,537 40,412
Group
2010 $000 20,464 5,172 5,057 1,189 31,882
Company 2011 2010 $000 $000 2,485 54 781 3,320 2,440 122 838 3,400
21
Financial instruments Credit risk The maximum amount of financial assets, representing the maximum exposure to credit risk, at the reporting date was: 2011 $000 Non-current loans to subsidiaries Loans and receivables Cash and cash equivalents 528,904 131,397 660,301 Group 2010 $000 Company 2011 2010 $000 $000 84,500 29,909 19,628 134,037 101,238 36,650 8,833 146,721
535,933 92,500 628,433
The maximum exposure to credit risk for loans and receivables at the reporting date by geographic region was: 2011 $000 China Thailand Singapore Indonesia Philippines 308,429 97,970 56,733 63,576 2,196 528,904 Group 2010 $000 Company 2011 2010 $000 $000 7,414 20,299 2,196 29,909 36,650 36,650
331,118 109,575 45,022 41,903 8,315 535,933
82 83
ANNUAL REPORT 2011

21 Financial instruments (contd) Credit risk (contd) The maximum exposure to credit risk for loans and receivables at the reporting date by type of customer was: 2011 $000 Value added resellers System integrators Direct accounts Retailers Others 219,743 64,643 57,567 108,140 78,811 528,904 Group 2010 $000 Company 2011 2010 $000 $000 29,909 29,909 36,650 36,650
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: 2011 $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 Group 2010 $000 Company 2011 2010 $000 $000
370,683 94,327 45,064 23,798 14,472 548,344 (1,592) (5,508) (12,340) (19,440)
429,320 72,959 27,195 11,884 8,715 550,073 (1,254) (4,973) (7,913) (14,140)
29,909 29,909 -
36,650 36,650 -
The movements in the allowance for impairment in respect of loans and receivables during the year were as follows: 2011 $000 14,140 (575) 5,585 290 19,440 Group 2010 $000 11,812 (243) 3,589 (628) (390) 14,140 Company 2011 2010 $000 $000 -
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
23(b)
The loans and receivables that were not past due or impaired at the reporting date is assessed to be at acceptable risk.
ANNUAL REPORT 2011

21 Financial instruments (contd) Impairment losses (contd) 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 2011 and 31 December 2010. 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: Carrying amount $000 Group 2011 Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities - Inflow - Outflow Trade and other payables Contractual cash flows $000 Cash flows Within Between 1 year 1 to 5 years $000 $000
35,271 206,293 235 882 431,243 673,924
(35,271) (213,385) (294) 20,337 (21,219) (431,243) (681,075)
(35,271) (109,150) (167) 20,337 (21,219) (431,243) (576,713)
(104,235) (127) (104,362)
2010 Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities - Inflow - Outflow Trade and other payables
45,641 178,756 435 5,628 405,402 635,862
(45,641) (188,492) (435) 15,404 (21,032) (405,402) (645,598)
(45,641) (81,209) (167) 15,404 (21,032) (405,402) (538,047)
(107,283) (268) (107,551)
Company 2011 Unsecured bank loans Derivative liabilities - Inflow - Outflow Trade and other payables
101,238 1,313 8,895 111,446
(107,292) 2,030 (3,343) (8,895) (117,500)
(3,057) 2,030 (3,343) (8,895) (13,265)
(104,235) (104,235)
2010 Unsecured bank loans Derivative liabilities - Outflow Trade and other payables
104,001 5,591 8,499 118,091
(113,118) (5,591) (8,499) (127,208)
(5,835) (5,591) (8,499) (19,925)
(107,283) (107,283)
It is not expected that the cash flow included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
84 85
ANNUAL REPORT 2011

21 Financial instruments (contd) Exposure to currency risk The Groups exposure to foreign currency risk based on notional amounts was as follows: 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 2011 IDR $000 PHP $000 USD $000 2010 IDR $000 PHP $000
55,789 15,157 (108,108) (99,653) 89,808 2,365 (44,642)
4,417 589 (4,240) (1,248) (235) (717)
416 416 USD $000
81,625 10,243 (114,722) (77,111) 112,904 585 13,524 2011 PHP $000
7,860 1,026 (7,249) (215) (435) 987 USD $000 2010
6,801 6,801 PHP $000
Company Loan receivables - non-current - current Dividend receivables Cash and cash equivalents Unsecured bank loans/trade financing Forward exchange contracts and hybrid swaps
84,500 8,904 3,796 10,911 (101,238) 71,500 78,373
416 416
101,238 8,095 4,955 3,898 (104,001) 97,500 111,685
6,801 6,801
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 2010. Group Profit or loss 2011 2010 $000 $000 USD IDR PHP (446) (7) 4 (135) (10) (68) Company Profit or loss 2011 2010 $000 $000 784 4 (1,117) (68)
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.
ANNUAL REPORT 2011

21 Financial instruments (contd) Sensitivity analysis (contd) Group Profit or loss 2011 2010 $000 $000 USD IDR PHP 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 2011 2010 $000 $000 Fixed rate instruments Financial liabilities Variable rate instruments Financial assets Financial liabilities Company Carrying amount 2011 2010 $000 $000 446 7 (4) 135 10 68 Company Profit or loss 2011 2010 $000 $000 (784) (4) 1,117 68
(235)
(435)
(242,446) (242,446)
6,801 (230,025) (223,224)
99,936 (107,751) (7,815)
123,247 (114,662) 8,585
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 2010.
86 87
ANNUAL REPORT 2011

21 Financial instruments (contd) Interest rate risk (contd) Cash flow sensitivity analysis for variable rate instruments (contd) Group Profit or loss 100 bp 100 bp increase decrease $000 $000 31 December 2011 Variable rate instruments Interest rate swaps and hybrid swaps Cash flow sensitivity (net) 31 December 2010 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 2011. 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). Level 1 $000 Level 2 $000 Level 3 $000 Total $000 Company Profit or loss 100 bp 100 bp increase decrease $000 $000
(2,424) 218 (2,206)
2,424 (218) 2,206
(78) 218 140
78 (218) (140)
(2,232) 1,338 (894)
2,232 (1,338) 894
86 1,338 1,424
(86) (1,338) (1,424)
Group 31 December 2011 Option asset Derivative liabilities 31 December 2010 Option asset Derivative liabilities
(882)
1,263 -
1,263 (882)
(5,628)
979 -
979 (5,628)
ANNUAL REPORT 2011

21 Financial instruments (contd) Fair values (contd) Fair value hierarchy (contd) Company 31 December 2011 Derivative liabilities 31 December 2010 Derivative liabilities Level 1 $000 Level 2 $000 Level 3 $000 Total $000
(1,313)
(1,313)
(5,591)
(5,591)
Assets measured at fair value based on Level 3 Fair value measurement at end of the reporting period: Group Option Asset $000 2011 Balance at beginning of the year Total gains in profit or loss Transfer out of Level 3 Balance at end of the year 2010 Balance at beginning of the year Total gains in profit or loss Transfer out of Level 3 Balance at end of the year Gains included in profit or loss for the year is presented in other income as follows: 2011 $000 Total gains included in profit or loss for the year Total gains for the period included in profit or loss for assets held at the end of the reporting period 22 Revenue 2011 $000 Sale of IT products IT services 3,578,927 28,238 3,607,165 Group 2010 $000 284 284 2010 $000 306 306
979 284 1,263
673 306 979
3,060,912 24,461 3,085,373
Transactions within the Group have been excluded in arriving at revenue for the Group.
88 89
ANNUAL REPORT 2011

23 Profit from operations The following items have been included in arriving at profit from operations:(a) Staff costs 2011 $000 Wages and salaries Contributions to defined contribution plans Government grants Jobs Credit Scheme, offset against wages and salaries 54,898 8,179 63,077 Group 2010 $000
51,733 7,346 (99) 58,980
(b)
Other expenses/(income) 2011 $000 Group 2010 $000 (1,403) (326) (629) 340 3,589 (4,569) (8,051) 264 24 209 54 15 722 155 4,381 5,698 140
Exchange gains, net Interest income - banks - associate Allowances made for - obsolete inventories - doubtful trade receivables 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 (back)/off, net Loss on disposal of property, plant and equipment Equity-settled share-based payment Property, plant and equipment written-off Audit fees paid/payable to: - auditors of the Group Non-audit fees paid/payable to auditors of the Group Net fair value (gain)/loss on financial instruments Operating lease expenses Other asset written off 24 Finance costs
(2,225) (356) (348) 2,735 5,585 344 48 (83) 17 54 175 393 105 (1,260) 6,936 -
2011 $000 Recognised in profit for the year Interest paid and payable on - bank overdrafts - finance leases - short-term loans - trade financing
Group
2010 $000
4 42 13,429 1,452 14,927
6 42 7,758 815 8,621
ANNUAL REPORT 2011

25 Income tax expense 2011 $000 Tax expense Current tax expense - Current year - Over provided in prior years Deferred tax expense - Movements in temporary differences - Changes in tax rates Group 2010 $000
13,760 (78) 13,682 (1,434) 490 (944) 12,738 2011 $000
13,876 (504) 13,372 (317) (160) (477) 12,895 Group 2010 $000
Income tax expense for the year
Reconciliation of effective tax rate Profit before tax Income tax at 17% Non-deductible expenses Income not subject to tax Effect of different tax rates in foreign jurisdictions Changes in tax rates Over 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 26 Earnings per share 2011 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) Group 2010 52,157 8,867 1,264 (265) 3,363 490 (78) 546 (1,176) (273) 12,738 67,065 11,401 1,563 (2,517) 3,346 (160) (504) (142) 677 (1,017) 248 12,895
39,230 365,360 365,360
52,998 365,360 365,360
90 91
ANNUAL REPORT 2011

26 Earnings per share (contd) 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 2011 2010 000 000 Weighted average number of shares used in calculation of basic earnings per share Weighted average number of dilutive potential ordinary shares Number of shares that would have been issued at fair value Weighted average number of ordinary shares (diluted) 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. 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 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. 365,360 8,988 (6,084) 368,264 365,360 3,443 (2,860) 365,943
IT services Distribution
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.
ANNUAL REPORT 2011

27 Operating segments (contd) Enterprise Systems 2011 2010 $000 $000 External revenue Depreciation and amortisation Reportable segment profit before interest and tax Reportable segment assets Capital expenditure Reportable segment liabilities 915,948 (556) 23,450 205,465 1,261 111,599 1,132,511 (820) 30,326 283,659 922 157,933 IT Services 2011 2010 $000 $000 28,238 (17) 1,800 5,695 67 3,133 24,461 (18) 1,161 5,103 38 2,373 Distribution 2011 2010 $000 $000 2,662,979 (1,617) 34,917 576,631 3,582 323,603 1,928,401 (1,397) 25,597 472,934 2,140 246,536 Consolidated 2011 2010 $000 $000 3,607,165 3,085,373 (2,190) (2,235) 60,167 787,791 4,910 438,335 57,084 761,696 3,100 406,842
Reconciliations of reportable segments profit or loss, assets and liabilities and other material items 2011 $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 Investments in associate Other unallocated amounts Consolidated total assets Liabilities Total liabilities for reportable segments Other unallocated amounts Consolidated total liabilities 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. 2011 $000 North Asia South East Asia (excluding Singapore) Singapore 2,328,449 913,631 365,085 3,607,165 Revenue 2010 $000 Non-current assets 2011 2010 $000 $000 37,499 4,620 4,704 46,823 35,904 4,085 1,116 41,105 2010 $000
60,167 (14,927) 6,917 52,157
57,084 (8,621) 4,569 8,051 5,982 67,065
787,791 46,329 185,577 1,019,697
761,696 41,585 141,241 944,522
438,335 253,520 691,855
406,842 239,993 646,835
1,779,031 998,414 307,928 3,085,373
92 93
ANNUAL REPORT 2011

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. Preacquisition 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 Recognised values on acquisition $000
Fair value adjustments $000
1,451 34,881 26 611 68,138 10,226 (52,015) (21,841) (1,375) (50) (2,658) 37,394
5,543 (1,386) 4,157
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) 24,931 (534) 4,569 6,388 (30,851) 4,503 (10,226) (5,723)
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 previous year increased by 2.2 cents. On 26 May 2010 and 27 May 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. 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.
ANNUAL REPORT 2011

30 Determination of fair values (contd) (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. 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. 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 principal risk to which the Group is exposed is credit risk in connection with the guarantee contracts it has issued. The credit risk represents the loss that would be recognised upon a default by the parties to which the guarantees were given on behalf of. To mitigate these risks, management continually monitors the risks and has established processes including performing credit evaluations of parties it is providing the guarantee on behalf of. Guarantees are only given to its subsidiaries. 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. 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.
94 95
ANNUAL REPORT 2011

31 Financial risk management (contd) Credit risk (contd) 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 $707,000,000 (2010: $599,000,000), of which $592,000,000 (2010: $483,000,000) 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), Philippines 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. Interest rate risk The Group hedges its exposure to changes in interest rates on certain borrowings by entering into interest rate swaps and hybrid swaps. Insurance risk The Company only issues guarantees to its subsidiaries. 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.
ANNUAL REPORT 2011

31 Financial risk management (contd) Capital management (contd) 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. 32 Commitments Operating lease commitments At 31 December, the Group has commitments for future minimum lease payments under non-cancellable operating leases as follows:2011 $000 Payable: Within 1 year After 1 year but within 5 years Group 2010 $000
4,315 6,690 11,005
3,686 3,877 7,563
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 $382,611,000 (2010: $299,038,000), of which the amount utilised was $196,594,000 (2010: $130,217,000). 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 $276,568,000 (2010: $225,847,000), of which the amount utilised was $112,144,000 (2010: $84,297,000). The guarantees are renewed on a yearly basis.
(b)
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. 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.
96 97
ANNUAL REPORT 2011

34 Related parties (contd) Transactions with directors and other key management personnel (contd) Key management personnel compensation comprises remuneration of directors and other key management personnel as follows: 2011 $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 Group 2010 $000 Company 2011 2010 $000 $000
2,549 20 2,298 48 3,071 55 8,041
3,948 34 2,255 43 2,983 51 9,314
840 889 21 1,750
2,323 5 922 20 3,270
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: 2011 $000 Purchase of information technology products and services Sales of information technology products and services 395 19,908 Group 2010 $000
612 22,366
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.
ANNUAL REPORT 2011

34 Related parties (contd) Other related party transactions (contd) 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:2011 $000 Subsidiaries - interest expense - interest income - management fee income - dividend income Affiliate - sales Associates - interest income - service fee income - management fee income - dividend income Group 2010 $000 Company 2011 2010 $000 $000
(169) 4,552 1,726 7,390
(418) 3,532 2,680 9,237
42,743
48,998
348 844 844 807
629 476 987 845
348 844 844 807
629 476 987 845
98 99
ANNUAL REPORT 2011
SHAREHOLDINGS STATISTICS
AS AT 14 MARCH 2012
Class of shares Voting rights Ordinary shares On a show of hands: On poll: One vote for each member One vote for each ordinary share
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 6 429 286 5 726 % 0.83 59.09 39.39 0.69 100.00 No. of Shares 2,196 2,350,089 19,364,796 343,693,093 365,410,174 % 0.00 0.64 5.30 94.06 100.00
Based on information available to the Company as at 14 March 2012, 10.35% 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. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Name of Shareholder Raffles Nominees (Pte) Ltd Citibank Nominees Singapore Pte Ltd DBS Nominees Pte Ltd Hong Leong Finance Nominees Pte Ltd UOB Kay Hian Pte Ltd United Overseas Bank Nominees Pte Ltd Mayban Nominees (S) Pte Ltd Koh Seng Chuah See Lop Fu James @ Shi Lap Fu James Lim Meng Seng CIMB Securities (S) Pte Ltd OCBC Securities Private Ltd Lim & Tan Securities Pte Ltd Vision Capital Private Limited Foo Seck Huat HSBC (Singapore) Nominees Pte Ltd Citibank Consumer Nominees Pte Ltd Habacus Trading Co Pte Ltd Lim Koh Sang Eng Hwee Siang No. of Shares 327,651,093 11,118,000 2,172,000 1,545,000 1,207,000 917,000 750,000 668,000 619,000 500,000 489,000 448,000 428,000 400,000 388,000 350,000 319,000 308,000 260,000 250,000 350,787,093 % 89.67 3.04 0.59 0.42 0.33 0.25 0.21 0.18 0.17 0.14 0.13 0.12 0.12 0.11 0.11 0.10 0.09 0.08 0.07 0.07 96.00
Substantial Shareholders Name of substantial shareholder VST Holdings Limited L&L Limited
Notes: (1) Deemed interest through Raffles Nominees Pte Ltd
Number of shares registered in the name of the substantial shareholder -
Number of shares in which substantial shareholder is deemed to have an interest 327,580,093 (1) 327,580,093
(1)
Total
Percentage (%) 89.65 89.65
327,580,093 327,580,093
ANNUAL REPORT 2011
NOTICE OF ANNUAL GENERAL MEETING

ECS HOLDINGS LIMITED (Incorporated in the Republic of Singapore) Company Registration No. 199804760R NOTICE IS HEREBY GIVEN that the Fourteenth Annual General Meeting of the Company will be held at 19 Kallang Avenue #07-153 Singapore 339410 on Wednesday, 25 April 2012 at 2.30 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 2011 and the Auditors Report thereon. [Resolution 1] To declare a one-tier tax exempt first and final dividend of 2.2 cents per ordinary share for the year ended 31 December 2011. [Resolution 2] (a) To re-elect Mr Leong Horn Kee who is retiring in accordance with Article 91 of the Companys Articles of Association, as Director of the Company. [Resolution 3(a)] Note: Mr Leong Horn Kee, if re-elected, will remain as the Chairman of the Companys Audit Committee, and a member of the Nominating Committee, Investment Committee and Compensation 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 (the SGX-ST, and the Listing Manual of the SGX-ST, the Listing Manual). (b) To re-elect Mr Tan Hup Foi who is retiring in accordance with Article 91 of the Companys Articles of Association, as Director of the Company. [Resolution 3(b)] Note: Mr Tan Hup Foi, if re-elected, will remain as the Chairman of the Companys Nominating Committee, and a member of the Audit Committee, Investment Committee and Compensation Committee and will be considered as an independent director for the purposes of Rule 704(8) of the Listing Manual. (c) To re-elect Mr Foo Sen Chin who is retiring in accordance with Article 91 of the Companys Articles of Association, as Director of the Company. [Resolution 3(c)] Note: Mr Foo Sen Chin, if re-elected, will remain as a member of the Investment Committee. 4 5 To re-appoint KPMG LLP as Auditors and to authorise the Directors to fix their remuneration. To approve the payment of Directors Fees of $343,500.00 for the year ended 31 December 2011. (2010: $263,750.00). [Resolution 4] [Resolution 5]
100 101
ANNUAL REPORT 2011

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 2012. [See Explanatory Note (i)] [Resolution 6] 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 (Chapter 50) of Singapore (the Act) and the listing rules of the SGX-ST, authority be and is hereby given to the Directors to:(i) (ii) issue shares in the capital of the Company whether by way of bonus issue, rights issue or otherwise; 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 any subsequent bonus issue or consolidation or subdivision of shares;
(iii)
(2)
(C)
ANNUAL REPORT 2011

(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
(4)
(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. [See Explanatory Note (ii)] [Resolution 7(a)]
(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 attached to this annual report with VST Holdings Limited, its subsidiaries and/or its associates (as set out in section 3.2) 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
(ii)
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). [See Explanatory Note (iii)] [Resolution 7(b)] (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 the associates of Mr. Narong Intanate (as set out in section 3.2), a Director of the Company, 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
(iii)
(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). [See Explanatory Note (iii)] [Resolution 7(c)]
102 103
ANNUAL REPORT 2011

(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: (a) (b) on-market purchases (each a Market Purchase) on the SGX-ST; and/or off-market purchases (each an Off-Market Purchase) (if effected otherwise than on the SGX-ST) in accordance with an equal access scheme(s) as may be determined or formulated by the Directors of the Company as they may consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Act and the Listing Manual, be and is hereby authorised and approved generally and unconditionally (the Share Buyback Mandate);
(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) (b) (c) 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 (the Relevant Period);
(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); 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,
where:
ANNUAL REPORT 2011

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 five-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)] [Resolution 7(d)] 8 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 9 April 2012
104 105
ANNUAL REPORT 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 2012. 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. 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 and/or their associates. 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. 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.
(ii)
(iii)
(iv)
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 8 May 2012, 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 25 April 2012. Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. on 7 May 2012 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 7 May 2012 will be entitled to such proposed dividend. The proposed dividend, if approved at the Annual General Meeting, will be paid on 18 May 2012.
PROXY FORM
ANNUAL GENERAL MEETING
ECS HOLDINGS LIMITED (Incorporated in the Republic of Singapore) Company Registration No. 199804760R I/We of
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. 3. 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. 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 of ECS Holdings Limited not less than 48 hours before the time appointed for holding the meeting.
being a member/members of ECS HOLDINGS LIMITED hereby appoint Name Address NRIC/Passport Number and/or (delete as appropriate) Proportion of Shareholdings (%)
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 25 April 2012 at 2.30 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 1. 2. 3. Ordinary Resolutions Ordinary Business: Adoption of Reports and Accounts Declaration of a onetier tax exempt first and final dividend of 2.2 cents per ordinary share for the year ended 31 December 2011 Re-election of Directors : (a) Mr Leong Horn Kee (b) Mr Tan Hup Foi (c) Mr Foo Sen Chin 4. 5. Re-appointment of Auditors Approval of Directors Fees of S$343,500/- for the year ended 31 December 2011 Special Business: 6. 7. 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 (Chapter 50) of Singapore and the Listing Manual 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 the associates of Mr Narong Intanate, a Director of the Company (d) To approve the proposed renewal of the Share Buyback Mandate 8. Any other ordinary business For Against
Dated this
day of
2012.
Total Number of Shares Held:
Signature(s) of member(s) or Common Seal

IMPORTANT: PLEASE READ NOTES OVERLEAF
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 (Chapter 50) of Singapore), 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. 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 (Chapter 50) of Singapore.
6.
7.
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.
LAP IT UP
(Incorporated in The Republic of Singapore) Co. Reg. No.: 199804760R
8 Temasek Boulevard #34-02 Suntec Tower Three Singapore 038988 Phone: +65 6659 6888 Fax: +65 6884 7549 Website: www.ecs.com.sg

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ECS HOLDINGS LIMITED ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

Mr Tay Eng Hoe Chairman

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

Mr Narong Intanate Group Chief Executive Officer

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

Mr Tay Eng Hoe Chairman 28 March 2012

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

Mr Narong Intanate Group Chief Executive Officer 28 March 2012

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011

ECS HOLDINGS LIMITED

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ECS Technology (China) Limited 100%

ECS Computers (Asia) Pte Ltd 100%

ECS Vietnam Company Limited 100%

ECS Beijing Chuang Yue Technology Co., Ltd 100%

ECS KU Sdn Bhd 100%

Pacific City (Asia Pacific) Pte Ltd 100%

PT ECS Indo Jaya 100%

MSI-ECS Phils., Inc. 49.99%

ECS (Shanghai) Management Co., Ltd 100%

ECS Astar Sdn Bhd 100%

ECS China Technology (Shanghai) Co., Limited 100%

ECS KUSH Sdn Bhd 100%

ECS Enterprise Solutions Pte Ltd 100%

ECS Technology (Guangzhou) Co., Ltd 100%

ECS Pericomp Sdn Bhd 100%

ECS Technology Co., Ltd 100%

EIT info-tech Limited 100%

ECS Technology (HK) Co., Limited 100%

ECS Chongqing Marketing & Payment Co., Ltd. 100%

ECS HOLDINGS LIMITED

ANNUAL REPORT 2011