ecs holdings 2010 annual report

8/2/2019 ECS Holdings 2010 Annual Report

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ECS HOLDINGS

LIMITED

synergy in motion

annual report 2010


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VisionTo be a Premier Asia-Pacifc ICT Company that

thinks globally but acts locally, excelling in all our

business segments to deliver optimal value to our

stakeholders.

MissionTo be the preferred supplier of choice for ICT

products and value-added services by building

strong customer relationships.

To sustain our entrepreneurial growth by seeking

new markets & businesses.

To bring the best-of-breed ICT products

and services to enhance the competitiveness

of our customers businesses.

pg01

Corporate

Profle

pg08

Chairmans

Statement

pg11

CEOs

Statement

pg14

Board of

Directors

pg16

Senior

Management

pg19

Corporate

Executives

pg21

Group

Structure

pg22

Corporate

Information

pg24

2010

Awards

pg25

2010

Milestones

pg26

CorporateGovernance

Statement

pg34

Directors

Report

pg40

Statement by

Directors

pg41

Independent

Auditors

Report

pg42

Financial

Statements

pg84

Shareholdings

Statistics

pg85Notice of

Annual General

Meeting

pg23

Financial

Highlights


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CORPORATE PROFILEECS is a well-recognised provider of ICT products and services

with three main businesses, namely Enterprise Systems, IT Services

and Distribution. With a network of more than 23,000 active channel

partners across China, Thailand, Malaysia, Singapore, Indonesia

and the Philippines, ECS is well-positioned to be a regional partner

of choice suitable for any global-leading ICT brand vendor tapping

Asia Pacics ICT spending growth.

Leading global brand names like Hewlett-Packard (HP), Apple,

Dell, Lenovo, Microsoft, IBM, Oracle and EMC leverage on ECS

extensive channel partner network to distribute their products across

the region.

The Groups Enterprise Systems business aims to give MNCs, local

government and domestic companies a competitive edge over theirpeers by designing, installing and implementing IT infrastructure.

ECS IT Services business provides a comprehensive range of

professional, technical support and training services.

ECS Distribution business leverages on a well-established and

highly-efcient logistical and IT infrastructure to distribute fast-

moving products in the most efcient manner.

The Group has a consistent track record of protability and a

management that is focused on operational excellence to achievesustainable prot growth and to enhance shareholder returns.

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We extend our distribution footprint in growth markets

and expand our product range and service offerings in

tandem with emerging technologies and trends. Our agility

in anticipating and meeting changing market demandshas served us well, continuously driving prot growth and

stakeholder value.

growth in step


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Foresight, experience and acumen from astute leadership

enable us to distil market possibilities. Even as we seize

todays opportunities, our sight is rmly set on the future.

We proactively invest in our people to harness their full

potential and nurture our next generation of leaders.

future in sight


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Dear Shareholders,

It gives me great pleasure to present to you

ECS annual report for the nancial year

ended 31 December 2010 (FY2010), a

year that has witnessed the beginning of

several transformational strategies, all of

which have an important role to play in our

corporate evolution as a leading regionalICT company. First and foremost, I would like

to express my sincere gratitude to you, our

loyal shareholders, for your kind patience and

support during the transition of leadership.

There have been signicant changes in ECS

topmost leadership; with me returning to the

position of Group Non-executive Chairman

and my fellow founding Board member, Mr

Narong Intanate taking over as Group CEO.

We respect Mr Lis decision to relinquish his

position as Group Non-executive Chairman

to attend to personal matters and thank

him for his guidance over the last 4 years.

Similarly, we thank Mr Mao Xiangqian for his

contribution as acting Group CEO during

our transition in FY2009 and he will now be

able to return his focus to leading our China

operations, which continues to be our single

largest market.

CHAIRMANSSTATEMENT

Strengthening assets,leveraging value

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As part of the pioneering team of ECS, Narong

and I look forward to earmarking renewed

corporate and business initiatives that will

enable ECS to exploit new opportunities in the

regional ICT industry that is seeing stronger

demand for consumer IT products and

increased corporate IT spending.

Some of these efforts have already startedpaying off and our stellar FY2010 nancial

performance can be attributed to a

combination of our continuing focus on higher-

margin products, product enhancement,

internal operational and nancial efciencies

and recovery of regional economies.

Hence FY2010 saw ECS propose its highest-

ever nal dividend of 3.6 cents per ordinary

share in FY2010 as compared to 3.0 cents

per ordinary share a year earlier as the Group

continued to register bottom line expansion

with a record FY2010 net prot attributable

to shareholders of $53.0 million from $38.2

million in FY2009.

Concurrently FY2010 gross margin improved

to 5.0% compared to 4.9% in FY2009

despite a 5.1% decline in FY2010 revenue

to $3.1 billion as compared to $3.3 billion in

FY2009; the lower FY2010 revenue being aconsequence of deconsolidation of revenue

from our Malaysian associate, ECS ICT

Berhad.

Excluding the effect of the revenues of ECS

ICT Berhad, and adjusting for currency

translation effects, the Groups revenue for

FY2010 would have grown by 14.8% year-on-

year on higher sales of consumer printers,

notebooks, supplies and tablets such asApple iPads.

Additionally, in line with ECS continuing

nancial efciencies, tighter credit control

and shorter cash cycles led to signicant

improvements in the Groups working capital

position which in turn helped our cash

position.

While this performance is encouraging, ECS

believes that it must push itself up to the nextlevel of growth so that it can spread its reach

across as much as possible of the ICT growth

expected in the region over the next few years.

With leading industry analyst, IDC predicting

that the Asia Pacic region, excluding Japan

(APeJ), which saw growth of 13% last year,

will see another 10% increase in 2011. (http://

www.idg.com/www/pr.nsf/0/14FD296F1791

438E852578320054102A), ECS has started

to sharpen its ongoing margins-accretive

initiatives both externally and internally.

On the business front, we have started

adjusting our portfolio to concentrate on

emerging technologies and service offerings

from existing and new vendors that will

increase our revenue and protability, a

strategy, if executed well, can help us corner

signicant market share.

The recently secured distribution rights byour China subsidiary from Apple to distribute

its two iconic products, the iPad and iPhone

within China are a crucial component of this

strategy.

Presently, as we work towards replicating

this agreement to our other markets, I am

delighted to update that ECS has successfully

signed many other regional distributorships

by other ICT vendors, key among them notebooks by Lenovo and more recently,

servers and notebooks by Dell.

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On behalf of my fellow Directors, I once

again thank you, our shareholders, for your

loyal support of the Group. I would also

like to express my sincere appreciation to

our channel partners, vendors, technology

partners and business associates without

whom our success would not have been

possible.

I would also like to thank the management

and staff for their unstinting dedication and

hard work.

With these strategies already in place, ECS

anticipates its growth would continue to be

strong in the years to come and we look

forward to the continuing participation of all

our stakeholders during that time.

Mr Tay Eng Hoe

Chairman

16 March 2011

Additionally, ECS also sees opportunities in

the demand for mobile device accessories

and has already started deepening its

partnership with Japanese manufacturer,

Buffalo, to distribute their products and

accessories in the ve ASEAN countries where

ECS is the authorised distributor.

In this way, our 23,000 channel partnernetwork across 6 regional countries gives the

Group added advantages from increasing

economies of scale and ECS intends to adopt

similar go-to-market strategies and engage

more strategic vendors regionally to increase

efciency. At the same time, the Group will be

growing this regional network, especially in the

high-growth markets of Indonesia and China

where the IT penetration rate is still low and

there is scope for growth and expansion in the

emerging fourth and fth-tier cities of thesecountries.

ECS will also be on the lookout for suitable

partners to grow into new markets like India

and Vietnam, both of which have been on our

radar for some time now and which are some

of the regions fastest growing markets.

Internally, ECS has also outlined a plan for

standardising core operational processes sothat we can achieve better business synergies

across different geographical entities.

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Dear Shareholders,

In FY2010, ECS ongoing new business and

corporate strategies yielded positive growth

both across the diverse geographies as well

as business segments in which it operates.

As a result, FY2010 saw the Group report a

record high net prot of $53.0 million, up from$38.2 million in FY2009. Concurrently, ECS

also proposed a rst and nal dividend of 3.6

cents its highest ever.

Financial and Operations Review:

In FY2010, ECS net prot attributable to

shareholders rose 38.8% to a record $53.0million from $38.2 million in FY2009, propelled

by the Groups continuing focus on higher-

margin products and efciency measures as

regional economies rebounded.

Signicantly, this performance was achieved

despite a 5.1% decline in FY2010 revenue

to $3.1 billion as compared to $3.3 billion

in FY2009. The Groups lower revenue in

FY2010 was due to the deconsolidation of

revenue from its Malaysian subsidiary, ECS

ICT Berhad (which was listed on 15 April 2010

on the mainboard of Bursa Malaysia Securities

Berhad).

Concurrently, the Groups FY2010 gross

margin improved to 5.0% compared to 4.9% in

FY2009.

Excluding the effect of the revenues of ECSICT Berhad, and adjusting for currency

translation effects, ECS revenue for FY2010

would have grown by 14.8% year-on-year

driven by higher sales of consumer printers,

notebooks, supplies and tablets such as

Apple iPads.

During FY2010, the Group carried on with

CEOSSTATEMENT

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ongoing nancial efciencies. As a result

of tighter credit control and shorter cashcycles, the Groups working capital position

strengthened. Working capital days were

further reduced to 35.1 days for the 12 months

ended 31 December 2010 from 35.9 days a

year ago.

Consequently, the Group generated a strong

positive operating cash ow of $21.3 million

in 4Q10 as compared to a negative operating

cash ow of $11.8 million in 4Q09.

As at 31 December 2010, ECS cash and cash

equivalents were $92.5 million, up signicantly

from $51.1 million as at 31 December 2009.

Due to the improved operating cash ow and

protability, net gearing was reduced to 0.45

times as at 31 December 2010 from 0.48 times

as at 31 December 2009.

As a result of these efforts, earnings per

share (EPS), on a fully diluted basis,

correspondingly rose to 14.51 cents in FY2010

versus 10.45 cents in FY2009 while net asset

value (NAV) per share increased to 81.18

cents as at 31 December 2010 versus 71.03

cents as at 31 December 2009.

Review by Business Segments:

Coinciding with the continuing upsurge in

IT spending, the adjustments we have been

making to our product portfolio to leverage

on emerging technologies and products from

existing and new vendors have beneted our

business performance across all segments.

Distribution:

Riding on the recovery in consumer spending

that emerged during the second half of 2010,

ECS strengthened its product portfolio with

the addition of emerging products that are

in demand, such as iPads and tablets. In

FY2010, our Distribution segment remained

as our growth driver, contributing about $1.9

billion or 62.5% to FY2010 revenue. This

growth is mainly driven by consumer printing

and imaging products, and mobile devicessuch as iPads.

Enterprise Systems:

Enterprise Systems also grew well due to a

strong surge in pent-up enterprise demand

which coincided with additional enterprise

products and recovery in corporate spending

on IT infrastructure. Contributed mainly

by networking and storage products, the

Enterprise Systems segment accounted for

$1.1 billion or 36.7% of revenue in FY2010,

up from 36.5% in FY2009.

Review by Geographical Markets:

Geographically both North Asia and South-east Asia continued on their growth path.

North Asia:

North Asia remained as ECS single largest

market at $1.8 billion in FY2010, up from

$1.7 billion in FY2009. The 5.6% increase in

revenue is mainly contributed by higher salesof printers, consumables and networking

products. Sales of Apples iPad in the last

quarter of 2010 also contributed to this growth.

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ECS also sees opportunities in the demand

for mobile device accessories for growingits Distribution business. We have started

working with Japanese accessories

manufacturer Buffalo to expand its portfolio

of products in the ve ASEAN countries ECS

operate in.

Moving forward, the Group seeks to adopt

a similar go-to-market strategy and engage

vendors regionally instead of on a standalone-

country basis to increase efciency andeconomies of scale.

This will be complemented by geographical

expansion particularly in the high-growth

markets of Indonesia and China, where

many of our vendors also want to grow.

In addition, India and Vietnam are also on

our agenda for expansion as one cannot

ignore the tremendous potential that both

these economies present. We will updateshareholders when these plans materialise.

Last but not the least, to support these

expansion plans, ECS will continue in

its efforts to carry on improving internal

efciencies, such as its cost-efcient

operational framework, working capital

management programmes, as well as core

operational processes.

I am condent these strategies will position us

for future successes.

Mr Narong Intanate

Group Chief Executive Ofcer

16 March 2011

Southeast Asia:

Revenue contribution from Southeast Asia

decreased by 16.6%. Excluding currency

translation effect and the deconsolidation of

ECS ICT Berhad, ECS Holdings associate

company that was listed on the mainboard

of Bursa Malaysia on 15 April 2010, revenue

would have grown 18.4%, contributed

mainly by the higher sales of notebooks and

desktops in Thailand and Indonesia.

Outlook:

Our ongoing growth initiatives have been

successful in diversifying our revenue base

while simultaneously boosting protability

and establishing a cost-effective operational

framework.

Moving forward, we anticipate increased

synergies from our business and corporate

growth efforts.

On the product front, our portfolio has been

suitably revamped with numerous new

consumer and enterprise products that have

been dominating global technology. This has

already started driving up our sales portfolios

across both business and geographicalsegments.

The two consecutive contracts that our China

subsidiary secured from Apple to distribute

the iPad and iPhone in China during the last

quarter of FY2010 will hopefully be replicated

to other countries in the Group.

In line with this, ECS has also recently signed

regional agreements for notebooks by Lenovoand for servers and notebooks by Dell. The

impact of these key wins should be felt more

substantially from FY2011 onwards.

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0301

0402

01.Mr Tay Eng Hoe

Mr Tay Eng Hoe was appointed the Non-ExecutiveChairman of the Group on 27 September 2010. He

is the founder of ECS Holdings Limited and also

the immediate past Group Chief Executive Ofcer.

Mr Tay has been a Director of the Group since 1

April 2001. He brings with him more than 28 years

of experience in the IT industry. Mr Tay is also a

Director and Vice Chairman of VST Holdings Limited,

the parent company of ECS Holdings Limited. In

August 2005, he was conferred the Public Service

Medal by the President of the Republic of Singapore

in recognition for his public service to the country.

Mr Tay holds a Bachelor of Science (Honours)

degree from the LaTrobe University and a Master of

Business Administration from the University

of Melbourne.

03.Mr Foo Sen Chin

Mr 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 onthe 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 Craneld

School of Management in the United Kingdom.

02.Mr Narong Intanate

Mr Narong Intanate was appointed the Group ChiefExecutive Ofcer of ECS Holdings Limited and

also to the Board of the ECS subsidiaries on 1 July

2010. He was formerly an Executive Director of the

Company an appointment on 15 December 2000.

Mr Intanate is actively involved in the management

of the subsidiaries and associate companies under

the ECS Group and plays a pivotal role in steering the

strategic direction of the Group. He is the founder and

Executive Chairman of The Value Systems Co., Ltd.,

our subsidiary, since 1988. Mr Intanate is currently an

advisor of the Hatyai University. He holds a Bachelor

of Science in Business Administration and a Master

of Business Administration from California State

University. Prior to forming The Value Systems Co.,

Ltd., he was the Marketing Manager of Sahaviriya

Infortech Computers Co., Ltd. from 1982 to 1983 and

the Marketing Director of Sahaviriya OA from 1983 to

1988.

BOARD OF DIRECTORS

04.Mr Mao Xiangqian

Mr Mao Xiangqian was appointed as Executive

Director of the Company on 3 May 2010 and is alsoconcurrently the Chief Executive Ofcer of ECS

Technology (China) Limited, a principal subsidiary

of ECS Holdings Limited. He has more than twenty

years of experience in Chinas ICT industry. Prior to

joining the Group, Mr Mao served as the Senior Vice

President of Digital China Holdings Limited, one of

Chinas leading ICT distributor, and was President

of Digital China Technology Limited, which is the

distribution business division of Digital China Holdings

Limited. Prior to Digital China, Mr Mao spent ten years

with the Lenovo Group. Mr Mao holds a Bachelor of

Science (Machine Building and Automation) degree

and a Master of Science (Modal Analysis) from Tianjin

University as well as an Executive MBA Degree from

China Europe International Business School.

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05.Mr Leong Horn Kee

Mr Leong Horn Kee was appointed as anIndependent 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.

05

06 08

08.Mr Ong Wei Hiam

Mr Ong Wei Hiam was appointed as Non-ExecutiveDirector of the Company on 3 May 2010. Mr Ong

is the Group Chief Financial Ofcer and Executive

Director of VST Holdings Limited, the parent

company of ECS Holdings Limited. Mr Ong holds

a Bachelor Degree in Economics from University

College London and a Master Degree in Analysis,

Design & Management of Information Systems

from the London School of Economics and Political

Science. He is a Fellow of the Institute of Chartered

Accountants in England and Wales, and Fellow of the

Hong Kong Institute of Certied 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.

07.Mr Koh Soo KeongMr 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

Ofcer and President of Toll Asia Pte Ltd, formerly

SembCorp Logistics Ltd (SembLog) which was

acquired by Toll in May 2006. Currently, he is the

CEO of KS Distribution Pte Ltd. With over 20 years of

experience in the logistics industry, he had helmed

SembLog and its preceding companies since 1986.

He is a board member of four other publicly listed

companies and the Chairman of the Agri-Food

and Veterinary Authority of Singapore. He holds

a Bachelor of Engineering (Honours), a Master of

Business Administration and a Postgraduate Diploma

in Business Law from the National University of

Singapore.

06.Mr Tan Hup Foi

Mr Tan Hup Foi was appointed as an IndependentDirector on 7 February 2006, and currently serves

as Chairman of the Nominating Committee and a

member of the Audit and Compensation Committees.

He was the Chief Executive of Trans-Island Bus

Services Ltd from 1994 to 2005 and also the Deputy

President of SMRT Corporation Ltd from 2003 to

2005. Mr Tan is known internationally as the Honorary

Vice President of the International Association of

Public Transport (UITP) and Honorary Chairman of

UITP Asia-Pacic Division. Mr Tan is the Chairman

of Ngee Ann Polytechnic Council. He was awarded

the Bintang Bakti Masyarakat (Public Service Star) in

2008 and the Pingat Bakti Masyarakat (Public Service

Medal) in 1996 by the President of Singapore.

Mr Tan graduated from Monash University in Australia

with a First Class Honours degree in Mechanical

Engineering in 1974 and he obtained a Master

of Science (Industrial Engineering) degree from

University of Singapore in 1979.

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01 03

02

01.Mr Narong Intanate

Mr Narong Intanate was appointedthe Group Chief Executive Ofcer

of ECS Holdings Limited and

also to the Board of the ECS

subsidiaries on 1 July 2010. He

was formerly an Executive Director

of the Company an appointment

on 15 December 2000.

Mr Intanate is actively involved

in the management of the

subsidiaries and associate

companies under the ECS Group

and plays a pivotal role in steering

the strategic direction of the

Group. He is the founder and

Executive Chairman of The Value

Systems Co., Ltd., our subsidiary,

since 1988.Mr Intanate is currently

an advisor of the Hatyai University.

He holds a Bachelor of Science

in Business Administration and a

Master of Business Administration

from California State University.

Prior to forming The Value SystemsCo., 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.

02.Mr Eddie Foo

Mr Eddie Foo is the Group ChiefFinancial Ofcer of the Company

and is concurrently the Group

Company Secretary. Mr Foo

is responsible for the Groups

overall nancial strategy and

management, corporate nance

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 nancial management

and audit experience in

multinational companies and

public accounting rms. Prior

to serving as Group Chief

Financial Ofcer, Mr Foo was

the Group Financial Controller

of the Company. Mr Foo holds a

Bachelor degree in Accountancy

from the Nanyang Technological

University and is a member of

the Institute of Certied PublicAccountants of Singapore.

03.Mr Lim Tow Cheng

Mr Lim Tow Cheng was appointedSenior Vice President, Business

Development on 18 October 2005.

He is responsible for managing

the regional expansion strategy

and for identifying new business

opportunities for the Group.

Mr Lim has more than 20 years of

experience in senior management

positions in the IT industry. Prior to

joining the Group, Mr Lim was the

Director for South Asia of Western

Digital and has previously worked

with Digiland International Limited

for more than 8 years, holding

several senior management

positions, including as Chief

Executive Ofcer. Mr Lim has an

Honours Degree in Economics

from the National University of

Singapore.

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05

04

04.Mr Mao Xiangqian

Mr Mao Xiangqian was appointedas Executive Director of the

Company on 3 May 2010

and is also concurrently the

Chief Executive Ofcer 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 (ModalAnalysis) from Tianjin University as

well as an Executive MBA Degree

from China Europe International

Business School.

05.Mr Somsak

PejthaveeporndejMr Somsak Pejthaveeporndej was

appointed as the President of

The Value Systems Co., Ltd., our

wholly-owned subsidiary, on

1 February 2009. He is responsible

for the overall management of The

Value Systems and has been with

our Group since 1988.

Mr Pethaveeporndej was formerly

responsible for managing

the Enterprise Systems & ICTServices Division of The Value

Systems. He has more than

20 years of experience in the

IT industry. Prior to joining our

Group, he was employed as a

technical manager by Sun Shine

Co., Ltd. from 1981 to 1984,

followed by Sahaviriya Telecom

Co., Ltd. from 1984 to 1988. He

holds a Bachelor of Science

degree majoring in electronics

from Rajamangala University ofTechnology Krungthep, Thailand,

and a Mini MBA from The Faculty

of Commerce and Accountancy,

Chulalongkorn University.

06. Mr Foo Sen Chin

Mr Foo Sen Chin was appointedas 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 anadvisor 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

Craneld School of Management

in the United Kingdom.

06

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08

08.Ms Lina Choo

Ms Lina Choo was appointed asExecutive Director of PT ECS Indo

Jaya in April 2009. She joined

ECS in September 2007 and is

responsible for overseeing the

nancial management of ECS

Indonesia. Ms Choo has more

than 15 years experience in

nancial management in various

companies, of which over 10

years was in the IT industry. Prior

to joining ECS Indonesia, she

worked with Natsteel Electronics

in Singapore as an accountant

before returning to Indonesia

to work as Finance Manager

for Diebold Indonesia and

subsequently, Datacraft Indonesia.

Ms Choo holds a Bachelor degree

in Accountancy from the University

of HKBP Nommensen.

09.Mr Jimmy Go

Mr Jimmy Go is the founder andPresident of MSI-ECS Phils.,

Inc., our associate company.

He has more than 25 years of

experience in the IT industry in the

Philippines. Mr Go started in the

IT industry way back in 1982 after

graduating from college selling

Fujitsu & Apple computers. He

currently holds a Bachelor degree

in Electronics & Communication

Engineering from De La Salle

University with an award of Magna

Cum Laude and Post Graduate

degree of Masters in Business

Administration in Ateneo de Manila

University. Mr Go was also the

past President of COMDDAP

(Computer Manufacturers,

Distributors & Dealers Association

of the Philippines). In 1998, Mr. Go

was named President and CEO of

MSI-Digiland. He was instrumental

in growing the business of MSI inthe Philippines, making it one of

the biggest IT distributors in the

country in less than 5 years.

07.Mr Sebastian Chong

Mr Sebastian Chong is thePresident of ECS Computers

(Asia) Pte Ltd, the wholly-owned

Singapore subsidiary of ECS

Holdings Limited. Mr Chong joined

ECS in 1990 and has 20 years of

experience in the IT industry. He is

responsible for strategic direction,

overall management, including

the sales and operations of the

commercial, consumer and retail

segments of ECS Singapore. Mr

Chong is also responsible for

business development, business

strategy and building of long

term relationships with vendors,

channels and partners.

07 09

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01

CORPORATE EXECUTIVES

02.Ms Peggy Leong-Yeo

Ms Peggy Leong-Yeo is theVice President of Group Human

Resources for ECS Holdings

Limited. Her main responsibility

is to establish HR strategies for

the Group and to strengthen

the Groups human capital. This

includes redening leading-edge

performance management and

development practices to support

leadership succession planning.

She provides leadership and

tactical support in formulation,

implementation and review of

HR policies in key HR areas to

support the Groups strategic

intent to ensure alignment and

adoption of best practices. She

has more than 20 years of Human

Resources experience behind

her, occupying management and

senior management positions with

Siemens, a global multinational

company. Ms Leong-Yeo wasinstrumental in achieving for

Siemens the prestigious Work

Life Balance Excellence Award,

the Workplace Health Promotion

Award and the People Developer

Award for several years. She

holds a Diploma in Administrative

Management from The Institute

of Administrative Management

in UK and a Master in Business

Administration from the University

of Birmingham, United Kingdom.

01.Mr Eugene Tan

Mr Eugene Tan was appointedas Group Financial Controller of

the Company on 1 March 2008.

He is responsible for the nancial

management of the Group, which

covers accounting, treasury, tax,

nancial control and reporting.

Prior to his appointment as Group

Financial Controller, Mr Tan was

the Vice President, Finance of

ECS Computers (Asia) Pte Ltd,

the wholly-owned Singapore

subsidiary of ECS Holdings

Limited. Prior to joining the

Group, Mr Tan worked for KPMG

Singapore as a senior auditor. Mr

Tan holds a Bachelor degree in

Accountancy & Economics from

the University of Reading.

03.Mr Newman Li

Mr Newman Li is the SeniorManager, Group Internal Audit of

the Company. He is a member

of CPA China and has more than

10 years of nancial and audit

experience. Prior to joining the

Group, he worked for Foshan

Power Construction Group Co. Ltd

in 1998 and Guangdong Telecom

in 2004. Mr Li holds a Bachelor

degree in Accountancy from the

Tianjin University of Commerce

and was appointed to his current

position since May 2008.

03

02

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04 06

05

04.Ms Lim Yok Yen

Ms Lim Yok Yen is the RegionalBusiness Controller of ECS

Holdings Limited. She is

responsible for nancial planning

and analysis, budgeting,

forecasting as well as providing

decision support and partnering

the business on analysis to

support the Groups business

growth strategy. Ms Lim is also

responsible for all channel

nance activities including credit

management, working capital

requirements and planning

with vendor nance 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

nancial accounting and groupreporting in the freight forwarding

industry and companies listed on

Singapore Exchange. Ms Lim is a

Certied Public Accountant and

also a member of Association of

Chartered Certied Accountants

(ACCA) since 2001.

05.Mr Tang Kin Meng

Mr Tang Kin Meng is the MIS andIT Technical Adviser to the Group.

He assists corporate management

in overseeing and advising on IT

policies, standardisation practices

and technology refresh programs

for the ECS Group. Prior to his

appointment in August 2008, he

was the Senior Vice President of

the IT Services Support Business

in ECS Computers (Asia) Pte

Ltd, the Groups wholly-owned

Singapore subsidiary. Mr Tang

joined ECS in April 1998 and

was instrumental in building a

variety of IT services and delivery

programs for the company. He

was awarded the ASEAN Partner

SE Manager of the Year by Sun

Microsystems in 2000 for his role

in managing the deployment of the

IT infrastructure for Starhubs Data

Center. Prior to ECS, Mr Tang has

worked for Fujitsu as a DivisionManager from 1992 to 1998, and

as a software specialist based in

Tokyo, Japan from 1992 to 1998

for NEC Corporation. He holds a

Diploma and Graduate Diploma

in Business Administration from

the Australian Institute of Business

Administration and was a Fellow

Member of the Institute. Mr Tang

was also a Professional Member of

the British Computer Society. While

lecturing in Ngee Ann Polytechnicfrom 1978 to 1986, he was granted

a scholarship to the City University,

London where he obtained the

specialist Post Graduate Diploma

in Business Systems and Design

in 1981.

06.Mr Paul Chong

Mr Paul Chong is the Group PRManager of ECS Holdings Limited

and also concurrently, the Vice

President, Marketing of ECS

Computers (Asia) Pte Ltd, the

Groups wholly-owned Singapore

subsidiary. As Group PR Manager,

Mr Chong is responsible for

the Groups branding and

communication programs,

publicity, corporate affairs

and internal communication

between management and

employees. In his role as Vice

President, Marketing, Mr Chong

is responsible for providing

comprehensive marketing

communications solutions such

as direct marketing programs,

promotions, events, seminars,

tradeshows and advertising. Prior

to joining the ECS Group in 1997,

Mr Chong worked for six years

in the public sector of Singaporehandling national IT initiatives

and training and development

programs. Mr Chong holds a

bachelor degree in Business

Administration from the National

University of Singapore and a

Master of Business Administration

Degree from the University of

Western Australia.

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group structure

ECSHOLDINGSLI

MITED

CHINA

ECS Technology

(China) Limited100%

ECS

Technology

(Guangzhou)

Co., Ltd100%

ECS

Technology

Co., Ltd

100%

ECS

(Shanghai)

Management

Co., Ltd100%

ECS China

Technology

(Shanghai)

Co., Limited100%

EIT info-tech

Limited

100%

ECS

Technology

(HK) Co.,

Limited

100%

THAILAND

The ValueSystems Co., Ltd.

100%

MALAYSIA

ECS ICT

Berhad41%

ECS KU

Sdn Bhd

100%

ECS Astar

Sdn Bhd

100%

ECS KUSH

Sdn Bhd

100%

ECS Pericomp

Sdn Bhd

100%

SINGAPORE

ECS Computers

(Asia) Pte Ltd100%

Pacic City

(Asia Pacic)

Pte Ltd100%

ECS Enterprise

Solutions

Pte Ltd100%

INDONESIA

ECS Indo

Pte Ltd

89%

PT ECS

Indo Jaya

100%

PHILIPPINES

ECS Infocom

(Phils) Pte. Ltd.100%

MSI-ECS

Phils., Inc49.99%

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corporate information

Board o Directors

Mr Tay Eng Hoe (Chairman, Non-Executive Director)Mr Narong Intanate (Executive Director)

Mr Foo Sen Chin (Non-Executive Director)

Mr Leong Horn Kee (Independent Director)

Mr Tan Hup Foi (Independent Director)

Mr Koh Soo Keong (Independent Director)

Mr Mao Xiangqian (Executive Director, appointed on 3 May 2010)

Mr Ong Wei Hiam (Non-Executive Director, appointed on 3 May 2010)

Audit Committee

Mr Leong Horn Kee (Chairman)

Mr Tan Hup Foi

Mr Koh Soo Keong

Compensation Committee

Mr Koh Soo Keong (Chairman)

Mr 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

Senior Management at ECS Holdings LimitedMr Narong Intanate (Group Chief Executive Ofcer)

Mr Eddie Foo Toon Ee (Group Chief Financial Ofcer)

Mr Lim Tow Cheng (Senior Vice President, Business Development)

Senior Management at ECS Holdings Limiteds Subsidiaries

and Associate Companies

Mr Mao Xiangqian (Chief Executive Ofcer)

ECS Technology (China) Limited

Mr Somsak Pejthaveeporndej (President)

The Value Systems Co., Ltd.

Mr Foo Sen Chin (Managing Director)

ECS ICT Berhad

Mr Sebastian Chong (President)

ECS Computers (Asia) Pte Ltd

Ms Lina Choo (Executive Director)

PT ECS Indo Jaya

Mr Jimmy Go (President)

MSI-ECS Phils., Inc.

Corporate Executives

Mr Eugene Tan (Group Financial Controller)

Ms Peggy Leong-Yeo (Vice President ,Group Human Resources)

Mr Newman Li (Senior Manager, Group Internal Audit)

Ms Lim Yok Yen (Regional Business Controller)Mr Tang Kin Meng (Group MIS Advisor)

Mr Paul Chong (Group PR Manager)

Auditors

KPMG LLP

Certied Public Accountants

16 Rafes Quay #22-00 Hong Leong Building

Singapore 048581

Partner-in-charge : Mr Tran Phuoc

(Since FY2006)

Registrar

M&C Services Private Limited138 Robinson Road #17-00 The Corporate Ofce

Singapore 068906

Registered Oce

19 Kallang Avenue #07-153 Singapore 339410

Principal Bankers

ANZ Bank

Citibank N.A.

DBS Bank Ltd

KBC Bank N.V.

Malayan Banking Berhad

Oversea-Chinese Banking Corporation

Standard Chartered Bank

Sumitomo Mitsui Banking Corporation

United Overseas Bank Limited

Company SecretaryMr Eddie Foo Toon Ee, CPA

ECS Oces

ECS Holdings Limited


Website : www.ecs.com.sg

ECS Technology (China) Limited

6/7F, Wanliuyicheng Building,

No.11 Changchunqiao Road, Haidian District,

Beijing, P.R.C(100089)

Branches in Beijing, Chengdu, Guangzhou,

Hong Kong, Shanghai, Shenyang, Shenzhen,

Wuhan, Xian

Website : www.ecschina.com

The Value Systems Co., Ltd.

21st Floor, Serm-Mit Tower

159/35 Sukhumvit 21 Road (Asok)

North Klongtoey, Wattana

Bangkok 10110, Thailand

Branches in Bangkok, Chiang Mai, Hat Yai,

Khon Kaen, Nakhon Ratchasima, Phitsanulok,

Phuket, Rayong, Surat Thani

Website : www.value.co.th

ECS ICT Berhad

Lot 3, Jalan Teknologi 3/5

Taman Sains Selangor, Kota Damansara

Selangor, Malaysia

Branches in Johor Bahru, Kota Kinabalu,

Kuantan, Kuching, Penang, Petaling Jaya

Websites : www.ecsm.com.my

ECS Computers (Asia) Pte Ltd


Website : www.ecs.com.sg

PT ECS Indo Jaya

Ruko Mangga Dua Square

Blok E 34-37 Jl. Gunung Sahari Raya No.1

Jakarta Utara 14420, Indonesia

Branches in Bali, Bandung, Jakarta, Makassar,

Medan, Palembang, Semarang, Surabaya,

Yogyakarta

Website : www.ecsindo.com

MSI-ECS Phils., Inc.

Topy II Bldg, #3 Economia St.,

Libis, Quezon City,

Philippines 1110Branches in Cebu, Davao, Manila

Website : www.msi-ecs.com.ph

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financiaL HigHLigHts

REVENUE(S$ million)

# Due to deconsolidation of the Groupsassociate company, ECS ICT Berhadwhich was listed on the main market ofBursa Malaysia on 15 April, 2010

0

500

1500

2500

1000

2000

3500

3000

4000

FY 06

2,339.3

FY 07

2,789.4

FY 08

2,949.9

FY 09

3,252.0

FY10

#3,085.4

0

0.5

1.5

2.5

1

2

3.5

3

4

FY 06

1.5

FY 07

1.5

FY 08

2.7

FY 09

3.0

FY10

3.6

DIVIDENDS PER SHARE (cents) RETURN ON EQUITY(%) RETURN ON CAPITALEMPLOYED

(%)

0

3

9

15

21

6

12

18

FY 06 FY 07 FY 08 FY 09 FY10

24

11.0 1

1.6

13.0

15.4

19.1

0

3

9

15

21

6

12

18

FY 06 FY 07 FY 08 FY 09 FY10

24

9.1 1

0.0 1

1.7 1

2.2

15.3

PROFITABILITY (S$ million)

80

Net Proft Attributable to Equity Holders

0

10

30

50

70

20

40

60

FY 06

20.1

FY 07

23.4

FY 08

29.4

FY 09

38.2

FY10

53.0

SHAREHOLDERS

EQUITY (S$ million)

0

50

150

250

350

100

200

300

FY 06

190.1

FY 07

212.7

FY 08

237.8

FY 09

259.5

FY10

296.6

400

REVENUE BY GEOGRAPHICAL

SEGMENT(S$ million)

North Asia

1,779.0

Southeast Asia

1,306.4

REVENUE BY BUSINESS SEGMENT (S$ million)

# Due to deconsolidation of the Groups associate company, ECS ICT Berhad which was listed onthe main market of Bursa Malaysia on 15 April, 2010

0

500

1500

2500

1000

2000

3500

3000

4000

FY 06

23.22,339.3

FY 07

32.22,789.4

FY 08

2,949.9

33.6

FY 09

3,252.0

29.9

FY 10

#3,085.4

24.5

Enterprise Systems Distribution IT Services

1,416.0

900.1

1,792.9

964.3

1,783.0

1,133.3

2,034.2

1,187.9

1,928.4

1,132.5

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2010 awarDs

COUNTRY AWARDED BY AWARD

ECS Holdings DP Information S1000 - Ranked 20th for Top Public-listed Company Ranked by Sales

TurnoverECS Holdings DP Information S1000 - Ranked 104th for Top Company Ranked by Sales Turnover

ECS China CBI News ECS China Awarded 2nd in Top 100 IT Distribution Firms by CBINEWS

ECS China China ComputerMagazine

ECS China Awarded 2nd in Top 100 Distribution Firms by ChinaComputer Magazine

ECS China Microsoft The Fastest Growing Award In Microsoft Authorized Distributors 2010

ECS Thailand Cisco Systems Top Distributor Of The Year 2009

ECS Thailand Microsoft Microsoft Distribution Partner of the Year FY2010

ECS Thailand Sun Microsystems RISE! Award

ECS Thailand Symantec Top Symantec Performing Distributor Award FY2010

ECS Thailand Symantec Top Value Added Distributor Asia South Region

ECS Malaysia AutoCad LT FY10 Highest Over Achievement Distributor

ECS Malaysia Buffalo Best Sales Growth Award

ECS Malaysia HP Top Performing Partner Sales Representative - HP Attach Services

ECS Malaysia HP ESSN The C.E.O. Award

ECS Malaysia HP ESSN Industry Standard Servers - Top Wholesaler

ECS Malaysia HP ESSN StorageWorks - Top Wholesaler

ECS Malaysia HP PSG Signicant Contribution - Wholesaler HP Consumer Desktop &Notebook PC

ECS Malaysia HP PSG Commercial Workstation Top Wholesaler

ECS Malaysia HP TSG Top Performing Master Parts Reseller for Asia Pacic, ReplacementParts Business

ECS Malaysia Printronix Most Signicant Business Improvement

ECS Singapore IBM 2010 Signicant Growth Software Group - Value Added Distributor

ECS Singapore Lenovo Winner - T1 Distributor, ThinkPad Challenge Award

ECS Singapore Lenovo Top Distributor of the Year 2010 - Key Account Business

ECS Singapore Oracle System Dsitributor Partner of the Year FY10

ECS Singapore Oracle Value-Added Distributor Partner of the Year FY10

ECS Singapore Lenovo Winner - T1 Distributor, ThinkPad Challenge Award

ECS Singapore Lenovo Top Distributor of the Year 2010 - Key Account Business

ECS Indonesia Cisco The Best Distributor FY10

ECS Indonesia Cisco The Best Services Strategic Distributor FY10

ECS Indonesia Hewlett-Packard The Best PSG Channel Coverage Wholesaler 1H 2010

ECS Philippines Acer Best in Growth Award (Consumer Products)

ECS Philippines HP HP PSG Wholesaler of the Year - Commercial Business (FY 2010)

ECS Philippines HP HP SWD Wholesaler of the Year (FY 2010)

ECS Philippines HP IWS (Inkjet) Wholesaler of the Year Award

ECS Philippines HP HP PSG (PC & Notebook) Wholesaler of the Year Award

ECS Philippines HP HP ISS (Server) Wholesaler of the Year Award

ECS Philippines HP Product Manager of the Year Award

ECS Philippines Lenovo Distributor of the Year Award - Commercial

ECS Philippines Lenovo PM of the Year Award Commercial

ECS Philippines Lenovo PM of the Year Award - Consumer

ECS Philippines Lenovo Distributor Sales Representative of the Year Award - Commercial

ECS Philippines Lenovo System Engineer of the Year Award - Commercial

ECS Philippines Lenovo 100% Achievement Award - Commercial

ECS Philippines Lenovo Distributor of the Year award - SMB Category

ECS Philippines Oracle Value Added Distributor of the Year

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2010 miLestones

COUNTRY MONTH DESCRIPTION OF MILESTONE

ECS China Jan - Mar 10 ECS China Appointed as Distributor for Lenovo

ECS China Jan - Mar 10 ECS China Appointed as Distributor for InfortrendECS China Jan - Mar 10 ECS China Appointed as Distributor for Motorola

ECS China Jan - Mar 10 ECS China Appointed as Distributor for Roucore

ECS Malaysia Jan - Mar 10 ECS Astar Sdn Bhd Appointed as Distributor for ASUS

ECS China Apr - Jun 10 ECS China Appointed as Distributor for Dvision

ECS China Apr - Jun 10 ECS China Appointed as Distributor for Fluke

ECS China Apr - Jun 10 ECS China Appointed as Distributor for Tandberg

ECS Thailand Apr - Jun 10 The Value Systems established the Corporate Social Responsibilitycampaign of The Fairy Tale Project IV at Banplaiklongnoi School,Krathum Baen District, Samut Sakhon province

ECS Thailand Apr - Jun 10 The Value Systems Appointed as Distributor for IronPort

ECS Malaysia Apr - Jun 10 ECS Astar Sdn Bhd Appointed as Distributor for Bakbone

ECS Malaysia Apr - Jun 10 ECS Pericomp Sdn Bhd Appointed as Distributor for Fujitsu

ECS Malaysia Apr - Jun 10 Listing of ECS ICT Berhad on the Main Market of Bursa MalaysiaSecurities Berhad

ECS Singapore Apr - Jun 10 ECS Singapore Appointed as Distributor for Huawei Symantec

ECS Singapore Apr - Jun 10 ECS Singapore Appointed as Distributor for Stratus

ECS Indonesia Apr - Jun 10 ECS Indonesia Appointed as Distributor for APC

ECS Indonesia Apr - Jun 10 ECS Indonesia Appointed as Distributor for Belkin

ECS Philippines Apr - Jun 10 ECS Philippines Appointed as Distributor for Samsung Notebook

ECS Holdings Jul - Sep 10 Appointment of Mr Narong Intanate as Group Chief Executive Ofcer

ECS Holdings Jul - Sep 10 US$89M Syndicated LoanECS Holdings Jul - Sep 10 Appointment of Mr Tay Eng Hoe as Chairman

ECS China Jul - Sep 10 ECS China Appointed as Distributor for Buffalo

ECS China Jul - Sep 10 ECS China Appointed as Distributor for Greenplum

ECS Thailand Jul - Sep 10 The Value Systems Appointed as Distributor for Canon

ECS Thailand Jul - Sep 10 The Value Systems Appointed as Distributor for Emerson

ECS Malaysia Jul - Sep 10 ECS Astar Sdn Bhd and ECS Pericomp Appointed as Distributor for APC

ECS Singapore Jul - Sep 10 ECS Singapore Appointed as Distributor for Promethean

ECS Singapore Jul - Sep 10 ECS Singapore Appointed as Distributor for APC

ECS Philippines Jul - Sep 10 ECS Philippines Appointed as Distributor for Microsoft Hardware

ECS Holdings Oct - Dec 10 ECS Proposed TDRECS China Oct - Dec 10 ECS China Appointed as Distributor for Apple iPad

ECS China Oct - Dec 10 ECS China Appointed as Distributor for Apple iPhone

ECS China Oct - Dec 10 ECS China Appointed as Distributor for Epson

ECS China Oct - Dec 10 ECS China Appointed as Distributor for Wescom

ECS China Oct - Dec 10 ECS China Appointed as Distributor for Cisco

ECS China Oct - Dec 10 ECS China Appointed as Distributor for SafeNet

ECS China Oct - Dec 10 ECS China Appointed as Distributor for Found

ECS China Oct - Dec 10 ECS China Appointed as Distributor for ZTE

ECS Thailand Oct - Dec 10 The Value Systems established the Corporate Social Responsibilitycampaign of The Tree Planting Project IV at Suan Pachumchon Moo 1Community Forest, Phra Pradaeng district, Samut Prakan province.

ECS Thailand Oct - Dec 10 The Value Systems Appointed as Distributor for Fortinet

ECS Thailand Oct - Dec 10 The Value Systems Appointed as Distributor for Extreme Network

ECS Thailand Oct - Dec 10 The Value Systems Appointed as Distributor for Dell

ECS Malaysia Oct - Dec 10 The Company held a Recycling Day campaign at its premise to promotethe principle of Reduce, Reuse and Recycle

ECS Malaysia Oct - Dec 10 ECS Astar Sdn Bhd Appointed Exclusive Distributor of YTLCommunications 4G Devices

ECS Singapore Oct - Dec 10 ECS Singapore Appointed as Distributor for Dell

ECS Singapore Oct - Dec 10 ECS Singapore Appointed as Distributor for Lexmark

ECS Singapore Oct - Dec 10 ECS Singapore Appointed as Distributor for Trend Micro

ECS Indonesia Oct - Dec 10 ECS Indonesia Appointed as Distributor for Lenovo

ECS Philippines Oct - Dec 10 ECS Philippines Appointed as Distributor for BelkinECS Philippines Oct - Dec 10 ECS Philippines Appointed as Distributor for Oracle Sun

ECS Philippines Oct - Dec 10 ECS Philippines Appointed as Distributor for Dell

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corporate

governance statement

ECS Holdings Limited (the Company) is committed to comply with the Code of Corporate Governance 2005

issued by the Corporate Governance Committee. It believes in maintaining a high standard of corporategovernance 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 o its Aairs

Principle 1 : Every company should be headed by an effective Board to lead and control the company.

The Board is collectively responsible for the success of the company. The Board works withManagement to achieve this and the Management remains accountable to the Board.

The Boards role is to:

a) provide entrepreneurial leadership, set strategic aims, and ensure that the necessary nancial and human

resources are in place for the company to meet its objectives;

b) establish a framework of prudent and effective controls which enables risk to be assessed and managed;

c) review management performance; and

d) set the companys values and standards, and ensure that obligations to shareholders and others are

understood and met.

The Board meets to consider the following, without limitation, corporate events and/or actions:

a) approval of quarterly results announcements;

b) approval of annual report and accounts;

c) declaration of interim dividend and proposal of nal dividends;

d) approval of corporate strategy;

e) authorisation of major transactions;

f) review and approval of annual budgets;

g) compensation of senior management personnel; andh) 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 Ofcer (Group CEO), while reserving certain key issues and policies

for its approval. Additionally, to facilitate effective management, certain functions have been delegated to the

following sub-committees, each of which has its own written terms of reference:

a) the Nominating Committee;

b) the Compensation Committee; and

c) the Audit Committee.

Newly-appointed directors are given briengs 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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corporate


The Board intends to hold about four meetings each year and shall also hold informal meetings regularly. The

Companys Articles of Association provide for telephonic and videoconference meetings. The number of Boardmeetings held since the date of the last annual report, as well as the attendance of every Board member at

those meetings is as follows:

DIRECTORS ATTENDANCE AT BOARD MEETINGS

Board

Board Member No. Of Meetings Attended

Tay Eng Hoe 5 5

Narong Intanate 5 5

Foo Sen Chin 5 5

Leong Horn Kee 5 5

Koh Soo Keong 5 5

Tan Hup Foi 5 5

Mao Xiangqian (appointed on 3 May 2010) 5 5

Ong Wei Hiam (appointed on 3 May 2010) 5 5

Li Jia Lin (resigned on 27 September 2010) 3 3

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. No

individual or small group of individuals should be allowed to dominate the Boards decision

making.

The Board comprises eight directors of which six are non-executive directors (including three independent

directors) and two executive directors. The Company places great importance on the quality of its Board of

Directors. The Group achieves this by appointing to its Board highly respected individuals and prominent

leaders in their respective professions. The Board comprises individuals with proven track record in the public

and/or corporate sector, and each is a highly respected member of the business community. As a group, they

provide core competencies such as accounting or nance, business or management experience, industryknowledge, strategic planning and customer-based experience or knowledge. Key information regarding the

directors is given in the Board of Directors section on pages 14 to 15 of the annual report.

Chairman and Chie Executive Ocer

Principle 3 : There should be a clear division of responsibilities at the top of the company - the working of the

Board and the executive responsibility of the companys business - which will ensure a balance

of power and authority, such that no one individual represents a considerable concentration of

power.

Mr Tay Eng Hoe, a non-executive director, was appointed as the Chairman of the Company on 27 September

2010. Mr Narong Intanate was appointed as Group CEO with effect from 1 July 2010. The Chairman and the

Group CEO each perform separate functions to ensure that there is an appropriate balance of power and

authority, and that accountability and independent decision-making are not compromised. The Chairman is

responsible for the functioning of the Board. The Group CEO has full executive responsibilities over the running

of the Groups business, the business direction and operational decisions of the Group. No individual or small

group of individuals dominate the Boards decision making process.

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Board Membership & Board Perormance

Principle 4 : There should be a formal and transparent process for the appointment of new directors to the

Board.

Principle 5 : There should be a formal assessment of the effectiveness of the Board as a whole and the

contribution by each director to the effectiveness of the Board.

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) identies and reviews all nominations for Board appointments and re-nominations of directors;

b) assesses the effectiveness of the Board as a whole and the contribution by each individual director to the

effectiveness of the Board; and

c) determines whether or not a Director is independent.

In accordance with the Companys Articles of Association, at each Annual General Meeting, one-third of the

Board shall retire from ofce by rotation provided that no director holding ofce 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 Inormation

Principle 6 : In order to full their responsibilities, board members should be provided with complete,

adequate and timely information prior to board meetings and on an on-going basis.

All directors are provided with complete, adequate and timely information prior to meeting and on a regular

basis to enable them to perform their roles properly. All directors have separate and independent access to

senior management and the company secretary. The company secretary has dened roles and responsibilities

and attends all Board and sub-committee meetings of the Company. Should directors, whether as a group orindividually, need independent professional advice in the furtherance of their duties, cost of such professional

advice will be borne by the Company.

(B) REMUNERATION MATTERS

Procedures or Developing Remuneration Policies

Principle 7 : There should be a formal and transparent procedure for xing the remuneration packages of

individual directors. No director should be involved in deciding his own remuneration.

The Compensation Committee oversees the general compensation of employees of our Group with a goal

to motivate, recruit and retain employees and directors through competitive compensation and progressive

policies. In particular, the Compensation Committee is responsible for overseeing our employee prot 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.

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Level and Mix o Remuneration; Disclosure o Remuneration

Principle 8 : The level of remuneration should be appropriate to attract, retain and motivate the directors

needed to run the company successfully but companies should avoid paying more than is

necessary for this purpose. A signicant proportion of executive directors remuneration should

be structured so as to link rewards to corporate and individual performance.

Principle 9 : Each company should provide clear disclosure of its remuneration policy, level and mix of

remuneration, and the procedure for setting remuneration, in the companys annual report.

It should also provide disclosure in relation to its remuneration policies to enable investors

to understand the link between remuneration paid to directors and key executives, and

performance.

The Groups remuneration policy is to provide a competitive remuneration package so as to attract, retain

and motivate directors and senior management of the required experience and expertise to run the Group

successfully. In setting remuneration packages for executive directors and senior management of the

Group, the pay and employment conditions within the industry and in comparable companies are taken into

consideration.

The compensation package of the Groups executive directors including its Group CEO and senior

management consists of salary, allowances, share options and bonuses which are conditional upon meeting

certain performance targets.

Non-executive directors have remuneration packages which consist of a directors fee component and a share

option component pursuant to the Companys Share Option Scheme. The directors fee policy is based on a

scale of fees divided into basic retainer fees as a director and additional fees for serving on board committees.

Directors fees for non-executive directors are subject to the approval of shareholders at the Annual General

Meeting. The report on directors remuneration is given below:

SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED 31 DECEMBER 2010

Name of Director

Salary

%

Bonus

%

Fees

%

Allowances andother Benets

%

Total

%

$1,000,000 to below $2,500,000

Tay Eng Hoe 24 72 - 4 100

$500,000 to below $1,000,000

Narong Intanate 31 64 - 5 100

Foo Sen Chin 21 68 - 11 100

Mao Xiangqian 58 39 - 3 100

Below $500,000

Li Jia Lin - - 100 - 100

Leong Horn Kee - - 100 - 100Tan Hup Foi - - 100 - 100

Koh Soo Keong - - 100 - 100

Ong Wei Hiam - - - - -

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Rather than setting out the names of the top ve 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 $100,000upwards in bands of $250,000 below. This should give a macro view of the remuneration pattern in the Group,

while maintaining condentiality of staff remuneration matters.

NO. OF EXECUTIVES IN REMUNERATION BANDS

Total Compensation (S$)

No. ofEmployees

(Note 1)

Total FixedCompensation

(Note 2)

Total VariableCompensation

(Note 3)Total

Remuneration

$100,000 to $249,999 12 $1,579,078 $175,500 $1,754,578

$250,000 to $499,999 9 $2,036,328 $1,836,882 $3,873,210

$500,000 to $749,999 5 $1,279,348 $1,658,488 $2,937,836

Total 26 $4,894,754 $3,670,870 $8,565,624

Notes :

1. Including employees in local and overseas subsidiaries.

2. Inclusive of salaries, AWS, related CPF and other statutory contributions, allowances and fringe-benets.

3. 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 nancial 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 nancial

position and prospects. On a quarterly basis, Board members are provided with business and nancial reports

comparing actual performance with budget and with prior year comparisons with highlights on key business

indicators and any signicant business development. In addition, the Group CEO communicates regularly

with Board members through informal meetings and phone calls with appropriate updates on Company

developments.

Audit Committee

Principle 11 : The Board should establish an Audit Committee with written terms of reference which clearly set

out its authority and duties.

The Audit Committee comprises three members, of which all members, including the Chairman, are

independent. The members of the Audit Committee at the date of this report are:

Leong Horn Kee Chairman

Tan Hup Foi Member

Koh Soo Keong Member

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The Audit Committee meets periodically to perform the following functions:-

a) reviewing the quarterly, half-yearly and annual nancial statements before recommending them to the

Board for approval;

b) reviewing interested person transactions (as dened 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;

c) 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;

d) 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 satised that the nature

and extent of such services will not prejudice the independence and objectivity of the external auditors;

e) reviewing the scope of internal audit procedures and the results and effectiveness of the internal audit;and

f) considering other matters as requested by the Board.

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 ofcer to attend its meetings. The auditors,

both internal and external, have unrestricted access to the Audit Committee. Reasonable resources have been

made available to the Audit Committee to enable them to discharge their duties.

The Audit Committee held four meetings since the date of the last annual report. The Audit Committee reviewed

the Interested Person Transactions for the year ended 31 December 2010 in accordance with the terms

of the Shareholders Mandate for such transactions as were approved on 30 April 2010. Interested Person

Transactions with a total value of $23.6 million were examined and the Audit Committee is of the opinion that

the said transactions were carried out on prevailing commercial terms and did not prejudice the interest of the

shareholders of the Company.

The Audit Committee had reviewed and conrmed 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 conrms that the methods and procedures are sufcient 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 satised

with the independence of the auditors. The Audit Committee has recommended to the Board that the auditors,

KPMG LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.

Meetings and attendance are as follows:

Audit Committee

Name of Director No. Of Meetings Attended

Leong Horn Kee (Chairman) 4 4

Tan Hup Foi 4 4Koh Soo Keong 4 4

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Internal Controls

Principle 12 : The Board should ensure that the Management maintains a sound system of internal controls to

safeguard the shareholders investment and the companys assets.

The Board acknowledges that it is responsible for the Groups system of internal control. It believes that in the

absence of any evidence to the contrary and from due enquiry, the system of internal controls that has been

maintained by the Group throughout the nancial year is adequate to meet the needs of the Group in its current

business environment. However, the Board notes that the system of internal controls is designed to manage

rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not

absolute assurance against material misstatements or loss.

Internal Audit

Principle 13 : The Company should establish an internal audit function that is independent of the activities it

audits.

The Group has an internal audit department which is independent of the activities it audits. It performs nancial

audits, implements operational and compliance controls. The Internal Auditor reports primarily to the Chairman

of the Audit Committee and administratively to the Group CEO. The Internal Auditor plans its internal audit work

in consultation with, but independent of, Management, and its yearly plan is submitted to the Audit Committee

for approval at the beginning of each year. The Internal Auditor reports to the Audit Committee quarterly

regarding its ndings. The Audit Committee also meets with the Internal Auditor at least once during the yearwithout the presence of Management. The Audit Committee also ensures that the internal audit function is

adequately resourced, and will review annually the adequacy of the internal audit function.

The internal auditors are expected to meet or exceed the standards set by nationally or internationally

recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by

The Institute of Internal Auditors.

(D) COMMUNICATION WITH SHAREHOLDERS

Principle 14 : Companies should engage in regular, effective and fair communication with shareholders.

Principle 15 : Companies should encourage greater shareholder participation at AGMs, and allow

shareholders the opportunity to communicate their views on various matters affecting the

company.

The Group does not practice selective disclosure. In line with continuous obligations of the Group pursuant to

the Listing Manual and the Companies Act, Chapter 50, of Singapore, the Boards policy is that all shareholders

are informed of all major developments of the Group. Price-sensitive information is released publicly, and

quarterly results and annual reports are announced or issued within the mandatory period and are available

on the Groups website. Thereafter, a brieng by Management is held jointly for the media and analysts every

half yearly. All shareholders of the Group receive the annual report and notice of Annual General Meeting.

Shareholders are encouraged to attend the Annual General Meeting to ensure a high level of accountability and

to stay informed of the Groups strategy and goals.

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(E) DEALING IN SECURITIES

The Company has adopted its own internal Code of Best Practices on Securities Transactions (Code) with

regard to dealings in the Companys shares by its directors and executives. It emphasizes that the law on

insider dealing is applicable at all times, notwithstanding that the Code provides certain window periods for

directors and executives to deal in the shares of the Company. The Code also enables the Company to monitor

such share transactions by requiring directors and executives to report to the Company whenever they deal

in the Companys shares. In the opinion of the directors, the Company has complied with the Best Practices

stipulated in Listing Manual Rule 1207 (18) of the SGX-ST Listing Manual.

(F) INTERESTED PARTY TRANSACTIONS

The Group has adopted an internal policy in respect of any transactions with interested persons and has

procedures established for the review and approval of the Groups Interested Party Transactions (IPT).

Pursuant to Rule 907 of the Listing Manual, the Group has the following IPTs entered into during the nancial

year, together with the corresponding aggregate value of the IPTs entered into with the same interested person,

are disclosed as follows:

Name of Interested Person

Aggregate value of all IPTs during

the nancial year under review

(excluding transactions lessthan $100,000 and transactions

conducted under shareholders

mandate pursuant to Rule 920 of

Listing Manual of SGX-ST)

Aggregate value of all IPTs

conducted under shareholders

mandate pursuant to Rule 920of Listing Manual of SGX-ST

(excluding transactions less than

$100,000)

Transactions for the sale of goods

and services with Vnet Capital Co.,

Ltd and its subsidiaries $313,743 $9,413,050

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Directors

report

We are pleased to submit this annual report to the members of the Company together with the audited nancial

statements for the nancial year ended 31 December 2010.

Directors

The directors in ofce 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 (Appointed on 3 May 2010)

Ong Wei Hiam (Appointed on 3 May 2010)

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 ofce at the end of the nancial 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:

Name of director and corporation in which interests are held

Holdings atbeginning

of the year/date ofappointment

Holdings at endof the year


- options to subscribe for ordinary shares at $0.550 per share

between 15/10/2011 and 15/10/2021

Narong Intanate - 1,500,000

Foo Sen Chin - 300,000

Mao Xiangqian - 900,000


- options to subscribe for ordinary shares at $0.550 per share

between 15/10/2011 and 15/10/2016

Tay Eng Hoe - 700,000

Leong Horn Kee - 400,000

Koh Soo Keong - 400,000

Tan Hup Foi - 400,000

Ong Wei Hiam - 300,000

Except as disclosed in this report, no director who held ofce at the end of the nancial year had interests

in shares, debentures, warrants or share options of the Company, or of related corporations, either at the

beginning of the nancial year or date of appointment if later, or at the end of the nancial year.

Except as disclosed under the Share Options section of this report, neither at the end of, nor at any time

during the nancial 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 benets by means of the acquisition of shares in ordebentures 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

nancial year and 21 January 2011.

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Directors

report

During the nancial year, certain of its subsidiaries have, in the normal course of business entered into

transactions with companies in which Mr Li Jia Lin (resigned on 27 September 2010) and Mr Narong Intanatehave an interest. These transactions include the purchase and sale of information t

ecs holdings 2010 annual report

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