ecs holdings annual report 2008

Contents

Corporate Profile p.01

Chairman’s Message p.04

CEO’s Message p.10

Corporate Information p.14

Financial Highlights p.15

Board of Directors p.20

Senior Management p.23

Milestones p.26

Group Structure p.28

Financial Contents p.29

Vision:

To be the leading provider of ICT products and value-added services. We strive forsustainable growth to achieve optimum returns to shareholders.

Mission:

To be the preferred supplier of choice for ICT products and value-added services by building strong customer relationships.

To sustain our entrepreneurial growth by expanding our business regionally.

To bring the best-of-breed ICT products and services to enhance the competitiveness of our customers’ businesses.

p. 01Annual Report 2008

ECS Holdings Limited (“ECS” or “the Group”) is a leading

Information and Communications Technology (“ICT”)

products and services provider that was established in 1985

and listed on the SGX Mainboard in 2001.

ECS is a well-recognised provider of ICT products and

services with three main businesses, namely Enterprise

Systems, IT Services and Distribution. With a network

of more than 18,000 active channel partners across

China, Th ailand, Malaysia, Singapore, Indonesia and

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

partner of choice suitable for any global-leading

MNC ICT brand vendor tapping Asia Pacifi c’s ICT

spending growth.

Leading global brand names like Hewlett-Packard

(“HP”), Apple, Microsoft, Sun Microsystems, IBM,

Oracle and EMC leverage on ECS’ extensive channel

partner network to distribute their products across

the region.

Th e Group’s Enterprise Systems business aims to give

MNCs, local government and domestic companies

a competitive edge over their peers by designing,

installing and implementing IT infrastructure. ECS’

IT Services business provides a comprehensive range of

professional, technical support and training services.

ECS’ Distribution business leverages on a well-

established and highly effi cient logistical and IT

infrastructure to distribute fast-moving products in

the most effi cient manner.

In 2007, the Group’s strategies acquired an additional

dimension when Hong Kong based and HKSE-listed

VST Holdings, a leading distributor of IT components

in China bought a 52.5% controlling stake in ECS from

certain ECS substantial shareholders.

Th e resultant union between ECS’ downstream regional

distribution of end-user ICT products and VST’s strong

upstream component distribution business and market

leadership in China, created a combined entity that

intends to be a leading full-range Asian ICT distributor.

Th e transaction makes VST ECS’ single largest

shareholder.

Th e Group has a consistent track record of profi tability

and a management that is focused on operational

excellence to achieve sustainable profi t growth and to

enhance shareholder returns.

CorporateProfile

p. 02 ECS Holdings Limited

Strengthening our Assets

We believe our relentless eff ort in pursuing margin enhancement initiatives and

operational effi ciency has strengthened our foundation. Notwithstanding the current

economic challenges, we are committed towards continuing to strengthen these

advantages to achieve even greater success moving forward.


Chairman’s Message

“While our overriding business objectives this year continued to be driven by our own ongoing margin enhancement initiatives started more than three years ago, FY2008 was another exciting year that strengthened the Group’s business foundation.”

Mr Li Jia Lin Chairman



DEAR STAKEHOLDERS

I am pleased to present to you our FY2008 annual

report which chronicles another stellar performance,

underscoring the effi cacy of ECS’ margins accretive growth

strategies and more signifi cantly, our agility to adjust to

changing economic circumstances.

Having resumed our listed status on the Singapore Exchange

in August 2008 since the completion of the VST transaction,

I am happy to report that the transition in ECS’ controlling

shareholding did not impact ECS’ exemplary track record

of operations and performance. Our relationships with our

vendors, customers and bankers remain strong.

While our overriding business objectives this year continued to

be driven by our own ongoing margin enhancement initiatives

started more than three years ago, FY2008 was another exciting

year that strengthened the Group’s business foundation.

We believe that our widened product range, enlarged

distribution network and enhanced operational effi ciency

will place us in good stead to compete in an increasingly

challenging business environment that the world is poised for

over the next few quarters.

Th ese eff orts had continued to gain momentum even before

the current fi nancial crisis deepened during the second half of

calendar year 2008, as we sharpened our focus on improving

internal effi ciencies including generating positive operating

cash fl ow through better management of working capital and

more eff ective management of fi nancial resources.

Notwithstanding the impact of the ongoing fi nancial crisis in

the countries in which we operate, for the fi nancial year ended

31 December 2008 (“FY2008”) the Group continued to break

new records across diff erent parameters.

Accordingly in FY2008, net profi t attributable to equity

holders rose 25.8% to $29.4 million.

Concurrently, FY2008 net profi t growth continued to outstrip

FY2008 revenue growth as the Group consciously tried to

enhance operating performance with revenue growth an

important but secondary priority.

For the period under review, operating profi t increased 22.9%

to $52.2 million from $42.5 million even as revenue rose

slightly by 5.8% to $2.9 billion from $2.8 billion. ECS’ revenue

performance in FY2008 would have been better by about 11.6%

had it not been for a one-time eff ect of a currency translation.

In line with our resolve to strengthen our long–term prospects,

we conscientiously focused on controlling costs. Consequently

profi t margins continued their upward trend, operating

cash fl ows and cash position also strengthened considerably

compared to a year ago.

Having intensifi ed our focus on cash management in view

of the declining fi nancial conditions worldwide, as at 31

December 2008, ECS generated a positive operating cash fl ow

of $16.4 million, up from $7.2 million at 31 December 2007.

Due to the improved operating cash fl ow, net gearing improved

to 0.60 times from 0.68 times a year ago.

Earnings per share (“EPS”), on a fully diluted basis,

correspondingly rose to 8.0 cents versus 6.4 cents in FY2007

while net asset value (“NAV”) per share increased to 65.09 cents

as at 31 December 2008 versus 58.20 cents a year ago.

I am happy to report that comparing by business division, our

on-going initiatives to enhance the Group’s sales mix in line

with market fundamentals have continued to pay off .

Revenue from higher-margin Enterprise Systems, comprising

servers, networking products and enterprise software, grew

17.5% while net profi t rose 31.5%.

On a geographical market basis, North Asia led the growth in

profi tability with a 47.6% growth in profi t before interest and

taxation (“PBIT”) buoyed by sales of higher-margin enterprise

software, networking products and servers.

While these strategies were undertaken to maximise our leverage

on opportunities that we believe will strengthen our long-term

growth prospects, this process is by no means complete.

Most signifi cantly, FY2008 represents our on-going smooth and

successful integration with VST.



OUTLOOK

I am very pleased that ECS has continued to deliver commendable

results in spite of softer consumer spending amid the global

financial uncertainty.

Having successfully integrated management and operation

styles along with our new parent VST, in FY2009 we can look

forward to giving more shape to our product and geographical

expansion plans.

However, we will be mindful of the global economic trends as

they unfold and consider our steps well before proceeding.

As the near-term outlook for the global economic and IT

industry continues to be uncertain and notwithstanding the

challenges in the external environment, we will continue to

further strengthen internal competencies which, in turn,

will safeguard longer-term growth opportunities when

markets recover.

While improving working capital management and cash fl ow

will be key initiatives over the next few quarters, ECS will

additionally look into other operational factors including

human resource and technological improvements.

Looking ahead, despite the anticipated slowdown in demand

for ICT products in 2009, the Directors are confi dent that in

FY2009, ECS will still be profi table.

Having said that, with a 25-year long track record and

experience in the regional ICT market, we have weathered

many storms before and I am confi dent that ECS will emerge

stronger after this global fi nancial crisis as well.

While the Directors recognise that these countries will not be

immune to the spillover of the ongoing global fi nancial crisis, I

also believe that ECS has put in place a fi rm foundation for the

Group’s growth strategy.

Given our strong vendor base, wide channel network and

experienced local management teams, we believe that we

will be positioned advantageously when the future outlook

becomes clearer.

DIVIDEND PAYMENT AND APPRECIATION

On behalf of my fellow Directors, I once again thank you,

our shareholders, for your loyal support of the Group even as

we continue our transformation. For FY2008, the Directors

have proposed a fi rst and fi nal dividend of 2.7 cents per share

(tax exempt).

I would also like to express my sincere appreciation to all our

customers, technology partners and business associates without

whom our success would not have been possible.

Additionally, I would like to thank management and staff for

their relentless hard work that helped ECS achieve our growth

plan and build a strong business.

Last but the least, I would like to thank my fellow Directors

for their pioneering direction and invaluable guidance that has

made the milestone achievements of FY2008 possible.

MR LI JIA LIN Chairman

6 April 2009


Targeted Expansion

Asia presents vast potential and opportunities for the Group’s expansion.

By strategically developing both new markets as well as complementary business categories,

ECS is committed to enhancing our corporate positioning and shareholder value.

ECS Holdings Limitedp.10

CEO’s Message

“Continued margins enhancement and improved cash management led ECS to generate not only strong profit and margins growth but also stronger cash fl ow.”

Mr Tay Eng Hoe Group CEO

p.11Annual Report 2008

CEO’s Message

AN OVERVIEW

FY2008 distinguishes itself as a year that witnessed ECS’ ongoing

margins accretive growth initiatives gaining momentum.

Th ese eff orts which were put in place a few years ago, continued

unabated throughout FY2008 even though ECS relisted its

shares on the Singapore Exchange only in August.

During the period under review, our conscious commitment

to enhance operating performance with revenue growth an

important but secondary priority saw net profi t growth continue

to outstrip revenue growth.

But most importantly, our improving bottomline and margins

for the year under review, even after the current fi nancial

crisis deepened during the second half of calendar year 2008,

demonstrated our agility to adapt to challenging economic

circumstances and uncertainties.

Realising our limited control over these externalities, we

sharpened focus on improving internal effi ciencies including

generating positive operating cash fl ow through better

management of working capital and more eff ective management

of fi nancial resources.

Continued margins enhancement and improved cash

management led ECS to generate not only strong profi t and

margins growth but also stronger cash fl ow. Th is is particularly

signifi cant in view of deteriorating fi nancial conditions

worldwide.

In fact, these two initiatives will continue to be pivotal to our

growth strategy over the next few quarters.

FINANCIAL AND OPERATIONS REVIEW

In FY2008 ECS’ net profi t attributable to equity holders

rose 25.8% to $29.4 million from $23.4 million in FY2007

propelled by continued margins enhancement and improved

cash management.

Th e Group’s sustained eff orts to enhance operating performance

with revenue growth an important but secondary objective saw

operating profi t increase 22.9% to $52.2 million from $42.5

million even though revenue inched up slightly by 5.8% to

$2.9 billion from $2.8 billion over the comparative period.

Consequently, net profi t before interest and tax (“PBIT”) rose

19.6% to $41.4 million from $34.6 million.

Concurrently gross and operating margins increased to 5.1%

from 4.8% and to 1.8% from 1.5% respectively, over the

comparative periods.

Despite the slight revenue growth, the Group’s total operating

expenses increased by 6.5% to $102.1 million from $95.9

million as we stepped up sales particularly in the higher margin

enterprise systems business segment.

Due to increases in interest rates, our fi nance costs also rose

30.0% to $11.4 million from $8.7 million. Current and

non-current bank borrowings rose 4.9% to $193.2 million

from $184.2 million.

Notwithstanding the challenges in the external environment,

throughout the year, the Group retained focus on improving

fi nancial health by generating strong profi t and margin growth

as well as stronger cash fl ow.

As at 31 December 2008, ECS generated a positive operating

cash fl ow of $16.4 million, up from $7.2 million as at 31

December 2007. We also continued to further reduce accounts

receivable days to 43.6 days from 47.8 days during the period

under review.


CEO’s Message

Tighter credit control and shorter cash cycles also led to

signifi cant improvements in working capital. As at 31 December

2008, ECS’ cash and cash equivalents were $49.5 million, up

from $39.4 million a year ago. Net gearing improved to 0.60

times from 0.68 times.

As a result of these eff orts, FY2008 earnings per share (“EPS”),

on a fully diluted basis, correspondingly rose to 8.0 cents from

6.4 cents while net asset value (“NAV”) per share increased to

65.09 cents from 58.20 cents a year ago.

REVIEW BY BUSINESS SEGMENTS

Enterprise Systems

Enterprise Systems continued to be the Group’s growth driver

in FY2008 even as global economic volatility began to dampen

ICT spending rates in the region as ECS reiterated its ongoing

strategy to continue pursuing bottomline and margins growth.

Consequently in FY2008, ECS’ higher margins’ Enterprise

Systems segment grew by 17.5% to $1.1 billion from $964.3

million mainly driven by higher sales of servers, networking

products and enterprise software in the Group’s mainstay

North Asia market as well as some Southeast Asian markets.

At the same time, PBIT from this segment strongly increased

by 31.5% to $26.4 million from $20.1 million.

Distribution

In line with the slowdown in demand for consumer ICT

products, in FY2008 our Distribution sales managed to sustain

themselves within the $1.7 billion range to dip only slightly by

0.6%. Encouragingly, Distribution PBIT grew 19.6% to $23.9

million from $20.0 million again propelled by better margins

mix of products.

REVIEW BY GEOGRAPHICAL MARKETS

ECS’ ongoing pursuit of country-specifi c business thrusts

continued to reap results and both North Asia and Southeast

Asia continued to deliver revenue and PBIT growth.

North Asia

Led by sustained business ICT infrastructure spending in fi rst

and second tier cities which continued throughout FY2008,

North Asia revenue grew 5.8% to $1.5 billion from $1.4

billion. PBIT grew 47.6% to $25.3 million from $17.2 million

over the comparative periods.

Southeast Asia

During the year under review, sales of both consumer electronics

especially notebooks and enterprise products in Malaysia,

Indonesia and the Philippines rose 5.7% to $1.43 billion

from $1.36 billion while PBIT grew 6.4% to $26.9 million

from $25.3 million; Southeast Asia continues to be the major

contributor to Group PBIT.

OUTLOOK

While ECS has put a solid foundation into place, we are

cognizant of the fact that at least the near-term outlook for

the global economy and the global ICT industry continues to

be uncertain. Th e countries in our region will not be immune

from the spillover eff ect of this scenario.

In a revised statement in December 2008, technology sector

analyst IDC, said that it anticipates IT spending in the region

to fall to US$195.6 billion in 2009 from the US$201.4

billion it had forecast in July 2008. IDC added that strategic

investments in IT will remain critical in achieving further

effi ciency and productivity gains, and driving longer term

growth of businesses.

As these external developments remain out of our control, as

in the past, we prefer to adopt a prudent business approach

by taking the opportunity to further enhance our business

fundamentals during trying times.

ECS recognises the importance of strengthening internal

competencies that have placed us in good stead even as the

economic challenges began to manifest themselves in our

industry during the last few months of FY2008.


CEO’s Message

We believe that by honing these operating and fi nancial

effi ciencies, ECS will be able to capitalise on the longer-term

growth opportunities when markets eventually recover.

Firstly, we intend to enhance operating cash fl ow and working

capital. Th is will help us to reduce our debt and funding costs,

thereby strengthening our balance sheet.

Secondly, we will work on strengthening internal business

processes like credit control to make operations more

cost-eff ective.

Finally, we plan to also implement tactical human resource

and technological improvements that will further scale up our

operational effi ciencies.

Looking further ahead, despite the anticipated slowdown in

demand for ICT products in 2009, the Directors are confi dent

that in FY2009, ECS will still remain profi table.

IN APPRECIATION

Once again, ECS has delivered an excellent set of results despite

the operating uncertainties that dampened global business

sentiments during the latter part of FY2008.

I must commend my fellow management team and staff for

their relentess determination and hard work which has helped

us to make major strides externally and internally.

To my fellow Board members, I would like thank you for your

valuable input that has steered ECS onto a solid path for many

more future successes.

ECS is on a new threshold and our newly strengthened

fundamentals auger well for the vast opportunities that lie

ahead of us when the global economy comes back on track.

TAY ENG HOEGroup Chief Executive Offi cer & Executive Director

6 April 2009

Once again, ECS has delivered an excellent set of results despite the operating uncertainties that dampened global business sentiments during the latter part of FY2008.


Corporate Information

BOARD OF DIRECTORS

Mr Li Jia Lin (Chairman, Non-Executive Director)

Mr Liu Wei (Vice Chairman, Non-Executive Director)

Mr Tay Eng Hoe (Group Chief Executive Offi cer)

Mr Narong Intanate (Executive Director)

Mr Foo Sen Chin (Executive Director)

Mr Leong Horn Kee (Independent Director)

Mr Tan Hup Foi (Independent Director)

Mr Koh Soo Keong (Independent 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

SENIOR MANAGEMENT AT

ECS HOLDINGS LIMITED

Mr Tay Eng Hoe (Group Chief Executive Offi cer)

Mr Foong Kam Th o (Group Chief Operating Offi cer)

Mr Eddie Foo Toon Ee (Group Chief Financial Offi cer)

Mr Foo Sen Chin (Group Human Resource Director)

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

Mr Eugene Tan Teck Th ye (Group Financial Controller)

Mr Newman Li (Senior Internal Audit Manager)

SENIOR MANAGEMENT AT ECS

HOLDINGS LIMITED’S SUBSIDIARIES

Mr Foong Kam Th o (Chief Executive Offi cer)

ECS Technology (China) Limited

Mr Somsak Pejthaveeporndej (President)

Th e Value Systems Co., Ltd.

Mr Foo Sen Chin (Managing Director)

ECS KUSH Sdn Bhd

Mr Sebastian Chong (President)

ECS Computers (Asia) Pte Ltd

Mr Nana Juhana Osay (Executive Director)

PT ECS Indo Jaya

Mr Jimmy Go (President)

MSI-ECS Phils., Inc.

AUDITORS

KPMGCertifi ed Public Accountants16 Raffl es Quay #22-00Hong Leong BuildingSingapore 048581

Partner-in-charge : Tran Phuoc(Since FY2006)

REGISTRAR

M&C Services Private Limited138 Robinson Road #17-00Th e Corporate Offi ce, Singapore 068906

REGISTERED OFFICE

19 Kallang Avenue #07-153Singapore 339410

PRINCIPAL BANKERS

DBS Bank Ltd

KBC Bank N.V.

Malayan Banking Berhad

Oversea-Chinese Banking Corporation

Rabobank International

Standard Chartered Bank

Sumitomo Mitsui Banking Corporation

United Overseas Bank Limited

COMPANY SECRETARY

Eddie Foo Toon Ee, CPA

ECS OFFICES

ECS Holdings Limited19 Kallang Avenue #07-153 Singapore 339410Website : www.ecs.com.sg

ECS Technology (China) LimitedPCI Building, No. 50 Jianzhong RoadTianhe Software Park Guangzhou, P.R.C. (510665)

Branches in Beijing, Chengdu, Fuzhou, Guangzhou,

Hangzhou, Hong Kong, Jinan, Nanjing, Nanning,

Shanghai, Shenyang, Shenzhen, Wuhan, Xi’anWebsite : www.ecschina.com

Th e Value Systems Co., Ltd.34th Floor, Charn Issara Tower 22922/328-331 New Petchburi Road Bangkapi, Huay-Kwang Bangkok 10320, Th ailand

Branches in Bangkok, Chiang Mai, Hat Yai,

Khon Kaen, Nakhon Ratchasima, Phitsanulok,

Phuket, Rayong, Surat Th aniWebsite : www.value.co.th

ECS KUSH Sdn BhdLot 3, Jalan Teknologi 3/5, Taman Sains Selangor, Kota Damansara 47810 Petaling Jaya, Selangor, Malaysia

Branches in Penang, Petaling JayaWebsites : www.ecsm.com.my

ECS Computers (Asia) Pte Ltd19 Kallang Avenue #07-153 Singapore 339410Website : www.ecs.com.sg

ECS Indo Pte Ltd19 Kallang Avenue #06-151Singapore 339410

Branches in Bandung, Jakarta, Medan,

Surabaya, YogyakartaWebsite : www.ecsindo.com

MSI-ECS Phils., Inc.Topy II Bldg, #3 Economia St.,Libis, Quezon City, Philippines 1110

Branches in Manila, CebuWebsite : www.msi-ecs.com.ph


Financial Highlights

Stroll down memory lane and re-live

ECS’ winning performance over

the years. On the record, ECS has

consistently surpassed itself to deliver

greater value for both stakeholders

and partners.

REVENUE ($ million)

2,949.9

1,865.7

2,036.3

2,339.3

2,789.4

FY 06 FY 07FY 05FY 04 FY 08



Legend

Total

Enterprise Systems

Distribution

IT Services

REVENUE BY BUSINESS SEGMENT ($ million)

PROFITABILITY ($ million) REVENUE BY GEOGRAPHICAL SEGMENT ($ million)

1,215.2

625.6

1,865.724.9

781.1

2,036.3

1,233.222.0

900.1

2,339.3

1,416.023.2

964.3

2,789.4

1,792.932.2

1,133.3

2,949.9

1,783.033.6

FY 04 FY 05 FY 06 FY 07 FY 08

1,000

500

0

1,500

Net profit attributable to equity holders

Profit from operations before tax

Legend

19.1

13.5

22.517.3

27.0

20.1

34.6

23.4

41.4

29.4

FY 04 FY 05 FY 06 FY 07 FY 08

North Asia

1,515.6

South East Asia

1,434.3

30

15

0

45

60

2,000

2,500

3,500

3,000



RETURN ON CAPITAL EMPLOYED (%)

SHAREHOLDERS’ EQUITY ($ million)

237.8

158.7

174.2

190.1

212.7

DIVIDENDS PER SHARE (cents)

FY 05FY 04 FY 06 FY 07 FY 08

2.7

0.8

1.41.5

FY 05FY 04 FY 06 FY 07 FY 08

RETURN ON EQUITY (%)

FY 04 FY 05 FY 06 FY 07 FY 08

11

12

14

10

0

13

15

4 6

8.8

10.4

11.0

11.6

13.0

FY 04 FY 05 FY 06 FY 07 FY 08

6

9

15

3

0

12

18

4 6

8.1 8.49.1

10.011.7


Geared for Sustained Future Growth

With the unleashed potential from our transformation to a complete ICT products

and services provider, the synergies from our union with VST will accelerate the Group

to the next level of growth.


Board ofDirectors

1.

4.

7.

2.

5.

8.

3.

6.


Board ofDirectors

1. CHAIRMAN

Mr Li Jia Lin was appointed Chairman of the Board on 31

December 2007. Mr Li is also the Chairman and Chief Executive

Offi cer and an Executive Director of VST Holdings Limited.

Mr Li is also the Director of VST Group Limited (BVI) and

VST Computers (H.K.) Limited respectively. He is responsible

for the overall management and strategic positioning of the

Group. Mr Li graduated from Tsinghua University of the People’s

Republic of China with a Degree of Bachelor of Engineering in

1983 and a Master Degree in Management Engineering in 1986.

2. VICE CHAIRMAN

Mr Liu Wei was appointed Vice Chairman of the Company on

3 December 2001 and is currently a director of ECS Technology

(China) Limited, our subsidiary in China. Mr Liu is one of the

founding members of Pacifi c City International Holdings Limited

and has more than 18 years of experience in the IT industry in

China. Mr Liu has assumed the positions of Vice Chairman

of Guangdong CAD and Executive Chairman of Guangdong

Academy of Electronics, and is a member of Guangzhou People’s

Congress. In recognition of his contributions and achievements,

Mr Liu had received many awards from the Chinese Government

and Industry Publications including, “Top 10 Economic

Contributors” by the Ministry of Information Industry of China

in 2006, “Ten Best New Entrepreneurs in Guangdong” and

“Guangdong Outstanding Entrepreneur of Private Enterprise”

by the Guangdong Government in 2006. He was recognised in

2004 as one of the top 10 IT leaders in China and was recipient

of the “Outstanding Enterprise Contribution Award” in 2003.

Mr Liu was awarded China Channel Permanent Achievement

Medal by Computer Business News in 2002 and was also listed

by Computer World as IT Fortune Top 50 in 2001. Mr Liu

graduated with a Bachelor’s degree in Applied Mechanics from

the Zhongshan University, PRC.

3. GROUP CHIEF EXECUTIVE OFFICER

Mr Tay Eng Hoe was appointed the Executive Director of

the Company on 1 April 2000 and he is also the Group Chief

Executive Offi cer of the Company. Mr Tay is the founder of

the ECS Group and also ECS Computers (Asia) Pte Ltd, our

Singapore subsidiary. He brings with him more than 20 years of

experience in the IT business. Mr Tay is an Executive Director

of VST 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 services 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.

4. EXECUTIVE DIRECTOR

Mr Narong Intanate is the founder and Executive Chairman

of Th e Value Systems Co., Ltd., our subsidiary, since 1988.

He is actively involved in the management of Th e Value

Systems Co., Ltd. and plays a pivotal role in steering the

strategic direction of Th e Value Systems. He was appointed

as an Executive Director of the Company on 15 December

2000 and he 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 Th e 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 ofDirectors

5. EXECUTIVE DIRECTOR

Mr Foo Sen Chin was appointed as an Executive Director on

15 December 2000 and is concurrently the Group Human

Resource Director of the Company. He is also the Managing

Director and founder of ECS KUSH Sdn Bhd, our subsidiary.

Mr Foo plays a pivotal role in steering the strategic direction

of ECS KUSH Sdn Bhd. His responsibilities include the

development of its long term business goals, overall operation

and administrative management of ECS KUSH. Prior to

joining our Group, he was the General Manager of a computer

bureau services company in Kuala Lumpur before forming

ECS KUSH 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. Mr Foo has a Bachelor of Science degree in

Electrical and Electronic Engineering from the University of

Birmingham, UK and he also holds a Master’s degree in Business

Administration from the Cranfi eld School of Management in

the United Kingdom.

6. NONEXECUTIVE INDEPENDENT DIRECTOR

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 extensive 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 appointed Singapore’s Non-Resident

Ambassador to Mexico and a member of the Security Industry

Council in 2006. He holds a Bachelor of Technology (Honours)

degree in Production Engineering from Loughborough

University, UK; an Economics (Honours) degree from the

University of London, UK; and an MBA from INSEAD,

France. In 2008, he completed a degree in Chinese Language and

Literature from Beijing Normal University, China.


Mr Tan Hup Foi was appointed as an Independent Director

on 7 February 2006, and currently serves as Chairman of

the Nominating Committee and a member of the Audit and

Compensation Committees. He was the Chief Executive of

Trans-Island Bus Services Ltd from 1994 to 2005 and also the

Deputy President of SMRT Corporation Ltd from 2003 to

2005. Mr Tan is known internationally as the Honorary Vice

President of the International Association of Public Transport

(UITP) and Honorary Chairman of UITP Asia Pacifi c

Division. Mr Tan is the Chairman of Ngee Ann Polytechnic

Council and a Board member of Singapore Corporation of

Rehabilitative Enterprises (SCORE). He was awarded the

Bintang Bakti Masyarakat (Public Service Star) and the Pingat

Bakti Masyarakat (Public Service Medal) by the President of

Singapore in 2008 and 1996 respectively. 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.


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 Offi cer and President of Toll Asia Pte Ltd,

formerly SembCorp Logistics Ltd (SembLog) which was acquired

by Toll in May 2006. Currently, he is the Managing Director

of EcoSave Pte Ltd. With over 20 years of experience in the

logistics industry, he has 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.


Senior Management

1.

9.

5.

2.

10.

6. 7. 8.

3.

11.

4.


1. GROUP CHIEF EXECUTIVE OFFICER

Mr Tay Eng Hoe was appointed the Executive Director of

the Company on 1 April 2000 and he is also the Group Chief

Executive Offi cer of the Company. Mr Tay is the founder of

the ECS Group and also ECS Computers (Asia) Pte Ltd, our

Singapore subsidiary. He brings with him more than 20 years of

experience in the IT business. Mr Tay is an Executive Director

of VST 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 services 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.

2. GROUP CHIEF OPERATING OFFICER,

CHIEF EXECUTIVE OFFICER ECS China)

Mr Foong Kam Th o was appointed as Group Chief Operating

Offi cer of ECS Holdings Limited with eff ect from 1 January

2008. He is responsible for the overall operational management

of the Group including setting business strategies and building

long-term customers and partners’ relationships. Mr Foong is

concurrently the Chief Executive Offi cer of ECS China and

was formerly the President of ECS Computers (Asia) Pte Ltd.

He joined ECS Computers (Asia) Pte Ltd in 1985 and had

more than 20 years experience in the IT industry. Mr Foong

holds a Bachelor of Science degree (Computer Science) from

the National University of Singapore.

3. GROUP CHIEF FINANCIAL OFFICER

Mr Eddie Foo is the Group Chief Financial Offi cer of the

Company and is concurrently the Group Company Secretary.

Mr Foo is responsible for the corporate fi nance and treasury,

reporting, accounts, tax, information technology and risk

management of ECS Holdings and is also a director on the boards

of various ECS companies. Mr Foo has more than 14 years of

fi nancial management and audit experience in multinational

and public accounting fi rms. Prior to serving as Group Chief

Financial Offi cer, 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 Certifi ed Public Accountants of Singapore.

4. SENIOR VICE PRESIDENT,

BUSINESS DEVELOPMENT

Mr Lim Tow Cheng was appointed Senior Vice President,

Business Development on 18 October 2005. He is responsible

for managing the regional expansion strategy and for identifying

new business opportunities for the Group. In addition, he also

looks after investor relations. 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

Offi cer. Mr Lim has an Honours Degree in Economics from

the National University of Singapore.

5. GROUP FINANCIAL CONTROLLER

Mr Eugene Tan was appointed as Group Financial Controller

of the Company on 1 March 2008. He is responsible for the

fi nancial management of the Group, which covers accounting,

treasury, tax, fi 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 Ltd. 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.

6. SENIOR INTERNAL AUDIT MANAGER

Mr Newman Li is the Senior Manager, Group Internal Audit

of the Company. He is a member of CPA China and has more

than 10 years of fi 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.

Senior Management


7. PRESIDENT Th e Value Systems Co., Ltd.)

Mr Somsak Pejthaveeporndej was appointed as the President

of Th e Value Systems Co., Ltd on 1 February 2009 and he

is responsible for the overall operational management of Th e

Value Systems. He has been with our Group since 1988 and

was formerly involved in managing the Enterprise Systems &

ICT Services division. 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. between 1981

to 1984, followed by Sahaviriya Telecom Co., Ltd. between

1984 to 1988. He holds a Bachelor of Science degree majoring

in electronics from Rajamangala University of Technology

Krungthep, Th ailand, and a Mini MBA from Th e Faculty of

Commerce and Accountancy, Chulalongkorn University.

8. MANAGING DIRECTOR ECS KUSH Sdn Bhd)

Mr Foo Sen Chin was appointed as an Executive Director on

15 December 2000 and is concurrently the Group Human

Resource Director of the Company. He is also the Managing

Director and founder of ECS KUSH Sdn Bhd, our subsidiary.

Mr Foo plays a pivotal role in steering the strategic direction

of ECS KUSH Sdn Bhd. His responsibilities include the

development of its long term business goals, overall operation

and administrative management of ECS KUSH. Prior to

joining our Group, he was the General Manager of a computer

bureau services company in Kuala Lumpur before forming

ECS KUSH 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. Mr Foo has a Bachelor of Science degree in

Electrical and Electronic Engineering from the University of

Birmingham, UK and he also holds a Master’s degree in Business

Administration from the Cranfi eld School of Management in

the United Kingdom.

9. PRESIDENT ECS Computers (Asia) Pte Ltd)

Mr Sebastian Chong is the President of ECS Computers

(Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS

Holdings Ltd. Mr Chong joined ECS in 1990 and has 18

years of experience in the IT industry. He oversees 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. EXECUTIVE DIRECTOR PT ECS Indo Jaya)

Mr Nana Juhana Osay is the Executive Director of PT ECS

Indo Jaya. He is responsible for overseeing ECS Indonesian

operations and has over 15 years experience in the IT industry.

Mr Osay was formerly Secretary General for Indonesia Computer

Business Association, a position he held from 1999 to 2005.

Mr Osay was educated in the Bandung Institute of Technology

from 1976 to 1981.

11. PRESIDENT (MSI-ECS Phils, Inc)

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

Inc. He has more than 25 years of experience in the IT industry

in the Philippines. He started in the IT industry way back in

1982 after graduating from college selling Fujitsu & Apple

computers. He currently holds a Bachelor degree in Electronics

& Communication Engineering from De La Salle University

with an award of Magna Cum Laude and Post Graduate degree

of Masters in Business Administration in Ateneo de Manila

University. Mr. Go was also the past President of COMDDAP

(Computer Manufacturers, Distributors & Dealers Association

of the Philippines). In 1998, Mr Go was named President and

CEO of MSI-Digiland. He was instrumental in growing the

business of MSI in the Philippines making it one of the biggest

IT distributors in the country in less than 5 years.

Senior Management


MilestonesHighlights & Awards

2008 HIGHLIGHTS

January - March

• Th e Value Systems held “ECS Bus Rally” on the Occasion of

its 20th Anniversary

• Th e Value Systems hosted “Th ank You Party” for Partners on

the Occasion of its 20th Anniversary

• ECS Astar Sdn Bhd was Appointed as Distributor for Nortel

• ECS Astar Sdn Bhd was Apppointed as Distributor for

HP Procurve

April - June

• Th e Value Systems was Appointed as Distributor for

Fujitsu Scanners

• Th e Value Systems Inaugurated “Th e Fairy Tale Project II”

on Occasion of its 20th Anniversary

• ECS Indo Jaya was Appointed as Distributor for Extreme

Networks

• ECS Computers (Asia) Pte Ltd was Appointed as Distributor

for OKI

• ECS (China) was Appointed as Distributor for Commercial

Products of EMC

• ECS(China) was Appointed as Distributor for O2

• ECS(China) was Appointed as Distributor for of Huawei /

Symantec Blade Server

July – September

• Th e Value Systems was Appointed as Distributor for SRAN

(Security Revolution Analysis Network)

• Th e Value Systems Established Arts & Culture Campaign on

the Occasion of its 20th Anniversary

• ECS Astar Sdn Bhd was Appointed as Distributor for

Extreme Network


for TriActive


for Intermec

• ECS (China) was Appointed as Distributor for Fujitsu

Enterprise Series Platform Products

• ECS(China) was Appointed as Distributor for Novell

October – December

• ECS Indo Jaya was Appointed as Distributor for Intermec

• Th e Value Systems was Appointed as Distributor for Red Hat

• Th e Value Systems was Appointed as Distributor for VMware

• Th e Value Systems Established ECS Tree Planting II

Campaign

• ECS Pericomp Sdn Bhd was Appointed as Distributor

for Intermec

• ECS Pericomp Sdn Bhd was Appointed as Distributor for

EMC Storage

• ECS Pericomp Sdn Bhd was Appointed as Distributor for

Blue Coat


for Adobe


MilestonesHighlights & Awards

2008 AWARDS

Group

• ECS Holdings Ranked 19th in Singapore International

100 Award

China

• ECS China Awarded 2nd in Top 100 IT Distribution Firms

by CBINEWS

• ECS China Awarded 2nd in Top 100 Distribution Firms by

China Computer Magazine

• Samsung – Top Performing Notebook Distributor FY08

• H3C – Best Network Distributor 2008

• H3C – Top Wholesaler for Integrated Services in Q2/Q3/Q4

& FY08

Th ailand

• HP – Top Performing Partner for HP Business Critical Server

– HP Integrity Solution (HP Partner Connect Achievers

Club 2008)

• Symantec – Top Performing Distributor FY 2008

• Symantec – Distribution Partner for Symantec Partner

Program 2009

Malaysia

• HP – ECS Astar Sdn Bhd Awarded Best Wholesaler Of Th e

Year for Consumer Category FY08

• HP – ECS Astar Sdn Bhd Awarded Top Wholesaler for

Commercial Storage Works FY08

• HP – ECS Astar Sdn Bhd Awarded Top Wholesaler Industry

Standard Servers FY08

• HP – ECS Astar Sdn Bhd Awarded Top Wholesaler for HP

Services FY08

• HP – ECS Astar Sdn Bhd Awarded Top Wholesaler for

Consumer Imaging & Printing FY08

• HP – ECS Astar Sdn Bhd Awarded Top Valued Added

Distributor Award FY08

• HP – ECS Astar Sdn Bhd Awarded Top Master Parts Reseller

of the year Award 2008

• HP – ECS Astar Sdn Bhd Awarded Top Event Service

Contributor FY08

• HP – ECS Astar Sdn Bhd Awarded Top Upfront Volume

Services Contributor FY08

• HP – ECS Astar Sdn Bhd Awarded Top Upfront Value

Service Contributor FY08

• HP – ECS Astar Sdn Bhd Awarded Best Authorized Support

Partner Program FY08

• HP – ECS Astar Sdn Bhd Awarded Best Overall HP Services

Partner Champion FY08

• HP – ECS Astar Sdn Bhd Awarded Top Performing Master

Part Reseller in Asia Pacifi c Replacement Parts business

Singapore

• Achievement as a Singapore 1000 Company 2008

• HP - Awarded as a Distinguished Partner of Hewlett-Packard

Singapore (Sales) Pte Ltd (January-December 2008)

• Sun Microsystems - Asia South Platinum Award FY08

• Sun Microsystems - Asia South, Partner of the Year, SPA

CDP Category, FY08

• Fuji-Xerox - Recognition for Being part of Fuji-Xerox

Printers One Million Record Sales 2004 – 2008

Indonesia

• Cisco – Th e Best Services Sales Distributor 2008

• Cisco – Th e Best System Engineer Distributor 2008

• Cisco – Distributor of the Year 2008

• Microsoft – In Recognition of Technological Excellence &

Impact on Customer through Microsoft Product & Services

2008 - 2009

Th e Philippines

• Acer – ePinnacle Award for Most Outstanding Master ASP

• HP – Outstanding IWS / InkJet Distributor of the Year

• HP – Outstanding SWD / Server Storage Distributor of

the Year

• HP – Outstanding Product Manager of the Year

• Oracle – Value-added Distributor of the Year (Technology)

• Oracle – Partner Sales Representative of the Year

(Technology)

• EMC – Channel Partner of the Year

• EMC – Pre-sales Engineer of the Year


Group Structure


THAILAND

Th e ValueSystems Co., Ltd.

100%

ECS Computers(Asia) Pte Ltd

100%

ECS Technology(China) Limited

100%

ECS KUSHSdn Bhd

60%

ECS IndoPte Ltd

90%

ECS Infocom(Phils) Pte. Ltd.

100%

ECS Technology(Guangzhou) Co., Ltd

100%

ECS KUSdn Bhd

100%

PT ECSIndo Jaya

100%

MSI-ECSPhils., Inc.

49.99%

Pacifi c City(Asia Pacifi c) Pte Ltd

100%

ECS TechnologyCo., Ltd

100%

ECS AstarSdn Bhd

100%

ECS International Trading (Shanghai) Co., Limited

100%

ECS ICTSdn Bhd

99%

ECS China Technology (Shanghai) Co., Limited

100%

ECS PericompSdn Bhd

80%

SINGAPORE CHINA MALAYSIA INDONESIA PHILIPPINES

Consolidated Statement of Changes in Equity p.48

Consolidated Cash Flow Statement p.50

Notes to the Financial Statements p.52

Shareholdings Statistics p.98

Substantial Shareholders p.99

Notice of Annual General Meeting p.100

Proxy Form

Corporate Governance Statement p.30

Directors’ Report p.38

Statement by Directors p.43

Independent Auditors’ Report p.44

Balance Sheets p.46

Consolidated Income Statement p.47

Financial Contents


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. Th is report describes the main corporate governance

practices that are adopted by the Company.

A BOARD MATTERS

Th e Board’s Conduct of its Aff airs

Principle 1 : Every company should be headed by an eff ective Board to lead and control the company. Th e Board is collectively responsible

for the success of the company. Th e Board works with Management to achieve this and the Management remains accountable

to the Board.

Th e Board’s role is to:

a) provide entrepreneurial leadership, set strategic aims, and ensure that the necessary fi nancial and human resources are in place for the

company to meet its objectives;

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

c) review management performance; and

d) set the company’s values and standards, and ensure that obligations to shareholders and others are understood and met.

Th e 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 fi 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; and

h) convening of shareholders’ meetings.

All directors must objectively take decisions in the interests of the Company.

Th e Board has delegated the day-to-day management and running of the Company to the management headed by our Group Chief

Executive Offi cer (“Group CEO”) and Executive Director, Mr Tay Eng Hoe, while reserving certain key issues and policies for its approval.

Additionally, to facilitate eff ective 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 briefi ngs by the Management on the Group’s 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 Company’s or directors’ disclosure obligations, directors are briefed either during Board meetings or at

specially convened sessions conducted by professionals.

Corporate Governance Statement



Th e Board intends to hold about four meetings each year and shall also hold informal meetings regularly. Th e Company’s Articles of

Association provide for telephonic and videoconference meetings. Th e 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

Board Member

Li Jia Lin (appointed on 31 December 2007) 4 3

Liu Wei 4 3

Tay Eng Hoe 4 4

Narong Intanate 4 4

Foo Sen Chin 4 4

Leong Horn Kee 4 4

Tan Hup Foi 4 4

Koh Soo Keong (appointed on 11 February 2008) 4 4

Board Composition and Guidance

Principle 2 : Th ere should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate

aff airs independently, in particular, from Management. No individual or small group of individuals should be allowed to

dominate the Board’s decision making.

Th e Board comprises eight directors of which fi ve are non-executive directors (including three independent directors) and three executive

directors. Th e Company places great importance on the quality of its Board of Directors. Th e Group achieves this by appointing to its

Board highly respected individuals and prominent leaders in their respective professions. Th e 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 fi nance, 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 20 to

22 of the annual report.

Chairman and Chief Executive Offi cer

Principle 3 : Th ere should be a clear division of responsibilities at the top of the company - the working of the Board and the executive

responsibility of the company’s business - which will ensure a balance of power and authority, such that no one individual

represents a considerable concentration of power.

Mr Li Jia Lin, a non-executive director, is the Chairman of the Company and Mr Tay Eng Hoe is the Group CEO. Th ey 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. Th e Chairman is responsible for the functioning of the Board. Th e Group CEO has full executive responsibilities

over the running of the Group's business, the business direction and operational decisions of the Group. No individual or small group of

individuals dominate the Board's decision making process.

ECS Holdings Limited


p.32

Board Membership & Board Performance

Principle 4 : Th ere should be a formal and transparent process for the appointment of new directors to the Board.

Principle 5 : Th ere should be a formal assessment of the eff ectiveness of the Board as a whole and the contribution by each director to the

eff ectiveness of the Board.

Th e 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 executive director, Mr Tay Eng Hoe. Mr Tan Hup Foi is the Chairman of the

Nominating Committee.

Th e role of the Nominating Committee is to perform the following functions:

a) identifi es and reviews all nominations for Board appointments and re-nominations of directors;

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

and

c) determines whether or not a Director is independent.

In accordance with the Company’s Articles of Association, at each Annual General Meeting, one-third of the Board shall retire from offi ce

by rotation provided that no director holding offi ce 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 fulfi l 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. Th e company

secretary has defi ned roles and responsibilities and attends all Board and sub-committee meetings of the Company. Should directors,

whether as a group or individually, need independent professional advice in the furtherance of their duties, cost of such professional advice

will be borne by the Company.

B REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Principle 7 : Th ere should be a formal and transparent procedure for fi xing the remuneration packages of individual directors. No director

should be involved in deciding his own remuneration.

Th e 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 profi t 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. Th e 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 : Th e 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 signifi cant 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 company’s 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.

Th e Group’s 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.

Th e compensation package of the Group’s executive directors including its Group CEO and senior management consists of salary, allowances,

share options and bonuses which are conditional upon meeting certain performance targets.

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

to the Company’s Share Option Scheme. Th e 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. Th e report on directors’ remuneration is given below:

SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED 31 DECEMBER 2008

Name of Director

Salary

%

Bonus

%

Fees

%

Allowances

and other

Benefi ts

%

Total

%

$1,000,000 to below $1,250,000

Tay Eng Hoe 50 49 – 1 100

$750,000 to below $1,000,000

- – – – – –

$500,000 to below $750,000

Narong Intanate 37 53 – 10 100

Foo Sen Chin 28 61 – 11 100

$250,000 to below $500,000

- – – – – –

Below $250,000

Li Jia Lin – – – – –

Liu Wei 100 – – – 100

Leong Horn Kee – – 100 – 100

Tan Hup Foi – – 100 – 100

Koh Soo Keong – – – – –



p.34

Executives’ Remuneration

Rather than setting out the names of the top fi 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 $100,000 upwards in bands of $250,000 below. Th is should give

a macro view of the remuneration pattern in the Group, while maintaining confi dentiality of staff remuneration matters.

NO. OF EXECUTIVES IN REMUNERATION BANDS

Total Compensation

(S$)

No. of

Employees

(Note 1)

Total Variable

Compensation

(Note 2)

Total Fixed

Compensation

(Note 3)

Total

Remuneration

$100,000 to $249,999 24 $1,735,944 $1,942,618 $3,678,562

$250,000 to $499,999 8 $1,547,384 $1,704,997 $3,252,381

$500,000 to $749,999 2 $ 718,594 $ 365,913 $1,084,507

Total 34 $4,001,922 $4,013,528 $8,015,450

Notes :

1. Including employees in local and overseas subsidiaries

2. Sales commission, bonus and other statutory contributions

3. Inclusive salaries, AWS, related CPF and other statutory contributions, allowances and fringe-benefi ts.

Th ere 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 : Th e Board should present a balanced and understandable assessment of the company’s performance, position and

prospects.

In presenting the annual fi 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 Group’s fi nancial position and prospects. On a quarterly basis, Board

members are provided with business and fi nancial reports comparing actual performance with budget and with prior year comparisons with

highlights on key business indicators and any signifi cant 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 : Th e Board should establish an Audit Committee with written terms of reference which clearly set out its authority and

duties.

Th e Audit Committee comprises three members, of which all members, including the Chairman, are independent. Th e members of the

Audit Committee at the date of this report are:

Leong Horn Kee Chairman

Tan Hup Foi Member

Koh Soo Keong Member

Th e Audit Committee meets periodically to perform the following functions:-

a) reviewing the quarterly, half-yearly and annual fi nancial statements before recommending them to the Board for approval;

b) reviewing interested person transactions (as defi ned 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 management’s 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 satisfi ed 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 eff ectiveness of the internal audit; and

f) considering other matters as requested by the Board.

Th e Audit Committee has full access to and co-operation of the Company's management and the internal auditors and has full discretion to

invite any director or executive offi cer to attend its meetings. Th e 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.

Th e Audit Committee held fi ve meetings since the date of the last annual report. Th e Audit Committee reviewed the Interested Person

Transactions for the year ended 31 December 2008 in accordance with the terms of the Shareholders' Mandate for such transactions as were

approved on 30 April 2008. Interested Person Transactions with a total value of $13.9 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.

Th e Audit Committee had reviewed and confi rmed that the methods and procedures for determining the transaction prices relating to

Interested Person Transactions have not changed since the last shareholders' approval. Th e Audit Committee also confi rms that the methods

and procedures are suffi cient 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.



p.36

Th e Audit Committee had reviewed the non-audit services provided by the external auditors and is satisfi ed with the independence of the

auditors. Th e 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:

BOARD

No. of Meetings Attended

Name of Director

Leong Horn Kee (Chairman) 5 5

Tan Hup Foi 5 5

Koh Soo Keong 5 5

Internal Controls

Principle 12 : Th e Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’

investment and the company’s assets.

Th e Board acknowledges that it is responsible for the Group’s 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 fi 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 : Th e Company should establish an internal audit function that is independent of the activities it audits.

Th e Group has an internal audit department which is independent of the activities it audits. It performs fi nancial audits, implements

operational and compliance controls. Th e Internal Auditor reports primarily to the Chairman of the Audit Committee and administratively

to the Group CEO. Th e 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. Th e Internal Auditor reports to the Audit

Committee quarterly regarding its fi ndings. Th e Audit Committee also meets with the Internal Auditor at least once during the year without

the presence of Management. Th e Audit Committee also ensures that the internal audit function is adequately resourced, and will review

annually the adequacy of the internal audit function.

Th e 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 Th e Institute of Internal Auditors.



D COMMUNICATION WITH SHAREHOLDERS

Principle 14 : Companies should engage in regular, eff ective 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 aff ecting the company.

Th e 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 Board’s 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 Group’s website. Th ereafter, a briefi ng 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 Group’s strategy and goals.

E INTERESTED PARTY TRANSACTIONS

Th e 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 Group’s Interested Party Transactions (“IPT”).

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

(excluding transactions less than

$100,000 and transactions conducted

under shareholders’ mandate pursuant to

Rule 920 of Listing Manual of SGX-ST)

Aggregate value of all IPTs conducted

under shareholders’ mandate

pursuant to Rule 920 of Listing

Manual of SGX-ST (excluding

transactions less than $100,000)

(A) Transactions for the sale of goods and

services with Vnet Capital Co., Ltd

and its subsidiaries

– $2,033,141

(B) Transactions for the sale of goods and

services with Guangzhou

Jia Dou Ji Tuan Co Ltd and

its subsidiaries

– $424,948


Directors’ Report

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

year ended 31 December 2008.

DIRECTORS

Th e directors in offi ce at the date of this report are as follows:-

Li Jia Lin (Chairman)

Liu Wei (Vice-Chairman)

Tay Eng Hoe (Group Chief Executive Offi cer)

Narong Intanate

Foo Sen Chin

Leong Horn Kee

Tan Hup Foi

Koh Soo Keong (Appointed on 11 February 2008)

DIRECTORS’ INTERESTS

According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), no director

who held offi ce at the end of the fi nancial year had interests in shares, debentures, warrants or share options of the Company or of related

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

Neither at the end of nor at any time during the fi 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 benefi ts by means of the acquisition of shares in or debentures of the

Company or any other body corporate.

Since the end of the last fi nancial year, no director has received or become entitled to receive a benefi t by reason of a contract made by the

Company or a related corporation with the director, or with a fi rm of which he is a member or with a company in which he has a substantial

fi nancial interest.

Th ere were no changes in any of the above mentioned interests in the Company between the end of the fi nancial year and 21 January

2009.

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

benefi ts by means of the acquisition of shares in or debentures of the Company or any other body corporate.

During the fi nancial year, the Company and certain of its subsidiaries have, in the normal course of business entered into transactions with

companies in which Mr Narong Intanate and Mr Liu Wei have an interest. Th ese transactions include the purchase and sale of information

technology products and services of $15,231,472 (2007: $2,115,875) and $13,836,284 (2007: $10,840,896) respectively and are carried

out on normal commercial terms.

However, the directors have not received nor will they be entitled to receive any benefi ts 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 fi rm.

Annual Report 2008 p.39

DIRECTORS’ INTERESTS CONT’D

Except as disclosed above and in note 32 to the fi nancial statements, since the end of the last fi nancial year, no director has received or

become entitled to receive a benefi t by reason of a contract made by the Company or a related corporation with the director or with a fi rm

of which he is a member or with a company in which he has a substantial fi nancial interest.

SHARE OPTIONS

(a) Share Option Scheme

Th e 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 signifi cantly to the growth and performance of the Group to participate in the equity of the

Company.

Th e 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

During the fi nancial year, no option was granted under Scheme II.

(c) Issue of Shares Under Option

In 2007, the Company issued a total of 1,761,000 ordinary shares of $0.10 each fully paid at par for cash upon the exercise of options

granted under Scheme II.

(d) Unissued Shares under Option

At the end of the fi nancial year, there are no unissued shares under the share option schemes of the Company.

Directors’ Report


SHARE OPTIONS CONT’D

Th e details of options granted and exercised are as follows:-

Name of Participants

Options

Granted

Aggregate

Options

Granted

Aggregate

Options

Exercised

Aggregate

Options

Forfeited/

Lapsed

Aggregate

Options

Outstanding

[1] [2] [3] [4] [5]

Executive directors

- Tay Eng Hoe - 4,976,000 (2,226,000) (2,750,000) -

- Narong Intanate - 9,506,000 (8,906,000) (600,000) -

- Foo Sen Chin - 3,860,000 (3,340,000) (520,000) -

Non-executive directors

- Leong Horn Kee - 278,000 - (278,000) -

- Koh Soo Keong

(appointed on 11 February 2008) - 120,000 - (120,000) -

Former directors

- Wong Heng Chong - 1,713,000 (1,113,000) (600,000) -

- Lin Chien - 128,000 - (128,000) -

- Chay Yee Meng - 188,000 - (188,000) -

- Teo Ek Tor - 130,000 - (130,000) -

- Wang Fangmin - 50,000 - (50,000) -

- Hsieh Fu Hua - 88,000 - (88,000) -

- Lee Suet Fern - 258,000 - (258,000) -

Employees (including executive offi cers)

- Foong Kam Th o - 8,629,000 (6,679,000) (1,950,000) -

- Other employees - 23,292,000 - (23,292,000) -

- 53,216,000 (22,264,000) (30,952,000) -

[1] Options granted during the fi nancial year under review.

[2] Aggregate options granted since commencement of the schemes to the end of the fi nancial year under review.

[3] Aggregate options exercised since commencement of the schemes to the end of the fi nancial year under review.

[4] Aggregate options lapsed since commencement of the schemes to the end of the fi nancial year under review.

[5] Aggregate options outstanding as at end of the fi nancial year under review.

Directors’ Report


SHARE OPTIONS CONT’D

Except as disclosed, since the commencement of the option schemes:-

(i) no option has been granted to the controlling shareholders of the Company or their associates;

(ii) no participant under the schemes has been granted 5% or more of the total options available under the schemes; and

(iii) no option has been granted to employees of subsidiaries under the schemes.

Th e options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any right to participate in any

share issue of any other company.

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 fi nancial year.

ECS PERFORMANCE SHARE SCHEME

Th e ECS Performance Share Scheme (the “Scheme”) was approved at the Company’s Extraordinary General Meeting held on 1 December

2006. Th e 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 defi ned below), Group Executive

Directors and Non-Executive Directors are eligible to participate in the Scheme (“Participants”). Th e 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 specifi ed performance period.

Since the commencement of the Scheme, no Awards have been granted.

AUDIT COMMITTEE

Th e 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)

Th e Audit Committee performs the functions specifi ed by section 201B of the Companies Act, the SGX Listing Manual and the Code of

Corporate Governance.

Directors’ Report


AUDIT COMMITTEE CONT’D

Th e Audit Committee held fi ve meetings since the last directors’ report. In performing its functions, the Audit Committee met with the

Company’s external and internal auditors to discuss the scope of their work and the results of their examination and evaluation of the

Company’s internal accounting control system.

Th e Audit Committee also reviewed the following:-

• Assistance provided by the Company’s offi cers to the internal and external auditors;

• Quarterly fi nancial information and annual fi nancial statements of the Group and the Company prior to their submission to the

directors of the Company for adoption; and

• Interested person transactions (as defi ned in Chapter 9 of the Listing Manual of the Singapore Exchange).

Th e 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 offi cer to attend its meetings. Th e Audit Committee also recommends the appointment

of the external auditors and reviews the level of audit and non-audit fees.

Th e Audit Committee is satisfi ed 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

Th e auditors, KPMG LLP, have indicated their willingness to accept re-appointment.

On behalf of the Board of Directors

Li Jia Lin

Director

Tay Eng Hoe

Director

27 February 2009

Directors’ Report


In our opinion:

(a) the fi nancial statements set out on pages 46 to 97 are drawn up so as to give a true and fair view of the state of aff airs of the Group and

of the Company as at 31 December 2008 and of the results, changes in equity and cash fl ows 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

(b) 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.

Th e Board of Directors has, on the date of this statement, authorised these fi nancial statements for issue.

On behalf of the Board of Directors

Li Jia Lin

Director

Tay Eng Hoe

Director

27 February 2009

Statement by Directors


MEMBERS OF THE COMPANY


We have audited the fi nancial statements of ECS Holdings Limited (the Company) and its subsidiaries (the Group), which comprise the

balance sheets of the Group and the Company as at 31 December 2008, the income statement, statement of changes in equity and cash

fl ow statement of the Group for the year then ended, and a summary of signifi cant accounting policies and other explanatory notes, as set

out on pages 46 to 97.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation and fair presentation of these fi nancial statements in accordance with the provisions of the

Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. Th is responsibility includes:

(a) devising and maintaining a system of internal accounting controls suffi cient 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 profi t and loss accounts and balance sheets and to maintain accountability of

assets;

(b) selecting and applying appropriate accounting policies; and

(c) making accounting estimates that are reasonable in the circumstances.

AUDITORS’ RESPONSIBILITY

Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with

Singapore Standards on Auditing. Th ose standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance whether the fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. Th e

procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the fi nancial

statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s

preparation and fair presentation of the fi nancial statements in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the eff ectiveness of the entity’s 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 fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

Independent Auditors’ Report


OPINION

In our opinion:

(a) the consolidated fi nancial statements of the Group and the balance sheet 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 aff airs of the Group

and of the Company as at 31 December 2008 and the results, changes in equity and cash fl ows of the Group for the year ended on

that date; and

(b) 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

Certifi ed Public Accountants

Singapore

27 February 2009

Independent Auditors’ Report


Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Non-Current Assets

Property, plant and equipment 3 10,918 10,599 225 198

Goodwill on consolidation 4 33,522 33,522 - -

Subsidiaries 5 - - 174,374 107,774

Interest in associate 6 7,284 7,019 - -

Other fi nancial assets 7 303 718 151 151

Deferred tax assets 8 4,257 2,314 - -

56,284 54,172 174,750 108,123

Current Assets

Inventories 9 175,292 163,094 - -

Trade and other receivables 10 444,662 428,890 46,697 82,014

Cash and cash equivalents 14 50,518 39,425 2,087 470

670,472 631,409 48,784 82,484

Total Assets 726,756 685,581 223,534 190,607

Equity Attributable to Equity Holders of the Company

Share capital 15 112,815 112,815 112,815 112,815

Reserves 16 124,986 99,838 20,741 11,907

237,801 212,653 133,556 124,722

Minority Interests 14,285 10,983 - -

Total Equity 252,086 223,636 133,556 124,722

Non-Current Liabilities

Financial liabilities 18 66,818 5 66,600 -

Deferred income 19 978 968 - -

Deferred tax liabilities 8 886 308 27 27

68,682 1,281 66,627 27

Current Liabilities

Financial liabilities 18 126,596 190,533 20,660 62,790

Deferred income 19 556 302 - -

Trade and other payables 20 275,424 267,111 2,594 2,964

Current tax payable 3,412 2,718 97 104

405,988 460,664 23,351 65,858

Total Liabilities 474,670 461,945 89,978 65,885

Total Equity and Liabilities 726,756 685,581 223,534 190,607

.

Balance SheetsAs at 31 December 2008

Th e accompanying notes form an integral part of these fi nancial statements.


Note 2008 2007

$’000 $’000

Revenue 22 2,949,871 2,789,415

Cost of sales (2,800,395) (2,655,162)

Gross profi t 149,476 134,253

Other income 4,915 4,176

Selling and distribution expenses (60,057) (55,023)

General and administrative expenses (42,090) (40,893)

Profi t from operations 23 52,244 42,513

Finance costs 24 (11,350) (8,730)

Share of profi t of associate, net of tax 492 825

Profi t before income tax 41,386 34,608

Income tax expense 25 (8,115) (8,445)

Profi t for the year 33,271 26,163

Attributable to:

Equity holders of the Company 29,386 23,352

Minority interests 3,885 2,811

33,271 26,163

Earnings per share 26

- Basic 8.0 cents 6.4 cents

- Fully diluted 8.0 cents 6.4 cents

.

Consolidated Income Statement

Year Ended 31 December 2008



Share

capital

Dividend

reserve

General

reserve

Currency

translation

reserve

Accumulated

profi ts

Total

attributable

to equity

holders

of the

Company

Minority

interests Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2007

At 1 January 2007 112,016 5,655 - (5,623) 78,007 190,055 8,248 198,303

Transfer of reserves - - 669 - (669) - - -

Translation diff erences relating

to fi nancial statements of

subsidiaries - - - 3,903 - 3,903 (76) 3,827

Net gains/(losses) recognised

directly in equity - - - 3,903 - 3,903 (76) 3,827

Net profi t for the year - - - - 23,352 23,352 2,811 26,163

Total recognised income and

expense for the year - - - 3,903 23,352 27,255 2,735 29,990

Issue of shares 799 - - - - 799 - 799

Final tax-exempt one-tier

dividends paid at 1.50 cents per

share for 2006 - (5,456) - - - (5,456) - (5,456)

Proposed tax-exempt one-tier

dividends of 1.50 cents per

share for 2007 - 5,480 - - (5,480) - - -

At 31 December 2007 112,815 5,679 669 (1,720) 95,210 212,653 10,983 223,636

Consolidated Statement ofChanges in EquityYear Ended 31 December 2008



Share

capital

Dividend

reserve

General

reserve

Currency

translation

reserve

Accumulated

profi ts

Total

attributable

to equity

holders

of the

Company

Minority

interests Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

2008

At 1 January 2008 112,815 5,679 669 (1,720) 95,210 212,653 10,983 223,636

Transfer of reserves - - 1,754 (7) (1,747) - - -

Translation diff erences relating

to fi nancial statements of

subsidiaries - - - 1,250 (8) 1,242 (583) 659

Net gains/(losses) recognised

directly in equity - - - 1,250 (8) 1,242 (583) 659

Net profi t for the year - - - - 29,386 29,386 3,885 33,271

Total recognised income and

expense for the year - - - 1,250 29,378 30,628 3,302 33,930

Reversal of dividend reserve - (199) - - 199 - - -

Final tax-exempt one-tier

dividends paid at 1.50 cents per

share for 2007 - (5,480) - - - (5,480) - (5,480)

Proposed tax-exempt one-tier

dividends of 2.70 cents per

share for 2008 - 9,865 - - (9,865) - - -

At 31 December 2008 112,815 9,865 2,423 (477) 113,175 237,801 14,285 252,086


Consolidated Statement of Changes in Equity



Note 2008 2007

$’000 $’000

Operating Activities

Profi t before income tax 41,386 34,608

Adjustments for:

Share of profi t of associate (492) (825)

Net fair value changes on fi nancial instruments - 3,533

Depreciation of property, plant and equipment 2,915 3,416

Loss on disposal of property, plant and equipment 171 54

Gain on disposal of other assets (286) -

Finance costs 11,350 8,730

Interest income (272) (477)

Negative goodwill arising from additional investment in subsidiary - (55)

Fair value loss/(gain) on call option 102 (756)

Operating profi t before working capital changes 54,874 48,228

Changes in working capital:

Inventories (14,050) (39,707)

Trade and other receivables (21,386) (75,266)

Trade and other payables 5,871 81,623

Cash generated from operations 25,309 14,878

Income taxes paid (8,944) (7,649)

Cash fl ows from operating activities 16,365 7,229

Investing Activities

Interest received 272 477

Purchases of property, plant and equipment (3,514) (3,411)

Proceeds from disposal of property, plant and equipment 29 88

Purchase of other assets (17) -

Proceeds from sale of other assets 674 -

Cash fl ows used in investing activities (2,556) (2,846)

Consolidated Cash Flow StatementYear Ended 31 December 2008



Note 2008 2007

$’000 $’000

Financing Activities

Interest paid (11,430) (9,367)

Proceeds from issue of shares - 799

Proceeds from bank loans/trade fi nancing 697,339 802,540

Repayment of bank loans/trade fi nancing (684,782) (782,304)

Payment of fi nance lease instalments (43) (26)

Dividends paid to equity holders of the Company (5,480) (5,456)

Repayment of loans from minority shareholders of a subsidiary (13) (4,563)

Repayment of loan to associate 1,253 4,605

Cash fl ows (used in)/from fi nancing activities (3,156) 6,228

Net increase in cash and cash equivalents 10,653 10,611

Cash and cash equivalents at beginning of the year 39,425 29,381

Eff ect of exchange rate changes on balances held in foreign currencies (576) (567)

Cash and cash equivalents at end of the year 14 49,502 39,425


Consolidated Cash Flow Statement



Notes to the Financial StatementsTh ese notes form an integral part of the fi nancial statements.

p.52

Th e fi nancial statements were authorised for issue by the directors on 27 February 2009.

1 DOMICILE AND ACTIVITIES

ECS Holdings Limited (the “Company”) is incorporated in the Republic of Singapore and has its registered offi ce at 19 Kallang

Avenue, #07-153, Singapore 339410.

Th e principal activities of the Company are those relating to investment holding and the distribution of information technology

products. Th e principal activities of the subsidiaries are set out in note 5 to the fi nancial statements.

Th e immediate and ultimate holding company is VST Holdings Limited, a company incorporated in the Cayman Islands.

Th e consolidated fi nancial statements relate to the Company and its subsidiaries (together referred to as the “Group”) and the Group’s

interests in associates.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of Preparation

Th e fi nancial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS).

Th e fi nancial statements have been prepared on the historical cost basis except for certain fi nancial assets and fi nancial liabilities as

described below.

Th e fi nancial statements are presented in Singapore dollars which is the Company’s functional currency. All fi nancial information

presented in Singapore dollars has been rounded to the nearest thousand, unless stated otherwise.

Th e preparation of fi nancial statements in conformity with FRS requires management to make judgements, estimates and assumptions

that aff ect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results

may diff er 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 aff ected.

In particular, information about signifi cant areas of estimation uncertainty and critical judgements in applying accounting policies

that have the most signifi cant eff ect on the amounts recognised in the fi nancial statements are described in note 4 on the assumptions

relating to recoverable amount of goodwill.

Th e accounting policies used by the Group have been applied consistently to all periods presented in these fi nancial statements.


Annual Report 2008

Notes to the Financial Statements

Th ese notes form an integral part of the fi nancial statements.

p.53

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.2 Consolidation

Business combinations

Business combinations are accounted for under the purchase method. Th e cost of an acquisition is measured at the fair value of the

assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to

the acquisition.

Th e excess of the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent liabilities over the cost of

acquisition is credited to the income statement in the period of the acquisition.

Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the power to govern, directly or indirectly, the fi nancial and

operating policies of a company so as to obtain benefi ts from its activities. In assessing control, potential voting rights that presently

are exercisable are taken into account. Th e fi nancial statements of subsidiaries are included in the consolidated fi nancial statements

from the date that control commences until the date that control ceases.

Minority interests represent the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company,

whether directly or indirectly through subsidiaries. Minority interests are presented in the consolidated balance sheet within equity,

separately from equity attributable to the equity shareholders of the Company. Minority interests in the results of the Group are

presented on the face of the consolidated income statement as an allocation of the total profi t or loss for the year between minority

interests and the equity shareholders of the Company.

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses

applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to,

and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profi ts, the Group’s interest is

allocated all such profi ts until the minority share of losses previously absorbed by the Group has been recovered.

Associates

Associates are those entities in which the Group has signifi cant infl uence, but not control, over fi nancial and operating policies.

Signifi cant infl uence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.

Associates are accounted for using the equity method. Th e consolidated fi nancial statements include the Group’s share of income,

expenses and equity movements of associates after adjustments to align the accounting policies with those of the Group, from the

date that signifi cant infl uence commences until the date that signifi cant infl uence ceases. When the Group’s share of losses exceeds

its interest in an associate, the carrying amount of that interest (including any long-term investments) is reduced to zero and the

recognition of further losses is discontinued except to the extent that the Group has an obligation or made payments on behalf of

the associate.



p.54


2.2 Consolidation (Cont’d)

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 fi nancial statements. Unrealised gains arising from transactions with associates are eliminated against the

investment to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains,

but only to the extent that there is no evidence of impairment.

Accounting for subsidiaries and associates by the Company

Investments in subsidiaries and associates are stated in the Company’s balance sheet at cost less accumulated impairment losses.

2.3 Foreign Currencies

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the

date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the

functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies

that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was

determined.

Foreign currency diff erences arising on retranslation are recognised in the income statement, except for diff erences arising on the

retranslation of monetary items that in substance form part of the Group’s net investment in a foreign operation (see below) and

available-for-sale equity instruments.

Foreign operations

Th e assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date.

Th e income and expenses of foreign operations are translated to Singapore dollars at exchange rates prevailing at the dates of the

transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2006 are

treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2006, the

exchange rates at the date of acquisition were used.

Foreign currency diff erences are recognised in the foreign currency translation reserve. When a foreign operation is disposed of, in

part or in full, the relevant amount in the foreign exchange translation reserve is transferred to the income statement.

Net investment in foreign subsidiaries and associates

Exchange diff erences arising from monetary items that in substance form part of the Company’s net investment in foreign operations

are recognised in the Company’s income statement. Such exchange diff erences are reclassifi ed to equity in the consolidated fi nancial

statements. When the foreign operation is disposed of, the cumulative amount in equity is transferred to the income statement.

Annual Report 2008



p.55


2.4 Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Th e cost of self-constructed assets includes the

cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended

use, and the cost of dismantling and removing the items and restoring the site on which they are located.

When parts of an item of property, plant and equipment have diff erent useful lives, they are accounted for as separate items (major

components) of property, plant and equipment.

Th e cost of replacing a part 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 benefi ts embodied within the part will fl ow to the Group and its cost can be measured reliably. Th e

costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the diff erences

between the net disposal proceeds and the carrying amount of the item and are recognised in the income statement on the date of

retirement or disposal.

Except for assets under construction, depreciation is recognised in the income statement on a straight-line basis over the estimated

useful lives (or lease term, if shorter) of each part of an item of property, plant and equipment.

Th e estimated useful lives are as follows: -

Freehold building - 50 years

Leasehold improvements - 10 years

Offi ce equipment - 5 years

Furniture and fi ttings - 5 years

Computers - 5 years

Motor vehicles - 5 years

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date.

Fully depreciated assets are retained in the fi nancial statements until they are no longer in use.

2.5 Goodwill on Consolidation

Goodwill

Acquisitions occurring between 1 January 2001 and 31 December 2004

Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifi able assets and

liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible assets.

Goodwill was stated at cost from the date of initial recognition and amortised over its estimated useful life of not more than 20 years.

On 1 January 2005, the Group discontinued amortisation of this goodwill. Th e remaining goodwill balance is subject to testing for

impairment, as described in note 2.8.



p.56


2.5 Goodwill on Consolidation (Cont’d)

Goodwill (Cont’d)

Acquisitions on or after 1 January 2005

Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifi able assets,

liabilities and contingent liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible

assets.

Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in note 2.8.

Negative goodwill arising on the acquisition of controlled subsidiaries and associates represents the excess of the Group’s share of the

fair value of identifi able assets and liabilities acquired over the cost of the acquisition. Negative goodwill is accounted for as follows:

- for acquisitions before 1 January 2005, negative goodwill is credited to a capital reserve;

- on 1 January 2005, the negative goodwill in the capital reserve was derecognised by crediting accumulated profi ts; and

- for acquisitions on or after 1 January 2005, to the extent that negative goodwill relates to an expectation of future losses and

expenses that are identifi ed in the plan of acquisition and can be measured reliably, but which have not yet been recognised, it is

recognised in the consolidated income statement when the future losses and expenses are recognised. Any remaining negative

goodwill is recognised immediately in the consolidated income statement.

Acquisitions of minority interest

Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additional investment

over the carrying amount of the net assets acquired at the date of exchange.

2.6 Financial Instruments

Non-derivative fi nancial instruments

Non-derivative fi nancial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents,

fi nancial liabilities, and trade and other payables.

Non-derivative fi nancial instruments are recognised initially at fair value plus, for instruments not at fair value through profi t or loss,

any directly attributable transaction costs. Subsequent to initial recognition, non-derivative fi nancial instruments are measured as

described below.

A fi nancial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are

derecognised if the Group’s contractual rights to the cash fl ows from the fi nancial assets expire or if the Group transfers the fi nancial

asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases

and sales of fi nancial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset.

Financial liabilities are derecognised if the Group’s obligations specifi ed in the contract expire or are discharged or cancelled.

Annual Report 2008



p.57


2.6 Financial Instruments (Cont’d)

Non-derivative fi nancial instruments (Cont’d)

Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on demand and that form

an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the

statement of cash fl ows.

Available-for-sale financial assets

Th e Group’s investments in equity securities are classifi ed as available-for-sale fi nancial assets. Subsequent to initial recognition, they

are measured at fair value and changes therein, other than for impairment losses and foreign exchange gains and losses on available-

for-sale monetary items (see note 2.3), are recognised directly in equity. When an investment is derecognised, the cumulative gain or

loss in equity is transferred to the income statement.

Equity securities available-for-sale which do not have a quoted market price in an active market and whose fair value cannot be

reliably measured are stated at cost less impairment losses which, in the opinion of the directors, are other than temporary.

Others

Other non-derivative fi nancial instruments are measured at amortised cost using the eff ective interest method, less any impairment

losses.

Derivative fi nancial instruments and hedging activities

Th e Group holds derivative fi nancial 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 derivates are not closely related, a separate instrument with the same terms as the embedded derivative would meet the

defi nition of a derivative, and the combined instrument is not measured at fair value through profi t or loss.

Derivative fi nancial instruments are recognised initially at fair value; attributable transaction costs are recognised in the income

statement when incurred. Subsequent to initial recognition, derivative fi nancial instruments are measured at fair value. Th e gain or

loss on remeasurement to fair value is recognised immediately in the income statement. However, where derivatives qualify for hedge

accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged as described below.

Th e fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance

sheet date, taking into account current interest rates and the current credit-worthiness of the swap counterparties. Th e fair value of

forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.



p.58


2.6 Financial Instruments (Cont’d)

Derivative fi nancial instruments and hedging activities (Cont’d)

Cash fl ow hedges

Changes in the fair value of the derivative hedging instrument designated as a cash fl ow hedge are recognised directly in equity to

the extent that the hedge is eff ective. To the extent that the hedge is ineff ective, changes in fair value are recognised in the income

statement.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge

accounting is discontinued prospectively. Th e cumulative gain or loss previously recognised in equity remains there until the forecast

transaction occurs. When the hedged item is a non-fi nancial asset, the amount recognised in equity is transferred to the carrying

amount of the asset when it is recognised. In other cases, the amount recognised in equity is transferred to the income statement in

the same period that the hedged item aff ects the income statement.

Impairment of fi nancial assets

A fi nancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A fi nancial

asset is considered to be impaired if objective evidence indicates that one or more events have had a negative eff ect on the estimated

future cash fl ows of that asset.

An impairment loss in respect of a fi nancial asset measured at amortised cost is calculated as the diff erence between its carrying

amount, and the present value of the estimated future cash fl ows discounted at the original eff ective interest rate. An impairment loss

in respect of an available-for-use fi nancial asset is calculated by reference to its current fair value.

Individually signifi cant fi nancial assets are tested for impairment on an individual basis. Th e remaining fi nancial assets are assessed

collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale fi nancial asset

recognised previously in equity is transferred to the income statement.

Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are not reversed through

the income statement. Any subsequent increase in the fair value of such assets is recognised directly in equity.

Share capital

Ordinary shares are classifi ed 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 eff ects.

Where share capital recognised as equity is repurchased (treasury shares), the amount of the consideration paid, including directly

attributable costs, is presented as a deduction from equity. Where such shares are subsequently reissued, sold or cancelled, the

consideration received is recognised as a change in equity. No gain or loss is recognised in the income statement.

Annual Report 2008



p.59


2.7 Leases

When entities within the group are lessees of a fi nance lease

Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classifi ed as fi nance leases. Upon

initial recognition, property, plant and equipment acquired through fi nance leases are capitalised at the lower of their fair value and

the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with

the accounting policy applicable to that asset.

Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments are apportioned between fi nance

expense and reduction of the lease liability. Th e fi nance 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 confi rmed.

At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even though the

arrangement is not in the legal form of a lease.

When entities within the group are lessees of an operating lease

Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement

on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part

of the total lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they

are incurred.

2.8 Impairment – non-fi nancial assets

Th e carrying amounts of the Group’s non-fi nancial assets are reviewed at each reporting date to determine whether there is any

indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, recoverable

amount is estimated at each reporting date, and as when indicators of impairment are identifi ed.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A

cash-generating unit is the smallest identifi able asset group that generates cash fl ows that largely are independent from other assets

and groups. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating

units are allocated fi rst to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount

of the other assets in the unit (group of units) on a pro rata basis.

Th e recoverable amount of an asset or cash-generating unit 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 fl ows are discounted to their present value using a pre-tax discount rate that refl ects

current market assessments of the time value of money and the risks specifi c to the asset or cash-generating unit.

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 asset’s 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.



p.60


2.9 Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs

incurred in bringing the inventories to their present location and condition.

Work-in-progress is stated at cost incurred plus attributable profi ts. Cost includes direct materials, sub-contracted costs, an appropriate

share of production overheads based on normal operating capacity and other related costs incurred. Progress billings received and

receivable are shown as a deduction from the value of work-in-progress. Provision is made for anticipated losses on uncompleted

projects when foreseeable.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the

estimated costs necessary to make the sale. In arriving at net realisable value, due allowance is made for all obsolete and slow moving

inventories.

2.10 Dividends

Dividends on ordinary shares are recognised as a liability in the period in which it is declared.

2.11 Employee Benefi ts

Defi ned contribution plans

Obligations for contributions to defi ned contribution pension plans are recognised as an expense in the income statement as

incurred.

Short-term employee benefi ts

Short-term employee benefi t obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A provision is recognised for the amount expected to be paid under short-term cash bonus or profi t-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.

Share-based payments

Th e share option programme allows Group employees to acquire shares of the Company. Th e fair value of options granted is

recognised as an employee expense with a corresponding increase in equity. Th e fair value is measured at grant date and spread

over the vesting period. At each balance sheet date, the Company revises its estimates of the number of options that are expected

to become exercisable. It recognises the impact of the revision of original estimates in employee expense and in a corresponding

adjustment to equity over the remaining vesting period.

Th e proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised.

Annual Report 2008



p.61


2.12 Financial Guarantee Contracts

Financial guarantee contracts are regarded as insurance contracts under which the Group accepts signifi cant insurance risk from a

third party by agreeing to compensate that party on the occurrence of a specifi ed uncertain future event. Provisions are recognised

when it is probable that the guarantee will be called upon and an outfl ow of resources embodying economic benefi ts will be required

to settle the obligations.

2.13 Revenue Recognition

Sale of goods

Revenue from the sale of goods which encompasses distribution of e-enabling infrastructure and IT products is measured at the

fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue

is recognised when the signifi cant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration

is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management

involvement with the goods, and the amount of revenue can be measured reliably.

Transfers of risks and rewards vary depending on the individual terms of the contract of sale. For sales of IT products, transfer usually

occurs when the product is received at the customer’s warehouse; however, for some international shipments, transfer occurs upon

loading of the goods on to the relevant carrier.

Service fees

Fees from service maintenance contracts are recognised over the period of the contract.

Project revenue

Revenue on projects is recognised in the income statement based on the percentage of completion method, measured by reference to

the percentage of contract costs incurred to date to estimated total contract costs for the contract.



p.62


2.14 Finance Income and Expenses

Finance income comprises interest income, dividend income, gains on the disposal of available-for-sale fi nancial assets and gains

on hedging instruments that are recognised in the income statement. Interest income is recognised as it accrues, using the eff ective

interest method. Dividend income is recognised on the date that the Group’s right to receive payment is established, which in the

case of quoted securities is the ex-dividend date.

Finance expenses comprise interest expense on borrowings, impairment losses recognised on fi nancial assets, and losses on hedging

instruments that are recognised in the income statement. All borrowing costs are recognised in the income statement using the

eff ective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or

production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale.

Foreign currency gains and losses are reported on a net basis.

2.15 Income Tax Expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the

extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

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 prior years.

Deferred tax is recognised using the balance sheet method, providing for temporary diff erences between the carrying amounts of

assets and liabilities for fi nancial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for

the following temporary diff erences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction

that is not a business combination and that aff ects neither accounting nor taxable profi t, and diff erences relating to investments in

subsidiaries and joint ventures to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is

measured at the tax rates that are expected to be applied to the temporary diff erences when they reverse, based on the laws that have

been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are off set if there is a legally enforceable

right to off set current tax liabilities and assets and they relate to income taxes levied by the same tax authority on the same taxable

entity, or on diff erent 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 to the extent that it is probable that future taxable profi t will be available against which the

temporary diff erences 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 benefi t will be realised.

Deferred tax is provided on temporary diff erences arising on investments in subsidiaries and associates, except where the timing of

the reversal of the temporary diff erence can be controlled and it is probable that the temporary diff erence will not be reversed in the

foreseeable future.

Annual Report 2008



p.63

3 PROPERTY, PLANT AND EQUIPMENT

Freehold

Building

Leasehold

Improvements

Offi ce

Equipment

Furniture

and Fittings Computers

Motor

Vehicles

Assets

under

Construction Total

Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost

At 1 January 2007 1,596 1,977 2,251 1,463 14,061 1,537 383 23,268

Additions 9 389 227 161 1,745 220 660 3,411

Disposals - (65) (30) (60) (1,093) (181) - (1,429)

Transfers/

Reclassifi cations - (22) (780) 106 1,011 (79) (236) -

Translation adjustment 22 9 93 177 583 11 48 943

At 31 December 2007 1,627 2,288 1,761 1,847 16,307 1,508 855 26,193

Additions 102 148 401 384 2,093 346 279 3,753

Disposals - - (246) (243) (2,662) (23) - (3,174)

Transfers/

Reclassifi cations - - - - 58 - (58) -

Translation adjustment (86) 130 (123) (175) (161) 1 (88) (502)

At 31 December 2008 1,643 2,566 1,793 1,813 15,635 1,832 988 26,270



p.64

3 PROPERTY, PLANT AND EQUIPMENT CONT’D

Freehold

Building

Leasehold

Improvements

Offi ce

Equipment

Furniture

and Fittings Computers

Motor

Vehicles

Assets

under

Construction Total

Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Accumulated

Depreciation

At 1 January 2007 199 952 1,331 660 9,027 776 - 12,945

Depreciation charge for

the year 49 214 133 281 2,475 264 - 3,416

Disposals - (1) (30) (50) (1,025) (181) - (1,287)

Transfers/

Reclassifi cations - (11) (152) 11 152 - - -

Translation adjustment 6 2 73 98 333 8 - 520

At 31 December 2007 254 1,156 1,355 1,000 10,962 867 - 15,594

Depreciation charge for

the year 50 269 152 256 1,921 267 - 2,915

Disposals - - (246) (141) (2,577) (10) - (2,974)

Transfers/

Reclassifi cations - - - - - - - -

Translation adjustment (26) 95 (98) (115) (40) 1 - (183)

At 31 December 2008 278 1,520 1,163 1,000 10,266 1,125 - 15,352

Carrying Amount

At 1 January 2007 1,397 1,025 920 803 5,034 761 383 10,323

At 31 December 2007 1,373 1,132 406 847 5,345 641 855 10,599

At 31 December 2008 1,365 1,046 630 813 5,369 707 988 10,918

Th e net carrying amount of property, plant and equipment under fi nance leases as at 31 December 2008 was $269,000 (2007:

$27,000).

Annual Report 2008



p.65

3 PROPERTY, PLANT AND EQUIPMENT CONT’D

Leasehold

Improvements

Offi ce

Equipment

Furniture

and Fittings Computers Total

Company $’000 $’000 $’000 $’000 $’000

Cost

At 1 January 2007 191 10 22 76 299

Additions - - - 118 118

Disposals - - - (4) (4)

At 31 December 2007 191 10 22 190 413

Additions - 1 - 83 84

Disposals - - - - -

At 31 December 2008 191 11 22 273 497

Accumulated Depreciation

At 1 January 2007 94 10 21 59 184

Depreciation charge for the year 19 - 1 15 35

Disposals - - - (4) (4)

At 31 December 2007 113 10 22 70 215

Depreciation charge for the year 19 - - 38 57

Disposals - - - - -

At 31 December 2008 132 10 22 108 272

Carrying Amount

At 1 January 2007 97 - 1 17 115

At 31 December 2007 78 - - 120 198

At 31 December 2008 59 1 - 165 225



p.66

4 GOODWILL ON CONSOLIDATION

2008 2007

$’000 $’000

Goodwill on consolidation 33,522 33,522

Impairment testing for goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating unit (CGU) in a group of subsidiaries in

the same geographical location with similar principal activities.

Th e recoverable amount of each CGU is based on its value-in-use. Value-in-use is determined by discounting the future cash fl ows

generated from the continuing use of the unit and is based on the following key assumptions:

• Cash fl ows were projected based on actual operating results and the fi ve-year business plan.

• Th e anticipated annual revenue growth included in the cash fl ow projections ranges from 9.7% to 13.5% per annum for the

years 2009 to 2013, giving an average annual growth in revenue of 11.4%.

• A pre-tax discount rate of 7.8% (2007: 8.5%) per annum was used. Th e discount rate used refl ects the risk-free rate and the

premium for specifi c risks relating to the business unit.

• Terminal value was not considered.

Th e values assigned to the key assumptions represent management’s 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.

Annual Report 2008



p.67

5 SUBSIDIARIES

Company

Note 2008 2007

$’000 $’000

Unquoted equity shares, at cost 100,258 100,258

Quasi-equity loans to subsidiaries, at cost (a) 7,516 7,516

Loan to subsidiary (b) 66,600 -

174,374 107,774

(a) Th e loans to subsidiaries are unsecured and interest-free. Th e settlement of these loans is neither planned nor likely to occur

in the foreseeable future. As these loans are, in substance, part of the Company’s net investments in the subsidiaries, the loans

are stated at cost.

(b) Th e loan to subsidiary is unsecured, repayable on 17 January 2011 and bears interest at rates ranging from 4.174% to 4.555%

per annum.

Details of the subsidiaries held directly by the Company are set out below.

Name of Company Principal Activities

Country of

Incorporation/

Business

Group’s Eff ective

Equity Interest

2008 2007

% %

ECS Computers

(Asia) Pte Ltd

Provider of information technology

products and services for IT infrastructure

Singapore 100 100

ECS Indo Pte Ltd Distributor of information technology

products

Singapore 90 90

Th e Value Systems Co., Ltd Provider of information technology

products and services for IT infrastructure

Th ailand 100 100

ECS KUSH Sdn Bhd Investment holding Malaysia 60 60

ECS Technology (China)

Limited

Investment holding, provider of

information technology products and

services for IT infrastructure

Hong Kong 100 100

EC Sure Holdings (Th ailand)

Co., Ltd

Investment holding Th ailand 99.9 99.9

ECS Infocom (Phils)

Pte. Ltd.

Investment holding Singapore 100 100



p.68

5 SUBSIDIARIES CONT’D

Details of the signifi cant subsidiaries held by the direct subsidiaries of the Company are set out below.

Name of Company Principal Activities

Country of

Incorporation/

Business

Group’s Eff ective

Equity Interest

2008 2007

% %

Subsidiaries of ECS Computers (Asia) Pte Ltd

Pacifi c City (Asia Pacifi c) Pte Ltd Retail of information technology

products, IT equipment and

accessories

Singapore 100 100

Subsidiary of ECS Indo Pte Ltd

PT ECS Indo Jaya Distributor of information technology

products

Indonesia 90 90

Subsidiaries of ECS KUSH Sdn Bhd

ECS Pericomp Sdn Bhd )

)

)


products and services for IT

infrastructure

Malaysia 48 48

ECS Astar Sdn Bhd ) Malaysia 60 60

Subsidiaries of ECS Technology (China) Limited

ECS International Trading (Shanghai)

Co., Limited (a)

)

)

)


products and services for IT

infrastructure

People’s

Republic

of China

100 100

ECS China Technology (Shanghai)

Co., Ltd (a)

)

)

)

People’s

Republic

of China

100 100

(a) Audited by other member fi rms of KPMG International for consolidation purposes.

KPMG LLP Singapore is the auditor of all the Singapore incorporated subsidiaries. Other member fi rms of KPMG International are

auditors of the signifi cant foreign-incorporated subsidiaries.

Annual Report 2008



p.69

6 INTEREST IN ASSOCIATE

Group

2008 2007

$’000 $’000

Investment in associate, at equity-accounted value 6,618 6,271

Loan to associate 666 748

7,284 7,019

Th e loan to the 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 Company’s net investment in the associate, it is stated at

cost.

Details of the associate, which is audited by Pelayo Teodoro Santamaria & Co., are as follows:

Name of associate

Country of

incorporation

Eff ective equity

held by the Group

2008 2007

MSI-ECS Phils., Inc. Philippines 49.99% 49.99%

Th e summarised fi nancial information below relating to the associate is not adjusted for the percentage of ownership held by the

Group.

2008 2007

$’000 $’000

Revenue 126,911 163,933

Profi t after taxation 695 1,066

Total assets 44,451 51,480

Total liabilities 31,257 37,398

7 OTHER FINANCIAL ASSETS

Group Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Available-for-sale

Unquoted equity investments, at cost - 432 - -

Club memberships, at cost 292 275 140 140

Others 11 11 11 11

303 718 151 151



p.70

8 DEFERRED TAX

Movements in deferred tax assets and liabilities during the year are as follows:-

At 1/1/2007

Recognised in income statement

(note 25)Translationadjustment

At31/12/2007

Overprovided inprior years

Recognised in income statement

(note 25)Translationadjustment

At31/12/2008

Group $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Deferred Tax Assets

Provisions 1,987 107 220 2,314 (39) 2,208 (226) 4,257

Deferred Tax

Liabilities

Accelerated tax

depreciation (398) 13 77 (308) (47) (538) 7 (886)

Company

Deferred Tax

Liabilities

Accelerated tax

depreciation (27) - - (27) - - - (27)

9 INVENTORIES

Group

2008 2007

$’000 $’000

Trading inventories 161,816 149,917

Goods in transit 21,214 17,819

183,030 167,736

Allowance for obsolete inventories (7,738) (4,642)

175,292 163,094

Comprises:-

Inventories, at cost 21,214 17,819

Inventories, at net realisable value 154,078 145,275

175,292 163,094

Cost of sales represents trading inventories and changes in work-in-progress recognised in income statement during the year.

Annual Report 2008



p.71

10 TRADE AND OTHER RECEIVABLES

Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Trade receivables 11 384,672 403,457 - -

Deposits, prepayments and other receivables 12 59,667 23,857 69 40

Amount due from related corporations 13 323 1,576 46,628 81,974

444,662 428,890 46,697 82,014

11 TRADE RECEIVABLES

Group Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Trade receivables 374,721 370,534 - -

Bills receivable - 218 - -

Amounts due from affi liated companies 21,116 40,977 - -

395,837 411,729 - -

Allowance for doubtful receivables (11,165) (8,272) - -

384,672 403,457 - -

An affi liated company is a company, other than a related corporation, which directly or indirectly through one or more intermediaries,

is under common signifi cant infl uence.

Th e maximum exposure credit risk for trade receivables at the balance sheet date by geographic region is:

Group Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

North Asia 210,845 202,483 - -

South East Asia 173,827 200,974 - -

384,672 403,457 - -



p.72

11 TRADE RECEIVABLES CONT’D

Th e maximum exposure credit risk for trade receivables at the balance sheet date by type of customer is:

Group Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Value added resellers 120,549 105,907 - -

System integrators 45,105 39,455 - -

Direct accounts 171,236 199,824 - -

Retailers 41,508 33,809 - -

Others 6,274 24,462 - -

384,672 403,457 - -

Impairment losses

Th e aging of trade receivables at the balance sheet date is:

Group Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Gross

Not past due 280,996 252,464 - -

Past due 0 – 30 days 71,061 106,933 - -

Past due 31 – 120 days 31,906 41,727 - -

Past due 121 – 365 days 5,596 2,793 - -

More than one year 6,278 7,812 - -

395,837 411,729 - -

Impairment losses

Not past due (4) - - -

Past due 0 – 30 days (233) (233) - -

Past due 31 – 120 days (663) (296) - -

Past due 121 – 365 days (3,987) (135) - -

More than one year (6,278) (7,608) - -

(11,165) (8,272) - -

Annual Report 2008



p.73

11 TRADE RECEIVABLES CONT’D

Th e change in impairment losses in respect of trade receivables during the year is as follows:

Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

At 1 January 8,272 8,884 - -

Utilised during the year (1,547) (4,333) - -

Impairment loss recognised 23(b) 4,773 3,151 - -

Translation diff erences on consolidation (333) 570 - -

At 31 December 11,165 8,272 - -

Based on historical default rates, the Group believes that no further impairment allowance is necessary in respect of trade receivables

not past due as at 31 December 2008. Th ese receivables are mainly arising with customers that have a good record with the Group.

12 DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES

Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Deposits 1,620 913 - -

Prepayments 53,346 14,953 59 26

Recoverables 2,563 3,169 - 14

Tax recoverables 33 - - -

Other receivables 1,452 4,066 10 -

Call option (a) 653 756 - -

10 59,667 23,857 69 40

(a) 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. Th e 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. Th e fair value of the call option as at balance sheet

date has been recognised as an option asset with its corresponding change in fair value during the year recognised in the income

statement.



p.74

13 AMOUNTS DUE FROM/TO RELATED CORPORATIONS

Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Amounts due from subsidiaries -

Non-trade receivables - - 2,481 2,145

Loans receivable (current) - - 43,824 78,253

- - 46,305 80,398

Amounts due from associate -

Non-trade receivables 323 1,576 323 1,576

10 323 1,576 46,628 81,974

Amounts due to subsidiaries -

Non-trade payables - - 478 535

20 - - 478 535

Th e loans due from subsidiaries are unsecured, repayable on demand and bear interest at rates ranging from 1.96% to 6.73% (2007:

2.64% to 7.75%) per annum; and

Th e non-trade balances are unsecured, interest-free and repayable on demand.

Th ere is no allowance made for doubtful receivables arising from the outstanding balances.

14 CASH AND CASH EQUIVALENTS

Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Cash at bank and in hand 50,518 39,425 2,087 470

Bank overdrafts 18 (1,016) - - -

Cash and cash equivalents in cash fl ow statement 49,502 39,425 2,087 470

Th e weighted average eff ective interest rates per annum relating to cash and cash equivalents, excluding bank overdrafts, at the balance

sheet date for the Group range from 0.3% to 3.0% (2007: 0.5% to 2.0%) per annum. Interest rates reprice at monthly intervals.

Annual Report 2008



p.75

15 SHARE CAPITAL

Group and Company

No. of shares

2008 2007

’000 ’000

Issued and fully paid:

At 1 January 365,360 363,599

Issue of shares - 1,761

At 31 December 365,360 365,360

In 2007, the Group has issued share options under its ECS Share Option Scheme II.

At 31 December 2008, there were nil (2007: 110,000) outstanding share options of unissued ordinary shares of the Company

granted under the ECS Share Option Scheme II.

Capital Management

Th e Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confi dence and to sustain

future development of the business. Th e Board of Directors monitors the return on capital, which the Group defi nes as net operating

income divided by total shareholders’ equity excluding minority interest. Th e Board also monitors the level of dividends to ordinary

shareholders.

Th e 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 Group’s share option programme. Buy

and sell decisions are made on a specifi c transaction basis by the Board. No shares have been purchased to date.

Th ere were no changes in the Group’s approach to capital management during the year.

Th e Group is subject to externally imposed capital requirements which involve fi nancial covenants relating to consolidated tangible

net worth as stipulated by its bankers in respect of credit facilities. Th e Group ensures its compliance by monitoring such fi nancial

covenants on a regular basis.



p.76

16 RESERVES

Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Currency translation reserve (a) (477) (1,720) - -

Dividend reserve (b) 9,865 5,679 9,865 5,679

General reserve (c) 2,423 669 - -

Accumulated profi ts 113,175 95,210 10,876 6,228

124,986 99,838 20,741 11,907

(a) Currency Translation Reserve

Th e currency translation reserve of the Group comprises foreign exchange diff erences arising from the translation of the

fi nancial statements of foreign entities.

(b) Dividend Reserve

Th e dividend reserve of the Group represents dividends proposed which are subject to approval of the shareholders at a general

meeting.

(c) General Reserve

According to the current People’s Republic of China (“PRC”) Company Law, the PRC subsidiaries of the Group are required

to transfer 10% of their profi t 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 profi t after taxation is the amount

determined under PRC accounting standards. Th e amount of transfer to this reserve has to be made before profi t distribution

to shareholders.

Annual Report 2008



p.77

17 EQUITY COMPENSATION BENEFITS

Th e 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 signifi cantly to the growth and performance of the Group to participate in the equity of the

Company.

Th e 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) Th e 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.

(b) Options granted are exercisable at any time after the fi rst 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 fi fth anniversary of the date of grant.

(c) Th e 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.

At 31 December 2008, details of the options granted under the Company’s option schemes for unissued ordinary shares of the

Company were as follows:-

Date of

grant of

options

Exercise

price

Options

outstanding

1 Jan 2008

Options

exercised

Options

forfeited

or lapsed

Options

outstanding

31 Dec 2008

Options

vested

1 Jan 2008

Options

vested

31 Dec 2008

Exercise

period

Scheme II:

2002 $0.72 110,000 - (110,000) - 110,000 -

11/03/2003 to

10/03/2012



p.78

18 FINANCIAL LIABILITIES

Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Non-current liabilities

Unsecured bank loans 18(a) 66,600 - 66,600 -

Finance lease liabilities 218 5 - -

66,818 5 66,600 -

Current liabilities

Unsecured bank overdrafts 14 1,016 - - -

Unsecured trade fi nancing 25,621 29,902 - -

Unsecured bank loans 18(a) 99,955 154,280 20,660 62,790

Finance lease liabilities 4 22 - -

Derivative liabilities - 6,329 - -

126,596 190,533 20,660 62,790

Total fi nancial liabilities 193,414 190,538 87,260 62,790

(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

2008 of $220,546,617 (2007: $129,404,784).

Finance Lease Liabilities

At 31 December, the Group has obligations under fi nance leases that are payable as follows:

Principal Interest Payments

$’000 $’000 $’000

2008

Repayable within 1 year 4 - 4

Repayable after 1 year but within 5 years 218 79 297

222 79 301

2007

Repayable within 1 year 22 2 24

Repayable after 1 year but within 5 years 5 2 7

27 4 31

Annual Report 2008



p.79

18 FINANCIAL LIABILITIES CONT’D

Terms and conditions of all other interest-bearing liabilities are as follows:

Nominal 2008 2007

interest

rate

Year of

maturity

Face

value

Carrying

amount

Face

value

Carrying

amount

$’000 $’000 $’000 $’000

Group

Unsecured bank loans and trade

fi nancing

- S$ fl oating rate 1.19% - 6.73% 2009 14,500 14,500 7,000 7,000

- US$ fl oating rate 1.19% - 8.10% 2009 – 2011 99,938 99,938 82,042 82,042

- RMB fl oating rate 4.50% - 7.52% 2009 28,604 28,604 26,358 26,358

- THB fl oating rate 3.13% - 5.66% 2009 23,220 23,220 37,872 37,872

- RM fl oating rate 4.87% - 8.05% 2009 25,914 25,914 30,910 30,910

192,176 192,176 184,182 184,182

Unsecured bank overdrafts 7.00% - 8.05% 2009 1,016 1,016 - -

US$ fi nance lease liabilities 10.00% 2009 – 2012 222 222 27 27

Derivative liabilities - - - - 6,329 6,329

193,414 193,414 190,538 190,538

Company

Unsecured bank loans

- S$ fl oating rate loans 1.71% - 3.56% 2009 2,500 2,500 4,500 4,500

- US$ fl oating rate loans 1.19% - 6.91% 2009 84,760 84,760 58,290 58,290

87,260 87,260 62,790 62,790



p.80


Liquidity Risk

Th e following are the contractual undiscounted cash outfl ows of fi nancial liabilities, including interest payments and excluding the

impact of netting agreements:

Cash fl ows

Carrying

amount

Contractual

cash fl ows

Within

1 year

Between

1 to 5 years

Group $’000 $’000 $’000 $’000

2008

Non-derivative fi nancial liabilities

Unsecured bank overdrafts 1,016 (1,016) (1,016) -

Unsecured trade fi nancing 25,621 (25,621) (25,621) -

Unsecured bank loans 166,555 (171,505) (102,052) (69,453)

Finance lease liabilities 222 (222) (4) (218)

Trade and other payables* 241,827 (241,827) (241,827) -

435,241 (440,191) (370,520) (69,671)

2007


Unsecured trade fi nancing 29,902 (29,902) (29,902) -

Unsecured bank loans 154,280 (154,796) (154,796) -

Finance lease liabilities 27 (27) (22) (5)

Trade and other payables* 233,088 (233,088) (233,088) -

Derivative fi nancial liabilities

Forward exchange contracts used for hedging 6,329 (6,329) (6,329) -

423,626 (424,142) (424,137) (5)

* excludes accrued operating expenses

Annual Report 2008



p.81


Cash fl ows

Carrying

amount

Contractual

cash fl ows

Within

1 year

Between

1 to 5 years

Company $’000 $’000 $’000 $’000

2008


Unsecured bank loans 87,260 (92,269) (22,816) (69,453)

Trade and other payables* 478 (478) (478) -

87,738 (92,747) (23,294) (69,453)

2007


Unsecured bank loans 62,790 (63,000) (63,000) -

Trade and other payables* 792 (792) (792) -

63,582 (63,792) (63,792) -

* excludes accrued operating expenses

19 DEFERRED INCOME

Deferred income relates to fees billed in advance on service maintenance contracts and consists of:

Group

2008 2007

$’000 $’000

Current portion 556 302

Non-current portion 978 968

1,534 1,270



p.82

20 TRADE AND OTHER PAYABLES

Group Company

Note 2008 2007 2008 2007

$’000 $’000 $’000 $’000

Trade payables 230,638 217,631 - -

Accruals and other payables 21 44,786 49,480 2,116 2,429

Amounts due to subsidiaries 13 - - 478 535

275,424 267,111 2,594 2,964

21 ACCRUALS AND OTHER PAYABLES

Group Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Accrued operating expenses 33,597 34,023 2,116 2,172

Deposits received 5,851 10,718 - -

Other payables 5,338 3,062 - 257

Interest payables - 1,677 - -

44,786 49,480 2,116 2,429

22 REVENUE

Group

2008 2007

$’000 $’000

Sale of IT products 2,916,291 2,757,195

IT services 33,580 32,220

2,949,871 2,789,415

Transactions within the Group have been excluded in arriving at revenue for the Group.

Annual Report 2008



p.83

23 PROFIT FROM OPERATIONS

Th e following items have been included in arriving at profi t from operations:-

(a) Staff Costs

Group

2008 2007

$’000 $’000

Wages and salaries 52,321 49,651

Contributions to defi ned contribution plans 4,096 4,792

56,417 54,443

(b) Other Expenses/(Income)

Group

2008 2007

$’000 $’000

Exchange gains (net) (987) (1,054)

Interest income

- banks (272) (217)

- associate - (260)

Allowances made for

- obsolete inventories 4,225 1,323

- doubtful trade receivables 4,773 3,151

Directors’ fees 207 341

Inventories written back (466) (315)

Bad debts written off net of bad debts recovered 127 -

Loss on disposal of property, plant and equipment 171 54

Non-audit fees to auditors of the Company 23 9

Negative goodwill arising from additional investment in subsidiary - (55)

Net fair value changes on fi nancial instruments - 3,533

Fair value loss/(gain) on call option 102 (756)

Operating lease expenses 5,163 4,624



p.84

24 FINANCE COSTS

Group

2008 2007

$’000 $’000

Interest paid and payable on

- bank overdrafts 29 20

- fi nance leases 10 4

- short-term loans 11,311 8,706

11,350 8,730

25 INCOME TAX EXPENSE

Group

2008 2007

$’000 $’000

Tax Expense

Current tax expense

- Current year 9,881 7,872

- (Over)/under provided in prior years (96) 693

9,785 8,565

Deferred tax expense

- Movements in temporary diff erences (1,584) (117)

- Changes in tax rates - (17)

- (Over)/under provided in prior years (86) 14

(1,670) (120)

Income tax expense for the year 8,115 8,445

Reconciliation of Eff ective Tax Rate

Profi t before tax 41,386 34,608

Income tax at 18% 7,450 6,229

Non-deductible expenses 508 992

Tax rebate/relief/exemption - (78)

Income not subject to tax (84) (165)

Eff ect of diff erent tax rates in foreign jurisdictions 804 894

Recognition of previously unrecognised tax losses - 50

(Over)/under provided in prior years (182) 707

Utilisation of previously unrecognised tax losses (528) -

Others 147 (184)

Income tax expense for the year 8,115 8,445

Annual Report 2008



p.85

26 EARNINGS PER SHARE

Group

2008 2007

Basic earnings per share is based on:-

Net profi t for the year ($’000) 29,386 23,352

Number of shares outstanding at the beginning of the year (’000) 365,360 363,599

Weighted average number of shares issued during the year (’000) - 974

Weighted average number of shares in issue during the year (’000) 365,360 364,573

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 eff ect arising from the dilutive share options, with the potential ordinary

shares weighted for the period outstanding:

Number of Shares

2008 2007

’000 ’000

Weighted average number of shares used in calculation of basic earnings per share 365,360 364,573

Weighted average number of dilutive potential ordinary shares - 9,422

Number of shares that would have been issued at fair value - (7,877)

Weighted average number of ordinary shares (diluted) 365,360 366,118

In 2007, 110,000 ordinary shares at exercise price of $0.72 per share were outstanding but were not included in the computation of

diluted earnings per share because those options were anti-dilutive.

27 SEGMENT INFORMATION

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 diff erent from those of other segments.

Segment information is presented in respect of the Group’s business and geographical segments. Th e primary format, business

segments, is based on the Group’s management and internal reporting structure.

Inter-segment pricing is determined on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be 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.



p.86

27 SEGMENT INFORMATION CONT’D

Th e main business segments of the Group are the following:-

Segments Principal Activities

Enterprise systems Provider of enterprise systems tools (middleware, operating systems, Unix/NT servers, databases, storage

and security products) for IT infrastructure.

IT services IT infrastructure design and implementation, training, maintenance and support services.

Distribution Distribution of IT products (desktop PCs, notebooks, handhelds, printers, etc) for the commercial and

consumer markets.

Enterprise

Systems IT Services Distribution Consolidated

Revenue $’000 $’000 $’000 $’000

2008

Total revenue from external customers 1,133,338 33,580 1,782,953 2,949,871

Segment results 26,437 1,874 23,933 52,244

Share of associate’s profi t 492

Net fair value changes on fi nancial Instruments -

Finance costs (11,350)

Unallocated negative goodwill -

Taxation (8,115)

Profi t from ordinary activities after taxation 33,271

Minority interests (3,885)

Net profi t for the year 29,386

Annual Report 2008



p.87


Enterprise


$’000 $’000 $’000 $’000

Revenue

2007

Total revenue from external customers 964,334 32,220 1,792,861 2,789,415

Segment results 22,416 2,423 21,152 45,991

Share of associate’s profi t 825

Net fair value changes on fi nancial instruments (3,533)

Finance costs (8,730)

Unallocated negative goodwill 55

Taxation (8,445)

Profi t from ordinary activities after taxation 26,163

Minority interests (2,811)

Net profi t for the year 23,352

Assets and Liabilities

2008

Segment assets 223,604 26,194 354,606 604,404

Unallocated assets -

Tax assets 4,257

Others 118,095

Total assets 726,756

Segment liabilities 113,898 2,760 160,300 276,958

Unallocated liabilities -

Tax liabilities 4,298

Financial liabilities 193,414

Total liabilities 474,670



p.88


Enterprise


$’000 $’000 $’000 $’000

Assets and Liabilities (Cont’d)

2007

Segment assets 199,847 27,211 383,613 610,671

Unallocated assets -

Tax assets 2,314

Others 72,596

Total assets 685,581

Segment liabilities 98,983 3,452 165,946 268,381

Unallocated liabilities -

Tax liabilities 3,026

Financial liabilities 190,538

Total liabilities 461,945

Capital Expenditure

2008

Capital expenditure 1,308 56 2,389 3,753

2007

Capital expenditure 900 60 2,451 3,411

Signifi cant Non-Cash Expenses

2008

Depreciation of property, plant and equipment 1,120 33 1,762 2,915

2007

Depreciation of property, plant and equipment 1,181 39 2,196 3,416

Annual Report 2008



p.89

28 GEOGRAPHICAL SEGMENTS GROUP

Th e Group operates principally in Singapore, Th ailand, Malaysia, Indonesia and China. 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.

North Asia South East Asia Consolidated

$’000 $’000 $’000

2008

Total revenue from external customers 1,515,564 1,434,307 2,949,871

Segment assets 310,615 293,789 604,404

Segment liabilities 169,268 107,690 276,958

Capital expenditure 1,203 2,550 3,753

2007

Total revenue from external customers 1,432,078 1,357,337 2,789,415

Segment assets 289,579 321,092 610,671

Segment liabilities 149,306 119,075 268,381

Capital expenditure 523 2,888 3,411

29 FINANCIAL RISK MANAGEMENT

Overview

Risk management is integral to the whole business of the Group. Th e Group has a system of controls in place to create an acceptable

balance between the cost of risks occurring and the cost of managing the risks. Th e management continually monitors the Group’s

risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and

systems are reviewed regularly to refl ect changes in market conditions and the Group’s activities.

Th e Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures

and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. Th e 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.



p.90

29 FINANCIAL RISK MANAGEMENT CONT’D

Credit Risk (Group)

Th e 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 fi nancial position and past

experience with the customers.

Th e Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other

receivables. Th e main components of this allowance are a specifi c loss component that relates to individually signifi cant exposures.

Th e allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfi ed that

no recovery of the amount owing is possible. At that point, the fi nancial asset is considered irrecoverable and the amount charged to

the allowance account is written off against the carrying amount of the impaired fi nancial asset.

Cash and fi xed deposits are placed with banks and fi nancial institutions which are regulated.

Liquidity Risk

Th e Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to fi nance

the Group’s operations and to mitigate the eff ects of fl uctuations in cash fl ows. Typically the Group ensures that it has suffi cient

cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of fi nancial obligations; this

excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

In addition, as at 31 December 2008, the Group maintains various lines of credit amounting to $434 million, of these, $353 million

of the credit facilities are unsecured.

Market Risk

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices will aff ect the

Group’s income or the value of its holdings of fi nancial instruments. Th e 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

Th e 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. Th e currencies giving rise to this risk

are primarily the United States dollar (“USD”), Th ai Baht (“THB”), Chinese Renminbi (“RMB”) and Ringgit Malaysia (“RM”).

Movements in their exchange rates against the Singapore dollar could result in the Group incurring foreign exchange losses/gains.

Th e Group recognises that any signifi cant fl uctuations in the USD dollar may aff ect the Group’s foreign currency risk. As a result, the

Group actively monitors its exposure and uses forward foreign exchange contracts and currency swaps to hedge against USD dollar

exposures, as and when necessary and where possible.

In view of the nature of the Group’s business which spans several countries, foreign exchange risks will continue to be an integral

aspect of the Group’s risk profi le in the future.

Annual Report 2008



p.91


Foreign Currency Risk (Cont’d)

At 31 December, the Group has outstanding forward exchange contracts with a total notional amount of approximately $15,369,000

(2007: $12,158,000). In 2007, the Group also entered into a hybrid swap contract to hedge against US dollar exposure and fl oating

rate interest risks, with notional principal value of US$40,000,000 which commenced in 2005 and has expired in 28 January 2008.

Exposure to currency risk

Th e Group’s fi nancial assets and liabilities are denominated in the following currencies:

SGD USD RMB THB RM Others

$’000 $’000 $’000 $’000 $’000 $’000

2008

Trade receivables 31,268 36,248 200,439 65,628 50,890 199

Loan receivable from associate 323 666 - - - -

Unsecured bank loans/trade fi nancing (14,500) (99,938) (28,604) (23,800) (26,350) -

Trade payables (15,129) (31,384) (141,901) (21,434) (20,773) (17)

Forward exchange contracts and hybrid

swap - - - (7,450) (7,919) -

1,962 (94,408) 29,934 12,944 (4,152) 182

2007

Trade receivables 44,252 40,576 200,113 68,026 50,274 216

Loan receivable from associate 1,576 748 - - - -

Unsecured bank loans/trade fi nancing (7,000) (82,042) (26,358) (37,872) (30,910) -

Trade payables (30,577) (34,290) (111,645) (15,902) (25,217) -

Forward exchange contracts and hybrid

swap - 58,000 - (4,574) (7,584) -

8,251 (17,008) 62,110 9,678 (13,437) 216



p.92


Foreign Currency Risk (Cont’d)

Sensitivity analysis

A 1% strengthening of the Singapore dollar against fi nancial assets and liabilities denominated in the following currencies other than

the functional currencies of Group entities at 31 December would have increased/(decreased) profi t before tax by the amounts shown

below. Th is analysis assumes that all other variables, in particular interest rates, remain constant.

Income statement

2008 2007

$’000 $’000

USD 944 170

RMB (299) (621)

THB (129) (97)

RM 42 134

A 1% weakening of the Singapore dollar against the above currencies, would have had the equal but opposite eff ect on the above

currencies to the amounts shown above, on the basis that all other variables remain constant.

Interest Rate Risk

Th e Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s debt obligations. Th e Group

manages some of its exposure to fl oating rate interest by entering into a hybrid swap as described above.

Sensitivity analysis

An increase of 100 bps in the interest rate at the balance sheet date would decrease profi t in the income statement by the amounts

shown below. Th is analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Increase/(Decrease)

2008 2007

$’000 $’000

Hybrid swap - 580

Financial liabilities (1,932) (1,842)

(1,932) (1,262)

A decrease of 100 bps in the interest rate would have had the equal but opposite eff ect on the above fi nancial instruments to the

amounts shown above, on the basis that all other variables remain constant.

Annual Report 2008



p.93


Fair Values

Th e following summarises the signifi cant methods and assumptions used in estimating the fair values of fi nancial instruments of the

Group and Company.

Derivatives

Th e fair value of forward exchange contracts is based on their quoted market price, if available. If a quoted market price is not

available, fair value is estimated by discounting the diff erence between the contractual forward price and the current forward price for

the residual period to maturity of the contract using a risk-free interest rate (based on government bonds).

Th e fair value of the hybrid swap is based on a broker quote. Th e quote is tested for reasonableness by discounting estimated

future cash fl ows based on the terms and maturity of the contract and using market interest rates for a similar instrument at the

measurement date.

Other fi nancial assets

It is not practicable to estimate the fair value of the Group’s long-term unquoted equity investments because of the lack of quoted

market prices.

Other short term fi nancial assets and liabilities

Th e carrying amounts of fi nancial assets and liabilities with a maturity of less than one year (including trade and other receivables,

cash and cash equivalents, and trade and other payables) approximate their fair values because of the short period to maturity. All

other fi nancial assets and liabilities are discounted to determine their fair values.

Financial liabilities

2008 2007

Carrying

amount

Fair

value

Carrying

amount

Fair

value

$’000 $’000 $’000 $’000

Group

Unsecured bank overdrafts 1,016 1,016 - -

Unsecured trade fi nancing 25,621 25,621 29,902 29,902

Unsecured bank loan 166,555 166,555 154,280 154,280

Finance lease liabilities 222 222 27 27

Derivative liabilities - - 6,329 6,329

193,414 193,414 190,538 190,538

Company

Unsecured bank loans 87,260 87,260 62,790 62,790



p.94

30 COMMITMENTS

Operating Lease Commitments

At 31 December, the Group has commitments for future minimum lease payments under non-cancellable operating leases as

follows:-

Group

2008 2007

$’000 $’000

Payable:

Within 1 year 4,723 3,580

After 1 year but within 5 years 4,951 5,306

9,674 8,886

Th e Group leases offi ce premises and warehouse facilities under operating leases. Th e leases typically run for an initial period of three

years, with an option to renew the lease after that date.

31 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 amounted to

$187,084,000 (2007: $150,388,000), of which the amount utilised was $56,174,000 (2007: $45,900,000). Th e guarantees

are renewed on a yearly basis.

(b) Guarantees given to fi nancial institutions by the Company in respect of credit facilities extended to certain subsidiaries

amounted to $199,746,000 (2007: $156,016,000), of which the amount utilised was $74,494,000 (2007: $97,522,000).

Th e guarantees are renewed on a yearly basis.

(c) Guarantees given to fi nancial institutions by the subsidiaries in respect of credit facilities extended to the Company amounted

to $81,400,000 (2007: $87,000,000), of which $81,400,000 (2007: $58,290,000) had been utilised.

(d) A claim was made on a subsidiary, Th e Value Systems Co., Ltd, which was named as a second defendant in a law suit for

copyright infringement amounting to Baht 170 million (equivalent to $7 million). Th e Central Intellectual Property and

International Trade Court of Th ailand has ruled that the company was not liable for the damages claimed by the plaintiff .

Although the plaintiff has fi led an appeal, based on legal opinion obtained, the directors are of the view that the claim has no

merit and accordingly, no provision for the claim is required.

Th e Group has accounted for these corporate guarantees as insurance contracts. Th ere are no terms and conditions attached to the

guarantee contracts that would have a material eff ect on the amount, timing and uncertainty of the Company’s future cash fl ows.

Th e Company has undertaken to provide continuing fi nancial 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.

Annual Report 2008



p.95

32 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. Th e directors and directors of subsidiaries and members of the management team are

considered as key management of the Group.

Key management personnel compensation comprises remuneration of directors and other key management personnel as follows:

Group

2008 2007

$’000 $’000

Directors of the Company

- Short-term employment benefi ts 2,271 2,218

- Other long-term benefi ts 94 71

Directors of the subsidiaries

- Short-term employment benefi ts 2,379 2,713


Executive offi cers

- Short-term employment benefi ts 1,387 961


6,275 6,103

During the year, the Company and certain of its subsidiaries have, in the normal course of business entered into the following

transactions with companies in which certain directors have interests:

Group

2008 2007

$’000 $’000

Purchase of information technology products 15,231 2,116

Sales of information technology products 13,836 10,841

Legal professional services fees - 92

Consultancy services - 161

Th e directors and other key management personnel participate in the Company’s share option plans, the terms and conditions of

which are stated in note 17. Th ere are no options granted, exercised for the year ended 31 December 2008 or outstanding at 31

December 2008.



p.96

32 RELATED PARTIES CONT’D

Other Related Party Transactions

For the purpose of these fi nancial 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 signifi cant infl uence over the party in making fi nancial and operating decisions, or vice

versa, or where the Group and the party are subject to common control or common signifi cant infl uence. Related parties may be

individuals or other entities.

During the fi nancial year, there were the following signifi cant transactions with related parties, based on terms agreed by the

parties:-

Group Company

2008 2007 2008 2007

$’000 $’000 $’000 $’000

Subsidiaries

- sales - - - 81

- purchases - - - 81

- interest paid - - 369 646

Affi liates

- sales 110,770 23,799 - -

33 ACCOUNTING ESTIMATES AND JUDGEMENT

Management discussed with the Audit Committee the development, selection and disclosure of the Group’s and the Company’s

critical accounting policies and estimates and the application of these policies and estimates.

Key source of estimates uncertainty

Note 4 contains information about the assumptions and their risk factors relating to goodwill impairment.

Annual Report 2008



p.97

34 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

Th e Group has not applied the following accounting standards (including its consequential amendments) and interpretations that

have been issued as of the balance sheet date but are not yet eff ective:

FRS 1 (revised 2008) Presentation of Financial Statements

FRS 23 (revised) Borrowing Costs

FRS 32 Amendments relating to puttable fi nancial instruments and obligations arising on

liquidation

FRS 108 Operating Segments

INT FRS 111 FRS 102 - Group and Treasury Share Transactions

INT FRS 113 Customer Loyalty Programmes

INT FRS 116 Hedges of a Net Investment in a Foreign Operation

Amendments to FRS 1 (revised 2008) Amendments relating to puttable fi nancial instruments and obligations arising on

liquidation

Amendments to FRS 102 Amendments relating to vesting conditions and cancellation

FRS 23 will become eff ective for fi nancial statements for the year ending 31 December 2009. FRS 23 removes the option to

expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or

production of a qualifying asset as part of the cost of that asset. Th is standard does not have any material impact on the recognition

and measurement of the Group’s fi nancial statements.

FRS 108 will become eff ective for fi nancial statements for the year ending 31 December 2009. FRS 108, which replaces FRS 14

Segment Reporting, requires identifi cation and reporting of operating segments based on internal reports that are regularly reviewed

by the Group’s chief operating decision maker in order to allocate resources to the segment and assess its performance. Currently, the

Group represents segment information in respect of its business and geographical segments (see notes 27 and 28). Under FRS 108,

the Group will present segment in respect of its operating segments.

Other than the changes in disclosures relating to FRS 108, the initial application of these standards and interpretations is not expected

to have any material impact on the Group’s fi nancial statements. Th e Group has not considered the impact of accounting standards

issued after the balance sheet date.


Shareholdings StatisticsAs at 16 March 2009

Class of shares – Ordinary shares

Voting rights – On a show of hands : One vote for each member

– On poll : One vote for each ordinary share

ANALYSIS OF SHAREHOLDINGS

Range of Shareholdings No. of Shareholders % No. of Shares %

1 – 999 8 1.59 3,081 0.00

1,000 – 10,000 389 77.03 2,076,000 0.57

10,001 – 1,000,000 100 19.80 3,686,000 1.01

1,000,001 and above 8 1.58 359,595,093 98.42

505 100.00 365,360,174 100.00

Based on information available to the Company as at 16 March 2009, 10.34% of the issued ordinary shares of the Company is held by the

public and therefore Rule 723 of the Listing Manual is complied with.

TOP 20 SHAREHOLDERS

No. Name of Shareholder No. of Shares %

1 Raffl es Nominees Pte Ltd 327,595,093 89.66

2 Th omas Tan Soon Seng (Th omas Chen Shuncheng) 7,400,000 2.03

3 Tat Hong Capital Pte Ltd 6,600,000 1.81

4 Ng Chwee Cheng 6,200,000 1.70

5 Phillips Securities Pte Ltd 4,800,000 1.31

6 HSBC (Singapore) Nominees Pte Ltd 4,400,000 1.20

7 Ng Siew Ban (Huang Xiuwan) 1,500,000 0.41

8 Ong Tiew Siam 1,100,000 0.30

9 DBS Nominees Pte Ltd 251,000 0.07

10 Sim Sok Koon 200,000 0.05

11 United Overseas Bank Nominees Pte Ltd 187,000 0.05

12 OCBC Nominees Singapore Pte Ltd 120,000 0.03

13 Pui Cheng Wui 120,000 0.03

14 Chee Swee Cheng Investments Pte Ltd 100,000 0.03

15 Circular Leasing Pte Ltd 100,000 0.03

16 Yap Kheok Joo 100,000 0.03

17 Estate Of Lim Chin Beng @ Seow Chong Beng Deceased 90,000 0.02

18 Tan Tiong Eng 84,000 0.02

19 Chan Chee Seng 80,000 0.02

20 Lee Cheng Cheong Edward 80,000 0.02

361,107,093 98.82


Substantial Shareholders

As at 16 March 2009

SUBSTANTIAL SHAREHOLDERS

Name of Substantial

Shareholder

Number of shares

registered in the name of the

substantial shareholder

Number of shares in which

substantial shareholder is

deemed to have an interest Total

Percentage

(%)

VST Holdings Limited – 327,580,093(1) 327,580,093 89.66

L&L Limited – 327,580,093(1) 327,580,093 89.66

Notes :(1) Deemed interest through Raffl es Nominees Pte Ltd


ECS HOLDINGS LIMITED(Incorporated in the Republic of Singapore)

Company Registration No. 199804760R

NOTICE IS HEREBY GIVEN that the Eleventh Annual General Meeting of the Company will be held at 19 Kallang Avenue #07-153

Singapore 339410 on Th ursday, 30 April 2009 at 10.00 a.m. to transact the following business :-

ORDINARY BUSINESS

1 To receive and adopt the Directors’ Report and Audited Accounts for the fi nancial year ended 31 December 2008 and the Auditors’

Report thereon. [Resolution 1]

2 To declare a one-tier tax exempt fi rst and fi nal dividend of 2.7 cents per ordinary share for the year ended 31 December 2008.

[Resolution 2]

3 (a) To re-elect Mr Tan Hup Foi who is retiring in accordance with Article 91 of the Company’s Articles of Association, as Director

of the Company. [Resolution 3(a)]

Note: Mr Tan Hup Foi if re-elected, will remain as the Chairman of the Company’s Nominating Committee, and member of the Audit

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 (“Listing Manual”).

(b) To re-elect Mr Narong Intanate who is retiring in accordance with Article 91 of the Company’s Articles of Association, as

Director of the Company. [Resolution 3(b)]

(c) To note that Mr Liu Wei who is retiring in accordance with Article 91 of the Company’s Articles of Association, as Director of

the Company, will not stand for re-election.

Note: Mr Liu Wei, a Non-Executive Director of the Company, will cease to be the Vice-Chairman of the Company.

4 To re-appoint KPMG LLP as Auditors and to authorise the Directors to fi x their remuneration. [Resolution 4]

5 To approve the payment of Directors’ Fees of $189,000.00 for the year ended 31 December 2008. (2007: $348,000.00).

[Resolution 5]

SPECIAL BUSINESS

6 To consider and, if thought fi t, to pass the following as Ordinary Resolutions, with or without modifi cations:-

(a) THAT pursuant to Section 161 of the Companies Act, Cap. 50 (the “Act”) and the listing rules of the Singapore Exchange

Securities Trading Limited (the “SGX-ST”), authority be and is hereby given to the Directors to:-

(i) issue shares in the capital of the Company whether by way of bonus issue, rights issue or otherwise; and/or

(ii) make or grant off ers, 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

(iii) issue additional Instruments convertible into shares arising from adjustments made to the number of Instruments;

Notice of Annual General Meeting


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 fi t; 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):

(a) 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); and

(b) the 50% limit in sub-paragraph (a) above may be increased to 100% for issues of shares and/or Instruments by way of

renounceable rights issue where shareholders of the Company are entitled to participate in the same on a pro rata basis;

(2) (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 sub-paragraphs (1)(a) and (1)(b) 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) 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 this Resolution is passed, provide that the aforesaid share options or share awards were granted in compliance

with Part VIII of Chapter 8 of the Listing Manual; and

(c) any subsequent bonus issue or consolidation or subdivision of shares;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing

Manual for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association

for the time being of the Company; and

(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 (i)] [Resolution 6(a)]

(b) THAT, subject to the grant of the share issue mandate proposed to be tabled as Resolution 6(a) above and pursuant to the terms

and conditions of the share issue mandate, notwithstanding Rule 811 of the Listing Manual, the Directors of the Company be

and are hereby authorised to issue new shares of the Company to subscribers or placees under a share placement, undertaken on

a non pro rata basis, at a discount of up to 20% to the weighted average price for trades done on the SGX-ST for the full market

day on which the placement agreement or subscription agreement is signed, PROVIDED THAT, if trading in the Company’s

shares is not available for a full market day, the weighted average price shall be based on trades done on the preceding market day

up to the time the placement agreement or subscription agreement is signed.

[See Explanatory Note (ii)] [Resolution 6(b)]



(c) Th at the Directors be and are hereby authorised to off er and grant options in accordance with the provisions of the ECS Share

Option Scheme II (the “ECS Share Option Scheme II”), and to allot and issue from time to time such number of shares in the

capital of the Company as may be required to be issued pursuant to the exercise of the options under the ECS Share Option

Scheme II provided always that the aggregate number of ordinary shares to be issued pursuant to the ECS Share Option Scheme

II shall not exceed fi fteen per cent of the total number of issued shares in the capital of the Company from time to time.

[See Explanatory Note (iii)] [Resolution 6(c)]

(d) Th at 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 the Appendix A with Guangzhou Jia Dou Ji Tuan Co., Limited and its subsidiaries be and

is hereby approved, provided that such transactions are entered into on an arm’s 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 the

Appendix A;

(ii) the aforesaid Shareholders’ General Mandate shall, unless earlier revoked or varied by the Company in general meeting,

continue in force until the next annual general meeting of the Company; and

(iii) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things

(including, without limitation, executing all such documents and approving any amendment, alteration or modifi cation to

any document) as they may consider desirable, expedient or necessary or in the interests of the Company to give eff ect to the

aforesaid Shareholders’ General Mandate and/or this Resolution 6(d).

[See Explanatory Note (iv)] [Resolution 6(d)]

(e) Th at 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 the Appendix A with Netband Consulting Co., Ltd, Vnet Capital Co., Ltd, Vnet

Capital International Co., Ltd., Th ai Incubator.Com Co., Ltd and/or Vintcom Technology Co., Ltd. (as the case may be),

be and is hereby approved, provided that such transactions are entered into on an arm’s 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 the Appendix A;

(ii) the aforesaid Shareholders’ General Mandate shall, unless earlier revoked or varied by the Company in general meeting,

continue in force until the next annual general meeting of the Company; and

(iii) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things

(including, without limitation, executing all such documents and approving any amendment, alteration or modifi cation to

any document) as they may consider desirable, expedient or necessary or in the interests of the Company to give eff ect to

the aforesaid Shareholders’ General Mandate and/or this Resolution 6(e).

[See Explanatory Note (iv)] [Resolution 6(e)]

(f ) Th at:

(i) for the purposes of the Companies 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 defi ned), 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 defi ned), whether by way of:



(a) market purchases (each a “Market Purchase”) on the Singapore Exchange Securities Trading Limited (“SGX-ST”);

and/or

(b) off -market purchases (each an “Off -Market Purchase”) eff ected otherwise than on the SGX-ST in accordance with

any equal access schemes as may be determined or formulated by the Directors of the Company as they consider fi t,

which schemes shall satisfy all the conditions prescribed by the Companies Act, and otherwise in accordance with all

other provisions of the Companies Act and listing rules of the SGX-ST as may for the time being be applicable, be

and is hereby authorised and approved generally and unconditionally (the “Share Buyback Mandate”);

(ii) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company

pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the

period commencing from the passing of this Resolution and expiring on the earlier of:

(a) the date on which the next annual general meeting of the Company is held or required by law to be held;

(b) the date on which the share buybacks are carried out to the full extent mandated; or

(c) the date on which the authority contained in the Share Buyback Mandate is varied or revoked;

(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 eff ected a reduction of the share capital of the Company in accordance with the

applicable provisions of the Companies Act, at any time during the Relevant Period, in which event the issued ordinary

share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered

(excluding any treasury shares that may be held by the Company from time to time);

“Relevant Period” means the period commencing from the date on which the last this AGM was is held and expiring on the

date the next AGM is held or is required by law to be held, whichever is the earlier, after the date of this Resolution; and

“Maximum Price” in relation to a share to be purchased, means an amount (excluding brokerage, stamp duties, applicable

goods and services tax and other related expenses) not exceeding:

(i) in the case of a Market Purchase : 105% of the Average Closing Price;

(ii) in the case of an Off -Market Purchase : 120% of the Highest Last Dealt Price,

where:

“Average Closing Price” means the average of the closing market prices of a share over the last fi ve market days, on which

transactions in the shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any

corporate action that occurs after the relevant 5-day period;

“Highest Last Dealt Price” means the highest price transacted for a share as recorded on the market day on which

there were trades in the shares immediately preceding the day of the making of the off er pursuant to the Off -Market

Purchase; and

“day of the making of the off er” means the day on which the Company announces its intention to make an off er 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

eff ecting the Off - Market 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 eff ect to the transactions

contemplated by this Resolution.

[See Explanatory Note (v)] [Resolution 6(f )]

7 To transact any other business that may be properly transacted at an annual general meeting. [Resolution 7]

By Order of the Board

Eddie Foo Toon EeCompany Secretary

Singapore

14 April 2009

Explanatory Notes :(i) Resolution 6(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 (i) 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 and (ii) the aforesaid limit of 50% may be increased to 100% for issue of shares and/or Instruments

by way of renounceable rights issue where shareholders of the Company are entitled to participate in the same on a pro rata basis. 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 6(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 6(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.

Th e authority for undertaking pro rata renounceable rights issues of up to 100% of the Company’s issued share capital is proposed

pursuant to the SGX-ST’s news release of 19 February 2009 which, inter alia, introduced further measures to accelerate and facilitate

the fund raising eff orts of listed issuers. If Resolution 6(a) is approved, a renounceable rights issue made pursuant to the mandate is

conditional upon the Company:-

• making periodic announcements on the use of the proceeds as and when the funds are materially disbursed; and

• providing a status report on the use of proceeds in the annual report.

Resolution 6(a), if passed, will provide the Directors with an opportunity to raise funds and avoid prolonged market exposure by

reducing the time taken for shareholders’ approval, in the event such need arises. Th e risk to minority shareholders’ interests are

mitigated as all shareholders have equal opportunities to participate and can dispose of their entitlements through trading of nil-paid

rights if they do not wish to subscribe for their rights shares pursuant to any renounceable rights issue.



(ii) Resolution 6(b), if passed, will authorise the Directors to issue new shares in pursuance of the share issue mandate granted under

Resolution 6(a), to subscribers or placees, on a non pro rata basis, at a discount of not more than 20% to the weighted average price

for trades done on the SGX-ST for the full market day on which the placement or subscription agreement is signed.

Th e maximum discount of 20% is proposed pursuant to the SGX-ST’s news release of 19 February 2009 which, inter alia, introduced

further measures to accelerate and facilitate the fund raising eff orts of listed issuers.

(iii) Resolution 6(c), if passed, will authorise the Directors to off er and grant options and to allot and issue shares pursuant to the ECS Share

Option Scheme II, provided that the aggregate number of shares issued pursuant to the ECS Share Option Scheme II shall not exceed

fi fteen (15) per cent of the total number of issued shares in the capital of the Company from time to time.

(iv) Resolutions 6(d) and 6(e), if passed, will authorise the Company, its subsidiaries and associated companies, from the date of the annual

general meeting until the conclusion of the next annual general meeting, to enter into interested person transactions with certain

interested persons of the Company, its subsidiaries and/or associated companies. Each of such mandates shall, unless revoked or varied

by the Company in general meeting, continue in force until the next annual general meeting of the Company. For further details on

the interested person transactions and interested persons referred to, please see the appendices Appendix A to this Notice.

(v) Resolution 6(f ), if passed, will renew eff ective up to the next annual general meeting (unless earlier revoked or varied by the Company

in general meeting) the Share Buy-back Mandate for the Company to purchase or acquire its ordinary shares. Th e amount of fi nancing

required for the Company to purchase or acquire its ordinary shares, and the impact on the Company’s fi nancial position, cannot be

ascertained as at the date of the Notice of Annual General Meeting as these will depend on the number of ordinary shares purchased or

acquired and the price at which such ordinary shares were purchased or acquired. For further details on the Share Buyback Mandate,

please see Appendix B to this Notice.

Proxies :A member entitled to attend and vote at the annual general meeting may appoint not more than two proxies to attend and vote on his behalf

and where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be

specifi ed in the form of proxy. A proxy need not be a member of the Company. Th e instrument appointing a proxy must be deposited at

the offi ce of the Company’s Share Registrar, M & C Services Private Limited, 138 Robinson Road #17-00, Th e Corporate Offi ce, 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 9

May 2009, 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 30 April 2009. Duly completed registrable transfers in respect of shares in the Company received up to

the close of business at 5.00 p.m. on 8 May 2009 by the Company’s Share Registrar, M & C Services Private Limited, will be registered

to determine members’ entitlements to such dividend. Members whose securities accounts with Th e Central Depository (Pte) Ltd are

credited with shares in the Company as at 5.00 p.m. on 8 May 2009 will be entitled to such proposed dividend.

Th e proposed dividend, if approved at the Annual General Meeting, will be paid on 22 May 2009.



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Proxy Form Annual General Meeting

ECS HOLDINGS LIMITED(Incorporated in the Republic of Singapore)

Company Registration No. 199804760R

IMPORTANT:

1. For investors who have used their CPF monies to buy the Company’s shares, the Annual Report is forwarded to

them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. Th is Proxy Form is not valid for use by CPF investors and shall be ineff ective for all intents and purposes if used

or purported to be used by them.

3. CPF Investors who wish to attend the Annual General Meeting as OBSERVERS have to submit their requests

through their respective Agent banks so that their Agent banks may register with the Company Secretary of ECS

Holdings Limited not less than 48 hours before the time appointed for holding the meeting.

I/We ____________________________________________________________________________________________________________________

of _______________________________________________________________________________________________________________________

being a member/members of ECS HOLDINGS LIMITED hereby appoint

Name Address NRIC /Passport Number Proportion of Shareholdings(%)

and/or (delete as appropriate)

as my/our proxy/proxies to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of ECS HOLDINGS LIMITED to be held at 19 Kallang Avenue #07-153 Singapore 339410 on 30 April 2009 at 10.00 a.m. and at any adjournment thereof.

(Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutions as set out in the Notice of Annual General Meeting. In the absence of specifi c directions, the proxy/proxies will vote or abstain as he/they may think fi t, as he/they will on any other matter arising at the Annual General Meeting.)

No ORDINARY RESOLUTIONS FOR AGAINST

1.

Ordinary Business:

Adoption of Reports and Accounts

2. Declaration of a one–tier tax exempt fi rst and fi nal dividend of 2.7 cents per ordinary share for the year ended

31 December 2008

3. Re-election of Directors :

(a) Mr Tan Hup Foi

(b) Mr Narong Intanate

4. Re-appointment of Auditors

5. Approval of Directors’ Fees of S$189,000/- for the year ended 31 December 2008

6.

Special Business

(a) Authority for Directors to issue shares pursuant to Section 161 of the Companies Act, Cap. 50

(b) Authority to issue shares priced at a discount of up to 20% for placement exercise

(c) Authority for Directors to off er and grant options and allot shares pursuant to the ECS Share Option Scheme II

(d) To approve the proposed renewal of the Shareholders’ General Mandate for Interested Person Transactions with

Guangzhou Jia Dou Ji Tuan Co., Limited and its subsidiaries

(e) To approve the proposed renewal of the Shareholders’ General Mandate for Interested Person Transaction with

Netband Consulting Co., Ltd, Vnet Capital Co., Ltd, Vnet Capital International, Th ai Incubator.Com Co., Ltd

and/or Vintcom Technology Co., Ltd.

(f ) To approve the proposed renewal of the Share Buy-back Mandate

7. Any other ordinary business

Dated this __________ day of __________ 2009.

______________________________________Signature(s) of member(s) or Common Seal

IMPORTANT : PLEASE READ NOTES OVERLEAF

Total Number of Shares Held:

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 defi ned in Section 130A

of the Companies Act, Cap. 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you

should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the

Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name

in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by

you.

2 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.

3 Where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specifi ed in the

form of proxy, failing which, the appointment shall be deemed to be in the alternative.

4 Th e instrument appointing a proxy must be deposited at the offi ce of the Share Registrar of the Company, M&C Services Private Limited at 138

Robinson Road #17-00, Th e Corporate Offi ce, Singapore 068906, not less than forty-eight (48) hours before the time appointed for the holding of the

Annual General Meeting.

5 Th e 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 offi cer of the corporation.

6. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certifi ed copy thereof

must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid.

7. A corporation which is a member may by a resolution of its directors or other governing body authorise such person as it thinks fi t to act as its

representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Cap. 50.

General:

Th e 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 specifi ed 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 certifi ed by Th e

Central Depository (Pte) Limited to the Company.

ecs holdings annual report 2008

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