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As an established player in the industry, ECS has remained steadfast in the face of economic uncertainties. It has seen and outlast market turmoils. It will do so again and again, emerging stronger every time. In Asia, it has been growing. It is positioned to prevail even more brilliantly when the global economic tide turns.
As ECS goes about its business, it demonstrates a distinct character. This character has vision, courage, integrity, professionalism and notably, joy. The company will not be daunted by challenges; it welcomes them and emerges stronger from them, with a smile. This character forms ECS brand DNA. This years annual report theme BRING IT ON lights up ECS core brand values as a foremost IT distribution company. It portrays ECS resolve to take on challenges, harness partnerships and reap from opportunities - all done with gusto and derring-do. And yet always with joy. As ECS embraces challenges, it responds by bringing on its brand values - Shining, Nurturing, Committing and Growing. The brand values are the companys pledge to do the best for quality, employees, partners and progress continuously. All these qualities are embraced with a collegial and fun mood, as shown in the images in the annual report. Current IT applications such as QR code and augmented reality provide a bridge from the print version of this annual report to the companys digital presence. The presence of current and cutting-edge finished electronic products serve to reiterate ECS commitment to the IT distribution industry. As ECS surmounts challenges and engender more growth, it lights up businesses and end consumers lives as an IT distributor by bringing information technology to them. The annual report closes with an open invitation on the back cover to LAP IT UP - referring to challenges and opportunities, partnerships and achievements - in character with the ECS brand. Just as ECS can BRING IT ON by shining, nurturing, committing and growing, so can every stakeholder shine, nurture, commit and grow. Just LAP IT UP.
VISION
To be a Premier Asia-Pacific To be the preferred ICT Company that thinks supplier of choice for globally but acts locally, ICT products and valueexcelling in all our business added services by segments to deliver optimal building strong customer value to our stakeholders. relationships. To sustain our entrepreneurial growth by seeking new markets & businesses. To bring the best-ofbreed ICT products and services to enhance the competitiveness of our customers businesses. CONTENTS
14 // Chairmans Statement 22 // Senior Management 30 // Corporate Information 34 // Financial Highlights 37 // Corporate Governance Statement 16 // CEOs Statement 26 // Corporate Executives 32 // Regional Network 35 // 2011 Awards 19 // Board of Directors 29 // Group Structure 33 // Business Model 36 // 2011 Milestones
MISSION
01
BRING IT ON
SHINE
We aim to be the brightest star, to be the leader in the industry by continuously and consistently offering the best and constantly pursuing excellence. Our professionalism and work ethic becomes the pillar in everything we do. It is our promise to add value for every single stakeholder. This is our pledge for quality.
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BRING IT ON
NURTURE
We believe that people are full of potential and every single person contributes to the organisations strength. Within ECS, there will always be opportunities to learn, develop oneself and make personal progress. We encourage a learning organisation, and take every single employee as a part of our family. This is our pledge for our people.
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BRING IT ON
COMMIT
ECS is here for long term relationship. We realise that our stakeholders are our partners. We create trust and partnership. We put importance in delivering our promises to every stakeholder. We are doing business with trusted friends and colleagues. This is our pledge for dedication.
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BRING IT ON
GROW
Our simple ambition is to evolve and grow. We are driven to provide the best, to expand ourselves through organic growth or acquisition. We understand the industry, the customers and our own capability to make the right strategic moves to create value for the whole organisation. This is our pledge for progression.
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BRING IT ON
THE YEAR IN REVIEW
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CHAIRMANS STATEMENT
... the Group continued to improve internal operational and costs efficiency, in line with the strategies set in motion several years ago. As a result of these efforts, operating cash flow increased significantly, while total operating expenses as a percentage of revenue improved further to 3.2% in FY2011 compared to 3.4% a year earlier.
CHAIRMANS STATEMENT
Dear Shareholders, It gives me great pleasure to present to you ECS annual report for the financial year ended 31 December 2011 (FY2011). While FY2010 was a year in which we benefited from the pent-up demand following the 2008-2009 financial crisis due to the U.S. subprime problem, the year under review was marked by fresh uncertainty emanating from the Eurozone debt crisis; supply chain disruptions to the electronics sector due to the earthquake and tsunami in Japan and the floods in Thailand; and the uncertainty resulting from an announcement, later rescinded, by HP a major principal that it was planning to spin off its Personal Systems Group. Despite these challenges, the Groups FY2011 revenue increased 16.9% to $3.61 billion compared to FY2010. However, net profit after tax declined 26.0% to $39.2 million from $53.0 million due to several factors. The first is the absence of the one-off exceptional gain of $12.6 million from the disposal and dilution of ECS ICT Berhad of Malaysia in FY2010. Excluding the exceptional gain, the net profit for FY2011 decreased 2.8% compared to FY2010. During the year under review, the Group continued to improve internal operational and costs efficiency, in line with the strategies set in motion several years ago. As a result of these efforts, operating cash flow increased significantly, while total operating expenses as a percentage of revenue improved further to 3.2% in FY2011 compared to 3.4% a year earlier. Dividend In view of the Groups financial performance against the challenging backdrop outlined above, the Board of Directors has proposed a first and final dividend of 2.2 cents per ordinary share. Corporate Developments After assessing the market conditions globally and in Taiwan, the Directors have decided not to proceed with an earlier proposal to issue and list Taiwan Depository Receipts. Mr Li Jia Lin (an indirect shareholder and former Chairman of the Board) was appointed Chairman to the respective boards of directors of the Groups wholly owned ECS Technology (China) Limited, and its subsidiaries with effect from 22 November 2011. Outlook The economic uncertainty and supply chain disruptions will impact spending on technology products in the coming months. Amidst the challenging conditions, we will continue to improve our internal efficiencies such as working capital cycle and reducing costs while focusing on growing our share of the higher-margin Enterprise Systems business. Appreciation and Acknowledgement On behalf of my fellow Directors, I wish to thank our customers, channel partners, vendors, technology partners, banks and business associates for their support; the management and staff for their dedication and hard work despite the challenging conditions; and our shareholders for their loyal support.
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CEOS STATEMENT
Despite the various challenges, ECS achieved 16.9% growth in revenue to $3.61 billion from $3.09 billion in FY2010. This growth was mainly attributed to the 38.1% growth in the Distribution segment, driven by increased sales of media tablets, desktops and notebooks, consumer printers and imaging devices.
CEOS STATEMENT
Dear Shareholders, The year under review was marked by various challenges including the European debt crisis and the severe flooding in Thailand which affected the supply chain of the electronics sector. Financial and Operations Review Despite the various challenges, ECS achieved 16.9% growth in revenue to $3.61 billion from $3.09 billion in FY2010. This growth was mainly attributed to the 38.1% growth in the Distribution segment, driven by increased sales of media tablets, desktops and notebooks, consumer printers and imaging devices. Notwithstanding the deconsolidation of ECS ICT Berhad which was completed on 15 April 2010, the Group exceeded the $3.25 billion revenue achieved in FY2009 by 11.1%. Our FY2011 sales were propelled by additions to our product portfolio base, including Apple, Dell, and Lenovo, since FY2010. However, the Groups net profit attributable to shareholders declined 26.0% to $39.2 million from $53.0 million in FY2010 (performance that year had included a one-off exceptional gain of S$12.6 million from the disposal/dilution of a 20%-stake in ECS Malaysian subsidiary). Other factors included higher finance costs from increased bank borrowings and higher interest rates, particularly in China. Excluding the exceptional gain, the Groups FY2011 net profit reflects a decrease of 2.8% compared to FY2010. The Groups gross profit increased by 7.9% to S$167.3 million from S$155.1 million a year ago, mainly due to the revenue growth of S$521.8 million. Gross margin was lower at 4.6% as compared to 5.0% in FY2010 due to change in product mix with higher volume of lower-margin distribution sales. This was further reduced by higher provisions for stock obsolescence and lower early payment discounts and rebates.
The Group continued to implement efforts to improve operational and financial efficiencies in FY2011. As a result, the Groups working capital position strengthened with the generation of $44.7 million cash from operating activities compared to negative $1.0 million in FY2010, mainly due to tighter credit control and improved cash cycles. As a result, cash and cash equivalents increased by $38.9 million to $131.4 million as at 31 December 2011 from $92.5 million as at 31 December 2010. Consequently, the Groups net gearing ratio improved to 0.34 times as at 31 December 2011 from 0.45 times a year earlier. Earnings per share (EPS) was 10.74 cents in FY2011 from 14.51 cents in FY2010 while net asset value (NAV) per share increased to 89.37 cents as at 31 December 2011 from 81.18 cents as at 31 December 2010. The Group has proposed a first and final dividend of 2.2 cents per share. Review by Business Segments In view of the continued growth in IT spending, the Group expanded its product portfolio to leverage on emerging technologies and products from existing and new vendors. This has helped to improve the performance of our business segments. Distribution With the inclusion of new products in our portfolio, ECS strengthened its Distribution segment which remained the main revenue driver. In FY2011, this segment contributed $2.66 billion or 73.8% of total revenue, up by 38.1% from $1.93 billion in FY2010. This growth is mainly driven by higher sales of media tablets, desktops, imaging devices and consumer printers.
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CEOS STATEMENT
Enterprise Systems Following the pent-up demand in FY2010, the enterprise product portfolio in FY2011 was relatively weaker. Enterprise Systems segment accounted for $0.92 billion or 25.4% of revenue in FY2011 (FY2010: $1.13 billion) as IT infrastructure tools, such as servers, databases and storage products, experienced slower demand. Review by Geographical Markets Geographically both North Asia and Southeast Asia continued on their growth paths. North Asia In FY2011, North Asia was the main revenue growth driver as it grew 30.9% to $2.33 billion from $1.78 billion in FY2010 mainly due to stronger sales of media tablets, desktops, printers and notebooks in distribution segment. The Group also greatly benefitted from the nation-wide distribution rights for Apples iPad and iPhone in China clinched by ECS in the last quarter of FY2010. North Asia remains ECS single largest market, contributing 64.6% of the total revenue. Southeast Asia Revenue contribution from Southeast Asia experienced a marginal decrease of 2.1% to $1.28 billion in FY2011 from $1.31 billion in FY2010 as growth was limited by flooding in Thailand. The revenue in FY2010 also included the deconsolidated ECS ICT Berhads revenue in the first quarter. If not for the deconsolidation, revenue would have been up by 8.6% due to higher sales for notebooks, desktops and networking hardware in Singapore and Thailand.
Outlook We continue to gain traction in our initiatives to diversify our revenue base while improving profitability and establishing a cost-effective operational framework. Moving forward, we anticipate increased synergies from our business and corporate growth efforts. On the product front, we have extended our portfolio to new vendors including Apple, Lenovo and Dell, contributing to the revenue increase this year. We hope to clinch more new products from existing vendors to deepen the relationship. Going forward, the Group will focus on growing higher-margin Enterprise Systems business. We will also continue to adopt a similar go-to-market strategy and engage vendors regionally instead of on a standalone-country basis to increase efficiency and economies of scale. Lastly, ECS will continue to focus on operating costs management and improve working capital cycles, as well as efforts to carry on improving internal efficiencies and core operational processes.
BOARD OF DIRECTORS
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04
05
06
07
08
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BOARD OF DIRECTORS
01. Mr Tay Eng Hoe Mr Tay Eng Hoe was appointed the Non-Executive Chairman of the Group on 27 September 2010. He was the founder of ECS Holdings Limited and also formerly the Group Chief Executive Officer. Mr Tay has been a Director of the Group since 1 April 2001. He brings with him more than 28 years of experience in the IT industry. Mr Tay is also a Director and Vice Chairman of VST Holdings Limited, the parent company of ECS Holdings Limited. In August 2005, he was conferred the Public Service Medal by the President of the Republic of Singapore in recognition for his public service to the country. Mr Tay holds a Bachelor of Science (Honours) degree from the LaTrobe University and a Master of Business Administration from the University of Melbourne.
02. Mr Narong Intanate Mr Narong Intanate was appointed the Group Chief Executive Officer of ECS Holdings Limited and also to the Board of the ECS subsidiaries on 1 July 2010. He is an Executive Director of the Company, an appointment held since 15 December 2000. Mr Intanate is actively involved in the management of the subsidiaries and associate companies under the ECS Group and plays a pivotal role in steering the strategic direction of the Group. He is the founder and Executive Chairman of The Value Systems Co., Ltd., our subsidiary, since 1988. Mr Intanate is currently an advisor of the Hatyai University. He holds a Bachelor of Science in Business Administration and a Master of Business Administration from California State University. Prior to forming The Value Systems Co., Ltd., he was the Marketing Manager of Sahaviriya Infortech Computers Co., Ltd. from 1982 to 1983 and the Marketing Director of Sahaviriya OA from 1983 to 1988.
03. Mr Foo Sen Chin Mr Foo Sen Chin was appointed as a Director on 15 December 2000 and is concurrently the Advisor to Group Human Resources of the Company. He is also the Managing Director and founder of ECS ICT Berhad, our associate company which is listed on the Main Board of Bursa Malaysia Securities Berhad. Mr Foo plays a pivotal role in steering the strategic direction of ECS ICT Berhad. His responsibilities include the development of its long term business goals, overall operation and management of ECS ICT Berhad. Prior to joining our Group, he was the General Manager of a computer bureau services company in Kuala Lumpur before forming ECS KU Sdn Bhd (formerly known as K.U. Sistems Sdn Bhd) in 1985. Mr Foo is an advisor to the current Council of PIKOM, Association of Computer and Multimedia Industry of Malaysia. He has a Bachelor of Science degree in Electrical and Electronic Engineering from the University of Birmingham, UK and he also holds a Masters degree in Business Administration from the Cranfield School of Management in the United Kingdom.
04. Mr Mao Xiangqian Mr Mao Xiangqian was appointed as Executive Director of the Company on 3 May 2010 and is also concurrently the President of ECS Technology (China) Limited, a principal subsidiary of ECS Holdings Limited. He has more than 20 years of experience in Chinas ICT industry. Prior to joining the Group, Mr Mao served as the Senior Vice President of Digital China Holdings Limited, one of Chinas leading ICT distributor, and was President of Digital China Technology Limited, which is the distribution business division of Digital China Holdings Limited. Prior to Digital China, Mr Mao spent 10 years with the Lenovo Group. Mr Mao holds a Bachelor of Science (Machine Building and Automation) degree and a Master of Science (Modal Analysis) from Tianjin University as well as an Executive MBA degree from China Europe International Business School.
BOARD OF DIRECTORS
05. Mr Leong Horn Kee Mr Leong Horn Kee was appointed as an Independent Director on 15 December 2000, and currently serves as the Chairman of the Audit Committee and a member of the Nominating and Compensation Committees. He is currently the Chairman/CEO of CapitalCorp Partners Pte Ltd. Mr Leong was a Member of Parliament for 22 years. He has wide work experience in the public sector in the Ministries of Finance and Trade & Industry, and in the private sector in venture capital, merchant banking, corporate investments, hotels and property development. Mr Leong is currently Singapores Non-Resident Ambassador to Mexico and a member of the Securities Industry Council. He holds a degree (Honours) in Production Engineering from Loughborough University, UK; a degree (Honours) in Economics from the University of London, UK; a degree in Chinese Language and Literature from Beijing Normal University, China; an MBA degree from Insead, France, and a Master in Business Research from the University of Western Australia.
07. Mr Koh Soo Keong Mr Koh Soo Keong was appointed as an Independent Director on 11 February 2008, and currently serves as Chairman of the Compensation Committee and a member of the Audit and Nominating Committees. Mr Koh was, until April 2007, the Chief Executive Officer and President of Toll Asia Pte Ltd, formerly SembCorp Logistics Ltd (SembLog) which was acquired by Toll in May 2006. With over 20 years of experience in the logistics industry, he had helmed SembLog and its preceding companies since 1986. He is currently the Managing Director of EcoSave Pte Ltd. He is also the Chairman of the Agri-Food & Veterinary Authority of Singapore and Ascendas Funds Management (S) Ltd (managing Ascendas-REITs). He is a board member of four other publicly listed companies. He holds a Bachelor of Engineering (Honours), a Master of Business Administration and a Postgraduate Diploma in Business Law from the National University of Singapore.
06. Mr Tan Hup Foi Mr Tan Hup Foi was appointed as an Independent Director on 7 February 2006, and currently serves as Chairman of the Nominating Committee and a member of the Audit and Compensation Committees. He was the Chief Executive of Trans-Island Bus Services Ltd from 1994 to 2005 and also the Deputy President of SMRT Corporation Ltd from 2003 to 2005. He was also the Chairman of Ngee Ann Polytechnic Council from 2004 to 2011. Mr Tan is known internationally as the Honorary Vice President of the International Association of Public Transport (UITP) and Honorary Chairman of UITP Asia-Pacific Division. He was awarded the Bintang Bakti Masyarakat (Public Service Star) in 2008 and the Pingat Bakti Masyarakat (Public Service Medal) in 1996 by the President of Singapore. Mr Tan graduated from Monash University in Australia with a First Class Honours degree in Mechanical Engineering in 1974 and he obtained a Master of Science (Industrial Engineering) degree from University of Singapore in 1979.
08. Mr Ong Wei Hiam Mr Ong Wei Hiam was appointed as Non-Executive Director of the Company on 3 May 2010. Mr Ong is the Group Chief Financial Officer and Executive Director of VST Holdings Limited, the parent company of ECS Holdings Limited. Mr Ong holds a Bachelors degree in Economics from University College London and a Masters degree in Analysis, Design & Management of Information Systems from the London School of Economics and Political Science. He is a Fellow of the Institute of Chartered Accountants in England and Wales, and Fellow of the Hong Kong Institute of Certified Public Accountants. Prior to joining the VST Group, Mr Ong served in a senior position at PricewaterhouseCoopers and has extensive working experience in London and Hong Kong.
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SENIOR MANAGEMENT
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05
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07
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09
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SENIOR MANAGEMENT
01. Mr Narong Intanate Mr Narong Intanate was appointed the Group Chief Executive Officer of ECS Holdings Limited and also to the Board of the ECS subsidiaries on 1 July 2010. He is an Executive Director of the Company, an appointment held since 15 December 2000. Mr Intanate is actively involved in the management of the subsidiaries and associate companies under the ECS Group and plays a pivotal role in steering the strategic direction of the Group. He is the founder and Executive Chairman of The Value Systems Co., Ltd., our subsidiary, since 1988. Mr Intanate is currently an advisor of the Hatyai University. He holds a Bachelor of Science in Business Administration and a Master of Business Administration from California State University. Prior to forming The Value Systems Co., Ltd., he was the Marketing Manager of Sahaviriya Infortech Computers Co., Ltd. from 1982 to 1983 and the Marketing Director of Sahaviriya OA from 1983 to 1988. 03. Ms Ge Hong Ms Ge Hong is the Group Chief Information Officer of the Company. Her main responsibility is in leading the development of an IT blueprint for the Groups business and service delivery to support the Groups vision and sustainable growth. An experienced solution and management consultant, she has more than 16 years of global experience in enterprise resource planning and business process reengineering. Prior to ECS, Ms Ge was in leading organisations like IBM, SAP, Accenture in consulting roles at the senior level, serving major MNC clients like Warner Bros., Owens Corning, Mercedes Benz, Good Year, DuPont, LTV Steel as well as US government agencies including IRS and NASA. Some of her major recent achievements include leading the transition management for Warner Bros and an outsourcing project for Capgemini. Ms Ge holds a Bachelors degree from Beijing University, China and two Master degrees one in Accountancy and Financial Information System, and the other in Public Administration from Cleveland State University, USA.
02. Mr Eddie Foo Mr Eddie Foo is the Group Chief Financial Officer of the Company and is concurrently the Group Company Secretary. Mr Foo is responsible for the Groups overall financial strategy and management, corporate finance and treasury management, tax, and investor relations of ECS Holdings, and is also a director on the boards of various ECS companies. Mr Foo has several years of financial management and audit experience in multinational companies and public accounting firms. Prior to serving as Group Chief Financial Officer, Mr Foo was the Group Financial Controller of the Company. Mr Foo holds a Bachelors degree in Accountancy from the Nanyang Technological University and is a member of the Institute of Certified Public Accountants of Singapore.
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SENIOR MANAGEMENT
04. Mr Lim Tow Cheng Mr Lim Tow Cheng was appointed as the Executive Vice President, Group Business Development on 18 October 2005. Mr Lim is responsible for managing the regional expansion strategy and for identifying new business opportunities for the Group. He has more than 20 years of experience in senior management positions in the IT industry. Prior to joining the Group, Mr Lim was the Director for South Asia of Western Digital and has previously worked with Digiland International Limited for more than 8 years, holding several senior management positions, including as Chief Executive Officer. Mr Lim has an Honours degree in Economics from the National University of Singapore.
05. Mr Mao Xiangqian Mr Mao Xiangqian was appointed as Executive Director of the Company on 3 May 2010 and is also concurrently the President of ECS Technology (China) Limited, a principal subsidiary of ECS Holdings Limited. He has more than 20 years of experience in Chinas ICT industry. Prior to joining the Group, Mr Mao served as the Senior Vice President of Digital China Holdings Limited, one of Chinas leading ICT distributor, and was President of Digital China Technology Limited, which is the distribution business division of Digital China Holdings Limited. Prior to Digital China, Mr Mao spent 10 years with the Lenovo Group. Mr Mao holds a Bachelor of Science (Machine Building and Automation) degree and a Master of Science (Modal Analysis) from Tianjin University as well as an Executive MBA Degree from China Europe International Business School.
06. Mr Somsak Pejthaveeporndej Mr Somsak Pejthaveeporndej was appointed as the President of The Value Systems Co., Ltd., our wholly-owned subsidiary on 1 February 2009. He is responsible for the overall management of The Value Systems and has been with our Group since 1988. Mr Pejthaveeporndej was formerly responsible for managing the Enterprise Systems & ICT Services Division of The Value Systems. He has more than 20 years experience in the IT industry. Prior to joining our Group, he was employed as a Technical Manager by Sun Shine Co., Ltd. from 1981 to 1984, followed by Sahaviriya Telecom Co., Ltd. from 1984 to 1988. He holds a Bachelor of Science degree majoring in electronics from Rajamangala University of Technology Krungthep, Thailand, and a Mini MBA from The Faculty of Commerce and Accountancy, Chulalongkorn University.
SENIOR MANAGEMENT
07. Mr Foo Sen Chin Mr Foo Sen Chin was appointed as a Director on 15 December 2000 and is concurrently the Advisor to the Group Human Resources of the Company. He is also the Managing Director and founder of ECS ICT Berhad, our associate company which is listed on the Main Board of Bursa Malaysia Securities Berhad. Mr Foo plays a pivotal role in steering the strategic direction of ECS ICT Berhad. His responsibilities include the development of its long term business goals, overall operation and administrative management of ECS ICT Berhad. Prior to joining our Group, he was the General Manager of a computer bureau services company in Kuala Lumpur before forming ECS KU Sdn Bhd (formerly known as K.U. Sistems Sdn Bhd) in 1985. Mr Foo is an advisor to the current Council of PIKOM, Association of Computer and Multimedia Industry of Malaysia. He has a Bachelor of Science degree in Electrical and Electronic Engineering from the University of Birmingham, UK and he also holds a Masters degree in Business Administration from the Cranfield School of Management in the United Kingdom.
09. Ms Lina Choo Ms Lina Choo was appointed as Executive Director of PT ECS Indo Jaya in April 2009. She joined ECS in September 2007 and is responsible for overseeing the financial management of ECS Indonesia. Ms Choo has more than 15 years experience in financial management in various companies, of which over 10 years was in the IT industry. Prior to joining ECS Indonesia, she worked with Natsteel Electronics in Singapore as an accountant before returning to Indonesia to work as Finance Manager for Diebold Indonesia and subsequently, Datacraft Indonesia. Ms Choo holds a Bachelors degree in Accountancy from the University of HKBP Nommensen.
08. Mr Sebastian Chong Mr Sebastian Chong is the President of ECS Computers (Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Limited. Mr Chong joined ECS in 1990 and has over 20 years of experience in the IT industry. He is responsible for strategic direction, overall management, including the sales and operations of the commercial, consumer and retail segments of ECS Singapore. Mr Chong is also responsible for business development, business strategy and building of long term relationships with vendors, channels and partners.
10. Mr Jimmy Go Mr Jimmy Go is the founder and President of MSI-ECS Phils., Inc., our associate company. He has more than 25 years of experience in the IT industry in the Philippines. Mr Go started in the IT industry way back in 1982 after graduating from college selling Fujitsu & Apple computers. He currently holds a Bachelors degree in Electronics & Communication Engineering from De La Salle University with an award of Magna Cum Laude and Post Graduate degree of Masters in Business Administration in Ateneo de Manila University. Mr Go was also the past President of COMDDAP (Computer Manufacturers, Distributors & Dealers Association of the Philippines). In 1998, Mr Go was named President and CEO of MSI-Digiland. He was instrumental in growing the business of MSI in the Philippines, making it one of the biggest IT distributors in the country in less than 5 years.
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CORPORATE EXECUTIVES
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04
05
CORPORATE EXECUTIVES
01. Mr Eugene Tan Mr Eugene Tan is the Senior Vice President, Group Finance of ECS Holdings Limited since 1 March 2008. He is responsible for the financial management of the Group, which covers accounting, treasury, tax, financial control and reporting. Prior to his current appointment, Mr Tan was the Vice President, Finance of ECS Computers (Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Limited. Prior to joining the Group, Mr Tan worked for KPMG Singapore as a senior auditor. Mr Tan holds a Bachelors degree in Accountancy & Economics from the University of Reading. 02. Ms Peggy Leong-Yeo Ms Peggy Leong-Yeo is the Senior Vice President, Group Human Resources for ECS Holdings Limited. Her main responsibilities are to establish HR strategies for the Group and to strengthen the Groups human capital, which includes redefining leading-edge performance management and development practices to support leadership succession planning. She provides leadership and tactical support in formulation, implementation and review of HR policies in key HR areas to support the Groups strategic intent to ensure alignment and adoption of best practices. She has more than 20 years of Human Resources experience behind her working with a global multinational company. She holds a Diploma in Administrative Management from The Institute of Administrative Management in UK and a Master in Business Administration from the University of Birmingham, United Kingdom.
03. Mr Newman Li Mr Newman Li is the Vice President, Group Internal Audit of the Company. He is a member of CPA China and has more than 10 years of financial and audit experience. Prior to joining the Group, he worked for Foshan Power Construction Group Co. Ltd in 1998 and Guangdong Telecom in 2004. Mr Li holds a Bachelors degree in Accountancy from the Tianjin University of Commerce and was appointed to his current position since May 2008.
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CORPORATE EXECUTIVES
04. Ms Lim Yok Yen Ms Lim Yok Yen is the Vice President, Group Finance of ECS Holdings Limited. She is responsible for financial planning and analysis, budgeting, forecasting as well as working with partners and management to support the Groups business growth strategy. Ms Lim is also responsible for all channel finance activities including credit management, working capital requirements and planning with vendor finance teams and internal business units. Prior to joining ECS in April 2008, she was a Group Accountant in a public-listed company in Singapore where she handled Group reporting and treasury planning. Ms Lim has more than 13 years of experience in financial accounting and group reporting in the freight forwarding industry and companies listed on Singapore Exchange. Ms Lim is a Certified Public Accountant and also a member of Association of Chartered Certified Accountants (ACCA) since 2001.
05. Mr Paul Chong Mr Paul Chong is the Assistant Vice President, Group Public Relations of ECS Holdings Limited and concurrently, the Vice President, Marketing of ECS Computers (Asia) Pte Ltd, the Groups wholly-owned Singapore subsidiary. In his role for Group Public Relations, Mr Chong is responsible for the Groups branding and communication programs, publicity, corporate affairs and internal communication between management and employees. As Vice President, Marketing, he is responsible for providing comprehensive marketing communications solutions such as direct marketing programs, promotions, events, seminars, tradeshows and advertising. Prior to joining the ECS Group in 1997, Mr Chong worked for 6 years in the public sector of Singapore handling national IT initiatives and training and development programs. Mr Chong holds a Bachelors degree in Business Administration from the National University of Singapore and a Master of Business Administration degree from the University of Western Australia.
GROUP STRUCTURE
ECS HOLDINGS LIMITED
CHINA
THAILAND
The Value Systems Co., Ltd. 100%
MALAYSIA
ECS ICT Berhad 41%
SINGAPORE
INDONESIA
ECS Indo Pte Ltd 89%
PHILIPPINES
ECS Infocom (Phils) Pte. Ltd. 100%
VIETNAM
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CORPORATE INFORMATION
Board of Directors Mr Tay Eng Hoe // Chairman, Non-Executive Director Mr Narong Intanate // Executive Director Mr Foo Sen Chin // Non-Executive Director Mr Leong Horn Kee // Independent Director Mr Tan Hup Foi // Independent Director Mr Koh Soo Keong // Independent Director Mr Mao Xiangqian // Executive Director Mr Ong Wei Hiam // Non-Executive Director Audit Committee Mr Leong Horn Kee // Chairman Mr Tan Hup Foi Mr Koh Soo Keong Compensation Committee Mr Koh Soo Keong // Chairman Mr Leong Horn Kee Mr Tan Hup Foi Nominating Committee Mr Tan Hup Foi // Chairman Mr Leong Horn Kee Mr Koh Soo Keong Mr Tay Eng Hoe Investment Committee Mr Leong Horn Kee // Chairman Mr Foo Sen Chin Mr Tan Hup Foi Mr Ong Wei Hiam Senior Management at ECS Holdings Limited Mr Narong Intanate // Group Chief Executive Officer Mr Eddie Foo Toon Ee // Group Chief Financial Officer Ms Ge Hong // Group Chief Information Officer Mr Lim Tow Cheng // Executive Vice President, Business Development Senior Management at ECS Holdings Limiteds Subsidiaries and Associate Companies Mr Mao Xiangqian // President ECS Technology (China) Limited Mr Somsak Pejthaveeporndej // President The Value Systems Co., Ltd. Mr Foo Sen Chin // Managing Director ECS ICT Berhad Mr Sebastian Chong // President ECS Computers (Asia) Pte Ltd Ms Lina Choo // Executive Director PT ECS Indo Jaya Mr Jimmy Go // President MSI-ECS Phils., Inc. Corporate Executives Mr Eugene Tan // Senior Vice President, Group Finance Ms Peggy Leong-Yeo // Senior Vice President, Group Human Resources Mr Newman Li // Vice President, Group Internal Audit Ms Lim Yok Yen // Vice President, Group Finance Mr Paul Chong // Assistant Vice President, Group Public Relations Auditors KPMG LLP Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 Partner-in-charge : Ms Chu Sook Fun (Since FY2011)
CORPORATE INFORMATION
Registrar M&C Services Private Limited 138 Robinson Road #17-00 The Corporate Office Singapore 068906 Registered Office 8 Temasek Boulevard #34-02 Suntec Tower Three Singapore 038988 Principal Bankers ANZ Bank Citibank N.A. DBS Bank Ltd KBC Bank N.V. Oversea-Chinese Banking Corporation Standard Chartered Bank Sumitomo Mitsui Banking Corporation United Overseas Bank Limited Company Secretary Mr Eddie Foo Toon Ee, CPA ECS Offices ECS Holdings Limited 8 Temasek Boulevard #34-02 Suntec Tower Three Singapore 038988 Website : www.ecs.com.sg ECS Technology (China) Limited 6/7F, Wanliuyicheng Building, No.11 Changchunqiao Road, Haidian District, Beijing, P.R.C (100089) Offices in Beijing, Changchun, Changsha, Chengdu, Chongqing, Dalian, Fuzhou, Guangzhou, Guiyang, Harbin, Hefei, Hong Kong, Huhehaote Jinan, Kunming, Lanzhou, Nanchang, Nanjing, Nanning, Ningbo, Qingdao, Shanghai, Shenzhen, Shenyang, Shijiazhuang, Taiyuan, Tianjin, Urumqi, Wuhan, Xiamen, Xian, Zhengzhou Website : www.ecschina.com
The Value Systems Co., Ltd. 21st Floor, Serm-Mit Tower 159/35 Sukhumvit 21 Road (Asok) North Klongtoey, Wattana Bangkok 10110, Thailand Offices in Bangkok, Chiang Mai, Hat Yai, Khon Kaen, Nakhon Ratchasima, Phitsanulok, Phuket, Rayong, Surat Thani Website : www.value.co.th ECS ICT Berhad Lot 3, Jalan Teknologi 3/5 Taman Sains Selangor, Kota Damansara 47810 Petaling Jaya, Selangor, Malaysia Offices in Johor Bahru, Kota Kinabalu, Kuantan, Kuching, Penang, Petaling Jaya Websites : www.ecsm.com.my ECS Computers (Asia) Pte Ltd 19 Kallang Avenue #07-153 Singapore 339410 Website : www.ecs.com.sg PT ECS Indo Jaya Komplek Mangga Dua Square Blok E 34-37 Jl. Gunung Sahari Raya No.1 Jakarta Utara 14420, Indonesia Offices in Balikpapan, Bandung, Jakarta, Makassar, Medan, Palembang, Semarang, Surabaya, Yogyakarta Website : www.ecsindo.com MSI-ECS Phils., Inc. Topy II Bldg, #3 Economia St., Libis, Quezon City, 1110, Philippines Offices in Cebu, Davao, Manila Website : www.msi-ecs.com.ph
30 31
REGIONAL NETWORK
PT ECS Indo Jaya MSI-ECS Phils., Inc. ECS Holdings Limited (Listed on SGX) ECS Computers (Asia) Pte Ltd ECS ICT Berhad ECS Vietnam Company Limited The Value Systems Co., Ltd. ECS Technology (China) Limited
BUSINESS MODEL
Complete Solution
ECS
Aggregator of Best-of-Breed IT Products: Convenient One-Stop Supplier Channel Development and Management Volume Aggregator Efficient Inventory Management to ensure timely delivery Financial Credit Support to Resellers/IT Partners Consultancy/ Implementation Managed Services Post-Sales/ Maintenance Support Professional Services Training/Certification Logistical Services
Channel Partners
Corporate Resellers System Integrators Application Providers Retailers ISVs Superstores Developers
End Users
Corporates Manufacturing Industry Government Service Industry Telcos & Service Providers Emerging Industry SME Home /SOHO Consumer & Lifestyle
Volume Products
Notebooks Desktops Printers & Imaging Devices Mobility Devices Printing Supplies Accessories & Options Productivity Software
32 33
FINANCIAL HIGHLIGHTS
REVENUE (S$ million) $
3,850 3,607.2 3,300 3,252.0 2,789.4 2,949.9 3,085.4 2,750 2,200 1,650 1,100 550 0 FY07 FY08 FY09 FY10 FY11
Enterprise Systems
39.2
FY07
212.7
FY08
2.2
FY09
15.4
FY10
FY11
237.8
200
2011 AWARDS
Country ECS Holdings ECS Holdings ECS China ECS China ECS China ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Indonesia ECS Indonesia ECS Indonesia ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines ECS Philippines Awarded by DP Information DP Information FLUKE HP Intel HP HP HP Intermec Oracle Symantec HP HP HP HP Oracle HP HP IBM Lenovo Buffalo Cisco Cisco Acer Acer Acer Acer Acer EMC HP HP HP IBM Oracle Award S1000 - Ranked 22nd for Top Public-Listed Company by Sales Turnover Singapore International 100 - Ranked Top 15 by Overseas Revenue Best Distributor Partner of 2011 Distributor Partner of the Year 2011 Excellent Distributor of Intel Software (China Area) - 2011 Best Distributor - Outstanding Enterprise Business Product Selling 2011 Best Distributor - HP Software 2011 Best Distributor - Outstanding Overall TS Achievement 2011 Distributor of the Year 2011 Partner of the Year 2011 Top Symantec Performing Distributor FY2011 Top Master Part Reseller - Technology Services (2011) Top Services Contract Specialist - Technology Services (2011) Top Wholesaler - HP Storage Division Broadbase Category (2011) Top Wholesaler - Storage Division (2011) Partner of the Year FY11 - Value Added Distributor 1H11 Best Performing Distributor (Partner-Led Business) Top Wholesaler of the Year 2011 - IPG Singapore Asia Pacific Software Distributor 2011 Top Distributor of the Year 2011 - Relationship Segment Best Sales Growth 2011 Best Distributor FY 2011 Best Service Sales Distributor FY 2011 Distributor of the Year, Consumer Sales Notebooks and UMPC (2011) Distributor of the Year, Consumer Sales Projectors (2011) Most Outstanding Master Authorized Service Partner of the Year (2011) Product Manager of the Year - Consumer Notebooks (2011) Product Manager of the Year Projectors (2011) Distributor of the Year 2011 IPG Distributor of the Year 2011 Top Distributor - Highest Growth 2011 IPG IWS System Sales Distributor 2011 Top Volume Partner Distributor for 2011 Value-Added Distributor of the Year 2011
34 35
2011 MILESTONES
Country ECS Thailand ECS Thailand Month Jan - Mar 11 Apr - Jun 11 Description of Milestone Apppointed as Distributor for Lexmark The Value Systems established the Corporate Social Responsibility Campaign of The Fairy Tale Project V at Watprachanart School, Nakhonchaisri District, Nakhonpathom Province Appointed as Distributor for Symantec Cloud Appointed as Distributor for Huawei Technology Appointed as Dells Strategic Authorised Distributor for Dell Commercial & Consumer Products Appointed as Lenovos Distributor for Consumer & SMB ECS ICT Berhad nominated as one of the companies in The Edge Billion Ringgit Club Opening of technology centre facility in Malaysia for Oracle Exadata Database machine located in main office. Appointed as Distributor for Trek Appointed as Distributor for InFocus Appointed as Distributor for Serena Software Appointed as Distributor for Dell Streak Appointed as Distributor for HP Networking Appointed as Distributor for Huawei Appointed as Distributor for Hitachi Data Systems Appointed as Distributor for Proofpoint Appointed as Distributor for WatchGuard Appointed as Distributor for Decision Appointed as Distributor for Huawei Consumer Appointed as Distributor for Fujitsu Appointed as Distributor for Dell Appointed as Distributor for Huawei Appointed as Distributor for Fortinet Appointed as Distributor for ASUS
ECS Thailand ECS Thailand ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Singapore ECS Indonesia ECS Indonesia ECS Indonesia ECS Philippines ECS Philippines
Apr - Jun 11 Jul - Sep 11 Jan - Mar 11 Apr - Jun 11 Jul - Sep 11 Oct - Dec 12 Jan - Mar 11 Jan - Mar 11 Apr - Jun 11 Apr - Jun 11 Apr - Jun 11 Jul - Sep 11 Jul - Sep 11 Jul - Sep 11 Oct - Dec 12 Oct - Dec 12 Oct - Dec 12 Jan - Mar 2011 Jan - Mar 2011 Jul - Sept 2011 Jan - Mar 11 Jan - Mar 11
The Boards role is to: a) b) c) d) e) f) provide entrepreneurial leadership, set strategic aims, and ensure that the necessary financial and human resources are in place for the company to meet its objectives; establish a framework of prudent and effective controls which enables risks to be assessed and managed, including safeguarding of shareholders interests and the companys assets; review management performance; identify the key stakeholder groups and recognise that their perceptions affect the companys reputation; and set the companys values and standards, and ensure that obligations to shareholders and other stakeholders are understood and met; consider sustainability issues, e.g. environmental and social factors, as part of its strategic formulation.
The Board meets to consider the following, without limitation, corporate events and/or actions: a) b) c) d) e) f) g) h) approval of quarterly results announcements; approval of annual report and accounts; declaration of interim dividend and proposal of final dividends; approval of corporate strategy; authorisation of major transactions; review and approval of annual budgets; compensation of senior management personnel; and convening of shareholders meetings.
All directors must objectively take decisions in the interests of the Company. The Board has delegated the day-to-day management and running of the Company to the management headed by our Group Chief Executive Officer (Group CEO), while reserving certain key issues and policies for its approval. Additionally, to facilitate effective management, certain functions have been delegated to the following sub-committees, each of which has its own written terms of reference: a) b) c) d) the Nominating Committee; the Compensation Committee; the Audit Committee; and the Investment Committee.
Newly-appointed directors are given briefings by the Management on the Groups activities and its strategic directions. Changes to regulations and accounting standards are monitored closely by Management. To keep pace with regulatory changes, where these changes have an important bearing on the Companys or directors disclosure obligations, directors are briefed either during Board meetings or at specially convened sessions conducted by professionals.
36 37
Board Member Tay Eng Hoe Narong Intanate Foo Sen Chin Leong Horn Kee Koh Soo Keong Tan Hup Foi Mao Xiangqian Ong Wei Hiam Board Composition and Guidance Principle 2:
There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management and substantial shareholders. No individual or small group of individuals should be allowed to dominate the Boards decision making.
The Board comprises eight directors of which six are non-executive directors (including three independent directors) and two executive directors. The Company places great importance on the quality of its Board of Directors. The Group achieves this by appointing to its Board highly respected individuals and prominent leaders in their respective professions. The Board comprises individuals with proven track records in the public and/or corporate sector, and each is a highly respected member of the business community. As a group, they provide core competencies such as accounting or finance, business or management experience, industry knowledge, strategic planning and customer-based experience or knowledge. Key information regarding the directors is given in the Board of Directors section on pages 19 to 21 of the annual report. Chairman and Chief Executive Officer Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the companys business. No one individual should represent a considerable concentration of power.
Mr Tay Eng Hoe, a non-executive director, was appointed as the Chairman of the Company on 27 September 2010. Mr Narong Intanate was appointed as Group CEO with effect from 1 July 2010. The Chairman and the Group CEO each perform separate functions to ensure that there is an appropriate balance of power and authority, and that accountability and independent decision-making are not compromised. The Chairman is responsible for the functioning of the Board. The Group CEO has full executive responsibilities over the running of the Groups business, the business direction and operational decisions of the Group. No individual or small group of individuals dominate the Boards decision making process. Board Membership & Board Performance Principle 4: Principle 5: There should be a formal and transparent process for the appointment and re-election of directors to the Board. There should be a formal annual assessment of the effectiveness of the Board as a whole and its committees and the contribution by each director to the effectiveness of the Board.
In accordance with the Companys Articles of Association, at each Annual General Meeting, one-third of the Board shall retire from office by rotation provided that no director holding office as Managing or Joint Managing Director shall be subject to retirement by rotation or be taken into account in determining the number of directors to retire. Access to Information Principle 6: In order to fulfil their responsibilities, board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities as directors.
All directors are provided with complete, adequate and timely information prior to meetings and on a regular basis to enable them to perform their roles properly. Directors are entitled to request additional information as needed to make informed decisions. All directors have separate and independent access to senior management and the company secretary. The company secretary has defined roles and responsibilities and attends all Board and sub-committee meetings of the Company. Should directors, whether as a group or individually, need independent professional advice in the furtherance of their duties, the cost of such professional advice will be borne by the Company. (B) REMUNERATION MATTERS Procedures for Developing Remuneration Policies Principle 7: There should be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director should be involved in deciding his or her own remuneration.
The Compensation Committee oversees the general compensation of employees of our Group with a goal to motivate, recruit and retain employees and directors through competitive compensation and progressive policies. In particular, the Compensation Committee is responsible for overseeing our employee profit sharing scheme as well as the share incentives, including the ECS Share Option Scheme I, ECS Share Option Scheme II and ECS Performance Shares Scheme. The Compensation Committee of the Board comprises Mr Koh Soo Keong, Mr Leong Horn Kee, and Mr Tan Hup Foi. Mr Koh Soo Keong is the Chairman of the Compensation Committee. Level and Mix of Remuneration; Disclosure of Remuneration Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and should be appropriate to attract, retain and motivate the (a) directors to provide good stewardship of company, and (b) key management personnel to successfully manage the company. However, companies should avoid paying more than is necessary for this purpose.
38 39
The Groups remuneration policy is to provide a competitive remuneration package so as to attract, retain and motivate directors and senior management with the required experience and expertise to run the Group successfully. In setting remuneration packages for executive directors and senior management of the Group, the pay and employment conditions within the industry and in comparable companies are taken into consideration. The compensation package of the Groups executive directors including its Group CEO and senior management consists of salary, allowances, share options and bonuses which are conditional upon meeting certain performance targets. Non-executive directors have remuneration packages which consist of a directors fee component and a share option component pursuant to the Companys Share Option Scheme. The directors fee policy is based on a scale of fees divided into basic retainer fees as a director and additional fees for serving on board committees. Directors fees for non-executive directors are subject to the approval of shareholders at the Annual General Meeting. The report on directors remuneration is given below: SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED 31 DECEMBER 2011 Allowances and other Benefits %
Name of Director $1,000,000 to below $2,000,000 Narong Intanate $500,000 to below $1,000,000 Mao Xiangqian Below $500,000 Tay Eng Hoe Foo Sen Chin Leong Horn Kee Tan Hup Foi Koh Soo Keong Ong Wei Hiam Executives Remuneration
Salary %
Bonus %
Fees %
Total %
17
80
100
49
48
100
Rather than setting out the names of the top five key executives who are not also directors of the Company, we have shown a Group-wide cross-section of executive remuneration by number of employees earning $100,000 upwards in bands of $250,000 below. This should give a macro view of the remuneration pattern in the Group, while maintaining confidentiality of staff remuneration matters.
Total Compensation (S$) $100,000 to $249,999 $250,000 to $499,999 $500,000 to $749,999 Total Notes: 1. 2. 3.
Including employees in local and overseas subsidiaries. Inclusive salaries, AWS, related CPF and other statutory contributions, allowances and fringe-benefits. Sales commission, bonus and other statutory contributions.
There are no employees in the Group who are immediate family members of a director or the Group CEO. (C) ACCOUNTABILITY AND AUDIT Accountability Principle 10: The Board should present a balanced and understandable assessment of the companys performance, position and prospects. In presenting the annual financial statements and quarterly announcements to shareholders, it is the aim of the Board to provide the shareholders with a detailed analysis, explanation and assessment of the Groups financial position and prospects. On a quarterly basis, Board members are provided with business and financial reports comparing actual performance with budget and with prior year comparisons with highlights on key business indicators and any significant business development. In addition, the Group CEO communicates regularly with Board members through informal meetings and phone calls with appropriate updates on Company developments. Risk Management and Internal Controls Principle 11: The Board is responsible for the governance of risk. The Board should ensure that the Management maintains a sound system of risk management and internal controls to safeguard the shareholders interests and the companys assets, and should determine the nature and extent of the significant risks which the Board is willing to take in achieving its strategic objectives. The Board acknowledges that it is responsible for the Groups system of internal control and strives to maintain a robust and effective system of internal controls to address any financial, operational or compliance risks. It is the opinion of the Board with the concurrence of the AC that, in the absence of evidence to the contrary, the system of internal controls maintained by the Company and in place throughout the financial year 2011, provides reasonable, but not absolute, assurance against material financial misstatements or loss, and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of financial information, compliance with appropriate legislation, regulations and best practices, and the identification and containment of financial, business and compliance risks. The Board notes that all internal control systems contain inherent limitations and no system of internal controls could provide absolute assurance against the occurrence of material errors, poor judgment in decision-making, human error, losses, fraud or other irregularities.
40 41
The Audit Committee meets periodically to perform the following functions:a) b) reviewing the quarterly, half-yearly and annual financial statements before recommending them to the Board for approval; reviewing interested person transactions (as defined in Chapter 9 of the Listing Manual (Listing Manual) of the Singapore Exchange Securities Trading Limited (SGX-ST), including such transactions conducted under the shareholders general mandate previously obtained; reviewing with external auditors the audit plan, their evaluation of the systems of internal controls, their annual reports and their management letters and managements response; reviewing and recommending to the Board the re-appointment of the external auditors, taking into consideration the non-audit services rendered by the external auditors and being satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors; reviewing the scope of internal audit procedures and the results and effectiveness of the internal audit; reviewing any suspected fraud or irregularity, or suspected infringement of any Singapore laws or regulations or rules of the SGX-ST or any other regulatory authority in Singapore, which has or is likely to have a material impact on the Groups operating results or financial position, and reporting such matters to the Board; and considering other matters as requested by the Board.
c)
d)
e) f)
g)
The Audit Committee has full access to and co-operation of the Companys management and the internal auditors and has full discretion to invite any director or executive officer to attend its meetings. The auditors, both internal and external, have unrestricted access to the Audit Committee. Reasonable resources have been made available to the Audit Committee to enable them to discharge their duties. The Audit Committee held 4 meetings since the date of the last annual report. The Audit Committee reviewed the Interested Person Transactions for the year ended 31 December 2011 in accordance with the terms of the Shareholders Mandate for such transactions as were approved on 21 April 2011. Interested Person Transactions with a total value of $20.6 million were examined and the Audit Committee is of the opinion that the said transactions were carried out on prevailing commercial terms and did not prejudice the interest of the shareholders of the Company. The Audit Committee had reviewed and confirmed that the methods and procedures for determining the transaction prices relating to Interested Person Transactions have not changed since the last shareholders approval. The Audit Committee also confirms that the methods and procedures are sufficient to ensure that the transactions will be carried out on normal terms and will not be prejudicial to the interests of the Company and its minority shareholders. The Audit Committee had reviewed the non-audit services provided by the external auditors and is satisfied with the independence of the auditors. The Audit Committee has recommended to the Board that the auditors, KPMG, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company.
Name of Director Leong Horn Kee (Chairman) Tan Hup Foi Koh Soo Keong Internal Audit
Principle 13 : The Company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits. The Group has an internal audit department which is independent of the activities it audits. It performs financial audits, implements operational and compliance controls. The Audit Committee approves the hiring, removal, evaluation and compensation of the head of the internal audit department. The Internal Auditor reports primarily to the Chairman of the Audit Committee and administratively to the Group CEO. The Internal Auditor plans its internal audit work in consultation with, but independent of, Management, and its yearly plan is submitted to the Audit Committee for approval at the beginning of each year. The Internal Auditor has access to all the Companys documents, records, properties and personnel and reports to the Audit Committee quarterly regarding its findings. The Audit Committee also meets with the Internal Auditor at least once during the year without the presence of Management. The Audit Committee also ensures that the internal audit function is adequately resourced, and will review annually the adequacy of the internal audit function. The internal auditors are expected to carry out their function according to standards set by nationally or internationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. Investment Committee The Investment Committee is chaired by the independent and non-executive director, Mr Leong Horn Kee. The members of the Committee comprise Mr Foo Sen Chin, Mr Tan Hup Foi and Mr Ong Wei Hiam. The Investment Committee meets periodically to perform the following functions:a) b) c) to review and recommend investment policy guidelines and capital expenditure plans to the Board; to review investment risk management policies; to evaluate and recommend any proposed investments, divestments, geographical expansion, mergers and acquisitions, joint ventures for Boards approval; and to review and monitor performance, forecast and business plan of investments.
d)
The Investment Committee held 3 meetings since the date of the last annual report.
42 43
Name of Interested Person Transactions for the sale of goods and services with Vnet Capital Co., Ltd and its subsidiaries
FINANCIAL CONTENTS
46 // Directors Report 51 // Statement by Directors 52 // Independent Auditors Report 53 // Statement of Financial Position 54 // Consolidated Statement of Comprehensive Income 55 // Consolidated Statement of Changes In Equity 57 // Consolidated Statement of Cash Flows 58 // Notes to the Financial Statements 100 // Shareholdings Statistics 101 // Notice of Annual General Meeting
DIRECTORS REPORT
We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2011. Directors The directors in office at the date of this report are as follows:Tay Eng Hoe Narong Intanate Foo Sen Chin Leong Horn Kee Tan Hup Foi Koh Soo Keong Mao Xiangqian Ong Wei Hiam Directors interests According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants or share options of the Company and in related corporations (other than wholly-owned subsidiaries) are as follows: Holdings at beginning of the year Holdings at end of the year
Name of director and corporation in which interests are held ECS Holdings Limited - options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2020 Narong Intanate Mao Xiangqian Foo Sen Chin ECS Holdings Limited - options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2015 Tay Eng Hoe Leong Horn Kee Koh Soo Keong Tan Hup Foi Ong Wei Hiam
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or at the end of the financial year. Except as disclosed under the Share Options section of this report, neither at the end of, nor at any time during the financial year, was the Company a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate. There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2012. During the financial year, certain of its subsidiaries have, in the normal course of business entered into transactions with companies in which Mr Narong Intanate has an interest. These transactions include the purchase and sale of information technology products and services amounted to $394,548 (2010: $611,877) and $19,908,337 (2010: $22,365,842) respectively and are carried out on normal commercial terms.
DIRECTORS REPORT
However, the directors have not received nor will they be entitled to receive any benefits arising out of these transactions other than those which they may be entitled to as shareholders of those companies or as a member of the firm. Except as disclosed above and in note 34 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest. Share options The Company (a) Share option scheme The ECS Share Option Scheme II (Scheme II) was approved and adopted by its members at an Extraordinary General Meeting held on 13 December 2000. Scheme II provides an opportunity for employees and directors, including non-executive directors, of the Group who have contributed significantly to the growth and performance of the Group to participate in the equity of the Company. The above scheme is administered by the Compensation Committee (the Committee) which comprises the following directors:Koh Soo Keong (Chairman) Leong Horn Kee Tan Hup Foi Details of Scheme II were set out in the Directors Report for the year ended 31 December 2000. (b) Options granted On 15 October 2010, the Group granted 13,770,000 share options pursuant to the rules of the ECS Share Option Scheme II. The options have an exercise price of $0.550 per share; a vesting period of 1 year from date of grant; and can be exercised within 5 years from date of grant for non-executive directors and 10 years from date of grant for executive directors and employees. Issue of shares under option During the financial year, there is no issuance of shares under the share option scheme of the Company. Unissued shares under option
Number of option holders at 31 December 2011 Options outstanding at 31 December 2011
(c)
(d)
5 48
2,200,000 10,650,000
46 47
DIRECTORS REPORT
Share options (contd) The Company (contd) (d) Unissued shares under option (contd) The details of options granted and exercised are as follows:-
Name of participant Executive directors - Narong Intanate - Mao Xiangqian Non-executive directors - Tay Eng Hoe - Foo Sen Chin - Leong Horn Kee - Koh Soo Keong - Tan Hup Foi - Ong Wei Hiam Former directors - Wong Heng Chong - Lin Chien - Chay Yee Meng - Teo Ek Tor - Wang Fangmin - Hsieh Fu Hua - Lee Suet Fern Employees (including executive officers) - Foong Kam Tho - Other employees
11,006,000 900,000
(8,906,000) -
(600,000) -
1,500,000 900,000
(2,226,000) (3,340,000) -
(1,113,000) -
(6,679,000) (22,264,000)
7,950,000 12,850,000
[2] Aggregate options granted since commencement of the schemes to the end of the financial year under review. [4] Aggregate options lapsed since commencement of the schemes to the end of the financial year under review. [5] Aggregate options outstanding as at end of the financial year under review.
[3] Aggregate options exercised since commencement of the schemes to the end of the financial year under review.
Except as disclosed, since the commencement of the option schemes:(i) no option has been granted to the controlling shareholder of the Company or their associates; (ii) no participant under the schemes has been granted 5% or more of the total options available under the schemes; and (iii) no option has been granted to employees of subsidiaries under the schemes. The options granted by the Company do not entitle the holders of the options, by virtue of such holding, to any rights to participate in any share issue of any other company.
DIRECTORS REPORT
Share options (contd) ECS Indo Pte Ltd (a) Options granted On 16 October 2009, the subsidiary granted 450,000 share options to a minority shareholder and four senior employees of the subsidiary. Each option is, upon full payment of the exercise price, convertible into one new ordinary share of the company. The options are exercisable at any time within 3 years from the grant date and are settled by physical delivery of shares. Issue of shares under option During the financial year, there were no issuance of shares under the share option scheme of the company. Unissued shares under option
Number of option holders at 31 December 2011 Options outstanding at 31 December 2011
(b)
(c)
425,215
Except as disclosed above, there were:(i) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; (ii) no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; and (iii) no unissued shares of the Company or its subsidiaries under option at the end of the financial year. ECS Performance Share Scheme The ECS Performance Share Scheme (the Scheme) was approved at the Companys Extraordinary General Meeting held on 1 December 2006. The Scheme is administered by the Compensation Committee which comprises the Non-Executive Directors Messrs Koh Soo Keong, Leong Horn Kee and Tan Hup Foi. Group Executives who have attained the age of 21 years on or before the date of grant of the Award (as defined below), Group Executive Directors and Non-Executive Directors are eligible to participate in the Scheme (Participants). The Scheme is to reward Participants by award of existing Shares held as treasury shares in the Company (Awards), which are given free of charge to the Participants according to the extent to which their performance targets set under the Scheme are achieved at the end of a specified performance period. Since the commencement of the Scheme, no Awards have been granted. Audit committee The members of the Audit Committee during the year and at the date of this report are:Leong Horn Kee (Chairman, Independent director) Tan Hup Foi (Independent director) Koh Soo Keong (Independent director) The Audit Committee performs the functions specified by section 201B of the Companies Act, the SGX Listing Manual and the Code of Corporate Governance. The Audit Committee held four meetings since the last directors report. In performing its functions, the Audit Committee met with the Companys external and internal auditors to discuss the scope of their work and the results of their examination and evaluation of the Companys internal accounting control system.
48 49
DIRECTORS REPORT
Audit committee (contd) The Audit Committee also reviewed the following: Assistance provided by the Companys officers to the internal and external auditors; Quarterly financial information and annual financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption; and Interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange).
The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees. The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company. Auditors The auditors, KPMG LLP, have indicated their willingness to accept re-appointment. On behalf of the Board of Directors
9 March 2012
STATEMENT BY DIRECTORS
In our opinion: (a) the financial statements set out on pages 53 to 99 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2011 and of the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
(b)
The Board of Directors has, on the date of this statement, authorised these financial statements for issue. On behalf of the Board of Directors
9 March 2012
50 51
KPMG LLP Public Accountants and Certified Public Accountants Singapore 9 March 2012
4 5 6 7 18 8
Current assets Inventories Trade and other receivables Deferred expenses Cash and cash equivalents
9 10 18 13
Total assets Equity attributable to owners of the Company Share capital Reserves Non-controlling interests Total equity Non-current liabilities Financial liabilities Deferred income Deferred tax liabilities Current liabilities Financial liabilities Deferred income Trade and other payables Current tax payable Total liabilities Total equity and liabilities
14 15
17 18 8
101,340 3,938 2,913 108,191 141,341 3,154 431,243 7,926 583,664 691,855 1,019,697
101,506 570 2,367 104,443 128,954 872 405,402 7,164 542,392 646,835 944,522
17 18 19
52 53
23 24
25
26 26
Group 112,815 (809) (4,986) 52,998 (534) (534) (809) 48,012 (3,643) 52,998 52,998 (3,643) 10,961 3,775 (7,435) 139,412 259,528
At 1 January 2010 Total comprehensive income for the year Profit for the year Effects of translation of net assets of foreign subsidiaries Realisation of foreign currency reserve on dilution and partial disposal of a subsidiary Share of foreign currency translation differences of associates Total comprehensive income for the year
1,377 -
Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Transfer to general reserve Share-based payment transactions Final tax-exempt one-tier dividends paid at 3.0 cents per share for 2009 Proposed tax-exempt one-tier dividends of 3.6 cents per share for 2010 Effect of dilution and partial disposal of a subsidiary to an associate Total contributions by and distributions to owners At 31 December 2010
54
55
Group 112,815 (522) 3,814 39,230 (522) 43,044 4,336 39,230 39,230 4,336 13,153 5,152 (12,421) 177,895 296,594 1,093 189 21 210
At 1 January 2011 Total comprehensive income for the year Profit for the year Effects of translation of net assets of foreign subsidiaries Share of foreign currency translation differences of associates Total comprehensive income for the year
1,310 -
1,303
Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Transfer to general reserve Share-based payment transactions Final tax-exempt one-tier dividends paid at 3.6 cents per share for 2010 Proposed tax-exempt one-tier dividends of 2.2 cents per share for 2011 Total contributions by and distributions to owners At 31 December 2011
52,157
67,065
23 4 23 23 23 23 23 24 23 23
(6,917) (1,260) 2,190 175 17 14,927 (704) 54 60,639 (25,684) (14,577) 37,170 57,548 (12,860) 44,688
(5,982) 4,381 2,235 140 54 (4,569) (8,051) 8,621 (955) 15 62,954 (34,111) (90,447) 71,927 10,323 (11,325) (1,002)
29
(14,579) 898,308 (879,597) (200) (13,153) (9,221) 38,952 92,500 (55) 131,397
(7,979) 857,385 (779,277) (119) (10,961) (1,810) 57,239 43,147 51,117 (1,764) 92,500
13
(b)
(c)
(d)
58 59
60 61
62 63
64 65
66 67
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. In the ordinary course of business, there are many transactions and calculations for which the ultimate tax treatment is uncertain. Therefore, the Company recognises tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognised when the Company believes certain positions may be fully sustained upon review by tax authority, despite the Companys belief that its tax return positions are supportable. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors including interpretations of tax law and prior experience. The assessment relies on estimates and assumptions and may involve a series of multifaceted judgments about future events. New information may become available that causes the Company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact tax expense in the period that such a determination is made.
68 69
Group
Total $000
ANNUAL REPORT 2011
Cost At 1 January 2010 Additions Disposals/written off Dilution of a subsidiary to an associate Transfers/reclassifications Translation adjustment At 31 December 2010 Additions Disposals/written off Transfers/reclassifications Translation adjustment At 31 December 2011 99 (4) 95 512 18 625 2,421 463 (57) 2,827 676 (273) 497 (77) 3,650 1,704 360 (35) (796) 31 1,264 291 (35) 95 (42) 1,573 2,363 305 (315) (665) 426 19 2,133 589 (110) 336 (57) 2,891 13,932 974 (917) (2,128) 45 (113) 11,793 1,414 (1,122) 949 36 13,070 1,733 450 (107) (594) (28) 1,454 124 (78) 15 1,515 982 549 (471) 24 1,084 1,304 (1,877) (45) 466
23,234 3,101 (1,374) (4,183) (128) 20,650 4,910 (1,618) (152) 23,790
Accumulated depreciation At 1 January 2010 Depreciation charge for the year Disposals/written off Dilution of a subsidiary to an associate Translation adjustment At 31 December 2010 Depreciation charge for the year Disposals/written off Translation adjustment At 31 December 2011 6 5 11 16 1 28 1,757 298 (64) 1,991 341 (202) (94) 2,036 1,042 124 (31) (329) 18 824 142 (26) (25) 915 1,195 300 (309) (231) 29 984 290 (105) (39) 1,130
14,950 2,235 (1,253) (2,732) (133) 13,067 2,190 (1,344) (104) 13,809
Carrying amount At 1 January 2010 At 31 December 2010 At 31 December 2011 93 84 597 664 836 1,614
The net carrying amount of property, plant and equipment under finance leases as at 31 December 2011 was $362,000 (2010: $553,000).
Company Cost At 1 January 2010 Additions Disposal/write off At 31 December 2010 Additions Disposal/write off At 31 December 2011 Accumulated depreciation At 1 January 2010 Depreciation charge for the year Disposal/write off At 31 December 2010 Depreciation charge for the year Disposal/write off At 31 December 2011 Carrying amount At 1 January 2010 At 31 December 2010 At 31 December 2011 5 Intangible assets
11 4 15 13 (11) 17
22 3 25 31 (24) 32
25 (25) -
11 1 12 4 (11) 5
22 22 4 (22) 4
15 (15) -
40 87 20
3 12
3 28
185 155 51
Group
2010 $000
33,522
For the purpose of impairment testing, goodwill is allocated to the Groups cash-generating unit (CGU) of ECS Technology (China) Limited group of companies being a group of entities operating in the same geographical location with similar principal activities. The recoverable amount of each CGU is based on its value-in-use. Value-in-use is determined by discounting the future cash flows generated from the continuing use of the unit and is based on the following key assumptions: Cash flows were projected based on actual operating results and the five-year business plan. The anticipated annual revenue growth included in the cash flow projections ranges from (2.9%) to 18.6% (2010: 8.6% to 13.1%) per annum for the years 2012 to 2016 (2010: 2011 to 2015), giving an average annual growth in revenue of 12.4% (2010: 13.1%). A pre-tax discount rate of 11.2% (2010: 7.3%) per annum was used. The discount rate used reflects the risk-free rate and the premium for specific risks relating to the business unit. Terminal value was not considered.
The values assigned to the key assumptions represent managements assessment of future trends in the IT industry and are based on both external sources and internal sources and both past performance (historical data) and its expectations for market development. Group management believes that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount.
70 71
Note Unquoted equity shares, at cost Quasi-equity loans to subsidiaries, at cost Loans to subsidiaries
(a) (b)
(a)
The quasi-equity loans to subsidiaries are unsecured and interest-free. The settlement of these loans is neither planned nor likely to occur in the foreseeable future. As these loans are, in substance, part of the Companys net investments in the subsidiaries, the loans are stated at cost. The loans to subsidiaries are unsecured, repayable on 30 August 2013 (2010: 30 August 2013) and bear interest at 3.47% to 3.52% (2010: 3.49%) per annum.
(b)
Details of the significant subsidiaries are set out below. Groups effective equity interest 2011 2010 % % 100 100
Principal activities Provider of information technology products and services for IT infrastructure Distributor of information technology products Provider of information technology products and services for IT infrastructure Investment holding, provider of information technology products and services for IT infrastructure Investment holding
Singapore
89.12
89.12
Thailand
100
100
Hong Kong
100
100
EC Sure Holdings (Thailand) Co., Ltd ECS Infocom (Phils) Pte. Ltd. ECS Vietnam Company Limited 1
Thailand
99.9
99.9
Investment holding Trading of information and communications technology products and services
Singapore Vietnam
100 100
100 -
Name of company
Principal activities
Subsidiaries of ECS Computers (Asia) Pte Ltd Pacific City (Asia Pacific) Pte Ltd Retail of information technology products, IT equipment and accessories Provider of information technology products and services for IT infrastructure Singapore 100 100
Singapore
100
100
Subsidiary of ECS Indo Pte Ltd PT ECS Indo Jaya (a) Distributor of information technology products Indonesia 89.12 89.12
Subsidiaries of ECS Technology (China) Limited ECS (Shanghai) Management Co., Ltd Provider of information technology products (formerly ECS International Trading and services for IT infrastructure (Shanghai) Co., Ltd) (a) ECS China Technology (Shanghai) Co., Ltd (a) Provider of information technology products and services for IT infrastructure Peoples Republic of China Peoples Republic of China Peoples Republic of China Hong Kong 100 100
100
100
100
Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure
100
100
Hong Kong
100
100
On 28 December 2011, the Company incorporated a wholly owned subsidiary, ECS Vietnam Company Limited. The Company has a commitment to inject a total of $129,000 within 12 months after the issuance of investment certificate. On 14 November 2011, ECS Technology (China) Limited, a wholly owned subsidiary of the Company, has incorporated a wholly owned subsidiary, ECS Beijing Chuang Yue Technology Co., Ltd. On 17 February 2012, the subsidiary has injected a capital of $1,280,000. Audited by other member firms of KPMG International for consolidation purposes.
(a)
KPMG LLP Singapore is the auditor of all the Singapore incorporated subsidiaries.
72 73
The loan to an associate is denominated in United States dollars, unsecured and interest-free. Settlement is neither planned nor likely to occur in the foreseeable future. As this loan is, in substance, part of the Companys net investment in the associate, it is stated at cost. Details of the associates are as follows: Country of incorporation Philippines Malaysia Effective equity held by the Group 2011 2010 49.99% 41% 49.99% 41%
ECSB is listed on the Main Market of Bursa Malaysia Securities. Based on its closing price at the reporting date, the fair value of the Groups investment in ECSB is $25,227,000 (2010: 27,495,000). MSI-ECS Phils., Inc. is not listed. Included in the investment in ECSB is goodwill on acquisition and customer relationships amounting to $6,388,000 and $4,157,000 respectively. These amounts have been determined based on a fair valuation of ECSBs identifiable net assets in accordance with the requirement of FRS 28. The intangible asset relating to customer relationships is amortised over an estimated useful life of 5 years amounting to $333,000 (2010: $249,000). The summarised financial information below relating to the associates are not adjusted for the percentage of ownership held by the Group. 2011 $000 Revenue Profit after taxation Total assets Total liabilities Impairment testing for investment in an associate As the market value of the Groups shareholding in ECSB at reporting date is below the carrying value of the Groups investment in ECSB, management performed an impairment assessment to determine the recoverable value of its investment in ECSB. 774,474 15,053 200,423 111,127 2010 $000 711,266 15,153 176,491 98,954
The values assigned to the key assumptions represent managements assessment of future trends in the IT industry and are based on both external sources and internal sources and both past performance (historical data) and its expectations for market development. Group management believes that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount. 8 Deferred tax Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The amounts determined after appropriate offsetting are included in the balance sheet as follows: 2011 $000 Group Provisions Accelerated tax depreciation Deferred tax assets/(liabilities) Set off of tax Net deferred tax assets/(liabilities) Company Accelerated tax depreciation Deferred tax assets/(liabilities) Set off of tax Net deferred tax assets/(liabilities) Assets 2010 $000 Liabilities 2011 2010 $000 $000
74 75
Movements in deferred tax assets and liabilities during the year are as follows:-
At 1/1/2010 $000
Recognised Dilution of in profit a subsidiary or loss to an (note 25) associate $000 $000 Translation adjustment $000 At 31/12/2010 $000 Change in tax rates $000 Translation adjustment $000
At 31/12/2011 $000
Group Deferred tax assets Provisions 160 994 (615) (226) 6,932 (490) 1,979
6,619
(123)
8,298
(1,880)
(545)
(1)
(2,913)
(27)
(27)
2010 $000
In 2011, changes in trading inventories recognised as cost of sales amounted to $3,557,148,000 (2010: $3,034,600,000). 10 Trade and other receivables 2011 $000 495,040 14,852 18,769 528,661 (19,440) 509,221 2,196 511,417 17,487 528,904 23,704 552,608 Group 2010 $000 Company 2011 2010 $000 $000 29,802 29,802 107 29,909 85 29,994 36,648 36,648 2 36,650 426 37,076
Note Trade receivables Bills receivable Amounts due from affiliated companies Allowance for doubtful receivables Amount due from related corporations Deposits and other receivables Loans and receivables Prepayments 11 12
515,154 3,632 8,182 526,968 (14,140) 512,828 8,315 521,143 14,790 535,933 18,704 554,637
An affiliated company is a company, other than a related corporation, which directly or indirectly through one or more intermediaries, is under common significant influence. The Group and the Companys exposure to credit, currency and interest rate risks, and impairment losses related to trade and other receivables are disclosed in note 21.
76 77
Note Amounts due from subsidiaries Dividend receivable Non-trade receivables Loans receivable Amounts due from associate Non-trade receivables Loans receivable 10 Amounts due to subsidiaries Non-trade payables Loans payable 19
29 5,070 5,099
The loans due from subsidiaries and associate are unsecured, repayable on demand and bear interest at rates ranging from 2.04% to 6.5% (2010: 1.93% to 10.00%) per annum. The non-trade balances are unsecured, interest-free and repayable on demand. The loans payable are unsecured, bear interest at 1.57% to 3.36% (2010: 1.64% to 4.44%) per annum and are repayable on demand. There is no allowance made for doubtful receivables arising from the outstanding balances. 12 Deposits, prepayments and other receivables 2011 $000 2,258 4,142 6,860 2,964 1,263 17,487 Group 2010 $000 3,493 1,459 4,960 3,899 979 14,790 Company 2011 2010 $000 $000 105 2 107 2 2
Note Deposits Recoverables Tax recoverables Other receivables Call option Deposits and other receivables (a)
(a) 10
On 4 January 2006, a subsidiary entered into a call option agreement with a shareholder of the associate for US$1 cash consideration which will entitle the subsidiary to acquire additional 10% equity interest in the associate. The call option is exercisable beginning 4 July 2008 and ending on the date falling three years thereafter, unless otherwise further extended by the shareholder in writing, at an option price equivalent to US$450,000. On 1 May 2011, the shareholders agreed to defer the commencement date of the call option period to sixty months from 4 January 2006 and ending on the date falling three years thereafter, unless otherwise further extended by the shareholder in writing. The fair value of the call option as at the reporting date has been recognised as an option asset with its corresponding change in fair value during the year recognised in profit or loss.
The weighted average effective interest rates per annum relating to cash and cash equivalents, excluding bank overdrafts, at the reporting date for the Group range from 0.05% to 1.49% (2010: 0.10% to 1.35%) per annum. Interest rates reprice at weekly to monthly intervals. The Group and the Companys exposure to currency risks are disclosed in note 21. 14 Share capital Group and Company No. of shares 2011 2010 000 000 Issued and fully paid, with no par value: At 1 January and 31 December
365,360
365,360
All shares rank equally with regards to the Companys residual assets. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company. 15 Reserves 2011 $000 (8,607) 8,038 6,462 207,831 213,724 Group 2010 $000 Company 2011 2010 $000 $000 8,038 9,939 17,977 13,153 11,321 24,474
Note Currency translation reserve Dividend reserve General reserve Accumulated profits (a) (b) (c)
(a)
Currency translation reserve The currency translation reserve of the Group comprises foreign exchange differences arising from the translation of the financial statements of foreign operations. Dividend reserve The dividend reserve of the Group represents dividends proposed which are subject to approval of the shareholders at a general meeting. General reserve According to the current Peoples Republic of China (PRC) Company Law, the PRC subsidiaries of the Group are required to transfer 10% of their profit after taxation to statutory surplus reserve until the surplus reserve balance reaches 50% of the registered capital. For the purpose of calculating the amount to be transferred to reserve, the profit after taxation is the amount determined under PRC accounting standards. The amount of transfer to this reserve has to be made before profit distribution to shareholders. Legal reserve is set up under the provision of the Civil and Commercial Code of Thailand, which requires that a company shall allocate not less than 5% of its net profit appropriated for payment of dividend to a reserve account (legal reserve) upon each dividend distribution, until the balance reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.
78 79
(b)
(c)
(b)
(c)
On 15 October 2010, the Group granted 13,770,000 share options pursuant to the rules of the ECS Share Option Scheme II. The options have an exercise price of $0.550 per share; a vesting period of 1 year from date of grant; and can be exercised within 5 years from date of grant for non-executive directors and 10 years from date of grant for executive directors and employees. At 31 December 2011, details of the options granted were as follows:Options outstanding at 1 January 2011 11,570,000 2,200,000 Options outstanding at 31 December 2011 10,650,000 2,200,000
Options granted -
Options exercised -
The fair value of the employee share options is measured using quoted share price on measurement date and exercise price of the instrument. ECS Indo Pte Ltd On 16 October 2009, the subsidiary granted 120,000 share options to four senior employees of a subsidiary. Each option is, upon full payment of the exercise price, convertible into one new ordinary share of the company. The options are exercisable at any time within 3 years from the grant date and are settled by physical delivery of shares.
Options granted -
Options exercised -
16/10/2009 US$1.8156
The fair value of such equity-settled share based payments was determined based on adjusted market comparables. 17 Financial liabilities Note Non-current liabilities Unsecured bank loans Finance lease liabilities Current liabilities Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities 2011 $000
Group
2010 $000
(a)
A negative pledge has been given in respect of all of the assets of certain subsidiaries with a total net book value at 31 December 2011 of $282,248,000 (2010: $256,221,000).
Included in unsecured bank loans is a syndicated loan amounting to $101,238,000 (2010: $104,001,000). The syndicated loan bears interest at 2.88% to 3.02% (2010: 1.70% to 2.99%) per annum. The long term portion of the syndicated loan amounted to $101,238,000 (2010: $101,238,000) and is due on 30 August 2013 (2010: 30 August 2013). The loans are guaranteed by certain subsidiaries. Finance lease liabilities At 31 December, the Group has obligations under finance leases that are payable as follows: Principal $000 2011 Repayable within 1 year Repayable after 1 year but within 5 years 2010 Repayable within 1 year Repayable after 1 year but within 5 years Interest $000 Payments $000
34 25 59 44 67 111
80 81
Currency
Group Unsecured bank loans and trade financing - floating rate - floating rate - floating rate - floating rate - floating rate Finance lease liabilities Derivative liabilities
SGD 2% - 2.2% USD 1.60% - 6.05% RMB 6.41% - 8.87% THB 3.8% IDR 10.45% IDR 7.00% -
2013 -
18
Deferred income and expenses Deferred income and expenses relate to fees billed/paid in advance on service maintenance contracts and consist of: 2011 $000 Deferred income Current portion Non-current portion Group 2010 $000
2010 $000
20 11
The Group and the Companys exposure to liquidity and currency risks related to trade and other payables is disclosed in note 21. 20 Accruals and other payables 2011 $000 Accrued operating expenses Deposits received Other payables Interest payables 18,116 13,895 6,864 1,537 40,412
Group
Company 2011 2010 $000 $000 2,485 54 781 3,320 2,440 122 838 3,400
21
Financial instruments Credit risk The maximum amount of financial assets, representing the maximum exposure to credit risk, at the reporting date was: 2011 $000 Non-current loans to subsidiaries Loans and receivables Cash and cash equivalents 528,904 131,397 660,301 Group 2010 $000 Company 2011 2010 $000 $000 84,500 29,909 19,628 134,037 101,238 36,650 8,833 146,721
The maximum exposure to credit risk for loans and receivables at the reporting date by geographic region was: 2011 $000 China Thailand Singapore Indonesia Philippines 308,429 97,970 56,733 63,576 2,196 528,904 Group 2010 $000 Company 2011 2010 $000 $000 7,414 20,299 2,196 29,909 36,650 36,650
82 83
Impairment losses The aging of loans and receivables at the reporting date was: 2011 $000 Gross Not past due Past due 0 30 days Past due 31 120 days Past due 121 365 days More than one year Impairment losses Not past due Past due 0 30 days Past due 31 120 days Past due 121 365 days More than one year Group 2010 $000 Company 2011 2010 $000 $000
370,683 94,327 45,064 23,798 14,472 548,344 (1,592) (5,508) (12,340) (19,440)
429,320 72,959 27,195 11,884 8,715 550,073 (1,254) (4,973) (7,913) (14,140)
29,909 29,909 -
36,650 36,650 -
The movements in the allowance for impairment in respect of loans and receivables during the year were as follows: 2011 $000 14,140 (575) 5,585 290 19,440 Group 2010 $000 11,812 (243) 3,589 (628) (390) 14,140 Company 2011 2010 $000 $000 -
Note At 1 January Utilised during the year Allowances made during the year Dilution of subsidiary to an associate Translation differences on consolidation At 31 December
23(b)
The loans and receivables that were not past due or impaired at the reporting date is assessed to be at acceptable risk.
2010 Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities - Inflow - Outflow Trade and other payables
Company 2011 Unsecured bank loans Derivative liabilities - Inflow - Outflow Trade and other payables
(104,235) (104,235)
2010 Unsecured bank loans Derivative liabilities - Outflow Trade and other payables
(107,283) (107,283)
It is not expected that the cash flow included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
84 85
81,625 10,243 (114,722) (77,111) 112,904 585 13,524 2011 PHP $000
Company Loan receivables - non-current - current Dividend receivables Cash and cash equivalents Unsecured bank loans/trade financing Forward exchange contracts and hybrid swaps
416 416
6,801 6,801
Sensitivity analysis A 1% strengthening of the Singapore dollar against the above currencies at 31 December would have increased/(decreased) profit or loss before tax by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for 2010. Group Profit or loss 2011 2010 $000 $000 USD IDR PHP (446) (7) 4 (135) (10) (68) Company Profit or loss 2011 2010 $000 $000 784 4 (1,117) (68)
A 1% weakening of the Singapore dollar against the above currencies at 31 December would have had the following effect as shown below, on the basis that all other variables remain constant.
(235)
(435)
(242,446) (242,446)
Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss. Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased/ (decreased) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2010.
86 87
78 (218) (140)
86 1,338 1,424
Group 31 December 2011 Option asset Derivative liabilities 31 December 2010 Option asset Derivative liabilities
(882)
1,263 -
1,263 (882)
(5,628)
979 -
979 (5,628)
(1,313)
(1,313)
(5,591)
(5,591)
Assets measured at fair value based on Level 3 Fair value measurement at end of the reporting period: Group Option Asset $000 2011 Balance at beginning of the year Total gains in profit or loss Transfer out of Level 3 Balance at end of the year 2010 Balance at beginning of the year Total gains in profit or loss Transfer out of Level 3 Balance at end of the year Gains included in profit or loss for the year is presented in other income as follows: 2011 $000 Total gains included in profit or loss for the year Total gains for the period included in profit or loss for assets held at the end of the reporting period 22 Revenue 2011 $000 Sale of IT products IT services 3,578,927 28,238 3,607,165 Group 2010 $000 284 284 2010 $000 306 306
Transactions within the Group have been excluded in arriving at revenue for the Group.
88 89
(b)
Other expenses/(income) 2011 $000 Group 2010 $000 (1,403) (326) (629) 340 3,589 (4,569) (8,051) 264 24 209 54 15 722 155 4,381 5,698 140
Exchange gains, net Interest income - banks - associate Allowances made for - obsolete inventories - doubtful trade receivables Gain on dilution and partial disposal of a subsidiary to an associate Fair value adjustment of remaining interest in an associate Directors fees Inventories written off Bad debts written (back)/off, net Loss on disposal of property, plant and equipment Equity-settled share-based payment Property, plant and equipment written-off Audit fees paid/payable to: - auditors of the Group Non-audit fees paid/payable to auditors of the Group Net fair value (gain)/loss on financial instruments Operating lease expenses Other asset written off 24 Finance costs
(2,225) (356) (348) 2,735 5,585 344 48 (83) 17 54 175 393 105 (1,260) 6,936 -
2011 $000 Recognised in profit for the year Interest paid and payable on - bank overdrafts - finance leases - short-term loans - trade financing
Group
2010 $000
13,876 (504) 13,372 (317) (160) (477) 12,895 Group 2010 $000
Reconciliation of effective tax rate Profit before tax Income tax at 17% Non-deductible expenses Income not subject to tax Effect of different tax rates in foreign jurisdictions Changes in tax rates Over provided in prior years Utilisation of previously unrecognised tax losses Withholding taxes on profits from PRC subsidiaries Share of profit of associates, net of tax Others Income tax expense for the year 26 Earnings per share 2011 Basic earnings per share is based on:Net profit for the year ($000) Number of shares outstanding at the beginning of the year (000) Weighted average number of shares issued during the year (000) Weighted average number of shares in issue during the year (000) Group 2010 52,157 8,867 1,264 (265) 3,363 490 (78) 546 (1,176) (273) 12,738 67,065 11,401 1,563 (2,517) 3,346 (160) (504) (142) 677 (1,017) 248 12,895
90 91
IT services Distribution
Information regarding the results of each reportable segment is included below. Performance is measured based on segment profit before income tax, as included in the internal management reports that are reviewed by the Groups CEO. Segment profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries.
Reconciliations of reportable segments profit or loss, assets and liabilities and other material items 2011 $000 Profit or loss Total profit for reportable segments Unallocated amounts: - Finance costs - Gain on dilution and partial disposal of a subsidiary to an associate - Fair value adjustment of remaining interest in an associate Share of profit of associate Consolidated profit before tax Assets Total assets for reportable segments Investments in associate Other unallocated amounts Consolidated total assets Liabilities Total liabilities for reportable segments Other unallocated amounts Consolidated total liabilities 28 Geographical segments The Group operates principally in North Asia and South East Asia including Singapore. In presenting information on the basis of geographic segments, segment revenue is based on the geographic location of operations. Segment assets are based on the geographic location of the assets. 2011 $000 North Asia South East Asia (excluding Singapore) Singapore 2,328,449 913,631 365,085 3,607,165 Revenue 2010 $000 Non-current assets 2011 2010 $000 $000 37,499 4,620 4,704 46,823 35,904 4,085 1,116 41,105 2010 $000
92 93
1,451 34,881 26 611 68,138 10,226 (52,015) (21,841) (1,375) (50) (2,658) 37,394
1,451 34,881 5,543 26 611 68,138 10,226 (52,015) (21,841) (1,375) (1,436) (2,658) 41,551 (16,620) 24,931 (534) 4,569 6,388 (30,851) 4,503 (10,226) (5,723)
The Group re-measured its remaining interests in ECSB at fair value upon losing control on 15 April 2010. This resulted in an increase of the Groups other income and profit before tax by $8,051,000 in 2010. Correspondingly, earning per share for the previous year increased by 2.2 cents. On 26 May 2010 and 27 May 2010, the Group acquired another 1,222,500 shares in ECSB for a cash consideration of $647,000, thereby increasing its interest in the associate by 1% to 41% as at 31 December 2010. 30 Determination of fair values A number of the Groups accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods or as disclosed in the notes specific to that asset or liability. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (i) Inventories The fair value of inventories is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.
94 95
The Group leases office premises and warehouse facilities under operating leases. The leases typically run for an initial period of three years, with an option to renew the lease after that date. 33 Contingent liabilities (unsecured) Guarantees issued At 31 December, there were contingent liabilities in respect of the following:(a) Guarantees given to suppliers by the Company in respect of credit facilities extended to certain subsidiaries and associates amounted to $382,611,000 (2010: $299,038,000), of which the amount utilised was $196,594,000 (2010: $130,217,000). The guarantees are renewed on a yearly basis; and Guarantees given to financial institutions by the Company in respect of credit facilities extended to certain subsidiaries and associates amounted to $276,568,000 (2010: $225,847,000), of which the amount utilised was $112,144,000 (2010: $84,297,000). The guarantees are renewed on a yearly basis.
(b)
The Company has accounted for these corporate guarantees as insurance contracts. There are no terms and conditions attached to the guarantee contracts that would have a material effect on the amount, timing and uncertainty of the Groups future cash flows. The Company has undertaken to provide continuing financial support to certain subsidiaries to enable them to continue to operate as going concerns and to meet their obligations as and when they fall due. 34 Related parties Transactions with directors and other key management personnel Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group. The directors and directors of subsidiaries and members of the management team are considered as key management of the Group.
96 97
During the year, certain of its subsidiaries have, in the normal course of business entered into the following transactions with companies in which certain directors have interests: 2011 $000 Purchase of information technology products and services Sales of information technology products and services 395 19,908 Group 2010 $000
612 22,366
The directors and other key management personnel participate in the Companys share option plans, the terms and conditions of which are stated in note 16. Other related party transactions For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.
42,743
48,998
98 99
SHAREHOLDINGS STATISTICS
AS AT 14 MARCH 2012
Class of shares Voting rights Ordinary shares On a show of hands: On poll: One vote for each member One vote for each ordinary share
Analysis of Shareholdings Range of Shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above No. of Shareholders 6 429 286 5 726 % 0.83 59.09 39.39 0.69 100.00 No. of Shares 2,196 2,350,089 19,364,796 343,693,093 365,410,174 % 0.00 0.64 5.30 94.06 100.00
Based on information available to the Company as at 14 March 2012, 10.35% of the issued ordinary shares of the Company are held by the public and therefore Rule 723 of the Listing Manual is complied with. Top 20 Shareholders No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Name of Shareholder Raffles Nominees (Pte) Ltd Citibank Nominees Singapore Pte Ltd DBS Nominees Pte Ltd Hong Leong Finance Nominees Pte Ltd UOB Kay Hian Pte Ltd United Overseas Bank Nominees Pte Ltd Mayban Nominees (S) Pte Ltd Koh Seng Chuah See Lop Fu James @ Shi Lap Fu James Lim Meng Seng CIMB Securities (S) Pte Ltd OCBC Securities Private Ltd Lim & Tan Securities Pte Ltd Vision Capital Private Limited Foo Seck Huat HSBC (Singapore) Nominees Pte Ltd Citibank Consumer Nominees Pte Ltd Habacus Trading Co Pte Ltd Lim Koh Sang Eng Hwee Siang No. of Shares 327,651,093 11,118,000 2,172,000 1,545,000 1,207,000 917,000 750,000 668,000 619,000 500,000 489,000 448,000 428,000 400,000 388,000 350,000 319,000 308,000 260,000 250,000 350,787,093 % 89.67 3.04 0.59 0.42 0.33 0.25 0.21 0.18 0.17 0.14 0.13 0.12 0.12 0.11 0.11 0.10 0.09 0.08 0.07 0.07 96.00
Substantial Shareholders Name of substantial shareholder VST Holdings Limited L&L Limited
Notes: (1) Deemed interest through Raffles Nominees Pte Ltd
Number of shares in which substantial shareholder is deemed to have an interest 327,580,093 (1) 327,580,093
(1)
Total
327,580,093 327,580,093
100 101
(iii)
(2)
(C)
(4)
(unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier. [See Explanatory Note (ii)] [Resolution 7(a)]
(b)
That for the purposes of Chapter 9 of the Listing Manual: (i) the Shareholders General Mandate for the Company, its subsidiaries and associated companies or any of them to enter into any of the transactions falling within the types or categories of interested person transactions as described in section 3.1 (Interested Person Transactions) of Appendix A attached to this annual report with VST Holdings Limited, its subsidiaries and/or its associates (as set out in section 3.2) be and is hereby approved, provided that such transactions are entered into on an arms length basis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of Appendix A; the aforesaid Shareholders General Mandate shall, unless earlier revoked or varied by the Company in general meeting, continue in force until the next annual general meeting of the Company; and
(ii)
the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including, without limitation, executing all such documents and approving any amendment, alteration or modification to any document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect to the aforesaid Shareholders General Mandate and/or this Resolution 7(b). [See Explanatory Note (iii)] [Resolution 7(b)] (c) That for the purposes of Chapter 9 of the Listing Manual: (i) the Shareholders General Mandate for the Company, its subsidiaries and associated companies or any of them to enter into any of the transactions falling within the types or categories of interested person transactions as described in section 3.1 (Interested Person Transactions) of Appendix A with the associates of Mr. Narong Intanate (as set out in section 3.2), a Director of the Company, be and is hereby approved, provided that such transactions are entered into on an arms length basis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of Appendix A; the aforesaid Shareholders General Mandate shall, unless earlier revoked or varied by the Company in general meeting, continue in force until the next annual general meeting of the Company; and
(iii)
(ii)
(iii)
the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including, without limitation, executing all such documents and approving any amendment, alteration or modification to any document) as they may consider desirable, expedient or necessary or in the interests of the Company to give effect to the aforesaid Shareholders General Mandate and/or this Resolution 7(c). [See Explanatory Note (iii)] [Resolution 7(c)]
102 103
(ii)
unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earlier of: (a) (b) (c) the date on which the next annual general meeting of the Company is held or required by law to be held; the date on which the share buybacks are carried out to the full extent mandated; or the date on which the authority contained in the Share Buyback Mandate is varied or revoked (the Relevant Period);
(iii)
in this Resolution: Prescribed Limit means 10% of the issued ordinary share capital of the Company as at the date of passing of this Resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Act, at any time during the Relevant Period, in which event the issued ordinary share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered (excluding any treasury shares that may be held by the Company from time to time); and Maximum Price in relation to a share to be purchased, means an amount (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) not exceeding: (i) (ii) in the case of a Market Purchase: 105% of the Average Closing Price; in the case of an Off-Market Purchase: 120% of the Highest Last Dealt Price,
where:
104 105
(ii)
(iii)
(iv)
Proxies: A member entitled to attend and vote at the annual general meeting may appoint not more than two proxies to attend and vote on his behalf and where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the office of the Companys Share Registrar, M & C Services Private Limited, 138 Robinson Road #17-00, The Corporate Office, Singapore 068906, not less than forty-eight hours before the time set for the holding of the annual general meeting. NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATE NOTICE IS ALSO HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on 8 May 2012, for the purpose of determining the members entitlements to the dividend to be proposed at the Annual General Meeting of the Company to be held on 25 April 2012. Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. on 7 May 2012 by the Companys Share Registrar, M & C Services Private Limited, will be registered to determine members entitlements to such dividend. Members whose securities accounts with The Central Depository (Pte) Ltd are credited with shares in the Company as at 5.00 p.m. on 7 May 2012 will be entitled to such proposed dividend. The proposed dividend, if approved at the Annual General Meeting, will be paid on 18 May 2012.
PROXY FORM
ANNUAL GENERAL MEETING
ECS HOLDINGS LIMITED (Incorporated in the Republic of Singapore) Company Registration No. 199804760R I/We of
Important: 1. For investors who have used their CPF monies to buy the Companys shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. 3. This Proxy Form is not valid for use by CPF investors and shall be ineffective for all intents and purposes if used or purported to be used by them. CPF Investors who wish to attend the Annual General Meeting as OBSERVERS have to submit their requests through their respective Agent banks so that their Agent banks may register with the Company Secretary of ECS Holdings Limited not less than 48 hours before the time appointed for holding the meeting.
being a member/members of ECS HOLDINGS LIMITED hereby appoint Name Address NRIC/Passport Number and/or (delete as appropriate) Proportion of Shareholdings (%)
as my/our proxy/proxies to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of ECS HOLDINGS LIMITED to be held at 19 Kallang Avenue #07-153 Singapore 339410 on 25 April 2012 at 2.30 p.m. and at any adjournment thereof. (Please indicate with an X in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/ they will on any other matter arising at the Annual General Meeting.)
No 1. 2. 3. Ordinary Resolutions Ordinary Business: Adoption of Reports and Accounts Declaration of a onetier tax exempt first and final dividend of 2.2 cents per ordinary share for the year ended 31 December 2011 Re-election of Directors : (a) Mr Leong Horn Kee (b) Mr Tan Hup Foi (c) Mr Foo Sen Chin 4. 5. Re-appointment of Auditors Approval of Directors Fees of S$343,500/- for the year ended 31 December 2011 Special Business: 6. 7. Approval of payment of consultancy fees to Mr Tay Eng Hoe, Non-executive Chairman of the Company (a) Authority for Directors to issue shares pursuant to Section 161 of the Companies Act (Chapter 50) of Singapore and the Listing Manual of the Singapore Exchange Securities Trading Limited (b) To approve the proposed renewal of the Shareholders General Mandate for Interested Person Transactions with VST Holdings Limited, its subsidiaries and/or associates (c) To approve the proposed renewal of the Shareholders General Mandate for Interested Person Transactions with the associates of Mr Narong Intanate, a Director of the Company (d) To approve the proposed renewal of the Share Buyback Mandate 8. Any other ordinary business For Against
Dated this
day of
2012.
Total Number of Shares Held:
Notes:1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act (Chapter 50) of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company. Where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy, failing which, the appointment shall be deemed to be in the alternative. The instrument appointing a proxy must be deposited at the office of the Share Registrar of the Company, M&C Services Private Limited at 138 Robinson Road #17-00, The Corporate Office, Singapore 068906, not less than forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting. The instrument appointing a proxy must be signed by the appointor or his attorney. Where the instrument appointing a proxy is given by a corporation, it must be given either under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid. A corporation which is a member may by a resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act (Chapter 50) of Singapore.
6.
7.
General: The Company shall be entitled to reject an instrument of proxy if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument of proxy. In addition, in the case of shares entered in the Depository Register, the Company may reject an instrument of proxy lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.
LAP IT UP
ECS HOLDINGS LIMITED
(Incorporated in The Republic of Singapore) Co. Reg. No.: 199804760R
8 Temasek Boulevard #34-02 Suntec Tower Three Singapore 038988 Phone: +65 6659 6888 Fax: +65 6884 7549 Website: www.ecs.com.sg