Ecs Holdings Annual Report 2008

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

Mission: To be the preferred supplier of choice for ICT products and value-added services by building strong customer relationships. To sustain our entrepreneurial growth by expanding our business regionally. To bring the best-of-breed ICT products and services to enhance the competitiveness of our customers’ businesses.

Contents Corporate Profile p.01 Chairman’s Message p.04 CEO’s Message p.10 Corporate Information p.14 Financial Highlights p.15 Board of Directors p.20 Senior Management p.23 Milestones p.26 Group Structure p.28 Financial Contents p.29

ECS Holdings Limited (“ECS” or “the Group”) is a leading Information and Communications Technology (“ICT”) products and services provider that was established in 1985 and listed on the SGX Mainboard in 2001.

ECS is a well-recognised provider of ICT products and services with three main businesses, namely Enterprise Systems, IT Services and Distribution. With a network of more than 18,000 active channel partners across China, Thailand, Malaysia, Singapore, Indonesia and the Philippines, ECS is well-positioned to be a regional partner of choice suitable for any global-leading MNC ICT brand vendor tapping Asia Pacific’s ICT spending growth. Leading global brand names like Hewlett-Packard (“HP”), Apple, Microsoft, Sun Microsystems, IBM, Oracle and EMC leverage on ECS’ extensive channel partner network to distribute their products across the region. The Group’s Enterprise Systems business aims to give MNCs, local government and domestic companies a competitive edge over their peers by designing, installing and implementing IT infrastructure. ECS’ IT Services business provides a comprehensive range of professional, technical support and training services.

In 2007, the Group’s strategies acquired an additional dimension when Hong Kong based and HKSE-listed VST Holdings, a leading distributor of IT components in China bought a 52.5% controlling stake in ECS from certain ECS substantial shareholders. The resultant union between ECS’ downstream regional distribution of end-user ICT products and VST’s strong upstream component distribution business and market leadership in China, created a combined entity that intends to be a leading full-range Asian ICT distributor. The transaction makes VST ECS’ single largest shareholder. The Group has a consistent track record of profitability and a management that is focused on operational excellence to achieve sustainable profit growth and to enhance shareholder returns.

ECS’ Distribution business leverages on a wellestablished and highly efficient logistical and IT infrastructure to distribute fast-moving products in the most efficient manner.

Corporate Profile Annual Report 2008

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Strengthening our Assets

We believe our relentless effort in pursuing margin enhancement initiatives and operational efficiency has strengthened our foundation. Notwithstanding the current economic challenges, we are committed towards continuing to strengthen these advantages to achieve even greater success moving forward.

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02 ECS Holdings Limited

Annual Report 2008

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

Chairman’s Message p.

04 ECS Holdings Limited

DEAR STAKEHOLDERS I am pleased to present to you our FY2008 annual report which chronicles another stellar performance, underscoring the efficacy of ECS’ margins accretive growth strategies and more significantly, our agility to adjust to changing economic circumstances. Having resumed our listed status on the Singapore Exchange in August 2008 since the completion of the VST transaction, I am happy to report that the transition in ECS’ controlling shareholding did not impact ECS’ exemplary track record of operations and performance. Our relationships with our vendors, customers and bankers remain strong. While our overriding business objectives this year continued to be driven by our own ongoing margin enhancement initiatives started more than three years ago, FY2008 was another exciting year that strengthened the Group’s business foundation. We believe that our widened product range, enlarged distribution network and enhanced operational efficiency will place us in good stead to compete in an increasingly challenging business environment that the world is poised for over the next few quarters. These efforts had continued to gain momentum even before the current financial crisis deepened during the second half of calendar year 2008, as we sharpened our focus on improving internal efficiencies including generating positive operating cash flow through better management of working capital and more effective management of financial resources.

For the period under review, operating profit increased 22.9% to $52.2 million from $42.5 million even as revenue rose slightly by 5.8% to $2.9 billion from $2.8 billion. ECS’ revenue performance in FY2008 would have been better by about 11.6% had it not been for a one-time effect of a currency translation. In line with our resolve to strengthen our long–term prospects, we conscientiously focused on controlling costs. Consequently profit margins continued their upward trend, operating cash flows and cash position also strengthened considerably compared to a year ago. Having intensified our focus on cash management in view of the declining financial conditions worldwide, as at 31 December 2008, ECS generated a positive operating cash flow of $16.4 million, up from $7.2 million at 31 December 2007. Due to the improved operating cash flow, net gearing improved to 0.60 times from 0.68 times a year ago. Earnings per share (“EPS”), on a fully diluted basis, correspondingly rose to 8.0 cents versus 6.4 cents in FY2007 while net asset value (“NAV”) per share increased to 65.09 cents as at 31 December 2008 versus 58.20 cents a year ago. I am happy to report that comparing by business division, our on-going initiatives to enhance the Group’s sales mix in line with market fundamentals have continued to pay off. Revenue from higher-margin Enterprise Systems, comprising servers, networking products and enterprise software, grew 17.5% while net profit rose 31.5%.

Notwithstanding the impact of the ongoing financial crisis in the countries in which we operate, for the financial year ended 31 December 2008 (“FY2008”) the Group continued to break new records across different parameters.

On a geographical market basis, North Asia led the growth in profitability with a 47.6% growth in profit before interest and taxation (“PBIT”) buoyed by sales of higher-margin enterprise software, networking products and servers.

Accordingly in FY2008, net profit attributable to equity holders rose 25.8% to $29.4 million.

While these strategies were undertaken to maximise our leverage on opportunities that we believe will strengthen our long-term growth prospects, this process is by no means complete.

Concurrently, FY2008 net profit growth continued to outstrip FY2008 revenue growth as the Group consciously tried to enhance operating performance with revenue growth an important but secondary priority.

Most significantly, FY2008 represents our on-going smooth and successful integration with VST.

Chairman’s Message Annual Report 2008

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OUTLOOK I am very pleased that ECS has continued to deliver commendable results in spite of softer consumer spending amid the global financial uncertainty. Having successfully integrated management and operation styles along with our new parent VST, in FY2009 we can look forward to giving more shape to our product and geographical expansion plans. However, we will be mindful of the global economic trends as they unfold and consider our steps well before proceeding. As the near-term outlook for the global economic and IT industry continues to be uncertain and notwithstanding the challenges in the external environment, we will continue to further strengthen internal competencies which, in turn, will safeguard longer-term growth opportunities when markets recover.

Given our strong vendor base, wide channel network and experienced local management teams, we believe that we will be positioned advantageously when the future outlook becomes clearer.

DIVIDEND PAYMENT AND APPRECIATION On behalf of my fellow Directors, I once again thank you, our shareholders, for your loyal support of the Group even as we continue our transformation. For FY2008, the Directors have proposed a first and final dividend of 2.7 cents per share (tax exempt). I would also like to express my sincere appreciation to all our customers, technology partners and business associates without whom our success would not have been possible. Additionally, I would like to thank management and staff for their relentless hard work that helped ECS achieve our growth plan and build a strong business.

While improving working capital management and cash flow will be key initiatives over the next few quarters, ECS will additionally look into other operational factors including human resource and technological improvements.

Last but the least, I would like to thank my fellow Directors for their pioneering direction and invaluable guidance that has made the milestone achievements of FY2008 possible.

Looking ahead, despite the anticipated slowdown in demand for ICT products in 2009, the Directors are confident that in FY2009, ECS will still be profitable.

Chairman

MR LI JIA LIN 6 April 2009

Having said that, with a 25-year long track record and experience in the regional ICT market, we have weathered many storms before and I am confident that ECS will emerge stronger after this global financial crisis as well. While the Directors recognise that these countries will not be immune to the spillover of the ongoing global financial crisis, I also believe that ECS has put in place a firm foundation for the Group’s growth strategy.

Chairman’s Message p.

06 ECS Holdings Limited

Annual Report 2008

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Targeted Expansion

Asia presents vast potential and opportunities for the Group’s expansion. By strategically developing both new markets as well as complementary business categories, ECS is committed to enhancing our corporate positioning and shareholder value.

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08 ECS Holdings Limited

Annual Report 2008

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“Continued margins enhancement and improved cash management led ECS to generate not only strong profit and margins growth but also stronger cash flow.” Mr Tay Eng Hoe Group CEO

CEO’s Message p.

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AN OVERVIEW

FINANCIAL AND OPERATIONS REVIEW

FY2008 distinguishes itself as a year that witnessed ECS’ ongoing margins accretive growth initiatives gaining momentum.

In FY2008 ECS’ net profit attributable to equity holders rose 25.8% to $29.4 million from $23.4 million in FY2007 propelled by continued margins enhancement and improved cash management.

These efforts which were put in place a few years ago, continued unabated throughout FY2008 even though ECS relisted its shares on the Singapore Exchange only in August. During the period under review, our conscious commitment to enhance operating performance with revenue growth an important but secondary priority saw net profit growth continue to outstrip revenue growth. But most importantly, our improving bottomline and margins for the year under review, even after the current financial crisis deepened during the second half of calendar year 2008, demonstrated our agility to adapt to challenging economic circumstances and uncertainties. Realising our limited control over these externalities, we sharpened focus on improving internal efficiencies including generating positive operating cash flow through better management of working capital and more effective management of financial resources. Continued margins enhancement and improved cash management led ECS to generate not only strong profit and margins growth but also stronger cash flow. This is particularly significant in view of deteriorating financial conditions worldwide. In fact, these two initiatives will continue to be pivotal to our growth strategy over the next few quarters.

The Group’s sustained efforts to enhance operating performance with revenue growth an important but secondary objective saw operating profit increase 22.9% to $52.2 million from $42.5 million even though revenue inched up slightly by 5.8% to $2.9 billion from $2.8 billion over the comparative period. Consequently, net profit before interest and tax (“PBIT”) rose 19.6% to $41.4 million from $34.6 million. Concurrently gross and operating margins increased to 5.1% from 4.8% and to 1.8% from 1.5% respectively, over the comparative periods. Despite the slight revenue growth, the Group’s total operating expenses increased by 6.5% to $102.1 million from $95.9 million as we stepped up sales particularly in the higher margin enterprise systems business segment. Due to increases in interest rates, our finance costs also rose 30.0% to $11.4 million from $8.7 million. Current and non-current bank borrowings rose 4.9% to $193.2 million from $184.2 million. Notwithstanding the challenges in the external environment, throughout the year, the Group retained focus on improving financial health by generating strong profit and margin growth as well as stronger cash flow. As at 31 December 2008, ECS generated a positive operating cash flow of $16.4 million, up from $7.2 million as at 31 December 2007. We also continued to further reduce accounts receivable days to 43.6 days from 47.8 days during the period under review.

CEO’s Message Annual Report 2008

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Tighter credit control and shorter cash cycles also led to significant improvements in working capital. As at 31 December 2008, ECS’ cash and cash equivalents were $49.5 million, up from $39.4 million a year ago. Net gearing improved to 0.60 times from 0.68 times. As a result of these efforts, FY2008 earnings per share (“EPS”), on a fully diluted basis, correspondingly rose to 8.0 cents from 6.4 cents while net asset value (“NAV”) per share increased to 65.09 cents from 58.20 cents a year ago.

REVIEW BY BUSINESS SEGMENTS

REVIEW BY GEOGRAPHICAL MARKETS ECS’ ongoing pursuit of country-specific business thrusts continued to reap results and both North Asia and Southeast Asia continued to deliver revenue and PBIT growth.

North Asia Led by sustained business ICT infrastructure spending in first and second tier cities which continued throughout FY2008, North Asia revenue grew 5.8% to $1.5 billion from $1.4 billion. PBIT grew 47.6% to $25.3 million from $17.2 million over the comparative periods.

Enterprise Systems

Southeast Asia

Enterprise Systems continued to be the Group’s growth driver in FY2008 even as global economic volatility began to dampen ICT spending rates in the region as ECS reiterated its ongoing strategy to continue pursuing bottomline and margins growth.

During the year under review, sales of both consumer electronics especially notebooks and enterprise products in Malaysia, Indonesia and the Philippines rose 5.7% to $1.43 billion from $1.36 billion while PBIT grew 6.4% to $26.9 million from $25.3 million; Southeast Asia continues to be the major contributor to Group PBIT.

Consequently in FY2008, ECS’ higher margins’ Enterprise Systems segment grew by 17.5% to $1.1 billion from $964.3 million mainly driven by higher sales of servers, networking products and enterprise software in the Group’s mainstay North Asia market as well as some Southeast Asian markets. At the same time, PBIT from this segment strongly increased by 31.5% to $26.4 million from $20.1 million.

Distribution In line with the slowdown in demand for consumer ICT products, in FY2008 our Distribution sales managed to sustain themselves within the $1.7 billion range to dip only slightly by 0.6%. Encouragingly, Distribution PBIT grew 19.6% to $23.9 million from $20.0 million again propelled by better margins mix of products.

OUTLOOK While ECS has put a solid foundation into place, we are cognizant of the fact that at least the near-term outlook for the global economy and the global ICT industry continues to be uncertain. The countries in our region will not be immune from the spillover effect of this scenario. In a revised statement in December 2008, technology sector analyst IDC, said that it anticipates IT spending in the region to fall to US$195.6 billion in 2009 from the US$201.4 billion it had forecast in July 2008. IDC added that strategic investments in IT will remain critical in achieving further efficiency and productivity gains, and driving longer term growth of businesses. As these external developments remain out of our control, as in the past, we prefer to adopt a prudent business approach by taking the opportunity to further enhance our business fundamentals during trying times. ECS recognises the importance of strengthening internal competencies that have placed us in good stead even as the economic challenges began to manifest themselves in our industry during the last few months of FY2008.

CEO’s Message p.

12 ECS Holdings Limited

We believe that by honing these operating and financial efficiencies, ECS will be able to capitalise on the longer-term growth opportunities when markets eventually recover. Firstly, we intend to enhance operating cash flow and working capital. This will help us to reduce our debt and funding costs, thereby strengthening our balance sheet. Secondly, we will work on strengthening internal business processes like credit control to make operations more cost-effective. Finally, we plan to also implement tactical human resource and technological improvements that will further scale up our operational efficiencies. Looking further ahead, despite the anticipated slowdown in demand for ICT products in 2009, the Directors are confident that in FY2009, ECS will still remain profitable.

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

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

I must commend my fellow management team and staff for their relentess determination and hard work which has helped us to make major strides externally and internally. To my fellow Board members, I would like thank you for your valuable input that has steered ECS onto a solid path for many more future successes. ECS is on a new threshold and our newly strengthened fundamentals auger well for the vast opportunities that lie ahead of us when the global economy comes back on track.

TAY ENG HOE Group Chief Executive Officer & Executive Director 6 April 2009

CEO’s Message Annual Report 2008

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BOARD OF DIRECTORS Mr Li Jia Lin (Chairman, Non-Executive Director) Mr Liu Wei (Vice Chairman, Non-Executive Director) Mr Tay Eng Hoe (Group Chief Executive Officer) Mr Narong Intanate (Executive Director) Mr Foo Sen Chin (Executive Director) Mr Leong Horn Kee (Independent Director) Mr Tan Hup Foi (Independent Director) Mr Koh Soo Keong (Independent Director)

AUDIT COMMITTEE

SENIOR MANAGEMENT AT ECS HOLDINGS LIMITED’S SUBSIDIARIES Mr Foong Kam Tho (Chief Executive Officer) ECS Technology (China) Limited

Mr Somsak Pejthaveeporndej (President) The Value Systems Co., Ltd.

Mr Foo Sen Chin (Managing Director) ECS KUSH Sdn Bhd

Mr Sebastian Chong (President) ECS Computers (Asia) Pte Ltd Mr Nana Juhana Osay (Executive Director) PT ECS Indo Jaya

Mr Leong Horn Kee (Chairman) Mr Tan Hup Foi Mr Koh Soo Keong

Mr Jimmy Go (President)

COMPENSATION COMMITTEE

KPMG Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 Partner-in-charge : Tran Phuoc (Since FY2006)

Mr Koh Soo Keong (Chairman) Mr Leong Horn Kee Mr Tan Hup Foi

NOMINATING COMMITTEE Mr Tan Hup Foi (Chairman) Mr Leong Horn Kee Mr Koh Soo Keong Mr Tay Eng Hoe

SENIOR MANAGEMENT AT ECS HOLDINGS LIMITED Mr Tay Eng Hoe (Group Chief Executive Officer) Mr Foong Kam Tho (Group Chief Operating Officer) Mr Eddie Foo Toon Ee (Group Chief Financial Officer)

Mr Foo Sen Chin (Group Human Resource Director) Mr Lim Tow Cheng (Senior Vice President, Business Development)

Mr Eugene Tan Teck Thye (Group Financial Controller)

Mr Newman Li (Senior Internal Audit Manager)

MSI-ECS Phils., Inc.

AUDITORS

REGISTRAR M&C Services Private Limited 138 Robinson Road #17-00 The Corporate Office, Singapore 068906

REGISTERED OFFICE 19 Kallang Avenue #07-153 Singapore 339410

PRINCIPAL BANKERS DBS Bank Ltd KBC Bank N.V. Malayan Banking Berhad Oversea-Chinese Banking Corporation Rabobank International Standard Chartered Bank Sumitomo Mitsui Banking Corporation United Overseas Bank Limited

COMPANY SECRETARY Eddie Foo Toon Ee, CPA

Corporate Information p.

14 ECS Holdings Limited

ECS OFFICES ECS Holdings Limited 19 Kallang Avenue #07-153 Singapore 339410 Website : www.ecs.com.sg ECS Technology (China) Limited PCI Building, No. 50 Jianzhong Road Tianhe Software Park Guangzhou, P.R.C. (510665) Branches in Beijing, Chengdu, Fuzhou, Guangzhou, Hangzhou, Hong Kong, Jinan, Nanjing, Nanning, Shanghai, Shenyang, Shenzhen, Wuhan, Xi’an Website : www.ecschina.com The Value Systems Co., Ltd. 34th Floor, Charn Issara Tower 2 2922/328-331 New Petchburi Road Bangkapi, Huay-Kwang Bangkok 10320, Thailand Branches in Bangkok, Chiang Mai, Hat Yai, Khon Kaen, Nakhon Ratchasima, Phitsanulok, Phuket, Rayong, Surat Thani Website : www.value.co.th ECS KUSH Sdn Bhd Lot 3, Jalan Teknologi 3/5, Taman Sains Selangor, Kota Damansara 47810 Petaling Jaya, Selangor, Malaysia Branches in 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 ECS Indo Pte Ltd 19 Kallang Avenue #06-151 Singapore 339410 Branches in Bandung, Jakarta, Medan, Surabaya, Yogyakarta Website : www.ecsindo.com MSI-ECS Phils., Inc. Topy II Bldg, #3 Economia St., Libis, Quezon City, Philippines 1110 Branches in Manila, Cebu Website : www.msi-ecs.com.ph

Stroll down memory lane and re-live ECS’ winning performance over the years. On the record, ECS has consistently surpassed itself to deliver greater value for both stakeholders and partners. REVENUE ($ million)

2,949.9 2,789.4 2,339.3 2,036.3 1,865.7

FY 04

FY 05

FY 06

FY 07

FY 08

Financial Highlights Annual Report 2008

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REVENUE BY BUSINESS SEGMENT ($ million) 3,500

3,000

2,789.4 32.2 1,792.9

2,500

2,339.3 23.2 1,416.0

2,036.3 22.0 1,233.2

1,865.7 24.9 1,215.2

2,000

2,949.9 33.6 1,783.0

1,500

Legend 1,133.3 1,000

Total

964.3

900.1 781.1

IT Services

625.6

500

Distribution Enterprise Systems

0

FY 04

FY 05

FY 06

FY 07

PROFITABILITY ($ million)

FY 08

REVENUE BY GEOGRAPHICAL SEGMENT ($ million)

60 45

41.4

30 19.1 15

29.4

27.0 22.5 17.3

20.1

North Asia

1,515.6

34.6 23.4

13.5

South East Asia

1,434.3 0

FY 04

FY 05

FY 06

FY 07

Legend Net profit attributable to equity holders

Financial Highlights p.

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Profit from operations before tax

FY 08

SHAREHOLDERS’ EQUITY ($ million)

DIVIDENDS PER SHARE (cents) 2.7

237.8 212.7 190.1 174.2 158.7

1.5 1.4

0.8

FY 04

FY 05

FY 06

FY 07

FY 08

FY 04

FY 05

FY 06

FY 07

RETURN ON EQUITY (%)

RETURN ON CAPITAL EMPLOYED (%)

15

18

14

15 13.0

13 12 11.0

11 10 0

8.1

8.4

FY 044

FY 05

9.1

10.0

6

10.4 8.8

FY 044

11.7

12 9

11.6

FY 08

3 FY 05

FY 06 6

FY 07

FY 08

0

FY 06 6

FY 07

FY 08

Financial Highlights Annual Report 2008

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Geared for Sustained Future Growth

With the unleashed potential from our transformation to a complete ICT products and services provider, the synergies from our union with VST will accelerate the Group to the next level of growth.

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Annual Report 2008

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Board of Directors p.

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1. CHAIRMAN

3. GROUP CHIEF EXECUTIVE OFFICER

Mr Li Jia Lin was appointed Chairman of the Board on 31 December 2007. Mr Li is also the Chairman and Chief Executive Officer and an Executive Director of VST Holdings Limited. Mr Li is also the Director of VST Group Limited (BVI) and VST Computers (H.K.) Limited respectively. He is responsible for the overall management and strategic positioning of the Group. Mr Li graduated from Tsinghua University of the People’s Republic of China with a Degree of Bachelor of Engineering in 1983 and a Master Degree in Management Engineering in 1986.

Mr Tay Eng Hoe was appointed the Executive Director of

2. VICE CHAIRMAN Mr Liu Wei was appointed Vice Chairman of the Company on 3 December 2001 and is currently a director of ECS Technology (China) Limited, our subsidiary in China. Mr Liu is one of the founding members of Pacific City International Holdings Limited and has more than 18 years of experience in the IT industry in China. Mr Liu has assumed the positions of Vice Chairman of Guangdong CAD and Executive Chairman of Guangdong Academy of Electronics, and is a member of Guangzhou People’s Congress. In recognition of his contributions and achievements, Mr Liu had received many awards from the Chinese Government and Industry Publications including, “Top 10 Economic Contributors” by the Ministry of Information Industry of China in 2006, “Ten Best New Entrepreneurs in Guangdong” and “Guangdong Outstanding Entrepreneur of Private Enterprise” by the Guangdong Government in 2006. He was recognised in 2004 as one of the top 10 IT leaders in China and was recipient of the “Outstanding Enterprise Contribution Award” in 2003. Mr Liu was awarded China Channel Permanent Achievement Medal by Computer Business News in 2002 and was also listed by Computer World as IT Fortune Top 50 in 2001. Mr Liu graduated with a Bachelor’s degree in Applied Mechanics from the Zhongshan University, PRC.

the Company on 1 April 2000 and he is also the Group Chief Executive Officer of the Company. Mr Tay is the founder of the ECS Group and also ECS Computers (Asia) Pte Ltd, our Singapore subsidiary. He brings with him more than 20 years of experience in the IT business. Mr Tay is an Executive Director of VST Holdings Limited. In August 2005, he was conferred the Public Service Medal by the President of the Republic of Singapore in recognition for his public services to the country. Mr Tay holds a Bachelor of Science (Honours) degree from the LaTrobe University and a Master of Business Administration from the University of Melbourne.

4. EXECUTIVE DIRECTOR Mr Narong Intanate is the founder and Executive Chairman of The Value Systems Co., Ltd., our subsidiary, since 1988. He is actively involved in the management of The Value Systems Co., Ltd. and plays a pivotal role in steering the strategic direction of The Value Systems. He was appointed as an Executive Director of the Company on 15 December 2000 and he is currently an advisor of the Hatyai University. He holds a Bachelor of Science in Business Administration and a Master of Business Administration from California State University. Prior to forming The Value Systems Co., Ltd., he was the Marketing Manager of Sahaviriya Infortech Computers Co., Ltd. from 1982 to 1983 and the Marketing Director of Sahaviriya OA from 1983 to 1988.

Board of Directors Annual Report 2008

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5. EXECUTIVE DIRECTOR

7. NONEXECUTIVE INDEPENDENT DIRECTOR

Mr Foo Sen Chin was appointed as an Executive Director on 15 December 2000 and is concurrently the Group Human Resource Director of the Company. He is also the Managing Director and founder of ECS KUSH Sdn Bhd, our subsidiary. Mr Foo plays a pivotal role in steering the strategic direction of ECS KUSH Sdn Bhd. His responsibilities include the development of its long term business goals, overall operation and administrative management of ECS KUSH. Prior to joining our Group, he was the General Manager of a computer bureau services company in Kuala Lumpur before forming ECS KUSH Sdn Bhd (formerly known as K.U. Sistems Sdn Bhd) in 1985. Mr Foo is an advisor to the current Council of PIKOM, Association of Computer and Multimedia Industry of Malaysia. Mr Foo has a Bachelor of Science degree in Electrical and Electronic Engineering from the University of Birmingham, UK and he also holds a Master’s degree in Business Administration from the Cranfield School of Management in the United Kingdom.

Mr Tan Hup Foi was appointed as an Independent Director on 7 February 2006, and currently serves as Chairman of the Nominating Committee and a member of the Audit and Compensation Committees. He was the Chief Executive of Trans-Island Bus Services Ltd from 1994 to 2005 and also the Deputy President of SMRT Corporation Ltd from 2003 to 2005. Mr Tan is known internationally as the Honorary Vice President of the International Association of Public Transport (UITP) and Honorary Chairman of UITP Asia Pacific Division. Mr Tan is the Chairman of Ngee Ann Polytechnic Council and a Board member of Singapore Corporation of Rehabilitative Enterprises (SCORE). He was awarded the Bintang Bakti Masyarakat (Public Service Star) and the Pingat Bakti Masyarakat (Public Service Medal) by the President of Singapore in 2008 and 1996 respectively. Mr Tan graduated from Monash University in Australia with a First Class Honours degree in Mechanical Engineering in 1974 and he obtained a Master of Science (Industrial Engineering) degree from University of Singapore in 1979.

6. NONEXECUTIVE INDEPENDENT DIRECTOR Mr Leong Horn Kee was appointed as an Independent Director on 15 December 2000, and currently serves as the Chairman of the Audit Committee and a member of the Nominating and Compensation Committees. He is currently the Chairman/CEO of CapitalCorp Partners Pte Ltd. Mr Leong was a Member of Parliament for 22 years. He has extensive work experience in the public sector in the Ministries of Finance and Trade & Industry, and in the private sector in venture capital, merchant banking, corporate investments, hotels and property development. Mr Leong is appointed Singapore’s Non-Resident Ambassador to Mexico and a member of the Security Industry Council in 2006. He holds a Bachelor of Technology (Honours) degree in Production Engineering from Loughborough University, UK; an Economics (Honours) degree from the University of London, UK; and an MBA from INSEAD, France. In 2008, he completed a degree in Chinese Language and Literature from Beijing Normal University, China.

Board of Directors p.

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8. NONEXECUTIVE INDEPENDENT DIRECTOR Mr Koh Soo Keong was appointed as an Independent Director on 11 February 2008, and currently serves as Chairman of the Compensation Committee and a member of the Audit and Nominating Committees. Mr Koh was, until April 2007, the Chief Executive Officer and President of Toll Asia Pte Ltd, formerly SembCorp Logistics Ltd (SembLog) which was acquired by Toll in May 2006. Currently, he is the Managing Director of EcoSave Pte Ltd. With over 20 years of experience in the logistics industry, he has helmed SembLog and its preceding companies since 1986. He is a board member of four other publicly listed companies and the Chairman of the Agri-Food and Veterinary Authority of Singapore. He holds a Bachelor of Engineering (Honours), a Master of Business Administration and a Postgraduate Diploma in Business Law from the National University of Singapore.

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Senior Management Annual Report 2008

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1. GROUP CHIEF EXECUTIVE OFFICER Mr Tay Eng Hoe was appointed the Executive Director of the Company on 1 April 2000 and he is also the Group Chief Executive Officer of the Company. Mr Tay is the founder of the ECS Group and also ECS Computers (Asia) Pte Ltd, our Singapore subsidiary. He brings with him more than 20 years of experience in the IT business. Mr Tay is an Executive Director of VST Holdings Limited. In August 2005, he was conferred the Public Service Medal by the President of the Republic of Singapore in recognition for his public services to the country. Mr Tay holds a Bachelor of Science (Honours) degree from the LaTrobe University and a Master of Business Administration from the University of Melbourne.

2. GROUP CHIEF OPERATING OFFICER, CHIEF EXECUTIVE OFFICER ECS China) Mr Foong Kam Tho was appointed as Group Chief Operating Officer of ECS Holdings Limited with effect from 1 January 2008. He is responsible for the overall operational management of the Group including setting business strategies and building long-term customers and partners’ relationships. Mr Foong is concurrently the Chief Executive Officer of ECS China and was formerly the President of ECS Computers (Asia) Pte Ltd. He joined ECS Computers (Asia) Pte Ltd in 1985 and had more than 20 years experience in the IT industry. Mr Foong holds a Bachelor of Science degree (Computer Science) from the National University of Singapore.

4. SENIOR VICE PRESIDENT, BUSINESS DEVELOPMENT Mr Lim Tow Cheng was appointed Senior Vice President, Business Development on 18 October 2005. He is responsible for managing the regional expansion strategy and for identifying new business opportunities for the Group. In addition, he also looks after investor relations. Mr Lim has more than 20 years of experience in senior management positions in the IT industry. Prior to joining the Group, Mr Lim was the Director for South Asia of Western Digital and has previously worked with Digiland International Limited for more than 8 years, holding several senior management positions, including as Chief Executive Officer. Mr Lim has an Honours Degree in Economics from the National University of Singapore.

5. GROUP FINANCIAL CONTROLLER Mr Eugene Tan was appointed as Group Financial Controller of the Company on 1 March 2008. He is responsible for the financial management of the Group, which covers accounting, treasury, tax, financial control and reporting. Prior to his appointment as Group Financial Controller, Mr Tan was the Vice President, Finance of ECS Computers (Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Ltd. Prior to joining the Group, Mr Tan worked for KPMG Singapore as a senior auditor. Mr Tan holds a Bachelor degree in Accountancy & Economics from the University of Reading.

6. SENIOR INTERNAL AUDIT MANAGER 3. GROUP CHIEF FINANCIAL OFFICER 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 corporate finance and treasury, reporting, accounts, tax, information technology and risk management of ECS Holdings and is also a director on the boards of various ECS companies. Mr Foo has more than 14 years of financial management and audit experience in multinational and public accounting firms. Prior to serving as Group Chief Financial Officer, Mr Foo was the Group Financial Controller of the Company. Mr Foo holds a Bachelor degree in Accountancy from the Nanyang Technological University and is a member of the Institute of Certified Public Accountants of Singapore.

Senior Management p.

24 ECS Holdings Limited

Mr Newman Li is the Senior Manager, Group Internal Audit of the Company. He is a member of CPA China and has more than 10 years of financial and audit experience. Prior to joining the Group, he worked for Foshan Power Construction Group Co. Ltd in 1998 and Guangdong Telecom in 2004. Mr Li holds a Bachelor degree in Accountancy from the Tianjin University of Commerce and was appointed to his current position since May 2008.

7. PRESIDENT The Value Systems Co., Ltd.)

9. PRESIDENT ECS Computers (Asia) Pte Ltd)

Mr Somsak Pejthaveeporndej was appointed as the President

Mr Sebastian Chong is the President of ECS Computers

of The Value Systems Co., Ltd on 1 February 2009 and he is responsible for the overall operational management of The Value Systems. He has been with our Group since 1988 and was formerly involved in managing the Enterprise Systems & ICT Services division. He has more than 20 years experience in the IT industry. Prior to joining our Group, he was employed as a technical manager by Sun Shine Co., Ltd. between 1981 to 1984, followed by Sahaviriya Telecom Co., Ltd. between 1984 to 1988. He holds a Bachelor of Science degree majoring in electronics from Rajamangala University of Technology Krungthep, Thailand, and a Mini MBA from The Faculty of Commerce and Accountancy, Chulalongkorn University.

(Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Ltd. Mr Chong joined ECS in 1990 and has 18 years of experience in the IT industry. He oversees the sales and operations of the commercial, consumer and retail segments of ECS Singapore. Mr Chong is also responsible for business development, business strategy and building of long term relationships with vendors, channels and partners.

8. MANAGING DIRECTOR ECS KUSH Sdn Bhd) Mr Foo Sen Chin was appointed as an Executive Director on 15 December 2000 and is concurrently the Group Human Resource Director of the Company. He is also the Managing Director and founder of ECS KUSH Sdn Bhd, our subsidiary. Mr Foo plays a pivotal role in steering the strategic direction of ECS KUSH Sdn Bhd. His responsibilities include the development of its long term business goals, overall operation and administrative management of ECS KUSH. Prior to joining our Group, he was the General Manager of a computer bureau services company in Kuala Lumpur before forming ECS KUSH Sdn Bhd (formerly known as K.U. Sistems Sdn Bhd) in 1985. Mr Foo is an advisor to the current Council of PIKOM, Association of Computer and Multimedia Industry of Malaysia. Mr Foo has a Bachelor of Science degree in Electrical and Electronic Engineering from the University of Birmingham, UK and he also holds a Master’s degree in Business Administration from the Cranfield School of Management in the United Kingdom.

10. EXECUTIVE DIRECTOR PT ECS Indo Jaya) Mr Nana Juhana Osay is the Executive Director of PT ECS Indo Jaya. He is responsible for overseeing ECS Indonesian operations and has over 15 years experience in the IT industry. Mr Osay was formerly Secretary General for Indonesia Computer Business Association, a position he held from 1999 to 2005. Mr Osay was educated in the Bandung Institute of Technology from 1976 to 1981.

11. PRESIDENT (MSI-ECS Phils, Inc) Mr Jimmy Go is the founder and President of MSI-ECS Phils., Inc. He has more than 25 years of experience in the IT industry in the Philippines. He started in the IT industry way back in 1982 after graduating from college selling Fujitsu & Apple computers. He currently holds a Bachelor degree in Electronics & Communication Engineering from De La Salle University with an award of Magna Cum Laude and Post Graduate degree of Masters in Business Administration in Ateneo de Manila University. Mr. Go was also the past President of COMDDAP (Computer Manufacturers, Distributors & Dealers Association of the Philippines). In 1998, Mr Go was named President and CEO of MSI-Digiland. He was instrumental in growing the business of MSI in the Philippines making it one of the biggest IT distributors in the country in less than 5 years.

Senior Management Annual Report 2008

p.

25

2008 HIGHLIGHTS January - March

July – September

• The Value Systems held “ECS Bus Rally” on the Occasion of its 20th Anniversary

• The Value Systems was Appointed as Distributor for SRAN (Security Revolution Analysis Network)

• The Value Systems hosted “Thank You Party” for Partners on the Occasion of its 20th Anniversary

• The Value Systems Established Arts & Culture Campaign on the Occasion of its 20th Anniversary

• ECS Astar Sdn Bhd was Appointed as Distributor for Nortel

• ECS Astar Sdn Bhd was Appointed as Distributor for Extreme Network

• ECS Astar Sdn Bhd was Apppointed as Distributor for HP Procurve

April - June • The Value Systems was Appointed as Distributor for Fujitsu Scanners • The Value Systems Inaugurated “The Fairy Tale Project II” on Occasion of its 20th Anniversary • ECS Indo Jaya was Appointed as Distributor for Extreme Networks

• ECS Computers (Asia) Pte Ltd was Appointed as Distributor for TriActive • ECS Computers (Asia) Pte Ltd was Appointed as Distributor for Intermec • ECS (China) was Appointed as Distributor for Fujitsu Enterprise Series Platform Products • ECS(China) was Appointed as Distributor for Novell

October – December

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

• ECS Indo Jaya was Appointed as Distributor for Intermec

• ECS (China) was Appointed as Distributor for Commercial Products of EMC

• The Value Systems was Appointed as Distributor for VMware

• The Value Systems was Appointed as Distributor for Red Hat

• ECS(China) was Appointed as Distributor for O2

• The Value Systems Established ECS Tree Planting II Campaign

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

• ECS Pericomp Sdn Bhd was Appointed as Distributor for Intermec • ECS Pericomp Sdn Bhd was Appointed as Distributor for EMC Storage • ECS Pericomp Sdn Bhd was Appointed as Distributor for Blue Coat • ECS Computers (Asia) Pte Ltd was Appointed as Distributor for Adobe

Milestones Highlights & Awards p.

26 ECS Holdings Limited

2008 AWARDS Group • ECS Holdings Ranked 19th in Singapore International 100 Award

China • ECS China Awarded 2nd in Top 100 IT Distribution Firms by CBINEWS • ECS China Awarded 2nd in Top 100 Distribution Firms by China Computer Magazine

• HP – ECS Astar Sdn Bhd Awarded Top Upfront Value Service Contributor FY08 • HP – ECS Astar Sdn Bhd Awarded Best Authorized Support Partner Program FY08 • HP – ECS Astar Sdn Bhd Awarded Best Overall HP Services Partner Champion FY08 • HP – ECS Astar Sdn Bhd Awarded Top Performing Master Part Reseller in Asia Pacific Replacement Parts business

• Samsung – Top Performing Notebook Distributor FY08

Singapore

• H3C – Best Network Distributor 2008

• Achievement as a Singapore 1000 Company 2008

• H3C – Top Wholesaler for Integrated Services in Q2/Q3/Q4 & FY08

• HP - Awarded as a Distinguished Partner of Hewlett-Packard Singapore (Sales) Pte Ltd (January-December 2008) • Sun Microsystems - Asia South Platinum Award FY08

Thailand • HP – Top Performing Partner for HP Business Critical Server – HP Integrity Solution (HP Partner Connect Achievers Club 2008)

• Sun Microsystems - Asia South, Partner of the Year, SPA CDP Category, FY08 • Fuji-Xerox - Recognition for Being part of Fuji-Xerox Printers One Million Record Sales 2004 – 2008

• Symantec – Top Performing Distributor FY 2008 • Symantec – Distribution Partner for Symantec Partner Program 2009

Indonesia • Cisco – The Best Services Sales Distributor 2008 • Cisco – The Best System Engineer Distributor 2008

Malaysia

• Cisco – Distributor of the Year 2008

• HP – ECS Astar Sdn Bhd Awarded Best Wholesaler Of The Year for Consumer Category FY08

• Microsoft – In Recognition of Technological Excellence & Impact on Customer through Microsoft Product & Services 2008 - 2009

• HP – ECS Astar Sdn Bhd Awarded Top Wholesaler for Commercial Storage Works FY08 • HP – ECS Astar Sdn Bhd Awarded Top Wholesaler Industry Standard Servers FY08

The Philippines

• HP – ECS Astar Sdn Bhd Awarded Top Wholesaler for HP Services FY08

• HP – Outstanding IWS / InkJet Distributor of the Year

• HP – ECS Astar Sdn Bhd Awarded Top Wholesaler for Consumer Imaging & Printing FY08 • HP – ECS Astar Sdn Bhd Awarded Top Valued Added Distributor Award FY08 • HP – ECS Astar Sdn Bhd Awarded Top Master Parts Reseller of the year Award 2008 • HP – ECS Astar Sdn Bhd Awarded Top Event Service Contributor FY08

• Acer – ePinnacle Award for Most Outstanding Master ASP • HP – Outstanding SWD / Server Storage Distributor of the Year • HP – Outstanding Product Manager of the Year • Oracle – Value-added Distributor of the Year (Technology) • Oracle – Partner Sales Representative of the Year (Technology) • EMC – Channel Partner of the Year • EMC – Pre-sales Engineer of the Year

• HP – ECS Astar Sdn Bhd Awarded Top Upfront Volume Services Contributor FY08

Milestones Highlights & Awards Annual Report 2008

p.

27

ECS HOLDINGS LIMITED

THAILAND

SINGAPORE

CHINA

MALAYSIA

INDONESIA

PHILIPPINES

The Value Systems Co., Ltd.

ECS Computers (Asia) Pte Ltd

ECS Technology (China) Limited

ECS KUSH Sdn Bhd

ECS Indo Pte Ltd

ECS Infocom (Phils) Pte. Ltd.

100%

100%

100%

60%

90%

100%

Pacific City (Asia Pacific) Pte Ltd

ECS Technology (Guangzhou) Co., Ltd

ECS KU Sdn Bhd

PT ECS Indo Jaya

MSI-ECS Phils., Inc.

100%

100%

100%

100%

49.99%

ECS Technology Co., Ltd

ECS Astar Sdn Bhd

100%

100%

ECS International Trading (Shanghai) Co., Limited

ECS ICT Sdn Bhd

100%

99%

ECS China Technology (Shanghai) Co., Limited

100%

Group Structure p.

28 ECS Holdings Limited

ECS Pericomp Sdn Bhd

80%

Financial Contents Corporate Governance Statement p.30

Consolidated Statement of Changes in Equity p.48

Directors’ Report p.38

Consolidated Cash Flow Statement p.50 p.

Statement by Directors 43

Notes to the Financial Statements p.52

Independent Auditors’ Report p.44

Shareholdings Statistics p.98

p.

Substantial Shareholders p.99

Balance Sheets 46 p.

Consolidated Income Statement 47

Notice of Annual General Meeting p.100 Proxy Form

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

A BOARD MATTERS The Board’s Conduct of its Affairs Principle 1 :

Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board.

The Board’s role is to: a) b) c) d)

provide entrepreneurial leadership, set strategic aims, and ensure that the necessary financial and human resources are in place for the company to meet its objectives; establish a framework of prudent and effective controls which enables risk to be assessed and managed; review management performance; and set the company’s values and standards, and ensure that obligations to shareholders and others are understood and met.

The Board meets to consider the following, without limitation, corporate events and/or actions: a) b) c) d) e) f) g) h)

approval of quarterly results announcements; approval of annual report and accounts; declaration of interim dividend and proposal of final dividends; approval of corporate strategy; authorisation of major transactions; review and approval of annual budgets; compensation of senior management personnel; and convening of shareholders’ meetings.

All directors must objectively take decisions in the interests of the Company. The Board has delegated the day-to-day management and running of the Company to the management headed by our Group Chief Executive Officer (“Group CEO”) and Executive Director, Mr Tay Eng Hoe, 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)

the Nominating Committee; the Compensation Committee; and the Audit Committee.

Newly-appointed directors are given briefings by the Management on the Group’s activities and its strategic directions. Changes to regulations and accounting standards are monitored closely by Management. To keep pace with regulatory changes, where these changes have an important bearing on the Company’s or directors’ disclosure obligations, directors are briefed either during Board meetings or at specially convened sessions conducted by professionals.

Corporate Governance Statement p.

30 ECS Holdings Limited

The Board intends to hold about four meetings each year and shall also hold informal meetings regularly. The Company’s Articles of Association provide for telephonic and videoconference meetings. The number of Board meetings held since the date of the last annual report, as well as the attendance of every Board member at those meetings is as follows:

DIRECTORS’ ATTENDANCE AT BOARD MEETINGS BOARD No. of Meetings Attended Board Member Li Jia Lin (appointed on 31 December 2007) Liu Wei Tay Eng Hoe Narong Intanate Foo Sen Chin Leong Horn Kee Tan Hup Foi Koh Soo Keong (appointed on 11 February 2008)

4 4 4 4 4 4 4 4

3 3 4 4 4 4 4 4

Board Composition and Guidance Principle 2 :

There should be a strong and independent element on the Board, which is able to exercise objective judgement on corporate affairs independently, in particular, from Management. No individual or small group of individuals should be allowed to dominate the Board’s decision making.

The Board comprises eight directors of which five are non-executive directors (including three independent directors) and three executive directors. The Company places great importance on the quality of its Board of Directors. The Group achieves this by appointing to its Board highly respected individuals and prominent leaders in their respective professions. The Board comprises individuals with proven track record in the public and/or corporate sector, and each is a highly respected member of the business community. As a group, they provide core competencies such as accounting or finance, business or management experience, industry knowledge, strategic planning and customer-based experience or knowledge. Key information regarding the directors is given in the Board of Directors section on pages 20 to 22 of the annual report.

Chairman and Chief Executive Officer Principle 3 :

There should be a clear division of responsibilities at the top of the company - the working of the Board and the executive responsibility of the company’s business - which will ensure a balance of power and authority, such that no one individual represents a considerable concentration of power.

Mr Li Jia Lin, a non-executive director, is the Chairman of the Company and Mr Tay Eng Hoe is the Group CEO. They 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 Group's business, the business direction and operational decisions of the Group. No individual or small group of individuals dominate the Board's decision making process.

Corporate Governance Statement Annual Report 2008

p.

31

Board Membership & Board Performance Principle 4 :

There should be a formal and transparent process for the appointment of new directors to the Board.

Principle 5 :

There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

The Nominating Committee was formed on 6 January 2003 and comprises four directors, including three independent directors, Mr Tan Hup Foi, Mr Leong Horn Kee, Mr Koh Soo Keong and one executive director, Mr Tay Eng Hoe. Mr Tan Hup Foi is the Chairman of the Nominating Committee. The role of the Nominating Committee is to perform the following functions: a) b) c)

identifies and reviews all nominations for Board appointments and re-nominations of directors; assesses the effectiveness of the Board as a whole and the contribution by each individual director to the effectiveness of the Board; and determines whether or not a Director is independent.

In accordance with the Company’s Articles of Association, at each Annual General Meeting, one-third of the Board shall retire from office by rotation provided that no director holding office as Managing or Joint Managing Director shall be subject to retirement by rotation or be taken into account in determining the number of directors to retire.

Access to Information Principle 6 :

In order to fulfil their responsibilities, board members should be provided with complete, adequate and timely information prior to board meetings and on an on-going basis.

All directors are provided with complete, adequate and timely information prior to meeting and on a regular basis to enable them to perform their roles properly. All directors have separate and independent access to senior management and the company secretary. The company secretary has defined roles and responsibilities and attends all Board and sub-committee meetings of the Company. Should directors, whether as a group or individually, need independent professional advice in the furtherance of their duties, cost of such professional advice will be borne by the Company.

B REMUNERATION MATTERS Procedures for Developing Remuneration Policies Principle 7 :

There should be a formal and transparent procedure for fixing the remuneration packages of individual directors. No director should be involved in deciding his own remuneration.

The Compensation Committee oversees the general compensation of employees of our Group with a goal to motivate, recruit and retain employees and directors through competitive compensation and progressive policies. In particular, the Compensation Committee is responsible for overseeing our employee profit sharing scheme as well as the share incentives, including the ECS Share Option Scheme I, ECS Share Option Scheme II and ECS Performance Shares Scheme. The Compensation Committee of the Board comprises Mr Koh Soo Keong, Mr Leong Horn Kee, and Mr Tan Hup Foi. Mr Koh Soo Keong is the Chairman of the Compensation Committee.

Corporate Governance Statement p.

32 ECS Holdings Limited

Level and Mix of Remuneration; Disclosure of Remuneration Principle 8 :

Principle 9 :

The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A significant proportion of executive directors’ remuneration should be structured so as to link rewards to corporate and individual performance. Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company’s annual report. It should also provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.

The Group’s remuneration policy is to provide a competitive remuneration package so as to attract, retain and motivate directors and senior management of the required experience and expertise to run the Group successfully. In setting remuneration packages for executive directors and senior management of the Group, the pay and employment conditions within the industry and in comparable companies are taken into consideration. The compensation package of the Group’s executive directors including its Group CEO and senior management consists of salary, allowances, share options and bonuses which are conditional upon meeting certain performance targets. Non-executive directors have remuneration packages which consist of a directors’ fee component and a share option component pursuant to the Company’s Share Option Scheme. 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 2008

Name of Director $1,000,000 to below $1,250,000 Tay Eng Hoe

Salary %

Bonus %

Fees %

Allowances and other Benefits %

50

49

–

1

100

–

–

–

–

–

37 28

53 61

– –

10 11

100 100

–

–

–

–

–

– 100 – – –

– – – – –

– – 100 100 –

– – – – –

– 100 100 100 –

Total %

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

$500,000 to below $750,000 Narong Intanate Foo Sen Chin

$250,000 to below $500,000 -

Below $250,000 Li Jia Lin Liu Wei Leong Horn Kee Tan Hup Foi Koh Soo Keong

Corporate Governance Statement Annual Report 2008

p.

33

Executives’ Remuneration Rather than setting out the names of the top five key executives who are not also directors of the Company, we have shown a Group-wide cross-section of executive remuneration by number of employees earning $100,000 upwards in bands of $250,000 below. This should give a macro view of the remuneration pattern in the Group, while maintaining confidentiality of staff remuneration matters.

NO. OF EXECUTIVES IN REMUNERATION BANDS

Total Compensation (S$)

No. of Employees (Note 1)

Total Variable Compensation (Note 2)

Total Fixed Compensation (Note 3)

Total Remuneration

$100,000 to $249,999 $250,000 to $499,999 $500,000 to $749,999 Total

24 8 2 34

$1,735,944 $1,547,384 $ 718,594 $4,001,922

$1,942,618 $1,704,997 $ 365,913 $4,013,528

$3,678,562 $3,252,381 $1,084,507 $8,015,450

Notes : 1. 2. 3.

Including employees in local and overseas subsidiaries Sales commission, bonus and other statutory contributions Inclusive salaries, AWS, related CPF and other statutory contributions, allowances and fringe-benefits.

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 company’s 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 Group’s 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.

Corporate Governance Statement p.

34 ECS Holdings Limited

Audit Committee Principle 11 : The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties. The Audit Committee comprises three members, of which all members, including the Chairman, are independent. The members of the Audit Committee at the date of this report are: Leong Horn Kee Tan Hup Foi Koh Soo Keong

Chairman Member Member

The Audit Committee meets periodically to perform the following functions:a)

reviewing the quarterly, half-yearly and annual financial statements before recommending them to the Board for approval;

b)

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;

c)

reviewing with external auditors the audit plan, their evaluation of the systems of internal controls, their annual reports and their management letters and management’s response;

d)

reviewing and recommending to the Board the re-appointment of the external auditors, taking into consideration the non-audit services rendered by the external auditors and being satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors;

e)

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

f)

considering other matters as requested by the Board.

The Audit Committee has full access to and co-operation of the Company's 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 five meetings since the date of the last annual report. The Audit Committee reviewed the Interested Person Transactions for the year ended 31 December 2008 in accordance with the terms of the Shareholders' Mandate for such transactions as were approved on 30 April 2008. Interested Person Transactions with a total value of $13.9 million were examined and the Audit Committee is of the opinion that the said transactions were carried out on prevailing commercial terms and did not prejudice the interest of the shareholders of the Company. 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.

Corporate Governance Statement Annual Report 2008

p.

35

The Audit Committee had reviewed the non-audit services provided by the external auditors and is satisfied with the independence of the auditors. The Audit Committee has recommended to the Board that the auditors, KPMG LLP, be nominated for re-appointment at the forthcoming Annual General Meeting of the Company. Meetings and attendance are as follows:

BOARD No. of Meetings Attended Name of Director Leong Horn Kee (Chairman) Tan Hup Foi Koh Soo Keong

5 5 5

5 5 5

Internal Controls Principle 12 : The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investment and the company’s assets. The Board acknowledges that it is responsible for the Group’s system of internal control. It believes that in the absence of any evidence to the contrary and from due enquiry, the system of internal controls that has been maintained by the Group throughout the financial year is adequate to meet the needs of the Group in its current business environment. However, the Board notes that the system of internal controls is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable and not absolute assurance against material misstatements or loss.

Internal Audit Principle 13 : The Company should establish an internal audit function that is independent of the activities it audits. The Group has an internal audit department which is independent of the activities it audits. It performs financial audits, implements operational and compliance controls. The Internal Auditor reports primarily to the Chairman of the Audit Committee and administratively to the Group CEO. The Internal Auditor plans its internal audit work in consultation with, but independent of, Management, and its yearly plan is submitted to the Audit Committee for approval at the beginning of each year. The Internal Auditor reports to the Audit Committee quarterly regarding its findings. The Audit Committee also meets with the Internal Auditor at least once during the year without the presence of Management. The Audit Committee also ensures that the internal audit function is adequately resourced, and will review annually the adequacy of the internal audit function. The internal auditors are expected to meet or exceed the standards set by nationally or internationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.

Corporate Governance Statement p.

36 ECS Holdings Limited

D COMMUNICATION WITH SHAREHOLDERS Principle 14 : Companies should engage in regular, effective and fair communication with shareholders. Principle 15 : Companies should encourage greater shareholder participation at AGMs, and allow shareholders the opportunity to communicate their views on various matters affecting the company. The Group does not practice selective disclosure. In line with continuous obligations of the Group pursuant to the Listing Manual and the Companies Act, Chapter 50, of Singapore, the Board’s policy is that all shareholders are informed of all major developments of the Group. Price-sensitive information is released publicly, and quarterly results and annual reports are announced or issued within the mandatory period and are available on the Group’s website. Thereafter, a briefing by Management is held jointly for the media and analysts every half yearly. All shareholders of the Group receive the annual report and notice of Annual General Meeting. Shareholders are encouraged to attend the Annual General Meeting to ensure a high level of accountability and to stay informed of the Group’s strategy and goals.

E INTERESTED PARTY TRANSACTIONS The Group has adopted an internal policy in respect of any transactions with interested persons and has procedures established for the review and approval of the Group’s Interested Party Transactions (“IPT”). Pursuant to Rule 907 of the Listing Manual, the Group has the following IPTs entered into during the financial year, together with the corresponding aggregate value of the IPTs entered into with the same interested person, are disclosed as follows:

Name of Interested Person (A) Transactions for the sale of goods and services with Vnet Capital Co., Ltd and its subsidiaries (B) Transactions for the sale of goods and services with Guangzhou Jia Dou Ji Tuan Co Ltd and its subsidiaries

Aggregate value of all IPTs during the financial year under review (excluding transactions less than $100,000 and transactions conducted under shareholders’ mandate pursuant to Rule 920 of Listing Manual of SGX-ST)

Aggregate value of all IPTs conducted under shareholders’ mandate pursuant to Rule 920 of Listing Manual of SGX-ST (excluding transactions less than $100,000)

–

$2,033,141

–

$424,948

Corporate Governance Statement Annual Report 2008

p.

37

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 2008.

DIRECTORS The directors in office at the date of this report are as follows:Li Jia Lin Liu Wei Tay Eng Hoe Narong Intanate Foo Sen Chin Leong Horn Kee Tan Hup Foi Koh Soo Keong

(Chairman) (Vice-Chairman) (Group Chief Executive Officer)

(Appointed on 11 February 2008)

DIRECTORS’ INTERESTS According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year. 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. 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. There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2009. Except as disclosed under the “Share Options” section of this report, neither at the end of, nor at any time during the 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. During the financial year, the Company and certain of its subsidiaries have, in the normal course of business entered into transactions with companies in which Mr Narong Intanate and Mr Liu Wei have an interest. These transactions include the purchase and sale of information technology products and services of $15,231,472 (2007: $2,115,875) and $13,836,284 (2007: $10,840,896) respectively and are carried out on normal commercial terms. However, the directors have not received nor will they be entitled to receive any 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.

Directors’ Report p.

38 ECS Holdings Limited

DIRECTORS’ INTERESTS CONT’D Except as disclosed above and in note 32 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 (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 During the financial year, no option was granted under Scheme II.

(c)

Issue of Shares Under Option In 2007, the Company issued a total of 1,761,000 ordinary shares of $0.10 each fully paid at par for cash upon the exercise of options granted under Scheme II.

(d)

Unissued Shares under Option At the end of the financial year, there are no unissued shares under the share option schemes of the Company.

Directors’ Report Annual Report 2008

p.

39

SHARE OPTIONS CONT’D The details of options granted and exercised are as follows:-

Name of Participants

Executive directors - Tay Eng Hoe - Narong Intanate - Foo Sen Chin Non-executive directors - Leong Horn Kee - Koh Soo Keong (appointed on 11 February 2008) 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

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

Directors’ Report p.

40 ECS Holdings Limited

Options Granted

Aggregate Options Granted

Aggregate Options Exercised

[1]

[2]

[3]

-

4,976,000 9,506,000 3,860,000

-

278,000

-

120,000

-

1,713,000 128,000 188,000 130,000 50,000 88,000 258,000

-

8,629,000 23,292,000 53,216,000

(2,226,000) (8,906,000) (3,340,000)

Aggregate Options Aggregate Forfeited/ Options Lapsed Outstanding [4]

[5]

(2,750,000) (600,000) (520,000)

-

-

(278,000)

-

-

(120,000)

-

(1,113,000) -

(600,000) (128,000) (188,000) (130,000) (50,000) (88,000) (258,000)

-

(6,679,000) (22,264,000)

(1,950,000) (23,292,000) (30,952,000)

-

Options granted during the financial year under review. Aggregate options granted since commencement of the schemes to the end of the financial year under review. Aggregate options exercised since commencement of the schemes to the end of the financial year under review. Aggregate options lapsed since commencement of the schemes to the end of the financial year under review. Aggregate options outstanding as at end of the financial year under review.

SHARE OPTIONS CONT’D Except as disclosed, since the commencement of the option schemes:(i)

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

(ii)

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

(iii)

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

The options granted by the Company do not entitle the holders of the options, by virtue of such holdings, to any right to participate in any share issue of any other company. Except as disclosed above, there were:(i)

no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries;

(ii)

no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; and

(iii)

no unissued shares of the Company or its subsidiaries under option at the end of the financial year.

ECS PERFORMANCE SHARE SCHEME The ECS Performance Share Scheme (the “Scheme”) was approved at the Company’s 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 Tan Hup Foi Koh Soo Keong

(Chairman, Independent director) (Independent director) (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.

Directors’ Report Annual Report 2008

p.

41

AUDIT COMMITTEE CONT’D The Audit Committee held five meetings since the last directors’ report. In performing its functions, the Audit Committee met with the Company’s external and internal auditors to discuss the scope of their work and the results of their examination and evaluation of the Company’s internal accounting control system. The Audit Committee also reviewed the following:•

Assistance provided by the Company’s 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

Li Jia Lin Director

Tay Eng Hoe Director 27 February 2009

Directors’ Report p.

42 ECS Holdings Limited

In our opinion: (a)

the financial statements set out on pages 46 to 97 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 2008 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

(b)

at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

The Board of Directors has, on the date of this statement, authorised these financial statements for issue. On behalf of the Board of Directors

Li Jia Lin Director

Tay Eng Hoe Director 27 February 2009

Statement by Directors Annual Report 2008

p.

43

MEMBERS OF THE COMPANY ECS HOLDINGS LIMITED We have audited the financial statements of ECS Holdings Limited (the Company) and its subsidiaries (the Group), which comprise the balance sheets of the Group and the Company as at 31 December 2008, the income statement, statement of changes in equity and cash flow statement of the Group for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 46 to 97.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Singapore Companies Act, Chapter 50 (the Act) and Singapore Financial Reporting Standards. This responsibility includes: (a)

devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and balance sheets and to maintain accountability of assets;

(b)

selecting and applying appropriate accounting policies; and

(c)

making accounting estimates that are reasonable in the circumstances.

AUDITORS’ RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independent Auditors’ Report p.

44 ECS Holdings Limited

OPINION In our opinion: (a)

the consolidated financial statements of the Group and the balance sheet of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2008 and the results, changes in equity and cash flows of the Group for the year ended on that date; and

(b)

the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

KPMG LLP Public Accountants and Certified Public Accountants

Singapore 27 February 2009

Independent Auditors’ Report Annual Report 2008

p.

45

Group 2008 $’000

2007 $’000

3 4 5 6 7 8

10,918 33,522 7,284 303 4,257 56,284

10,599 33,522 7,019 718 2,314 54,172

225 174,374 151 174,750

198 107,774 151 108,123

9 10 14

175,292 444,662 50,518 670,472

163,094 428,890 39,425 631,409

46,697 2,087 48,784

82,014 470 82,484

726,756

685,581

223,534

190,607

15 16

112,815 124,986 237,801 14,285 252,086

112,815 99,838 212,653 10,983 223,636

112,815 20,741 133,556 133,556

112,815 11,907 124,722 124,722

18 19 8

66,818 978 886 68,682

5 968 308 1,281

66,600 27 66,627

27 27

18 19 20

Total Liabilities

126,596 556 275,424 3,412 405,988 474,670

190,533 302 267,111 2,718 460,664 461,945

20,660 2,594 97 23,351 89,978

62,790 2,964 104 65,858 65,885

Total Equity and Liabilities

726,756

685,581

223,534

190,607

Non-Current Assets Property, plant and equipment Goodwill on consolidation Subsidiaries Interest in associate Other financial assets Deferred tax assets Current Assets Inventories Trade and other receivables Cash and cash equivalents

Total Assets Equity Attributable to Equity Holders of the Company Share capital Reserves Minority 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

. The accompanying notes form an integral part of these financial statements.

Balance Sheets As at 31 December 2008 p.

46 ECS Holdings Limited

Company 2008 2007 $’000 $’000

Note

Note

Revenue Cost of sales Gross profit Other income Selling and distribution expenses General and administrative expenses Profit from operations Finance costs Share of profit of associate, net of tax Profit before income tax Income tax expense Profit for the year

22

23 24

25

Attributable to: Equity holders of the Company Minority interests

Earnings per share - Basic - Fully diluted

2008 $’000 2,949,871 (2,800,395) 149,476 4,915 (60,057) (42,090) 52,244 (11,350) 492 41,386 (8,115) 33,271

2007 $’000 2,789,415 (2,655,162) 134,253 4,176 (55,023) (40,893) 42,513 (8,730) 825 34,608 (8,445) 26,163

29,386 3,885 33,271

23,352 2,811 26,163

8.0 cents 8.0 cents

6.4 cents 6.4 cents

26

.

The accompanying notes form an integral part of these financial statements.

Consolidated Income Statement Year Ended 31 December 2008 Annual Report 2008

p.

47

Share Dividend capital reserve $’000 $’000 2007 At 1 January 2007 Transfer of reserves Translation differences relating to financial statements of subsidiaries Net gains/(losses) recognised directly in equity Net profit for the year Total recognised income and expense for the year Issue of shares Final tax-exempt one-tier dividends paid at 1.50 cents per share for 2006 Proposed tax-exempt one-tier dividends of 1.50 cents per share for 2007 At 31 December 2007

Total attributable to equity Currency holders General translation Accumulated of the Minority reserve reserve profits Company interests $’000 $’000 $’000 $’000 $’000

112,016 -

5,655 -

669

-

-

-

3,903

-

3,903

(76)

3,827

-

-

-

3,903 -

23,352

3,903 23,352

(76) 2,811

3,827 26,163

799

-

-

3,903 -

23,352 -

27,255 799

2,735 -

29,990 799

-

-

-

-

112,815

(5,456)

5,480 5,679

669

(5,623) -

(1,720)

78,007 (669)

(5,480) 95,210

190,055 -

(5,456)

212,653

The accompanying notes form an integral part of these financial statements.

Consolidated Statement of Changes in Equity Year Ended 31 December 2008 p.

48 ECS Holdings Limited

Total $’000

8,248 198,303 -

-

(5,456)

10,983 223,636

Share Dividend capital reserve $’000 $’000 2008 At 1 January 2008 Transfer of reserves Translation differences relating to financial statements of subsidiaries Net gains/(losses) recognised directly in equity Net profit for the year Total recognised income and expense for the year Reversal of dividend reserve Final tax-exempt one-tier dividends paid at 1.50 cents per share for 2007 Proposed tax-exempt one-tier dividends of 2.70 cents per share for 2008 At 31 December 2008

Total attributable to equity Currency holders General translation Accumulated of the Minority reserve reserve profits Company interests $’000 $’000 $’000 $’000 $’000

112,815 -

5,679 -

669 1,754

-

-

-

-

-

(1,720) (7)

95,210 (1,747)

212,653 -

1,250

(8)

1,242

(583)

659

-

1,250 -

(8) 29,386

1,242 29,386

(583) 3,885

659 33,271

30,628 -

3,302 -

33,930 -

-

(199)

-

1,250 -

29,378 199

-

(5,480)

-

-

-

112,815

9,865 9,865

Total $’000

2,423

(477)

(9,865) 113,175

(5,480)

237,801

10,983 223,636 -

-

(5,480)

14,285 252,086

The accompanying notes form an integral part of these financial statements.

Consolidated Statement of Changes in Equity Year Ended 31 December 2008 Annual Report 2008

p.

49

Note

2008 $’000

2007 $’000

Operating Activities Profit before income tax

41,386

34,608

Adjustments for: Share of profit of associate Net fair value changes on financial instruments Depreciation of property, plant and equipment Loss on disposal of property, plant and equipment Gain on disposal of other assets Finance costs Interest income Negative goodwill arising from additional investment in subsidiary Fair value loss/(gain) on call option Operating profit before working capital changes

(492) 2,915 171 (286) 11,350 (272) 102 54,874

(825) 3,533 3,416 54 8,730 (477) (55) (756) 48,228

(14,050) (21,386) 5,871 25,309 (8,944) 16,365

(39,707) (75,266) 81,623 14,878 (7,649) 7,229

272 (3,514) 29 (17) 674 (2,556)

477 (3,411) 88 (2,846)

Changes in working capital: Inventories Trade and other receivables Trade and other payables Cash generated from operations Income taxes paid Cash flows from operating activities Investing Activities Interest received Purchases of property, plant and equipment Proceeds from disposal of property, plant and equipment Purchase of other assets Proceeds from sale of other assets Cash flows used in investing activities

The accompanying notes form an integral part of these financial statements.

Consolidated Cash Flow Statement Year Ended 31 December 2008 p.

50 ECS Holdings Limited

Note

Financing Activities Interest paid Proceeds from issue of shares Proceeds from bank loans/trade financing Repayment of bank loans/trade financing Payment of finance lease instalments Dividends paid to equity holders of the Company Repayment of loans from minority shareholders of a subsidiary Repayment of loan to associate Cash flows (used in)/from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Effect of exchange rate changes on balances held in foreign currencies Cash and cash equivalents at end of the year

14

2008 $’000

2007 $’000

(11,430) 697,339 (684,782) (43) (5,480) (13) 1,253 (3,156)

(9,367) 799 802,540 (782,304) (26) (5,456) (4,563) 4,605 6,228

10,653 39,425 (576) 49,502

10,611 29,381 (567) 39,425

The accompanying notes form an integral part of these financial statements.

Consolidated Cash Flow Statement Year Ended 31 December 2008 Annual Report 2008

p.

51

The financial statements were authorised for issue by the directors on 27 February 2009.

1

DOMICILE AND ACTIVITIES ECS Holdings Limited (the “Company”) is incorporated in the Republic of Singapore and has its registered office at 19 Kallang Avenue, #07-153, Singapore 339410. The principal activities of the Company are those relating to investment holding and the distribution of information technology products. The principal activities of the subsidiaries are set out in note 5 to the financial statements. The immediate and ultimate holding company is VST Holdings Limited, a company incorporated in the Cayman Islands. The consolidated financial statements relate to the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interests in associates.

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1

Basis of Preparation The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS). The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities as described below. The financial statements are presented in Singapore dollars which is the Company’s functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless stated otherwise. The preparation of financial statements in conformity with FRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in note 4 on the assumptions relating to recoverable amount of goodwill. The accounting policies used by the Group have been applied consistently to all periods presented in these financial statements.

Notes to the Notes to the Financial Statements Financial Statements These notes form an integral part of the financial statements. p.

52 ECS Holdings Limited

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.2

Consolidation Business combinations Business combinations are accounted for under the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. The excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is credited to the income statement in the period of the acquisition.

Subsidiaries Subsidiaries are entities controlled by the Group. Control exists when the power to govern, directly or indirectly, the financial and operating policies of a company so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Minority interests represent the portion of the net assets of subsidiaries attributable to interests that are not owned by the Company, whether directly or indirectly through subsidiaries. Minority interests are presented in the consolidated balance sheet within equity, separately from equity attributable to the equity shareholders of the Company. Minority interests in the results of the Group are presented on the face of the consolidated income statement as an allocation of the total profit or loss for the year between minority interests and the equity shareholders of the Company. Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently reports profits, the Group’s interest is allocated all such profits until the minority share of losses previously absorbed by the Group has been recovered.

Associates Associates are those entities in which the Group has significant influence, but not control, over financial and operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another entity. Associates are accounted for using the equity method. The consolidated financial statements include the Group’s share of income, expenses and equity movements of associates after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the carrying amount of that interest (including any long-term investments) is reduced to zero and the recognition of further losses is discontinued except to the extent that the Group has an obligation or made payments on behalf of the associate.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

53

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.2

Consolidation (Cont’d) Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated against the investment to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

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

2.3

Foreign Currencies Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date on which the fair value was determined. Foreign currency differences arising on retranslation are recognised in the income statement, except for differences arising on the retranslation of monetary items that in substance form part of the Group’s net investment in a foreign operation (see below) and available-for-sale equity instruments.

Foreign operations The assets and liabilities of foreign operations are translated to Singapore dollars at exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translated to Singapore dollars at exchange rates prevailing at the dates of the transactions. Goodwill and fair value adjustments arising on the acquisition of a foreign operation on or after 1 January 2006 are treated as assets and liabilities of the foreign operation and translated at the closing rate. For acquisitions prior to 1 January 2006, the exchange rates at the date of acquisition were used. Foreign currency differences are recognised in the foreign currency translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the foreign exchange translation reserve is transferred to the income statement.

Net investment in foreign subsidiaries and associates Exchange differences arising from monetary items that in substance form part of the Company’s net investment in foreign operations are recognised in the Company’s income statement. Such exchange differences are reclassified to equity in the consolidated financial statements. When the foreign operation is disposed of, the cumulative amount in equity is transferred to the income statement.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

54 ECS Holdings Limited

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.4

Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the cost of dismantling and removing the items and restoring the site on which they are located. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred. Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the differences between the net disposal proceeds and the carrying amount of the item and are recognised in the income statement on the date of retirement or disposal. Except for assets under construction, depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives (or lease term, if shorter) of each part of an item of property, plant and equipment. The estimated useful lives are as follows: Freehold building Leasehold improvements Office equipment Furniture and fittings Computers Motor vehicles

-

50 years 10 years 5 years 5 years 5 years 5 years

Depreciation methods, useful lives and residual values are reviewed, and adjusted as appropriate, at each reporting date. Fully depreciated assets are retained in the financial statements until they are no longer in use.

2.5

Goodwill on Consolidation Goodwill Acquisitions occurring between 1 January 2001 and 31 December 2004 Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets and liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill was stated at cost from the date of initial recognition and amortised over its estimated useful life of not more than 20 years. On 1 January 2005, the Group discontinued amortisation of this goodwill. The remaining goodwill balance is subject to testing for impairment, as described in note 2.8.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

55

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.5

Goodwill on Consolidation (Cont’d) Goodwill (Cont’d) Acquisitions on or after 1 January 2005 Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill arising on the acquisition of subsidiaries is presented in intangible assets. Goodwill is measured at cost less accumulated impairment losses. Goodwill is tested for impairment as described in note 2.8. Negative goodwill arising on the acquisition of controlled subsidiaries and associates represents the excess of the Group’s share of the fair value of identifiable assets and liabilities acquired over the cost of the acquisition. Negative goodwill is accounted for as follows: -

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

-

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

-

for acquisitions on or after 1 January 2005, to the extent that negative goodwill relates to an expectation of future losses and expenses that are identified in the plan of acquisition and can be measured reliably, but which have not yet been recognised, it is recognised in the consolidated income statement when the future losses and expenses are recognised. Any remaining negative goodwill is recognised immediately in the consolidated income statement.

Acquisitions of minority interest Goodwill arising on the acquisition of a minority interest in a subsidiary represents the excess of the cost of the additional investment over the carrying amount of the net assets acquired at the date of exchange.

2.6

Financial Instruments Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity securities, trade and other receivables, cash and cash equivalents, financial liabilities, and trade and other payables. Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group’s contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or transfers substantially all the risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations specified in the contract expire or are discharged or cancelled.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

56 ECS Holdings Limited

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.6

Financial Instruments (Cont’d) Non-derivative financial instruments (Cont’d) Cash and cash equivalents comprise cash balances and bank deposits. Bank overdrafts that are repayable on demand and that form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Available-for-sale financial assets The Group’s investments in equity securities are classified as available-for-sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than for impairment losses and foreign exchange gains and losses on availablefor-sale monetary items (see note 2.3), are recognised directly in equity. When an investment is derecognised, the cumulative gain or loss in equity is transferred to the income statement. Equity securities available-for-sale which do not have a quoted market price in an active market and whose fair value cannot be reliably measured are stated at cost less impairment losses which, in the opinion of the directors, are other than temporary. Others Other non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Derivative financial instruments and hedging activities The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivates are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or loss. Derivative financial instruments are recognised initially at fair value; attributable transaction costs are recognised in the income statement when incurred. Subsequent to initial recognition, derivative financial instruments are measured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the income statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged as described below. The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current credit-worthiness of the swap counterparties. The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

57

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.6

Financial Instruments (Cont’d) Derivative financial instruments and hedging activities (Cont’d) Cash flow hedges Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognised in the income statement. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognised in equity remains there until the forecast transaction occurs. When the hedged item is a non-financial asset, the amount recognised in equity is transferred to the carrying amount of the asset when it is recognised. In other cases, the amount recognised in equity is transferred to the income statement in the same period that the hedged item affects the income statement.

Impairment of financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-use financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the income statement. Any cumulative loss in respect of an available-for-sale financial asset recognised previously in equity is transferred to the income statement. Impairment losses once recognised in the income statement in respect of available-for-sale equity securities are not reversed through the income statement. Any subsequent increase in the fair value of such assets is recognised directly in equity.

Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects. Where share capital recognised as equity is repurchased (treasury shares), the amount of the consideration paid, including directly attributable costs, is presented as a deduction from equity. Where such shares are subsequently reissued, sold or cancelled, the consideration received is recognised as a change in equity. No gain or loss is recognised in the income statement.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

58 ECS Holdings Limited

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.7

Leases When entities within the group are lessees of a finance lease Leased assets in which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, property, plant and equipment acquired through finance leases are capitalised at the lower of their fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. Lease payments are apportioned between finance expense and reduction of the lease liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. At inception, an arrangement that contains a lease is accounted for as such based on the terms and conditions even though the arrangement is not in the legal form of a lease.

When entities within the group are lessees of an operating lease Where the Group has the use of assets under operating leases, payments made under the leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease payments made. Contingent rentals are charged to the income statement in the accounting period in which they are incurred.

2.8

Impairment – non-financial assets The carrying amounts of the Group’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. For goodwill, recoverable amount is estimated at each reporting date, and as when indicators of impairment are identified. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash-generating unit. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

59

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.9

Inventories Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the weighted average cost formula and comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Work-in-progress is stated at cost incurred plus attributable profits. Cost includes direct materials, sub-contracted costs, an appropriate share of production overheads based on normal operating capacity and other related costs incurred. Progress billings received and receivable are shown as a deduction from the value of work-in-progress. Provision is made for anticipated losses on uncompleted projects when foreseeable. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. In arriving at net realisable value, due allowance is made for all obsolete and slow moving inventories.

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

2.11 Employee Benefits Defined contribution plans Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.

Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Share-based payments The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the vesting period. At each balance sheet date, the Company revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates in employee expense and in a corresponding adjustment to equity over the remaining vesting period. The proceeds received net of any directly attributable transaction costs are credited to share capital when the options are exercised.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

60 ECS Holdings Limited

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.12 Financial Guarantee Contracts Financial guarantee contracts are regarded as insurance contracts under which the Group accepts significant insurance risk from a third party by agreeing to compensate that party on the occurrence of a specified uncertain future event. Provisions are recognised when it is probable that the guarantee will be called upon and an outflow of resources embodying economic benefits will be required to settle the obligations.

2.13 Revenue Recognition Sale of goods Revenue from the sale of goods which encompasses distribution of e-enabling infrastructure and IT products is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. Transfers of risks and rewards vary depending on the individual terms of the contract of sale. For sales of IT products, transfer usually occurs when the product is received at the customer’s warehouse; however, for some international shipments, transfer occurs upon loading of the goods on to the relevant carrier.

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

Project revenue Revenue on projects is recognised in the income statement based on the percentage of completion method, measured by reference to the percentage of contract costs incurred to date to estimated total contract costs for the contract.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

61

2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONT’D

2.14 Finance Income and Expenses Finance income comprises interest income, dividend income, gains on the disposal of available-for-sale financial assets and gains on hedging instruments that are recognised in the income statement. Interest income is recognised as it accrues, using the effective interest method. Dividend income is recognised on the date that the Group’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date. Finance expenses comprise interest expense on borrowings, impairment losses recognised on financial assets, and losses on hedging instruments that are recognised in the income statement. All borrowing costs are recognised in the income statement using the effective interest method, except to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to be prepared for its intended use or sale. Foreign currency gains and losses are reported on a net basis.

2.15 Income Tax Expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of prior years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and joint ventures to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary 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 to the extent that it is probable that future taxable profit will be available against which the temporary differences 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. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not be reversed in the foreseeable future.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

62 ECS Holdings Limited

3

PROPERTY, PLANT AND EQUIPMENT

Group Cost At 1 January 2007 Additions Disposals Transfers/ Reclassifications Translation adjustment At 31 December 2007 Additions Disposals Transfers/ Reclassifications Translation adjustment At 31 December 2008

Assets Freehold Leasehold Office Furniture Motor under Building Improvements Equipment and Fittings Computers Vehicles Construction $’000 $’000 $’000 $’000 $’000 $’000 $’000

Total $’000

1,596 9 -

1,977 389 (65)

2,251 227 (30)

1,463 161 (60)

14,061 1,745 (1,093)

1,537 220 (181)

383 660 -

23,268 3,411 (1,429)

22 1,627 102 -

(22) 9 2,288 148 -

(780) 93 1,761 401 (246)

106 177 1,847 384 (243)

1,011 583 16,307 2,093 (2,662)

(79) 11 1,508 346 (23)

(236) 48 855 279 -

943 26,193 3,753 (3,174)

(86) 1,643

130 2,566

(123) 1,793

(175) 1,813

58 (161) 15,635

1 1,832

(58) (88) 988

(502) 26,270

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

63

3

PROPERTY, PLANT AND EQUIPMENT CONT’D

Group Accumulated Depreciation At 1 January 2007 Depreciation charge for the year Disposals Transfers/ Reclassifications Translation adjustment At 31 December 2007 Depreciation charge for the year Disposals Transfers/ Reclassifications Translation adjustment At 31 December 2008 Carrying Amount At 1 January 2007 At 31 December 2007 At 31 December 2008

Assets Freehold Leasehold Office Furniture Motor under Building Improvements Equipment and Fittings Computers Vehicles Construction $’000 $’000 $’000 $’000 $’000 $’000 $’000

199

952

1,331

49 -

214 (1)

133 (30)

6 254

(11) 2 1,156

(152) 73 1,355

50 -

269 -

152 (246)

(26) 278

95 1,520

1,397 1,373 1,365

1,025 1,132 1,046

Total $’000

660

9,027

776

-

12,945

281 (50)

2,475 (1,025)

264 (181)

-

3,416 (1,287)

152 333 10,962

8 867

-

520 15,594

256 (141)

1,921 (2,577)

267 (10)

-

2,915 (2,974)

(98) 1,163

(115) 1,000

(40) 10,266

-

(183) 15,352

920 406 630

803 847 813

11 98 1,000

5,034 5,345 5,369

1 1,125

761 641 707

383 855 988

10,323 10,599 10,918

The net carrying amount of property, plant and equipment under finance leases as at 31 December 2008 was $269,000 (2007: $27,000).

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

64 ECS Holdings Limited

3

PROPERTY, PLANT AND EQUIPMENT CONT’D Leasehold Improvements $’000

Office Equipment $’000

Furniture and Fittings $’000

Cost At 1 January 2007 Additions Disposals At 31 December 2007 Additions Disposals At 31 December 2008

191 191 191

10 10 1 11

22 22 22

76 118 (4) 190 83 273

299 118 (4) 413 84 497

Accumulated Depreciation At 1 January 2007 Depreciation charge for the year Disposals At 31 December 2007 Depreciation charge for the year Disposals At 31 December 2008

94 19 113 19 132

10 10 10

21 1 22 22

59 15 (4) 70 38 108

184 35 (4) 215 57 272

97 78 59

1

1 -

17 120 165

115 198 225

Company

Carrying Amount At 1 January 2007 At 31 December 2007 At 31 December 2008

Computers $’000

Total $’000

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

65

4

GOODWILL ON CONSOLIDATION

Goodwill on consolidation

2008 $’000

2007 $’000

33,522

33,522

Impairment testing for goodwill For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating unit (CGU) in a group of subsidiaries in the same geographical location with similar principal activities. 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 9.7% to 13.5% per annum for the years 2009 to 2013, giving an average annual growth in revenue of 11.4%.

•

A pre-tax discount rate of 7.8% (2007: 8.5%) per annum was used. 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 management’s assessment of future trends in the IT industry and are based on both external sources and internal sources and both past performance (historical data) and its expectations for market development. Group management believes that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

66 ECS Holdings Limited

5

SUBSIDIARIES Company 2008 2007 $’000 $’000

Note

Unquoted equity shares, at cost Quasi-equity loans to subsidiaries, at cost Loan to subsidiary

(a) (b)

100,258 7,516 66,600 174,374

100,258 7,516 107,774

(a)

The 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 Company’s net investments in the subsidiaries, the loans are stated at cost.

(b)

The loan to subsidiary is unsecured, repayable on 17 January 2011 and bears interest at rates ranging from 4.174% to 4.555% per annum.

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

Country of Incorporation/ Business

Group’s Effective Equity Interest 2008 2007 % %

Name of Company

Principal Activities

ECS Computers (Asia) Pte Ltd

Provider of information technology products and services for IT infrastructure

Singapore

100

100

ECS Indo Pte Ltd

Distributor of information technology products

Singapore

90

90

The Value Systems Co., Ltd

Provider of information technology products and services for IT infrastructure

Thailand

100

100

ECS KUSH Sdn Bhd

Investment holding

Malaysia

60

60

ECS Technology (China) Limited

Investment holding, provider of information technology products and services for IT infrastructure

Hong Kong

100

100

EC Sure Holdings (Thailand) Co., Ltd

Investment holding

Thailand

99.9

99.9

ECS Infocom (Phils) Pte. Ltd.

Investment holding

Singapore

100

100

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

67

5

SUBSIDIARIES CONT’D Details of the significant subsidiaries held by the direct subsidiaries of the Company are set out below.

Name of Company

Principal Activities

Country of Incorporation/ Business

Group’s Effective Equity Interest 2008 2007 % %

Subsidiaries of ECS Computers (Asia) Pte Ltd Pacific City (Asia Pacific) Pte Ltd

Retail of information technology products, IT equipment and accessories

Singapore

100

100

Distributor of information technology products

Indonesia

90

90

Provider of information technology products and services for IT infrastructure

Malaysia

48

48

Malaysia

60

60

People’s Republic of China

100

100

People’s Republic of China

100

100

Subsidiary of ECS Indo Pte Ltd PT ECS Indo Jaya

Subsidiaries of ECS KUSH Sdn Bhd ECS Pericomp Sdn Bhd

) ) )

ECS Astar Sdn Bhd

)

Subsidiaries of ECS Technology (China) Limited ECS International Trading (Shanghai) ) Co., Limited (a) ) ) ECS China Technology (Shanghai) Co., Ltd (a)

(a)

) ) )

Provider of information technology products and services for IT infrastructure

Audited by other member firms of KPMG International for consolidation purposes.

KPMG LLP Singapore is the auditor of all the Singapore incorporated subsidiaries. Other member firms of KPMG International are auditors of the significant foreign-incorporated subsidiaries.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

68 ECS Holdings Limited

6

INTEREST IN ASSOCIATE Group

Investment in associate, at equity-accounted value Loan to associate

2008 $’000

2007 $’000

6,618 666 7,284

6,271 748 7,019

The loan to the associate is denominated in United States dollars, unsecured and interest-free. Settlement is neither planned nor likely to occur in the foreseeable future. As this loan is, in substance, part of the Company’s net investment in the associate, it is stated at cost. Details of the associate, which is audited by Pelayo Teodoro Santamaria & Co., are as follows:

Name of associate

Country of incorporation

MSI-ECS Phils., Inc.

Philippines

Effective equity held by the Group 2008 2007 49.99%

49.99%

The summarised financial information below relating to the associate is not adjusted for the percentage of ownership held by the Group.

Revenue Profit after taxation Total assets Total liabilities

7

2008 $’000

2007 $’000

126,911 695 44,451 31,257

163,933 1,066 51,480 37,398

OTHER FINANCIAL ASSETS Group

Available-for-sale Unquoted equity investments, at cost Club memberships, at cost Others

2008 $’000

2007 $’000

292 11 303

432 275 11 718

Company 2008 2007 $’000 $’000 140 11 151

140 11 151

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

69

8

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

Group Deferred Tax Assets Provisions Deferred Tax Liabilities Accelerated tax depreciation

Recognised Recognised in income Over in income At statement Translation At provided in statement Translation At 1/1/2007 (note 25) adjustment 31/12/2007 prior years (note 25) adjustment 31/12/2008 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

1,987

107

220

2,314

(398)

13

77

(308)

(27)

-

-

(27)

(39)

(47)

2,208

(226)

(538)

4,257

7

(886)

-

(27)

Company Deferred Tax Liabilities Accelerated tax depreciation

9

-

-

INVENTORIES Group

Trading inventories Goods in transit Allowance for obsolete inventories Comprises:Inventories, at cost Inventories, at net realisable value

2008 $’000

2007 $’000

161,816 21,214 183,030 (7,738) 175,292

149,917 17,819 167,736 (4,642) 163,094

21,214 154,078 175,292

17,819 145,275 163,094

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

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

70 ECS Holdings Limited

10

TRADE AND OTHER RECEIVABLES Group

Trade receivables Deposits, prepayments and other receivables Amount due from related corporations

11

Note

2008 $’000

2007 $’000

11 12 13

384,672 59,667 323 444,662

403,457 23,857 1,576 428,890

Company 2008 2007 $’000 $’000 69 46,628 46,697

40 81,974 82,014

TRADE RECEIVABLES Group

Trade receivables Bills receivable Amounts due from affiliated companies Allowance for doubtful receivables

2008 $’000

2007 $’000

374,721 21,116 395,837 (11,165) 384,672

370,534 218 40,977 411,729 (8,272) 403,457

Company 2008 2007 $’000 $’000 -

-

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

Group

North Asia South East Asia

2008 $’000

2007 $’000

210,845 173,827 384,672

202,483 200,974 403,457

Company 2008 2007 $’000 $’000 -

-

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

71

11

TRADE RECEIVABLES CONT’D The maximum exposure credit risk for trade receivables at the balance sheet date by type of customer is:

Group

Value added resellers System integrators Direct accounts Retailers Others

2008 $’000

2007 $’000

120,549 45,105 171,236 41,508 6,274 384,672

105,907 39,455 199,824 33,809 24,462 403,457

Company 2008 2007 $’000 $’000 -

-

Impairment losses The aging of trade receivables at the balance sheet date is:

Group

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

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

72 ECS Holdings Limited

2008 $’000

2007 $’000

280,996 71,061 31,906 5,596 6,278 395,837

252,464 106,933 41,727 2,793 7,812 411,729

(4) (233) (663) (3,987) (6,278) (11,165)

(233) (296) (135) (7,608) (8,272)

Company 2008 2007 $’000 $’000 -

-

-

-

11

TRADE RECEIVABLES CONT’D The change in impairment losses in respect of trade receivables during the year is as follows:

Group Note

At 1 January Utilised during the year Impairment loss recognised Translation differences on consolidation At 31 December

23(b)

2008 $’000

2007 $’000

8,272 (1,547) 4,773 (333) 11,165

8,884 (4,333) 3,151 570 8,272

Company 2008 2007 $’000 $’000 -

-

Based on historical default rates, the Group believes that no further impairment allowance is necessary in respect of trade receivables not past due as at 31 December 2008. These receivables are mainly arising with customers that have a good record with the Group.

12

DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES Group Note

Deposits Prepayments Recoverables Tax recoverables Other receivables Call option

(a)

(a) 10

2008 $’000

2007 $’000

1,620 53,346 2,563 33 1,452 653 59,667

913 14,953 3,169 4,066 756 23,857

Company 2008 2007 $’000 $’000 59 10 69

26 14 40

On 4 January 2006, a subsidiary entered into a call option agreement with a shareholder of the associate for US$1 cash consideration which will entitle the subsidiary to acquire additional 10% equity interest in the associate. The call option is exercisable beginning 4 July 2008 and ending on the date falling three years thereafter, unless otherwise further extended by the shareholder in writing, at an option price equivalent to US$450,000. The fair value of the call option as at balance sheet date has been recognised as an option asset with its corresponding change in fair value during the year recognised in the income statement.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

73

13

AMOUNTS DUE FROM/TO RELATED CORPORATIONS Group Note

Company 2008 2007 $’000 $’000

2008 $’000

2007 $’000

-

-

2,481 43,824 46,305

2,145 78,253 80,398

323

1,576

323

1,576

10

323

1,576

46,628

81,974

20

-

-

478 478

535 535

Amounts due from subsidiaries Non-trade receivables Loans receivable (current) Amounts due from associate Non-trade receivables

Amounts due to subsidiaries Non-trade payables

The loans due from subsidiaries are unsecured, repayable on demand and bear interest at rates ranging from 1.96% to 6.73% (2007: 2.64% to 7.75%) per annum; and The non-trade balances are unsecured, interest-free and repayable on demand. There is no allowance made for doubtful receivables arising from the outstanding balances.

14

CASH AND CASH EQUIVALENTS Group Note

Cash at bank and in hand Bank overdrafts Cash and cash equivalents in cash flow statement

18

2008 $’000

2007 $’000

Company 2008 2007 $’000 $’000

50,518 (1,016) 49,502

39,425 39,425

2,087 2,087

470 470

The weighted average effective interest rates per annum relating to cash and cash equivalents, excluding bank overdrafts, at the balance sheet date for the Group range from 0.3% to 3.0% (2007: 0.5% to 2.0%) per annum. Interest rates reprice at monthly intervals.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

74 ECS Holdings Limited

15

SHARE CAPITAL Group and Company No. of shares 2008 2007 ’000 ’000 Issued and fully paid: At 1 January Issue of shares At 31 December

365,360 365,360

363,599 1,761 365,360

In 2007, the Group has issued share options under its ECS Share Option Scheme II. At 31 December 2008, there were nil (2007: 110,000) outstanding share options of unissued ordinary shares of the Company granted under the ECS Share Option Scheme II.

Capital Management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders’ equity excluding minority interest. The Board also monitors the level of dividends to ordinary shareholders. The Group has a share buy-back mandate to purchase its own shares on the market; the timing of these purchases depends on market prices. Primarily, the shares purchased are intended to be used for issuing shares under the Group’s share option programme. Buy and sell decisions are made on a specific transaction basis by the Board. No shares have been purchased to date. There were no changes in the Group’s approach to capital management during the year. The Group is subject to externally imposed capital requirements which involve financial covenants relating to consolidated tangible net worth as stipulated by its bankers in respect of credit facilities. The Group ensures its compliance by monitoring such financial covenants on a regular basis.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

75

16

RESERVES Group Note

Currency translation reserve Dividend reserve General reserve Accumulated profits

(a)

(a) (b) (c)

2008 $’000

2007 $’000

Company 2008 2007 $’000 $’000

(477) 9,865 2,423 113,175 124,986

(1,720) 5,679 669 95,210 99,838

9,865 10,876 20,741

5,679 6,228 11,907

Currency Translation Reserve The currency translation reserve of the Group comprises foreign exchange differences arising from the translation of the financial statements of foreign entities.

(b)

Dividend Reserve The dividend reserve of the Group represents dividends proposed which are subject to approval of the shareholders at a general meeting.

(c)

General Reserve According to the current People’s Republic of China (“PRC”) Company Law, the PRC subsidiaries of the Group are required to transfer 10% of their 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.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

76 ECS Holdings Limited

17

EQUITY COMPENSATION BENEFITS The ECS Share Option Scheme II (“Scheme II”) was approved and adopted by its members at an Extraordinary General Meeting held on 13 December 2000. Scheme II provides an opportunity for employees and directors, including non-executive directors, of the Group who have contributed significantly to the growth and performance of the Group to participate in the equity of the Company. The above scheme is administered by the Compensation Committee (the “Committee”) which comprises the following directors:Koh Soo Keong (Chairman) Leong Horn Kee Tan Hup Foi Information regarding the scheme is set out below:Scheme II (a)

The exercise price of the options exercisable pursuant to Scheme II is set either at: -

a price equal to the average of the last dealt price for the three consecutive trading days immediately preceding the grant of the option; or

-

a discount to the market price not exceeding 20% of the market price in respect of that option.

(b)

Options granted are exercisable at any time after the first anniversary of the grant date and in the case of options with exercise price set at a discount, at any time after the second anniversary of date of grant. Options granted to employees and executive directors are exercisable up to the tenth anniversary of date of grant and those granted to non-executive directors are exercisable up to the fifth anniversary of the date of grant.

(c)

The scheme will continue to be in force at the discretion of the Committee, subject to a maximum period of 10 years commencing 13 December 2000.

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

Date of grant of options

Options Exercise outstanding Options price 1 Jan 2008 exercised

Options forfeited or lapsed

Options Options Options outstanding vested vested 31 Dec 2008 1 Jan 2008 31 Dec 2008

Exercise period

Scheme II: 2002

$0.72

110,000

-

(110,000)

-

110,000

-

11/03/2003 to 10/03/2012

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

77

18

FINANCIAL LIABILITIES Group

Non-current liabilities Unsecured bank loans Finance lease liabilities

Current liabilities Unsecured bank overdrafts Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities

Total financial liabilities

(a)

Company 2008 2007 $’000 $’000

Note

2008 $’000

2007 $’000

18(a)

66,600 218 66,818

5 5

66,600 66,600

-

14

1,016 25,621 99,955 4 126,596

29,902 154,280 22 6,329 190,533

20,660 20,660

62,790 62,790

193,414

190,538

87,260

62,790

18(a)

A negative pledge has been given in respect of all of the assets of certain subsidiaries with a total net book value at 31 December 2008 of $220,546,617 (2007: $129,404,784).

Finance Lease Liabilities At 31 December, the Group has obligations under finance leases that are payable as follows:

2008 Repayable within 1 year Repayable after 1 year but within 5 years

2007 Repayable within 1 year Repayable after 1 year but within 5 years

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

78 ECS Holdings Limited

Principal $’000

Interest $’000

Payments $’000

4 218 222

79 79

4 297 301

22 5 27

2 2 4

24 7 31

18

FINANCIAL LIABILITIES CONT’D Terms and conditions of all other interest-bearing liabilities are as follows:

Nominal interest rate

Year of maturity

Face value

2008 Carrying amount

Face value

2007 Carrying amount

$’000

$’000

$’000

$’000

Group Unsecured bank loans and trade financing - S$ floating rate - US$ floating rate - RMB floating rate - THB floating rate - RM floating rate

1.19% - 6.73% 1.19% - 8.10% 4.50% - 7.52% 3.13% - 5.66% 4.87% - 8.05%

2009 2009 – 2011 2009 2009 2009

14,500 99,938 28,604 23,220 25,914 192,176

14,500 99,938 28,604 23,220 25,914 192,176

7,000 82,042 26,358 37,872 30,910 184,182

7,000 82,042 26,358 37,872 30,910 184,182

Unsecured bank overdrafts US$ finance lease liabilities Derivative liabilities

7.00% - 8.05% 10.00% -

2009 2009 – 2012 -

1,016 222 193,414

1,016 222 193,414

27 6,329 190,538

27 6,329 190,538

Company Unsecured bank loans - S$ floating rate loans - US$ floating rate loans

1.71% - 3.56% 1.19% - 6.91%

2009 2009

2,500 84,760 87,260

2,500 84,760 87,260

4,500 58,290 62,790

4,500 58,290 62,790

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

79

18

FINANCIAL LIABILITIES CONT’D Liquidity Risk The following are the contractual undiscounted cash outflows of financial liabilities, including interest payments and excluding the impact of netting agreements:

Group 2008 Non-derivative financial liabilities Unsecured bank overdrafts Unsecured trade financing Unsecured bank loans Finance lease liabilities Trade and other payables*

2007 Non-derivative financial liabilities Unsecured trade financing Unsecured bank loans Finance lease liabilities Trade and other payables* Derivative financial liabilities Forward exchange contracts used for hedging

* excludes accrued operating expenses

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

80 ECS Holdings Limited

Carrying amount $’000

Contractual cash flows $’000

Cash flows Within 1 year $’000

Between 1 to 5 years $’000

1,016 25,621 166,555 222 241,827 435,241

(1,016) (25,621) (171,505) (222) (241,827) (440,191)

(1,016) (25,621) (102,052) (4) (241,827) (370,520)

(69,453) (218) (69,671)

29,902 154,280 27 233,088

(29,902) (154,796) (27) (233,088)

(29,902) (154,796) (22) (233,088)

(5) -

6,329 423,626

(6,329) (424,142)

(6,329) (424,137)

(5)

18

FINANCIAL LIABILITIES CONT’D

Company 2008 Non-derivative financial liabilities Unsecured bank loans Trade and other payables*

2007 Non-derivative financial liabilities Unsecured bank loans Trade and other payables*

Carrying amount $’000

Contractual cash flows $’000

Cash flows Within 1 year $’000

87,260 478 87,738

(92,269) (478) (92,747)

(22,816) (478) (23,294)

62,790 792 63,582

(63,000) (792) (63,792)

(63,000) (792) (63,792)

Between 1 to 5 years $’000

(69,453) (69,453)

-

* excludes accrued operating expenses

19

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

Group

Current portion Non-current portion

2008 $’000

2007 $’000

556

302

978 1,534

968 1,270

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

81

20

TRADE AND OTHER PAYABLES Group Note

Trade payables Accruals and other payables Amounts due to subsidiaries

21

21 13

2008 $’000

2007 $’000

230,638 44,786 275,424

217,631 49,480 267,111

2,116 478 2,594

2,429 535 2,964

ACCRUALS AND OTHER PAYABLES Group

Accrued operating expenses Deposits received Other payables Interest payables

22

Company 2008 2007 $’000 $’000

2008 $’000

2007 $’000

Company 2008 2007 $’000 $’000

33,597 5,851 5,338 44,786

34,023 10,718 3,062 1,677 49,480

2,116 2,116

2,172 257 2,429

REVENUE Group

Sale of IT products IT services

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

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

82 ECS Holdings Limited

2008 $’000

2007 $’000

2,916,291 33,580 2,949,871

2,757,195 32,220 2,789,415

23

PROFIT FROM OPERATIONS The following items have been included in arriving at profit from operations:(a)

Staff Costs

Group

Wages and salaries Contributions to defined contribution plans

(b)

2008 $’000

2007 $’000

52,321 4,096 56,417

49,651 4,792 54,443

Other Expenses/(Income)

Group 2008 $’000 Exchange gains (net) Interest income - banks - associate Allowances made for - obsolete inventories - doubtful trade receivables Directors’ fees Inventories written back Bad debts written off net of bad debts recovered Loss on disposal of property, plant and equipment Non-audit fees to auditors of the Company Negative goodwill arising from additional investment in subsidiary Net fair value changes on financial instruments Fair value loss/(gain) on call option Operating lease expenses

2007 $’000

(987)

(1,054)

(272) -

(217) (260)

4,225 4,773 207 (466) 127 171 23 102 5,163

1,323 3,151 341 (315) 54 9 (55) 3,533 (756) 4,624

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

83

24

FINANCE COSTS Group

Interest paid and payable on - bank overdrafts - finance leases - short-term loans

25

2008 $’000

2007 $’000

29 10 11,311 11,350

20 4 8,706 8,730

INCOME TAX EXPENSE Group

Tax Expense Current tax expense - Current year - (Over)/under provided in prior years Deferred tax expense - Movements in temporary differences - Changes in tax rates - (Over)/under provided in prior years

Income tax expense for the year

2008 $’000

2007 $’000

9,881 (96) 9,785

7,872 693 8,565

(1,584) (86) (1,670)

(117) (17) 14 (120)

8,115

8,445

41,386

34,608

7,450 508 (84) 804 (182) (528) 147 8,115

6,229 992 (78) (165) 894 50 707 (184) 8,445

Reconciliation of Effective Tax Rate Profit before tax Income tax at 18% Non-deductible expenses Tax rebate/relief/exemption Income not subject to tax Effect of different tax rates in foreign jurisdictions Recognition of previously unrecognised tax losses (Over)/under provided in prior years Utilisation of previously unrecognised tax losses Others Income tax expense for the year

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

84 ECS Holdings Limited

26

EARNINGS PER SHARE Group

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)

2008

2007

29,386

23,352

365,360 365,360

363,599 974 364,573

For the purpose of calculation of the diluted earnings per ordinary share, the weighted average number of ordinary shares in issue during the year is adjusted to take into account the dilutive effect arising from the dilutive share options, with the potential ordinary shares weighted for the period outstanding:

Number of Shares 2008 2007 ’000 ’000 Weighted average number of shares used in calculation of basic earnings per share Weighted average number of dilutive potential ordinary shares Number of shares that would have been issued at fair value Weighted average number of ordinary shares (diluted)

365,360 365,360

364,573 9,422 (7,877) 366,118

In 2007, 110,000 ordinary shares at exercise price of $0.72 per share were outstanding but were not included in the computation of diluted earnings per share because those options were anti-dilutive.

27

SEGMENT INFORMATION A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. Segment information is presented in respect of the Group’s business and geographical segments. The primary format, business segments, is based on the Group’s management and internal reporting structure. Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assets and related revenue, interest in the associate, interest-bearing loans, borrowings and related expenses, income tax assets and liabilities, negative goodwill and corporate assets and expenses. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

85

27

SEGMENT INFORMATION CONT’D The main business segments of the Group are the following:Segments

Principal Activities

Enterprise systems

Provider of enterprise systems tools (middleware, operating systems, Unix/NT servers, databases, storage and security products) for IT infrastructure.

IT services

IT infrastructure design and implementation, training, maintenance and support services.

Distribution

Distribution of IT products (desktop PCs, notebooks, handhelds, printers, etc) for the commercial and consumer markets.

Revenue

Enterprise Systems $’000

IT Services $’000

Distribution $’000

Consolidated $’000

1,133,338

33,580

1,782,953

2,949,871

26,437

1,874

23,933

52,244 492

2008 Total revenue from external customers Segment results Share of associate’s profit Net fair value changes on financial Instruments Finance costs Unallocated negative goodwill Taxation Profit from ordinary activities after taxation Minority interests Net profit for the year

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

86 ECS Holdings Limited

(11,350) (8,115) 33,271 (3,885) 29,386

27

SEGMENT INFORMATION CONT’D Enterprise Systems $’000

IT Services $’000

Distribution $’000

Consolidated $’000

964,334

32,220

1,792,861

2,789,415

22,416

2,423

21,152

45,991 825

Revenue 2007 Total revenue from external customers Segment results Share of associate’s profit Net fair value changes on financial instruments Finance costs Unallocated negative goodwill Taxation Profit from ordinary activities after taxation Minority interests Net profit for the year

(3,533) (8,730) 55 (8,445) 26,163 (2,811) 23,352

Assets and Liabilities 2008 Segment assets Unallocated assets Tax assets Others Total assets

223,604

Segment liabilities

113,898

Unallocated liabilities Tax liabilities Financial liabilities Total liabilities

26,194

354,606

604,404 4,257 118,095 726,756

2,760

160,300

276,958

4,298 193,414 474,670

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

87

27

SEGMENT INFORMATION CONT’D Enterprise Systems $’000

IT Services $’000

Distribution $’000

Consolidated $’000

Segment assets Unallocated assets Tax assets Others Total assets

199,847

27,211

383,613

610,671

Segment liabilities

98,983

Assets and Liabilities (Cont’d) 2007

2,314 72,596 685,581 3,452

165,946

Unallocated liabilities Tax liabilities Financial liabilities Total liabilities

268,381

3,026 190,538 461,945

Capital Expenditure 2008 Capital expenditure

1,308

56

2,389

3,753

900

60

2,451

3,411

1,120

33

1,762

2,915

1,181

39

2,196

3,416

2007 Capital expenditure

Significant Non-Cash Expenses 2008 Depreciation of property, plant and equipment 2007 Depreciation of property, plant and equipment

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

88 ECS Holdings Limited

28

GEOGRAPHICAL SEGMENTS GROUP The Group operates principally in Singapore, Thailand, Malaysia, Indonesia and China. In presenting information on the basis of geographic segments, segment revenue is based on the geographic location of operations. Segment assets are based on the geographic location of the assets.

North Asia $’000

South East Asia $’000

Consolidated $’000

1,515,564

1,434,307

2,949,871

Segment assets

310,615

293,789

604,404

Segment liabilities

169,268

107,690

276,958

1,203

2,550

3,753

1,432,078

1,357,337

2,789,415

Segment assets

289,579

321,092

610,671

Segment liabilities

149,306

119,075

268,381

523

2,888

3,411

2008 Total revenue from external customers

Capital expenditure

2007 Total revenue from external customers

Capital expenditure

29

FINANCIAL RISK MANAGEMENT Overview Risk management is integral to the whole business of the Group. The Group has a system of controls in place to create an acceptable balance between the cost of risks occurring and the cost of managing the risks. The management continually monitors the Group’s risk management process to ensure that an appropriate balance between risk and control is achieved. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

89

29

FINANCIAL RISK MANAGEMENT CONT’D Credit Risk (Group) The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. If the customers are independently rated, these ratings are used. Otherwise, the credit quality of customers is assessed after taking into account its financial position and past experience with the customers. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures. The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. Cash and fixed deposits are placed with banks and financial institutions which are regulated.

Liquidity Risk The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition, as at 31 December 2008, the Group maintains various lines of credit amounting to $434 million, of these, $353 million of the credit facilities are unsecured.

Market Risk Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.

Foreign Currency Risk The Group incurs foreign currency risk mainly from foreign currency denominated sales, purchases and borrowings that are denominated in currencies other than the various functional currencies of Group entities. The currencies giving rise to this risk are primarily the United States dollar (“USD”), Thai Baht (“THB”), Chinese Renminbi (“RMB”) and Ringgit Malaysia (“RM”). Movements in their exchange rates against the Singapore dollar could result in the Group incurring foreign exchange losses/gains. The Group recognises that any significant fluctuations in the USD dollar may affect the Group’s foreign currency risk. As a result, the Group actively monitors its exposure and uses forward foreign exchange contracts and currency swaps to hedge against USD dollar exposures, as and when necessary and where possible. In view of the nature of the Group’s business which spans several countries, foreign exchange risks will continue to be an integral aspect of the Group’s risk profile in the future.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

90 ECS Holdings Limited

29

FINANCIAL RISK MANAGEMENT CONT’D Foreign Currency Risk (Cont’d) At 31 December, the Group has outstanding forward exchange contracts with a total notional amount of approximately $15,369,000 (2007: $12,158,000). In 2007, the Group also entered into a hybrid swap contract to hedge against US dollar exposure and floating rate interest risks, with notional principal value of US$40,000,000 which commenced in 2005 and has expired in 28 January 2008. Exposure to currency risk The Group’s financial assets and liabilities are denominated in the following currencies:

2008 Trade receivables Loan receivable from associate Unsecured bank loans/trade financing Trade payables Forward exchange contracts and hybrid swap

2007 Trade receivables Loan receivable from associate Unsecured bank loans/trade financing Trade payables Forward exchange contracts and hybrid swap

SGD

USD

RMB

THB

RM

Others

$’000

$’000

$’000

$’000

$’000

$’000

31,268 323 (14,500) (15,129)

36,248 666 (99,938) (31,384)

200,439 (28,604) (141,901)

65,628 (23,800) (21,434)

50,890 (26,350) (20,773)

199 (17)

1,962

(94,408)

29,934

(7,450) 12,944

(7,919) (4,152)

182

44,252 1,576 (7,000) (30,577)

40,576 748 (82,042) (34,290)

200,113 (26,358) (111,645)

68,026 (37,872) (15,902)

50,274 (30,910) (25,217)

216 -

8,251

58,000 (17,008)

62,110

(4,574) 9,678

(7,584) (13,437)

216

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

91

29

FINANCIAL RISK MANAGEMENT CONT’D Foreign Currency Risk (Cont’d) Sensitivity analysis A 1% strengthening of the Singapore dollar against financial assets and liabilities denominated in the following currencies other than the functional currencies of Group entities at 31 December would have increased/(decreased) profit before tax by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

Income statement 2008 2007 $’000 $’000 USD RMB THB RM

944 (299) (129) 42

170 (621) (97) 134

A 1% weakening of the Singapore dollar against the above currencies, would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.

Interest Rate Risk The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s debt obligations. The Group manages some of its exposure to floating rate interest by entering into a hybrid swap as described above. Sensitivity analysis An increase of 100 bps in the interest rate at the balance sheet date would decrease profit in the income statement by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Increase/(Decrease) 2008 2007 $’000 $’000 Hybrid swap Financial liabilities

(1,932) (1,932)

580 (1,842) (1,262)

A decrease of 100 bps in the interest rate would have had the equal but opposite effect on the above financial instruments to the amounts shown above, on the basis that all other variables remain constant.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

92 ECS Holdings Limited

29

FINANCIAL RISK MANAGEMENT CONT’D Fair Values The following summarises the significant methods and assumptions used in estimating the fair values of financial instruments of the Group and Company. Derivatives The fair value of forward exchange contracts is based on their quoted market price, if available. If a quoted market price is not available, fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual period to maturity of the contract using a risk-free interest rate (based on government bonds). The fair value of the hybrid swap is based on a broker quote. The quote is tested for reasonableness by discounting estimated future cash flows based on the terms and maturity of the contract and using market interest rates for a similar instrument at the measurement date. Other financial assets It is not practicable to estimate the fair value of the Group’s long-term unquoted equity investments because of the lack of quoted market prices. Other short term financial assets and liabilities The carrying amounts of financial assets and liabilities with a maturity of less than one year (including trade and other receivables, cash and cash equivalents, and trade and other payables) approximate their fair values because of the short period to maturity. All other financial assets and liabilities are discounted to determine their fair values. Financial liabilities

2008

Group Unsecured bank overdrafts Unsecured trade financing Unsecured bank loan Finance lease liabilities Derivative liabilities

Company Unsecured bank loans

2007

Carrying amount $’000

Fair value $’000

Carrying amount $’000

Fair value $’000

1,016 25,621 166,555 222 193,414

1,016 25,621 166,555 222 193,414

29,902 154,280 27 6,329 190,538

29,902 154,280 27 6,329 190,538

87,260

87,260

62,790

62,790

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

93

30

COMMITMENTS Operating Lease Commitments At 31 December, the Group has commitments for future minimum lease payments under non-cancellable operating leases as follows:-

Group 2008 $’000

2007 $’000

4,723 4,951 9,674

3,580 5,306 8,886

Payable: Within 1 year After 1 year but within 5 years

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.

31

CONTINGENT LIABILITIES UNSECURED Guarantees Issued At 31 December, there were contingent liabilities in respect of the following:(a)

Guarantees given to suppliers by the Company in respect of credit facilities extended to certain subsidiaries amounted to $187,084,000 (2007: $150,388,000), of which the amount utilised was $56,174,000 (2007: $45,900,000). The guarantees are renewed on a yearly basis.

(b)

Guarantees given to financial institutions by the Company in respect of credit facilities extended to certain subsidiaries amounted to $199,746,000 (2007: $156,016,000), of which the amount utilised was $74,494,000 (2007: $97,522,000). The guarantees are renewed on a yearly basis.

(c)

Guarantees given to financial institutions by the subsidiaries in respect of credit facilities extended to the Company amounted to $81,400,000 (2007: $87,000,000), of which $81,400,000 (2007: $58,290,000) had been utilised.

(d)

A claim was made on a subsidiary, The Value Systems Co., Ltd, which was named as a second defendant in a law suit for copyright infringement amounting to Baht 170 million (equivalent to $7 million). The Central Intellectual Property and International Trade Court of Thailand has ruled that the company was not liable for the damages claimed by the plaintiff. Although the plaintiff has filed an appeal, based on legal opinion obtained, the directors are of the view that the claim has no merit and accordingly, no provision for the claim is required.

The Group 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 Company’s 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.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

94 ECS Holdings Limited

32

RELATED PARTIES Transactions with directors and other key management personnel Key management personnel of the Group are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group. The directors and directors of subsidiaries and members of the management team are considered as key management of the Group. Key management personnel compensation comprises remuneration of directors and other key management personnel as follows:

Group

Directors of the Company - Short-term employment benefits - Other long-term benefits Directors of the subsidiaries - Short-term employment benefits - Other long-term benefits Executive officers - Short-term employment benefits - Other long-term benefits

2008 $’000

2007 $’000

2,271 94

2,218 71

2,379 121

2,713 117

1,387 23 6,275

961 23 6,103

During the year, the Company and certain of its subsidiaries have, in the normal course of business entered into the following transactions with companies in which certain directors have interests:

Group

Purchase of information technology products Sales of information technology products Legal professional services fees Consultancy services

2008 $’000

2007 $’000

15,231 13,836 -

2,116 10,841 92 161

The directors and other key management personnel participate in the Company’s share option plans, the terms and conditions of which are stated in note 17. There are no options granted, exercised for the year ended 31 December 2008 or outstanding at 31 December 2008.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

95

32

RELATED PARTIES CONT’D 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. During the financial year, there were the following significant transactions with related parties, based on terms agreed by the parties:-

Group

Subsidiaries - sales - purchases - interest paid Affiliates - sales

33

Company 2008 2007 $’000 $’000

2008 $’000

2007 $’000

-

-

369

81 81 646

110,770

23,799

-

-

ACCOUNTING ESTIMATES AND JUDGEMENT Management discussed with the Audit Committee the development, selection and disclosure of the Group’s and the Company’s critical accounting policies and estimates and the application of these policies and estimates.

Key source of estimates uncertainty Note 4 contains information about the assumptions and their risk factors relating to goodwill impairment.

Notes to the Financial Statements These notes form an integral part of the financial statements. p.

96 ECS Holdings Limited

34

NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED The Group has not applied the following accounting standards (including its consequential amendments) and interpretations that have been issued as of the balance sheet date but are not yet effective: FRS 1 (revised 2008)

Presentation of Financial Statements

FRS 23 (revised)

Borrowing Costs

FRS 32

Amendments relating to puttable financial instruments and obligations arising on liquidation

FRS 108

Operating Segments

INT FRS 111

FRS 102 - Group and Treasury Share Transactions

INT FRS 113

Customer Loyalty Programmes

INT FRS 116

Hedges of a Net Investment in a Foreign Operation

Amendments to FRS 1 (revised 2008) Amendments relating to puttable financial instruments and obligations arising on liquidation Amendments to FRS 102

Amendments relating to vesting conditions and cancellation

FRS 23 will become effective for financial statements for the year ending 31 December 2009. FRS 23 removes the option to expense borrowing costs and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. This standard does not have any material impact on the recognition and measurement of the Group’s financial statements. FRS 108 will become effective for financial statements for the year ending 31 December 2009. FRS 108, which replaces FRS 14 Segment Reporting, requires identification and reporting of operating segments based on internal reports that are regularly reviewed by the Group’s chief operating decision maker in order to allocate resources to the segment and assess its performance. Currently, the Group represents segment information in respect of its business and geographical segments (see notes 27 and 28). Under FRS 108, the Group will present segment in respect of its operating segments. Other than the changes in disclosures relating to FRS 108, the initial application of these standards and interpretations is not expected to have any material impact on the Group’s financial statements. The Group has not considered the impact of accounting standards issued after the balance sheet date.

Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008

p.

97

Class of shares – Ordinary shares Voting rights – On a show of hands : One vote for each member – On poll : One vote for each ordinary share

ANALYSIS OF SHAREHOLDINGS Range of Shareholdings

No. of Shareholders

%

No. of Shares

%

8 389 100 8 505

1.59 77.03 19.80 1.58 100.00

3,081 2,076,000 3,686,000 359,595,093 365,360,174

0.00 0.57 1.01 98.42 100.00

1 – 999 1,000 – 10,000 10,001 – 1,000,000 1,000,001 and above

Based on information available to the Company as at 16 March 2009, 10.34% of the issued ordinary shares of the Company is held by the public and therefore Rule 723 of the Listing Manual is complied with.

TOP 20 SHAREHOLDERS No.

Name of Shareholder

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Raffles Nominees Pte Ltd Thomas Tan Soon Seng (Thomas Chen Shuncheng) Tat Hong Capital Pte Ltd Ng Chwee Cheng Phillips Securities Pte Ltd HSBC (Singapore) Nominees Pte Ltd Ng Siew Ban (Huang Xiuwan) Ong Tiew Siam DBS Nominees Pte Ltd Sim Sok Koon United Overseas Bank Nominees Pte Ltd OCBC Nominees Singapore Pte Ltd Pui Cheng Wui Chee Swee Cheng Investments Pte Ltd Circular Leasing Pte Ltd Yap Kheok Joo Estate Of Lim Chin Beng @ Seow Chong Beng Deceased Tan Tiong Eng Chan Chee Seng Lee Cheng Cheong Edward

Shareholdings Statistics As at 16 March 2009 p.

98 ECS Holdings Limited

No. of Shares

%

327,595,093 7,400,000 6,600,000 6,200,000 4,800,000 4,400,000 1,500,000 1,100,000 251,000 200,000 187,000 120,000 120,000 100,000 100,000 100,000 90,000 84,000 80,000 80,000 361,107,093

89.66 2.03 1.81 1.70 1.31 1.20 0.41 0.30 0.07 0.05 0.05 0.03 0.03 0.03 0.03 0.03 0.02 0.02 0.02 0.02 98.82

SUBSTANTIAL SHAREHOLDERS

Name of Substantial Shareholder

Number of shares registered in the name of the substantial shareholder

Number of shares in which substantial shareholder is deemed to have an interest

Total

Percentage (%)

VST Holdings Limited L&L Limited

– –

327,580,093(1) 327,580,093(1)

327,580,093 327,580,093

89.66 89.66

Notes : (1) Deemed interest through Raffles Nominees Pte Ltd

Substantial Shareholders As at 16 March 2009 Annual Report 2008

p.

99

ECS HOLDINGS LIMITED (Incorporated in the Republic of Singapore) Company Registration No. 199804760R NOTICE IS HEREBY GIVEN that the Eleventh Annual General Meeting of the Company will be held at 19 Kallang Avenue #07-153 Singapore 339410 on Thursday, 30 April 2009 at 10.00 a.m. to transact the following business :-

ORDINARY BUSINESS 1

To receive and adopt the Directors’ Report and Audited Accounts for the financial year ended 31 December 2008 and the Auditors’ Report thereon. [Resolution 1]

2

To declare a one-tier tax exempt first and final dividend of 2.7 cents per ordinary share for the year ended 31 December 2008. [Resolution 2]

3

(a)

To re-elect Mr Tan Hup Foi who is retiring in accordance with Article 91 of the Company’s Articles of Association, as Director of the Company. [Resolution 3(a)]

Note: Mr Tan Hup Foi if re-elected, will remain as the Chairman of the Company’s Nominating Committee, and member of the Audit Committee and Compensation Committee and will be considered as an independent director for the purposes of Rule 704(8) of the Listing Manual of the Singapore Exchange Securities Trading Limited (“Listing Manual”).

(b)

To re-elect Mr Narong Intanate who is retiring in accordance with Article 91 of the Company’s Articles of Association, as Director of the Company. [Resolution 3(b)]

(c)

To note that Mr Liu Wei who is retiring in accordance with Article 91 of the Company’s Articles of Association, as Director of the Company, will not stand for re-election.

Note: Mr Liu Wei, a Non-Executive Director of the Company, will cease to be the Vice-Chairman of the Company.

4

To re-appoint KPMG LLP as Auditors and to authorise the Directors to fix their remuneration.

[Resolution 4]

5

To approve the payment of Directors’ Fees of $189,000.00 for the year ended 31 December 2008. (2007: $348,000.00). [Resolution 5]

SPECIAL BUSINESS 6

To consider and, if thought fit, to pass the following as Ordinary Resolutions, with or without modifications:(a)

THAT pursuant to Section 161 of the Companies Act, Cap. 50 (the “Act”) and the listing rules of the Singapore Exchange Securities Trading Limited (the “SGX-ST”), authority be and is hereby given to the Directors to:(i)

issue shares in the capital of the Company whether by way of bonus issue, rights issue or otherwise; and/or

(ii)

make or grant offers, agreements or options (collectively “Instruments”) that might or would require shares to be issued, including but not limited to the creation and issue of (as well as adjustments to) warrants, debentures or other instruments convertible into shares; and/or

(iii) issue additional Instruments convertible into shares arising from adjustments made to the number of Instruments;

Notice of Annual General Meeting p.

100 ECS Holdings Limited

at any time and upon such terms and conditions and for such purposes and to such persons as the Directors may, in their absolute discretion, deem fit; and (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in pursuance of any Instrument made or granted by the Directors while this Resolution was in force, provided that: (1)

(2)

(b)

the aggregate number of shares to be issued pursuant to this Resolution (including shares to be issued in pursuance of any Instruments made or granted pursuant to this Resolution): (a)

shall not exceed 50% of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with sub-paragraph (2) below), of which the aggregate number of shares to be issued other than on a pro rata basis to shareholders of the Company shall not exceed 20% of the total number of issued shares in the capital of the Company excluding treasury shares (as calculated in accordance with sub-paragraph (2) below); and

(b)

the 50% limit in sub-paragraph (a) above may be increased to 100% for issues of shares and/or Instruments by way of renounceable rights issue where shareholders of the Company are entitled to participate in the same on a pro rata basis;

(subject to such manner of calculation as may be prescribed by the SGX-ST) for the purpose of determining the aggregate number of shares that may be issued under sub-paragraphs (1)(a) and (1)(b) above, the percentage of issued shares shall be based on the total number of issued shares in the capital of the Company excluding treasury shares at the time this Resolution is passed, after adjusting for: (a)

new shares arising from the conversion or exercise of any convertible securities;

(b)

new shares arising from the exercise of share options or vesting of share awards which are outstanding or subsisting at the time this Resolution is passed, provide that the aforesaid share options or share awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual; and

(c)

any subsequent bonus issue or consolidation or subdivision of shares;

(3)

in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the Listing Manual for the time being in force (unless such compliance has been waived by the SGX-ST) and the Articles of Association for the time being of the Company; and

(4)

(unless revoked or varied by the Company in general meeting) the authority conferred by this Resolution shall continue in force until the conclusion of the next annual general meeting of the Company or the date by which the next annual general meeting of the Company is required by law to be held, whichever is the earlier. [See Explanatory Note (i)] [Resolution 6(a)]

THAT, subject to the grant of the share issue mandate proposed to be tabled as Resolution 6(a) above and pursuant to the terms and conditions of the share issue mandate, notwithstanding Rule 811 of the Listing Manual, the Directors of the Company be and are hereby authorised to issue new shares of the Company to subscribers or placees under a share placement, undertaken on a non pro rata basis, at a discount of up to 20% to the weighted average price for trades done on the SGX-ST for the full market day on which the placement agreement or subscription agreement is signed, PROVIDED THAT, if trading in the Company’s shares is not available for a full market day, the weighted average price shall be based on trades done on the preceding market day up to the time the placement agreement or subscription agreement is signed. [See Explanatory Note (ii)] [Resolution 6(b)]

Notice of Annual General Meeting Annual Report 2008

p.

101

(c)

That the Directors be and are hereby authorised to offer and grant options in accordance with the provisions of the ECS Share Option Scheme II (the “ECS Share Option Scheme II”), and to allot and issue from time to time such number of shares in the capital of the Company as may be required to be issued pursuant to the exercise of the options under the ECS Share Option Scheme II provided always that the aggregate number of ordinary shares to be issued pursuant to the ECS Share Option Scheme II shall not exceed fifteen per cent of the total number of issued shares in the capital of the Company from time to time. [See Explanatory Note (iii)] [Resolution 6(c)]

(d)

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 the Appendix A with Guangzhou Jia Dou Ji Tuan Co., Limited and its subsidiaries be and is hereby approved, provided that such transactions are entered into on an arm’s length basis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of the Appendix A;

(ii)

the aforesaid Shareholders’ General Mandate shall, unless earlier revoked or varied by the Company in general meeting, continue in force until the next annual general meeting of the Company; and

(iii) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including, without limitation, executing all such documents and approving any amendment, alteration or 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 6(d). [See Explanatory Note (iv)] [Resolution 6(d)] (e)

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 the Appendix A with Netband Consulting Co., Ltd, Vnet Capital Co., Ltd, Vnet Capital International Co., Ltd., Thai Incubator.Com Co., Ltd and/or Vintcom Technology Co., Ltd. (as the case may be), be and is hereby approved, provided that such transactions are entered into on an arm’s length basis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of the Appendix A;

(ii)

the aforesaid Shareholders’ General Mandate shall, unless earlier revoked or varied by the Company in general meeting, continue in force until the next annual general meeting of the Company; and

(iii) the Directors of the Company and/or any of them be and are hereby authorised to complete and do all such acts and things (including, without limitation, executing all such documents and approving any amendment, alteration or 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 6(e). [See Explanatory Note (iv)] [Resolution 6(e)] (f)

That: (i)

Notice of Annual General Meeting p.

102 ECS Holdings Limited

for the purposes of the Companies Act, the exercise by the Directors of the Company of all the powers of the Company to purchase or otherwise acquire the ordinary shares in the capital of the Company not exceeding in aggregate the Prescribed Limit (as hereafter defined), at such price(s) as may be determined by the Directors of the Company from time to time up to the Maximum Price (as hereafter defined), whether by way of:

(ii)

(a)

market purchases (each a “Market Purchase”) on the Singapore Exchange Securities Trading Limited (“SGX-ST”); and/or

(b)

off-market purchases (each an “Off-Market Purchase”) effected otherwise than on the SGX-ST in accordance with any equal access schemes as may be determined or formulated by the Directors of the Company as they consider fit, which schemes shall satisfy all the conditions prescribed by the Companies Act, and otherwise in accordance with all other provisions of the Companies Act and listing rules of the SGX-ST as may for the time being be applicable, be and is hereby authorised and approved generally and unconditionally (the “Share Buyback Mandate”);

unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earlier of: (a)

the date on which the next annual general meeting of the Company is held or required by law to be held;

(b)

the date on which the share buybacks are carried out to the full extent mandated; or

(c)

the date on which the authority contained in the Share Buyback Mandate is varied or revoked;

(iii) in this Resolution: “Prescribed Limit” means 10% of the issued ordinary share capital of the Company as at the date of passing of this Resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Companies Act, at any time during the Relevant Period, in which event the issued ordinary share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered (excluding any treasury shares that may be held by the Company from time to time); “Relevant Period” means the period commencing from the date on which the last this AGM was is held and expiring on the date the next AGM is held or is required by law to be held, whichever is the earlier, after the date of this Resolution; and “Maximum Price” in relation to a share to be purchased, means an amount (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) not exceeding: (i)

in the case of a Market Purchase : 105% of the Average Closing Price;

(ii)

in the case of an Off-Market Purchase : 120% of the Highest Last Dealt Price,

where: “Average Closing Price” means the average of the closing market prices of a share over the last five market days, on which transactions in the shares were recorded, preceding the day of the Market Purchase, and deemed to be adjusted for any corporate action that occurs after the relevant 5-day period; “Highest Last Dealt Price” means the highest price transacted for a share as recorded on the market day on which there were trades in the shares immediately preceding the day of the making of the offer pursuant to the Off-Market Purchase; and “day of the making of the offer” means the day on which the Company announces its intention to make an offer for the purchase of shares from shareholders of the Company stating the purchase price (which shall not be more than the Maximum Price calculated on the foregoing basis) for each share and the relevant terms of the equal access scheme for effecting the Off- Market Purchase; and

Notice of Annual General Meeting Annual Report 2008

p.

103

(iv) the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated by this Resolution. [See Explanatory Note (v)] [Resolution 6(f )] 7

To transact any other business that may be properly transacted at an annual general meeting.

[Resolution 7]

By Order of the Board

Eddie Foo Toon Ee Company Secretary Singapore 14 April 2009

Explanatory Notes : (i)

Resolution 6(a), if passed, will authorise the Directors to issue shares in the capital of the Company and to make or grant Instruments (such as warrants or debentures) convertible into shares, and to issue shares in pursuance of such Instruments, up to a number not exceeding (i) 50% of the total number of issued shares in the capital of the Company, of which up to 20% may be issued other than on a pro rata basis to shareholders and (ii) the aforesaid limit of 50% may be increased to 100% for issue of shares and/or Instruments by way of renounceable rights issue where shareholders of the Company are entitled to participate in the same on a pro rata basis. For the purpose of determining the aggregate number of shares that may be issued, the percentage of issued shares shall be based on the total number of issued shares excluding treasury shares in the capital of the Company at the time that Resolution 6(a) is passed, after adjusting for (a) new shares arising from the conversion or exercise of any convertible securities, (b) new shares arising from the exercise of share options or vesting of share awards which are outstanding or subsisting at the time that Resolution 6(a) is passed, provided that the aforesaid share options or share awards were granted in compliance with Part VIII of Chapter 8 of the Listing Manual, (c) any subsequent bonus issue or consolidation or subdivision or shares. The authority for undertaking pro rata renounceable rights issues of up to 100% of the Company’s issued share capital is proposed pursuant to the SGX-ST’s news release of 19 February 2009 which, inter alia, introduced further measures to accelerate and facilitate the fund raising efforts of listed issuers. If Resolution 6(a) is approved, a renounceable rights issue made pursuant to the mandate is conditional upon the Company:•

making periodic announcements on the use of the proceeds as and when the funds are materially disbursed; and

•

providing a status report on the use of proceeds in the annual report.

Resolution 6(a), if passed, will provide the Directors with an opportunity to raise funds and avoid prolonged market exposure by reducing the time taken for shareholders’ approval, in the event such need arises. The risk to minority shareholders’ interests are mitigated as all shareholders have equal opportunities to participate and can dispose of their entitlements through trading of nil-paid rights if they do not wish to subscribe for their rights shares pursuant to any renounceable rights issue.

Notice of Annual General Meeting p.

104 ECS Holdings Limited

(ii)

Resolution 6(b), if passed, will authorise the Directors to issue new shares in pursuance of the share issue mandate granted under Resolution 6(a), to subscribers or placees, on a non pro rata basis, at a discount of not more than 20% to the weighted average price for trades done on the SGX-ST for the full market day on which the placement or subscription agreement is signed. The maximum discount of 20% is proposed pursuant to the SGX-ST’s news release of 19 February 2009 which, inter alia, introduced further measures to accelerate and facilitate the fund raising efforts of listed issuers.

(iii) Resolution 6(c), if passed, will authorise the Directors to offer and grant options and to allot and issue shares pursuant to the ECS Share Option Scheme II, provided that the aggregate number of shares issued pursuant to the ECS Share Option Scheme II shall not exceed fifteen (15) per cent of the total number of issued shares in the capital of the Company from time to time. (iv) Resolutions 6(d) and 6(e), if passed, will authorise the Company, its subsidiaries and associated companies, from the date of the annual general meeting until the conclusion of the next annual general meeting, to enter into interested person transactions with certain interested persons of the Company, its subsidiaries and/or associated companies. Each of such mandates shall, unless revoked or varied by the Company in general meeting, continue in force until the next annual general meeting of the Company. For further details on the interested person transactions and interested persons referred to, please see the appendices Appendix A to this Notice. (v)

Resolution 6(f), if passed, will renew effective up to the next annual general meeting (unless earlier revoked or varied by the Company in general meeting) the Share Buy-back Mandate for the Company to purchase or acquire its ordinary shares. The amount of financing required for the Company to purchase or acquire its ordinary shares, and the impact on the Company’s financial position, cannot be ascertained as at the date of the Notice of Annual General Meeting as these will depend on the number of ordinary shares purchased or acquired and the price at which such ordinary shares were purchased or acquired. For further details on the Share Buyback Mandate, please see Appendix B to this Notice.

Proxies : A member entitled to attend and vote at the annual general meeting may appoint not more than two proxies to attend and vote on his behalf and where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be 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 Company’s 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 9 May 2009, for the purpose of determining the members’ entitlements to the dividend to be proposed at the Annual General Meeting of the Company to be held on 30 April 2009. Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. on 8 May 2009 by the Company’s Share Registrar, M & C Services Private Limited, will be registered to determine members’ entitlements to such dividend. Members whose securities accounts with The Central Depository (Pte) Ltd are credited with shares in the Company as at 5.00 p.m. on 8 May 2009 will be entitled to such proposed dividend. The proposed dividend, if approved at the Annual General Meeting, will be paid on 22 May 2009.

Notice of Annual General Meeting Annual Report 2008

p.

105

This page is intentionally left blank.

p.

106 ECS Holdings Limited

Proxy Form Annual General Meeting

IMPORTANT: 1. For investors who have used their CPF monies to buy the Company’s shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. 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.

ECS HOLDINGS LIMITED

3. CPF Investors who wish to attend the Annual General Meeting as OBSERVERS have to submit their requests through their respective Agent banks so that their Agent banks may register with the Company Secretary of ECS Holdings Limited not less than 48 hours before the time appointed for holding the meeting.

(Incorporated in the Republic of Singapore) Company Registration No. 199804760R

I/We ____________________________________________________________________________________________________________________ of _______________________________________________________________________________________________________________________ being a member/members of ECS HOLDINGS LIMITED hereby appoint

Name

Address

NRIC /Passport Number

Proportion of Shareholdings(%)

and/or (delete as appropriate)

as my/our proxy/proxies to vote for me/us on my/our behalf and, if necessary, to demand a poll, at the Annual General Meeting of ECS HOLDINGS LIMITED to be held at 19 Kallang Avenue #07-153 Singapore 339410 on 30 April 2009 at 10.00 a.m. and at any adjournment thereof. (Please indicate with an “X” in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.)

No ORDINARY RESOLUTIONS 1. 2. 3.

4. 5. 6.

7.

FOR

AGAINST

Ordinary Business: Adoption of Reports and Accounts Declaration of a one–tier tax exempt first and final dividend of 2.7 cents per ordinary share for the year ended 31 December 2008 Re-election of Directors : (a) Mr Tan Hup Foi (b) Mr Narong Intanate Re-appointment of Auditors Approval of Directors’ Fees of S$189,000/- for the year ended 31 December 2008 Special Business (a) Authority for Directors to issue shares pursuant to Section 161 of the Companies Act, Cap. 50 (b) Authority to issue shares priced at a discount of up to 20% for placement exercise (c) Authority for Directors to offer and grant options and allot shares pursuant to the ECS Share Option Scheme II (d) To approve the proposed renewal of the Shareholders’ General Mandate for Interested Person Transactions with Guangzhou Jia Dou Ji Tuan Co., Limited and its subsidiaries (e) To approve the proposed renewal of the Shareholders’ General Mandate for Interested Person Transaction with Netband Consulting Co., Ltd, Vnet Capital Co., Ltd, Vnet Capital International, Thai Incubator.Com Co., Ltd and/or Vintcom Technology Co., Ltd. (f) To approve the proposed renewal of the Share Buy-back Mandate Any other ordinary business

Dated this __________ day of __________ 2009. ______________________________________ Signature(s) of member(s) or Common Seal IMPORTANT : PLEASE READ NOTES OVERLEAF

Total Number of Shares Held:

Notes :1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you. 2 A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company. 3 Where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy, failing which, the appointment shall be deemed to be in the alternative. 4 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. 5 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. 6. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly 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. 7. A corporation which is a member may by a resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act, Cap. 50. General: The Company shall be entitled to reject an instrument of proxy if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument of proxy. In addition, in the case of shares entered in the Depository Register, the Company may reject an instrument of proxy lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.