ECS Holdings 2011 Annual Report

8/2/2019 ECS Holdings 2011 Annual Report

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As ECS goes about its business, it demonstrates adistinct character. This character has vision, courage,integrity, professionalism and notably, joy. The companywill not be daunted by challenges; it welcomes themand emerges stronger from them, with a smile.

This character forms ECS brand DNA.

This years annual report theme BRING IT ONlights up ECS core brand values as a foremost ITdistribution company. It portrays ECS resolve to takeon challenges, harness partnerships and reap fromopportunities - all done with gusto and derring-do. Andyet always with joy.

As ECS embraces challenges, it responds by bringingon its brand values - Shining, Nurturing, Committingand Growing.

The brand values are the companys pledge to do the

best for quality, employees, partners and progresscontinuously. All these qualities are embraced with acollegial and fun mood, as shown in the images in theannual report. Current IT applications such as QR codeand augmented reality provide a bridge from the printversion of this annual report to the companys digitalpresence. The presence of current and cutting-edgenished electronic products serve to reiterate ECScommitment to the IT distribution industry. As ECSsurmounts challenges and engender more growth,it lights up businesses and end consumers lives as an

IT distributor by bringing information technologyto them.

The annual report closes with an open invitation onthe back cover to LAP IT UP - referring to challengesand opportunities, partnerships and achievements- in character with the ECS brand. Just as ECS canBRING IT ON by shining, nurturing, committing andgrowing, so can every stakeholder shine, nurture,commit and grow. Just LAP IT UP.

As an established playerin the industry, ECS hasremained steadfast in theface of economicuncertainties. It hasseen and outlast marketturmoils. It will do soagain and again, emergingstronger every time. In Asia,it has been growing. It ispositioned to prevail even

more brilliantly when theglobal economic tide turns.


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CONTENTS14 // Chairmans Statement 16 // CEOs Statement 19 // Board of Directors

22 // Senior Management 26 // Corporate Executives 29 // Group Structure

30 // Corporate Information 32 // Regional Network 33 // Business Model

34 // Financial Highlights 35 // 2011 Awards 36 // 2011 Milestones

37 // Corporate Governance Statement

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VISION

To be a Premier Asia-PacificICT Company that thinksglobally but acts locally,excelling in all our businesssegments to deliver optimalvalue to our stakeholders.

MISSION

To be the preferredsupplier of choice forICT products and value-added services bybuilding strong customerrelationships.

To sustain ourentrepreneurial growthby seeking new markets& businesses.

To bring the best-of-breed ICT products andservices to enhance thecompetitiveness ofour customers

businesses.


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SHINEWe aim to be the brightest star,to be the leader in the industryby continuously and consistentlyoffering the best and constantlypursuing excellence. Ourprofessionalism and work ethicbecomes the pillar in everything wedo. It is our promise to add value forevery single stakeholder. This is our pledge for quality.

BRING IT ON

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NURTUREWe believe that people are full ofpotential and every single personcontributes to the organisationsstrength. Within ECS, there willalways be opportunities to learn,develop oneself and make personalprogress. We encourage a learningorganisation, and take every singleemployee as a part of our family. This is our pledge for our people.

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BRING IT ON


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COMMIT ECS is here for long termrelationship. We realise that ourstakeholders are our partners.We create trust and partnership.We put importance in deliveringour promises to every stakeholder.We are doing business withtrusted friends and colleagues. This is our pledge for dedication.

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BRING IT ON


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GROWOur simple ambition is to evolve andgrow. We are driven to provide thebest, to expand ourselves throughorganic growth or acquisition.We understand the industry, thecustomers and our own capabilityto make the right strategicmoves to create value for thewhole organisation. This is our pledge for progression.

BRING IT ON

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THE YEAR IN REVIEW

BRINGIT ON


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ECS HOLDINGS LIMITED ANNUAL REPORT 2011

Mr Tay Eng HoeChairman


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Mr Narong IntanateGroup Chief Executive Officer

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CHAIRMANSSTATEMENT

... the Group continuedto improve internaloperational and costsefficiency, in line with thestrategies set in motionseveral years ago. As aresult of these efforts,operating cash flow

increased significantly,while total operatingexpenses as a percentageof revenue improvedfurther to 3.2% inFY2011 compared to3.4% a year earlier.


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Dear Shareholders,

It gives me great pleasure to present to you ECS annualreport for the nancial year ended 31 December 2011

(FY2011).

While FY2010 was a year in which we bene ted from thepent-up demand following the 2008-2009 nancial crisis dueto the U.S. subprime problem, the year under review wasmarked by fresh uncertainty emanating from the Eurozonedebt crisis; supply chain disruptions to the electronicssector due to the earthquake and tsunami in Japan andthe oods in Thailand; and the uncertainty resulting from anannouncement, later rescinded, by HP a major principal that it was planning to spin off its Personal Systems Group.

Despite these challenges, the Groups FY2011 revenueincreased 16.9% to $3.61 billion compared to FY2010.However, net pro t after tax declined 26.0% to $39.2 millionfrom $53.0 million due to several factors.

The rst is the absence of the one-off exceptional gain of $12.6 million from the disposal and dilution of ECS ICTBerhad of Malaysia in FY2010. Excluding the exceptionalgain, the net pro t for FY2011 decreased 2.8% compared to FY2010.

During the year under review, the Group continued to improveinternal operational and costs ef ciency, in line with thestrategies set in motion several years ago. As a result of theseefforts, operating cash ow increased signi cantly, while totaloperating expenses as a percentage of revenue improvedfurther to 3.2% in FY2011 compared to 3.4% a year earlier.

CHAIRMANS STATEMENT

DividendIn view of the Groups nancial performance against the

challenging backdrop outlined above, the Board of Directorshas proposed a rst and nal dividend of 2.2 cents perordinary share.

Corporate Developments After assessing the market conditions globally and in Taiwan,the Directors have decided not to proceed with an earlierproposal to issue and list Taiwan Depository Receipts.

Mr Li Jia Lin (an indirect shareholder and former Chairman of the Board) was appointed Chairman to the respective boards

of directors of the Groups wholly owned ECS Technology(China) Limited, and its subsidiaries with effect from22 November 2011.

Outlook The economic uncertainty and supply chain disruptions willimpact spending on technology products in the comingmonths. Amidst the challenging conditions, we will continueto improve our internal ef ciencies such as working capitalcycle and reducing costs while focusing on growing our shareof the higher-margin Enterprise Systems business.

Appreciation and AcknowledgementOn behalf of my fellow Directors, I wish to thank ourcustomers, channel partners, vendors, technology partners,banks and business associates for their support; themanagement and staff for their dedication and hard work despite the challenging conditions; and our shareholders fortheir loyal support.

Mr Tay Eng HoeChairman

28 March 2012

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CEOSSTATEMENT

Despite the variouschallenges, ECS achieved16.9% growth in revenueto $3.61 billion from$3.09 billion in FY2010.This growth was mainlyattributed to the 38.1%growth in the Distribution

segment, driven byincreased sales ofmedia tablets, desktopsand notebooks,consumer printersand imaging devices.


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Dear Shareholders,

The year under review was marked by various challengesincluding the European debt crisis and the severe ooding in

Thailand which affected the supply chain of the electronicssector.

Financial and Operations ReviewDespite the various challenges, ECS achieved 16.9% growthin revenue to $3.61 billion from $3.09 billion in FY2010. Thisgrowth was mainly attributed to the 38.1% growth in theDistribution segment, driven by increased sales of mediatablets, desktops and notebooks, consumer printers andimaging devices.

Notwithstanding the deconsolidation of ECS ICT Berhadwhich was completed on 15 April 2010, the Group exceededthe $3.25 billion revenue achieved in FY2009 by 11.1%.Our FY2011 sales were propelled by additions to ourproduct portfolio base, including Apple, Dell, and Lenovo,since FY2010.

However, the Groups net pro t attributable to shareholdersdeclined 26.0% to $39.2 million from $53.0 million inFY2010 (performance that year had included a one-off exceptional gain of S$12.6 million from the disposal/dilutionof a 20%-stake in ECS Malaysian subsidiary). Other factorsincluded higher nance costs from increased bank borrowingsand higher interest rates, particularly in China. Excluding theexceptional gain, the Groups FY2011 net pro t re ects adecrease of 2.8% compared to FY2010.

The Groups gross pro t increased by 7.9% to S$167.3million from S$155.1 million a year ago, mainly due to therevenue growth of S$521.8 million. Gross margin was lowerat 4.6% as compared to 5.0% in FY2010 due to change inproduct mix with higher volume of lower-margin distributionsales. This was further reduced by higher provisions for

stock obsolescence and lower early payment discounts andrebates.

The Group continued to implement efforts to improve

operational and nancial ef ciencies in FY2011. As a result,the Groups working capital position strengthened with thegeneration of $44.7 million cash from operating activitiescompared to negative $1.0 million in FY2010, mainly due totighter credit control and improved cash cycles.

As a result, cash and cash equivalents increased by $38.9million to $131.4 million as at 31 December 2011 from $92.5million as at 31 December 2010.

Consequently, the Groups net gearing ratio improved to 0.34

times as at 31 December 2011 from 0.45 times a year earlier.

Earnings per share (EPS) was 10.74 cents in FY2011 from14.51 cents in FY2010 while net asset value (NAV) pershare increased to 89.37 cents as at 31 December 2011from 81.18 cents as at 31 December 2010. The Group hasproposed a rst and nal dividend of 2.2 cents per share.

Review by Business SegmentsIn view of the continued growth in IT spending, the Groupexpanded its product portfolio to leverage on emergingtechnologies and products from existing and new vendors.

This has helped to improve the performance of our businesssegments.

DistributionWith the inclusion of new products in our portfolio, ECSstrengthened its Distribution segment which remained themain revenue driver. In FY2011, this segment contributed$2.66 billion or 73.8% of total revenue, up by 38.1% from$1.93 billion in FY2010. This growth is mainly driven byhigher sales of media tablets, desktops, imaging devices andconsumer printers.

CEOS STATEMENT

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Enterprise SystemsFollowing the pent-up demand in FY2010, the enterpriseproduct portfolio in FY2011 was relatively weaker. Enterprise

Systems segment accounted for $0.92 billion or 25.4% of revenue in FY2011 (FY2010: $1.13 billion) as IT infrastructuretools, such as servers, databases and storage products,experienced slower demand. Review by Geographical MarketsGeographically both North Asia and Southeast Asia continuedon their growth paths.

North AsiaIn FY2011, North Asia was the main revenue growth driver

as it grew 30.9% to $2.33 billion from $1.78 billion in FY2010mainly due to stronger sales of media tablets, desktops,printers and notebooks in distribution segment. The Groupalso greatly bene tted from the nation-wide distribution rightsfor Apples iPad and iPhone in China clinched by ECS inthe last quarter of FY2010. North Asia remains ECS singlelargest market, contributing 64.6% of the total revenue.

Southeast AsiaRevenue contribution from Southeast Asia experienced amarginal decrease of 2.1% to $1.28 billion in FY2011 from$1.31 billion in FY2010 as growth was limited by oodingin Thailand. The revenue in FY2010 also included thedeconsolidated ECS ICT Berhads revenue in the rst quarter.If not for the deconsolidation, revenue would have been upby 8.6% due to higher sales for notebooks, desktops andnetworking hardware in Singapore and Thailand.

OutlookWe continue to gain traction in our initiatives to diversify ourrevenue base while improving pro tability and establishing a

cost-effective operational framework.

Moving forward, we anticipate increased synergies from ourbusiness and corporate growth efforts.

On the product front, we have extended our portfolio to newvendors including Apple, Lenovo and Dell, contributing tothe revenue increase this year. We hope to clinch more newproducts from existing vendors to deepen the relationship.

Going forward, the Group will focus on growing higher-margin

Enterprise Systems business. We will also continue to adopta similar go-to-market strategy and engage vendors regionallyinstead of on a standalone-country basis to increaseef ciency and economies of scale.

Lastly, ECS will continue to focus on operating costsmanagement and improve working capital cycles, as well asefforts to carry on improving internal ef ciencies and coreoperational processes.

Mr Narong IntanateGroup Chief Executive Of cer28 March 2012

CEOS STATEMENT


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01. Mr Tay Eng HoeMr Tay Eng Hoe was appointed the Non-Executive Chairmanof the Group on 27 September 2010. He was the founderof ECS Holdings Limited and also formerly the Group Chief

Executive Of cer. Mr Tay has been a Director of the Groupsince 1 April 2001. He brings with him more than 28 yearsof experience in the IT industry. Mr Tay is also a Directorand Vice Chairman of VST Holdings Limited, the parentcompany of ECS Holdings Limited. In August 2005, he wasconferred the Public Service Medal by the President of theRepublic of Singapore in recognition for his public service tothe country. Mr Tay holds a Bachelor of Science (Honours)degree from the LaTrobe University and a Master of Business

Administration from the University of Melbourne.

02. Mr Narong IntanateMr Narong Intanate was appointed the Group Chief ExecutiveOf cer of ECS Holdings Limited and also to the Board of theECS subsidiaries on 1 July 2010. He is an Executive Directorof the Company, an appointment held since 15 December2000. Mr Intanate is actively involved in the managementof the subsidiaries and associate companies under theECS Group and plays a pivotal role in steering the strategicdirection of the Group. He is the founder and ExecutiveChairman of The Value Systems Co., Ltd., our subsidiary,since 1988. Mr Intanate is currently an advisor of the HatyaiUniversity. He holds a Bachelor of Science in Business

Administration and a Master of Business Administrationfrom California State University. Prior to forming The ValueSystems Co., Ltd., he was the Marketing Manager of Sahaviriya Infortech Computers Co., Ltd. from 1982 to 1983and the Marketing Director of Sahaviriya OA from 1983 to1988.

03. Mr Foo Sen ChinMr Foo Sen Chin was appointed as a Director on 15December 2000 and is concurrently the Advisor to GroupHuman Resources of the Company. He is also the Managing

Director and founder of ECS ICT Berhad, our associatecompany which is listed on the Main Board of Bursa MalaysiaSecurities Berhad. Mr Foo plays a pivotal role in steering thestrategic direction of ECS ICT Berhad. His responsibilitiesinclude the development of its long term business goals,overall operation and management of ECS ICT Berhad.Prior to joining our Group, he was the General Manager of acomputer bureau services company in Kuala Lumpur beforeforming ECS KU Sdn Bhd (formerly known as K.U. SistemsSdn Bhd) in 1985. Mr Foo is an advisor to the currentCouncil of PIKOM, Association of Computer and Multimedia

Industry of Malaysia. He has a Bachelor of Science degreein Electrical and Electronic Engineering from the Universityof Birmingham, UK and he also holds a Masters degreein Business Administration from the Cran eld School of Management in the United Kingdom.

04. Mr Mao XiangqianMr Mao Xiangqian was appointed as Executive Director of the Company on 3 May 2010 and is also concurrently thePresident of ECS Technology (China) Limited, a principalsubsidiary of ECS Holdings Limited. He has more than 20years of experience in Chinas ICT industry. Prior to joining theGroup, Mr Mao served as the Senior Vice President of DigitalChina Holdings Limited, one of Chinas leading ICT distributor,and was President of Digital China Technology Limited, whichis the distribution business division of Digital China HoldingsLimited. Prior to Digital China, Mr Mao spent 10 years withthe Lenovo Group. Mr Mao holds a Bachelor of Science(Machine Building and Automation) degree and a Master of Science (Modal Analysis) from Tianjin University as well asan Executive MBA degree from China Europe InternationalBusiness School.

BOARD OF DIRECTORS


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BOARD OF DIRECTORS

05. Mr Leong Horn KeeMr Leong Horn Kee was appointed as an IndependentDirector on 15 December 2000, and currently serves asthe Chairman of the Audit Committee and a member of the

Nominating and Compensation Committees. He is currentlythe Chairman/CEO of CapitalCorp Partners Pte Ltd. MrLeong was a Member of Parliament for 22 years. He haswide work experience in the public sector in the Ministriesof Finance and Trade & Industry, and in the private sector inventure capital, merchant banking, corporate investments,hotels and property development. Mr Leong is currentlySingapores Non-Resident Ambassador to Mexico and amember of the Securities Industry Council. He holds a degree(Honours) in Production Engineering from LoughboroughUniversity, UK; a degree (Honours) in Economics from the

University of London, UK; a degree in Chinese Languageand Literature from Beijing Normal University, China; anMBA degree from Insead, France, and a Master in BusinessResearch from the University of Western Australia.

06. Mr Tan Hup FoiMr Tan Hup Foi was appointed as an Independent Directoron 7 February 2006, and currently serves as Chairman of the Nominating Committee and a member of the Audit andCompensation Committees. He was the Chief Executive of

Trans-Island Bus Services Ltd from 1994 to 2005 and alsothe Deputy President of SMRT Corporation Ltd from 2003 to2005. He was also the Chairman of Ngee Ann PolytechnicCouncil from 2004 to 2011. Mr Tan is known internationallyas the Honorary Vice President of the International

Association of Public Transport (UITP) and HonoraryChairman of UITP Asia-Paci c Division. He was awarded theBintang Bakti Masyarakat (Public Service Star) in 2008 andthe Pingat Bakti Masyarakat (Public Service Medal) in 1996 bythe President of Singapore. Mr Tan graduated from MonashUniversity in Australia with a First Class Honours degree inMechanical Engineering in 1974 and he obtained a Master

of Science (Industrial Engineering) degree from University of Singapore in 1979.

07. Mr Koh Soo KeongMr Koh Soo Keong was appointed as an IndependentDirector on 11 February 2008, and currently serves asChairman of the Compensation Committee and a member

of the Audit and Nominating Committees. Mr Koh was, until April 2007, the Chief Executive Of cer and President of Toll Asia Pte Ltd, formerly SembCorp Logistics Ltd (SembLog)which was acquired by Toll in May 2006. With over 20years of experience in the logistics industry, he had helmedSembLog and its preceding companies since 1986. He iscurrently the Managing Director of EcoSave Pte Ltd. He isalso the Chairman of the Agri-Food & Veterinary Authorityof Singapore and Ascendas Funds Management (S) Ltd(managing Ascendas-REITs). He is a board member of fourother publicly listed companies. He holds a Bachelor of

Engineering (Honours), a Master of Business Administrationand a Postgraduate Diploma in Business Law from theNational University of Singapore.

08. Mr Ong Wei HiamMr Ong Wei Hiam was appointed as Non-Executive Directorof the Company on 3 May 2010. Mr Ong is the Group Chief Financial Of cer and Executive Director of VST HoldingsLimited, the parent company of ECS Holdings Limited. MrOng holds a Bachelors degree in Economics from UniversityCollege London and a Masters degree in Analysis, Design & Management of Information Systems from the London Schoolof Economics and Political Science. He is a Fellow of theInstitute of Chartered Accountants in England and Wales,and Fellow of the Hong Kong Institute of Certi ed Public

Accountants. Prior to joining the VST Group, Mr Ong servedin a senior position at PricewaterhouseCoopers and hasextensive working experience in London and Hong Kong.


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SENIORMANAGEMENT

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SENIORMANAGEMENT

01. Mr Narong IntanateMr Narong Intanate was appointed the Group Chief ExecutiveOf cer of ECS Holdings Limited and also to the Board of theECS subsidiaries on 1 July 2010. He is an Executive Director

of the Company, an appointment held since 15 December2000. Mr Intanate is actively involved in the managementof the subsidiaries and associate companies under theECS Group and plays a pivotal role in steering the strategicdirection of the Group. He is the founder and ExecutiveChairman of The Value Systems Co., Ltd., our subsidiary,since 1988. Mr Intanate is currently an advisor of the HatyaiUniversity. He holds a Bachelor of Science in Business

Administration and a Master of Business Administrationfrom California State University. Prior to forming The ValueSystems Co., Ltd., he was the Marketing Manager of

Sahaviriya Infortech Computers Co., Ltd. from 1982 to 1983and the Marketing Director of Sahaviriya OA from 1983 to1988.

02. Mr Eddie FooMr Eddie Foo is the Group Chief Financial Of cer of the Company and is concurrently the Group CompanySecretary. Mr Foo is responsible for the Groups overallnancial strategy and management, corporate nance andtreasury management, tax, and investor relations of ECSHoldings, and is also a director on the boards of variousECS companies. Mr Foo has several years of nancialmanagement and audit experience in multinational companiesand public accounting rms. Prior to serving as Group Chief Financial Of cer, Mr Foo was the Group Financial Controllerof the Company. Mr Foo holds a Bachelors degree in

Accountancy from the Nanyang Technological University andis a member of the Institute of Certi ed Public Accountants of Singapore.

03. Ms Ge HongMs Ge Hong is the Group Chief Information Of cer of the Company. Her main responsibility is in leading thedevelopment of an IT blueprint for the Groups business and

service delivery to support the Groups vision and sustainablegrowth. An experienced solution and managementconsultant, she has more than 16 years of global experiencein enterprise resource planning and business process re-engineering. Prior to ECS, Ms Ge was in leading organisationslike IBM, SAP, Accenture in consulting roles at the seniorlevel, serving major MNC clients like Warner Bros., OwensCorning, Mercedes Benz, Good Year, DuPont, LTV Steel aswell as US government agencies including IRS and NASA.Some of her major recent achievements include leading thetransition management for Warner Bros and an outsourcing

project for Capgemini. Ms Ge holds a Bachelors degree fromBeijing University, China and two Master degrees one in Accountancy and Financial Information System, and the otherin Public Administration from Cleveland State University, USA.


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SENIOR MANAGEMENT

04. Mr Lim Tow ChengMr Lim Tow Cheng was appointed as the Executive VicePresident, Group Business Development on 18 October2005. Mr Lim is responsible for managing the regional

expansion strategy and for identifying new businessopportunities for the Group. He has more than 20 yearsof experience in senior management positions in the ITindustry. Prior to joining the Group, Mr Lim was the Directorfor South Asia of Western Digital and has previously workedwith Digiland International Limited for more than 8 years,holding several senior management positions, including asChief Executive Of cer. Mr Lim has an Honours degree inEconomics from the National University of Singapore.

05. Mr Mao XiangqianMr Mao Xiangqian was appointed as Executive Director of theCompany on 3 May 2010 and is also concurrently thePresident of ECS Technology (China) Limited, a principalsubsidiary of ECS Holdings Limited. He has morethan 20 years of experience in Chinas ICT industry. Prior to

joining the Group, Mr Mao served as the Senior VicePresident of Digital China Holdings Limited, one of Chinasleading ICT distributor, and was President of Digital China

Technology Limited, which is the distribution business divisionof Digital China Holdings Limited. Prior to Digital China,Mr Mao spent 10 years with the Lenovo Group. Mr Mao holdsa Bachelor of Science (Machine Building and Automation)degree and a Master of Science (Modal Analysis) from TianjinUniversity as well as an Executive MBA Degree from ChinaEurope International Business School.

06. Mr Somsak PejthaveeporndejMr Somsak Pejthaveeporndej was appointed as thePresident of The Value Systems Co., Ltd., our wholly-ownedsubsidiary on 1 February 2009. He is responsible for the

overall management of The Value Systems and has been withour Group since 1988. Mr Pejthaveeporndej was formerlyresponsible for managing the Enterprise Systems & ICTServices Division of The Value Systems. He has more than 20 years experience in the IT industry. Prior to joining ourGroup, he was employed as a Technical Manager by SunShine Co., Ltd. from 1981 to 1984, followed by Sahaviriya

Telecom Co., Ltd. from 1984 to 1988. He holds a Bachelorof Science degree majoring in electronics from RajamangalaUniversity of Technology Krungthep, Thailand, and a MiniMBA from The Faculty of Commerce and Accountancy,

Chulalongkorn University.


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SENIOR MANAGEMENT

07. Mr Foo Sen ChinMr Foo Sen Chin was appointed as a Director on 15December 2000 and is concurrently the Advisor to the GroupHuman Resources of the Company. He is also the Managing

Director and founder of ECS ICT Berhad, our associatecompany which is listed on the Main Board of Bursa MalaysiaSecurities Berhad. Mr Foo plays a pivotal role in steeringthe strategic direction of ECS ICT Berhad. His responsibilitiesinclude the development of its long term business goals,overall operation and administrative management of ECSICT Berhad. Prior to joining our Group, he was the GeneralManager of a computer bureau services company in KualaLumpur before forming ECS KU Sdn Bhd (formerly knownas K.U. Sistems Sdn Bhd) in 1985. Mr Foo is an advisorto the current Council of PIKOM, Association of Computer

and Multimedia Industry of Malaysia. He has a Bachelorof Science degree in Electrical and Electronic Engineeringfrom the University of Birmingham, UK and he also holds aMasters degree in Business Administration from the Cran eldSchool of Management in the United Kingdom.

08. Mr Sebastian ChongMr Sebastian Chong is the President of ECS Computers(Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Limited. Mr Chong joined ECS in 1990 andhas over 20 years of experience in the IT industry. He isresponsible for strategic direction, overall management,including the sales and operations of the commercial,consumer and retail segments of ECS Singapore. Mr Chongis also responsible for business development, businessstrategy and building of long term relationships with vendors,channels and partners.

09. Ms Lina ChooMs Lina Choo was appointed as Executive Director of PTECS Indo Jaya in April 2009. She joined ECS in September2007 and is responsible for overseeing the nancial

management of ECS Indonesia. Ms Choo has more than15 years experience in nancial management in variouscompanies, of which over 10 years was in the IT industry.Prior to joining ECS Indonesia, she worked with NatsteelElectronics in Singapore as an accountant before returning toIndonesia to work as Finance Manager for Diebold Indonesiaand subsequently, Datacraft Indonesia. Ms Choo holds aBachelors degree in Accountancy from the University of HKBP Nommensen.

10. Mr Jimmy GoMr Jimmy Go is the founder and President of MSI-ECS Phils.,Inc., our associate company. He has more than 25 yearsof experience in the IT industry in the Philippines. Mr Gostarted in the IT industry way back in 1982 after graduatingfrom college selling Fujitsu & Apple computers. He currentlyholds a Bachelors degree in Electronics & CommunicationEngineering from De La Salle University with an award of Magna Cum Laude and Post Graduate degree of Masters inBusiness Administration in Ateneo de Manila University.Mr Go was also the past President of COMDDAP (ComputerManufacturers, Distributors & Dealers Association of thePhilippines). In 1998, Mr Go was named President and CEOof MSI-Digiland. He was instrumental in growing the businessof MSI in the Philippines, making it one of the biggest ITdistributors in the country in less than 5 years.


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CORPORATEEXECUTIVES

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CORPORATE EXECUTIVES

01. Mr Eugene TanMr Eugene Tan is the Senior Vice President, Group Finance of ECS Holdings Limited since 1 March 2008. He is responsiblefor the nancial management of the Group, which covers

accounting, treasury, tax, nancial control and reporting. Priorto his current appointment, Mr Tan was the Vice President,Finance of ECS Computers (Asia) Pte Ltd, the wholly-ownedSingapore subsidiary of ECS Holdings Limited. Prior to joiningthe Group, Mr Tan worked for KPMG Singapore as a seniorauditor. Mr Tan holds a Bachelors degree in Accountancy & Economics from the University of Reading.

02. Ms Peggy Leong-YeoMs Peggy Leong-Yeo is the Senior Vice President, GroupHuman Resources for ECS Holdings Limited. Her main

responsibilities are to establish HR strategies for the Groupand to strengthen the Groups human capital, which includesrede ning leading-edge performance management anddevelopment practices to support leadership successionplanning. She provides leadership and tactical support informulation, implementation and review of HR policies in keyHR areas to support the Groups strategic intent to ensurealignment and adoption of best practices. She has morethan 20 years of Human Resources experience behind herworking with a global multinational company. She holds aDiploma in Administrative Management from The Institute of

Administrative Management in UK and a Master inBusiness Administration from the University of Birmingham,United Kingdom.

03. Mr Newman LiMr Newman Li is the Vice President, Group Internal Audit of the Company. He is a member of CPA China and has morethan 10 years of nancial and audit experience. Prior to joining

the Group, he worked for Foshan Power ConstructionGroup Co. Ltd in 1998 and Guangdong Telecom in 2004. Mr Li holds a Bachelors degree in Accountancy from the

Tianjin University of Commerce and was appointed to hiscurrent position since May 2008.

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04. Ms Lim Yok YenMs Lim Yok Yen is the Vice President, Group Finance of ECSHoldings Limited. She is responsible for nancial planningand analysis, budgeting, forecasting as well as working with

partners and management to support the Groups businessgrowth strategy. Ms Lim is also responsible for all channelnance activities including credit management, workingcapital requirements and planning with vendor nanceteams and internal business units. Prior to joining ECS in

April 2008, she was a Group Accountant in a public-listedcompany in Singapore where she handled Group reportingand treasury planning. Ms Lim has more than 13 years of experience in nancial accounting and group reporting in thefreight forwarding industry and companies listed on SingaporeExchange. Ms Lim is a Certi ed Public Accountant and also

a member of Association of Chartered Certi ed Accountants(ACCA) since 2001.

05. Mr Paul ChongMr Paul Chong is the Assistant Vice President, Group PublicRelations of ECS Holdings Limited and concurrently, the

Vice President, Marketing of ECS Computers (Asia) Pte

Ltd, the Groups wholly-owned Singapore subsidiary. In hisrole for Group Public Relations, Mr Chong is responsiblefor the Groups branding and communication programs,publicity, corporate affairs and internal communicationbetween management and employees. As Vice President,Marketing, he is responsible for providing comprehensivemarketing communications solutions such as direct marketingprograms, promotions, events, seminars, tradeshows andadvertising. Prior to joining the ECS Group in 1997,Mr Chong worked for 6 years in the public sector of Singapore handling national IT initiatives and training and

development programs. Mr Chong holds a Bachelors degreein Business Administration from the National University of Singapore and a Master of Business Administration degreefrom the University of Western Australia.

CORPORATE EXECUTIVES


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GROUPSTRUCTURE

ECS HOLDINGS LIMITED

CHINA

ECS Technology (China) Limited

100%

ECS BeijingChuang Yue

Technology Co., Ltd100%

ECS Technology(Guangzhou) Co., Ltd

100%

ECS TechnologyCo., Ltd100%

ECS (Shanghai)Management Co., Ltd

100%

ECS China Technology (Shanghai)

Co., Limited100%

EIT info-tech Limited100%

ECS Technology(HK) Co., Limited

100%

ECS ChongqingMarketing &

Payment Co., Ltd.100%

SINGAPORE

ECS Computers(Asia) Pte Ltd

100%

Paci c City(Asia Paci c)

Pte Ltd100%

ECSEnterpriseSolutionsPte Ltd100%

THAILAND

The ValueSystemsCo., Ltd.

100%

INDONESIA

ECS IndoPte Ltd

89%

PT ECSIndo Jaya

100%

MALAYSIA

ECS ICTBerhad

41%

ECS KUSdn Bhd

100%

ECS AstarSdn Bhd

100%

ECS KUSHSdn Bhd

100%

ECSPericomp

Sdn Bhd100%

PHILIPPINES

ECS Infocom(Phils) Pte. Ltd.

100%

MSI-ECSPhils., Inc.

49.99%

VIETNAM

ECS VietnamCompany Limited100%

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CORPORATEINFORMATION

Board of DirectorsMr Tay Eng Hoe // Chairman, Non-Executive Director Mr Narong Intanate // Executive Director Mr Foo Sen Chin // Non-Executive Director

Mr Leong Horn Kee // Independent Director Mr Tan Hup Foi // Independent Director Mr Koh Soo Keong // Independent Director Mr Mao Xiangqian // Executive Director Mr Ong Wei Hiam // Non-Executive Director

Audit CommitteeMr Leong Horn Kee // ChairmanMr Tan Hup FoiMr Koh Soo Keong

Compensation CommitteeMr Koh Soo Keong // ChairmanMr Leong Horn KeeMr Tan Hup Foi

Nominating CommitteeMr Tan Hup Foi // ChairmanMr Leong Horn KeeMr Koh Soo KeongMr Tay Eng Hoe

Investment CommitteeMr Leong Horn Kee // ChairmanMr Foo Sen ChinMr Tan Hup FoiMr Ong Wei Hiam

Senior Management at ECS Holdings LimitedMr Narong Intanate // Group Chief Executive Ofcer Mr Eddie Foo Toon Ee // Group Chief Financial Of cer Ms Ge Hong // Group Chief Information Of cer

Mr Lim Tow Cheng // Executive Vice President, Business Development

Senior Management at ECS Holdings LimitedsSubsidiaries and Associate CompaniesMr Mao Xiangqian // President ECS Technology (China) Limited

Mr Somsak Pejthaveeporndej // President The Value Systems Co., Ltd.

Mr Foo Sen Chin // Managing Director ECS ICT Berhad

Mr Sebastian Chong // President ECS Computers (Asia) Pte Ltd

Ms Lina Choo // Executive Director PT ECS Indo Jaya

Mr Jimmy Go // President MSI-ECS Phils., Inc.

Corporate ExecutivesMr Eugene Tan // Senior Vice President, Group FinanceMs Peggy Leong-Yeo // Senior Vice President, Group Human Resources

Mr Newman Li // Vice President, Group Internal Audit Ms Lim Yok Yen // Vice President, Group FinanceMr Paul Chong // Assistant Vice President, Group Public Relations

AuditorsKPMG LLPCerti ed Public Accountants16 Raf es Quay #22-00 Hong Leong BuildingSingapore 048581Partner-in-charge : Ms Chu Sook Fun(Since FY2011)


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CORPORATE INFORMATION

RegistrarM&C Services Private Limited138 Robinson Road #17-00

The Corporate Of ce

Singapore 068906

Registered O ce8 Temasek Boulevard#34-02 Suntec Tower ThreeSingapore 038988

Principal Bankers ANZ Bank Citibank N.A.DBS Bank Ltd

KBC Bank N.V.Oversea-Chinese Banking CorporationStandard Chartered Bank Sumitomo Mitsui Banking CorporationUnited Overseas Bank Limited

Company Secretary Mr Eddie Foo Toon Ee, CPA

ECS O cesECS Holdings Limited8 Temasek Boulevard#34-02 Suntec Tower ThreeSingapore 038988Website : www.ecs.com.sg

ECS Technology (China) Limited6/7F, Wanliuyicheng Building,No.11 Changchunqiao Road, Haidian District,Beijing, P.R.C (100089)Of ces in Beijing, Changchun, Changsha, Chengdu,Chongqing, Dalian, Fuzhou, Guangzhou, Guiyang, Harbin,Hefei, Hong Kong, Huhehaote Jinan, Kunming, Lanzhou,Nanchang, Nanjing, Nanning, Ningbo, Qingdao, Shanghai,Shenzhen, Shenyang, Shijiazhuang, Taiyuan, Tianjin, Urumqi,Wuhan, Xiamen, Xian, ZhengzhouWebsite : www.ecschina.com

The Value Systems Co., Ltd.21st Floor, Serm-Mit Tower159/35 Sukhumvit 21 Road (Asok)North Klongtoey, Wattana

Bangkok 10110, ThailandOf ces in Bangkok, Chiang Mai, Hat Yai, Khon Kaen, NakhonRatchasima, Phitsanulok, Phuket, Rayong,Surat ThaniWebsite : www.value.co.th

ECS ICT BerhadLot 3, Jalan Teknologi 3/5

Taman Sains Selangor, Kota Damansara47810 Petaling Jaya, Selangor, MalaysiaOf ces in Johor Bahru, Kota Kinabalu, Kuantan, Kuching,Penang, Petaling JayaWebsites : www.ecsm.com.my

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

PT ECS Indo JayaKomplek Mangga Dua SquareBlok E 34-37 Jl. Gunung Sahari Raya No.1Jakarta Utara 14420, IndonesiaOf ces in Balikpapan, Bandung, Jakarta, Makassar,Medan, Palembang, Semarang, Surabaya, Yogyakarta

Website : www.ecsindo.comMSI-ECS Phils., Inc.

Topy II Bldg, #3 Economia St.,Libis, Quezon City,1110, PhilippinesOf ces in Cebu, Davao, ManilaWebsite : www.msi-ecs.com.ph


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REGIONALNETWORK

The Value Systems Co., Ltd.

ECS Vietnam Company Limited

ECS ICT Berhad

ECS Technology (China) Limited

ECS Holdings Limited (Listed on SGX)

ECS Computers (Asia) Pte Ltd

MSI-ECS Phils., Inc.

PT ECS Indo Jaya


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32

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BUSINESSMODEL

Value Products Servers

Storage

Application Software& Middleware

Networking & Communication

Volume Products Notebooks

Desktops

Printers & Imaging Devices

Mobility Devices

Printing Supplies

Accessories & Options

Productivity Software

Aggregator of Best-of-Breed ITProducts: ConvenientOne-Stop Supplier

ChannelDevelopmentand Management

Volume Aggregator

Ef cient InventoryManagement toensure timely delivery

Financial CreditSupport toResellers/IT Partners

Consultancy/ Implementation

Managed Services

Post-Sales/ Maintenance Support

Professional Services

Training/Certi cation

Logistical Services

Corporate Resellers

System Integrators

Application Providers

Retailers

ISVs

Superstores

Developers

Corporates

ManufacturingIndustry

Government

Service Industry

Telcos & ServiceProviders

Emerging Industry

SME Home /SOHO

Consumer & Lifestyle

ICT Vendors ECS Channel Partners End Users

Economiesof Scale

for BetterPricing and

Aggregation

SingleSourceSupplier

CompleteSolution

After SalesSupport


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FINANCIAL

HIGHLIGHTS

3.5

3

2.5

2

1.5

1

0.5

0

DIVIDENDS PER SHARE (cents)

FY07 FY08 FY09 FY10 FY11

1

. 5

2 . 7

3 . 0

3 . 6

2 . 2

REVENUE BYGEOGRAPHICAL SEGMENT(S$$ million)

North Asia2,328.5

Southeast Asia1,278.7

3,850

3,300

2,750

2,200

1,650

1,100

550

0


2 , 7

8 9

. 4

2 , 9

4 9

. 9

3 , 2

5 2

. 0

3 , 0

8 5

. 4 3 , 6

0

7 . 2

REVENUE (S$$ million)

70

60

50

40

30

20

10

0


2 3

. 4 2 9

. 43

8 . 2

5 3

. 0

3 9

. 2

Net Pro t Attributable to Equity Holders

PROFITABILITY (S$$ million)

350

300

250

200

150

100

50

0

SHAREHOLDERS EQUITY(S$$ million)


2 1 2

. 7

2 3 7

. 8 2 5 9

. 5 2 9 6

. 6 3 2 6

. 5

21

18

15

12

9

6

3

0

RETURN ON EQUITY (%)


1 1

. 6 1 3

. 01

5 . 4

1 9

. 1

1 2

. 6

21

18

15

12

9

6

3

0

RETURN ON CAPITAL EMPLOYED (%)


1 0

. 0 1 1

. 7 1 2

. 2 1 5

. 3

1 3

. 8

3,850

3,300

2,750

2,200

1,650

1,100

550

0

Enterprise Systems Distribution IT Services

2,789.4

964.3

1,792.9

32.2

2,949.9

1,133.3

1,783.0

33.6

1,187.9

3,252.0

2,034.2

29.9

1,132.5

3,085.4

1,928.4

24.5

916.0

3,607.2

2,663.0

28.2

REVENUE BY BUSINESS SEGMENT (S$$ million)



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2011AWARDS

Country Awarded by Award

ECS Holdings DP Information S1000 - Ranked 22nd for Top Public-Listed Company by Sales Turnover

ECS Holdings DP Information Singapore International 100 - Ranked Top 15 by Overseas Revenue

ECS China FLUKE Best Distributor Partner of 2011ECS China HP Distributor Partner of the Year 2011

ECS China Intel Excellent Distributor of Intel Software (China Area) - 2011

ECS Thailand HP Best Distributor - Outstanding Enterprise Business Product Selling 2011

ECS Thailand HP Best Distributor - HP Software 2011

ECS Thailand HP Best Distributor - Outstanding Overall TS Achievement 2011

ECS Thailand Intermec Distributor of the Year 2011

ECS Thailand Oracle Partner of the Year 2011

ECS Thailand Symantec Top Symantec Performing Distributor FY2011

ECS Malaysia HP Top Master Part Reseller - Technology Services (2011)

ECS Malaysia HP Top Services Contract Specialist - Technology Services (2011)ECS Malaysia HP Top Wholesaler - HP Storage Division Broadbase Category (2011)

ECS Malaysia HP Top Wholesaler - Storage Division (2011)

ECS Malaysia Oracle Partner of the Year FY11 - Value Added Distributor

ECS Singapore HP 1H11 Best Performing Distributor (Partner-Led Business)

ECS Singapore HP Top Wholesaler of the Year 2011 - IPG Singapore

ECS Singapore IBM Asia Paci c Software Distributor 2011

ECS Singapore Lenovo Top Distributor of the Year 2011 - Relationship Segment

ECS Indonesia Buffalo Best Sales Growth 2011

ECS Indonesia Cisco Best Distributor FY 2011

ECS Indonesia Cisco Best Service Sales Distributor FY 2011

ECS Philippines Acer Distributor of the Year, Consumer Sales Notebooks and UMPC (2011)

ECS Philippines Acer Distributor of the Year, Consumer Sales Projectors (2011)

ECS Philippines Acer Most Outstanding Master Authorized Service Partner of the Year (2011)

ECS Philippines Acer Product Manager of the Year - Consumer Notebooks (2011)

ECS Philippines Acer Product Manager of the Year Projectors (2011)

ECS Philippines EMC Distributor of the Year 2011

ECS Philippines HP IPG Distributor of the Year 2011

ECS Philippines HP Top Distributor - Highest Growth 2011

ECS Philippines HP IPG IWS System Sales Distributor 2011ECS Philippines IBM Top Volume Partner Distributor for 2011

ECS Philippines Oracle Value-Added Distributor of the Year 2011


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2011MILESTONES

Country Month Description of Milestone

ECS Thailand Jan - Mar 11 Apppointed as Distributor for Lexmark

ECS Thailand Apr - Jun 11 The Value Systems established the Corporate Social Responsibility Campaign of

The Fairy Tale Project V at Watprachanart School, Nakhonchaisri District, Nakhonpathom Province

ECS Thailand Apr - Jun 11 Appointed as Distributor for Symantec Cloud

ECS Thailand Jul - Sep 11 Appointed as Distributor for Huawei Technology

ECS Malaysia Jan - Mar 11 Appointed as Dells Strategic Authorised Distributor for Dell Commercial & Consumer Products

ECS Malaysia Apr - Jun 11 Appointed as Lenovos Distributor for Consumer & SMB

ECS Malaysia Jul - Sep 11 ECS ICT Berhad nominated as one of the companies inThe Edge Billion Ringgit Club

ECS Malaysia Oct - Dec 12 Opening of technology centre facility in Malaysia for Oracle Exadata Databasemachine located in main of ce.

ECS Singapore Jan - Mar 11 Appointed as Distributor for Trek

ECS Singapore Jan - Mar 11 Appointed as Distributor for InFocus

ECS Singapore Apr - Jun 11 Appointed as Distributor for Serena Software

ECS Singapore Apr - Jun 11 Appointed as Distributor for Dell Streak

ECS Singapore Apr - Jun 11 Appointed as Distributor for HP Networking

ECS Singapore Jul - Sep 11 Appointed as Distributor for Huawei

ECS Singapore Jul - Sep 11 Appointed as Distributor for Hitachi Data Systems

ECS Singapore Jul - Sep 11 Appointed as Distributor for ProofpointECS Singapore Oct - Dec 12 Appointed as Distributor for WatchGuard

ECS Singapore Oct - Dec 12 Appointed as Distributor for Decision

ECS Singapore Oct - Dec 12 Appointed as Distributor for Huawei Consumer

ECS Indonesia Jan - Mar 2011 Appointed as Distributor for Fujitsu

ECS Indonesia Jan - Mar 2011 Appointed as Distributor for Dell

ECS Indonesia Jul - Sept 2011 Appointed as Distributor for Huawei

ECS Philippines Jan - Mar 11 Appointed as Distributor for Fortinet

ECS Philippines Jan - Mar 11 Appointed as Distributor for ASUS



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ANNUAL REPORT 2011ECS HOLDINGS LIMITED

CORPORATE GOVERNANCE STATEMENT

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

(A) BOARD MATTERS

The Boards Conduct of its Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsiblefor the long-term success of the company. The Board works with Management to achieve this objective and the Managementremains accountable to the Board.

The Boards role is to:

a) provide entrepreneurial leadership, set strategic aims, and ensure that the necessary nancial and human resources are in place for thecompany to meet its objectives;

b) establish a framework of prudent and effective controls which enables risks to be assessed and managed, including safeguarding of shareholders interests and the companys assets;

c) review management performance;d) identify the key stakeholder groups and recognise that their perceptions affect the companys reputation; ande) set the companys values and standards, and ensure that obligations to shareholders and other stakeholders are understood and met;f) consider sustainability issues, e.g. environmental and social factors, as part of its strategic formulation.

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

a) approval of quarterly results announcements;b) approval of annual report and accounts;c) declaration of interim dividend and proposal of nal dividends;d) approval of corporate strategy;e) authorisation of major transactions;f) review and approval of annual budgets;g) compensation of senior management personnel; andh) convening of shareholders meetings.

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

The Board has delegated the day-to-day management and running of the Company to the management headed by our Group Chief ExecutiveOf cer (Group CEO), while reserving certain key issues and policies for its approval. Additionally, to facilitate effective management, certainfunctions have been delegated to the following sub-committees, each of which has its own written terms of reference:

a) the Nominating Committee;b) the Compensation Committee;c) the Audit Committee; andd) the Investment Committee.

Newly-appointed directors are given brie ngs by the Management on the Groups activities and its strategic directions. Changes to regulationsand accounting standards are monitored closely by Management. To keep pace with regulatory changes, where these changes have animportant bearing on the Companys or directors disclosure obligations, directors are briefed either during Board meetings or at speciallyconvened sessions conducted by professionals.

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

DIRECTORS ATTENDANCE AT BOARD MEETINGSBoard

No. ofMeetings Attended

Board Member 5 5 Tay Eng Hoe 5 5Narong Intanate 5 5Foo Sen Chin 5 5

Leong Horn Kee 5 5Koh Soo Keong 5 5

Tan Hup Foi 5 5Mao Xiangqian 5 4Ong Wei Hiam 5 5

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 corporateaffairs independently, in particular, from Management and substantial shareholders. No individual or small group of individualsshould be allowed to dominate the Boards decision making.

The Board comprises eight directors of which six are non-executive directors (including three independent directors) and two executivedirectors. The Company places great importance on the quality of its Board of Directors. The Group achieves this by appointing to its Boardhighly respected individuals and prominent leaders in their respective professions. The Board comprises individuals with proven track recordsin the public and/or corporate sector, and each is a highly respected member of the business community. As a group, they provide corecompetencies such as accounting or nance, business or management experience, industry knowledge, strategic planning and customer-basedexperience or knowledge. Key information regarding the directors is given in the Board of Directors section on pages 19 to 21 of the annualreport.

Chairman and Chief Executive Of cer

Principle 3: There should be a clear division of responsibilities between the leadership of the Board and the executives responsible formanaging the companys business. No one individual should represent a considerable concentration of power.

Mr Tay Eng Hoe, a non-executive director, was appointed as the Chairman of the Company on 27 September 2010. Mr Narong Intanate wasappointed as Group CEO with effect from 1 July 2010. The Chairman and the Group CEO each perform separate functions to ensure that thereis an appropriate balance of power and authority, and that accountability and independent decision-making are not compromised. The Chairmanis responsible for the functioning of the Board. The Group CEO has full executive responsibilities over the running of the Groups business, thebusiness direction and operational decisions of the Group. No individual or small group of individuals dominate the Boards decision makingprocess.

Board Membership & Board Performance

Principle 4: There should be a formal and transparent process for the appointment and re-election of directors to the Board.

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

by each director to the effectiveness of the Board.


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The Nominating Committee was formed on 6 January 2003 and comprises four directors, including three independent directors, Mr TanHup Foi, Mr Leong Horn Kee, Mr Koh Soo Keong and one non-executive director, Mr Tay Eng Hoe. Mr Tan Hup Foi is the Chairman of theNominating Committee.

The role of the Nominating Committee is to perform the following functions:

a) identi es and reviews all nominations for Board appointments and re-nominations of directors;b) assesses the effectiveness of the Board as a whole and the contribution by each individual director to the effectiveness of the Board;c) determine whether or not a Director is independent;d) review of board succession plans for directors, in particular, the Chairman and for the CEO;e) the development of a process for evaluation of the performance of the Board, its committees and directors;f) the review of training programs for the Board; andg) the appointment and re-election of directors.

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

Access to Information

Principle 6: In order to ful l their responsibilities, board members should be provided with complete, adequate and timely information priorto board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties andresponsibilities as directors.

All directors are provided with complete, adequate and timely information prior to meetings and on a regular basis to enable them to perform

their roles properly. Directors are entitled to request additional information as needed to make informed decisions. All directors have separateand independent access to senior management and the company secretary. The company secretary has de ned roles and responsibilitiesand attends all Board and sub-committee meetings of the Company. Should directors, whether as a group or individually, need independentprofessional advice in the furtherance of their duties, the cost of such professional advice will be borne by the Company.

(B) REMUNERATION MATTERS

Procedures for Developing Remuneration Policies

Principle 7: There should be a formal and transparent procedure for xing the remuneration packages of individual directors. No directorshould be involved in deciding his or her own remuneration.

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

Level and Mix of Remuneration; Disclosure of Remuneration

Principle 8: The level and structure of remuneration should be aligned with the long-term interest and risk policies of the company, and shouldbe appropriate to attract, retain and motivate the (a) directors to provide good stewardship of company, and (b) key managementpersonnel to successfully manage the company. However, companies should avoid paying more than is necessary for thispurpose.

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Principle 9: Every company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure forsetting remuneration, in the companys annual report. It should also provide disclosure in relation to its remuneration policiesto enable investors to understand the link between remuneration paid to directors and key management personnel, andperformance.

The Groups remuneration policy is to provide a competitive remuneration package so as to attract, retain and motivate directors and seniormanagement with the required experience and expertise to run the Group successfully. In setting remuneration packages for executive directorsand senior management of the Group, the pay and employment conditions within the industry and in comparable companies are taken intoconsideration.

The compensation package of the Groups executive directors including its Group CEO and senior management consists of salary, allowances,share options and bonuses which are conditional upon meeting certain performance targets.

Non-executive directors have remuneration packages which consist of a directors fee component and a share option component pursuant tothe Companys Share Option Scheme. The directors fee policy is based on a scale of fees divided into basic retainer fees as a director andadditional fees for serving on board committees. Directors fees for non-executive directors are subject to the approval of shareholders at the

Annual General Meeting. The report on directors remuneration is given below:

SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED 31 DECEMBER 2011

Allowancesand other

Salary Bonus Fees Bene ts TotalName of Director % % % % %

$1,000,000 to below $2,000,000 Narong Intanate 17 80 - 3 100

$500,000 to below $1,000,000 Mao Xiangqian 49 48 - 3 100

Below $500,000 Tay Eng Hoe - - 100 - 100Foo Sen Chin - - 100 - 100Leong Horn Kee - - 100 - 100

Tan Hup Foi - - 100 - 100Koh Soo Keong - - 100 - 100Ong Wei Hiam - - 100 - 100

Executives Remuneration

Rather than setting out the names of the top ve key executives who are not also directors of the Company, we have shown a Group-widecross-section of executive remuneration by number of employees earning $100,000 upwards in bands of $250,000 below. This should give amacro view of the remuneration pattern in the Group, while maintaining con dentiality of staff remuneration matters.


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NO. OF EXECUTIVES IN REMUNERATION BANDS

No. of Total Fixed Total Variable TotalEmployees Compensation Compensation Remuneration

Total Compensation (S$) (Note 1) (Note 2) (Note 3)

$100,000 to $249,999 11 $1,581,519 $132,932 $1,714,451$250,000 to $499,999 7 $1,788,120 $1,228,790 $3,016,910$500,000 to $749,999 3 $610,005 $1,361,173 $1,971,178

Total 21 $3,979,644 $2,722,895 $6,702,539

Notes:

1. Including employees in local and overseas subsidiaries.2. Inclusive salaries, AWS, related CPF and other statutory contributions, allowances and fringe-bene ts.3. Sales commission, bonus and other statutory contributions.

There are no employees in the Group who are immediate family members of a director or the Group CEO.

(C) ACCOUNTABILITY AND AUDIT

Accountability

Principle 10: The Board should present a balanced and understandable assessment of the companys performance, position and prospects.

In presenting the annual nancial statements and quarterly announcements to shareholders, it is the aim of the Board to provide theshareholders with a detailed analysis, explanation and assessment of the Groups nancial position and prospects. On a quarterly basis, Boardmembers are provided with business and nancial reports comparing actual performance with budget and with prior year comparisons withhighlights on key business indicators and any signi cant business development. In addition, the Group CEO communicates regularly with Boardmembers through informal meetings and phone calls with appropriate updates on Company developments. Risk Management and Internal Controls

Principle 11: The Board is responsible for the governance of risk. The Board should ensure that the Management maintains a sound system of risk management and internal controls to safeguard the shareholders interests and the companys assets, and should determinethe nature and extent of the signi cant risks which the Board is willing to take in achieving its strategic objectives.

The Board acknowledges that it is responsible for the Groups system of internal control and strives to maintain a robust and effective system

of internal controls to address any nancial, operational or compliance risks. It is the opinion of the Board with the concurrence of the AC that,in the absence of evidence to the contrary, the system of internal controls maintained by the Company and in place throughout the nancialyear 2011, provides reasonable, but not absolute, assurance against material nancial misstatements or loss, and includes the safeguarding of assets, the maintenance of proper accounting records, the reliability of nancial information, compliance with appropriate legislation, regulationsand best practices, and the identi cation and containment of nancial, business and compliance risks. The Board notes that all internal controlsystems contain inherent limitations and no system of internal controls could provide absolute assurance against the occurrence of materialerrors, poor judgment in decision-making, human error, losses, fraud or other irregularities.

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Audit Committee

Principle 12: The Board should establish an Audit Committee with written terms of reference which clearly set out its authority and duties.

The Audit Committee comprises three members, of which all members, including the Chairman, are independent. The members of the AuditCommittee at the date of this report are:

Leong Horn Kee Chairman Tan Hup Foi MemberKoh Soo Keong Member

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

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

b) reviewing interested person transactions (as de ned in Chapter 9 of the Listing Manual (Listing Manual) of the Singapore ExchangeSecurities Trading Limited (SGX-ST), including such transactions conducted under the shareholders general mandate previouslyobtained;

c) reviewing with external auditors the audit plan, their evaluation of the systems of internal controls, their annual reports and theirmanagement letters and managements response;

d) reviewing and recommending to the Board the re-appointment of the external auditors, taking into consideration the non-audit servicesrendered by the external auditors and being satis ed that the nature and extent of such services will not prejudice the independence andobjectivity of the external auditors;

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

f) reviewing any suspected fraud or irregularity, or suspected infringement of any Singapore laws or regulations or rules of the SGX-ST or anyother regulatory authority in Singapore, which has or is likely to have a material impact on the Groups operating results or nancial position,and reporting such matters to the Board; and

g) considering other matters as requested by the Board.

The Audit Committee has full access to and co-operation of the Companys management and the internal auditors and has full discretion toinvite any director or executive of cer to attend its meetings. The auditors, both internal and external, have unrestricted access to the AuditCommittee. Reasonable resources have been made available to the Audit Committee to enable them to discharge their duties.

The Audit Committee held 4 meetings since the date of the last annual report. The Audit Committee reviewed the Interested Person Transactionsfor the year ended 31 December 2011 in accordance with the terms of the Shareholders Mandate for such transactions as were approved on21 April 2011. Interested Person Transactions with a total value of $20.6 million were examined and the Audit Committee is of the opinion thatthe 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 con rmed that the methods and procedures for determining the transaction prices relating to InterestedPerson Transactions have not changed since the last shareholders approval. The Audit Committee also con rms that the methods andprocedures are suf cient to ensure that the transactions will be carried out on normal terms and will not be prejudicial to the interests of theCompany and its minority shareholders.

The Audit Committee had reviewed the non-audit services provided by the external auditors and is satis ed with the independence of theauditors. The Audit Committee has recommended to the Board that the auditors, KPMG, be nominated for re-appointment at the forthcoming

Annual General Meeting of the Company.



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Meetings and attendance are as follows:

Audit CommitteeNo. of

Name of Director Meetings Attended

Leong Horn Kee (Chairman) 4 4 Tan Hup Foi 4 4Koh Soo Keong 4 4

Internal Audit

Principle 13 : The Company should establish an effective internal audit function that is adequately resourced and independent of the activities

it audits.

The Group has an internal audit department which is independent of the activities it audits. It performs nancial audits, implements operationaland compliance controls. The Audit Committee approves the hiring, removal, evaluation and compensation of the head of the internal auditdepartment. 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 AuditCommittee for approval at the beginning of each year. The Internal Auditor has access to all the Companys documents, records, propertiesand personnel and reports to the Audit Committee quarterly regarding its ndings. The Audit Committee also meets with the Internal Auditor atleast once during the year without the presence of Management. The Audit Committee also ensures that the internal audit function is adequatelyresourced, and will review annually the adequacy of the internal audit function.

The internal auditors are expected to carry out their function according to standards set by nationally or internationally recognised professionalbodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors.

Investment Committee

The Investment Committee is chaired by the independent and non-executive director, Mr Leong Horn Kee. The members of the Committeecomprise Mr Foo Sen Chin, Mr Tan Hup Foi and Mr Ong Wei Hiam.

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

a) to review and recommend investment policy guidelines and capital expenditure plans to the Board;

b) to review investment risk management policies;

c) to evaluate and recommend any proposed investments, divestments, geographical expansion, mergers and acquisitions, joint ventures forBoards approval; and

d) to review and monitor performance, forecast and business plan of investments.

The Investment Committee held 3 meetings since the date of the last annual report.

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(D) COMMUNICATION WITH SHAREHOLDERS

Principle 14 : Companies should treat all shareholders fairly and equitably, and should recognise, protect and facilitate the exercise of shareholders rights, and continually review and update such governance arrangements.

Principle 15 : Companies should actively engage their shareholders and put in place an investor relations policy to promote regular, effective andfair communication with shareholders.

Principle 16 : Companies should encourage greater shareholder participation at general meetings of shareholders, and allow shareholders theopportunity 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 theCompanies Act, Chapter 50, of Singapore, the Boards policy is that all shareholders are informed of all major developments of the Group.Price-sensitive information is released publicly, and quarterly results and annual reports are announced or issued within the mandatory periodand are available on the Groups website. Thereafter, a brie ng by Management is held jointly for the media and analysts every half yearly. Allshareholders of the Group receive the annual report and notice of Annual General Meeting. Shareholders are encouraged to attend the AnnualGeneral Meeting to ensure a high level of accountability and to stay informed of the Groups strategy and goals.

(E) DEALING IN SECURITIES

The Company has adopted its own internal Code of Best Practices on Securities Transactions (Code) with regard to dealings in the Companysshares by its directors and executives. It emphasizes that the law on insider dealing is applicable at all times, notwithstanding that the Codeprovides certain window periods for directors and executives to deal in the shares of the Company. The Code also enables the Company tomonitor such share transactions by requiring directors and executives to report to the Company whenever they deal in the Companys shares.In the opinion of the directors, the Company has complied with the Best Practices stipulated in Listing Manual Rule 1207 (18) of the SGX-ST

Listing Manual.

In addition, pursuant to Rule 728 of the Listing Manual, where any borrowings or loans of the Company or its subsidiaries contains anyprovisions which makes reference to the shareholding interest of any controlling shareholder(s), the Company will obtain an undertaking fromsuch controlling shareholder(s) to notify the Company, as soon as it becomes aware, of any share pledging arrangements relating to theseshares and of any event which may result in a breach of the Companys loan provisions.

(F) INTERESTED PARTY TRANSACTIONS

The Group has adopted an internal policy in respect of any transactions with interested persons and has procedures established for the reviewand approval of the Groups Interested Party Transactions (IPT).

Pursuant to Rule 907 of the Listing Manual, the Group has the following IPTs entered into during the nancial year, together with thecorresponding aggregate value of the IPTs entered into with the same interested person, are disclosed as follows:

Aggregate value of all IPTs during thenancial year under review (excluding

transactions less than $100,000 and Aggregate value of all IPTs conductedtransactions conducted under shareholders under shareholders mandate pursuant

mandate pursuant to Rule 920 of to Rule 920 of Listing Manual of SGX-STName of Interested Person Listing Manual of SGX-ST) (excluding transactions less than $100,000)

Transactions for the sale of goods and N/A S$4,764,928 services with Vnet Capital Co., Ltd and its subsidiaries



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FINANCIAL CONTENTS46 // Directors Report

51 // Statement by Directors

52 // Independent Auditors Report

53 // Statement of Financial Position

54 // Consolidated Statement of Comprehensive Income

55 // Consolidated Statement of Changes In Equity

57 // Consolidated Statement of Cash Flows

58 // Notes to the Financial Statements

100 // Shareholdings Statistics

101 // Notice of Annual General Meeting


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We are pleased to submit this annual report to the members of the Company together with the audited nancial statements for the nancial yearended 31 December 2011.

Directors

The directors in of ce at the date of this report are as follows:- Tay Eng HoeNarong IntanateFoo Sen ChinLeong Horn Kee

Tan Hup FoiKoh Soo KeongMao XiangqianOng Wei Hiam

Directors interests

According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), particularsof interests of directors who held of ce at the end of the nancial year (including those held by their spouses and infant children) in shares,debentures, warrants or share options of the Company and in related corporations (other than wholly-owned subsidiaries) are as follows:

Holdings HoldingsName of director and corporation at beginning at end ofin which interests are held of the year the year

ECS Holdings Limited- options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2020

Narong Intanate 1,500,000 1,500,000Mao Xiangqian 900,000 900,000Foo Sen Chin 300,000 300,000

ECS Holdings Limited- options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2015

Tay Eng Hoe 700,000 700,000Leong Horn Kee 400,000 400,000Koh Soo Keong 400,000 400,000

Tan Hup Foi 400,000 400,000Ong Wei Hiam 300,000 300,000

Except as disclosed in this report, no director who held of ce at the end of the nancial year had interests in shares, debentures, warrants orshare options of the Company, or of related corporations, either at the beginning of the nancial year, or at the end of the nancial year. Except as disclosed under the Share Options section of this report, neither at the end of, nor at any time during the nancial year, was theCompany a party to any arrangement whose objects are, or one of whose objects is, to enable the directors of the Company to acquire bene tsby means of the acquisition of shares in or debentures of the Company or any other body corporate.

There were no changes in any of the above mentioned interests in the Company between the end of the nancial year and 21 January 2012.

During the nancial year, certain of its subsidiaries have, in the normal course of business entered into transactions with companies in whichMr Narong Intanate has an interest. These transactions include the purchase and sale of information technology products and servicesamounted to $394,548 (2010: $611,877) and $19,908,337 (2010: $22,365,842) respectively and are carried out on normal commercial terms.

DIRECTORS REPORT


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46

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DIRECTORS REPORT

However, the directors have not received nor will they be entitled to receive any bene ts arising out of these transactions other than those whichthey may be entitled to as shareholders of those companies or as a member of the rm.

Except as disclosed above and in note 34 to the nancial statements, since the end of the last nancial year, no director has received or becomeentitled to receive a bene t by reason of a contract made by the Company or a related corporation with the director or with a rm of which he isa member or with a company in which he has a substantial nancial interest.

Share options

The Company

(a) Share option schemeThe ECS Share Option Scheme II (Scheme II) was approved and adopted by its members at an Extraordinary General Meeting heldon 13 December 2000. Scheme II provides an opportunity for employees and directors, including non-executive directors, of theGroup who have contributed signi cantly 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 KeeTan Hup Foi

Details of Scheme II were set out in the Directors Report for the year ended 31 December 2000. (b) Options granted

On 15 October 2010, the Group granted 13,770,000 share options pursuant to the rules of the ECS Share Option Scheme II. The

options have an exercise price of $0.550 per share; a vesting period of 1 year from date of grant; and can be exercised within 5 yearsfrom date of grant for non-executive directors and 10 years from date of grant for executive directors and employees.

(c) Issue of shares under optionDuring the nancial year, there is no issuance of shares under the share option scheme of the Company.

(d) Unissued shares under option

Number of Optionsoption holders outstanding

Date of grant Exercise price at 31 December at 31 Decemberof options per share Exercise period 2011 2011

15/10/2010 $0.550 15/10/2011 to 15/10/2015 5 2,200,00015/10/2010 $0.550 15/10/2011 to 15/10/2020 48 10,650,000


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Share options (contd)

The Company (contd)

(d) Unissued shares under option (contd)

The details of options granted and exercised are as follows:-

Aggregate

Aggregate Aggregate options AggregateOptions options options forfeited/ options

Name of granted granted exercised lapsed outstanding

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

Executive directors- Narong Intanate - 11,006,000 (8,906,000) (600,000) 1,500,000- Mao Xiangqian - 900,000 - - 900,000

Non-executive directors- Tay Eng Hoe - 5,676,000 (2,226,000) (2,750,000) 700,000- Foo Sen Chin - 4,160,000 (3,340,000) (520,000) 300,000- Leong Horn Kee - 678,000 - (278,000) 400,000- Koh Soo Keong - 520,000 - (120,000) 400,000- Tan Hup Foi - 400,000 - - 400,000- Ong Wei Hiam - 300,000 - - 300,000

Former directors- Wong Heng Chong - 1,713,000 (1,113,000) (600,000) -- Lin Chien - 128,000 - (128,000) -- Chay Yee Meng - 188,000 - (188,000) -- Teo Ek Tor - 130,000 - (130,000) -- Wang Fangmin - 50,000 - (50,000) -- Hsieh Fu Hua - 88,000 - (88,000) -- Lee Suet Fern - 258,000 - (258,000) -

Employees (including executive o cers)- Foong Kam Tho - 8,629,000 (6,679,000) (1,950,000) -

- Other employees - 32,162,000 - (24,212,000) 7,950,000- 66,986,000 (22,264,000) (31,872,000) 12,850,000

[1] Options granted during the nancial year under review.[2] Aggregate options granted since commencement of the schemes to the end of the nancial year under review.[3] Aggregate options exercised since commencement of the schemes to the end of the nancial year under review.[4] Aggregate options lapsed since commencement of the schemes to the end of the nancial year under review.

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

Except as disclosed, since the commencement of the option schemes:-(i) no option has been granted to the controlling shareholder of the Company or their associates;(ii) no participant under the schemes has been granted 5% or more of the total options available under the schemes; and(iii) no option has been granted to employees of subsidiaries under the schemes.

The options granted by the Company do not entitle the holders of the options, by virtue of such holding, to any rights to participate in any shareissue of any other company.

DIRECTORS REPORTDIRECTORS REPORT


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DIRECTORS REPORT

Share options (contd)

ECS Indo Pte Ltd

(a) Options grantedOn 16 October 2009, the subsidiary granted 450,000 share options to a minority shareholder and four senior employees of the subsidiary.Each option is, upon full payment of the exercise price, convertible into one new ordinary share of the company. The options areexercisable at any time within 3 years from the grant date and are settled by physical delivery of shares.

(b) Issue of shares under optionDuring the nancial year, there were no issuance of shares under the share option scheme of the company.

(c) Unissued shares under option

Number of Optionsoption holders outstanding

Date of grant Exercise price at 31 December at 31 Decemberof options per share Exercise period 2011 2011

16/10/2009 US$1.8156 16/10/2009 to 16/10/2012 5 425,215

Except as disclosed above, there were:-(i) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries;(ii) no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; and(iii) no unissued shares of the Company or its subsidiaries under option at the end of the nancial year.

ECS Performance Share Scheme

The ECS Performance Share Scheme (the Scheme) was approved at the Companys Extraordinary General Meeting held on 1 December2006. 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 de ned below), Group ExecutiveDirectors and Non-Executive Directors are eligible to participate in the Scheme (Participants). The Scheme is to reward Participants by awardof existing Shares held as treasury shares in the Company (Awards), which are given free of charge to the Participants according to the extentto which their performance targets set under the Scheme are achieved at the end of a speci ed performance period.

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

Audit committee

The members of the Audit Committee during the year and at the date of this report are:-Leong Horn Kee (Chairman, Independent director)

Tan Hup Foi (Independent director)Koh Soo Keong (Independent director)

ECS Holdings 2011 Annual Report

Documents

Transcript of ECS Holdings 2011 Annual Report