Professional Documents
Culture Documents
Rationale
As a leading ICT products and services provider, ECS prides itself in never losing sight of the fundamentals of success. Financial strength, prudence, and good corporate governance have ensured consistent growth for the company since inception. And it is this backto-basics philosophy that will continue to anchor the progress of the company even in a rapidly changing industry, with an uncertain economic climate unfolding.
Corporate profile
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 23,000 active channel partners across China, Thailand, Malaysia, Singapore, Indonesia and the Philippines, ECS is well-positioned to be a regional partner of choice suitable for any global-leading ICT brand vendor tapping Asia Pacifics ICT spending growth. Leading global brand names like Hewlett-Packard (HP), Apple, Dell, Lenovo, Microsoft, IBM, Oracle and EMC leverage on ECS extensive channel partner network to distribute their products across the region. The Groups Enterprise Systems business aims to give MNCs, local government and domestic companies a competitive edge over their peers by designing, installing and implementing IT infrastructure. ECS IT Services business provides a comprehensive range of professional, technical support and training services. ECS Distribution business leverages on a well-established and highly-efficient logistical and IT infrastructure to distribute fast- moving products in the most efficient manner. 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.
To be a Premier Asia-Pacific ICT Company that thinks globally but acts locally, excelling in all our business segments to deliver optimal value to our stakeholders.
vision
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 seeking new markets & businesses. To bring the best-of-breed ICT products and services to enhance the competitiveness of our customers businesses.
4 Chairmans Statement 6 CEOs Statement 10 Board of Directors 13 Senior Management 16 Corporate Executives 18 Corporate Information 20 Group Structure 21 Strategic Partners 24 Regional Network 26 Business Model 27 Financial Highlights 28 2012 Awards 29 2012 Milestones 30 Corporate Governance Statement
CONTENTS
Chairmans statement
Dear Shareholders, It gives me great pleasure to once again present this annual report, this time in my capacity as Executive Chairman. Amidst continuing headwinds in the global economy and the distinctive shift of consumer preference towards mobility devices, I am pleased to present to you a commendable scorecard of ECS performance for the financial year ended 31 December 2012 (FY2012). Financial Performance Against the backdrop of weak U.S. economic recovery, the Eurozone debt crisis and slower growth in China, the Groups FY2012 revenue increased 1.0% to $3.64 billion from a year earlier. I am pleased to note that the top-line included higher contributions from the Enterprise Segment in South East Asia, especially in the fourth quarter of FY2012. The Enterprise Segment, which offers higher margins, recorded a 20.8% growth to $1.1 billion for the whole of FY2012. This positive development has to be seen against lower sales of our desktop PCs and notebooks, in line with a global consumer trend towards mobility devices, which offer lower margins. Accordingly, net profit for FY2012 decreased 24.4% to $29.6 million as gross profit margin narrowed to 3.9% due to the change in sales mix which resulted in higher revenue contribution from lower-margin mobility devices in FY2012. Dividend The Board of Directors has proposed a first and final dividend of 2.2 cents per ordinary share, which is consistent with the previous year, and represents 27.2% of the profit attributable to shareholders.
The Board of Directors has proposed a first and final dividend of 2.2 cents per ordinary share, which is consistent with the previous year, and represents 27.2% of the profit attributable to shareholders.
Our Strategies to Deal With Headwinds and Capture New Opportunities Based on latest trends emerging in FY2012, the Group will focus more on emerging markets such as China for the mobility devices led by Apple products, and Indonesia for Enterprise Systems segment (for storage and software products). We are also reviewing our vendor relationship to focus on key vendors and escalate such relationships with a view to expanding the product portfolio. Despite incurring some losses on key vendors, we will continue our relationship with them as we believe that they still have the potential to regain leading positions in the market as they offer more competitive products. In terms of product portfolio, we will continue to tap on the growing market of mobility devices despite its lower-margin as we need to position ourselves well for this clear shift in global trends. At the same time we will also emphasise Enterprise Systems to grow our margin. As we have done over the past few years, the Group will continue to focus on strengthening working capital management, as well as improve cost management through ongoing improvements in operating and financial efficiencies. These efforts manifested in the 40% lower finance costs recorded in FY2012 which resulted from better cash flow planning and cost reduction initiatives which led to lower average effective interest rates.
Significant Corporate Developments On 8 December 2012, the Group announced the appointments of myself as Group Executive Chairman and of Mr Ong Wei Hiam as Group Chief Executive Officer, replacing Mr Narong Intanate who retired, effective 1 January 2013. I am concurrently serving as NonExecutive Chairman of Hong Kong Stock Exchange-listed VST Holdings Limited, the parent company of ECS. Mr Ong, who was appointed as Executive Director of ECS on 16 April 2012, is concurrently serving as Group CFO and Executive Director of VST Holdings. I am deeply honoured by the faith and trust placed on me by my fellow members of the Board of Directors (Board). Together with Wei Hiam we will strive to maintain the forward-looking and inclusive management style that has helped ECS withstand various challenges through the years. Following his retirement as Group CEO, Mr Intanate will continue to serve with the Board as NonExecutive Director with effect from 1 January 2013. The Board deeply appreciates the contributions of Mr Intanate during his tenure as Group CEO, especially his leadership at a time of major global economic challenges. While we respect his decision to retire as Group CEO, we are happy that he will continue to serve on the Board as nonexecutive director. On the same day, the Group also announced the appointment of Mr Leong Horn Kee, a Non-Executive and Independent Director, as Lead Independent Director with effect from 1 January 2013.
Appreciation and Acknowledgement On behalf of my fellow Directors, I wish to thank our customers, channel partners, vendors, technology partners, banks and business associates for their constant support; the management and staff for their dedication and hard work despite the challenging conditions; and our shareholders for their loyal support.
CEOs statement
Dear Shareholders, I am presenting you this operational and financial update against the challenging global economic backdrop you are all aware of. Compounding the uncertainties in the United States, the Eurozone and a notso-buoyant Chinese economy we are confronting a major shift in consumer preferences away from PCs and notebooks towards mobility devices. Financial and Operations Review: In the financial year under review (FY2012), the Groups revenue increased 1.0% to $3.64 billion as compared to $3.61 billion in FY2011 driven by higher contributions from our higher-margin Enterprise Systems segment. ECS FY2012 net profit decreased 24.4% to $29.6 million from $39.2 million for FY2011 with gross profit of $143.8 million compared to $167.3 million, respectively. Gross profit margin narrowed to 3.9% from 4.6% over the comparative period due to the change in sales mix which resulted in higher revenue contribution from lower-margin mobility devices in FY2012. Finance costs decreased by 40.1% to $8.9 million in FY2012 from $14.9 million in FY2011 mainly due to cost savings achieved through better cashflow planning and cost reduction initiatives which led to lower average effective interest rates over the comparative period. Cash and bank balances stood at $108.2 million as at 31 December 2012, lower than at $131.4 million a year earlier, while bank borrowings stood at $243.0 million, higher than $241.6 million as at 31 December 2011. The net gearing was at 0.40 times as at 31 December 2012. Earnings per share (EPS) declined to 8.10 cents in FY2012 from 10.74 cents in FY2011 while net asset value (NAV) per share increased to 92.83 cents as at 31 December 2012 from 89.37 cents a year earlier. ECS has proposed a first and final dividend of 2.2 cents per share, representing 27.2% of the profit attributable to shareholders.
Revenue from Enterprise Systems segment was 20.8% higher in FY2012 of $1.11 billion as compared to FY2011 of $0.92 billion, mainly driven by higher sales of storage and software products. Enterprise Systems segment accounted for 30.4% of total revenue in FY2012 higher compared to 25.4% a year earlier, mainly due to exceptional growth of 81.4% year-onyear in the fourth quarter.
Review by Business Segments: In terms of product portfolio, we will continue to tap on the growing market of mobility devices despite its lowermargin, and will tilt more towards Enterprise Systems to grow our margin, leveraging on existing vendors, for storage and software products. Distribution: The Distribution segment remained the main revenue driver in FY2012 with $2.50 billion revenue, lower by 6.1% as compared to $2.66 billion in FY2011. This segment contributed 68.6% of the total FY2012 revenue. This decrease was mainly due to lower sales of desktop PCs, notebooks and imaging products, partially offset by growth in sales of mobility devices. The lower sales from desktop PCs reflect both the economic uncertainty and the clear shift in consumer IT patterns globally towards mobility devices. Enterprise Systems: Revenue from Enterprise Systems segment was 20.8% higher in FY2012 of $1.11 billion as compared to FY2011 of $0.92 billion, mainly driven by higher sales of storage and software products. Enterprise Systems segment accounted for 30.4% of total revenue in FY2012 higher compared to 25.4% a year earlier, mainly due to exceptional growth of 81.4% year-on-year in the fourth quarter. In the year under review, ECS strengthened its relationship with our key Enterprise Systems vendors as they expanded regional alliance in China and South East Asia markets.
Review by Geographical Markets: Geographically, South East Asia has performed better in this period while North Asia was challenged by the slower economic growth in China. North Asia: Although North Asia remained to be the revenue driver with $2.18 billion in FY2012 contributing 59.9% of the total revenue, its top line decreased by 6.2% from $2.33 billion in FY2011 due to lower sales of desktop PCs, media tablets and imaging products in the Distribution segment. The performance was greatly affected by economic slowdown in China as well as the continued uncertainties in the global economy. South East Asia: Revenue contribution from South East Asia in FY2012 reflected a 14.2% growth to $1.46 billion from $1.28 billion in FY2011 mainly from improved sales of storage and software products. South East Asias scorecard includes $470.7 million revenue from Singapore in FY2012 (up $105.6 million or 28.9% from $365.1 million), driven by increased sales of storage products. The growth is expected to continue as the Group will focus on South East Asia to grow its Enterprise Systems. Outlook: Notwithstanding these developments, ECS already has the foresight to transform its business mix by moving into mobility products and not be over-reliant on a few key vendors.
In view of an uncertain economic outlook, the Group will continue to focus on the fundamentals of operating cost management, improving working capital cycle, and strengthening balance sheet and operating cash flow. As an established player in the industry, ECS will remain steadfast in the face of uncertainties, riding through the different economic cycles and shifts in technology trends.
Board of directors
Mr narong intanate
Mr Narong Intanate was appointed as Executive Director of ECS Holdings Limited on 15 December 2000 and subsequently served as the Group Chief Executive Officer of ECS Group to focus on overall business growth opportunities from 1 July 2010 to 31 December 2012. With effect from 1 January 2013, following his retirement as Group CEO, Mr Intanate was redesignated as a Non-Executive Director of ECS Holdings Limited. He is the founder and Executive Chairman of The Value Systems Co., Ltd., a subsidiary of ECS Holdings Limited since 1988. He is also the founder and Chairman of Vnet Capital Co., Ltd., a leading private equity and venture capital firm in Thailand. Mr Intanate holds a Bachelor of Science in Business Administration and a Master of Business Administration from California State University. He is currently an advisor of the Hatyai University, and also the Board of Governors of The Bangkok Club. 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.
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Mr mao xiangqian
Mr Mao Xiangqian was appointed as Executive Director of the Company on 3 May 2010 and is also concurrently the President of ECS Technology (China) Limited, a principal subsidiary of ECS Holdings Limited. He has more than 20 years of experience in Chinas ICT industry. Prior to joining the Group, Mr. Mao served as the Senior Vice President of Digital China Holdings Limited, one of Chinas leading ICT distributor, and was President of Digital China Technology Limited, which is the distribution business division of Digital China Holdings Limited. Prior to Digital China, Mr Mao spent 10 years with the Lenovo Group. Mr Mao holds a Bachelor of Science (Machine Building and Automation) degree and a Master of Science (Modal Analysis) from Tianjin University as well as an Executive MBA degree from China Europe International Business School.
Senior Management
Mr EDDIE FOO
Mr Eddie Foo is the Group Chief Financial Officer of the Company and is concurrently the Group Company Secretary. Mr Foo is responsible for the Groups overall financial strategy and management, corporate finance and treasury management, tax, and investor relations of ECS Holdings, and is also a director on the boards of various ECS companies. Mr Foo has several years of financial management and audit experience in multinational companies and public accounting firms. Prior to serving as Group Chief Financial Officer, Mr Foo was the Group Financial Controller of the Company. Mr Foo holds a Bachelor degree in Accountancy from the Nanyang Technological University and is a member of the Institute of Certified Public Accountants of Singapore.
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Mr mao xiangqian
Mr Mao Xiangqian was appointed as Executive Director of the Company on 3 May 2010 and is also concurrently the President of ECS Technology (China) Limited, a principal subsidiary of ECS Holdings Limited. He has more than 20 years of experience in Chinas ICT industry. Prior to joining the Group, Mr. Mao served as the Senior Vice President of Digital China Holdings Limited, one of Chinas leading ICT distributor, and was President of Digital China Technology Limited, which is the distribution business division of Digital China Holdings Limited. Prior to Digital China, Mr Mao spent 10 years with the Lenovo Group. Mr Mao holds a Bachelor of Science (Machine Building and Automation) degree and a Master of Science (Modal Analysis) from Tianjin University as well as an Executive MBA degree from China Europe International Business School.
Mr somsak pejthaveeporndej
Mr Somsak Pejthaveeporndej was appointed as the President of The Value Systems Co., Ltd., our whollyowned subsidiary on 1 February 2009. He is responsible for the overall management of The Value Systems and has been with our Group since 1988. Mr Pethaveeporndej was formerly responsible for managing the Enterprise Systems & ICT Services Division of The Values Systems. He has more than 20 years experience in the IT industry. Prior to joining our Group, he was employed as a technical manager by Sun Shine Co., Ltd. from 1981 to 1984, followed by Sahaviriya Telecom Co., Ltd. from 1984 to 1988. He holds a Bachelor of Science degree majoring in electronics from Rajamangala University of Technology Krungthep, Thailand, and a Mini MBA from The Faculty of Commerce and Accountancy, Chulalongkorn University.
Mr sebastian chong
Mr Sebastian Chong is the President of ECS Computers (Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Limited. Mr Chong joined ECS in 1990 and has over 20 years of experience in the IT industry. He is responsible for strategic direction, overall management, including the sales and operations of the commercial, consumer and retail segments of ECS Singapore. Mr Chong is also responsible for business development, business strategy and building of long term relationships with vendors, channels and partners.
Mr ANTONIUS
Mr Antonius is the Executive Director of PT ECS Indo Jaya. He is responsible for product and sales especially for the commercial and enterprise sectors. Mr Antonius also oversees business development and overall planning of long term business goals for PT ECS Indo Jaya. Prior to joining PT ECS Indo Jaya in 2002, he worked for an electricity manufacturer in Indonesia as an IT consultant. Mr Antonius has a Bachelors degree in Information Systems from Bina Nusantara University and a Master of Management degree from Tarumanagara University, Indonesia.
Mr jimmy go
Mr Jimmy Go is the founder and President of MSI-ECS Phils., Inc., our associate company. He has more than 25 years of experience in the IT industry in the Philippines. Mr Go started in the IT industry way back in 1982 after graduating from college selling Fujitsu & Apple computers. He currently holds a 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.
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corporate executives
Mr eugene tan
Mr Eugene Tan is the Senior Vice President, Group Finance of ECS Holdings Limited since 1 March 2008. He is responsible for the financial management of the Group, which covers accounting, treasury, tax, financial control and reporting. Prior to his current appointment, Mr Tan was the Vice President, Finance of ECS Computers (Asia) Pte Ltd, the wholly-owned Singapore subsidiary of ECS Holdings Limited. Prior to joining the Group, Mr Tan worked for KPMG Singapore as a senior auditor. Mr Tan holds a Bachelor degree in Accountancy & Economics from the University of Reading.
Ms peggy leong
Ms Peggy Leong-Yeo is the Senior Vice President, Group Human Resources for ECS Holdings Limited. Her main responsibilities are to establish HR strategies for the Group and to strengthen the Groups human capital, which includes redefining leadingedge performance management and development practices to support leadership succession planning. She provides leadership and tactical support in the formulation, implementation and review of HR policies in key HR areas to support the Groups strategic intent to ensure alignment and adoption of best practices. She has more than 20 years of Human Resources experience behind her working with a global multinational company. She holds a Diploma in Administrative Management from The Institute of Administrative Management in UK and a Master in Business Administration from the University of Birmingham, United Kingdom.
Mr newman li
Mr Newman Li is the Vice President, Group Internal Audit of the Company. He is a member of CPA China and has more than 10 years of financial and audit experience. Prior to joining the Group, he worked for Foshan Power Construction Group Co. Ltd in 1998 and Guangdong Telecom in 2004. Mr Li holds a Bachelor degree in Accountancy from the Tianjin University of Commerce and was appointed to his current position since May 2008.
Mr christanto suryadarma
Mr Christanto Suryadarma is the Vice President, Group Business Development for ECS Holdings Limited. Mr Suryadarma manages vendor-partner relationships, identifies new business opportunities for the Group and assists in geographical expansion to increase sustainable profitability at the Group and country levels. An experienced senior manager, Mr Suryadarma has more than 20 years of extensive experience in marketing, sales and general management, covering the Asia Pacific, ASEAN and Australasian regions. He has led cross-functional teams in implementing strategies and processes across varied industries including major international conglomerates, the computer software, semiconductor, IT, services and retail sectors. His most recent appointment was Senior Director, Microsoft Corporation covering Asia Pacific, Japan and India. Mr Suryadarma holds a Bachelor of Science, Electronics Engineering degree from the Satya Wacana Christian University.
Mr paul chong
Mr Paul Chong is the Assistant Vice President, Group Public Relations of ECS Holdings Limited and concurrently, the Vice President, Marketing of ECS Computers (Asia) Pte Ltd, the Groups wholly-owned Singapore subsidiary. In his role for Group Public Relations, Mr Chong is responsible for the Groups branding and communication programs, publicity, corporate affairs and internal communication between management and employees. As Vice President, Marketing, he is responsible for providing comprehensive marketing communications solutions such as direct marketing programs, promotions, events, seminars, tradeshows and advertising. Prior to joining the ECS Group in 1997, Mr Chong worked for 6 years in the public sector of Singapore handling national IT initiatives and training and development programs. Mr Chong holds a Bachelor degree in Business Administration from the National University of Singapore and a Master of Business Administration degree from the University of Western Australia.
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corporate information
Board of Directors
Mr Tay Eng Hoe (Executive Chairman) Mr Ong Wei Hiam (Executive Director) Mr Narong Intanate (Non-Executive Director) Mr Foo Sen Chin (Non-Executive Director) Mr Leong Horn Kee (Lead Independent Director) Mr Tan Hup Foi (Independent Director) Mr Koh Soo Keong (Independent Director) Mr Mao Xiangqian (Executive Director)
Audit Committee
Mr Leong Horn Kee (Chairman) Mr Tan Hup Foi Mr Koh Soo Keong
Compensation Committee
Mr Koh Soo Keong (Chairman) Mr Leong Horn Kee Mr Tan Hup Foi
Nominating Committee
Mr Tan Hup Foi (Chairman) Mr Leong Horn Kee Mr Koh Soo Keong Mr Tay Eng Hoe
Corporate Executives:
Mr Eugene Tan (Senior Vice President, Group Finance) Ms Peggy Leong-Yeo (Senior Vice President, Group Human Resources) Mr Newman Li (Vice President, Group Internal Audit) Ms Lim Yok Yen (Vice President, Group Finance) Mr Christanto Suryadarma (Vice President, Group Business Development) Mr Paul Chong (Assistant Vice President, Group Public Relations)
Investment Committee
Mr Leong Horn Kee (Chairman) Mr Foo Sen Chin Mr Tan Hup Foi Mr Ong Wei Hiam
Auditors
KPMG LLP Certified Public Accountants 16 Raffles Quay #22-00 Hong Leong Building Singapore 048581 Partner-in-charge: Ms Chu Sook Fun (Since FY2011)
Registrar
M&C Services Private Limited 112 Robinson Road #05-01 Singapore 068902
Registered Office
8 Temasek Boulevard #34-02 Suntec Tower Three Singapore 038988
Principal Bankers
ANZ Bank Citibank, N.A. DBS Bank Ltd KBC Bank N.V. Oversea-Chinese Banking Corporation Standard Chartered Bank Sumitomo Mitsui Banking Corporation United Overseas Bank Limited
ECS ICT Berhad Lot 3, Jalan Teknologi 3/5 Taman Sains Selangor Kota Damansara 47810 Petaling Jaya Selangor, Malaysia Offices in Johor Bahru, Kota Kinabalu, Kuantan, Kuching, Penang, Petaling Jaya Websites : www.ecsm.com.my ECS Computers (Asia) Pte Ltd 19 Kallang Avenue #07-153 Singapore 339410 Website : www.ecs.com.sg PT ECS Indo Jaya Komplek Mangga Dua Square Blok E 34-37 Jl. Gunung Sahari Raya No.1 Jakarta Utara 14420, Indonesia Offices in , Bandung, Jakarta, Makassar, Medan, Semarang, Surabaya, Yogyakarta Website : www.ecsindo.com MSI-ECS Phils., Inc. Topy II Bldg, #3 Economia St., Libis, Quezon City, 1110, Philippines Branches in Cebu, Davao, Manila, Taguig Website : www.msi-ecs.com.ph
Company Secretary
Mr Eddie Foo Toon Ee, CPA
ECS Offices
ECS Holdings Limited 8 Temasek Boulevard #34-02 Suntec Tower Three Singapore 038988 Website : www.ecs.com.sg ECS Technology (China) Limited 6/7F Wanliuyicheng Building No. 11 Changchunqiao Road, Haidian District Beijing, P.R.C. (100089) Offices in Beijing, Changchun, Changsha, Chengdu, Chongqing, Dalian, Fuzhou, Guangzhou, Guiyang, Harbin, Hefei, Hong Kong, Huhehaote Jinan, Kunming, Lanzhou, Nanchang, Nanjing, Nanning, Ningbo, Qingdao, Shanghai, Shenzhen, Shenyang, Shijiazhuang, Taiyuan, Tianjin, Urumqi, Wuhan, Xiamen, Xian, Zhengzhou Website : www.ecschina.com The Value Systems Co., Ltd. 21st Floor, Serm-Mit Tower 159/35 Sukhumvit 21 Road (Asok) North Klongtoey, Wattana Bangkok 10110, Thailand Offices in Bangkok, Chiang Mai, Hat Yai, Khon Kaen, Nakhon Ratchasima, Nongkhai, Phitsanulok, Phuket, Rayong, Surat Thani Website : www.value.co.th
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group structure
ECS HOLDINGS LIMITED
singapore indonesia
philippines vietnam
strategic partners
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regional network
01
02 03 04 05 06
01. china
Offices: 33 | Cities: Beijing (2 Offices), Changchun, Changsha, Chengdu, Chongqing, Dalian, Fuzhou, Guangzhou, Guiyang, Harbin, Hefei, Hong Kong, Huhehaote Jinan, Kunming, Lanzhou, Nanchang, Nanjing, Nanning, Ningbo, Qingdao, Shanghai, Shenzhen, Shenyang, Shijiazhuang, Taiyuan, Tianjin, Urumqi, Wuhan, Xiamen, Xian, Zhengzhou
02. thailand
Offices: 12 | Cities: Bangkok (3 offices), Chiang Mai, Hat Yai, Khon-Kaen, Nakhon Ratchasima, Nongkai, Phitsanulok, Phuket, Rayong, Surat Thani
03. malaysia
Offices: 6 | Cities: Johor Bahru, Kota Kinabalu, Kuantan, Kuching, Penang, Petaling Jaya
04 . singapore (Hq)
Offices: 2
05. indonesia
Offices: 7 | Cities: Bandung, Jakarta, Makassar, Medan, Semarang, Surabaya, Yogyakarta
06. philippines
Offices: 4 | Cities: Cebu, Davao, Manila, Taguig
Total Offices: 64
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business model
Complete Solution
ICT VENDORS
VALUE PRODUCTS Servers Storage Application Software & Middleware Networking & Communication VOLUME PRODUCTS Notebooks Desktops Printers & Imaging Devices Mobility Devices Printing Supplies Accessories & Options Productivity Software
ECS
Aggregator of Best-of-Breed IT Products : Convenient One Stop Supplier Channel Development and Management Volume Aggregator Efficient Inventory Management to ensure timely delivery Financial Credit Support to Resellers / IT Partners Consultancy / Implementation Managed Services Post-Sales / Maintenance Support Professional Services Training / Certification Logistical Services
channel partners
Corporate Resellers System Integrators Application Providers Retailers ISVs Superstores Developers
end users
Corporates Manufacturing Industry Government Service Industry Telcos & Service Providers Emerging Industry SME Home / SOHO Consumer & Lifestyle
financial highlights
revenue (S$ million)
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 3,607.2 3,643.7
3,252.0
2,949.9
3,085.4
53.0 38.2 39.2 FY10 FY11 3.6 2.2 FY08 FY09 FY10 FY11 15.3 11.7 12.2 13.8 FY11 FY12 9.2 FY10 North Asia 2,183.4 Southeast Asia 1,460.3
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FY08
FY09
FY10
FY11
FY12
FY08
29.4
FY09
FY12
326.5
339.7
296.6
237.8
259.5
2.7
3.0
FY08
FY09
FY10
FY11
FY12
FY12
FY12
FY08
FY09
3,252.0
29.9
3,607.2 3,085.4
24.5 28.2
3,643.7
36.3
2,034.2
1,928.4
2,663.0
2,500.5
1,133.3
1,187.9
1,132.5
916.0
1,106.9
FY08
Enterprise Systems
FY09
FY10
Distribution
FY11
FY12
IT Services
2.2
29.6
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2012 awards
COUNTRY ECS Holdings ECS Holdings ECS Holdings AWARDED BY Security Investors' Association Singapore DP Information DP Information AWARD Runner-up, Most Transparent Company (Technology) - SIAS 13th Investors' Choice Awards 2012 S1000 - Ranked 19th for Top Public Listed Company by Sales Turnover Singapore International 100 - Ranked Top 13 by Overseas Sales Turnover Global Partner Network Award Training VATC Partner of the Year for APJ Thailand Top Performing Distributor Award 2012 Best Distributor Outstanding Overall TS Achievement Best Distributor Outstanding Enterprise Business Product Selling Best Distributor HP Software Distributor of the Year Partner of the Year - Value Added Distributor Distributor of the Year 2012 Distributor of the Year 2012 Consumer Distributor of the Year 2012 The CEO Award Wholesaler Category 2012 Top Wholesaler for Industry Standard Server Broadbase Category Top Wholesaler for HP Storage Top Wholesaler for Industry Standard Server HP PPS - Best Consumer Distributor for Hardware (PC) Sell-Thru HP PPS - Best Distributor for Hardware (Printing) Sell-Thru Remarketer Partner of the Year 2012 Top Distributor of the Year - Relationship Segment Partner of the Year - Highest Over Achievement Best Lenovo SMB Distributor FY11/12 Best Microsoft Distributor FY12 Intel Ultrabook Great Team Distributor of the Year 2012 Fastest Distributor of the Year for SEA 2012 IBM xSeries run rate distributor of the Year 2012
ECS China ECS China ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Thailand ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Malaysia ECS Singapore ECS Singapore ECS Indonesia ECS Indonesia ECS Indonesia ECS Philippines ECS Philippines ECS Philippines
VMware VMware F5 HP HP HP Intermec Oracle Asus Cisco Dell HP HP HP HP HP HP Oracle Lenovo EMC Lenovo Microsoft Intel APC Fortinet IBM
2012 milestones
COUNTRY ECS Thailand ECS Thailand MONTH Apr - Jun 12 Apr - Jun 12 DESCRIPTION OF MILESTONE Appointed as NetApp Partner Program Distribution Partner with Support Services Certification The Value Systems established the Corporate Social Responsibility Campaign of "The Fairy Tale Project 6" at Wat Chokchang School, Uthai District, Ayudhya Province Appointed as F5 Authorised Distributor-FY2013 Appointed as Distributor for Huawei Device Appointed as Distributor for Novell Suse Appointed as Distributor for IBM SmartCloud Appointed as Distributor for A10 Networks Appointed as Distributor for Microsoft SPLA Appointed as Distributor for Quest Software Appointed as Distributor for EMC Appointed as Distributor for Samsung Printer Appointed as Distributor for Samsung Mobile Appointed as ZTE Mobile Distributor Appointed as Distributor for Fuji Xerox Printers
ECS Thailand ECS Malaysia ECS Malaysia ECS Malaysia ECS Singapore ECS Singapore ECS Indonesia ECS Indonesia ECS Indonesia ECS Indonesia ECS Philippines ECS Philippines
Oct - Dec 12 Jan - Mar 12 Jun - Sep 12 Oct - Dec 12 Apr - Jun 12 Oct - Dec 12 Oct - Dec 12 Oct - Dec 12 Oct - Dec 12 Oct - Dec 12 Apr - Jun 12 Apr - Jun 12
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The Boards role is to: a) b) c) d) e) f ) provide entrepreneurial leadership, set strategic aims, and ensure that the necessary financial and human resources are in place for the company to meet its objectives; establish a framework of prudent and effective controls which enables risks to be assessed and managed, including safeguarding of shareholders interests and the companys assets; review management performance; identify the key stakeholder groups and recognise that their perceptions affect the companys reputation; set the companys values and standards, and ensure that obligations to shareholders and other stakeholders are understood and met; and consider sustainability issues, e.g. environmental and social factors, as part of its strategic formulation.
The Board meets to consider the following, without limitation, corporate events and/or actions: a) b) c) d) e) f ) g) h) approval of quarterly results announcements; approval of annual report and accounts; declaration of interim dividend and proposal of final dividends; approval of corporate strategy; authorisation of major transactions; review and approval of annual budgets; compensation of senior management personnel; and convening of shareholders meetings.
All directors must objectively take decisions in the interests of the Company. The Board has delegated the day-to-day management and running of the Company to the management headed by our Group Chief Executive Officer (Group CEO), while reserving certain key issues and policies for its approval. Additionally, to facilitate effective management, certain functions have been delegated to the following sub-committees, each of which has its own written terms of reference: a) b) c) d) e) the Nominating Committee; the Compensation Committee; the Audit Committee; the Investment Committee; and the Risk Management Committee.
Newly-appointed directors are given briefings by the management on the Groups activities and its strategic directions. Changes to regulations and accounting standards are monitored closely by management. To keep pace with regulatory changes, where these changes have an important bearing on the Companys or directors disclosure obligations, directors are briefed either during Board meetings or at specially convened sessions conducted by professionals. 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:
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 records in the public and/or corporate sector, and each is a highly respected member of the business community. As a group, they provide core competencies such as accounting or finance, business or management experience, industry knowledge, strategic planning and customer-based experience or knowledge. Key information regarding the directors is given in the Board of Directors section on pages 10 to 12 of the annual report. Executive Chairman and Chief Executive Officer Principle 3 : There should be a clear division of responsibilities between the leadership of the Board and the executives responsible for managing the companys business. No one individual should represent a considerable concentration of power.
Mr Tay Eng Hoe was appointed as Executive Chairman of the Company on 1 January 2013. Mr Ong Wei Hiam was appointed as Group CEO with effect from 1 January 2013. The Executive Chairman and the Group CEO each perform separate functions to ensure that there is an appropriate balance of power and authority, and that accountability and independent decision-making are not compromised. The Executive Chairman plays an instrumental role in providing the Company with strong leadership and vision, assisting the Board to develop policies and strategies, and ensuring that these are implemented effectively. As Chairman of the Board, he bears primary responsibility for the workings of the Board, by ensuring effectiveness on all aspects of its role including setting agenda for Board meeting with input from management, and exercising control over the quality, quantity and timeliness of information flow between the Board and management. At annual general meetings and other shareholders meetings, he plays a pivotal role in fostering constructive dialogue between shareholders, the Board and management. As Executive Chairman, he is the most senior executive in the Company and bears executive responsibility for the Groups business. 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. Lead Independent Director In line with the recommendation in Guideline 3.3 of the Code of Corporate Governance 2012, the Board has appointed Mr Leong Horn Kee as Lead Independent Director (Lead ID) on 1 January 2013. The role of the Lead ID is set out under the written terms of reference of the Lead ID, which has been approved by the Board.
30
31
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. 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) d) e) f ) g) 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; determine whether or not a director is independent; review of board succession plans for directors, in particular, the Chairman and for the CEO; the development of a process for evaluation of the performance of the Board, its committees and directors; the review of training programs for the Board; and 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 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. Board Assessment & Evaluation Processes Each board member is required to complete a Board Evaluation Questionnaire and send the Questionnaire directly to the Company Secretary. Based on the returns from each of the directors, the Company Secretary prepares a consolidated report and briefs the Chairman of the Nominating Committee on the report. The Company Secretary will thereafter present the report to the Board together with the recommendations of the Nominating Committee for discussion on the changes which should be made to help the Board discharge its duties more effectively. Access to Information Principle 6 : In order to fulfil their responsibilities, Board members should be provided with complete, adequate and timely information prior to Board meetings and on an on-going basis so as to enable them to make informed decisions to discharge their duties and responsibilities as directors.
All directors are provided with complete, adequate and timely information prior to meetings and on a regular basis to enable them to perform their roles properly. Directors are entitled to request additional information as needed to make informed decisions. All directors have separate and independent access to senior management and the Company Secretary. The Company Secretary has defined roles and responsibilities and attends all Board and sub-committee meetings of the Company. Should directors, whether as a group or individually, need independent professional advice in the furtherance of their duties, the cost of such professional advice will be borne by the Company.
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.
Principle 9 :
The Groups remuneration policy is to provide a competitive remuneration package so as to attract, retain and motivate directors and senior management with the required experience and expertise to run the Group successfully. In setting remuneration packages for executive directors and senior management of the Group, the pay and employment conditions within the industry and in comparable companies are taken into consideration. The compensation package of the Groups executive directors including its Executive Chairman, Group CEO and senior management consists of salary, allowances, share options and bonuses which are conditional upon meeting certain performance targets. Non-executive directors have remuneration packages which consist of a directors fee component and a share option component pursuant to the Companys Share Option Scheme. The directors fee policy is based on a scale of fees divided into basic retainer fees as a director and additional fees for serving on board committees. Directors fees for nonexecutive 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 2012 Allowances and other Benefits %
Name of Director $1,500,000 to below $2,000,000 Narong Intanate $500,000 to below $1,500,000 Nil $250,000 to below $500,000 Mao Xiangqian Below $250,000 Tay Eng Hoe Foo Sen Chin Leong Horn Kee Tan Hup Foi Koh Soo Keong Ong Wei Hiam Executives Remuneration
Salary %
Bonus %
Fees %
Total %
18
79
100
82
14
100
66
29
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.
32
33
$100,000 to $249,999 $250,000 to $499,999 $500,000 to $749,999 $750,000 to $1,000,000 Total Notes :
1. Including employees in local and overseas subsidiaries. 2. Inclusive salaries, AWS, related CPF and other statutory contributions, allowances and fringe-benefits. 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.
The Audit Committee meets periodically to perform the following functions:a) b) reviewing the quarterly, half-yearly and annual financial statements before recommending them to the Board for approval; reviewing interested person transactions (as defined in Chapter 9 of the Listing Manual (Listing Manual) of the Singapore Exchange Securities Trading Limited (SGX-ST), including such transactions conducted under the shareholders' general mandate previously obtained; reviewing with external auditors the audit plan, their evaluation of the systems of internal controls, their annual reports and their management letters and managements response; reviewing and recommending to the Board the re-appointment of the external auditors, taking into consideration the non-audit services rendered by the external auditors and being satisfied that the nature and extent of such services will not prejudice the independence and objectivity of the external auditors; reviewing the scope of internal audit procedures and the results and effectiveness of the internal audit; reviewing any suspected fraud or irregularity, or suspected infringement of any Singapore laws or regulations or rules of the SGX-ST or any other regulatory authority in Singapore, which has or is likely to have a material impact on the Groups operating results or financial position, and reporting such matters to the Board; and considering other matters as requested by the Board.
c) d)
e) f )
g)
The Audit Committee has full access to and co-operation of the 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 4 meetings since the date of the last annual report. The Audit Committee reviewed the Interested Person Transactions for the year ended 31 December 2012 in accordance with the terms of the Shareholders' Mandate for such transactions as were approved on 25 April 2012. Interested Person Transactions with a total value of $115.7 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.
34
35
Name of Director Leong Horn Kee (Chairman) Tan Hup Foi Koh Soo Keong Internal Audit
Principle 13 : The company should establish an effective internal audit function that is adequately resourced and independent of the activities it audits. The Group has an internal audit department which is independent of the activities it audits. It performs financial audits, implements operational and compliance controls. The Audit Committee approves the hiring, removal, evaluation and compensation of the head of the internal audit department. The Internal Auditor reports primarily to the Chairman of the Audit Committee and administratively to the Group CEO. The Internal Auditor plans its internal audit work in consultation with, but independent of, management, and its yearly plan is submitted to the Audit Committee for approval at the beginning of each year. The Internal Auditor has access to all the Companys documents, records, properties and personnel and reports to the Audit Committee quarterly regarding its findings. The Audit Committee also meets with the Internal Auditor at least once during the year without the presence of management. The Audit Committee also ensures that the internal audit function is adequately resourced, and will review annually the adequacy of the internal audit function. The internal auditors are expected to carry out their function according to standards set by nationally or internationally recognised professional bodies including the Standards for the Professional Practice of Internal Auditing set by The Institute of Internal Auditors. Investment Committee The Investment Committee is chaired by the independent and non-executive director, Mr Leong Horn Kee. The members of the Committee comprised Mr Foo Sen Chin, Mr Tan Hup Foi and Mr Ong Wei Hiam. The Investment Committee meets periodically to perform the following functions:a) b) c) d) to review and recommend investment policy guidelines and capital expenditure plans to the Board; to review investment risk management policies; to evaluate and recommend any proposed investments, divestments, geographical expansion, mergers and acquisitions, joint ventures for Boards approval; and to review and monitor performance, forecast and business plan of investments.
Risk Management Committee Risk management continues to play an important part in the Companys business activities and is an essential component of its planning process. The Board has overall responsibility to ensure that the Company has the capability and necessary framework to manage risks in new and existing businesses and that business plans and strategies accord with the risks appetite that the Company undertakes to achieve its corporate objectives. To assist the Board in its risk management oversight, the Audit Committee has been authorised by the Board to provide oversight and review on matters relating to the risk management policies and systems of the Company.
36
37
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 VST Holdings Ltd and its subsidiaries c) Transactions for the purchase of goods with VST Holdings Ltd and its subsidiaries
S$98,701,575
S$597,577
financial contents
40 45 46 47 48 49 51 52 96 97 Directors Report Statement by Directors Indepedent Auditors Report Statement of Financial Position Consolidated Statement of Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Shareholdings Statistics Notice of Annual General Meeting
Directors report
We are pleased to submit this annual report to the members of the Company together with the audited financial statements for the financial year ended 31 December 2012. Directors The directors in office at the date of this report are as follows: Tay Eng Hoe Narong Intanate Foo Sen Chin Leong Horn Kee Tan Hup Foi Koh Soo Keong Mao Xiangqian Ong Wei Hiam Directors interests According to the register kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50 (the Act), particulars of interests of directors who held office at the end of the financial year (including those held by their spouses and infant children) in shares, debentures, warrants or share options of the Company and in related corporations (other than wholly-owned subsidiaries) are as follows: Holdings at beginning of the year Holdings at end of the year
Name of director and corporation in which interests are held ECS Holdings Limited - options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2020 Narong Intanate Mao Xiangqian Foo Sen Chin ECS Holdings Limited - options to subscribe for ordinary shares at $0.550 per share between 15/10/2011 and 15/10/2015 Tay Eng Hoe Leong Horn Kee Koh Soo Keong Tan Hup Foi Ong Wei Hiam ECS Holdings Limited - ordinary shares Narong Intanate
569,000
Except as disclosed in this report, no director who held office at the end of the financial year had interests in shares, debentures, warrants or share options of the Company, or of related corporations, either at the beginning of the financial year, or at the end of the financial year. Except as disclosed in 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.
Directors report
Directors interests (contd) There were no changes in any of the above mentioned interests in the Company between the end of the financial year and 21 January 2013. During the financial year, certain of its subsidiaries have, in the normal course of business entered into transactions with companies in which Mr Narong Intanate has an interest. These transactions include the purchase and sale of information technology products and services amounted to $139,787 (2011: $394,548) and $15,680,193 (2011: $19,908,337) 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. Except as disclosed above and in note 33 to the financial statements, since the end of the last financial year, no director has received or become entitled to receive a benefit by reason of a contract made by the Company or a related corporation with the director or with a firm of which he is a member or with a company in which he has a substantial financial interest. Share options The Company (a) Share option scheme The ECS Share Option Scheme II (Scheme II) was approved and adopted by its members at an Extraordinary General Meeting held on 13 December 2000. Scheme II provides an opportunity for employees and directors, including non-executive directors, of the Group who have contributed significantly to the growth and performance of the Group to participate in the equity of the Company. The above scheme is administered by the Compensation Committee (the Committee) which comprises the following directors: Koh Soo Keong (Chairman) Leong Horn Kee Tan Hup Foi Details of Scheme II were set out in the Directors Report for the year ended 31 December 2000. (b) Options granted On 15 October 2010, the Group granted 13,770,000 share options pursuant to the rules of the ECS Share Option Scheme II. The options have an exercise price of $0.550 per share; a vesting period of 1 year from date of grant; and can be exercised within 5 years from date of grant for non-executive directors and 10 years from date of grant for executive directors and employees. (c) Issue of shares under option During the financial year, the Company has issued 550,000 shares under the share option scheme of the Company. (d) Unissued shares under option Number of option holders at 31 December 2012 5 45 Options outstanding at 31 December 2012 2,200,000 9,850,000
41
Directors report
Share options (contd) (d) Unissued shares under option (contd) Aggregate options granted [2] Aggregate options exercise [3] Aggregate options forfeited/ lapsed [4] Aggregate options outstanding [5]
Name of participants
Executive directors - Narong Intanate - Mao Xiangqian - Ong Wei Hiam Non-executive directors - Tay Eng Hoe - Foo Sen Chin - Leong Horn Kee - Koh Soo Keong - Tan Hup Foi 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
(9,406,000)
(600,000)
(2,226,000) (3,340,000)
(1,113,000)
7,650,000 12,050,000
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.
Except as disclosed, since the commencement of the option schemes: (i) (ii) (iii) no option has been granted to the controlling shareholder of the Company or their associates; no participant under the schemes has been granted 5% or more of the total options available under the schemes; and no option has been granted to employees of subsidiaries under the schemes.
The options granted by the Company do not entitle the holders of the options, by virtue of such holding, to any rights to participate in any share issue of any other company.
Directors report
Share options (contd) ECS Indo Pte Ltd (a) Options granted On 16 October 2009, the subsidiary granted 450,000 share options to a minority shareholder and four senior employees of the subsidiary. Each option is, upon full payment of the exercise price, convertible into one new ordinary share of the company. The options are exercisable at any time within 3 years from the grant date and are settled by physical delivery of shares. (b) Issue of shares under option During the financial year, there were no issuance of shares under the share option scheme of the company. (c) Unissued shares under option Number of option holders at 31 December 2012 Options outstanding at 31 December 2012
The options have expired during the financial year. Except as disclosed above, there were: (i) (ii) (iii) no options granted by the Company or its subsidiaries to any person to take up unissued shares in the Company or its subsidiaries; no shares issued by virtue of any exercise of option to take up unissued shares of the Company or its subsidiaries; and no unissued shares of the Company or its subsidiaries under option at the end of the financial year.
ECS Performance Share Scheme The ECS Performance Share Scheme (the Scheme) was approved at the Companys Extraordinary General Meeting held on 1 December 2006. The Scheme is administered by the Compensation Committee which comprises the Non-Executive Directors Messrs Koh Soo Keong, Leong Horn Kee and Tan Hup Foi. Group Executives who have attained the age of 21 years on or before the date of grant of the Award (as defined below), Group Executive Directors and Non-Executive Directors are eligible to participate in the Scheme (Participants). The Scheme is to reward Participants by award of existing Shares held as treasury shares in the Company (Awards), which are given free of charge to the Participants according to the extent to which their performance targets set under the Scheme are achieved at the end of a specified performance period. Since the commencement of the Scheme, no Awards have been granted. Audit committee The members of the Audit Committee during the year and at the date of this report are: Leong Horn Kee Tan Hup Foi Koh Soo Keong (Chairman, Lead 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.
42 43
Directors report
Audit committee (contd) The Audit Committee held four meetings since the last directors report. In performing its functions, the Audit Committee met with the Companys external and internal auditors to discuss the scope of their work and the results of their examination and evaluation of the Companys internal accounting control system. The Audit Committee also reviewed the following: assistance provided by the Companys officers to the internal and external auditors; quarterly financial information and annual financial statements of the Group and the Company prior to their submission to the directors of the Company for adoption; and interested person transactions (as defined in Chapter 9 of the Listing Manual of the Singapore Exchange).
The Audit Committee has full access to management and is given the resources required for it to discharge its functions. It has full authority and discretion to invite any director or executive officer to attend its meetings. The Audit Committee also recommends the appointment of the external auditors and reviews the level of audit and non-audit fees. The Audit Committee is satisfied with the independence and objectivity of the external auditors and has recommended to the Board of Directors that the auditors, KPMG LLP, be nominated for re-appointment as auditors at the forthcoming Annual General Meeting of the Company. In appointing our auditors of the Company, subsidiaries and significant associated companies, we have complied with Rules 712 and 715 of the SGX Listing Manual. Auditors The auditors, KPMG LLP, have indicated their willingness to accept re-appointment.
statement by Directors
In our opinion: (a) the financial statements set out on pages 47 to 95 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 2012 and of the results, changes in equity and cash flows of the Group for the year ended on that date in accordance with the provisions of the Singapore Companies Act, Chapter 50 and Singapore Financial Reporting Standards; and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.
(b)
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
44
45
KPMG LLP Public Accountants and Certified Public Accountants Singapore 8 March 2013
As at 31 December 2012
Non-current assets Property, plant and equipment Intangible assets Subsidiaries Interest in associates Deferred expenses Deferred tax assets Current assets Inventories Trade and other receivables Deferred expenses Cash and cash equivalents
4 5 6 7 18 8
9 10 18 13
Total assets Equity attributable to owners of the Company Share capital Reserves Non-controlling interests Total equity Non-current liabilities Financial liabilities Deferred income Deferred tax liabilities
14 15
17 18 8
110,250 27 110,277
101,238 27 101,265
Current liabilities Financial liabilities Deferred income Trade and other payables Current tax payable
17 18 19
46
47
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 associates, net of tax Profit before income tax Income tax expense Profit for the year Other comprehensive income Exchange (loss)/gain on translation of net assets of foreign subsidiaries Share of foreign currency translation differences of associates Other comprehensive income for the year, net of tax Total comprehensive income for the year Profit attributable to: Owners of the Company Non-controlling interests Profit for the year Total comprehensive income attributable to: Owners of the Company Non-controlling interests Total comprehensive income for the year Earnings per share - Basic - Fully diluted
22
23 24
25
20,888 61 20,949
26 26
Group 112,815 (522) 3,814 39,230 (522) 43,044 4,336 39,230 39,230 4,336 13,153 5,152 (12,421) 177,895 296,594 1,093 189 21 210 297,687 39,419 4,357 (522) 43,254
At 1 January 2011 Total comprehensive income for the year Profit for the year Effects of translation of net assets of foreign subsidiaries Share of foreign currency translation differences of associates Total comprehensive income for the year
(13,153)
(8,607)
1,303
Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Final tax-exempt one-tier dividends paid at 3.6 cents per share for 2010 Proposed tax-exempt one-tier dividends of 2.2 cents per share for 2011 Share-based payment transactions Transfer to general reserve Total contributions by and distributions to owners At 31 December 2011
48
49
Group 112,815 (809) (8,758) 29,646 (809) 20,888 (7,949) 29,646 29,646 (7,949) 8,038 6,462 (8,607) 207,831 326,539 1,303 143 (82) 61 327,842 29,789 (8,031) (809) 20,949
At 1 January 2012 Total comprehensive income for the year Profit for the year Effects of translation of net assets of foreign subsidiaries Share of foreign currency translation differences of associates Total comprehensive income for the year
302 302 113,117 12 8,050 465 465 6,927 8,050 (8,050) (17,365)
12
Transactions with owners of the Company, recognised directly in equity Contributions by and distributions to owners of the Company Transfer to dividend reserve Final tax-exempt one-tier dividends paid at 2.2 cents per share for 2011 Proposed tax-exempt one-tier dividends of 2.2 cents per share for 2012 Dividend payable to minority shareholders Acquisition of non-controlling interests without a change in control Share options exercised Transfer to general reserve Total contributions by and distributions to owners At 31 December 2012
Cash flows from operating activities Profit before income tax Adjustments for: Depreciation of property, plant and equipment Equity-settled share-based payment Finance costs Interest income Loss on disposal of property, plant and equipment Net fair value loss/(gain) on financial instruments Property, plant and equipment written off Share of profit of associates Changes in working capital: Inventories Trade and other receivables Trade and other payables Cash (used in)/generated from operations Income taxes paid Net cash (used in)/from operating activities Cash flows from investing activities Dividend received from associates Interest received Loan received from associate Proceeds from disposal of property, plant and equipment Purchases of property, plant and equipment Net cash from investing activities Cash flows from financing activities Dividends paid to equity holders of the Company Interest paid Payment of finance lease Proceeds from issuance of shares Proceeds from bank loans/trade financing Repayment of bank loans/trade financing Net cash used in financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at 1 January Effect of exchange rate fluctuations on cash held Cash and cash equivalents at 31 December
4 23 24 23 23 23 23
2,646 8,947 (551) 37 65 1 (6,997) 41,144 (58,512) (44,355) 59,262 (2,461) (11,758) (14,219)
2,190 54 14,927 (704) 17 (1,260) 175 (6,917) 60,639 (25,684) (14,577) 37,170 57,548 (12,860) 44,688
(8,050) (9,551) (132) 302 1,316,632 (1,303,707) (4,506) (17,833) 131,397 (5,354) 108,210
(13,153) (14,579) (200) 898,308 (879,597) (9,221) 38,952 92,500 (55) 131,397
13
50
51
2
2.1
Basis of preparation
Statement of compliance The financial statements have been prepared in accordance with Singapore Financial Reporting Standards (FRS).
2.2
Basis of measurement The financial statements have been prepared on the historical cost basis except for certain financial assets and financial liabilities as described below.
2.3 Functional and presentation currency The financial statements are presented in Singapore dollars which is the Companys functional currency. All financial information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated. 2.4 Use of estimates and judgements 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. Information about critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements, assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is described in notes 5 and 7. 2.5 Accounting policies for new transactions and events Distributions of non-cash assets to owners of the Company From 1 January 2012, the Group has applied INT FRS 117 Distributions of Non-cash Assets to owners in accounting for distributions of non-cash assets to owners of the Company. The new accounting policy (see note 3.3 (iii)) has been applied prospectively.
(v)
Loss of control Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. Subsequently, it is accounted for as an equityaccounted investee or as an available-for-sale financial asset depending on the level of influence retained.
(vi)
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 equity-accounted investees are eliminated against the investment to the extent of the Groups interest in the investees. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
(vii)
Accounting for subsidiaries and associates Investments in subsidiaries and associates are stated in the Companys statement of financial position at cost less accumulated impairment losses.
3.2 Foreign currencies (i) 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. The reporting currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. 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. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are recognised in profit or loss, except for the following differences which are recognised in other comprehensive income arising on the retranslation of: available-for-sale equity instruments except on impairment in which case foreign currency differences that have been recognised in other comprehensive income are reclassified to profit or loss; a financial liability designated as a hedge if the net investment in a foreign operation to the extent that the hedge is effective; or qualifying cash flow hedges to the extent the hedge is effective.
Foreign currency differences arising on retranslation are recognised in the profit or loss.
54
55
Depreciation methods, useful lives and residual values are reviewed at the end of each reporting period and adjusted if appropriate. 3.5 Intangible assets
(i) Goodwill Goodwill represents the excess of: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree,
over the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity-accounted investee. 3.6 Leased assets Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognised in the Groups statement of financial position.
58
59
3.9 Dividends Dividends on ordinary shares are recognised as a liability in the period in which it is declared. 3.10 (i) Employee benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.
(iii)
Share-based payments The grant date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees unconditionally become entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes. The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognised as an expense with a corresponding increase in liabilities, over the period that the employees unconditionally become entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised as personnel expense in profit or loss.
3.11 (i)
Revenue recognition Goods sold Revenue from the sale of goods in the course of ordinary activities is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been transferred to the customer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised. The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement. For sales of IT products, transfer usually occurs when the product is received at the customers warehouse; however, for some international shipments, transfer occurs upon loading of the goods on to the relevant carrier.
(ii)
Service fees Fees from service maintenance contracts are recognised over the period of the contract.
3.12 Lease payments Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding 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.
60
61
The measurement of deferred taxes reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
3.15
Earnings per share The Group presents basic and diluted earnings per share data for its ordinary shares. Basic earnings per share is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year, adjusted for own shares held. Diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.
3.16
Segment reporting An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups other components. All operating segments operating results are reviewed regularly by the Groups CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Companys headquarters), head office expenses, and income tax assets and liabilities. Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment, and intangible assets other than goodwill.
3.17
New standards and interpretations not adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2012, and have not been applied in preparing these consolidated financial statements. None of these are expected to have a significant effect on the consolidated financial statements of the Group.
62
63
Group
Freehold Leasehold building improvements $000 $000 2,827 676 (273) 497 (77) 3,650 84 195 (116) 3,813
Cost At 1 January 2011 Additions Disposals/written off Transfers/reclassifications Translation adjustment At 31 December 2011 Additions Disposals/written off Transfers/reclassifications Translation adjustment At 31 December 2012
Accumulated depreciation At 1 January 2011 Depreciation charge for the year Disposals/written off Translation adjustment At 31 December 2011 Depreciation charge for the year Disposals/written off Translation adjustment At 31 December 2012 1,991 341 (202) (94) 2,036 409 (62) 2,383 824 142 (26) (25) 915 183 (145) (20) 933 984 290 (105) (39) 1,130 358 (426) (44) 1,018 8,513 1,216 (981) 39 8,787 1,474 (1,250) (326) 8,685
11 16 1 28 27 (2) 53
Carrying amounts At 1 January 2011 At 31 December 2011 At 31 December 2012 836 1,614 1,430 440 658 598
84 597 543
1,084 466 19
The net carrying amount of property, plant and equipment under finance leases as at 31 December 2012 was $212,000 (2011: $362,000).
Company Cost At 1 January 2011 Additions Disposal/write off At 31 December 2011 Additions Disposal/write off At 31 December 2012 Accumulated depreciation At 1 January 2011 Depreciation charge for the year Disposal/write off At 31 December 2011 Depreciation charge for the year Disposal/write off At 31 December 2012 Carrying amounts At 1 January 2011 At 31 December 2011 At 31 December 2012
185 19 (202) 2 3 5
12 4 (11) 5 4 (1) 8
22 4 (22) 4 6 10
223 43 (243) 23 14 37
87 20 17
3 12 10
3 28 22
155 51 46
248 111 95
Intangible assets
Group 2012 $000 Goodwill on consolidation Impairment testing for goodwill For the purpose of impairment testing, goodwill is allocated to the Groups CGU of ECS Technology (China) Limited group of companies being a group of entities operating in the same geographical location with similar principal activities. The recoverable amount of each CGU is based on its value-in-use. Value-in-use is determined by discounting the future cash flows generated from the continuing use of the unit and is based on the following key assumptions: Cash flows were projected based on actual operating results and the five-year business plan. The anticipated annual revenue growth included in the cash flow projections ranges from 6.1% to 10.4% (2011: (2.9%) to 18.6%) per annum for the years 2013 to 2017 (2011: 2012 to 2016), giving an average annual growth in revenue of 7.4% (2011: 12.4%). A pre-tax discount rate of 14.4% (2011: 14.6%) 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 estimated using a growth rate of 4.3% (2011: Nil).
64
33,522
65
6 Subsidiaries
Company Note Unquoted equity shares, at cost Quasi-equity loans to subsidiaries, at cost Loans to subsidiaries 2012 $000 97,559 7,516 110,250 215,325 2011 $000 97,426 7,516 84,500 189,442
(a) (b)
(a)
The quasi-equity loans to subsidiaries are unsecured and interest-free. The settlement of these loans is neither planned nor likely to occur in the foreseeable future. As these loans are, in substance, part of the Companys net investments in the subsidiaries, the loans are stated at cost. The loans to subsidiaries are unsecured, repayable on 27 September 2015 (2011: 30 August 2013) and bear interest at 3.68% (2011: 3.47% to 3.52%) per annum.
(b)
Details of the significant subsidiaries are set out below. Country of incorporation/ business Singapore Groups effective equity interest 2012 % 100 2011 % 100
Principal activities Provider of information technology products and services for IT infrastructure Distributor of information technology products Provider of information technology products and services for IT infrastructure
Singapore
89.18
89.12
Thailand
100
100
Investment holding, provider Hong Kong of information technology products and services for IT infrastructure Investment holding Thailand
100
100
99.9
99.9
ECS Infocom (Phils) Pte. Ltd. ECS Vietnam Company Limited (b) 2
Investment holding
Singapore
100 100
100 100
Name of company
Principal activities
Subsidiaries of ECS Computers (Asia) Pte Ltd Pacific City (Asia Pacific) Pte Ltd Retail of information technology products, IT equipment and accessories Provider of information technology products and services for IT infrastructure Singapore 100 100
Singapore
100
100
Subsidiary of ECS Indo Pte Ltd PT ECS Indo Jaya (c) Distributor of information technology products Indonesia 89.18 89.12
Subsidiaries of ECS Technology (China) Limited ECS (Shanghai) Management Co., Ltd (a) Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure Provider of information technology products and services for IT infrastructure Peoples Republic of China Peoples Republic of China Peoples Republic of China Hong Kong 100 100
100
100
100
100
100
100
Hong Kong
100
100
Electronic settlement Peoples business centre and provider Republic of information technology of China products and services for IT infrastructure.
100
66
67
On 26 March 2012, there was an acquisition of non-controlling interests which resulted in an increase in the Groups effective equity interest from 89.12% to 89.18%. On 5 February 2012, the Company injected a capital of $125,000 into ECS Vietnam Company Limited. On 15 February 2012, ECS Technology (China) Limited, a wholly owned subsidiary of the Company, has incorporated a wholly owned subsidiary, ECS Chongqing Marketing & Payment Co., Ltd. On 5 March 2012, ECS Technology (China) Limited has injected a capital of $12,600,000 into the newly incorporated subsidiary. Audited by other member firms of KPMG International for consolidation purposes. Exempted from audit in the country of incorporation.
(a)
(b)
(c)
KPMG LLP Singapore is the auditor of all the Singapore incorporated subsidiaries.
Interest in associates
Group 2012 $000 Investment in associates Loan to associate 48,372 551 48,923 2011 $000 45,744 585 46,329 2012 $000 3,320 3,320 Company 2011 $000 3,320 3,320
The loan to an associate is denominated in United States dollars, unsecured and interest-free. Settlement is neither planned nor likely to occur in the foreseeable future. As this loan is, in substance, part of the Companys net investment in the associate, it is stated at cost. Details of the associates are as follows: Country of incorporation Effective equity held by the Group 2012 2011 49.99% 41% 49.99% 41%
Name of associate
Audited by
Philippines Malaysia
ECSB is listed on the Main Market of Bursa Malaysia Securities. Based on its closing price at the reporting date, the fair value of the Groups investment in ECSB is $30,715,000 (2011: $25,227,000). MSI-ECS Phils., Inc. is not listed. Included in the investment in ECSB is goodwill on acquisition and customer relationships amounting to $6,388,000 (2011: $6,388,000) and $4,157,000 (2011: $4,157,000) respectively. These amounts have been determined based on a fair valuation of ECSBs identifiable net assets in accordance with the requirement of FRS 28. The intangible asset relating to customer relationships is amortised over an estimated useful life of 5 years amounting to $333,000 for the year (2011: $333,000).
The values assigned to the key assumptions represent managements assessment of future trends in the IT industry and are based on both external sources and internal sources and both past performance (historical data) and its expectations for market development. Group management believes that any reasonably possible changes in the above key assumptions applied are not likely to materially cause the recoverable amount to be lower than its carrying amount.
68
69
Movements in deferred tax assets and liabilities during the year are as follows:
At 1/1/2011 $000
Recognised in profit or loss (note 25) $000 Translation adjustment $000 At 31/12/2011 $000 Change in tax rates $000 Translation adjustment $000 At 31/12/2012 $000
Group
6,932
(490)
(421)
8,791
Deferred tax liabilities Accelerated tax depreciation (545) (1) (2,913) (437)
(2,367)
158
(3,192)
Company
(27)
(27)
70
71
In 2012, changes in trading inventories recognised as cost of sales amounted to $3,598,102,000 (2011: $3,557,148,000).
10
An affiliated company is a company, other than a related corporation, which directly or indirectly through one or more intermediaries, is under common significant influence. The Group and the Companys exposure to credit and impairment losses, currency and interest rate risks related to trade and other receivables are disclosed in note 21.
The loans due from subsidiaries are unsecured, repayable on demand and bear interest at rates ranging from 2.54% to 6.50% (2011: 2.04% to 6.50%) per annum. The non-trade balances are unsecured, repayable on demand and interest-free. The loans payable are unsecured, repayable on demand and bear interest at 2.72% to 3.05% (2011: 1.57% to 3.36%) per annum. There is no allowance made for doubtful receivables arising from the outstanding balances.
12
(a) 10
On 4 January 2006, a subsidiary entered into a call option agreement with a shareholder of the associate for US$1 cash consideration which will entitle the subsidiary to acquire additional 10% equity interest in the associate. The call option is exercisable beginning 4 July 2008 and ending on the date falling three years thereafter, unless otherwise further extended by the shareholder in writing, at an option price equivalent to US$450,000. On 1 May 2011, the shareholder agreed to defer the commencement date of the call option period to sixty months from 4 January 2006 and ending on the date falling three years thereafter, unless otherwise further extended by the shareholder in writing. The fair value of the call option as at the reporting date has been recognised as an option asset with its corresponding change in fair value during the year recognised in profit or loss.
72
73
The weighted average effective interest rates per annum relating to cash and cash equivalents, excluding bank overdrafts, at the reporting date for the Group range from 0.10% to 3.90% (2011: 0.05% to 1.49%) per annum. Interest rates reprice at daily to monthly intervals. The Group and the Companys exposure to currency risks are disclosed in note 21.
14
Share capital
Group and Company No. of shares 2012 2011 000 000 Issued and fully paid, with no par value: At 1 January and 31 December
365,910
365,360
During the financial year, the Company has issued 550,000 ordinary shares, at an issue price of $0.55 per share, pursuant to the exercise of options granted under the ECS Share Option Scheme II (see note 16). All shares rank equally with regards to the Companys residual assets. The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of the Company.
15 Reserves
Group Note 2012 $000 (17,365) 8,050 6,927 228,950 226,562 2011 $000 (8,607) 8,038 6,462 207,831 213,724 2012 $000 8,050 7,794 15,844 Company 2011 $000 8,038 9,939 17,977
(a) (b)
Currency translation reserve The currency translation reserve of the Group comprises foreign exchange differences arising from the translation of the financial statements of foreign operations. Dividend reserve The dividend reserve of the Group represents dividends proposed which are subject to approval of the shareholders at a general meeting.
16
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. 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.
(c)
On 15 October 2010, the Group granted 13,770,000 share options pursuant to the rules of the ECS Share Option Scheme II. The options have an exercise price of $0.550 per share; a vesting period of 1 year from date of grant; and can be exercised within 5 years from date of grant for non-executive directors and 10 years from date of grant for executive directors and employees.
74
75
15/10/2010
$0.550
10,650,000
(550,000)
(250,000)
9,850,000
15/10/2010
$0.550
2,200,000
2,200,000
The fair value of the employee share options is measured using quoted share price on measurement date and exercise price of the instrument. ECS Indo Pte Ltd On 16 October 2009, the subsidiary granted 120,000 share options to four senior employees of a subsidiary. Each option is, upon full payment of the exercise price, convertible into one new ordinary share of the company. The options are exercisable at any time within 3 years from the grant date and are settled by physical delivery of shares. The options have expired during the financial year. At 31 December 2012, details of the options granted to senior employees were as follows: Options outstanding at 1 January 2012 Options outstanding Options at 31 Options Options forfeited December granted exercised or lapsed 2012
16/10/2009
US$1.8156
113,392
(113,392)
The fair value of such equity-settled share based payments was determined based on adjusted market comparables.
Current liabilities Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities
(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 2012 of $328,685,000 (2011: $282,248,000).
Included in unsecured bank loans is a syndicated loan amounting to $110,250,000 (2011: $101,238,000). On 27 September 2012, the Company has signed a $110,250,000 three-year term loan financing facility with three major financial institutions. The facility was fully drawn on 17 October 2012 to refinance the $101,238,000 syndicated loan. The syndicated loan bears interest at 2.73% to 3.25% (2011: 2.88% to 3.02%) per annum. The long term portion of the syndicated loan amounted to $110,250,000 (2011: $101,238,000) and is due on 27 September 2015 (2011: 30 August 2013). The loans are guaranteed by certain subsidiaries. Finance lease liabilities At 31 December, the Group has obligations under finance leases that are payable as follows: Future minimum Interest lease payments $000 $000 18 5 23 89 23 112
Principal $000 2012 Repayable within 1 year Repayable after 1 year but within 5 years 71 18 89
2011 Repayable within 1 year Repayable after 1 year but within 5 years
34 25 59
76
77
Currency Group Unsecured bank loans and trade financing - floating rate - floating rate - floating rate - floating rate - floating rate Finance lease liabilities Derivative liabilities
Year of maturity
SGD 1.51% - 2.1% 2013 USD 2.56% - 3.4% 2013 2015 RMB 5.32% - 6.16% 2013 THB 2.98% - 3.48% 2013 IDR 8.9% - 9.0% 2013 IDR 7.00% 2014
Company Unsecured bank loans - floating rate - floating rate Derivative liabilities
SGD USD
2.02% 2.68%
2013 2015
18
20 11
The Group and the Companys exposure to liquidity and currency risks related to trade and other payables are disclosed in note 21.
20
21 Financial instruments
Credit risk The maximum amount of financial assets, representing the maximum exposure to credit risk, at the reporting date was: Group 2012 $000 Non-current loans to subsidiaries Loans and receivables Cash and cash equivalents 551,318 108,210 659,528 2011 $000 528,904 131,397 660,301 2012 $000 110,250 36,633 4,357 151,240 Company 2011 $000 84,500 29,909 19,628 134,037
The maximum exposure to credit risk for loans and receivables at the reporting date by geographic region was: Group 2012 $000 China Thailand Singapore Indonesia Philippines Hong Kong Others 292,872 123,775 40,366 68,592 2,676 23,037 551,318 2011 $000 308,429 97,970 56,733 63,576 2,196 528,904 2012 $000 8,132 2,587 23,232 2,676 6 36,633 Company 2011 $000 7,414 20,299 2,196 29,909
78 79
Impairment losses The aging of loans and receivables at the reporting date was: Group 2012 $000 Gross Not past due Past due 0 30 days Past due 31 120 days Past due 121 365 days More than one year Impairment losses Not past due Past due 0 30 days Past due 31 120 days Past due 121 365 days More than one year 421,265 71,646 45,635 15,534 20,078 574,158 (1,125) (3,583) (18,132) (22,840) 2011 $000 370,683 94,327 45,064 23,798 14,472 548,344 (1,592) (5,508) (12,340) (19,440) 2012 $000 36,633 36,633 Company 2011 $000 29,909 29,909
The movements in the allowance for impairment in respect of loans and receivables during the year were as follows: Group Note At 1 January Utilised during the year Allowances made during the year Translation differences on consolidation At 31 December 2012 $000 19,440 (174) 23(b) 4,333 (759) 22,840 2011 $000 14,140 (575) 5,585 290 19,440 2012 $000 Company 2011 $000
The loans and receivables that were not past due or impaired at the reporting date is assessed to be at acceptable risk. Based on historical default rates, the Group believes that no further impairment allowance is necessary in respect of loans and receivables as at 31 December 2012 and 31 December 2011. These receivables are mainly arising with customers that have a good record with the Group.
Carrying amount $000 Group 2012 Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities - Inflow - Outflow Trade and other payables
2011 Unsecured trade financing Unsecured bank loans Finance lease liabilities Derivative liabilities - Inflow - Outflow Trade and other payables
Company 2012 Unsecured bank loans Derivative liabilities - Inflow - Outflow Trade and other payables
(115,403) (115,403)
2011 Unsecured bank loans Derivative liabilities - Inflow - Outflow Trade and other payables
(104,235) (104,235)
It is not expected that the cash flow included in the maturity analysis could occur significantly earlier, or at significantly different amounts.
80
81
(89) 8,776
456 456
2,587
(235) (717)
416 416
2,488
--------------- 2012 -------------- USD PHP THB $000 $000 $000 Company Loan receivables - non-current - current Dividend receivables Cash and cash equivalents Unsecured bank loans/trade financing Forward exchange contracts and hybrid swaps
456 456
2,587 2,587
416 416
2,488 2,488
Sensitivity analysis A 1% strengthening of the Singapore dollar against the above currencies at 31 December would have increased/ (decreased) profit or loss before tax by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecasted sales and purchases. The analysis is performed on the same basis for 2011.
A 1% weakening of the Singapore dollar against the above currencies at 31 December would have had the following effect as shown below, on the basis that all other variables remain constant. Group Profit or loss 2012 2011 $000 $000 USD IDR PHP THB Interest rate risk The Groups exposure to market risk for changes in interest rates relates primarily to the Groups debt obligations. The Group manages some of its exposure to floating rate interest by entering into interest rate swaps and hybrid swaps. At reporting date, the interest rate profile for the interest-bearing financial instruments was: Group Carrying amount 2012 2011 $000 $000 Fixed rate instruments Financial liabilities Variable rate instruments Financial assets Financial liabilities (89) (235) Company Carrying amount 2012 2011 $000 $000 (112) 88 5 26 (446) (7) 4 25 Company Profit or loss 2012 2011 $000 $000 735 5 26 784 4 25
(243,009) (243,009)
(241,564) (241,564)
Fair value sensitivity analysis for fixed rate instruments The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss. Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased/ (decreased) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis is performed on the same basis for 2011.
82 83
Group 31 December 2012 Variable rate instruments Interest rate swaps and hybrid swaps Cash flow sensitivity (net) 31 December 2011 Variable rate instruments Interest rate swaps and hybrid swaps Cash flow sensitivity (net) Fair values
92 205 297
65 (218) (153)
The carrying amounts of the Group and the Companys financial instruments carried at cost or amortised cost are not materially different from their fair values as at 31 December 2012. Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1 : Level 2 : quoted prices (unadjusted) in active markets for identical assets or liabilities inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)
Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(1,174)
1,543
1,543 (1,174)
(882)
1,263
1,263 (882)
(1,088)
(1,088)
(1,313)
(1,313)
280
284
84
85
Transactions within the Group have been excluded in arriving at revenue for the Group.
2,735 5,585 722 (83) 344 54 (2,225) (356) (348) 48 17 105 (1,260) 6,936 175 2,190
25
Income tax expense for the year Reconciliation of effective tax rate Profit before tax Income tax at 17% Non-deductible expenses Income not subject to tax Effect of different tax rates in foreign jurisdictions Changes in tax rates Income tax at concessionary rate Over provided in prior years Withholding taxes on profits from PRC subsidiaries Share of profit of associates, net of tax Others Income tax expense for the year
36,996 6,289 1,184 (286) 1,472 (22) (400) (397) 437 (1,189) 119 7,207
52,157 8,867 1,264 (265) 3,363 490 (115) (78) 546 (1,176) (158) 12,738
86
87
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 2012 2011 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) 365,781 3,158 (3,066) 365,873 365,360 8,988 (6,084) 368,264
27
Operating segments
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 Groups business and geographical segments. The primary format, business segments, is based on the Groups management and internal reporting structure. 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. The main business segments of the Group are the following: Segments Principal activities Enterprise systems IT services Distribution Provider of enterprise systems tools (middleware, operating systems, Unix/NT servers, databases, storage and security products) for IT infrastructure. IT infrastructure design and implementation, training, maintenance and support services. Distribution of IT products (desktop PCs, notebooks, handhelds, printers, etc) for the commercial and consumer markets.
(804)
(556)
(26)
(17)
(1,816)
(1,617)
(2,646)
(2,190)
21,798
23,450
1,531
1,800
15,617
34,917
38,946
60,167
7,809 33 4,398
5,695 67 3,133
Reconciliations of reportable segments profit or loss, assets and liabilities and other material items. 2012 $000 Profit or loss Total profit for reportable segments Unallocated amounts: - Finance costs Share of profit of associate Consolidated profit before tax 38,946 (8,947) 6,997 36,996 2011 $000 60,167 (14,927) 6,917 52,157
88
89
28
Geographical segments
The Group operates principally in North Asia and South East Asia including Singapore. In presenting information on the basis of geographic segments, segment revenue is based on the geographic location of operations. Segment assets are based on the geographic location of the assets. Revenue 2012 $000 North Asia South East Asia (excluding Singapore) Singapore 2,183,359 989,641 470,651 3,643,651 2011 $000 2,328,449 913,631 365,085 3,607,165 Non-current assets 2012 2011 $000 $000 37,019 4,562 4,106 45,687 37,499 4,620 4,704 46,823
29
(ii)
(iv) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases, the market rate of interest is determined by reference to similar lease agreements.
91
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.
32
(b)
The Company has accounted for these corporate guarantees as insurance contracts. There are no terms and conditions attached to the guarantee contracts that would have a material effect on the amount, timing and uncertainty of the Groups future cash flows. The Company has undertaken to provide continuing financial support to certain subsidiaries to enable them to continue to operate as going concerns and to meet their obligations as and when they fall due.
33
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.
92
93
During the year, certain of its subsidiaries have, in the normal course of business entered into the following transactions with companies in which certain directors have interests: Group 2012 $000 Purchase of information technology products and services Sales of information technology products and services 140 15,680 2011 $000 395 19,908
The directors and other key management personnel participate in the Companys share option plans, the terms and conditions of which are stated in note 16. Other related party transactions For the purpose of these financial statements, parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.
152,394 (2,889)
42,743
94
95
As at 13 March 2013
Shareholdings Statistics
Ordinary shares On a show of hands: On poll: One vote for each member One vote for each ordinary share
Analysis of Shareholdings Range of Shareholdings 1 - 999 1,000 - 10,000 10,001 - 1,000,000 1,000,001 and above No. of Shareholders 5 462 337 7 811 % 0.62 56.97 41.55 0.86 100.00 No. of Shares 2,096 2,565,189 24,389,796 338,953,093 365,910,174 % 0.00 0.70 6.67 92.63 100.00
Based on information available to the Company as at 13 March 2013, 10.32% of the issued ordinary shares of the Company are held by the public and therefore Rule 723 of the Listing Manual is complied with. Top 20 Shareholders No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Name of Shareholder Raffles Nominees (Pte) Ltd UOB Kay Hian Pte Ltd DBS Nominees Pte Ltd Citibank Nominees Singapore Pte Ltd Hong Leong Finance Nominees Pte Ltd Lim & Tan Securities Pte Ltd United Overseas Bank Nominees Pte Ltd Maybank Kim Eng Securities Pte Ltd See Beng Lian Janice Maybank Nominees (S) Pte Ltd Atma Singh S/O Nand Singh Koh Seng Chuah See Lop Fu James @ Shi Lap Fu James Tan Su Lan @ Tan Soo Lung Narong Intanate OCBC Securities Private Ltd Lim Meng Seng Vision Capital Private Limited Phillip Securities Pte Ltd Foo Seck Huat No. of Shares 327,883,093 2,512,000 2,408,000 2,329,000 1,463,000 1,325,000 1,033,000 933,796 810,000 750,000 740,000 718,000 619,000 615,000 569,000 468,000 430,000 400,000 399,000 388,000 346,792,889 % 89.61 0.69 0.66 0.64 0.40 0.36 0.28 0.26 0.22 0.20 0.20 0.20 0.17 0.17 0.16 0.13 0.12 0.11 0.11 0.11 94.80
Substantial Shareholders Name of substantial shareholder Number of shares Number of shares in which registered in the name substantial shareholder is of the substantial deemed to have an interest Shareholder Total Percentage (%)
327,580,093(1) 327,580,093(1)
327,580,093 327,580,093
89.52 89.52
Ordinary Business
1 To receive and adopt the Directors Report and Audited Accounts for the financial year ended 31 December 2012 and the Auditors Report thereon. [Resolution 1] To declare a one-tier tax exempt first and final dividend of 2.2 cents per ordinary share for the year ended 31 December 2012. [Resolution 2] (a) To re-elect Mr Koh Soo Keong who is retiring in accordance with Article 91 of the Companys Articles of Association, as Director of the Company. [Resolution3(a)] Note: Mr Koh Soo Keong, if re-elected, will remain as the Chairman of the Companys Compensation Committee, and a member of the Companys Nominating Committee and Audit 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 (the SGX-ST, and the Listing Manual of the SGX-ST, the Listing Manual).
(b) To re-elect Mr Tay Eng Hoe who is retiring in accordance with Article 91 of the Companys Articles of Association, as Director of the Company. [Resolution3(b)] Note: Mr Tay Eng Hoe, if re-elected, will remain as the Chairman of the Company and a member of the Companys Nominating Committee.
4 5 6
(c)
To re-elect Mr Narong Intanate who is retiring in accordance with Article 91 of the Companys Articles of Association, as Director of the Company. [Resolution3(c)] [Resolution 4]
To re-appoint KPMG LLP as Auditors and to authorise the Directors to fix their remuneration.
To approve the payment of Directors Fees of $320,479.00 for the year ended 31 December 2012. (2011: $343,500.00). [Resolution 5] 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 (Chapter 50) of Singapore (the Act) and the listing rules of the SGX-ST, authority be and is hereby given to the Directors to:(i) (ii) issue shares in the capital of the Company whether by way of bonus issue, rights issue or otherwise; 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 issue additional Instruments convertible into shares arising from adjustments made to the number of Instruments, 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,
96 97
(iii)
provided that:
(2)
(C)
(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)] [Resolution6(a)] (b) That for the purposes of Chapter 9 of the Listing Manual: (i) the Shareholders General Mandate for the Company, its subsidiaries and associated companies or any of them to enter into any of the transactions falling within the types or categories of interested person transactions as described in section 3.1 (Interested Person Transactions) of Appendix A attached to this annual report with VST Holdings Limited, its subsidiaries and/or its associates (as set out in section 3.2) be and is hereby approved, provided that such transactions are entered into on an arms length basis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of Appendix A; the aforesaid Shareholders General Mandate shall, unless earlier revoked or varied by the Company in general meeting, continue in force until the next annual general meeting of the Company; and
(ii) (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(b). [See Explanatory Note (ii)] [Resolution6(b)] (c) That for the purposes of Chapter 9 of the Listing Manual: (i) the Shareholders General Mandate for the Company, its subsidiaries and associated companies or any of them to enter into any of the transactions falling within the types or categories of interested person transactions as described in section 3.1 (Interested Person Transactions) of Appendix A with the associates of Mr Narong Intanate (as set out in section 3.2), a Director of the Company, be and is hereby approved, provided that such transactions are entered into on an arms length basis, on normal commercial terms and in accordance with the guidelines for interested person transactions as set out in section 3.5 (Review Procedures) of Appendix A;
the 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(c). [See Explanatory Note (ii)] [Resolution6(c)] (d) That: (i) for the purposes of the 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: (a) (b) on-market purchases (each a Market Purchase) on the SGX-ST; and/or off-market purchases (each an Off-Market Purchase) (if effected otherwise than on the SGXST) in accordance with an equal access scheme(s) as may be determined or formulated by the Directors of the Company as they may consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Act and the Listing Manual,
be and is hereby authorised and approved generally and unconditionally (the Share Buyback Mandate);
(ii) unless varied or revoked by the Company in general meeting, the authority conferred on the Directors of the Company pursuant to the Share Buyback Mandate may be exercised by the Directors at any time and from time to time during the period commencing from the passing of this Resolution and expiring on the earlier of: (a) the date on which the next annual general meeting of the Company is held or required by law to be held;
(b) the date on which the share buybacks are carried out to the full extent mandated; or (c) the date on which the authority contained in the Share Buyback Mandate is varied or revoked (the Relevant Period);
(iii) in this Resolution: Prescribed Limit means 10% of the issued ordinary share capital of the Company as at the date of passing of this Resolution unless the Company has effected a reduction of the share capital of the Company in accordance with the applicable provisions of the Act, at any time during the Relevant Period, in which event the issued ordinary share capital of the Company shall be taken to be the amount of the issued ordinary share capital of the Company as altered (excluding any treasury shares that may be held by the Company from time to time); and Maximum Price in relation to a share to be purchased, means an amount (excluding brokerage, stamp duties, applicable goods and services tax and other related expenses) not exceeding: (i) (ii) in the case of a Market Purchase: 105% of the Average Closing Price; in the case of an Off-Market Purchase: 120% of the Highest Last Dealt Price,
where:
98
99
(ii)
(iii)
Proxies : A member entitled to attend and vote at the annual general meeting may appoint not more than two proxies to attend and vote on his behalf and where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy. A proxy need not be a member of the Company. The instrument appointing a proxy must be deposited at the office of the Companys Share Registrar, M & C Services Private Limited, 112 Robinson Road #05-01, Singapore 068902, not less than forty-eight hours before the time set for the holding of the annual general meeting. NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT DATE NOTICE IS ALSO HEREBY GIVEN that the Share Transfer Books and Register of Members of the Company will be closed on 8 May 2013, 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 29 April 2013. Duly completed registrable transfers in respect of shares in the Company received up to the close of business at 5.00 p.m. on 7 May 2013 by the Companys Share Registrar, M & C Services Private Limited, will be registered to determine members entitlements to such dividend. Members whose securities accounts with The Central Depository (Pte) Ltd are credited with shares in the Company as at 5.00 p.m. on 7 May 2013 will be entitled to such proposed dividend. The proposed dividend, if approved at the Annual General Meeting, will be paid on 17 May 2013.
100
101
PROXY FORM
Important: 1. For investors who have used their CPF monies to buy the Companys shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY. 2. 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.
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 ofECS Holdings Limited not less than 48 hours before the time appointed for holding the meeting.
I/We of being a member/members of ECS HOLDINGS LIMITED hereby appoint NRIC/Passport Number Proportion of Shareholdings (%)
Name
Address
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 29 April 2013 at 3.00 p.m. and at any adjournment thereof. (Please indicate with an X in the spaces provided whether you wish your vote(s) to be cast for or against the Ordinary Resolutions as set out in the Notice of Annual General Meeting. In the absence of specific directions, the proxy/proxies will vote or abstain as he/they may think fit, as he/they will on any other matter arising at the Annual General Meeting.) NO 1. 2. 3. ORDINARY RESOLUTIONS Ordinary Business : Adoption of Reports and Accounts Declaration of a onetier tax exempt first and final dividend of 2.2 cents per ordinary share for the year ended 31 December 2012 Re-election of Directors : (a) Mr Koh Soo Keong (b) Mr Tay Eng Hoe (c) Mr Narong Intanate 4. 5. 6. Re-appointment of Auditors Approval of Directors Fees of S$320,479/- for the year ended 31 December 2012 Special Business (a) Authority for Directors to issue shares pursuant to Section 161 of the Companies Act (Chapter 50) of Singapore and the Listing Manual of the Singapore Exchange Securities Trading Limited (b) To approve the proposed renewal of the Shareholders General Mandate for Interested Person Transactions with VST Holdings Limited, its subsidiaries and/or associates (c) To approve the proposed renewal of the Shareholders General Mandate for Interested Person Transactions with the associates of Mr Narong Intanate, a Director of the Company (d) To approve the proposed renewal of the Share Buyback Mandate 7. Any other ordinary business day of 2013.
Total Number of Shares Held:
FOR
AGAINST
Dated this
Notes :1. Please insert the total number of shares held by you. If you have shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act (Chapter 50) of Singapore), you should insert that number of shares. If you have shares registered in your name in the Register of Members, you should insert that number of shares. If you have shares entered against your name in the Depository Register and shares registered in your name in the Register of Members, you should insert the aggregate number of shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the shares held by you. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote on his behalf. A proxy need not be a member of the Company. Where a member appoints more than one proxy, the proportion of the shareholding concerned to be represented by each proxy shall be specified in the form of proxy, failing which, the appointment shall be deemed to be in the alternative. The instrument appointing a proxy must be deposited at the office of the Share Registrar of the Company, M&C Services Private Limited at 112 Robinson Road #05-01, Singapore 068902, not less than forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting. The instrument appointing a proxy must be signed by the appointor or his attorney. Where the instrument appointing a proxy is given by a corporation, it must be given either under its common seal or signed on its behalf by an attorney or a duly authorised officer of the corporation. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof must (failing previous registration with the Company) be lodged with the instrument of proxy, failing which the instrument may be treated as invalid. A corporation which is a member may by a resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at the Annual General Meeting, in accordance with Section 179 of the Companies Act (Chapter 50) of Singapore.
2 3
6.
7.
General: The Company shall be entitled to reject an instrument of proxy if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument of proxy. In addition, in the case of shares entered in the Depository Register, the Company may reject an instrument of proxy lodged if the member, being the appointor, is not shown to have shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for the holding of the Annual General Meeting, as certified by The Central Depository (Pte) Limited to the Company.
phone: +65 6659 6888 | fax: +65 6884 7549 | website: www.ecs.com.sg