Audited Financial Statements

EX-10.14 2 c90716exv10w14.htm AUDITED FINANCIAL STATEMENTS exv10w14

EXHIBIT 10.14

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)

Company No: 501396-U

Financial Report
for the financial year ended 31 December 2004

Contents


		Page

Report of Independent Registered Accounting Firm		1

Balance Sheet		2

Income Statement		3

Statement of Changes in Equity		4

Cash Flow Statement		5

Notes to the Financial Statements		6-17

Statement by Directors		18

Report Of Independent Registered Accounting Firm To The Members Of

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

We have audited the financial statements set out on pages 2 to 17. The preparation of the financial statements is the responsibility of the Company’s directors. Our responsibility is to express an opinion on the financial statements based on our audit.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit included examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. Our audit also included assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2004 and its results and cash flows for the financial year ended on that date in conformity with accounting principles generally accepted in the United States of America.

The financial statements for the preceding financial year were audited by another firm of auditors whose report dated 25 February 2004 expressed an unqualified opinion on those statements.


/s/ Horwath		/s/ Eddy Chan Wai Hun
Firm No: AF 1018		Approval No: 2182/10/05 (J)
Chartered Accountants		Partner
Penang

18 March 2005

Page 1

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Balance Sheet As At 31 December 2004


		2004		2003
	Note	USD		USD

NON-CURRENT ASSETS
Property, plant and equipment	4		333,602		393,605
Deferred tax assets	5		0		30,789

CURRENT ASSETS

Inventories	6		2,011,104		1,473,773
Trade receivables	7		7,318,500		4,389,962
Other receivables, deposits and prepayments			21,339		14,320
Cash and bank balances	8		268,227		394,079

			9,619,170		6,272,134


CURRENT LIABILITIES
Trade payables	9		3,793,509		2,964,426
Other payables and accruals	10		362,721		122,038
Hire purchase payable	11		1,824		2,875
Bank borrowings — unsecured	12		3,404,769		1,873,684
Provision for tooling costs	13		44,458		103,712
Current tax liabilities			11,596		10,395

			7,618,877		5,077,130

NET CURRENT ASSETS			2,000,293		1,195,004

			2,333,895		1,619,398


FINANCED BY:-
Share capital	14		1,315,789		660,000
Retained profits			1,018,106		957,574

SHAREHOLDERS’ EQUITY			2,333,895		1,617,574

NON-CURRENT LIABILITY
Hire purchase payable	11		0		1,824

			2,333,895		1,619,398




The annexed notes form an integral part of these financial statements.		Page 2

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Income Statement
For The Financial Year Ended 31 December 2004


		2004			2003
	Note	USD			USD

REVENUE	15		19,822,673			12,639,956

COST OF SALES			(18,347,195	)		(11,693,100	)


GROSS PROFIT			1,475,478			946,856

OTHER OPERATING INCOME			24,392			24,183

ADMINISTRATIVE AND GENERAL EXPENSES			(548,255	)		(396,277	)

SELLING AND DISTRIBUTION EXPENSES			(48,946	)		(45,918	)


PROFIT FROM OPERATIONS			902,669			528,844

FINANCE COSTS			(95,511	)		(67,658	)


PROFIT BEFORE TAX	16		807,158			461,186

TAX EXPENSE	17		(90,837	)		(34,225	)


NET PROFIT FOR THE YEAR			716,321			426,961




The annexed notes form an integral part of these financial statements.		Page 3

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Statement Of Changes In Equity
For The Financial Year Ended 31 December 2004


	Share		Retained
	capital		profits			Total
	USD		USD			USD

Balance at 1 January 2003		660,000		530,613			1,190,613

Net profit for the year		0		426,961			426,961


Balance at 31 December 2003		660,000		957,574			1,617,574

Issue of bonus shares		655,789		(655,789	)		0

Net profit for the year		0		716,321			716,321


Balance at 31 December 2004		1,315,789		1,018,106			2,333,895




The annexed notes form an integral part of these financial statements		Page 4

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Cash Flow Statement
For The Financial Year Ended 31 December 2004


	2004			2003
	USD			USD

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax		807,158			461,186

Adjustments for:-
Allowance for slow moving inventories		0			26,316
Depreciation		78,955			69,825
Interest expense		95,511			67,658
Provision for tooling costs		54,680			58,684
Interest income		(3,044	)		(1,340	)

Operating profit before working capital changes		1,033,260			682,329

(Increase)/Decrease in inventories		(537,331	)		376,790
(Increase)/Decrease in receivables		(2,935,557	)		263,824
Increase/(Decrease) in payables		1,069,766			(1,940,419	)

Cash absorbed by operations		(1,369,862	)		(617,476	)

Income tax paid		(58,847	)		(56,725	)
Tooling costs paid		(113,934	)		(6,132	)

Net cash used in operating activities		(1,542,643	)		(680,333	)

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received		3,044			1,340
Purchase of property, plant and equipment		(18,952	)		(67,604	)

Net cash used in investing activities		(15,908	)		(66,264	)

CASH FLOW S FROM FINANCING ACTIVITIES

Increase/(Decrease) in short term bank borrowings (net)		1,531,085			(399,474	)
Interest paid		(95,511	)		(67,616	)
Repayment of hire purchase obligations		(2,875	)		(1,753	)

Net cash from/(used in) financing activities		1,432,699			(468,843	)

Net decrease in cash and cash equivalents		(125,852	)		(1,215,440	)

Cash and cash equivalents brought forward		394,079			1,609,519


Cash and cash equivalents carried forward		268,227			394,079




The annexed notes form an integral part of these financial statements.		Page 5

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

1.	General Information

	The Company is a private company limited by shares, incorporated and domiciled in Malaysia.

	The local currency of the Company is Ringgit Malaysia (RM). The reporting currency used in presenting this set of financial statements is United States Dollars (USD).

	The Company is principally engaged in the manufacture of colour monitors. There has been no significant change in the nature of this activity during the financial year.

	The registered office of the Company is located at 3^rd Floor, Wisma Wang, 251-A, Jalan Burma, 10350 Penang, Malaysia.

	The principal place of business of the Company is located at Lot 316 & 317, Jalan PKNK 3/2, Kawasan Perindustrian Sungai Petani, 08000 Sungai Petani, Kedah, Malaysia.

	The total number of employees of the Company as at 31 December 2004 was 48 (2003 : 41).

2.	Financial Risk Management

	The activities of the Company expose it to certain financial risks, including currency risk, interest rate risk, credit risk, liquidity risk and cash flow risk. The overall financial risk management objective of the Company is to maximise shareholders’ value by minimising the potential adverse impacts of these risks on its financial position, performance and cash flows.

	The Board of Directors explicitly assumes the responsibilities of financial risk management which is carried out mainly through risk reviews and internal control systems.

	Currency Risk

	The Company’s exposure to currency risk arises mainly from normal trading transactions denominated in foreign currencies.

	The Company does not use any derivative financial instruments to manage its exposure to currency risk as the directors are of the opinion that the net exposure is not significant in view of the present Ringgit Malaysia exchange rate peg against United States Dollars.

	Interest Rate Risk

	The Company’s exposure to interest rate risk arises mainly from borrowings.

	The Company manages its exposure to interest rate risk by seeking to obtain the most favourable interest rates available without increasing its other financial risk exposures.




		Page 6

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

2.	Financial Risk Management (cont’d)

	Credit Risk

	The Company’s exposure to credit risk arises mainly from cash deposits and receivables. The maximum credit risk exposure is best represented by the total carrying amount of these financial assets in the balance sheet.

	The Company manages its exposure to credit risk by seeking to invest cash assets safely and profitably, assessing counter parties’ financial standings on an ongoing basis, setting and monitoring counter parties’ limits and credit terms. The Company does not have any major concentration of credit risk other than the significant amount owing by a related party as disclosed in Note 7 to the financial statements.

	Liquidity and Cash Flow Risks

	The Company’s exposure to liquidity and cash flow risks arises mainly from general funding and business activities.

	The Company practises prudent liquidity risk management by maintaining sufficient cash and the availability of funding through certain committed credit facilities.

3.	Significant Accounting Policies

	3.1	Basis of Preparation of Financial Statements

		The financial statements of the Company are prepared under the historical cost convention, modified to include other bases of measurement as disclosed in other sections of the significant accounting policies, and in compliance with the accounting principles generally accepted in the United States of America.

	3.2	Financial Instruments

		Recognised and Unrecognised

		The accounting policies for recognised financial instruments are disclosed in the individual policies associated with each item. The Company does not have any unrecognised financial instruments.

		Fair Values

		The carrying amounts of financial assets and liabilities with short maturity periods are assumed to approximate their fair values.




		Page 7

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

3.	Significant Accounting Policies (cont’d)

	3.3	Property, Plant and Equipment

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

		Property, plant and equipment are depreciated on a straight-line method over the estimated useful lives of the assets using the following annual rates:-


Plant and machinery	10-20	%
Electrical installation and renovation	10	%
Motor vehicles	20	%
Office equipment	20	%
Furniture and fittings	10	%
Computer	10-20	%
Factory tools and equipment	20	%
Mould	10	%

	3.4	Impairment of Assets

		The carrying amounts of assets, other than deferred tax assets, inventories and financial assets, are reviewed at each balance sheet date to determine whether there is any indication that an item of asset may be impaired. If any such indication exists, the recoverable amount of the asset is estimated. Any excess of the carrying amount of the asset over its recoverable amount represents an impairment loss and is recognised as an expense in the income statement.

		An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and it is reversed only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised. The reversal is recognised in the income statement.

	3.5	Inventories

		Inventories are valued at the lower of cost (determined on the first-in, first-out basis) and net realisable value. Cost consists of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

	3.6	Receivables

		Receivables are recognised at cost less an allowance for any doubtful debts. Specific allowance for doubtful debts is made when collection is no longer probable. Bad debts are written-off as incurred.




		Page 8

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

3.	Significant Accounting Policies (cont’d)

	3.7	Payables

		Payables are recognised at cost which is the fair value of the consideration to be paid in the future for goods and services received.

	3.8	Hire Purchase

		Assets acquired under hire purchase agreements are included in property, plant and equipment and the capital element of the hire purchase commitments is shown as hire purchase payables. The capital element of the hire purchase instalments is applied to reduce the outstanding obligations and the interest element is charged to the income statement so as to give a constant periodic rate of interest on the outstanding liability at the end of each accounting period. Assets acquired under hire purchase agreements are depreciated over the useful lives of equivalent owned assets.

	3.9	Loans and Borrowings

		All loans and borrowings are initially recognised at cost which is the fair value of the proceeds received. The loans and borrowings are subsequently stated at amortised cost using the effective yield method. The effective interest rate is the historical rate for a fixed rate instrument and the current market rate for a floating rate instrument.

		All borrowing costs are recognised as an expense in the period in which they are incurred.

	3.10	Provisions

		A provision is recognised when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation (legal or constructive) as a result of a past event and a reliable estimate can be made of the amount.

	3.11	Foreign Currency Transactions and Translation

		Transactions in foreign currencies are converted into the reporting currency at the rates of exchange ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into the reporting currency at the rates of exchange ruling at that date. Non-monetary assets and liabilities which are stated at cost denominated in foreign currencies are translated into the reporting currency at the rates of exchange ruling at the transaction dates. Exchange gains and losses arising on foreign currency transactions and translation are recognised in the income statement.

		The principal closing rate used in translation is RM1.00 : USD0.2632.




		Page 9

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

3.	Significant Accounting Policies (cont’d)

	3.12	Share Capital

		The Company has only one class of share capital, i.e. ordinary shares of RM1.00 (equivalent to USD0.2632) each, which is classified as equity. External costs directly attributable to the issue of new shares are written-off to the share premium account or, where there is no such account, charged to the income statement.

	3.13	Income Recognition

		Income from the sale of goods is recognised upon delivery of goods and customer’s acceptance. Interest income is recognised on an accrual basis.

	3.14	Income Taxes

		Income taxes for the year comprise current tax and deferred tax.

		Current tax represents the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted or substantially enacted by the balance sheet date.

		Deferred tax is provided for under the balance sheet liability method in respect of all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base except for those temporary differences associated with goodwill, negative goodwill or the initial recognition of an asset or liability in a transaction which is not a business combination and affects neither accounting nor taxable results at the time of the transaction.

		A deferred tax liability is recognised for all taxable temporary differences whereas a deferred tax asset is recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on the tax rates that have been enacted or substantially enacted by the balance sheet date.

	3.15	Research and Development Expenditure

		Research and development expenditure is recognised as an expense in the period in which the expenditure is incurred unless the development expenditure meets the asset recognition criteria in which case the expenditure will be capitalised.




		Page 10

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

3.	Significant Accounting Policies (cont’d)

	3.16	Employee Benefits

		Short-term Employee Benefits

		Short-term employee benefits such as wages, salaries, bonuses and social security contributions are recognised as an expense in the period in which the associated services are rendered by the employees.

		Defined Contribution Plans

		As required by law, employers in Malaysia make contributions to the state pension scheme, Employees Provident Fund (“EPF”). Such contributions are recognised as an expense in the period in which the associated services are rendered by the employees.

	3.17	Cash and Cash Equivalents

		Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, deposits pledged with financial institutions, bank overdrafts and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.




		Page 11

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

4.	Property, Plant And Equipment


	Balance at						Balance at
	1.1.2004		Additions		Disposals		31.12.2004
At Cost	USD		USD		USD		USD

Plant and machinery		355,001		1,447		0		356,448
Electrical installation and renovation		11,399		0		0		11,399
Motor vehicles		27,074		0		0		27,074
Office equipment		9,570		495		0		10,065
Furniture and fittings		7,069		0		0		7,069
Computer		15,094		8,772		0		23,866
Factory tools and equipment		102,989		8,238		0		111,227
Mould		94,421		0		0		94,421

		622,617		18,952		0		641,569


	Balance at		Charge for				Balance at
	1.1.2004		the year		Disposals		31.12.2004
Accumulated Depreciation	USD		USD		USD		USD

Plant and machinery		140,154		35,816		0		175,970
Electrical installation and renovation		4,006		1,140		0		5,146
Motor vehicles		10,825		5,415		0		16,240
Office equipment		6,679		1,964		0		8,643
Furniture and fittings		2,189		707		0		2,896
Computer		2,372		3,405		0		5,777
Factory tools and equipment		31,267		21,066		0		52,333
Mould		31,520		9,442		0		40,962

		229,012		78,955		0		307,967


	2004		2003
Carrying Amount	USD		USD

Plant and machinery		180,478		214,847
Electrical installation and renovation		6,253		7,393
Motor vehicles		10,834		16,249
Office equipment		1,422		2,891
Furniture and fittings		4,173		4,880
Computer		18,089		12,722
Factory tools and equipment		58,894		71,722
Mould		53,459		62,901

		333,602		393,605

Included in property, plant and equipment is a motor vehicle with a carrying amount of USD1,623 (2003 : USD4,407) acquired under hire purchase agreement.




		Page 12

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

5.	Deferred Tax Assets


	2004			2003
	USD			USD

Balance at 1 January		30,789			22,368
Deferred tax (expense)/income relating to origination and reversal of temporary differences		(30,789	)		11,579
Deferred tax expense underprovided in prior year		0			(3,158	)

Balance at 31 December		0			30,789

The deferred tax assets are in respect of the deductible/(taxable) temporary differences of the following items:-


	2004			2003
	USD			USD

Inventories		14,118			23,850
Receivables, payables and provisions		20,619			36,413
Property, plant and equipment		(34,737	)		(29,474	)

		0			30,789

6. Inventories


	2004		2003
At Cost	USD		USD

Raw materials		1,701,695		1,063,728
Work-in-progress		65,137		15,055
Finished goods		235,695		394,990
Goods-in-transit		8,577		0

		2,011,104		1,473,773

7.	Trade Receivables

Included herein is an amount of USD7,203,908 (2003 : USD4,389,962) owing by a substantial shareholder of the Company.

The credit terms of trade receivables range from 60 to 75 days.




		Page 13

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

8.	Cash And Bank Balances

The currency exposure profile of cash and bank balances is as follows:-


	2004		2003
	USD		USD

United States Dollars		64,605		65,439
Ringgit Malaysia		203,622		328,640

		268,227		394,079

9.	Trade Payables

Included herein are amounts totalling USD2,587,503 (2003 : USD2,420,032) owing to the shareholders of the Company.

The currency exposure profile of trade payables is as follows:-


	2004		2003
	USD		USD

United States Dollars		2,253,782		1,812,219
Ringgit Malaysia		1,539,727		1,152,207

		3,793,509		2,964,426

The credit terms of trade payables range from 30 to 60 days.

10.

Other Payables And Accruals

Included herein is an amount of USD70,994 (2003 : USD80,303) owing to a substantial shareholder of the Company. The amount due is unsecured, non-interest bearing and has no fixed term of repayment.

11.

Hire Purchase Payable


	2004			2003
	USD			USD

Minimum hire purchase payments:-
- not later than one year		1,890			3,240
- later than one year and not later than five years		0			1,890

		1,890			5,130
Future finance charges		(66	)		(431	)

Present value of hire purchase liability		1,824			4,699




		Page 14

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

11.

Hire Purchase Payable (cont’d)


	2004		2003
	USD		USD

Current:-
- not later than one year		1,824		2,875
Non-current:-
- later than one year and not later than five years		0		1,824

		1,824		4,699

The effective interest rate of hire purchase payable is 10.68% (2003 : 10.68%) per annum.

12.

Bank Borrowings — Unsecured


	2004		2003
	USD		USD

Bankers acceptance		2,875,526		1,873,684
Short-term loans		529,243		0

		3,404,769		1,873,684

The currency exposure profile of bank borrowings is as follows:-


	2004		2003
	USD		USD

United States Dollars		529,243		0
Ringgit Malaysia		2,875,526		1,873,684

		3,404,769		1,873,684

Bank borrowings are guaranteed by the holding company of a substantial shareholder of the Company. The effective interest rates of bank borrowings range from 2.85% to 3.75% (2003 : 3.2%) per annum.

13.

Provision For Tooling Costs


	2004			2003
	USD			USD

Balance at 1 January		103,712			51,160
Provision made during the year		54,680			58,684
Payment made during the year		(113,934	)		(6,132	)

Balance at 31 December		44,458			103,712




		Page 15

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

14.

Share Capital


	2004		2003
	USD		USD

Ordinary shares of RM1.00 (equivalent to USD0.2632) each
Authorised:-
10,000,000 shares		2,631,579		2,631,579


Issued and fully paid-up:-
At 1 January – 2,508,000 shares		660,000		660,000
Bonus issue – 2,492,000 (2003:NIL) shares		655,789		0

At 31 December - 5,000,000 (2003:2,508,000) shares		1,315,789		660,000

15.	Revenue

	Revenue represents income from the sale of goods. Included herein are amounts totalling USD19,319,539 (2003 : USD12,639,956) arising from sales to a substantial shareholder.

16.	Profit Before Tax


	2004		2003
	USD		USD

Profit before tax is arrived at after charging:-
Allowance for slow moving inventories		0		26,316
Auditors’ remuneration
- current year		4,605		3,684
- underprovision in prior year		1,053		0
Depreciation		72,080		67,352
Interest expense		95,511		67,658
Management fee		149,114		113,200
Provision for tooling costs		54,680		58,684
Realised loss on foreign exchange		8,468		5,876
Rental of premises		56,117		55,705
Research and development expenditure
- depreciation		6,875		2,473
- others		113,973		60,685
Staff costs		279,895		236,123

And crediting:-
Interest income		3,044		1,340

Included in staff costs are contributions to a defined contribution plan amounting to USD13,244 (2003 : USD11,733).




		Page 16

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

17.

Tax Expense


	2004			2003
	USD			USD

Tax based on results for the year:-
Malaysian income tax		60,281			43,553
Deferred tax		30,789			(11,579	)

		91,070			31,974

Tax (over)/underprovided in prior year:-
Malaysian income tax		(233	)		(907	)
Deferred tax		0			3,158

		90,837			34,225

The numerical reconciliation between the applicable tax rate, which is the statutory income tax rate, and the average effective tax rate is as follows:-


	2004			2003
	%			%

Applicable tax rate		28.00			28.00
Non-deductible expenses		0.46			0.74
Tax exempt income from pioneer status		(17.18	)		(21.81	)

Average effective tax rate		11.28			6.93

As at 31 December 2004, the Company has sufficient tax credits and tax exempt accounts to frank its retained profits in full if paid out as dividends.

18.	Financial Instruments

	Recognised and Unrecognised

	The information about the extent and nature of significant recognised financial instruments is disclosed in the individual notes associated with each item. The Company does not have any unrecognised financial instruments.

	Fair Values

	The carrying amounts of financial assets and liabilities of the Company as at 31 December 2004 and 2003 approximate their fair values.




		Page 17

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U

Notes To The Financial Statements
For The Financial Year Ended 31 December 2004

Statement By Directors

We, Hsu, Che-Chen and Yeh, Kuo-Sheng, being two of the directors of Wells Eastern Asia Displays (M) Sdn. Bhd., do hereby state that in the opinion of the directors, the financial statements set out on pages 2 to 17 are drawn up in accordance with the accounting principles generally accepted in the United States of America so as to give a true and fair view of the state of affairs of the Company as at 31 December 2004 and of its results and cash flows for the financial year ended on that date.


Hsu, Che-Chen		Yeh, Kuo-Sheng

Penang,

Date: 18 March 2005

Page 18

WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U