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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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 3rd 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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

 

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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

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WELLS EASTERN ASIA DISPLAYS (M) SDN. BHD.

(Incorporated in Malaysia)
Company No: 501396-U