ccet 04

Annual Report 2004

Cal-Comp Electronics (Thailand) Public Company Limited

CCET

Financial Highlights 1

Message from Chairman & President 2

Board of Directors 9

General Information 10

Nature of Business Operation 12

Risk Factors 21

Shareholding Structure and Management 23

Organization Chart 28

Related Party Transactions 32

Audit Committee Report 36

Controlling System & Internal Audit 38

Directors’ Reporting 38

Relation with Investors 39

Social and Environment Responsibilities 39

Report of Independent Auditor 41

Financial Statements 42

Management Explanation 72

CONTENTS

Annual Report 2004Cal-Comp Electronics (Thailand) Public Company Limited

FINANCIAL HIGHLIGHTS

01

Balance Sheet Summary 2004 2003 2002

Cash in hand and at banks 253,465,437 528,591,120 832,719,330

Accounts receivable 11,787,146,514 5,191,526,472 4,564,803,051

Inventory 7,527,751,465 4,695,484,285 3,790,164,115

Total current assets 20,965,730,288 11,664,114,080 10,561,465,151

Investment 170,417,206 213,652,382 202,042,388

Land, building and equipment (net) 4,927,450,793 3,829,224,176 2,719,141,248

Total assets 26,229,654,001 15,897,224,682 13,752,183,942

Loan from banks 4,471,984,209 3,072,953,989 971,505,366

Accounts payable 9,017,509,882 3,798,382,187 2,786,821,175

Total current liabilities 14,801,255,249 7,581,065,993 5,375,237,256

Convertible Bonds - 1,409,215,351 2,075,669,898

Total liabilities 17,937,455,249 8,990,281,344 7,450,907,154

Registered capital 4,230,000,000 3,780,000,000 3,780,000,000

Paid-up capital 3,235,318,350 3,050,310,720 3,020,000,000

Retained earnings 4,246,020,892 3,366,596,232 2,789,616,650

Total shareholders’ equity 8,292,198,752 6,906,943,338 6,301,276,788

Number of shares Outstanding Dec 31 323,531,835 305,031,072 302,000,000

Weighted average number of share 307,389,141 303,074,659 302,000,000

Profit & Loss Statement Summary 2004 2003 2002

Sales 56,466,836,001 29,086,570,253 32,364,007,357

Total revenue 56,498,780,570 29,330,849,792 32,502,545,768

Cost of sales 53,348,063,457 26,953,139,154 30,055,401,976

Selling and administrative expenses 1,125,847,316 814,426,794 739,553,747

Total expense 54,506,064,627 27,771,357,630 30,820,035,512

Net profit 1,801,816,541 1,484,772,316 1,596,903,117

Key Financial Ratios 2004 2003 2002

Liquidity Ratios

Current ratio 1.42 1.54 1.96

Quick ratio 0.91 0.92 1.26

Collection period (days) 54.12 60.38 49.53

Inventory turnover (days) 41.24 56.67 46.87

Payment period (days) 43.24 43.98 40.50

Cash cycle (days) 52.12 73.07 55.90

Profitability Ratios

Gross profit margin 5.52% 7.33% 7.13%

Operating profit margin 3.53% 4.53% 4.85%

Net profit margin 3.19% 5.06% 4.91%

Return on equity 23.71% 22.48% 25.73%

Efficiency Ratios

Return on total assets 8.55% 10.02% 11.42%

Return on fixed assets 41.15% 45.35% 57.70%

Total assets turnover (times) 1.65 1.28 1.55

Leverage Ratios

Total liabilities/Total equity 2.16 1.30 1.18

Interest coverage (EBIT/Interest expenses) 11.33 19.58 21.12

Information on Shares

Book value per share 25.63 22.64 20.87

Earnings per share 5.86 4.90 5.29

Dividend per share 3.00 3.00 3.00

Growth Rate

Total assets 65.00% 15.60% -3.22%

Total liabilities 99.52% 20.66% -8.02%

Sales 94.13% -10.13% 0.15%

Total revenue 92.63% -9.76% -0.03%

Cost of sales 97.93% -10.32% 1.14%

Selling and administrative expenses 38.24% 10.12% -18.50%

Net profit 21.35% -7.02% -1.08%

2Annual Report 2004Cal-Comp Electronics (Thailand) Public Company Limited

Mr. Hsu, Sheng-Hsiung

Chairman


Looking back to the economy of 2004, it was a year of growth for Cal-Comp. Under the global growth of

macro and microeconomics, Cal-Comp also catches up with tremendous speed and high growth for the year

2004. The company sales growth in year 2004 is 94.13 percent, comparing to that of year 2003. The major

contributions come from both Thailand and China Plant, which have achieved sales revenue of USD 1.42 billion or

THB 56.47 billion in year 2004.

Despite the worldwide intense competitive markets, Cal-Comp is capable of building up new clients such

as Western Digital, Motorola, Nikon, etc., and still maintains a strong business relationship with our existing

clients like Hewlett Packard, Panasonic, Olivetti, Advance Digital Broadcast, etc. With the trust and support of all

our clients, Cal-Comp has reached an exciting sales growth record in year 2004.

Starting from year 2003, the China Plant expansion is smoothly handled by all the superb managements

and staffs, which enable Cal-Comp to steadily operating the production for Plant I, and Plant II in Wu-jiang China.

We hope that in year 2005 the China expansion will further add up Cal-Comp growth in sales revenue and

significantly fulfill the demands and satisfactions of all our beloved partners and clients.

Moving onward into year 2005, we expect to see uncertainty in global economics, especially the fluctuation

of international oil price will impact in a certain way the growth of all global nations’ industrial activities. However,

we are well prepared for any kind of up-coming challenges. We shall develop and nurture more new trendy

products, sharpening our management skills, and recruit more talented people into the company. We shall

further expand our production facility to demonstrate our worldwide presence. With the support of all our

dedicated staff and management, we feel confidence to achieve the targeted business growth in year 2005.

On behalf of the Cal-Comp and Kinpo Group, I would like to express my utmost gratitude to all our

shareholders and business associates for your continuous support on us.

3Annual Report 2004


MESSAGE FROM CHAIRMAN & PRESIDENT

Mr. Chiang, Hsiao-Chin

President

03Annual Report 2004


Year 2004 is an exciting one for Cal-Comp, as we have broken the billion dollar barrier in sales revenue. The actual

sales revenue figure in year 2004 is USD 1.42 billion or THB 56.47 billion. This breaking of billion dollar barrier means

that Cal-Comp has upgraded its business status as a billion dollars sales company.

We understand that business management is a process of constantly facing and resolving global challenges.

Cal-Comp, as a qualified OEM/ODM Contract Manufacturer, we have generated certain core competences to cope with

the ever-increasing global pressures in EMS business arena, like:

1. The capacity of quick ramp-up with qualified QA monitoring systems;

2. The capability of aggressive cost-reduction via re-design engineering works, coupling efficient SCM chain;

3. The familiarity and team working with customers’ business operation systems to fulfill customers’ requirements,

and

4. The capability of offering NPI program management.

I also greatly appreciate the contributions by sharing of our valuable customers both in their technical and

business experiences with Cal-Comp in the past years. Through these interacting processes, Cal-Comp is able to solidify

its key strengths and core values to face the stern global challenges. Our production capacity is capable of meeting

global customers’ manufacturing needs, and our R&D resources are qualified to work closely with customers’ counterparts.

An important position that Cal-Comp strives to achieve is to utilize its DFM techniques, as well as cost-reduction schemes

and expertise, to reinforce and strengthen customers’ market competitiveness, and eventually accomplish a win-win

business model for both Cal-Comp and its valuable customers in global business domain.

Cal-Comp will continuously focusing its efforts in expanding its manufacturing capacity, and strengthening its

R&D capabilities to service its worldwide customers. Currently Cal-Comp has six well-managed factories in Thailand , and

we have already extended our manufacturing arm into China in a well-planned manufacturing Wu-Jiang campus.

On behalf of all Cal-Comp employees, I would like to extend my sincere thanks to our shareholders, valuable

customers, material suppliers, sub-contractors, as well as other collaborators who have played an indispensable roles to

support and foster Cal-Comp’s outstanding growth in year 2004, especially all of our supporting financing banks. I am

greatly appreciated also to the contributions by our diligent and well-disciplined employees and staffs, always an undeniable

part of Cal-Comp’s achievements for the past years.

I strong believe with all the team works and supports from all of you, we shall accomplish an excellent result in

year 2005.

5Annual Report 2004


7Annual Report 2004



REWARD &QUALITY STANDARD

ISO 9002 CertifiedISO 14001 CertifiedIEC 17025QS 9000 Certified

08


BOARD OF DIRECTORS

MR. HSU, SHENG-HSIUNG no. of ordinary shares 361,000

no. of TDR -None-

Education • Bachelor of Chinese, National Taiwan Normal UniversityWorking Experience • 1992-present The Chairman of the Board of Kinpo Electronics Inc.

1994-present The Chairman of the Board of Compal Electronics Inc.1989-present The Chairman of the Board of Cal-Comp Electronics (Thailand) Plc.

MR. CHIANG, HSIAO-CHIN no. of ordinary shares 1,001,000

no. of TDR -None-

Education • Bachelor of Industrial Engineering, Taipei CollegeWorking Experience • 1999-present Executive Vice President of Kinpo Group

1989-present The President of Cal-Comp Electronics (Thailand) Plc.

MR. KUO, HSIEN-MIN no. of ordinary shares 456,000

no. of TDR -None-

Education • Bachelor of Electrical Engineering, National Taiwan UniversityWorking Experience • 1995-present The Director of the Board of Kinpo Group

1989-present The Director of the Board of Cal-Comp Electronics (Thailand) Plc.

MR. HSU, SHENG-CHIEH no. of ordinary shares 556,000

no. of TDR -None-

Education • Bachelor of Architecture, Tamkang UniversityWorking Experience • 1994-present The Director of the Board of Kinpo Electronics Inc.


MR. KO, CHARNG-CHYI no. of ordinary shares 156,000

no. of TDR -None-

Education • Master of BA, National Cheng Chi UniversityBachelor of Business Administration, National Taiwan University

Working Experience • 1994-present The Director of the Board of Kinpo Electronics Inc.1989-present The Director of the Board of Cal-Comp Electronics (Thailand) Plc.

MR. CHOU, KUNG-HSIUNG no. of ordinary shares 140,000

no. of TDR 30,000

Education • Bachelor of Engineering, Feng Chia UniversityWorking Experience • 2000-2002 Assistant Managing Director of Cal-Comp Electronics (Thailand) Plc.


MR. WILLIAM HANG MAN CHAO no. of ordinary shares 1,018,000

no.of TDR -None-

Education • MBA, Major in Finance and Marketing University of ChicagoWorking Experience • 1998-present The Independent of Seamico Securities Plc.

1998-present Managing Director of Wing Wah Advisory (Thailand) Limited.2000-present The Independent Director of Cal-Comp Electronics (Thailand) Plc.

MR. CHATCHAVAL JIARAVANON no. of ordinary shares -None-

no. of TDR -None-

Education • B.A., University of Southern CaliforniaWorking Experience • 2000-present President and CEO of Telecom Holding Co.,Ltd.

2000-present The Independent Director of Cal-Comp Electronics (Thailand) Plc.

MR. ALAN KAM no. of ordinary shares -None-

no. of TDR -None-

Education • Master of Business Administration University of Denver, ColoradoWorking Experience • 2002-present Chief Executive Officer of Aberdeen Asset Management Co., Ltd.

2000-present The Independent Director of Cal-Comp Electronics (Thailand) Plc.

09


GENERAL INFORMATION

General information of the company

Cal-Comp Electronics (Thailand) Public Company Limited (the “Company”) was established in 1989 and to

manufacture electronic products in the form of OEM (Original Equipment Manufacturer). At present, the Company’s

groups of products consist of 4Cs which include (1) Computer Peripheral sectors such as Ink Jet Color Printer,

Multi-Function Printer, Dot Matrix Printer, LCD monitors, Auto Car PC, Digital Camera, Web Pad, Printed circuit

board assembly for hard disk, etc., (2) Telecommunications Equipment sectors such as Cordless Telephones, Mobile

Phone (CDMA, TDMA, GSM), Integrated Satellite Receivers and Transmitters, Blue tooth, GPS Personal Local, etc.,

and (3) Consumer Office Equipment sectors such as Facsimile Machines, Finger Print, etc. (4) Home Entertainment

such as the DVD Player and Recorder. The head office is located at 191/54 and 191/57 CTI Tower, 18th Floor,

Ratchadaphisek Road, Klongtoey, Bangkok 10110, Telephone 02-261-5033-40, Fax 02-661-9396-7, corporate

registration no. bor mor jor. 656, Homepage http\\:www.calcomp.co.th. As of December 31, 2004, the Company

had registered capital of Baht 4,230 million and paid-up capital of Baht 3,235.31 million.

Companies in which Cal-Comp Electronics PLC. holds 10 % or more of the shares outstanding

■ Logistar International Holding Co., Ltd. 100%

On May 2001, the Company established a new subsidiary company abroad with an initial capital of USD

50,000 in order to enhance the Company’s business potential in the future. Logistar was established to be a

holding company for the CCET’s investment oversea, as also act as a selling agent for CCET’s products. The registered

address is situated at Beaufort House, P.O. Box 438, Road Town, Tortola, British Virgin Islands.

■ Wise Sigma International Holding Co., Ltd. 45 %

November 2001, The Company’s had invested 45% in Wise Sigma International Holding Co., Ltd. through

Logistar International Holding Co., Ltd. with an initial capital of USD 50,000 which was increased to USD 5,000,000

on October 2002. It was established to enhance the Company’s business potential in the future. The registered

address is situated at Beaufort House, P.O. Box 438, Road Town, Tortola, British Virgin Islands.

■ Telian Corporation (Korea) 27.82 %

Incorporated in Korea with the paid-up capital Won 2,871,080,000, 60% of initial registered capitals of Telian

shares are held by parties who have no related interest in Kinpo group and Cal-Comp group. This subsidiary is

engaged in research and distribution of cordless phones and mobile phones by sending the prototype to Cal-Comp

to manufacture and export. The office address is 4th Fl., Namjeun Bldg., 53-3 Haan-Dong, Kwangmyung-Si, Kyunggi-

Do, 423-060, Korea.

■ Wide Telecom Inc. (Korea) 11.58 %

In 2001, Wide Telecom was incorporated to engage in develop and manufacture of telephones and

instruments for wire & wireless communication network with paid-up capital Won 1,360,633,500. Cal-Comp will

receive the prototype from Wide Telecom for production and export. The office address is C-402, Pundang Techno

Park, 151, Yatap-Dong, Pundang-Ku, Sungnam-Si, Kyunggi-Do, Korea.



■ Cal-Comp Electronics (Suzhou) Co., Ltd. 100%

In May 2002, Cal-Comp Electronics (Suzhou) Co., Ltd. was established with an initial capital of USD 12,495,000 in

order to expand the capacity and manufacture telecommunication equipments and accessories. The registered address

is no.18, Jiangxing Road, Wujiang Economic Development Zone, Jiangsu, The People’s Republic of China.

■ Cal-Comp Optical Electronics (Suzhou) Co., Ltd. 100%

In October 2003, the Company established a second subsidiary company in The Republic of China, with an initial

capital of USD 25 million to manufacture the electronics equipments. The registered address is no.18, Jiangxing Road,

Wujiang Economic Development Zone, Jiangsu, The People’s Republic of China.

■ Cal-Comp Electronics and Communications Co., Ltd. 100%

Cal-Comp Electronics and Communications Co., Ltd. was established in the December 2004, with registered capital

of NTD 100 million and paid up capital of NTD 69,920,780, to service providing and electronic goods trading. The

registered address is 3F., No.205, Sec.3, Beisin Road, Sindian City, Taipei County 231, Taiwan , R.O.C.

■ Inx Japan International, Inc. 19.98%

Inx Japan International, Inc. was established in the year 2003, with paid up capital of JPY 50,000,001 to sell,

purchase, lease and manage copyrights and design rights, and also act as a computer and peripheral trading company.

The investment will allow Cal-Comp Electronics (Thailand) Plc. to use its brand name in the Company’s product. The

registered address is 2 Fl., Akasaka Long Beach Bldg., Akasaka 3-21-20, Minato-ku, Tokyo, Japan.

Other reference parties

Shares Registrar :

Thailand Securities Depository Co., Ltd.

4th, 7th floor, The Stock Exchange of Thailand Building Rachadapisek Road, Klongtoey, Bangkok 10110

Tel: (662) 229-2800 Fax : (662) 359-1259

Taiwan Depository Receipt (TDR) Registrar :

Far Eastern International Bank

5 F, No. 1, Hsiang Yang Rd., Taipei, Taiwan, R.O.C.

Tel : 886-2-2312-3636 Fax : 886-2-2388-8278


NATURE OF BUSINESS OPERATION

Cal-Comp Electronics (Thailand) Public Company Limited was established with an initial registered share

capital of Baht 125 million on 4th December, 1989 to manufacture and export finished electronic products and

accessories. The major shareholder was Kinpo Electronics, Inc., a giant manufacturer of electronic products in

Taiwan. Its current products are calculators, global positioning systems (GPS), digital cameras, personal digital

assistants (PDA), etc. Kinpo Electronics Inc. was listed on the Taiwan Stock Exchange (TSE) in 1989. At present, the

Company’s major shareholders are Kinpo Electronics, Inc. and Compal Electronics, Inc. (a company listed on TSE

and being a company in the Kinpo Group manufacturing monitors and notebooks) holding 55.58% and 10.71%

stake respectively in the Company.

Currently, the main electronic products manufactured by the Company are as follows: Ink Jet Color Printer,

Multi-function Printer, Auto Car PC, LCD Monitors, Cordless Telephones, Dect Phone, Mobile phone Code Division

Multiple Access (CDMA) and Time Division Multiple Access (TDMA), Integrated Satellite Receiver and Recorder,

Cable Modems, Facsimile Machines, Web Pad, Bluetooth, DVD Player and Recorder. The Company can provide its

customers with integrated services. The Company has initiated the new products such as multi-function printer,

PCBA, Bluetooth, DVD Player and Recorder and already started the mass production and delivery to the customers.

Afterwards, a research and development department has been established to design, develop and improve its

products in an attempt to achieve the cost-efficiency aim, and to modify cosmetics and mechanism of products to

satisfy its cost reduction program and customers’ requirements. As a result, the Company has become well known

and recognized both locally and internationally for its high-standard quality of products. It was among certain

famous companies in Thailand, which was preliminarily granted a certificate of standard entitled ISO 9002, ISO

14001, QS-9000 and IEC17025.

The Company has been listed in the SET in 2000 with the Baht 3,200 million of registered share capital,

which was increased to Baht 4,230 million on April 26, 2004 and as of December 31, 2004, the paid-up capital was

Baht 3,235,318,350 due to the new shares offering by private placement. It has been granted certificates of

promotion by the Board of Investment in the category 5.6 in the areas of production of electronic products and 5.7

in the areas of production of component parts and accessories of electronic products. Plants are located at 2

provinces of Thailand and 1 province of China i.e. 3 plants in Kratoomban District, Samutsakorn, 3 plants in

Khaoyoi District, Petchburi and 2 plants in Suzhou, Jiang Su province, China. As of December 31, 2004. We have

totally 6,760 employees in Thailand and 2,725 employees in China.

Remarks : Kinpo Electronics Group. securities holding amount shows 55.58% came from the securities holding

amount of Kinpo Electronics, Inc. plus Kingbolt International (Singapore) Pte, Ltd. of 48.10% and

7.48% respectively.

Compal Electronics Group. securities holding amount shows 10.71% came from the securities holding

amount of Compal Electronics, Inc. plus Just International (Singapore) Pte, Ltd. of 9.87% and of

0.84% respectively.



Investment policy and rights and benefits derived from investment in any subsidiary

company, associated company and other companies.

In an attempt to make investments in any subsidiary company, associated company and other companies, the

Company will particularly take into account the possibility of generating proceeds and benefits to be obtained by the

Company. As at present the Company plans to expand its base into the telecommunications, computer and internet

industries, it continues to make investments in such subsidiary companies, associated companies and other companies

in such industries in Korea and Taiwan which are well-recognized for their expertise in the research and development of

telecommunications and computer products. As a result, the sales volume of the Company has increased and the

clients base expanded, such developing of client base will generate more sales and business opportunity to the Company,

and it has further received a great amount of profit in proportion to shareholding and dividend payment from such

investments. (Particulars of the Joint-Venture Agreement between Telian Corporation and Wide Telecom, Inc. are set

forth in Agreement Part).


Shareholding structure of Cal-Comp Group as of 31st December 2004

100%

100%

100%

100% 45%

27.8%

19.98%

11.6%

Cal-CompElectronics

(Thailand) Plc.

Cal-CompElectronics(Suzhou) Co., Ltd.

Cal-Comp OpticalElectronics (Suzhou)Co., Ltd.

Cal-Comp Electronicsand CommunicationsCo., Ltd.

Wise SigmaInternationalHolding Co.,Ltd.

LogistarInternationalHolding Co., Ltd.

TelianCorporation(Korea)

Inx JapanInternational, Inc.

Wide Telecom,Inc. (Korea)

6.9%

Afreey, Inc.(Taiwan)

Income structure

Divisions2002 2003 2004

Million Baht % Million Baht % Million Baht %

Office Equipment 1,470.71 4.54 1,449.58 4.98 1,910.90 3.38Telecommunication Accessories 9,997.41 30.89 12,433.80 42.75 19,642.98 34.79Computer Accessories 20,295.31 62.71 15,203.19 52.27 34,464.69 61.04Home Entertainment - - - - 448.26 0.79Others 600.58 1.86 - - - -

Total Sale 32,364.01 100.00 29,086.57 100.00 56,466.83 100

Note: 1) All types of products are manufactured by Cal-Comp Electronics (Thailand) Plc., and Cal-Comp Electronics(Suzhou) Co., Ltd. and Cal-Comp Optical Electronics (Suzhou) Co., Ltd.

2) Fixed assets cannot be classified by product group due to the fact that several products are manufactured inthe same line of production.



Material changes in 2004

■ The registered capital of the Company had increased of another Baht 450,000,000 by issue of 45,000,000 new

common shares from existing registered capital of 3,780,000,000 to the new capital of 4,230,000,000 divide into

423,000,000 common shares at the par value Baht 10 each as of April 26, 2004.

■ Issue the syndication loan of USD 80 million from Banks with tenor of not more than 5 years. The loan used as the

working capital and business expansion in China.

■ The capital increased of subsidiary company named Cal-Comp Electronics (Suzhou) Co., Ltd. from USD 10,000,000

to USD 12,495,000 according to the shareholding proportion. The purpose of the capital increase is for the new

business and capacity expansion.

■ The capital increased of subsidiary company named Cal-Comp Optical Electronics (Suzhou) Co., Ltd. from USD

10,000,000 to USD 25,000,000. The purpose of the capital increase is for the construction of the new factory and

new business expansion. This Subsidiary Company had completely construction and started mass production since

3rd quarter 2004.

■ Set up of the Taiwan subsidiary named Cal-Comp Electronics and Communications Co., Ltd, which 100%-owned

subsidiary and dissolution of the Taiwan branch in order to integrate entire sources, develop R&D technology, product

and marketing, enhance management efficiency and the benefit of the shareholders and the Company. After the

division, the company is sole shareholder of the new subsidiary with the registered capital of approximately NTD

100,000,000 or Baht 122,000,000 and paid- up capital was NTD 69,920,780.

■ Allocation of 13,350,000 common shares by way of private placement to financial investors is utilized on the working

capital of the Company. After allocation, the Company’s paid-up capital changed from Baht 3,098,788,490 to Baht

3,235,318,350.

■ In 2004, the Euro Convertible Bond (ECB), has been redeemed in December 2004 amount of USD 24,000,000 and

exercised amount of USD 4,250,000 to be converted as 5,150,763 shares as a result, the ECB outstanding is 7,250

units with an amount of USD 7,250,000 as of December 31, 2004.

Market and Competition

CCET, which has all of its production facilities in the low cost base of Thailand and China, is aware of this general

outsourcing trend and of the growth of the electronics product in the coming years. Since China is the most important

emerging market for consumer electronics, it is necessary to establish production facilities and capacities close to the

market.

Industry Review

Looking specifically at the EMS industry, IDC looks for worldwide revenue to grow at CAGR of 12.1 percent

between 2003 and 2008, with annual growth in double digits from 2004. See the chart below.


Worldwide EMS industry revenue 2003 to 2008

While the cyclical trend might be turning against EMS contractors such as CCET, there are secular trends

working in their favour. Rising disposal income in the world’s populous developing nations, namely China, India

and Russia, is likely to continue to underpin demand for electronic goods, such as PC’s and mobile phones, that

consumers in developed countries have enjoyed and taken for granted for decades.

IDC estimates that there were some 670 million PC users worldwide in 2003. IDC believes that the PC user

population will grow to 1.2 billion by the end of 2009, a 79 percent increase over six years. By 2010, there will be

1.3 billion PCs, up from 575 million today, Forrester predicts. Gartner estimates there were 631.8 million PC users

at the end of 2003. The number will hit 953 million at the end of 2008 and cross over the billion mark in 2009.

While the forecast numbers are huge, the annual compound growth rate is single-digit, at about 8 percent. The

number of PCs in emerging markets will grow by much higher rates than the global rate, at 31 percent compounded

annual growth rate, Forrester forecasts. And 670 million people currently using PC’s are equivalent to only some 10

percent of the global population, of about 6.50 bn.

The demand for mobile phones in developing countries is also likely to grow rapidly, despite any

short-term slowdown in the global tech cycle. The number of mobile phone subscribers in China surged more than

20 per cent in 2004. Data released by China’s Ministry of Information Industry in December 2004 showed that the

total number of mobile subscribers hit the 330 million mark at the end of last month, having risen by five million in

November alone. There were more mobile phone subscribers, at 310 m, in China than the entire population of the

US in July 2004. Mobile phone penetration in China, which has a population of 1.3 billion, stands at only 25

percent, although it is higher in the major cities and coastal areas than in the rest of the country. In the UK mobile

phone penetration is 94 per cent and in Japan 67 percent. By 2008 the number of mobile phone subscribers in

China could reach 447 million, according to Gartner.

While consumers in developing countries are scrambling for entry-models of PC’s and mobile phones, their

counterparts in the developed nations are keeping branded vendors and their EMS contractors busy. One of the

predictions of the dotcom boom in the late 1990’s that is actually being born out is convergence, mainly of

different applications onto fewer platforms. Mobile phone users in developed countries are increasingly replacing

their voice communication only devices with handsets that take digital pictures, connect to the Internet and play

2003 2004F 2005F 2006F 2007F 2008F

Revenue (US$bn)Source : IDC Change (%)

(USSbn) (%)

0

20

40

60

80

100

120

140

160

180

0

2

4

6

8

10

12

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16



ever more complex arcade games, in addition to providing voice telephony. And with armies of R&D staff specialising in

developing new killer applications and technology working around the globe, new consumer electronic devices are likely

to continue to hit shelves regularly. The ongoing fight for DVD format dominance, which invokes the trial of strength

between VHS and Beta Max in video recording space of the 1980’s, is a case in point.

Not all trends are positive for branded vendors and EMS contractors working for them. Consumers in developing

countries are not going to pay the sort of prices their counterparts in developed countries paid for the same model years

earlier. The days of the sub-US$ 1,000 PC were numbered within about 18 months of the form-factor being born.

A hardware specialist in Bangkok’s Pantip Plaza could put together a “no-name” PC, using new OEM parts, including a

Pentium 4 processor and a CRT monitor, for about US$ 300 per unit. A licensed operating system would add about 75

percent to the price tag. Against generally fierce price competition in develop countries; branded vendors can only

afford to leave their EMS contractors with wafer thin margins for manufacturing the product.

As competition intensifies, branded vendors are likely to merge. IBM’s sale of its PC unit to Lenovo in 2004 and

HP taking over Compaq in 2002 represent only the start of the trend of consolidation. As fewer branded vendors

emerge, the obvious prognosis would be fore fewer EMS contractors to survive. Even in Thailand, portfolio investors

have seen EMS contractor GSS Array lose independence, in 2000, and Magnecomp, the suspension-arm manufacturer,

is in the process of taking over KR Precision.

To survive, an EMS contractor is likely to have to offer production facilities in China and preferably in another low

cost country in Asia, in order to help keep production cost down. Branded vendors are increasingly involving EMS

contractors in the front-end of the production process, which would require investment in R&D on the part of EMS

contractors. As an EMS contractor offering production facilities in both China and Thailand and supported by R&D by

affiliates in Taiwan, we see CCET as having the potential to attract its fair share of the electronic manufacturing services

market.

According to IDC, the global EMS industry continues to be dominated by some half-dozen contractors. For a big

player, such as Flextronics, to grow market share from almost 16 percent, looks to be more difficult than for CCET, with

less than 1.5 percent market share.

Worldwide EMS industry revenue share by vendor. 1H04

Flextronics16%

Solectron12%

Sanmina12%

Foxconn10%

Celestica9%Jabil Circuit

7%

Others34%

Total : US$ 48.5 bnSource : IDC, 2004.


Procurement of Products for Sale

The manufacturing plants are located in Thailand and The People’s Republic of China i.e. 3 plants situated

at No. 60 Moo.8, Settakij Road, Kratoomban District, Samutsakorn, 3 plants situated at No. 138 Moo.4, Petchkasem

Road, Khaoyoi District, Petchburi with total area of 193,600 square metres and the manufacturing plant in China

situated at No.18,Jiangxing East Road, Wujiang Economic Development Zone, Jiangsu, the Peopleís Republic of

China with total area of 298,667 square metres.

Currently, the Companyís manufacturing consumes one shift/day (8 hours). An average actual production

quantity on a daily basis is up to 75% of the full productivity. During 2002-2004, details of the actual production

quantity are set forth below.

(Unit in Thousand set)

Products 2002 2003 2004

Office Equipment 1,879 1,894 930

Telecommunication Accessories 5,779 9,376 10,664

Computer Accessories 8,150 11,441 36,912

Home Entertainment - - 314

Others 101 - -

Types and sources of essential raw materials

Most of raw materials are imported from foreign countries. The following list shows the sources of each

kind of raw materials.

Type Details Source

LCD Panel TFT LCD Panel, Module Taiwan, Korea, China

Radio Components RF Modulator, Tuner, Korea, Taiwan, China

Resonator, Antenna, Filter

Chip IC, IC and IC encoders Electric circuits which vary in Singapore, Japan, Korea, U.S.A.

terms of usage and size according

to types of electronic appliances

Capacitors Equipment used in storing Singapore, Korea, Taiwan, Japan

electric charge

Pens Printer inks Singapore

Plastic Resins Plastic granules Singapore, Korea, Malaysia,

U.S.A., Germany

Printed Circuit Boards (PCB) Electronic circuit boards used China, Taiwan

in all kinds of electronic appliances

Adapters and Cables Electric cables and adapters Thailand, China, Malaysia

Printer Heads Printer heads used in printers Singapore, Japan

and printing calculators

Miscellaneous parts Screws, Nuts, Washers, Rollers China, Taiwan, Thailand

Packaging raw materials Paper cartons, polyfoam, Thailand

plastic bags, tapes, glue, tags

Note: No costs of any raw material exceed 50% of the total production costs.



Number of suppliers

In comparison between the quantity of local and foreign raw materials, it appears that they do not vary from year

to year because it is the Company’s policy to equally maintain the amicable relationships with its counterparts, customers

and suppliers. The Company does not depend on any supplier for more than 30% of the purchase value of raw materials

during the past three consecutive years.

Suppliers

Raw materials purchased by the Company from suppliers are divided into three groups as follows.

1) Direct purchase

2) Through parent company

3) Through subsidiary companies

The purchasing of essential raw materials such as ICs, chips are mainly subject to the specification of the customers.

Within this ambit, the parent company and subsidiary companies are deemed as the Company’s customers. Random

check in respect of each kind of raw materials is proportionally and regularly made, also the qualifications of each

supplier, by following the vendor quality assurance method prior to commencing any deal. The Company will purchase

raw materials from any supplier, which meets the Company’s requirements such as those obtaining an ISO 9002 certificate.

Moreover, the Company has asked the following suppliers to relocate their plants within the area of the Company so as

to facilitate the quality control, save storage room for raw materials and reduce deliver time. The six suppliers have no

connections with the Company or its executive officers.

Details of purchasing of local and foreign raw materials during 2002- 2004

Year 2002 Year 2003 Year 2004Thailand Plant China Plant Thailand Plant China Plant Thailand Plant China Plant

Baht % Baht % Baht % Baht % Baht % Baht %Million Million Million Million Million Million

Local Raw

materials 1,889.67 6.51 - - 3,007.28 11.38 65.89 3.15 1,935.71 4.79 1,279.78 9.55

Foreign raw

materials 27,129.96 93.49 - - 23,428.66 88.62 2,026.49 96.85 38,436.77 95.21 12,114.48 90.45

Total 29,019.63 100.00 - - 26,435.94 100.00 2,092.38 100.00 40,372.48 100.00 13,394.26 100.00

Notes: The total purchasing amount of raw materials in 2004 included the amount of the ending materials.


Company (Located in plant area) Raw materials

Ever Jet Co., Ltd. Plastic component parts

Jet Industries (Thailand) Co., Ltd. Plastic component parts

Yong Deng Industry (Thailand) Co., Ltd. Steel component parts, pressing steel

Lanjo Enterprise (Thailand) Co., Ltd. Rollers

Hypertek Plastic Industry Co., Ltd. Plastic

Chung Cheng Plastic (Thailand) Co., Ltd. Plastic

Purchasing Policy

The Company’s purchasing policy is based upon the comparison of prices of raw materials quoted by each

supplier, and punctual delivery of the supplier to each shipment and taking into account the maximum benefits to be

obtained by the company. In the purchasing process, the sales department and the production department will cooperate

in planning the purchase of raw materials so as to ascertain the demands for each period and maintain the inventory at

an appropriate level from time to time.

Details of purchasing channels of raw materials during 2002- 2004

Year 2002 Year 2003 Year 2004Thailand Plant China Plant Thailand Plant China Plant Thailand Plant China Plant

Baht % Baht % Baht % Baht % Baht % Baht %Million Million Million Million Million Million

Direct

purchase 28,686.98 98.86 - - 26,276.25 99.40 1,758.33 84.03 40,314.20 99.86 13,182.00 98.41

Through parent

Company 61.88 0.21 - - 18.84 0.07 334.05 15.97 51.24 0.13 212.26 1.59

Through

subsidiaries and

Joint Venture 270.77 0.93 - - 141.21 0.53 - - 7.04 0.02 - -

Total 29,019.63 100.00 - - 26,435.94 100.00 2,092.38 100.00 40,372.48 100.00 13,394.26 100.00

Notes: The total purchasing amount of raw materials in 2004 included the amount of the ending materials.



RISK FACTORS

1. Risk factors in short term borrowing

The Company high proportion of short-term debt means the Company would be vulnerable in the event

of a credit crunch and exposes the Company to volatility associated with interest rates or market liquidity.

On June 2004, the company had issued the Syndication loan for USD 80 million for 5 years tenors. The

issuance of the Syndication loan will diversify the risk of borrowings and strengthen the Company’s balance sheet.

2. Foreign exchange fluctuation risk

The fluctuation of the exchange rate of the Baht against dollar affects the Company’s sales revenue and

profit.

The Company major exposure arises from export revenues and import of raw materials. Occasionally, the

Company has conservatively used the natural hedging policy to match expenses and revenues, mainly denominated

in US Dollar. Meanwhile, the Company also tighten control the operating cost and carefully manage the foreign

liabilities and assets in order to reduce the risk of appreciation in Thai Baht.

3. Risk factors in connection with the insufficiency of skilled labour force

Based on the fact that the growth of electronic industry is quite high and conspicuous in this day and

age, the Company deems it necessary to recruit a number of skilled and professional persons such as engineers.

By reason of a limited number of high-quality human resources in Thailand and tendency of job changes,

the Company had invested in Mainland China and it will be able to bring more technical engineers to work and train

Thai engineers with the lower cost in comparison with Taiwan and Korea engineers. Beside that, the Company had

started to recruit some Southeast Asia engineers from India, Philippine, Myanmar to build up a stronger engineer

team with good command in English in order to serve our international clients.

4. Risk factors in connection with the change in life cycle of products and production technology

Significantly, life cycle of electronic products always changes rapidly continuous innovation of technology

and general standards of products. This situation forces product designers to be alert and updated at all times.

However, as the Company operates the OEM business mostly, it will not be materially affected by such

situation. Moreover, the Company’s production lines are ready to accommodate new products. The Company

always develops its technology and capability in order to provide total solution to the existing and the new customers.

We do believe that the technological advancement to continue to spur replacement of electronic devices and

increasingly competitive life-style to sustain convergence and shorten the life-cycle of electronic devices will cause

the bullish for EMS contractors like us.

5. Risk factors in connection with market competition

Due to the highly competitive electronics market, the ability to remain profitable is one of the risks for

manufacturers.

However, the Company’s long-term efforts at cost reduction in Original Equipment Manufacturing (OEM)

and reputation for reliability and quality service are noticed by our world-class clients. The Co-design technology will

be able to help our clients improve the cost structure, the above advantage of the Company will lead the clients to

stay with us and strengthen the relationship with our clients.


6. Risk factors in connection with the obsolete inventories

The Company’s inventories had increased from Baht 4,695.48 million at December 31, 2003 to Baht 7,527.75

million at December 31, 2004.

The management is always aware of the risk of obsolete inventories; the Company strictly monitors shipping

order schedule and control the lead time for raw material procurement in order to reduce the risk of obsolete inventories.

7. Risk factors in concentration on key clients

In concentration on key clients, the Company is trying to diversify the concentration risk on key clients.

Owing to the continuously developing of new products and clients, the Company is able to enter into

Bluetooth Headset business, Printed Circuit Board Assembly and multi-function printer with clients, which have grown to

become the firm’s key sales growth driver. Meanwhile, given the popularity of Mobile phone and wireless communications,

telecommunication equipment products being a key driver as well. Furthermore, the Company is continuously established

its new product dedicated to consumer and communication electronic products. Therefore, the concentration risk on

key clients should be reduced.

8. Risk factors in connection with the influence of the parent company on the administrative direction

of the Company

Kinpo Group is the major shareholder of the company and may use its voting power to influence the decision

of the company.

Kinpo Group’s shareholding in the Company has been reduced from 57.13% to 55.58% after the conversion

of Euro Convertible Debenture and the issuance of CCET new ordinary shares, making it unable to control voting at the

shareholders’ meeting. Normally, three-fourths of the votes are required to pass any significant issues, such as

appointment of directors. There are also some matters requiring a majority vote, except for those prescribed by laws or

the Company’s Articles of Association. Therefore, other shareholders may collect votes as a check and balance on

matters proposed by the major shareholder.

9. Risk factors in connection with the sufficient working capital

Adequate working capital is essential to ensure the smooth sales growth. The capital increase of 13.35 million

new ordinary shares on December 2004 will also support the working capital of the company.

However, the Company also finances its working capital mainly via short-term loan and medium-term

Syndication loan. As of 31 December 2004, the Company has the credit line of Baht 12,045 million and USD 301.13

million (including the syndication loan of USD80 million), which should be sufficient for the Company’s current operation.

10. Risk factors in connection with the contingent liabilities

As of December 31, 2004, there were approximately Baht 96.20 million (2003: Baht 96.2 million) of outstanding

bank guarantees issued to Department of Customs, Electricity Generating Authority of Thailand, The Communication

Authority of Thailand, USD 8 million to 100% held- subsidiary company named Logistar International Holding Co., Ltd.

and USD 1.5 million stand by letter of credit to the joint venture company named Telian Corporation.



SHAREHOLDING STRUCTUREAND MANAGEMENT

List of top 10 shareholders

Group of shareholders Nature of business No. of shares %as December 31, 2004

1. Kinpo Electronics, Inc Manufacture and distribution

of electronic products 155,516,377 48.10

2. Compal Electronics, Inc Manufacture and distribution

of computer equipment

and accessories 31,924,000 9.87

3. Far Eastern International Bank - 30,000,000 9.28

4. Kingbolt International (Singapore) - 24,193,000 7.48

5. Chase Nominees Limited 42 - 14,520,400 4.49

6. HSBC (Singapore) Nominee Pte., Ltd. - 5,559,800 1.72

7. Seamico Securities PLC. - 5,000,000 1.55

8. Thai NVDR Company Limited - 4,552,100 1.41

9. Pershing LLC-General

Clearance Account - 3,900,000 1.20

10. American International

Assurance Company Limited - AIA5E - 3,000,000 0.93

Total 278,165,677 86.03

Notes : 1) Kinpo Group includes Kinpo Electronics, Inc. and Kingbolt International (Singapore) Pte. Ltd., which

hold totally 179,709,377 shares or 55.58%.

2) Compal Group is including Compal Electronics, Inc. and Just International (Singapore) Pte. Ltd., which

hold totally 34,639,000 shares or 10.71%

2.1) Just International (Singapore) Pte. Ltd., holds 2,715,000 shares or 0.84%


Management Structure

Executive Committee

The Company has two executive committees, that is, the Board of Directors and the Audit Committee,

particulars of which are shown below.

Board of Directors

As of 31st December 2004, the Company’s Board of Directors consists of the following members.

1. Mr. Hsu, Sheng-Hsiung Chairman

2. Mr. Chiang, Hsiao-Chin President

3. Mr. Kuo, Hsien-Min Director

4. Mr. Ko, Charng-Chyi Director

5. Mr. Hsu, Sheng-Chieh Director

6. Mr. Chou, Kung-Hsiung Director

7. Mr. Alan Kam Independent Director and Audit Committee

8. Mr. William Hang Man Chao Independent Director and Audit Committee

9. Mr. Chatchaval Jiaravanon Independent Director and Audit Committee

Remark: 1. Board of Directors Total 9 persons

1 Chairman

1 President

4 Directors

3 Independent Directors

***(2 Directors are management)

2. The Chairman and President is not the same person for the determination of corporate

governance policy and Management. The Company has divided authorities between Chairman

of the Board of Directors and Executive Director for the suitability of the administration and

management functions.

Scope of powers and authorities

1. Performance of duties of the board of director

The Board of Directors has applied its best knowledge, capability and experience to carefully perform its

duties in the Company’s interests in accordance with the law, the Company’s Objectives, the Articles of Association

and resolutions made at shareholders’ meeting with a strong commitment to a practice of honesty, straight-

forwardness and carefulness towards a maximum extent of effort to maintain both the Company and shareholders’

benefits.



2. Duties on the Accountability to shareholders

The Board of Directors shall consistently have accountability to shareholders, protect the interests of

shareholders, and clearly and fully disclose information to the investors.

3. Review and approval of financial report and changes in accounting policy

The Board of Directors is responsible for approving the financial report that have been audited and/or

reviewed by the auditor and the audit committee and any changes in accounting policy.

4. Review and approval of policies, budget and business plan

The Board of Directors is responsible for reviewing and approving any appropriate policy, budget and

direction of the Company’s business operation and plan as proposed by the management.

5. Supervision of management

The Board of Directors is responsible for supervising the effective performance of the Company’s policy

by managing and informing the management in preparing any material reports on the Company’s business operation

and other related party transactions in accordance with the rules and regulations of The Office of Securities and

Exchange Commission and The Stock Exchange of Thailand.

In case of necessity, the Board of Directors will request third parties to give professional or technical

advice on any matters, which may materially affect the Company’s business.

6. Internal control and audit

The Board of Directors has set up and maintains effective internal control system designed to provide

management with reasonable assurance that transactions are recorded properly, the assets are safeguarded and

that material frauds and malpractices are precluded. The Board of Director also appointed the Audit Committee

and the internal auditors to examine the adequacy and the suitability of the internal control systems of the Company.

7. Independent performance of duties of non-management directors

The independent directors have in their own discretion to make decision on any strategy, administration,

appointment of directors and any other matter which may materially affect the benefits of the Company, including

the sufficient and appropriate access to information technology concerning financial and business matters in the

interest of the Company’s operation.

8. Ethics and etiquette

The Board of Directors prepared a compliance manual in relation to the ethics and etiquette of the

management and staff as guidelines for good and proper practice within the organization.


Scope of power and duties of the President

According to the Approval Authority List dated 1st November 1995, the President shall have the powers and

duties as follows:

1. To make a decision on important matters; determine the Company’s mission, objectives, strategies and policies;

oversee the overall operations, productivity, customer relation and overseas marketing; and assume responsibility to the

Board of Directors.

2. To approve the Company’s annual budgets.

3. To approve credit lines and terms of payment to the customers, conclusion of product supply agreements and

changes in dealing conditions, conclusion of insurance contracts, and management of obsolete inventories.

4. To have the authority to approve a purchase of fixed assets and settlement of payment in an amount up to

Baht 20 million.

5. To have the authority to approve investment in a new project in an amount up to Baht 20 million.

6. To determine and approve principles for personnel management and annual salary increase.

7. To approve the appointment of advisors on areas crucial for the operations.

8. To perform any activity relevant to the general administration, excluding connected transactions and acquisition

& disposal of properties under the regulations of the Stock Exchange of Thailand.

Management

The management of the Company consists of the following 10 executive officers.

1. Mr. Chiang, Hsiao-Chin President

2. Mr. Lai, Chi-Tien Vice President Administration

3. Mr. Liu, Kuo-Tung Vice President Sale & Marketing

4. Mr. Hsu, Chen-Hung Vice President Sale & Marketing

5. Mr. Yeh, Tien-Kung Financial Controller

6. Mr. Yu, Hsing-Chin Business Division Director

7. Mr. Yu, Shih-Tung Business Division Director

8. Mr. Pan, Hung- Shen Business Division Director

9. Mr. Chou Kung Hsiung Vice Managing Director

10.Mr. Fang, Chih-Cheng Finance and Sales Director



Appointment of directors

No nominating committee is established to select any appropriate persons to be directors of the Company.

The Company has laid down the guidelines on appointment of the Company’s directors as follows.

1. The Board of Directors is responsible for selecting any appropriate persons, taking into account the

experience, vision, abilities and characters, and submitting a list of nominees to the shareholders’ meeting.

2. At each annual general meeting of shareholders, it is prescribed by the Articles of Association that at

least one-thirds of the directors or if their number is not a multiple of three (3), the number nearest to one-third

(1/3) must retire. In the event that any retired director is re-elected, a resolution of the shareholders’ meeting will be

required. At the time of nominating any candidate for the Board of Directors, the Company will prepare a list of

details and information about such candidate for the shareholders’ consideration.

According to the Articles of Association, the shareholders’ meeting will appoint the Board of Directors in

accordance with the following rules and procedures.

(1) Each shareholder has a vote for each share he/she holds.

(2) Each shareholder will exercise the right to elect one or more persons to be members of the Board of

Directors, however, that a vote will not be divided. Each shareholder has the right of one vote for

each share held, each shareholder must also exercise in full the total number of votes he possesses.

(3) A person who has the most votes will be elected to the Board of Directors in respective order up to

the number of directors to be elected at that time. In case of two or more candidates having an

equality of votes, exceeding the number of directors required for election at that time, the Chairman

will have a casting vote.

Board of Directors’ Meeting

The Board of Directors’ meeting would be held quarterly to consider and approve the business performance,

operations and financial statement of the Company, implement and direct the Company’s policies, monitor and

supervise its operations to maximize economic value and shareholders’ wealth, approve any matters which are

beyond the authorization limit of the Executive Board. However the Company might hold an extra meeting for

approval the extra agenda, the Company will send the notice of Board of Directors’ meeting including agenda and

documents at least 7 days prior to the meeting date.

For year 2004, the Board of Directors’ meeting was held 8 times. There were at least 1/3 of directors

presented constituting the quorum as required by articles of association of the Company.


ORGANIZATION CHART

MR. HSUSHENG-HSIUNG

Chairman

MR. CHIANGHSIAO-CHIN

President

MR. LAICHI-TIEN

VP Administration

MR. LIUKUO-TUNGVP Sales &

Marketing

MR. YEH,TIEN-KUNG

FinancialController

MR. YU,SHIH-TUNG

BusinessDivisionDirector

MR. FANG,CHIH-CHENGFinance and

Sales Director

MR. HSU.CHEN-HUNG

VP Sales &

Marketing

MR. PAN,HUNG-SHEN


MR. CHOUKUNG HSIUNGVice Managing

Director

MR. YU,HSING-CHIN




Directors Remuneration

Monetary remuneration

The following is a list of remuneration for 9 directors and 10 executive officers in 2004.

Type of remuneration Remuneration Remuneration

for 9 directors for 10 Executive officers

Salary - 26,424,630

Bonus 16,200,000 5,527,853

Board allowance 1,800,000 -

Others - 675,536

Total 18,000,000 32,628,019

Other remuneration (if any)

■ Right to subscribe the shares or other security (please specify no. of security increase/decrease of the executive

officer)

- None -

■ Provident Fund

- None -

Policy on Corporate Governance

The Board of Directors realized the importance of Corporate Governance, which will promote transparency and

managerial efficiency and therefore strengthen the confidence of all shareholders, investors and other related parties.

The followings are the main policy to support Corporate Governance:.

■ Issued policy for the Rights and Equitable Treatment Shareholders and various groups of stakeholders

■ Managed through absolute responsibility and oversee for conflict of interests by the Board of Directors

■ Verified financial statement and connected transaction with related parties through Controlling system and

Internal Audit

■ Operated business with transparency and disclosure

■ Managed business operation under risk management

■ Performed under Code of Ethics by Directors and employees

Corporate Governance

The Board of Directors have implemented Best Practice Guidelines for Directors of Listed Companies set forth by

the Stock Exchange of Thailand such as roles, duties and responsibilities of company directors, appointment of directors,

fixing remuneration for directors, board meeting and shareholders’ meeting, and reporting financial information. In

addition, we have set up Audit Committee as resources for the board of directors and management of the Company for

necessary assistance.


Shareholders: Rights and Equitable Treatment

Shareholders’ Meetings

The Company encourages equal treatments and opportunities for all shareholders to express their opinions

and raise question at the meeting, according to the agenda and the issues presented to the meetings. And the

Company also has facilitated all shareholders to access to company information, as well as attend shareholders’

meetings with easy procedures and without expenses charged.

All shareholders are invited to the annual shareholder’s meeting. The company would send out an invitation

letter and agenda of each meeting to the shareholders prior to the meeting for their consideration. Shareholders

have voting rights equal to the number of shares owned and must exercise all eligible votes to safeguard their

investment in voting for the resolution, an opinion for a significant decision making, for example, regulation

amendment, capital increase. All shareholders have right to receive correct, up-to-date, fully disclosed information.

The meeting minutes were completely and accurately taken within the appropriate times in order to enable the

shareholders to monitor afterward. Shareholders wishing to appoint a proxy representation may appoint any

person or may elect to appoint the Independent Director and Chairman of the Audit committee as recommended

by SEC.

The Company has a policy for the Rights and Equitable Treatment Shareholders and Various groups of

Stakeholders by controlling of the exploitation of inside information by executive officers in securities trading since

the Company’s securities are listed on The Stock Exchange. The Company’s policy on such matter is described as

follows.

1. An executive officer will prepare and submit to the Company a securities holding report showing the

number of securities held by him/her, his/her spouses and minor children in the prescribed form immediately

following the delivery of such report to The Office of Securities and Exchange Commission and The Stock Exchange

of Thailand as follows.

■ Initial securities holding report (form 59-1) will be submitted within 30 days after the closing date of

public offering or after the date of appointment of such executive officer.

■ Amendment to securities holding report (form 59-2) will be submitted within 3 days from the date of

each purchase, sale, transfer and acceptance of securities.

2. The Company has submitted to each and every executive officer a circular letter notifying that any

executive officer who is informed of any inside information will prohibit to do any trading transaction of the

Company’s securities 30 days prior to the Company’s publication of its operating result (quarterly financial statement

and annual financial statement) or any other significant information which may materially affect the securities

value.

The Company will inflict the maximum punishment on any executive officer who exploits the inside information

or performs any act in such a way that may disgrace or damage the Company.



Leadership and Vision

The Board of Director has participated with the management by taking into account and making an approval of

vision, mission, strategies, oversight of business plan, oversea a level of control and risk management of operation. This

includes supervising the management to perform the business efficiently in accordance with the action plan’s target

and budget, which shall help add the highest economic value to the business and shareholders.

Various groups of stakeholders

The Board of Directors recognized the rights of various groups of stakeholders, including shareholders, minority

shareholders, employees, customers, supplier, the public and communities. The Board of Directors also supported a

collaborative approach between the company and its stakeholders for their mutual benefit.

The various groups of company’s stakeholders are treated with high priority as follows.

■ Employees are treated equally and fairly. Benefits are paid appropriately.

■ Products and service bought from supplier are in accordance with normal business condition and agreements.

■ Customers are treated with care. Their information is treated as confidential.

■ Competition is moral. No illegal practices are used to destroy competitors.

■ Community, environment, and society are responsibly treated.

Business Ethics

The Company adopted Code of Best Practice for the Board of Directors of listed companies issued by The Stock

Exchange of Thailand as company’s Code of Ethics for directors to comply. The Company will review the Code of Ethics

in compliance with ethics of the management and staff as guidelines for good and proper practice within the organization.

The Company also has the regulations of employees in order to set the standard of the work, quality and also the

employees. Related training courses and observation have also been arranged so as to assure effectiveness as desire.

Conflict of interests

The Audit Committee was appointed to consider every transactions and conflict of interest in according to the

relevant rules and regulations of The Stock Exchange of Thailand. The price and conditions should be similar to Arm’s

Length Basis and has disclosed details, transaction value, reason /necessity in Connected Transaction Report.


RELATED PARTY TRANSACTIONS

Related party transactions executed by the Company and other companies within the Group from the last

three years are shown below.

Purchase value of raw materials through the Group and percentage of total purchase value of

materials.

Companies Year 2002 Year 2003 Year 2004

Baht Million % Baht Million % Baht Million %

1. Kinpo Group 61.88 0.21 18.48 0.07 51.24 0.10

2. Cal-Comp Electronics (Suzhou) Co., Ltd. - - - - 251.08 0.47

3. Cal-Comp Optical Electronics

(Suzhou) Co., Ltd. - - - - 0.02 0.00

4. Logistar International Holding Co., Ltd. - - - - 24.71 0.05

5. Cal-Comp Electronics and

Communications Co., Ltd. - - - - 3.43 0.01

6. Wise Sigma International Holding Co., Ltd. - - - - 130.91 0.25

7. Telian Corporation 70.29 0.24 69.50 0.26 6.95 0.01

8. Wide Telecom Inc. 200.48 0.69 71.71 0.27 0.09 0.00

Total 332.65 1.14 159.69 0.60 468.43 0.89

In 2004, purchasing value of raw materials with related parties was increase due to the increase of sales

revenue and higher of raw material cost. In addition, almost raw materials are supplied by the employing company.

The purchase of raw materials from the associated companies, Telian Corporation and Wide Telecom, Inc is made

in the ordinary course of business and under the Joint-Venture agreement. No joint interested party has any

beneficial stake in such affiliate companies.

Sale value of products through the Group and percentage of total sales volume

Companies Year 2002 Year 2003 Year 2004

Baht Million % Baht Million % Baht Million %

1. Kinpo Group 3,606.70 11.14 809.01 2.93 2,658.59 4.71

2. Logistar International Holding Co., Ltd. 8,865.07 27.39 14,703.70 53.31 18,929.31 33.52

3. Cal-Comp Electronics (Suzhou) Co., Ltd. - - 376.33 1.37 171.64 0.30

4. Cal-Comp Optical Electronics

(Suzhou) Co., Ltd. - - - - 13.17 0.02

5. Cal-Comp Electronics and

Communications Co., Ltd. - - - - 13.14 0.02

6. Telian Corporation 441.56 1.36 635.16 2.30 22.73 0.04

7. Wide Telecom Inc. 779.07 2.41 415.76 1.51 1.70 0.00

Total 13,693.69 42.30 16,939.96 61.42 21,810.28 38.61

Notes: The said figure includes proceeds from non-product items such as machinery.



For the year 2004, the Company’s sale revenues had increased 94.13% from last year due to the increase of sale

in PC Peripheral and Telecom sactor and the sale of products through related parties was increased, however the

percentage is still similar with year 2003. The Company treats all related parties as one of its customers under the terms

and conditions of agreement.

Guarantee

As at 31 December 2004, the Company had outstanding commitment of NTD 30 million in respect of uncalled

portion of investments in Cal-Comp Electronics and Communications Co., Ltd.

As at 31 December 2004, Cal-Comp Electronics (Suzhou) Co., Ltd. and Cal-Comp Optical Electronics (Suzhou)

Co., Ltd. had outstanding commitments of approximately RMB 4 million in respect of agreements to construct a plant

in the People’s Republic of China (2003 : RMB 45 million).

In August 2004, Logistar International Holding Co.,Ltd., a subsidiary company, entered into a franchise agreement

with Dolby Laboratories Licensing Corporation, whereby the subsidiary has to pay a franchise fee based on sales volume

of contracted products. As at 31 December 2004, the subsidiary company had opened a letter of credit USD 150,000

for the franchise fee, which it had yet to use.

Opinions of Independent Directors in connection with the Related Party Transactions

After due consideration, the independent directors found no doubtful signs in the Company’s internal audit

report showing the product trading transactions between the Company and Kinpo Group during the year 2004. It

appeared that any and all trading agreements and transactions have been made in line with the relevant agreements

entered into by both parties.

The independent directors expressed their opinion that the shareholding structures among the company, its

subsidiary company, associated companies and related companies do not constitute conflicts of interests among the

Company, directors and executives and that no shareholding structure or management of companies in the group are

nominees.

The independent directors and the Company have committed themselves to ensure that any potential related

party transactions would be subject to the relevant agreements and disclose to each other the type and value of any

related party transaction in connection with the joint related parties under the relevant notifications and regulations of

The Office of Securities and Exchange Commission.


Supply/Manufacturing Agreement

Parties concerned : Cal-Comp Electronics (Thailand) Public Company Limited

and Kinpo Electronics, Inc. (a company incorporated under the laws of Taiwan).

Execution date : 1st April ,2004

Material subject : The term of the agreement apply to each purchase by Kinpo to Cal-Comp of the

good and services as specifies in the Purchase Order and

1. Cal-Comp shall notify Kinpo in advance and in writing of any proposed change

in method of producing or testing, subcontractors for producing, processing

and testing, site of manufacture and labeling.

2. All products shall meet the specifications and shall be subjected to quality control

inspection by Cal-Comp in accordance with Cal-Comp’s quality control standards.

Cal-Comp shall permit Kinpo to review periodically Cal-Comp’s production and

quality control procedures and records and to visit Cal-Comp’s facilities.

Expiry date : The Agreement shall continue in full force and effect for one year. The agreement

shall be renews and effective for another one year if there is no objection before

the end of the above effective period.

Joint Venture Agreement


and Telian Corporation (a company incorporated under the laws of Korea).

Execution date : 2nd April, 1998

Material subject : The Company shall be entitled to the following benefits.

1. Know-how: the Company is authorized to apply know-how, patents, technology

and formulae in connection with the production or sale of cordless telephones

and other telecommunications equipment owned, designed and developed by

Telian Corporation during the validity of the Joint Venture Agreement at the fair

market price.

2. Production: the Company is entitled to the first right refusal in connection with

any new product designed and developed by Telian. Parties concerned will

determine the remuneration and other relevant contractual conditions from

time to time.

Expiry date : This Agreement shall be terminated upon occurrence of any of the following events.

1. Both parties agree to terminate the Agreement.

2. Either party claims for compensation from any defaulting party, but the latter

fails to pay the compensation within the period of 30 days.



License Agreement


and Wide Telecom Inc. (a company incorporated under the laws of Korea).

Execution date : 25th September, 2000 Material subject :

1. The Company is granted exclusive right to use patents and know-how for

production and distribution of products (pagers) owned by Wide Telecom

throughout the validity of the Agreement.

2. Wide Telecom agrees to provide technical assistance for production of pagers.

3. The Company is entitled to sell Wide Telecom-technology pagers in any country,

except Korea.

4. The Company agrees not to enter into contract with any current and potential

customer of Wide Telecom. Both parties also agree to disclose their lists of

customers to each other from time to time.

Expiry date : This Agreement shall be terminated upon occurrence of any of the following events.

1. Either party breaches any provision thereof, and fails to remedy within the period

of 60 days.

2. Either party participates in the bankruptcy proceedings.

3. Either party becomes an injured party due to any Act of God for an uninterrupted

period of more than 6 months from the date of notice given by the other party.

Use-Right of Land Agreement

Parties Concerned : Cal-Comp Electronics (Thailand) Public Company Limited

and Wujiang State-Owned Land Administration Bureau

Execution Date : 4th June 2002

Material Subject : The company is granted 50 years usage-right of state-owned land of Wujiang City

for constructing plant. The constructed area and designing for each building must

be subjected to the layout of the city, and constructed as per ratified designing

program.

Expiry Date : 3rd June 2052

The contract may be terminated, if Cal-Comp delays the payment until 60 days.


AUDIT COMMITTEE REPORT

The Audit Committee of Cal-Comp performed various functions through out the financial year 2004 in

cooperation with the Board of Directors, senior management and staff.

Four audit committee meetings were held in 2004. Beside the attendance of the 3 audit committee members,

management of the company including the Company’s Chief Financial Officer, Head of Investors Relations and the

Company’s internal audit staff regularly participated in all the meetings. Committee members reviewed the monthly

audit reports for the previous quarters and they were satisfied with the outcome of the entire year’s audit. Findings

of the different audit reports and meetings reviewed that the Company’s broad-based policies, operation procedures,

production procedures, accounting policies and safety and environmental policies are strictly adhered to. In addition,

we find the Board of Directors of the company has clearly defined the Company’s mission, objectives and goals of

the Company and communicated to senior management and staff. Periodic strategy changes were also disseminated

to staffs. The committee also formulated the 2005 audit plan in the third quarter.

In June, accompanied by Mr.Yeh,Tien-Kung, Chief Financial Officer of CCET, Audit Committee members

Alan Kam and William Chao visited the new CCET’s subsidiary company and new factory facility in Su Zhou, China

to inspect the 2 new factories built. The committee held various discussions with management, production staff,

and heads of department and vendors. The committee members spent 2 days in China and came away satisfied

with the overall operation of the new subsidiary, in Su Zhou. The Su Zhou factories, with its modern and safety

features have become a prototype for further factory expansion in the coming year. Audit Committee Chairman

also visited the company’s Petchburi factory during the third quarter of 2004.

Communication to minority shareholders has always been regarded as an important aspect between

management and shareholders. In that respect, audit committee finds that the Investors Relations Department has

done an efficient job in communicating with shareholders and the public whether it concern corporate matters,

investment activities, and corporate policies.

Finally, the Audit Committee would not be able to perform its duties without the tireless support of senior

management, investors relations department and the internal audit department. We would like to thank all parties

concern for their assistance.

(Mr. Alan Kam)

Chairman of the Audit Committee



Scope of powers and authorities of the Audit Committee

1. To ensure that the Company prepares any quarterly and annual financial report which contains accurate and

sufficient information and cooperate with any third party auditor and executive officer in charge of preparing

such reports.

2. To ensure that the Company has the appropriateness and effectiveness of the internal control system and

internal audit functions by coordinating with the external auditors and internal auditors.

3. To consider and advise the appointment of the external auditors including the determine an amount of

remuneration for such auditor by considering the creditability, the adequacy of its resources, the firm’s audit

engagements, and the experience of its supervisory, and the experience of its supervisory and professional

staff.

4. To ensure that the conduct of business of the company is in compliance with the securities and exchange law,

regulations of The Stock Exchange or any other applicable law.

5. To make decision on disclosing any accurate and complete information of the Company in the case of any

related party transaction or conflicting transaction.

6. To take care of any other matters assigned by the Board of Directors and approved by the audit committee

such as reviewing the accounting policy, the financial reporting system and the information disclosure in

conformance with accounting standards, all important reports which must be disclosed to the public according

to the law.

7. To prepare an audit report and publish it in the annual report of the Company.

8. To perform any other act as assigned by the Board of Directors with the approval of the Audit Committee.


DIRECTORS’ REPORTING

CONTROLLING SYSTEM & INTERNAL AUDIT

The Company realized important of the internal audit, internal audit department was established as

compliance unit to review and verify financial statement and connected transaction with related party. Moreover,

Internal audits are independence unity and directly report to the audit committee.

The Board of directors are responsible for the accuracy and completeness of the Company and its subsidiary’s

financial statements. Accounting principles used and financial statements are in compliance with accounting standards

and disclosed.

In order to ensure the efficient internal control and audit system, the audit committee will regularly review

the financial statement and internal control system. The audit committee report had already disclosed in annual

report.

Audit committee had clarified on internal audit with good management that can be confident for the

financial statement and its subsidiary as of 31 December 2004.

Mr. Hsu Sheng-Hsiung Mr. Chiang Hsiao-Chin

Chairman Managing Director



RELATION WITH INVESTORS

The Company always realizes that the successful factors in conducting business are not only perseverance of

good operation results but also the responsibility to society and environment. Therefore, the Company determined

to continue further contribution, though our activity is only a small social contribution, but we did it with the great

intention to all in society.

Regarding the environment, the Company received ISO 14001 certification from AFAQ & Bestcert (Thailand)

Co., Ltd., France which result from the successful in implementing the ISO 14001 standard for Environmental

Management Systems (EMS) at both Mahachai and Petchburi plants.

In year 2004, we are a part of supporting a charitable performance of choral music called “Prasarn Seang

Terd Prakiet Prasarn Jai Wattanatham Thai” by the visit of Her Royal Highness Princess Maha Chakri Sirindhorn and

awarded plaques for honors.

SOCIAL ANDENVIRONMENT RESPONSIBILITIES

Investor relations Department has been established for individual investors or stockholders benefits and

interests as the Company sees the significant of their investments and values, by communicate with investors and

allowing them to procure appropriate devices for presenting information or for helping them in dealing with

communication. The analyst meetings are held at least forth a year to meeting with investors and analysts to

provide on the updated company financial results and businesses.

All interested investors can obtain information on the Company at website: www.calcomp.co.th or email any

concerns to [email protected]

Contact Department : Investor Relations Department

E-Mail Address : [email protected]

Telephone no. : 0-2261-5033-40 Ext: 5605, 5620, 5622

Fax no. : 0-2661-9390, 0-2661-9396-7


FINANCIAL STATEMENTS



REPORT OF INDEPENDENT AUDITOR

To the Board of Directors and Shareholders ofCal-Comp Electronics (Thailand) Public Company Limited

I have audited the accompanying consolidated balance sheets of Cal-Comp Electronics (Thailand) Public

Company Limited and its subsidiaries as at 31 December 2004 and 2003, and the related consolidated statements

of earnings, changes in shareholders’ equity and cash flows for the years then ended; and the separate financial

statements of Cal-Comp Electronics (Thailand) Public Company Limited for the same years. These financial statements

are the responsibility of the Company’s management as to their correctness and the completeness of the presentation.

My responsibility is to express an opinion on these financial statements based on my audits. I did not audit the

financial statements of Logistar International Holding Co., Ltd. and Cal-Comp Electronics (Suzhou) Co., Ltd. and Cal-

Comp Optical Electronics (Suzhou) Co., Ltd. and Cal-Comp Electronics & Communications Co., Ltd., four overseas

subsidiary companies, which are included in the consolidated financial statements for the years ended 31 December

2004 and 2003. These subsidiaries’ financial statements show total assets as at 31 December 2004 and 2003 of

Baht 14,788 million and Baht 5,372 million, respectively, revenues for the years then ended totalling Baht 34,598

million and Baht 16,831 million, respectively and net earnings for the years then ended of Baht 132 million and Baht

200 million, respectively. In addition, the financial statements of the Company only include its investments in its

subsidiaries presented under the equity method, amounting to Baht 2,060 million and Baht 845 million, as at 31

December 2004 and 2003, respectively, and its share of the profits of its subsidiaries for the years then ended,

amounting to Baht 132 million and Baht 200 million, respectively. The financial statements of the subsidiary companies

were audited by other auditors, whose reports have been furnished to me, and my opinion, in so far as it relates to

the figures for the various transactions with those subsidiary companies included in the consolidated financial

statements and the financial statements of Company only, is based on those auditors’ reports.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require

that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free

of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant

estimates made by management, as well as evaluating the overall financial statement presentation. I believe that

my audits, together with the report of other auditors discussed in the first paragraph, provide a reasonable basis for

my opinion.

In my opinion, based on my audits and the report of other auditors, the financial statements referred to

above present fairly, in all material respects, the financial position of Cal-Comp Electronics (Thailand) Public Company

Limited and its subsidiary companies and of Cal-Comp Electronics (Thailand) Public Company Limited as at 31

December 2004 and 2003, and the results of their operations and cash flows for the years then ended in accordance

with generally accepted accounting principles.

I draw attention to Note 7 to the financial statements. The Company has substantial product sales and raw

material purchase transactions with its subsidiaries and related companies, and these are presented in the financial

statements at the prices which it mutually agreed with those subsidiaries and related companies.

Rungnapa LertsuwankulCertified Public Accountant (Thailand) No. 3516

Ernst & Young Office Limited

Bangkok: 27 January 2005


BALANCE SHEETSCal-Comp Electronics (Thailand) Public Company Limited and its Supsidiary Companies

As At 31 December 2004 and 2003 (Unit : Baht)

The accompanying notes are an integral part of the financial statements.

CONSOLIDATED THE COMPANY ONLY

NOTE 2004 2003 2004 2003

ASSETS

Current assets

Cash and cash equivalents 253,465,437 528,591,120 61,889,555 38,605,323

Short-term investments 4 - 158,854,484 -

Trade accounts receivable 9,522,453,439 4,447,823,625 1,854,210,867 2,720,517,664

Trade accounts receivable under agreements

assigning rights of claim 6 151,144,845 - - -

Less: Allowance for doubtful accounts (52,096,931) (45,167,904) (52,096,931) (45,167,904)

Trade accounts receivable, net 5 9,621,501,353 4,402,655,721 1,802,113,936 2,675,349,760

Trade accounts receivable - related parties 2,165,654,497 788,963,074 7,740,067,109 2,824,450,120

Less: Allowance for doubtful accounts (9,336) (92,323) (9,336) (92,323)

Trade accounts receivable - related parties, net 5,7 2,165,645,161 788,870,751 7,740,057,773 2,824,357,797

Short-term loans to related party 7 67,271,407 137,643,476 - -

Amount due from related parties 7 145,053,811 34,806,884 153,547,636 252,518,291

Inventories, net 8 7,527,751,465 4,695,484,285 5,809,989,932 3,827,520,284

Goods in transit 54,369,802 13,217,306 54,369,802 13,217,306

Advances payment for raw materials 9 295,585,804 145,955,047 221,689,440 145,955,047

Value added tax refundable 6,394,523 16,910,260 6,394,523 16,910,260

Other receivables 10 261,836,127 391,355,139 261,836,127 312,078,839

Other current assets 11 566,855,398 349,769,607 68,610,130 205,066,797

Total current assets 20,965,730,288 11,664,114,080 16,180,498,854 10,311,579,704

Non-current assets

Investments accounted for under

the equity method 12 119,674,479 140,910,707 2,121,710,624 907,005,281

Other long-term investments, net 13 50,742,727 72,741,675 24,762,615 46,299,270

Property, plant and equipment, net 14 4,927,450,793 3,829,224,176 2,307,647,311 2,782,097,642

Intangible assets

Deferred assets, net 8,752,096 11,983,192 - 11,983,192

Land occupancy rights, net 15 59,846,782 62,292,887 - -

Other non-current assets

Molds and spare parts 91,136,862 104,682,916 91,136,862 104,682,916

Others 6,319,974 11,275,049 1,274,815 11,275,049

Total non-current assets 5,263,923,713 4,233,110,602 4,546,532,227 3,863,343,350

TOTAL ASSETS 26,229,654,001 15,897,224,682 20,727,031,081 14,174,923,054



As At 31 December 2004 and 2003 (Unit : Baht)



NOTE 2004 2003 2004 2003

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Short-term loans from financial institutions 16 4,471,984,209 3,072,953,989 1,576,280,224 2,070,416,620

Trade accounts payable

- Related parties 7 845,523,256 61,092,717 196,555,031 13,371,887

- Others 8,171,986,626 3,737,289,470 6,865,203,197 3,246,063,643

Total trade accounts payable 9,017,509,882 3,798,382,187 7,061,758,228 3,259,435,530

Convertible debentures due within 1 year 19 284,123,512 - 284,123,512 -

Advance from and amount due to related parties 7 16,555,003 9,285,106 18,457,248 20,652,532

Corporate income tax payable 9,089,564 - 2,875,280 -

Accrued interest expense 13,132,641 27,102,411 13,132,641 27,102,411

Accrued expenses 317,127,312 294,116,026 144,261,428 265,653,160

Other payable 17 442,601,128 191,336,720 114,848,335 43,239,045

Other current liabilities 18 229,131,998 187,889,554 82,895,433 172,265,067

Total current liabilities 14,801,255,249 7,581,065,993 9,298,632,329 5,858,764,365

Non-current liabilities

Convertible debentures 19,7 - 1,409,215,351 - 1,409,215,351

Long-term loan 20 3,136,200,000 - 3,136,200,000 -

Total non-current liabilities 3,136,200,000 1,409,215,351 3,136,200,000 1,409,215,351

Total liabilities 17,937,455,249 8,990,281,344 12,434,832,329 7,267,979,716

Shareholders’ equity

Share capital 21

Authorised share capital

423,000,000 ordinary shares of Baht 10 each

(2003: 378,000,000 ordinary shares

of Baht 10 each) 4,230,000,000 3,780,000,000 4,230,000,000 3,780,000,000

Issued and paid up share capital

323,531,835 ordinary shares of Baht 10 each

(2003: 305,031,072 ordinary shares

of Baht 10 each) 3,235,318,350 3,050,310,720 3,235,318,350 3,050,310,720

Additional paid-in capital

Premium on common stocks 21 1,108,433,144 714,881,697 1,108,433,144 714,881,697

Other deficits (162,192,236) (149,010,536) (162,192,236) (149,010,536)

Convertible debentures - equity component 19 453,224 2,219,233 453,224 2,219,233

Currency translation differences (135,834,622)) (78,027,008) (135,834,622) (78,027,008)

Retained earnings

Appropriated - legal reserve 22 423,000,000 378,000,000 423,000,000 378,000,000

Unappropriated 3,823,020,892 2,988,569,232 3,823,020,892 2,988,569,232

Total shareholders’ equity 8,292,198,752 6,906,943,338 8,292,198,752 6,906,943,338

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 26,229,654,001 15,897,224,682 20,727,031,081 14,174,923,054


STATEMENTS OF EARNINGSCal-Comp Electronics (Thailand) Public Company Limited and its Supsidiary Companies

For the Years Ended 31 December 2004 and 2003 (Unit : Baht)



NOTE 2004 2003 2004 2003

REVENUES

Sales 7 56,466,836,001 29,086,570,253 41,088,875,638 27,581,076,525

Share of profit from investments

accounted for under equity method - 25,650,957 135,986,257 251,392,221

Gain on exchange 23 - 181,377,491 - -

Other income

- Service income 7 - - 603,311,610 -

- Others 7 31,944,569 37,251,091 18,959,066 28,262,937

Total revenues 56,498,780,570 29,330,849,792 41,847,132,571 27,860,731,683

Expenses

Cost of sales 7 53,348,063,457 26,953,139,154 39,035,220,350 25,549,755,226

Cost of service - - 580,321,114 -

Selling and administrative expenses 1,125,847,316 792,289,294 231,560,882 660,321,932

Share of loss from investments accounted

for under equity method 17,982,466 3,791,682 - 25,638,366

Loss on exchange 23 7,778,888 - 70,010,962 52,704,503

Directors’ remuneration 24 6,392,500 22,137,500 6,392,500 22,137,500

Total expenses 54,506,064,627 27,771,357,630 39,923,505,808 26,310,557,527

Earnings before interest expense and income tax 1,992,715,943 1,559,492,162 1,923,626,763 1,550,174,156

Interest expense 7 (175,907,529) (74,719,846) (108,917,712) (65,401,840)

Corporate income tax 25 (14,991,873) - (12,892,510) -

Net earnings for the year 1,801,816,541 1,484,772,316 1,801,816,541 1,484,772,316

Basic earnings per share

Net earnings 5.86 4.90 5.86 4.90

Weighted average number of

ordinary shares (million shares) 307.4 303.1 307.4 303.1

Diluted earnings per share 26

Net earnings 5.28 4.21 5.28 4.21

Weighted average number of

ordinary shares (million shares) 346.3 359.3 346.3 359.3



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STATEMENTS OF CASH FLOWS




NOTE 2004 2003 2004 2003

Cash flows from operating activities

Net earnings for the year 1,801,816,541 1,484,772,316 1,801,816,541 1,484,772,316

Adjustments to reconcile net earnings to net cash

provided by (paid from) operating activities: -

Depreciation and amortisation 508,090,060 482,898,837 408,907,787 466,871,966

Allowance for doubtful accounts (reversal) 6,846,040 (18,215,791) 6,846,040 (18,215,791)

Loss on disposal of equipment 20,598,994 214,342 20,568,962 214,342

Share of loss (profit) from investments

accounted for under equity method 17,982,466 (25,650,957) (135,986,257) (225,753,855)

Allowance for diminution in value of investments 12,000,000 - 12,000,000 -

Provision for obsolete inventories (reversal) 1,457,573 (54,100,000) - (54,100,000))

Amortisation of discounts on convertible

debentures 919,085 1,440,753 919,085 1,440,753

Unrealised loss (gain) on exchange 89,439,246 (5,926,611) 87,062,082 (54,521,003)

Earnings from operating activities before

change in operating assets and liabilities 2,459,150,005 1,865,432,889 2,202,134,240 1,600,708,728

Operating assets (increase) decrease

Trade accounts receivable (5,158,975,645) (1,250,723,506) 781,960,965 (1,178,049,877)

Trade accunts receivable under agreements

assigning rights of claim (151,144,845) - - -

Trade accounts receivable - related parties (1,672,729,442) 574,228,474 (5,211,655,009) 721,961,603

Amount due from related parties (110,405,479) (123,769,052) 98,812,104 41,209,381

Inventories (2,833,724,753) (863,339,479) (1,982,469,648) 4,624,522

Goods in transit (41,540,976) 10,400,073 (41,540,976) 10,400,073

Advances payment for raw materials (152,181,273)) 66,858,752 (78,284,909) 66,858,752

Value added tax refundable 10,515,737 25,482,357 10,515,737 25,482,357

Other receivables 114,521,597 62,026,848 35,245,297 141,303,148

Other current assets (217,551,734) (83,640,646) 135,990,723 (160,931,902)

Other non-current assets (2,923,140) (13,461,759) 11,983,192 (13,461,759)

Operating liabilities increase (decrease)

Trade accounts payable 4,632,923,971 1,108,853,669 3,817,366,370 617,627,842

Trade accounts payable - related parties 787,044,202 (557,310,987) 185,796,805 (129,839,517)

Corporate income tax payable 9,089,564 (2,675,135) 2,875,280 (2,675,135)

Accrued interest expense (15,313,784) 22,793,111 (16,750,715) 22,509,365

Accrued expenses 23,011,286 61,658,745 (121,391,730) 34,131,965

Other payable 254,000,704 (13,878,026) 74,345,587 (157,760,659)

Other current liabilities 42,922,101 (95,834,044) (87,689,978) (32,558,518)

Net cash from (used in) operating activities (2,023,311,904) 793,102,284 (182,756,665) 1,611,540,369

Cal-Comp Electronics (Thailand) Public Company Limited and its Supsidiary Companies






NOTE 2004 2003 2004 2003

Cash flows from investing activities

Decrease in short-term investments - 45,364,025 - 45,364,025

Increase in investments accounted

for under equity method - (3,645,000) (1,051,985,319) (269,991,718)

Decrease in short-term loans to related parties 69,775,016 254,281,586 - -

Increase in currency translation differences (60,433,173) (108,993,626) (88,186,427) (76,537,967)

(Increase) decrease in property, plant and

equipment (1,665,536,637) (1,493,017,260) 74,754,217 (711,123,778)

(Increase) decrease in molds and spare parts 13,413,415 (31,758,462) (63,068,055) (31,758,462)

Proceeds from sales of equipment 46,327,020 19,286,945 46,327,020 19,286,945

Decrease in deposits 4,955,075 12,495,748 10,000,234 12,495,748

Net cash used in investing activities (1,591,499,284) (1,305,986,044) (1,072,158,330) ((1,012,265,207)

Cash flows from financing activities

Increase (decrease) in short-term loans from

financial institutions 1,398,386,009 2,101,456,083 (494,780,607) 1,098,918,714

Increase in capital 400,500,000 - 400,500,000 -

Decrease in convertible debentures (944,400,000) (429,618,203) (944,400,000) (429,618,203)

Increase (decrease) in advance from and

amount due to related parties 7,269,896 (396,408,112) (2,195,284) (389,063,171)

Increase in long-term loan 3,241,440,000 - 3,241,440,000 -

Dividends paid (922,364,882) (907,819,734) (922,364,882) (907,819,734)

Net cash from (used in) financing activities 3,180,831,023 367,610,034 1,278,199,227 (627,582,394)

Net increase (decrease) in cash and cash equivalents (433,980,165) (145,273,726) 23,284,232 (28,307,232)

Cash and cash equivalents at beginning of year 687,445,604 832,719,330 38,605,323 66,912,555

Cash and cash equivalents at end of year (Note 32) 253,465,439 687,445,604 61,889,555 38,605,323

Supplemental cash flows information: -

Cash paid during the year for: -

Interest expense 177,524,985 50,063,861 118,007,285 40,740,118

Corporate income tax 5,952,888 2,828,607 5,949,209 2,828,607

Non-cash items consist of: -

Unrealised loss on change in the value of

investment 13,181,699 3,159,062 13,181,699 3,159,062

Sold of fixed assets to related parties that

has yet been collected - 1,324,435 - 215,919,677

Purchase of plant and equipment that

has yet been paid 161,438,117 - - -

Increase in capital due to convert

convertible debentures 51,507,630 30,310,720 51,507,630 30,310,720

Increase in premium on common stocks

due to convert convertible debentures 134,569,455 78,881,697 134,569,455 78,881,697


1. GENERAL INFORMATION

On 4 December 1989, Cal-Comp Electronics (Thailand) Public Company Limited was incorporated as a limited

company under Thai laws. On 11 August 2000, the Company registered the change of its status to a public limited

company under the Public Limited Companies Act. Its major shareholder is Kinpo Electronics, Inc., a company incorporated

in Taiwan. The Company operates its business in Thailand and its principal activity is the manufacture of electronic

products in three sectors, such as computer and computer peripheral, telecommunication equipment and automation

equipment. Its registered office is 191/54, 191/57 18th Floor, CTI Tower, Rachadapisek Road, Klongtoey, Bangkok

10110. The Company has 2 branches in Thailand located at Samutsakorn and Petchaburi province.

In 2000, the Company opened a branch in Taiwan to purchase raw materials and finished goods, to coordinate

between the Company and its overseas customers, and to facilitate the Company’s business operations. On 24 September

2004, the Company’s Board of Directors approved the dissolution of the Taiwan branch and the establishment of a new

subsidiary located in Taiwan, in order to enhance management efficiency and maximise benefits to the Company and its

shareholders. This company has a registered capital of approximately NTD 100 million or Baht 122 million and all shares

held by the Company. The Company implemented the approved steps in December 2004.

The financial statements of the Company only included the financial statements of Taipei branch for the period as

from 1 January 2004 to 30 November 2004, which has been audited by other auditors.

2. BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements for the years ended 31 December 2004

and 2003 of Cal-Comp Electronics (Thailand) Public Company Limited (hereinafter called “the Company”) and its subsidiary

companies, Logistar International Holding Co., Ltd., Cal-Comp Electronics (Suzhou) Co., Ltd., Cal-Comp Optical Electronics

(Suzhou) Co., Ltd. and Cal-Comp Electronics & Communications Co., Ltd. which were incorporated and operated their

businesses in overseas (hereinafter call “the subsidiaries”). The financial statements of the subsidiaries were prepared by

the management of the subsidiaries and audited by their auditors overseas.

During the last quarter of 2004, the Company incorporated a subsidiary company, Cal-Comp Electronics &

Communications Co., Ltd. in Taiwan with an authorised capital of NTD 100 million. The Company held 100% stake.

The Company has subsidiary companies as follows: -

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended 31 December 2004 and 2003

Cal-Comp Electronics (Thailand) Public Company Limited and its Supsidiary Companies



Revenue

Investment Country of Nature of for the years endedSubsidiaries’ name proportion incorporation business Total assets 31 December

2004 2003 2004 2003 2004 2003% % Million Million Million Million

Baht Baht Baht Baht

Logistar International 100 100 British Virgin Company’s 9,050 2,717 30,785 15,537

Holding Co., Ltd. Islands distributor

Cal-Comp Electronics 100 100 The People’s Manufacture 3,454 2,585 3,798 1,294

(Suzhou) Co., Ltd. Republic of

China

Cal-Comp Optical Electronics 100 100 The People’s Manufacture 1,677 70 2 -

(Suzhou) Co., Ltd. Republic of

China

Cal-Comp Electronics & 100 - Taiwan Purchasing material 607 - 13 -

Communications Co., Ltd. and research

and development

All intercompany balances and significant intercompany transactions have been eliminated from the consolidated

financial statements.

The financial statements of the branch office and subsidiaries incorporated overseas are translated into Thai Baht at

the closing exchange rate for assets and liabilities, and at the average exchange rate for revenues and expenses. The

resultant difference is shown under the caption of “Currency translation differences” in shareholdersí equity.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with accounting standards pronounced by the Institute

of Certified Accountants and Auditors of Thailand which are effective under the Accounting Act B.E. 2543.

Significant accounting policies adopted by the Company and its subsidiary companies are summarised below: -

3.1 Revenue and expense recognition

Sales and service income represent the invoiced value, excluding value added tax, of goods sold and delivered

after deducting discount and allowance and services rendered.

Expenses are recognised on an accrual basis.

3.2 Inventories

Inventories are valued at the lower of cost (first-in, first-out method) or net realisable value.

Provision for obsolete stocks is made for damaged, slow-moving and obsolete stock.

3.3 Trade accounts receivable and other receivables

Trade accounts receivable and other receivables are recognised and carried at original invoice amount less an

allowance (if any) for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full

amount is no longer probable.

3.4 Investments

a) Investments in unit trusts in overseas, which are held as short-term investments, are determined at fair

value. Gains or losses arising from change in value is included in determining earnings.

b) Investments in marketable equity securities, which are held as available-for-sale securities, are determined at

fair value. Gains or losses arising from changes in value have been separately shown in shareholdersí equity under the

caption of “Other deficits”.


c) Investments in non-marketable equity securities, which the Company hold as, other investments, are valued at

cost. Loss on impairment (if any) of investments in available-for-sale securities and other investments is included in determining

earnings.

d) Investments in subsidiary and associated companies are valued under the equity method.

3.5 Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of buildings, building

improvements and equipment are calculated by reference to their costs on a straight-line basis over the estimated useful lives

as follows: -

Buildings and building improvements - 11 - 50 years

Machinery and factory equipment - 5 - 10 years

Office furniture and equipment - 5 - 11 years

Motor vehicles - 5 - 10 years

Miscellaneous equipment and research and development equipment - 1 - 7 years

No depreciation is provided for land, land improvement, construction in progress, equipment under installation and

fixed assets in transit.

3.6 Intangible assets

Deferred assets are stated at cost and amortised on a straight-line basis over 3 years.

Land occupancy rights are stated at cost and amortised on contract period of 50 years.

3.7 Deferred expenses

Deferred expenses are calculated by reference to their costs and amortised on a straight-line basis at the following

rates:

Convertible debentures issued expenses - 3 years

Molds and spare parts - 1, 2, 5 years

3.8 Impairment of assets

The Company reviews the impairment of assets whenever events indicate that the carrying value of an asset

exceeds its realisable value. Realisable value is the higher of an asset’s net selling price and its value in use. The value in use is

arrived at based on the management estimates.

The Company recognises an impairment loss in the earnings statements whenever the carrying value of an assets

exceeds its realisable value. The Company will reverse the impairment loss when there are indications that the value of the

asset is no longer impaired or the amount of impairment has decreased.

3.9 Foreign currencies

Foreign currency transactions incurred during the year are translated into Baht at the rates ruling on the transaction

dates. Monetary assets and liabilities denominated in foreign currency outstanding at the balance sheet date are translated

into Baht at the rates ruling on the balance sheet date.

Exchange gains and losses are included in determining earnings.



3.10 Foreign exchange contracts

Foreign exchange contracts are accounted for as hedge against exposure to the foreign currency risk related to

the Company and its subsidiaries’s purchases and sales to overseas in the normal course of business. Premium paid for

forward exchange contracts are recognised as liabilities or assets and are amortised over the period of contracts and

included in determining earnings.

3.11 Cash and cash equivalents

Cash and cash equivalents are cash and deposits at banks, excluded deposits at banks with an original maturity

over 3 months and cash secured as collateral.

3.12 Interest rate swap

The notional amounts of interest rate swap agreements of the Company and its subsidiaries are not recognised

in the financial statements since the agreements do not require the settlement of such notional amounts. The amounts

receivable or payable under the agreements resulting from the difference in the interest rates are recognised as interest

income or interest expense at the balance sheet dates and at settlement dates.

3.13 Foreign currency option

The notional amounts of the foreign currency option contracts of the Company and its subsidiaries are not

recognised as either assets or liabilities on the contract dates. However, amounts received on options written are recognised

as liabilities, and amounts paid on options bought are recognised as assets. Such amounts are amortised using the

straight-line method over the terms of contracts and charged to current income. Gains or losses on the exercise of the

options are charged to current income.

3.14 Provident fund

The Company and its employees jointly established a provident fund as approved by the Ministry of Finance in

accordance with the Provident Fund Act B.E. 2530. The fund is contributed by both employees at the rate of 2 percent of

salary and the Company at the rate of 2 percent of salary.

3.15 Earnings per share

Basic earnings per share is calculated by dividing net earnings for the year by the weighted average number of

ordinary shares held by outside shareholders in issue during the year.

Diluted earnings per share is calculated by dividing net earnings for the year by the total sum of the weighted

average number of ordinary shares held by outside shareholders in issue during the year plus the weighted average

number of ordinary shares to issue for conversion of all dilutive potential ordinary shares into ordinary shares.

3.16 Use of accounting estimates

Preparation of financial statements in conformity with generally accepted accounting principles requires

management to make estimates for certain accounting transactions, affecting amounts reported in the financial statements

and notes related thereto. Subsequent actual results may differ from these estimates.

4. SHORT-TERM INVESTMENTS

(Unit: Thousand Baht)


2004 2003 2004 2003

Term deposits with financial

institutions - 158,855 - -


5. TRADE ACCOUNTS RECEIVABLE / TRADE ACCOUNTS RECEIVABLE - RELATED PARTIES

The outstanding balances of trade accounts receivable is aged as follows: -



2004 2003 2004 2003

Not yet due 7,305,324 3,962,962 1,159,860 2,329,864

Overdue

Less than 1 month 1,387,958 351,475 546,432 293,531

1 - 2 months 636,628 44,609 27,641 12,404

2 - 3 months 91,318 1,245 1,556 1,013

3 - 6 months 130,485 3,364 1,881 295

6 - 12 months 42,519 3,648 37,782 2,890

Over 12 months 79,366 80,521 79,059 80,521

Total 9,673,598 4,447,824 1,854,211 2,720,518

Less: Allowance for doubtful accounts (52,097) (45,168) (52,097) (45,168)

Net 9,621,501 4,402,656 1,802,114 2,675,350

The outstanding balances of trade accounts receivable - related parties is aged as follows: -



2004 2003 2004 2003

Not yet due 1,516,992 569,257 5,489,004 2,293,093

Overdue

Less than 1 month 428,782 100,111 1,196,444 245,111

1 - 2 months 151,254 118,274 703,119 126,192

2 - 3 months 8,789 525 311,434 60,534

3 - 6 months 53,760 701 39,956 95,614

6 - 12 months 6,077 95 110 3,906

Total 2,165,654 788,963 7,740,067 2,824,450

Less: Allowance for doubtful accounts (9) (92) (9) (92)

Net 2,165,645 788,871 7,740,058 2,824,358

The Company and its subsidiary companies’ management believes that allowance for doubtful accounts set aside is

adequate in the present situation.

6. TRADE ACCOUNTS RECEIVABLE UNDER AGREEMENTS ASSIGNING RIGHTS OF CLAIM

As at 31 December 2004, a subsidiary company had assigned its rights of claim over trade receivables amounting to Baht

504 million to a bank, whereby the trade receivables had agreed in writing to make their payment against all invoices issued

by the subsidiary company directly to this bank. The subsidiary company, as the assignor had surrendered control over these

debts, and the bank, as the assignee, had sole rights of claim over the trade receivables. The subsidiary company had recorded

the transactions as sales to the bank. The subsidiary company had received payment of Baht 353 million from the bank and

recorded the amount as a deduction from the trade accounts receivable balance. The remaining Baht 151 million, for which no

payment had yet been received from the bank, had been presented as “Trade accounts receivable under agreements assigning

rights of claim” in the balance sheet.



The subsidiary company had provided a guarantee to the bank to cover any defaults on payment by these accounts

receivable. However, no allowance had been set up against these assigned trade receivables since the subsidiary company

believed that they were financially strong.

7. RELATED PARTY TRANSACTIONS

During the years, the Company had significant business transactions with its overseas related companies (related by

way of having certain shareholders and/or directors in common).

The relationship between the Company and the related parties are summarised below:

Name of related parties Relationship with the Company

Kinpo Electronics, Inc. Parent company

Logistar International Holding Co., Ltd. Subsidiary company

Cal-Comp Electronics (Suzhou) Co., Ltd. Subsidiary company

Cal-Comp Optical Electronics (Suzhou) Co., Ltd. Subsidiary company

Cal-Comp Electronics & Communications Co., Ltd. Subsidiary company

Wise Sigma International Holding Co., Ltd. Associated company (held by a subsidiary company)

Telian Corporation Associated company and common directors

inx Japan International Inc. Shareholding by the Company

Wide Telecom, Inc. Shareholding by the Company

Afreey Inc. Shareholding by the Company

Kinpo Electronics, Inc. (China) Co., Ltd. Subsidiary of the parent company

Kinpo International Co., Ltd. Shareholding by the parent company

Leading Tham Technology Ltd. Common shareholders

Such significant transactions are summarised below: -


CONSOLIDATED THE COMPANY ONLY Pricing policy

2004 2003 2004 2003

Transactions with subsidiaries

(Eliminated from consolidated

financial statements)

Sales - - 19,127,259 15,080,023 Near market price

Service income - - 603,312 - USD 1,349,000 per month

Sales of fixed assets - - 10,065 214,595 Cost

Purchases of raw materials - - 279,244 - Near market price

Transactions with related parties

Sales

- Kinpo Electronics, Inc. 4,699,741 4,121,131 2,051,536 809,012 Near market price

- Others 3,483,078 1,584,843 631,679 1,050,919 Near market price

Sales of fixed assets - 1,324 - 1,324 Cost

Purchases of raw materials 5,789,986 261,967 189,190 159,688 Near market price

Interest income 1,993 4,739 - - 2% per annum

Interest expense 1,864 3,444 1,864 3,444 2% per annum


The outstanding balances of the above transactions have been presented in the balance sheets as follows: -



2004 2003 2004 2003

Trade accounts receivable - related parties

Subsidiary companies

(eliminated from consolidated


- Logistar International Holding Co., Ltd. - - 7,014,442 2,274,031

- Cal-Comp Electronic (Suzhou) Co., Ltd. - - 102,940 357,945

- Cal-Comp Optical Electronic

(Suzhou) Co., Ltd. - - 9,507 -

- Cal-Comp Electronics &

Communications Co., Ltd. - - 123,858 -

- - 7,250,747 2,631,976

Related companies

- Kinpo Electronics, Inc. 475,912 281,796 227,293 46,338

- Telian Corporation 550,238 329,005 371 65,014

- Wide Telecom, Inc. 96,861 171,666 1,486 74,626

- Leading Tham Technology Ltd. 380,968 - - -

- Kinpo International Co., Ltd. 260,170 6,496 260,170 6,496

- Wise Sigma International

Holding Co., Ltd. 401,505 - - -

Total 2,165,654 788,963 489,320 192,474

Less: Allowance for doubtful accounts (9) (92) (9) (92)

2,165,645 788,871 489,311 192,382

2,165,645 788,871 7,740,058 2,824,358

Short-term loans to related party

Related company


Holding Co., Ltd. 67,271 137,643 - -

Amount due from related parties




- Logistar International Holding Co., Ltd. - - 2,345 78

- Cal-Comp Electronics (Suzhou) Co., Ltd. - - 10,163 217,633


Communications Co., Ltd. - - 2,318 -

- - 14,826 217,711

Related companies


- Telian Corporation 535 2,683 535 2,683

- Wide Telecom, Inc. 84,841 16,487 84,841 16,487

- Others 3,509 211 401 211

145,054 34,807 138,722 34,807

145,054 34,807 153,548 252,518





2004 2003 2004 2003

Trade accounts payable - related parties




- Logistar International Holding Co., Ltd. - - 23,994 -

- Cal-Comp Electronics (Suzhou) Co., Ltd. - - 41,643 -


Communications Co., Ltd. - - 205 -

- - 65,842 -

Related companies


- Wide Telecom, Inc. 2,412 13,175 - 2,155

- Telian Corporation 17,810 8,622 766 6,303


Holding Co., Ltd. 126,515 - 126,515 -

- Leading Tham Technology Ltd. 272,518 - - -

- Kinpo Electronices, Inc.

(China) Co., Ltd. 422,836 - - -

- Kinpo International Co., Ltd. 1,807 - 1,807 -

845,523 61,093 130,713 13,372

845,523 61,093 196,555 13,372

Advance from and amount due to related parties




- Logistar International Holding Co., Ltd. - - 2,279 4,372

- Cal-Comp Electronics (Suzhou) Co., Ltd. - - 1,902 6,996


Communications Co., Ltd. - - 226 -

- - 4,407 11,368

Related company


16,555 9,285 14,050 9,285

16,555 9,285 18,457 20,653

Convertible debentures

Related company

- Kinpo Electronics, Inc.

Cost (par value) 4,000 units - 117,558 - 117,558

Less: Discount on convertible

debentures to be realised

as interest expense in the future - (123) - (123)

Convertible debentures, net - 117,435 - 117,435


The movements of short-term loans to related party during the year are as follows: -


CONSOLIDATED

31 December Interest 31 December

2003 Additional Repayment receivable Translation 2004loans

Short-term loans to related party

Wise Sigma International Holding Co., Ltd. 137,643 - (81,867) 9,684 1,811 67,271

Short-term loans to Wise Sigma International Holding Co., Ltd. were denominated in US dollar currency and interest was

charged at the rate of 2 percent per annum.

Net foreign currency assets and liabilities has been included in Note 34.3.

8. INVENTORIES

(Unit: Baht)


2004 2003 2004 2003

Finished goods 739,677,824 573,952,103 550,381,524 441,770,102

Work in process 18,556,834 26,040,868 15,290,490 24,556,107

Raw materials 6,838,082,397 4,220,553,264 5,311,425,935 3,492,060,960

Raw materials outside contract 144,948,194 86,994,261 144,948,194 81,189,326

Total 7,741,265,249 4,907,540,496 6,022,046,143 4,039,576,495

Less: Provision for obsolete inventories (213,513,784) (212,056,211) (212,056,211) (212,056,211)

Inventories, net 7,527,751,465 4,695,484,285 5,809,989,932 3,827,520,284

The Company and its subsidiary companies’ management believes that allowance for obsolete inventories set aside is

adequate in the present situation.

9. ADVANCES PAYMENT FOR RAW MATERIALS

Included in the balances as at 31 December 2004 and 2003 mainly consist of: -

a) Short-term loans of Baht 95 million (2003: Baht 99 million) provided to local suppliers for use as working capital in

agreed production of raw materials, on which interest is charged at the rate of 7 percent per annum.

b) Advance payment of Baht 113 million (2003: Baht 7 million) for the purchase of raw materials and others.

c) Advance payment of Baht 14 million to overseas suppliers (2003: Baht 40 million) for the purchase of molds and

raw materials. The remaining balances is to be paid upon the completion of molds (please refer to Note 33.4).

10. OTHER RECEIVABLES

The balances as at 31 December 2004 and 2003 of Baht 262 million and Baht 105 million, respectively represent

suspense accounts receivable set up for inventories to which engineering or component changes have been made of which

the expense can be passed on to customers or vendors and for raw materials which were purchased from suppliers and the

orders later cancelled. The Company sets up these suspense account while awaiting the return of the raw materials to the

creditors.



11. OTHER CURRENT ASSETS

The balances as at 31 December 2004 and 2003 consist of: -



2004 2003 2004 2003

Receivable - molds 34,769 155,548 34,769 155,548

Other receivable 94,346 50,378 - -

Others 437,740 143,844 33,841 49,519

Total 566,855 349,770 68,610 205,067

12. INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD


CONSOLIDATED

Nature of Country of Investments Investments

Company’s name business incorporation Paid up capital proportion Cost method Equity method

2004 2003 2004 2003 2004 2003 2004 2003

% %

Investments in associated companies

Telian Corporation Mobile phone Korea KW 2,871 KW 2,871 27.8 27.8 57,825 57,825 61,887 58,107

million million

inx Japan International Inc. Japan - 20 - 3,645 - 3,645

Wise Sigma International Holding British 45 45 87,994 89,186 57,787 79,159

Holding Co., Ltd. company Virgin

Islands

Total investments accounted for under equity method 145,819 150,656 119,674 140,911


THE COMPANY ONLY

Nature of Country of Investments Investments

Company’s name business incorporation Paid up capital proportion Cost method Equity method

2004 2003 2004 2003 2004 2003 2004 2003

% %

Investments in subsidiary companies

Logistar International Holding Company’s British USD 50,000 USD 50,000 100 100 2,280 2,280 326,473 403,234

Co., Ltd. distributor Virgin

Islands

Cal-Comp Electronics Manufacturing The People’s USD 10 USD 10 100 100 528,610 430,167 534,899 371,728

(Suzhou) Co., Ltd. Republic of million million

China

Cal-Comp Optical Electronics Manufacturing The People’s USD 25 USD 1.76 100 100 1,023,834 70,291 1,098,591 70,291

(Suzhou) Co., Ltd. Republic of million million

China

Cal-Comp Electronics & Purchasing Taiwan NTD 100 - 100 - 92,510 - 99,861 -

Communications Co., Ltd. material and million

research and

development

Investments in associated companies

Telian Corporation Mobile phone Korea KW 2,871 KW 2,871 27.8 27.8 57,825 57,825 61,887 58,107

million million

inx Japan International Inc. Japan - 20 - 3,645 - 3,645

Total investments accounted for under equity method 1,705,059 564,208 2,121,711 907,005


Towards the end of 2003 the Company set up a subsidiary company, Cal-Comp Optical Electronics (Suzhou) Co., Ltd., in

The People’s Republic of China with an authorised capital of USD 10 million. The Company invested USD 1.76 million in 2003

and an additional USD 8.24 million during the current year. On 6 May 2004, a meeting of the Company’s Board of Directors

approved a USD 15 million capital injection into this subsidiary company, to fund a new plant and expansion of the business.

As a result the subsidiary company has a registered capital of USD 25 million and the Company invested an additional USD 15

million in September 2004. This subsidiary company commenced its operation in the third quarter of current year.

In December of 2003, the Company participated in the incorporation of inx Japan International Inc. in Japan, and held

a 20% stake, amounting to Baht 3.6 million. Because its share capital is not yet fully called up, this associated company has not

yet registered as a company and the investment is thus presented at cost. During the second quarter of current year the

shareholding structure of this company changed, resulting in a dilution of the Company’s interest to 19.98 percent. The

Company has therefore presented the investment in other long-term investments, as described in Note 13.

In December 2004, the Company set up a new subsidiary company in Taiwan, Cal-Comp Electronics & Communications

Co., Ltd., by dissolving the Taiwan branch and transferring all business, assets and liabilities of the branch to the new subsidiary.

The subsidiary is wholly owned by the Company and is engaged in the acquisition of raw materials, and the research and

development of new products for the group.

13. OTHER LONG-TERM INVESTMENTS


CONSOLIDATED

Country of Investments Investments

Company’s name Nature of business incorporation proportion Cost method Fair value

2004 2003 2004 2003 2004 2003

% %

Investments in other companies

Wide Telecom, Inc. CDMA Korea 11.60 11.60 171,247 171,247 9,055 22,236

Less: Unrealised loss on change

in the value of investment (162,192) (149,011)

9,055 22,236

Afreey Inc. Producing of CD ROM Taiwan 6.90 6.90 76,752 76,752

Power Digital Communication Trading of

Co., Ltd. communication apparatus Taiwan 1.90 4.70 25,980 26,443

102,732 103,195

Less: Allowance for diminution

in the value of investments (64,689) (52,689)

38,043 50,506

inx Japan International Inc. Japan 19.98 - 3,645 -

Total other long-term investments 50,743 72,742




THE COMPANY ONLY

Country of Investments Investments

Company’s name Nature of business incorporation proportion Cost method Fair value

2004 2003 2004 2003 2004 2003

% %

Investments in other companies

Wide Telecom, Inc. CDMA Korea 11.60 11.60 171,247 171,247 9,055 22,236

Less: Unrealised loss on change

in the value of investment (162,192) (149,011)

9,055 22,236

Afreey Inc. Producing of CD ROM Taiwan 6.90 6.90 76,752 76,752

Less: Allowance for diminution

in the value of investments (64,689) (52,689)

12,063 24,063

inx Japan International Inc. Japan 19.98 - 3,645 -

Total other long-term investments 24,763 46,299

14. PROPERTY, PLANT AND EQUIPMENT

(Unit: Baht)

CONSOLIDATED

Construction in

progress, equipment

Buildings Machinery under installation

Land and land and buildings and factory Office furniture and fixed

improvements improvements equipment and equipment Motor vehicles assets in transit Total

Cost

31 December 2003 330,641,702 2,055,388,690 2,883,600,267 273,267,653 22,325,486 102,085,771 5,667,309,569

Acquisitions - 70,866,415 639,088,292 156,568,424 7,916,531 1,299,465,380 2,173,905,042

Disposals - (11,865,438) (159,047,043) (19,457,022) (4,078,781) - (194,448,284)

Transfer in (out) - 7,590,073 167,522,575 142,865,621 1,349,051 (826,292,590) (506,965,270)

Translation adjustment 10,252,275 (8,462,396) (24,804,178) (3,158,782) (103,779) (48,312,426) (74,589,286)

31 December 2004 340,893,977 2,113,517,344 3,506,359,913 550,085,894 27,408,508 526,946,135 7,065,211,771

Accumulated depreciation

31 December 2003 - 355,778,773 1,384,632,327 90,794,227 6,880,066 - 1,838,085,393

Depreciation for the year - 79,840,445 306,618,066 46,680,771 2,546,450 - 435,685,732

Disposals - (72,968) (130,853,190) (1,662,794) (1,219,945) - (133,808,897)

Translation adjustment - (343,012) (1,757,691) (129,141) 28,594 - (2,201,250)

31 December 2004 - 435,203,238 1,558,639,512 135,683,063 8,235,165 - 2,137,760,978

Net book value

31 December 2003 330,641,702 1,699,609,917 1,498,967,940 182,473,426 15,445,420 102,085,771 3,829,224,176

31 December 2004 340,893,977 1,678,314,106 1,947,720,401 414,402,831 19,173,343 526,946,135 4,927,450,793

Depreciation charged in the earnings statements

2003 345,422,719

2004 435,685,732


A part of depreciation of 2004 amounting to Baht 427 million (2003: Baht 333 million) for the consolidated has been

charged to cost of sales and the remaining part of Baht 9 million (2003: Baht 12 million) has been charged to selling and

administrative expenses.

(Unit: Baht)

THE COMPANY ONLY

Construction in

progress, equipment

Buildings Machinery under installation

Land and land and buildings and factory Office furniture and fixed

improvements improvements equipment and equipment Motor vehicles assets in transit Total

Cost

31 December 2003 330,641,702 1,609,060,105 2,434,795,484 203,613,226 19,475,704 11,168,947 4,608,755,168

Acquisitions - - - 2,988,060 - 427,088,896 430,076,956

Disposals (222,431,451) (230,295,674) (119,864,221) (28,659,660) (3,152,596) - (604,403,602)

Transfer in (out) - 7,590,073 167,522,575 142,865,621 1,349,051 (424,968,513) (105,641,193)

31 December 2004 108,210,251 1,386,354,504 2,482,453,838 320,807,247 17,672,159 13,289,330 4,328,787,329

Accumulated depreciation

31 December 2003 - 352,536,247 1,379,042,922 88,741,244 6,337,113 - 1,826,657,526

Depreciation for the year - 61,860,023 246,720,477 22,725,258 1,949,925 - 333,255,683

Disposals - (1,519,963) (125,847,991) (9,989,204) (1,416,033) - (138,773,191)

31 December 2004 - 412,876,307 1,499,915,408 101,477,298 6,871,005 - 2,021,140,018

Net book value

31 December 2003 330,641,702 1,256,523,858 1,055,752,562 114,871,982 13,138,591 11,168,947 2,782,097,642

31 December 2004 108,210,251 973,478,197 982,538,430 219,329,949 10,801,154 13,289,330 2,307,647,311

Depreciation charged in the earnings statements

2003 333,478,959

2004 333,255,683

A part of depreciation of 2004 amounting to Baht 327 million (2003: Baht 323 million) for the Company only has been

charged to cost of sales and the remaining part of Baht 6 million (2003: Baht 10 million) has been charged to selling and

administrative expenses.

As at 31 December 2004, certain machinery and factory equipment and office equipment items have been fully depreciated

but are still in use. The original cost, before deducting accumulated depreciation, of those assets amounts to Baht 392 million

(2003: Baht 276 million).

15. LAND OCCUPANCY RIGHTS

The balance as at 31 December 2004 and 2003 represents the land occupancy rights of a subsidiary in the People’s

Republic of China. These rights are for 50 years.


Consolidated

2004 2003

Cost 68,555 68,555

Translation adjustment (6,756) (5,591)

Amortisation for the year (as included in statements of earnings) (1,952) (671)

Net 59,847 62,293



16. SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS

Short-term loans from financial institutions of the Company and its subsidiaries consist of loans from both local banks

and overseas financial institutions in both local currency and foreign currency. The loans are mainly repayable within 3

months, and carry interest rates of 1.33 - 4.4 percent per annum.

The Company has considered the foreign currency risk pertaining to the above loans. These loans which are not

hedged with derivative financial instruments are included in Note 34.3.

17. OTHER PAYABLE

The outstanding balance as at 31 December 2004 and 2003 represents trade accounts payable suspense for goods

purchases which there are subject to changes in price, specifications and other components. The Company has recorded

the suspense account separately from normal trade accounts payable.

18. OTHER CURRENT LIABILITIES

The balance as at 31 December 2004 and 2003 consist of: -



2004 2003 2004 2003

Advances received from customers

- for purchase of molds 67,014 140,613 64,677 140,613

- for preparation of production line 1,998 2,016 1,998 2,016

Money received from customers

pending for clear 5,217 3,408 5,217 3,408

Other payables - 20,570 - 4,945

Others 154,903 21,283 11,003 21,283

Total 229,132 187,890 82,895 172,265

19. CONVERTIBLE DEBENTURES

On 25 March 2002, the Company’s Annual General Meeting of shareholders approved the issue and offering of not

more than Baht 2,500 million of unsecured convertible debentures, or the equivalent amount in any foreign currency, with

a maturity of not more than 7 years. The offer price is to be determined later and will depend upon the market situation at

the time the debentures are issued and offered for sale to institutional investors or specific groups of investors in accordance

with the Notification of the Securities and Exchange Commission.

On 6 December 2002, the Company issued 48,000 convertible debentures of USD 1,000 each, amounting to USD 48

million, maturing in 3 years, redeemable on 6 December 2005, with the following terms are conditions.

Description of convertible debenture

- Form Unsecured convertible debentures

- Type Debentures with registered holders

- Maturity period 3 years from the date of issuance convertible debentures

- Issue date 6 December 2002

- Maturity date 6 December 2005

- Offering value USD 48 million

- Offering amount 48,000 units


Description of convertible debenture

- Face value USD 1,000 per unit

- Offering price USD 1,000 per unit

- Coupon rate None

- Conversion rate 1 convertible debenture can convert to 1,211.9444 ordinary shares

- Right to convert into shares Convertible from 6 March 2003 to 6 November 2005 at a conversion price

of Baht 36* per share (at a fixed rate of conversion of Baht 43.63

per USD 1).

- Periodic redemption at the Annually. Redeemable at a price of 102.01% of principal on

option of the debenture holders 6 December 2003 and at 104.06% of principal on 6 December 2004.

- Redemption at the option Redeemable within 2 years after the issue at a closing price of the shares

of the issuer on the Stock Exchange of Thailand for each of 30 consecutive trading days,

which is at least 130 percent of the convertible price.

- Yield to maturity 2 percent per annum.

- Rights, benefits, and other 1. The redemption is to be made at maturity date.

conditions 2. The debenture holders have the right to authorise the Company to redeem

the debentures before the maturity date if there is a change in authorisation.

- Alternative market N/A

*On 26 January 2005, the Company’s Board of Directors Meeting approved the adjustment to the conversion price at

Baht 35 per share for 7,250 convertible debentures outstanding as at 31 December 2004.

During the current year, debenture holders exercised their rights to convert 4,250 debentures into shares. The Company

registered the increase in its paid-up capital to support such conversion, as described in Note 21 and debenture holders

redeemed 24,000 convertible debentures. There were 7,250 convertible debentures outstanding as at 31 December 2004.

20. LONG-TERM LOAN



2004 2003 2004 2003

Loan from financial institutions 3,136,200 - 3,136,200 -

Less: Current portion of long-term loan - - - -

Long-term loan, net of current portion 3,136,200 - 3,136,200 -

On 18 June 2004, the Company entered into a 5-year syndicated loan agreement with financial institutions for a facility

of USD 80 million. The loan carries interest at LIBOR plus margin per annum and is to be repaid in semi-annually installments,

the first of which will be due in June 2006.

The above loan agreement contains certain restrictive covenants relating to the maintenance of a particular current ratio

and EBITDA for the term of the agreement, among others.



21. SHARE CAPITAL/PREMIUM ON ORDINARY SHARES

On 2 April 2004, the Company’s Annual General Meeting of shareholders approved the increase of registered share

capital from Baht 3,780 million to Baht 4,230 million, comprising shares with a par value of Baht 10. This increase is in

accordance with the plan to offer Taiwan Depositary Receipts (TDR) to investors in Taiwan. In addition, the AGM agreed

to allow the Company to provide support for the offer and sale of TDR by a shareholder in Taiwan, in addition to that

provided to a major shareholder of the Company which issued TDR in 2003. However, on 21 December 2004 the

Company’s Board of Directors approved the acknowledge the withdrawal of the application for offering of TDR in Taiwan.

On 26 April 2004, the Company registered the increase in its share capital with the Ministry of Commerce. Registered

share capital is Baht 4,230 million.

As described in Note 19, on 3 August 2004 and 8 December 2004 the Company registered the increase of its paid-

up capital by a total of 4,847,777 ordinary shares and 302,986 ordinary shares, respectively to support the exercise of the

convertible debentures. Both liability and equity components of such convertible debentures have been transferred to

share capital, and the difference between the transfer value and the par value of the ordinary shares has been recorded as

premium on ordinary shares.

In December 2004, the Company sold 13,350,000 above additional registered shares to the private placement

investors at Baht 30 per share. The premium over the par value of the shares is presented net of the underwriting

expenses, in “Premium on common stocks” in the balance sheet. The Company registered the increase in its paid-up

capital with the Ministry of Commerce on 28 December 2004. As at 31 December 2004, the Company’s paid-up capital

comprises 323,531,835 shares or Baht 3,235,318,350.

22. LEGAL RESERVE

Pursuant to section 116 of the Public Limited Companies Act B.E. 2535, 5 percent of the net earnings has been set

aside as part of the statutory reserve in order to increase the amount of the reserve to the level of 10 percent of the

registered share capital. The statutory reserve could not use for dividend payment.

23. EXCHANGE GAINS (LOSS)


FOR THE YEARS ENDED 31 DECEMBER


2004 2003 2004 2003

Realised exchange gains (loss) 81,660 175,450 17,051 (107,226)

Unrealised exchange gains (loss) (89,439) 5,927 (87,062) 54,521

Exchange gains (loss) - net (7,779) 181,377 (70,011) (52,705)

24. DIRECTOR’S REMUNERATION

Directors’ remuneration represents the benefits paid to the Company’s directors in accordance with section 90 of

the Public Limited Companies Act, exclusive of salaries and related benefits payable to Executive Directors.


25. CORPORATE INCOME TAX

Corporate income tax has been calculated at the rate of 25 percent on the non-BOI promoted earnings after adding back

provisions and certain expenses which are disallowable for tax computation purposes.

26. RECONCILIATION OF DILUTED EARNINGS PER SHARE

For the years ended 31 December

Weighted average

Net earnings number of Earnings per share

ordinary shares

2004 2003 2004 2003 2004 2003

Million Million Million Million Baht Baht

Baht Baht Share share

Basic earnings per share

Net earnings for the year of ordinary shareholders 1,802 1,485 307.4 303.1 5.86 4.90

Effect of dilute potential ordinary shares

Convertible debentures 26 29 38.9 56.2

Diluted earnings per share

Net earnings for the year of ordinary sharesholders

assuming the conversion of diluted potential

ordinary shares 1,828 1,514 346.3 359.3 5.28 4.21

27. NUMBER OF EMPLOYEES AND RELATED COSTS


2004 2003 2004 2003

Number of employees at the end of year 9,915 8,962 6,782 7,218

Employee costs (Thousand Baht) 1,339,137 1,016,449 1,083,512 934,126

28. DIVIDEND

On 19 March 2003, the Company’s Annual General Meeting of Shareholders approved the payment of dividend of Baht

1.5 per share from its earnings for the year 2002 to the Company’s shareholders, totalling Baht 453 million. The Company paid

dividend on 16 April 2003.

On 13 August 2003, the Company’s Board of Directors Meeting approved the payment of interim dividend of Baht 1.5

per share from its earnings for the six-month period ended 30 June 2003 to the Company’s shareholders 303,213,156 shares,

totalling Baht 454.82 million. The Company paid dividend on 12 September 2003.

On 2 April 2004, the Company’s Annual General Meeting of Shareholders approved the payment of dividend of Baht 3.0

per share from its earnings for the year 2003 to the Company’s shareholders, totalling Baht 912.4 million. The Company paid

interim dividend of Baht 1.5 each totalling Baht 454.8 million and, the existing of Baht 1.5 per share or equivalent to Baht

457.6 million paid on 30 April 2004.



On 13 August 2004, the Company’s Board of Directors Meeting approved the payment of interim dividend of Baht

1.5 per share from its earnings for the six-month period ended 30 June 2004 to the Company’s shareholders 309,878,849

shares, totaling Baht 464.8 million. The Company paid dividend on 10 September 2004.

29. PROVIDENT FUND

The Company and its employees jointly established a provident fund as approved by the Ministry of Finance in

accordance with the Provident Fund Act B.E. 2530. The fund is contributed by both employees at the rate of 2 percent of

salary and the Company at the rate of 2 percent of salary and managed by TISCO Securities Company Limited. The fund

will be paid to the employees upon termination in accordance with the rules of the fund. Total contributions of the

Company for the current year amounted to Baht 0.7 million (2003: Baht 0.7 million).

30. BOARD OF INVESTMENT PRIVILEGES

The Company was granted the following tax privileges by the Board of Investment for certain specified categories of

products, under the Investment Promotion Act B.E. 2520: -

- Exemption from corporate income tax on net profit for periods of 3 to 8 years commencing as from the date of

first earning operating income.

- Dividends paid from the promoted operations which are exempt from corporate income tax are in turn exempted

from inclusion in the determination of corporate income tax.

- Exemption from import duty on the raw and essential materials imported for use specifically in producing for

export.

- Exemption from import duty on items imported for re-export.

- Exemption from import duty on machinery as approved by the Board.

- An allowance of five percent of the increment in export income over that of the preceding year is deductible

from taxable income for a period of ten years commencing as from the date of earning operating income.

- A fifty percent reduction of the normal rate of corporate income tax on net profit, of for a period of 5 years

after the expiry of the corporate income tax exemption period.

To be entitled to these rights and privileges, the Company must comply with conditions specified in the promotional

certificates.

The Company’s operating revenues for the years ended 31 December 2004 and 2003 are below divided according

to whether the revenues are from promoted and non-promoted activities: -

(Unit: Million Baht)

Promoted Non-promoted Total

2004 2003 2004 2003 2004 2003

Revenues

Sales

Local 6,989 1,536 8 3 6,997 1,539

Overseas 31,675 23,761 2,417 2,281 34,092 26,042

Total 38,664 25,297 2,425 2,284 41,089 27,581


31. FINANCIAL INFORMATION BY SEGMENT

The Company’s operations involve the single industry segment of manufacturing and distributing electronic equipment.

Information for the years ended 31 December 2004 and 2003 is below presented by geographic segment: -


For the years ended 31 December 2004 and 2003

Local sales Overseas sales Total Elimination Grand total

2004 2003 2004 2003 2004 2003 2004 2003 2004 2003

Sales

- external 6,997 1,539 43,337 21,842 50,334 23,381 - - 50,334 23,381

- related parties - - 34,611 20,786 34,611 20,786 (28,478) (15,080) 6,133 5,706

6,997 1,539 77,948 42,628 84,945 44,167 (28,478) (15,080) 56,467 29,087

Earnings from operations 3,119 2,134

Other income 32 242

Expenses and interest

expenses (1,334) (891)

Corporate income tax (15) -

Net earnings 1,802 1,485

The Company used the gross profit margin + 2% basis to set transfer prices between the geographic segment.


As at 31 December 2004 and 2003

Local Overseas Total Elimination Grand total

2004 2003 2004 2003 2004 2003 2004 2003 2004 2003

Assets

- Trade accounts

receivable, net 9,542 5,500 10,923 2,324 20,465 7,824 (8,678) (2,632) 11,787 5,192

- Inventories, net 5,810 3,736 1,717 947 7,527 4,683 1 12 7,528 4,695

- Property, plant and

equipment, net 2,308 2,310 2,631 1,531 4,939 3,841 (11) (12) 4,928 3,829

- Others 3,186 2,252 1,905 1,659 5,091 3,911 (3,104) (1,730) 1,987 2,181

Total assets 20,846 13,798 17,176 6,461 38,022 20,259 (11,792) (4,362) 26,230 15,897



32. STATEMENTS OF CASH FLOWS

For the purpose of the statements of cash flows, cash and cash equivalents include cash on hand and at financial

institutions with an original maturity of 3 months or less and without restriction.

Cash and cash equivalents as reflected in the statements of cash flows consist of the followings: -



2004 2003 2004 2003

Cash 604 816 239 643

Deposits at financial institutions 252,861 527,776 61,651 37,962

Cash and cash equivalents 253,465 528,592 61,890 38,605

Current investments - Term

deposits with financial institutions - 158,854 - -

Cash and cash equivalents in

statements of cash flows 253,465 687,446 61,890 38,605

33. COMMITMENTS AND CONTINGENT LIABILITIES

33.1 Financial derivatives

a) Forward foreign exchange contracts

Buying / Selling forward Forward exchange

foreign exchange contracts Amount rate

As at 31 December 2004

The Company

Buying forward foreign exchange contract USD 20 million against Baht 39.095

Selling forward foreign exchange contract USD 5 million against Baht 39.4875


Buying forward foreign exchange contracts USD 28 million against Baht 39.2 - 40.055

USD 65 million against RMB 7.8165 - 8.2425

JPY 501 million against RMB 12.318 - 12.515

Selling forward foreign exchange contracts USD 3 million against Baht 39.4785

USD 65 million against RMB 8.0599 - 8.2499

As at 31 December 2003

Selling forward foreign exchange contracts USD 25 million against Baht 39.58 - 40.0475


These foreign exchange contracts generally have maturities of less than 1 year and the counterparties to the transactions

are financial institutions.

b) Option contracts

As at 31 December 2004, the Company had outstanding option contracts as follows: -

Amount Contractual exchange rate

(Million USD) (Per 1 USD)

2004 2004

Buy “call option” contracts 41 39.5 Baht

Buy “put option” contracts 20 40.4 Baht

Sell “call option” contracts 192 39.5 - 40.4 Baht

Sell “put option” contracts 41 38.5 Baht

As at 31 December 2004, a subsidiary of the Company has outstanding option contracts under which it will pay

USD 848 million and Baht 7,184 million (2003: USD 503 million) and receive USD 184 million and Baht 28,295 million and

RMB 414 million (2003: Baht 18,695 million and RMB 372 million) on maturity dates between 6 January 2005 to 15 November

2005 (2003: 2 January 2004 and 22 September 2004).

As at 31 December 2004, the exchange rate announced by the BOT is as following: -

Average buying rate Average selling rate

Currency (Baht per 1 USD) (Baht per 1 USD)

USD 39.0147 39.2025

c) Interest Rate Swap Transaction Agreement

The Company has entered into Interest Rate Swap Transaction Agreements with a bank for principal totaling

USD 40 million. The contracts are for a period of 5 years, maturing in June 2009 with the condition stipulated in the agreements.

At each of the maturity dates, which occur every 3 months, the Company is required to pay interest to the bank based on the

rate stipulated in the agreements and the bank is required to pay interest to the Company at 3-month LIBOR of the lasted

maturity date. The agreements contain other conditions.

A subsidiary of the Company has entered into an Interest Rate Swap Transaction Agreement with an oversea

bank for principal totaling USD 10 million. The contract is for a period of 1 year, maturing in April 2005. At the maturity date,

the subsidiary is required to pay interest to the bank at 12 month LIBOR and the bank is required to pay interest to the

subsidiary at a fixed rate of 3.22 percent per annum.

33.2 Guarantees

a) As at 31 December 2004, there were outstanding bank guarantees of approximately Baht 96.2 million (2003:

Baht 96.2 million) issued by banks on behalf of the Company in respect of certain performance bonds as required in the

normal course of the Company’s business. Its parent company has issued a letter of awareness to a bank for credit facilities.

b) As at 31 December 2003, the Company has issued a letter of guarantee of USD 9.5 million to a financial

institution to secure against credit facilities as granted by those financial institutions to a subsidiary company and a related

company.



33.3 Sale of collection rights over trade accounts receivable

As discussed in Note 6, as at 31 December 2004 the subsidiary company had contingent liabilities to bank

amounting to Baht 353 million as a result of its sale of collection rights over trade accounts receivable are unable to repay

their debt to the bank.

33.4 Agreements for hire of production of molds

As at 31 December 2004, the Company had outstanding commitments of Baht 15.9 million with overseas

suppliers in respect of agreements for hire of production of molds (2003: Baht 12.3 million).

33.5 Sales and marketing services agreement

As at 31 December 2003, a subsidiary company had an outstanding commitment of SGD 1.2 million under a

sales and marketing services agreement.

33.6 Commitments

As at 31 December 2004, the Company had outstanding commitment of NTD 30 million in respect of uncalled

portion of investments in its subsidiary (2003: USD 8.2 million).

As at 31 December 2004, its two subsidiaries had outstanding commitments of approximately RMB 4 million in

respect of agreements to construct a plant in the People’s Republic of China (2003: RMB 45 million).

In August 2004, a subsidiary company entered into a franchise agreement with a company, whereby the subsidiary

has to pay a franchise fee based on sales volume of contracted products. As at 31 December 2004, the subsidiary company

had opened a letter of credit USD 150,000 for the franchise fee, which it had yet to use.

34. FINANCIAL INSTRUMENTS

34.1 Financial risk management and policies

The Company and its subsidiaries are exposed to risks from changes in market interest rates and in currency

exchange rates and from nonperformance of contractual obligations by counter parties. The Company and its subsidiaries

use derivative instruments, as and when it, considers appropriate, to manage such risks.

34.2 Credit Risk

It is the Company and its subsidiaries’ policy to enter into financial instruments with creditworthy counterparties.

Therefore the Company and its subsidiaries do not expect any material loss to arise from the counterparties’ failure to

perform their obligations under the financial statements. The Company’s and its subsidiaries’ revenues are generated in the

technology industry, which is characterised by short product life cycles and rapid advances in manufacturing technologies.

The maximum exposure to credit risk is the carrying amount of the financial assets less provision for losses as stated in the

balance sheets.

With respect to off-balance sheet derivative financial instruments, it is the Company’s and its subsidiaries’ policy

to enter into financial instruments with creditworthy counterparties. Therefore, the Company and its subsidiaries do not

expect any material losses to arise from the counterparties’ failure to perform their obligations under the financial instruments.


34.3 Foreign currency risk

The Company and its subsidiaries’ exposure to foreign currency risk relates primarily to their receivable, payable,

loans and convertible debentures which are denominated in foreign currencies.

As at 31 December 2004 and 2003, the Company’s net foreign currency assets and liabilities that were not hedged

by derivative financial instruments were as follows.

Million YEN Million USD Million NTD Million EURO Million SGD

2004 2003 2004 2003 2004 2003 2004 2003 2004 2003

Foreign currency assets

- Due within one year 14 - 243 133 23 71 5 2 - 0.7

Foreign currency liabilities

- Due within one year (216) (61) (157) (147) (2) (36) (1) (2) - -

- Due over one year - - (80) - - - - - - -

Net foreign currency

assets (liabilities) (202) (61) 6 (14) 21 35 4 - - 0.7

34.4 Interest rate risk and liquidity

The interest rate risk is the risk that future movements in market interest rates will affect the results of operations

of the Company and its subsidiaries and their cash flows. The Company’s and its subsidiariesí exposure to interest rate risk

related primarily to their deposits at banks, short-term investments, loans to related party and loans from financial institutions.

The majority of these financial assets and liabilities carry interest rates which vary in line with market rates.

The cash flow requirements related to the Company and its subsidiaries’ forward contracts and interest rate swap

are limited to the net differences between the contracted forward rate and the spot rates prevailing at their settlement dates,

and the net differences between the floating rate and fixed rate at the maturity date, respectively.

Cash and cash equivalents as at 31 December 2004 and 2003 are as follows: -


CONSOLIDATED THE COMPANY ONLY Interest rate

2004 2003 2004 2003

Cash on hand 0.6 0.8 0.2 0.6

Cash at banks 252.9 686.6 61.7 38.0 Market rate

253.5 687.4 61.9 38.6



34.5 Fair value

Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between

knowledgeable willing parties in an armís length transaction. Fair values are obtained from quoted market prices, discounted

cash flow models or net asset value as appropriate.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments.

Cash on hand and at banks, current investments, accounts - the carrying values approximate their fair values due

to the relatively short-term maturity of these financial instruments.

The determination of fair value of investments and the presentation of such items are described in Notes 12

and 13.

Accounts payable - the carrying amounts of these financial liabilities approximates their fair values due to the

relatively short-term maturity of these financial instruments.

Loans - the carrying amounts approximate its fair values due to its carrying a floating interest rate, which is

considered to be market rate.

35. SUBSEQUENT EVENT

On 26 January 2005, the Company’s Board of Directors Meeting approved the issuance and offering of 31,650,000

new ordinary shares to the private placement investors. The offering price will be Baht 30 per share.

36. PRESENTATION

The presentation of these financial statements have been made in compliance with the Notification of the Department

of Business Development dated 14 September 2001, issued under the Accounting Act. B.E. 2543.

Certain amounts in the financial statements for the year ended 31 December 2003 have been reclassified to conform

to the current year classifications, with no effect on previously reported net earnings or shareholders’ equity.

37. APPROVAL OF FINANCIAL STATEMENTS

These financial statements have been approved by the Company’s directors.


1. Sales revenues

For the year 2004, The company’s sale revenues were Bt. 56,466.84 million which increased

94.13% from last year due to the increase of sales in PC Peripheral and Telecom sectors from both

existing and new clients.

2. Cost of goods sold

For the year 2004, the company’s cost of goods sold was Bt.53,348.06 million or 94.48% of sale

revenues which increased 97.93% from last year, the gross margin decreased from 7.33% to 5.52%

compare to the same period last year.

The increased of cost of goods sold was because of the increase of sales and gross margin

decreased from the same period last year because the change of the product mix, the increasing orders

for PCB assembly of Hard Disk therefore, the margin for assembly is lower than finish products and also

higher of raw material cost in this year.

3. Selling and Administrative Expenses

For the year 2004, the company’s SG&A expenses were Bt.1,125.85 million or 1.99% of the total

sale revenue that was decreased from 2.72% of sales revenue, compare to the same period last year

which contributed from efficient SG&A expenses control.

4. Interest Expenses

For the year 2004, the company had interest expenses of Bt.175.91 million, increased from

Bt.74.72 million in same period year 2003.

Due to the business expansion in year 2004, the Company needs to finance more working capital

to support the business operation, therefore, the interest expenses was increased compare to the same

period last year.

5. Net Profit

For the year 2004, the Company’s net profit was Bt.1,801.82 million, which increased 21.35%,

compared to the same period last year due to increase of sales revenue. However, the company net

profit margin was slightly dropped from 5.06% in the same period last year to 3.19%

The company’s net profit margin for the year 2004 decreased due to the increasing orders for

PCB assembly of Hard Disk, therefore, the margin for assembly is lower than finish products.

6. Earning per share

For the year 2004, the Company’s earning per share was Bt.5.86 increased from Bt.4.90 or

19.59% compare to the same period last year.

MANAGEMENT EXPLANATION

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HEAD OFFICE191/54, 191/57, 18th floor, CTI Tower, Rachadapisek Road, Klongtoey, Bangkok 10110, ThailandTel. (662) 261-5033-40, 661-9381-88 Fax. (662) 261-5042, 661-9396-9 e-mail : [email protected] http://www.calcomp.co.th

FACTORY 1,2,3 (SAMUTSAKORN)60 Moo 8, Sethakij Road, Klong Maduea, Kratoom Ban, Samutsakorn 74110, Thailand Tel. (6634) 472-000, 849-000 Fax. (6634) 471-654, 471-998, 472-009

FACTORY 4,5,6 (PETCHABURI)138 Moo 4, Phetchakasem Road, Sapang, Koaw Yoi, Petchaburi 76140, Thailand Tel. (6632) 447-756-67 Fax. (6632) 477-619-20

CAL-COMP ELECTRONICS AND COMMUNICATION CO., LTD.3Fl., No. 205, Sec. 3, Beisin Rd., Sindian City, Taipei County 231, Taiwan R.O.C. Tel. 886-2-2764-5312 Fax. 886-2-2748-5208

CAL-COMP ELECTRONICS (SUZHOU) CO., LTD.No. 18, Jiangxing Rd., Wujiang Economic Development Zone, Jiangsu, China Tel. 86-512-6340-7000 Fax. 86-512-6340-7995

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Documents

total revenue

total current assets

total expense

total current liabilities

total assets turnover

total shareholders equity

net profit margin

fixed assets