Elec & Eltek International Company Limited · 2011. 3. 14. · Elec & Eltek International Company...

Annual Report 2003/2004

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www.eleceltek.com

Elec & Eltek International Company Limited

Elec & Eltek International Company Limited(Incorporated in the Republic of Singapore)

Annual Report 2003/2004Elec &

Eltek International Company Lim

ited

Company Registration Number 199300005H

Set the target

2 Corporate Profile

3 Financial Highlights and Calendar

6 Production and Market Information

7 Five Years’ Financial Summary

8 Corporate Information

9 Functional Structure of the Group

12 Chairman’s Letter

18 Statement on Corporate Governance

28 Profiles of Board of Directors and Core Management

33 Report of the Directors

39 Statement by Directors

40 Statutory Auditors’ Report

41 Consolidated Profit and Loss Account

42 Balance Sheets

43 Statements of Changes in Equity

45 Consolidated Statement of Cash Flow

46 Notes to the Financial Statements

75 Statistics of Shareholdings

Elec & Eltek International Company Limited (‘‘Elec & Eltek’’), with its regional investment office in

Singapore, is principally engaged in the manufacture and distribution of high-density double-sided

and multi-layer printed circuit boards (‘‘PCBs’’).

Founded 32 years ago in Hong Kong with three partners and no more than 40 staff, the Elec & Eltek

Group today has eighteen offices worldwide, fifteen plants across Asia — one in Hong Kong, two in

Thailand and twelve in mainland China — and a skilled and experienced workforce of over 10,500

employees.

The Group mass-produces HDI mircovia and up to 36-layer PCB with production capacity of

approximately 38 million square feet per annum. Our diverse customer base includes worldwide

market leaders in different sectors, such as computer and computer peripheral, communication/

networking, consumer electronics, and automotive.

We provide ‘‘one-stop-shopping’’ for customers with wide array of PCBs requirements. On the

upstream, through vertical integration, our prepreg and laminate material plants in China &

Thailand enhance our competitive edge in quality, cost and delivery.

The global PCB market has continued its exponential growth over the past decade. Elec & Eltek, in

this era of keen competition and rapid changes, has maintained its premier position in PCB

industry. We are equipped with high density interconnect and high layer PCB technologies to

satisfy our customers’ every expectation.

Elec & Eltek’s mission is to be a leading PCB manufacturer that supplies quality high-tech PCBs

in mass volume at competitive prices with excellent services.


2

Corporate Profile

30 June 2004

2004 2003

US$ million US$ million

Profit and Loss Account

Turnover 354 245

Profit before taxation 46 17

Profit after taxation and minority interests but before

extraordinary item 41 14

Per Share

Net earnings (US cents) — Basic 27.79 9.73

Net earnings (US cents) — Diluted 27.67 9.73

Net tangible assets (US$) 1.63 1.52

Balance Sheet

Shareholders’ funds 238 222

Total assets 470 352

Financial Ratios

Current assets: Current liabilities (ratio) 1.1 1.5

Inventory turnover period (month) 1.9 1.7

Gearing ratio 0.2 0.1

Financial Calendar Year 2003–2004 Year 2002–2003

Financial year results announced on 23 August 2004 10 September 2003

Annual Report and Accounts issued on 10 September 2004 6 October 2003

Annual General Meeting held on 5 October 2004 30 October 2003

Registers of Shareholders closed on 12–13 October 2004 7–8 November 2003

Dividend paid/payable on

Interim 12 March 2004 28 March 2003

Final 20 October 2004 18 November 2003


3

Financial Highlights and Calendar


4

Financial Highlights and Calendar


5


6

Production and Market Information

2004 2003 2002 2001 2000

US$’000 US$’000 US$’000 US$’000 US$’000

Consolidated Results

Turnover 354,388 245,080 244,165 340,277 284,526

Profit before taxation 46,406 17,358 28,243 60,016 48,834

Taxation (3,403) (1,360) (1,749) (3,775) (2,849)

Profit after taxation 43,003 15,998 26,494 56,241 45,985

Minority interests (2,408) (1,788) (1,809) (2,837) (2,691)

Profit for the year 40,595 14,210 24,685 53,404 43,294

Financial Positions

Property, plant and equipment 278,350 209,635 212,339 215,326 169,780

Intangible assets 71 174 252 350 382

Deferred tax assets 2,111 1,763 1,958 1,075 —

Current assets 189,939 140,778 114,883 125,309 135,420

Total assets 470,471 352,350 329,432 342,060 305,582

Non-current liabilities 50,941 18,109 19,877 9,720 1,470

Current liabilities 167,473 96,982 62,002 87,323 94,044

Total liabilities 218,414 115,091 81,879 97,043 95,514

Net assets 252,057 237,259 247,553 245,017 210,068

Represented by:

Shareholders’ funds 238,294 221,577 232,498 227,363 192,902

Minority interests 13,763 15,682 15,055 17,654 17,166

252,057 237,259 247,553 245,017 210,068


7

Five Years’ Financial Summary

BOARD OF DIRECTORS

Executive Directors

Thomas Tang Koon Yiu

Chairman and Managing Director

Canice Chung Tai Keung

Chief Executive Officer

Claudia Heng Nguan Leng

Non-Executive Directors

David So Cheung Sing

Marcus Tsang Ming Pui

Wilson Tam Kam Ho

Johnny Ng Ho Kin

Independent Non-Executive Directors

Au Eng Kok

Keith Tay Ah Kee

Eugene Lee

Kenneth Shim Hing Choi

AUDIT COMMITTEE

Keith Tay Ah Kee (Chairman)

Au Eng Kok

Eugene Lee

NOMINATION COMMITTEE

Au Eng Kok (Chairman)

Keith Tay Ah Kee


REMUNERATION COMMITTEE

Au Eng Kok (Chairman)

Keith Tay Ah Kee

Johnny Ng Ho Kin

STRATEGIC COMMITTEE

Eugene Lee (Chairman)



Wilson Tam Kam Ho

SECRETARIES


Marian Ho Wui Mee

REGISTERED OFFICE

80 Raffles Place #25-01

UOB Plaza 1

Singapore 048624

Tel: 6535-6844

Fax: 6534-1909

PRINCIPAL OFFICE

8 Shenton Way #37-03

Temasek Tower

Singapore 068811

Tel: 6226-0488

Fax: 6220-2377

Website: www.eleceltek.com

SHARE REGISTRARS

Lim Associates (Pte) Ltd

10 Collyer Quay #19-08

Ocean Building

Singapore 049315

STATUTORY AUDITORS

Ernst & Young

Certified Public Accountants

Partner: Winston Ngan

(financial year ended 30 June 2004)

SOLICITORS

Khattar Wong & Partners

Chang See Hiang & Partners

PRINCIPAL BANKERS

The Hongkong and Shanghai

Banking Corporation Limited

DBS Bank Ltd


8

Corporate Information


9

Functional Structure of the Group

BUSINESS REVIEW

Starting from the beginning of the financial year 2004, the global economy has been recovering

steadily, with the Computer Sector began in July 2003 and the Communication Sector follow up in

October 2003.

During the year, there were the usual short-term seasonal adjustments for different industrial

sectors. The demand for Computer Sector adjusted downward during December 2003 through

March 2004 after the Christmas season spending was over. The Communication Sector also started

to slow down around April 2004 after a continuous business growth of almost six months.

The ongoing Group’s strategy is to strive for equal market participation in each of the three key

industrial sectors, namely the Computer & Computer Peripherals, Communication, and Consumer

& Automotive. As a result, the Group was able to smooth out short-term seasonal slowdown in each

sector through the development of new businesses or by obtaining higher allocation of businesses

from the other sectors.

Through outsourcing of manufacturing as well as components sourcing in China, the Group was

able to enjoy higher growth as compared with other PCB manufacturers in higher cost countries.


12

Chairman’s Letter

During the year, we spent around

US$92.2 million in capital expenditure

and expanded our PCB production

capacity output to approximately

38 million sq.ft. per annum. This

capacity increase will bring much benefit

to the Group in the coming year.

Mr. Thomas Tang Koon YiuChairman and Managing Director

As a result, the Group’s revenue in the fourth quarter of the financial year 2004 grew further to

US$100.4 million, up 8.4% sequentially and up 41.2% year-on-year. The Group’s revenue for the

financial year 2004 was US$354.4 million, US$109.3 million or 44.6% higher than in the financial year

2003.

The Group’s net profit in the fourth quarter of the financial year 2004 grew to US$12.5 million,

representing growth of US$0.8 million and 6.7% over the third quarter of the financial year 2004. For

the financial year 2004, the Group’s net profit was US$40.6 million, representing a growth of

US$26.4 million and 185.7% over the financial year 2003.

Due to the increasing PCB demand in China, the Group’s shipments to the PRC had increased from

US$31.8 million (13.0% of Turnover) in the financial year 2002 to US$62.7 million (25.6% of Turnover)

in the financial year 2003 and US$105.2 million (29.7% of Turnover) in the financial year 2004.

As at 30 June 2004, our backlogs increased by around 21.2% over the third quarter of the financial

year 2004 and the Book-to-Bill ratio in the fourth quarter of the financial year 2004 stood at above

1.07 despite higher shipments in that quarter with the benefit of capacity expansion.

Although there were short-term adjustments in the Communication Sector, the supply and demand

for PCBs in China region remained relatively balance. As a result, the selling prices of PCB in the

fourth quarter of the financial year 2004 still held.

The average selling prices in the fourth quarter of the financial year 2004 dropped by 3.6% over the

third quarter of the financial year 2004 mainly due to a change in layer count mix following the

improvement in the Computer, Computer Peripherals, Consumer and Automotive Sectors.

The average selling prices for the financial year 2004 were higher than those in the financial year

2003 by around 3.0% primarily due to the improvement in layer count mix and the financial year

2004 average selling price level rebounded back to the third quarter of the financial year 2003

average selling price level.

The layer count mix in the fourth quarter of the financial year 2004 deteriorated slightly as

compared with the third quarter of the financial year 2004 due to Communication Sector slowdown,

2- to 4-layer products increased by around 3.1% and both 6-layer and 10-layer above products

decreased by 1.7% each.

For the financial year 2004, layer count mix had significantly improved due to improvement in

communication, notebook and higher-end server businesses. As a result, we gained shares on

microvias and 10-layer above PCBs by 3.3% and 6.2% while we lowered our reliance on 2- to 4-layer,

6- and 8-layer products by around 5.3% and 2.8% and 1.4% respectively.


13

In view of demands arising from new business developments, the Group had to expand capacity

rapidly. We spent around US$92.2 million in capital expenditure and reached around 760K sq ft of

PCB output per week as at 30 June 2004, a jump of 20% when compared to 30 June 2003. Raw

material supply was tight, prices moved up further in the fourth quarter of the financial year 2004

but their effects in the financial year 2004 as a whole were mitigated by corresponding increases in

selling prices.

In the opinion of the Directors, no item, transaction or event of material or unusual nature has

occurred during the period from 1 July 2004 to the date of this report that would materially affect

the results of the Company and/or the Group in the financial year in which this announcement is

made.

FUTURE PROSPECTS

Although recent economic indices indicate that the global economy is generally healthy, there are

risks of higher oil prices and increases in interest rates which will impact global growth adversely.

With positive growth in the global PCB demand, coupled with continuous outsourcing of

manufacturing and components sourcing in China, the PCB industry in China region has been

projected by PCB industry analyst, BPA to have CAAGR (compounded average annual growth rate)

of 18% from 2004 to 2007 onwards, as compared with the global CAAGR of around 7.6% projected

by the same organisation — BPA.

While the Group expects to enjoy the benefits of growth in regional business opportunities, it has

to face and manage various regional challenges, such as power shortage, increases in people and

overhead costs adjusting to economic policies for regulating the over-heated economy in China.

After gradually phasing in an additional 6 million sq ft PCB annual capacity in the financial year

2004, the Group should have the full benefit from this capacity increase in the financial year 2005.

The focus in the financial year 2005 will be on expanding inner-layer capacities rather than outer-

layer capacities in view of more HDI and higher layer count businesses being developed or in stage

of mass volume ramp-up.

Raw material supply is expected to remain cyclical and prices will further trend upward in the short

term of 3 to 6 months. However, the new raw material capacity increase arising from mass volume

production in around late second quarter of the financial year 2005 will stabilise prices by the third

quarter of the financial year 2005.

The first quarter business is normally slower due to summer vacation, however the bookings up to

the announcement date are still holding well.


14

Chairman’s Letter

Barring any unforeseen circumstances, the Directors expect the Group’s performance in the coming

quarter may be slightly slower than that of the fourth quarter of the financial year 2004 due to

seasonal volatility but the Group’s performance for the financial year 2005 is expected to further

improve over the financial year 2004.

By order of the Board



23 August 2004


15

INTRODUCTION

Elec & Eltek International Company Limited (the ‘‘Company’’) is committed to complying with the

Code of Corporate Governance (the ‘‘Code’’) issued by the Corporate Governance Committee in

2001 so as to promote greater transparency and protection of shareholders’ interests. This

Statement describes the corporate governance policies and practices of the Company during the

financial year ended 30 June 2004.

BOARD MATTERS

Board of Directors’ (the ‘‘Board’’) Conduct of Its Affairs

The Board oversees the business of the Company and every Director is expected to exercise

objective judgment on the Company’s affairs and to always consider the interests of the Company

and its subsidiary companies (the ‘‘Group’’). The Board reviews and discusses reports by

management on the performance, plans and prospects of the Group.

In addition to its general oversee of management, the Board also performs a number of specific

functions, including:

(i) reviewing, approving and monitoring fundamental financial and business strategies and major

corporate actions;

(ii) approving major acquisitions or disposals, corporate or financial restructuring, issuance of

shares and other equity or debt instruments, payment of dividends and other distribution to

shareholders;

(iii) assessing risks facing the Group and reviewing and implementing appropriate measures to

manage such risks;

(iv) selecting and evaluating the performance and compensation of key office holders;

(v) approving nominations to the Board;

(vi) reviewing and endorsing the recommended framework of remuneration for the Board and key

executives by the Remuneration Committee; and

(vii) assuming overall responsibility for corporate governance.

To facilitate effective management, certain functions have been delegated by the Board to various

Board Committees. Each Board Committee operates under clearly defined terms of reference. The

Chairman of the respective Board Committees will report to the Board the outcome of the Board

Committee meetings.


18

Statement on Corporate Governance

BOARD MATTERS (continued)

Board Composition and Balance

Presently, the Board consists of eleven Directors, eight of whom are Non-Executive Directors.

The Board has reviewed its composition of Directors and is satisfied that such composition isappropriate. The Board will continually examine its size, and with a view to determining the impactof the number of Directors upon the effectiveness of the Board, maintain an appropriate size whichwill facilitate effective decision-making.

The Board examines the independence of its Directors based on the criterion of independencedefined in the Code. An independent director is one who has no relationship with the Company, itsrelated companies or its officers that could interfere, or be reasonably perceived to interfere withthe exercise of the Director’s independent business judgement. The Board consists of fourIndependent Non-Executive Directors.

Role of Chairman and Chief Executive Officer

The Chairman bears responsibility for the workings of the Board and ensures the integrity andeffectiveness of the governance process of the Board. The Chief Executive Officer (‘‘CEO’’) togetherwith the Chairman are responsible for ensuring the execution of strategic goals and the day-to-daymanagement of the Group.

The Chairman and the CEO’s performance, appointment to the Board and remuneration packageare being reviewed periodically by the Nomination Committee and Remuneration Committeerespectively. The majority of the members of these committees are Independent Non-ExecutiveDirectors of the Company.

Board Committees

To give effect to the discharge of its responsibilities, the Board has established four BoardCommittees, namely, the Strategic Committee, the Nomination Committee, the RemunerationCommittee and the Audit Committee. These committees have written mandates and operatingprocedures which are reviewed periodically.

Strategic Committee

The Strategic Committee comprises Eugene Lee (Chairman), David So Cheung Sing, Marcus TsangMing Pui and Wilson Tam Kam Ho.

During the financial year and up to the date of this report, the Strategic Committee assists theBoard in reviewing and evaluating issues and proposals that concern the Group’s annual budget,businesses, policies and investment matters. Following these reviews, evaluations anddeliberations, the Strategic Committee submits its recommendations to the Board to set thestrategic direction of the Group.


19


Nomination Committee

The Nomination Committee comprises Au Eng Kok (Chairman), Keith Tay Ah Kee and Marcus Tsang

Ming Pui. The Chairman and Keith Tay Ah Kee are Independent Non-Executive Directors.

During the financial year and up to the date of this report, the Nomination Committee performed,

inter alia, the following functions:

(i) evaluated the independence of the Directors on an annual basis; and ensured that at least

one-third of the Board is made up of independent directors;

(ii) reviewed and recommended to the Board, the retirement and re-election of directors in

accordance with the Company’s Articles of Association at each annual general meeting;

(iii) evaluated the Board’s performance as a whole as well as contribution of each Director to the

effectiveness of the Board; and

(iv) where a Director has multiple board representations, to assess if such Director is able to and

has been adequately carrying out his duties as a Director of the Company.

Remuneration Committee

The Remuneration Committee comprises Au Eng Kok (Chairman), Keith Tay Ah Kee and Johnny Ng

Ho Kin. The Chairman and Keith Tay Ah Kee are Independent Non-Executive Directors.

The Remuneration Committee will review and recommend remuneration policies and packages for

key executives. The review will cover all aspects of remuneration, including but not limited to

salaries, allowances, bonuses, options and benefits-in-kind. In conducting its review, the Committee

will give due regard to the financial and commercial health and business needs of the Group.

Where appropriate, external consultants will be appointed to assist the Committee in the review.

The Committee’s recommendations will be submitted for endorsement by the entire Board.

The Remuneration Committee has a set of terms of reference defining its scope of authority. During

the financial year and up to the date of this report, the Remuneration Committee performed, inter

alia, the following functions over 2 meetings:

(i) to ensure the Committee’s recommendations have been made in consultation with the

Chairman of the Board and submitted for endorsement by the entire Board; and

(ii) to liaise with the Board in relation to the preparation on executive compensation for inclusion

in the Company’s Annual Report as required.

Board Membership

The Board endeavours to ensure that there is an appropriate mix of core competencies and

collective experience to provide the necessary knowledge and objective judgment to meet its

responsibilities.


20



Board Membership (continued)

The Board benefits from the depth and breath of experience each Director possesses, collectively

providing core competencies in finance, industry, business and management.

The profiles of Board of Directors and core management are set forth on pages 28–32 of this Annual

Report.

In accordance with the Code and the Company’s Articles of Association, each director will have to

retire at least once every three years by rotation and all newly appointed directors will have to retire

at the next annual general meeting. The retiring directors are eligible to offer themselves for re-

election. The Nomination Committee had recommended the re-appointment of four directors,

David So Cheung Sing, Wilson Tam Kam Ho, Johnny Ng Ho Kin and Claudia Heng Nguan Leng, at

the forthcoming Annual General Meeting. The Board has also accepted the Nomination

Committee’s recommendation, and David So Cheung Sing, Wilson Tam Kam Ho, Johnny Ng Ho

Kin and Claudia Heng Nguan Leng will be offering themselves for re-election.

Board Performance

The Board has used its best efforts to ensure that directors appointed to the Board possess the

background, experience and knowledge in technology, business, finance and management skills

critical to the Group’s business to enable the Board to make sound and well-considered decisions.

The Nomination Committee has identified a set of performance criteria that is linked to long-term

shareholders’ value, to be used for evaluating the effectiveness of the Board as well as the

performance of individual director. The set of performance criteria includes but is not limited to the

comparison of the Company’s share price performance against appropriate indices of SGX-ST.

Other performance criteria that may be used include return on assets, return on equity, return on

investment and economic value added.

Access to Information

The management provides the Board and its various Board Committees with adequate and timely

information and reports prior to their respective meetings and on an on-going basis.

Directors have separate and independent access to the Company’s senior management and the

Company Secretaries for additional information. In addition, should Directors, whether as a group

or individually, need independent professional advice, the Management will, upon direction by the

Board, appoint a professional advisor selected by the group or the individual Director, to render the

advice. The cost of such professional advice will be borne by the Company.

At least one of the Company Secretaries will attend Board meetings, particularly the meetings for

reviewing the draft announcements of the Group’s quarterly and full year results, and is responsible

for ensuring that Board procedures are followed. Together with the management, the Company

Secretaries are responsible for ensuring compliance with the Companies Act (Chapter 50,

Singapore Statutes) and all other SGX-ST rules and regulations applicable to the Company.


21


Remuneration Matters

The Group’s remuneration policy is to provide compensation packages at rates which rewardsuccessful performance and the enhancement of shareholder value and to attract, retain andmotivate employees and directors.

Remuneration and Benefits of Directors and Top Five Executives

1. The following table shows breakdown of Directors’ remuneration (in percentage terms) for thefinancial year ended 30 June 2004 :

Name of Director Salary Bonus Fees#Consultancy

Fees@Other

Benefits Total*% % % % % %

Thomas Tang Koon Yiu 98 — 2 — — 100Canice Chung Tai Keung 35 6 2 — 57 100Claudia Heng Nguan Leng 70 5 4 — 21 100David So Cheung Sing — — 29 71 — 100Marcus Tsang Ming Pui — — 29 71 — 100Wilson Tam Kam Ho — — 29 71 — 100Johnny Ng Ho Kin — — 49 51 — 100Au Eng Kok — — 100 — — 100Keith Tay Ah Kee — — 100 — — 100Eugene Lee — — 100 — — 100Kenneth Shim Hing Choi — — 100 — — 100

# subject to approval by the shareholders at each annual general meeting.

@ consultancy fees refer to fees paid to David So Cheung Sing, Marcus Tsang Ming Pui, Wilson Tam Kam Ho and

Johnny Ng Ho Kin in addition to their directors’ fees for their provision of industry specific advice and guidance.

* excluding share options which are disclosed in the Report of the Directors.

The Directors’ remuneration by bands are disclosed in note 5 to the financial statements.

2. The remuneration paid to the top five key executives who are not Directors of the Companyfall within the remuneration band of S$250,000 to S$500,000.

3. During the financial year under review, no employee whose annual remuneration exceededS$150,000 was related to the Chairman and the CEO or other Directors of the Company.

Accountability and Audit

In presenting the financial statements announcements to shareholders, it is the aim of the Board toprovide the shareholders with a balanced and comprehensible assessment of the Group’s positionand prospects. Management will provide the Board with appropriately detailed managementaccounts of the Group’s performance, position and prospects.


22



Audit Committee

The Audit Committee comprises Keith Tay Ah Kee (Chairman), Au Eng Kok and Eugene Lee who all

are Independent Non-Executive Directors.

The Audit Committee has written terms of reference approved by the Board. During the financial

year and up to the date of this report, the Audit Committee met with the management, internal

auditor and statutory auditors of the Company and performed, inter alia, the following functions

over 4 meetings:

(i) reviewed the annual audit plan of the Company’s statutory auditors and the results of their

examination of the financial statements, as well as their evaluation of the Group’s internal

accounting controls and managements’ responses to their recommendations;

(ii) recommended to the Board, subject to shareholders’ approval, the re-appointment of the

Company’s statutory auditors;

(iii) reviewed and approved internal audit plans and reviews results of internal audits and

management’s responses to the internal auditors’ recommendations;

(iv) reviewed the Group’s interested person transactions; and

(v) reviewed the annual and quarterly financial statements and announcements to shareholders

before submission to the Board.

In addition, the Audit Committee reviewed all non-audit services provided by the statutory auditors

during the year and is of the opinion that the provision of such services will not affect the

independence of the statutory auditors.

The Audit Committee has full access to and co-operation from the Company’s management and

the statutory and internal auditors and has full discretion to invite any Director or executive officer

to attend its meetings. The statutory and internal auditors have unrestricted access to the Audit

Committee.

Internal Controls

The Group’s internal controls are designed to provide reasonable assurance that assets are

safeguarded, that proper accounting records are maintained, and that financial information used

within the business and for publication are reliable.

The statutory auditors, in the course of conducting their annual audit procedures on the statutory

financial statements, also reviewed the Group’s significant internal financial controls to the extent of

their scope as laid out in their audit plan. Any material non-compliance and internal financial control

weaknesses noted by the auditors and their recommendations are reported to the Audit

Committee. The management would then take action to rectify the weakness highlighted.


23


Internal Audit

The Group is in the process of building up the resources of its internal audit function which was set

up in previous financial year to report the conclusions and recommendations of their audit findings

to management and the Audit Committee.

The internal audit function would report to the Audit Committee and assist the Board in monitoring,

and managing business risks and internal controls. The Audit Committee reviews and approves the

internal audit plan. Reports from the internal auditors are tabled at meetings of the Audit

Committee, where applicable.

Communication with Shareholders

The Board is mindful of its obligations to provide timely and fair disclosure of material information

to its shareholders. Financial results, annual reports, circulars and other announcements are

released through MASNET, and annual reports and circulars are sent to all shareholders by post.

The Board has released its quarterly financial results through MASNET from financial year 2004

onwards.

Price sensitive information is first publicly released, either before the Company meets with any

group of investors or investment analysts or simultaneously with such meetings, if necessary.

Notices of shareholders’ general meetings are advertised in the newspapers. Shareholders are

encouraged to communicate their views and ask questions regarding the Group and resolutions

being proposed during shareholders’ meetings.

Under the Company’s Articles of Association, a shareholder of the Company is allowed to appoint

one or two proxies to attend and vote at all shareholders’ meetings on his/her behalf.

The statutory auditors and the Chairman of the Audit Committee, Nomination Committee and/or

Remuneration Committee are present at shareholders’ meetings to assist the Directors in

addressing any queries by shareholders.

Interested Person Transactions

The Company has adopted an internal policy in respect of any transaction with interested persons

and has set out the procedures for review and approval of the Company’s interested person

transactions. For the current financial year, the amount of interested person transactions to be

disclosed pursuant to Rule 920(1)(a)(ii) of the Listing Manual of the Singapore Exchange Securities

Trading Limited was not more than S$100,000.


24



Internal Code on Dealing in Securities

The Company has devised and adopted its own Internal Code on Securities Transaction. Apart fromsetting out the implications of insider trading, the Internal Code also provides a comprehensivesystem of controls in monitoring the dealing in the Company’s securities by the employees, inparticular, the identification of the parties subject to the control system and the prompt reportingof such dealings by the management to the Board.

Directors’ Attendance from the Date of Last Annual Report to the Date of this Annual Report

Board Committee

Directors BoardAudit

CommitteeNominationCommittee

RemunerationCommittee

StrategicCommittee

Total number ofmeetings held 5 4 1 2 6

Thomas Tang Koon Yiu 5 — — — —Canice Chung Tai Keung 5 — — — —Claudia Heng Nguan Leng 5 — — — —David So Cheung Sing 5 — — — 6Marcus Tsang Ming Pui 5 — — — 6Wilson Tam Kam Ho 5 — — — 6Johnny Ng Ho Kin 4 — — 1 —Au Eng Kok 5 4 1 2 —Keith Tay Ah Kee 5 4 1 2 —Eugene Lee 5 4 — — 6Kenneth Shim Hing Choi 5 — — — —

On behalf of the Board

Thomas Tang Koon YiuChairman and Managing Director

Canice Chung Tai KeungChief Executive Officer

23 August 2004


25

The profiles of Board of Directors and core management who held office during the current

financial year and up to the date of this report are set forth below:

BOARD OF DIRECTORS


Thomas Tang Koon Yiu joined the Elec & Eltek Group as Chairman and Managing Director on 26

March 2003. Together with the other Board members, he is responsible for setting the Group’s

mission and objectives, and developing business and management strategies. Mr. Tang is an

industrialist with profound experience in diverse industries such as computers and computer

peripherals, critical components, office automation, consumer electronics, metals and plastics. He

was also appointed as managing director and president of various corporations (including multi-

national corporations). Before joining the Elec & Eltek Group, he was the Executive Director of

Hong Kong Productivity Council since 1997.

Mr. Tang also serves as chairman, other leadership and advisory positions in various professional

and industry associations and universities. He holds a Master of Science Degree in Industrial

Engineering & Administration. He was awarded the Young Industrialist Award in 1990 and

Outstanding PolyU Alumni Award in 2001.


Canice Chung Tai Keung joined the Elec & Eltek Group in 1991. In his capacity as the Chief

Executive Officer and an Executive Director of the Company, he is responsible for the overall

operations of the printed circuit board business.

Mr. Chung is the Vice Chairman of Hong Kong Printed Circuit Association Limited which aims at

promoting and protecting the rights and interests of the printed circuit industry.


Claudia Heng Nguan Leng joined the Elec & Eltek Group in 1994 and was appointed to the Board in

July 1995. In her current capacity as Vice President — Group Finance, and Company Secretary of the

Company, she is responsible for the full spectrum of financial, management, cost accounting, and

statutory compliance functions pertaining to the Group.

Ms. Heng is a Certified Public Accountant and a member of the Institute of Certified Public

Accountants in Singapore. She is also a member of the Singapore Institute of Directors.


28

Profiles of Board of Directors and Core Management

BOARD OF DIRECTORS (continued)


David So Cheung Sing is one of the founders of the Elec & Eltek Group and the former Chairman

and Executive Director of the Company. Mr. So is now a Non-Executive Director and Senior

Consultant of the Company responsible for giving advice and guidance on the strategic thinking

and direction of the Company.

Mr. So is the Honorary Chairman of Hong Kong Critical Components Manufacturers Association, the

Permanent Honorary President of Friends of Hong Kong Association Limited and Director of The

Chinese Manufacturers’ Association of Hong Kong.

Mr. So is also a member of the Strategic Committee and the Employees’ Share Option Scheme

Committee.


Marcus Tsang Ming Pui is one of the founders of the Elec & Eltek Group and the former Deputy

Chairman, Managing Director and Executive Director of the Company. Mr. Tsang is now a Non-

Executive Director and Senior Consultant of the Company responsible for giving advice and

guidance on the strategic thinking and direction of the Company.

Mr. Tsang is also a member of the Strategic Committee, the Nomination Committee and the

Employees’ Share Option Scheme Committee.

Wilson Tam Kam Ho

Wilson Tam Kam Ho is one of the founders of the Elec & Eltek Group and the former Deputy

Chairman and Executive Director of the Company. Mr. Tam is now a Non-Executive Director and

Senior Consultant of the Company responsible for giving advice and guidance on the strategic

thinking and direction of the Company.

Mr. Tam is also a member of the Strategic Committee and the Employees’ Share Option Scheme

Committee.

Johnny Ng Ho Kin

Johnny Ng Ho Kin joined the Elec & Eltek Group in 1972 and is the former Executive Director and

Senior Vice President — Corporate Control and Audit of the Company. Mr. Ng is now a Non-

Executive Director and Senior Consultant of the Company responsible for giving advice and

guidance on the strategic thinking and direction of the Company.

Mr. Ng is also a member of the Remuneration Committee.


29

BOARD OF DIRECTORS (continued)

Au Eng Kok

Au Eng Kok was appointed as an Independent Non-Executive Director of the Company in August

1994. He serves as Chairman of the Nomination Committee and Remuneration Committee. He is

also a member of the Audit Committee.

Mr. Au has more than 35 years experience in engineering planning, construction and real estate

development and had held directorships in a number of Singapore Government-linked

corporations.

Keith Tay Ah Kee

Keith Tay Ah Kee was appointed an Independent Non-Executive Director of the Company in August

1994. He is a member of the Nomination Committee and Remuneration Committee. He is also the

Chairman of the Audit Committee.

Mr. Tay’s career in the local and international financial industry spans over 30 years. He was the

President of the Institute of Certified Public Accountants of Singapore from 1982 to 1992 and was

the Singapore Representative on the Council of the International Federation of Accountants from

1987 to 1990. Mr. Tay was Chairman and Managing Partner of KPMG Peat Marwick from 1984 to

1993. Mr. Tay presently serves on the boards of several public listed companies in Singapore and is

a board member of the Singapore International Chamber of Commerce, of which he was Chairman

from 1995 to 1997. He is also Vice Chairman of the Singapore Institute of Directors.

Eugene Lee

Eugene Lee was appointed an Independent Non-Executive Director of the Company in March 2003.

He serves as Chairman of the Strategic Committee and is also a member of the Audit Committee.

Mr. Lee was in international and merchant banking in New York, London, Hong Kong and Bangkok

for over 15 years, and held senior positions with Esprit Far East Limited, Chase Manhattan Bank,

Wardley Limited and Finance One PCL. Most recently he has been a company director, financial

and business development adviser, and interim Chief Executive Officer in Asia and the United

States.

Mr. Lee graduated from the Massachusetts Institute of Technology, and holds graduate degrees

from Stanford University and the Harvard Business School.


Kenneth Shim Hing Choi was appointed an Independent Non-Executive Director of the Company in

March 2003.

Mr. Shim is a veteran banker with over 33 years of experience in commercial banking. He is the

General Manager in DBS Bank Ltd (Guangzhou Branch).


30


CORE MANAGEMENT

Vice President — Operation I

Leung Tin Po joined the Elec & Eltek Group as Production Supervisor in 1988. In his current capacity

as Vice President — Operation I, Mr. Leung is responsible for the overall management of the PCB

fabrication plants located in Kaiping plant phases I & II and Guangzhou plant phases I, II and V.

Mr. Leung has got over 20 years of experience in the electronics industry. Before taking up his

current position, he once served in various management positions in the manufacturing plants of

the Group in Hong Kong, the PRC and Thailand.

Mr. Leung holds a Diploma in Business Management from Hong Kong Polytechnic University.

Vice President — Operation III

Li Muk Kam, Thomas, first joined the Elec & Eltek Group as Senior Production Supervisor in

manufacturing operation in 1982. In 1998, Mr. Li was assigned to sales operation as Vice President

— Sales responsible for the Europe Region. He is now the Vice President — Operation III

responsible for the overall management of the PCB fabrication plants located in Hong Kong,

Guangzhou plant phases III & IV and Kaiping plant phase III.

Mr. Li holds a Higher Certificate in Mechanical Engineering from Hong Kong Polytechnic University

and a Master Degree in Manufacturing Systems Engineering from University of Warwick.

General Manager — Material

Chan Chi Yin first joined the Elec & Eltek Group as Process Engineer in 1988. Starting from 1992, Mr.

Chan has been involved in plant management and is now the General Manager — Material

responsible for the overall management of the Material Division of the Group, including the

operation of two laminate manufacturing plants in Shenzhen and Thailand.

Mr. Chan holds a Degree in Applied Science from Hong Kong Baptist University and a Master

Degree in Information Systems Management from University of Stirling School of Management.

General Manager — Nanjing Plant, PRC

Ye Yun Shui joined the Elec & Eltek Group as Vice President — Marketing for the PRC Region in

1992. In his current position as General Manager — Nanjing Plant, Mr. Ye is responsible for the

overall management of the two PCB fabrication plants in Nanjing.

Prior to joining the Elec & Eltek Group, Mr. Ye possessed 25 years of production management

experience in the PCB industry. He holds a Degree in Material Science (Non-metallic) and

Manufacturing Engineering in Xi An Xi Bei University in the PRC.


31

CORE MANAGEMENT (continued)

Vice President — Thailand Operation

Somkit A Naksinchapon joined the Elec & Eltek Group as Production Manager in 1989. He is now

the Vice President and Director of Thailand Operation responsible for the overall operations of the

fabrication plant and material plant in Thailand.

Prior to joining the Elec & Eltek Group, Mr. Somkit possessed 10 years of experience in engineering,

quality management and production in the electronics industry. He holds a Degree in

Telecommunication from King Mongkut Institute of Technology and a Master Degree in Business

Administration from National Institute of Development & Administration.

Chief Financial Officer

Cheung Po King, Anna, joined the Elec & Eltek Group in January 2003 as Chief Financial Officer

responsible for the functions of Finance, Human Resource, Legal & Company Secretarial,

Information Technology, Procurement and Shipping of the Group.

Prior to joining the Elec & Eltek Group, Miss Cheung has got over 11 years of experience in financial

planning and general management in manufacturing and trading, out of which 7 years were with

publicly listed companies.

Miss Cheung holds a Bachelor of Science Degree and is a fellow member with the Institute of

Chartered Accountant of England and Wales.

Vice President — Group Sales

Chan Sai Kit, Philip, joined the Elec & Eltek Group as Sales Manager in 1989 and then served as the

regional sales head responsible for the Europe and then America region. In his current position as

Vice President — Group Sales, Mr. Chan is responsible for formulating sales plans and overseeing

the sales activities of all regions, managing the strategic issues of the Group’s pricing policy and

corporate accounts.

Mr. Chan holds a Bachelor Degree in Civil Engineering from Coventry (Lanchester) Polytechnic in

the UK.

Vice President — Group Quality Assurance

Ho Chien Lung, Jim, joined the Elec & Eltek Group in 2003 as Vice President — Group Quality

Assurance and is responsible for the development and implementation of the Group’s quality

system and policy and overseeing quality assurance function of all plants.

Prior to joining the Elec & Eltek Group, Mr. Ho has got over 11 years of experience in

manufacturing, engineering and quality management. Mr. Ho holds a Bachelor of Science Degree

in Electrical Engineering from University of Utah and a Master of Science Degree in Electrical

Engineering from University of Portland in the US.


32


The Directors of Elec & Eltek International Company Limited (the ‘‘Company’’) are pleased to

present their report to the members together with the audited consolidated financial statements of

the Company and its subsidiary companies (the ‘‘Group’’) and audited balance sheet and statement

of changes in equity of the Company for the financial year ended 30 June 2004.

DIRECTORS OF THE COMPANY

The names of the Directors of the Company in office at the date of this report are:






Wilson Tam Kam Ho

Johnny Ng Ho Kin

Au Eng Kok

Keith Tay Ah Kee

Eugene Lee


DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The following Directors who held office at the end of the financial year have, according to the

register required to be kept under Section 164 of the Companies Act (Chapter 50, Singapore

Statutes) (the ‘‘Act’’), interests in the share capital of the Company, its holding company, Elec &

Eltek International Holdings Limited (‘‘EEIH’’), and related corporations (other than wholly-owned

subsidiary companies) as stated below:

Company

Ordinary shares of S$0.80 each

Shareholdings registered in

the name of or beneficially

held by directors

Shareholdings in which

directors are deemed to

have an interest

Name of Director At 1.7.2003 At 30.6.2004 At 1.7.2003 At 30.6.2004

Thomas Tang Koon Yiu — — — 40,000^Canice Chung Tai Keung 1,564,800 1,720,800 — —

Claudia Heng Nguan Leng 229,000 229,000 — —

David So Cheung Sing — — 75,617,959 75,617,959

Marcus Tsang Ming Pui — — 76,157,959 76,157,959

Wilson Tam Kam Ho — — 75,917,959 75,917,959

Johnny Ng Ho Kin 386,400 386,400 — —

Keith Tay Ah Kee 9,960 9,960 — —


33

Report of the Directors

DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES (continued)

EEIH

Ordinary shares of HK$0.10 each

Shareholdings registered in

the name of or beneficially

held by directors

Shareholdings in which

directors are deemed to

have an interest

Name of Director At 1.7.2003 At 30.6.2004 At 1.7.2003 At 30.6.2004

Thomas Tang Koon Yiu — — 975,000^ 975,000^David So Cheung Sing — 5,000,000 544,558,159@ 546,058,159@

Marcus Tsang Ming Pui 27,632,775 27,632,775 521,921,359# 521,921,359#

Wilson Tam Kam Ho 12,200,000 12,200,000 521,921,359# 521,921,359#

Johnny Ng Ho Kin 13,878,104 18,878,104 415,800* 415,800*

Eugene Lee — 5,000,000 — —

Kenneth Shim Hing Choi 240,000 240,000 — —

^ These shares are held by the wife of Thomas Tang Koon Kiu.

@ 1,636,800 (2003 : 1,636,800) shares are held by the wife of David So Cheung Sing. 521,921,359 (2003 : 521,921,359)

shares are held by Elec & Eltek Investments Limited (‘‘EEIL’’). The balance of 22,500,000 (2003 : 21,000,000) shares are

held by Plenty Gain Limited.

# These shares are held by EEIL.

* These shares are held by the wife of Johnny Ng Ho Kin.

At the balance sheet date, certain Directors of the Company had the following interests in the share

capital of EEIL, which in turn held 521,921,359 shares in EEIH:

Name of shareholder

Percentage

shareholdings

in EEIL

%

Plenty Gain Limited 30.97

Champion Oriental Inc. 29.98

Goldful Holdings Limited 29.98

Expert Gold Inc. 9.07

100.00

Plenty Gain Limited is ultimately 100% owned by a discretionary trust, the eligible beneficiaries of

which include the family members of David So Cheung Sing, other than David So Cheung Sing

himself.


34


DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES (continued)

Champion Oriental Inc. holds the shares of EEIL as trustee for a unit trust, of which 99.9999948% of

the units are owned by a discretionary trust, the eligible beneficiaries of which include the family

members of Marcus Tsang Ming Pui, other than Marcus Tsang Ming Pui himself, with the remaining

units being owned by Marcus Tsang Ming Pui directly.

Goldful Holdings Limited is ultimately 100% owned by a discretionary trust, the eligible

beneficiaries of which include the family members of Wilson Tam Kam Ho, other than Wilson

Tam Kam Ho himself.

Expert Gold Inc. holds the shares of EEIL as trustee for a unit trust, of which 99.99998% of the units

are owned by a discretionary trust, the eligible beneficiaries of which include the family members of

Johnny Ng Ho Kin, other than Johnny Ng Ho Kin himself.

There was no change in the above-mentioned interests between the end of the financial year and 21

July 2004 except as disclosed below:

(i) David So Cheung Sing’s direct interest in EEIH increased to 8,000,000 ordinary shares.

(ii) Eugene Lee’s direct interest in EEIH decreased to 1,250,000 ordinary shares.

(iii) Wilson Tam Kam Ho’s deemed interests in EEIH increased to 525,671,359 ordinary shares as a

result of the further acquisition of 3,750,000 ordinary shares by Goldful Holdings Limited.

Apart from interests in the Company’s share capital as disclosed above, the following Directors

hold options to subscribe for unissued ordinary shares of S$0.80 each in the Company, pursuant to

the Company’s employees’ share option schemes as described under the ‘‘Share Options’’ section

below:

Options to subscribe for

unissued ordinary shares of

S$0.80 each of the Company

Name of Director At 1.7.2003 At 30.6.2004

At subscription price of US$3.100

Canice Chung Tai Keung 156,000 —

Claudia Heng Nguan Leng 36,000 —

Johnny Ng Ho Kin 120,000 —

At subscription price of US$1.450

Thomas Tang Koon Yiu 1,400,000 1,400,000

Subsequent to the end of the current financial year, 1,400,000 options at subscription price of

US$2.250 were granted on 19 July 2004 to Thomas Tang Koon Yiu upon his acceptance.


35

ARRANGEMENTS FOR DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

Except as disclosed above, neither at the end of the financial year, nor at any time during the

financial year, did there subsist any arrangement to which the Company was a party whose object

was to enable the Directors to acquire benefits by means of the acquisition of shares in or

debentures of the Company or any other body corporate.

DIRECTORS’ INTERESTS IN CONTRACTS

Except as disclosed in the financial statements, since the end of the previous financial year, no

Director has received or has become entitled to receive benefits by reason of contracts made by the

Company or a related body corporate with the Director, or with a firm of which the Director is a

member, or with a company in which the Director has a substantial financial interest required to be

disclosed under section 201(8) of the Act.

SHARE OPTIONS

At the end of the financial year, there were in aggregate 1,400,400 (2003 : 2,233,200) outstanding

options issued under the 1999 Elec & Eltek Employees’ Share Option Scheme (the ‘‘1999 Scheme’’)

and the 2002 Elec & Eltek Employees’ Share Option Scheme (the ‘‘2002 Scheme’’) (collectively the

‘‘Schemes’’) to subscribe for a total of 1,400,400 (2003 : 2,233,200) unissued ordinary shares of S$0.80

each in the Company.

There were no options granted under the 2002 Scheme in the current financial year.

The details of the outstanding options are as follows:

Date of grant

Balance as at

1 July 2003 Exercised Lapsed

Balance as at

30 June 2004

Subscription

price Expiry date

US$

19 April 1999 832,800 (174,000) (658,800) — 3.100 18 April 2004

25 May 2000 400 — — 400 1.308 24 May 2005

7 May 2003 700,000 — — 700,000 1.450 6 May 2006

7 May 2003 700,000 — — 700,000 1.450 6 May 2007

2,233,200 (174,000) (658,800) 1,400,400

Subsequent to the end of the current financial year, the Company granted 1,400,000 share options

to Thomas Tang Koon Yiu, Director of the Company, pursuant to the 2002 Scheme to subscribe for

1,400,000 ordinary shares of S$0.80 each in the Company at a discounted subscription price of

US$2.250 per share. This grant represents more than 5% of the total number of the options available

under the 2002 Scheme.

The Schemes are administered by the Employees’ Share Option Scheme Committee comprising

David So Cheung Sing, Marcus Tsang Ming Pui and Wilson Tam Kam Ho.


36


AUDIT COMMITTEE

The members of the Audit Committee (the ‘‘Committee’’) at the date of this report are as follows:

Keith Tay Ah Kee (Chairman)

Au Eng Kok

Eugene Lee

The members of the Committee are independent of management.

The Committee performed the functions specified in Section 201B of the Act. In performing its

functions, the Committee reviewed the overall scope of the audit and the assistance given by the

Group’s officers to the statutory and internal auditors. It met with the statutory and internal auditors

to discuss the results of their examinations and their evaluation of the Group’s system of internal

accounting controls.

The Committee also reviewed the financial statements of the Company and the consolidated

financial statements of the Group for the financial year ended 30 June 2004 as well as the statutory

auditors’ report thereon before their submission to the Board of Directors (the ‘‘Board’’) for

approval.

The Committee reviewed the procedures set up by the Group and the Company to identify, report

and, where necessary, seek appropriate approval for interested person transactions.

The Committee has reviewed the non-audit fees paid to the statutory auditors and are of the

opinion that the fees paid would not impair their independence.

The Committee recommends to the Board the re-appointment of Ernst & Young as statutory

auditors at the forthcoming Annual General Meeting of the Company.


37

STATUTORY AUDITORS

Ernst & Young, Certified Public Accountants, have expressed their willingness to accept re-

appointment as statutory auditors of the Company.






23 August 2004


38


We, Thomas Tang Koon Yiu and Canice Chung Tai Keung, being two of the Directors of Elec & Eltek

International Company Limited, do hereby state that, in the opinion of the Directors:

(a) the balance sheets, consolidated profit and loss account, statements of changes in equity and

consolidated statement of cash flow together with the notes thereto, are drawn up so as to

give a true and fair view of the state of affairs of the Group and of the Company as at 30 June

2004 and of the results of the business of the Group, and changes in equity of the Group and

the Company, and cash flow of the Group for the financial year then ended; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will

be able to pay its debts as and when they fall due.






23 August 2004


39

Statement by Directors Pursuantto Section 201(15) of the Companies Act, Cap. 50

To the Members of


We have audited the accompanying financial statements of Elec & Eltek International Company

Limited (the ‘‘Company’’) and its subsidiary companies (the ‘‘Group’’) set out on pages 41 to 74 for

the year ended 30 June 2004. These financial statements are the responsibility of the Company’s

directors. Our responsibility is to express an opinion on these financial statements based on our

audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards

require that we 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 the directors, as well as

evaluating the overall financial statement presentation. We believe that our audit provides a

reasonable basis for our opinion.

In our opinion,

(a) the consolidated financial statements of the Group and the balance sheet and statement of

changes in equity of the Company are properly drawn up in accordance with the provisions of

the Companies Act (Chapter 50, Singapore Statutes) (the ‘‘Act’’) and Singapore Financial

Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of

the Company as at 30 June 2004 and the results of the Group, changes in equity of the Group

and of the Company and cash flows of the Group for the financial year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company and by

those subsidiary companies incorporated in Singapore of which we are the auditors have been

properly kept in accordance with the provisions of the Act.

ERNST & YOUNG

Certified Public Accountants

Singapore

23 August 2004


40

Statutory Auditors’ Report

2004 2003

Note US$’000 US$’000

Sale of goods 4 354,388 245,080

Cost of sales (270,808) (197,625)

Gross profit 83,580 47,455

Other revenue

Interest income 162 71

Costs and expenses

Distribution and selling costs (15,150) (13,160)

Administrative costs (19,968) (15,325)

Other operating expenses (1,063) (73)

Profit from operating activities 5 47,561 18,968

Interest expense (1,155) (995)

Exceptional item 6 — (615)

Profit before taxation 46,406 17,358

Taxation 7 (3,403) (1,360)

Profit after taxation 43,003 15,998

Minority interests (2,408) (1,788)

Profit attributable to shareholders 40,595 14,210

Earnings per share: 8 United States

cents

United States

cents

— basic 27.79 9.73

— diluted 27.67 9.73

The accounting policies and explanatory notes on pages 46 to 74 form an integral part of the

financial statements.


41

Consolidated Profit and Loss Accountfor the financial year ended 30 June 2004

Group Company

2004 2003 2004 2003

Note US$’000 US$’000 US$’000 US$’000

Non-current assets

Property, plant and equipment 9 278,350 209,635 26 26

Intangible assets 10 71 174 — —

Subsidiary companies 11 — — 20,178 20,178

Deferred tax assets 12 2,111 1,763 — —

Current assets

Inventories 13 42,364 27,301 — —

Trade and other receivables 14 117,945 91,070 15,505 13

Due from subsidiary companies 15 — — 111,014 113,497

Fixed and call deposits 16 5,221 5,117 418 28

Cash at bank and in hand 24,409 17,290 180 47

189,939 140,778 127,117 113,585

Current liabilities

Trade and other payables 17 (124,641) (62,477) (129) (96)

Due to subsidiary companies 15 — — (1,346) (9,385)

Due to bankers 18 (41,390) (33,961) — —

Provision for taxation (1,442) (544) (1) (2)

(167,473) (96,982) (1,476) (9,483)

Net current assets 22,466 43,796 125,641 104,102

Non-current liabilities

Due to bankers 18 (48,501) (16,027) — —

Deferred tax liabilities 12 (2,440) (2,082) — —

252,057 237,259 145,845 124,306

Equity

Share capital 19 74,065 73,982 74,065 73,982

Reserves 20 164,229 147,595 71,780 50,324

238,294 221,577 145,845 124,306

Minority interests 13,763 15,682 — —

252,057 237,259 145,845 124,306




42

Balance Sheetsas at 30 June 2004

Group

Share

capital

Share

premium

Capital

reserve

Statutory

reserve

Revenue

reserve

Foreign

currency

translation

reserve

Total

share-

holders’

equity

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Balance at 30 June 2002

— As previously stated 66,072 12,462 2,475 — 150,984 505 232,498

— Effect of adopting INT FRS 19 7,870 4,820 122 — 18,015 (30,827) —


— As restated 73,942 17,282 2,597 — 168,999 (30,322) 232,498

Shares issued pursuant to the

exercise of options 40 75 — — — — 115

Refund of share issue expenses — 2 — — — — 2

Transfer from revenue reserve to

statutory reserve — — — 105 (105) — —

Utilisation of statutory reserve — — — (35) — — (35)

Profit for the financial year — — — — 14,210 — 14,210

Dividends paid (Note 22)

— in respect of previous

financial year — — — — (14,908) — (14,908)

— in respect of current financial

year — — — — (9,172) — (9,172)

Foreign currency translation — — — — — (1,133) (1,133)

Balance at 30 June 2003 73,982 17,359 2,597 70 159,024 (31,455) 221,577


— As previously stated 66,507 12,614 2,490 70 141,847 (1,951) 221,577

— Effect of adopting INT FRS 19 7,475 4,745 107 — 17,177 (29,504) —


— As restated 73,982 17,359 2,597 70 159,024 (31,455) 221,577

Shares issued pursuant to the

exercise of options 83 457 — — — — 540

Transfer from revenue reserve to

statutory reserve — — — 506 (506) — —

Profit for the financial year — — — — 40,595 — 40,595


— in respect of previous

financial year — — — — (14,349) — (14,349)


year — — — — (10,405) — (10,405)

Foreign currency translation — — — (9) — 345 336

Balance at 30 June 2004 74,065 17,816 2,597 567 174,359 (31,110) 238,294


43

Statements of Changes in Equityfor the financial year ended 30 June 2004

Company

Share

capital

Share

premium

Revenue

reserve

Total

share-

holders’

equity

US$’000 US$’000 US$’000 US$’000


— As previously stated 66,072 12,462 45,605 124,139

— Effect of adopting INT FRS 19 7,870 4,820 (12,690) —


— As restated 73,942 17,282 32,915 124,139

Shares issued pursuant to the exercise

of options 40 75 — 115

Refund of share issue expenses — 2 — 2

Profit for the financial year — — 24,130 24,130


— in respect of previous financial

year — — (14,908) (14,908)


year — — (9,172) (9,172)

Balance at 30 June 2003 73,982 17,359 32,965 124,306


— As previously stated 66,507 12,614 45,510 124,631

— Effect of adopting INT FRS 19 7,475 4,745 (12,545) (325)


— As restated 73,982 17,359 32,965 124,306

Shares issued pursuant to the exercise

of options 83 457 — 540

Profit for the financial year — — 45,753 45,753


— in respect of previous financial

year — — (14,349) (14,349)


year — — (10,405) (10,405)

Balance at 30 June 2004 74,065 17,816 53,964 145,845




44

Statements of Changes in Equity

for the financial year ended 30 June 2004

2004 2003

US$’000 US$’000

Cash flow from operating activities:

Operating profit before interest and taxation 47,399 18,282

Adjustments for:

Amortisation of intangible assets 103 103

Depreciation of property, plant and equipment 22,646 24,590

Loss on disposal of plant and equipment 159 127

Operating income before reinvestment in working capital 70,307 43,102

Increase in inventories (15,063) (1,855)

Increase in trade and other receivables (26,875) (15,813)

Increase in trade and other payables 62,164 15,305

Cash generated from operations 90,533 40,739

Interest income received 162 71

Interest paid (1,155) (995)

Income taxes paid (2,445) (1,924)

Net cash provided by operating activities 87,095 37,891

Cash flow from investing activities:

Proceeds from disposal of plant and equipment 128 30

Plant and equipment acquired (92,179) (22,942)

Intangible assets acquired — (25)

Net cash used in investing activities (92,051) (22,937)

Cash flow from financing activities:

Bank borrowings obtained 39,936 18,643

Repayment of loan to minority shareholders (4,375) —

Proceeds from share issue pursuant to the exercise of share

options 540 115

Refund of share issue expenses — 2

Capital injection from minority interests 178 —

Dividends paid by the Company (24,754) (24,080)

Dividends paid by subsidiaries to minority shareholders (1,200) (1,092)

Net cash provided by/(used in) financing activities 10,325 (6,412)

Net increase in cash and cash equivalents 5,369 8,542

Cash and cash equivalents at beginning of financial year 22,374 14,143

Effect of foreign exchange rate changes, net 1,887 (311)

Cash and cash equivalents at end of financial year (Note 24) 29,630 22,374




45

Consolidated Statement of Cash Flowfor the financial year ended 30 June 2004

1. CORPORATE INFORMATION

Elec & Eltek International Company Limited (the ‘‘Company’’) is a limited liability companyincorporated and domiciled in Singapore. The Company’s immediate and ultimate holdingcompany is Elec & Eltek International Holdings Limited, incorporated in Bermuda. Relatedcompanies in these financial statements refer to the ultimate holding company and itssubsidiary companies. Related parties in these financial statements refer to entities withcommon directors or shareholders of the ultimate holding company and its subsidiarycompanies.

The principal activity of the Company is investment holding. Its subsidiary companies areprimarily engaged in the design, development, manufacture and distribution of high-density,double-sided and multi-layer printed circuit boards. There have been no significant changes inthe nature of these activities during the financial year.

The Company’s principal office is located at 8 Shenton Way, #37-03 Temasek Tower,Singapore 068811 and its registered office is located at 80 Raffles Place, #25-01 UOB Plaza 1,Singapore 048624.

The Group, comprising the Company and its subsidiary companies, had 10,982 employees and7 employees (2003 : 7,755 and 7) as at 30 June 2004, respectively.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The financial statements have been prepared in accordance with Singapore FinancialReporting Standards (‘‘FRS’’) as required by the Companies Act (Chapter 50, SingaporeStatutes) (the ‘‘Act’’). In previous years, the financial statements were prepared inaccordance with Singapore Statements of Accounting Standard (‘‘SAS’’). The transitionfrom SAS to FRS did not result in any significant change in accounting policies.

The financial statements have been prepared on a historical cost basis.

The accounting policies have been consistently applied by the Group and the Companyand are consistent with those used in the previous financial year except as disclosed at2(b) below.

The financial statements are presented in United States Dollars (US$).

(b) Change in accounting policy

Prior to 1 July 2003, all transactions in currencies other than Singapore Dollars (S$) weretreated as transactions in foreign currencies and were recorded, on initial recognition, inS$ using the exchange rate at the transaction date. On 1 July 2003, the Companyadopted INT FRS 19, Reporting Currency — Measurement and Presentation of FinancialStatements under FRS 21 and FRS 29, and changed the measurement and presentationcurrency of the financial statements from S$ to US$. The change in measurementcurrency to US$ was made as it reflects more accurately the economic substance of theunderlying events and circumstances of the Group’s business operations. INT FRS 19requires all transactions in currencies other than the measurement currency to be treatedas transactions in foreign currencies and to be recorded, on initial recognition, in themeasurement currency using the exchange rate at the transaction date.


46

Notes to the Financial Statements30 June 2004

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(b) Change in accounting policy (continued)

The change in measurement and presentation currency from S$ to US$ gave rise to an

increase in the Group’s net profits by US$277,000 for the financial year ended 30 June

2004. The retrospective financial effect of this change is disclosed in the statements of

changes in equity.

(c) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will

flow to the Group and the Company and that the revenue can be reliably measured. The

following specific recognition criteria must also be met before revenue is recognised:

Sale of goods

Revenue from the sale of manufactured products is recognised upon their delivery which

is taken to be the point of acceptance when the significant risks of ownership have been

transferred to the customer and the Group maintains no effective control over the goods

delivered.

Dividend income

Dividend income from subsidiary companies is recognised on the date the right to

receive payment has been established.

Interest income

Interest income is recognised on an accrual basis.

(d) Interest expense

Interest expense, other than those incurred in relation to the acquisition of plant and

equipment during the construction phase, is recognised on an accrual basis.

Interest expense incurred in relation to the acquisition of plant and equipment during the

construction phase, is capitalised as part of the cost of plant and equipment in the period

in which they are incurred.


47


(e) Depreciation

Depreciation is calculated on the straight-line basis to write off the cost of the assets over

their estimated useful economic lives.

The useful lives used for depreciating assets are as follows:

Years

Freehold buildings — 20

Leasehold land and buildings — over the lease terms

Leasehold improvements — lower of 10 or lease terms

Furniture and fixtures — 5

Plant and equipment — manufacturing plant

& equipment — 10

Plant and equipment — office equipment — 5

Motor vehicles and yacht — 5 – 7

No depreciation is provided on freehold land and construction-in-progress.

Fully depreciated assets are retained in the financial statements until they are no longer

in use and no further charge for depreciation is made in respect of these assets.

From 1 July 2002 to 30 June 2003, the Group’s manufacturing plant and equipment was

depreciated using the unit-of-production depreciation method. The unit-of-production

method determined the asset’s depreciation based on their actual utilisation. Utilisation

was measured by comparing actual output against the expected total output as

determined by the asset’s optimum capacity over their estimated useful lives of either 5

or 7 years. Full utilisation was assumed unless the asset’s utilisation falls below its normal

production capacity.

With effect from 1 July 2003, the Group reverted to the time-based straight-line method

to depreciate its manufacturing plant and equipment. In addition, the economic useful

lives of the Group’s manufacturing plant and equipment have been extended from 5 or 7

years to 10 years. The extended useful lives have been confirmed by a recently concluded

technical study, conducted by professional independent appraisers, and is in line with

industry practices. The adoption of the straight-line method of depreciation over 10 years

will free the Group from the complex methodology inherent in the unit-of-production

method mentioned above.

The change in depreciation method and the useful lives resulted in a lower depreciation

charge by approximately US$7,400,000 for the current financial year.


48

Notes to the Financial Statements

30 June 2004


(f) Foreign currencies

Transactions in currencies other than US$ are treated as transactions in foreign currenciesand are recorded at exchange rates approximating those ruling at the transaction dates.Foreign currency monetary assets and liabilities are measured using the exchange ratesruling at balance sheet date. Non-monetary assets and liabilities are measured using theexchange rates ruling at the transaction dates or, in the case of items carried at fair value,the exchange rates that existed when the values were determined. All resultant exchangedifferences are recognised in the profit and loss account.

For inclusion in the consolidated financial statements, all assets and liabilities of foreignsubsidiary companies are translated into US$ at the exchange rates ruling at the balancesheet date and the results of foreign subsidiary companies are translated into US$ at theaverage exchange rates. Exchange differences due to such currency translations areincluded in foreign currency translation reserve.

(g) Income tax

Income tax in the profit and loss account for the year comprises current and deferredincome tax. Income tax is recognised in the profit and loss account except to the extentthat it relates to items recognised directly to equity, in which case it is recognised inequity.

Current tax is the expected tax payable on the taxable income for the financial year,using tax rates enacted or substantially enacted at the balance sheet date and anyadjustment to tax payable in respect of previous years.

Deferred income tax is provided, using the liability method, on all temporary differencesat the balance sheet date between the tax bases of assets and liabilities and theircarrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences associatedwith investments in subsidiary companies, except where the timing of the reversal of thetemporary differences can be controlled and it is probable that the temporary differenceswill not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable thattaxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilised.

For deductible temporary differences associated with investments in subsidiarycompanies, deferred tax assets are only recognised to the extent that it is probablethat the temporary differences will reverse in the foreseeable future and taxable profitwill be available against which the temporary differences can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected toapply to the period when the asset is realised or the liability is settled, based on tax ratesand tax laws that have been enacted or substantively enacted by the balance sheet date.


49


(h) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and

impairment losses. The cost of an asset comprises its purchase price and any directly

attributable costs of bringing the asset to working condition for its intended use.

Expenditure for additions, improvements and renewals are capitalised and expenditure

for maintenance and repairs are charged to the profit and loss account. When assets are

sold or retired, their cost and accumulated depreciation are removed from the financial

statements and any gain or loss resulting from their disposal is included in the profit and

loss account.

(i) Intangible assets

Technical know-how

Technical know-how is technical knowledge acquired from third parties and is stated at

purchase cost unless there has been an impairment in value at which it is written down to

reflect the recoverable value.

Amortisation is computed based on an estimated economic useful life of 5 years.

Pre-production expenditure

Pre-production expenditure, comprising costs incurred in the development and pilot

testing of new manufacturing plants and processes, are expensed directly to the profit

and loss account in the period in which they are incurred.

Research and development costs

Research and development costs are expensed directly to the profit and loss account in

the period in which they are incurred.

(j) Subsidiary companies

Interests in subsidiary companies are stated at cost unless, in the opinion of the

Directors, there has been an impairment in value at which they are written down to reflect

their recoverable value. Details of the subsidiary companies are set out in Note 3 to the


(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct

materials on a first-in, first-out basis and, in the case of finished products and work-in-

progress, includes direct labour and attributable production overheads based on normal

levels of activity. Net realisable value represents the estimated selling price less

anticipated cost of disposal and after making allowance for damaged, obsolete and slow

moving items.


50


30 June 2004


(l) Receivables

Trade receivables, which generally have 30 – 120 day terms, are recognised and carried at

original invoiced amount less an allowance for any uncollectible amounts. An estimate for

doubtful debts is made when collection of the full amount is no longer probable. Bad

debts are written off to the profit and loss account in the period in which they are

incurred.

Amounts due from subsidiary companies and related parties are carried at cost less an

allowance for any uncollectible amounts.

(m) Payables

Liabilities for trade and other payables, which are normally settled on 30 – 120 day terms,

are carried at cost which is the fair value of the consideration to be paid in the future for

goods and services received, whether or not billed to the Group.

Amounts owing to subsidiary companies are carried at cost.

(n) Loans and borrowings

Loans and borrowings are recognised at cost, being the consideration received and

including acquisition charges associated with the loans and borrowings.

(o) Provisions

Provisions are recognised when the Company and the Group have a present obligation

(legal or constructive) as a result of a past event, it is probable that an outflow of

resources embodying economic benefits will be required to settle the obligation and a

reliable estimate can be made of the amount of the obligation.

(p) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and at bank and fixed and call

deposits.

For the purpose of the cash flow statement, cash and cash equivalents are shown net of

outstanding bank overdraft.


51


(q) Impairment of assets

An assessment is made at each balance sheet date to determine whether there is

objective evidence that an asset may be impaired. Whenever the carrying amount of an

asset exceeds its recoverable amount, an impairment loss is recognised in the profit and

loss account.

Except for impairment loss arising from intangible assets, the reversal of impairment

losses recognised in prior years is recorded when there is an indication that the

impairment losses recognised for the asset no longer exist or have decreased. The

reversal is recorded in the profit and loss account. However, the increased carrying

amount of an asset due to a reversal of an impairment loss is recognised to the extent it

does not exceed the carrying amount that would have been determined (net of

amortisation or depreciation) had no impairment loss been recognised for that asset in

prior years.

(r) Employee benefits

(i) Employees’ share option scheme

The Company has in place the Elec & Eltek Employees’ Share Option Scheme

adopted in 1997, the 1999 Elec & Eltek Employees’ Share Option Scheme (the ‘‘1999

Scheme’’) and the 2002 Elec & Eltek Employees’ Share Option Scheme (the ‘‘2002

Scheme’’) (collectively the ‘‘Schemes’’) for the granting of share options to eligible

employees of the Group to subscribe for ordinary shares in the Company.

When the option is exercised, the nominal value of the shares subscribed for is

credited to the share capital account and the balance of the proceeds, net of any

transaction costs, is credited to the share premium account. Details of the Schemes

are disclosed in Note 21 to the financial statements.

(ii) Defined contribution plans

Contributions to post-employment benefits under defined contribution plans made

in accordance to the statutory regulations in the countries in which the Group’s

companies operate are recognised as compensation expenses in the same period

as the employment that gives rise to the contributions.

(iii) Employee entitlements

Liabilities for paid leave are recognised and are measured as the amount unpaid at

the balance sheet date at current pay rates in respect of employees’ services up to

that date.


52


30 June 2004

3. GROUP COMPANIES

The subsidiary companies as at 30 June 2004 are:

Name of Company

Place of

incorporation

and operations

Registered

capital

Percentage of

equity held Principal activities

2004 2003

% %

Subsidiary companies

@ Elec & Eltek Company Limited Hong Kong HK$98,123,732 100.0 100.0 Trading of printed

circuit boards

(‘‘PCBs’’)

* Elec & Eltek Huangpu

(Singapore) Pte. Ltd.

Singapore S$2 100.0 100.0 Investment holding


(Singapore) No. 2 Pte. Ltd.










(formerly known as

Growthlink Holdings Pte.

Ltd.)




Singapore S$2 100.0 — Investment holding

* Elec & Eltek Kaiping (Singapore)

Pte. Ltd.



No. 2 Pte. Ltd.



No. 3 Pte. Ltd.



No. 4 Pte. Ltd.

(formerly known as Globalrise

Holdings Pte. Ltd.)


@ Elec & Eltek Multi-Language

Systems Limited

Hong Kong HK$14,000 100.0 100.0 Dormant


53

3. GROUP COMPANIES (continued)

Name of Company

Place of

incorporation

and operations

Registered

capital

Percentage of


2004 2003

% %

Subsidiary companies (continued)

@ Elec & Eltek Multilayer PCB

Limited

Hong Kong HK$5,000,000 100.0 100.0 Manufacturing and

distribution of PCBs

* Elec & Eltek Nanjing



# Elec & Eltek Printed Circuit

Board Corporation

United States of

America

US$75,000 100.0 100.0 Liaison office

* Elec & Eltek Shenzhen



* Elec & Eltek Technology

Research & Marketing Pte.

Ltd.

Singapore S$2 100.0 100.0 Technology research

and marketing

* Elec & Eltek Thai (Singapore)

Pte. Ltd.


* Elec & Eltek Thai (Singapore)

No. 2 Pte. Ltd.


@ PIC Corporate Services Limited Hong Kong HK$10,000 100.0 100.0 Trading of copper

clad laminate

Subsidiary company of Elec & Eltek Company Limited

@ Elec & Eltek International

Limited

Hong Kong HK$150,000 100.0 100.0 Provision of

marketing and

corporate services

Subsidiary company of Elec & Eltek Huangpu (Singapore) Pte. Ltd.

@ Elec & Eltek (Guangzhou)

Electronic Company Limited

The People’s

Republic of

China

US$51,200,000 98.0 98.0 Manufacturing and


Subsidiary company of Elec & Eltek Huangpu (Singapore) No. 2 Pte. Ltd.

@ Elec & Eltek (Guangzhou)

Technology Company

Limited

The People’s

Republic of

China

US$6,000,000 98.0 98.0 Research and

development,

manufacturing and



54


30 June 2004


Name of Company

Place of

incorporation

and operations

Registered

capital

Percentage of


2004 2003

% %


@ Guangzhou Elec & Eltek

Microvia Technology Limited

The People’s

Republic of

China




@ Guangzhou Elec & Eltek High

Density Interconnect

Technology No.1 Company

Limited

The People’s

Republic of

China




(formerly known as Growthlink Holdings Pte. Ltd.)

@ Guangzhou Elec & Eltek Printed

Circuit Board Company

Limited

The People’s

Republic of

China

US$12,000,000 98.0 98.0 Dormant

Subsidiary company of Elec & Eltek Kaiping (Singapore) Pte. Ltd.

@ Kai Ping Elec & Eltek Company

Limited

The People’s

Republic of

China



Subsidiary company of Elec & Eltek Kaiping (Singapore) No. 2 Pte. Ltd.

@ Kaiping Elec & Eltek No.2

Company Limited

The People’s

Republic of

China





Company Limited

The People’s

Republic of

China




(formerly known as Globalrise Holdings Pte. Ltd.)


Company Limited

The People’s

Republic of

China



Subsidiary company of Elec & Eltek Nanjing (Singapore) Pte. Ltd.

@ Nanjing Elec & Eltek Electronic

Co., Ltd.

The People’s

Republic of

China




55


Name of Company

Place of

incorporation

and operations

Registered

capital

Percentage of


2004 2003

% %

Subsidiary company of Elec & Eltek Shenzhen (Singapore) Pte. Ltd.

@ Shenzhen Pacific Insulating

Material Co., Ltd.

The People’s

Republic of

China

RMB67,491,458 93.5 93.5 Manufacturing and

distribution of PCB

raw materials

Subsidiary company of Elec & Eltek Thai (Singapore) Pte. Ltd.

b Elec & Eltek (Thailand) Limited Thailand Baht780,000,000 100.0 100.0 Manufacturing and


Subsidiary company of Elec & Eltek Thai (Singapore) No. 2 Pte. Ltd.

b Pacific Insulating Material

(Thailand) Limited

Thailand Baht650,000,000 100.0 100.0 Manufacturing and

distribution of PCB

raw materials

Subsidiary company of PIC Corporate Services Limited

@ Elec & Eltek Management

Services Limited

British Virgin

Islands

US$1 100.0 100.0 Dormant

* Audited by Ernst & Young Singapore.

@ Audited by Ernst & Young Hong Kong.

b Audited by Ernst & Young Thailand.

# Exempt from preparing audited statutory financial statements by the laws of its country of incorporation.

Increases in the registered capital of subsidiary companies during the financial year were as

follows:

Subsidiary companies

Increase in

registered

capital Purpose of increase

Percentage

interest held

Kaiping Elec & Eltek No.3 Company

Limited

US$15,300,000 To allow for the

increase in

working capital

90.1%

Guangzhou Elec & Eltek Microvia

Technology Limited

US$4,000,000 To allow for the

increase in

working capital

98.0%

4. SALE OF GOODS

This represents the invoice value of goods supplied.


56


30 June 2004

5. PROFIT FROM OPERATING ACTIVITIES

Profit from operating activities is arrived at after charging/(crediting):

Group

2004 2003

US$’000 US$’000

Staff costs (excluding Directors’ emoluments)

— Salaries and employees benefits 43,215 33,113

— Contributions to defined benefit plans 1,952 1,572

Depreciation of property, plant and equipment 22,646* 24,590*

Directors’ emoluments

— Remuneration 1,017 903

— Consultancy fees 382@ —

— Fees 449 156

— Contributions to defined benefit plans 44 38

Operating lease rentals in respect of land and buildings 739 704

Statutory auditors’ emoluments

— Company

current financial year 72 50

over provision in previous financial years — (2)

— Subsidiary companies

current financial year 318 268

under/(over) provision in previous financial years 3 17

— Non-audit fees paid to statutory auditors 73 71

Amortisation of intangible assets 103* 103*

Loss on disposal of plant and equipment 159 127

Provision for doubtful debts 678 1,531

Provision for/(write-back of provision) for inventory

obsolescence 81 (75)

Loss/(gain) on foreign exchange 289 (234)

* US$21,606,000 (2003 : US$23,675,000) of depreciation and amortisation expense has been included in the cost of

sales and the remaining balance has been included in the administrative costs.

@ consultancy fees refer to fees paid to David So Cheung Sing, Marcus Tsang Ming Pui, Wilson Tam Kam Ho and

Johnny Ng Ho Kin in addition to their directors’ fees for their provision of industry specific advice and guidance.

Number of Directors in remuneration bands

Group

2004 2003

S$500,000 to S$749,999 2 1

S$250,000 to S$499,999 3 2

Below S$250,000 6 8

Total 11 11


57

6. EXCEPTIONAL ITEM

The exceptional item pertains to redundancy compensation incurred for rationalising the

Group’s Hong Kong and China manufacturing plants in the previous financial year.

7. TAXATION

Group

2004 2003

US$’000 US$’000

Major components of income tax expense:

Current:

Singapore 12 (6)

Foreign 3,331 1,183

Deferred:

Foreign 60 183

3,403 1,360

The taxation charge for the Group materially differs from the amount determined by applyingthe Singapore income tax rate of 20.0% (2003 : 22.0%) to pre-tax profits because the taxcharge for the Group mainly relates to Hong Kong profits which are taxed at a lower rate inHong Kong. Furthermore, certain subsidiary companies in mainland China have been grantedtax privileges and are only liable for 50% of normal corporate profits tax, and a subsidiarycompany in Thailand has also been granted tax privileges and is exempt from corporateprofits tax for between three to seven years with effect from the date the operating income isfirst earned.

A reconciliation of the statutory tax rate to the Group’s effective tax rate applicable to incomebefore minority interests for the financial years ended 30 June is as follows:

Group

2004 2003

% %

Domestic statutory tax rate 20.0 22.0

Lower statutory tax rates and tax incentives in other

countries (5.8) (4.3)

Tax benefits not recognised — 8.5

Utilisation of tax losses brought forward (7.1) (15.2)

Others, net 0.2 (3.2)

Effective tax rate 7.3 7.8

The Group has tax losses of US$17,230,000 (2003 : US$35,655,000) available for offset against

future taxable profits of the subsidiary companies in which the losses arose.

The use of these tax losses is subject to the agreement of the tax authorities and compliance

with local tax legislations.


58


30 June 2004

8. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the Group’s profit attributable to

shareholders by the weighted average number of ordinary shares in issue during the

financial year.

Diluted earnings per share is calculated by dividing the Group’s profit attributable to

shareholders by the weighted average number of ordinary shares in issue, adjusted for the

effect of dilutive options during the financial year.

The following reflects the income and share data used in the basic and diluted earnings per

share computations for the financial year:

Group

2004 2003

US$’000 US$’000

Profit attributable to shareholders 40,595 14,210

Number of

ordinary

shares

Number of

ordinary

shares

(in thousands) (in thousands)

Number of ordinary shares in issue at the beginning of

financial year 146,063 145,975

Weighted average number of ordinary shares issued

pursuant to the exercise of share options 32 45

Weighted average number of ordinary shares applicable

to basic earnings per share 146,095 146,020

Effect of dilutive share options 637 67

Weighted average number of ordinary shares applicable

to diluted earnings per share 146,732 146,087

United States United States

cents cents

Earnings per share — basic 27.79 9.73

— diluted 27.67 9.73


59

9. PROPERTY, PLANT AND EQUIPMENT

Freehold

land

Freehold

buildings

Leasehold

land and

buildings

Leasehold

improve-

ments

Furniture

and

fixtures

Plant and

equipment

Motor

vehicles

and yacht

Construction

in progress Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Group

Cost

At beginning of financial year 6,563 9,591 64,679 28,178 10,438 248,801 2,148 11,001 381,399

Currency realignment 153 224 (464) 30 (79) (721) (13) (246) (1,116)

Reclassifications — 213 8,099 1,001 677 5,914 — (15,904) —

Additions — 1,386 3,901 1,806 781 70,976 429 12,900 92,179

Disposals — — — (56) (31) (3,459) (154) (46) (3,746)

At end of financial year 6,716 11,414 76,215 30,959 11,786 321,511 2,410 7,705 468,716

Accumulated depreciation

At beginning of financial year — 5,357 10,291 16,923 5,343 132,169 1,681 — 171,764

Currency realignment — 116 85 83 (186) (672) (11) — (585)

Charge for the financial year — 658 1,426 1,414 1,138 17,812 198 — 22,646

Disposals — — — (25) (12) (3,294) (128) — (3,459)

At end of financial year — 6,131 11,802 18,395 6,283 146,015 1,740 — 190,366

Charge for 2003 — 546 1,491 971 1,402 19,983 197 — 24,590

Net book value:

At 30 June 2004 6,716 5,283 64,413 12,564 5,503 175,496 670 7,705 278,350

At 30 June 2003 6,563 4,234 54,388 11,255 5,095 116,632 467 11,001 209,635


60


30 June 2004

9. PROPERTY, PLANT AND EQUIPMENT (continued)

Furniture and

fixtures

Office

equipment Total

US$’000 US$’000 US$’000

Company

Cost

At beginning of financial year 28 114 142

Additions — 19 19

Disposals — (5) (5)

At end of financial year 28 128 156

Accumulated depreciation

At beginning of financial year 26 90 116

Charge for the financial year 1 18 19

Disposals — (5) (5)

At end of financial year 27 103 130

Charge for 2003 1 14 15

Net book value

At 30 June 2004 1 25 26

At 30 June 2003 2 24 26

Notes

(a) The Group’s major properties are as follows:

Freehold

(i) 3 factories and 9 ancillary buildings at No. 134 Moo 2 Soi Sriyothin Pakred-Pathumthani Road, Bang-

Khayang, Muang District, Thailand on freehold land area of 82,080 sq.m.

(ii) 2 factories and various offices at Rojana Industrial Park No. 1/68 Moo 5, Pranakorn, Sri Ayutthaya,

Thailand on freehold land area of 17,180 sq.m.

Leasehold

(iii) A factory and various offices located at New Technology Development Zone, Kai Ping, Guangdong

Province, the People’s Republic of China, on leasehold land area of 122,877 sq.m. The land is leased for

50 years from 30 July 1997 till 30 July 2047.

(iv) Leasehold land at New Technology Development Zone, Kai Ping, Guangdong Province, the People’s

Republic of China. The site has a land area of 158,500 sq.m. The land is leased for 50 years from 15 March

2004 till 14 March 2054.

(v) Leasehold land at lot BW-5, Guangzhou Economic & Technological Development District, the People’s

Republic of China. The site has a land area of 25,907 sq.m. The land is leased for 50 years from 31

December 1993 till 31 December 2043.


61

9. PROPERTY, PLANT AND EQUIPMENT (continued)

Leasehold (continued)

(vi) Factories and office units in Merit Industrial Centre, Hong Kong, occupying a total floor area of 13,764

sq.m. Merit Industrial Centre is held under a Government lease for a term of 75 years from 5 October

1953, renewable for a further 75 years.

(vii) Leasehold land at Eastern Park of Guangzhou Economic & Technological Development District, the

People’s Republic of China. The site has a land area of 160,554 sq.m. The land is leased for 50 years from

16 August 2000 till 15 August 2050.

(viii) Leasehold land at Nanjing Economic & Technological Development Zone, Jiangsu Province, the People’s

Republic of China. The site has a land area of 13,661 sq.m. The land is leased for 50 years.

(b) During the financial year, US$398,000 (2003 : nil) of interest cost was capitalised and included in the cost of

leasehold land and buildings, plant and equipment.

10. INTANGIBLE ASSETS

Intangible assets represent technical know-how stated at purchase cost less accumulated

amortisation.

Group

2004 2003

US$’000 US$’000

Cost:

At beginning of financial year 515 490

Additions — 25

At end of financial year 515 515

Accumulated amortisation:

At beginning of financial year 341 238

Charge for the financial year 103 103


Net book value:


11. SUBSIDIARY COMPANIES

Company

2004 2003

US$’000 US$’000

Unquoted shares, at cost 20,178 20,178

Details of the subsidiary companies are set out in Note 3 to the financial statements.


62


30 June 2004

12. DEFERRED TAXATION

Deferred taxes pertain to the following:

Group

2004 2003

US$’000 US$’000

Deferred tax assets

Difference in depreciation of property, plant and

equipment for accounting and for tax purposes 766 1,763

Accumulated tax losses 2,142 —

2,908 1,763

Deferred tax assets not recognised (797) —

2,111 1,763

Deferred tax liabilities

Difference in depreciation of property, plant and

equipment for accounting and for tax purposes (2,440) (2,082)

13. INVENTORIES

Group

2004 2003

US$’000 US$’000

Raw materials 22,173 15,105

Work-in-progress 15,974 8,908

Finished goods 5,523 4,496

43,670 28,509

Less: Provision for obsolescence

Raw materials (470) (411)

Work-in-progress (362) (191)

Finished goods (474) (606)

(1,306) (1,208)

42,364 27,301

Inventories on hand at balance sheet date are as follows:

— Cost 40,359 25,399

— Net realisable value 2,005 1,902

42,364 27,301


63

14. TRADE AND OTHER RECEIVABLES

Group Company

2004 2003 2004 2003

US$’000 US$’000 US$’000 US$’000

Trade receivables, net

— third parties 102,394 75,310 — —

— related party 217 676 — —

Value added tax claims 7,136 8,205 — —

Deposits 2,041 1,724 — —

Prepaid expenses 2,995 2,596 3 3

Bills receivable 1,021 1,257 — —

Dividend receivable — — 15,500 —

Others 2,141 1,302 2 10

117,945 91,070 15,505 13

Trade receivables are stated after provision for doubtful debts of US$5,622,000 (2003 :

US$5,052,000).

The trade receivable from a related party is unsecured, interest-free and repayable by monthly

instalments over the next twelve months.

15. DUE FROM/(TO) SUBSIDIARY COMPANIES

The amounts due from/(to) subsidiary companies arise from the Group’s internal funding

activities and are unsecured, interest free and have no fixed terms of repayment.

16. FIXED AND CALL DEPOSITS

Fixed and call deposits are placed with financial institutions for periods between 1 to 2 months

at interest rates ranging from 0.25% to 4.75% (2003 : 0.25% to 1.5%) per annum.

17. TRADE AND OTHER PAYABLES

Group Company

2004 2003 2004 2003

US$’000 US$’000 US$’000 US$’000

Trade payables 91,214 47,322 22 11

Accrued operating expenses 28,762 11,334 107 85

Bills payable 4,665 3,821 — —

124,641 62,477 129 96


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30 June 2004

18. DUE TO BANKERS

Group

2004 2003US$’000 US$’000

Bank loans — unsecured 89,891 49,955Bank overdrafts — unsecured (Note 24) — 33

89,891 49,988

Comprising amounts falling due:— within one year 41,390 33,961— more than one year 48,501 16,027

89,891 49,988

The Group’s unsecured bank loans are repayable in quarterly instalments commencing from2001 and ending in 2008 and bear interest ranging from 1.85% to 2.33% (2003 : 1.95% to 2.97%)per annum.

The above credit facilities are provided under:

(a) corporate guarantees from the Company;

(b) a letter of undertaking from the Company to maintain a minimum consolidated net worthof HK$600,000,000 (approximately US$76,930,000) at all times; and

(c) a negative pledge from the Company.

There are no fixed or floating charges against any assets belonging to the Group or theCompany.

19. SHARE CAPITAL

Group and Company

2004 2003US$’000 US$’000

Authorised:500,000,000 ordinary shares of S$0.80 each 262,494 262,494

Issued and fully paid:At beginning of financial year— 146,063,397 (2003 : 145,975,397) ordinary shares

of S$0.80 each 73,982 73,942Issued during the financial year— 174,000 (2003 : 88,000) ordinary shares of S$0.80

each issued pursuant to the exercise of options 83 40

At end of financial year— 146,237,397 (2003 : 146,063,397) ordinary shares

of S$0.80 each 74,065 73,982


65

19. SHARE CAPITAL (continued)

The holders of ordinary shares are entitled to receive dividends as and when declared by the

Company. All ordinary shares carry one vote per share without restriction. The new shares

issued during the financial year rank pari passu to existing ordinary shares.

Details of the outstanding options to subscribe for unissued ordinary shares of the Company

are set out in Note 21 to the financial statements.

20. RESERVES

Group Company

2004 2003 2004 2003

US$’000 US$’000 US$’000 US$’000

Non-distributable reserves:

Share premium 17,816 17,359 17,816 17,359

Capital reserve 2,597 2,597 — —

Statutory reserve 567 70 — —

20,980 20,026 17,816 17,359

Distributable reserves:

Revenue reserve 174,359 159,024 53,964 32,965

Foreign currency translation

reserve (31,110) (31,455) — —

143,249 127,569 53,964 32,965

164,229 147,595 71,780 50,324

The share premium reserve comprises the premium received by the Company on its shares

issued over their par value. The utilisation of the share premium is governed by Section

69 – 69F of the Act.

The capital reserve relates to amounts set aside by subsidiary companies operating in

Thailand for declaration of dividends as required under the laws of Thailand.

The statutory reserve relates to the legal accumulation fund set aside by subsidiary companies

operating in China as required under the laws of the People’s Republic of China.


66


30 June 2004

21. SHARE OPTIONS

The Company has granted share options to eligible employees under its Elec & Eltek

Employees’ Share Option Scheme adopted in 1997 (the ‘‘1997 Scheme’’), the 1999 Elec & Eltek

Employees’ Share Option Scheme (the ‘‘1999 Scheme’’) and the 2002 Elec & Eltek Employees’

Share Option Scheme (the ‘‘2002 Scheme’’) (collectively referred to as the ‘‘Schemes’’). The

1997 Scheme and the 1999 Scheme were subsequently terminated without affecting the rights

of holders of options granted thereunder. The 2002 Scheme was approved by the

shareholders at the Extraordinary General Meeting held on 8 November 2002 and was

adopted and took effect from 12 November 2002 upon fulfilment of all the conditions

precedent as set out in Rule 3 of the 2002 Scheme.

The 2002 Scheme is open to full-time employees and directors of any company within the

Group, the parent group and of an associated company of the Company, subject to certain

conditions being satisfied.

The 2002 Scheme entitles the option holders to exercise their options and subscribe for new

ordinary shares in the Company either at a ‘‘Subscription Price’’, equal to the average of the

last dealt price of the Company’s shares for the last 5 market days immediately preceding the

relevant date of grant, or at a ‘‘Discounted Subscription Price’’, whereby the discount shall not

exceed 20% of the Subscription Price as defined earlier.

Options granted at the Subscription Price may be exercised commencing on a date not earlier

than the first anniversary date of the date of grant and ending on a date not later than 5 years

after the date of grant. Options granted at the Discounted Subscription Price may only be

exercised commencing on a date not earlier than the second anniversary date of the date of

grant and ending on a date not later than 5 years after the date of grant.

The duration of the 2002 Scheme is 5 years and the total number of shares that may be issued

shall not exceed 10% of the issued share capital of the Company as at the adoption date or

subject to certain conditions being satisfied, 15% of the issued share capital of the Company

as at the adoption date.

There were no options granted under the 2002 Scheme in the current financial year.

Information with respect to the movement of share options of the Company during the year

are as follows:

Date of grant

Balance as at

1 July 2003 Exercised Lapsed

Balance as at

30 June 2004

Subscription

price Expiry date

US$

19 April 1999 832,800 (174,000) (658,800) — 3.100 18 April 2004

25 May 2000 400 — — 400 1.308 24 May 2005

7 May 2003 700,000 — — 700,000 1.450 6 May 2006

7 May 2003 700,000 — — 700,000 1.450 6 May 2007

2,233,200 (174,000) (658,800) 1,400,400


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21. SHARE OPTIONS (continued)

Information in respect of share options granted to and exercised by Directors of the Company

are as follows:

Name of Participant

Name of

Scheme

Options

granted during

financial year

under review

Aggregate

options

granted

Aggregate

options

exercised

Aggregate

options

lapsed

Aggregate options

outstanding as at end

of financial year

under review

Thomas Tang Koon Yiu 2002 Scheme — 1,400,000 — — 1,400,000

Canice Chung Tai Keung 1997 Scheme — 291,600 (156,000) (135,600) —

1999 Scheme — 1,368,000 (1,368,000) — —

Claudia Heng Nguan

Leng

1997 Scheme — 72,000 — (72,000) —

1999 Scheme — 228,000 (228,000) — —

Johnny Ng Ho Kin 1997 Scheme — 240,000 — (240,000) —

1999 Scheme — 360,000 (360,000) — —

None of the participants under the 1999 Scheme have received more than 5% of the total

number of the options available under the 1999 Scheme, save for Canice Chung Tai Keung, a

director of the Company, who has fully exercised the options granted to him under the 1999

Scheme as disclosed above.

During the current financial year, there have been no options granted to the eligible

participants, directors and substantial shareholders of the Company pursuant to the 2002

Scheme.

Subsequent to the end of the current financial year, the Company granted 1,400,000 share

options to Thomas Tang Koon Yiu, Director of the Company, pursuant to the 2002 Scheme to

subscribe for 1,400,000 ordinary shares of S$0.80 each in the Company at a Discounted

Subscription Price of US$2.250 per share. The options were granted at a 20% discount to the

Subscription Price and the amount of options granted represents more than 5% of the total

number of options available under the 2002 Scheme.

The Schemes are administered by the Employees’ Share Option Scheme Committee

comprising David So Cheung Sing, Marcus Tsang Ming Pui and Wilson Tam Kam Ho.


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30 June 2004

22. DIVIDENDS, TAX EXEMPT

The amount, net of tax, and the rates of dividends paid are:

Group and Company

2004 2003

US$’000 % US$’000 %

In respect of previous financial

year

Ordinary dividends:

— Final 4,220 6.25 8,282 12.50

Special dividends:

— Final 10,129 15.00 6,626 10.00

14,349 21.25 14,908 22.50

In respect of current financial year

Ordinary dividends:

— Interim 10,405 15.00 9,172 13.75

The Directors have proposed an one-tier tax exempt final dividend of 7.5% (equivalent to 6

Singapore cents per share) and a one-tier tax-exempt final special dividend of 15% (equivalent

to 12 Singapore cents per share), totalling S$26,322,731 (equivalent to US$15,396,805), to be

paid in respect of the current financial year. This dividend will be recorded as a liability on the

balance sheets of the Company and of the Group upon approval by the shareholders of the

Company at the forthcoming Annual General Meeting of the Company.

The dividends paid in respect of previous financial years are exempt from income tax in

Singapore under Section 13E of the Income Tax Act, Cap. 134. From the current financial year

onwards, the Company shall pay and propose one-tier tax exempt dividends.

23. OPERATING LEASES

The Group leases certain properties under lease agreements that are non-cancellable within a

year. The leases, which do not have purchase or renewal options, expire at various dates till

2007 and contain provisions to restrict the Group to further leasing and sub-leasing.

Future minimum rentals under non-cancellable leases are as follows:

Group

2004 2003

US$’000 US$’000

Within one year 532 403

After one year but not later than five years 286 405

818 808


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24. CASH AND CASH EQUIVALENTS

For the purpose of consolidated statement of cash flow, cash and cash equivalents comprise

the following:

Group

2004 2003

US$’000 US$’000

Fixed and call deposits 5,221 5,117

Cash at bank and in hand 24,409 17,290

29,630 22,407

Bank overdrafts — unsecured (Note 18) — (33)

29,630 22,374

25. INFORMATION BY SEGMENT ON GROUP’S OPERATIONS

The Group operates principally in one business segment, the manufacture and distribution of

printed circuit boards. All the Group’s productive assets are employed in Asia with plants

located in Hong Kong, Thailand and mainland China. The analysis of the Group’s revenue,

results, assets and liabilities are set out in the consolidated profit and loss account and

consolidated balance sheet.

The sale of goods and the results of the Group by geographical area segments, which is based

upon the shipment locations, are provided below. Given the global nature of the Group’s

business, operating profit before interest and taxation is analysed in proportion to revenue by

geographical segmentation and has no correlation between the location of the profit and the

assets being employed.

Geographical area segment

Turnover

Operating profit before

interest and tax

2004 2003 2004 2003

US$’000 US$’000 US$’000 US$’000

Asia 247,367 166,728 35,364 12,617

Europe 79,550 57,226 9,034 4,106

North & Central America 23,363 19,152 2,541 1,358

Others 4,108 1,974 460 201

354,388 245,080 47,399 18,282


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30 June 2004

25. INFORMATION BY SEGMENT ON GROUP’S OPERATIONS (continued)

Geographical area segment (continued)

A further analysis of turnover and operating profit before interest and tax for Asia is as follows:

Turnover

Operating profit before

interest and tax

2004 2003 2004 2003

US$’000 US$’000 US$’000 US$’000

Hong Kong 51,411 19,713 7,336 1,049

Singapore 60,413 63,071 8,077 4,927

Others 135,543 83,944 19,951 6,641

247,367 166,728 35,364 12,617

26. CONTINGENT LIABILITIES

Group Company

2004 2003 2004 2003

US$’000 US$’000 US$’000 US$’000

Bank guarantees given to third

parties 1,127 493 — —

Corporate guarantees given by the

Company to secure credit

facilities utilised by subsidiary

companies — — 32,763 20,547

27. FUTURE COMMITMENTS

(a) Capital commitments

Capital expenditures not provided for in the financial statements:

Group

2004 2003

US$’000 US$’000

Commitments for capital contributions in subsidiary

companies 36,496 54,083

Commitments in respect of contracts placed 8,244 5,413

44,740 59,496


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27. FUTURE COMMITMENTS (continued)

(b) Other commitments

As at the current financial year end, the Group had the following outstanding foreignexchange contract for the purpose of hedging against currency fluctuations inconnection with payments to overseas suppliers:

Forward exchange rate Group

2004 2003 2004 2003US$’000 US$’000

To sell:United States dollars— for Japanese Yen 110 — 1,580 —— for Hong Kong Dollars — 7.8225 — 500

Unrealised foreign exchange gains arising on outstandingforward exchange contracts not accounted for in thefinancial statements as at the end of the financial yearend 31 2

28. INTERESTED PERSON TRANSACTIONS

For the financial year ended 30 June 2004, the amount of interested person transactions to bedisclosed pursuant to Rule 920(1)(a)(ii) of the Listing Manual of the Singapore ExchangeSecurities Trading Limited was not more than S$100,000.

29. RELATED PARTY TRANSACTIONS

The significant transactions between the Group and its related parties and the effects of thesetransactions on terms agreed among the companies are as follows:

Group Company

2004 2003 2004 2003US$’000 US$’000 US$’000 US$’000

IncomeSales to related companies 75 21 8 5Sales to a related party 133 24 — —Dividend income from subsidiarycompanies — — 46,549 24,655

ExpensesPurchases from related companies (324) (24) — —Consultation fees paid to relatedparties (60) (424) — —

Construction fee paid to a relatedparty (8,405) — — —

Management fee paid to asubsidiary company — — (49) (62)


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30 June 2004

30. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

The Group is exposed to interest rate, foreign currency, credit and liquidity risks. The Group’s

risk management approach seeks to minimise any potential adverse impact of these

exposures. The Board reviews and agrees policies for managing each of these risks and

they are summarised below:–

Interest rate risk

The Group’s exposure to market risk for changes in the interest rate environment principally

relates to its investments in financial products and debt obligations.

The investment in financial products mainly represent surplus funds placed with reputable

financial institutions as short-term deposits at the most favourable interest rates available.

The debt obligations pertain to its borrowings from banks and other financial institutions in

Hong Kong, the People’s Republic of China, Singapore and Thailand. The Group does not

hedge interest rate risk. The Group ensures that it obtains borrowings at competitive interest

rates under the most favourable terms and conditions.

Foreign currency risk

The Group is exposed to the effects of foreign currency exchange rate fluctuations, primarily in

relation to the Hong Kong Dollars, Chinese Renminbi, Thai Baht and S$.

Whenever possible, the Group seeks to maintain a natural hedge through the matching of

liabilities, including borrowings, against assets in the same currency or against the entity’s

functional currency, in particular its future revenue stream. Transactional exposures in

currencies other than the entity’s functional currency are kept to a minimal level.

When necessary, foreign exchange forward contracts are used by the Group to manage its

foreign currency exposure arising from its operating activities. The outstanding forward

exchange contracts at the financial year end are disclosed in Note 27(b) to the financial

statements.

As further disclosed in Note 2(f) to the financial statements on foreign currencies, exchange

differences on the Group’s net investment in the foreign subsidiary companies are dealt with

through the foreign currency translation reserve. This currency translation risk is regularly

monitored.


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30. FINANCIAL INSTRUMENTS (continued)

Credit risk

Credit risk is the risk that counterparties are unable to meet their obligations resulting in

financial loss to the Group. It is the Group’s policy to enter into transactions with a diversity of

credit-worthy parties to mitigate any significant concentration of credit risk. The Group

ensures that sales of products are rendered to customers with appropriate credit history and

has internal mechanisms to monitor the granting of credit and management of credit

exposures. The Group has made provisions for potential losses on credits extended. Surplus

funds are placed with reputable financial institutions. The Group’s maximum exposure to

credit risk in the event the counterparties fail to perform their obligations in relation to each

class of recognised financial assets is the carrying amount of those assets as indicated in the

balance sheet. As at financial year end there was no significant concentration of credit risk to

the Group or the Company.

Liquidity risk

The Group’s cash and short term deposits, operating cash flow and availability of banking

facilities are actively managed to ensure that there is adequate working capital and that

repayment and funding needs are met.

Fair value

The carrying amounts of trade and other receivables, cash and bank balances, short-term

borrowings and trade and other payables approximate their fair values due to their short-term

maturity.

In the opinion of the Directors, it is impractical to determine the fair values of the amounts due

from and to subsidiary companies as they do not have fixed repayment terms.

The fair value of the long term financial liabilities are not materially different from their carrying

values as at 30 June 2004.

31. SUBSEQUENT EVENTS

(a) On 6 July 2004 and 16 and 17 August 2004, the Group contributed US$1,000,000,

US$400,000 and US$1,000,000, totalling US$2,400,000 of capital, in Guangzhou Elec &

Eltek High Density Interconnect Technology No.1 Company Limited for additional

working capital.

(b) On 23 August 2004, the Group contributed US$2,067,795 of capital in Kaiping Elec &

Eltek No.3 Company Limited for additional working capital.

32. AUTHORISATION OF FINANCIAL STATEMENTS FOR ISSUE

These financial statements were authorised for issue in accordance with a resolution of the

Directors on 23 August 2004.


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30 June 2004

Authorised Share Capital : S$400,000,000

Issued Share Capital : S$116,989,918

Class of Shares : Ordinary Shares of S$0.80 each

Voting Rights : One vote per share

Size of shareholdings

No. of

shareholders

Percentage

shareholdings

% No. of shares

Percentage

shareholdings

%

1–999 237 8.93 118,835 0.08

1,000–10,000 2,134 80.38 6,269,644 4.29

10,001–1,000,000 276 10.39 12,136,280 8.30

1,000,001 and above 8 0.30 127,712,638 87.33

Total: 2,655 100.00 146,237,397 100.00

As at 23 August 2004, 38.104% of the Company’s total issued share capital was held in the hands of

the public. Accordingly, the Company confirms that Rule 723 of the Listing Manual has been

complied with.

SUBSTANTIAL SHAREHOLDERS (HOLDING 5% AND ABOVE)

(as shown in the Register of Substantial Shareholders)

Name of substantial shareholder

No. of shares

held

Elec & Eltek International Holdings Limited 75,617,959

Value Partners Limited 11,671,000


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Statistics of ShareholdingsAs at 23 August 2004

Twenty Largest Shareholders

No. Name of shareholder

No. of

shares

Percentage

shareholdings

%

1. Elec & Eltek International Holdings Limited 75,617,959 51.71

2. HSBC (Singapore) Nominees Pte Ltd 15,257,640 10.43

3. DBS Nominees Pte Ltd 8,716,200 5.96

4. Raffles Nominees Pte Ltd 8,628,657 5.90

5. United Overseas Bank Nominees Pte Ltd 5,963,090 4.08

6. BNP Paribas Peregrine Securities Pte Ltd 5,341,570 3.65

7. Citibank Nominees Singapore Pte Ltd 4,293,826 2.94

8. Morgan Stanley Asia (Singapore) Securities Pte Ltd 3,893,696 2.66

9. Merrill Lynch (S’pore) Pte Ltd 960,359 0.66

10. The Asia Life Assurance Society Ltd — S’pore Life Fund 838,090 0.57

11. DBS Vickers Securities (S) Pte Ltd 809,780 0.55

12. Nomura Singapore Limited 448,590 0.31

13. UOB Kay Hian Pte Ltd 445,222 0.30

14. Cosmic Insurance Corporation Limited — SIF 229,760 0.16

15. Heng Nguan Leng 229,000 0.16

16. Wong Ngit Liong @ Wong Geok Kiong 204,600 0.14

17. Nomura Securities S’pore Pte Ltd 199,173 0.14

18. OCBC Securities Private Ltd 189,650 0.13

19. Liew Chee Kong 187,000 0.13

20. Phillip Securities Pte Ltd 177,080 0.12

Total: 132,630,942 90.70


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Statistics of Shareholdings

As at 23 August 2004


New ChallengeNew Target

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Elec & Eltek International Company Limited(Incorporated in the Republic of Singapore)

Annual Report 2003/2004Elec &

Eltek International Company Lim

ited

Company Registration Number 199300005H

Elec & Eltek International Company Limited · 2011. 3. 14. · Elec & Eltek International Company...

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