Issuu on Google+

Annual Report 2003

FACTORY 1,2,3 (SAMUTSAKORN) 60 Moo 8, Sethakij Road, Klong Maduea, Kratoom Ban, Samutsakorn 74110, Thailand Tel. (6634) 472-000, 849-000 Fax. (6634) 471-654, 471-998, 472-009 FACTORY 4,5,6 (PETCHABURI) 138 Moo 4, Phetchakasem Road, Sapang, Koaw Yoi, Petchaburi 76140, Thailand Tel. (6632) 447-756-67 Fax. (6632) 477-619-20 SHOW ROOM No. 7 Building 3P 27/1 3rd floor, IT Mall, Fortune Town Bldg, Rachadapisek Road, Din Dang Bangkok 10407 Tel. 0-2641-0946-48 Fax. 0-2641-0752 TAIWAN (TAIPEI BRANCH) 3Fl., No. 205, Sec. 3, Beisin Rd., Sindian City, Taipei County 231, Taiwan R.O.C. Tel. 886-2-2764-5312 Fax. 886-2-2748-5208 CAL-COMP ELECTRONICS (SUZHOU) CO., LTD. No. 18, Jiangxing Rd., Wujiang Economic Development Zone, Jiangsu, China Tel. 86-512-6340-7000 Fax. 86-512-6340-7995

Cal-Comp Electronics (Thailand) Public Company Limited.

Annual Report 2003 Cal-Comp Electronics (Thailand) Public Company Limited

HEAD OFFICE 191/54, 191/57, 18th floor, CTI Tower, Rachadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel. (662) 261-5033-40, 661-9381-88 Fax. (662) 261-5042, 661-9396-9 e-mail : ir@calcomp.co.th http://www.calcomp.co.th

Cal-Comp Electronics (Thailand) Public Company Limited. CCET


0

Annual Report 2003

CONTENTS Financial Highlights

1

Message from Chairman & President

2

Board of Directors

9

General Information

10

Nature of Business Operation

12

Risk Factors

21

Shareholding Structure and Management

23

Organization Chart

28

Related Party Transactions

32

Audit Committee Report

36

Controlling System & Internal Audit

38

Directors’ Reporting

38

Relation with Investors

39

Social and Environment Responsibilities

39

Report of Independent Auditor

41

Management Explanation

72


Cal-Comp Electronics (Thailand) Public Company Limited

FINANCIAL HIGHLIGHTS BALANCE SHEET SUMMARY

2003

2002

2001

528,591,120 5,191,526,472 4,695,484,285 11,664,114,080 213,652,382 3,829,224,176 15,897,224,682 3,072,953,989 3,798,382,187 7,581,065,993 1,409,215,351 8,990,281,344 3,780,000,000 3,050,310,720 3,366,569,232 6,906,943,338 305,031,072 303,074,659

832,719,330 4,564,803,051 3,790,164,115 10,561,465,151 202,042,388 2,719,141,248 13,752,183,942 971,505,366 2,786,821,175 5,375,237,256 2,075,669,898 7,450,907,154 3,780,000,000 3,020,000,000 2,789,616,650 6,301,276,788 302,000,000 302,000,000

982,524,375 4,340,457,842 4,036,602,020 10,919,707,251 165,505,260 2,815,638,346 14,210,103,002 2,343,392,079 3,976,022,759 8,100,216,090 8,100,216,090 3,200,000,000 3,020,000,000 2,551,713,533 6,109,886,912 302,000,000 302,000,000

2003

2002

2001

29,086,570,253 29,330,849,792 26,953,139,154 814,426,794 27,771,357,630 1,484,772,316

32,364,007,357 32,502,545,768 30,055,401,976 739,553,747 30,820,035,512 1,596,903,117

32,314,344,967 32,512,538,862 29,717,319,352 907,409,420 30,681,475,762 1,614,330,630

KEY FINANCIAL RATIOS

2003

2002

2001

Liquidity Ratios Current ratio Quick ratio Collection period (days) Inventory turnover (days) Payment period (days) Cash cycle (days)

1.54 0.92 60.38 56.67 43.98 73.07

1.96 1.26 49.53 46.87 40.50 55.90

1.35 0.85 51.98 53.74 45.24 60.48

Profitability Ratios Gross profit margin Operating profit margin Net profit margin Return on equity

7.33% 4.53% 5.06% 22.48%

7.13% 4.85% 4.91% 25.73%

8.04% 5.23% 4.97% 29.31%

Efficiency Ratios Return on total assets Return on fixed assets Total assets turnover (times)

10.02% 55.90% 1.28

11.43% 70.10% 1.55

11.10% 69.84% 1.49

Leverage Ratios Total liability / Total equity Interest coverage (EBIT/I)

1.30 19.58

1.18 21.12

1.33 8.74

Information on Shares Book value per share Earnings per share Dividend per share

22.64 4.90 3.00

20.87 5.29 3.00

20.23 5.35 3.00

15.60% 20.66% -10.13% -9.76% -10.32% 10.12% -7.02%

-3.22% -8.02% 0.15% -0.03% 1.14% -18.50% -1.08%

-4.51% -18.78% 2.64% 3.20% 1.14% 55.65% 37.40%

Cash in hand and at banks Accounts receivable Inventory Total current assets Investment Land, building and equipment (net) Total assets Loans from banks Accounts payable Total current liabilities Long-term loans Non current liabilities(Convertible Bonds) Total liabilities Registered capital Paid-up capital Retained earnings Total shareholders’ equity Number of shares Outstanding Dec 31 Weighted average number of shares PROFIT & LOSS STATEMENT SUMMARY Sales Total income Cost of sales Selling and administrative expenses Total expenses Net profit

Growth rate Total assets Total liabilities Sales Total revenue Cost of sales Selling and administrative expenses Net profit

0

1


0

2

Annual Report 2003

MESSAGE FROM CHAIRMAN & PRESIDENT The Company was successfully listed on the Taiwan Stock Exchange as a Taiwan Depositary Receipt (TDR) in September 2003.

Due to the uncertainty of the military action in the Middle East early this year, the economic growth and consumer spending remained stagnant during the first half of 2003. The war not only affected the Company, which experienced a decline in sales compared to that of last year, but also aversely impacted businesses in this industry and in other industries as well. However, we believe this decline in sales to be for the short run and expect to see a continuous future sales growth. Two important events occurred last year, which positively affected the Company. First, thanks to the support from our investors and the government, the Company was successfully listed on the Taiwan Stock Exchange as a Taiwan Depositary Receipt (TDR) in September 2003. We believe that the listing on the TSE will positively improve our reputation and expand our future fund raising channels. Second, we expanded our production capacity by investing in a manufacturing facility in the People Republic of China. By the third quarter of 2003, we completed the construction of the facility and commenced the production of new products. The establishment of a production plant in China is an important step for the Company in its strive toward becoming a global EMS. In 2004, we expect to see a positive global economic outlook, and with our worldwide presence and the support of our dedicated staff and management we will be able to achieve business growth in the future. On behalf of the Kinpo Group, I would like to express my utmost gratitude to all our shareholders and business associates for their continuous support in the Company.

Mr. Hsu, Sheng-Hsiung Chairman


Cal-Comp Electronics (Thailand) Public Company Limited

The Company completed the construction of the first manufacturing plant in The People’s Republic of China for the production of telecommunication and computer peripheral products. Given several negative global economic factors, such as the Iraq War and the SARs outbreak, the year 2003 remained a tough year for the Company. The distressed economic situation caused some delay in the launch of our new products. Furthermore, due to the uncertain economic condition our customers became more conservative and cautious in placing product orders. Therefore, the sales of the Company slightly declined, compare to that of the previous year. The listing of the Company on the Taiwan Stock Exchange as a Taiwan Depositary Receipt (TDR) was a big step. It will surely assist us in our expansion by enhancing the fund raising channels on an international level, helping in reducing the future cost of funds, thus enabling us to generate better returns to our shareholders. In addition, the Company completed the construction of the first manufacturing plant in The People’s Republic of China for the production of telecommunication and computer peripheral products. This expansion will focus on producing new products and serving new clients in both the Chinese market and the global markets as well. Moreover, we have begun the construction of the second plant in China, which will be completed this year. Hopefully, the continuing economic recovery and the readiness of our production facilities will expand our business growth in the coming years. We are confident in our ability to sustain future sales growth, to effectively compete with our competitors, to produce credible and reliable products with utmost quality, and to serve our customers with competent business operations and knowledgeable staff. More importantly, we are confident of our potential in becoming a leading EMS in the near future. On behalf of the Board of Directors, I would like to express my heartfelt gratitude to our shareholders whose confidence contributes to the ultimate achievement of the Company and to our new and existing patrons who continuously support us, making us one of the leading companies in the industry.

Mr. Chiang, Hsiao-Chin President

0

3


0

Annual Report 2003


Cal-Comp Electronics (Thailand) Public Company Limited

0


0

Annual Report 2003


Cal-Comp Electronics (Thailand) Public Company Limited

0


Annual Report 2003

Reward & Quality Standard ISO 9002 Certified ISO 14001 Certified IEC 17025 QS 9000 Certified


Cal-Comp Electronics (Thailand) Public Company Limited

BOARD OF DIRECTORS no. of ordinary shares 361,000 no. of TDR -NoneEducation • Bachelor of Chinese, National Taiwan Normal University Working Experience • 1992-present The Chairman of the Board of Kinpo Electronics Inc. 1994-present The Chairman of the Board of Compal Electronics Inc. 1989-present The Chairman of the Board of Cal-Comp Electronics (Thailand) Plc.

MR. HSU, SHENG-HSIUNG

no. of ordinary shares 1,001,000 no. of TDR -NoneEducation • Bachelor of Industrial Engineering, Taipei College Working Experience • 1999-present Executive Vice President of Kinpo Group 1989-present The President of Cal-Comp Electronics (Thailand) Plc. MR. CHIANG, HSIAO-CHIN

no. of ordinary shares 456,000 no. of TDR -NoneEducation • Bachelor of Electrical Engineering, National Taiwan University Working Experience • 1995-present The Director of the Board of Kinpo Group 1989-present The Director of the Board of Cal-Comp Electronics (Thailand) Plc.

MR. KUO, HSIEN-MIN

MR. HSU, SHENG-CHIEH

no. of ordinary shares 556,000 no. of TDR -None-

Education • Bachelor of Architecture, Tamkang University Working Experience • 1994-present The Director of the Board of Kinpo Electronics Inc. 1989-present The Director of the Board of Cal-Comp Electronics (Thailand) Plc. MR. KO, CHARNG-CHYI

no. of ordinary shares 156,000 no. of TDR -None-

Education

• Master of BA, National Cheng Chi University Bachelor of Business Administration, National Taiwan University Working Experience • 1994-present The Director of the Board of Kinpo Electronics Inc. 1989-present The Director of the Board of Cal-Comp Electronics (Thailand) Plc. MR. CHOU, KUNG-HSIUNG

no. of ordinary shares 140,000 no. of TDR 30,000

Education • Bachelor of Engineering, Feng Chia University Working Experience • 2000-2002 Assistant Managing Director of Cal-Comp Electronics (Thailand) Plc. 2002-present The Director of the Board of Cal-Comp Electronics (Thailand) Plc.

no. of ordinary shares -Noneno.of TDR -NoneEducation • MBA, Major in Finance and Marketing University of Chicago Working Experience • 1998-present Managing Director of Wing Wah Advisory (Thailand) Limited. 2000-present The Independent Director of Cal-Comp Electronics (Thailand) Plc. MR. WILLIAM HANG MAN CHAO

MR. CHATCHAVAL JIARAVANON

no. of ordinary shares -Noneno. of TDR -None-

Education • B.A., University of Southern California Working Experience • 2000-present President and CEO of Telecom Holding Co.,Ltd. 1993-present President of Telecom Asia Corporation Plc. 2000-present The Independent Director of Cal-Comp Electronics (Thailand) Plc.

no. of ordinary shares -Noneno. of TDR -NoneEducation • Master of Business Administration University of Denver, Colorado Working Experience • 2002-present Chief Executive Officer of Aberdeen Asset Management Co., Ltd. 2000-present The Independent Director of Cal-Comp Electronics (Thailand) Plc. MR. ALAN KAM

0

9


1

0

Annual Report 2003

GENERAL INFORMATION GENERAL INFORMATION OF THE COMPANY Cal-Comp Electronics (Thailand) Public Company Limited (the “Company”) was established in 1989 and to manufacture electronic products in the form of OEM (Original Equipment Manufacturer). At present, the Company’s groups of products consist of 3Cs which include (1) Computer Peripheral sectors such as Ink Jet color printer, Multi-function printer, Dot Matrix Printer, LCD monitors, DVD, Auto PC, Digital Camera, Web Pad, Computer Set, Personnel Data Assistant, E-Book, Printed circuit board assembly for hard disk, etc., (2) Telecommunications Equipment sectors such as Cordless Telephones, Mobile Phone (CDMA, TDMA, GSM), FWT, Integrated Satellite Receivers and Transmitters, Cable Modems, GPS Personal Local, etc., and (3) Consumer Office Equipment sectors such as Facsimile Machines, Finger Print, etc. The head office is located at 191/54 and 191/57 CTI Tower, 18th Floor, Ratchadaphisek Road, Klongtoey, Bangkok 10110, Telephone 261-5033-40, Fax 261-5042, corporate registration no. bor mor jor. 656, Homepage http\\:www.calcomp.co.th. As of December 31, 2003, the Company had registered capital of Baht 3,780 million and paid-up capital of Baht 3,050.31 million. COMPANIES IN WHICH CAL-COMP ELECTRONICS PLC. HOLDS 10% OR MORE OF THE SHARES OUTSTANDING • Logistar International Holding Co.,Ltd.

100%

On May 2001, the Company established a new subsidiary company abroad with an initial capital of USD 50,000in order to enhance the company’s business potential in the future. The Company was established to be a holding company for the CCET’s investment oversea, as also act as a selling agent for CCET’s products. The registered address is situated at Beaufort House, P.O. Box 438, Road Town, Tortola, British Virgin Islands. • Wise Sigma International Holding Co.,Ltd.

45%

November 2001, the Company’s had invested 45% in Wise Sigma International Holding Co., Ltd. through Logistar Internatonal Holding Co., Ltd. with an initial capital of USD 50,000 which was increased to USD 5,000,000 on October 2002. It was established to enhance the Company’s business potential in the future. The registered address is situated at Beaufort House, P.O. Box 438, Road Town, Tortola, British Virgin Islands. • Telian Corporation (Korea)

27.82%

Incorporated in Korea, 60 % of initial registered capital of Telian shares are held by parties who have no related interest in Kinpo group and Cal-Comp group. This subsidiary is engaged in research and distribution of cordless phones and mobile phones by sending the prototype to Cal-Comp to manufacture and export. The office address is 4th Fl., Namjeun Bldg., 53-3 Haan-Dong, Kwangmyung-Si, Kyunggi-Do, 423-060, Korea.


Cal-Comp Electronics (Thailand) Public Company Limited

• Wide Telecom Inc. (Korea)

11.58%

In 2001, Wide Telecom was incorporated to engage in develop and manufacture of telephones and instruments for wire & wireless communication network. Cal-Comp will receive the prototype from Wide Telecom for production and export. The office address is C-402, Pundang Techno Park, 151, Yatap-Dong, Pundang-Ku, Sungnam-Si, Kyunggi-Do, Korea. • Cal-Comp Electronics (Suzhou) Co., Ltd.

100%

In May 2002, Cal-Comp Electronics (Suzhou) Co., Ltd. was established with an initial capital of USD 10 million in order to expand the capacity and manufacture telecommunication equipments and accessories. The registered address is no.18, Jiangxing Road, Wujiang Economic Development Zone, Jiangsu, The People’s Republic of China. • Cal-Comp Optical Electronics (Suzhou) Co., Ltd.

100%

In October 2003, the Company established a second subsidiary company in The People’s Republic of China, with an initial capital of USD 10 million, to manufacture the electronics equipments. The registered address is no.18, Jiangxing Road, Wujiang Economic Development Zone, Jiangsu, The People’s Republic of China. • Inx Japan International, Inc.

20%

Inx Japan International, Inc. was established in the year 2003, to sell, purchase, lease and manage copyrights and design rights, and also act as a computer and peripheral trading company. The investment will allow Cal-Comp Electronics (Thailand) Plc. to use its brand name in the Company’s product. The registered address is 2 Fl., Akasaka Long Beach Bldg., Akasaka 3-21-20, Minato-ku, Tokyo, Japan. OTHER REFERENCE PARTIES Shares Registrar : Thailand Securities Depository Co., Ltd. 4th, 7th floor, The Stock Exchange of Thailand Building Rachadapisek Road, Klongtoey, Bangkok 10110 Tel: (662) 229-2800 Fax : (662) 359-1259 Financial Advisor : Trinity Advisory 2001 Co., Ltd. 26th floor, Bangkok City Tower 179/108 South Sathon Rd., Sathon Bangkok 10120 Tel: (662) 670-9100 Fax: (662) 286-7222

1

1


1

2

Annual Report 2003

NATURE OF BUSINESS OPERATION Cal-Comp Electronics (Thailand) Public Company Limited was established with an initial registered share capital of Baht 125 million on 4th December, 1989 to manufacture and export finished electronic products and accessories. The major shareholder was Kinpo Electronics, Inc., a giant manufacturer of electronic products in Taiwan. Its current products are calculators, global positioning systems (GPS), digital cameras, personal digital assistants (PDA), etc. Kinpo Electronics Inc. was listed on the Taiwan Stock Exchange (TSE) in 1989. At present, the Company’s major shareholders are Kinpo Electronics, Inc. and Compal Electronics, Inc. (a company listed on TSE and being a company in the Kinpo Group manufacturing monitors and notebooks) holding 57.13% and 11.36% stake respectively in the Company. Currently, the main electronic products manufactured by the Company are as follows: Ink Jet Color Printer, Multi-function Printer, Auto PC, LCD Monitors, Cordless Telephones, Dect Phone, Mobile phone Code Division Multiple Access (CDMA) and Time Division Multiple Access (TDMA), Fixed Wireless Terminal (FWT), Integrated Satellite Receiver and Recorder, Cable Modems, Electronics Calculator, Facsimile Machines, Blue tooth, Web Pad and Electronics Dictionary. The Company can provide its customers with integrated services. The Company has initiated the new products such as multi-function printer, PCBA and already started the mass production and delivery to the customers. Afterwards, a research and development department has been established to design, develop and improve its products in an attempt to achieve the cost-efficiency aim, and to modify cosmetics and mechanism of products to satisfy its cost reduction program and customers’ requirements. As a result, the Company has become well known and recognized both locally and internationally for its high-standard quality of products. It was among certain famous companies in Thailand, which was preliminarily granted a certificate of standard entitled ISO 9002, ISO 14001, QS-9000 and IEC17025. The Company has been listed in the SET in 2000 with the Baht 3,200 million of registered share capital, which was increased to Baht 3,780 million on May 23, 2002 due to the issuance of ECB (Euro Convertible Bond), and as of December 31, 2003, the paid-up capital was Baht 3,050,310,720. It has been granted certificates of promotion by the Board of Investment in the category 5.6 in the areas of production of electronic products and 5.7 in the areas of production of component parts and accessories of electronic products. Plants are located at 2 provinces of Thailand and 1 province of China i.e. 3 plants in Kratoomban District, Samutsakorn, 3 plants in Khaoyoi District, Petchburi and 1 plant in Suzhou, Jiang Su province, China with totally 6,787 employees as of December 31, 2003. There is 1 plant under construction at Suzhou, Jiang Su province, China with 1,790 employees in total.


Cal-Comp Electronics (Thailand) Public Company Limited

Remarks : Kinpo Electronics, Inc. securities holding amount shows 57.13% came from the securities holding amount of Kinpo Electronics, Inc. plus Kingbolt International (Singapore) Pte, Ltd. of 49.2% and 7.93% respectively. Compal Electronics, Inc. securities holding amount shows 11.36% came from the securities holding amount of Compal Electronics, Inc. plus Just International (Singapore) Pte, Ltd. of 10.47% and of 0.89% respectively

INVESTMENT POLICY AND RIGHTS AND BENEFITS DERIVED FROM INVESTMENT IN ANY SUBSIDIARY COMPANY, ASSOCIATED COMPANY AND OTHER COMPANIES. In an attempt to make investments in any subsidiary company, associated company and other companies, the Company will particularly take into account the possibility of generating proceeds and benefits to be obtained by the Company. As at present the Company plans to expand its base into the telecommunications, computer and internet industries, it continues to make investments in such subsidiary companies, associated companies and other companies in such industries in Korea and Taiwan which are well-recognized for their expertise in the research and development of telecommunications and computer products. As a result, the sales volume of the Company has increased and the clients base expanded, such developing of client base will generate more sales and business opportunity to the Company, and it has further received a great amount of profit in proportion to shareholding and dividend payment from such investments. (Particulars of the Joint-Venture Agreement between Telian Corporation and Wide Telecom, Inc. are set forth in Agreement Part).

1

3


1

4

Annual Report 2003

SHAREHOLDING STRUCTURE OF CAL-COMP GROUP AS OF 31ST DECEMBER 2003

Cal-Comp Electronics (Thailand) Plc.

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

Logistar International 100% Holding Co., Ltd.

Wise Sigma International Holding Co.,Ltd.

45%

Telian Corporation 27.8% (Korea) Inx Japan International, 20% Inc. Wide Telecom, Inc. (Korea) 11.6%

Afreey, Inc. (Taiwan) 6.9%

INCOME STRUCTURE Divisions

2001 Million Baht

2002 % Million Baht

2003 % Million Baht

%

Office Equipment

2,311.79

7.15

1,470.71

4.54

1,449.58

4.98

Telecommunication Accessories

7,755.92

24.01

9,997.41

30.89

12,433.80

42.75

21,051.20

65.14

20,295.31

62.71

15,203.19

52.27

1,195.43

3.70

600.58

1.86

-

-

Computer Accessories Others Total Sale

32,314.34 100.00

32,364.01 100.00

29,086.57 100.00

Note: 1) All types of products are manufactured by Cal-Comp Electronics (Thailand) Plc., and Cal-Comp Electronics (Suzhou) Co., Ltd. 2) Fixed assets cannot be classified by product group due to the fact that several products are manufactured in the same line of production.


Cal-Comp Electronics (Thailand) Public Company Limited

MATERIAL CHANGES IN 2003 • The first subsidiary company in Suzhou, The People’s Republic of China named Cal-Comp Electronics (Suzhou) Co., Ltd. was established with the initial investment of USD 10 million. • The second subsidiary company was established in Wu Jiang, The People’s Republic of China named Cal-Comp Optical Electronics (Suzhou) Co., Ltd. with the initial investment of USD 10 million. • The first China Plant commenced production in 3Q/03 and produces TDMA, CDMA, GPRS and Multi-Function Printer. • The second China Plant has commenced construction in Wu Jiang, China, it aimed to produce the PC and Peripheral products. • The Company invested YEN10,000,000 or Baht3,650,000, which is accounted for 20% of total outstanding shares, in Inx Japan International, Inc. • The Company purchased a new office for Taipei Branch at Sindian City, Taipei Hsien, Taiwan (R.O.C.) from non-related party for total area including the parking lot for 7,483 square meters with total amount of NTD374.00 million or THB456.28 million (market price) due to the company’s long-term strategy consideration and future business expansion purpose. • Taiwan Depositary Receipt (TDR) was listed at Taiwan Stock Market on September 22, 2003. Trading code in Taiwan Stock Exchange Corporation (TSEC) is 9105.TW. • Due to the exercise of Euro Convertible Bond (ECB) in 2003, the Company’s paid up capital has increased from Baht 3,020,000,000 to Baht 3,050,310,720 as of December 31, 2003. Moreover, the ECB has been redeemed in December 2003 with the redemption amount of US$9,999,000, as a result, the ECB outstanding is 35,500 units with an amount of US$35,500,000 as of December 31, 2003. MARKET AND COMPETITION CCET, which has all of its production facilities in the low cost base of Thailand and China, is aware of this general outsourcing trend and of the growth of the electronics product in the coming years. Since China is the most important emerging market for consumer electronics, it is necessary to establish production facilities and capacities close to the market. Mobile Market We do focus on the growth in China which will come from the handset market such as CDMA, TDMA and GPRS handsets. According to IDC, in terms of mobile market, the worldwide mobile phone market will enjoy long-term expansion through 2007 and beyond. Driven by the intense human desire to communicate with one another while mobile, subscriber levels and mobile phone shipments will expand at a sustained pace, surpassing 1.2 billion individuals total and 471 million units shipped in 2003. Barring unforeseen events and disclosures, worldwide economic improvement in 2004, the rollout of 3G services worldwide, and new mobile phone technologies will allow the industry to maintain a growth rate of 7% overall through 2007.

1

5


6

Annual Report 2003

Worldwide Mobile Phone Shipments by Air Interface, 2000-2007 (m) 2003-2007 2000

2001

2002

2003

2004

2005

193.16

236.68

2006

2007

CAGR (%)

261.39

268.94

13.2

2.5G GSM/GPRS

1.47

EDGE

0.00

0.00

0.00

1.10

9.25

28.35

39.62

57.31

120.7

CDMA2000 1XRTT

0.87

11.66

61.57

74.99

88.42

98.55

102.88

97.31

5.4

Subtotal

2.34

19.27

134.94 220.69 290.83 363.57 403.90 423.58

13.9

7.41

73.37

144.60

3G WCDMA

0.02

0.11

1.27

3.67

19.73

42.73

58.68

122.25

101.6

CDMA2000 1X EV-DO 0.00

0.05

0.59

9.58

13.66

25.97

38.37

46.44

37.1

CDMA2000 1X EV-DV

0.00

0.00

0.00

0.00

0.31

1.23

4.53

10.83

143.3

TD-SCDMA

0.00

0.00

0.00

0.00

0.09

0.56

3.16

8.28

207.5

0.02

0.16

1.86

13.24

33.80

70.49 104.74 187.79

70.0

438.11 471.72 507.36 548.37 593.15 660.51

7.1

Subtotal Total

401.00 391.69

Source: IDC , 2003 Worldwide Mobile Phone Shipments by Region, 2002-2007 700 600 500

(M)

1

400 300 200 100 0

2000

2001

United States

2002

2003

Europe

Japan

2004

2005

2006

Asia Pacific (excluding Japan)

2007

ROW

Source : IDC, 2003 Image Products Market The image products also provide another potential growth drive; they have been focus on computer and video peripheral products. Digital image technology has brought the image process revolution into peoples lives. Convenience and slimness leads people to use new consumer electronics, such as TFT-LCD monitor, Car PC, so on. This milestone for the Company in that it starts to put efforts in R&D and ODM business for mainstream product, such as 15- to 17- inch TFTLCD monitor.


Cal-Comp Electronics (Thailand) Public Company Limited

Printer The OEM printer business has been playing an important revenue source since 1999. OEM Printer sales is expected to be sustainable with flat growth since the global inkjet printer demand matures and the key component of cartridge is mainly controlled by global vendors, such as HP, Epson, Cannon, and Lexmark. According to the global inkjet printer shipment forecast by Market Access, a market research institution Japan, global demand has entered the modest growth stage of 10.6% YoY from 53 million in 2002 to 58.6 million in 2003 despite the popularity of digital image process. Global Inkjet Printer Shipment Forecast (mn-unit)

(%)

70

25

60

20 15

50

10 40 5 30

0

20

(5)

10

(10) (15)

0

1997

1998

1999

Shipment (mn-unit)

2000

2001

2002

2003

YoY (%)

Source : Market Access, SinoPac, Jan. ’03 The competitive advantages for the Company include low production cost, reliable OEM quality, time to market capability, Co-design technology and also providing total solution to clients. In terms of the product, the Company keeps continuously launching new products such as Multifunction printer, Printed Circuit Board Assembly during 2003. Such strong points make us prevail over many of our competitors. Thanks to our good relationships with our suppliers, the Company has a negotiating power to request amicable business terms and conditions. The Company has established an active research and development department to oversee the quality of our products and made several investments in companies specializing in designing computer and telecommunication equipment and accessories. The Company is also aware that some customers, especially medium-sized companies, have not been getting enough attention from the top-tier OEM and EMS players, and are increasingly turning to smaller EMS vendors. Rather than competing directly with top-tier OEMs, the Company is well prepared to enhance our competitiveness within the mid-tier EMS business in Asia. PROCUREMENT OF PRODUCTS FOR SALE The manufacturing plants are located in Thailand and The Republic of China i.e. 3 plants situated at No. 60 Moo.8, Settakij Road, Kratoomban District, Samutsakorn, 3 plants situated at No. 138 Moo.4, Petchkasem Road, Khaoyoi District, Petchburi with total area of 193,600 square metres

1

7


1

8

Annual Report 2003

and the manufacturing plant in China situated at No.18,Jiangxing East Road, Wujiang Economic Development Zone, Jiangsu, the Republic of China with total area of 298,667 square metres. Currently, the Company’s manufacturing consumes one shift/day (8 hours). An average actual production quantity on a daily basis is up to 75% of the full productivity. During 2001-2003, details of the actual production quantity are set forth below. (Unit in Thousand set)

Products

2001

2002

2003

Office Equipment

2,286

1,879

1,894

Telecommunication Accessories

2,958

5,779

9,376

Computer Accessories

7,244

8,150

11,441

155

101

-

Others

TYPES AND SOURCES OF ESSENTIAL RAW MATERIALS Most of raw materials are imported from foreign countries. The following list shows the sources of each kind of raw materials. Type

Details

Source

LCD Panel

TFT LCD Panel, Module

Taiwan, Korea, China

Radio Components

RF Modulator, Tuner,

Korea, Taiwan, China

Resonator, Antenna, Filter Chip IC, IC and IC encoders

Electric circuits which vary

Singapore, Japan, Korea, U.S.A.

in terms of usage and size according to types of electronic appliances Capacitors

Equipment used in storing

Singapore, Korea, Taiwan, Japan

electric charge Pens

Printer inks

Singapore

Plastic Resins

Plastic granules

Singapore, Korea, Malaysia, U.S.A., Germany

Printed Circuit Boards (PCB)

Electronic circuit boards

China, Taiwan

used in all kinds of electronic appliances Adapters and Cables

Electric cables and adapters

Thailand, China, Malaysia

Printer Heads

Printer heads used in

Singapore, Japan

printers and printing calculators Miscellaneous parts

Screws, Nuts, Washers, Rollers

China, Taiwan, Thailand

Packaging raw materials

Paper cartons, polyfoam,

Thailand

plastic bags, tapes, glue, tags

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


Cal-Comp Electronics (Thailand) Public Company Limited

NUMBER OF SUPPLIERS In comparison between the quantity of local and foreign raw materials, it appears that they do not vary from year to year because it is the Company’s policy to equally maintain the amicable relationships with its counterparts, customers and suppliers. The Company does not depend on any supplier for more than 30% of the purchase value of raw materials during the past three consecutive years. Details of purchasing of local and foreign raw materials during 2001 - 2003 Year 2001 Thailand Plant China Plant Baht % Baht % Million Million

Year 2002 Thailand Plant China Plant Baht % Baht % Million Million

Year 2003 Thailand Plant China Plant Baht % Baht % Million Million

2,481.17

8.83

-

-

1,889.67

6.51

-

-

3,007.28

11.38

65.89

3.15

25,613.34

91.17

-

-

27,129.96

93.49

-

-

23,428.66

88.62

2,026.49

96.85

28,094.51 100.00

-

-

29,019.63 100.00

-

-

26,435.94 100.00

Local Raw materials Foreign raw materials Total

Notes :

2,092.38 100.00

The total purchasing amount of raw materials in 2003 included the amount of the ending materials.

SUPPLIERS Raw materials purchased by the Company from suppliers are divided into three groups as follows. 1) Direct purchase 2) Through parent company 3) Through subsidiary companies The purchasing of essential raw materials such as ICs, chips is mainly subject to the specification of the customers. Within this ambit, the parent company and subsidiary companies are deemed as the Company’s customers. Random check in respect of each kind of raw materials is proportionally and regularly made. Also the qualifications of each supplier, by following the vendor quality assurance method prior to commencing any deal. The Company will purchase raw materials from any supplier, which meets the Company’s requirements such as those obtaining an ISO 9002 certificate. Moreover, the Company has asked the following suppliers to relocate their plants within the area of the Company so as to facilitate the quality control, save storage room for raw materials and reduce deliver time. The six suppliers have no connections with the Company nor its executive officers.

1

9


2

0

Annual Report 2003

Company (Located in plant area)

Raw materials

Ever Jet Co., Ltd.

Plastic component parts

Jet Industries (Thailand) Co., Ltd.

Plastic component parts

Yong Deng Industry (Thailand) Co., Ltd.

Steel component parts, pressing steel

Lanjo Enterprise (Thailand) Co., Ltd.

Rollers

Hypertek Plastic Industry Co., Ltd.

Plastic

Chung Cheng Plastic (Thailand) Co., Ltd.

Plastic

DETAILS OF PURCHASING CHANNELS OF RAW MATERIALS DURING 2001- 2003 Year 2001 Thailand Plant China Plant Baht % Baht % Million Million Direct purchase

Year 2002 Thailand Plant China Plant Baht % Baht % Million Million

Year 2003 Thailand Plant China Plant Baht % Baht % Million Million

28,017.08

99.73

-

-

28,686.98

98.86

-

-

26,276.25

99.40

1,758.33

84.03

23.28

0.08

-

-

61.88

0.21

-

-

18.48

0.07

334.05

15.97

-

-

Through parent company Through subsidiaries and Joint Venture Total

Notes :

54.14

0.19

-

-

270.77

0.93

-

-

141.21

0.53

28,094.51

100.00

-

-

29,019.63

100.00

-

-

26,435.94

100.00

2,092.38 100.00

The total purchasing amount of raw materials in 2003 included the amount of the ending materials.

PURCHASING POLICY The Company’s purchasing policy is based upon the comparison of prices of raw materials quoted by each supplier, and punctual delivery of the supplier to each shipment and taking into account the maximum benefits to be obtained by the company. In the purchasing process, the sales department and the production department will cooperate in planning the purchase of raw materials so as to ascertain the demands for each period and maintain the inventory at an appropriate level from time to time.


Cal-Comp Electronics (Thailand) Public Company Limited

RISK FACTORS 1. Risk factors in short term borrowing The Company high proportion of short-term debt means the Company would be vulnerable in the event of a credit crunch and exposes the Company to volatility associated with interest rates or market liquidity. However, the Company intends to diversify the risk of borrowings and create some medium term debt in order to strengthen the balance sheet. 2. Foreign exchange fluctuation risk The fluctuation of the exchange rate of the Baht against dollar affects the Company’s sales and profit significantly. The Company major exposure arises from import of raw materials and export revenues. Occasionally, the Company has conservatively used the natural hedging policy to match expenses and revenues, mainly denominated in US Dollar. 3. Risk of appreciation in Thai Baht A sharp appreciation in Thai Baht will impact the margins and earnings of the Company. Therefore, the Company must tighten control the operating cost and carefully manage the foreign liabilities and assets in order to reduce the risk of appreciation in Thai Baht. 4. Risk factors in connection with the insufficiency of skilled labour force Based on the fact that the growth of electronic industry is quite high and conspicuous in this day and age, the Company deems it necessary to recruit a number of skilled and professional persons such as engineers. By reason of a limited number of high-quality human resources in Thailand and tendency of job changes, the Company had started to invest in Mainland China and it will be able to bring more technical engineers to work and train Thai engineers with the lower cost compare to the Taiwan and Korea engineers. 5. Risk factors in connection with the change in life cycle of products and production technology Significantly, life cycle of electronic products always changes rapidly due to the continuity innovation of technology and general standards of products. This situation forces product designers to be alert and updated at all times. However, as the Company operates the OEM business mostly, it will not be materially affected by such situation. Moreover, the Company’s production lines are ready to accommodate new products. The Company always develops our technology and capability in order to provide total solution to our existing and new customers. 6. Risk factors in connection with market competition Due to the highly competitive electronics market, the ability to remain profitable is one of the risks for manufacturers. However, the Company’s long-term efforts at cost reduction in Original Equipment Manufacturing (OEM) and reputation for reliability and quality service are noticed by our world-class clients. The strong client base shows that CCET can compete with industry leaders. 7. Risk factors in connection with the obsolete inventories The Company’s inventories had increased from Baht 3,790.16 million at December 31, 2002 to Baht 4,695.48 million at December 31, 2003. The management is always aware of the risk of obsolete inventories; the Company strictly monitors shipping order schedule and control the lead time for raw material procurement in order to reduce the risk of obsolete inventories.

2

1


2

2

Annual Report 2003

8. Risk factors in concentration on key clients Owing to the continuously developing of new products and clients, the Company is able to enter into LCD monitor business, Hard Diskette, and Printed Circuit Board Assembly with new clients, which have grown to become the firm’s key sales growth driver. Meanwhile, given the popularity of handset and wireless communications, telecommunication equipment products being a key driver as well. Furthermore, the Company is continuously established its new product dedicated to consumer and electronic products. Therefore, the concentration risk on key clients should be reduced. 9. Risk factors regarding the dependence on and competition with the parent company. (Kinpo Group) In the past, the company’s sales were largely via the parent company, Kinpo Group. Over the past years, the Company has been able to increase its direct sales portion, thus reducing its dependency on the parent company. 10.Risk factors related to the dependence on and competition with the parent company. As the Company operates the OEM business whereby the production is subject to the customers’ instructions, the Company is not quite dependent on technology and know-how of the Kinpo Group. In addition, the Company’s research and development department is responsible for improving the quality of products made by the Company and production lines in order to maintain the lowest production costs. Meanwhile, the Company invested in some R&D technology companies in Korea and Taiwan in order to build up technology skill independently such as in term of telecommunication and computer peripheral. 11.Risk factors in connection with the influence of the parent company on the administrative direction of the Company At present, five members of the Company’s current board of directors have been designated by Kinpo Group in order to facilitate the cooperation between the Company and Kinpo Group as the major shareholder and acquire the benefits from efficient administration and good relationships between the parties concerned. In other words, Kinpo Group may have the material influence on the administrative direction of the Company. However, there is a clear-cut separation in the operational management and costs incurred between Kinpo Group and the Company. As mentioned earlier, Kinpo Group’s shareholding in the Company has been reduced from 67.36% to 57.13% after the conversion of Euro Convertible Debenture and the issuance of CCET shares to Taiwan Depositary Receipt, making it unable to control voting at the shareholders’ meeting. Normally, three-fourths of the votes are required to pass any significant issues, such as appointment of directors. There are also some matters requiring a majority vote, except for those prescribed by laws or the Company’s Articles of Association. Therefore, other shareholders may collect votes as a check and balance on matters proposed by the major shareholder. 12.Risk factors in connection with the sufficient working capital Adequate working capital is essential to ensure the smooth sales growth. The Company finances its working capital mainly via internal fund and short-term loan. As of 31 December 2003, the Company has the credit line of Baht 13,100 million and USD 327.50 million, which should be sufficient for the Company’s current operation. 13.Risk factors in connection with the contingent liabilities As of December 31, 2003, there were approximately Baht 96.20 million of outstanding bank guarantees issued to Department of Customs, Electricity Generating Authority of Thailand, The Communication Authority of Thailand, USD 8 million to 100% held- subsidiary company named Logistar International Holding Co., Ltd. and USD 1.5 million standby letter of credit to the joint venture company named Telian Corporation.


Cal-Comp Electronics (Thailand) Public Company Limited

SHAREHOLDING STRUCTURE AND MANAGEMENT LIST OF TOP 10 SHAREHOLDERS Group of shareholders

Nature of business

1. Kinpo Electronics, Inc

Manufacture and distribution of electronic products

No. of shares as December 31, 2003

%

150,066,000

49.20

and accessories

31,924,000

10.47

3. Far Eastern International Bank

-

30,000,000

9.84

4. Kingbolt International (Singapore)

-

24,193,000

7.93

5. Chase Nominees Limited 42

-

6,303,800

2.07

6. HSBC (Singapore) Pte., Ltd.

-

6,256,700

2.05

-

5,211,600

1.71

-

4,549,800

1.49

-

3,374,600

1.11

-

2,720,000

0.89

264,599,500

86.75

2. Compal Electronics, Inc

Manufacture and distribution of computer equipment

7. American International Assurance Company LimitedAIA5E 8. Thai NVDR Company Limited 9. Government of Singapore Investment Corporate - C 10. American International Assurance Company LimitedAIA1 Total

Notes : 1) Kinpo Group includes Kinpo Electronics, Inc. and Kingbolt International (Singapore) Pte. Ltd., which hold totally 174,259,000 shares or 57.13%. 2) Compal Group is including Compal Electronics, Inc. and Just International (Singapore) Pte. Ltd., which hold totally 34,639,000 shares or 11.36% 2.1) Just International (Singapore) Pte. Ltd., holds 2,715,000 shares or 0.89%

2

3


2

4

Annual Report 2003

MANAGEMENT STRUCTURE Executive Committee The Company has two executive committees, that is, the Board of Directors and the Audit Committee, particulars of which are shown below. Board of Directors As of 31st December 2003, the Company’s Board of Directors consists of the following members. 1. Mr. Hsu, Sheng-Hsiung

Chairman

2. Mr. Chiang, Hsiao-Chin

President

3. Mr. Kuo, Hsien-Min

Director

4. Mr. Ko, Charng-Chyi

Director

5. Mr. Hsu, Sheng-Chieh

Director

6. Mr. Chou, Kung-Hsiung

Director

7. Mr. Alan Kam

Independent and Audit Director

8. Mr. William Hang Man Chao

Independent and Audit Director

9. Mr. Chatchaval Jiaravanon

Independent and Audit Director

Remark: 1. Board of Directors Total 9 persons 1 Chairman 1 President 4 Directors 3 Independent Directors ***(2 Directors are management) 2. The Chairman and President is not the same person for the determination of corporate governance policy and Management. The Company has divided authorities between Chairman of the Board of Directors and Executive Director for the suitability of the administration and management functions.

SCOPE OF POWERS AND AUTHORITIES 1. Performance of duties of the board of director The Board of Directors has applied its best knowledge, capability and experience to carefully perform its duties in the Company’s interests in accordance with the law, the Company’s Objectives, the Articles of Association and resolutions made at shareholders’ meeting with a strong commitment to a practice of honesty, straight-forwardness and carefulness towards a maximum extent of effort to maintain both the Company and shareholders’ benefits. 2. Duties on the Accountability to shareholders The Board of Directors shall consistently have accountability to shareholders, protect the interests of shareholders, and clearly and fully disclose information to the investors.


Cal-Comp Electronics (Thailand) Public Company Limited

3. Review and approval of financial report and changes in accounting policy The Board of Directors is responsible for approving the financial report that have been audited and/or reviewed by the auditor and the audit committee and any changes in accounting policy. 4. Review and approval of policies, budget and business plan The Board of Directors is responsible for reviewing and approving any appropriate policy, budget and direction of the Company’s business operation and plan as proposed by the management. 5. Supervision of management The Board of Directors is responsible for supervising the effective performance of the Company’s policy by managing and informing the management in preparing any material reports on the Company’s business operation and other related party transactions in accordance with the rules and regulations of The Office of Securities and Exchange Commission and The Stock Exchange of Thailand. In case of necessity, the Board of Directors will request third parties to give professional or technical advice on any matters, which may materially affect the Company’s business. 6. Internal control and audit The Board of Directors has set up and maintains effective internal control system designed to provide management with reasonable assurance that transactions are recorded properly, the assets are safeguarded and that material frauds and malpractices are precluded. The Board of Director also appointed the Audit Committee and the internal auditors to examine the adequacy and the suitability of the internal control systems of the Company. 7. Independent performance of duties of non-management directors The independent directors have in their own discretion to make decision on any strategy, administration, appointment of directors and any other matter which may materially affect the benefits of the Company, including the sufficient and appropriate access to information technology concerning financial and business matters in the interest of the Company’s operation. 8. Ethics and etiquette The Board of Directors prepared a compliance manual in relation to the ethics and etiquette of the management and staff as guidelines for good and proper practice within the organization.

2

5


2

6

Annual Report 2003

SCOPE OF POWER AND DUTIES OF THE PRESIDENT According to the Approval Authority List dated 1st November 1995, the President shall have the powers and duties as follows: 1. To make a decision on important matters; determine the Company’s mission, objectives, strategies and policies; oversee the overall operations, productivity, customer relation and overseas marketing; and assume responsibility to the Board of Directors. 2. To approve the Company’s annual budgets. 3. To approve credit lines and terms of payment to the customers, conclusion of product supply agreements and changes in dealing conditions, conclusion of insurance contracts, and management of obsolete inventories. 4. To have the authority to approve a purchase of fixed assets and settlement of payment in an amount up to Baht 20 million. 5. To have the authority to approve investment in a new project in an amount up to Baht 20 million. 6. To determine and approve principles for personnel management and annual salary increase. 7. To approve the appointment of advisors on areas crucial for the operations. 8. To perform any activity relevant to the general administration, excluding connected transactions and acquisition & disposal of properties under the regulations of the Stock Exchange of Thailand. MANAGEMENT As of 1st March 2004, the management of Company consists of the following 10 executive officers. 1. Mr. Chiang, Hsiao-Chin

President

2. Mr. Lai, Chi-Tien

Vice President Administration

3. Mr. Liu, Kuo-Tung

Vice President Sale & Marketing

4. Mr. Yeh, Tien-Kung

Financial Controller

5. Mr. Yu, Hsing-Chin

Business Division Director

6. Mr. Yu, Shih-Tung

Business Division Director

7. Mr. Pan, Hung-Shen

Business Division Director

8. Mr. Chang, Zuei-Wei

Administration Director

9. Mr. Huang, Yu-Hui

Vice Managing Director

10. Mr. Chou, Kung-Hsiung

Vice Managing Director


Cal-Comp Electronics (Thailand) Public Company Limited

APPOINTMENT OF DIRECTORS No nominating committee is established to select any appropriate persons to be directors of the Company. The Company has laid down the guidelines on appointment of the Company’s directors as follows. 1. The Board of Directors is responsible for selecting any appropriate persons, taking into account the experience, vision, abilities and characters, and submitting a list of nominees to the shareholders’ meeting. 2. At each annual general meeting of shareholders, it is prescribed by the Articles of Association that at least one-thirds of the directors or if their number is not a multiple of three (3), the number nearest to one-third (1/3) must retire. In the event that any retired director is re-elected, a resolution of the shareholders’ meeting will be required. At the time of nominating any candidate for the Board of Directors, the Company will prepare a list of details and information about such candidate for the shareholders’ consideration. According to the Articles of Association, the shareholders’ meeting will appoint the Board of Directors in accordance with the following rules and procedures. (1) Each shareholder has a vote for each share he/she holds. (2) Each shareholder will exercise the right to elect one or more persons to be members of the Board of Directors, however, that a vote will not be divided. Each shareholder has the right of one vote for each share held, each shareholder must also exercise in full the total number of votes he possesses. (3) A person who has the most votes will be elected to the Board of Directors in respective order up to the number of directors to be elected at that time. In case of two or more candidates having an equality of votes, exceeding the number of directors required for election at that time, the Chairman will have a casting vote. BOARD OF DIRECTORS’ MEETING The Board of Directors’ meeting would be held quarterly to consider and approve the business performance, operations and financial statement of the Company, implement and direct the Company’s policies, monitor and supervise its operations to maximize economic value and shareholders’ wealth, approve any matters which are beyond the authorization limit of the Executive Board. However, the Company might hold an extra meeting for approval the extra agenda, the Company will send the notice of Board of Directors’ meeting including agenda and documents at least 7 days prior to the meeting date. For year 2003, the Board of Directors’ meeting was held 4 times and the extra ordinary meeting was held 1 time totally 5 times. There were at least 1/3 of directors presented constituting the quorum as required by articles of association of the Company.

2

7


2

8

Annual Report 2003

ORGANIZATION CHART

MR. HSU SHENG-HSIUNG Chairman

MR. CHIANG HSIAO-CHIN President

MR. LAI CHI-TIEN VP Administration

MR. LIU KUO-TUNG VP Sales & Marketing

MR. YEH, TIEN-KUNG

MR. YU, HSING-CHIN

MR. YU, SHIH-TUNG

MR. PAN, HUNG-SHEN

MR. CHANG, ZUEI-WEI

MR. HUANG, YU-HUI

MR. CHOU KUNG HSIUNG

Financial Controller

Business Division Director

Business Division Director

Business Division Director

Administration Director

Vice Managing Director

Vice Managing Director

Note : Effective from 1st March, 2004


Cal-Comp Electronics (Thailand) Public Company Limited

DIRECTORS REMUNERATION Monetary remuneration The following is a list of remuneration for 9 directors and 5 executive officers in 2003. Type of remuneration

Salary Bonus Board allowance Profit contribution Others Total

Remuneration for 9 directors

Remuneration for 5 Executive officers

17,200,000 1,830,000 19,030,000

2,147,816 407,422 645,225 3,200,463

Other remuneration (if any) • Right to subscribe the shares or other security (please specify no. of security increase/ decrease of the executive officer) - None• Provident Fund - NonePOLICY ON CORPORATE GOVERNANCE The Board of Directors realized the importance of Corporate Governance which will promote transparency and managerial efficiency and therefore strengthen the confidence of all shareholders, investors and other related parties. The followings are the main policy to support Corporate Governance: • Issued policy for the Rights and Equitable Treatment Shareholders and various groups of stakeholders • Managed through absolute responsibility and oversee for conflict of interests by the Board of Directors • Verified financial statement and connected transaction with related parties through Controlling system and Internal Audit • Operated business with transparency and disclosure • Managed business operation under risk management • Performed under Code of Ethics by Directors and employees CORPORATE GOVERNANCE The Board of Directors have implemented Best Practice Guidelines for Directors of Listed Companies set forth by the Stock Exchange of Thailand such as roles, duties and responsibilities of company directors, appointment of directors, fixing remuneration for directors, board meeting and shareholders’ meeting, and reporting financial information. In addition, we have set up Audit Committee as resources for the board of directors and management of the Company for necessary assistance.

2

9


3

0

Annual Report 2003

SHAREHOLDERS: RIGHTS AND EQUITABLE TREATMENT Shareholders’ Meetings The Company encourages equal treatments and opportunities for all shareholders to express their opinions and raise question at the meeting, according to the agenda and the issues presented to the meetings. And the Company also has facilitated all shareholders to access to company information, as well as attend shareholders’ meetings with easy procedures and with out expenses charged. The invitation letter and related documents were sent out to the shareholders within the period as required by law. The meeting minutes were completely and accurately taken within the appropriate times in order to enable the shareholders to monitor afterward. The Company has a policy for the Rights and Equitable Treatment Shareholders and Various groups of Stakeholders by controlling of the exploitation of inside information by executive officers in securities trading since the Company’s securities are listed on The Stock Exchange. The Company’s policy on such matter is described as follows. 1. An executive officer will prepare and submit to the Company a securities holding report showing the number of securities held by him/her, his/her spouses and minor children in the prescribed form immediately following the delivery of such report to The Office of Securities and Exchange Commission and The Stock Exchange of Thailand as follows. • Initial securities holding report (form 59-1) will be submitted within 30 days after the closing date of public offering or after the date of appointment of such executive officer. • Amendment to securities holding report (form 59-2) will be submitted within 3 days from the date of each purchase, sale, transfer and acceptance of securities. 2. The Company has submitted to each and every executive officer a circular letter notifying that any executive officer who is informed of any inside information will prohibit to do any trading transaction of the Company’s securities 30 days prior to the Company’s publication of its operating result (quarterly financial statement and annual financial statement) or any other significant information which may materially affect the securities value. The Company will inflict the maximum punishment on any executive officer who exploits the inside information or performs any act in such a way that may disgrace or damage the Company. LEADERSHIP AND VISION The Board of Director has participated with the management by taking into account and making an approval of vision, mission, strategies, and aim of the Company’s action plans as well as the approval of the Company’s yearly budget. This includes supervising the management to perform the business efficiently in accordance with the action plan’s target and budget, which shall help add the highest economic value to the business and shareholders.


Cal-Comp Electronics (Thailand) Public Company Limited

VARIOUS GROUPS OF STAKEHOLDERS The Board of Directors recognized the rights of all stakeholders, and supported a collaborative approach between the company and its stakeholders for their mutual benefit. The various groups of company’s stakeholders are treated with high priority as follows. • Employees are treated equally and fairly. Benefits are paid appropriately. • Products and service bought from supplier are in accordance with normal business condition and agreements. • Customers are treated with care. Their information is treated as confidential. • Competition is moral. No illegal practices are used to destroy competitors. • Community, environment, and society are responsibly treated. BUSINESS ETHICS The Company adopted Code of Best Practice for the Board of Directors of listed companies issued by The Stock Exchange of Thailand as company’s Code of Ethics for directors to comply. The Company will review the Code of Ethics in compliance with ethics of the management and staff as guidelines for good and proper practice within the organization. The Company also has the regulations of employees in order to set the standard of the work, quality and also the employees. CONFLICT OF INTERESTS The Audit Committee was appointed to consider every transactions and conflict of interest in according to the relevant rules and regulations of The Stock Exchange of Thailand.

3

1


3

2

Annual Report 2003

RELATED PARTY TRANSACTIONS Related party transactions executed by the Company and other companies within the Group from the last three years are shown below. Purchase value of raw materials through the Group and percentage of total purchase value of materials. Companies

Year 2001 Baht Million

%

Year 2002 Baht Million

23.29

0.08

61.88

3.41

0.01

3. Afreey Inc.

14.62

4. Telian Corporation 5. Wide Telecom Inc.

1. Kinpo Electronics, Inc. 2. Forward International Ltd.

Total Notes :

Year 2003 Baht Million

%

0.21

18.48

0.07

-

-

-

-

0.05

-

-

-

-

30.69

0.11

70.29

0.24

69.50

0.26

5.44

0.02

200.48

0.69

71.71

0.27

77.45

0.27

332.65

1.14

159.69

0.60

%

Forward International Ltd. is a wholly owned subsidiary company of Kinpo Electronics, Inc.

In 2003, purchasing value of raw materials with Kinpo, Telian Corp. and Wide Telecom Inc. decreased due to its higher cost compare to the other suppliers. In addition, almost raw materials are supplied by the employing company. The purchase of raw materials from the associated companies, Telian Corporation and Wide Telecom, Inc. is made in the ordinary course of business and under the Joint-Venture agreement. No joint interested party has any beneficial stake in such affiliate companies. Sale value of products through the Group and percentage of total sales volume Companies

Year 2001 Baht Million

%

Year 2002 Baht Million

%

Year 2003 Baht Million

%

1. Kinpo Electronics, Inc.

4,908.78

15.19

3,606.70

11.14

809.01

2.93

2. Logistar International

827.18

2.56

8,865.07

27.39

14,703.70

53.31

-

-

-

-

376.33

1.37

4. Telian Corporation

61.97

0.19

441.56

1.36

635.16

2.30

5. Wide Telecom Inc.

5.55

0.02

779.07

2.41

415.76

1.51

62.05

0.19

1.29

-

-

-

5,865.53

18.15

13,693.69

42.30

16,939.96

61.42

Holding Co., Ltd. 3. Cal-Comp Electronics (Suzhou) Co., Ltd.

6. Afreey Inc. Total Notes :

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


Cal-Comp Electronics (Thailand) Public Company Limited

The sale of products through Kinpo Group has declined on a continual basis on account of the Company’s policy to reduce the dependence on such Group. However, the Company treats Kinpo Group as one of its customers under the terms and conditions of the Supply/Manufacturing Agreement. In respect of the sale through associated companies, the Company considers such associated companies as its customers under the terms and conditions of the Joint-Venture Agreement and License Agreement. GUARANTEE At 31 December 2003, the Company has issued a letter of guarantee of USD 9.5 million (2002 : USD 16.9 million) to a financial institution to secure credit facilities as granted by those financial institution to a subsidiary company and a related company by issuing USD 8 million to 100% held subsidiary company named logistar International Holding Co., Ltd. and USD 1.5 million stand by letter of credit to the joint venture company named Telian Corporation. OPINIONS OF INDEPENDENT DIRECTORS IN CONNECTION WITH THE RELATED PARTY TRANSACTIONS After due consideration, the independent directors found no doubtful signs in the Company’s internal audit report showing the product trading transactions between the Company and Kinpo Group during the year 2003. It appeared that any and all trading agreements and transactions have been made in line with the relevant agreements entered into by both parties. The independent directors expressed their opinion that the shareholding structures among the Company, its subsidiary company, associated companies and related companies do not constitute conflicts of interests among the Company, directors and executives and that no shareholding structure or management of companies in the group are nominees. The independent directors and the Company have committed themselves to ensure that any potential related party transactions would be subject to the relevant agreements and disclose to each other the type and value of any related party transaction in connection with the joint related parties under the relevant notifications and regulations of The Office of Securities and Exchange Commission.

3

3


3

4

Annual Report 2003

The following is the brief summary of the related agreements. Supply/Manufacturing Agreement Parties concerned : Cal-Comp Electronics (Thailand) Public Company Limited and Kinpo Electronics, Inc. (a company incorporated under the laws of Taiwan). Execution date

: 1st December, 1999

Material subject

: Kinpo Electronics, Inc. agrees to purchase products and services provided by the Company as indicated in any purchase order and 1. to give a prior notice to Kinpo when it plans to change the raw materials used in manufacturing process or change the manufacturing process; and 2. to ensure that all products must meet the Company’s standards.

Expiry date

: The Agreement shall be valid for one year and continue to be enforceable for another one year unless otherwise objected by any party prior to its expiry date.

Joint Venture Agreement Parties concerned : Cal-Comp Electronics (Thailand) Public Company Limited and Telian Corporation (a company incorporated under the laws of Korea). Execution date

: 2nd April, 1998

Material subject

: The Company shall be entitled to the following benefits. 1. Know-how: the Company is authorized to apply know-how, patents, technology and formulae in connection with the production or sale of cordless telephones and other telecommunications equipment owned, designed and developed by Telian Corporation during the validity of the Joint Venture Agreement at the fair market price. 2. Production: the Company is entitled to the first right refusal in connection with any new product designed and developed by Telian. Parties concerned will determine the remuneration and other relevant contractual conditions from time to time.

Expiry date

: This Agreement shall be terminated upon occurrence of any of the following events. 1. Both parties agree to terminate the Agreement. 2. Either party claims for compensation from any defaulting party, but the latter fails to pay the compensation within the period of 30 days.


Cal-Comp Electronics (Thailand) Public Company Limited

License Agreement Parties concerned : Cal-Comp Electronics (Thailand) Public Company Limited and Wide Telecom Inc. (a company incorporated under the laws of Korea). Execution date

: 25th September, 2000 Material subject : 1. The Company is granted exclusive right to use patents and know-how for production and distribution of products (pagers) owned by Wide Telecom throughout the validity of the Agreement. 2. Wide Telecom agrees to provide technical assistance for production of pagers. 3. The Company is entitled to sell Wide Telecom-technology pagers in any country, except Korea. 4. The Company agrees not to enter into contract with any current and potential customer of Wide Telecom. Both parties also agree to disclose their lists of customers to each other from time to time.

Expiry Date

: This Agreement shall be terminated upon occurrence of any of the following events. 1. Either party breaches any provision thereof, and fails to remedy within the period of 60 days. 2. Either party participates in the bankruptcy proceedings. 3. Either party becomes an injured party due to any Act of God for an uninterrupted period of more than 6 months from the date of notice given by the other party.

Use-Right of Land Agreement Parties concerned : Cal-Comp Electronics (Thailand) Public Company Limited Execution date

: 4th June 2002

Material Subject

: The Company is granted 50 years usage-right of state-owned land of Wujiang City for constructing plant. The constructed area and designing for each building must be subjected to the layout of the city, and constructed as per ratified designing program.

Expiry Date

: 3rd June 2052 The contract may be terminated, if Cal-Comp delays the payment until 60 days.

3

5


3

6

Annual Report 2003

AUDIT COMMITTEE REPORT The Board of Directors’ meeting of Cal-Comp Electronics Public Company Limited dated 23rd August 2000 and 3rd October 2000 approved to appoint the Audit Committee, which consists of three independent directors as members. 1. Mr. Alan Kam

Chairman of Audit Committee

2. Mr. Chatchaval Jiaravanon

Audit Committee

3. Mr. William Hang Man Chao

Audit Committee

The major responsibilities of the committee for 2003 was to ensure that financial record of the Company are prepared in accordance with applicable local law and regulations. The committee also ensure that necessary and vital transactions are fully recorded, disclosed, and presented in line with generally accepted accounting principle and reviewed before submission to the Board of Directors. The committee also attended regular Audit Committee meetings to review the annual audit plan and review the Internal Audit Department reports. Internal Audit Department over the financial year performed a total of 45 audits. The Audit Committee meetings were held 4 times in the year 2003 to monitor and rewiew these items. In May 2003, during the height of the SARS crisis in Asia, the Chirman of the Audit Committee also visited all the factories of Cal-Comp in Petchburi and Samuthsakorn to ensure that the factories implement adequate health policies to avoid production downtime. The committee was satisfied with the stringent health policies implemented. The Audit Committee also had discussions with company’s executive, internal auditors and external auditor to consider on accounting and financial issues and clarify on internal control and financial statements of 2003 operating result. The committees hereby acknowledged and accepted the Company’s financial statements duly audited by the Company’s certified auditor, prior to submission to The Securities and Exchange Commission and The Stock Exchange of Thailand. For the year 2004, the committees proposed to the Board of Directors to appoint external auditors of Ernst & Young Office Ltd. to be represented by Ms. Rungnapa Lertsuwankul, Certified Public Accountant No.3516 and/or Mr. Narong Puntawong, Certified Public Accountant No.3315 and/ or Mr. Sophon Permsirevallop, Certified Public Accountant No.3182 and it is subject to the approval of the Shareholders’ Annual General Meeting. On behalf of the Audit Committee

(Mr. Alan Kam) Chairman of the Audit Committee


Cal-Comp Electronics (Thailand) Public Company Limited

SCOPE OF POWERS AND AUTHORITIES OF THE AUDIT COMMITTEE 1. To ensure that the Company prepares any quarterly and annual financial report which contains accurate and sufficient information and cooperate with any third party auditor and executive officer in charge of preparing such reports. 2. To ensure that the Company has the appropriateness and effectiveness of the internal control system and internal audit functions by coordinating with the external auditors and internal auditors. 3. To consider and advise the appointment of the external auditors including the determine an amount of remuneration for such auditor by considering the creditability, the adequacy of its resources, the firm’s audit engagements, and the experience of its supervisory, and the experience of its supervisory and professional staff. 4. To ensure that the conduct of business of the Company is in compliance with the securities and exchange law, regulations of The Stock Exchange or any other applicable law. 5. To make decision on disclosing any accurate and complete information of the Company in the case of any related party transaction or conflicting transaction. 6. To take care of any other matters assigned by the Board of Directors and approved by the audit committee such as reviewing the accounting policy, the financial reporting system and the information disclosure in conformance with accounting standards, all important reports which must be disclosed to the public according to the law. 7. To prepare an audit report and publish it in the annual report of the Company. 8. To perform any other act as assigned by the Board of Directors with the approval of the Audit Committee.

3

7


3

8

Annual Report 2003

CONTROLLING SYSTEM & INTERNAL AUDIT The Company realized important of the internal audit, internal audit department was established as compliance unit to review and verify financial statement and connected transaction with related party. Moreover, Internal audits are independence unity and directly report to the audit committee.

DIRECTORS’ REPORTING The Board of directors are responsible for the accuracy and completeness of the Company and its subsidiary’s financial statements. Accounting principles used and financial statements are in compliance with accounting standards and disclosed. In order to ensure the efficient internal control and audit system, the Audit Committee will regularly review the financial statement and internal control system. The Audit Committee report had already disclosed in annual report. Audit committee had clarified on internal audit with good management that can be confident for the financial statement and its subsidiary as of 31 December 2003.

Mr. Hsu Sheng-Hsiung

Mr. Chiang Hsiao-Chin

Chairman

President


Cal-Comp Electronics (Thailand) Public Company Limited

RELATION WITH INVESTORS By overseeing the disclosure of essential company information to be handled correctly, on time and with transparency, by having Investor Relations Department to take responsibility for investor relations in acting as a representative to communicate with investors and allowing them to procure appropriate devices for presenting information or for helping them in dealing with communication. All interested investors can obtain information on the Company at website: www.calcomp.co.th or at email address: IR@calcomp.co.th Contact Department :

Investor Relations Department

E-Mail Address :

IR@calcomp.co.th

Telephone no. :

0-2261-5033-40 Ext: 5637-9

Fax no. :

0-2661-8039

SOCIAL AND ENVIRONMENT RESPONSIBILITIES The Company always realizes that the successful factors in conducting business are not only perseverance of good operation results but also the responsibility to society and environment. Therefore, the Company determined to continue further contribution, though our activity is only a small social contribution, but we did it with the great intention to all in society. Regarding the environment, the Company received ISO 14001 certification from AFAQ & Bestcert (Thailand) Co., Ltd., France in year 2003 which result from the successful in implementing the ISO14001 standard for Environmental Management Systems (EMS) at both Mahachai and Petchburi plants.

3

9


Annual Report 2003

FINANCIAL STATEMENTS


Cal-Comp Electronics (Thailand) Public Company Limited

REPORT OF INDEPENDENT AUDITOR REPORT OF INDEPENDENT AUDITOR TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF CAL-COMP ELECTRONICS (THAILAND) PUBLIC COMPANY LIMITED I have audited the accompanying consolidated balance sheets of Cal-Comp Electronics (Thailand) Public Company Limited and its subsidiaries as at 31 December 2003 and 2002, and the related consolidated statements of earnings, changes in shareholders’ equity and cash flows for the years then ended; and the separate financial statements of Cal-Comp Electronics (Thailand) Public Company Limited for the same years. These financial statements are the responsibility of the Company’s management as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. I did not audit the financial statements of Logistar International Holding Co., Ltd. and Cal-Comp Electronics (Suzhou) Co., Ltd. and Cal-Comp Optical Electronics (Suzhou) Co., Ltd., three overseas subsidiary companies, which are included in the consolidated financial statements for the years ended 31 December 2003 and 2002. These subsidiaries’ financial statements show total assets as at 31 December 2003 and 2002 of Baht 5,372 million and Baht 3,006 million, respectively, revenues for the years then ended totalling Baht 16,831 million and Baht 9,321 million, respectively and net earnings for the years then ended of Baht 200 million and Baht 70 million, respectively. In addition, the financial statements of the Company only include its investments in its subsidiaries presented under the equity method, amounting to Baht 845 million and Baht 378 million, as at 31 December 2003 and 2002, respectively, and its share of the profits of its subsidiaries for the years then ended, amounting to Baht 200 million and Baht 70 million, respectively. The financial statements of the subsidiary companies were audited by other auditors, whose reports I have received, and my opinion, insofar as it relates to the amounts of the various transactions of those companies included in the consolidated financial statements and the financial statements of Company only, is based on those auditors’ reports. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits, together with the report of other auditors discussed in the first paragraph, provide a reasonable basis for my opinion. As discussed in Note 11 to the financial statements, in 2002 the Company recorded its investment in an overseas associated company under the equity method, based on information provided by that company’s management which was unaudited by its external auditor. During 2003 the Company received the audited financial statements of that associated company for the year 2002 and there was no material difference. The Company has therefore recorded the difference in the 2003 financial statements. In my opinion, based on my audits and the report of other auditors, except for the effect to the 2002 financial statements of such adjustments as might be required as a result of the matter described in preceding paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Cal-Comp Electronics (Thailand) Public Company Limited and its subsidiary companies and of CalComp Electronics (Thailand) Public Company Limited as at 31 December 2003 and 2002, and the results of their operations and cash flows for the years then ended in accordance with generally accepted accounting principles. I draw attention to Note 7 to the financial statements that the Company presents significant product sales and raw material purchase transactions in the financial statements at prices mutually agreed among the Company, its subsidiaries and related companies.

Rungnapa Lertsuwankul Certified Public Accountant (Thailand) No. 3516 Ernst & Young Office Limited Bangkok: 26 January 2004

4

1


4

2

Annual Report 2003

BALANCE SHEETS Cal-Comp Electronics (Thailand) Public Company Limited

As At 31 December 2003 and 2002

(Unit : Baht)

CONSOLIDATED NOTE

THE COMPANY ONLY

2003

2002

2003

2002

528,591,120

832,719,330

38,605,323

66,912,555

ASSETS Current assets Cash and cash equivalents Short-term investments

4

Trade accounts receivable Less: Allowance for doubtful accounts Trade accounts receivable, net

5

Trade accounts receivable - related parties

158,854,484

45,364,025

-

45,364,025

4,447,823,625

3,224,811,326

2,720,517,664

1,570,178,993

-45,167,904

-58,752,779

-45,167,904

-58,752,779

4,402,655,721

3,166,058,547

2,675,349,760

1,511,426,214

788,963,074

1,403,467,743

2,824,450,120

3,383,443,779

Trade accounts receivable - related parties under agreements assigning rights of claim

6

Less : Allowance for doubtful accounts

-

-

-

203,244,138

-92,323

-4,723,239

-92,323

-4,723,239

Trade accounts receivable - related parties, net 5,7

788,870,751

1,398,744,504

2,824,357,797

3,581,964,678

Short-term loans to related party

7

137,643,476

266,647,679

-

-

Amount due from related parties

7

34,806,884

48,681,308

252,518,291

94,031,697

Inventories, net

8

4,695,484,285

3,790,164,115

3,827,520,284

3,790,164,115

13,217,306

23,625,350

13,217,306

23,625,350

9

145,955,047

214,890,365

145,955,047

214,890,365

16,910,260

42,392,616

16,910,260

42,392,616

10

391,355,139

455,219,503

312,078,839

455,219,503

Goods in transit Advances payment for raw materials Value added tax refundable Other receivables Other current assets Total current assets

349,769,607

276,957,809

205,066,797

54,963,745

11,664,114,080

10,561,465,151

10,311,579,704

9,880,954,863

Non-current assets Investments accounted for under the equity method

11

140,910,707

123,766,062

907,005,281

411,259,708

Other long-term investments

12

72,741,675

78,276,326

46,299,270

49,458,332

Property, plant and equipment, net

13

3,829,224,176

2,719,141,248

2,782,097,642

2,654,500,114

11,983,192

9,977,650

11,983,192

9,977,650

62,292,887

68,554,665

-

-

104,682,916

167,232,043

104,682,916

167,232,042

Intangible assets Deferred assets Land occupancy rights

14

Other non-current assets Molds and spare parts Others Total non-current assets TOTAL ASSETS

11,275,049

23,770,797

11,275,049

23,770,797

4,233,110,602

3,190,718,791

3,863,343,350

3,316,198,643

15,897,224,682

13,752,183,942

14,174,923,054

13,197,153,506

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


Cal-Comp Electronics (Thailand) Public Company Limited

As At 31 December 2003 and 2002

(Unit : Baht)

CONSOLIDATED NOTE

THE COMPANY ONLY

2003

2002

2003

2002

3,072,953,989

971,505,366

2,070,416,620

971,505,366

131,180,919

105,522,651

131,180,919

105,522,651

-

474,041,700

-

-

LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Short-term loans from financial institutions

15

Trade notes payable Liabilities under agreements assigning rights of claim

6

Trade accounts payable - Related parties

7

- Others Total trade accounts payable Advance from and amount due to related parties 7 Corporate income tax payable Accrued interest expense Accrued expenses Other payable

16

Other current liabilities

17

Total current liabilities

61,092,717

144,502,238

13,371,887

143,351,638

3,606,108,551

2,536,796,286

3,114,882,724

2,536,796,286

3,667,201,268

2,681,298,524

3,128,254,611

2,680,147,924

9,285,106

405,693,218

20,652,532

409,906,225

-

2,675,135

-

2,675,135

27,102,411

4,309,300

27,102,411

4,309,300

294,116,026

232,479,690

265,653,160

231,543,604

191,336,720

205,730,832

43,239,045

201,515,790

187,889,554

291,980,840

172,265,067

213,080,825

7,581,065,993

5,375,237,256

5,858,764,365

4,820,206,820

1,409,215,351

2,075,669,898

1,409,215,351

2,075,669,898

Non-current liabilities Convertible debentures

18,7

Total non-current liabilities

1,409,215,351

2,075,669,898

1,409,215,351

2,075,669,898

Total liabilities

8,990,281,344

7,450,907,154

7,267,979,716

6,895,876,718

3,780,000,000

3,780,000,000

3,780,000,000

3,780,000,000

3,050,310,720

3,020,000,000

3,050,310,720

3,020,000,000

714,881,697

636,000,000

714,881,697

636,000,000

-149,010,536

-145,851,474

-149,010,536

-145,851,474

2,219,233

3,000,653

2,219,233

3,000,653

-78,027,008

-1,489,041

-78,027,008

-1,489,041

Shareholders’ equity Share capital

19

Authorised share capital 378,000,000 ordinary shares of Baht 10 each Issued and fully paid share capital 305,031,072 ordinary shares of Baht 10 each (2002: 302,000,000 ordinary shares of Baht 10 each) Additional paid-in capital Premium on common stocks

19

Other deficits Convertible debentures - equity component

18

Currency translation differences Retained earnings Appropriated - legal reserve

20

Unappropriated Total shareholders’ equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

378,000,000

378,000,000

378,000,000

378,000,000

2,988,569,232

2,411,616,650

2,988,569,232

2,411,616,650

6,906,943,338

6,301,276,788

6,906,943,338

6,301,276,788

15,897,224,682

13,752,183,942

14,174,923,054

13,197,153,506

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

4

3


4

4

Annual Report 2003

STATEMENTS OF EARNINGS Cal-Comp Electronics (Thailand) Public Company Limited

For the Years Ended 31 December 2003 and 2002

(Unit : Baht)

CONSOLIDATED NOTE

THE COMPANY ONLY

2003

2002

2003

2002

29,086,570,253

32,364,007,357

27,581,076,525

32,377,109,343

REVENUES Sales Share of profit from investments accounted for under equity method Gain on exchange

21

25,650,957

27,185,399

251,392,221

93,109,366

181,377,491

-

-

-

-

52,310,872

-

52,310,872

-

-

-

249,397,003

Reversal of allowance for diminution in the value of investment Other income - Service income

7

- Others Total revenues

37,251,091

59,042,140

28,262,937

26,863,649

29,330,849,792

32,502,545,768

27,860,731,683

32,798,790,233

26,953,139,154

30,055,401,976

25,549,755,226

30,055,401,976

792,289,294

715,553,747

660,321,932

660,926,645

3,791,682

-

25,638,366

-

-

25,079,789

52,704,503

385,629,465

Expenses Cost of sales Selling and administrative expenses Share of loss from investments accounted for under equity method Loss on exchange

21

Directors’ remuneration

22

Total expenses

22,137,500

24,000,000

22,137,500

24,000,000

27,771,357,630

30,820,035,512

26,310,557,527

31,125,958,086

1,559,492,162

1,682,510,256

1,550,174,156

1,672,832,147

-74,719,846

-79,660,204

-65,401,840

-69,982,095

-

-5,946,935

-

-5,946,935

1,484,772,316

1,596,903,117

1,484,772,316

1,596,903,117

4.90

5.29

4.90

5.29

303.1

302.0

303.1

302.0

4.21

5.23

4.21

5.23

359.3

306.0

359.3

306.0

Earnings before interest expense and income tax Interest expense Corporate income tax

23

Net earnings for the year Basic earnings per share Net earnings Weighted average number of ordinary shares (million shares) Diluted earnings per share Net earnings

24

Weighted average number of ordinary shares (million shares)

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


636,000,000

3,020,000,000

the value of investment

714,881,697

3,050,310,720

-

78,881,697

-

78,256,624

625,073

-

-

-

30,310,720

-

30,310,720

-

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

Balance - end of year 2003

Dividends paid (Note 26)

Net earnings for the year 2003

Unrealised transactions in earnings statements

Currency translation adjustment

to shares

Increase due to convert convertible debentures

Periodic redemption of the debenture holders

-

636,000,000

3,020,000,000

Unrealised loss on change in

Balance - end of year 2002

-

-

Transferred to legal reserve

Dividends paid

-

-

-

Unrealised transactions in earnings statements

-

Currency translation adjustment

-

Net earnings for the year 2002

-

-

common stocks

paid share capital

-

Premium on

Issued and fully

Issuing convertible debentures during the year

of investment

Unrealised loss on change in the value

Balance - beginning of year 2002

For the Years Ended 31 December 2003 and 2002

Cal-Comp Electronics (Thailand) Public Company Limited

-149,010,536

-

-

-3,159,062

-

-

-

-3,159,062

-145,851,474

-

-

-

-47,262,986

-

-

-47,262,986

-98,588,488

2,219,233

-

-

-781,420

-

-156,347

-625,073

-

3,000,653

-

-

-

3,000,653

-

3,000,653

-

-

Other deficits equity component

Convertible debentures -

-78,027,008

-

-

-76,537,967

-76,537,967

-

-

-

-1,489,041

-

-

-

-2,250,908

-2,250,908

-

-

761,867

differences

Currency translation Retained earnings

378,000,000

-

-

-

-

-

-

-

378,000,000

-

83,449,073

-

-

-

-

-

294,550,927

2,988,569,232

-907,819,734

1,484,772,316

-

-

-

-

-

2,411,616,650

-1,359,000,000

-83,449,073

1,596,903,117

-

-

-

-

2,257,162,606

Appropriated Unappropriated

CONSOLIDATED AND THE COMPANY ONLY

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

6,906,943,338

-907,819,734

1,484,772,316

28,713,968

-76,537,967

108,410,997

-

-3,159,062

6,301,276,788

-1,359,000,000

-

1,596,903,117

-46,513,241

-2,250,908

3,000,653

-47,262,986

6,109,886,912

Total

(Unit : Baht)

Cal-Comp Electronics (Thailand) Public Company Limited

4 5


4

6

Annual Report 2003

STATEMENTS OF CASH FLOWS Cal-Comp Electronics (Thailand) Public Company Limited

For the Years Ended 31 December 2003 and 2002

(Unit : Baht)

CONSOLIDATED

THE COMPANY ONLY

2003

2002

2003

2002

1,484,772,316

1,596,903,117

1,484,772,316

1,596,903,117

-

-10,956,128

-

1,180,734

Depreciation and amortisation

482,898,837

555,415,480

466,871,966

555,415,480

Allowance for doubtful accounts (reversal)

-18,215,791

17,172,840

-18,215,791

17,172,840

214,342

1,392,497

214,342

1,392,497

-25,650,957

-27,185,399

-225,753,855

-102,858,366

Cash flows from operating activities Net earnings for the year Adjustments to reconcile net earnings to net cash provided by (paid from) operating activities: (Gains) loss on sales of investments

Loss on disposal of equipment Share of profit from investments accounted for under equity method Reversal of allowance for diminution in value of investments Reversal of provision for obsolete inventories

-

-52,310,872

-

-52,310,872

-54,100,000

-637,017

-54,100,000

-637,017

1,440,753

83,351

1,440,753

83,351

-5,926,611

55,043,229

-54,521,003

55,043,229

1,865,432,889

2,134,921,098

1,600,708,728

2,071,384,993

-1,250,723,506

219,338,118

-1,178,049,877

1,873,970,450

574,228,474

-466,957,699

721,961,603

-2,543,550,544

Amortisation of discounts on convertible debentures Unrealised loss (gain) on exchange Earnings from operating activities before change in operating assets and liabilities Operating assets (increase) decrease Trade accounts receivable Trade accounts receivable - related parties Amount due from related parties

-123,769,052

-48,681,308

41,209,381

-37,818,456

Inventories

-863,339,479

247,069,845

4,624,522

247,069,845

Goods in transit

10,400,073

261,415,737

10,400,073

261,415,737

Advances payment for raw materials

66,858,752

33,709,433

66,858,752

33,709,433

Value added tax refundable

25,482,357

5,963,620

25,482,357

5,963,620

Other receivables

62,026,848

169,746,312

141,303,148

169,746,312

Other current assets

-83,640,646

-112,415,931

-160,931,902

7,989,588

Other assets

-13,461,759

-12,228,092

-13,461,759

-12,228,092

25,658,268

-44,652,303

25,658,268

-44,652,303

1,083,195,401

-1,279,913,870

591,969,574

-1,289,691,911

-557,310,987

135,175,430

-129,839,517

143,802,871

Operating liabilities increase (decrease) Trade notes payable Trade accounts payable Trade accounts payable - related parties Corporate income tax payable

-2,675,135

2,675,135

-2,675,135

2,675,135

Accrued interest expense

22,793,111

-9,987,562

22,509,365

-9,987,562

Accrued expenses Other payable Other current liabilities Net cash from operating activities

61,658,745

42,994,943

34,131,965

44,021,481

-13,878,026

-98,583,131

-157,760,659

-102,798,173

-95,834,044

25,582,001

-32,558,518

-9,139,063

793,102,284

1,205,171,776

1,611,540,369

811,883,361

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


Cal-Comp Electronics (Thailand) Public Company Limited

For the Years Ended 31 December 2003 and 2002

(Unit : Baht)

CONSOLIDATED

THE COMPANY ONLY

2003

2002

2003

2002

45,364,025

66,358,375

45,364,025

66,358,375

-3,645,000

-91,225,172

-269,991,718

-155,638,318

-

97,877,457

-

58,345,347 88,167,200

Cash flows from investing activities Decrease in short-term investments Increase in investments accounted for under equity method Decrease in long-term investments (Increase) decrease in short-term loans to related parties

254,281,586

-178,480,479

-

-108,993,626

-2,250,908

-76,537,967

-2,250,908

-1,493,017,260

-256,920,994

-711,123,778

-192,279,860

Increase in molds and spare parts

-31,758,462

-79,511,527

-31,758,462

-79,511,527

Proceeds from sales of equipment

19,286,945

13,387,601

19,286,945

13,387,601

-

-68,554,665

-

-

12,495,748

-16,770,691

12,495,748

-16,770,691

-1,305,986,044

-516,091,003

-1,012,265,207

-220,192,781

2,101,456,083

-1,402,783,773

1,098,918,714

-1,402,783,773

Increase in currency translation differences Increase in property, plant and equipment

Increase in land occupancy rights Decrease (increase) in deposits Net cash used in investing activities Cash flows from financing activities (Increase) decrease in short-term loans from financial institutions Increase in liabilities under agreements assigning rights of claim Increase (decrease) in convertible debentures

-

474,041,700

-

-

-428,836,783

2,083,008,000

-428,836,783

2,083,008,000

-781,420

-

-781,420

-

Decrease in convertible debentures - equity component Decrease in advance from and amount due to related parties Dividends paid Net cash from (used in) financing activities Net decrease in cash and cash equivalents

-396,408,112

-634,151,745

-389,063,171

-366,388,524

-907,819,734

-1,359,000,000

-907,819,734

-1,359,000,000

367,610,034

-838,885,818

-627,582,394

-1,045,164,297

-145,273,726

-149,805,045

-28,307,232

-453,473,717

Cash and cash equivalents at beginning of year

832,719,330

982,524,375

66,912,555

520,386,272

Cash and cash equivalents at end of year (Note 30)

687,445,604

832,719,330

38,605,323

66,912,555

50,063,861

89,647,766

40,740,118

79,969,657

2,828,607

3,271,800

2,828,607

3,271,800

3,159,062

47,262,986

3,159,062

47,262,986

1,324,435

-

215,919,677

-

30,310,720

-

30,310,720

-

78,881,697

-

78,881,697

-

Supplemental cash flows information: Cash paid during the year for: Interest expense Corporate income tax Non-cash items consist of: Unrealised loss on change in the value of investment Sold fixed assets to related parties that has yet been collected Increase in capital due to convert convertible debentures Increase in premium on common stocks due to convert convertible debentures

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

4

7


4

8

Annual Report 2003

NOTE TO CONSOLIDATED FINANCIAL STATEMENTS Cal-Comp Electronics (Thailand) Public Company Limited and its Subsidiary Companies For the Years Ended 31 December 2003 and 2002

1.

GENERAL INFORMATION On 4 December 1989, Cal-Comp Electronics (Thailand) Public Company Limited was incorporated

as a limited company under Thai laws. On 11 August 2000, the Company registered the change of its status to a public limited company under the Public Limited Companies Act. Its major shareholder is Kinpo Electronics, Inc., a company incorporated in Taiwan. The Company operates its business in Thailand and its principal activity is the manufacture of electronic products in three sectors, such as computer and computer peripheral, telecommunication equipment and automation equipment. Its registered office is 191/54, 191/57 18th Floor, CTI Tower, Rachadapisek Road, Klongtoey, Bangkok 10110. The Company has 2 branches in Thailand located at Samutsakorn and Petchaburi province. In 2000, the Company opened a branch in Taiwan to purchase raw materials and finished goods, to coordinate between the Company and its overseas customers, and to facilitate the Company’s business operations. 2.

BASIS OF CONSOLIDATION The consolidated financial statements include the financial statements for the years ended 31

December 2003 and 2002 of Cal-Comp Electronics (Thailand) Public Company Limited (hereinafter called “the Company”) and its subsidiary companies, Logistar International Holding Co., Ltd., Cal-Comp Electronics (Suzhou) Co., Ltd. and Cal-Comp Optical Electronics (Suzhou) Co., Ltd., which were incorporated and operated their businesses in overseas (hereinafter call “the subsidiaries”). The financial statements of the subsidiaries were prepared by the management of the subsidiaries and audited by their auditors overseas. During the last quarter of 2003, the Company incorporated a subsidiary company, Cal-Comp Optical Electronics (Suzhou) Co., Ltd., in The People’s Republic of China with an authorised capital of USD 10 million. The Company will hold 100% stake. This subsidiary has not yet commenced its business operation. The Company has subsidiary companies as follows: -


Cal-Comp Electronics (Thailand) Public Company Limited

Revenue Country of Subsidiaries’ name

Logistar International

Investment proportion incorporation

business

for the years ended Total assets

31 December

2003

2002

2003

2002

2003

2002

%

%

Million Baht

Million Baht

Million Baht

Million Baht

100

100

2,717

2,842

15,537

9,321

100

-

2,585

164

1,294

-

70

-

-

-

Holding Co., Ltd. Cal-Comp Electronics

Nature of

(Suzhou) Co., Ltd.

British Virgin Company’s Islands

distributor

The People’s

Manufacture

Republic of China

Cal-Comp Optical Electronics

100

(Suzhou) Co., Ltd.

-

The People’s

Manufacture

Republic of

China

All intercompany balances and significant intercompany transactions have been eliminated from the consolidated financial statements. The financial statements of the branch office and subsidiaries incorporated overseas are translated into Thai Baht at the closing exchange rate for assets and liabilities, and at the average exchange rate for revenues and expenses. The resultant difference is shown under the caption of “Currency translation differences” in shareholders’ equity. 3.

SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with accounting standards pronounced

by the Institute of Certified Accountants and Auditors of Thailand which are effective under the Accounting Act B.E. 2543. Significant accounting policies adopted by the Company and its subsidiary companies are summarised below :3.1 Revenue and expense recognition Sales and service income represent the invoiced value, excluding value added tax, of goods sold and delivered after deducting discount and allowance and services rendered. Expenses are recognised on an accrual basis. 3.2 Inventories Inventories are valued at the lower of cost (first-in, first-out method) or net realisable value. Provision for obsolete stocks is made for damaged, slow-moving and obsolete stock. 3.3 Trade accounts receivable and other receivables Trade accounts receivable and other receivables are recognised and carried at original invoice amount less an allowance (if any) for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable.

4

9


5

0

Annual Report 2003

3.4 Investments a) Investments in unit trusts in overseas, which are held as short-term investments, are determined at fair value. Gains or losses arising from change in value is included in determining earnings. b) Investments in marketable equity securities, which are held as available-for-sale securities, are determined at fair value. Gains or losses arising from changes in value have been separately shown in shareholders’ equity under the caption of “Other deficits”. c) Investments in non-marketable equity securities, which the Company hold as, other investments, are valued at cost. Loss on impairment (if any) of investments in available-for-sale securities and other investments is included in determining earnings. d) Investments in subsidiary and associated companies are valued under the equity method. 3.5 Property, plant and equipment and depreciation Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of buildings, building improvements and equipment are calculated by reference to their costs on a straightline basis over the estimated useful lives as follows :Buildings and building improvements

- 11 - 50 years

Machinery and factory equipment

-

5 - 10 years

Office furniture and equipment

-

5 - 11 years

Motor vehicles

-

5 - 10 years

Miscellaneous equipment and research and development equipment

-

1 - 7 years

No depreciation is provided for land, land improvement, construction in progress, equipment under installation and fixed assets in transit. 3.6 Intangible assets Deferred assets are stated at cost and amortised on a straight-line basis over 3 years. Land occupancy rights are stated at cost and amortised on contract period of 50 years. 3.7 Deferred expenses Deferred expenses are calculated by reference to their costs and amortised on a straight-line basis at the following rates: Convertible debentures issued expenses

-

3 years

Molds and spare parts

-

1, 2, 5 years

3.8 Impairment of assets The Company reviews the impairment of assets whenever events indicate that the carrying value of an asset exceeds its realisable value. Realisable value is the higher of an asset’s net selling price and its value in use. The value in use is arrived at based on the management estimates. The Company recognises an impairment loss in the earnings statements whenever the carrying value of an assets exceeds its realisable value. The Company will reverse the impairment loss when there are indications that the value of the asset is no longer impaired or the amount of impairment has decreased.


Cal-Comp Electronics (Thailand) Public Company Limited

3.9 Foreign currencies Foreign currency transactions incurred during the year are translated into Baht at the rates ruling on the transaction dates. Monetary assets and liabilities denominated in foreign currency outstanding at the balance sheet date are translated into Baht at the rates ruling on the balance sheet date. Exchange gains and losses are included in determining earnings. 3.10 Foreign exchange contracts Foreign exchange contracts are accounted for as hedge against exposure to the foreign currency risk related to the Company and its subsidiary’s purchases and sales to overseas in the normal course of business. Premium paid for forward exchange contracts are recognised as liabilities or assets and are amortised over the period of contracts and included in determining earnings. 3.11 Cash and cash equivalents Cash and cash equivalents are cash and deposits at banks, excluded deposits at banks with an original maturity over 3 months and cash secured as collateral. 3.12 Interest rate swap The notional amounts of interest rate swap agreements of its subsidiary are not recognised in the financial statements since the agreements do not require the settlement of such notional amounts. The amounts receivable or payable under the agreements resulting from the difference in the interest rates are recognised as interest income or interest expense at the balance sheet dates and at settlement dates. 3.13 Foreign currency option The notional amounts of the foreign currency option contracts of its subsidiary are not recognised as either assets or liabilities on the contract dates. However, amounts received on options written are recognised as liabilities, and amounts paid on options bought are recognised as assets. Such amounts are amortised using the straight-line method over the terms of contracts and charged to current income. Gains or losses on the exercise of the options are charged to current income. 3.14 Provident fund The Company and its employees jointly established a provident fund as approved by the Ministry of Finance in accordance with the Provident Fund Act B.E. 2530. The fund is contributed by both employees at the rate of 2 percent of salary and the Company at the rate of 2 percent of salary. 3.15 Earnings per share Basic earnings per share is calculated by dividing net earnings for the year by the weighted average number of ordinary shares held by outside shareholders in issue during the year. Diluted earnings per share is calculated by dividing net earnings for the year by the total sum of the weighted average number of ordinary shares held by outside shareholders in issue during the year plus the weighted average number of ordinary shares to issue for conversion of all dilutive potential ordinary shares into ordinary shares.

5

1


5

2

Annual Report 2003

3.16 Use of accounting estimates Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates for certain accounting transactions, affecting amounts reported in the financial statements and notes related thereto. Subsequent actual results may differ from these estimates. 4.

SHORT-TERM INVESTMENTS (Unit: Thousand Baht) CONSOLIDATED 2003 2002 Term deposits with financial institutions Trading securities Unit trusts Total

THE COMPANY ONLY 2003 2002

158,855

-

-

-

-

45,364

-

45,364

158,855

45,364

-

45,364

As at 31 December 2002, the above short-term investments are investment in open-ended mutual fund overseas purchased by Taipei branch. The fair value of these investments is immaterially higher than their cost and the Company has therefore recorded the short-term investments at cost. 5.

TRADE ACCOUNTS RECEIVABLE / TRADE ACCOUNTS RECEIVABLE - RELATED PARTIES The outstanding balances of trade accounts receivable is aged as follows :(Unit: Thousand Baht) CONSOLIDATED 2003 2002 Not yet due

THE COMPANY ONLY 2003 2002

3,962,962

2,612,981

2,329,864

1,042,263

351,475

228,044

293,531

183,057

1 - 2 months

44,609

7,987

12,404

7,972

2 - 3 months

1,245

95,222

1,013

66,272

3 - 6 months

3,364

48,917

295

38,955

6 - 12 months

3,648

63,022

2,890

63,022

80,521

168,638

80,521

168,638

4,447,824

3,224,811

2,720,518

1,570,179

(45,168)

(58,753)

(45,168)

(58,753)

4,402,656

3,166,058

2,675,350

1,511,426

Overdue Less than 1 month

Over 12 months Total Less: Allowance for doubtful accounts Net


Cal-Comp Electronics (Thailand) Public Company Limited

The outstanding balances of trade accounts receivable - related parties is aged as follows: (Unit: Thousand Baht) CONSOLIDATED 2003 2002 Not yet due

THE COMPANY ONLY 2003 2002

569,257

981,438

2,293,093

2,963,191

Less than 1 month

100,111

317,110

245,111

408,487

1 - 2 months

118,274

53,140

126,192

66,196

2 - 3 months

525

400

60,534

87,930

3 - 6 months

701

12,210

95,614

21,767

6 - 12 months

95

38,213

3,906

38,160

-

957

-

957

788,963

1,403,468

2,824,450

3,586,688

(92)

(4,723)

(92)

(4,723)

788,871

1,398,745

2,824,358

3,581,965

Overdue

Over 12 months Total Less: Allowance for doubtful accounts Net

The Company’s management believes that allowance for doubtful accounts set aside is adequate in the present situation. 6.

TRADE ACCOUNTS RECEIVABLE UNDER AGREEMENTS ASSIGNING RIGHTS OF CLAIM As at 31 December 2002, the Company had assigned its rights of claim over trade receivables

amounting to Baht 677 million to banks, whereby the trade receivables had agreed in writing to make their payment against all invoices issued by the Company directly to these banks. The Company, as the assignor had surrendered control over these debts, and the banks, as the assignee, had sole rights of claim over the trade receivables. The Company had recorded the transactions as sales to the banks. The Company had received payment of Baht 474 million from the banks and recorded the amount as a deduction from the trade accounts receivable balance. The remaining Baht 203 million, for which no payment had yet been received from the banks, had been presented as “Trade accounts receivables under agreements assigning rights of claim” in the balance sheet. The Company had provided a guarantee to the banks to cover any defaults on payment by these accounts receivable. However, no allowance had been set up against these assigned trade receivables since the Company believed that they were financially strong. 7.

RELATED PARTY TRANSACTIONS During the years, the Company had significant business transactions with its overseas related

companies (related by way of having certain shareholders and/or directors in common). They are in connection with sales of goods, hire of manufacturing and purchases of raw materials. Such transactions, which have been concluded on the terms and bases agreed between the Company and those companies, are summarised below :-

5

3


5

4

Annual Report 2003

(Unit: Thousand Baht)

CONSOLIDATED 2003 2002

THE COMPANY ONLY 2003 2002

Pricing policy

Transactions with subsidiaries (Eliminated from consolidated financial statements) Sales

-

-

15,080,023

8,937,511

Near market price

Service income

-

-

-

Sales of fixed assets

-

-

214,595

- Kinpo Electronics, Inc.

4,121,131

6,687,198

809,012

3,604,058

Near market price

- Others

1,584,843

1,224,564

1,050,919

1,224,564

Near market price

1,324

-

1,324

261,967

312,782

159,688

4,739

9,976

-

249,397 USD 725,000 per month - Cost

Transactions with related parties Sales

Sales of fixed assets Purchases of raw materials Interest income

- Cost 312,782 Near market price 6,362

2% per annum (2002: 0-3.5%, 9% per annum)

Interest expense

3,444

25,180

3,444

25,180

2% per annum (2002 : 2.46-2.63% per annum)

Name of related parties

Relationship with the Company

Kinpo Electronics, Inc.

Parent company

Logistar International Holding Co., Ltd.

Subsidiary company

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

Subsidiary company

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

Subsidiary company

Wise Sigma International Holding Co., Ltd.

Associated company (held by a subsidiary company)

Telian Corporation

Associated company and common directors

inx Japan International Inc.

Associated company

Wide Telecom, Inc.

Shareholding by the Company

Afreey Inc.

Shareholding by the Company


Cal-Comp Electronics (Thailand) Public Company Limited

The outstanding balances of the above transactions have been presented in the balance sheets as follows: (Unit: Thousand Baht) CONSOLIDATED 2003 2002

THE COMPANY ONLY 2003 2002

Trade accounts receivable - related parties Subsidiary companies (eliminated from consolidated financial statements) - Logistar International Holding Co., Ltd. - Cal-Comp Electronic (Suzhou) Co., Ltd.

-

-

2,274,031

2,379,940

-

-

357,945

-

-

-

2,631,976

2,379,940

288,292

367,135

52,834

170,415

Related companies - Kinpo Electronics, Inc. - Telian Corporation

329,005

286,646

65,014

286,646

- Wide Telecom, Inc.

171,666

747,632

74,626

747,632

-

2,055

-

2,055

788,963

1,403,468

192,474

1,206,748

- Others Total Less : Allowance for doubtful accounts

(92)

(4,723)

(92)

(4,723)

788,871

1,398,745

192,382

1,202,025

788,871

1,398,745

2,824,358

3,581,965

137,643

266,648

-

-

- Logistar International Holding Co., Ltd.

-

-

78

45,351

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

-

-

217,633

-

-

-

217,711

45,351

15,426

19,101

15,426

19,101

- Telian Corporation

2,683

21,251

2,683

21,251

- Wide Telecom, Inc.

16,487

2,465

16,487

2,465

Short-term loans to related party Related company - Wise Sigma International Holding Co., Ltd. Amount due from related parties Subsidiary companies (eliminated from consolidated financial statements)

Related companies - Kinpo Electronics, Inc.

- Others

211

5,864

211

5,864

34,807

48,681

34,807

48,681

34,807

48,681

252,518

94,032

5

5


5

6

Annual Report 2003

(Unit : Thousand Baht) CONSOLIDATED 2003 2002

THE COMPANY ONLY 2003 2002

Trade accounts payable - related parties Related companies - Kinpo Electronics, Inc.

39,296

14,632

4,914

14,632

- Wide Telecom, Inc.

8,622

125,528

6,303

125,528

- Telian Corporation

13,175

3,192

2,155

3,192

-

1,150

-

-

61,093

144,502

13,372

143,352

- Logistar International Holding Co., Ltd.

-

-

4,372

4,213

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

-

-

6,996

-

-

-

11,368

4,213

- Others

Advance from and amount due to related parties Subsidiary companies (eliminated from consolidated financial statements)

Related companies - Kinpo Electronics, Inc.

9,285

363,073

9,285

363,073

- Wide Telecom, Inc.

-

919

-

919

- Telian Corporation

-

41,701

-

41,701

9,285

405,693

9,285

405,693

9,285

405,693

20,653

409,906

117,558

173,215

117,558

173,215

(123)

(243)

(123)

(243)

117,435

172,972

117,435

172,972

Convertible debentures Related company - Kinpo Electronics, Inc. Cost (par value) 4,000 units Less : Discount on convertible debentures to be realised as interest expense in the future Convertible debentures, net

A part of advances from and amounts due to related parties of Baht 325 million as of 31 December 2002 was charged interest at the rate of 2.495 percent per annum. The movements of short-term loans to related party during the year are as follows :(Unit: Thousand Baht) CONSOLIDATED 31 December 2002 Additional loans Repayment 31 December 2003 Short-term loans to related party Wise Sigma International Holding Co., Ltd.

266,648

-

129,005

137,643


Cal-Comp Electronics (Thailand) Public Company Limited

Short-term loans to Wise Sigma International Holding Co., Ltd. were denominated in US dollar currency and interest was charged at the rate of 2 percent per annum. Net foreign currency assets and liabilities has been included in Note 32.3. 8.

INVENTORIES (Unit: Baht) CONSOLIDATED 2003 2002

THE COMPANY ONLY 2003 2002

Finished goods

573,952,103

430,204,580

441,770,102

430,204,580

Work in process

26,040,868

16,985,808

24,556,107

16,985,808

4,220,553,264

3,568,161,654

3,492,060,960

3,568,161,654

Raw materials Raw materials outside contract Total Less : Provision for obsolete inventories Inventories, net

86,994,261

40,968,284

81,189,326

40,968,284

4,907,540,496

4,056,320,326

4,039,576,495

4,056,320,326

(212,056,211)

(266,156,211)

(212,056,211)

(266,156,211)

4,695,484,285

3,790,164,115

3,827,520,284

3,790,164,115

The Company’s management believes that allowance for obsolete inventories set aside is adequate in the present situation. 9.

ADVANCES PAYMENT FOR RAW MATERIALS Included in the balances as at 31 December 2003 and 2002 mainly consist of: a)

Short-term loans of Baht 99 million (2002: Baht 124 million) provided to local suppliers for use as working capital in agreed production of raw materials, on which interest is charged at the rate of 7 percent per annum.

b)

Advance payment of Baht 47 million to overseas suppliers (2002: Baht 91 million) for the purchase of molds and raw materials. The remaining balances is to be paid upon the completion of molds (please refer to Note 31.4).

10. OTHER RECEIVABLES The balances as at 31 December 2003 and 2002 of Baht 105 million and Baht 455 million, respectively represent suspense accounts receivable set up for inventories to which engineering or component changes have been made of which the expense can be passed on to customers or vendors and for raw materials which were purchased from suppliers and the orders later cancelled. The Company sets up these suspense account while awaiting the return of the raw materials to the creditors.

5

7


5

8

Annual Report 2003

11. INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD (Unit: Thousand Baht)

Company’s name

Nature of business

Country of incorporation

Investments proportion 2003 2002

Paid up capital 2003 2002

CONSOLIDATED Investments Cost method Equity method 2003 2002 2003 2002

%

%

27.8

27.8

57,825

57,825

58,107

32,456

20

-

3,645

-

3,645

-

45

45

89,186

97,198

79,159

91,310

150,656

155,023

140,911

123,766

Investments in associated companies Telian Corporation Mobile phone

inx Japan

Korea

KW 2,871

KW 2,871

million

million

Japan

-

International Inc. Wise Sigma International

Holding

British

company

Virgin

Holding Co., Ltd.

Islands

Total investments accounted for under equity method

(Unit: Thousand Baht)

Company’s name

Nature of business

Country of incorporation

Investments proportion 2003 2002

Paid up capital 2003 2002

%

THE COMPANY ONLY Investments Cost method Equity method 2003 2002 2003 2002

%

Investments in subsidiary companies Logistar International

Company’s

British

Holding Co., Ltd.

distributor

Virgin

USD 50,000

USD 50,000

100

100

2,280

2,280

403,234

214,812

USD 10

USD 10

100

100

430,167

162,328

371,728

163,992

million

million

USD 1.76

-

100

-

70,291

-

70,291

-

KW 2,871

KW 2,871

27.8

27.8

57,825

57,825

58,107

32,456

million

million 20

-

Islands Cal-Comp Electronics

Manufacturing The People’s

(Suzhou) Co., Ltd.

Republic of China

Cal-Comp Optical

Manufacturing The People’s

Electronics

Republic of

(Suzhou) Co., Ltd.

China

million

Investments in associated companies Telian Corporation

Mobile phone

inx Japan International Inc.

Korea

Japan

Total investments accounted for under equity method

-

3,645

-

3,645

-

564,208

222,433

907,005

411,260


Cal-Comp Electronics (Thailand) Public Company Limited

The Company respecitvely recognised a Baht 26 million share of profit for the year 2003 (2002: Baht 32 million), from its investment in Telian Corporation, an associated company. The figures were recorded based on the audited financial statement by the other auditor (2002: based on the information provided by that company’s management, which was not audited by the company’s external auditor as time constraints meant that the company’s management was unable to arrange for the information to be audited in time. The Company received the audited financial statement of this associated company for the year 2002 in 2003 and there was no material difference). In addition to the above, as at 31 December 2003 the Company granted a USD 1.5 million corporate guarantee to this associated company (2002: USD 1.5 million). During the last quarter of current year, the Company has incorporated a subsidiary company, CalComp Optical Electronics (Suzhou) Co., Ltd., in The People’s Republic of China with an authorised capital of USD 10 million. The Company invested USD 1.76 million in 2003. This subsidiary has no operation. In December of the current year, the Company participated in the incorporation of inx Japan International Inc. in Japan, and holds a 20% stake, amounting to Baht 3.6 million. Because its share capital is not yet fully called up, by the end of 2003 this associated company had not yet registered as a company and the investment is thus presented at cost. 12. OTHER LONG-TERM INVESTMENTS (Unit: Thousand Baht)

Company’s name

Nature of business

CONSOLIDATED Country of Investments incorporationInvestments proportion Cost method Fair value 2003 2002 2003 2002 2003 2002 % %

Investments in other companies Wide Telecom, Inc.

CDMA

Korea

12

12

171,247

171,247

Less : Unrealised loss on change in the value of investment

(149,011) (145,852)

Afreey Inc.

Producing of CD ROM Taiwan

Power Digital

Trading of

Taiwan

22,236

25,395

7

7

76,752

76,752

4.7

4.7

26,443

28,818

103,195

105,570

(52,689)

(52,689)

50,506

52,881

72,742

78,276

Communication Co., Ltd. communication apparatus

Less: Allowance for diminution in the value of investments

Total other long-term investments

22,236

25,395

5

9


6

0

Annual Report 2003

(Unit: Thousand Baht)

Company’s name

Country of incorporation Investments proportion 2003 2002 % %

Nature of business

THE COMPANY ONLY Investments Cost method Fair value 2003 2002 2003 2002

Investments in other companies Wide Telecom, Inc.

CDMA

Korea

12

12

171,247

171,247

(149,011)

(145,852)

22,236

25,395

76,752

76,752

(52,689)

(52,689)

24,063

24,063

46,299

49,458

22,236

25,395

Less : Unrealised loss on change in the value of investment

Afreey Inc.

Producing of CD ROM Taiwan

7

7

Less : Allowance for diminution in the value of investments

Total other long-term investments

13. PROPERTY, PLANT AND EQUIPMENT (Unit: Baht) CONSOLIDATED

Buildings and buildings

Machinery and factory

Office furniture

improvements improvements

equipment

and equipment

Land and land

Construction in progress, equipment under installation and fixed Motor vehicles assets in transit

Total

Cost 31 December 2002

108,210,251 1,376,083,234 2,523,013,452

Acquisitions

175,464,166

20,379,911

68,726,167 4,271,877,181 280,561,290 1,775,900,185

230,138,142

704,752,224

469,065,366

88,404,732

2,978,431

Disposals

-

-

(261,060,742)

(3,013,087)

(2,875,000)

-

(266,948,829)

Transfer in (out)

-

2,681,197

172,842,774

16,935,247

2,100,416

(242,649,271)

(48,089,637)

(7,706,691)

(28,127,965)

(20,260,583)

(4,523,405)

(258,272)

(4,552,415)

(65,429,331)

330,641,702 2,055,388,690 2,883,600,267

273,267,653

22,325,486

102,085,771 5,667,309,569

71,427,274

6,322,476

- 1,552,735,933

21,871,538

2,308,551

-

345,422,719

Translation adjustment 31 December 2003 Accumulated depreciation 31 December 2002

-

Depreciation for the year

-

289,847,673 1,185,138,510 66,203,958

255,038,672

Disposals

-

(76,344)

(55,292,530)

(1,467,898)

(2,145,403)

-

(58,982,175)

Translation adjustment

-

(196,514)

(252,325)

(1,036,687)

394,442

-

(1,091,084)

31 December 2003

-

355,778,773 1,384,632,327

90,794,227

6,880,066

31 December 2002

108,210,251 1,086,235,561 1,337,874,942

104,036,892

14,057,435

68,726,167 2,719,141,248

31 December 2003

330,641,702 1,699,609,917 1,498,967,940

182,473,426

15,445,420

102,085,771 3,829,224,176

- 1,838,085,393

Net book value

Depreciation charged in the earnings statements 2002

342,891,371

2003

345,422,719


Cal-Comp Electronics (Thailand) Public Company Limited

A part of depreciation of 2003 amounting to Baht 333 Million (2002: Baht 334 million) for the consolidated has been charged to cost of sales and the remaining part of Baht 12 Million (2002: Baht 9 million) has been charged to selling and administrative expenses. (Unit: Baht) THE COMPANY ONLY

Buildings and buildings

Machinery and factory

Office furniture

improvements improvements

equipment

and equipment

Land and land

Construction in progress, equipment under installation and fixed Motor vehicles assets in transit

Total

Cost 31 December 2002

108,210,251 1,376,083,234 2,523,013,452

175,398,950

20,379,911

Acquisitions

230,138,142

232,274,840

-

15,668,439

-

236,665,094

720,746,515

Disposals

-

-

(261,060,742)

(3,013,087)

(2,875,000)

-

(266,948,829)

Transfer in (out)

-

2,681,197

172,842,774

16,935,246

2,100,416

(229,646,396)

(35,086,763)

(7,706,691)

(7,979,166)

-

(1,376,322)

(129,623)

-

(17,191,802)

330,641,702 1,609,060,105 2,434,795,484

203,613,226

19,475,704

11,168,947 4,608,755,168

71,427,274

6,322,476

- 1,552,735,933

Translation adjustment 31 December 2003

4,150,249 4,207,236,047

Accumulated depreciation 31 December 2002

-

289,847,673 1,185,138,510

Depreciation for the year

-

62,815,053

249,196,942

19,268,539

2,198,425

-

333,478,959

Disposals

-

(76,344)

(55,292,530)

(1,467,898)

(2,145,403)

-

(58,982,175)

Translation adjustment

-

(50,135)

-

(486,671)

(38,385)

-

(575,191)

31 December 2003

-

352,536,247 1,379,042,922

88,741,244

6,337,113

- 1,826,657,526

31 December 2002

108,210,251 1,086,235,561 1,337,874,942

103,971,676

14,057,435

4,150,249 2,654,500,114

31 December 2003

330,641,702 1,256,523,858 1,055,752,562

114,871,982

13,138,591

11,168,947 2,782,097,642

Net book value

Depreciation charged in the earnings statements 2002

342,891,371

2003

333,478,959

A part of depreciation of 2003 amounting to Baht 323 million (2002: Baht 334 million) for the Company only has been charged to cost of sales and the remaining part of Baht 10 million (2002: Baht 9 million) has been charged to selling and administrative expenses. As at 31 December 2003, certain machinery and factory equipment and office equipment items have been fully depreciated but are still in use. The original cost, before deducting accumulated depreciation, of those assets amounts to Baht 399 million (2002: Baht 108 million).

6

1


6

2

Annual Report 2003

14. LAND OCCUPANCY RIGHTS The balance as at 31 December 2003 and 2002 represents the land occupancy rights of its subsidiary in the People’s Republic of China. These rights are for 50 years. (Unit: Thousand Baht) Cost

68,555

Translation adjustment

(5,591)

Amortisation for the year (as included in statements of earnings)

(671)

Net

62,293

15. SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS Short-term loans from financial institutions of the Company and its subsidiaries consist of loans from both local banks and overseas financial institutions in both local currency and foreign currency. The loans are mainly repayable within 3 months, and carry interest rates of 1.25 - 4.78 percent per annum. The Company has considered the foreign currency risk pertaining to the above loans. These loans which are not hedged with derivative financial instruments are included in Note 32.3. 16. OTHER PAYABLE The outstanding balance as at 31 December 2003 and 2002 represents trade accounts payable suspense for goods purchases which there are subject to changes in price, specifications and other components. The Company has recorded the suspense account separately from normal trade accounts payable. 17. OTHER CURRENT LIABILITIES The balance as at 31 December 2003 and 2002 consist of :(Unit: Thousand Baht) CONSOLIDATED 2003 2002

THE COMPANY ONLY 2003 2002

Advances received from customers - for purchase of molds - for preparation of production line

140,613

55,231

140,613

55,231

2,016

2,961

2,016

2,961

3,408

66,885

3,408

66,885

4,945

53,812

4,945

6,665

9

72,477

9

72,477

36,899

40,615

21,274

8,862

187,890

291,981

172,265

213,081

Money received from customers pending for clear Other payables Other payable - forward contracts Others Total


Cal-Comp Electronics (Thailand) Public Company Limited

18. CONVERTIBLE DEBENTURES On 25 March 2002, the Company’s Annual General Meeting of shareholders approved the issue and offering of not more than Baht 2,500 million of unsecured convertible debentures, or the equivalent amount in any foreign currency, with a maturity of not more than 7 years. The offer price is to be determined later and will depend upon the market situation at the time the debentures are issued and offered for sale to institutional investors or specific groups of investors in accordance with the Notification of the Securities and Exchange Commission. On 6 December 2002, the Company issued 48,000 convertible debentures of USD 1,000 each, amounting to USD 48 million, maturing in 3 years, redeemable on 6 December 2005, with the following terms are conditions. Description of convertible debenture - Form

Unsecured convertible debentures

- Type

Debentures with registered holders

- Maturity period

3 years from the date of issuance convertible debentures

- Issue date

6 December 2002

- Maturity date

6 December 2005

- Offering value

USD 48 million

- Offering amount

48,000 units Description of convertible debenture

- Face value

USD 1,000 per unit

- Offering price

USD 1,000 per unit

- Coupon rate

None

- Conversion rate

1 convertible debenture can convert to 1,211.9444 ordinary shares

- Right to convert into shares

Convertible from 6 March 2003 to 6 November 2005 at a conversion price of Baht 36 per share (at a fixed rate of conversion of Baht 43.63 per USD 1).

- Periodic redemption at the

Annually. Redeemable at a price of 102.01% of principal on

option of the debenture holders 6 December 2003 and at 104.06% of principal on 6 December 2004. - Redemption at the option of the issuer

Redeemable within 2 years after the issue at a closing price of the shares on The Stock Exchange of Thailand for each of 30 consecutive trading days, which is at east 130 percent of the convertible price.

- Yield to maturity

2 percent per annum.

- Rights, benefits,

1. The redemption is to be made at maturity date.

and other conditions

2. The debenture holders have the right to authorise the Company to redeem the debentures before the maturity date if there is a change in authorisation.

- Alternative market

N/A

6

3


6

4

Annual Report 2003

During the current year, debenture holders exercised their rights to convert 2,501 debentures into shares. The Company registered the increase in its paid-up capital to support such conversion, as described in Note 19. In addition, during the last quarter of current year debenture holders redeemed 9,999 convertible debentures. There were 35,500 convertible debentures outstanding as at 31 December 2003. 19. SHARE CAPITAL/PREMIUM ON ORDINARY SHARES On 25 March 2002, the Company’s Annual General Meeting of shareholders approved the reduction of registered share capital from Baht 3,200 million to Baht 3,020 million, comprising shares with a par value of Baht 10 and approved the increase registered share capital from Baht 3,020 million to Baht 3,780 million, comprising shares with a par value of Baht 10, for the purpose of the conversion of the convertible debentures as described in Note 18. On 26 April 2002, the Company registered the increase in its share capital with the Ministry of Commerce. Registered share capital is Baht 3,780 million. As described in Note 18, the Company registered increase of 3,031,072 shares in its paid-up capital to support exercise of the convertible debentures. Both liability and equity components of such convertible debentures have been transferred to share capital, and the difference between the transfer value and the par value of the ordinary shares has been recorded as premium on ordinary shares. 20. LEGAL RESERVE Pursuant to section 116 of the Public Limited Companies Act B.E. 2535, 5 percent of the net earnings has been set aside as part of the statutory reserve in order to increase the amount of the reserve to the level of 10 percent of the registered share capital. The statutory reserve could not use for dividend payment. 21. EXCHANGE GAINS (LOSS) (Unit: Thousand Baht) FOR THE YEARS ENDED 31 DECEMBER CONSOLIDATED THE COMPANY ONLY 2003 2002 2003 2002 Realised exchange gains (loss) Unrealised exchange gains (loss) Exchange gains (loss) - net

175,450

29,963

(107,226)

(330,586)

5,927

(55,043)

54,521

(55,043)

181,377

(25,080)

(52,705)

(385,629)

The unrealised exchange loss for the year 2002 included a Baht 10 million gains which is the result of netting the Company’s unrealised exchange loss against the subsidiary’s unrealised exchange gains from translation under forward contracts using the exchange rate at the balance sheet date. These forward contracts were made for square hedge purpose between the Company and its subsidiary.


Cal-Comp Electronics (Thailand) Public Company Limited

22. DIRECTOR’S REMUNERATION Directors’ remuneration represents the benefits paid to the Company’s directors in accordance with section 90 of the Public Limited Companies Act, exclusive of salaries and related benefits payable to Executive Directors. 23. CORPORATE INCOME TAX Corporate income tax has been calculated at the rate of 25 percent on the non-BOI promoted earnings after adding back provisions and certain expenses which are disallowable for tax computation purposes. 24. RECONCILIATION OF DILUTED EARNINGS PER SHARE 2003 Net earnings Million Baht

Weighted average number of ordinary shares Million share

Earnings per share Baht

1,485

303.1

4.90

29

56.2

1,514

359.3

Basic earnings per share Net earnings for the year of ordinary shareholders Effect of dilute potential ordinary shares Convertible debentures Diluted earnings per share Net earnings for the year of ordinary sharesholders assuming the conversion of diluted potential ordinary shares

4.21

2002 Net earnings Million Baht

Weighted average number of ordinary shares Million share

Earnings per share Baht

1,596.9

302.0

5.29

3.5

4.1

1,600.4

306.1

Basic earnings per share Net earnings for the year of ordinary shareholders Effect of dilute potential ordinary shares Convertible debentures Diluted earnings per share Net earnings for the year of ordinary sharesholders assuming the conversion of diluted potential ordinary shares

5.23

6

5


6

6

Annual Report 2003

25. NUMBER OF EMPLOYEES AND RELATED COSTS CONSOLIDATED 2002

2003

2002

8,962

6,345

7,218

6,345

1,016,449

935,593

934,126

935,593

Number of employees at the end of year Employee costs (Thousand Baht)

THE COMPANY ONLY

2003

26. DIVIDEND On 19 March 2003, the Company’s Annual General Meeting of Shareholders approved the payment of dividend of Baht 1.5 per share from its earnings for the year 2002 to the Company’s shareholders, totalling Baht 453 million. The Company paid dividend on 16 April 2003. On 13 August 2003, the Company’s Board of Directors Meeting approved the payment of interim dividend of Baht 1.5 per share from its earnings for the six-month period ended 30 June 2003 to the Company’s shareholders 303,213,156 shares, totalling Baht 454.82 million. The Company paid dividend on 12 September 2003. 27. PROVIDENT FUND The Company and its employees jointly established a provident fund as approved by the Ministry of Finance in accordance with the Provident Fund Act B.E. 2530. The fund is contributed by both employees at the rate of 2 percent of salary and the Company at the rate of 2 percent of salary and managed by TISCO Securities Company Limited. The fund will be paid to the employees upon termination in accordance with the rules of the fund. Total contributions of the Company for the current year amounted to Baht 2.0 million (2002: Baht 1.1 million). 28. BOARD OF INVESTMENT PRIVILEGES The Company was granted the following tax privileges by the Board of Investment for certain specified categories of products, under the Investment Promotion Act B.E. 2520 :- Exemption from corporate income tax on net profit for periods of 3 to 8 years commencing as from the date of first earning operating income. - Dividends paid from the promoted operations which are exempt from corporate income tax are in turn exempted from inclusion in the determination of corporate income tax. - Exemption from import duty on the raw and essential materials imported for use specifically in producing for export. - Exemption from import duty on items imported for re-export. - Exemption from import duty on machinery as approved by the Board. - An allowance of five percent of the increment in export income over that of the preceding year is deductible from taxable income for a period of ten years commencing as from the date of earning operating income. - A fifty percent reduction of the normal rate of corporate income tax on net profit, of for a period of 5 years after the expiry of the corporate income tax exemption period. To be entitled to these rights and privileges, the Company must comply with conditions specified in the promotional certificates. The Company’s operating revenues for the year ended 31 December 2003 and 2002 are below divided according to whether the revenues are from promoted and non-promoted activities :-


Cal-Comp Electronics (Thailand) Public Company Limited

(Unit: Million Baht) Promoted 2003 2002

Non-promoted 2003 2002

2003

Total 2002

Revenues Sales Local Overseas Total

1,536

507

3

5

1,539

512

23,761

29,870

2,281

1,995

26,042

31,865

25,297

30,377

2,284

2,000

27,581

32,377

29. FINANCIAL INFORMATION BY SEGMENT The Company’s operations involve the single industry segment of manufacturing and distributing electronic equipment. Information for the years ended 31 December 2003 and 2002 is below presented by geographic segment :(Unit: Million Baht) Local sales 2003 2002

For the years ended 31 December 2003 and 2002 Overseas sales Total Elimination Grand total 2003 2002 2003 2002 2003 2002 2003 2002

Sales - external

1,539

512

21,842

23,940

23,381

24,452

-

-

20,786

16,849

20,786

16,849 (15,080)

(8,937)

5,706

7,912

1,539

512

42,628

40,789

44,167

41,301 (15,080)

(8,937) 29,087

32,364

2,134

2,309

- related parties

-

- 23,381

Earnings from operations

24,452

Other income

242

138

Expenses and interest expenses

(891)

(844)

-

(6)

1,485

1,597

Corporate income tax Net earnings

The Company used the gross profit margin + 2% basis to set transfer prices between the geographic segment. (Unit: Million Baht) Local 2003 2002

As at 31 December 2003 and 2002 Overseas Total Elimination 2003 2002 2003 2002 2003 2002

receivable, net

5,500

5,094

2,324

1,911

7,824

7,005 (2,632) (2,440) 5,192

4,565

- Inventories, net

3,736

3,788

947

2

4,683

3,790

12

-

4,695

3,790

2,310

2,645

1,531

74

3,841

2,719

(12)

-

3,829

2,719

2,252

1,634

1,659

1,191

3,911

2,825 (1,730)

(147) 2,181

2,678

13,798 13,161

6,461

3,178 20,259 16,339 (4,362) (2,587) 15,897 13,752

Grand total 2003 2002

Assets - Trade accounts

- Property, plant and equipment, net - Others Total assets

6

7


6

8

Annual Report 2003

30. STATEMENTS OF CASH FLOWS For the purpose of the statements of cash flows, cash and cash equivalents include cash on hand and at financial institutions with an original maturity of 3 months or less and without restriction. Cash and cash equivalents as reflected in the statements of cash flows consist of the followings :(Unit: Thousand Baht) CONSOLIDATED 2003 2002 Cash

THE COMPANY ONLY 2003 2002

816

392,200

643

417

Deposits at financial institutions

527,776

440,519

37,962

66,496

Cash and cash equivalents

528,592

832,719

38,605

66,913

158,854

-

-

-

687,446

832,719

38,605

66,913

Current investments - Term deposits with financial institutions Cash and cash equivalents in statements of cash flows

31. COMMITMENTS AND CONTINGENT LIABILITIES 31.1 Financial derivatives a) Forward foreign exchange contracts As at 31 December 2003, the Company and its subsidiary had outstanding forward foreign exchange contracts for the sale of USD 25 million at ranging from Baht 39.58 to Baht 40.0475 per USD 1 (2002: outstanding forward foreign exchange contracts for the purchase of USD 100 million and the sale of USD 110 million). These foreign exchange contracts generally have maturities of less than 1 year and the counterparties to the transactions are financial institutions. b) Interest Rate Swap Transaction Agreement As at 31 December 2002, a subsidiary of the Company has entered into USD 15 million Interest Rate Swap Transaction Agreement with an oversea bank. The contract is for a period of 1 year, maturing in April 2003. At the maturity date, the subsidiary is required to pay interest to the bank at 12 month LIBOR (as at 31 December 2002, the 12 month LIBOR was 1.48625 percent per annum) and the bank is required to pay interest to the subsidiary at a fixed rate of 4.53 percent per annum. c) Option agreements As at 31 December 2003, a subsidiary of the Company has outstanding option contracts under which it will pay USD 503 million (2002: USD 180 million) and receive Baht 18,695 million and RMB 372 million (2002: Baht 7,900 million) on maturity dates between 2 January 2004 to 22 September 2004 (2002: 17 January 2003 and 18 June 2003). The fair value of the option contracts was USD 504 million (2002: USD 179.9 million). Such fair value was based on forward exchange rate quoted by banks. As at 31 December 2003, the exchange rate announced by the BOT is as following :-


Cal-Comp Electronics (Thailand) Public Company Limited

Currency

Average buying rate (Baht per 1 USD)

Average selling rate (Baht per 1 USD)

39.5385

39.7378

USD 31.2 Guarantees

a) As at 31 December 2003, there were outstanding bank guarantees of approximately Baht 96.2 million (2002: Baht 97.4 million) issued by banks on behalf of the Company in respect of certain performance bonds as required in the normal course of the Company’s business. Its parent company has issued a letter of awareness to a bank for credit facilities. b) As at 31 December 2003, the Company has issued a letter of guarantee of USD 9.5 million (2002: USD 16.9 million) to a financial institution to secure against credit facilities as granted by those financial institutions to a subsidiary company and a related company. 31.3 Sale of collection rights over trade accounts receivable As discussed in Note 6, as at 31 December 2002 the Company had contingent liabilities to banks amounting to Baht 474 million as a result of its sale of collection rights over trade accounts receivable are unable to repay their debt to the banks. 31.4 Agreements for hire of production of molds As at 31 December 2003, the Company had outstanding commitments of Baht 12.3 million with overseas suppliers in respect of agreements for hire of production of molds (2002: Baht 32.1 million). 31.5 Sales and marketing services agreement As at 31 December 2003, a subsidiary company had an outstanding commitment of SGD 1.2 million under a sales and marketing services agreement (2002: SGD 1.2 million). 31.6 Commitments As at 31 December 2003, the Company had outstanding commitment of USD 8.2 million in respect of uncalled portion of investments in its subsidiary. As at 31 December 2003, its subsidiaries had outstanding commitments of approximately RMB 45 million in respect of agreements to construct a plant in the People’s Republic of China (2002: RMB 57.3 million). 32. FINANCIAL INSTRUMENTS 32.1 Financial risk management and policies The Company and its subsidiaries are exposed to risks from changes in market interest rates and in currency exchange rates and from nonperformance of contractual obligations by counter parties. The Company and its subsidiaries use derivative instruments, as and when it, considers appropriate, to manage such risks.

6

9


7

0

Annual Report 2003

32.2 Credit Risk It is the Company and its subsidiaries’ policy to enter into financial instruments with creditworthy counterparties. Therefore the Company and its subsidiaries do not expect any material loss to arise from the counterparties’ failure to perform their obligations under the financial statements. The Company’s and its subsidiaries’ revenues are generated in the technology industry, which is characterised by short product life cycles and rapid advances in manufacturing technologies. The maximum exposure to credit risk is the carrying amount of the financial assets less provision for losses as stated in the balance sheets. With respect to off-balance sheet derivative financial instruments, it is the Company’s and its subsidiaries’ policy to enter into financial instruments with creditworthy counterparties. Therefore, the Company and its subsidiaries do not expect any material losses to arise from the counterparties’ failure to perform their obligations under the financial instruments. 32.3 Foreign currency risk The Company and its subsidiaries’ exposure to foreign currency risk relates primarily to its receivable, payable, loans and convertible debentures which are denominated in foreign currencies. As at 31 December 2003 and 2002, the Company’s net foreign currency assets and liabilities that were not hedged by derivative financial instruments were as follows. Million USD

Million NTD

Million EURO

Million SGD

2003

Million YEN 2002

2003

2002

2003

2002

2003

2002

2003

2002

-

5

133

116

71

16

2

6

0.7

0.4

(61)

(91)

(147)

(31)

(36)

(48)

(2)

(1)

-

-

(61)

(86)

(14)

85

35

(32)

-

5

0.7

0.4

Foreign currency assets - Due within one year Foreign currency liabilities - Due within one year Net foreign currency assets (liabilities)

32.4 Interest rate risk and liquidity The interest rate risk is the risk that future movements in market interest rates will affect the results of operations of the Company and its subsidiaries and their cash flows. The Company’s and its subsidiaries’ exposure to interest rate risk related primarily to their deposits at banks, short-term investments, loans to related parties and loans from financial institutions. The majority of these financial assets and liabilities carry interest rates which vary in line with market rates. However, one subsidiary of the Company has entered into interest rate swap agreements to hedge such interest rate risk, as discussed in Note 31.1 b).


Cal-Comp Electronics (Thailand) Public Company Limited

The cash flow requirements related to the Company and its subsidiary’s forward contracts and interest rate swap are limited to the net differences between the contracted forward rate and the spot rates prevailing at their settlement dates, and the net differences between the floating rate and fixed rate at the maturity date, respectively. Cash and cash equivalents as at 31 December 2003 and 2002 are as follows :(Unit: Million Baht) CONSOLIDATED 2003 2002

Cash on hand Cash at banks

0.8 686.6 687.4

0.4 832.3 832.7

THE COMPANY ONLY Interest rate 2003 2002

0.6 38.0 38.6

0.4 66.5 66.9

Market rate

32.5 Fair value Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm’s length transaction. Fair values are obtained from quoted market prices, discounted cash flow models or net asset value as appropriate. The following methods and assumptions are used to estimate the fair value of each class of financial instruments. Cash on hand and at banks, current investments, accounts and notes receivable - the carrying values approximate their fair values due to the relatively short-term maturity of these financial instruments. Investment in shares - the fair values of publicly traded instruments are estimated based on the last bidding price of the Stock Exchange of Thailand, all other instruments for which there are no quoted market prices, a reasonable estimate of fair value has been calculated based on the underlying net asset base for such investment, which approximates their carrying values. Accounts payable - the carrying amounts of these financial liabilities approximates their fair values due to the relatively short-term maturity of these financial instruments. 33. PRESENTATION The presentation of these financial statements have been made in compliance with the Notification of the Department of Business Development dated 14 September 2001, issued under the Accounting Act. B.E. 2543. 34. APPROVAL OF FINANCIAL STATEMENTS These financial statements have been approved by the Company’s directors.

7

1


7

2

Annual Report 2003

MANAGEMENT EXPLANATION 1. Sale revenues: At the end of year 2003 the Company’s sale revenues were Bt. 29,086.57 million, which decreased 10.13 % from that in year 2002 due to the declining in demand of PC peripheral and telecom products. During year 2003, the Company had gain on share of profit from investment accounted for under equity method, gain on exchange and other revenues of Bt.25.65 million, Bt.181.38 million, and Bt.37.25 million respectively. Therefore, total revenues were Bt.29,330.85 million.

2. Cost of good sold: Cost of good sold for the year 2003 amounted Bt.26,953.14 million or 92.67% of the sale revenues which decreased from 92.87% compared to that in year 2002. As a result, the gross margin slightly improved from 7.13% to 7.33% with contributed from higher bargaining power over suppliers and efficient cost control.

3. Selling and administrative Expenses: The SG&A expenses in the year 2003 were Bt.792.29 or 2.72% of the sale revenues which increased from 2.21% in year 2002 due to the capacity expansion and the increase in marketing activities for new products in China.

4. Interest Expenses: The Company had interest expenses at Bt.74.72 million which decreased from Bt.79.66 million in year 2002 because of the decline of interest rate.

5. Net Profit: The Company’s net profit for the year 2003 was Bt.1,484.77 million which decreased 7.02% compared to the year 2002. At a result, the Company’s earning per share also decreased from Bt.5.29 in year 2002 to Bt.4.90 in year 2003. However, net profit margin increased slightly to 5.11% from 4.93%.


Annual Report 2003

FACTORY 1,2,3 (SAMUTSAKORN) 60 Moo 8, Sethakij Road, Klong Maduea, Kratoom Ban, Samutsakorn 74110, Thailand Tel. (6634) 472-000, 849-000 Fax. (6634) 471-654, 471-998, 472-009 FACTORY 4,5,6 (PETCHABURI) 138 Moo 4, Phetchakasem Road, Sapang, Koaw Yoi, Petchaburi 76140, Thailand Tel. (6632) 447-756-67 Fax. (6632) 477-619-20 SHOW ROOM No. 7 Building 3P 27/1 3rd floor, IT Mall, Fortune Town Bldg, Rachadapisek Road, Din Dang Bangkok 10407 Tel. 0-2641-0946-48 Fax. 0-2641-0752 TAIWAN (TAIPEI BRANCH) 3Fl., No. 205, Sec. 3, Beisin Rd., Sindian City, Taipei County 231, Taiwan R.O.C. Tel. 886-2-2764-5312 Fax. 886-2-2748-5208 CAL-COMP ELECTRONICS (SUZHOU) CO., LTD. No. 18, Jiangxing Rd., Wujiang Economic Development Zone, Jiangsu, China Tel. 86-512-6340-7000 Fax. 86-512-6340-7995

Cal-Comp Electronics (Thailand) Public Company Limited.

Annual Report 2003 Cal-Comp Electronics (Thailand) Public Company Limited

HEAD OFFICE 191/54, 191/57, 18th floor, CTI Tower, Rachadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel. (662) 261-5033-40, 661-9381-88 Fax. (662) 261-5042, 661-9396-9 e-mail : ir@calcomp.co.th http://www.calcomp.co.th

Cal-Comp Electronics (Thailand) Public Company Limited. CCET


Ccet 03