5 Notice of Nomination of Auditors. 6 Corporate Information. 7 8 Directors Profile Chairman s Statement. 11 Other Information

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2 contents 2 4 Notice of Annual / Extraordinary General Meeting 5 Notice of Nomination of Auditors 6 Corporate Information 7 8 Directors Profile 9 10 Chairman s Statement 11 Other Information Audit Committee Report Statement on Corporate Governance Statement on Internal Control Financial Statements 76 Properties Owned By The Cover Rationale Concept: An International Force Analysis of Shareholdings enclosed Proxy Form A globe was chosen as the focal point of this cover to create the impression of a dynamic, international company; to emphasise this, a large Welli Multi logo has been used as a screened back element. Welli Multi s products and pictures of oil palm fruits are also incorporated on the cover to demonstrate the Company s core business. Blue was chosen as the predominant colour to mirror Welli Multi s corporate colour scheme to give the cover a modern, stylish look, different tones of blue have been used.

3 Notice of Annual / Extraordinary General Meeting NOTICE IS HEREBY GIVEN that the Twelfth Annual General Meeting of Welli Multi Corporation Berhad will be held at the Balau Room, Level 2, Sunway Hotel Seberang Jaya, No. 11, Lebuh Tenggiri Dua, Pusat Bandar Seberang Jaya, Seberang Jaya, Prai, Penang on Monday, 20th June, 2005 at 9.00 a.m. for the following purposes: - AGENDA As Ordinary Business 1. To receive and consider the Reports of the Directors and Auditors and the Statement of Accounts for the financial year ended 31st December Resolution 1 2. To re-elect the following Directors retiring under Article 80 of the Articles of Association of the Company: i. Ang Sun Beng ii. Tan Kim Oh Resolution 2 Resolution 3 3. To re-elect the following Director retiring under Article 87 of the Articles of Association i. Tan Chin Han Resolution 4 4. To approve the payment of Directors fees of 70,000 for the financial year ended 31st December 2004 Resolution 5 5. To appoint Auditors and to authorize the Directors to fix their remuneration. Notice of Nomination pursuant to Section 172(11) of the Companies Act, 1965, a copy of which is annexed on page 5 of this Annual Report and marked Annexure A has been received by the Company for the nomination of Messrs. Deloitte KassimChan who have given their consent to act, for appointment as Auditors and of the intention to propose the following ordinary resolution:- That Messrs. Deloitte KassimChan be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs. Moore Stephens to hold office until the conclusion of the next Annual General Meeting at a remuneration to be agreed between the Directors and the Auditors. Resolution 6 As Special Business 6. To consider and, if thought fit, to pass the following as an Ordinary Resolution: Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 That subject always to the Companies Act, 1965, the Articles of Association of the Company and the approvals of the relevant governmental / regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to issue shares in the Company at any time upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on the Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company. Resolution 7 7. To transact any other business for which due notice has been given. EXPLANATORY NOTES TO ITEM 6 OF AGENDA (RESOLUTION 7) The ordinary resolution under item 6 above is proposed pursuant to Section 132D of the Companies Act, 1965, and if passed, will give the Directors of the Company from the date of the above Annual General Meeting, authority to issue and allot shares from the unissued share capital of the Company for such purposes as the Directors deem fit and in the interest of the Company. This authority, unless revoked or varied at a general meeting, will expire at the conclusion of the next Annual General Meeting of the Company. 2 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

4 Notice of Annual / Extraordinary General Meeting (cont d) NOTES: 1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. A proxy need not be a member of the Company but such appointment must comply with Section 149 (1)(b) of the Companies Act, 1965 which states that a member shall not be entitled to appoint a person who is not a member of the Company as his proxy unless that person is an advocate, an approved auditor or a person approved by the Registrar of Companies in a particular case. 2. The instrument appointing a proxy must, to be valid, be deposited at the Registered Office: No. 85, 1st Floor (Suite B), Beach Street Penang not less than forty-eight (48) hours before the time set for the Meeting. 3. If the form of proxy is executed by a corporation, it must be either under its seal or under the hand of any officer or attorney authorised. NOTICE OF EXTRAORDINARY GENERAL MEETING NOTICE IS HEREBY GIVEN that an Extraordinary General Meeting of Welli Multi Corporation Berhad ( Welli or the Company ) will be held at Balau Room, Level 2, Sunway Hotel Seberang Jaya, No. 11, Lebuh Tenggiri Dua, Pusat Bandar Seberang Jaya, Seberang Jaya Prai, Penang on Monday, 20 June 2005 immediately after the conclusion or adjournment (as the case may be) of the Company s Twelfth Annual General Meeting, which will be held at the same venue on the same day at 9.00 a.m., for the purpose of considering, and if thought fit, passing the following resolutions, with or without modifications:- SPECIAL RESOLUTION PROPOSED AMENDMENTS TO CERTAIN CLAUSES IN THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF WELLI THAT, the deletion, alterations, modifications and/or additions to the Memorandum and Articles of Association of Welli Multi Corporation Berhad as set out in Section 4.0 of the Circular to shareholders of the Company dated 27 May 2005 be and are hereby approved. ORDINARY RESOLUTION 1 PROPOSED SHARE SPLIT INVOLVING THE SUBDIVISION OF EVERY ONE (1) EXISTING ORDINARY SHARE OF 1.00 EACH HELD IN WELLI MULTI CORPORATION BERHAD INTO TWO (2) ORDINARY SHARES OF 0.50 EACH THAT subject to the passing of the Special Resolution and approval of all relevant authorities, approval be and is hereby given to the Directors of Welli Multi Corporation Berhad ( Welli or the Company ) to subdivide the entire issued and paidup share capital of the Company on an entitlement date to be determined later by the Directors of the Company comprising ordinary shares of 1.00 each ( Ordinary Shares ) into ordinary shares of 0.50 each ( Welli Shares ) on the basis of two (2) new Welli Shares for every one (1) existing Ordinary Share held ( Proposed Share Split ). This will be applied for the shares in the capital of the Company to be distributed as fully paid-up to the shareholders of the Company whose names appear in the Record of Depositors on a date to be determined later by the Directors. The subdivided Welli Shares to be issued shall, upon allotment and issue, rank pari passu in all respects amongst themselves, and that the Directors be and are hereby authorised to sign and execute all documents, and do all acts and things as may be required for or in connection with and to give effect to and implement the Proposed Share Split with full power to assent to any conditions, modifications, variations and/or amendments as may be required or imposed by the relevant authorities. ORDINARY RESOLUTION 2 PROPOSED PURCHASE OF THE COMPANY S OWN SHARES OF UP TO TEN PERCENT (10%) OF THE ISSUED AND PAID-UP SHARE CAPITAL OF THE COMPANY THAT subject to the passing of the Special Resolution, the relevant provisions of the Companies Act, 1965 ( Act ), the Company s Memorandum and Articles of Association, the requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ) and any other relevant authorities, the Directors of the Company be and are hereby authorised to purchase the Company s own ordinary shares quoted on Bursa Securities, through stockbroker(s) to be appointed by the Directors of the Company, subject to the following:- W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 3

5 Notice of Annual / Extraordinary General Meeting (cont d) a. The maximum number of ordinary shares which may be purchased by the Company shall not exceed ten percent (10%) of the issued and paid-up ordinary share capital of the Company at any point in time; b. The maximum funds to be allocated by the Company for the purpose of purchasing its ordinary shares shall not exceed the share premium account of the Company which stood at 32,810,299 as at 31 December 2004; c The authority conferred by this resolution will be effective upon passing of this resolution and will continue in force until: i. the conclusion of the next Annual General Meeting ( AGM ) of the Company following the forthcoming Extraordinary General Meeting, at which such resolution was passed, at which time the said authority will lapse, unless by an ordinary resolution passed at that meeting, the authority is renewed, either unconditionally or subject to conditions; or ii. the expiration of the period within which the next AGM of the Company after that date is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Act); or iii. revoked or varied by an ordinary resolution passed by the shareholders in a general meeting; whichever occurs first; d. Upon completion of the purchase(s) of the ordinary shares by the Company, such shares shall be dealt with in the following manner:- i. cancel the shares so purchased; ii. retain the shares so purchased as treasury shares; iii. distribute the treasury shares as dividends to shareholders; iv. resell the treasury shares on Bursa Securities in accordance with the relevant rules of Bursa Securities; and v. any combination of the above (i), (ii), (iii) and (iv). THAT the Directors of the Company be and are hereby authorised to take all such steps as are necessary and entering into all other agreements, arrangements and guarantees with any party or parties to implement, finalise and give full effect to the aforesaid purchase with full powers to assent to any conditions, modifications, revaluation, variations and/or amendments (if any) as may be imposed by the relevant authorities from time to time to implement or to effect the purchase of its own ordinary shares. By Order of the Board HENG FOOK TAU (MAICSA ) Company Secretary PENANG Dated: 27th May 2005 NOTES: 1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. 2. A proxy may not be a member of the Company but such appointment must comply with Section 149(1)(b) of the Companies Act, 1965 which states that a member shall not be entitled to appoint a person who is not a member of the Company as his proxy unless that person is an advocate, an approved auditor or a person approved by the Register of Companies in a particular case. 3. The instrument appointing the Proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if such appointer is a corporation under its common seal or the hand of its attorney. 4. All forms of proxy must be deposited at the registered office of the Company at 85, 1st Floor (Suite B), Beach Street, Penang not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof. 4 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

6 Notice of Nomination of Auditors Ms. SIM WEE LEE 10, Jalan Permata Satu Taman Permata Satu Bukit Mertajam Seberang Perai, Pulau Pinang. Annexure A 2 April 2005 The Board of Directors Welli Multi Corporation Berhad No. 85, 1st Floor, Beach Street Penang. Dear Sirs, NOTICE OF NOMINATION OF AUDITORS I, the undersigned, being a registered holders of 20,000 ordinary shares of 1.00 each fully paid-up in the capital of the Company, hereby nominate pursuant to Section 172(11) of the Companies Act, 1965, Messrs. Deloitte KassimChan for appointment as the new Auditors of the Company in place of the retiring Auditors, Messrs. Moore Stephens at the forthcoming Annual General Meeting. Therefore, I propose that the following resolution be considered at the forthcoming Annual General Meeting:- That Messrs Deloitte KassimChan be and are hereby appointed as Auditors of the Company in place of the retiring Auditors, Messrs. Moore Stephens to hold office until the conclusion of the next Annual General Meeting at a remuneration to be agreed between the Directors and the Auditors. Yours faithfully SIM WEE LEE NRIC: W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 5

7 Corporate Information board of directors Tunku Dato Seri Kamel Bin Tunku Rijaludin (Chairman and Independent Non-Executive Director) Ang Sun Beng (Managing Director) Ang Soon An (Executive Director) Ang Sun Tiong (Executive Director) Tan Kim Oh (Executive Director) Tan Chin Han (Executive Director) (appointed on 1 March 2005) Soh Yew Aun (Non-Executive Director) (resigned on 31 December 2004) Ooi Hun Pin (Independent Non-Executive Director) corporate information REGISTERED OFFICE 85, 1st Floor (Suite B), Beach Street, Penang. Tel. : Fax : COMPANY SECRETARY Heng Fook Tau (MAICSA No. : ) AUDITORS Moore Stephens Chartered Accountants Wisma Boon Siew, Level 10, Unit 10H, Penang Road, Penang. Tel. : Fax : SHARE REGISTRAR PFA Registration Services Sdn. Bhd Level 13, Uptown 1, No. 1 Jalan SS21/58, Damansara Uptown, Petaling Jaya. Tel. : Fax : SOLICITORS Salina, Lim Kim Chuan & Co C2, Menara BHL, Jalan Sultan Ahmad Shah, Penang. Tel. : Fax : STOCK EXCHANGE LISTING Second Board of Bursa Malaysia Securities Berhad 6 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

8 Directors Profile (cont d) TUNKU DATO SERI KAMEL BIN TUNKU RIJALUDIN, aged 51, Malaysian (Chairman and Independent Non-Executive Director) YM. Tunku Dato Seri Kamel bin Tunku Rijaludin is the Chairman and Non-Executive Director of Welli Multi Corporation Berhad. He was first appointed the Chairman of the Board in He is also the Chairman of the Audit Committee and of the Nomination and Remuneration Committees. Tunku Dato Seri Kamel graduated with a Bachelor of Science (Honours) degree majoring in Forestry in 1980 and also holds a Master s Degree in Business Administration from the University of Tennessee in the United States. He began his career in Sycip Gorres and Velayors Kassim Chan Sdn Bhd, a management consultancy firm, as a management consultant in In 1983, he joined Kedah Cement Sdn Bhd, a company involved in the manufacturing and sale of cement, clinker and related products, as the International Sales Manager. In 1989, he joined Asli Jardine Insurance Brokers Sdn Bhd, an insurance broking company, as the Principal Officer and Director. In 1990, he joined Dagang Net Technologies Sdn Bhd, an information technology company. He is also currently a director of Amtel Holdings Bhd and sits on the board of several private companies. He does not have any family relationship with any directors and/or major shareholders of the Company and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31st December ANG SUN BENG, aged 59, Malaysian (Managing Director) Mr. Ang Sun Beng left school at a very early age and worked in various businesses including the family business of coconut oil. He was first appointed to the Board on 1st August He has over 30 years of experience in the edible oil business and is the principal founding member of Welli Edible Oil Sdn. Bhd.. He is the Managing Director of the. He is the eldest brother of the Ang family and is a major shareholder of the Company. He does not have any conflict of interest with the Company and has not been convicted of any offence in the past ten (10) years. He attended all five (5) Board meetings during the financial year ended 31st December ANG SOON AN, aged 55, Malaysian (Executive Director) Mr. Ang Soon An was first appointed to the Board on 1st August He is also a member of the Audit Committee and a member of the Nomination and Remuneration Committees. He is principally in charge of the finance and administration of the group. He joined the family business upon leaving school and has over 27 years of experience in the milling and trading of edible oils. He is the younger brother of Mr. Ang Sun Beng and older brother of Mr. Ang Sun Tiong and is a major shareholder of the Company. He does not have any conflict of interest with the Company and has not been convicted of any offence in the past ten (10) years. He attended all five (5) Board meetings held during the financial year ended 31st December ANG SUN TIONG, aged 51, Malaysian (Executive Director) Mr. Ang Sun Tiong also left school at an early age to join the family business and has over 20 years of experience in the edible oil business. He was first appointed to the Board on 1st August He is the younger brother of Mr. Ang Sun Beng & Mr. Ang Soon An. He is a major shareholder of the Company and is now overall in-charge of the day-to-day operations of the three factories producing palm kernel oil. He does not have any conflict of interest with the Company and has not been convicted of any offence in the past ten (10) years. He attended all five (5) Board meetings held during the financial year ended 31st December 2004 TAN KIM OH, aged 51, Malaysian (Executive Director) Mr. Tan Kim Oh is the founder of the Fourseason. Mr. Tan had left school at an early age and worked in several businesses before starting his own trading business dealing in confectioneries. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 7

9 Directors Profile (cont d) He is a major shareholder of the Company and now primarily is in-charge of the confectionery business of the. He does not have any family relationship with any directors and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. He has attended all five (5) Board meetings held during the financial year ended 31st December TAN CHIN HAN, aged 48, Malaysian (Executive Director) (appointed on 1 March 2005) Mr. Tan Chin Han is a member of the MIA (Malaysian Institute of Accountants) and CIMA (Chartered Institute of Management Accountants, UK) and holds a MBA (Master in Business Administration) from the University of Hull, UK. He first joined the Company as the Financial Controller on 1st June 2004, and subsequently was appointed to the Board of the Company as an Executive Director on 1st March He began his career with Coopers Animal Health, UK, a worldwide joint venture company between ICI plc and Welcome Foundation Worldwide as its Management Accountant (Asia Pacific). He was then promoted to be the Regional Controller (Asia), and was subsequently promoted to General Manager (Malaysia). He was also instrumental in bringing the Cuban made Hepatitis vaccines to Malaysia. He has several years of experience with another German Plc as well as with the listed company before joining Welli. He does not have any family relationship with any directors and/or major shareholder of the Company and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. SOH YEW AUN, aged 47, Malaysian (Non-Executive Director) (resigned on 31 December 2004) Mr. Soh Yew Aun graduated in 1980 with an honours degree in Social Science from Universiti Sains Malaysia. He worked for several years with a leading local bank before joining Denko Industrial Corporation Bhd, a public listed company as its Corporate Planning Manager till He was appointed to the Board of Fourseason in 1992 when it went public. He currently sits on the board of Linear Corporation Bhd and several private companies. He does not have any family relationship with any directors and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. He has attended all the four (4) Board meetings held during the financial year ended 31st December OOI HUN PIN, aged 42, Malaysian (Independent Non-Executive Director) Mr. Ooi Hun Pin is a member of MICPA (Malaysian Institution of Certified Public Accountants) and MIA (Malaysian Institute of Accountants). He was first appointed to the Board of the Company on 12th March 2002 as an Independent Non-Executive Director. He is also a member of the Audit Committee and of the Nomination and Remuneration Committees. He obtained his professional qualification from the Malaysian Institute of Certified Public Accountants in 1987 and was subsequently admitted to the Malaysian Institute of Accountants. He also obtained his Master in Business Administration in He started his career in early 1983 as an audit trainee in Arthur Young and subsequently joined Price Waterhouse as its audit assistant from 1983 to early He was then with Datuk Keramat Holdings Berhad as its Accountant after leaving Price Waterhouse. In late 1988, he assumed the responsibility of Assistant Audit Executive in Universal Furniture Limited and left the company in He joined CIMB Securities Sdn Bhd from 1990 to mid 1992 as its Assistant Finance Manager. Thereafter, he was with SJ Securities Sdn Bhd as its Finance Manager. He then left SJ Securities after being promoted to General Manager in 1996 and joined Arab-Malaysian Securities Sdn Bhd as Remisier until From 1998 to 2001, he was the Director of Finance of Enrich Resowella (M) Sdn Bhd. Since then, he joined Avenue Securities Sdn Bhd as its Deputy Chief Executive Officer until 31 March He is now managing his own management consultancy firm called Merit Achievers Sdn. Bhd. He is also the Independent Non-Executive Director of Pentamaster Corporation Berhad and also sits on the board of several private companies. He does not have any family relationship with any directors and/or major shareholder of the Company and has no conflict of interest with the Company. He has not been convicted of any offence in the past ten (10) years. He has attended all the five (5) Board meetings of the Board held during the financial year ended 31st December W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

10 Chairman s Statement On behalf of the Board of Directors of Welli Multi Corporation Berhad ( Welli ), I am pleased to present to you the Annual Report and Audited Financial Statements of the for the financial year ended 31st December OPERATIONAL REVIEW The escalating petroleum prices caused by the increase in world consumption and the depleting oil reserves have a direct impact on the palm oil industry. Technological advancement has also make possible substitutes between palm oil derivatives and petroleum. The constant concern of the de-pegging of the Ringgit added to the volatility movements of the commodity prices especially raw materials. Overall, global vegetable oils prices remained high and fairly stable due to strong demand. With new machineries already installed, our productivity remain good and efficiency in terms of Oil Extraction ate (OER) has improved which in turn contributed positively to the bottom line of the. With the prevailing market conditions during the financial year under review, the managed to register a very respectable performance. REVIEW OF RESULTS The pre-tax profit for the year under review recorded a total of 5,365,162/, an improvement from 1,298,289/- achieved over the previous year. This is attributed primarily to the overall increase in revenue and lower operational costs incurred by the. The Company s positive performance was reflected by the basic earnings per share, viz sen as compared to 1.27 sen in year DIVIDENDS No dividends have been proposed. CORPORATE DEVELOPMENT On 1st July 2004 Welli Multi Corporation Berhad acquired an additional 139,998 ordinary shares of 1/- each, representing 70% of the total paid-up capital in Welli Business Ventures Sdn Bhd (formerly known as Esquire Pyramid Sdn Bhd), for a cash consideration of 139,998/-. On 15th July 2004 Welli Multi Corporation Berhad acquired an additional 500,000 shares of 1/- each in its wholly-owned subsidiary, Fourseason Trading Sdn Bhd for a cash consideration of 500,000/-. The proposed share split involving the subdivision of every one (1) existing ordinary share of 1.00 each held in the Company into two (2) ordinary shares of 0.50 each, which was announced on 25 February 2005, has been approved by Securities Commission and Bursa Malaysia Securities Berhad, vide their letter dated 18 April 2005 and 22 April 2005 respectively. The share split will definitely enhance the affordability and attractiveness, besides the liquidity and marketability of the Company s shares. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 9

11 Chairman s Statement (cont d) chairman s statement PROSPECTS The prospect for the palm kernel oil market remains bright and promising. This is attributed particularly to the competitive advantage of the intrinsic value of the oil itself as well as its competitive pricing. The opening up of new emerging markets such as China and India represents additional impetus to the further advancement and development of the industry. The group will continue to look out for other more lucrative downstream ventures related to palm kernel oil industry to further enhance its future earning base as well as moving the towards higher technologically based activities. This strategic focus will further entrench the group in the industry and will aid our efforts to develop a strong and sustainable profit trend. The group is also continuously on the look out to set-up new palm kernel crushing plant and/or strategic alliances with existing smaller palm kernel crushing plants that has logistical advantages over its competitors. This will not only enhance its presence but also broaden its base in reaching out to remote palm oil mills and strengthen our existing position as a major palm kernel oil producer in the country. For the food-division, the group has streamlined its activities and put in place a management team to spearhead its future activities which can enhance the group future profitability and earning base. In summary, the group will consolidate further to be a leading player in the palm kernel oil industry as well as other downstream related business activities. APPRECIATION On behalf of the Board of Directors, I would like to thank our shareholders, customers and business associates for their continuing loyal support. I would like to also express my deepest appreciation to the management and employees for their loyalty, dedication and positive efforts. Tunku Dato Seri Kamel Chairman 10 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

12 Other Information UTILISATON OF PROCEEDS No funds were raised by the Company from any corporate proposal during the financial year. SHARE BUY-BACKS There were no share buy-backs during the financial year. OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES No options, warrants or convertible securities were issued by the Company during the financial year. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME During the financial year, the Company did not sponsor any ADR or GDR programme. IMPOSITIONS OF SANCTIONS AND/OR PENALTIES There were no sanctions and/or penalties imposed on the Company and its subsidiaries, Directors or management by the relevant regulatory bodies during the financial year. NON-AUDIT FEES The non-audit fees paid and payable to the external auditors by the Company for the financial year amounted to 6,900. VARIATION IN RESULTS There is no material variance between the audited results and the previously announced unaudited results for the financial year ended 31 December PROFIT GUARANTEE There was no profit guarantee given by the Company during the financial year. MATERIAL CONTRACTS There were no material contracts entered into by the Company and its subsidiaries which involve the Directors and major shareholders interests, either still subsisting at the end of the financial year or entered into since the end of the previous financial year. MATERIAL CONTRACTS RELATED TO LOAN During the financial year under review, there were no material contracts relating to loans entered into by the Company and/ or its subsidiaries which involved Directors and major shareholders interests. REVALUATION POLICY OF LANDED PROPERTIES The Company has adopted a revaluation policy where landed properties are appraised once in every five years by independent professional valuers as disclosed in note 2. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 11

13 Audit Committee MEMBERS OF THE AUDIT COMMITTEE The present members of the Audit Committee are as follows:- Chairman : Members : Tunku Dato Seri Kamel Bin Tunku Rijaludin Chairman and Independent Non-Executive Director Ang Soon An Executive Director Ooi Hun Pin Independent Non-Executive Director TES OF REFERENCE The Directors have approved and adopted the following Terms of Reference which set out the roles and responsibilities of the Audit Committee. 1. COMPOSITION The committee shall be appointed by the Board from amongst the Directors of the Company and shall consist of not less than three (3) members. The majority of the members shall be independent directors and at least one member of the committee: a. must be a member of the Malaysian Institute of Accountants, or b. must have at least 3 years working experience and: have passed the examinations specified in Part 1 of the First Schedule of the Accountants Act 1967; or be a member of one of the associations of accountants specified in Part II of the First Schedule of the Accountants Act In the event of any vacancy in the Audit Committee resulting in the non-compliance of the above, the vacancy must be filled within three (3) months of that event. The members of the committee shall elect a chairman from amongst their number who shall be an independent director. No alternate directors shall be appointed as a member of the committee. The committee member shall serve up to the forthcoming Annual General Meeting. An appointment terminates when a member cease to be a Director. 2. OBJECTIVES The primary objectives of the Audit Committee are to: a. assist the Board in discharging its statutory duties and responsibilities relating to accounting and reporting practices and to ensure the adequacy and effectiveness of the company s internal control systems. b. provide greater emphasis on the audit function by serving as the focal point for communication between non- Committee Directors, the external auditors, internal auditors and the management and providing a forum for discussion that is independent of the management. It is to be the Board s principal agent in assuring the independence of the Company s external auditors, the integrity of the management and the adequacy of disclosure to shareholders. c. Undertake such additional duties as may be appropriate and necessary to assist the Board. 12 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

14 Audit Committee (cont d) 3. FUNCTIONS AND DUTIES The functions and duties of the Audit Committee shall be to: a. recommend to the Board the appointment of the external auditors, the audit fee and any matters in relation to their resignation or dismissal. b. review with the external auditors the nature and scope of their audit plan. c. review the assistance given by the company s officers to the external auditors. d. discuss the outcome of the interim and final audits and any matter the auditors may wish to discuss. e. review quarterly and annual accounts before submission to the Board focusing particularly on: Any changes in accounting policies and practices. Compliance with accounting standards. Compliance with stock exchange and legal requirements. f. review the effectiveness of the internal control systems. g. review of Internal Audit function focuses on the scope and effectiveness of internal audit activities and on Internal Audit Charter. h. undertake such other functions as may be agreed to by the Audit Committee and the Board of Directors. 4. AUTHORITY The Committee is authorized by the Board to investigate any activity within its Terms of Reference. It shall have: a. unrestricted access to any information pertaining to the Company and its Subsidiaries. b. direct communication channels with both the external auditors and internal auditors. c. free access to any employee or member of the management. The Committee is also authorized by the Board to obtain outside legal or other independent professional advice it considers necessary and reasonable for the performance of its duties. 5. MEETINGS AND PROCEDURES Meetings shall be conducted at least four (4) times annually, or more frequently as circumstances dictate. The Company Secretary shall be appointed Secretary of the Committee ( the Secretary ). The Secretary, in conjunction with the Chairman, shall draw up an agenda, which shall be circulated together with the relevant support papers, at least one (1) week prior to each meeting to the members of the Committee. The minutes are circulated to members of the Committee. The Committee may, as and when deemed necessary, invite other Board members and senior management members to attend the meetings. The external auditors may request for a meeting if they consider this necessary. The Committee shall regulate the manner of proceedings of its meetings, having regard to normal conventions on such matter. During the financial year ended 31 December 2004, the Audit Committee held a total of five (5) meetings. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 13

15 Audit Committee (cont d) The details of attendance of the committee members are as follows:- Name of committee member No. of meetings attended Tunku Dato Seri Kamel Bin Tunku Rijaludin 5/5 Ang Soon An 5/5 Ooi Hun Pin 5/5 6. QUORUM The quorum for a meeting shall consist of a majority of independent directors. 7. ACTIVITIES OF THE AUDIT COMMITTEE The following activities were performed by the Audit Committee during the financial year ended 31 December a. reviewed and approved the external auditor s scope of work and their Annual Audit Plan of the company for the calendar year b. reviewed the unaudited quarterly financial results announcements before recommending them for the Board of Directors approval. c. reviewed the audited financial statements of the Company and the and recommending the same for approval by the Board, upon being satisfied that inter-alia the financial reporting and disclosure requirements of the relevant authorities has been complied with. d. reviewed the Internal Audit Department s resources requirement, programmes and plan for the financial year and the annual assessment of the Internal Audit Department s performance. e. reviewed the internal audit reports, which highlighted the audit issues, recommendations and management s response and ensure that material findings are adequately addressed by management. f. reviewed of the principal risks profiles of relevant business units and the mitigating management action plans. g. reviewed of the Corporate Governance Statement and Statement of Internal Control for compliance with the Malaysian Code on Corporate Governance. 8. INTERNAL AUDIT FUNCTION The Audit Committee is supported by an independent Internal Audit Department. The principal role of the Internal Audit Department is to undertake regular and systematic reviews of the systems of internal controls so as to provide reasonable assurance that such systems continue to operate satisfactorily and effectively. During the financial year, audit assignments, special reviews and follow-up were carried out on all operating units in accordance with the annual audit plan or as special ad-hoc audits at management s request. The results undertaken and the implementation status of the audit recommendations were reported to the Audit Committee to assure that key control issues are being adequately addressed and managed. 14 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

16 Statement on Corporate Governance The Board of Directors ( The Board ) recognizes the importance of upholding the highest standards of corporate governance in conducting the s business activities and discharging the Board s fiduciary responsibilities to protect and enhance shareholders value. Therefore, it is the policy of the Board to manage the business and affairs of the in accordance with the appropriate standards of good corporate governance. In line with the revamped Listing Requirements of Bursa Malaysia Securities Berhad, the Board of Directors wishes to report on the manner the group has applied the principles and the extent of compliance with the best practices set out in the Malaysian code on Corporate Governance (Code) by the. DIRECTORS 1. Composition of the Board The Board presently has seven (7) members of whom five (5) are Executive Directors, and two (2) are Independent Non-Executive Directors. As such 2/7 of the Board is made up of Non-Executive Directors who are independent of management and provide a balanced and independent view to the decision making and corporate issues dealt with at the Board level to safeguard the interest of public shareholders. The Directors have a mix of business knowledge, skills and experience ranging from finance and corporate to operational and technical expertise necessary for managing the s business. The roles of Chairman and Managing Director are distinct and separate with responsibilities clearly drawn out to ensure a balance of power and authority. The Chairman is responsible for ensuring Board effectiveness and conduct while the Managing Director has overall responsibilities over the operating units, organizational effectiveness and implementation of Board policies and decisions. Given the nature and scope of the s operations, the Board considers that the current size of the Board is adequate. i. Attendance of meetings During the financial year ended 31 December 2004, there were five (5) meetings held. The details of attendance of each member are as follows:- Tunku Dato Seri Kamel Bin Tunku Rijaludin 5/5 Ang Sun Beng 5/5 Ang Soon An 5/5 Ang Sun Tiong 5/5 Tan Kim Oh 5/5 Soh Yew Aun (resigned on ) 4/5 Ooi Hun Pin 5/5 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 15

17 Statement on Corporate Governance (cont d) 2. Board Committees The Board has delegated certain responsibilities to other Board Committees, which operate within approved Terms of Reference. These committees are the Audit Committee, Nomination Committee, and Remuneration Committee. i. Nomination Committee The Nomination Committee comprises three members of which two (2) are Independent Non-Executive Directors and one (1) is an Executive Director. The Committee is empowered to bring to the Board recommendations as to the appointment of any new executive or non-executive director and the Directors to fill the seats on Board Committees. The committee will assess the effectiveness of the Board of Directors as a whole. Currently, the Nomination Committee members are Tunku Dato Seri Kamel Bin Tunku Rijaludin (chairman), Ang Soon An, and Ooi Hun Pin. ii. Remuneration Committee The Remuneration Committee comprises three members of which two (2) are Independent Non- Executive Directors and one (1) is an Executive Director. The determination of the remuneration of the Non-Executive Directors is a matter for the Board as a whole. The individuals concerned should abstain from discussion of their own remuneration and no director shall be involved in deciding his own remuneration. The remuneration of Directors is generally based on market conditions, responsibilities held and the s overall financial performance. Decisions and recommendations of the committee shall be reported back to the Board for approval and where required by the rules and regulations governing the Company, for approval of Shareholders at the Annual General Meeting. Currently, the Remuneration Committee members are Tunku Dato Seri Kamel Bin Tunku Rijaludin (chairman), Ang Soon An, and Ooi Hun Pin. The details of the Directors remuneration for the financial year ended 31 December 2004 are as follows: Categorization Aggregate Remuneration (in ) paid/payable to Executive Directors Non-Executive Directors Directors Fees 40,000 30,000 Other Emolument - Salaries and other emoluments 755,712 19,500 - Contribution by employer to Employees Provident Fund 90,480 2,340 - Benefits in kind 30,595 Total 916,787 51,840 The number of Directors whose remuneration for the financial year ended 31 December 2004 fall into the respective ranges are as follows:- Range of Remuneration Number of Directors Executive Directors Non-Executive Directors Below 50, , , , , , ,000 3 Total 4 3 iii. Audit Committee The composition and functions of the Audit Committee are detailed in the Audit Committee Report on pages 12 to W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

18 Statement on Corporate Governance (cont d) 3. Re-election of Directors In accordance with the Company s Articles of Association ( Article ), at least one-third of the Directors are subject to retirement by rotation at each Annual General Meeting and that all Directors shall retire from office at least once in every three years but shall be eligible for re-election. The Article also provides that all Directors appointed by the Board are subject to election by the shareholders at the next Annual General Meeting after their appointment. 4. Directors Training Directors have attended the Mandatory Accreditation Programme and will undergo such similar or continuing education pogrammes from time to time to equip themselves abreast of the latest development in order to discharge their duties and responsibilities more effectively. In compliance with MSEB s practice Note 15/2003, all directors must attend courses under the Continuing Education Programme ( CEP ) and accumulate such CEP points annually. 5. Supply of Information The Board members are provided with timely and relevant information to discharge their duties and responsibilities, including quarterly, half yearly and annual financial statements, minutes of meetings and board papers which include the agenda and reports relevant to the issues of the meetings covering the areas of strategic, financial and operational matters The Directors have direct access to the advice and the services of the s Company Secretary for ensuring that Board procedures are followed. The Directors may access all information within the in furtherance of their duties. RELATIONSHIP WITH SHAREHOLDERS The Company recognizes the importance of communication with its shareholders and investors. The Company meets with requests from any group or individuals for information and the AGM serves as the main forum for dialogue with its shareholders. At each AGM, the Board presents the progress and performance of the business as contained in the annual report and encourages shareholders to participate in a question and answer session. The Directors are available to provide responses to questions from the shareholders during the meeting. The Company also makes timely announcements through the Bursa Malaysia of any material information, corporate proposals, financial results and other announcements that are required to be made pursuant to the Listing Requirements. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 17

19 Statement on Corporate Governance (cont d) ACCOUNTABILITY AND AUDIT 1. Financial Reporting For the financial reporting through the quarterly reports to Bursa Malaysia Securities Berhad and the annual report to shareholders, the Directors have a responsibility to present a fair assessment of the s financial performance, position and prospects. The Statement by Directors pursuant to Section 169(15) of the Companies Act 1965 is set out in Page 25 of the Annual Report. 2. Internal Control The information on the s internal control is presented in the Statement on Internal Control in Pages 19 to Relationship with Auditors A transparent and appropriate relationship is maintained with the external auditors of Welli through the Audit Committee. The audit Committee has been explicitly accorded the authority to communicate directly with both the internal and external auditors. 4. Directors Responsibilities in respect of Audited Financial Statements The Directors are required by the Companies Act, 1965 to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the and of the Company as at the end of the financial year and of the results and cash flows of the and of the Company for the financial year then ended. In preparing the financial statements for the year ended 31 December 2004, the Directors have: i. adopted the appropriate accounting policies, which are consistently applied; ii. made decisions and estimates that are reasonably prudent and; iii. ensured that the applicable approved accounting standards in Malaysia and provisions of the Companies Act are complied with. The Directors have the responsibility for ensuring that the Company and the keep proper accounting records which disclose with reasonable accuracy the financial position of the Company and the and which will enable them to ensure that the financial statements comply with the Companies Act. The Directors have taken the necessary steps to safeguard the assets of the and to prevent and detect fraud and other irregularities. 18 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

20 Statement on Internal Control The Malaysian Code on Corporate Governance requires listed companies to maintain a sound system of internal control to safeguard shareholders investment and the s assets. The Board is pleased to present below the Internal Control Statement, which has been prepared in accordance with the Statement on Internal Control: Guidance for Directors of Public Listed Companies. BOARD RESPONSIBILITY The Board affirms its overall responsibility for the s system of internal control, which is designed to identify and manage the risks facing the business in pursuit of its objectives and for reviewing its adequacy and integrity. The system of internal control covers risk management, financial, operational and compliance controls. The system is designed to manage, rather than to eliminate, the risk of failure to achieve business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss. KEY ELEMENTS OF INTERNAL CONTROL The internal control systems are embedded within the overall management process where there is an ongoing process for identifying, evaluating and managing the significant risks faced by the. The following are the key elements of the s system of internal control: Clearly defined delegation of responsibilities from Board to management including charters, organizational structures with appropriate authority limits; Management meetings are carried out by the Managing Director together with Operations Heads and the Finance Department to identify, discuss and resolve operational, financial and key management issues. Reviews are also carried out to ensure that actual performance is in compliance with the agreed targets set by the Managing Director and that corrective action are taken to rectify any discrepancies in a timely and effective manner; Review and update on policies and procedures, and practices to be adopted by the to ensure clear accountability and control as well as proper segregation of tasks among departments and staff; Regular and comprehensive information provided to management, covering financial performance and key business indicators, such as average collection term given to customers, average inventory holding days and cash flow performance; The compliance function, which includes the Audit Committee and internal audit function, assists the Board to oversee the management of risks and review the efficiency and effectiveness of the internal controls of the. Regular internal audits are carried out to review the adequacy and integrity of the systems of internal control of the by assisting with the continuous improvement of controls and procedures. The reports are submitted to the Audit Committee, which reviews the findings with management at its quarterly meetings. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 19

21 Statement on Internal Control (cont d) RISK MANAGEMENT FRAMEWORK The Board reviews the financial statements and status reports of the on a quarterly basis, assessing the risk strategy and the overall management of principal areas of risk. The operations of the are subject to a variety of financial risks, including credit risk, liquidity risk and cash flow risk. A Risk Management Committee has been established to monitor and manage such risk, including the control over capital expenditure and cash flow management. To assist the business units and support departments in managing operational risk in their respective functional areas on a more effective basis, the internal audit department has developed an appropriate template which helps the management to identify inherent risks and allows the to clearly focus on business objectives and risks, thus providing management with a basis to address the issues so as to promptly manage those operational risks. CONCLUSION The review of the adequacy and the integrity of internal control is a continuous process and the Board will from time to time review the monitoring and reporting process to ensure their effectiveness on the whole. There are no significant control failings or weaknesses that would result in material loss and require disclosure in the s annual report for the financial year under review. 20 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

22 financial statements Directors Report 25 Statement by Directors 25 Declaration by the Directors 26 Report of the Auditors 27 Balance Sheets 28 Income Statements 29 Statements of Changes in Equity Cash flow statements Notes to the financial statements

23 Directors Report The Directors have pleasure in submitting their report and the audited financial statements of the and of the Company for the financial year ended. PRINCIPAL ACTIVITIES The Company is principally engaged in the business of providing management services and investment holding. The principal activities of the subsidiary companies are set out in note 4 to the financial statements. There have been no other significant changes in the nature of these principal activities during the year except as disclosed in note 4 to the financial statements. FINANCIAL RESULTS Company Profit after taxation 4,391, ,336 Minority interest 50,092 Profit for the year 4,441, ,336 DIVIDENDS No dividend has been paid or declared since the end of the previous financial year and the Directors do not recommend any dividend payment for the current financial year. RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. BAD AND DOUBTFUL DEBTS Before the income statements and the balance sheets of the and of the Company were made out, the Directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making of provisions for doubtful debts, and have satisfied themselves that all known bad debts had been written off and that adequate provision has been made for doubtful debts. At the date of this report, the Directors are not aware of any circumstances which would render the amount written off for bad debts or the amount of provision for doubtful debts in the financial statements of the and of the Company inadequate to any substantial extent. CURRENT ASSETS Before the income statements and the balance sheets of the and of the Company were made out, the Directors took reasonable steps to ensure that any current assets, which were unlikely to realise, in the ordinary course of business, their values as shown in the accounting records of the and of the Company have been written down to an amount which they might be expected to realise. At the date of this report, the Directors are not aware of any circumstances, which would render the values attributed to the current assets in the financial statements of the and of the Company misleading. 22 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

24 Directors Report (cont d) VALUATION METHODS At the date of this report, the Directors are not aware of any circumstances which have arisen, which render adherence to the existing method of valuation of assets or liabilities of the and of the Company misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES At the date of this report, there does not exist:- i. any charge on the assets of the and of the Company which has arisen since the end of the financial year which secures the liabilities of any other person, or ii. any contingent liability in respect of the and of the Company which has arisen since the end of the financial year. No contingent liability or other liability of the and of the Company has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the and of the Company to meet their obligations as and when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the and of the Company which would render any amount stated in the financial statements misleading. ITEMS OF AN UNUSUAL NATURE In the opinion of the Directors:- i. the results of the operations of the and of the Company for the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than those disclosed in the financial statements. ii. there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature that likely to affect substantially the results of the operations of the and of the Company for the financial year in which this report is made. ISSUE OF SHARES AND DEBENTURES The Company has not issued any new shares and debentures during the financial year. DIRECTORS The Directors who held office since the date of the last report are: ANG SOON AN ANG SUN BENG ANG SUN TIONG OOI HUN PIN SOH YEW AUN (Resigned on ) TAN CHIN HAN (Appointed on ) TAN KIM OH TUNKU DATO SERI KAMEL BIN TUNKU RIJALUDIN W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 23

25 Directors Report (cont d) According to the register required to be kept under Section 134 of the Companies Act, 1965, the Directors who held office at the end of the financial year had an interest in the shares of the Company are as follows:- Direct Interest At Number of ordinary shares of 1/- each Bought/ Sold/ At Transfer Transfer ANG SOON AN 399,892 (281,576) 118,316 ANG SUN BENG 319, ,634 (626,000) 138,526 ANG SUN TIONG 127,892 (89,576) 38,316 TAN KIM OH 3,113, ,900 (1,343,900) 2,113,091 Indirect interest being shares held through a nominee company ANG SOON AN 4,240,000 4,240,000 ANG SUN BENG 4,410,000 2,819,000 (1,500,000) 5,729,000 ANG SUN TIONG 3,602,000 3,602,000 By virtue of their interest in the shares of the Company, the Directors as disclosed above are also deemed to have an interest in the shares of the subsidiary companies to the extent of the shareholdings of the Company. In accordance with the Articles of Association, Messrs. Tan Kim Oh and Tunku Dato Seri Kamel Bin Tunku Rijaludin retire from the board at the forthcoming Annual General Meeting and being eligible offer themselves for re-election. SIGNIFICANT EVENTS Significant events are disclosed in note 37 to the financial statements. SUBSEQUENT EVENTS Subsequent events are disclosed in note 38 to the financial statements. DIRECTORS BENEFITS Since the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit (other than those disclosed as directors remuneration in the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the director is a member, or with a Company in which the Director has a substantial financial interest. Neither during nor at the end of the financial year, was the Company, a party to any arrangements whose object is to enable the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. AUDITORS The auditors, Messrs. Moore Stephens, have indicated that they will not seek re-appointment at the forthcoming Annual General Meeting. On Behalf of the Board ANG SOON AN ANG SUN BENG Penang 28th April, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

26 Statement By Directors We, the undersigned, being two of the Directors of the Company, state that in the opinion of the Directors, the accompanying financial statements as set out on pages 27 to 75, are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the and of the Company as at and of the results of the operations, changes in equity and cash flows of the and of the Company for the year ended on that date. On Behalf of the Board ANG SOON AN ANG SUN BENG Penang 28th April, 2005 Statutory Declaration I, Ang Soon An, NRIC No.: , being the Director primarily responsible for the financial management of the and of the Company, do solemnly and sincerely declare that the financial statements as set out on pages 27 to 75, are to the best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared at ) Georgetown in the State of Penang ) On 28th April 2005 ) Before me GOVINDASAMY A/L G. MUTTUSAMY, PJM Commissioner for Oaths Penang ANG SOON AN W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 25

27 Report of the Auditors to the Members of Welli Multi Corporation Berhad (Incorporated In Malaysia) We have audited the financial statements set out on pages 27 to 75. The preparation of the financial statements are the responsibility of the Company s directors. It is our responsibility to form an independent opinion, based on our audit, on those financial statements and to report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume responsibility towards any other person for the content of this report. We conducted our audit in accordance with the approved standards on auditing in Malaysia. These standards require that we plan and perform the audit to obtain all the information and explanations, which we considered necessary to provide us with sufficient evidence to give reasonable assurance that the financial statements are free of material misstatement. Our audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. Our audit includes an assessment of the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall adequacy of the presentation of information in the financial statements. We believe our audit provides a reasonable basis for our opinion. In our opinion:- a. the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of: i. the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the and of the Company; and ii. the state of affairs of the and of the Company as at and of the results of the operations, changes in equity and cash flows of the and of the Company for the year ended on that date; and b. the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company and its subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act. The name of the subsidiary companies of which we have not acted as auditors are indicated in note 4 to the financial statements. We have considered the financial statements of these subsidiary companies and the auditors report thereon. We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company s financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors reports on the financial statements of the subsidiary companies were not subject to any qualification in respect of subsidiary companies incorporated in Malaysia, and did not include any comment made under Section 174(3) of the Companies Act, MOORE STEPHENS Chartered Accountants (AF.0282) AU TAI WEE 1551/01/07 (J) Partner Penang 28th April, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

28 Balance Sheets as at NON-CURRENT ASSETS Note Company Property, plant and equipment 3 103,958,642 65,971, , ,094 Investment in subsidiary companies 4 68,882,578 68,242,576 Other investments 5 221, ,880 21,880 21,880 Long-term receivable 6 247, ,600 Goodwill on consolidation 7 9,204,249 9,204,249 Deferred expenditure 8 31,161 40,401 CURRENT ASSETS ,663,732 75,757,015 69,083,448 68,521,550 Inventories 9 31,943,897 28,686,266 Trade receivables ,202,752 90,838,699 57,980 Amount owing by subsidiary companies 11 1,180,461 2,148,354 Other receivables, deposits and prepayments 6 3,143,158 2,959,988 9,411 9,826 Tax assets , , Short term deposits with licensed banks 13 11,878,596 11,553,595 Cash at banks and in hand 739, ,058 74,774 43,314 CURRENT LIABILITIES 153,333, ,802,136 1,323,222 2,202,051 Trade payables 14 9,897,604 16,947,170 Amount owing to subsidiary companies 11 1,090, ,468 Other payables and accruals 15 7,743,018 9,190, , ,831 Provisions 16 3,766,442 4,552,867 3,706,679 4,502,038 Amount owing to directors 17 78,913 78,913 Hire purchase payables ,444 1,721,379 49,016 44,098 Bank overdrafts 19 6,245,593 7,577,033 Borrowings ,506,924 89,210, , ,188 Tax liabilities 85,728 40, ,993, ,319,412 5,682,236 5,933,536 NET CURRENT ASSETS/ (LIABILITIES) 10,339,387 6,482,724 (4,359,014) (3,731,485) 124,003,119 82,239,739 64,724,434 64,790,065 FINANCED BY: Share capital 21 43,136,364 43,136,364 43,136,364 43,136,364 Reserves 22 53,007,726 22,208,365 21,441,910 21,297,574 SHAREHOLDERS EQUITY 96,144,090 65,344,729 64,578,274 64,433,938 NON-CURRENT LIABILITIES Hire purchase payables 18 2,872, ,162 8,648 57,664 Borrowings 20 10,868,619 13,071, , ,463 Deferred taxation 23 14,117,600 3,610,600 27,859,029 16,895, , , ,003,119 82,239,739 64,724,434 64,790,065 The annexed notes form an integral part of, and should be read in conjunction with, these financial statements. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 27

29 Income Statements for the year ended Note Company 2003 OPERATING REVENUE ,209, ,075, , ,200 COST OF SALES AND SERVICES 25 (418,066,189) (344,558,763) GROSS PROFIT 23,143,207 20,516, , ,200 OTHER OPERATING INCOME 1,986,414 1,686, ,500 27,120 DISTRIBUTION COSTS (5,390,278) (7,216,059) ADMINISTRATIVE EXPENSES (7,512,601) (7,747,230) (842,822) (681,756) OTHER OPERATING EXPENSES (685,401) (1,268,645) (2,856) (13,830) (13,588,280) (16,231,934) (845,678) (695,586) PROFIT/(LOSS) FROM OPERATIONS 11,541,341 5,970, ,582 (548,266) FINANCE COSTS (6,176,179) (4,672,524) (107,246) (80,116) PROFIT/(LOSS) BEFORE TAXATION 26 5,365,162 1,298, ,336 (628,382) TAXATION 27 (973,775) (749,493) 85,535 PROFIT/(LOSS) AFTER TAXATION 4,391, , ,336 (542,847) MINORITY INTEREST 50,092 PROFIT/(LOSS) FOR THE YEAR 4,441, , ,336 (542,847) EARNINGS PER SHARE (SEN) sen 1.27 sen The annexed notes form an integral part of, and should be read in conjunction with, these financial statements. 28 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

30 Statements of Changes in Equity for the year ended Share Capital Share Premium Revaluation Reserve Reserve on Consolidation Foreign Translation Reserve Accumulated Losses Total Shareholders Equity At ,136,364 32,810,299 1,665,338 (127,734) (12,677,831) 64,806,436 Foreign exchange translation differences in respect of foreign subsidiary company* (10,503) (10,503) Net profit for the year 548, ,796 At ,136,364 32,810,299 1,665,338 (138,237) (12,129,035) 65,344,729 Foreign exchange translation differences in respect of foreign subsidiary company* (15,063) (15,063) Arising from dilution in equity interest of a subsidiary company 9,908 9,908 Surplus on revaluation of property, plant and equipment 26,363,037 26,363,037 Net profit for the year 4,441,479 4,441,479 At ,136,364 32,810,299 26,363,037 1,665,338 (153,300) (7,677,648) 96,144,090 * Represents net (loss)/gain not recognised in the income statement. Company Share Capital Share Premium Accumulated Losses Total Shareholders Equity At ,136,364 32,810,299 (10,969,878) 64,976,785 Net loss for the year (542,847) (542,847) At ,136,364 32,810,299 (11,512,725) 64,433,938 Net profit for the year 144, ,336 At ,136,364 32,810,299 (11,368,389) 64,578,274 The annexed notes form an integral part of, and should be read in conjunction with, these financial statements. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 29

31 Cash Flow Statements for the year ended Note Company 2003 CASH FLOWS FROM OPERATING ACTIVITIES Profit/(Loss) Before Taxation 5,365,162 1,298, ,336 (628,382) Adjustments for:- Allowance for diminution in value of quoted investments 9,240 9,240 Allowance for doubtful debts 1,965,716 1,349,773 Amortisation of deferred expenditure 8,940 9,047 Amortisation of leasehold land and buildings 721, ,872 Amortisation of freehold buildings 163, ,668 Bad debts written off 22, ,000 Deficit on revaluation of property, plant and equipment 440,634 Depreciation of property, plant and equipment 4,140,756 4,218,162 80,612 85,391 Interest expenses 4,818,215 4,387, ,093 79,900 Preliminary expenses written off 4,914 Property, plant and equipment written off 9,908 67,154 Provision for employee benefits 13,575 52,867 4,641 2,038 Tax penalty 69,061 Write down of inventories 125,938 Allowance for doubtful debts no longer required (184,029) (10,549) Bad debts recovered (146) (583) Interest revenue (379,477) (538,903) (27,120) (Gain)/Loss on disposal of property, plant and equipment (12,802) 325,577 Write back of provision for liability from corporate guarantee (800,000) (800,000) Operating Profit/(Loss) Before Working Capital Changes 16,494,314 12,358,323 (463,318) (478,933) (Increase)/Decrease in trade and other receivables (16,280,880) (7,532,099) (57,565) 523 (Increase)/Decrease in inventories (3,383,569) (4,276,226) (Decrease)/Increase in trade and other payables (7,147,339) 2,818,400 (137,327) (6,388) Cash (Used In)/Generated From Operations (10,317,474) 3,368,398 (658,210) (484,798) Interest paid (4,818,215) (4,387,709) (107,093) (79,900) Income tax paid (185,438) (937,471) (39) Income tax refund 263, ,066 Interest received 379, ,903 27,120 Net Cash Used In Operating Activities (14,941,650) (1,154,813) (765,342) (274,512) 30 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

32 Cash Flow Statements (cont d) for the year ended Note Company 2003 CASH FLOWS FROM INVESTING ACTIVITES Proceeds from disposal of property, plant and equipment 14, ,327 Acquisition of subsidiary companies 29 (140,002) Investment in subsidiary company (500,000) Purchase of property, plant and equipment 30 (6,207,785) (4,549,253) (2,508) (3,450) Repayments from subsidiary companies - 967, ,186 (Placement)/Withdrawal of fixed deposits (411,527) 10,985,465 Preliminary expenses incurred (4,914) Net Cash (Used In)/Generated From Investing Activities (6,609,310) 6,573, , ,736 CASH FLOWS FROM FINANCING ACTIVITIES Payments to hire purchase payables (556,237) (396,603) (44,098) (39,181) Repayments of long-term borrowings (2,194,607) (944,341) (140,083) (50,349) Advances from subsidiary companies 655, ,622 Proceeds from issuance of share to minority interest 60,000 Proceeds from long-term borrowings 500, ,000 Proceeds from/(repayment of) short-term borrowings 25,288,454 (5,109,047) Net Cash Generated From/ (Used In) Financing Activities 22,597,610 (5,949,991) 471, ,092 1,046,650 (531,265) 31, ,316 Translation differences 2,841 14,798 NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,049,491 (516,467) 31, ,316 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR As previously reported (6,553,780) (6,037,313) 43,314 (497,002) Effects of exchange changes on cash and cash equivalents (1,896) (6,555,676) (6,037,313) 43,314 (497,002) CASH AND CASH EQUIVALENTS AT END OF THE YEAR 31 (5,506,185) (6,553,780) 74,774 43,314 The annexed notes form an integral part of, and should be read in conjunction with, these financial statements. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 31

33 Notes to the Financial Statements The financial statements of the and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia. 1. SIGNIFICANT GENERAL INFOATION The Company is a public limited company, incorporated and domiciled in Malaysia, and listed on the Second Board of Bursa Malaysia Securities Berhad. The principal activities of the Company are investment holding and providing management services. The principal activities of the subsidiary companies are disclosed in note 4 to the financial statements. There have been no significant changes in the nature of these principal activities during the year except as disclosed in note 4 to the financial statements. The registered office is located at 85, 1st Floor (Suite B), Beach Street, Penang and the principal place of business is located at Lot 2688, MK 1, Jalan Perusahaan, Kawasan Perindustrian Prai, Prai, Penang. The financial statements were authorised for issue in accordance with a resolution passed at the Board of Directors meeting held on 26th April, SIGNIFICANT GROUP ACCOUNTING POLICIES The significant accounting policies adopted by the and the Company are consistent with those adopted in previous years. a. Basis of Accounting The financial statements of the and of the Company have been prepared under the historical cost convention modified to include the revaluation of certain property, plant and equipment unless otherwise indicated in the accounting policies set out below. b. Basis of Consolidation The consolidated financial statements include the audited financial statements of the Company and its subsidiary companies which are listed in note 4 to the financial statements made up to the end of the financial year. All intra-group balances and transactions and resulting unrealised profits are eliminated on consolidation. Unrealised losses are eliminated on consolidation unless cost cannot be recovered. Consolidated financial statements reflect external transactions only. The financial statements of the subsidiary companies acquired or disposed during the financial year are included in s financial statements based on the acquisition method from the effective date of acquisition or up to the date of disposal respectively. The gain or loss on disposal of subsidiary company is the difference between net disposal proceeds and the s share of its net assets together with any unamortised balance of goodwill on acquisition and exchange differences. 32 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

34 2. SIGNIFICANT GROUP ACCOUNTING POLICIES (cont d) c. Goodwill or Reserve on Consolidation Goodwill or reserve on consolidation represents the difference between the purchase consideration paid for acquiring the share capital of the subsidiary companies and the fair values attributable to the s share of net assets at the acquisition date. Goodwill on consolidation is not amortised but is written down when there is impairment in their carrying value. d. Subsidiary Companies Subsidiary companies are those companies in which the has a long term equity interest and where it directly or indirectly, exercises control over the financial and operating policies so as to obtain benefits therefrom. Investments in subsidiary companies, which are eliminated on consolidation, are stated at cost less accumulated impairment losses, if any, in the Company s financial statements. e. Property, Plant and Equipment and Depreciation Property, plant and equipment are stated at cost or at valuation less accumulated depreciation and accumulated impairment losses, if any, except for freehold land which is not depreciated. Additions subsequent to the date of the last valuation are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Leasehold land is amortised over the period of the lease. Depreciation on other property, plant and equipment is calculated on the straight line method to write off the cost or revalued amount of the property, plant and equipment over their estimated useful lives. The policy on revaluation of freehold and leasehold land and buildings, plant and machinery is stated in note 1 (g) to the financial statements. The principal annual rates used for this purpose are:- Short-term leasehold land Over the lease period of 20 to 60 years Long-term leasehold land Over the lease period of 60 to 99 years Buildings 1.75% - 20% Plant and machinery 5% - 25% Office equipment, furniture and fittings 8% /3% Motor vehicles 10% - 20% Fully depreciated property, plant and equipment are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these property, plant and equipment. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 33

35 2. SIGNIFICANT GROUP ACCOUNTING POLICIES (cont d) f. Impairment of Assets The carrying amounts of assets other than inventories, assets arising from construction contracts, deferred tax assets, assets arising from employee benefits and financial assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such an indication exists, the asset s recoverable amount is estimated. The recoverable amount is the higher of net selling price and the value in use, which is measured by reference to discounted future cash flows. An impairment loss is recognised whenever the carrying amount of an item of assets exceeds its recoverable amount. An impairment loss is recognised as an expense in the income statement. However, an impairment loss on a revalued asset will be treated as a revaluation deficit to the extent that the loss does not exceed the amount held in revaluation reserve in respect of the same asset. Any subsequent increase in recoverable amount due to a reversal of impairment loss is restricted to the carrying amount that would have been determined (net of accumulated depreciation for property, plant and equipment) had no impairment loss been recognised in previous years. The reversal of impairment loss is recognised as revenue in the income statement. However, the reversal of impairment loss on a revalued asset will be treated as a revaluation surplus to the extent that the reversal does not exceed the amount previously held in revaluation reserve in respect of the same asset. g. Revaluation of Property, Plant and Equipment Freehold and leasehold land and buildings, plant and machinery classified under property, plant and equipment held for long term purposes are revalued at least once in every five years except as disclosed in note 3 to the financial statements. The revaluation of freehold and leasehold land and buildings, plant and machinery are based on valuations carried out by independent professional valuers on the open market value basis and on depreciated replacement cost respectively. A surplus arising therefrom is credited to revaluation reserve. However, a surplus will be recognised as revenue to the extent that it reverses a revaluation deficit of the same asset previously recognised as an expense. A deficit arising therefrom is recognised as an expense. However, a deficit will be set-off against any related revaluation surplus to the extent that the deficit does not exceed the amount held in revaluation reserve in respect of the same asset. On disposal of these assets, any surplus in revaluation reserve relating to these assets will be transferred directly to retained earnings. h. Revenue Recognition Revenue from sale of goods is recognised when the goods are delivered and when the risks and rewards of ownership has been transferred to the buyers. Revenue from consultancy services and transportation are recognised when services are performed. Revenue from trading commission and brokerage are recognised when contracts are executed. Dividends from subsidiary companies are recognised when the right to receive payment is established. Dividends from other investments are recognised on receipt basis. Rental revenue and management fee are recognised on an accrual basis. Interest revenue is recognised on a time proportion basis that reflects the effective yield of the asset. 34 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

36 2. SIGNIFICANT GROUP ACCOUNTING POLICIES (cont d) i. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis. Cost includes the actual cost of purchase and incidentals in bringing the inventories into store. The cost of manufactured inventories includes labour and appropriate production overheads. j. Deferred Expenditure Trademark and design expenditure are stated at cost and amortised over a period of 10 years. k. Borrowing Costs Borrowing costs incurred on construction of property, plant and equipment which require a substantial period of time to get them ready for their intended use are capitalised and included as part of the related property, plant and equipment. Capitalisation of borrowings costs will cease when the property, plant and equipment are ready for their intended use. l. Hire Purchase Hire purchase instalment plans are agreements whereby the lender conveys to the hirer, in return for a series of instalment payments, the rights to use the assets involved with an option for hirer to purchase the assets upon full settlement of the instalment payments. Cost of property, plant and equipment acquired under the hire purchase instalment plans are capitalised as property, plant and equipment and depreciated in accordance with the Company s policy on depreciation of property, plant and equipment. The related finance charges are allocated to the income statement over the period of instalment plans based on the sum-of-digits method so as to produce a constant periodic rate of interest charges on the remaining balance of the liability. The total outstanding instalment payments after deducting the future finance charges, representing the present values of hire purchase liabilities, are included in payables. m. Taxation Taxation in the income statement represents the aggregate amount of current and deferred tax. Current tax is the expected amount payable in respect of taxable income for the year and any adjustments recognised in the year for current tax of prior years. Deferred tax is recognised using the liability method for all temporary differences between the carrying amount of assets and liabilities in the financial statements and their tax base at the balance sheet date. Deferred tax assets and liabilities are not recognised on temporary difference arising from goodwill or negative goodwill or from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period in which the assets are realised or the liabilities are settled. Deferred tax is recognised in equity when it relates to items recognised directly in equity. When the deferred tax arises from business combination that is an acquisition, the deferred tax is included in the resulting goodwill or negative goodwill. Deferred tax assets are recognised only to the extent that there are sufficient taxable temporary differences relating to the same taxation authority to offset or when it is probable that future taxable income will be available against which the deductible temporary differences can be utilised. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 35

37 2. SIGNIFICANT GROUP ACCOUNTING POLICIES (cont d) n. Foreign Currencies i. Transactions and Balances in foreign currency Transactions in foreign currencies are translated into Ringgit Malaysia at the rates of exchange ruling at the time of the transactions and where settlement had not taken place by at the approximate rates ruling as at that date. All gains and losses on exchange are recognised in the income statement. ii. Translation of foreign currency financial statements Assets, liabilities and revenue reserves of foreign subsidiary company are translated into Ringgit Malaysia at the approximate rates of exchange ruling as at the financial year end. The results of foreign subsidiary are translated at the average rate of exchange for the year. The translation differences arising therefrom are recorded as movement in translation reserve. On disposal of the foreign entity, such translation differences are recognised in the income statement as part of the gain or loss on disposal. The principal exchange rates denominated in units of Ringgit Malaysia per foreign currency used are as follows:- Year End Rates Hong Kong Dollar (HKD) Singapore Dollar (SGD) Thai Baht (THB) United States Dollar (USD) o. Exceptional Items Exceptional items relate to items of revenue and expense within profit or loss from ordinary activities which are of such size, nature or incidence that their disclosure is relevant to explain the performance of the and of the Company. p. Cash and Cash Equivalents Cash and cash equivalents comprise cash in hand, bank balances, demand deposits, bank overdrafts and highly liquid investments that are readily convertible to known amount of cash and are subject to insignificant risk of changes in value. q. Provisions Provisions are recognised when there is a present obligation as a result of past events, when it is probable that our outflow of resources will be required to settle the obligation and when a reliable estimate of the amount can be made. 36 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

38 2. SIGNIFICANT GROUP ACCOUNTING POLICIES (cont d) r. Employee Benefits i. Short term employee benefits Wages, salaries, social security contributions and bonuses are recognised as an expense in the year in which the associated services are rendered by employees of the Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short term non-accumulating compensated absences, such as sick and medical leaves are recognised when the absences occur. ii. Defined contribution plans As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees Provident Fund. Such contributions are recognised as an expense in the income statement as incurred. s. Financial Instruments Financial instruments are classified as assets, liabilities or equity in accordance with the substance of the contractual arrangements. Interest, dividends, losses and gains relating to financial instruments classified as assets or liabilities, are reported as expense or revenue. Distributions to holders of financial instruments classified as equity are charged directly to equity. Financial instruments are offset when the has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. The recognised financial instruments comprise cash and cash equivalents, trade and other receivables, trade and other payables, other non-current investments, bank borrowings and ordinary shares. These instruments are recognised in the financial statements when a contract or contractual arrangement has been entered into with the counter-parties. The unrecognised financial instruments comprise financial guarantees given to financial institutions for banking facilities granted to the subsidiary companies and derivatives of foreign exchange forward contracts. The financial guarantees would be recognised as liabilities when obligations to pay the counter-parties are assessed as being probable. The derivatives are recognised only when underlying transactions occur or when settled. i. Other Investments Other investments are stated at cost less allowance for diminution in value. Such allowance is made when there is a decline other than temporary in the value of investments and is charged to the income statement. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is charged or credited to the income statement. ii. Receivables Receivables are stated at cost less allowance for doubtful debts, if any, which are the anticipated realisable values. Known bad debts are written off and specific allowance is made for those debts considered to be doubtful of collection. In addition, general allowances are made to cover possible losses which are not specifically identified. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 37

39 2. SIGNIFICANT GROUP ACCOUNTING POLICIES (cont d) s. Financial Instruments (cont d) iii. Pledged Short-Term Deposits With Licensed Banks Pledged short-term deposits with licensed banks are stated at cost. iv. Payables Payables are stated at cost which are the fair values of considerations to be paid in the future for goods and services received. v. Borrowings The interest bearing loans, export credit refinancing, bills payable and overdrafts are stated at the amount proceeds received, net of transaction costs. vi. Equity Instruments Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared. The transaction costs of an equity transaction, other than in the context of a business combination, are accounted for as a deduction from equity, net of tax. Equity transaction costs comprise only those incremental external cost directly attributable to the equity transaction which would otherwise have been avoided. Cost of issuing equity securities in connection with a business combination are included in the cost of acquisition. vii. Derivative Financial Instruments Derivative financial instruments are not recognised in the financial statements on inception. Forward foreign exchange contracts The underlying foreign currency assets or liabilities are translated at their respective hedged exchange rate and all exchange gains or losses are recognised as revenue or expense in the income statement in the same period as the exchange differences on the underlying hedged items. Exchange gains and losses arising on contracts entered into as hedges of anticipated future transactions are deferred until the date of such transaction, at which time they are included in the measurement of such transactions. 38 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

40 3. PROPERTY, PLANT AND EQUIPMENT 2004 Freehold Land & Buildings Leasehold Land & Buildings Plant & Machinery Office Equipment, Furniture & Fittings Motor Vehicles Total Cost/Valuation At ,318,599 35,958,198 35,881,377 2,337,410 5,133,571 93,629,155 Translation differences (9,885) (9,759) (418) (1,572) (21,634) Additions 371,908 1,137,939 4,283,809 83,358 1,144,771 7,021,785 Disposals (9,709) (34,000) (43,709) Written off (212,523) (225,061) (437,584) Adjustment on revaluation 486,961 1,759,885 8,197,188 10,444,034 Reclassifications 1,152,650 (1,152,650) At ,177,468 38,846,137 49,292,742 2,185,580 5,090, ,592,047 Accumulated Depreciation At ,029 3,790,908 17,666,224 1,640,099 3,665,010 27,657,270 Translation differences (2,849) (5,278) (338) (807) (9,272) Charge for the year 163, ,366 3,412, , ,080 5,025,789 Disposals (7,596) (33,999) (41,595) Written off (212,506) (215,170) (427,676) Adjustment on revaluation (993,096) (4,129,898) (20,448,117) (25,571,111) Reclassifications 1,012,301 (552) (1,011,749) At , ,527 1,424,684 1,584,059 3,179,535 6,633,405 Net Book Value At ,111,868 38,466,610 47,868, ,521 1,910, ,958,642 At ,423,570 32,167,290 18,215, ,311 1,468,561 65,971,885 Depreciation charge for the year ended , ,872 3,448, , ,725 5,082,702 Analysis of Cost and Valuation 2004 Cost/Valuation At cost 1,237,468 2,306,453 6,471,878 2,185,580 5,090,120 17,291,499 At valuation ,940,000 36,539,684 42,820,864 93,300,548 15,177,468 38,846,137 49,292,742 2,185,580 5,090, ,592,047 Net Book Value At cost 1,171,868 1,926,926 5,047, ,521 1,910,585 10,658,094 At valuation ,940,000 36,539,684 42,820,864 93,300,548 15,111,868 38,466,610 47,868, ,521 1,910, ,958,642 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 39

41 3. PROPERTY, PLANT AND EQUIPMENT (cont d) 2003 Freehold Land & Buildings Leasehold Land & Buildings Plant & Machinery Office Equipment, Furniture & Fittings Motor Vehicles Total Cost/Valuation At cost 14,318,599 35,007,907 35,881,377 2,337,410 5,133,571 92,678,864 At valuation , ,291 14,318,599 35,958,198 35,881,377 2,337,410 5,133,571 93,629,155 Net Book Value At cost 13,423,570 31,418,332 18,215, ,311 1,468,561 65,222,927 At valuation , ,958 13,423,570 32,167,290 18,215, ,311 1,468,561 65,971,885 Analysis of Freehold and Leasehold Land and Buildings: Cost/Valuation Land Freehold Land & Buildings Long-term Leasehold Land & Building Short-term Leasehold Land & Buildings At cost 455, , ,907 At valuation ,891,000 8,961,000 1,371,930 10,332,930 Buildings Total 6,346,560 8,961,000 2,024,837 10,985,837 At cost 781,908 1,128, ,807 1,653,546 At valuation ,049,000 21,018,000 5,188,754 26,206,754 Land and Buildings 8,830,908 22,146,739 5,713,561 27,860,300 At cost 1,237,468 1,128,739 1,177,714 2,306,453 At valuation ,940,000 29,979,000 6,560,684 36,539,684 15,177,468 31,107,739 7,738,398 38,846, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

42 3. PROPERTY, PLANT AND EQUIPMENT (cont d) 2004 Net Book Value Land Freehold Land & Buildings Long-term Leasehold Land & Building Short-term Leasehold Land & Buildings At cost 455, , ,711 At valuation ,891,000 8,961,000 1,371,930 10,332,930 Buildings Total 6,346,560 8,961,000 1,812,641 10,773,641 At cost 716,308 1,119, ,827 1,486,215 At valuation ,049,000 21,018,000 5,188,754 26,206,754 Land and Buildings 8,765,308 22,137,388 5,555,581 27,692,969 At cost 1,171,868 1,119, ,538 1,926,926 At valuation ,940,000 29,979,000 6,560,684 36,539, Cost/Valuation Land 15,111,868 31,098,388 7,368,222 38,466,610 At cost 6,135,237 4,819, ,387 5,477,600 At valuation , ,291 6,135,237 4,819,213 1,608,678 6,427,891 Buildings At cost 8,183,362 29,001, ,212 29,530,307 Land and Buildings At cost 14,318,599 33,820,308 1,187,599 35,007,907 At valuation , ,291 Net Book Value Land 14,318,599 33,820,308 2,137,890 35,958,198 At cost 6,135,237 4,614, ,330 5,091,975 At valuation , ,958 6,135,237 4,614,645 1,226,288 5,840,933 Buildings At cost 7,288,333 20,961,400 5,364,957 26,326,357 Land and Buildings At cost 13,423,570 25,576,045 5,842,287 31,418,332 At valuation , ,958 13,423,570 25,576,045 6,591,245 32,167,290 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 41

43 3. PROPERTY, PLANT AND EQUIPMENT (cont d) Long-term lease refers to lease periods with unexpired periods of fifty years or more. Short-term lease refers to lease periods with unexpired periods of less than fifty years. Company Office Equipment, Furniture & Fittings Motor Vehicles Cost At , , ,437 Additions 2,508 2,508 At , , ,945 Total Accumulated Depreciation At , , ,343 Charge for the year 7,721 72,891 80,612 At , , ,955 Net Book Value At , , ,990 At , , ,094 Depreciation charge for the year ended ,694 74,697 85,391 During the year, the Directors revalued the s freehold and leasehold land and buildings, plant and machinery based on valuation carried out by an independent professional valuer, Irhamy Ahmad, a Chartered Valuation Surveyor & Registered Valuer from Irhamy & Co. on 15th December, 2004, on the open market basis and depreciated replacement cost basis respectively. However, no revaluation of leasehold land and building of Fourseason (Vietnam) Co., Ltd. has been made as the Directors are of the opinion that the fair value of this leasehold land and building is not materially different from their carrying amount and that it will involve undue cost for their valuation. Included in property, plant and equipment of the are:- i. The net book value of all revalued property, plant and equipment had they been carried at cost would have been as follows: Freehold land 5,679,677 Freehold building 6,780,266 Leasehold land 4,897, ,456 Leasehold buildings 25,370,581 Plant and machinery 14,175, ,903, , W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

44 3. PROPERTY, PLANT AND EQUIPMENT (cont d) ii. Property, plant and equipment pledged as securities for banking facilities granted to certain subsidiary companies disclosed in notes 19 and 20 to the financial statements are as follows: Net Book Value Freehold land and buildings 15,111,868 13,423,570 Long-term leasehold land and buildings 29,518,388 26,950,636 Plant and machinery 3,935,294 15,021,682 Office equipment, furniture and fittings 380,729 Motor vehicles 269, ,565,550 56,046,398 Property, plant and equipment of the and of the Company under hire purchase financing are as follows:- Company Cost Plant and machinery 5,399,620 2,068,405 Motor vehicles 1,640, , , ,000 7,039,760 2,575, , ,000 Net Book Value Plant and machinery 5,388,251 1,908,227 Motor vehicles 1,351, , , ,565 6,740,104 2,312, , , INVESTMENT IN SUBSIDIARY COMPANIES Company Unquoted shares, at cost At 1st January 68,242,576 68,242,576 Addition during the year 640,002 At 31st December 68,882,578 68,242,576 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 43

45 4. INVESTMENT IN SUBSIDIARY COMPANIES (cont d) Name of Company Country of Incorporation Principal Activities Percentage of Ownership Fourseason Foodstuff Industries (M) Sdn. Bhd. Malaysia Manufacturing and distributing all kinds of foodstuff 100% 100% Fourseason Trading Sdn. Bhd. Malaysia Trading and distributing all kinds of foodstuff and toys Welli Edible Oil Sdn. Bhd.* Malaysia Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake 100% 100% 100% 100% Welli International Education Centre Sdn. Bhd.* (formerly known as Twinkle Dynasty Sdn. Bhd.) Malaysia Inactive 100% Welli Business Ventures Sdn. Bhd.* (formerly known as Esquire Pyramid Sdn. Bhd.) Malaysia Importing, exporting, distribution and general trading of flexible packaging, plastic sheet products, plastic lighting diffuser, fast moving consumer products and health related food 70% Subsidiary company of Fourseason Foodstuff Industries (M) Sdn. Bhd. Fourseason Business Systems Sdn. Bhd. Malaysia Property investment, selling and providing consultancy services relating to computer software 100% 100% Subsidiary company of Fourseason Trading Sdn. Bhd. Fourseason (Vietnam) Co. Ltd.* Vietnam Manufacturer and processor of all kinds of foodstuff 100% 100% Subsidiary companies of Welli Edible Oil Sdn. Bhd. Welli Transport Sdn. Bhd.* Malaysia Transport and forwarding agent 100% 100% Pro Futures Sdn. Bhd.* Malaysia Ceased operations 100% 100% Welli International Sdn. Bhd.* Malaysia Trading of oil of all kinds and commodities 100% 100% The subsidiary company, Fourseason Business Systems Sdn. Bhd. ceased its operation in selling and providing consultancy services relating to computer software since January, * These subsidiary companies are audited by other professional firm of auditors. 44 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

46 5. OTHER INVESTMENTS Company Quoted investments in Malaysia At cost 715, , , ,092 Less: Allowance for diminution in value At 1st January (693,212) (683,972) (693,212) (683,972) Addition (9,240) (9,240) At 31st December (693,212) (693,212) (693,212) (693,212) 21,880 21,880 21,880 21,880 Unquoted investments in Malaysia At cost 200, , , ,880 21,880 21,880 Market value of quoted investments in Malaysia 31,350 21,880 31,350 21, OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS Company Other receivables 2,642,161 2,348, Deposits 123, ,018 2,315 2,415 Prepayments 624, ,254 6,995 7,411 3,390,958 3,278,588 9,411 9,826 Less: Long-term receivable after 12 months (247,800) (318,600) 3,143,158 2,959,988 9,411 9,826 Included in other receivables of the are:- i. proceeds from disposal of property, plant and equipment amounting to 618,600/- (2003: 689,400/-) of which 318,600/- (2003: 389,400/-) is receivable by 66 revised equal monthly instalments of 5,900/- commencing November, 2002; ii. advances to suppliers for purchase of raw material and finished goods amounting to 1,602,652/- (2003: 1,080,652/-). In previous financial year, other receivables of the included an amount of 4,575/- which bore interest at a rate of 3.5% per annum. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 45

47 7. GOODWILL ON CONSOLIDATION At cost:- At 1st January 9,204,249 9,204,249 At 31st December 9,204,249 9,204, DEFERRED EXPENDITURE Trademark and Design At cost 100, ,812 Translation differences At 1st January During the year (11,032) (9,630) (748) (1,402) (11,780) (11,032) At 31st December 89,032 89,780 (Less)/Add: Accumulated amortisation (58,319) (50,079) Translation differences (57,871) (49,379) 31,161 40, INVENTORIES At cost; Raw materials 14,345,769 12,038,327 Work-in-progress 17,407 54,289 Finished goods 15,241,597 13,697,888 Trading inventories 1,289,352 1,729,068 Consumable inventories 671, ,323 Goods-in-transit 348, ,371 31,913,917 28,686,266 At net realisable value; Trading inventories 29,980 31,943,897 28,686, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

48 9. INVENTORIES (cont d) Included in inventories of the are amounts pledged as securities for banking facilities granted to a certain subsidiary companies disclosed in notes 19 and 20 to the financial statements are as follows: Raw materials 9,043,786 Finished goods 12,947,737 Consumable inventories 591,901 22,583, TRADE RECEIVABLES Company Amount owing by subsidiary companies - Fourseason (Vietnam) Co. Ltd. 36,480 - Fourseason Foodstuff Industries (M) Sdn. Bhd. 5,000 - Fourseason Trading Sdn. Bhd. 5,000 - Welli Edible Oil Sdn. Bhd. 10,000 - Welli Transport Sdn. Bhd. 1,500 Other trade receivables 108,556,597 92,507,341 Less: Allowance for doubtful debts 108,556,597 92,507,341 57,980 At 1st January (1,668,642) (330,163) Additions (1,965,424) (1,349,028) Written off 96,192 No longer required 184,029 10,549 At 31st December (3,353,845) (1,668,642) 105,202,752 90,838,699 57,980 The s normal trade credit term ranges from 25 to 120 days. The currency exposure profile is disclosed in note 39 to the financial statements. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 47

49 11. AMOUNT OWING BY/TO SUBSIDIARY COMPANIES Company Amount owing by subsidiary companies:- Fourseason Foodstuff Industries (M) Sdn. Bhd. 1,108,767 2,093,354 Fourseason Trading Sdn. Bhd. 55,000 Welli International Education Centre Sdn. Bhd. (formerly known as Twinkle Dynasty Sdn. Bhd.) 2,010 Welli Business Ventures Sdn. Bhd. (formerly known as Esquire Pyramid Sdn. Bhd.) 69,684 1,180,461 2,148,354 Amount owing to subsidiary companies:- Fourseason Trading Sdn. Bhd. 200,063 Welli Edible Oil Sdn. Bhd. 890, ,468 1,090, ,468 These amounts are non-trade in nature, unsecured, interest free and have no fixed term of repayment except for advances from a subsidiary company, Welli Edible Oil Sdn. Bhd., amounting to 882,000/- (2003: 395,000/-), which bear interest at a rate of 10% (2003: 10%) per annum on a monthly rest basis. 12. TAX ASSETS This is in respect of tax paid in advance to the Inland Revenue Board. 13. SHORT TE DEPOSITS WITH LICENSED BANKS Included in short term deposits with licensed banks of the are amounts totalling 11,878,596/- (2003: 11,470,400/-) pledged for banking facilities granted to the subsidiary companies as disclosed in notes 19 and 20 to the financial statements. The currency exposure and maturity profile and effective interest rates are disclosed in note 39 to the financial statements. 14. TRADE PAYABLES The normal trade credit term granted to the ranges from 25 to 120 days. The currency exposure profile is disclosed in note 39 to the financial statements. 48 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

50 15. OTHER PAYABLES AND ACCRUALS Company Other payables 6,479,601 1,298, , ,396 Accruals 1,167,789 5,710, ,919 77,435 Deposits received 18,400 18,400 Advances from customers 77,228 2,163,129 7,743,018 9,190, , ,831 Included in other payables of the and of the Company are amounts totalling 350,560/- (2003: 405,210/-) being fees incurred for the acquisition of the entire equity interest in Welli Edible Oil Sdn. Bhd. and its subsidiary companies. 16. PROVISIONS Employee Benefits Provision for liability from corporate guarantee 2004 At 1st January 52,867 4,500,000 4,552,867 Additions 48,937 48,937 Incurred (35,362) (35,362) Write back of provision (800,000) (800,000) At 31st December 66,442 3,700,000 3,766,442 Total 2003 At 1st January 4,500,000 4,500,000 Additions 52,867 52,867 At 31st December 52,867 4,500,000 4,552,867 Company 2004 At 1st January 2,038 4,500,000 4,502,038 Additions 4,641 4,641 Write back of provision (800,000) (800,000) At 31st December 6,679 3,700,000 3,706, At 1st January 4,500,000 4,500,000 Additions 2,038 2,038 At 31st December 2,038 4,500,000 4,502,038 Employee benefits are in respect of short term accumulating compensated absences. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 49

51 17. AMOUNT OWING TO DIRECTORS Soh Yew Aun Ang Sun Beng Ang Soon An Ang Sun Tiong /Company ,858 21,645 21,725 21,685 78,913 These amounts are unsecured, interest free and are payable on demand. 18. HIRE PURCHASE PAYABLES Company Total instalment payments 4,360,758 1,984,513 61, ,750 Less: Future finance charges (739,504) (49,972) (3,586) (11,988) Present value of hire purchase payables 3,621,254 1,934,541 57, ,762 CURRENT LIABILITIES Payable within 1 year Total instalment payments 1,045,688 1,745,183 52,500 52,500 Less : Future finance charges (297,244) (23,804) (3,484) (8,402) 748,444 1,721,379 49,016 44,098 NON-CURRENT LIABILITIES Payable after 1 year and not exceeding 5 years Total instalment payments 3,208, ,330 8,750 61,250 Less : Future finance charges (437,843) (26,168) (102) (3,586) Payable after 5 years 2,770, ,162 8,648 57,664 Total instalment payments 106,448 Less : Future finance charges (4,417) 102,031 2,872, ,162 8,648 57,664 Present value of hire purchase payables 3,621,254 1,934,541 57, ,762 The maturity profile and effective interest rates are disclosed in note 39 to the financial statements. 50 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

52 19. BANK OVERDRAFTS Secured 1,942,021 3,743,142 Unsecured 4,303,572 3,833,891 6,245,593 7,577,033 The secured bank overdrafts of the bear interest at rates ranging from 7.50% to 7.75% (2003: 7.80% to 8.40%) per annum and are secured and supported by:- i. legal charges over the subsidiary companies leasehold and freehold properties; ii. iii. iv. debenture incorporating a first fixed charge on certain property, plant and equipment of a subsidiary company; pledge of fixed deposits belonging to the subsidiary companies; and jointly and severally guaranteed by certain directors of the subsidiary companies. In previous financial year, the facilities were further secured by debenture incorporating fixed and floating charges over all assets of certain subsidiary companies. The unsecured bank overdrafts of the bear interest at rates ranging from 7.75% to 8.50% (2003 : 8.40% to 8.90%) per annum and are supported by:- i. a negative pledge over the subsidiary company s present and future assets; and ii. corporate guarantees from the Company. The maturity profile and effective interest rates are disclosed in note 39 to the financial statements. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 51

53 20. BORROWINGS Company SHORT TE BORROWINGS - Secured Bills payable 101,663,321 78,844,757 Export credit refinancing 3,260,000 Term loan - No. I 95,030 - No. II 378, ,610 - No. III 180, ,822 - No. IV 5,589 50,178 - No. V 100,384 93,107 - No. VIII 437, ,344 - No. IX 642, ,591 1,746,061 1,725, ,669,382 80,570,439 - Unsecured Bills payable 7,471,401 8,261,511 Term loans No. VI 194, ,310 No. VII 172, , , ,188 NON-CURRENT LIABILITIES - Secured Term loans 366, , , , ,506,924 89,210, , ,188 - No. II 1,262,816 1,659,143 - No. III 1,227,053 1,417,725 - No. IV 7,504 - No. V 125, ,792 - No. VIII 4,554,451 5,019,687 - No. IX 3,561,356 4,237,410 - Unsecured Term loans 10,731,107 12,571,261 No. VI 201,524 No. VII 137, , , , , , , ,463 10,868,619 13,071, , , W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

54 20. BORROWINGS (cont d) The secured borrowings of the bear interest at rates ranging from 3.25% to 7.50% (2003: 4.50% to 7.90%) per annum and are secured and supported by:- i. legal charges over the subsidiary companies leasehold and freehold properties; ii. iii. iv. debenture incorporating a first fixed charge on certain property, plant and equipment of a subsidiary company; pledge of fixed deposits belonging to the subsidiary companies; and jointly and severally guaranteed by certain directors of the subsidiary companies. In previous financial year, the facilities were further secured by debenture incorporating fixed and floating charges over all assets of certain subsidiary companies. The unsecured borrowings of the are supported by corporate guarantees from the Company and bear interest at rates ranging from 2.84% to 8.50% (2003: 2.90% to 9.10%) per annum. The term loans are repayable as follows:- Term loan Secured:- Instalment Commencing Date No. I 36 equal monthly 31st May, 2001 No. II 120 equal monthly 1st August, 1999 No. III 120 equal monthly 1st May, 2001 No. IV 36 equal monthly 1st February, 2002 No. V 120 equal monthly 4th April, 1997 No. VIII 120 equal monthly 1st May, 2003 No. IX 84 equal monthly 1st May, 2003 Unsecured:- No. VI 36 equal monthly 1st October, 2002 No. VII 36 equal monthly 1st October, 2003 The unsecured term loan of the Company bears interest at 7.5% (2003: 8.5%) per annum and are supported by a negative pledge over the Company s present and future assets. The maturity profile and effective interest rates are disclosed in note 39 to the financial statements. 21. SHARE CAPITAL /Company Authorised: 100,000,000 ordinary share of 1/- each 100,000, ,000,000 Issued and fully paid: 43,136,364 ordinary share of 1/- each 43,136,364 43,136,364 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 53

55 22. RESERVES Company Accumulated losses (7,677,648) (12,129,035) (11,368,389) (11,512,725) NON-DISTRIBUTABLE Share Premium 32,810,299 32,810,299 32,810,299 32,810,299 Revaluation Reserve 26,363,037 Reserve on Consolidation 1,665,338 1,665,338 Foreign Translation Reserve (153,300) (138,237) 53,007,726 22,208,365 21,441,910 21,297, DEFERRED TAXATION At 1st January 3,610,600 3,023,900 Transfer from Income Statement (note 27) 414, ,700 Adjustment on surplus of revaluation of property, plant and equipment 10,092,742 At 31st December 14,117,600 3,610,600 This is in respect of estimated deferred tax liabilities/(assets) arising from temporary differences as follows: Differences between the carrying amount of property, plant and equipment and its tax base 2,994,000 2,639,300 Unrelieved tax losses (33,700) (96,200) Unabsorbed capital allowances (1,100) (20,400) Revaluation surplus arising from revaluation of property, plant and equipment 11,158,400 1,087,900 Net deferred tax liabilities provided 14,117,600 3,610, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

56 23. DEFERRED TAXATION (cont d) The estimated deferred tax liabilities/(assets) arising from temporary differences not recognised in the financial statements are as follows:- Company Differences between the carrying amount of property, plant and equipment and its tax base 551, ,200 11,400 5,300 Deductible/(taxable) temporary differences (151,300) 1,900 Unrelieved tax losses (1,531,400) (1,111,500) (643,100) (523,300) Unabsorbed capital allowances (1,399,000) (1,308,500) (58,200) (58,000) Net deferred tax assets not provided (2,530,200) (1,962,800) (688,000) (576,000) The estimated unrelieved tax losses and unabsorbed capital allowances are subject to agreement by the Inland Revenue Board and are not available for set-off within the. 24. OPERATING REVENUE Company Consultancy services 10,411 Dividend revenue Management fee 294, ,000 Sale of goods 439,036, ,640,400 Trading commission and brokerage 365,141 Transportation revenue 2,172,841 2,059, ,209, ,075, , , COST OF SALES AND SERVICES Cost of goods sold 415,687, ,391,372 Cost of services rendered 2,378,257 2,167, ,066, ,558,763 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 55

57 26. PROFIT/(LOSS) BEFORE TAXATION Company Profit/(Loss) before taxation is arrived at after charging/(crediting):- a. Exceptional items Write back of provision for liability arising from corporate guarantee (note 16) (800,000) (800,000) b. Other items Allowance for diminution in value of quoted investments 9,240 9,240 Allowance for doubtful debts 1,965,716 1,349,773 Allowance for doubtful debts no longer require (184,029) (10,549) Amortisation of freehold buildings 163, ,668 Amortisation of deferred expenditure 8,940 9,047 Amortisation of leasehold land and buildings 721, ,872 Auditors remuneration 58,047 54,663 5,000 2,200 Bad debts written off 22, ,000 Deficit on revaluation of property, plant and equipment 440,634 Depreciation of property, plant and equipment 4,140,756 4,218,162 80,612 85,391 Directors remuneration - fees 70,000 42,000 70,000 42,000 - other emoluments 868, , , ,560 Interest expense - bank overdrafts 579, ,788 27,120 - bills payable 2,787,067 2,596,787 - hire purchase 362,787 53,913 8,402 13,320 - term loans 1,067,747 1,204,078 33,542 13,850 - others 20,990 11,143 65,149 25,610 Preliminary expenses written off 4,914 Property, plant and equipment written off 9,908 67,154 Provision for employee benefits 13,575 52,867 4,641 2,038 Rental of motor vehicles 25,866 8,190 Rental of office equipment 1,595 1,885 Rental of premises 170,311 96,000 Write down of inventories 125,938 Realised loss on foreign exchange 19, ,809 Bad debts recovered (146) (583) Interest revenue (379,477) (538,903) (27,120) (Gain)/Loss on disposal of property, plant and equipment (12,802) 325,577 Rental revenue (133,200) (170,928) 56 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

58 26. PROFIT/(LOSS) BEFORE TAXATION (cont d) Company c. Directors remuneration Paid and payable to non-executive directors Tunku Dato Seri Kamel Bin Tunku Rijaludin Soh Yew Aun (Resigned on ) Ooi Hun Pin Directors fees 30,000 18,000 30,000 18,000 Directors other emoluments 21,840 20,160 21,840 20,160 Paid and payable to executive directors Ang Sun Beng Ang Soon An Ang Sun Tiong Tan Kim Oh 51,840 38,160 51,840 38,160 Directors fees 40,000 24,000 40,000 24,000 Directors other emoluments 846, , , , , , , ,400 d. Employees Information Staff costs 6,104,557 6,209, , ,485 The number of employees including full time directors of the and of the Company as at the financial year end were 291 (2003: 326) and 9 (2003: 7) respectively. 27. TAXATION Company Based on results for the year 484, ,400 Origination and reversal of temporary differences (note 23) 414, , , ,100 Under/(Over)provision in prior year 74,538 (193,607) (85,535) Tax expense/(credit) 973, ,493 (85,535) W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 57

59 27. TAXATION (cont d) The reconciliation from the tax amount at statutory tax rate to the and the Company s tax expense are as follows:- Company Accounting profit/(loss) before taxation 5,365,162 1,298, ,336 (628,382) Tax at the applicable tax rate of 28% 1,502, ,500 40,400 (175,900) Effect of different tax rate in foreign country 8,600 10,000 Tax effects of: - non-deductible expenses 481, ,600 71,600 28,300 - non-taxable revenue (277,992) (224,000) Effect of lower tax rate for Malaysian subsidiary companies with issued and paid-up share capital of 2.5 million and below 94,896 Deferred tax assets not recognised during the year 566, , , ,600 Utilisation of deferred tax assets previously not recognised (90,097) (6,300) Utilisation of reinvestment allowance (1,386,000) (437,000) Under/(Over)provision in prior year 74,538 (193,607) (85,535) Tax expense/(credit) 973, ,493 (85,535) Subject to agreement by the Inland Revenue Board:- i. the Company has estimated unrelieved tax losses and unabsorbed capital allowances of 2,297,000/- (2003: 1,869,000/-) and 208,000/- (2003: 207,000/-) respectively, available for set-off against future taxable profits; ii. iii. the Company has approximately 532,000/- (2003: 532,000/-) tax credit under Section 108 of the Income Tax Act, 1967 to frank future payment of dividends of approximately 1,368,000/- (2003: 1,368,000/-) without incurring additional tax liability; and the has estimated unutilised tax losses, capital allowances and reinvestment allowances of approximately 6,110,000/- (2003: 4,609,000/-), 5,006,000/- (2003: 4,746,000/-) and 1,260,000/- (2003: 1,260,000/-), available for set-off against future taxable business profits. 28. EARNINGS PER ORDINARY SHARE The earnings per ordinary share of 1/- each is based on the profit of 4,441,479/- (2003: 548,796/-) divided by the number of ordinary shares in issue during the year of 43,136,364 (2003: 43,136,364). 58 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

60 29. ACQUISITION OF SUBSIDIARY COMPANIES On 9th February, 2004, the Company acquired 2 ordinary shares of 1/- each, representing 100% equity interest in Welli International Education Centre Sdn. Bhd. (formerly known as Twinkle Dynasty Sdn. Bhd.) and is presently inactive. On 25th February, 2004, the Company acquired 2 ordinary shares of 1/- each, representing 100% equity interest in Welli Business Ventures Sdn. Bhd. ( WBV ) (formerly known as Esquire Pyramid Sdn. Bhd.). Subsequently, WBV allotted 199,998 ordinary shares of 1/- each at par, of which 139,998 ordinary shares of 1/- was allotted to the Company. As such, the equity interest was reduced to 70%. i. Effect of acquisition of subsidiary companies, net of cash acquired The fair values of the assets acquired and the liabilities assumed at the effective date of acquisition are as follows: Cash in hand 4 Less: Total purchase consideration (4) Effect of acquisition of subsidiary companies, net of cash acquired ii. Effect of acquisition of subsidiary companies from the effective date of acquisition on s Income Statement are as follows: Operating revenue 274,685 Cost of sales (243,474) Gross profit 31,211 Distribution costs (5,381) Administrative expenses (286,120) (291,501) Loss from operations (260,290) Finance costs (8,788) Loss before taxation (269,078) Taxation Loss after taxation (269,078) Minority interest 50,092 Decrease in profit attributable to shareholders (218,986) W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 59

61 29. ACQUISITION OF SUBSIDIARY COMPANIES (cont d) iii. Effect of acquisition of subsidiary companies on Balance Sheet as at year end are as follows: Property, plant and equipment 152,333 Inventories 75,450 Trade and other receivables, deposits and prepayment 130,500 Amount owing to related company (140,526) Amount owing to ultimate holding company (71,694) Cash at banks and in hand 12,821 Trade and other payables and accruals (110,564) Hire purchase payables (117,396) Decrease in net assets (69,076) 30. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT During the year, the and the Company acquired property, plant and equipment with aggregate cost of 7,021,785/- (2003: 6,236,599/-) and 2,508/- (2003: 3,450/-) respectively which were satisfied as follows:- Company Cash payments 6,207,785 4,549,253 2,508 3,450 Hire purchase financing 814,000 1,687,346 7,021,785 6,236,599 2,508 3, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

62 31. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise the following:- Company Bank overdrafts (6,245,593) (7,577,033) Cash at banks and in hand 739, ,058 74,774 43,314 Short term deposits with licensed banks - at cost 11,881,927 11,553,595 Translation differences (3,331) 11,878,596 11,553,595 6,372,411 4,916,620 74,774 43,314 Less: Short term deposits held under lien (note 13) (11,878,596) (11,470,400) (5,506,185) (6,553,780) 74,774 43, DISCONTINUING OPERATION During the year, Fourseason Business Systems Sdn. Bhd., a subsidiary company, ceased its operation in selling and providing consultancy services relating to computer software. No separate disclosures are made for results, cashflow, assets and liabilities of this discontinued operations as the amounts involved are immaterial. On 18th March 2003, the Board of Directors announced plans to cease the futures trading business operation of its subsidiary company, Pro Futures Sdn. Bhd. ( Pro Futures ). In view that there is no long term prospect in continuing its futures trading business, the Board of Directors of Pro Futures therefore has recommended for the cessation of Pro Futures operation. The cessation of Pro Futures operation took effect from 18th April, The revenue results and cash flow of the discontinuing operation of Pro Futures Sdn. Bhd. are as follows: Income Statement Revenue 365,141 Other operating revenue 5,702 79,559 5, ,700 Operating expenses (23,385) (807,721) Loss from operations (17,683) (363,021) Finance costs (2,411) Loss before taxation (17,683) (365,432) Taxation (10,346) (12,077) Net loss for the year (28,029) (377,509) Cash Flow Statement Cash Flow From Operating Activities (114,668) (2,932,950) Cash Flow From Investing Activities 3,234,559 Net (decrease)/increase in cash and cash equivalents (114,668) 301,609 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 61

63 32. DISCONTINUING OPERATION (cont d) The carrying amounts of Pro Futures total assets and liabilities as at the balance sheet date are as follows: Total assets 1,119,221 1,453,725 Total liabilities 59, , SEGMENT ANALYSIS Segment information is presented in respect of the s business and geographical segments. The primary format, business segment, is based on the nature of services. Segment results, assets and liabilities included items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets, liabilities and expenses. Segment assets and liabilities do not include tax assets and tax liabilities respectively. Segment capital expenditure is the total cost incurred during the year to acquire segment assets that are expected to be used for more than one accounting period. Inter-segment revenue which are eliminated upon consolidation, are entered in the ordinary course of business based on terms not materially different from transactions with external parties. 62 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

64 33. SEGMENT ANALYSIS (cont d) a. Primary Reporting - Business Segments 2004 Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake Management services and investment holding Continuing Operations Manufacturer, trader and distributor of all kind of foodstuff Transportation Others Discontinuing Operation Futures brokers Eliminations Consolidated Revenue External revenue 415,718, ,043,515 2,172, , ,209,396 Inter-segment revenue 6,130, ,480 6,348, ,402 24,000 (13,017,294) Total revenue 421,848, ,760 29,391,577 2,393, ,685 (13,017,294) 441,209,396 Result Segment result 8,369, ,429 (1,668,872) (239,593) (274,713) (41,683) 6,395,881 Interest expense (1,405,007) Interest revenue 374,288 Taxation (973,775) Minority interest 50,092 Profit for the year 4,441,479 Other Information Segment assets 210,647,689 9,489,304 28,963,881 2,822,617 1,755,782 1,013, ,692,947 Unallocated corporate assets - short-term deposits with licensed banks 11,483, ,296 11,878,596 - tax assets 98, , ,126 25,564 89, ,329 12,303,925 Consolidated total assets 266,996,872 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 63

65 33. SEGMENT ANALYSIS (cont d) a. Primary Reporting - Business Segments (cont d) 2004 Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake Management services and investment holding Continuing Operations Manufacturer, trader and distributor of all kind of foodstuff Transportation Others Discontinuing Operation Futures brokers Eliminations Consolidated Other Information Segment liabilities 116,923,772 4,371,096 18,083, , ,520 59, ,381,618 Unallocated corporate liabilities - hire purchase payables 3,287,015 - term loans 12,980,821 - deferred taxation 14,117,600 - tax liabilities 85,728 30,471,164 Consolidated total liabilities 170,852,782 Capital expenditure 5,939,176 2, , , ,217 7,021,785 Depreciation of property, plant and equipment 3,747,304 80, , ,097 41,846 6,780 5,025,789 Amortisation of deferred expenditure 8,940 8,940 Non cash expenses other than depreciation and amortisation 1,837,639 4, ,717 24,171 6, ,583, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

66 33. SEGMENT ANALYSIS (cont d) a. Primary Reporting - Business Segments (cont d) 2003 Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake Property management and investment holding Continuing Operations Manufacturer, trader and distributor of all kind of foodstuff Consultancy services related to computer software Transportation Discontinuing Operation Futures brokers Eliminations Consolidated Revenue External revenue 333,730, ,909,823 10,411 2,059, , ,075,498 Inter-segment revenue 144,000 9,643, ,660 (9,901,525) Total revenue 333,730, ,200 38,553,688 10,411 2,173, ,141 (9,901,525) 365,075,498 Result Segment result 5,093,126 (576,888) (1,492,963) (43,836) (524,631) (435,114) 2,019,694 Interest expense (1,260,308) Interest revenue 538,903 Taxation (749,493) Profit for the year 548,796 Other Information Segment assets 159,880,152 10,285,321 24,941,739 19,620 2,699,948 1,350, ,177,451 Unallocated corporate assets - short-term deposits with licensed banks 11,553,595 - tax assets 823,530 - others 4,575 12,381,700 Consolidated total assets 211,559,151 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 65

67 33. SEGMENT ANALYSIS (cont d) a. Primary Reporting - Business Segments (cont d) 2003 Processing of copra and palm kernel and trading of palm kernel oil, coconut oil, palm kernel cake and copra cake Property management and investment holding Continuing Operations Manufacturer, trader and distributor of all kind of foodstuff Consultancy services related to computer software Transportation Discontinuing Operation Futures brokers Eliminations Consolidated Other Information Segment liabilities 101,658,359 5,303,782 17,967,513 2, , , ,453,079 Unallocated corporate liabilities - hire purchase payables 1,934,541 - term loans 15,175,428 - deferred taxation 3,610,600 - tax liabilities 40,774 20,761,343 Consolidated total liabilities 146,214,422 Capital expenditure 5,786,405 3, ,090 31,654 6,236,599 Depreciation of property, plant and equipment 3,649, ,977 1,008, ,110 16,415 5,082,702 Amortisation of deferred expenditure 9,047 9,047 Non cash expenses other than depreciation and amortisation 1,066,024 11, , , ,995 1,805, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

68 33. SEGMENT ANALYSIS (cont d) b. Secondary Reporting - Geographical Segments Malaysia Vietnam Consolidated 2004 Total revenue from external customers 436,536,568 4,672, ,209,396 Segment assets 250,415,330 4,277, ,692,947 Capital expenditure 6,954,300 67,485 7,021, Total revenue from external customers 360,072,065 5,003, ,075,498 Segment assets 195,217,066 3,960, ,177,451 Capital expenditure 6,083, ,055 6,236, SIGNIFICANT INTERCOMPANY TRANSACTIONS Significant inter-company transactions for the year were as follows:- Company (Received or receivable from)/paid or payable to Subsidiary companies Fourseason Foodstuff Industries (M) Sdn. Bhd. - Interest (27,120) - Management fee (60,000) (60,000) Fourseason Trading Sdn. Bhd. - Management fee (60,000) (60,000) Welli Edible Oil Sdn. Bhd. - Interest 65,149 25,610 - Management fee (120,000) Welli Transport Sdn. Bhd. - Management fee (18,000) Fourseason (Vietnam) Co. Ltd. - Management fee (36,480) The above transactions have been entered based on terms mutually agreed upon between the parties concerned. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 67

69 35. CONTINGENT LIABILITIES (UNSECURED) Company In respect of corporate guarantees given to financial institutions for facilities granted to:- - subsidiary companies 148,304,221 31,878, CAPITAL COMMITMENT Approved and contracted for: Purchase of lorries 300,000 Purchase of reconditioned MAN Prime Mover 175, , SIGNIFICANT EVENTS A. On 9th February, 2004, the Company acquired a shelf company, Twinkle Dynasty Sdn. Bhd. for a purchase consideration of 2/-. Subsequently, Twinkle Dynasty Sdn. Bhd. changed its name to Welli International Education Centre Sdn. Bhd.. B. On 25th February, 2004, the Company acquired a shelf company Esquire Pyramid Sdn. Bhd. for a purchase consideration of 2/-. Subsequently, Esquire Pyramid Sdn. Bhd. changed its name to Welli Business Ventures Sdn. Bhd.. C. On 1st July, 2004, the Company acquired an additional 139,998 ordinary shares of 1/- each, representing 70% of the total paid-up capital in Welli Business Ventures Sdn. Bhd.. D. On 15th July, 2004, the Company acquired an additional 500,000 ordinary shares of 1/- each in its wholly owned subsidiary company, Fourseason Trading Sdn. Bhd. for a cash consideration of 500,000/-. 68 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

70 38. SUBSEQUENT EVENTS A. On 25th February, 2005, the Company has proposed to undertake the following proposal:- (a) the proposed share split involving the subdivision of one (1) existing ordinary share of 1/- each ( Ordinary Share ) held in Welli Multi Corporation Berhad ( Welli ) into two ordinary shares of 0.50 each ( Proposed Share Split ). (b) the proposed purchase of its own shares by the Company of up to ten per centum (10%) of the total issued and paid-up share capital of the Company in accordance with Section 67A of the Companies Act, 1965 ( Act ) ( Proposed Share Buy-Back ); and (c) the proposed amendments to certain clauses in the Memorandum and Articles of Association of the Company in relation to the Proposed Share Split and Proposed Share Buy-Back ( Proposed M&A Amendments ). B. On 19th April, 2005, Malaysian International Merchant Bankers Berhad ( MIMB ), announced on behalf of the Board of Directors of Welli, on the receipt of an approval letter dated 18th April, 2005 (which was received on 19th April, 2005) from the Securities Commission ( SC ) approving the Proposed Share Split and the listing of and quotation for the new ordinary shares of 0.50 each in Welli to be issued pursuant to the Proposed Share Split ( Split Shares ) on the Second Board of Bursa Malaysia Securities Berhad ( Bursa Securities ). The Proposals are now subject to the approvals of the following:- (a) Bursa Securities for the Proposed Share Split and the listing of and quotation for the Split Shares; and (b) the Shareholders of Welli at an extraordinary general meeting to be convened for the Proposals. C. On 26th April, 2005, MIMB announced on behalf of the Board of Directors of Welli, on the receipt of an approval letter dated 22nd April, 2005, (which was received on 25th April, 2005) from the Bursa Securities approving the Proposed Share Split and the listing of and quotation for the new ordinary shares of 0.50 each in Welli to be issued pursuant to the Proposed Share Split ( Split Shares ) on the Second Board of Bursa Securities. The Proposals are now subject to the approvals of the shareholders of Welli at an extraordinary general meeting to be convened for the Proposals. A circular to shareholders in relation to the Proposals shall be despatched to the shareholders of Welli in due course. 39. FINANCIAL INSTRUMENTS A. Financial Risk Management Policies The is exposed to a variety of risks in the normal course of business. The s risk management seeks to minimise the potential adverse effects from these exposures. The management reviews and agrees policies for managing each of these risks as follows:- i. Foreign Currency Risk Without Hedging The s exposure to foreign currency risk as a result of its normal trading activities, when the currency denomination differs from its functional currency. Exposure to foreign currency risks are monitored on an ongoing basis. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 69

71 39. FINANCIAL INSTRUMENTS (cont d) A. Financial Risk Management Policies (cont d) i. Foreign Currency Risk (cont d) The net unhedged financial assets and financial liabilities of the as at that are not denominated in their functional currencies are as follows:- (Represents foreign currencies translated into ) United States Dollar Singapore Dollar Hong Kong Dollar Thai Baht Total Functional currency of of Companies 2004 Trade Receivables Ringgit Malaysia 414,706 66, ,816 Short-term deposits with licensed banks Dong Vietnam 190, ,000 Cash and Bank Balances Ringgit Malaysia 78, ,039 80,386 Dong Vietnam , ,039 81,029 Trade Payables Ringgit Malaysia 119,360 3, ,605 Dong Vietnam 192, , ,139 3, ,384 Other Payables Ringgit Malaysia 12,940 12,940 Dong Vietnam 27,827 27,827 Functional currency of of Companies 40,767 40, Trade Receivables Ringgit Malaysia 2,840,496 7,810 96,918 2,945,224 Cash and Bank Balances Ringgit Malaysia 69, ,039 71,539 Trade Payables Ringgit Malaysia 356,948 1,014,150 47,880 1,418,978 Dong Vietnam 107, , ,134 1,014,150 47,880 1,526,164 Other Payables Ringgit Malaysia 2,064,345 2,064, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

72 39. FINANCIAL INSTRUMENTS (cont d) A. Financial Risk Management Policies (cont d) i. Foreign Currency Risk (cont d) With Hedging Material transactions of foreign exchange exposures are hedged, mainly with derivative financial instruments such as forward foreign exchange contracts to limit exposure on foreign currency receivables and payables, and on cash flows generated from anticipated transactions denominated in foreign currencies. As of, the has contracted to sell the following amounts under forward contracts: Average Exchange Rate per unit of Ringgit Malaysia United States Dollar 5,130,711 1,423, All of these contracts mature within six months from the balance sheet date. The net exchange gain/(loss) is deferred until the related sales are transacted, at which time it is included in the measurement of such transactions. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 71

73 39. FINANCIAL INSTRUMENTS (cont d) A. Financial Risk Management Policies (cont d) ii. Interest Rate Risk The s exposure to interest rate risk relates to interest bearing financial liabilities such as loans, export credit refinancing, bankers acceptance and overdraft facilities; and interest bearing asset such as short-term deposits with licensed banks and other receivables. Majority of these financial assets and liabilities are short term in nature and held for working capital purposes. As such, exposure to interest rate risk is minimal. The effective interest rate at the balance sheet date and the periods in which they reprice or mature, whichever is earlier, are as follows: Financial Assets Effective Maturity Interest Rate Total within 1 Year 1-5 Years After 5 years % Short-term deposits with licensed banks ,878,596 11,878,596 Financial Liabilities Hire purchase payables ,621, ,444 2,770, ,031 Borrowings - Bills payable ,134, ,134,722 - Overdrafts ,245,593 6,245,593 - Term loans ,980,821 2,112,202 5,905,677 4,962,942 - Export credit refinancing ,260,000 3,260, Financial Assets Other receivables ,575 4,575 Short-term deposits with licensed banks ,553,290 11,553,290 Financial Liabilities Hire purchase payables ,934,541 1,721, ,162 Borrowings - Bills payable ,106,268 87,106,268 - Overdrafts ,577,033 7,577,033 - Term loans ,175,428 2,104,180 7,914,751 5,156, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

74 39. FINANCIAL INSTRUMENTS (cont d) A. Financial Risk Management Policies (cont d) iii. Market Risk The s principal exposure to market risk arises from:- a. Quoted investments held for long term purposes As the amount held is not significant, exposure to market risk is minimal. b. Key raw material and commodities iv. Credit Risk The has in place policies to manage the s exposure in fluctuation in the prices of the key raw materials and commodities used in the operations. The enters into fixed price contracts to determine prices for raw materials and commodities used. The s exposure to credit risk arises from its receivables and the maximum risk associated with recognised financial assets is the carrying amounts as presented in the balance sheet. The has a credit policy in place and the exposure to credit risk is managed through the application of credit approvals, credit limits and monitoring procedures. The does not have any significant exposure to any individual customer. v. Liquidity and Cash Flow Risks B. Fair Value The actively manages operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the maintains sufficient levels of cash to meet its working capital requirements. The methods and assumptions used to estimate the fair values of the following classes of financial assets and liabilities are as follows:- i. Cash at Banks and in Hand, Short-Term Deposits, Receivables and Payables The carrying amounts approximate fair values due to the relatively short term maturities of these financial assets and liabilities. ii. Quoted Investments The fair values of quoted investments are based on quoted market prices. iii. Borrowings The carrying amounts of bank overdrafts, short term loans, export credit refinancing and bankers acceptance approximate fair values due to the relatively short term maturity of these financial liabilities. The carrying amounts of long-term floating rate loans approximate their fair values. The fair values of hire purchase payables and fixed rate term loans are estimated using discounted cash flow analysis, based on current lending rates for similar types of borrowing arrangements. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 73

75 39. FINANCIAL INSTRUMENTS (cont d) B. Fair Value (cont d) iv. Forward Foreign Currency Exchange Contracts The fair values of forward foreign currency exchange contracts are calculated by reference to the current rate for contracts with similar maturity profiles. The carrying amounts of financial assets and financial liabilities which are not carried at fair value on the balance sheets of the and of the Company are as follows: Financial Assets Company Carrying Amount Fair Value Carrying Amount Fair Value Amount owing by subsidiary companies 1,180,461 * Long term receivable Quoted investments 21,880 31,350 21,880 31,350 Unquoted investments 200,000 # 200,000 # Financial Liabilities Amount owing to subsidiary companies 1,090,068 * Hire purchase payables 3,621,254 3,671,574 57,664 59,013 Term loans 12,251,353 9,213, Financial Assets Amount owing by subsidiary companies 2,148,354 * Long term receivable Unquoted investments 200,000 # 200,000 # Financial Liabilities Amount owing to subsidiary companies 434,468 * Hire purchase payables 359, , , ,779 Term loans 13,974,044 It is not practical to estimate the fair value of long term receivable due to the lack of market information for similar type of lending arrangements. * It is not practical to estimate the fair values of amount owing by/to subsidiary companies due principally to lack of fixed repayment terms entered by the parties involved. However, the Company does not anticipate the carrying amounts recorded at the balance sheet date to be significantly different from the values that would eventually be received or settled. # It is not practical to estimate the fair value of unquoted investments due to the lack of available market information. 74 W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

76 39. FINANCIAL INSTRUMENTS (cont d) B. Fair Value (cont d) The carrying amounts and the estimated fair values of the s financial instruments as of 31st December, 2004 are as follows:- Carrying Amount Fair Value Off Balance Sheet Item 2004 Forward foreign currency exchange contracts 5,130,711 5,130, Forward foreign currency exchange contracts 1,423,774 1,422,064 The fair value of contingent liabilities of the Company as disclosed in note 35 to the financial statements are as follows:- Company Carrying Amount Fair Value 2004 Contingent liabilities 148,304,221 * 2003 Contingent liabilities 31,878,884 * * It is not practical to estimate the fair values of contingent liabilities reliably due to the uncertainties of timing, cost and eventual outcome. W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 75

77 Properties Owned by The as at Locations Tenure Land area/ (Build up) sq.m. Description Approximate age of building (years) Net book value Last date Revaluation or if none; date of aquistion H.S.(D) 4493 P.T. No. 3186, Lot 2688 MK.1, Jalan Perusahaan Kawasan, Perindustrian Prai, Prai. Leasehold expiring on , (6,074.20) Factory building with an integral three storey administrative office 12 6,560, No.1671 MAP 03, No. 6/38, Tan Ky, Tan Quy St. Binh Hung Hoa, Binh Chanh Dist. Ho Chi Minh City, Vietnam. Leasehold expiring on , (1,018.00) Factory building with single storey administrative office 7 807, GM 78, GM 79 & GM 80 Lot 216,221 & 223 No. 107 Mukim 6 Jalan Kerian Kedah Sungai Jawi Seberang Prai Selatan Pulau Pinang Freehold 26, (3,852.79) A main single-storey oil factory building, a single-storey office building, a cartons factory building where part of the front corner is partitioned up to accommodate a double storey office, a facial cotton factory with office rooms on mezzanine floor in front ,623, No.5002 M-3, Mukim of Lumut, District of Manjung Lot M-3, Lumut Port Industrial Park Jln. Kampung Acheh, Sitiawan Leasehold expiring on , (14,424.50) Factory buildings with three storey administrative office 10 15,910, GM 941 Mukim of Jeram Lot No.2196 Jalan Raja Abdullah Jeram, Selangor Freehold 9, ( ) Factory buildings with double storey administrative office 7 7,688, H.S.(D) PTD , Plentong PLO 690 Jln. Keluli, 9 Pasir Gudang Industrial Estate, Pasir Gudang, Johor Leasehold , (7,406.42) Factory buildings with double storey administrative office 3 15,187, Plot 20, Geran No P.T. No 488, Mukim 2 Daerah Seberang Perai Tengah, Pulau Pinang Freehold 169 (301) Double storey light industrial factory cum office , Plot 21, Geran No P.T. No 488, Mukim 2 Daerah Seberang Perai Tengah, Pulau Pinang Freehold 169 (301) Double storey light industrial factory cum office , W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

78 Analysis of Shareholding as at 29th April, 2005 SHARE CAPITAL Authorised Share Capital : 100,000,000 Issued and Fully Paid Capital : 43,136,364 Class of Share : Ordinary share of 1.00 each DISTRIBUTION OF SHAREHOLDERS Size of Holdings No. of Holders % No. of Shares % , ,106, ,222, ,610, (*) ,195, and above(**) TOTAL 2, ,136, Remark : * - less than 5% of issued shares ** - 5% and above of issued shares LIST OF TOP 30 HOLDERS No Name Shareholdings % 1 Tan Kim Oh 2,113, EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Ang Soon An (SBK) 1,820, OSK Nominees (Tempatan) Sdn. Berhad EON Finance Berhad for Ang Sun Tiong 1,510, OSK Nominees (Tempatan) Sdn. Berhad EON Finance Berhad for Ang Sun Beng 1,510, OSK Nominees (Tempatan) Sdn. Berhad EON Finance Berhad for Ang Soon An 1,420, KE-ZAN Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ang Sun Beng 1,409, Mayban Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Tan Kim Boon 1,350, EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Ang Sun Kin (SBK) 1,200, EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Ang Sun Beng (SBK) 1,200, PM Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ang Sun Beng (D) 1,180, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W ) 77

79 Analysis of Shareholding (cont d) as at 29th April, 2005 LIST OF TOP 30 HOLDERS (cont d) No Name Shareholdings % 11 EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Ong Siew Bee (SBK) 1,102, Ng Soo Gin 1,000, See Ahen 965, Mayban Securities Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ong Wee Meng (STF) 950, Ang Sun Tiong 910, Lim Koon Geok 896, Mayban Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ang Soon An 850, Yeoh Kwang Boo 845, EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Ang Sun Hing (SBK) 800, Mayban Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Teh Gek Neong 800, Mayban Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Yeoh Chee Oo 800, Permodalan Nasional Berhad 776, EB Nominees (Tempatan) Sendirian Berhad Pledged Securities Account for Ang Sun Tiong (SBK) 700, Ng Yuen Weng 605, Ang Soon An 568, Affin-ACF Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ang Soon An 550, Citicorp Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ong Wee Meng 550, Affin-ACF Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Ang Sun Tiong 520, Lee Pui Kiut 450, Yeo Li Yin 450, Total 29,799, W E L L I M U LT I C O R P O R AT I O N B E R H A D ( W )

80 proxy form No. of Shares Held: WELLI MULTI CORPORATION BERHAD ( W) (Incorporated in Malaysia) I / We, (Please use block letters) of (full Address) being a member / members of WELLI MULTI CORPORATION BERHAD hereby appoint of as my / our Proxy to vote and act for me / us and on my / our behalf at the Twelfth Annual General Meeting of the Company to be held on Monday, 20th June 2005 at 9.00 a.m. and at any adjournment thereof for / against the resolutions to be proposed thereat. I / We hereby indicate with an X in the spaces provided how I / we wish my / our votes to be cast. Resolution For Against 1. To receive and consider the Reports of the Directors and Auditors and the Statements of Accounts for the financial year ended 31st December To re-elect Mr. Ang Sun Beng as a Director of the Company. 3. To re-elect Mr. Tan Kim Oh as a Director of the Company. 4. To re-elect Mr. Tan Chin Han as a Director of the Company. 5. To approve the payment of Directors fees. 6. To appoint auditors of the Company and authorize the Directors to fix their remuneration. 7. To approve the authority to allot and issue shares pursuant to Section 132D of the Companies Act, Dated: Signed: in the presence of Note : 1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote in his stead. 2. A proxy need not be a member of the Company but such appointment must comply with Section 149 (1)(b) of the Companies Act, 1965 which states that a member shall not be entitled to appoint a person who is not a member of the Company as his proxy unless that person is an advocate, an approved auditor or a person approved by the Registrar of Companies in a particular case. 3. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if such appointer is a corporation under its common seal or the hand of its attorney. 4. All forms of proxy must be deposited at No. 85, 1st Floor (Suite B), Beach Street, Penang, not less than forty-eight (48) hours before the time appointed for holding the Meeting or any adjournment thereof.