09:44     WAFER SYSTEMS<08198> - Yearly Results Announcement (2)              

                                                                              
    4. Taxation                                                               
    The charge represents PRC income tax which is calculated at rates         
    applicable to respective PRC subsidiaries.                                
                                                                              
    No provision for Hong Kong Profits Tax has been made in the financial     
    statements as the Group had no assessable profit for the year.            
    Pursuant to the relevant laws and regulations in the PRC, the Company's   
    PRC subsidiaries are entitled to exemption from PRC income tax for two    
    or three years commencing from their first profit-making year of          
    operation and thereafter, these PRC subsidiaries will be entitled to a    
    50% relief from PRC income tax for the following three years.  During     
    the year, two of the Company's PRC subsidiaries are within their 50%      
    tax relief period, the rest is within its tax exemption period.           
                                                                              
    5. Earnings Per Share                                                     
    The calculation of the basic and diluted earnings per share is based      
    on the following data:                                                    
                                                                              
                                2004                    2003                  
    Earnings:                                                                 
    Net profit attributable to shareholders                                   
        for the purposes of basic                                             
        and diluted earnings                                                  
        per share                HK$3,023,000       HK$857,000                
                                                                              
    Number of shares:                                                         
    Weighted average number of ordinary                                       
        shares for the purposes of basic                                      
        earnings per share        289,944,745      287,021,272                
    Effect of dilutive potential                                              
        ordinary shares                                                       
        -warrants                  --              2,705,303                  
        -options                   177,389         --                         
                                  ------------------------------              
    Weighted average number of                                                
        ordinary shares for the                                               
        purposes of diluted                                                   
        earnings per share        290,122,134      289,726,575                
                                  ==============================              
                                                                              
    The computation of diluted earnings per share does not assume the         
    conversion of the Company's outstanding convertible bonds for             
    both years since their exercise would result in an increase in            
    earnings per share from continuing ordinary operations for both           
    years.  The effect of share options of 2003 was excluded from the         
    calculation of diluted earnings per share because certain                 
    exercise price of the Company's share options was higher than             
    the average market price of ordinary shares.