Contents notice of annual general meeting 2 statement accompanying notice of annual general meeting 5 corporate information 6 group corporate structure 8 profile of directors 9 financial summary 12 chairman s statement 13 audit committee report 15 corporate governance statement 17 other information 21 statement of internal control 22 financial statements 23 analysis of shareholdings 75 list of properties 77 proxy form
Notice of annual general meeting NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of the Company will be held at Dewan Berjaya, Bukit Kiara Equestrian and Country Resort, Jalan Bukit Kiara, Off Jalan Damansara, 60000 Kuala Lumpur on Thursday, 21 September 2006 at 10:30 a.m. for the following purposes:- 1. To receive and adopt the Audited Financial Statements for the year ended 31 March 2006 and the Reports of the Directors and the Auditors thereon. Resolution 1 2. To approve the payment of Directors Fees amounting to RM255,000 in respect of the year ended 31 March 2006 (Year 2005 : RM202,000) Resolution 2 3. To re-elect the following Directors retiring in accordance with Article 103 of the Articles of Association of the Company:- a) Mr Chang Song Hai Resolution 3 b) Mr Su Cheng Tao Resolution 4 c) Mr Soon Kwai Choy Resolution 5 4. To approve the payment of a final dividend of 6 sen per share less 28% tax for the year ended 31 March 2006. (2005 : 4 sen per share tax exempt) Resolution 6 5. To re-appoint BDO Binder as the Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. Resolution 7 As Special Business To consider and if thought fit, to pass the following resolutions:- 6. Ordinary Resolution - Authority to allot and issue shares pursuant to Section 132D of the Companies Act, 1965 THAT pursuant to Section 132D of the Companies Act, 1965 and approvals from Bursa Malaysia for the listing of and quotation for the additional shares so issued and other relevant authorities, where approval is necessary, authority be and is hereby given to the Directors to allot and 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 always that the aggregate number of shares to be issued shall not exceed 10% of the issued share capital of the Company for the time being AND THAT such authority shall continue to be in force until the conclusion of the next Annual General Meeting of the Company. Resolution 8
Notice of annual general meeting (cont d) 7. Ordinary Resolution - Proposed Renewal of Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature ( Proposed Shareholders Mandate ) THAT approval be and is hereby given for the renewal of the Shareholders' Mandate for the Acoustech Berhad Group of Companies to enter into any category of recurrent transactions of a revenue or trading nature falling within the types of transactions as set out in Section 3.3 in the Circular to Shareholder dated 28 August 2006 with the related parties falling within the classes of persons set out in Section 3.2 in the Circular which are necessary for day-to-day operations and are carried out in the ordinary course of business on terms which are not more favorable to the related parties than those generally available to the public and are not to the detriment of minority shareholders. AND THAT the authority conferred by such mandate shall commence upon the passing of this resolution and continue to be in force until;- (a) (b) (c) the conclusion of the next Annual General Meeting ( AGM ) of the Company at which time the mandate will lapse, unless by a resolution passed at the next AGM, the mandate is renewed; or the expiration of the period within which the next AGM of the Company is required to be held pursuant to Section 143(1) of the Act (but shall not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders in general meeting. whichever is earlier; AND THAT the Directors be and are hereby authorised to complete and do all such acts and things including executing such documents are may be required to give effect to the transactions contemplated and/or authorised by this mandate. Resolution 9 8. Ordinary Resolution - Authority to Allot and Issue Shares Pursuant to the Employee Share Option Scheme THAT pursuant to the Acoustech Berhad Employee Share Option Scheme ( the Scheme ) which was approved at the Extraordinary General Meeting held on 23 September 2004, approval be and is hereby given to the Directors to offer and grant options to eligible employees and eligible Directors of the Company and its subsidiary companies ( the Group ) and pursuant to Section 132D of the Companies, Act, 1965 to allot and issue such number of new ordinary shares of RM0.50 each in the capital of the Company from time to time in accordance with the Bye-Laws of the Scheme. Resolution 10 9. To transact any other business of the Company of which due notice shall have been given. By Order of the Board LIM HOOI MOOI TAN ENK PURN Secretaries Kuala Lumpur 28 August 2006
Notice of annual general meeting (cont d) CLOSURE OF BOOKS NOTICE IS ALSO HEREBY GIVEN that a Depositor shall qualify for entitlement to the dividend only in respect of:- i) Shares transferred into the Depositor s Securities Account before 12:30 p.m. on 10 October 2006 in respect of ordinary shares; ii) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. The dividend, if approved, will be payable on 10 November 2006 to shareholders whose names appear in the Record of Depositors on 10 October 2006. NOTES 1. A Member of the Company entitled to attend and vote at the meeting may appoint a proxy to attend and vote instead of him. A member of the Company who is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. 2. A proxy need not be a member of the Company. 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 the appointer is a corporation, either under its common seal or in some other manner approved by its Directors. 4. The instrument of proxy must be deposited at the Company s Registered Office at Suite 13A-2 Menara Uni.Asia, 1008 Jalan Sultan Ismail, 50250 Kuala Lumpur not later than forty-eight hours before the time appointed for holding the meeting. EXPLANATORY NOTES ON SPECIAL BUSINESS A) Ordinary Resolution No. 8 The Proposed Ordinary Resolution No. 8, if passed, will avoid any delay and cost involved in convening a general meeting and will empower the Directors to allot and issue shares in the Company up to an amount not exceeding in aggregate 10% of the issued share capital of the Company for the time being. This authority unless revoked or varied at a general meeting will expire at the next Annual General Meeting of the Company. B) Ordinary Resolution No. 9 The Proposed Ordinary Resolution No. 9 seeking a Renewal of Shareholders Mandate to allow the Company s subsidiaries to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature is to enable the Company to comply with Paragraph 10.09, Part E of Bursa Malaysia Listing Requirements. The mandate will take effect from the date of the passing of the Ordinary Resolution until the next Annual General Meeting of the Company. C) Ordinary Resolution No. 10 The Proposed Ordinary Resolution No. 10 is to empower the Directors to allot and issue ordinary shares from the unissued share capital of the Company pursuant to Acoustech Berhad s Employee Share Option Scheme. D) Statement accompanying Notice of Annual General Meeting A statement accompanying this notice which contains additional information as required under Appendix 8A of Bursa Malaysia Listing Requirements is found in page 5 of the Annual Report dated 28 August 2006.
Statement accompanying notice of annual general meeting 1. Directors standing for re-election The Directors retiring by rotation and standing for re-election pursuant to Article 103 of the Articles of Association of the Company are:- * Mr Soon Kwai Choy * Mr Su Cheng Tao * Mr Chang Song Hai The profiles of the above-named Directors are set out in the section entitled Profile of Directors on pages 9 to 11. 2. Date, Time and Venue of the Annual General Meeting The Seventh Annual General Meeting of the Company will be held as follows:- Date : Thursday, 21 September 2006 Time : 10:30 a.m. Venue : Dewan Berjaya, Bukit Kiara Equestrian and Country Resort Jalan Bukit Kiara, Off Jalan Damansara, 60000 Kuala Lumpur, Malaysia
Corporate information BOARD OF DIRECTORS Chang Song Hai Chairman Su Cheng Tao Managing Director Dato Nik Abdul Aziz Bin Mohamed Kamil Chen Po Hsiung Executive Director Huang Huai Son Executive Director Leong Ngai Seng Shih Chao Yuan Non- Soon Kwai Choy AUDIT COMMITTEE Soon Kwai Choy Chairman Su Cheng Tao Managing Director Dato Nik Abdul Aziz Bin Mohamed Kamil Leong Ngai Seng OPTION COMMITTEE Su Cheng Tao Managing Director Chen Po Hsiung Executive Director NOMINATION COMMITTEE Chang Song Hai Chairman Non- Leong Ngai Seng Soon Kwai Choy REMUNERATION COMMITTEE Chang Song Hai Chairman Non- Dato Nik Abdul Aziz Bin Mohamed Kamil Leong Ngai Seng SECRETARIES Lim Hooi Mooi MAICSA 0799764 Tan Enk Purn MAICSA 7045521 AUDITORS BDO Binder Chartered Accountants
Corporate information (cont d) REGISTERED OFFICE Suite 13A-2 Menara Uni.Asia 1008 Jalan Sultan Ismail 50250 Kuala Lumpur Telephone : 03-2697 7611 Fascimile : 03-2697 7311 SHARE REGISTRAR Symphony Share Registration Sdn Bhd Level 26, Menara Multi-Purpose Capital Square N0 8, Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia Telephone : 03-2721 2222 Fascimile : 03-2721 2530 PRINCIPAL PLACE OF BUSINESS No. 2, Jalan 1 Bandar Sultan Suleiman Taiwanese Industrial Park 42000 Port Klang Selangor Dahrul Ehsan Telephone : 03-3176 1145 Fascimile : 03-3176 2003 BANKERS RHB Bank Berhad Maybank Berhad Bumiputra-Commerce Bank Berhad Standard Chartered Bank Malaysia Berhad STOCK EXCHANGE LISTING Main Board of Bursa Malaysia Securities Berhad
Group corporate structure Formosa Prosonic Technics Sdn Bhd 100% 58.19% Aerotronic Sdn Bhd Acoustech Berhad (Company No. 496665-W) Formosa Prosonic Chemicals Sdn Bhd 100% 30% Musashi Paint Corporation Sdn Bhd Formosa Prosonic Equipment Sdn Bhd 75% 50% Elkay Pacific Rim (Malaysia) Sdn Bhd
Profile of directors CHANG SONG HAI Taiwanese, aged 60, Non-Executive Chairman, was appointed to the Board of Acoustech on 22 September 2001. Mr Chang had been involved in the plastic moulding industry for more than 37 years. Since 1968, he has been the Executive Chairman of Song Hai Plastic Industrial Co. Ltd., Taiwan, a company involved in the plastic moulding business. Mr Chang is the Chairman of both the Nomination and Remuneration Committee of the Company. Mr Chang holds directly 400,000 ordinary shares or 0.23% interest in the Company. Mr Chang is a Non-Independent Director as he is a major shareholder of Formosa Prosonic Industries Berhad, whose wholly owned subsidary Formosa Prosonic Manufacturing Sdn Bhd holds 38,902,194 or 22.85% interest in the Company. He does not have any family relationship with any other director and/or other major shareholders of the Company and has no conflict of interest with the Company. He has no conviction for offences within the past ten years. SU CHENG TAO Taiwanese, aged 60, Managing Director, was appointed to the Board of Acoustech on 18 September 2001. Mr Su holds a Diploma in Mechanical Engineering and he has more than 31 years of experience in the manufacturing industry. He started his career with Capetronics Group in Taiwan where he served for more than 10 years, gaining experience and expertise in manufacturing plastic components. Mr Su joined FPIB Group in 1988 where he served, as a General Manager in Formosa Prosonic Manufacturing Sdn Bhd until he left 2001 to join Acoustech. Mr Su is a Member of the Audit Committee of the Company. Mr Su holds directly 3,205,956 ordinary shares or 1.88% interest in the Company. He does not have any family relationship with any other director and/or major shareholder of the Company and has no conflict of interest with the Company. He has no conviction for offences within the past ten years. DATO NIK ABDUL AZIZ BIN MOHAMED KAMIL Malaysian, aged 63, Independent Non-Executive Director, was appointed to the Board of Acoustech on 3 September 2001. Dato Nik graduated from Universiti Malaya with a Bachelor of Arts Degree, Middlesex University, London with a Postgraduate Diploma in Personnel Management and Asian Institute of Management, Philippines with a Master in Management. He also attended the Senior Executive Program at the London Business School. Dato Nik has over 36 years of working experience in the human resource management/industry with attachments ranging from Petroliam Nasional Berhad (PETRONAS), Malaysian LNG Sdn Bhd, Bank Bumiputra Malaysia Berhad, Rothmants of Pall Mall (Malaysia) and the National Electricity Board. The pinnacle of Dato Nik s distinguished career in PETRONAS was his appointment as the Managing Director/CEO (PERMATA), in 1996. He left PETRONAS in 1997 to set up his own business, NA & Associates Sdn Bhd, a company involved in human resource training and skills management. Dato Nik is a Member of both the Audit and Remuneration Committee of the Company. Dato Nik does not hold any shares in the Company or its subsidiary companies. He does not have any family relationship with any other director and/or major shareholder of the Company and has no conflict of interest with the Company. He has no conviction for offences within the past ten years.
Profile of directors (cont d) CHEN PO HSIUNG HUANG HUAI SON LEONG NGAI SENG Taiwanese, aged 62, Executive Director, was appointed to the Board Acoustech on 3 September 2001. He obtained a Diploma in Mechanical Engineering from Air Asia Jet Engine Training Center, Taiwan in 1971. Upon his graduation in 1971, Mr Chen joined Air Asia (Aircraft Co.) as a Technician. In 1980, he joined Great Century Paints Co. Ltd as a General Manager until his resignation in 1991. He was appointed as the General Manager of FPC in 1991 where his experience in the aircraft industry as well as in the chemical industry has contributed to the success story of FPC. Mr Chen manages the daily operations of FPC. Mr Chen holds directly 6,609,876 ordinary shares or 3.88% interest in the Company. He does not have any family relationship with any other director and/or major shareholder of the Company and has no conflict of interest with the Company. He has no conviction for offences within the past ten years. Taiwanese, aged 60, Executive Director, was appointed to the Board of Acoustech on 22 May 2002, Mr Huang holds a Diploma in Business Management and he has accumulated 28 years of experience in the manufacturing industry. Mr Huang was involved with Foster Electric Co. Ltd, Taiwan, a manufacturer of speaker units, for over 15 years until his resignation as its Vice President in 1987. Mr Huang is presently the advisor of New Advance Electronic Co. Ltd, Taiwan, a company specialising in home theatre and multimedia speaker systems. Mr Huang holds directly 10,552,732 ordinary shares or 6.20% interest in the Company. He does not have any family relationship with any other director and/or major shareholder of the Company and has no conflict of interest with the Company. He has no conviction for offences within the past ten years. Malaysian, aged 34, Independent Non-Executive Director, was appointed to the Board of Acoustech on 25 February 2002. He obtained his law Degree and Commerce Degree LLB (Hons) B. Comm. from University of Melbourne and became a member of the Malaysian Bar in 1997. He was formerly an Assistant Vice-President in the Corporate Finance Department of a leading Merchant Bank in Malaysia. Mr Leong is currently a partner in his own law firm. Mr Leong is a Member of the Audit Committee, Nomination and Remuneration Committee of the Company. Mr Leong holds directly 266,000 ordinary shares or 0.16% interest in the Company. He does not have any family relationship with any other director and/or major shareholder of the Company and has no conflict of interest with the Company. He has no conviction for offences within the past ten years. 10
Profile of directors (cont d) SHIH CHAO YUAN SOON KWAI CHOY Taiwanese, aged 50, Non-Independent Non-Executive Director, was appointed to the Board of Acoustech on 25 February 2003. He holds a Master Degree in Management Science from Taiwan National Chiao Tung University. Prior to coming to Malaysia he was the assistant to the President of Friendship Corporation in Taiwan and was actively involved in the management and affairs of Friendship Corporation gaining experience and in-depth knowledge of speaker systems operations. In 1986 Mr Shih came to Malaysia to set up Formosa Prosonic Industries Sdn Bhd which has since been listed on the Bursa Malaysia Securities Berhad (formerly known as Kuala Lumpur Stock Exchange). Mr Shih is currently the Group Managing Director of the Formosa Prosonic Industries Berhad Group of Companies. Mr Shih holds directly 1,854,290 ordinary shares or 1.09% interest in the Company. As a representative of Formosa Prosonic Industries Berhad ( FPI ), Mr Shih is deemed to have an interest in 38,902,194 ordinary shares of RM0.50 each or 22.85% stake in the Company to the extent the FPI Group has an interest. Mr Shih does not have any family relationship with any other director and/or other major shareholders of the Company and he has no conflict of interest with the Company. He has no conviction for offences within the past ten years. Malaysian, aged 55, Independent Non-Executive Director was appointed the Board of Acoustech on 3 September 2001. He has held several senior positions in various major Malaysian corporations and was admitted as a member of the Association of Chartered Certified Accountants (ACCA) (UK) in 1979 and a member of the Malaysian Institute of Accountants (MIA) since 1980. He was the Past President of the Confederation of Asian and Pacific Accountants and former Vice-President of the Malaysian Institute of Accountants. He currently sits in the International Council of the ACCA headquarters in London, United Kingdom. He was awarded an honorary CPA by the Chinese Government in 1996. Mr Soon is the Chairman of the Audit Committee of the Company and a member of the Nomination Committee. Mr Soon holds directly 400,000 ordinary shares or 0.23% interest in the Company. He does not have any family relationship with any other director and/or major shareholder of the Company and has no conflict of interest with the Company. He has no conviction for offences within the past ten years. 11
Chairman s statement Dear shareholders, On behalf of the Board of Directors of Acoustech Berhad, I am pleased to present you the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 31 March 2006. The Group remains focused on its existing business segments, namely audio, chemical paints and electrical equipment, and strives to improve its performance with higher sales. For the financial year, all these business segments achieved increases in sales but the corresponding increases in profits were derailed except for the chemical paints division before taking into account the loss on disposal of shares in a jointly controlled entity. The performances by the audio and electrical equipment divisions were particularly affected by intense competition, appreciation in Ringgit Malaysia and higher material costs as a result of the worldwide increase in commodity prices. Notwithstanding the tough operating environment, the audio and electrical divisions would continue to enhance its product range and to improve its production capability and productivity with a view to produce higher value-added products. For strategic reasons, the Group had during the financial year completed the disposal of a 20% stake in Musashi Paint Corporation Sdn Bhd ( MPC ) with a loss of RM1.2 million. As a result, the Group s effective equity interest in MPC decreased to 30% from 50%. The Year In Review The Group s revenue increased by 32.6% to RM301.9 million from RM227.7 million achieved in the last financial year. Nevertheless, the Group s profit before tax (excluding the loss on disposal of shares in a jointly controlled entity of RM1.2 million) remained unchanged from the previous financial year, at about RM26 million. Net profit, however, dropped by 7.2% to RM16.6 million from the previous financial year of RM18.0 million due to higher tax charge. Consequently and on a larger share base resulting from issuance of new shares pursuant to the Company s Employee Share Option Scheme, the earnings per share on a fully diluted basis dropped to 10.0 sen as compared to 11.4 sen per share previously. The Group s net asset per share added by a marginal 2 sen to 83 sen from 81 sen mainly due to high dividend pay-outs. 13
Financial summary Revenue (RM) 2006 2005 2004 2003 2002 301,927,419 227,658,813 219,989,527 177,121,526 160,138,286 Profit Before Taxation (RM) 2006 2005 2004 2003 2002 25,083,779 26,471,792 16,218,879 10,787,327 13,526,181 12