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02 03 04 05 - 07 08 - 09 10 - 13 14 - 16 17 18 19 20 58 59 - 60 61 - 62 63 CORPORATE VISION, MISSION, OBJECTIVES AND STRATEGY CORPORATE INFORMATION CORPORATE STRUCTURE, PRINCIPAL ACTIVITIES PROFILE OF DIRECTORS CHAIRMANS STATEMENT CORPORATE GOVERNANCE STATEMENT AUDIT COMMITTEE REPORT STATEMENT ON INTERNAL CONTROL DISCLOSURE REQUIREMENTS STATEMENT OF DIRECTORS RESPONSIBILITIES FINANCIAL STATEMENTS LIST OF PROPERTY STATISTICS OF SHAREHOLDINGS NOTICE OF ANNUAL GENERAL MEETING PROXY FORM
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CORPORATE VISION
To excel as an energy solution provider through technology innovation.
CORPORATE MISSION
Provide shareholder value through the exploitation of the corporate asset in terms of revenue, earnings, cost reduction and time to market opportunities, and product innovation.
CORPORATE OBJECTIVES
Our three main corporate objectives are: To emerge as a premier international design house for rechargeable energy solutions. To develop an international distribution network. To build a strong internationally recognized brand.
BUSINESS STRATEGY
To align with green energy policy adopted by Malaysian government on the promotion and use of environmental friendly battery cells for global customers.
OUR COMMITMENT
You are assured of advance design, superior quality and competitive pricing when you purchase our products.
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CORPORATE INFORMATION
BOARD OF DIRECTORS Dato Ahmad Shukri Bin Tajuddin Independent Non-Executive Chairman Lee Kah Kheng Managing Director Dato Dennis Chuah Executive / Business Development Director Khor Yee Kwang Executive Director Nordin Bin Mohamad Desa Independent Non-Executive Director Baqir Hussain Bin Hatim Ali Independent Non-Executive Director Lim Mei Theng Non-Independent Non-Executive Director (Appointed w.e.f. 30 December 2011) Iqbal Yousuf Habib Al Yousuf Non-Independent Non-Executive Director (Resigned w.e.f. 27 December 2011) AUDIT COMMITTEE Nordin Bin Mohamad Desa Chairman Baqir Hussain Bin Hatim Ali Dato Ahmad Shukri Bin Tajuddin REMUNERATION COMMITTEE Baqir Hussain Bin Hatim Ali Chairman Nordin Bin Mohamad Desa Lee Kah Kheng NOMINATION COMMITTEE Baqir Hussain Bin Hatim Ali Chairman Nordin Bin Mohamad Desa Dato Ahmad Shukri Bin Tajuddin COMPANY SECRETARY How Wee Ling (MAICSA 7033850) Ooi Ean Hoon (MAICSA 7057078) HEAD OFFICE Lot No. 12, Industrial Zone Phase II Kulim Hi-Tech Park 09000 Kulim Kedah Darul Aman Tel : +60 (4) 403 1828 Fax : +60 (4) 403 6828 E-mail : info@etitech.com.my Website : www.etitech.com.my REGISTERED OFFICE 57-G Persiaran Bayan Indah Bayan Bay, Sungai Nibong 11900 Penang Tel : 604 640 8933 Fax : 604 643 8911 SHARE REGISTRAR Securities Services (Holdings) Sdn. Bhd. Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur Tel : 603 2084 9000 Fax : 603 2094 9940 AUDITORS Messrs. UHY Suite 11.05, Level 11, The Gardens South Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur, Malaysia. SOLICITOR Messrs. Zaid Ibrahim & Co PRINCIPAL BANKERS Malayan Banking Berhad Hong Leong Bank Berhad Standard Chartered Bank Malaysia Berhad STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Code: ETITECH (0118)
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CORPORATE STRUCTURE
ETI Tech (M) Sdn Bhd (ETI Tech) (A Wholly-Owned Subsidiary Company of ETICB)
PRINCIPAL ACTIVITIES
ETI Tech Corporation Berhad (ETICB) is principally involved in investment holding and provision of management services. The subsidiaries of ETICB as at 3 January 2012 were as follows: Date and Place of Incorporation 30 July 2002/ Malaysia Date of Acquisition 30 July 2005 Effective Equity Interest 100%
Principal activities R&D of BMS technology, as well as the design and marketing of the resulting battery packs and portable power packs for rechargeable energy storage solutions. Intended to carry out business of manufacturer and assembler in relation to the Lithium-Ion Cells and Battery Packs. Intended to carry out investment holding and to carry out its international procurement / sourcing function for the Group. Intended to carry out business activities in relation to Green Homes, more particularly setting up the energy supply of the Green Homes.
20 July 2006
100%
20 July 2006
100%
3 January 2012
51%
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PROFILE OF DIRECTORS
Dato Ahmad Shukri Bin Tajuddin Independent Non-Executive Chairman Malaysian, aged 52 Member of Audit Committee Member of Nomination Committee Dato Ahmad Shukri was appointed to the Board on 28 October 2008. He holds a Bachelor of Science degree in Accountancy from University of Missouri, Columbia, USA and was awarded a Master of Business Administration (MBA) from Greenwich University, Australia. He has over 27 years experience in various capacities in private as well as government sector and has accumulated vast experience in property, construction, business and technology development. He was appointed to the Kulim Technology Park Corporations (KTPC) Board of Directors in 1996 and had served as Managing Director until 2000, when he was then appointed the Group Managing Director / Chief Executive Officer of KTPC Group of Companies until September 2008. As a co-founder of KTPC, he was responsible for the overall implementation of the KHTP development Master Plan. Together with his team of professionals at KTPC, he has built from the ground up into one of Asias best science and technological parks. As a premier technology park in Malaysia, KHTP was conferred a Cybercity Status in 2006. Besides travelling extensively worldwide and locally to market KHTP to high tech companies, he has also created upstream and downstream industrial / technological activities that are inter-complementary for the further development of KHTP. He enjoys strong rapport with all the multinational and local companies present in KHTP. He is now the Chief Executive Officer and a member of the Board of Senai Hi-Tech Park, the second hi-tech park for the country. He also sits as a member of the Board of MIGHT Technology Nurturing (MTN) Sdn Bhd, UniMAP Holdings Sdn Bhd, NanoMalaysia Bhd and a member of the Consultative Panel on Creativity and Innovation of the Malaysian Productivity Corporation. He was a member of the Technical Committee to prepare and formulate the Malaysia Industrial Master Plan 3 (IMP3) and a Technical Advisor and Head of Study Team to the Government of Zambia for setting up of Industrial Park in Zambia. Earlier, he had served in various capacities in Kedah State Development Corporation and Darulaman Realty Sdn Bhd, the latter of which he was involved in the planning and development of the then new 1,200 acres Bandar Darulaman township in the 1986 1989. He has no family relationship with any other Directors and/or major shareholders of the Company.
Lee Kah Kheng Managing Director Malaysian, aged 48 Member of Remuneration Committee Mr. Lee is a promoter and substantial shareholder of ETICB, he was appointed to the Board of ETICB on 1 August 2005. He is also the Managing Director and a co-founder of ETI Tech (M) Sdn. Bhd. (ETI Tech). He graduated from Tunku Abdul Rahman College, Kuala Lumpur in 1988 with a professional accountancy qualification accredited by the Malaysian Institute of Certified Public Accountants (MICPA) and became a member of MICPA in 1993. He was attached to an accounting firm, Hanafiah, Raslan & Mohamad, from 1988 to 1992 as Senior Auditor before moving on to a multinational corporation, Northern Telecom Industry Sdn Bhd (whose principal activity is manufacturing and assembly of telecommunication products) in 1992 as a Cost Accountant. He left in 1994 to join a local corporation, Suiwah Corporation Bhd, which is currently listed on the Main Market of Bursa Securities and is principally involved in the retail industry, as its Group Financial Controller. He then left in 1997 to join Qdos Flexcircuits Sdn Bhd, a flexible PCB manufacturing company, as Executive Director. In 1999, he was promoted to become Group Executive Director of Qdos Holdings Sdn Bhd. In 2000, he left and became a consultant for several companies involved in ICT. He then set up ETI Tech in 2002 and was appointed its Managing Director in the same year. He is responsible for our Groups overall operations. Mr Lee does not have any family relationship with other directors of the Company. He is the spouse of Ms. Yeoh Li Hua, a substantial shareholder of ETICB.
Dato Dennis Chuah Executive/Business Development Director Malaysian, aged 39 Dato Dennis Chuah is a promoter and substantial shareholder of ETICB and was appointed to the Board of ETICB on 1 August 2005. He is also a co-founder of ETI Tech. He finished his secondary education at Methodist Boys School, Penang in 1990. He then joined Tako Astatic Technology Sdn Bhd in 1992 as a sales executive in charge of the sales of electrostatic discharge protective material for the semiconductor and electronics industries in Malaysia and Singapore. He left in 1996 to set up Zapstat Sdn Bhd, a manufacturer of electrostatic discharge packaging material, and was its Marketing Director until 2002. He helped to set up ETI Tech in 2002 and was appointed its Business Development Director in the same year. He is responsible for the overall business development and marketing functions of our Group. Dato Dennis Chuah does not have any family relationship with any director and/or major shareholder of ETICB.
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Nordin Bin Mohamad Desa Independent Non-Executive Director Malaysian, aged 56 Chairman of the Audit Committee Member of Nomination Committee Member of Remuneration Committee En. Nordin was appointed to the Board of ETICB on 1 August 2005. He graduated from the University of Leeds, UK, in 1979 with a Bachelor of Science degree in Electrical and Electronic Engineering. He obtained a Master of Business Administration (MBA) degree from the University of Hull, UK in 1993. He started his career in 1979 in Jabatan Telekom Malaysia as an Assistant Controller of Telecoms where he was involved in the operations and maintenance of telecommunication switches, subscriber network, equipment and apparatus. He then left in 1985 to join Ericsson Telecommunications Sdn Bhd as a Technical Manager in charge of technical and customer service operations for Private Automatic Branch eXchange (PABX) and public subscriber equipment. In 1990, he joined Perkom Sdn Bhd as an Engineering Manager where he was responsible for technical, maintenance and sales support operations for data and computer network equipment for the banking, telecommunication and airline industries. Subsequently, in 1992, he joined the Malaysian Technology Development Corporation Sdn Bhd where he was involved in the promoting and developing technologybased industries, commercialisation of local R&D, technology acquisition and transfer, and venture capital funding. He held several senior managerial positions in the company and was its Senior General Manager when he resigned in 2001. En. Nordin does not have any family relationship with any director and/or major shareholder of ETICB.
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Lim Mei Theng Non-Independent Non-Executive Director Malaysian, aged 44 Ms. Lim was appointed to the Board of ETICB on 30 December 2011. Ms. Lim obtained a Bachelor Degree in Finance and Decision Sciences from University of Oregon USA in 1988. With the surge of internet and mobile marketing and recognizing the global importance of the new media, she went on to pursue a Master of Business Administration (MBA) in Multimedia Marketing from Multimedia University Malaysia in 2006. In addition, she is also a Certified Professional Trainer with skills and competencies in managing and delivering effective training programs. Ms. Lim began her career in 1989 in the service industry as a Casino Executive with Resorts World Berhad where she learned the ever important art of managing people in a diverse and high performance environment. She later moved on to Fast Moving Consumer Goods (FMCG) industry and has since acquired more than ten (10) years of experience in retail market expansion services which include market feasibility studies, market penetration, sales network, marketing, branding, merchandising, logistics, and distribution. During the period from 1995 to 2000, she held several positions in Diethelm (M) Sdn Bhd and was its Senior Department Manager when she resigned in 2000. Being accountable to profit and loss, she improved organizational productivity by developing and implementing strategies that foster operating synergies and was responsible in turning around a few of the companys key agencies during the Asian Financial Crisis in 1998. Subsequently, from 2001 onwards, Ms. Lim opted to share her acquired knowledge with Small and Medium Enterprises (SME) by joining Pacific Impact Industries Sdn Bhd and later Embun Elit Sdn Bhd. She successfully generated new revenue streams and reviewed marketing investment focus, resulting in desirable growth and business profitability. It was also during this period, she acquainted herself with the many technological advances in the market and recognizing the increasing importance of these new interactive media, she went on a quest for knowledge by enrolling herself in an MBA Program in Multimedia Marketing. She is presently the Regional Liaison person for Al Yousuf L.L.C, a multi-million Dirham conglomerate with diverse interest ranging from motor vehicles, boat manufacturing, auto rental, real estate development, home electrical appliances, computer operating systems, electronics, and taxi businesses. Ms. Lim does not have any family relationship with any director and/or major shareholder of ETICB. ADDITIONAL INFORMATION ON DIRECTORS Material contracts involving Directors There were no material contracts involving Directors during the financial year. Convictions for offences (within past 10 years, other than traffic offences) None of Directors have any convictions for offences other than traffic offences. Securities held in the Company The details are disclosed on page 60 of this Annual Report.
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CHAIRMANS STATEMENT
On behalf of the Board of Directors of ETI Tech Corporation Berhad (ETICB), I have the pleasure of presenting to you the Annual Report of the Group for the financial year ended 31 August 2011.
In the financial year 2011, we witnessed a few major events which will contribute positively to the growth of the Group. On September 2010, we were appointed by Jabatan Kerja Raya Malaysia (JKR) as its Project Partner on the pilot project for Genset Hybrid Systems, which used diesel genset as its power generation and ETI lithium based batteries as its energy storage. Subsequently in November 2010, this pilot project was implemented in a school located at a rural area of Kapit, Sarawak. This was a test case whereby using lithium polymer battery had better efficiency, reliability and cost advantage over the conventional lead acid based system. The objective of this project was to enable this school to be supplied with 24 hour electricity. We have received a report in March, 2011 prepared by Pasukan Projek JARIMAS comprising, among others, JKR and Universiti Malaysia Sarawak in relation to the Pilot Project implemented at the school (Sekolah Kebangsaan Lepong Gaat, Kapit, Sarawak) for the Genset Hybrid System completed during the financial year. In January 2011, we announced the updates of the Memorandum of Understanding (MoU) signed with Sirim Berhad to establish a partnership to develop the appropriate testing technology and safety approval standards for the medium to high power lithium based battery for various industry applications such as solar, electric vehicles and other applications in the domestic as well as international markets. In line with the said MoU, ETI Tech had collaborated with SIRIM in developing the undermentioned Solar Power Solution System as the Pilot Project for both parties:1) Solar Power Solution System (Model : SPSS2000PSW1) for Surau in Kg Gontoi, Kota Marudu, Sabah. 2) Solar Power Solution System (Model : SPSS2000PSW2) for Solar Generation Lab test at Bukit Jalil. 3) Solar Power Solution System (Model : SPSS2000PSW2) for Surau in Kg Kundang, Pahang. In 11 April 2011, we entered into an MoU with Universiti Malaysia Sarawak (UNIMAS) and Green Electric Sdn. Bhd. (GESB) to develop technical knowledge and technology transfer, expertise and research co-operation and also to promote mutual understanding for the joint development and promotion of GenSet Hybrid System to the Ministry of Education (MOE) for the rural schools in Sarawak.
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Subject to the project survey and technical assessment on the suitability of micro hydro system, ETI shall also provide green energy storage system for the Projects. Increasingly, we will focus on working in collaboration with system integrators to implement projects that utilise its green technology batteries. These include government projects, such as rural electrification programme for schools and housing via solar power system, and private sector companies that are keen to embrace green technology. With the increasing awareness of the advantages of lithium based battery applications over lead acid battery which is deemed to be not environment friendly, we foresee a potential increase in demand for our products which provide innovative energy storage solutions. FINANCIAL RESULTS For the financial year ended 31 August 2011, the Group has achieved revenue and profit before taxation of RM58 million and RM4 million respectively, which were mainly contributed from the sales of its existing own brand mobile charging products and customized design battery packs. The decrease in revenue and profit before taxation by RM16.03 million and RM5.81 million respectively compared to the preceding year were mainly contributed from the decrease in sales volume, depreciation of US Dollar against the Ringgit Malaysia as well as foreign exchange losses. RESEARCH & DEVELOPMENT In the financial year ended 2011, the Group continued to carry out its Research & Development (R&D) efforts and activities as planned and in line with the markets needs and technological advances. During the year, the Group had focused in R&D activities for the development of solar storage system to rural areas. We worked on those projects implemented outside the grid power transmission coverage, alternative power sources that are more efficient and eco-friendly that should be given higher priority to prevent permanent environmental damage to the rural areas which play an important role in the national food chain. In addition, the solutions have to blend well with the local environment with future development of the selected areas taken into consideration. Our various combinations of power generation and storage systems, all of which incorporate green components and/or core solutions designed to reduce carbon emissions by 68-74%, towards meeting our Prime Ministers pledge at the Copenhagen Climate Change Summit COP15 to reduce 40% of Malaysias carbon emissions by the year 2020 compared to 2005 figures. It is also intended to set a new benchmark for operating and cost efficiency where power supply via connection to the grid is not possible or unrealistic in the medium term. Our R&D will remain focus on green and renewable energy sector as it is becoming increasingly significant and important as countries and governments globally are concerned about depleting non-renewable energy sources and global warming as well as to seek to become less reliant on traditional energy sources such as fossil fuels. Battery, as an energy storage medium, is one of the main components of the green energy drive. We are hopeful of being able to secure meaningful contracts by introducing these energy storage solutions in the domestic and international markets. FUTURE PROSPECTS OF THE GROUP The financial turmoil surrounding the US and European economies continued to weigh down on Asia and the rest of the world during the financial year. However, going forward into 2012, measured recovery is expected and in view of this as well as the promising outlook of the green and renewable energy sector, the Group foresees an increase in the demand for its products and hence has continued to undertake more business negotiations, upgrade its engineering capabilities and technical know-how as well as provide more enhanced and value-added services and innovative solutions to its customers. We expect a strong growth in both revenue and profitability in the near future given the promising outlook of the green and renewable energy sector. Appreciation On behalf of the Board, I would like to express our sincere appreciation and gratitude to the management team and staff for their continuing efforts, dedication and contribution towards the success of the Group. I would like to take this opportunity to thank our valued customers, business associates, suppliers, bankers and regulatory authorities for their support. I would also like to thank our shareholders for their continuing support, trust and confidence towards the achievements of the Group thus far. Last but not least, I wish to thank my fellow Directors for their invaluable guidance, advice and support. DATO AHMAD SHUKRI BIN TAJUDDIN Chairman
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The number of Directors for each band of total remuneration received is as follows: Band Below RM50,000 RM200,001-RM250,000 RM300,001-RM350,000 Executive Directors 2 1 Non-Executive Directors 5* -
* Included directors fees and allowances for a director who resigned during the financial year. 2.4 Nomination Committee The Nomination Committee (NC) currently comprises the following: Chairman : Baqir Hussain Bin Hatim Ali (Independent Non-Executive Director) Member : Nordin Bin Mohamad Desa (Independent Non-Executive Director) Dato Ahmad Shukri Bin Tajuddin (Independent Non-Executive Director) The NC consists exclusively of Independent Non-Executive Directors.
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Membership The Committee shall be appointed by the Board from amongst its members and shall consist of not less than three members exclusively NonExecutive Directors of whom a majority shall be Independent Directors. The members of the Committee shall elect a Chairman from among their number who is Independent Director. No Chief Executive Officer and Alternate Director shall be appointed as a member of the Committee. If the number of members is reduced below three, due to whatsoever reasons, the Board shall within three months of that event, appoint such number of new members as may be required to make up the minimum number of three members.
3.
Meetings Meetings shall be at least four times a year. A quorum of two independent members shall constitute a valid meeting. The Internal Auditor or professional firm engaged to provide such services and senior management members shall be invited to attend meetings, as the Committee deems necessary. The external auditors or any member of the Committee may request a meeting as and when they deem necessary. A meeting with external auditors shall be held at least twice a year without the presence of executive Board members. The Company Secretary shall be the Secretary to the Committee.
4.
Authority The Committee is authorized by the Board to investigate any activity within its terms of reference and shall have the resources required to perform its duties. The Committee has full and unrestricted access to all information and documents relevant to its activities as well as to the internal and external auditors and employees of the Group. The Committee is authorized by the Board to obtain external legal, independent or other professional advice and be able to convene meetings with external parties whenever deemed necessary. It shall also have the power to establish Sub-Audit Committee(s) to carry out certain investigation on behalf of the Committee in such manner, as the Committee shall deemed fit and necessary.
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Reporting The Committee is authorized to regulate its own procedure and in particular the calling of meetings, the notice to be given of such meetings, the voting and proceeding thereat, the keeping of minutes and the custody, production and inspection of such meetings. The Minutes of the meetings shall be concluded by the Secretary of the Committee to the Committee members and all the other Board members.
7.
Attendance at Meetings The information on the attendance of each member at the Committee meeting held during the financial year ended 31 August 2011 [FY 2011] is as follows:Member En. Nordin Bin Mohamad Desa En. Baqir Hussain Bin Hatim Ali Dato Ahmad Shukri Bin Tajuddin (Appointed w.e.f. 27 October 2010) No. of Meeting Held 5 5 4 Attendance 5 5 4
8.
Activities of the Audit Committee The activities were carried out by the Committee during the FY 2011 in the discharge of its duties and responsibilities are as follows: Reviewed the draft quarterly results of the Group and the recommendation of the same to the Board for approval. Reviewed the compliance on the Bursa Malaysia Securities Berhad Main Market Listing Requirements (Main LR), Malaysian Code on Corporate Governance and other statutory requirements. Discussed with the external auditors before the audit commences, the nature and scope of the audit. Reviewed the external auditors management letter and management's response. Reviewed any related party transactions and conflict of interest situation that may arise within the Company or Group and to monitor any inter-company transaction or any transaction between the Company and any related parties outside the Group. Reviewed the quarterly and year-end financial statements of the Company and the Group and thereafter submit them to the Board.
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The internal auditors have assisted the Audit Committee to: conduct the internal audit for FY 2011 review the state of corporate governance of the Group review and document the risk management framework of the Group review the state of internal control of various operating cycles within the Group
Information pertaining to the Companys internal controls is shown in the Statement on Internal Controls set out on page 17 of this Annual Report. This statement was made in accordance with a resolution of the Board dated January 13, 2012.
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The internal control system will continue to be reviewed, added on or updated in line with changes in the operating environment. Conclusion The Board is of the view that there were no significant weaknesses in the systems of internal control of the Group that had a material impact on the operations of the Group for FY2011. The Board remains committed to a sound system of internal controls and to progressively enhance the system to support the Groups operations. This statement was made in accordance with a resolution of the Board dated January 13, 2012.
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DISCLOSURE REQUIREMENTS
Pursuant To The BURSA SECURITIES MAIN MARKET Listing Requirements Utilization of Proceeds During the financial year, there were no proceeds raised by the Company from any corporate proposals. Share Buybacks During the financial year, there was no share buyback by the Company. Employee Share Scheme There was no Employee Share Scheme implemented by the Company during the financial year. Options, Warrants or Convertible Securities No options, warrants or convertibles 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 such programme. Imposition of Sanctions and/or Penalties There were no material sanction and/or penalties imposed on the Company and its subsidiary companies, Directors or management by the regulatory bodies. Non-Audit Fees The amount of non-audit fees incurred for services rendered to the Company and its subsidiary companies for the financial year by the Companys Auditors, or a firm or company affiliated to the Auditors firm is RM8,471.60. Profit Forecast and Unaudited Results Deviation There was no profit forecast issued by the Group during the financial year. The audited consolidated results during the financial year of the Group did not deviate by more than 10% of the unaudited consolidated results of the Group as announced via the BURSALINK on www.bursamalaysia.com on 28 October 2011. Profit Guarantee There was no profit guarantee issued by the Group during the financial year. Revaluation Policy The policy on revaluation of properties is as disclosed in the financial statements. Material Contract There were no material contracts entered into by the Company and its subsidiaries involving Directors and substantial shareholders interests either still subsisting as at 31 August 2011 or entered into since the end of the previous financial year. Corporate Social Responsibility (CSR) Statement The Group is driven by the belief that in pursuit of any business objective, we need to strike a balance between profitability and contributions to the social and environmental responsibilities. With such belief, the Group is committed and uses its best endeavour, on ongoing basis, to integrate CSR practices into its day-to-day business operations i.e. constantly reviewing the staff benefits to enhance the quality of life of its employees and adopting eco-friendly practices such as minimizing the use of hazardous compound in its manufacturing process to protect the environment. Recurrent Related Party Transactions of a Revenue or Trading Nature The details of Recurrent Related Party Transactions concluded and their actual amount entered into during the financial year ended 31 August 2011 are as below:Cumulative amount transacted as at 31.08.2011 (RM) 5,903.20
No. 1.
Nature of Transactions Sale of Nano Mobile Charger, Energy Rider, Green GenSet, Green Golf Cart battery pack by ETMSB to AYD whom as a Distributor for ETMSB within United Arab Emirates, Middle East and Africa Supply of battery pack to AYD
Interested Related Party Al Yousuf L.L.C (Al Yousuf), a major shareholder of ETICB is also the holding company of AYD Iqbal Yousuf Habib Al Yousuf^ is a major shareholder of ETICB and Al Yousuf. Al Yousuf L.L.C (Al Yousuf), a major shareholder of ETICB is also the holding company of AYD Iqbal Yousuf Habib Al Yousuf^ is a major shareholder of ETICB and Al Yousuf.
2.
AYD
ETI Tech
3.
Eclimo
ETI Tech
Dato Dennis Chuah, a Director and major shareholder of ETICB is also a major shareholder of Eclimo. Dato Dennis Chuah is also a common Director of Eclimo and ETI Tech.
411,444.47
Mr. Iqbal Yousuf Habib Al Yousuf is a former Director of ETICB, resigned w.e.f. 27 December 2011.
ETI Tech - ETI Tech (M) Sdn. Bhd. AYD Al Yousuf Digitals LLC Eclimo Eclimo Sdn. Bhd.
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The Directors are responsible for ensuring that the Company maintains proper accounting records which disclose with reasonable accuracy the financial position of the Group and the Company, and which enable them to ensure that the financial statements comply with the Companies Act, 1965. The Directors have general responsibility for taking such steps that are reasonably available to them to safeguard the assets of the Group and the Company, and to prevent and detect fraud and other irregularities.
FINANCIAL STATEMENTS
21 - 23 24 24 25 26 27 28 29 30 - 57 DIRECTORS REPORT STATEMENT BY DIRECTORS STATUTORY DECLARATION INDEPENDENT AUDITORS REPORT TO THE MEMBERS STATEMENTS OF FINANCIAL POSITION STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF CHANGES IN EQUITY STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS
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DIRECTORS REPORT
The Directors hereby present their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 August 2011. Principal Activities The principal activity of the Company is that of investment holding. 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 activities during the financial year. Financial Results Group RM Profit/(Loss) before taxation Taxation Net profit/(loss) for the financial year Attributable to: Equity holders of the parent 4,049,281 (304,000) 3,745,281 3,745,281 Company RM (323,094) (323,094)
In the opinion of the Directors, the results of the operations of the Group and of the Company for the financial year have not been substantially affected by any item, transaction or event of a material and unusual nature. 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 likely to affect substantially the results of their operations of the Group and of the Company for the current financial year. Dividend No dividend has been paid or declared by the Company since the end of the previous financial year. The Board of Directors does not recommend any dividend in respect of the financial year under review. Reserves and Provisions There were no material transfers to or from reserves or provisions during the financial year under review other than those disclosed in the financial statements. Issue of Shares and Debentures There were no issues of shares or debentures during the financial year under review. Options Granted Over Unissued Shares No options were granted to any person to take up unissued shares of the Company during the financial year under review. Directors The Directors who served since the date of the last report are as follows: Lee Kah Kheng Dato Dennis Chuah Nordin Bin Mohamad Desa Baqir Hussain Bin Hatim Ali Khor Yee Kwang Iqbal Yousuf Habib Al Yousuf Dato Ahmad Shukri Bin Tajuddin
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By virtue of their interests in the shares of the Company, Lee Kah Kheng and Dato Dennis Chuah are also deemed to have interests in the shares of all the subsidiary companies to the extent the Company has an interest. None of the other Directors holding office at the end of the financial year had any interest in the ordinary shares and options of the Company or its related corporations during the financial year under review. 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 a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown 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 or its subsidiary companies a party to any arrangement the object of which 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. Other Statutory Information (a) Before the statements of comprehensive income and statements of financial position of the Group and of the Company were made out, the Directors took reasonable steps: (i) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and (ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the Directors are not aware of any circumstances which would render: (i) the amount written off for bad debts or the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; (ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading; (iii) any amount stated in the financial statements of the Group and of the Company misleading; and (iv) adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
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Significant Events The significant events are disclosed in Note 29 to the financial statements. Auditors The auditors, UHY, have expressed their willingness to accept re-appointment. Signed in accordance with a resolution of the Directors.
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STATEMENT BY DIRECTORS
Pursuant to Section 169(15) of the Companies Act, 1965 We, LEE KAH KHENG and DATO DENNIS CHUAH, being two of the Directors of ETI TECH CORPORATION BERHAD, do hereby state that, in the opinion of the Directors, the financial statements set out on pages 26 to 57 are drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 August 2011 and of their financial performance and cash flows for the financial year then ended. The supplementary information set out in Note 13 to the financial statements have been compiled in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and the directive of Bursa Malaysia Securities Berhad. Signed in accordance with a resolution of the Directors.
STATUTORY DECLARATION
Pursuant to Section 169(16) of the Companies Act, 1965 I, LEE KAH KHENG, being the Director primarily responsible for the financial management of ETI TECH CORPORATION BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 26 to 57 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, 1960. Subscribed and solemnly declared by the abovenamed LEE KAH KHENG at KUALA LUMPUR in the FEDERAL TERRITORY on this 21 DEC 2011 ) ) ) ) )
25
TO THE MEMBERS OF ETI TECH CORPORATION BERHAD (Company No.: 667845-M) (Incorporated in Malaysia)
We have audited the financial statements of ETI Tech Corporation Berhad., which comprise the statements of financial position as at 31 August 2011 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 26 to 57. The financial statements of the Group and of the Company as at 31 August 2010 were audited by another auditors whose reports dated 23 December 2010, expressed an unqualified opinion on the financial statements. Directors Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of 31 August 2011 and of their financial performance and cash flows for the financial year then ended. Report on Other Legal and Regulatory Requirements In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the followings: (a) In our opinion, the accounting and other records and the registers required by the Act 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 Act. (b) We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Companys financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. (c) Our audit reports on the accounts of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act. Other Reporting Responsibilities The supplementary information set out in Note 13 is solely disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The Directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysia Institute of Accountants (MIA Guidance) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. UHY Firm Number: AF 1411 Chartered Accountants KUALA LUMPUR 21 DEC 2011 TEE GUAN PIAN Approved Number: 1886/05/12 (J/PH) Chartered Accountant
26
14 15 16
27
3,745,281
9,652,858
(323,094)
(841,912)
3,745,281 0.55
9,652,858 1.42
28
Group At 1 September 2009 Bonus issue Net profit for the financial year, representing total comprehensive income for the financial year At 31 August 2010 At 1 September 2010 Net profit for the financial year, representing total comprehensive income for the financial year At 31 August 2011 Company At 1 September 2009 Bonus issue Net loss for the financial year, representing total comprehensive income for the financial year At 31 August 2010 At 1 September 2010 Net loss for the financial year, representing total comprehensive income for the financial year At 31 August 2011
68,077,200 68,077,200
68,077,200
3,745,281 36,349,475
3,745,281 104,426,675
22,692,400 45,384,800
45,867,086 (45,384,800)
68,559,486 -
68,077,200 68,077,200
68,077,200
(323,094) (682,720)
(323,094) 67,394,480
29
30
Amendments to FRS1, First-time Adoption Financial Reporting Standards and FRS 127, Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate Amendments to FRS 139, Financial Instruments: Recognition and Measurement, FRS 7, Financial Instruments: Disclosures and IC Interpretation 9, Reassessment of Embedded Derivatives Amendments to FRSs contained in the document entitled Improvements to FRSs (2009) Amendments to IC Interpretation 9 Reassessment of Embedded Derivatives The new FRSs, revised FRSs, IC Interpretations and amendments to FRSs are either not applicable to the Group and to the Company or the adoptions did not result in significant changes in accounting policies of the Group and of the Company and did not have significant impact on the Group and on the Company.
31
Amendments to FRSs contained in the documents entitled Improvements to FRSs (2010) IC Interpretation 19 Amendments to IC Interpretation 14 IC Interpretation 15 FRS 124 Amendments to FRS 1 Amendments to FRS 7 Amendments to FRS 112 Amendments to FRS 101 FRS 9 FRS 10 FRS 11 FRS 12 FRS 13 FRS 119 FRS 127 FRS 128 IC Interpretation 20 Extinguishing Financial Liabilities with Equity Instruments Prepayment of a Minimum Funding Requirement Agreements for Construction of Real Estate Related Party Disclosures (revised) Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters Disclosures Transfers of Financial Assets Deferred Tax: Recovery of Underlying Assets Presentation of Items of Other Comprehensive Income Financial Instruments Consolidated Financial Statements Joint Arrangements Disclosure of Interests in Other Entities Fair Value Measurement Employee Benefits Separate Financial Statements Investments in Associates and Joint Ventures Stripping Costs in the Production Phase of a Surface Mine
The initial applications of the above applicable new FRSs, revised FRSs, IC Interpretations and amendments to FRSs is not expected to have any material impact on the financial statements of the Group and of the Company, except as discussed below: (i) FRS 7 Financial Instruments: Disclosures This new standard requires disclosures in financial statements that enable users to evaluate the significance of financial instruments for the entitys financial position and performance, and the nature and extent of risks arising from financial instruments to which an entity is exposed and how these risks are managed. This standard requires both qualitative disclosures describing managements objectives, policies and processes for managing those risks, and quantitative disclosures providing information about the extent to which an entity is exposed to risk, based on information provided internally to the entitys key management personnel. (ii) FRS 123 Borrowing Costs This new standard removes the option of immediately recognising as an expense borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. However, capitalisation of borrowing costs is not required for assets measured at fair value, and inventories that are manufactured or produced in large quantities on a repetitive basis, even if they take a substantial period of time to get ready for use or sale. (iii) Amendments to FRS 117: Leases Amendments to FRS 117 sets out the new requirement where leasehold land which is in substance a finance lease will be reclassified to property, plant and equipment. The Group has reassessed and determined that all leasehold land of the Group are in substance finance leases and accordingly, has reclassified the leasehold land to property, plant and equipment. The change in accounting policy has been made retrospectively in accordance with the transitional provisions of the amendment.
32
Carrying amount Property, plant and equipment Prepaid lease payments (iv) FRS 139 Financial Instruments: Recognition and Measurement
This new standard establishes the principles for the recognition, derecognition and measurement of an entitys financial instruments and for hedge accounting. The impact of applying FRS 139 on the financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors is not required to be disclosed by virtue of exemptions provided under paragraph 103AB of FRS 139. (v) FRS 101 Presentation of Financial Statements (revised) The revised FRS 101 introduces changes in the presentation and disclosures of financial statements. The revised Standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with all non-owner changes in equity presented as a single line. The Standard also introduces the statement of comprehensive income, with all items of income and expense recognised in profit and loss, together with all other items of recognised income and expense directly in equity, either in one single statement, or on two linked statements. The Group and the Company have elected to present this statement as one single statement. There is no impact on profits for the financial year since these changes affect only the presentation of items of income and expenses. The Group and the Company have applied the transitional provisions in FRS 7 and FRS 139 which exempt entities from disclosing the possible impact arising from initial application of the respective standards on the financial statements of the Group and of the Company. (b) Functional and presentation currency These financial statements are presented in Ringgit Malaysia (RM), which is the Companys functional currency. (c) Significant accounting estimates and judgements Estimates, assumptions concerning the future and judgements are made in the preparation of the financial statements. They affect the application of the Groups accounting policies, reported amounts of assets, liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based on historical experience and other relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The key assumptions concerning the future and other key sources of estimation or uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below. (i) Depreciation of property, plant and equipment The costs of property, plant and equipment of the Group and of the Company are depreciated on a straight-line basis over the useful life of the assets. Management estimates the useful life of the plant and equipment as disclosed in Note 2(i)(iii). These are common life expectancies applied in the industry. Changes in the expected level of usage could have impact the useful life and the residual values of these assets, therefore future depreciation charges could be revised. The carrying amounts of the Groups and of the Companys property, plant and equipment as at 31 August 2011 are disclosed in Note 3 to the financial statements. (ii) Impairment of investment in subsidiary companies The carrying values of investment in subsidiary companies and the related goodwill are reviewed for impairment. In the determination of the value in use of the investment, the Company is required to estimate the expected cash flows to be generated by the subsidiary companies and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of the Companys investment in subsidiary companies as at 31 August 2011 is disclosed in Note 4 to the financial statements.
33
34
35
36
37
38
39
40
41
Group 2011 Cost At 1 September 2010 - As previously stated - Effect of adopting Amendments to FRS 117 - As restated Additions Disposals At 31 August 2011 Accumulated depreciation At 1 September 2010 - As previously stated - Effect of adopting Amendments to FRS 117 - As restated Charge for the financial year Capitalised in development expenditure Disposals At 31 August 2011 Carrying amount At 31 August 2011 Group 2010 Cost At 1 September 2009 - As previously stated - Effect of adopting Amendments to FRS 117 - As restated Additions Disposals Written off At 31 August 2010 Accumulated depreciation At 1 September 2009 - As previously stated - Effect of adopting Amendments to FRS 117 - As restated Charge for the financial year - As previously stated - Effect of adopting Amendments to FRS 117 Capitalised in development expenditure Disposals Written off At 31 August 2010 Carrying amount At 31 August 2010
Note
Building RM
Leasehold land RM
Motor vehicles RM
Total RM
272,539
20,983,550
42
4.
Investment in Subsidiary Companies (a) Investment in subsidiary companies Company 2011 RM In Malaysia Unquoted shares, at cost (b) The subsidiary companies and shareholdings therein are as follows: Name of company Country of incorporation Effective interest 2011 2010 % % 100 100 Principal activities 9,168,998 2010 RM 9,168,998
Malaysia
Research and development, design and marketing of Battery Management System for rechargeable energy storage solutions Dormant
ETI Tech International Sdn. Bhd. Indirect holding: Subsidiary company of ETI Tech (M) Sdn. Bhd. Power Mac Sdn. Bhd.
Malaysia
100
100
Malaysia
100
100
Dormant
43
6.
Inventories Group 2011 RM At cost Raw material Work-in-progress Finished goods 19,727,537 1,293,984 17,826,261 38,847,782 2010 RM 9,155,196 415,405 695,693 10,266,294
7.
Trade Receivables Group 2011 RM Trade receivables Less: Accumulated impairment 31,896,537 (716,546) 31,179,991 2010 RM 46,728,153 (719,303) 46,008,850
Included in trade receivables is an amount of RM5,613 (2010: RM118,818) owing by a company in which a director of the Company has a substantial financial interest. Trade receivables are recognised at their original invoice amounts which represent their fair value on initial recognition. The Groups normal trade credit terms range from 30 to 120 days (2010: 30 to 120 days). Other credit terms are assessed and approved on a case by case basis.
44
The Group has not made any impairment on certain past due receivables as the Directors are of the view that the receivables are recoverable. The Groups credit exposures are concentrated mainly on 2 (2010: 3) trade receivables, which accounted for 81% (2010: 77%) of the total trade receivables as at 31 August 2011. The foreign currency exposure profile is as follows: Group 2011 RM United States Dollar (USD) 30,831,816 2010 RM 35,670,643
8.
Other Receivables Group 2011 RM Other receivables Deposits Prepayments 761,711 17,400 5,224,918 6,004,029 2010 RM 4,663,592 7,466 5,130,657 9,801,715
Other receivables are recognised at their original invoice amounts which represent their fair value on initial recognition. Included in the prepayments of the Group is an amount of RM5,078,911 (2010: RM5,045,457) representing a prepayment to acquire the materials from the suppliers. The foreign currency exposure profile is as follows: Group 2011 RM United States Dollar (USD) 2010 RM 4,111,250
45
Ordinary shares of RM0.10 each: Authorised At 1 September Created during the financial year At 31 August Issued and fully paid At 1 September Bonus issue during the financial year At 31 August
13.
Retained Profits/(Accumulated Losses) The movements in the reserves are reflected in the statements of changes in equity. 2011 Group RM Retained profits/(Accumulated losses) - Realised - Unrealised Less: Consolidation adjustments 38,306,473 (788,000) 37,518,473 (1,168,998) 36,349,475 Company RM (682,720) (682,720) (682,720)
The disclosure of realised and unrealised profits or losses is solely compiled in accordance to the Malaysian Institute of Accountants Guidance of Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Securities Listing Requirements issued on 20 December 2010. The disclosure of realised and unrealised profits and losses is solely for the purpose of disclosure requirements of Bursa Securities Listing Requirements, and the comparative figures are not required in the first financial year of complying with the realised and unrealised profits and losses disclosure.
46
The hire purchase liabilities are charged at a rate of 4.25% (2010: Nil) per annum.
15.
Bank Borrowings Group 2011 RM Secured Term loans Banker acceptances Trust receipts Bank overdraft Total bank borrowings Analysed as: Repayable within twelve months Secured Term loans Banker acceptances Trust receipts Bank overdraft Repayable after twelve months Secured Term loans 3,216,625 17,099,000 570,553 20,886,178 2010 RM 3,413,367 6,644,000 1,402,400 472,368 11,932,135
3,010,837 20,886,178
3,212,326 11,932,135
The above credit facilities obtained from licensed banks are secured by the following: (a) Legal charge over the leasehold land and building of a subsidiary company as disclosed in Note 3 to the financial statements; and (b) Pledged of fixed deposit with a licensed bank as disclosed in Note 10 to the financial statements.
47
Range of interest rates is as follows: Group 2011 % Term loans Banker acceptances Trust receipts Bank overdraft 7.40 3.31 - 4.96 9.10 2010 % 7.10 4.50 - 5.00 7.55 8.80
16.
Deferred Tax Liabilities Group 2011 RM At 1 September Relating to origination and reversal of temporary differences (Over)/Under provision in prior years At 31 August The component and movement of the deferred tax liabilities of the Group are as follows: Accelerated capital allowances RM At 1 September 2010 Relating to origination and reversal of temporary differences Over provision in prior years At 31 August 2011 At 1 September 2009 Relating to origination and reversal of temporary differences Under provision in prior years At 31 August 2010 284,000 225,000 (67,000) 442,000 184,000 100,000 284,000 Development expenditure RM 200,000 146,000 346,000 67,000 70,000 63,000 200,000 484,000 371,000 (67,000) 788,000 2010 RM 251,000 170,000 63,000 484,000
48
18.
Other Payables Group 2011 RM Other payables Deposits Advance payment from customers Accruals 801,007 7,000 278,968 179,904 1,266,879 2010 RM 498,782 4,000 748,367 491,191 1,742,340 2011 RM 44,938 34,000 78,938 Company 2010 RM 66,938 13,000 79,938
The foreign currency exposure profile is as follows: Group 2011 RM United States Dollar (USD) 504,872 2010 RM 171,379
19.
Revenue This represents invoiced value of goods sold less trade returns and discounts, if any.
20.
Finance Costs Group 2011 RM Interest expenses on: Bank overdrafts Term loans Banker acceptances and trust receipts Hire purchase 70,358 240,190 817,073 49,981 1,177,602 2010 RM 25,395 232,653 329,808 1,720 589,576
49
22.
Taxation Group 2011 RM Tax expense for the financial year: Over provision in prior year Deferred tax: Relating to origination and reversal of temporary differences (Over)/Under provision in prior years 371,000 (67,000) 304,000 304,000 2010 RM (26,000) 170,000 63,000 233,000 207,000
Income tax is calculated at the statutory tax rate of 25% (2010: 25%) of the estimated assessable profit/(loss) for the financial year. A subsidiary company, ETI Tech (M) Sdn. Bhd., has been granted Multimedia Super Corridor (MSC) status by Multimedia Development Corporation Sdn. Bhd. By virtue of its MSC status, the subsidiary company has also been granted pioneer status by the Ministry of International Trade and Industry Malaysia. Under this incentive, 100% of the subsidiary companys statutory income from the pioneer products is exempted from income tax for a period of 10 years commencing from 15 July 2003. A reconciliation of income tax expense applicable to profit/(loss) before taxation at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company are as follows: Group 2011 RM Profit before taxation Taxation at statutory tax rate of 25% (2010: 25%) Expenses not deductible for tax purposes Income exempted under pioneer status Income not subject to tax Deferred tax assets not recognised Over provision of taxation in respect of prior year (Over)/Under provision of deferred taxation in respect of prior years Tax expense for the financial year 4,049,281 1,012,319 473,692 (1,112,909) (2,977) 875 (67,000) 304,000 2010 RM 9,859,858 2,464,965 508,739 (2,676,209) (128,250) 755 (26,000) 63,000 207,000
50
23.
Earnings Per Shares The earnings per share has been calculated based on the consolidated profit for the financial year attributable to the equity holders of the parent of RM3,745,281 (2010: RM9,652,858) and the weighted average number of ordinary shares in issue during the financial year of 680,772,000 (2010: 680,772,000). Group 2011 RM Profit for the financial year attributable to the equityholders of parent Number of shares in issue Effect of bonus issue Weighted number of ordinary shares in issue Basic earnings per share (sen) 3,745,281 680,772,000 680,772,000 0.55 2010 RM 9,652,858 226,924,000 453,848,000 680,772,000 1.42
The dilution earnings per share equal the basic earnings per share as the Company did not have any dilutive potential ordinary shares during the financial year.
24.
Staff Costs Group Note Staff costs (excluding Directors) Recognised in statements of comprehensive income Capitalised in development expenditure Total staff costs for the financial year 2011 RM 2,366,056 877,449 3,243,505 2010 RM 2,873,108 1,105,629 3,978,737
Included in the staff costs (excluding Directors) are contributions made to the Employees Provident Fund under a defined contribution plan of the Group amounting to RM194,571 (2010: RM200,893). 25. Related Party Disclosures (a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the following transactions with related parties during the financial year. Group 2011 RM * Related Parties: Sales of goods 417,348 2010 RM 119,382
The Directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties. * The nature and relationship between the Company and the related parties are those companies in which a Director of the Company has financial interest.
51
Key management personnel include personnel having authority and responsibility for planning, directing and controlling the activities of the entity, including any Director of the Company.
26.
Segmental reporting Segment assets Segment assets information is neither included in the internal management reports nor provided regularly to the Executive Director. Hence no disclosure is made on segment assets. Segment liabilities Segment liabilities information is neither included in the internal management reports nor provided regularly to the Executive Director. Hence no disclosure is made on segment liability. All the inter-segment transactions were carried out on normal commercial basis and in the ordinary course of business. (a) Geographical segments In determining the geographical segments of the Group, segment revenue is based on the geographical location of customers. Group 2011 RM Malaysia China (including Hong Kong) Taiwan Others 23,474,317 24,007,928 10,448,609 63,729 57,994,583 2010 RM 16,594,057 36,195,734 18,653,476 2,582,649 74,025,916
(b) Major customers The following are major customers with revenue equal or more than 10% of the Groups revenue: Group 2011 RM Customer I Customer II Customer III Customer IV 9,951,691 10,448,609 14,019,530 20,704,920 2010 RM 21,338,486 18,653,476 14,744,672 14,711,800
27.
Capital Commitments Group 2011 RM Approved and contracted but not provided for Property, plant and equipment 7,989,000 2011 RM 7,989,000
52
(b)
(c)
Group 2011 Financial Assets Trade receivables Other receivables Fixed deposit with a licensed bank Cash and bank balances Total financial assets Financial Liabilities Trade payables Other payables Hire purchase payables Bank borrowings Total financial liabilities
Total RM
31,179,991 6,004,029 852,281 6,968,630 45,004,931 1,729,204 1,266,879 3,522,683 20,886,178 27,404,944
53
2010 Financial Assets Trade receivables Other receivables Fixed deposits with a licensed bank Cash and bank balances Total financial assets Financial Liabilities Trade payables Other payables Bank borrowings Total financial liabilities Company 2011 Financial Asset Amount owing by subsidiary companies Financial Liability Other payables 2010 Financial Asset Amount owing by subsidiary companies Financial Liability Other payables (b) Financial assets/(liabilities) at fair value through profit or loss
Total RM 46,008,850 9,801,715 823,462 6,474,595 63,108,622 2,722,856 1,742,340 11,932,135 16,397,331
58,304,420 -
78,938
58,304,420 78,938
58,628,514 -
79,938
58,628,514 79,938
There is no fair value through profit or loss has been imposed as the Group and the Company credit risks and liquidity risk are within the acceptable collection/payment period. (c) Capital risk management objectives and policies The Groups management manages its capital to ensure that the Group is able to continue as a going concern and maintains an optimal capital structure so as to maximise shareholder value. The management reviews the capital structure by considering the cost of capital and the risks associated with the capital. The capital of the Group consists of issued capital, fixed deposit and cash and bank balances. The Group is not subject to any externally imposed capital requirements. (d) Financial risk management objectives and policies The Groups and the Companys financial risk management policy is to ensure that adequate financial resources are available for the development of the Groups and the Companys operations whilst managing its financial risks, including foreign currency exchange risk, credit risk, liquidity risk and market risks. The Group and the Company operate within clearly defined guidelines that are approved by the Board and the Groups and the Companys policy is not to engage in speculative transactions. (e) Credit risk Fixed deposit with a licensed bank, cash and bank balances are placed with a credit worthy financial institution. Credit risk arises mainly from the inability of its customers to make payments when due. The Group and the Company has adopted a policy of only dealing with creditworthy counterparties. Receivables are monitored on an ongoing basis via Companys management reporting procedures and action will be taken for long outstanding debts.
54
78,938 79,938
78,938 79,938
(g)
Market risks (i) Foreign currency exchange risk The Group incurs foreign currency risk on transactions that are denominated in foreign currencies. The currencies giving rise to this risk are primarily the United States Dollar (USD), United Arab Emirates Dirham (AED), Euro (EUR), South Africa Rand (SAR), Singapore Dollar (SGD) and Thai Baht (THB).
55
Total RM 30,954,429 21,682 8,211 6,234 2,769 151 43,859,045 21,682 8,211 6,234 2,769 151
Trade payables RM 2011 USD 2010 USD (ii) Foreign currency risk sensitivity 1,045,136 1,976,414
A 10% strengthening of Ringgit Malaysia against the following foreign currencies at the end of the reporting period would increase/(decrease) the profit before taxation and other comprehensive income by the amounts shown below. This analysis assumes that all other variables remain unchanged. Group 2011 RM (2,940,442) (2,168) (821) (623) (277) (15)
A 10% weakening of Ringgit Malaysia against the above foreign currencies at the end of the reporting period would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain unchanged.
56
Group Financial Asset Fixed deposit with a licensed bank Financial Liability Bank borrowings
852,281 20,886,178
823,462 11,932,135
The Group is exposed to interest rate risk arising from its short and long term debts obligations, and its fixed deposits. Fixed deposits interest rate is insignificant and any fluctuations in the rate would have no material impact on the results of the Group. (iv) Interest rate risk sensitivity An increase in market interest rates by 1% on financial assets and liabilities of the Group and of the Company which have variable interest rates at the end of the reporting period would decrease the profit before tax by RM200,339. This analysis assumes that all other variables remain unchanged. A decrease in market interest rates by 1% on financial assets and liabilities of the Group and of the Company which have variable interest rates at the end of the reporting period would have had the equal but opposite effect on the amounts shown above, on the basis that all other variables remain unchanged. (h) Fair values of financial assets and financial liabilities (i) The carrying amounts of financial assets and financial liabilities, as reported in the financial statements, approximate their respective fair values. The carrying amount of these financial assets and financial liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period. (ii) Fair value of financial instruments by categories that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value. 2011 Carrying amount RM Fair value RM Carrying amount RM 2010 Fair value RM
2,909,815
2,918,997
57
1,182,272 (1,182,272) 46,008,850 9,801,715 (5,130,657) (50,679,908) 823,462 6,474,595 (7,298,057) 2,722,856 1,742,340 (3,716,829) (748,367)
(8,474,369) 613,248
32.
Date of Authorisation for Issue The financial statements of the Group and of the Company for the financial year ended 31 August 2011 were authorised for issue in accordance with a resolution of the Board of Directors on 21 December 2011.
58
LIST OF PROPERTY
Save as disclosed below, whereby ETICB is the lease owner, the ETICB Group does not own any landed property as at the date of this Annual Report:No Name of Registered Owner / Postal Address / Title Identification Perbadanan Kemajuan Negeri Kedah Lease of part of H.S.(D) 1708 P.T. No. 1950, Mukim Padang China, Daerah Kulim, Kedah Darul Aman situated at Lot No. 12, Industrial Zone Phase II, Kulim High Tech Park, Kedah Darul Aman, Malaysia Bearing Postal Address: Lot No. 12, Industrial Zone Phase II Kulim Hi-Tech Park 09000 Kulim Kedah Darul Aman Malaysia * The ETICB Group has yet to execute the lease for the remaining portion of the land measuring 29,833 m2. Approx Age of Building / Tenure / Date of Expiry of Lease Leasehold of thirty (30) years expiring on 25.12. 2034 Land Area / Build Up Area (m2) 39,950* / 3,809 Net Book Value as at 31 August 2011 RM 5,216,640.00 Year of Valuation / Acquisition December 2004
Description / Existing Use Double storey factory with office building to house our design and R&D center
1.
59
STATISTICS OF SHAREHOLDINGS
SHARE CAPITAL AS AT 30 DECEMBER 2011 Authorized Capital Issued and Paid-up Capital Class of Shares Voting Rights : RM100,000,000.00 : RM68,077,200.00 : Ordinary Shares of RM0.10 each : One voting right for one ordinary share
DISTRIBUTION OF SHAREHOLDERS AS AT 30 DECEMBER 2011 Size of Holdings Less Than 100 100 1,000 1,001 to 10,000 10,001 100,000 100,001 34,038,599 34,038,600 and above Total No. of Holders 6 789 1,469 2,357 517 3 5,141 % 0.12 15.35 28.57 45.85 10.06 0.06 100.00 No. of Shares 12 272,968 10,677,916 92,735,744 353,734,374 223,350,844 680,772,000 % 0.00 0.04 1.57 13.62 51.96 32.81 100.00
THIRTY (30) LARGEST SECURITIES HOLDERS AS AT 30 DECEMBER 2011 No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Name Al Yousuf L.L.C. OSK Nominees (Tempatan) Sdn Berhad Pledged Securities Account for Dennis Chuah OSK Nominees (Tempatan) Sdn Berhad Pledged Securities Account for Lee Kah Kheng Nor Ashikin Binti Khamis Siti Munajat Binti Md Ghazali Kamarudin Bin Meranun Compugates Holdings Berhad Tuanku Jaafar Ibni Tuanku Abdul Rahman Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Goh Kheng Peow (8026769) Amsec Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lee Kah Kheng (MX2636) Koperasi Permodalan Felda Malaysia Berhad Mansor Bin Padzin Chin Chin Seong Mayban Securities Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Raja Zainal Abidin Bin Raja Hussin (REM 672) HLB Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Lee Chiah Cheang OSK Nominees (Tempatan) Sdn Berhad OSK Capital Sdn Bhd for Ng Huat Tian Ho Swee Choon Sumdin @ Shamshudin Bin Nor Lee Chai Eng Alliancegroup Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Ng See Cheng (8040841) Goh Sock Sin Yeoh Li Hua Mayban Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Muhammad Ainuddin Bin Ramli Kenanga Nominees (Asing) Sdn Bhd Pledged Securities Account for Hsu,Chin-Shui M.N.Thamatanthi A/P M.Nardysamy Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Dennis Chuah HDM Nominees (Tempatan) Sdn. Bhd. Pledged Securities Account for Toh Pik Chai (M05) Yeoh Cheor Eng Mayban Nominees (Tempatan) Sdn. Bhd. Yeoh Li Hua HLG Nominee (Tempatan) Sdn. Bhd. Pledged Securities Account for Goh Sock Sin Total Shareholdings 101,547,000 72,815,822 48,988,622 34,000,000 34,000,000 31,399,300 23,337,100 13,500,000 6,188,300 5,000,000 5,000,000 4,850,448 4,000,000 3,459,400 3,350,000 3,320,000 3,209,800 3,000,000 2,540,000 2,500,000 2,306,000 2,136,270 2,048,300 1,905,100 1,880,000 1,853,200 1,850,000 1,850,000 1,800,000 1,725,000 425,359,062 % 14.92 10.70 7.20 4.99 4.99 4.61 3.43 1.98 0.91 0.73 0.73 0.71 0.59 0.51 0.49 0.49 0.49 0.44 0.37 0.37 0.34 0.31 0.30 0.28 0.28 0.27 0.27 0.27 0.26 0.25 62.48
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Deemed interest under Section 122A of the Companies Act, 1965 by virtue of his/her spouses shareholding in ETICB. Deemed interested by virtue of his substantial shareholding in Al Yousuf L.L.C.
DIRECTORS SHAREHOLDING AS AT 30 DECEMBER 2011 Name Dato Ahmad Shukri Bin Tajuddin Lee Kah Kheng Dennis Chuah Khor Yee Kwang Nordin Bin Mohamad Desa Baqir Hussain Bin Hatim Ali Lim Mei Theng
1
% 0.58 -
Deemed interest under Section 122A of the Companies Act, 1965 by virtue of his spouses shareholding in ETICB.
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5.
By Order of the Board HOW WEE LING (MAICSA 7033850) OOI EAN HOON (MAICSA 7057078) Secretaries Penang Date: 3 February 2012
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PROXY FORM
No of ordinary shares held
I/We
(*NRIC No./Company No
) of
being a *Member/Members of ETI TECH CORPORATION BERHAD hereby appoint (Proxy 1) (*NRIC No./Passport No. and*/ or failing him* (Proxy 2) ) of (*NRIC No./Passport No. ) of
and*/or failing him*, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the Seventh Annual General Meeting of the Company to be held at the Burma Room (Lobby Level), Evergreen Laurel Hotel of 53 Persiaran Gurney, 10250 Penang on Monday, 27 February 2012 at 10.00 a.m. or at every adjournment thereof to vote as indicated below:The proportions of my/our holdings to be represented by our proxy(ies) are as follows:Proxy 1 Proxy 2 % % 100% In case of a vote by show of hands, Proxy 1*/Proxy 2* shall vote on our behalf.
* Strike out whichever is inapplicable (Please indicate with an X in the space provided below on how you wish your vote to be cast. If you do not do so, the proxy will vote or abstain from voting at his discretion) RESOLUTIONS 1. To approve the payment of additional Directors Fees of RM2,000 for the year ended 31 August 2011. 2. To approve the payment of Directors Fees up to RM132,000 for the year ending 31 August 2012. To re-elect the following directors retiring under the respective provision of the Articles of Association of the Company:3. Dato Dennis Chuah [Article 85] 4. Dato Ahmad Shukri Bin Tajuddin [Article 85] 5. Baqir Hussain Bin Hatim Ali [Article 85] 6. Nordin Bin Mohamad Desa [Article 85] 7. Lim Mei Theng [Article 92] 8. To re-appoint Messrs. UHY as Auditors of the Company for the ensuing year and to authorize the Directors to fix their remuneration. To pass the following resolution as Special Business :9. Ordinary Resolution Authority to Issue Shares pursuant to Section 132D of the Companies Act, 1965. FOR AGAINST
Signature of Shareholder(s) . Signed this ......... day of...., 2012 Notes: A Member of the Company entitled to attend and vote is entitled to appoint up to two (2) proxies to attend and vote in his place. A proxy may but need not be a Member and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company. If a Member appoints two (2) proxies, the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. The instrument appointing the proxy shall be in writing, executed by or on behalf of the appointor. In the case of a corporate member, the instrument appointing a proxy must be either under its common seal or under the hand of its officer or attorney duly authorised. The instrument appointing a proxy must be deposited at the Registered Office, 57-G Persiaran Bayan Indah, Bayan Bay, Sungai Nibong, 11900 Penang, Malaysia at least 48 hours before the time for holding the Meeting or any adjournments thereof.
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