Part B � Explanatory Notes Pursuant to Appendix 9B of the

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Part B � Explanatory Notes Pursuant to Appendix 9B of the Powered By Docstoc
					MEMS TECHNOLOGY BERHAD (“MEMSTECH” OR “COMPANY”)
(Company No.: 531948-K)
(Incorporated in Malaysia)



Part A - Explanatory Notes Pursuant to MASB 26

1. Basis of Preparation

    The interim financial report is unaudited and is prepared in accordance with
    Malaysian Accounting Standards Board Standard No. 26 “Interim Financial
    Reporting” and Appendix 7A of the Listing Requirements of Bursa Malaysia
    Securities Berhad (“Bursa Securities”) for the MESDAQ Market and should be
    read in conjunction with the audited consolidated financial statements of
    MEMSTECH and its subsidiaries (“the Group”) for the year ended 31st July
    2004.

    The accounting policies and presentation adopted for this interim financial report
    are consistent with those adopted for the annual financial statements for the year
    ended 31st July 2004.

2. Auditors’ Report on Preceding Annual Financial Statements

    The audit report of the preceding annual financial statements was not subject to
    any qualification.

3. Comments About Seasonal or Cyclical Factors

    The micro electro-mechanical systems (“MEMS”) industry is still in its early
    stages of growth and hence it is not expected to be materially influenced by any
    seasonal or cyclical factors.

4. Unusual Items Due to Their Nature, Size or Incidence

    There were no unusual items during the quarter under review.

5. Changes in Estimates

    There were no changes in estimates during the quarter under review.

6. Debt and Equity Securities

    There were no issuance and repayment of debt and equity securities, share buy-
    back, share cancellations, shares held as treasury shares and resale of treasury
    shares during the quarter under review other than the issue of 866,250 ordinary
    shares of RM0.10 each at an issue price of RM0.62 per share pursuant to the
    exercise of options granted under the MEMS Technology Berhad Employee Share
    Option Scheme.

7. Dividends Paid

    There were no dividends paid during the quarter under review.



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MEMS TECHNOLOGY BERHAD (“MEMSTECH” OR “COMPANY”)
(Company No.: 531948-K)
(Incorporated in Malaysia)



8. Segmental Information

    Three (3) months ended 31st October 2004

    The revenue and results below are presented net of inter-segment elimination.

     Analysis by                      Malaysia        Singapore              Group
     Geographical Location            RM ‘000          RM ‘000              RM ‘000

     Revenue                              -             12,037               12,037
     Profit from operations             (131)            3,113                2,982
     Interest income/(finance            264              (51)                 213
     costs)
     Taxation                           (76)                -                 (76)

     Profit after taxation                                                    3,119


9. Carrying Amount of Revalued Assets

    The Company did not revalue any of its property, plant and equipment during the
    quarter under review.

10. Subsequent Events

    There were no material events between 1st November 2004 and 15th December
    2004 (being the latest practicable date not earlier than seven (7) days from the date
    of issue of this report) that have not been reflected in the interim financial
    statements.

11. Changes in the Composition of the Group

    There were no changes in the composition of the Group during the period under
    review.

12. Contingent Liabilities and Contingent Assets

    There were no contingent liabilities as at 15th December 2004 (being the latest
    practicable date not earlier than seven (7) days from the date of issue of this
    report).




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MEMS TECHNOLOGY BERHAD (“MEMSTECH” OR “COMPANY”)
(Company No.: 531948-K)
(Incorporated in Malaysia)



Part B
Explanatory Notes Pursuant to Appendix 7A of the Listing Requirements of
Bursa Securities for the MESDAQ Market

13. Performance review

    The Group generated revenue of RM12.04 million, an increase of 12.16% from
    the previous quarter of RM10.73 million, attributable to higher sales of pressure
    sensors and service income from its design, engineering and services work.
    Resulting from the higher revenue, the profit before tax of the Group for this
    reporting quarter has also increased in tandem by approximately 35.04% from
    RM2.37 million in the previous quarter to RM3.20 million in this reporting
    quarter.

14. Comment on Material changes in Profit before Taxation

    There were no material changes in profit before taxation for the quarter under
    review other than those as disclosed in Note 13 above.

15. Commentary on Prospects

    The Group has successfully developed the 2g dual axis accelerometers, integrated
    pressure sensors and silicon microphone for consumer electronic applications.
    These products are in the final stages of qualification by various potential
    customers and we expect volume commercial production to commence in the third
    quarter of the current financial year. In addition, the Group has also successfully
    developed pressure sensors for the automotive industry and is expecting to
    commence commercial production in the final quarter of the current financial year.

    Based on the above, barring any unforeseen circumstances, the Group is expected
    to achieve a better performance in the current financial year.

16. Profit Forecast and Profit Guarantee

    The Company did not issue any profit forecast or profit guarantee in any public
    document for the quarter under review.




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MEMS TECHNOLOGY BERHAD (“MEMSTECH” OR “COMPANY”)
(Company No.: 531948-K)
(Incorporated in Malaysia)



17. Taxation

                                       Current Quarter               Year to Date
                                       31st October 2004           31st October 2004
                                            RM ‘000                     RM ‘000
     Current year’s taxation                    76                          76


    The taxation charge for the current year is in respect of interest income earned by
    the Company. The subsidiaries are not subject to taxation as SensFab Pte Ltd was
    accorded Pioneer Status by the Singapore Government, whereby it will enjoy tax
    relief during the pioneer period, whereas, SenzPak Pte Ltd has available tax losses
    brought forward from previous years. SenzPak (M) Sdn Bhd is currently dormant.

18. Sale of Unquoted Investments and Properties

    There were no sale of unquoted investments and properties during the quarter
    under review.

19. Quoted Securities

    The Company did not have any investment in quoted securities as at the date of
    this report.

20. Corporate Proposals

    (i)     On 28 September 2004, the Company announced the intention to
            implement a proposed bonus issue of up to 325,721,500 new ordinary
            shares of RM0.10 each in MEMSTECH (“MEMSTECH Shares”) to be
            credited as fully paid-up on the basis of one (1) new MEMSTECH Share
            for every one (1) existing MEMSTECH Share held at a date to be
            determined (“Proposed Bonus Issue”). In conjunction with the Proposed
            Bonus Issue, the Company also proposed to increase its authorised share
            capital from RM50 million, comprising 500,000,000 MEMSTECH Shares
            to RM100 million, comprising 1,000,000,000 MEMSTECH Shares. The
            Proposed Bonus Issue and increase in authorized share capital are subject
            to the approval of the shareholders of the Company at the forthcoming
            general meeting to be held on 6th January 2005.

    (ii)    On 21 October 2004, Senzpak (M) Sdn Bhd entered into a sale and
            purchase agreement with Pembinaan Eastern Aluminium Sdn Bhd for the
            purchase of a parcel of land cum factory held under HS(D) No. 238764,
            PTD 43005, Mukim Senai-Kulai, District of Johor Bahru, Johor Darul
            Takzim for a cash consideration of RM3.45 million. The acquisition of the
            said land was completed on 30 November 2004.




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MEMS TECHNOLOGY BERHAD (“MEMSTECH” OR “COMPANY”)
(Company No.: 531948-K)
(Incorporated in Malaysia)



21. Status of Utilisation of Listing Proceeds

    The Company raised RM49.830 million during its Initial Public Offering exercise
    in August 2004 and the details of the utilisation of proceeds up to 31st October
    2004 are as follows:

                                                    Proposed       Actual
             Description                           Utilisation Utilisation    Balance
                                                     RM’000      RM’000       RM’000
    (i)      Capital Expenditure                       29,685          345     29,340
    (ii)     Working Capital                           10,997                 10,997*
    (iii)    Relocation Expenses                        1,770             -     1,770
    (iv)     Research and development
             expenditure                                 4,678        1,162     3,516
    (v)      Estimated listing expenses                  2,700        2,737     (37)*

             Total                                     49,830         4,244    45,586
    Note:
*           The excess expense is adjusted against working capital.

22. Group Borrowings and Debt Securities

    The Group’s interest-bearing borrowings as at 31st October 2004 are as follows:
                                                                                  RM’000
    Current
    Term loans (secured)                                                              1,115

    Non-Current
    Term loans (secured)                                                              3,769

    The term loans are denominated in United States Dollars (“USD”). The above
    balances have been computed based on exchange rates of USD1 : SGD1.6626 and
    SGD1 : RM2.23 as at 31st October 2004.

23. Off Balance Sheet Financial Instruments

    There were no off balance sheet financial instruments as at the date of this report.

24. Changes in Material Litigation

    As at 15th December 2004 (being the latest practicable date not earlier than seven
    (7) days from the date of issue of this report), neither the Company nor its
    subsidiaries are engaged in any material litigation either as plaintiff or defendant
    and the Directors of MEMSTECH do not have any knowledge of any proceedings
    pending or threatened against the Group which might materially and adversely
    affect the financial position or business of the Group.
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MEMS TECHNOLOGY BERHAD (“MEMSTECH” OR “COMPANY”)
(Company No.: 531948-K)
(Incorporated in Malaysia)



25. Dividend Payable
    No interim dividend has been declared or paid.

26. Earnings per Share
    The earnings per share were calculated by dividing the Company’s profit after
    taxation and minority interest by the weighted average number of ordinary shares
    in the respective period as follows:
                                   Current Year Quarter         Current Year To Date

     Profit after tax (RM’000)                       3,119                        3,119

     Basic Earnings                            321,830,552                 321,830,552

     Diluted Earnings                          328,959,738                 328,959,738




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