Beyond Basics - listed companyinnotek.listedcompany.com/misc/ar2004.pdf · 2008-06-04 · Thailand, this acquisition will enable us to capitalize on other opportunities in Thailand

Magnecomp International Limitedannual report 2004

Beyondthe

Basics

Magnecomp International Limited, headquartered in Singapore, is a leading international manufacturer of hard disk suspension assemblies and precision stamped metal components.

With the recent merger of the Magnecomp’s data storage division with K.R. Precision pcl, a public corporation listed in Thailand, Magnecomp is well poised for greater market penetration into the consumer electronics sector.

Hard Disk Drive (“HDD”) Supension Assembly

Suspension assemblies are the critical components that hold read/write heads above the spinning disks in disk drives. With our hard disk drive suspension assemblies, disk drive manufacturers produce quality drives for countless data storage needs.

Office Automation and Consumer Electronics Components (“OACE”)

Precision stamped components and sub-assemblies are used in some of the most technically advanced devices available today. Our adherence to quality and commitment to excellence mean these devices perform reliably all day, every day.

Financial Highlights

2000 2001 2002 2003 2004

For The Year (S$ in thousands)

Turnover 165,848 201,401 214,703 329,200 379,181Operating Profit 11,148 (4,855) (17,278) 32,040 27,048 Profit Before Tax 12,626 (6,452) (16,847) 32,167 26,923 Profit After Tax & Minority Interests Attributable to Members of the Co. 10,941 (3,291) (20,376) 25,431 19,993

At Year End (S$ in thousands)Shareholders’ Equity 114,930 115,998 90,532 141,026 153,874Fixed Assets (Net) 85,797 111,816 114,836 116,777 136,216

Per Share (Singapore cents)Profit After Tax & Minority Interests 5.4 (1.6) (10.1) 12.2 8.6Net Tangible Assets 57.1 54.5 41.6 58.8 64.6

RatiosOperating Profit % 6.7% (2.4%) (8.0%) 9.7% 7.1%Profit Before Tax % 7.6% (3.2%) (7.8%) 9.8% 7.1%Profit After Tax % 6.6% (1.6%) (9.5%) 7.8% 5.3%Current Ratio 1.9 1.5 0.9 1.4 1.5

Group Turnover (S$’million)

’00 ’01 ’02 ’03 ’04

166

201215

329

379

Group Profit After Tax (S$’million)

’00 ’01 ’02 ’03 ’04

11

(3)

25

20

Net Tangible AssetsPer Share (Singapore cents)

’00 ’01 ’02 ’03 ’04

57.154.5

41.6

58.8

64.6

(20)

Table of Contents• Financial Highlights • 02. 2004 Year in Review • 10. Corporate Structure • 12. Board Of Directors

• 14. Key Executive Management • 15. Magnecomp Locations • 16. Corporate Information

• 17. Corporate Governance Report • 27. Financial Contents

With solid business principles and

a consistent and sustainable business strategy,

Magnecomp International is ideally positioned to

deliver on its commitments to investors, customers

and personnel.

Magnecomp International Limited annual report 2004

02

2004 Year In Review

Magnecomp continues to strengthen its position for the Data Storage (“DS”) and Office Automation and Consumer Electronics (“OACE”) divisions. Overall, both divisions registered higher year-on-year sales.

The year 2004 was one of continued growth for Magnecomp despite a challenging operating landscape. We significantly strengthened our position as a global leader in the production of hard disk drive suspension assemblies through our landmark merger with former rival, K.R. Precision Public Company Limited (“KRP”) of Thailand.

GROUP PERFORMANCE

After a year of record performance in 2003, Magnecomp continued to post very strong results for the year ended 31 December 2004 for both the Data Storage and Office Automation and Consumer Electronics operating divisions. Against the backdrop of a difficult first half, particularly in the global hard disk drive industry, what the team has achieved in 2004 is indeed commendable.

With record-high revenues of $379.2 million, the Group achieved net profits attributable to shareholders of $20.0 million in 2004. This strong revenue performance was propelled by stronger demand in the second half of 2004 for products of both our divisions. Overall, both divisions registered higher year-on-year sales.

Beyond our financial performance, we strengthened the capabilities of our Group in 2004. We added new facilities to support the growth of the Office Automation and Consumer Electronics Division and entered into technology purchase and cross-licensing agreements with leading hard disk drive-related companies to enhance the product portfolio of our Data Storage Division.

More significantly, on 22 November 2004 we announced the merger of our Data


03

2004 Year In Review

Storage Division with KRP. Magnecomp now holds an 81.4% stake in KRP which has been renamed Magnecomp Precision Technology Public Company Limited (“MPT”) to better reflect the new entity. MPT continues to be listed on the Stock Exchange of Thailand.

Your approval of the transaction has paved the way for the creation of a world-class suspension assembly supplier with an enlarged manufacturing capacity and improved R&D capability. This will enable our Data Storage Division to expand production volume and strengthen our leadership especially in small form-factor hard disk drive products for handheld consumer electronics applications. It will also provide a larger customer base and product mix, contributing to higher revenue. In the coming years we expect to reap strong returns from this strategic acquisition and expansion of facilities.

DATA STORAGE

COMPONENTS DIVISION

The Data Storage Division closed 2004 with $227.5 million in sales, up from $210.9 million in 2003, on a record 183 million suspensions shipped. Net profit from this division was $13.1 million in 2004 compared to the $15.5 million achieved in 2003, after excluding a $3.5 million gain on disposal of a US property by the Division in 2003.

Despite the record revenues and unit shipments, sales and shipment figures for the first half of 2004 were impacted by the industry-wide oversupply situation leading to price erosion during the first six months. Demand returned very strongly in the second half of 2004 and the number of suspensions shipped in the second half was 38% higher than in 2004’s first half with a corresponding increase in revenue.

Beginning in early 2004, we expended considerable efforts working closely with our major customers to address competitive industry conditions. These efforts not only improved our business relationships but also led to increased shipments for the Data Storage Division. Our leadership in the 1-inch suspensions for the handheld/mobile hard disk drive segment was also bolstered with the ramp-up of production by new 1-inch suspension customers. The last quarter of 2004 saw record performance with operations running at near maximum capacity and record-high shipments of 59.4 million suspension units. The final quarter of 2004 also saw the launch of next-generation 120 Gigabyte/Disk 3.5-inch desktop hard disk drive programs.

We have also increased our portfolio of hard disk drive technologies through acquisitions and cross-licensing agreements. In January 2004 we entered into a cross-licensing agreement with NHK Spring of Japan to allow each company to use worldwide intellectual property covered by the other’s patents. In April we acquired the GTRiM technology and assets of Fujitsu and Fujitsu Interconnect, allowing us to be the first integrated suspension manufacturer in the world with a captive additive circuit supply.

We believe that access to, and ownership of, these technologies will enable Magnecomp to offer more value-added services and products to our customers and strategic partners, as smaller and higher performance hard disk drives become increasingly prevalent.

Through the KRP merger, we have added a strategic manufacturing presence in Thailand which is emerging as a regional hub for hard disk drive manufacturing. While complementing our existing

hard disk drive operations in China and Thailand, this acquisition will enable us to capitalize on other opportunities in Thailand.

OFFICE AUTOMATION AND

CONSUMER ELECTRONICS

COMPONENTS DIVISION

Our Office Automation and Consumer Electronics Division finished 2004 with a 28% rise in turnover to $151.6 million from $118.3 million the year before. All three business units – metal stamping, tooling and assembly – experienced growth with higher demand for products. Net profit contributed by this Division rose by $1.3 million or 25% to $6.4 million in 2004 from $5.1 million in 2003. This improved performance was the result of efforts which strengthened the Division’s production capabilities earlier in the year. We added new facilities in Suzhou and Dongguan, China, at the beginning of the year to improve our overall capacity. I am proud to report that despite start-up losses this Division has performed well and our operations in Suzhou broke even in December.

Our assembly business experienced the fastest growth in turnover in this Division, rising 57% to $33.3 million in 2004 from $21.2 million the previous year. This increase is due primarily to the increasing demand for assembled TV stands from several Japanese OEM customers.

Although margins in our metal stamping business continued to be affected by increased material costs, this business unit saw annual turnover increase 25% on continued demand for higher-tonnage stamped components. The metal stamping business continues to contribute 70% of our Division’s turnover.

With new equipment and devices constantly being introduced to the market, Magnecomp will continue to offer high-value products and services to partners, investors and customers — enriching lives with technology.

Hard Disk Drive (“HDD”) Suspension Assembly

Office Automation and Consumer Electronics Components (“OACE”)

Notebook Computer Display Hinges

CE Computer Brackets

Progressive Die

Plasma TV Stand


The tooling business maintained its turnover at $12.2 million in 2004. This unit has seen increased interest from the automotive and electrical appliance sectors with increasing demand for larger dies to meet the needs of customers.

OUTLOOK

In 2005 we are focusing on integrating and consolidating our acquisitions and facilities to generate better returns for our shareholders.

For Magnecomp Precision Technology, hard disk drive demand is expected to grow as more applications continue to be developed and introduced to the market. We see growth, particularly in consumer electronics, mobile and handheld applications, such as digital cameras, MP3 players, mobile phones, personal digital assistants and personal/digital video recorders.

DS Division Factories:

1. MPT (formerly KRP) Wangnoi - Suspension, etching and stamping

2. Magnecomp Dongguan - Suspension

3. Magnecomp Rojana Thailand - Suspension

4. Optimal Technology, Chang An, China - Suspension

5. Magnecomp Corporation, Temecula Ca USA, R&D

OACE Division Factories:

6. TangXia Stamping Factory

7. Feng Chuan Tooling Factory

8. Dongguan Mansfield Stamping Factory

9. Mansfield Suzhou Manufacturing Factory

1 2 3

4 5 6

7 8 9

Currently, we are in volume production of suspension assemblies for 3.5-inch, 2.5-inch and 1-inch hard disk drives and are the sole supplier to three out of four 1-inch hard disk drive manufacturers today. We have further extended our leadership in micro drives and will soon be shipping 1-inch hard disk drive suspension assemblies to new customers. At the same time, we are developing the 0.85-inch handheld/ mobile suspension assemblies to add to our small form factor portfolio. According to Trend Focus and Gartner, this segment of small form factor mobile drives is forecast to grow at an annual rate of more than 91% between 2003 and 2007.

So far in the first quarter of 2005, a seasonally weak quarter, we are already seeing strong demand for suspension assemblies. We believe that unit shipments for the quarter will hit a record-high of over 60 million units, compared with 38 million units shipped during the same period last year. This

06

2004 Year In Review


07

Our DS division saw operations running at

near maximum capacity during the last quarter of 2004, with a record 59.4 million suspension units

shipped. We also increased the portfolio of HDD

technologies that we offer.


08

2004 Year In Review

ROBERT SEBASTIAAN LETTENon-Executive Chairman and Independent Director

STEVEN GLENN CAMPBELLChief Executive Officer

29 March 2005

increase in units shipped, combined with the richer mix of new products, should allow us to improve our performance over last year.

Net profit for the Data Storage Division in the first half of 2005, however, is expected to be affected by the integration with KRP. We are on schedule to complete this integration in June 2005. Due to low factory utilization, and despite existing orders and new customers, the KRP portion of our business is still operating at a loss. We expect profitability of the combined MPT to improve in the second half of 2005 as the overall increase in volume is distributed across the combined infrastructure.

We believe that strong demand from both local and overseas customers will continue into 2005 and propel the Office Automation and Consumer Electronics Division to increased utilization of our new plants in China. We have embarked on significant efforts for aggressive utilization of our operations in both Suzhou and Dongguan.

The expansion of our plant in Suzhou to 300,000 square feet provide us with the ability to integrate tooling, stamping, surface treatment and assembly services under one roof. We have also increased our existing stamping facilities by 80,000 square feet. At Yien Tien, Dongguan, we have also added a new plant of 200,000 square feet for the tooling business. This facility commences operation in late March 2005.

These new and expanded facilities will enable us to enlarge our base of customers and make further inroads into the automotive, telecom and consumer electronics industries. We have already seen our Suzhou operations securenew customers for the automotive

components and consumer electronics components manufacturing businessesof the Group.

Equipment-wise, for both the stamping and tooling facilities, we have more than 400 presses in production, ranging from 25 tons to 400 tons, to cater to the customized products of our clients. During the year the Division added eight plastic injection molding machines to further integrate the assembly operations. Together with the wide and varied products and services that the Division is providing, the Group anticipates an exciting year ahead with positive contributions coming from its existing businesses as well as new products.

NEW CHAIRMAN

This year the Board of Directors welcomed Mr Robert Sebastiaan Lette as our non-executive Chairman and Independent Director. Mr Lette is no stranger to our business and has been an independent, non-executive Director of Magnecomp International Limited since 16 May 2002. A former banker with Credit Suisse Singapore, MeesPierson Asia Ltd and Dresdner South East Asia Ltd, Robert has wide experience in the banking industry.

We look forward to Mr Lette’s on-going guidance and leadership.

APPRECIATION

During the first quarter of the year we saw the resignation of Mr Bryan C. Burkhart as a non-executive Director and welcomed Prof Low Teck Seng as a member of the Board.

To Bryan, we thank him for his candid and refreshing ideas during his tenure on the Board.

We would like to express our gratitude to our customers, suppliers, business associates, fellow management and staff who have made 2004 a rewarding year.

On behalf of the Board and management, we would like to thank the dedicated staff from both Divisions for their efforts during the year. Their hard work has allowed us to make 2004 a year of continued growth and provided us with readiness for future opportunities. Last, but not least, we wish to thank our fellow Board members for the value and expertise they have imparted and for their continued service to our shareholders.


09

All three business units — metal stamping, tooling

and assembly — of the OACE division experienced healthy growth. Turnover of the division rose by 28% to

$151.6 million.


Key

* Holding Company** In the process of de-registration

Magnecomp International Limited

10

Corporate Structure

KR Precision, Inc.(USA)

Magnecomp (Thailand) Ltd

Indest Corporation* (USA)

Magnecomp Technology Ltd (Hong Kong)

Acrathon Precision Technologies (Hong Kong) Ltd

Optimal Technology Ltd (Hong Kong)

Magnecomp Flexture Ltd** (Hong Kong)

KR Precision, Inc.* (Labuan)

Magnecomp Precision Technology Public Company Limited

100%

100%

100%

100%

100%

100%

100%

The above Group structure is reflected as at 29 March 2005. Dormant companies and acquisitions / disposals after this date have been excluded.

81.39%

100%

Magnecomp Corporation(USA)

100%


Mansfield ManufacturingCompany Limited

Magix Mechatronics Co. Ltd(Hong Kong)

Lens Tool & Die (H.K.) Limited(Hong Kong)

Go Smart Development Limited(Hong Kong)

ME Electronic Products Limited(Hong Kong)

Mansfield (Suzhou) Manufacturing Co. Ltd(PRC)

Feng Chuan Tooling Co. Ltd(Hong Kong)

Dongguan Mansfield Metal Forming Ltd (PRC)

Magix Mechatronics (Dongguan) Co. Ltd

11

Corporate Structure

Feng Chuan Tooling (Dongguan) Co. Ltd (PRC)

83.33%

77.5%

100%

100%

100%

100%

100%

100%

100%

100%


23

45

committee and was also a member of the China committee of the Institute of Certified Public Accountants of Singapore. He holds a Master of Business Administration degree from the International Management Centre, United Kingdom.

3. Albert Ong Kim Guan is a non-independent, Executive Director and President of the Data Storage Components Division of Magnecomp International Limited. He was appointed to the Board on February 18, 2002. Mr Ong has more than 19 years of data storage experience. He spent the initial years of his career at one of the world’s leading manufacturers of hard disk drives in various management positions both in Asia and the United States rising from engineer to senior director. Mr Ong received his

Bachelor degree in Electrical Engineering from the University of Western Australia and holds a post-graduate diploma in Business Administration and one patent in the area of Optical Storage.

4. To Wai Hung is a non-independent, Executive Director and President of the Office Automation and Consumer Electronics Components Division of Magnecomp International Limited. Mr To was appointed to the Board on February 18, 2002. He is the co-founder of Mansfield Manufacturing, a subsidiary of Magnecomp International, and has more than 30 years of experience in the metal stamping and tool making industries. Mr To is the Honorary Fellow of the Professional Validation Council of Hong Kong Industries and actively engaged in the

12

Board of Directors

1. Steven Glenn Campbell is a non-independent, Executive Director and Chief Executive Officer of Magnecomp International Limited. He joined Magnecomp on July 26, 2002 and is currently based in Singapore. Prior to joining Magnecomp, he served two years as Senior Vice President of Engineering for DataPlay Corporation. Prior to DataPlay, Mr Campbell was General Manager of the Desktop Solutions Line of Business for Western Digital Corporation and also held several other executive positions at WD including Senior VP of Engineering, VP of New Product Introduction and Chief Quality Officer. Mr Campbell has over 25 years of experience in the electronics and disk drive industries, including more than 22 years in the data storage industry. His experience also includes managerial and engineering positions with Quantum Corporation, Honeywell Corporation and Hewlett-Packard Corporation. Mr Campbell also currently serves as CEO of Magnecomp Precision Technology Public Company Limited, Thailand, Managing Director of Multitech Systems Inc. and Director of Nano Precision Products, Inc. He holds three U.S. patents in the area of magnetic storage and received his Bachelor degree in Mechanical Engineering from the University of Arizona.

2. Yong Kok Hoon is a non-independent, Executive Director and Chief Financial Officer of Magnecomp International Limited. He was appointed to the Board on February 18, 2002. Mr Yong is a Certified Public Accountant and is a Fellow of the Association of Chartered Certified Accountants. Prior to joining the Group, he was the Group Financial Controller of QAF Group and was a partner in an international accounting firm. Mr Yong started his accounting career with KPMG and subsequently spent more than ten years in Ernst & Young specializing in auditing and advisory services for companies in various industries ranging from medium size enterprises to large MNCs, Big-Cap listed companies and conglomerates. He also acted as reporting accountant for multi-million dollar IPOs and M&A transactions. He was a member of the financial statements review


1

6

7

8

industries. Currently, he also serves as the Chairman of The Hong Kong Mould and Die Council, a board member of The Metal Training Board of Vocational Training Council in Hong Kong, and Vice Chairman of The Hong Kong Metals Manufacturers Association and Suzhou Mould and Die Association.

5. Dr Ong Chit Chung is an independent, non-executive Director of the Company since December 10, 1997, and is the Chairman of the Audit Committee. Dr Ong has experience in both the public and private sectors, having worked in several government ministries and held directorships in companies engaged in the property, construction, engineering, hospitality and food industries. Amongst his previous appointments, he was President of China Development Corporation Limited and

Deputy Group Managing Director of QAF Limited. He is presently the Chairman of TEE International Limited. Dr Ong holds a Ph.D. in International History from the London School of Economics of the University of London, a Master of Arts degree in Military History from the Duke University of the United States of America and a Bachelor of Arts (1st Class Honours) degree in History from the University of Singapore. Dr Ong is also a Member of Parliament for the Jurong GRC.

6. Leong Swee Sum has served as an independent, non-executive Director of Magnecomp International Limited since September 20, 1999. He is a Director of Allied Telesis K.K., Japan, and has served as Managing Director and current Chairman of Allied

Telesyn International (Asia) Pte Ltd, Singapore. He also serves as a director of several other companies. Mr Leong has a Bachelor’s degree from the University of London and is an associate member of the Institute of Electrical Engineers.

7. Robert Sebastiaan Lette is an independent, non-executive Director of Magnecomp International Limited since May 16, 2002. Mr Lette was appointed Chairman of the Board on November 12, 2004. A former banker with Credit Suisse Singapore, MeesPierson Asia Ltd and Dresdner South East Asia Ltd, Mr Lette is currently an executive vice president of Clariden Bank of Zurich, Switzerland. Mr Lette is an Alternate Director of Asia Pacific Breweries Ltd., Singapore. Apart from that, he is also a non-executive director of Heineken Beverages Switzerland, A.G.

8. Professor Low Teck Seng is an independent, non-executive Director of Magnecomp International Limited appointed on March 5, 2004. Prof Low is the Principal and CEO of Republic Polytechnic, Singapore. He graduated with a Bachelor of Science (1st Class) and Ph.D, in 1978 and 1982 from Southampton University, United Kingdom. Prof Low joined NUS in 1983 and founded the Magnetics Technology Centre in 1992. In 1998, he returned to NUS as Dean of the Faculty of Engineering. Prof Low is a Fellow of the Institute of Electrical and Electronics Engineers in 2002 and 2003. He is actively involved in research and his technical interests are in computational electromagnetics, nanomagnetics and data storage technologies. Prof Low sits on the boards of several companies as well as the Health Sciences Authority and chairs Singapore’s A*STAR’s (Agency for Science, Technology and Research) TSRP (Thematic Strategic Research Programmes) and the DSI’s Industry Advisory Committee.

13

Board of Directors


Albert Ong Kim Guan is a non-independent, Executive Director and President of the Data Storage Components Division of Magnecomp International Limited. He was appointed to the Board on February 18, 2002. Mr Ong has more than 19 years of data storage experience. He spent the initial years of his career at one of the world’s leading manufacturers of hard disk drives in various management positions both in Asia and the United States rising from engineer to senior director. Mr Ong received his Bachelor degree in Electrical Engineering from the University of Western Australia and holds a post-graduate diploma in Business Administration and one patent in the area of Optical Storage.

To Wai Hung is a non-independent, Executive Director and President of the Office Automation and Consumer Electronics Components Division of Magnecomp International Limited. Mr To was appointed to the Board on February 18, 2002. He is the co-founder of Mansfield Manufacturing, a subsidiary of Magnecomp International, and has more than 30 years of experience in the metal stamping and tool making industries. Mr To is the Honorary Fellow of the Professional Validation Council of Hong Kong Industries and actively engaged in the industries. Currently, he also serves as the Chairman of The Hong Kong Mould and Die Council, a board member of The Metal Training Board of Vocational Training Council in Hong Kong, and Vice Chairman of The Hong Kong Metals Manufacturers Association and Suzhou Mould and Die Association.

14

Key Executive Management

Thiti Makarabhiromya joined Magnecomp (Thailand) in July 2000 as its Managing Director and is currently the Vice President, Operations, overall in charge of the Asian Operations for the Data Storage Components Division. Apart from his responsibility in the manufacturing operations, Thiti is also responsible for the overall operational and financial performance of the plants in China and Thailand. Prior to joining Magnecomp, Thiti was the Vice President of Measurex Thailand. He worked with Seagate Technology (Thailand) for almost ten years holding various senior positions from Engineer to Executive Director of Materials. Thiti holds a Bachelor of Science degree and a Master of Science degree in Electro-Mechanical Engineering from California State University, U.S.A.

Steven Misuta is the Vice President of Engineering in Magnecomp Corporation, Temecula, U.S.A. Mr Misuta joined Magnecomp in January 2003. He reports to the President, Data Storage Components Division, and is responsible for new product and process development. Steve has more than 20 years of experience in the data storage industry including design and manufacturing of hard disk, tape and optical storage products. Prior to joining Magnecomp, Steve held senior management positions in engineering and operations at Seagate Technology, Western Digital Corporation, and DataPlay Inc. In addition, he held engineering positions in research and development at Digital Equipment Corporation and Laser Magnetic Storage International. Mr Misuta holds Bachelor of Science and Master of Science degrees in Mechnical Engineering from Columbia University, U.S.A. He currently serves as a director and member of the Executive Committee of INSIC, the Information Storage Industry Consortium.

Stanney Kwok Ip Keung joined Mansfield Manufacturing Co Ltd, the OACE Division of Magnecomp, in June 2002 as Vice President of Finance. He is currently holding the position of Vice President, Operations, responsible for the strategic business plans of the Division. He reports directly to the President of the OACE Division. Prior to joining Mansfield, Mr Kwok held various positions over the course of 13 years in Magnecomp Technology. He is a member of the Association of Chartered Certified Accountants and The Hong Kong Institute of Certified Public Society of Accountants. He holds a post-graduate diploma in Risk Management from the University of Hong Kong.

Xia Lurong Lawrence joined Mansfield in May 1999 and is currently the Vice President of Sales & Marketing and Stamping Operations of Mansfield. Prior to joining Mansfield, he has management and marketing experience in a Japanese company dealing with machinery and equipment, and management experience in international trading and investment fields in Hong Kong and mainland China for more than 10 years. Lawrence holds a Bachelor of Science degree in Industrial Engineering Management from Shanghai Jiaotong University in China and a Diploma in Business Studies from the Auckland Institute of Technology in New Zealand.


Magnecomp International Limited1 Finlayson Green #15-02Singapore 049246Tel: (65) 6535-0689Fax: (65) 6533-2680

Magnecomp Corporation26201 Ynez Road, Suite 103Temecula, CA 92591Tel: (951) 296-3582Fax: (951) 296-3592

1851 Lake Drive West, Suite 150Chanhassen, MN 55317Tel: (952) 448-6490Fax: (952) 448-3957

Magnecomp Technology LimitedSuites 1701-5 & 1217th Floor, Tower 1, The Gateway25 Canton Road, Tsim Sha TsuiKowloon, Hong KongTel: (852) 2795-5238Fax: (852) 2795-3291

Winnerway Industrial Area, Nan Cheng DistrictDongguan City, Guangdong Province, P.R.C. 523087Tel: (86-769) 242-8726Fax: (86-769) 242-8729

Optimal Technology LimitedSuite 1701-517th Floor, Tower 1, The Gateway25 Canton Road, Tsim Sha TsuiKowloon, Hong KongTel: (852) 2756-7336Fax: (852) 2756-3073

Unit B1, AnLi Science & TechnologyCompoundShang Sha Section, Zhen An RoadChangan Town, Dongguan City,Guangdong Province, P.R.C.Tel: (86-769) 532-9456Fax: (86-769) 538-6234

Magnecomp (Thailand) Limited1/25 Moo 5, Rojana Industrial ParkT.Karnharm, Amphoe U-ThaiAyutthaya, 13210 ThailandTel: (66-35) 226-560Fax: (66-35) 330-201

15

Magnecomp Locations

Magnecomp Precision Technology Public Company Limited162 Moo 5 Phaholyothin Rd.,T.Lamsai, A. Wangnoi,Ayutthaya 13170 ThailandTel: (66-35) 215-225Fax: (66-35) 215-345

Acrathon Precision Technologies(HK) LimitedSuite 1701-5, 17th FloorTower 1, The Gateway25 Canton Road,Tsim Sha Tsui Kowloon, Hong KongTel: (852) 2764-3862Fax: (852) 2764-5082

Xiao Bian Industrial AreaChangan TownDongguan City, Guangdong Province, P.R.C.Tel: (86-769) 531-2169Fax: (86-769) 553-1477

KR Precision Inc.4620 West 77th StSuite 230, Edina,Minnessota 55435 USATel: (952)-830-1278Fax: (952)-830-1298

KR Precision Inc.Level 7(E), Main Office TowerFinancial Park Labuan,Jalan Merdeka, 8700 F.T. Labuan, MalaysiaTel: (087)-443-118, 443-188Fax: (087)-441-288

Mansfield ManufacturingCompany Limited1/F Che Wah Industrial Building1-7 Kin Hong StreetKwai Chung, N.T.Hong KongTel: (852) 2489-1968Fax: (852) 2481-0946

Dongguan Tangxia LincunSun Mansfield PlantXin Yang Road,New Sun Industrial CityLincun, TangxiaDongguan, GuangdongChina 523711Tel: (86-769) 792-9299Fax: (86-769) 792-8993

Dongguan Mansfield MetalForming LimitedNo. 18, New Asia Industrial Zone, Lincun,Tangxia, Dongguan, Guangdong,China 523711Tel: (86-769) 793-3602Fax: (86-769) 793-3609

Mansfield (Suzhou) ManufacturingCompany Limited79 Lu Shan Road, Feng Qiao Industrial ParkSuzhou New District, Suzhou Jiangsu,China 215129Tel: (86-512) 6661-7083Fax: (86-512) 6661-7760

Feng Chuan ToolingCompany Limited1/F Che Wah Industrial Building1-7 Kin Hong StreetKwai Chung, N.T.Hong KongTel: (852) 2489-1968Fax: (852) 2481-0946

Feng Chuan Tooling(Dongguan) Company Limited55 Xiang Xin East RoadYantian, Fenggang TownDongguan City,Guangdong ProvinceChina 523700Tel: (86-769) 751-3998Fax: (86-769) 751-2008

Magix MechatronicsCompany Limited1/F Che Wah Industrial Building1-7 Kin Hong StreetKwai Chung, N.T.Hong KongTel: (852) 2427-2218Fax: (852) 2427-2696

Magix Mechatronics(Dongguan) Co., Ltd.Yian Tian, Feng GangDongguan, GuangdongChina 523698Tel: (86-769) 777-1571Fax: (86-769) 777-1572


16

Corporate Information

Directors

Robert Sebastiaan Lette

Steven Glenn Campbell

Yong Kok Hoon

Albert Ong Kim Guan

To Wai Hung

Dr Ong Chit Chung

Leong Swee Sum

Prof Low Teck Seng

Audit Committee

Dr Ong Chit Chung (Chairman)

Leong Swee Sum

Prof Low Teck Seng

Remuneration Committee /

Share Option Plan Committee

Leong Swee Sum (Chairman)


Dr Ong Chit Chung

Robert Sebastiaan Lette

Nominating Committee

Prof Low Teck Seng

Leong Swee Sum


Secretaries

Linda Sim Hwee Ai

Susie Low Geok Eng

Registrar And Share

Transfer Agent

Lim Associates (Pte) Ltd

10 Collyer Quay

#19-08 Ocean Building

Singapore 049315

Auditors

Ernst & Young

10 Collyer Quay

#21-01 Ocean Building

Singapore 049315

Partner-in-charge: Daniel Soh

(From 2002)

Principal Bankers

The Hongkong and Shanghai Banking Corporation

United Overseas Bank

Bank of China

Maybank

DBS Bank

KBC Bank N.V.

Registered Address

1 Finlayson Green #15-02

Singapore 049246

Tel: (65) 6535-0689

Fax: (65) 6533-2680

Website: www.magnecomp.com

17

annual report 2004

Corporate Governance Report

Name of Director Board Audit Committee Remuneration Nominating Committee Committee No. of Meetings No. of Meetings No. of Meetings No. of Meetings Held : 4 Held : 4 Held : 3 Held : 3 No. of Meetings No. of Meetings No. of Meetings No. of Meetings Attended Attended Attended Attended

Robert S. Lette 4 4 3 3

Steven G. Campbell 4 N/A 3 2

Yong Kok Hoon 4 N/A N/A N/A

Albert Ong Kim Guan 4 N/A N/A N/A

To Wai Hung 4 N/A N/A N/A

Dr. Ong Chit Chung 4 4 3 N/A

Leong Swee Sum 3 4 2 3

Prof. Low Teck Seng* 3 N/A N/A N/A

Corporate Governance Statement

The Directors and Management of Magnecomp International Limited are committed to comply with the Code of Corporate Governance (the “Code”) issued by the Corporate Governance Committee in March 2001 so as to ensure greater transparency and protection of shareholders’ interests.

Magnecomp International Limited (the “Company”) and its subsidiaries (the “Group”) have developed a set of procedures and policies to enhance the transparency and accountability to its shareholders. This statement outlines the main corporate governance practices that were in place throughout the financial year.

BOARD MATTERSPrinciple 1: Board’s Conduct of its Affairs

The principal functions of the Board are to guide the corporate strategy and directions of the Company; to ensure effective management leadership of integrity and competency and also to provide oversight in the proper conduct of the Company’s business.

The Board supervises the management of the business and affairs of the Group, reviews and approves the overall direction of the Group and establishes the strategies and financial objectives to be achieved by the Group. Board meetings are held to deliberate strategic policies of the Group including acquisitions and disposals, the annual budget, major funding of investments and divestments, review the performance of the business and approve the release of the quarterly and year-end results. The Board also reviews the adequacy of internal controls, financial reporting and compliance as well as the Group’s exposure to risks of a regulatory, legal and business nature as part of its risk management.

The Board currently holds four scheduled meetings each year. Additional meetings are held to discuss strategic business decision as and when necessary.

The attendance of the directors at meetings of the Board and other Committees during the year are as follows:-

* Prof Low Teck Seng was appointed a director on 5 March 2004

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BOARD COMPOSITION AND BALANCEPrinciple 2: Strong and independent element on the Board

The Board comprises the following members:-

1) Robert S. Lette (Chairman) (Non-Executive and Independent)2) Steven G. Campbell (CEO) (Executive)3) Yong Kok Hoon (CFO) (Executive)4) Albert Ong Kim Guan (Executive)5) To Wai Hung (Executive)6) Dr. Ong Chit Chung (Non-Executive and Independent)7) Leong Swee Sum (Non-Executive and Independent)8) Prof. Low Teck Seng (Non-Executive and Independent)

The Board comprises eight directors of whom four are executive directors and four are non-executive independent directors. The profile of the directors are found on pages 12 and 13 of this Annual Report.

The Chairman and the Chief Executive Officer are separate persons to maintain an effective oversight and a clear division of responsibilities.

The Company’s Articles of Association provide for at least one third of the directors to retire from office by rotation at each Annual General Meeting (“AGM”). The retiring directors shall be eligible for re-election at the AGM.

The current size of the Board appears appropriate to facilitate decision making in the financial year. However, as an ongoing basis, the Board has reviewed the size of the Board and proposes to reduce its number to six directors from its current number of eight directors. This is to allow the presidents of the respective divisions to concentrate and spend more time in their respective role considering the significant expansion of the Group’s Data Storage Components (“DS”) Division after the recent merger of the Group’s DS Division with K.R. Precision Public Company Limited of Thailand.

The Company has in place orientation programmes for newly appointed Directors to ensure that they are familiar with the Group structure, the Company’s business and its operations. The Company also organized overseas plants visits for the directors to familiarize them with the operations of the Group’s activities. In November 2004, a visit was organized for the directors and auditors of the Company to the China plants where the Group’s two core divisions are located.

To give effect to the discharge of its responsibilities, the Board has established an Audit Committee, a Nominating Committee and a Remuneration/ESOP Committee. All Committees are chaired by non-executive and independent directors with majority of members being independent.

As a team, the Board provides collectively core competencies in area of accounting, finance, business and management experience as well as industry knowledge.

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CHAIRMAN AND CHIEF EXECUTIVE OFFICER (the “CEO”)Principle 3: Clear division of responsibilities

Mr. Robert S. Lette who has been a director since 16 May 2002 was appointed Chairman of the Board on 12 November 2004. Mr. Lette is non-executive and independent and is not related to the CEO.

There is a clear division of responsibility between the Chairman and the CEO so as to ensure a balance of power and authority.

The Chairman bears responsibility for the workings of the Board, ensuring the integrity and effectiveness of the governance process of the Board.

The CEO, the most senior executive in the Company, has full executive responsibilities over the business directions and operational decisions of the Group. He works closely with the Board and the Presidents of the two divisions to implement the policies set by the Board to realize the vision for the Group.

BOARD MEMBERSHIP & PERFORMANCEPrinciple 4: Formal and transparent process for appointment of new directorsPrinciple 5: Formal assessment of the effectiveness of the Board and contributions of each director

The Board has in place a Nominating Committee to facilitate a formal and transparent process for appointment of directors, to assess the effectiveness of the Board as a whole and to review the re-election of directors. Members of the NC are:-

Robert S. Lette (Chairman) (until 12 November 2004)Prof. Low Teck Seng (Chairman) (from 12 November 2004)Steven G. CampbellLeong Swee Sum

The NC is charged with the responsibility of recommending appointment of new director, re-electing existing directors having regard to the director’s contribution and performance. Other responsibilities of the NC include:

1) recommend to the Board the appropriate size and needs of the Board, including annual nomination and screening for directors and nominees for appointment as new directors, having regard to their background, experience and ability to exercise independent business judgment;

2) for re-election, consider the contribution and performance of the directors, attendance and participation at meetings. If the director is on the board of other companies, the NC shall consider whether he has devoted adequate time and attention to the affairs of the Company;

3) evaluate annually the independence of the directors;

4) maintain a formal assessment process to evaluate the overall competency and effectiveness of the Board as a whole;

5) review and recommend to the Board other policies related to the board.

The NC has in place internal guidelines to address the conflict of interest as well as time commitments of directors serving on multiple boards.

The NC held three meetings during the year.


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BOARD ACCESS TO INFORMATIONPrinciple 6: Board members to have complete, adequate and timely information

To assist the Board in its discharge of duties, all directors are provided with complete, adequate and timely information prior to Board and Board Committee meetings.

All directors are updated on a monthly basis with management and financial reports and all non-executive directors are updated in between Board meetings on the status of on-going projects by the CEO and CFO.

All Board members have separate and independent access to advice and services of the Company Secretary, who is responsible to the Board for ensuring that Board procedures are followed and that applicable rules and regulations are complied with.

From time to time, the Company circulates to the directors new updates and regulations from the Singapore Exchange as well as market updates on the Company and the industry though generally the Company relies on directors to update themselves on new legislations, regulations and changing commercial risks.

Board members are aware that they, whether as a group or individually, in the furtherance of their duties, can have independent professional advice, if necessary, at the Company’s expense.

REMUNERATION MATTERSPrinciple 7: Procedures for Developing Remuneration PoliciesPrinciple 8: Level and Mix of RemunerationPrinciple 9: Disclosure on Remuneration

The Remuneration/Share Option Plan Committee (“RC”) comprises four directors, a majority of whom are independent of management and free from any business or other relationships:-

Mr Leong Swee Sum (Chairman)Mr Steven G. CampbellMr Robert LetteDr Ong Chit Chung

The RC held three meetings during the year.

The main function of the RC is to review, oversee and recommend remuneration packages and reward schemes, career development and advancements for the executive directors as well as the key management executives. The RC is also responsible for the administration of the Magnecomp Employees’ Share Option Plan of the Company.


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The RC is guided by its terms of reference that defines its scope of authority and responsibilities which are as follows:-

1) Advise the Board on compensation policy and practice, as well as best practice with regard to non-cash compensation and market trends, particularly in relation to the two core businesses of the Company;

2) Review and approve management’s recommendation of compensation for all staff, management and directors, including the allocation of share options and other equity incentives to be made at the annual review of compensation;

3) Ensure that the level of remuneration offered will be appropriate to the level of contribution after taking into account factors such as pay and employment conditions within the industry and in comparable companies, the Group’s performance, the individual performance and the responsibilities of the executives; and

4) Review the recommendations by the NC on the performance of top management executives and directors for annual compensation purposes.

The RC is of the opinion that the executive and non-executive directors and key management executives of the Group are not excessively compensated, taking into account their responsibilities, skills, expertise and contributions to the Group’s performance. In determining compensation, the RC takes into consideration the current market circumstances and the need to attract and retain top management personnel of the right calibre.

The service contract for the CEO was renewed for a further period of two years in July 2004. The package includes a base salary, bonus and a variable incentive that is linked to the Company’s performance.

Non-executive independent directors are paid a basic fee and for serving on any of the committees; the Chairman and members of each of these committees are compensated for such additional responsibilities. Such fees are approved by the shareholders of the Company as a lump sum payment at the AGM of the Company.

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While none of the RC members specializes in the area of executive compensation, all members of the RC are knowledgeable in the field of executive compensation through their industry experience.

The Board is of the view that it is not necessary to present its remuneration policy before shareholders for approval at AGM.

Details of the Magnecomp Employees’ Share Option Plan are set out in the Report of the Directors.

The details of the remuneration of the directors and key executives are as follows:-

Directors’ Remuneration Fee % Salary % Bonus % Other Total % Benefits %

2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 $1,250,000 to $1,499,999 Steven G. Campbell - - 44 37 29 48 27 15 100 100 $1,000,000 to $1,249,999 Albert Ong Kim Guan - - 37 39 15 17 48 44 100 100

$500,000 to $749,999 Harry To Wai Hung - - 45 - 25 - 30 - 100 - Yong Kok Hoon - - 55 - 22 - 23 - 100 -

$250,000 to $499,999 Harry To Wai Hung - - - 48 - 31 - 21 - 100 Yong Kok Hoon - - - 67 - 30 - 3 - 100

Less than $250,000 Robert S. Lette 100 100 - - - - - - 100 100 Dr Ong Chit Chung 100 100 - - - - - - 100 100 Leong Swee Sum 100 100 - - - - - - 100 100 Bryan C. Burkhart 100 100 - - - - - - 100 100 Prof. Low Teck Seng 100 100 - - - - - - 100 100

The Company does not have employees who are immediate family members of a director or the CEO.

Key Management Executives’ Designation % Salary % Bonus % Other Total %Remuneration Benefits %

2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 $500,000 to $749,999 Niiho Tetsuichi General Manager 49 61 16 18 34 21 100 100 Koji Inada Managing Director 52 50 17 16 31 34 100 100 Steven Misuta Vice President - 60 - 12 - 28 - 100

$250,000 to $499,999 Steven Misuta Vice President 71 - 15 - 14 - 100 - Thiti Makarabhiromya Vice President 75 76 19 23 6 1 100 100 Stanney Kwok Ip Keung Vice President 65 50 29 16 6 34 100 100 Lawrence Xia Lu Rong Vice President 59 - 29 - 12 - 100 -


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ACCOUNTABILITY AND AUDITPrinciple 10: Accountability to the Board and Shareholders

Board members are provided with management information including divisional performance, variance analysis, budgets, forecasts, funding position and cashflow projections of the Group. In addition, all relevant information on material events and transactions are circulated to directors as and when they arise.

The Company has adopted quarterly results reporting since the first quarter of 2003. The Company holds a media and analysts briefing of its quarterly, half-yearly and full year results. The results are published through SGXNET and media releases.

The Company communicates with its shareholders on a regular basis through SGXNET and media releases. All shareholders of the Company receive the annual report and notice of AGM and EGM. Notices for shareholders meetings are advertised in newspapers and made available on SGXNET.

At AGMs and EGMs, shareholders are given the opportunity to express their views and ask directors or management questions regarding the Company and the Group.

AUDIT COMMITTEE (“AC”)Principle 11: Establishment of Audit Committee with written terms of reference

The AC comprises three directors, all of whom are independent and non-executive. They are:-

Dr Ong Chit Chung (Chairman)Leong Swee SumRobert S. Lette (until 12 November 2004)Prof. Low Teck Seng ( from 12 November 2004)

The members of the AC have many years of experience in senior management positions in both the financial and industrial sectors.

The AC held four meetings during the year.

The role of the AC is to assist the Board of Directors in the execution of its corporate governance responsibilities. In performing its function, the AC met with the Company’s external and internal auditors to discuss the scope of their work and the results of their examination and evaluation of the Company’s overall financial, operational and compliance systems.

The AC performs the following functions:-

1) Reviews with the external auditors, their audit plan for the year, evaluates the internal accounting controls, audit report and any matters which the external auditors wish to discuss;

2) Reviews with the internal auditor, the audit plan, the scope and results of internal audit procedures, level of risks and evaluates the effectiveness of the system of internal controls and reporting processes;

3) Reviews the quarterly, half-yearly and full year results and the consolidated financial statements of the Group, including announcements of results and media release to shareholders and SGX-ST prior to submission to the Board;

4) Reviews any significant findings of internal investigations;

5) Reviews interested party transactions;

6) Makes recommendations to the Board on the appointment of the external auditors and the audit fee; and

7) Performs the functions required under the Companies Act, the Listing Rules and the Code.

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The AC has full access to the external and internal auditors without the presence of management and is authorized to have full and unrestricted access and co-operation of the Company’s management, personnel, records, operations and other information as required or desirable to properly discharge its responsibilities.

Save for fees paid for tax services and the financial due diligence fees for the merger of the Group’s data storage division with K.R. Precision Public Company Limited provided by Ernst & Young, there are no other non-audit fees payable to Ernst & Young. The fee for due diligence will be reflected in the accounts of the next financial year after completion of the merger transaction. The AC has also reviewed all non-audit services provided by Ernst & Young and has obtained the confirmation of independence of the external auditors.

INTERNAL CONTROLSPrinciple 12: Sound system of internal controls

The Group maintains a system of internal controls framework for all companies within the Group but recognizes that no internal control system will preclude all errors and irregularities. The system is designed to manage rather than to eliminate the risk of failure to achieve business objectives. The controls are to provide reasonable, but not absolute, assurance to safeguard shareholders’ investments and the Group’s assets.

With the assistance of the internal and external auditors, the audit committee and the Board of Directors review the effectiveness of the Company’s material internal controls, including financial, operational and compliance controls and risk management on an on-going basis.

The Board believes that, in the absence of any evidence to the contrary, the system of internal control maintained by the Company’s management provides reasonable assurance that assets are safeguarded, proper accounting records are maintained, and the financial information used within the business and for publication is reliable.

INTERNAL AUDITPrinciple 13: Internal Audit

The Group recognizes the importance of the internal audit function, which is one of the principal means by which the Audit Committee is able to carry out its responsibilities effectively.

The Group has an Internal Audit Director (“IAD”) whose main function is to ensure adequate internal controls in the Company. The IAD is a Certified Internal Auditor of the Singapore branch of the Institute of Internal Auditors Inc. (“IIA”). The IAD subscribes to, and is guided by the standards for the professional practice of Internal Auditing developed by the IIA and has incorporated these standards into the Internal Audit operating manual. The scope of the IAD covers the audits of all divisions and operations, including overseas subsidiaries.

The IAD reports directly to the Audit Committee. Administratively, he reports to the CEO on a regular basis. The IAD conducts regular checks and performs periodic reviews of the Group’s material internal controls, including financial, operational and compliance controls and risk management.


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COMMUNICATION WITH SHAREHOLDERSPrinciple 14: Regular, effective and fair communication with shareholdersPrinciple 15: Shareholders participation at AGMs

The Group believes in timeliness and transparency in its disclosures to the shareholders and the public. In addition to the regular dissemination of information through SGXNET, the Company also responds to enquiries from investors, analysts, fund managers and the press. Price sensitive information is always release to the SGX-ST after trading hours of the Singapore Exchange Ltd.

At general meetings, shareholders are given ample time and opportunities to speak and seek clarification of the Group’s affairs and a majority of the directors, including the chairmen of the respective committees, together with the external auditors, are present to answer questions from shareholders.

The Company’s Articles of Association allows a member of the Company to appoint one or two proxies to attend and vote instead of the member. The Company is not implementing absentia-voting methods such as mail, email or fax until security, integrity and other pertinent issues are satisfactorily resolved.

DEALING IN SECURITIES

The Company has adopted its own set of internal code, which mirrors substantially the provisions of the Best Practices Guide in the Listing Manual to provide guidance to its Directors and officers in relation to the dealings in its securities.

The internal code emphasizes that the law on insider trading is applicable at all times. Directors and employees who have access to unpublished material price-sensitive information are required to report on their dealings in the securities of the Company. Directors and officers who have access to price sensitive information are reminded of the prohibition in dealings in shares of the Company for two weeks before the release of the quarterly, half yearly and year-end financial results and ending on the date of the announcement of the relevant results.

RELATED PARTY TRANSACTIONS

The objective for the requirement to disclose related party transactions is to guard against the risk that a related party can influence the Company, its subsidiaries or associated companies, to enter into transactions with them that may adversely affect the interests of the Company and its shareholders.

During the year, the Audit Committee has reviewed and concluded that there is no related party transaction that warrants an announcement or requires shareholders’ approval as defined under the Listing Rules.

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Risk Management

Industry Risk

The Group regularly reviews and improves its business and operational activities to identify areas of significant business risks as well as take appropriate measures to control and mitigate these risks. The Data Storage Components Division (“DS Division”) continued to face fast changing technology and with the rapid industry development, the Company is constantly exploring avenues to upgrade itself and keep abreast of rapid technological changes.

In order to get a bigger share of the market, increase its customer base and expand its varieties of products, the Group merged its DS Division with K.R. Precision Public Company Limited towards the end of 2004.

The Group is confident that with the expansion of its DS Division R&D unit, the DS Division has the capabilities to continuously innovate to produce new products to meet the changing demands of the industry.

Dependence on Key Personnel

The success of the Group, to some extent, is dependent on the performance of its key management and technical personnel. The Group attracts and retains the services of its key personnel and technical staff by providing remuneration packages that are competitive within the industry and offering a challenging and stimulating work environment. In addition, the Group is committed to providing vigorous training and upgrading programmes to its technical staff to measure up to and surpass the industries’ and customers’ requirements.

Primary Materials Prices and Timely Supply of Materials

Any change in the price of primary materials would affect the cost of manufacturing. The Group manages the risk of price fluctuations by not committing to large orders of fixed price materials thus enabling the Group to adjust prices when appropriate and feasible.

In order to meet the commitments to customers and maintain a competitive operation, the timely supply of sufficient quantity of raw materials by supplier is critical. The Group manages its logistics of material supply by building up long term relationships with reliable suppliers and avoids dependence on sole supplier.

Foreign Exchange Exposure

The Group assets and raw materials are in U.S. currency and its manufacturing plants are mainly located in the PRC which has its Renminbi pegged to the U.S. dollar. Also, sales prices are denominated in US dollar though the cost of sales and other operating expenses are incurred in the currency of the country of operation. Thus there is little foreign exchange exposure. The Group monitors the US dollar exchange rates closely so as to minimize any potential material adverse effects from these exposures in a timely manner. From time to time, the Group looks into hedging its funds as and when appropriate.

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CONTENTS:

Report of the Directors 28 Auditors’ Report 34

Profit and Loss Accounts 35 Balance Sheets 36

Statement of Change in Equity 37

Consolidated Statement of Cash Flow 38

Notes to the Financial Statements 39

Statistics of Shareholdings 69

Notice of Annual General Meeting 71

Proxy Form 75

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Financial Statement

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The directors are pleased to present their report to the members together with the audited consolidated financial statements of the Company and of the Group for the financial year ended 31 December 2004.

DIRECTORS

The directors of the Company in office at the date of this report are :-

Robert Sebastiaan LetteSteven Glenn CampbellYong Kok HoonAlbert Ong Kim GuanTo Wai HungDr Ong Chit ChungLeong Swee SumProfessor Low Teck Seng (Appointed on 5 March 2004)

ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES AND DEBENTURES

Except as described in this report, neither at the end of the financial year, nor at any time during the financial year was the Company a party to any arrangement whose object is to enable the directors of the Company to acquire benefits by means of the acquisition of shares or debentures of the Company or any other body corporate.

DIRECTORS’ INTERESTS IN SHARES, SHARE OPTIONS AND DEBENTURES

According to the register of directors’ shareholdings kept by the Company for the purposes of Section 164 of the Companies Act, Chapter 50, particulars of interests of directors who held office at the end of the financial year in shares and options to subscribe for ordinary shares of the Company granted pursuant to the Magnecomp Employees’ Share Option Plan are as set out below:-

Ordinary Shares of $0.10 each

Holding in the name of the Director At beginning of the year At end of the year

Steven G. Campbell Nil 250,000Yong Kok Hoon Nil 150,000Albert Ong Kim Guan Nil 150,000To Wai Hung Nil 125,000Prof. Low Teck Seng 40,000* 40,000

* At date of appointment on 5 March 2004

Report of the Directors

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DIRECTORS’ INTERESTS IN SHARES, SHARE OPTIONS AND DEBENTURES (CONT’D)

Options to subscribe for ordinary shares of S$0.10 each

Directors At beginning of At end of the Option Price Date of the year year Per Share Grant

Steven G. Campbell 500,000 375,000 $0.16 7 March 2003 500,000 375,000 $0.17 31 March 2003 Nil 500,000 $0.69* 8 March 2004 Nil 500,000 $0.49 18 August 2004

Yong Kok Hoon 200,000 150,000 $0.16 7 March 2003 400,000 300,000 $0.17 31 March 2003 Nil 200,000 $0.69* 8 March 2004

Albert Ong Kim Guan 200,000 150,000 $0.16 7 March 2003 400,000 300,000 $0.17 31 March 2003 Nil 200,000 $0.69* 8 March 2004

To Wai Hung 200,000 150,000 $0.16 7 March 2003 300,000 225,000 $0.17 31 March 2003 Nil 200,000 $0.69* 8 March 2004 *Granted at a 20% discount

There was no change in any of the abovementioned interests between the end of the financial year and 21 January 2005.

Except as disclosed in this report, no director who held office at the end of financial year had interests in shares, share options of the Company, or of related corporations, either at the beginning of the financial year, or date of appointment if later, or at the end of the financial year.

DIRECTORS’ CONTRACTUAL BENEFITS

Since the end of the previous financial year, no director has received or has become entitled to receive a benefit 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.

OPTIONS

1. Magnecomp Employees’ Share Option Plan (the “Plan”) was approved by the shareholders at an extraordinary general meeting held on 18 September 2000.

2. The Plan is administered by the Remuneration Committee whose members are:-

Leong Swee Sum (Chairman)Steven G. CampbellDr Ong Chit ChungRobert S. Lette


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OPTIONS (CONT’D)

3 Each year the Remuneration Committee approves the date of grant after the announcement of the half year and full year results of the Group. The bulk of the options allocated for grant each year are given out after announcement of the full year results. The second grant in the year is mainly given to eligible employees who join the Group during the year and were left out in the earlier grant.

4. During the financial year, the following options were granted under the Plan:-

Date Granted Cancelled Outstanding Exercise Price

8 March 2004 5,098,000 16,000 5,082,000 $0.69*18 August 2004 660,000 Nil 660,000 $0.49

5,758,000 16,000 5,742,000

* Granted at a 20% discount

5. Following are details of options granted to Directors:-

Director Options Aggregate Aggregate Aggregate Aggregate granted during options options options options the financial granted since cancelled since exercised since outstanding year under commencement commencement commencement as at end of review of Plan of Plan of Plan financial year under review

Steven G. Campbell 1,000,000 2,500,000 500,000 250,000 1,750,000Yong Kok Hoon 200,000 1,200,000 400,000 150,000 650,000Albert Ong Kim Guan 200,000 1,200,000 400,000 150,000 650,000To Wai Hung 200,000 1,000,000 300,000 125,000 575,000

6. Following are the unissued ordinary shares of the Company under the Plan as at 31 December 2004 comprises:-

Granted on No. of unissued Exercise price Expiry date shares per share

8 Feb 2001 60,000 $0.75 8 Feb 20106 Mar 2002 126,000 $0.39* 6 Mar 20127 Mar 2003 3,791,000 $0.16 7 Mar 201231 Mar 2003 4,856,500 $0.17 31 Mar 201230 May 2003 60,000 $0.32 30 May 201227 Aug 2003 472,000 $0.71 27 Aug 20128 Mar 2004 5,082,000 $0.69* 8 Mar 201418 Aug 2004 660,000 $0.49 18 Aug 2013

Total 15,107,500

* Granted at a discount, therefore vesting date is two years after Date of Grant.


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OPTIONS (CONT’D)

6. The options are vested in four equal instalments with the first 25% of the options granted exercisable on the first anniversary of the date of grant.

The number of options granted under the Magnecomp Employees’s Share Option Plan (the “Plan”) during the financial year were 5,758,000 options, out of which 5,098,000 options which were granted on 8 March 2004 were all granted at a discount of 20% of the market price.

None of the executive directors and employees of the Group who participated in the Plan has received 5% or more of the total number of options available under the Plan.

7. Pursuant to the Option Agreements provided by Advantec Holding SA (“Advantec”), certain selected key executives of the Group were granted options to acquire 6,925,000 ordinary shares of $0.10 each in the capital of the Company by Advantec. During the year, a total of 1,495,500 options were exercised with 188,000 options cancelled when employees left the Group. As at 31 December 2004, share options to acquire 740,500 ordinary shares (2003: 2,424,000 ordinary shares) of $0.10 each in the capital of the Company were outstanding. These share options are exercisable within 10 years after 7 January 2000 at an exercise price of US$0.275 per ordinary share. Details of the terms and conditions of the options are set out in the Option Agreements dated 23 December 1997.

AUDIT COMMITTEE

The Audit Committee comprises three board members, all of whom are independent non-executive directors. The members of the Audit Committee during the financial year and at the date of this report are :-

Dr Ong Chit Chung (Chairman)Leong Swee SumProfessor Low Teck Seng

The functions of the Audit Committee are as laid down in Section 201B(5) of the Singapore Companies Act. In performing its function the Committee reviewed the overall scope of the external audit and the assistance given by the Company’s officers to the auditors. It met with the Company’s external auditors to discuss the audit plan and results of their examinations and their evaluation of the Company’s system of internal accounting controls. The Committee also reviewed the financial statements of the Company and the consolidated financial statements of the Group for the year ended 31 December 2004 as well as the auditors’ report thereon.

The Audit Committee recommended to the Board of Directors the nomination of Ernst & Young as auditors of the Company to be approved at the forthcoming Annual General Meeting of the Company.

SECURITIES TRANSACTIONS

The Group has issued an internal policy on share dealings to all employees of the Group setting out the implications of insider trading and the recommendations of the Best Practices Guide issued by the Singapore Exchange Securities Trading Limited. The Group has adopted a code of conduct to provide guidance to its officers with regard to dealing in the Company’s shares.


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AUDITORS

Ernst & Young have expressed their willingness to accept re-appointment as auditor.

On behalf of the Board,

Steven Glenn CampbellDirector

Yong Kok HoonDirector

Singapore8 March 2005


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Statement by Directors Pursuant to Section 201(15)

We, Steven Glenn Campbell and Yong Kok Hoon, being two of the directors of Magnecomp International Limited, do hereby state that, in the opinion of the directors:

(a) the accompanying balance sheets, profit and loss accounts, statements of changes in equity and consolidated cash flow statement together with the notes thereto are drawn up so as to give a true and fair view of the state of affairs of the Company and of the Group as at 31 December 2004 and of the results of the business, changes in equity of the Company and of the Group and cash flows of the Group for the year then ended; and

(b) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

On behalf of the board of directors :

Steven Glenn CampbellDirector

Yong Kok HoonDirector


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Auditors’ Reportto the Members of Magnecomp International Limited

We have audited the accompanying financial statements of Magnecomp International Limited (the Company) and its subsidiaries (collectively, the Group) set out on pages 35 to 68 for the year ended 31 December 2004. These financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Singapore Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion,

(a) the consolidated financial statements of the Group and the Company are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50 (the Act) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2004 and the results, changes in equity of the Group and the Company and cash flows of the Group for the financial year ended on that date; and

(b) the accounting and other records required by the Act to be kept by the Company and by those subsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

ERNST & YOUNGCertified Public Accountants


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Profit and Loss Accountsfor the year ended 31 December 2004

Group Company Note 2004 2003 2004 2003 $’000 $’000 $’000 $’000

Revenues Sales of goods 4 379,181 329,200 – – Dividend income – – 31,573 15,531Other revenue 5 1,711 7,064 15,224 6,356

Total revenues 380,892 336,264 46,797 21,887

Costs and expenses Raw materials and production overheads 213,512 181,588 – – Salaries and employee benefits 6 83,815 70,266 2,568 2,896Depreciation 12 22,837 22,681 109 104Foreign currency loss 543 1,870 218 214Research and development expenditure 7 877 919 – – Other operating expenses 8 31,011 25,152 6,722 1,354

Total costs and expenses 352,595 302,476 9,617 4,568

Operating profit before share of profit of unconsolidated associates 28,297 33,788 37,180 17,319Finance costs 9 (1,249) (1,748) (167) (719)Share of (loss)/profit of unconsolidated associates (125) 127 – –

Profit before taxes and minority interests 26,923 32,167 37,013 16,600Tax (expense)/credit 10 (1,838) (3,094) 536 (322)Minority interests, net of taxes (5,092) (3,642) – –

Net profit for the year 19,993 25,431 37,549 16,278

Earnings per share 11 - basic (in cents) 8.61 12.24 - diluted (in cents) 8.32 11.60

The accompanying notes form an integral part of the financial statements.

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ASSETS LESS LIABILITIES Non-current assets Property, plant and equipment, net 12 136,216 116,777 312 406Intangible assets 13 3,003 5,018 491 718Subsidiaries 14 – – 120,585 83,314Investment in associates 15 1,567 – 1,698 – Other investments 16 257 267 28 28

Current Assets Cash and cash equivalents 17 35,343 51,473 7,791 26,524Trade receivables 75,740 47,303 – – Other receivables 18 29,358 10,609 6,587 230Amount due from subsidiaries (trade) – – 14,579 8,091Inventories 19 26,938 27,005 – – Loans to subsidiaries 20 – – 4,500 11,254

167,379 136,390 33,457 46,099

Current Liabilities Interest-bearing loans and borrowings 21 32,561 37,498 – 8,000Trade payables 41,607 30,247 – – Other payables and accruals 22 35,504 24,636 1,571 1,716Tax payable 2,018 2,547 61 53

111,690 94,928 1,632 9,769

Net Current Assets 55,689 41,462 31,825 36,330

Non-Current Liabilities

Interest-bearing loans and borrowings 21 (15,133) (2,670) – – Deferred liabilities 23 (1,430) (2,760) – (762)Deferred taxation 24 (2,950) (3,451) (1,122) (1,838)

177,219 154,643 153,817 118,196

EQUITY Share capital 25 23,368 23,125 23,368 23,125Share premium 69,445 69,285 69,445 69,285Reserves 61,061 48,616 61,004 25,786

153,874 141,026 153,817 118,196Minority interests 23,345 13,617 – –

177,219 154,643 153,817 118,196

Balance Sheets as at 31 December 2004


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SHARE CAPITAL AND PREMIUM

Issued capital Balance at beginning of year 23,125 20,118 23,125 20,118Issuance of ordinary shares 25 243 3,007 243 3,007

Balance at end of year 23,368 23,125 23,368 23,125

Share premium Balance at beginning of year 69,285 46,553 69,285 46,553Premium on issuance of ordinary shares 160 22,732 160 22,732


RESERVES

Revenue reservesBalance at beginning of year 48,038 22,607 25,786 9,508Dividends (2,331) – (2,331) –Net profit for the year 19,993 25,431 37,549 16,278


Foreign currency translation reserve Balance at beginning of year (393) 283 – – Foreign currency translation adjustments (5,217) (676) – –

Balance at end of year (5,610) (393) – –

Statutory reserve 27 Balance at beginning and end of year 971 971 – –

TOTAL EQUITY 153,874 141,026 153,817 118,196

Statement of Changes in Equity for the year ended 31 December 2004


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2004 2003 $’000 $’000

Cash flows from operating activities : Profit before tax and minority interests 26,923 32,167Adjustments for : Share of loss/(profit) of unconsolidated associates 125 (127) Depreciation of fixed assets 22,837 22,681 Loss/(gain) on disposal of fixed assets 523 (5,457) Fixed assets written off 844 1,367 Provision for impairment of fixed assets – 917 Amortisation of intangible assets 1,731 1,835 Intangibles written off 169 223 Interest expense 1,249 1,748 Interest income (166) (176) (Profit)/loss on currency realignment (1,507) 316

Operating income before reinvestment in working capital 52,728 55,494Increase in receivables (47,202) (7,342)Decrease/(increase) in inventories 439 (9,572)Increase in payables 20,701 8,732

Cash generated from operating activities 26,666 47,312Interest expense (1,249) (1,748)Interest income 166 176Income taxes paid (2,825) (2,173)Refund of income taxes paid in prior years 85 79

Net cash provided by operating activities 22,843 43,646

Cash flow from investing activities Acquisition of subsidiary – (3,428)Purchase of fixed assets (49,614) (29,765)Proceeds from sale of fixed assets 720 13,218Proceeds from sale of investment – 40Increase in other investments (1,698) (166)Cost of development of intellectual properties – (174)

Net cash used in investing activities (50,592) (20,275)

Cash flows from financing activities : Dividends paid on ordinary shares by the company (2,331) – Proceeds from issuance of shares by subsidiary to minority shareholders 6,019 305Increase in amounts owing to bankers (trust receipts) 3,874 2,089Proceeds from issue of shares 404 26,442Additional term borrowing 13,815 15,456Repayment of bank loan (7,819) (16,150)Principal payment under finance leases (2,246) (3,163)Borrowings under finance leases – 2,132Expenses relating to issuance of shares – (704)

Net cash provided by financing activities 11,716 26,407

Net (decrease)/increase in cash and cash equivalents (16,033) 49,778Cash and cash equivalents at beginning of year (note 17) 51,360 1,582

Cash and cash equivalents at end of year (note 17) 35,327 51,360

Consolidated Cash Flow Statement for the year ended 31 December 2004


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1. CORPORATE INFORMATION

Magnecomp International Limited is a limited liability company which is incorporated in Singapore.

The registered office of the Company is located at 1 Finlayson Green #15-02, Singapore 049246. The principal place of business of the Company is located at 1 Finlayson Green #15-02, Singapore 049246.

The principal activity of the Company is that of investment holding.

The principal activities of the subsidiaries are those of manufacturing and sale of suspension assemblies, metal stamping and sub-assembly of stamped components, tooling and die making, investment holding and property investment. Details of these subsidiaries are disclosed in Note 3 to the financial statements. There have been no significant changes in the nature of these activities during the year.

The Group operates in five countries and employed 10,264 employees as of 31 December 2004 (2003 : 7,857).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with Singapore Financial Reporting Standards (FRS) as required by the Companies Act.

The consolidated financial statements have been prepared on a historical cost basis.

The accounting policies have been consistently applied by the Company and the Group and, are consistent with those used in the previous financial year.

The financial statements are presented in Singapore Dollars (SGD or S$).

(b) Principles of consolidation

The consolidated financial statements comprise the financial statements of Magnecomp International Limited (the parent company) and its controlled subsidiaries, after the elimination of all material intercompany transactions.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be considered from the date on which control is transferred out of the Group. Acquisitions of subsidiaries are accounted for using the purchase method of accounting.

The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances.

Assets, liabilities and results of overseas subsidiaries are translated into Singapore dollars on the basis outlined in paragraph (s) below.

Notes to the Financial Statements31 December 2004

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(c) Revenue recognition

Revenue is recognised to the extent that is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific criteria must also be met before revenue is recognised:

Sale of Goods

Revenue is recognised upon passage of title to the customers which generally coincides with their delivery and acceptance.

Dividend

Revenue is recognised to the extent of dividend declared during the year.

Interest

Revenue is recognised as the interest accrues unless collectibility is in doubt.

Management fees

Revenue is recognised when services are rendered.

(d) Employee benefits

Defined contribution plan

As required by law, the Company makes contributions to the state pension scheme – the Central Provident Fund (CPF) and the subsidiaries in the Group contribute to the state pension schemes in the respective countries of incorporation. CPF contributions by the Company and contributions to the various state pension schemes by the subsidiaries are recognised as compensation expense in the same period as the employment that gives rise to the contributions.

(e) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment in value. All items of property, plant and equipment are initially recorded at cost.

The initial cost of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchase taxes and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance and overhaul costs, are normally charged to the profit and loss account in the period in which the costs are incurred. In situations where it can be clearly demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its originally assessed standard of performance, the expenditures are capitalised as an additional cost of property, plant and equipment.


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Depreciation is computed on a straight-line basis over the estimated useful life of the asset as follows:

Freehold buildings - 20 years Leasehold land and buildings - 25 to 50 years Machinery and equipment - 5 to 10 years Tools and dies - 3 years Leasehold improvements - 5 to 10 years Furniture, fittings and office equipment - 3 to 10 years Motor vehicles - 5 years

No depreciation is provided on construction-in-progress.

The useful life and depreciation method are reviewed periodically to ensure that the method and period of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment. An assessment of the carrying value of property, plant and equipment is made when there are indications that the assets have been impaired or the impairment losses recognised in prior years no longer exist.

During the year, the directors have reassessed the estimated useful life of certain plant, machinery and equipments, taking into account of current business environment and conditions, and the expected pattern of economic benefits from these assets, and have revised the estimate useful lives of these assets. These revised accounting estimates have been adopted prospectively from 1 January 2004. The effect of this change in accounting estimate resulted in the decrease in the amount of depreciation of approximately S$1,078,000 charged to the profit and loss account for the year ended 31 December 2004.

Fully depreciated assets are retained in the financial statements until they are no longer in use and no further charge for depreciation is made in respect of these assets.

(f) Borrowing costs

Borrowing costs are recorded as expenses in the period in which they are incurred.

(g) Goodwill on consolidation

Goodwill represents the excess of the cost of acquisition over the fair value of the identifiable net assets of a subsidiary or associate at the date of acquisition. Goodwill is amortised using the straight-line basis over a period of between 5 to 10 years that benefits are expected to be received. Goodwill is stated at cost less accumulated amortisation and any impairment.

(h) Leased assets

Where assets are financed by lease agreements that give rights approximating to ownership (finance leases), the assets are capitalised under fixed assets as if they had been purchased outright at the values equivalent to the present values of total rental payable during the periods of the leases and the corresponding lease commitments are included under liabilities. Lease payments are treated as consisting of capital and interest elements and the interest is charged to profit and loss account. Depreciation on the relevant assets is charged to the profit and loss account on the basis outlined in paragraph (e) above.

Annual rental on operating leases is charged to the profit and loss account.


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(i) Intangible assets

Costs of development of intellectual property relating to patents of new products and process technologies are capitalised and amortised in the profit and loss account on a straight line basis over a five year period. All other development costs are written off to the profit and loss account in the year they are incurred.

Deferred expenditure is amortised in the profit and loss account on a straight line basis over a five year period.

Preoperating expenses are written off to the profit and loss account in the year they are incurred.

(j) Investments in subsidiaries

A subsidiary is a company in which the Group, directly or indirectly, holds more than 50% of the issued share capital, or controls more than half of the voting power, or controls the composition of the board of directors.

Investments in subsidiaries are stated at cost. An assessment of investments in subsidiaries is performed when there is indication that the asset has been impaired or the impairment losses recognised in the prior years no longer exist. Details of the subsidiary companies are set out in Note 3 to the financial statements.

(k) Investments in associates

An associate is defined as a company, not being a subsidiary, in which the Group has a long-term interest of not less than 20% of the equity and in whose financial and operating policy decisions the Group exercises significant influence.

The Group’s investment in associate is accounted for under the equity method. Investment in associate is carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets of associates, less any impairment loss. The Group’s investments in associates include goodwill (net of accumulated amortisation) on acquisition, which is treated in accordance with the accounting policy for goodwill stated in (g).

When the Group’s share of losses exceeds the carrying amount of the investment, the investment is reported at nil value and recognition of losses is discontinued except to the extent of the group’s commitment.

Intercompany transactions, including intercompany profits and unrealised profits and losses are eliminated. Unrealised gains arising from transactions with associates are eliminated to the extent of the group’s interest in the associate, against the investment in the associate. Unrealised losses are eliminated similarly but only to the extent that there is no evidence of impairment of the asset transferred.

The Group’s share of the results of associates is included in the consolidated profit and loss account. Investments in associates are stated at cost less any impairment loss in the Company’s balance sheet. An assessment of investments in associates is performed when there is indication that the asset has been impaired or the impairment losses recognised in the previous years no longer exist.

(l) Other investments

Other investments held on long-term basis are stated at cost. An assessment of investment is performed when there is indication that the asset has been impaired or the impairment losses recognised in the previous years no longer exist.


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(m) Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and insignificant risk of changes in value.

Cash on hand and in banks and short-term deposits which are held to maturity are carried at cost.

For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash on hand and deposits in banks, net of outstanding bank overdrafts but exclude secured trust receipts which are used for financing activities.

(n) Trade and other receivables

Trade and other receivables, which generally have 30-90 day terms, are recognised and carried at original invoiced amount less an allowance for any uncollectible amounts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred.

Receivables from related parties are recognised and carried at cost less an allowance for any uncollectible amounts.

(o) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials on a first-in-first-out basis and in the case of work in progress and finished products, includes direct labour and attributable production overheads based on normal operating capacity. Net realisable value represents the estimated selling price less estimated costs of completion and the estimated costs necessary to make the sale.

(p) Trade and other payables

Liabilities for trade and other amounts payable, which are settled on 30-60 day terms, are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group.

Payables to related parties are carried at cost.

(q) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

(r) Income tax

Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax liabilities are recognised for all taxable temporary differences associated with investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.


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(r) Income tax (cont’d)

Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax losses and unabsorbed capital allowances, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax losses and unused tax credits can be utilised.

At each balance sheet date, the Group re-assesses unrecognised deferred tax assets and the carrying amount of deferred tax assets. The Group recognises a previously unrecognised deferred tax asset to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. The Group conversely reduces the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of the deferred tax asset to be utilised.

Deferred tax are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

(s) Foreign currencies

Foreign currency transactions during the year are translated at rates closely approximating those ruling on the transaction dates. Foreign currency monetary assets and liabilities are translated into Singapore dollars (SGD) at exchange rates ruling at the balance sheet date. All exchange differences arising from the translation are included in the profit and loss account.

Exchange differences arising from long term loans to subsidiaries which are effectively part of net investment are taken to foreign currency translation reserve.

Assets and liabilities of foreign entities are translated into SGD equivalents at exchange rates ruling at balance sheet date. Revenues and expenses are translated at average exchange rates for the year. All resultant exchange differences are taken directly to equity. On disposal of a foreign entity, accumulated exchange differences are recognised in the profit and loss account as a component of the gain or loss on disposal.

(t) Impairment of assets

The carrying amounts of the Group’s assets, other than current assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The impairment loss is charged to the profit and loss account unless it reverses a previous revaluation surplus taken to equity in which case it will be charged to equity.


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3. GROUP COMPANIES

The subsidiary and associated companies as at 31 December 2004 are :

Name of Company Principal Effective (Country of activities interest held incorporation) (Place of business) Cost by the Group 2004 2003 2004 2003 $’000 $’000 % %

Subsidiary companies Directly held by the Company

* Acrathon Precision Manufacturing of 800 800 100 100 Technologies Limited precision tools (Thailand) and dies (Thailand)

* Indest Corporation Holding company for 30,300 30,300 100 100 (USA) U.S. operations and property investment (USA)

* Magnecomp (Thailand) Manufacturing and sale 8,596 8,596 100 100 Limited of suspension assemblies (Thailand) (Thailand)

* Optimal Technology Manufacturing and 11,252 5,708 51 51 Limited sale of flex suspension (Hong Kong) assemblies (Hong Kong)

* Magnecomp Manufacturing and sale 10,665 # 100 100 Technology Limited of suspension assemblies (Hong Kong) (Hong Kong)

* Mansfield Manufacturing Metal stamping and 13,587 # 100 100 Company Limited sub-assembly of stamped (Hong Kong) components, tooling and die making (Hong Kong)

* Acrathon Precision Manufacturing and 3,858 # 100 100 Technologies (HK) sale of suspension Limited components (Hong Kong) (Hong Kong)

* Magnecomp Flextures Property investment 140 # 100 100 Limited (Hong Kong) (Hong Kong)

79,198 45,404


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3. GROUP COMPANIES (CONT’D)


Subsidiary companies (Cont’d)

Indirectly held through subsidiary companies

* Acrathon Inc. Manufacturing of # # 100 100 (USA) precision tools and dies (USA)

* Magnecomp Corporation Research and development, # # 100 100 (USA) manufacturing and sale of suspension assemblies (USA)

* Go Smart Development Property investment and # # 83.33 83.33 Limited trading of electrical (Hong Kong) appliances (Hong Kong)

* Me Electronic Research, development, # # 83.33 83.33 Product Limited manufacture and sales (Hong Kong) of consumer electronics products * Lens Tool & Die Property investment # # 83.33 83.33 (H.K.) Limited) (Hong Kong) (Hong Kong)

* Magix Mechatronics Sale of Assembly # # 45.83 45.83 Company Limited Components (Hong Kong) (Hong Kong)

* Feng Chuan Tooling Sales of precision # # 83.33 83.33 Company Limited tools and dies (Hong Kong) (Hong Kong)

* Feng Chuan Tooling Manufacturing of # # 83.33 83.33 (Dongguan) precision tools and Company Limited dies (People’s Republic (People’s Republic of China) of China)


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3. GROUP COMPANIES (CONT’D)


Subsidiary companies (cont’d) Indirectly held through subsidiary companies (cont’d) * Mansfield (Suzhou) Metal stamping, tooling # # 83.33 83.33 Manufacturing Company and die making Limited (People’s Republic (People’s Republic of China) of China)

* Magix Mechatronics Assembly of components # # 45.83 45.83 (Dongguan) Company (People’s Republic of China) Limited (People’s Republic of China)

* Dongguan Mansfield Metal stamping, tooling # # 83.33 83.33 Metal Forming and die making Company Limited (People’s Republic (People’s Republic of China) of China)

Associated company

** nanoPrecision Products, Inc Development and 1,689 - 31 - commercialisation of non scale precision manufacturing process and resultant products

* Audited by associated firms of Ernst & Young Singapore** Not required to be audited by the law of its country of incorporation# Cost of investment in the sub-subsidiaries of the Group are reflected in the financial statements of their respective

holding companies

4. SALES OF GOODS

Sales of goods of the Group represents the aggregate of net invoiced value of goods sold, after allowances for goods returned and trade discounts, and excludes intra-group transactions.


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5. OTHER REVENUE Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Interest income - Subsidiaries – – 597 1,609- Banks 165 65 117 34- Others – 111 – – Management fees from subsidiaries – – 4,086 4,634Rental income 580 453 – – Gain on disposal of subsidiary – `– 10,424 – Gain on disposal of property, plant and equipment 41 5,457 – 79Others 925 978 – –

1,711 7,064 15,224 6,356

6. SALARIES AND EMPLOYEE BENEFITS Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Salaries and employee benefits includes the following:

Directors’ emoluments - Directors of the Company - Fees 133 201 133 201 - Other emoluments 3,817 3,510 2,037 1,687- Directors of subsidiaries - Other emoluments 35 136 – – Contributions to state pension schemes and CPF contributions 1,366 799 49 85Long term severance pay 1,323 674 – –

Approximately S$9.2 million (2003 : S$8.4 million) of salaries and employee benefits were paid to employees engaged in Research and Development activities.

7. RESEARCH AND DEVELOPMENT EXPENDITURE Group 2004 2003

$’000 $’000

Amortisation of intangible asset (Note 13) 877 919

Refer to Note 6 and Note 8 for other Research and Development related expenses.


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8. OTHER OPERATING EXPENSES

Group Company 2004 2003 2004 2003 $’000 $’000 $’000 $’000

Other operating expenses include the following: Fixed assets written off 844 1,367 – – Provision for impairment of leasehold property – 917 – – Amortisation of deferred expenditure 894 916 – – Operating lease rentals for land and buildings 5,791 4,380 158 141Write-back of provision for impairment of investments - Investment in subsidiary – – (9,298) – Provision for impairment of investment - investment in subsidiary – – 14,622 – Goodwill written off – 223 – – Provision for doubtful trade debts 92 249 – – Provision for obsolete inventories – 2,066 – – Write-back of provision for obsolete inventories (1,060) (2,943) – – Write-back of provision for doubtful trade debts (42) (536) – –

S$1.4 million (2003 : S$0.6 million) of the other operating expenses relate to Research and Development expenses.

9. FINANCE COSTS

Group Company 2004 2003 2004 2003 $’000 $’000 $’000 $’000

Interest expense - Bank loans and borrowings 1,076 1,397 167 617Finance charges - lease liability 21 256 – – - others 152 95 – 102

1,249 1,748 167 719


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10. INCOME TAX Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Major components of income tax expense are :- Current Singapore 91 – 91 – Foreign 1,634 3,814 – –

Deferred Singapore – 322 – 322 Foreign 932 (866) – –

2,657 3,270 91 322Overprovision of deferred tax in respect of prior year (716) – (716) –

(Over)/under provision in respect of previous years (103) (176) 89 –

1,838 3,094 (536) 322

A reconciliation between the tax expense and the product of accounting profit multiplied by the applicable tax rate for the

years ended 31 December was as follows :- Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Profit before taxes and minority interests 26,923 32,167 37,013 16,600

Tax at the domestic rates applicable to profits in the countries concerned 13,098 12,861 7,402 3,652Adjustments :- Non-taxable income and credits (16,430) (10,624) (10,258) (3,428)Non-deductible expenses 5,346 2,135 2,924 102Tax effect on benefits arising from deductible temporary differences not recognised 622 – – – Tax effect on realisation of previously unrecorded deductible temporary differences – (744) – – Prior year tax losses utilised previously not recognised – (320) – – Change in statutory tax rate – (108) – – Others 24 70 23 (4)Overprovision of deferred tax in prior years (716) – (716) – (Over)/under provision of tax in prior years (106) (176) 89 –

Tax expense/(credit) 1,838 3,094 (536) 322


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10. INCOME TAX (CONT’D)

A subsidary in Thailand was granted promotional privileges granted under the Investment Promotion Act in Thailand. As part of the privileges, certain profits of this subsidary are not subject to tax for a period of 7 years commencing on 28 January 1998. The subsidary obtained another promotional privileges under the Investment Promotion Act on 26 March 2004, and certain profits of this subsidary was not subject to tax for a period of 7 years from 30 June 2004.

As at 31 December 2004, the Group had unutilised tax losses of approximately $44,400,000 (2003: $47,140,000) which are available for offset against future taxable profits, subject to agreement with the tax authorities and compliance with certain provisions of the tax legislation of the respective countries in which the companies operate. No deferred tax asset is recognised on these losses in accordance with the accounting policy as set out in Note 2(r).

11. EARNINGS PER SHARE

(a) Basic earnings per share is calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

Group 2004 2003

$’000 $’000

Net profit attributable to ordinary shareholder for basic earnings per share 19,993 25,431

Weighted average number of ordinary shares on issue applicable to basic earnings per share 232,260 207,687

(b) Diluted earnings per share is calculated after adjusting for the effect of dilutive options under the Magnecomp Employees’ Share Option Plan as follows :

Net profit attributable to ordinary shareholders for dilutive earnings per share 19,993 25,431

Number of ordinary shares in issue (used in the calculation of basic earnings per share) 232,260 207,687Number of unissued shares under option 7,909 11,912

240,169 219,599


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12. PROPERTY, PLANT AND EQUIPMENT Furniture Machinery fittings,

Group Leasehold Freehold Investment and Tools and and office Motor Leasehold Construction properties properties properties equipment dies equipment vehicles improvements in progress Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Cost At beginning of year 6,004 3,341 217 143,710 19,019 16,493 1,481 29,002 1,238 220,505

Reclassification (59) – – (2,590) 38 83 – 376 (1,656) (3,808)Transfer to inventories – – – (369) – – – – – (369)Additions – 1,665 – 20,934 3,244 2,347 90 4,088 17,245 49,613Disposals – – (215) (1,121) (1,671) (52) (113) (190) (241) (3,603)Written off (199) (237) – (1,828) (1) (336) – (503) (371) (3,475)Currency realignment (192) (86) (2) (5,694) (742) (680) (45) (1,254) (530) (9,225)

At end of year 5,554 4,683 – 153,042 19,887 17,855 1,413 31,519 15,685 249,638

Accumulated depreciation

At beginning of year 3,053 715 3 62,998 15,143 9,021 841 11,954 – 103,728Reclassification (188) 131 – (3,497) (245) (9) – – – (3,808)Charge for the year 340 – – 13,373 2,343 2,773 178 3,830 – 22,837Disposals – – (3) (427) (1,665) (47) (64) (152) – (2,358)Written off (103) (45) – (1,763) – (267) – (453) – (2,631)Currency

realignment (86) (18) – (2,665) (567) (406) (35) (569) – (4,346)

At end of year 3,016 783 – 68,019 15,009 11,065 920 14,610 – 113,422

Charge for 2003 213 141 – 14,001 2,464 2,227 183 3,452 – 22,681

Net book value At 31 December 2004 2,538 3,900 – 85,023 5,856 6,790 493 16,909 14,707 136,216

At 31 December

2003 2,951 2,626 214 80,712 3,876 7,472 640 17,048 1,238 116,777


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12. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Furniture, fittings and office MotorCompany Computer equipment vehicles Total $’000 $’000 $’000 $’000

Cost At beginning of year 147 160 298 605 Additions 6 9 – 15 Written-off – (26) – (26)

At end of year 153 143 298 594

Accumulated depreciation At beginning of year 55 141 3 199 Charge for the year 47 19 43 109 Disposals – (26) – (26)

At end of year 102 134 46 282

Charge for 2003 45 18 41 104

Net book value At 31 December 2004 51 9 252 312

At 31 December 2003 92 19 295 406

(a) Net book value of machinery and equipment of the Group under finance leases is approximately $3,663,000 (2003 : $6,319,000).

(b) Leasehold properties with net book value of approximately $Nil (2003 : $1,552,000) have been pledged to secure banking facilities.


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12. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

(c) The following are the major properties of the Group :-

Property name/location Approximate site area Tenure of lease

Freehold

1/25 Moo 5 4,920 sq m Freehold Rojana Industrial Park, Rojana Road, T. Karnharm, Amphuru-Thai, Ayutthaya, 13210, Thailand

1/26 Moo 5 4,864 sq m Freehold Rojana Industrial Park, Rojana Road, T. Karnharm, Amphuru-Thai, Ayutthaya, 13210, Thailand

Leasehold

1/F Che Wah Industrial Building 1,977 sq m Up to June 2047 1-7 Kin Hong Street, Kwai Chung, New Territories, Hong Kong

Qin Ling 19,232 sq m Land use rights for Third Industrial zone, 50 years from 1991 Yian Tian Management District, Feng Gang Zhen, Dongguan City, Guang Dong Province, People’s Republic of China


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13. INTANGIBLE ASSETS DeferredGroup expenditure Patents Total $’000 $’000 $’000

Cost Balance at beginning of year 5,173 4,520 9,693 Write off – (169) (169) Currency realignment (157) (171) (328)

Balance at end of year 5,016 4,180 9,196

Accumulated amortisation Balance at beginning of year 2,435 2,240 4,675 Amortisation for the year 894 877 1,771 Write off – (41) (41) Currency realignment (99) (113) (212)

Balance at end of year 3,230 2,963 6,193

Charge for 2003 916 919 1,835

Net book value At 31 December 2004 1,786 1,217 3,003

At 31 December 2003 2,738 2,280 5,018

Company Deferred expenditure $’000Cost Balance at beginning of year and end of year 1,135

Accumulated amortisation Balance at beginning of year 417 Amortisation for the year 227

Balance at end of year 644

Net book value At 31 December 2004 491

At 31 December 2003 718

• Deferred expenditure represents license fee payable under cross licensing agreements for use of certain patents.

• Patents represent costs of developing intellectual property relating to patents on new products and process technologies.


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14. SUBSIDIARIES Company 2004 2003

$’000 $’000

Unquoted shares at cost 79,198 45,404Less : Provision for impairment (14,622) (9,298)

64,576 36,106Long term loans to subsidiaries 56,009 47,208

120,585 83,314

Analysis of provision for impairment : Balance at beginning of year 9,298 9,298Charged to profit and loss account 14,622 – Written-back to profit and loss account (9,298) –

Balance at end of year 14,622 9,298

Long term loans to subsidiaries are unsecured, interest bearing at 1% (2003: 1% to 4.75%) per annum and are not expected to be repaid within the next 12 months or in the foreseeable future.

Please see Note 3 for details of subsidiaries.

15. INVESTMENTS IN ASSOCIATES

Group Company 2004 2003 2004 2003 $’000 $’000 $’000 $’000

Unquoted shares at cost 1,698 – 1,698 – Share of post-acquisition loss (125) – – – Currency realignment (6) – – –

1,567 – 1,698 –

16. OTHER INVESTMENTS

Group Company 2004 2003 2004 2003 $’000 $’000 $’000 $’000

Investments in club membership 257 267 28 28


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17. CASH AND CASH EQUIVALENTS Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Cash and bank balances 27,960 25,236 429 333Fixed deposits 7,383 26,237 7,362 26,191

Cash and cash equivalents included in balance sheet 35,343 51,473 7,791 26,524

Bank overdrafts (Note 21) (16) (113)

Cash and cash equivalents included in the

consolidated statement of cash flows 35,327 51,360

18. OTHER RECEIVABLES Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Deposits 14,657 5,893 80 76Prepayments 4,666 1,974 – 59 Loan to a corporation, net of provision 6,300 – 6,300 – Others 3,032 2,025 207 95

28,655 9,892 6,587 230Income tax recoverable 703 717 – –

29,358 10,609 6,587 230

Loan given to a corporation (KR Precision), is part of the USD10 million loan under the terms of the shares sales and purchase agreement of the merger. The loan is unsecured, interest bearing at LIBOR plus 2.5% per annum and will be repaid on 13 June 2005.


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19. INVENTORIES Group 2004 2003

$’000 $’000

Finished goods - At cost 8,981 11,784 - At net realisable value 1,135 2,168

Work-in-progress - At cost 2,331 2,891 - At net realisable value 1,530 711

Raw materials - At cost 9,541 7,297 - At net realisable value 1,982 1,008

Goods-in-transit at cost 236 329

Other stocks - At cost 1,050 671 - At net realisable value 152 146

Total inventories at lower of cost and net realisable value 26,938 27,005

20. LOANS TO SUBSIDIARIES

Loans to subsidiaries disbursed by the Company are unsecured, interest bearing at 1% (2003 : 1% to 4.75%) per annum and are repayable on demand.

21. INTEREST BEARING LOANS AND BORROWINGS Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Short-term Finance lease liability (Note 26) 1,280 2,175 – – Bank loans 17,530 25,349 – 8,000Amounts owing to bankers 13,735 9,861 – – Bank overdrafts (Note 17) 16 113 – –

32,561 37,498 – 8,000

Long-term Finance lease liability (Note 26) 468 1,820 – – Bank loans 14,665 850 – –

15,133 2,670 – –


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21. INTEREST BEARING LOANS AND BORROWINGS (CONT’D)

The overdrafts, amounts owing to bankers and bank loans are secured by Corporate guarantee for $67,900,000 (2003 : $66,459,000) from the Company.

A subsidiary’s bank loan amounting to S$0.8 million (US$0.5 million) (2003: S$2.8 million) was secured by :-

(i) Corporate guarantee for S$10.3million (US$5 million) by the company

(ii) A first fixed legal charge over all machinery and equipment of approximately $6,344,000 and a first floating charge over all the existing and future assets of a subsidiary company,

(iii) An assignment of trade receivables of the subsidiary company upon the occurrence of an event of default.

Loans from bank to the Company were secured by corporate guarantees from the subsidiaries.

Loans from banks are interest bearing at 1.92% to 3.90% (2003 : 3.25% to 4.625%) and are repayable in instalments over 5 years.

22. OTHER PAYABLES AND ACCRUALS Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Payables for purchase of fixed assets 2,262 37 – – Accrued operating expenses 21,421 17,401 1,571 1,686Provision for severance pay 1,675 927 – – Deposits from customers – 1,144 – – Other payables 10,146 5,127 – 30

35,504 24,636 1,571 1,716

23. DEFERRED LIABILITIES Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Licence fee payable 1,430 2,420 – 422Gratuity payable – 340 – 340

1,430 2,760 – 762

Licence fee payable (long term portion) relates to deferred expenditure as detailed in note 13.


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24. DEFERRED TAXATION Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

Deferred tax liabilities Differences in depreciation 1,828 1,613 – – Foreign income not remitted 1,122 1,835 1,122 1,835 Others – 3 – 3

2,950 3,451 1,122 1,838

25. SHARE CAPITAL Group and Company 2004 2003 $’000 $’000

Authorised : 250,000,000 ordinary shares of S$0.10 each 25,000 25,000

Issued and fully paid : Balance at beginning 201,179,928 ordinary shares of S$0.10 each 23,125 20,118 Issued during the year - 30,000,000 ordinary shares of S$0.10 each for cash at a premium of S$0.78 each – 3,000 - 66,000 ordinary shares of S$0.10 each at a premium of S$0.65 each – 7 - 1,410,500 ordinary shares of S$0.10 each for cash at a premium of S$0.07 each 141 – - 1,021,000 ordinary shares of S$0.10 each for cash at a premium of S$0.06 each 102 –

23,368 23,125

The holders of ordinary shares are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restriction.


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26. FINANCE LEASE LIABILITY

The Group conducts a portion of its operations using leased machinery and equipment. These leases are classified as finance leases and expire over the next three years. The average discount rate implicit in the leases is 5% (2003 : 5% to 7.5%) per annum.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows :

Group Present Present Minimum value of Minimum value of payments payments payments payments 2004 2004 2003 2003

$’000 $’000 $’000 $’000

Within one year 1,338 1,280 2,330 2,175After one year but not more than five years 489 468 1,899 1,820

Total minimum lease payments 1,827 1,748 4,229 3,995Less: Amounts representing finance charges (79) – (234) –

1,748 1,748 3,995 3,995

27. STATUTORY RESERVES

Under the provision of the Civil and Commercial Code of Thailand, Magnecomp (Thailand) Limited is required to set aside as legal reserve at least 5% of annual net income (after deduction of the deficit brought forward, if any) until the reserve reaches 10% of the Company’s authorised capital. The reserve is not available for dividend distribution.

28. EMPLOYEE SHARE OPTIONS PLAN

The Magnecomp Employees’ Share Option Plan (the “Plan”) was approved by the shareholders of the Company at an Extraordinary General Meeting held on 18 September 2000.

The principal terms of the Plan were set out in the Circular to Shareholders dated 2 September 2000.

The Plan is administered by the Remuneration Committee which approves the dates of grant after the announcement of the half year and full year results of the Group. The bulk of the options allocated for grant each year are given out after announcement of the full year results. The second grant in the year is mainly given to eligible employees who join the Group during the year and were left out in the earlier grant.


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28. EMPLOYEE SHARE OPTIONS PLAN (CONT’D)

The options granted, exercised and cancelled under the Plan during the year and the options outstanding at the end of the year are as follows:-

No.of No.of No.of No.of Options Options Options Options Subscription Exercise Date of Grant Granted Exercised Cancelled Outstanding Price/ share Period

8 Feb 01 3,390,000 66,000 3,264,000 60,000 S$0.75 8/2/2002 to 8/2/2010

28 Aug 01 284,000 Nil 284,000 Nil S$0.52 28/8/2002 to 28/8/2010

6 Mar 02 4,318,000 2,000 4,190,000 126,000 S$0.39* 6/3/2004 to 6/3/2012

5 Sept 02 500,000 Nil 500,000 Nil S$0.24 5/9/2003 to 5/9/2011

7 Mar 03 5,386,000 1,021,000 574,000 3,791,000 S$0.16 7/3/2004 to 7/3/2012

31 Mar 03 6,946,000 1,410,500 679,000 4,856,500 S$0.17 31/3/2004 to 31/3/2012

30 May 03 60,000 Nil Nil 60,000 S$0.32 30/5/2004 to 30/5/2012

27 Aug 03 508,000 Nil 36,000 472,000 S$0.71 27/8/2004 to 27/8/2012

8 March 04 5,098,000 Nil 16,000 5,082,000 S$0.69* 8/3/2006 to 8/3/2014

18 Aug 04 660,000 Nil Nil 660,000 S$0.49 18/8/2005 to 18/8/2013

Total 27,150,000 2,499,500 9,543,000 15,107,500

* Granted at a discount, therefore vesting date is two years after Date of Grant


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28. EMPLOYEE SHARE OPTIONS PLAN (CONT’D)

The total number of options available for distribution up to February 2006 are as follows:-

10% of share capital set aside for options 23,367,942Less Options granted and outstanding 15,107,500 Less Options exercised 2,499,500Balance options available for grant in 2005 & 2006 5,760,942

The options may be exercised only after the first anniversary of the date of grant of option with the exception of options granted at a discount. The options are vested in four equal instalments with the first 25% of the options granted exercisable on the first anniversary of the date of grant. The number of options granted under the Magnecomp Employees’ Share Option Plan (the “Plan”) during the financial year were 5,758,000 options, out of which 5,098,000 options which were granted on 8 March 2004 were all granted at a discount of 20% of the market price.

None of the executive directors and employees of the Group who participated in the Plan has received 5% or more of the total number of options available under the Plan.

29. SEGMENT INFORMATION

The Company’s operating businesses are organised and managed separately according to the nature of products with each segment representing a strategic business unit that offers different products and services. The data storage components segment offers suspension assemblies to disk drive manufacturers. The office automation and consumer electronics components segment offers components for office automation machines like copier, printer and other electrical and electronic products. This segment also provides die making services to manufacturers of such equipment. The corporate and others segment include general corporate income and expense items. Segment accounting policies are the same as the policies described in Note 2.

The Group generally accounts for inter-segment sales and transfers as if the sales or transfers were to third parties at current market prices. Revenues are attributed to geographical areas based on the location of the assets producing the revenues. Segment assets consist primarily of fixed assets, current assets, intangibles and exclude investment in associated company. Segment liabilities comprise mainly of operating liabilities and exclude income tax liabilities and interest bearing liabilities.

The following tables present revenue and profit information regarding business and geographical segments for the financial years ended 31 December 2004 and 2003 and certain asset and liability information regarding business segments and certain asset information regarding geographical segments at 31 December 2004 and 2003. The format of segment information for business and geographical segments of the Group was modified for better presentation purposes and was not in the form presented in the previous audited financial statements.


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29. SEGMENT INFORMATION (CONT’D) Office automation and consumer Data storage electronics components components Corporate and others Elimination Consolidated 2004 2003 2004 2003 2004 2003 2004 2003 2004 2003 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Business segments Segment revenue Sales to external customer 227,527 210,922 151,654 118,278 – – – – 379,181 329,200 Management/ royalties fee – – – – 4,091 5,208 (4,091) (5,208) – – Intercompany interest income – 101 – – 594 1,495 (594) (1,596) – – Other revenue 540 6,434 1,054 515 117 115 – 1,711 7,064

Total revenue 228,067 217,457 152,708 118,793 4,802 6,818 (4,685) (6,804) 380,892 336,264

Segment operating profit 18,645 25,337 10,005 7,800 241 2,247 (594) (1,596) 28,297 33,788Finance cost (1,063) (2,029) (613) (698) (167) (617) 594 1,596 (1,249) (1,748) Share of (loss)/profit of unconsolidated associates – 127 – – (125) – – – (125) 127

Profit/(loss) before tax 17,582 23,435 9,392 7,102 (51) 1,630 – – 26,923 32,167Tax (expense)/ credit (882) (1,664) (1,492) (1,099) 536 (331) – – (1,838) (3,094)Minority interest (3,617) (2,732) (1,475) (910) – – – – (5,092) (3,642)

Net profit 13,083 19,039 6,425 5,093 485 1,299 – – 19,993 25,431

Segment assets 184,082 146,605 107,565 83,940 28,012 27,907 (12,804) – 306,855 258,452Investment in

associated company 1,567 –

Total assets 308,422 258,452

Segment liabilities (including minority interest) 71,215 36,051 42,278 32,730 1,572 2,479 (13,179) – 101,886 71,260Unallocated liabilities 52,662 46,166

Total liabilities 154,548 117,426

Capital expenditure 36,280 20,457 13,333 8,991 – 317 49,613 29,765

Depreciation 15,637 15,180 7,091 7,396 109 105 22,837 22,681

Write-off of goodwill – 223 – – – – – 223

Amortisation of intangible assets 1,731 1,608 – – – 227 1,731 1,835

Leasehold property impairment loss – – – 917 – – – 917


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29. SEGMENT INFORMATION (CONT’D) Asia USA Elimination Consolidated 2004 2003 2004 2003 2004 2003 2004 2003 $’000 $’000 S’000 S’000 $’000 $’000 $’000 $’000

Geographical segmentsSegment revenue Sales to external customer 376,074 326,035 3,107 3,165 – – 379,181 329,200Management/ royalties fee 4,091 5,208 – – (4,091) (5,208) – – Intercompany interest income 594 1,495 – 101 (594) (1,596) – – Other revenue 1,487 1,095 224 5,969 – – 1,711 7,064

Total revenue 382,246 333,833 3,331 9,235 (4,685) (6,804) 380,892 336,264

Segment 27,691 27,559 1,200 7,825 (594) (1,596) 28,297 33,788 operating profit

Segment assets 305,731 248,585 13,928 9,867 (12,804) – 306,855 258,452

Capital expenditure 44,075 27,793 5,538 1,972 – – 49,613 29,765

30. COMMITMENTS Group Company

2004 2003 2004 2003 $’000 $’000 $’000 $’000

(a) Capital expenditure not provided for in the financial statements : Commitments in respect of contracts placed 8,674 1,337 – –

(b) The Company and its subsidiaries have issued corporate guarantees amounting to approximately $67.9 million (2003

: $60.5 million) and $Nil million (2003 : $45 million) respectively in favour of certain financial institutions for banking and finance lease facilities extended to the subsidiaries in the Group, of which $38 million (2003 : $17.3 million) and $Nil million (2003 : $16 million) were utilised as at 31 December 2004.

(c) The Company has given an undertaking to its subsidiaries to provide continuing financial support to meet their debts, as and when they fall due for the next 12 months.

(d) During the year, one of the subsidiary companies entered into an interest rate swap agreement with a financial institution to hedge the floating rate loan for interest rate risk exposure with notional contract amount of S$14.7 million (HK$70 million) for a period of 3 years. The interest rate swap agreement utilised by the subsidiary company effectively protects its exposure to floating interest rate risk.


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31. OPERATING LEASE COMMITMENTS The Group leases certain property under lease agreements that are non-cancellable within a year. The leases expire at

various dates till 2008 and contain provisions for rental adjustments. Future minimum lease payments for all leases with initial or remaining terms of one year or more are as follows :-

Group Company 2004 2003 2004 2003 $’000 $’000 $’000 $’000

Within one year 7,180 6,804 195 256 After one year but not more than five years 17,269 20,261 91 39More than five years 10,395 10,984 – –

34,844 38,049 286 295

32. RELATED PARTY TRANSACTIONS

The following are the significant intercompany transactions entered into by the Company and the Group with related parties :-

Group Company 2004 2003 2004 2003 $’000 $’000 $’000 $’000

Management fees from subsidiaries – – 4,086 4,634Interest income from subsidiaries – – 597 1,609Dividend income from subsidiary/subsidiaries – – 31,573 15,530Interest expense from subsidiary – – – (102)Sales to a joint venture partner 19,881 4,605 – – Purchase of fixed assets from a joint venture partner – (5,003) – –

Directors’ and executives’ remuneration

Please refer to note 6 for directors’ fees and other emoluments. Top 5 executive officers’ remuneration totalled $2,600,000 (2003 : $2,257,000).

33. DIRECTORS’ REMUNERATION

Number of directors in remuneration bands :- 2004 2003

$500,000 and above 4 2$250,000 to $499,999 0 2Below $250,000 5 5

9 9


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34. FINANCIAL INSTRUMENTS

Financial risk management objectives and policies

The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and foreign currency risk. The board reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk

The Group obtains additional financing through bank borrowings and leasing arrangements. The Group’s policy is to obtain the most favourable interest rates available without increasing its foreign currency exposure.

Surplus funds are placed with reputable banks.

Liquidity risk

To ensure continuity of funding, the Group’s policy is to ensure availability of short-term funding through overdraft facilities. Long-term funding is through bank borrowings.

Foreign currency risk

The Group’s exposure to foreign currency risk relates primarily to its receivables and payables, which are denominated in foreign currencies, majority of which are in U.S. Dollars and translation of financial statements of foreign subsidiaries for the purposes of consolidation. The Group manages its transactional exposure by matching, as far as possible, its receipts and payments in each individual currency. The Group monitors the U.S. dollar exchange rates closely so as to minimize any potential material adverse effects from these exposure in a timely manner. From time to time, the Group looks into hedging the currency exposure as and when appropriate. Foreign exchange differences arising from translation of financial statements of foreign subsidiaries are taken to translation reserve, a component of equity.

Credit risk

The carrying amount of investments, trade and other receivables, and cash represent the Group’s maximum exposure to credit risk. No other financial assets carry a significant exposure to credit risk.

The Group has no significant concentrations of credit risk. Cash is placed with reputable financial institutions. Transactions are entered into with creditworthy counterparties, thereby mitigating any significant concentration of credit risk.

Fair values

The carrying amounts of trade and other receivables, cash, bank overdraft, trade and other payables and short-term loans approximate their fair values due to their short-term nature. The fair value of the long-term portion of the bank loan which is not carried at fair value in the balance sheet is presented below. The fair value is estimated using the discounted cash flow analysis based on current incremental lending rate for similar types of lending and borrowing arrangements.

Total carrying amount Aggregate net fair value 2004 2003 2004 2003 $’000 $’000 $’000 $’000

Interest-bearing bank loans - long term portion 14,665 – 14,368 –


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35. DIVIDEND

The Directors propose that a tax exempt final dividend of $0.01 per ordinary share amounting to $2.33m be paid for the year ended 31 December 2004.

36. AUTHORISATION OF FINANCIAL STATEMENTS

The financial statements for the year ended 31 December 2004 were authorised for issue in accordance with a resolution of the directors on 8 March 2005.

37. SUBSEQUENT EVENT

(a) On 1 February 2005, the Company completed the merger of the Data Storage Business with Magnecomp Precision Public Company (“MPT”) (formerly known as K.R. Precision Public Company (“KRP”) , a public listed company in the Stock Exchange of Thailand . The following companies were sold to MPT in exchange for 1,418,451,600 MPT shares @ 2.60 Baht each amounted to Baht 3,687,974,160 (approximately S$157,845,199) , representing 80% of the enlarged MPT :-

(i) 100% of Indest Corporation(ii) 100% of Magnecomp Technology Limited(iii) 100% of Magnecomp (Thailand) Limited(iv) 100% of Acrathon Precision Technologies (HK) Limited(v) 100% of Acrathon Precision Technologies Limited(vi) 100% of Magnecomp Flexture Limited(vii) 51% of Optimal Technology Limited

Following the completion of the merger , the Company has on 3 February 2005 made a tender offer to acquire the remaining 20% share not held by the Company at 2.60 Baht per share from the existing shareholders of MPT in accordance with the requirements of the Stock Exchange of Thailand and the relevant Thai laws. The tender offer is expected to close on 14 March 2005.

(b) On 17 January 2005, the Company entered into an agreement with its joint venture partner , SAE Magnetics (H.K.) Limited (SAE) to purchase their 49% stake in Optimal Technology Limited , a joint venture company between SAE and the Company. The 51% holding owned by the Company had been disposed off to MPT in the merger mentioned above. The purchase from SAE was completed on 28 February 2005 and as part of the Merger Share Sale and Purchase Agreement, the company sold the 49% stake amounting to S$14,274,258 to MPT at cost in exchange for 130,926,788 MPT share at 2.60 Baht on the same day, thereby increasing Magnecomp shareholding in MPT from 80% to 81.3%.

(c) On 17 January 2005, Optimal Technology Limited also entered into an agreement with its shareholder, SAE Magnetics (H.K.) Limited (SAE) for the sale of leasehold improvement and certain machinery and equipment relating to its Flipchip Business to SAE at net book value as at 31 December 2004 amounting to S$7,896,454 (US$4,832,591). On the same day, Optimal Technology Limited entered into a facilities lease-back agreement with SAE to leaseback certain facilities under its FSA business at a monthly rental of US$28,447, with a lease negotiated for a term of 3 years.


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Statistics of Shareholdingsas at 21 March 2005

Authorised share capital : $23,367,942.80Issued and fully paid-up capital : $23,367,942.80Class of shares : Ordinary share of $0.10 eachVoting rights : One vote per share

DISTRIBUTION OF SHAREHOLDINGS Size of Shareholding Number of Number of Shareholders % Shares %

1 - 999 8 0.24 1,738 0.001,000 - 10,000 2,474 74.34 13,078,508 5.6010,001 - 1,000,000 828 24.88 39,209,000 16.771,000,001 and above 18 0.54 181,471,182 77.63

TOTAL: 3,328 100.00 233,760,428 100.00

TWENTY LARGEST SHAREHOLDERS

Name No. of Shares %

1. HSBC (Singapore) Nominees Pte Ltd 74,332,200 31.802. Advantec Holding S.A. 43,381,300 18.563. Raffles Nominees Pte Ltd 16,605,000 7.104. Citibank Nominees Singapore Pte Ltd 8,105,429 3.475. DBS Nominees Pte Ltd 5,022,000 2.156. G K Goh Stockbrokers Pte Ltd 4,501,000 1.937. OCBC Securities Private Ltd 4,140,000 1.778. Gopala Achuta Menon 3,324,000 1.429. Capital Intelligence Limited 3,201,000 1.3710. Kim Eng Securities Pte Ltd 3,121,000 1.3411. United Overseas Bank Nominees Pte Ltd 3,064,000 1.3112. Morgan Stanley Asia (Singapore) Securities Pte Ltd 2,795,000 1.2013. Merrill Lynch (Singapore) Pte Ltd 2,519,825 1.0814. UOB Kay Hian Pte Ltd 1,911,000 0.8215. HL Bank Nominees (S) Pte Ltd 1,633,000 0.7016. Lim & Tan Securities Pte Ltd 1,446,000 0.6217. Phillip Securities Pte Ltd 1,239,500 0.5318. Kwok Wai Keung 1,129,928 0.4819. Wong Ngit Liong @ Wong Geok Kiong 1,000,000 0.4320. DMG & Partners Securities Pte Ltd 950,000 0.41

TOTAL : 183,421,182 78.49

PERCENTAGE OF SHAREHOLDING IN PUBLIC’S HANDS

Based on information available to the Company as of 21 March 2005, approximately 55.09% of the issued ordinary shares are held in the hands of the public. Accordingly, the Company has complied with Rules 723 of the Listing Mannual of the SGX-ST.

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SUBSTANTIAL SHAREHOLDERS(As recorded in the Register of Substantial Shareholders)

Direct Interest % Deemed Interest %

Advantec Holding S.A. 83,382,300 35.68 - -Trustee of Chandaria Trust I - - *83,832,300 35.87J.P. Morgan Chase & Co - - **20,422,000 8.739

Notes:

* The Trustee of Chandaria Trust 1 is deemed to have an interest in 83,832,300 shares, comprising of 83,382,300 shares held by Advantec Holding S.A. and 450,000 shares held by Metchem Engineering S.A., both wholly-owned by the Trust.

** J.P. Morgan Chase & Co is deemed to have an interest in 20,422,000 shares, comprising of 13,500,000 shares held by HSBC (Singapore) Nominees Pte Ltd and 6,922,000 shares held by Raffles Nominees (Pte) Ltd.

Statistics of Shareholdingsas at 21 March 2005

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Notice of Annual General Meeting

MAGNECOMP INTERNATIONAL LIMITEDCompany Registration No. 199508431Z

(Incorporated in Singapore)

NOTICE IS HEREBY GIVEN that the Annual General Meeting of MAGNECOMP INTERNATIONAL LIMITED (“the Company”) will be held at VIP Lounge, Raffles City Convention Centre, 2 Stamford Road, Singapore 178882 on Thursday, 28 April 2005 at 10 a.m. for the following purposes:

AS ORDINARY BUSINESS

1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended 31 December 2004 together with the Auditors’ Report thereon.

(Resolution 1)

2. To declare a tax exempt first and final dividend of 1 cent per share for the year ended 31 December 2004 (2003:1 cent per share).

(Resolution 2)

3. To re-appoint Ernst & Young as the Company’s Auditors and to authorise the Directors to fix their remuneration. (Resolution 3)

4. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.

AS SPECIAL BUSINESS

5. To re-elect the following Directors retiring pursuant to Article 84 of the Company’s Articles of Association:

Mr Leong Swee Sum (Retiring under Article 84) (Resolution 4) Mr Steven Glenn Campbell (Retiring under Article 84) (Resolution 5) Mr Robert Sebastiaan Lette (Retiring under Article 84) (Resolution 6)

Mr Leong Swee Sum will, upon re-election as a Director of the Company, remain the Chairman of the Remuneration Committee and a member of the Audit Committee and Nominating Committee and will be considered independent for the purposes of Rule 704(8) of Listing Manual of the Singapore Exchange Securities Trading Limited.

Mr Steven Glenn Campbell will, upon re-election as a Director of the Company, remain a member of the Remuneration Committee and Nominating Committee and will be considered non-independent for the purposes of Rule 704(8) of Listing Manual of the Singapore Exchange Securities Trading Limited.

Mr Robert Sebastiaan Lette will, upon re-election as a Director of the Company, remain a member of the Remuneration Committee and will be considered independent for the purposes of Rule 704(8) of Listing Manual of the Singapore Exchange Securities Trading Limited.

6. To approve the payment of Directors’ fees of S$133,370 for the year ended 31 December 2004 (2003: S$171,000). (Resolution 7)

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7. Authority to allot and issue shares up to 50 per centum (50%) of issued share capital

That pursuant to Section 161 of the Companies Act, Cap. 50 and Rule 806(2) of the Listing Manual of the Singapore Exchange Securities Trading Limited, the Directors be empowered to allot and issue shares in the capital of the Company at any time and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be allotted and issued pursuant to this Resolution shall not exceed fifty per centum (50%) of the issued share capital of the Company at the time of the passing of this Resolution, of which the aggregate number of shares to be issued other than on a pro rata basis to all shareholders of the Company shall not exceed twenty per centum (20%) of the issued share capital of the Company and that such authority shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the Company’s next Annual General Meeting or the date by which the next Annual General Meeting of the Company is required by law to be held, whichever is earlier.[See Explanatory Note (i)]

(Resolution 8)

8. Authority to allot and issue shares under the Magnecomp Employees’ Share Option Plan

That approval be and is hereby given to the Directors to offer and grant options in accordance with the provisions of the Magnecomp Employees’ Share Option Plan (the “Plan”) and pursuant to Section 161 of the Companies Act, Cap. 50 to allot and issue from time to time such number of shares as may be required to be issued pursuant to the exercise of the options under the Plan provided always that the aggregate number of shares to be issued pursuant to the Plan shall not exceed ten per centum (10%) of the total issued share capital of the Company for the time being and that such authority shall, unless revoked or varied by the Company in general meeting, continue in force until the conclusion of the Company’s next Annual General Meeting.[See Explanatory Note (ii)]

(Resolution 9)

By Order of the Board

Linda Sim Hwee AiSecretarySingapore, 13 April 2005


NOTICE IS HEREBY GIVEN that the Share Transfer Books and Register of Members of Magnecomp International Limited (“the Company”) will be closed from 5.00 p.m. on 6 May 2005 to 9 May 2005 (both dates inclusive) for the preparation of dividend warrants.

Duly completed registrable transfers received by the Company’s Share Registrar, Lim Associates (Pte) Ltd, 10 Collyer Quay #19-08, Ocean Building, Singapore 049315 up to 5.00 p.m. on 6 May 2005 will be registered to determine shareholders’ entitlements to the said dividend. Members whose Securities Accounts with The Central Depository (Pte) Limited are credited with shares at 5.00 p.m. on 6 May 2005 will be entitled to the proposed dividend.

Payment of the dividend, if approved by the members at the Annual General Meeting to be held on 28 April 2005, will be made on 24 May 2005.

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Explanatory Notes:

(i) The Ordinary Resolution 8 proposed in item 7 above, if passed, will empower the Directors from the date of this Meeting until the date of the next Annual General Meeting, or the date by which the next Annual General Meeting is required by law to be held or when varied or revoked by the Company in general meeting, whichever is the earlier, to allot and issue shares in the Company. The number of shares that the Directors may allot and issue under this resolution would not exceed fifty per centum (50%) of the issued capital of the Company at the time of the passing of this resolution. For issue of shares other than on a pro rata basis to all shareholders, the aggregate number of shares to be issued shall not exceed twenty per centum (20%) of the issued capital of the Company.

For the purpose of this resolution, the percentage of issued capital is based on the Company’s issued capital at the time this proposed Ordinary Resolution is passed after adjusting for new shares arising from the exercise of share options or the vesting of share awards outstanding or subsisting at the time when this proposed Ordinary Resolution is passed and any subsequent consolidation or subdivision of plan.

(ii) The Ordinary Resolution 9 proposed in item 8 above, if passed, will empower the Directors of the Company, from the date of the above Meeting until the next Annual General Meeting, to allot and issue shares in the Company of up to a number not exceeding in total ten per centum (10%) of the issued share capital of the Company from time to time pursuant to the exercise of the options under the Plan.

Notes:

1. A Member entitled to attend and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint a proxy to attend and vote in his/her stead. A proxy need not be a Member of the Company.

2. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 1 Finlayson Green #15-02 Singapore 049246 not less than forty-eight (48) hours before the time appointed for holding the Meeting.


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MAGNECOMP INTERNATIONAL LIMITEDCompany Registration No. 199508431Z

(Incorporated In The Republic of Singapore)

I/We, (Name)

Of (Address)

being a member/members of MAGNECOMP INTERNATIONAL LIMITED (the “Company”), hereby appoint:

Name Address NRIC/Passport Proportion of Number Shareholdings (%)

And /or (delete as appropriate)

Name Address NRIC/Passport Proportion of Number Shareholdings (%)

or failing him/her, the Chairman of the meeting as my/our proxy to vote for me/us on my/our behalf and, if necessary, demand for a poll at the Annual General Meeting of the Company to be held on Thursday, 28 April 2005 at 10.00a.m. and at any adjournment thereof. The proxy is to vote on the business before the meeting as indicated below. If no specific direction as to voting is given, the proxy will vote or abstain from voting at his/her discretion, as he/she will on any other matter arising at the Meeting:

No. Resolutions relating to: For Against

1 Adoption of Directors’ Report and Accounts for the year ended 31 December 2004

2 Declaration of Tax exempt first and final dividend

3 Re-appointment of Ernst & Young as Auditors

4 Re-election of Mr Leong Swee Sum

5 Re-election of Mr Steven Glenn Campbell

6 Re-election of Mr Robert Sebastiaan Lette

7 Approval of Directors’ fees amounting to S$133,370

8 Authority to allot and issue new shares

9 Authority to allot and issue shares under the Magnecomp Share Option Plan

(Please indicate with a cross [X] in the space provided whether you wish your vote to be cast for or against the Resolutions as set out in the Notice of the Meeting.)

Dated this day of 2005

Signature of Shareholder(s) or, Common Seal of Corporate Shareholder

Proxy Form(Please see notes overleaf before completing this Form)

IMPORTANT 1. For investors who have used their CPF monies to buy Magnecomp shares, the Annual Report is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purpose if used or purported to be used by them. 3. CPF Investors who wish to vote and/or attend should contact their CPF Approved Nominees.

Total number of Shares in: No. of Shares

(a)CDP Register

(b)Register of Members

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Notes:

1. Please insert the total number of Shares held by you. If you have Shares entered against your name in the Depository Register (as defined in Section 130A of the Companies Act, Chapter 50 of Singapore), you should insert that number of Shares. If you have Shares registered in your name in the Register of Members, you should insert that number of Shares. If you have Shares entered against your name in the Depository Register and Shares registered in your name in the Register of Members, you should insert the aggregate number of Shares entered against your name in the Depository Register and registered in your name in the Register of Members. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all the Shares held by you.

2. A member of the Company entitled to attend and vote at a meeting of the Company is entitled to appoint one or two proxies to attend and vote instead of him/her. A proxy need not be a member of the Company.

3. Where a member appoints two proxies, the appointments shall be invalid unless he/she specifies the proportion of his/her shareholding (expressed as a percentage of the whole) to be represented by each proxy.

4. The instrument appointing a proxy or proxies must be deposited at the registered office of the Company at 1 Finlayson Green #15-02 Singapore 049246 not less than forty-eight (48) hours before the time appointed for the Annual General Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or of his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executed either under its seal or under the hand of an officer or attorney duly authorised.

6. A corporation which is a member may authorise by resolution of its directors or other governing body such person as it thinks fit to act as its representative at the Meeting, in accordance with Section 179 of the Companies Act, Chapter 50 of Singapore.

General:

The Company shall be entitled to reject the instrument appointing a proxy or proxies if it is incomplete, improperly completed or illegible or where the true intentions of the appointor are not ascertainable from the instructions of the appointor specified in the instrument appointing a proxy or proxies. In addition, in the case of Shares entered in the Depository Register, the Company may reject any instrument appointing a proxy or proxies lodged if the member, being the appointor, is not shown to have Shares entered against his name in the Depository Register as at forty-eight (48) hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited to the Company.


Magnecomp Locations

Data Storage Components (DS) Division

Suspension Assemblies• Magnecomp Precision Technology Public Company Limited• Magnecomp Corporation• Magnecomp Technology Limited• Magnecomp (Thailand) Limited

Value Added Suspension Assemblies• Optimal Technology Limited

Etched Components• Acrathon Precision Technologies (HK) Limited

CORPORATEMagnecomp International Limited

Office Automation And Consumer

Electronics Components (OACE) Division

Stamped Components

• Mansfield Mfg. Co. Limited

• Mansfield (Suzhou) Mfg. Co. Limited

• Dongguan Mansfield Metal Forming Ltd

Tool & Die Fabrication

• Feng Chuan Tooling Co. Limited

Sub-Assembly

• Magix Mechatronics Co. Limited

USA China

Thailand

Singapore

Suzhou (OACE)

8 locations in Southern China(3 DS, 5 OACE)

HONG KONG / CHINA

Registrar And Share


1 Finlayson Green #15-02

Singapore 049246

Tel: (65) 6535-0689

Fax: (65) 6533-2680

www.magnecomp.com

Co. Reg. No. 199508431Z

Documents

Beyond Basics - listed companyinnotek.listedcompany.com/misc/ar2004.pdf · 2008-06-04 · Thailand, this acquisition will enable us to capitalize on other opportunities in Thailand