The Board of Directors of FCB ("Board"), is pleased to announce that the Company had on 10 May 2007 agreed to the terms and entered into a conditional Sale and Purchase Agreement ("SPA") with Evergreen Development Corporation ("Evergreen" or "Vendor") for the acquisition of 4,008,000 ordinary shares of NT$10 each in AGTC representing 13.36% of the issued and paid-up share capital of AGTC for a cash consideration of NT$148,296,000 (equivalent to approximately RM15.2 million based on the exchange rate of NT$9.7581: RM1.00 as at 9 May 2007) ("Proposed Acquisition").

2. THE PROPOSALS

2.1 Proposed Acquisition

The Proposed Acquisition involves the acquisition by the Company of 4,008,000 ordinary shares of NT$10 each in AGTC ("Sales Shares") representing 13.36% of the issued and paid-up share capital of AGTC from Evergreen for a cash consideration of NT$148,296,000 (equivalent to approximately RM15.2 million).

It is intended that the Sale Shares will be directly held by Frontken Technology Corporation, a wholly-owned subsidiary of FCB.

Following the implementation of the Proposed Acquisition, FCB would directly and indirectly hold a total of 9,708,000 ordinary shares of NT$10 each in AGTC, representing 32.36% of the issued and paid-up share capital of AGTC.

The salient terms of the SPA are as follows:

(a) The Vendor agrees to effect the transfer of the Sale Shares pursuant to the Securities and Exchange Act and sell, and FCB agrees to purchase, the Sale Shares in accordance with the terms and conditions of the SPA.

(b) The transfer of the Sale Shares shall take place from 14 May 2007 ("Closing") or such other date to be mutually agreed upon by the parties ("Closing Start Date"), until the date of which the total transfer of the Sales Shares is effected ("Closing Completion Date").


(c) Prior to the Closing Start Date, FCB shall deliver to the Vendor a written confirmation from the bank, evidencing the transfer of the purchase consideration by FCB to the bank account of the securities broker designated by both parties.

(d) If, at the Closing, the Vendor does not receive any of the cash consideration payable by FCB on any of the respective Closing Dates (being the respective dates commencing from the Closing Start Date and ending on the Closing Completion Date), the Vendor is not required to consummate the transaction on the next Closing Date. In addition, FCB shall return any of the Sale Shares already transferred to it at the time without any condition, and shall bear any costs and expenses resulting therefrom.

(e) Unless specifically waived by FCB, the SPA may be terminated if the Vendor does not fulfill the following obligations prior to the Closing Start Date:

(i) the delivery of all the documents stipulated in the SPA to FCB;
(ii) the representations and warranties of the Vendor set forth in the SPA continue to remain true and correct in all material respects as at the Closing Completion Date;
(iii) the Vendor having obtained approvals from all governmental or regulatory authorities having jurisdiction over the transactions contemplated under the SPA.

(f) The obligation of the Vendor to complete the Proposed Acquisition shall be subject to the fulfillment by FCB of the following prior to the Closing Start Date, unless specifically waived by the Vendor:

(i) the delivery of all the documents stipulated in the SPA to the Vendor;
(ii) the representations and warranties of FCB set forth in the SPA continue to remain true and correct in all material respects as at the Closing Completion Date;
(iii) FCB having obtained approvals from all governmental or regulatory authorities having jurisdiction over the transactions contemplated under the SPA.

(g) The Vendor covenants and agrees with FCB that for a period of three (3) years after the Closing Completion Date, it will not be engaged or interested, whether directly or indirectly, in any business in any place in which AGTC now operates its business that would be in competition with business as now operated by AGTC.

(h) The Vendor agrees to indemnify and hold FCB harmless from and against any damages (including any reduction in value) and costs incurred by FCB (including interest, penalties, cost of preparation and investigation, fees of attorneys, accountants and other professional advisors, and other reasonable expenses, not exceeding NT$1 million) resulting from the following:

(i) inaccuracy in any representation or warranty contained in the SPA, provided that the claim or demand for such indemnification is asserted on the Closing Start Date; or
(ii) breach or non-fulfillment of any obligation and covenant under the SPA.


(i) FCB agrees to indemnify and hold the Vendor harmless from and against any damages (including any reduction in value) and costs incurred by the Vendor (including interest, penalties, cost of preparation and investigation, fees of attorneys, accountants and other professional advisors, and other reasonable expenses, not exceeding NT$1 million) resulting from the following:

(i) inaccuracy in any representation or warranty contained in the SPA, provided that the claim or demand for such indemnification is asserted on the Closing Start Date; or
(ii) breach or non-fulfillment of any obligation and covenant under the SPA, rendering the SPA ineffective, in which event FCB shall pay a compensation sum of NT$10 million.

(j) FCB may nominate any nominee to purchase the Sale Shares on behalf of FCB, in which event both FCB and the nominee shall be bound by the terms and provisions of the SPA.

The purchase consideration of NT$148,296,000 (equivalent to approximately RM15.2 million) was arrived at following negotiations between the parties on a willing-buyer willing-seller basis after taking into consideration the future earnings potential and audited net assets of AGTC as at 31 December 2006 of approximately NT$572.0 million (equivalent to approximately RM62.0 million based on the exchange rate of NT$9.2289 : RM1.00 as at 29 December 2006).

AGTC was organised under the Company Law in Taiwan on 13 January 1999 and was admitted to the GreTai Securities Market as an emerging stock on 30 December 2004.

AGTC's present authorised share capital is NT$300 million comprising 30,000,000 ordinary shares of NT$10 each, of which NT$300 million comprising 30,000,000 ordinary shares of NT$10 each have been issued and fully paid-up.

AGTC is one of the leading service companies specialising in surface treatment and advanced precision cleaning for the TFT-LCD (Thin Film Transistor-Liquid Crystal Display) and semiconductor industries in Taiwan. AGTC also undertakes a high level of research and development ("R&D") in the environmentally friendly production of surface treatment and recycle cleaning technology. Its key technology includes Type III anodisation, Ti-anodisation, electroless Ni-plate, electro polishing, chemical polishing, selective Ni-plate, passivation, ultra precision cleaning, thermal spraying, water and disposal of waste services.

Currently, AGTC does not have any subsidiary or associated company.

A summary of the financial results of AGTC is provided in Table 1.

Evergreen was organised under the Company Law in Taiwan in January 1973 under the laws of Taiwan. The company is principally engaged in the repair of containers and manufacturing and sale of steel related products, such as steel bars, steel structures and related components.


The present authorised share capital of Evergreen is NT$4.4 billion comprising 440,000,000 ordinary shares of NT$10 each, of which NT$4,034,091,600 comprising 403,409,160 ordinary shares of NT$10 each have been issued and fully paid-up.

As at 9 May 2007, Evergreen held 20.75% of the issued and paid-up share capital of AGTC.

FCB was unable to obtain the original date and cost of investment in AGTC from Evergreen despite its best endeavour.

The purchase consideration of NT$148,296,000 (equivalent to approximately RM15.2 million) shall be satisfied entirely by cash and is expected to be financed temporarily by a bridging loan from a financial institution of RM15.0 million and internally generated funds. The bridging loan will be repaid via proceeds from the private placement which was announced on 2 April 2007.

There are no liabilities, including contingent liabilities and guarantees, to be assumed by FCB arising from the Proposed Acquisition.

The Directors of FCB do not foresee any immediate requirement for any additional financial commitment for its investment in AGTC.

On 20 December 2006, FCB acquired 19% of the issued and paid-up share capital of AGTC from Evergreen, which was completed on 19 March 2007. With the implementation of the Proposed Acquisition, it would enable FCB to equity account for the results of AGTC.

As stated in the Company's Circular to shareholders dated 22 January 2007, the acquisition of AGTC is the continuing efforts of the Group to penetrate new geographical markets and industry segments and increase market visibility and presence in the region. The acquisition of AGTC would not only allow the FCB Group to tap into the mature semiconductor industry in Taiwan, but would also provide a strategic platform for it to enter the North Asia markets such as China. In addition, the acquisition will enable the FCB Group to gain a quicker foothold in the lucrative global markets and put it in a better position to establish ties with some of the prominent global players.


The acquisition of AGTC also presents opportunities for the FCB Group to leverage on AGTC's leading position in surface treatment in the semiconductor industry in the region and tap into its established vast business network to provide more new fab (semiconductor services) and new parts manufacturing. The acquisition will also enable the FCB Group to broaden its range of service offerings by tapping into the existing critical surface treatment capabilities and technology of AGTC, provide the opportunity for transfer of technology and allow the Group to derive synergistic benefits through the exchange of expertise, knowledge and resources, thus propelling the Group to a new level of growth and enhancing its business prospects.

The acquisition of AGTC is in line with the Company's strategy to be a leading advanced materials and surface metamorphosis technology solutions provider in Southeast Asia, sustain continuous growth and maximise shareholders' value. To this end, the Company will continue to explore and evaluate investment opportunities that will enhance its competitiveness and broaden its capabilities in its core competencies.

4. PROSPECTS AND RISK FACTORS

4.1 Prospects of the TFT-LCD and Semiconductor Industry

After more than two decades of development, Taiwan's semiconductor industry has distinguished itself by its complete industry supply chain, significant clustering effect, and strong capabilities in contract wafer manufacturing. As a part of Challenge 2008, the Ministry of Economic Affairs is promoting a "Two Trillion and Twin Star" program, a four-year project to drive the production value of Taiwan's semiconductor and flat-panel display (TFT-LCDs in particular) industries to NT$1 trillion (US$29.1 billion) each. According to the program, by the year 2006, Taiwan is forecasted to become the world's third largest semiconductor supplier, with production value reaching US$46.19 billion and three of its companies among the world's top ten chipmakers. It is also expected that by 2006, Taiwan will have the highest density of 12-inch wafer foundries and offer the highest efficiency in wafer fabrication in the world.

Taiwan's flat-panel display industry developed out of the TN/STN (Twisted Nematic / Super Twisted Nematic) LCD industry and expanded to the production and processing of TFT-LCD and upstream components, such as glass substrates, colour filters, polarizers, backlight modules, and driver integrated circuits ("IC"). With large demand from local notebook PC (personal computers) manufacturers and technical advantages borrowed from the semiconductor industry, Taiwan's TFT-LCD industry has achieved its current strong position in a mere few years.

With the commencement of the "Two Trillion and Twin Star" program, measures are being taken to offer more incentives to businesses, resolve patent-related problems, and strengthen R&D and training of new talents. Through the cooperation of government and industry, the flat-panel display industry is expected to achieve a value of US$39.8 billion by 2006, with private investment to exceed US$10.17 million in 2007, making Taiwan the largest TFT-LCD supplier in the world.

(Source: "Taiwan Yearbook 2005" from Government Information Office's website)


In 2005, Taiwan IC revenue (including design, manufacturing, packaging and testing) totaled NT$1,117.9 billion, a 1.7% growth from 2004. The Industrial Economics & Knowledge Centre of the Industrial Technology Research Institute predicts that the 2006 Taiwan IC revenue (including design, manufacturing, packaging and testing) will reach NT$1,296.2 billion, a 15.9% growth from 2005.

(Source: "Overview on Taiwan Semiconductor Industry (2006 Edition)" by Taiwan Semiconductor Industry Association)

The Semiconductor Industry Association ("SIA") projects that global semiconductor industry will continue to ride a strong wave of consumer demand for electronic products, driving sales to $321 billion in 2009. The SIA forecast projects a compound annual growth rate of 9% for the forecast period, 2006-2009. The forecast projects growth in all regional markets, with the Asia Pacific region continuing to be the fastest growing market which is projected to reach 48.2% of the worldwide market in 2009.

(Source: "SIA Forecast: Microchip Industry Will Reach $321 Billion in 2009" dated 16 November 2006 by SIA)

AGTC provides cleaning and processing services for peripheral devices and supplies components for the semiconductor and optoelectronics industries. The commitment of AGTC in the future is to maintain the process yields of major semiconductor and optoelectronics manufacturers and lower the operation expenses in replacing components.

Since the market demand of flat panel displays has been developing continuously for automobile televisions, hand-held personal computers, and mobile phones in various sizes and large-size LCD panels are replacing traditional cathode-ray tube displays steadily, TFT-LCD is, without doubt, one of the mainstream industries. At the same time, peripheral key components such as glass substrates, colour filters, polarizer panels, driver ICs, and back light modules have attracted a substantial amount of investments from both foreign and local manufacturers, forming a huge industry clustering and a complete chain in terms of upstream, middle stream, and downstream suppliers.

Based on the expansion trend of fifth-generation plants established by major TFT-LCD manufacturers (including colour filters), the market share of AGTC in LCD cleaning as well as surface processing reaches approximately 50%. According to the management of AGTC, the expenditures in cleaning and surface processing for the five (5) major TFT-LCD manufacturers in Taiwan are approximately NT$13.88 million this year. As the TFT-LCD industry continues to increase its production capacity, the expenses in equipment / component cleaning and surface processing should gradually rise in the coming years. In particular, for next generation large-size panel manufacturing plants, the expenses will be higher.

AGTC, with its core technologies in high cleaning precision and all kinds of surface treatment processes, is poised to benefit from the growing market.

4.3 Risk Factors

(i) General Business Risk

As the operations of AGTC are similar to the existing operations of the FCB Group, they are exposed to certain inherent risks similar to those of the FCB Group. These include general downturn in the global, regional and national economy, entry of new players, constraints in labour supply and increase in labour costs, changes in law and tax legislation affecting the industry, changes in business and credit conditions, unfavourable change in government policy and regulations such as foreign exchange rates, methods of taxation and currency exchange controls. Although AGTC has been profitable for the past five (5) financial years, there is no assurance that adverse political and economic development that is beyond the control of AGTC will not materially and adversely affect the financial performance of AGTC.

(ii) Acquisition and Financing Risks

The Directors of FCB envisage that the Proposed Acquisition will provide the opportunity for the Group to penetrate new markets thus contributing positively to the revenue and earnings growth of the Group. However, there is no assurance that the anticipated benefits of the Proposed Acquisition will be realised or that the FCB Group will be able to derive sufficient dividend income from the Proposed Acquisition to offset associated acquisition cost.

Further, the purchase consideration for the Proposed Acquisition will be temporarily financed by a bridging loan from financial institution, the costs of which are expected to be affected by changes in interest rates. No assurance can be given that future fluctuations in interest rates will not have any material adverse impact on the profitability of the FCB Group.

(iii) Reliance on a Major Supplier

AGTC offers cleaning and surface processing services for parts and components on machines for semiconductor and photoelectric device manufacturing, and develops new parts and components for its customers. The latter is outsourced to a major supplier in Taiwan and AGTC does not have a long term contract with this supplier. Although the value and percentage of purchases from the major supplier have declined over the past three (3) years, the percentage of new parts supplied by the said supplier still represents a substantial part of the company's new parts. Therefore, in the event that the major supplier ceases its business relationship with AGTC, the business of AGTC may be adversely affected.

AGTC is currently working with a few other suppliers to reduce reliance on the above major supplier. In the long term, changing suppliers or sourcing for alternative suppliers and exploiting the mature technical capabilities of Taiwan's machine processing industry would allow AGTC to gradually find other component development partners.:

5. FINANCIAL EFFECTS

5.1 Share Capital and Shareholdings of Substantial Shareholders

The Proposed Acquisition will not have any effect on the share capital, shareholdings of substantial shareholders or the resultant foreign equity ownership in the Company.

The Proposed Acquisition is not expected to have any material effect on the earnings of the Group for the financial year ending 31 December 2007. Barring unforeseen circumstances, the Board expects the Proposed Acquisition to contribute positively to the future earnings of the FCB Group.

The Proposed Acquisition is not expected to have any effect on the audited consolidated net assets of FCB as at 31 December 2006.

The effect of the Proposed Acquisition on the gearing ratio of the FCB Group is set out in Table 2.

The Proposed Acquisition is conditional upon the following approvals:-
(a) Bank Negara Malaysia for the Proposed Acquisition, if required;
(b) Any other relevant authorities and/or parties.

The Proposed Acquisition is not subject to shareholders' approval.

Insofar as the Directors of FCB are aware, none of the Directors and/or major shareholders of FCB and/or person(s) connected with the Directors or major shareholders has any interest, direct or indirect, in the Proposed Acquisition.

Your Directors, having considered all aspects of the Proposed Acquisition, are of the opinion that the said Proposed Acquisition is in the best interests of the Company.

Barring unforeseen circumstances, the Proposed Acquisition is expected to be completed by the second quarter of 2007.

10. DEPARTURE FROM THE SECURITIES COMMISION'S GUIDELINES FOR THE MESDAQ MARKET ("SC'S GUIDELINES")

To the best knowledge and belief of the Board, the Proposed Acquisition has not departed from the requirements of the SC's Guidelines.

11. DOCUMENT FOR INSPECTION

The SPA is available for inspection at the registered office of FCB at Suite 1603, 16th Floor, Wisma Lim Foo Yong, 86 Jalan Raja Chulan, 50200 Kuala Lumpur from Mondays to Fridays (except for public holidays) during the hours from 9 a.m. to 5 p.m. for a period of three (3) months from the date of this announcement.


This announcement is dated 10 May 2007.

Table 1 – Financial Information of AGTC

A summary of the audited results of AGTC for the financial years ended 31 December 2002 to 2006 is as follows:-

Commentary:

1. For the FYE 2003, AGTC recorded revenue of approximately NT$340 million, an increase of approximately 45% as compared to NT$234 million in the previous financial year. This was mainly attributed to the growing semiconductor industry, coupled with the establishment of more fifth generation TFT-LCD plants in Taiwan as well as the continuous development of advanced process technologies giving rise to an increase in demand for the services of specialised surface treatment and advanced precision cleaning for the TFT-LCD and semiconductor industry. As a result of a higher revenue, profit after tax of AGTC grew by 90% to approximately NT$114 million.

2. For the FYE 2004, AGTC recorded revenue of approximately NT$568 million, an increase of 67% compared to the previous financial year. The increase was mainly due stronger demand for the TFT-LCD panels and semiconductor products, increased productivity in the industries and increased capital spending, leading to high capacity utilisation among manufacturers and thus an increase in demand for AGTC's services. As a result, profit after tax of AGTC improved by 26% to approximately NT$144 million.

3. In 2005, revenue of AGTC declined by 9% to approximately NT$517 million, while its profit after tax decreased by 22% to approximately NT$112 million. This was mainly due to slow down in demand for TFT-LCD panels and consequently a lower capacity utilisation among the manufacturers. The declining revenue was further exacerbated by competitive pricing from AGTC's competitors.

4. For FYE 2006, AGTC recorded revenue of approximately NT$605 million, an increase of 17% compared to the previous financial year. The increase was mainly due to recovery of demand for the TFT-LCD panels and semi-conductor product and higher turnover from existing customers. As a result, profit after tax of AGTC improved by 11% to approximately NT$124 million.

Table 2 – Effect of Proposed Acquisition on Gearing

The Proposed Acquisition is expected to be financed temporarily by a bridging loan from a financial institution of RM15.0 million and internally generated funds. The bridging loan will be repaid via proceeds from the private placement which was announced on 2 April 2007.

For illustration purposes, the effect of the Proposed Acquisition on the gearing ratio of the FCB Group arising from the above bridging loan is expected to be as follows: