February 21, 2018
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KUALA LUMPUR (Dec 7): Acoustech Bhd is exiting its loss-making audio business with the disposal of its wholly-owned subsidiary Formosa Prosonic Technics Sdn Bhd (FPT) to speaker systems manufacturer Formosa Prosonic Industries Bhd for RM10.6 million.

FPT manufactures moulded plastic components for the speaker systems. Upon completion of the proposed disposal, Acoustech will focus on its profitable property development business.

In a filing with Bursa Malaysia today, Acoustech said it has entered into a share sale agreement (SSA) with Formosa Prosonic for the proposed disposal.

The proposed disposal will result in Acoustech incurring an estimated one-off loss of approximately RM1.18 million. It had acquired FPT on June 15, 2001 at an original cost of RM47.61 million.

The group intends to use the proceeds from the proposed disposal to fund its existing developments and for working capital.

Acoustech said it is hopeful that the divestment of the group’s audio manufacturing operations will improve the performance and cashflow of the group post-disposal.

“The disposal of the unprofitable audio segment will allow the group to focus and utilise its resources solely in its core segment, the property development segment. The divestment will eliminate any further erosion of the group’s profits that may result from the poor performance of the audio segment,”it added.

For the financial year ended Dec 31, 2016 (FY16), Acoustech said the revenue and profit contribution of the property development segment had exceeded that of the audio segment.

Note that Acoustech was formerly an associate to Formosa Prosonic until January 2016, when the latter’s wholly-owned subsidiary Formosa Prosonic Manufacturing Sdn Bhd disposed of its entire equity interest of 27.79% in Acoustech for RM34.83 million.

In a separate filing, Formosa Prosonic said currently, FPT is a supplier of speaker units to the group where speaker units make up a crucial component in a range of Formosa Prosonic’s speaker products.

“The proposed acquisition will allow the group to consolidate its supply channel, improve efficiency, result in longer term cost savings and ensure continuous supply of speaker units. By consolidating the supply chain, our group is expected to maintain better quality management and expand the future range of products that it can market to its customers,” it said.

“At present, the board does not expect additional financial commitment to maintain the business of FPT.

“(However,) management expects that further investments in FPT will help generate returns in the longer run through cost savings and faster turnaround time for production requests.

“Therefore, the management of Formosa Prosonic expects the prospects of FPT to be favourable in the longer term based on the anticipated improvement in global demand for consumer electronic products,” it added.

Formosa Prosonic said it will fund the proposed acquisition via internal funds.

Barring unforeseen circumstances, the proposed disposal is expected to be completed by first quarter of 2018.

Acoustech shares closed unchanged at its three-year low of 39 sen today, giving it a market capitalisation of RM65.18 million.

Formosa Prosonic, on the other hand, gained four sen or 2.5% to close at RM1.64, slightly below its all-time high of RM1.74 that was achieved on Nov 24, bringing its market cap to RM405.67 million.

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