Hong Leong Industries Berhad (5486-P)

QUARTERLY REPORT ON CONSOLIDATED RESULTS

FOR THE FINANCIAL QUARTER ENDED 31 DECEMBER 2001

The Figures have not been audited. 

1.

Accounting policies

The accounting policies and methods of computation are consistent with those adopted in the most recent annual audited financial statements.

2.

Exceptional items

Exceptional items comprise :-

Individual Quarter

Cumulative Quarter

Current Year Quarter

31/12/2001

RM'000

Preceding Year Corresponding Quarter

31/12/2000

RM'000

Current Year- To-Date

31/12/2001

RM'000

Preceding Year Corresponding Period

31/12/2000

RM'000

Provision for EuroConvertible Bond Put Premiums

1,250

(88)

2,506

4,985

Loss on disposal of subsidiary company

7,937

-

7,937

-

9,187

(88)

10,443

4,985

3.

Extraordinary items

There were no extraordinary items for the current quarter and financial year to-date.

4.

Taxation

Taxation comprise :- 

Individual Quarter

Cumulative Quarter

Current Year Quarter

31/12/2001

RM'000

Preceding Year Corresponding Quarter

31/12/2000

RM'000

Current Year- To-Date

31/12/2001

RM'000

Preceding Year Corresponding Period

31/12/2000

RM'000

Taxation

- Current Year

2,207

4,327

6,355

8,443

- Under provision in prior

       years

110

218

-

218

Deferred taxation

- Current Year

4,752

4,203

9,504

8,406

- Over provision in prior

       years

(429)

-

(715)

-

Share of associated companies’ taxation

1

909

1

938

6,641

9,657

15,145

18,005

The Group’s effective tax rate is higher than the statutory tax rate due to the non-availability of group relief where tax losses of certain subsidiary companies cannot be set-off against the taxable income of other subsidiary companies.

5.

Sale of investments / properties

There were no sales of unquoted investments and/or properties for the current quarter and financial year to-date.

6.

Quoted securities

(a)

There were no purchases or disposals of quoted securities for the current quarter and year to-date other than as mentioned below:-

Current Year Quarter

31/12/2001

RM'000

Current Year   To-date

31/12/2001

RM'000

          (i) Purchases

-

7,132

          (ii) Disposal

Sale proceeds

24,324

25,854

Cost of  investment

(13,670)

(14,885)

Profit on disposal

10,654

10,969

(b)

Particulars of investments in quoted shares as at 31 December 2001:-

At cost :

RM’000

-           Associated Companies

-           Others

511,250

74,293

585,543

At book value :

-           Associated Companies

-           Others

121,199

67,268

188,467

At market value

190,189

7.

Group structure

There were no changes in the composition of the Group for the current quarter and financial year to-date other than as mentioned below :-

(i)

The Company had, on 5 July 2001, entered into an agreement with  Kobelco International (S) Pte Ltd (“Kobelco”) and Ricon Private Ltd , to dispose of 75% of its equity interest in Hong Leong Equipment Sdn Bhd (“HLE”) comprising 1,500,000 ordinary shares of RM1.00 each,  for a total consideration of RM1.5 million (“Disposal”). The Company has a put option and Kobelco has a call option in respect of the remaining 25% of the equity shares comprising 500,000 ordinary shares of RM1.00 each (“option shares”) within the period commencing one year from the completion date and ending two years from the completion date at a purchase price based on the higher of the par value of the option shares or  the NTA value of HLE on the option exercise date. The disposal was completed on 26 December 2001.

(ii)

The following Company's subsidiaries have been placed under member's voluntary winding-up pursuant to Section 254(1)(b) of the Companies Act, 1965. The liquidations are currently pending tax clearance from the Inland Revenue Board.

(a)

Jadipack Industries Sdn Bhd ;

(b)

Jasa Court Sdn Bhd ;

(c)

Joint Steel Works Sdn Bhd.

(iii)

The Company's wholly-owned subsidiary, Quayline Company Pte Ltd, has been put under member's voluntary winding-up pursuant to Section 290(1)(b) of the Singapore's Companies Act (Chapter 50) and is currently pending tax clearance from the Inland Revenue Board.

8.

Corporate Proposals

There were no corporate proposals announced but not completed other than as mentioned below:-

Aseambankers Malaysia Berhad, on behalf of the Company had, on 28 September 2001, announced that the Company proposed to implement a rights issue of up to RM288,038,060 nominal value of 4% five (5)-year irredeemable convertible unsecured loan stocks ("ICULS") at 100% of the nominal value on the basis of RM1.00 nominal value of ICULS for every one  (1) existing ordinary share of RM0.50 held in the Company (“Proposed Rights Issue”).

The Proposed Rights Issue is currently pending approvals from the relevant authorities and the Company’s shareholders.

9.

Debt / Equity securities and Share buy back

There were no issuance or repayment of debts or equity securities, share buy back, share cancellation, shares held as treasury shares and resale of treasury shares for the current financial year to-date.

(i)

The Executive Share Option Scheme (“ESOS”) of the Company was implemented with effect from 28 December 1999. During the current year to-date , there were no ordinary shares of RM0.50 each being issued and allotted pursuant to the exercise of the ESOS.

(ii)

There were no share buy back from the open market during the current year to-date. The total number of shares bought back as at 31 December 2001 was 7,344,000 shares and the shares are being held as treasury shares in accordance with the requirement of Section 67A of the Companies Act, 1965.

10.

Group’s borrowings

Particulars of  the Group’s borrowings as at 31 December 2001 are as follows :-

RM’000

(i)

Unsecured short term borrowings

599,852

(ii)

Unsecured long term borrowings

1,303,250

1,903,102

The above include borrowing denominated in foreign currency as follows :-

RM’000

USD borrowings

340,991

DM borrowings

25,520

11.

Contingent  liabilities

There are no contingent liabilities to be disclosed as at the date of this report.

12.

Off-balance sheet risks

There are no financial  instruments with off-balance sheet risks as at the date of this report.

13.

Material Litigation

There is no pending material litigation against the Group as at the date of this report.

14.

Segmental Reporting

The Group’s segmental report for the financial year to-date are as follows:-

Turnover

RM’000

Profit/(Loss) Before Tax

RM’000

Total Assets

Employed

RM’000

Semiconductor

359,507

(17,092)

1,999,141

Motorcycles

180,747

2,055

326,026

Building Materials

250,260

21,689

455,201

Packaging

94,733

8,484

211,409

Investment holding & others

52,173

(47,945)

779,537

937,420

(32,809)

3,771,314

Associated companies

-

(14,878)

160,516

937,420

(47,687)

3,931,830

15.

Material Changes in Profit Before Taxation

For the quarter under review, the Group recorded a loss before tax of RM17.98 million as compared with a loss before tax of RM29.71 million for the preceding quarter. The decrease in losses is attributable mainly to the decrease in share of associated companies' losses.

16.

Review of Performance 

The Group recorded a turnover and loss after tax of RM456.82 million and  RM24.62 million respectively for the current quarter under review. The Group’s overall performance continues to be affected by the semiconductor sector.

17

Material Events Not Reflected In The Financial Statements

There were no material subsequent events other than as mentioned below:-

(i)

JSW, a wholly-owned subsidiary of Guolene Packaging Industries Berhad which in turn is a subsidiary of the Company, has been placed under member’s voluntary winding-up and Mr Ling Kam Hoong of Messrs Ling Kam Hoong & Co has been appointed as liquidator of JSW on 21 January 2002.

18.

Seasonal / Cyclical factors

There were no material changes to the factors affecting the sources of income and performance of the Group for the quarter under review.

19.

Prospects

The short term outlook of the semiconductor sector still remains uncertain. Nevertheless, barring unforeseen circumstances, the Group's other businesses are expected to perform satisfactorily.

20.

Profit forecast / profit guaranteed

This note is not applicable.

21.

Dividend

The Board of Directors has declared a first interim dividend of 7% tax exempt and a further special interim dividend of 10% less tax for the six months ended 31 December 2001 (six months ended 31 December 2000 for the financial year 2000/2001 : 10% tax exempt and a further special interim dividend of 15% less tax) to be paid on 25 March 2002 to holders of ordinary shares whose names  appear  in  the Record  of Depositors at the close of business on 12 March 2002.

This is to inform that a Depositor shall qualify for entitlement only in respect of :-

(a)         Shares transferred into the Depositor's securities account before 12:30 pm 12 March 2002 in respect of ordinary transfers; and

(b)         Shares bought on the Kuala Lumpur Stock Exchange on a cum entitlement basis according to the Rules of the Kuala Lumpur Stock Exchange.

22.

Adjustment Against Brought Forward Reserve

During the current financial year to-date, an associated company of the Group has taken into account its share of losses in an associated company against its brought forward retained profit (“Effects”). Consequently, the Group has taken into account its share of the Effects, amounting to RM12.09 million and adjusted against the brought forward retained profit accordingly.