Hong Leong Industries Berhad (5486-P)

QUARTERLY REPORT ON CONSOLIDATED RESULTS

FOR THE FINANCIAL QUARTER ENDED 31 MARCH 2002

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

31/03/2002

RM'000

Preceding Year Corresponding Quarter

31/03/2001

RM'000

Current Year- To-Date

31/03/2002

RM'000

Preceding Year Corresponding Period

31/03/2001

RM'000

Provision for EuroConvertible Bond Put Premiums

1,253

-

3,759

4,985

Loss on disposal of subsidiary company

-

-

7,937

-

1,253

-

11,696

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

31/03/2002

RM'000

Preceding Year Corresponding Quarter

31/03/2001

RM'000

Current Year- To-Date

31/03/2002

RM'000

Preceding Year Corresponding Period

31/03/2001

RM'000

Taxation

- Current Year

3,576

286

9,931

8,729

- Under/(over) provision in prior

       years

(96)

(72)

(96)

146

Deferred taxation

- Current Year

4,752

4,203

14,256

12,609

- Over provision in prior

       years

(359)

-

(1,074)

-

Share of associated companies’ taxation

174

60

175

998

8,047

4,477

23,192

22,482

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 other than the disposal disclosed under Note 7(i ) of this report.

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

31/03/2002

RM'000

Current Year   To-date

31/03/2002

RM'000

          (i) Purchases

-

7,132

          (ii) Disposal

Sale proceeds

-

25,854

Cost of  investment

-

(14,885)

Profit on disposal

-

10,969

(b)

Particulars of investments in quoted shares as at 31 March 2002 :-

At cost :

RM’000

-           Associated Company

-           Others

511,250

74,293

585,543

At book value :

-           Associated Company

-           Others

121,470

74,293

195,763

At market value

196,759

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 (“QCPL”), has been placed under member's voluntary winding-up pursuant to Section 290(1)(b) of the Singapore's Companies Act (Chapter 50). The Liquidator of QCPL had on 12 April 2002 convened a Final Meeting to conclude the Member's Voluntary Liquidation of QCPL. A Return by Liquidator Relating To Final Meeting was lodged with the Singapore Registry of Companies and Businesses and the Official Receiver on 15 April 2002 and on the expiration of 3 months after the said lodgement date, i.e. 15 July 2002, QCPL shall be dissolved. Consequently, QCPL shall cease to be a subsidiary of the Company on that date.

(iv)

HL Maruken Sdn Bhd, 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 on 20 February 2002.

(v)

The Company  acquired 2 shares of HK$1.00 each fully paid at par representing 100% equity interest in MZ Holdings Limited, for a total cash consideration of HK$2.00 (equivalent to RM1.00).

Item (v) above occurred subsequent to the financial period under review.

8.

Corporate Proposals

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

(i)

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 Securities Commission had, via a letter dated 4 April 2002, approved the application by HLI on the proposal.

The Company had on 11 April 2002, announced to KLSE that the conversion price of the ICULS has been fixed at RM6.20 for every one ordinary share in HLI. The conversion price is based on a 10% discount from the 5 day weighted average share price of HLI shares for the 5 consecutive market days for the period from 4 April 2002 to 10 April 2002 of RM6.89.

The proposal has been approved by the shareholders of the Company at the Extraordinary General Meeting held on 30 April 2002.

(ii)

The Company had on 19 April 2002, announced to KLSE that Guolene Packaging Industries Berhad (“GPIB”), a 96.38% owned subsidiary of  the Company,  proposes to undertake a return of capital to its shareholders amounting to RM72,510,972.50 on the basis of RM0.50 for every one (1) GPIB ordinary share of RM1.00 each held, by the cancellation of RM0.50 from every GPIB ordinary share and the consolidation of every two (2) resultant GPIB ordinary shares of RM0.50 each into one (1) GPIB ordinary share of RM1.00 each (“GPIB Return of Capital”).

The GPIB Return of Capital is conditional upon the following approvals being obtained:-

(i)            Approval of the shareholders of GPIB ; and

(ii)          Sanction of the High Court of Malaya pursuant to Section 64 of the Companies Act, 1965.

The GPIB Return of Capital is not subject to the approval of the shareholders of HLI.

(iii)

Hong Leong Yamaha Motor Sdn Bhd, a subsidiary of the Company, had on 6 May 2002 entered into a Sale and Purchase Agreement with MZ Motorrad Sdn Bhd (“MZ”), a wholly owned subsidiary of the Company, for the sale and transfer of a piece of leasehold land located at Shah Alam, Selangor Darul Ehsan together with industrial factories and one office block erected thereon to MZ for a total cash consideration of RM23,400,000 (“Proposed Transfer of Properties”).

The Proposed Transfer of Properties is subject to the approval of the shareholders of HLI pursuant to Section 132E of the Companies Act, 1965.

Item (ii) and (iii) above occurred subsequent to the financial period under review.

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 24 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 March 2002 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 March 2002 are as follows :-

RM’000

(i)

Unsecured short term borrowings

743,730

(ii)

Unsecured long term borrowings

1,205,276

1,949,006

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

RM’000

USD borrowings

319,527

Euro borrowings

25,473

11.

Contingent  liabilities

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

12..

Financial Instruments with Off  Balance Sheet Risk

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

541,188

(25,358)

1,972,697

Motorcycles

263,548

91

340,000

Building Materials

365,197

30,896

445,646

Packaging

137,684

11,871

238,250

Investment holding & others

77,660

(65,346)

770,885

1,385,277

(47,846)

3,767,478

Associated companies

-

(25,744)

161,564

1,385,277

(73,590)

3,929,042

15.

Material Changes in Profit Before Taxation

For the quarter under review, the Group recorded a loss before tax of RM13.81 million as compared with a loss before tax of RM17.98 million for the preceding quarter. The decrease in losses is attributable mainly to the recognition of a loss amounting to RM7.94 million in the preceeding quarter in respect of the loss on disposal of a subsidiary company.

16.

Review of Performance 

The Group recorded a turnover and loss after tax of RM447.86 million and RM21.86 million respectively for the current quarter under review. The Group’s overall performance continued to be adversely affected by the performance of  the semiconductor sector.

17

Material Events Not Reflected In The Financial Statements

There were no material subsequent events.

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

There are signs of recovery for the semiconductor industry. Barring unforeseen circumstances, the Group is expected to perform better in the coming quarter.

20.

Profit forecast / profit guaranteed

This note is not applicable.

21.

Dividend

The Board of Directors has declared a 2nd interim dividend of 8% tax exempt and a further special interim dividend of 10% less tax for the quarter ended 31 March 2002 ( 2^nd interim dividend for the  financial year 2000/2001 : 10% tax exempt and a further special interim dividend of 15% less tax) to be paid on 20 June 2002 to holders of  ordinary shares whose names  appear  in  the Record  of Depositors at the close of business on  3 June 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 3 June 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.

Reversal of Adjustment Against Brought Forward Reserve

During the quarter ended 30 September 2001, an associated company of the Group, namely Camerlin Group Berhad (“CGB”) has taken into account its share of prior years’ losses of an associated company (“associate’s losses”) against its brought forward accumulated losses in which the Group has taken into account its share of the associate’s losses, amounting to RM12.1 million and adjusted against the brought forward retained earning accordingly. Subsequently, CGB changed the accounting treatment whereby the associate’s losses was restated to Income Statement. Consequently, the Group’s share of RM12.1 million are restated and adjusted against the Income Statement accordingly.