Hong Leong Industries Berhad (5486-P)

QUARTERLY REPORT ON CONSOLIDATED RESULTS

FOR THE FOURTH QUARTER ENDED 30 JUNE 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

30/06/2002

RM'000

Preceding Year Corresponding Quarter

30/06/2001

RM'000

Current Year- To-Date

30/06/2002

RM'000

Preceding Year Corresponding Period

30/06/2001

RM'000

Provision for EuroConvertible Bond Put Premiums

1,227

-

4,985

4,985

Loss on disposal of subsidiary company

-

-

7,938

-

1,227

-

12,923

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

30/06/2002

RM'000

Preceding Year Corresponding Quarter

30/06/2001

RM'000

Current Year- To-Date

30/06/2002

RM'000

Preceding Year Corresponding Period

30/06/2001

RM'000

Taxation

- Current Year

(14)

(10,530)

9,917

(1,801)

- Under/(over) provision in prior

       years

(3,166)

380

(3,262)

526

Deferred taxation

- Current Year

2,523

3,969

16,779

16,578

- Over provision in prior

       years

(348)

-

(1,422)

-

Share of associated companies’ taxation

132

170

307

1,168

(873)

(6,011)

22,319

16,471

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

30/06/2002

RM'000

Current Year   To-date

30/06/2002

RM'000

          (i) Purchases

-

7,132

          (ii) Disposal

Sale proceeds

121

25,975

Cost of  investment

-

(14,885)

Profit on disposal

121

11,090

(b)

Particulars of investments in quoted shares as at 30 June 2002 :-

At cost :

RM’000

-           Associated Company

-           Others

511,250

74,293

585,543

At book value :

-           Associated Company

-           Others

120,566

74,293

194,859

At market value :

-           Associated Company

-           Others

105,973

103,113

209,086

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 net tangible assets value of HLE on the option exercise date. The disposal was completed on 26 December 2001.

(ii)

Joint Steel Works Sdn Bhd, a wholly-owned subsidiary, had been placed under member's voluntary liquidation pursuant to Section 254(1)(b) of the Companies Act, 1965. The liquidation is currently pending tax clearance from the Inland Revenue Board.

(iii)

The following Company's subsidiaries had been placed under members' voluntary liquidation pursuant to Section 254(1)(b) of the Companies Act, 1965.

(a)         Jadipack Industries Sdn Bhd

(b)         Jasa Court Sdn Bhd.

The liquidator has fixed the Final Meetings to conclude the liquidation of both subsidiaries on 10 September 2002.

(iv)

Quayline Company Pte Ltd (“QCPL”), a wholly-owned subsidiary, had been placed under member's voluntary liquidation 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 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. Consequently, QCPL was dissolved on 15 July 2002 and ceased to be a subsidiary of the Company on that date.

(v)

HL Maruken Sdn Bhd, a 70% subsidiary, had been placed under members' voluntary liquidation pursuant to Section 254(1)(b) of the Companies Act,1965 and Mr Ling Kam Hoong of Messrs Ling Kam Hoong & Co has been appointed as liquidator on 20 February 2002.

(vi)

The Company had acquired 2 shares of HK$1.00 each, at par representing 100% equity interest in MZ Holdings Limited(“MZH”), a company incorporated in Hong Kong and had subsequently further subscribed for 9,998 shares of HK$1.00 each, at par.

On 11 June 2002, MZH had entered into a share subscription agreement with Mr Piti Manomaiphibul (“PM”), Mrs Daranit Srifuengfung, the spouse of PM, Millennium Motors Company Limited (“MMCL”) and the remaining shareholders of MMCL, for the subscription by MZHL of 9,800,000 ordinary shares of par value Thai Baht ten (10) each representing 49% of the enlarged paid-up share capital of MMCL for a total cash subscription price of Thai Baht 98,000,000 (equivalent to approximately RM8,805,300). The subscription was completed on 8 August 2002.

(vii)

The Jersey Financial Services Commission had, at the request of HLI Holdings Limited (“HLIH”), an indirect subsidiary, dissolved HLIH and removed the name of HLIH from the Register of Companies.

Item(vi) above was completed subsequent to the financial period under review.

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

8.

Corporate Proposals

There were no corporate proposals 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 (“Rights Issue”).

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

The Rights Issue was completed with the allotment and listing of the ICULS on the KLSE on 28 June 2002 and 10 July 2002 respectively.

(ii)

The Company had, on 19 April 2002, announced to KLSE that Guolene Packaging Industries Berhad (“GPIB”), a 96.38% owned subsidiary,  proposed 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 approval of the shareholders of GPIB has been obtained on 16 May 2002 and is currently pending sanction of the High Court of Malaya.

(iii)

Hong Leong Yamaha Motor Sdn Bhd, a 69.41% subsidiary, had, on 6 May 2002, entered into a Sale and Purchase Agreement with MZ Motorrad Sdn Bhd (“MZ”), a wholly owned subsidiary, 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 (“Transfer of Properties”).

The approval of the shareholders of HLI has been obtained on 28 June 2002 and the  Transfer of Properties was completed on the same day.

(iv)

The Company had, on 18 June 2002, announced to KLSE that the Company proposed:-

(i)         to amend the existing Bye-Laws of the Executive Stock Option Scheme and thereafter to adopt the amended and restated By-Laws of the  Executive Stock Option Scheme (“Scheme”)(“Proposed Adoption”) and;

(ii)       to extend the duration of the Scheme for an additional period of five (5) years (‘’Proposed Extension”)

(“collectively referred to as Proposals”).

The Proposals are subject to approvals being obtained from the following:-

(i)         Securities Commission, which application has been submitted on 19 June 2002;

(ii)       shareholders of HLI;

(iii)      grantees of the ESOS options; and

(iv)     any other relevant authorities.

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 other than as mentioned below:-

(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 was no share buy back from the open market during the current year to-date. The total number of shares bought back as at 30 June  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.

(iii)

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 (“Rights Issue”).

On the close of the acceptance and payment of the Rights Issue on 24 June 2002, applications for RM208,152,780 nominal value of the Rights Issue were received. The ICULS  were subsequently allotted and listed on the KLSE on 28 June 2002 and 10 July 2002 respectively.

10.

Group’s borrowings

Particulars of  the Group’s borrowings as at 30 June 2002 are as follows :-

RM’000

(i)

Unsecured short term borrowings

694,750

(ii)

Unsecured long term borrowings

1,152,705

1,847,455

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

RM’000

USD borrowings

290,203

Euro borrowings

29,245

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

768,842

(13,225)

1,887,844

Motorcycles

391,254

3,499

386,725

Building Materials

500,492

45,788

458,750

Packaging

185,494

15,054

237,837

Investment holding & others

104,186

(83,460)

901,333

1,950,268

(32,344)

3,872,489

Associated companies

-

(26,890)

160,003

1,950,268

(59,234)

4,032,492

15.

Material Changes in Profit Before Taxation

For the quarter under review, the Group recorded a profit before tax of RM14.36 million as compared with a loss before tax of RM13.82 million for the preceding quarter. The improvement is attributable mainly to the improvement in semiconductor sector.

16.

Review of Performance 

For the current quarter under review, the Group recorded a profit after tax of RM15.23 million as compared with a loss after tax of RM135.37 million for the preceding year corresponding quarter. The losses for the preceding year corresponding quarter was due mainly to the share of losses of  associated companies amounting to RM135.27 million.

17

Material Events Not Reflected In The Financial Statements

There were no material subsequent events to be disclosed as at the date of this report.

18.

Seasonal / Cyclical factors

The Group is not affected materially by any seasonal /cyclical factors for the quarter under review.

19.

Prospects

There are signs of recovery for the semiconductor industry. Barring unforeseen circumstances, the Group expects its performance to continue to improve.

20.

Profit forecast / profit guaranteed

This note is not applicable.

21.

Dividend

The Board has already declared a first and second interim dividend totalling 15% tax exempt and a further special interim dividend of 20% less tax (2000/2001 : 20% tax exempt and a further special interim dividend of 30% less tax). The Board does not recommend any final dividend  (2000/2001 : nil) for the year ended 30 June 2002.