NOTES TO THE UNAUDITED CONSOLIDATED RESULTS FOR THE
ENDED 31 DECEMBER 2000
QUARTER
1. Accounting Policies
The accounts of the Group are prepared using accounting policies and methods of
computation consistent with those adopted in the annual financial statement for the year
ended 30 June 2000. Certain comparative figures have been reclassified to conform to
current quarter/ year’s presentation.
2. Exceptional Items
There were no exceptional items included in the accounts for the quarter ended 31
December 2000.
3. Extraordinary Items
There were no extraordinary items included in the accounts for the quarter ended 31
December 2000.
4. Taxation
The tax figure does not contain any significant adjustment for deferred tax.
5. Pre-acquisition Profits
There were no pre-acquisition profits included in the accounts for the quarter ended 31
December 2000.
6. Profit on Sale of Investments and/or Properties
There was no significant sale of investments or properties for the year ended 31
December 2000.
7. Quoted Securities
All purchase and disposal of quoted securities by the Group were transacted in the
ordinary course of business of the Group.
8. Changes in the Composition of the Group
There were no significant changes in the composition of the Group for the quarter ended
31 December 2000, including business combination, acquisition or disposal of
subsidiaries and long term investments, restructuring and discontinuing operations.
9. Status of Corporate Proposals
HLG Securities Sdn Bhd ("HLGS"), a wholly-owned subsidiary of HLG Capital Berhad
("HLG Capital" or "Company") had, on 31 October 2000, entered into a conditional Sale
and Purchase Agreement with Borneo Securities Holdings Sdn Bhd ("BSH") for the
proposed acquisition of BSH's entire equity interest comprising 31,000,000 ordinary
shares of RM1.00 each in Borneo Securities Sdn Bhd ("BS") for a total consideration of
RM88,000,000, to be satisfied by a cash settlement of RM31,000,000 and the balance of
RM57,000,000 to be satisfied through the issue of new ordinary shares of RM1.00 each
in HLG Capital to BSH at a price of RM2.20 each.
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On 31 October 2000, the Company announced that it proposes to implement a rights
issue of up to 62,490,667 new ordinary shares of RM1.00 each on the basis of one (1)
new ordinary share for every two (2) existing ordinary shares held on a date and at an
issue price to be determined by the Board of Directors after the approval of the relevant
authorities.
In connection therewith, the Company also proposed to increase its authorised share
capital from RM200 million to RM500 million comprising 500 million shares of RM1.00
each.
10. Seasonal or Cyclical Factors
The operations of the Group were not affected by any seasonal or cyclical factors.
11. Debt and Equity Securities
There were no issuance and repayments of debt and equity securities, shares buy-back,
shares cancellation, shares held as treasury and resale of treasury shares for the
quarter ended 31 December 2000.
12. Group Borrowings
31 December 2000
RM’000
Short term
Long term
114,846
1,500
116,346
The borrowings of the Group are secured by corporate guarantees of the Company. All
borrowings are denominated in Ringgit Malaysia.
13. Contingent Liabilities
1. In 1994, a former remisier of a subsidiary made a claim of RM 2.0 million against the
subsidiary for loss of earnings and other consequential losses as a result of nonrenewal of the remisier’s license. The Directors are of the opinion that the claim is
invalid and will not result in any loss to the Group.
2. HLB Unit Trust Management Bhd is the Manager of HLB Sectoral Fund (“Funds”),
which comprises of five (5) sector funds. The Company provided a guarantee to
Universal Trustee (Malaysia) Berhad, the trustee of the Funds, that if any of the five
sector funds fall below the minimum fund size of RM1 million, the Company would
invest cash, equivalent to the shortfall, into the relevant fund.
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3. HLG Capital Markets Sdn. Bhd. ("HLGCM"), a wholly-owned subsidiary of HLG
Capital, had given an undertaking in favour of Gadek Capital Berhad ("Gadek
Capital") to procure HLGS. or such other broker or brokers acceptable to Gadek
Capital to enter into a conditional put and call option agreement within 60 days from
the date of completion of Hong Leong Bank Berhad's acquisition of Credit
Corporation (Malaysia) Berhad. The conditional put and call option agreement comes
into effect if the put and call option agreement between Gadek Capital and Koperasi
Polis DiRaja Malaysia Berhad is terminated. HLGCM had also undertaken to keep
Gadek Capital fully indemnified against any loss or damages suffered by Gadek
Capital as a result of or in connection with any breach of their undertaking, subject to
a maximum amount of RM188 million.
4. A subsidiary has entered into an obligation under on-going underwriting agreements
amounting to RM66,181,780 relating to the issue and sales of shares of public-listed
companies.
14. Off Balance Sheet Financial Instruments
There were no contracts involving off balance sheet financial instruments that will
significantly affect the risk or performance of the Group as at the date of issue of the
quarterly report.
15. Litigation
There was no pending material litigation as at the date of issue of the quarterly report.
16. Segmental Reporting
Group
(Loss)/
Assets
Profit
Employed
Before Tax
Six months ended
31 December 2000
RM’000
RM’000
RM’000
Turnover
Segmental Information by
Activities
Stockbroking and related
nominees services
Futures broking
Fund management
Corporate advisory services and
mezzanine financing
Others
19,071
908
1,831
(7,208)
(132)
1,503
278,069
10,255
2,273
537
-
(1,228)
(3,119)
90,518
21,573
22,346
(10,184)
402,688
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Group
4 -
Turnover
(Loss)/
Profit
Before Tax
Assets
Employed
Segmental Information by
Geographical Areas
Malaysia
Hong Kong
The Republic of Philippines
22,346
-
(10,448)
11
253
382,573
1,360
18,755
22,346
(10,184)
402,688
17. Comparison of Quarterly Results with the Results of the Preceding Quarter
The Group recorded a loss before tax of RM7.3 million for the quarter to 31 December
2000 as compared to a loss before tax of RM2.9 million in the preceding quarter. This
was principally due to the lower brokerage rate structure implemented on 1 Sep 2000
and low trading volume in the KLSE which declined by 5.1% compared to the preceding
quarter.
18. Performance Review and Event Subsequent to Balance Sheet Date
The Group suffered a loss before tax of RM7.3 million for the quarter ended 31
December 2000 as compared to a profit before tax of RM 5.5 million in the preceding
year corresponding quarter mainly due to the prevailing negative market sentiment.
Trading volume in the KLSE has declined by 17%. Brokerage income was further
affected by the reduction of commission rates which took effect from 1st September
2000.
HLG Philippines, Inc ("HLGP"), a wholly-owned subsidiary of the Company in the
Philippines, had entered into a Memorandum of Agreement ("Agreement") on 31
January 2001 for the disposal by HLGP of its 41% equity interest in DHB Capital
Philippines Inc ("DHB") for a cash consideration of Peso 84.05 million or approximately
RM6.46 million. The disposal resulted in a loss on disposal of approximately RM1.39
million to the HLG Cap Group, arising from exchange loss.
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19. Current Year Prospects
The Directors are of the view that the current quarter’s performance is unlikely to show
improvement unless the market sentiment and turnover improve.
20. Profit Guarantee
The Group had not entered into any scheme that requires it to present forecast results
or guarantee any profits.
21. Dividend
The Directors do not recommend the payment of dividend for the quarter ended 31
December 2000.