WCT ENGINEERING BERHAD (66538-K)
QUARTERLY UNAUDITED RESULTS FOR THE GROUP FOR THE 3RD QUARTER
ENDED 31.10.2002
A
EXPLANATORY NOTES IN COMPLIANCE WITH MALAYSIAN
ACCOUNTING STANDARD BOARD ("MASB") 26 INTERIM FINANCIAL
REPORTING
A1.
Annual Report
The condensed financial statements are to be read in conjunction with the
most recent annual financial statements for the year ended 31 January
2002.
A2
Accounting Policies
The interim financial statements has been prepared in compliance with
MASB 26 and Chapter 9 part K of the Listing Requirements of Kuala Lumpur
Stock Exchange. The same accounting policies, methods of computation and
basis of consolidated are followed in the interim financial statements as
those used during the preparation of the most recent annual financial
statements for the year ended 31 January 2002 except for the newly
effective applicable approved accounting standards listed below:
i)
A3
MASB 25 - Income Taxes
Audit Qualification
There was no audit qualification in the auditors’ report of the Company’s
previous financial statements for the financial year ended 31 January 2002.
A4
Seasonal Or Cyclical Factors
The business operations of the Group are not materially affected by any
seasonal or cyclical factors.
A5
Exceptional Transactions/Events
There were no exceptional transactions/events that occurred during the
quarter under review.
1
A6
Changes In Estimate
There were no significant changes in the estimates of amounts reported in
prior interim periods of the current financial year or changes in estimates of
amounts reported in prior financial years that have a material effect in the
current interim period.
A7
Changes In Share Capital
Save as disclosed below, there were no other issuance and repayment of
debts and equity securities, share buy backs, share cancellations, shares
held as treasury shares and resale of treasury shares during the financial
period under review.
a)
A8
Issuance of 2,000 ordinary shares of RM1.00 each pursuant to the
conversion of warrant 2000/2005 at the exercise price of RM2.25
per share.
Dividends
There was no dividend paid during the quarter ended 31 October 2002.
2
A9
Segmental Analysis – Cumulative Quarter To 31 October 2002
Business segment
Civil
Engineering
& Construction
RM'000
Revenue from external
customers
424,880
Inter-segment revenue
266,290
Trading
Property
development
Property and
investment
holding
Interest
income
Eliminations
Consolidated
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
37,164
75,755
4,793
-
542,592
(266,290)
542,592
Total revenue
691,170
37,164
75,755
4,793
-
Operating profit
43,538
1,727
11,511
2,664
1,751
61,191
Finance costs
(4,445)
-
(5,400)
(199)
Share of profit of an
associated company
Profit before taxation
(6)
(750)
13,894
13,894
39,093
1,528
25,399
1,914
1,751
69,685
3
A9
Segmental Analysis – Cumulative Quarter To 31 October 2002 (Con’t)
Geegrahical segment
Malaysia
RM'000
Revenue from external
customers
493,847
Inter-segment revenue
266,290
Total revenue
760,137
Operating profit
Outside
Malaysia
RM'000
Eliminations
RM'000
48,745
542,592
(266,290)
48,745
Consolidated
RM'000
542,592
4,696
Share of profit of an
associated company
56,495
(5,400)
13,894
61,191
(5,400)
13,894
Profit before taxation
64,989
4,696
69,685
Finance costs
4
A10
Valuation Of Property, Plant And Equipment
Freehold land and investment properties are to be revalued at least once in
every 5 years by Directors based on the opinion of independent professional
valuers. The date of the last revaluation was 1999 and there were no
amendment to the revaluation as compare with the previous annual financial
statements.
For properties held for trading purposes are revalued annually. The value of
properties held for trading purposes have been brought forward without
amendments from the previous financial statements.
A11
Subsequent Material Events
There were no material events subsequent to the reporting period up to
26.12.2002 being the latest practicable date which is not earlier than 7 days
from the date of issue of this quarterly report, that have not been
reflected in the financial statements for the quarter under review.
A12
Effect Of Changes In The Composition Of The Group
Save as disclosed below, there are no changes in the composition of the
Group for the period under review:(a)
On 18 March 2002, WCT (International) Private Limited, a wholly
owned subsidiary of WCT Engineering Berhad, subscribed for 30%
equity interest in Suria Holding(O) Private Limited ("SHOPL").
(b)
SHOPL was incorporated in the Republic of Mauritius and is the
holding company of Emas Expressway Private Limited ("Emas"), the
special purpose/concession company which will undertake the
Durgapur Expressway project in the State of West Bengal (India)
awarded on a Deferred Payment Basis for a concession period of 17
years and 4 months.
(c)
On 29 April 2002, WCT (Offshore) Private Limited, a wholly owned
subsidiary of WCT Engineering Berhad, acquired 61.9% equity
interest in IWM Constructions Private Limited ("IWM").
IWM is an engineering, procurement and construction company
incorporated in Andhra Pradesh, Hyderabad, India. IWM has on 20
September 2001 signed a Contract Agreement with Swarna wherein
IWM was awarded the contract amounting to 216 Crores to
undertake the Tada-Nellore Highway project in Andhra Pradesh
(India).
5
(d)
On 30 September 2002, WCT Realty Sdn. Bhd., a wholly owned
subsidiary of WCT Engineering Berhad, acquired the entire issued
and paid-up share capital of Gabungan Efektif Sdn Bhd ("GESB")
comprising 2 ordinary shares of RM1.00 each, for a cash
consideration ofRM2.00.
GESB is presently a dormant company and its intended principal
activities consist of property investment and development.
(e)
On 1 October 2002, WCT Engineering Berhad acquired the entire
issued and paid-up share capital of WCT Equity Sdn Bhd and WCT
Plantations Sdn Bhd, comprising 2 ordinary shares of RM1.00 each
respectively, for a cash consideration ofRM2.00 each.
WCT Equity Sdn Bhd and WCT Plantations Sdn Bhd, are presently
dormant.
(f)
A13
On 11 November 2002, WCT Engineering Berhad together with
Cybarco W.L.L, a private limited company incorporated in the Kingdom
of Bahrain registered a 50:50 joint venture company known as
Cybarco-WCT W.L.L. Cybarco-WCT W.L.L has an issued and paid-up
share capital of Bahrain Dinar (“BD”) 100,000 divided into 1,000
ordinary shares of BD100 each.
Contingent Liabilities
Contingent liabilities of the Group as at 26.12.2002 (the latest practicable
date which is not earlier than 7 days from the date of issue of this quarterly
report) comprises of Bank Guarantees and Corporate Guarantees totalling
RM145.070 million and RM34.949 million respectively provided by the Group
to various parties in the normal course of business. The changes in
contingent liabilities since 31.01.2002 are as follow: Bank Guarantee
Corporate Guarantee
(RM'000)
(RM'000)
Balance as at 31.01.2002
84,933
Extended during the period
78,235
34,949
Discharged during the period
(18,098)
-
Balance as at 26.12.2002
145,070
34,949
-
6
B
EXPLANATORY NOTES
REQUIREMENT
IN
COMPLIANCE
B1
Review Of The Performance Of The Group
WITH
KLSE
LISTING
The construction division of the Group continued to be the main contributor
to the total revenue of the Group for the period under review. It recorded
a revenue of RM462.044 million out of which RM48.745 million was revenue
derived from contracts undertaken in India. Property development on the
other hand contributed RM75.755 million to the Group’s revenue, being
progress billings recognised from 6 phases of its launches. For this year
cumulative quarter, the Group has achieved profit before and after taxation
of RM69.685 million and RM49.738 million respectively.
B2
Material Changes In The Quarterly Reports Compared To The Results
Of The Immediate Preceding Quarter
Current
3rd Quarter
2002
RM'000
Current
2nd Quarter
2002
RM'000
1,593
3,413
(1,820)
-53%
22,247
25,883
(3,636)
-14%
Share of results
in associate
Profit before taxation
Increase/(Decrease)
RM'000
%
Share of results of associate declined by 53% to RM1.6 million mainly due to
the labour shortage problem encountered which affected the construction
and hence the billings of Labur Bina Sdn Bhd, the associated company.
Profit before taxation of the Group has decreased by 14% mainly due to the
drop in associate’s results as mentioned above.
B3
Prospect For The Forthcoming Financial Period
Based on the current order book and the construction progress at site
coupled with the response to the property schemes launched, the Board of
Directors is of the opinion that the Group would be able to achieve better
results as compared to the previous year.
B4
Variance Of Actual Profit From Forecast Profit
Not applicable to the Group.
7
B5
Taxation
Individual Quarter Cumulative Quarter
Taxation comprises : -
Current
Current
Malaysia tax
RM'000
RM'000
- Current taxation
- deferred taxation
- in respect of prior year
- associated company
3,675
380
4,055
552
(14)
14,652
(444)
14,208
552
3,486
Overseas tax
- Current taxation
1,702
1,702
Effective tax rate
6,295
25%
19,948
28%
Profit before taxation (Malaysia operations)
Tax at statutory tax rate of 28%
15,958
51,095
4,468
14,307
189
186
20
129
217
27
(826)
18
(496)
24
Tax effects of expenses that
not deductible in determing
taxable profit:
-
Interest restriction
Building maintenance on property
Entertainment and others
Net of reversal of deferred tax on
unrealised profit now realised
- Business loss for subsidiaries
4,055
14,208
The effective tax rate of the current year quarter ended 31 October 2002
was lower than the statutory tax rate mainly due to reversal of deferred
tax on unrealised profit on transaction between the Group which was
realised during the period ended 31 October 2002.
8
B6
Profit On Sales Of Unquoted Investments And/Or Properties
There were no profit on sale of investments and/or properties recorded
during the quarter under review.
B7
B8
Quoted Securities
(a)
The Group did not transact any quoted securities for the current
financial quarter under review.
(b)
As at 31.10.2002, the group did not hold any quoted securities.
Status Of Corporate Proposals
Save as disclosed below, the Group has not announced any corporate proposal
which has not been completed as at 30 December 2002, the date of this
report.
(A)
The Company announced the proposed private placement of up to 10%
of the existing issued and paid-up share capital of WCT Engineering
Berhad on 27.06.02.
The proposed private placement is subject to the approval of :-
(B)
i)
the Securities Commission (“SC”) which was obtained on
18.07.02;
ii)
the Foreign Investment Committee (“FIC”) which was obtained
on 10.10.02; and
iii)
the KLSE for the listing of and quotation for the Placement
shares which was obtained on 21.11.02.
On 3 October 2002, the Company announced that Gabungan Efektif
Sdn. Bhd., a wholly-owned subsidiary of WCT Realty Sdn. Bhd.
(“WCTR”), which in turn is a wholly-owned subsidiary of WCT
Engineering Berhad, had on 2 October 2002 entered into a
conditional Sale and Purchase Agreement (“SPA”) with Syarikat
Jeleta Bumi Sdn Bhd, a wholly-owned subsidiary of Highlands &
Lowlands Berhad, which in turn is a 54.53%-owned subsidiary of
Kumpulan Guthrie Berhad for the acquisition of 2 parcels of land
measuring approximately 426 acres, on an “as is where is” basis, held
under Title Nos. Grant 3074 and Geran 43530, Lot Nos. (Portion) 130
and 77975 respectively, both located at Mukim and District of Klang,
State of Selangor Darul Ehsan for a total cash consideration of
RM115,335,333.50 based on the terms and conditions of the SPA.
9
The Proposed Acquisition is subject to the following conditions:
(C)
(i)
the approval of the FIC, which was obtained on 14 November
2002.
(ii)
the approval of the shareholders of WCT which was obtained
on 30 December 2002;
(iii)
the approval of the shareholders of WCTR, GESB and SJB,
which was obtained through EGMs convened on 2 October
2002;
(iv)
the approval of the Estate Land Board as defined in Section
214A of the National Land Code;
On 13 December 2002, AmMerchant Bank Berhad, on behalf of the
Board of Directors of WCT had announced that WCT had entered
into a Principal Agreement with the Bescorp Industries Berhad
(“Bescorp”) (Special Administrators appointed) for the Transfer of
Listing (“Principal Agreement”), for the implementation of a proposal
which includes inter-alia, the utilisation of WCT Realty Sdn. Bhd.
(“WCTR”), a wholly-owned subsidiary of WCT, for the acquisition of
the entire issued and paid-up share capital of Bescorp (“the
Proposal”) in accordance with the terms of the Principal Agreement.
Subsequently, on 27 December 2002, AmMerchant Bank Berhad
(“AmMechant Bank”), on behalf of the Board of WCT, wishes to
announce that WCT had on 27 December 2002 entered into a
Supplemental Agreement with Bescorp to amend, modify and/or vary
the Principal Agreement (“Supplemental Agreement”).
Pursuant to the Principal Agreement, Supplemental Agreement and an
internal restructuring exercise of WCTR, WCT shall undertake
proposals to enable the eventual listing of WCTR on the Main Board
of the KLSE via the transfer of the listing status of Bescorp to
WCTR, subject to the relevant Approvals of:i)
Pengurusan Danaharta Nasional Berhad;
ii)
the SC;
iii)
the KLSE;
iv)
the FIC;
v)
the Ministry of International Trade and Industry (“MITI”), if
required;
vi)
the Secured Creditors of Bescorp in accordance with Section
46 of the Companies Act, 1965, if required; and
vii)
any other relevant authorities.
An application for approvals had been submitted to SC and FIC on 27
December 2002.
10
B9
Group Borrowing And Debt Securities
Total group borrowings (all denominated in Ringgit Malaysia) as at 31.10.2002
are as follows : RM'000
Long Term Bond - Unsecured
120,000
Long Term Bank Loans - Secured
Total outstanding balances
Repayments due within the next 12 months
Sub-total
47,504
(38,966)
8,538
Long Term Hire purchase creditors - Secured
Total Long Term (A)
Short Term Bank Borrowings
Secured : Bank Overdrafts
Bankers Acceptance
Revolving credit
Hire purchase creditors
Current portion of Long Term Loan
Sub-total
Unsecured : Bank Overdrafts
Bankers Acceptance
Revolving Credit
Sub-total
Total (B)
10,002
138,540
21,312
3,406
6,357
38,966
70,041
23,163
23,585
9,500
56,248
126,289
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B10
Off Balance Sheet Financial Instruments
There were no financial instruments with off balance sheet risk as at
26.12.2002 the latest practicable date which is not earlier than 7 days from
the date of issue of this quarterly report.
B11
Material Litigation
Save as disclosed in the previous quarterly reports, WCT and its subsidiary
companies are not engaged in any material litigation from 31.01.2002 ( the
last annual balance sheet date) to 26.12.2002 the latest practicable date
which is not earlier than 7 days from the date of issue of this quarterly
report either as plaintiff or defendant, and the Board of WCT has no
knowledge of any proceedings pending or threatened against the Company
and its subsidiary companies or of any facts likely to give rise to any
proceedings which might materially and adversely affect the position or
business of WCT and its subsidiary companies during the said period.
B12
Dividends
(a)
No dividend is proposed for the quarter.
(b)
On 26 September 2002, the Directors have declared an interim
dividend of 7% (less Malaysian Income Tax of 28%) (2001 : Interim
tax exempt dividend of 5%) on ordinary shares of RM1.00 each
amounting to RM4,838,682 based on the issued and paid-up share
cpaital of the Company as at 31 July 2002, in respect of the financial
period ending 31st. December 2002. The interim dividend has been
paid on 20th. December 2002.
(c)
The Company paid a final and special tax exempt dividend of 2.5% and
5.0% respectively (2001:Final and special tax exempt dividend of
2.5%) amounting to RM2,400,140 and RM4,800,280 respectively in
respect of the financial year ended 31 January 2002 during the
quarter ended 31 July 2002.
By order of the Board
WCT Engineering Berhad
------------------------------------------------Loo Shen Chang (MIA 7069, MICPA 2521)
Secretary
SELANGOR DARUL EHSAN
30 December 2002
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