WCT ENGINEERING BERHAD (“WCT” OR “THE COMPANY”) (66538-K)
QUARTERLY UNAUDITED RESULTS FOR THE GROUP FOR THE 4th QUARTER
ENDED 31.12.2002
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 (“KLSE”).
The accounting policies and methods of
computation adopted by the Group in this interim financial statements are
consistent with those adopted in the annual financial statements for the
year ended 31 January 2002 except for the adoption of MASB 25 – “Income
Taxes”.
A3
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
Items Of Unusual Nature And Amount
There were no unusual items affecting assets, liabilities, equity, net income
or cash flows of the Group that are unusual due to their nature, size or
incidence for the current quarter.
1
A6
Changes In Estimate
There were no changes in the estimates of amounts reported in prior interim
periods of the current financial period 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
On 20 December 2002, the Company paid an interim dividend amounted to
RM4,838,783 in respect of the financial period ended 31 December 2002.
2
A9
Segmental Analysis – Cumulative Quarter To 31 December 2002
Business segment
Civil
Engineering
& Construction
RM'000
Trading
Property
development
Property and
investment
holding
Interest
income
Eliminations
Consolidated
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
Revenue from external
customers
541,451
Inter-segment revenue
337,949
Total revenue
879,400
43,008
115,213
4,130
-
Operating profit
48,128
2,002
21,315
2,377
2,067
Finance costs
(5,509)
Share of profit of
associated companies
Profit before taxation
43,008
4,130
-
703,802
(337,949)
(218)
(249)
42,370
115,213
(7)
(750)
-
35,056
75,889
(6,484)
13,499
13,748
1,784
703,802
1,627
2,067
82,904
3
A9
Segmental Analysis – Cumulative Quarter To 31 December 2002 (Con’t)
Geegrahical segment
Malaysia
RM'000
Revenue from external
customers
627,812
Inter-segment revenue
337,949
Total revenue
965,761
Operating profit
Outside
Malaysia
RM'000
75,990
75,990
7,342
Share of profit of
associated companies
Profit before taxation
75,811
7,093
(249)
Consolidated
RM'000
703,802
(337,949)
68,547
(6,484)
13,748
Finance costs
Eliminations
RM'000
703,802
75,889
(6,484)
13,499
82,904
4
A10
Valuation Of Property, Plant And Equipment
The valuations of property, plant and equipment have been brought forward
without amendment from the audited financial statements for the financial
year ended 31 January 2002.
A11
Subsequent Material Events
Save as disclosed below, there were no material events subsequent to the
reporting period up to 22 February 2003 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.
(i)
WCT Overseas Sdn. Bhd. (“WCT Overseas”) had on 14 February 2003
acquired and subscribed for an additional 452,140 and 82,489
ordinary shares of RM1.00 each respectively in the share capital of
CIDB Inventures Sdn. Bhd. (“CIDBI”) at par for a total cash
consideration of RM534,629 (the “Acquisition and Subscription of
Shares”). The Acquisition and Subscription of Shares by WCT
Overseas will result in the increase of WCT Group’s direct investment
in the ordinary share capital of CIDBI from 10% to approximately
15.34%.
As a result of the above, WCT will effectively hold 21.6% equity
interest in Swarna Tollway Private Limited (“Swarna”) via WCT
Overseas, as follows:(a)
17% equity interest via WCT Offshore Private Limited
(“WOPL”), a wholly owned subsidiary of WCT (International)
Private Limited (“WIPL”), which in turn is a wholly owned
subsidiary of WCT Overseas.
(b)
4.6% equity interest via CIDBI has a 30% direct equity
interest in Swarna.
On even date, WCT Overseas also resolved to subscribe for 153,463
Redeemable Preference Shares (“RPS”) in CIDBI of RM1.00 each at
an issue price of RM50 per RPS. The total subscription price for the
RPS is RM7,673,150 of which approximately RM4,730,000 has been
approved by the shareholders of WCT at the Extraordinary General
Meeting (“EGM”) held on 19 February 2003.
5
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, WIPL, a wholly owned subsidiary of WCT,
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, WOPL, 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).
(d)
On 30 September 2002, WCT Realty Sdn. Bhd. (“WCTR”), a wholly
owned subsidiary of WCT, 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 of RM2.00.
GESB is presently a dormant company and its intended principal
activities consist of property investment and development.
(e)
On 1 October 2002, WCT acquired the entire issued and paid-up
share capital of WCT Equity Sdn. Bhd. (“WCT Equity”) and WCT
Plantations Sdn. Bhd. (“WCT Plantations”), comprising 2 ordinary
shares of RM1.00 each respectively, for a cash consideration
ofRM2.00 each.
WCT Equity and WCT Plantations are presently dormant.
(f)
On 12 November 2002, WCT 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. CybarcoWCT 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.
6
A13
Contingent Liabilities
Contingent liabilities of the Group as at 22 February 2003 (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 RM274.986 million and RM43.928 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
(RM'000)
Balance as at 31.01.2002
Extended during the period
Discharged during the period
Balance as at 22.2.2003
84,933
237,317
(47,264)
274,986
Corporate Guarantee
(RM'000)
43,928
43,928
7
B
EXPLANATORY NOTES
REQUIREMENTS
IN
COMPLIANCE
B1
Review Of The Performance Of The Group
WITH
KLSE
LISTING
The Group recorded a revenue of RM703.802 million for the period ended 31
December 2002, representing an increase of 48.5% over the result of the
previous year ended 31 January 2002. Profit before taxation and net profit
for the period have also increased by 11% and 14% respectively from that of
the previous year ended 31 January 2002.
The increase is substantially due to the increase in the construction
activities undertaken by the Group, both locally and overseas as well as the
increase in property development activities.
B2
Material Changes In The Quarterly Reports Compared To The Results
Of The Immediate Preceding Quarter
Current
4th Quarter
2002
RM'000
Current
3rd Quarter
2002
RM'000
161,210
201,029
(39,819)
-20%
13,219
22,247
(9,028)
-41%
Revenue
Profit before taxation
Increase/(Decrease)
RM'000
%
Both the revenue and profit before taxation of the Group declined by 20%
and 41% respectively from the previous quarter as the results of the 4th
quarter represents the result of only two months as compared to three
months of the previous quarter due to the change in the Group’s financial
year end from 31 January to 31 December. In addition, the decrease in
profit before taxation was also due to the write down in value of properties
held for resale by RM2 million during the current quarter.
B3
Prospect For The Forthcoming Financial Year
Based on the balance of the order book in hand of RM1.4 billion and 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 period.
B4
Variance Of Actual Profit From Forecast Profit
Not applicable to the Group.
8
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
4,367
(1,332)
3,035
(2,047)
9
19,019
(1,776)
17,243
(1,495)
3,495
Overseas tax
- Current taxation
961
2,663
Effective tax rate
1,958
28%
21,906
28%
Profit before taxation (Malaysia operations)
Tax at statutory tax rate of 28%
10,968
62,063
3,071
17,377
Tax effects of expenses/(income) that are
not deductible/(taxable) in determing
taxable profit:
-
Interest restriction
Building maintenance on property
Entertainment and others
Foreign source income - management fees
Deferred tax on unrealised profits
net of realised profits
- Loss on sales of fixed assets
- Depreciation
- Business loss for subsidiaries
(53)
97
105
(415)
76
314
132
(415)
(26)
3
207
46
(522)
3
207
71
3,035
17,243
The effective tax rate of the current and cumulative quarter ended 31
December 2002 was lower than the statutory tax rate mainly due to
management fees received from foreign source income which is tax exempt.
9
B6
Profit On Sales Of Unquoted Investments And/Or Properties
There were no profits 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 31.12.2002, 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 22 February 2003, 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 on 27.06.02.
The proposed private placement is subject to the approval of :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 31 December 2002, AmMerchant Bank Berhad (“AmMerchant
Bank”), on behalf of the Board of Directors of WCT had announced
that an application has been made to the SC for an extension of time
of six months up to 18 July 2003 for the Company to implement the
proposed private placement. The aforesaid application was approved
by SC on 16 January 2003.
10
(B)
On 3 October 2002, the Company announced that GESB, a whollyowned subsidiary of WCTR, which in turn is a wholly-owned subsidiary
of WCT, had on 2 October 2002 entered into a conditional Sale and
Purchase Agreement (“SPA”) with Syarikat Jeleta Bumi Sdn Bhd
(“SJB”), 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.
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, on behalf of the Board of
Directors of WCT had announced that WCT had entered into a
Principal Agreement with the Bescorp Industries Berhad (Special
Administrators appointed) (“Bescorp”) for the implementation of a
proposal which includes inter-alia, the utilisation of WCTR for the
acquisition of the entire issued and paid-up share capital of Bescorp
(“the Proposal”) and the Transfer of Listing in accordance with the
terms of the Principal Agreement.
Subsequently, on 27 December 2002, AmMerchant Bank on behalf of
the Board of Directors of WCT announced 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”).
11
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.
12
B9
Group Borrowing And Debt Securities
Total group borrowings (all denominated in Ringgit Malaysia) as at 31.12.2002
are as follows : RM'000
Long Term Bond - Unsecured
Long Term Bank Loans - Unsecured
Long Term Bank Loans - Secured
Total outstanding balances
Repayments due within the next 12 months
Sub-total
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)
B10
120,000
45,000
44,163
(37,654)
6,509
9,159
180,668
16,403
3,199
6,242
37,654
63,498
15,618
18,367
9,500
43,485
106,983
Off Balance Sheet Financial Instruments
There were no financial instruments with off balance sheet risk as at 22
February 2003 the latest practicable date which is not earlier than 7 days
from the date of issue of this quarterly report.
13
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 22 February 2003, 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)
Having considered the Group’s cash position as well as the
performance, the Directors have proposed the declaration of a final
dividend of 7% (less Malaysian Income Tax of 28%). Together with
the interim dividend of 7% (less Malaysian Income Tax of 28%) paid
on 20 December 2002, the total annual dividends declared for the
financial year ended 31 December 2002 will amount to 14% (less
Malaysian Income Tax of 28%) (31.1.2002 : 10% tax exempt – annual
dividends and 2.5% tax exempt – special dividends ). This is
consistent with the Company’s objective to reward the shareholders
and to enhance their value. The payment of the final dividend is
subject to the approval of shareholders of the Company at the
forthcoming Annual General Meeting at the date to be convened by
the Directors of the Company.
(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 RM4,838,783 based on the issued and paid-up share
capital of the Company as at 31 July 2002, in respect of the financial
period ending 31 December 2002. The interim dividend has been paid
on 20 December 2002.
(c)
On 31 July 2002, 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
Date : 27 February 2003
14