FOREMOST HOLDINGS BERHAD
(Company No: 463440 –X)
(Incorporated in Malaysia)
NOTES TO THE QUARTERLY REPORT
FOR THE FINANCIAL QUARTER ENDED 30 JUNE 2004
MASB 26 – Paragraph 16
A1. Accounting Policies
The accounts of the Group are prepared using the same accounting policies,
method of computation and basis of consolidation as those used in the
preparation of the most recent annual financial statements.
A2. Audit Report
The audit report of the Group’s preceding annual financial statements was
qualified with emphasis of matter.
A3. Seasonal/Cyclical Factors
The manufacturing of speakers has shown a seasonal character. During a
financial year, major part of the invoicing and deliveries typically take place
towards the second and third quarter of the financial year.
A4. Unusual Items
There were no items which were unusual because of their nature, size and
incidence, that has affected the assets, liabilities, equity, net income or cash
flow for the financial quarter ended 30 June 2004.
A5. Changes in Estimation
There were no changes in 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
financial quarter.
A6. Issuance of Equity or Debt Securities
There were no issuance and repayment of debt and equity securities, share
buy-backs, share cancellations, shares held as treasury shares and resale of
treasury shares for the financial quarter ended 30 June 2004.
A7. Dividend
The Directors have not recommended any dividend for the current quarter
ended 30 June 2004.
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A8. Segmental Reporting
Financial data by business
segment for the Group
Automobile speakers
Home audio speakers
General purpose speakers
Wooden cabinet
Auto accessories
Others
Turnover
RM’000
7,320
80,594
17
247
88,178
Profit/(Loss)
Before Taxation
RM’000
(99)
(4,132)
(14)
(895)
48
(5,092)
A9. Valuation of Property, Plant and Equipment
There were no changes in the valuation of the property, plant and equipment
reported in the prior financial years that will have effect in the current financial
period under review.
A10. Subsequent Material Events
There were no items, transactions or events of a material and unusual nature
which have arisen from 30 June 2004 to the date of this announcement that
would substantially affect the financial results of the Group for the financial
quarter ended 30 June 2004.
A11. Effect of Changes in Composition of the Group
There were no significant changes in the composition of the Group for the
financial quarter ended 30 June 2004, including business combination,
acquisition or disposal of subsidiaries and long term investment, restructuring
and discontinuing operation.
A12. (a) Contingent Liabilities
(i)
Kenn Kenn Auto Accessories & Services Sdn. Bhd. (“KKAA”) has a
contingent liability amounting to RM341,897 in respect of a disputed
claim against them by Kenn Kenn Auto (SP) Sdn. Bhd. (“KKSP”). The
amount of RM341,897 has been deposited by KKAA with the Court.
There is a further claim for damages in respect of this suit but the
amount of the claim has not been quantified.
(ii)
KKAA has a contingent liability amounting to RM325,142 being claims
for breach of tenancy agreement not provided for in the financial
statements.
(iii)
KKAA is contingently liable for any shortfall between the sales proceed
of the landed property of RM608,000 and the outstanding loan together
with interest totaling RM834,288 as at 31 December 2003.
(b) Corporate Guarantees
The Company has issued corporate guarantees to various financial institutions
for banking facilities, amounting to RM35.77million granted to subsidiary
companies of which RM26.50 million of the facilities has been utilised as at 30
June 2004.
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BMSB Listing Requirements (Part A of Appendix 9B)
B1. (refer A1)
B2. (refer A4)
B3. Extraordinary Items
There were no extraordinary items for the financial quarter ended 30 June
2004.
B4. Taxation
The taxation for the current financial quarter is as follows:
Current Quarter
Ended 30/6/2004
RM’000
Current Year To Date
Ended 30/6/2004
RM’000
Taxation
- Current period
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12
3
12
The taxation for the current quarter amounted to RM12,000 was in respect of
profit from one of the subsidiaries.
B5. Profits on Sale of Unquoted Investments/Properties
There were no sales of unquoted investments and/or properties of the Group
for the financial quarter ended 30 June 2004.
B6. Profits on Sale of Quoted Securities
There were no purchases or disposal of quoted securities for the financial
quarter ended 30 June 2004.
B7. (refer A11)
B8. Corporate Proposals
(a) There was no further decision in respect of the Corporate Proposal,
regarding the subscription agreement with Clarion Network Sdn Bhd
(“CNSB”), Chua Dok Tong and Mohamed Zamani bin Ismail to subscribe for
99,998 new CNSB shares, representing 99.99% equity interest in the
company, for a total cash consideration of RM99,998 or at RM1.00 per
subscription share which has been deferred subject to further review.
(b) With regard to the proposed private placement exercise of 8,770,000 new
ordinary shares of RM1 each in the Company, representing 20% of the
issued and paid up capital of the Company, the approvals of the Foreign
Investment Committee and the Securities Commission (“SC”) were obtained
via the SC’s letter dated 28 June 2004, and the Company’s shareholders at
its Extraordinary General Meeting held on 30 June 2004 also passed the
resolution on the proposed private placement.
The related announcements were made on 30 June 2004 and 1 July 204
respectively.
On 20 August 2004, it was further announced that the Board has
determined the even date as the price fixing date for the 8,770,000
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placement shares to be issued pursuant to the proposed private placement.
Accordingly, the issue price of the 8,770,000 shares has been fixed at
RM1.00 per share, being a discount of 15.2% to the five day weighted
average market prices of the Company’s shares from 16 August 2004 to 20
August 2004 of RM1.18 per share.
B9. (refer A6)
B10. Borrowings and Debt Securities
Total Group borrowings as at 30 June 2004 were as follows:
RM'000
(a) Short Term – Secured
Bank Overdraft
Term Loans
Bankers' Acceptance
(b) Long Term – Secured
Term Loans
5,943
1,174
24,924
32,041
-
B11. (refer A12)
B12. Off Balance Sheet Financial Instruments
As at 23 August 2004, forward exchange contracts that were entered into by
subsidiary companies were USD4.66 million. These contracts were entered into
as a hedge for sales denominated in foreign currencies to limit the exposure to
potential changes in foreign exchange rates with respect to the subsidiary
companies’ estimated receipts denominated in foreign currencies. The maturity
of these contracts range from 24 August 2004 to 25 October 2004.
Transactions in foreign currencies are initially recorded in Ringgit Malaysia at
rates of exchange ruling at the date of the transaction. At each balance sheet
date, foreign currency monetary items are translated into Ringgit Malaysia at
exchange rates ruling at that date, unless hedged by forward foreign exchange
contracts, in which case the rates specified in such forward contracts are used.
The underlying foreign currency transactions are translated at their respective
hedged exchange rate and all exchange gains or losses are recognized as
income or expense in the income statement in the same period as the
exchange differences on the underlying hedged items. Exchange gains and
losses arising on contracts entered into as hedges of anticipated future
transactions are deferred until the date of such transaction, at which time they
are included in the measurement of such transactions.
There is minimal credit risk as the contracts were entered into with reputable
banks.
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B13. Material Litigations
As at 23 August 2004, the latest practicable date which is not earlier than 7
days from the date of issue of this quarterly report, the Group is engaged in the
following material litigations:Plaintiff/s
Kenn Kenn Auto
Accessories &
Services Sdn Bhd
(“KKAA”)
KKSP
Kenn Kenn Auto
(SP) Sdn Bhd
(“KKSP”)
Alor Setar High Court
Civil Suit No. 22-10496
Status as at 23 August
2004
Defendant’s application to
set aside Judgment In
Default was allowed.
KKAA
Alor Setar High Court
Civil Suit No. 22-24899
The Court will fix a date
for
hearing
of
Assessment of Damages.
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KKAA and
Foremost
Holdings Berhad
(“FHB”)
Kenn Kenn
Management Sdn
Bhd (“KKM”)
Kuala Lumpur High
Court Suit D6-221457-2001
The Honorable Court had
allowed the Plantiff’s
Solicitor to discharge
from the case.
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Citibank Berhad
(“Citibank”)
KKAA
Dalam Mahkamah
Tinggi Malaya Di
Kuala Lumpur Saman
Pemula No. S2-241811-2002
The Defendant is still
waiting for the proceeding
by the bank.
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Citibank
KKAA, Siow You
& Siow Geat Min
The Plaintiff is in the
midst of executing the
judgement.
6
Gan Seng Biang
7
RHB Bank
Berhad
FHB, KKAA,
Dato’ Mohammed
Radzi @ Mohd
Radzi bin Manan,
Siow You & IPO
Corporation Sdn
Bhd
KKAA and Siow
You
Mahkamah Tinggi
Malaya Kuala Lumpur
Guaman No. D1-221033-2002
Kuala Lumpur High
Court D1-22-19472002
Kuala Lumpur High
Court D7-22-594-2003
The Honourable Court
had
allowed
the
Defendant’s Solicitor to
discharge from the case.
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Scrin Technology
(M) Sdn Bhd
Pulau Pinang High
Court 22-576-2003MT-1
The Defendant will file
and serve his defense
and counter claim.
1
2
Defendant/s
Yaku Shin ETech (M) Sdn
Bhd
Court Reference
The Court has yet to fix
the matter for case
management.
Note: KKAA is currently under receivership
B14. (refer A8)
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B15. Material Changes in Quarterly Results
Current Year
Quarter
30/6/2004
RM’000
Profit/(loss) before tax
Immediate
Preceding Quarter
31/3/2004
RM’000
(2,731)
(2,361)
During the current quarter under review, the Group recorded a pre-tax loss of
RM2.731 million against a pre-tax loss of RM2.361 million in the immediate
preceding quarter. The increase in losses was mainly contributed by one of the
non-operating subsidiaries, Kenn Kenn Auto Accessories & Services Sdn Bhd.
As a result of the force sales of its assets by the banks, the subsidiary
registered a loss of RM0.734 million compared to the preceding quarter of
RM0.160 million. However, the loss was mitigated by the manufacturing
subsidiaries, which albeit registered losses, had improved in their financial
performance compared with the preceding quarter.
B16. Review of the Performance of the Company and its Principal Subsidiaries
Individual Quarter
Current
Preceding Year
Year
Corresponding
Quarter
Quarter
30/6/2004
30/6/2003
RM’000
RM’000
Cumulative Quarter
Current
Preceding Year
Year To
Corresponding
Date
Period
30/6/2004
30/6/2003
RM’000
RM’000
Revenue
46,208
67,878
88,178
108,504
Loss before tax
(2,731)
(15,469)
(5,092)
(18,689)
The Group reported revenue of RM46.208 million and loss before tax of
RM2.731 million, compared to the preceding year corresponding quarter
revenue of RM67.878 million and loss before tax of RM15.469 million.
The comparatively lower sales for the current quarter is due to one of its
subsidiaries having obtained an extraordinarily high sales order for one
particular model of speaker box in the previous financial year as explained in
the 2003 Annual Report. This resulted in the previous corresponding quarter’s
sales being higher than the current quarter.
The implementation of cost cutting measures coupled with increased efforts in
raw material sourcing and improvement in operational efficiencies has improved
the financial performance considerably. These efforts are continuing and are
expected to bear further positive results.
B17. (refer A10)
B18. (refer A3)
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B19. Prospects for the Current Financial Year
Barring unforeseen circumstances, the Group expects to see improvement in
performance for the remaining period to the end of the financial year.
B20. Variance of Actual Profit from Forecast Profit and Profit Guarantee
Not applicable.
B21. (refer A7)
B22. Earnings Per Share
Earnings per share was calculated based on loss after tax and minority interest
of RM3,541,860 and the weighted average number of ordinary shares of
RM1.00 each in issue during the financial year of 43,850,000.
WHERE
A denotes requirements of MASB 26
B denotes requirement of BMSB LR
BY ORDER OF THE BOARD
Teh Hong Beng
Group Managing Director
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