AMALGAMATED INDUSTRIAL STEEL BERHAD
(Company No. 9118-M)
QUARTERLY REPORT ON CONSOLIDATED RESULTS FOR THE
FOURTH FINANCIAL QUARTER ENDED 31 DECEMBER 2011
EXPLANATORY NOTES PURSUANT TO APPENDIX 9B OF THE
LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD
B1
Review of Performance of the Group and Company
For the fourth quarter ended 31 December 2011 (“Q4”), the Group recorded a
40% increase in revenue from RM31.5 million recorded in the previous
corresponding period (“PCQ4”) to RM44.28 million. The increase was mainly
attributable to the change in sales strategy with competitive pricing to push for
higher sales volume.
Lower selling prices which were off-set by the lower production cost per unit
on the back of higher production volume was not sufficient to generate profit
for Q4, which was also affected by stock write-down of RM2.2 Million to set
the stock value closer to market prices. The Group posted a pre-tax loss of
RM4.92 million in Q4 as compared to a pre-tax loss of RM3.19 million in
PCQ4.
Therefore, on the back of lower selling prices which had resulted in a lower
profit margin, the Group registered a pre-tax loss of RM9.61 million in the
Year 2011 against a pre-tax loss of RM4.30 million for the corresponding
period. The current year result was also affected by the higher stock writedown of RM2.2 Million as compared to RM647,000 in the previous year.
The Company reported a pre-tax loss of RM3.34 million in Q4 as compared to
a pre-tax loss of RM2.36 million in PCQ4. Q4 loss was mainly due to lower
selling prices to push for higher sale volume to drive down unit production
cost, while PCQ4 suffered a drop in selling prices when the market started to
soften in 3rd Quarter 2010. Year 2011 saw a decline in performance from a pretax loss of RM2.92 million in previous corresponding period to a pre-tax loss of
RM6.6 million in current period. Previous corresponding period selling prices
were supported by better market rates in the first half of 2010 before prices
Page 1 of 5
AISB-QUARTERLY REPORT ON CONSOLIDATED RESULTS FOR
THE FOURTH QUARTER ENDED 31 DECEMBER 2011
-EXPLANATORY NOTES TO THE INTERIM FINANCIAL REPORT (Cont’d)
suddenly softened in 3rd Quarter 2010. Current year performance was affected
by higher stock write-down of RM638,000.
B2
Material Changes in the Group Quarterly Results
Compared to the Results of the Preceding Quarter
The Group recorded slightly higher revenue of RM44.28 million in Q4 as
compared to the immediate preceding quarter (PQ3) revenue of RM40.38
million mainly attributable to higher sale volume.
The Group registered a higher pre-tax loss of RM4.92 million in Q4 as
compared to a pre-tax loss of RM2.28 million in PQ3 when it took up a stock
write-down charge of RM2.2 Million.
B3
Current Year Prospects
The domestic market price of mild steel hot-rolled coils (“HRC”) is not
expected to improve in first quarter of 2012. Notwithstanding, domestic selling
prices are stabilizing at the present levels and business activity cum margin is
expected to improve with the Group’s renewed focus on smaller customers’
orders which command better pricing.
For the financial year 2012, the directors remain cautiously optimistic that
demand will improve from the second quarter of 2012 with the strategy to push
for higher sale volume from smaller customers to bring down product cost to be
more competitive.
Management will manage its costs tightly going forward and also make a
concerted effort to manage the Group’s working capital effectively by
optimizing inventory level and improving its cash flow plan, as well as improve
on operation efficiencies.
B4
Profit Forecast or Profit Guarantee
This is not applicable to the Group.
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AISB-QUARTERLY REPORT ON CONSOLIDATED RESULTS FOR
THE FOURTH QUARTER ENDED 31 DECEMBER 2011
-EXPLANATORY NOTES TO THE INTERIM FINANCIAL REPORT (Cont’d)
B5
Taxation
Current Quarter
3 months ended
31.12.2011
31.12.2010
RM
RM
Cumulative Period-to-date
12 months ended
31.12.2011
31.12.2010
RM
RM
In respect of :current period
- income tax
- deferred tax
836,172
169,741
55,222
1,577,320
(7,761)
616,363
prior period
- income tax
- deferred tax
(1,373,543)
6,001
404,535
(1,373,543)
219
(124,782)
(537,371)
635,499
(203,777)
484,039
Tax (expense)/ income
The Company and its subsidiaries reported losses for the financial year ended 31 December
2011 and the losses of the Company and one of its subsidiaries are available for utilization
against future taxable profit.
However, for another subsidiary due to the uncertainty of profit recovery against accumulated
losses within a reasonable period, the deferred tax asset of RM1,373,543 was written back as
deferred tax expense in the 4th Quarter of 2011.
B6
Status of Corporate Proposals
There were no corporate proposals for the quarter.
B7
Group Borrowings and Debt Securities
The total Group borrowings of RM78.5 million were unsecured, covered by way
of negative pledges, of which RM75.1 million were short term and all were
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AISB-QUARTERLY REPORT ON CONSOLIDATED RESULTS FOR
THE FOURTH QUARTER ENDED 31 DECEMBER 2011
-EXPLANATORY NOTES TO THE INTERIM FINANCIAL REPORT (Cont’d)
denominated in Ringgit Malaysia.
B8
Pending Material Litigation
There was no pending material litigation for the quarter.
B9
Dividend Payable
No interim dividend has been declared for the quarter ended 31 December 2011
(31 December 2010: Nil).
B10 (Loss)/Earnings per Share
a)
Cumulative Period-to-date
12 months ended
31.12.2011
31.12.2010
(5,460,384)
(2,559,975)
(9,401,712)
(3,817,543)
113,728,575
113,735,575
113,732,139
113,806,187
(4.80)
(2.25)
(8.27)
(3.35)
Basic (loss)/earnings
per share
(Loss)/ Profit for the
financial period
attributable to owners
of the Parent (RM)
Weighted average
number of ordinary
shares in issue
Basic (loss)/ earnings
per share (Sen)
b)
Current Quarter
3 months ended
31.12.2011
31.12.2010
Diluted
earnings/
(loss) per share
This is not
applicable to the
Group.
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AISB-QUARTERLY REPORT ON CONSOLIDATED RESULTS FOR
THE FOURTH QUARTER ENDED 31 DECEMBER 2011
-EXPLANATORY NOTES TO THE INTERIM FINANCIAL REPORT (Cont’d)
B11
Disclosure of realised and unrealised profits/ (losses)
Current financial year end
Current
Preceding
Quarter
Quarter
RM
RM
As at the end of last
financial year
RM
Total retained profits /
(accumulated losses) of the
Group:
- Realised
- Unrealised
8,731,272
(968,733)
13,308,565
(247,927)
17,991,037
(989,073)
Total Group retained profit as
per consolidated accounts
7,762,539
13,060,638
17,001,964
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