H-DISPLAYS (MSC) BHD (Company No: 726318K ) (Incorporated in Malaysia) CONDENSED CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2010 (The figures have not been audited) AS AT CURRENT PRECEEDING FINANCIAL FINANCIAL YEAR QUARTER ENDED ENDED 30 SEP 2010 31 DEC 2009 (Unaudited) (Audited) RM'000 RM'000 NON-CURRENT ASSETS Property, Plant and Equipment 4,182 4,705 Deferred Taxation - - Intangible Assets - - 4,182 4,705 CURRENT ASSETS Inventories 9,647 10,114 Trade Receivables 7,580 9,639 Other Receivables 490 253 Tax recoverable - 2 Cash & Cash Equivalents 867 551 18,584 20,559 CURRENT LIABILITIES Trade Payables 6,468 7,679 Other Payables 2,720 2,404 Amount due to directors - - Tax payable 73 52 Borrowing 10,485 11,021 19,746 21,156 NET CURRENT LIABILITIES (1,162) (597) 3,020 4,108 FINANCED BY : Share Capital 21,000 21,000 Share Premium 14,637 14,637 Reserves Reserve on consolidation 2,837 2,715 Unappropriated profit Attributable to equity shareholders (35,509) (34,323) Minority - - (35,509) (34,323) Shareholders' Equity 2,965 4,029 NON-CURRENT LIABILITIES Hire purchase Creditor 55 79 3,020 4,108 Net assets per share attributable to ordinary equity holders of the Company (sen) 1.41 1.92 This is the third interim financial statements on the consolidated results for the financial year ending 31 December 2010 H-DISPLAYS (MSC) BHD (Company No: 726318K ) (Incorporated in Malaysia) UNAUDITED CONDENSED CONSOLIDATED INCOME STATEMENT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2010 (The figures have not been audited) Individual Quarter Cumulative Quarter Current Year Preceding year Current Year Preceding Year quarter corresponding quarter to-date to-date 30 Sep 2010 30 Sep 2009 30 Sep 2010 30 Sep 2009 RM'000 RM'000 RM'000 RM'000 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenue 10,300 12,086 26,314 36,633 Profit from operations 516 421 (428) (20,708) Other income 1 33 58 140 Depreciation and amortisation expenses (158) (178) (540) (566) Finance costs (81) (138) (266) (396) Profit before taxation 278 138 (1,176) (21,529) Taxation - (69) (9) (72) Profit for the financial period 278 70 (1,185) (21,600) Attributable to: Equity holders of the Company 278 70 (1,185) (21,600) Minority Interest - - - - 278 70 (1,185) (21,600) Basic earnings per share (sen) 0.13 0.03 (0.56) (10.29) Diluted earnings per share (sen) 0.13 0.03 (0.56) (10.29) H-DISPLAYS (MSC) BHD (Company No: 726318K ) (Incorporated in Malaysia) UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2010 Current Year Preceding year 3 months ended corresponding quarter 30 September 2010 30 September 2009 (Unaudited) (Unaudited) RM'000 RM'000 Net cash (used in) / from operating activities 599 1,694 Net cash used in investing activities - 128 Net cash from financing activities (87) (2,723) Net increase in cash and cash equivalents 511 (901) Effect of exchange rate changes (12) (488) Cash and cash equivalents as at 30 June 2010 368 3,403 Cash and cash equivalents as at 30 September 2010 867 2,015 H-DISPLAYS (MSC) BHD (Company No: 726318K ) (Incorporated in Malaysia) UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL PERIOD ENDED 30 SEPTEMBER 2010 Reserves <-------Non-distributable-------> Distributable Group Share Share Reserve on Unappropriated capital premium consolidation profit Total RM '000 RM '000 RM '000 RM '000 RM '000 Balance as at 1 July 2010 21,000 14,637 2,837 (35,787) 2,687 Issuance during the financial period - - - - - Currency translation differences - - (12) - (12) Net profit for the financial period - - 278 278 Balance at 30 September 2010 21,000 14,637 2,825 (35,509) 2,953 H-DISPLAYS (MSC) BHD (Company No: 726318K ) (Incorporated in Malaysia) NOTES TO INTERIM FINANCIAL REPORT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2010 1.0 EXPLANATORY NOTES PURSUANT TO FINANCIAL REPORTING STANDARD ("FRS") 134 INTERIM FINANCIAL REPORTING 1.1 Basis of Preparation The interim financial statements have been prepared under the historical cost convention except for the revaluation of properties included within property, plant and equipment and the investment properties which are stated at fair value. The interim financial statements are unaudited and have been prepared in accordance with the requirements of FRS 134: Interim Financial Reporting issued by Malaysian Accounting Standard Board ("MASB") and Paragraph 9.22 of the Listing Requirements of Bursa Malaysia Securities Berhad. It should be read in conjunction with the audited financial statements for the year ended 31 December 2009. Financial Reporting Standards (a) Adoption of New and Revised Financial Reporting Standards Significant accounting policies adopted by the Group in this interim financial statements are consistence with those of the audited financial statements for the year ended 31 December 2009 except for the adoption of the following new/revised Financial Reporting Standards ("FRS") by the Group for financial period beginning 1 January 2010: (I) Amendment to FRS 121: The Effect of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation (ii) FRS 107: Cash Flow Statements (iii) FRS 112: Income Taxes (iv) FRS 118: Revenue (v) FRS 120: Accounting for Government Grants asnd Disclosure of Government Assistance (vi) FRS 134: Interim Financial Reporting (vii) FRS 137: Provisions, Contingent Liabilities and Contingent Assets The adoption of the above mentioned Amendment and FRSs does not have significant financial impact on the Group. (b) New FRS and IC Interpretations Issued but Not Adopted The following FRS and IC Interpretations which are effective for financial period beginning on or after 1 July 2007 are not applicable to the Group:- (I) FRS 111: Construction Contracts (ii) IC Interpretation 1: Changes in Existing Decommissioning, Restoration and Similar Liabilities (iii) IC Interpretation 2: Members' Shares in Co-operative Entities and Similar Instruments (iv) IC Interpretation 5: Rights to Interest arising from Decommissioning, Restoration and Environmental Rehabilitation Funds (v) IC Interpretation 6: Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment (vi) IC Interpretation 7: Applying the Restatement Approach under FRS129 2004 - Financial Reporting in Hyperinflationary Economies 1.2 Reporting Notice This is the third interim financial statements on the consolidated results for the financial year ending 31 December 2010 announced by the Company. 1.3 Qualification of Financial Statements The auditor's report for the financial statements of the HDisply Group for the financial year ended 31 December 2009 is reproduced as follows: Basis for Qualified Opinion As disclosed in Note 32 (a) and (b) to the financial statements, there was an unadjusted unrecorded liabilities in the financial statements as at 31 December 2008 and the Company has lost control of Smart Good Enterprises Limited Group of Companies (“Smart Good Group”) during the financial year. Accordingly, we are unable to carry out audit procedures that we considered necessary to obtain adequate information pertaining to the unrecorded liabilities of the Smart Good Group and/or any further undisclosed liabilities that may further deteriorate the said financial statements. Accordingly, we are unable to form an opinion as to whether the state of affairs of the Group as at 31 December 2008 and of the results and cash flows of the Group for the financial statements ended on that date were fairly stated. Due to insufficient information as stated in the preceeding paragraphs, we are unable to ascertain the financial position and results at the point of deconsolidation. We are unable to satisfy ourselves that the amount of the effects on deconsolidation in this financial year are fairly stated in the results and cash flows. Any further adjustment to the financial position at deconsolidation would have consequential effect on the losses and cash flows for the financial year. In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion paragraph, the financial statements of the Group and of the Company have been prepared in accordance with the Companies Act, 1965 and Financial Reporting Standards in Malaysia so as to give a true and fair view of:- (i) the financial position of the Group and of the Company as at 31 December 2009 and of its financial performance and cash flows for the financial year then ended; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Group and of the Company. 1.4 Seasonal or Cyclical Factors Our customers demand for products in the electronics and electrical industry usually runs from March to November and peaks in the third quarter of the year prior to Christmas and year-end festive seasons. Usually demand for products for customers in the industry will slow down from December to February. 1.5 Unusual Items Affecting Assets, Liabilities, Equity, Net Income or Cash Flows There are no items of unusual nature that affects assets, equity, net income or cash flows during the quarter 1.6 Material Changes in Estimates There were no changes in estimates of amounts reported that have a material effect in the quarter under review. 1.7 Debts and Equity Securities There were no issuance, repurchase, cancellation, resale and repayment of debt and equity securities during the period under review. 1.8 Dividend No dividends were paid during the quarter under review. 1.9 Segment Information Business are the same with the manufacture and sale of LCD panels, LCD modules and LCD products as follows: Current financial Preceding year Preceding year to- quarter corresponding quarter Current year to date date 30 September 2010 30 September 2009 30 September 2010 30 September 2009 RM'000 RM'000 RM'000 RM'000 LCD Panels 271 539 830 1,540 Modules/Others 8,746 7,874 20,385 22,675 LCD Products 1,283 3,673 5,099 12,418 Total 10,300 12,086 26,314 36,633 1.10 Valuation of Property, Plant and Equipment The Group did not carry out any valuation on its property, plant and equipment during the current quarter under review. 1.11 Material Events Subsequent to the end of the Reporting Period There are no material events subsequent to period end 1.12 Changes in the Composition of the Group There were no changes in the composition of the Group during the quarter under review. 1.13 Contingent Assets and Liabilities The group does not have any contingent assets and liabilities as at the end of current quarter 1.14 Significant Related Party Transactions There were no significant related party transactions during the quarter under review. 2.0 EXPLANATORY NOTES PURSUANT TO APPENDIX 9B OF THE LISTING REQUIRMENTS OF BURSA SECURITIES FOR THE ACE MARKET 2.1 Review of the Performance For the third quarter ended 30 September 2010, the Group achieved a revenue of approximately RM10.3 million and a profit after tax of approximately RM 0.28 million compared with a revenue of approximately RM12.08 million and profit after tax of approximately RM 0.14 million for the corresponding period last year. The 15% decrease in turnover in the current period compared with the corresponding period last year resulted from weakening of the USD as well as materials procurement issues which still persists. 2.2 Comparison with Immediate Preceding Quarter Previous Quarter Current year quarter ended 30 September 2010 30-Jun-10 RM'000 RM'000 Revenue 10,300 7,683 Profit after tax 278 151 Revenue for current quarter has increased as the management was able to overcome some material supply bottlenecks. 2.3 Prospects for Year 2010 The remainder of year 2010 will be challenging as the Group will need to undertake restructuring plans to restore its financial position. 2.4 Variance of Actual Profit from Forecast Profit Not applicable. The Group did not announce any profit forecast previously; hence there was no comparison between actual results and forecast. 2.5 Taxation Details of taxation are as follows:- Individual Quarter Cumulative Quarter Preceeding year Current financial corresponding Current year Preceeding year quarter quarter to-date to-date 30 September 2010 30 September 2009 30 September 2010 30 September 2009 RM'000 RM'000 RM'000 RM'000 Provision of tax based on results for the - (2) (9) (3) quarter/ year No tax provision is made for the current quarter due to projected net loss for the current year. 2.6 Profit/(Loss) on Sale of Unquoted Investments and/or Properties There were no purchase or disposal of unquoted investments and/or properties during the quarter under review. 2.7 Purchase or Disposal of Quoted Securities There was no purchase or disposal of quoted securities for the quarter under review. 2.8 Status of corporate proposals announced but not completed There is no outstanding corporate proposal which is announced but not completed. 2.9 Status of Utilisation of Proceeds As part of HDisply IPO, the Company has undertaken a rights issue and a public issue which raised total gross proceeds amounting to RM23,753,993. Based on the revised utilisation as announced by the Company on 26th November 2009, the Company has fully utilised the proceeds as at 31 March 2010. 2.10 Borrowings and Debt Securities Group Current Borrowings (All in Local Currency) As at 30 September 2010 Secured Unsecured Total RM'000 RM'000 RM'000 Bank Borrowings 10,460 - 10,460 Hire Purchase - 25 25 10,460 25 10,485 2.11 Group Non-Current Borrowings (All in Local Currency) Secured Unsecured Total RM'000 RM'000 RM'000 Other Payables - Hire Purchase - 55 55 - 55 55 2.12 Off Balance Sheet Financial Instruments There were no financial instruments with off balance sheet risk as at the date of this report. 2.13 Material Litigation The Company had on 27 May 2009 served a notification to SFR and OSB to rescind and consequentially demand a refund to HDisply of the first part of the consideration of RM1,530,000, which was paid to SFR on 10 November 2008 pursuant to the terms of the SSA. In addition, H- Disply had also on 24th February 2010 served a writ of summons against Chan King Man, the sole director of SFR for a claim for breach of warranty of authority and misrepresentation. Both cases are still pending case management in chambers. 2.14 Dividend The Board of Directors do not recommend any dividend for the current quarter ended 30 September 2010. 2.15 Earnings/(Loss) per Share The calculation of basic earnings per share is based on the profit attributable to ordinary shareholders for the period ended 30 September 2010 divided by the weighted average number of ordinary shares of RM0.10 each. HDisply has no ordinary shares issued which have dilutive factors. Current financial Current financial 9 months ended 12 months ended 30 September 2010 31 December 2009 Profit after tax (1,185) (41,646) Weighted average number of ordinary shares in issue ('000) - Balance b/f 210,000 210,000 - Additions during the quarter/year - - 210,000 210,000 Basic loss per share (sen) (0.56) (19.83) Dilluted loss per share (sen) (0.56) (19.83) 2.16 Authorisation for Issue The interim financial report were authorised for issue by the Board in accordance with a resolution of the Board of Directors on 25th November 2010.
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