YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FINANCIAL QUARTER ENDED 31 OCTOBER 2003
Condensed Consolidated Income Statements (Unaudited)

	Individual Quarter
	Cumulative Quarter
	
		Current Year
Quarter	Preceding
Year 
Corresponding
Quarter	Current
YTD	Preceding
YTD	
		31/10/2003	31/10/2002	31/10/2003	31/10/2002	
	Note	RM'000	RM'000	 RM'000 	 RM'000 	
Revenue 	**					
        - Workmanship charges		6,539	4,744	12,356	14,682	
        - Sale of Gold		18,380	26,741	41,639	40,214	
        - Sale of Jewellery		165	-	769	-	
        - Investment Holding Income 			95	34	114	
Total Revenue		25,084	31,580	54,798	55,010	
Cost of goods sold		(23,212)	             (29,130)	(48,155)	(45,753)	
						
Gross profit		1,872	2,450	6,643	9,257	
Administrative expenses		(1,156)	(729)	(3,824)	(1,875)	
Other operating expenses		772	-	772	-	
Other operating income		133	104	620	275	
Operating profit  		1,621	1,825	4,211	7,657	
Finance Cost		(324)	(143)	(1,434)	(452)	
Profit before tax		1,297	1,682	2,777	7,204	
Taxation	19	(319)	(986)	(838)	(1,925)	
Profit after tax 		978	696	1,939	5,279	
Earnings per share (sen)
-	basic
-	diluted

	
26	              2.45
NA	1.74
NA	           4.85
NA	21.81
NA	
**	
Workmanship
Charge
(RM’000)	
Sales of
Gold
(RM’000)	
Sales of
Jewellery
(RM’000)	
Investment
Holding
(RM’000)	
Elimination

(RM’000)	
Group

(RM’000)	

Revenue	
12,356	
42,093	
769	
1,534	
(1,954)	
54,798	

Profit Before Tax	
3,227	
390	
(593)	
(247)	
	
2,777	

Taxation	

	

(838)	

Net Profit attributable to members	

	

1,939	

Sale of gold only occurs when customers settle their purchase in cash rather than physical gold. Furthermore, the Group is not involved in the trading of gold bullion and therefore, the profit margin derived from the sale of gold is negligible. An analysis of profitability of the business is better reflected in the contribution from the workmanship charges.

The Condensed Consolidated Income Statements should be read in conjunction with the Group’s audited Financial Statements as at 31 Oct 2002. The accompanying notes are an integral part of this income statements.	

YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FINANCIAL QUARTER ENDED 31 OCTOBER 2003
Condensed Consolidated Balance Sheet 

				Unaudited	As Restated	
					Audited	
			Note	As at
31/10/2003	As at
31/10/2002	
		RM'000	RM’000	
Non Current Assets				
	Property, Plant & Equipment		                    18,685	12,652	
				
Current Assets				
	Inventories		2,364	136	
	Trade receivables		2,619	10,233	
	Other receivables, deposits and prepayments		38,850	33,082	
	Tax Refundable		1,516		
	Cash & cash equivalents		4,965	8,230	
				50314	51,681	
						
Current Liabilities				
	Other payables and accruals		4,743	1,857	
	Short term borrowing	23	                    10,491   	6,001	
	Taxation		16	277	
					
			15,250	8,135	
				
Net Current Assets 		35,064	43,546	
						
				                    53,749	56,198	
						
Shareholders' Funds				
	Share Capital		40,000	40,000	
	Reserves				
	Share Premium		4,720	4,720	
	Unappropriated profits		4,002	5,263	
					
				8,722	9,983	
		48,722	49,983	
				
Negative Goodwill on Consolidation		3,330	4,995	
Deferred Taxation		1,697	1,220	
						
				53,749	56,198	
Net Tangible Assets per share (sen)                                                              1.34                              1.40	

The Condensed Consolidated Income Statements & Balance Sheet should be read in conjunction with the Group’s audited Financial Statements as at 31 October 2002. The accompanying notes are an integral part of this balance sheet.

				
YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FINANCIAL QUARTER ENDED 31 OCTOBER 2003
Condensed Consolidated Statement of Changes in Equity (Unaudited)

			Non-distributable	Distributable	
As of 31/10/2003	

Note	Share Capital	Share Premium	Retained
Profit	Total	
		RM’000	RM’000	RM’000	RM’000	
						
Balance at 01/11/2002		40,000	4,720	             5,263	49,983	

Dividend Paid	7	-	-	           (3,200)	(3,200)	
						
Net Profit for the year		-	-	             1,939	1,939	
Balance as at 
31/10/2003 		40,000	4,720	             4,002	48,722	
					
			Non-
distributable	Distributable	
As of 31/10/2002	

Note	Share Capital	Share Premium	Retained
Profit	Total	
		RM’000	RM’000	RM’000	RM’000	
						
Balance at 01/11/2001		-	-	               (16)	(16)	
						
Issue of shares 		40,000	6,192	                 -	46,192	
						
Listing Expenses		-	(1,472)	                 -
	           (1,472)	
Net Losses not recognised in the consolidated income statement		-	(1,472)	-	(1,472)	
						
Net Profit for the year		-	-	             5,279	5,279	
Balance as at 
31/10/2002 		40,000	4,720	             5,263	49,983	

The Condensed Consolidated Statement Of Changes In Equity should be read in conjunction with the Group’s audited Financial Statements as at 31 October 2002. The accompanying notes are an integral part of this statement.
YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FINANCIAL QUARTER ENDED 31 OCTOBER 2003
Condensed Consolidated Cash Flow Statement (Unaudited)

		As of 

31/10/2003	As of

31/10/2002	
	Note	RM’000	RM’000	
CASH FLOW FROM OPERATING ACTIVITIES
			
Profit Before Tax		2,777	7,204	
Adjustments for: -				
	Depreciation
Deferred expenditures written off
Loss / (gain) on disposal of plant & equipment
Impairment loss 	
	         1,058

   119           	580

(45)	
	Interest expenses
Negative goodwill recognised		        1,434
(1,665)	452	
	Interest income		(587)	(282)	
Operating profit before working capital changes		         3,136	7,910	
				
(Increase) / Decrease in:				
	Inventories		(2,229)	(135)	
	Trade and other receivables		1,848	(11,957)	
				
Increase in:				
	Trade and other payables		         2,885	452	
					
Cash generated from operating activities		5,640	(3,731)	
					
	Interest paid		(1,434)	(452)	
	Tax paid		(2,138)	(3,367)	
Net cash generated from operating activities		2,068	(7,550)	

CASH FLOW FROM INVESTING ACTIVITIES
				
	Purchase of property, plant and equipment		(7,210)	(3,089)	
	Proceeds from disposal of plant and equipment			                 59	
	Acquisition of subsidiaries, net of cash
Listing expenses paid			            2,040
         (1,472) 	
	ESOS Expenses		           	          	
	Issues of shares			23,794	
	Interest received		           587	           282	
Net cash generated from / (used in) investing activities		(6,623)	      21,614	

CASH FLOW FROM FINANCING ACTIVITIES
				
	Dividend paid		(3,200)		
	Drawdown/(Repayment) of bankers’ acceptances
Repayment of hire purchase		         4,491
             (1)	         (8,115)
              (19)	
	Withdrawal of fixed deposits			           2,300	
Net cash generated from / (used in) financing activities 		         1,290	         (5,833)	

				
Net increase in cash and cash equivalents		(3,265)	       8,230	
				
Cash and cash equivalents as at 1 November 2002 		8,230	          -	
				
Cash and cash equivalents as at 31 October 2003		4,965	       8,230	

The Condensed Consolidated Cash Flow Statement should be read in conjunction with the Group’s audited Financial Statements as at 31 October 2002. The accompanying notes are an integral part of this statement.	

YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FINANCIAL QUARTER ENDED 31 OCTOBER 2003
Notes to the interim financial report

1.	Accounting Policies

The interim financial reports of the Group have been prepared in accordance with MASB 26 “Interim Financial Report” and Chapter 9, Part K of the Listing Requirements of Kuala Lumpur Stock Exchange, and should be read in conjunction with the Group’s audited financial statements for the financial year ended 31 October 2002.

The accounting policies and methods of computation adopted by the Group in this interim financial report are consistent with those adopted in the audited financial statements for the year ended 31 October 2002 except for the following:

 i)   adoption of new Malaysian Accounting Standards Board (“MASB”) taking effect this   
      financial year:   

a.	MASB 23 - Impairment of Assets which is applied prospectively
      A subsidiary of the Group has provided impairment loss for its property in order to reflect its recoverable value in the current financial year under review.

b.	MASB 25 - Income Taxes which is adopted retrospectively
Prior to the adoption of MASB 25, no deferred tax liability was provided on the surplus arising from the revaluation of the Group’s properties. With the adoption of MASB 25, deferred tax is now provided in full using the balance sheet liability method on temporary differences arising from the tax bases of assets and liabilities and their carrying amounts.

The change in accounting policy has no material impact on the profit after tax for the current quarter and preceding year corresponding quarter.

The effects of the change in the accounting policy on the previous financial year’s financial statements are as follows:

      

ii)	Change in accounting policy on the treatment of negative goodwill on consolidation
      which is applied prospectively. Negative goodwill on consolidation is amortised over 3 
      years. The change in accounting policy has increased the profit before tax for the 
      the current financial year by  RM1.66million.
      	
2.	Audit Report of Preceding Annual Financial Statements

The audited financial statements of the Group for the financial year ended 31 October 2002 were not subject to any audit qualifications.	
3.	Seasonal or Cyclical Factors

Seasonal or cyclical factors have no significant impact on the principal business operations of the Group. However, turnover for the Group is normally higher during the festive seasons in particular the Ramadan month.
	
4.	Exceptional and Extraordinary Item

There was no material exceptional and extraordinary item affecting assets, liabilities, equity, net income or cash flow during the quarter and financial year under review.
	
5.	Changes in Estimates

There were no material changes in estimates of amounts reported in prior interim periods of the current financial year to date or prior financial year.
	
6.	Issuances and Repayment of Debt and Equity Securities

There was 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 current financial year under review.
	
7.	Dividend

A final tax exempt dividend of 8sen per share for the financial year ended 31 October 2002 was proposed and approved in the 2002 Annual General Meeting. This dividend was accounted for as an appropriation of the retained profits from the shareholders’ fund for the current financial year under review. The dividend was paid on 30 May 2003.

Subject to the shareholders’ approval, the directors propose a first and final tax exempt dividend of 3sen per share amounting to RM1,200,000 in respect of the financial year ended 31 October 2003.
	
8.	Segmental Information	
		
Workmanship
Charged

(RM’000)	
Sales of
Gold

(RM’000)	
Sales of
Jewellery

(RM’000)	
Investment
Holding
Income
(RM’000)	
Elimination

(RM’000)	
Group

(RM’000)	

Revenue:
-Middle
 East 
-Other Asia
 Countries   

11,962

394	

41,639

454

-

769

-

1,534	

(1.954)	

53,601

1,197	

Total	
12,356	
42,093	
769	
1,534	
(1,954)	
54,798	

Profit before
Tax:
-Middle 
 East
-Other Asia
 Countries	

3,126

101	

390

-	

-

(593)	

-

(247)	

-

-	

3,516

(739)	

Total	
3,227	
390	
(593)	
(247)	
	
2,777	

Sale of gold only occurs when customers settle their purchase in cash rather than physical gold. Furthermore, the Group is not involved in the trading of gold bullion and therefore, the profit margin derived from the sale of gold is negligible. An analysis of profitability of the business is better reflected in the contribution from the workmanship charges.
	
9.	Property, Plant and Equipment

The valuations of land and buildings have been brought forward without any amendment from the previous audited financial statements, except for an impairment loss of approximately RM118,657 has been provided for a suspended property under construction owned by a subsidiary in compliance with the newly adopted MASB 23. 
	
10.	Material Events Subsequent to the End of the Period Reported

Subsequent to the balance sheet date up to the date of this interim report a first offer of Employee Share Option of 3,524,000 shares at RM1.21 per share was made to 176 employees on 20th Nov 2003.   

11.	Changes In The Composition Of The Group

There was no change in the composition of the Group during the current quarter and financial year under review except for the Group via its wholly owned subsidiary, Yikon (H.K.) Limited, incorporated a wholly owned subsidiary, Yikoni Gold (Shaan Xi) Co. Limited in the People’s Republic of China with a registered capital of USD1.0 million on 8 of August 2003. The newly incorporated subsidiary has not commenced operation as at 31st October 2003.
	
12.	Contingent Liabilities

	
13.	Capital Commitments

Capital commitments of the Group are:         

	
14.	Related Party Transactions

There was no non-recurrent related party transaction during the current quarter and financial year under review.
	
15.	Review of Performance of the Company and its Principal Subsidiaries

The Group’s turnover generated from workmanship charge, which is the main profit contributor of the Group, has dropped by 15.84% in current financial year as compared to previous year. In line with the lower turnover, the Group’s profit before tax of approximately RM2.78million for the current financial year has been reduced as compared to last financial year. This is mainly attributed to the outbreak of Severe Acute Respiratory Syndrome (“SARS”) and the outbreak of war in Iraq. These factors contributed to the unfavourable global economic conditions, which have affected the overall performance of the Group.

Construction of the new factory in one of the subsidiaries has also affected its output volume due to the restructuring of its production line.

In addition, the Group’s profit before tax has been partly set off against the losses of approximately RM440,000 registered by a subsidiary in Hong Kong, which commenced operations during the financial year. The group has also amortised its negative goodwill of approximately RM1.66million during the financial year.
	
16.	Material Changes in the Quarterly Results Compared to the Results of the Preceding Quarter

The Group has registered a profit before tax approximately of RM1.30million in the current quarter representing an increase of 313.06% as compared to the preceding quarter. The increase is mainly due to the amortisation of negative goodwill of approximately RM1.66million during the quarter under review.

The Group has also expensed off the pre-operating expenditure amounting to RM136,000 in the setting up of a new subsidiary and retail outlet in China.  In relation to property, plant and equipment, impairment loss has been provided for a subsidiary’s property, and the newly completed factory building started to depreciate in the current quarter as well. These have resulted in higher expenses for the current quarter under review. 
	
17	Next Year Prospects

With the completion of the new factory, it is expected that the production volume of the subsidiary will increase in the next financial year. In tandem with the improved global economic outlook, the Group will continue its effort to increase its customer base by expanding into new markets for its products.

In respect of growth opportunities, the Group will focus its efforts in seeking more business opportunities in the same industry, such as diversifying its products to generate higher turnover.

In addition, the Group will continue to set up a few more retail outlets in the People’s Republic of China. This expansion program is expected to enable the Group to establish a firm footing in the retail sector in the People’s Republic of China.

With the above measures, and barring any unforeseen circumstances, the Board anticipates that the Group will achieve better results in the next financial year.
	
18.	Variance of Actual Profit Compared to Forecast Profit
Not applicable as no profit forecast was published.

19.	Taxation
The taxation of the Group for the financial year under review is as follows:	
		Individual Quarter	Cumulative Quarter	
		Current 
       Year
    Quarter 	Preceding
Year 
Corresponding
          Quarter 	Current
         YTD	Preceding
          YTD	
		31/10/2003
RM’000	31/10/2002
RM’000	31/10/2003
RM’000	31/10/2002
RM’000	
	Current tax expenses					
	            Malaysia   - current year
                              - prior year	(288)
130	805
                       -           	231
130	1,741
12	
		(158)	                    805    	361	1,752	
	Deferred tax expenses					
	            Malaysia - current year 
                           -  prior year	476
1	181
-	476
1	172
1	
		477	181	477	173	
	Total	319	986	838	1,925	
	
The tax provision for the Group in current financial year 2003 reflect a lower effective tax rate than the statutory income tax rate mainly due to tax incentive available to a subsidiary and certain income are not subject to tax. 
	
20.
	Quoted Securities

There was no disposal or purchase of quoted securities for the financial year under review.
	
21.	Unquoted Investment and Properties 

There was no disposal of unquoted investment and properties in the financial year under review.
	
22.	Status of Corporate Proposals Announced

The was no corporate proposal announced by the Company in the current financial year under review except the following:

a.	The company obtained the approval from the Securities Commission for its proposed Employee Share Option Scheme (ESOS) in June 2003. The related circular has been issued to the shareholders on 25th September 2003 and the ESOS Scheme has been approved at the Extraordinary General Meeting held on 10th October 2003. The ESOS effective date was fixed on the 10th November 2003. The first offer of the option of 3,524,000 shares at RM1.21 per share to 176 employees was effected on 20th Nov 2003. 

b.	The total gross proceeds of RM23.79million arising from the rights issue and the public issue pursuant to the Public Listing accrued to the Company upon listing of the Company on the Second Board of the Kuala Lumpur Stock Exchange on 4th June 2002 is being utilized in the following manners:

 
The Company has made an announcement pertaining to the extension of  the time frame from 30th June 2003 to 31st March 2004 for the utilization of the RM1,506,000 proceeds raised from the IPO. Please refer to the Company’s announcement dated 1st July 2003 for further details.

	
23.	Group Borrowings and Debts Securities

The Group borrowings as at 31 October 2003 are as follows:
                                                                                                             As at                   As at  
                                                                                                        31/10/2003         31/10/2002
                                                                                                          RM’000                 RM’000	

	i	Amount payable within 12 months	      10,491                 6,001
	
	ii	Amount payable after 12 months	       
	
			       10,491                 6,001	
	
The bank borrowings of the Group are secured by corporate guarantee given by the holding company.
	
24.	Off Balance Sheet Financial Instruments

There was no financial instrument with off balance sheet risk as at the latest practicable date  from the date of issue of this interim report.

	
25.	Changes In Material Litigation

The Group has not engaged in any material litigation case which proceedings might materially or adversely affect the financial position or business of Group except the following:

On 30th October 1997, Yikon Jewellery Industry Sdn Bhd (YJI), filed a suit against Malaysian Airline System Berhad (“Defendant”) claiming a sum of USD99,172 plus interest for inter-alia, the failure by the Defendant to exercise proper and reasonable care in carrying out its duty to ensure that proper procedures and instructions by YJI are carried out before the Defendant released a shipment of gold jewellery to a customer.

The court had on 26th April 2002 ruled in favour of YJI and has entered judgment for the sum of RM247,237.83 with interest at 8% from the date of judgment and cost.

The defendant filed a Notice of appeal against the judgment granted by the learned Judge on 26 April 2002 and the Appeal has been registered as Penang High Court C.A. No. 12-177-2002. The said Appeal was fixed for hearing on 27 February 2003 but had subsequently been adjourned. The case is now fixed for hearing on 9 February 2004. 

	
26.	Earnings Per Share
	
	(a) Basic earnings per share	
Individual Quarter	
Cumulative Quarter	

Current Year
Quarter	
Preceding
Year 
Corresponding
Quarter	
Current
YTD	
Preceding
YTD	

31/10/2003	
31/10/2002	
31/10/2003	
31/10/2002	

	

Net profit for the period	
(RM’000)	
978	
696	
1,939	
5,279	

	

	

	

	

Weighted average number of ordinary shares	
(‘000)	
40,000	
40,000	
40,000	
24,200	

	

	

Basic earnings per share	
(sen)	
2.45	
1.74	
4.85	
21.81	

	

	
	  	
	  (b) Diluted earnings per share	
	        Not applicable for the current financial year under review.

By Order of the Board

Lam Voon Kean (MIA 4793)

Dated this 30 December 2003