YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FIRST FINANCIAL QUARTER ENDED 31 JANUARY 2004
Condensed Consolidated Income Statements (Unaudited)

	Individual Quarter
	Cumulative Quarter
	
		Current Year
Quarter	Preceding
Year 
Corresponding
Quarter	Current
YTD	Preceding
YTD	
		31/1/2004	31/1/2003	31/1/2004	31/1/2003	
	Note	RM'000	RM'000	 RM'000 	 RM'000 	
Revenue 	**					
        - Workmanship charges		2,749	1,960	2,749	1,960	
        - Sale of Gold		7,848	19,336	7,848	19,336	
        - Sale of Jewellery		273	-	273	-	
        - Investment Holding /Others 		1	19	1	19	
Total Revenue		10,871	21,315	10,871	        21,315	
Cost of goods sold		(9,121)	             (19,254)	(9,121)	(19,254)	
						
Gross profit		1,750	2,061	1,750	2,061	
Administrative expenses		(1,271)	(753)	(1,271)	(753)	
Other operating expenses		(47)	-	(47)	-	
Other operating income		530	156	530	156	
Operating profit  		962	1,464	962	1,464	
Finance Cost		(277)	(413)	(277)	(413)	
Profit before tax		685	1,051	685	1,051	
Taxation	19	(107)	(335)	(107)	(335)	
Profit after tax 		578	716	578	716	
Earnings per share (sen)
-     basic
-     diluted

26	             1.45
           1.44	1.79
NA	           1.45
1.44	1.79
NA	
**	
Workmanship Charge/
Sales of Jewellery/ Others
(RM’000)	
Sales of
Gold

(RM’000)	
Elimination

(RM’000)	
Group

(RM’000)	

Revenue	
3,023	
7,963	
(115)	
10,871	

Profit Before Tax	
689	
                        (4)	
	
685	

Taxation	

	
(107)	

Net Profit 
attributable to members	

	
578	

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 2003. The accompanying notes are an integral part of this income statements.	

YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FIRST FINANCIAL QUARTER ENDED 31 JANUARY 2004
Condensed Consolidated Balance Sheet 

				Unaudited	Audited	
						
			Note	As at
31/1/2004	As at
31/10/2003	
		RM'000	RM’000	
Non Current Assets				
	Property, Plant & Equipment		                    19,688	18,685	
				
Current Assets				
	Inventories		2,424	2,364	
	Trade receivables		3,965	2,919	
	Other receivables, deposits and prepayments		36,485	38,549	
	Tax Refundable		1,394	1500	
	Cash & cash equivalents		4,143	4,965	
				48,411	50,297	
						
Current Liabilities				
	Other payables and accruals		5,189	4,742	
	Short term borrowing	22	                    9,000   	10,491	
					
			14,189	15,233	
				
Net Current Assets 		34,222	35,064	
						
				                    53,910	53,749	
						
Shareholders' Funds				
	Share Capital		40,000	40,000	
	Reserves				
	Share Premium		4,720	4,720	
	Unappropriated profits		4,580	                            4,002	
					
				9,300	8,722	
		49,300	48,722	
				
Negative Goodwill on Consolidation		2,913	3,330	
Deferred Taxation		1,697	1,697	
						
				53,910	53,749	
Net Tangible Assets per share (RM)                                                              1.23                              1.21	

The Condensed Consolidated Income Statements & Balance Sheet should be read in conjunction with the Group’s audited Financial Statements as at 31 October 2003. The accompanying notes are an integral part of this balance sheet.
	
YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FIRST FINANCIAL QUARTER ENDED 31 JANUARY 2004
Condensed Consolidated Statement of Changes in Equity (Unaudited)

			Non-distributable	Distributable	
As of 31/1/2004	

Note	Share Capital	Share Premium	Retained
Profit	Total	
		RM’000	RM’000	RM’000	RM’000	
						
Balance at 01/11/2003		40,000	4,720	             4,002	48,722	

Net Profit for the year		-	-	                578    	578	
Balance as at 
31/1/2004 		40,000	4,720	             4,580	49,300	
					
			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	

Net Profit for the year		-	-	             1,939	1,939	
						
2002 first and final dividend				(3,200)	(3,200)	
Balance as at 
31/10/2003 		40,000	4,720	             4,002	48,722	

The Condensed Consolidated Statement Of Changes In Equity should be read in conjunction with the Group’s audited Financial Statements as at 31 October 2003. The accompanying notes are an integral part of this statement.
YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FIRST FINANCIAL QUARTER ENDED 31 JANUARY 2004
Condensed Consolidated Cash Flow Statement (Unaudited)

		As of 
31/1/2004	As of
31/1/2003	
	Note	RM’000	RM’000	
CASH FLOW FROM OPERATING ACTIVITIES

Profit Before Tax		685	1,051	
Adjustments for: -				
	Depreciation
Revaluation reserve
Impairment loss 	
	         345
            
30              	262
(621)
	
	Interest expenses
Negative goodwill recognised		        277
(416)	413	
	Interest income		(105)	(140)	
Operating profit before working capital changes		         816	965	
				
(Increase) / Decrease in:				
	Inventories		(60)	(1,846)	
	Trade and other receivables		1,020	(14,965)	
				
Increase in:				
	Trade and other payables		           447	(1,746)	
Cash generated from operating activities		2,223	(17,592)	
					
	Interest paid		(277)	(413)	
	Interest received		105	140	
	Tax paid			(66)	
Net cash generated from operating activities		2,051	(17,931)	

CASH FLOW FROM INVESTING ACTIVITIES
				
	Purchase of property, plant and equipment		(1,382)	(1,868)	
	Disposal/(Purchase) of investment			(42)	
Net cash generated from / (used in) investing activities		(1,382)	      (1,910)	

CASH FLOW FROM FINANCING ACTIVITIES
				
	Bank Borrowings
		      (1,491)
	         15,699
         	
Net cash generated from / (used in) financing activities 		      (1,491)	         15,699	
				
Net increase in cash and cash equivalents		(822)	       (4,142)	
				
Cash and cash equivalents as at 1 November  		4,965	    8,230        -	
Cash and cash equivalents as at 31 January 		4,143	         4,088	
Condensed Consolidated Cash Flow Statement should be read in conjunction with the Group’s audited Financial Statements as at 31 October 2003. The accompanying notes are an integral part of this statement.	
YIKON CORPORATION BHD (527272-V)
INTERIM REPORT FOR THE FIRST FINANCIAL QUARTER ENDED 31 JANUARY 2004
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 2003.

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 2003 except for the following:

a.	MASB 29 – Employee Benefits which is applied retrospectively
The adoption of MASB 29 has no material impact on the profit before tax for the current quarter under review.     
      	
2.	Audit Report of Preceding Annual Financial Statements

The audited financial statements of the Group for the financial year ended 31 October 2003 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, except 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 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 quarter under review.
	
7.	Dividend

At the forthcoming Annual General Meeting, a first and final 3% tax exempt dividend totaling RM1, 200,000 in respect of the financial year ended 31 October 2003 will be proposed for shareholders’ approval. This declaration of dividend will be accounted for as an appropriation of the retained profits from shareholders’ equity in the financial year ending 31 October 2004 upon approval of shareholders.

8.	Segmental Information	
		
Middle East

(RM’000)	
Other Asia
Countries
(RM’000)	
Eliminations

(RM’000)	
Group

(RM’000)	

Revenue by location
Of customers	
10,597	
274	
-	
10,871	

Profit before tax	

938	

(253)	

-	

685	

The segmental information is presented based on the geographical location of customers.
	
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 RM29,664 has been provided for a suspended property under construction owned by a subsidiary in compliance with the 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, the company via its wholly owned subsidiary, Yikon (HK) Limited, has incorporated a wholly owned subsidiary, Yikoni Gold (Shen Zhen) Co. Limited (YGSZ) in People’s Republic of China. The initial cost of investment is USD1.0 million.

Please refer to the Company’s announcement dated 12 March 2004 for further details.
	
11.	Changes In The Composition Of The Group

There was no change in the composition of the Group during the current quarter under review.
	
12.	Contingent Liabilities

13.	Capital Commitments

Capital commitments of the Group are:
	
As at
31-Jan-04
RM’000	
As at
31-Oct-03
RM’000	

Contracted but not provided for	

Property, Plant and Equipment	
-	
939	

-	
939	

Approved but not contracted for	

Property, Plant and Equipment	
668	
901	

668	
901	

	

	
14.	Related Party Transactions

There was no non-recurrent related party transaction during the current quarter under review.
	
15.	Review of Performance of the Company and its Principal Subsidiaries Compared to the Results of the Corresponding Quarter of Preceding Year

The Group has registered a profit before tax of approximately RM 685,000 in the first quarter ended 31 January 2004. 

The turnover generated from workmanship charge, which is the main profit contributor of the Group, has increased by 40% as compared to the corresponding quarter in preceding year. This is mainly due to certain promotional efforts undertaken by the Group and it’s continuous effort in expanding its customer base has brought in new customers to the Group and contribute to the higher turnover in current quarter. 

However, the overall performance of the group does not improve simultaneously. The gross profit of the Group has been lowered by narrower margin and discount given to customers. In respect of administrative expenditure, higher depreciation and bonus charged out by one of the subsidiaries in current quarter have resulted in higher expenses to the Group. Furthermore, the Group’s profit before tax has been partly set off against the losses of approximately RM224,000 registered by a subsidiary in Hong Kong.

The Group continues to amortise its negative goodwill of approximately RM416,000 in the current quarter under review.
	
16.	Material Changes in the Quarterly Results Compared to the Results of the Preceding Quarter

The Group’s turnover in current quarter under review has dropped as compared to the last quarter. This is mainly because the last quarter was the Ramadan season, whereby turnover of the Group is usually higher during festive seasons.

In tandem with the lower turnover, the gross profit of Group has been reduced accordingly and leads to a lower profit before tax of approximately RM 685,000. 
	
17	Current Year Prospects

The Group will continue its effort to increase its customer base by expanding into new markets for its products. More retail outlets are planned to be established in the People’s Republic of China in the current year. 

Barring any unforeseen circumstances, the Board anticipates that the Group will be able to achieve better results in the current 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	
		31/1/2004
RM’000	31/1/2003
RM’000	31/1/2004
RM’000	31/1/2003
RM’000	
	Current tax expenses					
	            Malaysia   - current year
                             	107
	335
                                 	107
	335
	
	Total	107	                    335    	107	335	

The tax provision for the Group in the current quarter reflects a lower effective tax rate than the statutory income tax rate which is 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 current quarter under review.
	
21.	Unquoted Investment and Properties 

There was no disposal of unquoted investment and properties in the quarter under review.
	
22.	Group Borrowings and Debts Securities

The Group borrowings as at 31 January 2004 are as follows:

                                                                                                             As at                   As at  
                                                                                                        31/1/2004            31/10/2003
                                                                                                          RM’000                 RM’000

Amount payable within 12 months                                                       9,000                 10,491

The bank borrowings of the Group are all in Ringgit Malaysia and secured by corporate guarantee given by the holding company.
	
23.	Status of Corporate Proposals Announced

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

a.	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 utilised in the following manners:

Purpose	
Proposed	
Actual	
Balance	

Utilisation	
Utilisation	
Available	

RM’000	
RM’000	
RM’000	

	

1. Repayment of bank borrowings	
8,000	
8,000	
-	

2. Construction of factory building	
5,600	
5,600	
-	

3. Purchase of plant and machinery	
3,200	
2,532	
668	

4. Investment in research & development	
   500	
   500	
-	

5. Working capital **	
5,144	
5,144	
-	

6. Listing Expenditures	
1,350	
1,473	
(123)	

23,794	
23,249	
545	

	

** Advance given to Yikon Jewellery Industry Sdn Bhd, a subsidiary of the Company.

The Company has made an announcement pertaining to the extension of the time frame from 30th June 2003 to 31st March 2004 for the utilisation of the RM1,506,000 proceeds raised from the IPO. Please refer to the Company’s announcement dated 1st July 2003 for further details.	
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 the 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 26 April 2004. 
	
26.	Earnings Per Share	
Individual Quarter	
Cumulative Quarter	

Current Year
Quarter	
Preceding
Year 
Corresponding
Quarter	
Current
YTD	
Preceding
YTD	

31/1/2004	
31/1/2003	
31/1/2004	
31/1/2003	

(a)Basic 	

Net profit for the period (Basic EPS numerator)	
(RM’000)	
578	
716	
578	
716	

	

	

Weighted average number of ordinary shares (Basic EPS denominator)	
(‘000)	
40,000	
40,000	
40,000	
40,000	

	

	

Basic earnings per     share 	
(sen)	
1.45	
1.79	
1.45	
1.79	

	

	

(b) Diluted	

	

Net profit for the
Period (Diluted EPS
Numerator)	
(RM’000)	
578	
NA	
578	
NA	

	

	

Weighted average number of ordinary shares in issue	
(‘000)	
40,000	
NA	
40,000	
NA	

	

	

Weighted average number of shares under ESOS	
(‘000)	
321	
NA	
321	
NA	

	

	

Weighted average number of shares that would have been issued at fair value	
(‘000)	
(297)	
NA	
(297)	
NA	

	

	

Adjusted weighted average number of ordinary shares (Diluted EPS denominator) 	
(‘000)	
40,024	
NA	
40,024	
NA	

	

	

Diluted earnings per
share	
(sen)	
1.44	
NA	
1.44	
NA	

	

	

	

By Order of the Board

Lam Voon Kean (MIA 4793)

Dated this 29 January 2004