PART A: EXPLANATORY NOTES AS PER MASB 26

A1.	Basis of preparation 

The interim financial report is unaudited and has been prepared in accordance with the requirements of MASB 26: Interim Financial Reporting and Paragraph 9.22 and Part A of Appendix 9B of the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities"). 

The interim financial report should be read in conjunction with the audited financial statements of the Group for the financial year ended 30 April 2004. The explanatory notes attached to the interim financial report provide an explanation of events and transactions that are significant to an understanding of the changes in the financial position and performance of the Group.

The accounting policies, method of computation and basis of consolidation adopted for this quarterly financial report are consistent with those adopted for the Group’s financial statements for the financial year ended 30 April 2004.

A2.	Qualification of Annual Financial Statements

There were no audit qualifications on the annual financial statements for the year ended 30 April 2004.

A3.	Seasonal and cyclical factors

The Group’s business operation results were not materially affected by any major seasonal or cyclical factors.
	
A4.	Unusual nature and amounts of items affecting assets, liabilities, equity, net income or cash flows

There were no unusual nature and amounts of items affecting assets, liabilities, equity, net income or cash flows during the current quarter under review.

A5.	Material changes in estimates

There were no material changes in estimates of amounts reported in the current quarter under review. 

A6.	Issuances and repayment of debt and equity securities	

Save as disclosed below, there were no issuance, repayment of debt and equity securities, share buy-backs, share cancellations, shares held as treasury shares or resale of treasury shares during the current financial year to date. 

The increase in the Company’s issued and fully paid-up share capital pursuant to the Company’s listing exercise on the Second Board of Bursa Securities are as follows:

Date of issue	

Consideration	No. of ordinary shares of RM0.50 each allotted 	
			
23.8.2004	Allotment in consideration for the acquisition of 100% equity in Kein Hing Industry Sdn Bhd (“KHI”)	
91,199,998	
			
6.10.2004	Public issue	  7,800,000	
	                                                                                                                                           
A7.	Dividend Paid	

There was no dividend declared or paid by the company for the current quarter under review. 

A8.	Segment information

	Segmental information is presented in respect of the Group’s business segments:-

A9.	Valuation of property, plant and equipment

The property, plant and equipment except for freehold land are stated at cost/valuation less accumulated depreciation. There was no revaluation of property, plant and equipment for the current quarter and financial year to date.

A10.	Material events subsequent to the end of the interim period

There were no material events subsequent to the end of the current quarter ended 30 April 2005.

A11.	Changes in the composition of the Group

There were no changes in the composition of the Group during the current financial period under review except for the following restructuring exercise in conjunction with and as an integral part of the listing of KHIB on the Second Board of Bursa Securities:-

(a)	On 23 August 2004, Kein Hing International Berhad ("KHIB") acquired the entire issued and paid-up share capital of KHI comprising 4,000,000 ordinary shares of RM1.00 each for a total purchase consideration of RM48,672,315, satisfied by the issuance of 91,199,998 new ordinary shares of RM0.50 in KHIB at an issue price of approximately RM0.534 per KHIB Share.

(b)	On 25 August 2004, KHIB acquired 66% of the issued and paid-up share capital of Kein Hing Appliances Sdn Bhd ("KHA") comprising 329,999 ordinary shares of RM1.00 each (comprising 254,999 Class A Shares and 75,000 Class B Shares) for a total purchase consideration of RM263,795 satisfied by cash.

Prior to the Acquisition of KHA, KHIB had a 17% investment in KHA. Upon completion of the Acquisition of KHA, KHA is a 83% owned subsidiary of KHIB 

(c)	On 6 September 2004, KHIB acquired 51% of the legal capital of Kein Hing Muramoto (Vietnam) Co. Ltd  (“KHMV”) of USD612,000 for a total purchase consideration of USD612,000 satisfied by cash.

Upon completion of the Acquisition of KHMV, KHMV is a 51% owned subsidiary of KHIB.

(d)	On 25 August 2004, KHIB acquired 49% of the issued and fully paid up share capital of Hirotako Kein Hing Sdn Bhd (“HKH”) for a total purchase consideration of RM100 satisfied by cash.

Upon completion of the Acquisition of HKH, HKH is a 49% owned associated company of KHIB.

A12.	Changes in contingent liabilities

There were no changes in contingent liabilities and contingent assets of a material nature since the last audited financial statements for the year ended 30 April 2004, except for corporate guarantee amounting to RM10.50 million given by the Company to a bank for credit facilities granted to a subsidiary. 
                                             
      A13.     Capital commitments

	RM’000	

Approved but not contracted for: 	

     - Purchase of plant and machinery	
2,283	

PART B: 	ADDITIONAL INFORMATION REQUIRED BY THE BURSA MALAYSIA LISTING REQUIREMENTS

B1.	Review of performance 
	
The Group achieved revenue of RM34.28 million and profit after tax of RM1.42 million for the financial quarter under review as compared to RM32.08 million and RM2.53 million in the immediate preceding quarter.

B2.	Variation of results against preceding quarter 

The Group recorded a lower profit before taxation of RM1.40 million for the current quarter ended 30 April 2005 as compared to the profit before taxation of RM2.72 million for the immediate preceding quarter ended 31 January 2005. This was mainly due to higher loss recorded by a subsidiary in Vietnam as the operation has yet to achieve economy of scale. 

B3.	Prospects 

Barring any unforeseen circumstances and on the assumption that the current situation remains, the Board expects the Group to continue to achieve satisfactory performance for the next quarter.

B4.	Variance of actual and forecast profit 

The Group has achieved the profit after tax for the year and variance between actual profit after tax and the forecasted profit after tax is as follows:

	Actual for 12 months ended 30.4.2005	Proforma Forecast for 12 months ended 30.4.2005	
Variance	
	RM’000	RM’000	RM’000	
				
Net Profit After Tax	7,711	7,701	10	
Less : Pre-acquisition profit	(2,403)	(1,813)	(590)	
Consolidated PAT before negative goodwill	5,308	5,888	(580)	
Add : negative goodwill	2,700	-	2,700	
Consolidated profit attributable to shareholders	8,008	5,888	2,120	

	The preference variance of RM2.12 million for the consolidated profit attributable to shareholders is mainly contributed by negative goodwill of RM2.70 million recognised in the current year net off of higher pre-acquisition profit of RM0.59 million.

B5.	Tax expense 
 		Current		Current year	
		Quarter		To date	
		30.4.2005		30.4.2005	
                                                                                                RM' 000		RM' 000		
Current tax expense:

Current	67		         988		
Prior year	33		33		
	100		1,021		
Deferred tax expense	176		176		
	276		1,197		

The effective tax rate for the period under review was lower than the statutory income tax rate of 28% due to the utilization of reinvestment allowances in KHI, a wholly-owned subsidiary of KHIB.  

B6.	Unquoted investments and/or properties 

The Group has not disposed off any investments in any unquoted investments and/or properties during the financial quarter under review.

B7.	Quoted and marketable investments 

There were no investments in quoted and marketable securities made during the financial quarter under review.

B8.	Status of corporate proposal announced 

On 6 October 2004, the entire issued and paid-up share capital of KHIB comprising 99,000,000 ordinary shares of RM0.50 each was admitted to the Official List on the Second Board of Bursa Securities.

KHIB has raised gross proceeds of RM5,070,000 from its listing exercise from the Public Issue based on the issue price of RM0.65 per share. As at the date of this announcement, the said proceeds were utilised in the following manner:

	Total	Utilised	Unutilised	
	RM’000	RM’000	RM’000	
				
Working capital	3,070	2,932	138	
				
Listing expenses	2,000	1,573	427	
				
	5,070	4,505	565	

B9.	Group borrowings 

The Group’s borrowings as at the end of the reporting quarter are as follows:

The above inclusive of borrowing in foreign currency of USD1,744,385 by a subsidiary in Vietnam.

B10.	Off balance sheet financial instrument 

There are no financial instruments with off balance sheet risk as at the date of this report.

B11.	Changes in material litigation 

Neither KHIB nor any of its subsidiaries is engaged in any litigation or arbitration, either as plaintiff or defendant, which has a material effect the financial position of Company or any of its subsidiaries and the Board is not aware of any proceedings pending or threatened, or of any fact likely to give rise to any proceedings, which might materially and adversely affect the position or business of Company or any of its subsidiaries. 

B12.	Dividend payable

The Directors have proposed a first and final tax exempt dividend of 4% to the shareholders at the forthcoming Annual General Meeting of the Company, for the financial year ended 30 April 2005 which will be paid on a date to be determined.

B13.	Basic earnings per share 

	The basic earning per share for the current quarter and cumulative year to date are computed as follow:-
   
B14.	Authorisation for issue

	The fourth quarterly report was authorised for issue by the Board of Directors in accordance with the resolution of the directors on 23 June 2005.

	By order of the Board

	Yap Toon Choy
	Group Managing Director
	Seri Kembangan	
	23 June 2005