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 2005. 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 2005.

A2.	Qualification of Annual Financial Statements

There were no audit qualifications on the annual financial statements for the year ended 30 April 2005.

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	

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 quarter under review. 
	                                                                                                                                           
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

Save as disclosed below, there were no material events subsequent to the end of the current quarter ended 31 October 2005.

On 30 November 2005, the Company subscribed additional 255,000 legal capital (“the Subscription”) of Kein Hing Muramoto (Vietnam) Co. Ltd. (“KHMV”) for a total purchase consideration of USD255,000 satisfied by cash. KHMV is a 51% subsidiary of the Company. 

Upon completion of the Subscription, the Company has total 867,000 legal capital in KHMV representing 51% of KHMV’s enlarge capital. 

A11.	Changes in the composition of the Group

Save as disclosed below, there were no changes in the composition of the Group during the current quarter under review.

On 3 October 2005 the Company subscribed 400,000 ordinary shares of RM1.00 each in the share capital of Polychrome Sdn. Bhd. (“PSB”) at a total purchase consideration of RM500,722.00 (“the Subscription”). Upon completion of the Subscription, PSB is a 25% owned associated company of the company. 

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 2005, except for a corporate guarantee amounting to RM8.00 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	
1,000	

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

B1.	Review of performance 
	
The Group achieved revenue of RM33.43 million and profit after tax of RM0.65 million for the financial quarter under review as compared to RM34.75 million and RM1.01 million in the immediate preceding quarter.

B2.	Variation of results against preceding quarter 

The Group recorded a lower profit before taxation of RM0.72 million for the current quarter ended 31 October 2005 as compared to the profit before taxation of RM0.97 million for the immediate preceding quarter ended 31 July 2005. These were mainly due to the higher raw material price and stiff competition in local industry. 

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 not provided any profit forecast for the current financial year ending 30 April 2006.

B5.	Tax expense 
 		Current		Current year	
		Quarter		To date	
		31.10.2005		31.10.2005	
                                                                                                RM' 000		RM' 000		
Tax expense:

- Current	               33		         211		
- Prior year	(56)		(56)		
	(23)		155		

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	3,070	-  	
				
Listing expenses	2,000	1,573	427	
				
	5,070	4,643	427	

*  The unutilized amount for listing expenses has been re-allocated to the Group’s working capital
    requirement.

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 USD2,863,374 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

No dividend has been proposed for the current quarter ended 31 October 2005. 

The proposed first and final tax exempt dividend of 4% for the financial year ended 30 April 2005 has been paid on 21 November 2005.

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 second quarterly report was authorised for issue by the Board of Directors in accordance with the resolution of the directors on 16 December 2005.

	By order of the Board

	Yap Toon Choy
	Group Managing Director
	16 December 2005