PART A: EXPLANATORY NOTES AS PURSUANT TO MASB 26

A1.	Basis of preparation 

The interim financial report is unaudited and has been prepared in accordance with the 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 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 2006.

A11.	Changes in the composition of the Group

There were no changes in the composition of the Group during the current quarter under review.

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 corporate guarantees amounting to RM35.88 million given by the Company to financial institutions for credit facilities granted to the Group.
                                             
      A13.     Capital commitments
	RM’000	

Approved but not contracted for: 	
      	
- Purchase of plant and machinery	     2,300	
PART B: 	ADDITIONAL INFORMATION REQUIRED BY THE BURSA MALAYSIA LISTING REQUIREMENTS

B1.	Review of performance 
	
The Group achieved revenue of RM28.07 million and loss after tax of RM0.18 million for the financial quarter under review as compared to revenue of RM29.68 million and profit after tax of RM0.43 million in the immediate preceding quarter.

B2.	Variation of results against preceding quarter 

The Group recorded a loss before taxation of RM0.33 million for the current quarter ended 30 April 2006 as compared to the profit before taxation of RM0.52 million for the immediate preceding quarter ended 31 January 2006. These were mainly due to the provision of impairment loss for plant and machinery, provision for slow moving stock and lower order from customers during the quarter under review. Orders from customers are expected to increase in the next quarter.

B3.	Prospects 

Barring any unforeseen circumstances, the Board expects the performance of the Group will be improved in 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	
		30.04.2006		30.04.2006	
                                                                                                RM' 000		RM' 000		
Current tax expense:

Current	               (378)		         (627)		
Prior year	-		                  56 		
	 (378)		(571)		
Deferred tax	         502		502		
	124		(69)		

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 

There were no corporate proposals announced as at date of this report.

B9.	Group borrowings 

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

The above is inclusive of borrowing in foreign currency of USD2,599,475 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 2% to the shareholders at the forthcoming Annual General Meeting of the Company, for the financial year ended 30 April 2006 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 22 June 2006.

	By Order of the Board

	Yap Toon Choy
	Group Managing Director
	22 June 2006