1.	Basis of preparation

The interim financial report is unaudited and has been prepared in accordance with the requirement of Malaysian Accounting Standard Board’s Financial Reporting Standards 1342004: Interim Financial Reporting and paragraph 9.22 of the Listing Requirements of Bursa Malaysia Securities Berhad (“BMSB”). 

The Condensed Financial Statements should be read in conjunction with the Group’s audited financial statements for the year ended 31 March 2005.

The same accounting policies and methods of computation are followed in the interim financial statements as those applied in the audited annual financial statements for the year ended 31 March 2005.

2.	Audit qualification of the preceding annual financial statement

The Auditors’ Report on the financial statements for the year ended 31 March 2005 was not qualified.

3.	Seasonality or cyclicality of the operations

The Group does not experience any seasonal or cyclical sales cycle. However, there may be fluctuations between the quarters due to the nature of the Group system integration businesses which are secured on a project by project basis.

4.	Material unusual items 

There were no material unusual or exceptional items affecting the assets, liabilities, equity, net income or cash flows of the Group for the period under review.

5.	Changes in estimates 

There were no changes in estimates for the period under review. 

6. 	Issuances, cancellation, repurchase, resale and repayment of debt and equity securities

On 5 August 2005, the Company increased its issued and paid up capital from RM64,061,014 to RM76,118,087 by way of issuance of 12,057,073 new ordinary shares of RM1.00 each through the mandatory conversion of 18,085,635 units of 4% three years Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) of RM1.00 each.  The premium arising from the ICULS conversion of RM4,115,107 has been credited to the Share Premium account.

The new ordinary shares rank pari passu in all respects with the existing ordinary shares.

7. 	Dividends

No dividends were paid by the Company since the end of the previous financial year. 

8. 	Segmental information

The Group’s segmental report for the six months ended 30 September 2005 is as follows: -

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8.	Segmental information (cont’d)

The Group’s segmental report for the six months ended 30 September 2004 is as follows: -

No geographical segmental information is presented as the Group’s operations are located primarily in Malaysia.

9. 	Valuation of property, plant and equipment

The Group has not revalued its property, plant and equipment.

10. Subsequent material events

There were no material events subsequent to the end of the period under review.

11.	Effects of changes in the composition of the Group

On 5 August 2005, the Company acquired a 100% equity interest in Dataprep Payment Solutions Sdn Bhd (“DPS”) for a cash consideration of RM2.  Its intended principal activity is the provision of information technology services and solutions in relation to secured payments.

On 5 September 2005, the Company disposed off 1,692,000 ordinary shares, representing a 10% equity interest in its subsidiary, Solsis (M) Sdn Bhd for a sales consideration of RM272,900 of which RM27,900 was received for cash and the remaining balance is receivable within 90 days from 5 September 2005.  The disposal had resulted in a gain of RM34,000 to the Group and a loss of RM3,453,000 to the Company.

12. Changes in Contingent Liabilities (Unsecured)

13.	Review of performance 

For the second quarter ended 30 September 2005, the Group recorded a turnover of RM12.1 million as compared to RM11.39 million in the corresponding period of the previous financial year.    

Despite the higher revenue, the Group reported a pre-tax loss of RM1.72 million against a pre-tax profit of RM665,000 for the corresponding quarter of the previous financial year.  This was mainly attributed to insufficient revenue generated to cover its operating expenses as a result of deferment and delay of some projects together with the higher write-back of doubtful debts in the previous financial year.

14. Comparison with Immediate Preceding Quarter 

For the second quarter ended 30 September 2005, the Group recorded a lower revenue of RM12.1 million compared to RM18.1 million in the preceding quarter.  This was mainly due to lower billings arising from deferment and delay of some projects.  Consequently, the Group suffered a pre-tax loss of RM1.72 million as compared to the pre-tax profit of RM943,000 in the preceding quarter.    

15. Prospects 

	The IT industry has slowed down as a result of lower spending by the government departments and the private sector and consequently, the competitive environment is anticipated to erode margins.  Despite this, the Directors are cautiously optimistic that the Group’s results will improve for the remaining period of the financial year ending 31 March 2006.

16	Variance for profit forecast / Shortfall in profit guarantee

  	Not applicable.

17.	Taxation

Taxation comprises: -

The effective income tax rate for the six months was higher than the statutory income tax rate.  This was mainly due to certain expenses, which are not deductible for tax purpose as well as under provision of deferred tax in prior year. 

18. Sale of unquoted investments or properties 

There were no sales of unquoted investments or properties for the period under review.

19.	Purchase and disposal of quoted securities

There was no purchase and disposal of quoted securities for the period under review.

20.	Status of Corporate Proposals

(a) Private Placement

On 15 August 2005, the Company has decided not to proceed with the Proposed Private Placement involving the issuance of up to 6,400,000 new ordinary shares of RM1.00 each.

(b) Status of utilization of proceeds raised from the Corporate and Debt Restructuring Scheme

The Company raised a total proceeds of RM53.03 million from its Corporate and Debts Restructuring Scheme, which was completed on 15 November 2002.  The proceeds were originally approved by the shareholders for the following utilization and were varied as follows: 

Approved Utilization
RM’million	Previous variations not exceeding 25% of the total proceeds*
RM’ million	

Previous revised Utilization
RM’ million	
(i)    Capital and research and development   expenditure for new business	
19.50	
(12.87)	
6.63	
(ii)   Investment in core activities/business	13.00	    -	13.00	
(iii)  Working capital	19.33	12.87	32.20	
(iv) Restructuring expenses incur for the   corporate proposal	
1.20	
-	
1.20	
				
Total	53.03	-	53.03	
* Pursuant to the approval granted by the Securities Commission vide its letter dated 7th June 2001, any variation that exceeds 25% of the proceeds will required shareholders’ approval.

Subsequent to the above, the Company has further proposed to increase the proceeds earmarked for working capital to RM41.60 million and the approval from the shareholders for the revision was received on 28 September 2004. 

As at 21 November 2005, the proceeds have been fully utilized as follows: -

	Revised Approved Utilization
RM’million	
Amount 
Utilized
RM’ million	
Balance
Unutilized
RM’ million	
(i)  Capital and research and development   expenditure for new business	
6.63	
6.63	
-	
(ii)   Investment in core activities/business	3.60	3.60	-	
(iii)  Working capital	41.60	41.60	-	
(iv) Restructuring expenses incur for the   corporate proposal	
1.20	
1.20	
-	
				
Total	53.03	53.03	-	

21. Group borrowings 

The Group’s borrowings as at 30 September 2005 are as follows:   

All borrowings are denominated in Ringgit Malaysia.

22. Off Balance Sheet Financial instruments 

There was no financial instrument with off balance sheet risk as at 30 September 2005.

23. Changes in Material litigation

As at 21 November 2005, there were no changes in status of pending material litigation matters since the previous quarter ended 30 June 2005 except for the following: -

Dataprep Holdings Bhd (“DHB”) Vs Corporate Express Network Sdn Bhd (“CENSB”)

Pursuant to a winding up action by a creditor of CENSB, a winding up order was made on 12th August 2005 onto CENSB and the Official Receiver has been appointed as Liquidator.  

24.	Dividend

The directors do not recommend any dividend for the period under review (preceding year corresponding period: nil).

25. Loss per share

(a)	Basic

(b) Diluted

The assumed conversion of the unexercised share options and ICULS into new ordinary shares of RM1 each of the Company has an anti-dilutive effect on the loss per share of the Group for the period under review.

26.	Capital commitment 
	
The Group has no material capital commitment for the period under review.

27.	Irredeemable Convertible Unsecured Loan Stocks (“ICULS”)

	The movements of the ICULS since inception are as follows: 	

As full settlement of the borrowings pursuant to the Debt Restructuring Scheme, the Company on 6 August 2002 issued RM64,062,520 Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) as follows:-

(i)	30,000,000 3 years 4% ICULS at nominal amount of RM1.00 each.

(ii)	34,062,520 5 years 4% ICULS at nominal amount of RM1.00 each.

There shall be no redemption of the ICULS and all outstanding ICULS will be mandatorily converted into new shares at the conversion price of RM1.50 ICULS for one ordinary share of RM1.00 each on maturity date. 

	On 5 August 2005, the Company increased its issued and paid up share capital from RM64,061,014 to RM76,118,087 by way of issuance of 12,057,073 ordinary shares of RM1.00 each through the mandatory coversion of 18.085,635 units of 4% three-year ICULS of RM1.00 each. 

28.	Deferred tax asset, Net

By Order of the Board
Dataprep Holdings Berhad

	Koh Ai Hoon
	Sim Geok Ling
	Company Secretaries
	28th November 2005