ASSOCIATED KAOLIN INDUSTRIES BERHAD
									Without prejudice

Notes

1.	The accounting policies and methods of computation applied in the preparation of the quarterly financial statements for the period 1St October, 1999 to 31st December, 1999 are consistent with those of the recent annual financial statement for the year ended 30th June, 1999.

2.	There are no exceptional item incurred for the current financial year to date.

3.	There are no extraordinary item incurred for the current financial year to date.

4.	Included in the taxation figure is an adjustment for under-provision in respect of prior year of RM39,998.

5.	There are no pre-acquisition profits for the current financial year to date.

6.	There are no profits on sale of investment and property for the financial year to date

7.	There are no purchase or disposal of quoted security for the financial year to date.

8.	There are no changes in the composition of the company for the financial year to date

9.	There are no changes in the status of the corporate proposal since the expiry of the  Restraining Order pursuant to Section 176 of the Companies Act, 1965 on 14 October 1999 and no agreement has been reached since the submission of the proposed Scheme of Arrangement and Compromise Repayment to the Company’s bankers and creditors.

10.	There are no material changes in the seasonality or cyclicality fluctuations in operation 

11.	There are no issuances and repayment of debt and equity securities, share buy-backs, share cancellations, shares held as treasury shares and resale treasury shares for the current financial year to date.

12.	Group borrowings and debt securities

1.	Short Term Borrowings (Unsecured)	RM	
	Bank Overdrafts	12,745,767	
	Revolving credit	18,832,708	
	Short term loan	29,982,058	
		----------------	
		61,560,533	
		=======
	
2.	Other loans [Danaharta Nasional Berhad has taken over the rights, title and interest of certain banking facilities and amount due to a Bond guarantor]		
	Bank facilities	35,528,207	
	Amount due to a Bond guarantor	11,393,182	
		----------------	
		46,921,389	
		======	

13.	There are no contingent liabilities at the latest practicable date, which shall not be earlier that 7 days from the date of issue of the quarterly report.

14.	There are no financial instruments with off balance sheet risk at the latest practicable date which shall not be earlier that 7 days from the date of issue of the quarterly report.

15.	There are no pending material litigation at the latest practicable date which shall not be earlier that 7 days from the date of issue of the quarterly report.

16.	Segmental Results

By Industry:	

Consolidated Turnover
RM	Consolidated Profit/(Loss) from
Operations
RM	
Consolidated
Total Assets
at 31 Dec
RM	

Kaolin	
6,793,285	
(6,092,535)	
56,499,471	
Trading and others	2,973,937	553,443	2,524,344	
Rental of machinery	1,320,000	313,632	19,947,937	

Total	
11,087,222	
(5,225,460)	
78,971,752	

By Geographical Area:				

Within Malaysia	
9,767,222	
(5,539,092)	
59,023,815	
Outside Malaysia	1,320,000	313,632	19,947,937	

Total	
11,087,222	
(5,225,460)	
78,971,752	

17.	There are no material changes in the profit before taxation for the quarter reported on as compared with the preceding quarter.

18.	There are no material factors affecting the earnings and/or revenue of the company and the group .

19.	During the financial quarter under review, the group incurred a loss after tax of RM3.9 millions.  This is mainly attributable to high financing costs of RM4.4 millions and non-cash provisions like depreciation and amortisation amounting to RM1.9 millions.  The turnover of kaolin has remained fairly stable at round RM1 million per month whereas most of the contribution to group profitability came from the trading of African logs as well as the rental of machinery.

The Board of Directors is of the opinion that the group will return to profitability once the proposed restructuring scheme is implemented with the group having a new substantial income stream and a reduction of its financing costs.

20.	There are no material variances of actual profit from forecast profit and profit guarantee.

21.	There are no dividend declared/recommended for the current financial year to date.