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 January 2000 to 31st March 2000 are consistent with those of the recent annual financial statement for the year ended 30th June, 1999.

2.	During the period under review, the company disposed off one of its associated company – South Asia International Limited for a sum of RM435,000 resulting in a exceptional gain.  This investment was previously written off in the books.

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 other than mentioned in note 2.

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.	As announced to the KLSE on 3/5/2000, Special Administrator have been appointed to the company and they are currently working out a restructuring proposal.

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	   13,003,604	
	Revolving credit	      26,332,708	
	Short term loan	     29,991,029	
		----------------	
		69,327,341	
		=======
	
2.	Other loans (Unsecured) [Danaharta Nasional Berhad has taken over the rights, title and interest of certain banking facilities and amount due to a Bond guarantor]		
	Bank facilities	28,028,207	
	Amount due to a Bond guarantor	11,396,591	
		----------------	
		39,424,798	
		======	

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 Mar00
RM	

Kaolin	
9,829,167	
(8,836,254)	
55,473,253	
Trading and others	3,488,313	709,117	1,972,482	
Rental of machinery	1,980,000	470,448	20,104,753	

Total	
15,297,480	
(7,656,689)	
77,550,488	

By Geographical Area:				

Within Malaysia	
13,317,480	
(8,127,137)	
57,445,735	
Outside Malaysia	1,980,000	470,448	20,104,753	

Total	
15,297,480	
(7,656,689)	
77,550,488	

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.  During the financial quarter under review, the group incurred a loss after tax of RM2.46 million.  This is mainly attributable to high financing costs of RM2.57 million and non-cash provisions like depreciation and amortisation amounting to RM0.91 million.  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.

19.	The Board of Directors are of the opinion that the group will return to profitability once the proposed restructuring scheme is implemented whereby the group will have 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.