Kin Yat continued to maintain a healthy spread of business with three core lines: toys, micro motors and optical disk products. Overall, gross profit margin was reduced by 2% points to 21% by the following factors: global pricing pressures, shift in product mix towards the low and middle range and shortened production lead time. The reduction in gross margin was offset in part by the Group's expanding economies of scale, strong sourcing capabilities and cost control measures.

Mr Raymond Cheng Chor-kit, Chairman of Kin Yat Holdings, said: "As we chart forward amidst difficulties and uncertainties, our priorities for 2003/04 remain to deliver stable, improving results from our healthily diversified spread of industrial businesses. Commanding both product excellence and cost effectiveness, which is a strong leverage in a soft market, management maintains its justifiable confidence in our future growth potential."

In a year of poor economic conditions, revenues generated from toys operations were still maintained at a stable level of HK$572,471,000, or 72% of Group turnover, as a result of increased orders from new customers. Segment result declined to HK$46,307,000. Customers became increasingly conservative as consumer sentiments remained subdued, leading to a further delay in order releases, and a shift of orders towards the low to middle range and smaller sizes. Average selling price of toys output decreased as a result. The segment result of this operation also reflected additional air freight expenses and effects of order cancellations due to the closedown of US ports last year.

Mr Cheng explained: "We believe that with our technical and production competencies, our Group is able to add value to the traditional items for the mass market, and still stands a strong position in this low- to mid-range segment. Our years of active participation in the high value-adding toys sector has placed the Group in a strong, world-leading position in the industry, planting the seeds to sustain our growth and profitability in the past years. The toys division is positioned for a continued production expansion and enhancement. We continue to maintain our cautiously confident outlook for the coming year."

The Group's advance into motors production continued to contribute to overall performance. Revenues generated from this division, including turnover of HK$14,049,000 of goods sold to the Group, were also kept stable at HK$184,449,000 with segment result at HK$43,116,000, an increase of about 2%. This division accounted for 21% of total turnover.

The division's performance was restrained by the softening of world demand in motors for toys applications, which remained its mainstay of business. On the other hand, the new personal-care product line was still in its development phase and needs more time before it picks up more significant momentum. To tap new end-user sectors, the division renews its commitment to research and development.

The Group's investments in optical disk products manufacturer Concord continued to serve as a vehicle for long-term business diversification. Performance of this division has improved after the relocation of its production base from Hong Kong to Shaoguan, Guangdong Province, China, with the first 6 lines for CDR production fully installed and operational before the end of 2002. The Group was not able to book a full year of benefits from optimized production scale and efficiency after relocation, and there were certain one-off losses and start-up costs. These account for the loss recorded in the division.

As operations in the new CDR production base went into full gear, effects of economies of scale and cost benefits began to contribute to a turnaround of this division since the first quarter of 2003. Management expects this division to become profitable in fiscal 2003/04.

Kin Yat Holdings commands a strong financial position, with cash in hand of HK$85,000,000 and net asset value of HK$519,332,000 as at end of March, 2003. Gearing ratio was maintained at a healthy level of 1.5%.

Year ended March 31,
	2003	2002
	HK$ '000	HK$ '000
Turnover	794,209	785,804
Toys and related products	569,408	562,473
Motors (sales to external customers only)	169,016	174,903
Electrical household appliances	55,785	48,428
Net Profit Attributable to Shareholders	71,443	98,034
Segment Results from operating activities
Toys and related products	46,307	81,030
Motors	43,116	42,346
Electrical household appliances	1,262	1,442
Final dividend per share	HK5 cents	HK7 cents
Earnings per Share
- Basic	HK17.92 cents	HK25.86 cents
- Diluted	HK17.66 cents	HK24.99 cents

About Kin Yat Holdings
Kin Yat Holdings Limited (SEHK: 638) is an industrial group with a niche in electronic and mechanical productions. It has a stretch of toy, micro motor and optical disk manufacturing businesses, all based on its strong cost-effective engineering and production platform in Shenzhen and Shaoguan, China. The Group was named by Forbes Global as one of "The World's Best 200 Small Companies" for 2002.

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