In the first half, the core toys and motors divisions contributed 69% and 22% respectively of group turnover.

The toys market remained highly competitive during the period, however the toys division achieved a momentous turnaround with HK$47,142,000 in segment results, compared with a HK$5,039,000 loss for the same period last year. Turnover rose significantly to HK$366,473,000 which was largely attributable to orders relating to a blockbuster movie. The Group's relentless efforts to enhance production efficiency and cost effectiveness, increased economies of scale, and the relocation of more production lines from Shenzhen to low cost base Shaoguan, contributed to the improved bottom lines for the division.

In view of the high concentration of movie-related and other orders in the first half, it is foreseeable that the division may have to embrace a low season in the second half. In response, the Group will step up efforts in resources deployment and utilization.

Mr Raymond Cheng Chor-kit, Chairman of Kin Yat Holdings, said: "High fuel and raw material prices, as well as labor and electricity shortages in China, are likely to remain a serious concern. The year ahead will remain highly challenging. The Group will actively pursue the development of innovative and functional entertainment toys and products in order to achieve broad-based growth."

The toys industry continues to provide core support for the motors division. Given the cyclical nature of the toys industry, it is the Group's strategy to maintain a more balanced product portfolio. The shift in product mix contributed to the division's stable turnover and segment results for the period despite continued unfavorable market environment brought on by higher material costs.

During the first half of fiscal 2005/06, the motors division reported a 5% increase in segment results to HK$28,209,000 from HK$26,854,000 a year earlier. Turnover increased slightly by 1% to HK$120,268,000 from HK$119,285,000 of the previous period.

In addition to the orders from core toys customers, the motors division has received positive comments from customers in other industries, and the management remains optimistic as to the prospect of a long term relationship with these new customers.

The new materials development segment, which is intended to provide a stable revenue stream to complement the cyclical toys and motors industries, has reported increased sales. However, as most of the production activities have been shifted to new factories, profitability of the segment was affected by higher depreciation and interest costs. At present, materials under development are primarily for use in cathode ray tube and liquid crystal display.

The Group's 50%-owned CDR manufacturing arm had to share a loss of HK$6 million, largely attributable to increased production costs, suppressed selling prices and an influx of competitors in the market. The situation is unlikely to improve shortly and the Group is actively adjusting the strategy for this division.

"The securing of movie-related toys orders has underlined our toys division's strong turnaround performance for the first six months, despite no improvement in the overall market environment. This indicates the importance in staying abreast of the growing popular demand for entertainment toys and products. We will continue to strengthen product and market development capabilities to seize potentially lucrative diversification opportunities."

The Group's financial position remained strong, with cash in hand of HK$148 million and a healthy gearing ratio of 3.3% as at September 30, 2005.

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, materials development and CDR manufacturing businesses, all based on its strong cost-effective engineering and production platform in China. Headquartered in Hong Kong, Kin Yat operates two production centers in Shenzhen and Shaoguan, China.

Six months ended September 30,
	2005	2004
	HK$ '000	HK$ '000
Turnover	531,155	406,591
Toys and related products	366,473	238,195
Motors (including sales to Kin Yat Group)	120,268	119,285
Motors (sales to Kin Yat Group)	(3,663)	(5,048)
Electrical household appliances	28,179	37,997
Material development	19,898	16,162
Net Profit Attributable to Shareholders	58,295	12,625
Segment Results from operating activities
Toys and related products	47,142	(5,039)
Motors (including sales to Kin Yat Group)	28,209	26,854
Electrical household appliances	874	(616)
Material development	1,135	1,986
Interim dividend per share	HK2.0 cents	HK0.5 cents
Earnings per Share
- Basic	HK14.40 cents	HK3.12 cents
- Diluted	HK14.37 cents	HK3.11 cents

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Kin Yat Holdings Limited

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