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Karin Technology Holdings Limited Launches IPO At S$0.20 Per Share

Singapore, February 22, 2005 ??" Karin Technology Holdings Limited ("Karin"), a diversified and value-added electronic components, integrated circuit ("IC") software and IT infrastructure solutions provider, today announced that it has launched its initial public offering ("IPO") of 52 million shares at S$0.20 per share. Karin will be listed on the Main Board of the Singapore Exchange Securities Trading Limited (the "SGX-ST").

Mr Philip Ng , Executive Chairman said: "We have been looking forward to the listing on the SGX-ST and I am delighted that we have reached this milestone in our corporate history. We are now poised to embark on a new phase of growth. The listing will provide us with the financial resources to capitalise on the business potential in the region, in particular, Hong Kong and the PRC."

The Offer

The offer of 52 million New Shares represents approximately 25.7% of Karin's enlarged share capital. Of this, 5.2 million shares will be offered by way of public offer. The remaining 46.8 million shares to be offered by way of placement, comprise 41.6 million Placement Shares at S$0.20 for each Placement Share and 5.2 million Reserved Shares at S$0.20 for each Reserved Share reserved for Karin's management and employees who have contributed to the success of Karin and its subsidiaries (the "Group").

At an invitation price of S$0.20 per share, Karin is priced at a price earnings ratio of approximately 5.81 times, based on its historical net earnings per share for the financial year ended June 30 ("FY"), 2004.

The public offer will close at 12.00 noon on February 28, 2005. Trading for the shares is expected to commence at 9.00 am on March 2, 2005.

Use of Proceeds

Karin intends to use the estimated net proceeds of S$7.9 million from its IPO as follows:

- approximately S$2.5 million for setting up additional sales and liaison offices in the PRC to expand its marketing team and distribution network in the PRC;

- approximately S$1.5 million for the purchase of additional equipment and recruitment of additional engineers to expand its engineering division;

- approximately S$1.3 million to be used for capturing potential business opportunities through co-operation or alliances with suppliers to jointly market products through its extensive distribution channel, marketing expertise and technical capabilities, with a view to explore product lines with higher profit margin;

- approximately S$2.4 million to meet the increased inventory requirement to cover the expansion of its product range; and

- the balance of approximately S$0.2 million for additional working capital.

Corporate Profile

Established in 1977, Karin is a diversified and value-added electronic components, IC software and IT infrastructure solutions provider with operations in Hong Kong and the PRC. The Group has three core business segments: - Components Distribution, IC Application Design and IT Infrastructure.

Under its Components Distribution segment, the Group distributes and trades a wide range of electronic components, industrial materials and components such as ICs, connectors, semi conductors, cables and power semi conductors.

For its IC Application Design segment, the Group provides value-added services such as the customisation of IC software application design solutions for the performance of specific functions such as voice articulation, power reduction, speed control as well as alpha numeric display as required by its customers. These functions are commonly required for the production of a wide range of products such as educational toys, musical instruments, keyboard controllers, LCD controllers, speech controllers and remote controllers.

The Group is also actively generating demand for the components under its distributorship. Through collaborations with its customers and suppliers, the Group develops prototypes, reference designs (which are electronic circuit designs used in final product designs) and development kits (which comprise hardware and software platforms to test, develop, modify and improve product designs). In addition, the Group also provides technical advisory services to its customers in relation to product designs to improve the functionality and performance of their products.

The Group's IT Infrastructure segment provides computer data storage management solutions such as Storage Area Network ("SAN"), Network Attached Storage ("NAS") and Direct Attached Storage ("DAS"). These solutions provide the Group's customers with reliable, efficient and secured environments to monitor, control and administer data processing within their internal network. These solutions include computer data storage management software, backup automation software, online data replication software, data security management software and other computer products such as desktop and notebook computers, monitors and printers.

The Group has been an authorised distributor for Compaq options products and Compaq storage management solutions in Hong Kong since 1996 and 1999 respectively. In 2002, the Group was appointed by Sun Microsystems as an iForce System Provider and Local Strategic Provider for the distribution of their computer products and solutions. The Group also has distributorship arrangements with leading corporations such as EMC (Benelux) B.V., S.??.r.l, Nokia, Inc. and BEA Systems HK Limited.

Capitalising on Strong Growth Potential in the PRC and Hong Kong

Going forward, the Group is optimistic about its growth prospects. By leveraging its extensive distribution networks in both Hong Kong and the PRC, the Group plans to focus on the provision of IT infrastructure services, computer data storage management solutions as well as after-sales and consulting services.

Said Mr Ng: "We will continue to develop new IT infrastructure services and computer data storage management solutions that are not only cost competitive but also work effectively for our customers."
In addition, the Group plans to expand and enhance its capabilities in the IC Application Design segment by recruiting additional professionals to focus on the development of new software application design solutions so as to provide advanced product features and customised functions. The Group also intends to concentrate on the development of solutions for its four existing major market segments, namely; toys, consumer electronics, telecommunication products and multimedia products.

Further, the Group intends to establish additional liaison offices in Qingdao, Chongqing, Chengdu and Guangzhou so as to capture the growing PRC market and to provide timely and effective service to its existing and prospective customers.

Added Mr Ng: "We want to provide our customers with the widest range of products possible and intend to continue to expand our product offerings by identifying new components and suppliers with a good distribution and market potential."

Financials

The Group registered a double-digit growth in revenue on a year-on-year basis for the last two financial years. In FY2004, its revenue surpassed the billion dollar mark to HK$1.1 billion, which was an 11.3% improvement over its revenue of HK$987.4 million for FY2003. Similarly, its revenue grew by 11.2% from HK$888.1 million in FY2002 to HK$987.4 million in FY2003.

The Group's profit before tax improved by 50.5% from HK$19.7 million in FY2003 to HK$29.5 million in FY2004.
OCBC Bank is the Manager, Underwriter and Placement Agent for Karin's IPO.