(updated as at 19 July 2010)

BUSINESS

Q		What is so special about Karrie's business model?
A		Normally we deal with projects, which can take one year from initial project confirmation, development and engineering works to final shipment of goods. A project shipment cycle can run for 18 to 24 months. Usually we are the only vendor for a particular project confirmed. Combined with the 18 to 24 months shipment cycle, we are bestowed with relatively long-term business visibility. (2004/05 Annual Report, page 60)
Q		Would rising cost of raw material affect the performance of the Group?
A		Under the Group’s versatile ‘Total Transparent Cost Plus Pricing Mechanism’ most of the raw materials other than electro-galvanized steel plates are sourced through the customers or through suppliers designated by the customers. A rise in raw material price (other than steel) has only a marginal impact on the bottom line. (2004/05 Annual Report, page 18)
Q		Experts say RMB is going to appreciate more in the coming two years. What is the impact on the Group?
A		RMB payments represents about 15% of the total cost of sales. As most of our competitors are also based in China and on the basis that customers stick to their present purchasing practice, in theory we could raise price to cover the increase in cost over the time
Q		To whom do Karrie sell its products?
A		Our products, including computer server casings, laser printers, magnetic tape drive, are mainly sold to multi-national customers

CAPEX, DIVIDEND AND FINANCE

Q		Are you worried about a high level of bank borrowings?
A		The Group’s shareholders fund is much higher than the non-current assets meaning that the Group is financing its non-current assets through stable shareholders’ fund rather than bank borrowings; Any increase in net bank borrowings could therefore be attributed to the increased working capital requirement due to an increase in turnover. This is a positive news but not the otherwise
Q		What is the status of new Yu Quan and Yi Xing Plants?
A		The site area of Yu Quan Plant is approximately 240,000 sq. m. as compared to the combined site area of 89,000 sq. m. of the existing Yan Tien Plant and Fenggang Plant; We will build Yu Quan Plants in various phases depending on the economic conditions. Phase I has launched production in October 2006; Phase II of Yu Quan Plant was completed by end of 2008 and launched production; It is expected that Phase III of Yu Quan Plant to be completed by the end of 2010; Yi Xing Plant has commenced production in February 2010.
Q		Is Karrie going to change its dividend policy because of the capex and working capital requirements?
A		Our dividend policy is to pay out 30%* or more of the profit attributable to shareholders; In 2009/10, we paid out a total of HK1 cent as dividend (payout ratio: 45%), making the 13th year of unbroken dividend payment record; *Remarks: Because of the importance of maintaining financial stability in this crucial period of a CAPEX cycle, the Directors reserve the right of changing this guideline without prior notice.

CORPORATE GOVERNANCE AND OTHERS

Q		Should you worry about the corporate governance standard ofKarrie?
A		For three consecutive years from 2003-2005, fund managers and research analysts have voted Karrie as one of the best-managed companies in Hong Kong in the Asiamoney Polls. In the 2004 Poll, Karrie was voted as the second best in Corporate Governance in Hong Kong. In 2005 Karrie was voted as the best small cap in the same poll; We have made detailed explanation of corporate strategies and the rationale behind in our annual reports and our effort was recognised by Hong Kong Management Association and awarded with “Honorable Mentions” in 2006 and 2007 Best Annual Report Award, also being awarded with 2007 IR Magazine Award “Best Annual Report and Other Corporate Literature” Award. In 2008, we had been awarded “Citation for Achievement in Corporate Governance Disclosure” in the 2008 Hong Kong Management Association Best Annual Reports Award; Since 2001 the day-to-day operation of Karrie has been in the hands of a group of professional managers. The management team is not related to the controlling shareholder; Karrie is also willing to share with shareholders the wealth created through distribution of dividend. Since 2000/01, the aggregated amount of the Group’s dividends paid/payable is around HK$583,234,000 or around 83% of the shareholders’ fund as at 31 March 2010; To increase its transparency, Karrie arranges “tea-breaks” with individual shareholders annually; publishes an easy-to-read annual reports with graphs, tables and other useful information; and discloses price sensitive information on a timely basis.
Q		Who are the major shareholders?
A		As at 30 June 2010, the Ho's family/New Sense Enterprises Limited held around 56% of the issued share capital of the Company.