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Design Studio Launches IPO At S$0.23 Per Share

BackJan 16, 2003

NEWS RELEASE 

Singapore, January 16, 2003 - Design Studio Furniture Manufacturer Ltd ("Design Studio"), a furniture manufacturer and product specialist in Panelling Products, today launched its initial public offer ("IPO") of 20 million shares at S$0.23 per share. Upon listing, Design Studio's shares will be quoted on the Main Board of the Singapore Exchange Securities Trading Limited (SGX-ST).

The share offer represents approximately 28.6% of Design Studio's enlarged share capital.  The 20 million new shares on offer comprise a public offer tranche of 6 million shares, and a placement tranche of 14 million shares.  Of the 14 million placement shares, 2 million shares have been reserved for management staff, employees, business associates and those who have contributed to the success of the Group.  At the offer price of S$0.23 per share, Design Studio is priced at a historical price earnings ratio of 7.12 times, based on its earnings per share of 3.23 cents for the financial year ended December 31, 2001 ("FY2001").

Design Studio plans to use the estimated net proceeds of S$3.4 million raised from its IPO as follows:
- approximately S$1.0 million for the purchase of new machinery and the fitting-out of production premises;
- approximately S$500,000 for the promotion and marketing of the Group's products overseas;
- approximately S$200,000 for the purchase of computer software and hardware; and
- the balance of approximately S$1.7 million to be used for working capital purposes.

Said Mr Bernard Lim, Chief Executive Officer of Design Studio, "Today marks an important milestone in the history of Design Studio. Our listing status will not only enhance our corporate profile and strengthen our market position locally, but will also put us on a stronger footing to penetrate new markets abroad."

Design Studio has three complementary core businesses: supply and installation of Panelling Products to private residential property developments, interior fitting-out projects, and distributorship and exports of Panelling Products.

For its residential property projects business, Design Studio manufactures, supplies and installs Panelling Products, such as kitchen cabinets, wardrobes, vanity cabinets, doors and doorframes, for private residential property developments. The company is a specialist in the wrapped method of production, which involves the wrapping of wood furniture with veneer, vinyl or foil. As an established and leading furniture manufacturer in Singapore, Design Studio has supplied its Panelling Products to private residential property developments such as Ardmore Park, The Ladyhill, Sunhaven Condominium, Queens Condominium,  Cuscaden Residence, Changi Rise Condominium and Yishun Sapphire & Emerald Condominiums.  For FY2001, this segment accounted for 70.8% of the Group's total turnover.

Design Studio is also involved in interior fitting-out projects for residential, commercial and retail properties. Its projects include interior fitting-out for The Fullerton Singapore, Burlington Square, The Ascott Singapore and Liang Court Shopping Centre, amongst others. Interior fitting-out projects accounted for 26.8% of the Group's total turnover in FY2001.

Besides supplying its Panelling Products to residential property developments and providing interior fitting-out services, Design Studio also exports its Panelling Products to Malaysia, Hong Kong and Japan. Its in-house PANELZ product line was developed in

2001 to allow the company to strengthen its position in the local market and to tap export markets. Design Studio has exclusive distributorship of the upmarket German brand of SieMatic fitted kitchens in Singapore and Brunei. Some residential property projects that feature SieMatic kitchens include The Ladyhill, The Edge on Cairnhill, Leonie Hill Residences and Mimosa Gardens. Besides SieMatic, Design Studio also has the sole rights to sell the Italian brand of MAP furniture products in Singapore, Malaysia, Indonesia and Brunei. In addition, Design Studio has been appointed as a distributor and the first industrialised fabricator for DuPont�'s Corian� solid surfaces products in Singapore. Distributorship and exports contributed approximately 2.4% of the Group's total revenue in FY2001.

Said Mr  Lim, "Today, Design Studio's capabilities as a product specialist is what sets us apart from our competitors. We are able to provide clients with input on product designs, material usage and costing at an early stage and take them right through to execution. This early participation helps us establish a close rapport with our customers and we believe it has provided us with a competitive edge in tendering for projects."

The company plans to expand its core business by increasing market share in current areas of business and pursuing opportunities in existing and new geographical markets.

Commenting on the Group's next growth phase, Mr Lim said, "We intend to make in-roads into new markets by intensifying our efforts to promote our in-house brand of PANELZ Panelling Products abroad. We believe that there is growth potential in overseas residential property markets and intend to create a niche market for our Panelling Products aimed at the residential property projects overseas. This will enhance our product image and build brand awareness. "

"We also intend to capitalise on demand for quality home furniture products by securing more strategic tie-ups to distribute high-end brands of furniture and related products in the local and South East Asian markets. This will enable us to offer our customers a wider range of products - from Panelling Products to our own PANELZ brand of Panelling Products to imported quality brands," added Mr Lim.

Design Studio is committed to keeping abreast of the latest technology. Over the last 5 years, the company has invested approximately S$3.7 million in computerised machines to automate its manufacturing process. This has enabled the company to improve its production processes, achieve consistent quality in the manufacture of its products and reduce its labour costs.

In spite of the soft construction industry, Design Studio has managed to capture a large market share in the private residential property developments in Singapore. As at October 31, 2002, the company's total order book up to 2004 stood at S$74 million, of which S$66 million is contractual revenue to be recognised for residential property projects that are scheduled for completion in years 2002 to 2004.

For FY2001, the company recorded revenue of S$38.7 million and profit after tax of S$1.6 million.

As a testimony of the company's commitment to quality, it has been awarded ISO 9002 certification for its production and installation processes at its Singapore production facilities. Design Studio was also placed in the 2002 Enterprise 50 list, as one of the top 50 most enterprising, privately held companies in Singapore for 2002.  Mr Bernard Lim was named as one of the Top 10 Entrepreneurs of the Year 2002, a testimony of his abilities and achievements in his field of expertise.

SBI E2-Capital Pte Ltd is the Manager and SBI E2-Capital Securities Limited is the Joint Lead Placement Agent for Design Studio's listing. UOB Kay Hian Private Limited is the Joint Lead Placement Agent and the Underwriter for the listing.

The issue will close at 12 noon on Wednesday, January 22, 2003, and trading of the shares is expected to commence at 9.00 a.m. on January 24, 2003.

January 16, 2003