Cardlink Technology Group Limited
(Stock Code: 8066)

Major Shareholder:

• Mr. H S Wong - 47.9% interest
• Dickson Group Holding Ltd (0313) - 18.3% interest

The Group is a smart card solution provider with a primary focus on the provision of customized smart card application system. Having started out as a plastic card-printing manufacturer in 1995, the Group has evolved since 1996, through its extensive research and development of the smart card technology, into a smart card solution provider with expertise in hardware, software and system implementation.

The Group is able to offer to its customer highly customized smart card application systems suing the Group's smart card application products as final solution tailored to meet their specific needs. The Group has built up a smart card application library of major smart and card applications for use in system which include access control, security management, electronic payment, intelligent facility management and production process real time monitoring.

The Group has developed over the years a vertically integrated platform, which utilizes the technological know-how of the Group in almost every component of a smart card solution development process including the manufacturing of smart cards and related peripheral hardware as well as software development. This platform enables the group to design and develop innovative and highly customized smart card application systems and to explore smart card application for use in different industries.

The Directors believe that the Group's products and application systems have considerable potential in the PR on the grounds that (1) there is a vast potential for the development of the smart card business in the PRC; (2) the Group has strong capabilities in the provision of smart card application system; (3) there is no general prohibition for the Group to engage in smart card business in the PRC.

The Directors consider that the Group is capable of providing customers with ¡§one-stop-shop¡¨ smart card solution services. The clients using the Group's smart card solutions and products comprise of a number of government departments and a wide variety of clients from various types of industries in the private business sector.

The Directors believe that the Group has the following competitive advantages:

• Its technology platform characterized by its vertical integration of smart card hardware manufacturing, software development and system implementation which allows the Group to fully capture and capitalize all aspects of the smart and business opportunities;
• Years of experience and strong fundamental technical know-how accumulated in respect of smart card technology;
• An established smart card application library which contains a wide range of applications from basic smart card applications to highly customized applications;
• Its capability in the design and development of innovative smart card applications that deliver the appropriate solutions and/or products to its customers; and
• An established clientele comprising entities in the public sector and companies in the private sector.

• The Group may not be able to keep up with the technological advancement in the future. In such events, the Group's ability to attain its business objective will be adversely affected.
• If the Group has inaccurately estimated costs on fixed price contracts or its if encounters unexpec6ted problems and the price adjustment mechanism inadequately covers the additional costs incurred by the Group, the financial performance of the Group will be adversely affected.
• Should the Group fail to retain the services of its key management, the Group's business, operations and financial condition may be adversely affected.
• There is no assurance that this will be the case and if the Group is not able to secure project-based sales in future, the income generated from projected will be adversely affected.

In the future, the Group will further diversify its technological platform through research and development of advanced smart card applications, which apply the Bluetooth technology, fingerprinting technology, VRS and IVS. The ultimate goal is to apply such technologies in new smart card application system.

The Group aims to further develop multifunctional products and different application systems. Leveraging on the vertically integrated platform of the Group, the Group will focus on the development and enhancement of highly customized smart cards, related peripheral hardware and application software. The Group also intends to widen its application library by developing products/application systems which can be used in new smart card applications, for example, PMIS used in monitoring and control of a production process.

The Directors consider that the provision of such smart card services not only will generate steady and recurring income for the Group but also will allow the communities subscribing to the Group's services to become potential clients for the Group's other smart card application system products. In view of the perceived future trend in the smart card industry that multifunctional smart cards will face an increasing demand, there is vast potential for smart card service providers to capture various business opportunities by constantly introducing new smart card services to the community they serve from time to time.

The Group will continue to expand its smart card manufacturing and plastic card printing business. The Directors are of the view that the smart card manufacturing and plastic card printing business not only provides steady sources of income for the Group, but also increases the profile of the Group to capture the anticipated growth in smart card applications which in turn drive the demand on smart cards. The Directors also consider that by having a smart card manufacturing business eliminates the need to disclose its customers' identities to its competitors in the smart card application business.

The net proceeds from the Placing, after deducting the related expenses, are estimated to amount to approximately HK$29 million (based on the offer price HK$0.47 per share). The Group at present intends to apply the net proceeds as follows: