• FY 2004 net loss of Baht 729.3 million on sales of Baht 843.3 million
• Prospects for future are bright following the merger with Magnecomp and appointment of new management team
• 1H’05 performance will still be challenged while improvement will come only from 2H’05 onwards
• KR Precision changed its name to Magnecomp Precision Technology on February 21, 2005

Ayutthaya, Thailand, February 22, 2005 - Magnecomp Precision Technology PCL (SET:MPT) today reported revenues of Baht 107.7 million on net loss of Baht 267.7 million, or loss per share of Baht 0.75 per share, for the fourth quarter ended December 31, 2004. The net loss includes a number of non-recurring items, primarily relating to the merger with the data storage business of competitor Magnecomp International Limited, such as financial and legal advisory fees, and litigation fees relating to the intellectual property dispute with Magnecomp.  These charges are not expected to recur in 2005, and excluding one-off items, operating losses would be decreased by Baht 55.8 million.

In comparison, the Company reported revenues of Baht 830.3 million on net income of Baht 34.0  million, or Baht 0.10 per share in the same quarter last year. For the preceding third quarter of fiscal 2004, the company reported revenues of Baht 71.0 million on net loss of Baht 261.5 million or loss per share of Baht 0.74.

Revenues for the full year 2004 were Baht 843.3 million, a decrease of Baht 1,736 million or 67% compared to Baht 2,579 million in 2003. The decrease was primarily due to a sharp decline in suspension shipments following the loss of a major customer in first half 2004.  The Company recorded suspension assembly shipments of 2.4 million units for the fourth quarter and a total of 24.9 million units for the year 2004, compared with 27.3 million and 81.7 million during the comparable periods last year.  2004 was the worst performance ever by the Company. Net loss for the year 2004 widened to Baht 729.3 million, or loss per share of Baht 2.05, from a net loss of Baht 200.2 million, or loss per share of Baht 0.56, reported in 2003.

MERGER WITH MAGNECOMP INTERNATIONAL LIMITED

On January 24, 2005, the respective shareholders of the Company and Magnecomp International Limited approved the merger of the respective data storage businesses of both companies.  Since then: 

• The merger transaction has been completed.  The paid up capital of the Company has been increased 400% to Baht 17,730.6 million.   Magnecomp International Limited has subscribed to about 80% of the enlarged share capital base.
   
• The board has also been re-constituted to include representatives from Magnecomp International Limited.
   
• The senior management has been replaced.  Mr Steven Campbell will now lead the Company as Chief Executive Officer, and he will be aided by Mr Yong Kok Hoon, Chief Financial Officer, and Mr Albert Ong, President & Chief Operating Officer. Combined, they have more than 50 years in the data storage business.

“2004 was a difficult year for the Company - not only has it continued to make losses, but it also lost its major customer.  The Company was also burdened with one-off expenses like those relating to the merger, as well as those incurred in the IP legal proceedings with Magnecomp International Ltd.  We are confident we can put all of this behind us with the merger,” says new CEO Steven Campbell.  “The merger brings together two companies with individual strengths, and the new management will be spending the next few months implementing a strategic plan that will harness and leverage these strengths.  The new management will also be busy integrating the numerous sites of Magnecomp with the operations in Wangnoi (KR Precision’s manufacturing facility), and is glad to inform that the integration is going exceptionally well,” Mr Campbell added.  “Our expectation is that it will not be long before we are able to deliver a platform for sustained value enhancement for our shareholders, customers and employees." On management’s strategy to return the Company to financial profitability, Mr Campbell believes the Company will benefit from a higher volume of business as well as cost savings from the merger.  

"While KRP was operating at losses entering 2005 due to the low utilization rate,”  Mr Campbell said, “we believe the actions we are currently taking as MPT including expanding our product and customer mix, eliminating and restructuring of redundant business, and realization of cost savings through higher volume efficiency, will have a positive effect on our performance this year.  We anticipate increased revenue right from the first quarter of 2005, and to breakeven by the second quarter of 2005 as the overall increase in volume is distributed across the combined infrastructure.” 

Specifically indicating what shareholders and the investing public could look forward to, Mr Campbell indicated that the smaller form factors are projected to be the fastest growing segment of the HDD industry over the next five years.  MPT has established a leadership position in the hand held CE segment and is currently sole source suspension supplier to three of four 1 inch drives currently in production with a fourth launching by mid 2005. The disk drive has found its way into everyday consumer electronic devices such as MP3 players, digital video recorders, mobile phones, PDAs. 
 

About Magnecomp Precision Technology Public Company Limited

Headquartered in Ayutthaya, Thailand, Magnecomp Precision Technology Public Company Limited manufactures hard disk drive suspension assemblies with a set of subsidiary companies specializing in precision stamping,  chemical etchings, tooling and die supporting its core business. MPT has manufacturing facilities in China and Thailand and a research and development Technology Center facility close to its USA customers.

ENDS