The Board of Directors of Beyonics Technology Limited ("Beyonics") refers to the merger (the "Merger") between Beyonics and Flairis Technology Corporation Limited ("Flairis"), which became effective on 24 July 2003 (the "Effective Date").

As announced jointly by Beyonics and Flairis on 24 March 2003 (the "Announcement Date"), pursuant to the terms of the merger agreement entered into between Beyonics and Flairis on the Announcement Date, Beyonics and Flairis had agreed to a merger by way of a scheme of arrangement under Section 210 of the Companies Act, Chapter 50 of Singapore, under which, inter alia, shareholders of Flairis (the "Flairis Shareholders") would each receive 0.60 new Beyonics share for every one (1) Flairis Share (the "Share Exchange Ratio"), fractions of a new Beyonics share to be disregarded. Beyonics and Flairis had agreed on the Share Exchange Ratio on the Announcement Date, after taking into consideration Beyonics' and Flairis' market share price, prospects, operations and financial condition at that time. The new Beyonics shares were eventually allotted and issued to the Flairis Shareholders on the Effective Date.

The Board of Directors of Beyonics noted that Beyonics is required to determine the amount of goodwill arising in relation to the Merger based on the fair value of the new Beyonics shares on the date that the new Beyonics shares were allotted and issued to the Flairis Shareholders (that is, the Effective Date). This arises as a result of the application of Statement of Accounting Standard 22 ("SAS 22"; now known as Financial Reporting Standard 22), which provides that if a company issues its own equity instruments as purchase consideration in a business combination, the acquisition must be accounted for at its cost and the equity instruments issued by the acquirer must be measured at their fair value at the date of exchange. In the case of a listed share, the fair value would be the market price of the listed share as at the date of the exchange.

When the terms of the Merger were agreed on the Announcement Date, as stated above, Beyonics and Flairis took into account the respective market share prices, prospects, operations and financial condition of Beyonics and Flairis at that time. While the Board of Directors of Beyonics is of the view that the average market price of Beyonics shares leading up to the Announcement Date (being the date on which the parties agreed the terms of the Merger) should be the reference for recording the transaction in relation to the Merger, the Board of Directors of Beyonics notes that the accounting standard in SAS 22 requires reference to the market price on the date of the allotment and issue of the Beyonics shares. As a consequence of the application of SAS 22, the purchase consideration and the additional amount of goodwill arising in relation to the Merger are approximately S$54 million and S$10 million respectively based on the closing market price of S$0.23 for each Beyonics share on the Effective Date, instead of a purchase consideration of approximately S$44 million based on the average market price of approximately S$0.19 for each Beyonics share leading up to the Announcement Date. This has the effect of increasing the Net Assets of Beyonics by the said S$10 million. The additional amount of goodwill of S$10m is solely due to the increase in the market price of Beyonics shares from S$0.19 on or about the Announcement Date to S$0.23 on the Effective Date. It is noted that that the number of shares issued by Beyonics to the shareholders of Flairis remain unchanged.

Although the Board of Directors of Beyonics are of the view that the additional amount of goodwill of approximately S$10 million is not reflective of the commercial agreement or intentions of the parties to the Merger, the Board recognises that Beyonics is required to comply with SAS 22 and therefore to record an additional amount of S$10 million in the accounts of Beyonics as goodwill arising in relation to the Merger. In light of this and that the additional goodwill does not represent any future economic benefits, the Board of Directors of Beyonics has determined that it is prudent and appropriate in the circumstances to carry out a one-time write-off of the entire additional amount of goodwill of approximately S$10 million against the profit and loss accounts of Beyonics for the financial year ended 31 July 2003. This is so that the accounts of Beyonics will correctly reflect the commercial intention of Beyonics in relation to the Merger and not carry the additional goodwill which was not part of the commercial agreement. The implication of the write-off is that the profits of Beyonics for the financial year ended 31 July 2003 will be reduced by the amount of the write-off. This write-off will reverse the increase in Net Assets of Beyonics arising from the issue of shares at market value on the Effective Date mentioned above. The Board of Directors of Beyonics wishes to emphasize that this is purely as a result of complying with SAS 22, and has nothing to do with the Merger or the viability of the operations of Beyonics and its subsidiaries (including Flairis).

BY ORDER OF THE BOARD OF DIRECTORS

Submitted by Tay Peng Huat, Company Secretary on 25/08/2003 to the SGX