Announcement of Annual Results for FY2002      Posted on 28 Jun 02

Hong Kong, June 28, 2002 - Laminates manufacturer, Kingboard Chemical Holdings Limited ("Kingboard Chemical") (SEHK: 148) today announces the annual results for the year ended March 31, 2002. In spite of the very difficult operating environment faced by the electronics industry, the Group has successfully achieved a turnover of HK$2,464 million, representing an increase of 2% compared to the turnover of HK$2,416 million achieved in last year. However, due to the overall decrease in prices for most of its products during the year, profit attributable to shareholders and basic earnings per share after goodwill amortisation of HK$3.6 million stood at HK$338 million and HK70.1 cents respectively. The directors recommend the payment of a final dividend of HK8.0 cents per share which together with the payment of an interim dividend of HK3.5 cents per share gives a total of HK11.5 cents per share for the whole year, representing an increase of 4.5% as compared to that of last year.

Last year was a difficult year for the global electronics industry. Laminates, like most other electronics components, showed declines in both volume demand and unit price, resulting in the global laminate market by revenue falling over 25% in 2001. However our strength in the more promising China market and commitment to offer the most competitive laminate products on the balance of pricing, quality and services continued to enable us to gain market share and in turn strong volume sales growth in excess of 20%. As a result laminate external sales in dollar terms fell by only 5% despite facing severe adjustments in unit prices.

In the year we launched the paper laminate product line for double-side applications and continuously strengthened the offerings of glass epoxy laminate for multi-layer applications. Despite the price pressure, EBIT (earnings before interest and tax) return on sales (including inter-segment sales) fell by only 5% points to around 19% helped by the price declines of raw materials, increased vertical integration and success in controlling costs. The Group also commenced offering multi-layer printed circuit board customers with value-added services including drilling and mass lamination to become a total solution provider in the market.

The Group is very keen to expand its laminate production capacity. To this end, the Group is building a new paper laminate factory in Shaoguan, Guangdong, which would be ready for full production capacity of up to 500,000 sheets of laminate per month starting from December this year. This will mean an overall increase in the Group`s total paper laminate production capacity by 25%.

"Our new factory in Shaoguan will serve as a key production base to enhance our Group`s competitiveness in laminates production in the near future," confirmed Mr Cheung Kwok Wing, Chairman of Kingboard Chemical.

The Group`s acquisition of 57% stake in the capital of Techwise Circuits Company Limited ("Techwise"), which is engaged in the manufacture of double-sided and multi-layered printed circuit boards, in January this year, has significantly contributed to the increase in the Group`s printed circuit boards business. Techwise`s first quarter result for 2002 has seen a 15% growth in volume sales as compared to the same period last year.

The Group acquired two formalin plants in Guangdong last January, increasing its local market share to almost 70%. In addition, production has commenced at the Group`s new glass yarn plants in Nansha, Guangzhou with an initial production of 1,000 tonnes per month for the Group`s internal consumption in its production of glass epoxy laminates. Glass yarn is the basic material for weaving into glass fabric which itself is the key reinforcement material for glass epoxy laminates. This new plant is scheduled to commence full production in the last quarter of 2002. The Group has already reserved 660,000 square meter of land in Nansha to plan for future expansion of the Group`s petrochemical business in the future.

"By vertically integrating the development of the Group`s chemical business, it has substantially controlled the Group`s raw materials costs and yet the source of supply. The Group`s management will continue to build on the Group`s core businesses competitiveness and make full use of the development potential of the PRC market. Kingboard Chemical had passed the challenge arguably the toughest ever in the electronics industry with high scores in most areas. We shall no doubt be able to further exploit our development potential to greater strength in time of the forthcoming economic revival," concluded Mr Cheung.

Kingboard Chemical (SEHK: 148), the leading Hong Kong and PRC laminates manufacturer and one of the largest in the world, with more than 15 plants operating in different parts of China, has successfully integrated vertically in-house the production of copper foil, glass fabric, bleached kraft paper and epoxy resin needed for its laminates business. The Group has the honour of being named one of the "World`s 200 Best Small Enterprises" by FORBES Global for two consecutive years in 2000 and 2001 and one of the "20 Best Managed Companies in Hong Kong" in an institutional investors survey conducted by Asia Money magazine in December 2000.

Financial Highlights

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Kingboard Chemical Holdings Limited