Resumes Growth in First Half of 2002/3      Posted on 28 Nov 02

Hong Kong, November 28, 2002 - One of the world`s largest laminates manufacturer, Kingboard Chemical Holdings Limited (SEHK: 148) today announces the unaudited interim results for the six months ended 30 September 2002. During the first six months, the Group`s revenue increased by 41% to HK$1.7 billion and its net profit was up 9% to HK$201 million with return on equity exceeding 17%. In light of the Group`s increased profitability and solid balance sheet, the board of directors decided to distribute an interim dividend of HK4.0 cents, up 14% compared with the first half of last year.

In the last six months, Kingboard continued to increase its market share of laminates. Both paper and glass epoxy laminate volume sales were up more than 25% to the average monthly shipment of 3.5 million square meters, making the Group one of the world`s largest volume laminate producers. Plant utilization rate averaged around 90%. Although laminates prices more or less stabilized in the period, they were about 20% lower than a year ago. Therefore, laminate sales in dollar terms increased by only 9%. EBIT (earnings before interest and tax) return on sales maintained at 15%, a level similar to the second half of the last financial year.

The results of the printed circuited boards (PCB) division continued to be satisfactory with a 20% rise in volume sales. Although PCB prices were down by around 15%, EBIT return on sales was held at 14% owing to better plant utilization rate exceeding 90% and an improved product mix.

In September 2002, the Group`s 59% owned subsidiary Kingboard Copper Foil Holdings Ltd (KBCF) entered into a memorandum of understanding with Yinde City People`s Government to acquire Bai Shi Yao Hydro-Power Plant for RMB700 million. RMB200 million will be financed by the internal resources of KBCF group, and the rest of the consideration by a long term bank loan without recourse to both KBCF and the Group. This transaction is expected to finalize in the next few months.

"The majority of the power plant`s output will be consumed internally by our production facilities after 3-5 years. Given the minimal financial risk on shareholders and the good track record of the plant`s operations in the last few years, we believe the acquisition will provide a reliable source of electricity and attractive return to KBCF," said Mr Paul Cheung Kwok-Wing, Chairman, Kingboard Chemical.

Kingboard`s major near-term expansion includes a 25% increase in paper laminate capacity by the end of December 2002, the establishment of a second new paper mill production line, the development of phase two of glass yarn plant, a 50% increase in epoxy resin capacity, a 40% increase in formalin capacity and a 20% increase in hydrogen peroxide capacity. The construction of a 50,000-tonne petrochemcial terminal is scheduled to complete next month, significantly reducing transportation costs in due course.

Mr Cheung said, "Our growth was attributable to our focus on strengthening operational efficiency and capacity expansion via both organic development and acquisitions. Going forward, we will continue our commitment to prudently investing in production capability to address growing demand."

"Although the visibility of order books remains limited and excess capacity in the electronics manufacturing industry still hangs around, the market environment has been more rational than last year. As one of the key participants in the industry and through our evolving competitive edges, we will be able to benefit from China`s transformation into a world-class manufacturing hub to keep our successful growth track record going." Mr Cheung concluded.

Kingboard Chemical is one of the world`s largest manufacturers of laminates, operating more than 20 plants in China, vertically integrated with in-house production facilities for copper foil, paper, glass yarn, glass fabric, formalin, epoxy resin and hydrogen peroxide. The Group has recently been named for the third consecutive year by Forbes Global as "The World`s Best 200 Small Companies".

Financial Highlights

Issued by :
Kingboard Chemical Holdings Limited