Back to Growth in Nine Months to December 2002      Posted on 26 Mar 03

Hong Kong, March 26, 2003 - One of the world`s largest laminates manufacturer, Kingboard Chemical Holdings Limited (SEHK: 148) today announces that for the nine months period to December 2002*, the Group had successfully brought both top and bottom lines back to growth. Recognizing the solid business foundation and sound financial position, the Group proposed a final dividend of HK6.0cents per share which together with the interim dividend of HK4.0 cents representing an annualized 16% increase in dividends.

During the period under review, the Group`s revenue reached HK$2.552 billion and pre-tax margins, excluding the non-cash items (comprising goodwill and loss on deemed disposal of partial interests in a subsidiary), were held at a respectable level of 15.6%. Return on equity, excluding the non-cash items, was annualized at 18.2% from 17.5% of the previous year.

In the laminate segment, volume sales were up by more than 25% from the corresponding nine months period last year with the average monthly shipment over 3.5 million square meters. Laminate prices stabilized, but they were on average 20% lower than a year ago. Hence EBIT (earnings before interest and tax) margin, partly helped by the increased economies of production scale and higher degree of vertical integration, dropped slightly to 17% from 19% in the last financial year. In the period under review, the Group added new production capacity of laminates, beefed up the drilling services and vertically integrated the production of glass yarn, a key material for glass epoxy laminates.

The chemicals segment had performed strongly, aided by a price recovery of formalin and the full scale production of epoxy resin which started to have a trial run only in October 2001. External sales amounted to HK$319 million for the nine months period under review (year ended March 2002 HK$265 million). EBIT margin expanded to 11% from 8% in the last financial year.

The printed circuit board segment managed to achieve 20% volume growth, offseting the impact of around 15% decline of selling prices. EBIT margin, although helped by the reduction of material costs, was dragged down to 11% from around 15% last year.

In September 2002, the Group`s 59% owned subsidiary Kingboard Copper Foil Holdings Ltd (KBCF) entered into a memorandum of understanding (MOU) with Yinde City People`s Government to acquire Bai Shi Yao Hydro-Power Plant for RMB700 million. Negotiation for the proposed acquisition is under way. The transaction will be completed after the finalization of other terms and conditions being satisfactory.

"In December 2002, a new paper laminate plant was completed, increasing the production capacity by 25%. In addition the Group is planning to set up a new glass epoxy laminate plant in the next twelve months. In the chemicals segment, we are working on new chemical products to serve our growing internal demand." said Mr Paul Cheung Kwok-Wing, Chairman, Kingboard Chemical.

"The laminate market conditions have stabilized but continued to be challenging. Nevertheless, in line with the industry`s peers, the Group has recently been able to raise the laminate`s selling prices in order to offset the increases in material costs. With the growing demand for laminates experienced in China, the Group is committed to further capacity expansion to strengthen our leading position." Mr Cheung concluded.

The Group continued to maintain a healthy balance sheet. As at December 31, 2002, net current assets and current ratio of the Group were HK$940 million (March 31, 2002: HK$688 milion) and 1.69 (March 31, 2002: 1.50). The net working capital cycle improved from 155 days to 132 days. In addition, the mix of borrowings of the Group continued to shift in favor of long-term biased funding. The balance between short term and long term bank borrowings was 31%:69% (31 March 2002 51%:49%).

Financial Highlights

* The Group has changed its year-end date from 31 March to 31 December.

About Kingboard Chemical
Kingboard Chemical Holdings Limited (SEHK: 148) 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 was named for the third consecutive year by Forbes Global as one of "The World`s 200 Best Small Enterprises" in October 2002.

Issued by :
Kingboard Chemical Holdings Limited