Mr. Paul Cheung Kwok Wing, Chairman, Kingboard Chemical Holdings Ltd. said: "I am very pleased to report increased profitability across all our three divisions, notably a marked advancement by the laminates. Despite some uncertainties currently prevailed in the world's both economic and political scenes, I am confident that the Group will be able to finish the year 2004 with good results."

The volume sales of laminates grew around 30% with the average monthly shipment reaching 5.1 million square meters. With the tight supply balance, laminate price was raised on average 30%. Hence, amidst increased material costs, EBIT margin (earnings before interest and tax) improved to 26% from 14% a year ago.

The broad based recovery in the electronics market, led by strong demand for mobile handsets, computers and digital products, continued its momentum into the first half of 2004. Orders for laminate were extremely robust but there was a supply shortage of glass yarn placing a constraint on the output of the glass epoxy laminate industry. The Group once again demonstrated the success of its vertical integration strategy and was able to take the full advantage of its in-house glass yarn plant.

In order to strengthen the Group's relationship with customers, it is investing in new laminate products with better quality and is on track to increase the monthly laminate capacity by over 40% from a year ago to 6.7 million square meters by the end of 2004.

The printed circuit board division also saw a significant upturn in the order book with sales up 67%. Despite the material cost increases, it had been able to hold EBIT margin at around 7-8% with the focus on cost reduction and shift to higher layer count boards.

Further expansion is underway with a target for the monthly capacity of double side and above layer count to reach around 2.7 million square feet by the year end. In July 2004 the Group increased its stake in Techwise Circuits from 57% to 90%.

The chemical division continued to strengthen its market position in formalin and hydrogen peroxide beyond Guangdong with new plants located in Shangdong and Jiangxu. The caustic soda plant in Hengyang, the Hunan province acquired last September was maintained at full utilization. In addition, the Group had been expanding the production capacity of other chemicals such as epoxy resin and tetrabromobisphenol-A to strengthen the in-house supply for the laminate division. Chemicals sales were up 44% and EBIT margin maintained at around 8%. The methanol projects are progressing at full speed while the caustic soda plant is in the process of doubling its capacity in early 2005. More importantly, the Group is committed to make all necessary investments to meet the local environmental standards.

"We view the three divisions, particularly in the context of China perspective, offering tremendous opportunities. Our Group will at this excellent moment continue to make heavy investments in facilitating future high growth," said Mr. Cheung.

The Group's financial position continued to be healthy. As at 30 June 2004, net current assets and current ratio of the Group were approximately HK$1,400 million and 1.59.

About Kingboard Chemical
Kingboard Chemical Holdings Limited (SEHK: 148) is one of the world's largest manufacturers of laminates, operating more than 30 plants in China, vertically integrated with in-house capability for the production of copper foil, bleached kraft paper, glass yarn, glass fabric, formalin, hydrogen peroxide, epoxy resin and TBBA. The Group has been added to the MSCI World Index (Pacific ex Japan) and MSCI Hong Kong Index as a constituent since May 2004, and named for four consecutive years by Forbes Global as one of "The World's Best 200 Small Companies".

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