Mr Paul Cheung Kwok Wing, the Chairman of Kingboard Chemical Holdings Ltd., said: "Against the mixed backdrop of better economic conditions and rising oil prices, the Group reported double-digit increases in its revenue in all geographic regions and operating segments. The smooth business integration with Elec & Eltek Group enables the Group to strengthen its leadership position in the electronic components businesses. Year 2005 has been a milestone for the Group. Following the acquisition of a controlling stake in Elec & Eltek Group, the Group has gained a significant foothold in various business sectors, namely, Printed Circuit Board ("PCB"), Liquid Crystal Display ("LCD"), and Magnetic Products. These, together with our existing core businesses in laminates and chemicals, allow an appropriate balance of our operations across a good spectrum of industries and geographies, and bring in new revenue stream and significant synergies"

The laminates business recorded 30% growth in revenue to HK$2,619.7 million, and 9% increase in EBIT to HK$571.4 million in the reporting period. Volume sales, partly constrained by the relocation of paper laminate production facilities, were up by around 12%. EBIT margin contracted slightly to 21.8% as a result of the new capacity of glass yarn worldwide coming on stream which impacted the profitability of the glass epoxy laminate business. However, the favourable paper laminate market conditions coupled with the Group's leading position enabled the paper laminate business to sustain healthy returns.

Volume demands for both paper and glass epoxy laminates continue rising in the third quarter. Although the performance of glass epoxy laminate sector may be hindered by an increase in the supply of glass yarn in the market, the paper laminate sector is benefiting from the robust market conditions owing to the industry's limited capacity growth especially outside China. The Group is in the process of adding another new production line for paper laminates in Kunshan, Jiangsu province to meet the upsurge in demand.

The Group's PCB business experienced growth in all major market sectors with all manufacturing facilities operating close to full capacity since March 2005 and book-to-bill ratio stayed above one since July 2005. The Group achieved a 258% increase in revenue in the reporting period to HK$2,465.4 million after incorporating the full six months' results of Elec & Eltek. Excluding Elec & Eltek, the PCB business registered a 15% revenue growth. Elec & Eltek's business contribution has helped lift our overall layer count mix to include more higher value-added and higher density multi-layer product categories. We are installing production lines at various plant locations to increase additional monthly capacity of 0.8 million square feet by the end of 2005. Elec & Eltek will invest a new plant in Kaiping, Guangdong province with an annual production capacity of 3.0 million square feet to supply high density interconnect (HDI) PCBs and is expected to commence production in March 2006. At present we are leveraging the size of the enlarged operation to actively negotiate with suppliers of both raw materials and equipment for better payment terms and more competitive pricing.

The Group's chemicals division achieved satisfactory performance and its revenue , excluding contribution from Coke, for the reporting period rose 51% to HK$1,084.6 million with EBIT margin lower by around 0.8% to 7.5%. The lower EBIT margin was primarily due to more volatile feedstock costs. Including the contribution from Coke, revenue for the chemicals division surged by 93% to HK$1,387.4 million and EBIT margin reduced to around 6.6%. The coke-methanol plant was still at its pilot run stage during the reporting period but is expected to excel once production of methanol is fully ramped up in the second half of year 2005.

The expansion of caustic soda plant in Hengyang of Hunan province has been slightly delayed but pilot production had already commenced in August 2005 to cater for the growing market demand in the southern China region. To satisfy the growing internal demand, the Group plans to increase the monthly capacity of epoxy resin from 3,000 tonnes to 5,000 tonnes by the end of 2005.

Mr Cheung added: "Economic indicators released so far show that the global economy is on track to deliver another year of sustained growth with modest inflation. In light of this, the Group has confidence that all its business segments would continue to perform satisfactorily in the second half of this financial year." Financial Highlights Six months ended 30 June 2005 2004 HK$'000 HK$'000 Turnover 5,954,028 3,059,573 Earnings before interest & tax 846,005 618,297 Net profit attributable to shareholders 688,299 545,505 Basic earnings per share HK95.6 cents HK84.1 cents Interim dividend per share HK12.0 cents HK10.0 cents

About Kingboard Chemical
Kingboard Chemical Holdings Limited (HKEx: 148) is one of the world's largest manufacturers of laminates and printed circuit boards. Since the establishment of its first laminates plant in 1988, the Group has been growing in scale and expanding through vertical integration to become a widely recognized industry leader in laminates and printed circuit boards, with upstream capabilities in copper foil, bleached kraft paper, glass yarn, glass fabric, formalin, hydrogen peroxide, epoxy resin and TBBA. The Group's core manufacturing capability comprises an integrated network of more than 40 plants in China. 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 five consecutive years by Forbes Global as one of "The World's Best Small Companies".

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