Hong Kong, March 28, 2006 - Kingboard Chemical Holdings Limited (HKEx: 148) today announced another year of record-breaking turnover and profits in financial year 2005, for the third year in a row. The Group's revenue and earnings before interest & tax ("EBIT") rose 85% and 53% to HK$13.1 billion and HK$2,063.2 million respectively. Net profit, despite adversely impacted by higher interest expenses, effective tax rate, and profit sharings with minority interests, increased by 30% to reach HK$1,435.8 million in the financial year just ended.
The Directors have resolved to recommend a final dividend of HK28 cents per share, which together with the interim dividend of HK12 cents, represents a year-on-year 33% increase in full-year dividend to HK40 cents.
Mr Paul Cheung Kwok Wing, Chairman of Kingboard Chemical Holdings Limited said: "The integration of Elec & Eltek Group into the Group following our acquisition in last financial year end went on smoothly and effectively. Since April 2005, we have started supplying critical raw materials such as prepreg, copper foil, copper clad laminates and other essential materials to Elec & Eltek Group. In addition, the synergy brought by the alliance of all our printed circuit board ("PCB") subsidiaries including Elec & Eltek Group has enabled us to enhance our technical capability and flexibility as well as to obtain better terms from suppliers."
Despite a slow start in 2005 the electronics industry was considered to perform well in most part of 2005 amidst the interest rate hikes and rising oil price. We continued to broaden our market share in both paper and glass epoxy laminate businesses. The laminate division recorded 41% growth in revenue to HK$5,884.8 million, and 16% increase in EBIT to HK$1,217.3 million in this financial year. Volume sales were up by around 25% with monthly shipment hitting 6.4 million sq. meters, indicating our continued momentum to gain market share. EBIT margin fell slightly to 20.7%. The new glass yarn capacities coming on stream worldwide during the first half of 2005 had been gradually absorbed by the emerging market demand, allowing more balanced supply and demand of glass yarn and hence reversing the down-trend of glass epoxy laminate prices. Paper laminate market conditions were favorable throughout the year. Our unrivaled and leading position in the paper laminate industry continued to enable the Group to enjoy a satisfactory return.
For our PCB business, bolstered in part by the successful integration with Elec & Eltek Group, the Group achieved a 188% increase in revenue in this financial year to HK$5,284.2 million and EBIT margin improved to 10.7%. Excluding contribution from Elec & Eltek Group, the PCB business of the Group posted a 23% solid revenue growth. The growth was broad based across all of major applications with particular strength noted in the consumer electronics. We are setting up new PCB production line at various plant locations and an additional monthly capacity of 1.4 million square feet is expected in place by the end of 2006.
Turning to chemicals division, the Group managed to absorb the escalating feedstock and energy costs without an adverse impact on profitability. The caustic soda plant in Hengyang of Hunan province completed its expansion in August 2005 and the increased output has been fully taken up by its customers in the southern China region. Revenue for the chemicals division, excluding contribution from Coke, rose to HK$2,472.3 million in 2005, 32% higher than last financial year. EBIT margin improved to 8.4% from 6.1% a year ago. Including the contribution from Coke, revenue for the chemicals division surged by 70% to HK$3,195.3 million and EBIT margin reduced to around 5.3%.
A new epoxy resin plant alongside the planned glass epoxy laminate factory will be set up in Jiangyin, Jiangsu province. The construction of the methanol plant by our joint venture with CNOOC's chemical division in Hainan province is on schedule with trial production target in the third quarter of 2006. The setting up of the methanol plant in Chongqing and the phenol & acetone plant in Huizhou, Guangdong province is underway and both plants will commence operation in 2007. In furtherance, the Group is exploring the opportunity to utilize our know-how of coke-based methanol production process to manufacture methanol in Shanxi province.
Financial Highlights| Year ended Dec 31, | ||
| 2005 | 2004 | |
| HK$'000 | HK$'000 | |
| Turnover | 13,098,354 | 7,082,390 |
| Profit before tax | 1,788,802 | 1,257,497 |
| Net profit attributable to shareholders | 1,435,809 | 1,103,845 |
| Basic Earnings per share | HK191.5 cents | HK166.9 cents |
| Full-year dividend per share | HK40.0 cents | HK30.0 cents |
| - Interim dividend per share | HK12.0 cents | HK10.0 cents |
| - Proposed final dividend per share | HK28.0 cents | HK20.0 cents |
About Kingboard Chemical
Kingboard Chemical Holdings Limited (HKEx: 148) is one of the world's largest laminates and printed circuit boards manufacturers. 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 Hong Kong Index as a constituent since May 2004, and named for six consecutive years by the Forbes as one of "The Best 200 Under a Billion Companies". It may be the last time for the Group to receive this honour as the Group's sales is now beyond the entry criteria of annual sales being less than US$1 billion.