Mr Paul Cheung Kwok Wing, Chairman of Kingboard Chemical Holdings said: "The Group reached another milestone following the spin off of the laminate business under Kingboard Laminates Holdings Limited ("Kingboard Laminates") on the main board of the Stock Exchange of Hong Kong Limited on 7 December 2006. The success of the initial public offering of Kingboard Laminates enables it access to the international capital markets so as to capture additional growth opportunities as they arise. With a strong balance sheet, the Group is in a better position than it has ever been to seize growth opportunities for both PCB and chemical divisions."
Revenue (including inter-segment sales) for the laminate division recorded a 40% growth to HK$8,243.3 million. Earnings before interest and tax ("EBIT") rose even higher by 48% to HK$1,807.4 million over previous year. Volume sales were up by around 14% with the average monthly shipment reaching 7.3 million sq. meters.
With regards to PCB division, the Group saw surging demand from most key market segments due to upturn in emerging market economies as well as the continuous business migration from other parts of the world to China. As a result, all major manufacturing sites had been operating near full capacities during the year. Backed by a global customer base, revenue for PCB division was up by 25.8% to HK$6,650.0 million. Though oil and commodities price increases had brought higher material costs, EBIT had increased in tandem to HK$686.2 million as compared to previous financial year. The outstanding performance of Kingboard PCB division clearly demonstrated its unequivocal position as the largest PCB manufacturer in China and one of the top ten PCB manufacturers in the world.
The chemical division achieved revenue and EBIT growth of 25.5% to HK$4,011.4 million and 102.5% to HK$342.0 million in 2006. Benefited from increasing economies of scale and the significant cost advantages it had by being an early mover in chemical project investments, EBIT margin expanded by 3.2% to 8.5% in spite of higher feedstock costs. The newly completed projects such as the caustic soda plant expansion at Hengyang, Hunan province and the coke/ methanol plant in Hebei province had performed more profitably than previous year. The joint venture with China BlueChemical Limited in Hainan province started commercial production in December 2006 and, with its strategic location, is exporting methanol to south-east Asian countries such as Malaysia in addition to domestic sales.
Mr Cheung added: "Our remarkable operating performance has put us in an excellent position to invest in future earnings growth. Nevertheless, the Group is not complacent and will continue its relentless effort on cost management and efficiency improvements."
The Group plans to further expand monthly production capacity of glass epoxy laminates by 29% in Fogang, Guangdong province and Jiangyin, Jiangsu province by the end of 2007. For the PCB division, although the Group enjoys a significant presence in the single side to 6-layer count product segment, the management is now proactively planning to expand its core competence into the higher profit margin product segment including HDI and higher layer count PCB, and plans to expand its multi-layer PCB production capacity by about 20% in 2007.
The Group will continue to expand its chemicals business division. The methanol project in Chongqing has progressed smoothly and expects to be completed by end of 2007 which will provide an additional methanol output of 37,500 tonnes per month. The other two joint venture methanol projects in Shanxi province will add another 16,700 tonnes monthly production by first half of 2008. With the huge success of phase one of the coke/ methanol plant in Hebei province, the Group had recently commenced construction of phase two with similar production capacity as phase one and expect it to be operational in 2008. To capitalize on the lower cost structure of caustic soda plant in Hengyang, Hunan province, capacity expansion is underway with a targeted completion date by the first half of 2008. In addition, the phenol/ acetone plant in Huizhou, Guangdong province shall commence operation in year 2007. With all these chemical expansion projects coming on stream, the Group is well poised to seize growth opportunities in the chemical division which will contribute greater value to the Group.
Financial Highlights| Year ended Dec 31, | ||
| 2006 | 2005 | |
| HK$'million | HK$'million | |
| Turnover | 16,773.3 | 13,098.4 |
| Profit before tax* | 2,715.6 | 1,782.5 |
| Net profit attributable to shareholders* | 2,187.4 | 1,429.5 |
| Basic Earnings per share* | HK275.6 cents | HK190.7 cents |
| Full-year dividend per share | HK120.0 cents | HK40.0 cents |
| - Interim dividend per share | HK20.0 cents | HK12.0 cents |
| - Proposed final dividend per share | HK38.0 cents | HK28.0 cents |
| - Proposed special dividend per share | HK62.0 cents | Nil |
* excluding the gain from the spin off of laminate business HK$4.8 billion and discount on acquisition of HK$49.7 million
About Kingboard Chemical
Kingboard Chemical Holdings Limited (HKEx: 148) is a global leader in the manufacturing of laminate and printed circuit board as well as a major chemical supplier in China. The Group has more than 50 plants in China. Kingboard Group of Companies includes Kingboard Laminates Holdings Limited (HKEx: 1888), Kingboard Copper Foil Holdings Limited (listed on the SGX) and Elec & Eltek International Company Limited (listed on the SGX).