Global Bio-Chem reports interim net profit increase of 162 percent

September 17, 2008

Global Bio-chem Technology Group Company Limited and its subsidiaries reported a 162 percent upsurge in net profit to HK$602 million (US$77.34 million ) for the six months ended 30 June 2008, due to favourable product selling prices and strong performance in amino acids and polyol chemical products.

Basic earnings per share for the period were HK26.0 cents (2007 same period: HK9.9 cents per share).

The Group''s 6-month consolidated revenue also rose by 78 percent, when compared with that of the same period last year, to HK$4.9 billion (US$629.5 million).

The board of directors of Global Bio-Chemresolved to pay an interim dividend of HK1.5 cent per share for the six months ended 30 June 2008 (2007 same period: HK1.0 cent per share).

The Group''s revenue surge was mainly attributable to strong product prices and enlarged sales volume of upstream products, amino acids and polyol chemical products.

During the period, the operating costs, especially transportation and utility charges, increased substantially due to high petroleum price and natural disasters in China.

The Group managed to mitigate the cost impact through effective selling price adjustment and capacity efficiency enhancement.

During the period, the Group maintained its export sales at approximately 23 percent (2007 same period: 26 per cent) of the Group''s revenue.

During the first half of 2008, the upstream and downstream products accounted for approximately 31 percent and 69 percent of the Group''s total revenue respectively.

With the full utilisation of corn refining capacity, the revenue and gross profit of upstream products to external parties increased by approximately 99 percent and 180 percent to HK$1.5 billion and HK$288 million, respectively, as compared to those of the same period last year.

The gross profit margin of upstream products for the period under review stood at approximately 19 per cent, up by five percentage points over the previous year''s same period.

Revenue and gross profit of the Group''s downstream products reached HK$3.3 billion and HK$977 million respectively, rising 69 percent and 96 percent as compared with the same period last year.

The increases in revenue and gross profit of downstream products were mainly attributable to the launch of polyol chemical products, the enlarged sales volume of amino acids and strong lysine prices.

The aggregate turnover of amino acids - the Group''s major product - during the period amounted to HK$1.9 billion (US$244.1 million ), representing 40 percent of the Group''s total turnover.

The remarkable increase of approximately 46 percent was mainly derived from the increased output volume and better market condition of lysineproducts.

In light of the continuous strong demand for lysine, the Group is currently utilising all of its fermentation facilities for the production of lysine products. This measure will give the Group a total annual capacity of approximately 450,000 tonnes of lysine.