09:40     KINGBOARD CHEM<00148> - Announcement (3)                            

    Full allowances had been made in the annual report                        
    of the Company for the year ended 31 December 2003.                       
    The Company considers that the aforesaid                                  
    counterclaims are immaterial as compared to the                           
    annual turnover of the Group.                                             
                                                                              
    Disclaimer                                                                
                                                                              
    Save as aforesaid and apart from intra-group                              
    liabilities and normal trade payables, the Enlarged                       
    Group did not have any loan capital issued or agreed                      
    to be issued, bank overdrafts, loan, debt securities                      
    issued and outstanding, and authorized or otherwise                       
    created but unissued and term loans or other                              
    borrowings, indebtedness in the nature of borrowings,                     
    liabilities under acceptance (other than normal trade                     
    bills) or acceptance credits, debentures, mortgages,                      
    charges, finance lease or hire purchase commitments,                      
    which are either guaranteed, unguaranteed, secured                        
    or unsecured, guarantees or other material contingent                     
    liabilities outstanding at the close of business on                       
    the Latest Practicable Date.                                              
                                                                              
    Save as aforesaid, the Directors have confirmed that                      
    there had been no material change in the indebtedness                     
    and contingent liabilities of the Enlarged Group                          
    since the Latest Practicable Date up to the date of                       
    this announcement.                                                        
                                                                              
    3.      STATEMENT OF SUFFICIENCY OF WORKING CAPITAL                       
    AVAILABLE TO THE ENLARGED GROUP PURSUANT TO APPENDIX                      
    1B(30) OF THE LISTING RULES                                               
                                                                              
    The Directors are of the opinion that, taking into                        
    account the Facilities available under the Commitment                     
    Letter and based on the internal resources of the                         
    Enlarged Group, the Enlarged Group has sufficient                         
    working capital for its present requirement for the                       
    next 12 months from the date of this announcement.                        
                                                                              
    4.      DISCUSSION AND ANALYSIS ON THE E&E GROUP'S                        
    PERFORMANCE PURSUANT TO APPENDIX 16(32) OF THE                            
    LISTING RULES                                                             
                                                                              
    Shareholders' equity of the E&E Group                                     
                                                                              
    The shareholders' equity of the E&E Group continued                       
    to increase. As at 30 June 2004, shareholders' equity                     
    was approximately HK$816.8 million (2003: HK$684.3                        
    million), an increase of approximately 19.4% over the                     
    previous financial year mainly due to profits earned                      
    during the year.                                                          
                                                                              
    The E&E Group's liquidity and financial resources                         
                                                                              
    As at 30 June 2004, approximately 56.1% (2003: 59.6%)                     
    of the E&E Group's bank borrowings were repayable                         
    within one year, whilst approximately 43.9% (2003:                        
    40.4%) were repayable between two to five years.                          
                                                                              
    Capital structure of the E&E Group                                        
                                                                              
    The E&E Group's bank borrowings were mainly                               
    denominated in Hong Kong dollars and US dollars.                          
                                                                              
    The bank borrowings of the E&E Group were unsecured                       
    and negotiated on floating interest rates.                                
                                                                              
    As at 30 June 2004, the E&E Group has arranged an                         
    average SIBOR interest rate swap contract to cover                        
    approximately 6.0% or HK$54.6 million and two fixed                       
    interest rate contracts to cover another                                  
    approximately 12.0% or HK$109.2 million of the