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Nuplex Meets Challenge Of Massive Cost Increases

Nuplex Meets Challenge Of Massive Cost Increases And Lifts Dividend

Statement made by Fred Holland, Chairman, Nuplex Industries Limited

Nuplex increased its interim dividend by 0.5 cents a share to 12 cents after increasing its unaudited net surplus by 5% to $16.2 million for the six months ending December 31 2005.

The result was an “excellent one” given the circumstances, which has to be viewed against a background of “massive” global raw material cost increases of a magnitude not seen for 30 years.

These challenging increases were caused by a combination of international demand for raw materials, increased fuel and shipping costs.

The result was further impacted by the unfavourable translation of Australian and Vietnam earnings into an exceptionally strong New Zealand dollar.

Contributing to the increased surplus was a reduced interest charge of $5.6 million ($6.8 million), lower depreciation of $6.1 million ($6.8 million) and nil abnormals ($500,000 gain).

Early indications are that the second half business in New Zealand and Australia will soften in some areas, but the full year result will benefit from a contribution from the recently acquired global coatings resin business of Akzo Nobel.

We anticipate a full year net surplus of between $32 and $35 million.

Revenue was up 5% at $344 million with more than 71% of that being earned by Australian operations.

Asian based revenue increased by 77% to $17.3 million.

Demand for resins and specialty products, which are the mainstay of the company’s operations and contribute 90% of sales and 82% of earnings before interest, tax, depreciation and amortization (EBITDA) were much in line with last year.

A pleasing feature of the six month result was the improved contribution from construction products and environmental services, and their contribution to EBITDA improved by 52% to $6.7 million.

The interim dividend will be paid on April 1 2005 and will carry 100% imputation and franking credits.

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