HG Metal's Turnover Jumps On Higher Contribution From Manufacturing Operations - ? PBT Increased 20.9% On Better Profit Margin - ? Announces First And Final Net Dividend Of 5% Per Share

Turnover for FY2002 rose 10.4% to $90.3 million, from $81.8 million recorded in the previous year. PBT for FY2002 jumped 20.9% to $3.7 million, compared to $3.1 million in FY2001.

HG Metal's manufacturing and trading activities showed improved revenues and profits during FY2002. Turnover from Trading increased at a modest 9.6% while manufacturing rose 18.4% from $7.1 million in FY2001 to $8.4 million in FY2002. Gross profit improved due to higher revenue contribution from manufacturing activities and higher steel price. For FY2002, manufacturing contributed 42.6% of total PBT up from 25.9% the previous year. The PBT margin improved from 3.8% for FY2001 to 4.1% for FY2002.

Earnings per share and net asset value per share was 4.31 cents and 24.9 cents in FY2002 respectively.

Manufacturing Operations Drive Growth
HG Metal's manufacturing subsidiary, Oriental Metals, was the star performer, with its revenue rising 18.4% due to good demand for its Mild Steel Lip Channels. Strong demand required the addition of extra production shifts to increase production capacity.

Mr Tan Chan Too, Chairman of HG Metal, said, "We are pleased with our results given the difficult economic climate, HG Metal continues to enjoy stability in its core business of trading as well as strong growth in the manufacturing of steel products. Over the next few months, we expect to continue strengthening our regional position and competitiveness in the manufacturing of steel products."

Mr Lee Leng Loke, Executive Director, stated, "Our manufacturing subsidiary, Oriental Metals, has already embarked on setting up the new production line for the manufacturing of steel pipes. This new production line is financed from our IPO proceeds, which we raised last year. The machineries will be installed by the first half of the current financial year. We hope to have the line fully operational by the end of FY2003."


Strong Marine Demand Compensates for Weak Construction Sector
HG Metal, with more than 300 customers representing diverse industry sectors, was able to achieve strong growth in financial year 2002 despite a persistent slump in the construction sector. Strong demand in the marine sector and growing demand for customized lip channels and flat bars drove this growth with even greater profitability, as higher margins are achieved from custom manufactured products compared to trading activities. The buoyant marine industry contributed to the improvement with Ship plates and steel plates accounting for 46.0% of HG Metal's turnover, compared to 37.8% in FY2001.

With the new pipe production facility expected to be operational by end of FY2003, it will further diversify HG Metal's customer base and continue to enhance profitability and return on assets.


Outlook
Although the economic outlook for 2003 is uncertain due to the possibility of war and difficult economic conditions in Singapore and the region, HG Metal's management remained cautiously optimistic of HG Metal's prospects for FY2003.

Mr Wee Piew, CEO of HG Metal, said, "Our new manufacturing line for steel pipes, once fully operational, is expected to boost our revenue and profit positively. The expansion of our manufacturing capabilities into steel pipes and tubes was selected based on the fact that the domestic pipe market is estimated to be five times larger than the lip channel market. Because the existing markets for pipes and tubes are supplied by importing products from overseas, we believe our domestic manufacturing alternative will offer several competitive advantages. Our overall return on invested capital should also improve as we utilize the same raw materials and upstream processing equipment for the new pipe and tube line."

Mr Wee added, "With our excellent set of results, we are proposing a first and final net dividend of 5 percent per share to reward our shareholders for the financial year ended 31 October 2002."

About HG Metal

HG Metal is a premiere steel stockist and manufacturer of steel products. With more than 30 years in the steel business, HG Metal offers more than 2,000 different types of steel products of various dimensions for a wide variety of industrial and engineering applications. With their "one-stop supermarket" strategy, HG Metal is able to satisfy the needs of their customers with one visit to their extensive stockyard and manufacturing facility.

HG Metal has also differentiated itself from its peers in its strategic move to custom manufacture steel products. HG Metal currently manufactures customized flat steel bars used in a wide variety of engineering processes and mild steel lip channels commonly used as roofing support in commercial and industrial buildings. The Directors believe that HG Metal is the only steel stockist in Singapore with such manufacturing capability. This give HG Metal a distinct competitive advantage against their competitors, as they can fulfill their customers' requirements more quickly and completely, especially for specifications that are not readily available in the market. HG Metal intends to expand its product mix to include the manufacturing of steel pipes next year. With its listed status and enlarged custom manufacturing capabilities, HG Metal will advance further up the steel value chain.

You may also visit the Company's website at www.hgmetal.com.