The company declared an interim dividend of 12 HK cents per share - 50 percent higher than a year earlier. It said its dividend payout ratio for its 40th anniversary in 2011 will be higher than the current average of 40-60 percent.

Turnover fell 13 percent to HK$2.7 billion. Chairman Tony Ip Chi-shing attributed the drop to a "general decline in unit selling prices" although sales volume actually grew 12 percent.

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Gross profit margin rose 9 percent to 25 percent in the first half.

Chief executive Kenny Wong Kam- yim said its 120,000-tonne acetate solvents production facility in Taixing will be completed by the end of the year, taking total capacity to 430,000 tonnes and making the company the world's largest acetate solvents producer.

The operating profit of two core businesses - solvents and coatings - rose by 6 percent and 129 percent respectively, because of rising sales in the mainland.

But lubricants recorded an operating loss of HK$522,000, compared with a profit of HK$7.5 million a year ago.

However, Ip said the company has no plans to sell the business and would keep it as a small-profit contributor.

Director and chief financial officer George Ng Siu-ping said Yip's plans capital expenditure of HK$160 million for 2010-2011 to expand its sales market in the mainland.

He said the company has cash on hand of HK$155 million as of September 30, down from HK$369 million at the end of March.