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SP Chemicals registers 2Q FY2008 net profit of RMB152.7 million

Financial Highlights 3 months ended 30 June 6 months ended 30 June 2008 2007 % Change 2008 2007 % Change Revenue (RMB’m) 1,048.7 464.3 +126 1,734.8 889.9 +95 Gross Profit (RMB’m) 229.4 111.3 +106 349.2 223.9 +56 Operating Profit (RMB’m) 192.5 96.5 +100 285.0 191.2 +49 Net Profit (RMB’m) 152.7 89.9 +70 220.7 168.7 +31 EPS (RMB cents) 27.8 16.4 +70 40.2 30.8 +31 (RMB 1 = S$0.200 as at 18 July 2008)

SINGAPORE – 23 July 2008 – Reaping the benefits of its Production Phase 5 expansion (“PP5”) which started operations in March 2008, Main-Board listed SP Chemicals Ltd. (“SP Chemicals” or the “Group”), the fourth largest ion-membrane chlor-alkali producer and the fifth largest aniline producer in the PRC as at 31 March 2007, reported a 70% increase in its net profit for the three months ended 30 June 2008 (“2Q FY008”), to RMB152.7 million. This was against a 126% hike in 2Q FY2008 revenue to RMB1.0 billion, from RMB464.3 million in the corresponding period last year.

Mr Chan Hian Siang, Chief Executive Officer of SP Chemicals, explained, “The Group registered a new sales record due to a combination of factors – namely, increased output from our PP5 initiative, additional revenue stream from our new product, vinyl chloride monomer,

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as well as favourable product prices. International sales also generated about RMB205.4 million or 20% of our 2Q FY2008 turnover.”

To date, SP Chemicals’ annual production capacities for caustic soda, , aniline and vinyl chloride monomer (“VCM”) have grown to 450,000 tonnes, 396,000 tonnes, 135,000 tonnes, and 200,000 tonnes, respectively. In 2Q FY2008, its production utilization rate for caustic soda and aniline reached 110% and 101%, respectively.

SP Chemicals ended the first half of its financial year with a turnover of RMB1.7 billion, a 95% increase from last year. Net profit grew 31% year-on-year to RMB220.7 million.

For the six months ended 30 June 2008, the Group’s operating EBITDA was RMB363.7 million, compared to RMB262.5 million in 1H FY2007.

Inventory turnover improved to 42 days as at 30 June 2008, compared to 59 days as at 30 June 2007. Trade receivables turnover also improved from 16 days as at 30 June 2007, to 10 days as at 30 June 2008.

Based on the Group’s post-bonus issue share capital of 548,527,937 ordinary shares, its earnings per share for 2Q FY2008 was 27.8 RMB cents, up from 16.4 RMB cents a year ago. Its net asset value per share increased from RMB2.08 as at 31 December 2007, to RMB2.44 as at 30 June 2008.

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2Q FY2008 Business Review RMB million 2Q FY2008 2Q FY2007 % Change Aniline - Revenue 363.6 214.9 +69 - Gross Profit 53.6 6.9 +677 Caustic soda - Revenue 230.0 166.4 +38 - Gross Profit 128.0 89.9 +42 Chlorine - Revenue 126.3 70.4 +79 - Gross Profit 24.7 14.6 +69 VCM - Revenue 309.2 N.A. N/M - Gross Profit 22.6 N.A. N/M Others - Revenue 19.6 12.6 +56 - Gross Profit 0.5 -0.1 N/M

N/M: Not meaningful Note: Commercial production of VCM commenced at the end of FY2007.

All of the Group’s core products – aniline, caustic soda, chlorine and VCM – registered positive revenue and gross profit growth, buoyed by economies of scale generated from PP5 and higher selling prices.

In the quarter under review, the average selling prices for aniline, caustic soda and chlorine, grew by 19%, 6% and 12%, respectively.

Gross profit for aniline improved because the increase in its average selling price more than offset the increase in the price of its main raw material, benzene.

Looking Ahead On the outlook going forward, Mr Chan cautioned of challenging times ahead.

“While the Group enjoyed favourable product prices in 2Q FY2008, we were also challenged by the continued rise in the prices of our feedstock and coal used in our Co-generation plant. Coal prices have gone up by as much as 52%, since June 2007. This resulted in an increase in the costs of running our Co-generation plant. In fact, about 80% of the power plants in the PRC are loss-making because the PRC government restricted the increase in prices of electricity. Coal prices are likely to increase further in the second half of the year,” commented Mr Chan.

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“In this current situation, whenever it is cheaper for us to buy electricity from the local grid than produce it internally, then we will do so,” he elaborated.

SP Chemicals also faces the challenge of managing the increasing prices of feedstock. Mr Chan shared that the average prices of nitric acids in June 2008 was RMB3,233 per tonne, an increase of almost 150% since the beginning of the year. For SP Chemicals, this price increase resulted in cost increases of approximately RMB23 million in 2Q FY2008, as compared to 1Q FY2008.

In addition, the Group’s production output in 3Q FY2008 will be affected by the shut down of operations for its annual repairs and maintenance which will be scheduled in August 2008.

Despite the challenges, the Directors are confident that the Group will remain profitable for the full year of FY2008, barring unforeseen circumstances.

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About SP Chemicals SP Chemicals, a Singapore-based company listed on the Main-Board of SGX-ST on 6 August 2003, is the fourth largest ion-membrane chlor-alkali producer in the PRC, and the fifth largest aniline producer in the PRC as at 31 March 2007. Backed by a 15-year track record in the PRC, SP Chemicals manufactures and sells chlor-alkali products and related downstream products to PRC- based and export customers.

SP Chemicals’ customer base in the PRC spans the Jiangsu, Zhejiang and Shandong provinces, as well as Shanghai. In 2004, the Company also started exporting its products to the US, Japan, Korea and Taiwan. SP Chemicals’ customers include established multinational corporations and state- owned enterprises such as Basic Chemical Solutions, L.L.C., BASF, The Dow Chemical Company, Tomen Corporation Ltd, Flexsys N.V., Akzo Nobel Chemicals MCA (Taixing) Co, Ltd (part of the Dutch Fortune 500 company Akzo Nobel N.V.), and Yantai Wanhua Polyurethanes Co., Ltd, the largest domestic MDI producer in the PRC.

The Group’s Taixing production facilities is certified by Lloyd’s Register Quality Assurance to ISO 9001:2000 and ISO 14001:1996, the internationally recognized standard for environmental management systems.

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In a strategic thrust to expand its chemical raw materials business, SP Chemicals had, in August 2004, unveiled its Medium-Term Strategic Business Plan (“MTSBP”). The core of the plan was a commitment to achieve further growth and profitability pursued through an estimated US$216 million investment in a series of initiatives, which included the creation of new capabilities for the production of Vinyl Chloride Monomer (“VCM”), doubling of its chlor-alkali and aniline production capacities, and the development of its Co-generation plant.

Since 3Q 2006, the Company has doubled its Chlor-alkali and aniline production capacities in its Production Phase Four Expansion Plans (“PP4”). Its Co-generation plant has also been operating since May 2006, and commercial operation of the VCM plant commenced in 4Q 2007.

With the successful implementation of its MTSBP, the Group is embarking on Phase 2 of its growth plans (“MTSBP II”). Initiatives under MTSBP II include: (i) Production Phase Five Expansion Plans (“PP5”) to expand its annual production capacities for caustic soda, chlorine, and aniline to 450,000 tonnes (from 300,000 tonnes), 396,000 tonnes (from 264,000 tonnes), and 135,000 tonnes (from 90,000 tonnes), respectively. PP5 started commercial operation in March 2008. (ii) Production of 320,000 tonnes per annum of styrene monomer, an intermediate raw chemical used in making polystyrene , protective coatings, polyesters and resins. Construction of its new styrene monomer production facilities is expected to commence in 3Q FY2008, and completed by 4Q FY2009. Trial production is targeted to take place by 1Q FY2010. (iii) Embarking on a feasibility study to assess the viability of investing in the construction of a complex and an cracker in Hoa Tam, Phu Yen Province in Vietnam. Part of the contemplated project is to produce 800,000 tonnes of ethylene per annum by 2014.

SP Chemicals has won a number of accolades over the years, such as: • October 2005 – Most Transparent Company Award ( Category) by Securities Investors Association (Singapore) Investors’ Choice Awards 2005 • September 2006 – “2003-2005 PRC Top 100 Overseas Chinese Enterprise Award” (“2003 – 2005年度全国百家明星侨资企业 ”), presented by the Economy and Technology Department of the State Council’s Office of Overseas Chinese Affairs Office, for its accomplishments and contributions to China’s economic and social growth. The Group was ranked 19th out of the top 100 overseas Chinese enterprises. • May 2007 – Best Investor Relations Award / Gold (for companies with market capitalisation of less than S$500 million as at 30 June 2006), as part of the Singapore Corporate Awards 2007, organised by The Business Times, in collaboration with UBS and supported by the Singapore Exchange.