Information Request

Online Q&A

MegaChem Limited

Management Online Q&A With Investors

Dear Investors,

Thank you very much for your questions and the opportunities to respond to them.

We hope you have a better understanding of our business through this online exchange.

Your questions are reposted in blue followed by our replies in black.

Rgds,
The Management Team
MegaChem Limited

1. Dear Jayster, you wrote:

You own shares of Meghmani. The Indian Rupees is weak. The weak currency has improved the profits of Meghmani. Do you plan to buy more Meghmani shares?

Share investment is not our core business activity. Meghmani is our supplier who invited us to subscribe for their IPO shares. The investment is a gesture of goodwill. We have no plans to invest more.

2. Dear David Tan, you wrote:

Your 1H12 results has declined due to higher operating cost in Australia. Why are you adding headcount in Australia? What are you doing there? Trading or manufacturing?

We established our subsidiary in Australia in 2H 2011. It is part of our strategy of building a global network to serve our customers. The nature of business is therefore the same, that is, the distribution of chemicals in Australia as well as export of chemicals outside of Australia. As at today there are only 2 staffs as it is still in the early stage of business development.

The decline in our net profit year-on-year is not solely due to the higher operating cost in Australia. It is attributed to the lower sales, investment in the Australia subsidiary, expansion of our manufacturing facility as well as some foreign exchange losses.

3. Dear Kelvin Ho, you wrote:

When will the new Singapore custom-blending facility be ready? Why are you depreciating the property, plant and equipment even before you start operations?

The new custom blending facility was fully operational in June this year. Hence, depreciation for the plant and equipment started in June.

4. Dear Jasmine Koh Hwee Ling, you wrote:

You pay good dividend but wouldn't it be better to use the money to expand your company to generate higher returns for shareholder? Your company seems to prefer to expand via organic growth than thru M&A. Why is this so?

The amount of dividend we pay takes into consideration many factors such as our business performance, earnings reserve, business outlook, current cash position and future cash needs. We will attempt to strike a balance between preserving cash for business growth and rewarding our shareholders.

Our business model has been tested and proven right in many of the countries in which we operate. Therefore, with regard to your question of our mode of business expansion, we take the position that it is easier and more cost effective for us to set up our own and duplicate the same business model instead of acquiring distribution companies.

5. Dear Alvin Lim, you wrote:

The SGD is very strong, has it affected your export business? How do you hedge your FX risk against the increasingly volatile FX market?

Our export business does not originate solely from Singapore. We also export products through our subsidiaries such as in UK and China. Thus the strong SGD has not affected us significantly.

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures such as in United States Dollar, Sterling Pound and Malaysian Ringgit. Whenever possible we will buy and sell in the same currencies to reduce our exposures. Any net exposures are hedged using forward/option foreign exchange contracts. The foreign exchange losses in 1H 2012 arose mainly from USD/Rupee and USD/SGD.

Dear Investors,

Thank you for all your questions and your interest in MegaChem Limited. We have come to the end of this Q&A session.

We have enjoyed the session and have learnt much from your questions. We hope that through this Q&A, you have gained better insights to our Company and our operations.

Rgds,
The Management Team
MegaChem Limited

This announcement has been prepared by the Company and the contents have been reviewed by the Company's Sponsor, SAC Capital Private Limited, for compliance with the relevant rules of the Singapore Exchange Securities Trading Limited ("Exchange").The Company's Sponsor has not independently verified the contents of this announcement.

This announcement has not been examined or approved by the Exchange and the Exchange assumes no responsibility for the contents of this announcement, including the correctness of any of the statements or opinions made or reports contained in this announcement.

The contact person for the Sponsor is Mr Bernard Lim (tel : (65) 6221 5590) at 79 Anson Road, #15-03 Singapore 079906.