Investor Relations:

MegaChem Limited

Management Online Q&A With Investors

Dear Investors & Stakeholders

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

We hope you have a better understanding of our business and financial performance for the first half of financial year 2024 ("1H 24") through this online exchange.

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

Best Regards,
The Management Team
MegaChem Limited

Dear Tan B.C., you wrote:

Condensed Interim Financial Statements (Half Year Ended 30Jun'24);

Note.11 Property, Plant and equipment,...Capital commitment of the Group as at 30Jun'24 amounted to S$17,075,626

a) is this for rebuilding the fire site?

This mainly includes the cost of rebuilding the warehouse. We have stated on page 28 of our 1H 24 results announcement that the contract value for the rebuilding of the warehouse is approximately S$16.2 million (excluding professional fees, equipment and fixtures).

b) from the amount, how much is from Insurance Claim?

Based on our current budgeting, the funding for the rebuilding of the warehouse is likely to come from a mix (i) bank loan amounting to S$10 million (ii) insurance proceeds of about S$4 million and the (iii) balance from internal funds.

c) from the income, how the Company be able to support repayment, and taking care of the shareholders dividend?

With a bigger storage capacity, the new warehouse will lead to lower reliance on third party warehouse, thereby leading to lower warehousing cost. The savings from this warehousing cost coupled with positive operating cashflow will support the repayment of the bank loan.

Despite the capital commitment for rebuilding the warehouse, we have decided to pay an interim dividend of 0.5 Singapore cents per share for the 1H 24. While we aim to continue to enhance our shareholders' value, future dividend payments will have to take into consideration of financial factors such as future financial commitments, cashflow and profitability.

Note.4 Other Income,...Rental income S$7,181/-

a) what is this Rental income?

This pertains to rental income from an investment property in Malaysia.

Note.15 Trad and other receivables,...Short term loads to subsidiaries S$3,170,736

a) how this amount come about?

Megachem Limited, the parent company, provides working capital funding to our subsidiaries through trade credits and loans to our subsidiaries.

b) how is this difference to ˂˂Loan term loans to subsidiaries˃˃ & ˂˂subsidiaries˃˃?

The funding to our subsidiaries is for both short and long-term use.

Note.6 Profit before income tax...Waste disposal charge (fire-related) S$2,760,000/-

a) let me again REMIND the Management, the Company Fire Insurance Policy is under ALL RISK Coverage, if this is part of the Fire Debris, then it must be covered.

While the insurer has stated that demolition costs is not covered, we in prudence are seeking clarification advice.

2) Since Y'2011, the Sales break the record of S$106m., following the next 12 years the Sales stay within the S$150m., is this the sign of Marketing Model has come to obsolete, what is the plan to Break the Next High of S$150m.?

Our business has grown since the end of the US crisis as is evident in the increase of our sales from S$70.6 million in FY2009 to S$143.7 million in FY2022. This is a testament to our robust and resilient business model. We believe this proven and tested business model coupled with our extensive footprint in Asia will enable us to elevate our business further.

3) C.N. Chemicals Sdn Bhd

a) for the warehouse building, what is the total budgeted amount, and what is the total VO (Variation Order) amount paid?

This online Q&A is specifically set up for shareholders and investors to seek clarifications on our results announcement for 1H 24. We therefore apologize for not being able to answer questions that are not related to our results for the 1H 24 and seek your kind understanding.

b) what is the Dividend/year Paid to MGS in the last 5 years (Y'19-23)?

4) what is the M.D. Transport Allowance Change each year, in the last 5 years (Y'19-23)

5) Non Reply on Investor eMail;-

5.a) eMail dd.06Aug'24,
to: "MGS - Kwok Hwee Peng (Group Finance Manager)" hpkwok@sg.megachem.com,
"MGS - Francis Yau (Chief Fi nancial Officer)" fsyau@sg.megachem.com,
megachem@citigatedewerogerson.com,
"MGS - Woo Tze Yung (HR Manager)" tywoo@sg.megachem.com
date: Aug 6, 2024, 11:36PM
subject: Fwd: MegaChem Limited - Announcement

5.b) eMail dd.28May'24,
Date: Tue, May 28, 2024 at 2:51PM
Subject: Re: MegaChem Limited - Announcement
To: auditcom@sg.megachem.com
Cc: megachem@citigatedewerogerson.com

For the information of our shareholders, the Company received above-mentioned emails from Mr Tan separately and had responded to him on 23 August 2024.

The Company engages its stakeholders through various channels to ensure that the business interests of the Group are balanced against the needs and interests of its stakeholders, including 1) via online Q&A session after each results announcement which is open to all shareholders and potential investors to raise questions relating to the results announcement; 2) at our Annual General Meetings ("AGM"), shareholders can post their questions pertaining to matters within the agenda of the AGM.

We seek your kind understanding and look forward to your continued support as a shareholder of the company.

BR/JT.

Dear Puar Hai Kuan, you wrote:

1) Distribution costs surged sharply by almost $5m to $12.9m. If not for the insurance pay out of $5m the company would have been in net loss again. Can you elaborate on this? is this increase due to the loss of the warehouse (eg thereby leading to higher transportation and third party costs) and is the elevated level going to be permanent (or will it reduce when the new warehouse is ready?) Is the company doing anything to address this?

May we refer you to page 19 of our results announcement where we produced a table which shows the impact of the fire on our 1H 2024 and 2H 2023 profit and loss statement. In 1H 24 there was an insurance claims income of S$4.9 million as well as expenses relating the fire incident amounting to about S$4.2 million. The net effect is a positive S$0.7 million. If we exclude these fire-related impact, the company is still profitable in 1H 24 with a net profit after tax of S$1.7 million.

2) under key financial highlights the insurance claims income is stated as 8.059m to date. on 7 May 24 dated announcement to SGX, the company stated that total payments then was $7.91. Is there further insurance premiums pending and can you give an indication or range of the amounts involved, eg less than 1m, 2-3m, greater than 5m etc

The difference between the S$8.0 million and the S$7.9 million is an insurance payment of about S$0.1 million during 2H 23 for delivery truck destroyed during the fire.

3) It is mentioned that the new warehouse will cost approximately $16.2m and the funding will come from various sources including insurance, internal funding and borrowings. Does the funding of the building come from part of the $8.059m insurance prem received or will it come in part from a separate expected claim? With regards to external funding for the warehouse, is it fair to assume the loans and terms have already been agreed upon?

4) would it be possible for the company to share the impact the fire has had on your customer base and the manner in which business may have changed in the way it is conducted in past year and the way it may change further in the following 1-2 years before the new warehouse is completed?

The fire incident happened in July 2023. Our sales revenue in 2H 23 was higher than 1H 23 which demonstrated our ability to minimise disruption to our business and the more importantly our customers' continued confidence in us.

While we await the completion of the new warehouse, there is an increase in warehousing expenses since we have to rely on third party warehouses to store our goods. The new warehouse will have larger storage capacity compared to before which will lead to lower warehousing cost as we reduce our reliance on third party warehouses.

Dear Simon Goh, you wrote:

If the Johor-Singapore Special Economic Zone becomes reality, are you keen to invest?

If the Johor-Singapore Special Economic Zone becomes a reality, we will evaluate the advantages and the value it may add to our overall business strategy.

Dear Brandon Lim, you wrote:

How will the substantial increase in parental leave affect a small medium enterprise like yours?

As a company which puts our human capital at the core of our strategy, we believe our employees' well-being is critical in the sustainability of our business. The parental leave is in line with this belief.

Dear Investors & Stakeholders,

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.

Best Regards,
The Management Team
MegaChem Limited