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 through this online exchange.

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

Best Regards,
The Management Team
MegaChem Limited

1. Dear Simon Goh, you wrote:

MegaChem received S$635K in COVID-19 government assistance in 1H 20. The interim dividend remains the same at 0.5 cents, what do you intend to do with the extra money from the government?

The interim dividend will be paid out from positive cash flow generated during the first half of the financial year 2020. We did not have to rely on the government assistance to pay the interim dividend.

A major part of the government assistance came in the form of the Job Support Scheme which is aimed at providing wage support to employers to help them retain their local employees (Singapore Citizens and Permanent Residents) during this period of economic uncertainty.

Hence, we have kept our workforce in tact during this challenging period.

2. Dear Claridge Chan, you wrote:

Has the pandemic made it difficult to source for raw materials and foreign labour?

At the earlier stage of the pandemic, several countries from which we source our products imposed lockdown measures which led to supply disruption. Nevertheless, due to our diversified supply sources, we were able, to some extent, to fulfil our customers' demand.

In terms of labour, we do not rely heavily on foreign workers. During the border closure imposed by Malaysia, many of our workers from Malaysia chose to remain in Singapore which enabled us to continue our operations with minimal disruptions.

3. Dear Tan Han Fu, you wrote:

Does your company directly sell cleaning chemicals to retail and corporate cleaning companies in Singapore? Do you have a website to buy cleaning chemicals for household use?

We sell a wide range of chemicals including chemicals for the cleaning industry. These are sold mainly to companies which produce the cleaning products and not to retailers. For household use, we do not sell the cleaning products directly to household users. Instead, our customers are the ones who buy our chemicals to produce the household cleaning products. If you require more information on our products, please refer to our website at www.megachem.com.sg.

4. Dear Edwin Tang, you wrote:

What chemicals have seen greater demand during the pandemic?

MegaChem serves a wide spectrum of industries including polymers, coatings, construction, water treatment, electronics, cleaning, metal finishing, rubber, plastics, oil and gas, food, beverage, flavours, fragrance, pharmaceuticals, nutraceutical, cosmeceutical and homecare.

The impact of COVID-19 on chemical demand has been greater for industries such as coatings, construction, metal finishing whereas chemical demand from industries such as food, beverage, flavours and electronics experienced positive growth.

On balance, the impact of COVID-19 on our Group's business has been mitigated to some extent by our diversified business model.

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