Dear Shareholders,

FY2008 started positively for Sunvic Chemical Holdings Limited ("The Group", "The Company" or "Sunvic Chemical"). By the first half of the year, the Group achieved net profit of RMB158.6 million, which represented a fourfold increase compared to the corresponding period the year before. The Group's financial performance was subsequently impacted by events such as the Beijing Olympics and developments in the market including a fall in crude oil prices and raw materials prices as well as the US financial meltdown which impacted economies worldwide.

The Group ended FY2008 with total revenue of RMB2.5 billion which represented an increase of 38.5% compared to RMB1.8 billion in FY2007. Total gross profit totaled RMB316.9 million - a jump of 52.5% compared to RMB207.8 million in FY2007. Net profit for the Group was RMB120.0 million compared to RMB90.4 million in FY2007. The Group generated positive operating cash flow of RMB231.8 million in FY2008 mainly due to profit before income tax and better working capital management.

Dynamic operating environment

The operating environment in 2nd half of 2008 was challenging. Just before and during the Beijing Olympics, the PRC Government placed restrictions on transportation of dangerous chemical products which included the Company's AA (Acrylic Acid) and AE (Acrylate Esters) products. Many of our customers in the region also had to shut down their chemical plants. These had a negative impact on the Group's AA and AE sales and profits during the 3rd quarter of the year.

The global financial turmoil severely affected the demand in US, Europe and other major markets, this has caused a sudden drop in raw material prices in Q4 2008 which had a negative impact to our product selling prices as they are generally pegged to material prices.

The Group's Phase 2 PMIDA (N-(phosphonomethyl) Iminodiacetic Acid) plant expansion was completed in May 2008.

This doubled our annual production capacity from 20,000 tonnes to 40,000 tonnes. However, market dynamics for the Group's PMIDA business were also challenging in 2nd half of 2008. The crash of the Argentine Peso and Brazilian Real had a negative impact on the Group's financial performance as the region was a key market for the Group's PMIDA product. The slide of crude oil prices in the latter part of FY2008 also had an impact on PMIDA sales as manufacturing of biofuel (which uses transgenic corn) became less viable. PMIDA is used mainly in the production of glyphosate (a type of herbicide that is effective in transgenic plantation). The cumulative effect of these was a slow down in demand for glyphosate, necessitating the shutting down of our PMIDA plants in November and December 2008. To counteract the negative impact of prevailing market dynamics, the Group has since diversified its PMIDA business by expanding into the downstream production of glyphosate, a herbicide. This is done in partnership with a related party.

Focusing on fundamentals

The current financial turbulence is likely to have a negative impact on our business moving forward. We expect slower demand for our products in the next 12 months which is likely to affect our performance for the year. The Group will focus on exploring new markets and the fundamentals of costs management through better inventory management, purchases of raw materials, as well as prudent management of our working capital. A good cost management strategy will also allow the Group to deliver products at competitive prices to meet the demands of diverse industrial, consumer and agricultural products such as coatings, adhesives, textiles, diapers, detergents and herbicide. Although we expect to operate within a much slower business environment, we remain cautiously optimistic that the Group will be able to steer through this challenging environment and emerge stronger and ready to ride the next wave of market opportunities.

Dividend

The Company is pleased to announce a final dividend of S$0.008 per ordinary share. Together with an interim dividend of S$0.01 that was paid in September 2008, this represents a total dividend payment of S$0.018 per share for the financial year ended 31 December 2008.

In appreciation

I wish to thank the Board for their expertise and invaluable contributions in the past year. Our management and staff are dedicated professionals and team players which is a key asset to the Group. To our shareholders and business associates, I also wish to express our appreciation for their support of the Group.

I will be retiring from the Board and stepping down as Chairman of the Group after the coming AGM. It has been very satisfying for me to work with the Board and Management of the Group during my tenure to establish the Group into a leadership position it enjoys today.

The CEO and the Board would like to thank the Chairman for his leadership and contributions during the past year and wish him every success in his future endeavours.