Jiutian Chemical 1H Result Press Release

Jiutian Chemical reports 2Q2008 net earnings of RMB 7.0 million

• 2Q2008 net earnings improves 25.7% over 1Q2008 but62.4% below 2Q2007

• High cost of methanol continues to adversely impact ramping up of new DMF plant

Singapore, 13 August 2008 - Jiutian Chemical Group Limited (“Jiutian Chemical”, “工九天化” or “The Group”), one of the largest dimethylformamide1 (“DMF” or “二甲基甲酰胺”)producers in China, has announced net earnings of RMB 7.0 million on the back of revenue of RMB 75.8 million for the second quarter ended 30 June 2008.

Financial and Operations

The Group recorded revenue of RMB 75.8 million in 2Q2008 which was 5.5% below1Q2008 but 27.1% higher than 2Q2007. Despite 1Q2008 revenue being impacted by the severe snow storm as earlier reported, revenue in 2Q2008 was marginally lower asmethanol prices significantly higher during the current quarter adversely impacted the ramping up of the new 120,000 DMF plant in Anyang Jiuyang.

Average methanol prices increased 42.5% from RMB 2,857 in 1Q2008 to RMB 4,070 in 2Q2008 resulting inAnyang Jiuyang’s plant producing at 10% of its operational capacity. Against the corresponding quarter last year (2Q2007), revenue increased 27.1% from RMB 59.7million to RMB 75.8 million. The increase is attributable to the contribution of the new DMF plant in Anyang Jiuyang. Excluding the revenue contribution of Anyang Jiuyang, 2Q2008 revenue was RMB 62.5 million, up 4.7% against 2Q2007 driven by improved selling prices of DMF and methylamine. Average selling price for DMF rose from RMB6,184 in 2Q2007 to RMB 6,410 in 2Q2008 whilst average selling price of methylamine (secondary product) rose from RMB 5,747 in 2Q2007 to RMB 8,165 in 2Q2008.

Gross profit in 2Q2008 at RMB 22.0 million improved 18.8% over 1Q2008 but contracted 8.9% over 2Q2007. The fall in gross profit and gross margin over the correspondingly quarter (2Q2007) is attributable to

- Anyang Jiuyang new DMF plant which commenced operations from 4Q2007 is dependent on the purchase of methanol from the market. The strong market demand for methanol used as both a feedstock for chemical production and as analternative fuel has driven up prices impacting the margins of this plant. Whereas the smaller but fully integrated production facility of Anyang Jiutian has its own methanol production facility to provide as feedstock for the production of DMF andmethylamine, is able to produce and sell at a much higher margin.

• Low utilization of the plant capacity at 10% in Anyang Jiuyang’s new DMF plant in2Q2008 from the high methanol costs resulted in a gross loss incurred by the plantof RMB 2.3 million. Net profit after tax attributable to shareholders further dipped 62.4% from RMB 18.7million in 2Q2007 to RMB 7.0 million in 2Q2008 due to:

(a) Higher administrative and operating costs in line with the increased businessactivities of the Group from the commissioning of the new DMF plant in Anyang Jiuyang (adding RMB 2.2 million) and the new storage and distribution facility inChangzhou (adding RMB 0.3 million)

(b) Pre-operating expenses incurred for the new 250,000 tonnes methanol plant in Anyang Jiulong under construction of RMB 2.2 million.

(c) Higher finance costs arising from increase in bank loans and interest rates tofinance the Group’s expansion plans and working capital.Jiutian Chemical’s Executive Chairman, Mr. Wang Xianjin (王先进), commented, “Despite increasingly difficult market landscape for DMF driven by higher methanol and coal prices driving some industry players to register operating losses, the Group continues to remain profitable for the first half of 2008. Following the severe snow storm in 1Q2008, marketprices for DMF and methylamine gradually improve in the latter part of the second quarter.

However, methanol prices have risen sharply which continued to constraint on AnyangJiuyang’s new DMF plant. At the high methanol costs, the plant continued to operate at low utilization rate and recorded an operating loss in the second quarter of RMB 6.2million. As guided in earlier announcements, Anyang Jiuyang’s plant is expected to continue to operate well below its operational capacity at current high methanol prices until the Group completes construction of it’s 250,000 tonne methanol facility of Anyang Jiulong. Once completed and operational, it will have adequate methanol to be used as a feedstock for DMF production and also excess methanol to be sold to the market.

On current progress of construction, Anyang Jiulong’s new methanol facility is now scheduled to be completed by the first quarter of 2009. We will continue to put in our best efforts to contain the operating losses in Anyang Jiuyang in 2008 but expect the Group to remain profitable for FY2008. With the completion of the methanol facility in 1Q2009, we expect the situation in Jiuyang to improve significantly and the Group to become more versatile operationally, moving from just a significant DMF producer to becoming a significant coalbased chemical producer with 315,000 tonnes of methanol and 150,000 tonnes of DMF/methylamine capacities.”