Trading Statement

HaiKe Chemical Group Ltd

Trading Update

HaiKe Chemical Group Limited ("HaiKe" or the "Company"), the AIM quoted (AIM: HAIK) petrochemical, specialty chemical and biochemical business based in China, today provides an update on trading ahead of its interim results for the six months period ended 30 June 2011.

The Company is pleased to announce that the business continued to perform well in the first half of 2011 and in line with management expectations. The following represent the key points in the Company's trading performance:

·; The group has recorded strong revenue growth and generated a modest profit compared to significant losses made in H1 2010

·; HaiKe's revenues have more than doubled compared to H1 2010, mainly driven by the increase in sales volume as well as an improvement in the selling prices of refined products

·; The refinery business contributed 89% of total revenues but due to industry wide high feedstock prices margins continued to be squeezed. However, management action to control costs, improve product mix and source readily available feedstock at more favourable prices from the Singapore subsidiary, is having a beneficial impact on the business

·; Specialty chemical and biochemical contributed 11% of revenues. Both sales volume and selling prices have increased and margins sustained

·; The Company's strategic focus is on expanding its higher margin chemical products business. As previously announced, HaiKe acquired 29.137% in Shandong Hi-Tech Shengli Electrochemical Co., Ltd. ("Shengli") bringing its total shareholding to 91.45%. The acquisition provides a stable source of income and improves the Company's profitability. In addition, HaiKe has established a new subsidiary, namely Dongying Hebang Chemical Co., Ltd. ("Hebang"), which will produce specialty and salt chemical products. Hebang will further enhance intra-group synergies as it will utilise by-products from existing petrochemical and specialty/salt chemical products. Phase one is now under construction with a total investment of RMB300m (circa GBP29m). It is scheduled to start operation in December 2011.

Additionally, the Board has decided to change reporting currency with immediate effect from the current US dollar to the functional Renminbi in order to eliminate any impact arising from exchange rate movements.

Mr. Xiaohong Yang, Executive Chairman said:

""The board remains conscious of fluctuations in crude oil prices and the global economic and political environment which could have some impact on the business. We have generated a profitable performance which strongly reflects the actions we have undertaken to strengthen the business in these challenging conditions. HaiKe has made excellent progress in the strategic move to specialty chemicals; the buyout of Shengli which was immediately earnings enhancing and the establishment of Hebang will further improve intra-group synergies. We believe the focus on higher margin products will make a significant contribution and enhance the long term profitability for the Company as a whole."

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