(HAIK) Haike Chemical

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 final results for the year ended 31 December 2011, which are expected to be announced in March.

Highlights:

·     Encouraging performance resulting in an increase in revenues and strong year-on-year profit growth

·     Profitability behind market expectations due principally to lower margins at the end of the year

·      Growth in revenues compared to the previous year, driven by sales volume increases for most products.

·      Refinery division profitable in 2011 due to increases in both volume and price

·      Volume increases in specialty/salt and biochemical divisions outweigh a slight drop in price

·      In line with growing our higher margin specialty chemical products, construction of the newly established Dongying Hebang Chemical Co., Ltd ('Hebang') completed

Ruilin's utilisation rate and turnover rate improved significantly during the year. As a result, the refinery division was profitable in 2011, compared to a loss in 2010. The specialty/salt chemical division was overall stable while performance of individual products varied. The biochemical division became profitable in 2011 driven by volume increases as a result of economies of scale.

In line with our focus on growing our higher margin specialty chemicals division, the construction of the newly established Dongying Hebang Chemical Co., Ltd ('Hebang') has been completed and tests and trial production have begun. Hebang is expected to commence mass production for its first product in March 2012 and we expect it to break even in the current financial year.

Mr. Xiaohong Yang, Executive Chairman said:

"We are pleased with the performance of the Company which generated an increase in revenues across all divisions and strong profitable growth.  We continue to focus on the long term growth of the business and have made good progress in growing our higher margin specialty chemicals business through the establishment of Dongying Hebang. The Board remains conscious of a continuing difficult global economic environment and great emphasis has been placed on tightening costs and increasing operational efficiencies to strengthen the business.  We look forward to updating our shareholders with progress and developments at our final results in March.

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