The stock price of the company reached its minimum intraday limit in three consecutive trading sessions on 23, 24, and 25 Dec 2008, thus constituting an unusual price movement.

After consultation with the company management, there are no major assets restucturing, nor non-public share issues.

Furthermore, upon inquiry to the company's largest shareholder Newhope Chemicals Investment Co., Ltd., the comment is as follows: the company is in the stage of bankruptcy and restructuring; apart from these issues, there are no significant undisclosed issues.

According to the draft of Restructuring Plan (approved in relevant "Civil Decree" of the Baoding Intermediate People's Court), the company's 2nd batch debts, including about RMB 0.24 bln period liabilities and about RMB 0.1 bln community liabilities (The latter needs to be repaid at call), will be due on 5 Feb 2009. According to the preliminary statistics of its financial department, at the end of 2008, the business profit of the company is predicted to be more than RMB-0.5 bln (finally pursuant to the audit report), and the operational cash flow will be negative. Therefore, at present, the company hardly has the capability of continuous production and operation. Since there isn't enough funds in the account to repay the aforesaid due liabilities, it is possible that the company will be unable to repay debts when they are due and there exist the risks of bankruptcy liquidation and delisting of shares.

The board of directors confirms that, apart from the disclosed information, as of the date of this announcement, there are no significant undisclosed issues, plans, negotiations, intentions or outstanding agreements, pursuant to relevant regulations, nor are there any other events planned for the next two weeks that would materially impact the company's stock price or the prices of its derivatives.

The China Securities Journal, the Shanghai Securities News and the Shanghai Stock Exchange website (www.sse.com.cn) are the company's designated media for information disclosure. Investors are advised to exercise caution when dealing in the company's shares.

Board of Directors
29 Nov 2008

Source: Shanghai Stock Exchange

Date: 30 Dec 2008

CN01/VW/JW