China Sky Chemical Fibre Co., Ltd.

China Sky Chemical Fibre Co., Ltd. (Registration No: CT-146759)

RESPONSE TO SGX QUARIES ON THE COMPANY’S ANNUAL REPORT 2014

The Board of Directors of China Sky Chemical Fibre Co., Ltd (“the Company”, together with its subsidiaries, “the Group”) wishes to announce its response to the queries raised by the Singapore Exchange Securities Trading Limited (“SGX”) in connection with the annual report for the financial year 2014 (“Annual Report”). SGX Queries (1) On page 10 of the FY2014 Annual Report, it was disclosed that “the AC had raised a number of queries contained in the FY2014 Unaudited Results which was prepared by Management. The queries were relating to additional audit procedure to be performed and/or explanation from Management “and that “The AC had suggested to Management to carry out follow-up procedure in view of the abovementioned matters”. These matters include cash and bank balances. Regarding cash and bank balances, RT LLP reported under “Other Matters” in their audit opinion that “As part of our audit procedures, we had requested the banks in the People's Republic of China (the "PRC") to confirm bank transactions and balances of the subsidiaries of the Company. Certain bank confirmations received did not contain sufficient information for us to accept the bank confirmation as conclusive evidence. Our understanding is that it is the practice of those banks in the PRC not to confirm every aspect of the confirmation request. Therefore, the completeness of the confirmation may not be sufficient evidence of existence of transactions and balances in its entirety. This is an inherent limitation within the banking confirmation practices of those banks in the PRC. Accordingly, we had to perform alternative audit procedures and consider corroborative evidence such as management representation and review of accounting and other records to satisfy ourselves as to the bank transactions and balances.” In respect of the above, please: (i) confirm if this is a qualification or an emphasis of matter on the cash and bank balance. If not, please provide RT LLP’s confirmation that they are satisfied that the cash and bank balances are true and fair; Company’s Response: We have clarified with RT LLP and they have informed that the header "bank confirmation" under "Other Matters" in the Auditor's Report does not constitute a qualification or an emphasis of matter under the International Standards on Auditing. RT LLP has mentioned that based on their audit procedures performed and the bank confirmations obtained, nothing has come to their attention to believe that the cash and bank balances are not true and fair. (ii) provide an update on the status of the follow-up procedures and advise if the procedure has been completed; and Company’s Response: The AC understands that Management has completed the follow-up procedure in view of the "above mentioned matters" and the AC is satisfied that "these matters" have been satisfactorily resolved by Management. (iii) provide the AC’s views on the outcome of the review and disclose the basis for such views.

Company’s Response: Based on the audit feedback and briefing of the review and Management assurance that there are no known significant deficiencies or lapses which could materially and adversely affect the Company’s financial statements, the AC is satisfied with the outcome of the review and has reasonable basis to believe that the cash and bank balances are true and fair. (2) As required under Listing Rule 710, please make disclosures as recommended in the Code of Corporate Governance 2012 (the “Code”) or otherwise explain the reason(s) for the deviation from the following Code guidelines:- (i) Paragraph 2.4 of the Code states that the independence of any director who has served on the Board beyond nine years from the date of his first appointment should be subject to particularly rigorous review. In doing so, the Board should also take into account the need for progressive refreshing of the Board. Noting that Mr. Er Kwong Wah has been an independent director for at least 9 years, the Board should also explain the rigorous review why any such director should be considered independent. Company’s Response: The Board has reviewed the number of years served by Independent NonExecutive Director who has served for 9 years period, i.e. Mr Er Kwong Wah. With the concurrence of the NC and declaration of Mr Er Kwong Wah, the Board is satisfied that Mr Er Kwong Wah is considered independence based on the criterion of independence under the guidelines provided in the Code. In addition, having considered his appropriate skill and experience of the Group’s business operations, past and continuous contributions at Board level in terms of impartial and constructive advice, the Board is of the view that there is no material conflict between his tenure and his ability to discharge his role as Independent Non-Executive Director. (3) On page 14, it was disclosed that “Mr Tan Yew Chee, William has notified the Company that he will not be seeking re-election at the forthcoming AGM”. Please disclose the reasons for Mr Tan not to seek re-election at the forthcoming AGM. Company’s Response: Mr Tan has notified the Company that he will not be seeking re-election at the forthcoming AGM as he would like to pursue other personal interests. The Company wishes to thank Mr Tan for his contributions in the past three (3) years. With the retirement of Mr Tan, the Company will endeavour to seek a suitable replacement as soon as is practicable. (4) Paragraph 11.3 of the Code of Corporate Governance 2012 states that the Board should comment on the adequacy and effectiveness of the internal controls, including financial, operational, compliance and information technology controls, and risk management systems, in the Company's Annual Report. The Board's commentary should include information needed by stakeholders to make an informed assessment of the Company's internal control and risk management systems. On page 19 of the Company’s Annual Report, we note that the Board has not commented on the adequacy and effectiveness of the risk management systems. In this respect, please disclose or explain the reason(s) for the deviation from the Code. Company’s Response: Based on the internal controls established and maintained by the Group, work performed by internal and external auditors, and reviews performed by and assurance from the management, various Board committees and the Board, the Board, with the concurrence of the AC, is of the opinion that the Group’s internal controls, addressing financial, operational, compliance and information technology controls and risk management systems, were adequate and effectiveness as at 31 December 2014.

By Order of the Board

Song Jiansheng Executive Director 20 August 2015