CEO NEW YEAR MESSAGE

An eventful year has passed and a new one has come.
Welcoming the New Year, I wish that all executives and staff be blessed with good health and happiness.

Our company has made great advances both domestically and internationally following the takeover by LOTTE group in 2004. During 2011, our company's turnover dramatically increased from one billion five thousand million won to four billion eight thousand million won. This is a record profit for KP Chemical.
I would like to extend my thanks for your utmost efforts regarding our company during 2011.

In spite of the greatest outcome in our history, the business environment in 2012, locally and abroad is expected to deteriorate rapidly. Continued EU concerns over Greece and the debt crisis in the US have reminded the world of the 2008 recession and will have a large impact on all financial markets in 2012. In Asia, China has continued to control inflation while adopting a tight fiscal policy. The increased construction of new PTA plants in China will also have a dramatic impact on our sales volume. Domestically, the uncertainly over the direction of the new regime in North Korea will have all Korean companies on edge moving into 2012. To make sure KP is ready to survive this tough economic climate, counter measures will need to be implemented.

To successfully move forward in 2012, I believe we need to implement four main ideas of crisis management and innovation to realize our aim of sustainable management.

Firstly we need to implement a crisis management system directed at all areas both inside and outside KP's control
The forecasted economic global downturn and the impact of increased investment plans in China (especially in the PTA market) do not bode well for the growth of KP in 2012. However, it is up to our willpower to enhance management efficiency and specialization in each business sector to overcome this downturn.
This can be achieved by:
- Focusing on sales, we need to improve our long-term contracts, and control inventory figures tightly to take advantage of any improvements in market conditions throughout the year.
- Our production departments need to concentrate on cost control, energy saving and productivity drive.
- On our Plant side, I request an increased focus on maintenance and safety to help find an economic balance between investment and repairs.
Finally, because our most important resource is our skilled workers, I wish for all management and employees to strive to increase individual performance across all sections of KP Chemical.

Secondly, we need to find new growth business opportunities both domestically and internationally. The expected tough economic conditions of 2012 can also be seen as a great chance for growth opportunities. The successful expansion of PTA, PET in our subsidiaries LPPTA, LCUK are good examples of new business development.
Domestically, we need to find creative investment opportunities to enhance our company. I hope the S/F Project and G project which is related with Honam petrochemical can be normalized earlier then forecasted.

Thirdly, we have to establish a sustainable management system.
I would like to tell you that a company's best qualities come out of a crisis situation. No matter what the financial conditions are, we need to make establishing a sustainable management system.
To achieve this, we need:
- To continue to build cooperative structures between KP Chemical and raw material suppliers. This will help our MX purchasing become steady and competitive.
- Sales departments, which need a big change to be a leader of global market and to expand global business.
Production departments, where focus is required to improve productivity, establishing safety supervision and achieving the best quality.
Most importantly, all members of KP Chemical need to work together as a team to achieve a successfully business management system.

Throughout 2011, KP Chemical has carried out various charity programs through our 'sharing' and 'thoughtful consideration' programs. In 2012, we plan to continue these worthwhile endeavors working hard with local communities to help those less fortunate than ourselves.
Also during 2011, KP started our "growing together" campaign focusing on regular meetings with partner firms with the aim of improving financial, technical and management systems for all parties. After a successful implementation year, we look forward to continued success and ideas in 2012.

Finally, and what I believe is most important is the development KP Chemical employees.
With difficult financial times predicted, it is important for all members of KP to be skilled and experienced in handling all situations that may arise during their day to day work. I have recommended allocating a large section of our budget towards education training for all of our employees helping everyone develop in their chosen field. I hope all management and employee's take this opportunity to develop their own personal skills with the aim to enhance not only their own ability but that of KP Chemical as a whole.

Welcoming this year, the first thing that we must do is to challenge the ever changing chemical market head on with the aim of overcoming any obstacles that the future presents. We have the experience to overcome any future difficulties with confidence. I am sure that we have the qualifications and capability to make a history of successful and positive decisions. In 2012, let's start working to be the best global company within global LOTTE.

Thank you.

January 2, 2012
CEO, KPCHEMCIAL CORP,
Huh, Soo young.