NOTICE OF ARBITRATION FILED BY HYFLUX LIMITED

The board of directors of Hyflux Limited (“Hyflux”) wishes to announce that on 1 February 2011, Hyflux filed a Notice of Arbitration (the “NOA”) with the Singapore International Arbitration Centre (“SIAC”) to resolve disputes arising out of and/or in connection with a Shareholders Agreement dated 17 October 2003 (the “SHA”) between Hyflux and Ashcraft Holdings Pte Ltd (“Ashcraft”) (collectively the “Parties”) relating to the establishment of Hyflux Filtech (Singapore) Pte Ltd (“HFS”).

HFS together with HFS’s subsidiaries carry out water treatment services, sale of water treatment devices, plants and systems for industrial users in China.

On 17 January 2011, pursuant to and in accordance with the provisions of the SHA, Hyflux served a Deadlock Put Option Notice (the “Put Option Notice”) on Ashcraft, requiring Ashcraft to purchase all of Hyflux’s shares in HFS (the “Shares”).

Ashcraft disputed Hyflux’s right and entitlement to issue the Put Option Notice. The Parties then attempted to resolve their disputes amicably but were not able to arrive at a resolution. In the circumstances, pursuant to the dispute resolution provisions in the SHA, Hyflux filed the NOA through its lawyers Drew & Napier LLC.

Hyflux does not expect the arbitration to have a material adverse effect on its operations and the financial performance of the Hyflux group. HFS group's net profits as at financial year ended 31 December 2009 are S$3.1mil representing about 4% of the Hyflux group's net profit.

Hyflux will keep shareholders updated as and when there are material developments concerning this matter.