CWT International Limited - Proxy Solicitation & Information Statement 2007

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Sinofert Holdings Limited, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

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SINOFERT HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

SOMERLEY LIMITED

A letter from the Independent Board Committee (as defined in this circular) is set out on pages 17 to 18 of this circular. A letter from Somerley Limited, the independent financial adviser, containing its advice to the Independent Board Committee and the Independent Shareholders (as defined in this circular) is set out on pages 19 to 31 of this circular.

A notice convening the SGM (as defined in this circular) to be held at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Hong Kong on 28 December 2007 at 9:30 a.m. is set out on pages 40 to 42 of this circular. Whether or not you are able to attend the meeting in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the SGM. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the meeting or at any adjourned meeting should you so wish.

For identification purpose only

10 December 2007

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Particulars of the Non-exempt Continuing Connected Transactions . . . . . . . . . .	6
Reasons for and Benefits of the Non-exempt
Continuing Connected Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Implications under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
Information on the Company and Sinochem Corporation . . . . . . . . . . . . . . . . .	13
SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
Procedures for Demanding a Poll. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
Letter from the Independent Board Committee. . . . . . . . . . . . . . . . . . . . . . . . . . .	17
Letter from Somerley. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
Notice of SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	40

– i –

DEFINITIONS

In this circular, the following expressions have the following meanings, unless the context otherwise requires:

“2005 Circular”	the circular of the Company dated 13 June 2005
“Agreements”	comprising the Import Service Framework Agreement,
	the Fertilizer Purchase Agreement and the Fertilizer
	Supply Agreement
“associate(s)”	has the same meaning ascribed to it in the Listing Rules
“Board”	the board of Directors of the Company
“Bonds”	the HK$1,300,000,000 listed zero coupon convertible
	bonds due 2011 issued by the Company on 7 August 2006
“Bye-laws”	the bye-laws of the Company
“Company”	Sinofert Holdings Limited, a company incorporated on 26
	May 1994 in Bermuda with limited liability, the ordinary
	shares of which are listed on the Stock Exchange
“Director(s)”	the directors of the Company (including its independent
	non-executive Directors)
“Fertilizer Purchase Agreement”	the fertilizer purchase agreement between Sinochem
	Shandong and Sinochem Fertilizer dated 16 November
	2007
“Fertilizer Supply Agreement”	the fertilizer supply agreement between Sinochem
	Shandong and Sinochem Fertilizer dated 16 November
	2007
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	The Hong Kong Special Administrative Region of the
	PRC
“Import Service Framework	the import service framework agreement signed among
Agreement”	Sinochem Fertilizer, Sinochem Macao and Sinochem
	Corporation dated 16 November 2007

– 1 –

DEFINITIONS

“Independent Board Committee”	the committee of independent non-executive Directors
	formed to advise the Independent Shareholders in respect
	of the terms of the Non-exempt Continuing Connected
	Transactions and the proposed maximum annual values in
	respect thereof
“Independent Shareholder(s)”	Shareholder(s) who are not interested in the Non-exempt
	Continuing Connected Transactions, being
	Shareholder(s) other than Sinochem HK and its
	associates
“Latest Practicable Date”	3 December 2007, being the latest practicable date for the
	purpose of ascertaining certain information contained in
	this circular
“Listing Rules”	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited
“Non-exempt Continuing	the transactions contemplated under the Import Service
Connected Transactions”	Framework Agreement, the Fertilizer Purchase
	Agreement and the Fertilizer Supply Agreement which
	are not exempt from the reporting, announcement and
	independent shareholders’ approval requirements under
	Chapter 14A of the Listing Rules
“PCS Barbados”	PCS (Barbados) Investment Company Limited
“Potashcorp”	Potash Corporation of Saskatchewan Inc. and, as
	applicable, its direct and indirect subsidiaries
“PRC”	the People’s Republic of China, which for the purposes of
	this circular excludes Hong Kong Special Administrative
	Region, Macao Special Administrative Region and
	Taiwan
“RMB”	Renminbi, the lawful currency of the PRC
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“SGM”	the special general meeting of the Company to be
	convened to consider and, if thought fit, to approve the
	Non-exempt Continuing Connected Transactions and the
	proposed maximum annual values in respect thereof

– 2 –

DEFINITIONS

“Shandong Acquisition” the proposed acquisition of a 51% equity interest in Sinochem Shandong
“Shandong Acquisition conditional sale and purchase agreement dated 28 Agreement” November 2007 between Sinochem Fertilizer (as purchaser) and Sinochem Corporation (as seller) in relation to the Shandong Acquisition
“Shareholder(s)” shareholder(s) of the Company “Sinochem BVI” Sinochem Fertilizer (Overseas) Holdings Ltd., a company incorporated in the British Virgin Islands with limited liability on 1 July 2004 and is wholly-owned by the Company
“Sinochem Corporation” (Sinochem Corporation), a stateowned enterprise established in the PRC
“Sinochem Fertilizer” (Sinochem Fertilizer Company Limited), a limited liability company established in the PRC on 15 December 1992 and is wholly-owned by the Company
“Sinochem HK” Sinochem Hong Kong (Group) Company Limited, a company incorporated in Hong Kong with limited liability which is wholly owned by Sinochem Corporation
“Sinochem Macao” Sinochem Fertilizer Macao Commercial Offshore Limited, a company incorporated in Macao on 16 November 2004 and is wholly-owned by Sinochem BVI
“Sinochem Shandong” (Sinochem Shandong Chemical Fertilizer Company Limited), a limited liability company established in the PRC on 31 March 2004 in which Sinochem Corporation holds a direct 51% equity interest

– 3 –

DEFINITIONS

“Somerley”

Somerley Limited, a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) having CE registration number AAJ067 and the independent financial adviser to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Non-exempt Continuing Connected Transactions and the proposed maximum annual values in respect thereof

“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscription Agreement”
the subscription agreement entered into between Sinochem HK, PCS Barbados and the Company dated 2 November 2007
“United States” The United States of America
“US$” US dollars, the lawful currency of the United States

For the purpose of this circular, unless otherwise indicated, the exchange rate of US$1.00 = HK$7.79 and HK$1 = RMB0.9503 have been used for currency translation. Such exchange rates are for the purposes of illustration only and do not constitute a representation that any amount in RMB or US$ or HK$ have been, could have been or may be converted at such or any other rates.

– 4 –

LETTER FROM THE BOARD

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SINOFERT HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

Executive Directors: Du Ke Ping (Chief Executive Officer) Harry Yang

Non-Executive Directors: Liu De Shu (Chairman) Song Yu Qing (Deputy Chairman) Chen Guo Gang Stephen Francis Dowdle Wade Fetzer III

Independent non-executive Directors: Tse Hau Yin, Aloysius Ko Ming Tung, Edward Tang Tin Sek

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

Principal place of business: Units 4601-4610, 46th Floor Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

10 December 2007

To the Shareholders and, for information only, holders of share options and the Bonds of the Company

Dear Sir/Madam,

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

As disclosed in the 2005 Circular, the Group conducts the Non-exempt Continuing Connected Transactions with Sinochem Corporation and its associates in the ordinary and usual course of its business and on normal commercial terms. Sinochem Corporation through its wholly-owned subsidiary, Sinochem HK, controls approximately 50.06% of the issued shares of the Company and is a substantial shareholder of the Company, and therefore it and each of its associates is a connected person of the Company under the Listing Rules.

For identification purpose only

– 5 –

LETTER FROM THE BOARD

The Group entered into the Non-exempt Continuing Connected Transactions with Sinochem Corporation and/or its associates on various dates, details of which were disclosed in the 2005 Circular. An annual cap was assigned to each of the Non-exempt Continuing Connected Transactions for each of the three years ending 31 December 2007.

The Company announced on 16 November 2007 that, among other things, the Nonexempt Continuing Connected Transactions will continue following the expiration of the year ending 31 December 2007. The Company also announced that on the same date, Sinochem Fertilizer entered into the Import Service Framework Agreement, the Fertilizer Purchase Agreement and the Fertilizer Supply Agreement (together the “ Agreements ”) with Sinochem Corporation and Sinochem Shandong, respectively.

As Sinochem Corporation is a connected person of the Company, the Import Service Framework Agreement constitutes a connected transaction of the Company and is therefore subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

As Sinochem Shandong is a connected person of the Company by reason of it being a subsidiary of a substantial shareholder of the Company, the Fertilizer Purchase Agreement and the Fertilizer Supply Agreement constitute connected transactions of the Company and are therefore subject to the reporting, announcement and independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

The purpose of this circular is (a) to provide you with further information in respect of the Agreements and the related proposed annual caps; (b) to set out the recommendations of the Independent Board Committee in respect of the Agreements and the related proposed annual caps; (c) to set out the advice of Somerley to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Agreements and the related proposed annual caps; (d) to give you notice of the SGM to be held to consider and, if thought fit, approve the Agreements and the related proposed annual caps; and (e) to provide you with such other information as is required under the Listing Rules.

PARTICULARS OF THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

Details of the Non-exempt Continuing Connected Transactions and the respective caps for the three years ending 31 December 2010 are set out below.

(A) Import Service Framework Agreement;
(B) Fertilizer Purchase Agreement with Sinochem Shandong; and
(C) Fertilizer Supply Agreement with Sinochem Shandong.

– 6 –

LETTER FROM THE BOARD

As disclosed in the announcement of the Company on 28 November 2007, Sinochem Fertilizer and Sinochem Corporation entered into the Shandong Acquisition Agreement. Pursuant to the Shandong Acquisition Agreement, Sinochem Fertilizer has agreed to purchase and Sinochem Corporation has agreed to sell 51% interest in Sinochem Shandong in accordance with the terms and conditions therein. Upon completion of the Shandong Acquisition, Sinochem Shandong will become a subsidiary of the Company and will no longer be regarded as a connected person of the Company under the Listing Rules. The transactions contemplated under the Fertilizer Purchase Agreement and the Fertilizer Supply Agreement will no longer be considered as continuing connected transactions once the Shandong Acquisition is approved by independent shareholders of the Company, the other conditions as contained in the Shandong Acquisition Agreement are fulfilled and the Shandong Acquisition is completed.

Therefore, upon completion of the Shandong Acquisition, the Company shall not be subject to the maximum aggregate annual values proposed in respect of the Fertilizer Purchase Agreement and the Fertilizer Supply Agreement and approved in accordance with this circular.

Details of the Non-exempt Continuing Connected Transactions

Each of the above transactions is described in detail below.

(A) Import Service Framework Agreement

Sinochem Fertilizer, Sinochem Macao and Sinochem Corporation entered into the Import Service Framework Agreement on 16 November 2007. As under PRC law the Group is not allowed to import fertilizers and the right to import fertilizers is only granted to Sinochem Corporation and several other importers, Sinochem Corporation has agreed to provide import service to the Group according to this agreement. Pursuant to this agreement, fertilizer products sourced from overseas by Sinochem Macao for Sinochem Fertilizer will first be sold to Sinochem Corporation. Sinochem Corporation, as an approved importer of fertilizer products in the PRC, will import the products sourced by Sinochem Macao and sell them all to Sinochem Fertilizer. Sinochem Corporation also imports a small amount of fertilizer products direct from specific countries from time to time. Sinochem Corporation has undertaken that, except for any fertilizer products imported by it on behalf of its other customers, it will sell all the fertilizer products it imports to Sinochem Fertilizer exclusively. On the other hand, Sinochem Fertilizer is free to purchase fertilizer products from any authorised importers.

Sinochem Fertilizer, Sinochem Corporation and Sinochem Macao will, in accordance with provisions and principles stipulated in the Import Service Framework Agreement, enter into further specific agreements for the products imported through Sinochem Corporation.

– 7 –

LETTER FROM THE BOARD

Under the Import Service Framework Agreement, the pricing principles for the sale and purchase of fertilizer products between the parties are as follows:

(i) the price to be paid by Sinochem Corporation to Sinochem Macao for fertilizer products sold by Sinochem Macao to Sinochem Corporation will be set in accordance with the prevailing international market price;
(ii) the price to be paid by Sinochem Fertilizer to Sinochem Corporation for fertilizer products sourced from overseas by Sinochem Macao will be set on a cost basis, that is, the price of the imported fertilizer products acquired by Sinochem Corporation from Sinochem Macao plus product inspection costs, customs and excise handling charges, import duty, value-added tax and a reasonable administration cost incurred by Sinochem Corporation in relation to the importation of the fertilizers; and
(iii) the price to be paid by Sinochem Fertilizer to Sinochem Corporation for fertilizer products sourced by Sinochem Corporation direct from overseas will be set in accordance with the domestic wholesale market price.

The maximum aggregate annual value in respect of the connected transactions between Sinochem Macao and Sinochem Corporation under the Import Service Framework Agreement for each of the three years ending 31 December 2010 is estimated to be US$2,454,840,000 (equivalent to approximately HK$19,123,203,600), US$2,705,820,000 (equivalent to approximately HK$21,078,337,800) and US$3,029,700,000 (equivalent to approximately HK$23,601,363,000), respectively. Such estimates are calculated based on the projected quantities of purchase by Sinochem Corporation for Sinochem Fertilizer through the arrangement with Sinochem Macao and the projected average price per tonne of products for each of the relevant years (which is set in accordance with the prevailing international market price). Payments are normally made within 90 days of delivery of the fertilizers.

– 8 –

LETTER FROM THE BOARD

The historical amounts of such continuing connected transactions under the Import Service Framework Agreement for the two years ended 31 December 2006 and the six months ended 30 June 2007, and the annual caps for the three years ending 31 December 2007, were as follows:

For the year For the year For the year ended ended ending 31 December 31 December 31 December 2005 2006 2007 Historical US$732,347,295 US$788,526,000 US$583,033,202 amount (equivalent to (equivalent to (equivalent to approximately approximately approximately HK$5,704,985,428) HK$6,142,617,540) HK$4,541,828,644) (for the six months ended 30 June 2007) Annual cap US$1,398,293,000 US$1,442,683,000 US$1,531,463,000 (equivalent to (equivalent to (equivalent to approximately approximately approximately HK$10,892,702,470) HK$11,238,500,570) HK$11,930,096,770)

The maximum aggregate annual value in respect of the connected transactions between Sinochem Fertilizer and Sinochem Corporation under the Import Service Framework Agreement for each of the three years ending 31 December 2010 is estimated to be RMB18,663,080,000 (equivalent to approximately HK$19,639,145,533), RMB20,570,980,000 (equivalent to approximately HK$21,646,827,318) and RMB23,032,950,000 (equivalent to approximately HK$24,237,556,561), respectively. Such estimates are calculated based on (i) the projected quantities of sales of fertilizer products sourced from overseas by Sinochem Macao and the projected average price per tonne of fertilizer products for each of the relevant years (which is set on a cost basis); and (ii) the projected quantities of sales of fertilizer products sourced by Sinochem Corporation direct from overseas suppliers to Sinochem Fertilizer and the projected average price per tonne of fertilizer products for each of the relevant years (which is set in accordance with the domestic wholesale market price). Payments are normally made within 90 days of delivery of the fertilizers.

– 9 –

LETTER FROM THE BOARD

For the year For the year For the year ended ended ending 31 December 31 December 31 December 2005 2006 2007 Historical RMB6,460,253,956 RMB5,344,668,000 RMB4,176,654,882 amount (equivalent to (equivalent to (equivalent to approximately approximately approximately HK$6,798,120,547) HK$5,624,190,256) HK$4,395,090,900) (for the six months ended 30 June 2007) Annual cap RMB10,863,000,000 RMB12,180,000,000 RMB14,991,000,000 (equivalent to (equivalent to (equivalent to approximately approximately approximately HK$11,431,127,013) HK$12,817,005,156) HK$15,775,018,415)

Where a party to the Import Service Framework Agreement has committed a breach of any terms of the Import Service Framework Agreement and such breach is not remedied within 60 days of the date of written notice from the other parties requesting remedy of the breach, the other parties may terminate the Import Service Framework Agreement. Otherwise, only Sinochem Macao or Sinochem Fertilizer may terminate the Import Service Framework Agreement by giving one month’s notice to the other parties.

The Import Service Framework Agreement will expire on 31 December 2010. The term of the Import Service Framework Agreement can be extended with the consent of Sinochem Fertilizer, Sinochem Corporation and Sinochem Macao.

(B) Fertilizer Purchase Agreement with Sinochem Shandong

Sinochem Shandong, owned as to 51% by Sinochem Corporation, entered into the Fertilizer Purchase Agreement with Sinochem Fertilizer on 16 November 2007. Sinochem Shandong is held as to 51% by Sinochem Corporation. The agreement will expire on 31 December 2010. Sinochem Fertilizer may request that Sinochem Shandong enters into a new purchase agreement with it on the same terms upon the expiry of the current agreement.

Pursuant to this agreement, Sinochem Shandong has granted to Sinochem Fertilizer an exclusive right to sell its fertilizer products in the PRC, and shall sell all its fertilizer products to Sinochem Fertilizer based on production costs and the fair market price in the PRC at the time the purchase plan is submitted. Sinochem Shandong shall not, and shall not grant any right to any third party to, sell any of its fertilizer products in the PRC

– 10 –

LETTER FROM THE BOARD

during the term of the agreement. The agreement does not contain any provision obliging Sinochem Fertilizer to purchase fertilizer products from Sinochem Shandong. Sinochem Fertilizer shall provide Sinochem Shandong with a purchase plan two months in advance of a purchase, and Sinochem Shandong shall supply the fertilizer products required accordingly upon full payment of relevant price. Sinochem Fertilizer has entered into this agreement with Sinochem Shandong in order to avoid any competition between Sinochem Shandong and the Group.

Sinochem Fertilizer has purchased fertilizer products from Sinochem Shandong under the fertilizer purchase agreement dated 6 June 2005. The total purchases by Sinochem Fertilizer from Sinochem Shandong for the two years ended 31 December 2006 and six months ended 30 June 2007, and the annual caps for the three years ending 31 December 2007, were as follows:

For the year For the year For the year ended ended ending 31 December 31 December 31 December 2005 2006 2007 Historical RMB236,074,273 RMB438,160,000 RMB318,010,744 amount (equivalent to (equivalent to (equivalent to approximately approximately approximately HK$248,420,786) HK$461,075,450) HK$334,642,475) (for the six months ended 30 June 2007) Annual cap RMB555,060,000 RMB925,100,000 RMB1,850,000,000 (equivalent to (equivalent to (equivalent to approximately approximately approximately HK$584,089,235) HK$973,482,058) HK$1,946,753,657)

The Group estimates that the maximum annual amount of purchases of chemical fertilizer products from Sinochem Shandong under the Fertilizer Purchase Agreement will be approximately RMB1,350,000,000 (equivalent to approximately HK$1,420,604,020), RMB1,540,000,000 (equivalent to approximately HK$1,620,540,882) and RMB1,740,000,000 (equivalent to approximately HK$1,831,000,737), respectively, for each of the three years ending 31 December 2010. Such estimates are calculated based on projected production capacity of Sinochem Shandong and projected average price per tonne of products for each of the relevant years, having regard to the anticipated growth of fertilizer consumption in the PRC in the future and the continuing expansion of the Group’s sales network.

(C) Fertilizer Supply Agreement with Sinochem Shandong

Sinochem Fertilizer entered into the Fertilizer Supply Agreement with Sinochem Shandong, owned as to 51% by Sinochem Corporation, on 16 November 2007. The agreement will expire on 31 December 2010.

– 11 –

LETTER FROM THE BOARD

Pursuant to this agreement, Sinochem Fertilizer shall supply fertilizer products and raw materials to Sinochem Shandong. Sinochem Shandong shall place a purchase order with Sinochem Fertilizer two months in advance of a purchase, and Sinochem Fertilizer shall reply to Sinochem Shandong within 15 business days of each purchase order. The price of the fertilizer products and raw materials shall be their fair market price in the PRC at the time the purchase order is placed. Sinochem Fertilizer shall deliver the fertilizer products and raw materials ordered to Sinochem Shandong upon full payment of the relevant price.

Pursuant to the Fertilizer Supply Agreement, Sinochem Fertilizer may request that Sinochem Shandong enters into a new supply agreement with it on the same terms upon the expiry of the current agreement.

Sinochem Fertilizer has supplied fertilizer products and raw materials to Sinochem Shandong under the fertilizer supply agreement dated 6 June 2005 and 21 April 2006. The total sales by Sinochem Fertilizer to Sinochem Shandong for the two years ended 31 December 2006 and six months ended 30 June 2007, and the annual caps for the three years ending 31 December 2007, were as follows:

	For the year	For the year	For the year
	ended	ended	ending
	31 December	31 December	31 December
	2005	2006	2007
Historical amount	RMB49,148,250	RMB65,118,000	RMB121,836,707
	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately
	HK$51,718,668)	HK$68,523,624)	HK$128,208,678)
			(for the six
			months ended 30
			June 2007)
Annual cap	RMB116,407,200	RMB424,600,000	RMB508,600,000
	(equivalent to	(equivalent to	(equivalent to
	approximately	approximately	approximately
	HK$122,495,212)	HK$446,806,272)	HK$535,199,411)

Sinochem Fertilizer estimates that the maximum annual amount of sales of fertilizer products and raw materials to Sinochem Shandong under the Fertilizer Supply Agreement will be approximately RMB1,324,026,000 (equivalent to approximately HK$1,393,271,598), RMB1,521,432,000 (equivalent to approximately HK$1,601,001,789) and RMB1,598,472,000 (equivalent to approximately HK$1,682,070,925) for each of the three years ending 31 December 2010. Such estimates are calculated based on projected quantities of sales and projected average price per tonne of fertilizer products and raw materials for each of the relevant years, having regard to the anticipated growth of fertilizer products and raw materials consumption in the PRC in the future.

– 12 –

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

The Group entered into the Agreements for the effective and efficient conduct of its ordinary business, in particular:

The Import Service Framework Agreement is entered into because under the PRC law the Group is not allowed to import fertilizers and the right to import fertilizers is only granted to Sinochem Corporation and several other importers, so the Group has to import those fertilizers through authorised importers, such as Sinochem Corporation.
The Group entered into the Fertilizer Purchase Agreement and the Fertilizer Supply Agreement as the parties thereto produce similar products and would intend to eliminate the competition amongst themselves.

IMPLICATIONS UNDER THE LISTING RULES

Given that the relevant applicable percentage ratios set out in the Listing Rules for determining the value for each of the Non-exempt Continuing Connected Transactions is expected to be 2.5% or above on an annual basis and the annual consideration is more than HK$10,000,000, each of such transaction falls within Rule 14A.35 of the Listing Rules, and is subject to the disclosure and approval requirements under Rules 14A.45, 14A.46 and 14A.48 and the annual review requirements under Rules 14A.37 and 14A.38 of the Listing Rules.

To the best of the knowledge, information and belief of the directors of the Company, having made all reasonable enquiries, apart from Sinochem HK and its associates, no other Shareholder has a material interest in the Non-exempt Continuing Connected Transactions and thus no other Shareholder will be required to abstain from voting on the resolution to approve the Non-exempt Continuing Connected Transactions at the SGM.

INFORMATION ON THE COMPANY AND SINOCHEM CORPORATION

The Company

The Company is principally engaged in the production, procurement and sale of fertilizers and related products in the PRC. The main business comprises research and development, production, procurement and distribution of fertilizers and forms a vertically integrated business model combining upstream and downstream businesses. The Company aims to serve the agricultural industry in the PRC by introducing quality resources form overseas and to ensure agricultural safety in the PRC.

The Company’s subsidiaries are also engaged in the production, import, export, distribution, wholesale and retail of fertilizer raw materials and products, as well as research and development and services in the field of fertilizer-related business and products.

– 13 –

LETTER FROM THE BOARD

Sinochem Corporation

Established in 1950, Sinochem Corporation is a key state-controlled enterprise. It holds a 100% equity interest in Sinochem HK, which in turn owns approximately 50.06% of the Company.

Sinochem Corporation’s core business is as follows: petroleum, fertilizer, trade, distribution and logistics of chemicals, crude oil, fuel oil and natural rubber futures; overseas oil and gas exploitation and production, refinery, chemical mining and washing, fertilizer and chemicals production; hotel and real estate development and operation. Sinochem Corporation is one of the four major state-owned oil companies and the largest fertilizer importer and phosphorus and compound fertilizer manufacturer in the PRC. It is also a major sales and marketing service provider of chemical products in the PRC. Sinochem HK is an investment holding company wholly-owned by Sinochem Corporation and incorporated under the laws of Hong Kong with limited liability.

Sinochem Shandong

Sinochem Shandong was established in the PRC on 31 March 2004. Sinochem Shandong has been producing and selling nitrogen compound fertilizers in the PRC since the end of 2004.

Sinochem Macao

Sinochem Macao is principally engaged in sourcing fertilizer products and other related agricultural products from overseas suppliers.

SGM

Your attention is drawn to pages 40 and 42 of this circular where you will find a notice of the SGM to be held at 9:30 a.m. on 28 December 2007 at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Hong Kong. An ordinary resolution will be proposed at the SGM to approve the terms of each of the Agreements, and the transactions contemplated thereunder. Voting on the resolutions will be by way of poll.

Sinochem HK, a wholly-owned subsidiary of Sinochem Corporation and the direct controlling shareholder of the Company, together with any of its associates will abstain from voting on the resolutions to be proposed at the SGM to approve the Agreements, and the transactions contemplated thereunder. So far as the Company was aware having made all reasonable enquiries, Sinochem HK held the voting right in respect of approximately 50.06% of the Company’s issued ordinary share capital as at the Latest Practicable Date; and no voting trust or other agreement or arrangement or understanding has been entered into by or was binding upon Sinochem HK and/or any of its associates and there was no other obligation or entitlement of Sinochem HK and/or any of its associates as at the Latest Practicable Date, whereby Sinochem HK and/or any of its associates has/have or may have temporarily or permanently passed control over the exercise of the voting rights in respect of its/their Shares to a third party, either generally or on a case-by-case basis.

– 14 –

LETTER FROM THE BOARD

A form of proxy for use at the SGM is enclosed with this circular. Whether or not you are able to attend the SGM in person, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon and return it to the branch share registrar and transfer office of the Company in Hong Kong, Tricor Secretaries Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding the SGM. Completion and return of the form of proxy shall not preclude you from attending and voting in person at the SGM should you so wish.

PROCEDURES FOR DEMANDING A POLL

Pursuant to the Bye-laws, at any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless voting by way of a poll is required by the Listing Rules or (before or on the declaration of the results of the show of hands or on the withdrawal of any other demand for poll) a poll is demanded (i) by the Chairman of the meeting; or (ii) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or (iii) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or (iv) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right; or (v) if required by the Listing Rules, by any Director or Directors, who, individually or collectively, hold proxies in respect of shares representing five per cent. or more of the total voting rights of all Shareholders having the right to vote at such meeting.

RECOMMENDATION

The Directors (including the independent non-executive Directors) consider that the terms of each of the Agreements and the maximum annual value of each of the relevant Non-exempt Continuing Connected Transactions are fair and reasonable, on normal commercial terms and the entering into of each of the Agreements is in the interests of the Company and the Shareholders as a whole. The Directors therefore recommend the Shareholders to vote in favour of the resolutions regarding each of the Agreements, and the transactions contemplated thereunder to be proposed at the SGM.

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LETTER FROM THE BOARD

FURTHER INFORMATION

The Independent Board Committee has been appointed to advise the Independent Shareholders in respect of the Non-exempt Continuing Connected Transactions. Somerley has been appointed to advise the Independent Board Committee and the Independent Shareholders in such regard. Accordingly, your attention is drawn to the letter of advice from the Independent Board Committee set out on pages 17 to 18 of this circular, which contains its recommendation to the Independent Shareholders, and the letter from Somerley set out on pages 19 to 31 of this circular, which contains its advice to the Independent Board Committee and the Independent Shareholders.

Your attention is also drawn to the general information set out in the Appendix to this circular.

Yours faithfully, By the order of the Board of Sinofert Holdings Limited Du Ke Ping

Chief Executive Officer

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [60 x 59] intentionally omitted <==

SINOFERT HOLDINGS LIMITED

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

Independent non-executive Directors: Tse Hau Yin, Aloysius Ko Ming Tung, Edward Tang Tin Sek

Principal place of business: Units 4601-4610, 46th Floor Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

Registered Office: Clarendon House 2 Church Street Hamilton HM 11 Bermuda

10 December 2007

To the Independent Shareholders

Dear Sir/Madam,

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

We refer to the circular to the Shareholders dated 10 December 2007 ( Circular ) of which this letter forms part. Terms defined in the Circular shall have the same meanings when used herein unless the context otherwise requires.

The Independent Board Committee has been formed to advise the Independent Shareholders as to whether, in our opinion, the entering into of each of the Agreements and the transactions contemplated thereunder are in the interests of the Company and its Shareholders as a whole and the terms of which are fair and reasonable so far as the Independent Shareholders are concerned. Somerley has been appointed to advise the Independent Board Committee and the Independent Shareholders.

* For identification purposes only

– 17 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We wish to draw your attention to the “Letter from Somerley” as set out on pages 19 to 31 of the Circular. We have considered the terms and conditions of the Agreements, the advice of Somerley and the other factors contained in the “Letter from the Board” as set out on pages 5 to 16 of the Circular.

In our opinion, the terms of the Agreements and the maximum annual value of each of the relevant Non-exempt Continuing Connected Transactions are fair and reasonable so far as the Independent Shareholders are concerned and the Agreements are in the best interests of the Company and the Shareholders as a whole. We also consider that the terms of each of the Agreements and the maximum annual value of each of the relevant Non-exempt Continuing Connected Transactions are fair and reasonable, on normal commercial terms and in the interests of the Company and its shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Agreements and the maximum annual values.

Yours faithfully, Independent Board Committee of Sinofert Holdings Limited Tse Hau Yin, Aloysius Ko Ming Tung, Edward Tang Tin Sek

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LETTER FROM SOMERLEY

The following is the letter of advice from Somerley to the Independent Board Committee and the Independent Shareholders, which has been prepared for the purpose of inclusion in this circular.

SOMERLEY LIMITED

10th Floor

The Hong Kong Club Building 3A Chater Road Central Hong Kong

10 December 2007

To: the Independent Board Committee and the Independent Shareholders

Dear Sirs,

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

We refer to our appointment to advise the Independent Board Committee and the Independent Shareholders in relation to the import servicing arrangements and the sale and purchase of fertiliser products between the Group, Sinochem Corporation and its 51% owned subsidiary, Sinochem Shandong.

Sinochem Corporation, through Sinochem HK, is interested in 50.06% of the issued share capital of the Company as at the Latest Practicable Date. Sinochem Corporation, Sinochem HK and Sinochem Shandong are therefore connected persons of the Company under the Listing Rules. Accordingly, the transactions contemplated under the Agreements constitute continuing connected transactions for the Company.

The past non-exempt continuing connected transactions and the relevant annual caps for the three financial years ending 31 December 2007 were approved by the Independent Shareholders at the Shareholders’ meetings held on 5 July 2005 and 9 June 2006. As the Group will continue to carry out the Non-exempt Continuing Connected Transactions with Sinochem Corporation and/or its associates and the Board expects that the relevant applicable percentage ratios in respect of the annual consideration for each of the four types of the Non-exempt Continuing Connected Transactions will be 2.5% or above and will be more than HK$10,000,000, the Company must comply with the Independent Shareholders’ approval requirements described in Rule 14A.48 of the Listing Rules, in addition to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules. The Directors propose to seek Independent Shareholders’ approval of the Non-exempt Continuing Connected Transactions (including the relevant proposed caps) which will be conducted in the coming

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LETTER FROM SOMERLEY

three financial years ending 31 December 2008, 2009 and 2010. Sinochem HK and its associates will abstain from voting on the ordinary resolutions to be proposed at the SGM to approve the Agreements and the transactions contemplated thereunder.

Details of the Non-exempt Continuing Connected Transactions and the related proposed annual caps are set out in the letter from the Board contained in the circular of the Company to the Shareholders dated 10 December 2007 (the “Circular”), of which this letter forms part. Unless otherwise defined herein, capitalised terms used in this letter shall have the same meanings as those defined in the Circular.

The Independent Board Committee, comprising all the three independent non-executive Directors, namely Messrs. Tse Hau Yin, Aloysius, Ko Ming Tung, Edward and Tang Tin Sek, has been established to make a recommendation to the Independent Shareholders on whether the terms of the Non-exempt Continuing Connected Transactions are on normal commercial terms and in the ordinary course of business of the Group, and whether the Non-exempt Continuing Connected Transactions (including the related proposed annual caps) are fair and reasonable so far as Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. We, Somerley, have been appointed to advise the Independent Board Committee and the Independent Shareholders in this regard.

In formulating our opinion and recommendation, we have relied on the information and facts supplied, and the opinions expressed, by the Directors and management of the Group and have assumed that they are true, accurate and complete and will remain true, accurate and complete up to the time of the SGM. We have also sought and received confirmation from the Directors that no material facts have been omitted from the information supplied and opinions expressed to us. We have no reason to believe that any material information has been withheld from us, or to doubt the truth or accuracy of the information provided. We have relied on such information and consider that the information we have received is sufficient for us to reach an informed view. We have not, however, conducted any independent investigation into the business and affairs of the Group or Sinochem Corporation and its associates.

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LETTER FROM SOMERLEY

PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation on the terms of the Non-exempt Continuing Connected Transactions, we have taken the following principal factors and reasons into consideration:

1. BACKGROUND OF AND REASONS FOR THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

(a) Import Service Framework Agreement

The principal businesses of the Group are the procurement, production and sale of fertiliser and related products. Pursuant to the PRC law, only approved importers are allowed to import fertiliser products into the PRC. At present, only Sinochem Corporation, and several other importers, have been granted the right to import fertiliser products into the PRC. Before the acquisition of the fertilisers business (“Fertiliser Group”) by the Group in June 2005, all the import services for the Fertiliser Group which was then wholly-owned by Sinochem Corporation are provided by Sinochem Corporation. In view of the long-established relationship, and the quality services provided, on 6 June 2005, Sinochem Macao and Sinochem Fertiliser, both wholly-owned subsidiaries of the Company, entered into an agreement (the “2005 Import Service Framework Agreement”) with Sinochem Corporation.

Under the 2005 Import Service Framework Agreement, Sinochem Macao, being the international procurement arm of the Group, sourced fertiliser products from overseas and sold them to Sinochem Corporation. Sinochem Corporation, as an approved importer of fertiliser products in the PRC, imported the products and sold them (except for any such products imported by Sinochem Corporation as an agent for other customers) to Sinochem Fertiliser.

The 2005 Import Service Framework Agreement (including the related annual caps for the three years ending 31 December 2007) was approved by the then independent Shareholders. In view of the expiry of the 2005 Import Service Framework Agreement on 31 December 2007, the Import Service Framework Agreement was entered into between the parties on 16 November 2007 to regulate the import services in the coming three years ending 31 December 2010.

(b) Fertiliser Purchase Agreement with Sinochem Shandong

Sinochem Shandong, a 51% owned subsidiary of Sinochem Corporation, produces and sells nitrogen compound fertilisers in the PRC. Sinochem Fertiliser has been purchasing fertiliser products from Sinochem Shandong since mid-December 2004. In order to avoid any potential competition between the Group and Sinochem Shandong, Sinochem Shandong has entered into the fertiliser purchase agreement (the “2005 Sinochem Shandong Purchase Agreement”) with Sinochem Fertiliser on 6 June 2005 under which Sinochem Shandong has agreed to sell all its fertiliser products to Sinochem Fertiliser for three years ending 31 December 2007. The 2005 Sinochem Shandong Purchase Agreement (including the relevant annual caps for the three years ending 31 December 2007) was duly approved by the then independent Shareholders.

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LETTER FROM SOMERLEY

As the 2005 Fertiliser Purchase Agreement is going to expire on 31 December 2007, the parties entered into the Fertiliser Purchase Agreement, including renewing the annual caps for the three years ending 31 December 2010.

(c) Fertiliser Supply Agreement with Sinochem Shandong

Sinochem Fertiliser and Sinochem Shandong entered into the fertiliser supply agreement in June 2005 (“2005 Fertiliser Supply Agreement”) (amended in April 2006) pursuant to which Sinochem Fertiliser shall supply fertilisers products and raw materials to Sinochem Shandong for the three years ending 31 December 2007. The 2005 Fertiliser Supply Agreement was duly approved by the then independent Shareholders.

As the 2005 Fertiliser Supply Agreement expires on 31 December 2007, the parties entered into the Fertiliser Supply Agreement to regulate the future sales of fertiliser products and raw materials by Sinochem Fertiliser to Sinochem Shandong.

As disclosed in the announcement of the Company dated 28 November 2007, Sinochem Fertiliser and Sinochem Corporation have entered into the Shandong Acquisition Agreement. Pursuant to the Shandong Acquisition Agreement, Sinochem Fertiliser has agreed to purchase and Sinochem Corporation has agreed to sell its 51% interest in Sinochem Shandong. Upon completion of the Shandong Acquisition, Sinochem Shandong will become a 51% owned subsidiary of the Company. In that case, the transactions contemplated under both the Fertiliser Purchase Agreement and the Fertiliser Supply Agreement would no longer constitute continuing connected transactions for the Company and the annual caps to be considered and if thought fit, approved at the SGM will no longer be applicable.

We consider that the entering into of the Agreements is in the ordinary course of business of the Group. It enables the Group to secure the service of an approved importer to arrange for the import of fertilisers from overseas suppliers, which is necessary for its business operations, and to secure suppliers and customers for fertiliser products during the tenures of the relevant agreements.

2. PRINCIPAL TERMS OF THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

(a) Import Service Framework Agreement

Pursuant to the Import Service Framework Agreement, fertiliser products sourced overseas by Sinochem Macao for Sinochem Fertiliser will first be sold to Sinochem Corporation, an approved importer of fertiliser products in the PRC, which will then sell them to Sinochem Fertiliser. Sinochem Corporation imports a small amount of fertiliser products directly from specific countries from time to time. Sinochem Corporation has undertaken that except for fertiliser products imported by it as an agent for other customers, it will sell all the fertiliser products it imports to Sinochem Fertiliser exclusively. On the other hand, Sinochem Fertiliser is free to purchase fertiliser products from any supplier.

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LETTER FROM SOMERLEY

For products sourced by Sinochem Macao for Sinochem Fertiliser, the price to be paid by Sinochem Corporation to Sinochem Macao will be set in accordance with prevailing international market price. Settlement of purchases will be normally made within 90 days of delivery of the fertilisers. Pursuant to the Import Service Framework Agreement, Sinochem Corporation will charge Sinochem Fertiliser on a cost basis, that is, based on the price of the imported fertiliser products purchased by Sinochem Corporation from Sinochem Macao plus product inspection costs, customs and excise handling charges, import duty, value-added tax, and reasonable administrative costs incurred by Sinochem Corporation in relation to the import of the fertilisers. For fertiliser products sourced by Sinochem Corporation directly from overseas, Sinochem Corporation will charge Sinochem Fertiliser in accordance with prevailing domestic wholesale price. Payments will be normally made within 90 days of delivery of the fertilisers.

(b) Fertiliser Purchase Agreement with Sinochem Shandong

Pursuant to the Fertiliser Purchase Agreement, Sinochem Shandong has granted Sinochem Fertiliser an exclusive right to distribute its fertiliser products in the PRC, and Sinochem Shandong shall sell all its fertiliser products to Sinochem Fertiliser at the fair market price in the PRC at the time the purchase order is submitted by Sinochem Fertiliser two months in advance of the purchase. Sinochem Shandong shall not grant any right to any third party to sell any of its fertiliser products in the PRC during the term of the Fertiliser Purchase Agreement. Sinochem Shandong shall supply the fertiliser products upon full payment of the purchase price by Sinochem Fertiliser.

(c) Fertiliser Supply Agreement with Sinochem Shandong

Pursuant to the Fertiliser Supply Agreement, Sinochem Fertiliser shall supply fertiliser products and raw materials to Sinochem Shandong. The price of the fertiliser products and raw materials shall be at fair market price in the PRC at the time the purchase order is placed by Sinochem Shandong. Products and raw materials ordered will be delivered after Sinochem Shandong has fully settled the purchase price.

Given the commodity nature of fertiliser products, we consider that the basis for determining the prices for the fertiliser products to be transacted under the Import Service Framework Agreement, Fertiliser Purchase Agreement and Fertiliser Supply Agreement, which are set with reference to prevailing international or domestic wholesale market prices, is fair and reasonable. We also consider that the basis on which the prices for products to be sold by Sinochem Corporation to Sinochem Fertiliser sourced by Sinochem Macao under the Import Service Framework Agreement, which is based on cost with no mark-up, is fair and reasonable to the Group.

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LETTER FROM SOMERLEY

3. COMPARISON WITH TERMS WITH INDEPENDENT THIRD PARTIES

As Sinochem Fertiliser did not engage any independent importer in the past, we have not been able to review and compare the terms of the past non-exempt continuing connected transactions under the Import Service Framework Agreement with transactions between Sinochem Fertiliser and independent fertiliser importers. We have therefore reviewed contracts for sale/purchase transactions of similar products between Sinochem Corporation and independent third parties and noted that the terms and the basis of price determination for the Non-exempt Continuing Connected Transactions under the Import Service Framework Agreement is no less favourable to Sinochem Fertiliser than the terms and the basis for similar transactions between the Sinochem Fertiliser and independent third parties. We have also reviewed sample contracts between Sinochem Fertiliser and independent third parties for similar products under the Fertiliser Purchase Agreement and the Fertiliser Supply Agreement and noted that the terms and the basis of price determination for the Non-exempt Continuing Connected Transactions under the aforesaid agreements is no less favourable to Sinochem Fertiliser than the terms and the basis for similar transactions between Sinochem Fertiliser and independent third parties.

4. ANNUAL CAPS

The Non-exempt Continuing Connected Transactions are subject to the Listing Rules requirements and conditions as more particularly discussed under the section headed “Reporting requirements and conditions of the Non-exempt Continuing Connected Transactions” below. In particular, the Non-exempt Continuing Connected Transactions are subject to the annual caps.

(a) Review of historical figures

The table below sets out the transaction value of each category of the Non-exempt Continuing Connected Transactions for the two years ended 31 December 2006 and six months ended 30 June 2007 (“Track Record Period”):

				Six months ended
		Year ended	31 December	30 June
		2005	2006	2007
(i)	Import Service Framework
	Agreement
	– between Sinochem Macao	US$732,347,295	US$788,526,000	US$583,033,202
	and Sinochem Corporation	(HK$5,704,985,428)	(HK$6,142,617,540)	(HK$4,541,828,643)
	– between Sinochem Fertiliser	RMB6,460,253,956	RMB5,344,668,000	RMB4,176,654,882
	and Sinochem Corporation	(HK$6,798,120,547)	(HK$5,624,190,255)	(HK$4,395,090,900)
(ii)	Fertiliser Purchase Agreement	RMB236,074,273	RMB438,160,000	RMB318,010,744
		(HK$248,420,786)	(HK$461,075,450)	(HK$334,642,475)
(iii)	Fertiliser Supply Agreement	RMB49,148,250	RMB65,118,000	RMB121,836,707
		(HK$51,718,668)	(HK$68,523,624)	(HK$128,208,678)

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LETTER FROM SOMERLEY

Import Service Framework Agreement

The aggregate value for the import services provided by Sinochem Macao to Sinochem Corporation in 2006 jumped by 7.7% to US$788.5 million (approximately HK$6,142.6 million) when compared to 2005. Such increase in import services to Sinochem Corporation was mainly due to the growth in demand for fertilisers resulting from the PRC Government policy on the agricultural sector which boosted the willingness of farmers to increase investment in agricultural production. The transaction value for the first half of 2007 of US$583.0 million (approximately HK$4,541.8 million) represented approximately 74% of Sinochem Corporation’s total purchases from Sinochem Macao for the whole year of 2006. Such growth is in line with the continuing increase in demand for fertiliser products in the PRC.

The aggregate value for the import services provided by Sinochem Corporation to Sinochem Fertiliser in 2006 dropped by 17.3% to RMB5,344.7 million (approximately HK$5,624.2 million) when compared to 2005. The transaction value for the first half of 2007 of RMB4,176.7 million (approximately HK$4,395.1 million) represented approximately 78% of Sinochem Fertiliser’s total purchases from Sinochem Corporation for the whole year of 2006. Such an increase is in line with Sinochem Corporation’s growing sourcing from Sinochem Macao.

Fertiliser Purchase Agreement

The aggregate value for the purchase of fertiliser products from Sinochem Shandong in 2006 surged by 85.6% when compared to 2005. The purchases during the first half of 2007 already accounted for 73% of the Sinochem Fertiliser’s total purchase from Sinochem Shandong in 2006.

Based on the internal record of Sinochem Shandong, Sinochem Shandong has total output of compound fertilisers of 170,000 tonnes, 290,000 tonnes, and 200,000 tonnes for 2005, 2006 and the first half of 2007 respectively. With the rapid growth of business and the increasing output of Sinochem Shandong, the purchase from Sinochem Shandong was in an upward trend during the Track Record Period.

Fertiliser Supply Agreement

The aggregate value for the supply of fertiliser products and raw materials to Sinochem Shandong in 2006 rose by 32.5% when compared to 2005. The sales during the first half of 2007 represented about 1.9 times of the total sales by Sinochem Fertiliser to Sinochem Shandong for year 2006. Based on the internal record of Sinochem Shandong, the quantities of fertiliser products and raw materials supplied to Sinochem Shandong were 27,595 tonnes, 38,755 tonnes, and 65,585 tonnes in 2005, 2006 and the first half of 2007 respectively. Sinochem Shandong completed its first stage construction of production facilities at the end of 2004. With more production facilities being installed by Sinochem Shandong during 2005 to 2007, more raw materials and fertilisers products were needed for its enhanced production scale during the Track Record Period.

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LETTER FROM SOMERLEY

We are advised by the Directors that the growth in the aggregate value for the supply of fertiliser products and raw materials to Sinochem Shandong was due to both the increase in the volume of fertiliser products and raw materials sold to Sinochem Shandong as well as the rise in the overall selling price of fertiliser products and raw materials in the PRC domestic market. As the potash fertilisers purchased from Sinochem Fertiliser are one of the ingredients needed by Sinochem Shandong in its production of compound fertiliser products, and owing to the increase in consumption of fertilisers in the PRC, the increase in Sinochem Shandong’s production of compound fertiliser products as explained above led to its increase in purchase of fertilisers from Sinochem Fertiliser.

(b) Assessment of the annual caps

In assessing the reasonableness of the proposed annual caps, we have discussed with the Directors the basis and assumptions underlying the projections of the annual caps.

Set out below are the annual caps being proposed for the Non-exempt Continuing Connected Transactions for each of three years ending 31 December 2010:

		Year ending 31 December	Year ending 31 December	Year ending 31 December
		2008	2009	2010
(i)	Import Service Framework
	Agreement
	– between Sinochem Macao	US$2,454,840,000	US$2,705,820,000	US$3,029,700,000
	and Sinochem Corporation	(HK$19,123,203,600)	(HK$21,078,337,800)	(HK$23,601,363,000)
	– between Sinochem Fertiliser	RMB18,663,080,000	RMB20,570,980,000	RMB23,032,950,000
	and Sinochem Corporation	(HK$19,639,145,533)	(HK$21,646,827,318)	(HK$24,237,556,561)
(ii)	Fertiliser Purchase Agreement	RMB1,350,000,000	RMB1,540,000,000	RMB1,740,000,000
		(HK$1,420,604,020)	(HK$1,620,540,882)	(HK$1,831,000,737)
(iii)	Fertiliser Supply Agreement	RMB1,324,026,000	RMB1,521,432,000	RMB1,598,472,000
		(HK$1,393,271,598)	(HK$1,601,001,789)	(HK$1,682,070,925)

Import Service Framework Agreement

Import Service Framework Agreement – in respect of transactions between Sinochem Corporation and Sinochem Macao

As there has been a rise in international sourcing during the Track Record Period according to the China Statistical Yearbook 2006 published in September 2006, the Sinochem Fertiliser expects that it would need to secure a stable supply of high-quality imported fertiliser products to meet the anticipated robust growth in demand in fertilisers in the PRC.

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LETTER FROM SOMERLEY

In view of the escalation in import price of the fertiliser products imported by Sinochem Macao during the Track Record Period and the growth in demand for fertiliser products which may further push up fertiliser prices, we consider the annual cap for the Import Service Framework Agreement between Sinochem Macao and Sinochem Corporation provides an appropriate buffer for Sinochem Fertiliser to capture the growth potential in the fertiliser market in the PRC as well as to accommodate the expected rise in fertiliser prices.

Framework Agreement – in respect of transactions between Sinochem Corporation and Sinochem Fertiliser

The quantity of products expected to be sold by Sinochem Corporation to Sinochem Fertiliser under the Import Service Framework Agreement is principally based on the quantity of products expected to be sold by Sinochem Macao to Sinochem Corporation as discussed above, after adjusting for the quantity that Sinochem Corporation sourced directly from overseas suppliers from time to time. The average price of products to be sold by Sinochem Corporation to Sinochem Fertiliser for the purpose of the annual caps are based on the prices of products sold by Sinochem Macao to Sinochem Corporation as estimated on the basis discussed above, plus an additional cost per tonne which is estimated based on the actual administrative and other direct costs incurred for the import of fertiliser products in 2007.

Fertiliser Purchase Agreement

The annual caps are calculated based on projected production capacity of Sinochem Shandong and projected average price per tonne of products for each of the relevant years, having regard to the anticipated growth of fertiliser consumption in the PRC and the continuing expansion of the Group’s sales network.

The proposed annual cap of 2008 of RMB1,350 million (approximately HK$1,420.6 million) is made up of expected increases in both quantity as well as average sales price for the products. The annual caps for 2009 and 2010 represent a year-on-year growth of 14.1% and 13.0%.

Pursuant to the Fertiliser Purchase Agreement, Sinochem Shandong has agreed to sell all its fertiliser products to Sinochem Fertiliser on an exclusive basis. Accordingly, for the purpose of setting the annual cap for the Fertiliser Purchase Agreement, the quantity of compound fertiliser products to be purchased from Sinochem Shandong is estimated based on the production capacity of Sinochem Shandong of 700,000 tonnes of compound fertilisers in 2008 according to the production plan of Sinochem Shandong which we have discussed with the management of the Company.

According to the management of Sinochem Shandong, the output of Sinochem Shandong was 200,000 tonnes for the first half of 2007 and it is expected that the annual output will reach 500,000, 600,000 and 700,000 tonnes in 2008, 2009 and 2010 respectively. With the rapid growth of the business and the increasing output of Sinochem Shandong, the ongoing purchases from Sinochem Shandong will increase accordingly.

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LETTER FROM SOMERLEY

In view of the historical quantities figures and the fluctuation in the average price of compound fertiliser products in the market during the Track Record Period, in particular, the rise in the first six months of 2007, we consider the annual caps for the Fertiliser Purchase Agreement provide reasonable buffers to cater for the possible increase in the purchase price and the expected significant growth in the volumes of the fertiliser business in the next three years.

Fertiliser Supply Agreement

The annual caps are calculated based on projected quantities of sales and projected average price per tonne of fertiliser products for each of the relevant years, having regard to the anticipated growth of fertiliser consumption in the PRC in the future.

The proposed annual cap for the Fertiliser Supply Agreement of 2008 of RMB1,324 million (approximately HK$1,393.3 million) is made up of expected increases in both quantity as well as average sales price for the products. The annual caps for 2009 and 2010 represent a year-on-year growth of approximately 14.9% and 5.1%.

The potash fertilisers purchased from Sinochem Fertiliser are one of the ingredients needed by Sinochem Shandong in its production of compound fertiliser products. The annual caps are therefore estimated on the basis of the expected production capacity of Sinochem Shandong for each of the three years ending 31 December 2010 as referred to above, taking into account that compound fertilisers produced by Sinochem Shandong generally contain approximately 20% to 25% potash. The proposed annual caps for the Fertiliser Supply Agreement have also provided for a rise in the unit price of potash fertilisers in view of the substantial rise in the sale price of such products in 2007. We consider the proposed annual caps for the Fertiliser Supply Agreement provide reasonable buffers to cater for the possible increase in the purchase prices.

Having considered the growing annual output of Sinochem Shandong as discussed above, it is expected that the ongoing supply by Sinochem Fertiliser to Sinochem Shandong will increase in order to meet its expanding production scale.

In view of the anticipated growth of potash fertiliser consumption in the PRC and the substantial rise in price of potash fertilisers in 2006 and the first six months of 2007, we consider the annual caps for the Fertiliser Supply Agreement provide reasonable buffers to cater for the possible increase in the purchase price and the anticipated growth of potash fertiliser consumption in the next three years.

Having considered the basis on which the related proposed annual caps for the Non-exempt Continuing Connected Transactions are determined as described above, we are of the view that the related proposed annual caps for the Non-exempt Continuing Connected Transactions are fair and reasonable. The Non-exempt Continuing Connected Transactions are subject to annual review and confirmation of due compliance by the independent non-executive Directors and the Company’s auditors, detailed requirements for which are set out in the following paragraph. Such annual review will assist in safeguarding the interests of the Independent Shareholders.

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LETTER FROM SOMERLEY

4. FERTILISER INDUSTRY IN THE PRC

According to the China Statistical Yearbook 2006 published in September 2006, the population of the PRC was approximately 1.31 billion at the end of 2005. As the consumption of fertilisers largely relates to population size and the demand for agricultural products, the consumption of fertilisers in the PRC has increased accordingly to the growth in total population. Such increase in the consumption of fertilisers could have been contributed by the development of the feed crop industry to support the growth in demand for livestock products for food consumption which is in pace with the significant improvement in living standard.

5. REPORTING REQUIREMENTS AND CONDITIONS OF THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

Pursuant to Rules 14A.37 to 14A.40 of the Listing Rules, the Non-exempt Continuing Connected Transactions are subject to the following annual review requirements:

(a) each year the independent non-executive Directors must review the Non-exempt Continuing Connected Transactions and confirm in the annual report and accounts that the Transactions have been entered into:
(i) in the ordinary and usual course of business of the Group;
(ii) either on normal commercial terms or, if there are not sufficient comparable transactions to judge whether they are on normal commercial terms, on terms no less favourable to the Group than terms available to or from (as appropriate) independent third parties; and
(iii) in accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the Shareholders as a whole;
(b) each year the auditors of the Company must provide a letter to the Board (with a copy provided to the Stock Exchange at least ten business days prior to the bulk printing of the Company’s annual report) confirming that the Non-exempt Continuing Connected Transactions:
(i) have received the approval of the Board;
(ii) are in accordance with the pricing policies of the Group;
(iii) have been entered into in accordance with the relevant agreements governing the Non-exempt Continuing Connected Transactions; and
(iv) have not exceeded the annual caps;

– 29 –

LETTER FROM SOMERLEY

(c) the Company shall allow, and shall procure the relevant counterparties to the Non-exempt Continuing Connected Transactions to allow, the Company’s auditors sufficient access to their records for the purpose of the reporting on the Non-exempt Continuing Connected Transactions as set out in paragraph (b);
(d) the Company shall promptly notify the Stock Exchange and publish an announcement in accordance with the Listing Rules if it knows or has reason to believe that the independent non-executive Directors and/or auditors of the Company will not be able to confirm the matters set out in paragraphs (a) and/or (b) respectively.

In light of the reporting requirements attached to the Non-exempt Continuing Connected Transactions, in particular, (i) the restriction of the value of the Non-exempt Continuing Connected Transactions by way of the annual caps; and (ii) the ongoing review by the independent non-executive Directors and auditors of the Company of the terms of the Non-exempt Continuing Connected Transactions and the annual caps not being exceeded, we are of the view that appropriate measures will be in place to monitor the conduct of the Non-exempt Continuing Connected Transactions and safeguard the interests of the Independent Shareholders.

DISCUSSION AND ANALYSIS

Consumption of fertilisers in the PRC has increased nearly by 50 times since the 1960s. The main reason for such growth was the increase in population and the decline in arable land as a result of industrialisation. The decline in arable land makes fertilisers more important as it enhances agricultural productivity.

The consumption of fertilisers largely relates to population size and the demand for agricultural products. According to statistics obtained from China Statistical Yearbook 2006 published in September 2006, population of the PRC was approximately 1.31 billion at the end of 2005, which represents an increase of 8.10% in the eleven years since 1995. The consumption of fertilisers in the PRC has increased accordingly to the growth in total population.

Sinochem Corporation is currently one of the several entities permitted under PRC law to import and distribute fertiliser products in the PRC. Sinochem Corporation has a leading market position as the largest importer of fertiliser products in the PRC in terms of import volume and has an established track record in the fertiliser business offering a comprehensive range of fertiliser and agricultural related products. We consider that the entering into of the Agreements with Sinochem Group is in the interests of the Group as these agreements would enable the Group to continue to secure the service of an approved fertiliser importer, as well as suppliers and customers for fertiliser products in the coming years.

– 30 –

LETTER FROM SOMERLEY

We consider the terms for the Non-exempt Continuing Connected Transactions, which are to be determined by reference to prevailing market prices and based on cost with no mark-up basis, are fair and reasonable and no less favourable to Sinochem Fertiliser than the terms and the basis for similar transactions between Sinochem Fertiliser and independent third parties. The annual caps are based on the historical figures which allowance for the expected significant growth in the next three years of the fertiliser business, both in terms of volumes and prices.

OPINION

Having taken into account the above principal factors, we consider that the Non-exempt Continuing Connected Transactions are in the ordinary and usual course of business of the Group and the terms of the Agreements are on normal commercial terms. We also consider that the Non-exempt Continuing Connected Transactions and the annual caps are fair and reasonable so far as the Independent Shareholders are concerned and the entering into the Agreements is in the interests of the Company and the Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend, and we ourselves recommend, that the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the SGM to approve the Non-exempt Continuing Connected Transactions and the annual caps.

Yours faithfully, for and on behalf of SOMERLEY LIMITED M. N. Sabine Chairman

– 31 –

GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement herein misleading.

2. INTEREST IN SECURITIES

(a) Interests and short positions of Directors and chief executive in shares and debentures

As at the Latest Practicable Date, the Directors and chief executive of the Company had the following interests and short positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO), and the details of any right to subscribe for shares in the Company, which had to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange:

	Number of		Approximate
	underlying		percentage of
	shares of	Other derivative	aggregate
	unlisted share	interest in the	interests to total
	options	shares	issued share
Name of Director	beneficially held	beneficially held	capital
	(Note 1)
Liu De Shu	2,453,000	–	0.0395%
Song Yu Qing	1,838,000	–	0.0296%
Du Ke Ping	5,633,000	362,526 (Note 2)	0.0965%
Chen Guo Gang	1,838,000	–	0.0296%
Harry Yang	2,002,000	253,711 (Note 3)	0.0363%
Wade Fetzer III	256,000	–	0.0041%

– 32 –

GENERAL INFORMATION

APPENDIX

Notes:

The interests of the Directors and chief executive pursuant to unlisted physically settled equity derivatives are held through unlisted share options granted to them in their personal capacities under the share option schemes adopted by the Company on 26 August 2002 and 28 June 2007. Details of these options are as follows:

	Number of
	shares in
	which	Date of	Exercise
Name	interested*	grant	price	Exercise period
Liu De Shu	2,033,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	420,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Song Yu Qing	1,582,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	256,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Du Ke Ping	5,213,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	420,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Chen Guo Gang	1,582,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	256,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Harry Yang	1,582,000	23-1-2006	HK$1.672	23-1-2008 to 22-1-2012	Note 1
	420,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2
Wade Fetzer III	256,000	28-8-2007	HK$ 4.99	28-8-2009 to 27-8-2013	Note 2

Notes:

During the period between 23 January 2008 and 22 January 2009, no more than two-thirds of the options can be exercised and the remaining options can be exercised during the period between 23 January 2009 and 22 January 2012.
The options shall in any event not be exercised between 28 August 2007 and 27 August 2009, but may thereafter be exercised in accordance with the terms of offer of the options.
The total number of options held by each person is the same as the number of underlying shares in which that person is interested pursuant to the options.
Du Ke Ping has a derivative interest in respect of 362,526 shares in the Company within the meaning of Part XV of the SFO. That derivative interest represents Mr. Du’s entitlement to receive an equivalent value in cash of 362,526 shares in the Company subject to, among other things, satisfaction of certain performance targets.
Harry Yang has a derivative interest in respect of 253,711 shares in the Company within the meaning of Part XV of the SFO. That derivative interest represents Mr. Yang’s entitlement to receive an equivalent value in cash of 253,711 shares in the Company subject to, among other things, satisfaction of certain performance targets.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) and the right to subscribe for shares in the Company which had to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Director and the chief executive was taken or deemed to have under such provisions of the SFO) or which were required, pursuant to section 352 of the SFO, to be entered in the register of the Company referred to therein or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies contained in the Listing Rules, to be notified to the Company and the Stock Exchange.

– 33 –

GENERAL INFORMATION

APPENDIX

(b) Notifiable interests and short positions of substantial shareholders and other persons in shares

As at the Latest Practicable Date, so far as was known to the Directors and chief executive of the Company, the following substantial shareholders of the Company within the meaning of the Listing Rules and other persons (in each case other than the Directors and chief executive of the Company) had an interest or a short position in shares or underlying shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO:

	Interests in shares	Interests in shares
		Approximate
	Number of	percentage of
	shares	total issued
Name of substantial shareholder	involved	shares
Sinochem Corporation (Note 1)	4,984,739,015	80.26%
Potashcorp (Note 2)	4,984,739,015	80.26%

Notes:

These shares represent the corporate interest of Sinochem Corporation held through its wholly-owned subsidiary, Sinochem HK. The interests consist of (a) 3,108,863,335 shares directly held by Sinochem HK and interest in 519,995,539 underlying shares agreed to be subscribed by Sinochem HK under the Subscription Agreement and (b) 1,161,589,966 shares held by Potashcorp through its wholly owned subsidiary PCS Barbados Investment Company Limited (“PCS Barbados”) and interest in 194,290,175 underlying shares agreed to be subscribed by PCS Barbados under the Subscription Agreement in which Sinochem HK is deemed to have an interest under sections 317 and 318 of the SFO.
These shares represent the corporate interest of Potashcorp held through its wholly-owned subsidiary, PCS Barbados. The interests consist of (a) 1,161,589,966 shares directly held by PCS Barbados and interest in 194,290,175 underlying shares agreed to be subscribed by PCS Barbados under the Subscription Agreement and (b) 3,108,863,335 shares held by Sinochem HK and interest in 519,995,539 underlying shares agreed to be subscribed by Sinochem HK under the Subscription Agreement in which Potashcorp is deemed to have an interest under sections 317 and 318 of the SFO.

Save as disclosed above, as at the Latest Practicable Date, the Directors and chief executive of the Company were not aware of any substantial shareholder of the Company within the meaning of the Listing Rules or other person (in each case other than a Director or chief executive of the Company) who had, as at the Latest Practicable Date, an interest or a short position in shares or underlying shares which was required to be notified to the Company pursuant to Divisions 2 and 3 of Part XV of the SFO.

– 34 –

GENERAL INFORMATION

APPENDIX

(c) Interests in 10% or more of shares in subsidiaries

As at the Latest Practicable Date, so far as was known to the Directors and chief executive of the Company, the following are the persons who (not being a member of the Group or a Director or chief executive of the Company) were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the subsidiaries of the Company or in any options in respect of such capital:

==> picture [378 x 499] intentionally omitted <==

----- Start of picture text -----

|||||||||
|---|---|---|---|---|---|---|---|
|Approximate|
|Number|of|percentage|of|
|shares|held|or|the|existing|
|extent|of|issued|share|
|registered|capital|or|
|capital|in|registered|
|which|capital|of|the|
|Name|of|subsidiary|Name|of|shareholder|interested|subsidiary|
|RMB22,000,700|46.81%|
|(Fujian|Sinochem|Zhisheng|
|Chemical|Fertilizer|Company|(Yongan|Zhisheng|
|Limited)|Chemical|Company|
|Limited)|
|RMB4,500,000|45%|
|(Hubei|Sinochem|Dongfang|(Hubei|Dongfang|
|Chemical|Fertilizer|Company|Agricultural|Center)|
|Limited)|
|RMB31,000,000|38.75%|
|(Sinochem|Chongqing|Fuling|(Chongqing|Fuling|
|Chemical|Engineering|District|Finance|
|Company|Limited)|Bureau)|
|RMB580,000|29%|
|(Sinochem|Yantai|Crop|
|Nutrition|Co.,|Ltd)|(Yantai|City|Houdao|
|Fertilizer|Company|
|Limited)|
|RMB400,000|20%|
|(Sinochem|Yantai|Crop|(Yantai|Gang|Group|
|Nutrition|Co.,|Ltd)|Company|Limited)|

----- End of picture text -----

– 35 –

GENERAL INFORMATION

APPENDIX

==> picture [378 x 529] intentionally omitted <==

----- Start of picture text -----

|||||||||
|---|---|---|---|---|---|---|---|
|Approximate|
|Number|of|percentage|of|
|shares|held|or|the|existing|
|extent|of|issued|share|
|registered|capital|or|
|capital|in|registered|
|which|capital|of|the|
|Name|of|subsidiary|Name|of|shareholder|interested|subsidiary|
|200,000|40%|
|(Guizhou|Kaiyang|(Chen|Yongliang)|
|Qinglongjiang|Company|
|Limited)|
|RMB4,415,268|43.16%|
|(Chongqing|Fuyin|Plastic|(Boshide|Plastic|
|Company|Limited)|Company|Limited)|
|247,500|49.50%|
|(Fengdou|Tengsheng|(Fengdou|Province|
|Agricultural|Material|Agricultural|Material|
|Company|Limited)|Supply|Station)|
|19,600,000|49%|
|(Fuling|Water|Power|
|Electricity|Investment|
|(Chongqing|Fuling|Qilixin|Group)|
|Tiegongshui|Transport|
|Company|Limited)|
|200,000|20%|
|(Chongqing|Tengsheng|(Chongqing|Fuling|
|Agricultural|Production|Xinlan|Chemical|
|Resources|Company|Limited)|Industrial|Company|
|Limited)|

----- End of picture text -----

Save as disclosed above, as at the Latest Practicable Date, the Directors and chief executive of the Company were not aware of any person (other than a member of the Group or a Director or chief executive of the Company) who was, as at the Latest Practicable Date, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the subsidiaries of the Company or in any options in respect of such capital.

– 36 –

GENERAL INFORMATION

APPENDIX

3. DIRECTORS’ SERVICE CONTRACTS

Mr. Du Ke Ping, an executive Director and the Chief Executive Officer of the Company, has entered into a director’s service contract with the Company for a term of 3 years, with effect from 28 July 2005, subject to: (i) the service contract may be terminated prior to its expiry if either of Mr. Du or the Company serves two months’ prior notice to the other in writing; and (ii) the service contract may be terminated by the Company in the case of bankruptcy, disease and any other significant faults of a director as described in the service contract. Should the Company terminate the contract prior to its expiry, Mr. Du is entitled to receive a cash compensation equivalent to 11 months’ of his basic salary, save for circumstances described in item (ii) above.

Mr. Harry Yang, an executive Director and Deputy General Manager of the Company, has entered into a director’s service contract with the Company for a term of 3 years, with effect from 6 March 2006, subject to: (i) the service contract may be terminated prior to its expiry if either of Mr. Yang or the Company serves two months’ prior notice to the other in writing; or (ii) the service contract may be terminated by the Company in the case of bankruptcy, disease and any other significant faults of a director as described in the service contract. Should the Company terminate the contract prior to its expiry, Mr. Yang is entitled to receive a cash compensation equivalent to 11 months’ of his basic salary, save for circumstances described in item (ii) above.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had entered into or proposed to enter into any service contract with the Company or any of its subsidiaries (excluding contracts expiring or determinable by the employer within one year without payment of compensation, other than statutory compensation).

4. COMPETING INTERESTS

As at the Latest Practicable Date, Mr. Du Ke Ping, an executive Director and the Chief Executive Officer of the Company, was also a director of Sinochem Shandong and Mr. Harry Yang, an executive Director and Deputy General Manager of the Company, was a director of US Agri-Chemicals Corporation. Sinochem Shandong and US Agri-Chemicals Corporation are held as to 51% and 100% by Sinochem Corporation respectively.

Sinochem Shandong and US Agri-Chemicals Corporation are members of the group comprising Sinochem Corporation and its subsidiaries (other than the Group) which continue to be engaged in the production of fertilizers. As at the Latest Practicable Date, Sinochem Shandong continued to be engaged in the production of fertilizer while US Agri-Chemicals Corporation has ceased its operation since November 2005. As at the Latest Practicable Date, four out of eleven of the directors of Sinochem Shandong are also directors or members of the senior management of the Group and the remaining directors of Sinochem Shandong did not hold any positions or assume any role in the Group. As at the Latest Practicable Date, save for Mr. Yang, none of the directors of US Agri-Chemicals Corporation held any positions or assumed any role in the Group.

– 37 –

APPENDIX

GENERAL INFORMATION

In order to limit the competition between the Group and Sinochem Shandong, Sinochem Corporation granted an option to the Company in 2005 which allows the Company to acquire Sinochem Corporation’s interests in Sinochem Shandong at a fair market value. In addition, fertilizer purchase and supply agreements were also entered into with Sinochem Shandong. As announced by the Company on 28 November 2007, Sinochem Fertilizer entered into a conditional acquisition agreement with Sinochem Corporation to acquire Sinochem Corporation’s interest in Sinochem Shandong. Following the completion of the Shandong Acquisition, Sinochem Shandong will become a subsidiary of the Company and as such, the business of Sinochem Shandong will no longer be competing with the business of the Group.

Save as disclosed, as at the Latest Practicable Date, none of the Directors and their respective associates was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with the business of the Group.

5. OTHER ARRANGEMENTS INVOLVING DIRECTORS

As at the Latest Practicable Date:

(a) none of the Directors was materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group; and
(b) none of the Directors had any direct or indirect interest in any assets which had been, since 31 December 2006 (the date to which the latest published audited financial statements of the Company were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group.

6. MATERIAL ADVERSE CHANGE

As at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 December 2006, the date to which the latest published audited financial statements of the Company were made up.

– 38 –

GENERAL INFORMATION

APPENDIX

7. EXPERT

(a) The following is the qualification of the expert who has given its opinions or advice which are contained in this circular:

Name

Qualification

Somerley

a corporation licensed to carry out Type 1 (dealing in securities), Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

(b) As at the Latest Practicable Date, Somerley had no shareholding in any member of the Group and did not have any right, whether legally enforceable or not, to subscribe for or to nominate persons to subscribe for securities in any member of the Group.
(c) As at the Latest Practicable Date, Somerley had no direct or indirect interest in any assets which had been, since 31 December 2006 (the date to which the latest published audited financial statements of the Company were made up), acquired, disposed of by, or leased to any member of the Group, or were proposed to be acquired, disposed of by, or leased to any member of the Group.
(d) Somerley has given and has not withdrawn its written consent to the issue of this circular with inclusion of its letter and the reference to its name included herein in the form and context in which they respectively appear.

8. GENERAL

In the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

9. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the principal place of business of the Company at Units 4601-4610, 46th Floor, Office Tower, Convention Plaza, I Harbour Road, Wanchai, Hong Kong from the date of this circular up to and including 28 December 2007:

(a) the Agreements; and
(b) the service contracts referred to in the section headed “Directors’ service contracts” in this appendix.

– 39 –

NOTICE OF SGM

==> picture [60 x 59] intentionally omitted <==

SINOFERT HOLDINGS LIMITED

*

(Incorporated in Bermuda with limited liability)

(Stock Code: 297)

NOTICE IS HEREBY GIVEN that a special general meeting of Sinofert Holdings Limited (the “ Company ”) will be held at Lounge, Mezzanine Floor, Grand Hyatt Hong Kong, 1 Harbour Road, Hong Kong on 28 December 2007 at 9:30 a.m. for the purposes of considering and, if thought fit, passing, with or without modifications, the following resolutions as ordinary resolutions:

ORDINARY RESOLUTIONS

“ THAT :
(a) the Import Service Framework Agreement (as defined and described in the circular to the shareholders of the Company dated 10 December 2007 (the “Circular”), a copy of which has been produced to the meeting marked “A” and signed by the Chairman of the meeting for the purpose of identification) and the execution thereof and implementation of all transactions thereunder be and are hereby approved, ratified and confirmed;
(b) the proposed maximum aggregate annual values of the transactions under the Import Service Framework Agreement as described in the Circular be and are hereby approved; and
(c) the Directors of the Company be and are hereby authorised to sign, execute, perfect and deliver all such documents and do all such deeds, acts, matter and things as they may in their absolute discretion consider necessary or desirable for the purpose of or in connection with the implementation of the Import Service Framework Agreement and all transactions and other matters contemplated thereunder or ancillary thereto, to waive compliance from and/or agree to any amendment or supplement to any of the provisions of the Import Service Framework Agreement which in their opinion is not of a material nature and to effect or implement any other matters referred to in this resolution.”

* For identification purpose only

– 40 –

NOTICE OF SGM

“ THAT :
(a) the Fertilizer Purchase Agreement (as defined and described in the circular to the shareholders of the Company dated 10 December 2007 (the “Circular”), a copy of which has been produced to the meeting marked “B” and signed by the Chairman of the meeting for the purpose of identification) and the execution thereof and implementation of all transactions thereunder be and are hereby approved, ratified and confirmed;
(b) the proposed maximum aggregate annual values of the transactions under the Fertilizer Purchase Agreement as described in the Circular be and are hereby approved, provided that the Company shall not be subject to such maximum aggregate annual values when the transaction contemplated under the Fertilizer Purchaser Agreement is no longer regarded as a connected transaction under the Listing Rules; and
(c) the Directors of the Company be and are hereby authorised to sign, execute, perfect and deliver all such documents and do all such deeds, acts, matter and things as they may in their absolute discretion consider necessary or desirable for the purpose of or in connection with the implementation of the Fertilizer Purchase Agreement and all transactions and other matters contemplated thereunder or ancillary thereto, to waive compliance from and/or agree to any amendment or supplement to any of the provisions of the Fertilizer Purchase Agreement which in their opinion is not of a material nature and to effect or implement any other matters referred to in this resolution.”
“ THAT :
(a) the Fertilizer Supply Agreement (as defined and described in the circular to the shareholders of the Company dated 10 December 2007 (the “Circular”), a copy of which has been produced to the meeting marked “C” and signed by the Chairman of the meeting for the purpose of identification) and the execution thereof and implementation of all transactions thereunder be and are hereby approved, ratified and confirmed;
(b) the proposed maximum aggregate annual values of the transactions under the Fertilizer Supply Agreement as described in the Circular be and are hereby approved, provided that the Company shall not be subject to such maximum aggregate annual values when the transaction contemplated under the Fertilizer Supply Agreement is no longer regarded as a connected transaction under the Listing Rules; and
(c) the Directors of the Company be and are hereby authorised to sign, execute, perfect and deliver all such documents and do all such deeds, acts, matter and things as they may in their absolute discretion consider necessary or desirable for the purpose of

– 41 –

NOTICE OF SGM

or in connection with the implementation of the Fertilizer Supply Agreement and all transactions and other matters contemplated thereunder or ancillary thereto, to waive compliance from and/or agree to any amendment or supplement to any of the provisions of the Fertilizer Supply Agreement which in their opinion is not of a material nature and to effect or implement any other matters referred to in this resolution.”

By Order of the Board Sinofert Holdings Limited Navin Aggarwal Company Secretary

Hong Kong, 10 December 2007

Head office and principal place of business in Hong Kong: Units 4601-4610, 46th Floor

Office Tower Convention Plaza 1 Harbour Road Wanchai Hong Kong

Notes:

The register of members of the Company will be closed from 24 December 2007 to 28 December 2007, both days inclusive, during which period no transfer of shares of the Company will be registered. In order to qualify for voting at the special general meeting of the Company, all transfers of shares of the Company accompanied by the relevant share certificates must be lodged for registration with the Company’s branch share registrar in Hong Kong, Tricor Secretaries Limited, 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong, by not later than 4:30 p.m. on 21 December 2007.
Any member of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of him. A proxy need not be a shareholder of the Company.
To be valid, a proxy form, together with the power of attorney or other authority (if any) under which it is signed, or a notarially certified copy of that power or authority, must be deposited at the branch share registrar and transfer office of the Company in Hong Kong, Tricor Secretaries Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Hong Kong not less than 48 hours before the time fixed for the holding of the meeting or any adjournment thereof.
Where there are joint holders of any ordinary share of the Company, any one of such holders may vote at the meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such holders be present at the meeting personally or by proxy, that one of such holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.
Voting of the ordinary resolutions set out in this notice will be by poll.
As at the date of this notice, the executive Directors of the Company are Mr. Du Ke Ping (Chief Executive Officer) and Mr. Harry Yang; the non-executive Directors are Mr. Liu De Shu (Chairman), Mr. Song Yu Qing (Deputy Chairman), Mr. Chen Guo Gang, Mr. Stephen Francis Dowdle and Mr. Wade Fetzer III; and the independent non-executive Directors are Mr. Tse Hau Yin, Aloysius, Mr. Ko Ming Tung, Edward and Mr. Tang Tin Sek.

– 42 –

AI assistant

CWT International Limited — Proxy Solicitation & Information Statement 2007

49269_rns_2007-12-09_f7d42dbf-8f31-493c-a1f2-88194a744e1e.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

SINOFERT HOLDINGS LIMITED

*

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

SOMERLEY LIMITED

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

SINOFERT HOLDINGS LIMITED

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER FROM THE BOARD

PARTICULARS OF THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

LETTER FROM THE BOARD

Details of the Non-exempt Continuing Connected Transactions

(A) Import Service Framework Agreement

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(B) Fertilizer Purchase Agreement with Sinochem Shandong

LETTER FROM THE BOARD

(C) Fertilizer Supply Agreement with Sinochem Shandong

LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

IMPLICATIONS UNDER THE LISTING RULES

INFORMATION ON THE COMPANY AND SINOCHEM CORPORATION

The Company

Sinochem Corporation

Sinochem Shandong

Sinochem Macao

SGM

LETTER FROM THE BOARD

PROCEDURES FOR DEMANDING A POLL

RECOMMENDATION

FURTHER INFORMATION

SINOFERT HOLDINGS LIMITED

(Stock Code: 297)

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

SOMERLEY LIMITED

NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

INTRODUCTION

LETTER FROM SOMERLEY

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. BACKGROUND OF AND REASONS FOR THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

(a) Import Service Framework Agreement

(b) Fertiliser Purchase Agreement with Sinochem Shandong

(c) Fertiliser Supply Agreement with Sinochem Shandong

2. PRINCIPAL TERMS OF THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

(a) Import Service Framework Agreement

LETTER FROM SOMERLEY

(b) Fertiliser Purchase Agreement with Sinochem Shandong

(c) Fertiliser Supply Agreement with Sinochem Shandong

3. COMPARISON WITH TERMS WITH INDEPENDENT THIRD PARTIES

4. ANNUAL CAPS

(a) Review of historical figures

Import Service Framework Agreement

Fertiliser Purchase Agreement

Fertiliser Supply Agreement

(b) Assessment of the annual caps

Import Service Framework Agreement

LETTER FROM SOMERLEY

Fertiliser Purchase Agreement

LETTER FROM SOMERLEY

Fertiliser Supply Agreement

4. FERTILISER INDUSTRY IN THE PRC

5. REPORTING REQUIREMENTS AND CONDITIONS OF THE NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS

LETTER FROM SOMERLEY

DISCUSSION AND ANALYSIS

LETTER FROM SOMERLEY

OPINION

1. RESPONSIBILITY STATEMENT

2. INTEREST IN SECURITIES

(b) Notifiable interests and short positions of substantial shareholders and other persons in shares

(c) Interests in 10% or more of shares in subsidiaries

3. DIRECTORS’ SERVICE CONTRACTS

4. COMPETING INTERESTS

APPENDIX

CWT International Limited Proxy Solicitation & Information Statement 2007