Global Corn Group Limited — Audit Report / Information 2016

Mar 20, 2017

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GLOBAL SWEETENERS HOLDINGS LIMITED 大成糖業控股有限公司[*]

(incorporated in the Cayman Islands with limited liability)

(Stock code: 03889)

INSIDE INFORMATION

POSSIBLE DISCLAIMER OF AUDIT OPINION FOR THE FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 201 6

This announcement is made by Global Sweeteners Holdings Limited (the “ Company ” which, together with its subsidiaries, collectively the “ Group ”) pursuant to the Inside Information Provisions (as defined in the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”)) of Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rule 13.09 of the Listing Rules.

POSSIBLE DISCLAIMER OF AUDIT OPINION

The board (the “ Board ”) of directors of the Company (the “ Directors ”) wishes to advise that based on the communication between the auditor of the Company, Mazars CPA Limited (the “ Auditor ”) and the management of the Company, a disclaimer of audit opinion for the financial statements of the Company for the year ended 31 December 2016 (“ 2016 Financial Statements ”) is probable due to, among others, the following principal reasons:

• (i) the inability to obtain sufficient appropriate audit evidence to assess the adequacy and appropriateness of the Directors’ impairment assessment of non-current assets as at 31 December 2014 and 31 December 2015, which may affect the reversal of impairment loss and the related deferred tax effect recognised during the year ended 31 December 2016;

• (ii) the provision of financial guarantees (“ Financial Guarantee Contracts ”) to a bank by a subsidiary of the Company in connection with facilities granted to a former major supplier, which amounted to RMB2.5 billion as at 31 December 2015 and 2016. During the year ended 31 December 2016, the then ultimate holding company of a major shareholder of Global

• for identification purpose only

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Bio-chem Technology Group Company Limited (“ GBT ”), being the ultimate holding company of the Company provided a confirmation in writing that it would undertake all liabilities that may arise from the Financial Guarantee Contracts and would provide financial support to the Group to enable it to continue as a going concern (the “ Confirmation ”). The Financial Guarantee Contracts and the Confirmation had not been recognised in the Group’s financial statements and, as the management of the Company had not developed and applied an appropriate accounting policy for the Confirmation, and had not determined the fair value of the Financial Guarantee Contracts at initial recognition and the carrying amount for subsequent measurement, the Auditor may not be able to determine whether any adjustments in respect of the Financial Guarantee Contracts at 31 December 2015 and 2016 and the Confirmation at 31 December 2016 were necessary;

• (iii) the validity of the going concern basis in the preparation of the 2016 Financial Statements. As disclosed in the auditor’s report on the financial statements of the Company for the year ended 31 December 2015, the Auditor expressed an emphasis of matter in relation to conditions indicating the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. The validity of the going concern basis was dependent on the Group’s future performance and the outcomes of the steps being taken by the management as outlined in the annual report of the Company for the year ended 31 December 2015.

The management of the Group have taken the following steps to improve the Group’s financial position as at the date of this announcement: (i) active negotiations with banks to obtain adequate bank borrowings to finance the Group’s operations; (ii) negotiations with a potential purchaser regarding a potential disposal of lands and buildings of the Group’s production facilities in Luyuan District, Changchun; (iii) closely monitoring of the Group’s operating cash flow; (iv) conducting feasibility study on possible debt-equity swap with creditors of the Group, a proposal of which has been submitted to the Jilin Provincial Government for consideration; and (v) obtaining financial support from Jilin Agricultural Investment Group Co., Ltd. （吉林省農業投資集團有限公司） (“ Nongtou ”), a company established in the People’s Republic of China which is controlled by the State-owned Assets Supervision & Administration Commission of the People’s Government of Jilin Province, an indirect controlling shareholder of GBT.

Despite the aforementioned steps undertaken by the Group, and the receipt of a written confirmation (“ Letter of Support ”) from Nongtou in March 2017 that it would provide financial support to the Group for its operation on a going concern basis and undertake all liabilities that may arise from the Financial Guarantee Contracts, a disclaimer of opinion on the Group’s ability to continue as a going concern is expected to be raised by the Auditor in their audit opinion in respect of the 2016 Financial Statements, as: (i) the Group had continued to record a net loss during the year ended 31 December 2016 and, as of that date, the Group was in a net current liabilities position; (ii) any potential liabilities or obligations arising from the Financial Guarantee Contracts may have a significant negative impact on the financial position of the Group; and (iii) Nongtou may not have sufficient financial strength in providing adequate financial support to the Group, in particular as Nongtou was newly established in August 2016 and its paid up registered capital amounted to only RMB461 million as at the date of this announcement.

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Nevertheless, considering the background of Nongtou and its role in consolidating the state-owned investments in the agricultural sector in Jilin Province, the management of the Company is of the view that Nongtou would be able to support the operations of the Group to provide synergistic effects among its various investments in the agricultural sector in Jilin Province and commit to provide adequate and sufficient financial support to the Group as a whole.

For further information, please refer to the announcement of the Company in relation to the final results of the Company for the year ended 31 December 2016.

GENERAL

The management of the Group will continue to provide further audit evidence to the Auditor in respect of the audit of the 2016 Financial Statements. The Board wishes to emphasise that, as the Company is still in the process of preparing the 2016 Financial Statements, the information contained in this announcement is only based on the Board’s preliminary assessment of the unaudited consolidated financial statements of the Group, and is subject to finalisation and necessary adjustments, and the audit thereof by the Auditor. The announcement of the Company in relation to the final results of the Company for the year ended 31 December 2016 is expected to be published on or around 29 March 2017.

The Board also wishes to emphasise that the Auditor may or may not express a disclaimer of audit opinion for the 2016 Financial Statements. Investors and shareholders of the Company are urged to exercise caution when dealing in the shares and/or securities of the Company.

By order of the Board Global Sweeteners Holdings Limited Lee Chi Yung Company Secretary

Hong Kong, 20 March 2017

As at the date of this announcement, the Board comprises two executive Directors, namely, Mr. Wang Jian and Mr. Kong Zhanpeng; two non-executive Directors, namely, Mr. Fu Qiang and Ms. Zhang Yaohui; and three independent non-executive Directors, namely, Mr. Ho Lic Ki, Mr. Lo Kwing Yu and Mr. Yuen Tsz Chun.

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