Global Corn Group Limited — Interim / Quarterly Report 2021

Sep 9, 2021

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I n t e r i m R e p o r t

CONTENTS

Financial Highlights	2
Corporate Information	4
Message to Shareholders	5
Management Discussion and Analysis	7
Disclosure of Additional Information 15
Condensed Consolidated Financial Statements
Condensed Consolidated Statement of Profit or Loss and Other
Comprehensive Income 22
Condensed Consolidated Statement of Financial Position 23
Condensed Consolidated Statement of Changes in Equity 24
Condensed Consolidated Statement of Cash Flows 25
Notes to Condensed Consolidated Financial Statements 26

FINANCIAL HIGHLIGHTS

	Six months	ended 30 June
	2021	2020	Change %
	(Unaudited)	(Unaudited)
Revenue (HK$’Mn)	356.4	434.6	(18.0)
Gross profit (HK$’Mn)	13.6	48.0	(71.7)
Profit (Loss) before tax (HK$’Mn)	7.2	(151.2)	N/A
Profit (Loss) for the period (HK$’Mn)	7.2	(151.2)	N/A
Basic earnings (loss) per share (HK cents)	0.5	(9.9)	N/A
Interim dividend per share (HK cents)	Nil	Nil	N/A

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Revenue Gross profit Profit (Loss) for the period
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HK$ million
500
434.6
400
356.4
300
200
100
48.0
13.6 7.2
0
-100
(151.2)
-200
1H21 1H20
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Global Sweeteners Holdings Limited Interim Report 2021

FINANCIAL HIGHLIGHTS

REVENUE DISTRIBUTION

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1H21 1H20
%
HFCS 60 Corn
54% refined
products
50 47%
40
HFCS
30 27%
Maltose
Maltodextrin
18% 20
16% Maltodextrin
Glucose
Corn 11% Glucose Maltose 12%
refined 10 8%
6%
products
1% 0
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GROSS PROFIT DISTRIBUTION

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1H21 1H20
%
HFCS 60
54%
Corn
50 refined
products
41%
40
HFCS
32%
Maltose 30
Glucose 24%
20%
20 Maltodextrin
Maltose 14%
Corn
10%
refined 10 Glucose
products Maltodextrin 3%
1% 1% 0
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Interim Report 2021 Global Sweeteners Holdings Limited

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. Zhang Zihua (Acting Chairman) Mr. Tai Shubin

LEGAL ADVISERS AS TO HONG KONG LAWS

Chiu & Partners 40[th] Floor, Jardine House 1 Connaught Place Central Hong Kong

Independent non-executive Directors

Mr. Fan Yeran Mr. Fong Wai Ho Mr. Lo Kwing Yu

COMPANY SECRETARY

Mr. Chan Sing Fai, ACG, ACS, HKICPA

PRINCIPAL BANKER

Bank of China (Hong Kong) Limited Bank of China Tower 1 Garden Road Hong Kong

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

REGISTERED OFFICE

Cricket Square Hutchins Drive PO Box 2681 Grand Cayman KY1-1111 Cayman Islands

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESS IN HONG KONG

Suite 1002, 10[th] Floor Tower A, Cheung Kei Center 18 Hung Luen Road Hung Hom Kowloon Hong Kong

AUDITOR

Mazars CPA Limited Certified Public Accountants 42[nd] Floor Central Plaza 18 Harbour Road Wanchai Hong Kong

Conyers Trust Company (Cayman) Limited Cricket Square Hutchins Drive PO Box 2681 Grand Cayman KY1-1111 Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited Level 54, Hopewell Centre 183 Queen’s Road East Hong Kong

WEBSITE

www.global-sweeteners.com

STOCK CODE

03889

4 Global Sweeteners Holdings Limited Interim Report 2021

MESSAGE TO SHAREHOLDERS

Dear Shareholders,

The Group recorded significant improvement in the results for the Period, with a turnaround from loss-making to the recognition of a net profit of HK$7,230,000 as compared to the corresponding period last year. Such improvement was mainly due to the satisfactory progress made in the Group’s debt restructuring. The heavy debt of the Group, which has plagued the Group for years, has not only placed the Group under tremendous financial pressure, but also given rise to enormous interest expenses, aggravating the already cash-tight situation and curtailing the Group’s business development and profitability. The Group’s management team, after years of dedicated efforts, finally made notable progress in the debt restructuring plan, taking an important step towards resolving the Group’s debt issue.

BUSINESS REVIEW

In the first half of 2021, the stringent COVID-19 control measures in China had been effective in bringing the pandemic under control. Industries were able to resume operations and therefore Chinese economy recovered steadily. In the first half of the year, the gross domestic product of China increased by 12.7% year-on-year. The improved economic environment had led to a steady increase in sugar demand from various sectors. On the other hand, Brazil, the world’s largest sugar producing country, saw a decrease in sugar output in the first half of the year, while the sugar production in India, the second largest sugar producing country, was also temporarily affected as its COVID-19 pandemic situation worsened during the period under review. China, being the third largest sugar producing country in the world, has sugar production that could meet approximately 70% to 80% of its own demand. The remaining demand needs to be fulfilled by imports. Therefore, during the first half of 2021, China saw a modest rise in sugar price. The price of sweeteners in China also increased during the period under review as a result of rising corn price and sugar price spike.

During the period under review, due to high corn cost and the tight working capital of the Group, the Group continued to suspend the operation of its upstream production facilities and most of its downstream sweeteners production lines. In the first half of 2021, the Group concentrated its resources in the higher efficiency operation of the downstream sweeteners production facilities in Shanghai. The continued normal operation of the Shanghai production facilities has provided steady cash inflow for the Group.

In February 2020, 中國銀行股份有限公司吉林省分行 (Jilin Branch of Bank of China), one of the lending banks of the Group, transferred all the rights and benefits of the outstanding loans (the “ BOC Transferred Loans ”) of the Group, Global Bio-chem Technology Group Company Limited (“ GBT ”, together with its subsidiaries, “ GBT Group ”), the controlling shareholder of the Company, and 長春大金倉玉米收儲有限公司 (Changchun Dajincang Corn Procurement Co., Ltd.) (“ Dajincang ”) to 中國信達資產管理股份有限公司吉林省分公司 (Jilin Branch of China Cinda Asset Management Co., Ltd.) (“ China Cinda ”). In January 2021, China Cinda transferred the BOC Transferred Loans to 長春潤德投資集團有限公司 (Changchun Rudder Investment Group Co., Ltd.) (“ Changchun Rudder ”). In March 2021, each of the Group, GBT Group and Dajincang entered into repurchase agreements with Changchun Rudder for the purchase of each of their respective portions of the BOC Transferred Loans. The completion of the Repurchase Agreements took effect at the end of March 2021. All the obligations of the Group and GBT Group as guarantors in respect of the indebtedness of Dajincang under the financial guarantee contracts have been discharged.

On the other hand, 長春帝豪食品發展有限公司 (Changchun Dihao Foodstuff Development Co., Ltd.) (“ Dihao Foodstuff* ”), a subsidiary of the Company, entered into a compensation agreement with the local government in September 2020, for the resumption of properties owned by Dihao Foodstuff in Luyuan District, Changchun. As a result of the aforesaid resumption of land, a total compensation of approximately RMB443,000,000, which Dihao Foodstuff was entitled to, has been received in full at the end of March 2021. The proceeds from the resumption of land will help to relieve the Group’s financial pressure during the period of suspension, and provide working capital for the Group.

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Interim Report 2021 Global Sweeteners Holdings Limited

MESSAGE TO SHAREHOLDERS

OUTLOOK

Entering the second half of the year, the COVID-19 pandemic is still raging. With the pandemic worsening in different parts of the world, a number of countries have redeployed lockdown measures. In China, there have been occasional outbreaks. The pandemic preventive and control measures at home and abroad have caused different levels of disruption to cross-border transportation as well as domestic logistics and transportation. The supply chain of certain industries was inevitably affected. Based on the current situation, it is not likely that the pandemic will end soon. Moreover, international trade and economic situation are getting complex and volatile. The market environment is therefore expected to be full of challenges.

Since the significant increase in 2020, the domestic corn price continued to spike during the first half of 2021. Entering into August 2021, Heilongjiang Province planned for auctions of provincial corn reserves, while other regions in the northeast part of China began to auction their reserves. In addition, with the early-matured corn made available to the market, together with the imported corn continued to increase corn supply in China. It is expected that the corn price in the second half of the year will be stable, but remain at relatively high levels.

Imported sugar will continue to increase as a result of tariff reduction in the second half of 2021. It is expected that there would be further downward pressure on sugar price. The Group will remain cautious in assessing the changes in the sweeteners market.

In the second half of the year, the Group will closely monitor market development, and explore the possibility to partially resume the Group’s production facilities based on its financial conditions. The Group will first consider partially resuming production lines that have relatively lower working capital requirement and can enhance the Group’s overall cost efficiency.

In light of the sustainable development of the Group, the Group’s research and development (“ R&D ”) team is accelerating the R&D of high value-added products, and develops sweetener products targeting health concerns by leveraging the fully integrated advanced R&D facilities of the Shanghai base, to cater to the demand of the increasingly health-conscious consumers.

In the second half of the year, the Group will continue to strive to proceed with the second phase of debt restructuring plan. In addition, the Group will continue to actively engage in negotiation with the local government in respect of the resumption of the remaining land parcels owned by the Group in Luyuan District, Changchun, with an aim to accelerate the resumption progress. The resumption of the remaining land parcels owned by the Group in Luyuan District, Changchun, with an aggregate area of approximately 100,000 square metres is expected to complete by the end of 2021. The proceeds from the resumption of land will not only help to improve the Group’s financial condition, but also provide a considerable amount of cash flow to support the Group’s operations and serve as capital needed for the preparation for partial resumption of production operation.

We greatly appreciate the trust and support that our shareholders and business partners have given to the Group’s management over the years. The Group hopes that its business will be back on track soon, so as to reward our stakeholders for their support.

Zhang Zihua Acting Chairman

27 August 2021

6 Global Sweeteners Holdings Limited Interim Report 2021

MANAGEMENT DISCUSSION AND ANALYSIS

Global Sweeteners Holdings Limited (the “ Company ”) and its subsidiaries (collectively, the “ Group ”) are principally engaged in the manufacture and sale of corn refined products and corn sweeteners, categorised into upstream and downstream products. The Group’s upstream products include corn starch, gluten meal, corn oil and other corn refined products. Corn starch is refined downstream to produce various corn sweeteners such as corn syrup (which includes glucose syrup, maltose syrup and high fructose corn syrup) and corn syrup solid (which includes maltodextrin).

BUSINESS REVIEW

The selling prices of the Group’s products are affected by the prices of their raw materials (principally corn kernels and corn starch), the demand and supply of each of the products and their respective substitutes in the market and the variety of product specifications.

During the six months ended 30 June 2021 (the “ Period ”), the coronavirus disease (“ COVID-19 ”) pandemic continued to put pressure on the global economy. However, as different countries started rolling out COVID-19 vaccination programmes during the Period, infection cases in most countries have dropped from their peaks. There were signs of economic recovery in major economies such as the People’s Republic of China (the “ PRC ” or “ China ”) and the United States (the “ US ”). In the PRC, recovery pace was especially prominent as compared with other countries. China recorded a 7.9% year-on-year growth in the gross domestic product for the second quarter of 2021. Such growth was driven by recoveries in the retail sales and industrial production. Nevertheless, surging commodity prices have significantly narrowed the profit margins of many businesses as manufacturers avoided raising prices to stay competitive. On the other hand, travel restrictions and other COVID-19 prevention measures continued to affect certain industries such as the hospitality and airline industries, causing an unbalanced recovery. Although the PRC economy is on the trajectory of recovery, investment in the manufacturing industry and employment rate have yet to return to the levels before the outbreak of COVID-19. The operating environment of the Group remained challenging throughout the Period.

As disclosed in the annual report of the Company for the year ended 31 December 2020 (the “ 2020 Annual Report ”), the lockdown in the PRC in the first quarter of 2020 significantly lowered the demand for feed products. In addition, competition in the PRC sweeteners market intensified as market shrank. The situation escalated as the extra tariff on out-of-quota sugar imports expired in May 2020. Sugar imports in China surged from 3.39 million metric tonnes (“ MT ”) in 2019 to 4.35 million MT in 2020 as a result. In light of the challenging operating environment, the Group has suspended the operations of most of its production facilities in the PRC since February 2020. For details of the suspension, please refer to the Company’s announcements dated 24 September 2019, 10 February 2020 and 29 May 2020 (collectively, the “ Suspension of Operation Announcements ”).

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Interim Report 2021 Global Sweeteners Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

With respect to corn supply, global corn production for the year 2021/22 is estimated at 1,194.8 million MT (2020/21: 1,133.9 million MT), according to the estimates from the United States Department of Agriculture in July 2021. During the Period, huge demand from China together with increased corn consumption from the feed and bio-ethanol sectors in the US have kept international corn price at high level. International corn price once hit the highest level since 2012 at 773 US cents in May 2021. As at 30 June 2021, international corn price increased significantly to 720 US cents per bushel (equivalent to RMB1,831 per MT) as compared with 484 US cents per bushel (equivalent to RMB1,231 per MT) at the end of 2020. In the PRC, corn harvest in 2021/22 is estimated to produce approximately 271.8 million MT (2020/21: approximately 260.7 million MT) of corn, with consumption volume estimated at 293.7 million MT for 2021 (2020: 289.2 million MT). A shortage of corn of approximately 22 million MT is expected in the PRC in 2021. To make up the shortfall, China has been importing corn during the Period. According to the General Administration of Customs of the PRC, China imported approximately 15.9 million MT of corn during the first five months of 2021. It is estimated that China’s corn import will reach 26.0 million MT (2020: 11.3 million MT) in 2021. Despite this, domestic corn price has continued to surge during the Period and reached RMB2,790 per MT (end of June 2020: RMB2,158 per MT) by the end of June 2021. However, the recovery pace in the downstream user market has been lagging behind the rising corn cost. In addition, during the first quarter of 2021, there were outbreaks of the African Swines Fever (the “ ASF ”) in certain pig producing regions in China. Pig producers quickly increased the number of pigs slaughtered to avoid the spread of the ASF. The sudden drop in the number of livestocks has slowed down the recovery of the feed market and put the selling price of the Group’s upstream products under pressure. As such, it was not commercially viable for the Group to resume the production operation of the upstream corn refinery. As a result, the Group continued to suspend its upstream operation during the Period. Consequently, the performance of the Group’s upstream business was adversely affected during the Period. The Group will continue to monitor the market conditions and be cautious in making decisions on the Group’s business strategies so as to optimise the operation of the Group’s production facilities to maintain relatively healthy cash flow while balancing its market presence.

As for the sugar market, global sugar production volume for 2020/21 was 179.0 million MT (2019/20: 166.2 million MT). Although the COVID-19 pandemic had an impact on sugar consumption, industry estimates still show demand growth for sugar in 2020/21, leading to a sugar deficit of 3.1 million MT. As a result, international sugar price increased to 17.63 US cents per pound (equivalent to RMB2,517 per MT) (end of June 2020: 11.84 US cents per pound, equivalent to RMB1,853 per MT) by the end June of 2021. In the PRC, domestic sugar production reached 10.7 million MT (2019/20: 10.4 million MT) in 2020/21 harvest, while consumption stayed at around 15.2 million MT. As a result, domestic sugar price rose to RMB5,690 per MT (end of June 2020: RMB5,573 per MT) by the end of June 2021. Nevertheless, due to the changes in consumption patterns as a result of the COVID-19 prevention measures during the pandemic, people have reduced the frequency of dining out. The recovery pace of catering and other related industries has been slow, putting pressure on the recovery of the sweeteners market. In addition, the rising corn cost has further squeezed the profit margins of the Group’s downstream sweetener products. As such, the Group has continued to suspend the operation of the downstream sweeteners production facilities in the Jinzhou and Xinglongshan sites and consolidated its resources into the Shanghai production site which has higher operational efficiency during the Period. The Group will continue to utilise its research and development capabilities to improve operational efficiency to lower cost and at the same time, develop products that better suit market needs to cope with market changes.

8 Global Sweeteners Holdings Limited Interim Report 2021

MANAGEMENT DISCUSSION AND ANALYSIS

The operating environment of the Group in the second half of 2021 will continue to be challenging as the PRC corn price is expected to remain high throughout 2021. On top of this, the continued impact of the COVID-19 pandemic and the emergence of COVID-19 variants will continue to pose unknown threats to the global economy and slow down the pace of recovery. In the short run, businesses will have to find their ways to survive with the continued existence of the COVID-19 pandemic. The Group will continue to monitor closely the market conditions as well as the financial conditions of the Group, and assess the viability of various business segments to determine the best timing to resume the operation of the Group’s subsidiaries as soon as possible to the extent practicable. In the long run, the Group will continue to strengthen its market position utilising its brand name, strive to provide excellent customer service and be customer-oriented to understand better their ever-changing demands and product requirements, and further improve cost effectiveness and product mix through continuous research and development efforts.

FINANCIAL PERFORMANCE

During the Period, the continued impact of the COVID-19 pandemic and high corn price in China have narrowed the profit margin of the Group’s products (especially the upstream products). As such, the Group has continued to suspend all of its upstream operation and most of its downstream operation during the Period and consolidated its resources into the Shanghai production site which has higher operational efficiency to minimise financial risks and secure financial resources during the time of economic uncertainty. Consequently, the consolidated revenue of the Group dropped by 18.0% to approximately HK$356.4 million (2020: HK$434.6 million) during the Period. Notwithstanding the improvement in corn sweetener prices as driven by rising sugar price and the effort of the Group to optimise its operation to stay competitive during the Period, the increase in the average selling price of the Group’s sweetener products was offset by the increase of corn cost. This has further squeezed the profit margins of the sweetener products. As a result, the gross profit of the Group declined by 71.7% to approximately HK$13.6 million (2020: HK$48.0 million), while the gross profit margin dropped by approximately 7.2 percentage points to approximately 3.8% (2020: 11.0%).

Despite this, the continuous effort of the Group to lower costs through stringent cost control during the Period has resulted in the reduction of the Group’s operating cost by approximately 21.5% to approximately HK$101.9 million (2020: HK$129.8 million). In addition, during the Period, the management of the Group has been actively negotiating with suppliers on repayment terms. As a result, the finance cost of the Group decreased by 44.9% to approximately HK$41.6 million (2020: HK$75.5 million).

During the Period, following the completion of the repurchase agreements dated 26 March 2021 entered into between 長春帝豪食品發展有限公司 (Changchun Dihao Foodstuff Development Co., Ltd.) (“ Dihao Foodstuff ”) and 長春潤德投資集團有限公司 (Changchun Rudder Investment Group Co., Ltd.) (“ Changchun Rudder ”) (the “ Completion of the GSH Repurchase Agreements ”), pursuant to which Dihao Foodstuff purchased its debt owed to Changchun Rudder in the aggregate principal amount of RMB198.6 million with outstanding interest (the “ GSH Indebtedness ”) at the consideration of RMB113,510,000, the Group’s financial obligations in relation to the GSH Indebtedness has been discharged. As result, the Group recognised a one-off gain on debt restructuring of approximately HK$128.3 million. Consequently, the Group recorded a net profit of approximately HK$7.2 million (2020: net loss: HK$151.2 million), with EBITDA (i.e. earnings before interest, taxation, depreciation and amortisation) of approximately HK$83.2 million (2020: LBITDA (i.e. loss before interest, taxation, depreciation and amortisation): HK$33.3 million) for the Period.

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Interim Report 2021 Global Sweeteners Holdings Limited

MANAGEMENT DISCUSSION AND ANALYSIS

Upstream products

(Sales amount: HK$0.8 million (2020: HK$205.7 million)) (Gross profit: HK$0.1 million (2020: HK$19.6 million))

As the upstream operation in the Jinzhou site has been suspended since the second quarter of 2020 and most of the inventories have been sold in 2020, no revenue (2020: HK$159.6 million) from corn starch was recorded during the Period. Meanwhile, revenue of other corn refined products decreased significantly to approximately HK$0.8 million (2020: HK$46.1 million) as a result of the decline in sales volume by approximately 99.1% to approximately 200 MT (2020: 22,000 MT) during the Period. No internal consumption of corn starch (2020: 7,000 MT) was recorded during the Period.

Consequently, the Group’s upstream products segment recorded an insignificant gross profit of approximately HK$0.1 million (2020: HK$19.6 million) with gross profit margin of approximately 12.5% (2020: 9.5%).

Corn Sweeteners

Corn syrup

(Sales amount: HK$297.4 million (2020: HK$175.5 million)) (Gross profit: HK$13.4 million (2020: HK$21.8 million))

As the COVID-19 pandemic in China stabilised during the Period with sugar price increased year-on-year, the revenue of the corn syrup segment increased by approximately 69.5% to approximately HK$297.4 million (2020: HK$175.5 million). Such increase was mainly attributable to the increase in sales volume by approximately 30.9% to approximately 72,000 MT (2020: 55,000 MT). However, the increase in the selling price of corn syrup did not keep up with the increase in the raw material cost. As such, the gross profit and gross profit margin of the corn syrup segment dropped to approximately HK$13.4 million (2020: HK$21.8 million) and 4.5% (2020: 12.4%) respectively, during the Period.

Corn syrup solid

(Sales amount: HK$58.2 million (2020: HK$53.4 million)) (Gross profit: HK$0.1 million (2020: HK$6.6 million))

During the Period, the sales volume of corn syrup solid, which was entirely maltodextrin, declined by approximately 10.5% to approximately 17,000 MT (2020: 19,000 MT) as a result of the suspensions in the Xinglongshan site and the Jinzhou site with most of their inventories exhausted in 2020. As the selling price of maltodextrin has improved during the Period, the revenue of maltodextrin increased by approximately 9.0% to approximately HK$58.2 million (2020: HK$53.4 million). However, as the increase in selling price did not keep up with the rising corn cost, the gross profit and gross profit margin of the corn syrup solid segment decreased to approximately HK$0.1 million (2020: HK$6.6 million) and 0.2% (2020: 12.4%), respectively.

10 Global Sweeteners Holdings Limited Interim Report 2021

MANAGEMENT DISCUSSION AND ANALYSIS

Export sales

During the Period, export sales accounted for approximately 2.1% (2020: 4.3%) of the Group’s total revenue. The Group exported approximately 2,000 MT (2020: 1,000 MT) of corn sweeteners which amounted to sales of approximately HK$7.3 million (2020: HK$3.0 million) during the Period. No export sales of upstream corn refined products was recorded during the Period (2020: HK$15.9 million).

Other income and gains, operating expenses, finance costs and income tax expenses

Other income and gains

During the Period, other income and gains of the Group increased by approximately 2,111.3% to approximately HK$137.1 million (2020: HK$6.2 million) as a result of the recognition of a one-off gain on debt restructuring of approximately HK$128.3 million subsequent to the Completion of the GSH Repurchase Agreements.

Selling and distribution costs

During the Period, selling and distribution costs dropped by approximately 25.4% to approximately HK$26.7 million (2020: HK$35.8 million), accounting for approximately 7.5% (2020: 8.2%) of the Group’s total revenue. Such decrease was mainly attributable to the decrease in transportation and packaging costs as a result of the decline in sales volume during the Period.

Administrative expenses

During the Period, administrative expenses decreased by approximately 17.9% to approximately HK$44.5 million (2020: HK$54.2 million), representing approximately 12.5% (2020: 12.5%) of the Group’s total revenue. Such decrease was mainly attributable to the decrease in depreciation expenses by approximately 36.3% to HK$15.3 million (2020: HK$24.0 million) as a result of the completion of the first phase of resumption of the properties owned by Dihao Foodstuff (the “ Dihao Resumption ”) in the second half of 2020 and the effective cost control policy of the Group during the Period.

Other expenses

Other expenses of the Group decreased to approximately HK$30.7 million (2020: HK$39.9 million) during the Period. Such decrease was mainly attributable to the decrease in expenses in relation to the idle capacity of certain production facilities to approximately HK$24.3 million (2020: HK$36.8 million) as a result of the completion of the Dihao Resumption in the second half of 2020 and the effective cost control policy of the Group during the Period.

Finance costs

During the Period, finance costs of the Group decreased to approximately HK$41.6 million (2020: HK$75.5 million) as a result of the decrease in interest on trade payables to approximately HK$9.5 million (2020: HK$47.2 million).

Interim Report 2021 Global Sweeteners Holdings Limited 11

MANAGEMENT DISCUSSION AND ANALYSIS

Income tax expenses

During the Period, as all the subsidiaries of the Group recorded tax losses or the estimated assessable profits are wholly absorbed by tax losses brought forward from previous years, no income tax expenses were incurred for the Period (2020: Nil).

Profit (Loss) attributable to shareholders

As a result of the one-off gain on debt restructuring of approximately HK$128.3 million from the Completion of the GSH Repurchase Agreements during the Period, the Group recorded a net profit of approximately HK$7.2 million (2020: net loss: HK$151.2 million).

CAPITAL STRUCTURE, FINANCIAL RESOURCES AND LIQUIDITY

Capital structure

The capital structure of the Group consists of debts, which mainly include interest-bearing bank and other borrowings and equity reserves attributable to owners of the Company which comprise issued ordinary shares and various reserves. The board (the “ Board ”) of directors (the “ Directors ”) of the Company shall review the Group’s cost and risks of capital on a semi-annual basis with the aim to achieve the optimal capital structure for the Group.

Net borrowing position

The total interest-bearing bank and other borrowings of the Group as at 30 June 2021 decreased by approximately HK$73.1 million to approximately HK$922.5 million (31 December 2020: HK$995.6 million) was mainly attributable to the Completion of the GSH Repurchase Agreements during the Period, while cash and bank balances as at 30 June 2021 decreased by HK$8.3 million to approximately HK$13.0 million (31 December 2020: HK$21.3 million). As such, the net borrowings decreased to approximately HK$909.5 million (31 December 2020: HK$974.3 million).

Structure of interest-bearing bank and other borrowings

As at 30 June 2021, the Group’s interest-bearing bank and other borrowings amounted to approximately HK$922.5 million (31 December 2020: HK$995.6 million), all (31 December 2020: all) of which were denominated in Renminbi. The percentage of interest-bearing bank and other borrowings wholly repayable within one year and in the second to the fifth years were 80.0% and 20.0% (31 December 2020: 81.5% and 18.5%), respectively.

As at 30 June 2021, interest-bearing bank and other borrowings amounted to approximately HK$274.1 million (31 December 2020: HK$213.0 million) have been charged at fixed interest rates of approximately 5.8% to 8.0% per annum (31 December 2020: 7.0% to 8.0% per annum) for terms of one year to three years. Other than that, the rest of the Group’s interest-bearing bank and other borrowings were charged with reference to floating interest rate.

12 Global Sweeteners Holdings Limited Interim Report 2021

MANAGEMENT DISCUSSION AND ANALYSIS

Turnover days, liquidity ratios and gearing ratios

Credit terms, normally 30 to 90 days, are granted to customers, depending on their credit worthiness and business relationships with the Group. During the Period, trade receivable turnover days increased to approximately 58 days (31 December 2020: 46 days) as longer credit periods were granted to a number of customers with good track records.

During the Period, trade payables turnover days decreased to approximately 57 days (31 December 2020: 134 days) as the Group has actively negotiated with its suppliers on repayment plans mutually agreed among the parties during the Period.

The Group’s inventory level maintained at similar level at approximately HK$62.5 million (31 December 2020: HK$61.6 million) at 30 June 2021. Consequently, the inventory turnover days remained at 33 days (31 December 2020: 33 days) for the Period.

As at 30 June 2021, the current ratio and quick ratio decreased to approximately 0.2 (31 December 2020: 0.4) and 0.2 (31 December 2020: 0.4) respectively. Such declines were mainly due to the decrease of current assets. Gearing ratio in terms of debts (i.e. total interest-bearing bank and other borrowings) to total deficit and debts (i.e. aggregate total of shareholders deficit, non-controlling interests and total interest-bearing bank and other borrowings) was approximately 184.0% (31 December 2020: 174.4%). To improve the financial position of the Group, the Company has adopted several strategic measures as mentioned in note 2.2 to the condensed consolidated financial statements.

MAJOR INVESTMENTS

The Group had no material investments as at 30 June 2021.

MATERIAL ACQUISITION AND DISPOSAL OF SUBSIDIARIES AND ASSOCIATED COMPANIES

There was no material acquisition or disposal of subsidiaries, associates or joint ventures of the Company during the Period.

CONTINGENT LIABILITIES

As at 30 June 2021, the Group did not have any significant contingent liabilities.

CHARGE ON ASSETS

As at 30 June 2021, the Group’s interest-bearing bank and other borrowings amounted to approximately HK$651,546,000 (31 December 2020: HK$727,825,000) were secured by pledge of certain property, plant and equipment and right-of-use assets of the Group which amounted to approximately HK$335,752,000 (31 December 2020: HK$329,859,000) and HK$82,053,000 (31 December 2020: HK$58,077,000), respectively, and a receivable of a fellow subsidiary amounted to approximately HK$120,482,000 (31 December 2020: HK$119,048,000).

Interim Report 2021 Global Sweeteners Holdings Limited 13

MANAGEMENT DISCUSSION AND ANALYSIS

FOREIGN EXCHANGE EXPOSURE

Most of the operations of the Group were carried out in the PRC in which transactions were denominated in Renminbi, while export sales accounting for approximately 2.1% (2020: 4.3%) of the Group’s revenue were mostly denominated in US Dollars. The management of the Company has been closely monitoring the Group’s exposure to foreign exchange fluctuations in Renminbi and is of the view that there is no material unfavourable exposure to foreign exchange fluctuations. Therefore, the Group currently does not intend to hedge its exposure to foreign exchange fluctuations in Renminbi. The Group will constantly review the economic situation, development of the Group’s business segments and its overall foreign exchange risk profile, and will consider appropriate hedging measures in the future as and when necessary.

FUTURE PLANS AND PROSPECTS

In order to maintain the competitiveness of the Group, the Group will optimise its production while maintaining its market presence, diversify its product mix and enhance its capability in developing high value-added products and introduce strategic business alliance with prominent market leaders.

The operating environment in the second half of 2021 is expected to be challenging as the COVID-19 pandemic will continue to affect the global economy and the pace of recovery. In the short run, businesses will have to find their ways to survive with the continued existence of the COVID-19 pandemic. The Group will continue to monitor closely the market conditions as well as the financial conditions of the Group, and assess the viability of various business lines to determine the best timing to resume the operation of the Group’s subsidiaries as soon as possible to the extent practicable so that the Group could maximise the synergistic effects amongst its various production sites for the supply of raw materials and serving their respective markets.

In the long run, the Group will continue to strengthen its market position utilising its brand name, strive to provide excellent customer service and be customer-oriented to understand better their ever-changing demands and product requirements, and further improve cost effectiveness and product mix through continuous research and development efforts.

With respect to the financial position of the Group, the management will endeavour to facilitate the materialisation of the debt restructuring plan to improve the financial position of the Group and adopt a prudent approach in face of the current market condition.

NUMBER AND REMUNERATION OF EMPLOYEES

As at 30 June 2021, the Group had approximately 950 (31 December 2020: 950) full time employees in Hong Kong and the PRC. The Group appreciates the correlation between human resources and its success, and recognises the value of human resources management as a source of competitive advantage in the increasingly turbulent environment. The Group places great emphasis on the selection and recruitment of new staff, on-thejob training, appraisal and rewards to its employees to align employees’ performance with the Group’s strategies. The Company also acknowledges the contribution of its employees and strives to maintain the remuneration packages and career development opportunities to retain current employees. Remuneration packages include discretionary bonuses payable on a merit basis, which are in line with industrial practice. Staff benefits provided by the Group include mandatory funds, insurance schemes and discretionary bonuses.

14 Global Sweeteners Holdings Limited Interim Report 2021

DISCLOSURE OF ADDITIONAL INFORMATION

INTERIM DIVIDEND

The Board does not recommend the payment of any dividend in respect of the Period (six months ended 30 June 2020: Nil).

DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As at 30 June 2021, none of the Directors and chief executive of the Company had any interests and short position in the shares, underlying shares or debentures of the Company or any associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “ SFO ”)) as recorded in the register required to be kept under section 352 of the SFO, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Rules Governing the Listing of Securities (the “ Listing Rules ”) on the Stock Exchange (the “ Model Code ”).

DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES

At no time during the Period were rights to acquired benefits by means of the acquisition of shares in or debentures of the Company granted to any Directors or any person in whose shares and debentures any Directors is deemed to be interested under Part XV of the SFO, or were any such rights exercised by them; or was the Company or any of its subsidiaries a party to any arrangement to enable the Directors to acquire such rights in any other body corporate.

SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SHARES AND UNDERLYING SHARES

As at 30 June 2021, so far as is known to the Directors, the following persons (other than a Director or chief executive of the Company) had an interest or short position in the shares and underlying shares of the Company as recorded in the register required to be kept by the Company under section 336 of the SFO:

		Number of	Percentage of the
	Capacity/nature of	shares held	Company’s issued
Name	interest	(a)	share capital
Global Corn Bio-chem Technology	Beneficial owner	977,778,000 shares (L)	64.01
Company Limited
(“Global Corn Bio-chem”)
Global Bio-chem Technology Group	Interest of a controlled	977,778,000 shares (L)	64.01
Company Limited (“GBT”,	corporation (b)
together with its subsidiaries,
the “GBT Group”)	Beneficial owner	500,000 shares (L)	0.03
Modern Agricultural Industry	Interest of a controlled	978,278,000 shares (L)	64.04
Investment Limited (“Modern	corporation
Agricultural”)	(c)

Interim Report 2021 Global Sweeteners Holdings Limited 15

DISCLOSURE OF ADDITIONAL INFORMATION

Remarks:

• (a) The letter “L” denotes the person’s interest in the share capital of the Company.

• (b) These shares are registered in the name of Global Corn Bio-chem, which is a wholly-owned subsidiary of GBT. Therefore, GBT is deemed to be interested in all the shares in which Global Corn Bio-chem is interested according to the SFO.

• (c) These shares are registered in the name of or deemed to be interested by GBT, of which the issued share capital is beneficially owned as to approximately 35.2% by Modern Agricultural as at the date of this report. The entire issued capital of Modern Agricultural is held by Modern Agricultural Industry Investment Holdings Limited (“ Modern Agricultural Holdings ”) which is in turn wholly-owned by Jilin Province Modern Agricultural Industry Investment Fund (LLP) (“ PRC LLP ”). The sole general partner of PRC LLP is Jilin Province Modern Agricultural Industry Fund Limited (“ GP ”). As at the date of this report, 60.0% of the investment capital of PRC LLP is owned by 吉林省農業投資集團有限 公司 (Jilin Province Agricultural Investment Group Co., Ltd.) (“ Nongtou ”). As such, by virtue of Nongtou’s control over PRC LLP, Nongtou has become the indirect controlling shareholder of the Company. Nongtou is controlled by 吉林省人 民政府國有資產監督管理委員會 (The State-Owned Assets Supervision and Administration Commission of the People’s Government of Jilin Province) (“ Jilin SASAC* ”). Each of Modern Agricultural, Modern Agricultural Holdings, PRC LLP, GP, Nongtou and Jilin SASAC is deemed to be interested in the interest held by GBT.

As of 30 June 2021, none of the Directors nor chief executive of the Company had an interest or short position in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company, nor any of its subsidiaries has purchased, redeemed or sold any of the Company’s listed securities during the Period.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE AND THE MODEL CODE

The Company is committed to ensuring a high standard of corporate governance for the interests of its shareholders and devotes considerable effort in identifying and formalising the best practices.

To the best knowledge and belief of the Board, the Company has complied with all code provisions in the Corporate Governance Code (the “ CG Code ”) as set out in Appendix 14 to the Listing Rules during the Period.

The Company has adopted a code of conduct regarding the Directors’ securities transactions on terms no less exacting than the required standard set out in the Model Code. Having made specific enquiry of each of the Directors, all the Directors have confirmed to the Company that they have complied with the required standards set out in the Model Code and the Company’s code of conduct throughout the Period.

16

Global Sweeteners Holdings Limited Interim Report 2021

DISCLOSURE OF ADDITIONAL INFORMATION

AUDIT COMMITTEE

The audit committee (the “ Audit Committee ”) of the Company was established in accordance with the requirements of the CG Code for the purposes of reviewing and providing supervision over the Group’s financial reporting process, risk management and internal controls systems. The Audit Committee comprises all independent non-executive Directors, namely, Mr. Fong Wai Ho (chairman of the Audit Committee), Mr. Fan Yeran and Mr. Lo Kwing Yu.

The Audit Committee meets regularly with the Company’s senior management, internal audit team and the external auditor of the Company to review the Company’s financial reporting process, the effectiveness of internal control, audit process and risk management.

The Audit Committee has reviewed the interim results of the Group for the Period and has discussed with the management of the Company for the accounting principles and policies adopted by the Group.

NOMINATION COMMITTEE

The nomination committee (the “ Nomination Committee ”) of the Company comprises an executive Director, Mr. Zhang Zihua (chairman of the Nomination Committee), and two independent non-executive Directors, being Mr. Fan Yeran and Mr. Lo Kwing Yu. The duties of the Nomination Committee are, among others, determining policy for the nomination of the Directors, including the nomination procedures, processes and criteria adopted by the Nomination Committee to select and recommend candidates for directorship. The Nomination Committee also reviews the structure, size and composition of the Board and makes recommendations on any proposed changes to the Board and on the selection of individuals nominated for directorships, and reviews the board diversity policy adopted by the Company.

REMUNERATION COMMITTEE

The members of the remuneration committee (the “ Remuneration Committee ”) of the Company include an executive Director, Mr. Zhang Zihua, and two independent non-executive Directors, being Mr. Fan Yeran (chairman of the Remuneration Committee) and Mr. Lo Kwing Yu. The duties of the Remuneration Committee are, among others, to make recommendations to the Board on the remuneration packages of executive Directors and the senior management, as well as on the Group’s policy and structure for the remuneration of the Directors and the senior management. The Remuneration Committee also assesses performance of executive Directors and approves the terms of executive Directors’ service contracts. The Board has adopted remuneration policy of the Directors on the basis of their merit, qualification and competence with reference to the market benchmarks.

CORPORATE GOVERNANCE COMMITTEE

The corporate governance committee (the “ Corporate Governance Committee ”) of the Company was established in accordance with the requirements of the CG Code for the purposes of determining, developing and reviewing the Company’s policies and practices on corporate governance, and providing supervision over the Board and its committees’ compliance with their respective terms of reference and relevant requirements under the CG Code, or other applicable laws, regulations, rules and codes. The Corporate Governance Committee comprises an executive Director, Mr. Zhang Zihua, and two independent non-executive Directors, being Mr. Fong Wai Ho (chairman of the Corporate Governance Committee) and Mr. Fan Yeran.

The Corporate Governance Committee reviewed the Company’s policies and practices on corporate governance, and considered that the Company has complied with all code provisions in the CG Code during the Period.

17

Interim Report 2021 Global Sweeteners Holdings Limited

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DISCLOSURE OF ADDITIONAL INFORMATION

CONTINUING CONNECTED TRANSACTIONS EXECUTIVE COMMITTEE

The continuing connected transactions executive committee (the “ CCT Executive Committee ”) of the Company is responsible for monitoring, reviewing and managing the continuing connected transactions (the “ CCT ”) between the Group on one part and the GBT Group on the other part. The main duties of the CCT Executive Committee are to prepare the CCT reports and submit the same to the CCT supervisory committee (the “ CCT Supervisory Committee ”) of the Company on regular basis. The members of the CCT Executive Committee are Mr. Meng Xiangyan and Mr. He Xiaoming, both being the senior management of the Group.

CCT SUPERVISORY COMMITTEE

The CCT Supervisory Committee that comprises all independent non-executive Directors was established by the Board to supervise the CCT Executive Committee. The main responsibilities of the CCT Supervisory Committee, among others, are:

• (1) to devise and revise detailed rules and guidelines (the “ Prescribed Guidelines ”) from time to time for the CCT Executive Committee to follow in order to ensure that the CCT with the GBT Group, which are not qualified for exemptions or waivers from the shareholders’ approval, annual review and disclosure requirements under Chapter 14A of the Listing Rules, will be entered into in accordance with the respective agreements in relation to purchase of corn starch and other raw materials such as enzymes by the Group from the GBT Group, sale of corn sweeteners by the Group to the GBT Group and supply of electricity, water and steam and the provision of wastewater treatment services by the GBT Group to the Group (the “ New Master Agreements ”), on normal commercial terms or better and on terms that are fair and reasonable and in the interests of the shareholders as a whole;

• (2) to review, on a quarterly basis, the quarterly reports (the “ CCT Quarterly Reports ”) submitted by the CCT Executive Committee in relation to purchase of corn starch (either in powder or slurry form) and other raw materials from the GBT Group by the Group and the sale of corn sweeteners to the GBT Group (the “ Proposed Purchase and Sale ”) as to whether they have been proceeded with in accordance with the Prescribed Guidelines;

• (3) in respect of the provision of utility services (the “ Utility Services ”) by the GBT Group to the Group, to review the CCT Quarterly Reports from the CCT Executive Committee as to how the fees have been charged by the GBT Group during the previous quarter, with evidence and detailed calculations as to the amount of costs and expenses actually incurred by the GBT Group, and to recommend the Board to take action in recovering any excessive fees charged by the GBT Group (if any); and

• (4) to report its findings on review of the CCT Quarterly Reports to the Board and give recommendations to the Board to ensure the transactions will be entered into in the interests of the Group and the shareholders of the Company as a whole.

Details of findings of the CCT Supervisory Committee for the Period have been published on 27 May 2021 and 24 August 2021. As reported by the CCT Supervisory Committee, (i) the Proposed Purchase and Sale conducted during the Period were in line with the Prescribed Guidelines; (ii) the fees charged by the GBT Group in respect of its provision of the Utility Services during the Period have been charged in accordance with the relevant New Master Agreements; and (iii) there was no other matter that needs to be brought to the attention of the shareholders of the Company.

18 Global Sweeteners Holdings Limited Interim Report 2021

DISCLOSURE OF ADDITIONAL INFORMATION

SUPPLEMENTARY INFORMATION IN RELATION TO THE PERIOD UNDER REVIEW

Updates on the suspension of operation of certain subsidiaries of the Group

Reference is made to the Suspension of Operation Announcements. Due to the continued impact of the COVID-19 pandemic and the upsurge of the domestic corn price during the Period, the operating environment of the Group’s products remained challenging. Although selling prices of various product lines improved as China market recovered, such price improvement was not able to offset the rise in raw material costs. As such, it was still not commercially viable for the Group to resume the suspended operations and the Group has maintained its strategy to suspend the operation of those subsidiaries and focus its resources on the operation in Shanghai which has higher operational efficiency to minimise cash outflow and retain its financial resources. The management of the Group expects that the COVID-19 pandemic will linger for a relatively long period of time and business operators have to adapt to the changes the pandemic would bring about. The management believes that in the short run, based on the current corn price and the pace of recovery of the downstream user market, the continued suspension of operation of the suspended subsidiaries and production facilities is the optimal approach for the Group at the moment. Nevertheless, the Group will continue to closely monitor the market conditions and the financial conditions of the Group, and seek opportunity to partially resume the production facilities as soon as possible to the extent practicable.

Relocation of production facilities to the Xinglongshan site

Reference is made to the 2020 Annual Report, in relation to, among others, the suspension and relocation of production facilities of the Group at Luyuan District in Changchun pending its relocation of production facilities to the Xinglongshan site and the resumption of the land and buildings owned by the Group which located in Luyuan District, Changchun, the PRC (the “ Relevant Properties ”).

Due to the challenging economic environment and the continued impact of the COVID-19 pandemic, the initial plan for the relocation of the Group’s production facilities has been placed on hold in light of the changing market conditions and pending the availability of capital and favourable market conditions. The Group will continue to assess the changing market conditions and the progress of the resumption of the Relevant Properties owned by the Group so as to update and revise the feasibility studies of the relocation plan for submission to, among others, the relevant government bodies for approval. The Group will make announcement to inform its shareholders and potential investors for the latest updates of the relocation of production facilities to the Xinglongshan site as appropriate.

Interim Report 2021 Global Sweeteners Holdings Limited 19

DISCLOSURE OF ADDITIONAL INFORMATION

DISCLOSURE PURSUANT TO RULES 13.19 AND 13.21 OF THE LISTING RULES

Breach of loan agreements

• (1) Reference is made to the joint announcement of the Company and GBT dated 21 September 2018. Under a loan agreement (the “ Loan Agreement ”) entered into between 錦州大成食品發展有限公司 (Jinzhou Dacheng Food Development Co., Ltd.) (“ Jinzhou Dacheng ”), which is an indirect wholly-owned subsidiary of the Company, and 中國銀行股份有限公司錦州港支行 (Jinzhou Port Branch of Bank of China) (the “ Lender ”) in respect of a twelve month fixed term loan due in December 2018 (the “ Loan ”), Jinzhou Dacheng was required to satisfy certain financial covenants, failure to comply with such financial covenants entitles the Lender to, among others, declare the outstanding principal amount, accrued interest and all other sums payable under the Loan immediately due and payable. The Loan has been guaranteed by the Company and certain members of the Group have also provided guarantees and securities to secure the Loan. Jinzhou Dacheng has failed to fulfill certain financial covenants under the Loan Agreement. Such breach entitles the Lender to, among others, declare the outstanding principal amount, accrued interest and all other sums payable under the Loan Agreement immediately due and payable. In addition, such breach may also trigger cross default provisions in other loan agreements entered into by the Group. As at the date of this report, certain financial covenants under the Loan Agreement have yet to be fulfilled, and Jinzhou Dacheng has yet to receive a waiver from the Lender in respect of the breach under the Loan Agreement and the outstanding principal amount under the Loan Agreement is approximately RMB19.8 million as at the date of this report.

• (2) Reference is made to the joint announcement of the Company and GBT dated 4 May 2020. Under the various loan agreements (collectively, the “ Yuancheng CCB Loan Agreements ”) entered into between 錦 州元成生化科技有限公司 (Jinzhou Yuancheng Bio-chem Technology Co., Ltd.) (“ Jinzhou Yuancheng ”), which is an indirect wholly-owned subsidiary of the Company, and 中國建設銀行股份有限公司錦州分行 (Jinzhou Branch of China Construction Bank) (“ Jinzhou CCB ”) for the aggregate principal amount of RMB189.9 million (collectively, the “ Yuancheng CCB Loans ”), Jinzhou Yuancheng was required to satisfy certain financial covenants, failure to perform or comply with any of those financial covenants would entitle Jinzhou CCB to, among others, declare the outstanding principal amount, accrued interest and all other sums payable under the Yuancheng CCB Loans immediately due and payable. The maximum liability jointly guaranteed by the Company, GBT and certain members of the Group is RMB200.0 million, being the principal amount, together with all interests, liabilities, fees and penalty that may accrue under the Yuancheng CCB Loan Agreements. As at the date of this report, Jinzhou Yuancheng has failed to fulfill certain financial covenants under the Yuancheng CCB Loan Agreements. Such breach entitles Jinzhou CCB to, among others, declare the outstanding principal amount, accrued interest and all other sums payable under the Yuancheng CCB Loan Agreements immediately due and payable. In addition, such breach may also trigger cross default provisions in other loan agreements entered into by the Group. As at the date of this report, Jinzhou Yuancheng has yet to receive any waiver from Jinzhou CCB and the outstanding principal amount under the Yuancheng CCB Loan Agreements is approximately RMB189.9 million as at the date of this report.

20 Global Sweeteners Holdings Limited Interim Report 2021

DISCLOSURE OF ADDITIONAL INFORMATION

• (3) Reference is made to the joint announcement of the Company and GBT dated 23 December 2020 regarding the fixed-term loan under a loan agreement entered into between Dihao Foodstuff and 中國農業銀行股份有 限公司農安縣支行 (Nongan Branch of Agricultural Bank of China Co., Ltd.) (“ Nongan Branch ABC ”) with aggregate outstanding principal amount of RMB180.0 million, together with respective outstanding interest have become immediately due and payable before their maturity date in June 2021 in contemplation of the debt restructuring plan of the Group and the GBT Group. Dihao Foodstuff has defaulted in the repayment of such loan. The maximum liability guaranteed by the Company is RMB250.0 million, together with all interests, liabilities, fees and penalty that may accrue under the loan agreement. Dihao Foodstuff and 長春 帝豪結晶糖開發實業有限公司 (Changchun Dihao Crystal Sugar Industry Development Co., Ltd.) have also provided collaterals to secure such loan. As at the date of this report, the outstanding principal under such loan agreement is RMB180.0 million.

In addition, such default in repayment of such loans by the Group may also trigger cross default of other loan agreements entered into by the Group.

As disclosed in the joint announcement of the Company and GBT dated 23 December 2020, the transfer agreement entered into between 中國農業銀行股份有限公司吉林省分行 (Jilin Branch of Agricultural Bank of China Co., Ltd.) (“ Jilin Branch ABC ”) and 中國信達資產管理股份有限公司吉林省分公司 (Jilin Branch of China Cinda Asset Management Co., Ltd.) (“ China Cinda ”), Jilin Branch ABC (acting on behalf of Nongan Branch ABC) has agreed to sell to China Cinda, and China Cinda has agreed to purchase, all of its rights and benefits of the loans owned by the Group and the GBT Group with an aggregate outstanding principal amount of approximately RMB1,400.0 million and aggregate outstanding interest of approximately RMB42.8 million (the “ ABC Transferred Loans ”) at a consideration of approximately RMB414.7 million. The ABC Transferred Loans include, among others, the loan of the Group mentioned above with the principal amount of RMB180.0 million. The Company, together with GBT, will endeavour to facilitate the implementation of the next step of the debt restructuring plan for the ABC Transferred Loans with the aim to improve the financial position of the Group and the GBT Group.

• (4) Reference is made to the joint announcement of the Company and GBT dated 27 April 2021 regarding the fixed-term loan under a loan agreement (the “ Jinzhou BOC Loan Agreement ”) entered into between Jinzhou Yuancheng and 中國銀行股份有限公司錦州港支行 (Jinzhou Port Branch of Bank of China*). Jinzhou Yuancheng has defaulted in the repayment of such loan and the outstanding principal amount under the Jinzhou BOC Loan Agreement is RMB30.0 million, together with outstanding interests. The maximum liability guaranteed by the Group is RMB36.8 million, being the principal amount, together with all interests, liabilities, fees and penalty that may accrue under the Jinzhou BOC Loan Agreement. In addition, such breach may also trigger cross default provisions in other loan agreements entered into by the Group. As at the date of this report, the outstanding principal under the Jinzhou BOC Loan Agreement is RMB30.0 million.

IMPORTANT EVENTS SUBSEQUENT TO THE PERIOD UNDER REVIEW

There was no important event after the end of the Period up to the date of this report.

Interim Report 2021 Global Sweeteners Holdings Limited 21

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the six months ended 30 June 2021

		Six months ended 30 June	Six months ended 30 June
		2021	2020
		(Unaudited)	(Unaudited)
	Notes	HK$’000	HK$’000
REVENUE	4	356,399	434,576
Cost of sales		(342,800)	(386,608)
Gross profit		13,599	47,968
Other income and gains	4	137,116	6,227
Selling and distribution costs		(26,676)	(35,756)
Administrative expenses		(44,500)	(54,179)
Other expenses		(30,710)	(39,914)
Finance costs	5	(41,599)	(75,544)
PROFIT (LOSS) BEFORE TAX	6	7,230	(151,198)
Income tax expenses	7	—	—
PROFIT(LOSS) FOR THE PERIOD		7,230	(151,198)
OTHER COMPREHENSIVE (LOSS) INCOME
Items that are reclassified or may be
reclassified subsequently to profit or loss:
Exchange differences on translation of financial statements
of operations outside HongKong		(3,575)	5,582
TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD		3,655	(145,616)
PROFIT (LOSS) ATTRIBUTABLE TO:
Owners of the Company		7,230	(151,198)
Non-controllinginterests		—	—
		7,230	(151,198)
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:
Owners of the Company		3,733	(145,683)
Non-controllinginterests		(78)	67
		3,655	(145,616)
EARNINGS (LOSS) PER SHARE	8
Basic		HK0.5 cents	HK(9.9) cents
Diluted		HK0.5 cents	HK(9.9) cents

22 Global Sweeteners Holdings Limited Interim Report 2021

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2021

		30 June	31 December
		2021	2020
		(Unaudited)	(Audited)
	Notes	HK$’000	HK$’000
NON-CURRENT ASSETS
Property, plant and equipment	10	599,506	622,975
Right-of-use assets		68,133	68,023
Deposits paid for acquisition of property,
plant and equipment		–	16
Intangible assets		1,704	1,704
		669,343	692,718
CURRENT ASSETS
Inventories		62,525	61,602
Trade receivables	11	113,589	96,047
Prepayments, deposits and other receivables	12	33,590	432,876
Due from fellow subsidiaries	18(ii)	54,655	–
Cash and bank balances		13,005	21,281
		277,364	611,806
CURRENT LIABILITIES
Trade payables	13	107,365	253,200
Other payables and accruals	14	262,814	316,329
Lease liabilities		1,099	1,094
Interest-bearing bank and other borrowings		738,172	811,039
Due to fellow subsidiaries	18(ii)	–	90,804
Taxpayables		24,772	24,434
		1,134,222	1,496,900
NET CURRENT LIABILITIES		(856,858)	(885,094)
TOTAL ASSETS LESS CURRENT LIABILITIES		(187,515)	(192,376)
NON-CURRENT LIABILITIES
Interest-bearing bank and other borrowings		184,337	184,524
Lease liabilities		1,640	–
Deferred income		26,349	27,202
Deferred tax liabilities		21,362	20,756
		233,688	232,482
NET LIABILITIES		(421,203)	(424,858)
CAPITAL AND RESERVES
Share capital	15	152,759	152,759
Reserves		(567,659)	(571,392)
Deficit attributable to owners of the Company		(414,900)	(418,633)
Non-controlling interests		(6,303)	(6,225)
TOTAL DEFICIT		(421,203)	(424,858)

23

Interim Report 2021 Global Sweeteners Holdings Limited

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2021

At 1 January2021	Attributable to owners of the Company Properties Statutory Non-
	Share Share revaluation reserve Exchange Accumulated controlling Total capital premium reserve fund reserve losses Total interests deficit HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
	152,759 1,074,879 97,156 67,684 315,609 (2,126,720) (418,633) (6,225) (424,858)
Profit for the period Other comprehensive loss for theperiod	– – – – – 7,230 7,230 – 7,230 – – – – (3,497) – (3,497) (78) (3,575)
Total comprehensive income (loss)for theperiod	– – – – (3,497) 7,230 3,733 (78) 3,655
At 30 June 2021 (unaudited)	152,759 1,074,879 97,156 67,684 312,112 (2,119,490) (414,900) (6,303) (421,203)
At 1 January2020	Attributable to owners of the Company Properties Statutory Non- Share Share revaluation reserve Exchange Accumulated controlling Total capital premium reserve fund reserve losses Total interests deficit HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 152,759 1,074,879 118,081 67,910 326,874 (2,146,120) (405,617) (5,794) (411,411)
Loss for the period Other comprehensive income for theperiod	— — — — — (151,198) (151,198) — (151,198) — — — — 5,515 — 5,515 67 5,582
Total comprehensive income (loss)for theperiod	— — — — 5,515 (151,198) (145,683) 67 (145,616)
At 30 June 2020 (unaudited)	152,759 1,074,879 118,081 67,910 332,389 (2,297,318) (551,300) (5,727) (557,027)

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Global Sweeteners Holdings Limited Interim Report 2021

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 30 June 2021

	Six months ended 30 June	Six months ended 30 June
	2021	2020
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit (Loss) before tax	7,230	(151,198)
Adjustments for:
Finance costs	41,599	75,544
Bank interest income	(38)	(195)
Depreciation
— Property, plant and equipment	30,591	37,825
— Right-of-use assets	3,770	4,572
Amortisation of deferred income	(1,181)	(1,077)
Gain on debt restructuring	(128,279)	—
Gain on disposal of property, plant and equipment	(1)	—
Reversal of write-down of inventories, net	(420)	(671)
Reversal of impairment of trade receivables, net	(611)	(1,092)
Impairment of deposits paid for acquisition of property, plant and
equipment	16	62
(Reversal of impairment) Impairment of prepayments,
deposits and other receivables, net	(1,538)	2,118
Wavier of payables	—	(810)
Changes in working capital:
Inventories	239	138,872
Trade receivables	(14,154)	114,066
Prepayments, deposits and other receivables	(7,193)	863
Trade payables	(148,886)	(130,321)
Otherpayables and accruals	(63,823)	(38,397)
Cash (used in) generated from operations	(282,679)	50,161
Interest received	38	195
Taxpaid	—	(341)
Net cash(used in) generated from operating activities	(282,641)	50,015
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment	(804)	(923)
Proceeds from disposal of property, plant and equipment	53	—
Compensation for the Dihao Resumption received	413,236	—
Net cashgenerated from(used in) investing activities	412,485	(923)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from new interest-bearing bank and other borrowings	82,530	65,556
Repayment of interest-bearing bank and other borrowings	(65,060)	(98,889)
Interest paid	(9,276)	(17,025)
Change of amounts due with fellow subsidiaries	(146,462)	(10,467)
Net cash used in financing activities	(138,268)	(60,825)
Net decrease in cash and cash equivalents	(8,424)	(11,733)
Cash and cash equivalents at beginning of period	21,281	30,820
Effect of foreign exchange rate changes,net	148	(237)
CASH AND CASH EQUIVALENTS AT END OF PERIOD,
REPRESENTED BY CASH AND BANK BALANCES	13,005	18,850

25

Interim Report 2021 Global Sweeteners Holdings Limited

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

1. CORPORATE INFORMATION

The condensed consolidated financial statements of Global Sweeteners Holdings Limited (the “ Company ”) and its subsidiaries (collectively, the “ Group ”) for the six months ended 30 June 2021 (the “ Period ”) were authorised for issue in accordance with a resolution of the board (the “ Board ”) of directors (the “ Directors ”) of the Company passed on 27 August 2021.

The Company was incorporated in the Cayman Islands under the Companies Law, Cap 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands as an exempted company with limited liability. The principal activity of the Company is investment holding. The address of the registered office of the Company is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands. The principal place of business of the Company is located at Suite 1002, 10[th] Floor, Tower A, Cheung Kei Center, 18 Hung Luen Road, Hung Hom, Kowloon, Hong Kong. The Group is principally engaged in the manufacture and sale of corn refined products and corn sweeteners. There was no significant change in the nature of the Group’s principal activities during the Period.

The Company is a subsidiary of Global Corn Bio-chem Technology Company Limited, a company incorporated in the British Virgin Islands. In the opinion of the Directors, the ultimate holding company is Global Bio-chem Technology Group Company Limited (“ GBT ”, together with its subsidiaries, the “ GBT Group ”), a company incorporated in the Cayman Islands whose shares are also listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”).

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES

2.1 Basis of preparation

The condensed consolidated financial statements for the Period have been prepared in accordance with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities (the “ Listing Rules ”) on the Stock Exchange and Hong Kong Accounting Standard (“ HKAS ”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants.

The condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements for the year ended 31 December 2020.

2.2 Going concern

The Group recorded a profit of approximately HK$7.2 million (six months ended 30 June 2020: loss of approximately HK$151.2 million) for the Period and had net current liabilities of approximately HK$856.9 million (31 December 2020: approximately HK$885.1 million) and net liabilities of approximately HK$421.2 million (31 December 2020: approximately HK$424.9 million) as at 30 June 2021. There is a material uncertainty related to these conditions that may cast significant doubt on the Group’s ability to continue as a going concern and therefore, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. In view of these circumstances and based on the recommendations of the audit committee (the “ Audit Committee ”) of the Company after its critical review of the management’s position, the management of the Company has taken the following steps to improve the financial position of the Group:

26 Global Sweeteners Holdings Limited Interim Report 2021

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

• 2.2 Going concern (continued)

• (1) Active negotiations with banks and creditors for the debt restructuring plan of the Group to improve its financial position

As announced by the Company and GBT on 23 December 2020, each of 中國農業銀行股份有限 公司吉林省分行 (Jilin Branch of Agricultural Bank of China Co., Ltd.) (“ Jilin Branch ABC ”) and 中國建設銀行股份有限公司吉林省分行 (Jilin Branch of China Construction Bank Corporation) (“ Jilin Branch CCB ”) announced that they have each reached a transfer agreement with 中國 信達資產管理股份有限公司吉林省分公司 (Jilin Branch of China Cinda Asset Management Co., Ltd.) (“ China Cinda ”) to transfer all rights and benefits of certain loans. Jilin Branch ABC has transferred all of its rights and benefits of the loans owed by, amongst others, the Group and the GBT Group with an aggregate outstanding principal amount of approximately RMB1,400.0 million and aggregate outstanding interest of approximately RMB42.8 million (the “ ABC Transferred Loans ”) to China Cinda at a consideration of approximately RMB414.7 million; and Jilin Branch CCB has transferred all of its rights and benefits of the loans owed by the GBT Group with an aggregate outstanding principal amount of approximately RMB1,983.5 million with aggregate outstanding interest of approximately RMB128.5 million (the “ CCB Transferred Loans* ”) to China Cinda at a consideration of approximately RMB583.6 million.

In addition, as disclosed in the joint announcement of the Company and GBT dated 26 March 2021, each of the Group, the GBT Group and 長春大金倉玉米收儲有限公司 (Changchun Dajincang Corn Procurement Co., Ltd.) (“ Dajincang ”) (collectively, the “ BOC Borrowers ”) entered into repurchase agreements with 長春潤德投資集團有限公司 (Changchun Rudder Investment Group Co., Ltd.) (“ Changchun Rudder ”) (collectively, the “ Repurchase Agreements ” and each, a “ Repurchase Agreement ”), pursuant to which Changchun Rudder had agreed to sell to each of the BOC Borrowers, and each of the BOC Borrowers had agreed to purchase, all of the rights and benefits of the loans owed to Changchun Rudder, which included, among others, the loans of the Group in the amount of approximately RMB198.6 million with outstanding interest (the “ GSH Indebtedness ”), the loans of the GBT Group (excluding the Group) in the amount of approximately RMB1.3 billion with outstanding interest and the indebtedness of Dajincang with an aggregate outstanding principal amount of RMB2.49 billion together with outstanding interest (the “ Dajincang Indebtedness ”), which was guaranteed by 長春帝豪食品發展有限公司 (Changchun Dihao Foodstuff Development Co. Ltd.) (“ Dihao Foodstuff ”), an indirect wholly-owned subsidiary of the Company and certain subsidiaries of the GBT Group (collectively, the “ Guarantor Subsidiaries ”). The completion of the Repurchase Agreements took place on 31 March 2021. Upon the completion of the Repurchase Agreements, all the obligations of the Guarantor Subsidiaries pursuant to the financial guarantee contracts (the “ Financial Guarantee Contracts* ”) in respect of the Dajincang Indebtedness have been discharged. For details of the Repurchase Agreements, please refer to the joint announcements of the Company and GBT dated 26 March 2021 and 31 March 2021.

Following the discharge of the GSH Indebtedness as a result of completion of the Repurchase Agreements as set out above, the Group recorded a one-off gain on debt restructuring of approximately HK$128.3 million, being the difference between the considerations payable by the Group in the amount of RMB113,510,000 and the amount of the GSH Indebtedness. As a result, the net liabilities of the Group improved to approximately HK$421.2 million (31 December 2020: HK$424.9 million) as at 30 June 2021.

Interim Report 2021 Global Sweeteners Holdings Limited 27

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

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2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

• 2.2 Going concern (continued)

(1) Active negotiations with banks and creditors for the debt restructuring plan of the Group to improve its financial position (continued)

The Company, together with GBT, will endeavour to facilitate the implementation of the debt restructuring plan of the ABC Transferred Loans and the CCB Transferred Loans. It is currently expected that the debt restructuring plan of the ABC Transferred Loans and the CCB Transferred Loans could be completed by the end of 2021, pending and subject to the internal approval from the respective creditors and relevant local government authorities. The Board expects that upon the completion of the above debt restructuring plan, the financial position of the Group will improve significantly.

(2) Resumption of land and buildings located in Luyuan District, Changchun

As detailed in the annual report of the Company for the year ended 31 December 2020 (the “ 2020 Annual Report ”), in respect of the resumption of the land and buildings owned by the Group and the GBT Group which located in Luyuan District, Changchun, the People’s Republic of China (the “ PRC ” or “ China ”) (the “ Relevant Properties ”), the Group and the GBT Group have received an official document dated 28 April 2018 from the relevant authorities confirming the Relevant Properties being part of the subject properties for redevelopment under the PRC’s Slum Redevelopment Policy. Subsequently, an execution announcement for the redevelopment under the PRC’s Slum Redevelopment Policy was also issued on 30 October 2019.

The first phase of resumption involved the properties owned by Dihao Foodstuff (the “ Dihao Resumption ”) with an aggregate area of land of approximately 149,249 square metres and total gross floor area of approximately 67,000 square metres. The Dihao Resumption took place in 2020 and all the compensation in the amount of approximately RMB443.0 million has been received during the Period. For details of the Dihao Resumption, please refer to the joint announcements made by the Company and GBT on 24 August 2020 and 30 September 2020.

For the remaining part of the Relevant Properties owned by the Group with an aggregate area of land of approximately 100,000 square metres, it is expected that its resumption will be conducted by the local government by the end of 2021. The Directors expect that the proceeds from the resumption of the remaining part of the Relevant Properties owned by the Group will help to relieve the financial and cash flow pressure of the Group during the period of suspension.

(3) Monitoring of the Group’s operating cash flows

The Group has taken various measures to minimise operating cash outflow and secure financial resources during market turbulence as a result of, among others, the coronavirus disease (“ COVID-19 ”) pandemic. During the Period, the Group has suspended the production operation of most of the Group’s production facilities and consolidated its resources in the Shanghai production site.

28 Global Sweeteners Holdings Limited Interim Report 2021

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

2. BASIS OF PREPARATION AND ACCOUNTING POLICIES (continued)

• 2.2 Going concern (continued)

(4) Financial support from the indirect major shareholder of GBT

The Group has received a renewed written confirmation dated 30 March 2021 from 吉林省農 業投資集團有限公司 (Jilin Agricultural Investment Group Co., Ltd.) (“ Nongtou ”, together with its subsidiaries, the “ Nongtou Group ”) that it would continue to provide financial support to the Group and the GBT Group in the following 24 months on a going concern basis. Such assistance received by the Group is not secured by any assets of the Group.

Nongtou, being a state-owned enterprise, was established in August 2016 and its unaudited net assets value as at 30 June 2021 amounted to approximately RMB2,193.1 million (31 December 2020: approximately RMB2,327.4 million). It is tasked to consolidate the stateowned investments in the agricultural sector in the Jilin Province. The management of the Company is of the view that Nongtou would be able to support the operations of the Group and the GBT Group, to provide synergistic effects among its various investments in the agricultural sector in the Jilin Province and provide adequate and sufficient financial support to the Group and the GBT Group.

The validity of the going concern assumption on which the condensed consolidated financial statements are prepared is dependent on the successful and favourable outcomes of the steps being taken by the management of the Company and the development of the events as described above. The Directors proposed to procure additional working capital through the steps mentioned above. After taking into account the above steps, the internal resources, the present and expected banking facilities available, the Board, including the Audit Committee, is of the view that the Group would have sufficient working capital for at least 12 months from 30 June 2021. Therefore, the condensed consolidated financial statements of the Group have been prepared on a going concern basis.

Should the going concern assumption be inappropriate, adjustments may have to be made to reflect the situation that assets may need to be realised at the amounts other than which they are currently recorded in the condensed consolidated statement of financial position. In addition, the Group may have to recognise further liabilities that might arise, and to reclassify non-current assets and noncurrent liabilities as current assets and current liabilities, respectively.

2.3 Changes in accounting policies and disclosures

The accounting policies adopted in preparing the Group’s condensed consolidated financial statements for the Period are consistent with those adopted in the preparation of the Group’s annual financial statements for the year ended 31 December 2020, except for the adoption of the following new/revised Hong Kong Financial Reporting Standards (“ HKFRSs ”) which are relevant to the Group and are effective from the Period.

Amendments to HKAS 39, HKFRSs 4, 7, 9 and 16

Interest Rate Benchmark Reform — Phase 2

The adoption of the new/revised HKFRSs did not result in substantial changes to the Group’s accounting policies and amounts reported for the Period and prior years.

Interim Report 2021 Global Sweeteners Holdings Limited 29

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

3. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on its products and services and has two (six months ended 30 June 2020: two) reportable operating segments as follows:

• (i) the corn refined products segment which comprises the manufacture and sale of corn starch, gluten meal, corn oil and other corn refined products; and

• (ii) the corn sweeteners segment which comprises the manufacture and sale of glucose syrup, maltose syrup, high fructose corn syrup and maltodextrin.

The management, who is the chief operating decision-maker, monitors the results of the Group’s operating segments separately for the purpose of making decisions in relation to resources allocation and performance assessment. Segment performance is evaluated based on reportable segment’s profit or loss, which is a measure of adjusted profit or loss before tax. The adjusted profit or loss before tax is measured consistently with the Group’s profit or loss before tax except that finance costs as well as corporate income and expenses are excluded from such measurement.

Intersegment sales and transfers are transacted with reference to the then prevailing selling prices used for sales made to third parties.

30 Global Sweeteners Holdings Limited Interim Report 2021

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

3. OPERATING SEGMENT INFORMATION (continued)

(a) Segment results

Six months ended 30 June

Segment revenue: Sales to external customers Intersegment sales Reconciliation: Elimination of intersegment sales Revenue Segment results Reconciliation: Unallocated bank interest and other corporate income Corporate and other unallocated expenses Gain on debt restructuring Finance costs Profit (Loss) before tax Income tax expenses Profit (Loss) for the Period	Corn refined products Corn sweeteners 2021 2020 2021 2020 (Unaudited) (Unaudited) (Unaudited) (Unaudited) HK$’000 HK$’000 HK$’000 HK$’000 754 205,681 355,645 228,895 – 15,819 – 1,136	Total 2021 2020 (Unaudited) (Unaudited) HK$’000 HK$’000 356,399 434,576 – 16,955
	754 221,500 355,645 230,031 (22,727) (29,830) (53,029) (42,370)	356,399 451,531 – (16,955)
		356,399 434,576
		(75,756) (72,200) 38 195 (3,732) (3,649) 128,279 — (41,599) (75,544)
		7,230 (151,198)
		— —
		7,230 (151,198)

(b) Geographical information

Six months ended 30 June

	The	PRC	Asian regions and others	Asian regions and others	Total	Total
	2021	2020	2021	2020	2021	2020
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Segment revenue:
Revenue from external customers	349,065	415,720	7,334	18,856	356,399	434,576

31

Interim Report 2021 Global Sweeteners Holdings Limited

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

4. REVENUE, OTHER INCOME AND GAINS

REVENUE, OTHER INCOME AND GAINS
	Six months	ended 30 June
	2021	2020
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Revenue from contracts with customers within HKFRS 15
Sale of goods (a)	356,399	434,576
Other income and gains
Amortisation of deferred income	1,181	1,077
Bank interest income	38	195
Government grants (b)	86	162
Gain on debt restructuring (c)	128,279	–
Gain on disposal of property, plant and equipment	1	–
Subcontracting income	2,555	1,291
Rental income	1,080	–
Reversal of impairment of prepayments, deposits
and other receivables, net	1,538	–
Reversal of impairment of trade receivables, net	611	1,092
Wavier of payables	–	810
Others	1,747	1,600
	137,116	6,227

Remarks:

(a) The revenue from contracts with customers within HKFRS 15 is based on fixed price and recognised at a point in time.

• (b) Government grants represent rewards to certain subsidiaries of the Company with no further obligations and conditions to be complied with.

• (c) The details of debt restructuring was set out in note 2.2(1) to the condensed consolidated financial statements.

5. FINANCE COSTS

FINANCE COSTS
	Six months	ended 30 June
	2021	2020
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Interest on bank and other borrowings	32,031	27,834
Interest on trade payables	9,543	47,150
Interest on lease liabilities	25	57
Finance costs for discounted bills receivables	–	503
	41,599	75,544

32 Global Sweeteners Holdings Limited Interim Report 2021

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

6. PROFIT (LOSS) BEFORE TAX

The Group’s profit (loss) before tax is arrived at after charging (crediting):

	Six months ended 30 June	Six months ended 30 June
	2021	2020
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Employee benefit expenses
(excluding Directors’ remuneration)
— Wages and salaries	35,969	37,792
— Pension scheme contributions(a)	13,172	6,131
	49,141	43,923
Cost of inventories sold (b)	342,301	383,435
Depreciation
— Property, plant and equipment	30,591	37,825
— Right-of-use assets	3,770	4,572
Amortisation of deferred income	(1,181)	(1,077)
Foreign exchange loss, net	126	124
Gain on debt restructuring	(128,279)	–
Gain on disposal of property, plant and equipment	(1)	–
Impairment of deposits paid for acquisition of property,
plant and equipment	16	62
Rental income	(1,080)	–
Reversal of write-down of inventories, net,
included in cost of sales	(420)	(671)
Reversal of impairment of trade receivables, net	(611)	(1,092)
(Reversal of impairment) Impairment of prepayments,
deposits and other receivables, net	(1,538)	2,118

Remarks:

• (a) During the six months ended 30 June 2020, the government of the PRC granted reductions or exemptions from pension scheme contributions to certain subsidiaries operating in the PRC due to the COVID-19 pandemic.

• (b) Cost of inventories sold includes employee benefit expenses, depreciation and reversal of write-down of inventories, which are also included in the respective amounts disclosed separately above for each of these types of income and expenses.

Interim Report 2021 Global Sweeteners Holdings Limited 33

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

7. INCOME TAX EXPENSES

No Hong Kong profits tax has been provided as the Group had no assessable profits arising in Hong Kong during the Period and the six months ended 30 June 2020.

During the Period and the six months ended 30 June 2020, no provision for the PRC enterprise income tax was made as all the subsidiaries of the Group in the PRC incurred tax losses or the estimated assessable profits are wholly absorbed by tax losses brought forward from previous years.

8. EARNINGS (LOSS) PER SHARE

The calculation of the basic earnings per share for the Period is based on the profit attributable to owners of the Company for the Period of approximately HK$7,230,000 (six months ended 30 June 2020: loss attributable to owners of the Company of approximately HK$151,198,000) and the weighted average number of ordinary shares in issue during the Period of 1,527,586,000 shares (six months ended 30 June 2020: 1,527,586,000 shares).

Diluted earnings (loss) per share is the same as basic earnings (loss) per share as there was no potential dilutive ordinary shares outstanding during the Period and the six months ended 30 June 2020.

9. DIVIDEND

The Board does not recommend the payment of any dividend for the Period (six months ended 30 June 2020: Nil).

34 Global Sweeteners Holdings Limited Interim Report 2021

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

10. PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT
	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
At 1 January	622,975	806,693
Additions	804	9,959
Disposals	(52)	(6,236)
Resumption	—	(144,085)
Depreciation	(30,591)	(72,677)
Write-off	–	(2,404)
Exchange realignment	6,370	31,725
At 30 June/31 December	599,506	622,975

11. TRADE RECEIVABLES

	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Trade receivables	193,727	175,336
Loss allowance	(80,138)	(79,289)
	113,589	96,047

The Group normally grants credit terms of 30 to 90 days (31 December 2020: 30 to 90 days) to established customers. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the management of the Group.

Interim Report 2021 Global Sweeteners Holdings Limited 35

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

11. TRADE RECEIVABLES (continued)

Trade receivables are non-interest-bearing. At the end of the reporting period, the Group had a concentration of credit risk as 20.4% (31 December 2020: 14.5%) and 63.2% (31 December 2020: 47.7%) of the total trade receivables that were due from the Group’s largest customer and the five largest customers respectively.

Ageing analysis of the trade receivables at the end of the reporting period, based on the invoice date, is as follows:

follows:
	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Within 1 month	66,641	59,313
1 to 2 months	36,527	22,942
2 to 3 months	6,099	6,086
Over 3 months	4,322	7,706
	113,589	96,047

12. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Prepayments	9,889	7,498
Deposits and other debtors	7,474	1,009
The PRC value-added tax (“VAT”) and other tax receivables	16,227	16,053
Receivables from the Dihao Resumption	—	408,316
	33,590	432,876

36 Global Sweeteners Holdings Limited Interim Report 2021

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the six months ended 30 June 2021

13. TRADE PAYABLES

TRADE PAYABLES
	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Trade payables
— To third parties	107,365	83,591
— To the Nongtou Group (a)	–	169,609
	107,365	253,200

Remark:

• (a) The trade payables to the Nongtou Group are unsecured and interest-bearing at 11.0% per annum (31 December 2020: 11.0% per annum) after the credit periods lapsed. The outstanding balances were fully repaid during the Period.

The Group normally obtains credit terms ranging from 30 to 90 days (31 December 2020: 30 to 90 days) from its suppliers.

Ageing analysis of the trade payables at the end of the reporting period, based on the date of the receipt of goods purchased, is as follows:

of goods purchased, is as follows:
	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Within 1 month	42,110	20,267
1 to 2 months	1,524	62,268
2 to 3 months	241	291
Over 3 months	63,490	170,374
	107,365	253,200

Interim Report 2021 Global Sweeteners Holdings Limited 37

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

14. OTHER PAYABLES AND ACCRUALS

OTHER PAYABLES AND ACCRUALS
	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Payables for purchases of machinery	3,462	3,422
Customer deposits and receipts in advance	21,132	23,265
VAT and other duties payable	108,726	108,379
Accrued expenses	80,925	73,087
Interestpayables	48,569	108,176
	262,814	316,329

15. SHARE CAPITAL

SHARE CAPITAL
	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Authorised:
100,000,000,000 (31 December 2020: 100,000,000,000)
ordinary shares of HK$0.10 each	10,000,000	10,000,000
Issued and fully paid:
1,527,586,000 (31 December 2020: 1,527,586,000)
ordinary shares of HK$0.10 each	152,759	152,759

16. FINANCIAL GUARANTEE CONTRACTS

The Guarantor Subsidiaries have jointly provided corporate guarantees in respect of the financing facilities granted to Dajincang since 2010. The maximum amount of the financing facilities was RMB2.5 billion at 31 December 2020. Since the management of the Company was unable to obtain sufficient and reliable financial information of Dajincang, the professional valuer was unable to complete the valuation. Therefore, no financial guarantee liability in respect of the Financial Guarantee Contracts has been recognised in the Group’s annual consolidated financial statements for the year ended 31 December 2020.

As mentioned in note 2.2(1) to the condensed consolidated financial statements, upon the completion of the Repurchase Agreement between Dajincang and Changchun Rudder on 31 March 2021, the financial guarantee obligation of the Guarantor Subsidiaries pursuant to the Financial Guarantee Contracts have been discharged under the applicable law in the PRC.

38 Global Sweeteners Holdings Limited Interim Report 2021

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

17. CAPITAL COMMITMENTS

CAPITAL COMMITMENTS
	30 June	31 December
	2021	2020
	(Unaudited)	(Audited)
	HK$’000	HK$’000
Contracted, but not provided for:
Purchase or construction of property, plant and machinery	4,561	6,000

18. RELATED PARTY TRANSACTIONS

In addition to the information disclosed elsewhere in the condensed consolidated financial statements, the Group had the following transactions/balances with related parties during the Period and at the end of the reporting period:

(i) Transactions with related parties

	Six months	ended 30 June
	2021	2020
	(Unaudited)	(Unaudited)
	HK$’000	HK$’000
Purchases from fellow subsidiaries
— Corn starch and other raw materials (a)	1,799	392
Sales to fellow subsidiaries
— Corn sweeteners (a)	90	21
Purchases of corn kernels from the Nongtou Group (b)	–	19,840
Sales of corn starch to the Nongtou Group (c)	–	14,597
Interest on trade payables to the Nongtou Group (b)	9,543	47,150
Reimbursement of cost of utilities provided by a fellow
subsidiary (a)	77	1,469
Rental to fellow subsidiaries(d)	2,289	2,285

Remarks:

• (a) The Group sourced corn starch, other raw materials and utility services from, and sold corn sweeteners to fellow subsidiaries during the Period. These transactions were made in accordance with the respective agreements in relation to the purchase of corn starch and other raw materials by the Group from the GBT Group, the sale of corn sweeteners by the Group to the GBT Group and the supply of electricity, water and steam and the provision of wastewater treatment services by the GBT Group to the Group dated 28 February 2019.

• (b) The Group sourced corn kernels from the Nongtou Group. These purchases were made in accordance with the master supply agreement in relation to the supply of corn kernels by the Nongtou Group to members of the Group dated 12 September 2018. The trade payables to the Nongtou Group is unsecured and interest bearing at 11.0% per annum after the lapse of credit periods.

• (c) The Group sold corn starch to the Nongtou Group. These sales were made in accordance with the master sales agreement in relation to the supply of corn starch and other corn based products dated 12 September 2018.

• (d) The Group leased certain land and premises from fellow subsidiaries. The rental expenses were charged based on lease agreements signed between the parties. The amount disclosed represents the lease payments made by crediting the current account with the fellow subsidiaries.

39

Interim Report 2021 Global Sweeteners Holdings Limited

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2021

18. RELATED PARTY TRANSACTIONS (continued)

(ii) Balances with fellow subsidiaries

Balances with fellow subsidiaries are unsecured, interest-free and have no fixed term of repayment. The balances approximate to their fair values.

(iii) Compensation of key management personnel of the Group

		Six months	ended 30 June
		2021	2020
		(Unaudited)	(Unaudited)
		HK$’000	HK$’000
Short	term employee benefits	298	306
Total	compensation paid to key management personnel	298	306

40 Global Sweeteners Holdings Limited Interim Report 2021