Global Corn Group Limited - Proxy Solicitation & Information Statement 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Global Sweeteners Holdings Limited (‘‘Company’’), you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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

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

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3889)

MAJOR AND CONNECTED TRANSACTION

ACQUISITION OF A CORN REFINERY PLANT AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial Adviser to the Company

Piper Jaffray

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

Partners Capital International Limited

A letter from the Independent Board Committee to the Independent Shareholders is set out on page 14 of this circular. A letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 16 to 25 of this circular.

A notice convening the EGM of the Company to be held at Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 13 August 2008 at 3:00 p.m. is set out on page 141 of this circular. A form of proxy is enclosed to this circular. Whether or not you are able to attend the meeting in person, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon and deposit at the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the meeting. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

for identification purposes only

25 July 2008

CONTENTS

Page

Definitions . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
S&P Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		5
Reasons for	and benefits of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Information	on Jinzhou Yuancheng . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Financial effects of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		9
Background	information of the Vendors, the GBT Group and the Group . . . . . . . . . . . . . . . . .	10
Prospects of	the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Implications	of the Transaction under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
EGM . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Poll procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		12
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		13
Further Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		13
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		14
Letter from Partners Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		16
Appendix I —	Financial Information of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Appendix II —	Accountants’ Report of Jinzhou Yuancheng . . . . . . . . . . . . . . . . . . . . . . . . . . .	70
Appendix III —	Unaudited Pro Forma Financial Information of the Enlarged Group . . . .	107
Appendix IV —	Management Discussion and Analysis of Jinzhou Yuancheng . . . . . . . . . . .	112
Appendix V —	Valuation Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	119
Appendix VI —	General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	132
Notice of EGM	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	141

– i –

DEFINITIONS

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

‘‘associate(s)’’

shall have the same meaning as ascribed to it under the Listing Rules

‘‘Board’’

the board of Directors

‘‘Business Day(s)’’

any day(s), except Saturday, on which banks in Hong Kong are open for business

‘‘CCT Executive Committee’’ the independent management team comprising two disinterested Directors, namely Mr. Zhang Fusheng and Ms. Wang Guifeng, established by the Board and responsible for monitoring, review and management of the continuing connected transactions between the Group and the GBT Group ‘‘CCT Supervisory Committee’’ the committee comprising the four independent non-executive Directors established by the Board to supervise the CCT Executive Committee ‘‘Company’’ Global Sweeteners Holdings Limited, a company established in the Cayman Islands with limited liabilities, the Shares of which are listed on the Main Board of the Stock Exchange

‘‘Completion’’ completion of the S&P Agreement in accordance with its terms
‘‘connected person(s)’’ shall have the meaning as ascribed to it under the Listing Rules
‘‘Consideration’’ the aggregate consideration of the Transaction
‘‘Co-products’’ steepwater liquid, corn oil, germ cake, corn fibre feed, corn gluten meal, corn gluten feed pellets and/or such other types of products other than corn starch as being the types of co-products that are to be sold by Jinzhou Yuancheng under the Sales Agency Agreement
‘‘Dacheng Industrial’’ 長春大成實業集團有限公司 (Changchun Dacheng Industrial Group Co., Ltd.*), a wholly foreign owned enterprise established in the PRC and an indirect wholly owned subsidiary of GBT
‘‘Director(s)’’ director(s) of the Company
‘‘EGM’’ the extraordinary general meeting of the Company to be convened and held to consider the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of a waiver by the Company to GBT and Global Corn Bio-chem)
For identification purpose only

– 1 –

DEFINITIONS

‘‘Enlarged Group’’ the Group as enlarged by the Transaction ‘‘GBT’’ Global Bio-chem Technology Group Company Limited, the issued shares of which are listed on the Stock Exchange ‘‘GBT Group’’ GBT and its subsidiaries which, for the purpose of this circular, excludes the Group ‘‘Global Corn’’ Global Corn Investments Limited, a company incorporated in the British Virgin Islands and an indirect wholly owned subsidiary of GBT ‘‘Global Corn Bio-chem’’ Global Corn Bio-chem Technology Company Limited, a company incorporated in the British Virgin Islands and a direct wholly owned subsidiary of GBT ‘‘Group’’ the Company and its subsidiaries ‘‘GSIL’’ Global Sweeteners Investments Limited, a company incorporated in Hong Kong and a wholly owned subsidiary of the Company ‘‘HK$’’ Hong Kong dollars, the lawful currency in Hong Kong ‘‘HKFRS’’ Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants ‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC ‘‘Independent Board Committee’’ the independent board committee of the Board comprising Messrs. Chan Yuk Tong, Gao Yunchun, Ho Lic Ki and Yan Man Sing Frankie, the independent non-executive Directors, appointed by the Board for the purpose of advising the Independent Shareholders in relation to the Transaction ‘‘Independent Financial Adviser’’ Partners Capital International Limited, the independent financial or ‘‘Partners Capital’’ adviser appointed by the Board and approved by the Independent Board Committee for the purpose of advising the Independent Board Committee and the Independent Shareholders in relation to the Transaction ‘‘Independent Shareholder(s)’’ any shareholder of the Company that is not required to abstain from voting at a general meeting, if necessary, to approve a connected transaction ‘‘Jinzhou Yuancheng’’ 錦州元成生化科技有限公司 (Jinzhou Yuancheng Bio-chem Technology Co., Ltd.*), a PRC sino-foreign joint venture enterprise established in the PRC

For identification purpose only

– 2 –

DEFINITIONS

‘‘Latest Practicable Date’’	22 July 2008, being the latest practicable date for the purpose of	22 July 2008, being the latest practicable date for the purpose of	22 July 2008, being the latest practicable date for the purpose of	22 July 2008, being the latest practicable date for the purpose of
	ascertaining certain information contained in	this circular prior to
	its publication
‘‘Listing Rules’’	the Rules Governing the Listing of Securities on the		Main Board
	of the Stock Exchange
‘‘PRC’’	People’s Republic of China
‘‘mtpa’’	metric tonnes per annum
‘‘RMB’’	Renminbi, the lawful currency in the PRC
‘‘S&P Agreement’’	the agreement in relation to the Transaction	dated 27 June 2008
	entered into between the Vendors and GSIL
‘‘Sales Agency Agreement’’	the sales agency agreement in relation to the distribution of the
	Co-products to be entered into between Jinzhou Yuancheng and
	Global Corn at Completion
‘‘SFO’’	the Securities and Futures Ordinance, Chapter 571 of		the	Laws of
	Hong Kong
‘‘State Council’’	the State Council of the PRC (中華人民共和國國務院)
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘Transaction’’	the acquisition by GSIL and the disposal by	the Vendors of the
	entire equity interest in the registered	capital	of	Jinzhou
	Yuancheng pursuant to the S&P Agreement
‘‘US$’’	United States dollars, the lawful currency of	the United States of
	America
‘‘Vendors’’	Global Corn and Dacheng Industrial

– 3 –

LETTER FROM THE BOARD

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

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3889)

Executive Directors:

Mr. Kong Zhanpeng Mr. Zhang Fusheng Ms. Wang Guifeng Ms. Ge Yanping Mr. Zhang Fazheng

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1–1111 Cayman Islands

Independent non-executive Directors:

Mr. Chan Yuk Tong Mr. Gao Yunchun Mr. Ho Lic Ki Mr. Yan Man Sing Frankie

Headquarters and principal place of business in Hong Kong: Unit 2403 Admiralty Centre Tower II 18 Harcourt Road Hong Kong

25 July 2008

To the Shareholders

Dear Sirs or Madams,

MAJOR AND CONNECTED TRANSACTION

ACQUISITION OF A CORN REFINERY PLANT

INTRODUCTION

In a joint announcement of the Company and GBT dated 4 July 2008, the Company announced that GSIL, a direct wholly owned subsidiary of the Company, entered into the S&P Agreement with Global Corn and Dacheng Industrial, both being indirect wholly owned subsidiaries of GBT, on 27 June 2008 for the sale and purchase of the entire equity interests in Jinzhou Yuancheng, which is principally engaged in the manufacture and sales of corn starch and other Co-products in the PRC. Pursuant to the Listing Rules, the Transaction constitutes a major acquisition and a connected transaction of the Company.

for identification purposes only

– 4 –

LETTER FROM THE BOARD

The purpose of this circular is to provide particulars of the Transaction, including the letter to the Independent Shareholders from the Independent Board Committee, the letter from Partners Capital to the Independent Board Committee and Independent Shareholders in respect of the Transaction, and the notice convening the EGM. The notice of the EGM is set out from page 141 of this circular.

S&P AGREEMENT

Date

27 June 2008

Parties

Vendors: Global Corn and Dacheng Industrial, both being indirect wholly owned subsidiaries of GBT

Purchaser: GSIL, a wholly owned subsidiary of the Company

Assets involved

Pursuant to the S&P Agreement, GSIL has conditionally agreed to purchase 70% and 30% of the equity interests in Jinzhou Yuancheng held by Global Corn and Dacheng Industrial respectively.

Conditions

Completion is conditional upon fulfillment of the following conditions:

1) the passing of necessary resolutions by the Independent Shareholders at the EGM approving the S&P Agreement and the transactions contemplated thereby;
2) GSIL and Jinzhou Yuancheng having obtained from the Vendors, directors of Jinzhou Yuancheng and the relevant authorities in the PRC all necessary consents, authorisations and approvals in relation to the S&P Agreement, the transfer of the entire equity interests in Jinzhou Yuancheng and the new articles of association of Jinzhou Yuancheng (including but not limited to the approval from the relevant PRC authority in respect of the transfer of the entire equity interests in Jinzhou Yuancheng and the change in the composition of the board of directors of Jinzhou Yuancheng and the new business licence of Jinzhou Yuancheng), all such consents, authorisations and/or approvals not being subject to conditions and/or restrictions that are not acceptable to GSIL;

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LETTER FROM THE BOARD

3) GSIL having obtained a PRC legal opinion (in such form and substance to its satisfaction) covering the following issues:
(i) the legality and validity of the S&P Agreement and the new articles of association of Jinzhou Yuancheng;
(ii) the legality of the establishment and existence of Jinzhou Yuancheng;
(iii) the legality of the businesses of Jinzhou Yuancheng;
(iv) the legal title of the land and properties held by Jinzhou Yuancheng; and
(v) such other matters as GSIL may reasonably require;
4) the Vendors not having committed any material breach of the representations, warranties and undertakings given under the S&P Agreement; and
5) GSIL being satisfied with the results of the financial, business and legal due diligence review on, and the property valuation report of, Jinzhou Yuancheng and no events having suggested that there were any untrue, misleading and/or material breach of the representations, warranties and undertakings given by the Vendors.

Save for conditions 1 and 2 set out above, the above conditions may be waived by GSIL. If one or more of the abovementioned conditions are not fulfilled within 90 days from the date of the S&P Agreement, the S&P Agreement will be terminated unless GSIL agrees in writing to discard or waive the conditions. As at the Latest Practicable Date, none of the conditions above has been fulfilled.

Consideration

The Consideration for the Transaction was HK$520 million. The Consideration shall be payable by the Group at Completion in the following manner:

(a) HK$156 million by way of cash to Dacheng Industrial, which will be funded by the Group’s internal resources and banking facilities available to the Group; and
(b) HK$364 million by way of issue of an unsecured loan note to Global Corn which shall be due and repayable at the fifth anniversary of the date of issue and bearing an interest rate of 6% per annum payable on a semi-annual basis.

The Consideration was determined after arm’s length negotiations among the parties to the S&P Agreement and with reference to the fair value of Jinzhou Yuancheng of approximately RMB466 million (equivalent to approximately HK$522 million) as at 30 May 2008 as appraised by Greater China Appraisal Limited, an independent valuer, using the market approach method for the valuation of the entire equity interest of Jinzhou Yuancheng.

The terms of the S&P Agreement have been arrived at after arm’s length negotiations between the parties based on normal commercial terms and are considered by the Directors to be fair and reasonable.

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LETTER FROM THE BOARD

Completion

Completion shall take place on the fourteenth Business Day after the fulfillment or, as the case may be, waiver of the abovementioned conditions or such other date as agreed in writing among the parties to the S&P Agreement.

As one of GSIL’s Completion obligations, GSIL shall, upon Completion, deliver a waiver (the ‘‘Waiver’’) executed by the Company to GBT and Global Corn Bio-chem, pursuant to which the GBT Group may continue to engage in the production and sales of corn starch and/or Co-products notwithstanding the provisions in the non-compete undertaking given by GBT and Global Corn Biochem dated 3 September 2007, which restricts the GBT Group from engaging in any business that may compete with the business of the Group from time to time.

REASONS FOR AND BENEFITS OF THE TRANSACTION

Corn starch is one of the principal production materials for the Group. The Group has been sourcing a substantial amount of corn starch from the GBT Group. As disclosed in the Company’s prospectus for its initial public offering dated 10 September 2007, the Company has expressed its intention to reduce its perceived reliance on the GBT Group in terms of corn starch supply by projecting a decreasing proportion of its purchase of corn starch from the GBT Group for the three years ending 31 December 2009.

The Directors expect that the amount of corn starch required by the Group will increase as a result of the expected expansion of production capacity of its production facilities in Shanghai and the launch of a new sweeteners production facility with annual production capacity of 200,000 mtpa of corn sweeteners in Jinzhou, the PRC, which is expected to commence its commercial production in the second half of 2008. As disclosed in the annual report of the Company for the year ended 31 December 2007, the Directors are aware of the PRC government’s priority on stabilising the prices of food in recent years which could be observed by its stringent control over the use of corn kernel as raw material for producing ethanol. The Directors also noticed that construction of a new corn-processing plant and modification of an existing corn-processing plant may be subject to more stringent review and lengthy approval process by the State Council adding uncertainty to the option of the Group to construct a starch production plant by itself. In light of such, the Directors consider that the Transaction is strategically beneficial to the Group in a long run, as it allows the Group to secure stable supply of a key production material for its production facilities in Shanghai and Jinzhou going forward.

Besides, the Directors believe that certain production and other related costs can be saved, in that vicinity of Jinzhou Yuancheng’s production plant to the Group’s new sweeteners production facility in Jinzhou will enable Jinzhou Yuancheng to supply corn starch to such new sweeteners production facility in slurry form through a pipeline arrangement, whereby certain processing, packaging, dehumidifying, storage, transportation and other related costs can be saved. The corn sweeteners production facilities of the Group in Shanghai can also secure the supply of corn starch from Jinzhou Yuancheng rather than from third party suppliers and thereby enhancing the cost control of these production facilities. Such vertical integration along the chain of production for the Group also places it in a better position to effectively apply quality control procedures and to monitor and control the production flows of both corn starch and corn sweeteners, thereby minimising the chance of bottlenecks or inventory pile-up, and related administrative costs.

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LETTER FROM THE BOARD

Moreover, the Group can take advantage of the existing utility facilities of Jinzhou Yuancheng which are scalable for its new sweetener production plant in Jinzhou whereby such facilities can be expanded upon and shared among Jinzhou Yuancheng and the new sweetener production plant. Therefore, the Directors believe that capital expenditure for constructing utility facilities for the new sweetener production plant in Jinzhou can be reduced.

In addition, the Directors estimated that to secure land, obtaining all necessary approvals in relation to the construction of a new plant to the current capacity of the Jinzhou Yuancheng’s production plant will take about 18 months from the time that an approval for constructing a new corn-processing plant is sought from the State Council as discussed above. However, there is no assurance that the Group will be able to acquire suitable land which is sufficiently close to the current sweetener production plant under construction in Jinzhou to achieve the time, transportation and other procurement costs savings that may be achieved through the contemplated pipeline arrangement mentioned above.

As disclosed in GBT’s circular dated 16 August 2007 regarding the spin-off listing of the Group, the purposes of the spin-off listing of the Group were, among others, to create two groups of pure play companies with difference in products, growth paths and strategies, and enable the respective management teams of the GBT Group and the Group to focus on their respective core businesses of the two groups of companies, thereby enhancing the efficiency in operations and expediting their respective business development. While the Group will, after the Transaction, have the capacity of producing its own corn starch and other Co-products, it is not the intention of the Directors to defeat the above purposes of the spin-off listing of the Group by diversifying the Group’s business to the sales of the corn starch and/or Co-products so produced. Notwithstanding both the Group (via Jinzhou Yuancheng) and the GBT Group will be engaging in the production and sales of corn starch and Co-products upon Completion, the GBT Group will continue to engage in the production and sales of corn starch and Coproducts while the Group intends to focus on its corn sweetener business. To achieve this, under the S&P Agreement, the Company will deliver the Waiver in favour of GBT and Global Corn Bio-chem for the GBT Group to continue to engage in the production and sales of corn starch and/or Co-products, and Jinzhou Yuancheng will enter into the Sales Agency Agreement with the GBT Group. The Transaction is primarily for the sake of facilitating internal production of corn sweeteners by the Group, and upon Completion, the Group does not intend to engage in the production and sales of corn starch and/or Coproducts which would compete with the business of the GBT Group to any material extent. The Directors are of the view that there will not be material effect to the interests of the Independent Shareholders as a results of the grant of such Waiver since the Group will continue to focus on its principal corn sweetener business, having considered the various benefits that are expected to be reaped by it from the Transaction.

The Directors consider the terms of the Transaction, including the requirement to deliver the abovementioned Waiver to GBT and Global Corn Bio-chem, to be fair and reasonable so far as the shareholders of the Company are concerned and in the interests of the Company and its shareholders as a whole.

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LETTER FROM THE BOARD

INFORMATION ON JINZHOU YUANCHENG

Jinzhou Yuancheng is situated in Liaoning Province, the PRC and is a sino-foreign equity joint venture enterprise established on 6 August 2001 under the laws of the PRC with a registered capital of US$12,659,400.

The principal business of Jinzhou Yuancheng is the manufacture and sales of corn starch and the Co-products. It has a corn starch manufacturing plant, situated on a land with a site area of approximately 370,000 sq.m. in Jinzhou, the PRC, with a gross floor area of more than 94,000 sq.m. and the production capacity of approximately 420,000 mtpa of corn starch and 180,000 mtpa of Coproducts. Based on the audited accounts of Jinzhou Yuancheng prepared in accordance with the HKFRS for the year ended 31 December 2007, the net asset value of Jinzhou Yuancheng was approximately RMB367 million as at 31 December 2007. Based on the same audited accounts, for each of the two years ended 31 December 2007, the net profit before tax of Jinzhou Yuancheng amounted to approximately RMB89 million and approximately RMB71 million respectively and for each of the two years ended 31 December 2007, the net profit after tax attributable to the shareholders of Jinzhou Yuancheng amounted to approximately RMB88 million and approximately RMB58 million respectively.

The original purchase cost of Global Corn in 2003 while Jinzhou Yuancheng had yet commenced its commercial production and the allocated purchase cost recorded by the GBT Group for the interests held by Dacheng Industrial regarding 70% and 30% of the entire equity interest of Jinzhou Yuancheng were approximately HK$82 million and HK$181 million respectively.

Upon Completion, Jinzhou Yuancheng will become an indirect non-wholly owned subsidiary of GBT and indirect wholly owned subsidiary of the Company.

FINANCIAL EFFECTS OF THE TRANSACTION

Jinzhou Yuancheng will become a wholly owned subsidiary of the Company upon Completion. The accounts of Jinzhou Yuancheng will be consolidated into the financial statements of the Group.

Your attention is drawn to the unaudited pro forma financial information of the Enlarged Group set out in Appendix III to this circular. The unaudited pro forma statement of assets and liabilities of the Enlarged Group is prepared as if the Transaction has been completed at 31 December 2007. Based on the unaudited pro forma financial information of the Enlarged Group set out in Appendix III to this circular, the financial effects of the Transaction are summarised below:

Net assets

As extracted from the annual report of the Company for the year ended 31 December 2007, the audited consolidated net asset value of the Group was approximately HK$1,280.5 million at 31 December 2007, while the audited consolidated net tangible assets value of the Group as at 31 December 2007 was approximately HK$1,130.5 million. The Group will settle the Consideration by a loan note in the amount of HK$364 million and by cash in the amount of HK$156 million. As set out in Appendix III to this circular, assuming Completion had taken place on 31 December 2007, the unaudited pro forma net asset value of the Enlarged Group would be approximately HK$1,280.5 million.

– 9 –

LETTER FROM THE BOARD

On the other hand, the surplus of the Consideration of approximately HK$520 million over the net asset value of Jinzhou Yuancheng as at 31 March 2008 of approximately HK$393.0 million, calculated as approximately HK$127.0 million, will be reflected as goodwill on the consolidated balance sheet of the Enlarged Group, subject to annual impairment review. As a result, as set out in Appendix III to this circular, the net tangible asset of the Enlarged Group would decrease by approximately HK$127.0 million upon Completion.

Liquidity and gearing

As extracted from the annual report of the Company for the year ended 31 December 2007, the Group had net cash (cash and cash equivalents net of interest-bearing liabilities) of HK$380.6 million. As set out in Appendix III to this circular, assuming Completion had taken place on 31 December 2007, the Enlarged Group’s cash balance would be reduced by HK$111.1 million and liabilities shall be increased by HK$364 million (being the amount of the loan note to be issued for the Transaction) and the Enlarged Group would carry net debt (interest-bearing liabilities in excess of cash and cash equivalents) of HK$432.0 million.

As extracted from the annual report of the Company for the year ended 31 December 2007, the gearing ratio of the Group, calculated by dividing the total interest-bearing liabilities of about HK$525.0 million by its total assets of about HK$2,183.5 million as at 31 December 2007, was about 24.0%. As set out in Appendix III to this circular, assuming Completion had taken place on 31 December 2007, the gearing ratio of the Enlarged Group, calculated by dividing its total interest-bearing liabilities of approximately HK$1,226.5 million by its total assets of approximately HK$3,145.4 million, would be increased to approximately 39.0% as a results of the issue of the loan note as part of the Consideration and consolidation of the accounts of Jinzhou Yuancheng.

Earnings

As extracted from the annual report of the Company for the year ended 31 December 2007, the Group recorded audited consolidated profits of HK$193.7 million. Upon completion of the Transaction, the Company will indirectly own the entire equity interest in Jinzhou Yuancheng, and as a result Jinzhou Yuancheng’s financial results will be fully consolidated by the Company.

BACKGROUND INFORMATION OF THE VENDORS, THE GBT GROUP AND THE GROUP

The Vendors are indirect wholly owned subsidiaries of GBT and are investment holding companies. The GBT Group is principally engaged in the manufacture and sales of corn refined products and corn based biochemical products, categorised into upstream and downstream products. The GBT Group’s upstream products include corn starch, gluten meal and other corn refined products, and its downstream products include amino acids, modified starch and polyol chemical products.

The Group is principally engaged in the manufacture and sale of various corn sweeteners, which are classified into three categories: corn syrup (glucose syrup, maltose syrup and high fructose corn syrup), corn syrup solid (crystallised glucose and maltodextrin) and sugar alcohol (sorbitol).

– 10 –

LETTER FROM THE BOARD

PROSPECTS OF THE GROUP

It is the Group’s mission to become one of the leading corn sweeteners manufacturers in Asia and then a major player in global market. To realise this objective, the Group will strive to enlarge its market share and diversify its product mix, as well as enhance its capability in developing high valueadded products and new applications through in-house research and development and through strategic business alliances with prominent international market leaders.

As one of the largest corn sweetener producers in the PRC in terms of production capacity and production output in 2007, the Directors believe that it is of utmost importance for the Group to maintain its leading position in the market by expanding its production capacity, and at the same time, expanding its sales network.

Expansion of production capacity

The Directors intend to establish new production facilities at the existing locations of the production facilities of the Group and other locations in the PRC with an ultimate goal to increase the production capacity of its corn sweeteners.

The Group is currently constructing a new glucose production facility of 200,000 mtpa in Jinzhou. Commercial production is expected to commence in the second half of 2008. A new crystallised glucose production facility in Jinzhou with 100,000 mtpa capacity will start its construction in second half of 2008. Production is expected to commence in the first half of 2009. While in Changchun, the construction of phase two crystallised glucose production facility of 100,000 mtpa has been scheduled to start in the second half of 2008.

The Directors estimate that substantial portion of the above expected capital expenditures will be incurred prior to the commencement of commercial production of each of the production facilities while the remaining amounts are expected to be settled within one year from the relevant commencement dates. The expansion plans of the Group will be principally financed by the proceeds from the net proceeds from the placing and public offering of the Company’s shares and the internal resources of the Group and the Directors are of the view that the existing technology know-how of the Group is sufficient for such expansion. At present, the Directors intend to establish new wholly-owned subsidiaries or new joint ventures with third parties to undertake the construction of new production facilities to be constructed under the expansion plan.

Expansion of sales network

In order to strengthen its leading position in the PRC market and in view of the proposed expansion of production capacity of the Group, the Directors intend to expand the Group’s sales and marketing teams in terms of both headcount and coverage. In addition, the Directors plan to establish sales or sales representative offices in certain provinces of the PRC in order to achieve higher efficiency, provide better service to the customers and obtain more information of the local market to assist the management to respond to changes in market conditions. At present, the Company intends to enter into the PRC’s consumer market and a sales office has been set up in Shanghai in order to broaden the customer base of the Group.

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LETTER FROM THE BOARD

IMPLICATIONS OF THE TRANSACTION UNDER THE LISTING RULES

In addition, since Global Corn and Dacheng Industrial are wholly owned by GBT (a controlling shareholder of the Company) and hence are associates of GBT, the Transaction also constitutes a connected transaction for the Company under Chapter 14A of the Listing Rules and the resolution regarding the Transaction is subject to approval by Independent Shareholders voted by way of poll at the EGM.

EGM

Set out on page 141 in this circular is a notice convening the EGM which will be held at Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 13 August 2008 at 3:00 p.m., at which a resolution will be proposed to approve the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem). As a connected person having interest in the Transaction, GBT and its associates, which in aggregate were interested in and were entitled to exercise control over the voting rights of 700,000,000 Shares, representing 67% of the issued share capital of the Company as at the Latest Practicable Date, shall abstain from voting at the ordinary resolution regarding the Transaction.

Enclosed is a form of proxy for use at the EGM. If you are not able to attend the EGM, you are requested to complete the proxy form in accordance with the instructions printed thereon and return and deposit the same at the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event, not less than 48 hours before the holding of the EGM. Completion and return of proxy form will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

POLL PROCEDURE

Pursuant to Article 72 of the articles of association of the Company, a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) demanded:

(i) by the chairman of the meeting; or
(ii) by at least three members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy for the time being entitled to vote at the meeting; or
(iii) by any member or members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

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LETTER FROM THE BOARD

(iv) by a member or members present in person (or, in the case of a member being a corporation, by its duly authorised representative) or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right; or
(v) by any Director or Directors who, individually or collectively, hold proxies in respect of shares representing five per cent (5%) or more of the total voting rights at such meeting.

RECOMMENDATION

Your attention is drawn to the Letter from the Independent Board Committee set out on pages 14 to 15 of this circular which contains its advice to the Independent Shareholders regarding the Transaction and to the Letter from Partners Capital set out on pages 16 to 25 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders regarding the Transaction as well as the principal factors and reasons taken into consideration in arriving at its advice.

Taking into account the reasons set out above, the Directors (including the independent nonexecutive Directors) consider that the terms of the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Biochem) to be on normal commercial terms, fair and reasonable and in the interests of the Company and its Shareholders as a whole, and therefore recommend the Independent Shareholders to vote in favour of the relevant ordinary resolution to be proposed at the EGM to approve the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem). You are advised to read the Letter from the Independent Board Committee and the Letter from Partners Capital mentioned above before deciding as to how to vote at EGM.

FURTHER INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular.

On behalf of the Board of Global Sweeteners Holdings Limited Kong Zhanpeng Chairman

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [83 x 77] intentionally omitted <==

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

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3889)

25 July 2008

To the Independent Shareholders

Dear Sirs or Madams,

MAJOR AND CONNECTED TRANSACTION

We refer to the circular issued by the Company to its Shareholders dated 25 July 2008 (the ‘‘Circular’’) of which this letter forms part. Terms defined in the Circular bear the same meanings herein unless the context otherwise requires.

We have been appointed by the Board to consider the terms of the Transaction and the transactions contemplated therein and to advise the Independent Shareholders as to whether, in our opinion, the terms of the Transaction and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem) are on normal commercial terms, fair and reasonable so far as the Independent Shareholders are concerned and in the interests of the Company and the Independent Shareholders as a whole.

Partners Capital has been appointed as independent financial adviser to advise us in respect of the Transaction. Your attention is drawn to the Letter from Partners Capital in the Circular containing the advice of Partners Capital in such respect.

RECOMMENDATION

We have considered the principal factors taken into account by Partners Capital in arriving at its opinion in respect of the Transaction. We concur with the views of Partners Capital that the terms of the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem) are on normal commercial terms, fair and

for identification purposes only

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LETTER FROM THE BOARD

reasonable so far as the Independent Shareholders are concerned and the entering into of the S&P Agreement is in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution in respect of the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem) at the EGM.

Yours faithfully,

Chan Yuk Tong

Independent Board Committee Gao Yunchun Ho Lic Ki

Yan Man Sing Frankie

Independent non-executive Directors

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LETTER FROM PARTNERS CAPITAL

Partners Capital International Limited

Partners Capital International Limited Unit 3906, 39/F, COSCO Tower 183 Queen’s Road Central Hong Kong

25 July 2008

To the Independent Board Committee and the Independent Shareholders

Dear Sirs,

MAJOR AND CONNECTED TRANSACTION

INTRODUCTION

We refer to our engagement to advise the Independent Board Committee and the Independent Shareholders in respect of the Transaction, particulars of which are set out in the letter from the Board (the ‘‘Letter from the Board’’) of the circular to the shareholders (the ‘‘Shareholders’’) of the Company dated 25 July 2008 (the ‘‘Circular’’) and in which this letter is reproduced. Unless the context requires otherwise, capitalised terms used in this letter shall have the same meanings as given to them under the definitions section of the Circular.

On 27 June 2008, GSIL, a direct wholly-owned subsidiary of the Company, entered into the S&P Agreement with Global Corn and Dacheng Industrial, both being indirect wholly-owned subsidiaries of GBT, for the sale and purchase of the entire equity interests in Jinzhou Yuancheng, which is principally engaged in the manufacture and sales of corn starch and other Co-products in the PRC. Prior to the Transaction, Jinzhou Yuancheng is owned as to 70% and 30% by Global Corn and Dacheng Industrial respectively. Pursuant to the S&P Agreement, the Vendors have agreed to sell the entire equity interests in Jinzhou Yuancheng to GSIL at the Consideration of HK$520 million, as to HK$156 million by way of cash to Dacheng Industrial upon Completion, and as to HK$364 million to Global Corn by way of a 6% per annum unsecured semi-annual coupon loan note due and repayable on the fifth anniversary after the issue thereof on Completion. The Consideration was determined after arm’s length negotiations between GSIL and the Vendors by reference to the fair value of the entire equity interest of Jinzhou Yuancheng as at 30 May 2008 as appraised by Greater China Appraisal Limited (the ‘‘Appraiser’’), an independent valuer.

As the applicable percentage ratios (as calculated in accordance with Rule 14.07 of the Listing Rules) for the Transaction are more than 25% but less than 100%, the Transaction constitutes a major transaction of the Company under Rule 14.06 of the Listing Rules. Besides, as the Vendors are wholly owned by GBT (a controlling shareholder of the Company) and hence are associates of GBT, the Transaction also constitutes a connected transaction for the Company and is subject to the reporting, announcement and Independent Shareholders’ approval requirements under the Listing Rules. In this connection, the Company will seek the Independent Shareholders’ approval for the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem) at the EGM to be conducted by poll. At the EGM, GBT and its associates are required to abstain from voting on the resolution(s) in relation to the Transaction, the S&P

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LETTER FROM PARTNERS CAPITAL

Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem). In addition, the Independent Board Committee has been established to advise whether the terms of the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem) are on normal commercial terms and fair and reasonable and whether the Transaction, the S&P Agreement and the transactions contemplated therein (including the grant of the Waiver by the Company to GBT and Global Corn Bio-chem) are in the interests of the Company and the Independent Shareholders as a whole. In this regard, Partners Capital has been appointed as the independent financial adviser to the Independent Board Committee and the Independent Shareholders.

We are not connected with the directors, chief executive and substantial shareholders of the Company or GBT any of its subsidiaries or their respective associates and are therefore considered suitable to give independent advice to the Independent Board Committee and the Independent Shareholders. Apart from normal professional fees payable to us by the Company in connection with this appointment, no arrangement exists whereby we will receive any fees or benefits from the Company or GBT or the directors, chief executive and substantial shareholders of the Company or GBT or any of its subsidiaries or their respective associates.

In formulating our opinion, we have relied on the accuracy of the information and representations contained in the Circular and have assumed that all information and representations made or referred to in the Circular were true at the time they were made and continue to be true as at the date of the Circular. We have also relied on our discussion with the management of the Company regarding the Group and the Transaction, including the information and representations contained in the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors and the Company in the Circular were reasonably made after due enquiry. We consider that we have reviewed sufficient information to reach an informed view, to justify our reliance on the accuracy of the information contained in the Circular and to provide a reasonable basis for our advice. We have no reason to suspect that any material facts have been omitted or withheld from the information contained or opinions expressed in the Circular nor to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors. We have not, however, conducted an independent in-depth investigation into the business and affairs of the Group, the GBT Group, the Vendors, Jinzhou Yuancheng and their respective associates nor have we carried out any independent verification of the information supplied.

THE TRANSACTION

Principal factors considered

In arriving at our opinion regarding the Transaction and the terms of the S&P Agreement, we have considered the following principal factors and reasons:

Background of and reasons for the Transaction

The Group is principally engaged in the manufacture and sale of various corn sweeteners which are classified into three categories: corn syrup (glucose syrup, maltose syrup and high fructose corn syrup), corn syrup solid (crystallised glucose and maltodextrin) and sugar alcohol (sorbitol).

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LETTER FROM PARTNERS CAPITAL

(i) Background of Jinzhou Yuancheng

As set out in the Letter from the Board, Jinzhou Yuancheng is situated in Liaoning Province, the PRC and is a PRC sino-foreign equity joint venture enterprise established on 6 August 2001 under the laws of the PRC with a registered capital of US$12,659,400. The principal business of Jinzhou Yuancheng is manufacture and sales of corn starch and the Coproducts. It has a corn starch manufacturing plant, situated on a land with a site area of approximately 370,000 sq.m. in Jinzhou, the PRC, with a gross floor area of more than 94,000 sq.m. and the production capacity of approximately 420,000 mtpa of corn starch and 180,000 mtpa of Co-products. Based on the audited accounts of Jinzhou Yuancheng prepared in accordance with the HKFRS for the year ended 31 December 2007, the net assets value of Jinzhou Yuancheng was approximately RMB367 million as at 31 December 2007. For each of the two years ended 31 December 2007, the net profit before tax of Jinzhou Yuancheng amounted to approximately RMB89 million and approximately RMB71 million respectively and for each of the two years ended 31 December 2007, the net profit after tax attributable to the shareholders of Jinzhou Yuancheng amounted to approximately RMB88 million and RMB58 million respectively.

(ii) Reasons for entering into of the S&P Agreement

As set out in the Letter from the Board, corn starch is one of the principal production materials for the Group. The Group has been sourcing a substantial amount of corn starch from the GBT Group. As disclosed in the Company’s prospectus for its initial public offering dated 10 September 2007, the Company has expressed its intention to reduce its perceived reliance on the GBT Group in terms of corn starch supply by projecting a decreasing proportion of its purchase of corn starch from the GBT Group for the three years ending 31 December 2009.

As further set out in the Letter from the Board, the Directors expect that the amount of corn starch required by the Group will increase as a result of the expected expansion of production capacity of its production facilities in Shanghai, the PRC, and the launch of a new sweeteners production facility with annual production capacity of 200,000 mtpa of corn sweeteners in Jinzhou, the PRC, which is expected to commence its commercial production in the second half of 2008. As disclosed in the annual report of the Company for the year ended 31 December 2007, the Directors were aware of the PRC government’s priority on stabilising the prices of food in recent years which could be observed by its stringent control over the use of corn kernel as raw material for producing ethanol. The Directors also noticed that construction of a new corn-processing plant and modification of an existing cornprocessing plant may be subject to more stringent review and lengthy approval process by the State Council which added uncertainty to the option of the Group to construct a starch production plant by itself. In light of such, the Directors consider that the Transaction is strategically beneficial to the Group in a long run, as it allows the Group to secure stable supply of a key production material for its production facilities in Shanghai and Jinzhou going forward.

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LETTER FROM PARTNERS CAPITAL

Besides, the Directors believe that certain production and other related costs can be saved, in that vicinity of Jinzhou Yuancheng’s production plant to the Group’s new sweeteners production facility in Jinzhou enables Jinzhou Yuancheng to supply corn starch to such new sweeteners production facility in slurry form through a pipeline arrangement, whereby certain processing and packaging, dehumidifying, storage, transportation and other related costs can be saved. The corn sweeteners production facilities of the Group in Shanghai can also secure the supply of corn starch from Jinzhou Yuancheng rather than from third party suppliers and thereby enhancing the cost control of these production facilities. Such vertical integration along the chain of production for the Group also places it in a better position to effectively apply quality control procedures and to monitor and control the production flows of both corn starch and corn sweeteners, thereby minimising the chance of bottlenecks or inventory pile-up, and related administrative costs.

Immediately following Completion, Jinzhou Yuancheng will become an indirect whollyowned subsidiary of the Company and therefore under the full control by the Group. The Directors considered that the Group can take the advantage of the existing utility facilities of Jinzhou Yuancheng which are scalable for its new sweetener production plant in Jinzhou whereby such facilities can be expanded upon and shared among Jinzhou Yuancheng and the new sweetener production plant. Therefore, the Directors believe that capital expenditure for constructing utility facilities for the new sweetener production plant in Jinzhou can be reduced. In addition, the Directors estimated that to secure land, obtaining all necessary approvals in relation to the construction of a new plant to the current capacity of the Jinzhou Yuancheng’s production plant will take about 18 months from the time that an approval for constructing a new corn-processing plant is sought from the State Council. However, there is no assurance that the Group will be able to acquire suitable land which is sufficiently close to the current sweetener production plant under construction in Jinzhou to achieve the time, transportation and other procurement costs savings that may be achieved through the contemplated pipeline arrangement mentioned above.

According to 關於促進玉米深加工業健康發展的指導意見的通知 (‘‘the notice in relation to the Guidelines on promotion of healthy development of corn refinery industry’’) issued by the National Development and Reform Commission in September 2007, no further new corn refinery projects will be approved by the authorities thereafter in principle. In addition, the construction of those corn refinery projects, which had filed registration to the authorities during the Eleventh Five-Year Plan of the PRC but had not yet commenced construction, had to be halted. The main purpose of the guideline is to reform and adjust the corn-refinery industry in the PRC by balancing the supply and demand of various corn refined products and prohibit the construction of low value added corn processing plants. Thus, we concur with the view of the Board that the Transaction can facilitate the instant ownership of an established production plant of corn starch within the proximity of the proposed new production plant of the Group at Jinzhou and the vertical integration along the chain of production for the Group. Moreover, we consider that the Transaction enables the Company to secure a stable supply of a key production material for its production facilities in Shanghai and Jinzhou and save processing and packaging, dehumidifying, storage, transportation and other related costs.

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LETTER FROM PARTNERS CAPITAL

On the above basis, we consider that there is a strong commercial rationale for the Company to enter into of the S&P Agreement which enables the Company to secure a stable supply of corn starch for its production whilst achieving significant procurement costs savings.

2. Terms of the S&P Agreement

(i) Consideration

Pursuant to the S&P Agreement, GSIL will purchase 70% and 30% of the equity interests in Jinzhou Yuancheng held by Global Corn and Dacheng Industrial respectively, which in aggregate represent 100% of the issued share capital of Jinzhou Yuancheng, at a Consideration of HK$520 million. The Consideration shall be payable by the Group at Completion, as to HK$156 million by way of cash to Dacheng Industrial upon Completion, and as to HK$364 million to Global Corn by way of a 6% per annum unsecured semi-annual coupon loan note due and repayable on the fifth anniversary after the issue thereof on Completion. As set out in the Letter from the Board, the Consideration was determined after arm’s length negotiations among the parties to the S&P Agreement and with reference to the fair value of Jinzhou Yuancheng of approximately RMB466 million (equivalent to approximately HK$522 million) as at 30 May 2008 as appraised by the Appraiser using the market approach method for the valuation of the entire equity interest of Jinzhou Yuancheng. The original purchase cost of Global Corn in 2003 while Jinzhou Yuancheng had yet commenced its commercial production and the allocated purchase cost to GBT Group of the interests held by Dacheng Industrial regarding the respective 70% and 30% of the entire equity interest of Jinzhou Yuancheng were approximately HK$82 million and approximately HK$181 million respectively.

According to the valuation report for Jinzhou Yuancheng prepared and issued by the Appraiser, we note that the Appraiser used the market approach to prepare the valuation about the fair value of Jinzhou Yuancheng as at 30 May 2008. In particular, the Guideline Public Company Method was applied to determine the fair value of Jinzhou Yuancheng where invested capital multiple, a value multiple, was computed on a total-company basis by reference to the invested capital multiple of a number of guideline public companies, which are principally engaged in the manufacture and sales of corn starch and corn starch related products, after relevant adjustments of their respective financial information. We note that the Appraiser is a third party independent of the Group and the connected persons of the Group notwithstanding the Company and the Appraiser had normal business relationship since May 2008. We have also reviewed the scope of services provided under the engagement between the Appraiser and the Company and we note that the scope of work is appropriate to the opinion given and there were no limitations on the scope of work. We also note that the Appraiser had conducted valuations for a number of companies listed on the Stock Exchange and the valuers preparing the valuation for the Company have the relevant qualification and experience to conduct the valuation for Jinzhou Yuancheng. Based on the foregoing, we consider that the valuation methodology adopted by the Appraiser concerned is generally in line with market practice of determining the fair value of Jinzhou Yuancheng and is hence reasonable.

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LETTER FROM PARTNERS CAPITAL

Upon comparison, we note that the consideration for the Transaction of HK$520 million is virtually equivalent to the fair value of Jinzhou Yuancheng of approximately RMB466 million (equivalent to approximately HK$522 million) as appraised by the Appraiser.

Based on the above analysis, we consider that the Consideration is fair and reasonable so far as the Independent Shareholders are concerned.

(ii) Mode of settlement of the Consideration

Pursuant to the S&P Agreement, the Consideration for the Transaction of HK$520 million shall be payable by the Group at Completion, as to HK$156 million by way of cash to Dacheng Industrial upon Completion, and as to HK$364 million to Global Corn by way of a 6% per annum unsecured semi-annual coupon loan note due and repayable on the fifth anniversary after the issue thereof on Completion.

According to the annual report of the Company for the year ended 31 December 2007, the cash and bank balance of the Group as at 31 December 2007 amounted to approximately HK$906 million. According to the accountants’ report of Jinzhou Yuancheng as set out in Appendix II to the Circular, we note that the cash and bank balance of Jinzhou Yuancheng as at 31 March 2008 amounted to approximately RMB42.4 million. We note that that cash portion of the Consideration represents approximately 17.2% of the cash and bank balance of the Group as at 31 December 2007 and approximately 19.6% of the pro forma cash and bank balance of the Enlarged Group and we consider that there is no material impact on the cashflow position of the Group upon Completion taking into account of the cash position of Jinzhou Yuancheng as at 31 March 2008. On the other hand, we note that the Company will issue the loan note to settle the remaining portion of the Consideration. We consider that the issue of loan note can facilitate the Company to delay the one-off cash outlay in the amount of HK$364 million to five years and the Company can retain the cash for its operations and/ or expansion. In addition, as set in the annual report of the Company for the year ended 31 December 2007, the interest rates charging on the bank borrowings of the Group are Hong Kong Interbank Offered Rate (HIBOR) and a range of 6.3% to 6.75%. As at the Latest Practicable Date, the one-month HIBOR and 3-months HIBOR were approximately 1.90% and 2.27% respectively. We note that the coupon rate of the loan note of 6% per annum falls within the range of the interest rates charging on the bank borrowings of the Group. We also note that the maturity of the loan note is 5 years which is a relatively long term as compared to other borrowings of the Company.

Based on the above, we consider that the mode of settlement of the Consideration is on normal commercial terms, fair and reasonable and is in the interests of the Company and the Independent Shareholders as a whole.

(iii) Waiver

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LETTER FROM PARTNERS CAPITAL

efficiency in operations and expediting their respective business development. As set out in the Letter from the Board, the Group will have the capacity of producing its own corn starch and other Co-products after completion of the Transaction. However, it is not the intention of the directors of GBT and the Company to defeat the above purposes of the spin-off listing of the Group by diversifying the Group’s business to the sales of the corn starch and/or Coproducts so produced. Notwithstanding both the Group (via Jinzhou Yuancheng) and the GBT Group will be engaging in the production and sales of corn starch and Co-products upon Completion, the GBT Group will continue to engage in the production and sales of corn starch and Co-products while the Company intends to focus on its corn sweetener business. To achieve this, under the S&P Agreement, the Company will deliver the Waiver in favour of GBT and Global Corn Bio-chem for the GBT Group to continue to engage in the production and sale of corn starch and/or Co-products, and Jinzhou Yuancheng will enter into the Sales Agency Agreement with the GBT Group in relation to the distribution of the Co-products and corn starch in excess of internal consumption on the date of Completion.

Under the Sales Agency Agreement, Jinzhou Yuancheng will appoint Global Corn (for itself and on behalf of the GBT Group) as its exclusive agent for the sale of the Co-products and corn starch in excess of its internal consumption from time to time produced by Jinzhou Yuancheng from the date of Completion to 31 December 2010. The GBT Group will use its best endeavours to procure the sale and marketing of the Co-products and corn starch as exclusive agent of Jinzhou Yuancheng, and will sell the Co-products and corn starch produced by Jinzhou Yuancheng in priority to any Co-products and corn starch produced by any members of the GBT Group (other than those goods produced by Global Corn or any member of the GBT Group for sales in Jilin and Heilongjiang Provinces of the PRC).

As advised by the Directors, the objectives of the Transaction are to reduce its reliance on the GBT Group in terms of corn starch supply and secure a stable supply of a key production material for its production facilities in Shanghai and Jinzhou going forward. It is expected that all the corn starch produced by Jinzhou Yuancheng will eventually be consumed by the Group upon completion of the expansion of production capacity. However, pending completion of such expansion, the corn starch produced by Jinzhou Yuancheng will be in excess for the current internal consumption of the Group. Besides, in the course of production of corn starch, certain co-products including the Co-products will be produced which are not required by the Group for its production use. As further advised by the Directors, it was not the intention of the Directors to diversify the Group’s business to the sales of the corn starch and/or Co-products via the Transaction and the Co-products produced were incidental to the production of corn starch by Jinzhou Yuancheng. Moreover, we learnt from the Board that the sale and marketing team has been focusing on the corn sweeteners business and does not have idle capacity to manage the sales of the Co-products and corn starch produced in excess of the internal consumption . Also, the Board has no intention to set up a new sale and marketing team responsible for the sales of the Co-products and corn starch in excess. Notwithstanding this, the Board estimated that the aggregate cost of setting up and maintaining a new sale and marketing team responsible for the sales of the Coproducts and corn starch in excess would be approximately RMB3 million per year which is much higher than the expected costs reimbursable to the GBT Group under the expected annual capped amounts of the reimbursement of the costs of the GBT Group payable by Jinzhou Yuancheng to the GBT Group under the Sales Agency Agreement.

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LETTER FROM PARTNERS CAPITAL

In view that the GBT Group has been selling corn starch and Co-products produced by Jinzhou Yuancheng for and on its behalf through the distribution network of the GBT Group originated from Changchun prior to the Transaction and the sales teams of the GBT Group are experienced and have already established distribution channels for the Co-products and corn starch across the whole of the PRC, the Directors believe that it will be more efficient to sell the Co-products and corn starch in excess of internal consumption produced by Jinzhou Yuancheng to independent third parties by leveraging on the sales teams and network already established by the GBT Group.

Based on the above, we consider that it is justifiable to enter into the Sale Agency Agreement which brings financial benefits to the Group and the grant of the Waiver is crucial to the implementation of the Sale Agency Agreement and the continuing connected transactions contemplated thereunder. Accordingly, we consider that the grant of the Waiver is in the interests of the Group and the Independent Shareholders as a whole.

3. Financial effects of the S&P Agreement on the Group

(i) Earnings

Upon completion of the Transaction, Jinzhou Yuancheng will become an indirect wholly owned subsidiary of the Company and the Group will consolidate the financial results of Jinzhou Yuancheng in full. As set out in the Letter from the Board, based on the audited accounts of Jinzhou Yuancheng for the year ended 31 December 2007, the net profit before tax of Jinzhou Yuancheng amounted to approximately RMB89 million and approximately RMB71 million respectively, and for each of the two years ended 31 December 2007, the net profit after tax attributable to the shareholders of Jinzhou Yuancheng amounted to approximately RMB88 million and approximately RMB58 million respectively. In addition, the Company will record interest expenses arising from the loan note to be issued to Global Corn. Assuming the Transaction was completed on 1 January 2007, the Transaction is expected to have a positive effect on the earnings of the enlarged Group after completion of the S&P Agreement notwithstanding the increase in interest expenses as a result of the Completion.

(ii) Cashflow

As the consideration will be satisfied as to HK$156 million by way of cash to Dacheng Industrial upon Completion, and as to HK$364 million to Global Corn by way of a 6% per annum unsecured semi-annual coupon loan note due and repayable on the fifth anniversary after the issue thereof on Completion, it is expected that there will be a negative impact on the cashflow of the Group arising from the Transaction. It is expected that the interest expenses of the Company will be increased as a result of the interest expenses arising from the loan note to be issued to Global Corn. However, we understand from the Directors that it is expected that certain production (such as processing and packaging, dehumidifying, storage, transportation) and other related costs can be saved after completion of the Transaction. In addition, according to the annual report of the Company for the year ended 31 December 2007, the cash and bank balance of the Group as at 31 December 2007 amounted to approximately HK$906 million. In addition, the Company raised net proceeds of approximately HK$657 million in September 2007 from its listing on the Main Board of the

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Stock Exchange. Notwithstanding that the Transaction will have a negative impact on the cashflow of the Group, we understand from the Directors that the Transaction will not materially affect the cashflow position of the Group as at the Latest Practicable Date and the cash resources earmarked by the Company for satisfying the consideration of the Transaction will not conflict with the original use of proceeds cited in the prospectus of the Company for its listing on the Main Board of the Stock Exchange.

(iii) Net Asset Value

According to the annual report of the Company for the year ended 31 December 2007, the consolidated net assets attributable to equity holders of the Company were approximately HK$1,280 million. Upon completion of the Transaction, the Group will consolidate the financial assets and liabilities of Jinzhou Yuancheng fully. According to the Letter from the Board, the net asset value of Jinzhou Yuancheng was approximately RMB367 million as at 31 December 2007. According to the pro forma statement of assets and liabilities of the Enlarged Group set out in Appendix III to the Circular, the pro forma consolidated net assets attributable to equity holders of the Enlarged Group of approximately HK$1,280 million will remain the same upon completion of the Transaction as the consolidated net assets attributable to equity holders of the Company as at 31 December 2007.

Based on the above, we consider that the transactions under the S&P Agreement are expected to have no effect on the Group’s net assets position.

(iv) Gearing

According to the annual report of the Company for the year ended 31 December 2007, the gearing ratio of the Group as at 31 December 2007 was approximately 24.0%, as derived by dividing the total interest-bearing liabilities of the Group as at 31 December 2007 of approximately HK$525.0 million by the total assets of approximately HK$2,183.5 million as at 31 December 2007.

According to the pro forma statement of assets and liabilities of the Enlarged Group set out in Appendix III to the Circular, upon Completion, the total pro forma interest-bearing liabilities of the Enlarged Group will be approximately HK$1,226.5 million and the pro forma total assets of the Enlarged Group will be approximately HK$3,145.4 million. Hence, the pro forma gearing ratio will become approximately 39.0%.

On such basis, notwithstanding that the Transaction is expected to have negative effects on cashflow and gearing, the earnings of the Group are expected to be enhanced. Accordingly, we are of the view that the Transaction is, on balance, in the interests of the Company and the Shareholders as a whole.

– 24 –

LETTER FROM PARTNERS CAPITAL

Recommendation

Having considered the principal factors and reasons, we are of the opinion that the terms of the S&P Agreement are on normal commercial terms, in the ordinary and usual course of business of the Group and are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to, and we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM for approving the Transaction.

Yours faithfully, For and on behalf of

Partners Capital International Limited Alan Fung

Managing Director

– 25 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

1. FINANCIAL SUMMARY OF THE GROUP

Set out below is a summary of the audited consolidated balance sheets and consolidated income statements as at and for the year ended 31 December 2005 as extracted from the accountants’ report of the Company contained in the prospectus of the Company dated 10 September 2007 and as at and for the years ended 31 December 2006 and 2007 as extracted from the annual report of the Group for the year ended 31 December 2007.

Sales
Taxation
Profit for the year
Dividend
Basic
Diluted
Total assets
Less: Total liabilities
Total net assets

Results of the Group for
the years ended 31 December
2005
2006
2007
HK$’000
HK$’000
HK$’000
824,972
1,144,141
1,595,054
11,498
19,956
35,355
95,666
156,733
193,666
—
—
—
0.115
0.150
0.185
—
0.150
0.185
Assets and liabilities of the Group
as at 31 December
2005
2006
2007
HK$’000
HK$’000
HK$’000
1,121,388
1,330,692
2,183,469
(933,356)
(973,240)
(903,001)
188,032
357,452
1,280,468

– 26 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2. AUDITED CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007

The following is the audited consolidated financial statements of the Group for the year ended 31 December 2007, extracted from annual report of the Company for the year ended 31 December 2007:

Consolidated Balance Sheet

Notes NON-CURRENT ASSETS Property, plant and equipment 13 Prepaid land premiums 14 Deposits paid for acquisition of property, plant and equipment and land premiums Goodwill 15 Long term loan to a jointly-controlled entity 17 Total non-current assets CURRENT ASSETS Inventories 18 Trade receivables 19 Prepayments, deposits and other receivables 20 Due from jointly-controlled entities 17 Due from the immediate holding company 32 Due from fellow subsidiaries 32 Cash and cash equivalents 21 Total current assets CURRENT LIABILITIES Trade payables 22 Other payables and accruals 23 Interest-bearing bank and other borrowings 24 Due to fellow subsidiaries 32 Due to a related company 32 Due to the ultimate holding company 32 Due to jointly-controlled entities 17 Due to the immediate holding company 32 Tax payable Total current liabilities	As at 31 December 2007 2006 HK$’000 HK$’000 568,394 496,592 28,711 23,985 2,151 1,178 149,950 149,950 40,000 40,000 789,206 711,705 51,282 69,046 225,237 98,106 34,285 21,929 26,141 14,272 21,085 21,085 130,634 351,396 905,599 43,153 1,394,263 618,987 35,968 19,377 56,462 56,130 156,250 100,100 3,432 193,720 55 575 54,284 270,935 4,179 2,510 180,338 180,360 8,564 8,029 499,532 831,736	As at 31 December 2007 2006 HK$’000 HK$’000 568,394 496,592 28,711 23,985 2,151 1,178 149,950 149,950 40,000 40,000 789,206 711,705 51,282 69,046 225,237 98,106 34,285 21,929 26,141 14,272 21,085 21,085 130,634 351,396 905,599 43,153 1,394,263 618,987 35,968 19,377 56,462 56,130 156,250 100,100 3,432 193,720 55 575 54,284 270,935 4,179 2,510 180,338 180,360 8,564 8,029 499,532 831,736
		711,705
		69,046 98,106 21,929 14,272 21,085 351,396 43,153
		618,987
		19,377 56,130 100,100 193,720 575 270,935 2,510 180,360 8,029
		831,736

– 27 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes
NET CURRENT ASSETS/(LIABILITIES)
TOTAL ASSETS LESS CURRENT
LIABILITIES
NON-CURRENT LIABILITIES
Interest-bearing bank and other borrowings
24
Due to a venturer of a jointly-controlled entity
17
Deferred tax liabilities
25
Total non-current liabilities
Net assets
EQUITY
Equity attributable to equity holders of the
parent
Issued capital
26
Reserves
27(a)
Proposed final dividend
12
Minority interests
Total equity

As at 31 December
2007
2006
HK$’000
HK$’000
894,731
(212,749)
1,683,937
498,956
368,750
117,647
20,000
20,000
14,719
3,857
403,469
141,504
1,280,468
357,452
104,500
—
1,175,968
357,452
—
—
1,280,468
357,452
—
—
1,280,468
357,452

– 28 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Balance Sheet

Notes NON-CURRENT ASSETS Investments in subsidiaries 16 Total non-current assets CURRENT ASSETS Due from the immediate holding company 32 Due from subsidiaries 32 Prepayments, deposits and other receivables 20 Cash and cash equivalents 21 Total current assets CURRENT LIABILITIES Other payables and accruals 23 NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank loans 24 Net assets EQUITY Issued capital 26 Reserves 27(b) Proposed final dividend 12 Total equity	As at 31 December 2007 2006 HK$’000 HK$’000 513,163 491,695 513,163 491,695 126,054 — 279,611 — 1,613 — 527,470 — 934,748 — 5,656 — 929,092 — 1,442,255 491,695 300,000 — 1,142,255 491,695 104,500 — 1,037,755 491,695 — — 1,142,255 491,695	As at 31 December 2007 2006 HK$’000 HK$’000 513,163 491,695 513,163 491,695 126,054 — 279,611 — 1,613 — 527,470 — 934,748 — 5,656 — 929,092 — 1,442,255 491,695 300,000 — 1,142,255 491,695 104,500 — 1,037,755 491,695 — — 1,142,255 491,695
		491,695
		— — — —
		—
		—
		—
		491,695 —
		491,695
		— 491,695 —
		491,695

– 29 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Income Statement

Notes REVENUE 4 Cost of sales Gross profit Other income and gains 4 Selling and distribution costs Administrative expenses Other expenses Finance costs 6 PROFIT BEFORE TAX 5 Tax 9 PROFIT FOR THE YEAR Attributable to: Equity holders of the parent 10 Minority interests EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT 11 Basic and diluted	Year ended 31 December 2007 2006 HK$’000 HK$’000 1,595,054 1,144,141 (1,260,400) (892,564) 334,654 251,577 20,783 5,588 (47,607) (48,251) (36,500) (15,039) (17,953) (3,760) (24,356) (13,426) 229,021 176,689 (35,355) (19,956) 193,666 156,733 193,666 156,733 — — 193,666 156,733 HK$0.185 HK$0.150

– 30 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Statement of Changes in Equity

At 1 January 2006 Exchange realignment Total income and expenses directly recognised in equity Profit for the year Transfer from retained profits At 31 December 2006 At 1 January 2007 Revaluation surplus, net of deferred tax charge of HK$3,252,500 (notes 13 and 25) Exchange realignment Total income directly recognised in equity Profit for the year Share subscription and placement Transfer from retained profits At 31 December 2007	Issued share capital HK$’000 — — — — — — — — — — — 104,500 — 104,500	Attributable to equity holders of the parent Share premium account Asset revaluation reserve Statutory reserve fund Exchange fluctuation reserve Retained profits Total equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 — 3,750 14,743 7,575 161,964 188,032 — — — 12,687 — 12,687 — — — 12,687 — 12,687 — — — — 156,733 156,733 — — 17,515 — (17,515) — — 3,750 32,258 20,262 301,182 357,452 — 3,750 32,258 20,262 301,182 357,452 — 8,502 — — — 8,502 — — 1,683 40,192 — 41,875 — 8,502 1,683 40,192 — 50,377 — — — — 193,666 193,666 574,473 — — — — 678,973 — — 22,902 — (22,902) — 574,473 12,252 56,843 60,454 471,946* 1,280,468	Total equity HK$’000 188,032 12,687
			12,687 156,733 —

Certain subsidiaries which were established in the PRC are required to transfer 10% of profits after tax calculated in accordance with the PRC accounting regulations to their respective statutory reserve funds until they reach 50% of their respective registered capital, upon which any further appropriation is at the directors’ recommendation. Such reserve may be used to reduce any losses incurred by the subsidiaries or may be capitalised as paid-up capital of the subsidiaries.

These reserve accounts comprise the consolidated reserves of the Group of HK$1,175,968,000 on the consolidated balance sheet at 31 December 2007 (2006: HK$357,452,000).

– 31 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Consolidated Cash Flow Statement

Notes
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before tax
Adjustments for:
Finance costs
6
Bank interest income
4
(Gain)/loss on disposal of items of
property, plant and equipment
4 & 5
Depreciation
5
Amortisation of prepaid land premiums
5
Expensed listing expenditures
Impairment of trade receivables
5
Write down of inventories to net
realisable value
5
Decrease/(increase) in inventories
Increase in trade receivables
Increase in prepayments, deposits and other
receivables
Increase in trade payables
Increase/(decrease) in other payables and
accruals
Decrease/(increase) in amounts due from
fellow subsidiaries
Increase in amounts due from jointly-
controlled entities
Increase/(decrease) in amounts due to
fellow subsidiaries
Increase/(decrease) in amounts due to
jointly-controlled entities
Increase/(decrease) in an amount due to
a related company
Cash generated from operations
Interest received
Overseas taxes paid
Net cash inflow from operating activities

Year ended 31 December
2007
2006
HK$’000
HK$’000
229,021
176,689
24,356
13,426
(9,490)
(846)
(72)
664
36,395
27,641
1,038
832
21,874
—
—
1,207
(6,190)
2,167
296,932
221,780
23,954
(36,752)
(127,131)
(30,589)
(12,339)
(13,787)
16,591
808
332
(558)
203,996
(71,669)
(9,228)
(7,979)
(148,566)
8,930
1,246
(1,086)
(520)
26
245,267
69,124
9,490
846
(27,227)
(4,627)
227,530
65,343

– 32 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of items of property, plant and
equipment
Proceeds from disposal of items of
property, plant and equipment
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Net proceeds from initial public offering
New bank loans
Repayment of bank loans
Repayment of other loans
Interest paid
Decrease/(increase) in amounts due from
fellow subsidiaries
Increase in amounts due from jointly-
controlled entities
Decrease in an amount due to the
immediate holding company
Increase/(decrease) in an amount due to the
ultimate holding company
Increase in amounts due to jointly-
controlled entities
Decrease in amounts due to fellow
subsidiaries
Net cash inflow/(outflow) from financing
activities
NET INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of
year
Effect of foreign exchange rate changes, net
CASH AND CASH EQUIVALENTS AT
END OF YEAR
ANALYSIS OF BALANCES OF CASH
AND CASH EQUIVALENTS
Cash and bank balances
21

Year ended 31 December
2007
2006
HK$’000
HK$’000
(72,076)
(71,818)
1,687
1,496
(70,389)
(70,322)
657,099
—
545,833
72,516
(213,510)
(50,981)
(24,779)
—
(24,356)
(13,426)
16,766
(16,750)
(2,641)
—
(22)
—
(216,651)
2,023
423
—
(41,722)
(15,060)
696,440
(21,678)
853,581
(26,657)
43,153
66,146
8,865
3,664
905,599
43,153
905,599
43,153

– 33 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Notes to the Consolidated Financial Statements

(All amounts in HK dollar thousands unless otherwise stated)

1. CORPORATE INFORMATION

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 on 13 June 2006. The principal activity of the Company is investment holding. The Group is involved in the manufacture and sale of corn based sweetener products. There were no changes in the nature of the Group’s principal activities during the year.

Pursuant to a group reorganisation (the ‘‘Reorganisation’’) to rationalise the structure of the Group in preparation for the listing of the Company’s shares on The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’), the Company became the holding company of the companies now comprising the Group on 24 August 2007. Further details of the Reorganisation are set out in the Prospectus issued by the Company dated 10 September 2007 (the ‘‘Prospectus’’). The shares of the Company were listed on the Stock Exchange on 20 September 2007.

The Company is a subsidiary of Global Corn Bio-chem Technology Company Limited (the ‘‘immediate holding Company’’ or ‘‘Global Corn Bio-chem’’), 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 (the ‘‘ultimate holding Company’’), a company incorporated in the Cayman Islands whose shares are also listed on the Main Board of the Stock Exchange.

2.1 BASIS OF PREPARATION

These financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) (which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (‘‘HKASs’’) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’), accounting principles generally accepted in Hong Kong and the disclosure requirements of the Hong Kong Companies Ordinance. The accounting policies adopted in the preparation of these financial statements are the same as those disclosed in the Prospectus. They have been prepared under the historical cost convention, except for the periodic remeasurement of certain property, plant and equipment at fair value as further explained below. These financial statements are presented in Hong Kong dollars (‘‘HK$’’).

The financial information has been prepared using the principle of merger accounting in accordance with Accounting Guideline 5 ‘‘Merger Accounting for Common Control Combinations’’ issued by the HKICPA, as if the Reorganisation had been completed as at the beginning of the years presented because the Company’s acquisition of the companies now comprising the Group should be regarded as a business combination under common control as the Company and all companies now comprising the Group are ultimately controlled by the ultimate holding company before and after the Reorganisation.

The Group is regarded as a continuing entity resulting from the Reorganisation under common control. Accordingly, the consolidated financial statements of the Group for the year ended 31 December 2007 and the comparative amounts for the year ended 31 December 2006 have been prepared as if the current group structure had been in existence throughout the year presented.

Basis of consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries (collectively referred to as the ‘‘Group’’) and its share of each jointly-controlled entity for the year ended 31 December 2007. The results of subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. All significant intercompany transactions and balances within the Group are eliminated on consolidation.

Minority interests represent the interests of outside shareholders not held by the Group in the results and net assets of the Company’s subsidiaries.

– 34 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

2.2 IMPACT OF ISSUED BUT NOT YET EFFECTIVE HONG KONG FINANCIAL REPORTING STANDARDS

The Group has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these financial statements.

HKAS 1 (Revised) Presentation of Financial Statements[1] HKFRS 2 Amendment Share-Based Payment — Vesting Conditions and Cancellations[1] HKFRS 8 Operating Segments[1] HKAS 23 (Revised) Borrowing Costs[1] HKFRS 3 (Revised) Business Combinations[5] HKAS 27 (Revised) Consolidated and Separate Financial Statements[5] HK(IFRIC)-Int 11 HKFRS 2 — Group and Treasury Share Transactions[2] HK(IFRIC)-Int 12 Service Concession Arrangements[4] HK(IFRIC)-Int 13 Customer Loyalty Programmes[3] HK(IFRIC)-Int 14 HKAS 19 — The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction[4]

1 Effective for annual periods beginning on or after 1 January 2009
2 Effective for annual periods beginning on or after 1 March 2007
3 Effective for annual periods beginning on or after 1 July 2008
4 Effective for annual periods beginning on or after 1 January 2008
5 Effective for annual periods beginning on or after 1 July 2009

HKAS 1 has been revised to separate owner and non-owner changes in equity. The statement of changes in equity will include only details of transactions with owners, with all non-owner changes in equity presented as a single line. In addition, this standard introduces the statement of comprehensive income: it presents all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense, either in one single statement, or in two linked statements. The Group is still evaluating whether it will have one or two statements.

The amendment to HKFRS 2 restricts the definition of ‘‘vesting condition’’ to a condition that includes an explicit or implicit requirement to provide services. Any other conditions are non-vesting conditions, which have to be taken into account to determine the fair value of the equity instruments granted. In the case that the award does not vest as the result of a failure to meet a non-vesting condition that is within the control of either the entity or the counterparty, this must be accounted for as a cancellation. As the Group has not entered into share-based payment schemes with nonvesting conditions attached, the amendment is not expected to have any financial impact on the Group.

HKFRS 8, which will replace HKAS 14 Segment Reporting, specifies how an entity should report information about its operating segments, based on information about the components of the entity that is available to the chief operating decision maker for the purposes of allocating resources to the segments and assessing their performance. The standard also requires the disclosure of information about the products and services provided by the segments, the geographical areas in which the Group operates, and revenue from the Group’s major customers. The Group expects to adopt HKFRS 8 from 1 January 2009.

HKAS 23 has been revised to require capitalisation of borrowing costs when such costs are directly attributable to the acquisition, construction or production of a qualifying asset. As the Group’s current policy for borrowing costs aligns with the requirements of the revised standard, the revised standard is unlikely to have any financial impact on the Group.

HKFRS 3 has been revised to introduce a number of changes in the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. HKAS 27 has been revised to require that a change in the ownership interest of a subsidiary is accounted for as an equity transaction. Therefore, such a change will have no impact on goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. The changes introduced by the revisions to HKFRS 3 and HKAS 27 will be applied by the Group prospectively as required under the revised standards and will affect future acquisitions and transactions of the Group with minority interests.

– 35 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

HK(IFRIC)-Int 11 requires arrangements whereby an employee is granted rights to the Group’s equity instruments, to be accounted for as an equity-settled scheme, even if the Group acquires the instruments from another party, or the shareholders provide the equity instruments needed. HK(IFRIC)-Int 11 also addresses the accounting for share-based payment transactions involving two or more entities within the Group. As the Group currently has no such transactions, the interpretation is unlikely to have any financial impact on the Group.

HK(IFRIC)-Int 12 requires an operator under public-to-private service concession arrangements to recognise the consideration received or receivable in exchange for the construction services as a financial asset and/or an intangible asset, based on the terms of the contractual arrangements. HK(IFRIC)-Int 12 also addresses how an operator shall apply existing HKFRSs to account for the obligations and the rights arising from service concession arrangements by which a government or a public sector entity grants a contract for the construction of infrastructure used to provide public services and/or for the supply of public services. As the Group currently has no such arrangements, the interpretation is unlikely to have any financial impact on the Group.

HK(IFRIC)-Int 13 requires that loyalty award credits granted to customers as part of a sales transaction are accounted for as a separate component of the sales transaction. The consideration received in the sales transaction is allocated between the loyalty award credits and the other components of the sale. The amount allocated to the loyalty award credits is determined by reference to their fair value and is deferred until the awards are redeemed or the liability is otherwise extinguished.

HK(IFRIC)-Int 14 addresses how to assess the limit under HKAS 19 Employee Benefits, on the amount of a refund or a reduction in future contributions in relation to a defined benefit scheme that can be recognised as an asset, in particular, when a minimum funding requirement exists.

As the Group currently has no customer loyalty award credits and defined benefit scheme, HK(IFRIC)-Int 13 and HK(IFRIC)-Int 14 are not applicable to the Group and therefore are unlikely to have any financial impact on the Group.

2.3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsidiaries

A subsidiary is an entity whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities.

The results of subsidiaries are included in the Company’s income statement to the extent of dividends received and receivable. The Company’s investments in subsidiaries are stated at cost less any impairment losses.

Joint ventures

A joint venture is an entity set up by contractual arrangement, whereby the Group and other parties undertake an economic activity. The joint venture operates as a separate entity in which the Group and the other parties have an interest.

The joint venture agreement between the venturers stipulates the capital contributions of the joint venture parties, the duration of the joint venture entity and the basis on which the assets are to be realised upon its dissolution. The profits and losses from the joint venture’s operations and any distributions of surplus assets are shared by the venturers, either in proportion to their respective capital contributions, or in accordance with the terms of the joint venture agreement.

A joint venture is treated as:

(a) a subsidiary, if the Group has unilateral control, directly or indirectly, over the joint venture;
(b) a jointly-controlled entity, if the Group does not have unilateral control, but has joint control, directly or indirectly, over the joint venture;

– 36 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(c) an associate, if the Group does not have unilateral or joint control, but holds, directly or indirectly, generally not less than 20% of the joint venture’s registered capital and is in a position to exercise significant influence over the joint venture; or
(d) an equity investment accounted for in accordance with HKAS 39, if the Group holds, directly or indirectly, less than 20% of the joint venture’s registered capital and has neither joint control of, nor is in a position to exercise significant influence over, the joint venture.

Jointly-controlled entities

A jointly-controlled entity is a joint venture that is subject to joint control, resulting in none of the participating parties having unilateral control over the economic activity of the jointly-controlled entity.

The Group’s interests in its jointly-controlled entities are accounted for by proportionate consolidation, which involves recognising its share of the jointly-controlled entities’ assets, liabilities, income and expenses with similar items in the consolidated financial statements on a line-by-line basis. Unrealised gains and losses resulting from transactions between the Group and its jointly-controlled entities are eliminated to the extent of the Group’s interests in the jointly-controlled entities, except where unrealised losses provide evidence of an impairment of the asset transferred.

Goodwill

Goodwill arising on the acquisition of subsidiaries and jointly-controlled entities represents the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquirees’ identifiable assets acquired, and liabilities and contingent liabilities assumed as at the date of acquisition.

Goodwill arising on acquisition is recognised in the consolidated balance sheet as an asset, initially measured at cost and subsequently at cost less any accumulated impairment losses.

The carrying amount of goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. The Group performs its annual impairment test of goodwill as at 31 December. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units. Each unit or group of units to which the goodwill is so allocated:

. represents the lowest level within the Group at which the goodwill is monitored for internal management purposes; and
. is not larger than a segment based on either the Group’s primary or the Group’s secondary reporting format determined in accordance with HKAS 14 Segment Reporting.

Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cashgenerating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is recognised. An impairment loss recognised for goodwill is not reversed in a subsequent period.

Where goodwill forms part of a cash-generating unit (group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cashgenerating unit retained.

– 37 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Impairment of non-financial assets other than goodwill

Where an indication of impairment exists, or when annual impairment testing for an asset is required (other than inventories, financial assets and goodwill), the asset’s recoverable amount is estimated. An asset’s recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs to sell, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cashgenerating unit to which the asset belongs.

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the consolidated income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortisation), had no impairment loss been recognised for the asset in prior years. A reversal of such impairment loss is credited to the consolidated income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Related parties

A party is considered to be related to the Group if:

(a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the Group; or (iii) has joint control over the Group;
(b) the party is an associate;
(c) the party is a jointly-controlled entity;
(d) the party is a member of the key management personnel of the Group;
(e) the party is a close member of the family of any individual referred to in (a) or (d); or
(f) the party is an entity that is controlled, jointly-controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e).

Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost or valuation less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the consolidated income statement in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment, and where the cost of the item can be measured reliably, the expenditure is capitalised as an additional cost of that asset or as a replacement.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Valuations are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Changes in the values of property are dealt with as movements in the asset revaluation reserve. If the total of this reserve is insufficient to cover a deficit, on an individual asset basis, the excess of the deficit is charged to the consolidated income statement. Any subsequent revaluation surplus is credited to the consolidated income statement to the extent of the deficit previously charged. An annual transfer from the asset revaluation reserve to retained profits is made for the difference between the depreciation based on the revalued carrying amount of an asset and the depreciation based on the asset’s original cost. On disposal of a revalued asset, the relevant portion of the asset revaluation reserve realised in respect of previous valuations is transferred to retained profits as a movement in reserves.

Depreciation is calculated on the straight-line basis to write off the cost or valuation of each item of property, plant and equipment to its residual value over its estimated useful life. The principal annual rates used for this purpose are as follows:

Leasehold buildings	2%
Plant and machinery	6.7%
Leasehold improvements, furniture, office equipment and motor vehicles	20%

Where parts of an item of property, plant and equipment have different useful lives, the cost or valuation of that item is allocated on a reasonable basis among the parts and each part is depreciated separately.

Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at each balance sheet date.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the consolidated income statement in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Construction in progress represents plant under construction, which is stated at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction and capitalised borrowing costs on related borrowed funds during the period of construction. Construction in progress is reclassified to the appropriate category of property, plant and equipment or investment properties when completed and ready for use.

Operating leases

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group is the lessee, rentals payable under the operating leases net of any incentives received from the lessor are charged to the consolidated income statement on the straight-line basis over the lease terms.

Prepaid land premiums/land lease payments under operating leases are initially stated at cost and subsequently recognised on the straight-line basis over the lease terms.

Investments and other financial assets

Financial assets in the scope of HKAS 39 are classified as loans and receivables. When financial assets are recognised initially, they are measured at fair value. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

The Group assesses whether a contract contains an embedded derivative when the Group first becomes a party to it and assesses whether an embedded derivative is required to be separated from the host contract when the analysis shows that the economic characteristics and risks of the embedded derivatives are not closely related to those of the host contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at the balance sheet date.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and losses are recognised in the consolidated income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Impairment of financial assets

The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance account. The amount of the impairment loss is recognised in the consolidated income statement.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognised in the consolidated income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

In relation to trade and other receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor and significant changes in the technological, market economic or legal environment that have an adverse effect on the debtor) that the Group will not be able to collect all of the amounts due under the original terms of an invoice. The carrying amount of the receivables is reduced through the use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:

. the rights to receive cash flows from the asset have expired;

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

. the Group retains the rights to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘‘pass-through’’ arrangement; or
. the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except in the case of a written put option (including a cashsettled option or similar provision) on an asset measured at fair value, where the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities at amortised cost (including interest-bearing loans and borrowings)

Financial liabilities including trade and other payables and interest-bearing loans and borrowings are initially stated at fair value less directly attributable transaction costs and are subsequently measured at amortised cost, using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost. The related interest expense is recognised within ‘‘finance costs’’ in the consolidated income statement.

Gains and losses are recognised in the consolidated income statement when the liabilities are derecognised as well as through the amortisation process.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognised in the consolidated income statement.

Financial guarantee contracts

Financial guarantee contracts in the scope of HKAS 39 are accounted for as financial liabilities. A financial guarantee contract is recognised initially at its fair value less transaction costs that are directly attributable to the acquisition or issue of the financial guarantee contract, except when such contract is recognised at fair value through profit or loss. Subsequent to initial recognition, the Group measures the financial guarantee contract at the higher of: (i) the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and, in the case of work in progress and finished goods, comprises direct materials, direct labour and an appropriate proportion of overheads. Net realisable value is based on estimated selling prices less any estimated costs to be incurred to completion and disposal.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

For the purpose of the balance sheets, cash and cash equivalents comprise cash on hand and at banks, including term deposits, and assets similar in nature to cash, which are not restricted as to use.

Provisions

A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.

When the effect of discounting is material, the amount recognised for a provision is the present value at the balance sheet date of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in finance costs in the consolidated income statement.

Income tax

Income tax comprises current and deferred tax. Income tax is recognised in the consolidated income statement, or in equity if it relates to items that are recognised in the same or a different period directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.

Deferred tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

. where the deferred tax liability arises from goodwill or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
. in respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carryforward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carryforward of unused tax credits and unused tax losses can be utilised, except:

. where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
. in respect of deductible temporary differences associated with investments in subsidiaries and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Conversely, previously unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it is probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Government grants

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following bases:

(a) from the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that the Group maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold; and
(b) interest income, on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.

Employee benefits

Pension schemes and other retirement benefits

The Group operates a defined contribution Mandatory Provident Fund retirement benefits scheme (the ‘‘MPF Scheme’’) under the Mandatory Provident Fund Schemes Ordinance for all of its employees in Hong Kong. Contributions are made based on a percentage of the employees’ basic salaries and are charged to the consolidated income statement as they become payable in accordance with the rules of the MPF Scheme. The assets of the MPF Scheme are held separately from those of the Group in an independently administered fund. The Group’s employer contributions vest fully with the employees when contributed into the MPF Scheme.

The employees of the Group’s subsidiaries which operate in Mainland China are required to participate in the retirement benefits schemes (the ‘‘PRC RB Schemes’’) operated by the respective local municipal government in provinces of Mainland China that the group companies operate. These subsidiaries are required to contribute a certain percentage of their payroll costs to the PRC RB Schemes to fund the benefits. The only obligation of the Group with respect to the PRC RB Schemes is to pay the ongoing required contributions under the PRC RB Schemes. Contributions under the PRC RB Schemes are charged to the consolidated income statements as they become payable in accordance with the rules of the PRC RB Schemes.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, that is, assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. The capitalisation rate is based on the actual cost of the related borrowings. All other borrowing costs are recognised as expenses in the period in which they are incurred.

Dividends

Final dividends proposed by the directors are classified as a separate allocation of retained profits within the equity section of the balance sheet, until they have been approved by the shareholders in a general meeting. When these dividends have been approved by the shareholders and declared, they are recognised as a liability.

Interim dividends are simultaneously proposed and declared, because the Company’s memorandum and articles of association grant the directors the authority to declare interim dividends. Consequently, interim dividends are recognised immediately as a liability when they are proposed and declared.

Foreign currencies

These financial statements are presented in Hong Kong dollars, which is the Company’s functional and presentation currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions are initially recorded using the functional currency rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the balance sheet date. All differences are taken to the consolidated income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The functional currencies of certain overseas subsidiaries and jointly-controlled entities are currencies other than the Hong Kong dollar. As at the balance sheet date, the assets and liabilities of these entities are translated into the presentation currency of the Company at the exchange rates ruling at the balance sheet date and, their income statements are translated into Hong Kong dollars at the weighted average exchange rates for the year. The resulting exchange differences are included in the exchange fluctuation reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the consolidated income statement.

For the purpose of the consolidated cash flow statement, the cash flows of overseas subsidiaries and jointlycontrolled entities are translated into Hong Kong dollars at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of overseas subsidiaries and jointly-controlled entities which arise throughout the year are translated into Hong Kong dollars at the weighted average exchange rates for the year.

– 44 –

FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. SIGNIFICANT ACCOUNTING ESTIMATES

The preparation of the Group’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.

Estimation of fair value of leasehold buildings

In the absence of current prices in an active market for similar properties, the Group considers information by reference to the valuation performed by an independent valuer based on the open market value basis.

Impairment of goodwill

The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amount of goodwill at 31 December 2007 was HK$149,950,000 (2006: HK$149,950,000). More details are given in note 15 to the financial statements.

4. REVENUE, OTHER INCOME AND GAINS

Revenue, which is also the Group’s turnover, represents the net invoiced value of goods sold, after allowances for returns and trade discounts.

An analysis of revenue, other income and gains is as follows:

Revenue Sale of goods Other income and gains Bank interest income Net profit arising from sale of packing materials and by-products Gain on disposal of items of property, plant and equipment Others	Group 2007 2006 HK$’000 HK$’000 1,595,054 1,144,141 9,490 846 9,201 4,339 72 — 2,020 403 20,783 5,588	Group 2007 2006 HK$’000 HK$’000 1,595,054 1,144,141 9,490 846 9,201 4,339 72 — 2,020 403 20,783 5,588
		846 4,339 — 403
		5,588

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

5. PROFIT BEFORE TAX

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

Notes Cost of inventories sold Depreciation 13 Amortisation of prepaid land premiums 14 Auditor’s remuneration Employee’s benefits expenses, including direct labour costs as recorded in the cost of sales: Wages and salaries Pension scheme contributions Foreign exchange differences, net Impairment of trade receivables Write-down/(write-back) of inventories to net realisable value Loss/(gain) on disposal of items of property, plant and equipment	Group 2007 2006 HK$’000 HK$’000 1,117,696 774,227 36,395 27,641 1,038 832 1,374 185 17,922 11,811 1,645 2,064 19,567 13,875 (299) (1,034 — 1,207 (6,190) 2,167 (72) 664	Group 2007 2006 HK$’000 HK$’000 1,117,696 774,227 36,395 27,641 1,038 832 1,374 185 17,922 11,811 1,645 2,064 19,567 13,875 (299) (1,034 — 1,207 (6,190) 2,167 (72) 664
		13,875 (1,034 1,207 2,167 664

6. FINANCE COSTS

Interest on bank loans wholly repayable within five years Finance costs for discounting notes receivable	Group 2007 2006 HK$’000 HK$’000 24,328 13,426 28 — 24,356 13,426	Group 2007 2006 HK$’000 HK$’000 24,328 13,426 28 — 24,356 13,426
		13,426

7. DIRECTORS’ REMUNERATION

Directors’ remuneration for the year, disclosed pursuant to the Listing Rules and Section 161 of the Hong Kong Companies Ordinance, is as follows:

Notes Fees (a) Other emoluments: (b) Salaries, allowances and benefits in kind Performance related bonuses Pension scheme contributions	Group 2007 2006 HK$’000 HK$’000 360 — 1,798 60 2,500 — 13 — 4,311 60 4,671 60	Group 2007 2006 HK$’000 HK$’000 360 — 1,798 60 2,500 — 13 — 4,311 60 4,671 60
		60 — —
		60
		60

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

According to the directors’ service contracts, each of the executive directors, upon completion of every 12 months of service, is entitled to a management bonus. In addition, executive directors with special contributions to the Group may be entitled to special bonus. The aggregate amount of the bonuses payable to all the executive directors for any financial year may not exceed 5% of the consolidated net profit from ordinary activities attributable to shareholders in respect of that financial year. For the year ended 31 December 2007, the aggregate amount of the bonuses payable to the executive directors was equivalent to approximately 1.3% (2006: nil) of the net profit from ordinary activities attributable to shareholders.

(a) Independent non-executive directors

The fees paid to independent non-executive directors during the year were as follows:

Ms. Fung Siu Wan Stella Mr. Yan Man Sing Frankie Mr. Ho Lic Ki Mr. Gao Yunchun	2007 HK$’000 80 120 80 80 360	2006 HK$’000 — — — —
		—

There were no other emoluments payable to the independent non-executive directors during the year (2006:

Nil).

(b) Executive directors

Basic salaries,

	Basic salaries,
2007 Executive directors: Mr. Kong Zhanpeng Ms. Wang Guifeng Mr. Zhang Fusheng Ms. Ge Yanping 2006 Executive directors: Mr. Kong Zhanpeng Mr. Wang Guifeng Mr. Zhang Fusheng Mr. Ge Yanping	housing benefits, other allowances and benefits in kind HK$’000 920 600 120 158 1,798 — — — 60 60	Performance related bonuses HK$’000 2,500 — — — 2,500 — — — — —	Pension scheme contributions HK$’000 4 — — 9 13 — — — — —	Total remuneration HK$’000 3,424 600 120 167
				4,311
				— — — 60
				60

There was no arrangement under which a director waived or agreed to waive any remuneration during the year.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

8. FIVE HIGHEST PAID EMPLOYEES

The five highest paid employees during the year included two (2006: one) directors, details of whose remuneration are set out in note 7 above. Details of the remuneration of the remaining three (2006: four) non-director, highest paid employees for the year are as follows:

Basic salaries, housing benefits, other allowances and benefits in kind Pension scheme contributions	Group 2007 2006 HK$’000 HK$’000 1,040 538 19 36 1,059 574	Group 2007 2006 HK$’000 HK$’000 1,040 538 19 36 1,059 574
		574

The remuneration of the non-director, highest paid employees fell within the following band:

			Group
			2007	2006
			Number of	Number of
			individuals	individuals
Nil	to	HK$1,000,000	3	4

9. TAX

No Hong Kong profits tax has been provided as the Group had no assessable profits arising in Hong Kong. Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the locations in which the Group operates, based on existing legislation, interpretations and practices in respect thereof.

Current — Hong Kong Current — Elsewhere Deferred (note 25) Total tax charge for the year	Group 2007 2006 HK$’000 HK$’000 — — 27,745 19,055 7,610 901 35,355 19,956	Group 2007 2006 HK$’000 HK$’000 — — 27,745 19,055 7,610 901 35,355 19,956
		19,956

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

A reconciliation of the tax expense applicable to profit/(loss) before tax using the statutory rates for the locations in which the Company and the majority of its subsidiaries are domiciled to the tax expense at the effective tax rates, and a reconciliation of the applicable rates (i.e., the statutory tax rates) to the effective tax rates, are as follows:

Group — 2007

Profit/(loss) before tax Tax at the statutory rate Preferential tax rate offered Lower tax rate for tax relief granted Unrecognised tax losses Effect on opening deferred tax liabilities due to changes in tax rates Others Tax charge at the Group’s effective rate	Hong Kong HK$’000 % (39,008) (6,826) 17.5 — — — — 3,923 (10.1) — — 2,903 (7.4) — —	Mainland HK$’000 268,029 88,450 (43,292) (18,086) 1,532 5,175 1,576 35,355	China % 33.0 (16.2) (6.7) 0.6 1.9 0.6 13.2	Total HK$’000 % 229,021 81,624 35.6 (43,292) (18.9) (18,086) (7.9) 5,455 2.4 5,175 2.3 4,479 1.9 35,355 15.4

Group — 2006

Profit/(loss) before tax Tax at the statutory rate Preferential tax rate offered Lower tax rate for tax relief granted Unrecognised tax losses Others Tax charge at the Group’s effective rate	Hong Kong HK$’000 % (4,961) (868) 17.5 — — — — 868 (17.5) — —	Mainland HK$’000 181,650 59,945 (33,787) (11,989) 4,359 1,428 19,956	China % 33.0 (18.6) (6.6) 2.4 0.8 11	Total HK$’000 % 176,689 59,077 33.4 (33,787) (19.1) (11,989) (6.8) 5,227 3 1,428 0.8 19,956 11.3

All of the Group’s subsidiaries and jointly-controlled entities operating in Mainland China are exempt from PRC corporate income tax for two years starting from the first profitable year of their operations and are entitled to 50% relief from the PRC income tax for the following three years.

10. PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT

The consolidated profit attributable to equity holders of the parent for the year ended 31 December 2007 includes a loss of HK$28,413,000 (2006: Nil) has been dealt with in the financial statements of the Company (note 27(b)).

11. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of basic earnings per share is based on the consolidated profit for the year attributable to ordinary equity holders of the Company of approximately HK$193,666,000 and on the assumption that the 1,045,000,000 ordinary shares had been in issue throughout the year.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The earnings per share amount for the year ended 31 December 2006 was calculated based on the combined net profit from the ordinary activities attributable to shareholders of the Company of approximately HK$156,733,000 and the 1,045,000,000 shares which were in issue immediately following the Share Offer and the Capitalisation Issue and the fully exercise of the Over-allotment Option, as if the shares had been outstanding throughout the year ended 31 December 2006.

Since there were no dilutive potential ordinary shares as at 31 December 2007 (2006: Nil), the diluted earnings per share amount was equal to the basic earnings per share amount for the year ended 31 December 2007 (2006: the same).

12. DIVIDENDS

Pursuant to the board of directors’ meeting held on 21 April 2008, no dividend was declared for the year ended 31 December 2007.

13. PROPERTY, PLANT AND EQUIPMENT

Group

31 December 2007 At 31 December 2006 and at 1 January 2007: Cost or valuation Accumulated depreciation Net carrying amount At 1 January 2007, net of accumulated depreciation Additions Surplus on revaluation Disposals Depreciation provided during the year Transfers Exchange realignment At 31 December 2007, net of accumulated depreciation At 31 December 2007: Cost or valuation Accumulated depreciation Net carrying amount Analysis of cost or valuation: At cost At 31 December 2007 valuation	Leasehold buildings HK$’000 158,843 (15,808) 143,035 143,035 760 11,755 — (5,098) 8,055 8,684 167,191 188,097 (20,906) 167,191 — 188,097 188,097	Plant and machinery HK$’000 357,909 (60,075) 297,834 297,834 9,744 — (27) (29,397) 70,437 18,640 367,231 456,703 (89,472) 367,231 456,703 — 456,703	Leasehold improvements, furniture, office equipment and motor vehicles HK$’000 7,425 (3,843) 3,582 3,582 3,403 — (324) (1,900) 763 228 5,752 10,771 (5,019) 5,752 10,771 — 10,771	Construction in progress HK$’000 52,141 — 52,141 52,141 53,340 — (1,264) — (79,255) 3,258 28,220 28,220 — 28,220 28,220 — 28,220	Total HK$’000 576,318 (79,726) 496,592 496,592 67,247 11,755 (1,615) (36,395) — 30,810 568,394 683,791 (115,397) 568,394 495,694 188,097 683,791

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Group

31 December 2006 At 31 December 2005 and at 1 January 2006: Cost or valuation Accumulated depreciation Net carrying amount At 1 January 2006, net of accumulated depreciation Additions Disposals Depreciation provided during the year Transfers Exchange realignment At 31 December 2006, net of accumulated depreciation At 31 December 2006: Cost or valuation Accumulated depreciation Net carrying amount Analysis of cost or valuation: At cost At 31 December 2005 valuation	Leasehold buildings HK$’000 150,018 (11,109) 138,909 138,909 137 — (4,699) 6,046 2,642 143,035 158,843 (15,808) 143,035 8,825 150,018 158,843	Plant and machinery HK$’000 323,582 (38,041) 285,541 285,541 9,210 (568) (22,034) 20,086 5,599 297,834 357,909 (60,075) 297,834 357,909 — 357,909	Leasehold improvements, furniture, office equipment and motor vehicles HK$’000 6,898 (2,935) 3,963 3,963 1,981 (1,532) (908) — 78 3,582 7,425 (3,843) 3,582 7,425 — 7,425	Construction in progress HK$’000 4,981 — 4,981 4,981 73,254 (60) — (26,132) 98 52,141 52,141 — 52,141 52,141 — 52,141	Total HK$’000 485,479 (52,085) 433,394 433,394 84,582 (2,160) (27,641) — 8,417 496,592 576,318 (79,726) 496,592 426,300 150,018 576,318

The Group’s leasehold buildings with the shorter of the lease terms or 50 years were stated at the recent valuation less accumulated depreciation and impairment.

At 31 December 2007, the Group’s leasehold buildings were revalued on an open market value basis, by Savills Valuation and Professional Services Limited, independent professionally qualified valuers, at approximately HK$167,191,000. A surplus on revaluation of approximately HK$11,755,000 arising from the 2007 valuation had been credited to the asset revaluation reserve during the year ended 31 December 2007.

At 31 December 2006, the Group’s leasehold buildings were stated at the 2005 valuation conducted by Savills Valuation and Professional Services Limited, independent professionally qualified valuers, less accumulated depreciation provided since the 2005 valuation. In the opinion of the directors, as there were no material differences between the carrying value and the open market value of the Group’s leasehold buildings as at 31 December 2006, therefore no revaluation has been performed as at that date.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Had the Group’s leasehold buildings been carried at historical cost less accumulated depreciation, their carrying amount would have been approximately HK$151,251,000 (2006: HK$138,850,000).

14. PREPAID LAND PREMIUMS

Carrying amount at 1 January Additions Amortised during the year (note 5) Exchange realignment Carrying amount at 31 December Current portion included in prepayments, deposits and other receivables Non-current portion	Group 2007 2006 HK$’000 HK$’000 24,817 25,043 4,062 — (1,038) (832 1,908 606 29,749 24,817 (1,038) (832 28,711 23,985	Group 2007 2006 HK$’000 HK$’000 24,817 25,043 4,062 — (1,038) (832 1,908 606 29,749 24,817 (1,038) (832 28,711 23,985
		24,817 (832
		23,985

The leasehold land with the shorter of the lease terms or 50 years are situated outside Hong Kong.

15. GOODWILL

At 1 January and 31 December Cost Accumulated impairment Net carrying amount Impairment testing of goodwill	Group 2007 2006 HK$’000 HK$’000 149,950 149,950 — — 149,950 149,950	Group 2007 2006 HK$’000 HK$’000 149,950 149,950 — — 149,950 149,950
		149,950

The Group’s goodwill related to Changchun Dihao Food Development Co., Ltd. (the ‘‘Changchun Dihao’’) which was acquired by the Group during the years ended 31 December 2004 and 2005. The recoverable amount of Changchun Dihao has been determined based on a value in use calculation using cash flow projections based on financial budgets approved by senior management covering a five-year period. The discount rate applied to cash flow projections is 7.1% (2006: 7.0%). No growth has been projected beyond the five year period.

Key assumptions were used in the value in use calculation of cash-generating unit for 31 December 2007. The following describes each key assumption on which management has based its cash flow projections to undertake impairment testing of goodwill:

Budgeted gross margins — The basis used to determine the value assigned to the budgeted gross margins is the average gross margins achieved in the year immediately before the budgeted year, increased for expected efficiency improvements, and expected market development.

Discount rates — The discount rates used are before tax and reflect specific risks relating to the relevant

units.

Raw materials price inflation — The basis used to determine the value assigned to raw materials price inflation is the forecast price indices during the budget year for local market from where raw materials are sourced. The values assigned to key assumptions are consistent with external information sources.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

16. INVESTMENTS IN SUBSIDIARIES

				Company
				2007 2006
			HK$’000 HK$’000
Unlisted shares			513,163 491,695
Particulars of the Company’s principal subsidiaries are as follows:
		Nominal value	Percentage
	Place of incorporation/	of paid-up	of equity
	establishment	share/registered	attributable to
Name	and operations	capital	the Company	Principal activities
Directly held:
Global Sweeteners	British Virgin Islands	US$100	100	Investment holding
Investments Limited
(‘‘Global Sweeteners’’)
Global Sweeteners	British Virgin Islands	US$2	100	Investment holding
(China) Limited
(‘‘GS (China)’’)
Global Sweeteners	Hong Kong	HK$1,000	100	General administration
(HK) Limited
Jinzhou Dacheng Food	The People’s Republic	US$2,770,000	100	Manufacture and sale of
Development Co.,	of China (the	(2006:Nil)		corn based sweetener
Ltd.*	‘‘PRC’’)/Mainland			products
	China
Indirectly held:
Datex Investment Limited	Hong Kong	HK$2	100	Investment holding
Eternal Win Investments	British Virgin Islands	US$2	100	Investment holding
Limited
Changchun Dihao	PRC/Mainland China	RMB81,000,000	100	Manufacture and sale of
Foodstuff				corn based sweetener
Development Co.,				products
Ltd.* (‘‘Changchun
Dihao’’)
Shanghai Hao Cheng	PRC/Mainland China	US$2,668,000	100	Manufacture and sale of
Food Development				corn based sweetener
Co., Ltd.* (‘‘Hao				products
Cheng’’)
Changchun Dihao Crystal	PRC/Mainland China	US$16,200,000	100	Manufacture and sale of
Sugar Industry				crystallised sugar
Development Co.,
Ltd* (Dihao Crystal)

Wholly-foreign-owned enterprises

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

17. DUE FROM/TO JOINTLY-CONTROLLED ENTITIES AND DUE TO A VENTURER OF A JOINTLYCONTROLLED ENTITY

Long term loan to a jointly-controlled entity Short term balance due from jointly-controlled entities Short term balance due to jointly-controlled entities Due to a venturer of a jointly-controlled entity	Group 2007 2006 HK$’000 HK$’000 40,000 40,000 26,141 14,272 4,179 2,510 20,000 20,000	Group 2007 2006 HK$’000 HK$’000 40,000 40,000 26,141 14,272 4,179 2,510 20,000 20,000
		14,272
		2,510
		20,000

The long term loan advanced to a jointly-controlled entity is unsecured, interest-free and repayable in 2101 or upon the liquidation, winding-up or dissolution of this jointly-controlled entity, whenever is earlier. The loan to a jointlycontrolled entity represented a quasi-equity loan which is stated at cost less impairment.

The short term balances due from/to jointly-controlled entities are unsecured, interest-free and repayable within one year. About HK$23,425,000 and HK$14,197,000 of balance due from jointly-controlled entities arose from trading activities at 31 December 2007 and 31 December 2006 respectively. About HK$1,290,000 and HK$44,000 of balance due to jointlycontrolled entities arose from trading activities at 31 December 2007 and 31 December 2006 respectively.

Since the Group has no legal right to offset the long term loan advanced to a jointly-controlled entity against the venturer’s share of liability of that jointly-controlled entity, the balances have not been eliminated.

Particulars of the jointly-controlled entities are as follows:

	Place of	Percentage of	Percentage of
	incorporation/		Voting power
	registration and	Ownership	and profit
Name	operations	interest	sharing	Principal activities
Indirectly held:
Global Bio-chem-Cargill	Hong Kong	50	50	Investment holding
(Holdings) Limited
Global-Nikken (H.K.) Company	Hong Kong	51	50	Investment holding
Limited (‘‘Global-Nikken
(Hong Kong)’’)
Changchun Dacheng Nikken	PRC/Mainland	51	50	Manufacture and sale of
Polyols Co., Ltd.* (‘‘CDNP’’)	China			sorbitol products
GBT-Cargill High Fructose	PRC/Mainland	50	50	Manufacture and sale of
(Shanghai) Co., Ltd.*	China			high fructose corn syrup

Wholly-foreign-owned enterprises

All of the above investments in jointly-controlled entities are indirectly held by the Company.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The following table illustrates the summarised financial information of the Group’s jointly-controlled entities, which has been proportionately consolidated:

Share of the jointly-controlled entities’ assets and liabilities: Current assets Non-current assets Current liabilities Non-current liabilities Net assets Share of the jointly-controlled entities’ results: Revenue Other income Total expenses Tax Profit after tax 18. INVENTORIES Raw materials Work in progress Finished goods 19. TRADE RECEIVABLES Trade receivables Impairment	Group 2007 2006 HK$’000 HK$’000 71,717 65,895 70,246 68,897 (53,336) (60,099) — (6,941) 88,627 67,752 173,846 142,883 2,175 1,696 176,021 144,579 (167,264) (125,877) — — 8,757 18,702 Group 2007 2006 HK$’000 HK$’000 30,594 41,987 1,143 1,467 19,545 25,592 51,282 69,046 Group 2007 2006 HK$’000 HK$’000 226,822 103,001 (1,585) (4,895) 225,237 98,106

The Group normally allows credit terms of 90 days to established customers. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by senior management. Trade receivables are non-interest-bearing. Significant concentrations of risk exist where the Group has material exposures to trade receivables from one customer located in Mainland China which accounted for 32% of the total trade receivables as at 31 December 2007.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

An aged analysis of the trade receivables as at the balance sheet date, based on the invoice date, is as follows:

Within 1 month 1 to 2 months 2 to 3 months Over 3 months	Group 2007 2006 HK$’000 HK$’000 132,134 52,615 57,969 27,528 20,542 11,054 14,592 6,909 225,237 98,106	Group 2007 2006 HK$’000 HK$’000 132,134 52,615 57,969 27,528 20,542 11,054 14,592 6,909 225,237 98,106
		98,106

The movements in provision for impairment of trade receivables are as follows:

At 1 January Impairment losses recognised Amount written off as uncollectible Exchange realignment	Group 2007 2006 HK$’000 HK$’000 4,895 3,518 — 1,207 (3,616) — 306 170 1,585 4,895	Group 2007 2006 HK$’000 HK$’000 4,895 3,518 — 1,207 (3,616) — 306 170 1,585 4,895
		4,895

Included in the above provision for impairment of trade receivables is a fully provision for individually impaired trade receivables of HK$1,585,000 (2006: HK$4,895,000). The individually impaired trade receivables relate to customers that were in financial difficulties and the receivables is expected to be unrecovered. The Group does not hold any collateral or other credit enhancements over these balances.

The aged analysis of the trade receivables that are not considered to be impaired is as follows:

Neither past due nor impaired Less than 1 month past due 1 to 3 months past due	Group 2007 2006 HK$’000 HK$’000 210,645 91,197 8,970 5,372 5,622 1,537 225,237 98,106	Group 2007 2006 HK$’000 HK$’000 210,645 91,197 8,970 5,372 5,622 1,537 225,237 98,106
		98,106

Receivables that were neither past due nor impaired relate to a large number of diversified customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, the directors are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral or other credit enhancements over these balances.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

20. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

Prepayments Deposits and other receivables PRC value-added-tax (‘‘VAT’’) receivables and other tax receivable Current portion of prepaid land premium	Group 2007 2006 HK$’000 HK$’000 17,225 5,501 5,550 3,838 10,472 11,758 1,038 832 34,285 21,929	Company 2007 2006 HK$’000 HK$’000 — — 1,613 — — — — 1,613 —	Company 2007 2006 HK$’000 HK$’000 — — 1,613 — — — — 1,613 —
			—

None of the above assets are either past due or impaired. The financial assets included in the above balances relate to receivables for which there was no recent history of default.

21. CASH AND CASH EQUIVALENTS

				Group		Company
				2007	2006	2007	2006
				HK$’000	HK$’000	HK$’000	HK$’000
Cash	and	bank	balances	905,599	43,153	527,470	—

At the balance sheet date, the cash and bank balances of the Group denominated in Renminbi (‘‘RMB’’) amounted to HK$361,344,000 (2006: HK$32,317,000). The RMB is not freely convertible into other currencies. However, under Mainland China’s Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.

Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default. The carrying amounts of the cash and cash equivalents approximate to their fair values.

22. TRADE PAYABLES

The Group normally obtains credit terms ranging from 30 to 90 days from its suppliers.

An aged analysis of the trade payables as at the balance sheet date, based on the receipt of goods purchased, is as follows:

Within 1 month 1 to 2 months 2 to 3 months Over 3 months	Group 2007 2006 HK$’000 HK$’000 27,452 11,020 3,221 1,915 735 1,496 4,560 4,946 35,968 19,377	Group 2007 2006 HK$’000 HK$’000 27,452 11,020 3,221 1,915 735 1,496 4,560 4,946 35,968 19,377
		19,377

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

23. OTHER PAYABLES AND ACCRUALS

Payables for purchases of machinery Customer deposits/receipts in advance VAT and other duties payable Accrued welfare and others	Group 2007 2006 HK$’000 HK$’000 8,568 13,501 18,835 20,764 17,552 11,946 11,507 9,919 56,462 56,130	Company 2007 2006 HK$’000 HK$’000 — — — — — — 5,656 — 5,656 —	Company 2007 2006 HK$’000 HK$’000 — — — — — — 5,656 — 5,656 —
			—

Other payables are non-interest-bearing and have an average repayment term of three months.

24. INTEREST-BEARING BANK AND OTHER BORROWINGS

Group

2007 Effective interest rate per annum (%) Maturity Current Bank loans — unsecured 5.814–6.435 2008 Other loans — unsecured — Non-current Bank loans — unsecured 6.30–6.75 and HIBOR 2009–2010 Company 2007 Effective interest rate per annum (%) Maturity Non-current Bank loans — unsecured HIBOR 2009	2006 HK$’000 Effective interest rate per annum (%) Maturity 156,250 5.558–6.336 2007 — — 2007 156,250 368,750 6.435 2008 525,000 2006 HK$’000 Effective interest rate per annum (%) Maturity 300,000 — — 300,000	HK$’000 75,321 24,779
		100,100 117,647
		217,747
		HK$’000 —
		—

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

Analysed into: Bank loans repayable: Within one year or on demand In the second year In the third to fifth years, inclusive Other borrowings repayable: Within one year or on demand	Group 2007 2006 HK$’000 HK$’000 156,250 75,321 316,667 117,647 52,083 — 525,000 192,968 — 24,779 525,000 217,747	Company 2007 2006 HK$’000 HK$’000 — — 300,000 — — — 300,000 — — — 300,000 —	Company 2007 2006 HK$’000 HK$’000 — — 300,000 — — — 300,000 — — — 300,000 —
			— —
			—

The Group’s other loan was advanced by a third party, which is interest-free and repayable within one year.

The carrying amounts of bank and other loans approximated to their fair values.

The Group’s bank loans as at 31 December 2006 were guaranteed by the certain fellow subsidiaries with maximum limits of HK$171,539,000. Such guarantees have been released upon the listing of the Company’s shares on the Stock Exchange.

25. DEFERRED TAX LIABILITIES

The movements in deferred tax liabilities during the year are as follows:

Group

At 1 January 2006 Deferred tax charged to: — consolidated income statement during the year (note 9) At 31 December 2006 and 1 January 2007 Deferred tax charged to: — consolidated income statement during the year (note 9) — asset revaluation reserve At 31 December 2007	Depreciation allowance in excess of related depreciation HK$’000 2,224 901 3,125 7,610 — 10,735	Revaluation of leasehold buildings HK$’000 732 — 732 — 3,252 3,984	Total HK$’000 2,956 901
			3,857 7,610 3,252
			14,719

The Group had accumulated tax losses arising in Hong Kong of approximately HK$4,419,974 (2006: HK$496,951) that were available indefinitely for offsetting against future taxable profits of the companies in which the losses arose. The Group had accumulated tax losses arising in the PRC of approximately HK$29,987,877 (2006: HK$17,158,810) which would expire from the year ending 31 December 2010 to the year ending 31 December 2012. In the opinion of the directors, deferred tax assets have not been recognised as the directors consider that it is uncertain whether future taxable profits would arise to offset against these losses.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

During the 5[th] Session of the 10th National People’s Congress, which was concluded on 16 March, 2007, the PRC Corporate Income Tax Law (the ‘‘New CIT Law’’) was approved and has become effective on 1 January 2008. The New CIT Law establishes a unified 25% tax rate for both domestic enterprises and foreign invested enterprises. According to the Implementation Rules of the Grandfathering Relief under the New CIT Law, Guofa (2007) No. 39 by the State Council, the reduced tax rate of 15% under the old laws will gradually be increased to 18% in 2008, 20% in 2009, 22% in 2010, 24% in 2011 and 25% in 2012. Before 2007, deferred tax liabilities were recognised based on the applicable income tax rate of the respective companies. In 2007, according to the New CIT Law, the Group recognised deferred tax liabilities based on the applicable income tax rate when the taxable temporary differences are expected to be reversed which was 25%.

At 31 December 2007, there was no significant unrecognised deferred tax liability (2006: Nil) for taxes that would be payable on the unremitted earnings of certain of the Group’s subsidiaries or joint-controlled entities as the Group has no liability to additional tax should such amounts be remitted.

26. ISSUED CAPITAL

The following changes in the Company’s authorised and issued share capital took place during the period from 13 June 2006 (date of incorporation) to 31 December 2007:

Notes Authorised Upon incorporation (1,000,000 shares of HK$0.1 each) (i) As at 31 December 2006 Increase in authorised capital (ii) Increase in authorised capital (iii) As at 31 December 2007 Issued and fully paid Shares issued upon incorporation (1,000,000 shares of HK$0.1 each) (i) As at 31 December 2006 Paid up capital (i) Issue of new shares (ii) Capitalisation issued upon listing (iii) Shares issued under placing and public offering (iv) Issue of Over-allotment Shares (v) As at 31 December 2007	Number of ordinary shares 1,000,000 1,000,000 1,000,000 99,998,000,000 100,000,000,000 1,000,000 1,000,000 — 1,000,000 698,000,000 300,000,000 45,000,000 1,045,000,000	Nominal value of ordinary shares HK$’000 100
		100 100 9,999,800
		10,000,000
		—
		— 100 100 69,800 30,000 4,500
		104,500

Notes:

(i) The ordinary shares were issued at par nil paid upon incorporation of the Company. The ordinary shares were paid up on 24 August 2007.

(ii) The authorised share capital of the Company was increased from HK$100,000 to HK$200,000 by the creation of 1,000,000 new shares pursuant to the shareholders’ resolution passed on 24 August 2007. According to the agreement dated 24 August 2007 made between Global Corn Bio-chem as vendor and the Company as purchaser for the acquisition by the Company of the entire issued share capital of each of Global Sweeteners and GS (China) in consideration of 1) the allotment and issue, credited as fully paid, of 1 million new shares to Global Corn Bio-chem; and 2) the crediting as fully paid at par the 1 million nil-paid shares then held by Global Corn Bio-chem.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iii) Pursuant to the shareholders’ resolution passed on 3 September 2007, the authorised share capital of the Company has been conditionally increased from HK$200,000 to HK$10,000,000,000 by creation of 99,998 million ordinary shares of HK$0.1 each. The directors were authorised to allot and issue a total of 698 million shares by way of the capitalisation of a sum of HK$69.8 million standing to the credit of the share capital and the debit of the share premium account of the Company (‘‘Capitalisation Issue’’).
(iv) The Share Offer (‘‘Share Offer’’) comprises the public offer and the placing. On 20 September 2007, 300 million ordinary shares of HK$0.1 each were issued and offered at a price of HK$2.04 each under the public offer and the placing, resulting in aggregate proceeds of HK$612 million. The par value of the shares issued amounting to HK$30 million was credited to the Company’s share capital. The remaining proceeds of approximately HK$582 million, after deducting share issuing expenses of HK$25 million, were credited to the share premium account.
(v) On 12 October 2007, an additional 45,000,000 ordinary shares of HK$0.1 each were issued and offered at a price of HK$2.04 each for subscription upon the exercise of the Over-allotment Option (detailed in the Prospectus). The proceeds of HK$4.5 million representing the par value of the shares issued were credited to the Company’s share capital. The remaining proceeds of approximately HK$87.3 million were credited to the share premium account.

27. RESERVES

(a) Group

The amounts of the Group’s reserves and the movements therein for the current and prior years are presented in the consolidated statement of changes in equity on page 20 of the financial statements.

(b) Company

At 1 January 2006, 31 December 2006 and 1 January 2007 Issue of shares Share issuing expenses Net loss for the year At 31 December 2007	Contributed surplus HK$’000 Note 491,695 — — — 491,695	Share premium account HK$’000 — 599,300 (24,827) — 574,473	Accumulated losses HK$’000 — — — (28,413) (28,413)	Total HK$’000 491,695 599,300 (24,827) (28,413) 1,037,755

Note: The contributed surplus of the Company represents the difference between the cost of the investments in subsidiaries pursuant to the Reorganisation less the nominal value of the Company’s shares issued.

In accordance with the Companies Law (Revised) of the Cayman Islands, the share premium account is distributable to the shareholders of the Company provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as they fall due in the ordinary course of business. The share premium account may also be distributed in the form of fully paid bonus shares.

28. CONTINGENT LIABILITIES

The Group did not have any significant contingent liabilities at the balance sheet date.

The Company provided guarantees for banking facilities granted to certain subsidiaries. These subsidiaries utilised the banking facilities to the extent of about HK$225,000,000 as at 31 December 2007.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

29. COMMITMENTS

At 31 December 2007, the Group had capital commitments as follows:

Contracted, but not provided for: Land premiums and leasehold buildings Plant and machinery	Group 2007 2006 HK$’000 HK$’000 — 33,563 3,521 13,779 3,521 47,342	Group 2007 2006 HK$’000 HK$’000 — 33,563 3,521 13,779 3,521 47,342
		47,342

The Company did not have any significant commitments as at 31 December 2007.

30. RELATED PARTY TRANSACTIONS

(i) Transactions with related parties

During the year, the following related party transactions were noted:

Notes
Purchases from fellow subsidiaries
— corn starch slurry
(a)
Purchases from jointly-controlled entities
— corn sweeteners
(a)
— others
(a)
Sales to fellow subsidiaries
— corn sweeteners
(b)
— sorbitol
(b)
Sales to a jointly-controlled entity
— corn sweeteners
(b)
Utility cost charged to a jointly controlled entity
(c)
Utility cost charged by a fellow subsidiary
(c)
Sales commission paid to a related company
(d)

2007
2006
HK$’000
HK$’000
944,435
794,722
3,033
3,559
13,143
—
216,432
456,798
6,694
2,924
31,782
30,112
4,382
4,247
67,889
56,137
1,567
3,043

Notes:

(a) The Group sourced corn starch slurry from fellow subsidiaries and sourced corn sweetener products and a by-product from jointly-controlled entities. These purchases were made at prices based on the mutual agreement between the parties.
(b) The Group sold corn sweetener products and sorbitol to fellow subsidiaries and a jointly-controlled entity. These sales were made at prices mutually agreed between the parties.
(c) The Group used the utility facilities provided by a fellow subsidiary and a jointly-controlled entity that used the utility facilities provided by the Group. A reimbursement of such utility costs was paid to the fellow subsidiary and the Group based on the actual costs incurred.
(d) The commission was paid to the joint venture partner of a jointly-controlled entity of the Group who acted as a sales agent on behalf of that jointly-controlled entity. According to the agreement among these parties, the commission paid to this related company was calculated based on a rate of 5% on the successful sales amounts, which include the cost of goods sold by the joint venture partner of a jointlycontrolled entity and its related selling expenses incurred.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(ii) Other transactions with related parties

During the year, the Group acquired a piece of land from a fellow subsidiary amounting to HK$4,062,000 which was based on independent valuation performed by Savills Valuation and Professional Services Limited.

(iii) Balances with related parties:

(a) Balances with group companies

The balances with the ultimate holding company, the immediate holding company and fellow subsidiaries are unsecured, interest-free and have no fixed terms of repayment. The carrying amounts of the balances with these group companies approximate to their fair values at each of the balance sheet date. About HK$130,634,000 and HK$334,630,000 of balance due from fellow subsidiaries arose from trading activities at 31 December 2007 and 31 December 2006 respectively. About HK$3,432,000 and HK$151,998,000 of balance due to fellow subsidiaries arose from trading activities at 31 December 2007 and 31 December 2006 respectively.

The following table sets out the aging analysis of such trade nature portion of amounts due from fellow subsidiaries as at 31 December 2007 and 31 December 2006 respectively.

Trade nature Amounts due from fellow subsidiaries Within 3 months Over 3 months but less than 6 months Over 6 months but less than 1 year Over 1 year Total	Group 2007 2006 HK$’000 HK$’000 86,994 186,256 41,408 111,754 2,083 3,940 149 32,680 130,634 334,630	Group 2007 2006 HK$’000 HK$’000 86,994 186,256 41,408 111,754 2,083 3,940 149 32,680 130,634 334,630
		334,630

The following table sets out the aging analysis of such trade nature portion of amounts due to fellow subsidiaries as at 31 December 2007 and 31 December 2006 respectively.

Trade nature Amounts due to fellow subsidiaries Within 3 months Over 3 months but less than 6 months Over 6 months but less than 1 year Over 1 year Total	Group 2007 2006 HK$’000 HK$’000 3,432 111,569 — 11,813 — 26,375 — 2,241 3,432 151,998	Group 2007 2006 HK$’000 HK$’000 3,432 111,569 — 11,813 — 26,375 — 2,241 3,432 151,998
		151,998

(b) Balance with a related company

This balance is unsecured, interest-free and has no fixed terms of repayment. The carrying amount of the balance approximated to its fair value at each of the balance sheet date.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

(iv) Compensation of key management personnel of the Group:

Short term employee benefits Post-employment benefits Total compensation paid to key management personnel	2007 HK$’000 4,163 234 4,397	2006 HK$’000 1,324 168
		1,492

31. SEGMENT INFORMATION

Over 90% of the Group’s operation relates to the manufacture and sale of corn based sweetener products and over 90% of the Group’s products were sold to customers based in Mainland China. Accordingly, no segment information has been disclosed.

32. FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the balance sheet date are as follows:

Financial assets Long term loan to a jointly-controlled entity (note 17) Trade receivables Financial assets included in repayments, deposits and other receivables Due from jointly-controlled entities (note 17) Due from the immediate holding company Due from fellow subsidiaries Cash and cash equivalents Financial liabilities Long term loan to a jointly-controlled entity (note 17) Trade payables Financial liabilities included in other payables and accruals Interest-bearing bank and other borrowings Due to fellow subsidiaries Due to a related company Due to the ultimate holding company Due to jointly-controlled entities (note 17) Due to the immediate holding company	Group 2007 2006 Loans and receivables Loans and receivables HK$’000 HK$’000 40,000 40,000 225,237 98,106 5,550 3,838 26,141 14,272 21,085 21,085 130,634 351,396 905,599 43,153 1,354,246 571,850 Group 2007 2006 Financial liabilities at amortised cost Financial liabilities at amortised cost HK$’000 HK$’000 20,000 20,000 35,968 19,377 27,874 38,381 525,000 217,747 3,432 193,720 55 575 54,284 270,935 4,179 2,510 180,338 180,360 851,130 943,605	Group 2007 2006 Loans and receivables Loans and receivables HK$’000 HK$’000 40,000 40,000 225,237 98,106 5,550 3,838 26,141 14,272 21,085 21,085 130,634 351,396 905,599 43,153 1,354,246 571,850 Group 2007 2006 Financial liabilities at amortised cost Financial liabilities at amortised cost HK$’000 HK$’000 20,000 20,000 35,968 19,377 27,874 38,381 525,000 217,747 3,432 193,720 55 575 54,284 270,935 4,179 2,510 180,338 180,360 851,130 943,605
		943,605

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The carrying amounts of each of the categories of financial instruments as at the balance sheet date are as follows:

Financial assets Financial assets included in repayments, deposits and other receivables Due from the immediate holding company Due from subsidiaries Cash and cash equivalents Financial liabilities Interest-bearing bank borrowings	Company 2007 2006 Loans and receivables Loans and receivables HK$’000 HK$’000 1,613 — 126,054 — 279,611 — 527,470 — 934,748 — Company 2007 2006 Financial liabilities at amortised cost Financial liabilities at amortised cost HK$’000 HK$’000 300,000 —

33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial assets of the Group include cash and cash equivalents, trade receivables, prepayments, deposits and other receivables, amounts due from fellow subsidiaries, amounts due from jointly-controlled entities, amounts due from immediate holding company and long term loan to a jointly-controlled entity. Financial liabilities of the Group include trade payables, other payables and accruals, interest-bearing bank and other borrowings, amounts due to immediate holding company, amounts due to the ultimate holding company, amounts due to fellow subsidiaries, amounts due to jointlycontrolled entities and amounts due to a related company.

Financial assets of the Company include cash and cash equivalents, prepayments, deposits and other receivables, amounts due from fellow subsidiaries and amounts due from immediate holding company. Financial liabilities of the Company include other payables and accruals and interest-bearing bank and other borrowings.

The main risks arising from the Group’s financial instruments are interest rate risk, credit risk and liquidity risk. As the Group’s exposure to these risks is kept to a minimum, the Group has not used any derivatives and other instruments for hedging purposes. The Group does not hold or issue derivative financial instruments for trading purposes. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk

The Group’s exposure to the risk of changes in market interest rates relates primarily to its bank loans.

The Group manages its interest rate exposure with a focus on reducing the Group’s overall cost of debt and exposure to changes in interest rates. Management continues to monitor the cash flow of the operations and the debt markets, when considered appropriate, the Group would expect to refinance these borrowings with lower cost of debt.

The Group’s revenue and operating cash flows are substantially independent of changes in market interest rates.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the Group’s profit before tax (through the impact on floating rate borrowings) and the equity.

2007 Hong Kong dollar Hong Kong dollar 2006 Hong Kong dollar Hong Kong dollar	Increase/ (decrease) in basic points % 1 (1) 1 (1)	Group Increase/ (decrease) in profits before tax HK$’000 (1,531) 1,531 (1,617) 1,617	Increase/ (decrease) in equity HK$’000 (1,476) 1,476 (1,455) 1,455	Company Increase/ (decrease) in basic points Increase/ (decrease) in equity/ profits before tax % HK$’000 1 (978) (1) 978 1 — (1) —

Credit risk

The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and the group’s exposure to bad debts is not significant. For transactions that are not denominated in the functional currency of the relevant operating unit, the Group does not offer credit terms without the specific approval of the Head of Credit Control.

The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, trade receivables, amounts due from related parties and other receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral. Concentrations of credit risk are managed by customer/counterparty, by geographical region and by industry sector.

Further quantitative data in respect of the Group’s exposure to credit risk arising from trade and other receivables are disclosed in notes 19 and 20 to the financial statements.

Liquidity risk

The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial liabilities and financial assets and projected cash flows from operations.

The Group’s policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed annual borrowing facilities from banks to meet its commitments over the following year in accordance with its strategic plan.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The maturity profile of the Group’s financial liabilities as at the balance sheet date, based on the contracted undiscounted payments, was as follows:

Year ended 31 December 2007 — The Group

Interests in jointly-controlled entities Trade payables Other payables Interest-bearing bank and other borrowings Due to fellow subsidiaries Due to a related company Due to the ultimate holding company Due to jointly-controlled entities Due to the immediate holding company	On demand HK$’000 — 35,968 27,874 156,250 3,432 55 54,284 4,179 180,338 462,380	Less than 3 months HK$’000 — — — — — — — — — —	3 to 12 months HK$’000 — — — — — — — — — —	1 to 5 Years HK$’000 — — — 368,750 — — — — — 368,750	45 years HK$’000 20,000 — — — — — — — — 20,000	Total HK$’000 20,000 35,968 27,874 525,000 3,432 55 54,284 4,179 180,338
						851,130

Year ended 31 December 2006 — The Group

Interests in jointly-controlled entities Trade payables Other payables Interest-bearing bank and other borrowings Due to fellow subsidiaries Due to a related company Due to the ultimate holding company Due to jointly-controlled entities Due to the immediate holding company	On demand HK$’000 — 19,377 38,381 100,100 193,720 575 270,935 2,510 180,360 805,958	Less than 3 months HK$’000 — — — — — — — — — —	3 to 12 months HK$’000 — — — — — — — — — —	1 to 5 years HK$’000 — — — 117,647 — — — — — 117,647	45 years HK$’000 20,000 — — — — — — — — 20,000	Total HK$’000 20,000 19,377 38,381 217,747 193,720 575 270,935 2,510 180,360
						943,605

Year ended 31 December 2007 — The Company

Other payables Interest-bearing bank borrowings	On demand HK$’000 4,640 — 4,640	Less than 3 months HK$’000 — — —	3 to 12 months HK$’000 — — —	1 to 5 years HK$’000 — 300,000 300,000	4 5 years HK$’000 — — —	Total HK$’000 4,640 300,000
						304,640

Capital management

The primary objective of the Group’s capital management is to safeguard the Group’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholder value.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the year.

The Group monitors capital using a gearing ratio, which is net debt divided by equity. The Group’s policy is to maintain the gearing ratio no excess of 50%. Net debt includes interest-bearing bank and other borrowings less cash and cash equivalents and excludes discontinued operations. Capital includes equity attributable to equity holders of the parent. The gearing ratios as at the balance sheet dates were as follows:

Interest bearing bank and other borrowings Less: Cash and cash equivalents Net debt Equity Gearing ratio	Group 31 December 2007 31 December 2006 HK$’000 HK$’000 525,000 217,747 (905,599) (43,153) (380,599) 174,594 1,280,468 357,452 — 49%	Company 31 December 2007 HK$’000 300,000 (525,470) (227,470) 1,142,255 —

34. POST BALANCE SHEET EVENTS

On 8 January 2008, Global Sweeteners (China) Limited, a wholly-owned subsidiary of the Company, entered into an acquisition agreement with Mitsui & Co., Ltd., Mitsui & Co., (H.K.) Ltd. and Nikken Fine Chemicals Co., Ltd, the minority shareholders of Global-Nikken (H.K.) Company Limited (‘‘Global-Nikken (Hong Kong)’’) to acquire the remaining 49% equity interests in Global-Nikken (Hong Kong) at a total cash consideration of US$2,450,000 (equivalent to approximately HK$19.1 million) (the ‘‘Acquisition’’). After the completion of the Acquisition on 18 February 2008, Global-Nikken (Hong Kong) became a wholly-owned subsidiary of the Company.

On 18 February 2008, the Group has settled the total consideration and accounted for the acquisition of investment of subsidiary at the consideration of US$2,450,000 (equivalent to HK$19,127,150).

35. APPROVAL OF THE FINANCIAL STATEMENTS

The financial statements were approved and authorised for issue by the board of directors on 21 April 2008.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX I

3. INDEBTEDNESS STATEMENT

At the close of business on 31 May 2008, being the latest practicable date for the purpose of ascertaining certain information relating to this indebtedness statement prior to the printing of this circular, the Enlarged Group had bank borrowings of approximately HK$984.5 million, comprising unsecured short-term bank loans of approximately HK$628.9 million and unsecured long-term bank loans of approximately HK$355.6 million. Save as disclosed above and apart from intra-group liabilities, the Enlarged Group did not have, at the close of business on 31 May 2008, any outstanding mortgages, charges, pledge, debentures, loan capital, bank loans and overdrafts, debt securities or other indebtedness, finance leases or hire purchase commitments, acceptance liabilities or acceptance credits, any guarantees or other material contingent liabilities.

The Directors have confirmed that there has been no material change in the indebtedness and contingent liabilities of the Enlarged Group since 31 May 2008 and up to the Latest Practicable Date.

4. WORKING CAPITAL

Taking into account the internal resources available to the Enlarged Group, the Directors of the Company, after due and careful inquiry, are of the opinion that the Enlarged Group has sufficient working capital for its present requirements, that is for at least the next 12 months from the date of this circular.

5. MATERIAL ADVERSE CHANGES

The Directors are not aware of any material adverse change in the Group’s financial or trading position and prospects since 31 December 2007, the date to which the latest published audited consolidated accounts of the Group were made up.

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

18/F, Two International Finance Centre 8 Finance Street Central Hong Kong

25 July 2008

The Board of Directors

Global Sweeteners Holdings Limited

Dear Sirs,

We set out below our report on the financial information (the ‘‘Financial Information’’) of Jinzhou Yuancheng Bio-chem Technology Co., Ltd. (hereinafter referred to as ‘‘Jinzhou Yuancheng’’) for inclusion in the circular of Global Sweeteners Holdings Limited (the ‘‘Company’’) dated 25 July 2008 (the ‘‘Circular’’) in connection with the proposed acquisition of Jinzhou Yuancheng by the Company. The Financial Information comprises the balance sheets of Jinzhou Yuancheng as at 31 December 2005, 2006 and 2007 and 31 March 2008, and the income statements, the statements of changes in equity and the cash flow statements of Jinzhou Yuancheng for each of the three years ended 31 December 2005, 2006 and 2007 and for the three months ended 31 March 2008 (the ‘‘Relevant Periods’’), and comparative financial information of Jinzhou Yuancheng for the three months ended 31 March 2007 (the ‘‘Comparative Financial Information’’) and a summary of significant accounting policies and other explanatory notes.

Jinzhou Yuancheng is a sino-foreign equity joint venture enterprise established in the People’s Republic of China (the ‘‘PRC’’) on 8 August 2001 with its principal activity being the manufacture and sale of corn starch. Jinzhou Yuancheng has adopted 31 December as its financial year end for statutory financial reporting purposes.

The audited financial statements of Jinzhou Yuancheng for the Relevant Periods were audited by 吉林聖祥會計師事務有限公司 (Jilin Sheng Xiang Certified Public Accountants), registered in the PRC. These financial statements were prepared in accordance with accounting principles generally accepted in the PRC.

For the purpose of this report, the directors of Jinzhou Yuancheng, have prepared the financial information of Jinzhou Yuancheng for the Relevant Periods based on the management accounts of Jinzhou Yuancheng, in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA’’) and accounting principles generally accepted in Hong Kong. We have audited the financial statements of Jinzhou Yuancheng in accordance with Hong Kong Standards on Auditing issued by the HKICPA.

The directors of Jinzhou Yuancheng are responsible for preparing the Financial Information and the Comparative Financial Information which give a true and fair view in accordance with HKFRSs. In preparing the Financial Information and the Comparative Financial Information of Jinzhou Yuancheng which give a true and fair view, it is fundamental that appropriate accounting policies are selected and applied consistently, that judgements and estimates are made which are prudent and reasonable, and that the reasons for any significant departure/non-applicable accounting standards are stated. It is our

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

responsibility to form an independent opinion and a review conclusion, on such information in respect of the Relevant Periods and for the three months ended 31 March 2007, respectively, and to report our opinion and review conclusion to you.

PROCEDURES PERFORMED IN RESPECT OF THE RELEVANT PERIODS

For the purpose of this report, we have examined the management accounts of Jinzhou Yuancheng for the Relevant Periods and carried out such additional procedures as we considered necessary in accordance with Auditing Guideline No. 3.340 ‘‘Prospectuses and the Reporting Accountant’’ issued by the HKICPA. No adjustments were considered necessary to restate these management accounts.

PROCEDURES PERFORMED IN RESPECT OF THE COMPARATIVE FINANCIAL INFORMATION

For the purpose of this report, we have performed a review of the Comparative Financial Information which includes the income statement and cash flow statement of Jinzhou Yuancheng for the three months ended 31 March 2007, together with the notes thereto, for which the directors of Jinzhou Yuancheng are responsible, in accordance with HKSRE 2410 ‘‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’’ issued by the HKICPA. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets and liabilities and transactions. It is substantially less in scope and provides a lower level of assurance than our audit or examination procedures described in the preceding paragraph and, accordingly, we do not express an audit opinion on the Comparative Financial Information.

OPINION IN RESPECT OF THE FINANCIAL INFORMATION OF THE RELEVANT PERIODS

In our opinion, the Financial Information of Jinzhou Yuancheng, for the purpose of this report, gives a true and fair view of the results and cash flows of Jinzhou Yuancheng for each of the Relevant Periods and of the state of affairs of Jinzhou Yuancheng as at 31 December 2005, 2006 and 2007 and 31 March 2008.

REVIEW CONCLUSION IN RESPECT OF THE COMPARATIVE FINANCIAL INFORMATION

On the basis of our review, which does not constitute an audit, we are not aware of any material modifications that should be made to the Comparative Financial Information of Jinzhou Yuancheng for the three months ended 31 March 2007.

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

1. FINANCIAL INFORMATION

Balance Sheets

The following is a summary of the balance sheets of Jinzhou Yuancheng as at the end of each of the Relevant Periods which have been prepared on the basis set out in Section II below.

Notes NON-CURRENT ASSETS Property, plant and equipment 4 Prepaid land premiums 5 Total non-current assets CURRENT ASSETS Inventories 6 Trade receivables 7 Prepayments, deposits and other receivables 9 Due from fellow subsidiaries 12 Due from a related party 12 Cash and bank balances 8 Total current assets CURRENT LIABILITIES Interest-bearing bank and other borrowings 10 Trade payables 11 Other payables and accruals Tax payable Due to the immediate holding company 12 Due to the ultimate holding company 12 Due to fellow subsidiaries 12 Total current liabilities NET CURRENT LIABILITIES TOTAL ASSETS LESS CURRENT LIABILITIES	31 December 2005 2006 2007 RMB’000 RMB’000 RMB’000 485,412 467,707 476,019 52,724 50,964 48,796 538,136 518,671 524,815 64,344 83,474 147,809 39,981 28,105 149,569 8,245 6,368 10,379 21,775 129,621 63,197 207 9,504 — 135,732 72,473 44,209 270,284 329,545 415,163 124,644 274,644 204,534 77,115 15,442 49,665 70,879 57,709 50,583 — — 995 116,068 116,279 45,501 14,392 14,239 82,177 154,683 373 776 557,781 478,686 434,231 (287,497) (149,141) (19,068) 250,639 369,530 505,747	31 March 2008 RMB’000 468,532 48,351 516,883 190,463 105,138 13,092 84,833 — 42,444 435,970 254,534 45,480 56,513 491 46,169 82,144 — 485,331 (49,361) 467,522

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

Notes NON-CURRENT LIABILITIES Interest-bearing bank borrowings 10 Deferred tax liabilities 13 Total non-current liabilities Net assets EQUITY Share capital 14 Reserves 15 Total equity	31 December 2005 2006 2007 RMB’000 RMB’000 RMB’000 50,000 80,000 120,000 4,729 5,884 18,929 54,729 85,884 138,929 195,910 283,646 366,818 105,073 105,073 105,073 90,837 178,573 261,745 195,910 283,646 366,818	31 March 2008 RMB’000 70,000 19,623
		89,623
		377,899
		105,073 272,826
		377,899

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

Income Statements

The following is a summary of the income statements of Jinzhou Yuancheng for the Relevant Periods and for the three months ended 31 March 2007, which have been prepared on the basis set out in Section II below.

Notes REVENUE 17 Cost of sales Gross profit Other income 17 Selling and distribution costs Administrative expenses Other expenses Finance costs 19 PROFIT BEFORE TAX 18 Tax 21 PROFIT FOR THE YEAR/ PERIOD	Year ended 31 December 2005 2006 2007 RMB’000 RMB’000 RMB’000 952,041 1,009,555 1,102,668 (801,816) (872,486) (973,532) 150,225 137,069 129,136 3,775 11,383 11,828 (49,427) (31,980) (33,829) (8,033) (7,687) (12,933) (48) (1,547) (2,058) (10,899) (18,347) (20,772) 85,593 88,891 71,372 (1,099) (1,155) (13,511) 84,494 87,736 57,861	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 234,327 261,199 (206,573) (229,334) 27,754 31,865 1,301 687 (7,247) (5,569) (2,393) (3,661) (366) (1,934) (6,775) (8,160) 12,274 13,228 (2,743) (2,147) 9,531 11,081

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

Statements of Changes in Equity

The movements in the statements of changes in equity of Jinzhou Yuancheng for the Relevant Periods and for the three months ended 31 March 2007, which have been prepared on the basis set out in Section II below, are as follows:

At 1 January 2005 Surplus on revaluation, net of deferred tax charge of RMB3,212,123 (Notes 4 and 13) Profit for the year Transfer from retained profits Total income and expense for the year At 31 December 2005 and 1 January 2006 Profit for the year Transfer from retained profits Total income and expense for the year At 31 December 2006 and 1 January 2007 Profit for the year Surplus on revaluation, net of deferred tax charge of RMB8,418,430 (Notes 4 and 13) Transfer from retained profits Total income and expense for the year	Attributable to equity holders of Jinzhou Yuancheng Registered capital Statutory reserve Asset revaluation reserve Retained profits/ (accumulated losses) Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 105,073 — — (3,070) 102,003 — — 9,413 — 9,413 — — — 84,494 84,494 — 8,013 — (8,013) — — 8,013 9,413 76,481 93,907 105,073 8,013 9,413 73,411 195,910 — — — 87,736 87,736 — 8,675 — (8,675) — — 8,675 — 79,061 87,736 105,073 16,688 9,413 152,472 283,646 — — — 57,861 57,861 — — 25,311 — 25,311 — 4,965 — (4,965) — — 4,965 25,311 52,896 83,172	Attributable to equity holders of Jinzhou Yuancheng Registered capital Statutory reserve Asset revaluation reserve Retained profits/ (accumulated losses) Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 105,073 — — (3,070) 102,003 — — 9,413 — 9,413 — — — 84,494 84,494 — 8,013 — (8,013) — — 8,013 9,413 76,481 93,907 105,073 8,013 9,413 73,411 195,910 — — — 87,736 87,736 — 8,675 — (8,675) — — 8,675 — 79,061 87,736 105,073 16,688 9,413 152,472 283,646 — — — 57,861 57,861 — — 25,311 — 25,311 — 4,965 — (4,965) — — 4,965 25,311 52,896 83,172
		83,172

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

At 31 December 2007 and
1 January 2008
Profit for the period
At 31 March 2008
At 1 January 2007
Profit for the period
At 31 March 2007 (unaudited)

Attributable to equity holders of Jinzhou Yuancheng
Registered
capital
Statutory
reserve
Asset
revaluation
reserve
Retained
profits/
(accumulated
losses)
Total
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
105,073
21,653
34,724
205,368
366,818
—
—
—
11,081
11,081
105,073
21,653
34,724
216,449
377,899
105,073
16,688
9,413
152,472
283,646
—
—
—
9,531
9,531
105,073
16,688
9,413
162,003
293,177

Pursuant to the resolution of the directors, Jinzhou Yuancheng transferred 10% of its profits after tax to the statutory reserve fund. Such reserve may be used to reduce any losses incurred by Jinzhou Yuancheng or may be capitalised as paid-up capital of Jinzhou Yuancheng.

These reserve accounts comprise the reserves of Jinzhou Yuancheng of RMB272,826,000 on the balance sheet at 31 March 2008 (31 December 2007: RMB261,745,000; 31 December 2006: RMB178,573,000; 31 December 2005: RMB90,837,000).

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

Cash Flow Statements

The cash flow statements of Jinzhou Yuancheng for the Relevant Periods and for the three months ended 31 March 2007, which have been prepared on the basis set out in Section II, are as follows:

Notes CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments for: Finance costs Exchange differences Interest income 18 Depreciation 19 Write-down/(back) of inventories to net realisable value Gain on disposal of items of property, plant and equipment 19 Amortisation of prepaid land premiums 19 Increase in inventories Decrease/(increase) in trade receivables Decrease/(increase) in prepayments, deposits and other receivables Increase/(decrease) in trade payables Increase/(decrease) in other payables and accruals Decrease/(increase) in amounts due from fellow subsidiaries Decrease/(increase) in an amount due from a related party Increase/(decrease) in amounts due to fellow subsidiaries	Year ended 31 December 2005 2006 2007 RMB’000 RMB’000 RMB’000 85,593 88,891 71,372 10,899 18,347 20,772 48 1,547 2,058 (714) (670) (256) 23,649 27,273 33,940 2,409 (1,659) (118) (87) (23) — 2,134 2,161 2,168 123,931 135,867 129,936 (20,878) (17,471) (64,217) 38,570 11,876 (121,464) 3,267 1,884 (4,008) 66,950 (61,673) 34,223 (6,282) (13,170) (7,125) (9,164) (12,633) 7,916 (207) (9,297) 9,501 (14,968) (50,565) 403	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 12,274 13,228 6,775 8,160 362 1,930 (35) (65) 8,215 8,083 — (627) — — 542 543 28,133 31,252 (101,930) (42,027) (17,221) 44,431 (3,965) (2,709) 9,252 (4,185) 2,681 5,931 874 (21,636) 7,657 — (373) (776)

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

Cash generated from/(used in) operations Interest received Tax paid Net cash inflow/(outflow) from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchases of items of property, plant and equipment Proceeds from disposal of items of property, plant and equipment Net cash outflow from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase/(decrease) in an amount due to the immediate holding Increase/(decrease) in an amount due to the ultimate holding company Increase/(decrease) in amounts due to fellow subsidiaries Decrease/(increase) in amounts due from fellow subsidiaries Inception of bank loans Repayment of bank loans Interest paid Net cash inflow/(outflow) from financing activities	Year ended 31 December 2005 2006 2007 RMB’000 RMB’000 RMB’000 181,219 (15,182) (14,835) 714 670 256 — — (7,834) 181,933 (14,512) (22,413) (74,168) (10,003) (8,579) 147 50 — (74,021) (9,953) (8,579) 81,612 211 (70,778) (81,612) (153) 67,938 24,729 (107,243) 3,498 — (91,715) 55,010 175,000 350,000 240,000 (243,885) (170,000) (270,110) (10,899) (18,347) (20,772) (55,055) (37,247) 4,786	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 (74,892) 10,281 35 65 — (1,957) (74,857) 8,389 (580) (699) — — (580) (699) (71,247) 668 67,930 (33) 3,498 — 31,000 — 50,000 — (50,000) — (6,775) (8,160) 24,406 (7,525)

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year/period Effect of foreign exchange rate changes, net CASH AND CASH EQUIVALENTS AT END OF YEAR/PERIOD ANALYSIS OF BALANCE OF CASH AND CASH EQUIVALENTS Cash and bank balances	Year ended 31 December 2005 2006 2007 RMB’000 RMB’000 RMB’000 52,857 (61,712) (26,206) 82,923 135,732 72,473 (48) (1,547) (2,058) 135,732 72,473 44,209 135,732 72,473 44,209	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 (51,031) 165 72,473 44,209 (362) (1,930) 21,080 42,444 21,080 42,444

II. NOTES TO THE FINANCIAL INFORMATION

1.1 CORPORATE INFORMATION

Jinzhou Yuancheng is a sino-foreign equity joint venture enterprise established in the PRC on 8 August 2001 with its principal activity being the manufacture and sale of corn starch. The principal place of operation of Jinzhou Yuancheng is located at No. 9, 1st Sect, Xinghai Road, Economy & Technology Development District, Jinzhou, Liaoning Province, the PRC.

As at the date of this report, the immediate holding company of Jinzhou Yuancheng is Global Corn Investments Limited, a company incorporated in the British Virgin Islands. In the opinion of the directors of Jinzhou Yuancheng, Global Bio-chem Technology Group Company Limited, a company incorporated in the Cayman Islands whose shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’), is the ultimate holding company.

1.2 BASIS OF PRESENTATION

The Financial Information has been prepared on a going concern basis notwithstanding the fact that Jinzhou Yuancheng had net current liabilities at the balance sheet dates as the ultimate holding company has undertaken to provide continuing financial support to Jinzhou Yuancheng to meet its liabilities and commitments as and when they fall due.

2.1 BASIS OF PREPARATION

The Financial Information has been prepared in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’), which include all Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards (‘‘HKASs’’) and Interpretations (‘‘Int’’) issued by the HKICPA, accounting principles generally accepted in Hong Kong, the disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the Stock Exchange. The Financial Information has been prepared under the historical cost convention, except for certain property, plant and equipment which have been measured at fair value as further explained below. The Financial Information is presented in Renminbi (‘‘RMB’’).

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2.2 ACCOUNTING STANDARDS ADOPTED BY JINZHOU YUANCHENG

The HKICPA has issued a number of new and revised HKFRSs, most of which are generally effective for accounting periods beginning on or after 1 January 2005. For the purpose of preparing and presenting the Financial Information and the Comparative Financial Information for the three months ended 31 March 2007, Jinzhou Yuancheng has adopted the following new and revised HKFRSs throughout the Relevant Periods and for the three months ended 31 March 2007:

HKAS 1	Presentation of Financial Statements
HKAS 1 Amendment	Capital Disclosures
HKAS 2	Inventories
HKAS 7	Cash Flow Statements
HKAS 8	Accounting Policies, Changes in Accounting Estimates and Errors
HKAS 10	Events after the Balance Sheet Date
HKAS 12	Income Taxes
HKAS 14	Segment Reporting
HKAS 16	Property, Plant and Equipment
HKAS 17	Leases
HKAS 18	Revenue
HKAS 19	Employee Benefits
HKAS 20	Accounting for Government Grants and Disclosure of Government Assistance
HKAS 21	The Effects of Changes in Foreign Exchange Rates
HKAS 21 Amendment	Net Investment in a Foreign Operation
HKAS 23	Borrowing Costs
HKAS 24	Related Party Disclosures
HKAS 32	Financial Instruments: Disclosure and Presentation
HKAS 36	Impairment of Assets
HKAS 37	Provisions, Contingent Liabilities and Contingent Assets
HKAS 38	Intangible Assets
HKAS 39	Financial Instruments: Recognition and Measurement
HKAS 39 Amendment	Transition and Initial Recognition of Financial Assets and Financial Liabilities
HKAS 39 and HKFRS 4 Amendments	Financial Guarantee Contracts
HKFRS 1	First-time Adoption of Hong Kong Financial Reporting Standards
HKFRS 7	Financial Instruments: Disclosures
HK(IFRIC)-Int 4	Determining whether an Arrangement contains a Lease

2.3 NEW AND REVISED HKFRSS ISSUED BUT NOT YET EFFECTIVE

Jinzhou Yuancheng has not applied the following new and revised HKFRSs, that have been issued but are not yet effective, in these Financial Information.

HKAS 1 (Revised)	Presentation of Financial Statements1
HKFRS 2 Amendment	Share-Based Payment — Vesting Conditions and Cancellations1
HKFRS 8	Operating Segments1
HKAS 23 (Revised)	Borrowing Costs1
HKFRS 3 (Revised)	Business Combinations2
HKAS 27 (Revised)	Consolidated and Separate Financial Statements2
HKAS 32 and HKAS 1 Amendment	Puttable Financial Instruments and Obligations Arising on Liquidation1
HK(IFRIC)-Int 13	Customer Loyalty Programmes3

1 Effective for annual periods beginning on or after 1 January 2009

2 Effective for annual periods beginning on or after 1 July 2009

3 Effective for annual periods beginning on or after 1 July 2008

HKAS 1 has been revised to separate owner and non-owner changes in equity. The statement of changes in equity will include only details of transactions with owners, with all non-owner changes in equity presented as a single line. In addition, this standard introduces the statement of comprehensive income: it presents all items of income and expense recognised in profit or loss, together with all other items of recognised income and expense, either in one single statement, or in two linked statements. Jinzhou Yuancheng is still evaluating whether it will have one or two statements.

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The amendment to HKFRS 2 restricts the definition of ‘‘vesting condition’’ to a condition that includes an explicit or implicit requirement to provide services. Any other conditions are non-vesting conditions, which have to be taken into account to determine the fair value of the equity instruments granted. In the case that the award does not vest as the result of a failure to meet a non-vesting condition that is within the control of either the entity or the counterparty, this must be accounted for as a cancellation. As Jinzhou Yuancheng has not entered into any share-based payment schemes with non-vesting conditions attached, the amendment is not expected to have any financial impact on Jinzhou Yuancheng.

HKFRS 8, which will replace HKAS 14 Segment Reporting, specifies how an entity should report information about its operating segments, based on information about the components of the entity that is available to the chief operating decision maker for the purposes of allocating resources to the segments and assessing their performance. The standard also requires the disclosure of information about the products and services provided by the segments, the geographical areas in which Jinzhou Yuancheng operates, and revenue from Jinzhou Yuancheng’s major customers. Jinzhou Yuancheng expects to adopt HKFRS 8 from 1 January 2009.

HKAS 23 has been revised to require capitalisation of borrowing costs when such costs are directly attributable to the acquisition, construction or production of a qualifying asset. As Jinzhou Yuancheng’s current policy for borrowing costs aligns with the requirements of the revised standard, the revised standard is unlikely to have any financial impact on Jinzhou Yuancheng.

The amendment to HKAS 32 and HKAS 1 allows puttable financial instruments and financial instruments with obligations arising only on liquidation to be classified as equity when certain criteria are met and requires additional disclosures for puttable financial instruments and financial instruments with obligations arising only on liquidation classified as equity. As Jinzhou Yuancheng has no such financial instrument, the amendment is not expected to have any financial impact on Jinzhou Yuancheng.

2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Impairment of non-financial assets

An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is charged to the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

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recognised for the asset in prior years. A reversal of such impairment loss is credited to the income statement in the period in which it arises, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is accounted for in accordance with the relevant accounting policy for that revalued asset.

Related parties

A party is considered to be related to Jinzhou Yuancheng if:

(a) the party, directly, or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, Jinzhou Yuancheng; (ii) has an interest in Jinzhou Yuancheng that gives it significant influence over Jinzhou Yuancheng; or (iii) has joint control over Jinzhou Yuancheng;
(b) the party is a jointly-controlled entity;
(c) the party is a member of the key management personnel of Jinzhou Yuancheng or its holding companies;
(d) the party is a close member of the family of any individual referred to in (a) or (b); or
(e) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (c) or (d).

Property, plant and equipment and depreciation

Property, plant and equipment, other than construction in progress, are stated at cost or valuation less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income statement in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of an item of property, plant and equipment, and where the cost of the item can be measured reliably, the expenditure is capitalised as an additional cost of that asset or as a replacement.

Valuations are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Changes in the values of property are dealt with as movements in the asset revaluation reserve. If the total of this reserve is insufficient to cover a deficit, on an individual asset basis, the excess of the deficit is charged to the income statement. Any subsequent revaluation surplus is credited to the income statement to the extent of the deficit previously charged. An annual transfer from the asset revaluation reserve to retained profits is made for the difference between the depreciation based on the revalued carrying amount of an asset and the depreciation based on the asset’s original cost. On disposal of a revalued asset, the relevant portion of the asset revaluation reserve realised in respect of previous valuations is transferred to retained profits as a movement in reserves.

Leasehold buildings	3.6%
Plant and machinery	6.7%
Leasehold improvements, furniture, office equipment and motor vehicles	20%

Residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each balance sheet

date.

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An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the income statement in the year the asset is derecognised is the difference between the net sales proceeds and the carrying amount of the relevant asset.

Operating leases

Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where Jinzhou Yuancheng is the lessee, rentals payable under the operating leases net of any incentives received from the lessor are charged to the income statement on the straight-line basis over the lease terms.

Prepaid land premiums under operating leases are initially stated at cost and subsequently recognised on the straightline basis over the lease terms.

Financial assets

Financial assets in the scope of HKAS 39 are classified as loans and receivables. When financial assets are recognised initially, they are measured at fair value. Jinzhou Yuancheng assesses whether a contract contains an embedded derivative when Jinzhou Yuancheng first becomes a party to it and assesses whether an embedded derivatives is required to be separated from the host contract which is not measured at fair value through profit or loss when the analysis shows that the economic characteristics and risks of the embedded derivatives are not closely related to those of the host contract. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract.

Jinzhou Yuancheng determines the classification of its financial assets after initial recognition and, where allowed and appropriate, re-evaluates this designation at the balance sheet date.

All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that Jinzhou Yuancheng commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are subsequently carried at amortised cost using the effective interest method less any allowance for impairment. Amortised cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transaction costs. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

Impairment of financial assets

Jinzhou Yuancheng assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through the use of an allowance account. The amount of the impairment loss is recognised in the income statement. Loans and receivables together with any associated allowance are written off when there is no realistic prospect of future recovery.

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If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

In relation to trade and other receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor and significant changes in the technological, market economic or legal environment that have an adverse effect on the debtor) that Jinzhou Yuancheng will not be able to collect all of the amounts due under the original terms of an invoice. The carrying amount of the receivables is reduced through the use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible.

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where:

. the rights to receive cash flows from the asset have expired;
. Jinzhou Yuancheng retains the rights to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘‘pass-through’’ arrangement; or
. Jinzhou Yuancheng has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Where Jinzhou Yuancheng has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of Jinzhou Yuancheng’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that Jinzhou Yuancheng could be required to repay.

Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of Jinzhou Yuancheng’s continuing involvement is the amount of the transferred asset that Jinzhou Yuancheng may repurchase, except in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, where the extent of Jinzhou Yuancheng’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

Financial liabilities at amortised cost (including interest-bearing loans and borrowings)

Financial liabilities including trade and other payables, amounts due to fellow subsidiaries, an amount due to a shareholder and interest-bearing loans and borrowings are initially stated at fair value less directly attributable transaction costs and are subsequently measured at amortised cost, using the effective interest method unless the effect of discounting would be immaterial, in which case they are stated at cost. The related interest expense is recognised within ‘‘finance costs’’ in the income statement.

Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process.

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

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Financial guarantee contracts

Financial guarantee contracts in the scope of HKAS 39 are accounted for as financial liabilities. A financial guarantee contract is recognised initially at its fair value less transaction costs that are directly attributable to the acquisition or issue of the financial guarantee contract, except when such contract is recognised at fair value through profit or loss. Subsequent to initial recognition, Jinzhou Yuancheng measures the financial guarantee contract at the higher of: (i) the amount determined in accordance with HKAS 37 Provisions, Contingent Liabilities and Contingent Assets; and (ii) the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with HKAS 18 Revenue.

Inventories

Cash and cash equivalents

For the purpose of the cash flow statements, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments that are readily convertible into known amounts of cash, and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of Jinzhou Yuancheng’s cash management.

Provisions

Income tax

Income tax comprises current and deferred tax. Income tax is recognised in the income statement, or in equity if it relates to items that are recognised in the same or a different period directly in equity.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

. where the deferred tax liability arises from goodwill or the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
. in respect of taxable temporary differences associated with investments in subsidiaries and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

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. where the deferred tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
. in respect of deductible temporary differences associated with investments in subsidiaries and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

Government grants

Government grants are recognised at their fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income over the periods necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to the income statement over the expected useful life of the relevant asset by equal annual instalments.

Revenue recognition

Revenue is recognised when it is probable that the economic benefits will flow to Jinzhou Yuancheng and when the revenue can be measured reliably, on the following bases:

(a) from the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer, provided that Jinzhou Yuancheng maintains neither managerial involvement to the degree usually associated with ownership, nor effective control over the goods sold; and
(b) interest income, on an accrual basis using the effective interest method by applying the rate that discounts the estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the financial asset.

Pension schemes and other retirement benefits

The employees of Jinzhou Yuancheng are required to participate in the retirement benefits schemes (the ‘‘PRC RB Schemes’’) operated by the local municipal government. Jinzhou Yuancheng is required to contribute a certain percentage of its payroll costs to the PRC RB Schemes to fund the benefits. The only obligation of Jinzhou Yuancheng with respect to the PRC RB Schemes is to pay the ongoing required contributions under the PRC RB Schemes. Contributions under the PRC RB Schemes are charged to the income statement as they become payable in accordance with the rules of the PRC RB Schemes.

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Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for their intended use or sale. The capitalisation rate is based on the actual cost of the related borrowings. All other borrowing costs are recognised as expenses in the income statement in the period in which they are incurred.

Foreign currencies

The Financial Information are presented in RMB, which is Jinzhou Yuancheng’s functional and presentation currency. Foreign currency transactions are initially recorded using the functional currency rates ruling at the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rates of exchange ruling at the balance sheet date. All differences are taken to the income statement. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS

The preparation of Jinzhou Yuancheng’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in the future.

Estimates and assumptions

Corporate income tax

Jinzhou Yuancheng is subject to corporate income tax in the PRC. As a result of the fact that certain matters relating to corporate income tax have not been confirmed by the local tax bureau, objective estimates and judgements based on the current tax laws, regulations and other related policies are required in determining the provision of corporate income tax. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact on the corporate income tax and deferred tax provision in the period in which such differences arose.

Impairment of trade receivables

The policy for provision for impairment loss of Jinzhou Yuancheng is based on the evaluation of collectability, the aging analysis of accounts and on management’s judgement. A considerable amount of judgement is required in assessing the ultimate realisation of these receivables, including the current creditworthiness and the past collection history of each customer. If the financial conditions of customers of Jinzhou Yuancheng were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Useful lives and residual values of items of property, plant and equipment

In determining the useful lives and residual values of items of property, plant and equipment, Jinzhou Yuancheng has to consider various factors, such as technical or commercial obsolescence arising from changes or improvements in production, or from a change in the market demand for the product or service output of the asset, expected usage of the asset, expected physical wear and tear, the care and maintenance of the asset, and legal or similar limits on the use of the asset. The estimation of the useful life of the asset is based on the experience of the ultimate holding company with similar asset that is used in a similar way. Additional depreciation is made if the

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estimated useful lives and/or the residual values of items of property, plant and equipment are different from previous estimation. Useful lives and residual values are reviewed, at each financial year end date based on changes in circumstances.

Impairment of property, plant and equipment

Jinzhou Yuancheng assesses at each reporting date whether there is an indication that property, plant and equipment may be impaired. If any such indication exists, Jinzhou Yuancheng makes an estimate of the recoverable amount of property, plant and equipment. This requires an estimation of the value in use of property, plant and equipment. Estimating the value in use requires Jinzhou Yuancheng to make an estimate of the expected future cash flows from property, plant and equipment and also to choose a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of property, plant and equipment as at 31 December 2005, 2006 and 2007 and 31 March 2008 were RMB485,412,000, RMB467,707,000, RMB476,019,000 and RMB468,532,000, respectively. Further details are given in Note 4.

4. PROPERTY, PLANT AND EQUIPMENT

31 December 2005 At 1 January 2005: Cost or valuation Accumulated depreciation Net carrying amount At 1 January 2005, net of accumulated depreciation Additions Transfers Disposals Depreciation provided during the year Surplus on revaluation At 31 December 2005, net of accumulated depreciation At 31 December 2005: Cost or valuation Accumulated depreciation Net carrying amount Analysis of cost or valuation: At cost At 31 December 2005 valuation	Leasehold buildings RMB’000 114,018 (2,354) 111,664 111,664 — 27,320 — (4,650) 12,625 146,959 153,963 (7,004) 146,959 — 153,963 153,963	Plant and machinery RMB’000 251,989 (8,636) 243,353 243,353 65 34,444 — (17,950) — 259,912 286,498 (26,586) 259,912 286,498 — 286,498	Leasehold improvements, furniture, office equipment and motor vehicles RMB’000 5,038 (948) 4,090 4,090 372 — (60) (1,049) — 3,353 5,228 (1,875) 3,353 5,228 — 5,228	Construction in progress RMB’000 51,372 — 51,372 51,372 85,580 (61,764) — — — 75,188 75,188 — 75,188 75,188 — 75,188	Total RMB’000 422,417 (11,938) 410,479 410,479 86,017 — (60) (23,649) 12,625 485,412 520,877 (35,465) 485,412 366,914 153,963 520,877

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31 December 2006 At 1 January 2006: Cost or valuation Accumulated depreciation Net carrying amount At 1 January 2006, net of accumulated depreciation Additions Transfers Disposals Depreciation provided during the year At 31 December 2006, net of accumulated depreciation At 31 December 2006: Cost or valuation Accumulated depreciation Net carrying amount Analysis of cost or valuation: At cost At 31 December 2005 valuation	Leasehold buildings RMB’000 153,963 (7,004) 146,959 146,959 — 21,956 — (5,086) 163,829 175,919 (12,090) 163,829 21,956 153,963 175,919	Plant and machinery RMB’000 286,498 (26,586) 259,912 259,912 90 59,545 — (21,123) 298,424 346,133 (47,709) 298,424 346,133 — 346,133	Leasehold improvements, furniture, office equipment and motor vehicles RMB’000 5,228 (1,875) 3,353 3,353 204 — (27) (1,064) 2,466 5,381 (2,915) 2,466 5,381 — 5,381	Construction in progress RMB’000 75,188 — 75,188 75,188 9,301 (81,501) — — 2,988 2,988 — 2,988 2,988 — 2,988	Total RMB’000 520,877 (35,465) 485,412 485,412 9,595 — (27) (27,273) 467,707 530,421 (62,714) 467,707 376,458 153,963 530,421

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31 December 2007 At 1 January 2007: Cost or valuation Accumulated depreciation Net carrying amount At 1 January 2007, net of accumulated depreciation Additions Depreciation provided during the year Surplus on revaluation At 31 December 2007, net of accumulated depreciation At 31 December 2007: Cost or valuation Accumulated depreciation Net carrying amount Analysis of cost or valuation: At cost At 31 December 2007 valuation	Leasehold buildings RMB’000 175,919 (12,090) 163,829 163,829 — (9,682) 33,673 187,820 209,592 (21,772) 187,820 — 209,592 209,592	Plant and machinery RMB’000 346,133 (47,709) 298,424 298,424 156 (23,153) — 275,427 346,289 (70,862) 275,427 346,289 — 346,289	Leasehold improvements, furniture, office equipment and motor vehicles RMB’000 5,381 (2,915) 2,466 2,466 284 (1,105) — 1,645 5,665 (4,020) 1,645 5,665 — 5,665	Construction in progress RMB’000 2,988 — 2,988 2,988 8,139 — — 11,127 11,127 — 11,127 11,127 — 11,127	Total RMB’000 530,421 (62,714) 467,707 467,707 8,579 (33,940) 33,673 476,019 572,673 (96,654) 476,019 363,081 209,592 572,673

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31 March 2008 At 1 January 2008 Cost or valuation Accumulated depreciation Net carrying amount At 1 January 2008, net of accumulated depreciation Additions Depreciation provided during the period At 31 March 2008, net of accumulated depreciation At 31 March 2008: Cost or valuation Accumulated depreciation Net carrying amount Analysis of cost or valuation: At cost At 31 December 2007 valuation	Leasehold buildings RMB’000 209,592 (21,772) 187,820 187,820 — (2,009) 185,811 209,592 (23,781) 185,811 — 209,592 209,592	Plant and machinery RMB’000 346,289 (70,862) 275,427 275,427 80 (5,790) 269,717 346,369 (76,652) 269,717 346,369 — 346,369	Leasehold improvements, furniture, office equipment and motor vehicles RMB’000 5,665 (4,020) 1,645 1,645 6 (284) 1,367 5,671 (4,304) 1,367 5,671 — 5,671	Construction in progress RMB’000 11,127 — 11,127 11,127 510 — 11,637 11,637 — 11,637 11,637 — 11,637	Total RMB’000 572,673 (96,654) 476,019 476,019 596 (8,083) 468,532 573,269 (104,737) 468,532 363,677 209,592 573,269

At 31 December 2005, Jinzhou Yuancheng’s leasehold buildings were revalued on an open market value basis, by Savills Valuation and Professional Services Limited, independent professionally qualified valuers, at approximately RMB153,963,000. A surplus on revaluation of approximately RMB12,625,124 arising from the 2005 valuation, net of deferred tax liabilities of RMB3,212,000, had been credited to the assets revaluation reserve during the year ended 31 December 2005.

At 31 December 2007, Jinzhou Yuancheng’s leasehold buildings were revalued on an open market value basis by Savills Valuation and Professional Services Limited, independent professionally qualified valuers, at about RMB209,592,000 A surplus on revaluation of about RMB33,673,000 arising from the 2007 valuation, net of deferred tax liabilities of RMB8,418,000, had been credited to the asset revaluation reserve during the year ended 31 December 2007.

In the opinion of the directors, there were no material differences between the carrying value and the open market value of Jinzhou Yuancheng’s leasehold buildings as at 31 December 2006 and 31 March 2008 and, accordingly, no revaluation has been performed as at those dates.

Had Jinzhou Yuancheng’s leasehold buildings been carried at historical cost less accumulated depreciation, their carrying amounts would have been approximately RMB134,334,786, RMB151,688,958, RMB143,568,650 and RMB142,031,431, as at 31 December 2005, 2006 and 2007 and 31 March 2008, respectively.

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APPENDIX II

5. PREPAID LAND PREMIUMS

Carrying amount at 1 January Additions, at cost Amortised during the year/period Carrying amount at 31 December/31 March Current portion included in prepayments, deposits and other receivables Non-current portion	2005 RMB’000 55,476 1,543 (2,134) 54,885 (2,161) 52,724	31 December 2006 RMB’000 54,885 408 (2,161) 53,132 (2,168) 50,964	2007 RMB’000 53,132 — (2,168) 50,964 (2,168) 48,796	31 March 2008 RMB’000 50,964 103 (543
				50,524 (2,173
				48,351

Prepaid land premiums were pledged to secure banking facilities amounting to approximately RMB32,443,097 and RMB32,801,798 at 31 December 2005 and 2006, respectively (note 10).

6. INVENTORIES

Raw materials Work in progress Finished goods 7. TRADE RECEIVABLES Trade receivables	2005 RMB’000 47,522 3,257 13,565 64,344 2005 RMB’000 39,981	31 December 2006 RMB’000 65,763 5,741 11,970 83,474 31 December 2006 RMB’000 28,105	2007 RMB’000 120,367 6,465 20,977 147,809 2007 RMB’000 149,569	31 March 2008 RMB’000 126,977 3,321 60,165
				190,463
				31 March 2008 RMB’000 105,138

Jinzhou Yuancheng’s trading terms with its customers are mainly on credit. The credit period is generally for a period of three months. Jinzhou Yuancheng seeks to maintain strict control over its outstanding receivables to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned, there is no significant concentration of credit risk. Trade and other receivables are non-interest-bearing. The carrying amounts of trade receivables approximate to their fair values.

An aged analysis of the trade receivables as at the balance sheet date, based on the invoice date, is as follows:

Within 1 month 1 to 2 months 2 to 3 months Over 3 months	2005 RMB’000 23,881 13,087 2,152 861 39,981	31 December 2006 RMB’000 20,666 3,950 2,548 941 28,105	2007 RMB’000 33,742 23,758 24,158 67,911 149,569	31 March 2008 RMB’000 62,969 10,762 1,041 30,366
				105,138

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

The aged analysis of the trade receivables that are neither individually nor collectively considered to be impaired is as follows:

Neither past due nor impaired: Less than 1 month past due 1 to 3 months past due 3 to 9 months past due Over 9 months past due	Year 2005 RMB’000 39,512 — 138 331 — 39,981	ended 31 December 2006 2007 RMB’000 RMB’000 28,105 128,305 — — — 6,315 — 14,949 — — 28,105 149,569	31 March 2008 RMB’000 74,772 66 9,020 13,206 8,074
			105,138

Receivables that were neither past due nor impaired relate to a large number of diversified customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with Jinzhou Yuancheng. Based on past experience, the directors of Jinzhou Yuancheng are of the opinion that no provision for impairment is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. Jinzhou Yuancheng does not hold any collateral or other credit enhancements over these balances.

8. CASH AND BANK BALANCES

9. PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

Prepayments Deposits and other receivables Current portion of prepaid land premium	2005 RMB’000 1,488 4,596 2,161 8,245	31 December 2006 RMB’000 1,293 2,907 2,168 6,368	2007 RMB’000 1,942 6,269 2,168 10,379	31 March 2008 RMB’000 2,210 8,709 2,173
				13,092

None of the above assets is either past due or impaired. The financial assets included in the above balances relate to receivables for which there was no recent history of default.

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

10. INTEREST-BEARING BANK AND OTHER BORROWINGS

31 December 2005 31 December 2006 Effective interest rate (%) Maturity RMB’000 Effective interest rate (%) Maturity RMB’000 Current Bank loans — unsecured (ii) 5.12–5.58 2006 120,000 5.12–6.12 2007 250,000 Other loan — unsecured 4,644 4,644 Current portion of long term bank loans — secured (i) — 5.58 2007 20,000 124,644 274,644 Non-current Bank loans — unsecured (ii) — — — 6.3 2008 80,000 Bank loans — secured (i) 5.58 2007 50,000 — — — 174,644 354,644 31 December 2007 31 March 2008 Effective interest rate (%) Maturity RMB’000 Effective interest rate (%) Maturity RMB’000 Current Bank loans — unsecured 7.29 2008 120,000 7.29 2008 120,000 Other loan — unsecured 4,534 4,534 Current portion of long term bank loans — unsecured (ii) 6.3 2008 80,000 7.47–7.56 2008 -2009 130,000 204,534 254,534 Non-current Bank loans — unsecured (ii) 6.3–6.57 2009 120,000 6.57 2009 70,000 324,534 324,534 31 December 31 March 2005 2006 2007 2008 RMB’000 RMB’000 RMB’000 RMB’000 Analysed into: Bank loans repayable: Within one year or on demand 124,644 274,644 204,534 254,534 In the second year 50,000 80,000 120,000 70,000 174,644 354,644 324,534 324,534	31 December 2005 31 December 2006 Effective interest rate (%) Maturity RMB’000 Effective interest rate (%) Maturity RMB’000 Current Bank loans — unsecured (ii) 5.12–5.58 2006 120,000 5.12–6.12 2007 250,000 Other loan — unsecured 4,644 4,644 Current portion of long term bank loans — secured (i) — 5.58 2007 20,000 124,644 274,644 Non-current Bank loans — unsecured (ii) — — — 6.3 2008 80,000 Bank loans — secured (i) 5.58 2007 50,000 — — — 174,644 354,644 31 December 2007 31 March 2008 Effective interest rate (%) Maturity RMB’000 Effective interest rate (%) Maturity RMB’000 Current Bank loans — unsecured 7.29 2008 120,000 7.29 2008 120,000 Other loan — unsecured 4,534 4,534 Current portion of long term bank loans — unsecured (ii) 6.3 2008 80,000 7.47–7.56 2008 -2009 130,000 204,534 254,534 Non-current Bank loans — unsecured (ii) 6.3–6.57 2009 120,000 6.57 2009 70,000 324,534 324,534 31 December 31 March 2005 2006 2007 2008 RMB’000 RMB’000 RMB’000 RMB’000 Analysed into: Bank loans repayable: Within one year or on demand 124,644 274,644 204,534 254,534 In the second year 50,000 80,000 120,000 70,000 174,644 354,644 324,534 324,534	31 December 2005 31 December 2006 Effective interest rate (%) Maturity RMB’000 Effective interest rate (%) Maturity RMB’000 Current Bank loans — unsecured (ii) 5.12–5.58 2006 120,000 5.12–6.12 2007 250,000 Other loan — unsecured 4,644 4,644 Current portion of long term bank loans — secured (i) — 5.58 2007 20,000 124,644 274,644 Non-current Bank loans — unsecured (ii) — — — 6.3 2008 80,000 Bank loans — secured (i) 5.58 2007 50,000 — — — 174,644 354,644 31 December 2007 31 March 2008 Effective interest rate (%) Maturity RMB’000 Effective interest rate (%) Maturity RMB’000 Current Bank loans — unsecured 7.29 2008 120,000 7.29 2008 120,000 Other loan — unsecured 4,534 4,534 Current portion of long term bank loans — unsecured (ii) 6.3 2008 80,000 7.47–7.56 2008 -2009 130,000 204,534 254,534 Non-current Bank loans — unsecured (ii) 6.3–6.57 2009 120,000 6.57 2009 70,000 324,534 324,534 31 December 31 March 2005 2006 2007 2008 RMB’000 RMB’000 RMB’000 RMB’000 Analysed into: Bank loans repayable: Within one year or on demand 124,644 274,644 204,534 254,534 In the second year 50,000 80,000 120,000 70,000 174,644 354,644 324,534 324,534
		274,644
		80,000 —
		354,644
		RMB’000 120,000 4,534 130,000
		254,534
		70,000
		324,534
		31 March 2008 RMB’000 254,534 70,000
		324,534

Jinzhou Yuancheng’s bank loans, including term loans, mortgage loan and other general facilities, were secured by:

(i) mortgages over certain of Jinzhou Yuancheng’s prepaid land premiums, which had an aggregate carrying value of approximately RMB32,443,097, RMB32,801,798, nil and nil at 31 December 2005, 2006 and 2007 and 31 March 2008, respectively; and

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

(ii) corporate guarantees granted by the ultimate holding company and certain fellow subsidiaries of approximately RMB170,000,000, RMB350,000,000, RMB200,000,000 and RMB200,000,000 at 31 December 2005, 2006 and 2007 and 31 March 2008, respectively.

All bank loans are denominated in RMB and certain current bank loans bear interest at fixed interest rates. The carrying amounts of the bank loans approximate to their fair values.

The other loan was borrowed from 年豐投資(香港)有限公司, a former shareholder of Jinzhou Yuancheng. The other loan is unsecured, interest-free and repayable on demand.

11. TRADE PAYABLES

Jinzhou Yuancheng normally obtains credit terms ranging from 30 to 90 days from its suppliers. Trade payables are unsecured and interest-free.

An aged analysis of the trade payables as at the balance sheet date, based on the receipt of goods purchased, is as follows:

Within 1 month 1 to 2 months 2 to 3 months Over 3 months	2005 RMB’000 25,513 2,259 1,857 47,486 77,115	31 December 2006 RMB’000 10,012 428 299 4,703 15,442	2007 RMB’000 46,993 — — 2,672 49,665	31 March 2008 RMB’000 42,808 — — 2,672
				45,480

12. BALANCES WITH RELATED PARTIES

(i) Balances with group companies

The balances with the ultimate holding company, immediate holding company and fellow subsidiaries are unsecured, interest-free and have no fixed terms of repayment. The carrying amounts of the balances with these group companies approximate to their fair values at each of the balance sheet dates. About RMB21,774,556, RMB34,408,824, RMB26,492,113 and RMB48,128,601 at 31 December 2005, 2006 and 2007 and 31 March 2008, respectively, of balances due from fellow subsidiaries arose from trading activities. About RMB50,938,515, RMB372,620, RMB775,977 and nil, at 31 December 2005, 2006 and 2007 and 31 March 2008, respectively, of balances due to fellow subsidiaries arose from trading activities. The remaining balances with group companies arose from fund transfers between group companies.

(ii) Balance with a related company

The balance with a related company arose from trading activities. This related company is the jointly-controlled entity of the ultimate holding company. The balance is unsecured, interest-free and has been fully settled in 2006. The carrying amount of the balance approximated to its fair values at the respective balance sheet dates.

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

13. DEFERRED TAX LIABILITIES

The movements in deferred tax liabilities during the Relevant Periods are as follows:

At 1 January 2005 Deferred tax charged to: — income statement during the year — equity during the year At 31 December 2005 and 1 January 2006 Deferred tax charged to: — income statement during the year At 31 December 2006 and 1 January 2007 Deferred tax charged to: — income statement during the year — equity during the year Effect on deferred tax liabilities due to changes in tax rate At 31 December 2007 and 1 January 2008 Deferred tax charged to: — income statement during the period At 31 March 2008 SHARE CAPITAL Registered and fully paid:	exc Note 21 21 21 21 21 2005 RMB’000 105,073	exc	Depreciation allowance in ess of related depreciation RMB’000 418 1,099 — 1,517 1,155 2,672 2,408 — 2,275 7,355 694 8,049 31 December 2006 RMB’000 105,073	Revaluation of properties RMB’000 — — 3,212 3,212 — 3,212 — 8,418 (56) 11,574 — 11,574 2007 RMB’000 105,073	Total RMB’000 418 1,099 3,212
					4,729 1,155
					5,884 2,408 8,418 2,219
					18,929 694
					19,623
					31 March 2008 RMB’000 105,073

14. SHARE CAPITAL

At 31 December 2005, 2006 and 2007 and 31 March 2008, the registered capital of Jinzhou Yuancheng was RMB105,073,020 which had been fully paid by shareholders and verified by certified public accountants registered in the PRC. Global Corn Investment Limited and Changchun Dacheng Industrial Group Co., Ltd. (a wholly subsidiary of the ultimate holding company) contributed RMB73,551,280 and RMB31,521,740 accounting for 70% and 30% of equity interests of Jinzhou Yuancheng, respectively.

15. RESERVES

The movements of Jinzhou Yuancheng’s reserves for the Relevant Periods are presented in the statements of changes in equity in Section I.

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

16. CAPITAL COMMITMENTS

Contracted, but not provided for: Leasehold buildings	2005 RMB’000 15,437	31 December 2006 RMB’000 8,715	2007 RMB’000 8,839	31 March 2008 RMB’000 8,839

17. REVENUE AND OTHER INCOME

Revenue, which is also Jinzhou Yuancheng’s turnover, represents the net invoiced value of goods supplied to customers after allowances for returns, trade discounts and value-added tax.

An analysis of revenue and other income is as follows:

Revenue Sale of goods Other income Bank interest income Government grants* Other	Year 2005 RMB’000 952,041 714 500 2,561 3,775	ended 31 December 2006 2007 RMB’000 RMB’000 1,009,555 1,102,668 670 256 7,375 6,599 3,338 4,973 11,383 11,828	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 234,327 261,199 35 65 607 10 659 612 1,301 687	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 234,327 261,199 35 65 607 10 659 612 1,301 687
				65 10 612
				687

Government grants represented other taxes rebate and subsidy granted to Jinzhou Yuancheng.

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

18. PROFIT BEFORE TAX

Jinzhou Yuancheng’s profit before tax is arrived at after charging/(crediting):

Notes Raw materials and consumables used # Write-down/(write-back) of inventories to net realisable value # Depreciation 5 Amortisation of prepaid land premiums 6 Gain on disposal of items of property, plant and equipment Auditors’ remuneration Employee benefits expenses — Salaries & wages — Pension	Year 2005 RMB’000 721,463 2,409 23,649 2,134 (87) — 4,541 797	ended 31 December 2006 2007 RMB’000 RMB’000 796,991 880,329 (1,659) (118) 27,273 33,940 2,161 2,168 (23) — 82 223 5,504 6,028 992 1,014	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 196,647 211,630 — (627 8,215 8,083 542 543 — — — — 1,908 2,659 323 628

Raw materials and consumables used and write-down of inventories to net realisable value are included in ‘‘Cost of sales’’ on the face of the income statement.

19. FINANCE COSTS

Interest on bank loans Finance costs for discounting notes receivable Less: Government grants (note)	Year 2005 RMB’000 6,597 4,302 — 10,899	ended 31 December 2006 2007 RMB’000 RMB’000 15,980 21,920 2,367 1,768 — (2,916) 18,347 20,772	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 5,494 5,869 1,281 2,291 — — 6,775 8,160	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 5,494 5,869 1,281 2,291 — — 6,775 8,160
				8,160

Note: Government grants represented non-refundable interest subsidy granted by the State Government for a specific construction project carried out by Jinzhou Yuancheng. Such subsidy was offset against the finance cost in accordance with HKAS 20 ‘‘Accounting for Government Grants and Disclosure of Government Assistance’’ issued by the HKICPA.

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

20. DIRECTOR’S REMUNERATION AND FIVE HIGHEST PAID EMPLOYEES

(a) Director’s remuneration

Details of the director’s remuneration for the Relevant Periods and for the three months ended 31 March 2007 are as follows:

Mr. Wang Guicheng Salaries, allowances, bonus and benefits in kind Pension scheme contributions	Year 2005 RMB’000 48 10 58	ended 31 December 2006 2007 RMB’000 RMB’000 58 23 11 5 69 28	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 14 — — — 14 —	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 14 — — — 14 —
				—

The remuneration of other directors was borne by the fellow subsidiaries of Jinzhou Yuancheng during the Relevant Periods.

(b) Five highest paid employees

The details of the remuneration of the five non-director, highest paid employees for the Relevant Periods are set out below:

Salaries, allowances and benefits in kind Pension scheme contributions Bonuses paid and payable	Year 2005 RMB’000 146 32 — 178	ended 31 December 2006 2007 RMB’000 RMB’000 135 192 35 33 7 44 177 269	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 37 64 2 5 — — 39 69	Three months ended 31 March 2007 2008 RMB’000 (unaudited) RMB’000 37 64 2 5 — — 39 69
				69

The number of non-director, highest paid employees whose remuneration fell within the following band is as follows:

Nil to RMB500,000	Year 2005 5	Number of employees ended 31 December Three months ended 31 March 2006 2007 2007 2008 (unaudited) 5 5 5 5

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

21. TAX

During the two years ended 31 December 2005 and 2006, no PRC corporate income tax was provided by Jinzhou Yuancheng as Jinzhou Yuancheng is exempted from PRC corporate income tax for two years starting from the first profitable year of its operations, which was 2005. During the year ended 31 December 2007 and the three months ended 31 March 2008, PRC corporate income tax was provided for at a rate of 13.5% and 12.5% on the taxable profits, respectively, as Jinzhou Yuancheng is entitled to a 50% relief from the applicable PRC corporate income tax for three years commencing from 2007. Jinzhou Yuancheng operates in one of the coastal economic open zones of the PRC and is entitled the applicable income tax rate of 27% for the three years ended 31 December 2005, 2006 and 2007 and the applicable income tax rate of 25% for the three months ended 31 March 2008.

Current — Charge for the year/period Deferred (Note 13)	Year 2005 RMB’000 — 1,099 1,099	ended 31 December 2006 2007 RMB’000 RMB’000 — 8,828 1,155 4,683 1,155 13,511	Three months ended 31 March 2007 2008 RMB’000 RMB’000 (unaudited) 1,572 1,453 1,171 694 2,743 2,147	Three months ended 31 March 2007 2008 RMB’000 RMB’000 (unaudited) 1,572 1,453 1,171 694 2,743 2,147
				2,147

A reconciliation of the tax expense applicable to profit before tax using the statutory rates for the jurisdictions in which Jinzhou Yuancheng is domiciled to the tax expense at the effective tax rates, and a reconciliation of the applicable rates (i.e. the statutory tax rates) to the effective tax rates, are as follows:

Year ended 31 December 2005 2006 2007 RMB’000 % RMB’000 % RMB’000 % Profit before tax 85,593 88,891 71,372 Tax at the statutory tax rate 28,246 33.0 29,334 33.0 23,553 33.0 Lower tax rate for coast economy development zone (5,136) (6.0) (5,333) (6.0) (4,282) (6.0 Preferential tax rate offered for foreign invested company (22,011) (25.7) (22,846) (25.7) (9,635) (13.5 Effect on deferred tax liabilities due to changes in tax rate — — — — 2,275 3.2 Non-deductible expenses — — — — 1,600 2.2 Tax charge at the effective rate 1,099 1.3 1,155 1.3 13,511 18.9 Three months ended 31 March 2007 2008 RMB’000 (unaudited) % RMB’000 % Profit before tax 12,274 13,228 Tax at the statutory tax rate 4,050 33.0 3,307 25.0 Lower tax rate for coast economy development zone (736) (6.0) — — Preferential tax rate offered for foreign invested company (1,657) (13.5) (1,654) (12.5 Non-deductible expenses 1,086 8.8 494 3.7 Tax charge at the effective rate 2,743 22.3 2,147 16.2	Year ended 31 December 2005 2006 2007 RMB’000 % RMB’000 % RMB’000 % Profit before tax 85,593 88,891 71,372 Tax at the statutory tax rate 28,246 33.0 29,334 33.0 23,553 33.0 Lower tax rate for coast economy development zone (5,136) (6.0) (5,333) (6.0) (4,282) (6.0 Preferential tax rate offered for foreign invested company (22,011) (25.7) (22,846) (25.7) (9,635) (13.5 Effect on deferred tax liabilities due to changes in tax rate — — — — 2,275 3.2 Non-deductible expenses — — — — 1,600 2.2 Tax charge at the effective rate 1,099 1.3 1,155 1.3 13,511 18.9 Three months ended 31 March 2007 2008 RMB’000 (unaudited) % RMB’000 % Profit before tax 12,274 13,228 Tax at the statutory tax rate 4,050 33.0 3,307 25.0 Lower tax rate for coast economy development zone (736) (6.0) — — Preferential tax rate offered for foreign invested company (1,657) (13.5) (1,654) (12.5 Non-deductible expenses 1,086 8.8 494 3.7 Tax charge at the effective rate 2,743 22.3 2,147 16.2	Year ended 31 December 2005 2006 2007 RMB’000 % RMB’000 % RMB’000 % Profit before tax 85,593 88,891 71,372 Tax at the statutory tax rate 28,246 33.0 29,334 33.0 23,553 33.0 Lower tax rate for coast economy development zone (5,136) (6.0) (5,333) (6.0) (4,282) (6.0 Preferential tax rate offered for foreign invested company (22,011) (25.7) (22,846) (25.7) (9,635) (13.5 Effect on deferred tax liabilities due to changes in tax rate — — — — 2,275 3.2 Non-deductible expenses — — — — 1,600 2.2 Tax charge at the effective rate 1,099 1.3 1,155 1.3 13,511 18.9 Three months ended 31 March 2007 2008 RMB’000 (unaudited) % RMB’000 % Profit before tax 12,274 13,228 Tax at the statutory tax rate 4,050 33.0 3,307 25.0 Lower tax rate for coast economy development zone (736) (6.0) — — Preferential tax rate offered for foreign invested company (1,657) (13.5) (1,654) (12.5 Non-deductible expenses 1,086 8.8 494 3.7 Tax charge at the effective rate 2,743 22.3 2,147 16.2
		18.9
		% 25.0 — (12.5 3.7
		16.2

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

During the 5th Session of the 10th National People’s Congress, which was concluded on 16 March 2007, the PRC Corporate Income Tax Law (‘‘the New CIT Law’’) was approved and become effective on 1 January 2008. The New CIT Law establishes a unified 25% tax rate for both domestic enterprises and foreign invested enterprises. Pursuant to the estimation by management, Jinzhou Yuancheng would still be entitled to a 50% relief for both 2008 and 2009, and subject to income tax rate of 25% from year 2010 in accordance with the implementation of the New CIT Law.

22. RELATED PARTY TRANSACTIONS

(a) Transactions with related parties

In addition to the transactions and balances detailed elsewhere in this accountants’ report, Jinzhou Yuancheng had the following transactions with related parties during the Relevant Periods and the three months ended 31 March 2008.

Notes Purchases from fellow subsidiaries — raw material-corn (i) — machinery Sales to related parties — corn starch (ii) — corn gluten meal — feed — corn slurry Transportation cost charged to a fellow subsidiary (iii) Material cost charged to a fellow subsidiary (iii)	Year ended 31 December 2005 2006 2007 RMB’000 RMB’000 RMB’000 72,555 — — — 2,834 355 116,563 191,493 266,551 29,565 45,693 52,714 18,071 21,730 35,173 923 524 5,262 3,586 — — 416 — —	Three months ended 31 March 2007 2008 RMB’000 RMB’000 — — 102 — 103,778 33,358 11,637 16,057 5,173 14,022 1,184 972 — — — —

Notes:

(i) In 2005, Jinzhou Yuancheng sourced raw materials from Changchun Dacheng Corn Development Co., Ltd. and Changchun Jincheng Corn Development Co., Ltd., both fellow subsidiaries, for its production. These purchases were made at prices based on the mutual agreement between the parties.
(ii) Jinzhou Yuancheng sold finished goods to related parties during the Relevant Periods and the three months ended 31 March 2007. These sales were made at prices mutually agreed between the parties. These related companies are fellow subsidiaries of Jinzhou Yuancheng and a jointly-controlled entity of the ultimate holding company.
(iii) In 2005, certain fellow subsidiaries paid the transportation and material cost on behalf of Jinzhou Yuancheng. A reimbursement of such costs was received from the fellow subsidiaries based on the actual costs incurred.

23. SEGMENT INFORMATION

Over 90% of Jinzhou Yuancheng’s operations relate to the manufacture and sale of corn starch and relevant byproducts and over 90% of Jinzhou Yuancheng’s products were sold to customers based in Mainland China. Accordingly, no segment information has been disclosed.

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

24. FINANCIAL INSTRUMENTS CATEGORY

The carrying amounts of each of the categories of financial instruments as at the balance sheet date are as follows:

Financial assets Trade receivables Financial assets included in prepayments, deposits and other receivables Due from fellow subsidiaries Due from a related party Due from the immediate holding company Cash and cash equivalents Financial liabilities Trade payables Financial liabilities included in other payables and accruals Interest-bearing bank and other borrowings Due to the immediate holding company Due to the ultimate holding company Due to fellow subsidiaries	2005 Loans and receivables RMB’000 39,981 4,596 21,775 207 — 135,732 202,291 2005 Financial liabilities at amortised cost RMB’000 77,115 57,019 174,644 116,068 14,392 154,683 593,921	31 December 2006 Loans and receivables RMB’000 28,105 1,820 126,123 9,504 3,498 72,473 241,523 31 December 2006 Financial liabilities at amortised cost RMB’000 15,442 48,562 354,644 116,279 14,239 373 549,539	2007 Loans and receivables RMB’000 149,569 3,097 63,197 — — 44,209 260,072 2007 Financial liabilities at amortised cost RMB’000 49,665 43,643 324,534 45,501 82,177 776 546,296	31 March 2008 Loans and receivables RMB’000 105,138 5,744 84,833 — — 42,444
				238,159
				31 March 2008 Financial liabilities at amortised cost RMB’000 45,480 49,903 324,534 46,169 82,144 —
				548,230

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ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

25. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

Financial assets of Jinzhou Yuancheng include cash and cash equivalents, trade receivables, prepayments, deposits and other receivables, amounts due from fellow subsidiaries, amounts due from a related party and amounts due from fellow subsidiaries. Financial liabilities of Jinzhou Yuancheng include trade payables, other payables and accruals, interest-bearing bank and other borrowings, amounts due to the immediate holding company, amounts due to the ultimate holding company and amounts due to fellow subsidiaries.

The main risks arising from Jinzhou Yuancheng’s financial instruments are interest rate risk, credit risk and liquidity risk. As Jinzhou Yuancheng’s exposure to these risks is kept to a minimum, Jinzhou Yuancheng has not used any derivatives and other instruments for hedging purposes. Jinzhou Yuancheng does not hold or issue derivative financial instruments for trading purposes. The board of directors reviews and agrees policies for managing each of these risks and they are summarised below.

Interest rate risk

Jinzhou Yuancheng’s exposure to the risk of changes in market interest rates relates primarily to its bank loans.

Jinzhou Yuancheng’s revenue and operating cash flows are substantially independent of changes in market interest rates.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of Jinzhou Yuancheng’s profit before tax (through the impact on floating rate borrowings) and the equity.

Increase in basic points (%) Decrease in profits before tax (RMB’000) Decrease in equity (RMB’000)	Year 2005 1% (500) (500)	ended 31 December 2006 2007 1% 1% (513) (1,950) (513) (1,687)	Three months ended 31 March 2008 1% (497) (435)

Credit risk

Jinzhou Yuancheng trades only with recognised and creditworthy third parties. It is the Company’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis and Jinzhou Yuancheng’s exposure to bad debts is not significant. For transactions that are not denominated in the functional currency of the relevant operating unit, Jinzhou Yuancheng does not offer credit terms without the specific approval of the Head of Credit Control.

The credit risk of Jinzhou Yuancheng’s other financial assets, which comprise cash and cash equivalents, trade receivables, amounts due from jointly-controlled entities and other receivables, arises from default of the counterparty, with a maximum exposure equal to the carrying amounts of these instruments.

Since Jinzhou Yuancheng trades only with recognised and creditworthy third parties, there is no requirement for collateral. Concentrations of credit risk are managed by customer/counterparty, by geographical region and by industry sector. There are no significant concentrations of credit risk within Jinzhou Yuancheng as the customer bases of Jinzhou Yuancheng’s trade receivables are widely dispersed in different sectors and industries.

Further quantitative data in respect of Jinzhou Yuancheng’s exposure to credit risk arising from trade and other receivables are disclosed in note 12 to the financial statements.

– 103 –

ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

Liquidity risk

Jinzhou Yuancheng monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the maturity of both its financial liabilities and financial assets and projected cash flows from operations.

Jinzhou Yuancheng’s policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of committed annual borrowing facilities from banks to meet its commitments over the following year in accordance with its strategic plan.

Liquidity risk

The maturity profile of Jinzhou Yuancheng’s financial liabilities as at the balance sheet date, based on the contracted undiscounted payments, was as follows:

Year ended 31 December 2005

Trade payables Interest bearing bank and other borrowings Due to the immediate holding company Due to the ultimate holding company Due to fellow subsidiaries Other payables	On demand RMB’000 77,115 124,644 116,068 14,392 154,683 57,019 543,921	Less than 3 months RMB’000 — — — — — — —	3 to 12 months RMB’000 — — — — — — —	1 to 5 Years RMB’000 — 50,000 — — — — 50,000	> 5 years RMB’000 — — — — — — —	Total RMB’000 77,115 174,644 116,068 14,392 154,683 57,019
						593,921

Year ended 31 December 2006

Trade payables Interest bearing bank and other borrowings Due to the immediate holding company Due to the ultimate holding company Due to fellow subsidiaries Other payables	On demand RMB’000 15,442 274,644 116,279 14,239 373 48,562 469,539	Less than 3 months RMB’000 — — — — — — —	3 to 12 months RMB’000 — — — — — — —	1 to 5 years RMB’000 — 80,000 — — — — 80,000	> 5 years RMB’000 — — — — — — —	Total RMB’000 15,442 354,644 116,279 14,239 373 48,562
						549,539

– 104 –

ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

Year ended 31 December 2007

Trade payables Interest bearing bank and other borrowings Due to the immediate holding company Due to the ultimate holding company Due to fellow subsidiaries Other payables	On demand RMB’000 49,665 204,534 45,501 82,177 776 43,643 426,296	Less than 3 months RMB’000 — — — — — — —	3 to 12 months RMB’000 — — — — — — —	1 to 5 years RMB’000 — 120,000 — — — — 120,000	> 5 years RMB’000 — — — — — — —	Total RMB’000 49,665 324,534 45,501 82,177 776 43,643
						546,296

Three months ended 31 March 2008

Trade payables Interest bearing bank and other borrowings Due to the immediate holding company Due to the ultimate holding company Other payables	On demand RMB’000 45,480 254,534 46,169 82,144 49,903 478,230	Less than 3 months RMB’000 — — — — — —	3 to 12 months RMB’000 — — — — — —	1 to 5 years RMB’000 — 70,000 — — — 70,000	> 5 years RMB’000 — — — — — —	Total RMB’000 45,480 324,534 46,169 82,144 49,903
						548,230

Capital management

The primary objective of Jinzhou Yuancheng’s capital management is to safeguard Jinzhou Yuancheng’s ability to continue as a going concern and to maintain healthy capital ratios in order to support its business and maximise shareholder value.

Jinzhou Yuancheng manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, Jinzhou Yuancheng may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the Relevant Periods.

– 105 –

ACCOUNTANTS’ REPORT OF JINZHOU YUANCHENG

APPENDIX II

Jinzhou Yuancheng monitors capital using a gearing ratio, which is net debt divided by equity. Jinzhou Yuancheng’s policy is to maintain the gearing ratio at reasonable levels. Net debt includes interest-bearing bank and other borrowings less cash and cash equivalents, and excludes discontinued operations. The gearing ratios as at the balance sheet dates were as follows:

Interest bearing bank and other borrowings Less: cash and cash equivalents Net debt Equity Gearing ratio	2005 RMB’000 174,644 (135,732) 38,912 195,910 20%	31 December 2006 RMB’000 354,644 (72,473) 282,171 283,646 99%	2007 RMB’000 324,534 (44,209) 280,325 366,818 76%	31 March 2008 RMB’000 324,534 (42,444) 282,090 377,899 75%

26. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements have been prepared by Jinzhou Yuancheng in respect of any period subsequent to 31 March

Yours faithfully, Ernst & Young Certified Public Accountants Hong Kong

– 106 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

A. UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

The following is a summary of the unaudited pro forma statement of assets and liabilities of the Enlarged Group for the purpose of illustration only and does not form part of the accountants’ report prepared by the reporting accountants of the Company as set out in Appendix II to the Circular.

The unaudited pro forma statement of assets and liabilities of the Enlarged Group may not give a true picture of the financial position of the Enlarged Group had the Acquisition been completed on 31 December 2007 because of its hypothetical nature.

The unaudited pro forma statement of assets and liabilities of the Enlarged Group is prepared based on the audited consolidated balance sheet of the Group as at 31 December 2007 extracted from the annual report of the Company for the year ended 31 December 2007 and the audited financial information of Jinzhou Yuancheng as at 31 March 2008 extracted from the accountants’ report on Jinzhou Yuancheng as set out in the Circular and after taking into account of the unaudited pro forma adjustments as described in the notes thereto to demonstrate the effect of the Acquisition and the financing arrangements for the Acquisition might have affected the historical financial assets and liabilities in respect of the Group as if the Acquisition had been completed on 31 December 2007.

– 107 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

NON-CURRENT ASSETS Property, plant and equipment Prepaid land premiums Prepayment for acquisitions of property, plant and equipment Goodwill Long term loan to a related company Total non-current assets CURRENT ASSETS Inventories Trade receivables Prepayments, deposits and other receivables Due from the immediate holding company Due from fellow subsidiaries Due from a jointly-controlled entity Cash and cash equivalents Total current assets CURRENT LIABILITIES Trade payables Other payables and accruals Interest-bearing bank and other borrowings Due to fellow subsidiaries Due to a related company Due to the ultimate holding company Due to jointly-controlled entities Due to the immediate holding company Tax payable Total current liabilities NET CURRENT ASSETS/(LIABILITIES) TOTAL ASSETS LESS CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest-bearing bank and other borrowings Due to a fellow subsidiary Due to a venturer of a jointly-controlled entity Deferred tax liabilities Total non-current liabilities Net assets EQUITY Equity attributable to equity holders of the parent Issued capital Reserves Proposed final dividend Minority interests Total equity	The Group as at 31 December 2007 (Audited) HK$’000 568,394 28,711 2,151 149,950 40,000 789,206 51,282 225,237 34,285 21,085 130,634 26,141 905,599 1,394,263 35,968 56,462 156,250 3,432 55 54,284 4,179 180,338 8,564 499,532 894,731 1,683,937 368,750 — 20,000 14,719 403,469 1,280,468 104,500 1,175,968 — 1,280,468 — 1,280,468	Jinzhou Yuancheng as at 31 March 2008 (Audited) HK$’000 537,558 — — — — 537,558 198,082 109,344 13,616 — 88,226 — 44,142 453,410 47,299 58,774 264,715 — — 85,430 — 48,016 511 504,745 (51,335) 486,223 72,800 — — 20,408 93,208 393,015 98,199 294,816 — 393,015 — 393,015	Total Pro forma Adjustments (Unaudited) HK$’000 HK$’000 Notes 1,105,952 28,711 2,151 149,950 126,985 (iii) 40,000 1,326,764 249,364 334,581 47,901 21,085 218,860 (808) (iv) 26,141 949,741 (155,192) (i) & (iv) 1,847,673 83,267 115,236 420,965 3,432 55 139,714 4,179 228,354 9,075 1,004,277 843,396 2,170,160 441,550 — 364,000 (i) 20,000 35,127 496,677 1,673,483 202,699 (98,199) (iii) 1,470,784 (294,816) (iii) — 1,673,483 — 1,673,483	Pro forma Enlarged Group (Unaudited) HK$’000 1,105,952 28,711 2,151 276,935 40,000
				1,453,749
				249,364 334,581 47,901 21,085 218,052 26,141 794,549
				1,691,673
				83,267 115,236 420,965 3,432 55 139,714 4,179 228,354 9,075
				1,004,277
				687,396
				2,141,145
				441,550 364,000 20,000 35,127
				860,677
				1,280,468
				104,500 1,175,968 —
				1,280,468
				—
				1,280,468

– 108 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

Notes:

(i) The Acquisition is assumed to have been completed on 31 December 2007 and thus the consideration of HK$520 million payable by the Company is included as a pro forma adjustment. In the opinion the directors and as announced, the Acquisition will be financed by the existing funds of the Group of HK$156 million and the remaining consideration of HK$364 million will be funded by GBT by a long term unsecured semi-annual coupon loan note carrying interest of 6% per annum, due and repayable on the fifth anniversary after the issue.
(ii) Under Generally Accepted Accounting Principles in Hong Kong, the Group will apply the purchase method to account for the Acquisition. In applying the purchase method, the identifiable assets, liabilities and contingent liabilities of Jinzhou Yuancheng will be recorded on the unaudited pro forma consolidated balance sheet of the Enlarged Group at their fair values at the date of the completion, and all the capital and reserves of Jinzhou Yuancheng upon completion of the Acquisition will be eliminated as the pre-acquisition reserves of the Enlarged Group. Any goodwill arising on the Acquisition will be determined as the excess of the purchase consideration deemed to be incurred by the Group over the Group’s interests in the net fair value of the identifiable assets, liabilities and contingent liabilities of Jinzhou Yuancheng at the date of completion of the Acquisition.

For the purpose of preparing the unaudited pro forma balance sheet of the Enlarged Group after the Acquisition, the net book value of the identifiable assets, liabilities and contingent liabilities of Jinzhou Yuancheng as at 31 March 2008, as extracted from the accountants’ report on Jinzhou Yuancheng set out in the Circular, is applied in the calculation of the estimated goodwill arising from the Acquisition. The actual goodwill arising at the date of the completion of the Acquisition may be different from the estimated goodwill as shown in (iii) and the calculation on the basis as set out above because the fair value of the assets, liabilities and contingent liabilities of Jinzhou Yuancheng may be substantially different from their book value used in the preparation of the unaudited pro forma balance sheet.

(iii) The pro forma adjustments reflect: 1) elimination of the Group’s entire equity interests in Jinzhou Yuancheng after the completion of the Acquisition; and 2) the recognition of estimated goodwill of approximately HK$126,985,000 arising from the Acquisition (see (ii) above) on the basis that no impairment charges concerning the above estimated goodwill is considered necessary.
(iv) The pro forma adjustment reflects the elimination of the amounts due from Jinzhou Yuancheng to a subsidiary of the Group which have been settled by Jinzhou Yuancheng in cash in March 2008.

– 109 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

B. ACCOUNTANTS REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

25 July 2008

The Board of Directors Global Sweeteners Holdings Limited

Dear Sirs,

We report on the unaudited pro forma financial information (the ‘‘Unaudited Pro Forma Financial Information’’) of Global Sweeteners Holdings Limited (the ‘‘Company’’) and its subsidiaries (herein after collectively referred to as the ‘‘Group’’), and Jinzhou Yuancheng Bio-chem Technology Co., Ltd. (‘‘Jinzhou Yuancheng’’) (together with the Group hereinafter collectively referred to as the ‘‘Enlarged Group’’), which has been prepared by the directors, for illustrative purposes only, to provide information about how the acquisition of Jinzhou Yuancheng by the Company have affected the historical financial information of the Group for inclusion in Appendix III to the circular of the Company dated 25 July 2008 (the ‘‘Circular’’). The basis of preparation of the Unaudited Pro Forma Financial Information is set out in Appendix III to the Circular.

Respective Responsibilities of the Directors of the Company and Reporting Accountants

It is the responsibility solely of the directors of the Company to prepare the Unaudited Pro Forma Financial Information in accordance with paragraph 29 of chapter 4 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with reference to Accounting Guideline 7 ‘‘Preparation of Pro Forma Financial Information for Inclusion in Investment Circulars’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’).

It is our responsibility to form an opinion, as required by paragraph 29(7) of chapter 4 of the Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion solely to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the Unaudited Pro Forma Financial Information beyond that owed to those to whom those reports were addressed by us at the dates of their issue.

Basis of opinion

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagement 300 ‘‘Accountants’ Reports on Pro Forma Financial Information in Investment Circulars’’ issued by the HKICPA. Our work consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the Unaudited Pro Forma Financial Information with the directors of the Company. This engagement did not involve independent examination of any of the underlying financial information.

– 110 –

UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE ENLARGED GROUP

APPENDIX III

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated, that such basis is consistent with the accounting policies of the Group and that the adjustments are appropriate for the purposes of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of chapter 4 of the Listing Rules.

The Unaudited Pro Forma Financial Information is for illustrative purposes only, based on the judgements and assumptions of the directors of the Company, and, because of its hypothetical nature, does not provide any assurance or indication that any event will take place in the future and may not be indicative of the financial position of the Group as at 31 December 2007 or any future date.

Opinion

In our opinion:

(a) the Unaudited Pro Forma Financial Information has been properly compiled by the directors of the Company on the basis stated in Appendix III to the Circular;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purpose of the Unaudited Pro Forma Financial Information as disclosed pursuant to paragraph 29(1) of chapter 4 of the Listing Rules.

Yours faithfully, Ernst & Young Certified Public Accountants Hong Kong

– 111 –

MANAGEMENT DISCUSSION AND ANALYSIS OF JINZHOU YUANCHENG

APPENDIX IV

Set out below is the management discussion and analysis of the results of Jinzhou Yuancheng, which should be read in conjunction with the Accountants’ Report of Jinzhou Yuancheng set out in Appendix II to this circular.

THREE MONTHS ENDED 31 MARCH 2007 AND 2008

Business and financial review

Revenue

Revenue of Jinzhou Yuancheng increased by about RMB26.9 million, or about 11%, from about RMB234.3 million for the three months ended 31 March 2007 to about RMB261.2 million for the three months ended 31 March 2008, mainly due to the increase in overall sales volume and average unit selling price of Co-products. During the three months ended 31 March 2008, revenue generated from the sales of Co-products increased by about RMB42 million, representing an increase of about 70% compared with the corresponding period in 2007. The increase in revenue of Co-products was mainly due to the increase in sales volume of 31% and the increase in the average selling prices of 30%. Revenue for the sales of corn starch decreased by RMB15.1 million or about 9% compared with the corresponding period in 2007 since sales volume and average selling prices of corn starch decreased by 6% and 3% respectively.

Cost of sales

Cost of sales increased by RMB22.7 million, or 11%, from about RMB206.6 million for the three months ended 31 March 2007 to about RMB229.3 million for the three months ended 31 March 2008 due to increase in the sales volume and the unit cost of corn starch and Co-products.

Gross profit

Gross profit increased by about RMB4.1 million, or about 15%, from about RMB27.8 million for the three months ended 31 March 2007 to about RMB31.9 million for the three months ended 31 March 2008, mainly due to increase in overall sales volume and average unit selling price of Co-products.

Other income

Other income decreased from about RMB1.3 million for the three months ended 31 March 2007 to about RMB0.7 million for the three months ended 31 March 2008, mainly due to the decrease in the trading of production material.

Selling and distribution costs

Selling and distribution costs decreased by about RMB1.7 million, or about 23%, from about RMB7.2 million for three months ended 31 March 2007 to about RMB5.6 million for the three months ended 31 March 2008 despite a 5% increase in sales volume of corn starch and Co-products because the Group was able to negotiate for a larger proportion of sales with transportation costs being borne by customers, resulting in a reduction in transportation expenses for Jinzhou Yuancheng.

– 112 –

MANAGEMENT DISCUSSION AND ANALYSIS OF JINZHOU YUANCHENG

APPENDIX IV

Administrative expenses

Administrative expenses increased by about RMB1.3 million, or about 53%, from about RMB2.4 million for the three months ended 31 March 2007 to about RMB3.7 million for the three months ended 31 March 2008, due to the increase in property tax paid and social insurance paid.

Other expenses

Other expenses increased from about RMB0.4 million for the three months ended 31 March 2007 to about RMB1.9 million for the three months ended 31 March 2008 which was mainly due to increase in exchange loss.

Finance costs

Finance costs increased from about RMB6.8 million for the three months ended 31 March 2007 to about RMB8.2 million for the three months ended 31 March 2008 due to the increase in interest rate.

Profit for the period

Net profit increased by about RMB1.6 million, or about 16%, to about RMB11.1 million for the three months ended 31 March 2008 from about RMB9.5 million for the three months ended 31 March 2007, mainly due to increase in gross profit of corn starch and Co-products.

Liquidity, financial resources and capital structure

For the period ended 31 March 2008, Jinzhou Yuancheng obtained fundings by bank borrowings. The fundings were mainly utilised for working capital.

As at 31 March 2008, Jinzhou Yuancheng had net current liabilities of RMB49.4 million.

As at 31 March 2008, Jinzhou Yuancheng had a gearing ratio (calculated by dividing total interestbearing liabilities by total assets) of 34.06%.

As Jinzhou Yuancheng’s business transactions are principally denominated in Renminbi, the exposure to exchange rate is limited.

Charge on assets

As at 31 March 2008, Jinzhou Yuancheng did not pledge any of its assets.

Contingent liabilities

As at 31 March 2008, Jinzhou Yuancheng had no material contingent liabilities.

– 113 –

MANAGEMENT DISCUSSION AND ANALYSIS OF JINZHOU YUANCHENG

APPENDIX IV

Employee and remuneration policy

As at 31 March 2008, Jinzhou Yuancheng had approximately 380 employees with total staff costs for the period amounting to RMB3.3 million. Employees were remunerated with reference to their performance, experience and prevailing industrial practice. Remuneration packages comprised salary and year-end discretionary bonus based on market conditions and individual performance. The executive directors of Jinzhou Yuancheng continued to review employees’ contribution and to provide them with necessary incentives and flexibility for their better commitment and performance.

YEAR ENDED 31 DECEMBER 2006 AND 2007

Business and financial review

Revenue

Revenue of Jinzhou Yuancheng increased by about RMB93.1 million, or about 9%, from about RMB1,009.6 million for the year ended 31 December 2006 to about RMB1,102.7 million for the year ended 31 December 2007, mainly due to the increase in average unit selling price of corn starch and Coproducts. During the year ended 31 December 2007, revenue generated from the sales of corn starch and Co-products increased by about RMB47 million and RMB46 million respectively, representing an increase of about 6% and 18% respectively. The increase in revenue was mainly due to the increase in average selling prices of corn starch and Co-products by 8% and 23% respectively.

Cost of sales

Cost of sales increased by RMB101.0 million, or 12%, from about RMB872.5 million for the year ended 31 December 2006 to about RMB973.5 million for the year ended 31 December 2007 due to the increase in the unit cost of corn starch and Co-products.

Gross profit

Gross profit decreased by about RMB7.9 million, or about 6%, from about RMB137.1 million for the year ended 31 December 2006 to about RMB129.1 million for the year ended 31 December 2007 as the increase in average unit cost was greater than the increase in average selling prices of corn starch and Co-products.

Other income

Other income remained nearly the same for the years ended 31 December 2006 and 2007 at RMB11.4 million and RMB11.8 million respectively.

Selling and distribution costs

Selling and distribution costs increased by about RMB1.8 million, or about 6%, from about RMB32.0 million for the year ended 31 December 2006 to about RMB33.8 million for the year ended 31 December 2007, mainly due to increase in unit transportation cost.

– 114 –

MANAGEMENT DISCUSSION AND ANALYSIS OF JINZHOU YUANCHENG

APPENDIX IV

Administrative expenses

Administrative expenses increased by about RMB5.2 million, or about 68%, from about RMB7.7 million for the year 31 December 2006 to about RMB12.9 million for the year ended 31 December 2007, due to increase in land and property tax paid.

Other expenses

Other expenses increased from about RMB1.5 million for the year ended 31 December 2006 to about RMB2.1 million for the year ended 31 December 2007, as a result of increase in the exchange loss.

Finance costs

Finance costs increased from about RMB18.3 million for the year ended 31 December 2006 to about RMB20.8 million for the year ended 31 December 2007 due to the increase in interest rate despite of a drop in the outstanding balance of the total interest bearing bank borrowings.

Profit for the year

Net profit decreased by about RMB29.8 million, or about 34%, to about RMB57.9 million for the year ended 31 December 2007 from about RMB87.7 million for the year ended 31 December 2006 mainly due to decrease in gross profit amounted to RMB7.9 million, increase in operating expenses amounted to RMB7.6 million and increase in profit tax of RMB12.4 million due to the end of full tax exemption for Jinzhou Yuancheng which is now entitled to 50% tax relief starting from year 2007.

Liquidity, financial resources and capital structure

For the years ended 31 December 2006 and 2007, Jinzhou Yuancheng obtained fundings by bank borrowings. The fundings were mainly utilised for working capital.

As at 31 December 2006 and 2007, Jinzhou Yuancheng had net current liabilities of RMB149.1 million and RMB19.1 million respectively.

As at 31 December 2006 and 2007, Jinzhou Yuancheng had a gearing ratio (calculated by dividing total interest-bearing liabilities by total assets) of 41.81% and 34.53%, respectively. The decrease in gearing ratio was mainly due to the decrease of bank loan.

As Jinzhou Yuancheng’s business transactions are principally denominated in Renminbi, the exposure to exchange rate is limited.

Charge on assets

As at 31 December 2006, prepaid land premiums with a carrying value of about RMB32.8 million were pledged to secure general banking facilities. As at 31 December 2007, Jinzhou Yuancheng did not pledge any of its assets.

– 115 –

MANAGEMENT DISCUSSION AND ANALYSIS OF JINZHOU YUANCHENG

APPENDIX IV

Contingent liabilities

As at 31 December 2006 and 2007, Jinzhou Yuancheng had no material contingent liabilities.

Employee and remuneration policy

As at 31 December 2006 and 2007, Jinzhou Yuancheng had approximately 390 employees with total staff costs for the year amounting to RMB6.5 million and RMB7.0 million respectively. Employees were remunerated on the basis of their performance, experience and prevailing industrial practice. Remuneration packages comprised salary and year-end discretionary bonus based on market conditions and individual performance. The executive directors of Jinzhou Yuancheng continued to review employees’ contribution and to provide them with necessary incentives and flexibility for their better commitment and performance.

YEAR ENDED 31 DECEMBER 2005 AND 2006

Business and financial review

Revenue

Revenue of Jinzhou Yuancheng increased by about RMB57.5 million, or about 6%, from about RMB952.0 million for the year ended 31 December 2005 to about RMB1,009.6 million for the year ended 31 December 2006, mainly due to the increase in average unit selling price of corn starch. During the year ended 31 December 2006, revenue generated from the sales of corn starch increased by about RMB63 million, representing an increase of about 9%. The increase in revenue was mainly due to the increase in average selling prices of corn starch by 12%.

Cost of sales

Cost of sales increased by RMB70.7 million, or 9%, from about RMB801.8 million for the year ended 31 December 2005 to about RMB872.5 million for the year ended 31 December 2006 due to the increase in the unit cost of corn starch and Co-products.

Gross profit

Gross profit decreased by about RMB13.2 million, or about 9%, from about RMB150.2 million for the year ended 31 December 2005 to about RMB137.1 million for the year ended 31 December 2006, mainly due to the increase in average unit cost was greater than the increase in average selling prices of corn starch and Co-products.

Other income

Other income increased by about RMB7.6 million, or about 201%, from about RMB3.8 million for the year ended 31 December 2005 to about RMB11.4 million for the year ended 31 December 2006, mainly due to government grants in the amount of RMB7.4 million received.

– 116 –

MANAGEMENT DISCUSSION AND ANALYSIS OF JINZHOU YUANCHENG

APPENDIX IV

Selling and distribution costs

Selling and distribution costs decreased by about RMB17.4 million, or about 35%, from about RMB49.4 million for the year ended 31 December 2005 to about RMB32.0 million for the year ended 31 December 2006 was mainly attributable to decrease in transportation expenses amounted to about RMB16.0 million as a certain amount of transportation cost was borne by customers due to change in shipment terms.

Administrative expenses

Administrative expenses remained nearly the same for the years ended 31 December 2005 and 2006.

Other expenses

Other expenses increased from about RMB48,000 for the year ended 31 December 2005 to about RMB1.5 million for the year ended 31 December 2006 as a result of increase in exchange loss recorded.

Finance costs

Finance costs increased from about RMB10.9 million for the year ended 31 December 2005 to about RMB18.3 million for the year ended 31 December 2006 due to the increase in interest rate and bank borrowings of about RMB180 million.

Profit for the year

Net profit increased by about RMB3.2 million, or about 4%, to about RMB87.7 million for the year ended 31 December 2006 from about RMB84.5 million for the year ended 31 December 2005 mainly due to the abovementioned government grants received.

Liquidity, financial resources and capital structure

For the year ended 31 December 2005, Jinzhou Yuancheng obtained fundings by unsecured and interest free loan from holding company and bank borrowings. For the year ended 31 December 2006, Jinzhou Yuancheng obtained fundings by bank borrowings. The fundings were mainly utilised for working capital and repayment of loan from holding company amounted to around RMB262 million.

As at 31 December 2005 and 2006, Jinzhou Yuancheng had net current liabilities of RMB287.5 million and RMB149.1 million respectively.

As at 31 December 2005 and 2006, Jinzhou Yuancheng had a gearing ratio (calculated by dividing total interest-bearing liabilities by total assets) of 21.60% and 41.81%, respectively. The increase in gearing ratio was mainly due to the increase of bank loan.

As Jinzhou Yuancheng’s business transactions are principally denominated in Renminbi, the exposure to exchange rate is limited.

– 117 –

MANAGEMENT DISCUSSION AND ANALYSIS OF JINZHOU YUANCHENG

APPENDIX IV

Charge on assets

As at 31 December 2005 and 2006, prepaid land premiums with a carrying value of about RMB32.4 million and RMB32.8 million respectively were pledged to secure general banking facilities.

Contingent liabilities

As at 31 December 2005 and 2006, Jinzhou Yuancheng had no material contingent liabilities.

Employee and remuneration policy

As at 31 December 2005 and 2006, Jinzhou Yuancheng had approximately 400 and 390 employees with total staff costs for the year amounting to RMB5.3 million and RMB6.5 million respectively. Employees were remunerated on the basis of their performance, experience and prevailing industrial practice. Remuneration packages comprised salary and year-end discretionary bonus based on market conditions and individual performance. The executive directors of Jinzhou Yuancheng continued to review employees’ contribution and to provide them with necessary incentives and flexibility for their better commitment and performance.

– 118 –

VALUATION REPORT

APPENDIX V

==> picture [292 x 75] intentionally omitted <==

25 July 2008

The Directors Global Bio-chem Technology Group Company Limited Unit 1104, Admiralty Centre Tower I, 18 Harcourt Road Hong Kong

The Directors Global Sweeteners Holdings Limited Unit 2403, Admiralty Centre Tower II, 18 Harcourt Road Hong Kong

Dear Sirs/Madams,

In accordance with the instructions from Global Bio-chem Technology Group Company Limited and Global Sweeteners Holdings Limited, we have completed a valuation of the fair value of 100% controlling, non-marketable equity interest of Jinzhou Yuancheng Bio-chem Technology Co., Ltd. (the ‘‘Company’’) as at 30 May 2008 (the ‘‘Valuation Date’’). Unless otherwise stated, terms used in this valuation report have the same meanings as those defined in the circular to the shareholder date 25 July 2008 (the ‘‘Circular’’) of he above companies.

We confirm that we have made relevant enquiries and obtained such information as we consider necessary for the purpose of providing our opinion of the fair value. We understand that this valuation will be used by your companies as a reference for the Transaction in relation to the Company, details of which are set out in the letter from the Board (the ‘‘Letter from the Board’’) in the Circular, of which this letter forms part. Our analysis was conducted for this purpose only and this report should not be used for other purposes.

INTRODUCTION

Jinzhou Yuancheng Bio-chem Technology Co., Ltd., which principally engaged in the manufacturing and sale of corn starch, is a sino-foreign equity joint venture enterprise established in the People’s Republic of China (the ‘‘PRC’’) on 6 August 2001.

Corn starch (also called cornflour), is the starch of the corn. It is also ground from the endosperm, or white heart, of the corn kernel. During the growing season of corn, the green leaves collect energy from the sun and transports the energy as sugar solution to the starch storage cells. The sugar is then converted to starch in the form of tiny granules occupying most of the cell interior. The conversion of sugar to starch takes place by means of enzymes.[1]

Corn starch is processed and refined from the kernels of corn by using a series of steeping, separation and grinding processes, and is commonly used as a thickening agent in sauces, and making corn syrup and sugars.

1 The International Starch Institute, http://www.starch.dk

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Besides using corn starch as a raw material in food preparation, it is also found in the production of starch sugar, amino acid and lactic acid. With the rapid development in the corn starch industry, it is now commonly consumed in the medical industry, packaging industry and textile industry. The diversification of corn starch usage has greatly increases the demand and therefore accelerated the growth in the corn starch industry.

Figure 1 — Corn processing chain in a China corn group and its targeted industries

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Source: CCM International Ltd

BASIS OF VALUATION

We have valued the Company on the basis of fair value.

Fair Value

According to Hong Kong Financial Reporting Standard, fair value is the amount for which an asset could be exchanged, or a fair value liability settled, between knowledgeable, willing parties in an arm’s length transaction.

For the purpose of this valuation, the term fair value is similar and/or interchangeable with the valuation standards or definitions below and will be used throughout this valuation report.

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APPENDIX V

Market Value

According to The Hong Kong Business Valuation Forum — Business Valuation Standards, market value is defined as the estimated amount for which an asset (a property) should exchange on the date of valuation between a willing buyer and willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.

Fair Market Value

The International Valuation Glossary defined fair market value as the amount at which property would change hands between a willing buyer and a willing seller, when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts.

Our valuation has been prepared in accordance with the HKIS Valuation Standards on Traderelated Business Assets and Business Enterprise (First Edition 2004) published by the Hong Kong Institute of Surveyors and the Business Valuation Standards (First Printed 2005) published by the Hong Kong Business Valuation Forum, which are generally accepted valuation standards followed by relevant professional practitioners in Hong Kong. These standards contain detailed guidelines on the basis and valuation approaches in valuing assets used in the operation of a trade or business and business enterprises.

BUSINESS VALUATION

Premise of Value

Although valuation is a range concept, current valuation theory suggests that there are three basic ‘‘levels’’ of value applicable to a business or business interest. The levels of value are respectively:

Controlling interest: the value of the enterprise as a whole
As if freely tradable minority interest: the value of a minority interest, lacking control, but enjoying the benefit of market liquidity
Non-marketable minority interest: the value of a minority interest, lacking both control and market liquidity

This valuation is prepared on a 100% controlling and non-marketable interest basis.

ECONOMIC OUTLOOK AND INDUSTRY ANALYSIS

In conjunction with the preparation of this appraisal opinion, we have reviewed and analysed the current economic conditions in China and how the corn starch industry may be impacted.

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APPENDIX V

The National Economy Outlook

	2005	2006	2007	2008
China	Actual	Actual	Actual	Forecast
GDP Growth Rate2 (%)	10.4	10.7	11.4	10.0
Inflation Rate (%)	3.9	4.0	4.8	3.0

The Chinese economy attained double digit growth rates of 10.7% and 11.4% in 2006 and 2007 respectively. In 2007, the GDP growth rate of 11.4% was contributed by 4.4% points of domestic consumption, 4.3% points of investment and 2.7% points of net exports[3] . However, the real GDP of China is forecast to slow slightly but will remain impressive, easing gradually to 10.0% in 2008.

Due to the weakened global demand for exports and imposition of government measures to curb inflation and prevent overheating of the economy, the economic expansion of China is expected to cool. Further, in order to mitigate the uncertainties of the global and financial markets, the Chinese government increases the interest rate and initiates the currency appreciation.

In 2008, the government is anticipated to boost the contribution of private consumption to overall growth. Government spending is expected to increase as the government focuses on development needs in rural areas and in central and western provinces in an attempt to prevent widening inequalities of economic development within the country. Service industries will be boosted by the 2008 Olympic Games in Beijing and the 2010 Shanghai World Expo. Having said the above, investment spending growth will slow gradually from 2007 though, partly owing to higher interest rates.

In view of the above factors, the Chinese economy is forecast to have a GDP growth rate of 10.0% and an inflation rate of 3.0% or even higher in 2008, heading toward stabilisation in future years. As the Chinese economy grows stably and the corn starch industry continues to expand, the domestic demand of corn and its by-products would sustain further growth in the near future.

2 National Bureau of Statistics of China

3 Shanghai Daily, January 31, 2008

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Industry Analysis

The Corn and the Corn Starch Industry in China

China is a major corn producing country in the world, accounting for 18% of the total world output in 2005[4] . The corn industry has been growing steadily from 2003, but the industry profit has tightened as the supply meets its demand. According to CCM International, demand for corn will reach 144 million tonnes in 2008, in which 38.7 million tonnes in corn processing industry (Figure 3). Figure 3 — China corn’s supply and demand, industrial consumption from 2000 to 2010 (Unit: million tonnes)

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Source: CCM International Ltd

As the corn industry became more stable in the past decade, attention has been shifted to the corn processing industry and attracted huge growth in the industry. The corn starch sector, one of the main sectors in the corn processing industry, has skillfully developed in China, but competitions became fiercer and merger and recombination occurred frequently. The production of corn starch in China originated in the 1950s and the producers are largely located in the Northern China. The corn starch and modified starch market prices in April 2008 are RMB2,270 and RMB3,700 per tonne respectively[5] . It is shown that the industrial consumption of corn has grown more than doubled in the past 5 years.

In corn processing field, most corn is demanded to produce modified starch, starch sugar, polyol, lactic acid and amino acid, etc. (Figure 4). The competitiveness of Chinese corn starch producers has been greatly improved in the past few years and has aroused the world’s attention.

4 Soyatech, http://www.soyatech.com/print_news.php?id=7997

5 CCM International, Corn Products China News 2008.

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Figure 4 — Output of main corn processing products in China and their demand for corn in 2006 (Unit: million tonne)

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12
10
8
6
4
2
0
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Source: CCM International Ltd

According to China Starch Industry Association, it is expected that corn starch consumption will rise to 25.53 million tonnes in 2010, with a total demand of 162 million tonnes of corn in corn processing industry. Figure 5 shows the projected China’s corn consumption in 2010.

Figure 5 — China’s corn consumption in 2010 (Unit: million tonne)

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120
100
80
60
40
20
0
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Source: China Starch Industry Association

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APPENDIX V

New Government Policy Impacting the Corn Processing Industry

Although China corn’s output is expected to increase to 149 million tonnes in 2008 and over 150 million tonnes in 2010, the Chinese government fears that the increasingly corn demand from corn processing industry will lead to supply shortage of corn in food industry in the future, as corn processing industry’s demand for corn is predicted to exceed 53 million tonnes in 2010, which roughly accounting for 1/3 of China’s total corn yield[6] .

In order to ensure food supply, the government is making an effort to restrict corn consumption ratio in corn industry within 26% of total corn consumption in China, by shutting down small-scale and unqualified corn processing enterprises, laying strict standard for launch of new corn processing enterprises in China. In addition, the restrictions could allow the government to cool down the overheated economy with high inflation with stable food prices and to ensure food safety as it has been a major global focus of Chinese exports.

Hence, it is predicted that domestic corn processing industry will grow at a slowdown speed in the next few years, due to China’s food supply priority policy. The competition is likely to be less intense in te near future with medium to large sized corporations and high requirements for corn processed products.

ASSUMPTIONS

Our investigation included discussions with management of the Company in relation to the history and nature of the business, review and analysis of relevant financial information and financial statements provided. We have assumed that such information and representation provided to us are true and accurate.

Owing to the changing environments in which the business is operating and the market where the business is provided, a number of assumptions have to be established in order to sufficiently support our opinion of fair value. The major assumptions adopted in this valuation are:

there will be no material changes in the existing political, legal, fiscal, foreign trade and economic conditions in which the business is carried on or intended to carry on;
there will be no material changes in the current taxation law in which the business is carried on or intended to carry on, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;
there will be no material changes in interest rates or foreign currency exchange rates from those currently prevailing;
all relevant legal approvals and business certificates or licenses to operate the businesses should have been formally obtained; and
competent management, key personnel, and technical staff will be retained to support the ongoing operation and development.

6 CCM International, Corn Products China News 2008.

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APPENDIX V

METHODOLOGIES CONSIDERED BUT REJECTED

In formulating an opinion of the fair value of the Company, we have considered the following valuation methodologies.

The Asset Approach

The Asset Approach is based on the so-called economic principle of substitution; it essentially measures what is the net value of the assets today and how much it would cost to replace those assets. One of the replacement value, liquidation value or book value is used to estimate the fair value of the business enterprise or its assets.

We consider the asset approach to be inappropriate because our analysis and investigation indicated that the business value of the Company is driven by the ability of the collection of assets in place to generate a benefit stream that is more important in terms of valuation than the value in the underlying assets. In other words, the value of the individual assets and their associated liabilities are less important than the manner in which management has utilized them.

The Income Approach

The Income Approach is the generally accepted way of determining a value indication of a business/project, business ownership interest, security, or intangible asset using one or more methods that convert anticipated economic benefits into a present single amount.

We have considered but decided against the income approach because this involves more assumptions and estimates while not all of the assumptions and estimates can be easily quantified or obtained. After taking into account the sufficient market guideline companies adopted in the Market Approach, we consider the Market Approach to be the most appropriate.

METHODOLOGY APPLIED

The Market Approach

The Market Approach develops a value using the principle of substitution. This simply means that if one thing is similar to another and could be used for the other, then they must be equal. Furthermore, the price of two alike and similar items should approximate one another. For the market approach to be used, there must be a sufficient number of comparable companies to make comparisons, or, alternatively, the industry composition must be such that meaningful comparisons can be made.

Since the objective of this report is to arrive at an opinion of the fair value of the business of the Company, a logical starting point is value determined and tested in the marketplace.

Guideline Public Company Method

The premise behind the Guideline Public Company Method is that prices of publicly traded stocks in the same or a similar industry provide objective evidence as to values at which investors are willing to buy and sell interest of companies in that industry.

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In applying the Guideline Public Company Method, we compute a value multiple for various benefit streams for each guideline public company. The appropriate value multiple is determined and adjusted for the unique aspects of the subject company being valued. This multiple is then applied to the subject company being valued to arrive at an estimate of value for the appropriate ownership interest. A value multiple represents a ratio that uses a comparative company’s market value of invested capital (‘‘MVIC’’) as the numerator and a measure of the company’s operating results (or financial position) as the denominator. One of the most preferable value multiples for valuing controlling interests is invested capital multiple (MVIC/EBITDA), whereby a company’s MVIC (which includes common and preferred equity plus interest-bearing debt) is divided by its earnings before interest, taxes, depreciation and amortization (‘‘EBITDA’’). MVIC multiple is computed on a total-company basis, instead of a per-share basis. Once we select a number of guideline public companies and adjust their financial information, the next step is to determine and compute the appropriate value multiples. The process of computing the value multiple in this case consists of the following procedures:

Determination of the appropriate MVIC for each guideline public company. This represents the numerator of the multiple; and
Determination of the measure of operating results such as EBITDA for the appropriate time period. This represents the denominator of the multiple.

The application of this method depends on the selection of publicly traded guideline companies that are similar enough to the underlying business of the Company so as to provide a meaningful comparison. We exercise due care in the selection of guideline public companies by using reasonable criteria in deciding whether or not a particular guideline public company is relevant. When difference is so large such that meaningful comparison cannot be made, we would then question the use of this method.

The following is a discussion of the search for guideline publicly traded companies as applied to this valuation.

Selection of Guideline Public Companies

We searched for similar publicly traded companies that are principally engaged in the manufacture and sales of corn starch and corn based by-products. We have selected the below five guideline public companies for the purpose of this valuation:

	Ticker			MVIC/
Company	Symbol	MVIC	EBITDA	EBITDA
		(in million)	(in million)
Global Bio-Chem Technology	809.HK	HKD12,947.42	HKD1,738.80	7.45
Group Co. Ltd.
China Starch Holdings Ltd.	3838.HK	RMB2,321.63	RMB269.60	8.61
Xiwang Sugar Holdings Co.	2088.HK	RMB3,276.81	RMB483.10	6.78
Ltd.
China Sun Bio-Chem	CSBT.SP	RMB1,947.19	RMB491.50	3.96
Technology Group Co. Ltd.
Luzhou Bio-Chem	LUBC.SP	RMB851.06	RMB153.00	5.56
Technology Ltd.

Note: Figures above are calculated from the companies’ latest annual report.

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APPENDIX V

Global Bio-Chem Technology Group Co. Ltd. (00809.HK) is one of the largest corn refiners in Asia. It manufactures corn refined and corn based biochemical products in China, including cornstarch, corn gluten, corn oil, feed, modified starch, corn sweeteners, and amino acids.

China Starch Holdings Ltd. (03838.HK) primarily engaged in manufacture and sale of cornstarch and corn-refined by-products. It also manufactures Lysine and Electricity and steam. It operations are located in PRC.

Xiwang Sugar Holdings Co. Ltd. (02088.HK) is engages in the manufacture, distribution and sale of corn refined products and corn-based biochemical products. These products include corn gluten meal, corn germ, animal feed, corn starch paste, crystallized glucose and crystallized fructose.

China Sun Bio-Chem Technology Group Co. Ltd. (CSBT.SP) is one of the top corn starch manufacturers in China. It produces more than 200 varieties of modified starch, corn starch and other corn based by-products, and non-fuel ethanol products, which involves the development, manufacturing and sales of these products.

Luzhou Bio-Chem Technology Ltd. (LUBC.SP) is a Singapore-incorporated company with operations in the PRC. It engaged in the production and distribution of sweeteners, corn starch and by-products of corn starch. It also provides engineering services, construction of industrial machinery and equipment) to several industrial, including the corn starch industry.

We considered the above companies are appropriate guideline public companies as all of them are engaged in the similar business lines as the Company and operates in the South East Asia region.

Historical Financial Information Base

We used the EBITDA of the Company’s audited financial statements for the fiscal year ended 31 December 2007 provided by management, multiplied the median multiples of the five selected guideline companies to estimate the fair value. We also excluded the amount of interest-bearing debt of RMB324,534,000 in determining the fair value as the controlling shareholder is liable for the debt of the company.

Discount for Lack of Marketability

Because private companies generally do not have a readily market for their stock, a discount for lack of marketability/illiquidity is applicable in this valuation. The discount for lack of marketability/illiquidity recognizes the fact that an investment is worth more if the interest is readily marketable, or conversely, worth less if it is not.

In selecting the appropriate discount for lack of marketability/illiquidity, we considered the length of time and effort expended by management necessary to sell a controlling interest in the company. This typically would take at least three to nine months if a transaction could be consummated at all. A controlling interest does enjoy the benefit of controlling the cash flow

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APPENDIX V

stream of the company during this time period and we considered this fact as well. Finally, we considered the expenses that are typically incurred to sell a business which are substantial and include legal fees, accounting fees, and intermediary fees.

After taking into account all of the factors mentioned above, we selected a 15% marketability discount.

Accordingly, the fair value of the Company is computed as follows:

Market Approach

Fundamental Financial Variable (EBITDA) Median MVIC multiple of guideline public companies Less: Interest-bearing debt Less: Discount for Lack of Marketability (15%) Fair Value of the Company Fair Value of the Company (rounded) (Some amounts may not foot due to rounding)	RMB128,732,000 6.7829 RMB873,173,391 (324,534,000) RMB548,639,391 (82,295,909) RMB466,343,482 RMB466,343,000

LIMITING CONDITIONS

We have made no investigation of and assumed no responsibility for the title to or any liabilities against the Company.

The opinions expressed in this report have been based on the information supplied to us by the Company and their staff, as well as from various institutes and government bureaus without verification. All information and advice related to this valuation are provided by the company management. Reader of this report may perform due diligence themselves. We have exercised all due care in reviewing the supplied information. Although we have compared key supplied data with expected values, the accuracy of the results and conclusions from the review are reliant on the accuracy of the supplied data. We have relied on this information and have no reason to believe that any material facts have been withheld, or that a more detailed analysis may reveal additional information. We do not accept responsibility for any errors or omissions in the supplied information and do not accept any consequential liability arising from commercial decision or actions resulting from them.

This valuation reflects facts and conditions existing at the Valuation Date. Subsequent events have not been considered, and we have no obligation to update our report for such events and conditions.

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APPENDIX V

SYNTHESIS AND RECONCILIATION

Because valuations cannot be made on the basis of a prescribed formula, there is no means whereby the various applicable factors in a particular case can be assigned mathematical weights in deriving the fair value. For this reason, no useful purpose is served by taking an average of several factors (for example, book value, capitalized earnings and capitalized dividends) and basing the valuation on the result. Such a process excludes active consideration of other pertinent factors, and the end result cannot be supported by a realistic application of the significant facts in the case except by mere chance.

The following comparative data summarizes the various methods that we have accepted or considered and rejected, along with their respective final values. Each method is rated relative to the applicability of the method relative to the facts and circumstances, and strengths/weaknesses are discussed.

Asset Approach

Asset Approach
Book Value Method, Liquidation or Replacement Cost	N/A
Application	Rejected
Income Approach
Discounted Cash Flow Method	N/A
Application	Rejected
Market Approach
Guideline Public Company Method	RMB466,343,000
Application	Accepted

Based on the above analysis, the market approach should be the most applicable and appropriate to value the fair value of the business of the Company. The market approach is applied with reference to market multiples of the five selected guideline public companies engaged in the similar lines of business. We took the market approach to conclude our valuation of RMB466,343,000.

CONCLUSION OF VALUE

Based on the investigation and analysis stated above and on the valuation method employed, in our opinion, the fair value of 100% controlling, non-marketable equity interest of the Company as of the Valuation Date is reasonably stated as follows:

RENMINBI FOUR HUNDRED AND SIXTY-SIX MILLION THREE HUNDRED AND FORTYTHREE THOUSAND ONLY (RMB466,343,000)

The opinion of value was based on generally accepted valuation procedures and practices that rely extensively on the use of numerous assumptions and consideration of many uncertainties, not all of which can be easily quantified or ascertained.

We hereby certify that we have neither present nor prospective interests in the Company and have neither personal interest nor bias with respect to the parties involved.

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APPENDIX V

This valuation report is issued subject to our general service conditions.

Yours faithfully, For and on behalf of

GREATER CHINA APPRAISAL LIMITED

K. K. Ip Registered Business Valuer of HKBVF MRICS, MHKIS and RPS (GP) Managing Director

Samuel Y.C. Chan MBA, CVA, CM&AA Director Head of Business Valuation

Analysed and reported by Carol Tso

Note:

Mr. K.K. Ip, a Chartered Valuation Surveyor of The Royal Institution of Chartered Surveyors (RICS), Member of Surveyors Registration Board of Hong Kong, Member (General Practice Division) of The Hong Kong Institute of Surveyors (HKIS) and Registered Business Valuer of The Hong Kong Business Valuation Forum (HKBVF), has substantial experience in property, plant and machinery, business enterprise and intellectual property valuations for various purposes in Greater China Region since 1992.

Mr. Samuel Y.C. Chan, MBA, Certified Valuation Analyst of The International Association of Consultants, Valuators and Analysts (IACVA) and Certified Merger & Acquisition Advisor, has been conducting business enterprise and intellectual property valuations for various purposes since 2004. He also spends a significant portion of his time in valuation of financial instruments including convertible bonds, preference shares, swaps, corporate guarantees and employee share options for private and public companies in China, Hong Kong, Taiwan, Japan, Singapore and the United States.

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GENERAL INFORMATION

APPENDIX VI

1. RESPONSIBILITY STATEMENT

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

2. DISCLOSURE OF INTERESTS

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

		Company/Name			Approximate
		of associated		Number and class	percentage of
Name	of Director	corporation	Capacity	of securities	shareholding
				(Note 1)
Kong	Zhanpeng	GBT	Beneficial owner	13,040,000	0.56%
				ordinary shares of
				HK$0.10 each (L)
		GBT	Interest of a controlled	172,800,000	7.45%
			corporation	ordinary shares of
				HK$0.10 each (L)
				(Note 2)

Notes:

The letter ‘‘L’’ represents the Director’s interests in the shares and underlying shares of the Company or its associated corporations.
These shares in GBT are held by Hartington Profits Limited, a company incorporated in the British Virgin Islands and the entire issued share capital of which is beneficially owned by Mr Kong Zhanpeng.

Save as disclosed herein, as at the Latest Practicable Date, none of the Directors and chief executive of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (a) which were required to be notified to the Company and the Stock Exchange (including interests and short positions which they were taken or deemed to have under such provisions of SFO); or (b) which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange.

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APPENDIX VI

Save for Mr. Kong Zhanpeng, an executive Director, by virtue of his interest in the shares of GBT, none of the Directors had any interest, direct or indirect, in any assets which have been since 31 December 2007, being the date to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or leased to any member of the Enlarged Group, or are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group as at the Latest Practicable Date.

As at the Latest Practicable Date, Mr. Kong Zhanpeng, an executive Director, was interested in transactions as contemplated under the following agreements with the Enlarged Group by virtue of his interest in the shares of GBT:

(1) sorbitol master purchase agreement dated 7 May 2007 and entered into between CDNP as supplier and the GBT Group for the supply of sorbitol by the Group;
(2) utilities master supply agreement dated 3 September 2007 and entered into between the GBT Group as supplier and the Group as purchaser for the provision of water, electricity, steam and utilities services by the GBT Group;
(3) utilities master supply agreement dated 3 September 2007 and entered into between the GBT Group as supplier and CDNP as purchaser for the provision of water, electricity, steam and utilities services by the GBT Group;
(4) corn starch master purchase agreement dated 3 September 2007 and entered into between the GBT Group as supplier and the Group as purchaser for the purchase of corn starch by the Group; and
(5) corn sweeteners master sales agreement dated 3 September 2007 and entered into between the Group as supplier and the GBT Group as purchaser for the supply of corn sweeteners by the Group.

Please refer to the section headed ‘‘Continuing Connected Transactions’’ in the prospectus of the Company dated 10 September 2007 for further details. Save as the aforesaid, none of the Directors was materially interested in any contract or arrangement subsisting as at the date thereof and which was significant in relation to the business of the Enlarged Group as at the Latest Practicable Date.

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APPENDIX VI

3. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, so far as was known to any Directors or chief executive of the Company, the persons (other than a Director or chief executive of the Company) (a) who had an interest or short position in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO; or (b) who were, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at the general meetings of the Company or any other members of the Enlarged Group, were as follows:

				Approximate
	Company/Name		Number and	percentage of
Name of Shareholder	of Group member	Capacity	class of securities	shareholding
			(Note 1)
Global Corn Bio-chem	The Company	Beneficial owner	700,000,000	67%
			Shares of
			HK$0.10 each (L)
GBT	The Company	Interest of a controlled	700,000,000	67%
		corporation	Shares of
		(Note 2)	HK$0.10 each (L)
Global Corn	Jinzhou	Beneficial owner	Registered capital	70%
	Yuancheng		for the sum of
			US$8,861,580
Dacheng Industrial	Jinzhou	Beneficial owner	Registered capital	30%
	Yuancheng		for the sum of
			US$3,797,820

Notes:

The letter ‘‘L’’ denotes the Shareholders’ long position in the share capital of the Company.
These Shares are registered in name of Global Corn Bio-chem, which is a wholly-owned subsidiary of GBT. GBT is deemed to be interested in all the Shares in which Global Corn Bio-chem is interested by virtue of the SFO.

Save as disclosed herein, there was no person (other than the Directors or chief executive of the Company) known to any Directors or chief executive of the Company, who, as at the Latest Practicable Date, had an interest or short position in the Shares and underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at the general meetings of the Company or any other member of the Enlarged Group.

4. SERVICE AGREEMENTS

Each of Mr. Kong Zhanpeng, Mr. Zhang Fusheng, Ms. Wang Guifeng, Ms. Ge Yanping, Mr. Zhang Fazheng, all being executive Directors, has entered into a service contract with the Company for an initial fixed term of three years commencing from 1 September 2007 (1 June 2008 for Mr. Zhang

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APPENDIX VI

Fazheng) renewable automatically for successive terms of one year each commencing from the next day after the expiry of the then current term of the service contracts until terminated by at least three months’ notice in writing served by either party to the other.

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

5. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Company or any member of the Enlarged Group within the two years preceding the date of this prospectus and are or may be material:

(a) an equity transfer agreement dated 27 March 2007 made between GSIL as transferor and Global Sweeteners (China) Limited as transferee for the transfer by GSIL of its 100% interests in the registered capital of Changchun Dihao Crystal Sugar Industry Development Co., Ltd to Global Sweeteners (China) Limited at a cash consideration of US$3.2 million;
(b) an equity transfer agreement dated 28 March 2007 made between GSIL as transferor and Global Sweeteners (China) Limited as transferee for the transfer by GSIL of its 100% interests in the registered capital of Shanghai Hao Cheng Food Development Co., Ltd to Global Sweeteners (China) Limited at a cash consideration of US$2,668,000;
(c) an equity transfer agreement dated 2 April 2007 and a supplementary confirmation dated 6 April 2007 both made between Dacheng Industrial as transferor and Eternal Win Investment Limited as transferee for the transfer by Dacheng Industrial of its 25% interest in the registered capital of Changchun Dihao Foodstuff Development Co., Ltd at a cash consideration of RMB20.25 million, subject to adjustment by reference to the valuation of Changchun Dihao Foodstuff Development Co., Ltd as appraised by valuers. The consideration was confirmed and agreed by Changchun Dihao Foodstuff Development Co., Ltd and Dacheng Industrial to be HK$57.8 million under the supplementary confirmation;
(d) a joint venture agreement dated 2 April 2007 made between GSIL and Eternal Win Investment Limited in respect of the joint investments by them in Changchun Dihao Foodstuff Development Co., Ltd;
(e) an agreement dated 10 August 2007 made between Global Corn Bio-chem as vendor and GSIL as purchaser for the acquisition by GSIL of the entire issued share capital of Eternal Win Investment Limited at a consideration of HK$180,338,816, which is settled by the allotment and issue, credited as fully paid, 99 shares of US$1 each in the share capital of GSIL to Global Corn Bio-chem;
(f) an agreement dated 10 August 2007 made between GSIL as vendor and Global Sweeteners (China) Limited as purchaser for the acquisition by Global Sweeteners (China) Limited of the entire issued share capital of Eternal Win Investment Limited, in consideration of and in

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exchange for the allotment and issue, credited as fully paid, one share of US$1 in the share capital of Global Sweeteners (China) Limited to Global Corn Bio-chem (as directed by GSIL);

(g) an equity transfer agreement dated 10 August 2007 made between GSIL as transferor and Global Sweeteners (China) Limited as transferee for the transfer by GSIL of its 75% interests in the registered capital of Changchun Dihao Foodstuff Development Co., Ltd to Global Sweeteners (China) Limited at a cash consideration of RMB60.75 million;
(h) a joint venture agreement dated 10 August 2007 made between Eternal Win Investment Limited and Global Sweeteners (China) Limited in respect of the joint investments by them in Changchun Dihao Foodstuff Development Co., Ltd;
(i) an agreement dated 15 August 2007 made between GSIL as vendor and Global Sweeteners (China) Limited as purchaser for the acquisition by Global Sweeteners (China) Limited of 102 shares of US$1 each in the share capital Global-Nikken (Hong Kong) Company Limited at a cash consideration of HK$47,274,450;
(j) a deed of novation dated 15 August 2007 made between GSIL, Global Sweeteners (China) Limited, GBT and Mitsui & Co. (H.K.) Ltd, Mitsui & Co., Ltd. and Nikken Fine Chemicals Co., Ltd. for, among other matters, (i) the assignment and novation of all GSIL’ rights, interests, benefit, liabilities, obligations and undertakings of and under the Joint Venture Structure Agreement dated 9 February 2004 entered into among GBT, GSIL, Mitsui & Co. (H.K.) Ltd., Mitsui & Co., Ltd. and Nikken Fine Chemicals Co., Ltd., for the joint investment of Gobal-Nikken (H.K.) Company Limited and Changchun Dacheng Nikken Polyols Co., Ltd. to Global Sweeteners (China) Limited with effect from 15 August 2007; and (ii) the release and discharge of GSIL from all its liabilities, obligations and undertakings under the Joint Venture Structure Agreement with effect from 15 August 2007;
(k) an agreement dated 24 August 2007 made between Global Corn Bio-chem Company Limited as vendor and the Company as purchaser for the acquisition by the Company of the entire issued share capital of each of GSIL and Global Sweeteners (China) Limited in consideration of (i) the allotment and issue, credited as fully paid, of 1 million new Shares to Global Corn Bio-chem Company Limited and (ii) the crediting as fully paid at par the 1 million nil-paid Shares held by Global Corn Bio-chem Company Limited;
(l) a deed of indemnity dated 7 September 2007 executed by GBT and Global Corn Biochem in favour of the Company for itself and as trustee for each member of the GSIL Group stated therein containing the indemnities in respect of estate duty, taxation and other liabilities of the GSIL Group referred to in paragraph headed ‘‘Estate duty, tax and other indemnities’’ of this Appendix;
(m) a conditional underwriting agreement dated 7 September 2007 entered into among the Company, the executive Directors, the Global Corn Bio-chem, GBT, the placing underwriters and the public offer underwriters;
(n) an agreement dated 8 January 2008 made between Global Sweeteners (China) Limited as purchaser and Mitsui & Co. (H.K.) Ltd., Mitsui Co., Ltd. and Nikken Fine Chemicals Co., Ltd. as vendors for the acquisition by Global Sweeteners (China) Limited of an aggregate of 49% of the Entire issued share capital in Global-Nikken (H.K.) Company Limited at an aggregate cash consideration of US$2,450,000; and

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APPENDIX VI

(o) the S&P Agreement.

6. COMPETING INTEREST

Mr. Kong Zhanpeng, an executive Director, is interested in approximately 7.5% of the issued share capital of GBT through his interest in Hartington Profits Limited. The GBT Group is engaged in, among other things, the production and sale of corn starch and Co-Products (the ‘‘Excluded Business’’). Pursuant to a non-compete undertaking given by GBT and Global Corn Bio-chem dated 3 September 2007 in favour of the Group, the GBT Group is restricted from engaging in any business that may compete with the business of the Group from time to time. As part of the S&P Agreement, GSIL will deliver the Waiver to GBT and Global Corn Bio-chem to the effect that the GBT Group may continue to engage in the Excluded Business notwithstanding the provision of the non-compete undertaking. As Jinzhou Yuancheng will become a wholly owned subsidiary of the Company and will also be engaged in the production and sale of corn starch and Co-Products, the Excluded Business would compete, or is likely to compete, either directly or indirectly, with the Group’s business.

The Group is principally engaged in the manufacture and sales of various corn sweeteners, which are classified into three categories: corn syrup (glucose syrup, maltose syrup and high fructose corn syrup), corn syrup solid (crystallised glucose and maltodextrin) and sugar alcohol (sorbitol). The production and sales of corn starch and Co-Products are not the core business of the Group and the management team of the Group is independent from the management team of the GBT Group. The core business of the Group is not dependent or otherwise rely on the sales of corn starch and/or the Coproducts, and since Mr. Kong Zhanpeng does not hold any directorship or managerial position in the GBT Group and is not involved in the management and operation of the GBT Group (including the Excluded Business), the Directors consider that the Group is capable of carrying on its own business independently of, and at arm’s length from, the Excluded Business.

In order to facilitate the Group’s sales of corn starch and Co-Products to its customers at arm’s length from the GBT Group’s Excluded Business and protect the Group from any possible direct and indirect competition from the GBT Group in respect of the Excluded Business, Jinzhou Yuancheng and Global Corn will enter into the Sales Agency Agreement on the date of Completion. Under the Sales Agency Agreement, Jinzhou Yuancheng will appoint Global Corn (for itself and on behalf of the GBT Group) as its exclusive agent for the sales of the Co-products and corn starch in excess of its internal consumption from time to time produced by Jinzhou Yuancheng from the date of Completion to 31 December 2010, subject to renewal by Jinzhou Yuancheng. Under the Sales Agency Agreement, the GBT Group will use its best endeavours to procure the sale and marketing of the Co-products and corn starch as exclusive agent of Jinzhou Yuancheng, and will sell the Co-products and corn starch produced by Jinzhou Yuancheng in priority to any Co-products and corn starch produced by any members of the GBT Group (other than those goods produced by Global Corn or any member of the GBT Group for sales in Jilin and Heilongjiang Provinces of the PRC). Jinzhou Yuancheng will reimburse the GBT Group’s for its costs for the performance of its obligations under the Sales Agency Agreement, and there will not be any other agency fee payable to the GBT Group for the services rendered.

As at the Latest Practicable Date, save as disclosed above, none of the Directors and his/her associates (as would be required to be disclosed under Rule 8.10 of the Listing Rules if any of them was a controlling Shareholder) was interested in any business apart from the business of the Group, which competes or is likely to compete, either directly or indirectly, with that of the Group.

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7. LITIGATION

As the Latest Practicable Date, neither the Company nor any members of the Enlarged Group was engaged in any litigation or arbitration of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against either the Company or any of its subsidiaries.

8. DETAILS OF SENIOR MANAGEMENT TO BE APPOINTED UPON THE COMPLETION

Mr. Li Yingkui (李英奎) from Jinzhou Yuancheng will be appointed as one of the senior management members of the Group after Completion. The biographical information of Mr. Li Yingkui is set out below.

Mr. Li Yingkui (李英奎), aged 43, is the general manager of Jinzhou Yuancheng. He graduated from Dalian Transport University (大連交通大學) in 1987, majoring in Professional in Machinery Manufacturing Technique (機器製造工藝及設備專業). He joined GBT in 1999 and engaged in the management of various business including corn sweeteners, modified starch and also corn refinery. He became the general manager of Jinzhou Yuancheng in May 2007. Mr. Li has over 9 years’ experience in corn refinery industry.

9. QUALIFICATION AND CONSENT OF EXPERT

(a) The following is the qualification of the experts which have given its report, opinion or advice which is contained in this circular:

Name Qualifications Ernst &Young Certified Public Accountants Greater China Professional valuer Appraisal Limited (‘‘Greater China’’) Partners Capital a corporation licensed to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO

(b) As at the Latest Practicable Date, each of Ernst & Young, Greater China and Partners Capital did not have any direct or indirect shareholding, direct or indirect, in any member of the Enlarged Group or any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Enlarged Group.
(c) Each of Ernst & Young, Greater China and Partners Capital has respectively given and has not withdrawn their respective written consent to the issue of this circular with the inclusion of their respective letter and references to their respective name in the form and context in which they are included.

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(d) Each of Ernst & Young, Greater China and Partners Capital did not have any interest, direct or indirect, in any assets which have been acquired or disposed of by or leased to any member of the Enlarged Group, or which are proposed to be acquired or disposed of by or leased to any member of the Enlarged Group since 31 December 2007, the date to which the latest published audited financial statements of the Company were made up.
(e) The letters and report from Ernst & Young, Greater China and Partners Capital are given as of the date of this circular for incorporation herein.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the principal place of business in Hong Kong of the Company at Unit 2403, Admiralty Centre, Tower II, 18 Harcourt Road, Hong Kong during normal business hours from 25 July 2008 up to and including 13 August 2008:

(a) the memorandum and articles of association of the Company;
(b) the annual report of the Company for the year ended 31 December 2007;
(c) the letter from the Independent Board Committee, the text of which is set out on pages 14 to 15 of this circular;
(d) the letter from Partners Capital, the text of which is set out on pages 16 to 25 of this circular;
(e) the accountants’ report on Jinzhou Yuancheng from Ernst & Young dated 25 July 2008, the text of which is set out on pages 70 to 106 of this circular;
(f) the letter from Ernst & Young setting in respect of the unaudited pro forma financial information of the Enlarged Group, the text of which is set out on pages 107 to 111 of this circular;
(g) the valuation report from Greater China, the text of which is set out on pages 119 to 131 of this circular;
(h) the material contracts as referred to in the paragraph 5 of this appendix;
(i) the letter of consent as referred to in paragraph 8 of this appendix;
(j) the service contracts referred to in the paragraph headed ‘‘Service Agreements’’ in this appendix;
(k) the prospectus of the Company dated 10 September 2007;
(l) the circular despatched by the Company dated 4 February 2008; and
(m) a copy of this circular.

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11. MISCELLANEOUS

(a) The secretary and qualified accountant of the Company is Mr. Lee Chi Yung, who is a member of the Association of Chartered Certified Accountants and Hong Kong Institute of Certified Public Accountants.
(b) The registered office of the Company is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The principal place of business of the Company is at Unit 2403, Admiralty Centre, Tower II, 18 Harcourt Road, Hong Kong.
(c) The Hong Kong branch share registrar and transfer office of the Company is Tricor Investor Services Limited at 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong.
(d) The English text of this circular shall prevail over its Chinese text.
(e) The residential address of Mr. Li Yingkui (李英奎) is No. 27, Qing Feng Road, Kuan Cheng District, Changchun, Jilin Province, the PRC.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [83 x 76] intentionally omitted <==

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

(incorporated in the Cayman Islands with limited liability)

(Stock code: 3889)

NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Global Sweeteners Holdings Limited (the ‘‘Company’’) will be held at Chatham Room, Level 7, Conrad Hong Kong, Pacific Place, 88 Queensway, Hong Kong on Wednesday, 13 August 2008 at 3:00 p.m. for the purpose of considering and, if thought fit, passing the following resolution:

ORDINARY RESOLUTION

‘‘THAT the sale and purchase agreement (the ‘‘S&P Agreement’’) dated 27 June 2008 (a copy of which has been produced to the meeting marked ‘‘A’’ and signed by the chairman of the meeting for the purpose of identification) and entered into between Global Corn Investments Limited and 長春大成實業集團有限公司 (Changchun Dacheng Industrial Group Co., Ltd.) as vendors and Global Sweeteners Investments Limited as purchaser and the transactions contemplated thereby (including without limitation the execution of a waiver by the Company to Global Bio-chem Technology Group Company Limited and Global Corn Bio-chem Technology Company Limited in respect of the non-compete undertaking given thereby dated 3 September 2007) be and are hereby approved and that the directors of the Company be and are hereby authorised to take any action and sign any document (under seal, if necessary) as they consider necessary, desirable or expedient in connection with the S&P Agreement or the transactions contemplated thereby.’’

By Order of the Board Kong Zhanpeng Chairman

Hong Kong, 25 July 2008

Notes:

A shareholder of the Company entitled to attend and vote at the extraordinary general meeting (or at any adjournment thereof) is entitled to appoint another person as his/her/its proxy to attend and vote in his/her/its stead in accordance with the bye-laws of the Company. A proxy need not be a shareholder of the Company.
A form of proxy for use at the extraordinary general meeting is enclosed.
for identification purposes only

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NOTICE OF EXTRAORDINARY GENERAL MEETING

To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a certified true copy of that power of attorney or authority must be deposited at the Company’s branch share registrar in Hong Kong, Tricor Investor Services Limited, at 26/F., Tesbury Centre, 28 Queen’s Road East, Wan Chai, Hong Kong not less than 48 hours before the time appointed for holding the meeting (or any adjourned meeting thereof) and in default the form of proxy shall not be treated as valid. Completion and return of the form of proxy will not preclude shareholders of the Company from attending and voting in person at the meeting (or any adjourned meeting thereof) should they so wish.
In the case of joint holders, the vote of the senior who tenders a vote, whether in person or by proxy, will be accepted to the exclusion of the vote(s) of other joint holder(s), and for this purpose seniority will be determined by the order in which the names stand in the register of members of the Company in respect of such shares.

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AI assistant

Global Corn Group Limited — Proxy Solicitation & Information Statement 2008

50915_rns_2008-07-25_7312ad6c-4396-4594-a346-da7303c26df2.pdf

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

MAJOR AND CONNECTED TRANSACTION

Piper Jaffray

DEFINITIONS

DEFINITIONS

GLOBAL SWEETENERS HOLDINGS LIMITED 大 成 糖 業 控 股 有 限 公 司[*]

Executive Directors:

Independent non-executive Directors:

MAJOR AND CONNECTED TRANSACTION

ACQUISITION OF A CORN REFINERY PLANT

INTRODUCTION

LETTER FROM THE BOARD

S&P AGREEMENT

Date

Parties

Assets involved

Conditions

Consideration

LETTER FROM THE BOARD

Completion

REASONS FOR AND BENEFITS OF THE TRANSACTION

LETTER FROM THE BOARD

LETTER FROM THE BOARD

INFORMATION ON JINZHOU YUANCHENG

FINANCIAL EFFECTS OF THE TRANSACTION

Net assets

LETTER FROM THE BOARD

Liquidity and gearing

Earnings

BACKGROUND INFORMATION OF THE VENDORS, THE GBT GROUP AND THE GROUP

PROSPECTS OF THE GROUP

Expansion of production capacity

Expansion of sales network

IMPLICATIONS OF THE TRANSACTION UNDER THE LISTING RULES

EGM

POLL PROCEDURE

RECOMMENDATION

FURTHER INFORMATION

GLOBAL SWEETENERS HOLDINGS LIMITED 大 成 糖 業 控 股 有 限 公 司[*]

MAJOR AND CONNECTED TRANSACTION

RECOMMENDATION

LETTER FROM THE BOARD

Yours faithfully,

LETTER FROM PARTNERS CAPITAL

MAJOR AND CONNECTED TRANSACTION

INTRODUCTION

LETTER FROM PARTNERS CAPITAL

THE TRANSACTION

Principal factors considered

LETTER FROM PARTNERS CAPITAL

(i) Background of Jinzhou Yuancheng

(ii) Reasons for entering into of the S&P Agreement

LETTER FROM PARTNERS CAPITAL

2. Terms of the S&P Agreement

(i) Consideration

(ii) Mode of settlement of the Consideration

LETTER FROM PARTNERS CAPITAL

LETTER FROM PARTNERS CAPITAL

3. Financial effects of the S&P Agreement on the Group

(i) Earnings

(ii) Cashflow

LETTER FROM PARTNERS CAPITAL

(iii) Net Asset Value

(iv) Gearing

Recommendation

Yours faithfully, For and on behalf of

Partners Capital International Limited Alan Fung

1. FINANCIAL SUMMARY OF THE GROUP

2. AUDITED CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2007

Consolidated Balance Sheet

Balance Sheet

Consolidated Income Statement

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Consolidated Financial Statements

1. CORPORATE INFORMATION

2.1 BASIS OF PREPARATION

Global Corn Group Limited Proxy Solicitation & Information Statement 2008

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

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