Corporate Presentation Agenda Business Updates Operation - - PDF document

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Corporate Presentation

November 2008

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Agenda

• Business Updates
• Operation Overview
• Financial Overview

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Recent Highlights

• NO foreign currency hedging arrangements /

derivative

• Simple debt structure:

– Over 80% PRC loans (simple revolving, without covenants) – NO stock-pledged arrangements

• NO melamine contamination issue:

– Tests / examinations of various indices and criteria began 2 years ago – All products pass relevant approvals domestically and internationally

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Raw Material - Corn

• 4Q 08 – corn price 10%
• Outstanding harvest: 156 million mt (↑11% yoy )
• Cost control: the Group collects most of the corn raw material during

harvest seasons

Source: eFeedlink. Based on average price from northeast regions (Jilin, Dalian, Shandong)

1,300 1,350 1,400 1,450 1,500 1,550 1,600 1,650 1,700 1,750

Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08

RMB / mt

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2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2007 2008

RMB/mt

Lysine Protein Lysine

Amino Acids – Product Price Trend

• 1H 08 Amino Acid ASP: approx. RMB 9,210 ( 22% YOY)

Source: efeedlink.

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1H 2008 Amino Acid Turnover Breakdown

Lysine 39% Protein Lysine 58% Others 3%

Amino Acids – Business Update

1H 08 Quantity (mt) YOY change Export volume (mt) YOY change Lysine 60,150 13% 34,900 1% Protein Lysine 159,750 25% 42,800 36% Others 3,400 (39%) 920 49%

• Annual capacity of all Amino Acid products: 450,000 mt.

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Lysine Market Overview

• 2007-2008: healthy market environment

– Global market : approx. 1.2 million mt – PRC market : approx. 330,000mt – Supply / Demand : equilibrium

• High technological entry barrier
• Few major global players - concentrated supply market:

Global Bio-chem (China) Ajinomoto (Japan) ADM (United States) CJ (South Korea) Degussa (Germany)

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Polyol chemicals

• Readily markets:

– Chemicals demand/consumption in PRC: 5 – 6 million mt – Over 70% demand relies on imports – Petroleum based chemicals vs green products

• Cost advantage:

Breakeven (approx.): Corn price RMB 1,400/mt vs Oil price: US$40/barrel

• Target GP margin from 25 – 30%
• 1H: ASP RMB 8,900/mt, GP margin 39%
• Various types of resin in the market:

e.g. - Synthetic resin

• PVC resin
• Polythene resin
• Polypropylene resin

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20,000 40,000 60,000 80,000 100,000 metric tonnes 2H 07 1H 08 2H 08 Polyol Chemicals Production

Polyol – Business Update

Operation of new business line begins Estimated

• Production Facilities :

– Pilot Plant : 10,000 mtpa (operation for R&D purposes) – First Commercial Plant : 200,000 mtpa (operation at 60-70% utilisation rate)

• Future Plan (schedule altered in view of market sentiment):

– New Production Site: 1 million mtpa (to be constructed in 4 – 5 years)

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Corn Based Polyol Chemicals

Newly developed production technology by the Group

Corn Starch Glucose ((C6H10O5)n + H2O) Sorbitol (C6H14O6)

Hydrogenation Reaction Chemical reaction with catalysts

Polyol chemicals mixture (or product: Resin):

Ethylene Glycol (C2H6O2) Propylene Glycol (C3H8O2) Glycerin (C3H8O3) Butanediol (C4H10O2)

Distillations / Separations Saccharification

Products: EG / PPG Sales & Marketing – anti-freeze, plastics, textiles industries, etc.

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Polyol – Sales & Marketing

Polyol – collective name for groups of chemicals

Intermediate Materials

Polymeric polyol Polymers Polyester

Adhesive Plastics Coatings Footwear Films Glasses Fiberglass Coolant Lubrication Solvent Detersive Fibre Textile

Applications Raw Materials EG PG Glycerin Resin

GBT’s products

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Future Development

Phase 1: 1 million mtpa Corn Refinery Phase 2: 500,000 mtpa Polyol Chemicals Phase 3: 700,000 mtpa Corn Refinery Phase 4: 500,000 mtpa Polyol Chemicals 2010 2011 2009 2008

2H 1H 2H 2H 2H 1H 1H 1H

• New production base: Xinglongshan
• Vertically integrated facilities:
• Corn refinery: 1.7 million mtpa
• Polyol chemicals: 1.0 million mtpa

Original plan at 1Q :

Pending schedule:

Phase 1: 1 million mtpa Corn Refinery Phase 2: 500,000 mtpa Polyol Chemicals

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Corn Sweeteners – Business Update

308 570 619 200 400 600 800

(HK$'million)

1H 06 1H 07 1H 08 Corn Sweeteners Business Revenue

• Stable margin business
• Market: strong demand growth in PRC on all natural sweeteners
• Growth strategies under Global Sweeteners Holdings:

– Diversification of products portfolio – 6 featured sweetener products – Scale participation – capacity expansion – Value adding – retail market

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Designed Capacity

Designed Capacity (mtpa) FY2007 FY2008 FY2009 Upstream Corn Refinery 2,400,000 450,000 80,000 210,000 1,020,000 3,400,000 2,400,000 450,000 80,000 210,000 Downstream

• Amino Acids

450,000

• Modified Starch

80,000

• Polyol Chemicals

210,000

• Corn Sweeteners

Global Sweeteners Holdings Limited 1,220,000 1,510,000

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Capex 2008 - 2009

200 400 600 800 1000 1200 1400 1600 2008* 2009* 2008 2009 HK$ (million)

Maintanence

* Original plan at 1Q 08 Latest schedule Corn Refinery & supporting facilities Polyol chemical facilities Corn Refinery & supporting facilities

Operation Overview

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Turnover Breakdown

Turnover (HK$‘000) 1H 2008 1H 2007 Change Upstream

• Corn Refinery

1,511,139 753,544 101% Downstream

• Amino Acids

1,932,676 1,326,140 46%

• Polyol Chemicals

697,252 4,205 N/A

• Modified Starch

91,623 81,016 13%

• Corn Sweeteners

619,263 569,555 9% 1H 2007 Turnover Breakdown

Modified Starch 3% Corn Sweeteners 21% Corn Refinery 28% Amino Acids 48% Polyol Chemicals 0%

1H 2008 Turnover Breakdown

Corn Refinery 32% Modified Starch 2% Amino Acids 40% Corn Sweeteners 13% Polyol Chemicals 13%

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Gross Profit Breakdown

1H 2008 Gross Profit Breakdown

Corn Refinery 23% Modified Starch 1% Corn Sweeteners 13% Amino Acids 42% Polyol Chemicals 21%

1H 2007 Gross Profit Breakdown Corn Refinery 17% Modified Starch 2% Corn Sweeteners 25% Polyol Chemicals 0% Amino Acids 56%

Gross Profit (HK$‘000) 1H 2008 1H 2007 Change Upstream

• Corn Refinery

288,242 102,798 180% Downstream

• Amino Acids

535,905 342,976 56%

• Polyol Chemicals

269,034 (10,265) N/A

• Modified Starch

13,597 12,313 10%

• Corn Sweeteners

158,855 153,215 4%

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Sales Analysis

Quantity (mt) 1H 08 Upstream Corn Refinery 650,160 425,540 53% 19% 14% 5% Modified Starch 30,090 33,890 (11%) 15% 15%

• Downstream

Amino Acids 223,330 186,350 20% 28% 26% 2% 83,723 276,723 Polyol Chemicals Corn Sweeteners Gross Profit Margin (%) 1H 07 % Change 1H 08 1H 07 % Change 985 309,378 N/A 39% N/A N/A (11%) 26% 27% (1%)

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Export Breakdown

Turnover Volume US$’000 mt Amino Acids 98,373 70% 78,600 34% Modified Starch 4,769 3% 12,660 6% Corn Refined Products 38,249 27% 137,000 60% TOTAL 141,391 228,260

Export to Total Turnover : 23%

1H Export Turnover By Regions

Asia 44% Europe 36% Australia 3% South & North America 17% Africa 0%

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Operating Cost Structure

1H 08 1H 07 Raw materials (Corn + Sweeteners) 56% 56% Other chemicals 11% 5% Utilities 12% 16% Labour 1% 1% Depreciation 5% 7% Packaging 3% 2% Production Overhead 1% 2% Selling and Distribution Expenses 7% 6% Administrative Expenses 3% 4% Other Operating Expenses 1% 1%

Financial Overview & Appendix

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Operation Results

2008 1H 2007 1H Change

Basic EPS HK 26.0 cents HK 9.9 cents

HK$ million

Turnover 4,852 2,734 78% Gross Profit 1,266 601 111%

• Corn based biochemical products

977 498 96%

• Corn refined products

288 103 180% EBITDA 1,111 549 102% Operating Profit 883 381 132% Net Profit to GBT’s shareholders 602 230 162% Interim Dividend Per Share HK 1.5 cents HK 1.0 cent

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Operational Indicators

30 Jun 08 30 Jun 07 Change Gross Profit Margin (%) 26% 22% 4%

• Corn based biochemical products

29% 25% 4%

• Corn refined products

19% 14% 5% Operating Margin (%) 18% 14% 4% Net Margin (%) 13% 8% 5% ROE 8% 4% 4%

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Balance Sheet

HK$ million 30 Jun 2008 (unaudited) 31 Dec 2007 (audited) Change

Non-current Assets

9,767

8,732 12% Current Assets

5,557

4,666 19% Current Liabilities

5,093

3,264 56% Cash and Bank Balances

2,439

2,022 21% Shareholder’s Equity

7,311

6,463 13% Interest-bearing Loans

5,583

4,803 16%

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Key Financial Ratios

30 Jun 2008 31 Dec 2007

• Total Debt to Total Assets

49% 48% Current Ratio 1.1 1.4 Quick Ratio 0.8 1.1 Gearings:

• Net Debt to Equity

43% 43% Inventories Turnover Days 73 87 Debtors’ Turnover Days 52 58

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1994 GBT was founded 1996 Established R&D Centre 1998 Corn refinery began 2001 Listed on Main Board

• f HKEx

2000 Lysine plant began

• peration

1999 Modified starch & corn sweeteners plants began operation 2002 HFCS JV plant began

• peration

2004 Protein lysine & polyol pilot plants began

• perations

2006 Glutamic acid & crystallised glucose plants began operations 2003 R&D on Polyol began 2007 Spun-off Global Sweeteners Polyol plant began operation 2005 Sorbitol plant began

• perations

1994 1996 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Corn Feed Manufacturer Corn Refinery Corn-based Biochemical Chemicals

Milestone

2008 Scales up polyol project

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Vertical Integration and Product Diversification

Raw Material

Corn Kernel

Upstream Process

Gluten Fibre Corn Oil Corn Refinery Amino Acids Modified Starch Corn Sweeteners Polyol Chemicals

Downstream Process

Corn Starch Biochemical / Chemical processes

Global Sweeteners Holdings Limited