Global Sweeteners : Announcements and Notices - Continuing Connected Transactions (1)new Master Agreements (2)revision of the Prescribed Guidelines

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GLOBAL SWEETENERS HOLDINGS LIMITED ɽϓጟุછٰϞࠢʮ̡ *

(incorporated in the Cayman Islands with limited liability)

(Stock code: 03889)

CONTINUING CONNECTED TRANSACTIONS

(1) NEW MASTER AGREEMENTS

(2) REVISION OF THE PRESCRIBED GUIDELINES

NEW MASTER AGREEMENTS

Reference is made to the announcement of the Company dated 26 February 2016 in relation to among others, the Existing Corn Starch Master Purchase Agreement and the Existing Utilities Master Supply Agreement.

The Company (for itself and as trustee for the benefit of other members of the Group) will enter into the New Corn Starch and Other Raw Materials Master Purchase Agreement, the New Utilities Master Supply Agreement and the Master Sales Agreement with GBT (for itself and as trustee for the benefit of other members of the GBT Group) on and with effect from the date of approval by the Independent Shareholders at the EGM to 31 December 2021.

REVISION OF THE PRESCRIBED GUIDELINES

In view of the entering into of the New Corn Starch and Other Raw Materials Master Purchase Agreement and the Master Sales Agreement, as recommended by the CCT Supervisory Committee, the Board has revised and approved the Prescribed Guidelines on 8 January 2019 to set out the procedures for the CCT Executive Committee to follow in the determination of the purchase price or as the case may be, the selling price and other major commercial terms in respect of the purchase of other raw materials and the supply of corn sweeteners under the New Corn Starch and Other Raw Materials Master Purchase Agreement and the Master Sales Agreement.

IMPLICATIONS UNDER THE LISTING RULES

As at the date of this announcement, GBT is the controlling shareholder of the Company holding approximately 64.04% of the entire issued share capital of the Company. Accordingly, the transactions contemplated under the New Master Agreements constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules.

Since the annual caps under each of the New Master Agreements for each of the three years ending 31 December 2021 are expected to represent more than 5% of one or more of the applicable percentage ratios under the Listing Rules and are expected to exceed HK$10,000,000 each, the continuing connected transactions contemplated under each of the New Master Agreements and the annual caps therefor are subject to the reporting, announcement and Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

In view of the foregoing, the Company will seek to obtain the approval of the Independent Shareholders on the continuing connected transactions under the New Master Agreements and the related annual caps at the EGM.

GENERAL

An EGM will be convened and held for, among others, the Independent Shareholders to consider and, if thought fit, to approve the New Master Agreements and the related annual caps for the three years ending 31 December 2021.

The Company has appointed Octal Capital Limited as the IFA for the purpose of advising the Independent Board Committee and the Independent Shareholders in respect of the continuing connected transactions contemplated under the New Master Agreements.

A circular containing, among other information, (i) a letter from the Board setting out further information on the continuing connected transactions contemplated under the New Master Agreements and the related annual caps; (ii) a letter from the IFA setting out its advice in connection with the aforesaid; (iii) recommendations of the Independent Board Committee to the Independent Shareholders; and (iv) a notice convening the EGM and the proxy form will be despatched to the Shareholders on or before 29 January 2019.

(A) NEW MASTER AGREEMENTS FOR CONTINUING CONNECTED TRANSACTIONS

Reference is made to the announcement of the Company dated 26 February 2016 in relation to among others, the Existing Corn Starch Master Purchase Agreement and the Existing Utilities Master Supply Agreement.

The Existing Corn Starch Master Purchase Agreement and the Existing Utilities Master Supply Agreement expired on 31 December 2018. Members of the Group in Changchun will continue the production of downstream products. It is expected that the Group will continue to utilise the electricity, water, steam and wastewater treatment facilities of the production facilities of theGBT Group there (which are adjacent to that of the Group). Members of the Group will also continue to purchase corn starch (either in powder or slurry form) from the GBT Group as its principal materials for the Group's production. In addition, the Group will also purchase other raw materials, such as enzymes, which are used in the production of corn sweeteners from a subsidiary of GBT. As such, the Company (for itself and as trustee for the benefit of other members of the Group) will enter into the New Corn Starch and Other Raw Materials Master Purchase Agreement and the New Utilities Master Supply Agreement with GBT (for itself and as trustee for the benefit of other members of the GBT Group) on and with effect from the date of approval by the Independent Shareholders at the EGM to 31 December 2021.

On the other hand, the Group's downstream production in Changchun could supply corn sweeteners to members of GBT for the production of enzymes and amino acids. Since the production facilities of the Changchun Group is in close proximity to the production facilities of the GBT Group in Changchun. Such arrangement could save the Group's processing, packaging, storage, transportation and other related selling expenses. As such, the Company (for itself and as trustee for the benefit of other members of the Group) will enter into the Master Sales Agreement with GBT (for itself and as trustee for the benefit of other members of the GBT Group) for the sale of corn sweeteners by the Group to the GBT Group on and with effect from the date of approval by the Independent Shareholders at the EGM to 31 December 2021.

New Corn Starch and Other Raw Materials Master Purchase Agreement

Principal terms of the New Corn Starch and Other Raw Materials Master Purchase Agreement

Pursuant to the New Corn Starch and Other Raw Materials Master Purchase Agreement, the Group will purchase corn starch in the form of powder or starch slurry and other raw materials, such as enzymes, from the relevant members of the GBT Group at prices to be determined from time to time by the relevant members of the GBT Group and the Group on arm's length basis and with reference to pricing method and procedures as explained below, and on such other standard terms of sale and purchase from time to time.

Pursuant to the New Corn Starch and Other Raw Materials Master Purchase Agreement, the GBT Group shall be responsible for the delivery of the corn starch and other raw materials to the production plants of the Group or such other locations from time to time designated by the Group, and the purchase price for corn starch and other raw materials shall be inclusive of transportation and packaging of the corn starch and other raw materials so purchased. In relation to corn starch in the form of starch slurry, the GBT Group will procure the delivery of corn starch slurry to the Group's Changchun production plants by way of starch pipelines. There are meters attached to the pipelines connecting between the production plants of the Changchun Group and the relevant GBT Group members in Changchun to record the amount of corn starch slurry consumed. In addition, another key raw material for the production of the Group's downstream products, enzymes, are produced as a main product of a subsidiary of GBT which is principally engaged in biomass processing, fermentation, research and development of bio-chemical technology equipment, and pilot production, etc. Since this subsidiary of GBT isspecialised in the research and development and pilot production of bio-chemical technology, the Group could benefit from the efficiency through the use of its enzymes required by the Group's production needs by utilising the service provided by GBT and a stable supply of such enzymes. In addition, the production plant of enzymes is located at the same site as the Changchun Group in Xinglongshan, Changchun. As such, the Changchun Group could stabilise the supply of enzymes and lower transportation costs by sourcing the enzymes from the GBT Group. The payment terms for the above products will be set out in the purchase order for each order to be placed under the New Corn Starch and Other Raw Materials Master Purchase Agreement, provided that the purchase price shall be payable by the relevant member of the Group within 60 days after the date of the relevant invoice issued by the relevant member of the GBT Group or such longer period as the parties may agree. The New Corn Starch and Other Raw Materials Master Purchase Agreement is for a term of three years commencing on and with effect from the date of approval by the Independent Shareholders at the EGM and expiring on 31 December 2021 unless terminated earlier by three months' written notice by either party.

Pricing method and procedures

In order to ascertain the prevailing market rates of corn starch in the form of powder or starch slurry and other raw materials from time to time and to ensure that the terms offered by the GBT Group to the Group are on normal commercial terms, pursuant to the Prescribed Guidelines, the CCT Executive Committee would obtain market selling prices of corn starch and other raw materials according to the following procedures:

• (1) the CCT Executive Committee will obtain quotation from at least one (or such other number as shall be determined by the CCT Supervisory Committee from time to time) Independent Third Parties supplier(s) and compare it with the terms offered by the GBT Group for the supply of corn starch and other raw materials of comparable specifications and quantities to its Independent Third Parties customers;

• (2) the total purchase price and terms for the purchase of corn starch in the form of corn starch slurry shall be determined by using the lower of (i) the average unit selling price of corn starch offered by the GBT Group to its Independent Third Parties customers, less the unit transportation, storage, insurance, dehydration and/or packaging costs saved by reason of the supply of corn starch in slurry form which would otherwise be payable to the GBT Group by its Independent Third Parties customers for the relevant month up to the price determination date; and (ii) the quotations from Independent Third Parties supplier(s) for the purchase of corn starch of comparable specifications and quantities plus (if not included as part of the purchase price) any additional cost (such as transportation, storage and/or insurance costs) to be incurred by the Group in order for the Group to purchase corn starch from such Independent Third Parties supplier(s) for the relevant month up to the price determination date;

• (3) the total purchase price and terms for the purchase of corn starch in the form of corn starch powder shall be determined by using the lower of (i) the average unit selling price of corn starch offered by the GBT Group to its Independent Third Parties customers for the relevant month up to the price determination date; and (ii) the quotations from Independent Third Parties supplier(s) for purchase of corn starch of comparable specifications and quantities plus (if not included as part of the purchase price) any additional cost (such as transportation, storage and/or insurance costs) to be incurred by the Group in order for the Group to purchase corn starch from such Independent Third Parties supplier(s) for the relevant month up to the price determination date; and

• (4) the total purchase price and terms for the purchase of other raw materials shall be determined by using the lower of (i) (if available) the average unit purchase price of other raw materials of comparable specifications and quantities plus (if not included as part of the purchase price) any additional cost (such as transportation, storage and/or insurance costs) from such Independent Third Parties supplier(s) for the relevant month up to the price determination date; and (ii) the quotations from Independent Third Parties supplier(s) for purchase of the other raw materials of comparable specifications and quantities plus (if not included as part of the purchase price) any additional cost (such as transportation, storage and/or insurance costs) to be incurred by the Group in order for the Group to purchase the products from such Independent Third Parties supplier(s) for the relevant month up to the price determination date.

Proposed annual caps

The management of the Group expects that the Group will purchase 113,000MT, 185,000MT and 257,000MT of corn starch (either in powder or slurry form) and other raw materials from the GBT Group for each of the three years ending 31 December 2021, which will constitute 32.3%, 45.8% and 56.2% of the total corn starch and other raw materials to be used by the Group for each of the three years ending 31 December 2021, respectively, and the aggregate purchase prices payable by the Group for the purchase of corn starch (either in powder or slurry form) and other raw materials from the GBT Group for each of the three years ending 31 December 2021 will not exceed HK$322,000,000 million, HK$539,000,000 million and HK$768,000,000 million, respectively.

The proposed annual caps for each of the three years ending 31 December 2021 are determined by the management of the Group by reference to the aggregate amounts paid by the Group to the GBT Group in respect of the purchase of corn starch and other raw materials from the GBT Group for the two years ended 31 December 2017, which were approximately HK$90,323,000 and HK$115,967,000, respectively, and the year ended 31 December 2018 which amounted to approximately HK$264,496,000 as projected based on the figures for the eleven months ended 30 November 2018, the prevailing market prices and taking into consideration of an estimated inflation rate of 3.0% in the PRC. The management of the Group expects that approximately 65.5%, 68.8% and 70.2% of the proposed annual caps for the three years ending 31 December