May 58 - In January 2007, the Board of Directors of China Sun Bio-chem Technology Group Company Ltd. (the “Company”) announced plans to tap on the potential in the growing corn sweetener market in the People's Republic of China (“PRC”) through the investment in a new production facility for the production of corn sweetener, with an annual production capacity of 120,000 tonnes per annum (“t/a”).
Due to the recent increases in sugar prices, domestic demand for corn sweetener as a sugar substitute has risen significantly. To meet the growing demand by domestic beverage companies for corn sweetener, the Company has planned to increase production capacity by an additional 80,000 t/a, to provide for the production of various sweetener products, resulting in an aggregate production capacity of 200,000 t/a. The increased production capacity will be achieved through the construction of an additional production line, to be integrated into the initial 120,000 t/a production capacity at Suzhou Gaofeng Sweetener Industry Co., Limited (“Gaofeng Sweetener”), located at Fenhu Economic Development Zone, Jiangsu Province, PRC.
Production of the combined output of 200,000 t/a is expected to commence in 4Q2008. The Company has set aside a capital expenditure of approximately RMB50 million for the expansion. Gaofeng Sweetener is expected to contribute to the Company’s operating profit in FY2009.
The above expansion is funded by internal sources of funds and is not expected to have any material impact on the net tangible assets and earnings per share of the Company for the current financial year.