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					   CHInA FooD CoMpAnY plC
   A n n uA l R e p o Rt 2 0 0 9




AnotHeR Step
      FoRwARD
CONTENTS




Directors, Secretary and Advisers    1    Consolidated Statement of Comprehensive Income   24


Chairman’s Statement                 2    Consolidated Statement of Financial position     25


Chief executive officer’s Report     4    Company Statement of Financial position          26


Management Discussion and Analysis   6    Consolidated Statement of Cash Flows             27


Board of Directors                   8    Company Statement of Cash Flows                  28


Directors’ Report                    9    Consolidated Statement of Changes in equity      29


Directors’ Remuneration              15   Company Statement of Changes in equity           30


Corporate Governance                 18   notes to the Financial Statements                31


Independent Auditor’s Report         21   letter to All Shareholders                       75


Consolidated Income Statement        23   notice of Annual General Meeting                 76
                                                                           ANNUAL	REPORT	2009        1




                                 DIRECTORS,	SECRETARY	AND	ADVISERS



Directors:	                          John Mclean	                          Non-executive Chairman
	                                    Raphael tham wai Mun	                 Chief Executive Officer
	                                    Feng Bo	                              Chief Operating Officer
	                                    Frank Chau leung Yu	                  Chief Financial Officer
	                                    Derek Marsh	                          Non-executive Director
Audit	Committee:	                    John Mclean	                          Chairman
	                                    Derek Marsh
	                                    Raphael tham wai Mun
Remuneration	Committee:	             Derek Marsh	                          Chairman
	                                    John Mclean
	                                    Raphael tham wai Mun
Company	Secretary:	                  nigel Cartwright
Company	Number:	                     06077223
Registered	Office:	                  17	Hanover	Square
	                                    London	W1S	1HU
Nominated	Adviser	and	Broker:	       FinnCap
	                                    4	Coleman	Street
	                                    London	EC2R	5TA
Registrars:	                         Computershare Investor Services plC
	                                    The	Pavilions,	Bridgwater	Road
	                                    Bristol	BS99	6ZY
Principal	Banks:	                    national westminster Bank plC
	                                    City	of	London	Office	
	                                    PO	Box	12258	
	                                    1	Princes	Street	
	                                    London	EC2R	8PA
	                                    united overseas Bank limited
	                                    80	Raffles	Place,	UOB	Plaza	1
	                                    Singapore	048624
	                                    Bank of weifang
	                                    5166	Dongfengdongjie	Street
	                                    Weifang,	Shandong
	                                    China	261061
Auditors:		                          Grant thornton uK llp
	                                    Grant	Thornton	House
	                                    Melton	Street,	Euston	Square
	                                    London	NW1	2EP
Internal	Auditors:	                  BDo Raffles Consultants pte ltd
	                                    19	Keppel	Road	#02-01
	                                    Jit	Poh	Building,	Singapore	089058
Legal	Advisers:	                     Fasken Martineau Stringer Saul llp
	                                    17	Hanover	Square
	                                    London	W1S	1HU
	                                    Stephenson Harwood, Singapore
	                                    1	Raffles	Place,	#12-00	OUB	Centre
	                                    Singapore	048616
Public	Relations	Advisers:	          Abchurch Communications
	                                    125	Old	Broad	Street
	                                    London	EC2N	1AR
Website:	                            www.chinafoodcompany.com
2   CHINA	FOOD	COMPANY	PLC




    DIRECTORS’	REPORT
    CHAIRMAN’S	STATEMENT



    While	2008	saw	China	officially	declaring	its	presence	to	the	world	with	the	Olympics,	it	was	2009	that	witnessed	China	firmly	
    establishing	itself	as	an	economic	world	power	with	GDP	growth	of	8.7%.		While	businesses	globally	faced	a	challenging	first	
    half	in	2009,	China	has	recovered	strongly	and	looks	set	to	continue	growing.		The	annual	rate	of	consumer	price	inflation	rose	
    to	2.7%	in	February	2010,	up	from	1.5%	in	January,	and	ahead	of	analysts’	expectations	of	2.3%.		China	Food	is	in	a	strong	
    position	to	benefit	from	the	overall	growth	in	China’s	economy.		

    I	am	pleased	to	report	that	after	a	slow	start	in	2009,	China	Food’s	results	improved	by	62.2%	in	the	second	half	of	2009,	
    to	 reach	 £1.7	 million	 profit	 after	 tax	 on	 a	 turnover	 of	 £30.1	 million	 for	 the	 year	 ended	 31	 December	 2009.	 	The	 issue	 of	
    convertible	loan	notes	in	November	2009	secured	£3.0	million	of	new	term	facilities	through	the	injection	of	£2.0	million	of	
    new	funds	and	the	conversion	of	shareholder	loans	of	£1.0	million.		This	will	allow	China	Food	to	complete	its	new	factory	
    and	increase	the	Company’s	production	capacity,	and	the	Company	will	be	seeking	to	apply	for	the	Convertible	Loan	Notes	
    (“CLN”)	to	be	quoted	on	PLUS	Markets	in	April	/	May	2010.		The	recovery	and	the	increased	capacity	will	put	the	Company	
    in	a	strong	position	to	capitalise	on	China’s	future	growth.

    In	order	to	fully	benefit	from	such	growth,	China	Food	will	be	pursuing	several	key	strategies:

    northern China strategy

    China	Food’s	operations	are	based	in	Northern	China,	with	a	population	of	approximately	450	million.	The	Company’s	current	
    focus	is	on	the	following	three	elements	of	its	operations:

    	          I
            •	 	ncreasing	the	product	range,	with	the	sale	of	new	products	such	as	olive	oil,	and	introducing	international	brands	
               into	the	Chinese	market;
    	          D
            •	 	 istribution	of	products	in	terms	of	channels	and	markets,	building	on	existing	strong	relationships	with	distributors	
               and	supermarkets	in	China,	and	expanding	beyond	Shandong	province;
    	          L
            •	 	 ogistics	distribution	of	our	products	by	capitalising	on	China’s	increased	spending	on	infrastructure.	

    China	Food’s	largest	market	for	the	Company’s	cooking	and	dipping	sauces	is	Shandong,	a	province	with	a	population	of	
    approximately	94	million.		Over	89%	of	the	Company’s	revenue	is	derived	from	sales	in	Shandong.		However,	over	the	last	18	
    months,	China	Food	has	developed	its	market	in	Henan	and	Hebei	in	order	to	provide	a	launchpad	to	penetrate	the	market	
    when	our	additional	capacity	is	available.		With	the	new	factory	starting	trial	production	in	April	2010	and	the	opening	in	May	
    2010,	the	Company’s	strategy	is	to	focus	its	efforts	on	satisfying	demand	in	these	provinces.	

    China	Food	will	also	be	exploring	the	possibility	of	sourcing	international	products	which	the	Company	can	represent	in	China	
    and	which	can	utilise	the	Company’s	extensive	distribution	network	in	Shandong	and	associated	provinces.		

    to operate to high international standards

    To	operate	successfully	in	a	global	marketplace,	China	Food	can	not	be	satisfied	solely	with	local	Chinese	standards.		In	the	
    last	two	years	the	Company	has	strengthened	its	financial	controls	and	monitoring	systems,	implemented	better	corporate	
    governance	and	sought	professional	assistance	to	improve	its	business	processes.		

    Whilst	 China	 Food	 is	 certified	 locally	 though	 the	 HACCP	 (Hazard	Analysis	 and	 Critical	 Control	 Points)	 safety	 system	 and	
    ISO9001	quality	management	system	which	is	maintained	by	the	International	Organisation	for	Standardisation,	the	Company	is	
    also	being	re-audited	by	an	international	certification	body	to	ensure	that	the	Company	obtains	international	accreditation.

    China	Food	is	committed	to	improving	its	quality	and	its	standards.		In	order	to	ensure	quality	improvement	going	forward,	
    Feng	Bo,	the	Company’s	Chief	Operating	Officer	has	also	been	appointed	by	the	Board	to	be	the	Quality	Director.

    It	is	important	to	emphasise	that	in	terms	of	food	safety	standards,	Chinese	standards	are	as	strict	or	in	some	cases,	even	stricter	
    than	international	standards.		This	is	largely	due	to	the	food	safety	issues	that	arose	towards	the	end	of	2008	and	the	Food	
    Safety	Law	passed	on	1	June	2009.		

    China	Food	believes	that	high	standards	of	overall	corporate	governance	are	essential	to	its	growth,	driving	performance,	and	
    maximising	long-term	shareholder	value.	While	the	Company	is	not	subject	to	the	Combined	Code	applicable	to	companies	
    listed	 on	 the	 Official	 List,	 China	 Food	 is	 committed	 to	 observing	 high	 standards	 of	 corporate	 governance.	The	 Company’s	
    corporate	governance	processes	and	activities	adopt	as	far	as	is	possible	the	principles	of	the	Quoted	Companies	Alliance’s	
    Corporate	Governance	Guidelines,	to	ensure	that	the	Company	is	compliant	with	these	international	guidelines..
                                                                                                         ANNUAL	REPORT	2009            3




                                                                  DIRECTORS’	REPORT
                                                                    CHAIRMAN’S	STATEMENT




people development and sales and marketing focus

China	Food	is	now	at	a	turning	point	in	its	development,	having	been	focused	on	the	construction	of	the	new	factory	for	
some	time.		It	is	now	almost	complete	and	the	Company	will	be	concentrating	its	efforts	on	sales	and	marketing.		To	this	end,	
the	Board	is	recruiting	a	Marketing	Director	to	drive	growth	in	China	Food’s	key	target	markets,	as	the	Company	becomes	
increasingly	customer	focused.		This	will	be	a	critical	role	within	the	Company,	as	China	Food	embarks	on	its	expansion	into	
neighbouring	provinces	with	the	additional	capacity	from	the	new	factory.		

China	Food	currently	employs	over	600	workers	and	the	Board’s	strategic	vision	to	be	a	leading	Chinese	food	company	with	
world-class	standards,	cannot	be	achieved	without	improving	and	supplementing	our	workforce.

The	Company	has	recently	promoted	four	more	people	to	its	key	management	team,	including,	a	Feed	General	Manager,	
a	Condiments	General	Manager,	a	Condiments	Factory	manager	and	a	Financial	Controller.		All	four	have	worked	with	the	
Company	for	over	10	years.

China	Food	has	also	issued	4,648,000	share	options	to	approximately	a	quarter	of	the	Company’s	staff.		The	share	option	
scheme	has	been	devised	to	encourage	loyalty	from	staff,	recognising	their	positive	contributions	as	well	as	to	reward	them	for	
their	actions.		These	options	will	represent	7%	of	the	Company’s	ordinary	share	capital	when	the	scheme	is	fully	exercised.

The	Company	has	a	committed,	highly	qualified	workforce,	and	the	Board	is	currently	reviewing	key	critical	skill-sets	which	
the	Company	requires	as	it	enters	the	next	stage	of	its	development.		It	is	the	intention	of	the	Board	to	introduce	such	skill-sets	
by	hiring	experienced	international	managers.		China	Food’s	employees	play	a	critical	role	in	the	Company’s	success	and	the	
Board	recognises	that	this	will	be	particularly	so	in	executing	the	strategies	outlined	above	which	will	take	China	Food	to	the	
next	stage	of	its	corporate	development.

Animal Feed Business

The	feed	business	has	gained	increasing	momentum	so	far	in	2010,	and	with	a	new	Feed	General	Manager	this	business	is	
gathering	pace.		The	business	is	to	a	certain	degree	dependent	on	livestock	prices,	and	if	these	increase	in	2010,	the	Company	
is	in	a	position	to	scale	up	production.		The	Company’s	strategy	is	to	focus	largely	on	the	higher	margin	pre-mix	feed.

China	Food	has	today	launched	its	new	website,	which	is	very	much	tailored	to	cater	for	the	needs	of	our	investors.		Please	
visit	www.chinafoodcompany.com	to	sign	up	to	investor	alerts,	and	for	full	information	on	the	Company.		

Looking	forward,	the	Board	remains	confident	of	continued	robust	growth	within	the	Chinese	domestic	market	and	is	excited	
about	our	factory	opening	on	12	May	2010.		We	welcome	any	shareholders	who	would	like	to	join	us	for	this	occasion.		Please	
contact	us	at	shareholder@chinafoodcompany.com.		

On	behalf	of	the	Board	I	thank	all	of	our	employees	for	another	year	of	significant	contribution	and	I	would	also	like	to	thank	
China	Food’s	shareholders	for	their	support.		We	look	forward	to	the	coming	year	with	confidence.		

John Mclean
Non-Executive Chairman
7	April	2010
4   CHINA	FOOD	COMPANY	PLC




    CHIEF	EXECUTIVE	OFFICER’S	REPORT



    The	Company	maintained	profitability	in	2009	in	a	difficult	year.		Business	in	the	first	half	of	2009	was	affected	largely	by	the	
    global	economic	crisis	as	many	factories	were	closed	and	unemployment	increased.		China	Food’s	business	was	not	isolated	
    from	this	broader	downturn	during	the	first	half	of	2009.

    The	conditions	improved	from	Spring	2009	as	the	effects	of	China’s	stimulus	package	gained	momentum	leading	to	a	stronger	
    second	half	to	2009.		Despite	this,	the	Company	achieved	a	turnover	of	£30.1	million	for	the	year	ended	31	December	2009,	
    representing	a	21.1%	drop	from	the	previous	year.		EBITDA	fell	55.7%	to	£3.7	million	due	to	lower	volumes	and	margins.		The	
    margin	fell	due	to	a	change	in	sales	mix	towards	cheaper	products.		This	has	since	started	to	recover	and	we	are	hopeful	of	
    improved	margins	in	the	current	year.	In	the	second	half	of	2009,	the	Company	achieved	revenues	of	£16.1	million	and	profit	
    after	tax	of	£1.1million	as	compared	to	£14.0	million	and	£652,000	in	the	first	half	of	2009.

    China	Food	remains	profitable	and	expects	the	positive	momentum	gained	in	the	second	half	of	2009	to	carry	through	into	2010.

    performance of the two businesses

    Cooking	and	dipping	sauces

    The	condiments	business	was	affected	by	the	slowdown	in	the	beginning	of	2009	especially	in	the	corporate	gifts	segment.	                  	
    Revenues	were	down	by	31.0%	(in	RMB)	compared	to	2008	and	gross	profits	fell	by	43.2%	as	margins	were	squeezed	in	
    the	 more	 challenging	 market.	 	 	In	 2008,	 the	 Company’s	 strategy	 was	 to	 move	 its	 products	 up	 in	 terms	 of	 price	 range	 and	
    product	quality.		As	such,	China	Food	resisted	the	temptation	to	reduce	its	prices	despite	customers	becoming	increasingly	
    price	sensitive	in	the	first	half	of	2009.		The	Company	believed	that	such	action	would	have	negated	its	brand-building	efforts	
    in	2008.		This	resulted	in	many	customers	trading	down,	i.e.	buying	China	Food’s	cheaper	products	as	well	as	those	of	our	
    competitors.		However,	with	the	quicker	than	anticipated	recovery,	this	trend	has	already	begun	to	reverse.

    Against	a	backdrop	of	economic	uncertainty,	the	Company	adopted	more	below-the-line	marketing	strategies	with	promotions	
    and	increased	sales	rebates	to	maintain	market	share.		China	Food	also	launched	new	products	(1.7	litre	packaging)	to	target	
    the	restaurant	industry	in	Shandong.		While	this	resulted	in	lower	margins,	the	Company	is	confident	that	its	product	strategy	
    will	yield	better	returns	in	the	medium	to	longer	term.		China	Food’s	soya	sauce	continues	to	be	one	of	the	“Shandong	top	10	
    brands”	for	soya	sauce	(source:	Shandong	Bureau	of	Quality	and	Technical	Supervision)	and	this	year	saw	the	Company’s	bean	
    paste	win	a	similar	award	in	the	bean	paste	category.

    2009	also	saw	the	Company’s	condiments	business	grow	beyond	the	Chinese	domestic	marketplace	as	China	Food	participated	
    in	a	number	of	international	food	fairs	and	explored	other	markets,	including	the	Middle-East.		Similarly,	the	Company	has	also	
    been	in	discussions	with	some	UK	food	manufacturers	to	potentially	import	their	products	into	China.

    Animal	Feed	Business

    China	Food’s	feed	business	continues	to	be	profitable	and	cash	generative.		If	livestock	prices	improve	in	2010	and	the	feed	
    industry	picks	up,	the	nature	of	the	industry	is	such	that	the	Company	can	quickly	scale	up	to	meet	such	demands.		Pre-mix	
    feed	remains	China	Food’s	product	priority	for	the	feed	business	in	the	long	run	as	it	provides	the	Company	with	the	best	
    margins.

    The	revenue	of	the	feed	business	fell	by	35.5%	(in	RMB)	in	the	period	up	to	31	December	2009	as	the	industry	continued	to	
    face	slow	demand	and	increased	competition.		The	economic	recovery	has	had	little	effect	on	the	livestock	and	feed	industry.	             	
    The	prices	for	pork,	chicken	meat	and	eggs	continue	to	be	low,	resulting	in	little	incentive	for	the	livestock	industry	to	invest.	       	
    The	 issues	 of	 food	 safety	 legislation	 and	 commodity	 inflation	 witnessed	 over	 the	 last	 two	 years	 have	 seen	 many	 livestock	
    farmers	close	down	or	curtail	investment	in	the	face	of	liquidity	concerns.			

    The	Company’s	margins	also	fell	as	a	result	of	increased	competition	and	a	change	in	our	product	mix.		China	Food	sold	less	
    of	its	pre-mix	feed	which	provided	the	highest	margins	and	instead	sold	more	compound	feed.		This	is	because	the	smaller	
    egg	farmers,	who	are	the	Company’s	largest	customer	group	for	pre-mix	feed,	have	been	especially	hit	by	the	melamine	issue	
    (which	caused	a	ban	of	eggs	from	China	to	Taiwan	and	Hong	Kong)	in	late	2008	and	early	2009,	as	well	as	the	depressed	
    prices	in	general.		China	Food	shifted	its	focus	to	sell	its	compound	feed	for	duck	farmers	in	2009	to	maintain	activity	levels	
    in	the	factory.
                                                                                                              ANNUAL	REPORT	2009            5




                                                  CHIEF	EXECUTIVE	OFFICER’S	REPORT



On	a	positive	note,	on	23	February	2010	the	Chinese	government	imposed	increased	restrictions	on	foreign	feed	companies	who	wish	
to	sell	their	products	in	China	in	an	effort	to	further	control	domestic	food	safety.		This	may	well	reduce	the	competition	and	improve	
the	margins	for	the	Company’s	feed	business.		However,	it	may	be	some	time	before	the	feed	industry	reaches	a	peak	similar	to	that	
of	the	pre-2008	period.

progress on new factory

With	the	improving	economy	in	the	second	half	of	2009,	China	Food	needed	to	complete	
its	factory	to	capitalise	on	the	recovery	and	support	growing	demand	for	its	products.		In	
November	 2009,	 the	 Company	 completed	 a	 £3.0	 million	 Convertible	 Loan	 Note	 at	 a	
coupon	rate	of	10%	and	a	conversion	price	of	32	pence.		The	primary	objective	of	the	
Convertible	Loan	Note	was	to	provide	funds	to	complete	the	construction	of	the	factory.	  	
China	Food	is	now	on	target	to	start	trial	production	in	April	2010.		

Challenges for 2010                                                                             The official opening of the new factory
                                                                                                by Mr Alastair Morgan, Commercial
                                                                                                Counsellor and Director of Trade and
The	Board	believes	that	China	Food	has	the	balance	sheet	and	market	presence	to	meet	           Investment for China, British Embassy
the	challenges	ahead.		After	two	years	of	global	economic	uncertainty,	China’s	economy	is	      Beijing (Centre) with Mr John Mclean,
steadier	and	stronger.		The	business	climate	will	see	“quality	growth”	but	at	a	much	more	      Chairman of China Food Company Plc
moderate	pace	and	with	more	sustainable	margins.		Customers	will	be	more	discerning	
                                                                                                                                   	
after	the	food	safety	issues	and	branding	will	grow	in	importance.		Quality	compliance	and	inspection	costs	are	likely	to	increase.	
Industry	consolidation	will	see	the	larger	players	reducing	prices	to	push	out	the	smaller	players.

For	2010,	the	immediate	focus	will	include:

the commencement of production at the Company’s new factory

With	the	construction	almost	complete,	the	next	challenge	will	be	to	get	the	new	factory	to	operate	in	an	efficient	and	effective	manner	
as	soon	as	possible.		This	will	involve	the	hiring	and	training	of	new	production	staff,	inventory	management	and	quality	processes.		

the sales and marketing phase of China Food’s premium range soya sauce

With	this	premium	product,	the	company	will	be	targeting	a	different	consumer	group.	     	
China	Food	currently	has	an	extensive	presence	in	more	than	1,000	retail	outlets,	however,	
to	reach	this	new	consumer	group,	China	Food	will	need	to	expand	the	current	market	
channels	with	a	particular	focus	on	the	hypermarkets.		The	Company	needs	to	supplement	
its	existing	sales	and	marketing	team	in	order	to	successfully	achieve	this.	

obtaining a bank facility for working capital

The	Company	will	begin	trial	production	at	the	new	factory	in	April	2010.		Looking	forward,	
the	business	will	be	carefully	managed	to	accommodate	the	Company’s	levels	of	working	
capital.		At	the	current	funding	levels,	China	Food	can	immediately	start	the	manufacturing	
process.	However,	should	the	Company	secure	additional	bank	facilities,	it	would	benefit	from	the	ability	to	increase	the	rate	of	
production	and	fill	additional	silos.		Management	will	monitor	and	manage	the	speed	at	which	the	facility	operates,	depending	on	
the	availability	of	this	working	capital.	The	rate	of	production	is	entirely	within	China	Food’s	control	and	will	be	constantly	reviewed	
by	management.		

In	a	recent	statement	Premier	Wen	stated	that	China	will	continue	to	grow	GDP	at	a	rate	of	8.0%.		The	emergent	middle-class	will	
provide	more	opportunities	of	growth	in	the	cooking	and	dipping	sauce	sector	than	the	feed	business.		The	Company	will	continue	to	
monitor	the	feed	business	in	the	second	half	of	2010	as	the	Board	reviews	its	strategy	for	this	business.

I	believe	China	Food	has	a	committed	team	of	key	managers	and	strong	products	to	succeed	in	this	challenging	market.		We	will	
continue	to	deliver	on	our	strategies	to	build	“富氏”	(Fushi)	into	a	bigger	and	better	brand,	and	China	Food	into	a	stronger	company.

Raphael tham
Chief	Executive	Officer
7	April	2010
6   CHINA	FOOD	COMPANY	PLC




    MANAGEMENT	DISCUSSION	AND	ANALYSIS



    Income Statement Review

    Revenue

    Turnover	of	the	Group	for	the	year	ended	31	December	2009	was	£30.1	million	(2008:	£38.2	million),	representing	a	drop	
    of	21.1%.	In	local	currency	terms,	there	was	a	drop	of	33.7%.	The	average	GBP:RMB	exchange	rate	for	2009	was	10.7382	
    (2008:	12.7762).	

    Turnover (in RMB’000)
                                                                          % to                                                  % to
                                  H1 2009      H2 2009       FY2009                     H1 2008      H2 2008      FY2008
                                                                          Group                                                 Group
                                  RMB’000      RMB’000      RMB’000                     RMB’000      RMB’000     RMB’000
                                                                          total                                                 total
     turnover
     Condiments                     62,572	     72,355	     134,927	      41.7%          94,286	     101,276	     195,562	      40.1%
     Animal feed                    81,858	     106,822	    188,680	      58.3%          131,218	    161,466	     292,684	      59.9%
     Group total                   144,430	     179,177	    323,607	     100.0%          225,504	    262,742	     488,246	     100.0%

    Turnover	of	condiments	business	for	2009	was	£12.6	million	(2008:	£15.3	million),	representing	a	drop	of	17.9%.	In	local	
    currency	terms,	there	was	a	drop	of	31.0%	with	H1	down	33.6%	and	H2	down	28.6%	year-on-year.

    Turnover	of	feed	business	for	2009	was	£17.5	million	(2008:	£22.9	million),	representing	a	drop	of	23.3%.	In	local	currency	
    terms,	there	was	a	drop	of	35.5%	with	H1	down	37.6%	and	H2	down	33.8%	year-on-year.

    Profitability analysis

    The	Group’s	gross	profit	for	2009	was	£6.4	million	(2008:	£10.8	million),	representing	a	gross	profit	margin	of	21.1%	(2008:	
    28.2%).

    The	condiments	gross	profit	margin	of	39.7%	(2008:	48.3%)	is	largely	due	to	a	higher	sales	rebate	and	increased	competition.	
    Sales	volume	decreased	by	22.6%	as	compared	to	that	of	2008.	The	Group	increased	sales	rebate	from	3.5%	to	9.5%	to	keep	
    loyal	customers	in	the	competitive	environment.			

    The	feed	gross	profit	margin	of	7.8%	(2008:	14.7%)	is	largely	due	to	a	change	in	product	mix	and	higher	sales	rebate.	Sales	
    volume	dropped	by	22.3%	as	compared	to	that	of	2008.	Sales	volume	for	premix,	concentrate,	and	compound	feed	amounted	
    to	 20.7%	 (2008:	 32.5%),	 1.7%	 (2008:	 8.5%),	 and	 77.6%	 (2008:	 59.0%)	 of	 the	 overall	 sales	 respectively.	 Demand	 for	 the	
    higher-margin	 premix	 feed	 decreased	 significantly	 and	 demand	 for	 the	 lower-margin	 compound	 feed	 remained	 high.	This	
    change	in	the	product	mix	led	to	a	lower	gross	profit	margin.	The	Group	also	increased	sales	rebate	from	3-5%	to	6%	in	2009	
    to	incentivise	our	distributors.	

    Segment profit after tax (in RMB’000)
                                                                          % to                                                  % to
                                  H1 2009      H2 2009       FY2009                     H1 2008      H2 2008      FY2008
                                                                          Group                                                 Group
                                  RMB’000      RMB’000      RMB’000                     RMB’000      RMB’000     RMB’000
                                                                          total                                                 total
     Segment profit
     Condiments                     13,329	     14,769	      28,098	      79.0%          29,372	      28,399	      57,771	      66.7%
     Animal feed                    3,391	       4,080	       7,471	      21.0%          13,823	      14,979	      28,802	      33.3%
     Group total                    16,720	     18,849	      35,569	     100.0%          43,195	      43,378	      86,573	     100.0%

    Profit	after	tax	from	condiments	business	was	£2.6million	(2008:	£4.5million),	representing	a	drop	of	42.1%.	In	local	currency	
    terms,	there	was	a	drop	of	51.4%	with	H1	down	54.6%	and	H2	down	48.0%	year-on-year.

    Profit	after	tax	from	feed	business	was	£696,000	(2008:	£2.3million),	representing	a	drop	of	69.1%.	In	local	currency	terms,	
    there	was	a	drop	of	74.1%	with	H1	down	75.5%	and	H2	down	72.8%	year-on-year.
                                                                                                              ANNUAL	REPORT	2009              7




                                  MANAGEMENT	DISCUSSION	AND	ANALYSIS



Selling	and	marketing	costs	up	11.1%,	mainly	due	to	the	appreciation	of	GBP:RMB	exchange	rate.	In	local	currency	terms,	
there	 was	 a	 drop	 of	 6.5%.	 	The	 Group	 reduced	 its	 advertising	 and	 promotion	 expenses	 by	 increasing	 sales	 rebates	 to	 its	
distributors.		This	reduced	the	Group’s	financial	risk	in	investing	in	advertising	and	promotions	and	also	freed	up	working	
capital	for	our	new	factory.

Included	in	administrative	costs	of	£1.8	million,	there	was	an	employee	share	option	expense	of	£66,000	due	to	the	issuance	
of	the	employee	share	options	in	June	2009.		Excluding	this	expense,	the	administrative	costs	will	be	£1.7	million	representing	
an	increase	of	1.5%.


Interest	expenses	increased	from	£304,000	to	£434,000,	up	42.8%,	due	mainly	to	a	loan	of	USD2.5	million	extended	from	a	
shareholder	to	the	Company	in	November	2008	and	convertible	loan	notes	of	£3	million	issued	in	November	2009.

Earnings	Before	Interest,	Taxes,	Depreciation	and	Amortisation	(“EBITDA”)	of	the	Group	was	£3.7	million	(2008:	£8.2	million),	
down	55.7%.	The	reconciliation	of	EBITDA	to	income	statement	is	as	follows:

                                                                                   Year ended                             Year ended
                                                                            31 December 2009                       31 December 2008
                                                                                        £’000                                  £’000
 profit before tax                                                                         2,820	                                 7,506	
 less:
 Finance income                                                                             (123)                                   (81)
 Add:
 Finance costs                                                                               434	                                   357	
 Depreciation                                                                                342	                                   283	
 Amortisation                                                                                182	                                   180	
 eBItDA                                                                                    3,655	                                 8,245	

Effective	 tax	 rate	 of	 the	 Group	 increased	 to	 39.4%	 (2008:	 30.2%).	 Net	 profit	 of	 the	 Group	 was	 £1.7	 million	 (2008:	 £5.2	
million),	representing	a	group	net	profit	margin	of	5.7%	(2008:	13.7%).

Financial position Review

At	31	December	2009,	the	Group’s	net	assets	stood	at	£30.1	million	(31	December	2008:	£31.3	million).	The	decrease	in	net	
assets	was	due	to	the	appreciation	of	GBP:RMB	exchange	rate	at	31	December	2009.	The	GBP:RMB	exchange	rate	at	the	year	
end	was	11.0394	(31	December	2008:	9.9806).

Inventory	was	£1.3	million	at	31	December	2009	(31	December	2008:	£1.3	million).	

Trade	and	other	receivables	balance	was	£420,000	(31	December	2008:	£520,000),	representing	a	19.2%	decline	as	compared	
to	31	December	2008.	There	were	no	outstanding	trade	debtors	overdue	at	the	year	end.	

The	 Group	 issued	 convertible	 loan	 notes	 of	 £3.0	 million	 during	 the	 year,	 of	 which	 £1.0	 million	 was	 from	 Main	 World	
Investments	Ltd,	one	of	the	major	shareholders	of	the	Company.	The	subscription	money	was	from	the	partial	repayment	of	the	
shareholder	loan.	Net	proceeds	from	the	convertible	loan	notes	amounted	to	£1.9	million.

At	31	December	2009,	the	Group	had	a	cash	balance	of	£3.2	million	(2008:	£4.4	million)	and	generated	£1.4	million	(2008:	
£6.1	million)	from	operating	activities.	The	decrease	in	cash	balance	was	mainly	due	to	the	capital	expenditure	during	the	
year.	The	Group	spent	£4.2	million	(2008:	£10.5	million)	in	capital	investment	in	the	new	soya	sauce	plant	in	2009.	Capital	
expenditure	for	the	year	was	partially	financed	by	the	net	proceeds	from	the	convertible	loan	notes.

At	31	December	2009,	the	Group’s	debt	to	equity	ratio	was	0.30	(31	December	2008:	0.26).	In	2009,	the	Group’s	turnovers	for	inventory,	
trade	debtors,	and	trade	creditors	were	20	days	(2008:	13	days),	4	days	(2008:	3	days),	and	39	days	(2008:	25	days)	respectively.
8   CHINA	FOOD	COMPANY	PLC




    BOARD	OF	DIRECTORS



                                                                            the	senior	vice	president	of	a	Hong	Kong	based,	GEM	listed	
                                                                            company	 involved	 in	 securities,	 corporate	 finance	 advisory	
                                                                            and	 other	 related	 services	 and	 was	 the	 country	 manager	 of	
                                                                            their	Singapore	subsidiary.	Mr	Tham	has	also	founded	and	run	
                                                                            other	businesses	and	served	on	the	board	of	listed	companies	
                                                                            in	 Singapore.	 He	 is	 also	 currently	 a	 non-executive	 director	
                                                                            of	Byte	Power	Group	Limited,	an	Australian	listed	company.	
                                                                            Mr	Tham	started	his	career	with	the	Economic	Development	
                                                                            Board	of	Singapore	and	holds	a	Bachelor	of	Arts	(Economics)	
                                                                            from	the	National	University	of	Singapore.	


                                                                            Feng Bo (Chief operating officer)
                                                                            Feng	 Bo,	 aged	 41,	 graduated	 from	 the	 Beijing	 Agriculture	
                                                                            Engineering	University	in	1991	with	a	Bachelor	of	Science.	
                                                                            She	then	completed	her	graduate	course	in	International	Trade	
                                                                            at	China	Ocean	University	in	2003.	She	is	also	a	committee	
                                                                            member	 of	 the	 China	 Animal	 Husbandry	 and	 Veterinary	
                                                                            Institute	 of	Animal	 Nutrition.	 She	 joined	 Fuss	 Feed	 in	 1994	
                                                                            and	 subsequently	 became	 its	 General	 Manager.	 Feng	 Bo	 is	
                                                                            currently	a	director	of	Fuss	Feed	and	its	legal	representative.	

       from left to right
       Derek Marsh, John McLean, Frank Chau Leung Yu , Feng Bo and          Frank Chau leung Yu (Chief Financial officer)
       Raphael Tham Wai Mun
                                                                            Frank	 Chau,	 aged	 38,	 has	 more	 than	 ten	 years	 experience	
                                                                            in	 audit,	 corporate	 finance	 and	 financial	 management	 in	
                                                                            Singapore,	Hong	Kong	and	mainland	China.	Mr	Chau	was	the	
    John Mclean (non executive Chairman)                                    Financial	Controller	of	a	Singapore	mainboard	listed	company	
    John	McLean,	aged	57,	is	Chairman	of	Albany	Capital,	which	             prior	to	joining	the	Company.	Mr	Chau	started	his	career	with	
    he	 co-founded	 to	 invest	 in	 Chinese	 and	 other	 investments.	      the	Hong	Kong	member	of	Grant	Thornton	International	and	
    He	is	the	Non-executive	Chairman	of	China	Food	Company	                 holds	a	Master’s	degree	in	Business	Administration	from	the	
    plc,	 the	 9th	 largest	 manufacturer	 and	 seller	 of	 soya	 sauce	    University	of	Adelaide,	Australia.	Mr	Chau	is	a	fellow	member	
    in	 China	 and	 is	 also	 Non-executive	 Chairman	 of	 Sorbic	          of	the	Association	of	Chartered	Certified	Accountants.	
    International	Plc,	the	leading	Chinese	sorbate	producer	and	
    distributor	 and	 a	 non-executive	 director	 of	 a	 private	 equity	
    fund.	In	2007	he	joined	the	board	of	Humberts	plc,	the	estate	          Derek Marsh, CVo (non-executive Director)
    agent,	and	became	its	Executive	Chairman	to	lead	its	rescue	            Derek	Marsh,	aged	63,	has	thirty	eight	years	of	Government	
    and	ultimate	disposal.	Prior	to	this,	he	carried	out	a	strategic	       experience,	 including	 with	 the	 British	 diplomatic	 service	 in	
    review	 for	 Gamma	 Holdings	 NV	 of	 their	 UK	 interests,	            East	Asia	where	he	was	Deputy	British	Ambassador	in	Seoul	
    including	Sanderson,	the	textile	and	wallpaper	company,	and	            from	1997	to	2001	and	British	Trade	Representative	in	Taipei	
    as	its	UK	group	managing	director	successfully	implemented	             from	2002	to	2005.	His	other	Government	experience	includes	
    the	 turnaround	 and	 disposal	 plan.	 Sanderson	 was	 a	 global	       the	 following	 areas:	 export	 promotion,	 aerospace	 industry,	
    company	which	was	brand	and	design	led	and	had	operations	              large-scale	 information	 business,	 defence	 procurement	 and	
    in	America,	Asia	and	China.	In	the	nineties,	he	was	Finance	            military	 operations.	 Derek	 was	 a	 non-executive	 director	
    Director	and	then	General	Manager	of	ICS,	the	UK	logistics	             of	 Bovis	 Homes	 Limited	 between	 1992	 and	 1994.	 Bovis	
    and	overnight	courier	business	and	co-led	a	management	buy-             Homes	Limited	was	a	subsidiary	of	the	P&O	Group	plc.	He	is	
    out	of	the	company	with	3i,	prior	to	its	successful	disposal	to	        currently	a	non-executive	director	of	the	AIM	quoted	HaiKe	
    Hays	plc.	John	is	a	Chartered	Accountant	and	was	previously	            Chemical	 Group	 Limited,	 based	 in	 the	 Shandong	 Province.	
    with	Coopers	&	Lybrand	in	both	London	and	New	York.                     Derek	graduated	from	the	Royal	College	of	Defence	Studies,	
                                                                            London	and	the	NATO	Defence	College,	Rome	and	holds	an	
                                                                            MA	from	The	Queen’s	College,	Oxford.
    Raphael tham wai Mun (Chief executive officer)
    Raphael	Tham	Wai	Mun,	aged	40,	is	experienced	in	various	
    businesses	 within	 the	 technology,	 construction,	 retail	
    and	 finance	 industries	 and	 has	 been	 involved	 in	 general	
    management,	strategic	development,	financing	and	corporate	
    restructuring.	 Prior	 to	 joining	 the	 Company,	 Mr	 Tham	 was	
                                                                                                    ANNUAL REPORT 2009          9




                                                                    DIRECTORS’ REPORT


The Directors are pleased to present their report to the members together with the audited financial statements of China Food
Company Plc (“China Food” or the “Company”) and its subsidiaries (the “Group”) for the year ended 31 December 2009.


Principal activities

The Group mainly engaged in the manufacture and distribution of cooking and dipping sauces and animal feed products
through its subsidiaries in the People’s Republic of China (the “PRC”) (as set out in note 3.2(c)).

The results of the Group are set out in detail on pages 23 to 30.


Business review

Key Performance Indicators (KPIs)

The Directors identified revenue, margins, working capital, and sales mix as the major KPIs of the Group.

Working Capital Management

Working capital is managed through closely monitoring inventory turnover, debtors’ turnover and creditors’ turnover. In
2009, the turnovers for inventory, trade debtors and trade creditors were 20 (2008: 13), 4 (2008: 3), and 39 (2008: 25) days
respectively. There were no outstanding trade debtors overdue at the year end. There was an increase in inventory turnover as
the Group kept more raw materials in anticipation of increasing prices. Creditor payment policy is stated below.

Sales Mix

The Group reviews sales demand frequently and adjusts its sales mix according to the requirements of the market. In 2009,
the demand for pre-mix feed was still low so the Group continued to sell more compound feed to maintain its activity levels
in the factory. Sales of compound feed remained high at 54,000 tonnes (2008: 53,000 tonnes). There is no significant change
in the sales mix of the condiments business during the year.

A review of the revenue and margins is given in the Management Discussion and Analysis.
10   CHINA FOOD COMPANY PLC




     DIRECTORS’ REPORT


     Financial review

     Below is a summary on the Group’s performance for the year ended 31 December 2009.

     Summary Financial Results

                                                                      Year ended                Year ended                  Percentage
                                                               31 December 2009          31 December 2008                      Change
                                                                           £'000                     £'000

     Revenue                                                                 30,136                    38,215                   -21.1%
     EBITDA                                                                   3,655                     8,245                   -55.7%
     Profit before tax                                                        2,820                     7,506                   -62.4%
     Profit after tax                                                         1,708                     5,240                   -67.4%
     Cash and cash equivalents                                                3,248                     4,414                   -26.4%
     Net assets                                                              30,054                    31,268                    -3.9%
     Earnings per share (pence)                                                2.57                      7.89                   -67.4%

     A review of the Group’s performance and financial position is given in the Management Discussion and Analysis.


     Risks affecting the group

     General economic climate

     The general economic climate is volatile and is affected by numerous factors which are beyond the Group’s control and
     which may affect its operations, business and profitability. These factors include the supply and demand of capital, growth in
     gross domestic product, employment trends and industrial disruption, international economic trends, currency exchange rate
     fluctuations, the level of interest rates and the rate of inflation, global or regional political events and international events, as
     well as a range of other market forces, all of which have an impact on demand and business costs.

     Fluctuations in the price of raw materials

     A significant percentage of the raw materials used in the production of the Group’s products are commodity-based. The prices
     of raw materials such as corn, wheat and soya bean used in the production of animal feed and condiments may fluctuate due
     to changes in supply and demand conditions. Any shortage in the supply or upsurge in demand may lead to an increase in
     prices, which may adversely affect the Group’s profitability. It may be difficult for the Group to increase prices to pass all or
     part of the cost increases to the customers in the future.

     Demand for premium products

     As a result of the economic climate in the PRC, the demand for our high-end products in the first half of 2009 was low. Instead,
     there was increased demand for lower priced “value” products. This impacted on margins and profitability. In the event that
     the economy does not recover, demand for premium products may continue to be low and it may be more difficult to push
     sales for such products. This may affect the Group’s profit margins and the roll-out of its new facility.
                                                                                                        ANNUAL REPORT 2009           11




                                                                 DIRECTORS’ REPORT


Brand recognition in new markets

Currently, the Group’s condiments products are mainly medium-to-lower end and distribution of its products are mainly
through distributors in Shandong and nearby provinces. New soya sauce products from its new factory will be medium-to-high
end. Majority of the new products will be distributed through supermarket and hypermarket chains in new markets. Investment
in marketing costs will be higher. Track record of the Group does not guarantee that the Group can penetrate into the new
markets quickly and customers in the new markets will accept and recognise its brand. The success of which will affect the
Group’s revenue and profitability.

Outbreaks of infectious diseases

Since the Group supplies animal feed to livestock and other animals, its business may be adversely affected in the event of an
infectious disease outbreak which affects livestock or animals, such as bird flu, blue-ear pig disease, SARS or Nipah virus, as
demand for feed may be significantly reduced in the event such livestock or animals are subject to culling or illness or there
are quarantines imposed on farms.

In addition, due to the contagious nature of infectious diseases, travel advisories may be issued and quarantines may be
imposed by certain government authorities in the infected cities or provinces. Accordingly, an outbreak can result in global or
regional economic and social uncertainties. This may have an adverse effect on the Group’s sales and profitability. In addition,
in the event of an outbreak of infectious disease in any of the Group’s production facilities, its management and employees
may be quarantined and it may be required by the relevant health authorities to suspend its operations, until further notice.
Accordingly, this may cause disruptions to the Group’s business and operations.

The Group mitigates this risk by developing products for different animals.

Competition

The animal and condiments markets are both intensely competitive with a large number of both large and small competitors.
Larger companies, in particular, may have access to greater financial resources and technical facilities than the Group, which
may give them a competitive advantage. The Board and management regularly meet to discuss and agree the Group’s strategy
in the face of such competition.

Food safety

While the Group is ISO certified and HACCP approved, the Group may still be at risk to manufacturing errors, sub-standard
raw materials from its suppliers or foul play which will affect the safety of the Group’s products. This may result in a fine, the
lost of the business licenses and the lost of its customer confidence. The Group continued to take measures to improve food
safety and had no safety issues in 2009 despite the government exercising increased inspection and controls.

Cashflow

While the Group generated strong cashflow from operating activities, the majority of the funds have been reinvested in its Shou
Guang facility. Having financed most of the construction through its internal funds, the Group is reviewing and in discussion
with banks to refinance its investment which is long-term capital intensive in nature. In the event the Group has to continue
financing the project through internal funds, this may absorb a large part of the Group’s free cashflow.

As most distributors are required to pay in advance, there are no overdue outstanding debts. However, the Group’s new range
of premium grade soya sauce products will depend more on sales through hypermarkets and supermarkets. More working
capital may be locked in providing credit terms to these customers who typically demand for 30-60 days terms. This may
increase the Group’s working capital requirement.
12   CHINA FOOD COMPANY PLC




     DIRECTORS’ REPORT


     Dependence on key executives and personnel

     The future performance of the Group will depend on its ability to retain the services and personal connections or contacts
     of key executives and to recruit, motivate and retain other suitably skilled personnel. The Group aims to mitigate this risk by
     developing its staff in-house, giving them clear objectives and career paths.


     Financial risk management

     The Board reviews and agrees policies for managing financial risks. The financial risk management objectives and policies of
     the Group are set out in note 27 to the financial statements.


     Share capital

     There were no new shares issued during the year. The total number of shares in issue, both at the year end and at 7 April 2010,
     was 66,399,991.


     Dividends

     The directors do not recommend payment of a dividend in respect of the year ended 31 December 2009.


     Directors

     The following directors served the company during the year:

     John McLean                                 (Non-executive Chairman)
     Raphael Tham Wai Mun                        (Chief Executive Officer)
     Feng Bo                                     (Chief Operating Officer)
     Frank Chau Leung Yu                         (Chief Financial Officer)
     Derek Marsh                                 (Non-executive Director)

     None of the directors has had a material interest in any contract or arrangement of significance to which the company or any
     of its subsidiaries was a party during the year except for those disclosed in note 25.


     Employees

     The Board recognises that the Group’s employees are its most important asset. Employees are encouraged to train and develop
     their careers.

     The Board maintains good working relations with employees by the use of clear channels of communication. The responsibility
     for communication with the workforce rests with the managers through formal and informal meetings.

     The Group is committed to achieving equal opportunities and to complying with anti-discrimination legislation.


     Environmental policy

     The Group is committed to operating in an environmentally responsible manner and endeavours to adopt the best practicable
     means to reduce or eliminate polluting releases to the environment or in the disposal of waste products. The Group is committed
     to complying with environmental legislative requirements.
                                                                                                         ANNUAL REPORT 2009           13




                                                                  DIRECTORS’ REPORT


Creditor payment policy

It is the Group’s policy that payments to its suppliers are made in accordance with all relevant terms and conditions. The
payment policy applies to all payments to creditors for revenue and capital supplies of goods and services. At the balance
sheet date, there were 39 (2008: 25) days’ purchases outstanding, calculated on the ratio of average trade creditors to total
cost of sales.


Annual general meeting

The next Annual General Meeting will be held at 11:30 a.m. on 16 June 2010.


Substantial shareholdings

The Company has been notified that the following shareholders’ interests exceeded 3% of the Company’s issued ordinary
share capital at the date of this report:


                                                                                               No. of       Percentage of issued
 Shareholder                                                                          ordinary shares              share capital
 Sound Venture Holdings Inc                                                               15,056,961                     22.68%
 Main World Investments Limited                                                           14,772,883                     22.25%
 Albany Capital Group Limited                                                             10,144,418                     15.28%
 Good Triumph Pte Ltd                                                                      5,714,555                      8.61%
 IFS Capital Assets Pte Ltd                                                                4,165,984                      6.27%
 Lam Soon Realty (Pte) Ltd                                                                 2,511,612                      3.78%


Donations

The Group did not make any charitable donations during the year (2008: £16,000).


Statement of directors’ responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and regulations.

Company law requires the directors to prepare financial statements for each financial year which give a true and fair view of
the state of affairs of the parent company and the group as at the end of the financial year and of the profit or loss of the group
for the financial year. Under that law the directors are required to prepare the group financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union (IFRSs). The directors have elected to prepare
the parent company financial statements in accordance with IFRSs. In preparing these financial statements, the directors are
required to:

•	     select	suitable	accounting	policies	and	then	apply	them	consistently;
•	     make	judgments	and	estimates	that	are	reasonable	and	prudent;
•	     for	the	group	and	parent	company	financial	statements,	state	whether	applicable	IFRSs	have	been	followed,	subject	to	
       any	material	departures	disclosed	and	explained	in	the	financial	statements;
•	     prepare	the	financial	statements	on	the	going	concern	basis	unless	it	is	inappropriate	to	presume	that	the	company	will	
       continue in business.
14   CHINA FOOD COMPANY PLC




     DIRECTORS’ REPORT


     The directors are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time
     the financial position of the company and enable them to ensure that the financial statements comply with the Companies
     Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the
     prevention and detection of fraud and other irregularities.

     In so far as the directors are aware:

     •	     there	is	no	relevant	audit	information	of	which	the	company's	auditors	are	unaware;	and
     •	     the	 directors	 have	 taken	 all	 steps	 that	 they	 ought	 to	 have	 taken	 to	 make	 themselves	 aware	 of	 any	 relevant	 audit	
            information and to establish that the auditors are aware of that information.

     The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
     company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
     may differ from legislation in other jurisdictions.


     Auditor

     Grant Thornton UK LLP, have expressed willingness to continue in office.

     In accordance with section 489(4) of the Companies Act 2006 a resolution to reappoint Grant Thornton UK LLP will be
     proposed at the Annual General Meeting.




     By order of the board




     John McLean
     Chairman
     7 April 2010
                                                                                                         ANNUAL REPORT 2009       15




                                      DIRECTORS’ REMUNERATION


A Remuneration Committee currently comprising of one independent Non-executive Director, one Non-executive Director
and one Executive Director has been established to make recommendations to the Board on the Group’s policy and structure
for all remuneration of the Directors and senior management.

As China Food Company Plc (the “Company”) is an AIM listed company it is not required to present the Directors’ Remuneration
report. The Board has chosen to do so as a voluntary disclosure.

The purpose of the Remuneration Committee is to review the remuneration policy for the Directors and other senior management
and to determine the level of remuneration package in order to attract, motivate and retain talent. The Remuneration Committee
will consult with the Chairman of the Board and the Chief Executive Officer in respect of their recommendations in determining
the remuneration of the Directors and senior management.

It is the Group’s policy that all Executive Directors’ service contracts contain a six-month notice period.

Non-executive Directors are compensated with the aim to fairly represent their efforts and time dedicated to the Board
and various committee meetings. The Non-executive Directors have letters of appointment stating their annual fee. Their
appointment may be terminated by giving six-month written notice.

The remuneration of all the Directors during the financial year, excluding Directors’ interests in share options of the Company
is set out below.

                                                         Salary and benefits                     Fees                   Total
                                                                      £'000                     £'000                  £'000

John McLean                                                                6                        50                    56
Raphael Tham Wai Mun                                                     152                         5                   157
Feng Bo                                                                  123                         5                   128
Frank Chau Leung Yu                                                      102                         5                   107
Derek Marsh                                                                2                        25                    27
                                                                         385                        90                   475
16   CHINA FOOD COMPANY PLC




     DIRECTORS’ REMUNERATION


     Share Options

     The Company adopted a share option scheme in 2007 (the “Share Option Scheme”) and granted 4,648,000 options to the
     Directors and employees on 10 June 2009.

     Details of the grant of share options to the Directors and a summary of the movements of the outstanding share options during
     the financial year under the Share Option Scheme are as follows:

                                                                        Outstanding as at      Date at which
     Director                                    Options granted       31 December 2009          exercisable        Expiry Date

     John McLean
     Lot 1                                                77,466                    77,466       10 Jun 2009        09 Jun 2019
     Lot 2                                                77,467                    77,467       10 Jun 2010        09 Jun 2019
     Lot 3                                                77,467                    77,467       10 Jun 2011        09 Jun 2019
                                                         232,400                   232,400

     Raphael Tham Wai Mun
     Lot 1                                               123,947                   123,947       10 Jun 2009        09 Jun 2019
     Lot 2                                               123,947                   123,947       10 Jun 2010        09 Jun 2019
     Lot 3                                               123,946                   123,946       10 Jun 2011        09 Jun 2019
                                                         371,840                   371,840

     Feng Bo
     Lot 1                                               123,947                   123,947       10 Jun 2009        09 Jun 2019
     Lot 2                                               123,946                   123,946       10 Jun 2010        09 Jun 2019
     Lot 3                                               123,947                   123,947       10 Jun 2011        09 Jun 2019
                                                         371,840                   371,840

     Frank Chau Leung Yu
     Lot 1                                                92,960                    92,960       10 Jun 2009        09 Jun 2019
     Lot 2                                                92,960                    92,960       10 Jun 2010        09 Jun 2019
     Lot 3                                                92,960                    92,960       10 Jun 2011        09 Jun 2019
                                                         278,880                   278,880

     Derek Marsh
     Lot 1                                                46,480                    46,480       10 Jun 2009        09 Jun 2019
     Lot 2                                                46,480                    46,480       10 Jun 2010        09 Jun 2019
     Lot 3                                                46,480                    46,480       10 Jun 2011        09 Jun 2019
                                                         139,440                   139,440

     None of the share options has been exercised during the year.
                                                                                                ANNUAL REPORT 2009          17




                                   DIRECTORS’ REMUNERATION


Directors’ Interests

The Directors’ interests in the share capital of the Company at 31 December 2009 are shown below.

                                                                                            Ordinary shares held
Director                                                                                      Direct          Deemed

John Mclean (1)                                                                              215,800        10,101,558
Raphael Tham Wai Mun                                                                         100,000
Feng Bo (2)                                                                                                 14,772,883
Frank Chau Leung Yu                                                                           50,000
Derek Marsh                                                                                   53,333
                                                                                             419,133        24,874,441

(1)
       John McLean is a director and shareholder of Albany Capital Group Limited which holds 10,101,558 ordinary shares
       in the Company.

(2)
       Feng Bo has deemed interest in Main World Investments Limited's holdings of 14,772,883 ordinary shares. Feng Bo is
       the spouse of Fu Guoping who is the sole shareholder of Main World Investments Limited.

The Company was informed on 24 and 29 March 2010 of the Directors’ dealing in the Company’s shares. The Directors’
interests in the share capital of the Company at the date of this report are shown below.

                                                                                            Ordinary shares held
Director                                                                                      Direct           Deemed

John Mclean (1)                                                                              243,655        10,144,418
Raphael Tham Wai Mun                                                                         100,000
Feng Bo (2)                                                                                                 14,772,883
Frank Chau Leung Yu                                                                           50,000
Derek Marsh                                                                                   58,478
                                                                                             452,133        24,917,301

(1)
       John McLean is a director and shareholder of Albany Capital Group Limited which holds 10,144,418 ordinary shares
       in the Company.

(2)
       Feng Bo has deemed interest in Main World Investments Limited's holdings of 14,772,883 ordinary shares. Feng Bo is
       the spouse of Fu Guoping who is the sole shareholder of Main World Investments Limited.
18   CHINA FOOD COMPANY PLC




     CORPORATE GOVERNANCE


     Introduction

     China Food Company Plc (“China Food” or the “Company”) believes that high standards of corporate governance are essential
     to its growth, driving performance, and maximising long-term shareholder value. While the Company is not subject to the
     Combined Code applicable to companies listed on the Official List, The Company is committed to observing high standards
     of corporate governance.

     In this report, we describe the Company’s corporate governance processes and activities with reference to the principles of the
     Quoted Companies Alliance’s Corporate Governance Guidelines. The main features of the Company’s corporate governance
     procedures are as follows:


     The Board

     The Board effectively leads the Group, provides strategic direction, sets the values and standards for corporate governance and
     oversees the business affairs of the Group.

     The Board meets regularly to review the Group’s operations and performance. Additional meetings are convened to discuss
     matters that require urgent consideration. The Board has defined a schedule of matters specifically reserved for its decision and
     delegates certain powers to the Board committees and to the executive directors, collectively and individually.

     The number of Board meetings and Board Committee meetings held in the current financial year and the attendance of
     Directors at these meetings are as follows:

                                                                                                                     Remuneration
     Attendance                                                             Board        Audit Committee               Committee
     Meetings held                                                              5                      2                        3

     John McLean                                                              5/5                      2/2                      3/3
     Derek Marsh                                                              5/5                      2/2                      3/3
     Raphael Tham Wai Mun                                                     5/5                      2/2                      3/3
     Feng Bo                                                                  5/5                      N/A                      N/A
     Frank Chau Leung Yu                                                      5/5                      N/A                      N/A

     Other than the meetings held, Directors also visited operations in China and held discussions with Management three times
     during the year ended 31 December 2009.

     The Board comprises five directors, including the non-executive Chairman, three executive directors, and one independent
     non-executive director. Notwithstanding that less than one-third of the Board comprises independent Directors, the Board is
     able to exercise objective judgment on corporate affairs, independent from Management. The Board considers the size and
     composition of the Board appropriate for the scope and nature of the Group’s operations. The members of the Board have core
     competencies in various fields including accounting, finance, business management and strategic planning. The composition
     of the Board and the skills mix are regularly reviewed.

     In accordance with the Company’s Articles of Association, one third of the Board is required to retire by rotation each year.

     The Chairman and the Chief Executive Officer are separate persons to ensure an appropriate balance of power and authority.
     The separation of roles between the Chairman and the Chief Executive Officer facilitates a healthy exchange of views and
     opinions between the Board and Management.
                                                                                                         ANNUAL REPORT 2009            19




                                            CORPORATE GOVERNANCE


Committees of the Board

The Board has two established Committees for Audit and Remuneration.

The Audit Committee, chaired by John McLean, meets at least twice a year with the Company’s external auditors present. Its
roles mainly include the review of the financial statements, internal controls and the scope and cost of the audit, reports from
the external auditors. The Committee has full access to, and the co-operation of Management, as well as full discretion to
invite any Director or executive officer to attend its meetings. It has reasonable resources to enable it to discharge its functions
effectively.

The Remuneration Committee, chaired by Derek Marsh, is responsible for making recommendations to the Board on
remuneration policy for directors, including the setting of directors’ salaries and incentive payments. The Committee is also in
charge of recommending the granting of share options to the employees.

The Board has not established a Nomination Committee yet and will consider having one in due course.


Relations with Shareholders

The Board considers it important to communicate a balanced and understandable assessment of the group’s performance
and prospects to all investors. The Board maintains frequent contact with institutional investors through regular meetings.
The Annual General Meeting (“AGM”) is regarded by the Board as an important opportunity to meet and communicate with
individual shareholders. Shareholders are given ample time and opportunity at the company’s AGM to express their views
and put forward their questions to directors or management concerning the Group. The Board welcomes the views of all
shareholders, and other stakeholders, which in the first instance should be communicated to the Chairman.


Internal Control

The Board is ultimately responsible for the Group’s system of internal control, including financial, operational, compliance
control and risk management, and for reviewing and monitoring its effectiveness. The system of internal control is designed
to manage and minimise risk, rather than eliminate it. In pursuing these objectives internal controls can only provide a
reasonable and not absolute assurance against material misstatement or loss.

The Group’s system of internal control is designed to assist its business objectives, safeguard the group’s assets, ensure
compliance with regulation and provide reliable financial information. Regular management meetings review all aspects of
the Group’s business including any inherent or identified risks. Executive management review the significant risks affecting the
business and the policies and procedures by which these risks are managed.

The Board has engaged an external party to provide internal audit services who conduct an annual independent review. The
internal auditors’ plans are reviewed by and discussed with the Chairman of the Audit Committee. Through this process, risks
are identified and assessed according to their potential impact and likelihood of occurrence and appropriate actions are
assigned. The internal auditors performed their annual review in July 2009. All recommendations from previous years review
were found to have been appropriately addressed.

There are established procedures for budgeting and planning capital expenditure, together with the reporting systems for
monitoring the Group’s business and performance. There is a rolling three month forecast in place, which is used to assess the
financial impact of the Group’s strategy, together with a comprehensive budgeting system with an annual budget approved
by the Board. A monthly report to the Board details the financial performance of the Group for the preceding period versus
budget and/or forecast.
20   CHINA FOOD COMPANY PLC




     CORPORATE GOVERNANCE


     The external auditors, who are engaged to express an opinion on the Group financial statements, also consider the systems of
     internal financial control to the extent necessary to express that opinion. Internal and external auditors report the results of
     their work to management, including executive members of the Board and the Audit Committee.

     The Board has adopted the Share Dealing Code for the purpose of compliance with Rule 21 of the AIM Rules and takes steps
     to ensure compliance with that rule by the Group’s employees.

     The Board confirms that there is a continuing process for identifying, evaluating and managing the risks faced by the Group.
     Through the procedures outlined above, the Board has considered all significant aspects of internal control during the period
     under review and to date.


     Going Concern

     The directors have reviewed forecasts and budgets for the coming year, which have been drawn up with appropriate regard for
     the current macroeconomic environment and the particular circumstances in which the Group operates. These were prepared
     with reference to historic and current industry knowledge, taking future strategy of the Group into account. The existing
     operations have been generating funds to meet the Group’s short-term cash requirements. In respect of the new facility, the
     construction has almost been completed. The Group will only start full production upon the receipt of a bank facility. As a
     result, at the time of approving the financial statements, the directors consider that the Company and the Group have sufficient
     resources to continue in operational existence for the foreseeable future, and accordingly, that it is appropriate to adopt the
     going concern basis in the preparation of the financial statements.

     As with all business forecasts, the directors’ statement cannot guarantee that the going concern basis will remain appropriate
     given the inherent uncertainty about future events.
                                                                                                         ANNUAL REPORT 2009             21




                       INDEPENDENT AUDITOR’S REPORT
                                  TO THE MEMBERS OF CHINA FOOD COMPANY PLC




We have audited the financial statements of China Food Company plc for the year ended 31 December 2009 which comprise
the consolidated income statement, the consolidated statement of comprehensive income, the consolidated and company
statements of financial position, the consolidated and parent company statements of cash flows, the consolidated and
company statements of changes in equity and the related notes. The financial reporting framework that has been applied in
their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union
and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act
2006.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required
to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors’ Responsibilities Statement set out on page 12, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit
the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the APB's website at www.frc.org.uk/apb/scope/
UKNP.

Opinion on financial statements

In our opinion:

•	     the	financial	statements	give	a	true	and	fair	view	of	the	state	of	the	group's	and	of	the	parent	company's	affairs	as	at	31	
       December	2009	and	of	the	group's	profit	for	the	year	then	ended;	

•	     the	 group	 financial	 statements	 have	 been	 properly	 prepared	 in	 accordance	 with	 IFRS	 as	 adopted	 by	 the	 European	
       Union;	

•	     the	 parent	 company	 financial	 statements	 have	 been	 properly	 prepared	 in	 accordance	 with	 IFRS	 as	 adopted	 by	 the	
       European	Union	and	as	applied	in	accordance	with	the	provisions	of	the	Companies	Act	2006;	and

•	     the	financial	statements	have	been	prepared	in	accordance	with	the	requirements	of	the	Companies	Act	2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Directors' Report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
22   CHINA FOOD COMPANY PLC




     INDEPENDENT AUDITOR’S REPORT
     TO THE MEMBERS OF CHINA FOOD COMPANY PLC




     Matters on which we are required to report by exception

     We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if,
     in our opinion:

     •	     adequate	accounting	records	have	not	been	kept	by	the	parent	company,	or	returns	adequate	for	our	audit	have	not	
            been	received	from	branches	not	visited	by	us;	or

     •	     the	parent	company	financial	statements	are	not	in	agreement	with	the	accounting	records	and	returns;	or

     •	     certain	disclosures	of	directors’	remuneration	specified	by	law	are	not	made;	or

     •	     we	have	not	received	all	the	information	and	explanations	we	require	for	our	audit.




     Norman Armstrong
     Senior Statutory Auditor
     for and on behalf of Grant Thornton UK LLP
     Statutory Auditor, Chartered Accountants
     London
     7 April 2010
                                                                                        ANNUAL REPORT 2009      23




                CONSOLIDATED INCOME STATEMENT
                                                   FOR THE YEAR ENDED 31 DECEMBER 2009




                                                                           Year ended             Year ended
                                                            Notes   31 December 2009       31 December 2008
                                                                                £'000                  £'000

Revenue                                                      4                 30,136                 38,215
Cost of sales                                                                 (23,779)               (27,450)
Gross profit                                                                    6,357                 10,765

Other operating income                                       5                      7                     12
Selling and marketing costs                                                    (1,456)                (1,310)
Administrative costs                                                           (1,777)                (1,685)
Operating result                                                                3,131                  7,782

Finance costs                                                6                   (434)                  (357)
Finance income                                               6                    123                     81
Profit before tax                                            7                  2,820                  7,506
Taxation                                                     8                 (1,112)                (2,266)
Profit for the year attributable to equity holders of the
  parent                                                                       1,708                  5,240

Earnings per share
- Basic (pence)                                              9                   2.57                   7.89
- Fully diluted (pence)                                      9                   2.57                   7.89




There are no discontinued operations.
24   CHINA FOOD COMPANY PLC




     CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
     FOR THE YEAR ENDED 31 DECEMBER 2009




                                                                                        Year ended           Year ended
                                                                                 31 December 2009     31 December 2008
                                                                                             £'000                £'000

     Profit for the year                                                                    1,708                5,240

     Other comprehensive income
     Exchange differences on translating foreign operations                                 (3,109)              9,073
     Other comprehensive income, net of tax                                                 (3,109)              9,073

     Total comprehensive income for the year attributable to equity holders of
       the parent                                                                           (1,401)             14,313
                                                                                                     ANNUAL REPORT 2009      25



           CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                               AS AT 31 DECEMBER 2009




                                                                    As at                  As at                    As at
                                           Notes        31 December 2009       31 December 2008         31 December 2007
                                                                   £'000                  £'000                    £'000
ASSETS
Non-current assets
Property, plant and equipment                10                     30,702                  29,732                11,176
Land use rights lease prepayments            11                      7,976                   9,018                 6,393
Total non-current assets                                            38,678                  38,750                17,569

Current assets
Inventories                                  12                       1,331                  1,318                   576
Land use rights lease prepayments            11                         177                    196                   114
Trade and other receivables                  13                         420                    520                   578
Cash and cash equivalents                    14                       3,248                  4,414                 7,270
Total current assets                                                  5,176                  6,448                 8,538

Total assets                                                        43,854                  45,198                26,107

LIABILITIES
Current liabilities
Trade and other payables                     15                       4,418                  4,929                 3,978
Bank loans                                   16                       2,246                  2,485                 1,339
Current portion of shareholders' loans       18                         440                    478                   547
Current tax payable                                                     341                    906                   738
Total current liabilities                                             7,445                  8,798                 6,602

Net current (liabilities)/asstes                                     (2,269)                (2,350)                1,936

Total assets less current liabilities                               36,409                  36,400                19,505

Non-current liabilities
Convertible loan notes                       17                       2,744                      -                     -
Shareholder's loan                           18                       3,611                  5,132                 2,550
                                                                      6,355                  5,132                 2,550

Net assets                                                          30,054                  31,268                16,955

EQUITY
Share capital                                19                       2,656                  2,656                  2,656
Share premium                                20                      25,678                 25,678                 25,678
PRC statutory reserve                                                 2,671                  2,340                  1,807
Reverse acquisition reserve                                         (23,992)               (23,992)               (23,992)
Shares to be issued reserve                                             116                     50                     50
Convertible loan notes - equity              17                         121                      -                      -
Foreign exchange translation reserve                                  6,299                  9,408                    335
Merger reserve                                                        2,216                  2,216                  2,216
Retained profits                                                     14,289                 12,912                  8,205
                                                                     30,054                 31,268                 16,955

These financial statements were approved by the directors on 7 April 2010, and signed on their behalf by:

John McLean
Chairman
26   CHINA FOOD COMPANY PLC




     COMPANY STATEMENT OF FINANCIAL POSITION
     AS AT 31 DECEMBER 2009




                                                                         As at                  As at                  As at
                                                  Notes      31 December 2009       31 December 2008       31 December 2007
                                                                        £'000                  £'000                  £'000
     ASSETS
     Non-current assets
     Investments in subsidiaries                    22                   28,128                  26,317              25,167

     Current assets
     Trade and other receivables                    13                         9                     10                  17
     VAT recoverable                                                           9                     11                 205
     Advance to a subsidiary                        25                     1,546                  1,713                   -
     Amount due from a subsidiary                   25                        77                     22                   -
     Cash and cash equivalents                      14                       161                    386               1,901
     Total current assets                                                  1,802                  2,142               2,123

     Total assets                                                        29,930                  28,459              27,290

     LIABILITIES
     Current liabilities
     Trade and other payables                       15                       257                    101                 274
     Amount due to subsidiary                                                  -                      -                  40
     Total current liabilities                                               257                    101                 314

     Net current assets                                                    1,545                  2,041               1,809

     Total assets less current liabilities                               29,673                  28,358              26,976

     Non-current liabilities
     Convertible loan notes                         17                     2,744                      -                    -
     Shareholder's loan                             18                       518                  1,713                    -
                                                                           3,262                  1,713                    -

     Net assets                                                          26,411                  26,645              26,976

     EQUITY
     Share capital                                  19                     2,656                  2,656               2,656
     Share premium                                  20                     6,037                  6,037               6,037
     Shares to be issued reserve                                             116                     50                  50
     Merger relief reserve                                               18,553                  18,553              18,553
     Convertible loan notes - equity                17                       121                      -                   -
     Accumulated losses                                                   (1,072)                  (651)               (320)
                                                                         26,411                  26,645              26,976

     These financial statements were approved by the directors on 7 April 2010, and signed on their behalf by:

     John McLean
     Chairman
                                                                                 ANNUAL REPORT 2009        27



                CONSOLIDATED STATEMENT OF CASH FLOWS
                                                FOR THE YEAR ENDED 31 DECEMBER 2009




                                                                      Year ended            Year ended
                                                               31 December 2009      31 December 2008
                                                                           £'000                 £ '000
Cash flows from operating activities
   Profit before tax                                                      2,820                  7,506
       Adjustments for:
           Depreciation                                                     342                    283
           Amortisation of land use rights lease prepayments                182                    180
           Loss on disposal of property, plant and equipment                  1                       -
           Employee share options                                            66                       -
           Finance costs                                                    434                    357
           Finance income                                                  (123)                    (81)
Operating profit before working capital changes                           3,722                  8,245
   Changes in working capital:
       Inventories                                                            (13)                 (742)
       Trade and other receivables                                           100                     58
       Trade and other payables                                             (792)                   588
Cash generated from operations                                             3,017                  8,149
   Interest received                                                           12                    81
   Income taxes paid                                                      (1,604)                (2,098)
Net cash generated from operating activities                               1,425                  6,132

Cash flows from investing activities
   Payment for acquisition of property, plant and equipment               (4,274)              (10,573)
   Proceeds from disposal of property, plant and equipment                     1                     3
Net cash used in investing activities                                     (4,273)              (10,570)

Cash flows from financing activities
   Proceeds from bank loan                                                    -                    469
   Repayment of bank loan                                                     -                     (47)
   Proceeds from shareholder loan                                             -                  1,262
   Repayment of shareholder loan                                              -                   (218)
   Net proceeds from convertible loan notes                               1,865                       -
   Interest paid                                                           (153)                  (286)
Net cash generated from financing activities                              1,712                  1,180

Net decrease in cash and cash equivalents                                 (1,136)                (3,258)

Effect of foreign exchange rate changes                                     (30)                   402
Cash and cash equivalents at beginning of period                          4,414                  7,270
Cash and cash equivalents at end of period                                3,248                  4,414
28   CHINA FOOD COMPANY PLC




     COMPANY STATEMENT OF CASH FLOWS
     FOR THE YEAR ENDED 31 DECEMBER 2009




                                                                       Year ended            Year ended
                                                        Notes   31 December 2009      31 December 2008
                                                                            £'000                 £'000
     Cash flows from operating activities
        Loss before taxation                                                 (421)                 (331)
            Adjustments for:
                Employee share options                                          66                     -
                Finance costs                                                 121                     32
                Finance income                                                 (37)                  (31)
     Operating profit before working capital changes                         (271)                 (330)
        Changes in working capital:
            Trade and other receivables                                        (15)                 178
            Trade and other payables                                            34                 (224)
     Cash used in operations                                                 (252)                 (376)
        Interest received                                                        1                   31
     Net cash used in operating activities                                   (251)                 (345)

     Cash flows from investing activities
        Advance to a subsidiary                                            (1,811)               (1,150)
     Net cash used in investing activities                                 (1,811)               (1,150)

     Cash flows from financing activities
        Advance to a subsidiary                                                -                 (1,262)
        Proceeds from shareholder loan                                         -                  1,262
        Proceeds from convertible loan notes            23.1               2,004                      -
        Payment of transaction costs                    23.2                (139)                     -
     Net cash generated from financing activities                          1,865                      -

     Net decrease in cash and cash equivalents                               (197)               (1,495)

     Effect of foreign exchange rate changes                                  (28)                  (20)
     Cash and cash equivalents at beginning of period                        386                 1,901
     Cash and cash equivalents at end of period                              161                   386
                                                                                                                          ANNUAL REPORT 2009             29



      CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                             FOR THE YEAR ENDED 31 DECEMBER 2009




                                                                                                                      Foreign             Total equity
                                                       Shares to    Reverse                   PRC Convertible       exchange              attributable
                                   Share       Share   be issued acquisition   Merger    Statutory loan notes -   translation   Retained to owners of
                                  capital   premium      reserve    reserve    reserve   Reserves       equity        reserve     profits  the parent
                                   £’000      £’000       £’000       £’000     £’000       £’000        £’000         £’000      £’000         £’000


As at 1 January 2009               2,656     25,678          50     (23,992)    2,216       2,340             -        9,408     12,912        31,268


Employee share options
  granted                               -          -         66            -         -          -             -             -          -           66
Transfer to PRC statutory
   reserves                             -          -          -            -         -        331             -             -       (331)            -
Convertible loan notes – equity         -          -          -            -         -          -          121              -          -          121
Transactions with owners                -          -         66            -         -        331          121              -       (331)         187
Profit for the period                   -          -          -            -         -          -             -             -     1,708         1,708


Other comprehensive income:


Exchange differences on
  translation of foreign
  operations                            -          -          -            -         -          -             -       (3,109)          -       (3,109)
Total comprehensive income
   for the period                       -          -          -            -         -          -             -       (3,109)     1,708        (1,401)


As at 31 December 2009            2,656      25,678         116     (23,992)    2,216       2,671          121         6,299     14,289        30,054


As at 1 January 2008              2,656      25,678          50     (23,992)    2,216       1,807             -         335       8,205        16,955
Transfer to PRC statutory
   reserves                             -          -          -            -         -       533              -             -       (533)            -
Transactions with owners                -          -          -            -         -       533              -             -       (533)            -
Profit for the period                   -          -          -            -         -          -             -             -     5,240         5,240


Other comprehensive income:


Exchange differences on
  translation of foreign
  operations                            -          -          -            -         -          -             -       9,073            -        9,073
Total comprehensive income
   for the period                       -          -          -            -         -          -             -       9,073       5,240        14,313


As at 31 December 2008            2,656      25,678          50     (23,992)    2,216       2,340             -       9,408      12,912        31,268
30   CHINA FOOD COMPANY PLC




     COMPANY STATEMENT OF CHANGES IN EQUITY
     FOR THE YEAR ENDED 31 DECEMBER 2009




                                                                                                                    Total equity
                                                                                      Convertible                attributable to
                                 Share       Share     Shares to be   Merger relief   loan notes -   Accumulated owners of the
                                capital   premium    issued reserve        reserve         equity         losses          parent
                                 £’000      £’000            £’000           £’000          £’000          £’000          £’000


     As at 1 January 2009        2,656      6,037               50          18,553               -           (651)       26,645


     Employee share options
       granted                        -          -              66                -              -              -            66


     Convertible loan notes -
       equity                         -          -                -               -           121               -           121


     Transactions with owners         -          -              66                -           121               -           187


     Loss for the period              -          -                -               -              -           (421)         (421)


     As at 31 December 2009      2,656      6,037              116          18,553            121          (1,072)       26,411


     As at 1 January 2008        2,656      6,037               50          18,553               -           (320)       26,976


     Loss for the period              -          -                -               -              -           (331)         (331)


     As at 31 December 2008      2,656      6,037               50          18,553               -           (651)       26,645
                                                                                                   ANNUAL REPORT 2009           31




      NOTES TO THE FINANCIAL STATEMENTS
                                               FOR THE YEAR ENDED 31 DECEMBER 2009




1.   General Information

     Principal activities of China Food Company Plc (“China Food” or the “Company”) and its subsidiaries (the “Group”)
     include the development, manufacture and distribution of cooking and dipping sauces and animal feed products. The
     Group’s main operations are in the People’s Republic of China (the “PRC”).

     China Food, a public limited company, is the Group’s ultimate parent company. It is incorporated and domiciled in the
     United Kingdom. The address of China Food’s registered office is 17 Hanover Square, London W1S 1HU. China Food’s
     shares are listed on the AIM market of the London Stock Exchange.


2.   Changes in accounting policies

     2.1    Overall Considerations

            The Group has adopted the following new interpretations, revisions and amendments to IFRS issued by
            the International Accounting Standards Board, which are relevant to and effective for the Group's financial
            statements for the financial year beginning 1 January 2009:

            IAS 1 Presentation of Financial Statements (revised 2007)
            IAS 23 Borrowing Costs (Revised 2007)
            IFRS 8 Operating Segments

            Significant effects on current, prior or future periods arising from the first time application of these new
            requirements in respect of presentation, recognition and measurement are described in notes 2.2 to 2.4. An
            overview of standards, amendments and interpretations to IFRSs issued but not yet effective is given in note
            2.5.

     2.2    Adoption of IAS 1 Presentation of Financial Statements (revised 2007)

            The Group has adopted IAS 1 Presentation of Financial Statements (Revised 2007) in its consolidated financial
            statements. This standard has been applied retrospectively. The adoption of the standard does not affect the
            financial position or profits of the Group, but gives rise to additional disclosures. The measurement and
            recognition of the Group's assets, liabilities, income and expenses is unchanged, however some items that were
            recognised directly in equity are now recognised in other comprehensive income, such as for example exchange
            differences on translating foreign operations. In particular, an amount of (£3,109,000) (2008: £9,073,000) that
            would previously have been recognised directly in equity, has now been recognised in other comprehensive
            income.

            IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a 'Statement of
            comprehensive income' (see note 3.1). The 'Statement of recognised income and expenses', as was presented
            in the 2008 consolidated financial statements is no longer required. Further, a 'Statement of changes in equity'
            is presented.

     2.3    Adoption of IAS 23 Borrowing Costs (Revised 2007)

            The revised standard requires the capitalisation of borrowing costs, to the extent they are directly attributable
            to the acquisition, production or construction of qualifying assets that need a substantial period of time to
            get ready for their intended use or sale. In prior periods, the Group's policy was to immediately expense
            those borrowing costs. In accordance with the transitional provisions of the revised standard, the Group has
            capitalised borrowing costs relating to qualifying assets for which the commencement date for capitalisation
            was on or after the effective date, being 1 January 2009.
32   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     2.   Changes in accounting policies (continued)

          2.3    Adoption of IAS 23 Borrowing Costs (Revised 2007) (continued)

                 No retrospective restatement has been made for borrowing costs that have been expensed for qualifying assets
                 with a commencement date before the effective date.

                 The revised standard has decreased the Group's reported interest expense and increased the capitalised cost of
                 qualifying assets under construction in the current period. Borrowing costs of £43,000 have been capitalised.
                 The capitalisation is related to Fuss Biotech’s new soya sauce plant. There is no impact on the Group’s tax
                 expense as Fuss Biotech still enjoyed a tax holiday. Basic and diluted earnings per share for the current period
                 have increased by 0.065pence.

          2.4    Adoption of IFRS 8 Operating Segments

                 This standard has been applied retrospectively. The adoption of this standard has not affected the identified
                 operating segments for the Group. However the accounting policy for identifying segments is now based on
                 internal management reporting information that is regularly reviewed by the chief operating decision maker.

                 In contrast, IAS 14 required the Group to identify two sets of segments (business and geographical) based
                 on risks and rewards of the operating segments. Refer to note 3.18 for further information about the entity's
                 segment reporting accounting policies under IFRS 8. The new format can be found in note 29.

          2.5    Standards, amendments and interpretations to existing standards that are not yet effective and have not been
                 adopted early by the Group

                 At the date of authorisation of these financial statements, certain new standards, amendments and interpretations
                 to existing standards have been published but are not yet effective, and have not been adopted early by the
                 Group.

                 Management anticipates that all of the pronouncements will be adopted in the Group's accounting policies
                 for the first period beginning after the effective date of the pronouncement. Information on new standards,
                 amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided
                 below. Certain other new standards and interpretations have been issued but are not expected to have a material
                 impact on the Group's financial statements.

                 IFRS 3 Business Combinations (Revised 2008) (effective from 1 July 2009)
                 The standard is applicable for business combinations occurring in reporting periods beginning on or after 1 July
                 2009 and will be applied prospectively. The new standard introduces changes to the accounting requirements
                 for business combinations, but still requires use of the purchase method, and will have a significant effect on
                 business combinations occurring in future reporting periods.

                 IAS 27 Consolidated and Separate Financial Statements (Revised 2008) (effective from 1 July 2009)
                 The revised standard introduces changes to the accounting requirements for the loss of control of a subsidiary and
                 for changes in the Group's interest in subsidiaries. These changes will be applied prospectively in accordance
                 with the transitional provisions and so do not have an immediate effect on the Group's financial statements.
                                                                                                    ANNUAL REPORT 2009           33




      NOTES TO THE FINANCIAL STATEMENTS
                                                FOR THE YEAR ENDED 31 DECEMBER 2009




2.   Changes in accounting policies (continued)

     2.5    Standards, amendments and interpretations to existing standards that are not yet effective and have not been
            adopted early by the Group (continued)

            Annual Improvements 2009 (effective from 1 July 2009 and later)
            The IASB has issued Improvements for International Financial Reporting Standards 2009. Most of these
            amendments become effective in annual periods beginning on or after 1 July 2009 or 1 January 2010. The
            Group expects the amendments to IAS 17 Leases to be relevant to the Group's accounting policies. Prior to the
            amendment IAS 17 generally required a lease of land to be classified as an operating lease. The amendment
            now requires that leases of land are classified as finance or operating applying the general principles of IAS 17.
            The Group will need to reassess the classification of the land elements of its unexpired leases at 1 January 2010
            on the basis of information existing at the inception of those leases. Any newly classified finance leases are
            recognised retrospectively. Preliminary assessments indicate that the effect on the Group's financial statements
            will not be significant.

            IFRS 9 Financial Instruments (effective from 1 January 2013)
            The IASB aims to replace IAS 39 Financial Instruments: Recognition and Measurement in its entirety by the end
            of 2010, with the replacement standard to be effective for annual periods beginning 1 January 2013. IFRS 9 is
            the first part of Phase 1 of this project. The main phases are:

            Phase 1: Classification and Measurement
            Phase 2: Impairment methodology
            Phase 3: Hedge accounting

            In addition, a separate project is dealing with derecognition. Management have yet to assess the impact that
            this amendment is likely to have on the financial statements of the Group. However, they do not expect to
            implement the amendments until all chapters of the IAS 39 replacement have been published and they can
            comprehensively assess the impact of all changes.


3.   Summary of significant accounting policies

     The principal accounting policies of the Group are set out below.

     3.1    Presentation of financial statements

            The consolidated financial statements are presented in accordance with IAS 1 Presentation of Financial
            Statements (Revised 2007). The Group has elected to present the 'Statement of comprehensive income' in two
            statements: the 'Income statement' and a 'Statement of comprehensive income'.

            Two comparative periods are presented for the statement of financial position when the Group:

            (i)     applies an accounting policy retrospectively,
            (ii)    makes a retrospective restatement of items in its financial statements, or
            (iii)   reclassifies items in the financial statements.
34   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     3.   Summary of significant accounting policies (continued)

          3.2    Basis of preparation

                 The consolidated financial statements comprise the financial statements of all the entities within the Group.
                 The financial statements of the subsidiaries are prepared for the same reporting date as the parent company.
                 Consistent accounting policies are applied for like transactions and events in similar circumstances.

                 The consolidated financial statements of the Group and the individual financial statements of the company have
                 been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the EU
                 and under the historical cost convention. The measurement bases are set out below.

                 All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group
                 transactions that are recognised in assets, are eliminated in full.

                 (a)    Reverse acquisition accounting

                        In December 2007, the company successfully completed the acquisition of Full Fortune and its
                        subsidiaries by an issuance of 40,333,333 new ordinary shares of the company and cash consideration
                        of £5,000,000.

                        Due to the relative values of the companies, the former Full Fortune shareholders became majority
                        shareholders with 60.74 per cent. of the enlarged ordinary share capital in China Food, and hence hold
                        the majority of the voting rights. Further, the executive management of Full Fortune Group became that
                        of China Food and the Corporate Headquarters of the Group was moved to the Full Fortune premises
                        in Singapore. A qualitative and quantitative analysis of these factors led the Directors to conclude that
                        in this transaction Full Fortune has the controlling interest and should be treated as the accounting
                        acquirer.

                        In determining the appropriate accounting treatment for the reverse acquisition, the Directors considered
                        the Application Supplement to IFRS 3, Business Combinations. However, they concluded that this
                        transaction fell outside of the scope of IFRS 3, since China Food, whose activities prior to the acquisition
                        were limited to the management of cash resources and the maintenance of its listing, did not constitute
                        a business. It was therefore determined that the transaction should be accounted for in a manner that
                        was similar to the reverse accounting as described in IFRS 3, but without recognising goodwill.

                        In accordance with IAS 8 Accounting Policies, changes in Accounting Estimates and Errors, in developing
                        an appropriate accounting policy the Directors have considered the pronouncements of other standard-
                        setting bodies and specifically looked to accounting principles generally accepted in the United States
                        of America (“US GAAP”) for guidance (FAS 141, Business Combinations).

                        Under US GAAP, in a reverse acquisition, the target company (Full Fortune) is treated as the acquiring
                        company for financial reporting purposes (no purchase accounting adjustments) and the fair value of the
                        issuing company's common shares (China Food) is recognised, together with adjustments necessary to
                        reflect the net tangible and identifiable intangible assets at their fair value with any remainder assigned
                        to goodwill (full application of purchase accounting).

                        Under US GAAP such a transaction is treated as an equity issuance by the operating entity (in this case
                        Full Fortune). As a result, the cost of the combination is deemed to equal the net monetary assets of
                        the acquiree (China Food) plus transaction costs. Only costs incurred by the "target" company can be
                        capitalised.
                                                                                                  ANNUAL REPORT 2009           35




      NOTES TO THE FINANCIAL STATEMENTS
                                               FOR THE YEAR ENDED 31 DECEMBER 2009




3.   Summary of significant accounting policies (continued)

     3.2    Basis of preparation (continued)

            (a)    Reverse acquisition accounting (continued)

                   As a consequence of applying the reverse acquisition accounting policy described, a reverse acquisition
                   reserve was created (see note 3.14).

            (b)    Business combinations involving entities under common control

                   For the purposes of the consolidated financial statements, the creation of the Full Fortune Group under
                   the restructuring exercise before the completion of the reverse acquisition was treated as a business
                   combination involving entities under common control. A business combination is a “common control
                   combination” if the combining entities are ultimately controlled by the same party (including the same
                   individual shareholder or a group of shareholders acting together in accordance with a contractual
                   arrangement) both before and after the combination and the common control is not transitory.

                   Business combinations involving entities under common control fall outside the scope of IFRS 3:
                   Business Combinations. In accordance with IAS 8, Accounting Policies, Changes in Accounting
                   Estimates and Errors, management have considered the pronouncements of other standard-setting
                   bodies in developing an accounting policy for common control combinations, in particular the pooling
                   of interest-type method prescribed under US GAAP in paragraphs D11 to D18 of SFAS 141, Business
                   Combinations. As a result, the Full Fortune Group accounts for business combinations involving entities
                   under common control using pooling of interest-type accounting. Under this policy the assets and
                   liabilities of the acquiree are recorded at book value not fair value (although adjustments are made to
                   achieve uniform accounting policies), intangible assets and contingent liabilities are recognised only to
                   the extent that they were recognised by the acquiree in accordance with applicable IFRS, no goodwill
                   is recorded, any expenses of the combination are written off immediately in the income statement and
                   comparative amounts are restated as if the combination had taken place at the beginning of the earliest
                   comparative period presented.
36   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     3.   Summary of significant accounting policies (continued)

          3.2    Basis of preparation (continued)

                 (c)    Subsidiary undertakings

                        As at 31 December 2008 and 2009, China Food had the following subsidiaries:

                                                                                   Percentage of
                                                                                           equity
                                                           Date and place of      attributable to
                        Name of subsidiary                 establishment             China Food      Principal activities

                        Full Fortune Holdings Pte Ltd      26 May 2005                     100%      Holding company
                                                           Singapore

                        Held by Full Fortune

                        Fuss Feed (Weifang) Co., Ltd       28 November 1994                100%      Manufacture and sale of
                        (“Fuss Feed”)                      PRC                                       animal feed in the PRC
                        富氏饲料(潍坊)有限公司

                        Shandong Fuss Biotech Co., Ltd     24 June 2005                    100%      Not yet commenced
                        (“Fuss Biotech”)                   PRC                                       trading as of 31 December
                        山东富氏生物科技有限公司                                                                 2009

                        Held by Fuss Feed

                        Shandong Fu-Rich Co., Ltd          7 August 2001                   100%      Manufacture and sale of
                        (“Fu-Rich”)                        PRC                                       condiments in the PRC
                        山东富氏味业有限公司

                        All of the above subsidiaries are included in the consolidated financial statements.

                 (d)    Investments

                        Investments in subsidiary companies are stated at cost, less provisions for diminution in carrying value.
                                                                                                     ANNUAL REPORT 2009           37




      NOTES TO THE FINANCIAL STATEMENTS
                                                FOR THE YEAR ENDED 31 DECEMBER 2009




3.   Summary of significant accounting policies (continued)

     3.3    Significant accounting estimates and judgments

            Estimates, assumptions concerning the future and judgments are made in the preparation of the financial
            statements. They affect the application of the Group’s accounting policies, reported amounts of assets,
            liabilities, income and expenses, and disclosures made. They are assessed on an on-going basis and are based
            on experience and relevant factors, including expectations of future events that are believed to be reasonable
            under the circumstances.

            Critical judgments

            The judgments made which, in the opinion of the Directors, are critical in drawing up the financial statements
            are as follows:

            (i)     Accounting for the reverse acquisition transaction

                    As explained in note 3.2 (a), the Directors are of the opinion that this transaction fell outside of the
                    scope of IFRS 3, and as such they needed to devise an appropriate accounting policy by reference to the
                    pronouncements of other standard-setting bodies. The judgment taken was that US GAAP provides the
                    most appropriate basis in this case, and the accounting policy note sets out the accounting implications
                    of following this approach.

            (ii)    Accounting for the Full Fortune business combination

                    As explained in note 3.2 (b), the Directors are of the opinion that this transaction fell outside of the
                    scope of IFRS 3, and as such they needed to devise an appropriate accounting policy by reference to the
                    pronouncements of other standard-setting bodies. The judgment taken was that US GAAP provides the
                    most appropriate basis in this case, and the accounting policy note sets out the accounting implications
                    of following this approach.

            (iii)   Classification of Land Use Rights as Operating Leases

                    Within the PRC it is the practice for the State to issue Land Use Rights to individuals or entities. Such
                    rights are evidenced through the granting of a Land Use Rights certificate, which gives the holder the
                    right to use the land (including the construction of buildings thereon) for a given length of time. An
                    upfront payment is made for these rights. The Directors judge that the substance of these arrangements is
                    an operating lease over the land, and that the upfront payment represents prepaid lease rentals. As such
                    a prepayment is recognised in the balance sheet, analysed between current and non-current assets. The
                    prepayment is amortised to spread the lease cost over the duration of the term of the land use rights, as
                    specified in the lease certificate. See also notes 3.6 and 11.

            (iv)    Functional currency of China Food Company PLC

                    The Company is incorporated in England and Wales. The registered office is 17 Hanover Square,
                    London and the Company's shares are listed on the AIM market of the London Stock Exchange. Certain
                    of the Directors are based in the UK and remunerated through this Company. The UK head office
                    has responsibility for corporate functions such as fund raising, treasury, company secretarial and other
                    aspects in relation to maintaining the AIM listing. The company incurs costs in respect of these activities
                    which are denominated in GBP, and are sufficiently significant for the Directors to be satisfied that
                    the Company operates as an entity in its own right as envisaged under IAS 21. In turn it levies a
                    management fee to its subsidiaries in respect of services performed. As such the Directors conclude that
                    the functional currency of the Company is GBP.
38   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     3.   Summary of significant accounting policies (continued)

          3.3    Significant accounting estimates and judgments (continued)

                 Key sources of estimation uncertainty

                 The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet
                 date are discussed below. These are included for completeness, although it is the Directors' view that none of
                 these have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
                 within the next financial year.

                 (i)    Estimated impairment of property, plant and equipment

                        The Group evaluates whether items of property, plant and equipment have suffered any impairment
                        whenever events or changes in circumstances indicate that the carrying amount of the assets may not
                        be recoverable, in accordance with the stated accounting policy. Under the requirements of IAS 36,
                        Impairment of Assets, when the marker capitalisation of an entity exceeds the net assets of that entity, this
                        is considered to be an indicator of impairment. Therefore an impairment review has been undertaken
                        in accordance with IAS 36. The recoverable amounts of cash-generating units have been determined
                        based on value-in-use calculations. These calculations require the use of estimates which are explained
                        in note 10. The carrying amounts of these assets are disclosed in note 10.

                 (ii)   Estimated useful lives of property, plant and equipment

                        The cost of property, plant and equipment is depreciated on a straight-line basis over their useful lives.
                        Management estimates the useful lives of these property, plant and equipment to be within 2 to 20 years.
                        These are common life expectancies applied in the industry in which the Group operates. Changes in
                        the expected level of usage and technological developments could impact the economic useful lives
                        and the residual values of these assets, therefore future depreciation charges could be revised.

          3.4    Functional and foreign currency

                 (a)    Foreign currency transactions

                        Transactions in foreign currencies are measured in the respective functional currencies of China Food
                        and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange
                        rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in
                        foreign currencies are translated at the closing rate of exchange ruling at the balance sheet date.

                        Exchange differences arising on the settlement of monetary items or on translating monetary items at the
                        balance sheet date are recognised in the income statement except for exchange differences arising on
                        monetary items that form part of the Group’s net investment in foreign subsidiaries, which are recognised
                        initially in a separate component of equity as foreign currency translation reserve in the consolidated
                        balance sheet and recognised in the consolidated profit and loss account on disposal of the subsidiary.
                                                                                                    ANNUAL REPORT 2009            39




      NOTES TO THE FINANCIAL STATEMENTS
                                                 FOR THE YEAR ENDED 31 DECEMBER 2009




3.   Summary of significant accounting policies (continued)

     3.4    Functional and foreign currency (continued)

            (b)    Foreign currency translations

                   The results and financial position of foreign operations are translated into the presentational currency of
                   China Food (GBP) using the following procedures:

                   •	      Assets	and	liabilities	for	each	balance	sheet	presented	are	translated	at	the	closing	exchange	rate	
                           ruling	at	the	balance	sheet	date;	and

                   •	      Income	and	expenses	for	each	income	statement	are	translated	at	average	exchange	rates	for	the	
                           year, which approximate the exchange rates at the dates of the transactions.

                   All resulting exchange differences are recognised in a separate component of equity as foreign currency
                   translation reserve.

     3.5    Property, plant and equipment

            All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, property,
            plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment
            losses.

            Depreciation of an asset begins when it is available for use and is computed on a straight-line basis over the
            estimated useful life of the asset as follows:

            Buildings                        –           20 years
            Plant and machinery              –           10 years
            Equipment                        –           2 - 5 years
            Motor vehicles                   –           5 years

            Construction in progress represents property, plant and equipment 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 when completed and ready for use.

            The carrying values of property, plant and equipment are reviewed for impairment when events or changes in
            circumstances indicate that the carrying value may not be recoverable.

            The residual values, useful life and depreciation method are reviewed at each financial year-end to ensure that
            the amount, method and period of depreciation are consistent with previous estimates and the expected pattern
            of consumption of the future economic benefits embodied in the items of property, plant and equipment.

            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 arising on derecognition of the asset is included in the
            income statement in the year the asset is derecognised.
40   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     3.   Summary of significant accounting policies (continued)

          3.6    Leased assets

                 In accordance with IAS 17 Leases, the economic ownership of a leased asset is transferred to the lessee if the
                 lessee bears substantially all the risks and rewards related to the ownership of the leased asset, with the related
                 asset recognised at the time of inception of the lease at the fair value of the leased asset or, if lower, the present
                 value of the minimum lease payments plus incidental payments, if any, to be borne by the lessee, and with a
                 corresponding amount recognised as a finance leasing liability. On such leases, the interest element of leasing
                 payments represents a constant proportion of the capital balance outstanding and is charged to the income
                 statement over the period of the lease.

                 All other leases are regarded as operating leases and the payments made under them are charged to the income
                 statement on a straight line basis over the lease term. Lease incentives are spread over the term of the lease.

                 The land use rights held by the Group are regarded as operating leases. The amounts paid for these rights are
                 treated as lease prepayments and are amortised over the period for which the rights have been granted in
                 accordance with the land use rights certificate.

          3.7    Impairment of non-financial assets

                 The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any
                 such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate
                 of the asset’s recoverable amount.

                 An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and
                 its value in use 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 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. Where the carrying amount of an
                 asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable
                 amount. Impairment losses are recognised in the income statement as ‘impairment losses’.

          3.8    Financial assets

                 Financial assets are assigned to the different categories on initial recognition, depending on the characteristics
                 of the instrument and its purpose. All financial assets of the Group are classified as loans and receivables.

                 Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
                 quoted in an active market. After initial recognition these are measured at amortised cost using the effective
                 interest method, less impairment losses. Any change in their value is recognised in the income statement.

                 Significant receivables are considered for impairment on a case-by-case basis when they are past due at the
                 balance sheet date or when objective evidence is received that a specific counterparty will default. All other
                 receivables are reviewed for impairment in groups, which are determined by reference to the industry and
                 region of a counterparty and other available features of shared credit risk characteristics, if any. The percentage
                 of the write down is then based on recent historical counterparty default rates for each identified group.
                                                                                                     ANNUAL REPORT 2009            41




      NOTES TO THE FINANCIAL STATEMENTS
                                                FOR THE YEAR ENDED 31 DECEMBER 2009




3.   Summary of significant accounting policies (continued)

     3.9    Cash and cash equivalents

            Cash and cash equivalents comprise cash on hand, demand deposits, and short-term, highly liquid investments
            that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
            in value.

     3.10   Impairment of financial assets

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

            If there is objective evidence that an impairment loss on financial assets 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 discounted at the financial asset’s original effective interest rate.

            The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is
            recognised in the income statement.

            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. 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.

     3.11   Derecognition of financial assets

            A financial asset is derecognised where the contractual rights to receive cash flows from the asset have
            expired.

     3.12   Inventories

            Inventories are stated at lower of cost and net realisable value. Cost is determined using the weighted average
            method. Net realisable value is the estimated selling price in the ordinary course of business, less estimated
            costs of completion and the estimated costs necessary to make the sale.

     3.13   Financial liabilities

            Financial liabilities include trade and other payables, payables to related parties and interest-bearing loans and
            borrowings. Financial liabilities are recognised on the balance sheet when, and only when, the Group becomes
            a party to the contractual provisions of the financial instrument. Financial liabilities are initially recognised at
            fair value of consideration received less directly attributable transaction costs and subsequently measured at
            amortised cost using the effective interest method.

            Gains and losses are recognised in the income statement when the liabilities are derecognised as well as
            through the amortisation process. The liabilities are derecognised when the obligation under the liability is
            discharged or cancelled or expired.
42   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     3.   Summary of significant accounting policies (continued)

          3.13   Financial liabilities (continued)

                 Convertible loan notes

                 Convertible loan notes issued by the Group are regarded as compound instruments, consisting of a liability
                 component and an equity component. At the date of issue, the fair value of the liability component is estimated
                 using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds
                 of issue of the convertible loan notes and the fair value assigned to the liability component, representing the
                 embedded option to convert the liability into equity of the Group, is included in equity.

                 Issue costs are apportioned between the liability and equity components of the convertible loan notes based
                 on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged
                 directly against equity.

                 The interest expense on the liability component is calculated by applying the prevailing market interest rate for
                 similar non-convertible debt to the liability component of the instrument. The difference between this amount
                 and the interest paid is added to the carrying amount of the convertible loan note.

          3.14   Equity

                 For the purpose of preparation of the consolidated financial statements of the Group, the share capital represents
                 the nominal value of the issued share capital of China Food. Share premium represents the excess over nominal
                 value of the fair value of consideration received for equity shares, net of expenses of the share issue.

                 For the purpose of preparation of the consolidated financial statements of the Group, the merger reserve
                 represents the combined paid-up registered capital of the subsidiaries of Full Fortune less the payment made by
                 Fuss Feed for the acquisition of Fu-Rich. It arises as a result of adopting the pooling of interest-type accounting
                 method described in note 3.2(b).

                 The PRC statutory reserves comprise the capital reserves and the surplus reserves of the subsidiaries of Full
                 Fortune established in the PRC which were set up in accordance with their respective articles of association and
                 the relevant PRC laws and regulations.

                 The shares to be issued reserve represents equity-settled share-based payments until such share options are
                 exercised.

                 The reverse acquisition reserve arises as a result of following the accounting method described in note 3.2(a) in
                 respect of the RTO completed in 2007.

                 Foreign currency translation reserve represents the differences arising from translation of investments in overseas
                 subsidiaries.

          3.15   Share-based payments

                 All share-based payment arrangements are recognised in the consolidated financial statements in the period in
                 which the associated goods or services are provided.

                 The Group operates equity-settled share-based remuneration plans for its employees. None of the Group's
                 plans feature any options for a cash settlement.
                                                                                                     ANNUAL REPORT 2009            43




      NOTES TO THE FINANCIAL STATEMENTS
                                                FOR THE YEAR ENDED 31 DECEMBER 2009




3.   Summary of significant accounting policies (continued)

     3.15   Share-based payments (continued)

            All goods and services received in exchange for the grant of any share-based payment are measured at their fair
            values. Where employees are rewarded using share-based payments, the fair values of employees' services are
            determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised
            at the grant date and excludes the impact of non-market vesting conditions.

            All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding
            credit to “Shares to be issued reserve”. If vesting periods or other vesting conditions apply, the expense is
            allocated over the vesting period, based on the best available estimate of the number of share options expected
            to vest. Non-market vesting conditions are included in assumptions about the number of options that are
            expected to become exercisable. Estimates are subsequently revised if there is any indication that the number
            of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting
            is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share
            options ultimately exercised are different to that estimated on vesting.

            Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to
            the nominal value of the shares issued are allocated to share capital with any excess being recorded as share
            premium. All goods and services received in exchange for the grant of any share-based payment are measured
            at their fair values at the date the services are provided by reference to the fair value of the services provided.

     3.16   Borrowing costs

            Borrowing costs are generally expensed as incurred. Borrowing costs are capitalised if they are directly
            attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing
            costs commences when the activities to prepare the asset for its intended use or sale are in progress and
            the expenditures and borrowing costs are being incurred. Borrowing costs are capitalised until the assets are
            ready for their intended use. If the resulting carrying amount of the asset exceeds its recoverable amount, an
            impairment loss is recorded.

     3.17   Employee benefits - Defined contribution plans

            Full Fortune, a Singapore incorporated company, makes contributions to the Central Provident Fund scheme in
            Singapore, a defined contribution pension scheme.

            As stipulated by the rules and regulations in the PRC, the PRC subsidiaries of the Group contribute to state-
            sponsored retirement plans for their employees in the PRC at rates of 20% of the basic salaries of their
            employees, and have no further obligations for the actual payment of pensions or post-retirement benefits.
            The state-sponsored retirement plans are responsible for the entire pension obligations payable to the retired
            employees.

            The pensions costs charged against profits are the contributions payable to the scheme in respect of the
            accounting period.
44   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     3.   Summary of significant accounting policies (continued)

          3.18   Segment reporting

                 In identifying its operating segments, management generally follows the Group's service lines, which represent
                 the main products and services provided by the Group. The activities undertaken by the condiments segment
                 include the sale of cooking and dipping sauces. The activities undertaken by the animal feed segment include
                 the sale of animal feed. Each of these operating segments is managed separately as each of these service lines
                 requires different technologies and other resources as well as marketing approaches. All inter-segment transfers
                 are carried out at arm's length prices.

                 The measurement policies the Group uses for segment reporting under IFRS 8 are the same as those used in its
                 financial statements, except that:

                 Expenses relating to share-based payments are not included in arriving at the operating profit of the operating
                 segments. In addition, corporate assets which are not directly attributable to the business activities of any
                 operating segment are not allocated to a segment. In the financial periods under review, this primarily applies
                 to the Group's headquarters.

                 There have been no changes from prior periods in the measurement methods used to determine reported
                 segment profit or loss. No assymetrical allocations have been applied between segments.

          3.19   Revenue

                 Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
                 revenue can be reliably measured.

                 Revenue from the sale of goods is recognised when all the following conditions have been satisfied:

                 (a)	   the	Group	has	transferred	to	the	buyer	the	significant	risks	and	rewards	of	ownership	of	the	goods;
                 (b)    the Group retains neither continuing managerial involvement to the degree usually associated with
                        ownership	nor	effective	control	over	the	goods	sold;
                 (c)	   the	amount	of	revenue	can	be	measured	reliably;
                 (d)	   it	is	probable	that	the	economic	benefits	associated	with	the	transaction	will	flow	to	the	Group;
                 (e)    the costs incurred or to be incurred in respect of the transaction can be measured reliably.

                 For both the Feed and Condiments businesses these conditions are considered to have been satisfied when the
                 customer either collects or takes delivery of the goods.

                 Interest income is recognised as interest accrues (using the effective interest method) unless collectibility is in
                 doubt.
                                                                                                              ANNUAL REPORT 2009            45




      NOTES TO THE FINANCIAL STATEMENTS
                                                  FOR THE YEAR ENDED 31 DECEMBER 2009




3.   Summary of significant accounting policies (continued)

     3.20   Income taxes

            (a)      Current tax

                     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. The tax rates and tax laws used to compute the
                     amount are those that are enacted or substantively enacted by the balance sheet date.

            (b)      Sales tax

                     Revenues, expenses and assets are recognised net of the amount of sales tax except:

                     •	     Where	 the	 sales	 tax	 incurred	 on	 a	 purchase	 of	 assets	 or	 services	 is	 not	 recoverable	 from	 the	
                            taxation authority, in which case the sales tax is recognised as part of the cost of acquisition of
                            the	asset	or	as	part	of	the	expense	item	as	applicable;	and

                     •	     Receivables	and	payables	that	are	stated	with	the	amount	of	sales	tax	included.

                     The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of
                     receivables or payables in the balance sheet.


4.   Revenue

                                                                                            Year ended                 Year ended
                                                                                     31 December 2009           31 December 2008
                                                                                                 £’000                      £’000

     Sale of goods                                                                                 30,136                     38,215



5.   Other operating income

                                                                                            Year ended                  Year ended
                                                                                     31 December 2009            31 December 2008
                                                                                                 £’000                       £’000

     Sundry income                                                                                        7                        12
46   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     6.   Finance income and finance costs

          Finance income and costs include all interest-related income and expenses. The following amounts have been included
          in the income statement line for the reporting periods presented:

                                                                                             Year ended          Year ended
                                                                                      31 December 2009    31 December 2008
                                                                                                  £'000               £'000
          Loans and receivables:
          - Cash and short-term deposits                                                            12                  81
          Gain on foreign currency financial liabilities                                           111                   -
          Finance income                                                                           123                  81

                                                                                             Year ended          Year ended
                                                                                      31 December 2009    31 December 2008
                                                                                                  £'000               £'000

          Interest expense for bank borrowings at amortised cost                                   153                 156
          Interest expense on shareholder's loan                                                   231                 148
          Interest expense on convertible loan                                                      50                   -
          Loss on foreign currency financial liabilities                                             -                  53
          Finance costs                                                                            434                 357


     7.   Profit before tax

          Group
                                                                                             Year ended          Year ended
                                                                                      31 December 2009    31 December 2008
          Profit before tax is arrived at after charging:                                         £’000               £’000

          Depreciation of property, plant and equipment:
          - Buildings                                                                              210                 177
          - Plant and machinery                                                                     88                  69
          - Equipment                                                                               12                  10
          - Motor vehicles                                                                          32                  27
                                                                                                   342                 283

          Loss on disposal of property, plant and equipment                                          1                   -
          Amortisation of land use rights lease prepayment                                         182                 180
          Cost of inventories expensed                                                          23,779              27,450

          Auditors’ remuneration:
          Payable to the current auditors and their associates:
          - audit of the consolidated financial statements                                          46                  50
          - audit of the financial statements of associates pursuant to Legislation                 61                  65
          Payable to the PRC auditors                                                                2                   2
                                                                                                   ANNUAL REPORT 2009     47




      NOTES TO THE FINANCIAL STATEMENTS
                                              FOR THE YEAR ENDED 31 DECEMBER 2009




7.   Profit before tax (continued)

     Average number of persons employed by the Group (including executive directors) during the year:

                                                                                   Year ended                Year ended
                                                                            31 December 2009          31 December 2008

     Production                                                                             260                    256
     Sales and marketing                                                                    308                    296
     Administration                                                                          92                     82
                                                                                            660                    634

     In accordance with the Section 408 of the Companies Act 2006, the company has not presented its individual income
     statement. The result for the financial year ended 31 December 2009 was a loss of £421,000 (2008: £331,000).


8.   Income tax

     (a)    The major components of income tax expense are as follows:

                                                                                   Year ended               Year ended
                                                                            31 December 2009         31 December 2008
                                                                                        £’000                    £’000
            Current income tax
            Provision for PRC Enterprise Income Tax                                        1,112                 2,266
            Income tax expense recognised in the income statement                          1,112                 2,266

            China Food is subject to a United Kingdom Tax rate of 28% (2008: 28.5%).

            Full Fortune is subject to a Singapore Income Tax rate of 17% (2008:18%). As Full Fortune has no trading
            income, the expenses incurred cannot be carried forward as tax losses.

            Fuss Feed is subject to a PRC Enterprise Income Tax rate of 25% (2008: 25%).

            Fu-Rich is subject to a PRC Enterprise Income Tax rate of 25% (2008: 25%).

            Fuss Biotech is not subject to PRC Enterprise Income Tax as it enjoyed a tax holiday for the year ended 31
            December 2009 (2008: Nil).
48   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     8.   Income tax (continued)

          (b)    A reconciliation between tax expense and the product of accounting profit multiplied by the applicable
                 corporate tax rates is as follows:

                                                                                                 Year ended          Year ended
                                                                                          31 December 2009    31 December 2008
                                                                                                      £’000               £’000

                 Accounting profit before tax                                                        2,820                7,506

                 Tax at the domestic rates applicable to profits / losses in the
                   countries concerned (see above)                                                     753                1,902

                 Adjustments:
                 - Non-deductible expenses                                                               6                    5
                 - Unrelieved tax losses                                                               353                  359
                 Income tax expense recognised in the income statement                               1,112                2,266

                 No deferred tax asset or liability is recognised, principally as a result of the taxable profits for the China
                 companies equating to accounting profits, and there being no differences between the tax basis of assets and
                 liabilities and the carrying values in the balance sheet.

          (c)    There was no material unprovided deferred tax as at 31 December 2009.


     9.   Earnings per share and dividends

                                              Year ended 31 December 2009                      Year ended 31 December 2008
                                             Net Weighted average     Earnings                Net Weighted average     Earnings
                                           Profit number of shares   per share              Profit number of shares   per share
                                           £’000                        pence               £’000                        pence

          Basic earnings per
            ordinary share                 1,708           66,399,991              2.57     5,240        66,399,991        7.89

          Fully diluted earnings per
            ordinary share                 1,708           66,399,991              2.57     5,240        66,399,991        7.89

          Earnings per share has been calculated on 66,399,991 shares (2008: 66,399,991 shares), and on attributable earnings
          of £1,708,000 (2008: £5,240,000).

          The warrant granted to Strand Partners to subscribe 1,328,000 shares (2008: 1,328,000 shares) at £0.50 per share (see
          note 21.2.2), the share options granted to employees to subscribe 4,648,000 shares (2008: Nil) at £0.355 per share
          (see note 21.2.1), and the convertible loan notes issued (see note 17) have no dilution effect on the calculation of the
          earnings per share as the market price of the Company’s shares was lower than the exercise prices and conversion price
          at 31 December 2009.

          No dividend is proposed for the year ended 31 December 2009 (2008: Nil).
                                                                                              ANNUAL REPORT 2009      49




       NOTES TO THE FINANCIAL STATEMENTS
                                              FOR THE YEAR ENDED 31 DECEMBER 2009




10.   Property, plant and equipment

      Group
                                                  Construction      Plant and                   Motor
                                      Buildings    in progress    machineries    Equipment    vehicles       Total
                                         £’000          £’000          £’000         £’000      £’000       £’000
      Cost
      As at 1 January 2007               3,266            901            694           64         173       5,098
      Additions                              2          6,612             30           10          98       6,752
      Disposal                               -              -            (21)          (7)        (63)        (91)
      Foreign currency translation
        adjustment                         187            391             40            4          12         634
      As at 31 December 2007             3,455          7,904            743           71         220      12,393
      Additions                              -         10,743             65           23          10      10,841
      Disposal                               -              -              -           (2)        (11)        (13)
      Foreign currency translation
        adjustment                       1,559          6,576            354           38          97       8,624
      As at 31 December 2008             5,014         25,223          1,162          130         316      31,845
      Additions                              1          4,215             32           26           -       4,274
      Disposal                               -              -             (5)          (3)          -          (8)
      Foreign currency translation
        adjustment                        (480)         (2,534)         (112)          (13)        (31)     (3,170)
      As at 31 December 2009             4,535         26,904          1,077          140         285      32,941

      Accumulated depreciation
      As at 1 January 2007                 590               -           235           51         130       1,006
      Charge for the year                  148               -            56            8          15         227
      Written back on disposal               -               -           (19)          (6)        (56)        (81)
      Foreign currency translation
        adjustment                          41               -            16            3           5          65
      As at 31 December 2007               779               -           288           56          94       1,217
      Charge for the year                  177               -            69           10          27         283
      Written back on disposal               -               -             -           (2)         (8)        (10)
      Foreign currency translation
        adjustment                         401               -           149           27          46         623
      As at 31 December 2008             1,357               -           506           91         159       2,113
      Charge for the year                  210               -            88           12          32         342
      Written back on disposal               -               -            (3)          (2)          -          (5)
      Foreign currency translation
        adjustment                        (135)              -            (51)          (9)        (16)      (211)
      As at 31 December 2009             1,432               -           540           92         175       2,239

      Net book value
      As at 31 December 2009             3,103         26,904            537           48         110      30,702
      As at 31 December 2008             3,657         25,223            656           39         157      29,732
      As at 31 December 2007             2,676          7,904            455           15         126      11,176
50   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     10.   Property, plant and equipment (continued)

           As at 31 December 2009 the buildings with net book values of £2,723,000 were pledged as security for the bank loans
           (2008: £3,206,000 and 2007: £2,343,000) (note 16).

           For the purpose of impairment testing, non-financial assets have been grouped in accordance with the business
           segments identified. In consideration of the relatively smaller proportion of the non-financial assets attributable to
           the feed segment, only the condiment segment has been tested for impairment. The recoverable amount of the cash-
           generating unit was determined based on value-in-use calculations, covering a detailed five-year forecast, followed by
           an extrapolation of expected cash flows for the unit's remaining useful lives using the growth rate of 5% per annum.
           These forecasts reflect expectations as to the cash flows that will be generated once the new manufacturing facility is
           brought into operation from 2010. To-date this significant capital investment, which has largely been funded from the
           Group's operating cash flows, has been recorded as Construction in Progress (see above) and has not been generating
           a return for the business. The growth rate reflects the long-term average growth rates for the product lines and industries
           of the cash-generating unit within the PRC. A discount rate of 14.3% has been used for this calculation. No impairment
           loss has been identified as a result of this review.

           Apart from the considerations described in determining the value in use of the cash-generating unit described
           above, management is not currently aware of any other probable changes that would necessitate changes in its key
           estimates.


     11.   Land use rights lease prepayments

           Group
                                                                    Year ended               Year ended               Year ended
                                                             31 December 2009         31 December 2008         31 December 2007
                                                                         £'000                    £'000                    £'000

           Net book value as at 1 January                                   9,214                    6,507                   6,095
           Land use rights lease payments made during
             the year                                                           -                        -                     169
           Amortisation of payments over lease term                          (182)                    (180)                   (108)
           Foreign currency translation difference                           (879)                   2,887                     351
           Net book value as at 31 December                                 8,153                    9,214                   6,507

           Of which:
           Current                                                            177                      196                     114
           Non-current                                                      7,976                    9,018                   6,393
                                                                            8,153                    9,214                   6,507

           The Group’s land use rights lease prepayments are being amortised straight-line over 45 to 50 year terms.

           As at 31 December 2009 the land use rights lease prepayments with net book values of £2,964,000 were pledged as
           security for the bank loans (2008: £3,350,000 and 2007: £747,000) (note 16).
                                                                                                           ANNUAL REPORT 2009          51




       NOTES TO THE FINANCIAL STATEMENTS
                                                   FOR THE YEAR ENDED 31 DECEMBER 2009




12.   Inventories

      Group
                                                                      As at                    As at                     As at
                                                          31 December 2009         31 December 2008          31 December 2007
                                                                     £’000                    £’000                     £’000

      Raw materials                                                      1,022                      796                       392
      Work-in-progress                                                     101                      175                       101
      Finished goods                                                       208                      347                        83
                                                                         1,331                    1,318                       576


13.   Trade and other receivables

      Group
                                                                      As at                    As at                     As at
                                                          31 December 2009         31 December 2008          31 December 2007
                                                                     £’000                    £’000                     £’000

      Trade receivables                                                    346                      391                       279
      Other receivables                                                     51                       97                        86
      Prepayments                                                           14                       21                         8
      VAT recoverable                                                        9                       11                       205
                                                                           420                      520                       578

      Trade receivables are unsecured and non-interest bearing. They are recognised at their original invoice amounts which
      represent their fair values on initial recognition less provision for impairment where this is required. All trade receivables
      are denominated in RMB.

      Company
                                                                      As at                     As at                    As at
                                                          31 December 2009          31 December 2008         31 December 2007
                                                                     £’000                     £’000                    £’000

      Other receivables                                                       -                        -                        9
      Prepayments                                                             9                       10                        8
                                                                              9                       10                       17
52   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     14.   Cash and bank balances

           Group

           The cash and bank balances of the Group are denominated in the following currencies:

                                                                         As at                    As at                As at
                                                             31 December 2009         31 December 2008     31 December 2007
                                                                        £’000                    £’000                £’000

           RMB                                                              2,748                 3,626                  4,993
           SGD                                                                 77                   395                    373
           GBP                                                                423                   392                  1,903
           USD                                                                  -                     1                      1
                                                                            3,248                 4,414                  7,270

           Cash at banks earns interest at floating rates based on daily bank deposit rates.

           The conversion of RMB denominated cash and bank balances into foreign currencies and the remittance of these
           funds out of the PRC is subject to the rules and regulations of foreign exchange control promulgated by the PRC
           government.

           Company
                                                                         As at                    As at                As at
                                                             31 December 2009         31 December 2008     31 December 2007
                                                                        £’000                    £’000                £’000

           GBP                                                                161                  386                   1,901


     15.   Trade and other payables

           Group
                                                                         As at                    As at                As at
                                                             31 December 2009         31 December 2008     31 December 2007
                                                                        £’000                    £’000                £’000

           Trade payables                                                   2,414                2,624                   1,169
           Other payables
             - Bills payable                                                  362                  701                   1,002
             - Amount due to a related party                                   49                   54                     350
             - Others                                                         429                  500                     633
           Accrued expenses                                                 1,164                1,043                     822
           Receipts in advance                                                  -                    7                       2
                                                                            4,418                4,929                   3,978

           Trade and other payables are unsecured and non-interest bearing. They are recognised at their original invoice amounts
           which represent their fair values on initial recognition.
                                                                                                        ANNUAL REPORT 2009          53




       NOTES TO THE FINANCIAL STATEMENTS
                                                  FOR THE YEAR ENDED 31 DECEMBER 2009




15.   Trade and other payables (continued)

      The amount due to a related party represents the amount due to Mr Fu Guoping who is the beneficial owner of Main
      World Investments Limited, one of the major shareholders of the company. It is unsecured, non-interest bearing, and
      repayable in cash on demand.

      Company
                                                                     As at                    As at                   As at
                                                         31 December 2009         31 December 2008        31 December 2007
                                                                    £’000                    £’000                   £’000

      Trade payables                                                        -                       -                        3
      Other payables                                                       27                      16                        -
      Accrued expenses                                                    230                      85                      271
                                                                          257                     101                      274


16.   Bank loans

      All bank loans of the Group are denominated in RMB and are repayable within one year. The effective interest rate of
      the bank loans for the year ended 31 December 2009 was approximately from 7.43% to 8.66% (2008: approximately
      from 8.54% to 9.47% and 2007: approximately from 8.19% to 9.47%).

      The bank loans as at 31 December 2009 were secured by charges over the buildings and land use rights lease prepayments
      of the Group with net book values of £2,723,000 (2008: £3,206,000 and 2007: £2,343,000) and £2,964,000 (2008:
      £3,350,000 and 2007: £747,000), respectively as at 31 December 2009.


17.   Convertible loan notes

      The convertible loan notes were issued between 3 November 2009 and 15 December 2009. The notes are convertible
      into ordinary shares of the Company at any time between the date of issue of the notes and their maturity date, i.e.
      three years after the date of issue. The loan notes are convertible at £0.32 per share. The effective interest rate used to
      calculate the interest charged to the income statement was 12%.

      If the notes have not been converted, they will be redeemed on their maturity date at par. Interest of 10% per annum
      will be paid biannually up until that date.

      The net proceeds received from the issue of the convertible loan notes have been split between the liability element
      and an equity component, representing the fair value of the embedded option to convert the liability into equity of the
      Group, as follows:

                                                           Gross amount         Transaction costs             Net amount
                                                                  £'000                    £'000                   £'000

      Convertible loan notes issued                                 3,004                     139                    2,865
      Equity component                                               (127)                      (6)                   (121)
      Liability component at date of issue                          2,877                     133                    2,744
      Interest charged                                                                                                  50
      Interest paid                                                                                                      -
      Liability component at 31 December 2009                                                                        2,794

      The directors estimate the fair value of the liability component of the convertible loan notes at 31 December 2009 to
      be approximately £2.79 million.
54   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     18.   Shareholders’ loans

           Group
                                                                        As at                   As at                   As at
                                                            31 December 2009        31 December 2008        31 December 2007
                                                                       £'000                   £'000                   £’000

           Current                                                          440                     478                     547
           Non-current                                                    3,611                   5,132                   2,550
                                                                          4,051                   5,610                   3,097

           These are two shareholder loans in place – one denominated in USD which is non-current, and one denominated in
           SGD which is current.

           The current portion of the loan from a shareholder is denominated in SGD, and is unsecured, interest free and repayable
           on demand.

           The non-current portion of the loan from a shareholder is denominated in USD, and is unsecured, bears interest of 5%
           per annum and will expire on 11 November 2011.

           Company
                                                                        As at                   As at                   As at
                                                            31 December 2009        31 December 2008        31 December 2007
                                                                       £,000                   £,000                   £’000

           Non-current                                                      518                   1,713                        -
                                                                            518                   1,713                        -

           The loan from a shareholder is denominated in USD. It is unsecured, bears interest of 5% per annum and will expire
           on 11 November 2011.


     19.   Share capital

                                                                                       No. of shares                  £’000
           Authorised
           As at 31 December 2008 and 31 December 2009
             - Ordinary shares of 4p each                                              100,000,000                    4,000

           Issued, called up and fully paid
           As at 31 December 2008 and 31 December 2009
              - Ordinary shares of 4p each                                              66,399,991                    2,656
                                                                                                    ANNUAL REPORT 2009        55




       NOTES TO THE FINANCIAL STATEMENTS
                                                FOR THE YEAR ENDED 31 DECEMBER 2009




20.   Share premium

      Group
                                                                                          As at                   As at
                                                                              31 December 2009        31 December 2008
                                                                                         £’000                   £’000

      At end of period                                                                     25,678                 25,678

      Company
                                                                                          As at                    As at
                                                                              31 December 2009         31 December 2008
                                                                                         £’000                    £’000

      At end of period                                                                      6,037                  6,037

      It has been ascertained the reverse acquisition of Full Fortune Holdings Pte Ltd by the Company in 2007 qualified for
      merger relief under s131 Companies Act 1985. Accordingly the share premium previously recognised as arising on
      the shares issued by the Company in that transaction has been reclassified as a 'merger relief reserve'.


21.   Employee remuneration

      21.1    Employee benefits expenses

                                                                                     Year ended               Year ended
                                                                              31 December 2009         31 December 2008
                                                                                          £’000                    £’000
              Employee benefits expenses
              - Salaries and allowances                                                     1,525                  1,349
              - Pension scheme contributions                                                   42                     23
              - Share-based payment                                                            66                      -
                                                                                            1,633                  1,372

              Remuneration of the Directors is disclosed in the Directors’ Remuneration report and note 26.
56   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     21.   Employee remuneration (continued)

           21.2   Share-based payments

           21.2.1 Employee share option

                  The Group established a share option scheme in 2007 (the “Share Option Scheme”). On 10 June 2009 (the
                  “Date of Grant”), the Group granted 4,648,000 options to its Directors and employees with an exercise price of
                  £0.355 per ordinary share. The purpose of granting options under the Share Option Scheme was to incentivise
                  and reward the Group’s employees.

                  The Options may normally be exercised as follows:

                  Date of Grant          Vesting dates                               Number of options granted                   Total
                                                                                       Directors     Employees

                  10 June 2009           From the date of grant                          464,800         1,084,533          1,549,333

                                         From the date falling 12 months after
                                         the date of grant                               464,800         1,084,533          1,549,333

                                         From the date falling 24 months after
                                         the date of grant                               464,800         1,084,534          1,549,334
                                                                                       1,394,400         3,253,600          4,648,000

                  As at 31 December 2009, all options remained unexercised.

                  The fair values of options granted were determined using the binomial option pricing model. The following
                  principal assumptions were used in the valuation:

                  Exercise price (£)                                       0.355
                  Market price (£)                                         0.313
                  Option life                                             2 years
                  Volatility                                                20%
                  Risk free interest rate                                 1.12%
                  Dividend yield                                                -
                  Fair value at date of grant (£)                         0.0225

                  The underlying expected volatility was determined by reference to historical data of the Company's shares from
                  the date of completion of the reverse takeover to the date of grant of the share options. Though the options have
                  a contract life of ten years, a shorter option life is used as early exercise is expected. No special features inherent
                  to the options granted were incorporated into measurement of fair value.

                  In total, £66,000 of employee remuneration expense (all of which related to equity-settled share-based payment
                  transactions) has been included in profit and loss for 2009 (2008: nil) and credited to “shares to be issued
                  reserve”.
                                                                                                     ANNUAL REPORT 2009        57




       NOTES TO THE FINANCIAL STATEMENTS
                                                FOR THE YEAR ENDED 31 DECEMBER 2009




21.   Employee remuneration (continued)

      21.2   Share-based payments (continued)

      21.2.2 Other share-based payments

             China Food granted Strand Partners a warrant to subscribe for 1,328,000 new ordinary shares of the company
             at a subscription price of £0.50 per share. The warrant may be exercised at any time during the period of five
             years from 10 December 2007. As at 31 December 2009 the warrant remained unexercised.


22.   Investments in subsidiaries

      Company
                                                                   As at                   As at                   As at
                                                       31 December 2009        31 December 2008        31 December 2007
                                                                  £'000                   £'000                   £'000

      Equity investment                                             25,167                  25,167                 25,167
      Advance to a subsidiary                                        2,961                   1,150                      -
      As at end of the period                                       28,128                  26,317                 25,167

      Please refer to note 3.2(c) for details of the subsidiary companies of the Company.

      The advance to a subsidiary was capitalised because repayment was neither planned nor likely in the foreseeable future
      and is viewed as a capital contribution to be treated as equity.


23    Notes to the Company statement of cash flows

      23.1   Proceeds from issue of convertible loan notes

                                                                                                              Year ended
                                                                                                       31 December 2009
                                                                                                                   £’000

             Convertible loan notes issued for cash                                                                 2,004
             Convertible loan notes issued by converting shareholder’s loan                                         1,000
                                                                                                                    3,004

      23.2   Payment of transaction costs

             Transaction costs were professional fees paid to lawyers, accountants, and advisers for the Company in
             connection with the convertible loan notes.
58   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     24.   Capital commitments

           Group

           As at the balance sheet date, capital expenditure contracted for but not recognised in the financial statements is as
           follows:

                                                                                                   As at                    As at
                                                                                       31 December 2009         31 December 2008
                                                                                                  £’000                    £’000
           Capital commitments in respect of:

           Acquisition of property, plant and equipment                                                 577                      621
                                                                                                        577                      621


     25.   Related party disclosures

           Group

           An entity or individual is considered a related party of the Group for the purposes of the financial statements if: (i) it
           possesses the ability (directly or indirectly) to control or exercise significant influence over the operating and financial
           decisions	of	the	Group	or	vice	versa;	or	(ii)	it	is	subject	to	common	control.

           (a)     In addition to related party information disclosed elsewhere in the financial statements, the following significant
                   related party transactions took place during the year on terms agreed between the parties:

                                                                                              Year ended               Year ended
                                                                                       31 December 2009         31 December 2008
                                                                                                   £’000                    £’000
                   Director
                   Convertible loan interest                                                               1                        -

                   Main World Investments Limited
                   Convertible loan interest                                                             19                        -
                   Shareholder loan interest                                                            231                      148

                   Albany Capital Group Limited / Albany Capital PLC
                   Convertible loan interest                                                              9                        -
                   Management fee payable                                                                24                       25

                   Sorbic International PLC
                   Service fee receivable                                                                12                        3
                                                                                                   ANNUAL REPORT 2009       59




       NOTES TO THE FINANCIAL STATEMENTS
                                               FOR THE YEAR ENDED 31 DECEMBER 2009




25.   Related party disclosures (continued)

      (b)    Compensation of key management personnel (as recognised in the consolidated income statement)

                                                                                     Year ended             Year ended
                                                                              31 December 2009       31 December 2008
                                                                                          £’000                  £’000

             Short-term employee benefits                                                   532                     412
             Post employment benefits                                                        18                      15
             Share-based payments                                                            31                       -
             Total compensation to key management personnel                                 581                     427

             Comprised amounts paid to:
             Directors                                                                      494                     400
             Other key management personnel of the Group                                     87                      27
                                                                                            581                     427

      (C)    Convertible loan notes

             As at 31 December 2009, outstanding convertible loan notes owed to the directors were as follows:

                                                                                          Direct                 Deemed
                                                                                          £’000                    £’000

             Principal                                                                       50                    1,525
             Interest accrued                                                                 1                       28
                                                                                             51                    1,553

             Deemed interests are indirect holdings, namely shares owned by the spouse of a director, and by a company in
             which a director holds office.

      (d)    Ultimate controlling party

             China Food is a public listed company with no single controlling party.

             Company

             The following significant related party transactions took place during the year on terms agreed between the
             parties:
                                                                                          As at                  As at
                                                                              31 December 2009       31 December 2008
                                                                                         £’000                  £’000

             Advance to a subsidiary                                                      1,546                    1,713

             Amount due from a subsidiary                                                     77                      22

             The advance to a subsidiary represents an amount extended by China Food to a subsidiary. It is unsecured,
             interest free and has no fixed terms of repayment.
60   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     25.   Related party disclosures (continued)

           (d)    Ultimate controlling party (continued)

                  The amount due from a subsidiary is unsecured, interest free and has no fixed terms of repayment.

                                                                                          Year ended              Year ended
                                                                                   31 December 2009        31 December 2008
                                                                                               £’000                   £’000

                  Management fee income from a subsidiary                                          100                       100

                  Directors
                  Convertible loan interest                                                           1                        -

                  Main World Investments Limited
                  Convertible loan interest                                                          19                        -
                  Shareholder loan interest                                                          72                       12

                  Albany Capital Group Limited / Albany Capital PLC
                  Convertible loan interest                                                           9                        -
                  Management fee payable                                                             24                       25

                  As at 31 December 2009, outstanding convertible loan notes owed to the directors were as follows:

                                                                                                 Direct               Deemed
                                                                                                 £’000                  £’000

                  Principal                                                                         50                   1,525
                  Interest accrued                                                                   1                      28
                                                                                                    51                   1,553

                  Deemed interests are indirect holdings, namely shares owned by the spouse of a director, and by a company in
                  which a director holds office.


     26.   Directors’ remuneration

           Remuneration paid to or receivable by Directors of China Food in respect of qualifying services was as follows:

                                                                                          Year ended              Year ended
                                                                                   31 December 2009        31 December 2008
                                                                                               £’000                   £’000

           Aggregate fees and emoluments                                                           459                       386
           Pension scheme contributions                                                             16                        14
           Share-based payment                                                                      19                         -
                                                                                                   494                       400
                                                                                                          ANNUAL REPORT 2009       61




       NOTES TO THE FINANCIAL STATEMENTS
                                                  FOR THE YEAR ENDED 31 DECEMBER 2009




26.   Directors’ remuneration (continued)

      Total emoluments include the following amounts in respect of the highest paid director:

                                                                                        Year ended                 Year ended
                                                                                 31 December 2009           31 December 2008
                                                                                             £’000                      £’000

      Salary and benefits                                                                           162                    129

      There are no directors to whom retirement benefits are accruing under money purchase pension schemes.


27.   Risk management objectives and policies

      China Food is exposed to market risk through its use of financial instruments and specifically to currency risk, interest
      rate risk, credit and liquidity risk and certain other price risks, which result from both its operating and investing
      activities. The Group’s risk management is coordinated at its headquarters, in close co-operation with the Board of
      directors, and focuses on actively securing the Group’s short to medium term cash flows by minimising the exposure
      to financial markets.

      The Group’s raw materials consist of commodities such as soya bean, corn, wheat and sorghum. Most of these raw
      materials are purchased direct from farmers. The directors concluded this is not considered an area where sensitivity
      analysis is of value even though it is influenced by market prices.

      China Food does not engage in the trading of financial assets for speculative purposes nor does it write options. The
      most significant financial risks to which the Group is exposed are described below. See also note 27.5 for a summary
      of the Group’s financial assets and liabilities by category.

      27.1   Foreign currency sensitivity

             Group

             Most of the Group’s transactions are carried out in the PRC. Both sales and purchases are primarily denominated
             in RMB. The amounts to be paid and received in RMB are expected to largely offset one another, no hedging
             activity is undertaken. However, as the Group’s financial statements are prepared in GBP, its exposure to
             foreign currency translation is analysed as follows:

             Foreign currency denominated financial assets and liabilities, translated into GBP at the closing rate, are as
             follows:

                                        As at 31 December 2009       As at 31 December 2008          As at 31 December 2007
                                                 £’000                        £’000                           £’000
             Nominal amounts             USD      RMB     SGD         USD      RMB     SGD             USD     RMB     SGD

             Financial assets                 -    3,143       83          1    4,106       414             1    5,349      373
             Financial liabilities            -   (2,246)    (440)         -   (2,485)     (478)          (71)   (1,339)   (476)
             Short-term exposure              -      897     (357)         1    1,621        (64)         (70)   4,010     (103)

             Financial liabilities      (3,611)        -         -   (5,139)         -         -     (2,519)          -        -
             Long-term exposure         (3,611)        -         -   (5,139)         -         -     (2,519)          -        -
62   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     27.   Risk management objectives and policies (continued)

           27.1   Foreign currency sensitivity (continued)

                  The following table illustrates the sensitivity of the net result for the year and equity in regards to the Group’s
                  financial assets and financial liabilities and the GBP - USD, GBP - RMB and GBP - SGD exchange rate.

                  It assumes a +3.2% / - 1.5% change of the GBP/USD exchange rate for the year ended at 31 December 2009
                  (2008: +0.3% / -5.0% and 2007: +1.3% / -1.3%). A +3.8% / - 1.3% change of the GBP/RMB exchange rate
                  for the year ended at 31 December 2009 (2008: +0.0% / -5.0% and 2007: +1.0% / -1.7%). A +2.2% / - 1.9%
                  change of the GBP/SGD exchange rate for the year ended at 31 December 2009 (2008: +0.2% / -5.0% and
                  2007: +1.2% / -1.1%). Each of these percentages has been determined based on the average monthly market
                  volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Group’s foreign
                  currency financial instruments held at each balance sheet date.

                  If the GBP had strengthened against the USD, RMB and SGD by 3.2% (2008: 0.3% and 2007: 1.3%), 3.8%
                  (2008: 0.0% and 2007: 1.0%) and 2.2% (2008: 0.2% and 2007: 1.2%) respectively then this would have had
                  the following increase/(decrease) in the net result for the year and equity:

                                            As at 31 December 2009         As at 31 December 2008        As at 31 December 2007
                                                      £’000                          £’000                        £’000
                                             USD       RMB    SGD           USD       RMB    SGD          USD      RMB     SGD

                  Net result for the year      112        (33)        8       15          -         -       33        (40)        1
                  Equity                       112        (33)        8       15          -         -       33        (40)        1

                  If the GBP had weakened against the USD, RMB and SGD by 1.5% (2008: 5.0% and 2007: 1.3%), 1.3% (2008:
                  5.0% and 2007: 1.7%) and 1.9% (2008: 5.0% and 2007: 1.1%) respectively then this would have had the
                  following increase/(decrease) in the net result for the year and equity:

                                            As at 31 December 2009         As at 31 December 2008        As at 31 December 2007
                                                      £’000                          £’000                        £’000
                                             USD       RMB    SGD           USD       RMB    SGD          USD      RMB     SGD

                  Net result for the year       (55)      12         (7)    (270)       85         (3)     (34)       69         (1)
                  Equity                        (55)      12         (7)    (270)       85         (3)     (34)       69         (1)
                                                                                                          ANNUAL REPORT 2009         63




       NOTES TO THE FINANCIAL STATEMENTS
                                                 FOR THE YEAR ENDED 31 DECEMBER 2009




27.   Risk management objectives and policies (continued)

      27.1   Foreign currency sensitivity (continued)

             Company

             Most of the Company’s transactions are denominated in GBP except for an advance to a subsidiary and a
             shareholder loan which are denominated in USD.

             Foreign currency denominated financial assets and liabilities, translated into GBP at the closing rate, are as
             follows:

                                                                     As at                    As at                     As at
                                                         31 December 2009         31 December 2008          31 December 2007
                                                                    £'000                    £'000                     £'000
             Nominal amounts                                         USD                      USD                       USD

             Financial assets                                           1,546                    1,713                         -
             Short-term exposure                                        1,546                    1,713                         -

             Financial liabilities                                       (518)                  (1,713)                        -
             Long-term exposure                                          (518)                  (1,713)                        -

             The following table illustrates the sensitivity of the net result for the year and equity in regards to the Company’s
             financial assets and financial liabilities and the GBP - USD exchange rate.

             It assumes a +3.2% / - 1.5% change of the GBP/USD exchange rate for the year ended at 31 December 2009
             (2008: +0.3% / -5.0%). Each of these percentages has been determined based on the average monthly market
             volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Company’s foreign
             currency financial instruments held at each balance sheet date.

             If the GBP had strengthened against the USD by 3.2% (2008: 0.3%), then this would have had the following
             increase/(decrease) in the net result for the year and equity:

                                                                     As at                    As at                     As at
                                                         31 December 2009         31 December 2008          31 December 2007
                                                                    £'000                    £'000                     £'000
                                                                     USD                      USD                       USD

             Net result for the year                                       (32)                       -                        -
             Equity                                                        (32)                       -                        -
64   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     27.   Risk management objectives and policies (continued)

           27.1   Foreign currency sensitivity (continued)

                  If the GBP had weakened against the USD by 1.5% (2008: 5%), then this would have had the following
                  increase/(decrease) in the net result for the year and equity:

                                                                         As at                    As at                       As at
                                                             31 December 2009         31 December 2008            31 December 2007
                                                                        £'000                    £'000                       £'000
                                                                         USD                      USD                         USD

                  Net result for the year                                        16                         -                        -
                  Equity                                                         16                         -                        -

                  In 2008, the Company had a USD loan, in relation to which the foreign currency risk was mitigated due to an
                  offsetting USD loan receivable from a subsidiary.

           27.2   Interest rate sensitivity

                  Group

                  China Food’s policy is to minimise interest rate cash flow risk exposure on long-term financing. Longer-term
                  borrowings are therefore usually at fixed rates. At 31 December 2009, China Food is exposed to changes in
                  market interest rates through its bank borrowings, which are subject to variable interest rates.

                  The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible
                  change in interest rates of +0.81% and -0.00% (2008: +0.25%/-0.25% and 2007: +1.5%/-0.5%), with effect
                  from the beginning of the year. These changes are considered to be reasonably possible based on observation
                  of current market conditions, and based on the fact that the Group’s borrowings comprise shareholder loans at
                  a fixed rate of interest, and bank loans in China where interest rates are expected to increase. The calculations
                  are based on the Group’s financial instruments held at each balance sheet date. All other variables are held
                  constant.

                                                               As at                      As at                         As at
                                                        31 December 2009           31 December 2008              31 December 2007
                                                       Change in Interest rate    Change in Interest rate       Change in Interest rate
                                                         0.81%       -0.00%         0.25%       -0.25%              1.5%        -0.5%
                                                          £'000        £'000         £'000        £'000            £'000        £'000

                  Cash and banks                               23            -           11          (11)             109          (36)
                  Bank loans                                  (18)           -            (6)          6              (20)           6
                  Shareholders' loans - current                (1)           -            (1)          1                (8)          3
                  Shareholder's loan - non-current             (8)           -          (13)          13              (39)          13
                                                               (4)           -           (9)           9               42          (14)
                                                                                                         ANNUAL REPORT 2009        65




       NOTES TO THE FINANCIAL STATEMENTS
                                                 FOR THE YEAR ENDED 31 DECEMBER 2009




27.   Risk management objectives and policies (continued)

      27.2   Interest rate sensitivity (continued)

             Company

             The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible
             change in interest rates of +0.00% and -0.00% (2008: +0.25%/-0.25% and 2007: +0.5%/-0.5%), with effect
             from beginning of the year. These changes are considered to be reasonably possible based on observation
             of current market conditions. The calculations are based on the Company’s financial instruments held at the
             balance sheet date. All other variables are held constant.

                                                             As at                     As at                     As at
                                                      31 December 2009          31 December 2008          31 December 2007
                                                     Change in Interest rate   Change in Interest rate   Change in Interest rate
                                                       0.00%       -0.00%        0.25%       -0.25%          0.5%        -0.5%
                                                        £’000        £’000        £’000        £’000        £’000        £’000

             Cash and banks                                   -           -            1           (1)          10          (10)
             Shareholder's loan – non-current                 -           -           (4)           4            -            -
                                                              -           -           (3)           3           10          (10)

      27.3   Credit risk analysis

             Group

             China Food’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the
             balance sheet date, as summarised below:

                                                                      As at                    As at                   As at
                                                          31 December 2009         31 December 2008        31 December 2007
                                                                     £'000                    £'000                   £'000

             Trade and other receivables                                  411                      509                     373
             Cash and cash equivalents                                  3,248                    4,414                   7,270
                                                                        3,659                    4,923                   7,643

             China Food continuously monitors defaults of customers and other counterparties, identified either individually
             or by group, and incorporates this information into its credit risk controls. The Group’s policy is to deal only
             with creditworthy counterparties.

             China Food’s management considers that all the above financial assets that are not impaired for each of the
             reporting dates under review are of good credit quality.

             In respect of trade and other receivables, China Food is not exposed to any significant credit risk exposure to
             any single counterparty or any group of counterparties having similar characteristics. The credit risk for liquid
             funds is considered negligible, since the counterparties are reputable banks with high quality external credit
             ratings.

             All trade receivables as at 31 December 2009, 31 December 2008 and 31 December 2007 were current.
66   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     27.   Risk management objectives and policies (continued)

           27.3   Credit risk analysis (continued)

                  Company

                  The Company’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the
                  balance sheet date, as summarised below:

                                                                         As at                   As at                   As at
                                                             31 December 2009        31 December 2008        31 December 2007
                                                                        £'000                   £'000                   £'000

                  Trade and other receivables                                  9                      10                      17
                  Advance to a subsidiary                                  1,546                   1,713                       -
                  Amount due from a subsidiary                                77                      22                       -
                  Cash and cash equivalents                                  161                     386                   1,901
                                                                           1,793                   2,131                   1,918

                  In respect of trade and other receivables, China Food is not exposed to any significant credit risk exposure.
                  The credit risk for liquid funds is considered negligible, since the counterparties are reputable banks with high
                  quality external credit ratings.

           27.4   Liquidity risk analysis

                  Group

                  China Food manages its liquidity needs by carefully monitoring scheduled debt servicing payments for long-
                  term and short-term financial liabilities as well as cash-outflows due in day-to-day operations. Liquidity needs
                  are monitored in various time bands, on a day-to-day basis, as well as on the basis of a rolling one month and
                  three months projection. Long-term liquidity needs for a 360-day lookout period are identified in the year end
                  budget.

                  China Food maintains cash to meet its liquidity requirements for up to 30-day periods. Funding for long-term
                  liquidity needs is additionally secured by an adequate amount of committed credit facilities.

                  As at 31 December 2009, China Food’s financial liabilities have contractual maturities which are summarised
                  below:

                                                                    Current                              Non-current
                                                       within 6 months 6 to 12 months             1 to 5 years later than 5 years
                                                                 £’000          £’000                   £’000             £’000

                  Trade and other payables                        4,418                  -                  -                   -
                  Convertible loan notes                            192                152              3,556                   -
                  Shareholder's loan                                  -                440              4,341                   -
                  Bank borrowings                                   550              1,825                  -                   -
                                                                  5,160              2,417              7,897                   -
                                                                                                      ANNUAL REPORT 2009          67




       NOTES TO THE FINANCIAL STATEMENTS
                                                   FOR THE YEAR ENDED 31 DECEMBER 2009




27.   Risk management objectives and policies (continued)

      27.4   Liquidity risk analysis (continued)

             This compares to the maturity of China Food’s financial liabilities in the previous reporting periods as follows:

                                                                 Current                              Non-current
                                                    within 6 months 6 to 12 months             1 to 5 years later than 5 years
             2008                                             £’000          £’000                   £’000             £’000

             Trade and other payables                          4,741                  -                  -                    -
             Shareholder’s loan                                    -                478              5,798                    -
             Bank borrowings                                     610              2,024                  -                    -
                                                               5,351              2,502              5,798                    -

                                                                 Current                              Non-current
                                                    within 6 months 6 to 12 months             1 to 5 years later than 5 years
             2007                                             £’000          £’000                   £’000             £’000

             Trade and other payables                          3,978                  -                  -                    -
             Shareholder’s loan                                  250                350              2,789                    -
             Bank borrowings                                       -              1,339                  -                    -
                                                               4,228              1,689              2,789                    -

             The above contractual maturities reflect the gross cash flows, which may differ to the carrying values of the
             liabilities at the balance sheet date.

             Company

             As at 31 December 2009, the Company’s liabilities have contractual maturities which are summarised below:

                                                                 Current                              Non-current
                                                    within 6 months 6 to 12 months             1 to 5 years later than 5 years
                                                              £’000          £’000                   £’000             £’000

             Trade and other payables                            257                  -                  -                    -
             Convertible loan notes                              192                152              3,556                    -
             Shareholder’s loan                                    -                  -                647                    -
                                                                 449                152              4,203                    -

             This compares to the maturity of the Company’s financial liabilities in the previous reporting periods as follows:

                                                                 Current                              Non-current
                                                    within 6 months 6 to 12 months             1 to 5 years later than 5 years
             2008                                             £’000          £’000                   £’000             £’000

             Trade and other payables                             89                   -                 -                    -
             Shareholder’s loan                                    -                   -             1,884                    -
                                                                  89                   -             1,884                    -
68   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     27.   Risk management objectives and policies (continued)

           27.4   Liquidity risk analysis (continued)

                                                                      Current                               Non-current
                                                         within 6 months 6 to 12 months              1 to 5 years later than 5 years
                  2007                                             £’000          £’000                    £’000             £’000

                  Trade and other payables                             274                   -                   -                  -
                  Shareholder’s loan                                    40                   -                   -                  -
                                                                       314                   -                   -                  -

           27.5   Summary of financial assets and liabilities by category

                  Group

                  The carrying amounts of China Food’s financial assets and liabilities as recognised at the balance sheet date of
                  the reporting periods under review may also be categorised as follows. See notes 3.8 and 3.13 for explanations
                  as to how the categorisation of financial instruments affects their subsequent measurement.

                  In all cases the fair values of the assets and liabilities are considered to approximate to their carrying values. In
                  the case of the convertible loan notes this applies to the debt component only

                                                                                    Loan and              Other
                                                               Notes              receivables        (non-IAS39)                Total
                                                                                       £’000              £’000                £’000
                  2009

                  Current:
                  Trade and other receivables                    13                       411                   9                420
                  Cash and cash equivalents                      14                     3,248                   -              3,248
                  Total for category                                                    3,659                   9              3,668

                  2008

                  Current:
                  Trade and other receivables                    13                       509                  11                520
                  Cash and cash equivalents                      14                     4,414                   -              4,414
                  Total for category                                                    4,923                  11              4,934

                  2007

                  Current:
                  Trade and other receivables                    13                       373                205                 578
                  Cash and cash equivalents                      14                     7,270                  -               7,270
                  Total for category                                                    7,643                205               7,848
                                                                                                       ANNUAL REPORT 2009     69




       NOTES TO THE FINANCIAL STATEMENTS
                                               FOR THE YEAR ENDED 31 DECEMBER 2009




27.   Risk management objectives and policies (continued)

      27.5   Summary of financial assets and liabilities by category (continued)

                                                                               Financial liabilities
                                                                                     measured at
                                                               Notes               amortised cost                     Total
                                                                                             £’000                   £’000
             2009

             Non-current:
             Borrowings                                                                      6,355                   6,355

             Current:
             Borrowings                                                                      2,686                   2,686
             Trade and other payables                            15                          4,418                   4,418
             Total for category                                                             13,459                  13,459

             2008

             Non-current:
             Borrowings                                                                      5,132                   5,132

             Current:
             Borrowings                                                                      2,963                   2,963
             Trade and other payables                            15                          4,929                   4,929
             Total for category                                                             13,024                  13,024

             2007

             Non-current:
             Borrowings                                                                      2,550                   2,550

             Current:
             Borrowings                                                                      1,886                   1,886
             Trade and other payables                            15                          3,978                   3,978
             Total for category                                                              8,414                   8,414
70   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     27.   Risk management objectives and policies (continued)

           27.5   Summary of financial assets and liabilities by category (continued)

                  Company

                  The carrying amounts of the Company’s financial assets and liabilities as recognised at the balance sheet date
                  are considered to approximate to their carrying values. The loan to a subsidiary is non interest bearing but is
                  viewed by the Directors as short term in nature and hence the fair value is not considered to be materially
                  different from carrying value. These assets and liabilities may also be categorised as follows:

                                                                     Notes        Loan and receivables                    Total
                                                                                                £’000                    £’000
                  2009

                  Current:
                  Trade and other receivables                          13                             9                      9
                  Advance to a subsidiary                              25                         1,623                  1,623
                  Cash and cash equivalents                            14                           161                    161
                  Total for category                                                              1,793                  1,793

                  2008

                  Current:
                  Trade and other receivables                          13                            10                     10
                  Advance to a subsidiary                              25                         1,735                  1,735
                  Cash and cash equivalents                            14                           386                    386
                  Total for category                                                              2,131                  2,131

                  2007

                  Current:
                  Trade and other receivables                          13                            17                     17
                  Cash and cash equivalents                            14                         1,901                  1,901
                  Total for category                                                              1,918                  1,918
                                                                                                       ANNUAL REPORT 2009       71




       NOTES TO THE FINANCIAL STATEMENTS
                                               FOR THE YEAR ENDED 31 DECEMBER 2009




27.   Risk management objectives and policies (continued)

      27.5   Summary of financial assets and liabilities by category (continued)

                                                                               Financial liabilities
                                                                                     measured at
                                                               Notes               amortised cost                     Total
                                                                                             £’000                   £’000
             2009

             Non-current:
             Borrowings                                        17, 18                        3,262                   3,262

             Current:
             Trade and other payables                            15                            257                     257
             Total for category                                                              3,519                   3,519

             2008

             Non-current:
             Borrowings                                          18                          1,713                   1,713

             Current:
             Trade and other payables                            15                            101                     101
             Total for category                                                              1,814                   1,814

             2007

             Non-current:
             Borrowings                                                                            -                        -

             Current:
             Trade and other payables                            15                            274                    274
             Amount due to a subsidiary                                                         40                     40
             Total for category                                                                314                    314
72   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     28.   Capital management policies and procedures

           China Food’s capital management objectives are:

           •	     to	ensure	the	Group’s	ability	to	continue	as	a	going	concern;	and	
           •	     to	provide	an	adequate	return	to	shareholders.

           These objectives are achieved by pricing products and services commensurately with the level of risk.

           The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented
           on the face of the statement of financial position.

           The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities.
           The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions
           and risk characteristics of the underlying assets.

           Capital for the reporting periods under review is summarised as follows:

                                                                           As at                    As at                    As at
                                                               31 December 2009         31 December 2008         31 December 2007
                                                                          £’000                    £’000                    £’000

           Total equity                                                     30,054                   31,268                   16,955
           Cash and cash equivalents                                         (3,248)                  (4,414)                  (7,270)
           Capital                                                          26,806                   26,854                     9,685

           Total equity                                                     30,054                   31,268                   16,955
           Borrowings:
             Bank loans                                                      2,246                    2,485                    1,339
             Shareholder’s loan - current                                      440                      478                      547
             Convertible loan notes                                          2,744                        -                        -
             Shareholder's loan - non-current                                3,611                    5,132                    2,550
           Overall financing                                                39,095                   39,363                   21,391

           Capital-to-overall financing ratio                                  0.69                     0.68                     0.45

           The capital-to-overall financing ratio is considered to be appropriate to the needs of the business.
                                                                                                     ANNUAL REPORT 2009        73




       NOTES TO THE FINANCIAL STATEMENTS
                                                FOR THE YEAR ENDED 31 DECEMBER 2009




29.   Segmental reporting

      Management currently identifies the Group's two service lines as operating segments as further described in note 3.18.
      These operating segments are monitored and strategic decisions are made on the basis of adjusted segment operating
      results.

      Segment information is presented in respect of the Group’s business segments. No geographical segment information
      is presented as the Group mainly operates in the PRC.

      There were no inter-segment sales and transfers during the years ended 31 December 2009 (2008: Nil).

      Business segments

                                                                        Year ended 31 December 2009
                                                               Animal feed           Condiments                      Total
                                                                    £'000                 £'000                     £'000
      Segment revenue
      Sales to external customers                                   17,571                 12,565                  30,136

      Cost of sales                                                (16,205)                 (7,574)               (23,779)
      Finance income                                                     2                       4                       6
      Finance costs                                                      -                    (153)                   (153)
      Other expenses                                                  (437)                 (1,348)                 (1,785)
      Segment operating profit                                         931                   3,494                   4,425
      Taxation                                                        (235)                   (877)                 (1,112)
      Segment profit for the year                                      696                   2,617                   3,313

      Segment assets                                                 2,772                 40,554                  43,326

      Depreciation and amortisation                                     89                     431                    520
      Unallocated depreciation and amortisation                                                                         4
      Group depreciation and amortisation                                                                             524
74   CHINA FOOD COMPANY PLC




     NOTES TO THE FINANCIAL STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2009




     29.   Segmental reporting (continued)

                                                                             Year ended 31 December 2008
                                                                    Animal feed           Condiments                       Total
                                                                         £'000                 £'000                      £'000
           Segment revenue
           Sales to external customers                                   22,908                  15,307                  38,215

           Cost of sales                                                (19,534)                  (7,916)               (27,450)
           Finance income                                                    12                       13                      25
           Finance costs                                                      -                     (141)                   (141)
           Other expenses                                                  (377)                  (1,230)                 (1,607)
           Segment operating profit                                       3,009                    6,033                   9,042
           Taxation                                                        (754)                  (1,512)                 (2,266)
           Segment profit for the year                                    2,255                    4,521                   6,776

           Segment assets 2008                                            3,460                  40,904                  44,364

           Depreciation and amortisation                                      74                    386                     460
           Unallocated depreciation and amortisation                                                                          3
           Group depreciation and amortisation                                                                              463

           Segment assets 2007                                            2,415                  21,194                  23,609

           The totals presented for the Group's operating segments reconcile to the entity's key financial figures as presented in
           its financial statements as follows:

                                                                                           Year ended              Year ended
                                                                                    31 December 2009        31 December 2008
                                                                                                £'000                   £'000
           Segment revenue
           Total segment revenues                                                                30,136                  38,215
           Group revenues                                                                        30,136                  38,215

           Profit or loss
           Segment operating profit                                                                4,425                  9,042
           Finance income not allocated                                                              117                     56
           Finance costs not allocated                                                              (281)                  (216)
           Other expenses not allocated                                                           (1,441)                (1,376)
           Group operating profit                                                                  2,820                  7,506

                                                                        As at                   As at                   As at
                                                            31 December 2009        31 December 2008        31 December 2007
                                                                       £'000                   £'000                   £'000
           Assets
           Total segment assets                                          43,326                  44,364                  23,609
           Group headquarters                                               528                     834                   2,498
           Group assets                                                  43,854                  45,198                  26,107
                                                                                                         ANNUAL REPORT 2009            75




                                  LETTER TO ALL SHAREHOLDERS


                                                CHINA FOOD COMPANY PLC
                            (incorporated in England and Wales with registered number 06077223)




Registered office:
17 Hanover Square
London W1S 1HU

Date: 7 April 2010



To all shareholders

Notice of Annual General Meeting

Dear Shareholder,

The Annual General Meeting (“Meeting”) of China Food Company Plc (the “Company”) is due to take place on 16 June 2010
at 11.30 a.m. at the offices of Finncap, 4 Coleman Street, London EC2R 5TA.

The Meeting is being held to comply with company law requirements and to pass a standard set of shareholder resolutions.
You will be given the opportunity to raise any questions in relation to such resolutions at the Meeting.

Resolution 7 is proposed as a special resolution and is special business. This means that for the resolution to be passed, at least
three quarters of the votes cast must be in favour of the resolution. This resolution grants the directors authority to allot equity
securities for cash, without the need first to offer such shares to existing shareholders. The proposed limits on the nominal
value of ordinary shares that may be allotted for cash under Resolution 7(a) and 7 (b) are £437,000 and £664,000 respectively
which represents 16.45% and 25% of the nominal value of the issue ordinary share capital as at 6 April 2010 (being the latest
date prior to the publication of this Notice).

Recommendation

The directors of the Company consider that all the proposals to be considered at the Meeting are in the best interests of the
Company and its members as a whole and are most likely to promote the success of the Company. The directors unanimously
recommend that you vote in favour of all the proposed resolutions as they propose to do in respect of their own holdings in
the ordinary share capital of the Company.

Yours sincerely,




John McLean
Chairman
76   CHINA FOOD COMPANY PLC




     NOTICE OF ANNUAL GENERAL MEETING


     Notice is hereby given that the Annual General Meeting of the China Food Company Plc (the “Company”) will be held at
     the offices of FinnCap, 4 Coleman Street, London EC2R 5TA on 16 June 2010 at 11:30 a.m. (UK time) for the purpose of
     considering and, if thought fit, passing the following resolutions of which numbers 1 to 6 will be proposed as Ordinary
     Resolutions and number 7 will be proposed as a Special Resolution.

     ORDINARY RESOLUTIONS

     1.     To receive and consider the Company’s accounts for the year ended 31 December 2009 and the reports of the directors
            and the auditors thereon.

     2.     To re-appoint pursuant to Article 182 of the Company’s Articles of Association, Grant Thornton UK LLP as auditors of
            the Company until the conclusion of the next Annual General Meeting.

     3.     To authorise the directors to fix the auditors’ remuneration.

     4.     To re-elect as a director of the Company, John McLean, who is retiring by rotation in accordance with Article 118 of
            the Company’s Articles of Association and is offering himself for re-election.

     5.     To re-elect as a director of the Company, Frank Chau Leung Yu, who is retiring by rotation in accordance with Article
            118 of the Company’s Articles of Association and is offering himself for re-election.

     6.     That the directors be and they are hereby generally and unconditionally authorised, to allot shares in the Company and/
            or to grant rights to subscribe for, or to convert any security into, shares in the Company in accordance with section
            551 of the Companies Act 2006, provided that this authority shall be limited to:

            (a)    the grant of rights to subscribe for A Notes (as defined in the Instrument) and/or B Notes (as defined in the
                   Instrument) issued, or to be issued, by the Company pursuant to the convertible loan note instrument executed
                   by the Company on 2 November 2009 (the “Instrument”) and/or the allotment of shares in the Company
                   to be issued in connection with the conversion of such A Notes or B Notes up to an aggregate allotment of
                   10,925,000	Ordinary	Shares;	and

            (b)    (in addition to the authority conferred pursuant to sub-paragraph 6(a) above) shares in the Company up to an
                   aggregate nominal value not exceeding £664,000,

                   provided that such authority shall expire at the conclusion of the Annual General Meeting of the Company to
                   be held in 2011 or 30 June 2011 (whichever is earlier) save that the Company may before such expiry make an
                   offer or enter into an agreement which would or might require shares in the Company to be allotted, or rights
                   to subscribe for, or to convert any security into, shares in the Company, to be granted after such expiry and the
                   directors may allot shares in the Company and/or grant rights to subscribe for, or to convert any security into,
                   shares in the Company in pursuance of such offer or agreement as if the authority conferred hereby had not
                   expired.
                                                                                                     ANNUAL REPORT 2009         77




     NOTICE OF ANNUAL GENERAL MEETING


SPECIAL RESOLUTION

7.    To consider, and if thought fit, to pass the following resolution which is proposed as a Special Resolution:-

      THAT, subject to and conditional upon resolution 6 being duly passed by the shareholders as an Ordinary Resolution,
      the directors be authorised and empowered pursuant to section 570 of the Companies Act 2006 to allot equity securities
      (as defined in section 560 of the Companies Act 2006) wholly for cash pursuant to the section 551 authority referred
      to in resolution 6 of this notice as if section 561(1) of the Companies Act 2006 did not apply to any such allotment,
      provided that this authority should be limited to:

      (a)    up to an aggregate allotment of 10,925,000 Ordinary Shares issued in connection with the conversion of A
             Notes	or	B	Notes	(as	defined	in	resolution	6);	and

      (b)    (in addition to the authority conferred pursuant to sub-paragraph 7(a) above) the allotment of equity securities
             up to an aggregate nominal value not exceeding £664,000,

      provided that such power shall expire at the conclusion of the Annual General Meeting of the Company to be held
      in 2011 or 30 June 2011 (whichever is earlier), save that the Company may, before the expiry of this power, make an
      offer or agreement which would or might require equity securities to be allotted after the expiry of this power and the
      directors may allot equity securities in pursuance of such an offer or agreement as if the power had not expired.


By Order of the Board


Nigel Cartwright
Company Secretary

Registered Office:
17 Hanover Square
London W1S 1HU
7 April 2010
78   CHINA FOOD COMPANY PLC




     NOTICE OF ANNUAL GENERAL MEETING


     NOTES

     Entitlement to attend and vote

     1.      Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those
             members registered on the Company’s register of members at 6.00 p.m. on 14 June 2010 or, if this Meeting is adjourned,
             at 6 p.m. on the day two days prior to the adjourned meeting, shall be entitled to attend and vote at the Meeting.

     Appointment of proxies

     2.      If you are a member of the Company at the time set out in note 1 above, you are entitled to appoint a proxy to exercise
             all or any of your rights to attend, speak and vote at the Meeting and you should have received a proxy form with this
             notice of meeting. You can only appoint a proxy using the procedures set out in these notes and the notes to the proxy
             form.

     3.      A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how
             to appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes
             to the proxy form. If you wish your proxy to speak on your behalf at the Meeting you will need to appoint your own
             choice of proxy (not the Chairman) and give your instructions directly to them.

     4.      You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares.
             You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy,
             it will be necessary to notify the registrar in accordance with Note 6 below.

     5.      A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for
             or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her
             discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is
             put before the Meeting.

     Appointment of proxy using hard copy proxy form

     6.      The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To
             appoint a proxy using the proxy form, the form must be:

             •	     completed	and	signed;
             •	     sent	or	delivered	to	Computershare	Investor	Services	PLC,	The	Pavilions,	Bridgwater	Road,	Bristol	BS99	6ZY;	
                    and
             •	     received	by	Computershare	Investor	Services	PLC	no	later	than	11.30	a.m.	on	14	June	2010.

             In the case of a member which is a company, the proxy form must be executed under its common seal or signed on
             its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority
             under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the
             proxy form.

     Appointment of proxy by joint members

     7.      In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment
             submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the
             joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the
             most senior).
                                                                                                           ANNUAL REPORT 2009             79




      NOTICE OF ANNUAL GENERAL MEETING


Changing proxy instructions

8.     To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note
       that	the	cut-off	time	for	receipt	of	proxy	appointments	(see	above)	also	apply	in	relation	to	amended	instructions;	any	
       amended proxy appointment received after the relevant cut-off time will be disregarded. Where you have appointed
       a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy
       form, please contact Computershare Investor Services PLC. If you submit more than one valid proxy appointment, the
       appointment received last before the latest time for the receipt of proxies will take precedence.

Termination of proxy appointments

9.     In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice
       clearly stating your intention to revoke your proxy appointment to Computershare Investor Services at The Pavilions,
       Bridgwater	 Road,	 Bristol	 BS99	 6ZY.	 In	 the	 case	 of	 a	 member	 which	 is	 a	 company,	 the	 revocation	 notice	 must	 be	
       executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company.
       Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy
       of such power or authority) must be included with the revocation notice. The revocation notice must be received
       by Computershare Investor Services no later than 11.30 a.m. on 14 June 2010. If you attempt to revoke your proxy
       appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your
       proxy appointment will remain valid. Appointment of a proxy does not preclude you from attending the Meeting
       and voting in person. If you have appointed a proxy and attend the Meeting in person, your proxy appointment will
       automatically be terminated.

Issued shares and total voting rights

10.    As at 6.00 p.m. on 6 April 2010 the Company’s issued share capital comprised 66,399,991 ordinary shares of 4 pence
       each. Each ordinary share carries the right to one vote at a general meeting of the Company and, therefore, the total
       number of voting rights in the Company as at 6.00 p.m. on 6 April 2010 is 66,399,991.

Communication

11.    Except as provided above, members who have general queries about the Meeting should call the shareholder helpline
       of Computershare on 0870 707 1607 (no other methods of communication will be accepted).

       You may not use any electronic address provided either in this notice of general meeting or any related documents
       (including the Chairman’s letter and the proxy form), to communicate with the Company for any purposes other than
       those expressly stated.
80   CHINA FOOD COMPANY PLC




                              This page has been intentionally left blank.
www.chinafoodcompany.com




         CHInA FooD CoMpAnY plC
      17	Hanover	Square,	London	W1S	1HU

				
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