? Bio-diesel production to commence by end 2007

? New retail products targeted for launch in 2QFY2008

To mitigate the impact brought by the increase in raw material costs, the Group has raised selling prices of certain sales orders in 2007Q2. The management will closely monitor the market condition and if necessary, the Group will further adjust the selling prices so as to maintain the profitability of the Group.

After the commencement of the Soybean Zone operation, the management has spent great and concerted effort in ramping up its facility utilisations. In 2007Q2, the average facility utilisation rate of
Soybean Zone was 62.6%. The Group has previously advised that it intended to achieve an utilisation rate of 70% for these new facilities by end of 2007. Based on the existing production progress and the current favourable business condition, the Directors are confident that this target
can be exceeded. With a higher level of utilisation, unit costs are expected to fall as compared to the early days of the Soybean Zone operation.

To further improve the efficiency of the Group's production resources and strengthen its leading position in the industrial protein industry, there are plans to re-engineer the production facilities of SPI and SFP and combine these two divisions to enhance the flexibility in the production of both SPI and SFP to meet the changing market demands. This would position the Group to explore market potentials in other industrial proteins. In longer term, the Group will produce different kinds of industrial proteins to cater for the needs of the growing China food sector. It is expected that the reengineering work itself would not require significant capital investments.

As announced on 26 September 2006, the Group has entered into a formal contract for the production of bio-diesel with annual target capacity of 100,000 tonnes. The installation of machinery and equipment has been started on schedule and production is expected to commence by end of
2007. Besides, the Group is currently negotiating with several potential customers from both the local market and overseas market for the sales of bio-diesel. Announcements will be made when more details are finalised.

The Directors continue to be optimistic on the market of soybean-based products, including both health food and beverages and industrial products. On 22 May 2007, the Group announced its investment in new facilities to extend its health food and beverages product range to produce high protein nutrient beverage and high protein nutrient powders. Construction for these new faciliites has started and it is expected these new facilities would commence operation in the second quarter of
2008.

In order to further capitalise on the market potentials and the strong brand (Sun Moon Star) that it has built up over the years and to propel the growth of the Group, it would continue to explore and
launch good expansion plans. To this end, the Group would keep on investing in its brand building efforts and production facilities to cater for the production of these new products