1. What is the major business of CBI?
CBI is an international renewable energy corporation focusing on Biodiesel R&D, manufacturing, marketing and investment. Our leading product is Biodiesel, a kind of recycling and green-clean fuel. Biodiesel can be widely used in automobiles, gas engines, and power plants. Our biodiesel can be burned for energy and also be used as an additive with 0# fossil-diesel with any proportion. Furthmore it can be used as a very good chemical agent in the production of some chemical products. As the Chinese leading biodiesel manufacturer, CBI has developed at a very fast speed in recent years, earning much profit for shareholders and also doing much contribution to environmental protection and research of renewal energy.

2. What is the major raw material that you use to produce biodiesel?
CBI has it proprietary techniques that enable the Company to secure the supply of a broad range of feedstock, including most of vegetable oils and waste animal and plant oils. Today, the Company’s major raw material is used cooking oil and plant acid oils from the domestic market in China, which is still quite cheap and abundant.

3. How many tons of biodiesel will be produced from one hundred tons of used cooking oil as raw material?
The oil conversion rate is around 90%, depending on the quality of raw material, which means about 90 tons of biodiesel or heavy biodiesel can be abstracted from 100 tons of UCO, with no pollution produced.

4. Are there any plans for plants in the adjoining provinces? What is the Company’s future strategy?
It will be possibly realized that a new plant with 100,000 tpy will be launched in a neighboring province, such as Guangdong Province, between 2009 and 2010. The climate there is quite suitable for production and the quantity of raw material is also very abundant.

In the coming years, 2006-2010, basing on the urgent demand for biodiesel, the Company is planning to carry out the expansion strategy by building plants and acquisition. For example, in Longyan, the Company has had two plants with total capacity of 50,000 tons per annum, and will start the construction of the first production line with 50,000 tons per annum at the first half of 2008. Through building plants, capacity will increase from 20,000 tons per annum in 2006 to 350,000 tons per annum in 2010. The Company is also investigating and hunting for the right targets for acquisition.

5. Does the Company have any idea of procuring enough raw materials for the new plants? How will the Company cope with the price rising of raw materials?
During the past few years, the Company has settled many channels for procurement of material, including China and South Asian countries. Depending on the advanced techniques, the Company is able to choose from a broad range of low cost oils as material. Also, CBI has been exploiting the international market for more choice of feedstock.

Despite the price of feedstock is rising, the Company has lowered the production cost by achieving technological breakthroughs, for example, to increase oil conversion and to reduce energy consumption. At the same time, the range of raw materials has been broadened. We can also use many kinds of vegetable acid oils, which are much cheaper than the virgin oils.

6. Are you worried about the sales in the future because of the quickly increased capacity?
The demand on biodiesel is increasing at the surprising speed. In China the demand for fuel is depending on the international market by around 40%. Market supply does not satisfy the huge demand. During the past few years, we have settled good networks for sales. Furthermore, the Company’s new department for international trade has come into existence, which has been working hard to promote sales outside China. Exports connection has been achieved to Europe and Asia countries.

7. In 2006 and 2007, many biodiesel factories in European countries did not earn profit substantially because of the price rising of raw material. They lived on the governmental subsidies. Why could CBI keep earning profit continuously?
The reason why CBI earned a lot and is still confident for further quick development is based on the following aspects, which are also the traits that CBI is different from European biodiesel factories.

1) The demand for fossil diesel is far beyond the supply, which results in great demand for biodiesel as well. Compared to the international market, there is still space for price of Chinese biodiesel to rise.
2) The resource of UCO in China is very abundant, and furthermore, the collecting expense (labour) is quite low. Therefore, raw material is relatively cheap.
3) The proprietary techniques enable CBI to minimize the wastage of production and energy consumption. Moreover, the cost of labour and land is also low. All the above results in low production cost.
4) CBI has successfully worked out a series of products, not only as biodiesel sold in gas stations but also as materials for some chemical factories, which makes the Company more active in dealing with the price fluctuation of biodiesel.
5) Financial and overhead expenses have been well controlled due to the high efficient management.
6) Governmental subsidies accounted for only a small part of profit in 2006. The more important is that, in recent years, the whole industry will still get a very good environment for development under the Chinese support policy.

8. Why does the Company choose to construct a new plant in Longyan, instead of in other cities?
Because Longyan is the original base of the Company, it is easier to carry out the management efficiently. Transportation here is very convenient, because it is the connection of Fujian and Guangdong provinces. Also, the cost of land and labor is cheaper than that in other cities. Furthermore, the demand for biodiesel around Longyan is still huge. In a few years, the Company will move farther to neighboring provinces and spread the matured experience then.

9. Why does the Company would rather construct plants than buy an existing plant by acquisition in recent years?
If there are good targets for merger and acquisition, the Company will happily consider it. But currently, it is quite hot for investment in building biodiesel plants, which means that the price to purchase an existing plant will be very high. The Company leads in Chinese biodiesel industry and will keep paying attention to any competitors, so that to find good hunting objects.

10. What is the major source of the capital for the future expansion plan?
To finance the construction of the third plant in Longyan, the Company plans to reinvest its earning, so the dividend for 2006 is not too much. Besides, the Board is considering to loan from banks, to issue bonds or new shares from AIM market, for the necessary capital.

11. For 2006 and 2007, why did Mr. Ye, who holds more than 72.47% of shares of the Company, decide to waive the entitlement of dividend?
Mr. Ye is not only a responsible but also a push-and-go person. It is a very generous decision and it is also a symptom that represents the confidence of Mr. Ye have in the company’s future operation. He believes that the benefit from the stock market will be much more from him in the future, because the waived money is just what the company needs for further development.

12. What will the year of 2008 probably be like for CBI?
The Longyan new production line will bring the Company much support on Turnover. The Xiamen new plant will also contribute a little bit in the first half of the year. The profit margin might be lessened because of the rising of cost. But as we all know, the Company’s patented techniques are working efficiently and the operation is still earning much profit. This period seems to be a hard time for the whole biodiesel industry, especially for some European companies, but the Company is still running at a happy rhythm.