Annual Report 2005 / 2006 - KU Leuven€¦ · FINASUCRE Annual Report 2005 / 2006 7 Bundaberg Sugar...

Annual Report 2005 / 2006

2 Annual Report 2005 / 2006 FINASUCRE

FINASUCRE Annual Report 2005 / 2006 1

Board of Directors, Statutory Auditor 2

Report of the Board of Directors 3

Presentation of the group 3

Signifi cant developments in 2005/2006 3

Consolidation chart 4

Key fi gures 5

Report on our activities 6

World Sugar Market (review of the fi nancial year 2005/2006 and outlook 2006/2007) 6

Bundaberg Sugar (Australia) 7

Groupe Sucrier (Belgium) 9

Iscal Sugar (Belgium) 9

Compagnie Sucrière (D.R.Congo) 10

Galactic (Belgium) 11

Devolder (Belgium) 11

Financial situation 12

Comments on the consolidated fi nancial statements 12

Comments on the fi nancial statements 14

Appropriation account, statutory elections 16

Appropriation account 16

Statutory elections 16

Additional information 17

Risks and uncertainties 17

Environment, personnel, customers 17

Other 17

ANNEX 18-43

A. Consolidated fi nancial statements of the Group as at 31 March 2006 18-34

Balance sheet, income statement and annex 18-27

Consolidation and accounting principles 27-33

Statutory Auditor’s report 34

B. Financial statements of Finasucre as at 31 March 2006 35-43

Balance sheet, income statements, annex 35-42

Statutory Auditor’s report 43

Summary


Board of Directors

Mr. Yves Boël President

Mr. Olivier Lippens Managing Director

Count Guillaume d’Arschot Schoonhoven Director

Count Richard Goblet d’Alviella Director

Mrs. Claude Lippens Director

Mrs. Florence Lippens Director

Count Maurice Lippens Director

Count Paul Lippens Director

Statutory Auditor

ERNST & YOUNG Company Auditors SCC, represented by Mr. Vincent Etienne


Report of the Board of Directors

Ladies,Gentlemen,

It is our pleasure to report to you on our company’s activity during our 76th fi scal year, and to submit for your approval - in accordance with the law and with our Articles of Association - the company’s fi nancial statements, closed at 31 March 2006, as well as its consolidated statements at the same date.

Presentation of the Finasucre Group The group produces raw, direct consumption raw, white and refi ned sugar from cane and beet and mar-kets them to industrial clients and to retail outlets in many different types of packaging. It also manufac-tures an entire line of caramels and specialities.

It sells renewable energy in the form of electricity; alcohol and molasses; beet pulps and other products used for animal feed.

Through its Galactic subsidiary, Finasucre is a large producer of lactic acid and its derivatives resulting from the fermentation of carbohydrates.

Finasucre is also involved in the engineering and production of equipment for sugar mills.

The group has factories throughout the world: in Belgium, the Netherlands, Congo, Australia and China.

For the year ended 31 March 2006, the group recorded a turnover of € 495 million and net assets of € 382 million. The group employs 3,831 people worldwide on a permanent basis and about 5,400 people during the campaign to produce 1,246,181 tonnes of sugar.

As Finasucre is convinced of the future importance of sugar as a source of renewable energy, it plans to develop this new aspect of the business while continuing to expand current uses of natural sweeteners in all of its markets.

Signifi cant developments in 2005/2006 • Approval of the new European Sugar Regime (2006-2015) which will come into effect on 1 July 2006.• Closing of the Veurne factory (Belgium) at the end of the 2005 campaign.• Record high production for Compagnie Sucrière in Congo.• Sales of company subsidiaries in Luxembourg - Sopagri and Soreas.• Extensive damage caused to Australian subsidiary mills and crop by category 5 Cyclone Larry, which hit Far

North Queensland on 20 March 2006. This event however has no significant impact on the accounts of the financial year ending 31 March 2006 but it will affect the next crop year.

• The accounts of our Australian activities have for the first time been established according to IFRS prin-ciples. The impact of this first adoption enacted in stockholders’ equity by our subsidiary company has been restated as results in Finasucre’s consolidated accounts.


Consolidation chart as at 31 March 2006

FINASUCRE s.a.BELGIUM

FINASUCRE INVESTMENTS(AUSTRALIA) Pty Limited

AUSTRALIA

GROUPE SUCRIER s.a.BELGIUM

FINASUCRE HOLDINGS(AUSTRALIA) Pty Ltd

AUSTRALIA

FINASUCRE AUSTRALIA Pty Ltd

AUSTRALIA

BUNDABERG SUGAR GROUP LtdAUSTRALIA

BUNDABERG SUGAR LtdAUSTRALIA

BBS SUBSIDIARY Pty LtdAUSTRALIA

NORTHERN LAND HOLDINGS LtdAUSTRALIA

R&J HOFFMAN INVESMENTS Pty LtdAUSTRALIA

BUNDABERG FOUNDRYENGINEERS Ltd

AUSTRALIA

QUEENSLAND URBAN PROJECTS Pty Ltd

AUSTRALIA

ISCAL SUGAR s.a.BELGIUM

EURO STAR HOLLAND b.v.THE NETHERLANDS

COMPAGNIE SUCRIÈRE scarl *DEM.REP. of CONGO

GALACTIC s.a.BELGIUM

B&G *DEM.REP. of CHINA

GALACTIC IncU.S.A.

DEVOLDER s.a.BELGIUM

C

@

C

C

C

Sugar and by-products

Engineering

Real estate

@

C

*Financial Statements as ar 31 December 2005

n Consolidated companies

n Non consolidated companies

100% 99,7%

62,6%

100%

60%

55%

49%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%


Key fi gures Consolidated group Finasucre s.a.

in ‘000 € 2005/2006 2004/2005 2005/2006 2004/2005

Turnover 495,243 464,258 - -

Operating cash fl ow (EBITDA) 67,455 66,381 - -

Profi t on ordinary activities before taxes 43,808 39,919 6,621 18,267

Profi t (loss) after taxes (share of the Group) 49,047 16,027 - -

Shareholders’ equity 382,268 354,888 282,032 283,298

Total of the balance sheet 630,420 607,808 295,149 293,007

Net dividend per share (in €) - - 75.00 51.60

500.0

450.0

400.0

350.0

300.0

250.0

200.0

150.0

100.0

50.0

0.0

Consolidated turnoverin million €

70.0

65.0

60.0

55.0

50.0

45.0

40.0

35.0

30.0

25.0

20.0

15.5

10.0

5.0

0.0

-5.0

EBITDA and consolidated resultsin million €

n EBITDAn Profi t (loss) after tax

(share of the Group)

80

70

60

50

40

30

20

10

0

Net dividend per sharein €

45.347.4 49.5 51.6

75.0

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06


Report on our activities World Sugar Market (review of the fi nancial year 2005/2006 and outlook for 2006/2007)

The market price improved dramatically during the fi nancial year, due to another year of defi cit and a continuing strong interest in commodities.

Brazil continued its strong growth in both sugar and ethanol production.

Consumption increased, especially in Asia, which remains a defi cit area.

The outlook for the market remains positive on the back of a strong ethanol demand, decreasing European Union exports and fewer stocks.

155

150

145

140

135

130

125

120

115

110

World production and consumption(in millions tons raw sugar) source : Czarnikow

1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

2019181716151413121110

987654

World raw sugar market price(in USD cents / lb) source : Czarnikow

j f m a m j j a s o n d j f m a m j j a s o n d j f m a m j j a s o n d j f m a m j j a s o n d j f m a

2002 2003 2004 2005 2006

n Productionn Consumption


Bundaberg Sugar (Australia)

Economic growth in Australia was around 3% in 2005/2006, and is forecast to grow at the same rate in the next few years. The annual cost infl ation index is almost 3% and is not expected to ease in 2006/2007. The Australian dollar exchange rate continues to exhibit considerable volatility at a relatively high level in response to increasing world commodity prices. There is a growing shortage of skilled workers, particularly in Queensland, due to the strong economy and demand from mining and other sectors.

Australian and Queensland State Governments continued to promote the sugar industry reform measures in conformity with the intent of earlier agreements with industry representative bodies. Under the Australian Sugar Reform Program (SIRP 2004), taxable grants were announced to industry participants (including Bundaberg Sugar) for regional and community projects which were assessed on a competitive basis.

There were also major changes to the single desk system of marketing of bulk raw sugar produced in Queensland. State Government legislation to remove long standing provisions under the current Sugar Industry Act for compulsory acquisition of raw sugar became effective from 1 January 2006, i.e. after the completion of the 2005 harvesting season. The removal of the restricting legislation followed the introduc-tion of a system of Voluntary Marketing Arrangements (VMA) for export bulk sugar. Those arrangements

0.80

0.75

0.70

0.65

0.60

0.55

0.50

0.45

Australian Dollar exchange ratevs US Dollar and vs Euro

2000 2001 2002 2003 2004 2005 2006

Monthly average rate €

Yearly average rate €

Monthly average rate USD

Yearly average rate USD


involved individual sugar supplying enterprises either commercially contracting all of their bulk export exclu-sively with Queensland Sugar Limited (QSL) for three years or determining to sell all of their sugar indepen-dently on the domestic or export markets (Bundaberg Sugar has entered into the three years arrangement with QSL). More flexible arrangements for individual suppliers to exercise sugar futures pricing and currency exchange hedges are also being introduced.

Queensland’s overall sugar production in 2005/2006 was 4.78 million tonnes (compared to 4.87 million tonnes in 2004/2005). The 2005 crop had an average sugar content of 13.48 % and enjoyed steadily increasing sugar prices over the course of the year. The QSL sugar pool price for the 2005 season is expected to be AUD 315/ts (compared to AUD 255 in the previous year).

Bundaberg Sugar is the largest producer of sugar cane in Australia and is a major raw sugar miller, re-finer and marketer of sugar and related products. The company’s operations include Bundaberg Foundry Engineers Ltd (BFEL), one of the country’s oldest heavy engineering and foundry enterprises. The Bundaberg Sugar Group employs 817 people, as well as some 400 seasonal workers for the campaign.

Despite the strong Australian dollar and lower cane volumes, final results exceeded estimates, thanks to improved world prices, strict cost control measures and payment of the second half of the Australian Government sustainability grant (AUD 4.73 million). The consolidated profit of the Bundaberg Sugar Group was AUD 10.1 million, before application of IFRS principles as described hereafter.

The main items of the consolidated income statement for 2005/2006 are:

in ‘000 AUD 2005/2006 2004/2005

Turnover 373,379 354,166

Operating cash flow 25,280 22,974

Depreciation (9,911) (9,398)

Financial results (3,002) (2,591)

Results before extraordinary items 12,367 10,985

Extraordinary results 323 (1,157)

Income tax (2,553) (2,312)

Net profit (before application of IFRS principles) 10,137 7,516

Potential capital gain on superannuation 20,748 -

Transfer from deferred taxation 22,808 -

Net profit (after application of IFRS principles) 53,693 7,516

Bundaberg Sugar presents its consolidated accounts as at 31 March 2006, based on Australian standards (GAAPs), which are inspired by IFRS principles. This first application of these accounting rules has signifi-cantly affected the profit and loss account by taking into consideration the potential capital gains on funds accumulated previously to cover superannuation liabilities. The treatment of deferred taxes has equally been corrected according to IFRS principles on the subject, which at 31 March 2006 recommends a balance-sheet approach versus the results approach at 31 March 2005. Enacted in shareholders’ equity in the ac-counts of Bundaberg and restated as results in Finasucre’s consolidate accounts, these elements have been identified separately in the chart above to enable comparison with previous results.

Production of raw sugar reached 719,283 tonnes (compared to 792,811 tonnes in 2004) from a harvest of 5.499 million tonnes of cane (compared to 5.767 million tonnes in 2004).

Campaigns 2005/2006 2004/2005

Cane crushed 5,499 5,767

Cane produced by Bundaberg Sugar 634 597

Production of raw sugar 719 793

Production of refined sugar 150 146

in ‘000 tons


Bundaberg Sugar purchased a few farms in Bundaberg and North Queensland to increase the company’s production of cane and to facilitate transport and harvesting. There was not a great deal of progress in sell-ing company property in the Nambour area (Moreton mill was closed in 2003/2004), although negotiations are ongoing and some sales are expected in 2006/2007.

The engineering (BFEL) subsidiary was active with a number of different projects in Australia and overseas during the year.

At the end of the financial year, on 20 March 2006, Category 5 Cyclone Larry hit directly that part of Queensland where Bundaberg Sugar has three mills (Mourilyan, South Johnstone and Babinda) and large cane farms. All three mills suffered significant damage and the crop was negatively affected. Forecasts for the 2006 crop have been revised down as a direct result of what has been said to be the most severe cyclone in 100 years.

Groupe Sucrier (Belgium)

Groupe Sucrier closed the financial year with a net profit of € 6,847,043, compared with € 847,614 for the preceding period. The proposal will be put to the next General Assembly Meeting of 28 June 2006 to distribute a total gross dividend of € 16,954,224.

Iscal Sugar (Belgium)

Iscal Sugar is the second largest participant in the Belgian sugar industry, with one third of the quota. Roughly 6,500 farmers supply the company with beets.

The 2005 crop enjoyed good agronomic conditions at all three factory sites. The crop year lasted an aver-age of 92 days for a production of 346,537 tons of sugar. This production includes 54,856 tons of sugar produced on behalf of the Dutch company CSM.

The principal elements of the 2005 crop are outlined below:

Campaigns 2005/2006 2004/2005

Surface Ha 29,983 30,786

Yield T/Ha 62.2 67.3

Sugar production T 291,681 332,160


From a marketing point of view, the financial year was difficult, despite a quota cut of 11.39%. The plethora of sugar in Europe caused a major drop in the selling price and made it difficult to export under acceptable condi-tions. Consequently, Iscal Sugar sold 10,000 tons to the Belgian Intervention and Restitution Bureau (BIRB). Prospects for the 2006/2007 financial year are not encouraging. The high prices for fuel had a negative effect on the profit.

Iscal Sugar invested € 2.2 million, mainly to improve efficiency and to modernize production. At the end of the campaign, in anticipation of the new European Sugar Regime, it was decided to close the Veurne factory and to relocate the beet processing to the factories of Moerbeke and Fontenoy.

Iscal Sugar achieved turnover of € 220.4 million. The trading cash flow is € 44.8 million (compared with € 46.6 million for the preceding period). The profit on ordinary activities before tax is € 32.1 million. The net income after tax is € 11.7 million (compared with € 17.6 million for the preceding period). A gross dividend of € 5.5 million is envisaged.

On 24 November 2005, the European Council of Agriculture Ministers reached an agreement on a radical revision of the European regulation. The new regulation runs until 2014/2015 and provides for:

• A gradual decrease in the sugar prices by ultimately 36% over a four year period; at the same time, the beet price will be reduced by 39.4 %, reduction partly compensated by an income support;

• A reduction in the production of the European Union, and to support it, the introduction of a restructuring fund in order to buy back sugar quota. Depending on its success and on the increase of imports from lesser developed countries, a generic quota cut will be applied in 2010 to create a new balance in the European Union market.

Compagnie Sucrière (D.R. Congo)

Having adopted a new constitution in February 2006, the country is actively preparing for elections – presi-dential, parliamentary and local, with the support of the international community. The UNO Peace Keeping Force MONUC is very active in many regions. International financial organisations provide assistance to the Democratic Republic of Congo as it continues efforts to stabilize the currency, contain inflation and start improving growth.


A few significant figures are shown hereunder:

2005 2004

GNP per inhabitant in USD 87.8 84.8

Inflation in % 21.3 9.2

Exchange rate (CDF/USD) 434 453

Galactic (Belgium)

The Galactic subsidiary is a large producer of lactic acid and its derivatives. In spite of very tough competi-tion, the sales of the company grew in its principal markets.The production, quality level and sales of the Chinese factory are developing most satisfactorily.The company continues its research in the field of biodegradable plastics (PLA).

Devolder (Belgium)

The net profit for the year ending 31 March 2006 was € 70,444 (compared to € 87,166 in 2004/2005), resulting from real estate income and charges. Iscal Sugar’s production of speciality sugars will cease during the summer of 2006, and studies are ongoing to access the development possibilities of the property.

Cane yields improved again in 2005 and the factory performed well. A production record was achieved with 85,085 tonnes of sugar (compared with 78,306 tonnes in 2004) and 681,304 tonnes of cane processed (against 629,847 tonnes in 2004). Compagnie Sucrière employed 2,450 full time workers at year-end. The company exported 7,200 tonnes of sugar to the European Union (against 11,932 tonnes in 2004) under the EBA quota allocated to Congo. If the market conditions remain favourable, those exports will continue. The alcohol production was 54,372 HL, most of which was exported to the European Union (42,544 HL). The higher world market price has not reduced the volume of sugar imported into the country, but helped to improve the local selling price.

Compagnie Sucrière closed the 2005 financial accounts with a profit that largely absorbed the carry forward losses. Nevertheless, there is continuing concern because of the very fragile operating environment prevail-ing in the country.


Financial situation Comments on the consolidated financial statements as at 31 March 2006

We hereafter comment on the consolidated fi nancial statements of the group as mentioned in Annex A of this report.

BalanceThe consolidated balance sheet refl ects, through our consolidated subsidiaries, the sugar and derived prod-uct activities in Belgium, the Netherlands, Australia, China and the USA during the twelve months of the fi nancial year under review. The comparative fi gures of the preceding fi nancial year also relate to a twelve-month period.

The other fi nancial holdings, primarily in Australia, are included in the item for “Other Financial Fixed Assets”, which are described in Appendix V hereafter. The funds constituted to meet Bundaberg’s pension commitments are included (€ 12,207 thousand) for the fi rst time as balance sheet assets, as credits in Financial Fixed Assets.

ResultsThe fi nancial data relating to our Australian subsidiaries is posted in Australian dollars (AUD) and is translated into euros in the consolidated accounts at the rates mentioned below. The trend of the AUD compared to the USD is also to be observed, because Bundaberg Sugar’s raw sugar selling prices are concluded in USD.

The fi nancial data of our subsidiaries in China and the USA results from the translation into euros of their accounting currencies (respectively CNY and USD), the variations of which during the last twelve months are not signifi cant in the consolidated balance sheet and result.

TO DOExchange

rateaverage 12 mths Exchange

rateaverage 12 mths

as at31-03-06

as at31-03-05

1-04-05 31-03-06

1-04-04 31-03-06

as at31-03-06

as at31-03-05

1-04-05 31-03-05

1-04-04 31-03-05

1 AUD = € 0.5883 0.5951 0.6182 0.5873 1 AUD = USD 0.7121 0.7714 0.7528 0.7393

- 1.1% + 5.3% - 7.7% + 1.8%


in ‘000 € 2005/2006 2004/2005

Turnover 495,243 464,258

Operating cash fl ow 67,455 66,381

Depreciation (21,215) (22,919)

Financial results (2,432) (3,543)

Results before extraordinary items 43,808 39,919

Extraordinary results 2,013 (1,321)

Income tax (16,441) (16,468)

Net earnings (before application of the IFRS principles in Australia) 29,380 22,130

Extraordinary earnings resulting from the application of the IFRSprinciples in Australia

12,827

Levies on deferred taxes resulting from the application of the IFRS principles in Australia

14,101

Net earnings (after application of the IFRS principles in Australia) 56,308

The consolidated results are outlined below:

The increase in the turnover comes especially from the effects of the rise of the world sugar prices increasing this item at Bundaberg Sugar and, to a lesser extent, from the fi rst integration of the sub-sidiary companies B&G and Galactic Inc.

The cash fl ow has remained stable despite contrasting developments within our subsidiaries. That of Bundaberg Sugar has progressed thanks to the rise of world prices, but that of Iscal Sugar has been maintained thanks to some unusual destocking.

Depreciation has little varied and the fi nancial results have progressed with a reduction of debt at Iscal Sugar. Depreciation of the consolidation variations is practically unchanged.

The extraordinary net profi ts come mainly from gains from stake disposal (Sopagri and Soreas) and tangible fi xed asset disposal gains. On the other hand, some extraordinary depreciation on the unused industrial assets of the closed factory of Veurne (Iscal Sugar) has had a negative effect.

The taxes are to be correlated with the Group’s taxable earnings.

The fi rst application of IFRS principles at Bundaberg Sugar, have, as already mentioned in the com-ments on the Bundaberg Sugar results, signifi cant effect on the Group’s consolidated net earnings. This has been taken into account in the presentation of the consolidated results by identifying them separately. This way of doing things enables comparison of the contribution to the consolidated results of all the subsidiary companies on the basis of compatible accounting rules and isolation of income elements that are not of a recurring nature.

The Notes to the consolidated accounts described the development of the Group’s balance-sheet com-ponents and consolidated income statement in greater detail.


Comments on the financial statements of Finasucre s.a. as at 31 March 2006 We hereafter comment on the financial statements of Finasucre s.a. as mentioned in Annex B of this report.

Balance

Fixed assetsIV. Financial assetsThe interests held are shown in Appendix II of the financial statements. The financial holding in Sopagri was sold during the financial year with a gain of € 3,398 thousand. Current assetsVII. Amounts receivable within one year This heading is down € 9,581 thousand, Iscal Sugar having refunded our advance granted during the previous financial year. At 31 March 2006, it is mainly a question of the advance of AUD 30 million granted to the Bundaberg Sugar Group. Its counter value in € is the subject of an exchange cover contract. Also included under this heading is the interest to be received on current and deposit bank accounts.

VIII. InvestmentsOur current investments are constituted in treasury bills, short-term deposits, bonds and monetary funds.

X. Deferred charges and accrued incomeIt is mainly a question of interest to be received on our amounts receivable within one year.

Capital and reserves I. CapitalIII. Revaluation surplusIV. ReservesThese headings are unchanged.

V. Profit (loss) carried forwardAccording to the profit appropriation. Provisions and deferred taxation VII. Provisions for liabilities and chargesThis provision, constituted two years ago, remains unchanged. Creditors IX. Amounts payable within one yearThis includes the financial and fiscal debts and primarily the proposed profit distribution as well as the dividends to be paid from previous financial years.

X. Accrued charges and deferred income These include interest collected in advance on treasury bills.


Income statements

ChargesII. Services and other goods, other operating charges, increase & decrease in provisions for liabilities

and chargesThe operating expenses and the non-periodical remuneration of our directors have remained stable.

V. Financial chargesThey include € 625 thousand of exchange losses made on the cover of our receivables in AUD. The other charges are mainly commissions on coupon payments and management expenses relating to our investment portfolio in bonds and monetary funds.

X. Income taxesThis amount corresponds to the estimated tax on the year’s profit.

IncomeIV. A. Income from financial fixed assetsWe have received, for the financial year 2004/2005, € 2,113 thousand of dividend from Groupe Sucrier and € 872 thousand of preferential dividend from Finasucre Investments (Australia) Pty Ltd.

IV. B. Income from current assets Interests received on our loan to Bundaberg Sugar Group have been € 1,240 thousand. We received € 82 thousand interest from our loan to Iscal Sugar S.A and € 2,374 thousand interest on our forward deposits and investments.

IV. C. Other financial incomeIt is a question of gains realised on our bonds portfolio.

Additional information about the hedging of financial risks

Finasucre has recourse to hedging its exchange risks on its operations in foreign currencies, particularly on its amount receivable of AUD 30 million from its Bundaberg Sugar subsidiary.

The annex to the financial statements of Finasucre S.A. describes the development of the balance sheet and income statement components in greater detail.


Appropriation account, statutory election Appropriation account

The year’s profi t reached € 8,733,958.73 to which we must add the previous year’s retained earnings of € 17,453,341.38, thereby forming a distributable profi t of € 26,187,300.11 which we propose to distribute as follows:

Gross dividend . . . . . . . . . € 10,000,000.00Retained earnings . . . . . . . € 16,187,300.11TOTAL to be distributed . . . € 26,187,300.11

If you approve this distribution proposal, the net dividend, after deduction of a 25% withholding tax, will be € 75.00 instead of € 51.60 for the previous year. It will be payable as of 3 July 2006, in exchange for coupon no. 80, at the counters of Banque Degroof as well as at our registered offi ce at 40, avenue Herrmann-Debroux, BE-1160 Brussels.

Statutory elections The directorship of Mr. Yves Boël expires at the end of this General Assembly Meeting. He is not stand-ing for reelection. Appointed as Director for the fi rst time in 1955, Mr. Yves Boël has contributed to the Group for more than fi fty years. Our companies have benefi ted from his professionalism and extensive experience of the business world, particularly since his appointment as Vice-President in 1975, and President in 1992. The Board of Directors pays tribute to Mr Yves Boël for his contribution and is pro-posing that you confer on him the title of Honorary Chairman.

Count Paul Lippens will succeed him to the Chair of the Board of Directors. He has been a director of our company since 1983, and for more than fi fteen years, he has been associated with the develop-ment our businesses.

We are proposing that you appoint Mr Harold Boël as a director for a three-year mandate that would expire at the end of the 2009 Assembly General Meeting.

The mandate of our Statutory Auditor Ernst & Young Reviseurs d’Entreprises SCC, represented by


Additional information Risks and uncertainties

In addition to the information given in this report, summarized below are the crucial points describing the risks and uncertainties that could impact our activities:

• Our European sugar activities are dependent on the evolution of the new Sugar Regime and particularly on the supply and demand of the European sugar each year.

• The Australian operations are directly dependent on the evolution of the raw sugar world market.

• Oil price fl uctuations have a direct impact on our companies, not only as fuel for the factories, but also on all other aspects of the business (fertilizers, transport, packing material, …); the raw sugar mills mitigate that impact by using bagasse as fuel.

• Our businesses are signifi cantly affected by the evolution of currencies (the AUD/US for Australia and the €/USD for Galactic).

• Climate vagaries can affect our activities in all countries (frost, cyclones, drought, fl ood, …).• Our subsidiary in Congo is confronted with risks linked to the prevailing political situation.

Environment, personnel, customers Our group is committed to sound environmental policy in all its operations. It observes the laws and standards in force in the countries in which it operates. Unfortunately our group has experienced factory closures recently. It has always managed the closure and resultant rationalisation according to the social laws in place at the time, and in a manner which supports social dialogue and a smooth transition process. It is not always possible to prevent social confl ict, but every effort is made to minimise disruption. Our technical staff ensures a proper work safety environment, according to legal requirements in each country. Desiring to offer our customers the best possible quality, our various businesses achieve the highest possible certifi cation standards.

Other information • The Board of Directors is not aware of any circumstances or events occurring after the balance

sheet’s date (other than those described above) that could affect the normal operation of the company’s activities.

• The company does not have any branches.• The company did not carry on any distinct activity as regards Research and Development.• None of the company’s own shares were acquired by the company itself or by any direct sub-

sidiary.• The Board of Directors states that no decision has been carried out and no operations have

been decided that would fall under the application of Article 523 of the Company Code con-cerning confl icts of interest with directors.

• No special mission was assigned to an auditor during the year.

This management report will be fi led in accordance with the law and shall be kept at the regis-tered offi ce.

The Board of Directors 9 June 2006

Mr. Vincent Etienne, expires at the end of this General Assembly Meeting; we propose to re-elect him for a new three-year term.

In accordance with the law and the Articles of Association, we ask you to give discharge to the directors and to the auditor for their work over the period that ended on 31 March 2006.


Consolidated balance sheet (after appropriation) as at 31 March 2006

ASSETS 31-03-2006 31-03-2005

Fixed Assets 269,782 279,666

I. Formation expenses 40 55

II. Intangible assets 15,187 22,714

III. Consolidation differences (positive) 4,970 6,960

IV. Tangible assets 226,941 237,336

A. Land and buildings 146,287 149,343

B. Plant, machinery and equipment 73,942 82,492

C. Furniture and vehicles 3,087 2,951

D. Leasing and other similar rights 51 69

E. Other tangible assets 286 331

F. Assets under construction and advance payments 3,289 2,149

V. Financial Assets 22,644 12,602

B. Other entreprises

1. Shares 10,211 12,332

2. Amounts receivable and cash guarantees 12,434 270

Current assets 360,638 328,142

VI. Amounts receivable after one year 2,691 2,698

B. Other amounts receivable 2,691 2,698

VII. Stocks and contracts in progress

A. Stocks 85,288 101,951

1. Raw materials and consumables 11,063 11,118

2. Work in progress 16,238 15,490

3. Finished goods 57,322 74,918

4. Goods purchased for resale 665 425

B. Contracts in progress 5,731 1,384

VIII.Amounts receivable within one year 96,075 75,602

A. Trade debtors 93,395 68,558


IX. Investments 160,143 137,631

B. Other investments 160,143 137,631

X. Cash at bank and in hand 8,570 7,129

XI. Deferred charges and accrued income 2,140 1,747

TOTAL ASSETS 630,420 607,808

in 000 €

Annex A. – Consolidated financial statements of the group as at 31 March 2006


LIABILITIES 31-03-2006 31-03-2005

Capital and reserves 382,268 354,888

I. Capital 2,232 2,232

A.Issued capital 2,232 2,232

III. Revaluation surpluses 22,345 29,963

IV. Consolidated reserves 311,095 272,047

V. Consolidation differences (negative) 56,858 57,809

VI. Translation differences (10,290) (7,266)

VII. Investment grants 27 103

VIII.Minority interests 29,204 22,885

Provisions, deferred taxation and latent taxation liabilites 26,390 32,798

IX. A. Provisions for liabilities and charges 20,498 22,144

1. Pensions and similar obligations 4,451 660

3. Major repairs and maintenance 2,139 1,908

4. Other liabilities and charges 13,909 19,576

B. Deferred taxation and latent taxation liabilities 5,892 10,654

Creditors 192,557 197,238

X. Amounts payable after more than one year 33,321 45,136

A. Financial debts

3. Leasing and other similar obligations 14 18

4. Credit institutions 33,307 45,118

D. Other amounts payable 2

XI. Amounts payable within one year 152,646 149,906

A. Current portion of amounts payable after more than one year

14,644 35,766

B. Financial debts

1. Credit institutions 43,810 19,815

2. Other loans 9,100

C. Trade debts

1. Suppliers 57,362 48,818

D. Advances received on contracts in progress 4,791 2,079

E. Taxes, remuneration and social security

1. Taxes 7,146 5,033

2. Remuneration and social security 8,024 7,929

F. Other amounts payable 16,869 21,365

XII. Accrued charges and deferred income 6,590 2,194

TOTAL LIABILITIES 630,420 607,808

in 000 €



Consolidated income statement as at 31 March 2006 in 000 €

31-03-2006 31-03-2005

I. Operating income 494,843 488,706

A. Turnover 495,243 464,258

B. [increase,(decrease)] in stocks of finished goods, work and contract in progress

(18,563) 7,178

C. Own construction capitalised 339 966

D. Other operating income 17,824 16,304

II. Operating charges (448,602) (445,244)

A. Raw materials, consumables and goods for resale

1. Purchases 293,442 281,847

2. [(increase), decrease] in stocks (5,523) 5,901

B. Services and other goods 57,048 52,994

C. Remuneration, social security costs and pensions

67,769 71,233

D. Depreciation of and other amounts written off formation expenses, intangible and tangible fixed assets

21,215 22,919

E. [increase, (decrease)] in amounts written off stocks, contracts in progress and trade debtors

437 890

F. [increase, (decrease)] in provisions for liabilities and charges

4,368 (8,977)

G. Other operating charges 10,953 18,886

H. Operating charges capitalised as reorganisation costs

(1,106) (447)

III. Operating profit (loss) 46,240 43,462

IV. Financial income 6,207 4,980

A. Income from financial fixed assets 1,632 647

B. Income from current assets 784 971

C. Other financial income 3,792 3,362

V. Financial charges (8,639) (8,523)

A. Interest and other debt charges 3,827 4,270

B. Amounts written down on positive consolidation differences

2,754 2,601

C. [increase,(decrease)] in amounts written off current assets other than mentioned under II.E

38

D.Other financial charges 2,020 1,652

VI. Profit (Loss) on ordinary activities before taxes 43,808 39,919



31-03-2006 31-03-2005

VII. Extraordinary income 19,336 697

C. Adjustments to amounts written off financial fixed assets

2

E. Gain on disposal of fixed assets 6,364 415

F. Other extraordinary income 12,972 279

VIII.Extraordinary charges (4,495) (2,018)

A. Extraordinary depreciation and extraordina-ry amounts written off formation expenses, intangible and tangible fixed assets

3,624

D. Provisions for extraordinary liabilities and charges [increase,(decrease)]

140

E. Loss on disposal of fixed assets 749 1,759

F. Other extraordinary charges 121 119

IX. Profit (Loss) for the period before taxes 58,649 38,598

X. A. Transfer from deferred taxation 14,101

B. Transfer to deferred taxation (1,579) (1,358)

XI. Income taxes (14,863) (15,110)

A. Income taxes 14,872 15,110

B. Adjustment of income taxes and write-back of tax provisions

(10) ()

XII. Profit (Loss) for the period 56,308 22,130

XIII. Share in the profit (loss) of the companies accounted for using the equity method

XIV.Consolidated profit (loss) 56,308 22,130

A. Share of third parties 7,261 6,103

B. Share of the group 49,047 16,027

in 000 €



Annex to the consolidated accounts

I. Statement of formation expenses in 000 €

Formation expenses

a) Net carrying value as at the end of the preceding period 55

b) Movements of the period

- New expenses incurred -

- Depreciation (15)

- Other -

c) Net carrying value as at the end of the period 40

of which :

- Expenses of formation or capital increase 40

- Other -

II. Statement of intangible assets in 000 €

Research anddevelopment

expenses

Concessions,patents,

licences, etc…Goodwill

a) Acquisition cost

As at the end of the preceding period 322 286 48,658

Movements during the period

- Acquisitions, including fixed assets, own production

- 28 -

- Sales and disposals - - -

- Changes in the consolidation scope - 80 -

- Translation differences - 10 -

- Other (82) - -

At the end of the period 240 404 48,658

c) Depreciation and amounts written down

As at the end of the preceding period (322) (159) (26,071)


- Recorded - (85) (7,529)

- Written back as superfluous - - -

- Changes in the consolidation scope - (27) -

- Translation differences - (4) -

- Other 82 - -

At the end of the period (240) (275) (33,600)

d) Net carrying value at the end of the period - 129 15,058



III. Statement of tangible fixed assets in 000 €

Landand

buildings

Plant,machinery and

equipment

Furnitureand

vehicles

a) Acquisition cost

As at the end of the preceding period 136,910 273,877 9,422



2,189 3,852 890

- Sales and disposals (6,657) (43,826) (283)

- Transfers from one heading to another - 2,232 -

- Changes in the consolidation scope 335 48 530

- Translation differences (1,071) (818) (11)

At the end of the period 131,706 235,365 10,549

b) Revaluation surpluses

As at the end of the preceding period 39,975 8,386 -


- Changes in the consolidation scope (335) - -

- Translation differences (338) - -

At the end of the period 39,302 8,386 -


As at the end of the preceding period (27,542) (199,770) (6,471)


- Recorded (2,495) (13,426) (1,247)

- Written back as superfluous 5,279 43,130 214

- Changes in the consolidation scope - (11) (7)

- Translation differences 37 268 49

At the end of the period (24,721) (169,809) (7,462)

d) Net carrying value at the end of the period 146,287 73,942 3,087

Leasing andother similar

rights

Othertangibleassets

Assets underconstruction and

advance payments

a) Acquisition cost

As at the end of the preceding period 123 1,271 2,149



- 115 3,434

- Sales and disposals (31) (865) -

- Transfers from one heading to another - - (2,232)

- Translation differences - - (56)

At the end of the period 93 521 3,295


As at the end of the preceding period (54) (940) -


- Recorded (19) (17) (6)

- Written back as superfluous 31 722 -

At the end of the period (42) (236) (6)

d) Net carrying value at the end of the period 51 286 3,289



IV. Statement of financial fixed assets in 000 €

Other enterprises

1. Participating interests and shares

a) Acquisition cost as at the end of the preceding period 16,600


- Acquisitions 28

- Transfers from one heading to another (2,031)

- Translation differences (118)

At the end of the period 14,479

c) Amounts written down as at the end of the preceding period (4,268)


- Recorded -

- Translation differences -

- Other -

At the end of the period (4,268)

d) Net carrying value at the end of the period 10,211

2. Amounts receivable

Net carrying value at the end of the preceding period 269


- Additions 12,831

- Sales and disposals (47)

- Translation differences (620)

Net carrying value at the end of the period 12,433

Accumulated amounts written down on amounts receivable at the end of the period -

V. Statement of enterprises excluded from the consolidation and in which a meaningful interest is held

Year end Currency Shareholder’s equity

( in ‘000 )

Results( in ‘000 )

% shareholding

Compagnie Sucrière scarl

Kwilu-Ngongo 31/12/05 FC 5,712,930 112,523 59.82%

(Dem.Rep. of Congo)

Sugar Terminals Limited

King George Square 30/06/05 AUD 347,113 16,813 8.60%

Brisbane Qld 4000

(Australia)



VI. Statement of consolidated reserves and profit carried forward in 000 €

Reserves and results brought forward

At the end of the previous financial period 272,047

Appropriation of prior results -

Results of the current period (share of the group) 49,047

Appropriation of result (10,000)

At the end of the period 311,095

VII. Statement of consolidation differences in 000 €

Goodwill

Positive Negative

Net carrying value at the end of the preceding period 6,960 (57,809)


- arising from an increase of the percentage held 764 -

- arising from a decrease of the percentage held - 951

- depreciation (2,754) -

Net carrying value at the end of the period 4,970 (56,858)

VIII. Statement of amounts payable in 000 €

A. Analysis of the amounts originally payable after one year according to their residual term

Amount payable (or the portion thereof)with a residual term of

No more than1 year

Between 1 and5 years

Over 5 years

Financial debts

1. Subordinated loans - - -

2. Unsubordinated debentures - - -

3. Leasing and other similar obligations 32 14 -

4. Credit institutions 14,612 33,307 -

5. Other loans - - -

Other amounts payable - -

Total 14,644 33,321 -



IX. Result in 000 €

Current period Precedingperiod

Net turnover 495,243 464,258

European Union 224,512 246,607

Australia 217,622 191,801

Other countries 53,109 25,850

Workforce recorded in the personnel register

Total number of personnel at the closing date 1,381 1,491

Personnel charges and pensions 67,769 71,233

Of which : Provisions for pensions

Increase (+) ; Decrease (-) 3,743 (5,449)

Income taxes

1. Income taxes of the current period 14,872 15,110

a. Taxes and withholding taxes due or paid 9,842 13,907

b. Excess of income tax prepayments and withholding taxes capitalised

(16) (15)

c. Estimated additional charges for income tax 5,046 1,218

d. Deferred taxes - -

2. Income taxes on previous periods (10) -

a. Taxes and withholding taxes due or paid (10) -

3. Deferred taxes and latent taxation

a. Beneficial deferred taxes 2,496 12,543

Accumulated tax losses deductible from future taxable profits 2,039 12,086

Deduction for investments on later tax years 457 457

X. Rights and commitments not reflected in the balance sheet in 000 €

Period

as a security for debtsand commitments

of the enterprise of third parties

A2. Amounts of real guarantees, given or irrevocably promised by the enterprises included in the consolidation on their own assets

Pledge on current and other assets :

- amount of the registration 7,291 -

- other pledged assets 1,500 -

A5. b) Commitments from transactions :

- to exchange rates (currencies to be received) 7,228 -

- to exchange rates (currencies sold to be delivered) 29,025 -

D. Members of management and employees of group companies benefit from an extra-legal pension scheme. The premiums paid for these group insurance contracts are partially borne by the personnel and partially by the enterprise.



XI. Relationships with affiliated enterprises but not included in the consolidation in 000 €

Affiliatedenterprises

Enterprises linked with

participatinginterests

1. Financial fixed assets :

- participating interests and shares 10,211 -

2. Amounts payable :

- within one year 726 -

3. Amounts receivable :

- within one year 1,055 -

XII. Financial relationships with directors or managers in 000 €

Period

A. Direct and indirect remuneration and pensions accounted for in this period, granted to :

- the directors 1,245

B. Receivables from directors -

Consolidation and accounting principles

I. CONSOLIDATION PRINCIPLES

Consolidation scope

All affiliated companies as well as companies linked by participating interests are taken into consid-eration when drawing up the consolidated accounts. However, the companies meeting one or more of the following criteria could be excluded: (i) too low participating interest; (ii) located in a country with political or monetary instability; (iii) probable break of links with the group; (iv) liquidation, nationaliza-tion or loss of activity; (v) impossibility to exercise power or impossibility to obtain information within a reasonable time or without generating disproportionate expenses.

Accordingly, as the present political situation in the Democratic Republic of Congo renders the con-tinuation of normal economic activities uncertain, the company located in that country (Compagnie Sucrière scarl) has been excluded from the scope of consolidation.

Consolidation methods

• Full consolidation

The full consolidation method is used whenever one of the following two conditions is met: (i) the participating interest of the group in the capital of its subsidiary is more than 50 %; (ii) the group has controlling power in the company, as is the case with the financial holding in B&G in China.

This consolidation method consists in incorporating into the parent company’s accounts all assets and liabilities of the consolidated subsidiary as a substitute for the carrying value of the participating inter-est therein. It reveals consolidation differences and identifies minority interests. Similarly, the income statement items of the subsidiaries are added to those of the parent company and their results of the year are split into the parent company’s share and the share of third parties. Intercompany accounts and operations are eliminated on consolidation.



• Equity method

This method is used when the group’s interest in the company is more than 20 % but less than 50 %. Assets and liabilities of the company consolidated using the equity method are not incorporated in each section of the consolidated balance sheet, but the account «participating interests» of the consolidat-ing company is adjusted in the consolidated financial statements to take account of the fluctuations of its share in the net assets of the subsidiary. The consolidated income statement records the part of the group in the results realized by the company consolidated using the equity method, instead of the dividends received or the write-offs recorded.

• Consolidation differences

The differences between, on the one hand, the share in the consolidated companies’ shareholders’ equity on the shares’ acquisition date or on a date close to said date, and, on the other, the accounting net value of these interests on the same date are attributed, to the extent possible, to the asset and liability items that have a value superior or inferior to their book value in the subsidiary’s accounts. The remaining difference is posted to the consolidated balance sheet under the item «Positive consoli-dation differences» or “Negative consolidation differences», which cannot be compensated, except for those that are associated with the same subsidiary. «Positive consolidation differences» are depreci-ated over 5 years in the consolidated profit and loss account. Additional one-time depreciations are booked if, as a result of changes in economic circumstances, there is no longer any economic justifica-tion for keeping them at this value in the consolidated balance sheet.

• Foreign currency translation differences

The accounts of foreign companies included in the consolidation are translated into Euro at the ex-change rate in force at 31 March for all balance sheet items and at the average rate in force during the book-year for all income statement items. In the specific case of B&G in China, which closes its financial year on 31 December, it is the exchange rates on this date that are used as well as the average price of the financial year for all its results items.

The exchange differences on foreign currency translation are recorded in the balance sheet under li-abilities in the section «Foreign currency translation differences». They include the following two items: (i) exchange rate differences on equity, equalling the difference between the historical rate and the closing rate and (ii) exchange differences on results, equalling the difference between the average rate and the closing rate of the period.

• Valuation rules

The valuation rules used for the preparation of the consolidated accounts are the same as those ap-plied to the annual statutory accounts. Group companies have adopted – per sector – uniform valuation rules so that no retreatment is required. The rules applied by B&G and Galactic Inc do not significantly diverge from those of the other Group companies and no adjustment is required.

For foreign subsidiaries, the necessary reclassifications and retreatments have been performed. The fiscal charge of the consolidated accounts corresponds to the sum of the individual fiscal charges of the consolidated companies using the equity method.

The consolidated financial statements of Finasucre Investments (Australia) Pty Ltd are prepared in ac-cordance with Australian generally accepted accounting principles and valuation rules. They have not been adjusted with a view to their integration in the consolidated accounts of the Finasucre group. In fact, most of the accounting principles and valuation rules applied are very similar to those applied in the other companies of the Finasucre group and any possible discrepancies which could have a signifi-cant impact on the interpretation of the consolidated financial statements of the group are specified hereunder. However, new Australian standards (IFRS) have been applied to this financial year. Apart from the obligation henceforth to include in the accounts the current value of previously constituted funds and possibly supplemented in the course of the financial year and to post the deferred taxes ac-cording to the IFRS principles, the new standards do not require a reworking of the financial statements in order for them to be harmonised with the other consolidated companies.



• Elimination of internal operations

Intra-group operations affecting assets and liabilities, such as financial fixed assets, payables and receivables, as well as the income statement, such as interests, charges and income, are eliminated in the full and proportional consolidations. Dividends received from consolidated companies using the equity method are eliminated and replaced by our share in the result.

In the particular case of B&G in China, closing its accounts on 31 December, the elimination of internal transactions with companies of the consolidation perimeter has been done for the smallest amount ap-pearing in the balance sheet and income statement items of the companies in internal relationships for each balance sheet and income statement item balance.

• Accounting period of reference

For companies included in the consolidation, the date of closure of the accounts is 31 March 2006, except for B&G in China, which closes on 31 December. The consolidated income statement shows twelve months of activity for all companies included in the consolidation as well as the comparative figures of the previous year

II. STATEMENT OF CONSOLIDATED COMPANIES

Company Registered address and National number % Interest % Control

FINASUCRE S.A. Av.Herrmann-Debroux, 40-42 BE-1160 Brussels - Belgium Nat Nr 0403 219 201

Mother- company

-

GROUPE SUCRIER S.A. Route d’Hacquegnies, 2 BE-7911 Frasnes-lez-Buissenal - Belgium Nat Nr 0402 802 594

99,72% 99,72%

FINASUCRE INVESTMENTS (AUSTRALIA) PTY LTD

Bundaberg (Queensland) - Australia ABN 23 062 315 593

100% 100%

FINASUCRE HOLDINGS (AUSTRALIA) PTY LTD


100% 100%

FINASUCRE AUSTRALIA PTY LTD


100% 100%

BUNDABERG SUGAR GROUP LTD


100% 100%

BBS FINANCE LTD Bundaberg (Queensland) - Australia ABN 44 062 234 682

100% 100%

QUEENSLAND URBAN PROJECTS PTY LTD


100% 100%

BUNDABERG FOUNDRY ENGINEERS LTD


100% 100%

BUNDABERG SUGAR LTD


100% 100%

BBS SUBSIDIARY PTY LTD


100% 100%



NORTHERN LAND HOLDINGS LTD


100% 100%

ISCAL SUGAR S.A. / N.V.

Chaussée de la Sucrerie, 1 BE-7643 Fontenoy - Belgium Nat Nr 0861 251 419

62,624% 62,624%

EURO STAR HOLLAND B.V.

Zuiveringweg, 14 NL-8243 PZ Lelystad - The Netherlands

62,453% 100%

DEVOLDER S.A. Rue de l’Intendant, 156 BE-1080 Bruxelles - Belgium Nat Nr 0422 175 969

99,73% 100%

GALACTIC S.A. Place d’Escanaffles, 23 BE-7760 Escanaffles - Belgium Nat Nr 0408 321 795

54,85% 55%

GALACTIC INCORPORATED

West Silver Spring Drive 2700 53209 Milwaukee - United States

54,85% 55%

B&G Daqing road 73 233010 Bengbu - China

48,87% 49%

III. SUMMARY OF ACCOUNTING PRINCIPLES

ASSETS

1. Valuation rule valid for all fixed assets (excluding financial fixed assets)

Fixed assets are valued at their acquisition value, which corresponds either to the acquisition price (including accessory costs), or to cost price, or to their incorporation value.

2. Start-up expenses

These are depreciated over 5 years.

3. Intangible fixed assets

Intangible fixed assets whose use is limited in time are depreciated over their lifetime or probable use, which cannot exceed 5 years.

To the extent possible, merger goodwill is allocated to any under-valuations of assets; the balance is depreciated over no more than 5 years, based on probable economic lifetime.

4. Tangible fixed assets

Tangible fixed assets whose use is limited in time are depreciated as of their acquisition or commis-sioning date.

The annual depreciation rates are calculated using the straight-line method or on a degressive basis, depending on the lifetime of the investments as defined below:

- Industrial buildings : 20 years- Operating equipment : 10 years- Tools : 3 years- Movable objects : 10 years- Office furniture : 5 years- Computer equipment: 4 years- Rolling stock: 5 years



Bundaberg Sugar’s industrial buildings are depreciated using the straight-line method, based on the economic lifetime (40 to 67 years). Its industrial equipment and facilities are depreciated using the straight-line method, based on an economic lifetime of 5 to 40 years.

Tangible fixed assets, the estimated economic lifetime of which is not limited, are subject to value adjustments in case of long-lasting value decrease or depreciation.

Additional, one-time or accelerated depreciations can be applied based on tax provisions or due to changes in economic or technological circumstances.

5. Financial fixed assets

Participations, shares and participating interests are valued at their acquisition cost, excluding acces-sory costs.

Write-downs are booked when the estimated value of a share is below inventory value, provided that the loss of value observed is of a lasting nature.

When financial fixed assets show a lasting and unquestionable surplus as compared to the initial book value, a revaluation can be performed.

The funds constituted and held by Bundaberg Sugar for the purpose of guaranteeing its pension com-mitments with regard to its staff are included in this heading as a credit and estimated at their realisa-tion value at the balance sheet’s closing date.

6. Amounts receivable

Receivables are recorded at nominal value or acquisition cost. Receivables in foreign currency are recorded in Euro at the rate in force on the day of the transaction and revalued at the closing rate at year-end. Write-offs are recorded if the collectibility at due-date is partially or completely uncertain or hazardous.

7. Stocks

A. Cane still growing in the fields

Costs incurred by Bundaberg Sugar for the agricultural production of sugar cane are recorded in in-ventories from the moment of the last harvest until the balance sheet date. They are recorded under consumption in the following financial year based on the tonnage harvested.

B. Goods, raw materials, consumable products and supplies

Those goods are valued at the lower of either acquisition cost according to the weighted average prices method or market value at closing date. Spare parts or slow moving parts are systematically written off.

Write-downs are booked on obsolete stocks or on slow moving stocks.

C. Work in progress and finished goods

The products are generally valued based on the «direct costing» method.

a) Crystallized sugar

This product is valued in accordance with the « direct costing » method which includes the following production costs: raw materials, consumable goods, and direct production cost, less the value of the sub-products (foam, pulps and molasses).Those of Bundaberg Sugar include raw materials, consumption materials, direct manufacturing costs, and fixed manufacturing costs.



b) Gross sugar and syrup

These products are assigned a value based on the white content as per European regulations and the cost price of crystallised sugar.

c) Pulp, molasses and other by-products are valued at market price.

d) Lactic acid is valued at the lower of «full costing» price or realization price. Work in progress is val-ued at the average sales price of the period.

e) Orders and Contracts in progress are valued at cost, increased by a percentage of profit considered as earned at balance sheet date (based on an individual rate of completion of at least 70%). Costs com-prise all direct costs and a percentage of overhead expenses charged individually to each contract.

If the costs incurred for a contract in progress exceed the expected income, the exceeding portion is immediately recorded as a charge.

8. Investments and cash at bank and in hand

Assets are recorded at their nominal value and investments are recorded in the balance sheet as assets at acquisition cost, excluding accessory costs. At year-end, a write-off is recorded if the realizable value is lower than acquisition cost. 9. Deferred charges and accrued income

Expenses incurred during the period but relating partially or totally to a following financial year are valued in accordance with the pro rata rule.

Income or part of income, the collection of which will only take place in a future period but relating to the period in question, are valued at the pro rata amount related to the said period.

LIABILITIES

10. Investments grants

Investment grants are progressively reduced, in proportion to the depreciation of the fixed assets for which the grants were obtained.

11. Provisions for liabilities and charges

At year-end, the Boards examine the advisability of setting up provisions to cover the risks or losses arisen during the period.

Deferred taxes and latent tax assets and liabilities are henceforth posted at Bundaberg Sugar accord-ing to the new IFRS accounting standards. The effects on the Group’s consolidated income statement resulting from this first application have been isolated from the corresponding items in order to show the impact thereof and to enable comparison with the previous financial years’ results.

12. Amounts payable after more than one year

Those debts are recorded at their nominal value. A value adjustment must be booked if the estimated value of the debt at the end of the year exceeds book value.

13. Amounts payable within one year

Those debts are recorded at their nominal value. A value adjustment must be booked if the estimated value of the debt at year-end is above the book value.

Provisions are recorded for tax and social charges related to the period.



Vacation pay accruals are computed in accordance with fiscal rules.

The provisions are regularly reviewed and reversed when they became obsolete.

14. Accrued charges and deferred income

Charges or part of charges relating to the period but which will only be paid in a later period, are valued on the basis of the amount related to the period.

Income received during the period but relating partially or totally to a future period is also valued based on the amount considered income from a future period.

Income with uncertain collectibility is also recorded in that section.

15. Turnover

The net turnover recorded by Bundaberg Sugar on the sale of raw sugar is based on the «pool price» applicable per ton of sugar, estimated by Queensland Sugar Limited, the official organization authorized to carry out the Australian exports of raw sugar. Any adjustment between this price and the final sales price is booked in the following financial year.

16. Extra-legal pension scheme

a) Apart from the legal pension schemes, certain group companies have adopted a complementary pen-sion scheme in favour of their management and certain categories of employees. For that purpose, group insurance contracts have been subscribed, the premiums of which are covered by contributions by the persons insured and by the employer.

b) Bundaberg Sugar sets up provisions for the pension rights of its personnel. Those provisions are re-viewed annually in order to be able to meet future estimated pension costs, based on the future level of remunerations and length of service of the entitled personnel, calculated at balance sheet date as per present interest rates applicable following the presumed due dates.

17. Deviations from the valuation rules

a) The receivable from the State of Congo (ex-Zaire), amounting to € 2.65 million (section V of the bal-ance sheet) results from a handover agreement of 60 % of the shares of Compagnie Sucrière scarl, signed in 1977. It is still considered as 100 % collectible, but it is impossible to foresee a precise date.

b) As a consequence of the merger in 1989 between Sogesucre s.a., Suikerfabrieken van Vlanderen n.v. and Fabrique de Sucre de Frasnes-lez-Buissenal s.a. with a view to creating Groupe Sucrier s.a., and as a consequence of the acquisition of Devolder s.a. in 1989 and the demerger effective 1 September 1993 of Advanced Technics Company s.a. to create Brussels Biotech s.a., not all of the depreciations have been recorded in accordance with the depreciation rates indicated above. Fixed assets of those companies acquired before those dates of merger or demerger, have been depreci-ated at rates sometimes different from those mentioned above.

c) In accordance with tax provisions, the assets contributed to the company in 2003 by Groupe Sucrier s.a. to Iscal Sugar s.a. or resulting from merger in 2003 between the latter and Sucrerie de Fontenoy s.a. and Suikerfabriek van Veurne n.v. continue to be depreciated based on their original valuation rules.

d) By derogation, Iscal Sugar had initially undertaken to depreciate the goodwill recorded at the time of the merger with Suikerfabriek van Veurne n.v. over five six-month periods but has subsequently decided, with effect from the 2004/2005 financial year, to depreciate the balance over a four-year period.



Statutory Auditor’s report to the General Meeting of Shareholders of Finasucre s.a. on the consolidated financial statemens for the year ended 31 March 2006In accordance with the legal and statutory requirements, we report to you on the performance of the audit mandate which has been entrusted to us. We have audited the consolidated financial statements for the year ended 31 March 2006, prepared in accordance with the legal and regulatory requirements applicable in Belgium, which show a balance sheet total of € 630,420(,000) and a consolidated profit (group’s share) for the year of € 49,047(,000).We have also carried out the specific additional audit procedures required by law.The preparation of the consolidated financial statements and the assessment of the information to be included in the consolidated directors’ report, are the responsibility of the Board of Directors. Our audit of the consolidated financial statements was carried out in accordance with the auditing standards applicable in Belgium, as issued by the Institut des Reviseurs d’Entreprises / Instituut der Bedrijfsrevisoren. Unqualified audit opinion on the consolidated financial statements The above mentioned auditing standards require that we plan and perform our audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. In accordance with those standards, we considered the group’s administrative and accounting or-ganisation, as well as its internal control procedures. Company officials have responded clearly to our requests for explanations and information. We have examined, on a test basis, the evidence support-ing the amounts included in the consolidated financial statements. We have assessed the accounting policies, the consolidation principles, the significant accounting estimates made by the company and the overall consolidated financial statement presentation. We believe that our audit provides a reason-able basis for our opinion. In our opinion, taking into account the legal and regulatory requirements applicable in Belgium, the consolidated financial statements for the year ended 31 March 2006 give a true and fair view of the group’s assets, liabilities, financial position and results of operations. Additional certification and information We supplement our report with the following certification and information which do not modify our audit opinion on the consolidated financial statements: • The consolidated directors’ report includes the information required by law and is consistent with

the consolidated financial statements. We are, however, unable to comment on the description of the principal risks and uncertainties which the group is facing, and of its situation, its foreseeable evolution or the significant influence of certain facts on its future development. We can nevertheless confirm that the matters disclosed do not present any obvious contradictions with the information of which we became aware during our audit.

• As disclosed in the directors’ report, the Australian subsidiaries are included in the consolidated financial statements following their own accounting policies. These accounting policies have been modified during the financial year as a result of the adoption by Australia of new accounting standards similar to IFRS. In this context and in connection with the preparation the consolidated financial statements of Finasucre, the impact of the adoption of these new standards was recorded in the profit and loss account of the year. The positive impact on the consolidated profit of the year amounts to € 26.9 million and mainly relates to the pension obligations and deferred tax position of the Australian subsidiaries.

Brussels, 12 June 2006Ernst & Young Reviseurs d’Entreprises SCC

Statutory Auditor, represented byVincent Etienne

Partner



Balance sheet as at 31 March 2006 in 000 €

ASSETS 31-03-2006 31-03-2005

Fixed Assets 148,009 154,584

IV. Financial Assets 148,009 154,584

A. Affiliated enterprises

1. Participating interests 148,009 154,584

Current assets 147,140 138,423

VII. Amounts receivable within one year 18,671 28,251


VIII.Investments 128,203 109,838

B. Other investments 128,203 109,838

IX. Cash at bank and in hand 147 144

X. Deferred charges and accrued income 119 189

TOTAL ASSETS 295,149 293,007

LIABILITIES 31-03-2006 31-03-2005

Capital and reserves 282,032 283,298

I. Capital 2,232 2,232

A. Issued capital 2,232 2,232

III. Revaluation surplus 10 10

IV. Reserves 263,602 263,602

A. Legal reserve 223 223

B. Reserves not available for distribution

2. Other 27 27

C. Untaxed reserves 3,352 3,352

D. Reserves available for distribution 260,000 260,000

V. Profit (Loss) carried forward 16,187 17,453

Provisions and deferred taxation 2,400 2,400

VII. A. Provisions for liabilities and charges 2,400 2,400

4. Other liabilities and charges 2,400 2,400

Creditors 10,717 7,309

IX. Amounts payable within one year 10,520 7,239

E. Taxes, remuneration and social security

1. Taxes 412 241

F. Other amounts payable 10,107 6,998

X. Accrued charges and deferred income 198 70

TOTAL LIABILITIES 295,149 293,007

Annex B. – Financial statements of Finasucre s.a. as at 31 March 2006


31-03-2006 31-03-2005

I. Operating income

D. Other operating income

II. Operating charges (219) (212)

B. Services and other goods 214 212

G. Other operating charges 4 1

III. Operating profit (loss) (219) (212)

IV. Financial income 7,631 19,201

A. Income from financial fixed assets 2,985 15,125

B. Income from current assets 3,696 3,153

C. Other financial income 950 923

V. Financial charges (790) (722)

C. Other financial charges 790 722

VI. Profit (Loss) on ordinary activities before taxes 6,622 18,267

VII. Extraordinary income 3,399

D. Gain on disposal of fixed assets 3,399

IX. Profit (Loss) for the period before taxes 10,021 18,267

X. Income taxes (1,287) (1,325)

A. Income taxes (1,287) (1,325)

XI. Profit (Loss) for the period 8,734 16,942

APPROPRIATION ACCOUNT

A. Profit to be appropriated 26,187 34,333

1. Profit for the period available for appropriation

8,734 16,942

2. Profit brought forward 17,453 17,391

C. Transfers to capital and reserves (10,000)

3. To other reserves 10,000

D. Result to be carried forward (16,187) (17,453)

1. Profit to be carried forward 16,187 17,453

F. Distribution of profit (10,000) (6,880)

1. Dividends 10,000 6,880

Income statement as at 31 March 2006 in 000 €



Balance sheet as at 31 March 2006

I. Statement of financial fixed assets in 000 €

Affiliated With participationlink

1. Participating interests and shares

a) Acquisition cost as at the end of the preceding period 154,911 -


- Acquisitions -

- Sales and disposals (6,575) -

- Transfers from one heading to another - -

At the end of the period 148,336 -

b) Revaluation surpluses at the end of the preceding period 11 -

Movements during the period :

- Recorded - -

At the end of the period 11 -

c) Amounts written down as at the end of the preceding period (339) -


- Recorded - -

At the end of the period (339) -

d) Net book value at the end of the period 148,008 -

II. Participating interests and other rights in other enterprises in 000 €

Name of the registered office and for

enterprise governed by Belgian law the VAT or

national number

Rights held by Information from the most recent period available

The enterprise directly

Subsi-diaries

Annual account

Currency Capital and

reserves

Net result

Number % % as at ( ‘000 ) ( ‘000 )

Groupe Sucrier s.a. Route d’Hacquegnies, 2 BE-7911 Frasnes-lez-Buissenal - Belgium Nat nr 0402802594

2,113,481 99.72 - 31/03/2006 € 31,274 6,847

Finasucre Investments (Australia) Pty Ltd 4 Gavin street Bundaberg QLD 4670 - Australia

122,833,643 100.00 - 31/03/2006 AUD 260,622 -

Devolder sa Rue de l’Intendant, 156 BE-1080 Bruxelles - Belgium Nat nr 0422175969

1 0.02 99,98 31/03/2006 € 352 70



III. Investments : other investments and deposits in 000 €

Period Precedingperiod

Shares -

Book value increased with the uncalled amount -

Fixed income securities 31,769 30,788

issued by credit institutions -

Term deposits with credits institutions 96,524 79,050

falling due :

- less or equal to one month 11,600 7,400

- between one month and one year 84,924 71,650

Other investments not yet shown separately - -

IV. Deferred charges and accrued income (taken to assets) in 000 €

Period

- Charges carried forward to the next financial year 7

- Interest receivable 112

V. Statement of capital in 000 €

Period Numberof shares

A. Capital

1. Issued capital

- At the end of the preceding period 2,232 -

- Changes during the period -

At the end of the period 2,232 -

2. Structure of the capital

2.1. Different categories of shares

Shares without nominal value 2,232 100,000

2.2. Registered shares and bearer shares

- registered - 48,704

- bearer - 51,296

VI. Provision for other liabilities and charges in 000 €

Period

- Provision for litigation 2,400



VII. Statement of amounts payable en 000 €

C. Amounts payable for taxes, remuneration and social security Period

1. Taxes

a) Expired taxes payable -

b) Non expired taxes payable 105

c) Estimated taxes payable 307

VIII. Accrued charges and deferred income in 000 €

Period

- Interest collected in advance 198

IX. Operating results in 000 €


F. Other operating charges

- Taxes related to operations 4 1

X. Financial results in 000 €


A. Other financial income

- Win on bonds portfolio 950 923

E. Other financial charges

- Exchange losses 625 607

- Bank charges 23 24

- Miscellaneous financial charges 137 91

XI. Extraordinary results in 000 €


A. Extraordinary income

- Gain on disposal of participating interest 3,399 -



XII. Income taxes in 000 €

Period

A. Analysis of heading

1. Income taxes of the current period 1,287

a. Taxes and withholding taxes due or paid 980

b. Excess of income tax prepayments and withholding taxes capitalised -

c. Estimated additional charges for income taxes 307

2. Income taxes on previous periods -

a. Additional charges for income taxes due or paid -

b. Additional charges for income taxes estimated or provided for -

B. In so far as taxes of the current period are materially affected by differences between the profit before taxes and the estimated taxable profit

- Income definitively taxed (2,836)

- Gain on disposal of participating interest (3,399)

XIII. Other taxes and taxes borne by third parties in 000 €


B. Amounts retained on behalf of third parties for :

1. payroll withholding taxes 34 36

2. withholding taxes on investment income 1,174 1,127

XIV. Relationships with affiliated enterprises and enterprises linked by participating interests in 000 €

Affiliated enterprises Enterprises linkedby participation



1. Financial fixed assets : 148.009 154,583 - -

- Investments 148,009 154,583 - -

2. Amounts receivable : 18,426 28,194 - -

- Within one year 18,426 28,194 - -

Affilied enterprises


7. Financial results :

- From financial fixed assets 2,985 15,125

- From current assets 1,322 1,202

- Other financial income - -



XV. Financial relationships with directors and managers in 000 €

Period

A. The amount of direct and indirect remuneration and pensions included in the income statement

- to the directors and managers 145

XVI. Rights and commitments not accrued in the balance sheet in 000 €

Period

Amount of forward contracts :

Currencies sold (to be delivered) 18,426

ASSETS

III. Tangible fixed assets

Tangible fixed assets are recorded in the balance sheet as assets at their historical purchase price, including accessory costs, or at cost or at the contribution value.

Depreciation is calculated on a linear basis, at the authorized tax rates, based on their esti-mated useful life.

IV. The acquisitions of the financial year are depreciated as from the year in which they are recorded.

V. Financial fixed assets

These assets are valued at acquisition cost, under deduction of related write-offs. Accessory costs are incorporated in the acquisition price.

Write-downs are booked when the estimated value of a share is below inventory value, provided that the loss of value observed is of a lasting nature.

Amounts receivable are recorded at nominal value. Write-offs are recorded if the collectibility at due-date is partially or completely uncertain or hazardous.

V. & VII. Amounts receivable after more than one year Amounts receivable within one year

Amounts receivable are recorded at nominal value. Write-offs are recorded if the collectibility at due-date is partially or completely uncertain or hazardous.

VIII. & IX. Investments and cash at bank and in hand

Receivables are recorded at nominal value. Investments are recorded on the asset-side of the balance sheet at acquisition cost, excluding accessory costs. At the end of the financial year write-downs are recorded if the realizable value is below book value.

As to fixed interest bearing securities, held directly or indirectly through mutual fund instru-ments having a regular quotation and a liquid market, the market value at closing date is applied for valuation purposes.

XVII. Summary of Accounting Principles



LIABILITIES

VII. Provisions for liabilities and charges

At each closing date, the Board of Directors, ruling with prudence, sincerity and in good faith, examines the provisions to be constituted to cover the risks foreseen, potential ex-penses or losses arisen during the present or prior periods.

Provisions related to prior periods are regularly reviewed and written back if they are no longer relevant.

VIII. & IX. Amounts payable after more than one year Amounts payable within one year

Those debts are recorded at their nominal value.

Assets and liabilities expressed in foreign currency

Valuations of credit balances, debts and foreign currency: assets and liabilities expressed in foreign currency are, in principle, valued at the exchange rate prevailing at the closing date of the financial year, allowing for any possible exchange risk covers. Exchange differences are recorded in the income statement.



Statutory Auditor’s report to the Annual General Meeting of Shareholders of Finasucre s.a. on the financial statements for the year ended 31 March 2006In accordance with the legal and statutory requirements, we report to you on the performance of the audit mandate which has been entrusted to us. We have audited the financial statements for the year ended 31 March 2006, prepared in accordance with the legal and regulatory requirements applicable in Belgium, which show a balance sheet total of € 295,149(,000) and a profit for the year of € 8,734(,000). We have also carried out the specific additional audit procedures required by law.The preparation of the financial statements, the assessment of the information to be included in the directors’ report, as well as the compliance by the company with the Company Code and the company’s bylaws, are the responsibility of the Board of Directors. Our audit of the financial statements was carried out in accordance with the legal requirements and the auditing standards applicable in Belgium, as issued by the Institut des Reviseurs d’Entreprises / Instituut der Bedrijfsrevisoren. Unqualified audit opinion on the financial statements The above mentioned auditing standards require that we plan and perform our audit to obtain reason-able assurance about whether the financial statements are free of material misstatement. In accordance with those standards, we considered the company’s administrative and accounting or-ganisation, as well as its internal control procedures. Company officials have responded clearly to our requests for explanations and information. We have examined, on a test basis, the evidence supporting the amounts included in the financial statements. We have assessed the accounting policies, the sig-nificant accounting estimates made by the company and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, taking into account the legal and regulatory requirements applicable in Belgium, the financial statements for the year ended 31 March 2006 give a true and fair view of the company’s as-sets, liabilities, financial position and results of operations. Additional certifications We supplement our report with the following certifications which do not modify our audit opinion on the financial statements: • The directors’ report includes the information required by law and is consistent with the financial

statements. We are, however, unable to comment on the description of the principal risks and uncer-tainties which the company is facing, and of its situation, its foreseeable evolution or the significant influence of certain facts on its future development. We can nevertheless confirm that the matters disclosed do not present any obvious contradictions with the information of which we became aware during our audit.

• Without prejudice to formal aspects of minor importance, the accounting records were maintained in accordance with the legal and regulatory requirements applicable in Belgium.

• Otherwise, we do not have to report to you any transactions undertaken or decisions made in violation of the bylaws or the Company Code. The appropriation of results proposed to the General Meeting complies with the legal and statutory provisions.

Brussels, 12 June 2006Ernst & Young Reviseurs d’Entreprises SCC

Statutory Auditor, represented byVincent Etienne

Partner


Ce rapport est disponible en anglais, en néerlandais et sur notre site www.finasucre.com

This report is also available in English, in Dutch and on our website www.finasucre.com

Dit verslag is beschikbaar in het Engels, in het Nederlands en op onze website www.finasucre.com

FINASUCRE s.a.

Avenue Herrmann-Debroux 40-42

BE-1160 Brussels – Belgium

Tel. +32 (0)2 661 19 11 • Fax +32 (0)2 672 02 22

www.finasucre.com

BUNDABERG SUGAR Ltd4 Gavin Street - BundabergQueensland 4670 - AustraliaTel. +61 (0)7 41 50 85 00 • Fax +61 (0)7 41 50 85 22www.bundysugar.com.au

BUNDABERG FOUNDRY ENGINEERS Ltd4 Gavin street - BundabergQueensland 4670 - AustraliaTel. +61 (0)7 41 50 87 00 • Fax +61 (0)7 41 50 87 11www.bfel.com.au

GROUPE SUCRIER s.a.Registered Office : Route d’Hacquegnies 2BE-7911 Frasnes-lez-Buissenal - Belgium

Location in Brussels : Avenue Herrmann-Debroux 40-42BE-1160 Brussels - BelgiumTel. +32 (0)2 661 19 11 • Fax +32 (0)2 672 02 22www.groupesucrier.be

ISCAL SUGAR s.a.Registered Office : Factory in FONTENOYChaussée de la Sucrerie 1BE-7643 Fontenoy - BelgiumTel. +32 (0)69 87 17 11 • Fax +32 (0)69 44 44 16

Factory in MOERBEKEOpperstraat 108 BE-9180 Moerbeke-Waas - BelgiumTel. +32 (0)9 346 85 91 • Fax +32 (0)9 346 90 12

Factory in BRUSSELS Rue de l’Intendant 156 BE-1080 Brussels - BelgiumTel. +32 (0)2 426 98 73 • Fax +32 (0)2 425 38 83

Factory in FRASNES Route d’Hacquegnies 2BE-7911 Frasnes-lez-Buissenal - BelgiumTel. +32 (0)69 87 17 11 • Fax +32 (0)69 44 44 16www.iscalsugar.com EURO STAR HOLLAND BVZuiveringweg 14NL-8243 PZ Lelystad - The NetherlandsTel +31 320 25 43 44 • Fax +31 320 25 26 12www.euro-star-holland.com

CIE SUCRIERE scarlBP 10 Kwilu-Ngongo (Bas-Congo)Democratic Republic of CongoContact in Belgium :Tel. +32 (0)2 661 19 11 • Fax +32 (0)2 661 19 21

GALACTIC s.a.Sales department - Marketing departmentChaussée de Saint Job 12 BE-1180 Brussels - BelgiumTel. +32 (0)2 332 14 00 • Fax +32 (0)2 332 16 11

Factory : Place d’Escanaffles 23BE-7760 Escanaffles - BelgiumTel. +32 (0)69 45 49 21 • Fax +32 (0)69 45 49 26www.lactic.com

GALACTIC IncorporatedWest Silver Spring Drive 270053209 Milwaukee - United StatesTél. +1 414 462 1990 • Fax +1 414 462 2070www.lactic-us.com

Anhui BBCA & GALACTICLACTIC ACID COMPANY LIMITED (B&G)Daging Road 73 - Bengbu233010 Anhui - ChinaTel. +86 552 49 28 716

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