China XLX Fertiliser Ltd

DIRECTORS’ REPORTBy virtue of Section 7 of the Singapore Companies Act, Cap. 50, Liu Xingxu and Yan Yunhua are deemed to haveinterests in the 343,376,000 shares and 280,944,000 shares of the Company registered in the name of Pioneer TopHoldings Limited and Go Power Investments Limited respectively.There was no change in any of the above-mentioned interests between the end of the financial year and 21January 2009.Except as disclosed in this report, no director who held offices at the end of the financial year had interests inshares, share options, warrants or debentures of the Company, or of related corporations, either at the beginningor at the end of the financial year.Directors’ contractual benefitsExcept as disclosed in the financial statements, since the end of the previous financial year, no director of theCompany has received or become entitled to receive a benefit by reason of a contract made by the Company ora related corporation with the director, or with a firm of which the director is a member, or with a company inwhich the director has a substantial financial interest.OptionsNo options were issued by the Company or its subsidiary during the financial year. As at 31 December 2008, therewere no options on the unissued shares of the Company or its subsidiary which are outstanding.Audit CommitteeThe Audit Committee (“AC”) carried out its functions in accordance with Section 201B(5) of the SingaporeCompanies Act, Cap. 50, including the following:• Reviews the audit plans of the internal and external auditors of the Company, and reviews the internalauditors’ evaluation of the adequacy of the Company’s system of internal accounting controls and theassistance given by the Company’s management to the external and internal auditors;• Reviews the quarterly and annual financial statements and the auditors’ report on the annual financialstatements of the Company before their submission to the board of directors;• Reviews effectiveness of the Company’s material internal controls, including financial, operational andcompliance controls and risk management via reviews carried out by the internal auditors;• Meets with the external auditors, other committees, and management in separate executive sessions todiscuss any matters that these groups believe should be discussed privately with the AC;• Reviews legal and regulatory matters that may have a material impact on the financial statements, relatedcompliance policies and programmes and any reports received from regulators;• Reviews the cost effectiveness and the independence and objectivity of the external auditors;• Reviews the nature and extent of non-audit services provided by the external auditors;Annual Report 200836