Le Gaga (GAGA) 20-F 2012 FY Annual report (foreign)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from April 1, 2012 to June 30, 2012

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report                    

Commission file number: 001-34564

LE GAGA HOLDINGS LIMITED

(Exact Name of Registrant as Specified in Its Charter)

N/A

(Translation of Registrant’s Name Into English)

Cayman Islands

(Jurisdiction of Incorporation or Organization)

Unit 1105, The Metropolis Tower

10 Metropolis Drive

Hung Hom, Kowloon

Hong Kong

(Address of Principal Executive Offices)

Auke Cnossen, Chief Financial Officer

Unit 1105, The Metropolis Tower

10 Metropolis Drive

Hung Hom, Kowloon

Hong Kong

Tel: +852-3162-8585

Fax: +852-3167-7227

E-mail: ir@legaga.com.hk

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Ordinary shares, par value US$0.01 per share* American Depositary Shares, each representing 50 ordinary shares	The NASDAQ Stock Market LLC (The NASDAQ Global Select Market)

* Not for trading, but only in connection with the listing on The NASDAQ Global Select Market of American depositary shares, each representing 50 ordinary shares

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the transition report.

2,281,430,300 ordinary shares, par value $0.01 per share, as of June 30, 2012, after deducting (1) 19,351,850 of ordinary shares repurchased and (2) 17,808,850 ordinary shares issued to Citi (Nominees) Limited, as nominee for Citibank, N.A., the depositary of our ADS program, to facilitate our future issuance of ADSs upon the exercise of options under our share incentive plans.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨                 Accelerated filer  x                 Non-accelerated filer  ¨

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board  x Other  ¨

* If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.  Item 17  ¨ Item 18 ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨ No  ¨

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨  No ¨

TABLE OF CONTENTS

Explanatory Note	3
Introduction	3
Forward-Looking Statements	3
Part I	4
Item 5. Operating and Financial Review and Prospects	4
Item 8. Financial Information	23
Part II	23
Item 13. Defaults, Dividends Arrearages and Delinquencies	23
Item 14. Material Modifications to the Rights of Secuirty Holders and Use of Proceeds	23
Part III	23
Item 18. Financial Statements	23
Item 19. Exhibits	24

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Explanatory Note

On August 24, 2012, our board of directors approved a change in our fiscal year end from March 31 to June 30. As a result, we are required to file this transition report on Form 20-F for the transition period from April 1, 2012 to June 30, 2012. We note that this transition report on Form 20-F is filed pursuant to Rule 13a-10(g)(4) of the Securities Exchange Act of 1934, as amended, which permits us to respond to only Items 5, 8.A.7., 13, 14 and 17 or 18 of Form 20-F.

Introduction

Unless the context otherwise requires, in this transition report on Form 20-F:

• “We,” “us,” “our company,” and “our” refer to Le Gaga Holdings Limited, any entity carrying on Le Gaga’s current business prior to the restructuring transactions through which Le Gaga became our listing vehicle, and their respective subsidiaries;

• “China” or “PRC” refers to the People’s Republic of China, excluding Taiwan, Hong Kong and Macau;

• “ADSs” refers to American Depositary Shares, each representing 50 of our ordinary shares;

• “Renminbi” or “RMB” refers to the legal currency of China; and

• “$,” “US$” or “U.S. dollars” refers to the legal currency of the United States.

Names of certain companies provided in this transition report are translated or transliterated from their original Chinese legal names.

Discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

We and certain selling shareholders of our company completed the initial public offering of 10,871,599 ADSs on November 3, 2010. On October 29, 2010, we listed our ADSs on the NASDAQ Global Select Market under the symbol “GAGA.”

Our business is primarily conducted in China and substantially all of our revenues are denominated in RMB. This transition report contains translations of RMB amounts into U.S. dollars at specific rates solely for the convenience of the readers. Unless otherwise noted, all translations from RMB to U.S. dollars in this transition report were made at a rate of RMB6.3530 to US$1.00, the noon buying rate in effect as of June 29, 2012 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. On November 16, 2012, the noon buying rate was RMB6.2354 to US$1.00.

Forward-Looking Statements

This transition report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

The words “may,” “could,” “would,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “future,” “continue,” “is/are likely to” and other similar expressions may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, among other things, statements about:

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• our anticipated growth strategies, including increasing our greenhouse coverage, increasing our production scale, strengthening our sales, marketing and distribution efforts, focusing on high quality off-season products, improving our product mix, and expanding our research and development capability;

• our future business development, results of operations and financial condition;

• weather conditions that affect the production, harvest, transportation, storage and trade of fresh produce;

• trends and competition in the fresh vegetable market;

• future changes in laws or regulations affecting our business; and

• changes in general economic and business conditions in China.

You should thoroughly read this transition report and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements. We would like to caution you not to place undue reliance on forward-looking statements and you should read these statements in conjunction with the risk factors disclosed in “Item 3. Key Information—D. Risk Factors” contained in our annual report on Form 20-F filed with the SEC on July 20, 2012 and elsewhere in this transition report. Those risks are not exhaustive. We operate in an emerging and evolving environment. New risk factors emerge from time to time and it is impossible for our management to predict all risk factors, and we cannot assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to materially differ from results contained in any forward-looking statement.

You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable law.

Part I

Item 5. Operating and Financial Review and Prospects

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this transition report. Certain information contained in the discussion and analysis set forth below and elsewhere in this transition report includes forward-looking statements that involve risks and uncertainties. See “—G. Safe Harbor” below for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this transition report. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.

A.Operating Results

Overview

We are a leading greenhouse vegetable producer in China. We focus on applying advanced agricultural know-how to grow safe and consistently high-quality vegetables.

We sell over 50 varieties of vegetables to wholesalers, institutional customers and supermarket chains in China and Hong Kong. Our customers include Walmart and the top three Hong Kong supermarket chains, Wellcome, ParknShop and Vanguard. Sales to wholesalers are our largest revenue contributor and accounted for 50.7% and 51.9% of our total revenue in the three months ended June 30, 2011 and 2012, respectively.

We operated 11 farms with an aggregate area of 26,124 mu (1,742 hectares) in the Chinese provinces of Fujian, Guangdong and Hebei as of June 30, 2012. Ten of our farms, with an aggregate area of 22,142 mu (1,476 hectares), are located in Fujian and Guangdong near our target markets in southern China, which offers a favorable climate for year-around crop cultivation. In addition, we operate one farm in Hebei province to produce vegetables that grow best in a cooler climate. We use greenhouses to grow vegetables in most of our Fujian and Guangdong farms. As of June 30, 2012, our greenhouses covered approximately 34.1% of our total arable land. Greenhouses protect our crops from adverse weather conditions, such as typhoons and rainstorms. They also create a favorable microclimate that, together with our horticultural know-how, allows us to grow and sell high-priced vegetables of superior quality and uniform size, as well as off-season vegetables during the winter, which enables us to avoid selling into a highly commoditized market. Compared to open-field farming, greenhouse cultivation thus improves our revenue per mu, profit margins and return on our investment expenditures. Accordingly, our greenhouses have contributed to a significantly higher percentage of our revenues than would be suggested by their percentage coverage of our arable land.

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In the three months ended June 30, 2011 and 2012, our revenue was RMB123.3 million and RMB123.2 million ($19.4 million), respectively. We had a net loss of RMB8.5 million (US$1.3 million) for the three months ended June 30, 2012, compared to a net profit of RMB12.6 million for the same period in 2011.

Financial Overview

Revenue

We derive substantially all of our revenue from the sale of fresh vegetables. Our revenue decreased slightly from RMB123.3 million in the three months ended June 30, 2011 to RMB123.2 million ($19.4 million) in the same period in 2012. The slight change in revenue was primarily attributable to the offsetting effect of (1) an increase in revenue-per-mu, which in turn was due to an increase in average selling price of our produce, and (2) a decrease in average operating land from 20,569 mu for the three months ended June 30, 2011 to 20,062 mu for the three months ended June 30, 2012. The decreased in average operating land was due to an increase in land under construction or reserved during the three months ended June 30, 2012.

Our revenue-per-mu increased from RMB6,046 per mu (RMB90,690 per hectare) for the three months ended June 30, 2011 to RMB6,129 ($965) per mu (RMB91,935 ($14,475) per hectare) for the three months ended June 30, 2012. The increase in our revenue-per-mu was primarily attributable to (1) increased greenhouse coverage, which leads to (a) better product mix, i.e., more solanaceous products and (b) improved quality of our products, (2) enhanced cultivation know-how, and (3) market inflation. As of June 30, 2011 and 2012, a total of 7,150 mu (477 hectares) and 8,915 mu (594 hectares) of our arable land was covered by greenhouses, respectively, accounting for 32.6% and 34.1% of our total arable land as of each of the respective dates. As of June 30, 2011 and 2012, a total of 1,217 mu (81 hectares) and 6,014 mu (401 hectares) of our arable land was under construction or reserved. The size of our arable land amounted to 21,952 mu (1,463 hectares) and 26,124 mu and (1,742 hectares) as of June 30, 2011 and 2012, respectively.

We sell fresh vegetables to wholesalers, institutional customers and supermarket chains in China and Hong Kong. The following table sets forth a breakdown of our revenue by sales channels, in absolute amounts and as a percentage of total revenue, for the periods indicated.

	Three Months Ended June 30,
	2011				2012
	RMB		%		RMB		$		%
	(In thousands, except percentages)
Wholesalers		62,542		50.7		63,968		10,069		51.9
Institutional customers		51,412		41.7		54,224		8,535		44.0
Supermarkets		9,347		7.6		5,047		795		4.1
Others(1)		31		0.0		9		1		0.0
Total		123,332		100.0		123,248		19,400		100.0

(1) Includes retailers and small distributors who are not our regular customers.

Sales to wholesalers were our largest revenue contributor in the three months ended June 30, 2011 and 2012. Sales to wholesalers grew from RMB62.5 million in the three months ended June 30, 2011 to RMB64.0 million ($10.1 million) in the three months ended June 30, 2012. The growth of our sales to wholesalers was primarily attributable to (i) the successful implementation of our strategy to adjust our product mix to meet the increasing local and regional demand for high-quality fresh vegetables in the PRC domestic market, and (ii) the increasing recognition of our corporate brand in the wholesale markets.

A large proportion of our sales to institutional customers are made to export traders, who purchase vegetables from us and resell them in the overseas markets. Our institutional customers also include produce processing companies, large company cafeterias and large logistic traders. Sales to our top five institutional customers by revenue accounted for 45.8% and 65.2% of our total sales to institutional customers in the three months ended June 30, 2011 and 2012, respectively.

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We also sell our produce to supermarket chains in Hong Kong and China, with Hong Kong sales constituting a major portion of the supermarket sales. Sales to supermarket chains decreased from RMB9.3 million in the three months ended June 30, 2011 to RMB5.0 million ($0.8 million) in the three months ended June 30, 2012. The decrease in sales to supermarkets was primarily because we ceased operation of all concession sales to the Hong Kong supermarket customers during the fiscal year ended March 31, 2012.

From time to time, we also purchase from third parties a small number of vegetable varieties that we do not produce to fulfill the diverse demand of our supermarket customers in Hong Kong.

Our customer base has narrowed from 95 customers in the three months ended June 30, 2011 to 88 customers in the three months ended June 30, 2012. Sales to our top five customers collectively accounted for 20.1% and 30.4% of our revenue in the three months ended June 30, 2011 and 2012, respectively. Sales to our top customer accounted for 10.8% of our revenues in the three months ended June 30, 2012. No single customer accounted for over 10% of our revenue during the three months ended June 30, 2011.

Cost of Inventories Sold

Our cost of inventories sold comprises (1) direct materials such as seeds, fertilizers and pesticides, (2) labor costs associated with our cultivation activities, (3) manufacturing expenses of our farmland facilities such as rents, salaries for administrative staff, utilities and depreciation, (4) costs associated with the purchase from third parties of certain vegetables that we do not produce to fulfill the diverse demand of our supermarket customers in Hong Kong, and (5) biological assets fair value adjustment at the point of harvest.

Our cost of inventories sold was RMB106.3 million and RMB108.0 million ($17.0 million) in the three months ended June 30, 2011 and 2012, respectively.

Although adjusted cost of inventories sold (cost of inventories sold before biological assets fair value adjustment) is a non-IFRS measure, we believe that separate analysis of the cost of inventories sold excluding the fair value adjustment adds clarity to the constituent parts of our cost of inventories sold and provides additional useful information for investors to assess our cost structure.

Our adjusted cost of inventories sold decreased from RMB46.9 million in the three months ended June 30, 2011 to RMB46.0 million ($7.2 million) in the three months ended June 30, 2012.

Our direct material costs are affected by our production volume, the cost of agricultural inputs, our product mix, our plantation model and our horticultural know-how. Greenhouse production, as compared to open field production, typically results in more efficient utilization of inputs such as seeds, fertilizers and other growing materials. As such, material costs as a percentage of revenue decreased. At the same time, our seed costs decreased due to improved production techniques, partly off-set by more plantation of higher value solanaceous products which typically have more expensive seeds. As most of our fertilizers are organic fertilizers and the prices of organic fertilizers are less volatile compared to those of chemical fertilizers, the unit cost of our fertilizers did not materially change during the three months ended June 30, 2012 as compared to the three months ended June 30, 2011.

Our business is labor intensive. As of June 30, 2012, we indirectly hired 2,602 farm workers through a labor company to perform all agricultural labor work on our farms. We have observed an overall tightening of the labor market in the PRC and an emerging trend of shortage of labor supply in China. Furthermore, labor costs have been increasing in China in recent years and may continue to increase in the near future. Our labor costs amounted to RMB10.9 million and RMB11.0 million ($1.7 million) in the three months ended June 30, 2011 and 2012, respectively, accounting for 8.8% and 8.9% of our revenue during the respective period. We do not expect that the overall tightening of the labor market will have a material adverse effect on our expansion plans, as our standardized production process can be easily followed by farm workers with minimal skills, allowing us to hire farm workers from a large labor pool. We have experienced wage inflation and require more skilled laborers, causing higher wages, because we expand our greenhouse coverage and upgrade our product mix towards higher value solanaceous products. The adverse effect from increases in wages has been mitigated because our greenhouses have typically resulted in better utilization of labor compared to open field farming and solanaceous crops are less labor intensive compared to leafy and cruciferous vegetables. However, a further increase in labor costs will increase our business operation costs and our financial position may be adversely affected.

Our manufacturing expenses are primarily affected by our greenhouse expansion. Higher greenhouse coverage will lead to higher depreciation and lower fixed costs, such as rent, as a percentage of sales. Land rents have been increasing in China in recent years and may continue to increase in the near future. We do not expect that increasing land rents have a material adverse effect on our cost structure as our productivity as measured by revenue per mu increases due to higher greenhouse coverage.

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Purchases of third party produced vegetables have declined as we ceased all concession sales in the Hong Kong supermarket channel during the fiscal year ended March 31, 2012.

Biological Assets Fair Valuation and Its Impact on Cost of Inventories and Results of Operations

As a company primarily engaged in agricultural activities, we have adopted International Accounting Standard 41 “Agriculture,” or IAS 41, in the measurement of biological assets and agriculture produce. IAS 41 applies to biological assets, such as living plants related to managed agricultural activity that are in the process of growing, degenerating, regenerating and/or procreating and that are expected to eventually result in agricultural produce, as well as agricultural produce at the point of harvest. Our biological assets represent the growing crops, including vegetables, fresh fruits, tea trees and fir trees in our various production bases in China.

We recognize in our income statements the changes in the fair value less costs to sell of biological assets, which include the agricultural produce (vegetables and fruits) harvested during the reporting period and the vegetables and trees on the farmland at each reporting period end. In addition, cost of inventories sold represents the deemed cost of the agricultural produce based on the fair value less costs to sell at the point of harvest. Costs to sell are the incremental costs incurred in selling the agricultural produce. With respect to the agricultural produce harvested during the reporting period, the fair value of our biological assets in their present locations and condition is determined based on the current market price of these biological assets. With respect to the vegetables and trees on the farmland at each reporting period end, the fair value of our biological assets in their present locations and conditions is determined at the present value of expected cash flows from the biological assets discounted at a market-determined pre-tax rate, with reference to the species, growing conditions, costs incurred and expected yield of the crops.

Cost of inventories sold determined under IAS 41 reflects the deemed cost of agricultural produce, which is based on their fair value (less costs to sell) at the point of harvest. Biological assets fair value adjustment is the difference between the deemed cost of the agricultural produce and the plantation expenditure we incurred to cultivate the produce to the point of harvest. For agricultural produce harvested and sold during the period, the fair value adjustment included in the cost of inventories sold represents the total changes in fair value less costs to sell for that particular agricultural produce, which include the fair value gain or loss that arose in both the current and the prior periods, and therefore differ from the amount of changes in fair value less costs to sell related to crops harvested during the period.

The gain or loss arising from the changes in fair value less costs to sell of our biological assets are partially offset by the corresponding gain or loss included in the cost of inventories sold, to the extent that the agricultural produce is sold, as the harvested agricultural produce is also stated at the fair value less costs to sell at the point of harvest. Our changes in fair value less costs to sell of biological assets amounted to RMB36.2 million and RMB23.0 million ($3.6 million) in the three months ended June 30, 2011 and 2012, respectively, which was partially offset by the fair value adjustments included in the costs of inventories sold of RMB59.4 million and RMB62.0 million ($9.8 million), for the three months ended June 30, 2011 and 2012, respectively. This resulted in a negative net impact.

As a result, our cost of inventories sold after biological assets fair value adjustment represented the agricultural produce sold during the period at their fair value less costs to sell at the point of harvest, and increased from RMB106.3 million for the three months ended June 30, 2011 to RMB108.0 million ($17.0 million) for same period in 2012.

The following table sets forth the biological assets fair value adjustment included in cost of inventories sold, the changes in fair value less costs to sell of biological assets and the net impact of biological assets fair value adjustments to our results of operations.

	Three Months Ended June 30,
	2011			2012
	RMB			RMB			$
	(In thousands)
Biological assets fair value adjustment included in cost of inventories sold		(59,405	)		(61,963	)		(9,753	)
Changes in fair value less costs to sell of biological assets		36,163			22,964			3,615
Net impact		(23,242	)		(38,999	)		(6,138	)

The net impact of the biological assets fair value adjustments represents the net increase or decrease in the gain in fair value less costs to sell of crops on our farmland at the current reporting period end compared to the immediately preceding reporting period end. The negative net impact for the three months ended June 30, 2011 and 2012, primarily arose from the change in product mix from solanaceous to leafy products because the season for solanaceous products ended during the three months ended June 30. Therefore, the value of crops on our farmland as of June 30, when compared with that of March 31 (the immediately preceding reporting period end) decreased.

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The net impact of biological assets fair value adjustments is primarily driven by:

• the volume of crops on the land at the period ends;

• the product mix of the crops on the land at the period ends; and

• the market prices at the period ends of different products.

We plant different types of vegetables with different yields and selling prices during different periods. The net impact of biological assets fair value adjustments for each reporting period is attributable to the comparison of the adjustment to record our unharvested biological assets at fair value at the beginning of the reporting period and such fair value adjustment related to our unharvested biological assets at the end of the reporting period. As the quantity, product mix and market prices at the beginning and end of each reporting period are different, it is not meaningful to discuss the net impact of biological assets fair value adjustments of the reporting period by comparing different products’ prices and yields.

Changes in fair value less costs to sell of biological assets reported in each period include the biological assets fair value gain or loss arising from both (1) crops harvested during the period and (2) growing crops on the farmland at the period end. The growing crops on the farmland at the period end will be carried forward to future reporting periods and as the crops are harvested and sold, the related biological assets fair value gain or loss up to point of harvest is included in the determination of cost of inventories sold for the period in which the inventory is sold. The factors driving the changes in fair value less costs to sell relating to harvested crops or growing crops are generally the same, such as product mix and the market prices of different types of crops at the time of harvest or at period end. Furthermore, because the growth cycle of our crops is generally less than one year, the time factor is insignificant and it would not be meaningful to discuss the drivers separately. We believe the separate preparation of the two components of the changes in fair value less costs to sell, together with the discussion of the cost of inventories sold (including the effect of the biological assets fair value adjustment), provide relevant and useful financial information for the various stages of our agricultural production cycle.

Key Factors Affecting Our Results of Operations

Revenue-Per-Mu

The key metric used by our management in evaluating our financial performance is revenue-per-mu, or the revenue that a unit measure of arable land generates. Revenue-per-mu is determined by our production yield, defined as the production output that a unit measure of arable land generates, and the price at which we can sell our produce. Both production yield and average selling price are affected by our product mix. Our revenue-per-mu was RMB6,046 and RMB6,129 ($965) in the three months ended June 30, 2011 and 2012, respectively.

Production Yield

Our production yield across all crops was 2.0 tonnes and 1.7 tonnes per mu in the three months ended June 30, 2011 and 2012, respectively. Our production yield is affected by various factors, primarily our greenhouse coverage, product mix, weather, our horticultural know-how and techniques and our production planning. Our production yield has been significantly enhanced by our greenhouse cultivation. Greenhouses increase production output by allowing crops to grow faster and year-round and protecting crops from extreme weather conditions, such as typhoons and rainstorms. As of June 30, 2011 and 2012, a total of 7,150 mu (477 hectares) and 8,915 mu (594 hectares), respectively, of our arable land was covered by greenhouses, accounting for 32.6% and 34.1% of our total arable land for each period, respectively.

Within each crop, we have been able to increase our production yield by applying advanced cultivation techniques at each step of the cultivation process to improve soil productivity, enhance crop nutrient content and minimize crop diseases, pests and weeds. Relying on our greenhouse cultivation, horticultural know-how and our effective production planning, we are able to schedule and control crop plantation and harvest to meet higher–priced off-season demand. We intend to increase our production yield for each crop by continuing to increase our greenhouse coverage and enhance our horticultural know-how.

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The decrease in production yield across all crops for the three months ended June 30, 2012 as compared to the three months ended June 30, 2011 was primarily the result of (1) our improved product mix, with more focus on higher value but lower yielding vegetable varieties and (2) the poor weather conditions which resulted in lower overall volumes but higher selling prices.

Product Mix

Greenhouses create a more favorable and controlled growing environment, which allows us to grow more fruit-bearing solanaceous vegetables. Fruit-bearing solanaceous vegetables are typically much more difficult to grow compared to leafy and cruciferous vegetables and as a result, they can be sold for higher market prices than those of leafy and cruciferous vegetables. As we are expanding our greenhouse coverage, we expect solanaceous vegetables of higher value grown in greenhouses will constitute a larger share of our total revenue. Solanaceous vegetables are also less labor intensive compared to leafy vegetables, which further improves our profit margins.

Within the solanaceous vegetable category, we focus primarily on fruit-bearing crops such as peppers, tomatoes, eggplants, cucumbers and melons. Within each of these product groups, yields and average selling prices can vary widely. For example, specialty solanaceous vegetables, such as small snack tomatoes or mini peppers, may have a much higher average selling price but much lower yield per mu compared to beefsteak tomatoes and bell peppers. Therefore, our sales volume and average selling prices are also affected by each product’s percentage of our overall product mix.

Product Pricing

The prices of our produce are determined by several factors, including general economic conditions, market competition, weather conditions, seasonal factors, sales channels and most importantly, the supply of and demand for different types of vegetables.

The price of a particular type of vegetable is volatile and fluctuates depending on seasonal factors, the distance between vegetable farms and markets, the supply of and demand for it in the marketplace throughout the year, which in turn depends on weather conditions, including level of precipitation, temperature and other extreme weather conditions, local preferences and festivities. We focus on cultivating high-value vegetables during off-season periods, and through careful production planning and the use of greenhouses and advanced horticultural know-how to control the crop cycle, seek to sell them during the periods with the least amount of supply to achieve higher prices and profits.

Size of Arable Land

Our total production capacity depends to a large extent on the size of our arable land. As of June 30, 2012, a total of 26,124 mu (1,742 hectares) of arable land, compared to 21,952 mu (1,463 hectares) as of June 30, 2011, were leased and either in operation or under construction or reserved by us. As land is a precious commodity in China, while we seek to increase our arable land, we have also been building greenhouses extensively to improve our revenue per mu and increase our total production capacity.

We source most of our land from farmer households, local villagers’ committees or local governments. Although China is one of the largest countries in the world by land area, the arable land area as a percentage of total land is small. In addition, arable land in recent years has been increasingly scarce due to extensive urbanization and property development. Sourcing arable land in China has been highly competitive because of the increased demand for land for agricultural and other uses. Because the supply of arable land that can be leased from the farmers is limited, competition is fierce in obtaining such leases. In addition, farmland in China is highly fragmented and we generally enter into a few master lease agreements each with many neighboring land users to form one farm base, which makes our arable land expansion more complicated.

Market Demand

Our ability to increase production and grow our revenue is driven in part by the increasing demand in China for safe and high-quality fresh vegetables. We currently target the Guangdong, Fujian, Yangtze River Delta and Hong Kong markets, which have demonstrated a strong demand for fresh vegetables.

9

Operating Costs and Expenses

The following table sets forth our operating expenses, both as an absolute amount and as a percentage of total revenue for the periods indicated.

	Three Months Ended June 30,
	2011				2012
	RMB		%		RMB		$		%
	(In thousands, except percentages)
Packing expenses		8,431		6.8		8,913		1,403		7.2
Land preparation costs		7,008		5.7		12,887		2,028		10.5
Research and development expenses		2,061		1.7		2,291		361		1.9
Selling and distribution expenses		8,882		7.2		6,516		1,026		5.3
Administrative expenses		14,361		11.6		13,155		2,071		10.7
Other expenses		133		0.1		132		21		0.1

Packing Expenses. Our packing expenses primarily consist of materials utilized to pack our vegetables, labor costs and various expenses associated with our packing and processing facilities. Our packing expenses were RMB8.4 million and RMB8.9 million ($1.4 million) in the three months ended June 30, 2011 and 2012, respectively, representing 6.8% and 7.2% of our revenue in those respective periods. The increase in our total packing expenses was primarily due to (1) our product mix shift towards more solanaceous vegetables, which typically require more packing material compared to leafy and cruciferous vegetables, (2) an increase in packing material consumed in an effort to increase our brand awareness, and (3) better packaging used to enhance the selling price. Packing expenses, as a percentage of revenue, were higher in the three months ended June 30, 2012, because of our effort to increase our brand awareness, which was partly offset by better economies of scale in our packing facilities. In general, produce sold to institutional and supermarket customers entail higher packing expenses than those sold to the wholesale market.

Land Preparation Costs. We leave parts of our farmlands uncultivated in between plantation cycles to improve soil quality, and recognize expenses associated with the uncultivated land during these periods. Furthermore, some of the parcels of land we lease are not used for plantation immediately after we rent them. We record the rent, the depreciation of facilities on the land, and other miscellaneous costs relating to preparing these land parcels as an expense. We expect this expense to increase as we continue to expand our production and lease more land, which will result in additional losses associated with land before plantation, in non-cultivation periods and in between growing seasons. Our land preparation costs increased by RMB5.9 million, or 83.9%, from RMB7.0 million for the three months ended June 30, 2011 to RMB12.9 million (US$2.0 million) for the three months ended June 30, 2012, which was primarily due to (1) an increase in greenhouse coverage which increased the unit land preparation cost and (2) an increase in the amount of land in reserve or under construction due to new farm bases added.

Research and Development Expenses. We incur research and development expenses in connection with our research and development activities focusing on developing more effective cultivation techniques, improving produce quality and increasing production yield. Our research and development expenses consist primarily of:

• direct cost of materials used in research and development such as seeds, fertilizers, pesticides and consumable materials;

• salaries and related expenses for research and development personnel;

• rent for our research facilities; and

• depreciation.

Our research and development expenses were RMB2.1 million and RMB2.3 million ($0.4 million) in the three months ended June 30, 2011 and 2012, respectively, representing 1.7% and 1.9% of our revenue in those respective periods. We anticipate that our research and development expenses will increase as we continue to experiment with new horticultural know-how, new varieties and new plantation models.

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Selling and Distribution Expenses. Our selling and distribution expenses primarily consist of transportation expenses to transport vegetables from our farms to their points of sale, salaries, employee benefits, bonuses and related expenses for our sales and marketing staff, concessionaire fees and rebates paid to the supermarkets in Hong Kong to sell our produce in these supermarkets, packaging and loading expenses, and advertising expenses. Our selling and distribution expenses were RMB8.9 million and RMB6.5 million ($1.0 million) in the three months ended June 30, 2011 and 2012, respectively, representing 7.2% and 5.3% of our revenue in those respective periods. The decrease in selling and distribution expenses was primarily due to reduced salary and commission expenses as we ceased the concessionary sales in the Hong Kong market during the fiscal year ended March 31, 2012. This decrease was partially offset by higher distribution expenses. We expect our selling and distribution expenses to increase as we plan to strengthen our brand building efforts and expand and broaden our sales, marketing and distribution network and enter new markets.

Administrative Expenses. General and administrative expenses primarily consist of the following:

• salaries, bonuses and benefits for our administrative and management personnel;

• auditing fees and legal and other professional fees; and

• travel and other expenses associated with our corporate and administrative activities.

Our administrative expenses were RMB14.4 million and RMB13.2 million ($2.1 million) in the three months ended June 30, 2011 and 2012, respectively, representing 11.6% and 10.7% of our revenue in those respective periods. The decrease in administrative expenses was primarily due to (1) a decrease of RMB0.9 million in equity-settled share-based compensation and (2) a decrease of RMB0.5 million in legal and professional fees.

Other Expenses. Other expenses include expenses associated with natural disaster losses for crops on exposed lands, losses associated with the disposal of fixed assets, profit and loss adjustments for previous years, and so forth.

Taxation

The Cayman Islands, the British Virgin Islands and Hong Kong

Under the current laws of the Cayman Islands and the British Virgin Islands, or the BVI, we and our subsidiaries incorporated in the BVI are not subject to any tax on income or capital gains. In addition, dividend payments are not subject to withholding tax in those jurisdictions. No provision for Hong Kong profits tax has been made, as our Hong Kong subsidiaries did not generate any assessable profits or had tax losses brought forward to offset estimated assessable profits for three months ended June 30, 2011 and 2012.

PRC

Enterprise Income Tax

According to the PRC Enterprise Income Tax Law and its implementation rules, the statutory income tax rate is 25%. In addition, our PRC subsidiaries which are engaged in growing, processing and sales of agricultural products are exempt from PRC income tax, subject to approval by or registration with the relevant tax authority.

No provision for PRC income tax was made for Linong Agriculture Technology (Shenzhen) Co. Limited, which is engaged in the sales of agricultural products, as it sustained losses for the three months ended June 30, 2011 and 2012 for taxation purpose.

The financial impact related to tax exemptions amounted to RMB5.9 million and RMB1.1 million ($169,000) in the three months ended June 30, 2011 and 2012, respectively. Without the preferential tax treatment, the impact on our net income and basic and diluted earnings per share for the following periods is as set forth below:

	Three Months Ended June 30,
	2011		2012
	RMB		RMB		$
	(In thousands, except for per share data)
Profit/loss for the period		5,876		1,074		169
Basic earnings per share (in cents)		0.26		0.05		0.01
Diluted earnings per share (in cents)		0.25		0.05		0.01

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As of June 30, 2012, Land V. Ltd (Fujian), Land V. Ltd. (Zhangjiakou), Land V. Agriculture Technology (Ningde) Co. Ltd., Linong Agriculture Technology (Huizhou) Co. Ltd., Land V. Agriculture Technology (Zhangzhou) Co. Ltd. and Putian Land V. Group Co., Ltd. have registered with the tax authorities for the tax exemption under the Enterprise Income Tax Law. We will apply for such exemptions for our remaining PRC subsidiaries. See “Item 3. Key Information — D. Risk Factors — Risks Related to Doing Business in China — Our business benefits from certain government incentives. Expiration of, or changes to, these incentives could have a material adverse effect on our operating results by significantly increasing our tax expenses” contained in our annual report on Form 20-F filed with the SEC on July 20, 2012.

Pursuant to the Enterprise Income Tax Law and its implementation rules, dividends payable to foreign investors are subject to a 10% withholding tax. Pursuant to the grandfathering arrangement, dividends receivable from our PRC subsidiaries in respect of their undistributed profits prior to December 31, 2007 are exempt from withholding tax. Under the taxation arrangement between the PRC and Hong Kong, a qualified Hong Kong tax resident which is the “beneficial owner” and directly holds 25% or more of the equity interest in a PRC-resident enterprise is entitled to a reduced withholding tax rate of 5%.

Value-added Tax

In accordance with the relevant tax laws in the PRC, value-added tax, or VAT, is levied on the value of sales of agricultural and related products at a general rate of 13%. We are required to remit the VAT collected to the tax authority, but may deduct the VAT that we have paid on eligible purchases. Except for Linong Agriculture Technology (Shenzhen) Co., Ltd., our PRC subsidiaries are exempt from VAT since they are engaged in the sales of self-produced agricultural products.

Critical Accounting Policies

We prepare our financial statements in conformity with IFRS, which require us to make judgments, estimates and assumptions. We continually evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.

An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could material impact the consolidated financial statements. We believe that the following accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and other disclosures included in this transition report.

Fair Value of Biological Assets and Agricultural Produce

Biological assets include vegetables and fruits which are to be harvested as agricultural produce, tea and other trees which are not agricultural produce but are self-regenerating for sustaining regular harvests of agricultural produce.

We account for biological assets and agricultural produce by applying IAS41. Under IAS 41, biological assets are measured on initial recognition and at the end of each reporting period at their fair value less costs to sell; agricultural produce harvested from biological assets are measured at its fair value less costs to sell at the point of harvest. With respect to the agricultural produce harvested during the reporting period, the fair value of our biological assets is determined based on the current market price of these biological assets in their present location and condition. The fair value is determined based on the market price at which our agricultural produce is sold to customers on the date of harvest, adjusted for packing and transportation costs. With respect to the vegetables and trees on the farmland at each reporting period end, the fair value is determined at the present value of expected cash flows from the biological assets discounted at a market-determined pre-tax rate, with reference to the species, growing conditions, costs incurred and expected yield of the crops. We estimate that it takes one to ten months to grow our vegetable crops and approximately 3 years to 16 years to grow our trees on the farmland before they can be harvested. For the three months ended June 30, 2012, the revenue contributed by the tree business accounted for less than 0.3% of our total revenue. Costs to sell include all incremental costs directly attributable to the sale of the biological assets. The change in fair value less costs to sell of a biological asset is included in profit or loss of the period in which it arises. We record such gains or losses in our Consolidated Income Statement under “Changes in fair value less costs to sell of biological assets.”

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The determination of fair value of biological assets and agricultural produce requires us to make complex and subjective estimates and assumptions about the expected production output and market price of crops on the land.

We applied weighted average cost of capital as a discount rate to reflect the risks of the cash flows as how the risks of the cash flows from growing crops should be borne by both the equity holders and the debt holders. In determining the discount rate, we have considered factors including the risk free rate, the market return, the re-levered beta, the size premium and the specific premium. We used 20.1% to 20.2% as the discount rate for orchards and 16.6% as the discount rate for vegetables in the three months ended June 30, 2011 and 19.1% to 19.3% as the discount rate for orchards and 15.8% as the discount rate for vegetables in the three months ended June 30, 2012. In the three months ended June 30, 2012, the decrease in discount rates was primarily due to the change in market parameters, such as the decrease in interest rate.

Changes in the estimates and assumptions regarding the expected market price, production output and the discount rates in the valuation of our biological assets and agricultural produce could significantly impact the estimated fair values of our biological assets and agricultural produce and, as a result, our net income. For illustration purposes, in the three months ended June 30, 2012:

• a 5% increase or decrease in the prices of vegetables, fruits and teas we assumed, in the absence of other changes, will result in an RMB2.8 million ($448,000) increase or decrease in our net change in fair value less costs to sell of biological assets and profit for the period; and

• an increase or decrease in the average discount rate we used by one percentage point, in the absence of other changes, will result in an RMB496,000 ($78,000) decrease or increase in our net change in fair value less costs to sell of biological assets and profit for the period.

Share-based Payments

We account for share-based payments under the provisions of IFRS 2 “Share-based Payment,” or IFRS 2. Under IFRS 2, we are required to measure the cost of employee and consultant services received in exchange for an award of equity instruments based on the grant date fair value of the award and recognize the expense in our consolidated statements of comprehensive income over the period during which an employee is required to provide service in exchange for the award. The additional expenses associated with share-based compensation may reduce the attractiveness of our equity incentive plans to directors, employees and consultants.

We applied the Binomial Option Pricing model for the three months ended June 30, 2011 in determining the fair value of the options granted to employees and others providing similar services. No new options were granted after June 30, 2011. This model requires the input of highly subjective assumptions including the expected stock price volatility, the expected life at which employees are likely to exercise share options. For expected volatilities, we made reference to historical volatilities of several comparable companies. The risk-free rate for periods within the expected life of the option was based on the yield of USD China Sovereign Bond Rate denominated in USD with similar terms in effect at the time of grant.

We have used the market approach to assess our enterprise value at the grant date after our listing on the NASDAQ Global Select Market.

Depreciation and Estimated Useful Life

We record property, plant and equipment in the balance sheet at cost less accumulated depreciation and impairment losses. Gains or losses arising from the retirement or disposal of an item of property, plant and equipment as the difference between the net disposal proceeds and the carrying amount of the item and are recognized in profit or loss on the date of retirement or disposal. We calculate depreciation to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:

Land improvements, buildings and farmland infrastructure	—	Shorter of the unexpired term of land leases and their estimated useful lives of 3 to 30 years
Equipment and machinery	—	3 to 10 years
Motor vehicles	—	3 to 10 years
Furniture, fixtures and computer equipment	—	5 years

We capitalize costs relating to land improvements during the formative stage and depreciate these costs over the shorter of the unexpired term of the respective land leases or their estimated useful lives.

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We capitalize depreciation of property, plant and equipment attributable to agricultural activities as part of inventory, and expense such depreciation when the inventory is sold. We charge depreciation relating to idle capacity to profit or loss in the accounting period in which it is incurred. Where parts of an item of property, plant and equipment have different useful lives, we allocate the cost of the item on a reasonable basis between the parts and each part is depreciated separately. We review both the useful life of an asset and its residual value, if any, annually.

Impairment of Assets

Impairment of Non-current Assets

We review internal and external sources of information at each balance sheet date to identify indications that the following assets may be impaired or an impairment loss previously recognized no longer exists or may have decreased:

• property, plant and equipment;

• construction in progress;

• lease prepayments; and

• deposits and prepayments.

If any such indication exists, we estimate the asset’s recoverable amount.

• Calculation of Recoverable Amount. The recoverable amount of an asset is the greater of its fair value less costs to sell and value in use. In assessing value in use, we discount the estimated future cash flows to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, we determine the recoverable amount for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

• Recognition of Impairment Losses. We recognize an impairment loss in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. We allocate impairment losses recognized in respect of cash-generating units to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs to sell, or value in use, if determinable.

• Reversals of Impairment Provisions. We reverse an impairment provision if there has been a favorable change in the estimates used to determine the recoverable amount.

We limit a reversal of an impairment provision to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. We credit reversals of impairment provisions to profit or loss in the period in which the reversals are recognized.

Impairment of Receivables

We review current receivables that are carried at amortized cost at each balance sheet date to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to our attention about one or more of the following loss events:

• significant financial difficulty of the debtor;

• breach of contract;

• it becoming probable that the debtor will enter bankruptcy or other financial reorganization; and

• significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor.

14

If any such evidence exists, we determine and recognize the impairment loss as follows: for trade and other current receivables carried at amortized cost, we measure the impairment loss as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. We make assessment collectively where financial assets carried at amortized cost share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. We base future cash flows for financial assets which are assessed for impairment collectively on historical loss experience for assets with credit risk characteristics similar to the collective group.

We write off impairment losses against the corresponding assets directly, except for impairment losses recognized in respect of trade receivables whose recovery is considered doubtful but not remote. In this case, we record the impairment losses for doubtful debts using an allowance account. When we are satisfied that recovery is remote, the amount considered irrecoverable is written off against trade receivables directly and any amounts held in the allowance account relating to that debt are reversed. We recognize other changes in the allowance account and subsequent recoveries of amounts previously written off directly in profit or loss. In the three months ended June 30, 2012, we did not recognize any impairment loss in profit or loss nor write-off of uncollectible amount against the allowance account.

15

Results of Operations

The following income statement data sets forth a summary of our consolidated results of operations for the periods indicated. The consolidated income statement data for the three months ended June 30, 2012 has been derived from our audited consolidated financial statements, which are included in this transition report beginning on page F-1. The consolidated income statement data for the three months ended June 30, 2011 has been derived from our unaudited interim consolidated financial statements for the three months ended June 30, 2011. Our consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS. This information should be read together with our consolidated financial statements and related notes included elsewhere in this transition report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

	Three Months Ended June 30,
	2011			2012
	RMB			RMB			$
	(In thousands)
Revenue		123,332			123,248			19,400
Cost of inventories sold		(106,276	)		(107,983	)		(16,997	)
Changes in fair value less costs to sell related to:
Crops harvested during the period		13,173			5,067			798
Growing crops on the farmland at the period end		22,990			17,897			2,817
Total changes in fair value less costs to sell of biological assets		36,163			22,964			3,615
Packing expenses		(8,431	)		(8,913	)		(1,403	)
Land preparation costs		(7,008	)		(12,887	)		(2,028	)
Other income		135			466			73
Research and development expenses		(2,061	)		(2,291	)		(361	)
Selling and distribution expenses		(8,882	)		(6,516	)		(1,026	)
Administrative expenses		(14,361	)		(13,155	)		(2,071	)
Impairment losses on property, plant and equipment and prepayments		—			—			—
Other expenses		(133	)		(132	)		(21	)
Results from operating activities		12,478			(5,199	)		(819	)
Finance income		2,937			909			143
Finance costs		(2,787	)		(4,046	)		(637	)
Net finance income/(cost)		150			(3,137	)		(494	)
Profit/(loss) before taxation		12,628			(8,336	)		(1,313	)
Income tax expense		—			(128	)		(20	)
Profit/(loss) for the period		12,628			(8,464	)		(1,333	)

16

The following table sets forth the biological assets fair value adjustment included in cost of inventories sold, the changes in fair value less costs to sell of biological assets and the net impact of biological assets fair value adjustments to our results of operations.

	Three Months Ended June 30,
	2011			2012
	RMB			RMB			$
	(In thousands)
Biological assets fair value adjustment included in cost of inventories sold		(59,405	)		(61,963	)		(9,753	)
Changes in fair value less costs to sell of biological assets		36,163			22,964			3,615
Net impact		(23,242	)		(38,999	)		(6,138	)

Three Months Ended June 30, 2012 Compared to Three Months Ended June 30, 2011

Revenue. Our revenue decreased by RMB0.1 million, or 0.1%, from RMB123.3 million for the three months ended June 30, 2011 to RMB123.2 million (US$19.4 million) for the three months ended June 30, 2012. The slight change in revenue was primarily attributable to the offsetting effect of (1) an increase in revenue-per-mu from RMB6,046 for the three months ended June 30, 2011 to RMB6,129 (US$965) for the three months ended June 30, 2012, which in turn was due to an increase in average selling price of our produce, and (2) a decrease in average operating land from 20,569 mu for the three months ended June 30, 2011 to 20,062 mu for the three months ended June 30, 2012.

The increase in revenue-per-mu and average selling price for the three months ended June 30, 2012 was primarily driven by (1) increased greenhouse coverage, which lead to (a) better product mix, i.e., more solanaceous products, and (b) improved quality of our products, (2) enhanced cultivation know-how, and (3) market inflation.

We primarily grow solanaceous vegetables (primarily peppers and tomatoes) and green leafy vegetables during the period ended June 30, 2012. Solanaceous vegetables generally have a higher selling price. Due to increased greenhouse coverage, more revenue from high quality solanaceous vegetables was generated for the three months ended June 30, 2012 compared to the three months ended June 30, 2011. Furthermore, within the solanaceous category we grew more specialty products such as small snack tomatoes, which have higher selling prices but lower volume per mu. Due to the poor weather, we planted more leafy and less cruciferous product during the period as compared to the three months ended June 30, 2011. However, leafy product prices decreased during the month of June 2012, and our revenue was negatively affected.

Our greenhouse area increased from 7,150 mu (477 hectares) as of June 30, 2011 to 8,915 mu (594 hectares) as of June 30, 2012. The average selling price of our produce increased from RMB2,965 per tonne for the three months ended June 30, 2011 to RMB3,527 ($555) per tonne for the three months ended June 30, 2012. Our production yield decreased from 2.0 tonnes per mu in the three months ended June 30, 2011 to 1.7 tonnes in the three months ended June 30, 2012.

Our product mix shifted further towards solanaceous products during the three months ended June 30, 2012. Solanaceous vegetables sold to external customers in the PRC mainland increased from 60% of total revenue from these customers for the three months ended June 30, 2011 to 65% for the three months ended June 30, 2012. The percentage of leafy, cruciferous and other vegetables declined as our product mix shifted towards solanaceous vegetables.

Cost of Inventories Sold. Our cost of inventories sold increased by RMB1.7 million, or 1.6%, from RMB106.3 million for the three months ended June 30, 2011 to RMB108.0 million (US$17.0 million) for the three months ended June 30, 2012.

Cost of inventories sold before biological assets fair value adjustment decreased by RMB0.9 million, or 1.8%, from RMB46.9 million in the three months ended June 30, 2011 to RMB46.0 million ($7.2 million) in the three months ended June 30, 2012. Cost of inventories sold before biological assets fair value adjustment as a percentage of our revenue decreased to 37.3% in the three months ended June 30, 2012 from 38.0% in the three months ended June 30, 2011. The decrease in our cost of inventories sold before biological assets fair value adjustment as a percentage of revenue was primarily due to (1) increased greenhouse coverage and improved production techniques reducing variable inputs such as seeds and land film as a percentage of revenue, which was partially offset by an increase in overhead costs, and (2) reduced purchases of third party product due to our decision to cease Hong Kong concessionary sales during the fiscal year ended March 31, 2012.

Changes in Fair Value Less Costs to Sell of Biological Assets and Net Impact of Biological Assets Fair Value Adjustment. Changes in fair value less costs to sell of biological assets decreased by RMB13.2 million, or 36.5%, from RMB36.2 million in the three months ended June 30, 2011 to RMB23.0 million ($3.6 million) in the three months ended June 30, 2012.

17

The net impact of biological assets fair value adjustment for the three months ended June 30, 2012 was a loss of RMB39.0 million ($6.1 million). This was primarily attributable to the change in product mix from solanaceous to leafy products because the season for solanaceous products ended during the three months ended June 30, 2012. Therefore, the value of crops on our farmland as of June 30, 2012, when compared with that of March 31, 2012 (the immediately preceding reporting period end) decreased, resulting in a negative net impact.

In comparison, the net impact of biological assets fair value adjustment for the three months ended June 30, 2011 was a loss of RMB23.2 million. The larger negative net impact for the three months ended June 30, 2012 compared to the same period in 2011 was primarily due to the more pronounced seasonality resulting from the higher concentration on solanaceous products. More pronounced seasonality resulted in a larger fair value gain recognized in preceding reporting periods, and thus a larger change in biological assets fair value is reflected in the three months ended June 30, 2012, when compared to the same period in 2011. The low vegetable market prices at the end of June 2012 further reduced the value of crops on land at the end of the period and thus increased the fair value change resulting from switching from high value to low value crops.

Packing Expenses. Our packing expenses increased by RMB0.5 million, or 5.7%, from RMB8.4 million for the three months ended June 30, 2011 to RMB8.9 million (US$1.4 million) for the three months ended June 30, 2012, primarily due to an increase of RMB1.1 million in packing materials consumed. The increase in packing materials consumed was primarily due to (1) our effort to enhance our brand awareness, (2) better packing used to enhance the selling price, (3) an increase in the production of solanaceous products as a percentage of total revenue, which require more packing compared to leafy and cruciferous vegetables.

Land Preparation Costs. Our land preparation costs increased by RMB5.9 million, or 83.9%, from RMB7.0 million for the three months ended June 30, 2011 to RMB12.9 million (US$2.0 million) for the three months ended June 30, 2012, which was primarily due to (1) an increase in greenhouse coverage which increased the unit land preparation cost and (2) an increase in the amount of land in reserve or under construction due to new farm bases added.

Other Income. Our other income increased by RMB0.4 million from RMB0.1 million in the three months ended June 30, 2011 to RMB0.5 million ($0.1 million) in the three months ended June 30, 2012. This increase was primarily due to the amortization of RMB0.4 million resulting from incentive payment received from our depositary bank.

Research and Development Expenses. Our research and development expenses increased by RMB0.2 million, or 11.2%, from RMB2.1 million in the three months ended June 30, 2011 to RMB2.3 million ($0.4 million) in three months ended June 30, 2012, which was in line with the expansion of our operations.

Selling and Distribution Expenses. Our selling and distribution expenses decreased by RMB2.4 million, or 26.6%, from RMB8.9 million for the three months ended June 30, 2011 to RMB6.5 million (US$1.0 million) for the three months ended June 30, 2012, which was primarily due to (1) a decrease of RMB1.5 million in salary and commission payments as we ceased our concessionary sales in Hong Kong and (2) poor weather conditions, resulting in higher prices but lower volumes, which resulted in lower distribution costs.

Administrative Expenses. Our administrative expenses decreased by RMB1.2 million, or 8.4%, from RMB14.4 million for the three months ended June 30, 2011 to RMB13.2 million (US$2.1 million) for the three months ended June 30, 2012, primarily due to (1) a decrease of RMB0.9 million in equity-settled share-based compensation and (2) a decrease of RMB0.5 million in legal and professional fees.

Other Expenses. Our other expenses were RMB0.1 million and RMB0.1 million ($21,000) in the three months ended June 30, 2011 and 2012, respectively.

Results of Operating Activities. As a result of the foregoing, our results of operating activities was a loss of RMB5.2 million ($0.8 million) in the three months ended June 30, 2012, compared to a profit of RMB12.5 million in the three months ended June 30, 2011.

Net Finance Income/(Costs). We had a net finance cost of RMB3.1 million ($0.5 million) in the three months ended June 30, 2012, compared to a net finance income of RMB0.2 million in the three months ended June 30, 2011, primarily due to the net foreign exchange loss of RMB1.2 million in the three months ended June 30, 2012 resulting from the depreciation of the Renminbi, compared with a net foreign exchange gain of RMB2.7 million in the three months ended June 30, 2011, attributable to the appreciation of the Renminbi, from translation of non-functional currency balances between group companies.

18

Income Tax Expense. Our income tax expense was RMB0.1 million ($20,000) in the three months ended June 30, 2012. We did not have any income tax expense in the three months ended June 30, 2011. This increase was primarily due to the withholding tax relating to the incentive payment received from our depositary bank.

Profit/(loss) for the Period. As a result of the foregoing, we recorded a loss of RMB8.5 million ($1.3 million) for the three months ended June 30, 2012 compared to a profit of RMB12.6 million for the three months ended June 30, 2011.

B.Liquidity and Capital Resources

We have financed our business primarily through cash generated from our operations, sale of preferred shares, borrowings from institutional lenders and proceeds from initial public offering. Our cash consists of cash on hand and cash at banks, which are unrestricted as to withdrawal or use, and which have maturities of three months or less that are placed with banks. As of June 30, 2012, we had RMB504.5 million ($79.4 million) in cash. We generally deposit our excess cash in interest bearing bank accounts.

As of June 30, 2012, we had a RMB76.3 million ($12.0 million) outstanding bank loan bearing an interest rate of 13.14% per annum, which was drawn down under a loan agreement that we entered into with DEG — Deutsche Investitions- und Entwicklungsgesellschaft mbH, or DEG, for a principal amount of $18.0 million on November 10, 2009. The loan was obtained to fund the construction and improvement of our greenhouses and other agricultural facilities prior to our initial public offering that was completed in November 2010. The loan is repayable in equal semi-annual installments of approximately $2.3 million from May 15, 2013 to November 15, 2016. The loan bears a floating interest rate at the aggregate of six months USD LIBOR plus 12% per year from the date of the first disbursement of the loan to the interest conversion date, which is defined as (i) the date on which the loan principal is fully disbursed or (ii) if the loan has not been fully disbursed by December 30, 2010, the date on which DEG suspends or terminates our right to draw down on the undrawn portion of the loan principal. From the interest conversion date to May 14, 2013, the loan bears a fixed interest rate of 13.14% per annum based on a base rate plus 12% per year. From May 15, 2013 to November 14, 2016, the loan bears a floating interest rate at the aggregate of six months USD LIBOR plus 12% per year. As a condition precedent to the disbursements of the loan, Mr. Shing Yung Ma executed a share retention letter. Pursuant to the share retention letter, as amended, that he will not, and he will procure that Grow Grand Limited, his wholly owned entity, and Le Gaga Holdings Limited will not sell, transfer or encumber shares of China Linong International Limited, or China Linong, which would cause the number of issued shares in China Linong held by him directly and/or indirectly through Grow Grand Limited and Le Gaga Holdings Limited to fall below 509,770 shares without DEG’s consent.

Key covenants included in the loan agreement with DEG are as follows:

• we will maintain at all times on a consolidated basis (i) a debt/EBITDA (earnings before interest, taxes, depreciation and amortization) ratio not exceeding 2.0, (ii) a debt/equity ratio not exceeding 1.5 and (iii) a current ratio not less than 1.5;

• without DEG’s consent, we will not make any dividend or other capital distribution or similar payment which would have a material adverse effect on our ability to repay the loan;

• without DEG’s consent, we will not amend our constitutional documents in a way inconsistent with the loan agreement, or sell, transfer or otherwise dispose of significant components of our fixed assets;

• without DEG’s consent, we will not enter into any partnership or profit sharing where our income is shared with any other person (except for our shareholders and option holders);

• the loan will be applied exclusively to fund the development of farmland and the construction of greenhouses, irrigation systems and agricultural facilities in the PRC;

• our PRC subsidiaries will comply with a corrective plan defining actions, budgets and a timeframe to remediate all known non-compliance with respect to environmental and social matters and comply with the International Finance Corporation General Environmental Health and Safety Guidelines; and

• our PRC subsidiaries will develop and implement a supervision and grievance mechanism related to land lease issues and their relationships with adjacent communities and will appoint a senior management member responsible for environmental and social issues.

We have complied with and intend to continue to comply with these covenants under our loan agreement with DEG.

19

As of June 30, 2012, we also had an RMB10.0 million outstanding short-term bank loan bearing an interest rate of 6.888% per annum under a loan agreement that we entered into with Bank of China, Quanzhou Branch, under a facility of RMB40.0 million secured by a personal guarantee given by Mr. Shing Yung Ma and a corporate guarantee given by one of our subsidiaries.

Cash Flows and Working Capital

The following table shows our cash flow with respect to operating activities, investing activities and financing activities for the periods indicated:

	Three Months Ended June 30,
	2011			2012
	RMB			RMB			$
	(In thousands)
Net cash generated from operating activities		82,458			53,351			8,398
Net cash used in investing activities		(112,221	)		(65,221	)		(10,267	)
Net cash used in financing activities		(11,378	)		(5,305	)		(835	)
Net decrease in cash		(41,141	)		(17,175	)		(2,704	)
Cash at April 1		598,722			520,475			81,926
Cash at June 30		551,491			504,506			79,412

Operating Activities

Net cash generated from operating activities decreased by RMB29.1 million, or 35.3%, from RMB82.5 million in the three months ended June 30, 2011 to RMB53.4 million ($8.4 million) in the three months ended June 30, 2012. This decrease in operating cash flow was primarily the result of (1) a decrease of RMB18.2 million in cash received due to a positive effect from trade balances from March 31, 2011 to June 30, 2011, and (2) an increase of RMB10.9 million in cash paid for our cost of revenue and operating expenses.

Investing Activities

Net cash used in investing activities in the three months ended June 30, 2012 was RMB65.2 million ($10.3 million), due primarily to the cash outflows for payment for construction in progress of RMB60.9 million ($9.6 million), which consisted primarily of the payment for (a) the construction of greenhouses in the amount of RMB43.3 million ($6.8 million), (b) land improvements in the amount of RMB6.7 million ($1.1 million) and (c) payment for agricultural infrastructure of RMB6.1 million ($1.0 million) in connection with our operation expansion.

Net cash used in investing activities in the three months ended June 30, 2011 was RMB112.2 million, due primarily to the cash outflows for payment for construction in progress of RMB109.2 million, which consisted primarily of the payment for (a) the construction of greenhouses in the amount of RMB61.0 million, (b) agricultural infrastructure in the amount of RMB29.6 million and (c) land improvements in the amount of RMB13.1 million.

Financing Activities

Net cash used in financing activities in the three months ended June 30, 2012 was RMB5.3 million ($0.8 million), which was related to interest payment.

Net cash used in financing activities in the three months ended June 30, 2011 was RMB11.4 million, primarily due to (1) interest payment of RMB5.4 million and (2) repayment for bank loan of RMB6.0 million.

Capital Expenditures

We had capital expenditures of RMB99.8 million and RMB65.2 million ($10.3 million) for the three months ended June 30, 2011 and 2012, respectively. Our capital expenditures were made primarily for the construction of our production facilities, farmland infrastructure and the purchases of property, plant and equipment. Our capital expenditures have been primarily funded by net cash generated from our operating activities and cash provided by financing activities. In fiscal year ending June 30, 2013, we expect to incur capital expenditures of approximately RMB380 million ($59.8 million). We expect our capital expenditures in fiscal year ending June 30, 2013 to primarily consist of the construction of our production facilities, land improvements, farmland infrastructure and the purchases of property, plant and equipment. We expect to fund these capital expenditures from cash on hand as well as operating cash inflow.

20

Recent Accounting Pronouncements

The following standards, amendments and interpretations to existing standards are not yet effective and have not been adopted by us:

• Amendments to IAS 1, Presentation of financial statements – Presentation of items of other comprehensive income effective for periods beginning on or after July 1, 2012.

• IFRS 10, Consolidated financial statements effective for periods beginning on or after January 1, 2013.

• IFRS 12, Disclosure of interests in other entities effective for periods beginning on or after January 1, 2013.

• IFRS 13, Fair value measurement effective for periods beginning on or after January 1, 2013.

• Annual improvements to IFRSs 2009-2011 Cycle effective for periods beginning on or after January 1, 2013.

• Amendments to IAS 32, Financial instruments: Presentation – Offsetting financial assets and financial liabilities effective for periods beginning on or after January 1, 2014.

• IFRS 9, Financial instruments effective for periods beginning on or after January 1, 2015.

We are in the process of making an assessment of what the impact of these amendments is expected to be in the period of initial application. So far we have concluded that the adoption of these amendments is unlikely to have a significant impact on our results of operations and financial position.

C.Research and Development

We place a strong emphasis on research and development to improve our productivity and profitability. Our research and development efforts focus on developing more effective crop cultivation techniques, improving product quality, testing new vegetable varieties, increasing production yield and revenue per mu. As of June 30, 2012, our in-house research and development team consists of 103 research professionals and staff, eight of which have advanced degrees. Production on each of our farms is supervised by a horticultural technician who usually possesses at least ten years of experience in agriculture.

Each year we test grow many varieties of seeds, including superior varieties supplied by leading international seed companies, to identify five to eight varieties with superior quality and yield for production. We have leased a parcel of forestland with an aggregate area of 1,150 mu (77 hectares) in Fuzhou to test grow new varieties of fruits.

We study the different nutrient requirements of various vegetables as well as factors affecting soil fertility and fertilizer efficiency in an effort to achieve optimal nutrient supply by managing fertilizer application and mix. We grow seedlings of superior varieties in nursery greenhouses with controlled temperature, moisture, sunlight and soil conditions to produce large volumes of seedlings in an accelerated manner. Our research and development team also uses techniques such as grafting and cuttage to cultivate seedlings in large volumes in soil with rich minerals before growing them in regular farm fields to control costs and produce large volumes of seedlings.

We continually develop our horticultural know-how and carry out research and development of cultivation techniques such as scaffolding, pruning and fruit retention to improve our production yield and efficiency.

We also focus on designing and improving our agricultural facilities and farm equipment. Our research and development personnel are actively involved in the design, planning and improvement of farm facilities, for example, the layout, height, construction materials and ventilation of greenhouses and the irrigation and road systems, to achieve optimal production. Our research and development team maintains cooperative relationship and collaborates closely with research institutions, universities and industry experts.

21

We have devoted significant resources to research and development. Our research and development expenses were RMB2.1 million and RMB2.3 million ($0.4 million) in the three months ended June 30, 2011 and 2012, respectively, representing 1.7% and 1.9% of our net revenue in those respective periods.

D.Trend Information

Other than as disclosed elsewhere in this transition report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from April 1, 2012 to June 30, 2012 that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E.Off-Balance Sheet Commitments and Arrangements

We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

F.Contractual Obligations and Commercial Commitments

The following table sets forth our contractual obligations as of June 30, 2012:

	Payment Due by Period
	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Contractual Obligations	(RMB in thousands)
Debt obligations (including interest)		106,774		34,786		66,982		5,006		—
Operating lease obligations		200,827		14,308		28,450		27,678		130,391
Purchase obligations		147,759		147,759		—		—		—
Total		455,360		196,853		95,432		32,684		130,391

Our operating lease obligations consisted of our obligations under lease agreements with lessors of our farmland. Our purchase obligations relate to construction contracts in respect of greenhouses, infrastructure and irrigation systems that we entered into with respective sub-contractors.

G.Safe Harbor

This transition report on Form 20-F contains statements of a forward-looking nature. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements convey our current expectations and views of future events. The words “may,” “could,” “would,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “future,” “continue,” “is/are likely to” and other similar expressions may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements include, among other things, statements about:

• our anticipated growth strategies, including increasing our greenhouse coverage, increasing our production scale, strengthening our sales, marketing and distribution efforts, focusing on high quality off-season products, improving our product mix, and expanding our research and development capability;

• our future business development, results of operations and financial condition;

• weather conditions that affect the production, harvest, transportation, storage and trade of fresh produce;

• trends and competition in the fresh vegetable market;

• future changes in laws or regulations affecting our business; and

• changes in general economic and business conditions in China.

22

Any or all of our forward-looking statements in this transition report may turn out to be inaccurate. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. They may be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including the risks, uncertainties and assumptions described in “Item 3. Key Information—D. Risk Factors” contained in our annual report on Form 20-F filed with the SEC on July 20, 2012 and elsewhere in this transition report. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this transition report may not occur as contemplated, and actual results could differ materially from those anticipated or implied by the forward-looking statements.

You should not unduly rely on these forward-looking statements, which speak only as of the date of this transition report. Unless required by law, we undertake no obligation to update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the factors and risks we describe in reports we will file from time to time with the SEC after the date of this transition report.

Item 8. Financial Information

A.Consolidated Statements and Other Financial Information

7. Legal and Administrative Proceedings

From time to time, we may be subject to various claims and legal actions arising in the ordinary course of business. We are not aware of any proceedings being contemplated by any governmental authority.

We are not currently a party to any material litigation or other legal proceedings and are not aware of any pending or threatened litigation or legal proceedings that may have a material adverse impact on our business, financial condition or results of operations.

Part II

Item 13. Defaults, Dividends Arrearages and Delinquencies

None.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

A. – D.Material Modifications to the Rights of Security Holders

None.

E.Use of Proceeds

Not Applicable.

Part III

Item 18. Financial Statements

The consolidated financial statements of Le Gaga Holdings Limited and its subsidiaries are included at the end of this transition report.

23

Item 19. Exhibits

Exhibit Number	Description of Document
12.1	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	Consent of KPMG, Independent Registered Public Accounting Firm

24

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this transition report on its behalf.

Le Gaga Holdings Limited
By:	/s/ Auke Cnossen
Name:	Auke Cnossen
Title:	Chief Financial Officer

Date: November 23, 2012

25

LE GAGA HOLDINGS LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Income Statements for the Three Months ended June  30, 2012 and the Years ended March 31, 2012, 2011 and 2010	F-3
Consolidated Statements of Comprehensive Income for the Three Months ended June  30, 2012 and the Years ended March 31, 2012, 2011 and 2010	F-4
Consolidated Balance Sheets as of June 30, 2012 and as of March 31, 2012, 2011 and 2010	F-5
Consolidated Statements of Changes in Equity for the Three Months ended June  30, 2012 and the Years ended March 31, 2012, 2011 and 2010	F-7
Consolidated Statements of Cash Flows for the Three Months ended June  30, 2012 and the Years ended March 31, 2012, 2011 and 2010	F-12
Notes to the Consolidated Financial Statements	F-15

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of

Le Gaga Holdings Limited:

We have audited the accompanying consolidated balance sheets of Le Gaga Holdings Limited and subsidiaries as of June 30, 2012 and March 31, 2012, 2011 and 2010, and the related consolidated income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for the three months ended June 30, 2012 and each of the years in the three-year period ended March 31, 2012, all expressed in Renminbi. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Le Gaga Holdings Limited and subsidiaries as of June 30, 2012 and March 31, 2012, 2011 and 2010, and the results of their operations and their cash flows for the three months ended June 30, 2012 and each of the years in the three-year period ended March 31, 2012, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ KPMG

Hong Kong, China

November 23, 2012

F-2

Consolidated income statements

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010

(Expressed in Renminbi)

		Three months ended June 30,						Years ended March 31,
	Note	2012			2011			2012			2011			2010
		RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
					(unaudited)
Revenue	4		123,248			123,332			519,399			406,772			280,512
Cost of inventories sold	17(b)		(107,983	)		(106,276	)		(455,380	)		(357,211	)		(238,277	)
Changes in fair value less costs to sell related to:
– Crops harvested during the period/year			5,067			13,173			226,037			186,183			119,009
–Growing crops on the farmland at the period/year end			17,897			22,990			60,890			55,713			33,734
Total changes in fair value less costs to sell of biological assets	16(a)		22,964			36,163			286,927			241,896			152,743
Packing expenses			(8,913	)		(8,431	)		(33,405	)		(28,248	)		(18,281	)
Land preparation costs	7(c)		(12,887	)		(7,008	)		(37,593	)		(20,800	)		(12,434	)
Other income	5		466			135			3,330			124			626
Research and development expenses			(2,291	)		(2,061	)		(9,091	)		(7,298	)		(6,519	)
Selling and distribution expenses			(6,516	)		(8,882	)		(32,120	)		(24,949	)		(18,207	)
Administrative expenses			(13,155	)		(14,361	)		(58,519	)		(68,978	)		(25,059	)
Impairment losses on property, plant and equipment and prepayments			—			—			(14,823	)		—			—
Other expenses	5		(132	)		(133	)		(2,551	)		(6,070	)		(3,404	)
Results from operating activities			(5,199	)		12,478			166,174			135,238			111,700
Finance income			909			2,937			11,838			2,881			101
Finance costs			(4,046	)		(2,787	)		(10,781	)		(4,643	)		(709	)
Net finance (costs)/income	6		(3,137	)		150			1,057			(1,762	)		(608	)
(Loss)/profit before taxation	7		(8,336	)		12,628			167,231			133,476			111,092
Income tax expense	8(a)		(128	)		—			(4,415	)		(101	)		(890	)
(Loss)/profit for the period/year			(8,464	)		12,628			162,816			133,375			110,202
(Loss)/earnings per ordinary/ preferred share (in RMB cents)	9
Basic			(0.37	)		0.55			7.12			6.68			6.52
Diluted			(0.37	)		0.53			6.91			6.46			6.43

See accompanying notes to the consolidated financial statements.

F-3

Consolidated statements of comprehensive income

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010

(Expressed in Renminbi)

		Three months ended June 30,						Years ended March 31,
	Note	2012			2011			2012			2011			2010
		RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
					(unaudited)
(Loss)/profit for the period/year			(8,464	)		12,628			162,816			133,375			110,202
Other comprehensive income for the period/year (net of nil income tax)
Exchange differences on translation of financial statements of entities outside the People’s Republic of China (the “PRC”)—mainland			1,254			(6,508	)		(23,535	)		(12,486	)		(713	)
Reclassification adjustment for release of exchange reserve upon disposal of subsidiaries/ deregistration of a subsidiary			—			—			2,969			—			(541	)
Total comprehensive income for the period/year			(7,210	)		6,120			142,250			120,889			108,948

See accompanying notes to the consolidated financial statements.

F-4

Consolidated balance sheets at June 30, 2012 and

March 31, 2012, 2011 and 2010

(Expressed in Renminbi)

		As of June 30,		As of March 31,
	Note	2012		2012		2011		2010
		RMB’000		RMB’000		RMB’000		RMB’000
Assets
Property, plant and equipment	11		700,245		693,297		575,246		357,862
Construction in progress	12		68,627		52,441		24,294		17,402
Lease prepayments	13		1,256		1,263		2,413		2,516
Long-term deposits and prepayments	14		163,494		142,754		56,991		31,559
Biological assets	16		7,833		7,697		6,049		5,186
Deferred tax assets	24		1,943		2,060		—		—
Total non-current assets			943,398		899,512		664,993		414,525
Biological assets	16		30,709		77,097		73,662		45,005
Inventories	17		16,427		11,193		4,608		2,938
Trade and other receivables	18		64,566		59,861		63,000		36,779
Cash	19		504,506		520,475		598,722		139,207
Total current assets			616,208		668,626		739,992		223,929
Total assets			1,559,606		1,568,138		1,404,985		638,454
Equity	25
Capital			692,833		692,833		687,706		307,689
Reserves			742,820		745,838		592,041		272,355
Total equity			1,435,653		1,438,671		1,279,747		580,044

F-5

Consolidated balance sheets at June 30, 2012 and

March 31, 2012, 2011 and 2010 (continued)

(Expressed in Renminbi)

		As of June 30,		As of March 31,
	Note	2012		2012		2011		2010
		RMB’000		RMB’000		RMB’000		RMB’000
Liabilities
Bank loans	20		61,998		75,875		78,835		34,290
Loan from municipal government	21		—		—		—		1,410
Total non-current liabilities			61,998		75,875		78,835		35,700
Bank loans	20		24,307		10,000		6,000		—
Trade and other payables	22		31,111		37,055		36,321		18,628
Current taxation	24		6,537		6,537		4,082		4,082
Total current liabilities			61,955		53,592		46,403		22,710
Total liabilities			123,953		129,467		125,238		58,410
Total equity and liabilities			1,559,606		1,568,138		1,404,985		638,454

See accompanying notes to the consolidated financial statements.

F-6

Consolidated statements of changes in equity

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010

(Expressed in Renminbi)

	Share capital		Share premium		Statutory reserve			Exchange reserve			Capital reserve		Other reserve		Retained earnings			Total
	(note 25(a))		(note 25(b)(i))		(note 25(b)(iii))			(note 25(b)(iv))			(note 25(b)(v))		(note 25(b)(vi))
	RMB’000		RMB’000		RMB’000			RMB’000			RMB’000		RMB’000		RMB’000			RMB’000
At April 1, 2009		14		267,018		19,043			(1,698	)		8,302		28,355		103,632			424,666
Profit for the year		—		—		—			—			—		—		110,202			110,202
Other comprehensive income		—		—		—			(1,254	)		—		—		—			(1,254	)
Total comprehensive income for the year		—		—		—			(1,254	)		—		—		110,202			108,948
Issue of preferred shares, net of issuing expense		1		40,656		—			—			—		—		—			40,657
Equity settled share-based transactions		—		—		—			—			5,773		—		—			5,773
Disposal of a subsidiary		—		—		(304	)		—			—		—		304			—
Appropriations		—		—		8,057			—			—		—		(8,057	)		—
At March 31, 2010		15		307,674		26,796			(2,952	)		14,075		28,355		206,081			580,044

F-7

Consolidated statements of changes in equity

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010 (continued)

(Expressed in Renminbi)

	Share capital		Share premium			Statutory reserve		Exchange reserve			Capital reserve			Other reserve		Retained earnings			Total
	(note 25(a))		(note 25(b)(i))			(note 25(b)(iii))		(note 25(b)(iv))			(note 25(b)(v))			(note 25(b)(vi))
	RMB’000		RMB’000			RMB’000		RMB’000			RMB’000			RMB’000		RMB’000			RMB’000
At April 1, 2010		15		307,674			26,796		(2,952	)		14,075			28,355		206,081			580,044
Profit for the year		—		—			—		—			—			—		133,375			133,375
Other comprehensive income		—		—			—		(12,486	)		—			—		—			(12,486	)
Total comprehensive income for the year		—		—			—		(12,486	)		—			—		133,375			120,889
Arising from the Reorganization		118,762		(307,674	)		—		—			—			188,912		—			—
Exercise of share options		5,383		28,655			—		—			(11,793	)		—		—			22,245
Equity settled share-based transactions		—		—			—		—			21,678			—		—			21,678
Issue of ordinary shares, net of issuing costs		30,778		504,113			—		—			—			—		—			534,891
Appropriations		—		—			14,473		—			—			—		(14,473	)		—
At March 31, 2011		154,938		532,768			41,269		(15,438	)		23,960			217,267		324,983			1,279,747

F-8

Consolidated statements of changes in equity

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010 (continued)

(Expressed in Renminbi)

	Share capital		Share premium		Treasury shares			Statutory reserve			Exchange reserve			Capital reserve			Other reserve		Retained earnings			Total
	(note 25(a))		(note 25(b)(i))		(note 25(b)(ii))			(note 25(b)(iii))			(note 25(b)(iv))			(note 25(b)(v))			(note 25(b)(vi))
	RMB’000		RMB’000		RMB’000			RMB’000			RMB’000			RMB’000			RMB’000		RMB’000			RMB’000
At April 1, 2011		154,938		532,768		—			41,269			(15,438	)		23,960			217,267		324,983			1,279,747
Profit for the year		—		—		—			—			—			—			—		162,816			162,816
Other comprehensive income		—		—		—			—			(20,566	)		—			—		—			(20,566	)
Total comprehensive income for the year		—		—		—			—			(20,566	)		—			—		162,816			142,250
Repurchase of shares		—		—		(10,513	)		—			—			—			—		—			(10,513	)
Exercise of share options		453		4,674		—			—			—			(1,650	)		—		—			3,477
Equity settled share-based transactions		—		—		—			—			—			23,710			—		—			23,710
Disposal of a subsidiary		—		—		—			(3,800	)		—			—			—		3,800			—
Appropriations		—		—		—			15,037			—			—			—		(15,037	)		—
At March 31, 2012		155,391		537,442		(10,513	)		52,506			(36,004	)		46,020			217,267		476,562			1,438,671

F-9

Consolidated statements of changes in equity

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010 (continued)

(Expressed in Renminbi)

(Unaudited)
	Share capital		Share premium		Treasury shares		Statutory reserve		Exchange reserve			Capital reserve		Other reserve		Retained earnings		Total
	(note 25(a))		(note 25(b)(i))		(note 25(b)(ii))		(note 25(b)(iii))		(note 25(b)(iv))			(note 25(b)(v))		(note 25(b)(vi))
	RMB’000		RMB’000		RMB’000		RMB’000		RMB’000			RMB’000		RMB’000		RMB’000		RMB’000
At April 1, 2011		154,938		532,768		—		41,269		(15,438	)		23,960		217,267		324,983		1,279,747
Profit for the period		—		—		—		—		—			—		—		12,628		12,628
Other comprehensive income		—		—		—		—		(6,508	)		—		—		—		(6,508	)
Total comprehensive income for the period		—		—		—		—		(6,508	)		—		—		12,628		6,120
Equity settled share-based transactions		—		—		—		—		—			5,124		—		—		5,124
At June 30, 2011		154,938		532,768		—		41,269		(21,946	)		29,084		217,267		337,611		1,290,991

F-10

Consolidated statements of changes in equity

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010 (continued)

(Expressed in Renminbi)

	Share capital		Share premium		Treasury shares			Statutory reserve		Exchange reserve			Capital reserve		Other reserve		Retained earnings			Total
	(note 25(a))		(note 25(b)(i))		(note 25(b)(ii))			(note 25(b)(iii))		(note 25(b)(iv))			(note 25(b)(v))		(note 25(b)(vi))
	RMB’000		RMB’000		RMB’000			RMB’000		RMB’000			RMB’000		RMB’000		RMB’000			RMB’000
At April 1, 2012		155,391		537,442		(10,513	)		52,506		(36,004	)		46,020		217,267		476,562			1,438,671
Loss for the period		—		—		—			—		—			—		—		(8,464	)		(8,464	)
Other comprehensive income		—		—		—			—		1,254			—		—		—			1,254
Total comprehensive income for the period		—		—		—			—		1,254			—		—		(8,464	)		(7,210	)
Equity settled share-based transactions		—		—		—			—		—			4,192		—		—			4,192
At June 30, 2012		155,391		537,442		(10,513	)		52,506		(34,750	)		50,212		217,267		468,098			1,435,653

See accompanying notes to the consolidated financial statements.

F-11

Consolidated statements of cash flows

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010

(Expressed in Renminbi)

			Three months ended June 30,						Years ended March 31,
	Note		2012			2011			2012			2011			2010
			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
						(unaudited)
Operating activities
(Loss)/profit before taxation				(8,336	)		12,628			167,231			133,476			111,092
Adjustments for:
Amortization of lease prepayments				14			26			87			103			104
Depreciation				18,065			15,329			65,885			47,406			35,057
Equity settled share-based transactions				4,192			5,124			23,710			21,678			5,773
Changes in fair value less costs to sell of biological assets				(22,964	)		(36,163	)		(286,927	)		(241,896	)		(152,743	)
Interest income				(909	)		(292	)		(1,310	)		(254	)		(101	)
Interest expense				2,792			2,787			10,781			4,643			—
Gain on disposal of subsidiaries		26		—			—			(1,309	)		—			(540	)
Net loss on disposal of property, plant and equipment and lease prepayment				79			73			2,153			5,143			3,142
Impairment losses on property, plant and equipment and prepayments				—			—			14,823			—			—
Foreign exchange loss/(gain)				330			(1,326	)		(7,630	)		(2,261	)		(529	)
				(6,737	)		(1,814	)		(12,506	)		(31,962	)		1,255
Changes in working capital:
Changes in current biological assets due to plantations				(37,627	)		(40,731	)		(162,201	)		(134,070	)		(99,854	)
Changes in inventories, net of effect of harvested crops transferred to inventories				102,089			100,987			439,116			346,468			228,881
(Increase)/decrease in trade and other receivables				(4,724	)		15,706			295			(35,310	)		(8,252	)
Decrease/(increase) in long-term deposits and prepayments				3,192			3,033			7,561			(21,025	)		(10,021	)
(Decrease)/increase in trade and other payables				(2,842	)		5,277			17,265			5,459			5,592
Cash generated from operations				53,351			82,458			289,530			129,560			117,601
Income tax paid				—			—			(2,881	)		(101	)		—
Net cash generated from operating activities				53,351			82,458			286,649			129,459			117,601

F-12

Consolidated statements of cash flows

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010

(continued)

(Expressed in Renminbi)

		Three months ended June 30,						Years ended March 31,
	Note	2012			2011			2012			2011			2010
		RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
					(unaudited)
Investing activities
Interest received			909			292			1,310			254			101
Plantations of non-current biological assets			(480	)		(518	)		(1,656	)		(1,692	)		(624	)
Payment for the purchase of property, plant and equipment			(4,746	)		(3,751	)		(6,797	)		(9,520	)		(6,122	)
Payment for construction in progress and prepayments			(60,904	)		(109,244	)		(339,046	)		(262,704	)		(161,378	)
Proceeds from disposal of property, plant and equipment and lease prepayment			—			1,000			5,331			13,411			7,658
Net cash outflow from disposal of subsidiaries			—			—			3,737			—			—
Net cash used in investing activities			(65,221	)		(112,221	)		(337,121	)		(260,251	)		(160,365	)

F-13

Consolidated statements of cash flows

for the three months ended June 30, 2012 and

the years ended March 31, 2012, 2011 and 2010

(continued)

(Expressed in Renminbi)

			Three months ended June 30,						Years ended March 31,
	Note		2012			2011			2012			2011			2010
			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
						(unaudited)
Financing activities
Interest paid				(5,305	)		(5,378	)		(10,521	)		(5,803	)		(1,133	)
Proceeds from bank loans				—			—			10,000			53,632			34,300
Repayment of bank loan				—			(6,000	)		(6,000	)		—			—
Repayment to a director				—			—			—			(40	)		—
Proceeds from municipal government loan				—			—			—			—			410
Repayment of municipal government loan				—			—			—			(1,410	)		—
Net proceeds from issue of preferred shares				—			—			—			—			40,657
Proceeds received from exercise of share options				—			—			3,161			22,245			—
Payment for repurchase of shares				—			—			(10,185	)		—			—
Net proceeds from issue of ordinary shares, net of issuing costs				—			—			—			534,891			—
Net cash (used in)/generated from financing activities				(5,305	)		(11,378	)		(13,545	)		603,515			74,234
Net (decrease)/increase in cash				(17,175	)		(41,141	)		(64,017	)		472,723			31,470
Cash at beginning of the period/year				520,475			598,722			598,722			139,207			107,939
Effect of foreign exchange rate changes				1,206			(6,090	)		(14,230	)		(13,208	)		(202	)
Cash at end of the period/year		19		504,506			551,491			520,475			598,722			139,207

See accompanying notes to the consolidated financial statements.

F-14

Notes to the consolidated financial statements

(Expressed in Renminbi unless otherwise indicated)

1 General information

(a) Principal activities and reorganization

Le Gaga Holdings Limited (the “Company”) was incorporated in the Cayman Islands on May 6, 2010 as the holding company of China Linong International Limited (“China Linong”) and its subsidiaries in connection with the initial public offering (the “IPO”) of the Company’s American depositary shares on the NASDAQ Global Select Market, which was completed in October 2010. The registered office of the Company is located at the offices of Maples Corporate Services Limited, P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The Company and its subsidiaries (hereinafter collectively referred as the “Group”) are principally engaged in cultivating and processing of vegetables in the People’s Republic of China (the “PRC”) for distribution to markets in the PRC.

On July 16, 2010, the Company issued ordinary shares and preferred shares to the existing ordinary shareholders and preferred shareholders of China Linong in exchange for all outstanding ordinary shares and preferred shares of China Linong at a 1,000-for-1 exchange ratio (the “Reorganization”). Upon the completion of the Reorganization, the Company became the holding company of the Group.

(b) Change in Fiscal Year End

On August 24, 2012, the Board of Directors of the Company (the “Board”) approved a change in the Company’s fiscal year end from March 31 to June 30. The change in year end is to align the Company’s fiscal reporting period and its annual budget planning with the Company’s production and sales cycle.

As a result of this change, the Company is required to file a transition report to the Securities and Exchange Commission covering the three-month transition period ended June 30, 2012. References to any of the Company’s years in the accompanying consolidated financial statements refer to the fiscal year ended March 31 of that year. The comparative financial information with respect to the three months ended June 30, 2011 is unaudited.

F-15

2 Significant accounting policies

(a) Statement of compliance

The accompanying consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”), as issued by the International Accounting Standards Board (“IASB”). IFRSs include International Accounting Standards (“IASs”) and interpretations. The consolidated financial statements were approved and authorized for issue by the Board of Directors of the Company on November 23, 2012.

The IASB has issued certain new and revised IFRSs that are first effective or available for early adoption for the current accounting period of the Group. Information on changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior periods reflected in the accompanying consolidated financial statements is provided in note 2(c).

(b) Basis of preparation of the financial statements

Since the shareholders’ equity holdings remained the same before and after the Reorganization, there were no changes in the economic substance of the ownership structure and the business of the Group. Accordingly, the Reorganization has been accounted for as a recapitalization of the Group and the accompanying consolidated financial statements reflect the assets and liabilities and results of operations of the Group at their respective historical amount as if the Reorganization had occurred at the beginning of the financial periods presented.

The measurement basis used in the preparation of the accompanying consolidated financial statements is the historical cost basis except for the following assets and liabilities which are stated at fair values as explained in the accounting policies set out below:

• biological assets (see note 2(l))

• derivative financial instruments (see note 2(e))

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

F-16

2 Significant accounting policies (continued)

(b) Basis of preparation of the financial statements (continued)

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of IFRSs that have significant effect on the financial statements and major sources of estimation uncertainty are discussed in note 3.

(c) Changes in accounting policies

The IASB has issued a few amendments to IFRSs that are first effective for the current accounting period of the Group. Of these, the amendments to IFRS 7,Financial instruments: Disclosures—Transfer of financial assets are relevant to the Group’s financial statements.

The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period (see note 30).

The amendments to IFRS 7 require certain disclosures for all transferred financial assets that are not derecognised and for any continuing involvement in a transferred asset existing at the balance sheet date, irrespective of when the related transfer transaction occurred. However, an entity need not provide the disclosures for the comparative period in the first year of adoption. The Group did not have any significant transfers of financial assets in previous periods or the current period which require disclosure in the current accounting period under the amendments.

(d) Subsidiaries

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control commences until the date that control ceases. Intra-group balances and transactions and any unrealized profits arising from intra-group transactions are eliminated in full in preparing the consolidated financial statements. Unrealized losses resulting from intra-group transactions are eliminated in the same way as unrealized gains but only to the extent that there is no evidence of impairment.

F-17

2 Significant accounting policies (continued)

(e) Derivative financial instruments

Derivative financial instruments are recognized initially at fair value. At each balance sheet date the fair value is remeasured. The gain or loss on remeasurement to fair value is charged immediately to profit or loss.

(f) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been within three months of maturity at acquisition.

(g) Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses (see note 2(k)).

Gains or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the item and are recognized in profit or loss on the date of retirement or disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual value, if any, using the straight-line method over their estimated useful lives as follows:

•    Land improvements, buildings and farmland infrastructure	Shorter of the unexpired term of land leases and their estimated useful lives of 3 to 30 years
•    Equipment and machinery	3 to 10 years
•    Motor vehicles	3 to 10 years
•    Furniture, fixtures and computer equipment	5 years

Depreciation of property, plant and equipment attributable to agricultural activities is capitalized as part of plantation expenditure. Depreciation relating to idle capacity is charged to profit or loss in the accounting period of which the idle capacity is identified.

Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its residual value, if any, are reviewed annually.

F-18

2 Significant accounting policies (continued)

(h) Construction in progress

Construction in progress represents property, plant and equipment under construction, and is stated at cost less impairment losses (see note 2(k)). Cost of self-constructed items of property, plant and equipment include the cost of materials, direct labour and an appropriate proportion of production overheads and borrowing costs (see note 2(x)). Capitalization of these costs ceases and the construction in progress is transferred to property, plant and equipment when substantially all of the activities necessary to prepare the asset for its intended use are complete.

No depreciation is provided in respect of construction in progress until it is completed and ready for its intended use.

(i) Lease prepayments

Lease prepayments represent the cost of land use rights paid to the PRC government authorities. Lease prepayments are carried at cost less accumulated amortization and impairment losses (see note 2(k)). Amortization is charged to profit or loss on a straight-line basis over the respective periods of the rights.

(j) Leased assets

An arrangement, comprising a transaction or a series of transactions, is or contains a lease if the Group determines that the arrangement conveys a right to use a specific asset or assets for an agreed period of time in return for a payment or a series of payments. Such a determination is made based on evaluation of the substance of the arrangement and is regardless of whether the arrangement takes the legal form of a lease.

(i) Classification of assets leased to the Group

Assets that are held by the Group under leases which transfer to the Group substantially all the risks and rewards of ownership are classified as being held under finance leases. Leases which do not transfer substantially all the risks and rewards of ownership to the Group are classified as operating leases.

(ii) Operating lease charges

Where the Group has the use of assets held under operating leases, payments made under the leases are charged to profit or loss in equal installments over the accounting periods covered by the lease term. Lease incentives received are recognized in profit or loss as an integral part of the aggregate net lease payments made. Contingent rentals are charged to profit or loss in the accounting period in which they are incurred.

The cost of acquiring land held under an operating lease is amortized on a straight-line basis over the period of the lease term.

F-19

2 Significant accounting policies (continued)

(k) Impairment of assets

(i) Impairment of receivables

Current receivables that are carried at amortized cost are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. Objective evidence of impairment includes observable data that comes to the attention of the Group about one or more of the following loss events:

• significant financial difficulty of the debtor;

• a breach of contract, such as a default or delinquency in interest or principal payments;

• it becoming probable that the debtor will enter bankruptcy or other financial reorganization; and

• significant changes in the technological, market, economic or legal environment that have an adverse effect on the debtor.

If any such evidence exists, the impairment loss is determined and recognized as follows:

• For trade and other current receivables carried at amortized cost, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where these financial assets share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group.

Impairment losses are written off against the corresponding assets directly, except for impairment losses recognized in respect of trade receivables whose recovery is considered doubtful but not remote. In this case, the impairment losses for doubtful debts are recorded using an allowance account. When the Group is satisfied that recovery is remote, the amount considered irrecoverable is written off against trade receivables directly and any amounts held in the allowance account relating to that debt are reversed. Subsequent recoveries of amounts previously charged to the allowance account are reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly are recognized in profit or loss.

F-20

2 Significant accounting policies (continued)

(k) Impairment of assets (continued)

(ii) Impairment of other assets

Internal and external sources of information are reviewed at each balance sheet date to identify indications that the following assets may be impaired or an impairment loss previously recognized no longer exists or may have decreased.

• property, plant and equipment;

• construction in progress;

• lease prepayments; and

• long-term deposits and prepayments.

If any such indication exists, the asset’s recoverable amount is estimated.

• Calculation of recoverable amount

The recoverable amount of an asset is the greater of its fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).

• Recognition of impairment losses

An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs to sell, or value in use, if determinable.

• Reversals of impairment losses

An impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount. A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to profit or loss in the year in which the reversals are recognized.

F-21

2 Significant accounting policies (continued)

(l) Biological assets

Biological assets are living plants managed by the Group on its farmland. Biological assets include vegetables and fruits which are to be harvested as agricultural produce, and tea and other trees which are not agricultural produce but are self-regenerating for sustaining regular harvests of agricultural produce. Biological assets with life cycle of one year or less are classified as current biological assets. Biological assets are measured at fair value less costs to sell on initial recognition and at each balance sheet date. Costs to sell include all incremental costs directly attributable to the sale of the biological assets, excluding finance costs and income taxes. The fair value of a biological asset in its present location and condition is determined based on either the present value of expected net cash flows from the biological asset discounted at a current market-determined pre-tax rate or the current market price with reference to the species, growing condition, costs incurred and expected yield of the crops. The gain or loss arising from initial recognition of a biological asset at fair value less costs to sell and from a change in fair value less costs to sell of a biological asset is recognized in profit or loss.

Agricultural produce harvested from the Group’s biological assets is initially measured at its fair value less costs to sell at the point of harvest. The fair value of agricultural produce is determined based on market prices in the local market. The gain or loss arising from initial recognition of agricultural produce as a result of harvesting is recognized in profit or loss for the period in which it arises. The fair value less costs to sell at the point of harvest is the deemed cost of the agricultural produce included in inventories for subsequent sale in the local market.

(m) Inventories

Inventories comprising agricultural materials, consumables, packing materials, and agricultural produce and are measured at the lower of cost and net realizable value. The cost of inventories, other than agricultural produce, is based on the weighted average cost formula, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. The cost of agricultural produce transferred from biological assets is its fair value less costs to sell at the point of harvest.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs.

F-22

2 Significant accounting policies (continued)

(n) Preferred share capital

Preferred share capital is classified as equity if it is non-redeemable, or redeemable only at the Company’s option, and any dividends are discretionary. Dividends on preferred share capital classified as equity are recognized as distributions within equity.

(o) Trade and other receivables

Trade and other receivables are initially recognized at fair value and thereafter stated at amortized cost using the effective interest rate method, less allowance for impairment of doubtful debts (see note 2(k)), except where the receivables are interest-free loans made to related parties without any fixed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of doubtful debts.

(p) Interest-bearing borrowings

Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between the initially recognized amount and redemption value being recognized in profit or loss over the period of the borrowings, together with any interest and fees payable, using the effective interest method.

(q) Trade and other payables

Trade and other payables are initially recognized at fair value and thereafter stated at amortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost.

(r) Employee benefits

(i) Short term employee benefits and contributions to defined contribution retirement plans

Salary, annual bonuses, paid annual leave, contributions to defined contribution retirement plans and the cost of non-monetary benefits are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values.

F-23

2 Significant accounting policies (continued)

(r) Employee benefits (continued)

(ii) Share-based payments

The fair value of share options granted to employees is recognized as an employee cost with a corresponding increase in a capital reserve within equity. The fair value is measured at grant date using the Black-Scholes Option Pricing model or the Binomial Option Pricing model, taking into account the terms and conditions upon which the options were granted. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the options, the total estimated fair value of the options is spread over the vesting period, taking into account the probability that the options will vest.

During the vesting period, the number of share options that is expected to vest is reviewed. Any resulting adjustment to the cumulative fair value recognized in prior years is charged/credited to profit or loss for the year of the review, unless the original employee expenses qualify for recognition as an asset, with a corresponding adjustment to the capital reserve. On vesting date, the amount recognized as an expense is adjusted to reflect the actual number of options that vest (with a corresponding adjustment to the capital reserve) except where forfeiture is only due to not achieving vesting conditions that relate to the market price of the shares. The equity amount is recognized in the capital reserve until either the option is exercised (when it is transferred to the share premium account) or the option expires (when it is released directly to retained profits).

(s) Income tax

Income tax for the period/year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognized in profit or loss except to the extent that they relate to business combinations or items recognized in other comprehensive income or directly in equity, in which case the relevant amounts are recognized in other comprehensive income or directly in equity, respectively.

Current tax is the expected tax payable on the taxable income for the period/year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits.

F-24

2 Significant accounting policies (continued)

(s) Income tax (continued)

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilized, are recognized. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilized.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future.

The amount of deferred tax recognized is measured based on the expected manner of realization or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax assets and liabilities are not discounted.

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met:

• in the case of current tax assets and liabilities, the Group intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously; or

F-25

2 Significant accounting policies (continued)

(s) Income tax (continued)

• in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either:

• the same taxable entity; or

• different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously.

(t) Provisions and contingent liabilities

Provisions are recognized for liabilities of uncertain timing or amount when the Group has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

(u) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably, revenue is recognized in profit or loss as follows:

(i) Sale of goods

The Group recognizes revenue on product sales when vegetables are delivered and the customers take ownership and assume risk of loss, which is when the vegetables are received by the customer at its or a designated location or collected directly by the customer from the cultivation bases, collection of the relevant receivable is probable and the selling price is fixed or determinable. Net sales of products represents the invoiced value of goods, net of trade discounts and allowances.

F-26

2 Significant accounting policies (continued)

(u) Revenue recognition (continued)

(ii) Interest income

Interest income is recognized as it accrues using the effective interest method.

(iii) Government grants

Government grants unrelated to biological assets are recognized in the balance sheet initially when there is reasonable assurance that it will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are deducted from the expenses on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are deducted from the carrying amount of the asset and consequently are effectively recognized in profit or loss over the useful life of the asset by way of reduced depreciation expense.

During the three months ended June 30, 2012, no government grant (three months ended June 30, 2011 (unaudited): Nil; year ended March 31, 2012: Nil; year ended March 31, 2011: RMB95,000; year ended March 31, 2010: RMB135,000) that compensated the Group for expenses incurred in research and development activities were deducted from the related expenses, and no government grants (three months ended June 30, 2011 (unaudited): Nil; year ended March 31, 2012: RMB1,100,000; year ended March 31, 2011: RMB723,000; year ended March 31, 2010: RMB592,000) that compensated the Group for the cost of construction of certain buildings and farmland infrastructure were deducted from the carrying amount of the respective construction in progress.

(v) Translation of foreign currencies

The functional currency of the subsidiaries of the Group in the PRC-mainland is Renminbi (“RMB”), whereas the functional currencies of the Company and China Linong are United States dollars and the functional currencies of the subsidiaries of the Group outside the PRC-mainland are either United States dollars or Hong Kong dollars. For the purposes of presenting the consolidated financial statements, the Group has adopted RMB as its presentation currency, rounded to the nearest thousand.

Foreign currency transactions during the period/year are translated at the foreign exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at the balance sheet date. Exchange gains and losses are recognized in profit or loss.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the foreign exchange rates ruling at the transaction dates.

F-27

2 Significant accounting policies (continued)

(v) Translation of foreign currencies (continued)

The results of operations outside the PRC-mainland are translated into RMB at the exchange rates approximating the foreign exchange rates ruling at the dates of the transactions. Balance sheet items are translated into RMB at the closing foreign exchange rates ruling at the balance sheet date. The resulting exchange differences are recognized in other comprehensive income and accumulated separately in equity in the exchange reserve.

On disposal of an operation outside the PRC-mainland, the cumulative amount of the exchange differences relating to that operation is reclassified from equity to profit or loss when the profit or loss on disposal is recognized.

(w) Research and development costs

Research and development costs are recognized as expenses in the period in which they are incurred.

(x) Borrowing costs

Borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.

The capitalization of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. Capitalization of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

(y) Related parties

(a) A person, or a close member of that person’s family, is related to the Group if that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or the Group’s parent.

F-28

2 Significant accounting policies (continued)

(y) Related parties (continued)

(b) An entity is related to the Group if any of the following conditions applies:

(i) The entity and the Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others).

(ii) One entity is an associate or joint venture of the entity (or an associate or joint venture of a member of a group of which the other entity is a member).

(iii) Both entities are joint ventures of the same third party.

(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group.

(vi) The entity is controlled or jointly controlled by a person identified in (a).

(vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).

Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.

(z) Earnings per share

As further described in note 25(a), the Company’s preferred shares were converted into ordinary shares on an one-to-one basis on October 29, 2010 upon the completion of the IPO. For the purpose of calculation of earnings per share for the years ended March 31, 2010 and 2011, the holders of the ordinary shares and preferred shares were considered to have equal rights to receive dividends from the Group’s earnings for periods prior to the conversion.

Basic earnings per share (EPS) is calculated by dividing the profit or loss attributable to ordinary and preferred shareholders by the weighted average number of ordinary and preferred shares outstanding during the period/year.

Diluted EPS is determined by adjusting the profit or loss attributable to ordinary and preferred shareholders and the weighted average number of ordinary and preferred shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.

F-29

2 Significant accounting policies (continued)

(z) Earnings per share (continued)

For the purpose of calculating basic and diluted earnings per share, the number of ordinary and preferred shares used in the calculation reflects the 1,000-for-1 share exchange in connection with the Reorganization described in note 1 on a retrospective basis as if the share exchange had occurred at the beginning of the earliest period presented.

(aa) Segment reporting

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are reviewed regularly by the Group’s most senior executive management to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

3 Accounting estimates and judgements

Notes 23 and 27 contain information about the assumptions and their risk factors relating to fair value of the share options granted and financial instruments. Other key sources of estimation uncertainty are as follows:

(a) Depreciation and estimated useful lives

Property, plant and equipment is depreciated on a straight line basis over the estimated useful lives of the assets. The Group reviews the estimated useful lives of the assets regularly in order to determine the amount of depreciation expense to be recorded during any reporting period. The useful lives are based on the Group’s historical experience with similar assets. The depreciation expense for future periods is adjusted if there are material changes from previous estimates.

(b) Impairment of assets

The Group reviews the internal and external sources of information at each balance sheet date to identify indications that property, plant and equipment, construction in progress, lease prepayments and long-term deposits and prepayments may be impaired. When indication of impairment is identified, management assesses its fair value less costs to sell or value in use to determine the recoverable amount of such assets and the difference between the carrying amount and recoverable amount is recognized as impairment losses. Discounted future cashflows are estimated by the Group to assess the value in use and any change in the assumptions adopted in the cash flow forecasts would increase or decrease in the impairment losses and affect the net asset value and results of the Group.

F-30

3 Accounting estimates and judgements (continued)

(c) Fair value of biological assets and agricultural produce

The Group’s biological assets are valued at fair value less costs to sell at each balance sheet date and the Group’s agricultural produce harvested from a biological asset is measured at fair value less costs to sell at the point of harvest.

The fair value less costs to sell at each balance sheet date is determined using the net present value approach which requires a number of key assumptions and estimates to be made such as discount rate, future net cash flows, etc. Any change in these estimates may affect the fair value of the biological assets significantly. Management reviews the assumptions and estimates periodically to identify any significant change in the fair value of biological assets.

4 Revenue and segment information

(a) Revenue

The principal activities of the Group are cultivating, processing and distribution of vegetables. Revenue represents the invoiced value of goods sold during the year, net of returns and discounts.

An analysis of the Group’s revenue by the categories of customers for the three months ended June 30, 2012 and 2011 and the years ended March 31, 2012, 2011 and 2010 is as follows:

	Three months ended June 30,				Years ended March 31,
	2012		2011		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000		RMB’000
			(unaudited)
Wholesalers		63,968		62,542		289,976		213,974		137,546
Institutional customers		54,224		51,412		197,394		149,131		100,969
Supermarkets		5,047		9,347		31,880		43,099		41,235
Others		9		31		149		568		762
		123,248		123,332		519,399		406,772		280,512

The Group’s customer base is diversified and sales to the largest customer accounted for 10.8% of revenue in the three months ended June 30, 2012. No single customer accounted for over 10% of revenue during three months ended June 30, 2011 and the years ended March 31, 2012, 2011 and 2010. Details of concentrations of credit risk are set out in note 27.

F-31

4 Revenue and segment information (continued)

Further details regarding the Group’s principal activities are disclosed as follows:

(b) Segment information

The Group manages its business by two operating segments, being the Vegetables business and Trees business, which are organized by the type of biological assets. In a manner consistent with the way in which information is reported internally to the Group’s most senior executive management for the purpose of resource allocation and performance assessment, the Group has identified the following two reportable segments. No operating segments have been aggregated to form the following reportable segments.

• Vegetables business (PRC-mainland/Hong Kong)

Vegetables business consists of the cultivating, processing and distribution of vegetables.

• Trees business (PRC-mainland)

Trees business consists of the cultivating, processing and distribution of fruits and tea leaf from its fruit and tea trees, and cultivating and selling of fir trees.

F-32

4 Revenue and segment information (continued)

(b) Segment information (continued)

For the purposes of assessing the Group’s performance, the Group’s senior executive management monitors segment performance according to the operating results after charging the cost of inventories used, packing expenses, land preparation costs and natural disaster losses but before biological fair value adjustments, other income and expenses as set out in the reconciliation in note 4(b)(ii) below.

(i) Analysis of segment results

	Three months ended June 30,
	2012									2011 (unaudited)
	Vegetables			Trees			Total			Vegetables			Trees			Total
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
Segment revenue		122,880			368			123,248			122,970			362			123,332
Segment profit		55,197			231			55,428			60,798			224			61,022
Depreciation and amortization		(17,411	)		(14	)		(17,425	)		(14,673	)		(43	)		(14,716	)

F-33

4 Revenue and segment information (continued)

(b) Segment information (continued)

(i) Analysis of segment results (continued)

	Years ended March 31,
	2012									2011									2010
	Vegetables			Trees			Total			Vegetables			Trees			Total			Vegetables			Trees			Total
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
Segment revenue		517,783			1,616			519,399			405,398			1,374			406,772			279,852			660			280,512
Segment profit		274,522			1,078			275,600			217,476			905			218,381			146,649			346			146,995
Depreciation and amortization		(63,406	)		(87	)		(63,493	)		(45,425	)		(154	)		(45,579	)		(33,723	)		(81	)		(33,804	)

F-34

4 Revenue and segment information (continued)

(b) Segment information (continued)

(ii) Reconciliation of segment profit

Reconciliation of reportable segment profit to consolidated profit before taxation is disclosed as follows:

	Three months ended June 30,						Years ended March 31,
	2012			2011			2012			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
				(unaudited)
Segment profit		55,428			61,022			275,600			218,381			146,995
Other income		466			135			3,330			124			626
Research and development expenses		(2,291	)		(2,061	)		(9,091	)		(7,298	)		(6,519	)
Selling and distribution expenses		(6,516	)		(8,882	)		(32,120	)		(24,949	)		(18,207	)
Administrative expenses		(13,155	)		(14,361	)		(58,519	)		(68,978	)		(25,059	)
Impairment losses on property, plant and equipment and prepayments		—			—			(14,823	)		—			—
Other expenses		(132	)		(133	)		(2,551	)		(5,590	)		(3,167	)
Net finance (costs)/ income		(3,137	)		150			1,057			(1,762	)		(608	)
Biological assets fair value adjustment		(38,999	)		(23,242	)		4,348			23,548			17,031
(Loss)/profit before taxation		(8,336	)		12,628			167,231			133,476			111,092

(iii) Geographical information

The geographical location of a customer is based on the location at which the services were provided or the goods delivered. Substantially all of the Group’s revenues are derived from external customers located in the PRC.

The geographical location of the Group’s non-current assets is based on the physical location of an asset in the case of property, plant and equipment, construction in progress, lease prepayments and biological assets. Substantially all of the Group’s non-current assets are located in the PRC.

F-35

5 Other income and other expenses

	Three months ended June 30,						Years ended March 31,
	2012			2011			2012			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
				(unaudited)
Other income
Gain on disposal of subsidiaries (note 26)		—			—			1,309			—			540
Incentive payment from depositary bank		427			—			980			—			—
Rental income		—			135			750			—			—
Sundry income		39			—			291			124			86
		466			135			3,330			124			626
Other expenses
Net loss on disposal of property, plant and equipment		(79	)		(73	)		(2,153	)		(5,143	)		(3,142	)
Natural disasters losses		—			—			—			(480	)		(237	)
Others		(53	)		(60	)		(398	)		(447	)		(25	)
		(132	)		(133	)		(2,551	)		(6,070	)		(3,404	)

6 Finance income and finance costs recognized in profit or loss

	Three months ended June 30,						Years ended March 31,
	2012			2011			2012			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
				(unaudited)
Finance income
Interest income on bank deposits		909			292			1,310			254			101
Net foreign exchange gain		—			2,645			10,528			2,627			—
		909			2,937			11,838			2,881			101
Finance costs
Interest on bank loans		(2,792	)		(2,787	)		(10,781	)		(9,040	)		(1,133	)
Net foreign exchange loss		(1,254	)		—			—			—			(709	)
		(4,046	)		(2,787	)		(10,781	)		(9,040	)		(1,842	)
Less: Interest expense capitalized into construction in progress		—			—			—			4,397			1,133
		(4,046	)		(2,787	)		(10,781	)		(4,643	)		(709	)
Net finance (costs)/ income recognized in profit or loss		(3,137	)		150			1,057			(1,762	)		(608	)

F-36

7 (Loss)/profit before taxation

(Loss)/profit before taxation is arrived at after charging:

		Three months ended June 30,				Years ended March 31,
		2012		2011		2012		2011		2010
		RMB’000		RMB’000		RMB’000		RMB’000		RMB’000
				(unaudited)
(a)	Staff costs
	Contributions to defined contribution retirement plans		149		202		699		701		502
	Equity settled share-based payment expenses		3,813		4,627		21,564		19,460		4,096
	Salaries, wages and other benefits		17,661		16,466		67,117		56,474		38,275
			21,623		21,295		89,380		76,635		42,873
(b)	Other items
	Amortization of lease prepayments		14		26		87		103		104
	Depreciation		18,065		15,329		65,885		47,406		35,057
	Equity settled share-based payment expenses in respect of the Company’s consultants		379		497		2,146		2,218		1,677
	Impairment losses
	–property, plant and equipment (note 11)		—		—		12,771		—		—
	–long-term prepayments (note 14)		—		—		2,052		—		—
	Auditors’ remuneration		1,444		1,276		5,686		3,869		1,774
	Operating lease charges: minimum lease payments in respect of farmland and premises		4,384		3,386		14,738		9,996		9,273
(c)	Land preparation costs
	Land preparation costs represent costs incurred before the commencement of agricultural activities on farmland and cost of maintenance of idle farmland during the rotation period.

F-37

8 Income tax in the consolidated income statements

(a) Taxation in the consolidated income statements represents:

	Three months ended June 30,				Years ended March 31,
	2012		2011		2012			2011		2010
	RMB’000		RMB’000		RMB’000			RMB’000		RMB’000
			(unaudited)
Current tax
PRC withholding tax on dividends (note (v))		—		—		3,353			101		607
US withholding tax on incentive payment (note (iv))		—		—		2,099			—		—
PRC withholding tax on capital gains (note (vi))		—		—		358			—		283
Provision for PRC income tax (note (vii))		—		—		1,317			—		—
Over-provision in respect of prior years		—		—		(641	)		—		—
Deferred tax		—		—		6,486			101		890
Origination of temporary differences		128		—		(2,071	)		—		—
		128		—		4,415			101		890

F-38

8 Income tax in the consolidated income statements (continued)

(b) Reconciliation between tax expense and accounting (loss)/profit at applicable tax rates:

	Three months ended June 30,						Years ended March 31,
	2012			2011			2012			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
				(unaudited)
(Loss)/profit before taxation		(8,336	)		12,628			167,231			133,476			111,092
Notional tax on profit before taxation, calculated at the rates applicable to the tax jurisdictions concerned (note (i))		897			5,806			53,256			47,812			35,178
Effect of non-taxable income		(49	)		—			(528	)		(110	)		(4,429	)
Effect of non-deductible expenses		—			—			—			26			14
Effect of tax concessions (note (ii))		(1,074	)		(5,876	)		(53,397	)		(48,570	)		(32,906	)
Effect of tax loss not recognized (note (iii))		226			70			570			842			2,143
Effect of tax on gain on disposal of an asset (note (vii))		—			—			1,416			—			—
US withholding tax on incentive payment (note (iv))		128			—			258			—			—
PRC withholding tax on dividends (note (v))		—			—			3,353			101			607
PRC withholding tax on capital gains (note (vi))		—			—			128			—			283
Over-provision in respect of prior years		—			—			(641	)		—			—
Actual tax expense		128			—			4,415			101			890

F-39

8 Income tax in the consolidated income statements (continued)

Notes:

(i) Pursuant to the rules and regulations of the Cayman Islands and the British Virgin Islands (“BVI”), the Group is not subject to any tax on income or capital gains in the Cayman Islands and the BVI.

The Hong Kong statutory profits tax rate is 16.5%. The payments of dividends by Hong Kong companies are not subject to any Hong Kong withholding tax.

Effective from January 1, 2008, the PRC’s statutory income tax rate is 25%.

(ii) According to the PRC’s new Income Tax Law and its relevant regulations, effective from January 1, 2008, the PRC statutory income tax rate is 25%, however, the Group’s PRC subsidiaries which are engaged in growing, processing and sales of agricultural products are exempt from PRC income tax.

(iii) No provision for Hong Kong profits tax was made as the Group’s subsidiaries operating in Hong Kong sustained tax losses or had tax losses brought forward to offset estimated assessable profits for the three months ended June 30, 2012 and 2011 and the years ended March 31, 2012, 2011 and 2010.

No provision for PRC income tax was made for Linong Agriculture Technology (Shenzhen) Co. Limited, which is engaged in the sales of agricultural products, as it sustained tax losses for the three months ended June 30, 2012 and 2011 and the years ended March 31, 2012, 2011 and 2010.

(iv) The Company has entered into a contract with its depositary bank for American Depositary Shares (“ADS”) depositary service for a term of 5 years. During the year ended March 31, 2012, the depositary bank provided an incentive payment of US$1,100,000 to the Company which is refundable to the extent that the service contract is early terminated before the expiry of the 5-year term. The incentive amount is recorded as deferred income in the consolidated balance sheet (see note 22), which is amortized and recognized as other income over the contract term on a straight-line basis. The Company received a net payment of US$770,000 (equivalent to RMB4,897,000) from the depositary bank, after the deduction of a 30% withholding tax on the gross incentive payment, as required under the relevant U.S. tax laws. Such withholding tax amounted to US$330,000 (equivalent to RMB2,099,000). Deferred tax asset was recognized in respect of such deferred income upon receipt of the incentive payment during the year ended March 31, 2012.

F-40

8 Income tax in the consolidated income statements (continued)

Notes: (continued)

(v) Pursuant to the PRC’s new Income Tax Law and its relevant regulations, dividends payable to foreign corporate investors are subject to a 10% withholding tax for earnings generated since January 1, 2008. Under the Mainland China/Hong Kong Special Administrative Region (“HKSAR”) taxation arrangement, a qualified Hong Kong tax resident which is the “beneficial owner” and holds 25% or more of the equity interest in a PRC-resident enterprise is entitled to a reduced withholding rate of 5%.

During the year ended March 31, 2010, Linong Agriculture Technology (Liaoyang) Co. Limited declared a dividend of RMB23,000,000 to its immediate holding company, Land V. Limited, a Hong Kong company. Included in the dividend payable to Land V. Limited, an amount of RMB12,148,000 was distributed from earnings generated since January 1, 2008 which is subject to 5% PRC dividend withholding tax.

During the year ended March 31, 2012, Linong Agriculture Technology (Shantou) Co. Limited (“Linong Shantou”) declared a dividend of RMB58,204,000 to its immediate holding company, Land V. Group Limited, a BVI company, following the decision to dispose of Linong Shantou as mentioned in notes 11 and 26. Included in the dividend payable to Land V. Group Limited, an amount of RMB33,531,000 was distributed from earnings generated since January 1, 2008 which is subject to 10% PRC dividend withholding tax and provision for PRC withholding tax on dividends of RMB3,353,000 was made.

(vi) During the year ended March 31, 2010, Land V. Limited disposed of its equity interest in Land V. Limited (Tianjin), with a gain of RMB2,825,000 for PRC tax purpose which is subject to 10% PRC capital gain withholding tax.

During the year ended March 31, 2012, Linong Agriculture Technology (Liaoyang) Co. Limited was deregistered, with a gain of RMB2,296,000 for PRC tax purpose from the transfer of its processing factory located at Liaoyang, Shenyang to its immediate holding company, Land V. Limited, which is subject to 10% PRC capital gain withholding tax. No such gain was noted for accounting purposes. Accordingly, deferred tax asset was recognized in respect of such capital gain and related temporary differences would be reversed upon the disposal of the relevant assets.

During the year ended March 31, 2012, Land V. Group Limited disposed of its equity interest in Linong Shantou, with a gain of RMB1,276,000 for PRC tax purpose which is subject to 10% PRC capital gain withholding tax.

F-41

8 Income tax in the consolidated income statements (continued)

Notes: (continued)

(vii) During the year ended March 31, 2012, Land V. Limited (Fujian) disposed of its processing factory located at Lianjiang, Fujian Province for a consideration of RMB2,300,000 which is subject to PRC income tax of RMB575,000 and PRC land appreciation tax of RMB742,000.

9 (Loss)/earnings per ordinary/preferred share

(a) Basic (loss)/earnings per ordinary/preferred share

During the years ended March 31, 2011 and 2010, the Group had in issue ordinary shares and preferred shares. On October 29, 2010, all preferred shares were automatically converted into ordinary shares on an one-to-one basis upon the IPO of the ordinary shares of the Group. The automatic conversion did not result in the retrospective adjustments to any previously reported basic and diluted earnings per share since the weighted average number of shares used in the calculation of basic and diluted earnings per share for periods prior to the conversion has included both ordinary and preferred shares.

For the purpose of calculating basic and diluted (loss)/earnings per share, the number of ordinary and preferred shares used in the calculation reflects the effect of the 1,000-for-1 share exchange in connection with the Reorganization described in note 1(a) on a retrospective basis as if the event had occurred at the beginning of the earliest period presented.

The calculation of basic (loss)/profit per share is based on the (loss)/profit attributable to ordinary and preferred equity shareholders of the Group of a loss of RMB8,464,000 (three months ended June 30, 2011 (unaudited): profit of RMB12,628,000; year ended March 31, 2012: profit of RMB162,816,000; year ended March 31, 2011: profit of RMB133,375,000; year ended March 31, 2010: profit of RMB110,202,000) and the weighted average number of ordinary and preferred shares outstanding, calculated as follows:

F-42

9 (Loss)/earnings per ordinary/preferred share (continued)

(a) Basic (loss)/earnings per ordinary/preferred share (continued)

Weighted average number of ordinary and preferred shares:

	Three months ended June 30,					Years ended March 31,
	2012			2011		2012			2011		2010
				(unaudited)
Issued ordinary and preferred shares at beginning of the period/year		2,300,782,150			2,293,591,000		2,293,591,000			1,753,997		1,674,870
Preferred shares issued		—			—		—			—		15,609
		2,300,782,150			2,293,591,000		2,293,591,000			1,753,997		1,690,479
Effect of share exchange in connection with the Reorganization		—			—		—			1,752,243,003		1,688,788,521
Effect of treasury shares		(19,351,850	)		—		(7,425,000	)		—		—
Effect of share options exercised		—			—		969,000			50,997,000		—
Effect of shares issued under IPO		—			—		—			192,822,000		—
Weighted average number of ordinary and preferred shares at end of the period/year		2,281,430,300			2,293,591,000		2,287,135,000			1,997,816,000		1,690,479,000

F-43

9 (Loss)/earnings per ordinary/preferred share (continued)

(b) Diluted (loss)/earnings per ordinary/preferred share

The calculation of diluted (loss)/earnings per share is based on the (loss)/profit attributable to ordinary and preferred equity shareholders of the Group of a loss of RMB8,464,000 (three months ended June 30, 2011 (unaudited): profit of RMB12,628,000; year ended March 31, 2012: profit of RMB162,816,000; year ended March 31, 2011: profit of RMB133,375,000; year ended March 31, 2010: profit of RMB110,202,000) and the weighted average number of ordinary and preferred shares outstanding, calculated as follows:

Weighted average number of ordinary and preferred shares (diluted):

	Three months ended June 30,				Years ended March 31,
	2012		2011		2012		2011		2010
			(unaudited)
Weighted average number of ordinary and preferred shares at beginning of the period/year		2,281,430,300		2,293,591,000		2,287,135,000		1,997,816,000		1,690,479,000
Effect of deemed issue of shares under the Company’s share option schemes		—		88,389,000		67,614,000		68,160,000		23,906,000
Weighted average number of ordinary and preferred shares (diluted) at end of the period/year		2,281,430,300		2,381,980,000		2,354,749,000		2,065,976,000		1,714,385,000

For the three months ended June 30, 2012, the computation of diluted loss per share does not assume the conversion of the Company’s outstanding share options since it would have been anti-dilutive.

For the three months ended June 30, 2011 (unaudited), 45,872,001 options issued under the Group’s share option schemes (year ended March 31, 2012: 44,971,801 options; year ended March 31, 2011: Nil; year ended March 31, 2010: 151,430 options and the conversion option of bank loan (see note 20)) were excluded from the diluted weighted average number of shares calculation as their effect would have been anti-dilutive.

F-44

10 Employee retirement benefits

Defined contribution retirement schemes

Pursuant to the relevant labour rules and regulations in the PRC-mainland, the Group participates in defined contribution retirement benefit schemes (the “Schemes”) organized by the relevant local government authorities whereby the Group is required to make contributions to the Schemes based on a percentage of the eligible employees’ salaries. Contributions made are charged to profit or loss as they become payable, in accordance with the rules of the Schemes. The employers’ contributions vest fully once they are made. The local government authorities are responsible for the entire pension obligations payable to existing and retired employees.

The Group also operates a Mandatory Provident Fund Scheme (the “MPF Scheme”) under the Hong Kong Mandatory Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong Employment Ordinance. The MPF Scheme is a defined contribution retirement plan administered by independent trustees. Under the MPF Scheme, the employer and its employees are each required to make contributions to the plan at 5% of the employees’ relevant income, subject to a cap of monthly relevant income of HK$25,000. Contributions to the plan vest immediately.

The Group does not have any other pension schemes for its employees in respect of the subsidiaries outside PRC-mainland and Hong Kong. The directors of the Company are of the opinion that the Group did not have any significant liabilities beyond the above contributions in respect of the retirement benefits of its employees.

F-45

11 Property, plant and equipment

	Land improvements			Buildings and farmland infrastructure			Equipment and machinery			Motor vehicles			Furniture, fixtures and computer equipment			Total
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
Cost:
As at April 1, 2009		53,215			205,609			17,049			3,449			1,426			280,748
Exchange adjustments		—			—			—			(5	)		—			(5	)
Additions		800			600			4,138			274			312			6,124
Transfer from construction in progress (note 12)		47,331			114,294			3,738			—			—			165,363
Disposals		(6,027	)		(17,875	)		(1,243	)		(328	)		(367	)		(25,840	)
As at March 31, 2010		95,319			302,628			23,682			3,390			1,371			426,390
Accumulated depreciation:
As at April 1, 2009		9,129			24,796			5,118			2,101			511			41,655
Exchange adjustments		—			—			—			(4	)		—			(4	)
Charge for the year		7,304			21,716			5,391			371			275			35,057
Written back on disposals		(1,399	)		(5,398	)		(898	)		(277	)		(208	)		(8,180	)
As at March 31, 2010		15,034			41,114			9,611			2,191			578			68,528
Net book value:
As at March 31, 2010		80,285			261,514			14,071			1,199			793			357,862

F-46

11 Property, plant and equipment (continued)

	Land improvements			Buildings and farmland infrastructure			Equipment and machinery			Motor vehicles			Furniture, fixtures and computer equipment			Total
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
Cost:
As at April 1, 2010		95,319			302,628			23,682			3,390			1,371			426,390
Exchange adjustments		—			—			—			(46	)		(14	)		(60	)
Additions		160			231			7,710			561			858			9,520
Transfer from construction in progress (note 12)		43,456			225,456			515			—			—			269,427
Disposals		(2,201	)		(15,308	)		(1,303	)		(1,189	)		(250	)		(20,251	)
As at March 31, 2011		136,734			513,007			30,604			2,716			1,965			685,026
Accumulated depreciation:
As at April 1, 2010		15,034			41,114			9,611			2,191			578			68,528
Exchange adjustments		—			—			—			(21	)		(5	)		(26	)
Charge for the year		11,340			29,665			5,680			390			331			47,406
Written back on disposals		(603	)		(3,515	)		(598	)		(1,188	)		(224	)		(6,128	)
As at March 31, 2011		25,771			67,264			14,693			1,372			680			109,780
Net book value:
As at March 31, 2011		110,963			445,743			15,911			1,344			1,285			575,246

F-47

11 Property, plant and equipment (continued)

	Land improvements			Buildings and farmland infrastructure			Equipment and machinery			Motor vehicles			Furniture, fixtures and computer equipment			Total
	RMB’000			RMB’000			RMB’000			RMB’000			RMB’000			RMB’000
Cost:
As at April 1, 2011		136,734			513,007			30,604			2,716			1,965			685,026
Exchange adjustments		—			(70	)		—			(36	)		(17	)		(123	)
Additions		100			253			5,765			563			116			6,797
Transfer from construction in progress (note 12)		42,815			160,749			932			—			—			204,496
Disposals
–through disposal of subsidiary		(11,163	)		(8,250	)		(198	)		—			—			(19,611	)
–others		—			(5,030	)		(9,776	)		(198	)		(418	)		(15,422	)
As at March 31, 2012		168,486			660,659			27,327			3,045			1,646			861,163
Accumulated depreciation:
As at April 1, 2011		25,771			67,264			14,693			1,372			680			109,780
Exchange adjustments		—			(4	)		—			(18	)		(4	)		(26	)
Charge for the year		15,559			43,264			6,339			412			311			65,885
Impairment loss		4,055			8,711			5			—			—			12,771
Written back on disposals
–through disposal of subsidiary		(4,686	)		(4,308	)		(119	)		—			—			(9,113	)
–others		(28	)		(2,391	)		(8,690	)		(131	)		(191	)		(11,431	)
As at March 31, 2012		40,671			112,536			12,228			1,635			796			167,866
Net book value:
As at March 31, 2012		127,815			548,123			15,099			1,410			850			693,297

F-48

11 Property, plant and equipment (continued)

	Land improvements		Buildings and farmland infrastructure			Equipment and machinery			Motor vehicles		Furniture, fixtures and computer equipment			Total
	RMB’000		RMB’000			RMB’000			RMB’000		RMB’000			RMB’000
Cost:
As at April 1, 2012		168,486		660,659			27,327			3,045		1,646			861,163
Exchange adjustments		—		49			—			5		2			56
Additions		—		—			4,500			171		75			4,746
Transfer from construction in progress (note 12)		1,000		19,298			—			—		—			20,298
Disposals		—		(3,778	)		(619	)		—		(80	)		(4,477	)
As at June 30, 2012		169,486		676,228			31,208			3,221		1,643			881,786
Accumulated depreciation:
As at April 1, 2012		40,671		112,536			12,228			1,635		796			167,866
Exchange adjustments		—		4			—			3		1			8
Charge for the period		4,150		11,960			1,782			104		69			18,065
Written back on disposals		—		(3,778	)		(548	)		—		(72	)		(4,398	)
As at June 30, 2012		44,821		120,722			13,462			1,742		794			181,541
Net book value:
As at June 30, 2012		124,665		555,506			17,746			1,479		849			700,245

F-49

11 Property, plant and equipment (continued)

At March 31, 2010 and 2011, the Group was still in the process of obtaining the relevant property ownership certificates of certain buildings in the PRC-mainland from the relevant government authorities, the carrying value of which amounted to approximately RMB6,655,000 and RMB6,396,000 respectively. During the year ended March 31, 2012, the Group obtained the property ownership certificates of these buildings.

Farmland infrastructure and certain buildings are built on the leased farmland and the directors of the Company are of the opinion that the Group is entitled to the beneficial title of such farmland infrastructure and buildings over the term of land leases, the carrying value of those farmland infrastructure and buildings amounted to approximately RMB549,107,000, RMB541,702,000, RMB439,347,000 and RMB254,859,000 at June 30, 2012 and March 31, 2012, 2011 and 2010 respectively.

During the year ended March 31, 2012, the Group suspended operations at certain of its cultivation bases. The Group assessed the recoverable amounts of those items of property, plant and equipment with carrying amount of RMB12,771,000 located at suspended cultivation bases and as a result the carrying amount of property, plant and equipment held by these cultivation bases were fully impaired following the Group’s decision to return the related leased farmland to the landlords and dispose of the related property, plant and equipment.

12 Construction in progress

	As of June 30,			As of March 31,
	2012			2012			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000
At beginning of the period/year		52,441			24,294			17,402			18,988
Additions		36,484			232,643			276,319			163,777
Transfer to property, plant and equipment (note 11)		(20,298	)		(204,496	)		(269,427	)		(165,363	)
At end of the period/year		68,627			52,441			24,294			17,402

The construction in progress primarily comprises costs incurred on the land improvements and farmland infrastructure on cultivation bases of the subsidiaries in the PRC-mainland under construction at the respective balance sheet dates.

F-50

13 Lease prepayments

	As of June 30,		As of March 31,
	2012		2012			2011		2010
	RMB’000		RMB’000			RMB’000		RMB’000
Cost:
At beginning of the period/year		1,471		2,828			2,828		2,828
Exchange adjustments		7		—			—		—
Disposals		—		(1,357	)		—		—
At end of the period/year		1,478		1,471			2,828		2,828
Accumulated amortization:
At beginning of the period/year		208		415			312		208
Charge for the period/year		14		87			103		104
Written back on disposals		—		(294	)		—		—
At end of the period/year		222		208			415		312
Net book value:
At end of the period/year		1,256		1,263			2,413		2,516

Lease prepayments represent cost of land use rights paid to the PRC land bureau. The Group has been granted land use rights for a period of 50 years.

F-51

14 Long-term deposits and prepayments

Long-term deposits and prepayments represent prepayments for construction works, deposits to wholesalers and the prepaid marketing, pest control, environmental protection and land sanitation service costs and utilities expenses at the respective balance sheet dates:

	As of June 30,			As of March 31,
	2012			2012			2011		2010
	RMB’000			RMB’000			RMB’000		RMB’000
Construction works		123,436			99,504			3,440		3,910
Prepaid environmental protection service costs		12,926			13,454			15,564		6,517
Prepaid land sanitation service costs		10,764			12,390			18,739		—
Prepaid pest control service costs		11,323			12,215			11,755		13,087
Deposits to wholesalers		4,080			4,080			3,080		3,080
Prepaid utilities expenses		1,773			1,830			2,058		2,309
Prepaid front-end fee in connection with the long-term bank loan		1,244			1,333			1,688		1,189
Prepaid advertising and promotion expenses		—			—			667		1,467
		165,546			144,806			56,991		31,559
Less: Impairment loss related to suspended cultivation bases		(2,052	)		(2,052	)		—		—
		163,494			142,754			56,991		31,559

The Group made prepayments to certain third party vendors during the three months ended June 30, 2012 and the years ended March 31, 2012, 2011 and 2010 for the provision of pest control, environmental protection and land sanitation service for periods of three to ten years.

During the year ended March 31, 2012, the Group suspended the operations of certain cultivation bases and impairment loss of RMB2,052,000 was recognized in respect of prepayments for pest control service and land sanitation service in relation to such cultivation bases.

F-52

15 Subsidiaries

The following list contains the particulars of subsidiaries of the Company as of June 30, 2012 and March 31, 2012, 2011 and 2010. The class of shares held is ordinary unless otherwise stated.

Name of company	Place and date of establishment/ incorporation and operation		Registered capital/issued and fully paid up capital		Ownership interest												Principal activities
					As of June 30,			As of March 31,
					2012			2012			2011			2010
China Linong International Limited		BVI/ Hong Kong March 24, 2006		US$1,754		100	%		100	%		100	%		100	%		Investment holding
Land V. Group Limited		BVI/ Hong Kong March 24, 2005		US$1,050		100	%		100	%		100	%		100	%		Investment holding
China Linong (Hong Kong) Limited		Hong Kong July 22, 2011		HK$10,000		100	%		100	%		—			—			Investment holding
Linong (Fujian) Investment Holdings Limited		The PRC January 19, 2012		Registered capital of RMB200,000,000		100	%		100	%		—			—			Investment holding
Land V. Limited		Hong Kong October 31, 2001		HK$100,000		100	%		100	%		100	%		100	%		Sales of agricultural products
Hong Kong Linong Limited		Hong Kong November 10, 2006		HK$100,000		100	%		100	%		100	%		100	%		Sales of agricultural products
Linong Agriculture Technology (Shenzhen) Co. Limited		The PRC April 23, 2004		HK$10,000,000		100	%		100	%		100	%		100	%		Sales of agricultural products
Linong Agriculture Technology (Liaoyang) Co. Limited (note (b))		The PRC July 7, 2004		US$640,000		—			—			100	%		100	%		Growing, processing and sales of agricultural products
Land V. Limited (Fujian)		The PRC July 23, 2004		HK$15,000,000		100	%		100	%		100	%		100	%		Growing, processing and sales of agricultural products

F-53

15 Subsidiaries (continued)

Name of company	Place and date of establishment/ incorporation and operation		Registered capital/issued and fully paid up capital		Ownership interest												Principal activities
					As of June 30,			As of March 31,
					2012			2012			2011			2010
Land V. Limited (Zhangjiakou)		The PRC October 18, 2006		HK$11,000,000		100	%		100	%		100	%		100	%		Growing, processing and sales of agricultural products
Linong Agriculture Technology (Shantou) Co. Limited (note (a))		The PRC May 9, 2007		US$1,000,000		—			—			100	%		100	%		Growing, processing and sales of agricultural products
Linong Agriculture Technology (Huizhou) Co. Limited		The PRC December 28, 2006		US$10,000,000		100	%		100	%		100	%		100	%		Growing, processing and sales of agricultural products
Xiamen Land V. Group Co. Limited		The PRC March 20, 2007		US$1,000,000		100	%		100	%		100	%		100	%		Growing, processing and sales of agricultural products
Land V. Agriculture Technology (Ningde) Co. Limited		The PRC September 22, 2008		US$2,100,000		100	%		100	%		100	%		100	%		Growing, processing and sales of agricultural products
Fuzhou Land V. Group Co. Limited		The PRC June 12, 2008		US$10,000,000		100	%		100	%		100	%		100	%		Growing, processing and sales of agricultural products
Land V. Agriculture Technology (Zhangzhou) Co. Limited		The PRC June 19, 2008		US$2,000,000		100	%		100	%		100	%		100	%		Growing, processing and sales of agricultural products
Liyuan Agriculture Technology (Quanzhou) Co. Limited		The PRC October 26, 2009		RMB10,000,000		100	%		100	%		100	%		100	%		Growing, processing and sales of agricultural products

F-54

15 Subsidiaries (continued)

Name of company	Place and date of establishment/ incorporation and operation		Registered capital/issued and fully paid up capital		Ownership interest											Principal activities
					As of June 30,			As of March 31,
					2012			2012			2011			2010
Liaoyang Liyuan Agricultural Products Co. Limited		The PRC April 28, 2010		RMB3,000,000		100	%		100	%		100	%		—		Growing, processing and sales of agricultural products
Putian Land V. Group Co. Limited		The PRC December 23, 2010		Registered capital of US$20,000,000		100	%		100	%		100	%		—		Growing, processing and sales of agricultural products
Linong (Sanming) Limited		The PRC May 23, 2012		RMB50,000,000		100	%		—			—			—		Growing, processing and sales of agricultural products
Linong Agriculture Technology (Fuqing) Co. Limited		The PRC May 31, 2012		RMB50,000,000		100	%		—			—			—		Growing, processing and sales of agricultural products
Linong Agriculture Technology (Xianyou) Co. Limited		The PRC June 19, 2012		RMB10,000,000		100	%		—			—			—		Growing, processing and sales of agricultural products

Notes:

(a) The Group disposed of Land V. Limited (Tianjin) during the year ended March 31, 2010 and Linong Agriculture Technology (Shantou) Co. Limited during the year ended March 31, 2012 (see note 26).

(b) Linong Agricultural Technology (Liaoyang) Co. Limited was deregistered during the year ended March 31, 2012.

F-55

16 Biological assets

Biological assets represent the growing crops including vegetables, fresh fruits, tea trees in various cultivation bases located in the PRC-mainland.

(a) Reconciliation of carrying amount of biological assets:

	As of June 30, 2012 RMB’000			As of March 31,
				2012 RMB’000			2011 RMB’000			2010 RMB’000
At beginning of the period/year		84,794			79,711			50,191			25,587
Changes in fair value less costs to sell		22,964			286,927			241,896			152,743
Plantation expenditure		38,107			163,857			135,762			100,478
Harvested crops transferred to inventories		(107,323	)		(445,701	)		(348,138	)		(228,617	)
At end of the period/year		38,542			84,794			79,711			50,191
Non-current portion		7,833			7,697			6,049			5,186
Current portion		30,709			77,097			73,662			45,005
At end of the period/year		38,542			84,794			79,711			50,191

Plantation expenditure comprises those costs that are directly attributable to cultivation of vegetables, fresh fruits and trees on farmland including seeds, fertilizers, pesticide, direct labour, operating lease charges on farmland, depreciation and other direct costs.

F-56

16 Biological assets (continued)

(b) The analysis of carrying amount of biological assets:

	As of June 30, 2012
	Area		Vegetables and fruits		Area		Tea and other trees		Total
	(Mu)		RMB’000		(Mu)		RMB’000		RMB’000
Non-current		—		—		1,150		7,833		7,833
Current		6,848		30,709		—		—		30,709
		6,848		30,709		1,150		7,833		38,542
	As of March 31, 2012
	Area		Vegetables and fruits		Area		Tea and other trees		Total
	(Mu)		RMB’000		(Mu)		RMB’000		RMB’000
Non-current		—		—		1,150		7,697		7,697
Current		7,092		77,097		—		—		77,097
		7,092		77,097		1,150		7,697		84,794
	As of March 31, 2011
	Area		Vegetables and fruits		Area		Tea and other trees		Total
	(Mu)		RMB’000		(Mu)		RMB’000		RMB’000
Non-current		—		—		1,150		6,049		6,049
Current		5,956		73,662		—		—		73,662
		5,956		73,662		1,150		6,049		79,711
	As of March 31, 2010
	Area		Vegetables and fruits		Area		Tea and other trees		Total
	(Mu)		RMB’000		(Mu)		RMB’000		RMB’000
Non-current		—		—		1,150		5,186		5,186
Current		6,833		45,005		—		—		45,005
		6,833		45,005		1,150		5,186		50,191

F-57

16 Biological assets (continued)

(b) The analysis of carrying amount of biological assets (continued):

Vegetables and fruits are to be harvested as agricultural produce while tea and other trees are not agricultural produce but are self-regenerating for sustaining regular harvests of agricultural produce.

Biological assets were stated at fair value less costs to sell as estimated by an independent appraiser using the net present value approach whereby projected future net cash flows were discounted at the rates of 15.8% for vegetables and fruits and 19.3% for tea and other trees as of June 30, 2012 (March 31, 2012: 16.0% and 19.4%; March 31, 2011: 16.6% and 20.2%; March 31, 2010: 14.7% and 18.4%) to provide a current market value of the biological assets.

The discount rates used in the valuation of the biological assets in the PRC-mainland as at each balance sheet date were based on the market-determined pre tax rate.

The principal valuation methodology and assumptions adopted are as follows:

• The present condition of a biological asset excludes any increases in value from additional biological transformation and future activities of the Company such as those related to enhancing the future biological transformation, harvesting and selling; and

• Estimated future net cash flows are referenced to past experience from the management and historical records.

(c) The quantity and amount of fair value less costs to sell of agricultural produce harvested during the period/year:

As of June 30,

As of March 31,

2012

2012

2011

2010

Quantity

Amount

Quantity

Amount

Quantity

Amount

Quantity

Amount

(tons)

RMB’000

(tons)

RMB’000

(tons)

RMB’000

(tons)

RMB’000

Vegetables and fruits

34,947

107,323

144,192

445,701

123,294

348,138

98,076

228,617

(d) Risks related to the Group’s biological assets:

Regulatory and environment risks

The Group is subject to laws and regulations in various locations in which it operates. The Group has established environmental policies and procedures aimed at compliance with local environmental and other laws. Management performs regular reviews to identify environmental risks and to ensure that the systems in place are adequate to manage these risks.

F-58

16 Biological assets (continued)

(d) Risks related to the Group’s biological assets: (continued)

Supply and demand risk

The Group is exposed to risks arising from fluctuations in the price and sales volume of agricultural crops. When possible the Group manages this risk by aligning its harvest volume to market supply and demand. Management performs regular industry trend analysis to ensure that the Group’s pricing structure is in line with the market and to ensure that projected harvest volumes are consistent with the expected demand.

Climate and other risks

The Group’s agricultural crops are exposed to the risk of damage from climatic changes, diseases and other natural forces. The Group has extensive processes in place aimed at monitoring and mitigating those risks, including regular inspections and industry pest and disease surveys.

17 Inventories

(a) Inventories in the consolidated balance sheets comprise:

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Agricultural materials		15,057		10,886		3,992		2,759
Consumables and packing materials		1,370		307		582		179
Agricultural produce		—		—		34		—
		16,427		11,193		4,608		2,938

Agricultural materials represent seeds, fertilizers and pesticides.

F-59

17 Inventories (continued)

(b) Reconciliation of carrying amount of agricultural produce:

	As of June 30,			As of March 31,
	2012			2012			2011			2010
	RMB’000			RMB’000			RMB’000			RMB’000
At beginning of the period/year		—			34			—			—
Harvested crops transferred in from biological assets		107,323			445,701			348,138			228,617
Purchases during the period/year		660			9,645			9,107			9,660
Cost of inventories sold		(107,983	)		(455,380	)		(357,211	)		(238,277	)
At end of the period/year		—			—			34			—

(c) The cost of inventories sold for the three months ended June 30, 2012 and the years ended March 31, 2012, 2011 and 2010 includes the costs of agricultural produce purchased from third party vendors, the actual plantation expenditure and the adjustments to record the inventories at fair value less costs to sell, as follows:

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Purchases of agricultural produce		660		9,679		9,073		9,660
Plantation expenditure		45,360		163,122		129,790		92,905
Biological assets fair value adjustments		61,963		282,579		218,348		135,712
Cost of inventories sold		107,983		455,380		357,211		238,277

F-60

18 Trade and other receivables

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Trade receivables		32,876		29,804		40,131		19,595
Other receivables, deposits and prepayments		31,690		30,057		22,869		17,184
		64,566		59,861		63,000		36,779

All of the trade and other receivables are expected to be recovered within one year.

Included in other receivables, deposits and prepayments as of March 31, 2010 were amounts due from a director of China Linong of RMB46,000, which was unsecured, interest-free and repayable on demand. There was no amount due from a director of China Linong as of June 30, 2012 and March 31, 2012 and 2011.

No allowance for impairment of doubtful debts on trade receivables has been made as of June 30, 2012 and March 31, 2012, 2011 and 2010.

The ageing analysis of trade receivables that are neither individually nor collectively considered to be impaired are as follows:

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Neither past due nor impaired		31,403		29,576		40,001		18,823
Less than 1 month past due		484		7		—		577
1 to 3 months past due		3		1		—		195
3 to 6 months past due		982		216		—		—
6 to 12 months past due		4		4		130		—
		1,473		228		130		772
		32,876		29,804		40,131		19,595

F-61

18 Trade and other receivables (continued)

Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track record with the Group. Based on past experience, management believes that no impairment allowance is necessary in respect of these balances as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral over these balances.

19 Cash

Cash comprises:

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Cash at bank		435,547		469,225		564,069		116,347
Cash in hand		68,959		51,250		34,653		22,860
		504,506		520,475		598,722		139,207

As of June 30, 2012, cash of RMB309,105,000 (March 31, 2012: RMB306,463,000; March 31, 2011: RMB155,992,000; March 31, 2010: RMB56,364,000) is denominated in RMB. RMB is not a freely convertible currency and the remittance of funds out of the PRC is subject to the exchange restriction imposed by the PRC government.

F-62

20 Bank loans

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Non-current liabilities
DEG loan – non-current portion		61,998		75,875		78,835		34,290
Current liabilities
DEG loan – current portion		14,307		—		—		—
Other bank loan		10,000		10,000		6,000		—
		86,305		85,875		84,835		34,290

(a) DEG loan

On November 10, 2009, China Linong entered into a loan agreement (the “Loan Agreement”) with DEG—Deutsche Investitions—Und Entwicklungsgesellschaft mbH (“DEG”) for a loan principal amount of US$18,000,000 (the “DEG Loan”). At June 30, 2012, the DEG Loan had been drawn down to an extent of US$12,000,000 (equivalent to RMB76,305,000) (March 31, 2012: US$12,000,000 (equivalent to RMB75,875,000); March 31, 2011: US$12,000,000 (equivalent to RMB78,835,000); March 31, 2010: US$5,000,000 (equivalent to RMB34,290,000)). The purpose of the DEG Loan is to finance the expansion of the Group’s farmland operations, which involve construction of greenhouse, infrastructure works, irrigation systems and accessory facilities in the cultivation bases of the Group.

(i) Repayment terms and interest rates

The DEG Loan is repayable in equal semi-annual instalment of US$2,250,000 each from May 15, 2013 to November 15, 2016. Any undisbursed loan amounts and any amount outstanding under the DEG Loan which is converted as mentioned in note 20(a)(ii) shall be set off against the repayment installments in inverse order of their maturity.

The DEG Loan bears a floating interest rate at the aggregate of London Interbank Offered Rates for six months United States Dollars deposits (“six months USD LIBOR”) plus 12% per annum from the date of first disbursement of loan to interest conversion date, which is determined to be the date when the loan principal has been fully disbursed or the date on which the bank suspends or terminates the right of China Linong to disbursement of the undrawn portion of the loan principal if the total disbursement has not been made by December 30, 2010. The loan principal was not fully drawn down by the Group by December 30, 2010 and the interest conversion date was then determined to be December 30, 2010.

F-63

20 Bank loans (continued)

(a) DEG loan (continued)

(i) Repayment terms and interest rates (continued)

From the interest conversion date (December 30, 2010) up to May 14, 2013, the DEG Loan bears a fixed interest rate of 13.14% per annum based on the DEG Base Rate plus 12% per annum. During the three months ended June 30, 2012, the DEG Loan carried a weighted average interest rate of 13.14% (year ended March 31, 2012: 13.14%; year ended March 31, 2011: 12.73%; year ended March 31, 2010: 12.28%) per annum. From May 15, 2013 up to November 14, 2016, the DEG Loan will bear a floating interest rate at the aggregate of six months USD LIBOR plus 12% per annum.

(ii) Conversion right

Pursuant to the Loan Agreement, DEG was provided the right to subscribe for new ordinary or preferred shares under certain conditions. In connection with the Company’s IPO, the conversion right of DEG was terminated effective on October 29, 2010.

(iii) Prepayment option

The Group may prepay the whole or any part of the DEG Loan on any payment dates, which is defined as May 15, and November 15, in each year after the date of drawdown and up to November 15, 2016, and the prepaid amount shall be an amount of not less than US$2,250,000 or a multiple thereof. If the Group prepays any amount of the DEG Loan before May 15, 2013 while a fixed interest rate applies, the Group shall pay an amount necessary to compensate DEG for any loss DEG incurs in redeploying the prepaid amount in USD Treasury Bonds with a maturity corresponding to the remaining maturity of the DEG Loan prepaid until May 14, 2013 plus reasonable costs and expenses relating to such prepayment (“compensation”). No compensation will be applied on prepayment made on or after May 15, 2013 as long as prepayments are made on payment dates.

If the Group exercises the prepayment option before May 15, 2013, the redemption amounts, which is the aggregate amount of the prepaid amount and the compensation, would be significantly different from the amortized cost of the DEG Loan. Hence, the embedded derivative is not considered closely related to the DEG Loan and therefore the prepayment option has been accounted for as a derivative liability for which the Group has determined that the fair value is not material.

F-64

20 Bank loans (continued)

(a) DEG loan (continued)

(iv) Share retention and financial covenants

In connection with the DEG Loan, Mr Ma Shing Yung, Chief Executive Officer and the former Chairman and a shareholder of the Company, provided a share retention letter as amended and restated, to the effect that he, Grow Grand Limited, his wholly owned entity, and the Company will not sell, transfer or encumber China Linong’s shares which would cause the number of issued shares in China Linong held by him indirectly through Grow Grand Limited and the Company to fall below 509,770 shares without DEG’s consent. In addition, the Group is subject to the requirements of certain financial covenants in respect of the Loan. As at June 30, 2012, the Group was in compliance with such financial covenants.

(b) Other bank loan

During the year ended March 31, 2012, a subsidiary of the Company obtained a banking facility of RMB40,000,000 which was secured by a personal guarantee given by Mr. Ma Shing Yung, at nil fee, and corporate guarantee given by another subsidiary of the Company. The facility was utilized to the extent of RMB10,000,000 as at June 30, 2012. The bank loan is unsecured, interest bearing at a fixed rate of 6.888% per annum and repayable within one year.

During the year ended March 31, 2011, the Group obtained a short-term bank loan of RMB6,000,000 in the PRC-mainland for general working capital purposes. The short-term bank loan was unsecured, interest bearing at a fixed rate of 6.2658% per annum and repayable within one year. This short-term bank loan was settled on June 21, 2011.

21 Loan from municipal government

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Long-term municipal government loan		—		—		—		1,410

The municipal government loan was obtained by the Group for acquiring a land use right in Liaoyang, Liaoning Province, the PRC and for constructing a processing factory for its agricultural produce on that land. There were no unfulfilled conditions or contingencies relating to the municipal government loan. The municipal government loan was unsecured, interest bearing at a fixed rate of 2% per annum and was repaid in full during the year ended March 31, 2011.

F-65

22 Trade and other payables

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Trade creditors		7,755		9,307		8,214		4,508
Deferred income		5,710		6,103		—		—
Other creditors and accrued charges		17,646		21,645		28,107		14,080
Amount due to a director		—		—		—		40
		31,111		37,055		36,321		18,628

All of the trade and other payables (including amount due to a director) are expected to be settled within one year.

Amount due to a director is unsecured, interest-free and repayable on demand.

23 Equity settled share-based transactions

China Linong has several share option schemes (the “Scheme”) which were adopted on May 22, 2007, April 16, 2009 and March 26, 2010, whereby the board of directors of China Linong is authorized to, at its discretion, invite directors, employees and others providing similar services of China Linong or its subsidiaries to take up options to subscribe for shares in China Linong subject to terms and conditions stipulated therein. The Schemes will terminate after ten years from the dates of adoption and no options may be granted under the Schemes thereafter.

On May 23, 2007, China Linong granted share options to Winsome Group Limited, a company held by certain directors and employees of the Group, to subscribe 66,580 ordinary shares of China Linong (on post-split basis upon the subdivision of ordinary shares into 1,000 shares of nominal value of US$0.001 each pursuant to written board resolutions of China Linong on March 21, 2008). On April 17, 2009 and March 29, 2010, China Linong granted share options to certain directors, employees and others providing similar services of the Group to subscribe 48,246 and 103,184 ordinary shares of China Linong respectively. The options granted vest after one to three years after the date of grant and are exercisable within a period of ten years. Each option gives the holder the right to subscribe for one ordinary share in China Linong.

F-66

23 Equity settled share-based transactions (continued)

On July 17, 2010, the Company granted 218,010,000 share options (“Le Gaga option”) to the options holders of China Linong at a 1,000-for-1 exchange ratio (“Share Options Exchange”). Each Le Gaga option gives the holder the right to subscribe for one ordinary Share in the Company. Upon the grant of Le Gaga options, 218,010 share options representing all outstanding share options of China Linong were cancelled on July 17, 2010. The grant of Le Gaga options was a replacement plan for the cancelled share options of China Linong and no increment fair value was resulted from the Share Options Exchange as the terms and conditions attached to Le Gaga options are the same as those options granted by China Linong on May 23, 2007, April 17, 2009 and March 29, 2010, respectively except for the corresponding adjustment for the exercise price to give effect to the 1,000-for-1 exchange ratio. The number of options and per share data disclosed in notes 23(a), (b) and (c) was adjusted if applicable to give effect of the 1,000-for-1 exchange ratio.

On August 31, 2010 and June 10, 2011, the Company granted shares options under 2010 Share Incentive Plan (adopted by the Company on August 31, 2010) to certain directors, employees and others providing similar services to the Group to subscribe 60,000,000 and 45,871,801 ordinary shares of the Company, respectively. The options granted vest after one to three years after the date of grant and are exercisable within a period of ten years. Each option gives the holder the right to subscribe for one ordinary share in the Company. The exercise price of share options granted on August 31, 2010 and June 10, 2011 is US$0.08 and US$0.143, respectively.

(a) The terms and conditions of the grants are as follows:

	Number of share options								Vesting conditions (from the date		Contractual
	Directors		Consultants		Employees		Total		of grant)		term
Granted on May 23, 2007
		15,526,667		—		6,700,000		22,226,667		One year		10 years
		15,526,667		—		6,700,000		22,226,667		Two years		10 years
		15,526,666		—		6,600,000		22,126,666		Three years		10 years
		46,580,000		—		20,000,000		66,580,000
Granted on April 17, 2009
		8,748,667		5,666,667		1,666,667		16,082,001		One year		10 years
		8,748,667		5,666,667		1,666,667		16,082,001		Two years		10 years
		8,748,666		5,666,666		1,666,666		16,081,998		Three years		10 years
		26,246,000		17,000,000		5,000,000		48,246,000

F-67

23 Equity settled share-based transactions (continued)

(a) The terms and conditions of the grants are as follows: (continued)

	Number of share options								Vesting conditions (from the date		Contractual
	Directors		Consultants		Employees		Total		of grant)		term
Granted on March 29, 2010
		14,394,667		6,000,000		14,000,000		34,394,667		One year		10 years
		14,394,667		6,000,000		14,000,000		34,394,667		Two years		10 years
		14,394,666		6,000,000		14,000,000		34,394,666		Three years		10 years
		43,184,000		18,000,000		42,000,000		103,184,000
Granted on August 31, 2010
		5,600,000		1,800,000		12,600,000		20,000,000		One year		10 years
		5,600,000		1,800,000		12,600,000		20,000,000		Two years		10 years
		5,600,000		1,800,000		12,600,000		20,000,000		Three years		10 years
		16,800,000		5,400,000		37,800,000		60,000,000
Granted on June 10, 2011
		11,085,000		1,000,000		3,205,601		15,290,601		One year		10 years
		11,085,000		1,000,000		3,205,600		15,290,600		Two years		10 years
		11,085,000		1,000,000		3,205,600		15,290,600		Three years		10 years
		33,255,000		3,000,000		9,616,801		45,871,801

F-68

23 Equity settled share-based transactions (continued)

(b) The number and weighted average exercise price of share options are as follows:

	As of June 30,					As of March 31,
	2012					2012					2011						2010
	Weighted average exercise price		Number of options			Weighted average exercise price		Number of options			Weighted average exercise price		��	Number of options			Weighted average exercise price		Number of options
	US$					US$					US$						US$
Outstanding at beginning of the period/year		0.089338		232,363,302			0.076493		197,516,001			0.062780			218,010,000			0.035402		66,580,000
Exercised during the period/year		—		—			0.076699		(7,191,150	)		0.041538			(79,593,999	)		—		—
Forfeited during the period/year		0.08		(1,800,000	)		0.093296		(3,833,350	)		0.08			(900,000	)		—		—
Granted during the period/year		—		—			0.143		45,871,801			0.08			60,000,000			0.074817		151,430,000
Outstanding at end of the period/year		0.089411		230,563,302			0.089338		232,363,302			0.076493			197,516,001			0.062780		218,010,000
Exercisable at end of the period/year		0.0834		126,187,434			0.075855		96,914,833			0.075473			37,462,668			0.035402		44,460,000

F-69

23 Equity settled share-based transactions (continued)

(b) The number and weighted average exercise price of share options are as follows: (continued)

The weighted average share price at the date of exercise for share options exercised during the year ended March 31, 2012 was US$0.10 (2011: US$0.10). No share options were exercised during the three months ended June 30, 2012 or the year ended March 31, 2010.

The options outstanding as of June 30, 2012 had a weighted average remaining contractual life of 7.94 years (March 31, 2012: 8.19 years; March 31, 2011: 8.96 years; March 31, 2010: 8.91 years).

(c) Fair value of share options and assumptions

The fair value of services received in return for share options granted is measured by reference to the fair value of share options granted. The estimate of the fair value of the share options granted is measured based on the Black-Scholes Option Pricing model or the Binomial Option Pricing model. The weighted average life of the share option is used as an input into this model. Expectations of early exercise are incorporated into the Black-Scholes Option Pricing model or the Binomial Option Pricing model.

	At April 17, 2009 (date of grant)		At March 29, 2010 (date of grant)		At August 31, 2010 (date of grant)		At June 10, 2011 (date of grant)
Fair value at measurement date		US$0.02035 - US$0.02385		US$0.02912 - US$0.03209		US$0.04571 - US$0.04862		US$0.06960 - US$0.07760
Share price		US$0.05015		US$0.06061		US$0.083		US$0.135
Exercise price		US$0.07293		US$0.07570		US$0.080		US$0.143
Expected volatility (expressed as average volatility used in the modeling under the Black-Scholes Option Pricing model or the Binomial Option Pricing model)		51.30% - 53.70%		56.90%		57.60% - 58.70%		53.00%
Option life (expressed as weighted average life used in the modeling under the Black-Scholes Option Pricing model or the Binomial Option Pricing model)		5.5 - 6.5 years		5.5 -6.5 years		5.5 - 6.5 years		10 years
Expected dividends		—		—		—		—
Risk-free interest rate (based on USD China Sovereign Bond Rate)		3.75% - 3.90%		2.96% - 3.26%		2.51% - 2.75%		4.1184%

F-70

23 Equity settled share-based transactions (continued)

(c) Fair value of share options and assumptions (continued)

The expected volatility is based on the average annualized standard deviations of the continuously compounded rates of return on the average share prices of similar companies as of the measurement date publicly quoted. Expected dividends are based on historical record. Changes in the subjective input assumptions could materially affect the fair value estimate.

Share options were granted under a service condition. This condition has not been taken into account in the grant date fair value measurement of the services received. There were no market conditions associated with the share option grants.

24 Income tax in the consolidated balance sheets

(a) Current taxation in the consolidated balance sheets represents:

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Provision for PRC income/ withholding tax for the period/year		—		3,096		—		890
Balance in respect of prior years		6,537		3,441		4,082		3,192
		6,537		6,537		4,082		4,082

F-71

24 Income tax in the consolidated balance sheets (continued)

(b) Deferred tax assets recognized

The component of deferred tax assets recognized in the consolidated balance sheets and the movements during the three months ended June 30, 2012 and the year ended March 31, 2012 are as follows:

	Property, plant and equipment and lease prepayment			Deferred income			Total
	RMB’000			RMB’000			RMB’000
Deferred tax arising from:
At April 1, 2011		—			—			—
Credited to profit or loss		230			1,841			2,071
Exchange difference		(1	)		(10	)		(11	)
At March 31, 2012		229			1,831			2,060
At April 1, 2012		229			1,831			2,060
Charged to profit or loss		—			(128	)		(128	)
Exchange difference		1			10			11
At June 30, 2012		230			1,713			1,943

(c) Deferred tax assets not recognized

The Group has not recognized deferred tax assets as of June 30, 2012 in respect of cumulative tax losses of RMB30,523,000 and RMB7,382,000 (March 31, 2012: RMB29,282,000 and RMB7,297,000; March 31, 2011: RMB27,714,000 and RMB6,253,000; March 31, 2010: RMB24,282,000 and RMB5,570,000) arising from the subsidiaries in Hong Kong and in the PRC-mainland, respectively, as it is not probable that future taxable profits against which losses can be utilized will be available in the relevant entities. The tax losses of the subsidiaries in Hong Kong do not expire under current tax legislation while those of the subsidiaries in the PRC-mainland will expire in five years.

The cumulative tax losses of the subsidiaries in the PRC-mainland amounted to RMB7,382,000 as of June 30, 2012, of which RMB1,308,000, RMB1,700,000, RMB1,560,000, RMB1,208,000, RMB1,210,000 and RMB396,000 will expire, if unused, by December 31, 2012, 2013, 2014, 2015, 2016 and 2017 respectively.

F-72

24 Income tax in the consolidated balance sheets (continued)

(d) Deferred tax liabilities not recognized

At June 30, 2012, deferred tax liabilities not recognized in respect of temporary differences relating to the undistributed profits of PRC subsidiaries amounted to RMB575,867,000 (March 31, 2012: RMB531,015,000; March 31, 2011: RMB348,264,000; March 31, 2010: RMB177,313,000) as the Group controls the dividend policy of these PRC subsidiaries and it has been determined that it is probable that these accumulated profits will not be distributed in the foreseeable future by the PRC subsidiaries.

25 Equity

(a) Share capital

(i) Share capital of the Company

The Company was incorporated in the Cayman Islands on May 6, 2010 with an authorized share capital of US$50,000,000 divided into 5,000,000,000 shares of US$0.01 each. On the date of incorporation, 1 share of US$0.01 was issued at par as initial capital of the Company. After the Reorganization as described in note 1, the Company became the holding company of the Group on July 16, 2010 and the then shareholders of China Linong became the shareholders of the Company with the same percentage holdings.

Upon completion of the Reorganization, the Company had 1,050,000,000 outstanding ordinary shares of US$0.01 each and 703,997,000 outstanding preferred shares (Series A: 215,060,000 shares; Series A1: 80,710,000 shares; Series B: 329,100,000 shares; Series B1: 79,127,000 shares) of US$0.01 each. All the rights, terms and conditions attached to ordinary shares and each class of preferred shares of the Company were the same as those of China Linong.

During the year ended March 31, 2011, 79,593,999 ordinary shares were issued in respect of the exercise of options.

On October 29, 2010, 460,000,000 ordinary shares of US$0.01 each were issued and offered for subscription at a price of US$0.19 per share upon the IPO of the Company. The net proceeds from the IPO, after deducting share issuing costs of RMB49,885,000, amounted to approximately RMB534,891,000. In connection with the IPO, all preferred shares were automatically converted into ordinary shares on an one-to-one basis on October 29, 2010.

During the year ended March 31, 2012, 7,191,150 ordinary shares were issued in respect of the exercises of options.

F-73

25 Equity (continued)

(a) Share capital (continued)

(i) Share capital of the Company (continued)

	As of June 30,				As of March 31,
	2012				2012				2011
	Number of shares		Amount		Number of shares		Amount		Number of shares			Amount
			RMB’000				RMB’000					RMB’000
Authorized:
Ordinary shares of US$0.01 each		5,000,000,000		338,590		5,000,000,000		338,590		5,000,000,000			338,590
Issued:
Ordinary shares:
At beginning of the period/year		2,300,782,150		155,391		2,293,591,000		154,938		—			—
Issue of ordinary shares upon incorporation		—		—		—		—		1			—
Issue of ordinary shares upon the Reorganization		—		—		—		—		1,050,000,000			71,104
Exercise of share options		—		—		7,191,150		453		79,593,999			5,383
Issue of ordinary shares upon the IPO		—		—		—		—		460,000,000			30,778
Automatic conversion of preferred shares into ordinary shares upon the IPO		—		—		—		—		703,997,000			47,673
At end of the period/year		2,300,782,150		155,391		2,300,782,150		155,391		2,293,591,000			154,938
Preferred shares:
At beginning of the period/year		—		—		—		—		—			—
Issue of preferred shares upon the Reorganization		—		—		—		—		703,997,000			47,673
Automatic conversion of preferred shares to ordinary shares upon the IPO		—		—		—		—		(703,997,000	)		(47,673	)
At end of the period/year		—		—		—		—		—			—

F-74

25 Equity (continued)

(a) Share capital (continued)

(ii) Share capital of China Linong

On January 18, 2010, China Linong issued 79,127 Series B1 Preferred Shares for US$75.7 per share pursuant to the Series B1 Shareholders Agreement dated January 18, 2010. The net proceeds of RMB40,656,000, after deducting share issuing expenses of RMB398,000, were credited to the capital.

	As of March 31,
	2011						2010
	Number of shares			Amount			Number of shares		Amount
				RMB’000					RMB’000
Authorized:
Ordinary shares of US$0.001 each		50,703,997			406			1,050,000		9
Preferred shares of US$0.001 each		—			—			703,997		6
Issued:
Ordinary shares:
At beginning of the year		1,050,000			9			1,050,000		9
Effect of share subdivision from US$1 each to US$0.001 each		—			—			—		—
Re-designation of preferred shares to ordinary shares		703,997			6			—		—
At end of the year		1,753,997			15			1,050,000		9
Preferred shares:
At beginning of the year		703,997			6			624,870		5
Re-designation of preferred shares to ordinary shares		(703,997	)		(6	)		—		—
Issue of Series B1 Preferred Shares		—			—			79,127		1
At end of the year		—			—			703,997		6

F-75

25 Equity (continued)

(a) Share capital (continued)

(iii) Ordinary shares

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All ordinary shares rank equally with regard to the Company’s residual assets.

(iv) Preferred shares

As described in notes 9(a) and 25(a)(i), on October 29, 2010, all preferred shares were automatically converted into ordinary shares on an one-to-one basis upon the Company’s IPO. Details of the preferred shares outstanding prior to the conversion are provided below.

Each preferred shareholder carries a number of votes equal to the number of ordinary shares then issuable upon its conversion into ordinary shares at the date for determination of the shareholder entitled to vote on such matters, or, if no such date is established, at the date such vote is taken or any written consent of shareholders is solicited.

The holders of preferred shares are entitled to receive dividends, which are at the discretion of the Company, as declared from time to time and subject to the approval as disclosed in note 25(a)(iii).

On liquidation of the Company, the holders of Series B1 Preferred Shares would be entitled to receive an amount equal to 100% of the issue price of Series B1 Preferred Shares plus all accrued or declared but unpaid dividends (“Series B1 Preference Amount”). After the full distribution of Series B1 Preference Amount, the holders of Series B Preferred Shares would be entitled to receive, prior to any distribution to holders of Series A1 Preferred Shares, Series A Preferred Shares and holders of ordinary shares, an amount equal to 100% of the issue price of Series B Preferred Shares plus all accrued or declared but unpaid dividends (“Series B Preference Amount”). After the full distribution of Series B1 and Series B Preference Amount, the holders of Series A1 Preferred Shares would be entitled to receive, prior to any distribution to the holders of Series A Preferred Shares and holders of ordinary shares, an amount equal to 100% of the issue price of Series A1 Preferred Shares plus all accrued or declared but unpaid dividends (“Series A1 Preference Amount”). After the full distribution of Series B1, Series B and Series A1 Preference Amount, the holders of Series A Preferred Shares would be entitled to receive an amount equal to 100% of the issue price of Series A Preferred Shares plus all accrued or declared but unpaid dividends (“Series A Preference Amount”). After full distribution of Series B1, Series B, Series A1 and Series A Preference Amounts, any remaining funds or assets of the Company would be distributed on a pro-rata basis among the holders of preferred shares (on as converted basis) together with the holders of ordinary shares.

F-76

25 Equity (continued)

(a) Share capital (continued)

(iv) Preferred shares (continued)

The rights of the preferred shareholders to convert the shares into ordinary shares are summarized as follows:

• Conversion rights are exercisable at any time at the preferred shareholders’ option, to convert all or any portion of preferred shares into ordinary shares of the Company unless automatically converted as described.

• The initial conversion price for each class of preferred shares is the issue price subject to adjustments from time to time in the event of any share splits, share combinations, share dividends, recapitalizations and similar events.

• The Series A Preferred Shares and Series A1 Preferred Shares would automatically be converted into ordinary shares, at the then applicable conversion price, upon

(1) the date specified by written consent or agreement of the holders of at least 50% of the Series A Preferred Shares and Series A1 Preferred Shares outstanding, or

(2) the closing of an underwritten public offering of ordinary shares of the Company in the United States of America with gross proceeds to the Company in excess of US$70,000,000 and a pre-public offering market capitalization of at least US$300,000,000, or in a similar public offering of the ordinary shares of the Company in another jurisdiction which results in the ordinary shares trading publicly on a recognized regional or national securities exchange (“Qualified Public Offering”).

• The Series B Preferred Shares and Series B1 Preferred Shares would automatically be converted into ordinary shares, at the then applicable conversion price, upon the closing of a Qualified Public Offering.

• No fractional ordinary share would be issued upon conversion of the preferred shares. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company would pay cash equal to such fraction multiplied by the then effective respective conversion price.

F-77

25 Equity (continued)

(b) Nature and purpose of reserves

(i) Share premium

The share premium represents the difference between the par value of the ordinary shares of the Company and proceeds received from the issue of the ordinary shares of the Company. Under the Companies Law of the Cayman Islands, the share premium account of the Company is distributable to the shareholders of the Company provided that immediately following the date on which the dividend is proposed to be distributed, the Company will be in a position to pay off its debts as they fall due in the ordinary course of business.

(ii) Treasury shares

Treasury shares comprise the cost of the Company’s American Depositary Shares (“ADS”) held by the Company. As of June 30, 2012, the Company held 387,037 of its own ADSs (March 31, 2012: 387,037; March 31, 2011 and March 31, 2010: Nil).

(iii) Statutory reserve

Transfers from retained earnings to statutory reserves were made in accordance with the relevant PRC rules and regulations and the articles of association of the Company’s subsidiaries incorporated in the PRC and were approved by the respective board of directors.

Statutory surplus reserve

The subsidiaries in the PRC-mainland are required to transfer 10% of their net profit, as determined in accordance with the PRC accounting rules and regulations, to statutory surplus reserve until the reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of a dividend to shareholders.

Statutory surplus reserve can be used to make good previous years’ losses, if any, and may be converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares currently held by them, provided that the balance after such issue is not less than 25% of their registered capital.

(iv) Exchange reserve

The exchange reserve comprises all foreign exchange differences arising from the translation of the financial statements of entities outside the PRC-mainland. The reserve is dealt with in accordance with the accounting policy set out in note 2(v).

F-78

25 Equity (continued)

(b) Nature and purpose of reserves (continued)

(v) Capital reserve

Capital reserve comprises the fair value of the actual or estimated number of unexercised share options granted to directors and other eligible participants of the Group recognized in accordance with the accounting policy adopted for share based payments in note 2(r)(ii).

(vi) Other reserve

(1) Under the 2006 Reorganization, China Linong acquired the entire equity interest in Land V. Group Limited by issuing 1,050 new ordinary shares as consideration. The difference between the carrying amount of share capital and share premium of Land V. Group Limited and the nominal value of the share issued by China Linong was credited to other reserve.

(2) Under the Reorganization, the Company issued ordinary shares and preferred shares to the then ordinary shareholders and preferred shareholders of China Linong in exchange for all outstanding ordinary shares and preferred shares of China Linong at a 1,000-for-1 exchange ratio. The difference between the carrying amount of share capital and share premium of China Linong and the nominal value of the shares issued by the Company was credited to other reserve.

(c) Share repurchase

On September 27, 2011, the Company’s Board of Directors authorized a program to repurchase the Company’s ADSs, each representing 50 ordinary shares of the Company, up to US$10 million over a period of six months or at the time when the repurchase program is revoked or varied by the Board of Directors, whichever occurs earlier. During the year ended March 31, 2012, the Company repurchased a total of 387,037 of its ADSs.

(d) Capital management

The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, so that it can continue to provide returns for its shareholders by pricing products commensurately with the level of risk and by securing access to finance at a reasonable cost.

The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher returns to the equity shareholders of the Group that might be possible with higher level of borrowings and the advantages and security afforded by a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

F-79

25 Equity (continued)

(e) Capital management (continued)

The Group maintains sufficient capital (which comprises all components of equity) such that net current assets are maintained, i.e. it has the financial resources to repay all its current liabilities when they fall due.

The Group was not subject to any externally imposed capital requirements during the periods/years presented in these financial statements.

26 Disposal of subsidiaries

(a) Disposal of Linong Agriculture Technology (Shantou) Co Limited

During the year ended March 31, 2012, the Group disposed of its 100% equity interests in Linong Agriculture Technology (Shantou) Co Limited (the “Shantou Subsidiary”) to an independent third party for a consideration of RMB7,600,000 which was settled by cash.

Net assets disposed of at the date of disposal:

	RMB’000
Property, plant and equipment		10,498
Trade and other receivables		1,612
Trade and other payables		(7,224	)
Current taxation		(1,149	)
Cash and cash equivalents		3,863
Net assets disposed of		7,600
Satisfied by cash		(7,600	)
Release of exchange reserve upon disposal of the Shantou Subsidiary		(1,309	)
Gain on disposal of the Shantou Subsidiary		(1,309	)

(b) Disposal of Land V. Limited (Tianjin)

During the year ended March 31, 2010, the Group disposed of its 100% equity interest in Land V. Limited (Tianjin) (the “Tianjin Subsidiary”) to an entity controlled by a former director of China Linong (see note 28) for a consideration of RMB6,004,000 which was satisfied by a waiver of payables to the Tianjin Subsidiary.

F-80

26 Disposal of subsidiaries (continued)

(b) Disposal of Land V. Limited (Tianjin) (continued)

Net assets disposed of at the date of disposal:

	RMB’000
Trade and other receivables		6,005
Net assets disposed of		6,005
Satisfied by wavier of amounts due to the Tianjin Subsidiary		(6,004	)
Release of exchange reserve upon disposal of the Tianjin Subsidiary		(541	)
Gain on disposal of the Tianjin Subsidiary		(540	)

27 Financial risk management and fair values

Exposure to credit, currency and liquidity risks arises in the normal course of the Group’s business. The Group does not have significant exposure to interest rate risk. The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.

(a) Credit risk

The Group’s credit risk is primarily attributable to trade and other receivables. Management has a credit policy in place and the exposures to these credit risks are monitored on an ongoing basis.

Customers are either required to settle in cash on delivery or granted with credit term. Individual credit evaluations are performed on all customers requiring credit over a certain amount. These evaluations focus on the customer’s past history of making payments when due and current ability to pay, and take into account information specific to the customer. Trade receivables are generally due within 5 to 60 days from the date of delivery. Debtors with balances that are overdue are requested to settle all outstanding balances before any further credit is granted. Normally, the Group does not obtain collateral from customers.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The default risk of the industry and country in which customers operate also has an influence on credit risk but to a lesser extent. At the balance sheet date, the Group has certain concentrations of credit risk as 6.5% (March 31, 2012: 5.1%; March 31, 2011: 4.4%; March 31, 2010: 8.0%) and 17.3% (March 31, 2012: 13.0%; March 31, 2011: 14.8%; March 31, 2010: 15.1%) of the total trade and other receivables were due from the largest customer and the five largest customers respectively.

F-81

27 Financial risk management and fair values (continued)

(a) Credit risk (continued)

Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from trade and other receivables are set out in note 18.

(b) Currency risk

(i) Forecast transactions

The Group is exposed to currency risks arising from the intra-group purchases by the subsidiaries outside the PRC-mainland from those subsidiaries in the PRC-mainland. Such purchases are denominated in RMB. The Group ensures that the net exposure is kept to an acceptable level by selling Hong Kong dollars and United States dollars at spot rates where necessary to address short-term imbalances.

(ii) Exposure to currency risk

The following table details the Group’s exposure at the balance sheet date to currency risk arising from recognized assets or liabilities denominated in a currency other than the functional currency of the entity to which they relate. For presentation purposes, the amounts of the exposure are shown in RMB, translated using the spot rate at the year end. Differences resulting from the translation of the financial statements of operations outside the PRC-mainland into the Group’s presentation currency are excluded.

	As of June 30, 2012 (expressed in Renminbi)
	Hong Kong dollars			United States dollars			Renminbi
	RMB’000			RMB’000			RMB’000
Trade and other receivables		—			—			79,057
Cash and cash equivalents		2			22,355			26,679
Trade and other payables		(17,908	)		(23,068	)		(617	)
Net exposure arising from recognized assets and liabilities		(17,906	)		(713	)		105,119

F-82

27 Financial risk management and fair values (continued)

(b) Currency risk (continued)

(ii) Exposure to currency risk (continued)

	As of March 31, 2012 (expressed in Renminbi)
	Hong Kong dollars			United States dollars			Renminbi
	RMB’000			RMB’000			RMB’000
Trade and other receivables		—			—			78,197
Cash and cash equivalents		210			2			26,837
Trade and other payables		(17,510	)		(22,282	)		(587	)
Net exposure arising from recognized assets and liabilities		(17,300	)		(22,280	)		104,447
	As of March 31, 2011 (expressed in Renminbi)
	Hong Kong dollars			United States dollars			Renminbi
	RMB’000			RMB’000			RMB’000
Trade and other receivables		19,363			—			52,880
Cash and cash equivalents		9,849			24,271			98,567
Trade and other payables		(21,506	)		(175,388	)		(3,036	)
Net exposure arising from recognized assets and liabilities		7,706			(151,117	)		148,411
	As of March 31, 2010 (expressed in Renminbi)
	Hong Kong dollars			United States dollars			Renminbi
	RMB’000			RMB’000			RMB’000
Trade and other receivables		7,370			—			42,553
Cash and cash equivalents		7,667			20,992			—
Trade and other payables		(20,568	)		(70,419	)		—
Net exposure arising from recognized assets and liabilities		(5,531	)		(49,427	)		42,553

F-83

27 Financial risk management and fair values (continued)

(b) Currency risk (continued)

(iii) Sensitivity analysis

The following table indicates the instantaneous change in the Group’s profit after tax that would arise if foreign exchange rates to which the Group has significant exposure at the balance sheet date had changed at that date, assuming all other risk variables remained constant. In this respect, it is assumed that the pegged rate between the Hong Kong dollars and the United States dollars would be materially unaffected by any changes in movement in value of the United States dollars against other currencies.

	As of June 30,						As of March 31,
	2012						2012						2011						2010
	Increase/ (decrease) in foreign exchange rates			Decrease/ (increase) in loss after tax			Increase/ (decrease) in foreign exchange rates			Increase/ (decrease) in profit after tax			Increase/ (decrease) in foreign exchange rates			Increase/ (decrease) in profit after tax			Increase/ (decrease) in foreign exchange rates			Increase/ (decrease) in profit after tax
				’000						’000						’000						’000
Renminbi (note (a))		5	%		5,287			5	%		5,252			5	%		7,421			5	%		2,128
		(5	)%		(5,287	)		(5	)%		(5,252	)		(5	)%		(7,421	)		(5	)%		(2,128	)
Hong Kong		5	%		(895	)		5	%		(865	)		5	%		928			5	%		(948	)
Dollars (note (b))		(5	)%		895			(5	)%		865			(5	)%		(928	)		(5	)%		948
United States		5	%		(36	)		5	%		(1,114	)		5	%		(1,258	)		5	%		865
Dollars (note (b))		(5	)%		36			(5	)%		1,114			(5	)%		1,258			(5	)%		(865	)

Results of the analysis as presented in the above table represent an aggregation of the effects on each of the group entities’ profit after tax measured in the respective functional currencies, translated into RMB at the exchange rate ruling at the balance sheet date for presentation purposes.

The sensitivity analysis assumes that the change in foreign exchange rates had been applied to re-measure those financial instruments held by the Group which expose the Group to foreign currency risk at the balance sheet date, including inter-company payables and receivables within the Group which are denominated in a currency other than the functional currencies of the lender or the borrower. The analysis excludes differences that would result from the translation of the financial statements of operations outside the PRC-mainland into the Group’s presentation currency. The analysis is performed on the same basis for all the years presented.

Notes:

(a) Arising from subsidiaries outside the PRC-mainland whose functional currency is Hong Kong dollars.

(b) Arising from PRC subsidiaries whose functional currency is RMB.

F-84

27 Financial risk management and fair values (continued)

(c) Liquidity risk

The Group’s policy is to regularly monitor liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

The following tables show the remaining contractual maturities at the balance sheet date of the Group’s non-derivative financial liabilities, which are based on the contractual undiscounted cashflows (including interest payment computed using contractual rates) and the earliest date the Group can be required to pay:

			Contractual undiscounted cash outflow
	Balance sheet carrying amount		Within 1 year or on demand		More than 1 year but less than 2 years		More than 2 years but less than 5 years		Total
	RMB’000		RMB’000		RMB’000		RMB’000		RMB’000
June 30, 2012
Trade and other payables		31,111		31,111		—		—		31,111
Bank loans		86,305		34,786		35,380		36,608		106,774
		117,416		65,897		35,380		36,608		137,885
March 31, 2012
Trade and other payables		37,055		37,055		—		—		37,055
Bank loans		85,875		20,659		37,147		53,762		111,568
		122,930		57,714		37,147		53,762		148,623
March 31, 2011
Trade and other payables		36,321		36,321		—		—		36,321
Bank loans		84,835		16,735		10,359		91,380		118,474
		121,156		53,056		10,359		91,380		154,795
March 31, 2010
Trade and other payables		18,628		18,628		—		—		18,628
Bank loan		34,290		4,657		4,657		41,991		51,305
Loan from municipal government		1,410		—		778		784		1,562
		54,328		23,285		5,435		42,775		71,495

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27 Financial risk management and fair values (continued)

(d) Nature risk

The Group’s revenue depends significantly on the ability to grow crops and harvest agricultural produce at an adequate level. The ability to grow crops may be affected by unfavorable local weather conditions and natural disasters. Weather conditions such as floods, droughts and windstorms and natural disasters such as fire, disease, insect infestation and pests are examples of such events. The occurrence of severe weather conditions or natural disasters may affect the growth of crops, which in turn may have a material adverse effect on the Group’s ability to harvest the agricultural produce in sufficient quantities and in a timely manner.

(e) Price risk

The market prices of crops and agricultural produce are constantly affected by both demand and supply cycle of the agricultural industry. As a result, movements of the market prices would have significant impact on the Group’s earnings. Whilst efforts have been made by management to implement certain strategies, there can be no assurance that the Group will be fully shielded from the negative effects of cyclical movements of the market prices of crops and agricultural produce.

(f) Fair values

The amounts due from/(to) directors are unsecured, interest-free and repayable on demand. Given these terms, it is not meaningful to disclose their fair values.

All other financial instruments are carried at amounts not materially different from their fair values as of June 30, 2012 and March 31, 2012, 2011 and 2010 because of the immediate and short-term maturities of those financial instruments.

28 Material related party transactions

(a) During the three months ended June 30, 2012 and the years ended March 31, 2012, 2011 and 2010, the directors of the Company are of the view that the following are related parties of the Group:

Name of party	Relationship
Ma Shing Yung	Chief Executive Officer and former Chairman of the Company and China Linong
Lui Ming Ho	Director of China Linong
New Oriental Group Limited (“New Oriental”)	An entity controlled by Luan Li, a former director of China Linong

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28 Material related party transactions (continued)

(b) In addition to the transactions and balances disclosed elsewhere in these financial statements, the Group entered into the following material related party transactions:

(i)

	As of June 30,		As of March 31,
	2012		2012		2011			2010
	RMB’000		RMB’000		RMB’000			RMB’000
Amount due to a director—Ma Shing Yung
At beginning of the period/year		—		—		40			41
Exchange adjustments		—		—		—			(1	)
Repayment to Ma Shing Yung		—		—		(40	)		—
At end of the period/year (note 22)		—		—		—			40
Amount due from a director of China Linong—Lui Ming Ho
At beginning of the period/year		—		—		46			48
Exchange adjustments		—		—		—			(1	)
Advance to Lui Ming Ho		—		—		—			2
Repayment from Lui Ming Ho		—		—		(46	)		(3	)
At end of the period/year (note 18)		—		—		—			46

Amount due to a director of the Company—Ma Shing Yung represents the advances received from Ma Shing Yung for financing the operations of the Group.

Amount due from a director of China Linong—Lui Ming Ho represents the advances made by the Group to Lui Ming Ho for operating expenses to be incurred in business development activities.

(ii) During the year ended March 31, 2010, the Group disposed of one of the subsidiaries (see note 26) to New Oriental.

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28 Material related party transactions (continued)

(b) (continued)

(iii) Remuneration for key management personnel of the Group is as follows:

	Three months ended June 30,				Years ended March 31,
	2012		2011		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000		RMB’000
			(unaudited)
Basic salaries, allowances and benefits in kind		1,383		1,505		6,474		5,501		2,462
Equity settled share-based payment expenses		3,176		3,535		16,909		15,732		4,096
		4,559		5,040		23,383		21,233		6,558

Total remuneration is included in “staff costs” (see note 7(a)).

29 Commitments and contingent liabilities

(a) Capital commitments

Capital commitments outstanding at June 30, 2012 and March 31, 2012, 2011 and 2010 not provided for in the financial statements are as follows:

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Contracted for		147,759		126,998		46,188		30,268
Authorized but not contracted for		229,726		252,140		172,363		136,313
		377,485		379,138		218,551		166,581

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29 Commitments and contingent liabilities (continued)

(b) Operating lease commitments

The total future minimum lease payments under non-cancellable operating leases are payable as follows:

	As of June 30,		As of March 31,
	2012		2012		2011		2010
	RMB’000		RMB’000		RMB’000		RMB’000
Within 1 year		14,308		14,479		10,592		7,343
After 1 year but within 5 years		56,128		56,333		44,607		32,486
After 5 years		130,391		133,675		106,955		70,103
		200,827		204,487		162,154		109,932

The Group leases a number of properties and cultivation bases under operating leases. The leases typically run for an initial period of one to fifteen years, with an option to renew the lease when all terms are renegotiated. None of the leases includes contingent rentals.

(c) Environmental contingencies

The Group’s operations are regulated by various laws and regulations. Laws and regulations protecting the environment have generally become more stringent in recent years and could become more stringent in the future. Violation of these laws and regulations could impose significant costs, expenses, penalties and liabilities on the Group. The financial position of the Group may be adversely affected by any environmental liabilities which may be imposed under such new environmental laws and regulations. The directors of the Company are not aware of any environmental liabilities as of June 30, 2012 and March 31, 2012, 2011 and 2010. The directors of the Company are also not aware of any significant costs, expenses, penalties and liabilities resulting from violation of existing laws and regulations.

(d) Contingent liabilities

As at June 30, 2012, a subsidiary of the Company had issued a corporate guarantee in respect of banking facility granted to another subsidiary of the Company which would remain in force so long as the subsidiary has drawn down under the banking facility. Under the corporate guarantee, the subsidiary is liable for all and any of the borrowings from the bank which is the beneficiary of the guarantee.

As at June 30, 2012, the directors of the Company did not consider it probable that a claim will be made against the Group under the above guarantee. The maximum liability of the Group as at June 30, 2012 under the corporate guarantee is the amount of the facilities utilized by the subsidiary of RMB10,000,000.

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30 Possible impact of amendments, new standards and interpretations issued but not yet effective for the three months ended June 30, 2012

Up to the date of issue of these financial statements, the IASB has issued a number of amendments and five new standards which are not yet effective for the three months ended June 30, 2012 and which have not been adopted in these financial statements. These include the following which may be relevant to the Group.

	Effective for accounting periods beginning on or after
Amendments to IAS 1,Presentation of financial statements —Presentation of items of other comprehensive income	July 1, 2012
IFRS 10,Consolidated financial statements	January 1, 2013
IFRS 12,Disclosure of interests in other entities	January 1, 2013
IFRS 13,Fair value measurement	January 1, 2013
Annual improvements to IFRSs 2009-2011 Cycle	January 1, 2013
Amendments to IAS 32,Financial instruments: Presentation—Offsetting financial assets and financial liabilities	January 1, 2014
IFRS 9,Financial instruments	January 1, 2015

The Group is in the process of making an assessment of what the impact of these amendments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements of operations and financial position.

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