China Agri Industries : Announces 2016 Annual Results

Hong Kong, 29 March 2017 - China Agri-Industries Holdings Limited ("China Agri" or the "Company"; stock code: 606.HK), a leading agribusiness and food processing company in China, today announced its annual results for the year ended 31 December 2016.

In 2016, the agricultural processing industry faced fierce competition and the restructuring trend became more pronounced. Overcapacity remained a drag on the industry, together with volatility in the oilseeds market and Renminbi depreciation. Despite these, lower international soybean prices and lower domestic corn prices eased cost pressures in the second half of the year, leading to an improved profit margin.

The Company focused on operational stability and undertook a variety of measures to address the weak market demand. Regional development and joint marketing efforts helped to boost sales volume of major products significantly, as well as improving capacity utilisation and offsetting a year-over-year decline in average selling prices. Total revenue increased 8.0 % year-on-year to HK$89,163 million.

Meanwhile, benefited from the established and enhanced core competencies including market intelligence, risk management, brand marketing, R&D and supply-chain management, the Company successfully captured business opportunities from market and policy reforms to re-emerge as the leading Company in the industry in terms of business scale and operating performance. For the year ended 31 December 2016, the profit attributable to owners of the Company is HK$1.419 billion, a substantial turnaround year-on-year.

1. Oilseeds Processing Business: Sales grew, profit rebounded substantially

   In 2016, oilseeds processing industry witnessed a relatively volatile business environment. During the second half of the year, with a decline of soybean prices and recovery in demand for meals, crushing margin improved for the whole industry. By making good use of market intelligence and hedging strategy, the segment was able to improve performance on the procurement side, in terms of costs and timing, substantially improving operating profit to HK$1.046 billion. By diversifying services and providing customised solutions, the Company increased its utilisation rate. Sales of oilseeds meals and vegetable oils were 7,870,000 metric tons and 3,788,000 metric tons, increasing 18.5% and 29.2% year-on-year respectively.

2. Biochemical and Biofuel Business: Enjoyed favourable policy reforms and market opportunities, further enhanced lean management and product innovation

   Against the backdrop of pricing policy reforms, Company succeeded in using multiple sourcing channels to reduce material costs. Supported by the further strengthened lean management system, gross profit margin rose 8.1 percentage point year-on-year to 12.3%, boosting operating profit to HK$607 million. A deepening of market penetration combined with better customised service led to steady growth in sales to key customers. The Company made a breakthrough in special-purpose products rollouts, including special corn starch with low bacteria, medical dextrin, and packaged fructose. Sales of these high-value added products grew significantly with an expanded sales network.

3. Rice Processing and Trading Business:Brandedricebusiness developedsteadily, profitability further improved In 2016, revenue from branded products, international trading and storage services totalled HK$9.196 billion. Operating profit rose significantly year-on-year to HK$191 million. For branded rice business, the Company kept increasing the number of point-of-sale to boost sales volume through both online and offline markets. At the same time, the Company increased its investment in R&D and launched new medium-to-high-end products in order to gain price premiums. In its international trading business, the Company leveraged client networks and trading experiences to explore new export markets in Africa and the Middle East. Higher sales volumes helped to increase the capacity utilisation rate of processing plants and reduce fixed costs per unit. As a result, gross margin gained 3.3 percentage points on an annual basis to 12.1%.
4. Wheat Processing Business: Used cost control competitiveness to boost sales and profitability

   In 2016, speed up of the consolidation intensified the fierce competition among wheat processing industry. China Agri used its integrated operational model to secure a stable supply of feedstock to meet market demand. The Company made a breakthrough in production process that greatly lowered costs and improved gross profit margin by 1.8 percentage points to 8.5%. Special-purpose flour sales to existing key customers increased based on quality and cost advantages. Sales channels and resources from our rice products were used to boost the sales of branded flour products. The sales volume of flour and noodle products increased by 17.8% and 11.9% compared with 2015, to 2,189,000 metric tons and 122,000 metric tons respectively. During the year under review, operating profits grew 139.2% year-on-year to HK$150 million.

5. Brewing Materials Business: Despite sluggish demand, premium and export sales supported volume growth

In 2016, the upstream brewing materials business experienced margin pressure resulting from weak domestic demand for beer and lower brewery sales. By using its superior technology and products quality, the Company gained domestic market share. Market expansion in Southeast Asia contributed to the growth in mid-to-high- end products and export sales. Despite headwinds, total sales of malts reached a record high of 730,000 metric tons in 2016. Economies of scales improved margins and reduced sourcing costs, enabling China Agri to maintain its leading position in industry.

Looking ahead in 2017, the Chinese economy is expected to enjoy good momentum, with a slower but stable growth. Reforms in the domestic grains pricing mechanism should further ease cost pressures for processors, given an anticipated abundant global grain supply. Moreover, further consolidation will improve discipline in the industry. The trend of consumption upgrading will benefit industry leaders and reinforce their competitive advantages.

The Company will maintain a conservative operational principle based on its advantages in product quality and low-cost system, and focus more on risk management, striving to improve performance. As industry consolidation accelerates, China Agri will strengthen the supply of high-quality feedstock to meet growing diversified demands. It will make use of its R&D capability to launch more customised and high-quality products. By promoting downstream development of the corn processing value chain, the Company aims to upgrade more products to improve competitive advantage, enhancing its industry-leading position.

China Agri-Industries Holdings Limited (stock code: 606.HK) is a member of the COFCO Group and takes industry-leading position for each of its business segments in China, namely oilseeds processing, biochemical and biofuel, rice processing and trading, wheat processing and brewing materials.

Website: www.chinaagri.com

For further information, please contact:

China Agri-Industries Holdings Limited

Yifan Ma

Tel: (852) 2833 0314

Fax: (852) 2833 0319

Email: IR@cofco.com

Christensen

Tip Fleming / Jung Chang

Tel： (852) 2232 3922 / 2232 3933

Fax：(852) 2117 0861

Email: tfleming@christensenir.com / jchang@christensenir.com