China Agri Industries : Announces 2016 Interim Results

Hong Kong, 24 August 2016 - China Agri-Industries Holdings Limited ("China Agri" or the "Company"; stock code: 606.HK), a leading agribusiness and food processing company in China, announced its unaudited interim results today for the first six months ended 30 June 2016.

For the first half of 2016, the Chinese economy achieved a 6.7% GDP growth rate year-on-year due to the government's efforts to deepen reforms, underpinning the global economic growth as an important pillar. At the same time, the rebound in global oil prices, higher profits in domestic livestock feed industry and general growth in consumer demand have eased pressure on the agribusiness and food processing industry.

The management continued focusing primarily on improving business performance. At major production plants, the Company set and followed quantitative targets, and tracked a range of metrics to increase operational efficiency. At the same time, business segments proactively seek to benefit from government policies adjustment and "destocking" in agriculture sector to mitigate cost pressures. By adjusting procurement strategies in advance and participating relevant grain reserves business, the divisions set solid foundation to improve their performances.

During the period under review, the Company continued expanding market and developing sales channels which led to a 22.2% increase on total sales volume to 10,795,000 metric tons of main products, including vegetable oil, rice, flour and feed ingredients. Total revenue was HK$40,764 million with a year-on-year growth of 4.0%, which enhanced the Company's leading position in terms of business scale. Loss attributable to equity holders narrowed on a year-on-year basis to HK$223 million due to continued business recovery.

1. Oilseeds Processing adjusted business strategy to cope with volatile market and boosted sales to maintain its industry leading position

   In the first half of 2016, domestic oilseeds processing industry witnessed unstable market conditions with steep increases in the prices of oilseeds and relevant products. In response to the price spike in soybean market, the Company adjusted strategy and sourcing pace to secure low cost supplies, maintaining a solid business momentum. Based on our regional sales platform, oilseed processing business successfully expanded market share in both of direct and indirect sales channels with more specific and customised market penetration strategy. Sales volume of oilseed meals and vegetable oil increased 23.9% and 35.0% to 3,609,000 metric tons and 1,710,000 metric tons respectively, with revenues of HK$21,880 million for the oilseeds processing business, an increase of 14.8% year-on-year.

2. Biochemical and Biofuel benefited from lower corn prices caused by pricing policy reforms, rebound in crude oil prices underpinned the performance recovery

   In 2016, corn prices fell due to abundant supplies and continuing market-oriented reforms in China's domestic corn market. The Company implemented a low inventory strategy to effectively mitigate downward price risk. Since biofuel business was able to further reduce cost by obtaining old inventory from the "destocking" of national grain reserves, fuel ethanol become profitable again underpinned by rebound in crude oil prices. With the extra income from participation in the temporary corn reserve scheme, biochemical and biofuel business improved the gross profit margin by 0.6 percentage points to 8.8%, despite the unstable profitability of basic products such as cornstarch.

3. Rice Processing and Trading adopted integrated development strategy for different types of businesses to improve profitability

   In the first half of 2016, China Agri's sales volume for rice processing and trading business totaled 898,000 metric tons, an increase year-on-year. In the face of fierce competition, the Company further expanded its business in branding, international trading and storage services based on the geographic footprint of our production plants, improving the profitability steadily. By investing resources in new product development and marketing, the

   "Fortune" 「福临门」 brand rice products enhanced the ability for charging brand premium and maintained its

   industry leading position. With the volume growth and margin expansion of international trading business, rice processing and trading business contributed HK$108.0 million operating profit in the first half of 2016.

4. Wheat Processing leveraged cost control as a competitive edge to boost sales and profitability

   During the first half of 2016, overcapacity remained a drag for the industry, leading to fierce competition in the downstream products. The Company has been working to develop integrated operations and professional management in the wheat processing business. By implementing benchmarking, the plants are able to improve flour production technology as well as products quality. With this advanced low-cost production system and the high attentions to source high-quality feedstock, wheat processing business delivered gross profit margin of 7.6%, an increase of 2.9 percentage points year-on-year. Besides the quality and cost advantages, wheat processing business also concentrated on developing tailor-made premium products. This strategy satisfied our key strategic customers and boost sales volume of flour and noodle products by 18.4% and 9.3% compared with the corresponding period of last year to 976,000 metric tons and 54,000 metric tons respectively.

5. Brewing materials business increased sales volume with satisfactory level of profit contribution

In the first half of 2016, weak demand in the domestic beer market and lower beer production put pressure on the margin of the upstream industry. For basic products, the Company leveraged its quality service and reputation advantages to maintain the sales volume with the loyal customers. To adapt to the trend of consumption upgrade, the Company also made use of its production technology advantage to boost the markets of mid to high-end and export products. Sales volume for brewing materials business rose by 15.2% to 406,000 metric tons. With the lean management system, brewing materials business maintained the satisfactory level of profit and returns through managing cost and optimising products portfolio.

Looking ahead to the second half of the year, demand for feed ingredients is expected to rebound as hog inventories have begun restocking, underpinning the prices of relevant products. As market-oriented reforms of pricing policies have initiated, cost pressure on processing business will also be eased by the new harvest of domestic grains. Based on the principles of operational stability and market risk management, the Company will focus on bottom-line improvement by seizing market opportunities. Meanwhile, China Agri will refine the management through the entire supply chain and improve the comprehensive operational efficiency, striving for satisfactory returns on performance.

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