China XLX Fertiliser : FY2014 Interim Results

Press Release

(For immediate release)

Results Highlights for 1H 2014:

 Net profit attributable to owners of the parent dropped 66.4%

year-on-year to approximately RMB64.1 million.

 Revenue edged up 23.81% year-on-year to approximately RMB2,433 million.

 Overall gross profit margin decreased 6 percentage points to 15% from a

year ago.
(29 August 2014, Hong Kong) China XLX Fertiliser Ltd. ("China XLX Fertiliser" or the "Company") (HKSE: 01866.HK; SGX: B9R.SI) announces that revenue for the six months ended 30 June 2014 (the "Period") increased 23.81% year-on-year to approximately RMB2,433 million.
Revenue of the Company and its subsidiaries (the "Group") for the Period rose mainly due to higher sales volume of urea, compound fertiliser and methanol. The increase in sales volume was partially offset by the decrease in average selling prices of urea and compound fertiliser.
During the Period, all business performance of the Group has been improved while the overall gross profit declined due to the product prices' decrease. Revenue derived from the sales of urea increased by approximately RMB203 million or approximately 16% from approximately RMB1,239 million for
1H2013 to RMB1,442 million for 1H2014 mainly due to the increase in sales volume by approximately 53% resulting from the commencement of production of Plant IV. The increase was partially offset by the decrease in average selling price by approximately 24%. Gross profit margin of urea decreased from approximately 26% in 1H2013 to 13% in 1H2014 due to the decrease in average selling price by approximately 24%.
Revenue derived from the sales of methanol increased by approximately
RMB150 million or approximately 65% from approximately RMB231 million for
1H2013 to RMB381 million for 1H2014 mainly due to the increase in average selling price and sales volume by approximately 1% and 64% respectively.
Gross profit margin of methanol improved from approximately 6% in 1H2013 to approximately 24% in 1H2014 on account of lower coal prices which resulted in average cost of sales' declining.
Revenue derived from the sales of compound fertiliser increased by approximately RMB106 million or approximately 22% from approximately RMB490 million for 1H2013 to RMB596 million for 1H2014. Such increase

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primarily resulted from the increase in sales volume by approximately 35% in
1H2014 resulting from the expansion of the sales network. The gross profit margin of compound fertiliser increased to 16% in 1H2014.
Mr. Liu Xingxu, Chairman and CEO of the Group, commented, "During the first half of 2014, the price of urea continued to stay at low level and profitability of overall market is affected. Profitability of the Group declined but its overall performance remained above the industrial average. The Group expects the urea industry to remain stable amid industry consolidation and favourable government policies. Going forward, we expect urea selling prices to be improved with the lower export tariffs window that begins from July
2014 to October 2014 and the increase in domestic natural gas prices. Meanwhile, the Plant IV has started production and achieved a lower
production cost compared to Plant I, II and III. The annual urea production capacity of the Group has reached approximately 2.1 million tons, and the new technology adopted by Plant IV will enable the Group to further improve cost efficiency and strengthen the Group's leading position in the industry in China."
Mr. Liu Xingxu added, "The Group has created a product differentiation strategy to develop high-efficiency fertilisers. Recently, the Group has developed control release urea, control release compound fertiliser and water soluble compound fertiliser. The sales of such high-efficiency fertilisers would enable the Group to gain better returns. The Group has received approval from local authorities to establish a national class nitrogen fertiliser research centre, which would support the development and implement of new products. The construction of the production plants under the Xinjiang Project is scheduled to complete in the second half of 2015. Upon commencement of production in the Xinjiang Project, the annual urea production capacity of the Group will reach 2.6 million tons. The Xinjiang Project will extend the value chain of the Group and the Group's self-owned coal mine would further lower the production cost and strengthen the Group's ability to resist fluctuations in the prices of coal and other market risks."

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About China XLX Fertiliser Ltd.

China XLX Fertiliser Ltd., one of the largest and most cost efficient coal-based urea producers in China, is mainly engaged in the production and sale of urea, compound fertiliser and methanol. Its annual production capacity of urea, compound fertiliser and methanol is 2.1 million tons, 1.1 million tons and 200,000 tons, respectively. Besides, the 5th plant in Xinxiang, which is under construction, is expected to commence trial production next year. The Group forged a strategic partnership with Primavera Capital, an internationally renowned private equity fund, at the end of 2011, aiming to leverage on its extensive experience and resources network in the capital market to sustain stable business growth. The Company's shares are dually traded on the main boards of the Stock Exchange of Hong Kong Limited (stock code: 01866.HK) and the Singapore Stock Exchange (stock code: B9R.SI).

China XLX Fertiliser Ltd. Zhu Weiwei
Tel: 86-138 4939 1363
Email: weiwei.zhu@chinaxlx.com.hk
PRChina Limited
Terence Wong / Henry Chik / Phoebe
Leung
Tel: 852-2522 1368 / 852-2521 2823
Email: twong@prchina.com.hk hchik@prchina.com.hk pleung@prchina.com.hk

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