Sinofert : Announcements and Notices - INTERIM RESULTS ANNOUNCEMENT - FOR THE SIX MO…

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中化化肥控股有限公司 *

(Incorporated in Bermuda with limited liability)

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The Group's revenue was RMB8,909 million for the current period, down by 46.66% year

on year

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Loss attributable to owners of the Company for the current period was RMB432 million (the

corresponding period in 2015: profit attributable to owners of the Company was RMB342 million)

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Basic loss per share for the current period was RMB0.0615 (the corresponding period in

2015: basic earnings per share was RMB0.0487)

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The Board did not recommend the declaration of interim dividend for the six months ended

30 June 2016

Dear Shareholders,

On behalf of the Board of Directors (the "Board"), I hereby present to all the shareholders the interim results of Sinofert Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2016.

In the first half of 2016, the fertilizer industry was under heavy pressure to resolve overcapacity and to overcome the challenge of falling domestic demand amidst the general slowdown in macro- economic growth. This year the usual effect of the spring peak season for fertilizer consumption did not materialize as expected, while the resumption of the value-added tax on fertilizer products weakened the overall profitability of the fertilizer industry. The Group's fertilizer operations were dealt a heavy blow from such changes in the industry, and its performance as a whole took a big downturn. For the six months ended 30 June 2016, the Group suffered a loss attributable to owners of the Company of RMB432 million. To turn the situation around and regain profitability, the management has made and put into place a counter-measure action plan. The Board is confident that the Group will continue to consolidate its business footing and be able to achieve long-term sustainable growth.

It's foreseeable that the macro-economic environment will remain severe and the situation of overcapacity of the fertilizer industry will hardly improve during the second half of 2016. Against this background, the Chinese economy has been in the process of further transforming and upgrading its growth modes and fostering new growth dynamics. A series of supply-side structural reforms, including cutting overcapacity, destocking, deleveraging, reducing cost and identifying growth areas, have been implemented by the Chinese government, and this will provide the Company with new growth potentials and historic opportunities.

Facing a grim market outlook and many unprecedented challenges, we will deepen our reforms and innovations and beef up our core competitiveness and specialized operating capabilities. We will adopt effective counter-measures to tackle the key problems and challenges, uplift our internal operational efficiency and fully implement the program of improving both quality and performance. Our commitment to striving for better business results and creating higher returns for the shareholders is unswerving.

Last but not the least, on behalf of the Board, I would like to take this opportunity to extend our heartfelt appreciations to all the shareholders and customers of the Group. We hope to have your continuous attention and support in our future development. The Company's management and employees will bear in mind the concept of "creating value and pursuing excellence", make special efforts, and strive to make greater contributions to the development of the Group.

Chairman of the Board

Hong Kong, 25 August 2016

In the first half of 2016, the global macro economic environment continued to deteriorate, major economies underperformed, the economic growth rate stagnated, risk factors kept gathering and the prospect of global economic recovery was still uncertain. The growth rate of the Chinese economy slowed down. Currently the Chinese government is vigorously promoting the supply-side structural reform, the Chinese economy is moving to a higher gear, the growth momentum is changing, the macro environment is complex and severe, and the economic downward pressure is still huge. Domestic enterprises are generally faced with challenges including excessive production capacity, weak market demand and increasing risks.

In the first half of 2016, the prices of corn and wheat in major grain producing areas in China suffered from different degrees of decline, of which the plunge in corn was more obvious - an average decline of above 20% and up to 30% compared to the same period of 2015, and wheat also witnessed a cliff-like drop. Although the purchasing price of rice was stable in general, there was some decrease in certain regions. It's really rare to see a fall in the prices of all the three staple foods in China, and the hundreds of billions RMB negative growth in revenue has made an impact on the consumption market and the growth of GDP. With the surge of import and inventory of the three staple foods, the plunge in grain prices and the sharp drop of the farmers' income, the upstream agricultural inputs industry represented by fertilizer was also consequently affected. Enterprises are facing intensified competition due to the impact from declining real economy and excessive production capacity, the fertilizer industry entered the crucial moment of eliminating excessive capacity, and the elimination process might speed up. Meanwhile, due to the cancellation of preferential policies and the resumption of value-added tax on fertilizer products, the supply and demand disparity is still prominent and the operating pressure of domestic enterprises is constantly growing under the policy of zero-growth in fertilizer consumption and increasing pressure from environmental protection regulations.

Faced with a prolonged weak macro economy and a tough market environment, under the leadership of the Board, the Group adhered to the established orientation for strategic transformation, accelerated the transformation and upgrading and was devoted to becoming an agricultural service enterprise which provides high-quality fertilizer products and crop nutrition solutions with the general philosophy of "taking root in the transformation and upgrading of modern agriculture".

For the six months ended 30 June 2016, the Group's revenue amounted to RMB8,909 million, down by 46.66% over the corresponding period of 2015; and loss attributable to owners of the Company amounted to RMB432 million, which was mainly attributable to the sluggish fertilizer market, falling fertilizer prices and the resumption of value-added tax on fertilizer products.

In the first half of 2016, Sinochem Yunlong Co., Ltd. ("Sinochem Yunlong"), a subsidiary of the Group, brought into full play its advantage in high-quality phosphate rock resource, optimized its phosphate mine development plan and extracted 149,600 tons of phosphate rock. For mine construction, Sinochem Yunlong carried out the preliminary design, budget approval and tendering and procurement of the PC implementation general contract for Mozushao capacity expansion project and the prospecting work of Dawan mine was basically completed, laying a good foundation for the sustainable development of the Group's phosphate fertilizer and phosphoric chemical industries and ensuring that the demand for phosphate rock in the follow-up development of Sinochem Yunlong will be met.

The total annual fertilizer production capacity of the Group's subsidiaries, associates and joint ventures exceeded 12 million tons. By continuing to promote the "three basics" among production subsidiaries, carrying out the trial run of new plants, launching benchmarking management of technology, eliminating key factors hindering the release of production capacity, further tapping the potential of the equipment, enhancing the process management in production, carrying out cost management and control and pushing forward scientific and technological innovation, the Group's production and supply capacity was further enhanced.

Sinochem Chongqing Fuling Chemical Fertilizer Co., Ltd. ("Sinochem Fuling"), a subsidiary of the Group, produced 620,700 tons of phosphate, compound fertilizers and other products. Faced with a market downturn, Sinochem Fuling adjusted its product mix of phosphate and compound fertilizers, increased the production of high value-added products including DAP and fine phosphates, extended the life cycle of the phosphogypsum stack, maintained the efforts made in scientific and technological innovation and explored ways for sustainable development.

Sinochem Jilin Changshan Chemical Co., Ltd. ("Sinochem Changshan"), a subsidiary of the Group, produced 60,000 tons of urea in the first half of 2016. When the urea price continued to run at a low level, Sinochem Changshan, based on its geographical advantage, deepened the integration of production and marketing, and promoted the upgrading and transformation of the facilities. The "1830 Project" was put into pilot production and transferred from CIP to PPE.

Sinochem Yunlong produced 165,500 tons of Monocalcium/Dicalcium Phosphate (MDCP) in the first half of 2016. Sinochem Yunlong vigorously promoted its brand name recognition for its MDCP products; optimized the internal organizational structure in order to improve the operation efficiency; cooperated with research institutions, strove to make technological breakthrough related to production capacity constraints to release the production capacity of existing equipment and gradually formed a scale effect in the production capacity of the existing equipment; promoted the information technology in production, gradually realized integrated management in the whole process of the production line, improved the operating efficiency of the systems; and developed tailored product standards to meet the demand of the customers based on the differences in product quality standards of regional customers.