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2008 Interim Results Announcement

China Foods Limited (00506.HK ）. 2008 Interim Results Announcement. 22 September 2008. Disclaimer.

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2008 Interim Results Announcement

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  1. China Foods Limited (00506.HK） 2008 Interim Results Announcement 22 September 2008

  2. Disclaimer The slides herein are prepared by China Foods Limited (the "Company") solely to be used as a support for oral discussions of its interim results for the year 2008. They may not be distributed, reproduced or re-distributed or passed on, directly or indirectly, to any person, in whole or in part, for any purpose. By participating in this presentation, you agree to be bound by the forgoing restrictions. Any failure to comply with these restrictions may constitute a violation of applicable laws and regulations. The information contained in this presentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis for or be relied on in connection with any contract or commitment whatsoever. This presentation may contain forward-looking statements. Prospective investors are cautioned that actual results may differ materially from those set forth in any forward-looking statements herein. The information contained in these slides herein has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of any information or opinion contained herein. The information contained in these slides should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date of the presentation. None of the Company, or any of their respective directors, officers, employees, agents or advisers shall be in any way responsible for the contents hereof, or shall be liable for any loss arising from use of the information contained in these slides herein or otherwise arising in connection therewith.

  3. Contents • 2008 Interim Financial Performance • 2008 Interim Business Review and Analysis

  4. China Foods Limited (00506.HK） 2008 Interim Financial Performance

  5. Business Structure COFCO 100% COFCO (Hong Kong) 74.25% China Foods Limited (0506.HK) Wines Beverages Consumer-pack Edible Oil Confectionary 100% 65% China Great Wall WineCo.，Ltd. COFCO Coca-Cola Beverages Limited 100% 100％ COFCO Le Conte Food (Shenzhen) Co., Ltd. 100% Hunan COFCO Coca-Cola Beverages Co.,Ltd. COFCO Huaxia Great wall WineCo.， Ltd. 100％ COFCO Foods Sales and Distribution Co., Ltd. 100% Tianjin Coca-Cola Beverages Co., Ltd. 90% 50％ COFCO Greatwall Winery (Yantai)Co.， Ltd. Shenzhen Le Conte Marketing Services Co., Ltd. 75％ Qingdao Coca-Cola Beverages Limited 55％ COFCO Junding Vineyard Co.， Ltd. Zhanjiang COFCO Coca-Cola Beverages Limited 100％ 100% COFCO Wines and SpiritsCo.， Ltd. Hainan COFCO Coca-Cola Beverages CompanyLimited 100％ 80% 100％ Gansu COFCO Coca-Cola Beverages Co.Ltd. COFCO Huaxiahong Wines and Spirits (Shenzhen) Co.,Ltd. 100％ COFCO Coca-Cola Beverages (Xinjiang )Co. Ltd. 80% Yantai Greatwall Wines and Spirits Co., Ltd. COFCO Coca-cola Beverages (Jiangxi) Limited 100％ 100％ Qinghuangdao Huaxia Greatwall Wines & Spirits Co., Ltd. 100％ 75％ Jinan Coca-cola Beverages Limited 100％ COFCO Shaoxing Winery Co., Ltd. Other associated Companies

  6. Financial Results Highlights 2008 1H 2007 1H 2007 Turnover HK$8,156mm HK$4,294mm HK$9,743mm Operating Profit HK$361mm HK$322mm HK$544mm EBITDA HK$466mm HK$391mm HK$699mm HK$242mm HK$202mm HK$361mm Earnings per share HK8.65cents HK7.25cents HK12.9cents ROE5.1% 5.1% 8.6% Profits after Tax & MI Note 1: 2007 1H and 2007 results are Pro Forma figures. Note 2: Half year ROE for 2008 1H and 2007 1H.

  7. Assets, Liabilities and Equities 30June 200831 December 2007 Total Assets HK$9,739mm HK$8,993mm Total Liabilities HK$3,678mm HK$3,360mm Minority interests HK$1,178mm HK$1,075mm Net Assets HK$4,883mm HK$4,558mm Cash on book HK$1,001mm HK$1,397mm Total Liabilities/Total Assets 37.8% 37.4% Interest Bearing Debt/Net Assets 9.0% 8.6% No. of Shares Issued 2,791 mm shares 2,791 mm shares

  8. Turnover Breakdown 2008 1H 2007 1H +/-% (HK$mm) Wine 1,493 1,081 38.1% Beverages 2,450 1,570 56.0% 4,101 1,516 170.6% Confectionery 112 128 (12.2%) Total 8,156 4,294 89.9% Consumer-pack edible oil

  9. Operating Profit and Net Profit Operating Profit Net Profit 2008 1H 2007 1H +/-% 20081H 2007 1H +/-% (HK$mm) (HK$mm) Wine 243.7 143.2 70.2% Beverages 135.7 83.5 62.6% (41.8) (6.9) — Confectionery （68.3）（18.3）— Wine 316.5 211.8 49.4% Beverages 178.6 124.6 43.3% (39.6) (0.7) — Confectionery （66.9）（14.4）— Consumer-pack edible oil Consumer-pack edible oil

  10. Net Profit and EPS Growth (HK cents/share) 8.65 (HK$mm) 242 +19% +19% 250 7.25 8 202 7 200 6 5 150 4 100 3 2 50 1 0 2007 1H 2008 1H 2007 1H 2008 1H Profit Attributable to Shareholders Earnings per share

  11. Total Assets and Net Assets by Business Net Assets Total Assets Confectionery 7.5％ Others 7.4% Others 3.7% Confectionery 5.5％ Wine 36.4% Wine 48.8% Consumer -pack edible oil 10.0% Consumer-pack edible oil 0% Beverages 44.4% Beverages 36.4%

  12. China Foods Limited (00506.HK） 2008 Interim Business Review and Analysis

  13. Wine business －2008 interim operation results overview • Turnover of the wine business in 2008 1H reached HK$1,493million, representing an increase of 38.1% over the same period of the previous year. • Sales volume in 2008 1H was 57,700tonnes, 17.6% higher than that in 20071H. • Attributable to the increase in average selling price and the reduction of the cost of raw materials, the gross profit margin of the wine business increased by 5.6% to 56.1%compared with the same period of the previous year. • We have three wineries and two château at the best regions in China , Currently the capacity has reached 146,000 tonnes.

  14. Wine Business — Brand Positioning and Focus The Wine Specialist Brand Positioning Fine regions, Fine wines Unique selling proposition Smooth and Balanced Rich and Full-bodied Fresh and Fruity Structure & Style Region Location Shacheng, Hebei Changli, Hebei Peng lai, Shandong Specific Character Fossil-Rich Land Coastal Area Volcano Mineral Land Three regions are the core resources of the brand Provide consumers with multiple choices with different styles based on different regions

  15. Wine Business—Product Portfolio Pyramid Elite-range Greatwall Sungod Chateau, Junding Chateau. Chateau wines Huaxia Cru Vineyard. Premium-range Small cru vineyards Base on regions, i.e. Coastal series of penglai, Shangdong and Star series of Shacheng, Hebei. Major wine regions Mid-range Shacheng Changli Penglai Economy range With no regions specified. Planned to use another brand with “Greatwall” endorsement. Table Wines 15

  16. Wine business —New Sales platforms to have more control over the market • We have established new sale platforms in Beijing and Guangdong. • Sales Platform Features： • Develop and execute uniformed sales and promotion programme. • Direct control of below-the-line promotion spending. • Managing wholesalers by retail channels. • Direct sales team covering retail promotion. • The sales platform will be replicated to other areas in China. 16

  17. Beverage Business —2008 interim operation results overview • The beverage business recorded a turnover of HK$2,450million for the 20081H, increased by 56% compared with the same period of last year. • The total number of bottlers under operation will reach nine after the Jiangxi and Xinjiang bottlers been put into production at year end.

  18. Beverage Business —More balanced products portfolio % 14% 17% 18% 21% 86% 83% 82% 79% proportion to total sales • Coca-Cola have the most complete product portfolio ,compared with other beverage companies in China • Due to the faster growth of The “Minute Maid” juice drinks and the “Original Leaf ” tea in recent two years, the proportion of the still drinks continuously increases, making a more balanced products portfolio.

  19. Beverage Business ——high efficiency sales network Direct Sale Bottlers/Operating House Wholesaler Distributor Outlet Delivery Partner Wholesaler/Retailer Wholesaler/Retailer Super Markets Groceries Internet Bars Schools Restaurants Others Consumers • Multiple sales models can control the sales terminal with high value while cover the small sales terminal at the same time . • Sales under direct control accounts for 55％ of total sales.

  20. Xinjiang Inner Mongolia Tianjin Hebei Qinghai Shandong Ningxia Tibet Hunan Jiangxi Guizhou Zhanmao Hainan Beverage Business—Great grow potential in authorized regions CBL SBL CCCIL The population of our authorized regions accounts for 33% of the total population of China. The national drink volume per capita of Coca Cola products is 23.8 caps(8 ounce per cup) while the drink volume per capita is only 12.8caps in our authorized regions. There is huge room for future growth.

  21. Consuming pack edible oil —2008 1H operating results overview • The consuming pack edible oil business recorded a sales of HKD$ 4.1billion, representing an increase of 170.6% compared to the same period of last year. • The sales volume increased by 79% to 312,000 Tonnes. • The market share increased to 14.2% from last year 9.56%. • In the first half year of 2008, We can not increase the price to pass the increased cost to the consumer due to the government temporary price control policy over the consuming pack edible oil , the gross margin of the business drop dramatically to 3.6% from 9.9% at the same period of last year. The business incurred loss.

  22. consumer-pack edible oil business—Huge development potential ahead High Big Cities(97M population) Mature market Demand for high-end edible oil products Medium/small Cities(187M population) Small cities / towns(211M population) Potential market Villages (764M population) low • In the past five years, consumer-pack edible oil market experienced an average annual growth rate of 21% . we expect an 15% average annual growth for next three to five years . • Consumers demand more high quality edible oil, that can be shown by the gradual decrease of the sales proportion of soybean oil, versus an increase of the sales proportion of blended oil ,and faster growth of peanut oil, sunflower oil and maize oil sales volume.

  23. 2008 The consumer-pack edible oil business—Building comprehensive sales network Covering 5,000 retail outlets 2007 Covering 20,000 retail outlets 2013 Covering 120,000 retail outlets After the group restructuring done in 2007, COFCO foods sales and distribution Co.Ltd was formed to serve as the distribution, sales and marketing arm of consumer-pack edible oil products. This arrangement strengthened our sales network to reach more end users.

  24. The consumer-pack edible oil business— Extension of “Fortune” Brand “Fortune ” kitchen series Consumer-pack edible oil Sauce Others Sunflower oil Soybean oil Sesame oil Spicy Garlic sauce Sauce Maize oil Healthy mushroom sauce Vinegar Blended oil Olive oil Peanut oil Colza oil Salt black bean sauce 2007 2008 2009

  25. Confectionery business —2008 1H Operating Results Overview • During the period under review, affected by the snowstorms in Southern China at the beginning of the year. Turnover decreasedby 12% to HKD112 million compared with the same period of previous year. • This business recorded loss during the period under review. • By April 2008, company appointed a new management team for the confectionery business and is now actively carrying out strategy adjustments including product line rationalization, brand building, market positioning and distributors management.

  26. Thank you！

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