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COFCO International Limited(0506.HK）

2006 Results Announcement

19 April 2007

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DisclaimerThe slides herein are prepared by COFCO International Limited (the "Company") solely to be used as a support for oral discussions of its annual results for the year 2006. 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."

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Contents

1. The Reorganization

2. 2006 Pro Forma Financial Performance

3. 2006 Business Review

4. Outlook and Prospects

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COFCO Int’l (0506.HK）

1. The Reorganization

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Objectives of the Reorganization

To create two key flagships, namely branded food business and agri-industrial business within COFCO Group

To develop a more focused business strategy executed by a professional team to enhance the shareholders’ value

To establish the company as the market leader in China branded food & beverage industry

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Restructuring Steps

Step 1: Acquisition & Disposal of Step 1: Acquisition & Disposal of Assets Assets

Step 2: Spin-off of China Agri HoldingStep 2: Spin-off of China Agri Holdingss

Form wholly-owned subsidiary China Agri Holdings to hold the Agri-Industrial Businesses

Acquisition of Food & Beverage Businesses and Agri-Industrial Businesses from COFCO (HK)

Transfer of Non-core Business back to COFCO(HK)

Accomplished on December 31, 2006

Spin-off of China Agri Holdings by way of special dividend, and listing of China Agri Holdings by way of introduction

China Agri Holdings offers new shares through a Global Offering and was listed on HKSE on 21st, March

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COFCO Group

COFCO (HK) and Its Affiliates*

100%

74.25%

COFCO International Limited(0506.HK)

ConfectionaryWines

COFCO Le Conte Food(Shenzhen)

Shenzhen Le Conte Marketing Services

100%

90%

COFCO Foods Sales and Distribution

COFCO Huaxia Greatwall Wine

100%

100%

80%

100%

55 ％

Organization Structure post Spin-off

100 ％

100%China Great Wall

Wines

100％

100％

COFCO ShaoxingWinery

COFCO Greatwall Wine(Yantai)

COFCO Wines andSpirits

COFCO Huaxiahong Wines and Spirits (Shenzhen)

COFCO NavavallyJundung Vineyard

Qighuangdao Huaxia Greatwall Wines & Spirits

100％

100％Yantai Greatwall Wines

and Spirits100％

BeveragesCOFCO Coca-Cola

Beverages Ltd

65%

Hunan COFCO Coca-Cola

Tianjin COFCO Coca-Cola Beverages

Jilin COFCO Coca-Cola Beverages

Zhanjiang COFCO

Coca-Cola Beverages

Hainan COFCO Coca-cola Company

80%

Gansu COFCO Coca-Cola

Xinjiang COFCO

Coca-Cola

Other associated companies

50％

100％

100％

100％

100％

Consumer-pack

Edible Oil

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Core Management Team post Spin-off

Mr. Qu, Zhe, 43

Executive Director

Managing Director

Extensive experience in food & beverage products

Mr. Ma, Jianping, 42

Executive Director

Deputy General Manager

Extensive experience in strategy management

Mr. Mak, Chi Wing, William, 45

Executive Director

Deputy General Manager

Extensive experience in corporate governance

Ms. Luan, Xiuju, 41

Executive Director

Head of Beverage Division

Extensive of experience in beverage production, trade and management

Mr. Zhang, Zhentao, 43

Executive Director

Head of Consumer-pack Edible Oil Division

Extensive experience in oil trade and management

Mr. Cao, Zhaoliang, 40

Head of Confectionery division

Extensive experience in confectionery business

Mr. Man, Jacky, 31

Financial Controller

Extensive financial industry & corporate finance

Mr. Wufei, 36

Head of Wine division

Extensive experience in

wine business

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COFCO Int’l (0506.HK）

2. 2006 Pro Forma Financial Performance

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Turnover HK$6,509mm HK$5,749 mm

Operating Profit HK$538 mm HK$420 mm

EBITDA HK$663mm HK$583 mm

HK$342mm HK$257 mm

Earnings per share HK12.9cents HK9.8 cents

ROE 11.5 % 11.6%

ROA 8.2% 7.9%

31 December 2006 31 December 2005

Post Spin-off Pro Forma Results Highlights

Profits after Tax & MI

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Total Assets HK$6,837mm HK$5,291 mm

Total Liabilities HK$2,231mm HK$1,907 mm

Minority interests HK$730mm HK$793mm

Net Assets HK$3,876mm HK$2,591 mm

Cash on book HK$1,308mm HK$516 mm

Total Liabilities/Total Assets 32.63% 36.04%

Interest Bearing Debt/Net Assets 15.4% 23.2%

Pro Forma No. of Shares Issued 2,791 mm shares 2,638 mm shares

31 December 2006 31 December 2005

Pro Forma Assets, Liabilities and Equities

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Wines 1,803 1,552 16.2%

Beverages 2,431 1,917 26.8%

1,854 1,899 -2.4%

Confectionary 421 381 10.4%

Total 6,509 5,749 13.2%

(HK$mm) 2006 2005 +/-%

Pro Forma Turnover Breakdown

Consumer-pack Edible Oil

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Wine 221.2 184.6 19.8%

Beverage 114.8 85.7 33.9%

25 0.2 11781%

Confectionary -15.1 19.7 —

Consumer-pack Edible Oil

Consumer-pack

Edible Oil

Wine 321.5 298.5 7.7%

Beverage 159.9 115.8 38.1%

63.2 12.7 397.6%

Confectionary -8 25.1 —

(HK$mm) 2006 2005 +/-%

Operating Profit

(HK$mm)

Net Profit

Pro Forma Operating Profit and Net Profit

2006 2005 +/-%

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Pro Forma Net Profit and EPS Growth

0

90

180

270

360 12.9

0605Profit Attributable to

Shareholders

342.1

05 06

+33% +32%

Earnings per share

2

4

6

8

10

12

14

(HK$mm)(HK$ cents/share)

257.4 9.8

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Pro Forma Total Assets and Net Assets by Business

Total Assets Net Assets

Confectionary

8.9％

Beverage

35.9%

Consumer-

pack

Edible

Oil

6.8%

Others

10.9%Wine

37.5%Confectionary

8.1％

Beverage

31%

Consumer-pack

Edible Oil

1.6%

Others

18.1% Wine

41.2%

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COFCO Int’l (0506.HK）

3. 2006 Business Review

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Consumer-pack Edible Oil 12.5% 2

Coca-Cola Beverages* 53% 1

Le Conte Chocolate 14.5% 2

Greatwall Wines 17.5% 1

Products & Brands2006

Market Share2006

Ranking

*Note: market share and ranking of Coca-Cola Beverages refers to that of sparkling drinks in the sales regions under franchise

Still the Market Leaders

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Mission and Vision

Mission: To maximize value for customers, shareholders and employees by providing nutritious and healthy food

Vision: To become the leading food and beverage company with the most valuable brands in China

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Channels——A professional sales & marketing team and an extensive sales network throughout China

Brands—— A portfolio of well-known consumer brands

Innovation——In-house R&D capabilities and product innovation capabilities

Management——Professional management team

Our Competitive Edges

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Turnover of Wine Business in 2006 reached HK$1,803 mm, 16.3% increase from 2005, higher than the industry revenue growth of the year

We sold 86,100 tonnes of wine in 2006, an increase by 11% from 77,700 tonnes in 2005.

ROE in 2006 was 16.6%

Wine BusinessPerformance in 2006

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Expansion of production capacity—— Production capacity in 2006 reached 110,000 tonnes per annum. It is expected that production capabilities in 2007 will increase by 6,000 tonnes; Navavally Jundung Vineyard was established with an investment of RMB 260 million in Yantai, positioned to produce high end Chateau wines and is expected to commence operation in mid-2007

Product Positioning——Product streamline and integration of the current three wineries were completed. Three principal product series, namely Huaxia Cru Vineyard Series, Star-rating series and Coast series will be launched, to better define and enrich our product portfolio Enhancement of Brands Images——Further enhance the brand image of Greatwall through the exclusive wine supplier position to Beijing 2008 Olympics; devote more sources into brand image building Integration of Channels——Further distribution channel integration of the three wineries. Initiating pilot schemes in northern China and southern China to explore new sales and distribution model

External Expansion——To seek mergers and acquisition opportunities in and outside the PRC

Wine BusinessFuture Development Initiatives

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One of the three Coca-Cola Beverages bottler groups in the PRC, through a 65% owned JV with the Coca-cola Company. Currently this business owns six operating plants in Tianjin, Hunan, Hainan, Jilin, Gansu and Zhanjiang. This business also has minority interests in 14 other bottling plants in cities like Nanjing, Hangzhou and Guangzhou

Our franchise sales regions include: Tianjin, Hebei, Inner Mongolia, Jilin, Hunan, jiangxi, Guizhou, Gansu, Ningxia, Qinghai, Xizang, Xinjiang, Hainan and Zhanjiang

The population in the sales regions under franchise accounts for 28% of the PRC population, GDP accounts for 21% of total GDP

Annual Coca-Cola consumption per capita in our regions is 11.5 8oz-cup, whilst the annual consumption per capita in the country is 20.3 8oz-cup

Thank for the growth in both sales volumes and prices, the Beverage Business recorded a turnover of HK$2,431 million in 2006, an increased by 26.8% from 2005. Sparkling drinks accounted for 86% and still drinks accounted for 14%. Such growth rate exceeded that of the industry, and ranked top among the bottlers of Coca-Cola in China

Beverage BusinessPerformance in 2006

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Capacity Expansion——We plan to build new plants and add new product lines.

Product Mix Adjustment——We will gradually increase the percentage of still drinks. It is expected that in the coming three years, the sales volume of sparkling drinks will decrease from the current 86 ％ to 77 ％ and that of still drinks will increase from the current 14 ％ to 23 ％

Optimization of Geographic Lay-out ——We will seek to optimize the geographic locations of our sales channels

Beverage BusinessFuture Development Initiatives

Sparking drinks

Fruit juice Tea Water

Market share in 2006

53% 5.3% 1.9% 7%

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Growth in consumer-pack edible oil market in the PRC remains strong. According to the data provided by AC Nielsen, it is expected that the industry as a whole will maintain average growth of around 8 ％ in the future

In the Reorganization, we separated the consumer-pack edible oil business from the oilseed processing business, to establish a sales company operated by a professional team to focus on brand management and sales and marketing capability

The Fortune related brands wholly-owned by our parent is licensed to us exclusively

Have a comprehensive product portfolio, including blended cooking oil, peanut oil, corn oil, sunflower seed oil, vitamin A enriched oil, sesame oil, olive oil and soybean oil

Excluding the sales of Northsea, an associated company, the Turnover of consumer-pack edible oil was HK$1,854 mm, which were decreased by 2.4% from 2005, mainly due to the decrease in the sales of edible oil with low gross profit margin

Consumer-pack Edible Oil BusinessPerformance in 2006

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Adjust product portfolio and increase the weighting of products with higher gross profit margins to enhance overall profitability

New “Fortune” brand logo will be launched in mid-2007 to enhance the brand image

To further develop distribution channels and manage distributors, to increase the sales coverage at retail level

Consumer-pack Edible Oil BusinessFuture Development Initiatives

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The Confectionery Business achieved a turnover of HK$421 million in 2006, an increase of 10.4% from 2005

Due to a surge in raw material prices, including sugar, gross profit margin decreased slightly to 44.3%

Due to the increase in marketing investment, this business recorded loss for the year.

Confectionery BusinessPerformance in 2006

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Plan to rebuild the “Le Conte” brand to satisfy the upgrading of consumer taste

To expand mass channels in major and middle cities and channels in second to third tier cities so as to enhance product penetration rate

To develop differentiated products with good growth prospects, and invest reasonably on marketing and promotion so as to secure long term growth

To strive for improvement in operation from 2006 and achieve turnaround in 2007

Confectionery BusinessFuture Development Initiatives

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COFCO Int’l (0506.HK）

4. Outlook and Prospects

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Outlook and Prospects

Brands consolidation, promotion and extension

Sales channels and network integration and sharing

New product development and new business expansion

Explore synergies in procurement, production, and logistics

Centralize financial management, client bases and form a unified corporate culture

As a company dedicated to branded food business, COFCO Int’l will leverage on the three engines of brands, channels and R&D to maximize the synergies among its business units and drive

the company’s transformation and development

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Outlook and Prospects

Consolidate corporate resources, including brands, channels, R&D, production, logistics and corporate structure

Achieve organic growth from existing businesses: e.g. energising marketing efforts for branded consumer-pack edible oils; studying the possibility of extending the “Fortune” brand product range; extending and expanding the range of wine brands; tapping into the high-end confectionery product category

New business development: identify and nurture new growth businesses, external M&As

Major Future Growth Drivers

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Outlook and Prospects

Formulate and constantly review the long-term strategic development plan of the company

Improve corporate governance and corporate control, strengthen team-building, establish an effective incentive mechanism to achieve better organisational integration

Enhance corporate transparency and improve investor communication

With the ultimate goal of maximising shareholder value, strive to enhance the company’s overall profitability and build COFCO International into the leading player in the branded food industry in China

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Thank youThank you ！！