China Yurun Food Group Limited Announces Its Interim Results For The Six Months Ended 30 June 2012

- Continue to Implement Long-Term Strategies to Drive Stable Business Development

- In the first half of 2012, the Group recorded a turnover of HK$12,529 million.

- The Group's gross profit was HK$268 million.

- During the Period, profit attributable to shareholders was HK$107million.

- Diluted earnings per share was HK$0.059.

HONG KONG, Aug. 15, 2012 /PRNewswire/ -- China Yurun Food Group Limited ("Yurun Food" or the "Company", and together with its subsidiaries, the "Group") (SEHK: 1068), a leading vertically-integrated meat-product processor and supplier in China, announced today its interim results for the six months ended 30 June 2012 (the "Period").

During the Period, the Group recorded a turnover of HK$12,529 million. The Group's gross profit was HK$268 million with an overall gross profit margin of 2.1%. During the Period, profit attributable to shareholders was HK$107 million and diluted earnings per share was HK$0.059.

During the Period, Yurun Food endeavored to strengthen its business development through proactive brand building and diversified marketing strategies, rigorous cost control measures and strict implementation of international product quality control standards. Mr. Li Shibao, CEO of Yurun Food, said, "Facing the challenges of a depressed macroeconomic environment, as well as weakened consumer sentiment, we have implemented a series of measures to minimize the impact of these short-term fluctuations on the Group's long-term development. These measures include adopting prudent measures to control and reinforce cooperation with a broad range of sales partners, so as to maintain our market competitiveness, reinforce the solid business foundation fostered by Yurun Food over the years, and drive sustainable business development. "

Mr. Li continued, "Although we are still facing tremendous challenges, leveraging on the robust nation-wide foundation built by Yurun Food, as well as the relentless efforts of the entire team, the overall business performance in 2012 has already shown signs of improvement. We believe that the overall development dynamic of the industry, together with the competitive advantages of Yurun Food accumulated over the years remain fundamentally unchanged. We are optimistic that, with our comprehensive, hands-on industry and management experience, various innovative business ideas, together with the concerted efforts of the Group, we will continue to reinforce and drive sustainable and stable business development, and capture the opportunities brought by industry consolidation."

Business Review

The Group's business is divided into downstream processed meat products and upstream chilled and frozen meat segments.

*LTMP is defined as low temperature meat products.

**HTMP is defined as high temperature meat products.

Signs of Business Improvement

Despite the challenging conditions in the first half of 2012, two major indicators measuring upstream and downstream business performance showed signs of improvement as compared to the second half of 2011, and in particular the fourth quarter of 2011. Firstly, slaughtering volume saw a slight increase compared with the second half of 2011. With the various measures taken by the Group, slaughtering volume recorded an increase as compared to the second half of 2011 despite weak consumer sentiment. Secondly, through proactively optimizing our distribution and product structure, coupled with less pressure from hog prices since the second quarter, the gross profit margin of LTMP began to recover in the first half of 2012.

Production Capacity

Through increasing capacities in Anhui, Sichuan, Gansu and Jiangxi provinces, our upstream slaughtering capacity reached 48.45 million heads per year as at 30 June 2012, representing an increase of 2.40 million heads as compared to that at the end of 2011. In terms of downstream, the Group had an annual downstream meat processing capacity of 307,000 tons as at 30 June 2012, representing an increase of approximately 3,000 tons as compared to that at the end of 2011.

Capacity Expansion

The Group will continue to systematically expand its capacity and further enhance its nationwide production capacity allocation in the coming years and aim to reach a slaughtering capacity of 70 million heads by the end of 2015, so as to strengthen its leading position in the industry and capture business opportunities brought by industry consolidation. The Group will continue to orderly expand its downstream capacity, with an aim to increase market coverage, reduce bottlenecks and fully capture the steady growth of high quality meat product market in China.

Opportunities

Despite the uncertain macroeconomic environment and possible challenges in the second half of 2012, the Chinese hog slaughtering and meat products processing industry will achieve sustained development with the formulation and implementation of industry policy incentives by the Central Government. In order to stabilize hog prices, the Central Government launched another round of state reserve purchases of frozen pork in August. The Group believes that the exercise will support hog prices.

Meanwhile, the Central Government continued to promote the orderly development of the Chinese hog slaughtering industry, and further implemented the "Guideline for National Hog Slaughtering Industry Development (2010-2015)" during the Review Period, gradually eliminating outdated hog slaughtering capacity so as to continually encourage the consolidation of the Chinese hog slaughtering industry. It is believed that the continuous consolidation of the slaughtering industry will provide opportunities for the long-term, steady development of the Group.

Prospects

Under the leadership of the highly experienced management team, the Group will persist in implementing its long-term development strategies, continue to enhance its nation-wide hog slaughtering capacity allocation, and flexibly adapt its upstream and downstream business segment strategies in order to ensure sustained development. The Group will focus on developing new growth drivers through optimizing distribution and product mix, such as restaurant chain channels and products, with the aim of further penetrating the high value-added consumer market. With support from the favorable central and local government policies, and its solid business foundation, the Group believes it can successfully overcome short term challenges and continue to drive its long-term steady development.

About China Yurun Food Group Limited (Stock Code: 1068)

Leveraging on its vertically-integrated business model and strategically located production plants, Yurun Food is the leading meat-processor and meat products supplier in China. With its well-established food brands, state-of-the-art production facilities and diversified distribution channels, Yurun Food will further strengthen its leading market position. Yurun Food was included in MSCI Global Standard Index (MSCI China Index) on 29 August, 2008, which is an important recognition of Yurun Food as a leading company in the meat processing industry by the investment community.

Company website: www.yurun.com.hk

Issued by Porda Havas International Finance Communications Group for and on behalf of China Yurun Food Group Limited.

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