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Processed Food Business Segment Records Strong Performance


Hong Kong, 29 August 2012 – DaChan Food (Asia) Limited (“DaChan Food” or the “Company”, SEHK stock code: 3999), China’s leading supplier of chicken meat products, today announced its results for the six months ended 30 June 2012. Given the challenging global economic situation, the price of pork decreased, which in turn drove the price of chicken meat to drop, creating a challenging business environment for the Company. However, DaChan Food still received a positive response as it optimized its product structure and internal cost control, and maintained growth momentum in its operational results in 1H 2012. The Company’s processed food business recording strong performance with turnover and gross profit surging 21% and 41.1% year-on-year, respectively.

During the period under review, the Company’s turnover increased by 8. 3 % year-on-year to RMB5.5 billion. However, due to the decline in the price of chicken meat and the increase in the cost of raw materials, gross profit margin dropped from 7.9% in 1H 2011 to 6.3% during the period under review.

Among all of the Company’s segments, the comprehensive food operation that the Company developed in recent years has progressed in a stable manner, while processed food business segment recorded strong performance. The Company achieved satisfactory results in the promotion of and product development for the “Sisters’ Kitchen” brand. More related products will be launched during the year. The export of processed foods maintained stable growth despite the economic downturn, reflecting strong recognition of DaChan Food in the foreign markets. In addition, food safety is on the Chinese government’s agenda, an item that has been given great emphasis. DaChan Food has always placed the same importance on food safety and developed a food security tracing system in 2009 which has been well-received by clients and customers. Backed by its vertically-integrated business model, DaChan Food ensures that all products delivered to its customers are safe and of high quality, making it the first choice for consumers who demand safe and guaranteed products. The processed food business segment recorded turnover of approximately RMB780 million in 1H 2012, representing year-on-year growth of 21%. Gross profit rose to approximately RMB110 million, a surge by 41.1% compared with the same period in 2011.

In addition, despite the constant rise in the prices of raw materials, the Company continued to enhance its R&D efforts and to improve cost control to stabilize turnover for the feeds segment. The performance in the overseas markets was outstanding, driving the Company’s overall results. To respond to the surging prices of raw materials, the Company’s feed department adopted various measures – including adjustments in inventory levels, exploring new supply channels, looking for alternative materials, focusing on upgrading feed technology and adopting various bio-technologies to promote new efficient feeds – to enhance the competitiveness of the Company’s products and to increase its market share. Despite the depressed market sentiment for the first half, the feed segment maintained an increase of 6.1% year-on-year to RMB2.2 billion in turnover. Gross profit achieved a stable increase of 7.6% year-on-year to RMB 230 million.

Han Jia-Hwan, Chairman of the Board of DaChan Food, said, “Despite the challenging economic environment in the first half of 2012, DaChan Food received a positive response as it expanded its business in a steady fashion and maintained consistent growth in overall turnover. As a responsible corporation, we strive to uphold a high level of food safety to address the needs of our customers, and at the same time promote the image of food safety associated with our ’Sisters’ Kitchen’ products. Looking ahead, with the support of policies that aim to achieve stable growth, the Chinese economy is expected to stabilize and to emerge from its current downward trend. Although the overall business environment remains unfavorable, DaChan Food will continue to optimize its internal controls and to enhance food safety measures to further consolidate and improve its leading position in the breeding and rearing industry and the food industry, as well as its public image, so as to achieve further growth.”

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