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China Foods Limited (0506.HK）

2007 Annual Results Announcement

15 April 2008

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DisclaimerThe slides herein are prepared by China Foods Limited (the "Company") solely to be used as a support for oral discussions of its annual results for the year 2007. 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

2007 Financial Performance

2007 Business Review and Analysis

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China Foods Limited (0506.HK）

2007 Financial Performance

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COFCO

COFCO (Hong Kong)

100%

74.25%

China Foods Limited (0506.HK)

ConfectionaryWines

COFCO Le Conte Food(Shenzhen) Co., Ltd.

Shenzhen Le Conte

Marketing Services Co., Ltd.

100%

90%

COFCO Foods Sales and Distribution Co., Ltd.

COFCO Huaxia Greatwall Wine Co. ， Ltd.100%

100%

80%

100%

55 ％

Organization Structure

100 ％

100%China Great WallWine Co. ， Ltd.

100％

100％

COFCO Shaoxing

Winery Co., Ltd.

COFCO Greatwall Wine(Yantai)Co. ， Ltd.

COFCO Wines and

Spirits Co. ， Ltd.

COFCO Huaxiahong Wines

and Spirits (Shenzhen) Co.,Ltd.

COFCO NavavallyJundung Vineyard Co. ， Ltd.

Qinghuangdao Huaxia Greatwall Wines & Spirits Co., Ltd.

100％

100％Yantai Greatwall Wines

and Spirits Co., Ltd.100％

BeveragesCOFCO Coca-Cola Beverages Limited

65%

Hunan COFCO Coca-Cola Beverages Co.,Ltd.

Tianjin Coca-Cola Beverages Co., Ltd.

Qingdao COFCO Coca-Cola Beverages Limited

Zhanjiang COFCO

Coca-Cola Beverages Limited

Hainan COFCO Coca-cola

Beverages Company Limited

80%

Gansu COFCO Coca-Cola Beverages Co.Ltd.

Xinjiang COFCO Coca-Cola Beverages Co. Ltd.

Other associated Companies

50％

75％

100％

100％

100％

Consumer-pack

Edible Oil

COFCO Coca-cola Beverages (Jiangxi) Limited

100％

Jinan Coca-cola Beverages Limited

75％

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Turnover HK$9,743mm HK$6,509 mm

Operating Profit HK$544 mm HK$538 mm

EBITDA HK$699mm HK$663mm

HK$361mm HK$342 mm

Earnings per share HK12.9ents HK12.9 cents

ROE 8.6% 11.5%

ROA 5.5% 8.2%

2007 2006

Pro Forma Financial Results Highlights

Profits after Tax & MI

Note ： excluding the expenses for the stamp duty in connection with the Spin-off and the net gain

from disposal of interests in certain bottlers and sharing by minority interests

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Total Assets HK$8,993mm HK$6,837 mm

Total Liabilities HK$3,360mm HK$2,231 mm

Minority interests HK$1,075mm HK$731mm

Net Assets HK$4,558mm HK$3,875 mm

Cash on book HK$1,396mm HK$1,308 mm

Total Liabilities/Total Assets 37.4% 32.6%

Interest Bearing Debt/Net Assets 8.6% 15.4%

No. of Shares Issued 2,791 mm shares 2,791 mm shares

31 December 2007 31 December 2006(Pro forma)

Assets, Liabilities and Equities

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Wine 2,140 1,803 18.7%

Beverages 3,007 2,431 23.7%

4,158 1,854 124.3%

Confectionery 437 421 3.9%

Total 9,743 6,509 49.7%

(HK$mm) 2007 2006 +/-%

Pro Forma Turnover Breakdown

Consumer-pack edible oil

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Wine 314.7 221.2 42.3%

Beverages 105.1 114.8 ( 8.4%)

(21.5) 2 5 —

Confectionery （ 36.5） （ 15.1） —

Consumer-pack edible oil

Consumer-pack

edible oil

Wine 445 321.5 38.4%

Beverages 147 159.9 ( 8.1%)

(19.8) 63.2 —

Confectionery （ 29.9） （ 8） —

(HK$mm) 2007 2006 +/-%

Operating Profit

(HK$mm)

Net Profit

Pro Forma Operating Profit and Net Profit

2007 2006 +/-%

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Total Assets and Net Assets by Business

Total Assets Net Assets

Confectionery

6.4 ％

Beverages

41.3%

Consumer

-pack

edible oil 11.1%

Others

6.3%Wine

34.9%Confectionery

7.3 ％

Beverages

34.6%

Consumer-pack

edible oil

0.8%

Others

12.2% Wine

45.1%

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China Foods Limited (0506.HK）

2007 Business Review and Analysis

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Turnover of the wine business in 2007 reached HK$2140 million, representing an increase of 18.7% over previous year.

Sales volume in 2007 was 94,000 tonnes, 9.2% higher than that in 2006.

Attributable to the increase in average selling price ， optimizing of product portfolio and lower material cost , the gross profit margin of the wine business increased by 4.4% compared with last year.

The first phase construction of a new vineyard in Yantai was completed in 2007 1H. After the completion of the second phase construction, the vineyard will become a premium chateau encompassing research and development of premium wines, top-quality vine planting, promotion of oenology and vineyard resort.

We enhanced the product mix of “Greatwall” wines and launched the Huaxia Vineyard Small Cru series, the Star series and the Coast series of the “Greatwall” brand, and the revenue for the three series increased by over 40% in 2007.

As the exclusive supplier of wines for the Beijing 2008 Olympics, we launched the Olympic Edition wine, Olympic concept advertisements and the “Greatwall” wines Olympic website in 2007. These Olympics-related marketing activities are designed to increase the brand awareness of “Greatwall” wines.

Wine business

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Wine business (Cont’)

The integration of the distributors of the three wine production bases was basically completed and a new duplicable sales platform was established in Beijing. This sales platform comprises a sales team of more than 80 members with uniform formulation and execution of sales strategies with thorough contact with the end customers.

In addition to the development of mainstream distribution network of principally shopping malls and supermarkets, we will also develop specialty chain stores offering quality wines to high-end consumer, in order to capitalize on the strong growth in the wine market and the increase in consumption.

We have also introduced Italian and Spanish sparkling wines under the Greatwall label to further enhance our product portfolio and brand image.

Shaoxing wine business attained good development since its injection into the Group. During 2007, the revenue for the Shaoxing wine amounted to HK$31.96Million, which nearly doubled the revenue for the previous year. In 2007, we launched two types of low-alcohol rice wine, and we developed more than 70 new distributors, making a total of 120 distributors which cover markets across the country.

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The beverages business recorded a turnover of HK$3,007 million, increased by 23.7% compared with previous year. Among the total sales , sparking beverages account for 82%, while still beverages account for 18%.

The operating profit was HK$147 million, representing a decrease of 8.1% from the previous year. Among the bottlers of the Group, except for one disposed bottler which recorded a operating loss due to decline in sales, the other bottlers reported significant increase in operating profit.

In 2007 we set up a new bottling plant in each of Jiangxi and Xinjiang, which are expected to complete construction and commence production in the second half of 2008.

In October 2007, we completed the first phase of the share sale and purchase with the bottling group of The Coca-Cola Company, by disposing of the 100% interest in the bottler in Jilin province and the minority interests in the bottlers in Harbin, Taiyuan, Chengdu, Kunming and Wuhan, and acquiring the majority interests in the bottlers in Qingdao and Jinan. Shandong province, the franchised market of the bottlers in Qingdao and Jinan, ranks among top 10 provinces in China in terms of per capita GDP, but the per capita consumption of Coca-Cola beverages in the province is currently significantly lower than that for the country. We believe the acquisition shall have positive impact for the future development of the beverages business. According to the second phase sale and purchase agreement, we will purchase 40% interest of Beijing bottler after the expiration of the CCCI management control period, which will be no later than 10 January 2009 or such other date as may be agreed by the parties.

Beverages business

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Beverages business (Cont’)After the completion of the transactions, China Foods will control 10 bottlers in Tianjin, Hunan, Hainan, Gansu, Zhanjiang, Beijing, Qingdao, Jinan, Jiangxi and Xinjiang . In addition, China Foods hold minority interests in the bottlers in Nanjing, Hangzhou, Wenzhou, Shanghai, Huizhou and Guangzhou. Our franchise with The Coca-Cola Company will cover Beijing, Tianjin, Hebei, Shandong, Inner Mongolia, Gansu, Qinghai, Ningxia, Tibet, Hunan, Jiangxi, Guizhou, Hainan, Zhanjiang, Maoming and Xinjiang.

The completion of the transactions will give us a contiguous bloc of territory covering 118 million people, and enable our bottlers to better share transportation, storage and distribution channels and other resources, which will be beneficial to the beverage business over the longer term.

On 21 February 2008, we completed acquisition of 21% interest in Coca-Cola Bottlers Manufacturing Holdings Limited, which enabled us to acquire a stake in the business of production and supply of Coca-Cola beverages still products.

In the next few years, the beverages business will try to maintain its leading position in the sparkling beverages market while develop still beverages including fruit juices and tea and increase its share in the fast-growing still beverages market . Coca-cola Zero, tea beverage Original Leaf and100% juice beverage Minute Maid is introducing to the market. We expect that the beverages business will continue its strong growth trend.

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The consumer-pack edible oil business recorded a turnover of HK$4,158 million, an increase of 124.3% over previous year. If the sales of associate companies were included for 2006, the increase would be 46%.

Due to significant pressure from rising raw materials cost, the consumer-pack edible oil business recorded loss in 2007.

In 2007, in response to the pressure from rising costs, the consumer-pack edible oil business reduced the sales of products with low gross profit margin while increasing the sales of high gross profit margin, making the sales volumes of medium and high end products increase by 19%.

we enhanced our supply chain and lowered our costs by developing new third party edible oil supplier in Fujian and Sichuan provinces. In 2008, we plan to develop new third party edible oil supplier in the northeastern region.

New visual identity for the “ 福臨門” brand was launched in July 2007, which effectively enhanced the brand image and made it sharper and more lively. We made great efforts in the establishment of sales network and the number of end service points had reached 5,000 and we expect the number will exceed 10,000 in 2008.

Consumer-pack edible oil business

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The confectionery business recorded a turnover of HK$437million in 2007 ，representing a increase of 3.9% over previous year.

The gross margin is 44.5% which is maintained at previous year level

Due to the intensified market competition and the increase of distribution expenses, this business recorded loss during the year

Confectionery business

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Thank youThank you ！！