CHINA CORN OIL : First-half 2008 results

Excellent results, boosted by exceptionally high corn oil prices A growth strategy in line with business plan targets, with the ramp-up of the Longevity Flower brand

Zouping - China, October 20, 2008 - China Corn Oil SA, China's largest producer of edible corn oil accounting for 42% of the country's production, today announced its first-half 2008 results.

No pro forma accounts are available for the first half of 2007 and comparative information therefore corresponds to the fiscal 2007 accounts as audited by Lux-Audit Revision SARL, a Luxembourg-based firm of accountants that is a member of the Grant Thornton network.

 (in ¤m) First-half 2008
(6 months)*
(12 months)*
Revenue 49.6 64.5
Gross profit 6.5 6.7
Gross margin 13.1% 10.4%
Recurring operating profit 6.1 6.1
Recurring operating margin 11.5% 9.4%
Net profit (before goodwill impairment) 5.9 5.6

(*)Exchange rate:
Average rate for first-half 2008: RMB 10.85/¤
Average rate for fiscal 2007: RMB 10.77 /¤

Strong revenue growth, boosted by exceptionally high corn oil prices
China Corn Oil reported first-half revenue of ¤49.6 million, compared with ¤64.5 million for the twelve months of fiscal 2007.

This excellent performance reflects:

The increase in the price of corn oil, which accounted for 55% of revenue growth.  International prices started to rise in February, reaching a high of RMB 14,459.8/ton in March/April due to supply shortages before falling back to RMB 11,510.9/ton in June, with the downward trend expected to continue throughout the second half of the year. Rapidly growing sales of China Corn Oil's own Longevity Flower brand, which commands a higher price than bulk oil.  Longevity Flower accounted for 23% of total sales volume for the first half of 2008, compared to 15% in fiscal 2007.

Exports rose to 37% of total revenue in first-half 2008 from 20% in fiscal 2007, a gain of 17 points.

First-half results that reflect an improvement in the product mix
Cost of sales amounted to ¤43.1 million in first-half 2008, compared to ¤54.9 million for the twelve months of fiscal 2007. This item corresponds essentially to raw materials (unrefined crude oil or corn germ), which represent 95% of total revenue.

First-half 2008 gross profit amounted to ¤6.5 million, representing a gross margin of 13.5% versus 10.4% for fiscal 2007.  The increase reflects the improved product mix, and in particular the higher margins generated by branded products for which increased from 28.9% to 32.4% during the period.

Recurring operating profit totaled ¤6.1 million, representing 11.5% of revenue, compared to 9.4% in 2007.

Net profit (before goodwill impairment) for the six-month period came in at ¤5.9 million, representing a net margin of 12.1%, compared to 8.7% in fiscal 2007.

The Company has a solid balance sheet, with equity of ¤25.7 million at June 30, 2008 - compared to ¤15.2 million at December 31, 2007 - and debt of ¤4 million, representing gearing of 15.6%. In first-half 2008, net cash provided from operating activities totaled ¤7.5 million and net cash used by investing activities amounted to ¤17.2 million. Including the proceeds from share issues  for ¤4.5 million and from new borrowings  for ¤7.7 million, net cash and cash equivalents increased by ¤2.5 million over the period.

Development of a growth strategy in line with business plan targets
In a market shaped by an exceptional, non-recurring surge in corn oil prices, during first-half 2008 China Corn Oil focused on implementing its brand-led growth strategy:

Marketing strategy supported by a brand marketing and promotion plan.

During the first half the company accelerated the penetration of its Longevity Flower brand in the domestic market and deepened its marketing presence throughout the country.

Over the past year the Longevity Flower brand has been increasing successful, thanks to:

- National and regional advertising campaigns featuring a well-known television personality.
- The emergence of a middle class in China that is paying increasing attention to the quality of food and its nutritional content.  Longevity Flower is one of the only brands that carry the Green Food Standard label.
- The absence of dominant brand in this market segment, which has allowed Longevity Flower to become the benchmark.

To keep pace with this growth, the marketing team was strengthened in the first half of 2008 with the arrival of Mr. Fu Lei as the new Marketing Director.
Mr. Wang, Chief Executive Officer, stated "I am very happy that Mr. Fu has joined China Corn Oil.  Thanks to his vast knowledge of the market, having successively held management positions in the Xi'An and Quingdoa regions, and then serving as Marketing Director in the Hujihua department at Wilmar, one of China's largest companies with two competing oil brands, Mr. Fu has all the necessary skills and expertise to help continue the expansion of our group."

After building a strong presence for the brand in the wealthiest provinces such as Jiangsu and Zhejiang, as well as in the two economic centers, Shanghai and Beijing, the sales deployment strategy was intensified in other influential zones in the center of the country.  China Corn Oil plans to increase the number of sales offices by 25% before the end of the year.

China Corn Oil's distribution policy is also evolving, with priority being given to the signature of slotting agreements directly with leading national retailers such as Wal-Mart or major regional retailers such as Carrefour. This organization allows China Corn Oil to reach the entire Chinese market with a presence in 86  national and local outlets.

An optimized production strategy that aims to respond to strong domestic demand

The Company doubled its nominal production capacity in response to new health conscious consumer trends, and multiplied its bottling capacity by 2.5 in first-half 2008, in order to increase the number of bottles sold under its own brand name. In addition, 100,000 tons of extra refining capacity came on stream at the end of July.


With additional production capacity coming on stream and moves to bring down inventory levels, corn oil prices are likely to fall in the second half. Looking ahead to next year, prices are expected to average RMB 8,000 per ton, compared to RMB 11,245 in first-half 2008 and RMB 7,350 in fiscal 2007.

In this environment, China Corn Oil will continue its growth strategy in order to reach its objective of doubling revenue and selling 50% of total production volume under its own Longevity Flower brand in three years time.
Considering this outlook, the Company plans to launch an equity issue in the coming months.

The first-half pro forma consolidated financial statements and the auditors' review report are available on the company's website :

ISIN Code: LU 0340126951 -Alternext symbol: ALCOO

This press release does not concern a transaction that requires a prospectus to be submitted to the French securities regulator (AMF) for approval.
Article 211-4, paragraph 3, of the AMF's General Regulations states that "[...] the financial instruments [...] cannot be distributed directly or indirectly to the public otherwise than in accordance with Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-8-3 of the Monetary and Financial Code"
The rules governing private placements on Alternext are set out in the press release published by the AMF on October 15, 2007.

About China Corn Oil:
China Corn Oil is the largest specialist producer and exporter of edible corn oil in China, the second major producer worldwide after the USA. Based in the Shandong province, China Corn oil is located within the very heart of the main corn production region of China. This location confers a real strategic advantage to the Company in terms of geographic proximity with suppliers and with the Quingdao harbour, second major port after Shanghai. China Corn Oil currently has a total production capacity of 100,000 tons, and supplies more than 35% of the edible corn oil on sale in China's domestic market. Moreover China Corn Oil is the only Chinese producer to benefit from a high recognition brand name: "Longevity Flower".


Huang Da - Secretary of the Board
China Corn Oil
e-mail :
Nicole Roffé
EZRA Communication
Mobile: + 33 (0)6 60 06 16 45
e-mail :
China Corn Oil
Statements of Income
In millions of euros First-half 2008
Revenue 49.6
Raw Materials 43.1
Total direct costs 43.1
Gross Profit 6.5
Other revenue 0.7
Sales and Marketing expenses (0.7)
Administrative expenses (0.4)
Recurring Operating Profit 6.1
Other income and expenses -
Operating Profit 6.1
Finance costs, net (0.2)
Profit before tax 5.9
Income tax expense -
Net income (before goodwill impairment) 5.9
*Based on an exchange rate of RMB 10.85/¤
China Corn Oil
BALANCE SHEET (in millions of euros)
ASSETS 30/O6/2008* 31/12/07**
Intangible assets   -
Tangible assets   5 .4
Other non-current assets   -
Non-Current Assets 22.2 5.4
Stocks 8.2 7.0
Trade receivables 9.2 0.6
Other receivables 6.5 3.9
Other current assets   -
Securities   -
Cash 3.7 1.2
Total cash and equivalents   1.2
Current Assets 27.6 12.7
TOTAL ASSETS 49.9 18.1
EQUITY AND LIABILITIES 30/06/2008 31/12/07
Equity   15.2
Minority interests   -
Total Equity 25.7 15.2
Provisions   -
Long-term debt 7.7 -
Other non-current liabilities 12 -
Non-Current Liabilities -
Trade payables 1.7 1.2
Short-term debt   -
Other current liabilities 2.8 1.7
Total Current Liabilities 24.2 2.9

*Based on an exchange rate of RMB 10.85 /¤
**Based on an exchange rate of RMB 10.77 /¤

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