[For immediate release] Shenguan Holdings (Group) Limited Announces 2013 Interim Results * * * Sales Volume Grew Moderately Export Sales Surged Significantly Net Profit for the First Half of 2013 Amounted to RMB304 million Total Dividend for the First Half of 2013 (Special Dividend Included) was 7.5 HK cents and Dividend Payout Increased to 65.1%

Financial highlights

For the six months ended

30 June

Change

2013

2012

Change

Revenue (RMB million)

683.3

692.3

-1.3%

Gross profit (RMB million)

393.4

415.7

-5.4%

Profit attributable to owners of the Company

(RMB million)

304.6

312.7

-2.6%

Basic earnings per share (RMB cents)

9.16

9.41

-2.7%

Dividend per share (HK cents)

- Interim

- Special

4.7

2.8

4.5

1.0

+4.4%

+180.0%

(19 August 2013 - Hong Kong) - The largest manufacturer of edible collagen sausage casing products in the PRC, Shenguan Holdings (Group) Limited ("Shenguan Holdings" or the "Company", together with its subsidiaries, the "Group", HKEx stock code: 829), today announces its interim results for the six months ended 30 June 2013 (the "Period").
During the first half of 2013, profit attributable to owners of the Company decreased by
2.6% to RMB304.6 million from RMB312.7 million for the same period last year. Basic earnings per share of the Group for the Period were RMB9.16 cents, down 2.7% from
RMB9.41 cents of the same period of 2012. The Board recommends the payment of an interim dividend for the Period of HK4.7 cents per share and a special dividend of HK2.8
cents per share. Dividend payout ratio for the first half was 65.1%.
During the Period, sales volume of sausage casing products recorded a moderate growth of
2.0%. However, such growth was partly offset by the slower growth in the demand from sausage manufacturers when they were de-stocking raw materials amid a difficult business environment. Other factors that hindered the growth were the lower efficiency experienced by the Group during the transitional period to extensive use of the whole pieces of cattle inner layer skin, and the interruption to daily operation during the installation period of new heat energy technology. Therefore, the overall revenue decreased by 1.3% to RMB683.3 million as compared to the previous year. While domestic sales remained to be the Group's major source of revenue, the growth of sales volume in exports for the first half surged significantly and accounted for 7.5% of the total sales.

Shenguan Holdings (Group) Limited Announces 2013 Interim Results

19 August 2013 / page 2

During the first half, gross profit margin of the Group was 57.6%, down 2.5 percentage points from that of the same period of 2012. This mainly reflected that the change to extensive use of the whole pieces of cattle inner layer skin as raw material in the first quarter of 2013 was not as smooth as expected and caused some wastage, coupled with the rising factory overheads, resulting into a relatively low gross profit margin for this quarter. In respect of the extensive use of the whole pieces of cattle inner layer skin for production, the situation started to improve and the gross profit margin began to stabilize during the second quarter of 2013 when the workers became better versed in the new treatment and processing procedures and technical problems were solved.
To mitigate the impact of the rising cost pressure, the Group strived to implement stringent cost control, enhanced the efficiency and automation of existing production lines and optimized its energy-saving facilities during the Period. In particular, the fourth-generation heat energy system was installed on the production lines during the Period. As at 30 June
2013, 70% production lines has already adopted the new technology and the whole project has been completed by the end of August 2013.
For the six months ended 30 June 2013, the Group was in a net cash position of RMB390.7 million together with held-to-maturity investments of RMB54.6 million.
Looking ahead, the Group's chairman, Ms Zhou Yaxian said, " The favourable policies as elaborated in the 'Twelfth Five Year Plan' report, the central and local governments' support to the meat industry, and the optimization of both the meat industry structure and the product portfolio will further boost the market growth in the years ahead. Looking ahead to the second half of the year, as the Mid-Autumn Festival and National Day is approaching; the festive atmosphere will trigger a gradual recovery for the Chinese meat consumption market. 'Forecast of the global demand and supply of
agricultural products' (