统一企业中国 二零一三年中期报告

统一企业中国 二零一三年中期报告

2013 INTERIM REPORT (Stock Code : 220)

(a company incorporated in the Cayman Islands with limited liability)

统一企业中国 二零一三年中期报告

统一企业中国 二零一三年中期报告

Contents

Pages

2 Corporation Information

4 Management Discussion & Analysis

19 Other Information

26 Report on Review of Interim Financial Information

28 Condensed Consolidated Interim Balance Sheet

30 Condensed Consolidated Interim Income Statement

31 Condensed Consolidated Interim Statement of Comprehensive Income

32 Condensed Consolidated Interim Statement of Changes in Equity

33 Condensed Consolidated Interim Statement of Cash Flows

35 Notes to the Condensed Consolidated Interim Financial Information

1

Uni-President China Holdings Ltd. Interim Report 2013

统一企业中国 二零一三年中期报告

Corporate Information

220

P.O. Box 309

Ugland House

Grand Cayman

KY1-1104

Cayman Islands

131

188

7 703A

SHARE LISTING

The Stock Exchange of Hong Kong Limited

(Stock Code: 220)

REGISTERED OFFICE

P.O. Box 309

Ugland House

Grand Cayman

KY1-1104

Cayman Islands

HEAD OFFICE

No. 131, Linhong Road

Shanghai Hongqiao Linkong Economic Zone

Changning District

Shanghai

China

PLACE OF BUSINESS IN HONG KONG

Unit 703A, 7/F., Golden Centre

188 Des Voeux Road Central

Hong Kong

WEBSITE ADDRESS

EXECUTIVE DIRECTORS

Mr. Lo Chih-Hsien (Chairman)

Mr. Hou Jung-Lung (President)

NON-EXECUTIVE DIRECTORS

Mr. Kao Chin-Yen

Mr. Lin Chang-Sheng

Mr. Lin Lung-Yi

Mr. Su Tsung-Ming

INDEPENDENT NON-EXECUTIVE DIRECTORS Mr. Chen Sun-Te

Mr. Fan Ren-Da, Anthony

Mr. Yang Ing-Wuu

Mr. Lo Peter

COMPANY SECRETARY

Mr. Pang Ka Fai, Angus

AUDIT COMMITTEE

Mr. Fan Ren-Da, Anthony (Chairman)

Mr. Chen Sun-Te

Mr. Lin Lung-Yi

Mr. Lo Peter

2Uni-President China Holdings Ltd. Interim Report 2013

统一企业中国 二零一三年中期报告

3Uni-President China Holdings Ltd. Interim Report 2013 Corporate Information NOMINATION COMMITTEE Mr. Fan Ren-Da, Anthony (Chairman)Mr. Lo Chih-Hsien Mr. Lo Peter REMUNERATION COMMITTEE Mr. Chen Sun-Te (Chairman)Mr. Lin Chang-Sheng Mr. Yang Ing-Wuu PRINCIPAL BANKERS Agricultural Bank of China Bank of China Industrial and Commercial Bank of China China Construction Bank China Merchants Bank AUDITOR PricewaterhouseCoopers Certified Public Accountants HONG KONG LEGAL ADVISERS Leung & Lau 3rd Floor, Agricultural Bank of China Tower 50 Connaught Road C.Central, Hong Kong PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE Royal Bank of Canada Trust Company (Cayman) Limited 4th Floor, Royal Bank House 24 Shedden Road, George Town Grand Cayman KY1-1110Cayman Islands HONG KONG BRANCH SHARE REGISTRAR AND TRANSFER OFFICE Computershare Hong Kong Investor Services Limited Shops 1712-1716, 17th Floor Hopewell Centre 183 Queen ’s Road East, Wanchai Hong Kong

50

3

Royal Bank of Canada Trust Company

(Cayman) Limited

4th Floor, Royal Bank House

24 Shedden Road, George Town

Grand Cayman KY1-1110

Cayman Islands

183

17 1712-1716

统一企业中国 二零一三年中期报告

Management Discussion & Analysis

2013 6 30 2410

2013 2013 2013 (GDP) 7.6% 7.7% 7.5% 2013 6 2013 The board of directors (“Board”) of Uni-President China Holdings Ltd. (“Company”) is pleased to present the unaudited interim condensed consolidated financial information of the Company and its subsidiaries (together, “Group”) for the six months ended 30 June 2013 (“Period under Review”). The interim condensed consolidated financial information is unaudited but has been reviewed by the audit committee of the Company and PricewaterhouseCoopers, the independent auditor of the Company, in compliance with Hong Kong Standard on Review Engagements 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”issued by the Hong Kong Institute of Certified Public Accountants.

ECONOMIC ENVIRONMENT

The global economy is yet to recover in the first half of 2013, as reflected by the marked slowdown of the Chinese economic growth in the second quarter of 2013 and the economic hardships faced by the greater Eurozone. These fundamental problems remain difficult to resolve. Despite the slight improvement in the economy, the United States maintains a loose monetary policy, indicating uncertainties of economic growth. On the other hand, the government of the People’s Republic of China (“PRC”) continues with its macroeconomic controls and industrial restructuring by a series of effective measures. The gross domestic product (“GDP”) of China for the first half of 2013 recorded a year-on-year growth of 7.6% but the year-on-year growth rates for the first quarter and the second quarter were 7.7% and 7.5% respectively, which indicated a slowdown in the second quarter. At the end of June 2013, the central bank of the PRC made an unexpected move by tightening liquidity in the market in order to adjust credit growth, causing seasonal cash shortage among banks and financial institutions. Hence, the Group takes a “wait-and-see” attitude towards the PRC economic development for the second half of 2013.

4Uni-President China Holdings Ltd. Interim Report 2013

统一企业中国 二零一三年中期报告

Management Discussion & Analysis

2013 12,203.9 10,648.1 14.6% 12.6% 4,144.7 34.6% 0.6 34.0% 2013 6 620.0 213.3 3,498.2 2012 2,882.5 390.3 2012 353.0 48.4 2012 63.6 13.9% 574.9 2012 504.9

FINANCIAL RESULTS

Due to the significant downswing in the PRC economic growth in the first half of 2013 and the intensifying competition within the industry, revenue, gross profit and operating profit of the Group showed a slower growth during the Period under Review. Nevertheless, the Group outperformed the market in terms of revenue growth as a result of the effective implementation of its focused operating strategies and increased brand value. During the Period under Review, the Group recorded a revenue of RMB12,203.9 million, representing an increase of 14.6% from RMB10,648.1 million for the corresponding period last year. Our gross profit increased by 12.6% to RMB4,144.7 million, while the gross profit margin dropped by 0.6 percentage points to 34.0% from 34.6% compared to the corresponding period last year. The slight decrease in gross profit margin was mainly attributable to the sluggish instant noodles and beverage markets and intensifying industry competition, and the relatively lower prices of major raw materials during the Period under Review were not able to set off the effect. Also, the Group devoted more resources in improving our products in order to enhance our market share. The operating profit included a net gain of RMB213.3 million from the sale and transfer of machineries and equipment of (Beijing President Enterprises Drinks Co., Ltd.*) and (Kunshan President Enterprises Food Co., Ltd.*), wholly-owned subsidiaries of the Company, from the Group to Cayman Ton Yi (China) Holdings Limited, a connected person of the Group, at a consideration of RMB620.0 million in June 2013. Due to the proactive efforts of the Group in brand building of its instant noodles and beverage business and sales channel development to expand its customer base during the Period under Review, selling and marketing expenses increased to RMB3,498.2 million (first half of 2012: RMB2,882.5 million). Administrative expenses for the Period under Review amounted to RMB390.3 million (first half of 2012: RMB353.0 million), which was mainly attributable to the increase in operating expenses in relation to the Group’s expansion. During the Period under Review, share of net profit of jointly controlled entities and associates reduced to RMB48.4 million (first half of 2012: RMB63.6 million) as a result of the sluggish economic growth. Profit attributable to equity holders of the Company for the Period under Review increased by 13.9% to RMB574.9 million (first half of 2012: RMB504.9 million).

5 Uni-President China Holdings Ltd. Interim Report 2013

统一企业中国 二零一三年中期报告

Management Discussion & Analysis

2013 3,776.7 10.4% 2013 4.5% 2012 15.1% 2013 16.9% 1.8 2013

2013 0.5% 2008 2013 BUSINESS REVIEW

Instant Noodles Business

Our instant noodles business managed to secure its growth during the first half of 2013 with a revenue of RMB3,776.7 million for the first half of the year, representing a year-on-year growth of 10.4%. According to ACNielsen, sales of the instant noodles market for the first half of 2013 grew by only 4.5% on an overall basis as compared to the corresponding period last year. Our instant noodles business continued to outperform the market in general with a constant and stable increase in the market share, which rose by 1.8 percentage points from 15.1% for the first half of 2012 to 16.9% for the first half of 2013. With our effective and focused operating strategy, our key product, “Lao Tan Pickled Cabbage and Beef Flavoured Noodles ”, recorded a sustainable growth and ranked the second among all Chinese instant noodle flavours in terms of sales. The new product, “Braised Beef Flavoured Noodles ”, maintained a rapid growth during the first half of 2013 and became the second most successful key instant noodles flavour of the Group.

ACNielsen reported that sales volume of instant noodles in general grew significantly slower as compared to the corresponding period with a growth rate of only 0.5% during the first half of 2013. The operating environment and market competition have been tough. However, the increase in sales amount has exceeded that in sales volume for several years continuously, clearly indicating an undergoing industry upgrade. Mid-to-high-priced instant noodles will become increasingly popular in the future. The Group has already shifted the focus to mid-to-high-priced instant noodles and has been following a “value-oriented marketing ”strategy since the second half of 2008. We set ourselves to offer noticeably unique and high value-added products to consumers, and have outgrew the industry performance in general for three consecutive years. Our key product, “Lao Tan Pickled Cabbage and Beef Flavoured Noodles”, has led a further market change in terms of flavour. In the first half of 2013, the share of pickled cabbage flavoured noodles ranked the second in the market. Our “Lao Tan Pickled Cabbage and Beef Flavoured Noodles” was able to maintain its leading position in the pickled cabbage flavoured noodles market according to ACNielsen.

6Uni-President China Holdings Ltd. Interim Report 2013

统一企业中国 二零一三年中期报告

7Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

Many competitors in the market have also released products similar to “Lao Tan Pickled Cabbage and Beef Flavoured Noodles ” to compete with us. In view of the surge of similar products, we maintained our focused operating strategy to differentiate ourselves from the competing, imitating pickled cabbage flavoured products by means of brand promotion and marketing, which strengthened our interaction with consumers, advocated our “authenticity of Lao Tan ” concept, promoted our “Made by 81-day Double Fermentation with Traditional Pickling Jars ” technique, and established the image of “Uni-President Lao Tan: Authentic Sourness and Crunchiness ” in consumers ’ hearts. In respect of product quality, we continued to improve our product in order to outshine our competitors and secure our leading position in the spicy flavours market. For the new “Braised Beef Flavoured Noodles ”, we focused on building the image of “Braised Beef Flavoured Noodles is the

Choice for New Generation Consumers

” among consumers and obtaining share in the non-spicy market actively. Extending our marketing theme of “Enjoy the Perfect Taste

of Braised Meat

”, we promoted the concept of “Long-Pickled and Slow-Braised with 18 Selected Pickling Ingredients, Delivering Rich Aroma and Taste

” on the media and actively held free tasting events called “Invitation to a Feast Full of Braised Flavours

” and exhibited the “Box of 18 Pickling Ingredients

” around the cities to give a full demonstration of the product ’s quality.

In respect of sales channels construction, we continued to adopt the strategy of “celebrity products driving development of sales channels ” and allocate resources to expand new channels. Besides enhancing sales of the existing network, we have also devoted great efforts to the development of new points of sales. We have basically completed a dealership and distributor network from first tier cities to prefecture-level cities, counties and townships across the PRC. At the same time, the penetration of our channels into rural markets continued through rural procurement conferences and roadshows in market time. The

Group also devoted great efforts to the development of railway, highway, airport, factory, mine, construction site and chain hotel as special new sales channels.

统一企业中国 二零一三年中期报告

8Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

Our instant noodles business recorded a lower profit margin for the first half of 2013 as the Group has expanded its investment in marketing activities in order to enhance the competitiveness of our products and strengthen our brand-building efforts in the face of sluggish growth and intense competition within the industry. However, the Group fought with the tough operating environment successfully and posted an increased revenue, which was a double of the market growth, as well as an increase in market share. For the second half of 2013, we will continue to maintain the edge of our products and invest in marketing where necessary in order to

establish our key products, “Lao Tan Pickled Cabbage and Beef

Flavoured Noodles ” and “Braised Beef Flavoured Noodles ”, as the

two cornerstones of our instant noodles business and gain further

foothold in the instant noodles market.

Beverage Business Tea Drinks During the first half of 2013, revenue from our tea drinks business amounted to RMB3,453.5 million, up by 10.8% as compared with the corresponding period last year. According to ACNielsen, the ready-to-drink tea (excluding milk tea) market continued to shrink in the first half of 2013 with an 8.7% year-on-year drop in overall tea drink sales amount. In contrast, our tea drinks business managed to increase its revenue amid persistent contraction of the market in general. Our market share in the tea drinks market increased

substantially by 3.5 percentage points from 21.2% for the first half

of 2012 to 24.7%.

In the first half of 2013, our tea drinks business maintained its

value-oriented marketing strategy and concentrated its resources

on our core products, “Uni Ice Tea

” and “Uni Green Tea

”. Further to the introduction of an enhanced formula to our “Uni Ice Tea ” last year in which a refreshing and

smooth lemon-flavoured product was added, “Uni Ice Tea ” kicked

off its celebrity endorsement campaign featuring Avril Lavigne, an

international star, together with the thematic activity of “In Pursuit

of Unlimited, Dare to Reach Target

” this year. The brand fused marketing events with media advertising,

in particular a combination of new media advertisements, and

organised a wide range of topical campus events during the year,

such as “Reaching Target with Avril Lavigne

” and “Skateboarding Together in the Provincial Capitals

”. Such activities successfully publicised the core brand theme of “Uni Ice Tea ” of “Youth Unlimited

” and enhanced the brand ’s identity and uniqueness. We have also

improved the formula of Uni Green Tea in 2013 to create a purer

and more refreshing taste. Coupled with the new package design,

the new formula helped to establish a younger and trendier image 2013

2013

2013

3,453.5 10.8%

2013

8.7%

2012 21.2%

24.7% 3.5 2013 ? (Avril Lavigne) 2013 2013 4.20

统一企业中国 二零一三年中期报告

9

Uni-President China Holdings Ltd. Interim Report 2013

Management Discussion & Analysis

for the brand. The major event of “Uni Green Tea ” for 2013 is “Experience the Nature with My Own Tracks

”, which demonstrated the brand tagline of “Experience the Nature

” and strengthened the tie with consumers with a series of topical cycling activities along the most beautiful nature trails in Beijing, Shanghai and Guangzhou and the selection of cycling ambassadors on Earth Day (20 April) together with interactive media advertising. The cycling events of “Uni Green Tea ” helped publicise the brand ’s “taste of new leaves and aromatic tea

”, and the naturalness of our products have, conversely, assisted in building up the direct association between “Uni Green Tea = Experience the Nature = Green Cycling

= =

” so as to enhance the popularity of the “Uni Green Tea ” cycling activities among the consumers.

In addition to the existing products, the Group launched brand

new product lines, namely the “Natural Intuition

” series of plant-based tea and the sugar-free “Just Tea

” series of pure tea that cater for the growing number of “nature and health

conscious

” consumers, in the second quarter of 2013 in order to achieve market diversification and expand our tea drinks profile. These products were rolled out in key cities in eastern and southern China.

In the second half of 2013, the Group will use the savings from lower raw material prices and costs for product improvement and marketing. Insisting on our value-oriented strategy, we will increase our investment in brand-building instead of participating in price competition. We will also review both the input and output of our key resources under our guiding principle of “managing resources effectively, optimising product mix and efficiency of policy

implementation ”.On the brand-building front, “Uni Ice Tea ” will turn its focus from

campus to offices. Under the “In Pursuit of Unlimited, Dare to Reach Target ” campaign, we will organise a super skateboarding event to be endorsed by Avril Lavigne, an international star, in August. This event will be the climax of our brand-building activities during the peak season of tea drink sales and maximise the effect of celebrity endorsement. For “Uni Green Tea ”, a super large thematic activity, “Experience the Most Beautiful Trails

”, will be held across 12 provinces. Together with other activities on the “Car Free Day

”, the “Experience the Nature with My Own Tracks ” and “Experience the Nature ” brand images will be given full play.

= =

2013

2013

8 12

统一企业中国 二零一三年中期报告

10Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

In terms of the sales network, while maintaining better relationship with distributors, we will also focus on the storage capacity, distribution, coverage, policy execution and management of key stores in 2013 through expanding our investment in refrigerators and improving the management of our points of sales in order to

enhance our market share.

Juice Drinks Our juice drinks business carried on its value-oriented marketing strategy and active brand-building efforts during the first half of 2013 and recorded a revenue of RMB2,403.4 million, a year-on-year increase of 23.4%. In comparison, the growth rate of the juice drinks market in general was only 4.7% according to ACNielsen. In particular, pear drinks performed strongly and have become the major juice flavour second only to orange juices. The Group was able to fully utilise celebrity endorsement and outperformed the industry in general by focusing on “More ” Orange Juice

under the “More Juice Series

” and “Crystal Sugar Pear Drink ” under the “Seasonal Drinks

” series.Adhering to the promotion theme of “Boosting Your Beauty with

Vitamin C C

”, the “More Juice Series ” continued to engage Jang Keunsuk, the “Prince of Asia

”, and Park Min Young, the “Beautiful Princess

”, to endorse its products in 2013. A micro film and a theme song, ICU, were released under the theme of “International Beauty Inn

” while a series of events of “International Beauty Inn ” were launched since April. The new small-sized 450 ml “More ” Orange Juice hit the market with a comprehensive launch campaign conducted on online platforms and media with a wide coverage across television and outdoor and online media. This campaign

successfully evoked a “beauty whirlwind

” and aroused fierce response after winning the recognition of consumers, thereby utilising the effect of celebrity endorsement to the fullest. Thus, the brand ’s equity was demonstrated and communicated to consumers in the most effective way. In comparison, we promoted Crystal Sugar Pear Drink under the “Seasonal Drinks ” series, which stresses its “quenching and soothing quality

”, with the special sponsorship of Zhejiang Satellite TV ’s highly popular “Do You Remember?

” programme which showcases people who are good at remembering lyrics. Through frequent product placement in the programme, our product,

relevant brand activities and the “quenching quality

” of the brand were widely advertised. 2013

2013 2,403.4

23.4% 4.7%

C 2013 ICU 4 450ml

统一企业中国 二零一三年中期报告

11Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

For the second half of 2013, the juice drinks business will operate under the guiding principle of “securing the leadership of its major flavours, adjusting its product mix continually and rationalising resource allocation ”. Adhering to our value-oriented marketing strategy and carrying on our brand-building efforts, savings from the lower raw material bulk purchasing prices will be applied to product improvement and marketing activities. The “More Juice Series ” will continue to demonstrate its image of beauty and youthfulness and uphold its vitality and liveliness with the annual brand events and marketing activities of “International Beauty Inn ” in order to accumulate sustainable brand equity. On the other

hand, we will advertise the “Seasonal Drinks ” series, strengthen

its marketing, and demonstrate the “quenching

” quality of this brand through the activities of the “Do You Remember?” programme and interviews with its endorsing celebrity, Fish Leong, and the champion of the programme, together with promotion activities on radio and Weibo. Tickets to such events were highly sought after.

Milk Tea Revenue from our milk tea business for the first half of 2013 increased by 14.8% as compared with the corresponding period last year. According to ACNielsen, the market share of “Uni Milk Tea ” rose to 62.7% in the first half of 2013, thereby maintaining its market leadership. “Uni Milk Tea ” is fully committed

to the provision of better products of higher quality to consumers, and will carry on its value-oriented marketing strategy.

In 2013, in order to prepare for the traditional sales peak during the Chinese New Year, our milk tea business launched the 1.5-litre package of its leading product line, “Assam Milk Tea

”, designed for sharing in a timely manner with a view to satisfying consumers ’ increased and diversified consumption needs, promoting its products awareness among consumers and penetrating into county and township markets. “British Earl Grey

Milk Tea

” carried on its promotion campaign with the theme of good mood from England through offering unique experience to the consumers with advertisements on CCTV, national satellite channels and regional television stations, as well

as the “Joyful Playland

” integrated point-of-sales marketing campaign, which involved a series of marketing activities tailored to our target customers such as the interactive “Joyful Playland ” experience events held at points of sales and activities on the Internet and Weibo. This campaign has successfully promoted the sustainable growth of “Uni Milk Tea ” and enhanced its brand awareness.2013

2013 14.8% 2013 62.7% 2013 1.5

统一企业中国 二零一三年中期报告

12Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

For the second half of 2013, “Uni Milk Tea ” will uphold its value-oriented marketing strategy so as to promote the noticeable uniqueness of its brand which advocates the “Joyful Mood ” to differentiate its products. With the effective “Joyful Mood ” television commercials, we will interact closely with our young target consumers on the Internet and at the points of sales in order to promote the acceptance of “Uni Milk Tea ” among consumers

and further strengthen the leading position of “Uni Milk Tea ”.

Coffee Our coffee business maintained a rapid and steady growth during the first half of 2013 with a year-on-year increase in revenue of 39.1%. The refreshing 450 ml “A-Ha Ice Coffee ” and the mid-to-high-end aromatic 280 ml “A-Ha Italian Mocha Pot ” series tailoring to different targets were both well-received by the consumers. In particular, the “A-Ha Italian Mocha Pot ” series received great response from the market with its Italian Mocha Pot espresso coffee process, aromatic and authentic taste and patented groundbreaking octagonal package coupled with the television commercial shot in Italy and aired on television and online

media in various major cities.

For the second half of 2013, “A-Ha Coffee ” will adhere to its value-oriented and differentiation development strategy, focus on promoting the ready-to-drink coffee market in the PRC and enhance its brand awareness and reputation. Besides promoting the ready-to-drink coffee markets in first tier cities, it will also accelerate its expansion in provincial capitals and second tier cities

in order to become one of the leading ready-to-drink coffee brands in the PRC.

Bottled Water Total operating income from our bottled water business for the first half of 2013 grew by 29.5%, which was mainly attributable to the mid-to-high-priced natural spring water. The share of “Uni Mineralised Water ” in our sales dropped remarkably to less than 20%, while that of the mid-to-high-priced spring water rose to over 80% of the total operating income in the first half of 2013. The restructuring of our product portfolio since

2011 has achieved initial success and the Group will stay focused on mid-to-high-priced natural spring water.

2013

2013 39.1% 450ml 280ml 2013

2013 29.5% 2013 2011

统一企业中国 二零一三年中期报告

13Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

For the first half of 2013, the revenue of the major brand “ALKAQUA ” recorded a year-on-year growth of 80.6%. The growth was attributable to its noticeably unique design and positioning, which has won the recognition from its target customers, as compared with similar products. With the continual improvement in living standard, consumers nowadays have higher requirements for drinking water. To satisfy the affluent consumers in their pursuit of healthy and quality lifestyle, the Group launched “Bama Spring Mineral Water

”, a new and quality choice for the consumers from Bama, Guangxi (a world-famous town of longevity), early this year.

The Group is actively looking for quality spring water sources across the PRC and will gradually establish more garden-like production bases for spring water throughout the country. Leveraging on its nationwide sales network, the Group will further enhance the scale and efficiency of the sales of its bottled water in order to bring us into the league of leading mid-to-high-priced spring water brands in the PRC within three years. Our bottled

water business will strive to provide consumers with better bottled water that are more natural and healthier.

ALKAQUA 2013 80.6%

统一企业中国 二零一三年中期报告

14Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

FINANCIAL ANALYSIS Cash and Borrowings As at 30 June 2013, the Group had a total cash and cash equivalents of RMB2,034.6 million (31 December 2012: RMB2,290.8 million), among which 98.0% were denominated in Renminbi. As at 30 June 2013, the Group had pledged bank deposit of RMB23.0 million (31 December 2012: RMB4.7 million). Current assets of the Group amounted to RMB5,364.5 million (31 December 2012: RMB4,917.3 million) with current liabilities of RMB6,307.5 million (31 December 2012: RMB4,948.2 million). Net current liabilities were RMB943.0 million (31 December 2012: RMB30.9 million). During the Period under Review, the Group mainly finances its working capital and capital expenditure by internally generated cash flows, credit facilities from principal bankers and the fund raised by the debt issue of RMB1,000 million notes due 2016. As at 30 June 2013, the Group ’s total borrowings increased by RMB1,174.7 million to RMB5,145.6 million (31 December 2012: RMB3,970.9 million), among which 73.6% were repayable over one year and 60.9% were denominated in United States dollar. All of the Group ’s borrowings are at floating interest rates save for the RMB1,000 million notes due on 2016 which are at a fixed interest rate of 3.5% per annum. As at 30 June 2013, the Group had secured bank borrowings of RMB Nil (31 December 2012: RMB Nil). Due to the increase in profit for the Period under Review, most of the capital expenditure was funded by cash inflow from the Group ’s operating activities.

Financing In June 2013, RMB1,000 million of 3.5 per cent notes due 2016 (“Notes ”) were issued by the Company by way of debt issue to professional investors only, with the net proceeds (after deducting the related expenses) intended to be used by the Company as general working capital. The approval for the listing of the Notes (Stock Code: 85927) has been granted by The Stock Exchange of Hong Kong Limited (“Stock Exchange ”). Unless previously redeemed or purchased and cancelled, the Notes will be redeemed at their principal amount on, or nearest to, 6 June 2016.

2013 6 30 2,034.6 2012 12 31 2,290.8 98.0% 2013 6 30 23.0 2012 12 31 4.7 5,364.5 2012 12 31 4,917.3 6,307.5 2012 12 31 4,948.2 943.0 2012 12 31 30.9 2016 1,000 2013 6 30 1,174.7 5,145.6 2012 12 31 3,970.9 73.6% 1 60.9% 2016 1,000 3.5 2013 6 30 0 2012 12 31 0

2013 6 2016 1,000 3.50 85927 2016 6 6

统一企业中国 二零一三年中期报告

15

Uni-President China Holdings Ltd. Interim Report 2013

Management Discussion & Analysis

The gearing ratios of the Group as at 30 June 2013 and 31 December 2012 were as follows:

Cash Flow and Capital Expenditure

For the six months ended 30 June 2013, the Group recorded a net decrease in cash and cash equivalents of RMB256.2 million, comprising net cash inflow from operating activities of RMB764.2 million, net cash inflow from financing activities of RMB1,067.7 million, and net cash outflow from investing activities of RMB2,087.2 million. The net cash outflow from investing activities was mainly applied to the expansion in scale of production, establishment of new production base and purchasing machinery and equipment for the instant noodles business and beverage business to enhance production capacity in order to satisfy demand from the expansion of consumption market and the Group ’s business growth. During the Period under Review, the Group had capital expenditure of RMB2,391.9 million (six months ended 30 June 2012: RMB1,440.0 million).

2013 6 30 2012 12 31

2013 6 30 2012 12 31 30 June

2013

31 December

2012

RMB ’000

RMB ’000

Total borrowings

5,145,5563,970,879

Less: cash and cash equivalents

(2,034,568)

(2,290,809)

Net debt 3,110,9881,680,070

Total equity

8,069,943

7,671,068

Total capital

11,180,931

9,351,138

Gearing ratio

27.82%

17.97%

2013 6 30 256.2 764.2 1,067.7 2,087.2 2,391.9 2012 6 30 1,440.0

统一企业中国 二零一三年中期报告

16

Uni-President China Holdings Ltd. Interim Report 2013

Management Discussion & Analysis

Analysis of Operating Efficiency

The Group keeps its trade receivables and payables and inventory level under strict control and management. Sales to most customers are made on a delivery on payment basis. The Group ’s trade receivables are generated from credit sales to credit customers of modern channels including, but not limited to, grocery stores, street stalls and department stores, with credit terms normally ranging from 30 to 60 days. For the Period under Review, trade receivables increased by RMB245.6 million to RMB758.2 million. The Group ’s inventories mainly comprised raw and packaging materials, finished goods and low value consumables. The inventory turnover days decreased by 5 days as compared with that in 2012 as the finished products continuously sold well in various sales channels. As at 30 June 2013, the inventory balance decreased to RMB1,225.6 million as compared with the beginning of the year. The Group ’s trade payables mainly arise from credit purchases of raw materials. For the Period under Review, the Group recorded an increase in trade payables by RMB154.2 million to RMB1,596.2 million, mainly due to the increase in purchase of raw materials and increase in accounts payable resulting from the growth in sales for the Period under Review.

30 60 245.6 758.2 2012 5 2013 6 30 1,225.6 154.2 1,596.2

2013 6 30 2012 12 31 30 June

2013

31 December

2012

Trade receivable turnover days 99

Inventory turnover days 28

33

Trade payable turnover days

34

34

统一企业中国 二零一三年中期报告

17Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

Financial Management and Policy In view of the uncertain global economic outlook for 2013, the Group adheres to the principle of financial prudence. We responded to risks and moved forward in a steady pace by adjusting sales and marketing expenses, increasing in capital expenditures, and improving and expanding infrastructure according to market conditions. The Group ’s financial department formulates financial risk management policies based on the policies and programmes approved by the Board and under the guidance of the executive Director. Such financial risk management policies were regularly reviewed by the Group ’s internal audit department. The Group ’s

financial policies aim at reducing the impact of interest rate and exchange rate fluctuations on the Group ’s overall financial position, as well as minimising the Group ’s financial risk exposure.

The Group ’s financial department provides centralised financial risk (including interest rate and foreign exchange risks) and cash flow management, and cost-effective funding for the Group and its members. The functional currencies of most of the Group ’s members are Renminbi since the majority of their revenues are derived from operations in the PRC. Foreign exchange risk may arise from future borrowings from overseas and recognised assets or liabilities, such as cash and cash equivalents and borrowings, part of which are denominated in United States dollar and Hong Kong dollar. The Group uses foreign exchange forward contracts outside the PRC for risk management and control of the Group ’s assets and liabilities when interest or exchange rates were uncertain or fluctuate, or whenever suitable. Our policy is not to engage in speculative derivative financial transactions nor invest the current

capital in financial products with significant underlying leverage or risk, including hedge funds or similar instruments.

CONTINGENT LIABILITIES The Group did not have any material contingent liabilities as at 30 June 2013.

2013

2013 6 30

统一企业中国 二零一三年中期报告

18Uni-President China Holdings Ltd. Interim Report 2013 Management Discussion & Analysis

PROSPECTS Looking forward to the second half of 2013, in spite of the slowdown in the PRC economy, the Group will continue to cautiously expand its operation, pursue its operation strategy of “staying focused in business strategy and streamlining operations ” and make every effort to increase corporate and shareholder value. To manage industry competition and enhance operational efficiency, the Group has made proactive efforts in brand building, further developed its sales network, optimised its product mix and moderately adjusted its sales and

marketing expenses. In respect of food safety, the Group will strictly implement its quality control measures in order to ensure that all products meet the safety standards.

HUMAN RESOURCES AND EMOLUMENT POLICY As at 30 June 2013, the Group had 38,916 employees. In view of the huge market opportunities for dairy beverages and food products in the PRC, the Group is actively expanding its foothold on a large scale, thus fuelling a huge demand for talents. It aims at fulfilling the human resources demand arising from the rapid business and production expansion by adopting a more prudent and effective approach in the selection and hiring process. In respect of the new grass roots staff, the Company devotes considerable resources in staff training and monitoring their development and progress in a timely manner in order to familiarise them with the working environment and build up team spirit. Meanwhile, the Company recognises the value of its key personnel in maintaining team morale and competitiveness. Both internal promotion and external recruitment are applied to select and promote outstanding employees for vacant positions and attract

qualified candidates to join the Company. The Group ensures the continuity of the senior management by grooming management talents with various measures, such as continuous internal training and appropriate job rotation as well as external on job training.

2013

2013 6 30 38,916

统一企业中国 二零一三年中期报告

Other Information

2013 6 30

2013 6 30 352 XV

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s shares during the six months ended 30 June 2013.

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS IN THE SECURITIES OF THE COMPANY

As at 30 June 2013, the interests and short positions of the directors and chief executive of the Company in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”) as recorded in the register required to be kept under section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) as set out in Appendix 10 to the Rules Governing the Listing of Securities on the Stock Exchange (“Listing Rules”) were as follows:

Long positions in the shares of the Company

2013

6 30

Name of Director Capacity

Number of

ordinary shares

of the Company

Percentage of

shareholding

as at

30 June 2013

(Approximate)

50,0000.00% Hou Jung-Lung Beneficial owner

19

Uni-President China Holdings Ltd. Interim Report 2013

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