Financials

UNAUDITED FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR THE THIRD QUARTER AND NINE MONTHS ENDED 28 JUNE 2010

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Income Statement for the third quarter and nine months ended 28 June 2010

Consolidated Statement of Comprehensive Income

Balance Sheet

Review of Performance

Income Statement

3QFY2010 (3 months ended 28 June 2010) vs 3QFY2009 (3 months ended 30 June 2009)

Group revenue increased by 10.6% from HK$2,023.2 million to HK$2,237.9 million.

Revenue from the fishing division, which accounted for 55.6% of total revenue, surged by 48.4% from HK$838.0 million to HK$1,243.2 million. The increase attributed to a combination of an increase in total allowable catch for the year as well as to an increase in fishing and shipment activities carried over from the previous quarter resulting from port closures in China during part of the winter. Also, higher selling prices for fishmeal products also contributed to the increase in segment revenue.

The Group's investment in its start-up South Pacific fishing operations yielded a HK$52.3 million contribution to revenue. The operating model adopted a factory vessel working alongside a fleet of catcher vessels has proved successful and will result in reduced fuel consumption and savings in crew requirements.

Revenue from the frozen fish supply chain management ("frozen fish SCM") division, which accounted for 44.4% of turnover, dropped by 16.1% from HK$1,185.2 million to HK$994.7 million, due mainly to lower sales volume.

By markets, the People's Republic of China ("PRC") remained the Group's largest market with sales of HK$1,942.9 million, accounting for 86.8% of total revenue. Sales to East Asia amounted to HK$153.0 million, accounting for 6.8% of total revenue. Sales to Europe amounted to HK$76.2 million, accounting for 3.4% of total revenue.

Gross profit increased by 48.0% from HK$396.4 million to HK$586.7 million, while the gross profit margin increased from 19.6% to 26.2%. This improvement was largely driven by economies of scale and overall improvements in operating efficiencies.

Selling expenses increased by 154.4% from HK$41.9 million to HK$106.7 million, because of higher direct expenses such as freight, insurance and port charges incurred, in line with the higher sales volume of the Group's fishing division, and higher selling expenses incurred for the Group's South Pacific operations.

Finance costs increased by 11.2% from HK$86.6 million to HK$96.3 million due mainly to an increase in bank borrowings taken to finance the 2 acquisitions in Peru.

Administrative expenses increased by 56.4% from HK$30.8 million to HK$48.2 million, mainly because of additions in staff and other expenses in line with the Group's expanding operations.

Net profit increased by 36.4% from HK$231.1 million to HK$315.1 million.

9MFY2010 (9 months ended 28 June 2010) vs 9MFY2009 (9 months ended 30 June 2009)

The Group's revenue grew of 5.5% from HK$5,905.8 million to HK$6,228.8 million.

Revenue from the fishing division, which accounted for 54.5% of total revenue, increased by 14.8% from HK$2,954.9 million to HK$3,392.3 million, driven by higher catch volumes from North Pacific fishing operations and higher selling prices for fish products.

Revenue from the frozen fish SCM division, which accounted for 45.5% of turnover, dropped by 3.9% from HK$2,950.9 million to HK$2,836.5 million, primarily due to lower sales volume.

By markets, the PRC remained the Group's largest market with sales of HK$5,172.2 million, accounting for 83.0% of total revenue. Sales to Europe amounted to HK$461.7 million, accounting for 7.4% of total revenue. Sales to East Asia amounted to HK$437.3 million, accounting for 7.0% of total revenue.

Gross profit increased by 24.4% from HK$1,240.8 million to HK$1,543.5 million, while the gross profit margin jumped from 21.0% to 24.8%, reflecting economies of scale and the positive impact of the Group's ongoing initiatives to improve operating efficiencies.

Selling expenses increased by 73.4% from HK$146.5 million to HK$254.1 million, attributable mainly to higher direct expenses such as freight, insurance and port charges incurred in line with the higher sales volume of the Group's fishing division.

Finance costs decreased by 9.8% from HK$293.6 million to HK$264.7 million. The reduction in finance costs despite the increase in bank borrowings was mainly due to low market interest rates and the reduction in convertible bonds outstanding.

Administrative expenses increased by 23.7% from HK$112.0 million to HK$138.6 million, mainly due to a higher headcount and other expenses in line with the increase in business activities.

Net profit increased by 10.8% from HK$847.6 million to HK$939.4 million.

Statement of Financial Position

28 June 2010 vs 28 September 2009

Current assets increased by 21.4% from HK$5,237.5 million to HK$6,360.2 million due mainly to the increase in receivables attributed principally to a shift in the fishing season which resulted in higher fishmeal and fish oil sales transacted in the month of June.

Non-current assets increased by 19.7% from HK$7,622.1 million to HK$9,127.0 million. During the period, the Group acquired two Peruvian companies which own approximately 1.2% of the fishing quota for the Peruvian anchovy. The two Peruvian companies also operate 7 fishing vessels and a fishmeal plant.

Current liabilities increased by 44.5% from HK$2,874.0 million to HK$4,152.2 million due mainly to the increase in short-term borrowings to fund the increased working capital requirements of the Group.

Non-current liabilities increased by 14.6% from HK$2,971.9 million to HK$3,406.0 million, mainly due to the increase in bank borrowings of HK$592.8 million to finance the acquisitions in Peru.

Net assets went up by 13.1% from HK$7,013.7 million to HK$7,929.0 million and net debt to equity ratio increased from 72.1% to 77.8%.

Commentary

Outlook

The management remains positive on the market outlook for the next 12 months.

For the fishing operations, the management expects that a higher Peruvian quota share following the acquisition of two Peruvian fishing companies in May 2010 will increase the Group's production volume of fishmeal and fish oil, and will further enhance economies of scale and operating efficiencies. In addition, the Group's start-up South Pacific operations will continue to benefit from the experience gained in fleet management and operations.

The frozen fish SCM division will continue to benefit from worldwide growth in demand for fish, particularly in the PRC, where demand for fish as a healthy source of protein continues to grow. The Group will continue to strengthen its distribution in the PRC as well as in Eastern Europe and Africa to further grow the sales volume of frozen fish.

In July 2010, the Group's subsidiary China Fishery Group Limited completed a private placement of 113.5 million new shares and 26.7 million warrants to The Carlyle Group. The gross proceeds of US$150 million will be used primarily for strategic acquisitions and to acquire additional fishing quota. Management believes that in addition to the new capital from the placement that will help fuel its expansion plans, China Fishery can also benefit from leveraging Carlyle's strategic insights, and their extensive network, acquisition and financing expertise.

Management expects further growth for the rest of the financial year, barring any unforeseen circumstances.