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3rd QUARTER FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR PERIOD ENDED 30 SEPTEMBER 2011

Financials Archive

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Income Statement

Income Statement 3Q11

Balance Sheet

Balance Sheet 3Q11

Review of Performance

(a) 3Q2011 vs 3Q2010

Our revenue increased by RMB 24.2 million or 15.3% from RMB 157.5 million in 3Q2010 to RMB 181.7 million in 3Q2011 due to an increase in sales volume of both natural and synthetic flavours especially Methyl Dihydromethyl Jasmonate ("MDJ"), Ambergris Ketone and Carvone products.

Gross margin in 3Q2011 decreased by 7.0% from 28.4% in 3Q2010 to 21.4%.

Distribution and selling expenses decreased by RMB 0.5 million mainly due to a reduction in commission accrual for the sales personnel.

Administrative expenses increased by RMB 2.7 million from RMB 21.4 million to RMB 24.1 million in 3Q2011 mainly due to higher staff costs and research & development expenses.

Other operating income mainly arose from government grants and sales of scrap material.

Finance costs increased significantly by 49.7% in 3Q2011 as compare to 3Q2010 mainly due to higher outstanding bank borrowings and hike in borrowing rate in China.

Tax expense decreased as a result of lower estimated taxable profit.

(b) 9 months 2011 vs 9 months 2010

Our revenue increased by RMB 67.2 million or 15.2% from RMB 442.6 million for the 9M2010 to RMB 509.8 million in 9M2011 due to increase in sales volume of both natural and synthetic flavours especially Methyl Dihydromethyl Jasmonate ("MDJ"), Ambergris Ketone and Carvone products.

Gross margin in 9M2011 decreased by 0.9% from 26.5% in 9M2010 to 25.6%.

Distribution and selling expenses increased by RMB 1.3 million mainly due to increase in freight costs and storage as a result of higher sales volume. However, it is offset by the reduction in accrual of commission.

Administrative expenses increased by RMB 14.0 million from RMB 55.2 million in 9M2010 to RMB 69.2 million mainly due to higher staff costs as a result of recruiting new employees and bonus accrual, research and development expenses and additional provision for doubtful debts.

Finance costs increased significantly by 58.9% in 9M2011 as compare to 9M2010 mainly due to higher outstanding bank borrowings and hike in borrowing rate in China.

Tax expense increased as a result of higher estimated taxable profit for certain subsidiary with a higher tax rate.

(c) Current assets increased by RMB 89.8 million from RMB 479.4 million in FY2010 to RMB 569.2 million at 30 September 2011. The increase was mainly due to an increase in other receivables largely due to sales proceed not collected from the disposal of a subsidiary. The other increase was due to trade receivables as a result of higher sales in 9M2011 and cash and cash equivalents by RMB 16.8 million and RMB 46.6 million respectively.

Current liabilities increased by RMB 123.3 million from RMB 378.3 million in FY2010 to RMB 501.6 million at 30 September 2011 mainly due to an increase in trade payables as a result of higher purchases of materials for production and bank borrowings by RMB 49.6 million and RMB 58.9 million respectively.

Property, plant and equipment increased by RMB 78.2 million from RMB 173.3 million in FY2010 to RMB 251.5 million at 30 September 2011. The increase was mainly due to construction of the new factory and production lines in our China subsidiaries and reversal of an impairment charge of RMB 3.7 million. However, the increase is partially offset by depreciation charges amounting to RMB 15.2 million.

Non-current liabilities increased by RMB 16.6 million as a result of drawdown of new long term loan to finance the construction of a new plant in Shanghai, China.

(d) Cash and cash equivalents for 3Q11's statement of cash flow increased by RMB 31.2 million from RMB 64.7 million to RMB 95.9 million at 30 September 2011. The improved cash position was mainly due to cash generated from profitable operation and draw down of loans from the banks. However, the increase is offset partially due to the construction of facilities in our China subsidaries.

Commentary On Current Year Prospects

On 11 October 2011, the Company and Wanbang Joint Investment Pte Ltd had jointly announced the proposed voluntary delisting of the Company from the Official List of the Singapore Exchange Securities Trading Limited. Please refer to the announcement entitled "Proposed Voluntary Delisting of Wanxiang International Limited" released on 11 October 2011 for further details of the proposed voluntary delisting. Specifically, Shareholders are advised to exercise caution when dealing in their respective shares held in the Company and to refrain from taking any action in relation to their shares which may be prejudicial to their interests.

The Group's revenue for the 9 months ended 30 September 2011 was higher than the Group's revenue for the corresponding 9 months period ended 30 September 2010 despite pressures on the selling prices and increases in raw material prices. The Group will continue to improve its production technologies and enhance production efficiency, and to seek to lower its raw material costs by sourcing from a wider supplier base.

On 19 August 2011, the Group announced the disposal of a wholly owned subsidiary, Huaian Wanfeng Investment Co., Ltd ("Huaian Wanfeng"). Huaian Wanfeng is a wholly owned subsidiary of the Group established under the laws of the PRC, and its principal asset is its ownership of a plot of land located along the North of Jichang Road, Huaian Economic Development Zone, Jiangsu Province, PRC. The Group recognised a gain on disposal of RMB 3.2 million. With this disposal, the Group has as at the date of this announcement no landbank to develop residential and commercial property.

With the prevailing financial turmoil, increase in bank lending rate, appreciation of RMB against USD and volatility of the raw material costs, the Board expects the above factors to affect the profitablility of the Group. Nevertheless, barring unforeseen circumstances, we expect the Group to remain profitable for FY2011.