The Group's gross profit was HK$2,785 million compared to HK$3 in 2010, which was a drop of 10.1 per cent.

The Group's overall gross profit margin reached 8.6 per cent during the year.

The company said the decrease in gross profit margin was mainly due to the significant increase in raw material costs, in particular hog prices, together with weakened market confidence in the group's products and the increasing difficulty in transferring the group's increased operation costs to its customers.

The decrease has also ben attricuted to product promotion activities conducted by the group in the fourth quarter of 2011, which were targeted at retaining market share.

The board of directors of the Company has not recommended the payment of final dividend for the year of 2011.

Zhu Yicai, Chairman of Yurun Food said: "In 2011, the pork product and hog slaughtering industries in China faced unprecedented challenges. It has been a short term turmoil experienced by the highly fragmented hog slaughtering and meat processing industries in China.

"For Yurun Food, this crisis allowed us to better recognise the challenges and opportunities of the Group's development in all aspects.

"The possible insufficient communication with the market during our development led to misunderstandings on the Group's quality management processes, which triggered a crisis of trust.

"Having experienced this setback, Yurun Food will remain committed to the realization of its long-term development strategies, optimize the communication channels between the Company and consumers, so as to rebuild the brand and regain the trust of consumers of the Group, as well as to bring returns to shareholders."

Mr Zhu added: "The management believes that the Group's business has reached the light at the end of the tunnel.

"We are confident that our business will progressively return to normal and realise a long-term steady growth.

"Looking ahead, the Group will be fully committed to our motto of 'you trust because we care', continue to implement internationally recognized internal quality control measures, strive to realise its nationwide marketing and production capacity development, so as to capture the business opportunities brought by industry consolidation, and to strengthen its leading market position."

As at 31 December 2011, slaughtering capacity of the Group was 46.05 million heads per year, representing an increase of 10.45 million heads as compared to 35.60 million heads at the end of 2010, while the group's annual capacity of downstream meat processing was 304,000 tons. The Group will continue to expand its capacity, accelerate the enhancement of its nationwide production capacity in the coming years and aim to reach a slaughtering capacity of 70 million heads per year, as well as a downstream capacity of 600,000 tons per year by 2015, so as to further strengthen its leading position in the industry and capture the tremendous business opportunities in both upstream and downstream markets.