China Mengniu Dairy : Announcements and Notices - ANNOUNCEMENT OF THE INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2021

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CHINA MENGNIU DAIRY COMPANY LIMITED

中 國 蒙 牛 乳 業 有 限 公 司*

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 2319)

ANNOUNCEMENT OF THE INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2021

HIGHLIGHTS

• In the first half of 2021, the Group grasped the consumption upgrade trend under
  the backdrop of increasing national nutrition and health awareness post-epidemic, and actively implemented the strategy of "Creating a new Mengniu (再創一個新蒙 牛)", further promoted product innovation and upgrade and expanded online and offline channels for omni-channel development. The revenue of the Group amounted to RMB45,905.2 million for the six months ended 30 June 2021 (2020: RMB37,533.5 million), representing a year-on-year increase of 22.3%. Due to the increase in revenue and increase in operating efficiency, profit attributable to owners of the Company increased by 143.2% year-on-year to RMB2,946.5 million (2020: RMB1,211.5 million).
• In the first half of 2021, as the Group continued to drive the product innovation, brand upgrade and channel expansion for room temperature liquid milk, chilled yogurt and probiotic drinks, and the fresh milk business, the revenue from the liquid milk business increased by 21.1% from the same period last year to RMB39,448.1 million (2020: RMB32,565.3 million).

• For identification purposes only

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• During the period, the ice cream business segment continued to focus on its brands, such as Suibian , Deluxe and Mood for Green , to further improve innovation, branding and channel sales. In order to accelerate the business expansion in the Southeast Asian market, the Group acquired Aice , a leading ice-cream brand in Southeast Asia, at the end of March. Revenue for this segment for the period increased by 34.8% from the same period last year to RMB3,003.9 million (2020: RMB2,229.2 million).
• Yashili, the domestic milk formula platform of the Group, focused on its brands such as Reeborne , a brand of infant formula products, and Yourui, a brand of adult milk powder, whilst Bellamy's adhered to its brand positioning of "True Organic". Through market segmentation and expansion of sales channels, the revenue from the milk formula business increased by 11.6% from the same period last year to RMB2,547.3 million (2020: RMB2,281.9 million).
• With the increasing demand from consumers for healthy, nutritional, and high-end nutritional dairy products, and the Group's proactive development of product innovation and digital marketing, the cheese business grew rapidly in the retail and food service sectors. In July 2021, the Group became a substantial shareholder of Milkground, a leading cheese enterprise in China. In the future, through cooperating with Milkground, both the Group and Milkground will be able to gain advantages through sharing resources and together expand into the domestic and global cheese market with enormous potential.
• In active response to the national goal of "carbon neutrality", Mengniu has promised to take lead in achieving carbon neutrality in the industry, and will disclose its carbon emission reduction targets and roadmap in 2022. As of the first half of the year, 17 factories of Mengniu were recognized as "National Green Factory" and Mengniu obtained Green Finance Certificate from the Hong Kong Quality Assurance Agency.

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The board (the "Board") of directors (the "Directors") of China Mengniu Dairy Company Limited (the "Company") is pleased to present the unaudited consolidated interim results of the Company and its subsidiaries (the "Group" or "Mengniu") for the six months ended 30 June 2021, together with the comparative amounts. The interim results and condensed interim financial statements have been reviewed by the audit committee (the "Audit Committee") and the auditors of the Company.

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the six months ended 30 June 2021

		2021		2020
		(Unaudited)	(Unaudited)
	Notes	RMB'000		RMB'000
Revenue	4	45,905,209		37,533,459
Cost of sales		(28,352,576)	(22,881,073)
Gross profit		17,552,633		14,652,386
Other income and gains		414,935		296,410
Selling and distribution expenses		(12,888,117)	(11,499,647)
Administrative expenses		(1,634,341)	(1,438,981)
Impairment losses on financial and		(76,625)
contract assets, net		(101,731)
Loss on derecognition of financial assets measured		(12,655)
at amortised cost		(8,253)
Other expenses	5	(462,685)	(943,795)
Interest income		476,512		564,490
Finance costs		(304,958)	(324,449)
Share of profits and losses of:		(34,905)
Joint ventures		(14,853)
Associates		367,253		220,759
Profit before tax	6	3,397,047		1,402,336
Income tax expense	7	(429,699)	(267,538)
Profit for the period		2,967,348			1,134,798
Attributable to:
	2,946,537
Owners of the Company			1,211,526
Non-controlling interests		20,811		(76,728)
		2,967,348		1,134,798
Earnings per share attributable to
ordinary equity holders of the Company
(expressed in RMB per share)	9	0.748
Basic			0.309
Diluted		0.744		0.308

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOME

For the six months ended 30 June 2021

		2021		2020
		(Unaudited)	(Unaudited)
		RMB'000	RMB'000
Profit for the period	2,967,348		1,134,798
Other comprehensive income/(loss)
Other comprehensive income/(loss) that may be reclassified
to profit or loss in subsequent periods:
Exchange differences:	(274,910)
Exchange differences on translation of foreign operations	(197,358)
Cash flow hedges:
Effective portion of changes in fair value of hedging	(28,225)
instruments arising during the period	8,721
Reclassification adjustments for gains included in the	-
consolidated statement of profit or loss	(10,814)
		(28,225)	(2,093)
Share of other comprehensive income/(loss) of associates	1,030		(3,632)
Net other comprehensive loss that may be reclassified
to profit or loss in subsequent periods	(302,105)	(203,083)
Other comprehensive income/(loss) that will not be
reclassified to profit or loss in subsequent periods:
Exchange differences:	41,882		-
Exchange differences on translation of foreign operations
Equity investments designated at fair value through other
comprehensive income:	(27,038)
Changes in fair value	27,854
Net other comprehensive income that will not be reclassified
to profit or loss in subsequent periods	14,844		27,854
Other comprehensive loss, net of tax		(287,261)	(175,229)
Total comprehensive income for the period		2,680,087		959,569
Attributable to:	2,689,738
Owners of the Company		1,054,554
Non-controlling interests	(9,651)	(94,985)
		2,680,087		959,569

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INTERIM CONDENSED CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

30 June 2021

		30 June	31 December
		2021	2020
		(Unaudited)		(Audited)
	Notes	RMB'000		RMB'000
NON-CURRENT ASSETS		13,077,242
Property, plant and equipment		12,546,604
Construction in progress		3,646,860	2,729,469
Investment properties		63,106	63,924
Right-of-use assets		1,984,609	1,847,675
Goodwill		5,258,383	4,883,291
Other intangible assets		8,420,201	7,717,340
Investment in joint ventures		2,000	103,427
Investments in associates		9,241,189	9,020,464
Deferred tax assets		1,698,388	1,276,625
Other financial assets		11,454,836	7,690,082
Long term prepayments		860,383		760,762
Total non-current assets		55,707,197	48,639,663
CURRENT ASSETS
	6,391,921
Other financial assets		7,752,088
Derivative financial instruments		8,766	2,175
Inventories		5,165,525	5,512,450
Trade and bills receivables	10	3,887,854	2,988,362
Prepayments, other receivables and other assets		5,819,069	3,604,858
Pledged deposits		258,406	249,521
Cash and bank balances		8,086,329	11,397,123
Assets of a disposal group classified		944,893		-
as held for sale
Total current assets		30,562,763	31,506,577
CURRENT LIABILITIES
	8,265,865
Trade and bills payables	11	7,969,321
Other payables and accruals		9,977,707	11,465,916
Interest-bearing bank and other borrowings		7,122,225	4,924,393
Derivative financial instruments		6,958	3,653
Income tax payable		622,143	181,013
Other financial liabilities		1,601,200		1,600,200
Total current liabilities		27,596,098	26,144,496
NET CURRENT ASSETS		2,966,665	5,362,081
TOTAL ASSETS LESS CURRENT LIABILITIES		58,673,862	54,001,744

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