China Mengniu Dairy : Announcements and Notices - Announcement of the Annual Results for the Year Ended 31 December 2018

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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 ANNUAL RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2018

HIGHLIGHTS

•In 2018, Mengniu continued to be named among the "Global Dairy Top 10" by Rabobank for two years in a row, BrandZ™'s list of top 20 most valuable Chinese brands for the fourth consecutive year and topping the list of brand contribution. In 2019, for the first time, Mengniu made it among Brand Finance's list of the top 500 most valuable brands of the world.

•Mengniu introduced the "Power of Nature, Born for Greatness" brand proposition which gained unprecedented success by tying in with 2018 FIFA World Cup ("World Cup") themed marketing. During the period of World Cup, the brand power of Mengniu increased significantly, climbing to the top spot of the industry for the first time in five years.

•Mengniu's room temperature products saw a significant boost in sales volume, while overall sales recorded considerable growth and the business gained a bigger market share; the share of chilled products remained the first in the market for the 13th consecutive year. Core products delivered steady performance while its innovative new products performed brilliantly; the ice cream business achieved sales that had grown at a high single-digit rate. The milk formula business, which had turned around to profit and capitalized on the growth momentum, managing significant growth.

•During the year, Mengniu consolidated and established new business divisions, focusing on businesses with high potentials including overseas markets, fresh milk, plant-based protein beverage and yogurt, with which the overall deployment witnessed initial satisfactory results.

•Mengniu strengthened its digital marketing development and reinforced channel and POS constructions, while promoting new retail model via B2B and empowering distributors to enhance its sales capability.

•Mengniu further optimized the deployment in quality milk sources and production lines in order to enhance the efficiency of its supply chain. Also, it established a factory in Indonesia as its second overseas factory, which is also the first liquid milk factory of Mengniu located in overseas markets, serving to speed up the entry to Southeast Asian markets.

* For identification purposes only

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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 results of the Company and its subsidiaries (the "Group" or "Mengniu") for the year ended 31 December 2018, together with the comparative amounts.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Year ended 31 December 2018

		2018		2017
	Notes	RMB'000		RMB'000
REVENUE	4	68,977,066		60,155,622
Cost of sales		(43,193,440)		(38,972,927)
GROSS PROFIT		25,783,626		21,182,695
Other income and gains	4	736,255		338,179
Selling and distribution expenses		(18,833,306)		(14,868,755)
Administrative expenses		(2,915,035)		(2,497,212)
Impairment losses on financial and contract asset, net		(85,262)		(83,893)
Other expenses	5	(851,216)		(1,098,605)
Interest income		868,257		584,011
Finance costs	7	(550,662)		(399,872)
Share of losses of associates		(299,935)		(531,587)
PROFIT BEFORE TAX	6	3,852,722		2,624,961
Income tax expense	8	(649,001)		(594,283)
PROFIT FOR THE YEAR		3,203,721		2,030,678
Attributable to:
		3,043,030
Owners of the Company				2,047,839
Non-controlling interests		160,691		(17,161)
		3,203,721		2,030,678
EARNINGS PER SHARE ATTRIBUTABLE
TO ORDINARY EQUITY HOLDERS
OF THE COMPANY (EXPRESSED
IN RMB PER SHARE)	10
Basic		0.779
- For profit for the year				0.526
Diluted
		0.778
- For profit for the year				0.526

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2018

	2018		2017
	RMB'000		RMB'000
PROFIT FOR THE YEAR	3,203,721		2,030,678
OTHER COMPREHENSIVE INCOME/(LOSS)
Other comprehensive income/(loss) that may be
reclassified to profit or loss in subsequent periods:
Exchange differences:
Exchange differences on translation of foreign	(206,615)
operations			194,835
Cash flow hedges:
Effective portion of changes in fair value of	(4,196)
hedging instruments arising during the year			30,617
Share of other comprehensive income of associates	(21,181)		3,617
Net other comprehensive income/(loss) that
may be reclassified to profit or loss
in subsequent periods	(231,992)		229,069
Other comprehensive loss that will not be reclassified
to profit or loss in subsequent periods:
Equity investments designated at fair value through
other comprehensive income:	(218,287)
Changes in fair value			(270,160)
Net other comprehensive loss that will
not be reclassified to profit or loss
in subsequent periods	(218,287)		(270,160)
OTHER COMPREHENSIVE LOSS, NET OF
TAX	(450,279)		(41,091)
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR	2,753,442		1,989,587
Attributable to:	2,589,152
Owners of the Company			2,023,028
Non-controlling interests	164,290		(33,441)
	2,753,442		1,989,587

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2018

		31 December		31 December
		2018	2017
	Note	RMB'000		RMB'000
NON-CURRENT ASSETS		14,733,924
Property, plant and equipment			12,715,454
Construction in progress		2,203,125	1,363,399
Investment properties		73,785	59,333
Land use rights		1,120,666	1,055,968
Goodwill		4,681,492	4,532,899
Other intangible assets		2,298,075	2,193,901
Investments in associates		7,202,363	7,194,010
Deferred tax assets		1,041,626	665,364
Biological assets		1,136,600	646,143
Derivative financial instruments		28,598	54,602
Other financial assets		2,131,485	1,585,183
Long term prepayments		64,140	54,769
Total non-current assets		36,715,879	32,121,025
CURRENT ASSETS
		11,819,198
Other financial assets			10,690,539
Derivative financial instruments		49,212	5,584
Inventories		4,281,919	3,510,268
Trade and bills receivables	11	2,891,973	2,646,834
Prepayments, other receivables and other assets		2,777,593	2,541,423
Pledged deposits		623,495	466,265
Cash and bank balances		7,297,988	5,958,877
		29,741,378	25,819,790
Assets of a disposal group classified as held for sale		-	197,916
Total current assets		29,741,378	26,017,706

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued) As at 31 December 2018

		31 December		31 December
		2018		2017
	Note	RMB'000		RMB'000
CURRENT LIABILITIES		7,021,542
Trade and bills payables	12			6,342,273
Other payables and accruals		10,889,417		7,324,223
Interest-bearing bank and other borrowings		6,522,915		7,935,027
Other loans		22,912		22,912
Derivative financial instruments		9,705		1,222
Deferred income		170,261		160,279
Income tax payable		472,366		231,899
Other financial liabilities		-		545,594
Liabilities directly associated with the assets		25,109,118		22,563,429
		-
classified as held for sale				2,864
Total current liabilities		25,109,118		22,566,293
NET CURRENT ASSETS		4,632,260		3,451,413
TOTAL ASSETS LESS CURRENT LIABILITIES		41,348,139		35,572,438
NON-CURRENT LIABILITIES
		8,192,400
Interest-bearing bank and other borrowings				6,015,097
Long term payables		814		10,894
Deferred income		856,120		739,459
Deferred tax liabilities		206,122		70,028
Derivative financial instruments		17,457		-
Other financial liabilities		1,610,947		1,629,837
Total non-current liabilities		10,883,860		8,465,315
NET ASSETS		30,464,279		27,107,123
EQUITY
Equity attributable to owners of the Company		357,602
Share capital				357,572
Treasury shares held under share award scheme		(218,717)		(262,929)
Other reserves		12,450,930		12,716,143
Retained earnings		12,622,549		9,793,487
		25,212,364		22,604,273
Non-controlling interests		5,251,915		4,502,850
TOTAL EQUITY		30,464,279		27,107,123

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