China Mengniu Dairy : Announcements and Notices - Announcement of the Interim Results for the Six Months Ended 30 June 2016

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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 2016 HIGHLIGHTS

• Benefiting from active brand promotion and marketing, revenue increased by 6.6% to RMB27.26 billion. Gross profit margin was enhanced continuously and increased by

  1.8 percentage points year-on-year to 33.7%.

• Mengniu constantly strives to optimize its product mix with the aim of guiding the premium product consumption trend as well as promoting consumption of nutritious and healthy dairy products. During the period, Milk Deluxe continued to lead the high end market and Mengniu maintained leadership in liquid milk and chilled dairy product market with the largest market share.

• The first in China to expand the application of LIMS (Laboratory Information Management System) and SAP system, Mengniu has been able to offer intelligent and systematic quality assurance throughout its entire industrial chain. It can track information forward and backward at all quality control points, allowing it to safeguard quality at every stage in the industrial chain.

• By bringing in advanced international resources and technologies, Mengniu has continued to strengthen its milk sources foundation and meet international standards. During the period, the percentage of Mengniu's milk sourced from ranches and scaled farms reached 100%.

• As the official dairy product partner of Shanghai Disney Resort, Mengniu provides premium quality products to visitors to the resort from all over the world and has created an exclusive series of special delights for it.

• Mengniu strengthened its milk formula business with an optimized product mix. During the period, Mengniu and Yashili completed the acquisition of Dumex Baby Food Co., Ltd. ("Dumex China"), a specialist in infant milk formula, from Danone Group.

* For identification purposes only

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 2016, 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 Unaudited For the six months ended 30 June

Notes	2016 RMB'000	2015 RMB'000
Continuing operations Revenue	4	27,257,154	25,564,409
Cost of sales	(18,075,749)	(17,421,599)
Gross profit	9,181,405	8,142,810
Other income and gains Losses arising from changes in fair value less cost to sell of dairy cows	4	169,963 (22,285)	177,611 (6,912)
Selling and distribution expenses	(6,448,888)	(5,565,274)
Administrative expenses	(1,135,934)	(1,093,651)
Other expenses	5	(218,793)	(182,839)
Interest income	278,098	273,764
Finance costs	7	(151,460)	(134,616)
Share of profits/(losses) of associates	(154,555)	143,306
Profit before tax from continuing operations	6	1,497,551	1,754,199
Income tax expense	8	(313,030)	(321,343)
Profit for the period from continuing operations	1,184,521	1,432,856
Discontinued operation Loss for the period from a discontinued operation	9	-	(8)
Profit for the period	1,184,521	1,432,848
Attributable to: Owners of the Company	1,077,290	1,338,669
Non-controlling interests	107,231	94,179
1,184,521	1,432,848

Unaudited For the six months ended 30 June

Note 2016 2015

Restated

Earnings per share attributable to ordinary

equity holders of the Company (expressed

in RMB per share) 10

Basic

• For profit for the period 0.277 0.344

• For profit from continuing operations 0.277 0.344

  Diluted

• For profit for the period 0.277 0.343

• For profit from continuing operations 0.277 0.343

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited For the six months ended 30 June 2016 2015

RMB'000 RMB'000

Profit for the period 1,184,521 1,432,848 Other comprehensive income/(loss)

Other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods:

Exchange differences on translation of foreign

operations 11,177 (6,088)

Cash flow hedges:

Effective portion of changes in fair value of

hedging instruments arising during the period - (11,519) Income tax effect - 3,098

Net other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods 11,177 (14,509)

Other comprehensive loss not to be reclassified to profit or loss in subsequent periods:

Equity investments designated as fair value through other comprehensive income:

Changes in fair value (67,100) (91,363)

Net other comprehensive loss not to be reclassified

to profit or loss in subsequent periods	(67,100)	(91,363)
Other comprehensive loss, net of tax	(55,923)	(105,872)
Total comprehensive income for the period	1,128,598	1,326,976
Attributable to: Owners of the Company	988,488	1,244,756
Non-controlling interests	140,110	82,220
1,128,598	1,326,976