China Modern Dairy Holdings Ltd. announced that based on the preliminary assessment of the unaudited consolidated management accounts of the Group for the six months ended 30 June 2016, it is expected that the Group will record a loss for the six months ended 30 June 2016. Such loss was mainly attributable to: (i) total revenue for the six months ended 30 June 2016 decreased by 10% as compared to the corresponding period in 2015. Due to the impact of and effect from the import of milk powder in large packets and concentrated milk, the raw milk market condition became harsh and there were difficulties in the sale of raw milk, as a result of which more than 11% of the raw milk production for the six months ended 30 June 2016 was sprayed into dried milk powder, and also affected by the general decline in the milk selling price in China, the average selling price per ton of the raw milk decreased by 11%. Cash EBITDA (being earnings before interest expenses, taxation, depreciation, amortization and gain/loss arising from changes in fair value less cost of sales of dairy cows) for the six months ended 30 June 2016 is expected to decrease by approximately 30% as compared to the corresponding period in 2015; (ii) a non-cash loss on changes in the fair value less costs to sell of dairy cows of the Group in the six months ended 30 June 2016, which is expected to be significantly greater as compared to the corresponding period in 2015. This is mainly due to the decline in the raw milk selling price in China in the first half of 2016 and the control on the number of dairy cows in response to the difficulties in the sale of raw milk; and (iii) the non-cash fair value losses from the value adjustment undertakings provided by the company to Success Dairy II Limited pursuant to the share purchase agreement entered into between the Company and Success Dairy dated 6 July 2015 in the six months ended 30 June 2016 which is expected to be approximately RMB 400,000,000. This is mainly due to the decrease in trading price of the shares in the first half of 2016 due to the above factors and the market condition. Mainly due to the non-cash losses, it is expected that the Group will record a consolidated net loss of no less than RMB 400,000,000 for the six months ended 30 June 2016.