China Shengmu Organic Milk : Announcements and Notices - Business Update

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CHINA SHENGMU ORGANIC MILK LIMITED ʕ਷໋ىϞዚุ̲Ϟࠢʮ̡

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1432)

BUSINESS UPDATE

This is a voluntary announcement made by China Shengmu Organic Milk Limited (the "Company", together with its subsidiaries, the "Group") to keep the its shareholders and potential investors informed of the latest business development of the Group.

In order to adapt to the changes in the development of the market and improve operational efficiency, the Company will no longer apply for organic certification for some of its dairy farms after the expiration of such certification this year ("Change in Certification"). However, in the event that market needs arise in the future, the Company will be able to convert such dairy farms into organic dairy farms by applying for organic certification and in accordance with the relevant regulations and standards in six months' time. The Group's own organic liquid milk products will continue to be processed from raw milk produced by the organic dairy farms. The Change in Certification will only apply to the raw milk business that is sold to third parties.

The Group is principally engaged in dairy farming business and liquid milk business. The board (the "Board") of directors of the Company expects that the above decision will enable the Group to better meet the changing market needs, improve its operational efficiency and bring better returns to its shareholders. The Group will continue to closely monitor the market and industry environment and shall keep its shareholders and potential investors informed of any material developments

By order of the Board of

China Shengmu Organic Milk Limited

Shao Genhuo

Chairman

Hong Kong, 10 September 2018

As at the date of this announcement, the executive directors of the Company are Mr. Yao Tongshan, Mr. Wu Jianye and Mr. Wang Yuehua; and the non-executive directors of the Company are Mr. Shao Genhuo, Mr. Wen Yongping and Mr. Sun Qian; and the independent non-executive directors of the Company are Mr. Fu Wenge, Mr. Wang Liyan and Mr. Li Xuan.