China Shengmu Organic Milk : Announcements and Notices - Final Results Announcement for the Year Ended December 31, 2018

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CHINA SHENGMU ORGANIC MILK LIMITED

中 國 聖 牧 有 機 奶 業 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1432)

FINAL RESULTS ANNOUNCEMENT

FOR THE YEAR ENDED DECEMBER 31, 2018

HIGHLIGHTS

• The Group entered into an agreement with Mengniu Group to dispose 51% of its equity interests in the down-stream liquid milk business. The Company has been able to obtain harmonious development in its dairy business, while supplementing its demand for working capital efficiently.
• The Group entered into an acquisition agreement with 12 individual shareholders to acquire minority interests in the joint ventured farms located at the core area of the organic industry system. In the coming future, the Group will devote further efforts to dairy farming business and raw milk business.
• In the BIOFACH CHINA Organic Trade Fair(中國國際有機食品博覧會), organic dairy products of Shengmu were awarded the "Gold Medal of BIOFACH CHINA Organic Trade Fair" for the seventh time. In the Chinese Dairy Industry Exhibition, Shengmu was honored "Excellent Enterprise" among the outstanding dairy product processing enterprises for 2018.
• Liquid milk business of the Company has strictly implemented the high-price strategy through unified retail price, sales-oriented production and cash on delivery. Therefore, there was no increase in receivables during the year.
• Online business achieved sustainable growth by deepening cooperation with various platforms including Jingdong and Yunji, as well as developing exclusive ranches and customized products.
• In 2018, the Group's revenue increased from RMB 2,706.8 million in 2017 to RMB 2,887.2 million, nevertheless, the net cash inflow of the Group's operating activities was approximately RMB972.5 million, representing an increase of RMB1,085.7 million from the net cash outflow of approximately RMB113.2 million in the year of 2017.

In this announcement "we", "us" and "our" refer to the Company (as defined below) and where the context otherwise requires, the Group (as defined below).

Translated English names of Chinese natural persons, legal persons, governmental authorities, institutions or other entities for which no official English translation exists are unofficial translations for identification purpose only.

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The board (the "Board") of directors (the "Directors") of China Shengmu Organic Milk Limited (the "Company" or "China Shengmu") hereby to announce the consolidated financial results of the Company and its subsidiaries (the "Group" or "Shengmu") for the year ended December 31, 2018, together with the comparative figures for the year ended December 31, 2017.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

			For the year ended
			December 31,
	Notes	2018		2017
					Restated*
			RMB'000	RMB'000
CONTINUING OPERATIONS
REVENUE	4	2,164,449		1,860,722
Cost of sales		(1,468,427)	(792,295)
Gross profit		696,022		1,068,427
Loss arising from changes in fair value
less costs to sell of biological assets		(1,321,554)	(595,479)
Other income and gains/(losses)	4	12,576		(13,550)
Selling and distribution expenses		(63,723)	(34,907)
Administrative expenses		(119,262)	(76,171)
Impairment losses on financial and contract assets		(91,345)	-
Other expenses		(36)	-
Finance costs	6	(144,995)	(146,015)
Share of losses of associates		(15,180)	(2,937)
(LOSS)/PROFIT BEFORE TAX FROM
CONTINUING OPERATIONS	5	(1,047,497)	199,368
Income tax credit/(expense)	7	280		(23)
(LOSS)/PROFIT FOR THE YEAR FROM
CONTINUING OPERATIONS		(1,047,217)	199,345
DISCONTINUED OPERATION
Loss for the year from a
discontinued operation	8	(1,264,000)	(1,053,135)
LOSS FOR THE YEAR		(2,311,217)	(853,790)
(Loss)/profit attributable to:
Owners of the parent		(2,225,200)	(1,015,266)
Non-controlling interests		(86,017)	161,476
		(2,311,217)	(853,790)
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONTINUED)

		For the year ended December 31,
	Notes	2018		2017
					Restated*
			RMB'000	RMB'000
(LOSS)/EARNINGS PER SHARE
ATTRIBUTABLE TO ORDINARY EQUITY
HOLDERS OF THE PARENT	10
Basic
- For loss for the year			(RMB 0.350)	(RMB0.160)
- For (loss)/profit for continuing operations			(RMB 0.151)	RMB0.006
Diluted
- For loss for the year			(RMB 0.350)	(RMB0.160)
- For (loss)/profit for continuing operations			(RMB 0.151)	RMB0.006
OTHER COMPREHENSIVE INCOME
Exchange differences on translation
of foreign operations		(2,360)	3,081
Net other comprehensive (loss)/income
that may be reclassified to profit or loss
in subsequent periods		(2,360)	3,081
OTHER COMPREHENSIVE (LOSS)/
INCOME FOR THE YEAR, NET OF TAX		(2,360)	3,081
TOTAL COMPREHENSIVE LOSS
FOR THE YEAR		(2,313,577)	(850,709)
(Loss)/profit attributable to:
Owners of the parent		(2,227,560)	(1,012,185)
Non-controlling interests		(86,017)	161,476
		(2,313,577)	(850,709)

• Certain amounts shown here do not correspond to the 2017 financial statements and reflect adjustments made, refer to Note 3.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

					As at
		31 December 31 December	1 January
	Notes	2018	2017		2017
					Restated*	Restated*
			RMB'000		RMB'000	RMB'000
NON-CURRENT ASSETS
Property, plant and equipment		2,087,045	2,798,328		2,710,368
Prepaid land lease payments		18,845	36,550		37,566
Other intangible assets		11,463	13,611		14,847
Investments in associates		90,328	105,784		112,658
Available-for-sale investments			-	2,007		1,427
Biological assets	11	2,667,427	3,867,389		3,884,257
Prepayments for property, plant
and equipment and biological assets		1,014	6,209		11,963
Long term receivables		11,516	14,059		19,684
Deferred tax assets		410	32,197		24,634
Other non-current assets		9,930	39,212		16,565
Total non-current assets		4,897,978	6,915,346		6,833,969
CURRENT ASSETS
Inventories		604,060	860,828		928,816
Biological assets	11	7,492	33,511		-
Trade and bills receivables		246,715	1,100,006		1,108,787
Prepayments, other receivables
and other assets		599,092	898,837		393,550
Available-for-sale investments			-		-	120,000
Pledged deposits		150,617	128,884		66,791
Cash and bank balances		74,052	582,283		1,047,382
Assets of a disposal group classified
as held for sale	8	978,355		-	-
Total current assets		2,660,383	3,604,349		3,665,326

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)

					As at
		31 December 31 December	1 January
	Notes	2018		2017		2017
					Restated*	Restated*
			RMB'000	RMB'000	RMB'000
CURRENT LIABILITIES
Trade and bills payables	12	997,085		1,188,964		920,631
Receipts in advance			-	14,700		13,152
Other payables and accruals		486,235		482,387		449,742
Derivative financial instruments		81,238		-	-
Interest-bearing bank and
other borrowings		2,218,864		2,654,046		918,404
Income tax payable			-	1,455		1,581
Liabilities directly associated with
the assets classified as held for sale	8	790,006		-	-
Total current liabilities		4,573,428		4,341,552		2,303,510
NET CURRENT LIABILITIES		(1,913,045)	(737,203)	1,361,816
TOTAL ASSETS LESS CURRENT
LIABILITIES		2,984,933		6,178,143		8,195,785
NON-CURRENT LIABILITIES
Interest-bearing bank and
other borrowings		49,518		720,201		1,751,950
Long term payables		56,528		82,829		107,900
Total non-current liabilities		106,046		803,030		1,859,850
Net assets		2,878,887		5,375,113		6,335,935
EQUITY
Equity attributable to owners
of the parent
Share capital	13	50		50		50
Reserves		2,017,863		4,315,612		5,327,797
		2,017,913		4,315,662		5,327,847
Non-controlling interests		860,974		1,059,451		1,008,088
Total equity		2,878,887		5,375,113		6,335,935

• Certain amounts shown here do not correspond to the 2017 financial statements and reflect adjustments made, refer to Note 3.

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