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HK Bourse: Results Announcement From Yuanshengtai Dairy Farm Ltd. -4-

28 Aug 2017 3:32 am
      Other payables - equipment and materials                                                                                 10,095 
      Advance from customers                                                                                                       96 
      Others                                                                                                                  112,688 
                                                                                                         556,725              502,753 
      The above amounts are non-interest-bearing and have no fixed terms of settlement. 
                                                                                                   30 June 2017 31 December 2016 
                                                                                                    (Unaudited)         (Audited) 
                                                                                                       RMB'000          RMB'000 
      Authorised: 50,000,000,000 ordinary shares of HK$0.01 each                                                              406,897 
      Issued and fully paid: 
         4,690,496,000 (31 December 2016: 3,908,747,000) ordinary shares 
           of HK$0.01 each                                                                                                      30,727 
      On 13 January 2017, 781,749,000 ordinary shares were issued at a price of HK$0.5 per share. 
      The Group had the following commitments at the end of the period/year: 
                                                                                                   30 June 2017 31 December 2016 
                                                                                                    (Unaudited)         (Audited) 
                                                                                                       RMB'000          RMB'000 
      Contracted but not provided for: 
        - Construction in progress                                                                                            104,708 
Market Review 
In the first half of 2017, the dairy industry in China still faced opportunities and challenges. The selling price 
of raw milk in China maintained a relatively low level as compared with the same period last year while 
imported raw milk continued to have some impact on domestic raw milk. Meanwhile, the raw milk market 
in China suffered seasonal excess production due to the increase in raw milk yield. Affected by the low 
selling price of raw milk, dairy farmers who suffered losses exited the market more quickly, and large-scale 
farms also started to restrain excessive production capacity by eliminating dairy cows with low capacity. 
On the other hand, the Ministry of Agriculture of China and the Dairy Association of China jointly released 
the "2017 Quality Report of Dairy Industry in China" which states that as China further improves its laws 
and standards on dairy products, the quality of dairy products in China will be greatly improved and the 
competitiveness of dairy farming companies in China will steadily increase. 
As a leading dairy farming company in China, the Company will continue to maintain its commitment to 
a large-scale, diversified and intensive development strategy. The Group, on the one hand, has reduced its 
total milk yield to alleviate its sales pressure and control its production cost by adjusting the cattle mix 
and improving the feeding formula and on the other hand, is seeking for diversified business development 
opportunities to create more sources of income. 
Business Review 
In terms of herd size and production volume, YuanShengTai is one of the leading dairy farming companies 
in China. For the Period, the total sales of raw milk of the Group remained relatively stable at 128,067 tons 
as compared to the same period of 2016. Due to further decrease in domestic milk prices, the total revenue 
of the Group during the Period amounted to RMB492.5 million, representing a slight decrease as compared 
to the same period last year. The gross profit during the Period dropped by 25.4% from RMB176.4 million 
to RMB131.7 million. The net loss during the Period was RMB17.2 million (first half of 2016: RMB135.6 
Since its establishment, the Group has established and maintained long-term relationships with China's leading 
dairy manufacturers. In the first half of 2017, the top four customers of the Company were Feihe Dairy Group, 
Mengniu Group, Yili Group and Bright Dairy Group and they accounted for 99.95% of the Group's revenue. 
Facing the increasing competition in the international raw milk market, the raw milk industry in China is 
under enormous sales pressure. In order to improve its sales performance, on 12 May 2017, the Group entered 
into a new Feihe master agreement with China Feihe Limited, a member of Feihe Dairy Group, to confirm 
the priority arrangement of the Group's supply of raw milk to Feihe Dairy Group for a term ending on 31 
December 2019 and such transaction has been approved by the independent shareholders of the Company at 
the special general meeting held on 17 July 2017. Please refer to the announcements of the Company dated 12 
May 2017, 5 June 2017, and 17 July 2017 and a circular of the Company dated 30 June 2017. It is expected 
that in the long term, continuing supply of raw milk products to the Feihe Dairy Group will further enhance 
the stability of the Group's customer base and ensure future demand for the Group's raw milk product. 
Construction of Farms 
As of 30 June 2017, we had six farms in Heilongjiang Province and one farm in Jilin Province. Each farm 
had an actual capacity ranging from 6,000 to 18,000 dairy cows, and the total site area of the seven farms 
amounted to approximately 5,909,000 square metres. At the same time, the construction of Keshan Farm has 
been half-completed, which now raised 6,205 heifers and calves. 
                                                 Actual Designed 
                                                        Capacity              Actual 
                                                     (Number of            Inventory 
                                                     Cows/Head)              Number            Area (m2) 
Gannan Oumei Farm                                          12,000               9,311             986,333 
Kedong Oumei Farm                                           6,000               6,225             384,000 
Kedong YST Farm                                            18,000              11,209             784,000 
Zhenlai Farm Phase I                                       15,000              12,870           1,066,667 
Kedong Yongjin Farm                                        12,000               6,856             714,000 
Baiquan Ruixincheng Farm                                   15,000               3,460             994,000 
Keshan Farm                                                12,000               6,205             980,000 
Total                                                      90,000              56,136           5,909,000 
Milk Yield 
During the Period, the average annual milk yield per cow was 10.91 tons, representing an increase of 7.0% 
as compared to 10.2 tons in the same period of 2016. The Group adjusted the cattle mix and improved the 
feeding formula, in order to optimize the management and improve the profits. 
Size of Our Herds 
Driven by the advanced management model of our farms, the number of dairy cows of the Group's seven 
dairy farms increased from 54,749 as of 31 December 2016 to 56,136 as of 30 June 2017. The total number 
of our matured milkable cows increased from 26,689 as of 31 December 2016 to 27,259 as of 30 June 2017. 
The increase in number of matured milkable cows ensured our steady source of quality raw milk. 
                                                                        30 June 2017 31 December 2016 
Number of matured milkable cows                                                                    26,689 
Number of heifers and calves                                                                       28,060 
Total number of dairy cows                                                                         54,749 
                                                 - 10 - 
Price of Raw Milk 
The price of domestic raw milk remained low due to continuous increase in imported milk powder, the over- 

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