June 2015

FY2014/15 Annual Results

This presentation has been prepared by China Huishan Dairy Holdings Company Limited ("Huishan“ or the

“Company") and is solely for the purpose of corporate communication and general reference only. The presentation

is not intended as an invitation, offer, recommendation or solicitation for you to buy or sell securities or to engage in

any investment activities whatsoever, or to form any basis of investment decision for any securities (whether or not

in relation to the Company) in any jurisdiction. All such information should not be used or relied on without

professional advice. The presentation is a brief summary in nature and does not purport to be a complete

description of the Company, its business, its current or historical operating results or its future business prospects.

This presentation material may contain forward-looking statements. These forward-looking statements are based on

a number of assumptions about the future, some of which are beyond the Company’s control. The Company does

not undertake any obligation to update any information contained in this presentation (including but not limited to the

forward-looking statements) to reflect events that occur or circumstances that arise after the date of this

presentation. Potential investors should bear in mind that actual financial results may differ materially from the

forward-looking statements contained herein. The information contained in this presentation is not verified by any

independent third party. No warranty or representation of any kind, whether express or implied, is made as to, and

no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information contained

herein. The information contained in this presentation should be interpreted under the prevailing circumstances.

There will be no update of matters in the presentation to reflect any significant change in the development. The

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respect of any use or reliance of any information, whether financial or otherwise, contained in this presentation, and

shall not be liable for any and all losses incurred (whether directly or indirectly, financial or otherwise) by any person

in reliance on any information contained in this presentation.

2

Disclaimer

• Industry Opportunities and Challenges

• Financial Overview

• Business Highlights and Strategies

• Dairy Farming Business

• Liquid Milk Business

• Milk Powder Business

3

Table of contents

Industry Opportunities and Challenges

Industry opportunities

Consumption upgrade:

• Literacy of Chinese consumers, their acceptance of new information and health consciousness are rising

• As China’s disposable income per capital increases, consumers demand and are willing to spend more on reliable and

high-quality dairy products. High-quality dairy products require premium milk source

• Sales of high-end liquid milk in China recorded a CAGR of 22.1% from 2009 to 2014

• Growth of pasteurized milk market exceeded expectations, especially in tier-1 and tier-2 cities

• Liaoning Province’s pasteurized milk sales grew from RMB550 million in 2009 to RMB1.28 billion in 2014, with a CAGR

of 18.5%. Growth is expected to speed up in the future*

Industry transformation: • Pasteurized milk gains increasing popularity; dairy enterprises realized that raw milk source is the key to development

• As the price of raw milk dropped in 2014, many small-scale farms have exited the market. China’s dairy farming market

development trend is towards intensive farming

• A safe and continues supply of forage grass and feed, on-going improvement of feed formula and the healthy

development of cattle have gained more attention within the industry

5

Consumption upgrade and industry transformation are two key themes

Consumers prefer large dairy companies with self-owned milk sources

and comprehensive management operations

*Source: Frost & Sullivan industry report

Industry challenges

From “milk shortage” to “overcapacity”:

• Imported base powder are selling at a low price in China

• Production volume of reconstituted milk products have increased significantly

• More Chinese dairy companies are executing M&As and forming partnership with foreign dairy farms, causing raw milk

demand to relocate overseas

• Supply-demand of raw milk has reversed from “milk shortage” to “overcapacity” in a year, leading to a “price-cut trend”

• Many farmers are tipping milk on the ground and culling cows; more farms have shut down

Weak market demand with pressure from imported products: • Chinese dairy retail sales remained stagnant in 2014

• Imported dairy products, especially liquid milk products (mainly UHT milk) have increased in tier-1 and tier-2 cities,

putting further pressure on the local high-end dairy market

• Imported milk powder occupies 50% market share in the Chinese milk powder market

• The convenience and low-cost business model of E-commerce has allowed international dairy companies to speed up

development in China

6

China’s dairy market implemented numerous policies in 2014, moving towards the next stage of development.

However, Chinese dairy companies have faced a “winter period”.

*Source: Frost & Sullivan industry report

Financial Overview

FY2015 vs. FY2014

• Revenue increased 11.1% to RMB 3,923 million

• Gross profit margin of 57.6%*, compared to 62.4% of FY2014

• Net profit decreased 29.8% to RMB 877 million

• The total dividend amounted to approximately RMB 219 million; with a dividend payout ratio of 25%

Main reasons for profit decrease：

• The decline of raw milk price as a result of the change in industry dynamics, overall weak market

sentiment and the impact from imported dairy products

• Delay of the commencement of additional production capacity

• Increased distribution and selling expense for the purpose of distribution network expansion

• Increased finance cost as a result of the additional bank loan for lease prepayment of 240k mu

plantation land

* Before biological fair value adjustments

8

Financial review

62.0% 65.5%

36.2%

56.1% 60.6%

45.7%

Dairy Farming Liquid Milk Milk Powders

Upstream business

• Considering the decline of raw milk price, overall consumer

demand weakness and the impact from imported base

powder reconstituted milk, we adopted a prudent approach to

avoid over-aggressive growth on our raw milk production

volume to minimize the inventory risk

• We shifted more of our focus to cost control

‒ Expansion of grass plantation field to total over 480k

mu

‒ Successful trial two-harvest plantation for oats and

corn silage, an important agriculture breakthrough, to

be further implemented to all of our plantation fields

and various kinds of feed grass

‒ Optimization of feed constitution mix, continuous feed

cost saving and seeking the best economic balance

between feed cost and production volume in order to

maximize our profit

Downstream business

• Commencement of addition of production capacity delayed by

6 months, therefore, slowed down the volume growth of our

liquid milk

• Although the capacity delay and overall market weakness, we

have successfully maintained a stable growth on both volume

and ASP

Against the backdrop of weak market sentiment,

we have maintained healthy and stable growth on our revenue while keeping gross profit margin at a relatively high level

Segment profit margin

after elimination

Segment profit margin

before elimination

Gross profit before biological

fair value adjustments

989

2,288

254

3,530

1,028.3

2,421.7

473.3

3,923.3

0

1,000

2,000

3,000

4,000

5,000

Dairy Farming Liquid Milk Milk Powders Total

FY14 FY15 Revenue

(RMB’m )

62.1%

28.5% 18.9%

55.7%

29.6% 29.8%

Dairy Farming Liquid Milk Milk Powders

Gross profit after biological

fair value adjustments

20.1% 22.7%

FY14 FY15

62.4% 57.6%

FY14 FY15

9

Revenue and gross profit margin

Labour

• Increase of sales and related staff, especially outside of

Northeastern market to promote our liquid and IMF products

• Recruited more experienced sales

• An overall salary raise for all sales during the fiscal year

Advertisement

• Shooting and broadcasting of our “Jersey Farm” video on CCTV

• Sponsored CCTV show “Power of Chinese Kids少年中國强” in

order to promote our brand awareness

Channels promotion

• Increasing number of supermarkets and related store entry fees

We increased our selling and distribution expense for the purpose of future network expansion

Our distribution network expanded rapidly thanks to the increasing investment in marketing activities

Liquid milk

• 373 distributors and 408 direct sales stores at the end of reporting period

• Liquid milk market share in Northeastern region increased to 20.9% in 2014 from 19.5% in 2013, ranked No. 1

• Ranked #5 by sales of liquid milk in China

Milk powder

• 1,049 distributors (FY2014: 418), 8,785 POS, 621 mom-and-baby shops with “Huishan Red Label” products

• Completed establishment of mobile terminal “Wechat Shop” and commenced online operation

10

344

595

9.74%

15.17%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

FY14 FY15

Distribution cost Distribution cost to revenue %

(RMB’ m )

Distribution cost

266

424

0 50

100 150 200 250 300 350 400 450

FY14 FY15

(RMB’ m )

Finance cost vs. feed cost saving

• The increase of finance cost from RMB266 million in FY2014 to RMB424 million in FY2015 was mainly

due to the additional bank loan for lease prepayment of 240k mu plantation land

• The saving of feed cost was much bigger than the increase of the related interest expense

Finance cost Feed cost saving <

Profit contribution

Cash flow saving

Finance cost

11

Business Highlights & Strategies

Business highlights

13

China’s Leading Vertically-Integrated Dairy Company

• Leading milk production and premium raw milk, cost efficient and high nutrition feeds

• Employs self-produced raw milk for scale production of liquid milk and IMF products

• Long-term lease of 480,000mu of arable land

• Owns the largest commercial alfalfa plantation field in China

• Second largest cow herd in China with over 180,000 dairy cows and 69 farms

Reliable Premium

Milk Source

• Milk powder and liquid milk production facilities have all been “GMP” certified

• IMP products are tracing its first test unit

• Certified as a 5A enterprise with “Transparent Supply Chain” by the logistics

committee of the China National Food Industry Association

• “Gold Queen Label” products have passed quality inspection tests for 10

consecutive months, and it was awarded the “2014 Quality Excellence Award” by

the China Dairy Industry Association

Quality Control in

Production

• Large-scale feed plantation

• Plantation land has a fixed lease which allows us to maintain long-term low rents

• Implemented trial two-harvest plantation in oats and corn silage fields

• Successfully employed Mexican corn silage plantation methods to guarantee quality

and boost our low-cost advantage

• Adjust and develop new feed formula to boost feed efficiency and maximize profit

Cost Control

• Capture consumption upgrade and the growth of low-temperature dairy products

• Leveraging our premium milk source advantage, we will boost the sales of pasteurized

milk and yogurt with comprehensive cold chain logistics development

• Enhanced customer royalty through “Freshness Delivery”, delivering products to

customers’ doorstep

Quality

Low-temperature

Dairy Products

Business highlights

14

China’s Leading Vertically-Integrated Dairy Company

• According to Frost & Sullivan’s report, Huishan was ranked as No.1 by market share in the liquid milk

market in the three provinces in Northeastern China with a 20.9% market share, among which its

pasteurized milk and yogurt products are industry leaders with market share of 44.3% and 28.7%

• China Statistical Information Services Center (CSISC) published the “2014 China IMF Brand

Reputation Report”

Among the 274 brands included in the China Food and Drug Association’s “List of IMF

Enterprise and Product (second batch inclusive)”, Huishan’s milk powder brand reputation,

quality and brand favorite has been ranked among the top ten

In terms of overall rating, “Huishan” milk powder is ranked as “Top Ten China IMF Brand in

2014”

Brand Reputation

and Recognition

• Huishan’s sales network is based in Northeastern China, and it is expanding into Northern and

Eastern China. Its sales channels include:

Distributors, direct-sale supermarket, traditional retail and special channels

Liquid milk sales are also available through milk stations and “Freshness Home Delivery”

program

IMF products are sold through special channel, mother-and-baby stores, mother’s club, etc

• Huishan has accumulated over 100,000 active members

• Completed the construction of its desktop and mobile “Wechat Mall” e-commerce platform, allowing

consumers to place orders on their computers and mobile phones, trace orders and proceed online

payment for their preferred products

Diversified

Sales Channel

Our strategies

15

Maximize shareholder value: • Increase promotions of low-temperature products (pasteurized milk and yogurt) and UHT milk

• Stringent control on cost saving through innovative technology, sophisticated management and scale operation

• Prudent investment and catch the best timing to realize our potential value

Upstream: • Increase production yield of arable land

‒ Implement the successful two-harvest plantation technology across the entire 340,000mu of corn silage

and other feed fields

‒ Fully promote the Mexican corn silage plantation method to guarantee quality and maintain low-cost

advantage

• Adjust and develop new feed formula to boost feed efficiency and maximize profit

• Implement large sprinkling irritation system across its plantation fields to extend growing season and combat

droughts

Downstream: • In April 2015, the Shenbei liquid milk processing plant has commenced operations with planned liquid milk

production capacity of 620ktpa, strengthening the Northeastern market, laying a strong foundation for the

expansion of “Huishan” liquid milk products nationwide

• Expand its business from Northeast China across other liquid milk markets (especially Shandong, Henan, Hebei,

Jiangsu), expand sales network and launch differentiated products to satisfy the changing consumer demand

• Huishan and Zongyi Investment’s Alpha Spring have invested to establish a vertically-integrated dairy value. The

joint venture has been established on 18 May 2015, and officially launched the East China business operations to

expand its pasteurized milk market into provinces including Jiangsu, Shanghai, Zhejiang, Shandong and Anhui

• Establishment of JV with FrieslandCampina has been completed by obtaining the approval from the Ministry of

Commerce, and will launch new IMF brand in China

Dairy Farming Business

• 69 standardised dairy farms in

Liaoning Province, China

• A herd size of 180,331

Holstein and Jersey cows as

by 31 March 2015

• Herd size growing organically

at around10% pa

• 480,000mu of leased land with

an average lease of 15 years,

which includes 140,000mu of

alfalfa plantations

• 500ktpa of concentrated feed

processing capacity

• Successful trial for two-harvest

of oats and corn silage and

will be fully promoted in the

future

• 601,604 tonnes of premium

quality raw milk production in

FY2015 with average realised

raw milk prices of RMB4,873

/tonne

• A yield of 9.1t per milkable cow

• 63.3% of raw milk sales are for

internal use

• Yili is our largest external raw

milk buyers

Largely self-sufficient in feed A rapidly growing dairy herd Premium raw milk production

Self-sufficiency in

alfalfa gives us a

material cost

advantage versus

peers

Our ability to

secure sufficient

arable land is a

key competitive

advantage

We will consume

more raw milk

internally as our

liquid milk

products sales

increase

Our raw milk is

high-quality and

realises a

premium to the

industry average

17

Dairy farming business

Revenue

Segment profit1 (adjusted EBITDA)

Gross profit

Margins

(1) Segment profit is “adjusted EBITDA” adjusted for items not specifically attributed to individual segments and before changes in fair value to biological assets (see our

financial statements for a complete definition)

488

973

1,483 1,548

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

FY12 FY13 FY14 FY15

(RMB’m)

48.0%

59.8% 62.1%

55.7%

0%

10%

20%

30%

40%

50%

60%

70%

FY12 FY13 FY14 FY15

GP margin

326 399 614 577 132 553

891 988 458

952

1,504 1,565

FY12 FY13 FY14 FY15

External sales

Internal sales (RMB’m)

Decrease of dairy farming gross profit margin was mainly due to the decline of raw milk price

Financial overview

18

672 681 989 1,028

281 910

1,432 1,784

953

1,591

2,421

2,812

0

500

1,000

1,500

2,000

2,500

3,000

FY12 FY13 FY14 FY15

Internal Revenue

External Revenue (RMB’m)

• We have a herd size of 180,331 cows, of which

74,389 are milkable cows

• We now have 69 standardised dairy farms in

Liaoning province

• We expect the herd size to continue growing rapidly

based on an organic growth rate of c.10% (of total

herd size), consistent with historical growth rates

• The percentage of milkable cows to total herd size

is expected to remain relatively flat in FY2015

(42.5% in FY2014) as we slow down the pace to

import younger heifers. The percentage of milkable

cows will increase towards a longer-term

sustainable ratio of c.50% as the herd matures

Herd size and %‘milkable cows

31/3/13 30/9/13 31/3/14 30/9/14 31/3/15

Milkable cows 49,889 57,040 61,286 65,312 74,389

Heifers and

Calves 62,962 71,312 82,905 97,082 105,942

112,851 128,352 144,191 162,394 180,331

% of Milkable

cows 44.21% 44.44% 42.50% 40.22% 41.25%

-68,433

-449,865

FY14 FY15

Loss arising from changes in fair value less costs to sell of biological assets

Loss arising from changes in fair value increased

• Mainly due to the increase of culled cows

• Economic value of milkable cows is the major consideration

of our culling policy. As the price of raw milk declined, we

seek for higher efficiency to the culling strategy

• The costs of culling a cow is still less than the costs to breed

one

19

Rapidly growing dairy herd

Huishan’s raw milk sales

Yield per milkable cow

9.0

9.1

FY14 FY15

• Annual yield is 9.1 tonnes

• Culling rate increased while the proportion of

Jersey cows increased

• In FY2015, the annual yield per milkable cow was 9.1

tonnes, a slight increase compared to the production

in the same period last year

• The company aims to sustain high yields through:

• Culling of low yield cows

• Ongoing purchases of heifers with superior

genetics

• Optimization of the feed mix

• Management of milking schedules and cow

welfare

20

Maintaining high milk yield

196,119 211,769

286,309 365,302

FY14 FY15

External sales

Internal sales

Unit: tonnes

• Raw milk prices in China, as reported by the Ministry of Agriculture national raw milk price index, have stabilised after

falling since 2014

• Our average raw milk sales price was RMB4,873/tonne in FY2015

• Our realised price is only loosely correlated to the raw milk price index due to:

• Our realisation of significant price premiums that reflect the higher quality of our raw milk and the more positive

supply and demand trends in the premium raw milk segment

• Significant regional raw milk price differences that are obfuscated in the national index

• Longstanding relationships with external customers

• Demand growth for premium raw milk remains strong

Our realised raw milk price versus national index price

Source: Ministry of Agriculture

3,000

3,500

4,000

4,500

5,000

5,500

Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15

Huishan Ministry of Agriculture national raw milk price index

(RMB/tonne)

21

Premium realised raw milk prices

• We believe our raw milk production costs

advantage is primarily due to:

• The lower cost of self-produced feed,

particularly alfalfa, versus purchasing feed in

the market

• Higher milk yields from better quality nutrition

due to usage of self produced feeds

• Lower transportation costs

• The proximity of a number of our farms to each

other and the resulting synergies

• Take alfalfa for example, our production costs is

about 107 USD/tonne. However, CIF price of

imported alfalfa is 400 USD/tonne and delivery

to farm price even reached 3,247 USD/tonne

• Our lower feed costs have required a significant

investment in arable land

Breakdown of Huishan’s raw milk production costs, FY2015

Feed (including plantation lease amortisation)

75.9%

Labour5.1%

Veterinary expense5.7%

Utilities3.7%

Others6.9%

Depreciation2.7%

Feed comprises the majority of raw milk production costs

22

Huishan’s leased land, mu

* 15mu = 1 hectare

• Our ability to grow low cost, high nutrition value feeds

requires us to secure sufficient arable land

• Today, our feeds plantation fields exceeded

480,000 mu

• About 20,000 mu of land was put under two-

harvest trial cultivation of oat and corn silage

and turned out to be a breakthrough in such

plantation in the agricultural industry in

Northern China

• Successfully implemented Mexican corn silage

plantation technology to ensure the cost

advantage and quality

• Continue to save cost for breeding cows, adjust

and innovate new feeds mix. To maximize

economic interest, we are also looking for the

best marginal effect between breeding costs

and milk yield

23

Securing sufficient arable land

Unit: mu*

140,000 140,000

100,000

340,000

-

100,000

200,000

300,000

400,000

500,000

600,000

FY14 FY15

Alfalfa land

Other feeds land

• We have an inspection center and over 200 staff

ensuring the health of our dairy herd

• Routine health inspections are carried out and any sick

cows are immediately quarantined by our veterinarians

• Each farm implements a standardised immunisation

program, and farm-wide disinfection and immunisation is

carried out if there is a concern of substantial infection

risk

• A cow’s vaccination history is tracked by our ERP

system

• The size of our dairy farms, c.3,000 cows per farm,

reduces the risk of disease versus super large-scale

dairy farms

Milk yields are better in healthier herds

Source: Company

24

Managing our cow’s health

Liquid Milk Business

• The Huishan brand is

renowned for its quality and

safety assurance

• 2014, Huishan ranked No.1 in

Northeastern China with a

20.9% market share. For the

pasteurised milk and yogurt

market, Liaoning with the

largest market share, reached

50.2% and 47.9% respectively

• We are in the early stage of

expanding the brand outside

of Northeastern China

Increasing capacity Established premium brands With expanding distribution

A new 360ktpa liquid milk production facility commenced operations

c. 63.3% of our raw

milk production was

processed internally

in FY2015

We have a well

established brand

in Northeastern

China

We are gradually

expanding into

other provinces in

Eastern China

• Current liquid milk products production capacity is 375ktpa at the 31 March 2015

• Operations are currently at 70-80% utilisation rates

• A new 360ktpa liquid milk production facility was put to use. removing the growth bottleneck. c. 115ktpa of this new capacity will replace existing outdated capacity

• Sales of 293kt of liquid milk

products in FY2015 across

four product categories

(pasteurised milk, UHT milk,

yogurt, and milk beverages)

• The only large-scale dairy in

China to source all its raw milk

from own farms

26

Liquid milk products Business overview

Revenue

Segment profit1 (adjusted EBITDA)

Gross profit

Gross Profit Margins

(1) Segment profit is “adjusted EBITDA” adjusted for items not specifically attributed to individual segments and before changes in fair value to biological assets (see

our financial statements for a complete definition)

564

1,707

2,288 2,422

0

500

1,000

1,500

2,000

2,500

3,000

FY12 FY13 FY14 FY15

(RMB’m )

60

268

410 374

0

50

100

150

200

250

300

350

400

450

FY12 FY13 FY14 FY15

(RMB’m )

85

377

652 716

217

922

1,499 1,467

0

200

400

600

800

1,000

1,200

1,400

1,600

FY12 FY13 FY14 FY15

Before elimination

After elimination (RMB’m )

Gross profit margin before elimination slightly increased mainly due to

rise of ASP as a result of the upgrade of product mix

15.1% 22.1%

28.5% 29.6%

38.4%

54.0%

65.5% 60.6%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

FY12 FY13 FY14 FY15

GP Margin before elimination

GP Margin after elimination

27

Financial overview

Revenue

Volume

FY2015 FY2014

30.8%

32.7%

36.0%

0.5%

Fresh milk

UHT

Yogurt

Milk beverage

21.5%

40.7%

37.3%

0.4%

31.1%

42.2%

25.7%

1.1%

Fresh milk

UHT

Yogurt

Milk beverage

Increasing weight of fresh milk

Revenue and volume breakdown

FY2015

22.9%

48.1%

26.3%

0.7%

28

FY2014

91,244

123,707

75,257

3,129

66,654

141,374

77,097

2,404

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Fresh milk UHT Yogurt Milk beverage

FY15 Volume tonnes

FY14 Volume tonnes

Liquid milk product volumes and ASPs

(Units: tonnes)

8,176

6,406

11,568

4,027

7,392 6,595

11,061

4,149

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Fresh milk UHT Yogurt Milk beverage

FY15 Average selling price

FY14 Average selling price

(RMB/Tonne)

• Sales of liquid milk products reached RMB2,422m in

FY2015, an increase of 5.9% from RMB2,288m in

FY2014, gross margin after elimination was 60.6% as

compared with 65.5% in FY2014

• Products mix upgrade

• Increased production and sales of pasteurised

milk

• Raw milk production costs increased

• we continue to enhance our product mix with more

premium products including:

• “Jersey Dairy Farm” – ultra-premium UHT

products

• “心情工坊” –new yogurts products

• “10 Days for kids” – additive free yogurt with a

natural-taste

• Increasing sales of pasteurised milk versus UHT

29

Growing downstream volumes and margins

Distribution channels • According to Frost & Sullivan, Huishan is ranked No.1

by market share in the liquid milk market in the three

with market share of 20.9%, among which we are in

absolute leading position in pasteurised milk and

yogurt products with market share of 44.3% and

28.7%, respectively

• As at 31 March 2015, Huishan’s distribution network

comprised 373 distributors, 408 supermarkets and

over 10,000 subscribers for home milk delivery

• Huishan will continue to build its distribution channels

and network in Northeastern China through:

• Strengthen the publicity and promotion power,

organized the first international Milk Festival,

and continued to educate consumers

• Building a home delivery service

• Increasing sales of pasteurised milk and yogurt

products

Third-party

distributors

Modern

channels

Specialty

channels

Home delivery

Club

memberships

E-commerce

platforms

International

supermarkets

National

supermarkets

Regional

supermarkets

Convenience

stores

Department

stores

Consumers

Third-party

distributors

purchase our

products from

us directly

and

subsequently

sell our

products to

retailers

within a

designated

region

30

Market leader in Northeastern China

• Huishan is at an early stage of selectively expanding into other provinces including Jiangsu, Shandong, Hebei,

Henan and Sichuan with:

• An initial focus on 15 key provinces/areas

• Sales of primarily high-end products, such as “Jersey farm” products

• Aim at target group, enhance the interaction process and coordinate with products release and CCTV

advertising

• Select stores with active sales and high-end residential block as major sales channels

• On 30 November 2014, Huishan and a subsidiary of Nantong Zongyi Investment Co., Ltd named Alpha

Spring reached an agreement. Both parties decided to develop integrated dairy business. The joint venture

were officially established on 18 May 2015 and the Eastern China industry cluster commenced opeartions

• We will invest equity of up to RMB650m initially in the JV

• Help Huishan to replicate the business to Shanghai, Jiangsu, Zhejiang, Shandong, Anhui and other

pasteurised milk markets apart from Northeast region

• These moves show that Huishan begin to map out the countrywide market, enter into terminal sales

beyond Northeast region and become a nationwide dairy company from a regional brand

31

Expanding distribution beyond Northeastern China

Milk Powder Business

• In October 2014, we announced the formation of a joint

venture with FrieslandCampina

• We will receive c. RMB700m in cash and the milk

powder production plant in Shenyang will become part

of the JV company

• We will continue to produce and distribute our own IMF

brands in parallel with the JV

• Our milk powder and dairy ingredients products

business is still relatively new

• We currently have three milk powder production facilities: a 26ktpa milk powder production plant in Shenyang, a 12ktpa D90 whey powder plant in Fushun, and a 19.8ktpa milk powder plant in Jinzhou

• Sales of 15,925t of milk powder products in FY2015,

included infant milk formula (IMF) sales of 2,938t

• Other milk powder products include, whole milk powder, D90 whey powder, and non-dairy creamer

• Processing capacity is underutilised but will grow as marketing efforts intensify

Growth in our milk powder products segment

has been slower than anticipated

We are focusing on the higher margin IMF

segment with the FrieslandCampina JV

33

Milk powder products Business overview

Our milk powder products business remains in its infancy

Revenue

Segment profit1 (adjusted EBITDA)

Gross profit

Margins

(1) Segment profit is “adjusted EBITDA” adjusted for items not specifically attributed to individual segments and before changes in fair value to biological assets (see

our financial statements for a complete definition)

(Rmb m)

143 311 111

162 254

473

0

200

400

600

800

1,000

FY14 FY15

IMF Products (including Audlt Milk Powder)

Dairy Ingredients

51.8%

18.9%

29.8%

60.6%

36.2%

45.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

FY13 FY14 FY15

GP Margin before elimination

GP Margin after elimination

46 48

141

53

92

216

0

50

100

150

200

250

FY13 FY14 FY15

Before elimination

After elimination (Rmb m)

49

(44) (49)

-80

-60

-40

-20

0

20

40

60

FY13 FY14 FY15

(Rmb m)

34

Financial overview

Significant changes in product mix in the past two financial

years, comparability is not strong

• In FY2015, we sold 2,938 tonnes of IMF (1,417 tonnes in

FY2014), and produced 12,987 tonnes of dairy ingredients

(3,458 tonnes in FY2014), including non-dairy creamer, whole-

milk powder and clarified butter

• Gross margins in the powder milk products segment were

45.7% compared to last year’s 36.2% after elimination

• We will continue to develop our own IMF brands alongside the

JV with FrieslandCampina. Growth in IMF sales has been

helped by the launch of ‘Huishan Red Label’ in March 2014

• As the end of Financial Year, 1,049 distributors (FY2014: 418),

8,785 points of sales, 621 “Huishan Red” direct-sale mother-

and-baby stores

• Completed mobile “Wei Mall” set up and commenced operations

Still a relatively new business

Milk powder product volumes and ASPs

2015 2014

Sales Volume tonnes ASP Sales Volume tonnes ASP

rmb'000 tonne rmb/tonne rmb'000 tonne rmb/tonne

IMF Products (including Adult Milk Powder) 311,054 2,938 105,873 143,265 1,417 101,104

Dairy Ingredients 162,284 12,987 12,496 110,503 3,458 31,956

Total 473,338 15,925 29,723 253,768 4,875 52,055

1,417 2,938 3,458

12,987

0

5000

10000

15000

FY14 Volume tonnes FY15 Volume tonnes

IMF Products (including Audlt Milk Powder)

Dairy Ingredients (Unit: tonnes)

35

101,104 105,873

31,956 12,496

0

50,000

100,000

150,000

FY14 Average selling price FY15 Average selling price

IMF Products (including Audlt Milk Powder) Dairy Ingredients

RMB/tonne

Benefits of a JV with FrieslandCampina

• We announced on 8 October 2014 a proposed 50:50 JV with

FrieslandCampina to produce and sell IMF products in China under an

existing FrieslandCampina brand. Key terms of the proposed JV include:

• FrieslandCampina will pay c. RMB700m for its stake in the JV

• FrieslandCampina will acquire USD30m of Huishan shares

on-market within 6 months

• The JV does not restrict Huishan or FrieslandCampina from

continuing to develop their existing IMF businesses

• The primary benefits of the proposed JV include:

• Builds on the existing partnership in the production of non-dairy

creamers

• Secures additional demand for sales of premium raw milk

• Utilises FrieslandCampina’s existing brand, sales and distribution

networks

50%

50%

36

Q&A