Yashili International : Records 2016 Revenue of RMB2,200 million - Implements Channel Transformation in Orderly Manner and Actively Strengthens Business Layout

(Hong Kong, 30 March 2017) - Yashili International Holdings Ltd ("Yashili" or the "Group"; stock code: 1230.HK), one of the leading infant milk formula and nutrition food manufacturers in China, has announced its annual results for the year ended 31 December 2016.

In 2016, sales in the milk formula industry were generally weak, the overall selling price rose slightly, and the scale of the market was basically similar to last year. The competition of international brands and cross-border e-commerce merchants has presented huge challenges to the milk powder industry. The Group's revenue in 2016 dropped by 20.2% year-on-year to approximately RMB2,203.3 million. Gross profit decreased by 26.0% to approximately RMB1,037.3 million with gross profit margin down 3.7 percentages points to 47.1%. Loss attributable to equity holders of the Company was RMB320.2 million. Basic loss per share was RMB6.7 cents.

Business Performance

As for IMF products, sales revenue from Yashili decreased by 26.6% over the same period last year to RMB1,462.4 million. During the year, the Group focused on brand integration and capacity allocation to vigorously build up a professional, international and high quality brand image. In April 2016, the Group's originally canned and packaged Super α- Golden from New Zealand was launched in both China and New Zealand. In May, the Group completed its acquisition of Dumex Baby Food Co., Ltd. from Danone Group, which marked the initial achievement of brand consolidation and a new domestic production layout in May. Besides, as part of the strategic cooperation between the Group and Arla Foods, the

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super-premium organic product series "Baby & Me" has enjoyed rapid growth and further expanded into the first-tier market. Other brands such as Oushi Mengniu and the organic brand Reeborne continued to boom and grow steadily.

Types of nutrition food the Group sells include milk powder for adults under both the Mengniu and Youyi brands, milk powder for middle-age and elderly people under the Huanqing brand, Future Star Kid Milk Powder, cereal under the Zhengwei brand and nutritional rice cereal for infants and toddlers under the Yashily brand. During the year, sales revenue of the Group's nutrition food and other products was approximately RMB668.2 million, with its overall revenue decreasing by 11.7% over the same period last year.

Accelerated Brand Upgrade

The Group's strategy was to reinforce the Yashily brand, vigorously build the Reeborne brand and quickly cultivate the Arla product series to continuously increase its brand influence and realize the brand upgrading and remodeling. Yashily Super α- Golden manufactured and originally canned and packaged in New Zealand was launched in both China and overseas, marking the first-ever shelf-sale of a Chinese milk formula brand in an overseas market. To actively enhance its brand image, the Group became the sponsor of China's first star variety show for the preservation of intangible culture - "The Splendid Chinese Dialects" and exclusively sponsored a solo concert performed by Lang Lang in Auckland to enhance its brand awareness and reputation. Furthermore, on behalf of the Reeborne brand, the Group carried out in-depth cooperation with Baidu to gain access to highly targeted consumers leveraging big data, which has notably boosted brand exposure. To promote the Group's high-end product of Arla, "Baby & Me", the internationally renowned visual artist Ms. Chen

Man (陳漫) was engaged during the year to boost its brand exposure and further build up its differentiated brand layout.

Enhanced Product Nutrition

With the Administrative Measures for the Registration of Recipes of infant Formula Milk Powder Products ("Recipe Registration Requirement") on IMF products implemented by the government, the Group has actively optimized its portfolio and the nutritional structure of products. By leveraging the milk sources and high operating standard of the factory in New Zealand, the Group has introduced a variety of series and brands of imported milk formula, which has enriched the product lines and upgraded the nutrition of the existing Youyi series and Future Star Kid products to satisfy the appetites of consumers for product nutrition. During the year, the Group has long been committed to researching and analyzing the macro-nutrient composition of breast milk, which laid a foundation for the development of future IMF products. The Group worked with well-known domestic and foreign nutrition specialists to demonstrate the benefits of the newly-developed products for infants' growth and nutritional needs through clinical laboratory science.

Implemented Marketing Reform

The Group strived to enhance its IMF and e-commerce marketing teams and rapidly increased the contribution of the mother-and-baby store channel by advancing the "All Staff Engaging in Mother-and-Baby Store Channel" program. It also set up a project department for the "Directly-managed mother-and-baby store channel" to put in place a related entrepreneurial system, while promoting channel transformation and unleashing the potential of teams. Besides, in managing online operations, the Group has divided its offerings into three product lines, namely high-end infant formula, basic infant formula, and adult milk powder and dissolvable products, which has helped the Group's online sales rise steadily during the year. To redevelop business channels, the original marketing structure of brand divisions was restructured into "four core business units plus one project department" mainly according to channels and product categories, so the positioning of sales teams was more focused and clearer.

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Strengthened Quality Monitoring and Control

The Group has persisted in implementing all-round quality controls from raw material to finished products. In this regard, the Group centers on Yashili's Central Laboratory for strict self-conducted inspection. It has also invested heavily in quality management hardware to ensure product quality and safety. In 2016, the Group's processes have passed the supervisory accreditation or reassessment of internationally-accepted management systems as ISO9001, ISO14001, HACCP and CMS. In the meantime, under various strict risk monitoring procedures performed by the government, the products of Yashily, Mengniu, Dumex and Scient brands have been 100% qualified after analysis, strengthening consumer confidence in using the Group's products.

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About Yashili International Holdings Ltd

Yashili International Holdings Ltd. mainly focuses on the production and sales of pediatric milk formula products and nutritious wholesome food under major brands including Yashily, Oushi, Dumex, Arla and Scient. Yashili is one of the leading pediatric milk formula product manufacturers in China. The Group also sells four nutrition foods including adult powder under Mengniu brand, milk powder for adults and teenagers under the Youyi brand, adult powder under Awakening Youth brand, cereal under the Zhengwei brand as well as soymilk powder and pediatric rice flour under the Yashily brand. Please visit www.yashili.com for more information.

For Enquiries:

Karen Hung Tel: +852 2864 4845

Janice Au Tel: +852 2864 4874

Karen Li Tel: +852 2864 4837

Phoenix Fung Tel: +852 2864 4850

Jacqueline Tang Tel: +852 2864 4846

Mina Pang Tel: +852 2864 4830

Gloria Huang Tel: +852 2864 4839

Joyce Wu Tel: +852 2864 4860 Email: sprg-yashili@sprg.com.hk