The board of directors of China Modern Dairy Holdings Ltd. informed shareholders of the company and potential investors that, based on the preliminary assessment of the unaudited consolidated management accounts of the Group for the eleven months ended 30 November 2015, the profit attributable to the owners of the company for the financial year ending 31 December 2015 is expected to record a decrease as compared to the corresponding period in 2014 as a result of: (i) the selling price of raw milk in China decreased in the second half of 2015. The average selling price per ton of raw milk for the five months ended 30 November 2015 decreased by 4.6% and 13.6% as compared to each of the six months ended 30 June 2015 and the financial year ended 31 December 2014, respectively. Although the gross profit margin of each of the Group's dairy farming business and liquid milk products business is still generally higher than its peers, its Cash EBITDA (being earnings before interest expenses, taxation, depreciation, amortization and gain/loss arising from changes in fair value less cost of sales of dairy cows) for the year ended 31 December 2015 is expected to decrease by approximately 15% as compared to RMB 1,767.4 million for the corresponding period in 2014.

However, the expected Cash EBITDA is still 47% higher as compared to the corresponding period in 2013; and (ii) the decline in the raw milk selling price in China in 2015. The company expects a loss on changes in the fair value less costs to sell of dairy cows of the Group in the financial year ended 31 December 2015, which may be greater as compared to RMB 329.1 million for the corresponding period in 2014.