Madison Wine : ANNOUNCEMENT OF FIRST QUARTERLY RESULTS FOR THE THREE MONTHS ENDED 30 JUNE 2017

Madison Holdings Group Limited

麥迪森控股集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8057) ANNOUNCEMENT OF FIRST QUARTERLY RESULTS FOR THE THREE MONTHS ENDED 30 JUNE 2017 CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE") GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

This announcement, for which the directors (the "Directors") of Madison Holdings Group Limited (the "Company") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM (the "GEM Listing Rules") for the purposes of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading.

FINANCIAL HIGHLIGHTS

For the three months ended 30 June 2017, unaudited operating results of the Company and its subsidiaries (collectively referred to as the "Group") were as follows:

• the Group recorded a revenue of approximately HK$43.0 million for the three months ended 30 June 2017 (three months ended 30 June 2016: HK$39.0 million), representing an increase of approximately 10.3% as compared with the corresponding period in 2016.

• loss attributable to the owners of the Company for the three months ended 30 June 2017 amounted to approximately HK$3.3 million (three months ended 30 June 2016: HK$3.8 million), representing a decrease of approximately 13.2% as compared with the corresponding period in 2016.

• the Directors do not recommend the payment of any dividend for the three months ended 30 June 2017.

The board of Directors (the "Board") is pleased to present the unaudited condensed consolidated results of the Group for the three months ended 30 June 2017, together with the comparative unaudited figures for the corresponding period in 2016, as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the three months ended 30 June 2017

NOTES	2017 HK$'000	2016 HK$'000
(unaudited)	(unaudited)
Revenue	4	43,022	38,960
Cost of sales	(35,135)	(29,950)
Gross profit	7,887	9,010
Other income	5	147	727
Selling and distribution expenses	(4,149)	(3,106)
Administrative expenses	(7,272)	(9,873)
Loss before tax	(3,387)	(3,242)
Income tax credit (expense)	6	61	(447)
Loss for the period and total comprehensive expense for the period	7	(3,326)	(3,689)

Three months ended 30 June

Owners of the Company Non-controlling interests	(3,326) (3,803) - 114
(3,326)	(3,689)

(Loss) profit for the period and total comprehensive (expense) income for the period attributable to:

Loss per share (HK cents) 9

(restated)

Basic and diluted (0.08) (0.10)

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the three months ended 30 June 2017

Attributable to owners of the Company

Share

Non-

Share capital

Share premium

Other reserve

Capital reserve

option reserve

Retained

earnings Total

controlling

interests Total

HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000 HK$'000

At 1 April 2016 (audited) 4,000 65,376 29,047 - 6,636 18,478 123,537 298 123,835

(Loss) profit for the period and total comprehensive

(expense) income for the period - - - - - (3,803) (3,803) 114 (3,689)

Recognition of equity-settled share-based

payment expenses - - - - 4,740 - 4,740 - 4,740 At 30 June 2016 (unaudited) 4,000 65,376 29,047 - 11,376 14,675 124,474 412 124,886

At 1 April 2017 (audited) 4,000 65,376 29,047 34,660 11,376 3,859 148,318 5,441 153,759

Loss for the period and total comprehensive

expense for the period - - - - - (3,326) (3,326) - (3,326) At 30 June 2017 (unaudited) 4,000 65,376 29,047 34,660 11,376 533 144,992 5,441 150,433

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended 30 June 2017

1. GENERAL

   The Company was incorporated in the Cayman Islands under the Companies Law, Chapter 22 (Law 3 of 1961, as consolidated and revised) of the Cayman Islands as an exempted company with limited liability on 15 April 2015. The shares of the Company have been listed on GEM on 8 October 2015. The addresses of the registered office and the principal place of business of the Company are Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1- 1111, Cayman Islands and Flat A & B, 10/F, North Point Industrial Building, 499 King's Road, North Point, Hong Kong respectively.

   The Company is an investment holding company. Its major operating subsidiaries are mainly engaged in sales of alcoholic beverages and provision of wine storage services, corporate advisory and securities placement services.

   The functional currency of the Group is Hong Kong dollar ("HK$"), which is the same as the presentation currency of the condensed consolidated financial statements.

2. BASIS OF PREPARATION

   The condensed consolidated financial statements have been prepared in accordance with the applicable disclosure requirements of Chapter 18 of the GEM Listing Rules.

3. SIGNIFICANT ACCOUNTING POLICIES

   The condensed consolidated financial statements have been prepared on the historical cost basis.

   The significant accounting policies that have been used in the preparation of these condensed consolidated financial statements for the three months ended 30 June 2017 are consistent with those adopted in the consolidated financial statements for the year ended 31 March 2017, except for the adoption of the new and revised Hong Kong Financial Reporting Standards ("HKFRSs").

   In the current period, the Group has adopted all the new and revised HKFRSs, amendments to HKASs and interpretations ("Ints") (hereinafter collectively referred to as "new and revised HKFRSs") issued by the HKICPA that are relevant to the Group and effective for accounting periods beginning on or after 1 April 2017. The adoption of these new and revised HKFRSs did not result in significant changes to the Group's accounting policies and amounts reported for the current and prior periods.

   The Group has not early adopted the new and revised HKFRSs issued by the HKICPA that have been issued but are not yet effective for the current period. The Directors anticipate that the application of the new and revised HKFRSs will have no material impact on the results and financial position of the Group.

4. REVENUE AND SEGMENT INFORMATION

   Revenue represents the fair value of the consideration received and receivable for goods sold and services provided by the Group to outside customers less discounts.

   The Group's operation is mainly derived from sales of alcoholic beverages. For the purpose of resources allocation and performance assessment, the chief operating decision maker ("CODM") (i.e. the Directors) reviews the overall results and financial position of the Group as a whole prepared in accordance with accounting policies which conform to HKFRSs. Accordingly, the Group has only one single operating segment and no further analysis of this single segment is presented.

   Geographical information

   The Group's operations are located in Hong Kong (country of domicile) during the periods.

   During the periods, the Group's revenue is derived solely in Hong Kong from customers. As at the end of each reporting period, the Group's non-current assets by location of assets are all located in Hong Kong.

5. OTHER INCOME

   2017 HK$'000	2016 HK$'000
   (unaudited)	(unaudited)
   Bank interest income	1	-
   Consignment income	121	360
   Insurance claim	-	149
   Net exchange gain	-	37
   Promotion income	22	159
   Others	3	22
   147	727

   Three months ended 30 June

6. INCOME TAX (CREDIT) EXPENSE

   2017 HK$'000	2016 HK$'000
   (unaudited)	(unaudited)
   Current tax: Hong Kong Profits Tax	27	391
   Deferred taxation	(88)	56
   (61)	447

   Three months ended 30 June

   Hong Kong Profits Tax is calculated at 16.5% on the estimated assessable profits during the relevant periods.

7. LOSS FOR THE PERIOD

   2017 HK$'000	2016 HK$'000
   (unaudited)	(unaudited)
   Loss for the period has been arrived at after charging (crediting):
   Cost of inventories recognised as expense	35,135	29,950
   Depreciation of plant and equipment	1,165	736
   Equity-settled share-based payment expenses	-	4,740
   Loss on written off of plant and equipment Minimum lease payments under operating leases in respect of office premises, warehouses and shop	- 1,673	3 922
   Net exchange loss (gain)	100	(37)

   Three months ended 30 June

8. DIVIDEND

   No dividend was paid, declared or proposed during the period. The Directors do not recommend the payment of any dividend for the three months ended 30 June 2017 (three months ended 30 June 2016: nil).

9. LOSS PER SHARE

The calculation of the basic and diluted loss per share attributable to the owners of the Company is based on the following data:

2017 HK$'000	2016 HK$'000
(unaudited)	(unaudited)
Loss Loss for the purpose of basic and diluted loss per share for the period attributable to the owners of the Company	(3,326)	(3,803)

Three months ended 30 June

Three months ended 30 June

2017 2016

(restated)

Number of shares

Weighted average number of ordinary shares for the purpose of

basic and diluted loss per share 4,000,000,000 4,000,000,000

Diluted loss per share is equal to the basic loss per share for the three months ended 30 June 2017 and 2016, as the effect of the Company's outstanding share options would result in a decrease in loss per share for the three months ended 30 June 2017 and 2016.

The weighted average number of ordinary shares for the purpose of basic and diluted loss per share for the three months ended 30 June 2016 was adjusted for the share subdivision on 8 November 2016.

MANAGEMENT DISCUSSION AND ANALYSIS Business Review

During the three months ended 30 June 2017, revenue was increased by approximately 10.3% to approximately HK$43.0 million (three months ended 30 June 2016: HK$39.0 million). During the reporting period, the Company is engaged in the retail sales and wholesales of a wide spectrum of wine products and other alcoholic beverages in Hong Kong with a focus on red wine. The increase in revenue was mainly the result of the expanded sales network by adopting a competitive pricing strategy.

Financial Review Revenue

Revenue of the Group increased by approximately 10.3% from approximately HK$39.0 million to HK$43.0 million for the three months ended 30 June 2016 and 2017 respectively. The increase in revenue was mainly the result of the expanded sales network by adopting a competitive pricing strategy.

Gross Profit and Gross Profit Margin

For the three months ended 30 June 2016 and 2017, (i) the gross profit of the Group decreased by approximately 12.2% from approximately HK$9.0 million to approximately HK$7.9 million; and (ii) the gross profit margin of the Group decreased from 23.1% to 18.3%, respectively. The decrease was mainly due to the application of a more competitive pricing approach with a lower profit margin for our sales during the three months ended 30 June 2017.

Other Income

Other income of the Group decreased by approximately 85.7% from approximately HK$0.7 million to approximately HK$0.1 million for the three months ended 30 June 2016 and 2017 respectively. The decrease was mainly due to the decrease in consignment sales during the period.

Selling and Distribution Expenses

Selling and distribution expenses of the Group increased by approximately 32.3% from HK$3.1 million to HK$4.1 million for the three months 30 June 2016 and 2017 respectively. The increase was mainly due to the increase in number of sales person and the additional warehouse rented in September 2016.

Administrative Expenses

Administrative expenses of the Group decreased by approximately 26.3% from HK$9.9 million to HK$7.3 million for the three months ended 30 June 2016 and 2017 respectively. Should the recognition of equity-settled share-based payment expenses for the share options granted of approximately HK$4.7 million during the three months ended 30 June 2016 be excluded, the administrative expenses of the Group increased by approximately 40.4% from HK$5.2 million to HK$7.3 million for the three months ended 30 June 2016 and 2017 respectively. The increase was mainly due to (i) the increase in advertising and promotion of approximately HK$1.2 million; (ii) the increase in salary of approximately HK$0.7 million for the management and administrative staff; and (iii) the increase in other administrative expenses of approximately HK$0.2 million incurred by the Group with the increase in number of staff.

Income Tax Expense

Income tax expenses for the Group decreased from HK$0.4 million to a tax credit of HK$0.06 million. The change was due to the loss before taxation recorded during the period.

Loss for the Period and Total Comprehensive Expense for the Period Attributable to Owners of the Company

Loss for the period attributable to owners of the Company decreased by approximately 13.2% from approximately HK$3.8 million to HK$3.3 million for the three months ended 30 June 2016 and 2017 respectively. The decrease was mainly due to the decrease in equity-settled share-based payment expenses for the share options granted.

Dividend

The Directors do not recommend the payment of any dividend for the three months ended 30 June 2017 (2016: nil).

Material Acquisitions and Disposals of Subsidiaries and Affiliated Companies

During the three months ended 30 June 2017, saved as disclosed in the sub-section headed "Outlook and Prospects" in this announcement, the Group did not have any material acquisitions nor disposals of subsidiaries and affiliated companies.

OUTLOOK AND PROSPECTS

In view of (i) Hong Kong being an important global financial hub, bridging capital flows between the PRC and international markets and fund raising through securities issuance and relevant corporate finance advisory in Hong Kong has been top of the global ranking; and (ii) many of the Group's clients being members of senior management, directors, substantial shareholders or controlling shareholders of listed and private companies who have great demand in getting quality advise on merger and acquisitions, corporate restructuring as well as fund raising activities, the Group entered into (i) a subscription agreement (the "Share Subscription Agreement") to subscribe for new shares in CVP Capital Limited at the subscription price of HK$14 million on 9 February 2017 (the "Proposed Subscription");

(ii) an acquisition agreement (the "Acquisition Agreement") to acquire the entire issued share capital of CVP Asset Management Limited at a consideration of HK$14 million on 9 February 2017 (the "Proposed Acquisition"); and (iii) a subscription agreement (the "EB Subscription Agreement") to subscribe for exchangeable bonds (the "EB Subscription") to be issued by Bartha Holdings Limited ("Bartha Holdings") at a consideration of HK$150 million on 17 February 2017. As at the date of this announcement, all of the Proposed Subscription, the Proposed Acquisition and the EB Subscription have been completed. For details of the Proposed Subscription, the Proposed Acquisition and the EB Subscription, please refer to the circulars dated 30 June 2017 and 5 July 2017 respectively.

Looking forward, with the expanded business area into the financial market of Hong Kong upon the completion of the Proposed Subscription, the Proposed Acquisition and the EB Subscription, the Board believes that the Group could benefit from the diversified business. At the same time, the Group will also endeavor to strengthen its position in the retail sales and wholesales of wine products in Hong Kong. The Group will continue to expand its existing product portfolio, which aims at providing its customers with a wider range of choices so as to facilitate the broadening of its existing customer base as well as reinforcing its market presence in Hong Kong wine industry.

Share Option Scheme

The Company has conditionally adopted a share option scheme pursuant to a written resolution of the shareholders of the Company passed on 21 September 2015 (the "Share Option Scheme") for the purpose of providing incentives or rewards to eligible persons for their contribution to the Group and/or enabling the Group to recruit and retain high-calibre employees and attract human resources that are valuable to the Group. The terms of the Share Option Scheme are in accordance with the provisions of Chapter 23 of the GEM Listing Rules. On 17 December 2015, the Company granted an aggregate of 18,100,000 share options to the grantees of the Company, to subscribe, in aggregate, for up to 18,100,000 ordinary shares of HK$0.01 each in the share capital of the Company under the Share Option Scheme.

Upon the share subdivision (the "Share Subdivision") which subdivided every one (1) issued and unissued ordinary share of HK$0.01 each in the share capital of the Company into ten (10) subdivided shares of HK$0.001 each (the "Subdivided Shares") becoming effective on 8 November 2016, adjustments were made to the exercise price of the outstanding Share Options and the number of Subdivided Shares to be allotted and issued upon full exercise of subscription rights attaching to the outstanding Share Options in the following manner:

Immediately before the Share Subdivision becoming effective Immediately after the Share Subdivision becoming effective Date of grant Number of Shares to be issued Exercise price per Share Adjusted number of Subdivided Shares to be issued Adjusted exercise price per Subdivided Share

17 December 2015 18,100,000 HK$8.00 181,000,000 HK$0.80

Save for the above adjustments, all other terms and conditions of the outstanding Share Options granted under the Share Option Scheme remain unchanged.

Purchase, Sale or Redemption of Listed Securities

Neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Shares during the three months ended 30 June 2017.

Directors' Interests in Competing Business

As at 30 June 2017, none of the Directors or their respective associates had any business or interests in a business which competes or is likely to compete, either directly or indirectly, with the business of the Group.