SCulture International : Announcement of Interim Results for the Six Months Ended 30 June 2017 and Change of Chief Financial Officer

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S. CULTURE INTERNATIONAL HOLDINGS LIMITED

港大零售國際控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1255) ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2017 AND CHANGE OF CHIEF FINANCIAL OFFICER FINANCIAL HIGHLIGHTS For the six months ended 30 June 2017 2016

Revenue HK$'000 243,317 282,579

Gross profit HK$'000 133,318 160,307

Loss before taxation HK$'000 (24,783) (22,178) Loss attributable to owners of the Company HK$'000 (24,878) (19,094) Gross profit margin % 54.8 56.7

Loss margin attributable to owners of the Company % (10.2) (6.8) Loss per share - basic HK$ (0.124) (0.095)

As at
30 June 2017	31 December 2016
Current ratio	1.6 times	1.6 times
Gearing ratio (total debt to total equity)	106.7%	111.4%
Average trade receivables turnover period	34 days	39.1 days
Average trade payables turnover period	6.6 days	7.5 days
Average inventory turnover period	361.4 days	361.2 days

The board of directors (the "Board") of S. Culture International Holdings Limited (the "Company") announces the unaudited condensed consolidated interim results of the Company and its subsidiaries (the "Group") for the six months ended 30 June 2017 together with comparative figures for the corresponding period in 2016, and the unaudited condensed consolidated statement of financial position of the Group as at 30 June 2017 together with audited comparative figures as at 31 December 2016. The unaudited condensed consolidated interim financial statements have been reviewed by the Company's audit committee.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the six months ended 30 June 2017

Six months ended

Notes	30.6.2017 HK$'000 (unaudited)	30.6.2016 HK$'000 (unaudited)
Revenue	3	243,317	282,579
Cost of goods sold	(109,999)	(122,272)
Gross profit	133,318	160,307
Other income	669	731
Other gains and losses	459	371
Selling and distribution costs	(94,757)	(111,058)
Administrative expenses	(62,945)	(70,890)
Finance costs	(1,527)	(1,639)
Loss before taxation	4	(24,783)	(22,178)
Taxation	5	(95)	3,084
Loss for the period	(24,878)	(19,094)
Other comprehensive income Item that may be subsequently reclassified to profit or loss: Exchange differences arising on translation	2,626	851
Total comprehensive expense for the period	(22,252)	(18,243)

Loss per share - basic (HK$) 7 (0.124) (0.095)

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2017

At 30.6.2017	At 31.12.2016
Notes	HK$'000	HK$'000
(unaudited)	(audited)
Non-current assets
Property, plant and equipment	43,758	46,929
Investment properties	745	751
Deferred tax assets	10,390	10,155
Deposit and prepayment for a life insurance policy	1,865	1,862
Rental deposits	11,001	10,940
67,759	70,637
Current assets
Inventories	208,531	227,121
Trade and other receivables	8	59,745	87,038
Taxation recoverable	258	2,795
Bank balances and cash	20,439	26,233
288,973	343,187
Current liabilities
Trade and other payables	9	21,774	24,469
Taxation payable	490	211
Bank borrowings - due within one year	163,397	195,867
185,661	220,547
Net current assets	103,312	122,640
Total assets less current liabilities	171,071	193,277
Non-current liabilities
Bank borrowings - due after one year	9,255	9,209
Net assets	161,816	184,068
Capital and reserves
Share capital	2,000	2,000
Reserves	159,816	182,068
Total equity	161,816	184,068

NOTES

1. BASIS OF PREPARATION

   The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard 34 "Interim financial reporting" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

   The condensed consolidated financial statements are presented in Hong Kong dollars ("HK$"), which is the functional currency of the Company.

2. PRINCIPAL ACCOUNTING POLICIES

   The condensed consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments that are measured at fair values.

   The accounting policies and methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2017 are the same as those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2016.

   In the current interim period, the Group has applied, for the first time, certain amendments to Hong Kong Financial Reporting Standards ("HKFRSs") issued by the HKICPA which are effective for the current interim period.

   The application of those amendments to HKFRSs in the current interim period has had no material effect on the amounts and/or disclosures set out in these condensed consolidated financial statements.

   Amendments to HKAS 7 "Disclosure initiative"

   The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities including both changes arising from cash flows and non-cash changes. Specifically, the amendments require the following changes in liabilities arising from financing activities to be disclosed: (i) changes from financing cash flows; (ii) changes arising from obtaining or losing control of subsidiaries or other businesses; (iii) the effect of changes in foreign exchange rates; (iv) changes in fair values; and (v) other changes.

   The application of the amendments will result in additional disclosures on the Group's financing activities, specifically reconciliation between the opening and closing balances in the consolidated statement of financial position for liabilities arising from financing activities will be provided on application.

   The adoption will result in relevant disclosures in the Group's annual consolidated financial statements for the year ending 31 December 2017.

3. REVENUE AND SEGMENT INFORMATION

   The Group's operating activities are attributable to operating segments focusing on retail sales and wholesale of footwear products. These operating segments have been identified on the basis of internal management reports prepared in accordance with accounting policies which conform with HKFRSs, that are regularly reviewed by the chief operating decision makers, the executive directors of the Company. The executive directors of the Company regularly review revenue and results analysis by (i) retail sales and (ii) wholesale. No analysis of segment assets or segment liabilities is presented as they are not regularly provided to the executive directors of the Company.

   • Retail sales: Retail sales channel refers to sales at the self-operated concession counters in department stores and self-operated retail stores.

   • Wholesale: Wholesale refers to the sales to wholesale customers who resell the products to end-user consumers, typically at retail stores operated by wholesale customers.