361 In The First Half Of The Year Turnover Increased 15%, The Proportion Of Electricity Providers Will Continue To Improve.

In August 16, 2016, China led.

Enterprise,

International Limited ("361" or "company") and its Affiliated Companies, collectively known as "group"; Hongkong Stock Exchange Stock Code: 1361) pleased to announce its unaudited interim results for the six months ended June 30, 2016.

Financial Summary

Financial analysis

In the first half of 2016, the group's turnover increased by 15.7% to RMB 2 billion 555 million 500 thousand yuan (the first half of 2015: RMB 2 billion 208 million 300 thousand yuan), which was mainly driven by the growth of orders in the first half of the group, and also reflected the steady growth stage of the Chinese sports apparel industry.

Sales of major product groups continued to improve, as the group was more focused on

The sales volume and the average wholesale price of the products increased significantly. The proportion of sales to turnover increased to 45.1%, while garment sales accounted for 41.2% of the turnover in the retrospective period.

In addition, the income of 361 degree children's clothing continued strong momentum, increasing 16.5% to RMB 272 million 100 thousand yuan (the first half of 2015: RMB 233 million 500 thousand yuan), accounting for 10.7% of the group's turnover; reflecting that the children's clothing business has established a mature customer base and has great potential for growth.

Gross profit in the first half of 2016 was 1 billion 59 million yuan (in the first half of 2015: RMB 911 million 300 thousand yuan), and gross profit margin edged up 0.1 percentage points to 41.4%.

During the review period, the gross profit margin of footwear decreased by 0.3 percentage points to about 40.7%.

The gross profit margin of clothing and children's clothing business increased to 43.1% and 43% respectively.

During the period of review, administrative expenses increased by 43.3% to 219 million 700 thousand yuan, 153 million 200 thousand yuan in the first half of 2015, accounting for about 8.6% of the group's turnover (in the first half of 2015: 6.9%).

The increase is mainly due to the increase in research and development expenses, the increase in management staff salaries in overseas business units and the depreciation cost arising from the new headquarters in Xiamen.

Expenditure on research and development increased to 72 million 400 thousand yuan (54 million 400 thousand yuan in the first half of 2015), accounting for 2.8% of the turnover during the review period (2.5% in the first half of 2015).

The cost of publicity and promotion increased by 15.4% to RMB 310 million 900 thousand yuan, which accounted for about 12.2% of the turnover in the first half of 2015: RMB 269 million 400 thousand yuan.

As of June 30, 2016, accounts receivable accounted for less than 90 days, accounting for more than 89.3% (in the first half of 2015: 75.7%), and no accounts receivable accounted for over 180 days.

After deducting the financial cost of RMB 78 million 100 thousand yuan (the first half of 2015: RMB 62 million 800 thousand yuan), the profit before tax was RMB 427 million 200 thousand yuan (the first half of 2015: RMB 422 million 700 thousand yuan).

After deducting the income tax expense of RMB 149 million 700 thousand yuan, the profit of the equity holders should increase by 1.3% to RMB 273 million 100 thousand yuan (the first half of 2015: RMB 269 million 600 thousand yuan), equivalent to 13.2 yuan of earnings per share.

During the review period, the group received net cash from operating activities of 372 million 400 thousand yuan (233 million 100 thousand yuan in the first half of 2015).

Net cash (including deposits and cash equivalents) is RMB 2 billion 500 million yuan (the first half of 2015: RMB 2 billion 700 million yuan).

In the face of the sustained growth of the sports apparel industry, the strong financial position of the group will help them grasp the opportunities for business development.

In view of the group's outstanding performance, the board announced an interim dividend of 5 cents per share (in the first half of 2015: 5 yuan), and a special dividend of 5 yuan per share.

In the future, the group will strive to steadily increase dividend payout ratio in order to repay shareholders' long-term and solid support.

Operating highlights: in the first half of 2016, 361 continued to work hard to market the functional sporting goods market for the Chinese people, relying on the multi brand strategy jointly constructed by 361, 361 children's clothing and outdoor brand ONE WAY to capture sales opportunities in different channels.

As of June 30, 2016, the group's authorized network in China has 6853 stores.

The group will continue to focus on building a sustainable business profit model, increasing investment in product development, subdivision of products, upgrading terminal payment methods, and enhancing the efficiency and profitability of stores.

The group also encourages distributors to develop large scale complex stores (including 361 children's wear products) to attract more people to increase sales.

The same store sales of 361 degrees achieved a high number of units in six consecutive quarters.

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In the first half of 2016, the total sales of children's clothing at 361 degrees reached 2416, of which 1134 were located in the 361 degree main brand store.

During the period, children's wear sales continued to grow steadily, and the related income has accounted for 10.7% of the group's earnings.

361 degree children's clothing has been recognized in the industry and consumer groups. During the review period, the group's children's clothing business has won many awards, including "3.15 China's consumer market industry influence brand", "China's ten children's wear brand" and "China's best children's wear brand".

The state has fully implemented the two child policy, and believes that the potential consumer groups will continue to grow in the future and the market will continue to expand. The group is confident that children's wear brands will continue to grow stronger and stronger.

In recent years, Internet and mobile end shopping are increasingly becoming consumer trends. The group also focuses on building its modern e-commerce.

In addition to online sales on the official website, the group has also entered China's major e-commerce platforms such as Tmall, Taobao, Jingdong and vip.com.

The group has launched online products exclusively through the electric business, such as children's smart children's shoes, which are cooperating with Baidu, and the newly launched "361 degree +iMate intelligent running shoes" series, which has been independently developed.

During the period of review, the group's sales to e-commerce distributors on the Internet provided products with a turnover of RMB 166 million 400 thousand yuan (the first half of 2015: RMB 62 million 400 thousand yuan), accounting for 6.5% of the total turnover of the group (the first half of 2015: 2.8%).

In the future, the group will continue to promote the network sales of modern e-commerce, and develop it into an important part of the group's revenue.

The group is committed to strengthening product innovation and conducting all-round research and development in intelligent products, so as to seize market share with multi-functional and cost-effective products.

In the second half of 2015, the group started its own iMate intelligent running shoes series, combined with the three elements of shoes, smart chips and mobile app APP, with excellent functional and advanced technology to enhance the running experience.

The series of intelligent running shoes came out in May 2016, and the product was released with great response.

At the same time, the group has continued to optimize its R & D capability, constantly optimize product design in fashion design, molding and fabric selection, and introduce the most sophisticated patent materials in various footwear products, and strive to achieve the goal of product differentiation.

To further diversify its business and explore potential for growth, the group is also committed to expanding new businesses and expanding overseas markets.

As of June 30, 2016, the group has established wholly-owned subsidiary companies in Brazil and the United States to develop overseas businesses, and has 908, 180 and 52 outlets in Brazil, the United States and Europe respectively.

At the 2016 Brazil Olympic Games and Paralympic Games, the group appeared in Rio as an official sponsor of the two level, and supported many athletes and delegations to compete for the Olympic Games.

As the first Chinese sports brand to sponsor such a large-scale World Games, the move not only benefits the group's overseas popularity, expands its brand awareness in overseas markets, and sets up a high-quality brand image, pushing the brand value to a peak.

During the period of review, the sales growth of the group's overseas business has more than doubled to RMB 45 million 200 thousand yuan (the first half of 2015: RMB 20 million 500 thousand yuan), accounting for about 1.7% of the group's total turnover.

In the next three to five years, the group will vigorously invest in the rapid development of overseas business.

The group also expects that international business will increasingly become an important source of group revenue contribution.

After Beijing successfully bid for the 2022 Winter Olympic Games, the Chinese government has promoted the public's participation in the ice and snow campaign through the implementation of the 300 million member participation in the ice and snow sports program. It is expected that the public's interest in winter sports and the demand for related sports equipment will be improved.

It is expected that ONE WAY, the high-end brand of ice and snow sports, will continue to benefit.

As of June 30, 2016, ONE WAY opened 65 self operated stores in 29 first and second tier cities in China. The group will continue to open shops in the future, laying the foundation for rapid development.

Since 2015, the central government has launched a number of reforms to promote the development of football, including the adoption of the general plan of Chinese football reform and the publication of the guidelines on mid long term development of Chinese football issued by the NDRC in April 2016.

The Group officially launched its soccer products in September 2015. Its fast execution and professionalism of the product were once again highly praised by the market.

361 also signed Yang Xu, a Chinese football forward player, to promote the football product series.

In the future, the group will strengthen research and development and launch more professional and cost-effective football equipment products, so as to promote the popularization of football in line with national policies.

Future outlook

In June this year, the State Council promulgated the national fitness program 2016-2020, aiming at promoting the total scale of sports consumption in 2020 to reach 1 trillion and 500 billion yuan.

Looking ahead, the scale of the sports industry will further expand, and the demand for professional sports apparel will steadily increase.

Faced with fierce competition in the industry, 361 confidence in the development prospects of the group.

The group will continue to promote product innovation and R & D, and achieve product differentiation to maintain the leading position in the industry.

In addition, the group will expand modern e-commerce and online sales in an all-round way, promote its emerging brands such as ONE WAY, and improve overall operational efficiency, achieve long-term profit models, and consolidate the leader position of the group.

Mr. Ding Wuhao, President of the 31st degree group, concluded: "361 will continue to face the mass market, build a sustainable business profit model, and continue to play a multi brand advantage to meet the needs of different consumers by product segmentation strategy.

361 degree will continue to consolidate the main products of its running class, and focus on the development of football, ice and snow sports and other promising business projects.

At the same time, the group will vigorously develop overseas international business and continue to compete with international brands with its outstanding product quality.

In addition, the group will continue to increase the proportion of e-commerce products and expand the sales of this channel.

We will continue to focus on product research and development, leading the leading position with cutting-edge technology.

The group supports the Brazil Olympic and Paralympic Games as an official sponsor. It is believed that our brand will win more reputation in the international market and will push the brand to a peak at this grand event.