Li Ning : INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2016

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INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2016 FINANCIAL HIGHLIGHTS

•

Net Profit attributable to equity holders of the Company reached RMB113 million, improved from

losses of RMB29 million in the corresponding period last year:

• Revenue increased by 13% to RMB3,596 million

• Gross profit margin increased by 1.5 percentage points

• Rationalized cost structure, particularly without provision impact

•

Operating cash flow doubled to RMB346 million.

•

Significant improvements in working capital:

-

-

Gross working capital still improved (decreased) by 8% while revenue increased on a year-on

year basis.

Cash conversion cycle improved (shortened) by 15 days (2015: 90 days/2016: 75 days)

OPERATIONAL HIGHLIGHTS

•

Low-teens growth for total platform retail sales, including online and offline channels.

•

Overall Same-Store-Sales in the first half of 2016 grew mid-single digit.

•

New product sell-out rate improvement continued, up 2 percentage points.

•

Discount rate improved over 2 percentage points driven by higher new product mix, particularly in

direct retail platform.

INTERIM RESULTS

The board of directors (the "Board") of Li Ning Company Limited (the "Company" or "Li Ning Company") hereby announces the unaudited condensed consolidated interim results of the Company and its subsidiaries (collectively, the "Group") for the six months ended 30 June 2016, together with comparative figures, as follows:

INTERIM CONDENSED CONSOLIDATED BALANCE SHEET

Note	Unaudited As at 30 June 2016 RMB'000	Audited As at 31 December 2015 RMB'000
ASSETS Non-current assets Property, plant and equipment	782,322	740,305
Land use rights	78,837	79,788
Intangible assets	260,636	265,570
Deferred income tax assets	228,687	230,868
Available-for-sale financial assets	14,000	26,000
Investments accounted for using the equity method	33,219	27,796
Other receivables and prepayments	65,341	43,615
Total non-current assets	1,463,042	1,413,942
Current assets Inventories	4	1,028,603	959,652
Trade receivables	5	1,406,384	1,439,513
Other receivables and prepayments - current portion	324,012	309,389
Restricted bank deposits	855	495
Cash and cash equivalents	1,544,570	1,812,572
4,304,424	4,521,621
Assets of disposal group classified as held for sale	12	1,070,012	961,895
Total current assets	5,374,436	5,483,516
Total assets	6,837,478	6,897,458

Unaudited Audited As at As at 30 June 31 December

Note 2016 2015

RMB'000 RMB'000

EQUITY Capital and reserves attributable to equity holders of the Company

Ordinary shares	177,492	177,492
Share premium	2,170,335	2,168,867
Shares held for Restricted Share Award Scheme	(7,449)	(2,084)
Other reserves	1,336,255	1,308,230
Accumulated deficit	(382,994)	(472,602)
3,293,639	3,179,903
Non-controlling interests in equity	262,921	230,637
Total equity	3,556,560	3,410,540
LIABILITIES Non-current liabilities License fees payable	24,846	27,886
Borrowings	200,000	200,000
Convertible bonds	728,436	710,033
Deferred income tax liabilities	8,724	11,503
Deferred income	59,843	65,710
Total non-current liabilities	1,021,849	1,015,132
Current liabilities Trade payables	6	995,136	997,473
Other payables and accruals	825,857	696,168
License fees payable - current portion	45,183	63,357
Current income tax liabilities	6,671	3,777
Borrowings	10,000	366,499
Convertible bonds - interest payable	12,500	12,500
1,895,347	2,139,774
Liabilities of disposal group classified as held for sale	12	363,722	332,012
Total current liabilities	2,259,069	2,471,786
Total liabilities	3,280,918	3,486,918
Total equity and liabilities	6,837,478	6,897,458

INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT Unaudited Six months ended 30 June

Note	2016 RMB'000	2015 RMB'000
Continuing operations Revenue	3	3,595,635	3,186,507
Cost of sales	7	(1,918,094)	(1,745,259)
Gross profit	1,677,541	1,441,248
Distribution expenses	7	(1,355,081)	(1,243,733)
Administrative expenses	7	(202,996)	(157,674)
Other income and other gains - net	8	33,183	17,362
Operating profit	152,647	57,203
Finance income	9	4,343	13,943
Finance expenses	9	(71,825)	(76,359)
Finance expenses - net Share of profit of investments accounted for using the equity method	9	(67,482) 3,423	(62,416) 3,325
Profit/(Loss) before income tax	88,588	(1,888)
Income tax expense	10	(20,279)	(61,558)
Profit/(Loss) for the period from continuing operations	68,309	(63,446)
Discontinued operations Profit for the period from discontinued operations	12	80,018	63,204
Profit/(Loss) for the period	148,327	(242)
Attributable to: Equity holders of the Company	113,421	(29,407)
Non-controlling interests	34,906	29,165
148,327	(242)