Cosmo Lady China : SUPPLEMENTAL ANNOUNCEMENT TO 2019 ANNUAL REPORT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited 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.

Cosmo Lady (China) Holdings Company Limited

都 市 麗 人（中 國）控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2298)

SUPPLEMENTAL ANNOUNCEMENT TO 2019 ANNUAL REPORT

Reference is made to the Company's annual report for the year ended 31 December 2019 (the "2019 Annual Report"). Unless the context otherwise requires, capitalized terms in this reply shall have the same meanings as defined in the 2019 Annual Report.

The Board would like to provide additional information pursuant to paragraph 11(8) of Appendix 16 of the Listing Rules ("App 16 para 11(8)") in relation to the Company's various fundraising rounds.

USE OF PROCEEDS FROM THE INITIAL PUBLIC OFFERING

1. The Company's ordinary shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 26 June 2014. The gross and net proceeds from the Company's initial public offering amounted to approximately HK$1,463,245,000 and HK$1,386,405,000 respectively. As at 31 August 2020, the amount of net proceeds has been fully utilized.
2. In addition to the information disclosed under the section headed "USE OF PROCEEDS FROM THE INITIAL PUBLIC OFFERING" in the 2019 Annual Report, the Board would like to present the following comparative information in tabular form as per the recommendation in the "Note" to App 16 para 11(8):

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Use of net proceeds

Expansion of the retail network of self-managed stores (Note 1)

Construction and operation of logistics centers in Dongguan, Tianjin and Chongqing (Note 2)

Acquisitions of businesses, brands or products

and further development of strategic alliances (Note 3)

					Expected
					timeline of
Original			Revised		full
		Amount	utilization
intended	Amount utilized	Amount	use of net	unutilized as at	of said
use of net	as at 31 December	utilized as at	proceeds	31 August	unutilized
proceeds	2019	30 June 2020	(Note 3)	2020	balance
(HK$)	(HK$)	(HK$)	(HK$)	(HK$)
540,700,000	819,141,000	873,300,000	886,760,000	-	N/A
			(fully utilized as
			of 31 August
			2020)
350,800,000	361,972,000	361,972,000	361,972,000	-	N/A
			(fully utilized as
			of 31 August
			2020)

174,700,000

90,069,000

90,069,000

90,069,000

-

N/A

(fully utilized as of 31 August 2020)

Establishment of	91,500,000	-	-	-	-	N/A
design, research
and development
center
(Note 3)
Upgrade of		91,500,000	45,621,000	46,391,000	47,604,000	-	N/A
information					(fully utilized as
technology
				of 31 August
infrastructure
				2020)
(Note 3)
Working capital	137,205,000	-	-	-	-	N/A
and other general
corporate purposes
(Note 3)
Note 1	:	The Group has increased the allocated amount for expansion of the retail network of self-managed stores since 2014
		due to the Group's business growing at a much faster rate than was contemplated during the initial public offering,
		which resulted in the opening of a larger number of self-managed stores.

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Note 2	:	Being approximately HK$226,182,000 for the Tianjin logistics center and approximately HK$135,790,000 for the
		Dongguan logistics center. Upon and since its listing, the Company has raised funds by equity offerings in HK$ and
		incurs expenditure predominantly in RMB given its geographical focus on the PRC.
		Given the fluctuating exchange rate between RMB and HK$ since 2014, the HK$ equivalent amount spent on the
		construction and operation of logistics centers in Dongguan and Tianjin is marginally higher than the amount
		originally allocated. The project for constructing the Chongqing logistics center has been cancelled due to the
		changes in business environment.
Note 3	:	Given the over-allocation of the net proceeds for the expansion of the Company's retail network of self-managed
		stores as explained above and the resulting smaller amount of unutilized net proceeds, and the changing business
		environment, the Board has made reasonable reductions in the amounts allocated for the other intended uses in
		August 2020.
		The Board believes that the above reallocation of the use of net proceeds is in the interest of the Company and its
		shareholders as a whole, in response to the changing market conditions in light of the challenges as a result of the
		general slowdown of mainland China economy and the COVID-19 pandemic.

USE OF PROCEEDS FROM THE FOSUN SUBSCRIPTION AND THE WINDCREEK SUBSCRIPTION

In addition to the information disclosed under the section headed "USE OF PROCEEDS FOR FUNDS RAISED" in the 2019 Annual Report, the Board would like to present the following comparative information in tabular form as per the recommendation in the "Note" to App 16 para 11(8):

							Expected
				Amount			timeline of full
			Intended	utilized as at	Amount	Amount	utilization of said
	Use of net proceeds	use of net	31 December	utilized as at	unutilized as at	unutilized
	proceeds	2019	30 June 2020	31 August 2020	balance (Note 1)
			(HK$)	(HK$)	(HK$)	(HK$)
Fosun Subscription:
Financing the reforms in	39,000,000	-	-	34,837,000	Before the end of
sales	and	distributions					2021
channels of the Group
Potential	mergers,	30,000,000	-	-	30,000,000	Before the end of
acquisitions	and					2023
cooperation opportunities
General working capital	530,000,000	462,545,000	515,238,000	6,112,000	Before the end of
							2021
Windcreek Subscription:
Financing the reforms in	239,000,000	-	-	239,000,000	Before the end of
sales	and	distributions					2023
channels of the Group
Potential	mergers,	70,000,000	-	-	70,000,000	Before the end of
acquisitions	and					2023
cooperation opportunities
General working capital	200,000,000	-	-	200,000,000	Before the end of
							2023

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Note 1	:	The expected timeline of full utilization of said unutilized balance is based on the best estimation of the future market
		conditions made by the Group. It may be subject to change due to future development of market conditions.

REASONS FOR DELAY IN UTILIZATION OF PROCEEDS

As explained in the Company's interim results announcement dated 28 August 2020, the retail sales and sales to franchisees of the Group were affected due to the outbreak of COVID-19 in mainland China since the first quarter of 2020 and the consequential social distancing and community lockdown measures imposed by the relevant authorities to prevent further spreading of the virus. Collectively, such measures had a devastating impact on the operating performance of the Group by limiting, to a very significant extent, foot traffic in the main shopping areas where our self-managed stores and our franchisees are located.

In addition, apart from COVID-19, since the beginning of 2020, there has been a general slowing down of the mainland Chinese economy and its retail industry, given the ongoing trade disputes between China and its major trading partners. This has dampened consumer sentiment across various sectors and hence the operating performance of the Group for the six months ended 30 June 2020.

The abovementioned factors have contributed to the delay in the Company's utilization of the net proceeds from the Fosun

Subscription and the Windcreek Subscription.

GENERAL

The above supplemental information does not affect other information contained in the 2019 Annual Report and all other information therein remains unchanged.

Save as disclosed above, there is no material delay or change in the use of proceeds. Should there be any, further announcement(s) will be made by the Company as and when appropriate.

By Order of the Board

Cosmo Lady (China) Holdings Company Limited

Zheng Yaonan

Chairman

Hong Kong, 22 September 2020

As at the date of this announcement, the Board comprises Mr. Zheng Yaonan, Mr. Zhang Shengfeng, Ms. Wu Xiaoli and Mr. Siu Ka Lok as executive Directors; Mr. Lin Zonghong, Mr. Wen Baoma, Mr. Jiang Bo and Mr. Zhao Yingming as non-executive Directors; and Mr. Yau Chi Ming, Dr. Dai Yiyi, Mr. Chen Zhigang and Dr. Lu Hong Te as independent non-executive Directors.

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