Xinjiang La Chapelle Fashion : AUDITED ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 AND RESUMPTION OF TRADING OF H SHARES

April 29, 2021 at 08:02 pm EDT

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.

新疆拉夏貝爾服飾股份有限公司

Xinjiang La Chapelle Fashion Co., Ltd.

(formerly known as "Shanghai La Chapelle Fashion Co., Ltd. （上海拉夏貝爾服飾股份有限公司）")

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock code: 06116)

AUDITED ANNUAL RESULTS ANNOUNCEMENT

FOR THE YEAR ENDED 31 DECEMBER 2020

AND RESUMPTION OF TRADING OF H SHARES

INTRODUCTION

Reference is made to the announcement of Xinjiang La Chapelle Fashion Co., Ltd. (the "Company", together with its subsidiaries, the "Group") dated 15 April 2021 in relation to the unaudited annual results of the Group for the year ended 31 December 2020 (the "2020 Unaudited Results Announcement"). Capitalised terms used herein shall have the same meanings as those defined in the 2020 Unaudited Results Announcement, unless otherwise specified.

As stated in the 2020 Unaudited Results Announcement, the unaudited results contained therein had not been agreed by the Company's auditor (the "Auditor") as required under Rule 13.49(2) of the Listing Rules as at 15 April 2021.

The Board is pleased to announce that the Auditor has completed its audit of the annual results of the Group for the year ended 31 December 2020 in accordance with the Accounting Standards for Business Enterprises on Auditing issued by the Ministry of Finance of the PRC and the Company has obtained the agreement from the Auditor on the audited consolidated results of the Group for the year ended 31 December 2020 (including the figures contained in the Group's consolidated income statements, consolidated balance sheets, the consolidated cash flow statements, and the related notes thereto) (the "2020 Audited Annual Results").

Save as disclosed in the paragraph headed "Certain differences between the 2020 Unaudited Results Announcement and the 2020 Audited Annual Results" in this announcement, the annual results contained in the 2020 Unaudited Results Announcement are substantially the same as the 2020 Audited Annual Results.

AUDITED ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020

This announcement sets out the full text of the 2020 annual report of the Company and complies with the relevant requirements of the Listing Rules in relation to information to accompany preliminary announcement of annual results. The audit committee of the Company has reviewed the audited annual results of the Group for the year ended 31 December 2020.

CERTAIN DIFFERENCES BETWEEN THE 2020 UNAUDITED RESULTS ANNOUNCEMENT AND THE 2020 AUDITED ANNUAL RESULTS

Shareholders and potential investors of the Company should pay attention to certain differences between the 2020 Unaudited Annual Announcement and the 2020 Audited Annual Results in this announcement. Set forth below are the principal details and reasons for such differences in such financial information:

			Disclosure
			in the 2020
	Disclosure		Unaudited
	in this	Annual Results
Relevant item	announcement		Announcement	Difference	Notes
	(RMB'000)		(RMB'000)	(RMB'000)
Consolidated Balance Sheet
Current assets:
Cash at bank and on hand	206,477	206,477
Financial assets held for trading
Accounts receivable	270,637	270,637
Advance payment	122,926	131,033	-8,107	(3)(5)
Other accounts receivable	125,636	168,512	-42,876	(2)
Including: Interests receivable
Inventories	438,716	438,716
Non-current assets due within one year	25,844	25,844
Other current assets	88,952	88,952
Total current assets	1,279,188	1,330,171	-50,983

			Disclosure
			in the 2020
	Disclosure		Unaudited
	in this	Annual Results
Relevant item	announcement		Announcement	Difference	Notes
	(RMB'000)		(RMB'000)	(RMB'000)
Non-current assets:
Debt investments
Long-term receivables	4,447	4,447
Long-term equity investment	180,825	180,825
Other equity instruments	4,741	3,187	1,554	(1)
Other non-current financial assets	94,050	94,051	-1
Fixed assets	1,624,902	1,624,902
Construction in progress	69,054	69,054
Right-of-use assets	47,846	47,846
Intangible assets	166,856	166,856
Goodwill	78,231	78,231
Long-term prepaid expenses	22,984	22,984
Deferred tax assets	0	448,579	-448,579	(9)
Other non-current assets	8,591	23,205	-14,614	(3)(4)

Total non-current assets	2,302,527	2,764,167	-461,640

Total assets	3,581,715	4,094,338	-512,623
Current liabilities:


Short-term borrowings	1,167,400	1,167,400
Notes payable
Accounts payable	1,164,154	1,168,081	-3,927	(5)
Advances from customers	1,428	1,428
Contract liabilities	7,330	7,330
Payroll payable	65,636	65,636
Tax payable	163,914	163,916	-2
Other accounts payable	922,343	931,165	-8,822	(4)
Including: Interest payable	58,830	58,608	222
Dividend payable
Non-current liabilities due within one
year	368,670	368,670
Total current liabilities	3,860,875	3,873,626	-12,751

			Disclosure
			in the 2020
	Disclosure		Unaudited
	in this	Annual Results
Relevant item	announcement		Announcement	Difference	Notes
	(RMB'000)		(RMB'000)	(RMB'000)
Non-current liabilities:
Long-term borrowings
Rental liabilities	36,263	36,263
Accrued liabilities	350,585	350,585
Deferred tax liabilities	13,911	13,911
Other non-current liabilities	8,150	8,151	-1

Total non-current liabilities	408,909	408,910	-1

Total liabilities	4,269,784	4,282,536	-12,752
Owners' equity (or shareholders' equity):

Paid in capital (or share capital)	547,672	547,672
Capital surplus	1,910,806	1,910,806
Less: treasury stock	20,010	20,010
Other comprehensive income	-38,866	-40,420	1,554
Surplus reserve	246,788	246,788
Undistributed profit	-3,255,667	-2,762,296	-493,371
Equity attributable to owners (or
shareholders' equity) of the parent
company	-609,277	-117,460	-491,817
Minority interest	-70,738	-70,738
Total owners' equity (or shareholders'
equity)	-688,069	-188,198	-499,871
Total liabilities and owners' equity (or
shareholders' equity)	3,581,715	4,094,338	-512,623

			Disclosure
			in the 2020
		Disclosure	Unaudited
		in this	Annual Results
Relevant item	announcement	Announcement	Difference	Notes
		(RMB'000)	(RMB'000)	(RMB'000)
CONSOLIDATED INCOME STATEMENTS
I.	Total operating income	1,819,317	1,819,317
	Including: Operating revenue	1,819,317	1,819,317
II.	Total operating costs	-3,023,194	-3,020,105	-3,089
	Including: Cost of sales	-933,721	-933,721
	Interest expenses
	Taxes and surcharges	-25,892	-25,892
	Selling and distribution expenses	-1,646,262	-1,643,394	-2,868	(6)
	General and administrative expenses	-264,580	-264,580
	Financial expenses	-152,739	-152,518	-221	(7)
	including: interest expenses	-138,859	-137,944	-915	(7)(8)
	interest income	8,645	8,645
	Add: Other income	23,606	23,606
	Investment income (loss stated with "-")	-39,201	-39,201
	Including: Investment income from	-7,095	-5,619	-1,476	(1)
	associates and joint ventures
	Profit arising from changes in fair value	-3,727	-3,727
	(loss stated with"-")
	Credit impairment losses (loss stated	-149,409	-98,334	-51,075	(2)(3)
	with "-")
	Asset impairment losses (loss stated	-341,184	-342,502
	with "-")
	Gains on disposals of assets (loss stated	214,334	214,334
	with "-")
III. Operating profit (loss expressed with "-")	-1,499,458	-1,446,612	-52,846
	Add: Non-operating income	2,034	2,034
	Less: Non-operating expenses	17,000	17,000
IV.	Total profit (total loss expressed with "-")	-1,514,424	-1,461,578	-52,846
	Less: Income tax expenses	363,933	-84,646	448,579	1

			Disclosure
			in the 2020
		Disclosure	Unaudited
		in this	Annual Results
Relevant item	announcement	Announcement	Difference	Notes
		(RMB'000)	(RMB'000)	(RMB'000)
V. Net profit (net loss expressed with "-")	-1,878,357	-1,376,932	-501,425
(I) Classified by continuity of operations
1.	Net profit from continuing operations	-1,823,505	-1,322,080	-501,425
	(loss expressed with "-")
2.	Net profit from discontinued	-54,852	-54,852
	operations (loss expressed with
	"-")
(II) Classified by ownership of equity
1.	Attributable to shareholders of the	-1,840,964	-1,347,593	-493,371
	parent company (loss expressed
	with "-")
2.	Minority interest (loss expressed with	-37,393	-29,339	-8,064
	"-")
VI. Other comprehensive income, net of tax	1,092	-462	1,554
(I) Attributable to owners' of the parent	1,092	-462	1,554
	company
1.	Other comprehensive income not to be	19,182	17,628	1,554
	reclassified into profit or loss
	(1) Changes in net liabilities or net
	assets arising from the re-
	measurement of defined
	benefit plans
	(2) Other comprehensive income
	of investees that cannot be
	reclassified to profit and loss
	under equity method
	(3) Fair value change gains of other	19,182	17,628	1,554	(1)
	equity instrument investments

(4) Changes in fair value of enterprise's credit risk

				Disclosure
				in the 2020
			Disclosure	Unaudited
			in this	Annual Results
Relevant item		announcement	Announcement	Difference	Notes
			(RMB'000)	(RMB'000)	(RMB'000)
2.	Other comprehensive income that will	-18,090	-18,090
		be reclassified to profit and loss
	(1)	Other comprehensive income
		of investees that will be
		reclassified to profit and loss
		under equity method
	(2) Gains and losses from changes
		in fair value of other debt
		investment
	(3) Gains and losses from financial
		assets that will be reclassified
		to other comprehensive
		income
	(4) Other impairment provision of
		debt investment credit
	(5) Cash flow hedges reserve
	(6) Exchange differences on foreign	-18,090	-18,090
		currency financial statements
		translation
	(7)	Others
(II) Net other comprehensive income
	attributable to minority shareholders
	after tax
VII. Total comprehensive income	-1,877,265	-1,377,394	-499,871
(I) Attributable to owners' of the Company	-1,839,872	-1,348,055	-491,871
(II) Attributable to minority shareholders	-37,393	-29,339	-8,064
VIII.Earnings per share:
(1) Basic earnings per share (RMB/share)	-3.38	-2.48	-0.90
(2) Diluted earnings per share (RMB/share)	-3.38	-2.48	-0.90

Notes:

The fair value comparable data of the participating companies was updated upon fair value adjustments.
On 25 February 2020, the Company lost control over LaCha Fashion I, LaCha Apparel II and Naf Naf SAS after LaCha Fashion I was taken over by HTI Advisory Company Limited. Based on the principle of prudence, additional provision for impairment of its creditor rights was made.
Due to the difficulty in contractual performance of relevant suppliers before the balance sheet date, the provision for bad debts in respect of advances to suppliers and other non-current assets was increased upon assessment.
Other payables and other non-current assets were consolidated and reclassified in the consolidated balance sheet.
Accounts payable and advances to suppliers were consolidated and reclassified in the consolidated balance sheet.
After the balance sheet date, store rental expenses were recognized upon the receipt of store lease notes of the previous period.
Subsequent additional provision was made after obtaining confirmation of the financing and the actual interest expenses confirmed by the lending companies. Adjustments were made to the interest expenses included in financial expenses accordingly.
The government subsidy interest originally included in the financial expenses was reclassified into the government interest subsidy.
The deferred income tax assets for the beginning of the Reporting Period were written down as sufficient taxable profit was not expected to be generated before the expiry of deductible losses.

EXTRACT OF THE INDEPENDENT AUDITOR'S REPORT

The following is an extract of the independent Auditor's report on the consolidated financial statements of the Group for the year ended 31 December 2020.

Qualified Opinion
We have audited the accompanying financial statements of XINJIANG LA CHAPELLE FASHION CO., LTD., (herein after "LA CHAPELLE Company"), which comprise the consolidated and the parent company's balance sheet as at 31 December 2020, the consolidated and the parent company's statement of comprehensive income, the consolidated and the parent company's cash flow statement and the consolidated and the parent company's statement of changes in shareholders' equity for the year then ended, and notes to the financial statements.
In our opinion, except for the possible financial impact of the matters as set out in the section "Basis for qualified opinion", the accompanying consolidated and separate financial statements present fairly, in all material respects, the consolidated and the company's financial position as at 31 December 2020, and the consolidated and the company's financial performance and cash flows for the year then ended, and are prepared in accordance with Accounting Standards for Business Enterprises ("ASBEs").

Basis for Qualified Opinion
1. Impacts of oversea subsidiaries on financial statements

As of June 4, 2019, the acquisition of 100% of equity interest in Naf Naf SAS has cost La Chapelle Company a cumulative consideration of EUR56,140,000 (equivalent to RMB 427,141,000). In 2019, La Chapelle Company has made provision for the long-term asset and goodwill generated from combination of RMB227,312,000, therefore, the net asset of Naf Naf SAS in the consolidated statement in the year of 2019 was RMB21,428,000, which have been recognized as loss in the consolidated financial statement of 2020. As stated in XII, FASHION I LIMITED (FASHION I) was taken over by HTI ADVISORY COMPANY LIMITED on February 25, 2020 due to its default on the loan. LA CHAPELLE Company has therefore lost control over FASHION I, which is its subsidiary, and APPAREL I, APPAREL II as well as Naf Naf SAS, which are subsidiaries of FASHION I. On June 19, 2020 local time in France, Naf Naf SAS was transferred into judicial liquidation, and the procedure has not been completed.

Based on the impact of above events, we are unable to audit the financial statements of FASHION I and its subsidiaries for the year ended 31 December 2020, we cannot identify whether adjustment is needed for the opening balance of the consolidated financial statements in 2020 and its influence over the financial report for this period, we cannot confirm the rationality and accuracy of the provision for asset impairment of long-term equity investment of Naf Naf SAS, as well as the completeness of the guarantee or liability obligation recorded in the financial accounts which has been provided to FASHION I and its subsidiaries.

(II) Litigation

As stated in Note XII/(II)/(1) Litigation, La Chapelle Company has suffered from financial constraints due to debt default. As of December 31, 2020, the cumulative amounts involved in litigation and arbitration that have not been judged was RMB782,468,000, among which the amount involved in respect of the judged cases till the reporting date is RMB236,904,000. As stated in Note XIII/(I)/2. Effect of newly added litigation or arbitration, from January 1, 2021 to the reporting date, the amount of the Company's new litigation involved was RMB1,005,987,000. We are unable to obtain sufficient and appropriate audit evidence to identify the potential losses that may be generated from the above litigation events, and the accuracy and completeness of accrued liability in respect of litigation and arbitration.

We conducted our audit work in accordance with Chinese Standards on Auditing ("CSAs"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with China Code of Ethics for Certified Public Accountants (the "Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainties related to going concern
We draw attention to Note III/(II) Going concern to the consolidated financial statements which indicates that La Chapelle Company incurred a net loss of RMB1,878,357,000, and has suffered a consecutive year loss. As at 31 December 2020, the Group's total liability exceeded its total asset by RMB688,069,000. La Chapelle Company is now facing significant litigations due to large number of overdue debts, which also led to the frozen of its principal bank accounts and shares of subsidiaries and the seize of real estates. La Chapelle Company has been presented on the list of dishonest person. All these events along with the events as at the balance sheet date stated in Note XII of the financial statements indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Details of the qualified opinion have been included in the consolidated financial statements of the Group in its 2020 annual report.

THE BOARD'S AND THE AUDIT COMMITTEE'S VIEWS ON THE QUALIFIED OPINION

Da Hua Certified Public Accountants (Special General Partnership) issued a qualified opinion on the Company's financial statements for the year ended 31 December 2020. The bases for the qualified opinion objectively reflect the actual situation of the Company and reveal the risks faced by it. The Board and the audit committee respect the independent judgment of Da Hua Certified Public Accountants (Special General Partnership) in issuing a qualified opinion, and attach great importance to the impact of the matters forming the bases for such an opinion on the Company. The Company will take active measures to eliminate the impact of such matters as soon as possible, and safeguard the interests of it investors.

MAJOR ACTIONS PROPOSED TO BE TAKEN BY THE COMPANY

As the company failed to repay the loan from HTI Advisory Company Limited in a timely manner, HTI Advisory Company Limited took over LaCha Fashion I on 25 February 2020, and the Company was unable to control or exert any influence over it, and thereby losing actual control over it and its subsidiaries, including mainly Naf Naf SAS. In addition, Naf Naf SAS officially entered into judicial liquidation on 19 June 2020 (French time). These have caused the Auditor's failure to audit LaCha Fashion I and its subsidiaries, and therefore the Auditor could not assess the reasonableness and accuracy of the long-term equity investment in Naf Naf SAS and the provision for asset impairment. As at the date of this announcement, the dispute over the contractual dispute over the Company's guarantee of the loan is still under legal proceedings. The Company will negotiate with HTI Advisory Company Limited to clarify HTI Advisory Company Limited's follow-up arrangements after taking over LaCha Fashion I, or will ascertain the availability of the Company's equity interest in LaCha Fashion I and its subsidiaries (and their actual amount) for the setting off of the Company's indebtedness to HTI Advisory Company Limited through friendly negotiations or

litigation. At the same time, the Company will continue to contact the judicial liquidator of Naf Naf SAS to follow up on the progress of the judicial liquidation, and actively seek professional opinions from French lawyers to understand the Company's remaining assets that can be recovered in the liquidation process. The Company will strive to properly and swiftly resolve the issues arising from Naf Naf SAS's judicial liquidation and the dispute between the Company and HTI Advisory Company Limited.

Regarding litigation cases that have not been concluded, the Company will actively respond to the cases and take necessary measures to protect the legal rights and legitimate interests of the Company with the support of legal professionals. Regarding debts arising from disputes that have been adjudicated or settled, the Company, being responsible to all of its shareholders and its creditors, will actively negotiate with the relevant courts, creditors and financial institutions and strive to come up with a centralized solution to litigation matters and debt settlement as soon as possible, including but not limited to the consideration of mechanisms such as seeking a release from debt or a discount, settlement and debt restructuring. At the same time, the Company will strengthen the internal information transmission mechanism in respect of litigation matters, improve its recording and classification of litigation to capture sufficient information, and monitor and evaluate the risks of litigation cases and their financial impact on the Company in a timely manner.

In response to the significant uncertainty of the Company's ability to continue as a going concern, the Company will take the following measures:
1. The Company will adjust its current business strategy and development direction. On the one hand, the Company will focus on enhancing the management of its high-quality stores, adhere to the policy of "direct store management from the headquarters and management responsibility towards every employee", and strive to improve store efficiency, personnel efficiency and single store profitability. On the other hand, the Company will continue to make efforts in expanding the promotion of its licensing business, and to realize the transition of the Company to a business model featuring light assets, high gross profit and quick turnover. In the fourth quarter of 2020, the Company realized revenue of approximately RMB19.18 million through its online (non-main-brand) licensing business. In the future, the Company will further explore its online licensing business's coverage of brands, categories and platform channels, and utilize the advantages of an "asset-light" business model to improve the asset turnover and profitability of the Company.
2. The Company will "remove its heavy burden and move forward with light gear" as soon as possible. The Company will seek to lease or sell its existing low-efficiency property assets (including park properties at the headquarters and warehousing and logistics assets), and strive to sell them at the maximum premium. Through disposing assets not suitable to its strategy, the Company aims to recover funds to improve its liquidity and asset structure, in order to provide financial support for the development of its core business.

The Company will inspect its existing inventories and adopt measures such as identification by price, quality screening, bundling and matching channels, to encourage all regions and partners to facilitate the disposal of the inventories of the Company in accordance with a unified policy, which can effectively reduce the inventory level of old products and accelerate the return of funds to the Company. Meanwhile, the Company will also actively develop new products to enhance its performance and image.
The Company will further adjust and optimize its management system, improve overall budget management and cost control, and strictly adopt measures that "reduce costs and enhance efficiency". In 2021, the Company will attach greater importance to the preparation, control and implementation of its overall budgets, strengthen cost control from the source, strictly control various costs and expenditures, conduct input-output analyses on major costs, perform closed- loop management of key expenses, and conduct dynamic monitoring and process supervision on overall budgets, in order to maximize the profitability of its primary business.
Regarding the debt problems faced by the Company at this stage, the Company, being responsible to all shareholders and creditors, will actively negotiate with the relevant courts, creditors and financial institutions to seek a centralized solution to debt settlement, including but not limited to debt extensions, exemptions, discounts and settlements as soon as possible, in order to alleviate the debt pressure of the Company and help the Company return to a positive development track. As of the date of this announcement, the Company still has frozen cash at banks in the amount of approximately RMB166 million (nominal value). The Company will propose a feasible plan for debt repayment, in order to combine the benefits of the reduction in operating burden and debt reorganization, thus further optimizing the asset-liability structure of the Company.
Apart from taking measures to overcome difficulties, the Company also aims to restore and improve its credit and financing capabilities through actively seeking new investors, obtaining external financing, leveraging the resources and advantages of substantial shareholders in various aspects such as entrusted financing, financial strength, and professional capabilities, optimizing and reorganizing its overall business as well as seeking further funds.

RESUMPTION OF TRADING OF H SHARES

At the request of the Company, trading in the H shares of the Company (the "H Shares") on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") has been suspended with effect from 9:00 a.m. on Thursday, 1 April 2021, pending the release of this announcement.

Application has been made to the Stock Exchange for the resumption of trading in the H Shares on the Stock Exchange from 9:00 a.m. on Friday, 30 April 2021.

The 2020 annual report and results announcement are published on the website of the Stock Exchange at www.hkexnews.hk and the website of the Company at http://group.lachapelle.cn/Investor/Announce. The 2020 annual report will be despatched to holders of the Company's H shares in due course.

By Order of the Board

Xinjiang La Chapelle Fashion Co., Ltd.

Mr. Wu Jinying

Chairman

Shanghai, the People's Republic of China

29 April 2021

As of the date of this announcement, the executive directors of the Company are Mr. Wu Jinying, Ms. Zhang Ying and Ms. Zhang Danling; the non-executive director of the Company is Mr. Yin Xinzai; the independent non-executive directors of the Company are Mr. Xing Jiangze, Ms. Wong Sze Wing and Mr. Zhu Xiaozhe.


	Corporate Profile	2
	Corporate Information	5
	Financial Highlights	7
	Chairman's Statement	9
Contents	Management Discussion and Analysis	13
Senior Management	26
	Profiles of Directors, Supervisors and
	Directors' Report	31
	Report of the Supervisory Committee	50
	Corporate Governance Report	56
	Auditor's Report, Financial Statements
	and Notes	79

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Profile

Xinjiang La Chapelle Fashion Co., Ltd. (the "Company") was incorporated in the People's Republic of China (the "PRC" or "China") as a joint stock company on 23 May 2011 converting from its predecessor, Shanghai Xuhui La Chapelle Fashion Limited that was founded in 1998. The H shares of the Company have been listed on the Main Board of the Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") since 9 October 2014 (the "Hong Kong Listing Date"), and the A shares of the Company have been listed on the Main Board of the Shanghai Stock Exchange since 25 September 2017.

The Company and its subsidiaries (the "Group") are a multi-brand and omni-channel operated fashion group in the PRC that designs, markets and sells apparel products with a focus on mass- market casualwear. Since its establishment, the Group has kept its focus on the apparel sector and adhered to the brand's core development concept of "designing for a better life". The Group has been committed to becoming a leading multi-brand,omni-channel, driven by data technology new fashion group in China. The Group has been dedicated to providing high- quality and fashionable apparel products and lifestyles to mass domestic consumers.

The Group now owns multiple brands such as La Chapelle, Puella, Candie's, 7 Modifier and La Babité which have different but complementary styles. They are mass-market women fashion brands that have interwoven and extensive customer positioning which satisfy the diverse needs of a wide range of female consumers.

During the Reporting Period, the major activities of the Group include apparel selling, brand licensing and property. It is a diversified Group including apparel products and brand licensing.

Annual Report 2020

Corporate Profile

Annual Report 2020

Corporate Information

REGISTERED CHINESE NAME

新疆拉夏貝爾服飾股份有限公司

ENGLISH NAME

Xinjiang La Chapelle Fashion Co., Ltd.

HEADQUARTERS

Building 4

No. 50, Lane 2700, South Lianhua Road

Minhang District, Shanghai, PRC

REGISTERED OFFICE IN THE PRC

Room 2008, 20/F, Tower D, Chuangxin Square, Si Ping Road, Xin Shi District,

Urumqi, Xinjiang, RPC

PLACE OF BUSINESS IN HONG KONG

40th Floor, Dah Sing Financial Centre,

No. 248 Queen's Road East Wanchai,

Hong Kong

COMPANY'S WEBSITE

www.lachapelle.cn

DIRECTORS

Executive Directors

Mr. Wu Jinying (Chairman)

Ms. Zhang Ying (President)

Ms. Zhang Danling

Non-executive Directors

Mr. Yin Xinzai

Independent Non-executive Directors

Mr. Xing Jiangze

Ms. Wong Sze Wing

Mr. Zhu Xiaozhe

AUDIT COMMITTEE

Mr. Xing Jiangze (Chairman)

Ms. Zhang Ying

Ms. Wong Sze Wing

NOMINATION COMMITTEE

Mr. Zhu Xiaozhe (Chairman)

Ms. Zhang Ying

Mr. Xing Jiangze

REMUNERATION AND APPRAISAL COMMITTEE

Mr. Xing Jiangze (Chairman)

Mr. Yin Xinzai

Mr. Zhu Xiaozhe

BUDGET COMMITTEE

Ms. Zhang Ying (Chairman)

Mr. Wu Jinying

Ms. Zhang Danling

Mr. Yin Xinzai

Mr. Xing Jiangze

Ms. Wong Sze Wing

STRATEGY AND DEVELOPMENT COMMITTEE

Mr. Wu Jinying (Chairman)

Ms. Zhang Ying

Ms. Zhang Danling

Mr. Yin Xinzai

Ms. Wong Sze Wing

Mr. Zhu Xiaozhe

SUPERVISORS

Mr. Ma Yuanbin (Chairman)

Mr. Sun Bin

Mr. Gu Zhenguang

COMPANY SECRETARIES

Ms. Wong Wai Ling (ACS, ACIS)

AUTHORIZED REPRESENTATIVES

Mr. Wu Jinying (appointed on 22 February 2021)

Ms. Wong Wai Ling (appointed on 25 February 2020)

LEGAL ADVISERS

Grandall Law Firm (Shanghai) (as to PRC Law)

Herbert Smith Freehills (as to Hong Kong Law)

AUDITOR

Da Hua Certified Public Accountants (Special General Partnership)

H SHARE REGISTRAR

Computershare Hong Kong Investor Services Limited

Shops 1712-1716, 17th Floor, Hopewell Centre

183 Queen's Road East

Wanchai, Hong Kong

PRINCIPAL BANKERS

China Everbright Bank Co., Ltd.

Bank of Communications Co., Ltd.

STOCK CODE

6116

Annual Report 2020

Financial Highlights

FINANCIAL SUMMARY

A summary of the consolidated results and of the consolidated assets, equity and liabilities of the Group for the last five financial years, is set as below:

CONSOLIDATED RESULTS

		For the year ended 31 December
	2020	2019	2018	2017	2016
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Revenue	1,819,317	7,666,229	10,175,853	8,998,709	8,550,867
Gross profit	885,596	4,423,450	6,647,516	5,627,804	5,479,566
Gross profit margin	48.68%	57.70%	65.33%	62.5%	64.1%
Operating (loss)/profit	(1,499,48)	(2,266,447)	(151,681)	737,493	686,972
Operating (loss)/profit margin	(82.42%)	(29.56%)	(1.49%)	8.2%	8.0%
(Loss)/profit for the year	(1,878,357)	(2,252,279)	(199,182)	537,440	572,267
(Loss)/profit attributable to equity owners
of the Company	(1,840,964)	(2,166,306)	(159,513)	498,527	531,963
Non-controlling interests	(37,393)	(85,973)	(39,669)	38,913	40,304

CONSOLIDATED ASSETS, EQUITY AND LIABILITIES

		As at 31 December
	2020	2019	2018	2017	2016
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
ASSETS
Non-current assets	2,302,527	4,811,602	3,473,479	2,817,072	2,224,927
Current assets	1,279,188	3,199,921	5,216,019	5,054,640	4,078,716
Total assets	3,581,715	8,011,523	8,689,498	7,871,712	6,303,643
EQUITY AND LIABILITIES
Total equity	(688,069)	1,126,196	3,561,957	4,069,228	3,510,218
Non-current liabilities	408,909	1,400,240	407,752	67,039	68,939
Current liabilities	3,860,876	5,485,087	4,719,789	3,735,445	2,724,486
Total liabilities	4,269,785	6,885,327	5,127,541	3,802,484	2,793,425
TOTAL EQUITY AND LIABILITIES	3,581,715	8,011,523	8,689,498	7,871,712	6,303,643

The above summary does not form a part of the consolidated financial statements.

The Company has prepared its financial statements in accordance with the China Accounting Standards for Business Enterprises (the "CAS") since 28 July 2017, in light of the then proposed listing of the A Shares of the Company and in order to improve the efficiency and reduce the cost of disclosures and audit expenses. The consolidated results for 2016 shown were adjusted in accordance with the CAS, while the consolidated results for 2015 were still prepared in accordance with the International Financial Reporting Standards.

Annual Report 2020

Chairman's Statement

Dear shareholders,

On behalf of the board of directors (the "Board"), I am pleased to present to you the audited annual results of the Group for the year ended 31 December 2020.

In 2020, the sudden outbreak of the COVID-19 pandemic had brought unprecedented impacts on the industry. As affected by the pandemic, consumer activities involving crowds and physical contact were restricted. Due to the spread of the COVID-19 pandemic in 2020, the Company's overall operations, especially its offline physical business, were significantly impacted, and the Company's implementation of adjustment measures was constrained to a certain extent. During the Reporting Period, the Company faced various difficulties such as a significant decline in operating income, high liquidity pressure and low profitability.

During the Reporting Period, facing changes in internal and external operating environment, the Company continued to adhere to the managing policy of "down-scaling and focusing, reducing costs and increasing efficiency and innovative development", and used its best effort to mitigate liquidity pressure with focus on ensuring continuous operation and carrying on its principal business. Meanwhile, the Company expedited its transformation and adjustment, and actively explored new business model and transformation initiatives to lay the foundation to help the Company return to a positive development track. In 2021, the Company will take the following targeted measures:

1. With improving profitability as the core, we will enhance offline business

management, and actively explore online "light asset" business model

For offline channels: the Company closed more loss- making and low-efficiency outlets in 2020. As at the end of the Reporting Period, the number of offline outlets operated by the Company decreased to 959, which effectively reduced the pressure of fixed expenses such as wages and rents attributable to directly-operated channels. The Company will focus on enhancing the management of the existing high quality stores, adhere

to the policy of "direct store management from the headquarters and management responsibility towards every employee", and strive to improve offline store efficiency, unit area results (坪效) and single store profitability. For online channels: the Company has adjusted its traditional model of "planning and design

- independent purchasing - platform operation - online sales" to the new model of "brand licensing + operational services" during the Reporting Period. In the fourth quarter of 2020, the Company realized revenue of approximately RMB19.18 million from its online (non- main-brand) licensing business only. In the future, the Company will continue to strengthen the promotion of online licensing business, and further explore its online licensing business's coverage of brands, categories and platform channels, in an effort to realise transformation to a light-asset, high margin and quick turnover operation model and increase business turnover and profitability.

2. Reorganise and define the Company's brands and remodel the image of

its main brands to support business adjustment and transformation

Based on the concept of "rebranding and brand protection", the Company will reorganize the structure and positioning of its various brands, implement the business development strategy of "one strategy for one brand, and differentiation of primary and secondary brands", and remodel its brand matrix. The Company plans to enhance its brand image and value as a whole by establishing brand culture, upgrading and transforming its core network and innovate its brand marketing mechanism, with focus on core brands. The Company will significantly adjust its publicity and promotion strategy, strengthen the close cooperation with emerging media in the Internet, promote brand promotion and traffic marketing with celebrities, enhance brand influence among young consumer groups, and fully combine and utilize the media, channels and end resources, so as to integrate brand promotion with consumer experience. Meanwhile, the Company will further enhance its brand protection

Xinjiang La Chapelle Fashion Co., Ltd.

Chairman's Statement

awareness and establish a cooperative fake-fighting mechanism with relevant authorities to match the needs of licensing business development, and speed up the construction of a dynamic quality monitoring system.

3. Improve overall budget management and cost control to increase profitability

T h e C o m p a n y w i l l f u r t h e r a d j u s t a n d o p t i m i z e its management system, improve overall budget management and cost control, and increase the profitability of its primary business through adopting strict measures of "reducing costs and enhancing efficiency". During the Reporting Period, in line with the progress of business adjustment and transformation, the Company has taken measures such as optimizing the structure of functional departments and reducing redundant personnel, resulting in a significant reduction of fixed expenses such as labour cost, and improvement in personnel efficiency management. In 2021, the Company will attach greater importance to the preparation, control and implementation of its overall budgets, strengthen cost control from the source, strictly control various costs and expenditures, conduct input-output analyses on major costs, perform closed-loop management of key expenses, and conduct dynamic monitoring and process supervision on overall budgets, in order to maximize the profitability of its primary business.

4. Actively prepare solutions for repayment of debts and strive to help the Company return to a positive development track

Regarding the debt problems faced by the Company at this stage, the Company, being responsible to all shareholders and creditors, will actively negotiate with relevant courts, creditors and financial institutions to seek a centralized solution to litigations and

debt settlement, including but not limited to debt exemptions, discounts, settlements and restructuring as soon as possible, in order to help the Company return to a positive development track. Apart from taking measures to overcome difficulties, the Company also aims to restore and improve its credit and financing capabilities through actively seeking new investors, obtaining external financing, leveraging the resources a n d a d v a n t a g e s o f s u b s t a n t i a l s h a r e h o l d e r s i n various aspects such as entrusted financing, financial strength, and professional capabilities, optimizing and reorganizing its overall business as well as seeking further funds.

5. Put in more effort to dispose non-core assets to reduce operating burden and debt pressure

On one hand, the Company intends to "remove its heavy burden and move forward with light gear" as soon as possible. The Company will seek to lease or sell its existing low-efficiency property assets (including park properties at the headquarters and warehousing and logistics assets), and strive to sell them at the maximum premium. Through disposing assets not suitable to its strategy, the Company aims to recover funds to improve its liquidity and asset structure, in order to provide financial support for the development of its core business. On the other hand, the Company will inspect its existing inventories and adopt measures such as identification by style, quality screening, bundling and matching channels, to encourage all regions and partners to facilitate the disposal of the inventories of the Company in accordance with a unified policy, which can effectively reduce the inventory level of old products and accelerate the return of funds to the Company. Meanwhile, the Company will also actively develop new products to enhance end product capability and operating results.

Annual Report 2020

6. Further strengthen internal control management and standardized operation, and improve and perfect internal control system

In 2021, taking actual situation into consideration, the Company will further strengthen its internal control management and standardized operation, improve weaknesses in the internal control system, optimize each aspect of control and functional departments, and improve and perfect the internal control system. It will maintain a stable management team that is appropriate for its present stage of business development, enhance the cohesion and centripetal force of all employees, and make it clear that improving operation quality and increasing profitability are the core objectives of the Company. Through down-scaling, focusing core resources, active exploring brand licensing business, optimizing internal operational management, and improving work flow, etc., the Company will adapt to the needs of its business activities and development and earnestly protect the interests of all shareholders.

Chairman's Statement

In 2021, the Company will adhere to the above measures, pursue improvements in various aspects including business model, brand management, cost control, financing channels and standardized operation, strive to further optimize the asset-liability structure of the Company and effectively enhance the overall operation and profitability of the Company.

On behalf of the Board, I would like to express sincere gratitude to the Group's shareholders, business partners, customers and employees for their unstinting support. Going forward, the Group will continue to strive for innovation and change, creating value for shareholders.

Mr. Wu Jinying

Chairman

29 April 2021

Annual Report 2020

Management Discussion and Analysis

INDUSTRY REVIEW

In 2020, the sudden outbreak of the COVID-19 pandemic had brought unprecedented impacts on the industry. According to the data from the National Bureau of Statistics, total retail sales of consumer goods in 2020 reached RMB39,198.1 billion, down 3.9% year on year; retail sales of consumer goods above the designated size were RMB14,332.3 billion, down 1.9% year on year, among which, the retail sales of garments, footwear, hats and knitwear reached RMB1,236.5 billion, down 6.6% year on year, and the retail sales of supermarkets in the retail enterprises above the designated size increased by 3.1% year on year, while department stores, professional stores and specialty stores decreased by 9.8%, 5.4% and 1.4% respectively. As affected by the pandemic, consumer activities involving crowds and physical contact were restricted. Due to the spread of the COVID-19 pandemic in 2020, the Company's overall operations, especially its offline physical business, were significantly impacted, and the Company's implementation of adjustment measures was constrained to a certain extent. During the Reporting Period, the Company faced various difficulties such as a significant decline in operating income, high liquidity pressure and low profitability.

The main reasons for the estimated loss during the Reporting Period are as follows: (1) as affected by factors such as the COVID-19 pandemic, the Company's revenue from its offline network dropped significantly, whilst at the same time the Company still had to bear fixed expenses such as shopping mall rentals and salaries. As a result, the decrease in selling expenses and administrative expenses was significantly lower than the decline in revenue, which led to a loss of approximately RMB890 million. (2) the Company further closed down ineffective offline stores, with the number of offline outlets within Mainland China having decreased from 4,878 at the beginning of the year to 959 at the end of the year. The operating loss of the closed stores and expenses such as those arising from paying off renovation fees in one go together accounted for a loss of RMB250 million. (3) Due to factors such as the external industry environment, internal inventory clearance efforts and cash flow pressure, the Company's sales of past-season products increased significantly during the Reporting Period, resulting in a corresponding decrease in gross profit margin, which led to a decrease in gross profit of approximately RMB190 million during the Reporting Period as compared with the same period of the previous year. At the same time, the aging of the Company's inventories at the end of the Reporting Period resulted in a loss of approximately RMB340 million due to the decline in value of inventories.

During the Reporting Period, the Company determined to dispose of projects that materially and adversely affected the Company's financial performance and cash flow. Further, Jack Walk (Shanghai) Fashion Limited* (傑克沃克（上海）服飾有限公司) and Naf Naf SAS, which were former subsidiaries of the Company, entered into judicial liquidation due to their inability to continue operation. The operating losses of investment projects and the disposal of loss-making investment projects by the Company together accounted for a loss of RMB230 million for the Reporting Period. (5) As sufficient taxable profit was not expected to be generated before the expiry of deductible losses, the deferred income tax assets for the beginning of the Reporting Period were written down, resulting in a loss of RMB340 million.

Xinjiang La Chapelle Fashion Co., Ltd.

Management Discussion and Analysis

FINANCIAL REVIEW

For the year ended 31 December 2020, the Group's revenue and operating loss were RMB1,819.3 million and RMB1,499.5 million respectively, representing a decrease of 76.3% and 33.8% respectively, as compared with the corresponding period of last year. The net loss for the year ended 31 December 2020 amounted to RMB1,878.4 million, representing a decrease of 16.6% as compared with the corresponding period of last year.

Revenue

The revenue of the Group in 2020 decreased from RMB7,666.2 million in 2019 to RMB1,819.3 million, representing a decrease of 76.3% year on year. The decrease in revenue was mainly attributable to the following reasons: (1) the Company proactively implemented a strategic contraction strategy. During the Reporting Period, it continued to optimize channels for direct offline sales and closed directly-operated stores that were not efficient and loss-making. As at the end of 2020, the number of domestic outlets of the Company was 959, with a net decrease of 3,919 from 4,878 as at the end of the year 2019, representing a drop of 80.3% in the number of domestic outlets; (2) as affected by COVID-19 and the resulting decline in customer flow in physical stores, the Company's direct offline sales during the Reporting Period were lower than expected, and the same store sales ratio decreased by 58.5%; (3) due to the pressure on the Company's cash flow during the Reporting Period, the quantity of goods purchased was reduced, and accordingly sales revenue also recorded a decrease.

Revenue by distribution channel

The following table sets out the revenue breakdown by type of retail points for the Reporting Period and the corresponding period of last year:

		Year ended 31 December
	2020		2019
	(Audited)		(Audited)
		Percentage		Percentage
	Revenue	of total	Revenue	of total
	(RMB'000)	(%)	(RMB'000)	(%)
Concessionaire counters	677,480	37.2	3,225,305	42.1
Standalone retail outlets	625,528	34.4	3,097,356	40.4
Online platform	295,775	16.2	816,164	10.7
Franchise/Associates	169,099	9.3	509,527	6.6
Licensing	19,179	1.1	-	-
Others Note 1	32,256	1.8	17,877	0.2
Total	1,819,317	100	7,666,229	100

Annual Report 2020

Management Discussion and Analysis

The revenue from concessionaire counters decreased from RMB3,225.3 million in 2019 to RMB677.5 million in 2020, representing a decrease of 79.0% year on year. The revenue from standalone retail outlets decreased from RMB3,097.4 million in 2019 to RMB625.5 million in 2020, representing a decrease of 79.8% year on year. The decreases in revenue from concessionaire counters and standalone retail outlets were mainly due to the decrease in the number of retail outlets caused by the active contraction strategy implemented by the Group. The number of retail outlets for concessionaire counters and standalone retail outlets decreased by approximately 78.3% and 84.4% respectively, as compared with the number of retail outlets at the end of the year 2019. In addition, the impact of COVID-19 home and abroad caused the decrease of same-store sales. The revenue from standalone retail outlets accounted for 34.4% of the total revenue of the Group in 2020, representing a period-on-period decrease of 6.0 percentage points. The revenue from online platform in 2020 reached RMB295.8 million, which accounted for 16.2% of the total revenue, representing a period-on-period increase of 5.5 percentage point.

Note: "Others" mainly refers to the revenue from the Company's leasing business and labour services.

Revenue by brand

The following table sets out the revenue breakdown by brand for the Reporting Period and the corresponding period of last year:

		Year ended 31 December
	2020		2019
	(Audited)		(Audited)
		Percentage		Percentage
	Revenue	of total	Revenue	of total
	(RMB'000)	(%)	(RMB'000)	(%)
La Chapelle	388,101	21.4	1,617,394	21.2
Puella	287,612	15.8	1,282,699	16.7
7 Modifier	266,274	14.6	1,162,231	15.2
La Babité	234,720	12.9	980,862	12.8
Candie's	187,228	10.3	683,109	8.9
Men's wear brands	72,586	4.0	346,820	4.5
8ém	37,081	2.0	152,780	2.0
Naf Naf	280,676	15.4	996,983	13.0
Other brands	32,783	1.8	425,474	5.5
Others	32,256	1.8	17,877	0.2
Total	1,819,317	100.0	7,666,229	100.0

Note:

Menswear brands comprise JACK WALK, Pote and MARC ECKÕ brands.
Other brands comprise GARTINE, Siastella and UlifeStyle brands.
Naf Naf SAS, a former wholly-owned subsidiary of the Company, was no longer included in the consolidated financial statements. From January 2020 to February 2020, Naf Naf SAS recorded an operating income of RMB280,676 thousand.

Xinjiang La Chapelle Fashion Co., Ltd.

Management Discussion and Analysis

As affected by the decrease in the number of retail outlets and the decrease in same store revenue, the revenue of the Group for the year ended 31 December 2020 had an overall decrease of 76.3%. The revenue from each of the major brands recorded a decrease: revenue from women's wear brands decreased by 76.2%, and revenue from men's wear brands decreased by 79.1%. At the same time, as the proportion of off-season products to total products increased, the overall gross profit margins of the Group also decreased: gross profit margin of women's wear decreased by 9.7%, and gross profit margin of men's wear decreased by 19.4%.

Revenue by tier of cities

The following table sets out the revenue breakdown by tier of cities (including revenue from online platform) for the Reporting Period and the corresponding period of last year:

		Year ended 31 December
	2020		2019
	(Audited)		(Audited)
		Percentage		Percentage
	Revenue	of total	Revenue	of total
	(RMB'000)	(%)	(RMB'000)	(%)
First-tier cities	150,388	8.3	1,103,569	14.4
Second-tier cities	678,740	37.3	2,782,798	36.3
Third-tier cities	374,030	20.6	1,484,055	19.4
Other cities	335,483	18.4	1,298,824	16.9
Overseas region	280,676	15.4	996,983	13.0
Total	1,819,317	100	7,666,229	100

Note:

For the classification of domestic cities in various tiers, please refer to the prospectus of the Company dated 24 September 2014 (the "Prospectus").
Operating income in overseas regions was realized by the Company's former wholly-owned subsidiary Naf Naf SAS, which was no longer included in the consolidated financial statements of the Company at the end of the reporting period.

In 2020, the Group's revenue decreased in all cities, mainly due to the decrease in the number of retail outlets, the decrease in the quantity of the goods purchased and the impact of the COVID-19 pandemic.

Annual Report 2020

Management Discussion and Analysis

Revenue by product type

The following table sets out the revenue breakdown by product type (including revenue from online platform) for the Reporting Period and the corresponding period of last year:

		Year ended 31 December
	2020		2019
	(Audited)		(Audited)
		Percentage		Percentage
	Revenue	of total	Revenue	of total
	(RMB'000)	(%)	(RMB'000)	(%)
Tops	1,181,143	64.9	5,186,003	67.7
Bottoms	174,546	9.6	842,148	11.0
Dresses	410,737	22.6	1,604,675	20.9
Accessories and others	52,891	2.9	33,403	0.4
Total	1,819,317	100	7,666,229	100

In 2020, revenue from sales of different products of the Group recorded a decrease, which was attributed to the decrease in purchase volume and sales volume period-on-period. Revenue contribution from sales of different products as compared with last year: revenue contribution from sales of tops decreased by 2.8%, revenue contribution from sales of bottoms decreased by 1.4% and revenue contribution from sales of dresses increased by 1.7%.

Cost of Sales

The cost of sales of the Group decreased by 71.2% from RMB3,242.8 million in 2019 to RMB933.7 million in 2020. The decrease in cost of sales was mainly due to the year-on-year decrease in revenue.

Gross Profit and Gross Profit Margin

The gross profit of the Group decreased from RMB4,423.5 million in 2019 to RMB885.6 million in 2020, representing a decrease of 80.0%. The overall gross profit margin of the Group decreased to 48.7% in 2020 from 57.7% in 2019, mainly due to an increase in proportion of sales of off-season products in 2020, resulting in a period-on-period decrease in actual comprehensive average gross profit margin.

Xinjiang La Chapelle Fashion Co., Ltd.

Management Discussion and Analysis

Selling and Distribution Expenses and General and Administrative Expenses

Selling and distribution expenses in 2020 amounted to RMB1,646.3 million (2019: RMB5,174.6 million), consisting primarily of salaries and benefits for sales staff, concession and rental expenses relating to retail points and online stores, amortisation of store decoration expenses and rental expenses. Expressed in percentage points, selling and distribution expenses as a percentage of total revenue in 2020 were 90.5% (2019: 67.5%). Compared to 2019, due to the strategic contraction strategy and impact of the COVID-19 pandemic, the significant decrease of sales volume resulted in the increase in the ratio of fixed selling expenses (such as salaries and benefits for sales staff, amortisation of store decoration expenses and shopping mall rental expenses) to revenue. General and administrative expenses in 2020 amounted to RMB264.6 million (2019: RMB483.2 million), consisting primarily of administrative employee salaries and benefit expenses, amortization of intangible assets, and consulting service fees. Expressed in percentage points, general and administrative expenses as a percentage of total revenue in 2020 were 14.5% (2019: 6.3%). The contribution of administrative staff salaries and benefits and depreciation of fixed assets to our revenue for the Reporting Period have increased from the corresponding period of last year.

Asset Impairment Loss

The asset impairment loss for the year ended 31 December 2020 was RMB341.2 million (2019: RMB778.5 million), which was mainly provision for impairment of inventories. Compared with 2019, the further asset impairment loss this year was mainly due to the further depreciation of right-of-use assets and intangible assets of the Company. Further details on the asset impairment loss will be disclosed by the Company upon completion of the audit as and when necessary.

Credit impairment losses

Credit impairment losses recorded RMB149.4 million in 2020 (2019: RMB151.9 million), mainly because LaCha Fashion I Limited was taken over by HTI Advisory Company Limited. As a result, the Company lost control of LaCha Fashion I Limited and its subsidiary, Naf Naf SAS. The Company will therefore make a full provision for bad debts arising from its investment in LaCha Fashion I Limited and its financial support provided to Naf Naf SAS to support its operation.

Other Income - Net

The Group's other income amounted to RMB23.6 million in 2020 (2019: RMB103.3 million), mainly due to the receipt of financial subsidies of RMB14.6 million in 2020 (2019: RMB102.2 million).

Finance Expenses/Income - Net

The Group's net finance expenses were RMB152.7 million in 2020 (2019: RMB241.7 million). The decrease in the net financial expenses was mainly due to the year-on-year decrease in interest expenses on lease liabilities resulting from further closure of stores under the new lease standard.

Loss before Income Tax

Loss before income tax of the Group decreased from RMB2,265.0 million in 2019 to a loss before income tax of RMB1,514.4 million in 2020, representing a decrease of 33.1% from the corresponding period of last year. The decrease in total loss was mainly due to the business contraction implemented by the Company and the decrease in fixed costs and expenses.

Income Tax Expense

Income tax expense amounted to RMB363.9 million in 2020 (2019: RMB-12.7 million).

The effective income tax rate in 2020 was 24.03% (2019: -0.56%).

Annual Report 2020

Management Discussion and Analysis

Net Loss and Net Loss Margin

As a result of the foregoing, net loss for the year ended

31 D e c e m b e r 2020 a m o u n t e d t o R M B1,878.4 m i l l i o n, representing a decrease by 16.6% from the net loss of RMB2,252.3 million in 2019. In particular, net loss for the period attributable to the owner of the Group was RMB1,841.0 million, representing a decrease by 15.0% from the net loss for the period attributable to the owner of the Group of RMB2,166.3 million in 2019. Net loss margin of the Group was 103.25% for the year 2020, as compared to 29.38% in 2019.

Capital Expenditure

Capital expenditure of the Group primarily consisted of payments and deposits paid for fixed assets, intangible assets, long-term amortization expenses and construction in progress. In 2020, the capital expenditure incurred by the Group was RMB45.0 million (2019: RMB477.6 million). In 2020, the decline in the capital expenditure of the Group was mainly due to the decrease in number of new stores and capital expenditure of construction in progress in 2020.

Cash and Cash Flow

In 2020, net cash inflow from operating activities amounted to RMB99.6 million (2019: net cash inflow of RMB1,598.0million). The significant decrease in net cash inflow from operating activities was mainly due to the significant decrease in the revenue resulting from the closure of a large number of offline stores during the Reporting Period.

In 2020, net cash outflow in investing activities was RMB5.2 million (2019: net cash outflow of RMB608.6 million). Major investment activities in 2020 were: (1) Net cash inflow of RMB52.8 million from disposal of subsidiaries and other business units; (2) Net cash outflow of RMB45.0 million paid for acquisition of fixed assets, intangible assets and other long-term assets; (3) Net cash outflow of RMB8.4 million from subsidiaries and other business units.

I n 2020, n e t c a s h o u t f l o w f r o m f i n a n c i n g a c t i v i t i e s w a s R M B 2 4 5 . 3 m i l l i o n ( 2 0 1 9 : n e t c a s h o u t f l o w o f RMB1,249.6million). The cash flow of financing activities in 2020 were mainly: (1) Net cash inflow of RMB358.0 million from obtaining loans; (2) net cash outflow of RMB283.0 million paid for debt repayments; (3) RMB268.9 million of other cash paid related to financing activities.

As at 31 December 2020, the Group held cash and cash e q u i v a l e n t s t o t a l i n g R M B24.3 m i l l i o n (31 D e c e m b e r 2019:RMB175.5 million). The main reason was a decrease in net cash inflow generated from operating activities during the period as compared to the previous period.

As at 31 December 2020, net current liabilities of the Group amounted to RMB3,860.9 million. Total assets less current liabilities amounted to RMB169,418.0 million, and gearing ratio (i.e. total liabilities/total assets) was 105.9%.

Inventories

In 2020, the average inventory turnover of the Group was

423.6 days (2019: 236.6 days), and the average receivables turnover was 86.0 days (2019: 38.4 days). The reasons for the decrease in inventory turnover rate as compared with the previous year are as follows: (1) the sales volumes from offline stores decreased as a result of the COVID-19 pandemic; (2) the Company adopted a contraction strategy and further closed down offline stores; and (3) the quantity of new products purchased by the Company decreased due to the pressure on the cash flow, and past-season products therefore accounted for a relatively high proportion in sale during the Reporting Period.

Bank loans and other borrowings

As at 31 December 2020, bank borrowings of the Group amounted to RMB1,515.2 million (31 December 2019: R M B1,842 . 7 m i l l i o n), w h i c h w e r e m a i n l y u n s e c u r e d borrowings repayable within one year.

Xinjiang La Chapelle Fashion Co., Ltd.

Management Discussion and Analysis

Pledge of assets

As at 31 December 2020, properties and plants with a book value of RMB1,581,525 thousand (31 December 2019: RMB1,384,412 thousand) were pledged to secure bank borrowings.
As at 31 December 2020, construction in progress with a book value of RMB68,537 thousand (31 December 2019: RMB69,235 thousand) were pledged to secure bank borrowings.
As at 31 December 2020, the land use right with a book value of RMB147,315 thousand (31 December 2019: RMB142,842 thousand) were pledged to secure bank borrowings; the amortization amount of the land use right in 2020 was RMB3,285 thousand (31 December 2019: RMB3,201 thousand).

Freeze of assets

Due to the Group's involvement in litigation and arbitration cases, certain bank accounts of the Group and the Company's equity interest in some of its subsidiaries have been frozen, and certain real properties of the Group have been seized. The latest situation is as follows:

As at 28 April 2021, the total number of frozen bank accounts of the Group was 106; the aggregate value of the frozen amounts was approximately RMB166 million.
As at 28 April 2021, due to the Group's involvement in litigation cases, the Company's equity interest in 16 of its subsidiaries have been frozen; the aggregate value of the execution amounts was approximately RMB536 million.
As at 28 April 2021, due to the Group's involvement in 21 litigation cases related to such disputes as financial loan disputes and construction agreement disputes, 4 real properties of the Group (with a total book value of RMB1.74 billion as at 31 March 2021) have been seized.

F o r d e t a i l s, p l e a s e r e f e r t o t h e o v e r s e a s r e g u l a t o r y announcement of the Company dated 28 April 2021 and the announcement of the Company dated 29 April 2021.

Total equity attributable to shareholders of the Company

As at 31 December 2020, total equity attributable to shareholders of the Company was RMB(609.3) million (as at 31 December 2019: RMB1,240.4 million).

Contingent liabilities

In May 2019, the Company pledged 100% of its equity interest in a former wholly-owned subsidiary LaCha Fashion I Limited ("LaCha Fashion I"), 100% of its equity interest in LaCha Apparel II Sàrl ("LaCha Apparel II"), and 100% of its equity interest in Naf Naf SAS to HTI Advisory Company Limited for a loan of EUR37.4million to fund the consideration for acquiring 60% equity interest in Naf Naf SAS. The Company accepted joint and several liability for the loan. Subsequently, due to the Company's liquidity difficulties and the deterioration of Naf Naf SAS's operating conditions, the Company failed to repay the loan on time.

On 25 February 2020, HTI Advisory Company Limited took over LaCha Fashion I. As a result, the Company was unable to control or exert any influence on it, and therefore lost actual control of it, thereby also losing control over LaCha Fashion I's subsidiaries, i.e. APPAREL I, APPAREL II and Naf Naf SAS. HTI Advisory Company Limited has commenced proceedings in order that the Company and its subsidiaries be ordered to be jointly and severally liable for the repayment of the loan. This dispute is still under legal proceedings. For details, please refer to the Company's announcement dated 25 September 2020.

As the Company may be jointly and severally liable for repayment of the loan, an estimated liability of RMB345.6 million was accrued.

Annual Report 2020

Management Discussion and Analysis

Human Resources

As at 31 December 2020, the Group had 2,354 full-time employees in total (31 December 2019: 15,354). The Group offers competitive compensation package for its employees, including statutory social insurance, housing fund, holiday benefits and other benefits, etc. Meanwhile, the Group is dedicated to building itself a learning organization by emphasizing employee training, individual development and team spirit.

Significant investments held

Please refer to notes VI(9) and VI(10) to the consolidated financial statements of the Group for the year ended 31 December 2020 for details of the investments held by the Group.

BUSINESS REVIEW

Retail Network

For the year ended 31 December 2020, the number of domestic retail outlets of the Group was 959, decreasing from 4,878 as at 31 December 2019, which were situated at approximately 339 physical locations. In addition, as Naf Naf SAS was no longer included in the consolidated financial statements, as at the end of the Reporting Period, the number of overseas retail outlets decreased by 586. The number of retail points was counted on the basis used for that as at 31 December 2015.

The table below sets out the distribution of the Group's retail points as at 31 December 2020 and as at 31 December 2019 by tier of cities in the PRC and in overseas region:

		As at 31 December
	2020		2019
	Number of	Percentage	Number of	Percentage
	retail points	of total	retail points	of total
		(%)		(%)
First-tier cities	50	5.2	443	8.1
Second-tier cities	408	42.5	1,909	34.9
Third-tier cities	204	21.3	1,296	23.8
Other cities	297	31	1,230	22.5
Overseas region	0	0	586	10.7
Total	959	100	5,464	100

Note:

In respect of the classification of the tier of cities, please refer to the Prospectus.
Overseas region refers to the stores of Naf Naf SAS, a former wholly-owned subsidiary of the Group, which has no longer been included in the Group's consolidated financial statements.

Xinjiang La Chapelle Fashion Co., Ltd.

Management Discussion and Analysis

The table below sets out the distribution of the Group's retail points in the PRC as at 31 December 2020 and as at 31 December

2019 by type of the retail points:

		As at 31 December
	2020		2019
	Number of	Percentage	Number of	Percentage
	retail points	of total	retail points	of total
		(%)		(%)
Concessionaire counters	561	58.5	2,584	47.3
Standalone retail outlets	331	34.5	2,123	38.8
Franchise/Associate	67	7.0	757	13.9
Total	959	100	5,464	100

The table below sets out the distribution of the Group's retail points in the PRC as at 31 December 2020 and as at 31 December

2019 by brands:

		As at 31 December
	2020		2019
	Number of	Percentage	Number of	Percentage
	retail points	of total	retail points	of total
		(%)		(%)
La Chapelle	253	26.3	1,204	22.1
Puella	202	21.1	1,033	18.9
7 Modifier	176	18.4	958	17.5
La Babité	154	16.1	767	14.0
Candie's	142	14.8	593	10.9
Menswear	21	2.2	216	4.0
8ém	5	0.5	94	1.7
Naf Naf SAS	0	0	586	10.7
Other brands	6	0.6	13	0.2
Total	959	100	5,464	100

Note:

The number of stores of the Company is calculated based on the number of outlets, that is, if multiple brands are included in the same collection store, the collection store is counted as multiple terminal outlets. During the Reporting Period, the Company continued conducting a comprehensive evaluation of stores in the terminal channel and further closed some loss-making and inefficient stores.
Other brands refer to those invested by the Company.

Annual Report 2020

Management Discussion and Analysis

The table below sets out the distribution of the Group's net additional retail points in the PRC in as at 31 December 2020 and as at 31 December 2019 by brands:

		For the year ended 31 December
	2020		2019
	Number of		Number of
	Net retail	Percentage	retail points	Percentage
	points closure	of total	points closure	of total
		(%)		(%)
La Chapelle	951	24.2	762	17.4
Puella	831	21.2	874	19.9
7 Modifier	782	20.0	772	17.6
La Babité	613	15.6	773	17.6
Candie's	451	11.5	334	7.6
Menswear	195	5.0	499	11.4
8ém	89	2.3	180	4.1
Other brands	7	0.2	197	4.5
Total	3,919	100	4,391	100

The above figures only represent the Group's total number of retail points in the PRC and do not include retail points overseas because Naf Naf SAS is no longer included in the Group's consolidated financial statements, resulting in a decrease in retail points by 586.

Same store sales

Same store sales of retail shops in 2020 decreased by 58.5%, compared to that of 2019, mainly due to the adverse impact on the fashion industry, particularly retail outlets, caused by the COVID-19 pandemic, and the Company's policy to increase sales of inventories.

Xinjiang La Chapelle Fashion Co., Ltd.

Management Discussion and Analysis

FUTURE OUTLOOK

Affected by factors such as the lack of a strategic focus and overly rapid expansion in the early stage, an unbalanced cost structure and changes in the industry environment, the Company is currently suffering operating losses and has a tight cash flow. The Company will mainly adopt the following countermeasures in response to the present problems:

1. The Company will adjust its current business strategy and development direction. On the one hand, the Company will focus on enhancing the management of its high-quality stores, adhere to the policy of "direct store management from the headquarters and management responsibility towards every employee", and strive to improve store efficiency, personnel efficiency and single store profitability. On the other hand, the Company will continue to make efforts in expanding the promotion of its licensing business, and to realize the transition of the Company to a business model featuring light assets, high gross profit and quick turnover. In the fourth quarter of 2020, the Company realized revenue of approximately RMB19.18 million through its online (non-main-brand) licensing business. In the future, the Company will further explore its online licensing business's coverage of brands, categories and platform channels, and utilize the advantages of an "asset-light" business model to improve the asset turnover and profitability of the Company.

The Company will "remove its heavy burden and move forward with light gear" as soon as possible. The Company will seek to lease or sell its existing low- efficiency property assets (including park properties at the headquarters and warehousing and logistics assets), and strive to sell them at the maximum premium. Through disposing assets not suitable to its strategy, the Company aims to recover funds to improve its liquidity and asset structure, in order to provide financial support for the development of its core business.
The Company will inspect its existing inventories and adopt measures such as identification by price, quality screening, bundling and matching channels, to encourage all regions and partners to facilitate the disposal of the inventories of the Company in accordance with a unified policy, which can effectively reduce the inventory level of old products and accelerate the return of funds to the Company. Meanwhile, the Company will also actively develop new products to enhance its performance and image.
T h e C o m p a n y w i l l f u r t h e r a d j u s t a n d o p t i m i z e its management system, improve overall budget management and cost control, and strictly adopt measures that "reduce costs and enhance efficiency". In 2021, the Company will attach greater importance to the preparation, control and implementation of its overall budgets, strengthen cost control from the source, strictly control various costs and expenditures, conduct input-output analyses on major costs, perform closed-loop management of key expenses, and conduct dynamic monitoring and process supervision on overall budgets, in order to maximize the profitability of its primary business.

Annual Report 2020

Management Discussion and Analysis

Regarding the debt problems faced by the Company at this stage, the Company, being responsible to all shareholders and creditors, will actively negotiate with the relevant courts, creditors and financial institutions to seek a centralized solution to debt settlement, i n c l u d i n g b u t n o t l i m i t e d t o d e b t e x t e n s i o n s, exemptions, discounts and settlements as soon as possible, in order to alleviate the debt pressure of the Company and help the Company return to a positive development track. As of the date of this announcement, the Company still has frozen cash at banks in the amount of approximately RMB166 million (nominal value). The Company will propose a feasible plan for debt repayment, in order to combine the benefits of the reduction in operating burden and debt reorganization, thus further optimizing the asset-liability structure of the Company.
Apart from taking measures to overcome difficulties, the Company also aims to restore and improve its credit and financing capabilities through actively seeking new investors, obtaining external financing, leveraging the resources and advantages of substantial shareholders in various aspects such as entrusted financing, financial strength, and professional capabilities, optimizing and reorganizing its overall business as well as seeking further funds.

Xinjiang La Chapelle Fashion Co., Ltd.

Profiles of Directors, Supervisors and Senior Management

DIRECTORS OF THE FOURTH SESSION OF THE BOARD

EXECUTIVE DIRECTORS

Mr. Wu Jinying (吳金應), aged 48, is an executive director of the Company (appointed since 22 February 2021). He has been the Director and Chairman of the Company, the chairman of the Strategy and Development Committee, and a member of the Budget Committee since 22 January 2021. Mr. Wu was a shareholder representative Supervisor from 8 May 2020 to 22 February 2021 and an employee representative Supervisor of the Company from 8 November 2015 to 8 May 2020. Mr. Wu graduated from senior high school in 1995. Mr. Wu currently serves as senior technical manager (software development) of the IT department of the Company and has done so since 1 May 2015. Mr. Wu has served as a system analyst, system R&D manager in the IT department, senior technical manager (software development) of the company since March 2001.

Ms. Zhang Ying (張瑩), aged 42, is the Company's executive director of the Company (with effect from 11 January 2021), the president of the Company (with effect from 9 December 2020), the chairman of the Budget Committee of the Company (with effect from 22 February 2021), a member of the Strategy and Development Committee of the Company (with effect from 22 February 2021), a member of Audit Committee of the Company (with effect from 11 January 2021) and a member of Nomination Committee of the Company (with effect from 22 February 2021). She was the chairman of the Board, the chairman of the Nomination Committee, the chairman of the Strategy and Development Committee and a member of the Budget Committee of the Company from 11 January 2021 to 22 February 2021.

She holds a Bachelor's degree in fashion design from Tianjin Polytechnic University and is now undertaking an EMBA degree at Xiamen University. Since 2003, she has worked as a designer, associate supervisor, a supervisor of brands, general manager of brand department, general manager of business unit, vice president, and president of the Company.

Ms. Zhang Danling (章丹玲), a g e d 43, h a s b e e n a n executive Director and a member of the Budget Committee and Strategy and Development Committee of the Company since 8 May 2020. She is the president of the marketing department. Ms. Zhang has been working as a design supervisor, a general manager of the brand management centre, a general manager of the brands department and a general manager of business department, the co-founder of the Company in the Group since March 2001. She also served as a Director of the Company from May 2011 to November 2012. Ms. Zhang was the president of the Company from 4 November 2020 to 9 December 2020. Ms. Zhang obtained an EMBA degree from Shanghai Jiao Tong University in December 2015.

NON-EXECUTIVE DIRECTORS

Mr. Yin Xinzai (尹新仔), aged 50, is a non-executive Director of the Company (with effect from 14 August 2020), a member of the Budget Committee of the Company (with effect from 22 February 2021), a member each of the Remuneration and Appraisal Committee and Strategy and Development Committee of the Company (with effect from 8 May 2020). He was the chairman of the Budget Committee from 8 May 2020 to 22 February 2021. He was the president of the Company from 20 April 2020 to 14 August 2020 and an executive Director from 8 May 2020 to 14 August 2020. Prior to joining the Company, Mr. Yin worked at Joeone Co., Ltd.* (九牧王股份有限公司) from September 1998 to June 2012 and at Hangzhou Jiuxuan Fashion Co., Ltd.* (杭州九軒服飾有限公司) from June 2012 to May 2013. Mr. Yin served as general manager of the sales and marketing department, executive vice president, senior vice president and president of the Company from August 2013 to August 2020. Mr. Yin obtained an EMBA degree from the Xiamen University in June 2018.

Annual Report 2020

Profiles of Directors, Supervisors and Senior Management

INDEPENDENT NON-EXECUTIVE

DIRECTORS

M r . X i n g J i a n g z e ( 邢江澤) , a g e d 54, h a s b e e n a n independent non-executiveDirector, the chairman of the Audit Committee and Remuneration and Appraisal Committee and a member of the Budget Committee and Nomination Committee of the Company since 8 May 2020.

Mr. Xing Jiangze is a certified public accountant, certified tax agent and senior accountant in China. He has a practicing certificate for Asset Management Association of China and has nearly 30 years' experience in finance, accounting and auditing. From January 1992 to November 1998, he served as a director and financial manager of Lingbao Wuhua Fuel Co., Ltd.* (靈寶物華燃料有限公司). From December 1998 to January 2000, he served as a chief accountant of Henan Lingye Group Co., Ltd.* (河南淩冶集團有限公司). From February 2000 to November 2002, he served as a project manager and a manager of the first auditing division of Henan Zhengyong Accounting Firm* (河南正永會計師事務所). From November 2002 to April 2007, he served as a financial director of Lingbao Shuangxin Mining Co., Ltd.* (靈寶雙鑫礦業有限公司). From April 2007 to June 2018, he served as a deputy financial director and manager of the finance department, financial director, investment director, secretary of the board, deputy general manager and executive director of Lingbao Gold Group Company Ltd. (stock code: 03330). He has been serving as a vice chairman, secretary of the board and senior executive vice president of Lingbao Gold Group Company Ltd. since June 2018.

Mr. Xing Jiangze graduated from Henan Radio and Television University with a college diploma in accounting in July 1988. Mr. Xing Jiangze attended the PLA Information Engineering University from September 2006 to June 2009 for computer science and technology, and obtained a bachelor's degree in engineering.

Ms. Wong Sze Wing (黃斯穎), aged 42, has been the Company's independent non-executive director, a member each of the Strategy and Development Committee, the audit committee and the budget committee of the Company since 11 January 2021. She holds a Bachelor of Business Administration from the University of Hong Kong. She received her EMBA from China Europe International Business School (中歐國際商學院), and holds qualification certificate of independent director from Shenzhen Stock Exchange. Ms. Wong has been the chief financial officer of Yingde Gases Group Company Limited (盈德氣體集團有限公司) from July 2008 to present.

Ms. Wong served as an audit manager at PricewaterhouseCoopers from January 2001 to January 2006, and served as the chief financial officer of Orange Sky Entertainment Group (International) Holdings Limited (橙天娛樂集團（國際）控股有限公司) from January 2007 to April 2008. Ms. Wong has served as independent non-executive director for Orange Sky Golden Harvest Entertainment (Holdings) Limited (橙天嘉禾娛樂（集團）有限公司) (a company listed on the Hong Kong Stock Exchange with stock code 1132) from April 2010 to present, as independent non-executive director for Rici Healthcare Holdings Limited (瑞慈醫療服務控股有限公司) (a company listed on the Hong Kong Stock Exchange with stock code 1526) from June 2016 to present, as independent non-executive director for Wangsu Science & Technology Co., Ltd. (網宿科技股份有限公司) (a company listed on the Shanghai Stock Exchange with stock code 300017) from April 2017 to present, and as independent non-executive director for Ganfeng Lithium Co., Ltd. (江西贛鋒鋰業股份有限公司) (a company listed on the Hong Kong Stock Exchange with stock code 1772) from July 2018 to present.

Xinjiang La Chapelle Fashion Co., Ltd.

Profiles of Directors, Supervisors and Senior Management

Mr. Zhu Xiaozhe (朱曉喆), aged 46, is an independent non-executive Director, a member of the Remuneration and Appraisal Committee and Strategy and Development Committee of the Company (with effect from 8 May 2020) and the chairman of the Nomination Committee (with effect from 22 February 2021). He was a member of the Nomination Committee from 8 May 2020 to 22 February 2021. He has a doctoral degree of History of Law in the East China University of Political Science and is a professor of the School of Law in Shanghai University of Finance and Economics.

Mr. Zhu was an associate professor and a master's degree candidate advisor at the Civil and Commercial Law Research Institute in East China University of Political Science and Law from September 2005 to January 2014. He has been a professor and a doctoral degree candidate supervisor of the School of Law in Shanghai University of Finance and Economics since January 2014. He also served as a council member of the Civil Law Research Institute of China Law Association from July 2014 to July 2017. He has served as the director of the Trust Law Research Institute of Shanghai University of Finance and Economics since January 2017, an executive council member of the Civil Law Research Institute of China Law Association since 2017, an arbitrator of the Shanghai Arbitration Commission since June 2018, a legal consultant of the Chinese Communist Party's Baoshan District Committee of Shanghai and a legal consultant of the Education Development Fund of Shanghai University of Finance and Economics since January 2018, a consultant of the Shanghai Judicial Think Tank Association since June 2018, the vice president of the Civil Law Research Institute of Shanghai Law Association since December 2019, an independent director of Anhui Jiaxian Functional Additives Co., Ltd. since March 2020, an independent-director of Hangzhou Bioer Technology Co,. Ltd since September 2020, and an independent-director of Horizon Holdings Group Inc since January 2021.

SUPERVISORS OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE

Mr. Ma Yuanbin (馬元斌), aged 39, is the chairman of the Supervisory Committee (appointed since 8 May 2020), the head of administration department and human resources department, assistant to president and a chairman of the labour union of the Company. Mr. Ma was a manager of the management department of Shanghai Zhenliu Property Management Co., Ltd. (上海震六物業管理有限公司) from April 2004 to March 2012 and a deputy head of administration department of Shanghai Semir Garment Co., Ltd. (上海森馬服飾有限公司) from March 2012 to July 2018. He has been a director of administration department and assistant to president of the Company since July 2018 and a chairman of the labour union of the Company since April 2020. Mr. Ma obtained a bachelor degree in business administration from Shanghai Jiao Tong University in June 2018.

Mr. Sun Bin (孫斌), a g e d 40, h a s b e e n a n e m p l o y e e representative Supervisor since 15 January 2021. Mr. Sun obtained a diploma in administration and management from Shanghai Normal University in March 2006. Mr. Sun Bin served as an executive officer of Shanghai Datun Energy Company Limited (上海大屯能源股份有限公司) (a company listed on the Shanghai Stock Exchange (stock code:600508)) from December 2000 to December 2010 and has served as an executive officer of the Company since December 2010.

M r. G u Z h e n g u a n g ( 顧振光), a g e d 40, h a s b e e n a shareholder representative Supervisor since 22 February 2021. Mr. Gu obtained a diploma in financial accounting from the Shanghai Open University in March 2008. Mr. Gu currently serves as a director of the accounting management department of the Company. Mr. Gu has served as a financial commissioner, financial supervisor, financial manager, and senior financial manager, director of the accounting management department of the Company since November 2003.

Annual Report 2020

Profiles of Directors, Supervisors and Senior Management

CURRENT SENIOR MANAGEMENT

Mr. Hu Zhiguo (虎治國), aged 38, has been the chief financial officer of the Company since 30 March 2020. Mr. Hu served as an accountant of cost of Dayu Jieshui Group Company Limited (大禹節水集團股份有限公司) from July 2008 to May 2010. He also served various positions, including as general ledger accountant of the finance department manager of accounting and auditing department and deputy head of the finance department, at Zhejiang Semir Garment Co., Ltd. (浙江森馬服飾股份有限公司) from June 2010 to April 2017. He joined the Company in April 2017 and served as the financial director at the regional finance management department, as general manager of the finance department and as the chief financial officer of the Company. Mr. Hu obtained a bachelor's degree in financial management from Gansu University of Political Science & Law (甘肅政法大學) in June 2008.

RESIGNED DIRECTORS

Mr. Duan Xuefeng (段學鋒), aged 41, has been an executive director of Zhongke Tongrong Investment Fund Management (Beijing) Company Limited (中科通融投資基金管理（北京）有限公司) since August 2013, a director and a manager of Beijing Beikuang Metallurgy Materials Technology Company Limited (北京北礦冶金工程技術有限公司) since May 2018, the president and the general manager of Mai Erfu Apparel Holdings Limited (邁爾富時尚服飾股份有限公司) since June 2019, and a director of Xinjiang Hengding Textile International Trading Company Limited (新疆恒鼎棉紡織國際貿易有限公司) since March 2020. He previously served as an associate general manager of Guoxin International Guarantee Company Limited (國信國際擔保有限公司) from September 2004 to December 2010, and as an executive director and general manager of Guangda Equity Investment Fund Management (Tianjin) Company Limited (光大股權投資基金管理（天津）有限責任公司) from June 2011 to July 2013.

Mr. Duan Xuefeng is a senior economist, and obtained a bachelor's degree in marketing from Zhengzhou University in June 2003 and a doctorate degree in Business administration from University of East London in June 2013.

Ms. Zhang Yujing (張妤菁), aged 36, was a consultant at Deloitte Consulting (Shanghai) Co., Ltd. from July 2011 to January 2013, and a senior consultant at KPMG Advisory (China) Limited from October 2014 to March 2017. She has been the chief risk officer of Xinjiang Great Western Growth Industry Investment Fund Management Co., Ltd. (新疆大西部成長產業投資基金管理有限公司) since March 2017.

Ms. Zhang Yujing obtained a bachelor's degree in finance, accounting and management from the University of Nottingham in the United Kingdom in July 2008, and a master's degree in finance and investment from the University of Bristol in the United Kingdom in February 2010. She is a chartered management accountant of the Chartered Institute of Management Accountants.

Xinjiang La Chapelle Fashion Co., Ltd.

Profiles of Directors, Supervisors and Senior Management

Ms. Xiao Yanming (肖艷明), aged 59, was an independent non-executive Director, a member of the Audit Committee and Strategy and Development Committee of the Company from 8 May 2020 to 1 January 2021.

She was a managing director of UBS Hong Kong Branch from 2010 to 2013. She has been serving as the chairlady and CEO of Hong Kong Cornucopiae Asset Management Limited since September 2013. She has been the non-executive director of Goldstone Investment Group Limited (a company listed on the Hong Kong Stock Exchange with stock code: 0901) from 18 August 2020 to 2 November 2020. She has been the executive director and chairman of the Board of Goldstone Investment Group Limited (a company listed on the Hong Kong Stock Exchange with stock code: 0901) since 2 November 2020. Ms. Xiao Yanming received a bachelor's degree in international law and international relations from China Foreign Affairs University in 1985, and a master's degree and a doctoral degree from Harvard University in 1999. She currently holds a Type 1, Type 4 and Type 9 license (as defined under the SFO) and is a responsible officer of the Securities and Futures Commission of Hong Kong.

RESIGNED SUPERVISORS

Mr. Shi Xiaofeng (施孝鋒), aged 40, was an employee representative Supervisor from 8 May 2020 to 15 January 2021. Mr. Shi was deputy general manager of women's wear department of Shanghai Metersbonwe Fashion & Accessories Co., Ltd. (上海美特斯邦威服飾股份有限公司) from June 2004 to January 2013. He has been director and deputy general manager of the supply chain management department, a general manager of the licensing business department and a general manager of the supply chain management department of the Company from February 2013 to January 2021. Mr. Shi obtained a bachelor degree in engineering from Zhejiang University of Technology in June 2004.

COMPANY SECRETARY

Ms. Wong Wai Ling (黃慧玲), is the Company's Company Secretary. She is also a vice president of SWCS Corporate Services Group (Hong Kong) Limited (formerly known as SW Corporate Services Group Limited) and is responsible for assisting listed companies in professional company secretarial work. Prior to joining SWCS Corporate Services Group (Hong Kong) Limited, she worked in a corporate service provider and the company secretarial department of an international accounting firm. She has been awarded a Bachelor of Arts degree in Marketing and Public Relations from The Hong Kong Polytechnic University and Master of Corporate Governance degree from The Open University of Hong Kong, and is Associate of the Hong Kong Institute of Chartered Secretaries and The Institute of Chartered Secretaries and Administrators in the United Kingdom. She has approximately 14 years of experience in providing company secretarial services.

Annual Report 2020

Directors' Report

The Board is pleased to present this report and the audited consolidated results of the Company and the Group for the year ended 31 December 2020.

PRINCIPAL ACTIVITIES

The Group designs, markets and sells apparel products with a focus on mass-market ladies' casual wear in the PRC. Principal activities and other particulars of the Company's subsidiaries are set out in note VIII of the consolidated financial statements.

BUSINESS REVIEW

The business review for the year and discussions on the future business development of the Group together with the description of the possible risks and uncertainties of the Group are contained in the section headed "Management Discussion and Analysis" on pages 13 to 25 of this report. The descriptions of the financial risk management of the Group are set out in note Ⅸ to the consolidated financial statements. Five-year financial summary of the Group is set out on page 7 of this report in which the annual performance of the Group is analyzed by means of the critical financial performance indicators. In addition, the compliance of related laws and regulations which have significant impacts on the Group is set out on page 48 of this report.

FINANCIAL STATEMENTS

The profit of the Group for the year ended 31 December 2020 and the Company's and the Group's financial position as at that date are set out in the consolidated financial statements of this report.

A discussion and analysis of the Group's performance during the year and material factors underlying its results and financial position are set out in the section headed "Management Discussion and Analysis" of this report.

In 2017, the Ministry of Finance ('MOF') released the revised 'Accounting Standards for Business Enterprises No.14 - Revenue' ('New Revenue Standards') and revised 'Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments',

'Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Instruments', 'Accounting Standards for Business Enterprises No. 37 - Disclosure of Financial Instruments' (hereinafter collectively referred to as 'New Financial Instruments Standards'). In 2018, MOF released 'Circular on Amendments to Formats of Financial Statements of General Industry' (Cai Kuai [2018] No. 15) (hereinafter referred to as "New Financial Statements Form").

To better reflect the operating result and financial position of the Group, the consolidated financial statements have been prepared in accordance with the above new standards since 1 January 2018.

The Group pays concessionaire fees to department stores and online platform for the right to occupy and use concessionaire c o u n t e r s p u r s u a n t t o c o n c e s s i o n a i r e a g r e e m e n t s. A concessionaire fee with respect to a concessionaire counter and the online platform is typically calculated as a percentage of the Group's monthly sales made at the concessionaire counter and is deducted by the department store before it transfers the payments from sales of products to the Group. Under the old revenue standards, revenue was recognized on a net basis, that is, the concessionaire fees were recorded as

deduction to revenue ("Net Revenue Method"). Regarding the accounting records of trustor, the New Revenue Standards are net of revenue. The New Revenue Standards introduced more clear rules on accounting judgement over principal versus agency relationship. According to the New Revenue Standards, the Group should consider whether it owns the products and takes the inventory risk before transfer of the products to the end customers when determining the Group is acting as agent or principal. The Group controls the products before sales to the end customers. The sales staff in the concessionaire counters are the Group's employees, who take charge of products promotion and end customers services. The Group is the primary obligor in the transfer of products to consumers. The Group is responsible for storage and display of the products and bearing the products return risk. Hence, the Group bears the inventory risks before and after the transfer of products. The Group has the right to determine the selling price, even in certain promotion events organized by the department stores or online platform. The department stores or the online platform charges concessionaire fees to the

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

Group which is calculated at certain fixed percentage of the gross sales amount. As such, management is in the opinion that the Group's customers are the end customers rather than the department stores or online platform. The Group is acting as a principal in the concessionaire arrangement. Accordingly, the Group should recognize revenue based on the gross amount of the sales transaction after adoption of the New Revenue Standards ('Gross Revenue Method'). The concessionaires fees are recorded as selling and distribution expenses.

The Ministry of Finance issued the revised "Accounting Standard for Business Enterprises No. 21-Leases" in 2018 (the "New Lease Standard") and promulgated "Notice of Modification of the Financial Statement Format for General Business Enterprises in 2019" (Cai Kuai [2019] No. 6) in 2019.

To better reflect the operating result and financial position of the Group, the consolidated financial statements have been prepared in accordance with the above new standards since 1 January 2019.

For adoption of other new accounting standards as mentioned above, there were changes in the reclassifications and restatements on certain balance sheet accounts in 2018 and 2019, and no impact on the net profit of the Group.

RESERVES

Details of movements in the reserves of the Company and the Group during the year ended 31 December 2020 are set out in note Ⅵ(35) to the consolidated financial statements.

SHARE CAPITAL

Details of movements of the share capital of the Company are set out in note Ⅵ(34) to the consolidated financial statements.

FINAL DIVIDENDS

As the distributable profit of the Company as at the end of 2020 was negative, pursuant to the requirements of the Articles of Association and taking into consideration the Company's current actual operation and development conditions and for securing the need of cash for future development, the Board of Directors recommended no payment of cash dividends or stock dividends and no transfer from capital surplus to share capital or other form of distribution for the year ended 31 December 2020.

DIVIDEND POLICY

The Company adopts continuous and stable profit distribution policies, aiming to bring reasonable returns to investors while ensuring the sustainable development of the Company and establishing a continuous and stable distribution mechanism based on the profitability and actual needs arising from the future development strategy of the Company. Specific details of the dividend distribution plan are as follow:

Profit distribution shall not exceed the accumulated distributable profit of the Company and shall not adversely affect the subsequent continuing operation of the Company;
The Company may distribute profits in cash, shares and/ or by a combination of cash and shares or otherwise as permitted by laws and regulations. However, where the conditions for cash dividend are satisfied, profit distribution in the form of cash dividend shall take priority;
Where the Company intends to implement cash dividend distribution, all the following conditions shall be satisfied:
1. the distributable profit (i.e. after-tax profit after making up for losses and making appropriation to the statutory reserve fund) of the Company for the year is positive;

Annual Report 2020

Directors' Report

1. the auditing firm issued a standard audit report with unqualified opinions on the financial report for the year.
W h e n t h e a b o v e c o n d i t i o n s f o r c a s h d i v i d e n d distribution are satisfied, the Company will actively distribute profits in the form of cash dividends once per year in principle. The Board may also propose distributing interim cash dividends after taking into account the profitability and capital demand of the Company;
The Company shall maintain the continuity and stability of its profit distribution policies. The total profit to be distributed in cash shall not be less than twenty percent (20%) of the distributable profit realised in such year. The Board shall comprehensively consider factors such as the characteristics of the industry in which the Company operates, the stage of development, operation model and profitability of the Company and whether there is any arrangement for significant capital expenditure to differentiate between the following situations, and put forward differentiated policies for cash dividend distribution according to the procedures stipulated in the Articles of Associations:
1. cash dividend distribution should at least account for 80% of the profit distribution if the Company reaches a mature stage in its development and there is no arrangement for significant capital expenditure;
2. cash dividend distribution should at least account for 40% of the profit distribution if the Company reaches a mature stage in its development and there is an arrangement for significant capital expenditure;

cash dividend distribution should at least account for 20% of the profit distribution if the Company is in a stage of growth and there is an arrangement for significant capital expenditure; the stipulations in the preceding paragraph shall prevail if it is difficult to differentiate the stages of development of the Company.

If the profit of the company grows substantially and the Board is of the opinion that there is a mismatch between the share price of the Company and the scale of its share capital, a preliminary dividend distribution plan may also be proposed and implemented after satisfying the above cash dividend distribution.

If the Board does not put forth a cash dividend distribution plan, the reasons shall be disclosed in the annual report and independent Directors shall express independent opinions thereon;
If there is misappropriation of funds of the Company by a Shareholder in violation of regulations, the Company has the right to deduct that Shareholder's cash dividend during profit distribution to reimburse the misappropriated funds.

CLOSURE OF REGISTER OF MEMBERS FOR H SHARES

On 10 June 2021, the Company will hold the 2020 AGM for the purposes of considering and, if thought fit, passing the resolutions listed in the notice of the 2020 AGM. The Company will publish the circular and notice of the 2020 AGM as and when appropriate.

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

In order to determine the H shareholders who are entitled to attend the 2020 AGM, the register of members of the Company for H shares will be closed from 7 June 2021 to 10 June 2021 (both days inclusive), during which period no transfer of H shares of the Company can be registered. In order to be qualified to attend and vote at the 2020 AGM, all transfer documents accompanied by the relevant share certificate(s) must be lodged with the Company's H Shares Registrar, Computershare Hong Kong Investor Services Limited, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong for registration not later than 4:30 p.m. on 4 June 2021.

H Shareholders whose names appear on the register of members of the Company at the close of business on 4 June 2021 are entitled to attend and vote at the 2020 AGM. Please refer to the A Share announcement published on the Shanghai Stock Exchange for the information for A Shareholders who are entitled to attend the 2020 AGM.

FIXED ASSETS

Details of the fixed assets of the Group are set out in note VI(12) to the consolidated financial statements.

BANK LOANS AND BORROWINGS

Details of the bank loans and borrowings of the Group as at 31 December 2020 are set out in note VI(21) to the consolidated financial statements.

DONATIONS

As a corporate citizen, the Company is driven by its wish to create maximum value for the community where its operation is located and participated in social welfare activities. In the last decade, the Group has made frequent donations of clothing and funds to the vulnerable groups through organisations such as the Foundation for Disabled People's Welfare and local Red Cross societies. During the Reporting Period, the Group made donation of approximately RMB1,488 thousand.

SUFFICIENCY OF PUBLIC FLOAT

As at the latest practicable date before printing this report, the Directors confirmed that based on information that is publicly available to the Company and within the knowledge of the Directors, the Company had maintained sufficient amount of public float as required under the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the "Listing Rules").

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES

For the year ended 31 December 2020, the Company repurchased 1,691,400 A shares of the Company on the Shanghai Stock Exchange for a total consideration of RMB9,844,599 (before transaction cost).

Details of the repurchase of A shares by the Company are as follows:

		Highest	Lowest	Total amount
Month of	Number of shares	price per share	price per share	of repurchase
repurchase	repurchased	(RMB)	(RMB)	(RMB)
January 2020	1,691,400 A shares	5.99	5.70	9,844,599

Such shares have not been cancelled completely during the year 2020.

Annual Report 2020

Directors' Report

According to the A share repurchase mandate of the Company, the repurchase of shares shall be for the purpose of providing safeguard to the value of the Company and the rights and interests of the Shareholders and for the purpose of equity incentive granted to specified persons and employee shareholding scheme. Please refer to the circulars dated 30 August 2019 and 3 April 2020 of the Company for details of the A share repurchase mandate.

The proposal in relation to the termination of the A share repurchase mandate had been approved by the shareholders at EGM on 21 October 2020.

Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities for the year ended 31 December 2020.

PRE-EMPTIVE RIGHTS

Pursuant to the Articles of Association and the laws of the PRC, the Company is not subject to any pre-emptive rights requiring it to propose new issues to its existing shareholders in proportion to their shareholdings.

DIRECTORS AND SUPERVISORS

The Directors during the year ended 31 December 2020 and as of the date of this report are as follows:

			Date of	Date of
		Roles and	appointment	joining
Name	Position	responsibilities	as Director	the Group
Mr. Wu Jinying (吳金應)	Chairman and Executive Director	Board management, strategic planning and	22	February 2021	March 2001
		decision making
Ms. Zhang Ying (張瑩)	President and Executive Director	Overall management of the Group, strategic	11	January 2021	March 2003
		planning and decision making
Ms. Zhang Danling (章丹玲)	Executive Director	Design and branding management	8	May 2020	March 2001
Mr. Yin Xinzai (尹新仔)1	Non-executive Director	As a non-executive Director	8	May 2020	August 2013
Mr. Xing Jiangze (邢江澤)	Independent non-executive Director	As an Independent non-executive Director	8	May 2020	May 2020
Ms. Wong Sze Wing(黃斯穎)	Independent non-executive Director	As an Independent non-executive Director	11	January 2021	January 2021
Mr. Zhu Xiaozhe (朱曉吉吉)	Independent non-executive Director	As an Independent non-executive Director	8	May 2020	May 2020
Mr. Xing Jiaxing (邢加興)2	Chairman and executive Director	Overall management of the Group, strategic	9	May 2011	March 2001
	(resigned)	planning and decision making
Mr. Yu Qiang (于強)3	Executive Director and president	Accounting, investment business and	5	February 2018	May 2016
	(resigned)	strategic planning
Mr. Lu Weiming (陸衛明)4	Non-executive Director (retired)	As a non-executive Director	9	May 2011	January 2008
Mr. Luo Bin (羅斌)5	Non-executive Director (retired)	As a non-executive Director	5	May 2015	May 2015
Mr. Wang Wenke (王文克)6	Non-executive Director (retired)	As a non-executive Director	18	December 2019	February 2015
Mr. Chan, Wing Yuen Hurbert	Independent non-executive Director	As an independent non-executive Director	25	July 2016	July 2016
(陳永源)7	(retired)
Mr. Zhang Zeping (張澤平)8	Independent non-executive Director	As an independent non-executive Director	12	May 2017	May 2017
	(retired)
Mr. Rui Peng (芮鵬)9	Independent non-executive Director	As an independent non-executive Director	16	October 2019	October 2019
	(retired)
Mr. Duan Xuefeng (段學鋒)10	Chairman and non-executive Director	Board management, strategic planning and	8	May 2020	May 2020
	(resigned)	decision making
Ms. Zhang Yujing (張妤菁)11	Non-executive Director (resigned)	As a non-executive Director	8	May 2020	May 2020
Ms. Xiao Yanming (肖艷明)12	Independent non-executive	As an independent non-executive Director	8	May 2020	May 2020
	Director(resigned)

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

Mr. Yin Xinzai resigned as a president with effect from 14 August 2020 and has been re-designated from an executive Director to a non-executive Director.
Mr. Xing Jiaxing resigned as a president with effect from 29 October 2019, resigned as chairman and an executive Director with effect from 3 February 2020 and was reappointed as president with effect from 25 February 2020 and resigned as a president with effect from 20 April 2020.
Mr. Yu Qiang was appointed as president with effect from 29 October 2019 and resigned as an executive Director and a member of Strategy and Development Committee and as president with effect from 25 February 2020.
Mr. Lu Weiming was appointed as a non-executive Director, a member of Remuneration and Appraisal Committee, Budget Committee and Strategy and Development Committee and retired with effect from 8 May 2020.
Mr. Luo Bin was appointed as chairman of Budget Committee with effect from28 August 2019 and retired with effect from 8 May 2020.
Mr. Wang Wenke was appointed as a non-executive Director and a member of Budget Committee and Strategy and Development Committee with effect from 18 December 2019 and retired with effect from 8 May 2020.
M r . C h a n, W i n g Y u e n H u r b e r t w a s a p p o i n t e d a s a n independent non-executive Director, chairman of Nomination Committee, a member of Audit Committee and Budget Committee with effect from 25 July 2016, and was appointed as a member of Remuneration and Appraisal Committee with effect from 30 October 2018, and retired with effect from 8 May 2020.

Mr. Zhang Zeping was appointed as a non-executive Director, chairman of Remuneration and Appraisal Committee, and a member of Nomination Committee and Strategy and Development Committee with effect from 12 May 2017, and retired with effect from 8 May 2020.
Mr. Rui Peng was appointed as an independent non-executive Director, chairman of Audit Committee and a member of Nomination Committee, Remuneration and Appraisal Committee and Budget Committee with effect from 16 October 2019, and retired with effect from 8 May 2020.
Mr. Duan Xuefeng was appointed as chairman, a non- executive Director, chairman of Nomination Committee and Strategy and Development Committee and a member of Budget Committee with effect from 8 May 2020, and resigned with effect from 11 January 2021.
Ms. Zhang Yujing was appointed as a non-executive Director, a member of Audit Committee, Budget Committee and Strategy and Development Committee with effect from 8 May 2020, and resigned with effect from 11 January 2021.
Ms. Xiao Yanming was appointed as an independent non- executive Director, a member of Audit Committee and Strategy and Development Committee with effect from 8 May 2020, and resigned with effect from 11 January 2021.

Annual Report 2020

Directors' Report

The Supervisors during the year ended 31 December 2020 and as of the date of this report are as follows:

			Date of
		Roles and	appointment	Date of joining
Name	Position	responsibilities	as Supervisor	the Group
Mr. Ma Yuanbin (馬元斌)	Chairman of the Supervisory Committee and	Supervision of the Board and Senior	8 May 2020	July 2018
	assistant to president and chairman of labour	Management
	union
Mr. Sun Bin (孫斌)	Supervisor and executive officer	Supervision of the Board and Senior	15 January 2021	November 2010
		Management
Mr. Gu Zhenguang (顧振光)	Supervisor and director of the accounting	Supervision of the Board and Senior	22 February 2021	December 2003
	management department	Management
Mr. Shi Xiaofeng (施孝鋒)1	Supervisor (resigned) and a general manager	Supervision of the Board and Senior	8 May 2020	February 2013
	of the licensing business department and	Management
	a general manager of the supply chain
	management department
Mr. Wu Jinying (吳金應)2	Supervisor (resigned) and senior technical	Supervision of the Board and Senior	8 November 2015	March 2001
	manager (software development)	Management
Ms. Liu Mei (劉梅)3	Supervisor (retired) and general manager of	Supervision of the Board and Senior	18 December 2017	February 2008
	legal department	Management
Ms. Zhang Haiyun	Supervisor (retired) and assistant to president	Supervision of the Board and Senior	28 December 2018	March 2001
(張海雲)4	and general manager of infrastructure	Management
	engineering department

Mr. Shi Xiaofeng was appointed as a Supervisor of the fourth session of the Supervisory Committee on 8 May 2020 and resigned with effect from 15 January 2021.
Mr. Wu Jinying was appointed as Supervisor of the fourth session of the Supervisory Committee on 8 May 2020 and resigned with effect from 22 February 2021.
Ms. Liu Mei was elected as the chairperson of the third session of the Supervisory Committee on 11 January 2019 and retired on 8 May 2020.
Ms. Zhang Haiyun was appointed as Supervisor of the third session of the Supervisory Committee on 28 December 2020 and retired on 8 May 2020.

Biographical details of the Directors, Supervisors and senior management are set out in the section headed "Profiles of Directors, Supervisors and Senior Management" in this report.

CONFIRMATION OF INDEPENDENCE OF INDEPDENDENT NON-EXECUTIVE DIRECTORS

The Company has received from each of the independent non-executive Directors a written confirmation of his or her independence pursuant to Rule 3.13 of the Listing Rules. The Company considers all of the independent non-executive Directors to be independent in accordance with Rule 3.13 of the Listing Rules.

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS

Each Director has entered into a service contract with the Company while all Supervisors do not have a service contract with the Company. The terms of the Directors and Supervisors do not exceed three years and will expire upon conclusion of the general meeting at which members of a new session of the Board and Supervisory Committee are elected.

DIRECTORS' AND SUPERVISORS' INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS OF SIGNIFICANCE

None of the Directors or Supervisors, or any entity connected with the Directors or Supervisors, had a material interest, whether directly or indirectly, in any transaction, arrangement or contract of significance to which the Company or any of its subsidiaries was a party as of and during the year ended 31 December 2020.

DIRECTORS', SUPERVISORS AND CHIEF EXECUTIVES'S INTERSTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES OR DEBENTURES OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS

As at 31 December 2020, the interests and short positions of the Directors, Supervisors and the chief executives of the Company in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong) (the "SFO")) which were (i) required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Division 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such positions of the SFO); or (ii) recorded in the register required to be kept under section 352 of the SFO, or (iii) otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules (the "Model Code") were as follows:

Interests and short position in the shares of the Company

					Approximate
				Approximate	percentage
				percentage	shareholding in
				shareholding in	the total issued
Name of Director/	Nature of interest	Number of Shares	A Shares as at	Shares at
chief executive	and capacity		interested2	31 December 2020	31 December 2020
Mr. Xing Jiaxing1	Beneficial owner	141,874,425	A Shares (L)	42.62%	25.91%
	Concert party to an agreement to buy shares	45,204,390	A Shares (L)	13.58%	8.25%
	described in section 317(1)(a) of the SFO, deemed
	interest pursuant to section 318 of the SFO
	Beneficial owner	141,600,000	A Shares (S)	42.54%	25.85%
	Concert party to an agreement to buy shares	45,200,000	A Shares (S)	13.58%	8.25%
	described in section 317(1)(a) of the SFO, deemed
	interest pursuant to section 318 of the SFO

Annual Report 2020

Notes:

1. Mr. Xing Jiaxing was the beneficial owner of 141,874,425 A shares of the Company ("A Share(s)"), which represent approximately 25.91% of the total issued share capital of the Company as at 31 December 2020.

In addition, Mr. Xing Jiaxing and Shanghai Hexia Investment C o., L t d. (上海合夏投資有限公司) ("Shanghai Hexia") entered into a new Acting-in-Concert Agreement (the "New Concert Agreement") on 9 January 2014. As the New Concert Agreement is an agreement to which section 317 of the SFO applies, Mr. Xing Jiaxing is also deemed, pursuant to section 318 of the SFO, to be interested in the Company's shares in which Shanghai Hexia is interested (being the 45,204,390 A Shares held by Shanghai Hexia, which represented approximately 8.25% of the total issued share capital of the Company as at 31 December 2020).

Mr. Xing Jiaxing entered into share pledge agreements with Haitong Securities Co., Ltd. ("Haitong Securities"), on 28 November 2017, 7 December 2017, 19 September 2018, 18 October 2018, 1 February 2019 and 10 June 2019, respectively, pursuant to which 141,600,000 A Shares of Mr. Xing's holdings were pledged as collateral for financing of a share repurchase transaction. Among such A Shares, 68,400,000 A Shares and 73,200,000 A Shares were scheduled to be repurchased on 27 November 2020 and on 4 December 2020 respectively. All the pledged shares represent approximately 25.85% of the total issued capital of the Company as at 31 December 2020.

As disclosed in the announcement of the Company dated 6 August 2019, the collateral coverage ratio of the 68,400,000 A Shares and the 73,200,000 A Shares (which were scheduled to be repurchased on 27 November 2020 and 4 December 2020 respectively) pledged by Mr. Xing Jiaxing had fallen below the lowest collateral coverage ratio, constituting breaches of the share pledge agreements, and Haitong Securities had issued a written notice of breach in respect of the share pledge agreements. Mr. Xing Jiaxing had proactively communicated with Haitong Securities intending to resolve the breach of contract through providing supplementary collateral or additional deposit, or repurchasing the pledged A Shares in advance.

Directors' Report

Shanghai Hexia entered into share pledge agreements with CITIC Securities Company Limited ("CITIC Securities"), on 8 May2018, 18 October 2018, 1 February 2019, 5 August 2019 and 8 April 2020, pursuant to which 45,200,000 A Shares of Shanghai Hexia's holdings were pledged as collateral for financing of a share repurchase transaction. The 45,200,000 A Shares were scheduled to be repurchased on 8 October 2020. All the pledged shares represented approximately 8.25% of the total issued capital of the Company as at 31 December 2020.

As disclosed in the announcements of the Company dated 12 July 2020, 16 July 2020, 17 August 2020, 24 September 2020 and 10 November 2020, a total of 187,078,815 A Shares (comprising 141,874,425 A Shares held by Mr. Xing Jiaxing and 45,204,390 A Shares held by Shanghai Hexia), which represented 34.16% of the total issued share capital of the Company and 56.20% of the total A Share capital of the Company as at 31 December 2020, are subject to subordinated freezing orders (the "Freezing Order(s)") as Mr. Xing Jiaxing and Shanghai Hexia did not repurchase such respective A Shares pledged by them respectively to Haitong Securities and CITIC Securities, or adopt security measures, as a result of which Haitong Securities and CITIC Securities applied to the Shanghai Financial Court for the Freezing Order(s) over such A Shares. The Shanghai Financial Court issued the Enforcement Ruling (2020) Hu 74 Zhi one of No. 216 and (2020) Hu 74 Zhi one of No. 425 *(《執行裁定書》(2020)滬74執216號之一、 (2020)滬74執425號之一), pursuant to which the Shanghai Financial Court proposed to auction or sell the Pledged Shares.

As disclosed in the announcement of the Company dated 31 January 2021, the Shanghai Financial Court issued the Notice of Judicial Disposal of Shares (2020) Hu Zhi No. 425 *(《司法處置股票公告》(2020)滬74執425號), pursuant to which the Shanghai Financial Court made a ruling for the compulsory auction of the 141,600,000 A Shares held by Mr. Xing Jiaxing.

As disclosed in the announcement of the Company dated 1 March 2021, the Shanghai Financial Court issued the Notice of Judicial Disposal of Shares (2020) Hu Zhi No.216 *(《司法處置股票公告》(2020)滬74執216號), pursuant to which the Shanghai Financial Court made a ruling for the compulsory auction of the 45,200,000 A Shares held by Shanghai Hexia.

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

As disclosed in the announcements of the Company dated 7 March 2021, 22 March 2021, 23 March 2021, 25 March 2021, 28 March 2021, 16 April 2021, 21 April 2021, 28 April 2021, and 29 April 2021, the Shanghai Financial Court auctioned the 141,600,000 A Shares held by Mr. Xing Jiaxing successfully on the judicial assistance execution platform (the "Judicial Execution Platform") on 5 March 2021; the Company received the execution rulings from Shanghai Wensheng Asset Management Co., Ltd.* (上海文盛資產管理股份有限公司) ("Shanghai Wensheng") and Shanghai Qijin Enterprise Management Partnership LLP* (上海其錦企業管理合夥企業（有限合夥）) ("Shanghai Qinjin") in respect of 61,600,000 of the A Shares bid by them; the Company received another execution ruling from Mr. Xing Jiaxing in respect of 80,000,000 of the A Shares bid by three other successful bidders who failed to complete their corresponding transaction; the transfers in respect of 61,600,000 of the A Shares held by Mr. Xing Jiaxing were completed; the Shanghai Financial Court auctioned the 45,200,000 A Shares held by Shanghai Hexia; the Company received a notice of forced auction in respect of the 80,000,000 A Shares held by Mr. Xing from the Shanghai Financial Court; the Shanghai Financial Court successfully auctioned the 80,000,000 A Shares held by Mr. Xing on 16 April 2021; the Company received an execution ruling from Shanghai Qijin in respect of the 45,200,000 A Shares held by Shanghai Hexia; the transfer in respect of 45,200,000 of the A Shares held was completed; and the Company received an execution ruling from the Shanghai Financial Court in respect of the 80,000,000 A Shares held by Mr. Xing. As a result of the change in shareholding, Mr. Xing has ceased to be a controlling shareholder of the Company since 22 March 2021 and has ceased to be a substantial shareholder of the Company since 29 April 2021.

2. The letter "L" denotes the person's long position in Shares, while the letter "S" denotes the person's short position in Shares.

Save as disclosed above, as at 31 December 2020, so far as is known to any Director, Supervisor or the chief executive of the Company, none of the Directors, Supervisors, or the chief executives of the Company had any interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were (i) required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Division 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO); or (ii) recorded in the register required to be kept under section 352 of the SFO, or (iii) otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code.

DIRECTORS' AND SUPERVISORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES

As at 31 December 2020, no rights to acquire benefits by means of the acquisition of shares in or debentures of the Company were granted to any Director, Supervisor or their respective spouse or children under 18 years of age, nor were any such rights exercised by them, nor was the Company or any of its subsidiaries a party to any arrangement to enable the Directors, or their respective spouse or children under 18 years of age, to acquire such rights in any other body corporate.

Annual Report 2020

Directors' Report

SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES OF THE COMPANY

As at 31 December 2020, the following persons (not being a Director, Supervisor or chief executive of the Company) had interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to section 336 of the SFO:

				Approximate
				percentage	Approximate
				shareholding in	percentage
				the relevant class	shareholding in the
	Nature of interest		Number of	of Shares as at	total issued Shares at
Name of Shareholder	and capacity	Shares interested8	31 December 2020	31 December 2020
Shanghai Hexia Investment Co., Ltd.1	Beneficial owner	45,204,390	A Shares (L)	13.58%	8.25%
	Concert party to an agreement to buy shares	141,874,425	A Shares (L)	42.62%	25.91%
	described in section 317(1)(a) of the SFO,
	deemed interest pursuant to section 318
	of the SFO
	Beneficial owner	45,200,000	A Shares (S)	13.58%	8.25%
	Concert party to an agreement to buy shares	141,600,000	A Shares (S)	42.54%	25.85%
	described in section 317(1)(a) of the SFO,
	deemed interest pursuant to section 318
	of the SFO
The Goldman Sachs Group, Inc.2	Interest in controlled corporation	16,593,935	A Shares (L)	4.98%	3.03%
Haitong Securities Co., Ltd.	Person having a security interest in shares	141,600,000	A Shares (L)	42.54%	25.85%
CITIC Securities Company Limited	Person having a security interest in shares	45,200,000	A Shares (L)	13.58%	8.25%
China Merchants Asset Management,	Others	11,400,000 H Shares (L)	5.31%	2.08%
Construction and Investment
Overseas No. 1 Overseas Single
Asset Management Plan*
(招商資管建投海外1號海外單
一資產管理計劃)
China Cinda Asset Management	Interest in controlled corporation	49,597,132 H Shares (L)	23.09%	9.06%
Co., Ltd.3
Ningbo Meishan Free Trade Zone	Beneficiary of a trust	22,150,000 H Shares (L)	10.31%	4.04%
Jinxin Changtai Investment

Partnership (Limited Partnership)* (寧波梅山保稅港區金信昌泰投資有限合夥）)4

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

				Approximate
				percentage	Approximate
				shareholding in	percentage
				the relevant class	shareholding in the
	Nature of interest		Number of	of Shares as at	total issued Shares at
Name of Shareholder	and capacity	Shares interested8	31 December 2020	31 December 2020
Gabriel Li5	Interest in controlled corporation	9,531,600	H Shares (L)	4.44%	1.74%
Lam Lai Ming5	Interest in controlled corporation	9,531,600	H Shares (L)	4.44%	1.74%
Zhejiang Longsheng Group Co., Ltd.*	Interest in controlled corporation	22,236,800	H Shares (L)	10.35%	4.06%
(浙江龍盛集團股份有限公司)6
Senda International Capital Limited6	Beneficial owner	16,630,800	H Shares (L)	7.74%	3.04%
Wang Shenghong7	Beneficiary of a trust	10,345,400	H Shares (L)	4.82%	1.89%

Note:

1. Shanghai Hexia was the beneficial owner of 45,204,390 A Shares, which represented approximately 8.25% of the total issued Share capital of the Company as at 31 December 2020. In addition, Shanghai Hexia and Mr. Xing Jiaxing entered into the New Concert Agreement on 9 January 2014, which is an agreement to which section 317 of the SFO applies. As a result, Shanghai Hexia is also deemed, pursuant to section 318 of the SFO, to be interested in the Company's Shares in which Mr. Xing Jiaxing is interested (being the 141,874,425 A Shares

(L) and 141,600,000 A Shares (S) held by Mr. Xing Jiaxing, which represented approximately 25.91% and 25.85% of the total issued share capital of the Company as at 31 December 2020).

Shanghai Hexia entered into share pledge agreements with CITIC Securities, on 8 May 2018, 18 October 2018, 1 February 2019, 5 August 2019 and 8 April 2020, pursuant to which, the 45,200,000 A Shares of Shanghai Hexia's holdings were pledged as collateral for financing of a share repurchase transaction, which represented approximately 8.25% of the total issued share capital of the Company as at 31 December 2020. The repurchase trading date of such pledged A Shares was 8 October 2020.

As disclosed in the Company's announcement dated 16 July 2020, the 45,204,390 A Shares held by Shanghai Hexia, which represented approximately 8.25% of the total issued share capital of the Company as at 31 December 2020, were subject to a subordinated freezing order. The Company was informed that such subordinated freezing order related to the 45,200,000 A Shares pledged by Shanghai Hexia to CITIC Securities which Shanghai Hexia failed to repurchase in advance or adopt security measures alternatively, which resulted in CITIC Securities applying to the Shanghai Financial Court for the subordinated freezing order.

Shanghai Hexia entered into share pledge agreements with CITIC Securities on 8 May 2018, 18 October 2018, 1 February 2019, 5 August 2019 and 8 April 2020, pursuant to which, a total of 45,200,000 A Shares were pledged as collateral for financing of a share repurchase transaction, which represented approximately 8.25% of the total issued share capital of the Company as at 31 December 2020. The repurchase trading date of such pledged A Shares was 8 October 2020.

As disclosed in the announcements of the Company dated 12 July 2020, 16 July 2020, 24 September 2020 and 10 November 2020, a total of 187,078,815 A Shares (comprising 141,874,425 A Shares held by Mr. Xing Jiaxing and 45,204,390 A Shares held by Shanghai Hexia), which represented 34.16% of the total issued share capital of the Company and 56.20% of the total A Share capital of the Company as at 31 December 2020, are subject to the "Freezing Order(s) as Mr. Xing Jiaxing and Shanghai Hexia did not repurchase such respective A Shares pledged by them respectively to Haitong Securities and CITIC Securities, or adopt security measures, as a result of which Haitong Securities and CITIC Securities applied to the Shanghai Financial Court for the Freezing Order(s) over such A Shares. The Shanghai Financial Court issued the Enforcement Ruling (2020) Hu 74 Zhi one of No. 216 and (2020) Hu 74 Zhi one of No. 425 *(《執行裁定書》 (2020)滬74執216號之一、(2020)滬74執425號之一), pursuant to which the Shanghai Financial Court proposed to auction or sell the Pledged Shares.

Annual Report 2020

Directors' Report

	As disclosed in the announcement of the Company dated 31	3.	China Cinda Asset Management Co., Ltd. was deemed to
	January 2021, the Shanghai Financial Court issued the Notice		be interested in an aggregate of 49,597,132 H shares of the
	of Judicial Disposal of Shares (2020) Hu Zhi No. 425 *(《司法		Company by virtue of the SFO. Those interests held through
	處置股票公告》(2020)滬74執425號), pursuant to which the		Cinda Investment Co., Ltd., Hainan Jianxin Investment
	Shanghai Financial Court made a ruling for the compulsory		Management Co., Ltd. and Jinxin Changtai Investment
	auction of the 141,600,000 A Shares held by Mr.Xing Jiaxing.		Partnership in Meishan Bonded Port Area, Ningbo (Limited
			Partnership).
	As disclosed in the announcement of the Company dated 1
	March 2021, the Shanghai Financial Court issued the Notice	4.	Ningbo Meishan Free Trade Zone Jinxin Changtai Investment
	of Judicial Disposal of Shares (2020) Hu Zhi No.216 *(《司法		Partnership (Limited Partnership) invested in H Shares of the
	處置股票公告》(2020)滬74執216號), pursuant to which the		Company as an asset principal through China Merchants Asset
	Shanghai Financial Court made a ruling for the compulsory		Management, Construction and Investment Overseas No. 1
	auction of the 45,200,000 A Shares held by Shanghai Hexia.		Single Asset Management Plan.
	As disclosed in the announcements of the Company dated 7	5.	Mr. Gabriel Li was deemed to be interested in an aggregate
	March 2021, 22 March 2021, 23 March 2021, 25 March 2021, 28		of 9,531,600 H Shares by virtue of the SFO. Those interests
	March 2021, 21 April 2021, 28 April 2021 and 29 April 2021, the		held through Areo Holdings Limited comprised deemed
	Shanghai Financial Court auctioned the 141,600,000 A Shares		interests in 9,026,600 H Shares held by Orchid Asia V Group,
	held by Mr. Xing Jiaxing successfully on the Judicial Execution		Limited through its various entities, namely Orchid Asia V
	Platform"; the Company received the execution rulings		Group Management, Limited, Orchid Asia VI GP, Limited, Oavi
	from Shanghai Wensheng and Shanghai Qijin in respect		Holdings, L.P., Orchid Asia VI, L.P. and 505,000 H Shares held
	of 61,600,000 of the A Shares bid by them; the Company		by Orchid Asia V Co-Investment, Limited. As a spouse of Mr.
	received another execution ruling from Mr. Xing Jiaxing		Gabriel Li, Ms. Lam Lai Ming was deemed to be interested in
	in respect of 80,000,000 of the A Shares bid by three other		an aggregate of 9,531,600 H Shares held by Mr. Gabriel Li by
	successful bidders who failed to complete their corresponding		virtue of the SFO.
	transaction; the transfers in respect of 61,600,000 of the A
	Shares held by Mr. Xing Jiaxing was completed; the Shanghai	6.	These H Shares were held by Senda International Capital
	Financial Court auctioned the 45,200,000 A Shares held by		Limited and Well Prospering Limited, being wholly-owned
	Shanghai Hexia; the Company received a notice of forced		subsidiaries of Zhejiang Longsheng Group Co., Ltd.* (浙江龍
	auction in respect of the 80,000,000 A Shares held by Mr. Xing		盛集團股份有限公司), which held 16,630,800 H Shares and
	from the Shanghai Financial Court; the Shanghai Financial		5,606,000 H Shares respectively.
	Court successfully auctioned the 80,000,000 A Shares held by
	Mr. Xing on 16 April 2021; the Company received an execution	7.	Mr. Wang Shenghong was deemed to be interested as a
	ruling from Shanghai Qijin in respect of the 45,200,000 A		beneficiary of a trust in 10,345,400 H shares of the Company
	Shares held by Shanghai Hexia; the transfer in respect of		held by TTCO Trust Corporation Limited (西藏信託有限公司)
	45,200,000 of the A Shares held was completed; and the		as trustee.
	Company received an execution ruling from the Shanghai
	Financial Court in respect of the 80,000,000 A Shares held by	8.	The letter "L" denotes the person's or entity's long position
	Mr. Xing. As a result of the change in shareholding, Shanghai		in Shares, while the letter "S" denotes the person's or entity's
	Hexia individually has ceased to be a substantial shareholder		short position in Shares.
	of the Company since 21 April 2021, and Shanghai Hexia
	and Mr. Xing have collectively ceased to be a substantial
	shareholder of the Company since 29 April 2021.
2.	The Goldman Sachs Group, Inc. is a company listed on the
	New York Stock Exchange. The Goldman Sachs Group, Inc.,

through its various entities, controls Beijing Kuanjie Bohua 2011 Investment Center (Limited Partnership), which was beneficially interested in 16,593,935 A Shares and The Goldman Sachs Group, Inc. was deemed to be interested in such shares by virtue of the SFO.

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

Other than as disclosed above, as at 31 December 2020, the Directors have not been notified by any person (not being the Directors, Supervisors or chief executives of the Company) who had interests or short positions in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept pursuant to Section 336 of the SFO.

DIRECTORS' INTERESTS IN

COMPETING BUSINESS

As disclosed in the announcement of the Company dated 8 February 2021, Mr. Duan Xuefeng was a 70% shareholder

of Zhongke Tongrong Investment Fund Management (Beijing) Co., Ltd. (中科通融投資基金管理（北京）有限公司)) ("Zhongke Tongrong") from 30 March 2020 to 6 November 2020, and served as an executive director for Zhongke Tongrong from 2 March 2020 to 6 November 2020. On 20 October 2020, Zhongke Tongrong acquired the entire equity

interest of Xiya Yijia Business Commerce Group Co., Ltd. (西雅衣家商貿集團有限公司) ("Xiya Yijia"), the main business

of which is the operation of the apparel retail business of an international fast-fashion retail brand, C&A, in the PRC.

So far as the Board is aware, the abovementioned prior business interest of Mr. Duan Xuefeng in Zhongke Tongrong has not caused any material actual harm to the interests of the Company, as Mr. Duan Xuefeng had transferred his entire equity interest in Zhongke Tongrong (including his indirect interests in Xiya Yijia) to an independent third party.

Saved as disclosed above, as at 31 December 2020, none of the Directors or their respective associates had interests in businesses which compete or are likely to compete, either directly or indirectly, with the businesses of the Group.

DIRECTORS' EMOLUMENTS AND FIVE HIGHEST EMOLUMENTS

The Directors' emoluments are determined by the Board with reference to their duties, responsibilities and performance and the results of the Group. Details of the Directors' emoluments and the five highest paid individuals are set out in note XI (IV)

(7) to the consolidated financial statements respectively.

EMOLUMENT POLICY

The Remuneration and Appraisal Committee was set up to develop the Group's emolument policy and structure for remuneration of the Directors, Supervisors and senior management of the Group, having regard to the Group's operating results, individual performance of the Directors, Supervisors and senior management and comparable market practices.

Mr. Lu Weiming (retired on 8 May 2020), Mr. Luo Bin (retired on 8 May 2020), Mr. Duan Xuefeng (resigned on 11 January 2021) and Ms. Zhang Yujing (resigned on 11 January 2021) agreed not to receive remuneration for acting as non- executive Directors of the Company. Save as disclosed above, none of the Directors waived remuneration for the year ended 31 December 2020.

PENSION SCHEMES

Pursuant to the relevant labour rules and regulations in the PRC, the Group's subsidiaries in the PRC participate in defined contribution retirement benefit schemes (the "Schemes") organized by the local authorities whereby the subsidiaries are required to make contributions to the Schemes based on a percentage of the eligible employees' salaries. Contributions to these Schemes vest to employees immediately. Under these Schemes, retirement benefits of existing and retired employees are payable by the relevant scheme administrators and the Group has no further obligations beyond the annual contributions.

The Group's contributions to retirement benefit schemes charged to the consolidated statement of profit or loss for the year ended 31 December 2020 were RMB26,540 thousand.

MANAGEMENT CONTRACTS

No contracts concerning the management and administration of the whole or any substantial part of the business of the Group were entered into or in existence during the year ended 31 December 2020.

PERMITTED INDEMNITY PROVISION

The Company has not arranged for appropriate insurance cover for the Directors, Supervisors and Senior Management in respect of certain liabilities arising out of corporate activities. As required by section 470(1) and (2) of the Hong Kong Companies Ordinance (Cap. 622 of the Laws of Hong Kong) (the "Hong Kong Companies Ordinance"), it is confirmed that the permitted indemnity provision mentioned

Annual Report 2020

Directors' Report

above is/was in force for the benefit of the Directors/ then Directors when the Directors' Report prepared by the Directors is approved in accordance with section 391(1)(a) of the Hong Kong Companies Ordinance; and has been in force throughout the financial year ended 31 December 2020, respectively.

MAJOR CUSTOMERS AND SUPPLIERS

For the year ended 31 December 2020, purchases attributable t o t h e G r o u p's l a r g e s t s u p p l i e r, X i n j i a n g H e n g d i n g

International Supply Chain Technology Co., Ltd. (新疆恒鼎國際供應鏈科技有限公司) ("Xinjiang Hengding") accounted

for 46.01% of the Group's total purchases and purchases from the Group's five largest suppliers accounted for 82.97% of the Group's total purchases. During the Reporting Period, in particular for the period from 8 May 2020 to 6 November 2020, Mr. Duan Xuefeng was a Director of the Company and was interested in approximately 70.33% of the equity interest in a company that was interested in 49% of the equity interest in Xinjiang Hengding. However, there was no connected transaction between the Group and Xinjiang Hengding during the Reporting Period. Apart from Mr. Duan Xuefeng, no other Directors or any of their associates or any shareholders of the Company (which, to the best knowledge of the Directors, own more than 5% of the Company's issued share capital) had any interest in the Group's five largest suppliers.

For the year ended 31 December 2020, the combined revenue from the five largest customers did not exceed 30% of the total revenue of the Group. None of the Directors or any of their associates or any shareholders of the Company (which, to the best knowledge of the Directors, own more than 5% of the Company's issued share capital) had any interest in the Group's five largest customers.

SUSTAINABLE DEVELOPMENT

The Group is committed to promoting the sustainable development of the environment and society. We recognize the inevitable impacts on the production of fabrics and apparels on the climate and local environment. The Group strives to enhance the environmental performance and social responsibility of fabrics and apparel suppliers. As such, the Group rigorously screens fabrics and apparel suppliers who are required to obtain the certificate in compliance with the national and international environmental standards, safety standards and health for workers. The Group conducts performance assessment of its suppliers on environment and social responsibility regularly. Detailed information on the environmental policy of the Group is contained in the "Environmental, Social and Governance Report 2020" (the

"ESG Report 2020"), which will be available on the websites of the Hong Kong Stock Exchange and the Company.

RELATIONSHIP WITH STAKEHOLDERS

The Group fully understands that employees, customers and partners are the key to our sustainable and steady development. We are committed to establishing a close relationship with our employees, enhancing cooperation with our partners and providing high-quality products and services to our customers so as to ensure our sustainable development.

The Group values our staff as the most important resource. Hence, the Group has been endeavouring to provide our staff with equal opportunities and humane workplace. We offer a competitive remuneration package and great opportunities for promotion based on employees' performance. The Group also provides our staff with regular training, including internal training and refresher courses offered by professional organisations, so as to keep them abreast of the latest development in the market and industry as well as to upgrade their job skills.

"Providing quality products and services to customers" has always been our goal. We uphold the philosophy of "Building up the brand reputation for the Company by placing equal emphasis on service and quality" to actively communicate with our customers to understand their views and suggestions so as to enhance our products and services.

We firmly believe that our suppliers are equally important in developing high-quality products. The Group has signed a bona-fide agreement for cooperation with every supplier at arms' length. Through open procedures for tender invitation and submission, the requirements of anti-corruption and anti-bribery are strictly followed, and various reporting channels are provided (including the mailbox and hotline made available to the public for reporting set up by the Audit Department). This agreement is an important legally binding attachment to any procurement cooperation agreement. In addition, we engaged a third-party inspection entity and adopted an "order management system" to strictly control the production process and product quality. Detailed information on the relationship between the Group and stakeholders is contained in the ESG Report 2020.

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

MATERIAL ACQUISITIONS AND DISPOSALS OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES IN 2020

On 19 June 2020, La Chapelle Apparel (Taicang) Co., Ltd.* (拉夏貝爾服飾（太倉）有限公司) (the "Vendor"), a wholly-owned

subsidiary of the Company, entered into a Sale and Purchase

Agreement with Shanghai Shihuai Logistics Co., Ltd.*(上海世淮物流有限公司) (the "Purchaser"), pursuant to which

the Vendor conditionally agreed to sell, and the Purchaser conditionally agreed to purchase, 100% of the equity interest (the "Target Equity Interest") in Taicang Xiawei Storage Co., Ltd.*(太倉夏微倉儲有限公司) (a wholly-owned subsidiary of the Vendor and an indirect subsidiary of the Company) (the "Target Company") at the consideration of approximately RMB725,000,000, subject to the terms and conditions of the Sale and Purchase Agreement (the "Disposal").

A s a t 3 D e c e m b e r 2020, t h e p r o p e r t y l o c a t e d a t 116 Guangzhou East Road, Taicang City, Jiangsu Province in the PRC (the "Target Property") and the Target Company had not been able to (i) perform the procedures in respect of the release of the mortgage of the Target Property and the pledge in respect of the Target Equity Interest (the "Releases"); and (ii) obtain relevant necessary documents in respect of the Releases. Therefore, not all of the conditions to completion were satisfied in accordance with the Sale and Purchase Agreement. Consequently, resolution No. 1 ("Resolution No. 1") in respect of the Disposal as set out in the notice of the 2020 fifth extraordinary general meeting (the "EGM") dated 26 October 2020 and the revised form of proxy published by the Company on 23 November 2020 were withdrawn, and Resolution No. 1 was not submitted to the EGM for consideration and approval by the Shareholders.

Details of the Disposal can be found in the announcements of the Company dated 21 June 2020, 24 June 2020, 26 October 2020 and 3 December 2020, and the circular of the Company dated 26 October 2020.

CONNECTED TRANSACTIONS

For the year ended 31 December 2020, the Group entered into the following connected transaction:

THE EARLY SETTLEMENT OF REMAINING CONSIDERATION FOR THE DISCLOSEABLE AND CONNECTED TRANSACTION IN RELATION TO THE DISPOSAL OF 54.05% EQUITY INTEREST IN ANSHE E-COMMERCE

On 7 May 2019, the Company entered into an Equity Transfer Agreement (the "Equity Transfer Agreement") with Hangzhou Yaner Enterprise Management Consulting Co., Ltd. (the "Purchaser") and Ms. Cao Qing ("Ms. Cao"), pursuant to which the Purchaser conditionally agreed to purchase and the Company conditionally agreed to sell the 54.05% equity interest in Hangzhou Anshe E-Commerce Company Limited ("Anshe E-Commerce") held by the Company, at the consideration of RMB200,000,000.

Anshe E-Commerce was owned by the Company as to 54.05%, Ms. Cao as to 23.86%, Aibo Technology Company Limited as to 14.32% and Hangzhou Anshe Investment Management Partnership LLP as to 7.77%. Upon Completion, the Company ceased to hold any equity interest in Anshe E-Commerce and Anshe E-Commerce ceased to be a subsidiary of the Company.

Since the Purchaser was wholly owned by Ms. Cao, who held 23.86% equity interest in Anshe E-Commerce as at 7 May 2019, the Purchaser was an associate of a substantial shareholder of Anshe E-Commerce and therefore a connected person of the Company at the subsidiary level. Accordingly, the Equity Transfer Agreement and the transactions contemplated thereunder constituted a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules.

As at 31 May 2019, completion already took place pursuant to the terms of the Equity Transfer Agreement.

In view of the Company's current working capital condition and business development needs and upon negotiation with the Purchaser, the Company entered into a supplemental a g r e e m e n t w i t h t h e P u r c h a s e r, M s . C a o a n d A n s h e E-Commerce on 3 December 2020 (the "Supplemental Agreement") for the early settlement of the remaining consideration totaling RMB90,000,000.

Pursuant to the note to Rule 14A.35 of the Hong Kong Listing Rules, if there is any material variation of the terms of a connected transaction, the listed issuer must re-comply with all other applicable provisions under the Hong Kong Listing Rules. In light of the variation of terms of the Equity Transfer

Annual Report 2020

Directors' Report

Agreement pursuant to the Supplemental Agreement, (i) the Board approved the Supplemental Agreement and the transactions contemplated therein, and (ii) the Independent Non-executive Directors confirmed that the terms of the Supplemental Agreement and the transactions contemplated thereunder were fair and reasonable, on normal commercial t e r m s a n d i n t h e i n t e r e s t s o f t h e C o m p a n y a n d i t s Shareholders as a whole. Pursuant to Rule 14A.101 of the Hong Kong Listing Rules, the Supplemental Agreement and the transactions contemplated thereunder were exempt from the circular, independent financial advice and independent Shareholders' approval requirements under Chapter 14A of the Hong Kong Listing Rules.

F o r d e t a i l s o f t h e E q u i t y T r a n s f e r A g r e e m e n t a n d Supplemental Agreement of 54.05% equity interest in Anshe E-commerce, please refer to the announcements of the Company dated 7 May 2019, 2 February 2021 and 22 February 2021.

For the year ended 31 December 2020, the Group entered into the above connect transaction (as defined under the Listing Rules). Save as disclosed above, the related party transactions as set out in note 11 to the consolidated financial statements do not constitute connected transactions under the Listing Rules. The Company confirms that it has complied with the disclosure requirements of Chapter 14A of the Listing Rules.

CONTRACT OF SIGNIFICANCE

Save as disclosed above, no contract of significance has been made between the Company or any one of its subsidiaries and a controlling shareholder or its subsidiaries during the year ended 31 December 2020 or as at the date of this report.

MATERIAL LITIGATION

During the year ended 31 December 2020, the Company or at least one of its subsidiaries was involved in the following material litigation or arbitration:

As a result of a dispute over a guarantee agreement, HTI A d v i s o r y C o m p a n y L i m i t e d ( 海通國際諮詢有限公司)

claimed against the Company and its subsidiaries for about EUR41,000,000. For details, please refer to the announcement of the Company dated 25 September 2020.

As a result of a dispute over a construction agreement,

Shanghai Construction No. 2 (Group) Co., Ltd. (上海建工二建集團有限公司) claimed against the Company and its

subsidiary for about RMB174,000,000. For details, please refer

to the announcement of the Company dated 9 December 2020.

As a result of a dispute over a property lease agreement,

Nanbu County Mei Hao Jia Yuan Real Estate Development Co., Ltd. (南部縣美好家園房地產開發有限公司) applied for

a retrial of its claim against the Company and its subsidiaries for about RMB028,000,000. For details, please refer to the announcements of the Company dated 12 January 2021 and 18 March 2021.

As a result of a dispute over an entrusted loan agreement,

Bank of Urumqi Co., Ltd. Urumqi Siping Road Technology Branch (烏魯木齊銀行股份有限公司烏魯木齊四平路科技

支行) claimed against the Company and its subsidiaries for about RMB586,000,000. The claim was later withdrawn. For details, please refer to the announcements of the Company dated 7 December 2021 and 12 January 2021.

During the year ended 31 December 2020, the Company and its subsidiaries were also involved in other non-material litigation or arbitration. For details, please refer to the overseas regulatory announcement of the Company dated 28 April 2021 and the announcement dated 29 April 2021.

As of the date of this report, the Company or at least one of its subsidiaries has been involved in the following new material litigation or arbitration:

As a result of a dispute over an entrusted loan agreement,

Urumqi High-tech Investment Development Group Co., Ltd. (烏魯木齊高新投資發展集團有限公司) claimed against the

Company and its subsidiaries for about RMB587,000,000. For details, please refer to the announcement of the Company dated 19 January 2021 and 23 April 2021.

As a result of a dispute over a clothing sale and purchase

agreement, Xinjiang Hengding International Supply Chain T e c h n o l o g y C o., L t d (新疆恒鼎國際供應鏈科技有限公

司) claimed against the Company and its subsidiaries for about RMB27,000,000. For details, please refer to the announcements of the Company dated 28 January 2021 and 9 March 2021.

COMPLIANCE WITH THE RELEVANT LAWS AND REGULATIONS

As far as the Board and management are aware, the Group has complied in material respects with the relevant laws and regulations that have a significant impact on the business and operation of the Group.

Xinjiang La Chapelle Fashion Co., Ltd.

Directors' Report

SHARE OPTION SCHEME

There is no share option scheme operated by the Company.

EQUITY-LINKED AGREEMENTS

No equity-linked agreement has been entered into with the Company during the year ended 31 December 2020.

AUDIT COMMITTEE

During the year ended 31 December 2020, the Audit Committee met eight times to review the annual financial results in respect of the year ended 31 December 2019, the first quarter results for the three months ended 31 March 2020, the interim financial results in respect of the six months ended 30 June 2020 and the third quarter financial results in respect of the nine months ended 30 September 2020, appointment of auditors and significant issues on internal control and risk management systems. The Audit Committee also met the external auditors once without the presence of the executive Directors during the year ended 31 December 2020.

The Audit Committee has reviewed the results of the Group for the year ended 31 December 2020 and has discussed with the management on the accounting policies and practices adopted by the Group, risk management and internal controls, and financial reporting matters.

REMUNERATION AND APPRAISAL COMMITTEE

During the year ended 31 December 2020, the Remuneration and Appraisal Committee met twice to review and assess the annual job performance of the Senior Management, and review and make recommendations to the Board on the policy and structure of the remuneration of Directors and Senior Management and other related matters.

NOMINATION COMMITTEE

During the year ended 31 December 2020, the Nomination Committee met nine times to nominate directors and senior management members for appointment and selection, review the structure, size and composition of the Board, the independence of the independent non-executive Directors and diversity of the Board.

AUDITORS

PricewaterhouseCoopers Zhong Tian LLP (Special General P a r t n e r s h i p) (t h e "PwC Zhong Tian") r e t i r e d a s t h e

international and domestic auditor of the Company upon expiration of its term of office with effect from the conclusion of the annual general meeting of the Company convened on 28 May 2019. Ernst & Young Hua Ming LLP ("EY") was appointed as the PRC statutory auditor and international auditor of the Company for the year ended 31 December 2019 on 16 July 2019.

EY was re-appointed as the domestic and international auditor of the Company at the annual general meeting of the Company held on 30 July 2020 (the "2019 AGM") to hold office until the conclusion of the next annual general meeting of the Company.

Subsequent to the 2019 AGM, the Company could not reach a consensus with EY on the audit fee for the year ended 31 December 2020. With a view to reasonably controlling the audit costs and to reducing expenses of the Company, and in consideration of the Company's 2020 audit schedule, after careful consideration, in December 2020 the Company appointed Da Hua Certified Public Accountants (Special General Partnership) ("Da Hua") as the Company's auditor for the year ended 31 December 2020.

The resolution regarding the appointment of the auditor for the year ending 31 December 2021 will be tabled at the 2020 AGM.

The remuneration paid to EY was RMB3.74 million and the remuneration paid to Da Hua was RMB3.48 million in respect of the audit services rendered for the year ended 31 December 2020.

Apart from the above disclosure, there was no change in the Company's auditor in the past three years.

POST REPORTING PERIOD EVENTS

Details of the events after the Reporting Period are set out in note XIII to the consolidated financial statements.

USE OF PROCEEDS FROM IPO

The Company received approximately HK$1,830.12 million (equivalent to approximately RMB1,450,214,934.20) as net proceeds (the "IPO Proceeds") from the global offering of the Company's H Shares. As at 31 December 2019, all IPO Proceeds were utilised.

For details, please refer to the annual report of the Company for the year ended 31 December 2019 and the supplemental announcement of the Company dated 21 October 2020.

Annual Report 2020

CHANGES TO INFORMATION IN RESPECT OF DIRECTORS AND SUPERVISORS

Save as disclosed in the section headed "Profiles of Directors, Supervisors and Senior Management" in this report, there was no change to any of the information required to be disclosed in relation to any Director or Supervisor pursuant to paragraphs (a) to (e) and (g) of Rule 13.51(2) of the Listing Rules since the date of 2020 interim report of the Company.

THE BOARD'S AND THE AUDIT COMMITTEE'S VIEWS ON THE QUALIFIED OPINION

Da Hua issued a qualified opinion on the Company's financial statements for the year ended 31 December 2020. The bases for the qualified opinion objectively reflect the actual situation of the Company and reveal the risks faced by it. The Board and the audit committee respect the independent judgment of Da Hua in issuing a qualified opinion, and attach great importance to the impact of the matters forming the bases for such an opinion on the Company. The Company will take active measures to eliminate the impact of such matters as soon as possible, and safeguard the interests of it investors.

MAJOR ACTIONS PROPOSED TO BE TAKEN BY THE COMPANY

As the company failed to repay the loan from HTI Advisory Company Limited in a timely manner, HTI Advisory Company Limited took over LaCha Fashion I on 25 February 2020, and the Company was unable to control or exert any influence over it, and thereby losing actual control over it and its subsidiaries, including mainly Naf Naf SAS. In addition, Naf Naf SAS officially entered into judicial liquidation on 19 June 2020 (French time). These have caused the Auditor's failure to audit LaCha Fashion I and its subsidiaries, and therefore the Auditor could not assess the reasonableness and accuracy of the long-term equity investment in Naf Naf SAS and the provision for asset impairment. As at the date of this announcement, the dispute over the contractual dispute over the Company's guarantee of the loan is still under legal proceedings. The Company will negotiate with HTI Advisory Company Limited to clarify HTI Advisory Company Limited's follow-up arrangements after taking over LaCha Fashion I, or will ascertain the availability of the Company's equity interest in LaCha Fashion I and its subsidiaries (and their

Directors' Report

actual amount) for the setting off of the Company's indebtedness to HTI Advisory Company Limited through friendly negotiations or litigation. At the same time, the Company will continue to contact the judicial liquidator of Naf Naf SAS to follow up on the progress of the judicial liquidation, and actively seek professional opinions from French lawyers to understand the Company's remaining assets that can be recovered in the liquidation process. The Company will strive to properly and swiftly resolve the issues arising from Naf Naf SAS's judicial liquidation and the dispute between the Company and HTI Advisory Company Limited.

R e g a r d i n g l i t i g a t i o n c a s e s t h a t h a v e n o t b e e n concluded, the Company will actively respond to the cases and take necessary measures to protect the legal rights and legitimate interests of the Company with the support of legal professionals. Regarding debts arising from disputes that have been adjudicated or settled, the Company, being responsible to all of its shareholders and its creditors, will actively negotiate with the relevant courts, creditors and financial institutions and strive to come up with a centralized solution to litigation matters and debt settlement as soon as possible, including but not limited to the consideration of mechanisms such as seeking a release from debt or a discount, settlement and debt restructuring. At the same time, the Company will strengthen the internal information transmission mechanism in respect of litigation matters, improve its recording and classification of litigation to capture sufficient information, and monitor and evaluate the risks of litigation cases and their financial impact on the Company in a timely manner.

For the measures that the Company will take in r e s p o n s e t o t h e s i g n i f i c a n t u n c e r t a i n t y o f t h e Company's ability to continue as a going concern, please refer to the section "Future Outlook" under "Management Discussion and Analysis" of this report.

For and on behalf of the Board

Mr. Wu Jinying(吳金應)

Chairman

Shanghai, PRC, 29 April 2021

Xinjiang La Chapelle Fashion Co., Ltd.

Report of the Supervisory Committee

In 2020, the Supervisory Committee of the Company fulfilled diligently its duties and conscientiously discharged its responsibilities and obligations, and implemented various oversight functions in accordance with the Company Law, the Securities Law, the Articles of Association, and the Rules of Procedure of the Supervisory Committee and other relevant laws and regulations of the PRC. The Supervisory Committee inspected and supervised the Company's legal operation, production and operation, financial condition, and performance of duty of the Company's directors and senior management, providing a strong protection for the Company's standardized operation and development. The report of the Supervisory Committee of the Company for this year is as follows:

1. WORK PERFORMED BY THE SUPERVISORY COMMITTEE DURING THE REPORTING PERIOD

During the Reporting Period, the Company convened fifteen meetings of the Supervisory Committee: namely the twentieth meeting of the third session of the Supervisory Committee, twenty-first meeting of the third session of the Supervisory Committee, twenty- second meeting of the third session of the Supervisory Committee, twenty-third meeting of the third session of the Supervisory Committee, twenty-fourth meeting of the third session of the Supervisory Committee, twenty- fifth meeting of the third session of the Supervisory Committee, first meeting of the fourth session of the Supervisory Committee, second meeting of the fourth session of the Supervisory Committee, third meeting of the fourth session of the Supervisory Committee, fourth meeting of the fourth session of the Supervisory Committee, fifth meeting of the fourth session of the Supervisory Committee, sixth meeting of the fourth session of the Supervisory Committee, seventh meeting of the fourth session of the Supervisory Committee, eighth meeting of the fourth session of the Supervisory Committee and ninth meeting of the fourth session of the Supervisory Committee. The convening and voting procedures of the meetings complied with the relevant provisions of the Company Law of the PRC and the Articles of Association. Specific details are as follows:

The twentieth meeting of the third session of the Supervisory Committee

On 14 January 2020, the Company convened the twentieth meeting of the third session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Proposed Change of Registered Address".

The twenty-first meeting of the third session of the Supervisory Committee

On 25 February 2020, the Company convened the twenty-first meeting of the third session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Amendments to the Rules of Procedure for Meetings of the Supervisory Committee of the Company".

The twenty-second meeting of the third session of the Supervisory Committee

On 2 March 2020, the Company convened the twenty-second meeting of the third session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in R e l a t i o n t o t h e T e m p o r a r y S u p p l e m e n t o f Liquidity with Idle Funds Raised from A Shares".

(IV) The twenty-third meeting of the third session of the Supervisory Committee

On 20 March 2020, the Company convened the twenty-third meeting of the third session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Extension of the Implementation P e r i o d f o r R e p u r c h a s i n g A S h a r e s o f t h e Company".

Annual Report 2020

The twenty-fourth meeting of the third session of the Supervisory Committee

On 30 March 2020, the Company convened the twenty-fourth meeting of the third session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Change of Registered Address and Name of the Company" and the "Resolution in Relation to the Early Election of Supervisors to the Supervisory Committee".

(VI) The twenty-fifth meeting of the third session of the Supervisory Committee

On 29 April 2020, the Company convened the twenty-fifth meeting of the third session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Full Text and Text of the First Quarterly Report of the Company in 2020".

(VII) The first meeting of the fourth session of the Supervisory Committee

On 8 May 2020, the Company convened the first meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Election of the Chairman of the Supervisory Committee".

(VIII) The second meeting of the fourth session of the Supervisory Committee

On 16 June 2020, the Company convened the second meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Disposal of the 100% Equity Interest in Taicang Xiawei Storage Co., Ltd. and property".

Report of the Supervisory Committee

(IX) The third meeting of the fourth session of the Supervisory Committee

O n 29 J u n e 2020, t h e C o m p a n y c o n v e n e d the third meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Report of the Supervisory Committee of the Company for the Year 2019", the "Report on the Company's Financial Accounts for the Year 2019", the "Resolution in Relation to the Provision for Asset Impairment", the "Annual Report and Summary of the Company for the Year 2019", the "Opinion on Specific Explanation of the Board on Matters Involving Non-Standard Audit Opinions", the "Proposal on the Unrecovered Losses Amounting to One-Third of the Total Paid-Up Share Capital", the "2019 Environmental, Social and Governance Report", the "Internal Control Evaluation Report of the Company for the Year 2019", the "Proposal on the Determination of the Remuneration of Supervisors of the Company for the Year 2019", the "Proposal on the Company's 2019 Plan on Non-distribution of Profit", the "Special Report on the Deposit and Actual Use of the Funds Raised by the Company for the Year 2019", the "Report on the Company's Financial Budget for the Year 2020", the "Resolution in Relation to the Determination of the Auditors' Remuneration for the Year 2019 and Re-appointment for the Year 2020", the "Resolution in Relation to the Application to Financial Institution(s) Including Bank(s) for Credit Facilities by the Company" and the "Resolution in Relation to Providing Guarantees for Wholly-owned Subsidiaries of the Company".

Xinjiang La Chapelle Fashion Co., Ltd.

Report of the Supervisory Committee

The fourth meeting of the fourth session of the Supervisory Committee

On 28 August 2020, the Company convened the fourth meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Provision for Asset Impairment", "Company Interim Report of 2020, Summary and Interim Results Announcement" and "Special Report on the Deposit and Actual Use of Funds Raised for the First Half Year of 2020".

(XI) The fifth meeting of the fourth session of the Supervisory Committee

On 1 September 2020, the Company convened the fifth meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Extension of the Temporary Supplement of Liquidity with Idle Funds Raised from A Shares" and the "Resolution in Relation to Adjusting the Operation Model of the Online Business of the Company".

(XII) The sixth meeting of the fourth

session of the Supervisory Committee

On 9 September 2020, the Company convened the sixth meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Proposed Change of Company N a m e a n d B u s i n e s s S c o p e a n d P r o p o s e d Amendments to the Articles of Association of the Company".

(XIII) The seventh meeting of the fourth session of the Supervisory Committee

On 29 September 2020, the Company convened the seventh meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Termination of the Repurchase of A Shares of the Company".

(XIV) The eighth meeting of the fourth session of the Supervisory Committee

On 29 October 2020, the Company convened the eighth meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Full Text and Text of the Third Quarterly Report of the Company in 2020".

(XV) The ninth meeting of the fourth

session of the Supervisory Committee

On 23 November 2020, the Company convened the ninth meeting of the fourth session of the Supervisory Committee in Shanghai, which considered and approved the "Resolution in Relation to the Removal of Ernst & Young Hua Ming LLP as Auditors of the Company" and the "Resolution in Relation to the Appointment of Da Hua Certified Public Accountants (Special General Partnership) as the Auditors of the Company for the Year 2020".

Annual Report 2020

The members of the Supervisory Committee took part in the Company's major work by attending the Board meetings and general meetings, and effectively supervised meeting agendas, voting procedures and voting results as well as made recommendations on operational activities and standardized operation. The Supervisory Committee also effectively supervised the decisions made to ensure their compliance with the laws and regulations of the state, the Articles of Association and the resolutions of the shareholders' general meetings and that they are in the interests of shareholders.

2. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE COMPANY'S OPERATIONS

D u r i n g t h e R e p o r t i n g P e r i o d, t h e S u p e r v i s o r y Committee inspected and supervised the Company's financial condition, operation and performance of duty by senior management in accordance with the Company Law and other relevant laws and regulations, the Articles of Association and relevant requirements of the Rules of Procedures for the Supervisory Committee. The Supervisory Committee is of the view that in 2020, the Company operated normatively in strict compliance with the Company Law, the Articles of Association and other relevant regulations and systems. Operating decisions were reasonable and effective, and decision- making procedures complied with the requirements of laws and regulations. None of the directors and senior management of the Company had violated laws and regulations or caused any prejudice to the interests of the Company and various investors in performing their duties.

Report of the Supervisory Committee

3. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON FINANCIAL POSITION OF THE COMPANY

D u r i n g t h e R e p o r t i n g P e r i o d, t h e S u p e r v i s o r y Committee of the Company supervised and inspected the Company's financial condition by receiving reports from the Company's chief financial officer, reviewing the Company's periodic reports, and reviewing audited reports issued by an accounting firm. The Supervisory Committee is of the view that the financial operations of the Company are made normatively during the year. The 2020 audited financial statements of the Company reflected truly the Company's operating condition, and there are no false records, misleading statements or major omissions.

4. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE UTILIZATION OF THE RAISED PROCEEDS OF THE COMPANY

T h e S u p e r v i s o r y C o m m i t t e e h a s i n s p e c t e d t h e utilization of the raised proceeds, and the Company has established the management system for the r a i s e d p r o c e e d s . T h e p r o c e e d s w e r e u s e d i n a regulated manner and were invested in the projects as undertaken. The Company utilized part of the idle raised proceeds for supplementing liquidity, performing the required legal and relevant approval procedures as well as fulfilling its information disclosure obligations.

Xinjiang La Chapelle Fashion Co., Ltd.

Report of the Supervisory Committee

In 2020, owing to factors such as the COVID-19 pandemic and the closure of a number of stores, the Company was under intense cash pressure to repay debts that were due. As the funds available to the Company are insufficient to repay the raised proceeds, and the bank account where the Company placed its raised proceeds has been frozen, there is a risk that the repaid proceeds would either be frozen or transferred. As at the date of this report, the Company is unable to repay the RMB50 million proceeds that were used for temporarily supplementing its liquidity to its specific bank account for such proceeds. The Supervisory Committee would urge the Board of Directors and management of the Company to actively seek solutions for repaying the proceeds used for temporarily supplementing its liquidity as soon as possible.

5. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE COMPANY'S CONNECTED TRANSACTIONS

The Supervisory Committee verified the related transactions of the Company during the Reporting Period and considered that the Company's related transactions in 2020 are fair and equal, there is no obvious unfairness and no profits of the Company are manipulated through related transactions, and there is no harm to the interests of the Company and other shareholders, especially the interests of small and medium shareholders.

6. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON REVIEW OF THE COMPANY'S EXTERNAL GUARANTEE

During the Reporting Period, the Company had no violation in external guarantees. The Supervisory Committee has not identified any circumstances that would impair the interests of the Company's shareholders or cause loss to the Company's assets.

7. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON INSPECTING THE COMPANY'S INTERNAL CONTROL SELF- EVALUATION REPORT

The Supervisory Committee reviewed the structure and operation of the Company's internal control system and the Company's Internal Control Evaluation Report for 2020, and is of the view that the Company's Internal Control Evaluation Report truly and objectively reflects the structure and operation of the Company's internal control system.

8. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE COMPANY'S PERIODIC REPORT

The preparation and review procedures for the Company's 2020 annual report are in compliance with relevant provisions of laws, regulations and the Articles of Association of the Company. Its substance and form are in compliance with the requirements of the China Securities Regulatory Commission and the Shanghai Stock Exchange. The information contained therein truly reflected the Company's operational management and financial condition in 2020. No violation of confidentiality requirements was found among those involved in the preparation and review of the annual report.

Annual Report 2020

Report of the Supervisory Committee

9. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON INSPECTING THE IMPLEMENTATION OF INFORMATION INSIDER MANAGEMENT OF THE COMPANY

During the Reporting Period, in accordance with the relevant requirements of the Securities Law and the Administrative Measures for the Disclosure of Information of Listed Companies* 《( 上市公司信息披露管理辦法》), the Company implemented insider information confidentiality and insider information registration for matters such as periodic reports and significant matters, effectively preventing the disclosure and utilization of insider information for trading. After verification, the Supervisory Committee is of the view that, during the Reporting Period, the Company's directors, supervisors, senior management and other insider information personnel did not use any insider information or to trade any stocks of the Company through others.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

The Board is pleased to present this Corporate Governance Report in the Group's annual report for the year ended 31 December 2020.

For the year ended 31 December 2020 and as at the date of this report, the Company has been complying with the code provisions ("Code Provision(s)") of the Corporate Governance Code set out in Appendix 14 to the Listing Rules (the "CG Code"), except the deviation mentioned below, making corporate governance rules and recommendations with respect to Board composition, Board diversity policy, duties and procedures, salary structure of the Directors and Senior Management and appraisal of the Board, internal control and auditing, Company Secretary, and communication between the Company and Shareholders.

As of 31 December 2020, the governance structure of the Company is as follows:

Supervisory

Committee

supervises

Board of Directors of

the Company

In particular, the Chairman assumes the major responsibility for ensuring sound corporate governance practices and procedures of the Company. The Company has adopted a corporate governance policy, stating terms of reference for the Board to perform, including but not limited to: formulation and review of the corporate governance policy and practices of the Company; review and monitoring of the training and continuous professional development of the Directors and Senior Management; review and monitoring of the policies and practices of the Company in relation to compliance with laws and regulatory requirements; formulation, review and monitoring of the compliance by staff and Directors with the code of conduct and compliance manual; and review of the compliance of the Company with the CG Code.

CORPORATE GOVERNANCE

PRACTICES

The Group recognizes the vital importance of good corporate governance to the Group's success and sustainability. The Group reviewed relevant regulations seriously pursuant to the guidelines as stipulated in the Listing Rules, and introduced corporate governance practices appropriate to the conduct and growth of the business.

The H shares of the Company were listed on the Hong Kong Stock Exchange with effect from the Hong Kong Listing Date, therefore, the CG Code has been applicable to the Company since the Hong Kong Listing Date.

The Company is committed to maintaining a high standard of corporate governance with a view to safeguarding the interests of its shareholders and enhancing corporate value. In the opinion of the Board, the Company has been in compliance with the Code Provisions of the CG Code as contained in Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the year ended 31 December 2020 and as at the date of this report, save as to the deviation from the CG Code Provision A.1.8, paragraph A.2 and paragraph A.3.

Under Code Provision A.1.8, an issuer should arrange appropriate insurance cover in respect of legal action against its directors. Currently, the Company does not have insurance cover for legal action against its Directors as the Board considers that no director liability insurance on the market provides sufficient protection for its directors at a reasonable insurance premium Therefore, benefits to be derived from taking out insurance may not outweigh the costs.

Annual Report 2020

Corporate Governance Report

Under paragraph A.2 of the CG Code, the chairman and chief executive officer of the Company should have a balanced power and authority. On 3 February 2020, Mr. Xing Jiaxing resigned as Director, chairman and all positions within the Group. On 25 February 2020, Mr. Yu Qiang resigned as Director, president, acting chairman and all positions within the Group. Following the resignation of Mr. Xing Jiaxing, the Company did not have a chairman of the Board during the period from 3 February 2020 to 7 May 2020. On 14 August 2020, Mr. Yin Xinzai resigned as president and was redesignated from an executive Director to a non-executive Director. Following the resignation of Mr. Yin Xinzai, the Company did not have a president from 14 August 2020 to 3 November 2020.

Under paragraph A.3 of the CG Code, the Board should have

balanced composition of executive and non-executive Directors (including independent non-executive Directors). Following the resignation of Mr. Yu Qiang with effect from 25 February 2020, the Board did not have any executive Director during the period from 25 February 2020 to 7 May 2020. With effect from 14 August 2020, Mr. Yin Xinzai was re-designated from an executive Director to a non-executive Director. Therefore, from 14 August 2020 until 31 December 2020, the Board comprised one executive Director, three non-executive Directors and three independent non-executive Directors. The Board, in concurrence with the nomination committee of the Board, is of the view that the Company had in place a senior management team (including Mr. Xing Jiaxing, who was re- appointed as president of the Company from 25 February 2020 to 20 April 2020 and Mr. Yin Xinzai, who was appointed as president of the Company on 20 April 2020) to continue leading the day-to-day management of the Company. Given that the Company has sufficient senior management members who are knowledgeable and experienced in different fields, the Board and the Nomination Committees believed that the senior management team would be able to provide sufficient information to the Board so as to make informed decisions and the Board could thereby function effectively. The Board will be responsible for formulating high-

level strategy and management guidelines and monitoring the Company's general performance, in order to ensure the proper and efficient administration and management of the Group.

BOARD OF DIRECTORS

Responsibilities

The Board is responsible for the overall management and control of the Company. The Board's main roles are to provide leadership and to approve strategic policies and plans with a view to enhancing shareholder value. All Directors carry out their duties in good faith and in compliance with the applicable laws and regulations, and act in the interest of the Company and its shareholders at all times.

All Directors have full and timely access to all relevant information as well as the advice and services of the Company Secretary and Senior Management, with a view to ensuring that Board procedures and all applicable laws and regulations are followed.

The Board reserves for its decision all major matters of the Company, including approval and monitoring of all policy matters, overall strategies and budgets, internal control and risk management systems, material transactions (in particular those that may involve conflict of interests), financial information, appointment of Directors and other significant financial and operational matters.

Directors have full and timely access to consultation with the Senior Management independently. Any Director and Board professional committee may request independent professional advice in appropriate circumstances at the Company's expense, upon making reasonable request to the Board.

The Board has delegated the authority and responsibility for day-to-day management and operation of the Group to the management of the Group. The respective functions of the

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

Board and management of the Company were established and will be reviewed from time to time as appropriate. To oversee particular aspects of the Company's affairs, the Board has established five Board professional committees, namely the Audit Committee, the Remuneration and Appraisal Committee, the Nomination Committee, the Budget Committee and the Strategy and Development Committee (altogether the "Board Professional Committees"). The Board has delegated to the Board Professional Committees responsibilities as set out in their respective terms of reference.

Board Composition

As at the date of this report, the Directors of the fourth session of the Board were as follows:

Executive Directors

Mr. Wu Jinying (Chairman)

Ms. Zhang Ying (President)

Ms. Zhang Danling

Non-executive Directors

Mr. Yin Xinzai

For the year ended 31 December 2020, the Company has been in compliance with the requirements of Rules 3.10(1) and 3.10(2) of the Listing Rules relating to the appointment of at least three independent non-executive Directors with at least one independent non-executive Director possessing appropriate professional qualifications of accounting or related financial management expertise. The Company has also complied with the requirement of Rule 3.10A of the Listing Rules relating to the appointment of independent non-executive Directors representing at least one-third of the Board.

Each of the independent non-executive Directors has confirmed his or her independence pursuant to Rule 3.13 of the Listing Rules and the Company considers each of them to be independent.

All Directors have brought a wide range of valuable business experience, knowledge and professionalism to the Board for its efficient and effective functioning. Moreover, through active participation in Board meetings, taking the lead in managing issues involving potential conflict of interests and serving on Board Professional Committees, all non-executive Directors make various contributions to the effective direction of the Company.

Independent Non-executive Directors

Mr. Xing Jiangze

Ms. Wong Sze Wing

Mr. Zhu Xiaozhe

Biographical details of the Directors are set out in the section headed "Profiles of Directors, Supervisors and Senior Management" in this report.

There are no relationships among the Directors, Supervisors and senior management, including financial, business, family or other material/relevant relationships.

Induction and Continuous Professional Development

All Directors confirmed that they have complied with Code Provision A.6.5 relating to the director training. During the year ended 31 December 2020, all Directors participated in continuous professional development by means of attending seminars and/or reading materials in the following aspects to develop and refresh their knowledge and skills. All Directors have provided their training record to the Company.

Annual Report 2020

Corporate Governance Report

	Corporate	Rules and	Financial	Business
Name of Directors	Governance	Regulations	Management	Management
Mr. Xing Jiaxing (resigned on 3 February 2020)	√	√	√	√
Mr. Yu Qiang (resigned on 25 February 2020)	√	√	√	√
Mr. Wang Wenke (appointed on 18 December 2019
and retired on 8 May 2020)	√	√	√	√
Mr. Lu Weiming (retired on 8 May 2020)	√	√	√	√
Mr. Luo Bin (retired on 8 May 2020)	√	√	√	√
Mr. Rui Peng (appointed on 16 October 2019 and
retired on 8 May 2020)	√	√	√	√
Mr. Chan, Wing Yuen Hubert (retired on 8 May
2020)	√	√	√	√
Mr. Zhang Zeping (retired on 8 May 2020)	√	√	√	√
Mr. Duan Xuefeng (appointed on 8 May 2020 and
resigned on 11 January 2021)	√	√	√	√
Mr. Yin Xinzai (appointed on 8 May 2020)	√	√	√	√
Ms. Zhang Danling (appointed on 8 May 2020)	√	√	√	√
Mr. Xing Jiangze (appointed on 8 May 2020)	√	√	√	√
Ms. Zhang Yujing (appointed on 8 May 2020 and
resigned on 11 January 2021)	√	√	√	√
Ms. Xiao Yanming (appointed on 8 May 2020 and
resigned on 11 January 2021)	√	√	√	√
Mr. Zhu Xiaozhe (appointed on 8 May 2020)	√	√	√	√

Chairman and Chief Executive Officer

Code Provision A.2 stipulates that the chairman and chief executive officer in the Company should have a balanced power and authority.

On 3 February 2020, Mr. Xing Jiaxing resigned as Director, chairman and all positions within the Group. On 25 February 2020, Mr. Yu Qiang resigned as Director, president, acting chairman and all positions within the Group. Following the resignation of Mr. Xing Jiaxing, the Company did not have a chairman of the Board during the period from 3 February 2020 to 7 May 2020. On 14 August 2020, Mr. Yin Xinzai resigned as president and was re-designated from an executive Director to a non-executive Director. Following the resignation of Mr. Yin Xinzai, the Company did not have a president from 14 August 2020 to 3 November 2020.

Appointment and Re-Election of Directors

Pursuant to the Articles of Association, Directors (including executive Directors, non-executive Directors and independent non-executive Directors) shall be subject to election at general meetings with a term of office of three years and may be re-elected. However, an independent non-executive Director shall not serve more than six years consecutively. The Company has implemented a set of effective procedures for the appointment of new Directors. The Nomination Committee shall, in accordance with provisions of the relevant laws and regulations and the Articles of Association, take into account the practical situations of the Company, consider the selection criteria, selection procedures and terms of office of the Directors of the Company, and record and submit the resolutions to the Board for approval. All newly nominated Directors are subject to election and approval at general meetings. Each of the Directors has entered into a service contract with the Company for a term commencing on the date of his appointment and ending on its expiration.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

Board Professional Committees

Audit Committee

The Company has established an Audit Committee with written terms of reference in compliance with the CG Code. The primary duties of the Audit Committee are to review and supervise the financial reporting process and internal controls.

The Audit Committee of the fourth session of the Board consists of one executive Director and two independent non- executive Directors. The members of the Audit Committee are Mr. Xing Jiangze, Ms. Zhang Ying and Ms. Wong Sze Wing. It is currently chaired by Mr. Xing Jiangze, an independent non- executive Director. Mr. Xing Jiangze was appointed as the chairman of the Audit Committee on 8 May 2020.

Nomination Committee

The Company has established a Nomination Committee with written terms of reference in compliance with the CG Code. The primary duties of the Nomination Committee are to review the structure, size and composition of the Board, assess the independence and diversity of the independent non-executive Directors and to make recommendations to the Board on the appointment and removal of Directors. The Nomination Committee has adopted a set of nomination procedures for selection of candidates for directorship of the Company by making reference to the Company's Board Diversity Policy, such individuals' skills, experience, professional knowledge and time commitments, the Company's needs and other relevant statutory requirements and regulations.

The Nomination Committee of the fourth session of the Board consists of one executive Director and two independent non-executive Directors. The members of the Nomination Committee are Mr. Zhu Xiaozhe, Mr. Zhang Ying and Mr. Xing Jiangze. It is currently chaired by Mr. Zhu Xiaozhe, an independent non-executive Director.

Annual Report 2020

Corporate Governance Report

Nomination Policy

The following selection process for directors and senior m a n a g e m e n t i s s e t o u t i n t h e t e r m s o f r e f e r e n c e o f nomination committee of the Board:

The Nomination Committee shall proactively exchange views with relevant departments of the Company, study the demand of the Company for new directors and senior management, and then prepare the written materials thereof;
The Nomination Committee may conduct extensive s e a r c h f o r c a n d i d a t e s f o r d i r e c t o r s a n d s e n i o r management in the Company and job market;
The Nomination Committee shall collect information on the potential candidates, including the profession, education, job title, detailed working experience and all part-time jobs, and then prepare the written materials thereof;
The Nomination Committee shall seek the nominee's consent to nomination, failing which such nominee shall not be named as a candidate for directors and senior management;
Meetings of the Nomination Committee shall be convened, at which a review on qualifications for the potential candidates shall be carried out based on the terms of appointment for directors and senior management;

The Nomination Committee shall submit to the Board of Directors its recommendations on the candidates for directors and new senior management together with relevant materials in one month to two months prior to the election of new directors and appointment of new senior management;
The Nomination Committee shall implement other follow-up work in accordance with the decisions and feedback of the Board of Directors.

During the year ended 31 December 2020, the Nomination Committee met nine times to nominate directors and senior management members for appointment and selection, review the structure, size and composition of the Board and the independence of the independent non-executive Directors and diversity of the Board.

Board Diversity Policy

With a view to achieving a sustainable and balanced development, the Company sees increasing diversity at the Board level as an essential element in supporting the attainment of its strategic objectives and sustainable development. All Board appointments will be based on meritocracy, and candidates will be considered against appropriate criteria, having due regard to the benefits of diversity on the Board.

The Company is committed to selecting the best person for the role. Selection of candidates will be based on a range of diversity perspectives, including but not limited to gender, age, cultural background and ethnicity, in addition to educational background, professional experience, skills, knowledge and length of service. The ultimate decision will be based on merit and contribution that the selected candidates will bring to the Board.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

Remuneration and Appraisal Committee

The Company has established a Remuneration and Appraisal Committee with written terms of reference in compliance with the CG Code. The primary duties of the Remuneration and Appraisal Committee are to make recommendations to the Board on the Company's policy and structure for all remuneration of Directors and Senior Management and on the establishment of a formal and transparent procedure for developing policy on such remuneration.

According to the Terms of Reference of Remuneration and Appraisal Committee, the remuneration plans of the directors of the Company raised by the Remuneration and Appraisal Committee must be agreed by the Board and then can be implemented after the approval on the General Meeting. The remuneration distribution schemes of the senior management of the Company must be submitted to the Board for approval. Model (ii) of Rule B.1.2(c) in Appendix 14 of the Listing Rules is adopted for the procedures that determine the remuneration.

The Remuneration and Appraisal Committee of the fourth session of the Board consists of one non-executive Director and two independent non-executive Directors. The members of the Remuneration and Appraisal Committee are Mr. Xing Jiangze, Mr. Yin Xinzai and Mr. Zhu Xiaozhe. It is chaired by Mr. Xing Jiangze, an independent non-executive Director.

For the year ended 31 December 2020, the Remuneration and Appraisal Committee met twice to review and assess the annual job performance of the Senior Management, and review and make recommendations to the Board on the policy and structure of the remuneration of Directors and Senior Management and other related matters.

Budget Committee

The Company has established a Budget Committee. The primary duties of the Budget Committee are to make recommendations to the Board on budgeting.

The Budget Committee of the fourth session of the Board consists of three executive Directors, one non-executive Director and two independent non-executive Directors. The members of the Budget Committee are Mr. Wu Jinying, Ms. Zhang Ying, Ms. Zhang Danling, Mr. Yin Xinzai, Mr. Xing Jiangze and Ms. Wong Sze Wing. It is chaired by Ms. Zhang Ying.

For the year ended 31 December 2020, the Budget Committee met once to review and make recommendations to the Board on budgeting for the upcoming financial year.

Strategy and Development Committee

The Company has established a Strategy and Development C o m m i t t e e. T h e p r i m a r y d u t i e s o f t h e S t r a t e g y a n d Development Committee are to make recommendations to the Board on matters such as the Company's development plans, strategic investments and business innovations.

The Strategy and Development Committee of the fourth session of the Board consists of three executive Directors, one non-executive Director and two independent non-executive Directors. The members of the Strategy and Development Committee are Mr. Wu Jinying, Ms. Zhang Ying, Ms. Zhang Danling, Mr. Yin Xinzai, Ms. Wong Sze Wing and Mr. Zhu Xiaozhe. It is chaired by Mr. Wu Jinying.

For the year ended 31 December 2020, the Strategy and Development Committee met twice to review and make recommendations to the Board on the Group's latest strategy plans and development.

Annual Report 2020

Corporate Governance Report

Corporate Governance Function

The Board recognizes that corporate governance should be the collective responsibility of the Directors and their corporate governance duties include:

to develop, review and implement the Company's policy and practices on corporate governance;
to review and monitor the training and continuous professional development of the Directors and Management;
to review and monitor the Company's policies and practices on compliance with legal and regulatory requirements;
to develop, review and monitor the code of conduct a n d c o m p l i a n c e m a n u a l (i f a n y) a p p l i c a b l e t o employees and Directors;
to review the Company's compliance with the CG Code and disclosure in the Corporate Governance Report; and
to develop, review and monitor the implementation of the shareholders' communication policy to ensure its effectiveness, and make recommendations to the Board where appropriate to enhance shareholders' relationship with the Company.

For the year ended 31 December 2020, the above corporate governance function has been performed and executed by the Board and the Board has reviewed the Company's compliance with the CG Code.

Board Meetings and Board Professional Committee Meetings

The Board intends to hold Board meetings regularly at least four times a year at approximately quarterly intervals. Notices of no less than fourteen days will be given for all regular Board meetings to provide all Directors with an opportunity to attend and include matters in the agenda for regular Board meetings.

For other Board and Board Professional Committee meetings, reasonable notice will generally be given. The agenda and accompanying board papers are dispatched to the Directors or members of a Board Professional Committee at least 3 days before the meetings to ensure that they have sufficient time to review the papers and can adequately prepare for the meetings. When Directors or members of a Board Professional Committee are unable to attend a meeting, they will be advised of the matters to be discussed and given an opportunity to make their views known to the chairman of the Board or the Chairmen of the Committees prior to the meeting.

Minutes of the Board meetings and Board Professional Committee meetings are/will be recorded in sufficient detail to include the matters considered by the Board and the Board Professional Committees and the decisions reached, including any concerns raised by the Directors. Draft minutes of each Board meeting and Board Professional Committee meeting will be sent to the Directors for comments within a reasonable time after the date on which the meeting is held.

According to the Articles of Association, a Director shall not vote nor be counted in the quorum on any resolution of the Board approving any contract or arrangement in which he or his associates is materially interested.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

DIRECTORS' ATTENDANCE RECORDS AT BOARD MEETINGS, BOARD PROFESSIONAL COMMITTEES' MEETINGS AND GENERAL MEETINGS

The attendance records of each Director at the meetings of the Board, Board Professional Committees and general meeting of the Company held during the year ended 31 December 2020 are set out below:

				Remuneration
				and		Strategy and
		Audit	Nomination	Appraisal	Budget	Development
	Board	Committee	Committee	Committee	Committee	Committee	General
Name of Directors	meeting	meeting	meeting	meeting	meeting	meeting	meeting
Ms. Zhang Danling (appointed on 8 May
2020)	13/13				1/1	1/1	2/6
Mr. Yin Xinzai (appointed on 8 May 2020)	13/13			1/1	1/1	1/1	3/6
Mr. Duan Xuefeng (appointed on 8 May 2020
and resigned on 11 January 2021)	13/13		3/3		1/1	1/1	3/6
Ms. Zhang Yujing (appointed on 8 May 2020
and resigned on 11 January 2021)	13/13	5/5			1/1	1/1	3/6
Mr. Xing Jiangze (appointed on 8 May 2020)	13/13	5/5	3/3	1/1	1/1		1/6
Mr. Zhu Xiaozhe (appointed on 8 May 2020)	13/13		3/3	1/1		1/1	2/6
Ms. Xiao Yanming (appointed on 8 May 2020
and resigned on 11 January 2021)	13/13	5/5				1/1	3/6
Mr. Xing Jiaxing (resigned on 3 February
2020)	1/1					1/1	0/0
Mr. Yu Qiang (resigned on 25 February 2020)	2/2					1/1	0/0
Mr. Wang Wenke (appointed on 18 December
2019 and retired on 8 May 2020)	9/9					1/1	2/2
Mr. Lu Weiming (retired on 8 May 2020)	9/9			1/1		1/1	1/2
Mr. Luo Bin (retired on 8 May 2020)	9/9	3/3				1/1	0/2
Mr. Chan, Wing Yuen Hubert (retired on 8
May 2020)	9/9	3/3	5/5	1/1			0/2
Mr. Zhang Zeping (retired on 8 May 2020)	9/9		5/5	1/1		1/1	2/2
Mr. Rui Peng (appointed on 16 October 2019
and retired on 8 May 2020)	9/9	3/3	5/5	1/1			1/2

Attendance at the above meetings by an alternate Director has not been counted as attendance by the Director himself.

Annual Report 2020

COMPLIANCE WITH NON-COMPETE UNDERTAKING

Each of Mr. Xing Jiaxing and Shanghai Hexia (the former controlling shareholders of the Company (the controlling shareholder as defined in the Listing Rules) has confirmed to the Company and declared that he/it has complied with the non-compete undertaking given by them to the Company on 10 September 2014 during the year ended 31 December 2020. The independent non-executive Directors have reviewed the status of compliance and enforcement of the non- compete undertaking and confirmed that all the undertakings thereunder have been complied with throughout the year ended 31 December 2020.

Remuneration bands

Corporate Governance Report

Note: Each of Mr. Xing and Shanghai Hexia ceased to be a controlling shareholder of the Company under the Listing Rules since 23 March 2021. For details, please refer to the announcements of the Company dated 31 January 2021, 1 March 2021, 7 March 2021, 22 March 2021, 23 March 2021, 25 March 2021, 28 March 2021, 16 April 2021 and 21 April 2021.

SENIOR MANAGEMENT'S

REMUNERATIONS

The Senior Management's remunerations are determined by the Board with reference to their duties, responsibilities and performance and the results of the Group. Remunerations paid to a total of 6 Senior Management (excluding Directors and Supervisors) by bands for the year ended 31 December

2020 are set out below:

Number of individuals

RMB1,000,000 and below	4
RMB1,000,001 to RMB2,000,000	2
RMB2,000,001 to RMB3,000,000	0

SECURITIES TRANSACTIONS BY DIRECTORS AND SUPERVISORS

The Company has adopted its own policies for securities transactions (the "Company Code") by Directors, Supervisors and relevant employees on terms no less exacting than the Model Code. Specific enquiry has been made of all the Directors and Supervisors, and all the Directors and Supervisors have confirmed that they have complied with the Model Code and the Company Code throughout the year ended 31 December 2020.

RISK MANAGEMENT AND INTERNAL CONTROLS

As a public company listed both in Shanghai and Hong Kong, the Company strives to improve its internal governance and build a favorable corporate risk monitoring environment by strictly abiding by laws and regulations and other regulatory requirements within and without the borders.

Continue to improve and optimize risk monitoring system

During the Reporting Period, in accordance with the four documents co-published by the five ministries of the PRC, namely, Fundamental Norms on Corporate Internal Control, Application Guidance on Corporate Internal Control, Guidance on Corporate Internal Control and Assessment, Audit Guidance on Corporate Internal Control as well as the relevant requirements with regard to self-criticism on risk management and internal control systems by the Hong Kong Stock Exchange, the Company, along with its subsidiaries and relevant departments, carried out a comprehensive check-up of its existing system and procedures in light of organizational structure, development strategy, human resources, social responsibility, corporate culture, funding activities, procurement business, asset management, sales business, merchandizing, financial reports, comprehensive budget, contract management, internal communications and information system and formed a benign cycle of detecting risks, identifying risks and facilitating business development

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

through risk identification, risk assessment and gradual optimization, so as to further strengthen and standardize internal corporate monitoring, enhance operational management and risk control capability as well as guarantee stakeholders' legal interests and facilitate the realization of the Company's strategic role and sustainable development.

Effectively prevent operational risks to strengthen corporate control

The Company further normalized and perfected its internal control system to enhance the efficiency and effectiveness of construction and implementation of the internal control system. The Company further improved its management and control measures with regard to strategic risks, financial risks, operational risks and market risks to prevent all kinds of risks, lay a solid foundation for corporate development as well as facilitate sustainable development. The Company further increased employee involvement in study and training to realize recognition and identification. The Company continued to enhance staff's competency and skills by urging them to learn new management concepts and internal control methods through external and internal trainings, thus forming a benign atmosphere within the Company that everyone learns internal control, everyone emphasizes risks and everyone is checked, and consequently facilitating the building of internal control and management mechanism and risk prevention mechanism that are systematic, normative and efficient.

The Company has established a scientific internal control system to identify, assess and manage the significant risks of the Company. The Board of Directors has confirmed its responsibility to supervise the Company's risk management and internal control systems and review the effectiveness at least annually through the Audit Committee. The Audit Committee generally supervises the effective implementation and self-evaluation of internal control, and is responsible for reviewing risk management and internal control systems and

supervision. Besides annual reports by external auditors, the Audit Committee also reviews periodic internal audit reports with regard to the Company's core businesses formulated by the audit department to check the effectiveness of the internal control system and risk management mechanism as well as resolves material inadequacies found in internal control. The Internal Review Committee manages and supervises the internal risk management system within relevant departments of the Company, guarantees the implementation and perfection of risk management system and measures, and manages disclosure of inside information. The Internal Review Committee, led by the Audit Committee, reports to the Audit Committee.

The management is responsible for the daily operation of the internal control within the Company. The Office of the Board, Audit and Regulatory Department and Merchandise Department constitute functioning departments within the Company to take charge of the implementation of internal control and the assessment of the soundness and effectiveness of all the internal systems within the Company. As the implementation units of the internal control, the Company's functioning departments, affiliates, wholly- owned and holding subsidiaries appoint certain persons to improve and evaluate the internal control system. The Company's internal risk management organizational structure is illustrated below:

		Board of
		Directors



		Audit
		Committee


		Internal
		Review
		Commitee


Oce of the	Audit and	Merchandise
Regulatory
Board	Department
Department

Annual Report 2020

Corporate Governance Report

In 2020, the Company has adopted a number of policies and procedures to assess and carefully improve the effectiveness of corporate risk management and internal control systems. During the Reporting Period, the Audit and Regulatory Department of the Company initiated several ad hoc audit projects concerning matters such as regional management, logistics operations and disposal of obsolete inventories, and actively assessed the plausibility, effectiveness and completeness of various aspects of management activities. The Audit Department also formulated several rules and regulations to tackle the above problems, namely Administrative Measures on Donations, Administrative Measures on Inventory-taking in Logistics Warehouse and Administrative Measures on Disposal of Obsolete Inventories, in an effort to improve corporate internal system and avoid operational risks. The Company's Regulatory Department participated in and organized anti-corruption campaigns, involving a total of around 130,000 attendances. Meanwhile, it opened a WeChat subscription account named La Chapelle with Integrity, which now has accumulated 35,000 followers. All the efforts above have contributed to the improvement of the Company's network for anti-corruption and internal control.

For the year ended 31 December 2020, the Board carried out annual review on the effectiveness of the Company's risk management system, procedures and internal control system, and continuously advised on various means of improvement. The review involved all material aspects of internal control, including financial control, operational control, compliance control and risk management functions. The Board also reviewed the adequacy of resources, staff qualifications and experience, training programs and corporate budget on accounting and financial reporting function. There were certain failures in the risk management and internal control system that could have negative impact on shareholders' interests. The Company's risk management and internal control systems were not deemed entirely effective and sufficient. The Company will continue to improve its risk management and internal control systems in order to protect the interests of the Company and its shareholders..

The Company's risk management and internal control systems aim to manage, rather than eliminate, the risks involved with failing to complete the business goals, and can only provide the reasonable, but not absolute, guarantee on the material misrepresentations or losses.

Strengthen insider filing to improve insider information management

During the Reporting Period, the Company carried out the management of insider information in strict accordance with the regulatory requirements both in Shanghai and Hong Kong and the internal system. The Company strengthened the management of confidentiality policy of insider information and seriously performed the duty with respect to confidentiality and filing of persons with knowledge of insider information, truly, accurately and completely recording persons with knowledge of insider information during the processes of counseling and planning, argumentation and consultation and compiling and reviewing. The Company timely performed filing of directors, supervisors and senior management, relevant staff and intermediary agents as well as irregularly carried out self-examination on insider trading, so as to make sure that the relevant information is legally collected, delivered, organized and disclosed in accordance with the relevant laws and regulations. During the Reporting Period, no person with knowledge of insider information was found using insider information to buy and sell the Company's shares.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

Perfect corporate governance system to improve corporate governance

In order to enhance corporate governance and build a favorable internal control environment, the Company further perfected rules of procedure regarding General Meeting, the Board of Directors and the Supervisory Committee, and terms of reference of the Audit Committee, the Nomination Committee and the Remuneration and Appraisal Committee. The Company's General Meeting, the Board of Directors, the Supervisory Committee, senior management and board secretary were able to operate independently and legally as well as performed rights and duties based on the authority endowed by the Articles of Association and relevant regulations. No violation of law and regulations had been found. All Board Professional Committees performed duties in accordance with the Articles of Association and corresponding terms of reference. Each Board Professional Committee has its own meeting system and submits written resolutions regarding reviewed matters to the Board, which act as an important foundation for decision-making for the Board and the General Meeting and thus play a positive role in corporate governance.

The Company will continue to perfect its internal control and improve self-assessment in the follow-up. It will also continue to establish and improve its risk management and internal control systems that meet the demand of its development

and management so as to make sure that the Company's operational management is legal, its assets are reliable, and financial reports and relevant information are true and complete, thus providing a reasonable guarantee for realizing the Company's strategic goals.

INTERNAL CONTROL SELF-

EVALUATION REPORT

Identification of deficiencies in internal control and rectification

1. Identification of deficiencies in internal control over financial reporting and rectification

1.1 Significant deficiencies

Whether there was a significant deficiency in the Company's internal control over financial reporting during the Reporting Period

√ Yes □No

Based on the above criteria for identifying deficiencies in internal control over financial reporting, the Company had two significant deficiencies in internal control over financial reporting during the Reporting Period.

Annual Report 2020

Corporate Governance Report

					Whether the
				Whether the	rectification
Significant				rectification is	is completed as
deficiencies in				completed as	of the date of
internal control over	Description			of the reporting	issuance
financial reporting	on the deficiency	Business sector	Deficiency rectification status/rectification plan	base date	of the report
Loss of control of a	The subsidiary was taken	Financial	The Company has accepted the opinion of the annual	No	No
subsidiary without	over by creditors and	Management	audit body and corrected the exclusion of LaCha
timely corresponding	the information about		Fashion I and its subsidiaries (including Naf Naf
adjustment to the	the takeover was not		SAS) from the scope of consolidation of financial
scope of consolidation	disclosed in a timely		statements to 25 February 2020, and made additional
of the accounting	manner and the scope		disclosures in the 2020 annual report on this matter
statements	of consolidation of the		and adjustments to the scope of consolidation of
	accounting statements		financial statements and the consolidated financial
	was not adjusted		data. The Company has also formulated a work plan
	accordingly in a timely		to address the matter, and in accordance with the
	manner		relevant regulations, the impact of the matter on
			the interim financial report will be assessed and
			disclosed in a timely manner. At the same time, the
			Company will further enhance the business skills
			and risk awareness of its financial staff, strengthen
			effective communication between the Company's
			internal staff and external auditors, and implement
			management of the entire process of preparation,
			provision and analysis of financial reports to prevent
			the recurrence of such problems.

Late disclosure of	Failure to disclose	Others
litigation information	information relating to
	litigation cases in a timely
	manner in accordance
	with relevant laws and
	regulations

The Company has strengthened its internal	Yes	Yes
communication mechanism for information
disclosure by requiring timely reporting of litigation
and other disputes involving various subsidiaries,
establishing a litigation case ledger with sufficient
information, monitoring the total amount of cases
involved and assessing the significance of litigation
and other disputes in a timely manner and making
timely disclosure accordingly.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

1.2 Significant deficiencies

Whether there was a significant deficiency in the Company's internal control over financial reporting during the Reporting Period

□ Yes √ No

1.5 W h e t h e r , a s a r e s u l t o f t h e a b o v e r e c t if ic a t io n, t h e C o m p a n y h a s a n y important deficiencies in internal control over financial reporting that have not been rectified as at the reporting base date

□ Yes √ No

1.3 General deficiencies

Based on the above criteria for identifying deficiencies in internal control over financial r e p o r t i n g, t h e C o m p a n y h a d n o g e n e r a l deficiencies in internal control over financial reporting during the Reporting Period.

1.4 W h e t h e r , a s a r e s u l t o f t h e a b o v e r e c t if ic a t io n, t h e C o m p a n y h a s a n y significant deficiencies in internal control over financial reporting that have not been rectified as at the reporting base date

√ Yes □No

There is 1 significant deficiency in internal control over financial reporting that has not been rectified.

2. Identification of deficiencies in internal control over non-financial reporting and rectification

2.1 Significant deficiencies

Whether there was a significant deficiency in the Company's internal control over non-financial reporting during the Reporting Period

√ Yes □No

Based on the above criteria for identifying deficiencies in internal control over non-financial reporting, the Company had three significant deficiencies in internal control over non-financial reporting during the Reporting Period.

Annual Report 2020

Corporate Governance Report

					Whether the
Significant				Whether the	rectification
deficiencies in				rectification is	is completed as
internal control over				completed as	of the date of
non-financial	Description			of the reporting	issuance
reporting	on the deficiency	Business sector	Deficiency rectification status/rectification plan	base date	of the report

Deficiencies in the internal control environment

Late compliance with decision-making process and failure to disclose information in a timely manner

Frequent changes in	Others
governance and
management of the
Company, loss of staff
in key positions, and the
absence of a full-time
board secretary.

The Company did not	Others
complete the share buy-
back programme within
the commitment period
and did not comply
with the corresponding
decision-making process
to vary or waive it in a
timely manner.

The Company will take into account the recent changes	No	No
in the shareholding of the Company to form a
sustainable and stable composition of- the Board as
soon as possible to ensure the smooth operation of
the Board and specialised committees. Up to now,
the Company has formed a management team that
is in line with the actual situation at this stage, and
has further clarified its core objectives of improving
the quality of its operations and enhancing its
profitability. It will continue to enhance the stability
of the management and key personnel by adjusting
its human resources policies, optimising its business,
position settings and risk management control
processes, so as to actively protect the normal
operation and development of the Company and
safeguard the legitimate interests of all investors.
The Company has promptly explained to investors,	Yes	Yes
in particular small and medium-sized investors,
the reasons, difficulties and risks involved for the
termination of the share buy-back, as well as the
current business operation situation and the direction
of subsequent development. In its subsequent work,
the Company will conduct serious investigation in
respect of the relevant decision-making resolutions,
make comprehensive and systematic assessment and
prudent decision-making, so as to ensure that the
relevant matters will be subject to internal approval
process in strict accordance with the statutory
procedures, and to safeguard the compliance
management and standard operation of the listed
company.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

					Whether the
Significant				Whether the	rectification
deficiencies in				rectification is	is completed as
internal control over				completed as	of the date of
non-financial	Description			of the reporting	issuance
reporting	on the deficiency	Business sector	Deficiency rectification status/rectification plan	base date	of the report
Failure in the	During the Reporting	Investment	Since 2018, the Company has started to divest itself of	No	No

implementation	Period, the Company	management	businesses that are not in line with the Company's
of internal control	did not obtain complete		strategy and has disposed of some of its investment
systems relating to	financial and operating		brands that are unable to achieve the expected
the management of	information of its external		objectives. In 2021, the Company will continue to
external investments	investment enterprises		sort out and consolidate its investee companies,
	and did not effectively		integrate resources with those investee companies
	implement the tracking		that have synergies with its existing businesses and
	and management of its		dispose of its equity interests in investee companies
	external investment.		that do not have a strong connection with the
			Company's existing businesses. At the same time,
			the Company will further clarify the responsibilities
			and authority of the appointed personnel, improve
			the risk management procedures and information
			reporting mechanism of its subsidiaries, improve
			the reporting system and deliberation procedures of
			major events of its subsidiaries, obtain financial and
			operational information of its subsidiaries in a timely
			manner and strengthen the financial management of
			its subsidiaries; and require its subsidiaries to establish
			a complete internal control system in accordance
			with the Company's internal control requirements to
			guard against internal control risks.

Annual Report 2020

Corporate Governance Report

2.2 Significant deficiencies

Whether there was a significant deficiency in the Company's internal control over non-financial reporting during the Reporting Period

Yes √ No

2.3 General deficiencies

There may be general deficiencies in the daily operation of internal control processes. As the Company's internal control has established a dual supervision mechanism of self-evaluation and internal audit, the internal deficiencies will be corrected once identified and will not have any material impact on the operation of the Company's internal control system.

2.4 W h e t h e r , a s a r e s u l t o f t h e a b o v e r e c t if ic a t io n, t h e C o m p a n y h a s a n y significant deficiencies in internal control over financial reporting that have not been rectified as at the reporting base date

√ Yes □No

There are 2 significant deficiencies in internal control over financial reporting that has not been rectified.

2.5 W h e t h e r , a s a r e s u l t o f t h e a b o v e r e c t if ic a t io n, t h e C o m p a n y h a s a n y important deficiencies in internal control over financial reporting that have not been rectified as at the reporting base date

□ Yes √ No

Description of other significant internal control related matters

1. Rectification of internal control deficiencies in the previous year

□ Applicable "√ Not applicable"

2. Internal control for the year and directions for improvement in the next year

√ Applicable "□ Not applicable"

The Company has conducted a self-evaluation of the effectiveness of the design and operation of the Company's internal controls as of 31 December 2020 in accordance with the requirements of the basic standards, evaluation guidelines and other relevant laws and regulations. In the year 2020, the self- evaluation of internal control revealed that there were significant internal deficiencies in the financial management of the Company, etc. In the year 2021, the Company will formulate rectification plans for the significant deficiencies in accordance with the relevant regulations of the corporate internal control system and implement the rectification work thoroughly t o e n s u r e c o m p l i a n c e w i t h t h e m a n a g e m e n t requirements of the relevant regulatory authorities. At the same time, the Company will further establish and improve the Company's internal control management system, which is oriented towards comprehensive risk management, with governance at source and process control at its core, to strengthen its risk prevention capability, and to ensure the safe and sound operation of the Company through a series of measures such as system improvement, standardisation of risk control, strengthening of internal supervision of the Company and reinforcement of supervision in key areas.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

DESCRIPTION ON THE INTERNAL	The failure of La Chapelle to make any disclosure on the
CONTROL AUDIT REPORTING	takeover of FASHION I and to adjust the scope covered
The Company engaged Da Hua CPAs (Special General	by the consolidated financial statements accordingly
on a timely basis is a failure in the implementation of
Partnership) to conduct an audit of the Company's internal
the relevant internal control system over information
controls for the year 2020 and issued a negative opinion on
disclosure in respect of financial reporting.
the internal control audit report. For details, please refer to

the overseas regulatory announcement disclosed by the	(2) As set out in the disclosure announcement of La
Company on 28 April 2021.
Chapelle dated 9 December 2020, from 9 December

Disclosure of internal control audit report: Yes	2019 to 9 December 2020, the Company was involved
in 439 accumulated litigations, with a total claimed

Type of opinion on internal control audit report: Negative	amount of approximately RMB1.523 billion. Among
them, there was one material litigation which involved
opinion
a litigation amount of approximately RMB176 million;

MATTERS RESULTING IN ADVERSE	and a total of 438 litigations which were cumulatively
involved, with an amount of approximately RMB1.347
OPINION
billion. The value of equity interests of subsidiaries

According to the Internal Control Audit Report issued by	being judicially frozen amounted to RMB435,709,300;
85 bank accounts in total were effectively frozen,
Da Hua: "Material defect refers to a defect or a combination
with an aggregate frozen amount of approximately
of defects in internal control that may result in material
RMB205,468,800; the book value of the Company's
misstatement in financial statements which cannot be
seized real estate amounted to RMB1,296,502,100 in
avoided, discovered and rectified on a timely basis.
aggregate.

The following material defects are found in La Chapelle's	These matters or situations of La Chapelle fall within
internal control in respect of financial reporting:
the definition of material matters under Article 30 of

(1) On 25 February 2020, FASHION I was taken over by	the Administrative Measures for Information Disclosure
of Listed Companies (上市公司信息披露管理辦法) and
HTI ADVISORY COMPANY LIMITED due to failure to
fall within the criteria and requirements for disclosure
repay borrowings due. La Chapelle could not control
under the Rules Governing the Listing of Stocks on the
or have any influence on FASHION I, and has lost its
Shanghai Stock Exchange (上海證券交易所股票上
de facto control, which resulted in the loss of control
市規則). Failure to disclose such matters on a timely
of La Chapelle over its wholly-owned subsidiary
basis is a failure in the implementation of the relevant
FASHION I and its subsidiaries, APPAREL Ⅱ and Naf
internal control system over information disclosure in
Naf SAS as a whole. On 15 May 2020, as Naf Naf SAS
respect of financial reporting.
was unable to settle the debts owed to its suppliers

and the local government, the local court ordered	An effective internal control can provide a reasonable
that the rehabilitation proceedings be initiated and an
assurance for the authenticity and completeness
administrator be appointed, and Naf Naf SAS was no
of financial reporting and relevant information. The
longer included in La Chapelle'sconsolidated financial
aforesaid material defects is a deficiency in the internal
statements.
control of La Chapelle in respect of this function.

Annual Report 2020

Corporate Governance Report

The aforesaid material defects are not included in the (2)	On 28 August 2019, the board of directors of La
corporate's internal control assessment report. In the	Chapelle has considered and approved the Resolution
course of audit of La Chapelle's financial statements	i n r e l a t i o n t o t h e A d j u s t m e n t s t o t h e A S h a r e
for 2020, we have taken into consideration the impact	Repurchase Proposal and the Measures to Stabilize the
on the nature, schedule and covered area of the audit	Share Price (關於調整回購A股股份方案暨穩定股價
process of the aforesaid material defects. This report	措施的議案》), which was considered and passed at
has no impact on our audit report dated 29 April 2021	the general meeting on 16 October 2019. According
on La Chapelle's financial statements for 2020.	to the Repurchase Proposal, the fund intended to be
	used by La Chapelle for repurchase shall be not more
AUDIT OPINION ON INTERNAL	than RMB100 million and not less than RMB50 million,
CONTROL IN RESPECT OF FINANCIAL	and the period for repurchase shall start from 22 March
REPORTING	2019 until 21 March 2020. As of 21 March 2020, an
We are of the opinion that, owing to the existence of the	aggregate of 3,573,200 A shares were repurchased by
La Chapelle with RMB20,009,900, which fell short of the
aforesaid material defects and its impact on achieving the
lower limit of the promised repurchase amount. On 20
objectives of internal control, La Chapelle failed to maintain
March 2020, the Resolution in relation to the Extension
an effective internal control in respect of financial reporting in
of the Implementation Period for Repurchasing A
all major aspects as at 31 December 2020 in accordance with
Shares (關於回購A股股份實施期限延期的議案) was
the Basic Standards for Enterprise's Internal Control (企業內部
considered and approved at the meeting of the board
控制基本規範) and the relevant requirements.
of directors, but the resolution has not been considered

MATERIAL DEFECTS IN INTERNAL	and passed in the general meeting before the expiry
date of the promised period.
CONTROL NOT RELATED TO

FINANCIAL REPORTING	The Resolution in relation to the Extension of the

In the course of our audit on internal control, we were aware	Implementation Period for Repurchasing A Shares

of the following material defects in La Chapelle's internal	was considered and passed at the general meeting

control not related to financial reporting:	on 8 May 2020. According to the resolution, the fund

	intended to be used by La Chapelle for repurchase
(1) D u r i n g t h e r e p o r t i n g p e r i o d, m e m b e r s o f t h e	shall be not more than RMB100 million and not less

governance and management of La Chapelle have	than RMB50 million, with the implementation deadline

changed frequently, and the turnover of staff holding	extended to 21 September 2020. However, La Chapelle

key positions was severe. The position of secretary	has not disclosed until 30 September 2020 that as of

to the board of directors has not been created since	the expiry date of the repurchase period, an aggregate

31 July 2019. There is a defect in the internal control	of 3,573,200 A Shares were repurchased with an amount

environment of La Chapelle, which has resulted in	of RMB20,009,900, which fell short of the lower limit of

material and adverse effect on the relevant information	the overall repurchase amount. On 29 September 2020,

disclosure.	the board of directors and the supervisory committee

	have considered and approved the termination of
	repurchase of A Shares. The resolution in relation to the
	termination of repurchase of A Shares was considered
	and passed at the general meeting on 21 October 2020.

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

La Chapelle failed to complete the share repurchase s c h e m e w i t h i n t h e p r o m i s e d p e r i o d, f a i l e d t o implement corresponding measures to amend or revoke the scheme, and failed to make timely disclosure of the risk information in relation to its failure at implement the share repurchase scheme as promised, which constituted a violation of Rule 1.4 of the Rules Governing the Listing of Stocks on the Shanghai Stock Exchange, Articles 5 and 41 of the Implementation Rules of Shanghai Stock Exchange for Share Repurchase by Listed Companies (上海證券交易所上市公司回購股份實施細則), and Article 5 of the Regulatory Guidelines for Listed Companies No. 4-Undertakingsand Performance by Listed Companies and Listed Companies' De Facto Controllers, Shareholders, Related Parties and Acquirers (CSRC Announcement [2013] No.

1. (上市公司監管指引第4號-上市公司實際控制人、股東、關聯方、收購人以及上市公司承諾及履行(證監會公告[2013]555號)).
The Administrative Measures for External Investment (對外投資管理辦法) of La Chapelle stipulated that (among others): the personnel appointed as the directors, supervisors and senior management members of investee companies shall report the investment status to the company on a timely basis; the appointed personnel shall submit a working report to and be inspected by the appointing company annually; the company shall inspect comprehensively the investment projects at the end of each year and conduct regular or specific audit on the subsidiaries it controlled.
During the reporting period, La Chapelle failed to implement the aforesaid requirements, which resulted in failure in the implementation of the internal control system in respect of the external investment management.

Due to the aforesaid material defects, users of this report are advised to pay attention to the relevant risks. Please also note that we do not express any opinion on or provide any assurance for La Chapelle's internal control which is not related to financial reporting.

This paragraph does not affect the audit opinion on the effectiveness of internal control in respect of financial reporting." For details, please refer to the overseas regulatory announcement of the Company dated 29 April 2021.

COMPANY SECRETARY

During the year ended 31 December 2020, Ms. Wong Wai Ling, the Company Secretary, has complied with the relevant professional training requirement under Rule 3.29 of the Listing Rules. Ms. Wong Wai Ling is the vice president of SWCS Corporate Services Group (Hong Kong) Limited (formerly known as SW Corporate Services Group Limited) and Mr. Yin Xinzai, a non-executive Director, is her primary contact person at the Company. The biographical details of the Company Secretary is set out in the section headed "Profiles of Directors, Supervisors and Senior Management".

Having been authorized by the Chairman, the Company Secretary is responsible for working out meeting agenda, organising Board meetings, and offering relevant documents to the Directors in advance, so as to ensure that the Directors have obtained sufficient and accurate information for making effective and well-grounded decisions.

The Company Secretary assists in convening and holding Board meetings in accordance with all applicable laws and rules and procedures specified in the Articles of Association. In addition, the Company Secretary would prepare relevant minutes and circulate them to the Directors for their comments.

Annual Report 2020

DIRECTORS' RESPONSIBILITY IN RESPECT OF THE FINANCIAL STATEMENTS

The Directors acknowledge their responsibility for preparing the financial statements of the Company for the year ended 31 December 2020 in accordance with statutory requirements and applicable accounting standards.

The Board is accountable to the shareholders for a clear and balanced assessment on the Company's financial position and prospects. The management of the Company provides all relevant information and records to the Board, which enable it to prepare the accounts of the Company and to make the above assessments.

The Audit Committee had reviewed and recommended to the Board to adopt the audited accounts for the year ended 31 December 2020.

The report of the independent auditor of the Company on its reporting responsibilities on the financial statements of the Group is set out in the Auditor's Report.

GOING CONCERN CAPABILITY

The net loss of the Group during 2020 was RMB1,429,779,000, and have suffered three consecutive years of losses. As at 31 December 2020, the Group's current liabilities exceeded its assets by approximately RMB239,491,000. The Group is now facing significant litigations due to a large number of overdue debts, which also led to the frozen of its principal bank accounts and shares of subsidiaries and the seize of real estates (refer to notes XII/(II)/(1), VI/ (I), XV/III/1, VI/XII/ (I)/4 respectively). The Company is presented as dishonest person. These events and conditions, indicate that a material uncertainty exists that may cast significant doubt on the ability of the Group to continue as a going concern. According to the note III/(II), the board of directors of the Company is taking various active measures to ensure the Company's continuous operation ability based on current actual operation situation.

Corporate Governance Report

AUDITORS

Da Hua Certified Public Accountants (Special General Partnership) ("Da Hua") was appointed as the domestic and international auditors of the Company for the year ended 31 December 2020. The resolution regarding the appointment of the auditor for the year ending 31 December 2021 will be tabled at the 2020 AGM.

The remuneration paid to Da Hua in respect of the audit services rendered for the year ended 31 December 2020 was RMB3.48 million.

COMMUNICATION WITH SHAREHOLDERS AND INVESTOR RELATIONS

The shareholders' communication policy of the Company is to maintain transparency and provide timely information of the Group's material developments to shareholders and investors. General meetings of the Company are formal channels for communication between shareholders and the Board. The chairman of the Board and the chairmen of the Board Professional Committees (or, in their absence, other members of the respective committees) will make themselves available at the general meetings to have direct communication with the shareholders.

Shareholders may also send their enquiries and concerns to the Board by sending them to the investor relations department of the Company to the following address:

Address: 12F, Building 4, No, 50. Lane 2700 South Lianhua Road, Minhang District, Shanghai, China 200241

Email: ir@lachapelle.cn

Xinjiang La Chapelle Fashion Co., Ltd.

Corporate Governance Report

SHAREHOLDERS' RIGHTS

Convening Extraordinary General Meeting or Class Meeting by Shareholders

Pursuant to the Articles of Association, shareholders severally or jointly holding 10% or more of the shares carrying the right to vote at the proposed meeting may request the Board to convene an extraordinary general meeting or a class meeting. The agenda of the proposed meeting shall be stated therein.

When the Company convenes an annual general meeting, a notice to notify all registered shareholders must be given no later than 20 business days before the meeting date; when the Company convenes an extraordinary general meeting, a notice to notify all registered shareholders must be given no later than 10 business days or 15 days, whichever is longer, before the meeting date. Such notice shall contain the matters to be considered at the meeting as well as the date and venue of the meeting.

Putting Forward Proposals at General Meetings

When the Company decides to convene an annual general meeting, any shareholders that severally or jointly holding 3% or more of the shares of the Company shall be entitled to put forward proposals to the Company, and may raise interim proposals and submit them in writing to the Board ten days prior to the general meeting. The Board shall, within two days after receipt of such proposal issue a supplemental notice of the general meeting and announce the contents of the ad hoc proposals.

The contents of the proposals to be raised shall be within the scope of duties of the general meetings. It shall have a clear topic and specific matters to be resolved on, and shall be in compliance with relevant requirements of the laws, administrative regulations and the Articles of Association.

CONSTITUTIONAL DOCUMENTS

During the Reporting Period, the Company proposed to make certain amendments to the existing Articles of Association (the "Proposed Amendments"). The Proposed Amendments were approved by the shareholders at the extraordinary general meetings held on 23 March 2020, 8 May 2020 and 29 September 2020 respectively. The revised Articles of Association has been published on both the websites of the Hong Kong Stock Exchange and the Company. According to the Company's announcement published on 29 April 2021, in light of the current circumstances of the Company, its future development plans, and the opinions of the relevant commercial and administrative regulatory authority in the PRC, the Company proposed cancelling the change of company name and cancelling the amendments to the Articles of Association which have been approved at the EGM held on 29 September 2020, subject to the approval of the Company's shareholders at the 2020 AGM of the Company.

Annual Report 2020

Audit Report

D.H.S.Z. [2020] 008149

To the Shareholders of Shanghai La Chapelle Co., Ltd.

I QUALIFIED OPINION

We have audited the accompanying financial statements of XINJIANG LA CHAPELLE FASHION CO., LTD., (herein after "LA CHAPELLE Company"), Which comprise the consolidated and the parent company's balance sheet as at 31 December 2020, the consolidated and the parent company's statement of comprehensive income, the consolidated and the parent company's cash flow statement and the consolidated and the parent company's statement of changes in shareholders' equity for the year then ended, and notes to the financial statements.

In our opinion, except for the possible financial impact of the matters as set out in the section "Basis for qualified opinion", the accompanying consolidated and separate financial statements present fairly, in all material respects, the consolidated and the company's financial position as at 31 December 2020, and the consolidated and the company's financial performance and cash flows for the year then ended, and are prepared in accordance with Accounting Standards for Business Enterprises ("ASBEs").

II BASIS FOR QUALIFIED OPINION

Impacts of oversea subsidiaries on financial statements

was taken over by HTI ADVISORY COMPANY LIMITED on February 25, 2020 due to its default on the loan. LA CHAPELLE Company has therefore lost control over FASHION I, which is its subsidiary, and APPAREL I, APPAREL II as well as Naf Naf SAS, which are subsidiaries of FASHION I. On June 19, 2020 local time in France, Naf Naf SAS was transferred into judicial liquidation, and the procedure has not been completed.

Xinjiang La Chapelle Fashion Co., Ltd.

Audit Report

Litigation

As stated in Note XII/(II)/ (1) Litigation, La Chapelle Company has suffered from financial constraints due to debt default. As of December 31, 2020, the cumulative amounts involved in litigation and arbitration that have not been judged was RMB782,468,000, among which the amount involved in respect of the judged cases till the reporting date is RMB236,904,000. As stated in Note XIII/(I)/2. Effect of newly added litigation or arbitration, from January 1, 2021 to the reporting date, the amount of the Company's new litigation involved was RMB1,005,987,000. We are unable to obtain sufficient and appropriate audit evidence to identify the potential losses that may be generated from the above litigation events, and the accuracy and completeness of accrued liability in respect of litigation and arbitration.

III MATERIAL UNCERTAINTIES RELATED TO GOING CONCERN

We draw attention to Note III/(II) Going concern to the consolidated financial statements which indicates that La Chapelle Company incurred a net loss of RMB1,878,357,000, and has suffered a consecutive year loss. As at 31 December 2020, the Group's total liability exceeded its total asset by RMB688,069,000. La Chapelle Company is now facing significant litigations due to large number of overdue debts, which also led to the frozen of its principal bank accounts and shares of subsidiaries and the seize of real estates. La Chapelle Company has been presented on the list of dishonest person. All these events along with the events as at the balance sheet date stated in Note XII of the financial statements indicate the existence of a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

IV KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

We determine that the carrying amounts of fixed asset and construction in progress are the key audit matters that need to be presented in the audit report.

Annual Report 2020

Audit Report

1. Description of the matter

As stated in Note VI (13) and Note (14), the carrying amount of fixed asset and construction in progress was RMB1,693,956,000 in the consolidated financial statement of LA CHAPELLE, accounting for 47.29% of the total assets of the Group. The following judgment by the management will affect the carrying amount and depreciation policy of fixed asset and construction in progress, including: (1) recognizing the expenses in accordance with the principle of capitalization; (2) recognizing the timing of construction in progress transferring to fixed asset and starting of depreciation; (3) estimating the expected residual life of fixed assets. We determine that the company's fixed assets and construction in progress are the key matters due to the fact that assessment of the carrying amount of fixed asset and construction in progress involving significant management judgment and it's important for consolidated financial statements.

2. Audit response

The key auditing procedures we implemented for the carrying amount of fixed asset and construction in progress include:

Evaluated the effectiveness of the internal control (including expected useful life and residual value) design and implementation related to completeness, existence and accuracy of fixed asset and construction in progress.
Understood the condition of fixed asset and construction in progress, and implemented the supervision and sampling stocktaking procedures for the major fixed asset and construction in progress, and checked the status and use in the current period of these assets.
Checked whether it met the conditions in accordance with the principle of capitalization by analyzing the construction situation of construction in progress in 2020;
Assessed the timing accuracy of construction in progress transferring to fixed asset by checking acceptance report or project supervision report;
Analyzed the rationality of the judgment made by management about whether there are signs of possible impairment and key assumptions used in the impairment test of construction in progress. Assessed the competence, professional quality and objectivity of third-party valuation experts hired by management; obtained the evaluation report of the construction in progress from a third-party agency and review its evaluation method, basis and key indicators. Discussed with external evaluation expert and analyzed the appropriateness of the evaluation method management adopted;
Checked the adequacy and completeness of relevant disclosures in the notes of the financial statements of the Group.
In our opinion, based on the work we have performed, the carrying amounts of fixed asset and construction in progress are of authenticity and accuracy, and recorded in the appropriate accounting period, which are recorded under the requirements of accounting standards.

Xinjiang La Chapelle Fashion Co., Ltd.

Audit Report

V OTHER INFORMATION

Management of the Group is responsible for the other information. The other information comprises all of the information included in 2020 annual report of the Company other than the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. As detailed in the section of "Basis for qualified opinion", we were not able to obtain sufficient and appropriate audit evidence of oversea subsidiaries and litigations, accordingly, we were not able to determine whether there are any significant misstatements regarding the information as set out in the other information.

VI RESPONSIBILITIES OF THE MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS

The management of LA CHAPELLE Group is responsible for the preparation and fair presentation of the financial statements in accordance with ASBEs, and for designing, implementing and maintaining such internal control as the management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting, unless the management either intends to liquidate the Group or to cease operations or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Annual Report 2020

Audit Report

VII AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are generally considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with CSAs, we exercise professional judgment and maintain professional skepticism throughout the audit, we also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances;
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors;
Conclude on the appropriateness of the management' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required by CSAs to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern;
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

Xinjiang La Chapelle Fashion Co., Ltd.

Audit Report

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Da Hua Certified Public Accountants	Chinese Certified Public Accountant: 何祚文
(Special General Partnership)	（The engagement partner）

	Chinese Certified Public Accountant: 劉任武
China Beijing	29 April 2021

Annual Report 2020

Consolidated Balance Sheet

As at 31 December 2020 (All amounts in RMB'000 unless otherwise stated)

	VI	Closing Balance	Opening Balance

ASSETS
Current assets:
Cash and bank	(I)	206,477	357,684
Financial assets held for trading		-	-
Derivative financial assets		-	-
Notes receivable		-	-
Accounts receivable	(II)	270,637	587,123
Accounts receivable financing		-	-
Prepayments	(III)	122,926	101,679
Other receivables	(IV)	125,636	174,643
Including: Interest receivables		-	-
Dividend receivables		-	-
Inventories	(V)	438,716	1,728,645
Contract assets		-
Held-for-sale assets		-
Non-current assets due within one year	(VI)	25,844	25,588
Other current assets	(VII)	88,952	224,559

Total current assets		1,279,188	3,199,921
Non-current assets:
Debt investments
Other debt investments
Long-term receivables	(VIII)	4,447	189,020
Long-term equity investments	(IX)	180,825	193,216
Other equity instruments	(X)	4,741	11,646
Other non-current financial assets	(XI)	94,050	97,777
Investment properties
Fixed assets	(XII)	1,624,902	1,678,939
Construction in progress	(XIII)	69,054	141,787
Productive biological assets
Right-of-use assets	(XIV)	47,846	1,609,398
Intangible assets	(XV)	166,856	183,554
Development expenditure
Goodwill	(XVI)	78,231	78,231
Long-term prepaid expenses	(XVII)	22,984	274,241
Deferred tax assets	(XVIII)	0	335,914
Other non-current assets	(XIX)	8,591	17,879

Total non-current assets		2,302,527	4,811,602

Total assets		3,581,715	8,011,523

(Attached notes to statements are part of the consolidated financial statements)

Xinjiang La Chapelle Fashion Co., Ltd.

Consolidated Balance Sheet

As at 31 December 2020

(All amounts in RMB'000 unless otherwise stated)

	VI	Closing Balance	Opening Balance

Liability and Equity
Current liabilities:
Short-term borrowings	(XXI)	1,167,400	1,481,107
Financial liabilities held for trading
Derivative financial liabilities
Notes payable	(XXII)		255,476
Accounts payable	(XXIII)	1,164,154	1,721,205
Advance from customers	(XXIV)	1,428	2,489
Contract liabilities	(XXV)	7,330	52,268
Employee benefits payable	(XXVI)	65,636	190,991
Tax payables	(XXVII)	163,914	227,208
Other payables	(XXVIII)	922,343	754,676
Including: Interest payables		58,830	6,774
Dividend payables		-
Held-for-sale liabilities		-
Non-current liability due within one year	(XXIX)	368,670	799,667
Other current liabilities

Total current liabilities		3,860,875	5,485,087
Non-current liabilities:
Long-term borrowings	(XXX)
Bonds payable
Including: Preferred stock
Including: Perpetual debt
Lease liabilities	(XXXI)	36,263	1,300,452
Long-term payables
Long-term employee benefits payable
Accrued liabilities	(XXXII)	350,585	35,299
Deferred income
Deferred tax liabilities	(XVIII)	13,911	37,517
Other non-current liabilities	(XXXIII)	8,150	26,972

Total non-current liabilities		408,909	1,400,240

Total liabilities		4,269,784	6,885,327

(Attached notes to statements are part of the consolidated financial statements)

Annual Report 2020

Consolidated Balance Sheet

As at 31 December 2020 (All amounts in RMB'000 unless otherwise stated)

	VI	Closing Balance	Opening Balance

Equity:
Share capital	(XXXIV)	547,672	547,672
Other equity instruments
Including: Preferred stock
Perpetual debt
Capital reserves	(XXXV)	1,910,806	1,910,800
Less: Treasury share	(XXXVI)	20,010	10,165
Other comprehensive income	(XXXVII)	(38,866)	(39,958)
Special reserves
Surplus reserve	(XXXVIII)	246,788	246,788
Undistributed profits	(XXXIX)	(3,255,667)	(1,414,703)

Equity attributable to Shareholders of the Company		(609,277)	1,240,434

Non-controlling interests		(78,792)	(114,238)

Total equity		(688,069)	1,126,196

Total liabilities and equity		3,581,715	8,011,523

Legal representative:	Principal in charge of accounting:	Head of accounting department:
Wu Jinying	Hu Zhiguo	Hu Zhiguo

(Attached notes to statements are part of the consolidated financial statements)

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Market Closed - Hong Kong S.E. Other stock markets 03:08:14 2023-02-06 am EST			5-day change	1st Jan Change
0.25 ^HKD	+0.40%		-.--%	-.--%

Apr. 09	Xinjiang La Chapelle Fashion Begins Bankruptcy Reorganization Procedure	MT
Mar. 27	Xinjiang La Chapelle Fashion Co., Ltd. Reports Earnings Results for the Full Year Ended December 31, 2023	CI

Xinjiang La Chapelle Fashion Begins Bankruptcy Reorganization Procedure	Apr. 09	MT
Xinjiang La Chapelle Fashion Co., Ltd. Reports Earnings Results for the Full Year Ended December 31, 2023	Mar. 27	CI
La Chapelle Fashion Settles One of 13 Lawsuits	Jan. 03	MT
La Chapelle Fashion's Bankrupt Unit Completes Distribution of Property Tied to Liquidation Process	Dec. 19	MT
Assets of Bankrupt Xinjiang La Chapelle's Former Unit to be Auctioned Off	Dec. 12	MT
Xinjiang La Chapelle Fashion Begins Bankruptcy Reorganization Procedures	Nov. 07	MT
Xinjiang La Chapelle Fashion Co., Ltd. Reports Earnings Results for the Half Year Ended June 30, 2023	23-08-30	CI
La Chapelle Fashion Sells China Land for 77.6 Million Yuan	23-08-09	MT
La Chapelle Fashion's Assets Worth 14.5 Million Yuan Ordered to be Frozen	23-08-02	MT
La Chapelle Fails to Find Buyer for Industrial Properties	23-05-12	MT
Xinjiang La Chapelle Fashion Co., Ltd. Announces Board Changes	23-04-17	CI
Xinjiang La Chapelle Fashion Co., Ltd. Reports Earnings Results for the Full Year Ended December 31, 2022	23-03-30	CI
Hong Kong Bourse Shares Share Trading Resumption Guidance with Xinjiang La Chapelle Fashion	23-03-08	MT
Xinjiang La Chapelle Fashion Co., Ltd. Approves Board Appointments	22-12-30	CI
Xinjiang La Chapelle Fashion Shareholders to Vote on Share Cancellation in January EGM	22-12-28	MT
La Chapelle Fashion Repurchases, Cancels Nearly 3.6 Million Shares	22-12-23	MT
Xinjiang La Chapelle Fashion Releases Litigation Data; 17 Cases Yet to be Settled	22-12-02	MT
Xinjiang La Chapelle Fashion Co., Ltd. Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2022	22-10-28	CI
La Chapelle Fashion Unit Faces Winding-Up Petition	22-10-13	MT
Xinjiang La Chapelle Fashion Co., Ltd. Reports Earnings Results for the Half Year Ended June 30, 2022	22-08-29	CI
Xinjiang La Chapelle Fashion Co., Ltd. Proposes Change of Registered Address	22-07-14	CI
Xinjiang La Chapelle Fashion Co., Ltd. Approves the Appointment of Fu Feng as Non-Executive Director and Member of the Budget Committee and Strategy and Development Committee	22-06-29	CI
Shanghai Bourse to Delist La Chapelle Fashion May 17	22-05-10	MT
Xinjiang La Chapelle Fashion Co., Ltd. Reports Earnings Results for the First Quarter Ended March 31, 2022	22-04-28	CI
Xinjiang La Chapelle Fashion Co., Ltd. Announces Executive Changes	22-04-20	CI

	1st Jan change	Capi.
XINJIANG LA CHAPELLE FASHION CO., LTD.	-.--%	17.36M
CHRISTIAN DIOR SE	+5.30%	144B
LULULEMON ATHLETICA INC.	-28.69%	45.95B
MONCLER S.P.A.	+19.93%	19.04B
RALPH LAUREN CORPORATION	+16.65%	10.74B
LEVI STRAUSS & CO.	+30.41%	8.78B
PVH CORP.	-7.57%	6.5B
BOSIDENG INTERNATIONAL HOLDINGS LIMITED	+29.91%	6.23B
GILDAN ACTIVEWEAR INC.	+11.46%	6.01B
LI NING COMPANY LIMITED	-4.88%	5.98B

Xinjiang La Chapelle Fashion Co., Ltd.

Equities

6116

CNE100001SY5

Apparel & Accessories

Xinjiang La Chapelle Fashion : AUDITED ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 DECEMBER 2020 AND RESUMPTION OF TRADING OF H SHARES

Latest news about Xinjiang La Chapelle Fashion Co., Ltd.

Chart Xinjiang La Chapelle Fashion Co., Ltd.

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Income Statement Evolution

Sector Other Apparel & Accessories