Xinjiang La Chapelle Fashion : UNUSUAL PRICE MOVEMENT OF A SHARES

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.

อᖛזࢀԎဧ؂ٰུ΅Ϟࠢʮ̡

Xinjiang La Chapelle Fashion Co., Ltd.

(formerly known as "Shanghai La Chapelle Fashion Co., Ltd.

€ɪऎזࢀԎဧ؂ٰུ΅Ϟࠢʮ̡")

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

(Stock code: 06116)

UNUSUAL PRICE MOVEMENT OF A SHARES

INTRODUCTION

This announcement is made by Xinjiang La Chapelle Fashion Co., Ltd. (the "Company", together with its subsidiaries, the "Group") pursuant to Rule 13.09(2) and Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO").

The increase in the closing prices of the A shares of the Company (the "A Shares") deviated by more than 15% for three consecutive trading days on 26 February 2021, 1 March 2021 and 2 March 2021 on a cumulative basis, thereby constituting unusual movements of trading of the A Shares under the "Measures for the Administration of Stock Trading on the Risk Warning Board of the Shanghai Stock Exchange"* (ɪऎᗇՎʹ׸הࠬᎈᙆٰͪؐୃʹ׸၍ଣ፬ج'). Upon internal investigation of the Company and checking with Mr. Xing Jiaxing, controlling shareholder and de facto controller of the Company, and Shanghai Hexia Investment Co., Ltd. (ɪऎΥࢀҳ༟Ϟࠢʮ̡) ("Shanghai Hexia"), the party acting in concert with Mr. Xing Jiaxing, the Company confirms that as at the date of this announcement, there are no material matters that should be disclosed but have not yet been disclosed under the relevant requirements of the Rules Governing the Listing of Stocks on Shanghai Stock Exchange* ( ɪऎᗇՎʹ׸הٰୃɪ̹஝ۆ') (the "SSE Listing Rules") etc, including but not limited to major asset restructuring, acquisitions of listed companies, business restructuring and asset injection.

Having made such enquiry with respect to the Company as is reasonable in the circumstances, the Company confirms that, save as disclosed in this announcement, it is not aware of any other reasons for such unusual trading price movement of the A Shares or of any other information which must be announced to avoid a false market in the Company's securities or of any inside information that needs to be disclosed under Part XIVA of the SFO.

• 1. PARTICULARS OF UNUSUAL MOVEMENTS OF TRADING OF A SHARES

  The increase of the A Share closing prices of the Company deviated by more than 15% for three consecutive trading days on 26 February 2021, 1 March 2021 and 2 March 2021 on a cumulative basis, thereby constituting unusual movements of trading of the A Shares under the "Measures for the Administration of Stock Trading on the Risk Warning Board of the Shanghai Stock Exchange"*

  ( ɪऎᗇՎʹ׸הࠬᎈᙆٰͪؐୃʹ׸၍ଣ፬ج').

• 2. PARTICULARS OF THE ATTENTION AND VERIFICATION OF THE COMPANY

  • (1) Production and operation situation

    Affected by factors such as the pandemic and the implementation of contractionary policies of the Company, it is estimated that the Company will incur a loss for the year ended 31 December 2020; the net loss attributable to shareholders of the Company will be between RMB1,300 million and RMB1,800 million. In addition, due to the freezing of assets and accumulated litigation involving the Company and its subsidiaries, the involvement in multiple litigation cases and freezes of equity interest and bank accounts of the Company will affect its cash flow and business operation. The Company has been actively communicating with the relevant courts, creditors and banks, and has been striving to reach an agreement on litigation matters and debts settlement as soon as possible, including but not limited to through ways such as debt restructuring, extension of repayment, and settlement. Meanwhile, the Company will continue to promote the disposal of assets, seek external financing, and procure new investors, in order to further enhance its continuous operating abilities.

  • (2) Particulars of material matters

    As Mr. Xing Jiaxing (the controlling shareholder of the Company) and Shanghai Hexia (the concert party of Mr. Xing Jiaxing) did not perform certain obligations under the Notarised Documents of Creditor's Rights arising from share pledge repurchase transactions, the Shanghai Financial Court will conduct an auction of a total of 186,800,000 A Shares held collectively by Mr. Xing Jiaxing and Shanghai Hexia on 5 March 2021 and 26 March 2021, respectively. For details, please refer to the announcement of the Company dated 31 January 2021 in relation to the receipt of a notice of forced auction in respect of the A Shares held by Mr. Xing Jiaxing from the Shanghai Financial Court and the announcement of the Company dated 1 March 2021 in relation to the receipt of a notice of forced auction in respect of the A Shares held by Shanghai Hexia from the Shanghai Financial Court.

  • (3) Share pledge of the controlling shareholder

    As of the date of this announcement, 187,078,815 A Shares of the Company, held by Mr. Xing Jiaxing, the controlling shareholder and de facto controller of the Company, and his concert party Shanghai Hexia, are subject to a subordinated freezing order in full.

After verification with Mr. Xing Jiaxing and Shanghai Hexia, save as disclosed above, the Company confirms that, as at the date of this announcement, there are no other material matters that should be disclosed but have not yet been disclosed under the relevant requirements of the SSE Listing Rules, including but not limited to major asset restructuring, acquisitions of listed companies, business restructuring and asset injection.

• (4) Media coverage, market rumours and hot topics

  Upon internal investigation of the Company, the Company is not aware of any media coverage or market rumours that required clarification or response.

• (5) Other stock price sensitive information

  Upon verification by the Company, none of the directors, supervisors, senior management or controlling shareholders of the Company and the parties acting in concert with such controlling shareholders have purchased or sold any shares of the Company during the price movement of the shares.

3. RELEVANT RISK WARNINGS

• 1. Based on the preliminary assessment made by the finance department, it is estimated that the net loss attributable to shareholders of the Company for the year ended 31 December 2020 will be between RMB1,300 million and RMB1,800 million; it is estimated that the net asset attributable to shareholders of the Company at the end of the year 2020 will be negative. If the Company's audited net asset attributable to the shareholders of the Company for the year ended 31 December 2020 is negative, a delisting risk warning might be imposed on the A Shares of the Company.

• 2. Taking into account the cash outflow pressure from operating activities and the repayment of due debts, the Company is currently facing greater cash flow pressure and the risk of concentrated debts repayments. The Company will continue to actively communicate with the relevant courts, creditors and banks, and strive to reach an agreement on litigation matters and debts settlement as soon as possible, including but not limited to methods such as debt restructuring, extension of repayment, and settlement. Meanwhile, the Company will continue to promote disposal of assets, seek external financing, and procure new investors, in order to further enhance its continuous operating abilities.

• 3. The Shanghai Financial Court will conduct an auction of a total of 186,800,000 A Shares held collectively by Mr. Xing Jiaxing and Shanghai Hexia on 5 March 2021 and 26 March 2021, respectively.

If the auctions of all or a substantial portion of the auctioned shares are completed, each of Mr. Xing Jiaxing and Shanghai Hexia may cease to be a controlling shareholder (as defined under the Listing Rules) of the Company and a de facto controller of the Company under the SSE Listing Rules. Such judicial disposal is still in the auction publicity stage, and the follow-up may involve other aspects such as bidding, payment, execution of legal procedures by the court, equity change and transfer. The auction result remains uncertain. The Company will pay close attention to the subsequent progress of the abovementioned auctions, and will perform its information disclosure obligations in a timely manner in accordance with the relevant requirements.

4. BOARD CONFIRMATION

The Board confirms that as of the date of this announcement, there are no other matters in respect of the Company that should be disclosed but have not yet been disclosed in accordance with the relevant requirements, including the SSE Listing Rules, and the Board is not aware of any information which should be disclosed but have not yet been disclosed in accordance with the relevant requirements of the SSE Listing Rules, which may have a relatively material impact on the trading price of the Company's shares and derivatives.

Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

This announcement is made by the order of the Company. The Board collectively and individually accepts responsibility for the accuracy of this announcement.

By Order of the Board

Xinjiang La Chapelle Fashion Co., Ltd.

Mr. Wu Jinying

Chairman

Shanghai, the People's Republic of China

2 March 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.

* For identification purpose only.