DISCLOSEABLE TRANSACTION ACQUISITION OF 60% EQUITY INTEREST AND SHAREHOLDERS LOAN IN LACHA APPAREL II SÀRL

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1 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. Shanghai La Chapelle Fashion Co., Ltd. (a joint stock company incorporated in the People s Republic of China with limited liability) (Stock code: 06116) DISCLOSEABLE TRANSACTION ACQUISITION OF 60% EQUITY INTEREST AND SHAREHOLDERS LOAN IN LACHA APPAREL II SÀRL Reference is made to the announcements of the Company dated on 11 April 2018, 15 May 2018, 31 May 2018, 1 June 2018, 15 June 2018 and 29 June 2018 (the Announcements ) in relation to, among other things, the Previous Acquisition. THE ACQUISITION The Board is pleased to announce that, on 26 November 2018 (after trading hours), the Purchaser (an indirect wholly-owned subsidiary of the Company) entered into the Share Purchase Agreement with the Vendors, pursuant to which the Purchaser conditionally agreed to purchase and undertake, and the Vendors conditionally agreed to sell the Target Shares (representing 60% of the entire issued share capital of the Target) and assign the Shareholders Loans, at the Consideration of EUR35,340,000. Upon Completion, the Company will indirectly hold 100% equity interest in the Target, and the Target will become as an indirect wholly-owned subsidiary of the Group. Accordingly, the financial results of the Target Group will be consolidated into the Group s financial accounts. IMPLICATIONS UNDER THE LISTING RULES As (i) the Acquisition and the Previous Acquisition were both entered into by the Group within a 12-month period prior to and inclusive of the date of the Share Purchase Agreement, and (ii) the Previous Acquisition and the Acquisition involve acquisition of the entire issued share capital of Naf Naf SAS by the Company indirectly, the Acquisition and the Previous Acquisition are aggregated pursuant to Rule of the Listing Rules. As one or more of applicable ratios as defined under Rule of the Listing Rules in respect of the Acquisition (when aggregated with the Previous Acquisition) exceed 5% but are below 25%, the Acquisition constitutes a discloseable transaction for the Company pursuant to Chapter 14 of the Listing Rules and is therefore subject to notification and announcement requirements but exempt from the shareholders approval requirement pursuant to Chapter 14 of the Listing Rules. 1

2 As the Acquisition is subject to the fulfilment of the condition precedent and may or may not proceed, shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company. THE ACQUISITION The Board is pleased to announce that on 26 November 2018 (after trading hours), the Purchaser (an indirect wholly-owned subsidiary of the Company) entered into the Share Purchase Agreement with the Vendors, pursuant to which the Purchaser conditionally agreed to purchase and undertake, and the Vendors conditionally agreed to sell the Target Shares (representing 60% of the entire issued share capital of the Target) and assign the Shareholders Loans, at the Consideration of EUR35,340,000. Upon Completion, the Company will indirectly hold 100% equity interest in the Target, and the Target shall become as an indirect wholly-owned subsidiary of the Group. Accordingly, the financial results of the Target Group will be consolidated into the Group s financial accounts. THE SHARE PURCHASE AGREEMENT The principal terms of the Share Purchase Agreement are as follows: Date : 26 November 2018 (after trading hours) Parties : (i) the Purchaser (ii) the Vendors (iii) the Target To the best of the Directors knowledge, information and belief and having made all reasonable enquiries, the Vendors and their respective ultimate beneficial owners are third parties independent of, and not connected with, the Company and its connected persons as at the date of this announcement. Assets to be acquired : The Target Shares (representing 60% of the entire issued share capital in the Target) and the Shareholders Loans, free from all encumbrances and third party rights together with all rights and benefits accrued thereto as at Completion, including the rights to receive any dividends relating to the Target Shares declared at any time on or after the Completion and on distributable profits recognised after 29 June

3 Consideration and term of payment Determination basis of the Consideration : The Consideration is EUR35,340,000 (being the aggregate amount of EUR17,670,000 payable to Trendy Pioneer and EUR17,670,000 payable to East Links), which shall be satisfied by the Purchaser by wire transfer of immediately available funds to the Escrow Account on the date of Completion. : The Consideration was determined after arm s length negotiations between the parties to the Share Purchase Agreement with reference to, among other things, (i) the audited financial accounts of the Naf Naf Group for the year ended 31 December 2017 and the six months ended 30 June 2018 issued by a qualified independent accounting firm, including the net assets value of the Naf Naf Group as at 30 June 2018, being EUR42,441,000; (ii) the aggregate amount of the Shareholders Loans granted by the Vendors to the Target for the purpose of the Previous Acquisition, being EUR31,200,000; (iii) an independent valuation of the market value of the Naf Naf Group as of 30 June 2018 (being EUR60,400,000) set out in the valuation report prepared by a qualified independent valuer adopting market approach. Accordingly, the Board is of the view that the Consideration is fair and reasonable and in the interests of the Company and the shareholders of the Company as a whole. The Consideration is intended to be funded by the internal resources of the Group. Condition Precedent : The Completion of the Acquisition is conditional upon the fulfilment, or waiver by the parties to the Share Purchase Agreement if applicable, of the Company and Shanghai LaCha having obtained all necessary approvals for an overseas direct investment, including: (i) the approval from Waigaoqiao Free Trade Zone Office of China (Shanghai) Pilot Free Trade Zone Administration ( ); (ii) the authorisation from the relevant commercial bank(s) qualified to deal with the cross-border capital flow; and (iii) any other necessary PRC regulatory authorisations. 3

4 Pre-Completion arrangements : The parties to the Share Purchase Agreement agreed to certain arrangements for the period from the date of the Share Purchase Agreement to the date of Completion, including but not limited to: (a) except (i) for actions as may be otherwise contemplated by the Share Purchase Agreement, (ii) for actions required by a contractual obligation existing on the date of the Share Purchase Agreement or by applicable law, or (iii) as reasonably required to manage the Target Group, the parties to the Share Purchase Agreement shall use their best efforts, to the extent reasonably possible under their powers as shareholders of the Target, to ensure that the Target operates its business and activities in the ordinary course of business substantially consistent with past practices; (b) by the date of Completion, the Vendors shall procure all agreements existing between any of them or their respective affiliates and the Target Group to be terminated with effect as at the date of Completion at no cost for the Purchaser and the Target Group; and (c) except as prescribed in the Share Purchase Agreement, none of the parties to the Share Purchase Agreement shall or shall permit any of their respective affiliates, representatives or advisers to, issue or cause the publication of any press release, public announcement or disclosure with respect to the Share Purchase Agreement or the Acquisition without the prior written consent of all the parties to the Share Purchase Agreement with such consent not being unreasonably withheld. Completion : Completion will take place on a date and at a place to be agreed in writing between the Purchaser and the Vendors or, if no such agreement is reached, at the designated address as prescribed in the Share Purchase Agreement on the fifth Business Day following the date on which the condition precedent to the Completion having been satisfied or waived by the parties to the Share Purchase Agreement, but, in any event, no later than 28 February Upon Completion, the Company will indirectly hold 100% equity interest in the Target, and the Target shall become as an indirect whollyowned subsidiary of the Group. Accordingly, the financial results of the Target Group will be consolidated into the Group s financial accounts. 4

5 The shareholding structure of the Target immediately after the Completion is as follows: Company 100% Shanghai LaCha 100% The Purchaser 100% The Target Group Governing law and jurisdiction : The Share Purchase Agreement is governed by and shall be interpreted in accordance with laws of Hong Kong. Any dispute arising out of or in connection with the Share Purchase Agreement and the Acquisition shall be submitted to the exclusive jurisdiction of the courts in Hong Kong. THE PREVIOUS ACQUISITION On 11 April 2018, the Target entered into the Previous Share Purchase Agreement with Vivarte SAS (a company incorporated in France) (among other parties), pursuant to which the Target conditionally agreed to purchase and Vivarte SAS conditionally agreed to sell the entire issued share capital of Naf Naf SAS at a consideration of EUR52,000,000. Naf Naf SAS is principally engaged in selling women s wear apparel products and accessories in Europe. The Previous Acquisition was completed on 29 June The Previous Acquisition, on a stand-alone basis, constituted a discloseable transaction of the Company pursuant to Chapter 14 of the Listing Rules. Please refer to the Announcements for further details in relation to the Previous Acquisition. 5

6 REASONS FOR AND BENEFITS OF THE ACQUISITION The Group is principally engaged in designing, marketing and selling apparel products in the PRC. The Target, as a special purpose vehicle, holds 100% issued shares of Naf Naf SAS, which mainly engaged in selling women s apparel products and accessories in Europe. Following the Completion, the Target, together with Naf Naf SAS, will become the Company s wholly owned subsidiary. As such, the Board believes that the Acquisition will enable the Group to enrich its brand diversity, thus serving its multibrand strategy, and opening a gateway of the group s internationalization. The business model of Naf Naf SAS contains direct sale, joint operation, etc. which is coherent with the model of the Group. In light of the above, the Directors believe that it is for the benefit of the Group to enter into the Share Purchase Agreement and consider that the Acquisition is in the ordinary and usual course of the Company s business, and the terms of the Share Purchase Agreement are fair and reasonable, on normal commercial terms and in the interests of the Company and the shareholders of the Company as a whole. None of the Directors has any material interest, directly or indirectly, in the resolution approving the entry into the Share Purchase Agreement and the Acquisition and therefore, none of the Directors is required to abstain from voting on the resolution in relation to the entry into of the Share Purchase Agreement and the Acquisition. INFORMATION OF EAST LINKS, TRENDY PIONEER AND THE PURCHASER East Links East Links is a company incorporated in Hong Kong with limited liability. It mainly engages in investment holding. As the date of the announcement, East Links holds 30% equity interests in the Target. Trendy Pioneer Trendy Pioneer is a company incorporated in Hong Kong with limited liability. It mainly engages in investment holding, and controlled by Star Platinum Fund, LP, an offshore investment fund incorporated in the Cayman Islands. As the date of the announcement, Trendy Pioneer holds 30% equity interests in the Target. The Purchaser The Purchaser is a company incorporated in Hong Kong with limited liability, and mainly engages in investment holding. It is directly 100% controlled by Shanghai LaCha and is an indirect wholly-owned subsidiary of the Company, which is principally engaged in designing, marketing and selling apparel products in the PRC. 6

7 INFORMATION OF THE TARGET GROUP The Target, established in April 2018, is a special purpose vehicle incorporated in the Grand Duchy of Luxembourg for the purpose of the Previous Acquisition, with a registered capital of EUR12,000. As the date of this announcement, the Target holds 100% issue shares of Naf Naf SAS, a France-incorporated company and principally engaged in selling women s wear apparel products and accessories in Europe. As the date of this announcement, Naf Naf SAS holds, directly or indirectly, the entire issued share capital of each of the following five operating subsidiaries ( Naf Naf Subsidiaries ), namely Naf Naf Boutiques SPRL (a company incorporated in Belgium), NNCK SRL (a company incorporated in Italy), NNC Service SAS (a company incorporated in France), NCK SLU (a company incorporated in Spain) and Naf Naf Suisse SARL (a company incorporated in Switzerland). Prior to the completion of the Previous Acquisition on 29 June 2018, a reorganisation of the Naf Naf Group (the Reorganisation ) for purpose of the Previous Acquisition had been carried out by Vivarte SAS (being the vendor in the Previous Acquisition), which entails injection of certain corporate entities within the Vivarte SAS group into the Naf Naf Group, and liquidation and disposal of certain corporate entities from the original Naf Naf Group. As a result of the Reorganisation, corporate entities within the Naf Naf Group at completion of the Previous Acquisition were different from those owned and managed by Naf Naf SAS prior to the completion of the Previous Acquisition. In order to better assess the value of the whole Naf Naf Group and provide insight into the historical performance and financial position of the Naf Naf Group, and taking into account that the Naf Naf Group changed its financial year end from 31 August to 31 December after the completion of the Previous Acquisition for the purpose of bringing the presentation of the Naf Naf Group s accounts in line with its shareholders, prior to the date of the Share Purchase Agreement, the Company engaged an independent accounting firm to perform audit work in respect of the financial accounts of the Naf Naf Group for the year ended 31 December 2017 and for the six months ended 30 June 2018 (the Relevant Period ). Such audited financial statements of the Naf Naf Group for the Relevant Period were prepared in accordance with the Group s accounting policies on a combined basis by, among others, (i) combining all individual Naf Naf Subsidiaries into one reporting entity (namely, the Naf Naf Group), (ii) including the respective financial results of each of the Naf Naf Subsidiaries for the Relevant Period as if they have always been within the Naf Naf Group throughout the Relevant Period, and (iii) excluding the financial results for the Relevant Period of such disposed or liquidated corporate entities held by Naf Naf SAS as if they have always been excluded from the Naf Naf Group throughout the Relevant Period. The Company believes that such audited combined financial statements of the Naf Naf Group for the Relevant Period would provide a more meaningful presentation of its historical performance and overall financial position for the shareholders of the Company and potential investors to understand the financial impact of the Acquisition. 7

8 Based on the audited combined financial statements of the Naf Naf Group for the Relevant Period, the combined deficits, combined total assets and combined total liabilities of the Naf Naf Group as at 31 December 2017 were EUR10,017,000, EUR113,067,000 and EUR123,084,000, respectively. Furthermore, the combined net assets, combined total assets and combined total liabilities of the Naf Naf Group as at 30 June 2018 were EUR42,441,000, EUR102,140,000 and EUR59,699,000, respectively. Based on the audited-combined financial statements of the Naf Naf Group, the operating revenue and the net profit of the Naf Naf Group for the year ended 31 December 2017 and for the six months ended 30 June 2018, respectively, were as follows: For the year ended For the ten months ended 31 December June 2018 (audited) (audited) million EUR million EUR Operating revenue Net profit/(loss) before tax (6.952) (1.366) Net profit/(loss) after tax (6.500) (3.422) The Target itself is a special purpose vehicle established in April 2018 merely for the purpose of holding the Naf Naf Group. It has no substantial operation with a limited track record period, and it did not record any operating revenue or profit on a stand-alone basis since its incorporation. Based on the unaudited management accounts of the Target Group on a combined basis, as of 30 June 2018, the combined net assets, combined total assets and combined total liabilities of the Target Group as at 30 June 2018 were EUR390,000, EUR115,778,000 and EUR115,388,000, respectively. IMPLICATIONS UNDER THE LISTING RULES As (i) the Acquisition and the Previous Acquisition were both entered into by the Group within a 12-month period prior to and inclusive of the date of the Share Purchase Agreement, and (ii) the Previous Acquisition and the Acquisition involve acquisition of the entire issued share capital of Naf Naf SAS by the Company indirectly, the Acquisition and the Previous Acquisition are aggregated pursuant to Rule of the Listing Rules. As one or more of applicable ratios as defined under Rule of the Listing Rules in respect of the Acquisition (when aggregated with the Previous Acquisition) exceed 5% but are below 25%, the Acquisition constitutes a discloseable transaction for the Company pursuant to Chapter 14 of the Listing Rules and is therefore subject to notification and announcement requirements but exempt from the shareholders approval requirement pursuant to Chapter 14 of the Listing Rules. As the Acquisition is subject to the fulfilment of the condition precedent and may or may not proceed, shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company. 8

9 DEFINITIONS In this announcement, unless the context otherwise requires, the following expressions have the following meanings: Acquisition Board Business Day Company Completion Consideration Directors East Links Escrow Account EUR Group HK$ the acquisition of the Target Shares and the Shareholders Loans by the Purchaser subject to the terms as set out in the Share Purchase Agreement the board of Directors a day of the week except for Saturday, Sunday and public holidays in Shanghai, the PRC; Shanghai La Chapelle Fashion Co., Ltd. ( ), a joint stock company established in the PRC with limited liability, whose A shares and H shares are listed on the Shanghai Stock Exchange (stock code: ) and the Main Board of the Stock Exchange (stock code: 06116), respectively completion of the Acquisition aggregate consideration for the Acquisition payable by the Purchaser to the Vendors in accordance with the Share Purchase Agreement the directors of the Company East Links International (HK) Co., Limited, a private company incorporated in Hong Kong with limited liability the escrow account opened, at the special request of the Vendors to regulate the payments to be made in accordance with the terms of the Share Purchase Agreement for the purpose of receiving the Consideration Euro, the lawful currency of the member states of the European Union that adopted the single currency in accordance with the Treaty on the Functioning of the European Union the Company and its subsidiaries Hong Kong dollar, the lawful currency of Hong Kong 9

10 Hong Kong Naf Naf Group Listing Rules PRC Previous Acquisition Previous Share Purchase Agreement Purchaser RMB Shanghai LaCha Shareholders Loans Share Purchase Agreement Stock Exchange Target the Hong Kong Special Administrative Region of the PRC Naf Naf SAS and its subsidiaries (namely, Naf Naf Boutiques SPRL, NNCK SRL, NNC Service SAS, NCK SLU and Naf Naf Suisse SARL) the Rules Governing the Listing of Securities on the Stock Exchange the People s Republic of China and for the purpose of this announcement, it excludes Taiwan, Hong Kong and Macau Special Administrative Region of the PRC the acquisition of the entire issued share capital of Naf Naf SAS subject to the terms as set out in the Previous Share Purchase Agreement the agreement dated 11 April 2018 entered into between Vivarte SAS and the Target (among other parties) in relation to the acquisition of all equity interests in Naf Naf SAS by the Target from Vivarte SAS LaCha Fashion I Limited, a company incorporated in Hong Kong with limited liability, and an indirect wholly-owned subsidiary of the Company Renminbi, the lawful currency of the PRC Shanghai LaCha Enterprise Management Co., Ltd. ( ), a private company incorporated in the PRC with limited liability and a wholly-owned subsidiary of the Company the shareholders loans in the respective amount of EUR15,600,000 and EUR15,600,000 advanced by East Links and Trendy Pioneer to the Target, respectively, for the purpose of the Previous Acquisition the agreement dated 26 November 2018 entered into between the Vendors and the Purchaser (among other parties) in relation to the acquisition of 60% equity interests in the Target by the Purchaser from the Vendors The Stock Exchange of Hong Kong Limited LaCha Apparel II Sàrl, a company incorporated in the Grand Duchy of Luxembourg 10

11 Target Group Target Shares Trendy Pioneer Vendors the Target and its subsidiaries, including Naf Naf SAS 7,200 ordinary shares of the Target, representing 60% of the entire issued share capital of the Target Trendy Pioneer Limited, a private company incorporated in Hong Kong with limited liability East Links and Trendy Pioneer % per cent By order of the Board Shanghai La Chapelle Fashion Co., Ltd. Mr. Xing Jiaxing Chairman Shanghai, the PRC 26 November 2018 As of the date of this announcement, the executive directors of the Company are Mr. Xing Jiaxing, Mr. Yu Qiang and Ms. Hu Lijie; the non-executive directors of the Company are Mr. Lu Weiming, Mr. Luo Bin and Mr. Mao Jianong; the independent non-executive directors of the Company are Dr. Chen Jieping, Mr. Zhang Zeping and Mr. Chan, Wing Yuen Hubert. 11