Revenue Up by 6.7% to RMB1,491 Million Net Profit Amounts to RMB270.5 Million Interim Dividends of HK18 Cents Per Share

HONG KONG SAR - Media OutReach - 16 August 2023 - China Lilang Limited ("China Lilang", or the "Company", together with its subsidiaries, the "Group"; stock code: 1234) today announced its interim results for the six months ended 30 June 2023. Mr. Wang Dong Xing, Chairman and Executive Director of China Lilang, said:"In the first half year, the society in Mainland China has returned to normalcy and the economy has gradually emerged from COVID-19's impact, with physical stores resuming normal operation and the consumer goods retail market recovering.We have also benefitted from the lifting of lockdown and control measures and the resumption of social activities, and have used the opportunity to upgrade Lilang's brand strategy. The store image renovation works, which were previously delayed by the pandemic, have continued to proceed. We hope to present a more fashionable and younger brand image with a new store image, in a bid to capture greater attention and gain popularity among consumers. During the reporting period, total retail sales of the Group's products maintained positive growth, achieving single-digit growth year-on-year." For the six months ended 30 June 2023, the Group's revenue increased by 6.7% year-on-year to RMB1,491 million. Profit from operations was up by 3.9% to RMB305 million. Gross profit margin was 51.8%, an increase of 3.1 percentage points year-on-year. The growth was mainly attributable to the relaxation of lockdown and control measures and the resumption of social activities. The smart casual business, which has higher gross profit margins, showed significant growth and its sales proportion also increased correspondingly. During the same period last year, the Group cleared off-season inventories by reducing prices, following a decision to cease the development of professional sports shoes. Hence, the Group was able to achieve a healthier off-season product inventory level this year. Such decrease in off-season inventory allowed the Group to write back some of its inventory provision. In addition, since the price increase began mainly in the second half of 2022, the unit sales price in the first half of 2023 was therefore higher than the same period last year. Net profit increased by 5.2% to RMB270.5 million, while net profit margin declined by 0.3 percentage point to 18.1%. Earnings per share was RMB22.6 cents. During the reporting period, the Group maintained a healthy financial position with sufficient cash flow. The Board of Directors has resolved to pay an interim dividend of HK13 cents per share (2022 Interim: HK13 cents) and a special interim dividend of HK5 cents per share (2022 Interim: HK5 cents), maintaining a stable payout ratio. The Group has established four sales channels following a reform of the sales channels, namely: core collection distribution and consignment models, direct-to-retail model of the smart casual collection, and e-commerce. The Group currently operates 2,394 core collection stores, 39% of which adopt the consignment operation model. During the reporting period, the Group continued to support distributors by optimizing the retail network. The Group also optimized store locations and space utilization of its smart casual business, while store renovations in Jiangsu, Qingdao and Wuhan continue apace, significantly improving sales efficiency as a result. The Group has a total of 2,646 retail stores nationwide, of which 252 are direct-to-retail stores, while 842 stores are in shopping malls, accounting for approximately 31.8% of the total store count and approximately 34.3% of total retail floor area. The Group also has 60 outlet stores. During the reporting period, both inventory balance and off-season inventory decreased, mainly because the Group added outlet stores and online retail channels. That, plus the commencement of operation of the logistics center, has raised the efficiency of inventory turnover, and the inventory of core collection and smart casual direct-to-retail stores continue to improve. New retail remains one of the Group's top priorities for business development, and the Group has been actively promoting the business of its LILANZ core collection and smart casual collection. These businesses are operated through the online-only sales model of its direct-to-retail online stores, as well as the ordering-online-while-picking-up-offline model of WeChat Mall. During the reporting period, the Group organized sales promotions through its direct-to-retail online stores, and launched the ice-type polo shirt hot products, during the 618 E-commerce Shopping Festival, boosting retail sales of online stores by approximately 24% year-on-year. In addition, the Group utilized its WeChat business platform to set up stores in WeChat Mall and provide customer relationship management services, taking advantage of the social...