Revenue at RMB3,086 Million Net Profit at RMB448 MillionTotal Dividend for the year at HK32 Cents Per Share HONG KONG SAR - Media OutReach - 17 March 2023 - China Lilang Limited ("China Lilang" or the "Company", together with its subsidiaries the "Group"; stock code: 1234) has today announced its 2022 annual results. Mr. Wang Dong Xing, Chairman and Executive Director of China Lilang, said, "In 2022, lockdowns and control measures were imposed one after another to address the fluctuating coronavirus pandemic, slowing down economic development and, at the same time, dampening consumer sentiment as in-store shopping and social activities were refrained, of which the apparel industry bore the brunt with negative growth recorded in retail sales of apparel for the year. Operating in such a challenging business environment, the Group actively responded to the changing market by continuously facilitating new retail business, promoting sales and driving store efficiency." In 2022, the Group's revenue decreased by 8.7% year-on-year to RMB3,086 million. Net profit decreased by 4.3% year-on-year to RMB448 million, mainly due to the decrease in overall revenue as the Pandemic weighed heavily on the offline retail business, with certain stores being temporarily suspended due to the pandemic prevention and control measures, and rebates provided to distributors by the Group during the year. The gross profit margin was 46.0%, representing an increase of 4.1 percentage points year-on-year, which was primarily attributable to the inventory provision of RMB120 million recorded in 2021 and the writeback of inventory provision of RMB22.26 million during the year. Earnings per share were RMB37.42 cents, down by 4.3%. During the year, the Group maintained a healthy financial position with sufficient cash flow. The Board of Directors recommended payment of a final dividend of HK9 cents per share and a special final dividend of HK5 cents per share, together with the interim dividend already distributed, the total dividend for the year amounted to HK32 cents per share, maintaining a stable payout ratio. The Group actively develop the business in WeChat Mall during the year to take advantage of the interactive features of the social platform and capitalise on the complementary advantages of online and offline services, thus driving store efficiency growth. The Group gradually transformed its online sales service from a channel for off-season inventory clearance to a platform mainly for advertising its brand image, and promoted sales through sales promotion, e-commerce live streaming and other campaigns, such as the launch of pants hot products on e-commerce platforms during the 618 E-Commerce Shopping Festival and the premier launch of quality and hot items, hydrophobic downs, online prior to the Double 11 Shopping Festival. Although retail sales decreased by 0.4% under a stagnant market, a significant increase in gross profit was recorded mainly due to higher unit price of new product sales and sales proportion of new products increased. The new retail business started generating net profit. However, physical stores' sales were strongly affected by the Pandemic, the Group decisively closed certain underperforming stores and slowed down its plan to open new stores, thus falling short of the target of maintaining the same number of stores throughout the year as the beginning of the year. As of the end of the previous year, the Group had 2,644 stores, representing a decrease of 89 stores as compared to the end of 2021. The Group further optimised its nationwide sales network by relocating approximately 50 stores to premium locations of first- and second-tier cities, so as to enhance store efficiency and utilisation of store space. Thus far, nearly 40% of core collection stores are operating under the consignment model. During the year, the Group continued to consolidate and develop its nationwide sales network through long-term partnership with distributors, in order to reach more consumers across China. At the same time, the Group pragmatically supported distributors in optimizing the retail network by opening stores in carefully selected quality shopping malls and prime shop locations. The Group also promoted increased usage of the WeChat platform in physical stores to achieve higher store efficiency. On the other hand, smart casual collection stores and online stores were converted to direct-to-retail mode in 2020 and 2021, respectively. By the end of 2022, the Group had a total of 251 smart casual collection stores, and other stores were operated the other stores were operated by distributors or sub-distributors respectively. With respect to inventory management, despite weaker sales caused by the volatile Pandemic situation, the effort put into inventory clearance by the Group was effective, and the inventory balance during the year approximated that of last year. On the brand promotion front, the Group has been on the...