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) UPDATE ANNOUNCEMENT IN RELATION TO DISPUTES ON PROPERTY LEASE AGREEMENT INVOLVING THE COMPANY’S SUBSIDIARIES This announcement is made by Xinjiang La Chapelle Fashion Co., Ltd. (the “Company”) 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). Reference is made to the announcements of the Company dated 17 June 2019, 15 October 2019, 7 November 2019, 10 March 2020 and 12 January 2021 (the “Announcements”) in relation to a dispute on a property lease agreement of Chengdu Lewei and Chengdu La Chapelle, both of which are wholly- owned subsidiaries of the Company. Unless the context otherwise requires, capitalized terms used herein shall have the same meanings as those defined in the Announcements. An update of the circumstances surrounding the dispute is summarised below: State of litigation of the case: Retrial ordered. Relevance of the Company in the The wholly-owned subsidiaries of the Company, Chengdu Lewei litigation: and Chengdu La Chapelle, are the defendants of the retrial. Judgment of the Higher People’s The (2019) Chuan 13 Min Zhong No. 4533 Civil Judgment* Court of Sichuan Province: ((2019) 川13 民終4533號民事判決) of the Intermediate People’s Court of Nanchong City of Sichuan Province and the (2019) Chuan 1321 Min Chu No. 2899 Civil Judgment* ((2019) 川1321 民初2899號民事判決) of The People’s Court of Nanbu County of Sichuan Province be withdrawn; and The case be remitted to The People’s Court of Nanbu County of Sichuan Province for retrial. 1 As the case has been remitted to The People’s Court of Nanbu County for retrial, the final results of the litigation is uncertain. Therefore, the impact of the litigation on the profit of the Company for the current financial period or after the period is unpredictable at this stage and is subject to the final judgment of the court and the results of the annual audit. The Company has engaged a team of professional legal counsel to respond to the retrial, and shall take proactive measures to protect the legal interests of the Company and to protect the interests of the Company and its shareholders as a whole. I. BASIC INFORMATION OF THE LITIGATION As disclosed in the Announcements, Mei Hao Jia Yuan sued Chengdu Lewei and Chengdu La Chapelle for all the losses caused due to their leaving the shopping mall and early termination of the Lease Agreement, including a loss of rent of RMB1.3456 million and penalty, and other losses of RMB25 million. As determined in the first instance judgment of The People’s Court of Nanbu County of Sichuan Province (the “First Instance Judgment”), Chengdu Lewei shall pay compensation of RMB5.897 million and bear part of the case acceptance and litigation preservation fee. The Company was of the view that the First Instance Judgment lacked factual and legal basis in respect of the amount of compensation, and therefore appealed to the Intermediate People’s Court of Nanchong City of Sichuan Province. Mei Hao Jia Yuan also made an appeal. The Intermediate People’s Court Nanchong City of Sichuan Province handed down its second instance judgment in respect of the litigation (the “Second Instance Judgment”) as follows: 1. The second item of the (2019) Chuan 1321 Min Chu No. 2899 Civil Judgment* ((2019）川 1321民初2899 號民事判決) of the People’s Court of Nanbu County of Sichuan Province be upheld, i.e. the other claims of Mei Hao Jia Yuan be dismissed. 2. The first item of the (2019) Chuan 1321 Min Chu No. 2899 Civil Judgment of the People’s Court of Nanbu County of Sichuan Province be varied, such that Chengdu Lewei shall compensate Mei Hao Jia Yuan for its financial loss of RMB7,897,043 within 10 days of the effective date of the judgment. Chengdu La Chapelle shall be jointly liable for the compensation (the performance deposit of RMB300,000 received from Chengdu Lewei, which should be returned by Mei Hao Jia Yuan, can be offset at the time of enforcement). If the payment obligation is not fulfilled within the period specified in the judgment, the interest on the debt for the period of delay in performance shall be doubled pursuant to Article 253 of the Civil Procedure Law of the People’s Republic of China. The case acceptance fee for the first instance trial of RMB86,764 and the litigation preservation fee of RMB5,000, totalling RMB91,764, shall be borne by Mei Hao Jia Yuan as to RMB34,698, and Chengdu Lewei as to RMB57,066. The case acceptance fee for the second instance trial of RMB173,528 shall be borne by Mei Hao Jia Yuan as to RMB69,411, and Chengdu Lewei and Chengdu La Chapelle jointly as to RMB104,117. As Mei Hao Jia Yuan was dissatisfied with the Second Instance Judgment, it applied for a retrial to the Higher People’s Court of Sichuan Province. 2 II. PROGRESS OF THE LITIGATION On 17 March 2021, Chengdu Lewei and Chengdu La Chapelle, being the Company’s wholly owned subsidiaries, received the (2021) Chuan Min Zai No. 4 Civil Judgment* ((2021）川民再4號《 民 事裁定書》) of the Higher People’s Court of Sichuan Province, which held that under the Lease Agreement, Chengdu Lewei was entitled to terminate it in advance when it was unable to continue to operate due to poor management. However, Chengdu Lewei should have compensated Mei Hao Jia Yuan for all financial losses arising from such early termination, including the difference in rental incomes as a result of re-leasing; the Lease Agreement was sincerely and truly entered into between the parties and should be respected. On 31 May 2019, Chengdu Lewei exercised its right to terminate the Lease Agreement in accordance with its terms. On 29 June 2019, Mei Hao Jia Yuan entered into a property lease agreement with Heng Fa Company* (亨發公司) (the “Heng Fa Lease Agreement”), which provides that the lease shall run from 1 October 2019 to 27 November 2029 (10 years and 2 months in total) at a fixed annual rent of RMB1 million. During the first instance and second instance trials, Chengdu Lewei argued that the rent under the Heng Fa Lease Agreement was far lower than the rent under the Lease Agreement and the market rate, and that the Heng Fa Lease Agreement had not been actually performed, casting doubt on its authenticity. Upon considering the Lease Agreement, the Heng Fa Lease Agreement, and Chengdu Lewei’s arguments, the Higher People’s Court of Sichuan Province held that in deciding whether there is a difference between the rental incomes as a result of re-leasing as claimed by Mei Hao Jia Yuan, it is first necessary to determine whether the Heng Fa Lease Agreement has been actually performed and to obtain valuation of the prevailing market rate of similar premises in the area at the time when Mei Hao Jia Yuan entered into the Heng Fa Lease Agreement, before it can be reasonably concluded, based on the findings, that there was a difference in rental incomes arising from re-leasing. Since the first instance court and the second instance court exercised their discretion in holding that there was such a difference without examining the above matters, they did not base their judgments on clear fundamental facts. Pursuant to Article 207(1) and Article 170(1)(iii) of the Civil Procedure Law of the People’s Republic of China, it was adjudged that: (1) The (2019) Chuan 13 Min Zhong No. 4533 Civil Judgment* ((2019）川 13 民終4533號民事判決) of the Intermediate People’s Court of Nanchong City of Sichuan Province and the (2019) Chuan 1321 Min Chu No. 2899 Civil Judgment* ((2019）川 1321民初2899號民事判決) of The People’s Court of Nanbu County of Sichuan Province be withdrawn; and (2) the case be remitted to The People’s Court of Nanbu County of Sichuan Province for retrial. III. IMPACT OF LITIGATION ON THE PROFITS OF THE COMPANY IN CURRENT OR SUBSEQUENT PERIODS As the case has been remitted to The People’s Court of Nanbu County of Sichuan Province for retrial, the final results of the litigation is uncertain. Therefore, the impact of the litigation on the profit of the Company for the current financial period or after the period is unpredictable at this stage and is subject to the final judgment of the court and the results of the annual audit. The Company has engaged a team of professional legal counsel to respond to the retrial, and shall take proactive measures to protect the legal interests of the Company and to protect the interests of the Company and its shareholders as a whole. 3 Shareholders and potential investors of the Company should exercise caution when dealing in the securities of the Company. By Order of the Board Xinjiang La Chapelle Fashion Co., Ltd. Mr. Wu Jinying Chairman Shanghai, the People’s Republic of China 18 March 2021 As of the date of this announcement, the executive directors of the Company are Mr.