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About Bosideng | Chairman's Statement

CROSSING THROUGH AGES AND CHALLENGING NEW HEIGHTS UNSTOPPABLY

Dear shareholders,

I would like to extend my gratitude to every one for your joint efforts in forging ahead with Bosideng. On behalf of the Board, I am pleased to present the Group's annual results for the year ended March 31, 2021.

FY2020/21 marks the last year of the first stage of the Group's new ten-year strategic plan and the beginning of the second stage of upgrading and development. Since the commencement of the new journey of "starting a new undertaking" in 2018, Bosideng has reaped satisfactory results of its strategic focus and the continuous enhancement of its profitability. The revenues of the Group grew steadily for three consecutive years, and in particular, the revenues hit a record high again in this financial year, amounting to RMB13.52 billion, representing a year-on-year increase of 10.9%. Net profit attributable to shareholders was approximately RMB1.71 billion, representing a year-on-year increase of 42.1%. Amid the challenges of COVID-19 pandemic and external environment, the Group attached greater importance to the enhancement of cash flow management and quality of operation. The cash flow generated from operating activities of the Group for the financial year amounted to RMB3.13 billion, representing a significant increase of 155.8% on a year-on-year basis. Through three years of efforts, the Company has improved its quality and efficiency of operation, maximized its brand potential, and showed its love for the motherland. We are undoubtedly the leading competitor in Chinese brands, winning the most significant "key battle" of transformation and upgrade in its development history. To thank the shareholders for their continued support and recognition, the Board recommended the distribution of a final dividend of HKD10.0 cents per share in the financial year. This, together with the distributed interim dividend of HKD3.5 cents per share, the dividend distribution rate of the financial year was 70.8%, continuously generating steady returns for our shareholders.

Forging ahead quickly but steadily and reaching new heights again

Only the toughest grass can withstand the strongest wind, and the raging fire makes the real gold. The world is undergoing great changes unprecedented in a century. The severe challenges arising from global pandemic and the rapid development of a new round of digital revolution promoted the reconstruction of global economy as well as the social order. For Bosideng, the period from 2018 to 2020 was a three-year period for strategic transformation and brand upgrading, as well as a remarkable and memorable journey of unwavering efforts.

Sticking to the strategic direction and focusing on principal business and key brands

Since 2018, the Group has established the strategic positioning of "focusing on principal business and key brands", returned to the development model of "Brand Leadership" initiated at our start-up stage, adapted to develop in line with the trend of the era, deeply explored the brand gene of "Top Brands of Down Apparel with High Quality", and commenced its new journey of "starting a new undertaking". Over the past three years, the Group has concentrated on our advantageous strength, enhanced the deployment of strategic resources, fully upgraded the brands, products, channels, retails, supply chains and our capabilities in other aspects. Furthermore, main development indicators of our business recorded increase under adverse conditions, and we realized the strategic goals of achieving sustained, steady and significant growth. As for the core down apparel business, while focusing the positioning of Bosideng brand being on the "top-selling down apparel expert in the world", the Group enhanced the brand strength, devoted to product innovation, increased efforts in retail transformation and won the recognition of mainstream consumers. Our down apparel brands, such as Snow Flying and Bengen, have achieved promising development. OEM management business and fashionable ladieswear business have also weathered the unprecedented impact brought by the pandemic and remained steady and showed positive signs of growth in general.

We persevere in maintaining brand leadership to create value for our users in line with consumers' needs in this era

In the face of great challenges arising from the pandemic, the "strength of brand" has been proved as the best immunity against adverse conditions. The Group has been persistent in building brand confidence, persevering in maintaining "Brand Leadership", to diversify the propositions of our brands and increase the brand value, so as to gain consumers of the era with brand strength.

Fully leveraging on brand potential to enter the first rank of the top brands in China

We position the Bosideng brand from a global perspective, making a stunning appearance at the international Fashion Weeks in New York, Milan and London. We participated in the "China Brand Day" and were listed in "Strong Country Brand Project (強國品牌工程)" by CCTV. We publicized in various platforms of new media and We Media to enhance brand presence. The first mentioned awareness rate, net promoter score (NPS) and brand reputation of Bosideng secured first ranking in the industry, demonstrating its strong brand confidence and presence in the fashion sector.

Product innovation empowered by fashion and extraordinary quality achieved through craftmanship

Quality products made with remarkable craftmanship could withstand the test of time. With the height of our products underpinned by their depth, we could reach the peak of brand building-up. Also, the rising share of high-end product is driven by technology innovation of Bosideng. Our products are empowered by design in terms of collection development, fashion and branding. Bosideng has been collaborating with Mr. Jean Paul Gaultier, a prestigious French designer and the creator of the golden age for Hermès, as well as other global designers with outstanding talent and creativity, to include the global perspective and meet its commitment on "quality" and "worthy". With the collection of warmth products, we supported the Mount Everest climbers to reach the summit and facilitated the Antarctic scientific investigation. The collections also won the Golden Award for Excellent Industrial Design in China 2020 and the Global Design Award of ISPO Award 2021. We infuse the element of fashion and culture and create barriers of leading-edge technologies to enhance the awareness of brand experts. Building on these advantages and our comprehensive and vertical product lines, we could become the choice of a wider range of consumers.

Enhancing transformation of new retail and upgrading channels to activate new growth momentum

Based on our consumer-centered concept, we have made persistent efforts in enhancing transformation of new retail, particularly, promoting the integrated commodity operation, nationwide inventory management, connecting the "people, goods with market" as well as "production, sales with inventory" to effectively support store-level operation and efficiency improvements. We have opened outlet stores in Wanda, Intime, CapitaLand and other core shopping malls, and established our flagship stores in landmark business districts in Beijing, Shanghai, Hangzhou, Chengdu and other first-and-second-tier cities. The Group has seen iteration of our image in core business districts, further perfection of our talent team building in terminal outlets, booming stores in mainstream channel propelling our sales, effective precision marketing through live streaming e-commerce, in-depth expansion of circle-based and group-based supply scenarios and optimization and upgrade of consumption experience. Breakthroughs are made in online and offline omni-channel sales. Bosideng's Tmall flagship store took the lead in the "Double 11" and "Double 12" massive promotional activities, ranking first in the domestic apparel category for two straight years in terms of sales.

Making breakthrough in the flexible supply system and intelligent transformation and digital transformation to improve business quality and efficiency

As the Group has been accelerating intelligent transformation, we independently developed a software system and big data center with our own intellectual property rights, and established the most advanced intelligent delivery center and intelligent manufacturing production bases in the apparel industry in China. Therefore, our degree of intelligence and rapid response capabilities are far ahead of the average level in the industry, as we are able to instruct rapid production and replenishment while serving customers swiftly and accurately. Synergistic effects between production and sales help link up the process of front-end sales, mid-end inventory and production and outsourcing of back-end supply chain, which realizes timely match with the needs of consumers and data docking with core suppliers to ensure healthy inventory.

While striving to start a new undertaking and to realize transformation in three years, the Group has achieved dual benefits in terms of operational and social value by faithfully fulfilling its commitments and responsibilities to employees, partners, investors and the society. The Company has promoted four large share-based incentive initiatives in succession, and therefore, our team has united as a closer and more steadfast one, which became a team with a shared future during our corporate development. Whilst fighting against the COVID-19 pandemic with unity and solidarity, we, the Bosideng people, took the initiative to launch the charity activity themed "down apparel worth RMB300 million from Bosideng to front-line personnel in pandemic prevention". We also actively participated in the China Charity Federation's activity "Philanthropy Sending Warmth to Numerous Families (慈善情暖萬家)", assisting more than 20,000 poverty-stricken families, which has greatly contributed to fighting the decisive battle against poverty and passing on warmth.

TRUST IN BRAND AND LEAD TO SUCCESS

The year of 2021 marked the 45th anniversary of Bosideng's foundation. In the past 45 years, Bosideng has become a proud national brand by starting from a "mountaineering" dream in Shikumen, Shanghai to a corporate whose products were sold well in 72 countries, maintaining a leading position in the Chinese market for 26 consecutive years by sales volume. In the past 45 years, we shared the same fate with our country, kept pace with the spirit of the era and engaged with reform and innovation. In the past 45 years, we fearlessly confronted the headwinds in the global eventful market and promoted the development of the high-end textile and down apparel industry in China, making a history of a Chinese brand's "warm" commitment over nearly half a century.

Only in hard times can courage and perseverance be manifested. Only after polishing can a piece of jade be finer. In the post-epidemic era, amid China's strong economic recovery, its bigger say and increasing influence of Chinese brands in the world, the market size of down apparel in China has experienced notably growth with obvious concentration of brands and high-end trend, and remarkable siphonic effect of leading brands. Digitalization makes innovation boundless; innovation makes development unlimited and branding makes our future infinite. We are committed to building up a top brand not only in the domestic industry, but a leading brand in the world. The Group has formulated our medium to long term strategy for 2021 and next three years and launched the "A World Leading Expert in Making Down Apparel" initiative. We will focus on customers' value and digital and intelligent operation, integrate global innovative resources and upgrade Bosideng brand from the international mid-and-high end perspective to blaze a trail of "Chinese brand" in global market, so as to achieve sustainable and maximized market value.

Building a high-rise begins with mounds of soil. A journey of a thousand miles begins with a single step. Facing the future, we need to firmly uphold overall strategic positioning of "focusing on principal business and key brands". It is necessary to navigate the future with the insightful view into the ages, integrate the resources of the future into the present and deal with problems with the methods of the future. We create new consumer demands with innovation-driven and high-quality supply, so that we can keep sustainable profitability and push our brand's quality development toward "fast track".

Establishing the leadership, and maximizing the potential of our brand

The Group will thoroughly exploit the connotation of its brand, tell a compelling brand story and deliver its brand values, so that it can win the emotional resonance of customers of the era and improve the potential and influence of the brand among customers and industry.

Establishing the leadership of our products, and focusing on customer values

Through our persevering pursuit of leadership in terms of fashion, function, category and quality, the Group interprets fashion and trend with our cultural confidence, passes on the gene of warmth with original design, lays down solid foundation of competitiveness with cutting-edge technologies, so as to create its core competitiveness.

Enhancing efficiency of the channels, and accelerating multiple growth

The Group makes every effort to boost the integration of new retail and adopt a digital and intelligent operation model in which the whole process and whole industry chain are digitalized. In addition, to improve the profitability of individual outlet stores, the Group commits to aligning the brand image with channel, business with channel, people with channel and products with sales. The Group thus builds up a landmark flagship in core business districts in core cities to boost business growth through its superior innovation of whole-sector retail.

Upgrading the organization, and establishing smart platforms

The Group focuses its organizational effectiveness on "take users as priority", and accelerates the establishment of a large commodity smart cooperation platform featuring whole value chain and a large retail smart operation platform featuring whole scenario, to link up the whole value chain for business and achieve flexible production. Also, it creates a self-driven organization, continues to optimize co-operated and win-win mechanism and expends a fruit sharing and business partners platform so that it can steadily march forward an organizational culture that embraces changes, responds swiftly and shares values.

No matter how far we go, we will never forget where we came from. "Bosideng warms the world" is our unswerving original mission. It is our ambitious vision to be the most respected fashion and functional apparel brand in the world. It is our irresistible aspiration to be the "A World Leading Expert in Making Down Apparel". We will carry forward the spirit of "overcoming difficulties and striving for the best". We will live up to their trust and forge ahead regardless of difficulties, seize opportunities and continue to strive for the warm story of "Down Apparel in China, Bosideng in the World". We will unremittingly strive to reach the new height of "global leadership" in terms of brand and business performance, thus creating greater value for customers, employees, shareholders and society!

Gao Dekang
Chairman and President
June 23, 2021

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