Cosmo Lady China : Renewal of Continuing Connected Transactions - Framework Purchase Agreement with Shantou Maosheng and Framework Purchase Agreement with Shantou Shengqiang

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Cosmo Lady (China) Holdings Company Limited

都市麗 人（中 國）控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 2298) RENEWAL OF CONTINUING CONNECTED TRANSACTIONS FRAMEWORK PURCHASE AGREEMENT WITH SHANTOU MAOSHENG AND FRAMEWORK PURCHASE AGREEMENT WITH SHANTOU SHENGQIANG

Reference is made to the prospectus of the Company dated 16 June 2014, which contains, among others, information in relation to the continuing connected transactions entered into between the Company and Shantou Maosheng and Shantou Shengqiang, respectively, under the Old Framework Purchase Agreements.

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

As the terms of the Old Framework Purchase Agreements as well as the relevant annual caps for the continuing connected transactions contemplated thereunder have expired on 25 June 2017, the Company entered into the New Framework Purchase Agreements with Shantou Maosheng and Shantou Shengqiang separately, each commencing on 26 June 2017 and ending on 31 December 2019.

HONG KONG LISTING RULES IMPLICATIONS

Mr. Lin is an executive Director and a substantial Shareholder of the Company, hence a connected person of the Company. Shantou Maosheung, in which Mr. Lin Zonglie, a brother of Mr. Lin, owns 60% of the equity interest and hence an associate of Mr. Lin and a connected person of the Company.

Mr. Zhang is an executive Director and a substantial Shareholder of the Company, hence a connected person of the Company. Shantou Shengqiang, in which Mr. Cai Shaoqiang (a brother of Mr. Zhang's spouse), together with his wife, in aggregate, own the entire equity interest, and hence an associate of Mr. Zhang and a connected person of the Company.

Accordingly, the continuing transactions between the Company and Shantou Maosheung and Shantou Shengqiang, respectively, contemplated by the New Framework Purchase Agreements constitute continuing connected transactions of the Group under Chapter 14A of the Listing Rules.

As the highest of the applicable Percentage Ratios in respect of the proposed annual caps for the continuing connected transactions proposed to be renewed and contemplated under the New Framework Purchase Agreements are more than 0.1% but less than 5%, such continuing connected transactions are only subject to the reporting, announcement and annual review requirements, but are exempt from Shareholders' approval requirement under Chapter 14A of the Listing Rules.

Reference is made to the prospectus of the Company dated 16 June 2014, which contains, among others, information in relation to the continuing connected transactions entered into between the Company and Shantou Maosheng and Shantou Shengqiang, respectively, under the Old Framework Purchase Agreements.

Information on the Company

The Company is an investment holding company. The Group is the largest branded intimate wear enterprise in the PRC in terms of total retail sales in 2016, according to Frost & Sullivan, an independent industry consultant engaged by the Company. It is principally engaged in the design, research, development and sale of its own branded intimate wear products (including bras, underpants, sleepwear and loungewear, thermal clothes and others) in the PRC.

Information on Shantou Maosheng

Shantou Maosheng is a limited liability company incorporated in the PRC which is principally engaged in producing intimate wear products as an OEM supplier.

Information on Shantou Shengqiang

Shantou Shengqiang is a limited liability company incorporated in the PRC which is principally engaged in producing intimate wear products as an OEM supplier.

The Shantou Maosheng Agreement

Parties:	Shantou Maosheng (as the supplier); and the Company (as the purchaser).
Principal terms:	The Company entered into the Shantou Maosheung Agreement with Shantou Maosheng on 26 June 2017, pursuant to which the Company will purchase intimate wear products from Shantou Maosheng, an OEM supplier, and sell such products under the Group's brand. The term of the Shantou Maosheng Agreement commenced on 26 June 2017 and ends on 31 December 2019.
Pricing policy:	Under the Shantou Maosheng Agreement, the purchase prices shall be determined on a cost-plus basis, with a mark-up rate of no more than 9%. The purchase prices shall not be higher than the prices at which the Company purchase similar products from independent third party OEM suppliers.
Reasons for the transaction:	Shantou Maosheng has been a reliable OEM supplier which can provide quality products to the Group at a price not higher than other OEM suppliers.
Historical figures:	The historical figures of the procurement from Shantou Maosheng are set out below:
Historical Transaction Amount for the Year ended 31 December
2014	2015	2016
(RMB'000)
Total procurement amount	22,131	21,543	9,592

Annual Caps:	The maximum aggregate annual procurement amount from Shantou Maosheng for the years ending 31 December 2017, 2018, 2019 shall not exceed the caps set out below:
Proposed Annual Cap for the Year ending 31 December
2017	2018	2019
(RMB'000)
Total procurement amount	25,000	25,000	25,000
Basis of Caps:	In determining the above annual caps, the Directors have considered the historical figures and the potential increase in purchase volume due to the Group's business expansion plan as well as the Group's intention to diversify the Group's supplier base.

The Shantou Shengqiang Agreement

Parties:	Shantou Shengqiang (as the supplier); and the Company (as the purchaser).
Principal terms:	The Company entered into the Shantou Shengqiang Agreement with Shantou Shengqiang on 26 June 2017, pursuant to which the Company will purchase intimate wear products from Shantou Shengqiang, an OEM supplier, and sell such products under the Group's brand. The term of the Shantou Shengqiang Agreement commenced on 26 June 2017 and ends on 31 December 2019.
Pricing policy:	Under the Shantou Shengqiang Agreement, the purchase prices shall be determined on a cost-plus basis, with a mark-up rate of no more than 9%. The purchase prices shall not be higher than the prices at which the Company purchase similar products from independent third party OEM suppliers.