China Dongxiang Announces Sale of Kappa Japan to the Italian Company BasicNet

Focuses on business development in China; Continues to implement the multi-brand strategy

HONG KONG, CHINA – Media OutReach – 31 July 2020 – The leading international sportswear brand enterprise in the PRC, China Dongxiang (Group) Co., Ltd. (“China Dongxiang” or “the Company”, together with its subsidiaries, “the Group”, HKEx stock code: 3818) announces that its non-wholly owned subsidiary Phenix Co., Ltd (“Phenix”) will sell the Kappa Japan trademarks and the IP miscellaneous assets for a consideration of US$13 million (equivalent to approximately RMB91.26 million) to Basic Trademark S.r.l. con socio unico, a wholly-owned subsidiary of BasicNet S.p.A.. The disposal includes the Kappa Japan trademarks and the IP miscellaneous assets used in the Japan business. Closing of the disposal shall take place on 15 September 2020 or no later than 15 October 2020.

Taking into account of the consideration of US$13 million, the unaudited book value of the Kappa Japan trademarks and the IP miscellaneous assets of US$1.98 million as at 30 June 2020 (equivalent to approximately RMB13.9 million), and the estimated transaction costs of US$0.09 million (equivalent to approximately RMB0.63 million), the Group is expected to record an unaudited estimated gain on the disposal of approximately US$10.93 million (equivalent to approximately RMB76.73 million). The net proceeds from the disposal will be applied for production and operation, as well as external investment of the Group.

The Chairman of the BasicNet Group, Mr. Marco Boglione, regarding the transaction stated: “I admit that the satisfaction with repurchasing the Kappa brand in Japan is immense. With the world’s third largest economy entering the BasicNet system, the global strategic project for the “omini” brand is completed. China DongXiang will independently manage the Kappa brand in the PRC and Macau, and BasicNet the rest of the world. I would like to take this opportunity to thank my friend Mr. Chen Yihong, Founder, Chairman and Executive Director of China DongXiang, who has been working with passion, courage and intelligence to develop the standing and growth of the Kappa brand for almost 20 years now. “

Mr. Chen Yihong, Founder, Chairman and Executive Director of China Dongxiang, said: “The disposal enables the Group to better integrate its resources and focus on the development of Kappa brand in the PRC, which is in the interests of the Group’s long-term development and the shareholders as a whole. Looking forward, we will, as always, continue to develop our business in the PRC through a multi-brand strategy, as well as to explore market opportunities.”

Chairman Chen concluded, “In 2006, China Dongxiang acquired from BasicNet all rights of Kappa brand in Mainland China and Macau. In 2008, the Group acquired Phenix, which owned and managed Kappa brand in Japan, becoming the owner of Kappa in both China and Japan. Today, the sale of Kappa Japan back to BasicNet reflects our close and harmonious relationship. In our nearly two decades of cooperation, I’m delighted that we have been respecting each other’s core interests, and continued to deepen our cooperation. I would like to express my sincere gratitude to Mr. Marco Boglione, Chairman of BasicNet. I hope that we can treasure what we had in the past and look forward to the future, working on our new foundation and bring the century-old brand Kappa towards a new milestone.”

Headquartered in Turin, Italy, BasicNet S.p.A. (BIT: BAN) mainly engages in the sector of branded leisurewear and sportswear, footwear and accessories with a collection of market-leading registered trademarks, including Kappa®, Robe di Kappa®, Jesus® Jeans, K-Way®, Superga®, Sabelt®, Briko® and Sebago®.

About China Dongxiang (Group) Co., Ltd. (Stock code: 3818)

China Dongxiang (Group) Co., Ltd. is a leading international sportswear brand enterprise in China which has been listed on the Main Board of the Hong Kong Stock Exchange since 10 October 2007. The Group is primarily engaged in the design, development, marketing and wholesale of branded sportswear in China. Currently, China Dongxiang owns all rights to the internationally renowned Kappa brand in China, Macau and Japan. On 1 May 2008, China Dongxiang completed the acquisition of Phenix, a Japanese sportswear enterprise. Phenix is the most popular ski brand in Japan with the largest market share, as well as a well-known brand in the international market.

Issued by Cornerstones Communications Ltd. on behalf of China Dongxiang (Group) Co., Ltd..