Financial Highlights for the 2021 First Fiscal Quarter Ended September 30, 2020

Revenue for the fiscal quarter ended September 30, 2020, was RMB2,072.1 million (US$305.2 million), representing a decrease of 30.7% from the fiscal quarter ended September 30, 2019, and an increase of 33.4% from the previous fiscal quarter ended June 30, 2020.

Gross profit for the fiscal quarter ended September 30, 2020, was RMB522.4 million (US$76.9 million), representing a decrease of 44.3% from the fiscal quarter ended September 30, 2019, and an increase of 37.7% from the previous fiscal quarter ended June 30, 2020.

Loss from continuing operations for the fiscal quarter ended September 30, 2020, was RMB1,676.3 million (US$246.9 million) as compared to RMB20.3 million for the fiscal quarter ended September 30, 2019, and RMB74.8 million for the previous fiscal quarter ended June 30, 2020.

Adjusted net profit[1] for the fiscal quarter ended September 30, 2020, was RMB102.1 million (US$15.0 million), representing a decrease of 74.6% from the fiscal quarter ended September 30, 2019, and an increase of 140.8% from the previous fiscal quarter ended June 30, 2020.

Operational Highlights for the 2021 First Fiscal Quarter Ended September 30, 2020

Number of MINISO stores increased from 3,913 as of September 30, 2019, and 4,222 as of June 30, 2020 to 4,330 as of September 30, 2020. The following table provides a breakdown of the number of MINISO stores as of the relevant dates:

	
		
			 
			
			As of
			
		
		
			 
			
			September 30, 2019June 30, 2020September 30, 2020
			
		
		
			
			Number of MINISO stores[2]
			
			
			3,913
			
			 
			
			4,222
			
			 
			
			4,330
			
		
		
			
			China
			
			
			2,384
			
			 
			
			2,533
			
			 
			
			2,633
			
		
		
			
			—Directly operated stores
			
			
			11
			
			 
			
			7
			
			 
			
			5
			
		
		
			
			—Third-party stores
			
			
			2,373
			
			 
			
			2,526
			
			 
			
			2,628
			
		
		
			
			Overseas[3]
			
			
			1,529
			
			 
			
			1,689
			
			 
			
			1,697
			
		
		
			
			—Directly operated stores
			
			
			79
			
			 
			
			122
			
			 
			
			115
			
		
		
			
			—Third-party stores
			
			
			1,450
			
			 
			
			1,567
			
			 
			
			1,582
			
		
	









	
		
			
			[1] See the sections entitled "Non-IFRS Financial Measure" for more 

information about the non-IFRS financial measure referred to in this press release.

			
		
		
			
			[2] "MINISO store" are any of the stores operated under the "MINISO" 

brand name, including those directly operated by us ("Directly operated stores"), and those operated by third parties under the MINISO Retail Partner model and the distributor model ("Third-party stores").

			
		
		
			
			[3] Overseas stores exclude a small number of stores under certain 

overseas businesses that the Company had disposed of as of June 30, 2020. The Company completed such business disposal during the period from December 2019 to April 2020.

Mr. Guofu Ye, Founder, Chairman, and Chief Executive Officer of MINISO, commented, "Despite facing macroeconomic headwinds across the globe, we have successfully completed our listing on the New York Stock Exchange. Going forward, we will utilize our access to the capital markets to enter the next stage of development, fuel our growth momentum, and enhance our shareholder base. In the fiscal quarter ended September 30, 2020, we continued to expand our domestic store network coverage across higher- and lower-tier city markets. In third-tier cities and below, for example, we adroitly responded to the exponential growth in demand for high-quality, aesthetically pleasing lifestyle products, prudently expanding our operations in these markets to better satisfy local shoppers. At the same time, we also continued to fortify our market share leadership in first- and second-tier cities. As a result, the number of MINISO stores in our domestic network reached 2,633 by the end of the quarter as compared to 2,533 at the end of the previous quarter. On the international front, the pandemic significantly impacted our operations, especially in North America and Europe. Nevertheless, we remained flexible, restraining our expansion efforts to set the stage for our future growth as the pandemic gradually abates. Meanwhile, we remained active in our initiative development as we leveraged strategic partnerships to advance our e-commerce capabilities and launched our new TopToy retail store brand. Looking ahead, we remain confident in the enduring strengths of our brand equity, retail partner model, and customer value proposition, all of which will support us as we continue to grow our business in a sustainable manner and deliver lasting shareholder value."

Mr. Saiyin Zhang, Chief Financial Officer and Executive Vice President of MINISO, stated, "Despite the challenges we faced as a result of the pandemic and its impact on our global operations, we remained committed to executing our development strategies to maintain our growth momentum. As such, in the fiscal quarter ended September 30, 2020, our revenue increased by 33.4% quarter over quarter to RMB2,072.1 million, and our gross profit grew by 37.7% quarter over quarter to RMB522.4 million. Going forward, as we continue to invest in bolstering our product development capabilities, streamlining our supply chain operations, and expanding our store network coverage, we will also further solidify our market leadership and thus generate more lasting shareholder value in turn."

Recent Development

Joint Venture for Headquarters Building Project in Guangzhou

On December 11, 2020, the Company announced that it had formed a joint venture in the British Virgin Islands with YGF MC Limited, a company jointly controlled by the Company's controlling shareholders, Mr. Guofu Ye and Ms. Yunyun Yang, to acquire the land use rights for a parcel of land in Guangzhou and to establish a new headquarters building for MINISO through the joint venture's subsidiary in Guangzhou. The Company holds 20% of the shares of the joint venture company, while YGF MC Limited holds the remaining 80% of the shares of the joint venture company. After the formation of the joint venture company, the Company invested RMB356 million in the joint venture company. YGF MC Limited will also invest RMB1,424 million in the joint venture company.

The total investment for the headquarters building project is estimated to be approximately RMB2,885 million, including approximately RMB1,780 million as consideration for the acquisition of land use rights and the remaining as building costs. The joint venture company will participate in the public bidding process for the land use rights and make deposit payments representing 20% of the purchase price for the land use rights in December 2020.

Initial Public Offering

On October 15, 2020, the Company successfully completed its initial public offering of 30,400,000 ADSs, each representing four Class A ordinary shares of the Company, at a price of US$20.00 per ADS for a total offering size of US$608 million. On November 13, 2020, the Company's underwriters exercised their option in part to purchase an additional 2,416,187 ADSs at the public offering price.

Impact of COVID-19

As of September 30, 2020, there were (i) 2,633 MINISO stores in China, all of which had resumed their operations after a period impacted by COVID-19, and (ii) 1,697 MINISO stores in overseas markets, 1,516 of which had resumed their operations after a period impacted by COVID-19.

Unaudited Financial Results for the 2021 First Fiscal Quarter Ended September 30, 2020

Revenue decreased by 30.7% to RMB2,072.1 million (US$305.2 million) for the fiscal quarter ended September 30, 2020, from RMB2,988.8 million for the fiscal quarter ended September 30, 2019, but increased by 33.4% from RMB1,553.2 million in the previous fiscal quarter ended June 30, 2020.

The year-over-year decrease in revenue was mainly attributable to the negative impact of COVID-19 on the Company's international operations during the period. As a result of the temporary store closures, reduction of store operating hours, and shipment suspensions caused by COVID-19, revenue generated from international markets, decreased by 70.5% to RMB350.2 million (US$51.6 million) for the fiscal quarter ended September 30, 2020, from RMB1,185.4 million for the fiscal quarter ended September 30, 2019. In addition, revenue per MINISO store, which is calculated by dividing the revenue of MINISO brand (excluding Africa and Germany) by the average number of stores at the beginning and the end of the relevant period, decreased by 38.1% to RMB469.9 thousand (US$69.2 thousand) for the fiscal quarter ended September 30, 2020, from RMB759.4 thousand for the fiscal quarter ended September 30, 2019.

The quarter-over-quarter revenue growth was primarily driven by the Company's initiatives to accelerate its store expansion. The total number of MINISO stores, including those in domestic and international markets, increased to 4,330 as of September 30, 2020, from 3,913 as of September 30, 2019, and 4,222 as of June 30, 2020. The Company also expanded its business into five additional countries and regions in the fiscal quarter ended September 30, 2020. The revenue generated from international markets increased by 85.7% to RMB350.2 million (US$51.6 million) for the fiscal quarter ended September 30, 2020, from RMB188.5 million for the previous fiscal quarter ended June 30, 2020. In addition, as the Company's overseas operations continued to recover from the impact of COVID-19, revenue per MINISO store increased by 31.9% to RMB469.9 thousand (US$69.2 thousand) for the fiscal quarter ended September 30, 2020, from RMB356.2 thousand for the previous fiscal quarter ended June 30, 2020, mainly due to recovering from COVID-19.

Cost of sales decreased by 24.5% to RMB1,549.8 million (US$228.3 million) for the fiscal quarter ended September 30, 2020, from RMB2,051.6 million for the fiscal quarter ended September 30, 2019, but increased by 32.0% from RMB1,173.8 million for the previous fiscal quarter ended June 30, 2020.

Gross profit decreased by 44.3% to RMB522.4 million (US$76.9 million) for the fiscal quarter ended September 30, 2020, from RMB937.2 million for the fiscal quarter ended September 30, 2019, but increased by 37.7% from RMB379.4 million for the previous fiscal quarter ended June 30, 2020. Gross margin for the fiscal quarter ended September 30, 2020, was 25.2% as compared to 31.4% for the fiscal quarter ended September 30, 2019, and 24.4% for the previous fiscal quarter ended June 30, 2020. The year-over-year decrease in gross margin was primarily due to (i) a lower revenue contribution from the Company's overseas business, which typically has a higher margin when compared with the Company's domestic business, as a result of the negative impact of COVID-19, and (ii) an impairment loss of inventory as a result of a decrease in the value of personal protective equipment.

Other income increased to RMB36.0 million (US$5.3 million) for the fiscal quarter ended September 30, 2020, from RMB3.1 million for the fiscal quarter ended September 30, 2019, and RMB33.7 million for the previous fiscal quarter ended June 30, 2020. The year-over-year increase in other income was primarily due to the receipt of a substantial amount of government grants in September 2020.

Selling and distribution expenses decreased by 6.3% to RMB286.7 million (US$42.2 million) for the fiscal quarter ended September 30, 2020, from RMB306.1 million for the fiscal quarter ended September 30, 2019, but increased by 4.9% from RMB273.2 million for the previous fiscal quarter ended June 30, 2020. Excluding the impact of share-based compensation expenses, selling and distribution expenses for the fiscal quarter ended September 30, 2020, were RMB230.4 million (US$33.9 million) as compared to RMB283.5 million for the fiscal quarter ended September 30, 2019, and RMB230.1 million for the previous fiscal quarter ended June 30, 2020. The year-over-year decrease was primarily attributable to decreases in logistics expenses, which were in line with the decrease in sales to overseas distributors as well as decreases in payroll and employee benefits due to decreases in the number of staff and working hours attributable to the negative impact of COVID-19.

General and administrative expenses increased by 18.5% to RMB252.1 million (US$37.1 million) for the fiscal quarter ended September 30, 2020, from RMB212.8 million for the fiscal quarter ended September 30, 2019, and increased by 43.3% from RMB175.9 million for the previous fiscal quarter ended June 30, 2020. Excluding the impact of share-based compensation expenses, general and administrative expenses increased to RMB155.3 million (US$22.9 million) from RMB151.4 million for the fiscal quarter ended September 30, 2019, and RMB118.4 million for the previous fiscal quarter ended June 30, 2020. The year-over-year increase was primarily attributable to the increase in accounting and legal service fees related to the Company's IPO.

Other net loss was RMB15.7 million (US$2.3 million) for the fiscal quarter ended September 30, 2020, as compared to other net income of RMB14.8 million for the fiscal quarter ended September 30, 2019, and other net income of RMB18.5 million for the previous fiscal quarter ended June 30, 2020. The Company recorded other net loss for the fiscal quarter ended September 30, 2020, mainly due to the appreciation of the Renminbi against the U.S. dollar, which resulted in net foreign exchange losses.

Operating loss was RMB2.1 million (US$0.3 million) for the fiscal quarter ended September 30, 2020, as compared to an operating profit of RMB426.6 million for the fiscal quarter ended September 30, 2019, and an operating loss of RMB29.7 million for the previous fiscal quarter ended June 30, 2020.

Loss from continuing operations was RMB1,676.3 million (US$246.9 million) for the fiscal quarter ended September 30, 2020, as compared to RMB20.3 million for the fiscal quarter ended September 30, 2019, and RMB74.8 million for the previous fiscal quarter ended June 30, 2020. The significant increases in loss from continuing operations for the fiscal quarter ended September 30, 2020 was mainly due to fair value changes of redeemable shares with other preferential rights, which resulted in a quarterly loss of RMB1,625.3 million (US$239.4 million).

Adjusted net profit, which excluded (i) fair value changes of paid-in capital subject to redemption and other preferential rights or redeemable shares with other preferential rights, (ii) loss from discontinued operations, net of tax, (iii) equity-settled share-based payment expenses, and (iv) impairment loss on non-current assets, was RMB102.1 million (US$15.0 million) for the fiscal quarter ended September 30, 2020, representing a decrease of 74.6% from RMB402.5 million for the fiscal quarter ended September 30, 2019, but an increase of 140.8% from RMB42.4 million for the previous fiscal quarter ended June 30, 2020.

Basic and diluted loss from continuing operations per American Depositary Share ("ADS") was RMB7.08 (US$1.04) for the fiscal quarter ended September 30, 2020, as compared to RMB0.12 for the fiscal quarter ended September 30, 2019, and RMB0.36 for the previous fiscal quarter ended June 30, 2020. Each ADS represents four of the Company's Class A ordinary shares.

Adjusted basic and diluted net profit per ADS were RMB0.40 (US$0.06) for the fiscal quarter ended September 30, 2020, as compared to RMB1.52 for the fiscal quarter ended September 30, 2019, and RMB0.12 for the previous fiscal quarter ended June 30, 2020. The adjusted basic and diluted net profit per ADS are computed using adjusted net profit attributable to the equity shareholders of the Company, and the aggregated number of ordinary shares used in GAAP basic and diluted loss per ADS calculation and Series A preferred shares issued by the Company.

See the sections entitled "Non-IFRS Financial Measure" and "Reconciliation of Non-IFRS Financial Measure" in this press release for more information about adjusted net profit.

The Company's cash and cash equivalents from continuing operations were RMB2,961.0 million (US$436.1 million) as of September 30, 2020.

Business Outlook

For the 2021 second fiscal quarter ended December 31, 2020, the Company estimates its total revenue to be between RMB2,200 million and RMB2,400 million. This estimate represents management's current and preliminary views on the market and operational conditions as of the date of this press release, which are subject to change.

• MINISO Group Holding Ltd