#

Dear Shareholders,

In 2020, the lockdowns implemented by various countries against the raging outbreak of COVID-19 worldwide have dampened economic activities and consumer sentiment, inevitably posing unprecedented and grave challenges to the sports industry and retail industry. In addition to the external challenges arising from the lingering Sino-US tensions, China also faced substantial economic shock brought on by the pandemic. Fortunately, such adversity at home and abroad had expedited the establishment of domestic economic circulation which represented a new economic development pattern and consumption model featuring domestic and international dual circulations that complement each other. Currently, China is experiencing an orderly economic recovery following the effective domestic containment of the pandemic, with its economy characterised by ample potential and strong resilience. The sports industry and retail industry which are closely related to the livelihood of the people are still presented with abundant opportunities for growth. In the short run, the economic stimulating measures launched by the central government will play an active role in driving the market demand during different domestic peak seasons of consumption. In the long run, the strong resilience of China’s economic development alongside the pursuit of better lifestyle consumables and sports experience by consumers will boost the demand for “sports and lifestyle consumables” and “sports experience”.

In 2019, the Group fully realised the layout of our two principal businesses: 1) “sports and lifestyle consumables”, covering investment in and operation of sports and lifestyle consumables brand projects; and 2) “sports experience”, including the operation, service provision and investment of sports destinations, sports competitions and events as well as an e-sports club. Owing to the perseverance and hard work of the working teams, we are pleased to have witnessed the consolidation and constant development of our two main businesses in the Reporting Period. In the future, the Group will make every effort to promote the development of our two principal businesses in order to provide consumer brand products of multiple brands as well as a full range of sports experience and services in a bid to grasp opportunities in the “prime consumer group” market with huge potential and a younger consumer base.

“Sports and Lifestyle Consumables”

Ever since the outbreak of the pandemic, people have become more aware of their health condition. Additionally, the Group has been benefited from the domestic economic circulation pushing forward by China and market opportunities brought by young consumers. In mid-2020, we have completed the acquisition of Bossini. Bossini is a well-known lifestyle apparel brand in the industry, with more than 30 years history in the Greater China region and other parts of Asia. While we are expanding our existing businesses (including Bossini and LNG brand), we will also continue to pursue potential M&A opportunities actively for different types of domestic and international consumable brands. On 15 March 2021, we announced that we conditionally agreed to subscribe for a majority share interest of LionRock Capital Partners QiLe Limited which holds a majority interest in C&J Clark (No.1) Limited (“Clark”). Clarks brand has a history of nearly two hundred years. Its main markets cover the United Kingdom, the United States and many different countries in the world, including the Greater China region. Upon completion of the transaction, the presence of the Group’s sports and lifestyle consumables business will be further expanded. The Group will make every effort to develop the business of apparels and footwears brands of Bossini, LNG and Clarks and is committed to capture the business growth opportunities in the large consumption market environment arising from the further urbanization and modernization of the PRC.

"Sports Experience"

In recent years, national fitness policy has been released, which has created a perfect timing for an in-depth and vibrant development of national fitness business in China. After the outbreak of the pandemic, people have been putting more attention to attain a fit and healthy body by doing sports. Therefore, we have worked to develop high-quality sports destinations in various communities, and provided professional sports training and services in an effort to proactively promote national physical fitness, whilst enriching people’s experience and interactions in our sports destinations. In 2020, we accelerated the expansion of our sports destinations network to various places nationwide. During the Reporting Period, the Group managed and operated seven sports parks. For “All Star Skating Club”, it operates a total of twelve ice-skating rinks in first and second-tier cities in China, mainly engaging in the provision of ice-skating experience and training services. Due to the outbreak of pandemic at the beginning of 2020, in response to the pandemic prevention measures, all sports parks and ice-skating rinks suspended operation from February to March. As the pandemic in China has been under control gradually, the ice-skating rinks have also resumed operation gradually since April. Currently, business has generally returned to normal. For sports team and event management business, CBA and streetball league “3+1 Basketball League” were resumed and held in June and September respectively. And “LNG Esports” was also affected by the pandemic, the spring and summer tournaments of League of Legends Pro League (LPL) in 2020 were held online instead. Therefore, the revenue generated from LNG Esports was affected to some extent. “LNG.M TEAM” was newly formed in September 2020, and achieved an outstanding performance in Onmyoji arena Pro League (OPL). The team won all the 22 matches and attained the overall champion of the competition.

During the Reporting Period, the State General Administration of Sports and the Ministry of Education jointly issued the “Opinions on Deepening the Integration of Sports into Education to Promote the Health Development of Youth” (《關於深化體教融合促進青少年健康發展的意見》) to include the subject of physical education in the high school and college entrance examinations in order to enhance the importance of physical education, promote physical education and training industry as well as the construction of sports facilities. These policies have created favorable conditions for the development of the sports industry during the pandemic. We also expect that the Beijing Winter Olympics will provide the winter sports industry with significant room for development, in particular the demand for different levels of skating training will grow further. Meanwhile, we look forward to the rapid increase in consumer sentiment of urban residents bolstered by the urbanisation in China in the next five to ten years, driving up the utilisation rates of sports parks and ice-skating venues. We continue to actively expand the sports destination network. The four sports parks currently under construction are located across the country and are expected to be completed between 2021 to 2022.

According to the 14th Five-Year Plan issued by the state, China will roll out the Nationwide Physical Fitness Program, which sets targets to improve the national physique and optimise the public service system of nationwide physical fitness. It aims to promote the construction of social sports venues and facilities and also allow better coverage of fitness trails and other convenient fitness venues alongside with the development of sports parks according to local conditions. Adhering to cultural education and professional training, it continues to promote the development of winter sports as well as the expansion of sports consumption, and tap into the sports industries including fitness, leisure, and outdoor sports. We hope to capitalise on this opportunity where nationwide physical fitness is becoming more popular and to engage more people in more diversified sports experience by operating sports destinations that are open to the public. It is expected to benefit the medium to long term development of our business.

Acknowledgement

The year of 2020 marks the 10th anniversary of Viva China. Consistently committed to our aspirations, we take it as our mission to integrate sports into daily life, communication and leisure consumption. In the next decade, adhering to a firm belief, Viva China will carry forward our visions with prudent steps, and continue to focus on developing our two principal businesses to offer all-rounded sports experience, services and consumables to consumer groups in order to create greater value for Shareholders.

Since the outbreak of the epidemic, the Group has endeavoured to implement epidemic prevention measures comprehensively to safeguard the health and safety of employees and customers, and worked side by side with our employees to overcome every single obstacle and challenge. On behalf of our fellow Board members, I want to thank our staff for sticking to their posts at all times. I would also like to extend my heartfelt thanks to our Shareholders and business partners for their trust, loyalty and support to the Group, and to our management and business teams for their contribution over the past year.

Chairman, Chief Executive Officer, and Executive Director

Li Ning

22 March 2021, Hong Kong