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Dear Shareholders,

During 2021, the Group has experienced extraordinary changes. During the first year of the 14th Five-Year Plan, the PRC government has been accelerating the establishment of a new economic development and consumption pattern featuring “domestic economy circulation” to expand domestic demand. Together with the widely applied vaccination for COVID-19 and other favorable conditions that mitigate the repeated impact from the pandemic, the economy has grown steadily. The PRC’s economy showed strong resilience during the entire 2021 and recorded an annual increase of 8.1%. In particular, consumption expenditures became the core momentum by contributing 65.4% to the economic growth. Targeting at the huge consumption market, the Group further expanded its multi-brand apparel and footwear consumable goods business. After acquiring Bossini, a lifestyle apparel brand well known in Mainland China and Hong Kong, the Group launched Bossini.X positioning as street fashion during the year and actively expanded its store network in Mainland China. In early 2022, the Group finished its acquisition of Amedeo Testoni, a century-old Italian luxury brand. It is also expected that the Group will complete its acquisition of Clarks, a century-old British footwear brand, within 2022. Through the steady development of self-own brands and the acquisitions of other brands, the Group’s multi-brand apparel and footwear consumable goods business begins to take shape and thereby lay a foundation for the sustainable development of the Group.

Thanks to the enthusiastic sports atmosphere during the year, the sports experience business has also been promoted. Chinese athletes achieved marvellous results in the Olympics Games that were delayed by one year, and the Beijing Winter Olympics held in early 2022 further stimulated the public’s enthusiasm to take exercise. In the meantime, the State Council issued the National Fitness Program (2021-2025) in the second half of 2021 to advocate the fitness among all citizens. It is expected that the development of sports industry will be accelerated and brings the overall scale of the national sports industry to RMB5 trillion. During the year, sports parks and ice-skating rinks within the Group reopened and customer flows gradually resumed, which significantly improved the results of sports experience segment.

EXPANDING THE SCALE OF THE MULTI-BRAND APPAREL AND FOOTWEAR CONSUMABLE GOODS BUSINESS

During the year, the Group continued to focus on the prime consumer segment and actively sought opportunities to expand its multi-brand apparel and footwear consumable goods business. In particular, the LNG and Bossini brands in the Greater China market rolled out offline retail stores to increase brand awareness and market coverage. By the end of 2021, Bossini.X, has opened a number of retail stores in the first- and second-tier cities in China. LNG, the Group’s affordable luxury brand, has also completed its repositioning by launching new store images and a new brand logo, and formed the styles of its various product lines. During the year, a number of physical stores were opened in the high-end business areas in the first-tier cities such as Chongqing, Shanghai, Shenzhen and Nanjing.

Given that the market demand remained uncertain as the pandemic continued during the year, we believe that it will take time to nurture and grow the brand. In the future, the Group will invest more in sales channel expansion, supply chain and marketing. Meanwhile, in order to enhance operational efficiency, the Group will focus on improving the store operational efficiency and strengthening the control of back-office operation expenses so as to improve the competitiveness and sustainability of the Group.

In order to further expand its business, the Group continued to search for and acquire a number of high-quality brands with potential during the year, including Amedeo Testoni, a century-old Italian luxury brand, whose acquisition was completed in early 2022, and Clarks, a British footwear brand that is nearly two hundred years old, whose acquisition is in progress. After the acquisitions, the Group’s brand portfolio will be enriched to meet the needs of the prime consumers in different areas such as sports and leisure, street fashion, affordable luxury and high-end luxury. The Group’s market share in the Greater China region and overseas markets can also be increased.

PROMOTING THE SPORTS EXPERIENCE BUSINESS DURING THE BIG YEAR OF SPORTS EVENTS

We came across a big year of sports events. A number of major events were held successively, such as the Tokyo Olympic Games, the National Games of PRC in 2021, and the Beijing Winter Olympics in early 2022. In respond to the initiative in the 14th Five-Year Plan to extensively carry out the nationwide fitness campaign and promote the construction of community sports venues and facilities, the Group strives to integrate sports into daily life and continues to expand the network of sports destinations. Since Tongxiang Li Ning Sports Park and Hangzhou Li Ning Sports Park put into operation in early 2022, the Group currently manages and operates 10 sports parks.

The Group’s “All Star Ice Skating Club” currently operates 11 ice-skating rinks in the first- and second-tier cities in China. Similarly, spurred by the various top sports events, especially the Beijing Winter Olympics, our ice-skating rinks recorded substantial growth in customer flow during the year and the revenue and segment result largely improved compared with prior year. In 2022, the Group will continue to expand its business in cities with strong consumption capacities such as Beijing and Shanghai, and capitalize on the boom in winter sports to provide the public with skating experience and various training services.

In terms of e-sports, the Group’s League of Legends e-sports team LNG achieved outstanding performance during the League of Legends Pro League (LPL) in the past year, and was qualified for the world championship during the Summer Split in China for the first time and advanced to the group stage. We are all encouraged and hope that it can achieve better results this year. Along with the upsurge of e-sports and the increasing popularity of the LNG team, the Group’s apparels and footwears brands including the LNG brand are expected to be further promoted and will gain recognitions from the younger generation.

Acknowledgement

Looking ahead, the multi-brand apparel and footwear consumable goods business will continue to be the main business of the Group. With the pursuit of high-quality life and fashion trends by the prime consumer groups, the Group will closely monitor the market trends while formulating its brand strategies, so as to meet the preferences of the target consumer groups. In the future, on the one hand, we will focus on the operation of the consumer brands of apparel and footwear, and on the other hand, by providing sports experience services, we will interact with the target consumer groups to further understand their needs, so as to promote the development of the apparel and footwear consumable goods business. At the same time, the Group will also expand the vertically integrated industry chain by building its own supply chain platform and e-commerce platform to enhance its synergies both internally and externally, so as to lay a foundation for the sustainable development of the Group.

Lastly, on behalf of the Board, I would like to express my great respect to the Company’s management and all employees for their unity and hard work over the past year. At the same time, I would like to express my heartfelt gratitude to our shareholders and business partners for their trust and continuous support to the Group. No matter how complex and volatile the external environment is, we will remain persistent and pragmatic, and continue to strive for the Company’s long-term development and create values for the shareholders!

Chairman, Chief Executive Officer, and Executive Director

Li Ning

18 March 2022, Hong Kong