Dear Shareholders,

2024 marked the 25th anniversary of 悟空体育’ deep-rooted presence in the Chinese sports retail market. Through a quarter-century of unwavering dedication and relentless pursuit of excellence, we have cultivated profound and enduring relationships with over 80 million passionate sports enthusiasts while building lasting partnerships with more leading sports brands that have spanned two decades to jointly spearhead market breakthroughs and foster growth. Overtime, we have observed global macroeconomic shifts, cyclical changes in domestic consumer needs, and evolving competitive landscapes. Over the past year, the combined impact of these challenges has unfolded in an increasingly intricate manner, raising the bar for industry players while impose a considerable pressure on the Group’s results performance of this financial year. In this environment where change has become the new normal, “adapting to change” and “pursuing certainty” remain our strategic priorities. By establishing clear boundaries of what not to pursue, our path forward becomes more distinct. Integration and connectivity represent our internal focus as we deepen our Omni-channel approach in this new landscape. Meanwhile, breakthrough thinking and innovation drive our proactive external exploration as we seek longer-term development beyond traditional approaches. Undeniably, this financial year’s challenges have been reflected in our overall financial performance. However, amid rapidly shifting market dynamics, we must remain anchored to our core development principles while resolutely embracing iterative innovation to face these challenges head-on. Looking back over 悟空体育’ remarkable 25-year journey, we have consistently embraced change and woven adaptability into our organizational DNA. We stand ready to move forward with an open mindset and clear understanding of our strategic position. By continuously expanding our collaborative network, we aim to provide the one-stop Omni-operation solution for more partners in China under variety of sports formats.

While navigating the changes, we have consistently adhered to the principles of transparency, timeliness, and efficiency in communication, maintaining close interactions with shareholders and investors. Meanwhile, elevating shareholder value remains our core objective. We are committed to continuously optimizing our business strategies, charting a steadfast and dependable growth trajectory to deliver sustainable investment returns for our shareholders. During the year, profit attributable to equity holders of the Company decreased by 41.9% year-onyear to RMB1,286.0 million. However, our disciplined operating working capital management led to RMB3,755.3 million in net cash generated from operating activities, representing a 20.0% increase year-on-year and 2.9 times the profit attributable to equity holders of the Company for the same period. In view of such, the Board has recommended a final dividend of RMB2.00 cents per ordinary share and a special dividend of RMB12.00 cents per ordinary share for the financial year ended 28 February 2025, which, together with the interim dividend, representing an annual dividend payout ratio of 135.0%, higher by 34.1 percentage points compared to last year. Since our listing in 2019, we have returned a total of RMB12.96 billion to shareholders through dividends, demonstrating our unwavering commitment to creating shareholder value and fulfilling our promise of long-term returns.

Navigating Market Dynamics: Strengthening Our Basis, Networks, and Growth Drivers

As the cornerstone of our operations, inventory management remains the foundation for a retail company to endure and thrive. During the year, weak market demand coupled with declining offline foot traffic significantly complicated our inventory management challenges. To address these difficulties, we first eliminated barriers between online and offline channels, creating streamlined pathways for efficient product turnover while implementing targeted strategies to accelerate inventory clearance. These measures were crucial for capital return, securing our financial stability, and lay the foundation for moving forward in the face of adversity. Leveraging on the empowerment of technology, we developed dynamic forecasting models that enable intelligent allocation through comprehensive integration of Omni-channel inventory data. We expanded our shared inventory system across platforms, increasing online inventory utilization while implementing tiered management strategies for different product categories to build a more resilient inventory system. By the end of the financial year, our inventory had declined 4.5% from the previous year, in line with the trend of our revenue performance and resulting in improved inventory turnover days year-on-year and half-on half.

Our comprehensive Omni-channel operation serves as the backbone of our growth strategy. By systematically upgrading our Omni-channel matrix layouts, we have created efficient pathways for products and services to reach consumers, positioning ourselves as a central hub for industry-wide connectivity. In the midst of today’s evolving retail landscape, the boundaries between offline and online continue to blur, accelerating the formation of an integrated ecosystem. Our physical stores now emphasize operational excellence, delivering immersive experiences through optimized spaces and enhanced service quality. Meanwhile, our online channels capture consumer needs with precision while leveraging each platform’s unique advantages, enabling our innovative “one store, multiple channels” model that pioneers new approaches to channel integration. By the end of this financial year, we had established an offline and online store touchpoint matrix-comprising approximately 5,000 offline stores, more than 2,300 mini-program shops, and over 500 Douyin and WeChat video accounts. Through these channels, we have facilitated meaningful engagement with more than 80 million users while consistently delivering premium products, contents, services, and experiences.

Our teams are the driver and engine of our sustained growth. We firmly believe that mutual empowerment between individual growth and organizational development builds the foundation for our future. We have created an equitable, inclusive and diverse workplace that thrives on differences. Through tailored incentive programs and systematic development platforms, we continuously enhance our team’s professional capabilities and competitive edge. Our ongoing HR digitalization initiatives provide robust talent support for high-quality business growth. During the financial year, we closely aligned with our strategic priorities, systematically strengthening our talent pipeline while optimizing our organizational structure. We established cross-department agile teams to create efficient, coordinated response mechanisms for navigating market uncertainties. In talent development, we delivered approximately 500 online learning programs and nearly 230 in-person training sessions in this year, achieving over 95% participation across our workforce. This comprehensive approach ensures our teams continuously update their knowledge base, enabling them to identify and capitalize on opportunities through market insight and effective execution.

Innovative Solutions: Engaging Consumers Across Amplified Dimensions

Looking back at this financial year, our actions was anchored by deep consumer insights that revealed four key market trends: rational consumption taking the lead, the rise of self-indulgent experiences, the intensification of demand polarization, and deep penetration of the concept of sustainability. In response, we strategically expanded our brand portfolio across recreational sports, leisure sports, performance sports, and IP culture. During the year, we broadened our offerings by onboarding a diverse portfolio of running and outdoor brands hailing from various global regions, each boasting distinctive styles and identities. We collaborated as their exclusive partner in the Chinese market, thereby presenting Chinese consumers with an enriched array of choices. Through these efforts, we remain committed to invigorating the Chinese sports market with sustained innovation and fresh impetus. By the end of the financial year, our strategic partnerships spanned to more than 20 brands, positioning us to jointly capitalize on emerging market opportunities.

This past financial year marked a significant milestone in our sustainability journey. We prioritized consumer interests at the core of our value system, reinforcing our commitment to product quality and safety while enhancing the consumer experience through personalized service and digital innovations. In green and environmental practices, our collaborative green store initiative with brand partner achieved prestigious Leadership in Energy and Environmental Design (LEED) Gold certification. Every aspect of these locations-from eco-friendly materials and energy-efficient systems to low-carbon construction methods-demonstrates our environmental commitment while providing consumers with shopping environments that blend quality with sustainability. Our public welfare IP “GREENBOX” initiative has served as a powerful platform for promoting environmental protection, carbon reduction, and circular economy principles, engaging consumers as partners in sustainable practices. This year, our ESG efforts received significant recognition from global institutes as our MSCI ESG rating soared two levels to AA, an achievement that keeps us ahead of the curve in China’s consumer goods sector.

Strategic Agility, Unwavering Execution

Looking back on our journey and forward to the road ahead, we maintain prudently optimistic in this era where change has become the new normal. Such prudence doesn’t equate to complacent stagnation, but in a proactive approach to reimagining our strategic landscape with bold determination. We stand ready to face challenges with courage and pursue opportunities with resolve, confident that through the collective efforts of our entire 悟空体育 team, we will capture the opportunities of our time. Our mission goes beyond creating positive, healthy, and joyful sporting experiences for consumers and generating sustainable returns for investors: we remain deeply committed to our social responsibilities, contributing meaningfully to both industry advancement and community development. On behalf of the Board of Directors, I extend my sincere gratitude to our dedicated employees, trusted partners, and loyal shareholders whose unwavering support continues to fuel our success.