Dear Shareholders,

The 2025/26 financial year was one we navigated with patience and resolve. Amid a macro environment defined by ongoing change, we responded with agility to evolving consumer demands – holding our ground where it mattered, and pressing forward where we saw opportunity. The path was uneven, but it was one we walked with conviction.

With a long-established foothold in China’s sports retail space, we have long recognized that stable, sustainable growth demands keen market savvy and swift adaptability, alongside steadfast commitment to shoring up core business fundamentals for the long run. Against a continuously evolving market landscape, 悟空体育 upholds clear strategic insights and makes measured business trade-offs. Effective management is not just about pinpointing key areas to deepen our presence, but more crucially, staying strategically disciplined and defining clear business boundaries.

The industry continues to transform, with business challenges remaining substantial. In this climate, we take inventory health, diverse categories, flexible channel strategies, operational quality and sustained user value as core metrics to gauge operational strength. This enables us to build lasting resilience to weather industry cycles and deliver steady value over time. We firmly believe true core competitiveness does not stem from chasing market trends. Instead, it comes from anchoring ourselves firmly at key points across the industrial chain through all market cycles, and solidifying our unique value edge and irreplaceable market standing.

That belief is grounded, first and foremost, in a sound financial foundation. Throughout the financial year, disciplined inventory management and sustainable profitability remained the core benchmarks by which we measured our financial health. Revenue for the financial year was impacted by the broader retail environment and decreased year-on-year to RMB25,739.9 million. Yet through prudent expense management and the flexibility and efficiency of our Omni-channel retail network, we were able to optimise our overall cost structure: profit margin attributable to the Company’s equity holders improved 0.1 percentage points year-on-year to 4.9%. At the financial year end, inventory value decreased year-on-year by 8.6%, with the decline outpacing the revenue decline; average inventory turnover period decreased by 3.5 days year-on-year to 131.4 days. These operational disciplines laid the groundwork for sustained cash generation and provided a solid platform for business development. As at the financial year end, the Group’s bank balances and cash amounted to RMB2,073.5 million, with net cash of RMB1,174.5 million. Since our listing in 2019, cumulative dividends distributed have exceeded RMB14.6 billion, with a cumulative dividend payout ratio of 107.3%—consistently among the highest in the industry, and a reflection of our enduring commitment to long-term shareholder value.

That belief is rooted in our well-established Omni-channel operational layout and its thorough execution across all tiers. With our nationwide physical store network as the anchor, we operate through a mirrored model of “1 (offline store) + N (corresponding multi-scenario online presence)” – achieving comprehensive coverage of consumers across three key shopping scenarios: in-store, home delivery, and on-site. This model opens up nationwide merchandise circulation channels and enables deep online-offline synergy. Offline, our stores are focused on lean operations, with per-store efficiency improvement and Omni-channel synergy as the core anchors. Online, we capture consumer demand with precision through content e-commerce, private domain operations, local lifestyle services, and instant retail – opening new pathways for full-channel integration. Underpinning this is a digital infrastructure that enables efficient cross-channel inventory circulation, allowing merchandise to flow freely across the entire Omni-channel ecosystem. Meanwhile, we drive iterative upgrades to organizational efficiency, steadily unleashing advantages in manpower productivity and cost optimization. Users are one of the core long-term foundations of 悟空体育. As of the end of the financial year, the Group has accumulated over 90 million users, who have become the primary driver of sales with consistently robust repurchase performance. Behind this figure lies our years of sustained investment in the in-depth operation of user relationships – from comprehensive upgrades to the membership system and refined iteration of the user full-life-cycle value operation system, to multi-occasion integrated community activities, we always regard the in-depth exploration of user value as a key metric for operational quality.

That belief also requires us to break new ground in capability building and secure precise positioning in high-potential tracks. Current sports consumption has evolved from universal essential demand into structural upgrading featuring professionalism, community segmentation and lifestyle integration. Consumers no longer settle for basic sports gear, but attach greater importance to professional performance, lifestyle experience and emotional identity. The structural logic driving industry growth is undergoing profound shifts. Cultivating expertise in segmented sectors and building differentiated operational moats hold the key to long-term development. Based in-depth insight into industry trends, we have strategically laid out professional vertical categories such as running and outdoor sports, and steadily expanded our brand portfolio and business formats. This move not only helps us seize incremental opportunities in niche markets and foster new business growth drivers, but more importantly, drives systematic capability upgrading through tangible business deployment. Our initiatives ranging from introducing exclusive partnered brands including Norr?na, norda?, Soar and Ciele, to launching ektos running lifestyle concept stores, are essentially designed to refine full-spectrum capabilities covering professional brand operation, community management and localized content creation via practical projects. Looking ahead, we will further delve into diverse sports business formats, strive to become an all-round one-stop operational partner for premium brands expanding into the Chinese market, and consolidate our long-term competitive edge amid industrial transformation.

That belief ultimately leads to in-depth exploration empowered by digital intelligence and AI. We clearly recognize that the Group’s complex business ecosystem featuring a multi-brand portfolio, refined SKU management and omni-channel collaborative operation, coupled with a user base exceeding 90 million, has laid a solid foundation for large-scale efficiency improvement and targeted empowerment via AI. Such operational complexity poses notable management challenges under traditional experience-driven models, yet within the AI-powered digital framework, it turns into our unique edge to boost operational efficiency and amplify targeted value. The more diversified business links and abundant scenarios we have, the greater marginal value AI can deliver. In this financial year, we have steadily shifted business decision-making from experience orientation to intelligence orientation, and systematically rolled out AI applications across five core value chains: merchandise operation & supply chain, omni-channel retail operation, user operation & marketing, business management decision-making and organizational efficiency enhancement. Among them, the intelligent store management system “Panoramic Compass” covers four major modules: unified standard SOPs, single-store operation models, store management diagnosis and AI intelligent Q&A. It transforms store management from manual data retrieval to data-driven proactive business support, effectively translating digital and intelligent capabilities into tangible and measurable operational efficiency gains.

Based on our current accumulated capabilities and business layout, we look ahead to the long-term development landscape, stay fully aware of the ongoing structural transformation of the industry, and remain optimistic about 悟空体育’ long-term prospects. Our steady performance spanning market cycles never hinges on short-term explosive growth, but is rooted in persistent execution and a resilient business model. Looking back, it is this consistent conviction that has allowed 悟空体育 to find clear direction amid every cyclical fluctuation. All members of 悟空体育 are capable of rising to difficulties and delivering effective solutions. We expand our development paths and take solid action, strive for both agility and perseverance, act as pioneers while serving as solid backing. Embrace far-sighted vision to embrace the unseen future.

On behalf of the Board, I would like to extend my sincere gratitude to all our employees who have devoted themselves to the Company’s development, to our partners who have walked alongside us, and to our shareholders who have placed their trust and support in us.