Evergreen International Holdings Limited

Chairman's Message

Dear Shareholders,

I hereby present the annual results of Evergreen International Holdings Limited (the "Company") and its subsidiaries (collectively referred to as the "Group") for the year ended 31 December 2018.

In 2018, the global economy continued to be complicated and volatile. According to the National Bureau of Statistics of China, the growth rate of gross domestic product ("GDP") grew by 6.6% in 2018, higher than the government annual target of around 6.5%.The total retail sales of consumer goods realised in urban area and rural area in 2018 grew at a rate of 8.8% and 10.1%, respectively, as compared to that of previous year. In 2018, the retail sales of apparel shoes, hats and knitwear amounted to RMB1.4 trillion, an increase of 8.0% over the same period of last year, an increase of 0.2 percentage points from the previous year.

For the year ended 31 December 2018, the revenue of the Group decreased by 15.2% to RMB284,521,000. Overall gross profit margin decreased from 61.6% to 53.7% for the year ended 31 December 2018 largely due to the decrease of the average selling price of menswear and the closure of underperforming retail stores and other rationalisation processes. The Group recorded a loss attributable to ordinary equity holders of the Company of RMB111,811,000 for the year ended 31 December 2018 (2017: a loss of RMB138,978,000). The decrease in the loss was mainly attributable to net foreign exchange gain, increase in fair value of investment properties and reduction in amount of the write-down of inventory to net realisable value.

During the year, faced with the challenge of the structural adjustments of the premium menswear industry in China, the Group continued to formulate new strategies for and implemented adjustments to certain department stores based on their operational performances in order to improve their operational efficiency. Moreover, the Group closed or re-adjusted certain retail stores with unsatisfactory performances as part of its efforts to proactively make adjustments to its sales and distribution channels.

As at 31 December 2018, the Group had a total of 103 menswear stores covering 22 provinces and autonomous regions, covering 55 cities in China. Given the intense competition in the retail market and weak consumer sentiment, the Group prudently adjusted the store opening plan in response to the challenging market condition and retail environment. The Group plans to open approximately 39 new retail stores for menswear business in 2019, of which approximately 19 are self-operated stores and 20 are franchised stores. On the other hand, the Group will continue to consolidate inefficient stores in order to improve the operating efficiency.

In order to improve brand image, the Group continued to conduct a series of advertising and promotional activities through various channels, e.g. advertisements in fashion magazines, promotional activities on the internet and other media, and large advertising billboards in airports and well-known department stores and launching fashion shows. Apart from routine advertising and promotional activities, corporate social responsibility is also one of the key values of the Group which will continue to organise and participate in various charitable and social activities in the future.

The Group is strategically transforming the menswear business through reconstructing brand position and product innovation to enhance the value of our brand. In V.E. DELURE 2019 spring summer new product release fashion conference, the Group had introduced a young, casual and sporty design style menswear apparel line with bargaining price to the customers. We believe the new apparel style will attract more young adults, refresh the brand image and enrich the core value of the brand. The Group will continue to implement consistent and clear strategies, which include prudently enhancing its retail and distribution network and healthily expanding product offerings and design capabilities, enhancing product quality, consolidating brand equity of V.E. DELURE, enriching our brand portfolio and upgrading our ERP system and administrative support, in order to achieve a healthy and sustainable growth in the long run.

The Group will continue to look for other new investment opportunities which could be beneficial to its shareholders in the long run.

Finally, I would like to take this opportunity to express my sincere gratitude to the members of the board (the "Board") of directors (the "Directors") of the Company, for their valuable advice and support. On behalf of the Board, I would also like to thank our employees, shareholders, distributors, customers and suppliers of the Group for their confidence and continuous support to the Group.

Chan Yuk Ming

Hong Kong, 29 March 2019

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