Good afternoon. Welcome to Giordano International Limited investor and analyst briefing of 2021 annual results presentation. I'm Loratta, the Director of Group Finance. Let me introduce our management. Dr. Peter Lau, our Chairman and CEO, Dr. Gary Cheng, our Executive Director and COO, and Mr. Mark Alan Loynd, our Executive Director and Legal Counsel are joining the Zoom meeting. After my presentation, there is a Q&A session. You can send us your questions through Zoom and WhatsApp. I will start with the presentations of the annual financial results for the year 2021. The group's sales rose by 8.3% to HKD 3,380 million, with gross profit advancing by 11.2% due to a 1.5 percentage point increase in gross margin and group-wide sales increase. The group's online sales surged by 25.5%, contributing 12.1% to the total sales. Operating expenses contracted by 8.8%, representing 52.7% of total sales. We expect further operating expense leverage in 2022 as the group further broadens the use of information and communication technologies to drive its operations. The net profit for the year was HKD 190 million. The basic earnings per share were HKD 0.12. The net profit for the second half of the year was HKD 130 million, compared with HKD 16 million reported for the first half, reflecting the relaxed social distancing, fewer discounts, and effective operating expense controls. The groups... The company's board of directors recommend a final dividend of HKD 0.10, to which a total dividend of HKD 0.165 per share. The final dividend payable, if approved, will amount to HKD 158 million. The group's inventory, mostly evergreens or in-season sales, increased by HKD 172 million to HKD 606 million, primarily due to early merchandise received as a precaution tactic against global supply chain disruptions, an early Lunar New Year, and a warmer than usual fourth quarter of 2021. The inventory turn of the days were higher by 38 days to 153 days. The cash and bank balance net of bank loans were HKD 875 million on December 31, 2021. The above said temporary surplus inventories will convert to cash during the first half of 2022. The group's sales increased by 8.3% year-on-year, driven by a satisfactory second quarter and fourth quarter performance off the back of the alleviation of the social distancing measures in Southeast Asia and Gulf Cooperation Council. All business channels report an increase in sales and in gross margin. The online sales outperformed offline sales, and this contribution increased to 12.1%. The operating expenses decreased by 8.8% and was 52.7% of sales, excluding the right-of-use asset and the property, plant and equipment impairment provisions. The improved leverage was due to sales increase, rental reductions, and closure of non-performing store. It returns to a more rational level. Taiwan's performance was below expectations due to the outbreak of COVID-19 in the quarter, in the first quarter. Other regions record an improvement in sales for this year. We actually turned loss in last year to profit this year. The group inventory increased by HKD 172 million due to early merchandise received as a precaution tactic against global supply chain disruptions. The inventory turnover on cost increased 38 days to 153 days. We expect the inventory to decrease during the first half of 2022 to return cash to the group. The cash and bank balance net of the bank loans was HKD 875 million, caused by a high inventory level. Our financial positions remain solid. The business environment in 2022 will remain volatile, especially in Greater China. The recent outbreak of pandemic in Hong Kong will continue to severely hurt our sales. The global supply chain disruption will present the challenges to our sourcing capacity. We have a diversified geographical strategy to alleviate the regional business risks. We will deploy more resources to our existing markets, including Southeast Asia and the Gulf Cooperation Council, where we see faster economic recoveries and reasonable operating expenses. We will also continue to develop our overseas franchisee in Malaysia, Kenya, and Ghana. For the supply chain disruption, we have taken measures to adjust the difficulties, quickly moving to the regional sourcing on the back of local management and network. Cash management is the defense for long-term sustainability. We will focus on working capital and strengthen cost control. For our offline business development, we will focus on margin strategy. This is to improve the average selling price, reduce discount for our merchandise, and also improve our product design and also the quality. For the online business development, we will continue develop in both proprietary and third-party platforms to address different consumer lists. This is the end of my presentation. Now is the Q&A session, and if you have any questions, feel free to send us. Yes. Thank you, Loratta. If you have any questions, please type it on the chat room. I believe that everybody is familiar with the way how to ask a question now. Elaine, you're always the first one to ask some questions. Your question is, what is the latest trading update? In the first two months, we have a good sales recovery in the Southeast Asia regions and the GCC. We record a double-digit growth over last year. We of course have faced a headwind in Hong Kong and also Taiwan. In mainland China, we also record a steady growth year-on-year. I just want to echo what Loratta said. In 2022, we believe that the sales rebound in the GCC and also Southeast Asia would be good. Hopefully these two areas is going to give a better profit for the group over last year. Thank you. Yeah. Thank you, Anne. You would like to ask about the supply chain issue, right? You want us to share with you that geographical mix on the sourcing, what would be the trend. In the meantime, 80% of our sourcing is in mainland China. But the percentage is actually decreasing. We will develop more sourcing bases outside China, for example, Vietnam, Malaysia, Bangladesh. We will be seeing that the mainland China sourcing will be decreasing in the coming year. Andrew Tam, the pandemic had increased the logistic cost and the price of the raw material. How will the management overcome the difficulties and protect the investor returns? Thank you for this question, Andrew. To address your questions, I have two answers. One is that we will increase our selling prices, which we have been doing this in the last two years' time. When you're going back to our financial report, our margins actually increased by one... Our gross margin actually increased by 1.5 percentage point over last year. We expected that our percentage will continue to grow. The next question is that how we can increase our selling prices. Of course, we have to enhance our merchandise quality, we aim the marketing. This is what we will do. At the same time, when we increase our selling prices and increase our margins, we expected that the quantity sold will be decreased and at the same time, the logistics cost increase will give a less impact to our operating expenses. Thank you. Spencer- Sorry, Andrew. At this point, I also want to elaborate a little bit on Gary's answer to your questions about the prices. In terms of the existing products, we will be maintain the price integrity by offering fewer discounts or changing the marketing schemes instead of discounting. We have been offering free premiums. The premiums are either at very low cost or no cost to the company, but it has a perceived high value to the customers. On the new products, on newer products, we have been launching or doing a lot of more innovative products. Products that in our opinion are unique which is not offered by the competitors. For those products we are able to ask for a higher price and therefore higher growth margin. Spencer's questions on the emerging markets. I think we'll leave it to Mark to be able to address this. Thank you, Peter. Thank you Spencer for your question. First of all, I'd like to say that we don't specifically limit ourselves to emerging markets. You know, we welcome opportunities from, you know, many different markets. What we can say is that traditionally, Giordano has worked very well in emerging markets. I think there's two reasons for that and why we perform better in those markets or why we prefer to work with those markets. First of all, is because of the opportunity. We get a first mover advantage. There are usually no other or very few international brands there competing with us, so we have more space to work with and more time to work with. The second thing is we can also set the tone of the conversation with our customers there, insofar as we can determine our own brand positioning. We can go in there with a more premium position. We can establish ourselves as a more premium brand, and therefore that has a knock-on effect on things like our average selling prices there as well. Traditionally, we've worked well in emerging markets, and right now we're continuing that strategy. Two of the main areas that we are focusing on now, we have been for the last several years, has been Africa and Central Asia. Africa, we've had more traction. We started in South Africa several years ago. We've now expanded to Mauritius and Kenya, and now we've gained more traction in northern Africa with our newer shops in Egypt due to open coming April. We're also looking at Central Asia in Uzbekistan and Kazakhstan. Those are still in the pipeline, but those are the two main areas that we're looking at now. Thank you for your question. Thank you, Spencer. Then James, you have a question about Hong Kong. In the end, the performance is not as good as other regions. What is our views on the future prospect of Hong Kong? Let me answer the question. It is that they, I think you use a very soft words talking about it's not as good as other regions. I was saying that the sales performance in Hong Kong in the meantime is very bad. There, as I report to all the shareholders analysts in the last one year time. We're not really optimistic about the situation of Hong Kong, given that the operating expenses, especially the rental, is very high. Of course, in the meantime, we are doing everything we can to reduce the operating costs, at the same time asking for rental reductions from concessions with the landlords. If some of the shops, if we really cannot be profitable, we would downsize it. After all, I want to remind all the gentlemen and ladies that Giordano is a geographically diversified company. We have lots of footprints in the Southeast Asia region, GCC, Korea, Taiwan, China, and just like what Mark said, in some emerging markets. I think the impact to the group is minimal. Thank you. I think I'll take a question from Arthur on the online business. The outlook, our outlook section mentioned it is mainly from China and South Korea. What is our future direction and region development? It is true because China and Korea, they established their online business many years ago, almost 10, 15 years ago, so they're very mature. They are currently around 35%-40% of the total business. As far as the other regions are concerned, we started building up the other regions about two years ago, and we're seeing faster growth because of the low base in other regions than Korea and China. We are seeing good growth in Hong Kong, very good growth in GCC as well. It's gonna take a few more years for them to match the significance of China and South Korea. Just to add on what Peter has said as well, we encourage both our proprietary e-shops and also working with reputable third-party platforms, depending on the popularity of those mediums in the markets that we work in. Obviously, for some of the emerging markets where the network is still not so strong and not so mature, the reliance on those sources is still stronger than in another market. Of course, e-commerce is much more widely accepted. That's the direction that we're currently taking. Gary, you want to take that end question? Yeah. You asked about the Southeast Asia regions. We just mentioned that we have a strong recoveries in the last one or two quarters. We're seeing that we're closing shop in 2021. What is our short-term strategies and then in the 2022, what will be our plan about the store opening? Let me give you the answer like this. In 2021, especially in the second quarter and the third quarter, the Southeast Asia region experienced a lockdown and the various tight social distancing measures. That's the reason why at that period of time we decided to control our developments of the shops in those regions. At the end of last year, especially in the fourth quarter, we see a very strong rebound in those regions. Of course, in 2022, we expect that the sales recovery will continue. If we get a good location where we can ask for some good locations, we definitely will open it. If you ask me that, if I can give you numbers about how many shops we can open, maybe 20, 30, and mainly in Indonesia, Thailand and Malaysia. Thank you. To Jeff's question about Hong Kong's number of stores is decreasing and do we want to reduce our direct operator stores in the future. It is always our strategy overall globally to increase franchise stores and to decrease direct operator stores. Now, Hong Kong doesn't have any franchise stores at all, so the decrease of store number in Hong Kong has nothing to do with the strategy at all. It's mainly has to do with Hong Kong's operating environment, especially the cost environment. Thank you. Spencer, you have the questions about the GCC and the our performance in GCC is good and what is the management expectation for the Giordano's future development in the market. To echo what Loratta said and what I said in the very beginning, yes, we have experiencing a very good rebound in the GCC region, and especially in the Saudi Arabia and UAE. I also want to report that to you that the local governments in the GCC have elevated most of the social distancing measures, and we expect that more travelers will travel to GCC regions. We are very optimistic about the GCC sales in this year. Just to add. Sorry. Yeah, go ahead. Just to add to what Gary already said, I think the GCC markets were the first to re-emerge from COVID and to open their doors for business. We're looking forward to, especially pilgrims returning to Saudi Arabia, the pilgrim tourists, that's what we're looking forward to. Of course, there's also a few major events taking place in the region, including the World Cup. Added to the solid management there, we're quite confident about GCC in the coming year. Yeah. I also want to add to this, as probably most of you already know, the economic reform in Saudi Arabia is very encouraging, which mainly has to do with less reliance on oil revenue, but to diversify the economy. At the same time, we are seeing liberalization of their commercial policies, allowing more freedom of foreign companies to operate in the country. Saudi Arabia, as you know, leads the rest of the region, and UAE is also following the same footsteps. We see very good opportunity in the long run. I also like to add that our regional office in Dubai, they don't only operate Dubai, UAE and Saudi Arabia. They also serve our neighboring countries like Qatar, even some of the central European countries like Georgia and so on. They also serve South and North America because of the proximity. With the more liberal commercial policies and a twenty-first century economic outlook, I think the region has a very good long-term prospect. I'm happy to remind all that we now own virtually 100% of the business there now, where some years ago we were a 60%. Was it 60%? Yeah. 60% shareholder. We now have increased our shares to almost 100%. Andrew's question on liquidation due to funding problem to a lot of current cash flow. Can you predict whether this year's cash flow will be sufficient to cover current expenses? Loratta, maybe you can answer this. You Yes, I do. You know our better plans. Yes. All right. Thank you. Thanks, Andrew, for your questions. I think, as I reported, as of December the 31st, we have HKD 875 million. The drop is mainly due to the increase in high levels of the inventory for the precautions of the supply chain disruptions. We believe that in the first half of 2022, it will return us to cash because we want to stock up the inventories because of the temporary supply chain disruptions. I think, the working capital will improve because of the decrease in the inventory. When we check for the declaration of the dividend, the final dividends, we are actually thinking about how the performance of our future cash flows will be for the coming 18 months to 24 months. We are quite confident we have sufficient cash to pay for the coming one or two years. Maybe I can put more colors on what on Loratta's answer. I think Giordano's is always prudent in managing our financial positions. We experience a lot of crises before. We have a track record showing that the management know how to manage the cash flow and also financial position. We believe that we will continue to do that in the future. Just like what Loratta mentioned, in the meantime, our inventory is, you know, in terms of year-on-year cash flow, we're down about 150 or 160 million dollars. It's actually because of the inventory increase. Because most of the inventories are the evergreens and the fall items, we expect that the inventory is going to deplete in the coming six months, and we try to cash back to the group. In regards to the liquidation probability, I don't see any probability here. I remember that last one or two years' time, we keep saying that, nobody's know what's going to be going on in the future, but Giordano must be the last one that's standing in the market. Thank you. Okay. Anne asked about any plan to buy back shares. No, we don't have any plan to buy back shares at this time. Asa asked, while our ITOD increases from 115 to 153 days, why is there not a larger provision amount? Now, keep in mind that we had known about the disruption in the supply chain and the cost escalation that was coming. Therefore, we deliberately, intentionally received goods earlier than usual. In our warehouses now and in our shops, we don't really have much of the winter stock left. Shall I say that the level of winter stock is not any higher than the previous years. They're normal levels, a very healthy normal, most of which we will be able to relaunch anyway in fall/winter 2022. Whereas most of the stocks in the warehouse are spring/summer 2022 stock that we will be launching in Southern China, for example, when the weather is right. Of course, for the one season countries like Southeast Asia, we are shifting the stock. We are filling up the warehouses in case of further logistics cost increases and transportation disruption. To us, this is the higher ITOD is deliberate. It's not accidental. Page 14 and 18. Vicara actually asked the questions about the online sales contribution in the different countries. Where is the significant and what to expect about the sales to remain mainly physical. Let me answer the questions. The online sales contribution is very high in Mainland China and Korea. Almost 40% of the sales are coming from the online platforms. In China, it's mainly from the third-party platform, but less in the proprietary websites. For the others, ex-Mainland China regions, the percentage is about 5%-10%. Some regions, for example, the GCC, the sales are always driven by the proprietary website instead of the third party platform. To echo what Loratta said in the outlook paragraph, we will deploy resources to develop both channels, the third party platform and also the proprietary website. We'll be expecting sales to remain high for the physical shop. Yes, I think the physical shops sales contribution is still high, but the sales contribution from the online platform will be increasing. In 2020, the contribution from online sales is 10%, and 2021 up to 10% to 12%. I think the reasonable expectations about the online sales contribution is around 15%. Thank you. May I please clarify the difference between- Yeah, I can always cut that. Yes. The difference between the sales figures on page 14 and 18, the first one is page 14, we are using the current exchange rate. It's the average exchange rate in 2021. When we doing the analysis between markets, we are using the constant exchange rate that is using 2020 exchange rate. There is a difference because of the different rate using. Priscilla, you want to ask about the same growth in China, in Mainland China in January and February, and what is our expectations about the same growth in China and other region in 2022. In January and February, I reported in the very beginning of the meeting that we report a steady growth, which is about high single digits%. But whilst the GCC and also Southeast Asia regions, we report the double-digit% growth over there. In 2022, we still have a confidence about developments and a steady sales rebound in the GCC and the Southeast Asia regions. Thank you. Consumption coupons. Well, in Hong Kong that will be in April. New consumption coupons. It will help a little bit Hong Kong, but I don't think too much. It will help, but not a great deal. Any other question coming up? Yes. No. Maybe we'll wait for one more minute to see if there's any further questions. Oh. Do we record a substantial government subsidy in 2022, and given that the situation in Hong Kong and China is still in trouble? We have the figures, right? In 2020 we received about HKD 100 million of government subsidies. In 2021 the government subsidies reduced substantially about $35 million-$40 million. It's mainly from Singapore and not Hong Kong really. Not Hong Kong. Well, I think Darren's asking 2022. Oh, sorry. Sorry. This is a very good question, Darren. You know, why don't you call Paul Chan for me and tell them how desperately the retailers need some subsidies from the government. As to Russian franchise, Mark? Sure. Thank you for your question about the Russian franchise. We did have a relationship with a wholesaler several years back where we worked on a trial-and-error sort of basis to see whether it would work in Russia. It was only one shop at the time in one of their domestic, international airport terminals. However, that didn't really work out. We haven't supplied any goods to that franchise for a long time, even before the current conflict. As of now, we have suspended our operations and our cooperation with that franchisee, and we will continue to monitor the situation. Thank you for your question. Yeah. I guess we could say at least is that the Russian situation to us is neutral. We have no gain and no loss. Yeah. Okay. It's interesting the questions are looping around. Indonesian high growth. Anybody can... Mark, can you talk about Indonesian high growth? Yeah. I'll just say, hi, Innes. We'll just talk about Indonesia. We have a very strong team locally and I think we have to look at it from two angles. On the one hand, we're not just operating the Pandora business in Indonesia. We've also got other reputable brands that we operate there. We have a very, very strong local team. We're constantly innovating and working with other partners. We do a lot of collaboration projects there. Of course, there's a very young and dynamic population there, and they were also one of the first markets that sort of emerged from the pandemic to sort of try and get back to normal life. Business is working well down there and is one of our biggest markets in the region. Not only that, of course, they've set their brand positioning quite high there. Our brand is quite premium there. Yes, we do look forward to do our ongoing venture in Indonesia and for further growth. For your information, Innes, we have in the past couple of years increased our stake in Indonesia. It is now around 60%. Is it 60%, Mark? No. More than that. 65. 65, yeah. 65? Yeah. We now own 65% of Indonesia as opposed to under 50% a couple years ago. We are happy to see the high growth there and our increased stake in Indonesia. As Mark explained earlier, we have a very good effective team in Indonesia and they have had very good track record in the last 25 years since the inception of the business there. You know, with the economy continuing to grow and the huge population in Indonesia, it is another region that we rely on for our future. The two really bright spots are Indonesia and GCC, where they have a substantial contribution to the company. Korea, of course, is another one. Korea, as you know, we don't have majority holding. We own 48.5% there. They're doing very well. They are run by independent management team. We are receiving good dividend cash dividend from the company every year. More information on operating leverage from the problem user information. Gary, maybe you can talk about this a bit. In the last two years' time, we have put a lot of resources to improve our system in terms of the information sharing and the communications. For example, in the meantime, where we're doing some so-called buying conference, where we're doing some sales conference, we can effectively use the video conference here. For example, in the meantime, I can actually give the instruction to the frontline team, myself. Previously, maybe we have to rely on some middle management or supervisor to do that. I think this help us to simplify the entire structure of the company, which eventually can help us to reduce our expenses. Thank you, Gary. What Gary just talked about has to do with administration. In terms of business or revenue generating in China the last several years our relationship with Tmall is excellent. Our China team there is using a lot of big data provided by Tmall to be more precisely and more accurately target our customers as well as the products that they would prefer. That has been working and improving our online business in China as well. We are happy to note that Giordano brand it has been moving up the rank on the Tmall. The profitability is not increasing at the same pace. That is, of course, has to do with some of the infrastructure that we installed for fulfillment. We have now about, I would say, completed 50% of this automation in our distribution center. The way it works is that we have to do all the packaging and sorting and everything for pickup by an appointed logistics company. To do that will save a lot of money. If we send them in pieces and for them to package, then it will cost us a lot more money. We have made some substantial investment in the last several years, which might be hurting our profitability a little bit, but I think we'll see the return in two years' time. Okay. The next question is from Darren, which has disappeared. Darren. How quickly will we decide to open stores back up in various countries? Some are adopting a live with COVID. The new cases have reached very high levels. Are we taking a wait and see approach, or we will be more opportunistic? I think generally, Darren, I don't understand COVID too much, whether it become a common flu people can live with or not. Our main concern, of course, is two things. Number one, the government decreed social distancing, like Hong Kong is facing right now. The general psychology of people, whether even with relaxed social distancing, will they still be afraid to come out? Now, what we are seeing is that, in many of these countries, except for Hong Kong, it is not the case. The Southeast Asian countries and Taiwan and many other GCC, for example, as long as the government does not restrict their movement, they will come out. Now, they do come out and look and see. There's no revenge consumption phenomenon that we are seeing in any of these countries. The opportunity, I don't call this opportunistic, but the good thing is that, there are fewer suppliers. In other words, there are more spaces, good spots in the shopping centers that we can occupy today as compared to several years ago. I think many of the other brands are very cautious. Plus, many of the other brands were badly injured during the COVID. They're a little bit shy reopening stores now. We do have confidence that, reading the behavior of the consumers and the performance of our products, we'll be happy to open more stores as long as they're in the right location and at the right prices. To keep it, to make the math very simple, no, we're not taking a wait-and-see approach. We will be maybe somewhat opportunistic. We'll go ahead when we find good locations on good terms. That's, I think, Gary had mentioned. I'm not quite sure in this section or in the previous section that he's planning to open at least 20-30 shops in Southeast Asia. Yes. Mainly in Indonesia. Thailand, Malaysia, and Thailand and Malaysia. Philippines as well. I think, the situation actually applied to Philippines that, the confirmed cases is still high every day. Our franchisee told me that, the citizens, the peoples over there start come back to buy. As a result, we actually opened two-three shops in December and January, which is in the very prime locations. Thank you. Do we have more questions? We have again, wait, one minute. Okay. I think everybody does not have any questions anymore. Thank you very much. Thank you for joining our annual announcement. We wish you all good health. Thank you. Okay. Thank you for your time.