On behalf of the board of directors of Grace Wine Holdings Limited (“Grace Wine”, and together with its subsidiaries, ”we” or “us”), I am pleased to present Grace Wine’s 2021 annual report. Compared to the year of 2020, our revenue in 2021 increased by 40.6% to RMB84.7 million. We recorded a net profit of RMB7.7 million in 2021, compared to a net loss of RMB0.6 million in 2020. The improvement of our financial results in 2021 was mainly due to the expansion of our distribution network in Shanxi Province and the upgrade of
our product portfolio. Percentage change in relation to the distribution channels of our products between 2020 and 2021 are set out below:

o total sales in tobacco, sugar & wine stores increased by 99%;

o total sales in convenience stores increased by 25%;

o total sales in wine shops increased by 44.5%; and

o total sales in supermarket increased by 1,175%.

2021 has also proven to be a challenging year. It rained heavily during the harvest season in Shanxi Province and we had lost 40% of our crops. Fortunately, the remaining crops were of good quality. As for the vineyards in Ningxia, the climate was stable throughout the year with good harvest. For details, please refer to our vintage report as set out
in our website. I would like to take this opportunity to thank our teams for their hard work and dedication to implementing our strategy despite the ongoing impact of the COVID-19 pandemic. In the face of continued and unexpected lockdowns due to the pandemic, we face significant challenges in keeping our employees safe as we execute our Plans. While it is uncertain when the pandemic will end, we believe it is necessary to continue investing in marketing and expanding our business. Our gin and whisky distillery in Fujian will commence production in June and the visitor’s centre will be completed by the end of 2022. We are very excited about the new products and the new visitor’s centre and, I hope you will come visit us if the circumstances permit. We have also identified several key markets and a new “home market” outside of Shanxi Province as a focus of expansion for the year. Several new products
will be launched in the market, including our new gin series, in order to cater to an increasingly fragmented market. Having said that, we remain very cautious about our resource allocation and cash flow. One example is that our cash-on-delivery policy remains unchanged.

The year 2022 marks the 25th anniversary of Grace Wine. I take this opportunity to reflect on how far we have come and to celebrate our achievements to date. I would also like to thank our customers, partners, employees and, of course, our shareholders for their support. It is our ambition to build Grace Wine into a premium alcohol beverage company in China, and I believe that the steps we are taking now will enable us to achieve long-term growth. Finally, I am excited to announce that we are going to distribute a dividend for the first time since we listed on GEM of the Stock Exchange. Thanks again to our shareholders for their continued support and trust.