Investment Rating - Buy rating maintained for China Lilang (01234 HK) with a target price range of HKD 5 20-5 50 [1][12] Core Views - China Lilang achieved 15% revenue growth and 18% net profit growth in 2023, with a slight increase in net profit margin [1] - The company's main series/light business revenue grew by 11%/35% respectively in 2023 [1] - Gross margin increased by 2 2 percentage points to 48 2% due to inventory provision reversal and no distributor rebates [1] - Operating cash flow surged 68% to RMB 1 10 billion in 2023, with a net cash ratio of 2 1 [1] - Dividend payout ratio remained high at 74%, consistently above 70% over the past 5 years [1] - H2 2023 saw accelerated growth with revenue up 21 6% and net profit up 36 1% [1] Channel Transformation and Product Competitiveness - Channel reform: Light business transitioned to self-operated and main series to consignment, improving inventory management and operational efficiency [1] - Light business achieved profitability with 35% revenue growth and 17% net store openings in 2023 [1] - Product competitiveness: 75% original design ratio, with upgraded water-repellent down jacket 2 0 driving 30% growth in down jacket sales [1] 2024 Operating Targets - Total retail sales growth target of 15% for 2024 [2] - Plan to open 100-200 new offline stores and achieve 20% growth in new retail business [2] Financial Projections - Revenue forecast: RMB 4 035/4 542/5 002 million for 2024E/2025E/2026E, representing 13 9%/12 6%/10 1% growth [3][13] - Net profit forecast: RMB 594/676/754 million for 2024E/2025E/2026E, representing 12 0%/13 7%/11 6% growth [3][13] - Net margin expected to remain stable at around 15% [3][13] - ROE projected to increase from 13 4% in 2023 to 16 6% in 2026 [3][13] Valuation Metrics - 2024E PE: 9 5-10x [12] - 2024E PB: 1 11x [3] - 2024E EV/EBITDA: 9 2x [3]

Core Viewpoint - China Lilang (01234) reported a revenue of approximately RMB 3.544 billion for 2023, reflecting a year-on-year growth of 14.8% [1] Financial Performance - Gross profit reached approximately RMB 1.707 billion, up 20.2% year-on-year [1] - Annual profit was around RMB 530 million, marking an 18.4% increase year-on-year [1] - Earnings per share stood at 44.3 cents, with a proposed final dividend of 13 Hong Kong cents and a special final dividend of 5 Hong Kong cents [1] Sales Growth Drivers - Sales growth was primarily driven by the resumption of normal operations in all stores as social activities returned [1] - The light business segment saw a significant revenue increase of 35.2% due to the opening of new stores and a higher proportion of high-end series sales [1] - The main series revenue growth was constrained at 10.7% as distributors needed to digest inventory from 2022, with no rebates provided to distributors during the year [1] Retail Network and Distribution - The company continued to enhance its new retail business, optimizing the integration of online and offline marketing models [1] - As of the end of 2023, the company operated 296 self-managed light business stores and 2,393 main series stores, totaling 2,695 stores, a net increase of 51 stores year-on-year [1] - The company successfully established four profitable sales channels, enhancing store efficiency and overall profitability [1] Inventory Management - The company implemented a more robust inventory management system, opening 22 outlet stores and selling unsold seasonal products from other stores [1] - The sell-through rates for both main series and light business stores improved [1] - The new logistics park and smart logistics system effectively accelerated the distribution pace and improved inventory control efficiency [1] Future Outlook - For 2024, the company plans to add 100-200 new stores to expand retail scale and improve operational efficiency [1] - New store locations will focus on high-quality shopping centers in provincial capitals and prefecture-level cities, with an increase in outlet stores to clear inventory [1] - The company aims for a 20% year-on-year growth in new retail business through initiatives like Douyin live streaming, leveraging the complementary advantages of online and offline stores [1] - Overall sales growth is targeted at 15% for 2024 [1]

Financial Performance - For the year ended December 31, 2023, China Lilang reported revenue of RMB 3,543.8 million, representing a 14.8% increase from RMB 3,086.2 million in 2022[14]. - Gross profit for the same period was RMB 1,706.8 million, up 20.2% from RMB 1,420.2 million in 2022[14]. - Operating profit increased by 17.6% to RMB 610.6 million, compared to RMB 519.1 million in the previous year[14]. - The profit for the year reached RMB 530.4 million, an 18.4% rise from RMB 448.1 million in 2022[14]. - Basic and diluted earnings per share were both RMB 44.30, reflecting an 18.4% increase from RMB 37.42 in 2022[14]. - The gross profit margin improved to 48.2%, up from 46.0% in the previous year, indicating enhanced profitability[14]. - The operating profit margin also increased to 17.2%, compared to 16.8% in 2022[14]. - The net profit margin rose to 15.0%, up from 14.5% in the previous year[14]. Store Expansion and Retail Strategy - The total number of stores reached 2,695, with a net increase of 51 stores year-on-year, including 296 smart casual collection stores operated under a direct-to-retail model[27][29]. - The Group plans to net increase 100 to 200 stores in 2024, targeting prime locations in provincial capitals and prefecture-level cities, aiming for over 20% growth in new retail business and 15% growth in overall sales[37][41]. - The Group completed the renovation of 400 stores to enhance brand image and shopping environment, introducing innovative and differentiated new products[38]. - The Group's total number of stores reached 2,695 by the end of 2023, with a net increase of 51 stores year-on-year[51]. - The Group's smart casual collection stores increased by a net of 43 stores during the year[97]. E-commerce and Sales Growth - The Group's new retail sales grew by 17.6% year-on-year, driven by enhanced online and offline integration and promotional activities[26][28]. - The e-commerce business achieved a growth rate of 17.6% for the year, outperforming the overall growth rate, driven by interactive live-streaming sales models[50]. - E-commerce sales achieved a growth rate of 17.6%, outperforming overall sales growth[54]. Product Development and Innovation - The Group's investment in product research and development led to a 30% increase in sales of down products compared to the previous year, with the hydrophobic down 2.0 exceeding industry standards[32]. - The launch of the upgraded Hydrophobic Down 2.0 achieved a water resistance test of 10,000 minutes, exceeding industry standards by over 20 times, contributing to a 30.5% increase in overall down sales compared to last year[122]. - The proportion of products with original designs for sale was approximately 75%, with around 50% utilizing proprietary fabrics developed by the Group, highlighting a strong focus on innovation[113][116]. Financial Management and Dividends - A final dividend of HK 13 cents per share and a special final dividend of HK 5 cents per share were declared, maintaining a stable payout ratio[24]. - The Group maintained a stable financial position with sufficient cash flow and recommended a final dividend of HK13 cents per share and a special final dividend of HK5 cents per share[53]. - The proposed final dividend and special final dividend will be subject to shareholder approval at the 2024 AGM, with the register of members closing from May 8 to May 10, 2024[194]. Market Trends and Consumer Insights - The total retail sales of consumer goods in China increased by 7.2% year-on-year, with apparel retail sales growing by 12.9%, indicating a recovering apparel market[44][45]. - The central government's "Year of Consumption Promotion" in 2024 is expected to boost consumer confidence and support the Group's growth strategy[34]. - The core collection targets consumers aged 25 to 45 in third- and fourth-tier markets, while the smart casual collection focuses on urban youths aged 20 to 30 in first- and second-tier markets[121]. Logistics and Inventory Management - Average inventory turnover days decreased to 170 days from 195 days in 2022, indicating improved inventory management[16]. - The new logistics center and intelligent logistics system improved inventory control and delivery speed, contributing to better inventory management[31]. - The Group's intelligent logistics system improved delivery speed and inventory control, contributing to cost reduction and efficiency improvements[106][108]. Awards and Recognition - The Group's "Anping Bridge Show" was awarded the "Best Video Account Marketing Award" in the Tencent Social Media category, showcasing excellence in brand marketing[136]. - The Group received the "Secondary Award for Scientific and Technological Advancement" at the 2023 Science and Technology Awarding Ceremony of the China National Textile and Apparel Council[134]. - The Group's brand enhancement efforts earned multiple accolades, including the "Brand Enhancement Discovery Award of the Year" at the 2023 T-EDGE Global Innovation Conference[135].

Financial Performance - Revenue for the first half of 2023 increased by 6.7% to RMB 1,491.1 million compared to RMB 1,397.8 million in the same period of 2022[5] - Gross profit rose by 13.4% to RMB 772.6 million, with a gross margin of 51.8%, up from 48.7%[4] - Operating profit increased by 3.9% to RMB 305.4 million, while the operating profit margin slightly decreased to 20.5%[5] - Net profit for the period was RMB 270.5 million, reflecting a 5.2% increase from RMB 257.0 million in the previous year[5] - Basic and diluted earnings per share were both RMB 22.6, representing a 5.1% increase from RMB 21.5[4] - Total comprehensive income for the period was RMB 273,268 thousand, compared to RMB 265,230 thousand, marking a growth of 3.9%[38] Inventory and Cash Management - The average inventory turnover days increased to 211 days, compared to 195 days in the previous year[6] - The inventory balance decreased during the period, with a provision of RMB 0.558 billion as of June 30, 2023, indicating improved inventory turnover efficiency[19] - The company has seen a decrease in inventory to RMB 792,839 thousand from RMB 885,142 thousand, a reduction of 10.4%[40] - Cash used in investing activities amounted to RMB 1,045,842 thousand, significantly higher than RMB 504,264 thousand in the prior year, indicating a 107.5% increase[49] - As of June 30, 2023, the total cash and bank balances amounted to RMB 2,896.1 million, an increase from RMB 1,891.3 million as of December 31, 2022, reflecting a significant growth in liquidity[29] Store Expansion and Market Performance - The company expanded its store network, with a total of 2,646 stores as of June 30, 2023, netting an increase of 2 stores during the period[9] - Sales in the North China region grew by 15.1%, while East China saw an 11.5% increase, driven by a higher proportion of light business operations and significant growth in e-commerce[10] - The apparel retail market in China showed signs of recovery, with a 12.8% year-on-year growth in clothing, footwear, and textile retail sales[8] - The company opened 114 new stores and closed 112 stores during the first half of 2023, resulting in a net increase of 2 stores[16] Dividends and Shareholder Returns - The company maintained a stable dividend policy, declaring an interim dividend of HKD 0.13 per share and a special interim dividend of HKD 0.05 per share[9] - The company declared an interim dividend of RMB 199,905,000 for the six months ended June 30, 2023, compared to RMB 184,260,000 for the same period in 2022, representing an increase of approximately 8.6%[79] Operational Efficiency and Cost Management - Sales and distribution expenses rose significantly to RMB 398.4 million, primarily due to increased advertising and promotional expenses[14] - The light business self-operated store expenses decreased to RMB 142.4 million, accounting for 9.6% of total revenue[14] - The average trade receivables turnover days improved to 51 days from 54 days in the previous interim period[31] - The average trade payables turnover days increased to 140 days from 91 days in the previous interim period, attributed to an increase in trade bills to be settled later[31] Future Outlook and Strategic Initiatives - The group aims to open 100 new stores in 2023, with a cautious approach to store openings, expecting to achieve this target in the second half of the year[26] - The group expects a 10% growth in total retail sales for the year 2023, driven by flexible sales strategies and improved brand image[26] - The group plans to launch more e-commerce special edition products ahead of the Double 11 shopping festival, enhancing online sales strategies[26] - The company continues to optimize its distribution network, focusing on enhancing store quality and increasing store sizes in prime locations[15] Employee and Management Information - Employee costs for the period totaled approximately RMB 177.0 million, slightly up from RMB 175.4 million in the first half of 2022[32] - The group had 3,549 employees as of June 30, 2023, reflecting the company's focus on recruiting and training high-quality talent[32] - The total remuneration for key management personnel for the six months ended June 30, 2023, was RMB 4,044,000, a slight decrease of 1.4% from RMB 4,102,000 in 2022[85] Corporate Governance and Compliance - The company has complied with all provisions of the Corporate Governance Code as of June 30, 2023[102] - The audit committee consists of three independent non-executive directors, overseeing the financial reporting process and internal control systems[103] - The interim results for the six months ending June 30, 2023, have not been audited but have been reviewed by the company's auditor[103]

Financial Performance - Revenue for the six months ended June 30, 2023, increased by 6.7% to RMB 1,491.1 million compared to RMB 1,397.8 million in the same period of 2022[4]. - Gross profit rose by 13.4% to RMB 772.6 million, with a gross margin of 51.8%, up from 48.7%[3][4]. - Operating profit increased by 3.9% to RMB 305.4 million, while the operating profit margin slightly decreased to 20.5%[3][4]. - Net profit for the period was RMB 270.5 million, reflecting a 5.2% increase from RMB 257.0 million in the previous year[4]. - Basic and diluted earnings per share were both RMB 22.6, representing a 5.1% increase from RMB 21.5[3]. - Total comprehensive income for the period was RMB 273,268 thousand, compared to RMB 265,230 thousand in the same period last year, indicating a growth of 3.9%[33]. Store Network and Expansion - The company expanded its store network, with a total of 2,646 stores as of June 30, 2023, net adding 2 stores during the period[8]. - The company opened 114 new stores and closed 112 stores during the first half of 2023, resulting in a net increase of 2 stores[15]. - The number of retail stores increased to 2,646 by the end of June 2023, with a total retail area of approximately 410,231 square meters, a 1.6% increase from the end of 2022[14]. - The group aims to open 100 new stores in 2023, with a cautious store opening strategy continuing into the second half of the year[24]. Inventory and Receivables Management - The average inventory turnover days increased to 211 days from 195 days, while average trade receivables turnover days improved to 51 days[5]. - The inventory balance decreased during the period, with a provision of RMB 0.558 billion as of June 30, 2023, reflecting improved inventory turnover efficiency due to the opening of more outlet stores and online retail channels[18]. - The total inventory as of June 30, 2023, was RMB 792,839,000, a decrease from RMB 885,142,000 as of December 31, 2022, representing a decline of approximately 10.43%[55]. - Trade receivables, net of loss provisions, amounted to RMB 342,439,000 as of June 30, 2023, down from RMB 528,592,000 as of December 31, 2022, showing a decrease of about 35.24%[57]. Cash Flow and Financial Position - The net cash generated from operating activities was RMB 598.6 million, with a significant improvement in cash flow from distributors due to the easing of pandemic measures[27]. - As of June 30, 2023, LILANZ operated a total of 2,646 stores, with 252 self-operated stores, 65 first-level distributors, and 750 second-level distributors, marking an increase in second-level distributors from 735[16][17]. - The group reported a net cash outflow from investing activities of RMB 1,045.8 million, primarily due to deposits and fixed-term deposits totaling RMB 1,009.0 million[27]. - The company’s total assets decreased from RMB 842,625,000 as of December 31, 2022, to RMB 645,546,000 as of June 30, 2023, reflecting a decline of approximately 23.36%[58]. Dividends and Shareholder Returns - The company maintained a stable dividend policy, declaring an interim dividend of HKD 0.13 per share and a special interim dividend of HKD 0.05 per share[8]. - The company declared an interim dividend of RMB 199,905,000 for the six months ended June 30, 2023, compared to RMB 184,260,000 for the same period in 2022, marking an increase of approximately 8.6%[69]. Market and Product Strategy - The apparel retail market in China showed signs of recovery, with a 12.8% year-on-year growth in clothing, footwear, and textiles retail sales[7]. - The company continues to focus on product originality, with approximately 75% of products being original designs and 50% utilizing proprietary fabrics developed by the company[20]. - LILANZ launched durable shirts and Polo shirts featuring innovative technologies, such as DP wrinkle-free technology, which maintains fabric quality after 30 washes, and high-temperature seamless pressing technology for Polo shirts[20]. Corporate Governance and Social Responsibility - The company has complied with the Corporate Governance Code as per the listing rules for the six months ending June 30, 2023[88]. - LILANZ is committed to corporate social responsibility, collaborating with the Shanghai True Love Dream Public Welfare Foundation to promote cultural education in Guizhou province[23]. Employee and Management Information - The group had 3,549 employees as of June 30, 2023[29]. - Total remuneration for key management personnel for the six months ended June 30, 2023, was RMB 4,044,000, slightly down from RMB 4,102,000 in the same period of 2022[75].

Financial Performance - For the fiscal year ended December 31, 2022, China Lilang reported revenue of RMB 3,086.2 million, a decrease of 8.7% compared to RMB 3,379.5 million in 2021[8]. - Gross profit for 2022 was RMB 1,420.2 million, with a gross margin of 46.0%, slightly up from 41.9% in 2021[8]. - Operating profit decreased to RMB 519.1 million, representing a decline of 2.6% from RMB 532.8 million in the previous year[8]. - Net profit for the year was RMB 448.1 million, down 4.3% from RMB 468.1 million in 2021[8]. - Basic earnings per share for 2022 were RMB 37.42, a decrease of 4.3% compared to RMB 39.09 in 2021[8]. - The effective tax rate for 2022 was 18.1%, up from 10.1% in 2021, indicating a significant increase in tax obligations[8]. - The company's annual revenue for 2022 decreased by 8.7% to RMB 3,086.2 million, while net profit fell by 4.3% to RMB 448.1 million, primarily due to the impact of the pandemic on offline retail operations[15]. - The overall revenue decreased by 8.7% to RMB 3,086.2 million, with total retail sales down approximately 6.0% year-on-year[22]. - Net profit for the year was RMB 448.1 million, a decrease of 4.3%, with net profit margin improving by 0.6 percentage points to 14.5%[32]. - The company proposed a final dividend of HKD 0.09 per share, down from HKD 0.11 the previous year, totaling approximately HKD 167.6 million (about RMB 148.6 million)[33]. Inventory and Store Management - The average inventory turnover days increased to 195 days in 2022, compared to 145 days in 2021[9]. - The company closed several underperforming stores and slowed down its store opening plans, resulting in a net decrease of 89 stores, totaling 2,644 stores by the end of 2022[15]. - The company aims for a net increase of approximately 100 stores in the coming year, focusing on high-quality shopping malls in provincial capitals and increasing presence in outlet malls[17]. - The total retail store area as of December 31, 2022, was approximately 403,703 square meters, a slight decrease of 0.1% compared to the previous year[36]. - The company plans to optimize over 100 stores in 2023, following the optimization of about 50 stores in 2022, focusing on first and second-tier cities[36]. - The inventory balance remained similar to the previous year despite sales impacts from the pandemic, with improvements in inventory levels for light business self-operated stores[40]. - The total inventory balance decreased by RMB 8.6 million to RMB 885.1 million, with an increase in inventory for the main series due to early deliveries from suppliers[53]. Product Development and Sales Strategy - The company emphasized the promotion of new retail strategies and enhancing brand youthfulness to adapt to market changes[10]. - China Lilang aims to provide value-for-money products and focuses on original and personalized designs to improve brand competitiveness[10]. - The company actively developed its micro-mall business, leveraging social media interactions and promoting brand image through online sales, which helped improve store efficiency despite a 0.4% decline in retail sales[15]. - The company introduced innovative products such as water-repellent down jackets and self-developed fabric summer shirts, which received positive consumer feedback[15]. - The company plans to enhance e-commerce development by using online platforms as a launchpad for new products and increasing the proportion of e-commerce sales[17]. - The company achieved a gross profit increase despite a 0.4% decrease in retail sales due to higher sales of new products with elevated price points[40]. - The summer product, ice pineapple shirt, features self-developed fabric with cooling and antibacterial properties, gaining popularity among consumers[43]. Market Outlook and Growth Plans - The company is optimistic about the retail market in 2023, anticipating a cautious recovery in consumer demand due to government consumption promotion policies[17]. - The group aims for a total retail sales growth target of over 10% for the year 2023, primarily driven by an increase in sales volume[48]. - The company plans to enhance its digital marketing strategy, allocating an additional 10% of the marketing budget to online channels[150]. - The company has set a future outlook with a revenue target of 1.5 billion for 2023, indicating an expected growth of 25%[150]. - A strategic acquisition of a local competitor is in progress, expected to enhance market share by 10%[150]. Corporate Governance and Compliance - The board of directors consists of six executive directors and three independent non-executive directors, ensuring accountability and governance standards[114]. - The company has complied with all code provisions of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules of the Hong Kong Stock Exchange as of December 31, 2022[112]. - The board has established a structured process for annual self-evaluation of its performance and contributions, confirming satisfactory performance for the year ending December 31, 2022[124]. - The company has a clear distinction between the roles of the chairman and the CEO to ensure better checks and balances for corporate governance[119]. - The company has established a formal and transparent process for determining the remuneration of directors and senior management[127]. - The company has integrated anti-corruption clauses into procurement contracts to mitigate risks of bribery and fraud[98]. Environmental, Social, and Governance (ESG) Initiatives - The company established a comprehensive ESG governance framework to assist the board in overseeing ESG-related matters and ensuring ESG is integrated into daily operations[65]. - The company emphasizes resource conservation and environmental optimization, despite not causing significant pollution, and actively invests in measures to reduce emissions[65]. - The company has implemented an ISO14001 environmental management system across its facilities, ensuring compliance with environmental regulations[72]. - The company promotes a paperless office environment, utilizing ERP and mobile applications to minimize paper usage[74]. - The company has trained workers to improve skills and reduce fabric waste during production[75]. - The company has invested in advanced energy-saving technologies to enhance production processes and reduce environmental impact[72]. Employee Engagement and Welfare - The total number of employees as of December 31, 2022, is 3,689, with a turnover rate of 16%[84]. - Employee wellness initiatives include free health check-ups and mental health support during the pandemic[89]. - The company emphasizes a safe working environment with regular safety training and emergency drills conducted annually[89]. - Total training hours for employees reached 28,006 in 2022[92]. - The company provides competitive compensation and benefits, ensuring timely payment of salaries and compliance with local social insurance standards[85]. Community Engagement and Corporate Social Responsibility - The group made charitable donations totaling RMB 2.139 million during the reporting period, including RMB 1.634 million to the Shanghai True Love Dream Foundation and RMB 500,000 to the Jinjiang Charity Foundation for pandemic relief efforts[99]. - The group has established a zero-tolerance policy towards corruption and fraud, with no reported cases of corruption or fraud during the reporting period[98]. - The group actively engages in community investment, enhancing local tax revenue and employment while supporting education, healthcare, and elderly care initiatives[99]. - The group has collaborated with the Shanghai True Love Dream Foundation to promote children's education through the Youth Aesthetic Education Program[101]. Risk Management and Internal Controls - The company has implemented a risk management and internal control system to manage risks associated with achieving strategic objectives[138]. - The board and audit committee found no significant issues during the review of the internal control system, although areas for improvement were identified[141]. - The independent auditor's report emphasizes the importance of identifying and assessing risks of material misstatement in the financial statements due to fraud or error[199]. Revenue Recognition and Accounting Practices - The company recognizes revenue upon delivery of products to the designated location of the distributor, indicating a clear transfer of control[194]. - Significant manual adjustments to revenue generated during the reporting period are examined to ensure compliance with accounting standards[194]. - The audit identified revenue recognition from sales to distributors and agents as a key audit matter due to the inherent risk of management manipulating revenue recognition timing[194].

[Financial Highlights](index=4&type=section&id=Financial%20Highlights) The group's key financial indicators for the six months ended June 30, 2021, show revenue growth and improved gross profit margin, despite a slight decrease in net profit margin Key Financial Indicators for the Six Months Ended June 30 | Indicator | 2021 (RMB million) | 2020 (RMB million) | Change (%) | | :------------- | :-------------------- | :-------------------- | :------- | | Revenue | 1,354.3 | 1,093.3 | +23.9 | | Gross Profit | 670.8 | 431.0 | +55.6 | | Operating Profit | 307.8 | 306.7 | +0.4 | | Profit for the Period | 271.5 | 268.9 | +0.9 | | | | | | | Earnings Per Share (Basic) | 22.7 (RMB cents) | 22.5 (RMB cents) | +0.9 | | Interim Dividend Per Share | 13 (HK cents) | 12 (HK cents) | +8.3 | | Special Interim Dividend Per Share | 5 (HK cents) | 5 (HK cents) | — | | | | | | | Gross Profit Margin | 49.5% | 39.4% | +10.1 | | Operating Profit Margin | 22.7% | 28.1% | -5.4 | | Net Profit Margin | 20.0% | 24.6% | -4.6 | | Average Inventory Turnover Days | 208 | 185 | +23 | | Average Trade Receivables Turnover Days | 69 | 135 | -66 | | Average Trade Payables Turnover Days | 93 | 114 | -21 | [Management Discussion and Analysis](index=5&type=section&id=Management%20Discussion%20and%20Analysis) This section provides an overview of the company's performance, industry trends, financial results, business operations, future outlook, and financial management policies [Industry Review](index=5&type=section&id=Industry%20Review) China's economy showed robust growth in H1 2021 with a **12.7%** GDP increase, driven by strong consumer market recovery, particularly in apparel retail - China's GDP grew by **12.7% year-on-year** in H1 2021, with strengthening consumer market recovery[7](index=7&type=chunk) - Total retail sales of consumer goods increased by **23.0% year-on-year**, with apparel, footwear, and textile retail sales growing by **33.7%**, indicating continued recovery in apparel retail demand[7](index=7&type=chunk) [Financial Review](index=6&type=section&id=Financial%20Review) H1 revenue grew by **23.9% to RMB 1,354.3 million**, driven by light business direct-to-consumer model and double-digit wholesale growth, with gross margin up **10.1 percentage points to 49.5%**, but net profit margin declined to **20.0%** due to increased expenses and delayed government subsidies [Revenue](index=7&type=section&id=Revenue) Group revenue increased by **23.9% to RMB 1,354.3 million**, primarily due to the light business shift to direct-to-consumer sales and double-digit growth in the main series wholesale business - Group revenue increased by **23.9% to RMB 1,354.3 million** for the period[9](index=9&type=chunk) - Revenue growth was primarily driven by the shift of most light business stores to direct operation, recognizing sales at retail value, and double-digit growth in the main series wholesale business[9](index=9&type=chunk) - Approximately **40%** of main series stores converting to consignment sales led to delayed revenue recognition, slightly impacting overall sales growth[9](index=9&type=chunk) [Revenue by Product Category](index=7&type=section&id=Revenue%20by%20Product%20Category) Tops remained the primary revenue source, contributing **55.2%** of total revenue with **30.1%** sales growth, while accessories sales declined by **18.4%** due to lower footwear sales - Tops accounted for **55.2%** of total revenue (H1 2020: 52.3%), with sales increasing by **30.1%**[9](index=9&type=chunk) - Accessories sales decreased by **18.4%**, primarily due to a decline in footwear product sales[9](index=9&type=chunk) [Revenue by Region](index=7&type=section&id=Revenue%20by%20Region) East China sales grew **57.3%** due to direct-operated light business stores and online shops, while Northeast China performed weakest, affected by population outflow - Total retail sales of "LILANZ" products increased by **25% to 30% year-on-year** in the first half[8](index=8&type=chunk) Revenue by Region (For the six months ended June 30) | Region | 2021 (RMB million) | % of Revenue | 2020 (RMB million) | % of Revenue | Change (%) | | :--- | :-------------------- | :------- | :-------------------- | :------- | :------- | | North China | 110.6 | 8.2% | 92.1 | 8.4% | 20.1% | | Northeast China | 38.2 | 2.8% | 42.9 | 3.9% | -11.0% | | East China | 523.5 | 38.6% | 332.7 | 30.5% | 57.3% | | Central South China | 328.7 | 24.3% | 312.4 | 28.6% | 5.2% | | Southwest China | 231.3 | 17.1% | 200.3 | 18.3% | 15.5% | | Northwest China | 122.0 | 9.0% | 112.9 | 10.3% | 8.1% | | Total | 1,354.3 | 100.0% | 1,093.3 | 100.0% | 23.9% | - Sales in East China increased by **57.3%**, primarily due to light business stores and online shops converting to direct operation, recognizing sales at retail value[10](index=10&type=chunk) - Sales in Northeast China decreased by **11.0%**, making it the worst-performing region, continuously affected by population outflow[10](index=10&type=chunk)[11](index=11&type=chunk) [Cost of Sales and Gross Profit Margin](index=8&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit%20Margin) Cost of sales slightly increased by **3.2% to RMB 683.5 million**, while gross profit margin significantly rose by **10.1 percentage points to 49.5%**, driven by higher product mark-ups and better light business direct-to-consumer margins - Cost of sales slightly increased by **3.2% to RMB 683.5 million** year-on-year[11](index=11&type=chunk) - Gross profit margin significantly increased by **10.1 percentage points to 49.5%**, primarily benefiting from higher product mark-ups and a higher gross profit margin from light business retail[11](index=11&type=chunk) [Net Other Income](index=8&type=section&id=Net%20Other%20Income) Net other income significantly decreased to **RMB 17.3 million** from **RMB 46.4 million**, mainly due to reduced government subsidies and delayed recognition for a key operating subsidiary - Net other income was **RMB 17.3 million** (H1 2020: RMB 46.4 million), a year-on-year decrease[11](index=11&type=chunk) - The decrease was primarily due to reduced government subsidies, as a major operating subsidiary's H1 government subsidies were received and recognized after the period end[11](index=11&type=chunk) [Selling and Distribution Expenses](index=8&type=section&id=Selling%20and%20Distribution%20Expenses) Selling and distribution expenses increased by **RMB 206.2 million to RMB 317.3 million**, representing **23.4%** of total revenue, primarily due to store operating costs from the light business direct-to-consumer model - Selling and distribution expenses increased by **RMB 206.2 million to RMB 317.3 million**[11](index=11&type=chunk) - Representing **23.4%** of total revenue, an increase of **13.2 percentage points** from the same period last year[11](index=11&type=chunk) - The significant increase in expenses was mainly due to store operating costs after the light business converted to direct operation in H2 2020[11](index=11&type=chunk) [Administrative Expenses](index=9&type=section&id=Administrative%20Expenses) Administrative expenses were **RMB 61.7 million**, representing **4.6%** of sales, an increase of **RMB 14.8 million**, primarily due to increased depreciation and property management costs from the new headquarters' Q1 activation - Administrative expenses were **RMB 61.7 million**, representing **4.6%** of sales (H1 2020: 5.0%)[12](index=12&type=chunk) - The amount increased by **RMB 14.8 million** year-on-year, mainly due to increased depreciation and property management expenses from the new headquarters' activation[12](index=12&type=chunk) [Other Operating Expenses](index=9&type=section&id=Other%20Operating%20Expenses) Other operating expenses included **RMB 0.4 million** in charitable donations, a decrease from **RMB 3.7 million** in the prior year - Other operating expenses included charitable donations of **RMB 0.4 million** (H1 2020: RMB 3.7 million)[12](index=12&type=chunk) [Operating Profit](index=9&type=section&id=Operating%20Profit) Operating profit slightly increased by **0.4% to RMB 307.8 million**, but the operating profit margin decreased by **5.4 percentage points to 22.7%** due to higher selling expenses and delayed government subsidies - Operating profit slightly increased by **0.4% to RMB 307.8 million**[12](index=12&type=chunk) - Operating profit margin decreased by **5.4 percentage points to 22.7%**, primarily affected by increased selling expenses and delayed government subsidy receipts[12](index=12&type=chunk) [Net Finance Income](index=9&type=section&id=Net%20Finance%20Income) Net finance income slightly decreased to **RMB 19.4 million**, primarily due to a **RMB 5.3 million** reduction in interest income from lower average cash balances and deposit rates - Net finance income was **RMB 19.4 million**, a slight decrease from the same period last year[12](index=12&type=chunk) - Interest income decreased by **RMB 5.3 million to RMB 19.0 million**, due to lower average cash balances and deposit interest rates[12](index=12&type=chunk) [Income Tax](index=9&type=section&id=Income%20Tax) The effective income tax rate for the period was **17.0%**, a slight decrease of **0.6 percentage points**, benefiting from preferential tax rates for high-tech and Tibet-registered subsidiaries - The effective income tax rate for the period was **17.0%**, a slight decrease of **0.6 percentage points** from the same period last year[12](index=12&type=chunk) - The group's subsidiaries enjoy tax incentives, including high-tech enterprise qualification (15% preferential tax rate) and Tibet-registered subsidiaries (15% preferential tax rate)[12](index=12&type=chunk) [Net Profit](index=9&type=section&id=Net%20Profit) Net profit for the period slightly increased by **0.9% to RMB 271.5 million**, but the net profit margin decreased by **4.6 percentage points to 20.0%** due to higher expenses and delayed government subsidies - Net profit for the period was **RMB 271.5 million**, a slight increase of **0.9%**[12](index=12&type=chunk) - Net profit margin decreased by **4.6 percentage points to 20.0%**, primarily affected by increased expenses and delayed recognition of government subsidies[12](index=12&type=chunk) [Earnings Per Share](index=9&type=section&id=Earnings%20Per%20Share) Earnings per share increased by **0.9% to RMB 22.7 cents** - Earnings per share were **RMB 22.7 cents**, an increase of **0.9%**[12](index=12&type=chunk) [Interim Dividend](index=9&type=section&id=Interim%20Dividend) The Board resolved to declare an interim dividend of **HK 13 cents** and a special interim dividend of **HK 5 cents** per share, totaling approximately **HKD 215.5 million** - The Board resolved to declare an interim dividend of **HK 13 cents** per share (H1 2020: HK 12 cents) and a special interim dividend of **HK 5 cents** per share (H1 2020: HK 5 cents)[12](index=12&type=chunk) - The total dividend payout amounted to approximately **HKD 215.5 million** (equivalent to approximately RMB 179.5 million)[12](index=12&type=chunk) [Business Review](index=10&type=section&id=Business%20Review) The group optimized sales channels, reducing net stores by **53 to 2,708**, converting **40%** of main series stores to consignment and most light business stores to direct operation, while new retail saw **15-20%** growth in online direct sales and enhanced product design [Sales Channel Management](index=10&type=section&id=Sales%20Channel%20Management) The group optimized its retail network, reducing net stores by **53 to 2,708**, converting **40%** of main series stores to consignment and most light business stores to direct operation to enhance channel control and reduce inventory risk - As of end-June 2021, "LILANZ" had **2,708** retail stores nationwide, with a net decrease of **53** stores during the period[13](index=13&type=chunk) - Approximately **40%** of main series stores converted to consignment sales, while most light business stores shifted to direct operation to further control retail channels and reduce inventory risk[13](index=13&type=chunk) "LILANZ" Brand Store Count Changes by Region | Region | As at January 1, 2021 | Stores opened | Stores closed | As at June 30, 2021 | | :--- | :------------- | :------- | :------- | :--------------- | | North China | 294 | 10 | 30 | 274 | | Northeast China | 185 | 2 | 23 | 164 | | East China | 790 | 46 | 57 | 779 | | Central South China | 727 | 52 | 49 | 730 | | Southwest China | 494 | 25 | 26 | 493 | | Northwest China | 271 | 19 | 22 | 268 | | Total | 2,761 | 154 | 207 | 2,708 | - Shopping mall stores increased to **821**, accounting for **30.3%** of total stores; outlet stores increased to **40**[14](index=14&type=chunk) - There were **279** direct-operated stores, first-tier distributors decreased from **90 to 69**, and second-tier distributors numbered **734**[15](index=15&type=chunk)[16](index=16&type=chunk) - The seventh-generation store image for the main series was promoted to existing stores, with approximately **100** renovations completed in H1, and **500** planned for the full year[17](index=17&type=chunk) - Light business stores will launch a new store image in the second half of the year[17](index=17&type=chunk) - In inventory management, after light business converted to direct operation and main series to consignment, inventory allocation became more flexible, improving spring/summer product sell-through rates[17](index=17&type=chunk) [New Retail Development](index=12&type=section&id=New%20Retail%20Development) The group prioritized new retail, achieving **15-20%** growth in online direct sales, expanding new product offerings, and leveraging in-house factories for quick response and WeChat platforms for customer engagement - The group prioritizes new retail development, integrating online services, offline experiences, and optimized logistics[18](index=18&type=chunk) - Online store retail sales increased by **15% to 20% year-on-year** after converting to direct operation, with new products introduced for online sales in H1[18](index=18&type=chunk) - By leveraging in-house factories for quick response, **seven** production lines were added to support e-commerce special pants production, demonstrating rapid small-batch production capability[18](index=18&type=chunk) - Actively promoting the use of WeChat platforms for customer relationship management and micro-store openings to drive store efficiency growth[18](index=18&type=chunk) [Product Design, Development and Supply Chain Management](index=12&type=section&id=Product%20Design%2C%20Development%20and%20Supply%20Chain%20Management) The group enhanced product personalization and original design, maintaining **70%** originality and **50%** unique fabric products, with **75%** projected for winter, while developing new suppliers and leveraging in-house factories for e-commerce fast-fashion - The group continues to enhance product personalization and original design to improve cost-effectiveness and differentiation[19](index=19&type=chunk) - Among products sold during the period, the original design ratio remained at approximately **70%**, and products using unique fabrics accounted for about **50%**, with the original design ratio for winter products expected to increase to approximately **75%**[19](index=19&type=chunk) - Actively developing new suppliers for fast-fashion materials, combined with in-house factories' rapid small-batch production capabilities, to launch more e-commerce fast-fashion products[19](index=19&type=chunk) - The fashionability and design of the light business series products were enhanced in the Spring/Summer 2021 season, and gross profit margin was improved by increasing mark-ups on individual products[20](index=20&type=chunk) - The group's R&D department has approximately **440** employees, comprehensively enhancing product competitiveness[20](index=20&type=chunk) [Brand Management and Promotion](index=13&type=section&id=Brand%20Management%20and%20Promotion) The group enhanced brand awareness and youth appeal through influencer marketing, brand ambassador Han Han's campaigns, IP collaborations with China Daily and "The Three-Body Problem," and continued partnership with Shanghai True Love Dream Foundation - Employed multiple influencers to showcase new products on platforms like Douyin and Xiaohongshu, attracting market attention[20](index=20&type=chunk) - Continued brand promotion activities with ambassador Han Han, including sponsoring New Year's Eve speeches and filming positive post-pandemic short videos[20](index=20&type=chunk) - The main series and light business launched IP collaboration series with China Daily and the sci-fi novel "The Three-Body Problem" respectively, contributing to brand rejuvenation[20](index=20&type=chunk) - Continued participation in the China University Student Advertising Art Festival to enhance brand reputation among young consumers[20](index=20&type=chunk) - Collaborated with Shanghai True Love Dream Foundation to launch student-designed apparel and donate sales proceeds, enhancing corporate image[20](index=20&type=chunk) [Awards](index=13&type=section&id=Awards) The group's advertisement "I'm a good fit for the world" won the 10th ADMEN International Award and IAI International Advertising Award gold prizes, and the "Innovative Upgraded Retail Enterprise of the Year" award - The advertisement "I'm a good fit for the world" won the "Creative Communication Practical Gold Case" award at the 10th ADMEN International Awards 2021 and a gold award at the 2021 IAI International Advertising Awards[20](index=20&type=chunk) - Awarded the "Innovative Upgraded Retail Enterprise of the Year 2020-2021" award[20](index=20&type=chunk) [Outlook](index=14&type=section&id=Outlook) The group is cautiously optimistic for H2, planning to optimize its store network with a revised net increase target of **50-100 stores**, expand new retail with WeChat platform training and eco-friendly products, and enhance logistics with the new headquarters and logistics park - For H2 2021, the group is cautiously optimistic about the Chinese retail market, despite ongoing uncertainties in the broader environment[21](index=21&type=chunk) - The group will continue a cautious store opening strategy, focusing on optimizing the existing store network, revising the full-year net store increase target to **50 to 100** (original target: 100 to 150)[21](index=21&type=chunk) - In new retail, distributors will be trained to use WeChat platforms to enhance store efficiency, and new products and e-commerce fast-fashion items will be increasingly launched through e-commerce channels[21](index=21&type=chunk) - Plans to launch special edition eco-friendly products for online sales in Fall/Winter 2021, utilizing fabrics made from recycled plastics and fast-growing non-edible plants[21](index=21&type=chunk) - The new headquarters officially opened in February 2021, and the first phase of the new logistics park aims to be operational before the 11.11 shopping festival, enhancing inventory management and logistics efficiency[22](index=22&type=chunk) - For long-term development, the group will continue its multi-brand strategy, striving to enhance product competitiveness and cost-effectiveness, and consolidate its leading position in the menswear industry[22](index=22&type=chunk) [Liquidity and Financial Resources](index=16&type=section&id=Liquidity%20and%20Financial%20Resources) The group maintains a strong financial position with **RMB 1,353.7 million** in cash and bank balances, though cash and equivalents decreased by **RMB 385.2 million** due to capital expenditures and financing activities, while working capital turnover days reflect improved channel control and inventory management [Cash and Bank Balances and Cash Flows](index=16&type=section&id=Cash%20and%20Bank%20Balances%20and%20Cash%20Flows) As of June 30, 2021, total cash and bank balances were **RMB 1,353.7 million**, primarily in RMB, with a **RMB 385.2 million** decrease in cash and equivalents due to net cash outflows from investing and financing activities - As of June 30, 2021, total cash and bank balances were **RMB 1,353.7 million**, primarily denominated in RMB (**95.0%**)[23](index=23&type=chunk)[24](index=24&type=chunk) - Cash and cash equivalents balance decreased by **RMB 385.2 million**[24](index=24&type=chunk) - Net cash generated from operating activities was **RMB 123.4 million**[24](index=24&type=chunk) - Net cash outflow from investing activities was **RMB 156.3 million**, primarily comprising capital expenditures of **RMB 170.1 million**[25](index=25&type=chunk) - Net cash outflow from financing activities was **RMB 351.6 million**, mainly for dividend payments of **RMB 267.9 million** and lease principal and interest payments of **RMB 83.7 million**[25](index=25&type=chunk) [Trade Working Capital Turnover Days](index=17&type=section&id=Trade%20Working%20Capital%20Turnover%20Days) Average inventory turnover days increased by **23 to 208**, while average trade receivables turnover days decreased to **69**, and average trade payables turnover days decreased to **93**, reflecting channel control and adjusted production schedules Trade Working Capital Turnover Days | Indicator | For the six months ended June 30, 2021 | For the year ended December 31, 2020 | For the six months ended June 30, 2020 | | :------------- | :-------------------- | :------------------- | :-------------------- | | Average Inventory Turnover Days | 208 | 168 | 185 | | Average Trade Receivables Turnover Days | 69 | 101 | 135 | | Average Trade Payables Turnover Days | 93 | 115 | 114 | - Average inventory turnover days were **208**, an increase of **23 days** compared to the prior interim period, mainly due to approximately **40%** of main series stores operating under a consignment model[27](index=27&type=chunk) - Average trade receivables turnover days were **69**, a decrease from **75 days** in 2020, primarily because approximately **40%** of main series stores converted to a consignment model[27](index=27&type=chunk) - Average trade payables and bills payable turnover days were **93**, a decrease from **84 days** in 2020, as the group adjusted production and delivery schedules for some autumn/winter products after light business converted to direct operation and main series to consignment[27](index=27&type=chunk) [Pledged Assets](index=17&type=section&id=Pledged%20Assets) Pledged bank deposits, serving as security for bills payable, will be released upon repayment; as of June 30, 2021, they significantly decreased to **RMB 30 thousand** from **RMB 1,710 thousand** at December 31, 2020 - Pledged bank deposits serve as security for bills payable and will be released upon repayment of the relevant bills[58](index=58&type=chunk) Pledged Bank Deposits | Item | As at June 30, 2021 (RMB thousand) | As at December 31, 2020 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Pledged bank deposits | 30 | 1,710 | [Capital Commitments and Contingent Liabilities](index=17&type=section&id=Capital%20Commitments%20and%20Contingent%20Liabilities) As of June 30, 2021, total capital commitments were **RMB 302.0 million**, primarily for logistics center construction, expected to be funded by internal resources, with no significant contingent liabilities - As of June 30, 2021, the group's total capital commitments were **RMB 302.0 million**, primarily related to the construction of a logistics center[27](index=27&type=chunk) - The first phase of the logistics center is expected to be completed in H2 2021, and these capital commitments are anticipated to be paid from the group's internal resources[27](index=27&type=chunk) - As of June 30, 2021, the group had no significant contingent liabilities[28](index=28&type=chunk) [Financial Management Policies](index=18&type=section&id=Financial%20Management%20Policies) The group prudently monitors financial risks; while its functional currency is HKD, primary business transactions are in RMB, resulting in minor operational exchange rate risk - The group continues to prudently monitor financial risks[28](index=28&type=chunk) - The company's functional currency is HKD, but as the group primarily conducts business transactions in RMB, operational exchange rate risk is minor[28](index=28&type=chunk) [Human Resources](index=18&type=section&id=Human%20Resources) As of June 30, 2021, the group had **3,874** employees with total staff costs of approximately **RMB 172.5 million**, focusing on talent acquisition, training, competitive compensation, and an employee share option scheme - As of June 30, 2021, the group had **3,874** employees, with total staff costs of approximately **RMB 172.5 million** for the period[28](index=28&type=chunk) - The group emphasizes recruiting and training high-quality talent, providing pre-job and continuous training and development opportunities[28](index=28&type=chunk) - The group offers competitive remuneration packages to employees and has adopted a share option scheme to recognize, reward, and encourage employee contributions[28](index=28&type=chunk) [Auditor's Review Report](index=19&type=section&id=Auditor%27s%20Review%20Report) KPMG reviewed the interim financial report for the six months ended June 30, 2021, noting no material non-compliance with IAS 34 - KPMG has reviewed the interim financial report of China Lilang Limited for the six months ended June 30, 2021[29](index=29&type=chunk) - The scope of a review is substantially less than that of an audit, and accordingly, no audit opinion is expressed[30](index=30&type=chunk) - Based on the review, nothing has come to the auditor's attention that causes them to believe the interim financial report is not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting"[31](index=31&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=20&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the group's financial performance, including revenue, expenses, profit for the period, and other comprehensive income for the six months ended June 30 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2021 (RMB thousand) | 2020 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Revenue | 1,354,299 | 1,093,336 | | Cost of sales | (683,479) | (662,354) | | **Gross profit** | **670,820** | **430,982** | | Net other income | 17,286 | 46,372 | | Selling and distribution expenses | (317,344) | (111,054) | | Administrative expenses | (61,688) | (54,337) | | Other operating expenses | (1,246) | (5,265) | | **Operating profit** | **307,828** | **306,698** | | Net finance income | 19,385 | 19,839 | | **Profit before taxation** | **327,213** | **326,537** | | Income tax | (55,757) | (57,595) | | **Profit for the period** | **271,456** | **268,942** | | Other comprehensive income for the period | (4,109) | 6,940 | | **Total comprehensive income for the period** | **267,347** | **275,882** | | Basic earnings per share (cents) | 22.7 | 22.5 | | Diluted earnings per share (cents) | 22.6 | 22.5 | [Condensed Consolidated Statement of Financial Position](index=21&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This statement outlines the group's assets, liabilities, and equity as of June 30, detailing non-current and current financial positions Condensed Consolidated Statement of Financial Position (As at June 30) | Indicator | 2021 (RMB thousand) | 2020 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | **Non-current assets** | | | | Property, plant and equipment | 1,093,818 | 923,727 | | Investment properties | 120,485 | 122,198 | | Right-of-use assets | 286,466 | 279,407 | | Intangible assets | 7,938 | 7,914 | | Deferred tax assets | 24,787 | 24,310 | | **Total non-current assets** | **1,561,460** | **1,393,525** | | | | | | **Current assets** | | | | Inventories | 901,222 | 667,054 | | Trade and other receivables | 731,725 | 1,210,168 | | Cash and cash equivalents | 1,353,722 | 1,738,934 | | **Total current assets** | **2,986,699** | **3,617,866** | | | | | | **Current liabilities** | | | | Trade and other payables | 566,460 | 1,036,022 | | Lease liabilities | 57,424 | 62,003 | | Current tax payable | 161,948 | 152,489 | | **Total current liabilities** | **813,739** | **1,287,977** | | **Net current assets** | **2,172,960** | **2,329,889** | | **Net assets** | **3,654,581** | **3,653,525** | | | | | | **Total equity** | **3,654,581** | **3,653,525** | [Condensed Consolidated Statement of Changes in Equity](index=23&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement details the group's equity changes, including profit for the period, other comprehensive income, and dividend payments, for the six months ended June 30 Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | 2021 (RMB thousand) | 2020 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Total equity as at January 1 | 3,653,525 | 3,606,279 | | Profit for the period | 271,456 | 268,942 | | Other comprehensive income for the period | (4,109) | 6,940 | | Total comprehensive income for the period | 267,347 | 275,882 | | Equity-settled share-based payment expense | 1,645 | — | | Dividends approved for prior year | (267,936) | (341,671) | | Transfer to statutory reserve | — | — | | Total equity as at June 30 | 3,654,581 | 3,540,490 | [Condensed Consolidated Statement of Cash Flows](index=24&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This statement presents the group's cash flows from operating, investing, and financing activities for the six months ended June 30 Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Activity | 2021 (RMB thousand) | 2020 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Net cash generated from operating activities | 123,389 | 117,265 | | Net cash used in investing activities | (156,296) | (63,333) | | Net cash used in financing activities | (351,634) | (71,656) | | Net decrease in cash and cash equivalents | (384,541) | (17,724) | | Cash and cash equivalents as at January 1 | 1,738,934 | 1,750,609 | | Effect of foreign exchange rate changes | (671) | 642 | | Cash and cash equivalents as at June 30 | 1,353,722 | 1,733,527 | [Notes to the Unaudited Interim Financial Report](index=25&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This section provides detailed notes and disclosures supporting the unaudited interim financial statements, covering accounting policies, changes, and specific financial items [1. Basis of Preparation](index=25&type=section&id=1.%20Basis%20of%20Preparation) This interim financial report, authorized for issue on August 23, 2021, is prepared in accordance with IAS 34 and reviewed by KPMG, using consistent accounting policies with the 2020 annual financial statements - This interim financial report is prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" and was authorized for issue on August 23, 2021[40](index=40&type=chunk) - The accounting policies adopted in the preparation of this interim financial report are consistent with those applied in the preparation of the annual financial statements for 2020[40](index=40&type=chunk) - This interim financial report is unaudited but has been reviewed by the company's auditor, KPMG, in accordance with Hong Kong Standard on Review Engagements 2410[40](index=40&type=chunk) [2. Changes in Accounting Policies](index=25&type=section&id=2.%20Changes%20in%20Accounting%20Policies) Certain IFRS amendments issued by the IASB became effective this period but were not relevant to the group's interim financial statements, and no new standards not yet effective were applied - Certain amendments to International Financial Reporting Standards issued by the IASB became effective for the group's current accounting period for the first time, but these amendments are not relevant to the group's interim financial statements[41](index=41&type=chunk) - The group has not applied any new standards or interpretations that are not yet effective for the current accounting period[41](index=41&type=chunk) [3. Revenue](index=25&type=section&id=3.%20Revenue) The group's primary business is manufacturing and selling branded menswear and accessories in China, with revenue defined as sales of goods net of returns, discounts, and VAT - The group's principal activities are the manufacture and sale of branded menswear and related accessories in China[42](index=42&type=chunk) - Revenue represents the sales value of goods sold, net of returns, discounts, and value-added tax[42](index=42&type=chunk) [4. Net Finance Income](index=26&type=section&id=4.%20Net%20Finance%20Income) For the six months ended June 30, 2021, net finance income slightly decreased to **RMB 19,385 thousand** from **RMB 19,839 thousand**, primarily due to lower interest income Net Finance Income (For the six months ended June 30) | Indicator | 2021 (RMB thousand) | 2020 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Interest income | 19,001 | 24,298 | | Interest on bank borrowings | (19) | (499) | | Interest on lease liabilities | (3,872) | (67) | | Net exchange gains/(losses) | 4,275 | (3,893) | | **Total** | **19,385** | **19,839** | [5. Profit Before Taxation](index=26&type=section&id=5.%20Profit%20Before%20Taxation) Profit before taxation is stated after deducting various expenses, including amortization of intangible assets, depreciation of property, plant and equipment, right-of-use assets, short-term lease expenses, R&D costs, subcontracting fees, inventory write-downs, and trade receivables impairment losses Profit Before Taxation Deductions (For the six months ended June 30) | Item | 2021 (RMB thousand) | 2020 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Amortization of intangible assets | 1,807 | 1,613 | | Depreciation of owned property, plant and equipment | 36,416 | 13,359 | | Depreciation of investment properties | 1,713 | 1,909 | | Depreciation of right-of-use assets | 58,054 | 3,741 | | Rental expenses for short-term leases | 7,946 | 34 | | Research and development costs | 47,222 | 56,239 | | Subcontracting fees | 114,197 | 115,330 | | Write-down of inventories | 5,174 | 3,380 | | Impairment losses on trade receivables | — | 7,443 | [6. Income Tax](index=27&type=section&id=6.%20Income%20Tax) For the six months ended June 30, 2021, total income tax was **RMB 55,757 thousand**, with Chinese subsidiaries benefiting from preferential tax rates, and deferred tax liabilities provided for dividends distributed to non-Chinese resident enterprises Income Tax (For the six months ended June 30) | Item | 2021 (RMB thousand) | 2020 (RMB thousand) | | :------- | :------------------ | :------------------ | | Current tax | 46,749 | 38,310 | | Deferred tax | 9,008 | 19,285 | | **Total** | **55,757** | **57,595** | - The group's PRC subsidiaries enjoy tax incentives, including high-tech enterprise qualification (15% preferential tax rate) and Tibet-registered subsidiaries (15% preferential tax rate)[45](index=45&type=chunk) - Deferred tax liabilities have been provided for dividends distributed by PRC enterprises to non-PRC resident enterprises out of profits earned from January 1, 2008 onwards[46](index=46&type=chunk) [7. Earnings Per Share](index=27&type=section&id=7.%20Earnings%20Per%20Share) For the six months ended June 30, 2021, basic earnings per share were **RMB 22.7 cents**, and diluted earnings per share were **RMB 22.6 cents**, reflecting the potential dilutive effect of share options [A) Basic Earnings Per Share](index=27&type=section&id=A)%20Basic%20Earnings%20Per%20Share) Basic earnings per share were **RMB 22.7 cents**, calculated based on profit for the period of **RMB 271,456 thousand** and a weighted average of **1,197,485 thousand** ordinary shares outstanding - Basic earnings per share were **RMB 22.7 cents** (2020: RMB 22.5 cents)[47](index=47&type=chunk) - Calculated based on profit for the period of **RMB 271,456 thousand** and a weighted average of **1,197,485 thousand** ordinary shares outstanding[47](index=47&type=chunk) [B) Diluted Earnings Per Share](index=28&type=section&id=B)%20Diluted%20Earnings%20Per%20Share) Diluted earnings per share were **RMB 22.6 cents**, calculated based on profit for the period of **RMB 271,456 thousand** and a weighted average of **1,199,330 thousand** ordinary shares, adjusted for the potential dilutive effect of share options - Diluted earnings per share were **RMB 22.6 cents** (2020: RMB 22.5 cents)[48](index=48&type=chunk) Weighted Average Number of Ordinary Shares (Diluted) | Item | 2021 (Thousand shares) | 2020 (Thousand shares) | | :------------------- | :------------ | :------------ | | Weighted average number of ordinary shares | 1,197,485 | 1,197,485 | | Effect of share options deemed to be issued | 1,845 | — | | **Weighted average number of ordinary shares (diluted)** | **1,199,330** | **1,197,485** | [8. Property, Plant and Equipment](index=28&type=section&id=8.%20Property%2C%20Plant%20and%20Equipment) As of June 30, 2021, the net book value of property, plant and equipment increased to **RMB 1,093,818 thousand** from **RMB 923,727 thousand** at year-end, primarily due to additions of **RMB 207,816 thousand** Property, Plant and Equipment Net Book Value Movement | Item | 2021 (RMB thousand) | 2020 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Net book value as at January 1 | 923,727 | 713,892 | | Additions | 207,816 | 40,087 | | Disposals (net book value) | (1,309) | (305) | | Depreciation charge for the period | (36,416) | (13,359) | | **Net book value as at June 30** | **1,093,818** | **740,315** | [9. Investment Properties](index=29&type=section&id=9.%20Investment%20Properties) As of June 30, 2021, the net book value of investment properties slightly decreased to **RMB 120,485 thousand** from **RMB 122,198 thousand** at year-end, primarily due to depreciation of **RMB 1,713 thousand** Investment Properties Net Book Value Movement | Item | 2021 (RMB thousand) | 2020 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Net book value as at January 1 | 122,198 | 142,403 | | Depreciation charge for the period | (1,713) | (1,909) | | **Net book value as at June 30** | **120,485** | **140,494** | - Investment properties are stated at cost less accumulated depreciation and impairment losses, with depreciation recognized in profit or loss on a straight-line basis over the shorter of the unexpired lease term and their estimated useful lives (not exceeding 40 years from the date of completion)[51](index=51&type=chunk) [10. Right-of-Use Assets](index=29&type=section&id=10.%20Right-of-Use%20Assets) As of June 30, 2021, the net book value of right-of-use assets increased to **RMB 286,466 thousand** from **RMB 279,407 thousand** at year-end, primarily due to additions of **RMB 77,877 thousand**, offset by disposals and depreciation Right-of-Use Assets Net Book Value Movement | Item | 2021 (RMB thousand) | 2020 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Net book value as at January 1 | 279,407 | 139,506 | | Additions | 77,877 | 53,462 | | Disposals | (12,764) | — | | Depreciation charge for the period | (58,054) | (3,741) | | **Net book value as at June 30** | **286,466** | **189,227** | - The group's right-of-use assets include land use rights and properties leased for own use, with initial lease terms typically ranging from one to five years[52](index=52&type=chunk) - As of June 30, 2021, rental deposits of **RMB 39,446 thousand** were paid for leases[52](index=52&type=chunk) [11. Inventories](index=29&type=section&id=11.%20Inventories) As of June 30, 2021, total inventories increased to **RMB 901,222 thousand** from **RMB 667,054 thousand** at December 31, 2020, primarily due to increased balances from main series stores converting to consignment, with **RMB 683,479 thousand** recognized as expense, including **RMB 5,174 thousand** in write-downs [a) Inventories in the Consolidated Statement of Financial Position](index=29&type=section&id=a)%20Inventories%20in%20the%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2021, inventories totaled **RMB 901,222 thousand**, comprising **RMB 119,512 thousand** in raw materials, **RMB 68,070 thousand** in work-in-progress, and **RMB 713,640 thousand** in finished goods Inventories in the Consolidated Statement of Financial Position | Item | As at June 30, 2021 (RMB thousand) | As at December 31, 2020 (RMB thousand) | | :----- | :------------------------- | :-------------------------- | | Raw materials | 119,512 | 97,927 | | Work-in-progress | 68,070 | 66,502 | | Finished goods | 713,640 | 502,625 | | **Total** | **901,222** | **667,054** | [b) Amount of Inventories Recognized as an Expense in Profit or Loss](index=30&type=section&id=b)%20Amount%20of%20Inventories%20Recognized%20as%20an%20Expense%20in%20Profit%20or%20Loss) For the six months ended June 30, 2021, inventories recognized as an expense in profit or loss totaled **RMB 683,479 thousand**, including the carrying amount of inventories sold of **RMB 678,305 thousand** and inventory write-downs of **RMB 5,174 thousand** Amount of Inventories Recognized as an Expense in Profit or Loss | Item | 2021 (RMB thousand) | 2020 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Carrying amount of inventories sold | 678,305 | 658,974 | | Write-down of inventories | 5,174 | 3,380 | | **Total** | **683,479** | **662,354** | [12. Trade and Other Receivables](index=30&type=section&id=12.%20Trade%20and%20Other%20Receivables) As of June 30, 2021, total trade and other receivables significantly decreased to **RMB 731,725 thousand** from **RMB 1,210,168 thousand**, with trade receivables (net of loss allowance) at **RMB 453,015 thousand**, primarily due to reduced turnover days from **40%** of main series stores converting to consignment Trade and Other Receivables | Item | As at June 30, 2021 (RMB thousand) | As at December 31, 2020 (RMB thousand) | | :------------------- | :------------------------- | :-------------------------- | | Trade receivables, net of loss allowance | 453,015 | 711,694 | | Other assets in respect of refund liabilities | — | 309,089 | | Prepayments to suppliers | 34,517 | 1,103 | | Prepaid advertising expenses | 39 | 5,658 | | Recoverable value-added tax | 139,742 | 130,752 | | Prepaid current tax | 8,429 | — | | Other deposits, prepayments and receivables | 95,983 | 51,872 | | **Total** | **731,725** | **1,210,168** | Ageing Analysis of Trade Receivables (Net of Loss Allowance) | Ageing | As at June 30, 2021 (RMB thousand) | As at December 31, 2020 (RMB thousand) | | :------------------- | :------------------------- | :-------------------------- | | Within 3 months | 252,335 | 554,283 | | Over 3 months but within 6 months | 142,770 | 135,979 | | Over 6 months but within 1 year | 57,910 | 21,432 | | **Total** | **453,015** | **711,694** | - The credit period granted by the group to its distributors is **180 to 240 days** (December 31, 2020: 90 to 240 days)[56](index=56&type=chunk) - There was no movement in the loss allowance account for trade receivables during the period, remaining at **RMB 16,597 thousand**[57](index=57&type=chunk) [13. Pledged Bank Deposits](index=31&type=section&id=13.%20Pledged%20Bank%20Deposits) Pledged bank deposits, serving as security for bills payable, will be released upon repayment; as of June 30, 2021, they significantly decreased to **RMB 30 thousand** from **RMB 1,710 thousand** at December 31, 2020 - Pledged bank deposits serve as security for bills payable and will be released upon repayment of the relevant bills[58](index=58&type=chunk) Pledged Bank Deposits | Item | As at June 30, 2021 (RMB thousand) | As at December 31, 2020 (RMB thousand) | | :--------------- | :------------------------- | :-------------------------- | | Pledged bank deposits | 30 | 1,710 | [14. Trade and Other Payables](index=32&type=section&id=14.%20Trade%20and%20Other%20Payables) As of June 30, 2021, total trade and other payables significantly decreased to **RMB 566,460 thousand** from **RMB 1,036,022 thousand**, with trade and bills payable at **RMB 289,095 thousand**, mostly due within three months Trade and Other Payables | Item | As at June 30, 2021 (RMB thousand) | As at December 31, 2020 (RMB thousand) | | :------------------- | :------------------------- | :-------------------------- | | Trade payables | 288,995 | 404,632 | | Bills payable | 100 | 5,700 | | Refund liabilities | — | 390,000 | | Accrued salaries and wages | 25,366 | 40,286 | | Payables for purchase of property, plant and equipment | 110,742 | 66,563 | | Payables for retirement benefit contributions | 25,524 | 25,524 | | Value-added tax payable | 4,993 | — | | Other payables and accrued charges | 110,740 | 103,317 | | **Total** | **566,460** | **1,036,022** | - All trade and other payables are expected to be settled or recognized as income within one year, or repayable on demand[60](index=60&type=chunk) Ageing Analysis of Trade and Bills Payable | Ageing | As at June 30, 2021 (RMB thousand) | As at December 31, 2020 (RMB thousand) | | :------------------- | :------------------------- | :-------------------------- | | Within 3 months | 271,138 | 341,568 | | Over 3 months but within 6 months | 11,205 | 62,668 | | Over 6 months but within 1 year | 4,471 | 3,472 | | Over 1 year | 2,281 | 2,624 | | **Total** | **289,095** | **410,332** | [15. Lease Liabilities](index=33&type=section&id=15.%20Lease%20Liabilities) As of June 30, 2021, the present value of lease liabilities was **RMB 119,815 thousand**, with **RMB 57,424 thousand** due within one year, representing a slight decrease from **RMB 123,929 thousand** at December 31, 2020 Lease Liabilities Remaining Contractual Maturity | Maturity | As at June 30, 2021 Present value of minimum lease payments (RMB thousand) | As at June 30, 2021 Total minimum lease payments (RMB thousand) | As at December 31, 2020 Present value of minimum lease payments (RMB thousand) | As at December 31, 2020 Total minimum lease payments (RMB thousand) | | :----------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Within 1 year | 57,424 | 59,192 | 62,003 | 66,546 | | After 1 year but within 2 years | 46,280 | 49,606 | 42,848 | 44,923 | | After 2 years but within 5 years | 16,111 | 18,313 | 19,078 | 19,351 | | **Total** | **119,815** | **127,111** | **123,929** | **130,820** | | Less: Total future interest expenses | | (7,296) | | (6,891) | | **Present value of lease liabilities** | | **119,815** | | **123,929** | [16. Dividends](index=34&type=section&id=16.%20Dividends) For the six months ended June 30, 2021, declared interim dividends were **HK 13 cents** per ordinary share and special interim dividends were **HK 5 cents** per ordinary share, with **RMB 267,936 thousand** in prior year final and special final dividends approved and paid Dividends Declared and Payable After Interim Period (For the six months ended June 30) | Dividend type | 2021 (RMB thousand) | 2020 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Interim dividend (HK 13 cents/12 cents) | 129,614 | 126,742 | | Special interim dividend (HK 5 cents) | 49,851 | 52,809 | - The interim dividend and special interim dividend were not recognized as liabilities as at June 30, 2021[63](index=63&type=chunk) Dividends Approved and Paid for Prior Financial Year During the Period (For the six months ended June 30) | Dividend type | 2021 (RMB thousand) | 2020 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Final dividend (HK 19 cents/21 cents) | 188,548 | 231,455 | | Special final dividend (HK 8 cents/10 cents) | 79,388 | 110,216 | | **Total** | **267,936** | **341,671** | [17. Equity-Settled Share-Based Transactions](index=34&type=section&id=17.%20Equity-Settled%20Share-Based%20Transactions) The company adopted a share option scheme on April 23, 2019, granting **11,500,000** share options to employees on July 3, 2020, with an exercise price of **HKD 4.31**, vesting between July 3, 2022, and July 3, 2024, all unexercised as of June 30, 2021 - The company adopted a share option scheme on April 23, 2019, to provide incentives and rewards to eligible participants for their contributions to the group[65](index=65&type=chunk) - On July 3, 2020, the group granted share options to its employees to subscribe for a total of **11,500,000** shares of the company, with an exercise price of **HKD 4.31** per share[65](index=65&type=chunk) - These share options will vest between July 3, 2022, and July 3, 2024[65](index=65&type=chunk) - As of June 30, 2021, the number of outstanding share options was **11,500,000**, with a weighted average remaining contractual life of **9 years**[65](index=65&type=chunk) [18. Commitments](index=35&type=section&id=18.%20Commitments) As of June 30, 2021, total capital commitments not provided for in the interim financial report amounted to **RMB 302,025 thousand**, comprising **RMB 210,203 thousand** contracted and **RMB 91,822 thousand** authorized but not contracted Capital Commitments | Item | As at June 30, 2021 (RMB thousand) | As at December 31, 2020 (RMB thousand) | | :----------- | :------------------------- | :-------------------------- | | Contracted | 210,203 | 258,336 | | Authorized but not contracted | 91,822 | 170,119 | | **Total** | **302,025** | **428,455** | [19. Material Related Party Transactions](index=35&type=section&id=19.%20Material%20Related%20Party%20Transactions) Total key management personnel compensation for the period was **RMB 3,933 thousand**, and a lease agreement with related party Jinlang (Fujian) Investment Co., Ltd. terminated on March 31, 2021, with **RMB 858 thousand** in rent paid [A) Key Management Personnel Remuneration](index=35&type=section&id=A)%20Key%20Management%20Personnel%20Remuneration) Total remuneration for the group's key management personnel for the period was **RMB 3,933 thousand**, including short-term employee benefits, contributions to defined contribution retirement plans, and share-based payments Key Management Personnel Remuneration (For the six months ended June 30) | Item | 2021 (RMB thousand) | 2020 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Short-term employee benefits | 3,723 | 3,919 | | Contributions to defined contribution retirement benefit plans | 56 | 52 | | Share-based payments | 154 | — | | **Total** | **3,933** | **3,971** | [B) Other Related Party Transactions](index=35&type=section&id=B)%20Other%20Related%20Party%20Transactions) The group's lease agreement with Jinlang (Fujian) Investment Co., Ltd., a related party, terminated on March 31, 2021, with **RMB 858 thousand** in rent paid or payable during the period - The group's lease agreement with Jinlang (Fujian) Investment Co., Ltd. (a related party) terminated on March 31, 2021[68](index=68&type=chunk) - During the period, the group paid or was payable to Jinlang Fujian a total of **RMB 858 thousand** for the lease agreement[68](index=68&type=chunk) [Other Information](index=36&type=section&id=Other%20Information) This section provides additional disclosures including directors' and major shareholders' interests, share option scheme details, corporate governance, and investor relations contact [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=36&type=section&id=Directors%27%20and%20Chief%20Executive%27s%20Interests%20and%20Short%20Positions%20in%20Shares%2C%20Underlying%20Shares%20and%20Debentures) As of June 30, 2021, several directors and chief executives held long positions in the company's shares and underlying shares, with Messrs. Wang Dongxing, Wang Liangxing, and Wang Congxing each beneficially owning **1.917%** of the company's shares Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures | Name of Shareholder | Name of Associated Corporation | Capacity/Nature of Interest | Number of Shares (L) | Number of Relevant Shares (L) | Approximate % of Shareholding | | :--------- | :----------- | :------------- | :----------- | :--------------- | :------------- | | Mr. Wang Dongxing | The Company | Beneficial owner | 22,950,000 | — | 1.917% | | Mr. Wang Liangxing | The Company | Beneficial owner | 22,950,000 | — | 1.917% | | Mr. Congxing Wang | The Company | Beneficial owner | 22,950,000 | — | 1.917% | | Mr. Cai Ronghua | The Company | Beneficial owner | 1,810,000 | — | 0.151% | | Mr. Cai Ronghua | The Company | Settlor of discretionary trust | 7,200,000 | — | 0.601% | | Mr. Hu Chengchu | The Company | Settlor of discretionary trust | 4,500,000 | — | 0.376% | | Mr. Pan Rongbin | The Company | Beneficial owner | 3,171,000 | — | 0.264% | | Mr. Pan Rongbin | The Company | Interest of spouse | — | 150,000 | 0.013% | - Interests in underlying shares refer to interests in share options granted under the company's share option scheme[73](index=73&type=chunk) [Substantial Shareholders' Interests and Short Positions](index=38&type=section&id=Substantial%20Shareholders%27%20Interests%20and%20Short%20Positions) As of June 30, 2021, Rising International Limited was the largest substantial shareholder with **55.24%** of shares, and Minglang Investment Limited held **6.26%**, with both indirectly owned by various directors and shareholders Substantial Shareholders' Interests and Short Positions | Name of Shareholder | Capacity/Nature of Interest | Number of Shares (L) | Approximate % of Shareholding | | :--------------- | :------------- | :----------------- | :------------- | | Rising International Limited | Beneficial owner | 661,500,000 shares | 55.24% | | Minglang Investment Limited | Beneficial owner | 74,905,000 shares | 6.26% | - Rising International is equally owned by Mr. Wang Dongxing, Mr. Wang Liangxing, and Mr. Wang Congxing, each holding **26.289%** equity[75](index=75&type=chunk) - Minglang Investment is equally owned by Mr. Wang Dongxing, Mr. Wang Liangxing, and Mr. Wang Congxing, each holding **26.289%** equity[75](index=75&type=chunk) [Share Option Scheme](index=39&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme on April 23, 2019, granting **11,500,000** options to employees and associates on July 3, 2020, at an exercise price of **HKD 4.31**, all unexercised as of June 30, 2021, with phased vesting - The company adopted a share option scheme pursuant to an ordinary resolution passed by shareholders on April 23, 2019[77](index=77&type=chunk) Details of Movements in Share Options During the Period | Name or Category of Participant | As at January 1, 2021 | Exercised | Cancelled | Lapsed | As at June 30, 2021 | Exercise Price | Grant Date | Exercise Period | | :--------------- | :------------- | :----- | :----- | :----- | :-------------- | :-------- | :----------------- | :-------- | | Mr. Chan Wai Chun | 433,000 | — | — | — | 433,000 | HKD 4.31 | July 3, 2020 | Note 2(a) | | Mr. Wang Junhong | 350,000 | — | — | — | 350,000 | HKD 4.31 | July 3, 2020 | Note 2(b) | | Mr. Wang Zhiyong | 350,000 | — | — | — | 350,000 | HKD 4.31 | July 3, 2020 | Note 2(b) | | Ms. Chen Zhimei | 150,000 | — | — | — | 150,000 | HKD 4.31 | July 3, 2020 | Note 2(b) | | Employees | 10,217,000 | — | — | — | 10,217,000 | HKD 4.31 | July 3, 2020 | Note 2(c) | | **Total** | **11,500,000** | **—** | **—** | **—** | **11,500,000** | | | | - The share options are exercisable from the date two years after the grant date up to ten years after the grant date, with phased exercise proportions[80](index=80&type=chunk) [Corporate Governance](index=40&type=section&id=Corporate%20Governance) For the six months ended June 30, 2021, the company fully complied with all code provisions of the Corporate Governance Code and Report in Appendix 14 of the Listing Rules, with all directors confirming adherence to the standard code - The company has complied with all code provisions of the Corporate Governance Code and Report set out in Appendix 14 to the Listing Rules[81](index=81&type=chunk) - All directors confirm their compliance with the required standards set out in the standard code for the six months ended June 30, 2021[81](index=81&type=chunk) [Review of Interim Results](index=40&type=section&id=Review%20of%20Interim%20Results) The Audit Committee, comprising three independent non-executive directors, reviewed and oversaw the financial reporting process and internal control systems, and the group's interim results for the six months ended June 30, 2021, were reviewed by KPMG and the Audit Committee - The Audit Committee, comprising three independent non-executive directors, is primarily responsible for reviewing and overseeing the group's financial reporting process and internal control systems[82](index=82&type=chunk) - The group's interim results for the six months ended June 30, 2021, are unaudited but have been reviewed by the company's auditor, KPMG, and the Audit Committee[82](index=82&type=chunk) [Purchase, Sale or Redemption of the Company's Listed Securities](index=40&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20the%20Company%27s%20Listed%20Securities) For the six months ended June 30, 2021, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - For the six months ended June 30, 2021, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[83](index=83&type=chunk) [Closure of Register of Members](index=41&type=section&id=Closure%20of%20Register%20of%20Members) To determine eligibility for interim and special interim dividends, the company will suspend its register of members from September 9 to September 10, 2021, requiring shareholders to register by 4:30 p.m. on September 8, 2021 - The company's register of members will be closed from Thursday, September 9, 2021, to Friday, September 10, 2021, during which no transfer of shares will be registered[84](index=84&type=chunk) - To qualify for the proposed interim dividend and special interim dividend, shareholders must register their transfers by 4:30 p.m. on Wednesday, September 8, 2021[84](index=84&type=chunk) [Acknowledgements](index=41&type=section&id=Acknowledgements) Chairman Mr. Wang Dongxing expressed gratitude to the directors, management, staff, shareholders, customers, suppliers, and business partners for their contributions and support during the period - Chairman Mr. Wang Dongxing expressed gratitude to the directors, management, and staff for their contributions and efforts[85](index=85&type=chunk) - The Chairman extended sincere thanks to the group's shareholders, customers, suppliers, and business partners[85](index=85&type=chunk) [Board of Directors](index=42&type=section&id=Board%20of%20Directors) The Board of Directors comprises executive directors Mr. Wang Dongxing (Chairman), Mr. Wang Liangxing (CEO), Mr. Wang Congxing, Mr. Cai Ronghua, Mr. Hu Chengchu, Mr. Pan Rongbin, and independent non-executive directors Dr. Lu Hongde, Mr. Nie Xing, and Mr. Lai Shixian - Executive Directors include Mr. Wang Dongxing (Chairman), Mr. Wang Liangxing (Chief Executive Officer), Mr. Wang Congxing, Mr. Cai Ronghua, Mr. Hu Chengchu, and Mr. Pan Rongbin[86](index=86&type=chunk) - Independent Non-executive Directors include Dr. Lu Hongde, Mr. Nie Xing, and Mr. Lai Shixian[86](index=86&type=chunk) [Share Information](index=42&type=section&id=Share%20Information) The company was listed on September 25, 2009, with a board lot size of **1,000 shares**, and **1,197,484,919** shares issued as of June 30, 2021 - Listing Date: September 25, 2009[86](index=86&type=chunk) - Board Lot Size: **1,000 shares**[86](index=86&type=chunk) - Number of Issued Shares: **1,197,484,919 shares** (as at June 30, 2021)[86](index=86&type=chunk) [Investor Relations Contact](index=42&type=section&id=Investor%20Relations%20Contact) Provides contact details for China Lilang Limited in Hong Kong, including address, phone, fax, email, and website, for investor inquiries - Contact Address: Unit 3402, 34/F, Lippo Centre, Tower 1, 89 Queensway, Admiralty, Hong Kong[87](index=87&type=chunk) - Email: ir@lilanz.com.hk, Website: www.lilanz.com[87](index=87&type=chunk)