Revenue and Profitability - For the six months ended June 30, 2022, total revenue increased by 58.3% to approximately RMB161.3 million compared to RMB101.9 million for the same period in 2021[8]. - Revenue from the CMS business rose by approximately 28.2% from RMB92.7 million to RMB118.8 million, accounting for 73.6% of total revenue[12]. - Revenue from the OBM business surged by approximately 360.0% from RMB9.2 million to RMB42.5 million[13]. - Sales to the U.S. market increased by approximately 82%, contributing about 88% of total revenue for the six months ended June 30, 2022[14]. - The Group's revenue from wigs was RMB 11.6 million, representing 7.2% of total revenue, while clothing and others accounted for RMB 149.7 million, or 92.8%[75]. - For the six months ended June 30, 2022, the company reported revenue of RMB 161,315,000, an increase from RMB 101,928,000 in the same period of 2021, representing a growth of approximately 58.4%[88]. - The gross profit for the same period was RMB 36,675,000, compared to RMB 27,533,000 in 2021, indicating a gross profit margin improvement[88]. - The increase in revenue and gross profit during the period was the primary reason for the reduction in loss attributable to equity holders[76]. - Revenue from contract manufacturing services for the six months ended June 30, 2022, was RMB 118,768,000, compared to RMB 92,680,000 in the same period of 2021, marking an increase of approximately 28.2%[139]. - The original brand manufacturing business generated revenue of RMB 42,547,000 for the six months ended June 30, 2022, compared to RMB 9,248,000 in the same period of 2021, indicating a substantial increase[139]. Financial Position - Total assets grew by 13.6% to RMB553.6 million from RMB487.2 million[8]. - Total liabilities increased by 47.9% to RMB181.3 million from RMB122.6 million[8]. - The gearing ratio increased to 34.9%, up from 27.8%, indicating a rise in financial leverage[8]. - As of June 30, 2022, total cash and cash equivalents were approximately RMB 90.0 million, a decrease of approximately RMB 9.7 million from December 31, 2021[42][47]. - Current assets as of June 30, 2022, totaled RMB 258,080,000, an increase from RMB 170,077,000 at the end of 2021[90]. - The net current assets increased to RMB 83,117,000 as of June 30, 2022, compared to RMB 53,626,000 at the end of 2021[90]. - As of June 30, 2022, total equity increased to RMB 372,315,000 from RMB 364,540,000 as of December 31, 2021, representing a growth of approximately 2.1%[92]. - Net assets rose to RMB 372,315,000, up from RMB 364,540,000, indicating a growth of about 2.1%[92]. - The company's reserves increased to RMB 359,909,000 as of June 30, 2022, compared to RMB 352,328,000 at the end of 2021, reflecting a growth of approximately 2.3%[96]. Expenses and Losses - Gross profit margin decreased to 22.7% from 27.0%, reflecting a decline of 4.3 percentage points[8]. - Administrative and other operating expenses increased by approximately RMB 12.1 million, from approximately RMB 33.4 million to approximately RMB 45.4 million[24][29]. - The loss attributable to equity holders for the six months ended June 30, 2022, was approximately RMB 0.5 million, a significant decrease from a loss of RMB 5.2 million for the same period in 2021[75]. - The company incurred a loss of RMB 327,000 for the period, a significant reduction from a loss of RMB 5,154,000 in the previous year, reflecting an improvement in financial performance[88]. - The total comprehensive income attributable to owners of the company for the period was RMB 2,176,000, compared to a loss of RMB 3,044,000 in 2021[88]. - The company reported a basic loss per share of RMB 0.000484 for the six months ended June 30, 2022, compared to a loss of RMB 0.00567 for the same period in 2021, showing an improvement in loss per share[153]. Acquisitions and Investments - The Group entered into a sales and purchase agreement to acquire High Kelee Investment Holdings Limited for a total consideration of HK$42.8 million, with HK$8.8 million paid in cash and the remainder settled through the issuance of 170 million shares[52]. - Following the acquisition, High Kelee became a wholly-owned subsidiary, and the financial results will be consolidated into the Group's financial statements[54]. - The company completed the acquisition of High Kelee in July 2022, which is expected to enhance its business in fabric care, personal hygiene, and home care products[82]. - The company is actively seeking opportunities to diversify its business and broaden revenue streams through acquisitions and collaborations[83]. Cash Flow and Financing - For the six months ended June 30, 2022, cash flows from operating activities resulted in a net cash outflow of RMB 39,250,000, compared to a net inflow of RMB 130,000 in the same period of 2021[102]. - The company generated RMB 107,602,000 from borrowings during the financing activities for the six months ended June 30, 2022[102]. - The total current tax expense for the six months ended June 30, 2022, was RMB 906,000, compared to RMB 794,000 in 2021, reflecting an increase of approximately 14.1%[150]. - The company’s total income tax expenses for the six months ended June 30, 2022, were RMB 807,000, a decrease from RMB 1,247,000 in 2021, indicating a reduction of approximately 35.4%[150]. Operational Efficiency and Strategy - The company aims to improve operational efficiency and increase revenue as top priorities for 2022[82]. - The company aims to better utilize its assets by sub-leasing parts of its production plants to local enterprises[15]. - The board believes that ongoing litigation has no material impact on the company's business and finances[81]. Accounting and Reporting - The interim financial information for the six months ended June 30, 2022, is presented in thousands of Renminbi (RMB'000) and is unaudited[109][111]. - The Group's revenue and results are analyzed by operating and reportable segments, with strategic decisions made based on adjusted segment operating results[122][124]. - The Group adopted new and amended Hong Kong Financial Reporting Standards effective from January 1, 2022, but these had no material impact on the financial results[114][117]. - Management made significant accounting judgments and estimates that may affect the reported amounts of assets and liabilities, income, and expenses[120][123]. - The financial report does not include all information required in annual consolidated financial statements and should be read in conjunction with the annual report for the year ended December 31, 2021[108][110]. Assets and Liabilities - The total reportable segment assets as of June 30, 2022, amounted to RMB 553,608,000, compared to RMB 487,152,000 as of December 31, 2021, indicating an increase of approximately 13.6%[132]. - The reportable segment liabilities as of June 30, 2022, were RMB 181,293,000, up from RMB 122,612,000 as of December 31, 2021, reflecting an increase of approximately 47.5%[133]. - The fair value of the Group's investment properties as of June 30, 2022, was RMB101,177,000, down from RMB102,184,000 as of December 31, 2021[168]. - The carrying value of investment properties pledged as collateral for bank loans was RMB30,316,000 as of June 30, 2022, compared to RMB31,164,000 as of December 31, 2021[174]. - The net book amount of property, plant, and equipment as of June 30, 2022, was RMB164,661,000, compared to RMB184,261,000 as of December 31, 2021[193]. - The accumulated depreciation for property, plant, and equipment as of June 30, 2022, was RMB235,817,000, reflecting a charge of RMB16,062,000 for the period[190]. Market and Risk Factors - The Group's exposure to currency risk arises from sales to overseas customers primarily denominated in USD, with no current foreign currency hedging policy in place[62]. - The Group's investment properties experienced a decrease in fair value, indicating potential market challenges affecting rental income streams[171]. - The cash flow projections used for impairment testing were based on a five-year approved business plan[199]. - The estimated cost of capital was a key factor in determining the discount rates used in the cash flow projections[197].

Financial Performance - The turnover for the year ended December 31, 2021, amounted to approximately RMB 242.2 million, representing a decrease of 5.1% compared to 2020[14]. - The gross profit margin and net loss margin were approximately 27.2% and 7.2% respectively[14]. - The Group recorded a loss for the year attributable to owners of the Company of approximately RMB 17.7 million, a decrease of 74.1% from a loss of approximately RMB 68.4 million in 2020[14]. - Revenue decreased from RMB 255.3 million in 2020 to RMB 242.2 million in 2021, representing a decrease of 5.1%[39]. - Gross profit increased to RMB 65.986 million in 2021, up 2.6% from RMB 64.284 million in 2020[28]. - Gross profit margin improved to 27.2% in 2021, up from 25.2% in 2020, an increase of 2.0 percentage points[28]. - Cash generated from operations was RMB 25.238 million, a significant improvement of 312% compared to a cash usage of RMB 11.894 million in the previous year[28]. - Bank balances and cash increased by 103.8% to RMB 99.661 million from RMB 48.908 million in 2020[28]. - Revenue from the CMS business increased from approximately RMB 167.4 million in 2020 to approximately RMB 200.5 million in 2021, representing an increase of approximately 19.7% and accounting for about 82.8% of total revenue[87]. - Revenue from the OBM business decreased from approximately RMB 87.8 million in 2020 to approximately RMB 41.8 million in 2021, representing a decrease of approximately 52.5%[88]. Business Strategy and Development - The Group plans to diversify its business and broaden revenue streams by acquiring intellectual property rights with potential growth[21]. - The Group aims to collaborate with companies in upstream and downstream industries to create synergies and enhance business operations[21]. - The Group established an associate company focused on cultural tourism development, which is expected to create synergies with its cultural products[13]. - The Group plans to strengthen research and development capabilities and broaden its customer base by expanding its OBM business in the PRC market[66]. - The Group aims to seek cooperation with other intellectual property right owners and collaborate with companies in upstream and downstream industries to enhance production efficiency[66]. - The company established a "Party Culture Industrial Park" to enhance production efficiency and foster collaboration within the industry[40]. Market and Economic Conditions - The COVID-19 pandemic has adversely affected the Group's development plans, and 2022 is expected to remain challenging due to economic uncertainties[20]. - Over 90% of revenue was generated from sales to overseas customers across more than 10 countries, indicating significant reliance on international markets[50]. - The popularity of animation characters significantly influences market demand and revenue from related products, which may fluctuate based on market trends[57]. - Foreign currency exchange rate fluctuations may adversely affect profit margins, as most revenue is denominated in USD[56]. - The U.S. market contributed 67% of total revenue for the year ended 31 December 2021, up from 34.2% in 2020[93]. - Revenue from the PRC market contributed 12.5% of total revenue for the year ended 31 December 2021, compared to 5.4% in 2020[92]. Operational Efficiency - The Group's operational efficiency and effectiveness will be a focus for improvement in the upcoming year[21]. - 65% of the gross floor areas of the Yiwu and Yichun production plants were sub-leased as of December 31, 2021, up from 35% in 2020[42]. - Gross income from leasing factory premises was approximately RMB 4.932 million in 2021, down from RMB 5.424 million in 2020[45]. - The company maintained long-term business relationships with customers from over 20 countries, with the top five customers averaging over seven years of partnership[84]. - The company has over 70 suppliers and does not enter into long-term procurement agreements, mitigating risks from supplier loss[79]. Financial Position and Capital Management - The Group maintained a healthy financial position with net current assets of RMB 53.6 million and a net cash position at the financial year end[14]. - The Group's borrowings amounted to approximately RMB 89.3 million as of December 31, 2021, with a current ratio of 146.1% and a gearing ratio of 27.8%[119]. - The total amount of bank balances and cash as of December 31, 2021, was approximately RMB 99.7 million, an increase of approximately RMB 50.8 million compared to December 31, 2020[118]. - The net proceeds from the placing were approximately HK$31.0 million, intended for repayment of current debts and general working capital[145]. - As of December 31, 2021, approximately HK$15.7 million of the net proceeds were used to repay part of the principal and interests of the borrowings[146]. Governance and Compliance - The Company has fully complied with the Corporate Governance Code for the year ended 31 December 2021[166]. - The Group's internal control system includes three Independent Non-executive Directors, representing nearly half of the Board, ensuring adequate balance of power[167]. - The Board consists of five directors, including two executive directors and three independent non-executive directors[179]. - The Chairman and CEO roles are separated, with Ms. Chen Sheng as Chairman and Mr. Xu Chengwu as CEO[180]. - The Board has complied with listing rules by maintaining at least three independent non-executive directors, representing one-third of the Board[181]. - The Company provides sufficient resources for Board Committees to discharge their duties and seek independent professional advice when necessary[198].

[Corporate Information](index=2&type=section&id=Corporate%20Information) This section provides essential corporate details, including board composition, contact information, and registration specifics [Board of Directors and Committees](index=3&type=section&id=Board%20of%20Directors%20and%20Committees) This section lists the company's board members and their roles in the audit, remuneration, and nomination committees, clarifying the composition of executive and independent non-executive directors - The Board of Directors comprises **three executive directors** (including Chairperson Ms. Chen Sheng and CEO Mr. Xu Chengwu) and **three independent non-executive directors**[4](index=4&type=chunk) - The Audit Committee is chaired by Mr. Zheng Jinmin, the Remuneration Committee by Mr. Chen Wenhua, and the Nomination Committee by Ms. Peng Xu[4](index=4&type=chunk) [Company Contact and Registration Information](index=3&type=section&id=Company%20Contact%20and%20Registration%20Information) This section provides detailed information on the company's registered office, China headquarters, principal place of business, Hong Kong business location, share registrar, legal counsel, auditor, stock code, company website, and investor relations contact - The company's registered office is in the Cayman Islands, with its China headquarters located in Yichun Economic and Technological Development Zone, Jiangxi Province[4](index=4&type=chunk) - The Hong Kong share registrar and transfer office is Tricor Investor Services Limited, and the auditor is Grant Thornton Hong Kong Limited[7](index=7&type=chunk) - The company's stock code is **1532**, and its website is **www.partytime.com.cn**[7](index=7&type=chunk) [Financial Highlights](index=4&type=section&id=Financial%20Highlights) This section presents a concise overview of the company's key financial performance and position indicators for the reporting period [Profit and Loss Summary](index=5&type=section&id=Profit%20and%20Loss%20Summary) For the six months ended June 30, 2021, the company's revenue decreased by 13.2% year-on-year, gross profit declined by 12.0%, but loss attributable to equity holders significantly narrowed by 88.1% Key Profit and Loss Indicators (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 101,928 | 117,378 | (13.2%) | | Gross Profit | 27,533 | 31,296 | (12.0%) | | Loss attributable to equity holders | (5,154) | (43,319) | (88.1%) | | Gross Profit Margin | 27.0% | 26.7% | 0.3% | | Net Loss Margin | (5.1%) | (36.9%) | 31.8% | | Basic Loss Per Share (RMB cents) | (0.57) | (4.83) | (88.2%) | [Financial Position Summary](index=5&type=section&id=Financial%20Position%20Summary) As of June 30, 2021, the company's total assets and liabilities both increased, total equity grew by 6.5%, and bank balances and cash significantly rose by 52.3% Key Financial Position Indicators (As at period end) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 493,600 | 460,112 | 7.3% | | Total Liabilities | 119,305 | 108,584 | 9.9% | | Equity attributable to equity holders | 374,295 | 351,528 | 6.5% | | Bank Balances and Cash | 74,474 | 48,908 | 52.3% | [Key Financial Ratios](index=5&type=section&id=Key%20Financial%20Ratios) As of June 30, 2021, the company's current ratio and gearing ratio both improved, indicating enhanced liquidity Key Financial Ratios (As at period end) | Indicator | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Current Ratio | 163.2% | 131.7% | | Gearing Ratio | 24.0% | 25.4% | [Directors' Business Review and Management Discussion and Analysis](index=5&type=section&id=Directors'%20Business%20Review%20and%20Management%20Discussion%20and%20Analysis) This section provides an in-depth review of the company's business operations, investment activities, future prospects, and detailed financial performance analysis [Business Review](index=6&type=section&id=Business%20Review) The Group primarily engages in the design, development, production, sales, and marketing of cosplay products (including costumes and wigs) and non-cosplay apparel (mainly lingerie), exporting to over 20 countries and regions globally, with business categorized into Contract Manufacturing Services (CMS) and Original Brand Manufacturing (OBM) - The Group primarily engages in the design, development, production, sales, and marketing of cosplay products (costumes and wigs) and non-cosplay apparel (lingerie)[11](index=11&type=chunk)[13](index=13&type=chunk) - Products are mainly exported to **over 20 countries and regions globally**, including the United States, Germany, the United Kingdom, Japan, and Australia[11](index=11&type=chunk)[13](index=13&type=chunk) - Business is categorized into **Contract Manufacturing Services (CMS)** and **Original Brand Manufacturing (OBM)**[12](index=12&type=chunk)[14](index=14&type=chunk) [Main Business and Products](index=6&type=section&id=Main%20Business%20and%20Products) The company's core business involves global export of cosplay products and lingerie, offering both contract manufacturing and original brand manufacturing services based on customer needs - Key products include **cosplay costumes, cosplay wigs, and lingerie**[11](index=11&type=chunk)[13](index=13&type=chunk) - Business models are divided into **Contract Manufacturing Services (CMS)** and **Original Brand Manufacturing (OBM)**[12](index=12&type=chunk)[14](index=14&type=chunk) [Revenue by Business Category](index=6&type=section&id=Revenue%20by%20Business%20Category) For the six months ended June 30, 2021, CMS business revenue increased by 14.3% year-on-year to **RMB 92.68 million**, accounting for 90.9% of total revenue, while OBM business revenue significantly decreased by 74.5% to **RMB 9.248 million** Revenue by Business Category (For the six months ended June 30) | Business Category | 2021 (RMB thousands) | Percentage of Total | 2020 (RMB thousands) | Percentage of Total | Revenue Increase (Decrease) (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | CMS Business | 92,680 | 90.9% | 81,104 | 69.1% | 14.3% | | OBM Business | 9,248 | 9.1% | 36,274 | 30.9% | (74.5%) | | **Total** | **101,928** | **100.0%** | **117,378** | **100.0%** | **(13.2%)** | [Revenue by Product Category](index=6&type=section&id=Revenue%20by%20Product%20Category) For the six months ended June 30, 2021, wig product revenue significantly decreased by 68.9% year-on-year, while apparel and other product revenue increased by 11.5% Revenue by Product Category (For the six months ended June 30) | Product Category | 2021 (RMB thousands) | Percentage of Total | 2020 (RMB thousands) | Percentage of Total | Revenue Increase (Decrease) (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Wigs | 11,189 | 11.0% | 35,990 | 30.7% | (68.9%) | | Apparel and Others | 90,739 | 89.0% | 81,388 | 69.3% | 11.5% | | **Total** | **101,928** | **100.0%** | **117,378** | **100.0%** | **(13.2%)** | [Investment Review](index=7&type=section&id=Investment%20Review) In 2018, the company subscribed to CSG convertible bonds for the Nickelodeon theme park project, but due to project delays, unassigned rights, and CSG's default, the company recorded a fair value loss in 2019 and sold the bonds for **HKD 10 million** in March 2021, recognizing a disposal gain of approximately **RMB 2.8 million** to mitigate losses and exit the investment - In March 2018, the company's subsidiary subscribed to **HKD 70 million** CSG convertible bonds issued by Charm Success Global Investment Limited (CSG) for the Nickelodeon theme park project[20](index=20&type=chunk)[22](index=22&type=chunk) - Due to project funding delays, unassigned rights, and CSG's failure to pay interest, the company recorded a fair value loss of approximately **RMB 60.5 million** in 2019[25](index=25&type=chunk)[29](index=29&type=chunk) - On March 15, 2021, the company sold the CSG convertible bonds for **HKD 10 million** (approximately **RMB 8.34 million**), recognizing a disposal gain of approximately **RMB 2.8 million**, aiming to reduce losses and exit the investment[31](index=31&type=chunk)[34](index=34&type=chunk) [CSG Convertible Bond Investment](index=7&type=section&id=CSG%20Convertible%20Bond%20Investment) The CSG convertible bond investment resulted in significant losses due to project delays and issuer default, leading the company to sell the bonds at a lower price to cut losses and obtain immediate funds, while reserving the right to take legal action against the defaulting party - Charm Success Global Investment Limited, the issuer of the CSG convertible bonds, defaulted due to project funding delays, unassigned theme park rights, and unpaid interest[25](index=25&type=chunk)[29](index=29&type=chunk) - The company recorded a fair value loss of approximately **RMB 60.5 million** in 2019 and a fair value gain of approximately **RMB 3.9 million** in 2020[25](index=25&type=chunk)[26](index=26&type=chunk)[29](index=29&type=chunk) - In March 2021, the company sold the CSG convertible bonds for **HKD 10 million**, recognizing a disposal gain of approximately **RMB 2.8 million** to reduce losses and generate immediate available funds[31](index=31&type=chunk)[34](index=34&type=chunk) - The Board does not rule out the possibility of initiating legal proceedings against the CSG issuer and related parties to recover losses incurred due to the default[32](index=32&type=chunk)[35](index=35&type=chunk) [Business Prospects](index=9&type=section&id=Business%20Prospects) Influenced by the COVID-19 pandemic, the business outlook for 2021 remains challenging, with the company focusing on improving operational efficiency, diversifying business, and expanding revenue streams through acquiring growth-potential intellectual property and collaborating with upstream and downstream companies to deliver higher shareholder returns - The COVID-19 pandemic has adversely affected the global economy and consumer confidence, making the **business outlook for 2021 challenging**[33](index=33&type=chunk)[36](index=36&type=chunk) - The Group will continue to **enhance operational efficiency and effectiveness**[39](index=39&type=chunk)[40](index=40&type=chunk) - The Board will seek opportunities to **diversify business and broaden revenue streams** through acquiring intellectual property with growth potential and collaborating with upstream and downstream industry companies[39](index=39&type=chunk)[40](index=40&type=chunk) [Financial Review](index=10&type=section&id=Financial%20Review) This section provides a detailed review of the company's financial performance during the reporting period, including changes in revenue, gross profit margin, various costs and expenses, as well as financial resources, liquidity, capital expenditure, and pledged assets [Revenue and Gross Profit Margin](index=10&type=section&id=Revenue%20and%20Gross%20Profit%20Margin) For the six months ended June 30, 2021, total revenue decreased by 13.2%, primarily due to weak OBM business sales performance; CMS business revenue grew by 14.3%, with non-surgical mask production contributing approximately **RMB 44.3 million**; gross profit margin slightly increased to **27.0%**, mainly benefiting from higher profit margins on non-surgical mask sales - Total revenue decreased by **13.2%**, mainly due to the severe impact of the COVID-19 pandemic on OBM business sales performance[15](index=15&type=chunk)[46](index=46&type=chunk)[49](index=49&type=chunk) - CMS business revenue increased by **14.3%** to approximately **RMB 92.7 million**, accounting for **90.9%** of total revenue[44](index=44&type=chunk)[49](index=49&type=chunk) - The Group diverted some production lines to non-surgical mask production, contributing approximately **RMB 44.3 million** in revenue, recognized under cosplay costumes within CMS business[47](index=47&type=chunk)[50](index=50&type=chunk) - Gross profit margin slightly increased from **26.7% to 27.0%**, primarily due to the higher profit margin contribution from non-surgical mask sales[48](index=48&type=chunk)[51](index=51&type=chunk) [Costs and Expenses](index=12&type=section&id=Costs%20and%20Expenses) Other income increased by approximately **RMB 3.5 million** to **RMB 8.0 million** year-on-year, mainly from rental income, utility fee income, and gain on disposal of financial assets; selling expenses as a percentage of revenue decreased; administrative and other operating expenses decreased by approximately **RMB 1.6 million**, primarily due to reduced R&D costs; impairment loss on property, plant, and equipment was approximately **RMB 4.5 million**; finance costs decreased by approximately **RMB 0.8 million**; and income tax expense increased by approximately **RMB 0.5 million** - Other income increased by approximately **RMB 3.5 million** to approximately **RMB 8.0 million**, mainly due to increased rental income and utility fee income from the Party Culture Industrial Base, and a gain of approximately **RMB 2.8 million** from the disposal of financial assets at fair value through profit or loss[55](index=55&type=chunk)[60](index=60&type=chunk) - Selling expenses as a percentage of revenue decreased from **2.3% to 1.7%**[56](index=56&type=chunk)[61](index=61&type=chunk) - Administrative and other operating expenses decreased by approximately **RMB 1.6 million** to approximately **RMB 33.4 million**, primarily due to a reduction in R&D costs of approximately **RMB 1.0 million**[57](index=57&type=chunk)[62](index=62&type=chunk) - Impairment loss on property, plant, and equipment of approximately **RMB 4.5 million** was recognized during the period due to continuous decline in turnover[58](index=58&type=chunk)[62](index=62&type=chunk) - Finance costs decreased by approximately **RMB 0.8 million** to approximately **RMB 2.7 million**, mainly due to reduced interest payments on other short-term borrowings[64](index=64&type=chunk)[68](index=68&type=chunk) - Income tax expense increased by approximately **RMB 0.5 million** to approximately **RMB 1.2 million**, primarily due to an increase in deferred tax recognized during the period[65](index=65&type=chunk)[69](index=69&type=chunk) [Financial Resources and Liquidity](index=13&type=section&id=Financial%20Resources%20and%20Liquidity) As of June 30, 2021, the Group's total cash and cash equivalents increased by approximately **RMB 25.6 million** to **RMB 74.5 million**, primarily benefiting from the net proceeds from share placement, with current ratio and gearing ratio at **163.2%** and **24.0%** respectively - As of June 30, 2021, total cash and cash equivalents were approximately **RMB 74.5 million**, an increase of approximately **RMB 25.6 million** compared to December 31, 2020[66](index=66&type=chunk)[70](index=70&type=chunk) - The increase was mainly due to the completion of a placement of **179,544,600 shares** in June 2021, with net proceeds of approximately **HKD 31.0 million**[66](index=66&type=chunk)[70](index=70&type=chunk) - As of June 30, 2021, the current ratio was **163.2%**, and the gearing ratio was **24.0%**[67](index=67&type=chunk)[71](index=71&type=chunk) [Capital Expenditure and Pledged Assets](index=14&type=section&id=Capital%20Expenditure%20and%20Pledged%20Assets) During the reporting period, the Group invested approximately **RMB 8.1 million** in property, plant, and equipment, with bank loans secured by right-of-use assets, buildings, and investment properties - For the six months ended June 30, 2021, the Group invested approximately **RMB 8.1 million** in property, plant, and equipment[75](index=75&type=chunk)[80](index=80&type=chunk) - Bank loans are secured by right-of-use assets with a carrying amount of approximately **RMB 6.8 million**, buildings of approximately **RMB 83.0 million**, and investment properties of approximately **RMB 27.2 million**[76](index=76&type=chunk)[81](index=81&type=chunk) [Events After Reporting Date](index=14&type=section&id=Events%20After%20Reporting%20Date) Subsequent to the reporting period, the company acquired a patent in July 2021 and received a writ of summons for legal proceedings concerning a proposed sale of the company's controlling stake, which the Board considers groundless - On July 9, 2021, the company acquired a **75% equity interest** in Hmda Culture International Co., Limited for a cash consideration of **HKD 11 million** to obtain a patent, with the transaction completed on July 30[78](index=78&type=chunk)[83](index=83&type=chunk) - On July 30, 2021, the company and certain former directors and shareholders received a writ of summons for legal proceedings concerning a proposed sale of the company's controlling stake[85](index=85&type=chunk)[88](index=88&type=chunk) - The Board considers the allegations against the company in the writ of summons to be **groundless and baseless**[85](index=85&type=chunk)[88](index=88&type=chunk) [Other Management Discussion](index=15&type=section&id=Other%20Management%20Discussion) This section discusses the company's foreign currency risk management, employee and remuneration policies, and the use of proceeds from share placement, highlighting the company's operational and financial management strategies [Foreign Currency Exposure](index=15&type=section&id=Foreign%20Currency%20Exposure) The company faces currency risk from its predominantly USD-denominated overseas sales, currently lacking a Group foreign currency hedging policy, but management will monitor and consider hedging significant foreign currency exposures - The company's currency risk primarily arises from **USD-denominated overseas sales**[86](index=86&type=chunk)[89](index=89&type=chunk) - There is currently **no Group foreign currency hedging policy**, but management will monitor foreign exchange risk and consider hedging when necessary[86](index=86&type=chunk)[89](index=89&type=chunk) [Employees and Remuneration Policy](index=15&type=section&id=Employees%20and%20Remuneration%20Policy) As of June 30, 2021, the company had approximately **924 employees**, with total staff costs of approximately **RMB 32.6 million** during the period; remuneration policy is regularly reviewed based on market practice, employee performance, and company financial performance, with no significant changes - As of June 30, 2021, the company had approximately **924 employees**[87](index=87&type=chunk)[90](index=90&type=chunk) - Total staff costs for the period were approximately **RMB 32.6 million**[87](index=87&type=chunk)[90](index=90&type=chunk) - Remuneration policy is regularly reviewed based on market practice, employee performance, and company financial performance, with **no significant changes**[87](index=87&type=chunk)[90](index=90&type=chunk) [Use of Proceeds](index=16&type=section&id=Use%20of%20Proceeds) The net proceeds from the June 2021 share placement were approximately **HKD 31.0 million**, with approximately **HKD 15.7 million** allocated to repay existing debt principal and interest, and approximately **HKD 15.3 million** for general working capital and intellectual property acquisition; as of June 30, 2021, approximately **HKD 4.3 million** had been used for general working capital - Net proceeds from the June 2021 share placement were approximately **HKD 31.0 million**[93](index=93&type=chunk)[95](index=95&type=chunk) - The net proceeds are intended for repaying approximately **HKD 15.7 million** of existing debt principal and interest, and approximately **HKD 15.3 million** for general working capital and intellectual property acquisition[93](index=93&type=chunk)[95](index=95&type=chunk) - As of June 30, 2021, approximately **HKD 4.3 million** had been used for general working capital[94](index=94&type=chunk)[96](index=96&type=chunk) [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=16&type=section&id=Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This section presents the condensed consolidated statement of profit or loss and other comprehensive income, detailing the company's financial performance for the reporting period [Profit or Loss Statement](index=17&type=section&id=Profit%20or%20Loss%20Statement) For the six months ended June 30, 2021, the company recorded a loss for the period of **RMB 5,154 thousand**, a significant reduction from **RMB 43,319 thousand** in the prior period, with revenue at **RMB 101,928 thousand** and gross profit at **RMB 27,533 thousand** Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 101,928 | 117,378 | | Cost of sales | (74,395) | (86,082) | | Gross profit | 27,533 | 31,296 | | Other income | 7,972 | 4,506 | | Selling expenses | (1,768) | (2,642) | | Net impairment loss on property, plant and equipment | (4,512) | (37,294) | | Reversal of impairment loss on investment properties | 3,313 | – | | Fair value loss on financial assets at fair value through profit or loss | (349) | – | | Administrative and other operating expenses | (33,440) | (35,035) | | Operating loss | (1,251) | (39,169) | | Finance costs | (2,656) | (3,461) | | Loss before income tax | (3,907) | (42,630) | | Income tax expense | (1,247) | (689) | | **Loss for the period** | **(5,154)** | **(43,319)** | | Other comprehensive income/(expense) for the period | 2,110 | (569) | | Total comprehensive expense for the period | (3,044) | (43,888) | | Basic and diluted loss per share (RMB cents) | (0.57) | (4.83) | [Condensed Consolidated Statement of Financial Position](index=17&type=section&id=Condensed%20Consolidated%20Statement%20of%20Financial%20Position) This section presents the condensed consolidated statement of financial position, outlining the company's assets, liabilities, and equity at the end of the reporting period [Statement of Financial Position](index=18&type=section&id=Statement%20of%20Financial%20Position) As of June 30, 2021, the Group's total assets were **RMB 493,600 thousand**, total liabilities were **RMB 119,305 thousand**, and total equity was **RMB 374,295 thousand**, with net current assets significantly increasing to **RMB 71,868 thousand** Condensed Consolidated Statement of Financial Position (As at period end) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | **Non-current assets** | | | | Right-of-use assets | 9,082 | 9,258 | | Investment properties | 62,069 | 58,915 | | Property, plant and equipment | 203,612 | 217,707 | | Deferred tax assets | 25,719 | 26,172 | | **Current assets** | | | | Inventories | 19,546 | 14,119 | | Trade and other receivables | 88,449 | 67,639 | | Bank balances and cash | 74,474 | 48,908 | | **Current liabilities** | | | | Trade and other payables | 25,071 | 19,289 | | Contract liabilities | 3,962 | 170 | | Short-term borrowings | 81,488 | 81,429 | | **Total assets** | **493,600** | **460,112** | | **Total liabilities** | **119,305** | **108,584** | | **Total equity** | **374,295** | **351,528** | | Net current assets | 71,868 | 32,646 | [Condensed Consolidated Statement of Changes in Equity](index=18&type=section&id=Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This section presents the condensed consolidated statement of changes in equity, detailing movements in the company's equity components during the reporting period [Statement of Changes in Equity](index=19&type=section&id=Statement%20of%20Changes%20in%20Equity) For the six months ended June 30, 2021, the company's total equity increased from **RMB 351,528 thousand** at the beginning of the period to **RMB 374,295 thousand**, primarily due to net proceeds from share issuance of **RMB 25,811 thousand**, despite a loss for the period of **RMB 5,154 thousand** Condensed Consolidated Statement of Changes in Equity (For the six months ended June 30) | Indicator | Share Capital (RMB thousands) | Share Premium (RMB thousands) | Capital Reserve (RMB thousands) | Statutory Reserve (RMB thousands) | Exchange Reserve (RMB thousands) | Retained Profits (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | January 1, 2021 | 7,352 | 196,839 | 85,160 | 36,409 | 5,482 | 20,286 | 351,528 | | Loss for the period | – | – | – | – | – | (5,154) | (5,154) | | Other comprehensive income | – | – | – | – | 2,110 | – | 2,110 | | Transactions with owners: | | | | | | | | | - Transfer to statutory reserve | – | – | – | 92 | – | (92) | – | | - Issue of share capital | 1,495 | 24,316 | – | – | – | – | 25,811 | | **June 30, 2021** | **8,847** | **221,155** | **85,160** | **36,501** | **7,592** | **15,040** | **374,295** | - Net proceeds from share capital issued during the period amounted to **RMB 25,811 thousand**, primarily from share placement[106](index=106&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=20&type=section&id=Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) This section presents the condensed consolidated statement of cash flows, detailing the company's cash movements from operating, investing, and financing activities [Cash Flow Statement](index=21&type=section&id=Cash%20Flow%20Statement) For the six months ended June 30, 2021, net cash inflow from operating activities was **RMB 130 thousand**, net cash outflow from investing activities was **RMB 632 thousand**, and net cash inflow from financing activities was **RMB 26,011 thousand**, resulting in a net increase in cash and cash equivalents of **RMB 25,509 thousand** Condensed Consolidated Statement of Cash Flows (For the six months ended June 30) | Indicator | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Net cash generated from/(used in) operating activities | 130 | (26,206) | | Net cash (used in)/generated from investing activities | (632) | 2,635 | | Net cash generated from financing activities | 26,011 | 18,632 | | Net increase/(decrease) in cash and cash equivalents | 25,509 | (4,939) | | Cash and cash equivalents at beginning of period | 48,908 | 78,761 | | Effect of foreign exchange rate changes | 57 | (244) | | **Cash and cash equivalents at end of period** | **74,474** | **73,578** | - Operating cash flow shifted from a net outflow in the prior period to a **net inflow**, indicating improved operating performance[109](index=109&type=chunk) - Cash inflow from financing activities primarily stemmed from proceeds from share issuance of **RMB 26,160 thousand**[109](index=109&type=chunk) [Notes to the Interim Financial Report](index=21&type=section&id=Notes%20to%20the%20Interim%20Financial%20Report) This section provides detailed notes to the interim financial report, offering additional context and breakdowns for the financial statements [GENERAL INFORMATION](index=22&type=section&id=GENERAL%20INFORMATION) The company was incorporated in the Cayman Islands, with shares listed on the Main Board of the Hong Kong Stock Exchange, primarily engaged in the production and sale of cosplay products, lingerie, and factory leasing; the ultimate controlling shareholder is Mr. Chen Shengbi - The company was incorporated in the Cayman Islands on **February 12, 2015**, with its shares listed on the Main Board of The Stock Exchange of Hong Kong Limited[111](index=111&type=chunk)[114](index=114&type=chunk) - Its principal activities include the design, development, production, sales, and marketing of cosplay products (including costumes and wigs) and lingerie, as well as factory leasing[112](index=112&type=chunk)[115](index=115&type=chunk) - The ultimate controlling shareholder is **Mr. Chen Shengbi**, through his wholly-owned company Master Professional Holdings Limited[113](index=113&type=chunk)[115](index=115&type=chunk) [BASIS OF PREPARATION](index=23&type=section&id=BASIS%20OF%20PREPARATION) The condensed consolidated interim financial information is prepared in accordance with the Listing Rules of the Stock Exchange and Hong Kong Accounting Standard 34, is unaudited, presented in RMB thousands, and should be read in conjunction with the annual consolidated financial statements - The condensed consolidated interim financial information is prepared in accordance with the Listing Rules of The Stock Exchange of Hong Kong Limited and Hong Kong Accounting Standard 34 "Interim Financial Reporting"[117](index=117&type=chunk)[120](index=120&type=chunk) - This information is **unaudited** and presented in **RMB thousands**[118](index=118&type=chunk)[119](index=119&type=chunk) - It should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2020[117](index=117&type=chunk)[120](index=120&type=chunk) [SIGNIFICANT ACCOUNTING POLICIES](index=24&type=section&id=SIGNIFICANT%20ACCOUNTING%20POLICIES) This period's financial information follows the accounting policies adopted in the 2020 annual consolidated financial statements, incorporating new and revised Hong Kong Financial Reporting Standards effective from January 1, 2021, with no significant impact on the results and financial position for the current and prior periods - The condensed consolidated interim financial information follows the accounting policies adopted in the 2020 annual consolidated financial statements[121](index=121&type=chunk)[124](index=124&type=chunk) - New and revised Hong Kong Financial Reporting Standards effective from **January 1, 2021**, including amendments to Interest Rate Benchmark Reform – Phase 2, have been adopted[122](index=122&type=chunk)[125](index=125&type=chunk) - The adoption of new standards has **no significant impact** on the preparation and presentation of results and financial position for the current and prior periods[122](index=122&type=chunk)[125](index=125&type=chunk) [ESTIMATES AND JUDGEMENTS](index=25&type=section&id=ESTIMATES%20AND%20JUDGEMENTS) The preparation of condensed consolidated interim financial information involves management making accounting judgments, estimates, and assumptions, with these judgments and estimates sharing the same primary sources of significant estimation uncertainty as those applied in the 2020 annual consolidated financial statements - The preparation of financial information requires management to make accounting judgments, estimates, and assumptions, affecting the reported amounts of assets, liabilities, income, and expenses[127](index=127&type=chunk) - The primary sources of significant judgments and estimation uncertainty made in the current period are the **same as those applied in the 2020 annual consolidated financial statements**[127](index=127&type=chunk) [SEGMENT INFORMATION](index=25&type=section&id=SEGMENT%20INFORMATION) The Group's operating segments include wigs, apparel and others, and factory leasing, with strategic decisions based on the adjusted operating results of these segments; segment results exclude unallocated finance costs, bank interest income, gain on disposal of financial assets, unallocated income, corporate expenses, and income tax expense - The Group's principal product and service lines are identified as operating segments, including **wigs, apparel and others, and factory leasing**[127](index=127&type=chunk)[130](index=130&type=chunk) - Segment results represent operating results before unallocated finance costs, bank interest income, gain on disposal of financial assets at fair value through profit or loss, unallocated income, corporate expenses, and income tax expense[127](index=127&type=chunk) Revenue and Results by Operating and Reportable Segments (For the six months ended June 30) | Segment | 2021 Revenue (RMB thousands) | 2021 Segment Results (RMB thousands) | 2020 Revenue (RMB thousands) | 2020 Segment Results (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | Wigs | 11,189 | (9,074) | 35,990 | (15,764) | | Apparel and Others | 90,739 | 25,281 | 81,388 | 7,125 | | Factory Leasing | – | (3,411) | – | (304) | | **Total** | **101,928** | **12,796** | **117,378** | **(8,943)** | Reportable Segment Assets and Liabilities (As at period end) | Indicator | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Reportable segment assets | 493,600 | 460,112 | | Reportable segment liabilities | 119,305 | 108,584 | [REVENUE](index=29&type=section&id=REVENUE) The Group's revenue primarily derives from the sale of wigs, apparel, and other products, with Contract Manufacturing Services (CMS) contributing the vast majority of revenue, while Original Brand Manufacturing (OBM) revenue significantly declined - The Group's revenue refers to the net invoiced value of goods sold, primarily from the sale of **wigs, apparel, and other products**[139](index=139&type=chunk)[140](index=140&type=chunk) Revenue by Product Category (For the six months ended June 30) | Product Category | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Wigs | 11,189 | 35,990 | | Apparel and Others | 90,739 | 81,388 | | **Total** | **101,928** | **117,378** | Revenue by Business Model (For the six months ended June 30) | Business Model | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Contract Manufacturing Services Business | 92,680 | 81,104 | | Original Brand Manufacturing Business | 9,248 | 36,274 | | **Total** | **101,928** | **117,378** | [OTHER INCOME](index=31&type=section&id=OTHER%20INCOME) For the six months ended June 30, 2021, other income increased from **RMB 4,506 thousand** to **RMB 7,972 thousand**, primarily benefiting from increased gain on disposal of financial assets at fair value through profit or loss, rental income, and utility fee income Other Income Details (For the six months ended June 30) | Income Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Exchange gain | – | 331 | | Bank interest income | 84 | 113 | | Government grants | 439 | 912 | | Gain on disposal of financial assets at fair value through profit or loss | 2,835 | – | | Rental income from operating leases of plant and machinery | 827 | 818 | | Rental income from operating leases of investment properties | 1,208 | 1,563 | | Income related to net investment in leases | 245 | 658 | | Utility service fee income | 1,283 | – | | Subcontracting income | 513 | – | | Others | 538 | 111 | | **Total** | **7,972** | **4,506** | - Gain on disposal of financial assets at fair value through profit or loss was **RMB 2,835 thousand**, representing a new major source of income for the period[148](index=148&type=chunk) - Utility service fee income increased from zero to **RMB 1,283 thousand**[148](index=148&type=chunk) [LOSS BEFORE INCOME TAX](index=32&type=section&id=LOSS%20BEFORE%20INCOME%20TAX) For the six months ended June 30, 2021, loss before income tax significantly narrowed to **RMB 3,907 thousand**, primarily benefiting from a substantial reduction in impairment loss on property, plant, and equipment and the reversal of impairment loss on investment properties Loss Before Income Tax Details (For the six months ended June 30) | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Cost of inventories recognized | 44,499 | 67,034 | | Depreciation – property, plant and equipment | 16,417 | 18,615 | | Depreciation – investment properties | 1,442 | 626 | | Depreciation – right-of-use assets | 115 | 350 | | Impairment loss on property, plant and equipment | 4,512 | 37,294 | | Reversal of impairment loss on investment properties | (3,313) | – | | Net exchange loss/(gain) | 693 | (331) | | Fair value loss on financial assets at fair value through profit or loss | 349 | – | | Research and development costs | 8,556 | 9,646 | | Government grants | (439) | (912) | | Staff costs | 32,646 | 25,610 | - Impairment loss on property, plant, and equipment significantly decreased from **RMB 37,294 thousand** in 2020 to **RMB 4,512 thousand** in 2021[151](index=151&type=chunk) - Reversal of impairment loss on investment properties of **RMB 3,313 thousand** had a positive impact on narrowing the loss[151](index=151&type=chunk) [INCOME TAX EXPENSES](index=33&type=section&id=INCOME%20TAX%20EXPENSES) For the six months ended June 30, 2021, income tax expense increased to **RMB 1,247 thousand**, primarily due to an increase in deferred tax; Chinese subsidiaries are subject to a **25% corporate income tax rate**, with some high-tech enterprises enjoying a preferential rate of **15%** Income Tax Expense Details (For the six months ended June 30) | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Current tax – PRC corporate income tax | 794 | 620 | | Current tax – Hong Kong profits tax | – | 69 | | Deferred tax | 453 | – | | **Income tax expense** | **1,247** | **689** | - Chinese subsidiaries are subject to a **25% corporate income tax rate**, with some high-tech enterprises eligible for a **15% preferential tax rate** for three years[154](index=154&type=chunk)[157](index=157&type=chunk) - Hong Kong profits tax for the period was **zero** due to no assessable profits[153](index=153&type=chunk)[156](index=156&type=chunk) [DIVIDENDS](index=34&type=section&id=DIVIDENDS) The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2021, consistent with the prior period - The Board does not recommend the payment of an interim dividend for the six months ended June 30, 2021 (2020: nil)[158](index=158&type=chunk)[160](index=160&type=chunk) [LOSS PER SHARE](index=34&type=section&id=LOSS%20PER%20SHARE) For the six months ended June 30, 2021, basic loss per share was **RMB (0.57) cents**, a significant reduction from **RMB (4.83) cents** in the prior period, with no diluted shares outstanding, thus no diluted earnings per share presented - Basic loss per share was **RMB (0.57) cents** (2020: **RMB (4.83) cents**), indicating a significant narrowing of loss[160](index=160&type=chunk) - Calculation is based on loss attributable to equity holders of the company of **RMB 5,154 thousand** and a weighted average of **907,643,000 ordinary shares** outstanding[158](index=158&type=chunk)[160](index=160&type=chunk) - Diluted earnings per share is not presented as there were **no dilutive shares** outstanding during the period[159](index=159&type=chunk)[160](index=160&type=chunk) [RIGHT-OF-USE ASSETS](index=35&type=section&id=RIGHT-OF-USE%20ASSETS) As of June 30, 2021, the carrying amount of right-of-use assets was approximately **RMB 9,082 thousand**, primarily prepaid land lease payments in China, of which **RMB 6,781 thousand** was pledged to secure bank loans Movement in Right-of-Use Assets (As at period end) | Item | Prepaid land lease payments (RMB thousands) | Other properties leased for own use (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | | Carrying amount at January 1, 2020 | 10,211 | 786 | 10,997 | | Depreciation for the year | (239) | (412) | (651) | | Transferred to investment properties | (714) | (374) | (1,088) | | Carrying amount at December 31, 2020 | 9,258 | – | 9,258 | | Carrying amount at January 1, 2021 | 9,258 | – | 9,258 | | Depreciation for the period | (115) | – | (115) | | Transferred to investment properties | (61) | – | (61) | | **Carrying amount at June 30, 2021** | **9,082** | **–** | **9,082** | - Right-of-use assets primarily refer to **prepaid land lease payments** for leased land located in China[163](index=163&type=chunk)[166](index=166&type=chunk) - As of June 30, 2021, right-of-use assets of approximately **RMB 6,781 thousand** were pledged to secure bank loans[163](index=163&type=chunk)[166](index=166&type=chunk) [INVESTMENT PROPERTIES](index=36&type=section&id=INVESTMENT%20PROPERTIES) As of June 30, 2021, the carrying amount of investment properties increased to **RMB 62,069 thousand**, with a reversal of impairment loss of **RMB 3,313 thousand** recorded for the period; fair value is assessed using the income approach, with key inputs being estimated rent and discount rate Movement in Carrying Amount of Investment Properties (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Carrying amount at January 1 | 58,915 | 20,754 | | Additions | – | 10,893 | | Transferred from right-of-use assets | 61 | 1,088 | | Transferred from property, plant and equipment | 1,222 | 59,112 | | Depreciation | (1,442) | (1,665) | | Reversal of/(provision for) impairment loss | 3,313 | (20,000) | | **Carrying amount** | **62,069** | **58,915** | - As of June 30, 2021, the fair value of investment properties was **RMB 84,208 thousand**, with a reversal of impairment loss of **RMB 3,313 thousand** recorded[174](index=174&type=chunk)[175](index=175&type=chunk) - Fair value is assessed using the income approach, with key unobservable inputs being estimated rent (**RMB 12-15 per square meter**) and discount rate (**6%-6.5%**)[177](index=177&type=chunk)[179](index=179&type=chunk) - As of June 30, 2021, investment properties with a carrying amount of **RMB 27,233 thousand** were pledged as collateral for bank loans[179](index=179&type=chunk) [PROPERTY, PLANT AND EQUIPMENT](index=39&type=section&id=PROPERTY%20PLANT%20AND%20EQUIPMENT) As of June 30, 2021, the net carrying amount of property, plant, and equipment was approximately **RMB 203,612 thousand**, with new additions of approximately **RMB 8,056 thousand** and an impairment loss of **RMB 4,512 thousand** recognized during the period; certain buildings were pledged to secure bank loans Movement in Net Carrying Amount of Property, Plant and Equipment (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Buildings | 143,733 | 145,378 | | Plant and machinery | 15,589 | 16,050 | | Motor vehicles | 493 | 630 | | Furniture and fixtures | 536 | 756 | | Leasehold improvements | 43,261 | 54,893 | | **Total** | **203,612** | **217,707** | - Additions during the period amounted to approximately **RMB 8,056 thousand**, primarily for buildings[185](index=185&type=chunk)[188](index=188&type=chunk) - An impairment loss of **RMB 4,512 thousand** was recognized during the period, mainly due to continuous decline in turnover[192](index=192&type=chunk)[204](index=204&type=chunk)[207](index=207&type=chunk) - As of June 30, 2021, buildings with a total value of approximately **RMB 83,023 thousand** were pledged to banks[199](index=199&type=chunk) [TRADEMARK](index=41&type=section&id=TRADEMARK) As of June 30, 2021, the cost and accumulated amortization of trademarks were both **RMB 500 thousand**, resulting in a net carrying amount of zero Net Carrying Amount of Trademark (As at period end) | Item | Trademark (RMB thousands) | | :--- | :--- | | Cost | 500 | | Accumulated amortization | 500 | | **Net carrying amount** | **–** | [INVENTORIES](index=41&type=section&id=INVENTORIES) As of June 30, 2021, total inventories increased to **RMB 19,546 thousand**, primarily composed of raw materials, representing a 38.4% year-on-year increase Inventories Details (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Raw materials | 18,144 | 12,748 | | Work-in-progress | 899 | 961 | | Finished goods | 503 | 410 | | **Total** | **19,546** | **14,119** | - Raw materials inventory increased from **RMB 12,748 thousand** to **RMB 18,144 thousand**, an increase of approximately **42.3%**[210](index=210&type=chunk) [TRADE AND OTHER RECEIVABLES](index=42&type=section&id=TRADE%20AND%20OTHER%20RECEIVABLES) As of June 30, 2021, total trade and other receivables increased to **RMB 88,449 thousand**; net trade receivables were **RMB 62,208 thousand**, with the 0-30 day aging category being the largest; prepayments, other tax receivables, and deposits significantly increased Trade and Other Receivables Details (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Trade receivables – from third parties | 62,989 | 62,807 | | Less: Provision for expected credit losses | (781) | (696) | | **Net trade receivables** | **62,208** | **62,111** | | Deposits, prepayments and other receivables | 26,241 | 5,528 | | **Total** | **88,449** | **67,639** | Aging Analysis of Trade Receivables (As at period end) | Aging | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | 0–30 days | 31,884 | 9,272 | | 31–60 days | 10,869 | 7,752 | | 61–90 days | – | 7,781 | | 91–365 days | 15,847 | 37,306 | | Over 1 year | 3,608 | – | | **Total** | **62,208** | **62,111** | - Prepayments, other tax receivables, and deposits significantly increased from a total of **RMB 5,486 thousand** as of December 31, 2020, to a total of **RMB 25,893 thousand** as of June 30, 2021[212](index=212&type=chunk) - Provision for expected credit losses increased from **RMB 696 thousand** to **RMB 781 thousand**[215](index=215&type=chunk)[218](index=218&type=chunk) [FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT OR LOSS](index=44&type=section&id=FINANCIAL%20ASSET%20AT%20FAIR%20VALUE%20THROUGH%20PROFIT%20OR%20LOSS) As of June 30, 2021, financial assets at fair value through profit or loss amounted to **RMB 651 thousand**, entirely comprising unlisted equity investments; the CSG convertible bonds were sold during the period, resulting in a fair value loss of **RMB 349 thousand** Financial Assets at Fair Value Through Profit or Loss Details (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Unlisted convertible bonds | – | 5,557 | | Unlisted equity investments | 651 | – | | **Total** | **651** | **5,557** | - The CSG convertible bonds were sold to an independent third party on **March 15, 2021**, for a cash consideration of **HKD 10 million** (approximately **RMB 8,340 thousand**)[237](index=237&type=chunk) - Unlisted equity investments recorded a fair value loss of **RMB 349 thousand** during the period, with a fair value of **RMB 651 thousand** at period end[240](index=240&type=chunk) [NET INVESTMENT IN LEASES](index=49&type=section&id=NET%20INVESTMENT%20IN%20LEASES) As of June 30, 2021, net investment in leases amounted to **RMB 9,998 thousand**, primarily from subleasing factory premises to third parties, with **RMB 3,065 thousand** due within one year and **RMB 6,933 thousand** due after one year Net Investment in Leases Details (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Gross investment in leases | 10,639 | 10,661 | | Less: Unearned finance income | (641) | (886) | | **Net investment in leases** | **9,998** | **9,775** | | Portion due within one year | 3,065 | 2,996 | | Portion due after one year | 6,933 | 6,779 | - The Group entered into three lease contracts for certain factory premises, with initial lease terms of two to four years, and all leased factory premises are subleased to third parties to earn rental income[248](index=248&type=chunk) - Net investment in leases refers to two sublease arrangements entered into by the Group with sublessees for factory premises, typically with an initial lease term of **four years**[248](index=248&type=chunk) [DEFERRED TAX ASSETS](index=51&type=section&id=DEFERRED%20TAX%20ASSETS) As of June 30, 2021, deferred tax assets amounted to **RMB 25,719 thousand**, a slight decrease from the beginning of the period, primarily related to asset impairment losses; the company has not recognized deferred income tax for withholding tax on unremitted earnings of Chinese subsidiaries Movement in Deferred Tax Assets (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | January 1 | 26,172 | 13,393 | | Recognized in profit or loss | (453) | 12,779 | | **June 30/December 31** | **25,719** | **26,172** | Composition of Deferred Tax Assets (As at period end) | Item | Asset impairment losses (RMB thousands) | Others (RMB thousands) | Total (RMB thousands) | | :--- | :--- | :--- | :--- | | January 1, 2021 | 26,338 | (166) | 26,172 | | Recognized in profit or loss | (453) | – | (453) | | **June 30, 2021** | **25,885** | **(166)** | **25,719** | - The company has not recognized deferred income tax for withholding tax payable on unremitted earnings of Chinese subsidiaries, with total related temporary differences of approximately **RMB 137,943 thousand**[255](index=255&type=chunk)[256](index=256&type=chunk) [BANK BALANCES AND CASH](index=52&type=section&id=BANK%20BALANCES%20AND%20CASH) As of June 30, 2021, total bank balances and cash amounted to **RMB 74,474 thousand**, of which approximately **RMB 60,443 thousand** were RMB-denominated balances deposited in banks in China, with RMB being a non-freely convertible currency Bank Balances and Cash (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Bank balances and cash | 74,474 | 48,908 | - Approximately **RMB 60,443 thousand** were RMB-denominated balances deposited in banks in China[258](index=258&type=chunk)[259](index=259&type=chunk) - RMB is a **non-freely convertible currency**, but the Group can convert foreign currencies through authorized banks[258](index=258&type=chunk)[259](index=259&type=chunk) [TRADE AND OTHER PAYABLES](index=53&type=section&id=TRADE%20AND%20OTHER%20PAYABLES) As of June 30, 2021, total trade and other payables increased to **RMB 25,071 thousand**; trade payables were primarily within 0-30 days aging, and salaries payable and other payables also increased Trade and Other Payables Details (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Trade payables – due to third parties | 14,436 | 9,144 | | Accrued expenses and other payables | 10,635 | 10,145 | | **Total** | **25,071** | **19,289** | Aging Analysis of Trade Payables (As at period end) | Aging | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | 0–30 days | 14,436 | 9,144 | - Salaries payable increased from **RMB 3,395 thousand** to **RMB 6,598 thousand**[265](index=265&type=chunk) [CONTRACT LIABILITIES](index=54&type=section&id=CONTRACT%20LIABILITIES) As of June 30, 2021, contract liabilities significantly increased to **RMB 3,962 thousand**, primarily from deposits received for production orders; all outstanding contract liabilities at the beginning of the period were recognized as revenue during the period Contract Liabilities (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Contract liabilities arising from deposits received for production orders | 3,962 | 170 | - Contract liabilities significantly increased, reflecting an increase in **deposits received for production orders** during the period[269](index=269&type=chunk) - All outstanding contract liabilities at the beginning of the period were **recognized as revenue** during the period[271](index=271&type=chunk) [LEASE LIABILITIES](index=55&type=section&id=LEASE%20LIABILITIES) As of June 30, 2021, total lease liabilities amounted to **RMB 8,262 thousand**, with **RMB 2,623 thousand** due within one year; lease liabilities primarily arise from office and factory leases and are secured by related assets Maturity Analysis of Lease Liabilities (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Total minimum lease payments | 8,766 | 8,395 | | Less: Future finance charges | (504) | (699) | | **Present value of lease liabilities** | **8,262** | **7,696** | | Portion due within one year | 2,623 | 2,190 | | Portion due after one year | 5,639 | 5,506 | - Lease liabilities primarily arise from **office and factory leases**, with factory leases including renewal options[283](index=283&type=chunk)[284](index=284&type=chunk) - Lease liabilities are effectively **secured by the related assets**, meaning that if the Group fails to make payments, the rights to the leased assets will revert to the lessor[276](index=276&type=chunk)[277](index=277&type=chunk) [SHORT TERM BORROWINGS](index=58&type=section&id=SHORT%20TERM%20BORROWINGS) As of June 30, 2021, total short-term borrowings amounted to **RMB 81,488 thousand**; secured bank loans bear interest at annual rates of **4.15% to 4.86%**, while unsecured borrowings bear a fixed annual interest rate of **14%** Short-Term Borrowings (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Short-term borrowings | 81,488 | 81,429 | - Secured bank loans bear interest at annual rates ranging from **4.15% to 4.86%** and are secured by certain Group assets (right-of-use assets, investment properties, buildings)[288](index=288&type=chunk)[290](index=290&type=chunk) - Unsecured borrowings totaled **RMB 12,488 thousand** and bear a fixed annual interest rate of **14%**[289](index=289&type=chunk)[290](index=290&type=chunk) [SHARE CAPITAL](index=59&type=section&id=SHARE%20CAPITAL) As of June 30, 2021, issued and fully paid share capital increased to **RMB 8,847 thousand**, with a total of **1,077,267,600 shares** outstanding, primarily due to the placement of **179,544,600 ordinary shares** in June 2021 Movement in Share Capital (As at period end) | Item | Number of Shares | Share Capital (RMB thousands) | | :--- | :--- | :--- | | January 1, 2020 and December 31, 2020 | 897,723,000 | 7,352 | | Shares issued by way of placement | 179,544,600 | 1,495 | | **June 30, 2021** | **1,077,267,600** | **8,847** | - On **June 21, 2021**, the company placed **179,544,600 ordinary shares** at **HKD 0.175 per share**, with net proceeds of approximately **HKD 31.0 million**[293](index=293&type=chunk) - Of the proceeds, **RMB 1,495 thousand** was credited to the share capital account, and approximately **RMB 24,316 thousand** was credited to the share premium account[293](index=293&type=chunk) [LEASE COMMITMENTS](index=59&type=section&id=LEASE%20COMMITMENTS) As of June 30, 2021, short-term lease commitments as a lessee amounted to **RMB 12 thousand**; as a lessor, total future minimum lease receivables for plant and machinery were **RMB 2,413 thousand**, and for investment properties were **RMB 2,915 thousand** Short-Term Lease Commitments as Lessee (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Land and buildings: within one year | 12 | 47 | Total Future Minimum Lease Receivables as Lessor (As at period end) | Item | June 30, 2021 (RMB thousands) | December 31, 2020 (RMB thousands) | | :--- | :--- | :--- | | Plant and machinery: less than one year | 1,645 | 1,870 | | Plant and machinery: one to two years | 768 | 1,478 | | **Total Plant and Machinery** | **2,413** | **3,348** | | Investment properties: less than one year | 990 | 651 | | Investment properties: one to two years | 964 | 528 | | Investment properties: two to three years | 517 | 396 | | Investment properties: three to four years | 335 | – | | Investment properties: four to five years | 109 | – | | **Total Investment Properties** | **2,915** | **1,575** | - The Group leases out plant and machinery for an initial term of **five years**, with an option to renew at expiry[299](index=299&type=chunk)[301](index=301&type=chunk) - The Group leases out investment properties for initial terms typically ranging from **2-5 years**, with no early termination, extension, or renewal options in the contracts[301](index=301&type=chunk) [RELATED PARTY TRANSACTIONS](index=62&type=section&id=RELATED%20PARTY%20TRANSACTIONS) For the six months ended June 30, 2021, total key management personnel remuneration amounted to **RMB 1,343 thousand**, comprising short-term employee benefits and contributions to retirement benefit schemes Key Management Personnel Remuneration (For the six months ended June 30) | Item | 2021 (RMB thousands) | 2020 (RMB thousands) | | :--- | :--- | :--- | | Short-term employee benefits | 1,317 | 1,236 | | Contributions to retirement benefit schemes | 26 | 24 | | **Total** | **1,343** | **1,260** | [FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS](index=62&type=section&id=FAIR%20VALUE%20MEASUREMENT%20OF%20FINANCIAL%20INSTRUMENTS) Financial assets and liabilities are measured at fair value across three levels (Level 1, Level 2, Level 3); as of June 30, 2021, financial assets at fair value through profit or loss (unlisted equity investments) amounted to **RMB 651 thousand**, categorized as Level 3 fair value measurement, with fair value assessment referencing net asset value and utilizing unobservable inputs such as market-based discount rates and control premiums - Financial assets and liabilities are measured at fair value across three levels (Level 1, Level 2, Level 3), with the level based on the observability of input data[304](index=304&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) Fair Value Measurement of Financial Assets at Fair Value Through Profit or Loss (As at period end) | Item | Fair Value (RMB thousands) | Level 1 (RMB thousands) | Level 2 (RMB thousands) | Level 3 (RMB thousands) | | :--- | :--- | :--- | :--- | :--- | | June 30, 2021: Unlisted equity investments | 651 | – | – | 651 | | December 31, 2020: CSG convertible bonds | 5,557 | – | – | 5,557 | - The fair value of unlisted equity investments references net asset value, using unobservable inputs such as market-based discount rates and control premiums[312](index=312&type=chunk)[316](index=316&type=chunk) - The fair value measurement of CSG convertible bonds uses a default model, with the primary unobservable input being the recovery rate; a **1% increase in recovery rate** would increase fair value and reduce loss by **RMB 622 thousand**[314](index=314&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk)[318](index=318&type=chunk) [SUBSEQUENT EVENTS](index=65&type=section&id=SUBSEQUENT%20EVENTS) Subsequent to the reporting period, the company acquired a patent in July 2021 and received a writ of summons for legal proceedings concerning a proposed sale of the company's controlling stake, which the Board considers groundless - On July 9, 2021, the company acquired a **75% equity interest** in Hmda Culture International Co., Limited for a cash consideration of **HKD 11 million** to obtain a patent, with the transaction completed on July 30[319](index=319&type=chunk) - On July 30, 2021, the company and certain former directors and shareholders received a writ of summons for legal proceedings concerning a proposed sale of the company's controlling stake[319](index=319&type=chunk) - The Board considers the allegations against the company in the writ of summons to be **groundless and baseless**[319](index=319&type=chunk) [Other Information](index=65&type=section&id=Other%20Information) This section provides additional information regarding interim dividends, directors' interests, securities transactions, share option schemes, shareholder disclosures, and corporate governance [Interim Dividend](index=66&type=section&id=Interim%20Dividend) The Board has resolved not to declare any interim dividend for the six months ended June 30, 2021, consistent with the corresponding period in 2020 - The Board has resolved **not to declare any interim dividend** for the six months ended June 30, 2021 (June 30, 2020: nil)[322](index=322&type=chunk)[325](index=325&type=chunk) [Directors' and Chief Executive's Interests](index=66&type=section&id=Directors'%20and%20Chief%20Executive's%20Interests) As of June 30, 2021, none of the company's directors, chief executive, and/or their associates held any interests or short positions in the shares, underlying shares, and debentures of the company or its associated corporations - As of June 30, 2021, none of the company's directors, chief executive, and/or any of their respective associates held any interests or short positions in the shares, underlying shares, and debentures of the company or its associated corporations[323](index=323&type=chunk)[326](index=326&type=chunk) [Purchase, Redemption or Sale of Listed Securities](index=66&type=section&id=Purchase%20Redemption%20or%20Sale%20of%20Listed%20Securities) For the six months ended June 30, 2021, neither the company nor its subsidiaries purchased, redeemed, or sold any of the company's listed securities - For the six months ended June 30, 2021, neither the company nor its subsidiaries purchased, redeemed, or sold any of the company's listed securities[324](index=324&type=chunk) [Share Option Scheme](index=66&type=section&id=Share%20Option%20Scheme) The company's share option scheme, adopted on August 7, 2015, allows for granting options to directors, employees, and other eligible participants, involving a maximum of **75,000,000 new shares**; no options were granted or exercised during the reporting period, and no outstanding options existed at period end - The company may grant share options to directors, Group employees, and other eligible participants under the share option scheme, involving a maximum of **75,000,000 new shares**[324](index=324&type=chunk) - During the reporting period, **no share options were granted or exercised**, and there were **no outstanding share options** at period end[329](index=329&type=chunk)[332](index=332&type=chunk) [Interests of Shareholders Disclosable Under the SFO](index=67&type=section&id=Interests%20of%20Shareholders%20Disclosable%20Under%20the%20SFO) As of June 30, 2021, major shareholders, including Master Professional Holdings Limited and its associates Mr. Chen Shengbi and Ms. Li Zhiping, as well as Mr. Lin Shixin, all held long positions in the company's shares Long Positions in Shares and Underlying Shares of the Company (As of June 30, 2021) | Name of Shareholder | Nature of Interest | Number of Ordinary Shares | Approximate Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Master Professional Holdings Limited | Beneficial owner | 371,859,000 | 34.52% | | Mr. Chen Shengbi | Interest in controlled corporation | 371,859,000 | 34.52% | | Ms. Li Zhiping | Interest of spouse | 371,859,000 | 34.52% | | Mr. Lin Shixin | Beneficial owner | 78,563,000 | 7.29% | - Mr. Chen Shengbi holds **34.52%** of the company's shares through his wholly-owned Master Professional Holdings Limited[336](index=336&type=chunk)[340](index=340&type=chunk) - Ms. Li Zhiping, as Mr. Chen Shengbi's spouse, is deemed to have an interest in the same number of shares[336](index=336&type=chunk)[340](index=340&type=chunk) [Corporate Governance](index=68&type=section&id=Corporate%20Governance) The company has adopted the Corporate Governance Code in Appendix 14 of the Listing Rules and fully complied with its relevant code provisions for the six months ended June 30, 2021 - The company has adopted the Corporate Governance Code as set out in **Appendix 14 of the Listing Rules**[338](index=338&type=chunk)[340](index=340&type=chunk) - For the six months ended June 30, 2021, the company has **fully complied** with the relevant code provisions of the Corporate Governance Code[338](index=338&type=chunk)[340](index=340&type=chunk) [Model Code for Securities Transactions by the Directors](index=68&type=section&id=Model%20Code%20for%20Securities%20Transactions%20by%20the%20Directors) The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers in Appendix 10 of the Listing Rules as its code of conduct for directors' securities transactions; all directors confirmed compliance with this Model Code during the review period - The company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in **Appendix 10 of the Listing Rules** as its code of conduct for directors' securities transactions[339](index=339&type=chunk)[341](index=341&type=chunk) - All directors have confirmed that they complied with the Model Code throughout the review period[339](index=339&type=chunk)[342](index=342&type=chunk) [Review of Interim Results and Interim Report](index=69&type=section&id=Review%20of%2

[Financial Highlights](index=3&type=section&id=Financial%20Highlights) The company's revenue decreased by 19.2% to RMB 255.3 million in FY2020, with gross profit down 22.9%; loss for the year narrowed by 5.2% to RMB 68.4 million, with gross margin at 25.2% and net loss margin at 26.8% FY2020 Key Financial Data Comparison | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 255,252 | 316,064 | (19.2%) | | Gross Profit | 64,284 | 83,401 | (22.9%) | | Loss for the year attributable to equity holders of the Company | (68,437) | (72,205) | (5.2%) | | Gross Profit Margin | 25.2% | 26.4% | (1.2%) | | Net Loss Margin | (26.8%) | (22.8%) | (4.0%) | [Corporate Information](index=5&type=section&id=Corporate%20Information) This section outlines the company's board members, committee compositions, registered office, principal place of business, share registrar, legal counsel, auditor, stock code, and website - The Board of Directors includes Executive Directors Ms. Chen Sheng (Chairperson), Mr. Xu Chengwu (Chief Executive Officer), Mr. Ma Zhijun, and Independent Non-executive Directors Mr. Zheng Jinmin, Mr. Chen Wenhua, and Ms. Peng Xu[17](index=17&type=chunk) - Mr. Zheng Jinmin chairs the Audit Committee, Mr. Chen Wenhua chairs the Remuneration Committee, and Ms. Peng Xu chairs the Nomination Committee[17](index=17&type=chunk) - The company's registered office is in the Cayman Islands, with its China headquarters and principal place of business located in Yichun Economic and Technological Development Zone, Jiangxi Province[19](index=19&type=chunk) [Chairman's Statement](index=7&type=section&id=Chairman's%20Statement) The Chairman's Statement reviews the Group's FY2020 performance, noting revenue and gross profit declines due to COVID-19, but a narrowed loss for the year; future plans include business diversification, M&A, and industry integration to expand revenue streams - In FY2020, both CMS and OBM business revenues decreased by **19.2% to RMB 255.3 million**, primarily due to weak demand and lower product prices in key markets, impacted by COVID-19 lockdowns and travel restrictions[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - The Group's loss for the year narrowed by **5.2% to RMB 68.4 million**, maintaining a healthy financial position with **net current assets of RMB 32.6 million**[25](index=25&type=chunk) - Future outlook includes diversifying business and expanding revenue streams through collaborations with other IP owners, upstream and downstream industry partnerships, and M&A and industry integration[33](index=33&type=chunk)[35](index=35&type=chunk) [Directors' Business Review and Management Discussion and Analysis](index=9&type=section&id=Directors'%20Business%20Review%20and%20Management%20Discussion%20and%20Analysis) This section details the Group's FY2020 operating results, financial position, key risks, business strategies, compliance, stakeholder relations, investment activities, and human resources; revenue and gross profit declined due to COVID-19, but cost control and leasing growth narrowed losses, with future focus on diversification and integration [Key Performance Indicators](index=9&type=section&id=Key%20Performance%20Indicators) In FY2020, Group revenue decreased by 19.2%, gross profit by 22.9%, and operating loss increased by 6.6%, while loss attributable to equity holders decreased by 5.2%; net current assets grew significantly by 238.6%, but bank balances and cash decreased by 37.9% FY2020 Key Performance Indicators Comparison | Performance Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 255,252 | 316,064 | (19.2%) | | Gross Profit | 64,284 | 83,401 | (22.9%) | | Operating Loss | (74,487) | (69,845) | 6.6% | | Loss for the year attributable to equity holders of the Company | (68,437) | (72,205) | (5.2%) | | Bank Balances and Cash | 48,908 | 78,761 | (37.9%) | | Net Current Assets | 32,646 | 9,642 | 238.6% | | Loss Per Share (Basic) | (7.62) cents | (8.04) cents | (5.2%) | [Business Review](index=10&type=section&id=Business%20Review) The Group designs, develops, produces, sells, and markets cosplay products and lingerie, exporting to over 20 countries; in 2020, CMS and OBM revenues declined due to COVID-19, but leasing revenue grew, leading to the establishment of a 'Party Culture Industrial Base' in Yiwu and property leases to enhance efficiency and collaboration [Product and Service Lines](index=10&type=section&id=Product%20and%20Service%20Lines) The Group's business is categorized into Contract Manufacturing Services (CMS) and Original Brand Manufacturing (OBM); in 2020, CMS accounted for 65.6% of revenue and OBM for 34.4%, with apparel and others at 70.4% and wigs at 29.6% by product type FY2020 Revenue by Business Segment | Business Segment | 2020 Revenue (RMB thousand) | Percentage of Total | 2019 Revenue (RMB thousand) | Percentage of Total | Revenue Decrease (Approximate Percentage) | | :--- | :--- | :--- | :--- | :--- | :--- | | CMS Business | 167,408 | 65.6% | 199,770 | 63.2% | (16.2%) | | OBM Business | 87,844 | 34.4% | 116,294 | 36.8% | (24.5%) | | **Total** | **255,252** | **100.0%** | **316,064** | **100.0%** | **(19.2%)** | FY2020 Revenue by Product Category | Product Category | 2020 Revenue (RMB thousand) | Percentage of Total | 2019 Revenue (RMB thousand) | Percentage of Total | Revenue Decrease (Approximate Percentage) | | :--- | :--- | :--- | :--- | :--- | :--- | | Wigs | 75,548 | 29.6% | 110,954 | 35.1% | (31.9%) | | Apparel and Others | 179,704 | 70.4% | 205,110 | 64.9% | (12.4%) | | **Total** | **255,252** | **100.0%** | **316,064** | **100.0%** | **(19.2%)** | - CMS business revenue decreased by **16.2%**, primarily due to weak demand for cosplay costumes and wigs caused by COVID-19, partially offset by increased demand for lingerie[95](index=95&type=chunk)[96](index=96&type=chunk) - OBM business revenue decreased by **24.5%**, mainly due to weak product demand and lower selling prices caused by COVID-19, significantly impacting sales performance[99](index=99&type=chunk)[102](index=102&type=chunk) [Leasing Business and Industrial Park](index=12&type=section&id=Leasing%20Business%20and%20Industrial%20Park) The Group established a 'Party Culture Industrial Base' in Yiwu in late 2019 and leased Feifeng Road property in September 2020 to integrate cultural product design, influencer marketing, creative design, R&D, and supply chain; some Yichun production facilities were subleased due to trade uncertainties, generating approximately **RMB 5.424 million** in total property leasing revenue in 2020, a **108% year-on-year increase** - The Group established a 'Party Culture Industrial Base' and e-commerce operations, service, and experience centers in Yiwu, with a total construction area of **50,579 square meters**, of which approximately **83.3%** has been leased/subleased to related industry companies[53](index=53&type=chunk)[56](index=56&type=chunk) - In September 2020, the Group leased approximately **27,600 square meters** of Feifeng Road property to further strengthen cooperation with upstream and downstream industry companies[53](index=53&type=chunk)[56](index=56&type=chunk) Total Property Leasing Revenue | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Total Property Leasing Revenue | 5,424 | 2,607 | 108.0% | [Principal Risks and Uncertainties](index=13&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces principal risks from global economic conditions, foreign currency fluctuations, and changes in movie and anime character popularity; COVID-19 severely disrupted global economic activity, leading to weak product demand and uncertain recovery, while RMB appreciation against the USD could impact profit margins, and character popularity directly affects product sales - Global economic and macroeconomic conditions: The COVID-19 pandemic adversely affected global economic activity, leading to weak product demand and lower selling prices, particularly in major markets like the US and UK[24](index=24&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[65](index=65&type=chunk) - Foreign currency exchange rate fluctuations: Most revenue is denominated in USD, and RMB appreciation against the USD could adversely impact profit margins, with exchange rate volatility also affecting costs and profitability[63](index=63&type=chunk)[66](index=66&type=chunk) - Changes in movie and anime character popularity: Some cosplay products rely on popular anime characters, and their market demand and revenue are affected by changes in character popularity; a decline could lead to fewer orders and lower-than-expected revenue[69](index=69&type=chunk)[70](index=70&type=chunk)[72](index=72&type=chunk) [Business Strategies](index=14&type=section&id=Business%20Strategies) The Group will pursue business expansion and revenue diversification by enhancing R&D, expanding OBM business in China to grow its customer base, collaborating with other IP owners, and strengthening partnerships with upstream and downstream industry companies to improve production efficiency - Strengthen research and development capabilities[74](index=74&type=chunk) - Expand OBM business in the China market to broaden the customer base[74](index=74&type=chunk) - Seek cooperation with other intellectual property owners to engage in different businesses[74](index=74&type=chunk) - Seek cooperation with upstream and downstream industry companies to further enhance production efficiency[74](index=74&type=chunk) [Law and Regulation](index=15&type=section&id=Law%20and%20Regulation) The Group is committed to complying with laws and regulations regarding workplace quality, product safety, and environmental protection; in 2020, no significant non-compliance or violations were found, and the Group obtained multiple certifications including ISO9001, ISO14001, and OHSAS 18001 [Workplace Quality](index=15&type=section&id=Workplace%20Quality) The Group is committed to providing equal opportunities and a safe working environment for employees, complying with all occupational health and safety legislation, with no significant non-compliance found in 2020 - The Group is committed to promoting equal opportunities for all employees in all aspects, including recruitment, compensation and benefits, training, promotion, transfer, and dismissal[77](index=77&type=chunk)[81](index=81&type=chunk) - The Group is committed to full compliance with all occupational health and safety legislation and providing a safe working environment for its employees[78](index=78&type=chunk)[81](index=81&type=chunk) [Product Safety](index=15&type=section&id=Product%20Safety) The Group prioritizes product quality and safety, with all products meeting international environmental and safety standards, including US ASTM, European EN71, and REACH, and holding ISO9001, ISO14001, and OHSAS 18001 certifications; no significant non-compliance was found in 2020 - All products are safe and fully comply with international environmental and safety standards, including US ASTM, European EN71 and REACH standards, and safety production standardization certificates[79](index=79&type=chunk)[82](index=82&type=chunk) - The Group has obtained multiple certifications, including ISO9001:2008, ISO14001:2004, and OHSAS 18001:2007[79](index=79&type=chunk)[82](index=82&type=chunk) [Environmental Protection](index=16&type=section&id=Environmental%20Protection) The Group is committed to protecting and maintaining the environment, adhering to high environmental standards, and complying with relevant laws and regulations in manufacturing and material disposal processes; no significant non-compliance or violations were found in 2020 - The Group is committed to protecting and maintaining the environment and complying with high environmental standards to fulfill relevant legal or regulatory requirements in manufacturing and material disposal processes[85](index=85&type=chunk)[89](index=89&type=chunk) - In 2020, the Group found no significant non-compliance or violations of relevant standards, rules, and regulations regarding air and greenhouse gas emissions, discharges to water and land, or the generation of hazardous or non-hazardous wastewater[86](index=86&type=chunk)[89](index=89&type=chunk) [Relationship with Suppliers and Customers](index=16&type=section&id=Relationship%20with%20Suppliers%20and%20Customers) The Group collaborates with over 70 suppliers, ensuring diverse raw material sources without long-term purchase agreements; it maintains long-term customer relationships, with the top five clients averaging over seven years of cooperation, indicating high customer loyalty - The Group procures raw materials from **over 70 suppliers**, ensuring diverse sources of supply, so the loss of a single supplier would not significantly impact operations[87](index=87&type=chunk)[90](index=90&type=chunk) - The Group maintains long-term business partnerships with customers in **over 20 countries and regions** globally; as of December 31, 2020, the top five customers had an average cooperation period of **over seven years**[88](index=88&type=chunk)[91](index=91&type=chunk) [Financial Review](index=17&type=section&id=Financial%20Review) This section analyzes the Group's FY2020 financial performance; revenue and gross profit declined due to the pandemic, but other income significantly increased from government grants and leasing growth; cost of sales and selling expenses decreased, while administrative and other operating expenses rose due to exchange losses and depreciation; asset impairment losses and income tax credits both increased substantially, with financial resources and liquidity remaining healthy despite a reduction in bank balances and cash [Revenue and Gross Profit](index=17&type=section&id=Revenue%20and%20Gross%20Profit) Total revenue for FY2020 decreased by 19.2% to RMB 255.3 million, with gross margin falling from 26.4% to 25.2%; CMS revenue declined by 16.2% and OBM revenue by 24.5%, primarily due to weak demand and rising production costs impacted by the pandemic FY2020 Revenue and Gross Margin by Business and Product Category | Business Segment | Product Category | 2020 Revenue (RMB thousand) | 2020 Gross Margin | 2019 Revenue (RMB thousand) | 2019 Gross Margin | Revenue Change Percentage | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | CMS Business | Cosplay Costumes | 58,202 | 21.8% | 89,438 | 26.5% | (34.9%) | | | Cosplay Wigs | 57,332 | 25.5% | 76,731 | 26.2% | (25.3%) | | | Lingerie | 45,136 | 24.3% | 33,575 | 27.8% | 34.4% | | | Others | 6,738 | 24.4% | 26 | 25.0% | 25,815.4% | | | **Subtotal** | **167,408** | **23.8%** | **199,770** | **26.6%** | **(16.2%)** | | OBM Business | Cosplay Costumes | 49,184 | 31.7% | 59,123 | 28.8% | (16.8%) | | | Cosplay Wigs | 18,216 | 24.6% | 34,223 | 21.3% | (46.8%) | | | Lingerie | 19,256 | 21.0% | 22,948 | 26.1% | (16.1%) | | | Others | 1,188 | 23.4% | — | — | Not Applicable | | | **Subtotal** | **87,844** | **27.8%** | **116,294** | **26.4%** | **(24.5%)** | | **Total** | | **255,252** | **25.2%** | **316,064** | **26.4%** | **(19.2%)** | - Gross margin decreased from **26.4% in 2019 to 25.2% in 2020**, primarily due to increased production costs (including procurement and transportation) and lower product selling prices caused by the pandemic[49](index=49&type=chunk)[50](index=50&type=chunk)[101](index=101&type=chunk)[104](index=104&type=chunk) [Cost of Sales and Other Income](index=19&type=section&id=Cost%20of%20Sales%20and%20Other%20Income) Cost of sales decreased by approximately RMB 41.7 million year-on-year to RMB 191.0 million; other income significantly increased by approximately RMB 9.1 million to RMB 14.4 million, primarily driven by government grants, net investment in leases income, and property leasing revenue Cost of Sales and Other Income Comparison | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Cost of Sales | 191,000 (approx) | 232,700 (approx) | (41,700) | | Other Income | 14,400 (approx) | 5,300 (approx) | 9,100 | | Government Grants | 3,100 (approx) | - | 3,100 | | Net Investment in Leases Income | 2,800 (approx) | - | 2,800 | | Property Leasing Income | 5,400 (approx) | 2,607 (approx) | 2,793 | | Net Exchange Gain | - | 2,080 (approx) | (2,080) | - The increase in other income was mainly due to government grants of approximately **RMB 3.1 million**, recognition of net investment in leases income of approximately **RMB 2.8 million**, and property and machinery leasing income of approximately **RMB 5.4 million**[107](index=107&type=chunk)[112](index=112&type=chunk) [Expenses and Impairment Losses](index=19&type=section&id=Expenses%20and%20Impairment%20Losses) Selling expenses decreased by approximately RMB 2.6 million due to lower transportation and staff costs; administrative and other operating expenses increased by approximately RMB 17.9 million due to higher exchange losses and depreciation; impairment losses on property, plant, and equipment significantly rose to RMB 55.4 million, and investment property impairment losses were RMB 20.0 million, mainly impacted by sustained revenue decline and changes in property use Key Expenses and Impairment Losses Comparison | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Selling Expenses | 5,600 (approx) | 8,200 (approx) | (2,600) | | Administrative and Other Operating Expenses | 76,100 (approx) | 58,200 (approx) | 17,900 | | Impairment Losses on Property, Plant and Equipment | 55,400 (approx) | 12,900 (approx) | 42,500 | | Impairment Losses on Investment Properties | 20,000 (approx) | 18,700 (approx) | 1,300 | - Impairment losses on property, plant, and equipment increased to **RMB 55.4 million**, primarily due to a decline in recoverable amounts caused by sustained revenue decrease[110](index=110&type=chunk)[115](index=115&type=chunk) - Impairment losses on investment properties amounted to **RMB 20.0 million**, mainly attributable to the reclassification of new Yichun factory premises to investment properties for leasing purposes, where their fair value was below carrying amount[118](index=118&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) [Finance Costs and Income Tax](index=21&type=section&id=Finance%20Costs%20and%20Income%20Tax) Finance costs remained at approximately RMB 6.7 million; income tax credit significantly increased by approximately RMB 8.5 million to RMB 12.8 million, primarily due to deferred tax recognized on asset impairment losses Finance Costs and Income Tax Credit Comparison | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Finance Costs | 6,700 (approx) | 6,700 (approx) | 0 | | Income Tax Credit | 12,800 (approx) | 4,300 (approx) | 8,500 | - The increase in income tax credit was mainly due to the recognition of deferred tax of approximately **RMB 12.7 million** on asset impairment losses during the year[126](index=126&type=chunk)[131](index=131&type=chunk) [Financial Resources and Liquidity](index=21&type=section&id=Financial%20Resources%20and%20Liquidity) As of December 31, 2020, total bank balances and cash were approximately RMB 48.9 million, a year-on-year decrease of approximately RMB 29.9 million, mainly due to reduced borrowings and capital expenditure; the current ratio was 131.7% and the gearing ratio was 25.4%, indicating the Group maintained a healthy liquidity position Financial Resources and Liquidity Indicators Comparison | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change (RMB thousand) | | :--- | :--- | :--- | :--- | | Bank Balances and Cash | 48,908 | 78,761 | (29,853) | | Total Borrowings | 81,400 (approx) | 94,700 (approx) | (13,300) | | Current Ratio | 131.7% | 106.8% | 24.9% | | Gearing Ratio | 25.4% | 23.2% | 2.2% | - The decrease in bank balances and cash was mainly due to a reduction in borrowings of approximately **RMB 13.3 million** and capital expenditure of approximately **RMB 14.3 million**[127](index=127&type=chunk)[132](index=132&type=chunk) [Investment Review](index=23&type=section&id=Investment%20Review) The Group subscribed to CSG convertible bonds in 2018, but due to project funding delays, license transfer delays, and issuer default, the bond's fair value recorded a significant loss in 2019, with a recovery in 2020; given ongoing defaults and the pandemic's impact on tourism, the Group sold the bond for **RMB 8.34 million** in March 2021 to mitigate losses and exit the investment - In 2018, the Group subscribed to CSG convertible bonds with a principal amount of **HKD 70 million** (approximately **RMB 56.7 million**), bearing an annual coupon of **6%** and maturing on March 15, 2022[149](index=149&type=chunk)[153](index=153&type=chunk) - In 2019, a fair value loss of approximately **RMB 60.5 million** on financial assets at fair value through profit or loss was recorded due to project funding delays, license transfer delays, and the issuer's failure to pay interest[150](index=150&type=chunk)[154](index=154&type=chunk) CSG Convertible Bond Fair Value Movement | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--- | :--- | :--- | | Fair Value Gain/(Loss) | 3,913 | (60,524) | | Fair Value (End of Period) | 5,557 | 1,969 | - On March 15, 2021, the Group sold the CSG convertible bonds for **HKD 10 million** (approximately **RMB 8.34 million**), aiming to mitigate losses, exit the investment, and generate immediate available funds[158](index=158&type=chunk)[160](index=160&type=chunk)[140](index=140&type=chunk)[143](index=143&type=chunk) [Human Resources](index=22&type=section&id=Human%20Resources) As of December 31, 2020, the Group's headcount was approximately 556, a decrease of 358 from 2019, mainly due to normal staff turnover and recruitment difficulties caused by COVID-19; total staff costs for the year were approximately RMB 56.0 million Staff Headcount and Costs Comparison | Indicator | 2020 | 2019 | | :--- | :--- | :--- | | Staff Headcount | 556 | 914 | | Staff Headcount Decrease | 358 | - | | Total Staff Costs (RMB million) | 56.0 | 77.5 | - The decrease in headcount was primarily due to normal staff turnover and increased difficulty in recruiting workers from other provinces following COVID-19 outbreaks, quarantine, lockdowns, and travel restrictions[141](index=141&type=chunk)[147](index=147&type=chunk) [Events after the reporting date](index=22&type=section&id=Events%20after%20the%20reporting%20date) Subsequent to the reporting period, on March 15, 2021, the Group sold the CSG convertible bonds for a cash consideration of HKD 10 million (approximately RMB 8.34 million) - On March 15, 2021, the Group entered into a sale and purchase agreement with an independent third party to dispose of the CSG convertible bonds for a cash consideration of **HKD 10 million** (approximately **RMB 8.34 million**)[140](index=140&type=chunk)[146](index=146&type=chunk) [Corporate Governance Report](index=25&type=section&id=Corporate%20Governance%20Report) This report details the company's FY2020 corporate governance practices, including board structure, committee operations, director training, shareholder communication, risk management, and internal controls; the company is committed to high governance standards to protect shareholder interests and enhance corporate value and accountability [Compliance with Corporate Governance Code](index=25&type=section&id=Compliance%20with%20Corporate%20Governance%20Code) The company largely complied with the Corporate Governance Code in FY2020, but deviated from provision A.2.1 from January 1 to October 9, 2020, when the Chairman and CEO roles were combined; since October 9, 2020, these roles have been separated, and the company fully complies with the code - From January 1 to October 9, 2020, Mr. Lam San Fuk served as both Chairman and Chief Executive Officer, deviating from Corporate Governance Code provision A.2.1[163](index=163&type=chunk)[167](index=167&type=chunk) - Effective October 9, 2020, Ms. Chen Sheng was re-designated as Executive Director and Chairperson, and Mr. Xu Chengwu was appointed Chief Executive Officer, bringing the company into compliance with all applicable Corporate Governance Code provisions[164](index=164&type=chunk)[168](index=168&type=chunk) [The Board of Directors](index=26&type=section&id=The%20Board%20of%20Directors) The Board of Directors is responsible for the company's leadership and control, formulating overall strategy and reviewing operational and financial performance; it comprises six directors, including three executive and three independent non-executive directors, who actively engage in continuous professional development and hold regular meetings [Chairman and Chief Executive Officer](index=27&type=section&id=Chairman%20and%20Chief%20Executive%20Officer) From January 1 to October 9, 2020, Mr. Lam San Fuk held both Chairman and CEO roles; effective October 9, 2020, Ms. Chen Sheng became Chairman and Mr. Xu Chengwu became CEO, achieving separation of these roles - From January 1 to October 9, 2020, Mr. Lam San Fuk served as both Chairman and Chief Executive Officer, which the Board believed ensured consistent leadership and efficient strategic planning for the Group[178](index=178&type=chunk)[179](index=179&type=chunk) - Effective October 9, 2020, Ms. Chen Sheng was re-designated as Executive Director and Chairperson, and Mr. Xu Chengwu was appointed Chief Executive Officer, achieving the separation of the Chairman and Chief Executive Officer roles[178](index=178&type=chunk)[179](index=179&type=chunk) [Independent Non-executive Directors](index=27&type=section&id=Independent%20Non-executive%20Directors) As of December 31, 2020, the Board consistently met Listing Rules requirements for the number of Independent Non-executive Directors, who come from diverse backgrounds, provide independent judgment and advice, and have confirmed their independence - The Board has consistently complied with the Listing Rules requirement to appoint at least three Independent Non-executive Directors, comprising one-third of the Board's membership[180](index=180&type=chunk)[183](index=183&type=chunk) - Independent Non-executive Directors come from diverse backgrounds and industries, with one member possessing appropriate professional expertise in accounting and related financial management[180](index=180&type=chunk)[183](index=183&type=chunk) - The company has received annual confirmations of independence from each Independent Non-executive Director and considers them all to meet the independence guidelines[181](index=181&type=chunk)[183](index=183&type=chunk) [Directors' Continuous Training and Development](index=28&type=section&id=Directors'%20Continuous%20Training%20and%20Development) All Directors engage in continuous professional development by attending seminars relevant to their directorial duties, enhancing and updating their knowledge and skills to ensure informed and pertinent contributions to the Board - All Directors participate in continuous professional development, enhancing and updating their knowledge and skills by attending seminars relevant to their duties as Directors of the company[190](index=190&type=chunk)[193](index=193&type=chunk) [Board Meetings and General Meeting](index=29&type=section&id=Board%20Meetings%20and%20General%20Meeting) One Annual General Meeting and seven Board meetings were held in FY2020; all Directors had the opportunity to include matters on the agenda and sufficient time to review relevant documents, with Board meeting minutes maintained by the company secretary for their inspection - For the year ended December 31, 2020, one Annual General Meeting and **seven Board meetings** were held[196](index=196&type=chunk)[199](index=199&type=chunk) - All Directors have the right to access Board papers and related information, unlimited access to the advice and services of the company secretary, and may seek independent professional advice when necessary[197](index=197&type=chunk)[200](index=200&type=chunk) [Board Committees](index=30&type=section&id=Board%20Committees) The Board has established Audit, Remuneration, and Nomination Committees to oversee specific aspects of company affairs; each committee has clear terms of reference and sufficient resources to fulfill its responsibilities [Nomination Committee](index=30&type=section&id=Nomination%20Committee) The Nomination Committee, comprising two Independent Non-executive Directors and one Executive Director, reviews Board structure, identifies qualified director candidates, assesses INED independence, and recommends director appointments and succession plans; it held **3 meetings** in 2020 - The Nomination Committee comprises Ms. Peng Xu (Chairperson), Mr. Chen Wenhua (Independent Non-executive Director), and Ms. Chen Sheng (Executive Director)[203](index=203&type=chunk)[207](index=207&type=chunk) - Functions include: reviewing and monitoring the Board's structure, size, and composition; identifying individuals suitably qualified to become Board members; assessing the independence of Independent Non-executive Directors; and making recommendations to the Board on director appointments or re-appointments and succession planning for directors, particularly the Chairman and Chief Executive Officer[204](index=204&type=chunk)[207](index=207&type=chunk) - In FY2020, the Nomination Committee held **3 meetings** to review director appointments and retirements, Board size, diversity, and composition[205](index=205&type=chunk)[210](index=210&type=chunk) [Board Diversity Policy](index=31&type=section&id=Board%20Diversity%20Policy) The company adopted a Board Diversity Policy on January 1, 2019, to ensure a balanced Board in terms of skills, experience, and diverse perspectives, considering gender, age, cultural and educational background, and professional experience; as of this annual report date, the Board comprises six directors, two of whom are female - The company adopted a Board Diversity Policy on January 1, 2019, aiming to ensure a balanced Board in terms of skills, experience, and diverse perspectives relevant to the company's business needs[212](index=212&type=chunk)[213](index=213&type=chunk) - Candidate selection will be based on the Board Nomination Policy and consider a range of diversity aspects, including but not limited to gender, age, cultural and educational background, professional or other experience, race, skills and knowledge, and length of service[212](index=212&type=chunk)[213](index=213&type=chunk) - As of the date of this annual report, the Board comprises **six directors**, two of whom are female[214](index=214&type=chunk) [Board Nomination Policy](index=32&type=section&id=Board%20Nomination%20Policy) The company adopted a Board Nomination Policy, outlining criteria and procedures for selecting director candidates, including reputation for integrity, business experience, time commitment, diversity (e.g., race, gender, age, educational background), professional qualifications, number of existing directorships, and independence - Selection criteria include: reputation for integrity, achievements and experience in the Group's businesses, time commitment and relevant interests, diversity in various aspects (including but not limited to race, gender, age, educational background, professional experience, skills and knowledge, and length of service), professional qualifications, number of existing directorships and other commitments that may require the candidate's attention, independence requirements, and the Board Diversity Policy[220](index=220&type=chunk)[222](index=222&type=chunk) - Nomination procedures include: the Nomination Committee identifying potential candidates; the company secretary providing candidate curriculum vitae details; the Nomination Committee making recommendations to the Board; the Nomination Committee ensuring candidates will enhance Board diversity, with particular attention to gender balance; for the appointment of Independent Non-executive Directors, obtaining all relevant information to assess independence; and the Board deliberating and deciding on appointments based on recommendations[224](index=224&type=chunk)[225](index=225&type=chunk) [Remuneration Committee](index=34&type=section&id=Remuneration%20Committee) The Remuneration Committee, comprising an Independent Non-executive Director (Chairman), an Executive Director, and another Independent Non-executive Director, advises the Board on remuneration policies and structures for directors and senior management; it held **3 meetings** in 2020 - The Remuneration Committee comprises Mr. Chen Wenhua (Chairman, Independent Non-executive Director), Mr. Xu Chengwu (Executive Director), and Ms. Peng Xu (Independent Non-executive Director)[229](index=229&type=chunk)[232](index=232&type=chunk) - Its function is to make recommendations to the Board on the company's policies and structures for the remuneration of all Directors and senior management, and on establishing formal and transparent procedures for developing remuneration policies[230](index=230&type=chunk)[232](index=232&type=chunk) - In FY2020, the Remuneration Committee held **3 meetings** to review the remuneration structure for Executive Directors and senior management and remuneration proposals for 2019/2020[231](index=231&type=chunk)[233](index=233&type=chunk) [Audit Committee](index=35&type=section&id=Audit%20Committee) The Audit Committee, composed of three Independent Non-executive Directors, advises on the appointment, remuneration, and terms of engagement of external auditors, reviews the Group's interim and annual reports, and oversees the company's financial reporting system, risk management, and internal control procedures; it held **4 meetings** in 2020 - The Audit Committee comprises Mr. Zheng Jinmin (Chairman), Mr. Chen Wenhua, and Ms. Peng Xu (all Independent Non-executive Directors)[237](index=237&type=chunk)[241](index=241&type=chunk) - Key responsibilities include: advising the Board on the appointment, re-appointment, and removal of external auditors; approving the remuneration and terms of engagement of external auditors; reviewing the Group's interim and annual reports and accounts; and overseeing the company's financial reporting system, risk management, and internal control procedures[238](index=238&type=chunk)[241](index=241&type=chunk) - In FY2020, the Audit Committee held **4 meetings**, reviewed the Group's annual and interim results, and concluded that the consolidated financial statements and results were prepared in accordance with applicable accounting standards and Listing Rules[244](index=244&type=chunk)[245](index=245&type=chunk)[250](index=250&type=chunk) [Company Secretary](index=36&type=section&id=Company%20Secretary) Mr. Chong Man Hung has served as Company Secretary since May 21, 2015, possessing over 18 years of audit and finance experience, and completed at least 15 hours of professional training in FY2020 - Mr. Chong Man Hung was appointed Company Secretary on May 21, 2015, and possesses **over 18 years** of experience in the auditing and finance industries[247](index=247&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) - In FY2020, Mr. Chong completed no less than **15 hours** of relevant professional training, complying with Listing Rules requirements[247](index=247&type=chunk)[252](index=252&type=chunk) [Corporate Governance Functions](index=36&type=section&id=Corporate%20Governance%20Functions) The Board is responsible for corporate governance functions, having reviewed the company's governance policies and practices, training and continuous professional development for directors and senior management, compliance with laws, regulations, and codes, and the disclosure of the corporate governance report - The Board has reviewed the company's corporate governance policies and practices, training and continuous professional development for directors and senior management, policies and practices regarding compliance with laws and regulations, adherence to standard codes, compliance with the Corporate Governance Code, and the disclosures in this Corporate Governance Report[249](index=249&type=chunk)[253](index=253&type=chunk) [Dividend Policy](index=37&type=section&id=Dividend%20Policy) The company has adopted a dividend policy, allowing the Board discretion to declare and distribute dividends, subject to the Articles of Association and applicable laws, considering financial position, cash flow, business strategy, earnings, capital requirements, and shareholder interests; the policy does not constitute a legally binding commitment - The company has adopted a dividend policy, allowing the Board discretion to declare and distribute dividends to shareholders, subject to the Articles of Association and applicable laws and regulations[255](index=255&type=chunk)[259](index=259&type=chunk) - When considering dividend payments, the Board will take into account factors such as financial position, cash flow, business conditions and strategies, earnings, capital requirements, shareholder interests, economic environment, and restrictions on dividend payments[256](index=256&type=chunk)[259](index=259&type=chunk) - The dividend policy does not constitute a legally binding commitment that the company will pay dividends at any specific amount, nor does it compel the company to declare dividends at any time[257](index=257&type=chunk)[259](index=259&type=chunk) [Auditors' Remuneration](index=37&type=section&id=Auditors'%20Remuneration) In FY2020, the company paid total remuneration of HKD 1,200 thousand to its auditor, Grant Thornton Hong Kong Limited, with HKD 1,020 thousand for audit services and HKD 180 thousand for non-audit services FY2020 Auditors' Remuneration | Service Nature | Amount (HKD thousand) | | :--- | :--- | | Audit Services | 1,020 | | Non-Audit Services | 180 | | **Total** | **1,200** | [Directors' Responsibilities for the Financial Statements](index=38&type=section&id=Directors'%20Responsibilities%20for%20the%20Financial%20Statements) The Board confirms its responsibility to prepare consolidated financial statements that truly and fairly reflect the Group's financial position, performance, and cash flows, and to take reasonable steps to safeguard assets and prevent fraud; the Board believes the Group has sufficient resources to continue as a going concern - The Board confirms its responsibility to prepare consolidated financial statements for each financial year that truly and fairly reflect the state of affairs of the Group and the company, as well as the Group's results and cash flows for that year[262](index=262&type=chunk)[266](index=266&type=chunk) - Directors are responsible for taking all reasonably necessary actions to safeguard the Group's assets and to prevent and detect fraud and other irregularities[263](index=263&type=chunk)[267](index=267&type=chunk) - The Directors believe the Group has sufficient resources to continue operations for the foreseeable future, thus the going concern basis is appropriate for preparing the consolidated financial statements[263](index=263&type=chunk)[267](index=267&type=chunk) [Risk Management and Internal Control](index=38&type=section&id=Risk%20Management%20and%20Internal%20Control) The Board is responsible for assessing and determining the nature and extent of risks the Group is willing to undertake to achieve its strategic objectives, and for maintaining appropriate and effective risk management and internal control systems; the Group has established continuous risk identification, assessment, and management procedures, with annual internal control reviews conducted by independent qualified accountants - The Board confirms its full responsibility for assessing and determining the nature and extent of risks the Group is willing to undertake to achieve its strategic objectives, and for maintaining appropriate and effective risk management and internal control systems[264](index=264&type=chunk)[268](index=268&type=chunk) - The Group has established a continuous process to identify, assess, and manage its significant risks, with each business unit responsible for identifying, assessing, and monitoring risks relevant to its own unit[265](index=265&type=chunk)[268](index=268&type=chunk) - The Group does not have an internal audit function; instead, an independent qualified accountant conducts an annual review of internal control and risk management systems, with no significant deficiencies found in the 2020 review[272](index=272&type=chunk)[274](index=274&type=chunk) [Business Activities in Sanctioned Countries](index=40&type=section&id=Business%20Activities%20in%20Sanctioned%20Countries) The Group effectively monitors and assesses sanction risks, assigning senior staff to review business transaction documents from sanctioned countries or individuals and cross-referencing them against restricted party and country lists maintained by the US, EU, Australia, or UN; in FY2020, no Group products were sold to any sanctioned countries or individuals - The Board has effectively monitored and assessed the sanction risks to our business, including assigning senior staff to review and approve all relevant business transaction documents from customers or potential customers in sanctioned countries and sanctioned individuals[279](index=279&type=chunk)[283](index=283&type=chunk) - Designated staff conduct cross-checks against various restricted party and country lists maintained by the US, EU, Australia, or the United Nations[279](index=279&type=chunk)[283](index=283&type=chunk) - In FY2020, the Group's products were not sold to any sanctioned countries or sanctioned individuals[280](index=280&type=chunk)[284](index=284&type=chunk) [Non-Competition Undertaking](index=40&type=section&id=Non-Competition%20Undertaking) The controlling shareholders have provided a non-competition undertaking to the company and confirmed compliance with its terms; the Board believes the controlling shareholders have adhered to the undertaking - Controlling shareholders Master Professional Holdings Limited and Mr. Chan Sing Pat have provided a deed of non-competition undertaking with the company as beneficiary[281](index=281&type=chunk)[285](index=285&type=chunk) - The controlling shareholders have confirmed compliance with the terms of the non-competition undertaking, and the Board believes they have adhered to it[287](index=287&type=chunk)[292](index=292&type=chunk) [Communication with Shareholders and Investors](index=41&type=section&id=Communication%20with%20Shareholders%20and%20Investors) The company values effective communication with shareholders, disseminating information through channels like Annual General Meetings and its website, and encouraging shareholder participation; all resolutions at general meetings are voted on, with results published on the website - The company believes effective communication with shareholders is crucial for enhancing investor relations and ensuring investors understand the Group's business performance and strategies[288](index=288&type=chunk)[293](index=293&type=chunk) - Board members, committee members, and external auditors attend the company's Annual General Meeting to answer shareholder questions[289](index=289&type=chunk)[293](index=293&type=chunk) - The company maintains a website for publishing corporate announcements, financial information, and other data, allowing shareholders and investors to submit written inquiries directly to the company[290](index=290&type=chunk)[294](index=294&type=chunk) [Shareholders' Rights](index=42&type=section&id=Shareholders'%20Rights) Shareholders have the right to requisition an extraordinary general meeting in accordance with the Articles of Association, with clear procedures for nominating director candidates; shareholders may submit written inquiries to the Board - Shareholders holding not less than one-tenth of the company's paid-up capital with voting rights may requisition an extraordinary general meeting[299](index=299&type=chunk)[302](index=302&type=chunk) - Nominations for director candidates require written notice, submitted no earlier than the day after the dispatch of the notice of the general meeting, and no later than seven days before the meeting, with the period being at least seven days[300](index=300&type=chunk)[303](index=303&type=chunk) - Shareholders may send written inquiries to the company's principal place of business in Hong Kong, providing their full name, contact details, and identification[301](index=301&type=chunk)[304](index=304&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk) [Directors and Senior Management](index=44&type=section&id=Directors%20and%20Senior%20Management) This section introduces the Group's Executive Directors, Independent Non-executive Directors, and senior management, detailing their backgrounds, ages, appointments, and key responsibilities; Board members possess extensive experience in compliance, finance, accounting, and law [Executive Directors](index=44&type=section&id=Executive%20Directors) Ms. Chen Sheng (48) has served as Chairperson and Executive Director since October 9, 2020, with over 25 years of compliance experience; Mr. Ma Zhijun (44) joined the Group in 2017, bringing over 19 years of commercial banking, fixed income, and M&A experience; Mr. Xu Chengwu (51) was appointed Executive Director on April 3, 2020, and CEO on October 9, 2020, with over 25 years of finance and tax experience - Ms. Chen Sheng (age **48**) was re-designated as Executive Director and Chairperson on October 9, 2020, possessing **over 25 years** of compliance experience[310](index=310&type=chunk)[311](index=311&type=chunk)[315](index=315&type=chunk) - Mr. Xu Chengwu (age **51**) was appointed Executive Director on April 3, 2020, and Chief Executive Officer on October 9, 2020, with **over 25 years** of finance and tax experience[313](index=313&type=chunk)[314](index=314&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) - Mr. Ma Zhijun (age **44**) joined the Group in 2017 and was appointed Executive Director, bringing **over 19 years** of experience in commercial banking, fixed income markets, and mergers and acquisitions[312](index=312&type=chunk)[315](index=315&type=chunk) [Independent Non-executive Directors](index=45&type=section&id=Independent%20Non-executive%20Directors) Mr. Chen Wenhua (53) has over 25 years of education industry experience and chairs the Remuneration Committee; Mr. Zheng Jinmin (49) has over 20 years of accounting experience and chairs the Audit Committee; Ms. Peng Xu (48) has over 18 years of legal industry experience and chairs the Nomination Committee - Mr. Chen Wenhua (age **53**) possesses **over 25 years** of experience in the education industry and serves as Chairman of the Remuneration Committee[319](index=319&type=chunk)[320](index=320&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk)[327](index=327&type=chunk) - Mr. Zheng Jinmin (age **49**) was appointed Independent Non-executive Director on June 14, 2019, is a Certified Public Accountant in China, has **over 20 years** of accounting experience, and serves as Chairman of the Audit Committee[321](index=321&type=chunk)[322](index=322&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) - Ms. Peng Xu (age **48**) was appointed Independent Non-executive Director on August 7, 2015, is a practicing lawyer in China, has **over 18 years** of legal industry experience, and serves as Chairman of the Nomination Committee[323](index=323&type=chunk)[324](index=324&type=chunk)[329](index=329&type=chunk)[330](index=330&type=chunk) [Senior Management](index=46&type=section&id=Senior%20Management) Mr. Chong Man Hung (42) has served as Company Secretary since May 21, 2015, is a member of the Hong Kong Institute of Certified Public Accountants, possesses over 18 years of audit and finance experience, and is responsible for the Group's company secretarial matters - Mr. Chong Man Hung (age **42**) joined the Group as Company Secretary on May 21, 2015, and is a member of the Hong Kong Institute of Certified Public Accountants[333](index=333&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) - Mr. Chong possesses **over 18 years** of experience in the auditing and finance industries and is responsible for the Group's company secretarial matters[334](index=334&type=chunk)[336](index=336&type=chunk) [Report of the Directors](index=47&type=section&id=Report%20of%20the%20Directors) The Report of the Directors presents the Group's audited financial statements for FY2020, outlining principal activities, results, dividend policy, share capital changes, short-term borrowings, reserves, post-reporting date events, related party transactions, directors' remuneration, and major customers and suppliers; the report confirms the Group's compliance with relevant laws and regulations and maintenance of sufficient public float [Principal Activities and Results](index=47&type=section&id=Principal%20Activities%20and%20Results) The company is an investment holding company, with subsidiaries primarily engaged in the design, development, production, sale, and marketing of cosplay products and lingerie, as well as property leasing; the Group recorded a loss in FY2020, and the Board does not recommend paying any dividends - The company is an investment holding company, and its subsidiaries are principally engaged in the design, development, production, sale, and marketing of cosplay products (including cosplay costumes and wigs) and lingerie, as well as property leasing[339](index=339&type=chunk)[347](index=347&type=chunk) - The Directors do not recommend the payment of any dividend for the year ended December 31, 2020[340](index=340&type=chunk)[349](index=349&type=chunk) [Financial Information Summary](index=47&type=section&id=Financial%20Information%20Summary) A summary of the Group's results, assets, liabilities, and non-controlling interests for the past five financial years is presented on page 152; details of movements in property, plant, and equipment, right-of-use assets, and investment properties are provided in Notes 16, 14, and 15 to the consolidated financial statements, respectively - A summary of the Group's results, assets, liabilities, and non-controlling interests for the past five financial years is set out on page 152[342](index=342&type=chunk)[351](index=351&type=chunk) - Details of movements in property, plant, and equipment and right-of-use assets are set out in Notes 16 and 14 to the consolidated financial statements, respectively[343](index=343&type=chunk)[352](index=352&type=chunk) - Details of movements in investment properties are set out in Note 15 to the consolidated financial statements[344](index=344&type=chunk)[353](index=353&type=chunk) [Share Capital and Reserves](index=48&type=section&id=Share%20Capital%20and%20Reserves) Details of share capital movements are in Note 29 to the consolidated financial statements; details of reserve movements are in the consolidated statement of changes in equity and Note 30; as of December 31, 2020, the company's distributable reserves were approximately RMB 152.9 million - Details of the company's share capital movements during the year are set out in Note 29 to the consolidated financial statements[358](index=358&type=chunk)[365](index=365&type=chunk) - Details of movements in the company's and the Group's reserves during the year are set out in the consolidated statement of changes in equity and Note 30 to the consolidated financial statements[362](index=362&type=chunk)[369](index=369&type=chunk) - As of December 31, 2020, the company's distributable reserves were approximately **RMB 152.9 million**[372](index=372&type=chunk)[379](index=379&type=chunk) [Major Customers and Suppliers](index=50&type=section&id=Major%20Customers%20and%20Suppliers) In FY2020, sales to the Group's top five customers accounted for approximately 31.4% of total revenue, with the largest customer contributing 11.0%; purchases from the top five suppliers represented approximately 30.2% of total purchases, with the largest supplier at 9.4%; no directors, their associates, or shareholders holding over 5% of the company's share capital had interests in the top five suppliers or customers - Total sales attributable to the Group's top five customers accounted for approximately **31.4%** of total revenue in FY2020, with the largest customer contributing approximately **11.0%**[388](index=388&type=chunk)[392](index=392&type=chunk) - The Group's purchases from its top five suppliers accounted for approximately **30.2%** of total purchases in FY2020, with the largest supplier contributing approximately **9.4%**[389](index=389&type=chunk)[393](index=393&type=chunk) - No directors, their associates, or shareholders holding **more than 5%** of the company's issued share capital had any interests in the top five suppliers or customers[389](index=389&type=chunk)[393](index=393&type=chunk) [Directors' Interests and Share Option Scheme](index=52&type=section&id=Directors'%20Interests%20and%20Share%20Option%20Scheme) As of December 31, 2020, no directors, chief executives, or their associates held disclosable interests or short positions in the company's shares, underlying shares, or debentures; the company adopted a share option scheme to reward employees, retain talent, and attract suitable personnel, but no options were granted or exercised in FY2020 - As of December 31, 2020, no directors, chief executives, or their associates held any disclosable interests or short positions in the shares, underlying shares, or debentures of the company or any of its associated corporations[411](index=411&type=chunk)[416](index=416&type=chunk) - The Share Option Scheme aims to recognize and reward eligible participants for their contributions to the Group, encourage optimized performance and efficiency, and attract, retain, or maintain ongoing business relationships with eligible participants beneficial to the Group[413](index=413&type=chunk)[418](index=418&type=chunk) - In FY2020, no share options were granted or exercised under the Share Option Scheme, and there were no outstanding share options at the end of the reporting period[428](index=428&type=chunk)[430](index=430&type=chunk) [Interests of Shareholders Disclosable Under The SFO](index=54&type=section&id=Interests%20of%20Shareholders%20Disclosable%20Under%20The%20SFO) As of December 31, 2020, major shareholder Mr. Chan Sing Pat held 41.42% of the company's shares through his wholly-owned Master Professional Holdings Limited, with his spouse, Ms. Li Zhi Ping, deemed to have the same interest; Mr. Lin Shi Xin beneficially owned 8.75% of the company's shares Major Shareholders' Long Positions in Shares and Underlying Shares of the Company | Major Shareholder Name | Nature of Interest | Number of Ordinary Shares | Approximate Percentage of Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Chan Sing Pat | Interest in controlled corporation | 371,859,000 | 41.42% | | Master Professional Holdings Limited | Beneficial owner | 371,859,000 | 41.42% | | Ms. Li Zhi Ping | Spouse's interest | 371,859,000 | 41.42% | | Mr. Lin Shi Xin | Beneficial owner | 78,563,000 | 8.75% | - Mr. Chan Sing Pat holds shares in the company through his wholly-owned Master Professional

ai159920961731_China Partytime IR2020 Cover output.pdf 1 4/9/2020 下午4:53 CHINA PARTYTIME CULTURE HOLDINGS LIMITED 中 國 派 對 文 化 控 股 有 限 公 司 www.partytime.com.cn (Incorporated in the Cayman Islands with limited liability 於開曼群島註冊成立的有限公司) Stock Code 股份代號：1532 Interim Report 2020 中期報告 Contents 目錄 Corporate Information 公司資料 2 Financial Highlights 財務摘要 4 Directors' Business Review and Management Discussion and Analysis 董事業務回顧與管理層討論及分析 5 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Inco ...

[Financial Highlights](index=2&type=section&id=Financial%20Highlights) The group experienced a 13.6% revenue decrease in FY2019, with improved gross profit margin, but significant impairment losses and fair value losses led to a substantial increase in loss attributable to equity holders [Key Financial Performance](index=3&type=section&id=Key%20Financial%20Performance) The Group's FY2019 revenue decreased by 13.6%, with an improved gross profit margin, but loss attributable to equity holders significantly increased due to impairment losses and fair value losses on financial assets FY2019 Key Financial Data Comparison with FY2018 | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 316,064 | 365,903 | (13.6%) | | Gross Profit | 83,401 | 76,711 | 8.7% | | Loss for the Year Attributable to Equity Holders of the Company | (72,205) | (11,735) | 515.3% | | Gross Profit Margin | 26.4% | 21.0% | 5.4% | | Net Loss Margin | (22.8%) | (3.2%) | 19.6% | | Adjusted Profit Before Income Tax | 15,564 | 11,416 | 36.3% | - Adjusted profit before income tax (excluding impairment losses on property, plant and equipment and investment properties, and fair value losses on financial assets at fair value through profit or loss) increased by **36.3%**, primarily due to an improved gross profit margin[42](index=42&type=chunk) [Corporate Information](index=2&type=section&id=Corporate%20Information) The company's corporate structure includes a board of directors and committees, with its registered office in the Cayman Islands and primary operations in Jiangxi, China [Board of Directors and Committees](index=5&type=section&id=Board%20of%20Directors%20and%20Committees) The company's Board of Directors comprises executive, non-executive, and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - The Board of Directors includes Mr. Lin Xinfu (Chairman), Mr. Ma Zhijun, Mr. Peng Zhencheng (Executive Directors), Ms. Chen Sheng (Non-executive Director), and Mr. Zheng Jinmin, Mr. Chen Wenhua, Ms. Peng Shu (Independent Non-executive Directors)[44](index=44&type=chunk) - Mr. Zheng Jinmin chairs the Audit Committee, Mr. Chen Wenhua chairs the Remuneration Committee, and Ms. Peng Shu chairs the Nomination Committee[44](index=44&type=chunk) [Company Details](index=5&type=section&id=Company%20Details) The company is registered in the Cayman Islands, with its headquarters and principal place of business in Jiangxi Province, China, and an operating location in Hong Kong, trading under stock code 1532 - Mr. Zhuang Wenhong serves as Company Secretary, with the registered office in the Cayman Islands and China headquarters located in Yichun Economic and Technological Development Zone, Jiangxi Province[44](index=44&type=chunk) - Tricor Investor Services Limited is the Hong Kong share registrar, and Grant Thornton Hong Kong Limited serves as the auditor[46](index=46&type=chunk)[47](index=47&type=chunk) [Chairman's Statement](index=7&type=section&id=Chairman's%20Statement) The Chairman's statement reviews the 2019 revenue decline and gross margin improvement, while outlining strategies for diversification and expansion amidst the challenging 2020 economic outlook [Chairman's Business Review](index=7&type=section&id=Chairman's%20Business%20Review) In 2019, the company's revenue decreased by 13.6% due to reduced customer orders from consumers shifting to online shopping and macroeconomic uncertainties; however, gross profit margin improved from 21.0% to 26.4% by enhancing R&D capabilities - Revenue decreased by **13.6%** from **RMB 365.9 million** in 2018 to **RMB 316.1 million** in 2019[52](index=52&type=chunk)[54](index=54&type=chunk) - Gross profit margin increased from **21.0%** in 2018 to **26.4%** in 2019, primarily due to enhanced R&D capabilities and the provision of high-quality one-stop solutions[53](index=53&type=chunk)[54](index=54&type=chunk) - Loss attributable to owners of the Company increased by **515.3%** from approximately **RMB 11.7 million** in 2018 to approximately **RMB 72.2 million** in 2019[53](index=53&type=chunk)[55](index=55&type=chunk) [Chairman's Prospects](index=8&type=section&id=Chairman's%20Prospects) Facing business environment uncertainties from the COVID-19 pandemic in early 2020, the company is committed to business diversification, expanding revenue streams, and achieving business expansion through intellectual property collaborations, supply chain integration, and mergers and acquisitions - The outbreak of the COVID-19 pandemic in early 2020 adversely affected the manufacturing industry and the company's business operations, with a full recovery of the industrial chain expected to take time[61](index=61&type=chunk)[63](index=63&type=chunk) - The company will achieve business diversification and expand revenue sources by collaborating with other intellectual property owners, partnering with upstream and downstream industry companies, and pursuing mergers, industrial integration, and business expansion[62](index=62&type=chunk)[64](index=64&type=chunk) [Directors' Business Review and Management Discussion and Analysis](index=9&type=section&id=Directors'%20Business%20Review%20and%20Management%20Discussion%20and%20Analysis) This section provides a comprehensive review of the Group's business performance, key financial indicators, operational strategies, and risk factors for the reporting period [Key Performance Indicators](index=9&type=section&id=Key%20Performance%20Indicators) This section outlines the company's key financial and operating indicators for FY2019, showing decreased revenue, expanded losses, but improved gross profit margin, alongside a decline in net current assets and current ratio, and an increase in the gearing ratio FY2019 Key Performance Indicators Comparison with FY2018 | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | Change Percentage | | :--- | :--- | :--- | :--- | | Revenue | 316,064 | 365,903 | (13.6%) | | Gross Profit | 83,401 | 76,711 | 8.7% | | Operating Loss | (69,845) | (10,046) | 595.3% | | Loss for the Year Attributable to Equity Holders of the Company | (72,205) | (11,735) | 515.3% | | Return on Total Assets | (12.9%) | (2.0%) | 10.9% | | Net Current Assets | 9,642 | 30,665 | (68.6%) | | Total Liabilities | 141,516 | 97,870 | 44.6% | | Current Ratio | 106.8% | 131.3% | (24.5%) | | Gearing Ratio | 23.2% | 14.1% | 9.1% | | Cash Generated from Operations | 46,988 | 45,268 | 3.8% | | Capital Expenditure | 64,037 | 40,963 | 56.3% | | Basic Loss Per Share (RMB Cents) | (8.04) | (1.35) | 495.6% | [Business Review](index=10&type=section&id=Business%20Review) The Group primarily designs, develops, produces, sells, and markets cosplay products and lingerie, mainly for export; in 2019, total revenue decreased by 13.6%, with Contract Manufacturing Services (CMS) revenue down 20.7% and Original Brand Manufacturing (OBM) revenue slightly up 2.1%, while gross profit margin increased due to enhanced R&D capabilities and premium one-stop solutions - The Group primarily engages in the design, development, production, sales, and marketing of cosplay products (including costumes and wigs) and non-cosplay apparel (mainly lingerie), primarily exporting to over **20** countries and regions worldwide[69](index=69&type=chunk)[70](index=70&type=chunk) FY2019 Revenue by Operating and Reportable Segment | Segment | 2019 (RMB Thousand) | Percentage of Total | 2018 (RMB Thousand) | Percentage of Total | Revenue Change Percentage | | :--- | :--- | :--- | :--- | :--- | :--- | | CMS Business | 199,770 | 63.2% | 251,960 | 68.9% | (20.7%) | | OBM Business | 116,294 | 36.8% | 113,943 | 31.1% | 2.1% | | Total | 316,064 | 100.0% | 365,903 | 100.0% | (13.6%) | - The decrease in revenue was primarily due to consumers' continued shift to online shopping platforms and a significant reduction in customer order volume, size, and timing caused by increased macroeconomic uncertainty[53](index=53&type=chunk)[54](index=54&type=chunk)[80](index=80&type=chunk) - Gross profit margin increased from **21.0%** in 2018 to **26.4%** in 2019, attributed to enhanced R&D capabilities and the provision of premium one-stop solution services with higher unit selling prices[53](index=53&type=chunk)[54](index=54&type=chunk)[80](index=80&type=chunk) - Loss attributable to equity holders of the Company increased from approximately **RMB 11.7 million** in 2018 to approximately **RMB 72.2 million** in 2019, primarily due to an impairment loss of **RMB 18.7 million** recognized upon reclassification of a center as investment property, and a fair value loss of approximately **RMB 60.5 million** on financial assets at fair value through profit or loss[79](index=79&type=chunk) - Excluding the aforementioned impairment losses and fair value losses, the Group's profit before income tax would have been approximately **RMB 15.6 million**, representing a **36.3%** increase from 2018[84](index=84&type=chunk)[86](index=86&type=chunk) [Principal Risks and Uncertainties](index=12&type=section&id=Principal%20Risks%20and%20Uncertainties) The Group faces multiple risks and uncertainties from global economic and macroeconomic conditions, foreign currency exchange rate fluctuations, and changes in movie and anime character trends, all of which could adversely impact its business, financial position, and growth prospects - Global economic and macroeconomic conditions: The COVID-19 pandemic outbreak adversely affected global economic activities; with over **90%** of the Group's revenue derived from overseas sales, it is susceptible to economic conditions, consumer spending, infectious disease outbreaks, and monetary environments[85](index=85&type=chunk)[87](index=87&type=chunk) - Foreign currency exchange rate fluctuations: A significant portion of revenue is denominated in USD; appreciation of RMB against USD or substantial exchange rate volatility could adversely affect profit margins, costs, profitability, and net assets[89](index=89&type=chunk) - Changes in movie and anime character trends and popularity: Some cosplay products in the CMS business are influenced by the popularity of anime characters, and shifts in market demand could lead to reduced orders and decreased revenue[90](index=90&type=chunk) [Our Business Strategies](index=14&type=section&id=Our%20Business%20Strategies) The Group will continue to focus on business expansion by enhancing R&D capabilities, expanding OBM business in the China market, seeking intellectual property collaborations, and strengthening upstream and downstream supply chain cooperation to improve production efficiency and customer base - Further enhance R&D capabilities[93](index=93&type=chunk)[98](index=98&type=chunk) - Expand OBM business in the China market to enlarge the customer base[93](index=93&type=chunk)[98](index=98&type=chunk) - Seek cooperation with other intellectual property owners for new business ventures[93](index=93&type=chunk)[98](index=98&type=chunk) - Seek collaboration with upstream and downstream industry companies to further enhance productivity[93](index=93&type=chunk)[98](index=98&type=chunk) [Law and Regulation](index=14&type=section&id=Law%20and%20Regulation) The Group is committed to complying with laws and regulations related to workplace quality, product safety, and environmental protection, holding multiple international certifications to ensure employee health and safety, product standards, and environmentally friendly production processes - Workplace quality: Committed to promoting equal opportunities for all employees, providing a safe working environment, and complying with labor laws, with no material non-compliance identified[95](index=95&type=chunk)[96](index=96&type=chunk)[100](index=100&type=chunk) - Product safety: All products comply with US ASTM standards, European EN71 and REACH standards, and safety production standardization certificates, holding multiple certifications including ISO9001:2008, ISO14001:2004, and OHSAS 18001:2007, with no material non-compliance identified in 2019[103](index=103&type=chunk)[105](index=105&type=chunk) - Environmental protection: Committed to protecting the environment, maintaining high environmental standards, and complying with applicable laws and regulations, with no material non-compliance identified in 2019 regarding air and greenhouse gas emissions, or discharges to water and land[104](index=104&type=chunk)[106](index=106&type=chunk) [Financial Review](index=16&type=section&id=Financial%20Review) The Group's revenue decreased in 2019, but gross profit margin improved; other income declined, and selling and administrative expenses slightly decreased. Concurrently, impairment losses on property, plant and equipment and investment properties were recognized, and finance costs increased. Liquidity indicators deteriorated, capital expenditure rose, but the outlook for future capacity expansion remains conservative FY2019 Revenue and Gross Profit Margin by Business Segment | Business | 2019 Revenue (RMB Thousand) | Gross Profit Margin | 2018 Revenue (RMB Thousand) | Gross Profit Margin | Revenue Change Percentage | | :--- | :--- | :--- | :--- | :--- | :--- | | CMS Business | 199,770 | 26.6% | 251,960 | 21.2% | (20.7%) | | OBM Business | 116,294 | 26.4% | 113,943 | 20.5% | 2.1% | | Total | 316,064 | 26.4% | 365,903 | 21.0% | (13.6%) | - CMS business revenue decreased by **20.7%**, primarily impacted by global economic uncertainty following escalating US-China trade tensions, declining overseas sales, and consumers shifting to online shopping platforms[111](index=111&type=chunk)[113](index=113&type=chunk) - OBM business revenue slightly increased by **2.1%**, mainly due to increased demand for OBM cosplay costumes offsetting the decline in demand for wigs and lingerie[112](index=112&type=chunk)[114](index=114&type=chunk) - Gross profit margin increased from **21.0%** in 2018 to **26.4%** in 2019, primarily attributed to enhanced R&D capabilities, enabling the provision of premium one-stop solution services at higher unit selling prices[117](index=117&type=chunk)[119](index=119&type=chunk) - Other income decreased by approximately **RMB 3.9 million** to **RMB 5.3 million**, mainly due to unrecognized interest income from financial assets at fair value through profit or loss and reduced government grants[118](index=118&type=chunk)[120](index=120&type=chunk) - Net impairment loss on property, plant and equipment was approximately **RMB 12.9 million**, and impairment loss on investment properties was approximately **RMB 18.7 million**[125](index=125&type=chunk)[128](index=128&type=chunk) - Finance costs increased by approximately **RMB 1.5 million** to **RMB 6.7 million**, primarily due to higher average loan balances and increased interest expenses on bank and other short-term borrowings[126](index=126&type=chunk)[128](index=128&type=chunk) - Total bank balances and cash were approximately **RMB 78.8 million** (an increase of **4.4%**), net current assets were approximately **RMB 9.6 million** (a decrease of **68.6%**), the current ratio was **106.8%** (a decrease of **24.5%**), and the gearing ratio was **23.2%** (an increase of **9.1%**)[66](index=66&type=chunk)[130](index=130&type=chunk)[134](index=134&type=chunk) - Capital expenditure was approximately **RMB 64.0 million**, primarily for the construction and renovation of new factory buildings at the Yichun production plant and the R&D, service, and experience center at the Yiwu production plant[132](index=132&type=chunk)[135](index=135&type=chunk) - Bank loans are secured by right-of-use assets (**RMB 10.2 million**), buildings (**RMB 129.6 million**), and investment properties (**RMB 20.7 million**)[136](index=136&type=chunk)[142](index=142&type=chunk) - As of December 31, 2019, the number of employees was approximately **914** (2018: **974**), with total staff costs of approximately **RMB 77.5 million** (2018: **RMB 91.1 million**)[139](index=139&type=chunk)[145](index=145&type=chunk) [Investment Review](index=21&type=section&id=Investment%20Review) The CSG convertible bonds subscribed by the company recorded a fair value loss of approximately RMB 60.5 million in FY2019 due to project funding delays, pending license approvals, and the issuer's interest default - The CSG convertible bonds (total principal of **HKD 70 million**) subscribed by Unlock Bound Investments Limited (a subsidiary of the Company) defaulted in FY2019 due to the issuer's failure to pay interest[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - The project development plan was delayed due to unexpected delays in investor funding acquisition and the delayed transfer of theme park licenses[150](index=150&type=chunk)[152](index=152&type=chunk) - In light of the above reasons, a fair value loss of approximately **RMB 60.5 million** on financial assets at fair value through profit or loss was recorded during the financial period[79](index=79&type=chunk)[152](index=152&type=chunk) [Corporate Governance Report](index=22&type=section&id=Corporate%20Governance%20Report) This report details the Group's commitment to high corporate governance standards, including board structure, committee functions, and other governance practices [Compliance with CG Code](index=22&type=section&id=Compliance%20with%20CG%20Code) The company is committed to high standards of corporate governance and complies with the Corporate Governance Code in Appendix 14 of the Listing Rules, with the exception of the Chairman and Chief Executive Officer roles being held by the same individual, an arrangement the Board believes is in the Group's best interest - The company has applied and complied with the principles and applicable provisions of the Corporate Governance Code, except for code provision A.2.1 where Mr. Lin Xinfu holds both the Chairman and Chief Executive Officer positions[155](index=155&type=chunk)[157](index=157&type=chunk) - The Board believes that Mr. Lin's dual role ensures leadership consistency and effective strategic planning for the Group, and the existing Board (including a sufficient number of non-executive and independent non-executive directors) adequately ensures a balance of power[155](index=155&type=chunk)[157](index=157&type=chunk)[167](index=167&type=chunk)[170](index=170&type=chunk) [The Board of Directors](index=23&type=section&id=The%20Board%20of%20Directors) The Board of Directors is responsible for the company's leadership and control, formulating overall strategy, and reviewing operational and financial performance; it comprises seven directors, including three executive, one non-executive, and three independent non-executive directors, ensuring independent judgment and diverse perspectives - The Board of Directors comprises **seven** directors, including **three** executive directors, **one** non-executive director, and **three** independent non-executive directors[162](index=162&type=chunk)[163](index=163&type=chunk) - Independent non-executive directors consistently met Listing Rules requirements throughout FY2019, constituting one-third of the Board, and providing independent judgment and opinions[167](index=167&type=chunk)[170](index=170&type=chunk) - All directors participate in continuous professional development to enhance knowledge and skills; in 2019, one annual general meeting and **seven** Board meetings were held[177](index=177&type=chunk)[178](index=178&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) [Board Committees](index=26&type=section&id=Board%20Committees) The Board has established Nomination, Remuneration, and Audit Committees to oversee specific aspects of company affairs, ensuring professional and transparent corporate governance, with each committee having clear terms of reference and independent operating mechanisms - The Nomination Committee comprises **two** independent non-executive directors and **one** non-executive director, responsible for reviewing Board structure, identifying qualified director candidates, assessing independence, and advising on director appointments and succession planning[187](index=187&type=chunk)[189](index=189&type=chunk) - The company has adopted a Board Diversity Policy, considering diversity aspects such as gender, age, cultural and educational background, experience, ethnicity, skills, and knowledge in Board appointments[193](index=193&type=chunk)[194](index=194&type=chunk) - The Remuneration Committee comprises **one** independent non-executive director (Chairman), **one** executive director, and **one** independent non-executive director, responsible for advising on the remuneration policy and structure for directors and senior management[258](index=258&type=chunk)[259](index=259&type=chunk)[261](index=261&type=chunk) - The Audit Committee comprises **three** independent non-executive directors, primarily responsible for recommending the appointment, remuneration, and terms of engagement of external auditors, reviewing the Group's interim and annual reports, and overseeing the financial reporting system and risk management and internal control procedures[271](index=271&type=chunk)[272](index=272&type=chunk)[276](index=276&type=chunk) [Other Governance Aspects](index=32&type=section&id=Other%20Governance%20Aspects) The company has a Company Secretary, with the Board fulfilling corporate governance functions and establishing a dividend policy; auditor remuneration is transparent, the Board is responsible for financial statements, and risk management and internal control systems are in place. The company adheres to non-competition undertakings and prioritizes communication with shareholders and investors - Mr. Zhuang Wenhong, the Company Secretary, has received no less than **15** hours of relevant professional training[290](index=290&type=chunk) - The company has adopted a dividend policy, allowing the Board to declare dividends at its discretion, but no dividends were paid or proposed for 2019[292](index=292&type=chunk)[294](index=294&type=chunk) FY2019 Auditor's Remuneration | Service Nature | Amount (HKD Thousand) | | :--- | :--- | | Audit Services | 1,020 | | Non-Audit Services | 240 | | Total | 1,260 | - The Board is responsible for assessing and determining risks, and overseeing the design, implementation, and monitoring of risk management and internal control systems; the annual review conducted by an independent qualified accountant in 2019 found no material deficiencies[304](index=304&type=chunk)[305](index=305&type=chunk)[310](index=310&type=chunk)[313](index=313&type=chunk) - In FY2019, the company's products were not sold to any sanctioned countries or sanctioned individuals[312](index=312&type=chunk)[314](index=314&type=chunk) - The controlling shareholder has confirmed compliance with the non-competition undertaking[319](index=319&type=chunk)[320](index=320&type=chunk) - The company maintains effective communication with shareholders and investors through channels such as annual general meetings, the company website, and email[321](index=321&type=chunk)[322](index=322&type=chunk) [Directors and Senior Management](index=39&type=section&id=Directors%20and%20Senior%20Management) This section introduces the Group's executive, non-executive, and independent non-executive directors, along with key senior management personnel, highlighting their diverse expertise and roles [Executive Directors](index=39&type=section&id=Executive%20Directors) The Group's Executive Directors include Mr. Lin Xinfu, Chairman and CEO, along with Mr. Ma Zhijun and Mr. Peng Zhencheng, all possessing extensive experience in anime derivative product manufacturing and sales, financial investment, and corporate banking - Mr. Lin Xinfu (**37** years old) is the Chairman, Executive Director, and Chief Executive Officer, having joined the Group in **2006**, responsible for sales and foreign trade activities, with over **twelve** years of experience in anime derivative product manufacturing and sales[335](index=335&type=chunk)[338](index=338&type=chunk) - Mr. Ma Zhijun (**43** years old) is an Executive Director, with over **nineteen** years of experience in commercial banking, fixed income markets, and mergers and acquisitions[336](index=336&type=chunk)[338](index=338&type=chunk) - Mr. Peng Zhencheng (**43** years old) is an Executive Director, with over **sixteen** years of experience in direct investment and corporate banking, also serving as an executive director and independent non-executive director for other listed companies[337](index=337&type=chunk) [Non-Executive Director](index=40&type=section&id=Non-Executive%20Director) Ms. Chen Sheng, as a Non-Executive Director, possesses over twenty-five years of compliance experience and is responsible for overseeing the Group's corporate governance - Ms. Chen Sheng (**47** years old) is a Non-Executive Director and a member of the Nomination Committee, with over **twenty-five** years of compliance experience, responsible for overseeing the Group's corporate governance[340](index=340&type=chunk)[341](index=341&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) [Independent Non-executive Directors](index=40&type=section&id=Independent%20Non-executive%20Directors) Independent Non-executive Directors include Mr. Chen Wenhua, Mr. Zheng Jinmin, and Ms. Peng Shu, who bring profound professional backgrounds in economics, accounting, and law, providing independent opinions to the company - Mr. Chen Wenhua (**52** years old) is an Independent Non-executive Director, holding a Ph.D. in Economics and over **twenty-five** years of experience in the education sector[342](index=342&type=chunk)[343](index=343&type=chunk)[348](index=348&type=chunk)[349](index=349&type=chunk) - Mr. Zheng Jinmin (**48** years old) is an Independent Non-executive Director and Chairman of the Audit Committee, a Certified Public Accountant in China, with over **twenty** years of accounting experience[344](index=344&type=chunk)[345](index=345&type=chunk)[350](index=350&type=chunk)[351](index=351&type=chunk) - Ms. Peng Shu (**47** years old) is an Independent Non-executive Director and Chairman of the Nomination Committee, holding a Ph.D. in International Law and over **eighteen** years of experience in the legal industry[354](index=354&type=chunk)[355](index=355&type=chunk)[359](index=359&type=chunk)[360](index=360&type=chunk) [Senior Management](index=41&type=section&id=Senior%20Management) Senior management includes Mr. Zhuang Wenhong, Company Secretary and Financial Controller, and Mr. Xu Chengwu, Financial Manager, both possessing extensive experience in auditing, finance, financial management, and taxation - Mr. Zhuang Wenhong (**41** years old) is the Company Secretary, with over **eighteen** years of auditing and financial experience, also serving as financial controller and company secretary for other listed companies[356](index=356&type=chunk)[361](index=361&type=chunk)[362](index=362&type=chunk) - Mr. Xu Chengwu (**50** years old) is the Financial Manager, with over **twenty-five** years of financial and tax experience, responsible for the Group's financial planning, management, and internal control matters[357](index=357&type=chunk)[358](index=358&type=chunk)[363](index=363&type=chunk)[364](index=364&type=chunk) [Report of the Directors](index=42&type=section&id=Report%20of%20the%20Directors) This report provides an overview of the Group's business, financial performance, capital and remuneration policies, stakeholder relationships, and directors' compliance for the year [Overview and Financial Performance](index=42&type=section&id=Overview%20and%20Financial%20Performance) The company, an investment holding company, has subsidiaries primarily engaged in the design, development, production, sales, and marketing of cosplay products and lingerie; in FY2019, the Group recorded a loss, and the Board does not recommend paying any dividends - The Company is an investment holding company, with its subsidiaries primarily engaged in the design, development, production, sales, and marketing of cosplay products (including costumes and wigs) and lingerie[368](index=368&type=chunk)[376](index=376&type=chunk) - The Group recorded a loss in FY2019, and the Directors do not recommend the payment of any dividends for the year ended December 31, 2019[369](index=369&type=chunk)[378](index=378&type=chunk) [Subsequent Events](index=43&type=section&id=Subsequent%20Events) The COVID-19 pandemic outbreak in early 2020 adversely affected the Group's business operations and the global economy; the Group has implemented cost control measures and will continue to assess the pandemic's impact on its financial position and operating results - COVID-19 spread globally in early 2020, adversely affecting business operations, manufacturing, and the global economy[392](index=392&type=chunk)[399](index=399&type=chunk) - As of the date of this annual report, the related financial impact has not yet been estimated, but the Group has implemented a series of cost control measures (such as negotiating with suppliers for more discounts/favorable terms) to minimize expenses[392](index=392&type=chunk)[399](index=399&type=chunk) [Capital and Remuneration](index=43&type=section&id=Capital%20and%20Remuneration) The company's distributable reserves were approximately RMB 156.4 million in 2019; employee remuneration policy is based on performance, qualifications, and capabilities, and is regularly reviewed. The Group has a share option scheme to incentivize employees, but no share options were granted or exercised in 2019 - As of December 31, 2019, the Company's distributable reserves were approximately **RMB 156.4 million**[403](index=403&type=chunk)[410](index=410&type=chunk) - The remuneration policy for the Group's employees (including key management personnel) is determined by management based on performance, qualifications, and capabilities, and is reviewed and recommended by the Remuneration Committee[408](index=408&type=chunk)[415](index=415&type=chunk) - The company has adopted a share option scheme to recognize and reward employee contributions, but no share options were granted or exercised in 2019, and there were no outstanding share options at year-end[417](index=417&type=chunk)[443](index=443&type=chunk)[454](index=454&type=chunk)[457](index=457&type=chunk) [Customer and Supplier Relationships](index=45&type=section&id=Customer%20and%20Supplier%20Relationships) The Group maintains long-term business relationships with customers in over 20 countries and regions worldwide, with the top five customers accounting for 33.1% of total sales; concurrently, the Group sources raw materials from over 70 suppliers, with the top five suppliers representing 35.8% of total purchases - The Group's top five customers accounted for approximately **33.1%** of total revenue in FY2019, with the largest customer contributing approximately **12.1%**[418](index=418&type=chunk)[421](index=421&type=chunk) - The Group's purchases from its top five suppliers accounted for approximately **35.8%** of total purchases in FY2019, with the largest supplier contributing approximately **8.3%**[419](index=419&type=chunk)[422](index=422&type=chunk) - The company maintains long-term business relationships with customers from over **20** countries and regions worldwide, with the top five customers having an average business relationship exceeding **seven** years[141](index=141&type=chunk)[147](index=147&type=chunk) [Directors' Interests and Compliance](index=46&type=section&id=Directors'%20Interests%20and%20Compliance) Board members meet independence requirements and comply with the standard code for securities transactions; controlling shareholder Mr. Chen Shengbi and his spouse Ms. Li Zhiping hold 41.42% of the company's shares. The company maintains sufficient public float, and financial statements are reviewed by the Audit Committee - The company has received independence confirmations from each independent non-executive director and considers all independent non-executive directors to be independent individuals[428](index=428&type=chunk)[434](index=434&type=chunk) - Directors have complied with the standard code for securities transactions by directors of listed issuers[439](index=439&type=chunk)[442](index=442&type=chunk) FY2019 Major Shareholders' Long Positions in Shares and Underlying Shares | Name of Major Shareholder | Nature of Interest | Number of Ordinary Shares | Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Mr. Chen Shengbi | Interest in controlled corporation | 371,859,000 | 41.42% | | Master Professional Holdings Limited | Beneficial owner | 371,859,000 | 41.42% | | Ms. Li Zhiping | Interest of spouse | 371,859,000 | 41.42% | | Mr. Lin Shixin | Beneficial owner | 78,563,000 | 8.75% | - The company has maintained a sufficient public float as required by the Listing Rules throughout 2019 and up to the date of this report[463](index=463&type=chunk)[469](index=469&type=chunk) - The Audit Committee has reviewed the Group's consolidated financial statements for the year ended December 31, 2019[465](index=465&type=chunk)[471](index=471&type=chunk) [Environmental, Social and Governance Report](index=51&type=section&id=Environmental%2C%20Social%20and%20Governance%20Report) This report outlines the Group's performance in environmental management and social responsibility for FY2019, adhering to ESG reporting guidelines and demonstrating commitment to sustainable development [About the Report and ESG Governance](index=52&type=section&id=About%20the%20Report%20and%20ESG%20Governance) This report covers the Group's performance in environmental management and social responsibility for FY2019, prepared in accordance with the HKEX ESG Reporting Guide; the Board oversees ESG strategy and risk management, actively engaging with stakeholders to enhance sustainable development - The ESG report covers the Group's core business performance in environmental management and social responsibility for FY2019, prepared in accordance with Appendix 27 "Environmental, Social and Governance Reporting Guide" of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[488](index=488&type=chunk)[489](index=489&type=chunk)[492](index=492&type=chunk)[493](index=493&type=chunk) - The Board is responsible for overseeing the formulation and reporting of the Group's ESG strategy, as well as assessing and determining ESG-related risks, with regular independent evaluations conducted[498](index=498&type=chunk)[504](index=504&type=chunk) - The Group engages with stakeholders (including government, shareholders, partners, customers, employees, and communities) through various effective communication channels to understand their requirements and expectations for corporate sustainable development[499](index=499&type=chunk)[500](index=500&type=chunk)[505](index=505&type=chunk)[506](index=506&type=chunk) [Environment and Resources](index=55&type=section&id=Environment%20and%20Resources) The Group is committed to improving environmental quality and resource efficiency, strictly complying with environmental regulations and holding ISO14001 certification. In 2019, the Group's greenhouse gas emissions and energy consumption increased, but both hazardous and non-hazardous waste generation and packaging material usage decreased. The Group also actively promotes environmental protection through energy-saving measures and solar power generation systems - The Group strictly complies with relevant environmental laws and regulations, including the "Environmental Protection Law of the People's Republic of China" and the "Energy Conservation Law of the People's Republic of China," and has obtained GB/T24001-2016/ISO14001:2015 Environmental Management System certification[515](index=515&type=chunk)[516](index=516&type=chunk) FY2019 Wastewater Discharge Data | Metric | Discharge Concentration | Execution Standard Value | | :--- | :--- | :--- | | pH | 7.25~7.38 | 6-9 | | Suspended Solids (mg/L) | 34.5~37.5 | 400 | | Chemical Oxygen Demand (mg/L) | 25.1~27.5 | 500 | | Ammonia Nitrogen (mg/L) | 0.15~0.20 | 25 | | Animal and Vegetable Oils (mg/L) | 0.09~0.11 | 100 | FY2019 Exhaust Gas Emission Data Comparison with FY2018 | Metric | 2019 (Kilograms) | 2018 (Kilograms) | | :--- | :--- | :--- | | Nitrogen Oxides | 78 | 34 | | Sulfur Oxides | 0.06 | 0.07 | | Particulate Matter | 4 | 3 | FY2019 Greenhouse Gas Emission Data Comparison with FY2018 | Metric | 2019 (Tonnes of CO2 equivalent) | 2018 (Tonnes of CO2 equivalent) | | :--- | :--- | :--- | | Total Greenhouse Gas Emissions | 690 | 495 | | Scope 1: Direct Emissions | 27 | 18 | | Scope 2: Energy Indirect Emissions | 640 | 457 | | Scope 3: Other Indirect Emissions | 23 | 20 | | Greenhouse Gas Emissions per Square Meter of Floor Area (Tonnes of CO2 equivalent/sqm) | 0.02 | 0.01 | FY2019 Waste Generation Data Comparison with FY2018 | Waste Type | 2019 | 2018 | | :--- | :--- | :--- | | Hazardous Waste Generated (Tonnes) | 0.19 | 0.73 | | Hazardous Waste Generated per Square Meter of Floor Area (Kilograms/sqm) | 0.005 | 0.02 | | Non-hazardous Waste Generated (Tonnes) | 95 | 103 | | Non-hazardous Waste Generated per Square Meter of Floor Area (Tonnes/sqm) | 0.002 | 0.003 | FY2019 Resource Usage Data Comparison with FY2018 | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Total Energy Consumption (MWh) | 1,531 | 1,167 | | Direct Energy Consumption (MWh) | 83 | 72 | | Indirect Energy Consumption (MWh) | 1,448 | 1,095 | | Energy Consumption per Square Meter of Floor Area (MWh/sqm) | 0.04 | 0.03 | | Total Water Consumption (Cubic meters) | 42,704 | 33,505 | | Water Consumption per Square Meter of Floor Area (Cubic meters/sqm) | 1.07 | 0.84 | FY2019 Packaging Material Usage Data Comparison with FY2018 | Packaging Material Type | 2019 | 2018 | | :--- | :--- | :--- | | Total Packaging Material Used (Tonnes) | 38 | 77 | | Total Plastic Products Used (Tonnes) | 22 | 44 | | Plastic Packaging Material Used per Product (Kilograms/product) | 0.01 | 0.01 | | Total Paper Products Used (Tonnes) | 16 | 33 | | Paper Packaging Material Used per Product (Kilograms/product) | 0.01 | 0.01 | - Jiangxi Party's solar power generation system generated **230 MWh** in 2019, reducing greenhouse gas emissions by approximately **121 tonnes of CO2 equivalent**, accounting for **18%** of its total emissions[551](index=551&type=chunk) [Employment and Labor Practice](index=61&type=section&id=Employment%20and%20Labor%20Practice) The Group values employees as precious assets, strictly adheres to labor laws, provides equal opportunities, competitive compensation, and generous benefits. The Group highly prioritizes occupational health and safety, fosters employee development through diverse training, and strictly prohibits child and forced labor - The Group strictly complies with the "Labor Law of the People's Republic of China" and the "Labor Contract Law of the People's Republic of China," implementing principles of open recruitment, fair competition, and merit-based hiring, and signing labor contracts with all employees[552](index=552&type=chunk)[557](index=557&type=chunk) - Competitive remuneration is provided, determined by internal salary policies and employee work performance, and reviewed and adjusted annually based on local market levels, overall benefits, and individual performance appraisal results[557](index=557&type=chunk) - The Group prioritizes employee occupational health and safety, complies with relevant laws and regulations, and has obtained GB/T28001-2011/OHSAS18001:2007 Occupational Health and Safety Management System certification[556](index=556&type=chunk)[558](index=558&type=chunk) - In 2019, the Group recorded no significant cases of work-related fatalities or injuries[561](index=561&type=chunk)[563](index=563&type=chunk) - The Group provides diverse and appropriate training, including knowledge training, management skills training, specialized skills/qualification training, and implements training internalization, encouraging employees to share acquired knowledge[566](index=566&type=chunk)[568](index=568&type=chunk) - The Group strictly prohibits any form of child and forced labor, complies with the "Labor Law of the People's Republic of China" and the "Provisions on the Prohibition of Child Labor," and has established child labor rescue protocols; no child or forced labor was employed in 2019[567](index=567&type=chunk)[569](index=569&type=chunk)[572](index=572&type=chunk)[573](index=573&type=chunk) [Operational Practice](index=65&type=section&id=Operational%20Practice) Adhering to the "quality wins" principle, the Group implements strict supply chain management and product responsibility systems to ensure product quality and safety. Concurrently, it actively invests in product R&D and technological innovation, takes measures to protect intellectual property and customer privacy, and has established comprehensive anti-corruption mechanisms to uphold integrity in operations - The Group implements a supplier management system, evaluating suppliers' business, manufacturing capabilities, and product quality to establish a qualified supplier list, categorize them, assess their performance monthly, and review annually[573](index=573&type=chunk)[574](index=574&type=chunk) - The Group requires key suppliers to comply with environmental and product safety regulations and sign a code of business conduct, ensuring their adherence to national laws and respect for employee rights, strictly prohibiting child labor, forced labor, or severe violations of labor laws[574](index=574&type=chunk)[579](index=579&type=chunk) - The Group complies with the "Product Quality Law of the People's Republic of China" and has obtained ISO9001:2015 Quality Management System certification, implementing quality control from raw material procurement to finished product dispatch[577](index=577&type=chunk)[579](index=579&type=chunk)[580](index=580&type=chunk) - In 2019, the Group had no products recalled for safety and health reasons, nor did it receive any complaints regarding products and services[584](index=584&type=chunk)[586](index=586&type=chunk) - The Group actively promotes product and technological R&D and innovation; in 2019, Jiangxi Party obtained **three** invention patents related to wigs and costumes and initiated R&D projects for graphene application and fully automatic stitching technology[585](index=585&type=chunk)[586](index=586&type=chunk) - The Group strictly adheres to various confidentiality systems, requiring employees to sign non-disclosure agreements, committing not to disclose trade secrets or customer resources, and prohibiting engagement in competitive activities for **two** years after leaving employment[589](index=589&type=chunk)[591](index=591&type=chunk) - The Group operates with "law-abiding integrity and quality service" as its core business philosophy, complies with anti-corruption laws and regulations, implements anti-bribery, anti-corruption, and anti-extortion control procedures, and provides commitment letters and training for key personnel and business partners; no cases of integrity law violations occurred in 2019[590](index=590&type=chunk)[592](index=592&type=chunk)[593](index=593&type=chunk) [Community Investment](index=69&type=section&id=Community%20Investment) The Group since its establishment has actively fulfilled its corporate social responsibility, focusing on employee well-being, providing financial assistance, and organizing diverse activities. Concurrently, it continuously donates to earthquake-stricken areas and disadvantaged communities, and supports youth football development and educational assistance programs - The Group adheres to the "people-oriented" principle, providing financial and other forms of assistance to employees facing family difficulties, and organizing employee activities such as company annual meetings, mountain clean-ups, and visits to nursing homes[596](index=596&type=chunk)[597](index=597&type=chunk) - Continuously donates to earthquake-stricken areas and disadvantaged communities, funds the establishment of a youth football development foundation, visits elderly in nursing homes, and conducts educational assistance activities[596](index=596&type=chunk)[597](index=597&type=chunk) [Prospects](index=69&type=section&id=Prospects) The Group will continuously improve its management systems and institutional frameworks, integrate green concepts into product manufacturing, and apply environmentally friendly materials and technologies to reduce negative environmental impact, while collaborating with all sectors of society to contribute to the industry's sustainable development - In the future, the Group will continuously improve its management systems and institutional frameworks, focusing more on integrating green concepts into product manufacturing and applying environmentally friendly materials and technologies in its operations[596](index=596&type=chunk)[597](index=597&type=chunk) - The Group will collaborate with all sectors of society, contributing to the industry's sustainable development while adhering to national and industrial policies[596](index=596&type=chunk)[597](index=597&type=chunk) [Independent Auditor's Report](index=70&type=section&id=Independent%20Auditor's%20Report) This report presents the independent auditor's opinion on the Group's consolidated financial statements and highlights key audit matters for the reporting period [Opinion](index=70&type=section&id=Opinion) The auditor believes that the Group's consolidated financial statements truly and fairly present its financial position as of December 31, 2019, and its financial performance and cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance - The consolidated financial statements truly and fairly present the Group's consolidated financial position as of December 31, 2019, and its consolidated financial performance and consolidated cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants, and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance[602](index=602&type=chunk)[603](index=603&type=chunk) [Key Audit Matters](index=70&type=section&id=Key%20Audit%20Matters) The auditor identified three key audit matters: the valuation of financial assets at fair value through profit or loss, the impairment assessment of property, plant and equipment and investment properties, and inventory valuation, all involving significant management judgments and assumptions - Valuation of financial assets at fair value through profit or loss: Involves unlisted convertible bonds that defaulted due to non-payment of interest and project delays, requiring significant management judgment and assumptions in determining fair value[605](index=605&type=chunk)[606](index=606&type=chunk) - Impairment assessment of property, plant and equipment and investment properties: Impairment indicators arose on December 31, 2019; management valued cash-generating units based on an independent professional valuer's assessment of value in use, involving significant judgments on utilization rates, discount rates, inflation rates, sales growth rates, and market rents[609](index=609&type=chunk)[610](index=610&type=chunk) - Valuation of inventories: As of December 31, 2019, inventories net of nil provision amounted to **RMB 24,271,000**; Directors made significant judgments regarding the provision for obsolete inventories[611](index=611&type=chunk)[612](index=612&type=chunk) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=77&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) This statement presents the Group's financial performance, including revenue, expenses, and comprehensive income, for the reporting period [Financial Results Summary](index=77&type=section&id=Financial%20Results%20Summary) In FY2019, the Group's revenue decreased, and gross profit increased, but the loss for the year significantly expanded due to substantial increases in impairment losses on property, plant and equipment, investment properties, and fair value losses on financial assets at fair value through profit or loss FY2019 Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Revenue | 316,064 | 365,903 | | Cost of Sales | (232,663) | (289,192) | | Gross Profit | 83,401 | 76,711 | | Other Income | 5,254 | 9,160 | | Selling Expenses | (8,198) | (10,291) | | Net Impairment Loss on Property, Plant and Equipment | (12,913) | (24,410) | | Impairment Loss on Investment Properties | (18,671) | - | | Fair Value Loss on Financial Assets at Fair Value Through Profit or Loss | (60,524) | (2,281) | | Administrative and Other Operating Expenses | (58,194) | (58,935) | | Operating Loss | (69,845) | (10,046) | | Finance Costs | (6,699) | (5,229) | | Loss Before Income Tax | (76,544) | (15,275) | | Income Tax Credit | 4,339 | 3,540 | | Loss for the Year | (72,205) | (11,735) | | Total Comprehensive Expense for the Year | (72,826) | (7,533) | | Basic Loss Per Share (RMB Cents) | (8.04) | (1.35) | [Consolidated Statement of Financial Position](index=78&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) This statement provides a snapshot of the Group's assets, liabilities, and equity as of the reporting date, reflecting changes in its financial structure [Financial Position Summary](index=78&type=section&id=Financial%20Position%20Summary) As of December 31, 2019, the Group's total assets and net assets both decreased, while total liabilities and short-term borrowings significantly increased, leading to a substantial reduction in net current assets FY2019 Key Data from Consolidated Statement of Financial Position | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Non-current Assets | 410,041 | 461,844 | | Property, Plant and Equipment | 362,865 | 381,223 | | Investment Properties | 20,754 | - | | Financial Assets at Fair Value Through Profit or Loss | 1,969 | 62,263 | | Deferred Tax Assets | 13,393 | 6,103 | | Current Assets | 151,158 | 128,535 | | Inventories | 24,271 | 21,944 | | Trade and Other Receivables | 41,349 | 27,630 | | Bank Balances and Cash | 78,761 | 75,417 | | Current Liabilities | 141,516 | 97,870 | | Trade and Other Payables | 44,112 | 28,070 | | Short-term Borrowings | 94,697 | 69,370 | | Net Current Assets | 9,642 | 30,665 | | Total Assets | 561,199 | 590,379 | | Total Liabilities | 141,516 | 97,870 | | Net Assets | 419,683 | 492,509 | | Total Equity | 419,683 | 492,509 | [Consolidated Statement of Changes in Equity](index=79&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) This statement details the changes in the Group's total equity, including losses, foreign currency translation differences, and reserve movements, for the reporting period [Equity Changes Summary](index=79&type=section&id=Equity%20Changes%20Summary) In FY2019, the Group's total equity decreased due to the loss for the year and exchange differences on translating foreign operations, despite transfers to statutory reserves FY2019 Consolidated Statement of Changes in Equity Summary | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Balance at January 1 | 492,509 | 441,305 | | Loss for the Year | (72,205) | (11,735) | | Exchange differences on translating foreign operations | (621) | 4,202 | | Total Comprehensive Expense for the Year | (72,826) | (7,533) | | Transfer to statutory reserve | - | - | | Balance at December 31 | 419,683 | 492,509 | [Consolidated Statement of Cash Flows](index=80&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) This statement presents the Group's cash flows from operating, investing, and financing activities, highlighting changes in cash and cash equivalents for the reporting period [Cash Flow Summary](index=80&type=section&id=Cash%20Flow%20Summary) In FY2019, the Group's net cash generated from operating activities decreased, net cash outflow from investing activities was primarily for property, plant and equipment acquisition, and net cash from financing activities contributed due to increased bank borrowings, but the overall net increase in cash and cash equivalents declined FY2019 Key Data from Consolidated Statement of Cash Flows | Metric | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 38,788 | 45,268 | | Net Cash Used in Investing Activities | (57,019) | (57,019) | | Net Cash Generated from Financing Activities | 21,866 | 58,644 | | Net Increase in Cash and Cash Equivalents | 3,635 | 9,033 | | Cash and Cash Equivalents at Year End | 78,761 | 75,417 | - Net cash generated from operating activities decreased by **2.2%** from **RMB 45,268 thousand** in 2018 to **RMB 38,788 thousand** in 2019[53](index=53&type=chunk)[55](index=55&type=chunk) - Net cash used in investing activities primarily included the acquisition of property, plant and equipment of approximately **RMB 58,196 thousand**[653](index=653&type=chunk) - Net cash generated from financing activities primarily stemmed from proceeds from bank borrowings of **RMB 109,800 thousand**, partially offset by repayment of bank borrowings of **RMB 84,800 thousand**[654](index=654&type=chunk) [Notes to the Consolidated Financial Statements](index=82&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes to the consolidated financial statements, covering general information, significant accounting policies, critical estimates, segment data, and financial risk management [General Information](index=82&type=section&id=General%20Information) The company was incorporated in the Cayman Islands, listed on the Hong Kong Stock Exchange, and primarily engages in the design, development, production, sales, and marketing of cosplay products and lingerie; Mr. Chen Shengbi is the ultimate controlling shareholder - The Company was incorporated in the Cayman Islands on **February 12, 2015**, and its shares were listed on the Hong Kong Stock Exchange on **October 16, 2015**[659](index=659&type=chunk)[664](index=664&type=chunk) - The Company is an investment holding company, with its subsidiaries primarily engaged in the design, development, production, sales, and marketing of cosplay products (including costumes and wigs) and lingerie[660](index=660&type=chunk)[664](index=664&type=chunk) - As of December 31, 2019, the Directors considered Mr. Chen Shengbi to be the ultimate controlling shareholder of the Company[660](index=660&type=chunk)[664](index=664&type=chunk) [Summary of Significant Accounting Policies](index=82&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) This section details the Group's significant accounting policies used in preparing the consolidated financial statements, covering basis of preparation, consolidation, foreign currency translation, property, plant and equipment, investment properties, intangible assets, financial instruments, impairment, inventories, cash and cash equivalents, contract liabilities, share capital, leases, revenue recognition, government grants, employee benefits, borrowing costs, income tax accounting, and related parties - The consolidated financial statements are prepared on a historical cost basis, except for financial assets at fair value through profit or loss, and are presented in RMB[670](index=670&type=chunk) - The Group's consolidated financial statements include the income and expenses of subsidiaries from the date the Group obtains control until the date it ceases to control the subsidiary[678](index=678&type=chunk) - Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, with depreciation provided on a straight-line basis over their estimated useful lives[697](index=697&type=chunk)[698](index=698&type=chunk) - Investment properties are initially measured at cost and subsequently stated at cost less subsequent accumulated depreciation and any accumulated impairment losses[709](index=709&type=chunk)[710](index=710&type=chunk) - Financial assets are classified as at amortized cost, fair value through profit or loss, or fair value through other comprehensive income, determined by the business model and contractual cash flow characteristics[727](index=727&type=chunk)[728](index=728&type=chunk)[731](index=731&type=chunk) - Revenue primarily derives from the sale of wigs, costumes, and other products (including cosplay costumes, lingerie, and others), recognized when control of the asset is transferred[802](index=802&type=chunk)[806](index=806&type=chunk)[812](index=812&type=chunk) - Income tax comprises current tax and deferred tax, with deferred tax calculated using the liability method for temporary differences[827](index=827&type=chunk)[830](index=830&type=chunk) [Adoption of New and Amended HKFRSs](index=109&type=section&id=Adoption%20of%20New%20and%20Amended%20HKFRSs) The Group first adopted HKFRS 16 "Leases" in FY2019, applying the modified retrospective approach with a cumulative effect adjustment to the opening equity balance, but without restating comparative information. Other issued but not yet effective amendments are not expected to have a significant impact - The Group first adopted HKFRS 16 "Leases" on **January 1, 2019**, applying the modified retrospective approach with a cumulative effect adjustment to the opening equity balance, without restating comparative information[109](index=109&type=chunk)[865](index=865&type=chunk)[869](index=869&type=chunk) HKFRS 16 Transition Impact (January 1, 2019) | Metric | Amount (RMB Thousand) | | :--- | :--- | | Increase in right-of-use assets | 293 | | Decrease in prepaid land lease payments (current assets) | (293) | - Issued but not yet effective Hong Kong Financial Reporting Standards (such as amendments to HKAS 1 and HKAS 8 "Definition of Material") are not expected to have a significant impact on the consolidated financial statements[917](index=917&type=chunk)[920](index=920&type=chunk)[921](index=921&type=chunk)[924](index=924&type=chunk) [Critical Accounting Estimates and Judgements](index=113&type=section&id=Critical%20Accounting%20Estimates%20and%20Judgements) In preparing financial statements, the Group involves significant estimates and judgments in key areas such as impairment assessments of property, plant and equipment, investment properties, right-of-use assets, and trademarks, net realizable value of inventories, valuation of financial assets at fair value through profit or loss, and impairment assessment of trade and other receivables - Impairment assessment of property, plant and equipment, investment properties, right-of-use assets/prepaid land lease payments, and trademarks: Involves significant management estimates and judgments regarding future cash flows, discount rates, sales growth rates, and market rents[929](index=929&type=chunk)[930](index=930&type=chunk)[933](index=933&type=chunk) - Net realizable value of inventories: Based on estimated selling prices less costs to complete and sell, referencing current market information and past experience; these estimates may vary significantly with market conditions[936](index=936&type=chunk)[939](index=939&type=chunk) - Valuation of financial assets at fair value through profit or loss (unlisted convertible bonds): Determined using valuation techniques, involving significant judgments on unobservable inputs such as recovery rates[943](index=943&type=chunk)[945](index=945&type=chunk) - Impairment estimate for trade and other receivables: Provisions are made based on assumptions of default risk and expected loss rates, derived from historical data, current market conditions, and forward-looking estimates[944](index=944&type=chunk)[945](index=945&type=chunk) [Segment Information](index=117&type=section&id=Segment%20Information) The Group's operating segments include wigs, costumes and others, and plant leasing. In 2019, revenue from external customers primarily came from the costumes and others segment, with the United States being the largest overseas market, and a single customer contributing 12% of revenue - The Group has identified three reportable segments: wigs, costumes and others (including cosplay costumes, lingerie, and others), and plant leasing[864](index=864&type=chunk)[109](index=109&type=chunk)[861](index=861&type=chunk) FY2019 Revenue by Operating and Reportable Segment | Segment | Revenue (RMB Thousand) | | :--- | :--- | | Wigs | 110,954 | | Costumes and Others | 205,110 | | Plant Leasing | - | | Total | 316,064 | FY2019 Revenue by Geographical Location | Region | Revenue (RMB Thousand) | | :--- | :--- | | China | 18,518 | | United States | 117,138 | | Germany | 8,302 | | United Kingdom | 11,817 | | Australia | 26,936 | | Netherlands | 11,023 | | Japan | 39,520 | | Brazil | 15,015 | | Israel | 17,308 | | Others | 50,487 | | Total | 316,064 | - In FY2019, the Group's revenue from a single customer was approximately **RMB 38,096,000**, accounting for **12%** of total revenue[120](index=120&type=chunk)[990](index=990&type=chunk) [Revenue](index=121&type=section&id=Revenue) The Group's revenue primarily derives from the sales of wigs, costumes, and other products, with total revenue of RMB 316,064 thousand in 2019, of which CMS business contributed RMB 199,770 thousand and OBM business contributed RMB 116,294 thousand FY2019 Revenue by Product Category | Product Category | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Wigs | 110,954 | 145,223 | | Costumes and Others | 205,110 | 220,680 | | Total | 316,064 | 365,903 | FY2019 Revenue by Business Model | Business Model | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Contract Manufacturing Services Business | 199,770 | 251,960 | | Original Brand Manufacturing Business | 116,294 | 113,943 | | Total | 316,064 | 365,903 | [Other Income](index=122&type=section&id=Other%20Income) Total other income in FY2019 amounted to RMB 5,254 thousand, a decrease from RMB 9,160 thousand in 2018, primarily due to unrecognized interest income from financial assets at fair value through profit or loss and reduced government grants FY2019 Other Income Details | Item | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Exchange gain, net | 2,080 | 1,997 | | Interest income | 269 | 267 | | Interest income from financial assets at fair value through profit or loss | - | 3,020 | | Government grants | 259 | 2,352 | | Rental income from operating leases of plant and machinery | 1,609 | 1,426 | | Rental income from operating leases of investment properties | 516 | - | | Income related to net lease investments | 482 | - | | Others | 39 | 98 | | Total | 5,254 | 9,160 | - The decrease in other income was mainly due to no interest income recognized from financial assets at fair value through profit or loss during the year (as interest defaulted) and reduced government grants recognized during the year[118](index=118&type=chunk)[120](index=120&type=chunk) [Finance Costs](index=122&type=section&id=Finance%20Costs) Total finance costs in FY2019 amounted to RMB 6,699 thousand, an increase from RMB 5,229 thousand in 2018, primarily due to higher average loan balances and increased interest expenses on bank and other short-term borrowings FY2019 Finance Costs Details | Item | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Interest on bank and other short-term borrowings | 6,635 | 4,668 | | Finance charges on lease liabilities | 64 | - | | Interest on convertible bonds | - | 561 | | Total | 6,699 | 5,229 | - The increase in finance costs was mainly due to higher average loan balances in 2019, with interest expenses on bank and other short-term borrowings increasing by approximately **RMB 1.9 million**[126](index=126&type=chunk)[128](index=128&type=chunk) [Loss Before Income Tax](index=123&type=section&id=Loss%20Before%20Income%20Tax) Loss before income tax in FY2019 was RMB 76,544 thousand, a significant increase from RMB 15,275 thousand i

CHINA PARTYTIME CULTURE HOLDINGS LIMITED 中 國 派 對 文 化 控 股 有 限 公 司 (Incorporated in the Cayman Islands with limited fability 煎陨曼群岛赶画成立的有限公司) Stock Code 股份代號 : 1532 Interim Report 非 Contents Corporate Information 公司資料 Financial Highlights 財務摘要 Directors' Business Review and 董事案務回顧與管理層討論及分析 Management Discussion and Analysis 簡明綜合損益及其他全面收益表 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 簡明綜合財務狀況表 Condensed Consolidated Statement of Financial Position 簡明綜合權益變動表 Condensed Consoli ...

(Incorporated in the Cayman Islands with limited liability 於開曼群島註冊成立的有限公司 ) Stock Code 股份代號：1532 Annual Report 年報 Contents 目錄 Financial Highlights 財務摘要 2 Corporate Information 公司資料 4 Chairman's Statement 主席報告 6 Directors' Business Review and Management Discussion and Analysis 董事業務回顧與管理層討論及分析 8 Corporate Governance Report 企業管治報告 19 Directors and Senior Management 董事及高級管理人員 37 Report of the Directors 董事會報告書 40 Environmental, Social and Governance Report 環境、社會及管治報告 50 Independent Auditor's Report 獨立核數師報告 68 Co ...