香港交易及結算所有限公司及香港聯合交易所有限公司對本公告的內容概不 負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不對因本公告 全部或任何部分內容而產生或因倚賴該等內容而引致的任何損失承擔任何責 任。 UNQ HOLDINGS LIMITED 優 趣 匯 控 股 有 限 公 司 （於開曼群島註冊成立的有限公司） 2177 （股份代號： ） 2022 12 31 截 至 年 月 日 止 年 度 之 年 度 業 績 公 告 摘要 • 截至2022年12月31日止年度的收入為人民幣2,379.0百萬元，與截至2021 年12月31日止年度相比減少21.6%。 • 截至2022年12月31日止年度的毛利為人民幣569.2百萬元，與截至2021年 12月31日止年度相比減少36.8%。 • 截至2022年12月31日止年度的淨虧損為人民幣116.8百萬元，而截至2021 年12月31日止年度本公司錄得淨利潤為人民幣30.0百萬元。 • 截至2021年12月31日止年度的經營活動現金流由人民幣負124.7百萬元 轉正至截至2022年12月31日止年度人民幣260.0百萬元。 優趣匯控股有限公司（「本公司」）董事 ...

Financial Performance - The total revenue for the first half of 2022 was RMB 1,124.4 million, representing a decrease of 24.1% compared to the same period last year[4]. - The net loss for the first half of 2022 was RMB 31.6 million, compared to a net profit of RMB 35.0 million in the same period of 2021[12]. - Operating loss for the first half of 2022 was RMB 41.2 million, compared to an operating profit of RMB 66.7 million in the same period of 2021[31]. - The company reported a total comprehensive loss of RMB 23,114,000 for the six months ended June 30, 2022, compared to a comprehensive income of RMB 22,325,000 in the same period of 2021[86]. - The company recorded a net loss per share of RMB 0.20 for the first half of 2022, compared to earnings per share of RMB 0.26 in the same period of 2021[31]. Revenue Breakdown - B2B sales revenue decreased by 25.7% and cross-border e-commerce sales revenue decreased by 27.2% compared to the previous year[5]. - B2C sales were RMB 593,807 thousand, a decline of 22.7% from RMB 768,362 thousand in the prior year[140]. - B2C general trade sales revenue declined by 12.9%, largely offset by sales growth from a significant adult personal care product brand[21]. - B2B general trade sales revenue decreased by 25.7%, primarily due to reduced demand in the maternal and infant market and weakened competitiveness of a key brand[21]. - B2C cross-border e-commerce sales revenue fell by 31.0%, mainly due to significant declines in demand for beauty products and a shift in business focus for a key infant personal care product[21]. Cost and Profitability - The gross profit margin decreased to 24.4% from 32.2% in the previous year, with promotional and advertising expenses declining by 34.2%[12]. - Overall gross margin for the first half of 2022 was 24.4%, down from 32.2% in the same period last year, attributed to low-margin sales strategies and inventory clearance promotions[22]. - Gross profit for the same period was RMB 273,795 thousand, down 42.5% from RMB 476,647 thousand year-on-year[84]. - Cost of goods sold was RMB 839,292 thousand, a decrease of 15.7% from RMB 995,679 thousand in the same period last year[147]. Cash Flow and Liquidity - Operating cash flow improved to RMB 13.0 million from a negative RMB 36.1 million in the previous year[12]. - Cash and cash equivalents as of June 30, 2022, amounted to RMB 243.2 million, primarily sourced from operating cash flow and bank borrowings[34]. - The net cash generated from operating activities was RMB 13.0 million, a significant improvement compared to a net cash used of RMB 36.1 million in the same period of 2021[35]. - The net cash used in financing activities was RMB 168.1 million, mainly due to the improvement in cash flow and the repayment of net borrowings amounting to RMB 154.8 million[36]. - Cash and cash equivalents decreased by RMB 211,262 thousand for the six months ended June 30, 2022, compared to an increase of RMB 99,375 thousand in the same period of 2021[99]. Strategic Plans and Future Outlook - The company plans to deepen cooperation with major brands and increase investment in platforms like Douyin, which saw revenue growth of 389%[14]. - The company expects to focus on expanding sales in the second half of the year to compensate for the shortfall in performance[15]. - In the second half of 2022, the company plans to strengthen its presence on interest e-commerce platforms like Douyin and enhance its global brand development strategy, particularly in Japan[54]. - The company aims to optimize inventory management and reduce personnel structure to improve financial performance in the second half of the year[14]. Impact of COVID-19 - The decline in performance was primarily due to the impact of COVID-19 and reduced consumer confidence, particularly affecting the adult personal care and beauty product segments[13]. - The company faced significant impacts on supply chain and logistics efficiency due to COVID-19-related disruptions in warehouses during the first half of the year[52]. - The company donated epidemic prevention materials worth RMB 92,614 to the local community in response to the COVID-19 outbreak in Shanghai[61]. Corporate Governance and Compliance - The board of directors decided not to declare any interim dividend for the six months ended June 30, 2022, consistent with the previous year[63]. - The company has maintained compliance with the corporate governance code, with no known breaches reported during the period[56]. - The board believes that the current structure of having the same individual serve as both Chairman and CEO does not impair the balance of power and responsibilities[57]. Shareholder Information - Major shareholders include Wisdom Oasis with 38.82% and Transcosmos Inc. with 34.52% of the shares[78]. - The company raised approximately HKD 320 million from its IPO, with 54.3% allocated for social media marketing and brand development, amounting to HKD 174 million[71]. - As of June 30, 2022, the company utilized HKD 198 million of the IPO proceeds, leaving HKD 122 million unutilized[71]. Employee and Training Initiatives - As of June 30, 2022, the company employed 470 staff members, with female employees accounting for 71.3%[60]. - The company organized 35 training sessions in the first half of 2022, covering business introductions, industry understanding, corporate culture, and skill enhancement[60].

Financial Data and Key Metrics Changes - The company's revenue decreased by 24.1% in the first half of 2022 compared to the previous year [4] - The net profit shifted from a profit of 34.5 million to a loss of approximately 31.6 million [4] - Inventory was reduced from 847 million to 705 million, a decrease of 20.2% [3][6] - Bank borrowings decreased from 582 million to 428 million, a reduction of 26.6% [3][7] - The asset-liability ratio improved from 56.1% to 48.5% [7] Business Line Data and Key Metrics Changes - The adult personal care, infant, beauty, and health categories all experienced varying degrees of decline due to the pandemic [4] - The OTC segment showed some growth despite the overall decline in other categories [4] - The company maintained a stable market share in Tmall, ranging from 75% to 76% [4] - Significant growth was observed in emerging channels, with Douyin achieving nearly 390% growth and Pinduoduo achieving 173% growth [4] Market Data and Key Metrics Changes - The overall market faced challenges due to the pandemic, leading to a decline in consumer spending and increased uncertainty [2] - The company noted that traditional e-commerce platforms like Tmall and JD.com are reaching a saturation point, while interest e-commerce platforms like Douyin and Pinduoduo present new opportunities [14][15] Company Strategy and Development Direction - The company plans to enhance its multi-channel layout and focus on private domain and information e-commerce [8] - There will be increased investment in Douyin and Pinduoduo, as well as community group buying [8] - The company aims to introduce differentiated, high-quality products, particularly in the health category [8][17] - A strategic shift towards a more cautious approach in business operations is planned, focusing on core competencies and optimizing cash flow [9][16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of the pandemic on operations and emphasized the need for adaptive measures [2][13] - The company is committed to improving cash flow and inventory management while exploring strategic partnerships [9][22] - Future growth is expected to come from optimizing existing operations and expanding into new product categories [17][21] Other Important Information - The company has implemented measures to reduce inventory and financing costs, leading to improved financial health [3][7] - Management is considering stock buyback plans due to perceived undervaluation of the company's shares [20] Q&A Session Summary Question: Can the company elaborate on the significant growth in Douyin's revenue? - Management reported a 389% year-on-year growth in Douyin, indicating ongoing improvements in team performance and sales strategies [10][11] Question: What measures will the company take to mitigate the impact of the pandemic on operations? - The company has implemented electronic systems for remote work and is reassessing warehouse layouts to ensure operational continuity [12][13] Question: What are the company's strategic growth points in light of external challenges? - The company plans to maintain its presence in traditional e-commerce while focusing on growth in Douyin and Pinduoduo [14][15] Question: How does the company plan to improve its gross margin? - Management indicated that inventory reduction efforts and a focus on higher-margin health products will contribute to margin improvement [18][19] Question: Is there a stock buyback plan in place? - Management expressed intentions to explore stock buyback options due to the current undervaluation of shares [20] Question: What is the impact of brand competition on performance? - Two key brands account for approximately 10% to 30% of revenue, with management planning to introduce new health-related products to offset declines [21]

Financial Performance - The company's revenue for the year ended December 31, 2021, was RMB 3,033.1 million, representing an increase of 8.3% compared to the previous year[14]. - The adjusted net profit for the year was RMB 41.7 million, a decrease of 60.9% compared to the previous year, primarily due to increased promotional and personnel expenses[16]. - B2B general trade and cross-border e-commerce sales revenue increased by 14.3% and 16.5% respectively, while B2C sales revenue grew by 6.2% and 1.5%[5]. - The company's total revenue for 2021 reached RMB 3,033.1 million, representing an 8.3% increase compared to RMB 2,800.8 million in 2020[31]. - B2B sales revenue increased to RMB 1,410.1 million, accounting for 46.5% of total revenue, up from 43.8% in 2020[33]. - B2C sales revenue rose to RMB 1,597.1 million, making up 52.7% of total revenue, compared to 55.0% in the previous year[33]. - In 2021, total sales revenue reached RMB 3,007.3 million, a 8.7% increase from RMB 2,766.3 million in 2020[37]. - Adult personal care products accounted for 64.6% of total revenue in 2021, with sales increasing to RMB 1,941.7 million from RMB 1,755.3 million in 2020[37][38]. Profitability and Margins - Gross margin slightly decreased to 29.7%, impacted by investments in new channels like live streaming on Douyin and Pinduoduo, while B2B gross margin improved due to optimized channel structure[15]. - Overall gross margin decreased from 31.7% in 2020 to 29.7% in 2021, primarily due to a significant increase in B2B revenue proportion[39]. - B2C gross margin for 2021 was 44.0%, down from 45.6% in 2020, influenced by strategic adjustments in a key maternal and infant care brand[41][42]. - The gross margin for beauty products increased to 45.4% in 2021 from 38.1% in 2020, attributed to a refined brand portfolio[46]. Cash Flow and Financial Position - The operating cash flow significantly improved compared to the previous year[17]. - The company reported a net cash flow from operating activities of RMB (124.7) million in 2021, an improvement from RMB (368.4) million in 2020[55]. - As of December 31, 2021, cash and cash equivalents totaled RMB 442.1 million, up from RMB 252.3 million in 2020[53]. - As of December 31, 2021, the company's debt-to-equity ratio was 16.8%, significantly decreased from the end of 2020 due to a substantial increase in cash and cash equivalents[60]. - The total borrowings of the company as of December 31, 2021, amounted to RMB 581.6 million, primarily consisting of bank loans[61]. - The company had unused bank financing of RMB 268.4 million as of December 31, 2021, enhancing its resilience against uncertainties brought by the COVID-19 pandemic[62]. Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.3 per share for the year ended December 31, 2021[18]. - The company has no formal dividend policy or fixed dividend payout ratio, and future dividends will be determined at the discretion of the board based on various factors[105]. - As of December 31, 2021, the company's distributable reserves were zero, consistent with 2020[116]. Operational Strategy and Market Position - The company continues to focus on enhancing operational efficiency and understanding consumer demand trends to provide better services to brand partners[5]. - The domestic e-commerce market is transitioning from a growth phase to a more competitive environment, with new business models emerging[12]. - The company maintains its leading position in the domestic e-commerce operation services market for Japanese fast-moving consumer goods[14]. - The company aims to deliver quality products with improved services to consumers amidst industry changes[12]. - The competitive landscape in the e-commerce sector remains intense, prompting the company to deepen collaborations with major brands and explore new opportunities[30]. Technology and Innovation - The introduction of RPA (Robotic Process Automation) has improved efficiency across supply chain, customer service, finance, and operations departments[23]. - The company aims to enhance its MCN capabilities and build a KOL matrix that influences over 20 million consumers in the next three years[25]. - The company aims to strengthen its technology systems and data analytics capabilities, allocating 7.0% of IPO proceeds for this purpose[110]. Human Resources and Corporate Governance - The company employed a total of 770 staff as of December 31, 2021, with a stable relationship with employees and no significant labor disputes reported[67]. - The company has a strong leadership team with extensive experience in finance and auditing, including over 25 years of experience from independent non-executive director Wu Jin-hua[84]. - The management team includes professionals with advanced degrees in engineering and business, indicating a strong academic background[83][86]. - The company has established a remuneration committee to review the compensation policies based on operational performance and market practices[126]. - The board consists of 3 executive directors, 1 non-executive director, and 3 independent non-executive directors, ensuring compliance with listing rules[175]. Environmental and Community Responsibility - The company recognizes the importance of environmental protection and strives to minimize its environmental impact through reduced energy and resource usage[166]. - The company is committed to improving community relations and has received recognition for its contributions to community development[85]. - The company made charitable donations amounting to RMB 10,579 for the year ended December 31, 2021, compared to none in 2020[117]. Related Party Transactions - The company paid a consideration of approximately RMB 87.79 million to TCI under the product procurement framework agreement during the reporting period[143]. - The maximum consideration payable to TCI for the years ending December 31, 2021, and 2022, was RMB 246 million and RMB 346 million, respectively[143]. - The product procurement framework agreement is set to expire on December 31, 2022, unless renewed[143]. - Independent non-executive directors confirmed that the related transactions were conducted on normal commercial terms and in the overall interest of shareholders[145].

Financial Data and Key Metrics Changes - The company reported a total revenue of 3.033 billion RMB in 2021, an increase of 8.3% compared to 2020 [2][3] - Gross profit increased by 1.4%, but the gross margin decreased from 31.7% in 2020 to 29.7% in 2021, a decline of two percentage points [2][8] - The net profit for 2021 was 30 million RMB, a turnaround from a loss of 1.9 million RMB in the previous year [3][4] - Total assets increased by 13.4% to 2.0345 billion RMB, with inventory rising from 660 million RMB to 787 million RMB [3][4] Business Line Data and Key Metrics Changes - Revenue breakdown showed B2B general trade accounted for 31%, cross-border 15%, B2C general trade 26%, and cross-border B2C 27% [5][6] - The adult personal care segment contributed 46% of total revenue, with significant growth in health products [6][7] Market Data and Key Metrics Changes - Tmall accounted for 76% of the company's revenue, while JD.com contributed 9% [6][7] - Pinduoduo saw a growth of 342.1%, while JD.com grew by 22.3% [7] Company Strategy and Development Direction - The company aims to strengthen its existing business relationships with key brands and enhance its operational capabilities [10][11] - Plans to improve cash flow management and profitability through inventory and accounts receivable optimization [14][15] - The strategy includes increasing focus on new channels like Douyin (TikTok) and Pinduoduo, with a goal of achieving significant sales growth in these platforms [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the competitive e-commerce landscape and the need for strategic adjustments [20][21] - The outlook for 2022 is cautiously optimistic, with expectations of slight revenue growth and significant profit improvement [25][26] Other Important Information - The company is focusing on compliance costs and believes that these are manageable within their planning framework [28] - The tax rate for 2021 was approximately 31%, influenced by non-deductible listing expenses [29] Q&A Session Summary Question: How did the company adapt to the changes in the e-commerce industry in 2021? - The company recognized the shift from Tmall's dominance to a more competitive landscape with Douyin's rapid growth and adjusted its strategy accordingly [20][21] Question: What brands does the company plan to collaborate with in the future? - The company aims to deepen long-term partnerships with brands, focusing on co-developing products tailored to Chinese consumers [22][23] Question: What is the sales and gross margin outlook for Q1 2022? - The management indicated that Q1 sales figures are not optimistic due to pandemic impacts, but they remain hopeful for the full year [24][25] Question: How does the company view the impact of recent pandemic waves on business? - Management believes the pandemic has become a norm and expects only minor impacts on overall sales [28] Question: What is the company's plan regarding stock performance and investor relations? - The company is enhancing its investor relations efforts and plans to communicate more effectively with investors [30][31] Question: How is the company managing currency risks? - The company has established measures to mitigate currency risks, ensuring that exchange rate fluctuations do not significantly impact profits [36][37] Question: What are the company's plans for overseas e-commerce platforms? - The company is actively expanding into Amazon in the US and is monitoring opportunities on TikTok [38][39]

[Company Overview](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E7%B0%A1%E4%BB%8B) [Company Profile](index=3&type=section&id=%E5%85%AC%E5%8F%B8%E7%B0%A1%E4%BB%8B) UQH, a leading Chinese brand e-commerce solution provider for Japanese FMCG, achieved stable business growth in H1 2021 with sales revenue up 17.4% to RMB 1.481 billion across all operational models - The company is positioned as a leading brand e-commerce retail and wholesale solution provider in China, strategically focusing on Japanese fast-moving consumer goods[3](index=3&type=chunk) Key Performance Indicators for H1 2021 (RMB) | Indicator | Value (RMB) | YoY Growth | | :--- | :--- | :--- | | Total Sales Revenue | 1.481 billion | 17.4% | | B2B General Trade Revenue | - | 20.4% | | B2B Cross-border E-commerce Revenue | - | 17.4% | | B2C General Trade Revenue | - | 17.9% | | B2C Cross-border E-commerce Revenue | - | 12.4% | - The company's business model primarily consists of distribution models (B2B and B2C) and a service fee model, acting as a bridge between brands, e-commerce platforms, and customers[4](index=4&type=chunk) [Financial Highlights](index=6&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) [Performance Highlights](index=6&type=section&id=%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) In H1 2021, the company achieved robust performance with revenue up 17.4%, gross margin slightly improved to 32.2%, net profit turned positive, and operating cash flow significantly improved - Robust performance growth: H1 2021 revenue increased by **17.4%** year-on-year to **RMB 1.481 billion**[12](index=12&type=chunk) - Gross margin improved to **32.2%** year-on-year, with an operating profit margin of **4.5%**, as the company significantly increased marketing investment in new channels like Douyin and Pinduoduo[12](index=12&type=chunk) - Net profit turned positive due to the absence of preferred share expenses, and operating cash flow significantly improved and turned positive[12](index=12&type=chunk) [Management Discussion and Analysis](index=7&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) [Business Overview](index=7&type=section&id=%E6%A6%82%E8%A7%88) In H1 2021, the company achieved robust growth amidst a favorable Chinese online retail market, driven by strong partnerships and strategic investments in emerging e-commerce platforms - Mainland China's online retail market continues to improve, with rapid growth in new formats like live-streaming and short-video e-commerce, indicating multi-layered and personalized demand trends[14](index=14&type=chunk) - The company actively increased resource investment and strategic deployment on emerging platforms such as Pinduoduo, Douyin, and Kuaishou to capture new growth opportunities[14](index=14&type=chunk) [Operating Performance Analysis](index=7&type=section&id=%E4%B8%BB%E8%A6%81%E8%B2%A1%E5%8B%99%E6%95%B8%E6%93%9A%E5%88%86%E6%9E%90) In H1 2021, total revenue grew 17.4% with gross margin at 32.2%, driven by core categories and incubated brands, while increased marketing expenses slightly reduced operating profit, but EPS turned positive to RMB 0.26 [Revenue Analysis](index=7&type=section&id=%E6%94%B6%E5%85%A5) H1 2021 total revenue grew 17.4% to RMB 1.481 billion, driven by stable partnerships, category growth, and successful new channel expansion, with B2B and B2C businesses achieving double-digit growth and adult personal care products as the main revenue source Revenue by Business Line (RMB Thousand) | Business Line | H1 2021 | H1 2020 | YoY Growth | | :--- | :--- | :--- | :--- | | **B2B** | **699,694** | **586,238** | **19.3%** | | General Trade | 467,180 | 388,131 | 20.4% | | Cross-border E-commerce | 232,514 | 198,107 | 17.4% | | **B2C** | **768,362** | **668,978** | **14.9%** | | General Trade | 352,331 | 298,778 | 17.9% | | Cross-border E-commerce | 416,031 | 370,200 | 12.4% | | **Services Rendered** | **13,043** | **6,701** | **94.6%** | | **Total** | **1,481,099** | **1,261,917** | **17.4%** | Goods Sales Revenue by Product Category (RMB Thousand) | Product Category | H1 2021 | % of Total | H1 2020 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Adult Personal Care Products | 919,613 | 62.6% | 733,839 | 58.5% | | Maternal & Infant Personal Care Products | 247,295 | 16.8% | 234,050 | 18.6% | | Beauty Products | 172,798 | 11.8% | 179,238 | 14.3% | | Health Products | 80,591 | 5.5% | 71,420 | 5.7% | | Others | 47,759 | 3.3% | 36,669 | 2.9% | | **Total** | **1,468,056** | **100.0%** | **1,255,216** | **100.0%** | - The company's investment in emerging channels yielded significant results, with monthly Gross Merchandise Volume (GMV) from stores opened on Douyin and Pinduoduo exceeding **RMB 8 million** in June 2021 alone, representing a **685%** year-on-year increase[15](index=15&type=chunk) [Gross Profit and Gross Margin Analysis](index=9&type=section&id=%E6%AF%9B%E5%88%A9%E5%8F%8A%E6%AF%9B%E5%88%A9%E7%8E%87) Overall gross margin slightly increased to 32.2% due to channel optimization, with B2B and B2C cross-border e-commerce margins improving, B2C general trade margin decreasing, and beauty products' margin significantly rising to 48.0% Gross Margin by Business Line (%) | Business Line | H1 2021 Gross Margin (%) | H1 2020 Gross Margin (%) | Change (bps) | | :--- | :--- | :--- | :--- | | **B2B** | **14.9%** | **12.0%** | **+290** | | General Trade | 14.5% | 12.7% | +180 | | Cross-border E-commerce | 15.6% | 10.5% | +510 | | **B2C** | **47.9%** | **48.8%** | **-90** | | General Trade | 44.8% | 49.6% | -480 | | Cross-border E-commerce | 50.6% | 48.1% | +250 | | **Total** | **32.2%** | **31.8%** | **+40** | Gross Margin by Product Category (%) | Product Category | H1 2021 Gross Margin (%) | H1 2020 Gross Margin (%) | Change (bps) | | :--- | :--- | :--- | :--- | | Adult Personal Care Products | 27.4% | 28.8% | -140 | | Maternal & Infant Personal Care Products | 35.5% | 37.4% | -190 | | Beauty Products | 48.0% | 32.7% | +1530 | | Health Products | 32.3% | 32.5% | -20 | | Others | 49.5% | 42.5% | +700 | - Beauty product gross margin significantly increased, primarily due to the company's adjustment of its brand portfolio, focusing on higher-margin brands, and increasing sales volume in high-margin B2C cross-border e-commerce[29](index=29&type=chunk) [Expense Analysis](index=11&type=section&id=%E9%8A%B7%E5%94%AE%E5%8F%8A%E7%87%9F%E9%8A%B7%E9%96%8B%E6%94%AF) Selling and marketing expenses increased due to higher promotion and labor costs from new channel investments, while general and administrative expenses decreased by 4.1% due to lower listing fees, and interest expenses rose from increased bank borrowings - Selling and marketing expenses increased, primarily due to higher market promotion fees and labor costs, especially increased investment in emerging channels such as live-streaming, short-video, and social e-commerce[30](index=30&type=chunk) - General and administrative expenses decreased by **4.1%** year-on-year, primarily benefiting from lower listing expenses[31](index=31&type=chunk) [Operating Profit and Earnings Per Share](index=12&type=section&id=%E7%B6%93%E7%87%9F%E5%88%A9%E6%BD%A4%E5%8F%8A%E6%AF%8F%E8%82%A1%E6%94%B6%E7%9B%8A) Operating profit slightly decreased in H1 2021 due to higher selling and marketing expenses, but earnings per share turned profitable from a loss of RMB 0.48 to a profit of RMB 0.26 - Operating profit slightly decreased year-on-year, primarily impacted by increased selling and marketing expenses[33](index=33&type=chunk) Earnings Per Share Performance (RMB) | Indicator | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Earnings Per Share (RMB) | 0.26 | -0.48 | [Liquidity and Capital Resources](index=12&type=section&id=%E6%B5%81%E5%8B%95%E8%B3%87%E9%87%91%E5%8F%8A%E8%B2%A1%E5%8B%99%E8%B3%87%E6%BA%90) As of June 30, 2021, cash and cash equivalents were RMB 326 million, operating cash flow significantly improved to a net outflow of RMB 36 million, capital structure remained stable with a 65% debt-to-asset ratio, and total borrowings were RMB 718 million [Cash Flow Analysis](index=12&type=section&id=%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F) Net cash used in operating activities significantly improved to RMB -36 million, with net cash inflows of RMB 67 million from investing and RMB 69 million from financing activities, leading to period-end cash and cash equivalents of RMB 326 million Cash Flow Summary (RMB Thousand) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (36,097) | (233,140) | | Net Cash From Investing Activities | 66,552 | 35,040 | | Net Cash From/(Used in) Financing Activities | 68,920 | (113,343) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 99,375 | (311,443) | | Cash and Cash Equivalents at Period-End | 325,550 | 239,079 | - Operating cash flow significantly improved, primarily due to the contribution from profit before income tax and a decrease in other current assets (timely collection of Japanese consumption tax receivables), partially offset by increases in inventories and trade receivables[37](index=37&type=chunk)[41](index=41&type=chunk) [Capital Structure and Debt](index=13&type=section&id=%E8%B3%87%E6%9C%AC%E6%9E%B6%E6%A7%8B) Capital structure remained stable with a 65% debt-to-asset ratio as of June 30, 2021, total borrowings were RMB 718 million, primarily bank loans, and a key credit agreement requires the founder to maintain his principal beneficial shareholder status - As of June 30, 2021, the Group's debt-to-asset ratio was **65%**[42](index=42&type=chunk) - Total borrowings amounted to **RMB 718 million**, of which **RMB 246 million** were secured by inventories or trade receivables, and **RMB 233 million** were guaranteed by group companies or banks[43](index=43&type=chunk) - One of the conditions for the credit facility with DBS Bank is that Mr. Wang Yong must remain the company's principal beneficial shareholder, otherwise it may impact the funding source for this loan[45](index=45&type=chunk) [Other Operating Information](index=14&type=section&id=%E5%85%B6%E4%BB%96%E7%B6%93%E7%87%9F%E4%BF%A1%E6%81%AF) In H1 2021, capital expenditure was RMB 3.3 million for office renovation with no major commitments, the company had 812 employees, and faced unhedged foreign exchange risk from USD and JPY fluctuations against RMB - Capital expenditure amounted to **RMB 3.3 million**, primarily for office renovation expenses, with no significant capital commitments or investment plans[46](index=46&type=chunk)[47](index=47&type=chunk) - As of June 30, 2021, the Group had a total of **812** employees, with the majority located in China[50](index=50&type=chunk) - The company's foreign exchange risk primarily arises from fluctuations in the exchange rates of USD and JPY against RMB, with no hedging undertaken during the period[52](index=52&type=chunk) - Post-balance sheet event: The company's shares were listed on the Main Board of the Hong Kong Stock Exchange on **July 12, 2021**[54](index=54&type=chunk) [Business Outlook and Strategy](index=15&type=section&id=%E5%B1%95%E6%9C%9B) The company anticipates benefiting from supportive Chinese policies and will focus its H2 strategy on deepening Japanese brand presence, investing in new e-commerce channels, seeking big data investment opportunities, and strengthening financial and inventory management - The company expects to benefit from supportive Chinese government policies regarding cross-border e-commerce, birth rates, and aging population[55](index=55&type=chunk) - Future development strategies include: - Continuing to deepen engagement with Japanese brands to consolidate market leadership - Increasing investment in short-video and social e-commerce channels such such as Douyin and Kuaishou - Seeking investment opportunities in areas like big data analytics - Strengthening financial position and inventory management[56](index=56&type=chunk) [Other Information](index=16&type=section&id=%E5%85%B6%E4%BB%96%E8%B3%87%E6%96%99) [Corporate Governance and Internal Control](index=16&type=section&id=%E4%BC%81%E6%A5%AD%E7%AE%A1%E6%B2%BB%E5%B8%B8%E8%A6%8F) The company maintains high corporate governance standards, despite the combined Chairman and CEO roles, which the Board believes provides strong leadership and is balanced by its composition, and an audit committee reviews financial information and internal controls - The company deviates from Corporate Governance Code Provision A.2.1, where the roles of Chairman of the Board and Chief Executive Officer are held by the same person, Mr. Wang Yong[58](index=58&type=chunk) - The Board believes the current structure does not impair the balance of power and responsibilities, as the Board comprises three executive directors, one non-executive director, and three independent non-executive directors, providing sufficient checks and balances[59](index=59&type=chunk) - The company has established an audit committee, composed of three independent non-executive directors, responsible for reviewing financial information and overseeing risk management and internal control procedures[66](index=66&type=chunk) [Dividends and Share Information](index=17&type=section&id=%E4%B8%AD%E6%9C%9F%E8%82%A1%E6%81%AF) The Board resolved not to declare an interim dividend for H1 2021; the company listed on July 12, 2021, with net proceeds of HKD 320 million, primarily allocated to social media marketing, brand portfolio, and supply chain management - The Board resolved not to declare any interim dividend for the six months ended **June 30, 2021**[65](index=65&type=chunk) Use of Listing Proceeds (HKD Million) | Item | Percentage (%) | Available | Utilized | Unutilized | | :--- | :--- | :--- | :--- | :--- | | Investment in social media marketing, proprietary brand development, etc. | 54.3% | 174 | 57 | 117 | | Enrichment of health product brands and categories | 15.7% | 50 | 17 | 33 | | Enhancement of technology systems and data analytics capabilities | 7.0% | 22 | 2 | 20 | | Seeking strategic investments in technology companies and O2O service providers | 13.0% | 42 | 0 | 42 | | Working capital and general corporate purposes | 10.0% | 32 | 32 | 0 | | **Total** | **100.0%** | **320** | **108** | **212** | [Directors' and Shareholders' Interests](index=19&type=section&id=%E8%91%A3%E4%BA%8B%E5%8F%8A%E6%9C%80%E9%AB%98%E8%A1%8C%E6%94%BF%E4%BA%BA%E5%93%A1%E6%96%BC%E8%82%A1%E4%BB%BD%E3%80%81%E7%9B%B8%E9%97%9C%E8%82%A1%E4%BB%BD%E5%8F%8A%E5%82%B5%E5%88%B8%E4%B8%AD%E6%93%81%E6%9C%89%E7%9A%84%E6%AC%8A%E7%9B%8A%E5%8F%8A%E6%B7%A1%E5%80%89) The report details director and major shareholder equity, with Chairman and CEO Mr. Wang Yong holding 38.82% through Wisdom Oasis, Executive Director Mr. Ryoji Matsumoto holding 0.60%, and Transcosmos Inc. holding 34.52% Directors' Shareholdings | Director Name | Capacity and Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding (%) | | :--- | :--- | :--- | :--- | | Mr. Wang Yong | Interest in controlled corporation | 64,392,700 | 38.82% | | Mr. Ryoji Matsumoto | Interest in controlled corporation | 1,000,000 | 0.60% | Major Shareholders' Shareholdings | Shareholder Name | Capacity and Nature of Interest | Number of Shares Held | Approximate Percentage of Shareholding (%) | | :--- | :--- | :--- | :--- | | Wisdom Oasis | Beneficial owner | 64,392,700 | 38.82% | | Transcosmos Inc. | Beneficial owner | 57,264,100 | 34.52% | [Unaudited Condensed Consolidated Financial Statements](index=21&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8) [Consolidated Statement of Comprehensive Income](index=21&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E5%85%A8%E9%9D%A2%E6%94%B6%E5%85%A5%E8%A1%A8) For H1 2021, revenue was RMB 1.481 billion (up 17.4%), gross profit RMB 477 million, and operating profit RMB 66.65 million; the company turned profitable with a period profit of RMB 35 million (vs. RMB 40.31 million loss prior year) and basic EPS of RMB 0.26 Consolidated Statement of Comprehensive Income Summary (RMB Thousand) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Revenue | 1,481,099 | 1,261,917 | | Gross Profit | 476,647 | 400,731 | | Operating Profit | 66,654 | 74,387 | | Profit/(Loss) Before Income Tax | 52,462 | (16,324) | | Profit/(Loss) for the Period | 34,995 | (40,307) | | Profit/(Loss) Attributable to Owners of the Company | 34,826 | (40,066) | | Basic Earnings/(Loss) Per Share (RMB) | 0.26 | (0.48) | [Consolidated Statement of Financial Position](index=23&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E7%8B%80%E6%B3%81%E8%A1%A8) As of June 30, 2021, total assets increased to RMB 1.863 billion, with inventories rising to RMB 760 million, total liabilities at RMB 1.223 billion (current liabilities RMB 1.165 billion), and total equity at RMB 640 million Consolidated Statement of Financial Position Summary (RMB Thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Total Non-current Assets | 88,548 | 86,644 | | Total Current Assets | 1,774,921 | 1,706,831 | | **Total Assets** | **1,863,469** | **1,793,475** | | **Equity and Liabilities** | | | | Total Equity | 640,007 | 617,687 | | Total Non-current Liabilities | 58,838 | 57,288 | | Total Current Liabilities | 1,164,624 | 1,118,500 | | **Total Liabilities** | **1,223,462** | **1,175,788** | | **Total Equity and Liabilities** | **1,863,469** | **1,793,475** | [Consolidated Statement of Changes in Equity](index=25&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E6%AC%8A%E7%9B%8A%E8%AE%8A%E5%8B%95%E8%A1%A8) For H1 2021, total equity increased from RMB 618 million to RMB 640 million, primarily due to RMB 35 million profit, partially offset by RMB 12.67 million in other comprehensive loss from exchange differences Summary of Changes in Equity (RMB Thousand) | Item | Value | | :--- | :--- | | As at January 1, 2021 | 617,687 | | Profit for the year | 34,995 | | Other comprehensive loss | (12,670) | | Transactions with owners | (5) | | **As at June 30, 2021** | **640,007** | [Consolidated Statement of Cash Flows](index=26&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E7%8F%BE%E9%87%91%E6%B5%81%E9%87%8F%E8%A1%A8) In H1 2021, net cash used in operating activities significantly improved to RMB 36.1 million, with net cash inflows from investing (RMB 66.55 million) and financing (RMB 68.92 million), resulting in a net increase of RMB 99.38 million in cash and cash equivalents, ending at RMB 326 million Consolidated Statement of Cash Flows Summary (RMB Thousand) | Item | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (36,097) | (233,140) | | Net Cash From Investing Activities | 66,552 | 35,040 | | Net Cash From/(Used in) Financing Activities | 68,920 | (113,343) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 99,375 | (311,443) | | Cash and Cash Equivalents at Beginning of Period | 252,334 | 538,561 | | Effect of Exchange Rate Changes | (26,159) | 11,961 | | **Cash and Cash Equivalents at End of Period** | **325,550** | **239,079** | [Selected Notes to Financial Statements](index=27&type=section&id=%E6%9C%AA%E7%B6%93%E5%AF%A9%E6%A0%B8%E7%B0%A1%E6%98%8E%E7%B6%9C%E5%90%88%E8%B2%A1%E5%8B%99%E5%A0%B1%E8%A1%A8%E9%99%84%E8%A8%BB) Notes provide detailed financial information, including all revenue from China (customer A contributing RMB 472 million), period-end inventories at RMB 760 million, total borrowings of RMB 718 million (largely secured/guaranteed), and trade payables of RMB 398 million - All of the company's revenue is derived from China, with customer A being a major client, contributing **RMB 472 million** in revenue, accounting for approximately **31.9%** of total revenue[105](index=105&type=chunk)[110](index=110&type=chunk) Inventory Movement (RMB Thousand) | Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Goods | 799,629 | 702,490 | | Less: Provision | (39,899) | (43,129) | | **Net** | **759,730** | **659,361** | Borrowing Structure (RMB Thousand) | Item | June 30, 2021 | | :--- | :--- | | Secured or Guaranteed | 479,284 | | Unsecured | 238,420 | | **Total Borrowings** | **717,704** |