Financial Performance - The group recorded revenue of RMB 776 million for the six months ended September 30, 2023, remaining flat year-on-year [25]. - The apparel business achieved an operating profit of RMB 75 million, reversing from a loss compared to the previous year [25]. - The group recorded a pre-tax loss of RMB 441 million, with an effective tax rate of 7.2% [43]. - The operating loss for the group was RMB 471 million, compared to an operating loss of RMB 367 million in the previous period, resulting in an operating loss margin of 60.7% [67]. - The net loss attributable to the owners of the company was RMB 409,713,000, compared to RMB 346,000,000 in the same period last year, representing an increase of approximately 18.4% [119]. - The company reported a financial income of RMB 31,939,000, down from RMB 42,530,000 in the previous year, indicating a decrease of about 25% [119]. - The company’s equity attributable to owners decreased to RMB 9,390,847,000 from RMB 9,665,449,000, a decline of approximately 2.8% [122]. Investment and Assets - The group's investment segment reported a net asset value of RMB 8,565 million as of September 30, 2023, a slight decrease of 2.0% from RMB 8,750 million on March 31, 2023 [27]. - The total assets as of September 30, 2023, amounted to RMB 10,245,045,000, down from RMB 10,576,825,000 as of March 31, 2023 [122]. - The fair value of financial liabilities related to derivatives was RMB (26,249,000) as of September 30, 2023, compared to RMB (64,664,000) as of March 31, 2023 [164]. - The fair value of listed equity securities was RMB 804,785,000 as of September 30, 2023 [164]. - The fair value of other unlisted equity investments was RMB 319,916,000 as of September 30, 2023 [164]. - The fair value of investments in private equity funds decreased to RMB 4,200,527,000 from RMB 5,313,629,000 at the beginning of the period [193]. Sales and Market Trends - Retail sales of sports goods in China reached RMB 77.76 billion in the first seven months of 2023, representing an annual increase of 11.4% [31]. - The sports and leisure apparel sector is experiencing continuous growth in retail sales, driven by the enthusiasm for sports events like the Asian Games [32]. - During the reporting period, Kappa brand sales increased by 8.0% compared to the previous period, while overall sales remained flat [36]. - Kappa brand's total sales reached RMB 739 million in 2023, representing 95.2% of the group's total sales, an increase of 8.0% compared to RMB 684 million in 2022 [59]. - The Kappa brand focused on consumer research and optimized its product lines, launching the retro Kappa 1916 series and the Kappa Player series targeting new generation consumers [17]. Dividends and Shareholder Returns - The group proposed a special interim dividend of RMB 0.71 per share to reward shareholders for their continued support [25]. - The company announced an interim special dividend of RMB 0.71 per share, amounting to approximately RMB 41.8 million [43]. Operational Efficiency - The group's sales cost was RMB 240 million, a decrease of RMB 52 million compared to RMB 292 million in the previous period [38]. - The logistics and warehouse operating expenses were RMB 16 million, down from RMB 21 million in the previous period, reflecting improved operational efficiency [41]. - The average trade receivables turnover days during the reporting period was 35 days, compared to 36 days in the previous period [69]. - The average inventory turnover days during the reporting period was 265 days [69]. Sustainability and Innovation - The group emphasized green innovation in its products, actively using advanced eco-friendly materials to enhance sustainability [11]. - The company is committed to integrating ESG strategies into its daily operations to create long-term value and contribute to society [11]. - The company anticipates that sustainable development will be a significant growth driver for the sports goods market in the future [32]. - Over 80% of surveyed companies in the global sports goods industry have announced or plan to announce carbon reduction targets [32]. Brand Development and Marketing - The group aims to strengthen its brand identity and lead the fashion retro sports trend through innovative marketing events [26]. - The company continues to promote its Kappa brand's philosophy of "passion, sexiness, and avant-garde" through collaborations with trendsetters and outdoor experience events [32]. - The PHENIX brand sponsored the Tsinghua University ski team and launched custom ski suits, enhancing its engagement with the youth community [10]. Employee Compensation and Stock Options - The group's employee compensation and benefits expenses increased to RMB 62 million, up RMB 3 million from the previous period [65]. - The company has granted a total of 7,081,000 restricted shares under the restricted share award plan, representing approximately 0.125% of the issued shares as of the adoption date [76]. - The total number of stock options available for issuance under the stock option plan as of the report date is approximately 383,472,102, representing about 6.51% of the issued shares [89].

Financial Performance - For the first three quarters of 2023, the group recorded revenue of RMB 776 million, remaining flat year-on-year, while the apparel business turned a profit of RMB 75 million, compared to a loss previously[17]. - Revenue for the six months ended September 30, 2023, was RMB 775,993 thousand, a slight decrease of 0.4% compared to RMB 776,339 thousand in the same period of 2022[152]. - Gross profit increased to RMB 536,439 thousand, up 10.8% from RMB 484,321 thousand year-over-year[152]. - Operating loss for the period was RMB 471,481 thousand, compared to a loss of RMB 367,353 thousand in the previous year, reflecting a 28.4% increase in losses[152]. - Net loss attributable to the owners of the company was RMB 409,713 thousand, compared to RMB 346,000 thousand in the same period last year, representing an increase of 18.4%[154]. - Total comprehensive loss for the period amounted to RMB 247,410 thousand, a significant decline from a gain of RMB 17,415 thousand in the prior year[154]. - The company reported a loss of RMB 409,713 thousand for the period, compared to a loss of RMB 346,000 thousand in the previous year, indicating a year-over-year increase in losses of about 18.4%[168]. - The company’s total comprehensive income for the period was a loss of RMB 247,410 thousand, compared to a gain of RMB 17,415 thousand in the previous year, indicating a substantial decline in comprehensive income[168]. Dividends and Shareholder Returns - The company declared a special interim dividend of RMB 0.71 per share, payable on December 22, 2023[5]. - The group proposed a special interim dividend of RMB 0.71 per share to reward shareholders for their continued support[17]. - Interim special dividend per share decreased by 39.3% to RMB 0.71 from RMB 1.17 year-on-year[74]. Market and Economic Conditions - China's GDP growth rate for 2023 is projected to be around 5%, significantly higher than the global average, positioning China as the largest engine of global economic growth[19]. - The domestic economic recovery is supported by a series of consumption-promoting policies, leading to a noticeable rebound in the consumer market[12]. - In the first three quarters of 2023, China's GDP grew by 5.2% year-on-year, with the third quarter showing a growth of 4.9%, exceeding market expectations[40]. - The Chinese government has implemented a series of consumption-promoting policies, resulting in a significant rebound in the domestic consumption market[40]. - Retail sales of sports goods in China reached 77.76 billion RMB in the first seven months of 2023, representing an annual increase of 11.4%[40]. - The retail sales of consumer goods in China increased by 6.8% year-on-year in the first three quarters of 2023, with upgraded goods sales growing by 12.2%[40]. Brand and Product Development - The new Kappa 1916 series draws inspiration from the brand's century-long history, aiming to attract younger consumers with retro sports fashion[10]. - The PHENIX brand, focusing on high-end professional skiing products, has sponsored the Tsinghua skiing team and launched custom team uniforms[10]. - The company continues to innovate in product design, focusing on professional competitive gear and expanding its market presence with new product lines[39]. - Kappa introduced several new product lines, including the Kappa 1916 series and Kappa Player series, targeting the new generation of trend-conscious consumers[45]. - Kappa's historical best-selling item, the combat pants, has been fully upgraded, emphasizing quality details with 22-piece stitching[45]. - The Kappa Gara series continues to integrate functional technology with fashion design, enhancing the brand's core competitiveness through the K-TECH technology platform[47]. Sustainability and ESG Initiatives - The company is committed to enhancing its ESG management system and optimizing its ESG strategies to create long-term value[9]. - Over 80% of surveyed companies in the global sports goods industry have announced or plan to set carbon reduction targets, indicating a significant trend towards sustainability[38]. - Kappa launched a special low-carbon training outfit made from Sorona eco-friendly fabric for the national fencing team, reflecting its commitment to sustainability[39]. Store and Channel Management - The company is enhancing its store quality and targeting higher-end consumer groups for greater growth opportunities[11]. - As of September 30, 2023, the total number of Kappa brand stores was 1,002, a net decrease of 21 stores compared to March 31, 2023[12]. - The group plans to enhance channel management efficiency and reduce operational costs to improve competitiveness[12]. Investment and Financial Position - The investment division's net assets amounted to RMB 8,565 million, reflecting a slight decrease of 2.0% from March 31, 2023[28]. - The group's investment segment reported a loss due to fluctuations in the capital market, resulting in a loss attributable to the company's owners of RMB 410 million, compared to a loss of RMB 346 million in the previous year[54]. - The company maintains a cautious investment strategy, with net assets in the investment segment amounting to RMB 85.65 million, a slight decrease of 2.0% from March 31, 2023[54]. - The company aims to optimize its investment asset structure and strengthen collaboration with project management parties to ensure stable long-term returns for shareholders[54]. Corporate Governance and Compliance - The independent auditor has provided an unqualified review opinion on the interim financial information for the six months ending September 30, 2023[149]. - The company has made efforts to ensure high-quality corporate governance in line with shareholder interests[149]. - The company has confirmed compliance with the standards for securities trading by directors during the review period[149]. - The latest version of the company's articles of association has been published on the company's website and the stock exchange[149].

Financial Performance - Revenue for the fiscal year ended March 31, 2023, was RMB 1,679 million, a decrease of 12.4% from RMB 1,916 million in the previous year[12]. - Operating profit for the same period was RMB 138 million, recovering from an operating loss of RMB 1,786 million in the previous year[12]. - Net profit attributable to the company's owners was RMB 115 million, compared to a net loss of RMB 1,783 million in the previous year[12]. - Gross margin for the year was 61.2%, down from 63.9% in the previous year[12]. - The company reported a net asset value per share of RMB 164.80, an increase from RMB 159.46 in the previous year[12]. - Total assets as of March 31, 2023, were RMB 10,577 million, slightly up from RMB 10,485 million in the previous year[12]. - The debt-to-equity ratio improved to 0.09 from 0.12 in the previous year, indicating a stronger financial position[12]. - The company reported a debt-to-equity ratio of 0.14 for the fiscal year 2022/23, indicating a stable financial position[53]. - The total revenue for the group was RMB 1,678,916 thousand, down 12.4% from RMB 1,915,735 thousand in the previous year[159]. - The gross profit for the group was RMB 1,063,544 thousand, compared to RMB 1,122,175 thousand in the previous year, indicating a decrease in gross profit margin[159]. - The operating profit for the group was RMB 137,848 thousand, a significant recovery from an operating loss of RMB 1,786,216 thousand in the previous year[159]. - The net profit from continuing operations was RMB 114,997 thousand, compared to a loss of RMB 1,765,704 thousand in the previous year, marking a turnaround in profitability[159]. - Total comprehensive income for the year was RMB 397,617 thousand, a significant recovery from a loss of RMB (1,893,956) thousand in the prior year[160]. - Basic and diluted earnings per share from continuing operations were RMB 1.96, a turnaround from a loss of RMB (30.11) per share in the previous year[160]. Market Strategy and Development - The company aims to enhance user confidence and promote a high-quality healthy lifestyle through its products[6]. - The group plans to continue focusing on digital transformation and omnichannel strategies to enhance operational efficiency and consumer engagement[32]. - The group aims to expand its market presence by seeking opportunities to operate more international brands in China and regional markets[39]. - The company is focusing on digital transformation and leveraging new technologies to optimize supply chain management and user experience[98]. - The group plans to continue expanding its market presence and product offerings, focusing on innovative designs and functional products to enhance customer experience[110]. - The company is optimistic about the growth potential of the sportswear market in China, driven by government initiatives and increasing industry penetration[110]. - The brand's strategy includes collaborations with trendy brands and digital marketing initiatives to attract younger consumers[76]. - The group aims to strengthen brand interaction with younger consumers through innovative marketing and co-branding initiatives[81]. Product Development and Innovation - The Kappa brand launched the Kappa 1916 product series during the reporting period, drawing design inspiration from its century-long history[32]. - The Kappa Player series was launched, integrating current fashion trends with the brand's historical elements, aimed at appealing to the youth market[57]. - The company emphasized the development of Kappa Sports products, incorporating advanced technologies such as K-FLEX and K-BREATH to enhance product quality and comfort[75]. - Kappa launched a new product line themed around the Chinese New Year, integrating Italian style with Eastern aesthetics, aimed at enhancing brand engagement with young consumers[102]. - Kappa's product lines include the Kappa 1916 series, Kappa Player series, and Kappa Sports series, which have been upgraded to meet modern consumer preferences[104][105]. - Kappa brand launched new products across design, materials, and functionality to strengthen market competitiveness[100]. Sustainability and Corporate Responsibility - The group is committed to sustainable development by incorporating recyclable and bio-based fibers into its product development[35]. - The group will continue to deepen its environmental, social, and governance (ESG) strategies to achieve long-term sustainable development[35]. - The company is committed to sustainable development and creating long-term value for shareholders[58]. - The group recognizes the importance of environmental, social, and governance (ESG) factors for sustainable development[86]. - The company maintained a focus on responsible supply chain management, emphasizing environmental protection and supplier evaluation[135]. - The group is committed to sustainable development, investing in eco-friendly materials and technologies to align with environmental and social governance (ESG) goals[112]. Challenges and Risks - The decline in sales was attributed to a decrease in customer traffic due to localized COVID-19 outbreaks and the transition of the children's clothing business to a licensing model[124]. - The group acknowledges various operational risks, including rising material costs and potential disruptions in supply chains, and has implemented strategies to mitigate these risks[115]. - In the 2022/23 fiscal year, the overall retail market was significantly impacted by the pandemic, leading to weak market demand and high fluctuations in raw material costs[100]. - The overall industry is experiencing structural changes, with brand differentiation and product innovation becoming key factors influencing consumer purchasing decisions[98]. Store and Asset Management - The total number of Kappa brand stores reached 1,025 as of March 31, 2023, a net decrease of 158 stores compared to the previous year[32]. - The investment division net assets amounted to RMB 8,741 million, an increase of 3.0% year-on-year as of March 31, 2023[36]. - The total number of Kappa brand retail stores reached 1,025, reflecting ongoing optimization and expansion of the self-operated store network[139]. - The group plans to optimize its investment asset structure and pursue new project investments cautiously[82].

Economic Performance - The Chinese economy showed a strong recovery with a GDP growth of 4.5% in Q1 2023 compared to the same period in 2022, indicating a rebound in consumer spending with retail sales increasing by 5.8% year-on-year[9]. - The group has reported a significant increase in offline customer traffic and consumption market recovery, driven by the government's optimization of pandemic control measures[14]. - The company anticipates future economic growth, projecting an increase in stock value that will provide stable returns to shareholders[73]. Business Strategy and Development - The group plans to leverage its management team's extensive experience in the sports apparel industry and strong financial resources to seek opportunities for operating more international brands in China and/or regional markets[5]. - The group is committed to optimizing its business system and accelerating digital transformation to improve efficiency and business performance[14]. - The group aims to provide long-term stable returns to shareholders through prudent project investment and timely exits from existing projects[3]. - The group aims to enhance brand competitiveness through innovative design and functional products, targeting the growing sportswear market in China[21]. - The group plans to continue expanding its market presence and product offerings, including collaborations with trendy brands like FR2[1]. Product Innovation and Marketing - The group continues to enhance its product development efforts, focusing on innovation in design, materials, and functionality to strengthen market competitiveness[14]. - The Kappa brand has engaged in multiple collaborations with youth idols and virtual influencers, enhancing brand visibility and engagement among younger consumers[14]. - The Kappa brand's promotional strategy emphasizes its core values of "passion, sexiness, and avant-garde," with various innovative and interactive marketing activities[14]. - The group has successfully launched new products under the phenix brand, including a collaboration with the Japanese streetwear brand FR2, showcasing a blend of retro elements and high-end technology[2]. - The group has launched the Kappa 1916 series to connect with younger consumers, emphasizing the brand's pioneering spirit and retro style[1]. Financial Performance - The group's operating profit for the reporting period was RMB 138 million, compared to an operating loss of RMB 1,786 million in the previous period, resulting in an operating profit margin of 8.2%[38]. - The group's sales cost for the reporting period was RMB 652 million, a decrease of RMB 39 million compared to RMB 691 million in the previous period[33]. - The total distribution and administrative expenses amounted to RMB 1,137 million, representing 67.7% of total sales, a reduction of 4.1 percentage points from the previous period[36]. - The group's advertising and sales expenses were RMB 788 million, a decrease of RMB 130 million from RMB 918 million in the previous period, mainly due to lower sales[58]. - The group's financial income net amount was RMB 40 million, compared to a net financial expense of RMB 14 million in the previous period[60]. Corporate Governance - The company adheres to the Hong Kong Stock Exchange listing rules, ensuring transparent communication with shareholders regarding business strategies and investment plans[75]. - The company emphasizes the protection of minority shareholders' rights and interests in its governance practices[75]. - The board of directors includes independent non-executive members, ensuring diverse perspectives in decision-making[85]. - The company has implemented a policy for the appointment of external auditors, ensuring their independence and the effectiveness of audit procedures[139]. - The company has established various committees, including the Audit Committee, Remuneration Committee, Nomination Committee, Executive Committee, and Environmental, Social, and Governance Committee, to oversee specific areas of the company's affairs[154]. Environmental, Social, and Governance (ESG) Commitment - The group is committed to sustainable development by establishing an Environmental, Social, and Governance (ESG) committee to oversee its policies[26]. - The company has maintained a commitment to environmental, social, and governance (ESG) reporting guidelines[95]. - The environmental, social, and governance (ESG) committee held two meetings in the past twelve months to review the company's ESG policies and performance[198]. - The company has complied with the environmental, social, and governance reporting guidelines as per the listing rules, with relevant disclosures made in its reports[144]. Workforce and Diversity - The group has reduced its workforce to 471 employees as of March 31, 2023, down from 627 employees a year earlier[28]. - The employee gender ratio is approximately 67.1% female and 32.9% male, reflecting the company's commitment to diversity[194]. - The board consists of 8 members, including 1 female and 6 males, with 3 independent directors and 4 executive directors[193]. - The company will continue to implement measures to promote diversity at all levels of the workforce[194]. - The nomination committee has reviewed the board's composition and is satisfied with its diversity in terms of independence, skills, industry experience, gender, age, and tenure[192].

Accounts Receivable Loans - As of March 31, 2022, the total accounts receivable loans amounted to RMB 867.5 million, including RMB 625.0 million to independent third parties and RMB 242.5 million to management personnel[2]. - The largest single borrower accounted for RMB 242.4 million, representing approximately 27.9% of the total accounts receivable loans[5]. - The total amount of loans to the five largest borrowers was RMB 576.8 million, accounting for approximately 66.5% of the total accounts receivable loans[5]. - The total number of borrowers under the lending arrangements was ten as of March 31, 2022[5]. Impairment and Repayment - The total provision for impairment of accounts receivable loans was approximately RMB 108.0 million, an increase of about 35.5% from RMB 79.7 million as of March 31, 2021[6]. - As of March 31, 2022, approximately 79.0% of the accrued interest had been repaid following the signing of a deferral agreement[8]. Credit Assessment and Loan Management - The company has adopted strict credit assessment policies and procedures to ensure the recoverability of loans and the adequacy of collateral[9]. - The company will continue to monitor the repayment ability of borrowers and the value of collateral to ensure the recovery of related loans[8]. - The company has established a committee to review and approve each loan application, ensuring compliance with listing rules[10]. Loan Characteristics - The company provided short-term loans with a typical duration of no more than one year, utilizing idle cash not required for business operations[4].

Financial Performance - For the six months ended September 30, 2022, the company reported revenue of RMB 776 million, a decrease of 8.9% compared to RMB 852 million in the same period last year[12]. - Gross profit for the same period was RMB 484 million, down 12.3% from RMB 552 million year-on-year[12]. - The company recorded a loss attributable to equity holders of RMB 386 million, which is a 48.4% reduction from a loss of RMB 748 million in the previous year[12]. - Basic loss per share was RMB 6.59, reflecting a 48.4% improvement compared to RMB 12.76 in the prior year[12]. - The gross margin decreased to 62.4%, down 2.4 percentage points from 64.8% in the previous year[12]. - The operating loss improved significantly to RMB 392 million, a 49.1% reduction from RMB 770 million in the previous year[12]. - The Kappa brand's total sales during the reporting period amounted to RMB 684 million, down from RMB 747 million in the previous year, representing a decline of RMB 63 million[58]. - The group's gross profit for the reporting period was RMB 461 million, a decrease of RMB 97 million from RMB 558 million in the previous year, resulting in a gross margin of 59.4%, down 6.1 percentage points from 65.5%[62]. - The company reported a net loss of RMB 386,227 thousand for the period, compared to a net loss of RMB 747,949 thousand in the same period last year, indicating an improvement[167]. - The company’s total comprehensive income for the period was RMB 17,415 thousand, a significant recovery from a loss of RMB 812,443 thousand in the previous year[154]. Store Operations - As of September 30, 2022, the total number of Kappa brand stores was 1,099, a net decrease of 84 stores since March 2022[17]. - The number of Kappa brand self-operated stores reached 640, while the total number of Kappa brand stores was 1,099[58]. - The total number of Kappa brand stores reached 1,099 as of September 30, 2022, a net decrease of 84 stores compared to March 31, 2022[42]. Marketing and Brand Strategy - The company aims to enhance its digital marketing strategies and has collaborated with young idols and artists to engage with consumers in both real and virtual worlds[17]. - Kappa brand launched the "Endless Spirit" marketing theme and introduced the new Kappa Player series, targeting Gen Z consumers[18]. - Kappa's marketing strategy focused on engaging with Generation Z through collaborations with popular artists, resulting in over 100 million exposures across platforms for their summer theme song and MV[35]. - Kappa's promotional efforts included collaborations with youth idols and leveraging social media trends to strengthen brand engagement with younger consumers[35]. - The brand's focus on creating a warm and deep connection with consumers aims to encourage a positive attitude towards challenges posed by the pandemic[32]. - Kappa's marketing activities are aligned with the interests of Generation Z, utilizing social media and virtual collaborations to enhance brand visibility[35]. - Kappa brand launched a collaboration with British creative organization BRANDALISED® and Brazilian pop artist Romero Britto, introducing a street culture message to the youth[32]. Investment and Financial Strategy - The group's investment division net assets reached RMB 8,568 million as of September 30, 2022, a 0.9% increase from March 31, 2022[22]. - The group will maintain a prudent investment strategy to provide stable and sustainable returns to shareholders[22]. - The investment strategy remains cautious, with a focus on equity investments, stock investments, fixed income, and cash management to ensure investment safety[45]. - The group plans to continue optimizing its investment asset structure and manage new project investments prudently to provide stable returns to shareholders[52]. - The company has not adopted any new or revised standards that would have a significant impact on its financial statements for the current or future reporting periods[179]. Cash Flow and Liquidity - As of September 30, 2022, the group's cash and bank balance was RMB 2,613 million, an increase of RMB 1,061 million from RMB 1,552 million as of March 31, 2022[84]. - The company reported a net cash inflow from operating activities of approximately RMB 22 million[84]. - The cash flow from operating activities for the six months ended September 30, 2022, was RMB 22,287 thousand, a significant recovery from a cash outflow of RMB 172,386 thousand in the previous year[171]. - The company’s cash and cash equivalents at the end of the period were RMB 2,602,990 thousand, up from RMB 1,377,643 thousand at the end of the previous year[171]. Corporate Governance - The company has complied with the corporate governance code as per the Hong Kong Stock Exchange regulations during the review period[143]. - The audit committee, consisting of three independent non-executive directors, reviewed the interim financial information for the six months ending September 30, 2022[147]. - The company is committed to implementing high-quality corporate governance practices to align with shareholder interests[139]. Risk Management - Credit risk primarily arises from receivables and trade receivables from subsidiaries engaged in investment and operational activities[185]. - The company has maintained its risk management policies since March 31, 2022, with no significant changes reported[184]. - The company’s financial risk management includes market risk, credit risk, and liquidity risk, which are detailed in the annual financial statements[183].

Financial Performance - For the fiscal year 2021/2022, the company reported a revenue of RMB 1,916 million, a decrease of 2.7% compared to RMB 1,970 million in the previous year[25]. - The operating loss for the year was RMB 1,751 million, compared to an operating profit of RMB 2,070 million in the prior year[25]. - The gross profit margin decreased to 63.9% from 65.6% year-on-year[25]. - The net loss attributable to shareholders was RMB 1,747 million, compared to a profit of RMB 1,811 million in the previous year[25]. - Basic and diluted loss per share was RMB 29.79, down from earnings of RMB 30.88 per share in the previous year[25]. - The group recorded revenue of RMB 1,916 million for the fiscal year ending March 31, 2022, a decrease of 2.7% year-on-year[40]. - The net loss attributable to equity holders was RMB 1,747 million during the reporting period[40]. - The group's gross profit was RMB 1,225 million, a decrease of RMB 67 million from RMB 1,292 million in the previous period, with a gross margin of 63.9% (previous period: 65.6%)[111]. - The group reported a loss attributable to owners of RMB 1,747 million for the reporting period, compared to a profit of RMB 1,811 million in the previous year[99]. Assets and Liabilities - Total assets as of March 31, 2022, were RMB 10,485 million, a decrease from RMB 12,638 million in the previous year[27]. - The company's net current assets amounted to RMB 4,484 million, down from RMB 5,764 million in the previous year[27]. - The debt-to-equity ratio increased to 0.12 from 0.10 year-on-year[28]. - The group had a net asset value attributable to equity holders of RMB 9,351 million as of March 31, 2022, down from RMB 11,533 million as of March 31, 2021[1]. - The group's current ratio as of March 31, 2022, was 6.7 times, down from 9.0 times as of March 31, 2021[1]. Market and Industry Trends - In 2021, the sportswear industry in China reached a market size of 385.8 billion yuan, with expectations to exceed 400 billion yuan in 2022[65]. - The national sports industry is projected to reach a total scale of 5 trillion yuan by 2025, with a target of 38.5% of the population regularly participating in sports[65]. - Online retail sales of physical goods grew by 12.0% in 2021, accounting for 24.5% of total retail sales, which exceeded 40 trillion yuan, reflecting a 12.5% year-on-year increase[54]. - The sportswear industry is focusing on digital transformation and expanding online channels, with increasing revenue from platforms like Xiaohongshu and Douyin[65]. Strategic Initiatives - The company aims to become the most desirable sports lifestyle brand, focusing on talent and management excellence[7]. - Future strategies include market expansion and potential new product development to enhance brand presence[39]. - The group aims to deepen digital transformation and enhance omnichannel operations to capture opportunities in the sports industry[44]. - The group plans to focus on the rapidly growing snow sports industry, investing in Xinjiang to create a comprehensive system around skiing equipment and training[43]. - The group will continue to integrate online and offline channels to optimize sales strategies and expand customer reach[40]. - The group is actively collaborating with local designers and brands to launch co-branded products, enhancing brand image[40]. - The group is committed to providing high-quality products and services in the Chinese market, maintaining its long-term commitment[40]. Corporate Governance and Management - The company has adhered to the corporate governance code as per the Hong Kong Stock Exchange rules, with the exception of the chairman's absence at the annual general meeting due to important matters[176]. - The board consists of seven members, including four executive directors and three independent non-executive directors, ensuring a balanced composition with sufficient knowledge and experience[182]. - The company has established an Environmental, Social, and Governance (ESG) committee to oversee its commitment to sustainability[88]. - The company has implemented environmental, social, and governance (ESG) reporting guidelines, disclosing relevant information in its ESG report[178]. - The executive committee is authorized by the board to manage the company's daily operations, focusing on overall strategy, financial matters, and risk management[179]. Marketing and Brand Development - Kappa brand successfully held its first annual fashion show in China in May 2021, marking a significant milestone in its 20-year market presence[70]. - Kappa has sponsored multiple national teams and sports events, achieving high visibility and brand recognition, with Kappa apparel worn by many athletes during competitions[73]. - Kappa's marketing strategy during the Lunar New Year included a campaign featuring Olympic champion Sun Yiwen, enhancing brand visibility through social media[70]. - The group has seen challenges in the operating environment due to the COVID-19 pandemic and a warm winter, impacting product demand[68]. - Kappa's brand promotion efforts have significantly increased brand awareness and image through various marketing combinations during major sports events[68]. Operational Efficiency - The group aims to strengthen its market position by optimizing online and offline sales channels and enhancing overall operational efficiency[68]. - The group aims to enhance operational efficiency by closing underperforming stores while expanding its e-commerce presence[80]. - The company is optimizing its offline store operations and enhancing digital management for better efficiency[65]. - The group has expanded its online store count to 764, facilitating flexible inventory management[78]. Future Outlook - The management has provided guidance for the next fiscal year, projecting a revenue growth of 10% to 12%[166]. - The company maintains an optimistic outlook on the sports apparel industry, anticipating growth opportunities as the pandemic situation improves[80]. - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share over the next two years[161].

Financial Performance - For the six months ended September 30, 2021, the company recorded revenue of RMB 852 million, an increase of 4.5% year-on-year[13]. - The gross profit was RMB 552 million, down 2.6% from RMB 567 million in the previous year, with a gross margin of 64.8%, a decrease of 4.8 percentage points[13]. - The company reported a net loss attributable to shareholders of RMB 748 million, compared to a profit of RMB 1,116 million in the same period last year, representing a decline of 167.0%[13]. - Basic loss per share was RMB 12.76, compared to earnings of RMB 19.04 per share in the previous year[13]. - The total sales revenue for the Kappa brand during the reporting period was RMB 747 million, a slight decrease of RMB 1 million compared to RMB 748 million in the previous period[50]. - The overall sales revenue for the group increased by 4.5% to RMB 852 million from RMB 815 million in the previous period[47]. - The gross profit for the group was RMB 558 million, up RMB 21 million from RMB 537 million in the previous period, resulting in a gross margin of 65.5%[53]. - The company incurred a loss from operations of RMB 769,769,000, compared to a profit of RMB 1,281,925,000 in the previous year, reflecting a significant decline[117]. - The total comprehensive loss for the period amounted to RMB 812,443,000, compared to a comprehensive income of RMB 913,720,000 in the previous year[119]. Store Expansion and Brand Strategy - The company opened 46 new Kappa brand stores, bringing the total to 1,421 stores as of September 30, 2021[17]. - Kappa has established a new brand core strategy of "returning to sports," actively sponsoring various sports teams, including the official sponsorship of the Chinese national skateboarding, equestrian, and fencing teams for the Tokyo Olympics[18]. - Kappa's first brand concept store opened in Beijing's Sanlitun, aiming to provide a high-end, customized shopping experience[33]. - Kappa has launched new product lines, including the Kappa x Jianyi Street co-branded skateboard shoes, and held offline events to enhance brand visibility[25]. - Kappa's collaboration with Olympic gold medalist Sun Yiman as a brand ambassador highlights the brand's commitment to promoting sports in China[33]. Market and Consumer Trends - The retail sales of consumer goods in China increased by 13.9% year-on-year in the first half of 2021, with online physical goods retail sales reaching approximately RMB 6.1 trillion, a year-on-year growth of 23.2%[28]. - The market size of China's sports footwear and apparel industry reached RMB 385.8 billion in 2021, with a compound annual growth rate (CAGR) of 9.83% from 2021 to 2023, ranking second among consumer sub-industries[30]. - The penetration rate of sports apparel consumption in China is only 12.5% of total footwear and apparel consumption, indicating significant growth potential[30]. - The Chinese sports footwear market is experiencing faster growth than the overall footwear market, driven by increasing health awareness and consumer demand for sports products[30]. Investment and Financial Strategy - The group reported an investment loss of RMB 661 million during the period, compared to an investment income of RMB 1,243 million previously, with net assets in the investment division decreasing by 9.8% to RMB 9,488 million as of September 30, 2021[22]. - The group aims to optimize its investment asset structure and strengthen cooperation with project management parties to ensure prudent investment in new projects[22]. - The company is committed to innovation and seizing opportunities in the sports industry, aiming to provide stable returns to shareholders despite uncertainties[23]. - The company has adjusted its investment strategy to optimize asset structure and ensure long-term stable returns for shareholders[42]. - The company has a capital commitment of RMB 300 million related to various investment agreements as of September 30, 2021[86]. Operational Challenges - The company faced challenges due to a resurgence of COVID-19 and adverse weather conditions, which impacted revenue in August and September 2021[15]. - The overall sales cost has increased due to rising raw material prices, with cotton prices reaching an annual high in September, impacting the retail performance of the apparel industry[28]. - The company experienced a fair value adjustment loss on investments due to macro market fluctuations since March 2021[15]. - The company reported a significant increase in inventory impairment losses, totaling RMB 5,893,000 compared to a reversal of RMB 30,738,000 in the previous year[117]. Digital and Omnichannel Strategies - Kappa is focusing on digital and omnichannel marketing strategies, enhancing private domain channels and launching new marketing scenarios to drive sales conversion[21]. - The company continues to deepen its sales layout in emerging channels like Douyin and Dewu to enhance online brand marketing and increase total sales[21]. - The company is leveraging digital technology to enhance the circulation and sales processes of its products, integrating online and offline sales channels[30]. - The company continues to focus on digitalization and omnichannel strategies to enhance brand competitiveness and operational efficiency[42]. Corporate Governance and Compliance - The company has committed to maintaining high standards of corporate governance and compliance with the Hong Kong Stock Exchange's listing rules[114]. - The company reported financial data for the six months ending September 30, 2021, which is unaudited[144]. - The company’s accounting policies remain consistent with those used in the annual financial statements for the year ending March 31, 2021[147].

�� | --- | --- | |-----------------------------------------------------------------------|--------| | | | | | AA | | | AA | | Ax Kappa | Ab | | | Ak | | 2020/2021 | AA | | | Ak | | 年度 ヤ景信 | AA | | | AA | | | Ak Ak | | | Ak | | | Ab | | | Ak | | | Ab | | | AA | | | Ab | | | Ak | | | AA | | | AA | | DONG ANG | AA | | China Dongxiang (Group) Co., Ltd. 中 國 動 向 ( 集 團 ) 有 限 公 司 | Ak | | (於開曼群島註因成立的有限公司） 股份代號: 3818 | Ab Ak | Kappa 目錄 | --- | --- | --- | |-------|--------------------------|-------| | | | | | | | | ...

Company Information [Company Profile](index=4&type=section&id=Company%20Profile) This section provides basic information about China Dongxiang (Group) Co., Ltd., including its board members, auditors, legal advisors, registered office, and main business locations - The company's board of directors comprises executive directors, including Chen Yihong (Chairman) and Zhang Zhiyong (CEO), and independent non-executive directors such as Chen Guogang and Liu Xiaosong[5](index=5&type=chunk) - The company's auditor is PricewaterhouseCoopers, with legal advisors including Norton Rose Fulbright Hong Kong and Beijing Tianda & G.H. Law Firm[5](index=5&type=chunk) - The company's registered office is in the Cayman Islands, its principal place of business in Hong Kong is at Lippo Centre, Admiralty, and its main office in China is in Beijing Economic-Technological Development Area[5](index=5&type=chunk) Investor Information [Share and Dividend Information](index=6&type=section&id=Share%20and%20Dividend%20Information) This section details China Dongxiang's share listing, outstanding ordinary shares, interim dividend distribution, key dates, and investor relations contact information - The company's shares were listed on the Main Board of The Stock Exchange of Hong Kong Limited on October 10, 2007, with stock code 03818[9](index=9&type=chunk) Share and Dividend Information | Indicator | Value | | :----------- | :----------------------------------- | | Number of Ordinary Shares Issued | 5,886,121,025 shares (as of September 30, 2020) | | Interim Dividend | RMB 5.69 cents per share | | Payment Date | On or about December 21, 2020 | | Results Announcement Date | November 25, 2020 | | Share Register Closure Period | December 10 to December 14, 2020 | - Investor Relations contact details include telephone (8610) 6783 6585 and email ir@dxsport.com.cn[9](index=9&type=chunk) Performance Highlights [Key Financial Indicators](index=7&type=section&id=Key%20Financial%20Indicators) For the six months ended September 30, 2020, the company's revenue remained flat, but net profit attributable to owners and basic earnings per share increased nearly fivefold, with a recommended interim dividend of 30% of net profit Performance Highlights for the Six Months Ended September 30 | Indicator | 2020 (RMB million) | 2019 (RMB million) | Change | | :------------------------------------ | :-------------------- | :-------------------- | :------------ | | Revenue | 899 | 899 | — | | Gross Profit | 540 | 588 | -8.2% | | Gross Profit (before inventory impairment provision/(reversal)) | 563 | 561 | 0.4% | | Gross Profit Margin | 60.1% | 65.4% | -5.3 percentage points | | Gross Profit Margin (before inventory impairment provision/(reversal)) | 62.6% | 62.4% | 0.2 percentage points | | Operating Profit | 1,240 | 247 | 402.0% | | Operating Profit excluding Investment Segment | 5 | 89 | –94.4% | | Net Profit Attributable to Owners of the Company | 1,116 | 188 | 493.6% | | Basic/Diluted Earnings Per Share (RMB cents) | 19.04 | 3.21 | 493.1% | | Interim Dividend Per Share (RMB cents) | 5.69 | 1.61 | 253.4% | - The Board recommended an interim dividend of **30% of the net profit attributable to equity holders** for the six months ended September 30, 2020[11](index=11&type=chunk) Chairman's Statement [Macroeconomic and Industry Overview](index=8&type=section&id=Macroeconomic%20and%20Industry%20Overview) During the reporting period, the global economy was severely impacted by COVID-19, while China's economy gradually recovered, driven by domestic demand and increased consumer focus on health and sports - The COVID-19 pandemic continued to severely impact the global economy, with severe outbreaks in Europe and America, and multiple Asian economies facing contraction[13](index=13&type=chunk) - China's epidemic was gradually brought under control, leading to economic recovery, with increased economic growth in the third quarter and domestic consumption becoming one of the most critical drivers of economic growth[13](index=13&type=chunk) - In the post-pandemic era, consumers focused on mental and physical health, sports, and fitness, with the gradual resumption of sports events indirectly boosting demand for sportswear[13](index=13&type=chunk) [Group Performance and Dividend Policy](index=8&type=section&id=Group%20Performance%20and%20Dividend%20Policy) The Group's revenue remained flat during the reporting period, but profit attributable to equity holders and basic EPS increased nearly fivefold, with a recommended interim dividend of 30% of net profit Group Key Financial Performance | Indicator | 2020 (RMB million) | Change | | :------------------- | :-------------------- | :-------- | | Revenue | 899 | Flat year-on-year | | Profit Attributable to Equity Holders | 1,116 | Up 493.6% year-on-year | | Basic Earnings Per Share (RMB cents) | 19.04 | Up 493.1% year-on-year | - The Board recommended an interim dividend of **30% of the net profit attributable to equity holders** for the six months ended September 30, 2020[14](index=14&type=chunk) [China Business Reform and Brand Promotion](index=8&type=section&id=China%20Business%20Reform%20and%20Brand%20Promotion) China's business deepened its "quasi-direct-to-consumer" model reform and digital transformation, with Kappa achieving progress in retail performance, inventory, and cash flow, enhancing brand exposure and youth appeal through collaborations and marketing - China's business comprehensively deepened the "quasi-direct-to-consumer" model reform, actively promoting omnichannel digitalization across channels, products, and supply chain management[15](index=15&type=chunk) - Kappa brand business achieved new phased progress in retail performance, terminal inventory levels, and cash flow, meeting management expectations[15](index=15&type=chunk) - The brand continued to collaborate with renowned designers and anime IPs to expand its customer base and increase exposure in the trendy market; it also hosted online music events, invited Lexie Liu and Justin Huang as brand ambassadors/spokespersons, and became an industry partner for "Honor of Girls Season 2," leading e-sports trends[16](index=16&type=chunk) - The Group continued to optimize its offline channel structure, with outlet channels and shopping malls showing stable growth; as of September 30, 2020, the total number of Kappa brand stores was **1,153**, a net increase of **24**, with plans to continue closing inefficient stores in the future[17](index=17&type=chunk) - E-commerce business continued to grow, launching a digital omnichannel operating platform to connect online and offline inventory and orders[18](index=18&type=chunk) [Japan Business Adjustment](index=9&type=section&id=Japan%20Business%20Adjustment) Due to the pandemic, the Group decided to focus on the China market, selling Kappa Japan trademarks and licensing the "Phenix" brand to a third party to consolidate resources - In July 2020, the Group sold Kappa Japan trademarks and miscellaneous intellectual property assets to a subsidiary of BasicNet S.p.A. for **USD 13 million**[19](index=19&type=chunk) - The decision was made to grant a license for the "Phenix" brand to a licensee to consolidate resources and marketing efforts, focusing on the China market[19](index=19&type=chunk) [Investment Business and Future Outlook](index=9&type=section&id=Investment%20Business%20and%20Future%20Outlook) The Group's investment business operated steadily with net assets of RMB 10 billion and RMB 1,261 million in net investment income, primarily from market valuation increases, with future plans for prudent investment and stable shareholder returns Investment Business Key Data | Indicator | Value (as of September 30, 2020) | | :----------- | :----------------------- | | Net Investment Assets | RMB 10 billion | | Net Investment Income | RMB 1,261 million | - The significant increase in investment income primarily resulted from increased book gains due to the rising valuation of major market investment products[20](index=20&type=chunk) - Looking ahead, the Group will continue to uphold the Kappa brand spirit, seize opportunities in the sports industry, prudently implement global strategies and investments, and deliver long-term stable returns to shareholders[20](index=20&type=chunk) Management Discussion and Analysis [Macroeconomic and Industry Review](index=11&type=section&id=Macroeconomic%20and%20Industry%20Review) During the reporting period, the global economy faced severe COVID-19 impacts, while China's economy gradually recovered with 4.9% GDP growth in Q3, driven by domestic consumption, and the sports and e-commerce sectors saw accelerated growth - In 2020, global GDP was projected to shrink by **4.5%**, with the US GDP shrinking by **5.9%**, the EU economy by **8.3%**, and developing Asian economies experiencing their first contraction[28](index=28&type=chunk) - China's economy continued to recover, with **GDP growing 4.9% year-on-year** in the third quarter, and cumulative growth for the first three quarters turning positive to **0.7%**, with domestic consumption driving GDP growth by **1.7 percentage points**[28](index=28&type=chunk) - China's total retail sales of consumer goods increased by **3.3% year-on-year** in September, with sports and entertainment goods growing by **8.0%**, and cumulative growth for nine months reaching **6.8% year-on-year**[28](index=28&type=chunk) - E-commerce further developed, with online retail sales of physical goods increasing by **11.3% year-on-year** in September, and online penetration rate rising by **4.8 percentage points to 24.3%** year-on-year[28](index=28&type=chunk) [Business Review](index=12&type=section&id=Business%20Review) The Group's China Kappa brand business advanced through reforms and digital transformation, enhancing competitiveness via diverse promotion and product innovation, while Japan operations adjusted strategically by selling Kappa trademarks and licensing Phenix to focus on China - The China Kappa brand business achieved new phased progress under channel, product, and supply chain management reforms, meeting management expectations[32](index=32&type=chunk) - In brand promotion, Kappa continued to collaborate with entertainment, music, and art sectors, hosted online music festivals, and invited Lexie Liu and Justin Huang as brand ambassadors/spokespersons to enhance brand image and youth appeal[32](index=32&type=chunk)[35](index=35&type=chunk) - Kappa actively sponsored the National Equestrian Team and the Chinese Fencing Team, became the title sponsor of e-sports team RNG DOTA2, and an industry partner for "Honor of Girls Season 2," leading e-sports trends[35](index=35&type=chunk) - In product design and R&D, Kappa launched series like BANDA, LABS, and Newtro-Ku, collaborated with IPs such as Crayon Shin-chan and Doraemon, significantly transforming footwear with a focus on personalized design and comfort, and expanding independent sales channels[35](index=35&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - The omnichannel retail network continued to optimize, with the total number of Kappa brand stores increasing by a net of **24 to 1,153**; e-commerce business continued to grow, launching a digital omnichannel operating platform[44](index=44&type=chunk) - Japan's business adjusted due to the pandemic and global uncertainties, selling Kappa Japan trademarks and intellectual property, and licensing the Phenix brand to a third party to focus on the China market[44](index=44&type=chunk)[46](index=46&type=chunk) [Investment Business](index=16&type=section&id=Investment%20Business) The Group's investment business remained prudent amid the pandemic, with RMB 10 billion in net investment assets and RMB 1,261 million in net investment income, primarily from rising market valuations, with future plans to strengthen partnerships - The Group maintained a prudent and pragmatic approach, controlling the scale and risk of investment assets[47](index=47&type=chunk) Investment Business Key Data | Indicator | Value (as of September 30, 2020) | | :----------- | :----------------------- | | Net Investment Assets | RMB 10 billion | | Net Investment Income | RMB 1,261 million | - The significant increase in investment income primarily resulted from increased book gains due to the rising valuation of major market investment products[47](index=47&type=chunk) - Looking ahead, the Group will strengthen cooperation with excellent investment partners, maintain a prudent attitude, patience, and focus to deliver stable returns to shareholders[47](index=47&type=chunk) [Outlook](index=16&type=section&id=Outlook) The Group is confident in China's economy and sportswear industry, expecting stable growth in the second half, and will continue to refine brand strategy, optimize operations, and prudently invest globally for long-term returns - Performance in the second half of the fiscal year is expected to achieve stable growth, as the Group remains confident in the prospects of China's economy and the sportswear industry[48](index=48&type=chunk) - In the future, the Group will continue to uphold the historical spirit of the Kappa brand, implement localized sales team strategies, accelerate omnichannel inventory turnover, and enhance the professional capabilities of the product team[48](index=48&type=chunk) - The Group will seize development opportunities in the sports industry, rationally utilize resources, expand brand promotion channels, and prudently implement global strategies and investments, combining capital with sports to deliver long-term stable returns to shareholders[48](index=48&type=chunk) [Financial Review](index=17&type=section&id=Financial%20Review) During the period, Group sales were flat, but profit attributable to owners surged nearly fivefold due to significantly higher net financial and other investment income, with strong performance in China's Kappa segment offsetting a decline in Japan, maintaining robust liquidity - For the six months ended September 30, 2020, the Group's sales amounted to **RMB 899 million**, remaining flat compared to the same period last year[51](index=51&type=chunk) - Profit attributable to equity holders of the Company significantly increased to **RMB 1,116 million** (2019: RMB 188 million)[51](index=51&type=chunk) Sales Analysis (by Region, Business Segment, and Product Category) | Segment/Product | 2020 (RMB million) | 2019 (RMB million) | Change | | :------------- | :-------------------- | :-------------------- | :------ | | China Segment Total | 815 | 749 | 8.8% | | - Kappa Apparel | 560 | 500 | 12.0% | | - Kappa Footwear | 169 | 143 | 18.2% | | - Kappa Accessories | 19 | 18 | 5.6% | | - Kids' Wear Business | 46 | 52 | -11.5% | | Japan Segment Total | 84 | 150 | -44.0% | | - Phenix Brand | 55 | 98 | -43.9% | | - Kappa Brand | 29 | 52 | -44.2% | | Group Total | 899 | 899 | 0.0% | Kappa Brand Sales by Channel (China Segment) | Channel | 2020 (RMB million) | 2019 (RMB million) | Change | | :------------- | :-------------------- | :-------------------- | :------ | | Non-Direct Operated | 309 | 236 | 30.9% | | Direct Operated | 439 | 425 | 3.3% | | Kappa Brand Total | 748 | 661 | 13.2% | - The Group's gross profit (before provision for impairment losses on inventories) was **RMB 563 million**, an increase of **RMB 2 million** year-on-year, with an overall gross profit margin of **62.6%**, up **0.2 percentage points**[58](index=58&type=chunk) Gross Profit Margin Analysis (by Region, Business Segment, and Product Category) | Segment/Product | 2020 Gross Margin | 2019 Gross Margin | Change (percentage points) | | :------------- | :----------- | :----------- | :------------ | | China Segment | 65.9% | 67.2% | -1.3 | | - Kappa Brand Total | 69.6% | 73.0% | -3.4 | | Japan Segment | 31.0% | 38.7% | -7.7 | | Group Overall | 62.6% | 62.4% | 0.2 | - Net gain from financial assets and other investments was **RMB 1,355 million**, a significant increase from **RMB 224 million** in the prior year, with the investment segment contributing **RMB 1,261 million**[61](index=61&type=chunk) Investment Segment Income (by Investment Direction) | Investment Direction | Investment Segment Income (RMB million) | Of which: Fair Value Change Gain on Financial Instruments (RMB million) | | :------------------- | :-------------------------- | :-------------------------------------------- | | Equities | 404 | 256 | | Private Equity Funds | 388 | 341 | | Equity Funds | 219 | 177 | | Single Equity Investments | 148 | 140 | | Debt, Bonds, Debt Funds | 95 | 32 | | Others | 7 | – | | Total | 1,261 | 946 | - Total distribution costs and administrative expenses were **RMB 658 million**, accounting for **73.2% of total sales**, an increase of **10.4 percentage points** from the prior year, primarily due to increased sales and the scaling back of Japan operations[66](index=66&type=chunk) - Operating profit was **RMB 1,240 million**, with an operating profit margin of **137.9%**; operating profit excluding the investment segment was **RMB 5 million**[67](index=67&type=chunk) - Profit attributable to equity holders of the Company was **RMB 1,116 million**, with a net profit margin of **124.1%**; basic and diluted earnings per share were both **RMB 19.04 cents**, an increase of **493.1%** year-on-year[70](index=70&type=chunk) - The Board resolved to distribute an interim dividend of **RMB 5.69 cents per ordinary share**, totaling approximately **RMB 334,920,000**[70](index=70&type=chunk) - As of September 30, 2020, the Group's cash and bank balances were **RMB 2,993 million**, an increase of **RMB 892 million** from March 31; net asset value was **RMB 11,371 million**, and the current ratio was **8.3 times**[76](index=76&type=chunk) Financial Asset Investments (at Fair Value) | Investment Item | September 30, 2020 (RMB million) | March 31, 2020 (RMB million) | | :----------------------- | :--------------------------- | :--------------------------- | | **Listed Securities** | | | | Alibaba | 568 | 1,166 | | Other Listed Securities | 996 | 1,020 | | **Total** | **1,564** | **2,186** | | **Other Unlisted Investments** | | | | Yunfeng USD Fund II | 477 | 424 | | Harvest Select Cornerstone | 353 | 364 | | Pingtao (Hong Kong) Limited | 309 | 174 | | Panfeng Value Private Securities Investment Fund C | 263 | 344 | | Yunfeng RMB Fund IV (Yunfeng Qitai) | 208 | 196 | | Yunfeng RMB Fund II (Yunfeng Xinchuang) | 196 | 196 | | Golden China Fund | 182 | 132 | | Harvest Select Fund II No. 3 | 174 | 178 | | Hangzhou Hanyun Xinling (Alibaba New Retail Fund) | 163 | 133 | | Yunfeng USD Fund III | 119 | 115 | | Yunfeng RMB Fund III (Yunfeng Xincheng) | 118 | 117 | | Jiachen RMB Fund I (Weixin Zhonghua) | 111 | 69 | | Hongtai Growth Fund (Angel Plus) | 108 | 108 | | Boyu RMB Fund II (Guokai Boyu) | 103 | 78 | | Others | 2,588 | 2,132 | | **Total** | **5,472** | **4,760** | - As of September 30, 2020, the Group's assets pledged were **RMB 130 million**, a decrease from **RMB 400 million** as of March 31[83](index=83&type=chunk) - The Group has various capital commitments, including investment commitments to private equity funds such as Shanghai Xianghe Yongyuan, Hangzhou Hanyun Xinling, Yunfeng Fund III, Xiamen Yuanfeng, Persistent Edge China Partners, Ltd., and CR Tech Investment Limited, with total outstanding commitments of approximately **RMB 500 million**[84](index=84&type=chunk)[85](index=85&type=chunk) - The Group faces foreign exchange risk, primarily due to fluctuations in USD, HKD, and JPY exchange rates against RMB, impacting net assets, revenue, and net profit[89](index=89&type=chunk) Significant Investment: Alibaba Group Holding Limited | Company Name & Stock Code | Number of Shares Held | Holding Percentage | Investment Cost (RMB million) | Fair Value (RMB million) | % of Total Assets | | :----------------------- | :------- | :------- | :---------------------- | :---------------------- | :----------- | | Alibaba Group Holding Limited (NYSE: BABA) | 198,919 | 0.007% | 87 | 398 | 3.2% | | Alibaba Group Holding Limited — SW (09988.HK) | 701,944 | 0.003% | 112 | 170 | 1.4% | | Total | | | 199 | 568 | 4.6% | - During the period, the company recognized an unrealized fair value change gain of **RMB 198 million** on Alibaba shares and a net disposal gain of **RMB 105 million**[93](index=93&type=chunk) Other Information [Restricted Share Award Scheme](index=28&type=section&id=Restricted%20Share%20Award%20Scheme) The company adopted a restricted share award scheme in 2010 to retain and incentivize employees, with a trustee holding shares until vesting conditions are met; no new shares were granted this period, with 23,050,071 shares awarded as of September 30, 2020 - The scheme was adopted on December 10, 2010, to retain and incentivize individuals who continuously contribute to the Group's operations and development[96](index=96&type=chunk) - The trustee is required to purchase a maximum of **30,000,000 existing shares** in the market and hold them in trust for the selected participants until the shares vest according to the scheme rules[96](index=96&type=chunk) - For the six months ended September 30, 2020, no restricted shares were granted to any eligible participants under the scheme[96](index=96&type=chunk) - As of September 30, 2020, the number of restricted shares awarded under the scheme was **23,050,071 shares**[96](index=96&type=chunk) [Share Option Scheme](index=29&type=section&id=Share%20Option%20Scheme) The company adopted a share option scheme in 2019 to reward and retain contributors, outlining eligibility, exercise price determination, and share limits; multiple options were granted to management and employees during the period, with some lapsing due to resignations - The share option scheme was adopted on August 8, 2019, to provide incentives to eligible participants to enhance company value and shareholder interests[99](index=99&type=chunk) - The exercise price of share options is determined by the Board and shall not be less than the highest of the closing price on the offer date, the average closing price for the preceding five business days, and the nominal value of the shares[99](index=99&type=chunk) - Under the scheme, the maximum number of shares that may be granted under options shall not exceed **10% of the total issued shares** on the adoption date, which is **588,612,102 shares**[99](index=99&type=chunk) Share Option Scheme Movement Details (for the six months ended September 30, 2020) | Grant Date | Unexercised as of April 1, 2020 | Granted during the six months ended September 30, 2020 | Unexercised as of September 30, 2020 | Lapsed during the period | Unexercised as of this interim report date | | :------------ | :------------------- | :---------------------------- | :-------------------- | :------- | :--------------------- | | 16/09/2019 | 18,300,000 | — | 18,300,000 | 480,000 | 17,820,000 | | 07/01/2020 | 1,560,000 | — | 1,560,000 | 480,000 | 1,080,000 | | 01/04/2020 | 2,400,000 | — | 2,400,000 | — | 2,400,000 | | 01/09/2020 | — | 1,200,000 | 1,200,000 | — | 1,200,000 | | **Total** | **22,260,000** | **1,200,000** | **23,460,000** | **960,000** | **22,500,000** | - During the period ended September 30, 2020, no share options were exercised or cancelled, while **960,000 share options** lapsed due to resignations[104](index=104&type=chunk) [Directors' and Major Shareholders' Interests in Securities](index=31&type=section&id=Directors%27%20and%20Major%20Shareholders%27%20Interests%20in%20Securities) This section discloses the interests and short positions of the company's directors, chief executives, and major shareholders in the company's shares as of September 30, 2020, with Chairman Mr. Chen Yihong and his controlled entities holding a majority stake Directors' Interests in Securities (as of September 30, 2020) | Director Name | Nature of Interest | Number and Class of Securities (Long Position) | Approximate Percentage | | :--------- | :------------- | :--------------------- | :--------- | | Mr. Chen Yihong | Controlled Corporation Interest | 2,273,024,000 shares | 38.62% | | | Controlled Corporation Interest | 315,698,025 shares | 5.36% | | Mr. Zhang Zhiyong | Beneficial Owner | 166,120,025 shares | 2.82% | | Ms. Chen Chen | Controlled Corporation Interest | 176,787,730 shares | 3.00% | | | Beneficial Owner | 21,500,000 shares | 0.37% | | Mr. Lv Guanghong | Beneficial Owner | 10,000,000 shares | 0.17% | Major Shareholders' Interests and Short Positions (as of September 30, 2020) | Shareholder Name | Nature of Interest | Number of Shares (Long Position) | Approximate Holding Percentage | | :----------------------- | :------------- | :--------------- | :------------- | | Poseidon Sports Limited | Beneficial Owner | 2,273,024,000 | 38.62% | | | Controlled Corporation Interest | 315,698,025 | 5.36% | | Harvest Luck Development Limited | Controlled Corporation Interest | 2,273,024,000 | 38.62% | | | Controlled Corporation Interest | 315,698,025 | 5.36% | - Mr. Chen Yihong wholly owns and controls Harvest Luck Development Limited, which holds all issued share capital of Poseidon Sports Limited, thus Mr. Chen Yihong is deemed to have an interest in the shares held by Poseidon[114](index=114&type=chunk) [Corporate Governance and Compliance](index=32&type=section&id=Corporate%20Governance%20and%20Compliance) The company is committed to high-quality corporate governance, complying with HKEX codes, with most directors attending the AGM despite some absences, and the audit committee reviewed interim financials and internal controls, with no listed securities transactions during the period - The company has complied with the code provisions set out in the Corporate Governance Code of the Hong Kong Stock Exchange, although Chairman Mr. Chen Yihong and independent non-executive director Mr. Liu Xiaosong were unable to attend the Annual General Meeting due to important engagements[126](index=126&type=chunk) - All directors of the company confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules throughout the review period[127](index=127&type=chunk) - The Audit Committee has reviewed the company's interim financial information, financial reporting system, and internal controls, and the interim condensed consolidated financial information has been reviewed by PricewaterhouseCoopers[128](index=128&type=chunk) - For the six months ended September 30, 2020, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[129](index=129&type=chunk) Interim Condensed Consolidated Financial Information [Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=34&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) For the six months ended September 30, 2020, Group revenue was flat, but operating profit and net profit attributable to owners significantly increased due to fair value gains on financial assets, offset by other comprehensive losses from foreign currency translation differences Interim Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | Change | | :------------------------------------ | :------------------ | :------------------ | :-------- | | Revenue | 898,957 | 899,318 | -0.04% | | Gross Profit | 539,888 | 587,853 | -8.2% | | Other Net Income | 1,355,193 | 223,802 | 505.5% | | Operating Profit | 1,240,301 | 246,926 | 402.3% | | Net Finance (Expenses)/Income | (21,975) | 4,197 | Negative to Positive | | Profit Before Income Tax | 1,204,666 | 253,424 | 375.4% | | Income Tax Expense | (91,073) | (66,990) | 35.9% | | Profit for the Period | 1,113,593 | 186,434 | 497.3% | | Profit Attributable to Owners of the Company | 1,116,183 | 188,107 | 493.4% | | Other Comprehensive (Loss)/Income (net of tax) | (199,873) | 207,062 | Negative to Positive | | Total Comprehensive Income for the Period | 913,720 | 393,496 | 132.2% | | Basic/Diluted Earnings Per Share (RMB cents) | 19.04 | 3.21 | 493.1% | - The significant increase in other net income was primarily due to fair value changes in financial instruments at fair value through profit or loss[133](index=133&type=chunk) - Foreign currency translation differences for foreign operations resulted in an other comprehensive loss of **RMB 199,873 thousand** for the current period, compared to a gain in the prior period[136](index=136&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=36&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of September 30, 2020, Group total assets grew to RMB 12,548 million, driven by increases in financial assets at fair value through profit or loss (non-current) and cash and cash equivalents, with total equity also rising and current liabilities remaining stable Interim Condensed Consolidated Statement of Financial Position Summary | Indicator | September 30, 2020 (RMB thousand) | March 31, 2020 (RMB thousand) | Change | | :------------------------------------ | :------------------------- | :------------------------- | :-------- | | **Assets** | | | | | Total Non-Current Assets | 5,763,520 | 4,954,441 | 16.3% | | - Financial assets at fair value through profit or loss | 4,576,815 | 3,688,063 | 24.1% | | Total Current Assets | 6,784,534 | 6,735,055 | 0.7% | | - Cash and cash equivalents | 2,993,280 | 2,063,150 | 45.1% | | Total Assets | 12,548,054 | 11,689,496 | 7.3% | | **Equity** | | | | | Capital and Reserves Attributable to Owners of the Company | 11,370,695 | 10,611,650 | 7.2% | | Total Equity | 11,370,584 | 10,615,854 | 7.1% | | **Liabilities** | | | | | Total Non-Current Liabilities | 355,050 | 281,695 | 26.0% | | Total Current Liabilities | 822,420 | 791,947 | 3.8% | | Total Liabilities | 1,177,470 | 1,073,642 | 9.7% | - Among non-current assets, financial assets at fair value through profit or loss showed significant growth, reflecting an increase in the value of the investment portfolio[139](index=139&type=chunk) - Cash and cash equivalents substantially increased, indicating ample liquidity for the Group[139](index=139&type=chunk) [Interim Condensed Consolidated Statement of Changes in Equity](index=38&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Changes%20in%20Equity) For the six months ended September 30, 2020, equity attributable to owners increased from RMB 10,611,650 thousand to RMB 11,370,695 thousand, primarily due to significant profit for the period, despite negative impacts from other comprehensive losses and dividends paid Interim Condensed Consolidated Statement of Changes in Equity Summary | Indicator | September 30, 2020 (RMB thousand) | March 31, 2020 (RMB thousand) | | :------------------------------------ | :------------------------- | :------------------------- | | Balance at Beginning of Period | 10,611,650 | 10,611,650 | | Profit for the Period | 1,116,183 | 1,116,183 | | Other Comprehensive Loss | (199,873) | (199,873) | | Total Comprehensive Income | 916,310 | 916,310 | | Related to 2019/20 Final Dividend | (158,702) | (158,702) | | Share Option Scheme | 1,437 | 1,437 | | Disposal of a Non-Wholly Owned Subsidiary | (1,725) | (1,725) | | Balance at End of Period | 11,370,695 | 11,370,695 | - Profit for the period of **RMB 1,116,183 thousand** was the primary driver of equity growth[147](index=147&type=chunk) - Other comprehensive loss of **RMB 199,873 thousand** and final dividends paid of **RMB 158,702 thousand** had a negative impact on equity[147](index=147&type=chunk) [Interim Condensed Consolidated Statement of Cash Flows](index=40&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Cash%20Flows) For the six months ended September 30, 2020, Group cash and cash equivalents increased by RMB 1,011,378 thousand, primarily driven by strong cash inflows from investing activities, despite net cash outflow from operating activities and increased financing cash outflows Interim Condensed Consolidated Statement of Cash Flows Summary | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------------------------ | :------------------ | :------------------ | | Net Cash Used in Operating Activities | (60,989) | (103,447) | | Net Cash From Investing Activities | 1,320,204 | 127,267 | | Net Cash Used in Financing Activities | (247,837) | (239,207) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 1,011,378 | (215,387) | | Cash and Cash Equivalents at Beginning of Period | 2,063,150 | 766,722 | | Cash and Cash Equivalents at End of Period | 2,993,280 | 556,436 | - Net cash from investing activities significantly increased to **RMB 1,320,204 thousand**, primarily from proceeds from disposal of financial assets at fair value through profit or loss[149](index=149&type=chunk) - Cash outflow from operating activities decreased but remained a net outflow; cash outflow from financing activities slightly increased, mainly due to dividends paid and repayment of bank borrowings[149](index=149&type=chunk) Notes to the Interim Condensed Consolidated Financial Information [General Information and Basis of Preparation](index=41&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) This section outlines China Dongxiang Group's core business in sportswear brand development, design, and sales, alongside investment activities, with interim condensed consolidated financial information prepared under IAS 34, considering COVID-19 impacts on valuations - The Group is principally engaged in brand development, design, and sales of sports-related apparel, footwear, and accessories, as well as investment activities in Mainland China and overseas[152](index=152&type=chunk) - This interim condensed consolidated financial information has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, taking into account the latest developments of the COVID-19 pandemic and its impact on the Group's business operations[156](index=156&type=chunk) - This interim condensed consolidated financial information should be read in conjunction with the Group's annual financial statements for the year ended March 31, 2020[156](index=156&type=chunk) [Changes in Accounting Policies and Estimates](index=42&type=section&id=Changes%20in%20Accounting%20Policies%20and%20Estimates) During the period, the Group adopted new and revised IFRS, early adopting IFRS 16 amendments for COVID-19 related rent concessions, resulting in RMB 1,918,000 in negative variable lease payments, with financial statement preparation involving management judgment and estimates - The Group adopted several new and revised standards, including IAS 1 and IAS 8 (Amendments) "Definition of Material" and IFRS 3 (Amendments) "Definition of a Business"[162](index=162&type=chunk) - The Group elected to early adopt IFRS 16 (Amendment) "COVID-19-Related Rent Concessions" and applied the practical expedient to eligible lease arrangements[163](index=163&type=chunk) - For the six months ended September 30, 2020, an amount of **RMB 1,918,000** was recognized in profit or loss as negative variable lease payments[163](index=163&type=chunk) - The preparation of interim condensed consolidated financial information requires management to make judgments, estimates, and assumptions regarding the application of accounting policies and the reported amounts of assets, liabilities, income, and expenses[166](index=166&type=chunk) [Financial Risk Management and Financial Instruments](index=43&type=section&id=Financial%20Risk%20Management%20and%20Financial%20Instruments) The Group faces market (currency and price), credit, and liquidity risks, using an expected credit loss model for credit risk, with fair value measurements employing a three-level hierarchy where Level 3 instruments significantly impact Group earnings - The Group's activities expose it to market risk (including foreign currency risk and price risk), credit risk, and liquidity risk, with no changes in risk management policies since March 31, 2020[167](index=167&type=chunk)[168](index=168&type=chunk) - Credit risk primarily arises from loans receivable and trade receivables, and the Group adopts an "expected credit loss" model for impairment assessment[169](index=169&type=chunk) Fair Value Hierarchy for Financial Assets and Liabilities (as of September 30, 2020) | Category | Level 1 (RMB thousand) | Level 2 (RMB thousand) | Level 3 (RMB thousand) | Total (RMB thousand) | | :----------------------- | :----------------- | :----------------- | :----------------- | :---------------- | | **Financial Assets** | | | | | | Financial assets at fair value through profit or loss | | | | | | - Private Equity Fund Investments | — | — | 4,948,123 | 4,948,123 | | - Other Unlisted Investments | — | 42,536 | 379,947 | 422,483 | | - Listed Equity Securities — Equities | 1,121,404 | — | — | 1,121,404 | | - Listed Perpetual Bonds | 418,890 | — | — | 418,890 | | - Listed Debt Securities | 23,253 | — | — | 23,253 | | - Unlisted Fixed Rate Notes | — | — | 101,617 | 101,617 | | **Total Financial Assets** | **1,563,547** | **42,536** | **5,429,687** | **7,035,770** | | **Financial Liabilities** | | | | | | Derivative Instruments | — | — | (91,984) | (91,984) | Level 3 Instruments Movement (for the six months ended September 30, 2020) | Indicator | Financial Assets at Fair Value Through Profit or Loss (RMB thousand) | Derivative Instruments (RMB thousand) | Total (RMB thousand) | | :------------------------------------ | :-------------------------------------------- | :-------------------- | :---------------- | | Balance at April 1, 2020 | 4,514,638 | (29,616) | 4,485,022 | | Acquisitions | 1,266,046 | — | 1,266,046 | | Disposals | (936,306) | — | (936,306) | | Other Net Income | 648,004 | (64,800) | 583,204 | | Currency Translation Differences | (62,695) | 2,432 | (60,263) | | Balance at September 30, 2020 | 5,429,687 | (91,984) | 5,337,703 | - Level 3 fair value measurements primarily include private equity fund investments, other unlisted investments, unlisted fixed-rate notes, and wealth management products, whose valuation methods and unobservable input data significantly impact fair value[182](index=182&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) [Segment Information](index=51&type=section&id=Segment%20Information) The Group operates three main segments: China Apparel, Japan Apparel, and Investment; China Apparel showed good revenue and operating profit, Japan Apparel's revenue declined and operating loss widened, while the Investment segment contributed most operating profit - The Group primarily operates three reportable segments: China Apparel (including Kappa brand and other sports-related products), Japan Apparel (including Kappa, Phenix, and other brands), and Investment (financial assets and wealth management products)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) Segment Results (for the six months ended September 30, 2020) | Indicator | China — Apparel (RMB thousand) | Japan — Apparel (RMB thousand) | Investment (RMB thousand) | Total (RMB thousand) | | :------------------- | :----------------------- | :----------------------- | :---------------- | :---------------- | | Revenue from External Customers | 814,788 | 84,169 | — | 898,957 | | Segment Gross Profit | 567,482 | (27,594) | — | 539,888 | | Other Net Income | 16,229 | 78,127 | 1,260,837 | 1,355,193 | | Segment Operating Profit/(Loss) | 64,694 | (59,781) | 1,235,388 | 1,240,301 | | Profit/(Loss) for the Period | 18,831 | (56,798) | 1,151,560 | 1,113,593 | Segment Assets and Liabilities (as of September 30, 2020) | Indicator | China — Apparel (RMB thousand) | Japan — Apparel (RMB thousand) | Investment (RMB thousand) | Total (RMB thousand) | | :------------------- | :----------------------- | :----------------------- | :---------------- | :---------------- | | Segment Assets | 1,911,360 | 172,380 | 10,464,314 | 12,548,054 | | Segment Liabilities | 633,910 | 78,949 | 464,611 | 1,177,470 | - The investment segment contributed the vast majority of operating profit and profit for the period, demonstrating its critical role in the Group's overall performance[209](index=209&type=chunk) [Analysis of Other Net Income and Expenses](index=56&type=section&id=Analysis%20of%20Other%20Net%20Income%20and%20Expenses) The Group's other net income significantly increased, primarily from fair value changes in financial instruments, while key expense items like advertising, employee compensation, and right-of-use asset depreciation also saw changes Other Net Income (for the six months ended September 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | Change | | :------------------------------------ | :------------------ | :------------------ | :-------- | | Fair value changes of financial instruments at fair value through profit or loss | 946,215 | 54,146 | 1647.2% | | Investment income from financial assets at fair value through profit or loss | 143,960 | 54,089 | 166.2% | | Gain on disposal of financial assets at fair value through profit or loss | 139,072 | 26,615 | 422.5% | | Gain on disposal of Kappa trademark | 75,378 | — | New | | Interest income from loans receivable | 31,179 | 31,085 | 0.3% | | Government grants income | 15,445 | 49,636 | -68.9% | | Brand usage rights income | 2,189 | 652 | 235.7% | | Others | 1,755 | 7,579 | -76.8% | | **Total** | **1,355,193** | **223,802** | **505.5%** | Expenses Presented by Nature (for the six months ended September 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | Change | | :------------------------------------ | :------------------ | :------------------ | :-------- | | Cost of inventories recognized as cost of sales | 335,303 | 337,260 | -0.6% | | Advertising and marketing expenses | 391,080 | 337,989 | 15.7% | | Employee compensation and benefits expenses | 84,697 | 91,759 | -7.7% | | Impairment of property, plant and equipment and right-of-use assets | 34,106 | — | New | | Depreciation of right-of-use assets | 28,813 | 23,532 | 22.4% | | Logistics and transportation costs | 27,851 | 27,478 | 1.4% | | Inventory impairment provision/(reversal) | 23,254 | (26,468) | Negative to Positive | | Product design and development expenses | 19,568 | 20,783 | -5.9% | | Short-term lease rentals and variable lease payments not included in lease liabilities and rent-related expenses | 17,297 | 22,429 | -22.8% | | Depreciation of property, plant and equipment and amortization of intangible assets | 10,185 | 10,563 | -3.6% | | Travel and entertainment expenses | 3,338 | 8,846 | -62.3% | | Auditor's remuneration | 1,800 | 1,800 | 0.0% | | Professional fees | 2,810 | 1,697 | 65.6% | | Others | 36,569 | 18,365 | 99.1% | | **Total** | **1,016,671** | **876,033** | **16.0%** | [Net Finance (Expenses)/Income and Income Tax Expense](index=58&type=section&id=Net%20Finance%20(Expenses)%2FIncome%20and%20Income%20Tax%20Expense) The Group's net finance shifted from income to expense due to exchange losses, and while income tax expense increased, the effective tax rate significantly decreased due to profit structure changes, with China corporate and withholding taxes being primary, and Japan paying minimum resident tax due to losses Net Finance (Expenses)/Income (for the six months ended September 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Finance Income: | | | | - Net exchange gains | — | 5,438 | | - Interest income | 2,581 | 4,781 | | **Subtotal** | **2,581** | **10,219** | | Finance Expenses: | | | | - Net exchange losses | (17,038) | — | | - Interest expense | (4,729) | (3,768) | | - Interest on lease liabilities | (2,532) | (2,017) | | - Others | (257) | (237) | | **Subtotal** | **(24,556)** | **(6,022)** | | **Net Finance (Expenses)/Income** | **(21,975)** | **4,197** | Income Tax Expense (for the six months ended September 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Current Income Tax | | | | - China Corporate Income Tax | 6,945 | 9,282 | | - Japan Tax | (1,300) | 649 | | Deferred Income Tax | 85,428 | 57,059 | | **Total** | **91,073** | **66,990** | - The Group's income tax expense was **RMB 91,073 thousand**, with an effective tax rate of **7.6%**, a significant decrease from **26.5%** in the prior year[231](index=231&type=chunk) - The China corporate income tax rate is **25%**, with a **15% rate** for subsidiaries in the Tibet Autonomous Region; the Group has provided deferred tax liabilities of **RMB 173,265 thousand** for future distributed profits of its Chinese subsidiaries[235](index=235&type=chunk)[236](index=236&type=chunk) - Japanese subsidiaries, having not recorded taxable profits, were only required to pay the minimum resident tax amount[237](index=237&type=chunk) [Earnings Per Share and Dividends](index=60&type=section&id=Earnings%20Per%20Share%20and%20Dividends) For the six months ended September 30, 2020, both basic and diluted earnings per share significantly increased to RMB 19.04 cents, with the Board recommending an interim dividend of RMB 5.69 cents per share, totaling approximately RMB 334,920 thousand Basic Earnings Per Share (for the six months ended September 30, 2020) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------------------------ | :------------------ | :------------------ | | Profit Attributable to Owners of the Company | 1,116,183 | 188,107 | | Weighted Average Number of Ordinary Shares in Issue (thousand shares) | 5,863,071 | 5,863,071 | | **Basic Earnings Per Share (RMB cents)** | **19.04** | **3.21** | Diluted Earnings Per Share (for the six months ended September 30, 2020) | Indicator | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------------------------ | :------------------ | :------------------ | | Profit Attributable to Owners of the Company | 1,116,183 | 188,107 | | Weighted Average Number of Ordinary Shares in Issue for Basic EPS (thousand shares) | 5,863,071 | 5,863,071 | | Adjustment for Granted and Assumed Exercised Share Options (thousand options) | 38 | 176 | | **Diluted Earnings Per Share (RMB cents)** | **19.04** | **3.21** | Dividends (for the six months ended September 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :------------------------------------ | :------------------ | :------------------ | | Final dividend paid of RMB 0.91 cents per share | 52,719 | 115,368 | | Final special dividend paid of RMB 1.84 cents per share | 106,597 | 28,842 | | Proposed interim dividend of RMB 5.69 cents per share | 334,920 | 56,507 | | Proposed interim special dividend of RMB 0 cents per share | — | 38,260 | | **Total** | **494,236** | **238,977** | - The total dividends paid for the six months ended September 30, 2020, amounted to **RMB 159,316 thousand** or **RMB 2.75 cents per share**[250](index=250&type=chunk) [Details of Asset Changes](index=63&type=section&id=Details%20of%20Asset%20Changes) This section details changes in property, plant and equipment, intangible assets, and right-of-use assets; PPE net book value decreased, intangible assets reduced due to Kappa Japan trademark sale, right-of-use assets varied with additions and impairments, and lease-related cash outflows increased Property, Plant and Equipment Net Book Value Movement (for the six months ended September 30, 2020) | Item | April 1, 2020 (RMB thousand) | Additions (RMB thousand) | Disposals (RMB thousand) | Depreciation (RMB thousand) | Impairment (RMB thousand) | Exchange Differences (RMB thousand) | September 30, 2020 (RMB thousand) | | :--------------- | :------------------------ | :---------------- | :---------------- | :---------------- | :---------------- | :-------------------- | :------------------------- | | Land | 25,237 | — | — | — | — | (843) | 24,394 | | Buildings | 54,278 | — | — | (2,307) | (208) | (1,041) | 50,722 | | Office Furniture and Equipment | 10,161 | 1,367 | (299) | (1,581) | (5,030) | (101) | 4,517 | | Motor Vehicles | 319 | 8 | (7) | (71) | — | — | 249 | | Leasehold Improvements | 6,989 | — | (155) | (1,372) | (4,677) | (119) | 666 | | **Total** | **96,984** | **1,375** | **(461)** | **(5,331)** | **(9,915)** | **(2,104)** | **80,548** | Intangible Assets Net Book Value Movement (for the six months ended September 30, 2020) | Item | April 1, 2020 (RMB thousand) | Additions (RMB thousand) | Disposals (RMB thousand) | Amortization (RMB thousand) | Exchange Differences (RMB thousand) | September 30, 2020 (RMB thousand) | | :--------------- | :------------------------ | :---------------- | :---------------- | :---------------- | :-------------------- | :------------------------- | | Kappa Trademarks | 194,895 | — | (13,524) | (3,756) | (238) | 177,377 | | Phenix and Other Brands | 6,473 | — | — | (109) | — | 6,364 | | Computer Software | 4,212 | 224 | — | (989) | (6) | 3,441 | | **Total** | **205,580** | **224** | **(13,524)** | **(4,854)** | **(244)** | **187,182** | - The Group derecognized intangible assets with a net book value of **RMB 13,524 thousand** due to the disposal of Kappa Japan trademarks and miscellaneous intellectual property assets, recognizing a gain of **RMB 75,378 thousand**[264](index=264&type=chunk) Right-of-Use Assets Movement (for the six months ended September 30, 2020) | Item | April 1, 2020 (RMB thousand) | Additions (RMB thousand) | Disposals (RMB thousand) | Depreciation Expense (RMB thousand) | Impairment (RMB thousand) | Exchange Differences (RMB thousand) | September 30, 2020 (RMB thousand) | | :--------------- | :------------------------ | :---------------- | :---------------- | :-------------------- | :---------------- | :-------------------- | :------------------------- | | Right-of-Use Assets | 100,161 | 49,172 | (2,417) | (28,813) | (24,191) | (581) | 93,331 | - Total cash outflow for leases for the six months ended September 30, 2020, was approximately **RMB 48,654 thousand**, an increase from **RMB 37,266 thousand** in the prior period[278](index=278&type=chunk) [Investments Accounted for Using the Equity Method and Trade Receivables and Payables](index=69&type=section&id=Investments%20Accounted%20for%20Using%20the%20Equity%20Method%20and%20Trade%20Receivables%20and%20Payables) Investments accounted for using the equity method decreased in carrying value, mainly due to shared losses; net trade receivables increased, primarily from third parties, with reduced impairment provisions, while total trade payables rose, reflecting supply chain activity changes Investments Accounted for Using the Equity Method Movement (for the six months ended September 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Beginning of Period | 117,173 | 151,680 | | Additions | 1,000 | — | | Disposals | — | (8) | | Share of (Loss)/Profit | (13,660) | 2,301 | | Offset of Unrealized Profit | 721 | 2,033 | | Reclassified as Assets Held for Sale | — | (7,971) | | Exchange Differences | (1,121) | 1,434 | | **End of Period** | **104,113** | **149,469** | Net Trade Receivables (as of September 30, 2020) | Item | September 30, 2020 (RMB thousand) | March 31, 2020 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | Trade Receivables | | | | - Third Parties | 182,626 | 146,623 | | - Related Parties | 22,627 | 33,903 | | **Subtotal** | **205,253** | **180,526** | | Less: Impairment Provision | (20,273) | (39,463) | | **Net Trade Receivables** | **184,980** | **141,063** | - The average turnover days for trade receivables decreased, primarily due to increased sales revenue in the current period[76](index=76&type=chunk) Trade Payables Aging Analysis (as of September 30, 2020) | Aging | September 30, 2020 (RMB thousand) | March 31, 2020 (RMB thousand) | | :------------- | :------------------------- | :------------------------- | | Within 30 days | 88,270 | 76,338 | | 31 to 180 days | 110,240 | 61,738 | | Over 180 days | 10,792 | 10,398 | | **Total** | **209,302** | **148,474** | [Other Financial Assets and Accrued Expenses](index=71&type=section&id=Other%20Financial%20Assets%20and%20Accrued%20Expenses) Other financial assets at amortized cost include loans to third parties and key management, with RMB 698 million in third-party loans secured by collateral; accrued expenses and other payables remained stable, comprising salaries, taxes, supplier deposits, and related party amounts Other Financial Assets at Amortized Cost (as of September 30, 2020) | Item | September 30, 2020 (RMB thousand) | March 31, 2020 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | **Current Portion:** | | | | Loans Receivable | 479,368 | 573,126 | | Loans to Related Parties | 14,606 | 14,606 | | Others | 87,324 | 97,988 | | Less: Impairment Provision | (36,546) | (20,922) | | **Total** | **544,752** | **664,798** | | **Non-Current Portion:** | | | | Loans Receivable | 219,526 | 126,591 | | Loans to Key Management Personnel | 298,737 | 315,467 | | Less: Impairment Provision | — | — | | **Total** | **518,263** | **442,058** | - As of September 30, 2020, the total amount of loans receivable from third parties was approximately **RMB 698,894 thousand**, with annual interest rates ranging from **8% to 11%**, secured by collateral such as equity, private equity fund investments, and properties[291](index=291&type=chunk) Accrued Expenses and Other Payables (as of September 30, 2020) | Item | September 30, 2020 (RMB thousand) | March 31, 2020 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | **Current Portion:** | | | | Salaries and Welfare Payable | 17,643 | 19,615 | | Other Taxes and Levies Payable | 17,837 | 9,215 | | Refund Liabilities | 13,383 | 24,371 | | Supplier Deposits | 76,600 | 73,087 | | Amounts Payable to Related Parties | 28,119 | 37,620 | | Marketing Expenses Payable | 37,631 | 38,286 | | Logistics Expenses Payable | 14,539 | 12,205 | | Professional Fees Payable | 3,702 | 5,842 | | Others | 44,364 | 37,185 | | **Subtotal** | **253,818** | **257,426** | | **Non-Current Portion:** | | | | Other Payables | — | 1,245 | | **Total** | **253,818** | **258,671** | [Share Capital, Share Schemes and Borrowings](index=74&type=section&id=Share%20Capital,%20Share%20Schemes%20and%20Borrowings) Group share capital and share premium remained stable, with no change in shares held by the employee share scheme; the 2019 share option scheme granted multiple options to management and employees, recognizing corresponding employee service value, while total borrowings decreased due to reduced secured bank loans Share Capital and Share Premium Account (as of September 30, 2020) | Item | Number of Ordinary Shares | Nominal Value of Issued Ordinary Shares (HKD thousand) | Equivalent Nominal Value of Ordinary Shares (RMB thousand) | Share Premium Account (RMB thousand) | Total (RMB thousand) | | :--------------- | :---------------- | :------------------------ | :-------------------------- | :---------------------- | :---------------- | | As of September 30, 2020 | 5,886,121,025 | 58,862 | 56,466 | 1,033,539 | 1,090,005 | Shares Held by Employee Share Scheme (as of September 30, 2020) | Item | Number of Shares | Value (RMB thousand) | | :--------------- | :---------------- | :---------------- | | Shares held by Employee Share Scheme | 23,050,071 | 196 | - The 2019 Share Option Scheme granted multiple tranches of share options to management and employees, with **RMB 1,437 thousand** recognized as employee service value for the six months ended September 30, 2020[300](index=300&type=chunk)[307](index=307&type=chunk) Borrowings (as of September 30, 2020) | Item | September 30, 2020 (RMB thousand) | March 31, 2020 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | Bank Loans | | | | - Secured | 130,026 | 196,647 | | Loans from a Company | | | | - Unsecured and Interest-Free | 47,734 | 49,661 | | **Total** | **177,760** | **246,308** | - Secured bank loans are collateralized by equivalent assets held by banks, including USD, JPY, and HKD loans[309](index=309&type=chunk) [Commitments and Related Party Transactions](index=78&type=section&id=Commitments%20and%20Related%20Party%20Transactions) The Group has multiple capital commitments, primarily investment pledges in private equity funds totaling approximately RMB 500 million; related party transactions include sales to joint ventures, interest income, commissions, and loans to management, all conducted on a mutually agreed basis - As of September 30, 2020, the Group had future minimum lease payments under non-cancellable short-term leases of **RMB 14,064 thousand**[313](index=313&type=chunk) - The Group has various capital commitments, including investment commitments to private equity funds such as Shanghai Xianghe Yongyuan, Hangzhou Hanyun Xinling, Yunfeng Fund III, Persistent Edge China Partners, Ltd., and CR Tech Investment Limited, with total outstanding commitments of approximately **RMB 500 million**[315](index=315&type=chunk)[316](index=316&type=chunk) Transactions with Related Parties (for the six months ended September 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Sales of goods to the Group's joint ventures | 4,977 | 5,400 | | Interest income from loans to the Group's joint ventures | 163 | 142 | | Interest income from loans to management personnel | 2,489 | 3,299 | | Commissions to the Group's joint ventures | 48,683 | 39,519 | | Loans granted to the Group's joint ventures | 15,000 | — | | Repayment of loans by the Group's joint ventures | 15,000 | — | Balances with Related Parties (as of September 30, 2020) | Item | September 30, 2020 (RMB thousand) | March 31, 2020 (RMB thousand) | | :--------------- | :------------------------- | :------------------------- | | Trade receivables — The Group's joint ventures | 22,627 | 33,903 | | Other financial assets — Non-current portion — Management personnel | 298,737 | 315,467 | | Accrued expenses and other payables — The Group's joint ventures | 28,119 | 37,620 | Key Management Compensation (for the six months ended September 30, 2020) | Item | 2020 (RMB thousand) | 2019 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Salaries, bonuses and other benefits | 5,433 | 4,878 | | Pension schemes — Defined contribution plans | 8 | 81 | | **Total** | **5,441** | **4,959** | [Events After the Reporting Period](index=82&type=section&id=Events%20After%20the%20Reporting%20Period) After the reporting period, on October 7, 2020, the Group entered an agreement with Shifune Co., Ltd., granting exclusive rights to use the "Phenix" trademark in Japan, South Korea, and parts of Europe for three years and three months, further focusing on the China market - On October 7, 2020, the Group entered into an agreement with Shifune Co., Ltd., granting exclusive rights to use the "Phenix" trademark in Japan, South Korea, and parts of Europe for a period of three years and three months[330](index=330&type=chunk) - This move aims to consolidate resources and marketing efforts, striving to become one of China's top sportswear companies and further focusing on the China market[330](index=330&type=chunk)