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GLOBALGLOBAL
OFFERINGOFFERING
(A joint stock company incorporated in the People’s Republic of China with limited liability)
Stock Code: 2429
北京友寶在線科技股份有限公司
Beijing UBOX Online Technology Corp.
北京友寶在線科技股份有限公司
Beijing UBOX Online Technology Corp.
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Sponsors
Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager
Joint Bookrunners and Joint Lead Managers  (in alphabetical order)


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IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
Beijing UBOX Online Technology Corp.
ʮ̡
(a joint stock company incorporated in the People’ s Republic of China with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the
Global Offering
: 22,576,500 H Shares
Number of Hong Kong Offer Shares : 2,258,000 H Shares (subject to
reallocation)
Number of International Offer Shares : 20,318,500 H Shares (subject to
reallocation)
Maximum Offer Price : HK$11.40 per H Share, plus brokerage of
1.0%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and
Hong Kong Stock Exchange trading fee
of 0.00565% (payable in full on
application in Hong Kong dollars and
subject to refund)
Nominal value : RMB1.00 per H Share
Stock code : 2429
Joint Sponsors
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and
Joint Lead Managers
Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager
Joint Bookrunners and Joint Lead Managers
(in alphabetical order)
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the contents of this prospectus, make no representation as to its accuracy
or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the con tents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in “Documents Delivered to the Registrar of Companies and Documents Avail able on Display” in Appendix V , has been registered by the Registrar of Companies in Hong
Kong as required by Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securi ties and Futures Commission of Hong Kong and the Registrar of Companies in Hong
Kong take no responsibility for the contents of this prospectus or any of the other documents referred to above.
The Offer Price is expected to be determined by agreement between the Overall Coordinators (for themselves and on behalf of the other Underwriters) an d our Company on or about Friday, October 27, 2023 and, in any event, not later than Monday,
October 30, 2023. The Offer Price will be not more than HK$11.40 per Offer Share and is currently expected to be not less than HK$9.40 per Offer Share, unl ess otherwise announced. Investors applying for the Hong Kong Offer Shares must
pay, on application, the maximum Offer Price of HK$11.40 per Offer Share, together with brokerage of 1.0%, SFC transaction levy of 0.0027%, AFRC trans action levy of 0.00015% and Stock Exchange trading fee of 0.00565%, subject to refund
if the Offer Price is less than HK$11.40 per Offer Share. If, for any reason, the Offer Price is not agreed between our Company and the Overall Coordinato rs (for themselves and on behalf of the other Underwriters) on or before Monday, October
30, 2023 (Hong Kong time), the Global Offering (including the Hong Kong Public Offering) will not proceed and will lapse.
The Overall Coordinators (for themselves and on behalf of the other Underwriters), with the consent of our Company, may reduce the indicative Offer Pr ice range stated in this prospectus and/or reduce the number of Offer Shares being offered
pursuant to the Global Offering at any time on or prior to the morning of the last day for lodging applications under the Hong Kong Public Offering. In suc h a case, notices of the reduction of the indicative Offer Price range and/or the number
of Offer Shares will be published on the websites of our Company at www.uboxol.com and on the website of the Hong Kong Stock Exchange at www.hkexnews.com as soon as practicable following the decision to make such reduction, and in
any event not later than the morning of the last day for lodging applications under the Hong Kong Public Offering.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this prospectus, includin g the risk factors set out in “Risk Factors.” The obligations of the Hong Kong Underwriters under
the Hong Kong Underwriting Agreement to subscribe for, and to procure subscribers for, the Hong Kong Offer Shares, are subject to termination by the Ov erall Coordinators (for themselves and on behalf of the other Underwriters) if certain events
occur prior to 8:00 a.m. on the Listing Date. Such grounds are set out in “Underwriting — Underwriting Arrangements and Expenses — Hong Kong Public Offe ring — Grounds for Termination”. It is important that you refer to that section for
further details.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offe red, sold, pledged or transferred, except pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the U.S. Securities Act. The Offer Shares will be offered and sold only outside the United States in of fshore transactions in accordance with Regulation S under the U.S. Securities Act.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this document to the pub lic in relation to the Hong Kong Public Offering.
This document is available at the websites of the Hong Kong Stock Exchange ( www.hkexnews.hk ) and our Company ( www.uboxol.com ). If you require a printed copy of this document, you may download and print from the website addresses
above.
IMPORTANT
October 24, 2023


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. We will not provide printed copies of this prospectus or printed
copies of any application forms to the public in relation to the Hong Kong Public
Offering.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing
Information” section, and our website at www.uboxol.com. If you require a printed
copy of this prospectus, you may download and print from the website addresses
above.
To apply for the Hong Kong Offer Shares, you may:
(a) apply online through the HK eIPO White Form service in the IPO App
(which can be downloaded by searching “ IPO App ” in App Store
or Google Play or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp )o ra t www.hkeipo.hk ;
(b) apply through the CCASS EIPO service to electronically cause HKSCC
Nominees to apply on your behalf, including by:
(i) instructing your broker or custodian who is a CCASS Clearing
Participant or a CCASS Custodian Participant to give electronic
application instructions via CCASS terminals to apply for the Hong
Kong Offer Shares on your behalf; or
(ii) (if you are an existing CCASS Investor Participant) giving electronic
application instructions through the CCASS Internet System
(https://ip.ccass.com ) or through the CCASS Phone System by calling
+852 2979 7888 (using the procedures in HKSCC’s “An Operating
Guide for Investor Participants” in effect from time to time). HKSCC
can also input electronic application instructions for CCASS Investor
Participants through HKSCC’s Customer Service Center at 1/F, One &
Two Exchange Square, 8 Connaught Place, Central, Hong Kong by
completing an input request.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of this
prospectus are identical to the printed prospectus as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website
addresses above.
Please refer to the section headed “How to Apply for Hong Kong Offer Shares” in
this prospectus for further details of the procedures through which you can apply for the
Hong Kong Offer Shares electronically.
IMPORTANT


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Y our application through the HK eIPO White Form service or the CCASS EIPO service
must be for a minimum of 500 Hong Kong Offer Shares and in one of the numbers set out in
the table. Y ou are required to pay the amount next to the number you select.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
500 5,757.48 6,000 69,089.81 40,000 460,598.75 400,000 4,605,987.60
1,000 11,514.97 7,000 80,604.78 45,000 518,173.60 500,000 5,757,484.50
1,500 17,272.46 8,000 92,119.75 50,000 575,748.46 600,000 6,908,981.40
2,000 23,029.94 9,000 103,634.72 60,000 690,898.15 700,000 8,060,478.30
2,500 28,787.42 10,000 115,149.69 70,000 806,047.84 800,000 9,211,975.20
3,000 34,544.90 15,000 172,724.54 80,000 921,197.52 900,000 10,363,472.10
3,500 40,302.39 20,000 230,299.38 90,000 1,036,347.21 1,000,000 11,514,969.00
4,000 46,059.88 25,000 287,874.23 100,000 1,151,496.90 1,129,000
(1) 13,000,400.01
4,500 51,817.37 30,000 345,449.06 200,000 2,302,993.80
5,000 57,574.85 35,000 403,023.91 300,000 3,454,490.70
(1) Maximum number of Hong Kong Offer Shares you may apply for.
No application for any other number of Hong Kong Offer Shares will be considered and
any such application is liable to be rejected.
IMPORTANT


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We will issue an announcement in Hong Kong to be published on the Hong Kong
Stock Exchange’ s website at www.hkexnews.hk and our Company’ s website at
www.uboxol.com if there is any change in the following expected timetable of the Global
Offering.
Hong Kong Public Offering commences ...................... .9:00 a.m. on Tuesday,
October 24, 2023
Latest time for completing electronic applications under
the HK eIPO White Form service through
one of the ways below: (Note 2) .............................. 1 1:30 a.m. on Friday,
October 27, 2023
 the IPO App , which can be downloaded by
searching “ IPO App ” in App Store or Google Play
or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp
 the designated website www.hkeipo.hk
Application lists open (Note 3) ................................. 1 1:45 a.m. on Friday,
October 27, 2023
Latest time for giving electronic application instructions
to HKSCC (Note 4) ...................................... .12:00 noon on Friday,
October 27, 2023
Latest time to complete payments for HK eIPO White Form
applications by effecting internet banking transfer(s)
or PPS payment transfer(s) .............................. .12:00 noon on Friday,
October 27, 2023
If you are instructing your broker or custodian who is a CCASS Clearing Participant or a
CCASS Custodian Participant to give electronic application instructions via CCASS
terminals to apply for the Hong Kong Offer Shares on your behalf, you are advised to contact
your broker or custodian for the latest time for giving such instructions which may be
different from the latest time as stated above.
Application lists close .................................... .12:00 noon on Friday,
October 27, 2023
Expected Price Determination Date
(Note 5) ................................ .Friday,
October 27, 2023
EXPECTED TIMETABLE (NOTE 1)
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Announcement of:
 the final Offer Price
 the level of applications in the Hong Kong Public Offering;
 the level of indications of interest in the International Offering; and
 the basis of allocation of the Hong Kong Offer Shares
to be published at the websites of the Hong Kong
Stock Exchange at www.hkexnews.hk and our website
at www.uboxol.com on(Not e6&1 1 ) ............................ .Thursday,
November 2, 2023
Results of allocations in the Hong Kong Public Offering (with successful applicants’
identification document numbers, or business registration numbers, where appropriate) to be
available through a variety of channels (See “How to Apply for Hong Kong Offer Shares —
11. Publication of Results”), including:
(1) In the announcement to be posted on our website at
www.uboxol.com and the website of the Hong Kong
Stock Exchange at www.hkexnews.hk from (Note 11) .................. .Thursday,
November 2, 2023
(2) Results of allocation in the Hong Kong Public
Offering will be available at the “IPO Results”
function in the IPO App or at www.hkeipo.hk/IPOResult
(or www.tricor.com.hk/ipo/result ) with a “search by ID”
function from (Note 11) .............................. .8:00 a.m. on Thursday,
November 2, 2023
to 12:00 midnight
on Wednesday, November 8, 2023
(3) From the allocation results telephone enquiry line by
calling + 852 3691 8488 between 9:00 a.m.
and 6:00 p.m. from
(Note 11) ................... Thursday, November 2, 2023 to
Tuesday, November 7, 2023
(excluding Saturday,
Sunday and public holiday
in Hong Kong)
H Share certificates in respect of wholly or partially
successful applications under the Hong Kong Public
Offering to be despatched/collected or deposited into
CCASS on or before
(Note 7, 10 & 11) ................................... Thursday,
November 2, 2023
EXPECTED TIMETABLE (NOTE 1)
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HK eIPO White Form e-Auto Refund payment instructions/refund cheques
in respect of wholly or partially successful if the final
Offer Price is less than the price payable on application
(if applicable) or wholly or partially unsuccessful
applications under the Hong Kong Public Offering to be
despatched/collected on or before
(Notes 8, 9, 10 & 11) ....................... .Thursday,
November 2, 2023
Dealings in H Shares on the Main Board of the Stock
Exchange to commence at 9:00 a.m. on (Note 11) ........................... .Friday,
November 3, 2023
Notes:
(1) All dates and times refer to Hong Kong local time, except as otherwise stated. Details of the structure of the
Global Offering, including conditions of the Hong Kong Public Offering, are set out in the section headed
“Structure of the Global Offering” in this prospectus.
(2) If you have already submitted your application and obtained application reference number from the IPO App
or the designated website at www.hkeipo.hk before 11:30 a.m., you will be permitted to continue the
application process (by completing payment of application monies) until 12:00 noon on the last day for
submitting applications, when the application lists close. Y ou will not be permitted to submit your application
through the IPO App or the designated website at www.hkeipo.hk after 11:30 a.m. on the last day for
submitting applications.
(3) If there is a “black” rainstorm warning or a tropical cyclone warning signal number 8 or above and/or Extreme
Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday, October 27, 2023,
the application lists will not open or close on that day. For further details, please refer to the section headed
“How to Apply for Hong Kong Offer Shares — 10. Effect of Bad Weather and/or Extreme Conditions on the
Opening of the Application Lists” in this prospectus.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC
should refer to the section headed “How to Apply for Hong Kong Offer Shares — 6. Applying Through The
CCASS EIPO Service” in this prospectus for details.
(5) The Price Determination Date is expected to be on or about Friday, October 27, 2023 and in any event not later
than Monday, October 30, 2023. If, for any reason, the Offer Price is not agreed between our Company and
the Overall Coordinators (for themselves and on behalf of the other Underwriters) on or before Monday,
October 30, 2023, the Global Offering will lapse.
(6) None of the website or any of the information contained on the website forms part of this prospectus.
(7) No temporary evidence of title will be issued in respect of the Offer Shares.
(8) Applicants who apply through the HK eIPO White Form service and paid their application monies through
single bank accounts may have refund monies (if any) despatched to the application payment account, in the
form of e-Auto Refund payment instructions. Applicants who apply through the HK eIPO White Form service
and paid their application monies through multiple bank accounts may have refund monies (if any) despatched
to the address as specified in their application instructions to the HK eIPO White Form Service Provider, in
the form of refund cheques in favour of the applicant (or, in the case of joint applications, the first-named
applicant), by ordinary post at their own risk.
(9) e-Auto Refund payment instructions/refund cheques will be issued in respect of wholly or partially
unsuccessful applications and in respect of successful applications if the Offer Price is less than the price
payable on application.
EXPECTED TIMETABLE (NOTE 1)
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(10) Applicants who have applied through the HK eIPO White Form service 1,000,000 or more Hong Kong Offer
Shares may collect any refund cheque(s) (where applicable) and/or H Share certificates in person from our H
Share Registrar, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong
Kong from 9:00 a.m. to 1:00 p.m. on Thursday, November 2, 2023 or such other date as notified by us as the
date of dispatch/collection of H Share certificates/e-Auto Refund payment instructions/refund cheque(s).
Applicants being individuals who are eligible for personal collection may not authorize any other person to
collect on their behalf. If you are a corporate applicant which is eligible for personal collection, your
authorised representative must bear a letter of authorization from your corporation stamped with your
corporation’s chop. Both individuals and authorized representatives must produce evidence of identity
acceptable to our H Share Registrar at the time of collection.
The H Share certificates will only become valid evidence of title provided that: (i) the Global Offering has
become unconditional in all respects; and (ii) neither of the Underwriting Agreements has been terminated in
accordance with its respective terms prior to 8:00 a.m. on the Listing Date (which is expected to be Friday,
November 3, 2023). Investors who trade our H Shares on the basis of publicly available allocation details prior
to the receipt of H Share certificates or prior to the H Share certificates becoming valid evidence of title do
so entirely at their own risk.
(11) In case a typhoon warning signal no. 8 or above, a black rainstorm warning signal and/or Extreme Conditions
is/are in force in any days between Tuesday, October 24, 2023 and Friday, November 3, 2023, then the day
of (i) announcement of results of allocations in the Hong Kong Public Offering; (ii) dispatch of H Share
certificates and refund cheques/ HK eIPO White Form e-Auto Refund payment instructions; and (iii) dealings
in the H Shares on the Stock Exchange may be postponed and an announcement may be made in such event.
The above expected timetable is a summary only. For details of the structure of the
Global Offering, including its conditions, and the procedures for applications for Hong
Kong Offer Shares, see the sections headed “Structure of the Global Offering” and “How
to Apply for Hong Kong Offer Shares,” respectively, in this prospectus.
If the Global Offering does not become unconditional or is terminated in accordance
with its terms, the Global Offering will not proceed. In such a case, we will make an
announcement as soon as practicable thereafter.
EXPECTED TIMETABLE (NOTE 1)
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IMPORTANT NOTICE TO INVESTORS
This prospectus is issued by our Company solely in connection with the Hong
Kong Public Offering and the Hong Kong Offer Shares and does not constitute an offer
to sell or a solicitation of an offer to buy any security other than the Hong Kong Offer
Shares offered by this prospectus pursuant to the Hong Kong Public Offering. This
prospectus may not be used for the purpose of, and does not constitute, an offer or
invitation in any other jurisdiction or in any other circumstances. No action has been
taken to permit a public offering of the Offer Shares in any jurisdiction other than
Hong Kong and no action has been taken to permit the distribution of this prospectus
in any jurisdiction other than Hong Kong. The distribution of this prospectus and the
offering of the Offer Shares in other jurisdictions are subject to restrictions and may
not be made except as permitted under the applicable securities laws of such
jurisdictions pursuant to registration with or authorization by the relevant securities
regulatory authorities or an exemption therefrom.
Y ou should rely only on the information contained in this prospectus and the
GREEN Application Form to make your investment decision. The Hong Kong Public
Offering is made solely on the basis of the information contained and the
representations made in this prospectus. We have not authorized anyone to provide you
with information that is different from what is contained in this prospectus. Any
information or representation not made in this prospectus must not be relied on by you
as having been authorized by us, the Joint Sponsors, the Overall Coordinators, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, the Capital Market Intermediaries, any of our or their respective
directors, officers, representatives, affiliates, employees, agents or any other person or
party involved in the Global Offering. Information contained in our website, located at
www.uboxol.com, does not form part of this prospectus.
Page
Expected Timetable ................................................. i
Contents .......................................................... v
Summary ......................................................... 1
Definitions ........................................................ 3 2
Glossary of Technical Terms .......................................... 4 6
Forward-looking Statements .......................................... 4 9
Risk Factors ....................................................... 5 1
Waivers from Strict Compliance with the Hong Kong Listing Rules .......... 9 4
CONTENTS
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Information about this Prospectus and the Global Offering ................. 9 8
Directors, Supervisors and Parties Involved in the Global Offering ........... 1 0 3
Corporate Information .............................................. 1 1 0
Industry Overview .................................................. 1 1 2
Regulatory Overview ................................................ 1 2 8
History and Development ............................................ 1 5 8
Business .......................................................... 1 9 4
Relationship with Our Single Largest Group of Shareholders ................ 3 2 0
Connected Transactions .............................................. 3 2 5
Directors, Supervisors and Senior Management ........................... 3 3 3
Substantial Shareholders ............................................. 3 5 5
Share Capital ...................................................... 3 6 0
Cornerstone Investors ............................................... 3 6 5
Financial Information ............................................... 3 7 2
Future Plans and Use of Proceeds ...................................... 4 9 3
Underwriting ...................................................... 4 9 7
Structure of the Global Offering ....................................... 5 0 9
How to Apply for Hong Kong Offer Shares .............................. 5 1 9
Appendix I Accountant’s Report .................................. I - 1
Appendix II Unaudited Pro Forma Financial Information ............... II-1
Appendix III Summary of Articles of Association ...................... III-1
Appendix IV Statutory and General Information ....................... I V - 1
Appendix V Documents Delivered to the Registrar of Companies and
Documents Available on Display ....................... V - 1
CONTENTS
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This summary aims to give you an overview of the information contained in this
prospectus. As this is a summary, it does not contain all the information that may be
important to you. You should read the whole document before you decide to invest in the
Offer Shares.
There are risks associated with any investment. Some of the particular risks in
investing in the Offer Shares are set forth in “Risk Factors.” You should read that section
carefully before you decide to invest in the Offer Shares.
OVERVIEW
Who We Are
We are a vending machine operator in mainland China with a 7.6% market share in terms
of GMV in 2022. According to Frost & Sullivan, we ranked first in terms of both total
transaction GMV and network scale in the unmanned retail industry, primarily consisting of
vending machines, unmanned stores and unmanned shelves, in mainland China for each of
2019, 2020, 2021 and 2022. For over a decade since our founding, we have endeavored to
cultivate the unmanned retail industry, a sub-segment of the retail industry, in mainland China
and developed digitalization and operation capabilities, covering merchandise procurement,
logistics and inventory management. Leveraging these core capabilities, we have rapidly
established an extensive point-of-sale, or POS, network covering a wide range of consumption
scenarios, including schools, factories, office premises, public venues, transportation hubs and
restaurants. Through our expansive POS network, we are able to provide services to a variety
of participants along the unmanned retail industry value chain. As of June 30, 2023, we had
a network of 61,888 Ubox POSs for vending machines across 157 cities and 28 provincial-level
administrative regions in mainland China, 87.3% of which were concentrated in tier one, new
tier one and tier two cities.
Our Revenue Model
We strive to refine the traditional retail industry with technology, and to further digitalize
and automate businesses along the retail value chain. We generated revenue during the Track
Record Period from the following business segments:
 Unmanned retail business . We leverage our nation-wide POS network and data-
driven operation system to digitalize and automate retail sales of FMCG in a wide
range of consumption scenarios through vending machines only. We derive revenue
from this segment primarily from retail sales of merchandise, including beverages
and snacks, through vending machines at Ubox POSs. Our vending machines
primarily include pick-and-go cabinets, beverage vending machines, beverage and
snack vending machines and freshly brewed beverage vending machines;
SUMMARY
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 Advertising and system support services. We leverage our extensive and unique
consumer touch points to offer advertisers with digital advertising services that
drive consumer traffic and sales, primarily consisting of (i) display screen
advertising services, (ii) after-payment advertising services, (iii) merchandise
display advertising services and (iv) machine body advertising services. We derive
revenue from service fees charged to our advertising customers for digital
advertising services. In addition, we also provide operation system support to
Non-Ubox POS operators by allowing them to connect their machines to our
operation system, which enables them to access a range of functionalities, including
monitoring their machines’ operating status in real time and receiving restocking
alerts, restocking routes and schedule recommendations. We derive revenue from
fees charged to our Non-Ubox POS operators for using our operation system. During
the Track Record Period, our revenue from digital advertising services was generally
determined by demand for such services from advertisers, which was impacted by
macro-economic conditions, and the expansiveness of our POS network, which
represents our capacity to reach consumers. During the Track Record Period,
revenue from digital advertising services also relates to the number of new POSs
opened which affects the amount of services fees we may receive from Alipay China
for the advertising and promotion of its payment service products. For details of
service fees from Alipay China, see “Connected Transactions — Partially-exempt
Continuing Connected Transactions — Advertising Cooperation Framework
Agreement.”;
 Merchandise wholesale. We offer merchandise wholesale primarily to merchandise
wholesale customers and certain Non-Ubox POS operators. We derive revenue from
this segment primarily from wholesale of merchandise;
 V ending machine sales and leases. We sell, lease and/or provide hardware support
services for vending machine to our Non-Ubox POS operators. We provide hardware
support services including machine installation and maintenance services. We derive
revenue from this segment primarily from sales and leases of vending machine
and/or fee charged for related hardware support services; and
 Others. We also offer other services, which mainly comprise mobile device
distribution services, karaoke booth services, karaoke booth sales and leases, and
karaoke booth operation system support across mainland China.
SUMMARY
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The table below sets forth our revenue by business segment during the Track Record Period:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Unmanned retail business 1,539,891 56.5 1,336,763 70.3 1,915,116 71.6 1,974,657 78.4 913,388 79.9 986,795 78.8
– Direct operation model 1,289,146 47.3 574,339 30.2 435,917 16.3 362,309 14.4 158,849 13.9 183,752 14.7
– Partner model 250,745 9.2 762,424 40.1 1,479,199 55.3 1,612,348 64.0 754,539 66.0 803,043 64.1
Advertising and system support
services 540,600 19.8 219,561 11.5 243,120 9.1 194,271 7.7 100,074 8.8 56,450 4.5
– Digital advertising services 518,874 19.0 203,095 10.6 224,706 8.4 176,216 7.0 91,314 8.0 50,415 4.0
– Operation system support 21,726 0.8 16,466 0.9 18,414 0.7 18,055 0.7 8,760 0.8 6,035 0.5
Merchandise wholesale 297,900 10.9 115,485 6.1 40,516 1.5 131,795 5.2 54,103 4.7 110,685 8.8
V ending machine sales and leases 91,485 3.4 47,040 2.5 44,241 1.7 33,840 1.3 16,149 1.4 11,712 0.9
Others 257,585 9.4 183,161 9.6 433,244 16.1 184,661 7.4 59,376 5.2 87,036 7.0
Total 2,727,461 100.0 1,902,010 100.0 2,676,237 100.0 2,519,224 100.0 1,143,090 100.0 1,252,678 100.0
SUMMARY
–3–


--- page 14 ---
Our revenue decreased substantially from RMB2,727.5 million in 2019 to RMB1,902.0
million in 2020, with revenue declining from each of our business lines, due to a general
decrease in overall outdoor consumer traffic and demand for our services as a result of
COVID-19. During a partial recovery from COVID-19, we experienced a significant increase
in our revenue from RMB1,902.0 million in 2020 to RMB2,676.2 million in 2021. Our revenue
decreased from RMB2,676.2 million in 2021 to RMB2,519.2 million in 2022 primarily due to
a decrease in revenue from our mobile device distribution services under our others segment,
which was in turn mainly because downstream mobile device retail market and demand for our
mobile device distribution services were negatively affected by weak macro-economic
conditions and consumer demand in 2022. Such decrease was partially offset by an increase in
revenue generated from merchandise wholesale. Our revenue increased from RMB1,143.1
million for the six months ended June 30, 2022 to RMB1,252.7 million for the six months
ended June 30, 2023, primarily due to an increase in revenue from unmanned retail business
and merchandise wholesale following the relaxation of COVID-19 policies and overall
recovery of consumer traffic and business activities. Such increase was partially offset by a
decrease in revenue from advertising and system support services, which was primarily
attributable to the decrease in service fees from Alipay China for the advertising and promotion
of its payment service products as the number of POSs opened during the six months ended
June 30, 2023 was relatively lower as compared to the same period in 2022 and demand for our
digital advertising services from advertisers has not fully recovered despite the relaxation of
COVID-19 policies. For further details, see “Financial Information — Business Sustainability”
and “Financial Information — Period-to-period Comparison of Results of Operations.”
The table below sets forth our gross profit and gross profit margin by business segment
during the Track Record Period:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Unmanned retail
business 683,467 44.4 557,516 41.7 888,056 46.4 891,398 45.1 413,543 45.3 444,458 45.0
Advertising and system
support services 488,280 90.3 218,812 99.7 184,411 75.9 160,225 82.5 87,918 87.9 55,769 98.8
– Digital advertising
services 466,634 89.9 202,365 99.6 166,431 74.1 142,233 80.7 79,180 86.7 49,764 98.7
– Operation system
support 21,646 99.6 16,447 99.9 17,980 97.6 17,992 99.7 8,738 99.7 6,005 99.5
Merchandise wholesale 14,669 4.9 4,029 3.5 2,965 7.3 5,225 4.0 2,834 5.2 3,990 3.6
V ending machine sales
and leases 15,147 16.6 (32,224) (68.5) 13,887 31.4 10,792 31.9 2,981 18.5 3,165 27.0
Others 127,633 49.5 (189,572) (103.5) 11,805 2.7 9,096 4.9 2,961 5.0 10,594 12.2
Total 1,329,196 48.7 558,561 29.4 1,101,124 41.1 1,076,736 42.7 510,237 44.6 517,976 41.3
SUMMARY
–4–


--- page 15 ---
Our gross profit margin decreased from 48.7% in 2019 to 29.4% in 2020 primarily due
to (i) a decrease in revenue generated from high gross margin consumption scenarios such as
transportation hubs, public venues and schools as such locations were particularly affected by
lockdowns, standstills and other restrictive measures adopted by PRC government authorities
in combating COVID-19, (ii) a decrease in revenue generated from advertising and system
support services (primarily due to the decrease in demand for such services from advertisers
and their budgets and expenditures owing to the decrease in outdoor consumer traffic in light
of COVID-19) which typically records higher gross profit margin than other business
segments, and (iii) impairment losses recognized in 2020. Our gross profit margin increased
from 29.4% in 2020 to 41.1% in 2021 primarily due to (i) improved revenue contribution and
gross profit margin of our unmanned retail business, (ii) recovery of consumer traffic at
consumption scenarios or POSs with higher gross profit margin, and (iii) the absence of
significant amounts of impairment losses which were recognized in 2020. Our gross profit
margin increased from 41.1% in 2021 to 42.7% in 2022, primarily due to (i) the increased
revenue contribution of our unmanned retail business, which has a relatively higher gross profit
margin and (ii) the decreased revenue contribution of our mobile device distribution services
under our others segment, which typically has a lower gross profit margin. Our gross profit
margin decreased from 44.6% for the six months ended June 30, 2022 to 41.3% for the six
months ended June 30, 2023, primarily due to a decrease in revenue contribution from
advertising and system support services which typically records higher gross profit margin than
other business segments and an increase in revenue contribution from merchandise wholesale
and mobile device distribution services which typically record lower gross profit margin than
other business segments.
Our Market Opportunity
We are well-positioned to capture the massive market opportunity driven by the fast
growth of the under-penetrated unmanned retail market in mainland China. According to Frost
& Sullivan, vending machines can effectively address the pain points of the traditional
fast-moving consumer goods, or FMCG, retail market, including high start-up costs and
escalating operation costs, and also provide consumers with convenient consumption
experiences. However, the unmanned retail market in mainland China is underpenetrated, with
an average of 0.8 vending machine per thousand population in 2022. As of December 31, 2022,
vending machines in mainland China covered only 8.8% of the country’s potentially available
offline sites, and such penetration rate of offline sites covered by vending machines is expected
to increase to 15.6% by 2027, indicating a vast development prospect for vending machines in
offline retail scenarios. Accordingly, the size of the vending machine retail market in mainland
China is expected to grow from RMB28.9 billion in 2022 to RMB73.9 billion in 2027, with a
CAGR of 20.7%.
SUMMARY
–5–


--- page 16 ---
Our Platform for Participants along the Industry Value Chain
We seek to capture this market opportunity as a core player by leveraging our strong
capabilities in digitalization and operation. We have created a platform where we provide value
to, and nurture symbiotic relationships among, a variety of participants along the unmanned
retail industry value chain. For consumers, we offer convenience, accessibility, excellent
multi-scenario user experiences, contactless purchase and a broad selection of trending
merchandise. For those who wish to start a vending machine business, we offer them an
opportunity to join us as POS partners, thereby allowing them to capitalize on their POS
resources and local expertise and tap into our digitalization and operation capabilities. The
POS partners are typically entitled to a share of the POSs’ transaction GMV subject to
deduction of their responsible fees and costs. For those who already operate vending machines,
we welcome them as our merchandise wholesale customers or Non-Ubox POS operators and
empower them to improve operational efficiency by providing them with access to our
digitalization and operation capabilities. For advertisers, we offer a vast and inter-connected
platform to reach consumers. The diagram below illustrates our platform and the interactions
among major participants:
Residential Apartments Local Communities
Hotels
Transportation
Hubs
Sports
Venues
Shopping
CentersHospitalsTourist
Attractions Parks
Office
Premises
Factories
Restaurants
Schools
Consumers
• Convenience and accessibility
• Superior multi-scenario user experience
• Contactless purchase
• Broad selection of trending merchandise
1
POS
Partners
• Operation
empowerment
• Centralized
operation
system
• Operation and
maintenance
support
2
Merchandise Wholesale
Customers/
Non-Ubox POS Operators
• Procurement cost reduction
• Operation empowerment
• Operation system support
3
Advertisers
• Product
promotion and
sales
• Brand exposure
• Data analytics
capabilities for
immediate
decisions
4
Unmanned Retail
Business
Merchandise Wholesale Advertising and System
Support Services
A
C
D
Vending Machine
Sales and Leases
B
Notes: Others include offering (i) mobile device distribution services to mobile device resellers and (ii) karaoke
booth services, karaoke booth sales and leases and karaoke booth operation system support to karaoke
booth franchisees.
Our Technology-based Retail Platform
Leveraging our technology capabilities, we digitalize, automate and refine each
component of our operation with technologies, including data analytics, visual identification
and IoT technologies, and have constructed a centralized operation system, which significantly
enhances our operational efficiency. Utilizing these technologies, we further design and
develop, and engage third-party manufacturers to produce to our specifications, a range of
customized vending machines, which are deployed across our vast network of POSs, forming
the bedrock of our retail platform. We may specify the type, size, design of internal
compartments, payment modules and display screen of our customized vending machines,
based on the intended application scenarios.
SUMMARY
–6–


--- page 17 ---
Our POS Partners
We engage POS partners, which primarily consist of individuals and enterprises with
previous experience and industry knowledge in the vending machine business, to assist with
sourcing and establishing, while we manage the operation of, POSs. Our POS partners are
typically entitled to a share of the transaction GMV , subject to deduction of their responsible
fees and costs, and are therefore incentivized to mobilize resources to set up vending machines
at the best POSs. For details of our arrangements with POS partners, see “Business — Our POS
Network — Our POS Partners.”
Non-Ubox POS Operators
Non-Ubox POS operators, which primarily consist of individuals and SMEs which
operate vending machines that are connected to our operation system, may choose to purchase
or rent vending machines from us, or use their own vending machines to sell merchandise. We
provide hardware support and operation system support to Non-Ubox POS operators. For
details of our arrangements with Non-Ubox POS operators, see “Business — Our POS Network
— Non-Ubox POS Operators.”
Our Major Suppliers
Our major suppliers are primarily beverages and food manufacturers, distributors and
machine manufacturers in mainland China. Purchases from our top five suppliers in each
year/period during the Track Record Period accounted for 22.5%, 27.7%, 32.5%, 24.5% and
27.2% of our total purchases in 2019, 2020, 2021, 2022 and the six months ended June 30,
2023, respectively, and purchases from our largest supplier in each year/period during the
Track Record Period accounted for 6.3%, 7.9%, 7.7%, 9.7% and 9.4% of our total purchases
in the same periods, respectively. See “Business — Our Suppliers.”
Our Major Customers
Our major customers in 2019, 2020, 2021, 2022 and the six months ended June 30, 2023
were customers of our advertising and system support services and/or mobile device
distribution services categorized under others, who are primarily online payment services
providers, beverages and food manufacturers and digital product sellers in mainland China. In
2019, 2020, 2021, 2022 and the six months ended June 30, 2023, our five largest customers in
each year/period during the Track Record Period generated RMB288.8 million, RMB163.2
million, RMB408.4 million, RMB153.7 million and RMB68.0 million of revenue, accounting
for 10.6%, 8.6%, 15.3%, 6.1% and 5.4% of our total revenue for the same periods, respectively.
For the same periods, our largest customer in each year/period during the Track Record Period
generated RMB159.2 million, RMB80.4 million, RMB120.2 million, RMB47.3 million and
RMB27.1 million of revenue, respectively, accounting for 5.8%, 4.2%, 4.5%, 1.9% and 2.2%
of our total revenue, respectively. See “Business — Our Customers.”
SUMMARY
–7–


--- page 18 ---
OUR STRENGTHS
We believe the following competitive advantages have contributed to our success and will
help drive our growth in the future:
 Well-positioned to capture the massive market opportunity in the underpenetrated
unmanned retail industry in mainland China with significant growth potential;
 Powerful digitalization capabilities driving operational excellence and empowering
customers and business partners;
 Strong operation capabilities underpinning our business growth;
 Flexible POS management and development strategies tailored to different
consumption scenarios fueling rapid expansion of POS network;
 Large POS network in mainland China creating economies of scale and competitive
edge;
 Outstanding R&D capabilities with deep industry insights;
 Management team with rich industry experience; and
 Backed by renowned strategic investors.
For further details, see “Business — Our Strengths.”
OUR STRATEGIES
To achieve our mission and further solidify our position in the industry, we intend to
pursue the following strategies:
 Further expand our POS network;
 Continuously invest in and enhance our services related technologies;
 Further improve operation infrastructure and enhance operational efficiency; and
 Attract, nurture and retain talent.
For further details, see “Business — Our Strategies.”
SUMMARY
–8–


--- page 19 ---
RISK FACTORS
Our business and the Global Offering involve certain risks as set out in “Risk Factors” in
this prospectus. Y ou should read that section in its entirety carefully before you decide to invest
in our Shares. Some of the major risks we face include (i) we may not be able to find suitable
sites for our POSs on commercially acceptable terms, if at all; (ii) if we are not able to
effectively manage our businesses, our expansion and growth in new geographical areas, our
business and prospects may be materially and adversely affected; (iii) if we fail to maintain the
existing scale of our partner model or retain our existing POS partners or attract new POS
partners, or if our POS partners decrease their scale of business, our POS network expansion
plan may be disrupted and their revenue contribution will decrease, and thus our business,
financial condition and results of operation may be materially and adversely affected; (iv) any
system failure or malfunctioning of our operation systems that are connected to our POSs or
our vending machines in our POS network will directly affect our ability to receive orders and
payments, which could adversely affect our ability to carry out our business effectively and
efficiently, and could materially and adversely affect our financial condition and results of
operations; (v) our vending machines are integrated with technology-based retail platform and
any interruption of the vending machines and the technology-based retail platform could impair
our ability to provide products and services; (vi) we face risks related to natural disasters,
epidemics and other public health emergencies, which could significantly disrupt our
operations and financial condition; (vii) we are subject to risks and uncertainties faced by
companies in a rapidly evolving industry; (viii) impairment of our property and equipment and
right-of-use assets could negatively affect our financial condition and results of operations; (ix)
we may incur impairment losses relating to goodwill and other intangible assets, which could
materially affect our profits; and (x) there has been no prior public market for our H Shares.
An active trading market for our H Shares may not develop, especially taking into account that
certain existing Shareholders may be subject to a lock-up period, and the liquidity and market
price of our H Shares may be volatile.
KEY OPERATING DATA
The table below sets forth the breakdown of our Ubox POS coverage by city tier as of the
dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Ubox POSs by city tier
Tier one cities 16,625 26.2 15,836 27.1 21,572 25.3 19,929 30.1 20,281 28.0 19,611 31.7
New tier one cities 21,462 33.8 17,725 30.3 30,580 35.9 23,077 34.8 24,335 33.6 21,365 34.5
Tier two cities 15,838 25.0 15,228 26.0 22,097 26.0 14,405 21.7 18,052 25.0 13,031 21.1
Tier three cities 6,420 10.1 5,718 9.8 7,042 8.3 5,820 8.8 6,419 8.9 5,177 8.4
Others 3,106 4.9 3,960 6.8 3,848 4.5 3,001 4.6 3,232 4.5 2,704 4.3
Total 63,451 100.0 58,467 100.0 85,139 100.0 66,232 100.0 72,319 100.0 61,888 100.0
SUMMARY
–9–


--- page 20 ---
Our POS network covers a wide range of consumption scenarios. The following table sets
forth the distribution of our Ubox POSs by consumption scenario as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Ubox POS by
consumption scenario
Schools 14,611 23.0 18,195 31.1 19,738 23.2 18,706 28.2 19,372 26.8 17,572 28.4
Factories 16,197 25.5 13,528 23.1 17,695 20.8 16,998 25.7 17,401 24.1 16,493 26.6
Office premises 12,797 20.2 11,059 18.9 14,113 16.6 13,876 21.0 14,453 20.0 13,342 21.6
Public venues
(1) 11,321 17.8 9,063 15.5 9,877 11.6 8,751 13.2 9,818 13.6 8,122 13.1
Transportation hubs 3,884 6.1 3,773 6.5 3,587 4.2 2,265 3.4 3,099 4.3 2,281 3.7
Restaurants
(2) 183 0.3 129 0.2 16,490 19.4 1,636 2.5 4,308 6.0 829 1.3
Others (3) 4,458 7.0 2,720 4.7 3,639 4.3 4,000 6.0 3,868 5.3 3,249 5.2
Total 63,451 100.0 58,467 100.0 85,139 100.0 66,232 100.0 72,319 100.0 61,888 100.0
Notes:
1. Public venues include, among others, tourist attractions, parks, hospitals, shopping centers and sports
venues.
2. We actively enhanced our collaborations with restaurant model partners to deploy pick-and-go cabinets
to restaurant premises in 2021 and achieved substantial scale during that year. The number of POSs in
restaurants decreased in 2022 primarily due to the regional resurgence of COVID-19 in mainland China
in the same period that affected consumer traffic in certain consumption scenarios, especially
restaurants.
3. Others primarily include hotels, local communities and residential apartments.
SUMMARY
–1 0–


--- page 21 ---
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
Selected Items of Consolidated Statements of Comprehensive Income
The following table sets forth selected items of our consolidated statements of
comprehensive income in absolute amounts and as percentages of revenue for the periods
indicated, which have been extracted from our Group’s audited consolidated financial
statements included in Appendix I:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Revenue 2,727,461 100.0 1,902,010 100.0 2,676,237 100.0 2,519,224 100.0 1,143,090 100.0 1,252,678 100.0
Cost of sales (1) (1,398,265) (51.3) (1,343,449) (70.6) (1,575,113) (58.9) (1,442,488) (57.3) (632,853) (55.4) (734,702) (58.7)
Gross profit 1,329,196 48.7 558,561 29.4 1,101,124 41.1 1,076,736 42.7 510,237 44.6 517,976 41.3
Operating profit/(loss) (2) 109,702 4.0 (1,135,708) (59.7) (167,006) (6.3) (243,670) (9.7) (110,416) (9.7) (138,240) (11.0)
Profit/(loss) before income tax 43,845 1.6 (1,171,524) (61.6) (184,615) (6.9) (272,256) (10.8) (122,462) (10.7) (146,645) (11.7)
Profit/(loss) for the
year/period 39,649 1.5 (1,184,196) (62.3) (188,194) (7.0) (283,069) (11.2) (128,399) (11.2) (147,389) (11.8)
Profit/(loss) for the year/period
attributable to:
– Owners of the Company 45,142 1.7 (1,172,461) (61.6) (185,000) (6.9) (284,529) (11.3) (127,479) (11.2) (152,480) (12.2)
– Non-controlling interests (5,493) (0.2) (11,735) (0.6) (3,194) (0.1) 1,460 0.1 (920) (0.1) 5,091 0.4
39,649 1.5 (1,184,196) (62.3) (188,194) (7.0) (283,069) (11.2) (128,399) (11.2) (147,389) (11.8)
Notes:
1. Consists of (i) cost of inventories sold, (ii) subcontractor cost of advertising resources, (iii) depreciation of
property and equipment, (iv) depreciation of right-of-use assets, (v) taxes and surcharges, (vi) impairment loss
of inventories, and (vii) impairment loss of property and equipment and right-of-use assets for karaoke booths
in operation.
2. Operating profit/(loss) represent gross profit net of (i) selling and marketing expenses, (ii) general and
administrative expenses, (iii) research and development expenses, (iv) net impairment loss on financial assets,
(v) other income, and (vi) other gains/(losses), net.
SUMMARY
–1 1–


--- page 22 ---
The following table sets forth a breakdown of our selling and marketing expenses for the
periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
POSs operation and
development
expenses 574,570 553,170 585,920 587,354 263,936 261,155
Employee benefit
expenses 172,563 168,206 151,386 170,190 84,073 63,303
Logistics and
transportation
expenses 108,480 97,243 138,277 156,637 77,222 88,642
Depreciation 98,564 177,787 137,068 186,927 90,150 102,693
Office and lease
expenses 34,452 29,804 29,125 29,470 15,082 8,310
Impairment loss of
property and
equipment and
right-of-use assets 1,240 27,573 1,44 9–––
Share-based payments ––––– 4,723
Others 33,847 29,952 34,187 25,142 16,273 16,307
Total 1,023,716 1,083,735 1,077,412 1,155,720 546,736 545,133
Non-HKFRS Measures
To supplement our financial information which are presented in accordance with HKFRS,
we use non-HKFRS measures, namely, adjusted EBITDA and adjusted net profit or loss, as
additional financial measures, which are not required by, or presented in accordance with,
HKFRS. We believe that such non-HKFRS measures facilitate comparisons of operating
performance from period to period and company to company by eliminating potential impacts
of certain items. We believe that such measures provide useful information to investors and
others in understanding and evaluating our consolidated results of operations in the same
manner as they help our management. However, our presentation of adjusted EBITDA and
adjusted net profit or loss may not be comparable to similarly titled financial measures
presented by other companies. The use of such non-HKFRS measures have limitations as
analytical tools, and you should not consider them in isolation from, or as substitute for
analysis of, our results of operations or financial condition as reported under HKFRS.
SUMMARY
–1 2–


--- page 23 ---
We define adjusted EBITDA (non-HKFRS measure) as EBITDA (which is profit/(loss)
for the year/period plus depreciation of property and equipment and right-of-use assets,
amortization of intangible assets, income tax expenses and interest expenses on borrowings and
lease liabilities) for the year/period adjusted by adding (i) share-based payment and (ii) listing
expenses.
We define adjusted net profit/(loss) (non-HKFRS measure) as profit/(loss) for the
year/period adjusted for (i) share-based payment and (ii) listing expenses.
Share-based payment consisted of non-cash expenses arising from granting options to
eligible individuals under the 2020 Incentive Scheme and the Pre-IPO Incentive Scheme and
does not result in cash outflow. Listing expenses are mainly expenses related to the Global
Offering and added back mainly because they were incurred for the purpose of the Listing.
The following table sets out adjusted EBITDA (non-HKFRS measure) and adjusted net
profit/(loss) (non-HKFRS measure), and a reconciliation from profit/(loss) for the year/period
to adjusted EBITDA (non-HKFRS measure) and adjusted net profit/(loss) (non-HKFRS
measure) for the periods indicated.
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit/(loss) for the
year/period 39,649 (1,184,196) (188,194) (283,069) (128,399) (147,389)
Add
Depreciation of
property and
equipment,
right-of-use assets 203,669 276,669 202,364 242,030 122,329 121,837
Amortization of
intangible assets 13,167 17,545 17,423 15,842 8,045 7,675
Income tax expenses 4,196 12,672 3,579 10,813 5,937 744
Interest expenses on
borrowings and
lease liabilities 58,688 32,344 13,517 13,331 7,260 4,584
EBITDA 319,369 (844,966) 48,689 (1,053) 15,172 (12,549)
SUMMARY
–1 3–


--- page 24 ---
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Add
Share-based payment – 210,918 1,500 – – 49,527
Listing expenses – – 16,411 22,077 3,790 6,581
Adjusted EBITDA
(non-HKFRS
measure) 319,369 (634,048) 66,600 21,024 18,962 43,559
Profit/(loss) for the
year/period 39,649 (1,184,196) (188,194) (283,069) (128,399) (147,389)
Add
Share-based payment – 210,918 1,500 – – 49,527
Listing expenses – – 16,411 22,077 3,790 6,581
Adjusted net
profit/(loss)
(non-HKFRS
measure) 39,649 (973,278) (170,283) (260,992) (124,609) (91,281)
Selected Items of Consolidated Statements of Financial Position
The following table sets forth selected information from our consolidated statements of
financial position as of the dates indicated, which have been extracted from our Group’s
audited consolidated financial statements included in Appendix I.
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Total current assets 1,843,674 1,032,918 785,396 518,007 637,858
Total non-current assets 1,785,365 1,165,806 1,151,214 1,000,862 895,933
Total current liabilities 780,296 615,400 609,487 493,596 612,508
Total non-current liabilities 197,399 114,406 42,957 23,337 17,209
Equity attributable to
owners of the Company 2,622,357 1,451,666 1,265,012 980,483 877,530
Non-controlling interests 28,987 17,252 19,154 21,453 26,544
Total equity/Net assets 2,651,344 1,468,918 1,284,166 1,001,936 904,074
Net current assets 1,063,378 417,518 175,909 24,411 25,350
SUMMARY
–1 4–


--- page 25 ---
Our net current assets remained relatively stable at RMB24.4 million as of December 31,
2022 and RMB25.4 million as of June 30, 2023.
Our net current assets decreased from RMB175.9 million as of December 31, 2021 to
RMB24.4 million as of December 31, 2022, primarily due to (i) a decrease in prepayments,
deposits and other receivables of RMB114.9 million primarily due to the decrease in
prepayment for purchase of inventories and the decrease in amount due from POS partners,
(ii) a decrease in trade receivables of RMB65.6 million primarily due to recovery of certain
trade receivables with long ages and our improved trade receivables management generally,
(iii) a decrease in cash and cash equivalents of RMB44.2 million, and (iv) a decrease in
inventories of RMB42.9 million primarily due to a decrease in merchandise as a result of
reduced procurement as sales were negatively affected in December 2022 by regional
resurgences of COVID-19, partially offset by (v) a decrease in other payables and accruals of
RMB50.9 million primarily due to the decrease in accrued and payments of POSs operation
expenses, (vi) a decrease in lease liabilities of RMB39.2 million primarily due to the expiration
of our leases for vending machines in 2021 under finance lease agreement as there were no new
finance lease of machinery and equipment in 2021 and 2022, respectively, and (vii) a decrease
in trade payables of RMB35.4 million primarily due to the decrease in procurement of
merchandise and machines.
Our net current assets decreased from RMB417.5 million as of December 31, 2020 to
RMB175.9 million as of December 31, 2021, primarily due to (i) a decrease in financial assets
at fair value through profit or loss of RMB132.1 million, primarily due to disposal of our
investment in wealth management products, (ii) a decrease in prepayments, deposits and other
receivables of RMB99.5 million primarily due to the further development of our partner model
since 2020 under which our POS partners typically bear the occupancy fee for machine spaces,
(iii) an increase in trade payables of RMB81.6 million in line with the expansion of our
business, and (iv) a decrease in trade receivables of RMB36.4 million due to our enhanced
collection efforts, partially offset by (v) an increase in inventories of RMB36.6 million,
primarily due to increased demands for our merchandise, and (vi) a decrease in lease liabilities
of RMB48.7 million, primarily due to the expiration of our leases for vending machines in
2021 under finance lease agreements.
Our net current assets decreased by 60.7% from RMB1,063.4 million as of December 31,
2019 to RMB417.5 million as of December 31, 2020, primarily due to (i) a decrease in
prepayments, deposits and other receivables of RMB396.9 million, primarily due to the
development of our partner model in 2020 under which our POS partners typically bear the
occupancy fee for machine spaces, (ii) a decrease in financial assets at fair value through profit
or loss of RMB154.6 million, primarily due to disposal of our investment in wealth
management products, (iii) a decrease in trade receivables of RMB147.0 million, primarily due
to the decrease in trade receivables from third-parties including advertisers for our advertising
and system support services and Non-Ubox POS operators in connection with our sale of
vending machines, and (iv) a decrease in inventories of RMB81.0 million, primarily because
we reduced the stock of merchandise in light of the COVID-19 outbreak, partially offset by (v)
a decrease in trade payables of RMB92.8 million, primarily due to the decrease in procurement
needs as a result of the impact of COVID-19 outbreak, and (vi) a decrease in lease liabilities
of RMB88.5 million, primarily due to the expiration of our leases for vending machines in
2020 under finance lease agreements.
SUMMARY
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Our net assets decreased from RMB2,651.3 million as of December 31, 2019 to
RMB1,468.9 million as of December 31, 2020, primarily due to (i) our net loss of RMB1,184.2
million in 2020 and (ii) the exercise of share options of the Company, see Note 28 to the
Accountant’s Report as set out in Appendix I for details, partially offset by share-based
compensation expenses of RMB210.9 million. Our net assets further decreased to RMB1,284.2
million as of December 31, 2021, primarily due to (i) our net loss of RMB188.2 million in 2021
and (ii) the exercise of share options of the Company, see Note 28 to the Accountant’s Report
as set out in Appendix I for details, partially offset by the capital injection of RMB3.4 million
by non-controlling interests. Subsequently, our net assets then decreased to RMB1,001.9
million as of December 31, 2022, primarily due to (i) our net loss of RMB283.1 million in
2022, (ii) the disposal of a subsidiary, see Note 14(e) to the Accountant’s Report as set out in
Appendix I for details, and (iii) the capital injection of RMB0.4 million by non-controlling
interests. Our net assets further decreased to RMB904.1 million as of June 30, 2023, primarily
due to (i) our net loss of RMB147.4 million in the six months ended June 30, 2023, partially
offset by (ii) share-based compensation expenses, see Note 28 to the Accountant’s Report as
set out in Appendix I for details. For further details, see the Consolidated Statements of
Changes in Equity in the Accountants’ Report as set out in Appendix I. For further details of
our net losses, see “— Business Sustainability.”
Summary of Consolidated Statements of Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash generated
from/(used in)
operating
activities 613,393 (31,948) 178,949 153,918 155,858 186,011
Net cash (used
in)/generated
from
investing
activities (717,349) 189,171 (22,742) (105,250) (89,799) (36,022)
Net cash generated
from/(used in)
financing
activities 20,908 (188,557) (174,836) (92,876) (13,683) (8,682)
Net (decrease)/
increase in cash
and cash
equivalents (83,048) (31,334) (18,629) (44,208) 52,376 141,307
SUMMARY
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For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash and cash
equivalents at
the beginning of
the year/period 305,394 222,347 191,015 172,386 172,386 128,178
Effects of
exchange rate
changes on cash
and cash
equivalents 12–– ––
Cash and cash
equivalents at
the end of the
year/period 222,347 191,015 172,386 128,178 224,762 269,485
In 2020, we recorded net operating cash outflow of RMB31.9 million, primarily due to
our loss before income tax of RMB1,171.5 million as adjusted by (i) positive movement of
operating cash flow before movements in working capital which was mainly comprised
impairment of non-financial assets of RMB414.0 million and share-based compensation
expenses of RMB210.9 million, and (ii) changes in working capital that positively affected
cash flow such as (a) decrease in trade receivables of RMB147.1 million, primarily due to trade
receivables in connection with sales of vending machines being gradually settled and the
decrease in number of vending machines sold as a result of the development of our partner
model, and decrease in demand for advertising and system support services as a result of the
COVID-19 outbreak, (b) a decrease in prepayments and deposits and other receivables of
RMB80.7 million, primarily due to decrease in prepayments for POSs expenses.
For a more detailed cash flow analysis, see “Financial Information — Liquidity and
Capital Resources — Cash Flows.”
BUSINESS SUSTAINABILITY
We had retained earnings of RMB54.2 million and RMB99.3 million as of January 1,
2019 (i.e. the beginning of the Track Record Period) and December 31, 2019, respectively. We
incurred net losses of RMB1,184.2 million, RMB188.2 million, RMB283.1 million and
RMB147.4 million in 2020, 2021, 2022 and the six months ended June 30, 2023, respectively.
As a result, we had accumulated losses of RMB1,073.2 million, RMB1,258.2 million,
RMB1,542.7 million and RMB1,695.2 million as of December 31, 2020, 2021, 2022 and June
30, 2023, respectively. We also experienced negative operating cash flow in 2020.
SUMMARY
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We incurred a net loss of RMB1,184.2 million in 2020, primarily due to (i) a decrease in
revenue from each of our business lines, primarily attributable to (a) the decrease in revenue
from our unmanned retail business primarily due to the significant decrease in overall outdoor
consumer traffic as a result of COVID-19 leading to a decrease in monthly average GMV per
POS despite the increase in average monthly number of POSs, and (b) the decrease in revenue
from our advertising and system support services primarily due to the decrease in demand for
such services from advertisers and their budgets and expenditures owing to the decrease in
outdoor consumer traffic in light of COVID-19, while we incurred POS operation and
development expenses when maintaining our Ubox POS network and other operating expenses,
(ii) an increase in general and administrative expenses, which was mainly attributable to (a)
share-based payments in relation to share incentives granted to management and core
employees in 2020 and (b) impairment loss of goodwill as the COVID-19 outbreak negatively
affected the business and expansion of our freshly brewed beverage vending machine business
and karaoke booth service business, and (iii) an increase in impairment loss of inventories,
property and equipment and right-of-use assets, primarily attributable to non-core types of
machines such as karaoke booths and orange juice machines and coconut juice machines as a
result of the negative impacts of COVID-19. For similar reasons, we incurred a net operating
cash outflow of RMB31.9 million in 2020.
During a partial recovery from COVID-19, we experienced a significant increase in our
revenue from RMB1,902.0 million in 2020 to RMB2,676.2 million in 2021, mainly attributable
to the increase in revenue from our unmanned retail business as a result of partial resumption
of outdoor consumer traffic. Accordingly, our net loss narrowed significantly from
RMB1,184.2 million in 2020 to RMB188.2 million in 2021, primarily due to (i) a significant
increase in revenue from unmanned retail business and others segment, which also led to the
increase of our gross profit by 97.1% from RMB558.6 million in 2020 to RMB1,101.1 million
in 2021 and (ii) the decrease in selling and marketing expenses and general and administrative
expenses. Our operating cash flow also improved from a net operating cash outflow of
RMB31.9 million in 2020 to a net operating cash inflow of RMB178.9 million in 2021.
Notwithstanding the aforesaid improvements, we incurred a loss in 2021 and our accumulated
loss increased primarily because average monthly GMV per POS for unmanned retail business,
and our revenue and gross profit margin from advertising and system support services, had not
recovered to pre-COVID-19 levels in 2019 as business activities and general market sentiment
recovered only to a limited extent from the impacts from COVID-19.
We incurred a net loss of RMB283.1 million in 2022, primarily due to (i) an increase in
selling and marketing expenses incurred, in terms of both absolute amount and a percentage of
our total revenue, primarily due to an increase in depreciation of our machines, logistics and
transportation expenses and employee benefit expenses in relation to the expansion and
optimization of our POS network, and (ii) a decrease in revenue and, in turn our gross profit,
mainly from (a) a decrease in revenue from our others segment primarily because the
downstream mobile device retail market and the demand for our mobile device distribution
services were negatively affected by macro-economic conditions and consumer demand in
2022, and (b) a decrease in revenue from advertising and system support services primarily due
to the decrease in consumer traffic as a result of the negative impact of COVID-19, which was
partially offset by (c) an increase of RMB91.3 million in revenue from our merchandise
wholesale as a result of the initiation of our shared warehouse initiative since the second half
SUMMARY
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of 2021 and (d) an increase in revenue from our unmanned retail business primarily due to the
expansion and optimization of our POS network. Specifically, the monthly average number of
Ubox POSs in 2022 increased as compared to that of 2021 (despite the decrease in number of
Ubox POSs from 85,139 to 66,232 as of December 31, 2021 and 2022, respectively, mainly due
to the regional resurgence of COVID-19 in mainland China which significantly affected
consumer traffic in certain scenarios, especially restaurants).
Our net loss increased from RMB128.4 million for the six months ended June 30, 2022
to RMB147.4 million for the same period in 2023. Such increase was primarily due to the
increase in general and administrative expenses mainly attributable to an increase in
share-based payments recognized in 2023 in relation to share incentives granted to our
employees. Nevertheless, our net cash generated from operating activities increased by 19.3%
from RMB155.9 million for the six months ended June 30, 2022 to RMB186.0 million for the
same period in 2023.
We have adopted various measures to better manage our costs and expenses, including
leveraging our data-driven inventory and operation system to lower procurement costs of
merchandise, leveraging shared warehouses and further digitalizing and automating our
operations to lower operating expenses. Nevertheless, we may still incur net losses and net
operating cash outflow in the near future as the recovery of the economy from the negative
impacts of COVID-19 is expected to be a gradual process especially in light of current
macro-economic conditions.
We had operated profitably prior to the COVID-19 outbreak and intend to re-achieve
profitability primarily by (i) further expanding our POS network especially under the partner
model by increasing the density of our POSs with a strategic focus on tier one and tier two
cities in the PRC, which will enable us to manage our logistics and operational costs more
efficiently and to better benefit from economies of scale, (ii) further developing our advertising
and system support services alongside the expansion of our POS network, and (iii) effectively
managing our costs and expenses and improving our operating leverage as, other than
share-based payments and certain impairment losses incurred in certain periods during the
Track Record Period, a majority of our general and administrative expenses are relatively fixed
or increasing at a slower pace compared to our business scale, which will enable us to benefit
from economies of scale and our business expansion.
Since December 2022, the PRC government has relaxed its zero-COVID policy, including
removing mass testing and central quarantine requirements and lifting travel restrictions. Many
regions were facing a surge in cases following such relaxation until early February 2023.
Driven by the pivot in COVID-19 policies and the early Chinese New Y ear holiday season,
many offline business operations and consumer traffic across mainland China have started to
recover. Performance at many of our POSs has also started to normalize and improve in 2023.
As a result, we witnessed an increase in average monthly GMV of our vending machines from
RMB2,700 per machine per month in 2022 to RMB2,992 per machine per month for the six
months ended June 30, 2023 and our revenue increased by 9.6% from RMB1,143.1 million for
the six months ended June 30, 2022 to RMB1,252.7 million for the same period in 2023. For
further details, see “— Impact of COVID-19” below.
SUMMARY
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Based on the foregoing and further details set forth in “Financial Information — Business
Sustainability”, our Directors believe, and the Joint Sponsors concur, that our Group’s business
is sustainable in the long run. Assuming that the negative effects of COVID-19 will be
gradually alleviated following the relaxation and overall consumer traffic will recover to the
pre-COVID-19 level in the foreseeable future, we expect to remain loss-making in 2023 but
achieve a turnaround in 2025. For details, see “Financial Information — Business
Sustainability.”
Working Capital Sufficiency
Our Directors are of the opinion that we possess sufficient working capital, including
sufficient cash and liquidity assets, and for at least the next 12 months from the date of this
prospectus, taking into account RMB269.5 million of cash and cash equivalents on hand as of
June 30, 2023, internally generated funds, RMB411.0 million of unutilized banking facilities
as of the Latest Practicable Date and HK$155.9 million of estimated net proceeds from the
Global Offering, assuming an Offer Price of HK$10.40 per Offer Share, being the mid-point
of the Offer Price range of HK$9.40 to HK$11.40 per Offer Share. In addition, as evidenced
by our Pre-IPO Investments and other historical fund-raising activities, we have a good track
record in being able to raise funds from renowned investors to finance our business growth and
expansion. See “History and Development — Pre-IPO Investments.” We believe that the
Global Offering and other potential external financing sources, including those to which we
will gain access after Listing, will provide additional funding for our business expansion
operations.
KEY FINANCIAL RATIOS
The following table sets forth our key financial ratios for the periods or as of the dates
indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
(unaudited)
Gross profit margin 48.7% 29.4% 41.1% 42.7% 44.6% 41.3%
Net profit/(loss) margin 1.5% (62.3)% (7.0)% (11.2)% (11.2)% (11.8)%
Adjusted net
profit/(loss) margin
(non-HKFRS
measure) 1.5% (51.2)% (6.4)% (10.4)% (10.9)% (7.3)%
Adjusted EBITDA
margin
(non-HKFRS
measure) 11.7% (33.3)% 2.5% 0.8% 1.7% 3.5%
SUMMARY
–2 0–


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As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
Current ratio 2.4 1.7 1.3 1.0 1.0
Quick ratio 2.1 1.4 1.0 0.8 0.8
Gearing ratio
(1) 16.6% 22.4% 14.0% 12.9% 14.7%
Note:
(1) Gearing ratio is calculated using total debt divided by total equity and multiplied by 100%.
For details, see “Financial Information — Key Financial Ratios.”
OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
Immediately after the completion of the Global Offering (without taking into account the
Unlisted Shares which may be issued upon the exercise of the options which were granted
under the Pre-IPO Incentive Scheme), Mr. Wang and Mr. Chen (as parties acting in concert
pursuant to the Deeds of AIC) will collectively hold and control voting rights attached to
approximately 21.35% of our Company’s total number of issued Shares. Accordingly, Mr.
Wang and Mr. Chen will be our Single Largest Group of Shareholders upon Listing, and our
Company will not have any controlling shareholder as defined under the Listing Rules upon
Listing. See “Relationship with Our Single Largest Group of Shareholders.”
DELISTING OF OUR SHARES FROM NEEQ
Our Company was listed on the NEEQ on February 24, 2016. Having taken into account
our operation demands and long-term development plans, and having already received a few
rounds of funding from certain investors on the NEEQ, the listing of our Shares on the NEEQ
no longer satisfied the then financing needs of our Company. As such, considering the reasons
as set out in “History and Development — Previous Listing on the NEEQ, Previous Listing
Plan and Proposed Merger Arrangement — Reasons for Seeking Listing on the Stock
Exchange” for seeking listing on the Stock Exchange, our Shareholders resolved to voluntarily
delist our Shares from the NEEQ. Our Company applied for the delisting on January 11, 2019
and the delisting was completed on March 12, 2019. See “History and Development —
Previous Listing on the NEEQ, Previous Listing Plan and Proposed Merger Arrangement —
Listing and Delisting in Relation to the NEEQ.”
SUMMARY
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PRE-IPO INVESTMENTS
Pre-IPO Investments in our Company were undertaken by each of Shanghai Y unxin,
Chunhua Rongshun, Mr. Xu Ge, Mr. Xiao Lin, Gongqingcheng Changyou, Guoxin Energy
Fund and Qingdao Haier, as our Pre-IPO Investors. For details of the background of the
Pre-IPO Investors and the principal terms of the Pre-IPO Investments, see “History and
Development — Pre-IPO Investments.”
PREVIOUS LISTING PLAN AND PROPOSED MERGER ARRANGEMENT
In December 2016, our Company planned to apply for listing on the Shenzhen Stock
Exchange. However, as we decided to focus our resources on the listing on the Stock Exchange,
we did not proceed with our listing plan.
In July 2017, our Single Largest Group of Shareholders entered into an absorption and
merger framework agreement with New Huadu Supercenter Co., Ltd. (“ New Huadu ”), a
company listed on the Shenzhen Stock Exchange (stock code: 002264), pursuant to which our
Company would be merged into and absorbed by New Huadu in consideration of New Huadu
issuing A shares to our then Shareholders. Nonetheless, the agreement was subsequently
terminated in August 2017.
For further details, see “History and Development — Previous Listing on the NEEQ,
Previous Listing Plan and Proposed Merger Arrangement — Previous Listing Plan and
Proposed Merger Arrangement.”
LEGAL COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, we did not have
any non-compliance incidents which our Directors believe would, individually or in the
aggregate, have a material operational or financial impact on our business as a whole. See
“Business — Legal Proceedings and Compliance” for details.
RECENT DEVELOPMENT
In light of the uncertainties in our operating environment, including regional resurgences
of COVID-19 in mainland China and the government’s subsequent relaxation of its COVID-19
policies in December 2022, we continued optimizing the layout of our POS network. Overall
offline business operations and consumer traffic across mainland China have started to recover
following the relaxation of COVID-19 policies. As a result, the average monthly GMV of our
vending machines increased from RMB2,700 per machine per month in 2022 to RMB2,992 per
machine per month for the six months ended June 30, 2023, and our revenue increased by 9.6%
from RMB1,143.1 million for the six months ended June 30, 2022 to RMB1,252.7 million for
the same period in 2023. In addition, monthly average GMV per POS in July and August 2023
increased by approximately 12.1% and 1.4%, respectively, as compared to the same months in
2022. As a result, revenue from our unmanned retail business for the eight months ended
SUMMARY
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August 31, 2023 has exceeded that of the same period in 2022. Nevertheless, we expect to
remain loss-making in 2023 as the recovery of the economy and overall consumer traffic from
the negative impacts of COVID-19 is expected to be a gradual process. For details, see
“Financial Information — Business Sustainability.”
Impact of COVID-19
The COVID-19 pandemic disrupted the normal life and daily routine of the world
population and restrictive measures were introduced by governments to curb the outbreak. Due
to social distancing, lock-down, temporary shut-down and other disruptions, the COVID-19
pandemic has significantly impacted our business. To protect the health and well-being of our
employees in support of efforts to control the spread of the COVID-19 outbreak, we closed, or
reduced, working hours at our headquarters and offices and made remote working
arrangements in early 2020. Our headquarters and offices had been reopened in an orderly
manner by February 2020. The emergence of COVID-19 in mainland China has also adversely
impacted the operations at our POSs because a number of public venues where our vending
machines were located were required to be closed and consumer traffic and sales activities
were adversely affected. For the two months of February and March 2020, approximately
27.9% of our Ubox POSs as of March 31, 2020 did not generate any sales, and our Non-Ubox
POSs also experienced similar disruptions of varying degrees depending on their locations. In
addition, the operations of our internal logistics functions and our logistics and transportation
service providers were also negatively impacted, thereby affecting restocking of our machines.
Moreover, due to closure of public venues and reduced consumer traffic, demand for our
advertising and system support services and sales and leases of machines also decreased.
Furthermore, during the outbreak of COVID-19 in mainland China, many of our karaoke
booths, especially those located in shopping malls, were shut down since early 2020 until
October 2020. As a result, our total revenue decreased by 30.3% from RMB2,727.5 million in
2019 to RMB1,902.0 million in 2020, and we recorded a loss of RMB1,184.2 million in 2020.
Following a partial recovery from COVID-19 in 2021, although we recorded a loss of
RMB188.2 million in 2021, our adjusted net loss (non-HKFRS measure) decreased from
RMB973.3 million in 2020 to RMB170.3 million in 2021 and our adjusted EBITDA
(non-HKFRS measure) improved from negative RMB634.0 million in 2020 to positive
RMB66.6 million in 2021. In addition, our operating cash flow improved from net cash used
in operating activities of RMB31.9 million in 2020 to net cash generated from operating
activities of RMB178.9 million in 2021.
In 2022, primarily related to the Delta and Omicron variants, COVID-19 resurged in
various locations in mainland China, with particularly stringent counter-resurgence measures
being taken in certain regions, including but not limited to, Beijing and Shanghai, resulting in
closure of, and reduced consumer traffic and sales activities at, public venues where our
vending machines are placed. Due to the resurgence and control measures, including the
lock-down of Shanghai, approximately 40.0% of our Ubox POSs as of December 31, 2022 (not
taking into account the sales of POSs located in schools in July and August as they generally
have limited or no sales during summer holiday) did not generate any sales for at least 60 days
SUMMARY
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in 2022. In addition, our POSs located at restaurants were also severely affected as the regional
resurgences of COVID-19 in mainland China had a negative impact on the catering industry in
mainland China. Similarly, Non-Ubox POSs also experienced disruptions of varying degrees
depending on their locations. Moreover, revenue from our mobile device distribution services
under our others segment decreased in 2022 as the downstream mobile device retail market and
the demand for our mobile device distribution services were negatively affected by macro-
economic conditions and consumer demand during the same year. As a result, our revenue
decreased by 5.9% from RMB2,676.2 million in 2021 to RMB2,519.2 million in 2022.
We took a series of actions to mitigate the impact of COVID-19 on us. For example, we
set up mandatory screening at the entrance of our offices and premises, checked health code
(਄ੰᇁ) and travel code ( Б೻ᇁ) of our employees and visitors from 2020 to 2022, and
complied with the guidelines of health authorities if any of our employees show infection
symptoms. During the Track Record Period, we also shifted our marketing efforts to the partner
model by engaging more POS partners for our unmanned retail business with an aim to
stabilize profit margin and alleviate the impact of interruption. Our POS partners under the
partner model, while typically entitled to a share of the POSs’ transaction GMV (subject to
deduction of their responsible costs and expenses), are responsible for sourcing potential sites
and bear the costs for developing POSs, occupancy fees and utility costs. As such, we are
insulated, to a certain extent and as compared to the direct operation model, from the risk that
revenue from POSs is insufficient to cover such costs and expenses, especially in light of the
negative impact of COVID-19. To this end, during the period when our POSs operation was
heavily impacted by COVID-19, we believe our POS partners, who maintained their POSs on
site and bore the costs of developing POSs and occupancy fees, were motivated to actively
negotiate with the site owners on the occupancy fees to better manage their costs and expenses
associated with the POS sites. The partner model therefore helped make us more resilient to the
uncertainties of overall business environment. In addition, we have become less susceptible, in
terms of sourcing and developing potential POSs, to travel restrictions and quarantine measures
by collaborating with a larger number of POS partners located across the country, instead of
relying on a small number of internal marketing staff. See “Business — Our POS Network” for
details. Moreover, our vending machines offer consumers with contactless purchase. With no
human interaction required in the process, unmanned retail also represents a safer and more
hygienic way of purchasing, which helps it gain an advantage at the time of the COVID-19
pandemic. According to Frost & Sullivan, in light of the fact that various social distancing
measures being implemented in China are increasingly being regarded as normative behavior
that guides consumers’ daily activities, consumers are becoming increasingly adapted to
unmanned retail which offers a contactless and time-saving shopping experience, where
consumers may keep social distance and avoid spending time in crowded places. Consumers
have also gradually embraced a variety of digital technologies, such as biometric
authentication payment, that facilitate unmanned retail. Furthermore, we have entered into
cooperation with a number of our customers, including merchandise wholesale customers as
part of our shared warehouse initiative, under which we would share our warehouses with each
other or we jointly establish new warehouses to save rental costs. In certain cases, we were able
to leverage our customers’ warehouses to shorten the re-stocking distance for our POSs. In
SUMMARY
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addition, we also expanded our POS partner recruitment channels to include online recruitment
with a view to attracting POS partners from different industries, and actively discussed and
negotiated with site owners for rent deduction.
In general, our Directors are of the view that, as our business operations strongly rely on
stable offline consumer traffic, the COVID-19 pandemic and the emergence of new COVID-19
variants which led to regional resurgences and certain pandemic control measures such as
travel restrictions, mass testing and lockdowns, have had temporary adverse impact on our
business operations and financial performance. Nevertheless, partially due to our promotion of
the partner model, our business demonstrated resilience against the pandemic as evidenced by
the significant increase in revenue by 40.7% from RMB1,902.0 million in 2020 to RMB2,676.2
million in 2021, approximately 98% of our revenue in 2019 before the outbreak of COVID-19.
Since December 2022, the PRC government has relaxed its zero-COVID policy, including
removing mass testing and central quarantine requirements and lifting travel restrictions. Many
regions were facing a surge in cases following such relaxation until early February 2023. We
also implemented various measures in light of such relaxation and surge in cases to mitigate
their impact on our business operations:
– we adjusted our procurement plans and placed order in advance to avoid potential
disruption to supply chains caused by the recent surge in cases;
– we flexibly adjusted work arrangement of our employees and adopted shifts to
ensure that we could maintain sufficient number of employees to maintain our daily
operation and, especially, to avoid logistics and transportation paralysis; and
– we increased supply and replenishment of merchandise in our vending machines that
are currently in strong demand, such as electrolyte beverages and drinks that contain
Vitamin C.
Driven by the pivot in COVID-19 policies and the early Chinese New Y ear holiday
season, many offline business operations and consumer traffic across mainland China have
started to recover in 2023. According to government statistics, railways, highways, waterways,
and civil aviation in mainland China transported a total of 226 million passengers during the
seven-day Chinese New Y ear holiday in early 2023, representing an increase of over 70%
year-on-year over the same period in 2022. Performance of our POSs at many transportation
hubs and public venues also experienced improvement. For instance, for our POSs at airports
that were in operation in both January 2022 and January 2023, transaction GMV increased by
approximately 23.0% from January 2022 to January 2023. Following the end of the Chinese
New Y ear holiday, consumer traffic at and performance of our POSs at other consumption
scenarios, such as schools, factories and office premises started to normalize and improve in
2023. As a result, transaction GMV of Ubox POSs and our revenue from unmanned retail
increased by approximately 10.4% and 8.0%, respectively, from the six months ended June 30,
2022 to the same period in 2023. According to Frost & Sullivan, as people move more
frequently and economic activities resume, the demand for and consumption of consumer
goods are expected to recover in 2023. Our Directors believe that our business operations and
SUMMARY
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--- page 36 ---
financial performance will steadily improve following the change in COVID-19 policies as
well as the improvement in consumer sentiment and overall business environment. For further
details of risks associated with COVID-19, see “Risk Factors — Risks Relating to Our
Business and Industry — We face risks related to natural disasters, epidemics and other public
health emergencies, which could significantly disrupt our operations and financial condition.”
Recent Regulatory Development
Regulations Relating to Information Security and Privacy Protection
On November 14, 2021, the CAC released the Administration Governing the Cyber Data
Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋจԈᇃ)) (the “ Draft Cyber
Data Security Regulations ”), and accepted public comments until December 13, 2021. The
Draft Cyber Data Security Regulations define data processors as individuals or organizations
that autonomously determine the purpose and the manner of processing data. If a data processor
who is in possession of personal data of more than one million users would like to listing in
a foreign country, it shall apply for a cybersecurity review according to the Draft Cyber Data
Security Regulations. Besides, data processors that are listed overseas shall carry out annual
data security assessment. Public consultation for the Draft Cyber Data Security Regulations
ended on December 13, 2021. The final version and effective date of such regulations are
subject to change with substantial uncertainty.
On December 28, 2021, the CAC and certain other regulatory authorities in mainland
China published the Measures for Cybersecurity Review (), which
reiterates and expands the applicable scope of the cybersecurity review. Pursuant to the new
measures, critical information infrastructure operators that purchase network products and
services and network platform operators engaging in data processing activities that affect or
may affect national security must be subject to the cybersecurity review. A network platform
operator that has personal information of more than one million users must apply for a
cybersecurity review when it seeks to list in a foreign country.
On April 20, 2022, our PRC Legal Advisor conducted a phone consultation with the China
Cybersecurity Review Technology and Certification Center (ҦஔၾႩᗇʕ
ː) (the “ CCRC ”), which is a competent authority according to our PRC Legal Advisor. The
CCRC confirmed that (i) the Company is not required to apply for cybersecurity review for the
proposed Listing in Hong Kong; and (ii) the Company is not bound by the requirements on
cybersecurity review for Hong Kong listing under the Draft Cyber Data Security Regulations
as such regulations have not come into effect. The CCRC also confirmed that the Company is
not required to notify the CAC of its proposed listing in Hong Kong because (i) the Company’s
current application for listing in Hong Kong is not listing in a foreign country, and (ii) the Draft
Cyber Data Security Regulations, which requires data processors to apply for cybersecurity
review if its listing in Hong Kong will affect or may affect national security, have not taken
into effect, and such requirement is not included in the Measures for Cybersecurity Review.
SUMMARY
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The Directors and our PRC Legal Advisor are of the view that the Measures for
Cybersecurity Review and the Draft Cyber Data Security Regulations (if implemented in
current forms) would not have a material adverse impact on our Group’s business operations
or our Company’s proposed Listing in Hong Kong. Based on the Directors’ and PRC Legal
Advisor’s view above, nothing has come to the Joint Sponsors’ attention that would cast a
doubt on or cause the Joint Sponsors to disagree with such view. We will closely monitor the
legislative and regulatory development in connection with cybersecurity and data protection
and will adjust and enhance data practices in a timely manner to ensure compliance with all
applicable laws and regulations.
On July 7, 2022, the CAC promulgated the Measures on Security Assessment of
Cross-border Data Transfer () (the “ Data Export Measures ”),
which became effective on September 1, 2022. The Data Export Measures stipulates that any
data processor who processes or exports personal information exceeding a certain volume
threshold shall apply for a security assessment by the CAC before transferring any personal
information abroad. The security assessment requirement also applies to any transfer of
important data outside of mainland China. See “Regulatory Overview — Regulations Relating
to Information Security and Privacy Protection” for more details. As of the Latest Practicable
Date, (i) we had not received any notification from relevant regulatory authorities identifying
us as a critical information infrastructure operator, (ii) the identification of important data and
the implementation are still subject to elaboration by relevant government authorities, and (iii)
the data collected and generated in our daily business operation are kept within mainland China
and not transmitted overseas. Therefore, our Directors and our PRC Legal Advisor are of the
view that the Measures on Security Assessment of Cross-border Data Transfer do not apply to
us.
For further details, see “Regulatory Overview — Regulations Relating to Information
Security and Privacy Protection” and “Risk Factors — Risks Relating to Legal, Compliance
and Regulatory Matters — Any failure to protect our customer data, or the improper collection,
use or disclosure of such data, as well as the uncertainties surrounding the cybersecurity review
may subject us to the liabilities imposed by data privacy and protection laws and regulations,
which may negatively impact our reputation and business.”
Regulations Relating to Overseas Listing
On February 17, 2023, the CSRC promulgated the Trial Measures for Administration of
the Overseas Securities Offering and Listing by Domestic Enterprises ( ྤʫΆุྤ̮೯Бᗇ
) (the “ Trial Measures ”) and five supporting guidelines, which took
effect on March 31, 2023. The Trial Measures comprehensively improve and reform the
existing regulatory regime for overseas offering and listing of securities of mainland
China-based companies and regulate both direct and indirect overseas offering and listing of
securities of mainland China-based companies by adopting a filing-based regulatory regime.
SUMMARY
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According to the Trial Measures, a domestic company seeking direct overseas offering
and listing shall file with the CSRC, submit the filing report, legal opinions and other relevant
materials as required under the Trial Measures, and state the shareholders’ information and
other matters in a truthful, accurate and complete manner. Where a domestic company submits
an application for initial public offering to the competent overseas regulators, such domestic
company shall file with the CSRC within three business days after such application is
submitted. The Trial Measures also require subsequent reports to be filed with the CSRC on
material events, such as a change of control event, or voluntary or forced delisting of the issuer
who has completed the overseas offering and listing. If the issuer fails to complete the filing
procedure, conceals any material fact or falsifies any major content in its filing documents, it
may be subject to administrative penalties, such as order to rectify, warnings, fines, and its
controlling shareholders, actual controllers, the person directly in charge and other directly
liable persons may also be subject to administrative penalties, such as warnings and fines.
However, since the Trial Measures were newly promulgated, the interpretation, application and
enforcement of the Trial Measures remain unclear.
Being a domestic company seeking direct overseas offering and listing, we are required
to file with the CSRC the filing report, legal opinions and other relevant materials in
accordance with the Trial Measures. The Company’s filing documents for the Listing has been
received by the CSRC on April 20, 2023. Our Directors, after having consulted with the PRC
Legal Advisor, believe that the Company does not fall within any of the circumstances in which
an issuer is expressly prohibited from seeking listing or conducting securities dealing overseas
under Article 8 of the Trial Measures. The CSRC published the notification on completion of
the filing procedures on July 3, 2023 for the Global Offering and the Conversion of Unlisted
Shares into H Shares and the making of the application to list our H Shares on the Hong Kong
Stock Exchange. We have taken, and will take, comprehensive steps to ensure our compliance
with the requirements of the Trial Measures, and will continue to monitor the developments in
the interpretation and implementation of the Trial Measures as well as any other legislative and
regulatory developments in respect of overseas listing of domestic companies. Any failure to
do so may limit our ability to complete the Listing, which could have a material adverse effect
on our business and financial conditions.
On February 24, 2023, the CSRC, jointly with other relevant governmental authorities,
promulgated the Provisions on Strengthening Confidentiality and Archives Management of
Overseas Securities Issuance and Listing by Domestic Enterprises (̋੶ྤʫΆุྤ̮
) (the “ Confidentiality and Archives
Management Provisions ”), which took effect on March 31, 2023. The Confidentiality and
Archives Management Provisions outline obligations of issuers listed in overseas markets with
operations in mainland China when they provide information involving state secrets or
sensitive information to their securities service providers (such as auditors) and overseas
regulators. In addition, under the Confidentiality and Archives Management Provisions, such
issuers will also be required to obtain approval from the CSRC and other authorities in
mainland China before accepting any investigation or inspection by overseas regulators. As the
SUMMARY
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Confidentiality and Archives Management Provisions were recently promulgated, there are
uncertainties with respect to their interpretation and implementation. For further details, see
“Regulatory Overview — Regulations Relating to Overseas Listing.”
No Material Adverse Change
Our Directors confirm that, as of the date of this prospectus, there has been no material
adverse change in our financial and trading positions or prospects since June 30, 2023, being
the end of the period reported on in the Accountant’s Report as set out in Appendix I.
DIVIDENDS
We do not currently have a fixed dividend policy and may declare dividends from time
to time as our Board considers appropriate in compliance with our Articles of Association and
the applicable laws and regulations. As confirmed by our PRC Legal Advisor, according to
relevant PRC Law, we cannot pay any dividends considering our accumulated loss position. No
dividends were paid to the shareholders of the Company during the Track Record Period.
GLOBAL OFFERING STATISTICS
Based on the Offer
Price of HK$9.40
per Share
Based on an Offer
Price of HK$11.40
per Share
Market capitalization of our Shares
(1) HK$7,330.5 million HK$8,890.1 million
Market capitalization of our
H Shares (2) HK$5,986.1 million HK$7,259.7 million
Unaudited pro forma adjusted
consolidated net tangible asset
value per Share
(3) HK$1.33 HK$1.38
Notes:
1. The calculation of the market capitalization of our Shares is based on the assumption that 779,835,433 Shares
will be in issue immediately upon completion of the Global Offering.
2. The calculation of the market capitalization of our H Shares is based on the assumption that 636,815,809
H Shares will be in issue immediately upon completion of the Global Offering, comprising 22,576,500 H
Shares to be issued pursuant to the Global Offering, 614,039,309 H shares to be converted from Unlisted
Shares.
3. The unaudited pro forma adjusted consolidated net tangible assets per Share is calculated after making the
adjustments referred to in the section headed “Appendix II – Unaudited Pro Forma Financial Information” in
this prospectus.
SUMMARY
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LISTING EXPENSES
The listing expenses in connection with the Global Offering are estimated to be RMB72.4
million (including underwriting-related expenses of approximately RMB8.6 million, and
non-underwriting related expenses of approximately RMB63.8 million, which consists of fees
and expenses of legal advisors and accountant of approximately RMB50.6 million and other
fees and expenses of approximately RMB13.2 million, based on an Offer Price of HK$10.40
per Offer Share, being the mid-point of the proposed Offer Price range), representing 33.6%
of the gross proceeds from the Global Offering of RMB215.7 million based on the Offer Price
of HK$10.40 per Share, being the mid-point of the proposed Offer Price range. During the
Track Record Period, we incurred listing expenses of RMB46.4 million, of which RMB45.1
million was recognized in the consolidated statement of comprehensive income and RMB1.3
million was recognized as prepayments in the consolidated statement of financial position
which will be accounted for as a deduction from equity upon Listing. Subsequent to the Track
Record Period, we expect to further incur listing expenses of RMB26.0 million prior to and
upon completion of the Global Offering, of which (i) RMB22.4 million is expected to be
recognized as expenses in our consolidated statement of comprehensive income; and (ii)
RMB3.6 million is expected to be accounted for as a deduction from equity upon Listing under
the relevant accounting standard.
FUTURE PLANS AND USE OF PROCEEDS
Assuming an Offer Price of HK$10.40 per Offer Share, being the mid-point of the Offer
Price range of HK$9.40 to HK$11.40 per Offer Share, we estimate that we will receive net
proceeds from the Global Offering of approximately HK$155.9 million (after deducting the
underwriting commissions and other estimated expenses paid and payable by us in relation to
the Global Offering). We intend to use the net proceeds from the Global Offering for the
purposes and in the amounts set forth below:
 approximately 80.0%, or HK$124.8 million, for expanding the coverage and
penetration of our POS network in tier one, new tier one, tier two and tier three cities
in mainland China;
 approximately 5.0%, or HK$7.8 million, for further developing our operation
capabilities and enhancing our warehouse inventory management capabilities by
building or upgrading our warehouses and/or logistics systems across mainland
China;
 approximately 7.0%, or HK$10.8 million, for enhancing our technologies in our
operation systems and vending machines through hardware upgrade, software
enhancement and recruitment of talents; and
 approximately 8.0%, or HK$12.5 million, for working capital and other general
corporate purposes.
See “Future Plans and Use of Proceeds.”
SUMMARY
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APPLICATION FOR LISTING ON THE HONG KONG STOCK EXCHANGE
We have applied to the Hong Kong Stock Exchange for the Listing pursuant to the market
capitalization/revenue test under Rule 8.05(3) of the Listing Rules.
We satisfy the market capitalization/revenue test under Rule 8.05(3) of the Listing Rules
with reference to (i) our revenue for the year ended December 31, 2022, being approximately
RMB2.52 billion (equivalent to approximately HK$2.89 billion), which is over HK$500
million; and (ii) our expected market capitalization at the time of Listing, which, based on the
low-end of the indicative Offer Price range of HK$9.40 per Share, exceeds HK$4 billion.
SUMMARY
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In this prospectus, unless the context otherwise requires, the following terms shall
have the meanings set out below.
“2020 Incentive Scheme” our share incentive scheme adopted in 2020, the details
of which are set out in “History and Development —
2020 Incentive Scheme and Pre-IPO Incentive Scheme”
“affiliate” any other person, directly or indirectly, controlling or
controlled by or under direct or indirect common control
with such specified person
“AFRC” Accounting and Financial Reporting Council of Hong
Kong
“Ant Group” Ant Group Co., Ltd. (ʮ̡)
“Articles” or “Articles
of Association”
the Articles of Association of our Company (as amended
from time to time), adopted on April 3, 2023, which will
become effective upon the Listing Date, a summary of
which is set out in Appendix III
“Beijing Beiguo” Beijing Beiguo Y oubang Electronics Co., Ltd. ( ̏ԯ̏਷
ʮ̡), a limited liability company
established in the PRC on September 28, 2012, a wholly-
owned subsidiary of our Company
“Beijing Taihe” Beijing Taihe Ruitong Cloud Business Technology Co.,
Ltd. (ʮ̡), a limited
liability company established in the PRC on January 16,
2014, a wholly-owned subsidiary of our Company
“Beijing Y oubaokesi” Beijing Y oubaokesi Trading Co., Ltd. (൱
ʮ̡), a limited liability company established in the
PRC on January 20, 2011 and became a member of our
Group by virtue of contractual arrangement in May 2012,
which is no longer a member of our Group since June
2021
“Board” the board of directors of our Company
“business day” any day (other than a Saturday, Sunday or public holiday)
on which banks in Hong Kong are generally open for
normal banking business to the public
DEFINITIONS
–3 2–


--- page 43 ---
“BVI” the British Virgin Islands
“CAC” the Cyber Space Administration of China ( ʕശɛ͏΍ձ
܃)
Capital Market Intermediaries” the Overall Coordinators, the Joint Global Coordinators,
the Joint Bookrunners, the Joint Lead Managers, the
Underwriters and other capital market intermediaries
(within the meaning ascribed thereto under the Listing
Rules) participating in the Global Offering
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“CCASS Clearing Participant” a person admitted to participate in CCASS as a direct
clearing participant or general clearing participant
“CCASS Custodian Participant” a person admitted to participate in CCASS as a custodian
participant
“CCASS EIPO ” the application for the Hong Kong Offer Shares to be
issued in the name of HKSCC Nominees and deposited
directly into CCASS to be credited to your or a
designated CCASS Participant’s stock account through
causing HKSCC Nominees to apply on your behalf,
including by (i) instructing your broker or custodian
who is a CCASS Clearing Participant or a CCASS
Custodian Participant to give electronic application
instructions via CCASS terminals to apply for the Hong
Kong Offer Shares on your behalf, or (ii) if you are an
existing CCASS Investor Participant, giving electronic
application instructions through the CCASS Internet
System ( https://ip.ccass.com ) or through the CCASS
Phone System (using the procedures in HKSCC’s “An
Operating Guide for Investor Participants” in effect from
time to time). HKSCC can also input electronic
application instructions for CCASS Investor
Participants through HKSCC’s Customer Service Centre
by completing an input request
“CCASS Investor Participant” a person admitted to participating in CCASS as an
investor participant who may be an individual or joint
individuals or a corporation
DEFINITIONS
–3 3–


--- page 44 ---
“CCASS Operational Procedures” the Operational Procedures of HKSCC in relation to
CCASS, containing the practices, procedures and
administrative requirements relating to operations and
functions of CCASS, as from time to time in force
“CCASS Participant” a CCASS Clearing Participant, a CCASS Custodian
Participant or a CCASS Investor Participant
“China”, “PRC” or “State” the People’s Republic of China
“Chunhua Rongshun” Chunhua Rongshun (Tianjin) Equity Investment Fund
(L.P .) (ശ࿲න(ݵ)ږ(ΥྫΆุ)), a
limited partnership established in the PRC on June 21,
2017 and one of our Pre-IPO Investors
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended or supplemented or otherwise
modified from time to time
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), as amended or supplemented or otherwise
modified from time to time
“Company”, “our Company” Beijing UBOX Online Technology Corp. ̏ԯʾᘒίᇞ
ʮ̡, a limited liability company
incorporated in the PRC on March 1, 2012 and converted
into a joint stock company with limited liability on
September 10, 2015
“Conversion of Unlisted Shares
into H Shares”
the conversion of 614,039,309 Unlisted Shares into
H Shares on a one-for-one basis upon the completion of
Global Offering. Such conversion of Unlisted Shares into
H Shares has been filed with the CSRC with the
notification issued by the CSRC on completion of the
filing procedures published on July 3, 2023 and an
application for H Shares to be listed on the Hong Kong
Stock Exchange has been made to the Hong Kong Stock
Exchange
“CSDC” China Securities Depository and Clearing Corporation
Limited
DEFINITIONS
–3 4–


--- page 45 ---
“CSDC (Hong Kong)” China Securities Depository and Clearing (Hong Kong)
Company Limited
“CSRC” the China Securities Regulatory Commission ( ʕ਷ᗇՎ
ึ)
“Deed of AIC” the deed of acting in concert dated October 16, 2023
entered into between Mr. Wang and Mr. Chen, the details
of which are set out in “History and Development” in this
prospectus
“Director(s)” the director(s) of our Company
“EIT” enterprise income tax
“EIT Law” the PRC Enterprise Income Tax Law ( ʕശɛ͏΍ձ਷
)
“Extreme Conditions” extreme conditions caused by a super typhoon, etc. as
announced by the government of Hong Kong
“First Renewal Deed of AIC” the deed of acting in concert dated July 18, 2019 entered
into between Mr. Wang and Mr. Chen, the details of
which are set out in “History and Development” in this
prospectus
“Founders” the founders of our Group, namely Mr. Wang (the
Chairman of our Board, chief executive officer, an
executive Director), Mr. Shen, Ms. Wu Songfeng (ؒ
ቜ), Mr. Lin Rong (࿲), Mr. Li Minghao (ख), Mr.
Huang Cinan (یand Ms. An Y ufang (ٹa
non-executive Director)
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., an
industry consultant
“Frost & Sullivan Report” the market research report on e-commerce market
prepared by Frost & Sullivan and commissioned by us
“Global Offering” the Hong Kong Public Offering and the International
Offering
DEFINITIONS
–3 5–


--- page 46 ---
“GREEN Application Form(s)” the application form(s) to be completed by the HK eIPO
White Form Service Provider designated by the
Company
“Gongqingcheng Changyou” Gongqingcheng Changyou Cultural Tourism Industry
Investment Partnership (L.P .) (ପุҳ༟
ΥྫΆุ(Υྫ)), a limited partnership established in
the PRC on December 20, 2019 and one of our Pre-IPO
Investors
“Group”, “our Group”, “we”,
“our” or “us”
our Company and our subsidiaries or, where the context
so requires, in respect of the period before our Company
became the holding company of our present subsidiaries,
the business operated by such subsidiaries or their
predecessors (as the case may be)
“Guangzhou Weiji” Guangzhou Weiji Trading Co., Ltd. (ࠢ
ʮ̡), a limited liability company established in the PRC
on January 20, 2012, a wholly-owned subsidiary of our
Company
“Guoxin Energy Fund” Guoxin Hongsheng (Zhuhai) Energy Industry Fund (L.P .)
(̾ସ(मऎ)ږ(Υྫ)), a limited
partnership established in the PRC on November 15,
2016 and one of our Pre-IPO Investors
“H Share(s)” overseas listed foreign Shares in the share capital of our
Company with a nominal value of RMB1.0 each, which
are to be traded in HK dollars and are to be listed on the
Hong Kong Stock Exchange
“H Share Registrar” Tricor Investor Services Limited
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the IPO App or the designated website at
www.hkeipo.hk
“HK eIPO White Form Service
Provider”
the HK eIPO White Form service provider designated
by our Company as specified in the IPO App or on the
designated website at www.hkeipo.hk
“HK$”, “Hong Kong dollars”,
“HK dollars” or “cents”
Hong Kong dollars and cents respectively, the lawful
currency of Hong Kong
DEFINITIONS
–3 6–


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“HKFRS” Hong Kong Financial Reporting Standards issued by the
Hong Kong Institute of Certified Public Accountants
“HKSCC” Hong Kong Securities Clearing Company Limited
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong Listing Rules” or
“Listing Rules”
the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited, as amended or
supplemented from time to time
“Hong Kong Offer Shares” the 2,258,000 H Shares being initially offered by our
Company for subscription pursuant to the Hong Kong
Public Offering (subject to reallocation as described in
“Structure of the Global Offering”)
“Hong Kong Public Offering” the offer of the Hong Kong Offer Shares for subscription
by the public in Hong Kong at the Offer Price on the
terms and conditions described in this prospectus and the
GREEN Application Form
“Hong Kong Stock Exchange” or
the “Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering listed
in “Underwriting — Hong Kong Underwriters”
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated October 19, 2023
relating to the Hong Kong Public Offering and entered
into by our Company, Mr. Wang, Mr. Chen, the Overall
Coordinators and the Hong Kong Underwriters
“IPO App ” the mobile application for the HK eIPO White
Form service which can be downloaded by
searching “ IPO App ” in App Store or Google Play
or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp
DEFINITIONS
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“Independent Third Party(ies)” person(s) or company(ies), who/which, to the best of our
Directors’ knowledge, information and belief, having
made all reasonable enquiries, is/are not our connected
persons
“International Offer Shares” the 20,318,500 H Shares being initially offered by our
Company for subscription at the Offer Price pursuant to
the International Offering (subject to reallocation as
described in “Structure of the Global Offering”)
“International Offering” the offer of the International Offer Shares by the
International Underwriters at the Offer Price outside the
United States in offshore transactions in accordance with
Regulation S, as further described in “Structure of the
Global Offering”
“International Underwriters” the group of underwriters that is expected to enter into
the International Underwriting Agreement to underwrite
the International Offering
“International Underwriting
Agreement”
the international underwriting agreement relating to the
International Offering, which is expected to be entered
into by the Overall Coordinators, the International
Underwriters, Mr. Wang, Mr. Chen and our Company on
or about the Price Determination Date
“Joint Bookrunners” Huatai Financial Holdings (Hong Kong) Limited, China
Securities (International) Corporate Finance Company
Limited, V aluable Capital Limited, ABCI Capital
Limited, CCB International Capital Limited, China
Galaxy International Securities (Hong Kong) Co.,
Limited, CMB International Capital Limited, ICBC
International Securities Limited and Livermore Holdings
Limited
“Joint Global Coordinators” Huatai Financial Holdings (Hong Kong) Limited, China
Securities (International) Corporate Finance Company
Limited and V aluable Capital Limited
DEFINITIONS
–3 8–


--- page 49 ---
“Joint Lead Managers” Huatai Financial Holdings (Hong Kong) Limited, China
Securities (International) Corporate Finance Company
Limited, V aluable Capital Limited, ABCI Securities
Company Limited, CCB International Capital Limited,
China Galaxy International Securities (Hong Kong) Co.,
Limited, CMB International Capital Limited, ICBC
International Securities Limited and Livermore Holdings
Limited
“Joint Sponsors” China Securities (International) Corporate Finance
Company Limited and Huatai Financial Holdings (Hong
Kong) Limited
“Latest Practicable Date” October 17, 2023, being the latest practicable date prior
to the printing of this prospectus for the purpose of
ascertaining certain information contained in this
prospectus
“Listing” the listing of the H Shares on the Main Board of the Hong
Kong Stock Exchange
“Listing Date” the date, expected to be on or about Friday, November 3,
2023, on which the H Shares are listed on the Hong Kong
Stock Exchange and from which dealings in the Shares
are permitted to commence on the Hong Kong Stock
Exchange
“Main Board” the stock market (excluding the option market) operated
by the Hong Kong Stock Exchange which is independent
from and operated in parallel with GEM of the Hong
Kong Stock Exchange
“mainland China” the People’s Republic of China excluding Hong Kong,
Macau Special Administrative Region and Taiwan region
“Mr. Chen” Mr. Chen Kunrong (Ꮜ), an executive Director, our
president and one of the members of the Single Largest
Group of Shareholders by virtue of the Deed of AIC
“Mr. Shen” Mr. Shen Guojun (ࠏone of our Founders
DEFINITIONS
–3 9–


--- page 50 ---
“Mr. Wang” Mr. Wang Bin ( ˮᏵ), the Chairman of our Board, chief
executive officer, an executive Director, our principal
Founder and one of the members of the Single Largest
Group of Shareholders by virtue of the Deed of AIC
“Mr. Xiao Lin” Mr. Xiao Lin ( ⓶ዼ), one of our Pre-IPO investors
“ M r .X uG e ” M r .X uG e( ஢ˑ), one of our Pre-IPO Investors
“NEEQ” the National Equities Exchange and Quotation ( Ό਷ʕʃ
΅ᔷᜫӻ୕), a PRC over-the-counter system for
trading shares for public companies
“Offer Price” the final offer price per Offer Share (exclusive of
brokerage of 1.0%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and Stock Exchange
trading fee of 0.00565%) of not more than HK$11.40 and
expected to be not less than HK$9.40, at which Hong
Kong Offer Shares are to be subscribed, to be determined
in the manner further described in “Structure of the
Global Offering — Pricing of the Global Offering”
“Offer Shares” the Hong Kong Offer Shares and the International Offer
Shares
“PRC Company Law” the Company Law of the People’s Republic of China ( ʕ
جas amended, supplemented or
otherwise modified from time to time
“PRC Securities Law” the Securities Law of the PRC (ج,)
as amended, supplemented or otherwise modified from
time to time
“PRC Government” the central government of the PRC, including all political
subdivisions (including provincial, municipal and other
regional or local government entities) and its organs or,
as the context requires, any of them
“PRC Law” the laws and regulations of the PRC, without reference to
the laws and regulations of Hong Kong and Macao
Special Administrative Region and the relevant
regulations of Taiwan region
DEFINITIONS
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“PRC Legal Advisor” Han Kun Law Offices, legal advisor to our Company as
to PRC Law
“Pre-IPO Incentive Scheme” our share incentive scheme adopted on May 31, 2021, the
details of which are set out in “Statutory and General
Information — D. Share Incentive Scheme — 1. Pre-IPO
Incentive Scheme” in Appendix IV
“Pre-IPO Investment(s)” the pre-IPO investment(s) undertaken by the Pre-IPO
Investors, details of which are set out in “History and
Development — Pre-IPO Investments”
“Pre-IPO Investor(s)” holder(s) of Shares pursuant to the Pre-IPO Investments,
the details of which are set out in “History and
Development — Pre-IPO Investments”
“Previous Deed of AIC” a deed of acting-in-concert dated July 20, 2015 entered
into between Mr. Wang and Mr. Chen, the details of
which are set out in “History and Development” in this
prospectus
“Price Determination Agreement” the agreement to be entered into by the Overall
Coordinators (for themselves and on behalf of the other
Underwriters) and our Company on the Price
Determination Date to record and fix the Offer Price
“Price Determination Date” the date, expected to be on or about Friday, October 27,
2023, or such later time as the Overall Coordinators (for
themselves and on behalf of the other Underwriters) and
our Company may agree, but in any event not later than
Monday, October 30, 2023, on which the Offer Price will
be determined
“prospectus” this prospectus being issued in connection with the Hong
Kong Public Offering
“Qingdao Haier” Qingdao Haier V enture Capital Co., Ltd. (ऎဧ௴ุ
ப΂ʮ̡), a limited liability company
established in the PRC on April 16, 2010 and one of our
Pre-IPO Investors
“Receiving Bank” Bank of China (Hong Kong) Limited
“Regulation S” Regulation S under the U.S. Securities Act
DEFINITIONS
–4 1–


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“Restructuring Framework
Agreement”
a restructuring framework agreement dated May 18, 2015
entered into between, among others, UBOX International
Holdings Co Limited, UBOX (Hong Kong) Company
Limited, Mr. Wang, Mr. Shen, Mr. Lin, Mr. Y u Long ( ఏ
Ꮂ), Mr. Li Minghao (ख), Mr. Huang Cinan ( රϣ
یMr. Xu Ge, Ms. Yi Jiaping ( Вྗ̻), Huazhu
Investment (Shanghai) Co., Ltd. ( ശИҳ༟(ɪऎ)ʮ
̡), Hainan Changyang V enture Capital Co., Ltd. (ڗی
ʮ̡), Horgos Fengmao Equity
Investment Management Partnership (L.P .) (౶ቜ
ᛆҳ༟၍ଣΥྫΆุ(Υྫ)), Nanjing Hanergy
V enture Capital Center (L.P .) (ԯဏঐ௴ุҳ༟ʕː(Ϟ
Υྫ)), Chongqing Hanergy V enture Capital Center
(L.P .) (Ҧ௴ุҳ༟ʕː(Υྫ)), Beijing
Hanergy Zhonghong Investment Center (L.P .) ( ̏ԯဏঐ
ʕ҃ҳ༟ʕː(Υྫ)), Jiaxing Yingfei Investment
Center (L.P .) (ҳ༟ʕː(Υྫ)), Mr. Chen,
Mr. Wen Ruifeng (ࢤand Mr. Zhou Jianghua ( մϪ
ശ), the details of which are set out in “History and
Development — Evolution of Our Group —
2. Establishment and unwinding of our offshore
structure”
“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC
“SAFE” the State Administration of Foreign Exchange of the PRC
(̮ි၍ଣ҅)
“SA T” the State Administration of Taxation of the PRC ( ʕശɛ
೼ਕᐼ҅)
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” or “Securities and
Future Ordinance”
the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended or supplemented from
time to time
“SGD” Singaporean dollars, being the lawful currency of
Singapore
DEFINITIONS
–4 2–


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“Shanghai-Hong Kong
Stock Connect”
a securities trading and clearing links program developed
by the Hong Kong Stock Exchange, Shanghai Stock
Exchange, HKSCC and China Securities Depository and
Clearing Corporation Limited for mutual market access
between Hong Kong and Shanghai
“Shanghai Huilin” Shanghai Huilin Trading Co., Ltd. (ʮ
̡), a limited liability company established in the PRC on
February 28, 2013, a wholly-owned subsidiary of our
Company
“Shanghai Y unxin” Shanghai Y unxin V enture Capital Co., Ltd. ( ɪऎථ㒥௴
ʮ̡), a limited liability company established
in the PRC on February 11, 2014 and one of our Pre-IPO
Investors
“Shareholder(s)” holder(s) of Share(s)
“Share(s)” ordinary share(s) in the capital of our Company with
nominal value of RMB1.00 each, comprising Unlisted
Shares and H Shares
“Shenzhen-Hong Kong
Stock Connect”
a securities trading and clearing links program developed
by the Hong Kong Stock Exchange, Shenzhen Stock
Exchange, HKSCC and China Securities Depository and
Clearing Corporation Limited for mutual market access
between Hong Kong and Shenzhen
“Shenzhen Y oubaokesi” Shenzhen Y oubaokesi Technology Co., Ltd. (߅
ʮ̡), a company established in the PRC on
July 22, 2014, and a wholly-owned subsidiary of our
Company
“Shenzhen Y ouhui” Shenzhen Y ouhui Investment Center (Limited
Partnership) ( ଉέʾිҳ༟ʕː(Υྫ)), a limited
partnership established in the PRC on June 29, 2016, an
employee incentive platform of our Company
“Shenzhen Y ouka” Shenzhen Y ouka Technology Co., Ltd. (Ҧ
ʮ̡), a limited liability company established in the
PRC on February 15, 2017, a subsidiary of our Company
DEFINITIONS
–4 3–


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“Shenzhen Y ousuan” Shenzhen Y ousuan Technology Co., Ltd. (Ҧ
ʮ̡), a limited liability company established in the
PRC on June 13, 2016, and a wholly-owned subsidiary of
our Company
“Shenzhen Y ouye” Shenzhen Y ouye Technology Co., Ltd. (ҦϞ
ʮ̡), a limited liability company established in the
PRC on June 8, 2017, a subsidiary of our Company
“Single Largest Group of
Shareholders”
Mr. Wang and Mr. Chen. See the section headed
“Relationship with Our Single Largest Group of
Shareholders” in this prospectus
“Sponsor-Overall Coordinators”
or “Overall Coordinators”
Huatai Financial Holdings (Hong Kong) Limited and
China Securities (International) Corporate Finance
Company Limited
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“SZSE” or “Shenzhen Stock
Exchange”
Shenzhen Stock Exchange
“Takeovers Code” the Codes on Takeovers and Mergers issued by the SFC,
as amended, supplemented or otherwise modified from
time to time
“Tianjin Y oubao” Tianjin Y oubao Trading Co., Ltd. (ʮ
̡), a limited liability company established in the PRC on
August 2, 2012, a subsidiary of our Company
“Track Record Period” the period comprising the financial years ended
December 31, 2019, 2020, 2021, 2022 and the six months
ended June 30, 2023
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“Unlisted Shares” ordinary Shares in the share capital of our Company with
a nominal value of RMB1.0 each, which are not listed in
any stock exchange
DEFINITIONS
–4 4–


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“U.S.” or “United States” the United States of America, its territories, its
possessions and all areas subject to its jurisdiction
“US$”, “USD” or “U.S. dollars” United State dollars, the lawful currency for the time
being of the United States
“U.S. Securities Act” the United States Securities Act of 1933, as amended and
supplemented or otherwise modified from time to time,
and the rules and regulations promulgated thereunder
“Xiamen Technology” Xiamen Qianyan Technology Development Co., Ltd. ( ข
ʮ̡), a limited liability company
established in the PRC on April 10, 1998, an indirect
wholly-owned subsidiary of our Company
“Y oubao Anglai” Beijing Y oubao Anglai Technology Co., Ltd. (׻
ʮ̡), a limited liability company established
in the PRC on September 26, 2012, a wholly-owned
subsidiary of our Company
In this prospectus, the terms “associate”, “close associate”, “connected person”,
“connected transaction”, “core connected person”, “controlling shareholder”, “insignificant
subsidiary”, “subsidiary” and “substantial shareholder” shall have the meanings given to
such terms in the Hong Kong Listing Rules, unless the context otherwise requires.
If there is any inconsistency between the Chinese names of the laws and regulations,
governmental authorities, institutions, natural persons, entities or enterprises established in
the PRC mentioned in this prospectus and their English translations, the Chinese names shall
prevail. The English translations of such Chinese names are provided for identification
purposes only.
DEFINITIONS
–4 5–


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This glossary contains terms used in this document in connection with us. As
such, these terms and their meanings may not correspond to standard industry
meanings or usages of these terms.
“AI” artificial intelligence
“Beijing-Tianjin-Hebei Region” an economic region in China encompassing Beijing,
Tianjin and Hebei
“CAGR” compound annual growth rate
“COVID-19” coronavirus disease 2019, a viral respiratory disease
caused by the severe acute respiratory syndrome
coronavirus 2
“FMCG” fast-moving consumer goods
“GFA” gross floor area
“GMV” gross merchandise value, the total value (inclusive of
value-added tax) of all merchandise sold at Ubox POSs
under our unmanned retail business
“IoT” the Internet of Things, a network of physical objects or
things embedded with electronics, software, sensors, and
network connectivity, which enables these objects to
collect and exchange data
“merchandise wholesale
customer(s)”
primarily being vending machine operator(s) that
purchase(s) merchandise from us on a wholesale basis
“new tier one cities” for the purpose of this prospectus, Chengdu, Chongqing,
Hangzhou, Wuhan, Xi’an, Suzhou, Tianjin, Nanjing,
Zhengzhou, Changsha, Dongguan, Shenyang, Qingdao,
Ningbo and Foshan
“Non-Ubox POS(s)” POS(s) that are connected to our operation system and are
operated by Non-Ubox POS operators
“Non-Ubox POS operator(s)” third-party operators who operate Non-Ubox POSs
GLOSSARY OF TECHNICAL TERMS
–4 6–


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“Pearl River Delta Region” an economic region in China encompassing a network of
cities situated within nine prefectures of Guangdong
province, namely Guangzhou, Shenzhen, Zhuhai,
Dongguan, Zhongshan, Foshan, Huizhou, Jiangmen and
Zhaoqing
“POS(s)” point(s) of sale for vending machine(s)
“POS network” comprising Ubox POSs and Non-Ubox POSs
“POS partner(s)” individual(s) and entity(ies) who assist(s) with sourcing
and establishing POSs
“R&D” research and development
“restaurant model partner(s)” POS partner(s) who assist(s) with the operation of POSs
at restaurants and, to a lesser extent and on a case-by-case
basis, certain other types of locations such as gyms and
cinemas, and is/are entitled to keep the difference
between the transaction GMV and a predetermined
merchandise price agreed with us, which is different from
our profit sharing and fees arrangement with other POS
partners
“SKU(s)” stock keeping unit(s), which is a unique code consisting
of letters and numbers that identify each product and is
used to identify and track inventory or stock
“SME(s)” small and medium-sized enterprises
“tier one cities” cities specified by China Business News ( ୋɓৌ຾)
(2021) as such and for the purpose of this prospectus,
Beijing, Shanghai, Guangzhou and Shenzhen
“tier two cities” cities specified by China Business News ( ୋɓৌ຾)
(2021) as such and for the purpose of this prospectus,
Hefei, Kunming, Fuzhou, Wuxi, Xiamen, Jinan, Dalian,
Harbin, Wenzhou, Shijiazhuang, Quanzhou, Nanning,
Changchun, Nanchang, Guiyang, Jinhua, Changzhou,
Huizhou, Jiaxing, Nantong, Xuzhou, Taiyuan, Zhuhai,
Zhongshan, Lanzhou, Taizhou ( ̨ψ), Shaoxing, Y antai,
Linyi and Weifang
GLOSSARY OF TECHNICAL TERMS
–4 7–


--- page 58 ---
“tier three cities and below” for the purpose of this prospectus, all the cities and
regions of China excluding tier one cities, new tier one
cities and tier two cities
“Ubox POS(s)” POS(s) operated by us under our direct operation model
and partner model
“Y angtze River Delta Region” as defined in the “Outline of Integrated Development
Planning for the Y angtze River Delta Region” (Ϫɧԉ
ࠅpromulgated on December
2, 2019, an economic region in China encompassing a
total of 27 cities, including Shanghai and various cities in
Jiangsu province, Anhui province and Zhejiang province
GLOSSARY OF TECHNICAL TERMS
–4 8–


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This prospectus contains certain forward-looking statements and information relating to
our Company and our subsidiaries that are based on the beliefs of our management as well as
assumptions made by and information currently available to our management. When used in
this prospectus, the words “aim”, “anticipate”, “believe”, “could”, “expect”, “going forward”,
“intend”, “may”, “might”, “ought to”, “plan”, “potential”, “predict”, “project”, “seek”,
“should”, “will”, “would” and the negative of these words and other similar expressions, as
they relate to the Group or our management, are intended to identify forward-looking
statements. Such statements reflect the current views of our management with respect to future
events, operations, liquidity and capital resources, some of which may not materialize or may
change. These statements are subject to certain risks, uncertainties and assumptions, including
the other risk factors as described in this prospectus. Y ou are strongly cautioned that reliance
on any forward-looking statements involves known and unknown risks and uncertainties. The
risks and uncertainties facing our company which could affect the accuracy of forward-looking
statements include, but are not limited to, the following:
 our operations and business prospects;
 future developments, trends and conditions in the industry and markets in which we
operate;
 our business strategies and plans to achieve these strategies;
 general economic, political and business conditions in the markets in which we
operate;
 changes to the regulatory environment and general outlook in the industry and
markets in which we operate;
 the effects of the on-going COVID-19 pandemic;
 the effects of the global financial markets and economic crisis;
 our ability to control or reduce costs;
 our dividend policy;
 the amount and nature of, and potential for, future development of our business;
 capital market developments;
 the actions and developments of our competitors;
 certain statements in “Business” and “Financial Information” with respect to trends
in prices, operations, margins, overall market trends, and risk management; and
FORW ARD-LOOKING STATEMENTS
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 change or volatility in interest rates, foreign exchange rates, equity prices, volumes,
operations, margins, risk management and overall market trends.
Subject to the requirements of applicable laws, rules and regulations, we do not have any
and undertake no obligation to update or otherwise revise the forward-looking statements in
this prospectus, whether as a result of new information, future events or otherwise. As a result
of these and other risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this prospectus might not occur in the way we expect or at all.
Accordingly, you should not place undue reliance on any forward-looking information. All
forward-looking statements in this prospectus are qualified by reference to the cautionary
statements in this section.
In this prospectus, statements of or references to our intentions or those of the Directors
are made as of the date of this prospectus. Any such information may change in light of future
developments.
All forward-looking statements contained in this prospectus are qualified by reference to
the cautionary statements set out in this section.
FORW ARD-LOOKING STATEMENTS
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An investment in the Shares involves various risks. You should consider carefully all
the information set out in this prospectus and, in particular , the risks described below
before making an investment in the Shares. The occurrence of any of the following events
could materially and adversely affect our business, financial position, results of
operations or prospects. If any of these events occurs, the trading price of the Shares
could decline and you may lose all or part of your investment. You should seek
professional advice from your relevant advisors regarding your prospective investment in
the context of your particular circumstances.
We believe that there are certain risks and uncertainties involved in our operations,
some of which are beyond our control. We have categorized these risks and uncertainties
into: (i) risks relating to our business and industry; (ii) risks relating to legal, compliance
and regulatory matters; and (iii) risks relating to our Global Offering. Additional risks
and uncertainties that are not presently known to us or we currently deem immaterial may
develop and become material and could also harm our businesses, financial position and
results of operations.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We may not be able to find suitable sites for our POSs on commercially acceptable terms,
if at all.
Our performance depends, to a significant extent, on our ability to find suitable and
strategic locations for our existing and new POSs. Our ability to secure suitable sites on terms
acceptable to us is critical to the success of our existing business as well as our expansion
strategy. When selecting a site for our POS, we take various factors into account, including
features of different types of machines, foot traffic, consumers’ spending power, operating
results at similar sites and distance from our warehouses and other POSs. We cannot assure that
we will be able to identify suitable sites for our new POSs that fit our criteria on terms
commercially acceptable to us. Many of our existing leases are short term leases for a term of
one year. We therefore cannot assure that we will be able to secure our existing strategic sites
on terms commercially acceptable to us. In the event that we encounter difficulties in securing
suitable locations in regions that we have entered or plan to expand into, our results of
operations and growth prospects may be adversely affected.
In addition, as we lease the sites to place our POSs, we are exposed to fluctuations in the
retail rental market in mainland China. In 2019, 2020, 2021, 2022 and the six months ended
June 30, 2022 and 2023, our POSs operation and development expenses, which primarily
represented fixed or variable expenses paid or payable to POSs providers and POS partners for
maintaining and expanding our POS network, amounted to approximately RMB574.6 million,
RMB553.2 million, RMB585.9 million, RMB587.4 million, RMB263.9 million and RMB261.2
million, respectively, representing 56.1%, 51.0%, 54.4%, 50.8%, 48.3% and 47.9% of our
selling and marketing expenses in 2019, 2020, 2021, 2022 and the six months ended June 30,
2022 and 2023, respectively. Moreover, in the event of any compulsory acquisition on the basis
RISK FACTORS
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of statutory power or otherwise, closure or demolition of any of the properties in which our
POSs or facilities are situated for redevelopment or other purposes, the amount of
compensation to be awarded to us may not be based on the fair market value but may be
assessed on the basis prescribed in the relevant legislation. In such event, we may incur
significant monetary loss and will be forced to relocate to other locations, which may
negatively impact our business, financial condition and results of operations.
If we are not able to effectively manage our businesses, our expansion and growth in new
geographical areas, our business and prospects may be materially and adversely affected.
During the Track Record Period, our Ubox POSs were mainly located in relatively
developed regions in mainland China, including the Y angtze River Delta Region, Pearl River
Delta Region, Beijing-Tianjin-Hebei Region and provincial capitals. In particular, as of
December 31, 2019, 2020, 2021, 2022 and June 30, 2023, 26.2%, 27.1%, 25.3%, 30.1% and
31.7% of our POSs were located in tier one cities, 33.8%, 30.3%, 35.9%, 34.8% and 34.5%
were located in new tier one cities, and 25.0%, 26.0%, 26.0%, 21.7% and 21.1% were located
in tier two cities, respectively. We plan to further increase our POS penetration in tier one, new
tier one and tier two cities, and gradually tap into tier three cities and below with higher
economic growth rates. To accommodate our growth, we need to develop and upgrade our
operational and management systems together with successful integration of our information
technology systems, all of which require substantial capital and management resources. Thus,
we will need to manage and control our costs efficiently. The level of economic development,
regulatory practice as well as consumer preferences may vary between mainland China and
other countries, as well as amongst various regions within mainland China. We may not be able
to leverage our past experiences, and may not have sufficient resources, in new locations where
we plan to expand our business. Furthermore, we may face challenges inherent in expanding
our business to other places in places where we operate which we consider to have growth
potential, considering the potential competition with competitors who may possess greater
resources, more extensive operational experiences and a better understanding of the local
regulatory requirements and customer behaviours. Any failure to successfully leverage our
experiences or to sufficiently understand the new markets within our business expansion plan
may have a material adverse effect on our business, financial condition and results of
operation.
During the Track Record Period, we shifted our marketing efforts to the partner model by
engaging more POS partners for our unmanned retail business. These efforts may subject us to
new risks and challenges. We cannot assure you that these shifted marketing efforts will enable
us to achieve our financial targets. The effectiveness of these marketing efforts is relatively
hard to predict and evaluate. Their effects maybe delayed, resulting in a delayed revenue
growth which may not be fully reflected during the period which the marketing efforts were
launched. In addition, their effects may be effective in some geographical areas but not the
other areas. If the results of our shifted marketing efforts fail to meet our expectation, our
business, financial condition and results of operations may be adversely affected.
RISK FACTORS
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We face certain risks associated with the shift from the direct operation model to the
partner model.
Since 2020, we shifted our focus from the direct operation model to the partner model.
From an accounting perspective, under both the direct operation model and the partner model,
we recognize retail sales revenue when control of the merchandise has been transferred to the
end customer. In terms of costs and expenses, we record procurement costs of merchandise
under both models under cost of sales, and we charge our expenses for sourcing, developing
and maintaining Ubox POSs under the direct operation model and the share of transaction
GMV paid to POS partners (as they bear the costs for developing POSs, occupancy fees and
utility costs) under the partner model to selling and marketing expenses. Our selling and
marketing expenses are thus subject to the transaction GMV which is intertwined with the
performance of POS partners. Any decrease in revenue generated from the POSs under the
partner model will lead to a decrease in our total revenue and our share of profits from those
POSs, which may materially and adversely affect our financial condition and results of
operations.
Our revenue from the POSs under the partner model continued to increase both in
absolute amount or as a percentage of our revenue from unmanned retail business during the
Track Record Period. Our revenue from unmanned retail business under the partner model
amounted to RMB250.7 million, RMB762.4 million, RMB1,479.2 million, RMB1,612.3
million, RMB754.5 million and RMB803.0 million in 2019, 2020, 2021, 2022 and the six
months ended June 30, 2022 and 2023, respectively, representing 16.3%, 57.0%, 77.2%,
81.7%, 82.6% and 81.4% of our revenue from unmanned retail business in the same periods,
respectively. Our limited operating history under the partner model may not serve as an
adequate basis for evaluating our results of operations and prospects. We have encountered,
and may continue to encounter in the future, risks and uncertainties experienced by growing
companies in evolving industries, such as managing our cost structure and profitability level
and addressing market conditions and regulatory developments. If we do not successfully
address these risks and uncertainties, our results of operations and financial condition could be
materially and adversely affected.
If we fail to maintain the existing scale of our partner model or retain our existing POS
partners or attract new POS partners, or if our POS partners decrease their scale of
business, our POS network expansion plan may be disrupted and their revenue
contribution will decrease, and thus our business, financial condition and results of
operation may be materially and adversely affected.
Our vast network of POSs is the bedrock of our retail platform. Our revenue is largely
affected by the number and coverage of our POSs, and our future revenue growth depends on
our ability to open new POSs and expand our POS network. During the Track Record Period,
we engaged POS partners to assist us with sourcing and establishing POSs to help expand into
relatively underpenetrated regions whereby our POS partners, other than restaurant model
partners, are typically entitled to a share of 20% to 30% of the transaction GMV after costs and
expenses. For POS partners who are restaurant operators, they are generally entitled to keep the
RISK FACTORS
–5 3–


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difference between the transaction GMV and the predetermined merchandise price they agreed
with us. The success of our business expansion into these new regions depends on our stable
relationship with existing POS partners and ability to attract new POS partners. Our revenue
from unmanned retail business under the partner model amounted to RMB250.7 million,
RMB762.4 million, RMB1,479.2 million, RMB1,612.3 million, RMB754.5 million and
RMB803.0 million in 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and
2023, respectively. If we fail to retain our existing POS partners or attract new POS partners,
we may not be able to maintain the existing scale of, or expand, our POS network, or if our
POS partners decrease their scale of business, our POS network expansion plan may be
disrupted and their revenue contribution will decrease, and thus our business, financial
condition and results of operation may be materially and adversely affected.
Any system failure or malfunctioning of our operation systems that are connected to our
POSs or our vending machines in our POS network will directly affect our ability to
receive orders and payments, which could adversely affect our ability to carry out our
business effectively and efficiently, and could materially and adversely affect our financial
condition and results of operations.
Our business largely relies on the secure and efficient operation of our vending machines.
We leverage our nation-wide POS network, and derive revenue from our unmanned retail
business segment primarily from retail sales of merchandise through vending machines at Ubox
POSs. In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, our
revenue from unmanned retail business amounted to approximately RMB1,539.9 million,
RMB1,336.8 million, RMB1,915.1 million, RMB1,974.7 million, RMB913.4 million and
RMB986.8 million, respectively, representing 56.5%, 70.3%, 71.6%, 78.4%, 79.9% and 78.8%
of our total revenue for the same periods, respectively. Our operation system is the backbone
of our retail platform. Each of the vending machines in our network is connected to our
centralized operation system over the cloud operated by third-party cloud service providers to
enable a range of functions such as constantly monitoring operating status of the vending
machines in real time. Moreover, our vending machines are equipped with technologies such
as vending machine payment system for receiving payments. In the event such as network
breakdowns, software bugs, computer virus attacks, intrusion attacks, catastrophic incidents or
system providers’ failure to provide ongoing maintenance, the proper functioning of our
operation systems and/or our vending machines, such as our vending machine’s ability to
receive orders and payments, may be affected, and our operation systems and/or our vending
machines may therefore be unable to operate and our business operations may be disrupted.
During the Track Record Period, there were one instance in each of 2019 and 2021 where our
vending machines and operation systems were temporarily out of service for approximately 15
minutes and 4 minutes, respectively, due to system failures of third-party payment platforms
as a result of such platform’s own technical glitch affecting a small portion of our vending
machines equipped with that third-party payment platform only, and our loss arising from each
incident was estimated to be approximately RMB0.1 million. One similar instance also
happened in 2022 due to system failure of third-party payment platform and our estimated loss
was estimated to be approximately RMB0.05 million. Moreover, there were also one instance
in 2019 where our vending machines and operation systems were temporarily out of service
RISK FACTORS
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during our system upgrade affecting restocking for all of our vending machines resulting
in an estimated loss of approximately RMB0.03 million and also one instance in each of 2021
and 2022 where our database for restocking of merchandise was temporarily out of service for
approximately 1.6 hours and 50 minutes with an estimated loss of approximately RMB0.03
million and RMB0.03 million, respectively. We cannot assure you that system failure or
malfunctioning of our operation systems or our vending machines will not occur in the future.
The occurrence of any incidents resulting in any system failure or malfunctioning of our
operation systems or our vending machines in our POS network will directly affect our ability
to receive orders and payments, which could adversely affect our ability to carry out our
business effectively and efficiently, and could materially and adversely affect our financial
condition and results of operations.
Failure to protect confidential information transmitted on our centralized operation
system over the cloud operated by third-party cloud service providers could damage our
relationship with our POS partners, harm our reputation, expose us to litigation and
adversely affect our business.
Our business operations are dependent on the advantages and reliability of our centralized
operation system. Each vending machine is connected to our centralized operation system over
the cloud operated by third-party cloud service providers in mainland China, which enables our
vending machines to instantly transmit data across our system, and allows operators to
constantly monitor its operating status in real time to ensure optimal performance. Therefore,
our centralized operation system stores, processes and transmits our and our POS partners’
confidential information, including operational data and transaction data, over the cloud
operated by third-party cloud services providers.
While we have taken steps to protect such confidential information and formulated
policies on cybersecurity and data security covering data transmitted on our centralized
operation system, the security and reliability of the cloud over which our confidential
information is transmitted are beyond our control. Given that the cloud is operated by
third-party cloud service providers, we cannot assure that the cloud is fully protected from any
external threats, such as computer viruses, worms, hackers or other disruptive actions, which
may lead to the leakage or misappropriation of our confidential information. Although to our
knowledge there was no instance of any cybersecurity or data security breach during the Track
Record Period and up to the Latest Practicable Date, we cannot assure that there will not be
a privacy or data security breach because techniques used to sabotage or obtain unauthorized
access to systems change frequently and generally are not recognized until they are launched
against a target, we and the third-party cloud service providers may be unable to anticipate
these techniques or to implement adequate preventative measures.
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While we strive to maintain the integrity of our cybersecurity and data security, any
failure or perceived failure to do so may result in proceedings or actions against us by our POS
partners, government entities or others, and could damage our reputation and subject us to fines
and damages. In addition, such events would lead to negative publicity and cause our POS
partners to lose their trust and confidence in us, which may result in material and adverse
effects on our ability to recruit new POS partners.
Our vending machines are integrated with technology-based retail platform and any
interruption of the vending machines and the technology-based retail platform could
impair our ability to provide products and services.
The continued operation of our technology-based retail platform enables us to efficiently
conduct our unmanned retail business operations. See “Business — Our Technology-based
Retail Platform.” Therefore, our business operations is dependent on the proper functioning of
our technology-based retail platform and any improper functioning or material failure of our
technology-based retail platform could interrupt our business activities. Our technology-based
retail platform is constructed based on complex algorithms which may contain “bugs” or
undetected errors. Such errors may affect proper functioning and reliability of our technology-
based retail platform. In addition, the orderly functioning of our technology-based retail
platform relies on the internet infrastructure and telecommunication network in places where
we operate, which may be subject to damage or interruption as a result of terrorist attacks,
wars, earthquakes, floods, fires, power loss, telecommunication failures, epidemics, computer
viruses, interruptions in access to our platform, hacking or other attempts to harm our platform,
and similar events. Interruptions of our technology-based retail platform or the internet
infrastructure and telecommunication network in places where we operate could harm our
ability to deliver our products and services in an efficient manner, thus reduce our revenue and
profit and damage our brand image if our technology-based retail platform is perceived to be
unreliable. Furthermore, our vending machines, which form an extensive sales and distribution
network, are strategically located in high foot traffic sites including schools, factories,
restaurants, office premises, public venues and transportation hubs. The vending machines are
vulnerable to break-ins, sabotage and vandalism.
If we experience frequent or persistent system failures on our technology-based retail
platform, whether due to interruption or failures of our own technology-based retail platform
or damage of our vending machines or instability of the internet infrastructure and
telecommunication network in places where we operate, our reputation and brand could be
severely harmed. Moreover, if we carry out initiatives to increase the reliability of our
technology-based retail platform, it may cause us to incur heavy costs and reduce our operating
margin, and may not be successful in reducing the frequency or duration of service
interruptions.
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We face risks related to natural disasters, epidemics and other public health emergencies,
which could significantly disrupt our operations and financial condition.
Substantially all of our POSs are located at high foot traffic sites including schools,
factories, restaurants, office premises, public venues and transportation hubs in mainland
China and are fragile against any occurrence or taking place of force majeure events, acts of
war, terrorist attacks, political unrest, social and economic chaos, natural disasters such as
earthquakes, tsunamis, snowstorms, sandstorms, droughts and extreme and adverse bad
weather conditions, widespread of public health problems such as outbreak of pandemics or
epidemics, including avian influenza, swine influenza, severe acute respiratory syndrome,
COVID-19 or other health problems with similar magnitude or effects which are out of control.
For instance, the global outbreak of COVID-19 had an adverse impact on the global
economy across different sectors. In response, countries across the world imposed widespread
lockdowns, closure of work places and restrictions on mobility and travel to contain the spread
of the virus which disrupted business operations, supply chains and workforce availability,
leading to substantial declines in business activity. The COVID-19 pandemic as well as the
responses and measures taken by the governments and society as a whole in response to the
COVID-19 pandemic, presented challenges to our business operations as well as consumers,
suppliers and other participants in our business. Many places where our POSs were located
were required to be closed temporarily or even permanently, which resulted in an unexpected
disruption to our expansion plan in certain strategically selected geographical areas as well as
loss resulting from accumulation of excessive inventory. In addition, the unprecedented
outbreak of COVID-19 also hit some of our suppliers leading to delay or failure in supply of
goods and machineries, compromised product quality or increased in costs. As a result, we
recorded a decrease in revenue in each of our principal business segments in 2020, as compared
to the corresponding period in 2019. The revenue from our unmanned retail business, our
advertising and system support services, our merchandise wholesale, our vending machine
sales and leases and others decreased by approximately 13.2%, 59.3%, 61.2%, 48.6% and
28.9% respectively in 2020 as compared with those in 2019, which was primarily due to the
outbreak of COVID-19 and the corresponding measures implemented in response to the
pandemic.
While our business operations and financial performance have recovered slightly in 2021
as the impact of COVID-19 wanes, COVID-19 resurged in various locations in mainland China
in 2022, with particularly stringent counter-resurgence measures being taken in certain regions,
including Beijing and Shanghai, resulting in closure of, and reduced consumer traffic and sales
activities at, public places where our POSs were placed. Approximately 40.0% of our Ubox
POSs as of December 31, 2022 (not taking into account the sales of POSs located in schools
in July and August as they generally have limited or no sales during summer holiday) did not
generate any sales for at least 60 days in 2022. In addition, our POSs located at restaurants
were also severely affected as the regional resurgences of COVID-19 in mainland China had
a negative impact on the catering industry in mainland China. Besides, as the downstream
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unmanned retail market and demand for our vending machines were negatively affected by
macro-economic conditions and consumer demand in 2022, our revenue from vending machine
sales and leases decreased by 23.5% from RMB44.2 million in 2021 to RMB33.8 million in
2022.
As the recovery of the economy and overall consumer traffic from the negative impact of
COVID-19 is expected to be a gradual process, we are uncertain and cannot predict the extent
to which the pandemic impacts our results of operations going forward. See “Summary —
Recent Development” for latest development of our business operations. In addition, there is
no assurance that another major disease outbreak will not happen in the future. Outbreak of
major diseases may create uncertainties for our business operations which could materially and
adversely affect the overall business sentiment, cause our business to suffer in ways that we
cannot predict and affect our business, financial condition and results of operations.
We are subject to risks and uncertainties faced by companies in a rapidly evolving
industry.
We operate in the rapidly evolving unmanned retail industry, which makes it difficult to
predict our future results of operations. Our business performance is therefore exposed to risks
and uncertainties related to our ability to:
 maintain our leading position in the unmanned retail industry in mainland China;
 develop and introduce attractive, popular and innovative products and services to
attract customers;
 retain existing customers and attract new customers, including merchandise
wholesale customers;
 upgrade our technology to support the increased traffic and expanded product-and-
service offerings;
 further deepen our market penetration;
 respond to competitive market conditions;
 respond to evolving consumer preferences, market trends or industry changes;
 respond to changes in the regulatory environment and manage the associated legal
risks;
 maintain effective control of our costs and expenses; and
 attract, retain and motivate qualified personnel and maintain good relations with
them.
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If we are unsuccessful in addressing any of these risks and uncertainties, our business
may be materially and adversely affected.
We operate in a highly competitive and rapidly evolving market in mainland China and
we face intense competition.
The vending machine retail industry in mainland China is fragmented and has witnessed
noticeable growth in the past few years. According to Frost & Sullivan, the market size of the
unmanned retail market in mainland China in terms of retail sales value contributed by vending
machines increased from approximately RMB13.1 billion in 2017 to RMB28.9 billion in 2022,
representing a CAGR of approximately 17.1%. An increasing number of players are planning
to enter the market, leading to fiercer competition in the coming future. Our primary
competitors may have solid position with longer operating track records and experience
particularly in their specialized areas of practice either retail or logistics services, access to
better machine sites, larger scales of operations, more advanced technology infrastructures and
better access to financial and managerial resources and they may be able to adopt more
aggressive pricing strategies, offer a wider range of merchandise, adopt more innovative
business model or sales channels, offer more comprehensive online and offline services, have
more advanced and stable information technology infrastructure, engage in more aggressive
promotional campaigns and have a more established customer base, which enable them to
compete more effectively against us.
Furthermore, we also compete against beverage companies, integrated logistics
companies, convenience store brands and other retail channels. The widespread penetration of
these convenience stores and other retail channels may reduce market demand for purchase
through vending machines. Increased competition may reduce our market share and
profitability and require us to increase our sales and marketing efforts and capital commitment
in the future, which could negatively affect our results of operations or force us to incur further
losses. If we fail to compete effectively, we may lose market share and customers, and our
business, financial condition and results of operations may be materially and adversely
affected.
We are subject to risks of shortages or unavailability of merchandise due to disruptions
to our operation, deterioration of business relationship with suppliers or potential
changes of distribution methods by suppliers.
We rely on our suppliers to provide a stable supply of merchandise and vending machines,
which are crucial to our unmanned retail business model, merchandise wholesale and vending
machine sales and leases to meet customer needs. In 2019, 2020, 2021, 2022 and the six months
ended June 30, 2022 and 2023, our cost of inventories sold accounted for 89.8%, 78.8%,
93.1%, 94.9%, 94.4% and 98.1% of our total cost of sales during the same periods,
respectively.
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We cannot assure that these suppliers will not breach their contractual obligations to us,
or that our agreements will not be suspended, terminated or otherwise expire without renewal.
We do not have direct control over our suppliers, and may thus experience operational
difficulties due to their insufficient quality control, failure to meet supply deadlines, increase
in costs, and their liquidity or solvency issues as a result of events beyond our control,
including but not limited to, outbreak of pandemics or epidemics such as COVID-19, natural
disasters, acts of war, terrorism and social and economic chaos. Moreover, we cannot guarantee
that these parties will maintain the same level of quality in their products and services or will
have the capacity to meet our needs as we expand rapidly. We may not be able to find
alternative suppliers if these parties are no longer able to meet our needs at acceptable costs
or in a timely manner. Failure to take adequate steps to mitigate the likelihood or potential
impact of such events, or to effectively manage such events if they occur, particularly when a
product or service is provided with a single source, could materially and adversely affect our
business, financial condition and results of operations.
Any loss or deterioration of our relationship with major suppliers, our failure to
renegotiate the purchase prices with our suppliers, or to establish relationships with new
suppliers would expose us to risks of shortages or unavailability of goods, which may
adversely affect our business, financial condition and results of operations.
If we fail to manage our inventory effectively, our results of operations, financial
condition and liquidity may be materially and adversely affected.
Our inventory primarily consists of vending machines, beverages and pre-packed food,
some of which may have relatively short shelf life. As of December 31, 2019, 2020, 2021, 2022
and June 30, 2023, the balances of our inventories respectively amounted to RMB231.2
million, RMB150.2 million, RMB186.8 million, RMB143.9 million and RMB126.8 million,
respectively. Our inventory turnover days in 2019, 2020, 2021, 2022 and for the six months
ended June 30, 2023 were 55 days, 60 days, 51 days, 53 days and 43 days, respectively. In 2019
and 2020, our impairment loss of inventories charged to our consolidated statements of
comprehensive income was approximately RMB2.5 million and RMB53.9 million,
respectively.
The demand for our products are vulnerable to changes in consumer spending patterns,
consumers’ preferences and tastes, as well as implementation of various restrictive measures
in response to the outbreak of pandemics or epidemics such as COVID-19. These changes are
beyond our control and may lead to decreased demand or overstocking of our particular
products. Furthermore, as we plan to continue expanding our product offerings, we expect to
include a wider variety of products and raw materials in our inventory. The risk of
obsolescence for our inventory increases as the age of our inventories increases, in particular
beverages and pre-packed food. If we fail to respond timely and effectively to changes in our
customers’ needs and preferences, or any stringent measures in containing epidemics and
pandemics, our sales revenue will decrease and the volume of obsolete and slow-moving
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inventory may increase, and we would need to discard expired beverages and pre-packed food
or write off such inventory, in the event of which our financial position and results of
operations may be materially and adversely affected.
We may fail to develop customized vending machines that cater to the preferences of our
customers.
The unmanned retail industry is constantly subject to changes. We design and develop,
and engage third-party manufacturers to produce customized vending machines to cater to the
shifting preferences of our customers, which requires substantial capital investment for
research and development. We may not be able to develop the technologies necessary to design
or develop our vending machines, license these technologies from third parties, or remain
competitive in our research and development. Therefore, we cannot assure that we will be able
to design or develop our vending machines, if at all, or on a timely basis. Even if we are able
to develop and introduce new vending machines to the market, they may fail to meet consumer
demands and gain market acceptance and our business, financial conditions and results of
operations may be materially and adversely affected.
Our business, financial condition and results of operations may be affected if we fail to
fully utilize and integrate AI in our operations.
We believe the success of our business operation depends on our AI capabilities. We
incorporate AI technologies into our technology-based retail platform to standardize and
digitalize our business process, including site selection and merchandise mix optimization and
procurement to vending machine restocking and maintenance. However, AI presents risks and
challenges that may affect its adoption, and, therefore, our business and operational efficiency.
AI algorithms may be flawed and contain undetected errors. Datasets may be insufficient or
contain biased information. Inappropriate or controversial data practices by us or other external
third parties could impair the acceptance of our AI technologies which may subject us to legal
liability, and brand or reputational harm and in turn affect our business, financial condition and
results of operations.
Advertisements shown on our digital advertising platform may subject us to penalties and
other administrative actions.
We derive our revenues from advertising and system support services we provide on our
digital advertising platform. PRC Law in relation to advertising require advertisers, advertising
operators and advertising distributors to ensure that the content of the advertisements they
prepare or distribute is fair and accurate and is in full compliance with the relevant laws and
regulations. In addition, for advertising content related to specific types of products and
services such as pharmaceuticals and medical instruments, advertisers, advertising operators
and advertising distributors must confirm that the advertisers have obtained the requisite
government approvals, including the advertiser’s operating qualifications, proof of quality
inspection of the advertised products and services, and, with respect to certain industries,
government approvals of the content of the advertisement and filings with the local authorities.
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Pursuant to the relevant PRC Law, we are required to take steps to monitor the content of
advertisements displayed on our platform. Complying with the relevant laws and regulations
requires considerable resources and time, and could significantly affect our business
operations. We cannot assure you that all the content contained in such advertisements or offers
therein are true and accurate as required by the advertising laws and regulations, especially
given that the interpretation and enforcement practices by relevant authorities which may
change or may be determined based on prevailing laws and regulations at the time. If we are
found to be in violation of applicable PRC Law, we may be subject to penalties including fines,
confiscation of advertising income, orders to cease dissemination of the advertisements and
orders to publish corrective information. In circumstances involving serious violations, the
governmental authorities in mainland China may force us to terminate our online marketing
services operations or revoke our licenses. If we become subject to any of the above penalties,
our reputation may be harmed and our business, financial condition, results of operations and
prospects may be materially and adversely affected.
Our results of operation depend on the level of traffic and consumption and are thus
subject to seasonal fluctuations.
We have experienced, and expect to continue to experience, seasonal fluctuations
depending on the location of our POSs and the relevant time of a year in our results of
operations. In general, we experience weaker performance in the first quarter of each year due
to lower level of customer foot traffic and consumption from vending machines, especially
outdoor ones, during winter. We typically record higher level of revenue from the second to
fourth quarters of each year due to the warmer weather and relatively stronger demand for
vending machine retail of beverages. We are also subject to seasonal fluctuations in demand
from particular scenarios. For example, POSs at schools typically record lower level of revenue
during summer and winter vacations. As a result of these seasonal fluctuations, comparisons of
revenue and our results of operations between different periods within a single financial year
are not necessarily meaningful, nor can these comparisons be relied upon as indicators of our
future performance. Should there be a significant reduction in demand for our services in any
particular period of any year, our business, financial condition and results of operations may
be adversely affected.
Our reputation, performance and financial condition could be adversely affected by any
failure to maintain effective quality control mechanism and food safety monitoring
system.
Product quality and food safety is fundamental and crucial to our business. Due to the
rapid expansion and geographical coverage of our nation-wide POS network, maintaining
consistent quality control and food safety depend on the effectiveness of our quality control
mechanisms and food safety monitoring system, which in turn depends on the design and
management of our quality control mechanism and food safety monitoring system, the
implementation of the quality control measures and initiatives by our staff and our suppliers.
For more details on our quality control systems, see “Business — Quality Control.” There can
be no assurance that our quality control mechanism and food safety monitoring system will
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remain effective. The quality of the products provided by our suppliers are subject to factors
beyond our control. We may be subject to complaints or even food safety incidents as well, and
our financial condition, performance and goodwill will therefore be seriously affected. Any
significant failure or deterioration of our quality control systems could have a material adverse
effect on our reputation, results of operations and financial condition.
According to the applicable PRC Law, both manufacturers and vendors of products shall
be responsible for food safety and quality of products being sold. The Product Quality Law and
Food Safety Law of the PRC requires vendors to establish a mechanism integrated with
purchase acceptance, product quality management, employee health management system and
food safety self-inspection system, holding us responsible for the food safety and product
quality to meet the relevant standards. Accordingly, we are subject to the supervision and
on-site inspection by the relevant administrative authorities. Any failure to comply with the
aforesaid requirements and standards may result in administrative penalties against us and, in
more extreme cases, criminal proceedings may be brought against us and our management. If
any quality issues are found in the products we sell, we may also be ordered by the relevant
government authorities to rectify the quality issues such as to repair or replace the products we
sold or make refunds and compensation to our customers.
Our retail business is subject to risks of food safety issues and defective products. At our
POSs, we sell merchandise and products manufactured by third parties, some of which may be
defective. Moreover, our Non-Ubox POS operators sell merchandise sourced by them at our
POSs. There can be no assurance that we will be able to detect all safety issues or defects in
the merchandise we offer. We maintain limited third party liability or product liability
insurance in relation to the merchandise, including mobile devices, we sell at our POS. We
cannot assure you that product liability claims against us will not arise in the future. In the
event that the consumption of our products results in any damage to our customers, we may
face product liabilities claims and be held liable to pay compensation and recover the damages
to the customers. The attention of our management and resources may be distracted by the
claims. In the case that any of such claims materializes, we may incur monetary loss, our
reputation may be harmed, and may harm our growth and profitability, which may in turn
adversely affect our business, financial condition and results of operations.
We rely on external suppliers to produce customized vending machines.
We rely on external suppliers to produce customized vending machines for our business.
We cannot guarantee that (i) the supply of vending machines is in a timely manner, stable and
free from unexpected interruption; (ii) there will not be any significant increase in procurement
costs of such vending machines following an increase in our production costs for any reason
beyond our control; (iii) the qualities of such products could always meet our expectation and
satisfy our quality control; (iv) the products manufactured by those external suppliers are free
from any third parties infringement, dilution or misappropriation of any third party’s
intellectual property rights; and (v) no leakage of our procurement plans and business
strategies by such external suppliers despite our great effort to preserve our confidential
business information.
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We may discover latent defects in the vending machines that were not apparent at the
point of purchase. Such defects may be discovered before or after the warranty period has
expired. If the products we lease to merchandise wholesale customers fail to function as
expected and we are unable to resolve the functionality issues in a timely manner, our
relationships with such customers may be damaged. In addition, any defects or malfunction of
our products could cause the loss of customers or revenues, delays in revenue recognition,
increased levels of product returns or replacements, damage to our market reputation and
significant increases in warranty claims and other expenses, all of which could result in a
material decrease in our profitability. The occurrence of any of the above events will have
adverse impact on our operation, financial and business conditions.
We face risks relating to third-party payment services, which may materially and
adversely affect our business, financial condition and results of operations.
We rely on third-party payment service providers for our customers’ payment channels.
If these third-party payment service providers do not perform adequately or if our relationships
with these third-party payment service providers were to terminate, our vending machines’
ability to receive orders or payment could be adversely affected, which would have a direct
impact on our business performance. If any of these third-party payment service providers have
any interruptions or delays in such platforms in the future, we may not be able to locate suitable
alternatives, and our business could also be harmed. In addition, an increase in the fees charged
by our third-party payment service providers would result in an increase in our operating
expenses, which may adversely affect our financial condition and results of operations.
Moreover, the laws and regulations governing payment services are complex, constantly
changing and vary significantly across different jurisdictions. Any actual or alleged failure by
us or our third-party payment service providers to comply with the applicable rules and
regulations may materially and adversely affect our business, financial condition and results of
operations.
We have incurred net losses, accumulated losses and negative operating cash flow during
the Track Record Period, which we may continue to experience in the near future.
We incurred net losses of approximately RMB1,184.2 million, RMB188.2 million,
RMB283.1 million, RMB128.4 million and RMB147.4 million in 2020, 2021, 2022 and the six
months ended June 30, 2022 and 2023, respectively, and our accumulated losses amounted to
RMB1,073.2 million, RMB1,258.2 million, RMB1,542.7 million and RMB1,695.2 million as
of December 31, 2020, 2021, 2022 and June 30, 2023, respectively. In addition, we had
negative net cash from operating activities of RMB31.9 million in 2020. We cannot assure that
we will be able to generate net profits or positive cash flow from operating activities in the near
future. Our ability to achieve and maintain profitability depends on various factors, including
but not limited to, maintaining existing and attracting new POS partners, merchandisers,
advertisers and merchandise wholesale customers, controlling costs and expenses and
increasing our revenues, and the effectiveness of our advertising and promotional activities.
Furthermore, if we are unable to successfully offset our increased costs and expenses with an
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appropriate increase in our revenue and margins, our financial condition and results of
operations may be materially and adversely affected. As such, we may not be able to fund our
operating expenses and expenditures and may be unable to fulfil our financial obligations as
they become due, which may result in voluntary or involuntary dissolution or liquidation
proceedings of our Company and a total loss of your investment.
We may incur impairment losses relating to goodwill and other intangible assets, which
could materially affect our profits.
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, we had intangible assets,
comprising goodwill, internally generated software and purchased software, of RMB318.4
million, RMB136.2 million, RMB118.6 million, RMB102.9 million and RMB95.2 million,
respectively. We recognized impairment loss of intangible assets of RMB2.2 million and
RMB9.7 million as of December 31, 2019 and 2020, respectively, and impairment loss of
goodwill of RMB158.4 million as of December 31, 2020.
There are inherent uncertainties in the estimates, judgments and assumptions used in
assessing recoverability of goodwill and intangible assets. Economic, legal, regulatory,
competitive, reputational, contractual, and other factors could result in future declines in the
operating results of our business or market values that do not support the carrying value of the
goodwill and other intangible assets. Any reduction in or impairment of the value of goodwill
or intangible assets will result in a charge against our profits, which could have a material
adverse impact on our results of operations and financial condition.
We may incur gross loss in our vending machine sales and leases and others segments, and
we may not be able to sustain our gross profit margins.
During the Track Record Period, we experienced fluctuations in gross profit and gross
profit margin of our vending machine sales and leases and others segments. We recorded gross
profit of RMB15.1 million, RMB13.9 million, RMB10.8 million, RMB3.0 million and RMB3.2
million in 2019, 2021, 2022 and the six months ended June 30, 2022 and 2023, respectively,
and gross loss of RMB32.2 million in 2020 for vending machine sales and leases, and recorded
gross profit of RMB127.6 million, RMB11.8 million, RMB9.1 million, RMB3.0 million and
RMB10.6 million in 2019, 2021, 2022 and the six months ended June 30, 2022 and 2023,
respectively, and gross loss of RMB189.6 million in 2020 for our others segment. Also, we
recorded gross profit margin of 16.6%, 31.4%, 31.9%, 18.5% and 27.0% in 2019, 2021, 2022
and the six months ended June 30, 2022 and 2023, respectively, and negative gross profit
margin of 68.5% in 2020 for vending machine sales and leases, and recorded gross profit
margin of 49.5%, 2.7%, 4.9%, 5.0% and 12.2% in 2019, 2021, 2022 and the six months ended
June 30, 2022 and 2023, respectively, and negative gross profit margin of 103.5% in 2020 for
others segment.
We experienced gross loss in vending machine sales and leases and others segments
primarily as a result of the outbreak of COVID-19. There is no assurance that our profitability
including our gross profit and gross profit margin of our vending machine sales and leases and
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other services may return to the level prior to the outbreak of COVID-19. In response to the
outbreak of COVID-19, we explored business opportunities and fine tuned our business
strategies. However, our evolving business strategies make it difficult to evaluate the risks and
challenges we may encounter. The risks and uncertainties we may face include challenges to
our ability to refine our product offerings and services to cater shifting customers’ preferences,
to anticipate and respond to macro-economic changes and changes in local markets where we
operate, to successfully expand our geographic reach and expand our POS network in the
manner we planned, to forecast our revenue and cost of sales and manage capital expenditures
for our current and future operations. If we fail to address the risks and challenges that we face,
our business, financial condition and results of operations may be materially and adversely
affected.
Our results of operations could be materially affected by the share of results of associates
and a joint venture.
We have invested in a number of companies such as operators of machines and other
FMCG retail businesses, and developers of relevant software and hardware, that could
potentially assist the expansion of our POS network or create synergies. As of December 31,
2019, 2020, 2021, 2022 and June 30, 2023, our investments accounted for using the equity
method were RMB54.6 million, RMB61.0 million, RMB76.5 million, RMB62.7 million and
RMB58.9 million, respectively. Our share of losses in investments accounted for using the
equity method were RMB7.2 million, RMB3.5 million, RMB4.1 million, RMB15.3 million,
RMB4.8 million and RMB3.8 million in 2019, 2020, 2021, 2022 and June 30, 2022 and 2023,
respectively. See Note 20 to the Accountant’s Report as set out in Appendix I for details.
There can be no assurance that our investments in joint venture(s) and associates will
achieve the results intended and guarantee a share of profits. Any loss incurred by these joint
venture(s) and associates shall be apportioned among our Group and other shareholders of the
joint venture(s) and associates, and we may be subject to liquidity risk as a result. Our
investments in the joint venture(s) and associates are not as liquid as other investment products
because the reported profits of these joint venture(s) and associates under the equity accounting
will not result in our cash inflow until dividends are received by us. Also, if there is no share
of results or dividends from the joint venture(s) or associates, we will be subjected to liquidity
risk and our financial condition or result or operations could be materially affected.
Furthermore, the possibility to promptly dispose of our interests in the joint venture(s) or
associates in response to changing economic, financial and investment conditions is uncertain.
The market is affected by various factors, such as general economic conditions, availability of
financing, interest rates and supply and demand, many of which are beyond our control. We
cannot be certain as to whether we will be able to sell any of our interests in these joint
venture(s) and associates for the price or on the terms that are acceptable to or set by us.
Therefore, the liquidity nature of our investment in these joint venture(s) and associates may
significantly limit our ability to respond to adverse changes in their performance.
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Acquisitions, investments or strategic alliances may fail and have a material and adverse
effect on our business, reputation and results of operations.
We have invested, and in the future, may invest, in a diverse array of businesses,
technologies and ventures, and may enter into acquisitions and alliances from time to time. See
“History and Development — Evolution of Our Group.” Such endeavors may involve
significant risks and uncertainties.
We have invested in a number of companies that are complementary to our growth
strategies, such as software developers and vending machine operators, and may invest in other
joint ventures, associates or companies in the future as we deem appropriate. We may not
obtain control and may lack influence over the operations in these joint venture(s) and
associates which may prevent us from achieving our strategic goals and financial returns in
these joint venture(s) and associates. Furthermore, acquisitions and investments also involve
challenges, risks and uncertainties, including but not limited to, difficulties in, and significant
and unanticipated additional costs and expenses resulting from, integrating into our existing
business the large number of personnel, operations, products, services, technology, internal
controls and financial reporting of the business we acquire or invest in, disruption of our
ongoing business, distraction of and significant time and attention required from our
management and employees and increases in our expenses, and additional or conflicting
regulatory requirements, heightened restrictions on and scrutiny of investments, acquisitions
and foreign ownership in other jurisdictions. Some of these challenges and risks are beyond our
control, and there can be no assurance that we will be able to realize the anticipated benefits,
synergies, cost savings or efficiencies may cast a material adverse effect on our business,
financial condition and results of operations.
We face certain risks associated with our cooperation with Non-Ubox POS operators.
We cooperate with our Non-Ubox POS operators. As of June 30, 2023, we had 1,153
Non-Ubox POS operators. Such cooperation subjects us to several risks, each of which may
impact our ability to collect fees and charges from our Non-Ubox POS operators, or may harm
our brand image, business performance and results of operations:
 Control over Non-Ubox POS operators. Our business performance relies on our
Non-Ubox POS operators, some of whom source and sell merchandise from third
parties selected by them. We cannot fully control our Non-Ubox POS operators’
action and our contractual rights and remedies are limited. There is no guarantee that
our Non-Ubox POS operators will share our concern on merchandise quality and
food safety. Therefore, our business and operating results are deemed to be hurt
unless our Non-Ubox POS operators duly comply with applicable laws and
regulations such as food safety related laws in their course of business and perform
their obligations consistent with our required standards such as those set out in our
cooperation agreements.
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 Revenues realized from our vending machines. The revenues we realize are linked
to our Non-Ubox POS operators’ profitability. Our revenues and margins could be
adversely affected or deteriorated by the worsen sales trend of our Non-Ubox POS
operators.
 Contractual relationship with Non-Ubox POS operators. We generally enter into
agreements with our Non-Ubox POS operators for sale of merchandise at our
vending machines for a term of one to five years. We compete against other industry
players and cannot assure that we will be able to maintain contractual relationships
with our Non-Ubox POS operators. In the event that we fail to renew contracts with
our Non-Ubox POS operators or attract new Non-Ubox POS operators for any
reasons, our revenue may be adversely affected.
 Bankruptcy. Non-Ubox POS operators’ bankruptcy could have a substantial negative
impact on our ability to collect payments due, and may have a negative impact on
our brand image.
 Litigation. Our Non-Ubox POS operators may be subject to a variety of litigation
risks from time to time, including but not limited to customer claims, personal-
injury claims, employee allegations of improper termination. Each of these claims
may increase the costs of our Non-Ubox POS operators and adversely affect their
profitability, and may therefore limit the funds available for them to pay fees and
charges and limit their ability to maintain the machines, which in turn could
adversely affect our business and operating results and may adversely affect our
brand image.
Our historical financial results may not be indication of our further performance and our
success depends on our ability to execute our business strategy.
Our revenue decreased by 30.3% from RMB2,727.5 million in 2019 to RMB1,902.0
million in 2020, increased by 40.7% from RMB1,902.0 million in 2020 to RMB2,676.2 million
in 2021, decreased by 5.9% from RMB2,676.2 million in 2021 to RMB2,519.2 million in 2022,
and increased by 9.6% from RMB1,143.1 million for the six months ended June 30, 2022 to
RMB1,252.7 million for the same period in 2023. Our gross profit decreased by 58.0% from
RMB1,329.2 million in 2019 to RMB558.6 million in 2020, increased by 97.1% from
RMB558.6 million in 2020 to RMB1,101.1 million in 2021, decreased by 2.2% from
RMB1,101.1 million in 2021 to RMB1,076.7 million in 2022, and increased by 1.5% from
RMB510.2 million for the six months ended June 30, 2022 to RMB518.0 million for the same
period in 2023.
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Our results of operations during the Track Record Period should not be considered
indicative of our future performance. Our future growth, profitability and cash flows depend
upon our ability to successfully execute our business strategies, which is dependent upon a
number of factors, including our ability to:
 anticipate and respond to rapidly changing technology development, market trends
and consumer preferences;
 explore, attract and cooperate with merchandise wholesale customers, POS partners,
karaoke booth franchisees and merchants on favourable terms;
 develop our technology-based retail platform with new functionalities on a timely
basis;
 expand our geographic presence to further extend our customer reach;
 enhance and maintain favourable brand recognition for our Group and product
offerings;
 effectively manage our relationships with external vending machines manufacturers;
 maintain and expand margins through sales growth and efficiency initiatives;
There can be no assurance that we can successfully execute our business strategies in the
manner or time that we expect. Our financial and operating results may not meet the
expectations of public market analysts or investors, which could cause the future price of our
H Shares to decline. In addition, we expect to recognize some of our expenses related to the
Listing in 2023, which will impact our financial performance for the respective years. Y ou
should not rely on our historical results to predict our future financial performance.
If our preferential tax treatment becomes unavailable, our results of operations may be
adversely affected.
During the Track Record Period, we enjoyed preferential tax treatment under relevant
preferential tax policies. We cannot assure that we will continue to enjoy similar preferential
tax treatment in the future. Our subsidiaries in mainland China are generally subject to
enterprise income tax at the statutory rate of 25% pursuant to the EIT Law, except for certain
subsidiaries which enjoyed preferential tax treatment. Our Company was granted the
qualification as “High and New Technology Enterprise” in 2017 and we renewed our
qualification in 2020, thus we were entitled to preferential tax rate of 15% in 2019, 2020, 2021,
2022 and the six months ended June 30, 2022 and 2023. Shenzhen Y oubaokesi and Y oubao
Anglai, two of our subsidiaries, were granted the “High and New Technology Enterprise” in
2016 and renewed the qualification in 2019. As a result, Shenzhen Y oubaokesi and Y oubao
Anglai were entitled to a preferential income tax rate of 15% in 2019, 2020, 2021 and the six
months ended June 30, 2022. Also, Shenzhen Y oubaokesi, which applied for the qualification
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as “High and New Technology Enterprise”, was entitled to preferential income tax rate of 15%
in 2022 and the six months ended June 30, 2023 upon the renewal of such qualification in
December 2022. If we cease to be entitled to preferential tax treatment, our income tax
expenses may increase, which would adversely affect our results of operations.
We may be subject to risks of recoverability of deferred tax assets.
Deferred tax assets are recognized for tax loss carry-forwards to the extent that the
recognition of the related tax benefits through the future taxable profits is probable. Based on
our accounting policies, we recognize deferred tax assets relating to certain temporary
differences and tax losses when we consider it is probable that future taxable profit will be
available and as a result, the temporary differences or tax losses can be utilized. The outcome
of the actual utilization of such temporary differences or tax losses may be different.
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, our deferred income tax
assets amounted to RMB50.2 million, RMB42.3 million, RMB41.8 million, RMB36.7 million
and RMB40.5 million, respectively. In addition, we had deferred income tax liabilities of
RMB1.8 million, RMB1.6 million, RMB1.9 million, RMB2.1 million and RMB2.5 million as
of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, respectively. In the application of
our accounting policies, significant management judgement is required to assess the
recognition of deferred income tax assets in future reporting periods, based on historical
experiences and amount of forecasted future taxable profits at the relevant times together with
future tax planning strategies. However, if there is a significant adverse change in our
performance, some or all of the relevant deferred income tax assets may need to be written off
and charged to the income statement, which could have an adverse effect on our financial
condition. Furthermore, utilization of deferred income tax assets significantly depends on our
management’s judgment as to whether sufficient profits or taxable temporary differences will
be available in the future. Any consequent changes in management judgement or future
operating results would deviate these accounting estimates of deferred income tax assets from
their actual results and the recoverability of deferred tax assets recognized in our financial
statements, and hence could materially and adversely affect our financial condition and results
of operation in the future years.
Impairment of our property and equipment and right-of-use assets could negatively affect
our financial condition and results of operations.
The value of our property and equipment represent a significant portion of the assets on
our consolidated balance sheet. As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023,
we recorded property and equipment of RMB589.5 million, RMB305.2 million, RMB398.8
million, RMB296.3 million and RMB223.6 million, respectively, and also recorded right-of-
use assets of RMB570.9 million, RMB446.2 million, RMB359.5 million, RMB289.1 million
and RMB247.1 million, respectively. During the Track Record Period, we recognized
impairment loss of property and equipment of RMB1.2 million, RMB140.3 million and
RMB1.4 million for the years ended December 31, 2019, 2020 and 2021, respectively, and
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impairment loss of right-of-use assets of RMB51.7 million for the year ended December 31,
2020 primarily attributable to our karaoke booths in operation as an impact of COVID-19
outbreak. For details of the accounting treatment, see Notes 16 and 17 to the Accountant’s
Report as set out in Appendix I.
The value of property and equipment is based on a number of assumptions made by the
management. If any of these assumptions does not materialize, or if the performance of our
business is not consistent with the assumptions, we may be required to record a significant
impairment loss, which could in turn adversely affect our results of operations. We may
continue to recognize impairment losses for property and equipment and right-of-use assets in
the future in the event the business and financial performances of certain karaoke booths or
non-core types of machines fail to meet our management’s expectation, in which case our
financial condition and results of operations may be materially and adversely affected.
We are exposed to credit risk of our customers and we may experience delays or defaults
in settling our trade and other receivables.
Our trade receivables as of December 31, 2019, 2020, 2021, 2022 and June 30, 2023 were
approximately RMB362.0 million, RMB200.7 million, RMB144.5 million, RMB77.4 million
and RMB75.9 million, respectively. Our loss allowance provision for trade receivables in 2019,
2020, 2021, 2022 and June 30, 2023 were approximately RMB31.6 million, RMB39.5 million,
RMB24.1 million, RMB22.8 million and RMB11.8 million, respectively. In 2019, 2020, 2021,
2022 and the six months ended June 30, 2023, our trade receivables turnover days were
approximately 108 days, 183 days, 85 days, 77 days and 54 days, respectively. In addition, our
net impairment losses on financial assets primarily comprised impairment losses on trade and
other receivables, amounting to RMB10.9 million, RMB58.4 million, RMB28.2 million,
RMB9.3 million, RMB6.9 million and RMB0.8 million in 2019, 2020, 2021, 2022 and the six
months ended June 30, 2022 and 2023, respectively. In the event that a significant number of
our customers fail to settle the trade receivables in full for any reason, our cashflow level may
be adversely affected, and we may have to make provision for impairment, write-off the
receivables and/or incur legal costs to recover the outstanding sum from our customers, which
may in turn have a material and adverse impact on our business, financial conditions and
results of operations.
We are exposed to risks associated with POSs operated under partner model with
cooperation agreements signed by us.
As of June 30, 2023, we had entered into cooperation agreements with the site owners for
the use of POS sites for all the POSs under the direct operation model and a part of the POSs
under the partner model (excluding restaurant model partners). Some of the POSs under the
cooperation agreements signed by us were operated under partner model. In the event that we
decide to change a POS from direct operation model to partner model, we generally allow our
POS partner to maintain that POS and bear the occupancy fees and utility costs without
terminating the existing cooperation agreement with the site owner.
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Although our POS partners shall be responsible for the occupancy fees and utility costs
even if we entered into cooperation agreements with site owners under partner model, we are
contractually liable to the site owners as a party to the cooperation agreements. We cannot
assure you that all our POS partners will reimburse us in a timely manner for payment of
occupancy fees and utility costs. In the event of significant delay or default in payment of the
occupancy fees and utility costs, our cashflow level may be adversely affected, and our
financial condition could also be adversely affected.
Our results of operations and financial condition may be adversely affected by the
recoverability of our prepayments, deposits and other receivables. Our allowance on
impairment losses on deposits and other receivables may not be sufficient to cover actual
losses on our deposits and other receivables in the future.
There are uncertainties about the recoverability of our prepayments, deposits and other
receivables. Our prepayments mainly comprise (i) prepayments for purchase of machines, (ii)
prepayments for purchase of inventories, (iii) prepayments for POSs expenses, (iv)
prepayments for listing expenses, and (v) others. As of December 31, 2019, 2020, 2021, 2022
and June 30, 2023, we recorded prepayments of RMB254.4 million, RMB188.6 million,
RMB214.8 million, RMB249.9 million and RMB254.0 million, respectively.
In order to ensure stable supply and lock in price as a precaution against any potential
adverse impact of market price, and to secure favourable POSs site locations, we made
prepayment for purchase of inventories arise from the contractual obligation with merchandise
suppliers as we submit estimated demands for merchandise for the next month to them and
deposit the corresponding purchase price to suppliers’ accounts in full or in part in accordance
with the terms of the relevant contract in advance as prepayment. Also, we made prepayments
for POSs expenses arise from the contractual obligations with site owners, pursuant to which
we shall pay in advance the POSs operation expenses, which primarily include occupancy fees
and utility costs, monthly, quarterly or semi-annually.
Our deposits and other receivables primarily comprise deposits, amount due from POS
partners, advances to and receivables from business partners and advances to staffs. Under our
partner model, our Company may make advances to POS partners for payment of POSs
occupancy fees, which would be deducted from their share of transaction GMV and are
typically settled on a monthly basis. As of December 31, 2019, 2020, 2021, 2022 and June 30,
2023, our amount due from POS partners was RMB19.8 million, RMB39.7 million, RMB71.3
million, RMB36.1 million and RMB26.2 million, respectively, representing approximately
3.6%, 11.7%, 27.7%, 22.4% and 16.6% of our other receivables, respectively.
There is no guarantee that our merchandise suppliers, site owners, POS partners or other
counterparties will perform their obligations in a timely manner and we are subject to
recoverability or credit risk in relation to our prepayments, deposits and other receivables. If
we are not able to recover the prepayments, deposits and other receivables as scheduled, our
financial position and results of operations may be affected.
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During the years ended December 31, 2020, 2021 and 2022, based on the results of the
impairment assessments, we recognized impairment provisions of RMB36.3 million, RMB24.3
million, RMB4.7 million, respectively, against the amount of deposits and other receivables.
Besides, as of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, we recorded allowance
for impairment of deposits and other receivables of RMB24.1 million, RMB55.9 million,
RMB80.2 million, RMB72.0 million and RMB64.5 million, respectively. Our allowance for
impairment of amount due from POS partners was RMB2.3 million, RMB5.1 million,
RMB12.0 million, RMB10.6 million and RMB3.8 million as of December 31, 2019, 2020,
2021, 2022 and June 30, 2023, respectively, and our allowance coverage ratio was 9.5%, 9.1%,
14.9%, 14.8% and 5.8%, respectively.
Such allowance was determined by our management based on estimations and
assumptions. If any of these assumptions or estimations does not materialize, or the
performance of our business is not consistent with the assumptions or estimations, or the
recoverability of the advances to and receivables from business partners, amounts due from
POS partners and advances to staffs, and the deposits are lower than expected, or that our past
allowance for advances to and receivables from business partners, amounts due from POS
partners and advances to staffs, and the deposits becomes insufficient, we may need to make
more allowance for such amounts due, which may in turn materially and adversely affect our
business, financial position and results of operations.
Our financial assets at fair value through profit or loss are subject to fair value
fluctuations and the valuation of such assets is subject to uncertainties due to the use of
valuation techniques and market observable and unobservable inputs, which may in turn
adversely affect our financial performance.
During the Track Record Period, our financial assets at fair value through profit or loss
include wealth management products and investments in unlisted equity securities and have
experienced fair value fluctuations. As of December 31, 2019, 2020, 2021, 2022 and June 30,
2023, our financial assets at fair value through profit or loss were RMB382.5 million,
RMB166.8 million, RMB32.8 million, RMB36.1 million and RMB34.5 million, respectively,
among which our investments in wealth management products amounted to RMB336.9 million,
RMB132.1 million, nil, nil and nil as of December 31, 2019, 2020, 2021, 2022 and June 30,
2023, respectively. During the Track Record Period, the net realized gains generated from such
wealth management products was RMB5.1 million in 2019, RMB6.3 million in 2020, RMB1.2
million in 2021, RMB0.2 million in 2022 and RMB0.07 million for the six months ended June
30, 2023, and the net unrealized gains of such wealth management products was RMB2.3
million in 2019, RMB4.6 million in 2020, and nil in 2021, 2022 and for the six months ended
June 30, 2023. In addition, we recognized fair value loss on financial assets at fair value
through profit or loss of RMB0.9 million, RMB18.3 million, RMB1.9 million and RMB1.6
million as of December 31, 2019, 2020, 2021 and June 30, 2023, respectively, and realized a
fair value gain on financial assets at fair value through profit or loss of RMB3.3 million as of
December 31, 2022. The returns on all of these wealth management products are not
guaranteed, and therefore are designated as financial assets at fair value through profit or loss.
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Fair value of our financial assets at fair value through profit or loss is estimated by using
valuation techniques and on the basis of market observable and unobservable inputs. The use
of unobservable inputs renders valuation uncertain, as changes of unobservable inputs such as
expected return rate may change the fair value of wealth management products we purchased.
The fair value fluctuation of our financial assets at fair value through profit or loss may
continue to affect our results of operations in the future. We cannot assure you that market
conditions and regulatory environment will remain stable or that we will generate such
investment income from our financial assets at fair value through profit or loss in the future.
As the fair value of our financial assets at fair value through profit or loss are subject to
fluctuations, such uncertainty may adversely affect our financial performance.
Our success depends on our talented personnel. Any failure to attract and retain
necessary talents may materially and adversely affect our business, prospects, financial
condition and results of operation.
Our continued success depends on our ability to attract, motivate and retain talented
personnel. We rely on the expertise and experiences of our employees throughout our business
operations from product maintenance, merchandise supplements, product research and
development as well as maintaining relationships with our suppliers and customers. Any loss
of our key personnel could materially and adversely affect our ability to sustain and develop
our business. We cannot assure that we will be able to recruit or retain a sufficient number of
qualified employees for our business. Subject to failure to keep up with market average
employee salary levels and other factors, any material increases in employee turnover rates and
any failure to recruit and retain sufficient personnel may make our growth strategy difficult to
implement. Any of the above would materially and adversely affect our business and results of
operations.
Share-based compensation expenses may adversely affect our financial performance and
also potentially dilute our shareholding.
In order to incentivize the management members and core employees of our Group to
further promote the development of our Group and in recognition of our employees’
contributions, we adopted the 2020 Incentive Scheme and the Pre-IPO Incentive Scheme. In
accordance with the 2020 Incentive Scheme, we granted options to our management and core
employees on January 23, 2020 to acquire up to 22,438,106 Shares at a price of RMB0.10 per
Share. Furthermore, in September 2021, in order to motivate the management of Y oubao
Online, a subsidiary of our Group, our Group transferred 4% and 13% equity interest in Y oubao
Online to two of its management members, and recognized RMB1.5 million as share-based
compensation expense based on the valuation performed by valuer engaged by the
management. Also in January 2023, we have also granted options to 27 grantees to subscribe
for a total of 37,750,000 Unlisted Shares, representing approximately 4.74% of the total issued
share capital of our Company immediately after completion of the Conversion of Unlisted
Shares into H Shares and the Global Offering (assuming the options granted have not been
exercised and remain outstanding), at an exercise price of RMB1.99 per option under the
Pre-IPO Incentive Scheme.
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In 2019, 2020, 2021, 2022 and the six months ended June 30, 2023, our share-based
compensation expenses amounted to nil, RMB210.9 million, RMB1.5 million, nil and
RMB49.5 million, respectively, all of which were recognized in our consolidated financial
statements in accordance with IFRS. We believe the granting of share-based compensation is
of significant importance to our ability to attract, retain and incentivize key personnel and other
employees, and we may continue to grant share-based compensation awards in the future
subject to compliance with the Listing Rules. As a result, we may continue to incur or even
increase the expenses associated with share-based compensation, which may have an adverse
effect on our financial performance. Any securities issued pursuant to our employee share
option plan will also dilute the ownership interests of our shareholders.
We may be subject to intellectual property infringement claims, which may be expensive
to defend and may disrupt our business and operations.
From time to time, we may be exposed to intellectual property infringement claims and
other proceedings as a result of our suppliers delivering to us counterfeited or fraudulent goods
manufactured without proper authorizations, licenses or approvals and sold under the imitated
labels or brands similar to the authentic ones. There is no assurance that our guidelines and
instructions in place are sufficient to deter suppliers from delivering counterfeit products to us,
and our inability to do so may result in adverse effects on our reputation, business and results
of operations. In addition, we cannot be certain that our operations or any aspects of our
business do not or will not infringe upon or otherwise violate trademarks, copyrights or other
intellectual property rights held by third parties. We may be subject to disputes, claims or other
proceedings with copyright owners in relation to our use of music or songs in the ordinary
course of our karaoke booth business or in our self-developed in-house products. Any such
proceedings and claims could result in significant costs to us and divert the time and attention
of our management personnel from the operation of our business. Regardless of the outcome
of such proceedings and claims, our brand name and image may be adversely affected.
We may not be able to adequately protect our intellectual property rights, which could
harm the value of our brand and adversely affect our business.
We rely heavily on a combination of trademarks, patents, domain name registrations,
copyrights and confidentiality agreements to protect our intellectual property rights. We also
possess a significant number of know-how or trade secrets in relation to technologies, which
we believe are material to our operations and which are not covered by patents.
We cannot assure that there will be no counterfeit or forgery of our equipment, whether
purchased or self-developed in-house products, such as vending machines and karaoke booths,
trademarks and/or brands in the market. Counterfeiters may illegally set up vending machines
and karaoke booths under our brand. Such counterfeit or forged products are usually difficult
to detect or ban in a timely manner. The occurrence of such incidents may harm the value of
our brand and thereby leading to adverse effects on our profitability and competitiveness.
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We rely on various protective measures to safeguard such unpatented proprietary
information, including prudent and careful selection of our suppliers. However, we cannot
assure that our protective measures will be sufficient to protect our trade secrets, know-how or
other proprietary information against any unauthorized use, misappropriation or disclosure. We
also cannot assure that we will be successful in enforcing confidentiality provisions or
undertaking enforcement proceedings in the event that there is any unauthorized use of our
intellectual property.
Furthermore, any litigation to protect our intellectual property would be time-consuming
and costly, and may divert the attention of our members of senior management and key
personnel from our business operations. If we fail to effectively protect our intellectual
property from inappropriate or unauthorized use by third parties in ways that adversely affect
our brand, our reputation could suffer, which in turn could materially and adversely affect our
business, financial condition and results of operations.
Our business operation needs various approvals, licenses and permits, which could be
materially and adversely affected by any failure to obtain or renew any of these approvals,
licenses and permits.
As the PRC Law require, we ought to maintain various approvals, licenses and permits
to provide our unmanned retailing and other services in mainland China. Take our pre-packed
food and beverage retail business as an example, Food Operation License (຾ᐄ஢̙ᗇ)o r
Record-filing for Selling Only Pre-packaged Food (ࣩshall be acquired
and maintained by each of our subsidiaries. We may take registrations for our karaoke booths
business according to the Ministry of Culture and Tourism. The premises, transportation
vehicles and vending machines we used for storage, logistics and sale are subject to compliance
inspections by the regulatory authorities under the PRC Law. These registrations, approvals,
licenses and permits are achieved upon satisfactory compliance with the applicable laws and
regulations. Most of these licenses are subject to examinations or verifications by relevant
authorities and some are valid only for a fixed period of time subject to renewal and
accreditation. Complying with government regulations may require substantial expense, and
any non-compliance may expose us to liability. In case of any non-compliance, we may have
to incur significant expense and divert substantial management time to resolving any
deficiencies. We may also experience adverse publicity arising from such non-compliance with
government regulations that negatively impacts our brand.
As of the Latest Practicable Date, we have complied with the applicable laws and
regulations to complete food safety procedures in all material respects. However, various
standards of vending machines may be implemented in different regions, which increases the
risks of our non-compliance. Our business, financial condition, results of operations and
prospects therefore may be materially and adversely affected. We may experience difficulties
or failures in obtaining the necessary approvals, licenses and permits for other merchandise.
We may also experience difficulties or failures in obtaining, renewing and/or converting all the
approvals, licenses and permits required for our existing business operations upon expiration
in a timely manner or at all. If we cannot obtain and/or maintain all licenses required by us to
operate our business, planned new business operations and/or expansion may be delayed and
our ongoing business could be interrupted. We may also be subject to fines and penalties.
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We face risks associated with the misconduct or illegal activities of our POS partners,
merchandise wholesale customers, mobile device resellers, employees, suppliers and other
business partners and their employees, and other related personnel.
Our performance and goodwill may well be adversely and materially affected by
misconducts of our POS partners, merchandise wholesale customers, mobile device resellers
and employees, at different operational levels, either individually or in collusion with other
employees, suppliers, customers or other third parties. We may even be subject to third-party
claims and regulatory actions. There is no assurance that our internal control procedures and
systems of rewards and punishments are adequate and effective, and we cannot assure that our
POS partners, merchandise wholesale customers, mobile device resellers and employees will
not engage in misconduct or illegal activities that could materially and adversely affect our
business, financial condition and results of operations.
We may also be subject to misconducts by third parties such as our suppliers, business
partners and customers. As the third parties are out of our control, we cannot assure that we
will be able to prevent or detect all incidents of their wrongdoing. Any misconduct committed
against us or our interests, which may include past acts that have gone undetected or future
acts, could subject us to financial losses, harm our reputation and may have a material adverse
effect on our business and results of operations.
We have limited insurance coverage, which could expose us to significant costs and
business disruption.
We purchase and maintain various insurance policies that we believe to be aligned with
the customary commercial practice in our industry and as required under relevant laws and
regulations to safeguard against risks and unexpected events for our employees and properties.
However, we cannot assure that our insurance coverage will be sufficient or available to cover
damages, liabilities or losses we may incur in the ordinary course of our business. In additional,
there are certain losses for which insurance is not available in mainland China on commercially
practicable terms, such as losses or damages arising from any disruption in our network
infrastructure or business operations, litigation or natural disasters. If we are held responsible
for any losses or damages and there is insufficiency or unavailability of insurance, we could
suffer significant costs and diversion of our resources, and thereby materially and adversely
affect our business, financial conditions and results of operation.
We may not receive further government grants and the loss of which may affect our
financial performance.
In 2019, 2020, 2021, 2022 and the six months ended June 30, 2023, we recognized
government grants of approximately RMB3.3 million, RMB5.4 million, RMB1.7 million,
RMB5.1 million and RMB1.2 million, respectively, many of which were COVID-19 related. As
government grants are typically awarded in the discretion of the relevant government agencies,
there is no assurance that the government grants will be recurring in the future and that our
Group will continue to receive the same or similar amount of government grants. If no or a
smaller amount of government grant is received by to our Group in the future, other income
will decrease correspondingly which may adversely affect our financial performance.
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Our performance may be adversely affected by litigation or disputes.
From time to time, we may be involved in disputes with our POS partners, customers,
suppliers, employees and other parties during the ordinary course of our business for various
reasons, including but not limited to product infringement, intellectual properties
infringements and labor disputes. The handling of contractual disputes and litigation
proceedings can be extremely costly and time consuming. Should such disputes arise, our
Directors’ and members of senior management’s attention, together with other internal
resources may be significantly diverted to the handling of such matters. Moreover, our
relationship with the relevant customer, supplier or employee may be adversely affected as a
result of the legal proceedings and would ultimately affect our business operation, financial
results and profitability.
Any claim against us could require us to pay for substantial damages and, whether or not
successful, are costly and time-consuming to defend. It would, with or without merit, result in
significant adverse publicity against us, and could have a material adverse effect on the
marketability of our products and our reputation, which in turn, could have a material adverse
effect on our business, financial condition and results of operations.
Our business and results of operations could be materially and adversely impacted by any
negative publicity or failure or perceived failure to deal with customer complaints or
adverse publicity involving our merchandise or services.
Our business depends on market recognition of our brand. Any customer complaints or
negative publicity of news reports or allegations in printed and online media concerning our
business, our Directors, Supervisors, members of senior management, employees or business
partners, in particular food quality and safety and data privacy related issues, even if meritless
or immaterial to our operations, may damage our brand and reputation. Any actual or perceived
food safety concerns, contamination, reports on public health concerns and/or negative media
attention concerning our competitors or beverage and snack producers across the food industry
supply chain could affect customer perception of our business. Moreover, we may be required
to spend significant time and incur substantial costs in response to allegations and negative
publicity, and may not be able to diffuse them to the satisfaction of our investors and
customers. If we fail to effectively manage such negative publicity or complaints, our brand
value may be diminished and our business, brands and results of operations will be materially
and adversely affected.
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RISKS RELATING TO LEGAL, COMPLIANCE AND REGULATORY MATTERS
The interpretation, application, and enforcement of PRC laws may change from time to
time, including the possibility of unexpected changes to the PRC laws and regulations that
may occur before we are fully prepared for compliance. These potential changes may
affect us.
Our operations in mainland China are governed by PRC laws and regulations. The PRC
legal system is a law system based on written statutes, and prior court decisions may only be
cited for reference. The interpretation and application of PRC laws and regulations including,
but not limited to, the laws and regulations governing our business and the enforcement and
performance of our business arrangements in certain circumstances, will be determined on an
ad hoc basis depending on the facts and circumstances. Since late 1970s, the PRC government
has been developing a comprehensive system of laws and regulations governing economic
matters in general. The overall effect of legislation over the past several decades has
significantly enhanced the protections afforded to various forms of foreign investments in
China. However, China is still in the process of perfecting its legal system, and recently
enacted laws and regulations may not sufficiently cover all aspects of economic activities in
China. The effectiveness and interpretation of newly enacted laws or regulations, including
amendments to existing laws and regulations, may be delayed, and our business may be
affected if we rely on laws and regulations which are subsequently adopted or interpreted in
a manner different from our current understanding of these laws and regulations. New laws and
regulations that affect existing and proposed future businesses may also be applied
retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or
regulations may have on our business.
Any major changes in relation to food-related laws and regulations may affect our
business.
Both vendors and manufacturers of the beverage and pre-packed food industry in
mainland China must comply with PRC Law in relation to food, which require all enterprises
engaged in the sale of food and beverage to obtain the Food Operation License or Record-filing
for Selling Only Pre-packaged Food. They also set out safety standards with respect to food and
food additives, packaging and containers, information to be disclosed on packaging as well as
requirements for food facilities and equipment used for the transportation and sale of food.
Besides, the revised Food Safety Law of the People’s Republic of China (࠮
جand the Regulation on the Implementation of the Food Safety Law of the People’s
Republic of China (ૢԷ) stipulate that businesses engaged in
sales of food should conduct their operation activities according to the applicable laws and
regulations and food safety standards, establish a comprehensive food safety management
system, and take effective measures to prevent and control food safety related risks to ensure
the safety of the food produced. This may increase the compliance costs of beverage and food
vendors and manufacturers, including us. In addition, initiatives such as the Action Plan for
Oral Health (2019-2025) (ࣩ2019-2025 ϋ)) by National Health Commission
(ሊ͛਄ੰ։) in 2019, which govern the sale of high-sugar beverage and snacks in
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kindergartens, primary and secondary schools may also affect our existing business activities
or our new business plans. Any failure to comply with applicable food-related laws and
regulations may result in order of rectification, fines, confiscation of illegal gains, order of
suspension of operations, revocation of food operation permits and, in more extreme cases,
prosecution for criminal liabilities. Furthermore, any changes on food-related regulation may
increase our sales and operational costs which could adversely affect our business, financial
condition and development prospects.
Any failure to protect our customer data, or the improper collection, use or disclosure of
such data, as well as the uncertainties surrounding the cybersecurity review may subject
us to the liabilities imposed by data privacy and protection laws and regulations, which
may negatively impact our reputation and business.
In the ordinary course of our business, we collect and use information provided by
customers, which may include their payment services’ account names and information. We are
subject to various laws and regulations regarding the collection, storage, sharing, use,
disclosure and protection of personally identifiable information and data. In November 2016,
the Standing Committee of the National People’s Congress of the PRC (the “ SCNPC ”)
promulgated the Cybersecurity Law of the PRC, or the Cybersecurity Law, which requires,
among others, that network operators take security measures to protect the network from
unauthorized interference, damage and unauthorized access and prevent data from being
divulged, stolen or tampered with. Network operators are also required to collect and use
personal information in compliance with the principles of legitimacy, properness and necessity,
and strictly within the scope of authorization by the subject of personal information unless
otherwise prescribed by laws or regulations. On August 20, 2021, SCNPC passed the PRC
Personal Information Protection Law () , which became
effective on November 1, 2021. The PRC Personal Information Protection Law lays out the
fundamental rules for the collection, storage, use, processing, transmission, provision,
disclosure, deletion of personal information in mainland China. The PRC Personal Information
Protection Law further supplements the existing data protection regime previously established
by the Cybersecurity Law and provides the circumstances under which a personal information
processor could process personal information, which include but not limited to, where the
consent of the individual concerned is obtained or where it is necessary for the conclusion or
performance of a contract to which the individual is a contractual party. The collection of
personal information should be conducted in a disciplined manner with as little impact on
individuals’ rights and interests as possible, and excessive collection of personal information
is prohibited. On September 14, 2022, the CAC released the Notice of Public Consultation on
the Decision on Amending the Cybersecurity Law of the People’s Republic of China (Draft for
Comments) (֛(ᅄӋจԈᇃ)
ٝor the Draft Amendment of Cybersecurity Law. The Draft Amendment of
Cybersecurity Law mainly increases the legal liability for violations under the current
Cybersecurity Law, integrates and unifies the penalties for violation of network operation
security protection obligations, violation of critical information infrastructure security
protection obligations and violation of personal information protection obligations. Numerous
regulations, guidelines and other measures have been and are expected to be adopted under the
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Cybersecurity Law and the PRC Personal Information Protection Law. See “Regulatory
Overview — Regulations Relating to Information Security and Privacy Protection” for details.
Moreover, different regulatory bodies in mainland China, including the Ministry of Industry
and Information Technology, the CAC and the State Administration for Market Regulation,
have enforced data privacy and protection laws and regulations with various standards and
applications. Complying with these data privacy and protection laws and requirements could
cause us to incur additional expenses or require us to alter or change our practices in a manner
that could affect our business. We cannot assure you that our existing privacy and personal
information protection system and technical measures will be considered sufficient under
applicable laws and regulations, and we may be subject to government enforcement actions and
investigations, fines, penalties, or suspension of our non-compliant operations, among other
sanctions, which could materially and adversely affect our business and results of operations.
Besides, the Measures for Cybersecurity Review (جthe
“Cybersecurity Review Measures ”) stipulates the mandatory requirement of cybersecurity
review for companies which hold more than one million users’ personal information when
applying for a listing abroad. Our PRC Legal Advisor is of the view that such mandatory
requirements of cybersecurity review are applicable to companies which are seeking a listing
abroad and we are not required to initiate a submission for cybersecurity review in connection
with the Listing under the Article 7 of the Cybersecurity Review Measures, as we are not
applying for a listing abroad.
The Administration Governing the Cyber Data Security (Draft for Comments) ( ၣഖᅰ
ኽτΌ၍ଣૢԷ(ᅄӋจԈᇃ)) (the “ Draft Cyber Data Security Regulations ”) provides
cross-border data transmission security and cybersecurity review standards for listing abroad
and in Hong Kong and the protection of important data and personal information rights.
According to Article 73 of the Draft Cyber Data Security Regulations, data processors refer to
individuals and organizations that independently determine the purposes and methods of their
data processing activities. If the listing in Hong Kong of a data processor affects or may affect
national security, or any other data processing activities of a data processor affect or may affect
national security, the data processor shall, in accordance with relevant state provisions, apply
for a cybersecurity review. Our PRC Legal Advisor has advised us that the Draft Cyber Data
Security Regulations is applicable to the data processing activities of our Company, if the draft
regulations were to be implemented in their current form. However, the Draft Cyber Data
Security Regulations does not provide the standard to determine the circumstances that would
be determined to “affect or may affect national security.” As of the Latest Practicable Date, the
Draft Cyber Data Security Regulations was released for public comments only and its final
version and effective date are subject to change.
The regulatory regime on data privacy and security in mainland China is relatively new.
The interpretation and application of relevant laws, regulations and standards are evolving and
may change, and new laws and regulations in this area may be promulgated in the future which
may affect us. We may be subject to investigations and inspections by government authorities
regarding our compliance with relevant laws and regulations. Any inability to adequately
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address data privacy and security concerns, even if unfounded, or to comply with applicable
data security and privacy laws, regulations and standards, could result in additional cost and
liability for us, damage our reputation and harm our business.
Regulatory measures on foreign currency conversion in mainland China may limit our
foreign exchange transactions.
The Renminbi is not currently a freely convertible currency due to regulatory measures
in mainland China on the convertibility of Renminbi into foreign currencies and in certain
cases, the remittance of currency out of mainland China. We cannot assure that we will have
sufficient foreign exchange to meet our foreign exchange requirements. Under the current
foreign exchange regulatory measures in mainland China, foreign exchange transactions under
the current account conducted by us, including the payment of dividends, do not require
advance approval from SAFE, but we are required to present documentary evidence of such
transactions and conduct such transactions at designated foreign exchange banks within
mainland China that have the requisite licenses to conduct foreign exchange business. Foreign
exchange transactions under the capital account conducted by us, however, must be approved
in advance by SAFE.
Under the existing foreign exchange regulations, following the completion of the Global
Offering, we will be able to pay dividends in foreign currencies without prior approval from
SAFE by complying with certain procedural requirements. However, we cannot assure that
these foreign exchange policies regarding payment of dividends in foreign currencies will
continue in the future. In addition, any insufficiency of foreign exchange may restrict our
ability to obtain sufficient foreign exchange for dividend payments to Shareholders or to satisfy
other foreign exchange requirements. If we fail to obtain approval from SAFE to convert
Renminbi into any foreign currency for any of the above purposes, our capital expenditure
plans and our business, operating results and financial position may be materially and
adversely affected.
Payment of dividends may be subject to restrictions under the PRC Law.
Under the PRC Law, dividends may be paid only out of distributable profits. Distributable
profits are the net profit as determined under PRC GAAP or HKFRS, whichever is the lower,
less any recovery of accumulated losses and appropriations to statutory and other reserves
required to be made. As a result, we may not have sufficient, or any, distributable profits to
enable us to make dividend distributions to our Shareholders in the future, including periods
for which our financial statements indicate that our operations have been profitable. Any
distributable profits that are not distributed in a given year are retained and available for
distribution in subsequent years.
Moreover, as the calculation of distributable profits under PRC GAAP is different from
the calculation under HKFRS in certain respects, our operating subsidiaries may not have
distributable profits as determined under PRC GAAP , even if they have profits for that year as
determined under HKFRS, or vice versa. Accordingly, we may not receive sufficient
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distributions from our subsidiaries. Failure by our operating subsidiaries to pay dividends to us
could have a negative impact on our cash flows and our ability to make dividend distributions
to our Shareholders in the future, including those periods in which our financial statements
indicate that our operations have been profitable.
Holders of our H Shares may be subject to income tax obligations in mainland China.
Under current PRC Law, non-mainland China resident individuals and non-mainland
China resident enterprises are subject to different tax obligations with respect to the dividends
paid to them by us and the gains realized upon the sale or other disposition of H Shares.
Non-mainland China resident individuals are required to pay mainland China individual
income tax at a 20% rate under Individual Income Tax Law of the People’s Republic of China
() for the interests, dividends and bonus they obtain from
mainland China. Accordingly, we are required to withhold such tax from dividend payments,
unless applicable tax treaties between mainland China and the jurisdiction in which the foreign
individual resides reduce or provide an exemption for the relevant tax obligations. Generally,
in accordance with the Notice on Matters Concerning the Levy and Administration of
Individual Income Tax After the Repeal of Guo Shui Fa [1993] No. 045 Issued by the
SA T (਷೼೯[1993]045),
domestic non-foreign-invested enterprises issuing shares in Hong Kong may, when distributing
dividends to overseas resident individuals in the jurisdiction of the tax treaty, withhold
individual income tax at the rate of 10%. When a tax rate of 10% is not applicable, the
withholding company shall: (a) return the excessive tax amount pursuant to due procedures if
the applicable tax rate is lower than 10%; (b) withhold such foreign individual income tax at
the effective tax rate agreed on if the applicable tax rate is between 10% and 20%; or
(c) withhold such foreign individual income tax at a rate of 20% if no taxation treaty is
applicable.
For non-mainland China resident enterprises that were established under foreign laws
with no real management body in mainland China but have establishments or premises in
mainland China, or for those which have no establishments or premises in mainland China but
whose income is derived from mainland China, under the Enterprise Income Tax Law of the
People‘s Republic of China (), dividends paid by us and
gains realized by such foreign enterprises upon the sale or other disposition of H Shares are
ordinarily subject to mainland China enterprise income tax at a 20% rate. In accordance with
the Circular on Issues Relating to the Withholding of Enterprise Income Tax by PRC Resident
Enterprises on Dividends Paid to Overseas Non-PRC Resident Enterprise Shareholders of H
Shares (͏ΆุΣྤ̮H੻೼Ϟᗫਪ
) issued by the SA T, such tax rate has been reduced to 10%, subject to a further
reduction under special arrangements or applicable treaties between mainland China and the
jurisdiction of the residence of the relevant non-mainland China resident enterprise.
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The interpretation and application of applicable PRC Law may change or may be
determined based on prevailing laws and regulations at the time, including individual income
tax on dividends paid to non-PRC resident Shareholders, and on gains realized on sale or other
disposition of our H Shares. The PRC Law may also change. We cannot predict whether the
relevant preferential tax treatment will be revoked in the future such that all non-mainland
China resident individual holders will be subject to individual income tax in mainland China
at a flat rate of 20%. If there is any change to applicable tax laws and regulations or in the
interpretation or application of such laws and regulations, the value of your investment in our
H Shares may be materially affected.
Investors may experience difficulties in effecting service of legal process and enforcing
judgments against us, our Directors, Supervisors or members of senior management.
We are a company incorporated under the PRC Law and most of our assets and our
subsidiaries are located within mainland China. Most of our Directors, Supervisors and
members of senior management reside within mainland China. Most of the assets of these
Directors, Supervisors and members of senior management may also be located within
mainland China. As a result, it may not be possible to effect service of process outside of
mainland China upon us or most of our Directors, Supervisors and members of senior
management.
A judgment of a court of another jurisdiction may be reciprocally recognized or enforced
in mainland China only if the jurisdiction has a treaty with mainland China or if the jurisdiction
has been otherwise deemed by mainland China courts to satisfy the requirements for reciprocal
recognition, subject to the satisfaction of other requirements. However, mainland China is not
a party to treaties providing for the reciprocal enforcement of judgments of courts with foreign
countries such as the United States and the United Kingdom and enforcement in mainland
China of judgments of a court in these jurisdictions may consequently be difficult or
impossible. On July 14, 2006, the Supreme People’s Court of the PRC and the Government of
the Hong Kong Special Administrative Region signed the Arrangement between the Mainland
and the HKSAR on Reciprocal Recognition and Enforcement of the Decisions of Civil and
Commercial Cases under Consensual Jurisdiction (ʝႩ
τર) (the “ 2006 Arrangement ”). Under the
2006 Arrangement, where any designated mainland China court or Hong Kong court has made
an enforceable final judgment requiring payment of money in a civil and commercial case
pursuant to a choice of court agreement, the party concerned may apply to the relevant
mainland China court or Hong Kong court for recognition and enforcement of the judgment.
On January 18, 2019, the Supreme People’s Court of the People’s Republic of China and the
Department of Justice under the Government of the Hong Kong Special Administrative Region
signed the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and
Commercial Matters by the Courts of the Mainland and of the Hong Kong Special
Administrative Region (ٙ
τર) (the “ 2019 Arrangement ”). The 2019 Arrangement seeks to establish a mechanism
with greater clarity and certainty for recognition and enforcement of judgments in wider range
of civil and commercial matters between the Hong Kong Special Administrative Region and the
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mainland China. The 2019 Arrangement does not include the requirement for a choice of court
agreement in writing by the parties. The 2019 Arrangement will only take effect after the
promulgation of a judicial interpretation by the Supreme People’s Court and the completion of
the relevant legislative procedures in the Hong Kong Special Administrative Region. The 2019
Arrangement will, upon its effectiveness, supersedes the 2006 Arrangement. Therefore, before
the 2019 Arrangement becomes effective, it may be difficult to enforce a judgment rendered
by a Hong Kong court in China if the parties in the dispute do not agree to enter into a choice
of court agreement in writing.
Our leased property interests may be defective and our lease agreements may not be
registered, our right to lease the properties affected by such defects may be challenged,
which could cause significant disruption to our business.
As of the Latest Practicable Date, (i) some of our leased properties with an aggregate of
61,196 sq.m., representing approximately 72.3% of our total leased GFA, the lessors of such
leased properties had not been able to obtain or provide us with sufficient and valid building
ownership certificates, (ii) the actual use of some of our leased properties with an aggregate
GFA of 3,895 sq.m., representing approximately 4.6% of our total leased GFA, did not fit into
the prescribed scope of usage shown on the relevant ownership certificates and (iii) the lessors
could not provide to us documents proving that the corresponding approval procedures had
been completed for some of our leased properties with an aggregate GFA of 5,944 sq.m.,
representing approximately 7.0% of our total leased GFA, built on collective land ( ණ᜗͜ή)
or allocated land ( ྌᅡ͜ή). If our lessors are not the owners of the properties or they have
not been authorised by the relevant owners of the properties for leasing such properties from
the relevant government authorities, our leases could be invalidated. If this occurs, we may
face challenges from the legal owners of the properties or other third parties, and may be forced
to vacate the relevant properties and relocate to a different site. We may incur additional
expenses during the process, and our business, financial condition and results of operations
may be negatively affected. In addition, 150 of our lease agreements with landlords have not
been registered with the relevant government authorities as required in mainland China by PRC
Law, which may expose us to potential fines of RMB1,000 to RMB10,000 for each
non-registered lease agreement. The estimated total maximum penalty was RMB1.5 million as
of the Latest Practicable Date.
We may be subject to adverse impact for our failure to register for and/or contribute to
social insurance and housing provident funds on behalf of some of our employees.
During the Track Record Period, we did not register for and/or fully contribute to the
social insurance and housing provident funds for certain employees. We estimate that the
shortfall of social insurance payments in 2019, 2020, 2021, 2022 and the six months ended
June 30, 2023 amounted to approximately RMB6.3 million, RMB2.0 million, RMB5.9 million,
RMB2.6 million and RMB1.6 million, respectively, and the shortfall of housing provident fund
contributions in 2019, 2020, 2021, 2022 and the six months ended June 30, 2023 amounted to
approximately RMB0.5 million, RMB1.8 million, RMB1.6 million, RMB0.8 million and
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RMB0.4 million, respectively. We had accordingly made a provision in the amount of RMB4.3
million, RMB1.8 million, RMB4.0 million, RMB2.4 million and RMB1.4 million in 2019,
2020, 2021, 2022 and the six months ended June 30, 2023, respectively.
Pursuant to the relevant PRC Law, (i) in respect of under-contribution of social insurance
within a prescribed period, we may be subject to an overdue charge of 0.05% of the delayed
payment amount per day and the competent authority may further impose a fine of one to three
times of the overdue amount if such payment is not made within the stipulated period; and (ii)
in respect of outstanding housing provident fund contributions, we may be ordered to pay the
outstanding housing provident fund contributions within a prescribed time period, and an
application may be made to a people’s court for compulsory enforcement if the payment of the
outstanding housing provident fund contributions is not made after the expiration of the time
limit. As advised by our PRC Legal Advisor, there is no expressed legal provision or regulation
that imposes a penalty on the Group for such non-payment of housing provident fund
contributions but we may be ordered to pay the outstanding amount of our housing provident
fund within the prescribed period.
As of the Latest Practicable Date, we had not received any notification from the relevant
in mainland China authorities requiring us to pay shortfalls or the penalties with respect to
social insurance and housing provident funds. However, we cannot assure you that the relevant
authorities in mainland China would not notify and require us in the future to complete
registration and/or pay the outstanding contributions by a stipulated deadline. In case we fail
to pay the outstanding contributions, or to complete the housing fund registration in accordance
with PRC Law and as required by the relevant authorities in mainland China, we may be
subject to a penalty fine and/or an order from the relevant people’s court to enforce such
payment. See “Business — Legal Proceedings and Compliance — Social Insurance and
Housing Provident Funds” for further details.
Changes in the economic, social and political conditions in mainland China may have an
adverse effect on our business, financial condition and results of our operation.
Our operations are conducted in mainland China, and our revenue is therefore derived
from operations in mainland China. Therefore, any changes in the economic, social and
political conditions in mainland China may have a great influence over our business, financial
condition and results of operation. The economy of mainland China differs from the economies
of certain other countries in various respects, including the level of development, the role of
government, its growth profile and its foreign exchange regulation.
There is no assurance that the economy of mainland China will continue to develop
rapidly and will remain as one of the fastest growing economy in terms of GDP growth in the
future. Any slowdown of the Chinese economy may have a negative effect on our business. A
substantial portion of the productive assets in mainland China is owned by the PRC
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Government. The PRC government also plays an active role in the Chinese economy through
promoting fiscal and monetary policies and industrial policies that may change from time to
time. Accordingly, our results of operations and financial conditions may be materially
affected.
In addition, economic conditions in mainland China are sensitive to global economic
conditions and the global economy including the economy of mainland China is facing
challenges, including challenges following the global outbreak of COVID-19, the withdrawal
of the United Kingdom from the European Union at the end of January 2020 and unrest in
Ukraine in 2022 and 2023, which have resulted in volatility in financial and other markets
recently. Moreover, there are also concerns over the trade and economic policies of the United
States government, which have contributed to, among other things, tensions between the
United States and mainland China. In particular, the imposition of tariffs on Chinese products
by the United States may result in a decrease in mainland China’s exports and a slowdown of
the Chinese economy, which would in turn reduce domestic consumption. Any adverse change
in the global or mainland China’s economic conditions or government policies in mainland
China could have a material adverse effect on the overall economic growth and the level of
investments and expenditures in mainland China, which in turn could lead to a reduction in
demand for our services and consequently have a material adverse effect on our businesses.
The enforcement of Chinese labor contract law, social insurance law and other labor
related regulations may adversely affect our business, financial condition and results of
operation.
Pursuant to PRC Labor Contract Law, or the Labor Contract Law, effective in January
2008 and amended in July 2013, and its implementation rules that became effective in
September 2008, employers are subject to strict requirements in terms of signing labor
contracts, minimum wages, paying remuneration, overtime working hours limitations,
determining the terms of employees’ probation and unilaterally terminating labor contracts. In
the event that we decide to terminate the employment of some of our employees or otherwise
change our employment or labor practices, the Labor Contract Law and its implementation
rules may limit our ability to effect those changes in a desirable or cost-effective manner,
which could adversely affect our business and results of operations.
On October 28, 2010, the Standing Committee of the National People’s Congress
promulgated PRC Social Insurance Law, or the Social Insurance Law, which became effective
on July 1, 2011. According to the Social Insurance Law, employees must participate in pension
insurance, work-related injury insurance, medical insurance, unemployment insurance and
maternity insurance and the employers must, as well as their employees or separately, pay the
social insurance premiums for such employees.
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The interpretation and enforcement practices of the Labor Contract Law, the Social
Insurance Law and other labor related regulations (the “ labor-related laws and regulations ”)
may change or may be determined based on prevailing laws and regulations at the time, which
may subject us to labor disputes or government investigations. If we are deemed to have
violated relevant labor-related laws and regulations, we could be required to provide additional
compensation to our employees and our business, financial condition and results of operation
could be adversely affected.
Any force majeure event could materially and adversely affect our business and results of
operations.
Any force majeure events, including the outbreak, or threatened outbreak, of any
epidemic or pandemic in Hong Kong or mainland China, could materially and adversely affect
the overall business sentiment and environment in mainland China, particularly if such
outbreak is inadequately controlled. Some regions in mainland China are subject to earthquake,
fire, bad weather, or other natural disaster. This, in turn, could materially and adversely affect
domestic consumption, labor supply and, possibly, the overall rate of growth of the gross
domestic product of mainland China. Our income is currently derived entirely from our
operations in mainland China, and any labor shortages on contraction or slowdown in the
growth of domestic consumption in mainland China could materially and adversely affect our
business, financial condition and results of operations. In addition, if any of our employees are
affected by any severe communicable disease, it could adversely affect or disrupt production
levels and operations at the relevant stations or potentially require a closure of our facilities
to prevent the spread of the disease. Any of these outcomes could materially and adversely
affect our business, financial condition and results of operations. The spread of any epidemic
or pandemic in mainland China may also affect the operations of our customers and suppliers,
which could materially and adversely affect our business, financial condition, and results of
operations.
RISKS RELATING TO OUR GLOBAL OFFERING
There has been no prior public market for our H Shares. An active trading market for our
H Shares may not develop, especially taking into account that certain existing
Shareholders may be subject to a lock-up period, and the liquidity and market price of
our H Shares may be volatile.
Prior to the Global Offering, there was no public market for our H Shares. We cannot
assure that a public market for our H Shares with adequate liquidity and trading volume will
develop and be sustained following the completion of Global Offering. In addition, the Offer
Price of our H Shares is expected to be fixed by agreement between the Overall Coordinators
(for themselves and on behalf of the other Underwriters) and us, and may not be an indication
of the market price of our H Shares following the completion of the Global Offering. If an
active public market for our H Shares does not develop following the completion of Global
Offering, the market price and liquidity of our H Shares could be materially and adversely
affected.
RISK FACTORS
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In particular, certain portion of H Shares to be converted upon Conversion of Unlisted
Shares into H Shares will be subject to a lock-up period from the Listing Date, which may
significantly affect the liquidity and trade volume of our H Shares in the short term following
the Global Offering. A listing on the Hong Kong Stock Exchange does not guarantee that an
active and liquid trading market for our H Shares will develop, especially during the period
when certain portion of our H Shares may be subjected to lock-up, or if it does develop, that
it will sustained following the Global Offering, or that market price of the H Shares will rise
following the Global Offering. If an active public market for our H Shares does not develop
following the completion of Global Offering, the market price and liquidity of our H Shares
could be materially and adversely affected.
The price and trading volume of our H Shares may be highly volatile. Several factors,
some of which are beyond our control, such as variations in our results of operations, changes
in our pricing policy, the emergence of new technologies, strategic alliances or acquisitions, the
addition or departure of key personnel, changes in profit forecast or recommendations by
financial analysts, changes in ratings by credit rating agencies, litigation or the removal of the
restrictions on share transactions, could cause large and sudden changes to the volume and
price at which our H Shares will trade.
In addition, the Hong Kong Stock Exchange and other securities markets have, from time
to time, experienced significant price and volume volatility that is not related to the operating
performance of any particular company.
Holders of our H Shares are subject to the risk that the price of our H Shares could fall
during the period before trading of our H Shares begins.
The Offer Price of our H Shares is expected to be determined on the Price Determination
Date. However, our Shares will not commence trading on the Hong Kong Stock Exchange until
they are delivered, which is expected to be several business days after the Price Determination
Date. As a result, investors may not be able to sell or deal in our H Shares during that period.
The price and trading volume of the Shares may be highly volatile. Factors such as variations
in our revenue, net profit and cash flows and announcements of new investments, strategic
alliances and acquisitions, fluctuations in market prices for our products or fluctuations in
market prices for other soft beverage companies could cause the market price of our H Shares
to change substantially. Any such developments may result in significant and sudden changes
in the volume and price at which our H Shares will trade. We cannot assure that these
developments will not occur in the future. Accordingly, holders of our H Shares are subject to
the risk that the price of our H Shares could fall before trading begins as a result of adverse
market conditions or other adverse developments, which could occur between the time of sale
and the time trading begins.
RISK FACTORS
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Substantial future sales or the expectation of substantial sales of our Shares in the public
market could cause the price of our H Shares to decline.
Although our existing Shareholders are subject to restrictions on their sales of Shares
within 12 months from the Listing Date as described in “Underwriting” in this prospectus,
future sales of a significant number of our Shares by our existing Shareholders in the public
market after the Global Offering, or the perception that these sales could occur, could cause the
market price of our H Shares to decline and could materially impair our future ability to raise
capital through offerings of our H Shares. We cannot assure that our existing Shareholders will
not dispose of Shares held by them upon the expiration of restrictions set out above. We have
applied for part of the Company’s Unlisted Shares to circulate on the Hong Kong Stock
Exchange after the completion of the Global Offering. According to the PRC Company Law,
the Shares issued by the Company prior to the Global Offering (including a total of
614,039,309 H Shares to be converted from Unlisted Shares held by 210 Shareholders of the
Company) are restricted from trading within one year from the Listing Date. Such restriction
from trading will limit the number of H Shares to be circulated on the market, which will in
turn adversely affect the liquidity of the H Shares during such restriction period. If our
application for the circulation of our relevant Unlisted Shares on the Hong Kong Stock
Exchange after the completion of the Global Offering is successful, any future sales (after the
expiration of the restrictions set out above) of Unlisted Shares by relevant Shareholders in the
public market may affect the market price of the Shares. Moreover, if we convert a substantial
amount of Unlisted Shares into H shares to be listed and traded in the future at the Stock
Exchange of Hong Kong, it may further increase the supply of the H shares in the market,
which may affect the market price of the H shares. We cannot predict the effect, if any, that any
future sales of Shares by our existing Shareholders, or the Shares available for sale by our
existing Shareholders may have on the market price of the Shares. Sale of a substantial amount
of Shares by our Shareholders or us, or the market perception that such sale may occur, could
materially and adversely affect the prevailing market price of the Shares.
As the Offer Price of our H Shares is higher than our consolidated net tangible book value
per Share, purchasers of our H Shares in the Global Offering may experience immediate
dilution upon such purchases.
As the Offer Price of our H Shares is higher than the consolidated net tangible assets per
H Share immediately prior to the Global Offering, purchasers of our H Shares in the Global
Offering may experience an immediate dilution. Our existing Shareholders will receive an
increase in the pro forma adjusted consolidated net tangible asset value per H Share of their
H Shares. In addition, holders of our H Shares may experience further dilution of their interest
if we issue additional H Shares in the future to raise additional capital.
RISK FACTORS
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Our Single Largest Group of Shareholders have significant control over our Company
and their interests may not be aligned with the interests of the other Shareholders.
Prior to and immediately following the completion of the Global Offering, our Single
Largest Group of Shareholders will remain having significant control over their interests in the
issued share capital of our Company. Subject to, among others, the Articles of Association and
the Hong Kong Listing Rules, the Single Largest Group of Shareholders by virtue of their
beneficial ownership of the share capital of the Company, will be able to exercise significant
control and exert significant influence over our business or otherwise on matters of
significance to us and other Shareholders by voting at the general meeting of the Shareholders
and at Board meetings. The interests of the Single Largest Group of Shareholders may differ
from the interests of other Shareholders and the Shareholders are free to exercise their votes
according to their interests. To the extent that the interests of the Single Largest Group of
Shareholders conflict with the interests of other Shareholders, the interests of other
Shareholders can be disadvantaged and harmed.
We may need additional capital, and the sale or issue of additional Shares or other equity
securities could result in additional dilution to our Shareholders.
Notwithstanding our current cash and cash equivalents and the net proceeds from the
Global Offering, we may require additional cash resources to finance our continued growth or
other future developments. We cannot assure that financing will be available in the amounts or
on terms acceptable to us, if at all. If we fail to raise additional funds, we may need to sell
additional equity securities, which could result in additional dilution to our Shareholders.
We cannot assure you whether and when we will declare and pay dividends in the
foreseeable future.
Our ability to pay dividends will depend on whether we are able to generate sufficient
earnings. Distribution of dividends shall be decided by our Board at their discretion and will
be subject to the approval of the general meeting. A decision to declare or to pay dividends and
the amount thereof depend on various factors, including but not limited to our results of
operations, cash flows and financial position, operating and capital expenditure requirements,
distributable profits as determined under PRC GAAP or HKFRS (whichever is lower), our
Articles of Association and other constitutional documents, the PRC Company Law and any
other applicable PRC Law, market conditions, our strategy and projection for our business,
contractual restrictions and obligations, taxation, regulatory restrictions and any other factors
from time to time deemed by our Board of Directors as relevant to the declaration or
suspension of dividends. As a result, there can be no assurance whether, when and in what form
we will pay dividends in the future. Subject to any of the above constraints, we may not be able
to pay dividends in accordance with our dividend policy. See “Financial Information —
Dividend.”
RISK FACTORS
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We published periodic financial information on the NEEQ in mainland China pursuant
to applicable rules and regulations and you should be cautious and not place any reliance
on financial information other than that disclosed in this prospectus.
We were listed on the NEEQ in 2016 and delisted in 2019. Pursuant to applicable PRC
Law, we were required to publish periodic financial information. Interim financial information
published by us in mainland China is normally derived from its management accounts and is
not audited or reviewed by independent auditors. Certain historical financial information not
included in this prospectus may not be directly comparable with our consolidated financial
information contained in this prospectus. Accordingly, financial information published in
mainland China by us should not be relied upon by potential investors to provide the same
quality of information associated with any consolidated financial information contained in this
prospectus.
We cannot guarantee the accuracy of facts, forecasts and statistics obtained from various
independent third-party sources contained in this prospectus.
This prospectus contains information and statistics relating to the industry in which we
operate. Such information and statistics have been derived from publicly available sources and
industry report prepared by Frost & Sullivan. We believe that the sources of the information
are appropriate for such information, and have taken reasonable care in the reproduction or
extraction of such information for the purpose of disclosure in this prospectus, however, we
cannot assure that the quality or reliability of such source materials. They have not been
prepared or independently verified by us, the Joint Sponsors, the Overall Coordinators, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters,
the Capital Market Intermediaries or any of their respective affiliates or advisors, or any other
persons or parties, excluding Frost & Sullivan, involved in the Global Offering. We cannot
assure you that those facts, forecasts and statistics are accurate and reliable. In all cases,
investors should give consideration as to how much weight or importance they should attach
to or place on such facts.
Forward-looking statements contained in this prospectus are subject to risks and
uncertainties.
This prospectus contains certain statements and information relating to us that are based
on beliefs of our management as well as assumptions made by and information currently
available to our management. When used in this prospectus, the words such as “believe,”
“expect,” “estimate,” “predict,” “aim,” “intend,” “will,” “may,” “plan,” “consider,”
“anticipate,” “seek,” “should,” “could,” “would,” “continue” and other similar expressions, as
they relate to our Company or our management, are intended to identify forward-looking
statements. Such statements reflect the current views of our management with respect to future
events, business operations, liquidity and capital resources, some of which may not materialize
or may change.Y ou are cautioned that reliance on any forward-looking statement involves risks
and uncertainties and that any or all of those assumptions could prove to be inaccurate and as
a result, the forward-looking statements based on those assumptions could also be incorrect. In
RISK FACTORS
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light of these and other risks and uncertainties, the inclusion of forward-looking statements in
this prospectus should not be regarded as representations or warranties by us that our plans and
objectives will be achieved and these forward-looking statements should be considered in light
of various important factors, including those set forth in this section. Subject to the
requirements of the Listing Rules, we do not intend publicly to update or otherwise revise the
forward-looking statements in this prospectus, whether as a result of new information, future
events or otherwise. Accordingly, you should not place undue reliance on any forward-looking
information. All forward-looking statements in this prospectus are qualified by reference to this
cautionary statement.
Investors should read the entire prospectus carefully and should not consider any
particular statements in this prospectus or in published media reports without carefully
considering the risks and other information contained in this prospectus.
Prior to the publication of this prospectus, there has been coverage in the media regarding
us and the Global Offering, which contained among other things, certain financial information,
projections, valuations and other forward-looking information about us and the Global
Offering. We have not authorized the disclosure of any such information in the press or media
and do not accept any responsibility for the accuracy or completeness of such media coverage
or forward-looking statements. We make no representation as to the appropriateness, accuracy,
completeness or reliability of any information disseminated in the media. We disclaim any
information in the media to the extent that such information is inconsistent or conflicts with
the information contained in this prospectus. Accordingly, prospective investors are cautioned
to make their investment decisions on the basis of the information contained in this prospectus
only and should not rely on any other information.
RISK FACTORS
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In preparation for the Listing, our Company has sought the following waivers from strict
compliance with the relevant provisions of the Hong Kong Listing Rules.
W AIVER IN RELATION TO MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rules 8.12 and 19A.15 of the Hong Kong Listing Rules, we must have
sufficient management presence in Hong Kong, which normally means that at least two of the
executive Directors must be ordinarily resident in Hong Kong.
Since our headquarters and principal business operations and management of our Group
are carried out in mainland China, our executive Directors are based in mainland China to
better manage and attend to our Group’s business operations. Therefore, we do not and, in the
foreseeable future, will not have sufficient management presence in Hong Kong for the purpose
of satisfying the requirement under Rules 8.12 and 19A.15 of the Hong Kong Listing Rules.
Accordingly, we have applied to the Hong Kong Stock Exchange for, and the Hong Kong
Stock Exchange has agreed to grant, a waiver from strict compliance with the requirement
under Rules 8.12 and 19A.15 of the Hong Kong Listing Rules. In order to maintain effective
communication with the Hong Kong Stock Exchange, we will put in place the following
measures in order to ensure that regular communication is maintained between the Hong Kong
Stock Exchange and us:
(a) we have appointed two authorized representatives pursuant to Rule 3.05 of the Hong
Kong Listing Rules. The two authorized representatives are Ms. Cui Y an (“ Ms. Cui
Ya n”), our executive Director and Ms. Hui Yin Shan (“ Ms. Hui ”), our joint
company secretary. The authorized representatives will act as the principal channel
of communication between the Hong Kong Stock Exchange and our Company. The
authorized representatives will be available to meet with the Hong Kong Stock
Exchange in Hong Kong within a reasonable period of time upon request and will
be readily contactable by the Hong Kong Stock Exchange by telephone, facsimile
and/or email to deal promptly with any enquiries which may be made by the Hong
Kong Stock Exchange. Each of the authorized representatives is authorized to
communicate on behalf of our Company with the Hong Kong Stock Exchange;
(b) each of the authorized representatives has means to contact all Directors (including
the non-executive Directors and the independent non-executive Directors) promptly
at all times as and when the Hong Kong Stock Exchange wishes to contact the
Directors on any matters. We will implement a policy whereby:
(i) Ms. Hui, our authorized representative and our joint company secretary, will
reside in Hong Kong so that the Hong Kong Stock Exchange may contact
Ms. Hui as and when needed;
W AIVERS FROM STRICT COMPLIANCE WITH THE HONG KONG LISTING RULES
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(ii) each Director will provide his/her mobile phone number, office phone number,
email address and facsimile number (if any) to the authorized representatives;
(iii) each Director will provide his/her phone numbers or means of communication
to the authorized representatives when he/she is travelling; and
(iv) each Director will provide his/her mobile phone number, office phone number,
email address and facsimile number (if any) to the Hong Kong Stock
Exchange;
(c) in compliance with Rules 3A.19 of the Hong Kong Listing Rules, we have retained
China Securities (International) Corporate Finance Company Limited to act as our
compliance adviser (“ Compliance Adviser ”), which will act as an additional
channel of communication between the Hong Kong Stock Exchange and our
Company for the period commencing on the Listing Date and ending on the date that
our Company publishes our financial results for the first full financial year after the
Listing Date pursuant to Rule 13.46 of the Hong Kong Listing Rules;
(d) our Company will inform the Hong Kong Stock Exchange promptly in respect of any
change in our Company’s authorized representatives and Compliance Adviser;
(e) each Director who is not ordinarily resident in Hong Kong has confirmed that each
of them possesses or can apply for valid travel documents to visit Hong Kong and
can meet with the Hong Kong Stock Exchange within a reasonable period; and
(f) we will retain a Hong Kong legal advisor to advise us on the application of the Hong
Kong Listing Rules and other applicable Hong Kong laws and regulations after our
Listing.
W AIVER IN RELATION TO JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Hong Kong Listing Rules, our company secretary
must be an individual who, by virtue of his or her academic or professional qualifications or
relevant experience, is, in the opinion of the Hong Kong Stock Exchange, capable of
discharging the functions of company secretary. The Hong Kong Stock Exchange considers the
following academic or professional qualifications to be acceptable: (a) a member of The Hong
Kong Institute of Chartered Secretaries; (b) a solicitor or barrister as defined in the Legal
Practitioners Ordinance (Chapter 159 of the laws of Hong Kong); or (c) a certified public
accountant as defined in the Professional Accountants Ordinance (Chapter 50 of the laws of
Hong Kong).
W AIVERS FROM STRICT COMPLIANCE WITH THE HONG KONG LISTING RULES
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Note 2 to Rule 3.28 of the Hong Kong Listing Rules further provides that in assessing
“relevant experience”, the Hong Kong Stock Exchange will consider the individual’s:
(a) length of employment with the issuer and other issuers and the roles he/she played;
(b) familiarity with the Hong Kong Listing Rules and other relevant law and regulations
including the SFO, the Companies Ordinance, the Companies (Winding Up and Miscellaneous
Provisions) Ordinance and the Takeovers Code; (c) relevant training taken and/or to be taken
in addition to the minimum requirement under Rule 3.29 of the Hong Kong Listing Rules (i.e.
not less than 15 hours of relevant professional training in each financial year); and (d)
professional qualifications in other jurisdictions.
We have appointed Ms. Cui Y an and Ms. Hui as our joint company secretaries. Our
Directors are of the view that, having regard to Ms. Cui Y an’s thorough understanding of our
business, internal administration and overall management of our Group, she is a suitable person
to act as a company secretary of the Company. In addition, as our headquarters and principal
business operations are located in mainland China, our Directors believe that it is necessary to
appoint Ms. Cui Y an as a company secretary whose presence in mainland China will enable her
to attend to the day-to-day corporate secretarial matters concerning our Group. However, as
Ms. Cui Y an does not possess the qualification and sufficient relevant experience as stipulated
in the Notes to Rule 3.28 of the Hong Kong Listing Rules, she is not able to solely fulfill the
requirements as a company secretary of a listed issuer stipulated under Rules 3.28 and 8.17 of
the Listing Rules. Therefore, we have appointed Ms. Hui, who fulfils the requisite qualification
as required under Note 1 to Rule 3.28 of the Hong Kong Listing Rules, to act as the other joint
company secretary and to assist Ms. Cui Y an to acquire all qualifications and experience as the
company secretary of our Company required under Rule 3.28 of the Hong Kong Listing Rules.
Apart from discharging her functions in her role as one of our joint company secretaries,
Ms. Hui will assist Ms. Cui Y an in enabling her to acquire the relevant company secretary
experience as required under Rule 3.28 of the Hong Kong Listing Rules and to become familiar
with the requirements of the Hong Kong Listing Rules and other applicable Hong Kong laws
and regulations. In addition, Ms. Cui Y an will also attend relevant professional training during
each financial year as required under Rule 3.29 of the Hong Kong Listing Rules.
We have applied for, and the Hong Kong Stock Exchange has granted, a waiver from strict
compliance of Rules 3.28 and 8.17 of the Hong Kong Listing Rules in respect of the
appointment of Ms. Cui Y an as one of our joint company secretaries pursuant to HKEX-
GL108-20 on the following conditions:
(a) Ms. Cui Y an must be assisted by Ms. Hui, who possess the qualifications and
experience required under Rule 3.28 of the Hong Kong Listing Rules and is
appointed as a joint company secretary of our Company throughout the validity
period of the waiver;
W AIVERS FROM STRICT COMPLIANCE WITH THE HONG KONG LISTING RULES
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(b) the waiver is valid for an initial period of three years commencing from the Listing
Date and will be revoked immediately if Ms. Hui ceases to provide such assistance
or if there are material breaches of the Hong Kong Listing Rules by our Company;
and
(c) before the end of the three-year period, the qualifications and experience of Ms. Cui
Y an and the need for on-going assistance of Ms. Hui will be further evaluated by the
Company. The Company will then endeavour to demonstrate to the Hong Kong
Stock Exchange’s satisfaction that Ms. Cui Y an, having had the benefit of the
assistance of Ms. Hui for the immediately preceding three years, has acquired the
relevant experience (within the meaning of Note 2 to Rule 3.28 of the Listing Rules)
such that a further waiver from Rules 3.28 and 8.17 of the Listing Rules will not be
necessary. The Company understands that the Hong Kong Stock Exchange may
revoke the waiver if Ms. Hui ceases to provide assistance to Ms. Cui Y an during the
three-year period.
CONTINUING CONNECTED TRANSACTIONS
We have entered into, and are expected to continue, certain transactions that will
constitute partially-exempt continuing connected transactions of our Company under the
Listing Rules upon the Listing. Accordingly, we have applied to the Hong Kong Stock
Exchange for, and the Hong Kong Stock Exchange has granted, waivers from the strict
compliance with the requirements in relation to certain continuing connected transactions
under Chapter 14A of the Listing Rules. For further details in this respect, please see the
section headed “Connected Transactions” in this prospectus.
W AIVERS FROM STRICT COMPLIANCE WITH THE HONG KONG LISTING RULES
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DIRECTORS’ RESPONSIBILITY STATEMENT
This prospectus, for which our Directors (including any proposed Director who is named
as such in this prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Companies Ordinance, the Companies (Winding Up
and Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing)
Rules (Chapter 571V of the laws of Hong Kong) and the Hong Kong Listing Rules for the
purpose of giving information with regard to us. Our Directors, having made all reasonable
enquiries, confirm that to the best of their knowledge and belief, the information contained in
this prospectus is accurate and complete in all material respects and not misleading or
deceptive, and there are no other matters the omission of which would make any statement
herein or this prospectus misleading.
CSRC FILING
The CSRC published the notification on completion of the filing procedures on July 3,
2023 for the Global Offering and the Conversion of Unlisted Shares into H Shares and the
making of the application to list our H Shares on the Hong Kong Stock Exchange. In
completing such filing procedure, the CSRC accepts no responsibility for our financial
soundness, nor for the accuracy of any of the statements made or opinions expressed in this
prospectus and the GREEN Application Form.
As advised by our PRC Legal Advisor, our Company has obtained all necessary approvals
and authorizations in mainland China in relation to the Global Offering and the Listing.
THE HONG KONG PUBLIC OFFERING AND THIS PROSPECTUS
This prospectus is published solely in connection with the Hong Kong Public Offering,
which forms part of the Global Offering. For applicants under the Hong Kong Public Offering,
this prospectus and the GREEN Application Form set out the terms and conditions of the Hong
Kong Public Offering.
The Hong Kong Offer Shares are offered solely on the basis of the information contained
and representations made in this prospectus and the GREEN Application Form on the terms
and subject to the conditions set out herein and therein. No person is authorized to give any
information in connection with the Global Offering or to make any representation not
contained in this prospectus and the GREEN Application Form, and any information or
representation not contained herein must not be relied upon as having been authorized by our
Company, the Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers and any of the Underwriters and the Capital
Market Intermediaries, any of their respective directors, agents, employees or advisers or any
other party involved in the Global Offering.
Neither the delivery of this prospectus nor any offering, sale or delivery made in
connection with the H Shares should, under any circumstances, constitute a representation that
there has been no change or development reasonably likely to involve a change in our affairs
since the date of this prospectus or imply that the information contained in this prospectus is
correct as of any date subsequent to the date of this prospectus.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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CONVERSION OF UNLISTED SHARES INTO H SHARES
The Company has applied for the Conversion of Unlisted Shares into H Shares, which
involves 614,039,309 Unlisted Shares held by 210 Shareholders (including the Shares held by
each Pre-IPO Investor). Please also refer to “History and Development” and “Share Capital”
for details of the Conversion of Unlisted Shares into H Shares. Such H Shares to be converted
from Unlisted Shares (as the case maybe) are restricted from trading for a period of one year
after the Listing.
The Conversion of Unlisted Shares into H Shares has been filed with the CSRC with the
notification issued by the CSRC on completion of the filing procedures published on July 3,
2023 and is still subject to the approval by the Hong Kong Stock Exchange.
PROCEDURES FOR APPLICATION FOR THE HONG KONG OFFER SHARES
The procedures for applying for the Hong Kong Offer Shares are set forth in “How to
Apply for Hong Kong Offer Shares” in this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
Details of the structure of the Global Offering, including its conditions, are set forth in
“Structure of the Global Offering” in this prospectus.
RESTRICTIONS ON OFFERS AND SALES OF SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his acquisition of Offer Shares to, confirm that he is aware
of the restrictions on offers of the Offer Shares described in this prospectus.
No action has been taken to permit a public offering of the Offer Shares or the general
distribution of this prospectus in any jurisdiction other than in Hong Kong. Accordingly, this
prospectus may not be used for the purposes of, and does not constitute, an offer or invitation
in any jurisdiction or in any circumstances in which such an offer or invitation is not authorized
or to any person to whom it is unlawful to make such an offer or invitation. The distribution
of this prospectus and the offering of the Offer Shares in other jurisdictions are subject to
restrictions and may not be made except as permitted under the applicable securities laws of
such jurisdictions and pursuant to registration with or authorization by the relevant securities
regulatory authorities or an exemption therefrom. In particular, the Offer Shares have not been
offered and sold, and will not be offered and sold, directly or indirectly, in mainland China.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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UNDERWRITING
The Listing is sponsored by the Joint Sponsors and the Global Offering is managed by the
Overall Coordinators. The Hong Kong Public Offering is fully underwritten by the Hong Kong
Underwriters subject to the terms and conditions of the Hong Kong Underwriting Agreement.
The International Offering is expected to be fully underwritten by the International
Underwriters, subject to the agreement on the Offer Price between the Overall Coordinators
(for themselves and on behalf of the other Underwriters) and us. For further details on the
Underwriters and the underwriting arrangements, see “Underwriting.”
DETERMINATION OF THE OFFER PRICE
The Offer Shares are being offered at the Offer Price which will be determined by the
Overall Coordinators (for themselves and on behalf of the other Underwriters) and our
Company on or around Friday, October 27, 2023 or such later date as may be agreed upon
between the Overall Coordinators (for themselves and on behalf of the other Underwriters) and
our Company, and in any event no later than Monday, October 30, 2023. If the Overall
Coordinators (for themselves and on behalf of the other Underwriters) and our Company are
unable to reach an agreement on the Offer Price on such date, the Global Offering will not
proceed and will lapse.
UNDERTAKINGS BY OUR COMPANY AND OUR SINGLE LARGEST GROUP OF
SHAREHOLDERS
Details of the undertakings by our Company and our Single Largest Group of
Shareholders are set forth in “Underwriting — Underwriting arrangements and expenses —
Hong Kong Public Offering” in this prospectus.
APPLICATION FOR LISTING OF THE H SHARES ON THE HONG KONG STOCK
EXCHANGE
We have applied to the Hong Kong Stock Exchange for the listing of, and permission to
deal in, the H Shares in issue and to be issued pursuant to the Global Offering and the H Shares
to be converted from Unlisted Shares.
No part of our equity or debt securities is listed on or dealt in on any other stock exchange
and no such listing or permission to list is being or proposed to be sought in the near future.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of,
and permission to deal in, the H Shares on the Hong Kong Stock Exchange is refused before
the expiration of three weeks from the date of the closing of the application lists, or such longer
period (not exceeding six weeks) as may, within the said three weeks, be notified to the
Company by or on behalf of the Hong Kong Stock Exchange.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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COMMENCEMENT OF DEALINGS IN THE SHARES
Dealings in the H Shares on the Hong Kong Stock Exchange are expected to commence
on Friday, November 3, 2023. The H Shares will be traded in board lots of 500 Shares each.
The stock code of the Shares will be 2429.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
If the Hong Kong Stock Exchange grants the listing of, and permission to deal in, the
Shares and we comply with the stock admission requirements of HKSCC, the H Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the Listing Date or any other date as determined by HKSCC. Settlement of
transactions between participants of the Hong Kong Stock Exchange is required to take place
in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional advisor for
details of the settlement arrangement as such arrangements may affect their rights and interests.
All necessary arrangements have been made to enable the H Shares to be admitted into CCASS.
PROFESSIONAL TAX ADVICE RECOMMENDED
Y ou should consult your professional advisors if you are in any doubt as to the taxation
implications of subscribing for, purchasing, holding or disposing of, or dealing in, the H Shares
or exercising any rights attaching to the Shares. We emphasize that none of our Company, the
Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters, the Capital Market Intermediaries,
any of our or their respective directors, officers or representatives or any other person involved
in the Global Offering accepts responsibility for any tax effects or liabilities resulting from
your subscription, purchase, holding or disposing of, or dealing in, the H Shares or your
exercise of any rights attaching to the H Shares.
H SHARE REGISTER OF MEMBERS AND STAMP DUTY
All of the H Shares issued pursuant to applications made in the Global Offering and
converted from Unlisted Shares will be registered on our H Share register of members to be
maintained in Hong Kong by our H Share Registrar. Our principal register of members will be
maintained by us at our headquarters in mainland China.
Dealings in our H Shares registered on our H Share register of members will be subject
to Hong Kong stamp duty. The stamp duty is charged to each of the seller and purchaser at the
ad valorem rate of 0.13% of the consideration for, or (if greater) the value of, the H Shares
transferred. In other words, a total of 0.26% is currently payable on a typical sale and purchase
transaction of the Shares. In addition, a fixed duty of HK$5 is charged on each instrument of
transfer (if required).
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DIVIDENDS PAYABLE TO HOLDERS OF H SHARES
Unless determined otherwise by the Company, dividends payable in Hong Kong dollars
in respect of our H Shares will be paid to the Shareholders as recorded on the H Share register
of members of the Company in Hong Kong and sent by ordinary post, at the Shareholders’ risk,
to the registered address of each Shareholder.
According to the Guide to the Program for “Full Circulation” of H shares promulgated by
CSDC on February 7, 2020, cash dividends to domestic investors of H-share “full circulation”
shall be distributed through CSDC. An H-share listed company shall transfer RMB cash
dividends to the designated bank account of the Shenzhen subsidiary of CSDC, who shall
complete the clearing of cash dividends by distributing the cash dividends to investors through
domestic securities companies.
EXCHANGE RATE CONVERSION
Solely for your convenience, this prospectus contains translations of certain currencies
based on the exchange rates prevailing on October 17, 2023. Unless otherwise specified,
amounts denominated in RMB and US$ have been translated into Hong Kong dollars in this
prospectus at the following exchange rates: HK$1.00:RMB0.9185 and US$1.00:RMB7.1796.
The aforementioned exchange rates are for illustrative purposes only and such conversions
shall not be construed as representations that amounts in Renminbi, US dollars and Hong Kong
dollars were or could have been or could be converted at such rates or any other exchange rates.
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures preceding them.
LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this
prospectus shall prevail, provided that if there is any inconsistency between the Chinese names
of the laws and regulations, governmental authorities, institutions, natural persons, entities or
enterprises established in mainland China mentioned in this prospectus and their English
translations, the Chinese names shall prevail. The English translations of such Chinese names
are provided for identification purposes only.
OTHER
Unless otherwise specified, all references to any shareholdings in our Company following
the completion of the Global Offering assume that the options granted under the Pre-IPO
Incentive Scheme are not exercised.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DIRECTORS
Name Residential Address Nationality
Executive Directors
Wang Bin ( ˮᏵ) Unit C15
Chunshui’an Townhouse
Oversea Chinese Town
Nanshan District
Shenzhen
PRC
Chinese
Chen Kunrong (Ꮜ) Unit 8B
2nd Floor
Block 4
Bolin Tianrui
No. 4088 Liuxian Avenue
Shenzhen
PRC
Chinese
Y u Lizhi ( Яͭқ) Room E
17th Floor
Block 2
Canglong Garden
Minzhi Road
Longhua District
Shenzhen
PRC
Chinese
Cui Y an ( ੦ᜮ) Room 1912
Block C
Building 1
Fanhai City Plaza
Nanshan District
Shenzhen
PRC
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 114 ---
Name Residential Address Nationality
Non-Executive Directors
Zhu Chao ( ϡ൴) No. 151 Y ejiazhai
Xiaoshiqiaodui
Guijing Village
Sanlin Town
Pudong District
Shanghai
PRC
Chinese
An Y ufang (ٹRoom 1005
V anke Metropolis
Middle East Third Ring Road
Chaoyang District
Beijing
PRC
Chinese
Independent Non-Executive Directors
Wang Xiaochuan ( ˮʃʇ) Unit 3301
3rd Floor
Block 1
No. 16 Zhongguancun East Road
Haidian District
Beijing
PRC
Chinese
Guo Wei ( ெ㎪) Unit 2302
23rd Floor
No. 113 North Lane
Shaoyaoju
Chaoyang District
Beijing
PRC
Chinese
Zhang Chen ( ੵԕ) Flat E
11th Floor
Block 3
Florient Rise
38 Cherry Street
Tai Kok Tsui
Hong Kong
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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SUPERVISORS
Name Residential Address Nationality
Qin Yi ( ॢ❙) No. 1301
Block B
Tower 10
Citic Mangrove Bay Garden
Nanshan District
Shenzhen
PRC
Chinese
Huang Ronghui ( ර࿲ሾ) No. 17-601
Moon Bay Park
Lane 288 Chengfeng Road
Chuansha Town
Pudong New Area
Shanghai
PRC
Chinese
Qi Rupeng ( ગϧᘄ) No. 2019
Block 1
No. 7 Qingheying South Street
Chaoyang District
Beijing
PRC
Chinese
Further information about the Directors, the Supervisors and other senior management
members are set out in “Directors, Supervisors and Senior Management.”
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Sponsors China Securities (International)
Corporate Finance Company Limited
18/F
Two Exchange Square
8 Connaught Place, Central
Hong Kong
Huatai Financial Holdings (Hong Kong)
Limited
62/F
The Center
99 Queen’s Road Central
Hong Kong
Sponsor-Overall Coordinators,
Joint Global Coordinators,
Joint Bookrunners and Joint Lead
Managers
Huatai Financial Holdings (Hong Kong)
Limited
62/F
The Center
99 Queen’s Road Central
Hong Kong
China Securities (International)
Corporate Finance Company Limited
18/F
Two Exchange Square
8 Connaught Place, Central
Hong Kong
Joint Global Coordinator,
Joint Bookrunner and
Joint Lead Manager
Valuable Capital Limited
RM 3601-06 & 3617-19
36/F, China Merchants Tower, Shun Tak
Centre
168-200 Connaught Road Central
Hong Kong
Joint Bookrunners and
Joint Lead Managers
ABCI Capital Limited
(in the capacity as a Joint Bookrunner only)
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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ABCI Securities Company Limited
(in the capacity as a Joint Lead Manager
only)
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
CCB International Capital Limited
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre
111 Connaught Road Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
ICBC International Securities Limited
37/F, ICBC Tower
3 Garden Road
Hong Kong
Livermore Holdings Limited
Unit 1214A, 12/F
Tower II Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Legal Advisors to Our Company As to Hong Kong law:
Han Kun Law Offices LLP
Rooms 3901-05
39/F., Edinburgh Tower
The Landmark
15 Queen’s Road Central
Hong Kong
As to PRC Law:
Han Kun Law Offices
9/F
Office Tower C1
Oriental Plaza
1 East Chang An Ave.
Dongcheng District
Beijing 100738
PRC
As to Hong Kong law:
O’Melveny & Myers
31/F, AIA Central
1 Connaught Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Legal Advisors to the Joint Sponsors
and the Underwriters
As to Hong Kong law:
Sidley Austin
39/F
Two International Finance Centre
8 Finance Street
Central
Hong Kong
As to PRC Law:
Jingtian & Gongcheng
34/F, Tower 3
China Central Place
77 Jianguo Road
Chaoyang District
Beijing
PRC
Auditor and Reporting Accountant PricewaterhouseCoopers
Certified Public Accountants and
Registered Public Interest Entity Auditor
22/F
Prince’s Building
Central
Hong Kong SAR, China
Industry Consultant Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
2504
Wheelock Square
1717 Nanjing West Road
Shanghai 200040
China
Receiving Bank Bank of China (Hong Kong) Limited
1 Garden Road
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 120 ---
Registered Office Room 128
Y unkai Real Estate Office Building
No. 8 Kangbao Road
Economic Development Zone
Miyun District
Beijing
PRC
Headquarters 4th Floor, Tower A
Tagen Knowledge & Innovation Center
West Second Shenyun Road
Nanshan District
Shenzhen
PRC
Principal Place of Business in Hong Kong 5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
Company’s Website www.uboxol.com
(Note: the information on this website does
not form part of this prospectus)
Joint Company Secretaries Cui Y an
Room 1912, Block C, Building 1
Fanhai City Plaza
Nanshan District
Shenzhen, PRC
Hui Yin Shan (ACG HKACG )
5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
Authorized Representatives Cui Y an
Room 1912, Block C, Building 1
Fanhai City Plaza
Nanshan District
Shenzhen, PRC
Hui Yin Shan (ACG HKACG )
5/F, Manulife Place
348 Kwun Tong Road, Kowloon
Hong Kong
CORPORATE INFORMATION
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Audit Committee Guo Wei (Chairman)
Wang Xiaochuan
Zhang Chen
Remuneration Committee Wang Xiaochuan (Chairman)
Y u Lizhi
Guo Wei
Nomination Committee Wang Bin (Chairman)
Guo Wei
Wang Xiaochuan
H Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
Compliance Adviser China Securities (International)
Corporate Finance Company Limited
18/F
Two Exchange Square
Central
Hong Kong
Principal Banks Hua Xia Bank Co., Ltd.
Shenzhen Branch
Zhongzhou Building 1-12/F
Jintian Road No. 3088
Futian Street
Futian District
Shenzhen
PRC
China Merchants Bank Co., Ltd.
Shenzhen Keyuan sub-branch
EVOC Technology Building 1F
Gaoxin Middle Fourth Road No. 31
Nanshan District
Shenzhen
Bank of China Co., Ltd.
Shenzhen High-tech Zone Sub-branch
Lenovo Building 1F
Gaoxin South First Road 16-1
Nanshan District
Shenzhen
CORPORATE INFORMATION
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Certain information and statistics set out in this section and elsewhere in this
prospectus relating to the vending machine retail market in mainland China are derived
from different official government publications and the market research report prepared
by Frost & Sullivan, an independent industry consultant which was commissioned by us
(the “ Frost & Sullivan Report ”).
No independent verification has been carried out on the official government
publications and such information and statistics by us, the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Underwriters, the Capital Market Intermediaries or any other parties,
excluding Frost & Sullivan, involved in the Global Offering or their respective directors,
officers, employees, advisers, or agents, and no representation is given as to the accuracy
or completeness of such information and statistics.
SOURCE AND RELIABILITY OF INFORMATION
We have commissioned Frost & Sullivan, an Independent Third Party, to conduct a study
of mainland China’s vending machine retail market. We agreed to pay Frost & Sullivan a fee
of RMB880,000 for the preparation of the Frost & Sullivan Report, and our Directors consider
that such fee reflects market rates and are of the view that the payment of the fee does not affect
the fairness of conclusions drawn in the Frost & Sullivan Report. Founded in 1961, Frost &
Sullivan has over 40 global offices with more than 2,000 industry consultants, market research
analysts, technology analysts and economists. Our Directors confirm to the best of their
knowledge, and after making reasonable enquiries, that there have been no adverse changes in
the industry since the date of the Frost & Sullivan Report which may qualify, contradict or have
an impact on the information set out in this section.
RESEARCH METHODOLOGY
During the preparation of the Frost & Sullivan Report, Frost & Sullivan conducted
primary research that involved discussing the status of the industry with industry participants
and industry experts, as well as secondary research that involved reviewing company reports,
independent research reports and Frost & Sullivan’s own database.
BASIS AND ASSUMPTION
The Frost & Sullivan Report was compiled based on the following assumptions:
(i) mainland China’ economy is likely to maintain steady growth in the next decade;
(ii) mainland China’s social, economic and political environment is likely to remain stable
from 2023 to 2027 (the “ Forecast Period ”); (iii) a growing number of enterprises, change of
policies and favourable government policy are likely to drive the future growth of the industry.
The impact of COVID-19 has been incorporated in the assumptions.
INDUSTRY OVERVIEW
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PAIN POINTS OF TRADITIONAL OFFLINE FMCG MARKET
Pain points of traditional offline FMCG market include high start-up costs, increasing
operation costs and complex premise requirements for space and infrastructure, among others.
V ending machines can effectively address these pain points with limited requirements for area
and manpower, and provide convenient consumption experience. On top of the
abovementioned points, a vending machine can also bring convenient consumption experience
by providing consumers contactless retail experience and save time costs by reducing billing
and waiting time, which satisfies customers’ immediate needs. Compared with traditional
offline retailers, vending machines have lower space and infrastructure requirements for
placement and operation.
Heavy Start-up Costs and Complex Requirements for Space and Infrastructure: The
traditional retail FMCG industry usually has a high requirement for capital strength, especially
for brick-and-mortar store owners. The initial investment includes rent and utilities, initial
inventory cost, marketing promotion fee, retail POS system, interior décor, equipment and
related financing costs. Also, it may take a period of time for FMCG retailers to gain profit as
the operation fee exceeds their revenue at the beginning of their business. Considering the
impact of COVID-19, traditional FMCG retailers not only need large initial capital but also
sustained investment in constructing logistics networks and developing new customers and
steady marketing activities. Furthermore, opening a new store has more stringent requirements
for area and infrastructure than launching a vending machine does.
High Operation Costs: As the FMCG industry in mainland China continuously develops,
the operation cost involving labor cost and rental cost for traditional retailers may rise in the
future, resulting in lower competitiveness for traditional retailers. According to the survey data
of China Chain-Store & Franchise Association (CCFA) published in 2021, 67.1% of the
enterprises indicated that the high operation costs are mainly due to the challenges of labor
costs, rental costs and financing costs. The hardware transformation and technology
application required for enterprise transformation and upgrading have increased the burden on
operation costs. During the COVID-19 pandemic, physical stores could not maintain normal
operation, and traditional offline retailers generally suffered heavy losses and operation costs.
Furthermore, during the lockdown period, consumers were less willing to spend in crowded
environments such as shopping centres and entertainment venues. At the same time, most
traditional offline retailers were unable to adjust operating costs flexibly due to their high fixed
cost base.
ANALYSIS OF MAINLAND CHINA’S FMCG MARKET
FMCG are products that are sold quickly and at a relatively low cost. Typical FMCG
include packaged food and beverage, household care products and personal care products
among others.
From 2022 to 2027, mainland China’s total sales of offline FMCG market is expected to
increase from RMB3,413 billion to RMB4,052 billion with a CAGR of 4.0%. Currently, most
of the products sold through vending machines are food and beverage. With the stable growth
of the Chinese economy, the traditional offline FMCG market is expected to continue to
increase. Meanwhile, vending machines have effectively addressed the pain points of the
INDUSTRY OVERVIEW
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traditional offline FMCG market, including (1) heavy cost related to new store opening, (2)
high operation costs and (3) complex premise requirements for space and infrastructure.
Therefore, the vending machine retail market is expected to have sustained growth in the
future. From 2022 to 2027, the share of vending machines in total sales of the traditional offline
FMCG market is expected to rise from 0.9% to 1.8% in terms of total sales of offline FMCG
by vending machines.
Total Sales of Offline FMCG Market and Share of the
Vending Machine Retail Market (Mainland China),
2017-2027E
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
3,413 3,418 3,426 3,274 3,408 3,338 3,491 3,649 3,809 3,946
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E 2027E
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
0.0
0.4% 0.6% 0.8% 0.7% 0.8% 0.9%
1.2% 1.4% 1.6%
1.0%
Billion RMB
Share of the Vending Machine Retail Market Total Sales
4,062
1.8%
Source: National Bureau of Statistics of China; Frost & Sullivan
ANALYSIS OF MAINLAND CHINA’S UNMANNED RETAIL MARKET
One of the major business forms of the traditional offline FMCG is unmanned retail.
Unmanned retail is a retail concept in which there are no service personnel and no cashiers,
primarily consisting of vending machines, unmanned stores and unmanned shelves. The total
sales of the unmanned retail market increased from RMB13,586.0 million in 2017 to
RMB29,916.5 million in 2022, representing a CAGR of 17.1%. The total sales of the unmanned
retail market is projected to reach RMB75,578.1 million in 2027 with a CAGR of 20.4% from
2022 to 2027. As shown in the table below, the market share of vending machine sales to the
unmanned retail market remained above 93.5% from 2017 to 2022.
Total Sales of Unmanned Retail Market (Mainland China), 2017-2027E
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E CAGR
17-22
CAGR
22-27E
13,126.0 19,286.5 27,081.6 21,429.0 27,123.9 28,908.1 35,597.0 42,201.1 51,546.1 62,131.2 17.1% 20.7%Vending Machine Retail
(Million RMB)
460.0 1,350.0 1,645.6 1,260.5 1,145.9 1,008.4 1,109.3 1,225.7 1,354.4 1,493.9 17.0% 10.4%Other Unmanned Retail
Concept (Million RMB)
13,586.0 20,636.5 28,727.2 22,689.5 28,269.8 29,916.5 36,706.3 43,426.8 52,900.5 63,625.1
2027E
73,927.3
1,650.8
75,578.1 17.1% 20.4%
Total Sales of Unmanned
Retail Market
(Million RMB)
Market Share of Vending
Machine (%) 96.6% 93.5% 94.3% 94.4% 95.9% 96.6% 97.0% 97.2% 97.4% 97.7% 97.8%
Source: China Commerce Association for General Merchandise, Frost & Sullivan
INDUSTRY OVERVIEW
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The basis for the expected growth of vending machine sales from 2022 to 2027 is as
follows. In 2020, the outbreak of COVID-19 has dragged on economic sentiment and activities
related to on-site public gathering and consumption in mainland China. Due to the strict
quarantine measures implemented by the PRC government to restrain the further spread of
COVID-19, the revenue of mainland China’s vending machine retail market declined from
RMB27.1 billion in 2019 to RMB21.4 billion in 2020 with a growth rate of -21.0%.
Nonetheless, the historical CAGR from 2016 to 2020 still remained at a high level, which was
24.9%. Before the impact of COVID-19 in 2020, the historical CAGR of mainland China’s
vending machine retail market from 2016 to 2019 was 45.5%, which was very high.
Meanwhile, since mainland China has entered the phase of regular epidemic prevention
and control since April 2020, mainland China’s unmanned retail and vending machine retail
market has recovered since the second half of 2020. The revenue of unmanned retail and
vending machine retail market is expected to grow accordingly with increasing disposable
income, consumption, urbanization rate and growing penetration rate of points of sale covered
by vending machines, increasing social distancing awareness, as well as continuous innovation
of vending machines. Also, only 8.8% of potentially available sites in mainland China were
occupied by vending machines by the end of 2022, presenting tremendous market potential.
Thus, the total revenue of mainland China’s vending machine retail market is expected to
increase with a rapid growth rate, representing a CAGR of 20.7% from 2022 to 2027.
The basis for the lower expected growth of other unmanned retail sales from 2022 to 2027
taking into account its significant growth in the last five years is as follows. The other
unmanned retail sales mainly include unmanned stores and unmanned shelves. At the
beginning, there were a flurry of enterprises entering the industry. By the end of 2017, over 138
companies had opened approximately 200 unmanned shops in mainland China with
collectively a total investment of RMB4 billion. But since the beginning of 2018, many
enterprises shut down their business due to their failure to attract stable consumer traffic and
differentiate from the traditional retail once the novelty wore off. The total sales of the
unmanned market increased to RMB28,727.2 million in 2019, after which the size of the
market declined for two consecutive years in 2020 and 2021. During the same period, the total
sales of the offline FMCG market and the vending machine retail market kept increasing
contrary to the trend of the other unmanned retail sales market. At present, there is still no
substantial capital investment in unmanned stores and unmanned shelves, and there is no
leading enterprise to enter the other unmanned retail sales market. Therefore, the other
unmanned retail sales market is not expected to see rapid growth, with a CAGR from 2022 to
2027 projected to be 10.4%.
INDUSTRY OVERVIEW
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ANALYSIS OF MAINLAND CHINA’S VENDING MACHINE RETAIL MARKET
A vending machine is an automatic retailing machine, which sells products at an
unattended point of sale and accepts payments through various methods such as coins, bank
cards, tokens and other means of cashless payment.
The main types of vending machines are as follows:
Beverage Vending Machine: Packaged drink vending machines mainly provide soft
drinks, equipped with either a closed front or a glass front.
Beverage and Snack Vending Machine: Beverage and snack vending machines
generally offer a wide range of drinks and snacks typically equipped with a glass front.
Pick-and-go Cabinet: Pick-and-go cabinets allow consumers to pick up the merchandise
and leave, which in essence revamped the traditional automated retailing mechanism by
leaving authentication and payment to technology. This unique type of vending machines is
built upon a suite of technologies, including RFID (radio-frequency identification), IoT and
data analytics.
Others: Other vending machines mainly include coffee vending machines, fresh juice
vending machines, toy vending machines, ice cream vending machines and vending machines
selling other merchandise.
The vending machine retail market is very fragmented due to the limited supply chain
capacity and operation capacity of individual operators as well as the associated supply chain
costs they need to bear. As a result, it is very challenging for an operator without strong
operational management and supply chain capabilities to develop its vending machine retail
network while maintaining healthy profitability at the same time.
DEVELOPMENT HISTORY OF MAINLAND CHINA’S VENDING MACHINE RETAIL
MARKET
Around 2000, the vending machine retail industry began to evolve and develop in
mainland China with the emergence of more diverse types of vending machines with more
advanced functions. In the following decade, leading vending machine operators such as our
Group started to connect vending machines to the internet, which enables vending machines
with human-machine interaction capabilities and cashless payment functions. In the recent
decade, the vending machine retail industry has entered into a more innovative stage which
focuses on real-time data transmission and IoT.
INDUSTRY OVERVIEW
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Development History of Vending Machine Retail Market (Mainland China)
Initial Stage 1.0
 Mature Stage 2.0
 Innovative Stage 3.0
Payment Method:
Only Coins and Petty notes
Types of merchandise on display:
Packaged drinks and snacks
Around Year 2000
Payment Method:
Cash Payment
Types of merchandise on display:
Beverages and snacks
Around Year 2005
Payment Method:
Cashless Payment/Face, eye, or
fingerprint recognition
Types of merchandise on display:
Physical goods and related
advertisement
Till Now
Internet of Things/Enhanced
Display and Interactive Functions
Machine Quality Improvement
Source: Prepared by the Frost & Sullivan through interviews with industry players and Frost & Sullivan’s research
SIZE OF MAINLAND CHINA’S VENDING MACHINE RETAIL MARKET
Among business forms of unmanned retail, the vending machine plays an important role
in the total market. In 2022, the vending machine population in mainland China has reached
1,116,600 with a CAGR of approximately 26.1% from 2017 to 2022. Looking forward, the total
vending machine retail market is estimated to reach 2,535,600 in 2027 with a CAGR of 17.8%
from 2021 to 2026. The market was mainly driven by the growing disposable income and
upgrading consumption of Chinese residents. Associated with the increasing annual disposable
income, mainland China’s per capita annual expenditure has maintained a steady growth,
increasing from RMB18,322 in 2017 to RMB24,538 in 2022 with a CAGR of 6.0%. Beverage
vending machines and beverage and snack vending machines have dominated the vending
machine retail market with a market share of roughly 77.7% of machines in 2022, while
pick-and-go cabinets and other vending machines have been growing rapidly in the past several
years.
Vending Machine Population Breakdown by Major Types (Mainland China),
2017-2027E
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Total 350.8 542.1 739.8 754.6 924.5 1,116.6 1,241.1 1,530.9 1,823.1 2,173.1
 Pick-and-go Cabinets 1.8 19.0 72.6 95.7 169.9 150.7 200.2 309.0 444.0 624.7
 Beverage Vending Machines 174.6 255.1 329.7 326.2 374.0 485.1 517.6 605.3 680.3 765.6
 Beverage and Snack Vending Machines 170.1 229.4 275.2 267.3 300.8 382.9 405.0 469.6 523.2 583.9
 Others 4.2 38.6 62.4 65.5 79.8 97.9 118.3 147.0 175.6 198.9
2027E
2,535.6
840.7
800.9
672.9
221.1
350.8
542.1
739.8 754.6
924.5
1,116.6
1,241.1
1,530.9
1,823.1
CAGR
(17-22)
CAGR
(22-27E)
26.1% 17.8%
142.4% 41.0%
22.7% 10.5%
17.6% 11.9%
87.7% 17.7%
0
500
1,000
1,500
2,000
3,000
2,500
2,173.1
Machine Population
(Thousand Units)
2,535.6
Source: China Commerce Association for General Merchandise, Frost & Sullivan
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The total sales generated from beverage vending machines increased from RMB8,182.6
million in 2017 to RMB15,788.4 million in 2022 and is expected to reach RMB33,499.4
million in 2027, accounting for around 54.6% of mainland China’s vending machine retail
market in 2022 and around 45.3% in 2027. Pick-and-go cabinets entered the market in the end
of 2016 and kept developing in the following years. The total sales generated from pick-and-go
cabinets grew from RMB15.4 million in 2017 to RMB3,795.1 million in 2022 and is expected
to reach RMB19,984.4 million in 2027, representing a CAGR of 39.4% from 2022 to 2027. The
market share of pick-and-go cabinets is projected to grow from approximately 13.1% in 2022
to approximately 27.0% in 2027.
Vending Machine Retail Market Size Breakdown by Major Types (Mainland China),
2017-2027E
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E
Total 13,126.0 19,286.5 27,081.6 21,429.0 27,123.9 28,908.1 42,201.1 51,546.1 62,131.2
 Pick-and-go Cabinets 15.4 189.3 899.4 1,817.3 3,012.5 3,795.1 6,333.2 9,657.4 14,133.7
 Beverage Vending Machines 8,182.6 11,614.5 16,119.9 12,196.5 15,054.6 15,788.4 22,627.5 26,423.2 30,312.4
 Beverage and Snack Vending Machines 4,865.9 7,105.6 9,153.9 6,638.9 8,037.1 8,267.7 11,598.2 13,429.2 15,274.2
 Others 62.1 377.1 908.4 776.3 1,019.7 1,056.9
35,597.0
4,232.4
19,809.3
10,243.2
1,312.1 1,642.2 2,036.3 2,410.9
2027E2026E
73,927.3
19,984.4
33,499.4
17,685.5
2,758.0
13,126.0
27,081.6
21,429.0
27,123.9 28,908.1
35,597.0
42,201.1
51,546.1
73,927.3
19,286.5
CAGR
(17-22)
CAGR
(22-27E)
17.1% 20.7%
200.8% 39.4%
14.0% 16.2%
11.2% 16.4%
76.3% 21.1%
Retail Sales Value (Million RMB)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
62,131.2
Source: China Commerce Association For General Merchandise, prepared by the Frost & Sullivan through interviews
with industry players and Frost & Sullivan’s research
In 2022, mainland China has 0.8 of vending machine per thousand people. There remains
huge room for growth in mainland China’s vending machine retail market.
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As of December 31, 2022, new tier one cities had the highest market share of mainland
China’s vending machine population of approximately 37.0%, followed by tier three cities and
below with a market share of around 23.6%. The total market share of tier one cities, new tier
one cities and tier two cities was around 83.2% as of December 31, 2022. The strengths of tier
one cities, new tier one cities and tier two cities include higher urbanization rate, more
developed economy and fast-growing per capita income. New tier one cities are expected to
have the fastest growth in terms of vending machine population with a CAGR of 21.8% from
2022 to 2027, followed by tier one cities with a CAGR of 20.0%. Tier three cities and below
had a relatively low number of vending machines per thousand people of 0.2 units in 2022 and
there are potential growth opportunities accompanied by the developing economy.
Vending Machine Population Breakdown by City Tier (Mainland China), 2017-2027E
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Total 350.8 542.1 739.8 754.6 1,116.6 1,241.2 1,530.9 1,823.1 2,173.1
 Tier One Cities 66.4 105.7 150.3 161.4 252.1 304.1 366.1 444.1 531.8
 New Tier One Cities 79.5 133.6 198.1 219.7 413.5 472.9 613.4 753.1 923.5
 Tier Two Cities 101.9 148.3 188.7 176.7 263.1 255.5 321.8 361.6 411.6
 Tier Three Cities and Below 103.0 154.5 202.7 196.9 188.0
924.5
199.5
298.6
208.6
217.7 208.6 229.7 264.3 306.1
2027E
2,535.6
628.0
1,109.3
466.9
331.5
350.8
542.1
739.8 754.6
924.5
1,116.6 1,241.2
1,530.9
1,823.1
2,535.6
CAGR
(17-22)
CAGR
(22-27E)
26.1% 17.8%
30.6% 20.0%
39.1% 21.8%
20.9% 12.2%
12.8% 12.0%
Machine Population (Thousand Unit)
0
500
1,000
1,500
2,000
3,000
2,500
2,173.1
Source: Prepared by the Frost & Sullivan through interviews with industry players and Frost & Sullivan’s research
Given the scale of mainland China’s vending machine retail market, the market generally
relies on five main types of sites to reach a broad base of customers. Traditional types of sites
include schools, factories and office premises which accounted for over half of mainland
China’s vending machine retail market in terms of machine population. On the other hand, the
ongoing penetration of pick-and-go cabinets and related technology innovation have driven the
rapid growth of possession size for vending machines in office premises. Factories as a type
of site had the highest market share of approximately 34.7% in 2022, and office premises with
a market share of around 16.0% in the same year. Looking forward, public venues and others
types of sites are the two categorized types of sites with the fastest growth, representing a
CAGR of 22.0% and 28.4% respectively from 2022 to 2027.
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Vending Machine Population Breakdown by Type of Sites (Mainland China),
2017-2027E
350.8
542.1
739.8 754.6
924.5
1,116.6
1,241.2
1,530.9
1,823.1
2,173.1
2,535.6
2017 2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Total 350.8 542.1 739.8 754.6 924.5 1,241.2 1,530.9 1, 823.1 2,173.1
 Campuses 52.6 79.8 104.1 108.7 130.1 155.6 187.1 220.1 260.5
 Factories 137.7 228.3 296.4 289.5 349.3 348.6 440.1 503.1 577.7
 Office Premises 47.6 77.4 117.8 123.2 153.9 198.4 220.6 264.2 317.1
 Public Service 40.7 62.7 97.9 102.9 137.6 228.6 271.8 314.6 365.5
 Transportation Hubs 16.6 21.5 28.0 34.2 37.6 43.9 47.4 51.2 53.1
 Others 55.7 72.4 95.7 96.0 116.0 266.0
1,116.6
143.4
387.0
179.1
154.3
41.4
211.4 363.9 469.9 599.2
CAGR
(17-22)
CAGR
(22-27E)
26.1% 17.8%
22.2% 16.2%
23.0% 10.8%
30.3% 15.8%
30.5% 22.0%
20.1% 5.8%
30.6% 28.4%
Machine Population (Thousand Unit)
0
500
1,000
1,500
2,000
2,500
3,000
2027E
2,535.6
304.0
647.1
373.2
417.7
55.0
738.6
Note: Others include restaurants, hotels, automobile sales service 4S shop and other entertainment type of sites.
Source: Prepared by the Frost & Sullivan through interviews with industry players and Frost & Sullivan’s research
Points of sale refer to sites where the vending machines could be placed.
Only 8.8% of potentially available sites in mainland China were occupied by vending
machines by the end of 2022, presenting tremendous market potential for industry participants.
Looking forward, the penetration rate of offline sites covered by vending machines is expected
to rise to 15.6% by the end of 2027. Many categories of potential points of sale, such as public
service places and restaurants, have been traditionally underserved by players in the industry.
Expansion in these places will be a key trend in the vending machine retail industry in
mainland China.
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Penetration Rate of Points of Sale Covered by Vending Machines in
Mainland China’s Vending Machine Retail Market, 2017-2027E
0
5
10
15
20
25
30
35
Penetration Rate (%)
2017
3.2%
6.4%4.8%
7.6%6.3%
9.4%8.8%
12.4%
15.6%14.1%
10.9%
202120192018 2020 2022 2023E 2024E 2025E 2027E 2026E
Source: Prepared by the Frost & Sullivan through interviews with industry players and Frost & Sullivan’s research
MARKET DRIVERS OF MAINLAND CHINA’S VENDING MACHINE RETAIL
MARKET
Technology Innovation: Technology innovation has promoted the development of
mainland China’s vending machine retail industry by improving the consumption experience
of consumers and reducing the cost of operators. On the other hand, to achieve better
interactive purchasing experience, cashless payment options and better storage conditions are
two critical hardware innovation of vending machines. Also, new technologies such as big data
analytics, visual identification, IoT and AI technologies have also improved the operation
efficiency and enable operators to access consumption data directly. The development and
innovation of technology is likely to drive the future development of the industry.
Wider Range of Merchandise and Improvement of Logistics Infrastructure: Cold chain
logistics is under rapid development and will hold a significant portion of the entire logistics
network in mainland China. The refrigerated warehouse capacity in mainland China increased
from around 35 million tons in 2015 to around 70 million tons in 2020, almost doubled in the
past five years. With the development of infrastructure such as cold chain and warehousing, a
wider range of merchandise including fresh food are expected to be sold through vending
machines. In addition, while the shape and size of the merchandise are limited in traditional
vending machines, they are not restricted in pick-and-go cabinets. A growing number of types
of merchandise and development of infrastructure are likely to be displayed in such cabinets,
attracting an increasing number of consumers and hence driving the market of vending machine
in mainland China.
Contactless Retailing and Increasing Demand for Convenience of Consumption: The
average monthly wage of employed people has increased from around RMB7,300 in 2017 to
RMB9,300 in 2022 in mainland China. Those people enjoy the fast-paced lifestyle of modern
cities and ask for convenience of consumption. The continuously rising labor costs lead to the
increasing popularity of contactless retailing, especially the vending machines. Although the
contactless retail also faced pressure and low consumer traffic during the COVID-19 outbreak
when lockdown and other measures were taken, due to its safety and convenience, contactless
retailing including vending machines has gained popularity among consumers, especially since
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the outbreak of COVID-19. Compared with traditional retailers, vending machines are not
restricted by opening hours and could have higher operation efficiency. The growing popularity
of contactless retailing is likely to drive the vending machine retail market in mainland China.
Growing Investment: An increasing number of players, including both beverage
companies and vending machine operators, are expected to invest more in the vending machine
retail market in the near future. The growing investment in the market is likely to further drive
the market.
COMPETITIVE LANDSCAPE OF MAINLAND CHINA’S UNMANNED RETAIL
MARKET AND VENDING MACHINE RETAIL MARKET
Mainland China’s unmanned retail industry is fragmented with thousands of players, most
of which are small-scale local individual operators. The top five players in mainland China’s
unmanned retail industry constituted a 16.4% market share in terms of GMV in 2022. Our
Group recorded a GMV of approximately RMB2.2 billion in 2022, accounting for
approximately a 7.4% market share.
Top Five Unmanned Retail Operators in Terms of GMV (Mainland China), 2022
Ranking Company Name GMV
(RMB Billion)
Market Share
(%)
1 Our Group 2.2 7.4%
2 Company A 1.0 3.3%
3 Company B 0.9 3.0%
4 Company C 0.4 1.3%
4 Company D 0.4 1.3%
Subtotal of top 5 market players 4.9 16.3%
Others 25.0 83.7%
Total 29.9 100.0%
Source: The Group and prepared by the Frost & Sullivan through interviews with industry players and Frost &
Sullivan’s research
Notes:
(1) Company A is a listed company on the Hong Kong Stock Exchange. Headquartered in Hangzhou, Company
A is a leading company in the packaged drinking water and beverage market in mainland China. Total revenue
of Company A in 2022 was RMB33.2 billion.
(2) Company B is a listed company on the Shenzhen Stock Exchange. Headquartered in Shenzhen, Company B
is mainly engaged in delivery services and logistics business. Total revenue of Company B in 2022 was
RMB267.5 billion.
(3) Company C is a listed company on the Hong Kong Stock Exchange. Headquartered in Beijing, Company C is
a leading player in the beverage market in mainland China. Total revenue of Company C in 2022 was RMB47.9
billion.
(4) Company D is a private company. Headquartered in Beijing, Company D is a beverage company based in
mainland China. Total revenue of Company D in 2022 was RMB8.0 billion.
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Our Group recorded a GMV of approximately RMB2.2 billion in 2022, accounting for
approximately a 7.6% market share in terms of GMV in 2022. Mainland China’s vending
machine retail market is a competitive market at present.
Top Five Vending Machine Operators in Terms of GMV (Mainland China), 2022
Ranking Company Name GMV
(RMB Billion)
Market Share
(%)
1 Our Group 2.2 7.6%
2 Company A 1.0 3.5%
3 Company B 0.9 3.1%
4 Company C 0.4 1.4%
4 Company D 0.4 1.4%
Subtotal of top 5 market players 4.9 17.0%
Others 23.9 83.0%
Total 28.8 100.0%
Source: The Group and prepared by the Frost & Sullivan through interviews with industry players and Frost &
Sullivan’s research
For number of POSs, our Group had approximately 66,200 vending machines in 2022
excluding Non-Ubox POSs. Our Group had established the largest vending machine
distribution scale in terms of GMV and number of POSs in 2022. In terms of number of POSs
excluding Non-Ubox POSs, our Group recorded a market share of 7.3% in 2022. Our Group
was far ahead of other competitors and its market share exceeded the second largest player and
the third largest player in 2022.
Top Five Vending Machine Operators in Terms of Number of POSs (Mainland China),
2022
Ranking Company Name Number of POS
(Thousand Units)
Market Share
(%)
1 Our Group 66.2 7.3%
2 Company A 57.1 6.3%
3 Company B 47.2 5.2%
4 Company D 28.9 3.2%
5 Company C 18.6 2.0%
Subtotal of top 5 market players 218.0 24.0%
Others 692.3 76.0%
Total 910.3 100.0%
Source: The Group and prepared by the Frost & Sullivan through interviews with industry players and Frost &
Sullivan’s research
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ENTRY BARRIERS ANALYSIS OF MAINLAND CHINA’S VENDING MACHINE
RETAIL MARKET
Location: Generally, the vending machine’s profitability is highly related to its location
and consumer traffic. Hence, vending machine operators in mainland China with high
bargaining power can access better locations. Existing vending machine operators with long
operating histories have already established a POS network. It is hard for new entrants to
establish an optimal POS network within the short term.
Supply Chain Management: The distribution of vending machine products depends
significantly on the supply chain management capability of market players. For a vending
machine operator, it is crucial to have the ability to manage the inventory and logistics for
beverage products and snacks across the country. New entrants with less supply chain
management experience may not be able to manage their supply chain effectively, which may
result in higher costs.
Digitalization and Technology: The technology innovation of the industry enables
operators to leverage POS networks, data-driven operation systems and supply chain networks
to digitalize and automate retail sales of FMCG. Also, they can leverage the unique consumer
touchpoints to offer advertisers with online and offline advertising services that drive traffic
and sales. The diversified operation models of different consumption scenarios bring barriers
and difficulties to individual operators to survive.
OPPORTUNITIES AND CHALLENGES OF MAINLAND CHINA’S VENDING
MACHINE RETAIL MARKET
Opportunities:
Opportunities in Tier One, New Tier One and Tier Two Cities: Currently most of the
vending machines are placed in tier one, new tier one and tier two cities due to the more
developed economy and higher urbanization rate in these regions. The high labor cost and
rental cost in these regions provide potential opportunities for the vending machine retail
business, which can also resolve the pain points of traditional offline FMCG retail such as high
initial investment for opening new stores and high operation cost. Also, as the consumption
power of populations in tier three cities and below increase, expanding the vending machine
retail business to tier three cities and below is likely to be new growth opportunities for the
market players.
Market Concentration: The concentration rate of the vending machine retail industry is
rather low in mainland China. The market is likely to be more concentrated, as the
competitiveness of leading players is strong, which leads them to gain a high reputation among
customers and establish a steady relationship with suppliers. They are more likely to attract
new customers and gain a larger market share, leading to a more concentrated market in the
future. In addition, as the market is relatively fragmented with thousands of market players,
leading players are also likely to further strengthen their market position through merge and
acquisition in the future.
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Challenges:
Fiercer Competition: The vending machine retail market in mainland China has
witnessed a growth in the past five years. Players have been competing for better locations to
attract consumers. An increasing number of players are planning to enter the market, leading
to a fiercer competition in the coming future. Market players need to invest more in technology
development and customer network establishment. Players also need to improve operation
efficiency and catch up with the latest consumption trends in order to gain higher revenue and
profit, and hence survive against fierce competition.
Talent Shortage: The vending machine retail market has experienced steady growth since
its first deployment in the retailing sector. However, the number of talent in the market is still
insufficient. Players have been competing for talent with market experience and deep industry
know-how. The lack of talent in the market has become a big challenge to the players,
especially for smaller ones.
COST ANALYSIS
The major cost for vending machine operating companies includes the cost of purchasing
machines. The average price of vending machine continues to drop due to the developing
technology. In 2018 and 2019, the average price of vending machines dropped sharply due to
the growing popularity of pick-and-go cabinets. Without the deployment of complex internal
mechanical systems, such as structures of motors and movable components that pick up or push
the selected merchandise towards the dispensers, in pick-and-go cabinets, the cost of vending
machines dropped largely compared with traditional ones, leading to a sharp reduction in the
price of vending machines. Going forward, the average price of vending machines is likely to
keep the slightly decreasing trend as the technology becomes increasingly mature.
Average Price of Vending Machines (Mainland China), 2017-2022
20.1
13.9
11.7 11.5 11.211.3
2017 2018 2019 2020 2022 2021
Thousand RMB/Unit
0.0
5.0
10.0
15.0
20.0
25.0
Source: Prepared by the Frost & Sullivan through interviews with industry players and Frost & Sullivan’s research
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Cost of purchasing merchandise is also one of the major costs for vending machine
operators. For example, for soft beverage, one of the most common types of merchandise sold
through vending machines in mainland China, the average price gradually increased from 2016
to 2019 and slightly dropped in 2020. Going forward, the average ex-factory price of soft
beverages is forecasted to keep the gradually growing trend in the coming future.
Average Ex-factory Price of Soft Beverages (Mainland China), 2017-2022
8.7 9.1 9.1 8.7
10.7 9.8
2017 2018 2019 2020 2021 2022
Thousand RMB/Tonne
0.0
3.0
6.0
9.0
12.0
15.0
Source: Prepared by the Frost & Sullivan through interviews with industry players and Frost & Sullivan’s research
MARKET SIZE OF VENDING MACHINE ADVERTISING MARKET IN MAINLAND
CHINA
The size of the vending machine advertising market in mainland China is approximately
RMB0.5 billion in 2022, decreasing at a CAGR of approximately -3.6% from 2017 to 2022.
The market size significantly dropped in 2020 and 2022 due to the outbreak of COVID-19 in
the first half of 2020. It is expected to recover from 2023 onwards corresponding with
economic growth and expected to reach RMB2.2 billion in 2027, representing a CAGR of
34.5% from 2022 to 2027. As mainland China began to modify its zero-COVID policy in the
fourth quarter of 2022, the economy is expected to have a rebound in 2023. Moreover, vending
machines are becoming more prevalent in various locations, including shopping malls, office
premises, airports and education institutions. The increasing vending machines provide a larger
platform for advertising opportunities. According to government statistics, railways, highways,
waterways, and civil aviation in mainland China transported a total of 226 million passengers
during the seven-day Chinese New Y ear holiday in early 2023, representing an increase of over
70% year-on-year over the same period in 2022. As people move more frequently and
economic activity resumes, the demand and consumption of consumer goods are also expected
to have a recovery in 2023. On the other side, the integration of advanced technologies into
vending machines, such as digital displays, interactive touch screens and data analytics,
enhances the advertising capabilities. Digital displays allow for dynamic and eye-catching
advertisements, while touch screens enable interactive engagement with consumers.
Additionally, data analytics can provide valuable insights into consumer behavior and
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preferences, enabling advertisers to optimize their marketing campaigns. As a result, the
development of advanced technologies may contribute to the fast growth of the vending
machine advertising market and increase the market demand for vending machine advertising.
Vending Machine Retail Market Advertising Market Size (Mainland China), 2017-2027E
0.6
0.8 1.0
0.6 0.6 0.5 0.6
0.8
1.6
1.1
2.2
2017 2018 2019 2020 2021 2022 2023E 2024E 2026E2025E 2027E
CAGR: 34.5%
CAGR: -3.6%
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Total Advertising Market Size
(Billion RMB)
Source: Prepared by the Frost & Sullivan through interviews with industry players and Frost & Sullivan’s research
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REGULATIONS ON CORPORATION
On December 29, 1993, the Standing Committee of the National People’s Congress (the
“SCNPC”) issued the PRC Company Law () (the “Company
Law”), which was lasted amended on October 26, 2018. All companies established in the PRC
are subject to the Company Law. The Company Law regulates the establishment, operation,
corporate structure, and management of corporate entities in China and classifies companies
into limited liability companies and limited companies by shares.
On December 24, 2021, the SCNPC released the PRC Company Law (Revised Draft)
(ج(ࣩ)) to solicit public opinions till January 22, 2022, on
December 30, 2022, the SCNPC issued the PRC Company Law (Second Revised Draft) ( ʕ
ج(ɚϣᄲᙄᇃ)) to solicit public opinions for 30 days and on
September 1, 2023, the SCNPC issued the PRC Company Law (Third Revised Draft) ( ʕശ
ج(ɧϣᄲᙄᇃ) ) to solicit public opinions for 30 days. The main
amendments in the PRC Company Law (Revised Draft) involve improving the company’s
establishment and exit system, optimizing the company’s organizational structure, perfecting
the company’s capital system and strengthening the responsibilities of controlling shareholders
and management personnel, etc.
General Meeting
According to the Company Law, a shareholders’ general meeting of a company limited by
shares shall be constituted by all the shareholders; the shareholders’ general meeting shall be
the authority of the company and shall exercise duties and powers in accordance with the
provisions the Company Law.
A shareholders’ annual general meeting shall be convened once every year. An
extraordinary shareholders’ general meeting shall be convened within two months in case of
the certain events specified in the Company Law.
The Company Law has no specific provisions on the quorum of shareholders to attend the
general meeting of shareholders.
Under the Company Law, shareholders present at a shareholders’ general meeting have
one vote for each share they hold, save that the company’s shares held by the company are not
entitled to any voting rights.
Under the Company Law, resolutions of the general meeting shall be passed by more than
half of the voting rights held by shareholders (including those represented by the appointed
representative), with the exception of matters relating to merger, division or dissolution of the
company, increase or reduction of registered share capital, change of corporate form or
amendments to the Articles of Association, which in each case shall be passed by at least
two-thirds of the voting rights held by the shareholders (including those represented by the
appointed representative).
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The shareholders may entrust the entrusted representative to attend the general meeting
of shareholders, and the power of attorney shall specify the scope of exercising the voting
right.
Transfer of Shares
Shares may be transferred in accordance with relevant laws and regulations. Registered
shares shall be transferred by means of endorsement or other means prescribed by laws or
administrative regulations; after the transfer, the company shall record the name and domicile
of the transferee in the register of shareholders of the company. Within 20 days before the
general meeting of shareholders or within 5 days before the record date of dividend distribution
determined by the company, the above-mentioned register of shareholders shall not be
changed. Any law that provides otherwise in relation to the amendment of details recorded in
the register of members of a listed company shall prevail over the requirement under the
preceding sentence. The transfer of bearer shares shall take effect when the shareholder
delivers the shares to the transferee.
Restrictions on Shareholding and Transfer of Shares
Generally, the target investors of H shares offering by domestic companies shall be
overseas investors. Where domestic investors subscribe H shares issued by domestic
companies, domestic investors shall be compliant with relevant provisions of the cross-border
investment, such as qualified domestic institutional investors (QDII), or overseas investment
filing (ODI), etc.
Under the Company Law, the shares of the company held by the promoters shall not be
transferred within one year from the date of establishment of the company. The directors,
supervisors and senior management personnel of the company shall report to the company the
shares held by them and their changes, and the shares transferred each year during their term
of office shall not exceed 25% of the total shares of the company held by them. The
above-mentioned personnel shall not transfer their shares of the company within half a year
after their resignation. The Articles of Association may make other restrictive provisions on the
transfer of shares held by the directors, supervisors, and management personnel of the
company.
Variation of Class Rights
The Company Law has no special provision relating to variation of class rights. However,
the Company Law states that The State Council may formulate separate regulations on
companies issuing other types of shares which are not provided in the Company Law.
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REGULATIONS RELATING TO FOOD SALE AND SAFETY
Licensing system for food production and trading
Pursuant to the Food Safety Law of the PRC () (the
“Food Safety Law”), which was promulgated by the Standing Committee of the National
People’s Congress (the “SCNPC”) on February 28, 2009, took effective on June 1, 2009 and
last amended on April 29, 2021 and entering into force since the same day and the
Implementing Regulations on the Food Safety Law of the PRC (ج
ૢԷ) (the “Implementing Regulations on the Food Safety Law”), which was
promulgated by the State Council on July 20, 2009 and amended on February 6, 2016 and
October 11, 2019 with effect from December 1, 2019, the state adopts a licensing system for
food production and trading. To engage in food production and selling/catering services, the
food production license for food production and food operation license for food selling and
catering services shall be obtained in accordance with the law. However, the license is not
required for sale of edible agricultural and if only pre-packaged food is sold. If only
pre-packaged food is sold, it should be filed for the record to the food safety supervision and
administration department of the local People’s Government at or above the county level.
On August 31, 2015, China Food and Drug Administration (the “CFDA”) promulgated the
Administrative Measures for Food Operation Licensing (), which
was amended on November 17, 2017. According to the Administrative Measures for Food
Operation Licensing, a person or entity that engages in food selling and catering services
within mainland China (herein after referred to in general as “food operator”) shall obtain a
food operation license in accordance with the law. Food and drug administrative authorities
shall implement classified licensing for food operation according to food operators’ types of
operation and the degree of risk of their operation projects.
On June 15, 2023, the State Administration for Market Regulation (“SAMR”)
promulgated the Administrative Measures for Food Operation Licensing and Filing (຾
), which will become effective on December 1, 2023. According to
the Administrative Measures for Food Operation Licensing and Filing, a food business license
is not required in the case of the sales of edible agricultural products, only prepackaged food,
specific total nutrient formula food within the scope of the food for special medical purposes
by medical institutions or drug retailers, or food produced by food producers which have
obtained food production licenses in their production and processing locations or through the
network, but any food operator which falls under any of the above circumstances and
simultaneously carries out other food operation projects shall obtain a food operation license
in accordance with the law. The sales of only prepackaged food shall be reported to the local
department for market regulation at or above the county level in the place where the food seller
is located for filing and medical institutions or drug retailers are not required to file for selling
specific total nutrient formula food within the scope of the food for special medical purposes,
but operators engaging in selling specific total nutrient formula food to medical institutions or
drug retailers shall obtain a food operation license or file for the sale. Any food operator
engaging in food operation in different operation sites shall respectively obtain food operation
licenses or file for operation in accordance with the law. Those food operators which engage
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in food operation through automatic equipment or which only engage in food operation may
carry out business activities within the scope of the obtained license or completed filing in
other operation sites within the corresponding provincial administrative region immediately
upon obtaining a food operation license for or making a filing for the operation site.
Food safety mechanism
Personnel health management system
In accordance with the Food Safety Law as well as the Implementing Rules on the Food
Safety Law, food producers and traders shall establish and implement a personnel health
management system. The personnel suffering from diseases that affect food safety according
to the regulations of the health administrative department under the State Council shall not
engage in work that involves contact with ready-to-eat food. The personnel who engage in
work that involves contact with ready-to-eat food shall have physical check-up each year and
shall obtain healthy certificates prior to working.
The packages of pre-packed food
According to the Food Safety Law and Administrative Provisions on Food Labelling
(), which was promulgated by the General Administration of Quality
Supervision, Inspection and Quarantine on August 27, 2007 and amended on October 22, 2009
and entered into force on the same day, the packages of pre-packed food shall bear labels. The
labels shall state the following matters, such as name, specifications, net content and date of
production; list of ingredients or components; producer’s name, address and contact details;
shelf life; product standard code; storage conditions; the general name of the food additives
used under the national standards; serial number of food production license; and other items
that must be indicated according to laws, regulations or food safety standards. The labels of the
staple and supplementary food exclusively for infants and babies and other designated groups
shall also indicate the principal nutritional ingredients and their contents.
Purchase acceptance system
According to the Food Safety Law, food traders purchasing food shall check the supplier’s
permit and food ex-factory inspection certificate or other qualification proof. Food trade
enterprise shall establish an inspection records system for inspection of purchased food,
truthfully record the description, specifications, quantity, date of manufacture or production
batch, shelf life and date of purchase of food, as well as the name, address and contact details
of the supplier etc., and retain the relevant documentation. The records and documentation
shall be kept at least six months upon expiry of the product’s shelf life; where the shelf life is
not specified, the records and documentation shall be kept at least for two years. Food trade
enterprises implementing unified distribution may arrange for the head office of the enterprise
to implement unified inspection of the permits of suppliers and product quality certificates of
food and to keep inspection records for purchases of food.
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Self-inspection System
According to the Food Safety Law, food producers and traders shall establish a food
safety self-inspection system, and conduct inspection and assessment of food safety conditions
on a regular basis. Where there is any change in producing and business operation conditions
and the food producers or traders no longer comply with food safety requirements, the food
producers or traders shall forthwith adopt rectification measures; in the event of a food safety
incident with potential risks, the food producers or traders shall forthwith cease food producing
or food business operations immediately, and report to the food safety supervision and
administration department of the county People’s Government at the locality.
Food recall system
Also under the Food Safety Law as well as the Implementing Rules on the Food Safety
Law, the Administrative Measures for Food Recall () was promulgated
by the CFDA on March 11, 2015 and entered into force on September 1, 2015, and last
amended on October 23, 2020. The Administrative Measures for Food Recall provides the
detailed rules on the food recall system. Where a food trader finds that the food traded by it
does not comply with the food safety standards, it shall immediately stop the trading, notify the
relevant producers and traders, as well as consumers and record the cessation of trading and
the notification. Where the food traders fail to recall or stop trading of the food failing to
comply with the food safety standards in accordance with the provisions of the Food Safety
Law as well as the Implementing Regulations on the Food Safety Law, the market supervision
and administration at or above the county level shall order them to recall or stop trading.
Food Storage
According to the Food Safety Law and the Implementing Rules on the Food Safety Law,
food traders shall store food pursuant to the requirements of ensuring food safety, inspect food
inventory on a regular basis, and promptly dispose deteriorated food or food with expired shelf
life. Food traders storing bulk food shall indicate the description, date of manufacture or
production batch, shelf life of food, the name and contact details of manufacturer at the place
of storage. For storage and transportation of food which have special requirements for
temperature and humidity, heat preservation, cold storage or freezing equipment and facilities
shall be available, and effective operation thereof shall be maintained.
Quality Control
On October 8, 2022, the SAMR released the Interim Measures for the Supervision and
Management of Food-related Product Quality and Safety (ሯඎτΌ္ຖ၍ଣ
), or the Interim Measures of Food-related Product, which took effect on March 1,
2023. The Interim Measures of Food-related Product specify the responsibilities of producers
and sellers of food-related products as well as the specific requirements for the control of the
whole production process. In addition, the Interim Measures of Food-related Product establish
a strict legal liability system for food-related products to define the legal liabilities of
food-related products.
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REGULATIONS RELATING TO IMPORTATION AND EXPORTATION OF GOODS
According to the Circular of the Ministry of Commerce on Relevant Issues Concerning
the Record Keeping and Registration of the Right to Foreign Trade by Foreign-funded
Enterprises (), which was
promulgated by the Ministry of Commerce (the “MOFCOM”) and with effect from August 17,
2004, where foreign-funded enterprises duly established before July 1, 2004 apply for the
addition of any import/export business to their approved scope of business, they must, in
accordance with the Measures for the Record-keeping and Registration by Foreign Trade
Dealers (), passed by the MOFCOM on June 25, 2004, took
effect on July 1, 2004, and was last amended on May 10, 2021, complete the formalities of
adding business items to the enterprises’ business licenses and shall, in accordance with the
relevant procedures, complete the formalities of record-keeping and registration (note: no
formalities of change are required in regard to the approval certificate for its establishment) on
the strength of the approval certificate for its establishment, business license with the business
addition made, and any other documents as required under the Measures for the Record-
keeping and Registration by Foreign Trade Dealers. The registration authorities shall affix a
stamp indicating “business of distribution of import goods excluded” on the registration form.
Pursuant to the Administrative Provisions of the Customs of the PRC on Record-filing of
Customs Declaration Entities () which was
promulgated on November 19, 2021 and took effect on January 1, 2022, consignors or
consignees of imported or exported goods or customs declaration enterprises that apply for
record-filing shall obtain market entity qualifications; in the case of consignors or consignees
of imported or exported goods applying for record-filing, they shall also complete the
record-filing formalities for foreign trade dealers.
REGULATIONS RELATING TO THE OPERATION OF MEDICAL DEVICES
Pursuant to the Administrative Measures for Operation of Medical Devices ( ᔼᐕኜ૛
), promulgated by the SAMR on March 10, 2022, and became effective on
May 1, 2022, an entity engaging in the operation of medical devices of Class II shall file for
record with the CFDA at city level where such entity is located. Any entity shall not sell or use
medical devices which are not properly registered or filed with the CFDA or its local
counterparts. In addition, according to the Administrative Measures for Operation of Medical
Devices, a medical device operator shall establish and maintain a record system of incoming
quality control.
REGULATIONS RELATING TO PRODUCT LIABILITY
The principal legal provisions governing product liability are set out in the Product
Quality Law of the PRC () (the “Product Quality Law”),
which was promulgated by the SCNPC on February 22, 1993 and last amended on December
29, 2018 with effect from the same day.
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The Product Quality Law is applicable to all activities of production and sale of any
product within the territory of mainland China, and the producers and sellers shall be liable for
product quality in accordance with the Product Quality Law. According to the Product Quality
Law, producers and sellers shall establish a sound internal product quality management system
and strictly adhere to a job responsibility system in relation to quality standards and quality
liabilities together with implementing corresponding examination and inspection measures.
Sellers shall also establish and implement an examination and acceptance system for purchased
stock to examine product quality certificates and other marks.
According to the Product Quality Law, consumers or other victims who suffer personal
injury or property losses due to product defects may demand compensation from the producer
as well as the seller. Where the responsibility for product defects lies with the producer, the
seller shall have the right to recover such compensation from the producer if they take the
responsibility and make a compensation, and vice versa. Violations of the Product Quality Law
may result in the imposition of fines. In addition, the seller or producer may be ordered to
suspend operation and its business license may be revoked. Criminal liability may be incurred
in serious cases.
REGULATIONS RELATING TO CONSUMER PROTECTION AND COMPETITION
Consumer protection
The principal legal provisions for the protection of consumer interests are set out in the
Consumer Protection Law of the PRC () (the
“Consumer Protection Law”), which was promulgated by the SCNPC on October 31, 1993,
took effect from January 1, 1994 and was amended on August 27, 2009 and October 25, 2013.
According to the Consumer Protection Law, the rights and interests of the consumers who buy
or use commodities or receive services for the purposes of daily consumption are protected and
all manufacturers and distributors involved must ensure that the products and services they
provide will not cause damage to the safety of consumers and their properties. Violations of the
Consumer Protection Law may result in the imposition of fines. In addition, the operator will
be ordered to suspend operations and its business license will be revoked. Criminal liability
may be incurred in serious cases.
According to the Part VII tort liability of the Civil Code of the PRC ( ʕശɛ͏΍ձ਷
Պ) promulgated by the National People’s Congress on May 28, 2020 and became
effective on January 1, 2021, in the event of an injury caused by a defective product, either the
manufacturer or seller of such product, as a tortfeasor, may be subject to tortious liability and
relevant remedies seeking by the consumers. If the product defect is caused by the
manufacturer, the manufacturer shall be held responsible and the seller, if having made the
compensation, shall be entitled to seek reimbursement from the manufacturer. If, on the other
hand, the defects of the products are caused by the fault of the seller, the seller shall be held
responsible and the manufacturer, if having made the compensation, shall be entitled to seek
reimbursement from the seller.
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Competition law
Competitions among the business operators are generally governed by the Law of the
PRC for Anti-Unfair Competition () (the “Anti-Unfair
Competition Law”), which was promulgated by the SCNPC on September 2, 1993, took effect
from December 1, 1993 and was amended on November 4, 2017 and April 23, 2019. According
to the Anti-Unfair Competition Law, when trading in the market, operators should abide by the
principles of voluntariness, equality, fairness, honesty, and credibility, and abide by laws and
recognized business ethics. An operator, in violation of the Anti-Unfair Competition Law,
disrupting the competition order, and infringing the legitimate rights and interests of other
operators or consumers, constitutes unfair competition. When the legitimate rights and interests
of an operator are damaged by unfair competition, it may start a lawsuit in the people’s court.
In contrast, if an operator violates the provisions of the Anti-Unfair Competition Law, engages
in unfair competition and causes damage to another operator, it shall be liable for damages. If
the damage suffered by the injured operator is difficult to assess, the amount of damages shall
be the profit obtained by the infringer through the infringement. The infringer shall also bear
all reasonable expenses paid by the infringed operator to stop the infringement.
Price law
According to the Price Law of the PRC () (the “Price Law”)
promulgated by the SCNPC on December 29, 1997 and took effect from May 1, 1998, operators
should observe the following principles when determining prices: fairness, lawfulness and
good faith. The production and operation costs and the market supply and demand situation
should be the fundamental basis for the operator to determine the price. When selling or
purchasing goods and providing services, the operator shall clearly indicate the price and
indicate the name, origin of production, specifications, grade, valuation unit and price of a
commodity, or service item, charging standards and other related particulars in accordance with
the requirements of the competent government price department. Operators shall not sell the
goods at a price beyond the marked price or charge unspecified fees on the top of price
indicated. In addition, operators may not take illegitimate pricing actions, such as colluding
with others to manipulate market prices and damaging the legitimate rights and interests of
other operators or consumers. Any operator engaged in the act of illegitimate pricing stipulated
by the Price Law shall be ordered to make corrections, have the illegal income be confiscated,
and may be imposed a fine of no more than five times of its illegal income; if the circumstances
are serious, the business combination shall be ordered to suspend for rectification, or the
administrative department for industry and commerce shall revoke the business license. In
addition, any operator who causes consumers or other operators to pay higher prices due to
illegal pricing acts should refund the overpaid portion; if damage is caused, it shall be liable
for compensation according to law. Any operator who violates the clearly marked price shall
be ordered to make corrections, have the illegal income be confiscated, and may be imposed
a fine of no more than RMB5,000.
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REGULATIONS RELATING TO ONLINE TRADING AND E-COMMERCE
The SCNPC enacted the E-Commerce Law of the PRC ()
(the “E-Commerce Law”) on August 31, 2018, which became effective on January 1, 2019.
Under the E-Commerce Law, e-commerce refers to a natural person, a legal person or an
unincorporated association that operates activities of selling goods or providing services
through the internet or other information networks. The E-Commerce Law generally applies to:
(i) Platform Operators, which refer to legal persons or unincorporated organizations that
provide network places of business, transaction matching, information release and other
services to enable the transaction parties to carry out independent transaction activities; (ii)
Operators on the platform, which refer to e-commerce Operators that sell goods or provide
services to customers through e-commerce platforms; and (iii) other e-commerce Operators
that sell goods or provide services through self-established websites or other network services.
The E-commerce Law also provides rules in relation to e-commerce contracts, dispute
settlements, e-commerce development as well as legal liabilities involved in e-commerce. An
e-commerce Business Operator shall make market participant registration and obtain relevant
administrative licensing according to the law.
In accordance with the Measures for the Supervision and Administration of Online
Trading () (the “Online Trading Measures”), promulgated by the
SAMR on March 15, 2021, which came into effect on May 1, 2021, any business activity of
selling goods or providing services through the Internet within mainland China shall abide by
the PRC Law and the provisions of the Online Trading Measures. Persons engaged in operation
of online goods trading (the “Online Trading Operators”) are required to make an industrial and
commercial registration in accordance with laws. In selling goods or providing services to
consumers, Online Trading Operators must observe the Consumer Protection Law, the Product
Quality Law, and provisions of other laws, regulations and rules.
REGULATIONS RELATING TO MOBILE APPs
In June 2016, the CAC promulgated the Administrative Provisions on Mobile Internet
Application Information Services () (the “Mobile
Application Administrative Provisions”), which became effective on August 1, 2016. Pursuant
to the Mobile Application Administrative Provisions, a mobile internet app refers to an app
software that runs on mobile smart devices providing information services after being
pre-installed, downloaded or embedded through other means, and mobile internet app providers
refer to the owners or operators of mobile internet apps. Pursuant to the Mobile Application
Administrative Provisions, an internet app program provider must verify a user’s mobile phone
number and other identity information under the principle of mandatory real name registration
at the back-office end and voluntary real name display at the front- office end. An internet app
provider must not enable functions that can collect a user’s geographical location information,
access user’s contact list, activate the camera or recorder of the user’s mobile smart device or
other functions irrelevant to its services, nor is it allowed to conduct bundle installations of
irrelevant app programs, unless it has clearly indicated to the user and obtained the user’s
consent on such functions and app programs.
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On June 14, 2022, the CAC amended the Administrative Provisions on Mobile Internet
Application Information Services (), or the revised
version of Mobile Application Administrative Provisions, which came into effect on August 1,
2022, which further emphasizes that mobile internet app providers shall not compel users to
agree to personal information processing out of any reason, and are prohibited from banning
users from their basic functional services due to the users refusal of providing non-essential
personal information. The revised version of Mobile Application Administrative Provisions
shall apply to whoever provide application information services and engage in the internet
application stores and other application distribution services, clarifying that engaging in the
Internet application stores and other application distribution services refers to the activities of
providing users with application publishing, downloading, dynamic loading and other services
through the Internet, including application stores, fast application centers, Internet applet
platforms, browser plug-ins and other types of platform distribution services. If mobile internet
app providers violate relevant laws and regulations and service agreement with the mobile
application distribution platforms, mobile app stores through which it distributes its apps may
issue warnings, suspend services, or terminate the distribution of its apps, and report the
violations to governmental authorities.
In December 2016, the Ministry of Industry and Information Technology of the PRC (the
“MIIT”) promulgated the Interim Measures on the Administration of Pre-Installation and
Distribution of Applications for Mobile Smart Terminals ( ୅ਗ౽ঐ୞၌Ꮠ͜ழ΁ཫໄձʱ
) (the “Interim Measures”), which came into effect on July 1, 2017. The
Interim Measures aim to enhance the administration of mobile apps, and require, among others,
that mobile phone manufacturers and internet information service providers must ensure that
a mobile app, as well as its ancillary resource files, configuration files and user data can be
uninstalled by a user on a convenient basis, unless it is a basic function software, which refers
to a software that supports the normal functioning of the hardware and operating system of a
mobile smart device.
The Announcement of Conducting Special Supervision against the Illegal Collection and
Use of Personal Information by App (࢝Appٙ
ʮѓ) jointly issued by the CAC, MIIT, the Ministry of Public Security and the SAMR on
January 23, 2019 provides that (i) application operators are prohibited from collecting any
personal information irrelevant to the services provided by such operator; (ii) information
collection and usage policy should be presented in a simple and clear way, and such policy
should be consented by the users voluntarily; (iii) authorization from users should not be
obtained by coercing users with default or bundling clauses or making consent a condition of
a service. App operators violating such rules can be ordered by authorities to correct its
incompliance within a given period of time, be reported in public; or even suspend its operation
for rectification or revoke its business license or operational permits.
The MIIT issued the Notice on the Further Special Rectification of App Infringing upon
Users’ Personal Rights and Interests (ᐽଉપආAppٙ
) (the “Further Rectification Notice”), on July 22, 2020. The Further Rectification
Notice requires that certain conducts of app service providers should be inspected, including,
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among others, (i) collecting or using personal information without the user’s consent,
collecting or using personal information beyond the necessary scope of providing services, and
forcing users to receive advertisements; (ii) requesting user’s permission in a compulsory and
frequent manner, or frequently launching third parties apps; and (iii) deceiving and misleading
users into downloading apps or providing personal information. The Further Rectification
Notice also set forth that the period for the regulatory specific inspection on apps and that the
MIIT will order the non-compliant entities to modify their business within five business days,
or otherwise the MIIT will make public announcement, remove the apps from the app stores
or impose other administrative penalties.
REGULATIONS RELATING TO ADVERTISING
The Advertising Law of the PRC (), which was promulgated
by the SCNPC, as most recently amended on April 29, 2021, outlines the regulatory framework
for the advertising industry. Advertisers, advertising operators and advertising distributors are
required by PRC Law in relation to advertising to ensure that the contents of the advertisements
they prepare or distribute are true and in full compliance with applicable laws and regulations.
For example, pursuant to the Advertising Law, advertisements must not contain, among other
prohibited contents, terms such as “the state level,” “the highest grade,” “the best” or other
similar words. In addition, where a special government review is required for certain categories
of advertisements before publishing, the advertisers, advertising operators and advertising
distributors are obligated to confirm that such review has been performed and the relevant
approval has been obtained. Pursuant to the Advertising Law, the use of the internet to
distribute advertisements shall not affect the normal use of the internet by users. Particularly,
advertisements distributed on internet pages such as pop-up advertisements shall be indicated
with a conspicuous mark for “close” to ensure the close of such advertisements by one click.
Where internet information service providers know or should know that illegal advertisements
are being distributed using their services, they shall prevent such advertisements from being
distributed.
In addition to the above regulations, the SAMR promulgated the Administrative Measures
for Internet Advertising () (the “Internet Advertising Measures”) on
February 25, 2023, which came into effect and replaced the Interim Administration Measures
of Internet Advertising () on May 1, 2023, also set forth certain
compliance requirements for online advertising businesses. For example, advertising operators
and distributors of internet advertisements must examine, verify and record identity
information, such as real identity, address and contact information, of advertisers, and maintain
an updated verification record on a regular basis. Moreover, advertising operators and
advertising distributors must examine supporting documentation provided by advertisers and
verify the contents of the advertisements against supporting documents before publishing. If
the contents of advertisements are inconsistent with the supporting documentation, or the
supporting documentation is incomplete, advertising operators and distributors must refrain
from providing design, production, agency or publishing services. The Internet Advertising
Measures set out, among other things, the following requirements for Internet advertising
activities: Online advertisements for prescription medicine or tobacco are not allowed, while
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advertisements for special commodities or services such as medical treatment,
pharmaceuticals, food for special medical purposes, medical instruments, agrochemicals,
veterinary medicine and other health foods must be reviewed by competent authorities before
online publication; Internet advertisements must be visibly marked as “advertisement”, while
paid search results must be obviously distinguished from natural search results; and Internet
advertisements must not affect users’ normal use of the Internet; “pop-up ads” must be clearly
marked with a “close” sign and be closable with one click; and no deceptive or misleading
means may be used to lure users into clicking or browsing an advertisement.
REGULATIONS RELATING TO MINI-KARAOKE
According to the Notice of the Ministry of Culture on Guiding the Healthy Development
of the Mini-Karaoke Market () which
was promulgated on July 18, 2017, mini-karaoke platform operators shall file the record with
the Ministry of Culture (which has been replaced by the Ministry of Culture and Tourism),
before the end of the month when they start operation. The Ministry of Culture will distribute
the record information of the mini-karaoke to the cultural administration departments and
cultural market comprehensive law enforcement agencies of each province as a unit, and will
develop a system for online filing and inquiries in a timely manner. Provincial cultural
administrative departments and cultural market comprehensive law enforcement agencies are
responsible for coordinating the management of mini-karaoke within the province, and
implementing territorial management responsibilities level by level in accordance with the
actual operating location of the mini-karaoke.
REGULATIONS RELATING TO INFORMATION SECURITY AND PRIV ACY
PROTECTION
According to the Civil Code of the PRC, the personal information of a natural person shall
be protected by the law. Any organization or individual that need to obtain personal
information of others shall obtain such information legally and ensure the security of such
information, and shall not illegally collect, use, process or transmit personal information of
others, or illegally purchase, sell, provide or make public personal information of others.
The Administration Measures on the Security Protection of Computer Information
Network with International Connections (),
promulgated by the Ministry of Public Security on December 16, 1997, as amended by the
State Council and became effective on January 8, 2011, prohibit using the internet which could
threat national security, cause leakages of state secrets, impair state, public or collective
interests or the lawful rights of citizens or commit a criminal crime. If the internet operators
do not fulfil the responsibilities stipulated in measures, the relevant Telecommunications
Operating License may be revoked and the websites shall be shut down, while a fine not more
than RMB15,000 shall be imposed to the unit.
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The Decisions on Protection of Internet Security ()
enacted by the SCNPC on December 28, 2000, as amended in August 2009, provides that,
among other things, the following activities conducted through the internet, if constituted a
crime according to PRC Law, are subject to criminal punishment: (i) intrusion into a
strategically significant computer or system; (ii) intentionally inventing and disseminating
destructive programs, such as computer viruses, to attack the computer system and the
communications network, thereby destroying the computer system and the communications
networks; (iii) violating national regulations, suspending the computer networks or the
communication services without authorization; (iv) leaking state secrets; (v) spreading false
commercial information; or (vi) infringing intellectual property rights through internet.
On June 22, 2007, the Ministry of Public Security, State Secrecy Bureau, State
Cryptography Administration and the Information Office of the State Council jointly
promulgated the Administrative Measures for the Multi-level Protection of Information
Security (), under which the security protection grade of an
information system may be classified into five grades. Companies operating and using
information systems shall protect the information systems and any system equal to or above
level II as determined in accordance with these measures, a record-filing with the competent
authority is required.
On November 7, 2016, the SCNPC promulgated the Cyber Security Law of the PRC ( ʕ
), which became effective on June 1, 2017. Pursuant to the Cyber
Security Law, network operators shall comply with laws and regulations and fulfil their
obligations to safeguard security of the network when conducting business and providing
services. Those who provide services through networks shall take technical measures and other
necessary measures in accordance with laws, regulations and compulsory national
requirements to safeguard the safe and stable operation of the networks, respond to network
security incidents effectively, prevent illegal and criminal activities and maintain the integrity,
confidentiality and usability of network data. Network operators shall not collect the personal
information irrelevant to the services they provide or collect or use the personal information
in violation of the provisions of laws or agreements between both parties, and network
operators of key information infrastructure shall store all the personal information and
important data collected and produced within the territory of mainland China. Their purchases
of network products and services that may affect national security shall be subject to national
cyber security review. The network operators who violate the aforesaid regulations may be
ordered by the competent authority to make corrections, be given a warning, or be imposed a
fine with different amounts.
On June 10, 2021, the SCNPC promulgated the PRC Data Security Law ( ʕശɛ͏΍
), which took effect in September 1, 2021. The Data Security Law introduces
a data classification and hierarchical protection system based on the materiality of data in
economic and social development, as well as the degree of harm it will cause to national
security, public interests, or legitimate rights and interests of persons or entities when such data
is tampered with, destroyed, divulged, or illegally acquired or used. It also provides for a
security review procedure for the data activities which may affect national security.
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On December 28, 2021, the CAC and certain other PRC regulatory authorities published
the Measures for Cybersecurity Review (), which became effective on
February 15, 2022, replacing the Measures for Cybersecurity Review in 2020. Pursuant to the
new measures, critical information infrastructure operators that purchase network products and
services and network platform operators engaging in data processing activities that affect or
may affect national security must be subject to the cybersecurity review. A network platform
operator that has the personal information of more than one million users must apply for a
cybersecurity review when it seeks to list in a foreign country. The Measures for Cybersecurity
Review further elaborates the factors to be considered when assessing the national security
risks of the relevant activities, including, among others: (i) the risk of core data, important data,
or a large amount of personal information being stolen, leaked, destroyed, and illegally used
or exited the country, and (ii) the risk of critical information infrastructure, core data, important
data, or a large amount of personal information being affected, controlled, or maliciously used
by foreign governments after listing abroad.
Pursuant to the Measures on Security Assessment of Cross-border Data Transfer ( ᅰኽ
), which were promulgated on July 7, 2022, and came into effect on
September 1, 2022 by the CAC, to provide data abroad, a data processor falling under any of
the following circumstances shall, through the local cyberspace administration at the provincial
level, apply to CAC for security assessment of outbound data: (i) where a data processor
provides critical data abroad; (ii) where a key information infrastructure operator or a data
processor processing the personal information of more than one million individuals provides
personal information abroad; (iii) where a data processor has provided personal information of
100,000 individuals or sensitive personal information of 10,000 individuals in total abroad
since January 1 of the previous year; and (iv) other circumstances prescribed by the CAC for
which declaration for security assessment for outbound data transfers is required.
On November 14, 2021, the CAC issued the Administration Governing the Cyber Data
Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋจԈᇃ), the “ Draft Cyber
Data Security Regulations ”). The Draft Cyber Data Security Regulations have set out
requirements on matters such as the protection of personal information, security of important
data, security management of cross-border data transfer, application for cybersecurity review
and obligations of internet platform operators. Pursuant to the Draft Cyber Data Security
Regulations, data processors carrying out the following activities must, in accordance with the
relevant national regulations, apply for a cybersecurity review: (i) the merger, reorganization
or spin-off of Internet platform operators that possess a large number of data resources related
to national security, economic development and public interests that affects or may affect
national security; (ii) listing in a foreign country of any data processors that process the
personal information of more than one (1) million users; (iii) listing in Hong Kong of data
processors, which affects or may affect national security; and (iv) other data processing
activities that affect or may affect national security. The Draft Cyber Data Security Regulations
did not define the scope of and threshold for determining what “affects or may affect national
security.” The term “national security” is defined as “the status of National regime,
sovereignty, unity and territorial integrity, people’s well-being, sustainable economic and
social development, and other major national interests that are relatively safe and free from
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internal and external threats, as well as the ability to ensure continuous security” in the
National Security Law of the PRC (). In the absence of further
explanation or interpretation, the PRC government authorities may have wide discretion in the
interpretation of “affects or may affect national security.” As of the Latest Practicable Date, the
Draft Cyber Data Security Regulations has not come into effect.
On August 20, 2021, the SCNPC issued the PRC Personal Information Protection Law
(), which took effect on November 1, 2021. It integrates
the scattered rules with respect to personal information rights and privacy protection and aims
at protecting the personal information rights and interests, regulating the processing of
personal information, ensuring the orderly and free flow of personal information in accordance
with the law, and promoting the reasonable use of personal information. Personal information,
as defined in the Personal Information Protection Law, refers to information related to
identified or identifiable natural persons and recorded by electronic or other means, but
excluding the anonymized information. The Personal Information Protection Law provides the
circumstances under which a personal information processor could process personal
information, which include but not limited to, where the consent of the individual concerned
is obtained or where it is necessary for the conclusion or performance of a contract to which
the individual is a contractual party. It also stipulates certain specific rules with respect to the
obligations of a personal information processor, such as to inform the purpose and method of
processing to the individuals, and the obligations of the third party who has access to the
personal information by way of co-processing or delegation.
On December 28, 2012, the SCNPC promulgated the Decision on Strengthening Network
Information Protection () to enhance the legal protection of
information security and privacy on the internet. The network services providers shall
strengthen the management of the information published by their users, and shall immediately
cease transmitting any information forbidden to be published or transmitted by the laws and
regulations, take such measures as elimination, preserve relevant records, and report the same
to relevant competent departments. On July 16, 2013, the MIIT promulgated the Provisions on
Protection of Personal Information of Telecommunication and Internet Users (ձʝᑌၣ
), which became effective on September 1, 2013, to regulate the
collection and use of personal information of users in the provision of telecommunication
service and internet information service in mainland China. The personal information of users
collected or used in the course of provision of service by the telecommunication business
operators, internet information service providers and their personnel shall be kept in strict
confidence, and may not be divulged, tampered with or damaged, and may not be sold or
illegally provided to others.
On December 29, 2011, the MIIT promulgated the Several Provisions on Regulation of
the Order of Internet Information Service Market (ʍ஝
) (the “Internet Information Service Market Provisions”), which became effective on
March 15, 2012. The Internet Information Service Market Provisions stipulate that without the
consent of users, internet information service providers shall not collect information relevant
to the users that can lead to the recognition of the identity of the users independently or in
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combination with other information (the “personal information of users”), nor shall they
provide personal information of users to others, unless otherwise provided by laws and
administrative regulations. The Internet Information Service Market Provisions also require
that internet information service providers shall properly preserve the personal information of
users. If internet information service providers violate the foregoing regulations, the
telecommunications management department shall issue a warning, and may also impose a fine
of not less than RMB10,000 but not more than RMB30,000, and announce to the public.
REGULATIONS RELATING TO EMPLOYMENT AND SOCIAL SECURITIES
Employment
The major PRC Law that govern employment relationship are the Labor Law of the PRC
() (the “Labor Law”), which was issued by the SCNPC on July 5,
1994, came into effect on January 1, 1995 and revised on August 27, 2009 and December 29,
2018, the Labor Contract Law of the PRC () (the “Labor
Contract Law”), which was promulgated by the SCNPC on June 29, 2007 and became effective
on January 1, 2008, and then amended on December 28, 2012 and became effective on July 1,
2013, and the Implementation Rules of the Labor Contract Law of the PRC ( ʕശɛ͏΍ձ
ૢԷ), which was issued by the State Council on September 18, 2008 and
came into effect on the same day. According to the aforementioned laws and regulations, labor
relationships between employers and employees must be executed in written form. The laws
and regulations above impose stringent requirements on the employers in relation to entering
into fixed-term employment contracts, hiring of temporary employees and dismissal of
employees. As prescribed under the laws and regulations, employers shall ensure its employees
have the right to rest and the right to receive wages no lower than the local minimum wages.
Employers must establish a system for labor safety and sanitation that strictly abide by state
standards and provide relevant education to its employees. Violations of the Labor Contract
Law and the Labor Law may result in the imposition of fines and other administrative liabilities
and/or incur criminal liabilities in the case of serious violations.
Social Securities
According to the Social Insurance Law of the PRC (),
which issued by the SCNPC on October 28, 2010 and came into effect on July 1, 2011 and was
newly revised on December 29, 2018, enterprises and institutions in mainland China shall
provide their employees with welfare schemes covering pension insurance, unemployment
insurance, maternity insurance, occupational injury insurance, medical insurance and other
welfare plans. The employer shall apply to the local social insurance agency for social
insurance registration within 30 days from the date of its formation. And it shall, within 30
days from the date of employment, apply to the social insurance agency for social insurance
registration for the employee. Any employer who violates the regulations above shall be
ordered to make correction within a prescribed time limit; if the employer fails to rectify within
the time limit, the employer and its directly liable person will be fined. Meanwhile, the Interim
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Regulation on the Collection and Payment of Social Insurance Premiums (ᎈ൬ᅄᖮ
ᅲБૢԷ), which was issued by the State Council on January 22, 1999 and came into effect
on the same day and was recently revised on March 24, 2019, prescribes the details concerning
the social securities.
Apart from the general provisions about social insurance, specific provisions on various
types of insurance are set out in the Regulation on Work-Related Injury Insurance (ڭ
ᎈૢԷ), which was issued by the State Council on April 27, 2003, came into effect on
January 1, 2004 and revised on December 20, 2010, the Regulations on Unemployment
Insurance (ᎈૢԷ), which was issued by the State Council on January 22, 1999 and
came into effect on the same day, the Trial Measures on Employee Maternity Insurance of
Enterprises (), which was issued by the Ministry of Labor on
December 14, 1994 and came into effect on January 1, 1995. Enterprises subject to these
regulations shall provide their employees with the corresponding insurance.
Housing Provident Fund
According to the Regulation Concerning the Administration of Housing Provident Fund
(၍ଣૢԷ), implemented since April 3, 1999 and amended on March 24, 2002
and March 24, 2019, any newly established entity shall make deposit registration at the housing
provident fund management center within 30 days as of its establishment. After that, the entity
shall open a housing accumulation fund account for its employees in an entrusted bank. Within
30 days as of the date an employee is recruited, the entity shall make deposit registration at the
housing provident fund management center and seal up the employee’s housing accumulation
fund account in the bank mentioned above within 30 days from termination of the employment
relationship. Any entity that fails to make deposit registration of the housing accumulation fund
or fails to open a housing accumulation fund account for its employees shall be ordered to
complete the relevant procedures within a prescribed time limit. Any entity failing to complete
the relevant procedure within the time limit will be fined RMB10,000 to RMB50,000. Any
entity fails to make payment of housing provident fund within the time limit or has shortfall
in payment of housing provident fund will be ordered to make the payment or make up the
shortfall within the prescribed time limit, otherwise, housing provident fund management
center is entitled to apply for compulsory enforcement with the People’s Court.
REGULATIONS RELATING TO INTELLECTUAL PROPERTIES
Patents
Patents are protected by the Patent Law of the PRC () (the
“Patent Law”), which was issued by the SCNPC on March 12, 1984, came into effect on April
1, 1985 and revised on September 4, 1992, August 25, 2000, December 27, 2008 and October
17, 2020 and became effective on June 1, 2021, as well as by the Implementation Regulations
for the Patent Law of the PRC () issued by the State
Council on June 15, 2001, came into effect on July 1, 2001 and revised on December 28, 2002
and January 9, 2010. The patent administrative departments are responsible for managing
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patent work. According to the Patent Law, inventions refer to inventions, utility models and
designs. An invention or utility model for which patent rights are granted shall reach the
standards of novelty, creativity and practicability. The protection period is 20 years for an
invention patent, 10 years for a utility model patent and 15 years for a design patent, all
counted from the date of application. Others may use the patent after obtaining the permit of
the patent holder, otherwise such behavior will constitute an infringing act of the patent right.
Trademarks
Pursuant to the Trademark Law of the PRC () which was
promulgated on August 23, 1982 and last amended on April 23, 2019 and came into effect on
November 1, 2019, and the Implementation Regulations of the Trademark Law of the PRC
(ૢԷ) which was issued on August 3, 2002 and amended on
April 29, 2014, the Trademark Office under the State Administration for Industry and
Commerce of the PRC (the “Trademark Office”) shall handle trademark registrations and grant
a term of ten years to registered trademarks, which may be renewed for additional ten year
period upon request from the trademark owner. The Trademark Law of the PRC has adopted
a “first-to-file” principle with respect to trademark registration. Where an application for
trademark for which application for registration has been made is identical or similar to another
trademark which has already been registered or is under preliminary examination and approval
for use on the same kind of or similar commodities or services, the application for registration
of such trademark may be rejected. Any person applying for the registration of a trademark may
not prejudice the existing right of others, nor may any person register in advance a trademark
that has already been used by another party and has already gained a “sufficient degree of
reputation” through such party’s use. A trademark registrant may, by entering into a trademark
licensing contract, license another party to use its registered trademark. Where another party
is licensed to use a registered trademark, the licenser shall report the license to the Trademark
Office for recordation, and the Trademark Office shall publish it. An unrecorded license may
not be used as a defense against a third party in good faith.
Copyright and Computer Software
China is a signatory to some major international conventions on protection of copyright
and became a member of the Berne Convention for the Protection of Literary and Artistic
Works in October, 1992, the Universal Copyright Convention in October, 1992, and the
Agreement on Trade-Related Aspects of Intellectual Property Rights upon its accession to the
World Trade Organization in December 2001. The Copyright Law of the PRC ( ʕ਷ɛ͏΍
) (the “Copyright Law”), which was promulgated by the SCNPC on September
7, 1990, as amended on October 27, 2001 and last amended on November 11, 2020, and became
effective on June 1, 2021, provides that Chinese citizens, legal persons, or other organizations
shall, whether published or not, enjoy copyright in their works, which include, among others,
works of literature, art, natural science, social science, engineering technology and computer
software. The purpose of the Copyright Law is to encourage the creation and dissemination of
works which is beneficial to the construction of socialist spiritual civilization and material
civilization and promote the development and prosperity of Chinese culture. Unless otherwise
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stipulated in the Copyright Law, anyone that wishes to use another’s work shall conclude a
licensing contract with the copyright owner of the work. A licensing contract shall include: the
type(s) of right(s) being licensed; whether the license is exclusive or non-exclusive; the
geographic scope and term of the license; the amount and method of remuneration; liability for
breach of contract; and other details which the parties consider necessary. Where the right
licensed is an exclusive licensing right, the contracts shall be made in writing, except in cases
where works are to be published by newspapers and periodicals according to the Implementing
Regulations of the Copyright Law of the PRC (ૢԷ), which
was promulgated by State Council on August 2, 2002, last amended on January 30, 2013 and
became effective on March 1, 2013. Any person, who concludes an exclusive licensing contract
or assignment contract with a copyright owner, may submit, for filing, the contractual
documents to the copyright administrative department.
The Computer Software Copyright Registration Measures (ၑዚழ΁ഹЪᛆ೮া፬
) (the “Software Copyright Measures”), promulgated by the National Copyright
Administration and became effective on February 20, 2002, regulate registrations of software
copyright, exclusive licensing contracts for software copyright and transfer contracts. The
National Copyright Administration shall be the competent governmental authority for the
nationwide administration of software copyright registration and the Copyright Protection
Center of China (the “CPCC”) is designated as the software registration authority. The CPCC
shall grant registration certificates to the Computer Software Copyrights applicants which
conforms to the provisions of both the Software Copyright Measures and the Computer
Software Protection Regulations (ᚐૢԷ).
Provisions of the Supreme People’s Court on Certain Issues Related to the Application of
Law in the Trial of Civil Cases Involving Disputes over Infringement of the Right of
Dissemination through Information Networks (ၣഖෂᅧᛆ
), which became effective on January 1, 2021,
provide that any network user or network service supplier provides without permission works,
performance, sound or visual recordings to which the right holder has information network
transmission right, the people’s courts shall hold that said user or service supplier has infringed
upon the information network transmission right, unless otherwise provided for by laws and
administrative regulations.
Domain Names
In accordance with the Measures for the Administration of Internet Domain Names ( ʝ
) which was issued by the MIIT on August 24, 2017 and came into effect
on November 1, 2017, the MIIT is responsible for supervision and administration of domain
name services in mainland China. Communication administrative bureaus at provincial levels
shall conduct supervision and administration of the domain name services within their
respective administrative jurisdictions. Domain name registration services shall, in principle,
be subject to the principle of “first apply, first register.” A domain name registrar shall, in the
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process of providing domain name registration services, ask the applicant for which the
registration is made to provide authentic, accurate and complete identity information on the
holder of the domain name and other domain name registration related information.
REGULATIONS RELATING TO FOREIGN INVESTMENT
Foreign Investment
The Provisions on Guiding Foreign Investment Direction (),
which was promulgated by the State Council on February 11, 2002 and came into effect on
April 1, 2002, classify all foreign investment projects into four categories: (i) encouraged
projects, (ii) permitted projects, (iii) restricted projects, and (iv) prohibited projects.
Investment activities in mainland China by foreign investors were principally governed by the
Catalogue of Industries for Guiding Foreign Investment (ኬͦ፽) (the
“Catalogue”), which was promulgated by the MOFCOM and the National Development and
Reform Commission (the “NDRC”), and was abolished by the Special Administrative
Measures (Negative List) for Access of Foreign Investment (2021 version) (ɝत
݄(૶ఊ)(2021و)) (the “Negative List”) and Catalogue of Industries for
Encouraging Foreign Investment (2022 version) ( ོᎸ̮ਠҳ༟ପุͦ፽(2022و)) (the
“Encouraging List”). The Negative List, which came into effect on January 1, 2022, sets out
special administrative measures in respect of the access of foreign investments in a centralized
manner, and the Encouraging List which came into effect on January 1, 2023, sets out the
encouraged industries for foreign investment.
Foreign-Invested Enterprises
On December 29, 1993, the SCNPC issued the Company Law of the PRC ( ʕശɛ͏΍
) (the “Company Law”), which was lasted amended on October 26, 2018. The
Company Law regulates the establishment, operation and management of corporate entities in
mainland China and classifies companies into limited liability companies and limited
companies by shares.
According to the Foreign Investment Law of the PRC ()
promulgated by the National People’s Congress on March 15, 2019 and came into effect as of
January 1, 2020, the state shall implement the management systems of pre-establishment
national treatment and negative list for foreign investment, and shall give national treatment to
foreign investment beyond the negative list. Simultaneously, Sino-foreign Equity Joint
V entures of the PRC (), the Wholly Foreign-owned
Enterprises Law of the PRC () and Sino-foreign Cooperative
Joint V entures of the PRC () have been repealed
since January 1, 2020.
In December 26, 2019, the State Council promulgated the Regulations on Implementing
the Foreign Investment Law of the PRC (ૢԷ), which
came into effect in January 1, 2020. After the Regulations on Implementing the Foreign
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Investment Law of the PRC came into effect, the Regulation on Implementing the Sino-Foreign
Equity Joint V enture of the PRC (ૢԷ),
Provisional Regulations on the Duration of Sino-Foreign Equity Joint V enture ( ʕ̮Υ༟຾
), the Regulations on Implementing the Wholly Foreign-owned
Enterprise Law of the PRC () and the Regulations on
Implementing the Sino-foreign Cooperative Joint V enture of the PRC ( ʕശɛ͏΍ձ਷ʕ̮
) have been repealed simultaneously.
On December 30, 2019, the MOFCOM and the SAMR issued the Measures for the
Reporting of Foreign Investment Information (), which came into
effect on January 1, 2020 and replaced the Interim Measures for the Recordation
Administration of the Incorporation and Change of Foreign-Invested Enterprises ( ̮ਠҳ༟
), for carrying out investment activities directly or
indirectly in mainland China, the foreign investors or foreign-invested enterprises shall submit
investment information to the commerce authorities pursuant to these measures.
REGULATIONS RELATING TO OVERSEAS LISTING
On February 17, 2023, the CSRC released the Trial Measures for Administration of the
Overseas Securities Offering and Listing by Domestic Enterprises ( ྤʫΆุྤ̮೯БᗇՎ
), and five supporting guidelines (the “ Trial Measures ”), which took
effect on March 31, 2023. According to the Trial Measures, mainland China-based companies
that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing
procedure and report relevant information to the CSRC. If a mainland China-based company
fails to complete the filing procedure, conceals any material fact or falsifies any major content
in its filing documents, such domestic company may be subject to administrative penalties,
such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the
person directly in charge and other directly liable persons may also be subject to administrative
penalties, such as warnings and fines. According to the Trial Measures, no overseas offering
and listing shall be made under any of the following circumstances: (1) where such securities
offering and listing is explicitly prohibited by provisions in laws, administrative regulations
and relevant state rules; (2) where the intended securities offering and listing may endanger
national security as reviewed and determined by competent authorities under the State Council
in accordance with law; (3) where the domestic company intending to make the securities
offering and listing, or its controlling shareholders and the actual controllers, have committed
crimes such as corruption, bribery, embezzlement, misappropriation of property or
undermining the order of the socialist market economy during the latest three years; (4) where
the domestic company intending to make the securities offering and listing is suspected of
committing crimes or major violations of laws and regulations, and is under investigation
according to law, and no conclusion has yet been made thereof; and (5) where there are material
ownership disputes over equity held by the domestic company’s controlling shareholders or by
other shareholders that are controlled by the controlling shareholders and/or actual controllers.
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On February 24, 2023, the CSRC, jointly with other relevant governmental authorities,
promulgated the Provisions on Strengthening Confidentiality and Archives Management of
Overseas Securities Issuance and Listing by Domestic Enterprises (̋੶ྤʫΆุྤ̮
) (the “ Confidentiality and Archives
Management Provisions ”), which took effect on March 31, 2023. According to the
Confidentiality and Archives Management Provisions, mainland China-based companies,
whether offering and listing securities overseas directly or indirectly, must strictly abide the
applicable laws and regulations when providing or publicly disclosing, either directly or
through their overseas listed entities, documents and materials to securities services providers
such as securities companies and accounting firms or overseas regulators in the process of their
overseas offering and listing. If such documents or materials contain any state secrets or
government authorities work secrets, the domestic companies must obtain the approval from
competent governmental authorities according to the applicable laws, and file with the secrecy
administrative department at the same level with the approving governmental authority.
Furthermore, the Confidentiality and Archives Management Provisions also provide that
securities companies and securities service providers shall also fulfill the applicable legal
procedures when providing overseas regulatory institutions and other relevant institutions and
individuals with documents or materials containing any state secrets or government authorities
work secrets or other documents or materials that, if divulged, will jeopardize national security
or public interest. Since the Confidentiality and Archives Management Provisions were
promulgated recently, substantial uncertainties still exist with respect to the interpretation and
implementation of such provisions and how they will affect us.
REGULATIONS RELATING TO THE H SHARE FULL CIRCULATION
“Full circulation” means listing and circulating on the Stock Exchange of the domestic
unlisted shares of an H-share listed company (the “H-share listed company”), including
unlisted domestic shares held by domestic shareholders prior to overseas listing, unlisted
domestic shares additionally issued after overseas listing, and unlisted shares held by foreign
shareholders. On November 14, 2019, the CSRC announced the Guidelines for the “Full
Circulation” Program for Domestic Unlisted Shares of H-share Listed Companies
(Announcement of the CSRC [2019] No. 22) ( H΅͡ሗ“ஷ”ܸ
ˏ(ึʮѓ[2019]22 ໮)) (the “Guidelines for the ‘Full Circulation’”),
which was amended on August 10, 2023.
According to the Guidelines for the “Full Circulation”, shareholders of domestic unlisted
shares may determine by themselves through consultation the amount and proportion of shares,
for which an application will be filed for circulation, provided that the requirements laid down
in the relevant laws and regulations and set out in the policies for state-owned asset
administration, foreign investment and industry regulation are met, and the corresponding
H-share listed company may be entrusted to file the said application for “full circulation.” To
file an application for “full circulation”, an H-share listed company shall file the application
with the CSRC according to the administrative licensing procedures necessary for the
“examination and approval of public issuance and listing (including additional issuance) of
shares overseas by a joint stock company.”
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On December 31, 2019, CSDC and the Shenzhen Stock Exchange jointly announced the
Measures for Implementation of H-share “Full Circulation” Business ( Hٰ“ஷ”ุਕྼ
) (the “Measures for Implementation”). The businesses of cross-border transfer
registration, maintenance of deposit and holding details, transaction entrustment and
instruction transmission, settlement, management of settlement participants, services of
nominal holders, etc. in relation to the H-share “full circulation business”, are subject to the
Measures for Implementation.
In order to fully promote the reform of H-shares “full circulation” and clarify the business
arrangement and procedures for the relevant shares’ registration, custody, settlement and
delivery, CSDC has promulgated the Circular on Issuing the Guide to the Program for Full
Circulation of H-shares (೯б<Hٰ“ஷ”یܸ>) in February 2020,
which specified the business preparation, account arrangement, cross-border share transfer
registration and overseas centralized custody, etc. In February 2020, China Securities
Depository and Clearing (Hong Kong) Co., Ltd. (the “CSDC (Hong Kong)”) also promulgated
the Guide to the Program for Full Circulation of H-shares ( ʕ਷ᗇՎ೮াഐၑ(ಥ)ʮ
̡Hٰ“ஷ”) to specify the relevant escrow, custody, agent service of CSDC
(Hong Kong), arrangement for settlement and delivery and other relevant matters.
According to the Trial Measures, the H-shares “full circulation” should comply with the
relevant regulations of the CSRC, and the domestic company should be entrusted to file with
the CSRC.
REGULATIONS RELATING TO FOREIGN EXCHANGE
On January 29, 1996, the State Council promulgated the Administrative Regulations on
Foreign Exchange of the PRC ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ) which became effective on
April 1, 1996 and was amended on January 14, 1997 and August 5, 2008. Foreign exchange
payments under current account items shall, pursuant to the administrative provisions of the
foreign exchange control department of the State Council on payments of foreign currencies
and purchase of foreign currencies, be made using self-owned foreign currency or foreign
currency purchased from financial institutions engaging in conversion and sale of foreign
currencies by presenting the valid document. Domestic entities and domestic individuals
making overseas direct investments or engaging in issuance and trading of overseas securities
and derivatives shall process registration formalities pursuant to the provisions of the foreign
exchange control department of the State Council.
On November 19, 2012, the SAFE issued the Circular of Further Improving and Adjusting
Foreign Exchange Administration Policies on Foreign Direct Investment (̮ි၍ଣ҅ᗫ
) (the “SAFE Circular 59”), which came
into effect on December 17, 2012 and was revised on May 4, 2015, October 10, 2018 and
partially abolished on December 30, 2019. The SAFE Circular 59 aims to simplify the foreign
exchange procedure and promote the facilitation of investment and trade. According to the
SAFE Circular 59, the opening of various special purpose foreign exchange accounts, such as
pre-establishment expenses accounts, foreign exchange capital accounts and guarantee
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accounts, the reinvestment of RMB proceeds derived by foreign investors in mainland China,
and remittance of foreign exchange profits and dividends by a foreign-invested enterprise to its
foreign shareholders no longer require the approval or verification of SAFE, as well multiple
capital accounts for the same entity may be opened in different provinces. Later, the SAFE
promulgated the Circular on Further Simplifying and Improving Foreign Exchange
Administration Policies in Respect of Direct Investment (ટҳ༟̮
) in February 2015 (the “SAFE Circular 13”), which was partially
abolished in December 2019 and prescribed that the bank instead of SAFE can directly handle
the foreign exchange registration and approval under foreign direct investment while SAFE
and its branches indirectly supervise the foreign exchange registration and approval under
foreign direct investment through the bank.
On May 10, 2013, the SAFE issued the Administrative Provisions on Foreign Exchange
in Domestic Direct Investment by Foreign Investors (ટҳ༟̮ි၍ଣ஝
) (the “SAFE Circular 21”), which became effective on May 13, 2013, amended on
October 10, 2018 and partially abolished on December 30, 2019. The SAFE Circular 21
specifies that the administration by SAFE or its local branches over direct investment by
foreign investors in mainland China must be conducted by way of registration and banks must
process foreign exchange business relating to the direct investment in mainland China based
on the registration information provided by SAFE and its branches.
According to the Notice on Relevant Issue Concerning the Administration of Foreign
Exchange for Overseas Listing () issued by the
SAFE on December 26, 2014, the domestic companies in mainland China shall register the
overseas listed with the foreign exchange control bureau located at its registered address in 15
working days after completion of the overseas listing and issuance. The funds raised by the
domestic companies in mainland China through overseas listing may be repatriated to mainland
China or deposited overseas, provided that the intended use of the fund shall be consistent with
the contents of the document and other public disclosure documents.
According to the Notice of the State Administration of Foreign Exchange on Reforming
the Management Mode of Foreign Exchange Capital Settlement of Foreign Investment
Enterprises ()
(the “SAFE Circular 19”) promulgated on March 30, 2015, coming effective on June 1, 2015
and partially abolished on December 30, 2019 and March 23, 2023, foreign-invested
enterprises (the “FIE”) may choose to convert any amount of foreign exchange in their capital
account into Renminbi according to their actual business needs. The converted Renminbi will
be kept in a designated account and if an FIE needs to make further payment from such
account, it still needs to provide supporting documents and go through the review process with
the banks. FIEs are still required to use the converted Renminbi within their approved business
scope.
On June 9, 2016, SAFE issued the Notice of the State Administration of Foreign
Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management
Policy of Capital Account (ஷ
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) (the “SAFE Circular 16”), which came into effect on the same day. The SAFE Circular
16 provides that discretionary foreign exchange settlement applies to foreign exchange capital,
foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding
RMB capital converted from foreign exchange may be used to extend loans to related parties
or repay inter-company loans (including advances by third parties). However, there remain
substantial uncertainties with respect to SAFE Circular 16’s interpretation and implementation
in practice.
On October 23, 2019, SAFE promulgated the Notice on Further Facilitating Cross-Board
Trade and Investment (),
which became effective on the same date (except for Article 8.2, which became effective on
January 1, 2020). The notice cancelled restrictions on domestic equity investments made with
capital funds by non-investing foreign-funded enterprises. In addition, restrictions on the use
of funds for foreign exchange settlement of domestic accounts for the realization of assets have
been removed and restrictions on the use and foreign exchange settlement of foreign investors’
security deposits have been relaxed. Eligible enterprises in the pilot area are also allowed to
use revenues under capital accounts, such as capital funds, foreign debts and overseas listing
revenues for domestic payments without providing materials to the bank in advance for
authenticity verification on an item by item basis, while the use of funds should be true, in
compliance with applicable rules and conforming to the current capital revenue management
regulations.
On April 10, 2020, SAFE promulgated Circular on Optimizing Administration of Foreign
Exchange to Support the Development of Foreign-related Business (Ꮄ
), which came into effect on the same day. The notice
provides that eligible enterprises are allowed to make domestic payments by using their capital,
foreign credits and the income under capital accounts of overseas listing, without the need to
provide the evidential materials concerning authenticity of such capital to banks in advance,
provided that their utilized capital shall be authentic and in line with provisions, and conform
to the prevailing administrative regulations related to the use of income under capital accounts.
The concerned bank shall conduct spot checks in accordance with the relevant requirements.
REGULATIONS ON OVERSEAS DIRECT INVESTMENT REGISTRATION
Pursuant to the Regulations on the Foreign Exchange Administration of the Overseas
Direct Investment of Domestic Institutions () issued
by the SAFE on July 13, 2009 and took effect on August 1, 2009, upon obtaining approval for
overseas investment, an enterprise in mainland China shall apply for foreign exchange
registration for its overseas direct investments. According to the SAFE Circular 13, the
administrative approval for foreign exchange registration approval under overseas direct
investment has been canceled, and the banks are entitled to review and carry out foreign
exchange registration under overseas direct investment directly.
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Pursuant to the Measures for the Administration of Overseas Investment ( ྤ̮ҳ༟၍
) which was issued by the MOFCOM on September 6, 2014 and became effective on
October 6, 2014, the MOFCOM and the commerce departments at provincial levels shall
subject the overseas investment of enterprises to recordation or confirmation management,
depending on the actual circumstances of investment. Overseas investment involving any
sensitive country or region, or any sensitive industry shall be subject to confirmation
management. Overseas investment under other circumstances shall be subject to recordation
management.
Pursuant to the Administrative Measures for Outbound Investment by Enterprises ( Ά
) promulgated by the NDRC on December 26, 2017 and took effect on
March 1, 2018, the investing activities of enterprises in mainland China such as acquiring
overseas ownerships, controlling rights, operating and management rights and other relevant
interests by way of investing assets and interests or providing financing and guarantees to
control its overseas enterprises, either directly or indirectly, are required to obtain approval or
filing with the NDRC in accordance with the relevant conditions of the overseas investment
projects. Outbound investment projects that involve sensitive countries and regions or sensitive
industries shall be subject to administration of verification and approval by the NDRC and
non-sensitive outbound investment projects shall be subject to administration by record-filing.
For non-sensitive projects of US$300 million or above invested by local enterprise in mainland
China or carried out by overseas enterprises controlled by them, the investors shall file with
the NDRC and non-sensitive outbound investment projects, of which the investment amount of
investors in mainland China is less than US$300 million (exclusive) shall file with the
provincial counterpart of the NDRC.
The principal laws, rules and regulations governing dividend distribution by companies
in mainland China are the PRC Company Law, most recently amended by the SCNPC on
October 26, 2018, which applies to both domestic companies and foreign-invested companies
in mainland China, and the Foreign Investment Law of the PRC and the Regulations on
Implementing the Foreign Investment Law of the PRC apply to foreign-invested companies.
Under these laws, regulations and rules, both domestic companies and foreign-invested
companies in mainland China are required to set aside as general reserves at least 10% of their
after-tax profit, until the cumulative amount of their reserves reaches 50% of their registered
capital. Companies in mainland China are not permitted to distribute any profits until any
losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be
distributed together with distributable profits from the current fiscal year.
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REGULATIONS RELATING TO TAXATION
Enterprise Income Tax
The Enterprise Income Tax Law of the PRC () (the
“EIT Law”), promulgated by the National People’s Congress on March 16, 2007, came into
effect on January 1, 2008 and amended on February 24, 2017 and December 29, 2018, as well
as the Implementation Rules of the EIT Law (ૢԷ)
(the “Implementation Rules”), promulgated by the State Council on December 6, 2007, came
into force on January 1, 2008 and amended on April 23, 2019, are the principal law and
regulation governing enterprise income tax in mainland China. According to the EIT Law and
its Implementation Rules, enterprises are classified into resident enterprises and non-resident
enterprises. Resident enterprises refer to enterprises that are legally established in mainland
China, or are established under foreign laws but whose actual management bodies are located
in mainland China. And non-resident enterprises refer to enterprises that are legally established
under foreign laws and have set up institutions or sites in mainland China but with no actual
management body in mainland China, or enterprises that have not set up institutions or sites
in mainland China but have derived incomes from mainland China. A uniform income tax rate
of 25% applies to all resident enterprises and non-resident enterprises that have set up
institutions or sites in mainland China to the extent that such incomes are derived from their
set-up institutions or sites in mainland China, or such income are obtained outside mainland
China but have an actual connection with the set-up institutions or sites. And non-resident
enterprises that have not set up institutions or sites in mainland China or have set up
institutions or sites but the incomes obtained by the said enterprises have no actual connection
with the set-up institutions or sites, shall pay enterprise income tax at the rate of 10% in
relation to their income sources from mainland China.
Value-Added Tax
The major PRC Law governing value-added tax are the Interim Regulations on
V alue-added Tax of the PRC (೼ᅲБૢԷ) issued on December 13,
1993 by the State Council, came into effect on January 1, 1994, and revised on November 10,
2008, February 6, 2016 and November 19, 2017, as well as the Implementation Rules for the
Interim Regulations on V alue-Added Tax of the PRC (݄
) issued on December 25, 1993 by the Ministry of Finance (the “MOF”), came into
effect on the same day and revised on December 15, 2008 and October 28, 2011, any entities
and individuals engaged in the sale of goods, supply of processing, repair and replacement
services, and import of goods within the territory of mainland China are taxpayers of V A T and
shall pay the V A T in accordance with the law and regulation. The rate of V A T for sale of goods
is 17% unless otherwise specified, such as the rate of V A T for sale of transportation is 11%.
With the V A T reforms in mainland China, the rate of V A T has been changed several times. The
MOF and the SA T issued the Notice of on Adjusting V A T Rates (ஷ
) on April 4, 2018 to adjust the tax rates of 17% and 11% applicable to any taxpayer’s V A T
taxable sale or import of goods to 16% and 10%, respectively, this adjustment became effect
on May 1, 2018. Subsequently, the MOF, the SA T and the General Administration of Customs
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jointly issued the Announcement on Relevant Policies for Deepening the V A T Reform (׵
ʮѓ) on March 20, 2019 to make a further adjustment, which
came into effect on April 1, 2019. The tax rate of 16% applicable to the V A T taxable sale or
import of goods shall be adjusted to 13%, and the tax rate of 10% applicable thereto shall be
adjusted to 9%.
Taxation on Dividends
Individual Investors
Pursuant to the Individual Income Tax Law of the PRC (੻೼
) (the “ IIT Law ”), which was last amended on August 31, 2018 by the SCNPC, which
came into effect on January 1, 2019, and the Regulations on Implementation of the Individual
Income Tax Law of the PRC (ૢԷ), which was last
amended on December 18, 2018 by the State Council and came into effect on January 1, 2019,
dividends paid by PRC enterprises are subject to individual income tax levied at a flat rate of
20%. For a foreign individual who is not a resident of the PRC, the receipt of dividends from
a PRC enterprise in the PRC is normally subject to individual income tax of 20% unless
specifically exempted by the tax authority of the State Council or reduced by an applicable tax
treaty.
Pursuant to the Notice of the SA T on Issues Concerning Taxation and Administration of
Individual Income Tax After the Repeal of the Document Guoshui Fa [1993] No. 45) (࢕
਷೼೯[1993]045) (Guoshui
Han [2011] No. 348) issued by the SA T on June 28, 2011, which came into effect on the same
day, domestic non-foreign-invested enterprises issuing shares in Hong Kong may, when
distributing dividends, withhold individual income tax at the rate of 10%. For the individual
holders of H Shares receiving dividends who are citizens of countries that have entered into a
tax treaty with the PRC with tax rate of lower than 10%, non-foreign-invested enterprises listed
in Hong Kong may apply on behalf of such holders for enjoying the lower preferential tax
treatments, and, upon approval by the tax authorities, the excessive withholding amount will
be refunded. For the individual holders of H Shares receiving dividends who are citizens of
countries that have entered into a tax treaty with the PRC with tax rate of higher than 10% but
lower than 20%, the non-foreign-invested enterprise is required to withhold the tax at the
agreed rate under the treaties, and no application procedures will be necessary. For the
individual holders of H Shares receiving dividends who are citizens of countries without
taxation treaties with the PRC or are under other situations, the non-foreign-invested enterprise
is required to withhold the tax at a rate of 20%.
Pursuant to the Circular on Certain Issues Concerning the Policies of Individual Income
Tax () (Caishui Zi [1994] No. 20) promulgated by
the MOF and the SA T on May 13, 1994 and came into effect on the same day, overseas
individuals are exempted from the individual income tax for dividends and bonuses received
from foreign-invested enterprises.
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Enterprise Investors
According to the EIT Law, which was latest amended by the SCNPC and implemented on
December 29, 2018, and the Implementation Rules for the Enterprise Income Tax Law of the
PRC (ૢԷ) enacted on December 6, 2007 by the State
Council and became effective on January 1, 2008, and amended on April 23, 2019, a
non-resident enterprise is generally subject to a 10% enterprise income tax on PRC-sourced
income (including dividends received from a PRC resident enterprise that issues shares in
Hong Kong), if it does not have an establishment or premise in the PRC or has an establishment
or premise in the PRC but its PRC-sourced income has no real connection with such
establishment or premise. The aforesaid income tax payable for non-resident enterprises are
deducted at source, where the payer of the income is required to withhold the income tax from
the amount to be paid to the non-resident enterprise.
The Circular of on Issues Relating to the Withholding and Remitting of Enterprise Income
Tax by PRC Resident Enterprises on Dividends Distributed to Overseas Non-Resident
Enterprise Shareholders of H Shares (͏ΆุΣྤ̮Hٰ
) (Guoshui Han [2008] No. 897), which was issued
and implemented by the SA T on November 6, 2008, further clarified that a PRC-resident
enterprise must withhold enterprise income tax at a rate of 10% on the dividends of 2008 and
onwards that it distributes to overseas non-resident enterprise shareholders of H Shares. In
addition, the Response to Questions on Levying Corporate Income Tax on Dividends Derived
by Non-resident Enterprise from Holding Stock such as B Shares (͏Άุ՟੻Bٰ
ҭᔧ) (Guoshui Han [2009] No. 394), which was issued
by the SA T and came into effect on July 24, 2009, further provides that any PRC-resident
enterprise whose shares are listed on overseas stock exchanges must withhold and remit
enterprise income tax at a rate of 10% on dividends of 2008 and onwards that it distributes to
non-resident enterprises. Such tax rates may be further modified pursuant to the tax treaty or
agreement that China has entered into with a relevant country or area, where applicable.
Pursuant to the Arrangement between the Mainland China and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (ᅄ೼
τર) (the “ Arrangement ”), which was signed between the SA T and the
Government of the Hong Kong Special Administrative Region of the PRC on August 21, 2006,
the PRC Government may levy taxes on the dividends paid by a PRC company to Hong Kong
residents (including resident individual and resident entities) in an amount not exceeding 10%
of the total dividends payable by the PRC company unless a Hong Kong resident directly holds
25.0% or more of the equity interest in the PRC company, then such tax shall not exceed 5%
of the total dividends payable by the PRC company. The Fifth Protocol to the Arrangement
between the Mainland China and the Hong Kong Special Administrative Region for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income ( <τર>֛
) which came into effect on December 6, 2019, added a criteria for the qualification of
entitlement to enjoy treaty benefits. Although there may be other provisions under the
Arrangement, the treaty benefits under the criteria shall not be granted in the circumstance
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where relevant gains, after taking into account all relevant facts and conditions, are reasonably
deemed to be one of the main purposes for the arrangement or transactions which will bring
any direct or indirect benefits under this Arrangement, except when the grant of benefits under
such circumstance is consistent with relevant objective and goal under the Arrangement. The
application of the dividend clause of tax agreements is subject to the requirements of PRC tax
law and regulation, such as the Notice of the State Administration of Taxation on the Issues
Concerning the Application of the Dividend Clauses of Tax Agreements (׵
).
Taxation on Share Transfer
Individual Investors
According to the Circular Concerning Temporary Exemption From Individual Income Tax
on The Income From Stocks Transfer (ஷ
) (Caishui Zi [1998] No. 61) promulgated by the MOF and SA T and became effective on
March 30, 1998, since January 1, 1997, the IIT in the individual income from transfer of stocks
of listed companies will continue to be temporarily exempted. In the newly revised IIT Law,
the SA T has not clearly stipulated whether to continue to exempt individuals from tax on the
income from transfer of stocks of listed companies.
Enterprise Investors
In accordance with the EIT Law and its implementation rules, a non-resident enterprise
that has not established an establishment or premises in the PRC or it has established an
establishment and premises but the income received has no actual connection with the
establishment and premises, it shall pay a business income tax at a rate of 10% for the income
arising within the PRC (including the income from sale of equity interests of PRC-resident
enterprise). The aforesaid income tax payable for non-resident enterprises are deducted at
source, where the payer of the income is required to withhold the income tax from the amount
to be paid to the non-resident enterprise on each payment or when it is payable on due date.
The withholding tax may be reduced pursuant to applicable treaties or agreements on avoidance
of double taxation.
PRC Stamp Duty
Pursuant to the Stamp Duty Law of the PRC (), which was
promulgated by the SCNPC on June 10, 2021 and came into effect on July 1, 2022, the PRC
stamp duty only applies to entities and individuals who make taxable documents and conduct
securities transactions within the PRC, and the entities and individuals who make taxable
documents outside the PRC to be used within the PRC, thus the requirements of the stamp duty
imposed on the transfer of shares of PRC listed companies shall not apply to the acquisition
and disposal of H Shares by non-PRC investors outside of the PRC.
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OVERVIEW
We are a vending machine operator in China. Leveraging our core capabilities and our
expansive network, we are able to provide consumers with services. Our unmanned retail
business can be traced back to 2011 when Mr. Wang, our principal Founder, together with our
other Founders, namely Mr. Shen, Ms. Wu Songfeng (ቜ)( “ Ms. Wu ”), Mr. Lin Rong (؍
࿲)( “ Mr. Lin ”), Mr. Li Minghao (ख)( “ Mr. Li ”), Mr. Huang Cinan (ی“() Mr.
Huang ”) and Ms. An Y ufang (ٹ“() Ms. An ”), commenced our vending machine business
through Beijing Y oubaokesi. For details of credentials and experience of Mr. Wang and Ms. An,
please see “Directors, Supervisors and Senior Management — Directors.”
Our Company was initially established on March 1, 2012 in the PRC as a wholly
foreign-owned enterprise in order to facilitate our Group’s financing opportunities outside
China. In 2015, as we became more optimistic about the PRC domestic capital market, we
unwound our offshore structure and streamlined our operations in the PRC, in which our
Company became the onshore holding company of our Group’s current business.
In preparation for the listing on the NEEQ, our Company was converted from a limited
liability company into a joint stock company with limited liability on September 10, 2015 and
was listed on the NEEQ on February 24, 2016. For further details, see “— Information on Our
Group — Our Company” and “— Evolution of Our Group — 3. Listing and Delisting in
relation to the NEEQ.” Our Company then voluntarily delisted from the NEEQ on March 12,
2019. For further details, see “— Evolution of Our Group — 3. Listing and Delisting in relation
to the NEEQ” below.
BUSINESS MILESTONES
The following is a summary of the key business development milestones of our Group:
Y ear Event
2011  Our Founders commenced our vending machine business through
Beijing Y oubaokesi, which built our first prototype vending machine
2012  Our number of POSs reached 5,000
2013  Our number of POSs reached 10,000
2015  Our Company was converted from a limited liability company into a
joint stock company with limited liability
 We were recognized as “China’s Most Promising Company” ( ʕ਷௰
ՈᆑɢΆุ) by Ernst & Y oung and Fudan University School of
Management
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Y ear Event
2016  Our Shares began trading on the NEEQ in the PRC (stock code:
836053)
2017  We were recognized as “The Best Operating Brand in the Auto
V ending Industry” (೐ᆤ) by the China
Commerce Association for General Merchandise in the PRC
2018  We collaborated with Alipay and launched our first biometrics
authentication ready vending machine
 Our investee, namely JR V ending Pte. Ltd. (“ JR Vending ”), placed
our first overseas vending machines in Singapore Changi Airport
2019  Our Company voluntarily delisted from the NEEQ
 Shanghai Y unxin, a wholly-owned subsidiary of Ant Group, invested
in our Group as a Pre-IPO Investor
 We received the “ONE Payment Business Transformation Award”
(ONEᆤ) by Alibaba
2020  We launched the People’s Bank of China’s first vending machine that
supported payment with e-CNY
 We were ranked first in the “Top 200 of China’s New Economy Quasi
Unicorns” (2020 ʕ਷อ຾᏶๟ዹԉᖕ200੶࿮ఊ) by iMedia
Research
 We were awarded as “Most Influential Enterprise in China’s New
Economy in 2020” (2020 ϋʕ਷อ຾᏶ʘˮ௰ՈᅂᚤɢΆุ)i nt h e
new retail industry by 36Kr Research Institute (36Ӻ৫)
 We strongly promoted our partner model
2021  We launched the first vending machine with 5G network
 We were nominated as an offline licensed retail store for the
Hangzhou 2022 19th Asian Games
 We were recognized “New Consumer Ecological Service Provider of
2021” (2021ਕਠ) by TMTPost Media Group for
the 2021 Edge Awards for Global Innovation
 Our number of POSs reached 100,000
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INFORMATION ON OUR GROUP
Our Company
Our Company was established as a wholly foreign-owned enterprise in the PRC on
March 1, 2012 with a registered capital of US$320,000 under its former name Beijing UBOX
Technology & Trade Company Limited (ʮ̡), and was wholly owned
by UBOX (Hong Kong) Company Limited (“ Y oubao (HK) ”), which was in turn indirectly
wholly owned by UBOX International Holdings Co Limited (“ Y oubao (Cayman) ”). For details
of the then shareholding of Y oubao (Cayman), see “— Evolution of Our Group — 2.
Establishment and unwinding of our offshore structure.” Our Company was initially
established as a wholly foreign-owned enterprise in order to facilitate our Group’s financing
opportunities outside China.
Between March 2012 and February 2014, our Company underwent a series of capital
increase, in which the registered capital of our Company increased from US$320,000 to
US$26,000,000. Each of the capital increase was contributed by Y oubao (HK) and was settled
by cash.
Pursuant to an equity transfer agreement dated May 25, 2015, Y oubao (HK) transferred
the entire equity interest it held in our Company to Mr. Wang, Mr. Shen, Mr. Lin, Ms. Wu,
Mr. Huang, Mr. Li, Mr. Xu Ge, Huazhu Investment (Shanghai) Co., Ltd. ( ശИҳ༟(ɪऎ)ࠢ
ʮ̡)( “ Huazhu Investment ”), Mr. Chen, Hainan Changyang V enture Capital Co., Ltd. (ی
ʮ̡)( “ Hainan Changyang ”), Horgos Fengmao Equity Investment
Management Partnership (L.P .) (ᛆҳ༟၍ଣΥྫΆุ(Υྫ)) (“ Horgos
Fengmao ”), Nanjing Hanergy V enture Capital Center (L.P .) (ԯဏঐ௴ุҳ༟ʕː(Υ
ྫ)) (“ Nanjing Hanergy ”), Chongqing Hanergy V enture Capital Center (L.P .) (Ҧ
௴ุҳ༟ʕː(Υྫ)) (“ Chongqing Hanergy ”) and Ms. Yi Jiaping ( Вྗ̻)( “ Ms. Yi ”),
respectively, for an aggregate consideration of RMB10,000,000 (the “ 2015 Equity Transfer ”),
which was fully settled on July 16, 2015. The consideration was made after arm’s length
negotiations between the parties with reference to the net asset value of our Company as at
December 31, 2014, after taking into account the fact that the transferees were either the
beneficial owners of Y oubao (Cayman) or the individuals/entities as designated by the
shareholders of Y oubao (Cayman) to undertake the equity transfers under the Restructuring
Framework Agreement. Upon completion of the 2015 Equity Transfers on June 5, 2015, our
Company was converted from a wholly foreign-owned enterprise to a limited liability
company, in which the registered capital of our Company was converted from US$26,000,000
to RMB161,209,504, and its shareholding was as follows:
Shareholders
Registered
capital
Percentage of
shareholding
(RMB) (%)
Mr. Wang 53,372,759 33.11
Mr. Shen 20,488,761 12.71
Mr. Xu Ge 18,425,924 11.43
Mr. Lin 13,884,330 8.61
Ms. Wu 13,884,330 8.61
Mr. Huang 13,864,982 8.60
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Shareholders
Registered
capital
Percentage of
shareholding
(RMB) (%)
Mr. Li 9,078,191 5.63
Huazhu Investment 6,011,180 3.73
Mr. Chen 5,122,110 3.18
Hainan Changyang 3,984,454 2.47
Horgos Fengmao 1,734,937 1.08
Nanjing Hanergy 472,183 0.29
Chongqing Hanergy 472,183 0.29
Ms. Yi 413,180 0.26
Total 161,209,504 100
On June 19, 2015, a capital subscription agreement was entered into between the then
shareholders of our Company, Beijing Hanergy Zhonghong Investment Center (L.P .) ( ̏ԯဏ
ঐʕ҃ҳ༟ʕː(Υྫ)) (“ Beijing Hanergy ”) and Jiaxing Yingfei Investment Center
(L.P .) (ҳ༟ʕː(Υྫ)) (“ Jiaxing Yingfei ”), pursuant to which Beijing Hanergy,
Jiaxing Yingfei and the then shareholders of our Company, namely Mr. Wang, Mr. Shen,
Mr. Lin, Ms. Wu, Mr. Li, Mr. Huang, Mr. Xu Ge, Mr. Chen, Ms. Yi, Huazhu Investment, Hainan
Changyang, Horgos Fengmao, Nanjing Hanergy and Chongqing Hanergy, agreed to make
capital contributions to our Company and subscribed for RMB487,459, RMB1,949,838,
RMB5,909,895, RMB2,268,693, RMB1,537,393, RMB1,537,393, RMB1,200,155,
RMB1,954,318, RMB2,040,278, RMB14,215,614, RMB630,638, RMB1,416,471,
RMB441,193, RMB192,107, RMB52,284 and RMB1,514,587, representing approximately
0.25%, 0.98%, 2.98%, 1.14%, 0.77%, 0.77%, 0.60%, 0.98%, 1.03%, 7.16%, 0.32%, 0.71%,
0.22%, 0.10%, 0.03% and 0.76% of our Company’s registered capital as enlarged upon
completion of the capital contribution, respectively, at an aggregate consideration of
RMB378,505,138. It was agreed that RMB37,348,316 shall be contributed to our Company’s
registered capital and the remaining consideration amount shall be contributed to our
Company’s capital reserves. The consideration was made after arm’s length negotiations
between the parties with reference to our Company’s then valuation of approximately RMB2
billion as agreed between the parties based on the then operating results and industry outlook
of our Group’s business, and was fully settled on July 27, 2015. Jiaxing Yingfei was an
Independent Third Party, and Beijing Hanergy, together with Nanjing Hanergy and Chongqing
Hanergy, are affiliated to The Hina Group ( ဏঐҳ༟ණྠ). On June 19, 2015, the registered
capital of our Company increased from RMB161,209,504 to RMB198,557,820 (the “ First
2015 Capital Increase ”).
Pursuant to the Previous Deed of AIC entered into between Mr. Wang and Mr. Chen on
July 20, 2015, which upon expiry was succeeded by the First Renewal Deed of AIC and the
Deed of AIC entered into between Mr. Wang and Mr. Chen with a consecutive term until
December 31, 2024 (all such deeds together, the “ Deeds of AIC ”), (i) Mr. Wang and Mr. Chen
had agreed to consult each other and reach a unanimous consensus between themselves on the
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subject matters of any shareholders’ resolutions or board resolutions of our Company to be
passed pursuant to applicable constitutional documents or applicable laws and regulations
during the period each party remains a shareholder of our Company, and (ii) where a consensus
cannot be reached, the matter shall be decided by the individual who holds more Shares. Mr.
Wang has, since the beginning of the acting-in-concert arrangement as described above, held
more Shares and been entitled to control more voting rights in the Company than Mr. Chen. Mr.
Wang and Mr. Chen believed that the entering into of the Deeds of AIC was based on the
mutual trust and confidence among them and the term of the Deeds of AIC would enable them
to regularly evaluate the effectiveness of the Deeds of AIC in achieving the benefits of the
concert party arrangement, and make necessary modifications to the terms thereof if needed,
further allowing flexibility in altering the composition to the concert party arrangement, if
needed. It is expected that Mr. Wang and Mr. Chen will enter into a further deed of
acting-in-concert agreement upon expiry of the Deed of AIC under similar terms as the Deeds
of AIC. By virtue of the Deeds of AIC, Mr. Wang and Mr. Chen are collectively our Single
Largest Group of Shareholders.
Further, the registered capital of our Company increased from RMB198,557,820 to
RMB207,486,509 on July 28, 2015 (the “ Second 2015 Capital Increase ”). The Second 2015
Capital Increase was contributed by (i) Mr. Wen Ruifeng (ࢤ“() Mr. Wen ”), who
controlled Beijing Taiming Investment Management Co., Ltd. (ʮ̡)
(“Beijing Taiming ”), which was a then minority shareholder of our Company’s subsidiary,
Beijing Taihe; and (ii) Mr. Zhou Jianghua ( մϪശ)( “ Mr. Zhou ”), who controlled Guangzhou
Dongji Industrial Co., Ltd. (ʮ̡)( “Guangzhou Dongji ”), which was a then
minority shareholder of our Company’s subsidiary, Guangzhou Weiji, pursuant to which
Mr. Wen and Mr. Zhou made capital contributions to our Company with reference to our
Company’s then registered capital, and subscribed for RMB4,870,194 and RMB4,058,495 of
our Company’s registered capital, representing approximately 2.35% and 1.96% of our
Company’s registered capital as enlarged upon completion of the capital contribution,
respectively, at an aggregate consideration of RMB8,928,689, which was fully settled on July
30, 2015. The Second 2015 Capital Increase was entered into pursuant to the Restructuring
Framework Agreement and the consideration of the Second 2015 Capital Increase formed a part
of the consideration of our Group’s acquisition of Beijing Taihe and Guangzhou Weiji from
companies controlled by Mr. Wen and Mr. Zhou, respectively. For further details of such
acquisitions and our Group’s relationship with Mr. Wen and Mr. Zhou, see “— Evolution of
Our Group — 1. Establishment of Our Principal Subsidiaries” below.
On September 10, 2015, in anticipation for the application for listing on the NEEQ, our
Company was converted into a joint stock company with limited liability and renamed as
Beijing Ubox Online Technology Corp. (ʮ̡). The conversion
was made with reference to the Company’s net asset value as at July 31, 2015 of approximately
RMB582 million, among which, RMB450 million was converted into 450,000,000 Shares with
a par value of RMB1.00 each, and the remaining amount was classified as capital reserves.
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Our Company was then listed on the NEEQ on February 24, 2016. Upon completion of
the First 2015 Capital Increase and the Second 2015 Capital Increase and immediately prior to
the listing on the NEEQ, our Company’s shareholding was as follows:
Shareholders
Registered
capital before
converting
into a joint
stock company Shares
Percentage of
shareholding
(RMB) (%)
Mr. Wang and Mr. Chen (Note) 78,620,378 170,513,550 37.89
Mr. Shen 22,757,454 49,356,900 10.97
Mr. Xu Ge 20,466,202 44,387,550 9.86
Mr. Huang 15,819,300 34,309,350 7.63
Mr. Lin 15,421,723 33,446,700 7.43
Ms. Wu 15,421,723 33,446,700 7.43
Mr. Li 10,278,346 22,291,650 4.95
Huazhu Investment 7,427,651 16,109,100 3.58
Mr. Wen 4,870,194 10,562,400 2.35
Hainan Changyang 4,425,647 9,598,500 2.13
Mr. Zhou 4,058,495 8,802,000 1.96
Chongqing Hanergy 1,986,770 4,308,750 0.96
Jiaxing Yingfei 1,949,838 4,228,650 0.94
Horgos Fengmao 1,927,044 4,179,600 0.93
Ms. Yi 1,043,818 2,263,950 0.50
Nanjing Hanergy 524,467 1,137,600 0.25
Beijing Hanergy 487,459 1,057,050 0.24
Total 207,486,509 450,000,000 100
Note: Pursuant to the Previous Deed of AIC, Mr. Wang and Mr. Chen were parties acting in concert.
On May 11, 2016, our Company issued 46,660,000 Shares, representing approximately
9.39% of our total number of issued Shares as enlarged upon completion of the share issuance,
at a subscription price of RMB7.50 per Share. The 46,660,000 Shares were subscribed by 22
investors, at an aggregate consideration of RMB349,950,000, which was fully settled on March
28, 2016, among which (i) each investor was an Independent Third Party; (ii) there were 10
individual investors and 12 corporate investors; and (iii) the largest investor, being Ms. Liu Xia
(ᄎᒳ)( “Ms. Liu Xia ”), acquired 13,326,500 Shares, representing approximately 2.68% of our
total number of issued Shares as enlarged upon completion of the share issuance. Upon
completion, our issued Shares increased from 450,000,000 Shares to 496,660,000 Shares (the
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“2016 Capital Increase ”). The purpose of the 2016 Capital Increase was principally to
increase the then working capital of our Company for Group expansion, and the consideration
was made with reference to the then operating results and industry outlook of our Group’s
business.
On July 6, 2017, our Company issued 22,412,184 Shares and 89,648,737 Shares,
representing approximately 3.68% and 14.73% of our issued Shares as enlarged upon
completion of the share issuance, respectively, to Beijing Kaibao Investment Center (L.P .) ( ̏
ԯ௱ᘒҳ༟ʕː(Υྫ)) (“ Beijing Kaibao ”), a then affiliate of The Carlyle Group, a
global investment firm, and Qingdao Haier, at a consideration of RMB106,009,630.32 and
RMB424,038,526.01, or approximately RMB4.73 per Share, respectively, which had been fully
settled on April 21, 2017. Upon completion, our issued Shares increased from 496,660,000
Shares to 608,720,921 Shares (the “ 2017 Capital Increase ”). Prior to the 2017 Capital
Increase, an investment agreement (the “ Kaibao Investment Agreement ”) was entered into in
June 2015 between, among others, Beijing Kaibao and our Company, pursuant to which Beijing
Kaibao agreed to provide a loan to our Company for the purpose of financing our business
operations, which would be convertible into a certain number of Shares upon our Company’s
application of a qualified IPO with reference to a business valuation of our Company to be
further determined between the parties and in accordance with the terms of the Kaibao
Investment Agreement. Beijing Kaibao then provided a loan in the principal amount of
RMB530,000,000 to our Company, at an annual interest rate of 13% and for a term of six years
(the “ 2015 Convertible Loan ”). In October 2015, it was determined between the parties that
our Company’s then valuation was approximately RMB2.66 billion, which was made with
reference to the targeted earnings for the years ended December 31, 2015 and 2016 as agreed
between the parties, and a maximum of 112,060,921 Shares would be issued upon exercise in
full of the conversion rights attached to the 2015 Convertible Loan at a conversion price of
approximately RMB4.73 per Share. In February 2017, Beijing Kaibao transferred 80% of the
rights and obligations in relation to the 2015 Convertible Loan to Qingdao Haier. Although our
Company’s listing on the NEEQ was not a qualified IPO under the Kaibao Investment
Agreement, it was nevertheless agreed between the parties that the basis of valuation adopted
for the 2017 Capital Increase would be made with reference to the conversion price in the
Kaibao Investment Agreement (as supplemented and amended) and the proceeds from the 2017
Capital Increase would be used to repay the 2015 Convertible Loan. As at the Latest
Practicable Date, the 2015 Convertible Loan has been fully repaid.
On October 26, 2018, our Company issued 22,222,223 Shares, representing
approximately 3.52% of our total number of issued Shares as enlarged upon completion of the
share issuance, at a subscription price of RMB9.00 per Share to Shantou Haiyi Investment
(Group) Co., Ltd. ( ϭ᎘̹ऎඅҳ༟(ණྠ)ʮ̡)( “ Shantou Haiyi ”), at a consideration of
RMB200,000,007, which had been fully settled on August 31, 2018. The consideration was
made with reference to, among others, the timing of the investment, the then trading price of
our Company and the then growth prospects of our Group. Upon completion, our issued Shares
increased from 608,720,921 Shares to 630,943,144 Shares (the “ 2018 Capital Increase ”). The
purpose of the 2018 Capital Increase was principally for repayment of loans and increasing the
then working capital of our Company.
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Our Company was delisted from the NEEQ on March 12, 2019. For details, see “ —
Previous Listing on the NEEQ, Previous Listing Plan and Proposed Merger Arrangement —
Listing and Delisting in Relation to the NEEQ.” Immediately after the delisting from the
NEEQ, our Company’s shareholding was as follows:
Shareholders Shares
Percentage of
shareholding
(%)
Mr. Wang and Mr. Chen (Note 1) 159,543,550 25.29
Qingdao Haier 59,648,737 9.45
Mr. Shen 49,356,900 7.82
Mr. Huang 27,988,350 4.44
Beijing Kaibao 22,412,184 3.55
Shantou Haiyi 22,222,223 3.52
Mr. Lin 12,588,700 2.00
Huazhu Investment 11,299,100 1.79
Mr. Wen 10,562,400 1.67
Mr. Xu Ge 10,114,550 1.60
Hainan Changyang 9,598,500 1.52
Mr. Zhou 9,493,000 1.51
Horgos Fengmao 4,179,600 0.66
Ms. Yi 2,263,950 0.36
Mr. Li 536,650 0.09
Remaining Shareholders
(Note 2) 219,134,750 34.73
Total 630,943,144 100
Notes:
1. Pursuant to the Previous Deed of AIC, Mr. Wang and Mr. Chen were parties acting in concert.
2. Among the remaining Shareholders, (i) there were a total of 316 Shareholders; (ii) the largest
Shareholder was CICC Qiyuan National Emerging Industry V enture Capital Guidance Fund (Hubei)
Equity Investment Enterprise (Limited Partnership) (ږ(ಳ̏)
ᛆҳ༟Άุ(Υྫ)( “ CICC Qiyuan ”), an Independent Third Party, which held 30,000,000
Shares, representing approximately 4.76% of our then total number of issued Shares; and (iii) the
shareholding of the other remaining Shareholders ranged from approximately 0.01% to 2.37%.
As a protective measure for Shareholders who dissented to the delisting of our Shares
from NEEQ, our Company and Mr. Wang undertook that they (or Mr. Wang’s designated person
acting in his/her own capacity) would repurchase any dissenting or abstaining Shareholders’
Shares after the completion of the delisting. Later, Mr. Wang designated Ms. Liu Xia, an
Independent Third Party and a then Shareholder holding 3,317,500 Shares, which represented
approximately 0.53% of the then total number of issued Shares, to be the person to undertake
the purchase of shares from dissenting Shareholders. Mr. Wang considered Ms. Liu Xia as a
suitable person because Ms. Liu Xia had been a Shareholder since 2016. Ms. Liu Xia entered
HISTORY AND DEVELOPMENT
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into share purchase agreements with 69 dissenting Shareholders, pursuant to which 34,144,550
Shares, representing an aggregate of 5.41% of our then total number of issued Shares were
transferred to Ms. Liu Xia during the period from May 23, 2019 to July 17, 2019. The price
paid by Ms. Liu Xia for the purchase of Shares from the 69 dissenting Shareholders ranged
from RMB9.50 to RMB15.00 per Share, which was determined largely based on the arm’s
length negotiations between Ms. Liu Xia and each of the dissenting Shareholders, and made
with reference to the original price paid by these dissenting Shareholders in relation to their
respective Shares. The Company made various advances in the aggregate amount of RMB362.9
million to facilitate her share purchases. The share purchases had all been completed and the
considerations for the share purchase had all been settled as at July 17, 2019. Upon completion
of the share purchases, Ms. Liu Xia reassessed her financial position and her total shareholding
in the Company, in which she then (A) purchased an aggregate of 9,857,325 Shares from five
individual Shareholders at a total consideration of RMB93,500,009.10 between August 2019
and July 2020; and (B) disposed of (i) 19,692,700 Shares and 3,000,000 Shares to Chunhua
Rongshun and Mr. Xiao Lin, each a Pre-IPO Investor, at a consideration of RMB187,080,650
and RMB28,500,000 in August 2019 and December 2019, respectively; (ii) 2,188,569 Shares
to Mr. Li Weiwei ( ҽሊਃ), an Independent Third Party, at a total consideration of
RMB10,395,702.75 in September 2019
(Note) ; and (iii) an aggregate of 22,438,106 Shares to Mr.
Wang, Mr. Chen, Ms. Cui Y an (an executive Director), Mr. Wang Ge (a senior management of
our Group) and Shenzhen Y ouhui, our employee incentive platform, at a total consideration of
approximately RMB213.2 million, for the purpose of implementing the 2020 Incentive Scheme
in December 2020 and January 2021, among which approximately RMB2.2 million were paid
by Mr. Wang, Mr. Chen, Ms. Cui Y an, Mr. Wang Ge and Shenzhen Y ouhui as the grant price
of the options under the 2020 Incentive Scheme and the remaining amount of approximately
RMB211.0 million was partially set off against the advances owed by Ms. Liu Xia to our
Company and such advances were fully repaid by Ms. Liu Xia as at the Latest Practicable Date.
Ms. Liu Xia was a friend of Mr. Wang, who then introduced Ms. Liu Xia to Mr. Chen. She
was a sole shareholder, director and legal representative of Beijing Qile Jiujiu Technology Co.,
Ltd. (ʮ̡), a wholly-owned subsidiary of our Company from
December 2015 to June 2017, and was a minority shareholder, legal representative and general
manager of Shenzhen Mibao New Retail Technology Co., Ltd. (ʮ̡)
(“Shenzhen Mibao ”), a then subsidiary of our Company which was disposed of in December
2021. Save as disclosed herein, to the best of our Directors’ knowledge, there was no other past
or present relationships between Ms. Liu Xia and our Group, our Directors or senior
management, or any of their respective associates. As at the Latest Practicable Date, Ms. Liu
Xia ceased to be a Shareholder. For details of the above transfer of Shares to Chunhua
Rongshun, Mr. Xiao Lin and Shenzhen Y ouhui, see “— Pre-IPO Investments” and “— 2020
Incentive Scheme and Pre-IPO Incentive Scheme.”
Note: As confirmed by Ms. Liu Xia, the consideration was determined after arm’s length negotiations and as agreed
between the parties. At the time of the transfer, since Ms. Liu Xia intended to increase the liquidity of her
assets, she was willing to dispose of such Shares at a lower price.
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Subsequent to the delisting from the NEEQ, on September 10, 2019, our Company issued
126,315,789 Shares, representing approximately 16.68% of our total number of issued Shares
as enlarged upon completion of the share issuance, of RMB9.50 each to Shanghai Y unxin, one
of our Pre-IPO Investors and a wholly-owned subsidiary of Ant Group, at a consideration of
RMB1,199,999,995.50 (the “ 2019 Capital Increase ”). The consideration had been fully settled
on August 21, 2019. For further details, see “— Pre-IPO Investments.” Upon completion, our
issued Shares increased from 630,943,144 Shares to 757,258,933 Shares.
Apart from the share purchases and disposals undertaken by Ms. Liu Xia and the Pre-IPO
Investments undertaken by the Pre-IPO Investors as set out in the section headed “— Pre-IPO
Investments”, there were certain shareholding changes of our Company from the date
immediately after our Company’s delisting from the NEEQ and up to April 18, 2022 involving
share transfers among the then Shareholders. Such share transfers were undertaken by a total
of 57 individuals and entities, as transferees, involving an aggregate of 102,962,902 Shares,
representing approximately 13.60% of our total number of issued Shares as at the Latest
Practicable Date, whereby on individual transaction basis, save for the share transfer as
detailed in the table below, the number of Shares involved in these share transfers were very
insignificant, ranging from 0.0002% to 1.27% of our then total number of issued Shares.
Transferor Transferee
Date of share
transfer
agreement
Number of Shares
acquired
Total amount of
consideration
Date of full
settlement of
consideration
Mr. Huang Mr. Li Wei August 6, 2019 26,988,350
(representing
approximately
4.28% of our
then total
number of
issued Shares)
RMB256,389,325.00 August 8, 2019
Except for (i) Mr. Li Wei ( ҽਃ)( “ Mr. Li Wei ”), who is the controller of Shenzhen
Baihang Management Consulting Partnership (Limited Partnership) ( ଉέ̹Ժঘ၍ଣፔ༔Υྫ
Άุ(Υྫ)) (“ Shenzhen Baihang ”), which holds as to 14.8% equity interest in Shenzhen
Y ouye, a subsidiary of our Company; and (ii) Mr. Y ang Ling (ࡗ“() Mr. Y ang Ling ”), who
holds 13% equity interest in Shenzhen Y oubao Online Technology Co., Ltd. ( ଉέ̹Ꮄᘒίᇞ
ʮ̡)( “ Y oubao Online ”), a subsidiary of our Company, our Directors have
confirmed that all these individuals and entities from the above-mentioned share transfers are
Independent Third Parties, and to the best of our Directors’ knowledge, information and belief
having made reasonable enquiries, the basis of consideration of these share transfers were
determined after arm’s length negotiations between the parties while the Company was not
involved in these negotiations at all. Our Directors have further confirmed that none of these
Shareholders were granted any special rights relating to our Company and the consideration for
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these share transfers have all been fully settled. Since April 18, 2022, being the final settlement
date of the share transfer to Mr. Xiao Lin as set out in the section headed “— Pre-IPO
Investments”, no other shareholding changes of the Company has taken place.
For further details of our Company’s shareholding structure as at the Latest Practicable
Date, see “— Corporate Structure.”
Adoption of the WVR Structure
From August 20, 2019 to May 30, 2021, in contemplation of the capital subscription by
Shanghai Y unxin which had completed on September 10, 2019, our Company had in place a
weighted voting rights structure (the “ WVR Structure ”) under which our Shares were
redesignated into 75,725,893 class A ordinary shares (“ Class A Shares ”, which were held
solely by Mr. Wang) and 681,533,040 class B ordinary shares (“ Class B Shares ”, which were
held by Mr. Wang, Mr. Chen and other Shareholders), respectively, for the purpose of enabling
our Company to benefit from the continuing vision and leadership of Mr. Wang, the sole holder
of Class A Shares, who, together with Mr. Chen, would control more than 50% voting rights
of our Company. Each Class A Share entitled its holder to exercise eight votes, and each Class
B Share entitled the holder to exercise one vote, on any resolution proposed at our Company’s
general meetings, except for resolutions for the approval of the following matters, on which the
holders of the Class A Shares and the Class B Shares were entitled to the same voting rights:
i. any amendment to the articles of association of our Company;
ii. variation of voting rights attached to the Class A Shares;
iii. the appointment or removal of the independent directors of our Company;
iv. the appointment or removal of our Company’s auditors which issues audit opinions
on the periodic reports of our Company; and
v. the combination, division, dissolution and change of legal form of our Company.
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Our Company’s shareholding upon the completion of the 2019 Capital Increase and the
adoption of the WVR Structure was as follows:
Shareholders Shares (Note 2)
Percentage of
shareholding
Percentage of
voting rights
(%) (%) (Note 3)
Mr. Wang and Mr. Chen (Note 1) 159,543,550 21.07 53.57
Shanghai Y unxin 126,315,789 16.68 9.81
Qingdao Haier 59,648,737 7.78 4.63
Mr. Shen 49,356,900 6.52 3.83
Shantou Haiyi 22,222,223 2.93 1.73
Mr. Lin 12,588,700 1.66 0.98
Huazhu Investment 11,299,100 1.49 0.88
Mr. Wen 10,562,400 1.39 0.82
Mr. Xu Ge 9,914,550 1.31 0.77
Hainan Changyang 9,598,500 1.27 0.75
Mr. Zhou 9,393,000 1.24 0.73
Horgos Fengmao 4,179,600 0.55 0.32
Ms. Yi 2,263,950 0.30 0.17
Mr. Li 536,650 0.07 0.04
Remaining Shareholders
(Note 4) 269,835,384 35.74 20.97
Total 757,258,933 100 100
Notes:
1. Pursuant to the First Renewal Deed of AIC, Mr. Wang and Mr. Chen were parties acting in concert.
2. As of September 10, 2019, the Company’s issued Shares was 757,258,933 Shares, comprising
75,725,893 Class A Shares (which were held solely by Mr. Wang) and 681,533,040 Class B Shares
(which were held by Mr. Wang, Mr. Chen and other Shareholders).
3. On the basis that Class A Shares entitled the Shareholder to eight votes per Share and Class B Shares
entitled the Shareholder to one vote per Share.
4. Among the remaining Shareholders, (i) there were a total of 254 Shareholders; (ii) the largest
Shareholder was CICC Qiyuan, which held 30,000,000 Class B Shares, representing approximately
3.96% and 2.33% of the issued Shares and total voting rights of our Company; and (iii) the shareholding
and total voting rights of our Company of the other remaining Shareholders ranged from approximately
0.01% to 3.56% and approximately 0.01% to 2.10%, respectively.
Nonetheless, during the process of preparation for Listing, in light of the requirements
under Rule 8.11 of the Listing Rules, our Company terminated the WVR Structure with effect
on May 31, 2021.
HISTORY AND DEVELOPMENT
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Our Principal Subsidiaries
We set forth below information about the principal subsidiaries of our Company that
made a material contribution to our results of operations:
No. Company name
Date of
establishment and
commencement
of business
Ownership as
of the Latest
Practicable Date
Principal business
activity
Major shareholding
changes during the
Track Record Period
1. Guangzhou Weiji January 20, 2012 100% Operation of unmanned
retail machine in
Guangzhou, the PRC
None
2. Beijing Beiguo September 28, 2012 100% Operation of unmanned
retail machine in
Beijing, the PRC
None
3. Shanghai Huilin February 28, 2013 100% Operation of unmanned
retail machine in
Shanghai, the PRC
None
4. Beijing Taihe January 16, 2014 100% Operation of wholesale
and retail in the PRC
None
5. Shenzhen Y ousuan June 13, 2016 100% Operation of wholesale
and retail in the PRC
None
We have adopted a complex group structure with a number of subsidiaries as our Group
has set up a company for each of the principal geographical area of our unmanned retail
business across China. Establishing a company for each principal geographical area allows our
Group’s direct sales force to be primarily located in tier one, new tier one or tier two cities and
highly populated areas in the PRC, which allows us to maximize POS acquisition efficiency for
our self-operated machines. For details of the principal activities of the other subsidiaries of
our Group, see Note 14 to the Accountant’s Report as set out in Appendix I.
HISTORY AND DEVELOPMENT
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EVOLUTION OF OUR GROUP
1. Establishment of Our Principal Subsidiaries
Guangzhou Weiji
Guangzhou Weiji was established in the PRC on January 20, 2012 as a limited
liability company with a registered capital of RMB50,000,000 and was owned as to 75%
by Mr. Li Wei, and 25% by Guangzhou Dongji, a company controlled by Mr. Zhou.
On April 26, 2012, Mr. Li Wei transferred the 75% equity interest he held in
Guangzhou Weiji to our Company for a consideration of RMB2,000,000, which was made
with reference to the paid-up registered capital of Guangzhou Weiji and was fully settled.
Subsequently, pursuant to the Restructuring Framework Agreement and in contemplation
of the Second 2015 Capital Increase, Guangzhou Dongji transferred the 25% equity
interest it held in Guangzhou Weiji to our Company at a consideration of RMB4,058,495,
which was made after arm’s length negotiation between the parties with reference to the
registered capital of Guangzhou Weiji. The consideration was fully settled on July 28,
2015 and the acquisition was properly and legally completed.
Since completion of the above acquisition and up to the Latest Practicable Date,
Guangzhou Weiji remained wholly owned by our Company and is principally engaged in
the operation of unmanned retail machine in Guangzhou, the PRC.
Beijing Beiguo
Beijing Beiguo was established in the PRC on September 28, 2012 as a limited
liability company with a registered capital of RMB3,000,000 and was wholly owned by
our Company. On September 15, 2014, the registered capital of Beijing Beiguo was
increased from RMB3,000,000 to RMB10,000,000.
Since its establishment and up to the Latest Practicable Date, Beijing Beiguo
remained wholly owned by our Company and is principally engaged in the operation of
unmanned retail machine in Beijing, the PRC.
Shanghai Huilin
Shanghai Huilin was established in the PRC on February 28, 2013 as a limited
liability company with a registered capital of RMB3,000,000 and was wholly owned by
our Company. On February 13, 2015, the registered capital of Shanghai Huilin was
increased from RMB3,000,000 to RMB10,000,000.
Since its establishment and up to the Latest Practicable Date, Shanghai Huilin
remained wholly owned by our Company and is principally engaged in the operation of
unmanned retail machine in Shanghai, the PRC.
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Beijing Taihe
Beijing Taihe was established in the PRC on January 16, 2014 as a limited liability
company with a registered capital of RMB30,000,000 and was owned as to 60% by
Beijing Beiguo and 40% by Beijing Taiming, a company controlled by Mr. Wen. Pursuant
to the Restructuring Framework Agreement and an equity transfer agreement dated July
29, 2015, and in contemplation of the Second 2015 Capital Increase, Beijing Taiming
agreed to transfer the 40% equity interest it held in Beijing Taihe to Beijing Beiguo at a
consideration of RMB18,870,194, which was made after arm’s length negotiation
between the parties with reference to the registered capital of Beijing Taihe. The
consideration was fully settled on July 29, 2015 and the acquisition has been properly and
legally completed.
Since completion of the above acquisition and up to the Latest Practicable Date,
Beijing Taihe was wholly owned by our Company and is principally engaged in our
Group’s vending machine operations located in airports and subway stations in the PRC.
Shenzhen Y ousuan
Shenzhen Y ousuan was established in the PRC on June 13, 2016 as a limited liability
company with a registered capital of RMB10,000,000 and was wholly owned by
Shenzhen Y oubaokesi, a wholly-owned subsidiary of our Company throughout the Track
Record Period and up to the Latest Practicable Date.
Since its establishment and up to the Latest Practicable Date, Shenzhen Y ousuan
remained wholly owned by Shenzhen Y oubaokesi and was principally engaged in the
operation of wholesale and retail in the PRC.
2. Establishment and unwinding of our offshore structure
Incorporation of and investments in Y oubao (Cayman)
On October 19, 2011, Y oubao (Cayman), the indirect holding company of our
Company, was incorporated in the Cayman Islands in order to facilitate our Group’s
financing opportunities outside China, and was owned as to 35% by Ever Surpass Limited
(wholly owned by Mr. Wang), 20% by Excel Dignity Limited (wholly owned by Mr.
Shen), 13% by Best Bond Investment Limited (wholly owned by Mr. Lin), 13% by Ding
Sheng Investments Limited (wholly owned by Mr. Y u Long as nominee for and on behalf
of Ms. Wu), 8% by Prolific Ocean Group Limited (wholly owned by Mr. Huang), 6% by
Top Sleek Limited (wholly owned by Mr. Li) and 5% by Great Distinct Investments
Limited (wholly owned by Ms. An), mirroring the then shareholding structure of Beijing
Y oubaokesi.
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In connection with the establishment of our offshore structure, we entered into
contractual arrangements with the onshore entities within our Group, namely Beijing
Y oubaokesi and Shenzhen Y oubaokesi.
Between 2012 and 2014, Y oubao (Cayman) received several rounds of investments
amounting to approximately US$67 million.
Unwinding of our offshore structure and reorganization of onshore structure
In 2015, as we became more optimistic about the PRC domestic capital market, we
underwent a corporate restructuring of our Group on the terms of the Restructuring
Framework Agreement. Pursuant to the Restructuring Framework Agreement, among
others, (i) Y oubao (Cayman) would repurchase all its issued shares from its then existing
shareholders; (ii) the equity interest in our Company would be transferred from Y oubao
(HK) to those as named in the Restructuring Framework Agreement, being either the
beneficial owners of Y oubao (Cayman) or the individuals/entities designated by the
shareholders of Y oubao (Cayman) to undertake the equity transfer; (iii) Mr. Chen was one
of the parties named therein to participate in the restructuring process and would be
entitled to acquire equity interests in our Company; (iv) our Group terminated the
contractual arrangements entered into by Y oubao (Cayman) with Beijing Y oubaokesi and
Shenzhen Y oubaokesi; (v) the onshore assets, liabilities and employees of Beijing
Y oubaokesi were also transferred to our Company; and (vi) the minority interests in
Beijing Taihe and Guangzhou Weiji would be transferred to our Company from Mr. Wen
and Mr. Zhou, respectively. Mr. Chen joined our Group in April 2011 and was promoted
to chief operating officer in 2014. See “Directors, Supervisors and Senior Management”
for his further details.
On July 23, 2015, Y oubao (Cayman) entered into a share repurchase agreement and
a series A preferred share repurchase agreement with the then ordinary shareholders and
series A preferred shareholders of Y oubao (Cayman), respectively, to implement the
corporate restructuring as contemplated under the Restructuring Framework Agreement.
Pursuant to the share repurchase agreements, save for one ordinary share held by Ever
Surpass Limited (wholly owned by Mr. Wang), Y oubao (Cayman) repurchased all its
shares for an aggregate consideration of RMB16,338,370, which was made with reference
to the consideration received by our Group’s offshore entities as a result of the
reorganization pursuant to the Restructuring Framework Agreement.
Subsequent to the completion of the repurchases, the offshore entities within our
Group were deregistered.
HISTORY AND DEVELOPMENT
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3. Listing and Delisting in relation to the NEEQ
For details on the listing and delisting of our Shares on the NEEQ, see “— Previous
Listing on the NEEQ, Previous Listing Plan and Proposed Merger Arrangement — Listing and
Delisting in Relation to the NEEQ.”
4. Overseas Expansion
In order to expand our vending machines operations overseas, we invested in JR V ending,
a limited liability company incorporated in Singapore on May 11, 2012.
Pursuant to an investment agreement dated November 28, 2016 made between, among
others, our Company and JR V ending, we agreed to subscribe for 1,406,850 shares of JR
V ending for a consideration of SGD4 million, which was made with reference to the then
prospects and industry outlook of JR V ending, and was fully settled on November 1, 2019.
Further, our Company was also granted an option to subscribe for a further 351,715 shares
pursuant to the terms of the investment agreement (the “ Option ”). Upon completion, our
Company held approximately 43.48% of JR V ending’s issued shares.
Pursuant to an investment agreement dated April 15, 2020 made between, among others,
our Company and JR V ending, we agreed to further subscribe for 1,406,850 shares for a
consideration of SGD4 million, among which, 351,715 Shares were subscribed upon the
exercise of the Option, and an additional 1,055,135 shares were subscribed based on the
exercise price under the Option. Such arrangement was made after arm’s length negotiations
and with reference to the then prospects and industry outlook of JR V ending, and was fully
settled on March 1, 2021. Upon completion, our Company was interested in approximately
60.61% of JR V ending’s issued shares.
Since our Company had the right to appoint only two board members out of five in JR
V ending, the financial results of JR V ending were accounted for as an associate of our Group
upon completion of the above share subscriptions. For further details, see Note 20 to the
Accountant’s Report as set out in Appendix I. As at the Latest Practicable Date, JR V ending
principally engaged in automated vending machine operations located in Singapore, and was
owned as to 60.61%, 37.88% and 1.51% by our Company, JR Group Holdings Pte. Ltd. (an
Independent Third Party) and AY A Asia Holding Pte. Ltd. (an Independent Third Party),
respectively.
HISTORY AND DEVELOPMENT
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5. Disposals and Deregistration during the Track Record Period and up to the Latest
Practicable Date
In order to rationalize our corporate structure, our Group deregistered certain subsidiaries
of our Company during the Track Record Period and up to the Latest Practicable Date as (i)
these subsidiaries had no business operations immediately prior to their respective
deregistration; (ii) our Group intended to streamline its business operations; or (iii) our Group
ceased to continue a business line that was not profit generating. The relevant deregistered
subsidiary that was not profit-generating was principally engaged in the provision of software
development and technical services in Qinhuangdao City, and its financial results prior to the
deregistration had been consolidated into our Company’s financial statements and included in
our Group’s others segment during the Track Record Period. The discontinued business line is
insignificant to the Group.
The following sets out certain unaudited financial information of the relevant deregistered
subsidiary which was principally engaged in the provision of software development and
technical services in Qinhuangdao City during the years ended December 31, 2019 and 2020
and the one month ended January 31, 2021:
For the year ended
December 31,
For the one
month ended
January 31,
2019 2020 2021
(RMB’000) (RMB’000) (RMB’000)
(Note)
Revenue 3,277 194 –
Percentage of our total revenue 0.120% 0.001% –
Profit/(Loss) before tax 152 (242) (1)
Percentage of our total profit/loss
before tax 0.357% 0.021% 0.004%
As of December 31,
As of
January 31,
2019 2020 2021
(RMB’000) (RMB’000) (RMB’000)
(Note)
Assets 3,369 2,313 2,103
Percentage of our total assets 0.093% 0.105% 0.101%
(Liabilities) (831) (29) (71)
Percentage of our total liabilities 0.085% 0.004% 0.011%
Note: The relevant financial information in terms of percentage to the Group for the one month ended January
31, 2021 was calculated based on the unaudited consolidated management accounts of the Company for
the one month ended January 31, 2021.
HISTORY AND DEVELOPMENT
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Further, during the Track Record Period and up to the Latest Practicable Date, the
following subsidiaries had been disposed of:
PRC subsidiary
disposed of
(Note 4)
Date of
agreement Transferee(s)
(Note 1)
Interest
disposed
of(Note 2) Reason for disposal
Total
consideration
Basis of
consideration
Consideration
settlement
date
(RMB)
Beijing Y ouyang Technology
Co., Ltd.
(ʮ̡)
June 9, 2020 Lu Jihong (ߎand
her wholly-owned
company, namely
Shenzhen Shengshi
Aicai Network
Technology Co., Ltd.
(ଉέ̹ସ˰ฌ੹ၣ
ʮ̡)
(“Shenzhen
Shengshi Aicai ”)
100% The subsidiary was
principally
engaged in the
operation of
advertising and
system support
services in the
PRC, and our
Group decided to
transfer its assets
to another
subsidiary prior to
the disposal of
this subsidiary in
order to streamline
our Group’s
business
500,000 Registered
capital of the
subsidiary
February 15,
2022
Beijing Y oubaokesi June 25, 2021 Liu Zuquan ( ᄎख़ᛆ) 100% The only business of
such subsidiary
was the holding of
an ICP license and
our Group’s
operation no
longer required
such license
(Note 3)
Nil Net asset value
of Beijing
Y oubaokesi as
at June 30,
2021
N/A
Shenzhen Mibao December 29,
2021
Shenzhen Shengshi
Aicai
56% The subsidiary was
initially used to
explore the market
of vending
machines for
female sanitary
napkins.
Nonetheless, the
relevant project
held by the
subsidiary had
ended
250,000 Paid-up
registered
capital of the
subsidiary
December 30,
2021
HISTORY AND DEVELOPMENT
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Notes:
1. Each of the transferees and their respective ultimate beneficial owners is an Independent Third Party.
2. Our Group ceased to have any interests in the relevant subsidiaries upon completion of the disposals.
3. Our Group initially obtained an ICP license as it contemplated to engage in the value-added
telecommunications business. Nonetheless, our Group did not commence such business line after obtaining the
ICP license.
4. Our Directors confirm that each of these subsidiaries were solvent immediately prior to their respective
disposal.
To the best of our Directors’ knowledge, and based on independent litigation search and
public search on the National Enterprise Credit Information Publicity System (͜
ʮͪӻ୕) and the Website of Administrative Penalties for the State Administration for
Market Regulation (ၣ), each of the deregistered or disposed
subsidiaries did not have any material non-compliance with relevant laws and regulations or
any material litigation, claims or legal proceedings during the Track Record Period prior to
their respective deregistration or disposal.
HISTORY AND DEVELOPMENT
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PRE-IPO INVESTMENTS
The following table summarizes the key terms of the Pre-IPO Investments to our Company made by the Pre-IPO Investors. As confirmed by
our PRC Legal Advisor, the Pre-IPO Investments have been approved, filed and registered by relevant regulatory authorities subject to the then
effective PRC Law.
Subscription by
Qingdao Haier
in 2017
(Note 3)
Subscription by
Shanghai Yunxin
in 2019
Transfers to Chunhua
Rongshun in 2019
Transfer to
Gongqingcheng
Changyou in 2020
Transfers to Guoxin
Energy Fund in 2020
Transfers to Mr. Xu
Ge in 2022
(Note 7)
Transfers to
Mr. Xiao Lin
(Note 7)
Date of agreement(s) February 24, 2017 April 22, 2019 June 28, 2019 August 12, 2020 November 18, 2020
and November 20,
2020
November 4, 2021,
April 2, 2022 and
April 5, 2022
November 18, 2019,
December 12, 2019
and April 6, 2022
Name of transferor(s)/issuer Our Company Our Company Ms. Liu Xia
and Beijing
Kaibao
(Note 4)
Qingdao Haier Mr. Li Wei and
Qingdao Haier
Mr. Li Wei,
Gongqingcheng
Yinxi Investment
Management
Partnership (L.P .)
(ვ๣ҳ༟၍
ଣΥྫΆุ(Υ
ྫ)) and Qingdao
Haier
(Note 5)
Ms. Liu Xia, Mr.
Chen, Mr. Ma
Kaiyuan ( ৵කʩ),
Mr. Li Wei and
M r .X uG e
Number of Shares involved 89,648,737 126,315,789 42,104,884 16,129,032 6,666,667 36,083,194 21,250,000
Total amount of consideration RMB424,038,526.01 RMB1,199,999,995.50 RMB399,996,398.00 RMB149,999,997.60 RMB60,000,003.00 RMB258,713,252.65 RMB186,250,000.00
Date of full settlement of the
consideration
April 21, 2017 August 21, 2019 February 28, 2021 August 21, 2020 November 26, 2020 April 8, 2022
(Note 6) April 18, 2022
Cost per Share RMB4.73 RMB9.50 RMB9.50 RMB9.30 RMB9.00 RMB7.16 RMB8.76
Discount/premium to the Offer
Price
(Note 1)
Discount of 50.37% Discount of 0.31% Discount of 0.31% Discount of 2.41% Discount of 5.56% Discount of 24.87% Discount of 8.08%
Approximate post-money valuation
of our Group (Note 2)
RMB2.88 billion RMB7.19 billion N/A
HISTORY AND DEVELOPMENT
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Subscription by
Qingdao Haier
in 2017
(Note 3)
Subscription by
Shanghai Yunxin
in 2019
Transfers to Chunhua
Rongshun in 2019
Transfer to
Gongqingcheng
Changyou in 2020
Transfers to Guoxin
Energy Fund in 2020
Transfers to Mr. Xu
Ge in 2022
(Note 7)
Transfers to
Mr. Xiao Lin
(Note 7)
Basis of determining the consideration See “— Information on
Our Group — Our
Company” for
details of the basis
of consideration in
relation to the
subscription by
Qingdao Haier in
2017 under the 2017
Capital Increase
The timing of the
investment, the
subscription price
and the valuation of
our Group for the
2018 Capital
Increase as agreed
with Shantou Haiyi
in late 2018 and the
then operating
results and industry
outlook of our
Group’s business
To the best of our Directors’ knowledge, information and belief having made reasonable enquiries, each of the basis of
consideration was made after arm’s length negotiations between the parties
Use of proceeds The proceeds had been
fully utilized for
repayment of the
2015 Convertible
Loan
The proceeds had been
fully utilized for
acquisition of fixed
assets and additional
working capital to
our Group
No proceed was received by our Company in relation to the share transfers
HISTORY AND DEVELOPMENT
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Subscription by
Qingdao Haier
in 2017
(Note 3)
Subscription by
Shanghai Yunxin
in 2019
Transfers to Chunhua
Rongshun in 2019
Transfer to
Gongqingcheng
Changyou in 2020
Transfers to Guoxin
Energy Fund in 2020
Transfers to Mr. Xu
Ge in 2022
(Note 7)
Transfers to
Mr. Xiao Lin
(Note 7)
Strategic benefits At the time of the
Pre-IPO Investment,
our Directors were
of the view that the
Pre-IPO Investment
would provide
additional capital to
our Company for
repayment of the
2015 Convertible
Loan, while
benefitting from the
strengthened and
diverse Shareholder
base
At the time of the
Pre-IPO Investment,
our Directors were
of the view that our
Company could
benefit from the
additional capital
that would be
provided by the
Pre-IPO Investment.
In addition, the
Pre-IPO Investment
would have provided
us with further
collaboration
opportunities with
Ant Group and
create business
synergies
Our Directors were of the view that the Pre-IPO Investors’ investments in our Company was an endorsement of our
Company’s strength and prospects, and that our Company would benefit from the strengthened and diverse
Shareholder base. In particular, each of Chunhua Rongshun, Gongqingcheng Changyou and Guoxin Energy Fund is a
professional investor, which can provide us with professional advice on our Group’s development when required
Notes:
1. The discount to the Offer Price is calculated based on the Offer Price of HK$10.40 per Share, being the mid-point of the Offer Price range.
2. Post-money valuation is calculated by dividing the total consideration of the Pre-IPO Investment by the total % of Shares allotted to the Pre-IPO In vestor. Accordingly, save
for the subscriptions made by Qingdao Haier and Shanghai Y unxin, the remaining Pre-IPO Investments were made by transferring existing Shares, and po st-money valuation
is not applicable to these Pre-IPO Investments as no Shares were issued and allotted to the relevant Pre-IPO Investors.
HISTORY AND DEVELOPMENT
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--- page 191 ---
3. In 2019, Qingdao Haier and Mr. Wang entered into a right-of-sale agreement, pursuant to which Mr. Wang granted Qingdao Haier a right to dispose of the Shares held by it
to Mr. Wang under the terms of the agreement. See “— Special Rights of the Pre-IPO Investors” for further details.
4. In 2018, Beijing Kaibao and our Company entered into a repurchase agreement pursuant to which the Company shall repurchase from Beijing Kaibao cert ain Shares held by
it, being 15,789,474 Shares, at a price of RMB9.50 per Share in anticipation of the NEEQ delisting. Later upon further discussion between the parties i n 2019, Beijing Kaibao
and our Company agreed not to proceed with the completion of the share repurchase and Beijing Kaibao shall instead transfer the 15,789,474 Shares to Ch unhua Rongshun.
The consideration paid by our Company under the repurchase agreement had been returned in full to our Company.
5. Upon completion of its share transfer to Mr. Xu Ge, Qingdao Haier ceased to be a Shareholder and the special right granted to Qingdao Haier as detailed in note 3 above was
terminated. For further information about Qingdao Haier, see “— Information about our Pre-IPO Investors — Qingdao Haier” below.
6. Mr. Xu Ge has been a Shareholder since the 2015 Equity Transfer and prior to our Company’s listing on the NEEQ. Immediately prior to his Pre-IPO Invest ment, Mr. Xu Ge
held 5,814,550 Shares, representing approximately 0.77% of our issued Shares. For illustration purposes, the cost per Share only takes into account of the Pre-IPO Investment
as detailed in the table. For further information about Mr. Xu Ge, see “— Information about our Pre-IPO Investors — Mr. Xu Ge” below.
7. It was agreed between Mr. Xu Ge and Qingdao Haier that the total consideration for the share transfer to Mr. Xu Ge in 2022 would be paid in three instalme nts, being
RMB50,000,000 by November 5, 2021, RMB50,000,000 by November 30, 2021 and RMB113,413,252.65 by April 8, 2022. Due to his liquidity issues, prior to th e payment
of the last instalment, Mr. Xu Ge decided to onward transfer part of the Shares to be acquired from Qingdao Haier, being 6,250,000 Shares, to Mr. Xiao Lin , an existing
Shareholder, who had also been purchasing Shares from various other Shareholders since the delisting of our Company from NEEQ.
HISTORY AND DEVELOPMENT
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--- page 192 ---
Information about our Pre-IPO Investors
Shanghai Yunxin
Shanghai Y unxin was established in the PRC on February 11, 2014 and is a wholly owned
subsidiary of Ant Group. Ant Group is the parent company of Alipay, a digital payment
platform, and the leader in the development of open platforms for technology-driven inclusive
financial services. Through technology and innovation, it enables the digitalization of the
modern service industry globally from financial services to services for everyday life. Ant
Group is committed to working with partners in China and around the world to bring services
to consumers and small businesses that are inclusive, green and sustainable. Ant Group was
acquainted with our Group through business cooperation opportunities, such as Alipay. As at
the Latest Practicable Date, Shanghai Y unxin held 126,315,789 Shares, representing
approximately 16.68% of our total number of issued Shares.
Chunhua Rongshun
Chunhua Rongshun was established in the PRC on June 21, 2017 and is managed by
Chunhua Qiushi (Tianjin) Equity Investment Management Co., Ltd. (ྼ(ݵ)ᛆҳ༟
ʮ̡)( “ Chunhua Qiushi ”), which is in turn indirectly controlled by an Independent
Third Party. Based on publicly available information, Chunhua Rongshun’s general partner is
Qiushi (Tianjin) Equity Investment Management Partnership (Limited Partnership) (ྼ(˂
ݵ)ᛆҳ༟၍ଣΥྫΆุ(Υྫ)) (“ Qiushi Tianjin ”), a company managed by Chunhua
Qiushi, and its limited partners are Chunhua Xingkang (Tianjin) Investment Center (Limited
Partnership) (ശጳੰ(ݵ)ҳ༟ʕː(Υྫ)) and Chunhua Xing’an (Tianjin) Investment
Center (Limited Partnership) (ശጳτ(ݵ)ҳ༟ʕː(Υྫ)), which are each an
Independent Third Party and managed by Qiushi Tianjin. Chunhua Rongshun is affiliated to the
Primavera Capital Group, a premier China-based global investment firm, and is principally
engaged in investing in unlisted companies and non-public shares by listed companies, with
main investment themes including consumption upgrade, technological innovation and
decarbonization, and with assets under management of over RMB10 billion. Chunhua
Rongshun was acquainted with our Group after conducting their independent market research
upon our Company’s delisting from the NEEQ. As at the Latest Practicable Date, Chunhua
Rongshun held 42,104,884 Shares, representing approximately 5.56% of our total number of
issued Shares.
M r .X uG e
Mr. Xu Ge is an individual Pre-IPO Investor who from time to time participates in various
investment opportunities with a primary focus in China. He was a chief operating officer of our
Group between 2012 and 2014. Mr. Xu Ge graduated from Shanghai Jiaotong University and
is experienced in the retail and the equity investment industry. He is currently the chairman of
V aluable Capital Group Limited ( ശସ༟͉ණྠ). As at the Latest Practicable Date, Mr. Xu Ge
held 35,647,744 Shares, representing approximately 4.71% of our total number of issued
Shares.
HISTORY AND DEVELOPMENT
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--- page 193 ---
Mr. Xiao Lin
Mr. Xiao Lin is an individual Pre-IPO Investor who from time to time participates in
various investment opportunities with a primary focus in China. He was acquainted with our
Group through the referral from Ms. Cui Y an (an executive Director), who was introduced to
Mr. Xiao Lin by their mutual friend. Mr. Xiao Lin obtained his master’s degree in economics
from Peking University and has extensive investment and financing experiences. He previously
worked at China Southern Airlines Company Limited (a company listed on the Stock Exchange
(stock code: 1055.hk), the Shanghai Stock Exchange (stock code: 600029) and the New Y ork
Stock Exchange (ADR Code: ZNH)) and Midea Group Co., Ltd. (a company listed on the
Shenzhen Stock Exchange (stock code: 000333)), and is currently the second largest investor
in Orinko Advanced Plastics Co., Ltd. (a company listed on the Shanghai Stock Exchange
(stock code: 688219)). As at the Latest Practicable Date, Mr. Xiao Lin held 21,250,000 Shares,
representing approximately 2.81% of our total number of issued Shares.
Gongqingcheng Changyou
Gongqingcheng Changyou was established in the PRC on December 20, 2019 and is
managed by its general partner, CCB International Wealth Management (Tianjin) Co., Ltd. (ܔ
ვ਷ყৌబ၍ଣ(ݵ)ʮ̡), an Independent Third Party, which is in turn ultimately
controlled by China Construction Bank Cooperation, a company listed on the Stock Exchange
(stock code: 939.hk) and the Shanghai Stock Exchange (stock code: 601939) (“ CCB”). As of
the Latest Practicable Date, based on publicly available information, the limited partners of
Gongqingcheng Changyou which held more than 5% partnership interests were (i) Jiangxi
Tourism Group Co., Ltd. (ʮ̡), a company controlled as to 37% by
its largest shareholder, Jiangxi State-owned Capital Operation Holding Group Co., Ltd. ( ϪГ
ʮ̡), which was in turn controlled by the State-Owned Asset
Supervision and Administration Commission (“ SASAC ”) of Jiangxi Province; (ii) Jiangxi
Province Development and Upgrade Guidance Fund (Limited Partnership) (ʺॴˏ
ږ(Υྫ)), which was in turn managed by its general partner, Jiangxi Caitou Equity
Investment Fund Management Co., Ltd. (ʮ̡), which was
in turn indirectly controlled by the SASAC of Jiangxi Province; and (iii) Shanghai Jingye
Investment Management Co., Ltd. (ʮ̡), an indirect wholly-owned
subsidiary of CCB. Gongqingcheng Changyou is a private equity fund which invests in both
unlisted and listed companies, and its general partner has assets under management of over
RMB2 billion. Gongqingcheng Changyou was acquainted with our Group through the referral
and introduction from a then existing Shareholder, namely Qingdao Haier. As at the Latest
Practicable Date, Gongqingcheng Changyou held 16,129,032 Shares, representing
approximately 2.13% of our total number of issued Shares.
HISTORY AND DEVELOPMENT
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--- page 194 ---
Guoxin Energy Fund
Guoxin Energy Fund was established in the PRC on November 15, 2016 and is controlled
by its general partner, Guoxin Hongsheng Private Equity Fund Management Co., Ltd. (̾
ʮ̡), which is in turn owned by Guosen Securities Co., Ltd., a company
listed on the Shenzhen Stock Exchange (stock code: 002736). As of the Latest Practicable
Date, based on publicly available information, the limited partners of Guoxin Energy Fund
were (i) Hubei E-Travel Investment Capital Holding Co., Ltd. (ʮ
̡), which was indirectly controlled by the SASAC of Hubei Provincial People’s Government;
(ii) Y ungang Innovation Technology (Zhuhai) Co., Ltd. (Ҧ(मऎ)ʮ̡), which
was indirectly wholly-owned by Elegance Collection (China) Holdings Limited ( ඩ་(ʕ਷)છ
ʮ̡), which was in turn indirectly owned as to 50% and 50% by Huang Keli and Li
Pingrong, each an Independent Third Party, respectively; and (iii) Xianning Hongzhi Equity
Investment Center (Limited Partnership) (ᛆҳ༟ʕː(Υྫ)), which was
managed by Guangxi Yirui Investment Co., Ltd. (ʮ̡), which was in turn
controlled by Y u Zhenzu ( ໬แख़), an Independent Third Party. Guoxin Energy Fund is
principally engaged in equity investments, and its general partner has accumulated assets under
management of over RMB9 billion. Guoxin Energy Fund was acquainted with our Group
through the referral and introduction from a then existing Shareholder, namely Qingdao Haier.
As at the Latest Practicable Date, Guoxin Energy Fund held 6,666,667 Shares, representing
approximately 0.88% of our total number of issued Shares.
Qingdao Haier
Qingdao Haier was established in the PRC on April 16, 2010 and is wholly owned by
Haier Group (Qingdao) Finance Holding Co., Ltd. ( ऎဧණྠ(ࢥڡ)ʮ̡), an
Independent Third Party, which is ultimately controlled by Haier Group Corporation ( ऎဧණ
ྠʮ̡). Qingdao Haier is principally engaged in investments and venture capital businesses.
Qingdao Haier was acquainted with our Group through the referral from Beijing Kaibao from
the 2017 Capital Increase.
Subsequent to the completion of the 2017 Capital Increase and prior to the Company’s
delisting from the NEEQ, Qingdao Haier had disposed of a total of 30,000,000 Shares, and had
further disposed of a total of 59,648,737 Shares after the Company’s delisting from the NEEQ.
As at the Latest Practicable Date, Qingdao Haier ceased to be a Shareholder. To the best of our
Directors’ knowledge, information and belief having made reasonable enquiries, Qingdao
Haier’s gradual exit was prompted after they had internally reviewed their overall investment
strategies and decided to withdraw from its non-core investments.
Save as disclosed herein, (i) other than their respective investments in our Group, each
of the Pre-IPO Investors and their respective general partners and limited partners or
substantial shareholder as publicly disclosed by the relevant investor (as the case may be) is
an Independent Third Party; and (ii) to the best knowledge of our Directors, the limited partners
of the Pre-IPO Investors (if any) are independent from each other.
HISTORY AND DEVELOPMENT
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--- page 195 ---
Special Rights of the Pre-IPO Investors
Save for Mr. Xu Ge and Mr. Xiao Lin, each of the Pre-IPO Investors had been granted
certain special rights relating to our Company by certain Shareholders, including but not
limited to rights of first refusal, anti-dilution rights, information rights, director nomination
rights and divestment rights. Since Qingdao Haier had ceased to be a Shareholder, the special
right granted to Qingdao Haier had been terminated. Further, as of the Latest Practicable Date,
supplemental termination agreements were entered into with (i) each of Gongqingcheng
Changyou and Guoxin Energy Fund, pursuant to which each of them agreed that such special
terms granted to them by certain Shareholders would be terminated upon the date of submission
of the listing application for the CSRC’s approval of the Listing; and (ii) each of Shanghai
Y unxin and Chunhua Rongshun, pursuant to which each of them agreed that the divestment
rights granted to them by certain Shareholders would be terminated immediately before the
date of submission of the listing application to the Stock Exchange, and all remaining special
rights granted to them will be terminated upon Listing.
Agreement among Shanghai Yunxin and our Single Largest Group of Shareholders
Pursuant to the supplemental termination agreement entered into with Shanghai Y unxin,
in the event a candidate is nominated by Shanghai Y unxin in accordance with the Articles of
Association as a Director after Listing, our Single Largest Group of Shareholders agreed to
vote for such candidate as Director (and to vote for the removal of any Director initially
nominated by Shanghai Y unxin) at the general meeting of our Company, the appointment of
which would be subject to shareholders’ approval. Shanghai Y unxin has director nomination
rights pursuant to the Articles of Association because Articles 70 and 73 provide that any
shareholder holding more than 10% of our issued Shares is entitled to request to convene a
shareholders’ general meeting and submit a resolution proposal for consideration, and
Shanghai Y unxin holds more than 10% of our issued Shares upon Listing.
The above agreement is not a special right granted by our Company to Shanghai Y unxin.
It constitutes private arrangement among Shanghai Y unxin and our Single Largest Group of
Shareholders and is not subject to the relevant guidance letters issued by the Stock Exchange,
and will not be terminated upon Listing.
Lock up
Pursuant to the laws of the PRC, the shares which have been issued before we publicly
issue H Shares are prohibited from being transferred within one year from the Listing Date.
HISTORY AND DEVELOPMENT
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--- page 196 ---
Public Float
Save for Shanghai Y unxin, which will hold approximately 16.20% of our total number of
issued Shares upon Listing (assuming the options granted under the Pre-IPO Incentive Scheme
are not exercised), and will therefore be a substantial shareholder of our Company, the other
Pre-IPO Investors are independent from our Group and our core connected persons and the H
Shares held by such independent Pre-IPO Investors shall be counted towards the public float
of our Company.
Further, upon Listing (assuming the options granted under the Pre-IPO Incentive Scheme
are not exercised), (i) Mr. Wang and Mr. Chen (as parties acting in concert pursuant to the
Deeds of AIC) and Ms. Cui Y an, each an executive Director, will hold approximately 21.35%
and 0.38% of our issued Shares, respectively; (ii) Shanghai Y unxin, as disclosed above, will be
a substantial shareholder of our Company; (iii) Mr. Li Wei and Mr. Y ang Ling, each a
substantial shareholder of our Company’s subsidiary, will hold approximately 0.33% and
0.05% of our issued Shares; and (iv) Mr. Zhu Jiang ( ϡϪ), the general manager of our
Company’s subsidiary, will hold approximately 0.05% of our issued Shares. As such, they are
core connected persons of our Company and the H Shares held by them will not be considered
as part of the public float.
Save as provided above, all of the other H Shares held by our Shareholders upon Listing
will be counted towards to the public float, and approximately 48.51% of our Company’s
issued Shares will be held by the public in accordance with Rule 8.08(1)(a) of the Listing Rules
upon Listing (assuming the options granted under the Pre-IPO Incentive Scheme are not
exercised).
Compliance with Interim Guidance and Guidance Letters
On the basis that (i) the first date of submission of the listing application to the Stock
Exchange took place on May 27, 2022, which was more than 28 clear days after completion
of the last Pre-IPO Investment, being the completion date of the Pre-IPO Investment made by
Mr. Xiao Lin on April 18, 2022; and (ii) the Pre-IPO Investors shall have the same rights as
the other public Shareholders after the Listing, the Joint Sponsors confirm that, based on the
documents provided by the Company relating to the Pre-IPO Investments, the Pre-IPO
Investments are in compliance with (i) the Guidance Letter HKEX-GL29-12 issued by the
Stock Exchange in January 2012 and updated in March 2017; and (ii) the Guidance Letter
HKEX-GL43-12 issued by the Stock Exchange in October 2012 and updated in July 2013 and
March 2017.
2020 INCENTIVE SCHEME AND PRE-IPO INCENTIVE SCHEME
With a view to incentivizing our management members and core employees to further
promote our development and in recognition of their contributions, our Company adopted the
2020 Incentive Scheme in 2020 and Shenzhen Y ouhui was established as the platform to hold
Shares for the option grantees under the 2020 Incentive Scheme. Shenzhen Y ouhui was a
HISTORY AND DEVELOPMENT
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limited partnership incorporated in the PRC by Ms. Zhou Chuanjiao (۷and Mr. Chen
Wenwei ( ௓˖ਃ), each an employee of our Group, and was initially incorporated for their own
personal use. As part of the 2020 Incentive Scheme, participants who were the then senior
management of our Company were granted options to directly subscribe for or acquire Shares,
whereas the remaining participants were granted options to hold limited partnership interests
in Shenzhen Y ouhui. The grant price of such options was RMB0.10 per Share. In accordance
with the 2020 Incentive Scheme, options to acquire a total of 22,438,106 Shares were granted,
pursuant to which each of Mr. Wang, Mr. Chen, Ms. Cui Y an (an executive Director) and Mr.
Wang Ge (a senior management of our Group) was granted options to directly acquire
7,000,000 Shares, 4,000,000 Shares, 3,000,000 Shares and 3,000,000 Shares, respectively,
while the remaining 5,438,106 Shares were held by Shenzhen Y ouhui. As at the Latest
Practicable Date, there were no outstanding options granted under the 2020 Incentive Scheme
and all options which were granted had been exercised. Ms. Zhou Chuanjiao is currently the
sole general partner of Shenzhen Y ouhui, and Shenzhen Y ouhui had 23 limited partners, all of
whom were employees of our Group who had obtained their respective limited partnership
interests as a result of exercising their options granted under the 2020 Incentive Scheme. As
at the Latest Practicable Date, Shenzhen Y ouhui held 5,438,106 Shares, representing
approximately 0.72% of our total number of issued Shares. For further information about the
2020 Incentive Scheme, see “Statutory and General Information — D. Share Incentive Scheme
— 2. 2020 Incentive Scheme” in Appendix IV .
Further, we adopted the Pre-IPO Incentive Scheme on May 31, 2021 to further refine the
incentive system of our Company by linking the personal interests of our officers, directors and
employees, and to attract technical and managerial talents in the industry to join our Company.
The principal terms of the Pre-IPO Incentive Scheme are set out in “Statutory and General
Information — D. Share Incentive Scheme — 1. Pre-IPO Incentive Scheme” in Appendix IV .
Pursuant to the Pre-IPO Incentive Scheme, the maximum number of Shares in respect of which
share options may be granted shall not exceed 37,862,946 Unlisted Shares, representing
approximately 4.86% of our Company’s issued share capital immediately after the Global
Offering (assuming the options granted under the Pre-IPO Incentive Scheme are not exercised).
As of the Latest Practicable Date, the Company had granted share options to subscribe for an
aggregate of 37,750,000 Unlisted Shares under the Pre-IPO Incentive Scheme, representing
approximately 4.84% of our Company’s issued share capital immediately after the Global
Offering (assuming the options granted under the Pre-IPO Incentive Scheme are not exercised).
The Company will not grant further share options under the Pre-IPO Incentive Scheme after the
Listing. For further information about the Pre-IPO Incentive Scheme, see “Statutory and
General Information — D. Share Incentive Scheme — 1. Pre-IPO Incentive Scheme” in
Appendix IV .
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PREVIOUS LISTING ON THE NEEQ, PREVIOUS LISTING PLAN AND PROPOSED
MERGER ARRANGEMENT
Listing and Delisting in Relation to the NEEQ
On January 29, 2016, our Company received approval for our Shares to be listed on the
NEEQ in the PRC (stock code: 836053), and our Shares began trading on the NEEQ in the PRC
on February 24, 2016.
Delisting of Our Shares from the NEEQ
Having taken into account our operation demands and long-term development plans, and
having already received a few rounds of funding from certain investors on the NEEQ, the
listing of our Shares on the NEEQ no longer satisfied the then financing needs of our Company.
As such, considering the reasons as set out in “— Previous Listing on the NEEQ, Previous
Listing Plan and Proposed Merger Arrangement — Reasons for Seeking Listing on the Stock
Exchange” below for seeking listing on the Stock Exchange, our Shareholders resolved to
voluntarily delist our Shares from the NEEQ. Our Company applied for the delisting on
January 11, 2019 and the delisting was completed on March 12, 2019. As a protective measure
for Shareholders who dissented to the delisting of our Shares from NEEQ, our Company and
Mr. Wang undertook to repurchase any dissenting or abstaining Shareholders’ Shares after the
completion for the delisting. For further details, see “— Information on Our Group — Our
Company.”
Change in Board Composition
Immediately prior to the delisting of our Shares on the NEEQ, our Board comprised seven
directors, including Mr. Wang, Mr. Chen, Mr. Gui Zhaoyu (ρ), Mr. Huang Heming ( රᚲ
ჼ), Mr. Li Xinyang ( ҽอජ), Ms. Cui Y an ( ੦ᜮ) and Ms. An Y ufang (ٹSave for Mr.
Wang, Mr. Chen, Ms. Cui Y an ( ੦ᜮ) and Ms. An Y ufang (ٹwho remain as our Directors,
other members of our Board during the period when our Shares were listed on the NEEQ had
ceased to be our Directors. For further details of our board composition, please see the section
headed “Directors, Supervisors and Senior Management” in this prospectus.
Compliance During Listing on the NEEQ
Our Directors, to the best of their knowledge and belief, confirmed that:
(i) during the period that our Company was listed on the NEEQ:
a. our Company and our then Directors had been in compliance in all material
respects with all applicable rules and regulations of the NEEQ and PRC
securities law; and
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b. our Company had not been subject to any administrative penalty by the NEEQ
and/or any relevant law enforcement authority or regulator related to securities
supervision; and
(ii) there are no further matters in relation to the prior listing of our Company on the
NEEQ and the subsequent withdrawal that needs to be brought to the attention of the
Stock Exchange, our Shareholders or the potential investors.
Based on the due diligence work conducted by the Joint Sponsors, nothing has come to
the Joint Sponsors’ attention that would cause them to disagree with the Directors’ views
mentioned above in relation to the compliance status of the Company, its shareholders and
directors during the quotation of the Company’s Shares on the NEEQ between February 2016
and March 2019. The Joint Sponsors also concur the view of the Directors that there is no other
matter in relation to the NEEQ quotation and the subsequent withdrawal that need to be
brought to the attention of the Stock Exchange or the potential investors.
Previous Listing Plan and Proposed Merger Arrangement
In December 2016, our Company planned to apply for listing on the Shenzhen Stock
Exchange (“ Previous Listing Plan ”). In preparation for the Previous Listing Plan, CSC
Financial Co., Ltd., a company listed on the Stock Exchange (stock code: 6066.hk) and the
Shanghai Stock Exchange (stock code: 601066), were engaged by our Company to provide
tutoring and preliminary compliance advice with regards to the requirements of the CSRC (the
“SZSE Financial Institution ”). In January 2017, our Company started to attend a pre-listing
tutorial ( ɪ̹Ⴞኬ). The purpose of the pre-listing tutorial was to update the Beijing CSRC ( ʕ
ึ̏ԯ္၍҅) from time to time in respect of the progress of the
preliminary guidance and tutoring services provided by the SZSE Financial Institution in
accordance with the relevant CSRC’s guidelines on our Group’s major operational and
financial condition, corporate governance and internal control measures. The scope of the
pre-listing tutorial provided by the SZSE Financial Institution involved, among others, the
provision of comprehensive training to the Company’s directors, supervisors, senior
management and shareholders on their obligations and duties, as well as the inspection and
supervision of the Company’s compliance with the relevant laws and regulations, corporate
governance and internal control measures. The pre-listing tutorial did not constitute a listing
application with the Beijing CSRC and there was no proposed timetable for the Previous
Listing Plan.
However, in consideration of the reasons as set out in “— 3. Listing and Delisting in
relation to the NEEQ — Reasons for Seeking Listing on the Stock Exchange” and the
uncertainty of the A-share listing timetable, we decided to focus our resources on the listing
on the Stock Exchange and did not proceed with the Previous Listing Plan. In February 2021,
we terminated the engagement with the SZSE Financial Institution. During the preparation for
the Previous Listing Plan, we did not receive any feedback nor comment from the CSRC, and
we did not encounter any disagreements with the relevant professional parties nor the CSRC.
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In July 2017, Mr. Wang and Mr. Chen, who were then (and currently are) our single
largest group of shareholders, entered into an absorption and merger framework agreement (the
“Merger Framework Agreement ”) with New Huadu Supercenter Co., Ltd. (“ New Huadu ”),
a company listed on the Shenzhen Stock Exchange (stock code: 002264). Pursuant to the
Merger Framework Agreement, our Company would be merged into and absorbed by New
Huadu in consideration of New Huadu issuing A shares to our then Shareholders (the
“Proposed Merger Arrangement ”). Upon completion of the Proposed Merger Arrangement,
New Huadu would assume all assets, liabilities, interests, businesses, employees, contracts and
all other rights and obligations of our Company and our Company would be deregistered.
Nonetheless, as New Huadu and our then Shareholders could not reach an agreement on the
pricing terms of the Proposed Merger Arrangement, the Merger Framework Agreement was
terminated in August 2017. As at the Latest Practicable Date and to the best of our Directors’
knowledge, New Huadu and our Company did not receive any comments from the relevant
authorities with respect to the Proposed Merger Arrangement. After the termination of the
Proposed Merger Arrangement, we continued to attend pre-listing tutorial for the Previous
Listing Plan until we terminated the engagement with the SZSE Financial Institution in
February 2021.
To the best of their knowledge, our Directors confirm that they are not aware of (i) any
other matters relating to the Previous Listing Plan nor the Proposed Merger Arrangement which
should be reasonably highlighted in this prospectus for investors to form an informed
assessment of our Company; (ii) any other matters relating to the Previous Listing Plan or the
Proposed Merger Arrangement that may have implications on our Company’s suitability for
listing on the Stock Exchange or on the truthfulness, accuracy and completeness of information
disclosed in this prospectus; and (iii) any other matters that need to be brought to the attention
of the Stock Exchange and investors in relation to the Previous Listing Plan or the Proposed
Merger Arrangement. Our Directors also confirm that no formal listing application was filed
in relation to the Previous Listing Plan nor the Proposed Merger Arrangement as at the Latest
Practicable Date.
The Joint Sponsors concur the view of the Directors that there are no other matters in
relation to the Previous Listing Plan or the Proposed Merger Arrangement that need to be
brought to the attention of the Stock Exchange and the potential investors.
Reasons for Seeking Listing on the Stock Exchange
Our Directors believe that the Listing will be in the interest of our Group’s business
development strategies, and would be beneficial to us and our Shareholders as a whole for the
following reasons:
(i) the Stock Exchange, as a leading player of the international financial markets, could
offer us a direct access to the international capital markets, enhance our fundraising
capabilities and broaden our fundraising channels and our Shareholders base as well
as strengthen our corporate governance;
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(ii) the Listing would give us a better platform to further develop our business; and
(iii) the Listing will further raise our brand awareness, business profile and thus, enhance
our corporate image to attract new customers, business partners and strategic
investors as well as to recruit, motivate and retain key management personnel for
our Group’s business.
PRC COMPLIANCE
As confirmed by our PRC Legal Advisor, the share subscriptions and material share
transfers of our Company have been approved, filed and registered by relevant regulatory
authorities subject to the then effective PRC Law.
SHAREHOLDING STRUCTURE
As of the Latest Practicable Date, our Company had in aggregate 303 Shareholders
holding 757,258,933 Unlisted Shares. Further, 614,039,309 Unlisted Shares held by a total of
210 Shareholders (including certain Shares held by each of Shanghai Y unxin, Chunhua
Rongshun, Mr. Xiao Lin, Gongqingcheng Changyou and Guoxin Energy Fund) have been filed
with the CSRC in relation to the filing of overseas listing and “Full Circulation.” See “Share
Capital — Conversion of Unlisted Shares into H Shares” for details of the filing of overseas
listing and “Full Circulation” with the CSRC and “Substantial Shareholders” for details on our
substantial Shareholders.
As of the Latest Practicable Date, we were unable to verify the identity and shareholding
of 56 Shareholders, who held approximately 0.23% of the issued share capital of our Company.
Our PRC Legal Advisor is of the view that the existence of such Shareholders does not have
any material adverse impact on the clarity of the shareholding structure of our Company.
As of the Latest Practicable Date, as far as our Directors are aware, save for Mr. Wang
and Mr. Chen, who are parties acting-in-concert pursuant to the Deeds of AIC, and Shanghai
Y unxin, which will become a substantial shareholder upon Listing, our Company did not have
any other substantial Shareholders. For further details on our substantial Shareholders, please
refer to the section headed “Substantial Shareholders” in this prospectus.
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CORPORATE STRUCTURE
Corporate Structure as at the Latest Practicable Date
The following diagram illustrates the corporate and shareholding structure of our
Company as at the Latest Practicable Date:
Our Company
21.99% 1.66% 16.68% 2.13%4.71%5.56%6.52% 37.06%0.88%2.81%
Mr. Wang
and
Mr. Chen(1)
Mr. Shen(2) Mr. Lin(2) Shanghai
Yunxin
(3)
Chunhua
Rongshun(3) Mr. Xu Ge(3) Mr. Xiao Lin(3) Gongqingcheng
Changyou(3)
Guoxin
Energy Fund(3)
Other Shareholders as at the
Latest Practicable Date(5)
100%
100%
Beijing Beiguo
Beijing Taihe
100%
Guangzhou Weiji
100%
Shanghai Huilin Other subsidiaries of our
Company(4)
100%
100%
Shenzhen Youbaokesi
Shenzhen Yousuan
Notes:
1. Pursuant to the Deeds of AIC, Mr. Wang and Mr. Chen were parties acting in concert. As at the Latest
Practicable Date, Mr. Wang and Mr. Chen held 135,573,100 Shares and 30,949,306 Shares, representing
approximately 17.90% and 4.09% of our issued Shares, respectively.
2. Each of Mr. Shen and Mr. Lin is one of the Founders.
3. For details, see “— Pre-IPO Investments — Information about our Pre-IPO Investors.”
4. As at the Latest Practicable Date, there were 34 other subsidiaries of our Company. For further details of the
subsidiaries of our Company, see Note 14 to the Accountant’s Report as set out in Appendix I.
5. As at the Latest Practicable Date, there were 293 other Shareholders, among which included:
a. CICC Qiyuan (3.96%), an Independent Third Party, which was the largest Shareholder among the other
Shareholders;
b. Ms. Cui Y an (0.40%) and Mr. Wang Ge (0.40%), an executive Director and a senior management of our
Group, respectively;
c. Shenzhen Y ouhui (0.72%), an employee incentive platform of our Group, which was managed by
Ms. Zhou Chuanjiao (۷an employee of our Group, as general partner;
d. Mr. Li Wei (0.34%), who is the controller of Shenzhen Baihang, which holds as to 14.8% equity interest
in Shenzhen Y ouye, a subsidiary of our Company;
e. Mr. Y ang Ling (0.06%), who holds 13% equity interest in Y oubao Online, a subsidiary of our Company;
and
f. the remaining 287 other Shareholders which (i) to the best of our Directors’ knowledge, information and
belief having made reasonable enquiries, were Independent Third Parties; and (ii) had a shareholding
ranging from approximately 0.01% to 2.94%.
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Corporate Structure Immediately Following the Global Offering
The following diagram illustrates the corporate and shareholding structure of our
Company immediately following the completion of the Global Offering (assuming the options
granted under the Pre-IPO Incentive Scheme are not exercised):
21.35% 1.61% 16.20% 2.07%4.57%5.40%6.33% 36.00% 2.90%0.85%2.72%
Mr. Wang
and
Mr. Chen(1)(A)(C)
Mr. Shen(2)(B) Mr. Lin(2)(A) Shanghai
Yunxin(3)(A)
Chunhua
Rongshun(3)(A) Mr. Xu Ge(3)(B) Mr. Xiao
Lin(3)(C)
Gongqingcheng
Changyou(3)(A)
Guoxin
Energy Fund(3)(A)
Other Shareholders as at the
Latest Practicable Date(5)(D)
H Shareholders pursuant to
the Global Offering(A)
Our Company
100%
Beijing Beiguo
Beijing Taihe
100%
Guangzhou Weiji
100%
Shanghai Huilin Other subsidiaries of our
Company(4)
100%
100%100%
Shenzhen Youbaokesi
Shenzhen Yousuan
Notes:
See notes (1) to (5) under “— Corporate Structure — Corporate structure as at the Latest Practicable Date.”
(A) The Shares held by these Shareholders are H Shares.
(B) The Shares held by these Shareholders are Unlisted Shares.
(C) Immediately upon the completion of the Global Offering and assuming the options granted under the Pre-IPO
Incentive Scheme are not exercised, (i) 94,901,170 Unlisted Shares, 30,949,306 Unlisted Shares and
15,000,000 Unlisted Shares held by Mr. Wang, Mr. Chen and Mr. Xiao Lin will be converted into H Shares,
respectively. Such conversion of Unlisted Shares into H Shares has been filed with the CSRC with the
notification issued by the CSRC on completion of the filing procedures published on July 3, 2023 and is still
subject to the approval by the Stock Exchange; and (ii) 40,671,930 Unlisted Shares and 6,250,000 Unlisted
Shares held by Mr. Wang and Mr. Xiao Lin will remain as Unlisted Shares, respectively.
(D) Immediately upon the completion of the Global Offering and assuming the options granted under the Pre-IPO
Incentive Scheme are not exercised, (i) 269,583,761 Unlisted Shares held by the other 203 Shareholders will
be converted into H Shares. Such Conversion of Unlisted Shares into H Shares has been filed with the CSRC
with the notification issued by the CSRC on completion of the filing procedures published on July 3, 2023 and
is still subject to the Listing approval by the Stock Exchange; and (ii) 11,093,050 Unlisted Shares held by the
other 90 Shareholders will remain as Unlisted Shares.
(E) Immediately upon the completion of the Global Offering and assuming the options granted under the Pre-IPO
Incentive Scheme are not exercised, Mr. Wang and Mr. Chen will hold 135,573,100 Shares and 30,949,306
Shares, representing approximately 17.38% and 3.97% of our issued Shares, respectively.
HISTORY AND DEVELOPMENT
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OVERVIEW
Who We Are
We are a vending machine operator in mainland China with a 7.6% market share in terms
of GMV in 2022. According to Frost & Sullivan, we ranked first in terms of both total
transaction GMV and network scale in the unmanned retail industry, primarily consisting of
vending machines, unmanned stores and unmanned shelves, in mainland China for each of
2019, 2020, 2021 and 2022. For over a decade since our founding, we have endeavored to
cultivate the unmanned retail industry, a sub-segment of the retail industry, in mainland China
and developed digitalization and operation capabilities, covering merchandise procurement,
logistics and inventory management. Leveraging these core capabilities, we have rapidly
established an extensive point-of-sale, or POS, network covering a wide range of consumption
scenarios, including schools, factories, office premises, public venues, transportation hubs and
restaurants. Through our expansive POS network, we are able to provide services to a variety
of participants along the unmanned retail industry value chain. As of June 30, 2023, we had
a network of 61,888 Ubox POSs for vending machines across 157 cities and 28 provincial-level
administrative regions in mainland China, 87.3% of which were concentrated in tier one, new
tier one and tier two cities.
Our Revenue Model
We strive to refine the traditional retail industry with technology and to further digitalize
and automate businesses along the retail value chain. We generated revenue during the Track
Record Period from the following business segments:
 Unmanned retail business. We leverage our nation-wide POS network and data-
driven operation system to digitalize and automate retail sales of FMCG in a wide
range of consumption scenarios through vending machines only. We derive revenue
from this segment primarily from retail sales of merchandise, including bottled
beverages, snacks, freshly brewed coffee and other beverages, through vending
machines at Ubox POSs. Our vending machines primarily include pick-and-go
cabinets, beverage vending machines, beverage and snack vending machines and
freshly brewed beverage vending machines;
 Advertising and system support services. We leverage our extensive and unique
consumer touch points to offer advertisers with digital advertising services that
drive consumer traffic and sales, primarily consisting of (i) display screen
advertising services, (ii) after-payment advertising services, (iii) merchandise
display advertising services and (iv) machine body advertising services. We derive
revenue from service fees charged to our advertising customers for digital
advertising services. In addition, we also provide operation system support to
Non-Ubox POS operators by allowing them to connect their machines to our
operation system, which enable them to access a range of functionalities, including
monitoring their machines’ operating status in real time and receiving restocking
alerts, restocking routes and schedule recommendations. We derive revenue from
fees charged to our Non-Ubox POS operators for using our operation system;
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 Merchandise wholesale. We offer merchandise wholesale primarily to merchandise
wholesale customers and certain Non-Ubox POS operators. We derive revenue from
this segment primarily from wholesale of merchandise;
 V ending machine sales and leases. We sell, lease and/or provide hardware support
services for vending machine to our Non-Ubox POS operators. We provide hardware
support services including machine installation and maintenance services. We derive
revenue from this segment primarily from sales and leases of vending machine
and/or fee charged for related hardware support services; and
 Others. We also offer other services, which mainly comprise mobile device
distribution services, karaoke booth services, karaoke booth sales and leases and
karaoke booth operation system support across mainland China.
Our Market Opportunity
We are well-positioned to capture the massive market opportunity driven by the fast
growth of the under-penetrated unmanned retail market in mainland China. According to Frost
& Sullivan, vending machines can effectively address the pain points of the traditional
fast-moving consumer goods, or FMCG, retail market, including high start-up costs and
escalating operation costs, and also provide consumers with convenient consumption
experiences. However, the unmanned retail market in mainland China is underpenetrated, with
an average of 0.8 vending machine per thousand population in 2022. As of December 31, 2022,
vending machines in mainland China covered only 8.8% of the country’s potentially available
offline sites, and such penetration rate of offline sites covered by vending machines is expected
to increase to 15.6% by 2027, indicating a vast development prospect for vending machines in
offline retail scenarios. Accordingly, the size of the vending machine retail market in mainland
China is expected to grow from RMB28.9 billion in 2022 to RMB73.9 billion in 2027, with a
CAGR of 20.7%.
Our Platform for Participants along the Industry Value Chain
We seek to capture this market opportunity as a core player by leveraging our strong
capabilities in digitalization and operation. We have created a platform where we provide value
to, and nurture symbiotic relationships among, a variety of participants along the unmanned
retail industry value chain. For consumers, we offer convenience, accessibility, excellent
multi-scenario user experiences, contactless purchase and a broad selection of trending
merchandise. For those who wish to start a vending machine business, we offer them an
opportunity to join us as POS partners, thereby allowing them to capitalize on their POS
resources and local expertise and tap into our digitalization and operation capabilities. The
POS partners are typically entitled to a share of the POSs’ transaction GMV subject to
deduction of their responsible fees and costs. For those who already operate vending machines,
we welcome them as our merchandise wholesale customers or Non-Ubox POS operators and
empower them to improve operational efficiency by providing them with access to our
digitalization and operation capabilities. For advertisers, we offer a vast and inter-connected
platform to reach consumers.
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The diagram below illustrates our platform and the interactions among its major
participants:
Residential Apartments Local Communities
Hotels
Transportation
Hubs
Sports
Venues
Shopping
CentersHospitalsTourist
Attractions Parks
Office
Premises
Factories
Restaurants
Schools
Consumers
 Convenience and accessibility
 Superior multi-scenario user experience
 Contactless purchase
 Broad selection of trending merchandise
1
POS
Partners
 Operation
empowerment
 Centralized
operation
system
 Operation and
maintenance
support
2
Merchandise Wholesale
Customers/
Non-Ubox POS Operators
 Procurement cost reduction
 Operation empowerment
 Operation system support
3
Advertisers
 Product
promotion and
sales
 Brand exposure
 Data analytics
capabilities for
immediate
decisions
4
Unmanned Retail
Business
Merchandise Wholesale Advertising and System
Support Services
A
C
D
Vending Machine
Sales and Leases
B
Notes: Others include offering (i) mobile device distribution services to mobile device resellers and (ii) karaoke
booth services, karaoke booth sales and leases and karaoke booth operation system support to karaoke
booth franchisees.
Digitalized Operation
We have been dedicated to digitalized operation since our inception. Based on industry
insights into and operational know-how of the unmanned retail industry that we have
accumulated over the years, we have continually upgraded vending machines and digitalized
our operation system to improve operational performance of our POSs and our operating
efficiency. We utilize massive multi-dimensional transaction data and our proprietary digital
management platform to digitalize, automate and refine core components across the retail value
chain. We use data analytics to select POS sites, determine and continuously optimize the
merchandise mixes tailored for each vending machine, and automatically generate
recommendations on restocking schedules and route plannings. Our algorithm and data
analytical capabilities coupled with the wealth of transaction data generated from our retail
platform bring insights to our operation, which in turn fuels our expansion and further
accelerates our accumulation of transaction data, forming a virtuous cycle. Leveraging our
strong digitalization capabilities, we have created a retail network for diversified consumption
scenarios, a nation-wide operation network and a data-driven operation system. It empowers
and optimizes various aspects of our operation, including:
 Merchandise mix optimization and procurement. Our operation system collects and
analyzes transaction data from our POS network to facilitate merchandise mix
optimization and procurement decision-making for each machine under different
consumption scenarios, maximizing potential sales of each POS.
 V ending machine restocking and maintenance. Our operation system uses algorithms
to enable centralized restocking scheduling and route planning, recommending
optimized restocking routes and schedules, ensuring efficient utilization of our
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transportation capacity, minimizing transportation and labor costs and maximizing
potential sales. Our operation system also closely tracks and monitors our vending
machines in real time, and automatically notifies responsible operation staff if any
malfunctioning is identified.
 POS site selection and optimization. We leverage our wealth of data and strong
analytical ability to select consumption scenarios and, within these scenarios,
pinpoint specific POS sites. Our operation system enables us to continuously
monitor and evaluate the performance of existing vending machines to guide our
future POS site selection.
 Inter-connected POS network with real-time data transmission. Equipped with
advanced telecommunication technology, each of our machines is connected to our
centralized operation system over the cloud operated by third-party cloud service
providers in mainland China, which enables our machines to instantly transmit data
across our system, and allows operators to constantly monitor its operating status in
real time to ensure optimal performance.
Operation Empowerment
Our strong operation capabilities have laid the foundation for our business expansion, and
have become one of our core competitive edges. Our bulk purchase has also given us a cost
advantage. We have built a nation-wide operation network and a data-driven operation system
that allow us to efficiently support our POS network, our POS partners and merchandise
wholesale customers. As of June 30, 2023, we operated 106 warehouses and 212 sorting
centers, covering 121 cities and 28 provincial-level administrative regions across mainland
China, and had entered into strategic cooperation with 13 well-known international FMCG
brands.
Flexible POS Management under Different Consumption Scenarios
For different consumption scenarios, we have strategically adopted different POS
management and expansion strategies to achieve efficient and rapid business expansion. We
generally adopt a direct operation model for POSs at strategically important sites, such as
transportation hubs and premises of key accounts (“ KAs”), including Deppon Logistics and
Xiaomi, which tend to have a large number of potential POS locations at a single site. As of
June 30, 2023, we cooperated with more than 40 KAs to operate POSs under the direct
operation model. By directly operating POSs in such premium locations, we not only achieve
a stable source of income, but also promote our brand awareness and presence. In other
locations, we engage POS partners to assist with sourcing and establishing POSs. This
facilitates the expansion of our POS network at relatively low costs and risks associated with
establishment and development of POSs, and better aligns our interest with those of the POS
partners by incentivizing them to capitalize on their expertise to source and establish more and
better POSs. In addition, our outstanding digitalization capability and unique business
expansion model together forge our “platform” capability, which allows us to transform from
operating a network of vending machines to a platform that provides services under a wide
range of consumption scenarios. See “Financial Information — Overview” for the revenue,
costs and expenses recognition of our direct operation and partner models.
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OUR ACHIEVEMENTS
Highlights of our major achievements as of June 30, 2023 are set forth as follows:
354.5 mm
5.4 bn
123.1%
Cumulative Distinguishable
Transacting Users
Cumulative Transaction Counts
>61,000
Ubox POSs in Our Network
Growth Rate of the Number of Ubox POSs
from January 1, 2019 to June 30, 2023
28
Provincial-level Coverage of
Our Ubox POS Network
Warehouses
106
Sorting Centers
212
Due to the COVID-19 pandemic, our revenue decreased from RMB2.7 billion in 2019 to
RMB1.9 billion in 2020. As the impact of COVID-19 relented and our new business operations
developed, our revenue in 2021 rebounded to RMB2.7 billion. Our revenue decreased from
RMB2.7 billion in 2021 to RMB2.5 billion in 2022 primarily due to the regional resurgence of
COVID-19 in mainland China. Despite that our revenue of vending machine sales and leases
in 2022 was adversely affected by the regional resurgences of COVID-19 in mainland China,
our revenue of unmanned retail business increased from RMB1,915.1 million in 2021 to
RMB1,974.7 million in 2022 primarily due to the expansion of our POS network driven by the
partner model. Our revenue from unmanned retail business increased by 8.0% from RMB913.4
million for the six months ended June 30, 2022 to RMB986.8 million for the six months ended
June 30, 2023, primarily due to the increase in our sales of FMCG through our POS network
as a result of the overall recovery of consumer traffic and business activities following the
relaxation of COVID-19 policies since December 2022.
OUR STRENGTHS
Well-positioned to capture the massive market opportunity in mainland China’s
Underpenetrated Unmanned Retail Industry with Significant Growth Potential
We are a vending machine operator in mainland China, with strong operation and
digitalization capabilities. According to Frost & Sullivan, we ranked first in terms of both total
transaction GMV and network scale in the unmanned retail industry in mainland China for each
of 2019, 2020, 2021 and 2022. The total transaction GMV from our unmanned retail business
amounted to approximately RMB1,724 million, RMB1,529 million, RMB2,142 million,
RMB2,210 million, RMB1,020 million and RMB1,126 million in 2019, 2020, 2021, 2022 and
the six months ended June 30, 2022 and 2023, respectively. During the Track Record Period,
the number of POSs in our network increased from 27,744 as of January 1, 2019 to 61,888 as
of June 30, 2023, representing a growth rate of 123.1%. The cumulative number of our
distinguishable transacting users reached 354.5 million as of June 30, 2023.
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According to Frost & Sullivan, vending machines provide a significant channel for offline
FMCG retail, as they can effectively address the pain points of the industry’s traditional
business model, including high start-up costs and escalating operating costs. However, the
unmanned retail market in mainland China is underpenetrated, with an average of 0.8 vending
machine per thousand population in 2022. As of December 31, 2022, the vending machines in
mainland China covered only 8.8% of the country’s potentially available sites, and such
penetration rate of offline sites covered by vending machines is expected to increase to 15.6%
by 2027, indicating a vast development prospect for vending machines in offline retail
scenarios. Accordingly, the size of the vending machine retail market in mainland China is
expected to grow from RMB28.9 billion in 2022 to RMB73.9 billion in 2027, with a CAGR
of 20.7%. We believe our industry-leading position and strong ability to digitalize operations
will enable us to further increase our market penetration and to expand into new consumption
scenarios.
In addition to capturing market opportunities to expand our business scale, we have led
the industry in innovation and developed numerous novel operation models, such as
customized sales and marketing strategies based on real-time data. We collaborate with internet
companies to build a diversified payment infrastructure supporting a wide variety of payment
methods including major payment methods such as Alipay and WeChat Pay, advanced
technologies such as biometric authentication payment, and customized scenario-specific
payment methods such as student card and staff card payment. We pay transaction fees to the
internet companies for the different payment methods. According to Frost & Sullivan, we
developed mainland China’s first vending machine that enables payment through biometric
authentication.
Powerful Digitalization Capabilities Driving Operational Excellence and Empowering
Customers and Business Partners
We have been dedicated to digital operations since our inception. As of June 30, 2023,
we had cumulatively 354.5 million distinguishable transacting users, with approximately
5.4 billion transactions completed. Leveraging our scale and IoT technology, we have enabled
automatic collection of a massive amount of transaction data in multiple dimensions, including
transaction frequency, location, timing and consumption preference.
We analyze these valuable transaction data with our proprietary data algorithms, and use
the insights we gain from the analytics to optimize economics of POSs and achieve operational
excellence on a continual basis. In any particular scenario, data analytics of, for example,
historical sales by SKU, sales speed and stock value informs our decisions in initial
merchandise mix and subsequent restocking strategies. We also continuously optimize the
accuracy of our algorithms and recommend the most popular and profitable merchandise for
any given vending machine in real time. In addition, our operation system allows us to conduct
optimized logistics operations by efficiently arranging regional restocking frequency and
routes, and merchandise redeployment. Our data-driven network is instrumental to enhancing
our merchandise turnover rate, gross margin and operating cash flows.
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Furthermore, our powerful digitalization capabilities based on massive transaction data
allow us to empower the other participants along the industry value chain on our platform,
including POS partners and Non-Ubox POS operators by streamlining their operations with
valuable insights into consumer behavior. We also provide advertisers with sales reports before
placing advertisements, and subsequent analytics reports on the effect of their advertisements,
allowing them to improve marketing efficiency.
Strong Operation Capabilities Underpinning Our Business Growth
We have built a nation-wide operation network and a data-driven operation system, which
underpin our business growth. Highlights of our operation capabilities include:
 Cost advantage. We purchase a large amount of merchandise and have strong
bargaining power. Our nation-wide POS network also presents an effective way for
merchandise suppliers to distribute and showcase their products, which further
increases our leverage to lower procurement costs.
 Nation-wide operation network. As of June 30, 2023, we operated 106 warehouses
and 212 sorting centers across 121 cities and 28 provincial-level administrative
regions in mainland China, covering a total of 61,888 Ubox POSs, and had entered
into strategic cooperation with 13 well-known international FMCG brands. As of the
same date, we had a fleet comprising 372 self-owned vehicles and approximately
900 operation personnel, among whom approximately 190 were our employees and
710 were third-party contractors. Our nation-wide operation network can effectively
support our rapid expansion of POS network across the country. Relying on our
data-driven operation network, we can realize efficient restocking, reduce stock-out
losses, and deliver merchandise to our customers timely, thereby reducing
transportation costs. In 2021, we introduced a shared warehouse initiative
leveraging our existing warehouses, which uses a high-density and low-inventory
“small warehouse” model to provide more efficient and flexible services to our
merchandise wholesale customers and help them reduce warehousing costs.
Leveraging our strong operation capabilities, our shared warehouse initiative targets
to reduce the merchandise wholesale customers’ staff costs and capital investment
in warehouse facilities through the provision of more comprehensive services,
including warehousing, operation system management, and hardware and software
support services, to the merchandise wholesale customers on top of merchandise
wholesale. Such services can be used by our merchandise wholesale customers who
participate in our shared warehouse initiative at no extra charge. We do not charge
our merchandise wholesale customers any rental fee for using the shared warehouse.
We believe this new initiative can help us attract new merchandise wholesale
customers and convert many of them into our POS partners.
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 Digitalized management and know-how. Our data-driven operation system can
predict demand from a specific POS for specific merchandise. Additionally, by
monitoring the status of our vending machines in real time, the system can
automatically propose restocking needs to operators as well as generate relevant
restocking schedules and route plans, reducing stock-out losses, minimizing sales
loss due to late restocking, and achieving operational and management efficiency.
The stock-out rate of our pick-and-go cabinets, being the number of SKUs sold out
before restocking as a percentage of the total number of SKUs after restocking,
decreased from 27.5% in 2019 to 8.6% for the six months ended June 30, 2023.
 Just-in-time capability. Our data-driven operation system allows us to predict
demand and timely arrange for procurement and logistics. For the six months ended
June 30, 2023, the average inventory retention days of our warehouses were
approximately 12 days. Through our shared warehouses, we further enable
merchandise wholesale customers to adopt a just-in-time inventory model by
tapping into our operation system, optimizing their inventory levels and increasing
their inventory turnover rates. In particular, for shared warehouses, we generally
only procure merchandise upon receiving orders from merchandise wholesale
customers, with an order-to-delivery time of approximately three days for the six
months ended June 30, 2023.
Flexible POS Management and Development Strategies Tailored to Different
Consumption Scenarios Fueling Rapid Expansion of POS Network
For different scenarios, we have strategically adopted different POS management and
development strategies to achieve efficient and rapid expansion. Currently, we predominantly
pursue the following models:
Direct Operation Model: We generally source, establish and manage POSs ourselves at
strategically important locations, such as schools and premises of KAs, which tend to have a
large number of potential POS sites at a single location. By directly operating POSs in such
premium locations, we not only achieve a stable source of income, but also promote our brand
awareness and presence. In addition, we had entered into strategic cooperation with various
leading internet companies, logistics service providers, automobile manufacturers and
companies from other industries, including Deppon Logistics and Xiaomi, with over 6,100
POSs deployed to their premises nationally as of June 30, 2023. We will continue to increase
the number of POSs under the direct operation model through strengthening our cooperation
with KAs and turning leading enterprises in industries with growth prospects into our KAs.
Partner Model: In other locations, we have actively enhanced the use of POS partners
since 2020 to maintain the flexibility to engage POS partners to assist with sourcing and
establishing, while we manage the operation of POSs. The partner model has transformed
traditional offline vending machine operation and revenue distribution models, which allows
us to rapidly expand our POS network at relatively low costs and risks associated with
establishment and operation of POSs. As a result, our POS operation and development
expenses as a percentage of revenue from unmanned retail business decreased from 37.3% in
2019 to 26.5% for the six months ended June 30, 2023. This partner model aligns our interest
with those of our POS partners, who are typically entitled to a share of the POSs’ transaction
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GMV subject to deduction of their responsible fees and costs, and therefore incentivized to
mobilize resources to set up vending machines at the best POSs. Our POS partners are
generally responsible for sourcing potential sites, the costs for developing POSs, occupancy
fees and utility costs. Since 2020, we have actively enhanced the use of POS partners to assist
us with sourcing and establishing POSs. At the same time, relying on our highly replicable
“platform” capability in unmanned retail operations, we have continuously sought to penetrate
into different consumption scenarios to fuel our growth.
Our POS management is flexible given that (i) our operation system allows the POS
partners to monitor the sales data and performance of the POSs in real time and provides them
with monthly reports in respect of their share of transaction GMV and the fees to be charged;
(ii) the POS partners can relocate or remove any of their POSs at any time with our technical
support; and (iii) the POS partners can give suggestions as to the merchandise mix in their
POSs, which will be taken into account by us in our decision to adjust and optimize the
merchandise mix when we arrange restocking for the vending machines.
Large POS Network in mainland China Creating Economies of Scale and Competitive
Edge
For more than a decade since our founding, we have endeavored to cultivate the
unmanned retail industry in mainland China, and built a large vending machine POS network,
occupying a large number of premium POSs with high foot traffic. According to Frost &
Sullivan, existing vending machine operators with long operating history have well-
established POS networks, which are difficult for new entrants to replicate within a short
period of time. As such, we believe our extensive POS network has formed a high competitive
barrier and cannot be easily replicated. According to Frost & Sullivan, we ranked first in terms
of network scale in the unmanned retail industry in mainland China for each of 2019, 2020,
2021 and 2022. As of June 30, 2023, we had a network of 61,888 Ubox POSs across 157 cities
and 28 provincial-level administrative regions in mainland China, 87.3% of which were
concentrated in tier one, new tier one and tier two cities, where populations are denser and
residents have higher levels of income and greater mobility.
Our POS network covers a wide range of consumption scenarios, including schools,
factories, restaurants, office premises, public venues and transportation hubs. As of December
31, 2022, our POS network covered 45% of mainland China’s top 40 airports by passenger
traffic, 22% of all university and college campuses, and 29% of top 80 shopping malls in terms
of sales. As of June 30, 2023, we had entered into strategic cooperation with various leading
companies, with over 6,100 POSs deployed to their premises nationally. During the Track
Record Period, the number of POSs in our network increased from 27,744 as of January 1, 2019
to 61,888 as of June 30, 2023, representing a growth rate of 123.1%.
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We believe that the breadth and depth of our nation-wide POS network benefit us with
significant economies of scale, as they enable us to significantly increase our operational
efficiency and profitability. Coupled with our deep understanding of different consumption
scenarios and first-mover advantage, we are well-positioned to continuously increase our
market share and to expand into new consumption scenarios.
Outstanding R&D Capabilities with Deep Industry Insights
We have continuously invested in research and development to further improve our
technological capabilities, and have acquired deep industry insights by collecting and
analyzing the massive amount of transaction data generated from our operations. We put
technologies including data analytics, visual recognition and IoT technologies into industry
applications, digitalizing, automating and refining our operation, and thereby significantly
enhancing our operational efficiency. We led the technological developments of the industry.
As early as 2015, we obtained the first patent of “Method for Communication between V ending
Machines and Industrial Computers,” which set the ground for the development of our vending
machines. We have since then leveraged real-time communication and data transmission
technologies to develop a set of systems, including remote control, information display,
advertising management and payment management on vending machines. Building upon these
systems, we further utilized data algorithm models to continuously enhance our operational
efficiency. As of the Latest Practicable Date, we had 197 registered patents in areas such as
structural designs and components in relation to vending machines, modules and components
for digital payment on vending machines and communication and restocking methods for
vending machines. As of June 30, 2023, our research and development team consisted of 75
personnel, the majority of whom had joined our Group for more than three years and held a
bachelor’s degree or above. Some of the key R&D innovations in various aspects of our
operations include:
 Application of advanced technologies on vending machines. We have continuously
enhanced our vending machines with technologies to meet the specific needs of a
diverse range of consumption scenarios. For example, we have developed a vending
machine payment system, which is able to accept a wide range of payment methods
and allows centrally controlled adjustment of payment methods accepted at each
machine. We have also developed pick-and-go cabinets, our generation 2.0 vending
machines. Equipped with advanced hardware technologies, structural design and
lighting, and the combined use of biometric authentication, credit assessment
algorithm and IoT technologies, these pick-and-go cabinets poise to revolutionize
unmanned retail by allowing consumers to open the door with biometric
authentication and simply pick up merchandise and leave, leaving authentication
and payment to technology and thereby creating a new, hassle-free consumption
experience.
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 Data analytical capability driving operational excellence. We have developed
algorithm models for determining the optimal POS sites, merchandise mix and
inventory level at each of our machines, as well as restocking routes and schedules.
We have also continuously trained and enhanced the accuracy of our algorithms with
the massive volume of transaction data generated from our operation. Leveraging
our data processing capabilities, our operation system is able to precisely guide the
operation of each of our machines. For the six months ended June 30, 2023, each of
our logistics staff restocked a monthly average of approximately 41,200 units of
merchandise.
 An inter-connected network of POSs forming diversified advertising media. With the
inter-connectivity of our nation-wide multi-scenario POS network, we have been
able to customize each machine with individualized features. By harvesting
transaction data accumulated from our POS network, we are able to devise and
implement targeted marketing campaigns through each of our machines. For
example, through our operation system, we can centrally adjust the display of, and
offer promotional discounts, at each machine during any designated period to appeal
to target demographics. This allows our advertising customers to precisely, flexibly
and timely implement a wide variety of marketing initiatives across the nation,
including product launches and promotional campaigns.
Management Team with Rich Industry Experience
Our management team introduced the concept of data-driven unmanned retail to the
vending machine retail industry in mainland China. Our founder, Mr. Wang, is experienced in
the field of research and development of software and unmanned retail platforms. He applied
the power of the internet to traditional retail and transformed it into an inter-connected and
data-driven process with our centralized operation system connecting our vending machines
through the cloud operated by third-party cloud service providers. Prior to establishing our
Group, Mr. Wang served as a senior vice president of SINA.com Technology (China) Co., Ltd.,
and had invested in a number of industry-leading companies as an independent angel investor.
We have a core management team that is stable, innovative and deeply committed to the
industry. As of June 30, 2023, the majority of our core management team members had more
than ten years of experience in the unmanned retail industry, and had been with our Group for
more than five years. Our middle and senior management teams also have extensive experience
in a variety of industries, including information and technology, logistics services and business
management, bringing a wealth of knowledge and insights into our operation. Our management
team guides our strategic development with innovative ideas and their unique and profound
insights into the industry. The team continuously cultivates breakthroughs in various aspects
including business models, payment channels, advertising and system support services and
operation management, with a view to achieving differentiated development.
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Backed by Renowned Strategic Investors
Renowned strategic investors have invested in and supported our business development,
creating strong synergies with our business with respect to technology and business
development, and have played an important role in boosting our influence in the industry.
 Technological cooperation. We cooperate with our strategic investors to apply AI,
payment and other advanced technologies to facilitate our development and enhance
the feasibility of some of our business initiatives. For example, we have leveraged
the technological strengths of our strategic investors, such as biometric
authentication technology, AI technology and motion sensing technology, to boost
the development of unmanned retail such as pick-and-go cabinets.
 Business development cooperation. We cooperate with our strategic investors to gain
access to potentially available sites at their commercial properties and tap into their
consumer traffic. While this allows us to rapidly expand our POS network, it also
enriches consumer experience and add value to the properties, creating a win-win
scenario.
OUR STRATEGIES
Further Expand Our POS Network
We plan to further increase our POS penetration in tier one, new tier one and tier two
cities. According to Frost & Sullivan, operation of vending machines is well suited for the
relatively fragmented spaces in these cities, as land is becoming increasingly scarce and rent
increasingly high. In addition, we plan to gradually tap into tier three cities and below with
higher economic growth rates.
The total capital expenditure for the above strategy in the two financial years ending
December 31, 2024 is expected to be approximately HK$199.5 million (equivalent to
approximately RMB183.3 million), of which HK$131.9 million (equivalent to approximately
RMB121.1 million) is expected to be applied to new POSs of pick-and-go cabinets,
approximately HK$19.5 million (equivalent to approximately RMB17.9 million) is expected to
be applied to new POSs of beverage vending machines, approximately HK$9.0 million
(equivalent to approximately RMB8.3 million) is expected to be applied to new POSs of
beverage and snack vending machines, and approximately HK$39.1 million (equivalent to
approximately RMB35.9 million) is expected to be applied to new POSs of freshly brewed
beverage vending machines. The total capital expenditure is estimated based on the expected
number of new POSs to be opened and the estimated costs of setting up new POSs of different
types of vending machines. We intend to apply approximately 80.0% or HK$124.8 million
(equivalent to approximately RMB114.6 million) of the net proceeds from the Global Offering
to finance this strategy. The remainder will be funded by our internal resources and/or bank
borrowings. See “Future Plans and Use of Proceeds — Use of Proceeds” for details.
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As we expand the scale of our POS network coverage and penetration, we believe we will
be able to further enhance economies of scale and improve operational efficiency and optimize
profitability.
Continuously Invest in and Enhance Our Services Related Technologies
We will continue to invest in R&D to enhance our technologies relating to our services.
For example, we will focus our resources on furthering data analytics capability, optimizing
algorithms, and expanding the application of data in our operations. We will endeavor to
develop and introduce AI recognition technology and back-end algorithms related to unmanned
retailing with vending machines to improve customer experience and fuel our business
expansion.
Further, we will continuously upgrade our vending machines. For example, we will
further enhance the structural design of our vending machines to increase their durability,
versatility, usability and energy efficiency. We will also continue to customize our vending
machines to cater to a wider range of consumption scenarios, tailored to varying needs from
consumers, and further enhancing the breadth and depth of our POS network.
We also plan to continuously optimize our operation systems for our business partners,
and further increase our overall operational efficiency through hardware and software
upgrades.
The total capital expenditure for this strategy in the two financial years ending December
31, 2024 is expected to be approximately HK$13.8 million (equivalent to approximately
RMB12.7 million), of which approximately HK$3.6 million (equivalent to approximately
RMB3.3 million) is expected to be applied to hardware upgrade and approximately HK$10.2
million (equivalent to approximately RMB9.4 million) is expected to be applied to software
enhancement. The total capital expenditure is estimated based on the expected development of
the Group’s R&D projects. We intend to apply approximately 5.5% or HK$8.5 million
(equivalent to approximately RMB7.8 million) of the net proceeds from the Global Offering to
finance this strategy. The remainder will be funded by our internal resources and/or bank
borrowings. See “Future Plans and Use of Proceeds — Use of Proceeds” for details.
Further Improve Operation Infrastructure and Enhance Operational Efficiency
We plan to further improve the efficiency of our operations to save costs and to improve
consumer experience. We believe that expansion in scale will further enhance our bargaining
power and allow us to develop relationships with a wider variety of suppliers to improve our
procurement efficiency in the supply chain. With the further expansion and enhancement of our
POS coverage and penetration rate, we will further upgrade our warehousing system and
equipment and therefore the overall management of our inventory. We will continue to enhance
our operation capability by promoting shared warehouses. We expect our shared warehouses to
attract more merchandise wholesale customers, who may become our POS partners. More
shared warehouses can also enhance the economies of scale by enabling more flexible storage
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and transportation of merchandise. We will also continuously increase the level of
digitalization and automation of shared warehouses to enable more unmanned operation,
including automatic placing of procurement orders.
We will further improve our inventory turnover rates. At the same time, we will constantly
adjust our restocking routes planning according to fluctuations of demand, inventory levels,
and location of our warehouses. We will expand our logistics team and enhance our restocking
efficiency through unified scheduling. In addition, we will continue to increase the level of
automation of our shared warehouses and thereby offer more efficient and flexible services to
merchandise wholesale customers. By fostering deep integration of the operation of our
merchandise wholesale customers with our operation system, we will strive to convert more
merchandise wholesale customers into our POS partners.
The total capital expenditure for the above strategy in the two financial years ending
December 31, 2024 is expected to be approximately HK$8.3 million (equivalent to
approximately RMB7.6 million), of which approximately HK$5.8 million (equivalent to
approximately RMB5.3 million) is expected to be applied to rental expenses, approximately
HK$0.8 million (equivalent to approximately RMB0.7 million) is expected to be applied to
renovation costs, and approximately HK$1.7 million (equivalent to approximately RMB1.6
million) is expected to be applied to staff costs. The total capital expenditure is estimated with
reference to the prevailing market rates. We intend to apply approximately 5.0% or HK$7.8
million (equivalent to approximately RMB7.2 million) of the net proceeds from the Global
Offering to finance this strategy. The remainder will be funded by our internal resources and/or
bank borrowings. See “Future Plans and Use of Proceeds — Use of Proceeds” for details.
Attract, Nurture and Retain Talent
In order to support future expansion, we intend to continue to attract, nurture and retain
talent. We plan to attract talent with our competitive remuneration and vibrant corporate
culture. In particular, we target to recruit talent from the internet and innovative economy
sectors to aid our innovation and development. The total capital expenditure for this strategy
in the two financial years ending December 31, 2024 is expected to be approximately HK$2.5
million (equivalent to approximately RMB2.3 million), which is expected to be applied to
recruitment of talents in algorithm, software and hardware development. The total capital
expenditure is estimated with reference to the prevailing market rates. We intend to apply
approximately 1.5% or HK$2.3 million (equivalent to approximately RMB2.1 million) of the
net proceeds from the Global Offering to finance this strategy. The remainder will be funded
by our internal resources and/or bank borrowings. See “Future Plans and Use of Proceeds —
Use of Proceeds” for details. In addition, we plan to further improve our employee training
programs through both in-house training as well as external resources to upskill our employees
and help realize their personal growth and professional advancements.
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We will also continue to provide career advancement opportunities to our employees. We
believe that our internet consciousness, innovative spirit and flat management structure will
continue to drive our growth. Our competitive remuneration and employee benefits, and
smooth promotion mechanism will stimulate the productivity of our employees, allowing us to
maintain our position in the industry.
OUR BUSINESS MODEL
Leveraging our digitalization and operation capabilities, we have created a platform
where we provide value to, and nurture symbiotic relationships among, a variety of participants
along the unmanned retail value chain. We offer consumers with easy access to a broad
selection of merchandise, and empower POS partners, merchandise wholesale customers,
Non-Ubox POS operators, advertisers and other participants of our unmanned retail platform.
As of June 30, 2023, we had a network of 61,888 Ubox POSs. Leveraging our vast network of
POSs and data analytical capabilities, we strive to refine the traditional retail industry by
establishing a technology-based retail platform, which digitalizes and automates core
components across the retail value chain.
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The table below sets forth our revenue, gross profit and gross profit margin by business segment during the Track Record Period:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited) (Unaudited)
Unmanned retail business 1,539,891 56.5 683,467 44.4 1,336,763 70.3 557,516 41.7 1,915,116 71.6 888,056 46.4 1,974,657 78.4 891,398 45.1 913,388 79 .9 413,543 45.3 986,795 78.8 444,458 45.0
Advertising and system support
services 540,600 19.8 488,280 90.3 219,561 11.5 218,812 99.7 243,120 9.1 184,411 75.9 194,271 7.7 160,225 82.5 100,074 8.8 87,918 87.9 56,450 4.5 55,7 69 98.8
Digital advertising services 518,874 19.0 466,634 89.9 203,095 10.6 202,365 99.6 224,706 8.4 166,431 74.1 176,216 7.0 142,233 80.7 91,314 8.0 79,180 86.7 50,415 4.0 49,764 98.7
Operation system support 21,726 0.8 21,646 99.6 16,466 0.9 16,447 99.9 18,414 0.7 17,980 97.6 18,055 0.7 17,992 99.7 8,760 0.8 8,738 99.7 6,035 0.5 6,00 5 99.5
Merchandise wholesale 297,900 10.9 14,669 4.9 115,485 6.1 4,029 3.5 40,516 1.5 2,965 7.3 131,795 5.2 5,225 4.0 54,103 4.7 2,834 5.2 110,685 8.8 3,990 3. 6
V ending machine sales and
leases 91,485 3.4 15,147 16.6 47,040 2.5 (32,224) (68.5) 44,241 1.7 13,887 31.4 33,840 1.3 10,792 31.9 16,149 1.4 2,981 18.5 11,712 0.9 3,165 27.0
Others 257,585 9.4 127,633 49.5 183,161 9.6 (189,572) (103.5) 433,244 16.1 11,805 2.7 184,661 7.4 9,096 4.9 59,376 5.2 2,961 5.0 87,036 7.0 10,594 12.2
Total 2,727,461 100.0 1,329,196 48.7 1,902,010 100.0 558,561 29.4 2,676,237 100.0 1,101,124 41.1 2,519,224 100.0 1,076,736 42.7 1,143,090 100.0 51 0,237 44.6 1,252,678 100.0 517,976 41.3
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Value Propositions to Key Participants of Our Unmanned Retail Platform
Leveraging our technology-based retail platform, we provide consumers with excellent
consumption experience and empower POS partners, merchandise wholesale customers or
Non-Ubox POS operators, advertisers and other participants of our unmanned retail platform.
V alue Propositions to Consumers
 Convenience and accessibility. Our expansive POS network covers a wide range of
consumption scenarios, including schools, factories, restaurants, office premises,
public venues and transportation hubs. Our POSs are also strategically located at
easily accessible locations. With its wide coverage and high accessibility, our POS
network allows consumers easy access to our broad selection of merchandise. See
“— Our POS Network.”
 Excellent consumption experience. Our vending machines significantly reduce
manual efforts in purchasing. For instance, our vending machines support popular
payment methods including biometric authentication to allow swift and frictionless
transactions. Most of our vending machines are equipped with touch screens that
support interactive content, thereby elevating the overall consumption experience.
In particular, our pick-and-go cabinet allows consumers to open the door with
biometric authentication and just pick up the merchandise and leave, thereby
reforming traditional automated retailing mechanism which requires consumers to
pay before they collect the merchandise. See “— Our Product and Service Offerings
— Unmanned Retail Business — Our V ending Machines — Pick-and-go Cabinet.”
 Contactless purchase. Our vending machines offer consumers with contactless
purchase. With no human interaction required in the process, it significantly
increases the efficiency and availability in terms of service time and location.
Moreover, by reducing face-to-face contact, it also represents a safer and more
hygienic way of purchasing, which helps it gain an advantage at the time of the
COVID-19 pandemic.
 Broad selection of trending products. As of June 30, 2023, we offered over 64,000
SKUs of quality products, including beverages, instant meals and casual snacks,
through vending machines under our unmanned retail business. We regularly update
our product offerings to satisfy consumers’ changing demands.
V alue Propositions to POS Partners
Under our partner model, we provide our POS partners with an opportunity and resources
to start a POS operation business. Our POS partners are responsible for sourcing potential sites,
bear the costs for developing POSs, occupancy fees and utility costs, and are generally entitled
to a share of the transaction GMV generated from the vending machines, subject to deduction
of their responsible costs and expenses. Our model allows POS partners to capitalize on their
POS resources and local expertise while tapping into our digitalization and operation
capabilities. See “— Our POS Network — Our POS Partners.”
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V alue Propositions to Merchandise Wholesale Customers/Non-Ubox POS Operators
We empower merchandise wholesale customers with our digitalization and operation
capabilities. Due to the relatively small scale of operation, it is not cost-efficient for our
merchandise wholesale customers to establish and maintain their own operation network.
Utilizing our nation-wide data-driven operation network, bulk purchase, and warehouses and
storage facilities across mainland China, our merchandise wholesale customers are able to
enjoy cost-efficient and flexible procurement. We also streamline the operation of our
merchandise wholesale customers who are also Non-Ubox POS operators, providing them with
our vending machines, access to our operation system, and hardware supports. See “— Our
Product and Service Offerings — Advertising and System Support Services”, “— Our Product
and Service Offerings — Merchandise Wholesale” and “— Our Product and Service Offerings
— V ending Machine Sales and Leases.”
V alue Propositions to Advertisers
We create value for advertisers by providing them with a vast and engaging platform to
reach consumers. Our extensive POS network allows advertisers to physically interact with
consumers across mainland China. With our deep insights into consumers’ behavior and data
analytical capabilities, we can help advertisers improve accuracy and efficiency in reaching
their target consumers by precisely placing their advertisements on POSs at specific
consumption scenarios that are most relevant to the target consumers. See “— Our Product and
Service Offerings — Advertising and System Support Services.”
OUR TECHNOLOGY-BASED RETAIL PLATFORM
Leveraging our digitalization capabilities, we strive to construct a technology-based retail
platform. We digitalize, automate and refine each component of our operation with
technologies, including data analytics, visual identification and IoT technologies, and have
constructed a centralized operation system, which significantly enhances our operational
efficiency. We also “platformize” our business model by allowing a wide range of participants
in the vending machine industry to tap into our operation system, thereby digitalizing and
streamlining workflows across the retail value chain.
V ending machines at our POSs are the bedrock of our retail platform. Utilizing a range
of technologies, we design and develop, and engage third-party manufacturers to produce, a
range of vending machines. We applied communication technology in vending machines and
developed the first prototype vending machine in 2011. This innovation enables us to realize
remote and real-time management of our vending machines, which essentially transforms
traditional vending machines into an inter-connected network of automated retail outlets. Since
then, we have developed a comprehensive line up of vending machines, including the
pick-and-go cabinet ( у፯у՟஬ᓞ), the beverage vending machine (ਯ஬ዚ), the
beverage and snack vending machine (ਯ஬ዚ) and the freshly brewed beverage
vending machine (ਯ஬ዚ), each of which is customized to meet consumers’ diverse
needs under different consumption scenarios. Our vending machines are characterized by the
ability to connect and share operational data with a back-end operation system. This would
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enable the use of a wide range of technologies to streamline operation. Our operation system
and vending machines have formed an inter-connected network that is able to operate without
manual intervention or reconciliation in certain material aspects. For example, coupled with
visual recognition technologies applied in our vending machines, our operation system can
monitor the machine inventory level in real time. Further, by utilizing data analytics and
proprietary algorithms, our operation system can make use of the transaction data collected by
our vending machines, such as sales and inventory levels of merchandise, to monitor and
evaluate the performance of vending machines, identify optimal sites for Ubox POSs,
recommend the most popular and profitable merchandise at each machine in real time,
constantly adjust merchandise mix recommendation, generate restocking alerts, formulate
restocking schedules and routing plans, and generate maintenance requests to our operation
staff. As of the Latest Practicable Date, all of our self-operated machines under our direct
operation model and partner model were connected to our operation system. For details, see
“— Our Product and Service Offerings — Unmanned Retail Business — Our V ending
Machines.”
With our centralized operation system, we streamline our operation into standardized
components, and significantly digitalize and automate each component. Our technologies and
algorithms can guide and streamline human decision-making in various aspects of our
operations, including site selection, merchandise mix optimization and procurement,
warehouse inventory management, vending machine restocking, payment processing and
machine maintenance. The following diagram illustrates how advanced technologies empower
our business operations:
Customized SKU
optimization and
management
Data and Feedback Enabling us
to Enhance Data Analytics
and Machine Learning
Real-time
operation control
Customized
advertisements
display
Our
Technologies
Machine-
level
Operation
Machine
Maintenance
Site
Selection
 & Optimization
Payment
Processing
Automatic
Restocking Inventory
Management
Procurement
Business
Operation
Decision-making
Data andFeedback
Data Analytics
ProprietaryAlgorithms
Visual Identification
IoT
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Our Technologies
Our digitalization capabilities lay the foundation of our business, and distinguish us from
our competitors. The following technologies assist us in creating our business model:
 Data analytics and proprietary algorithms. We utilize our extensive data and
proprietary algorithms throughout our entire business process, from site selection
and merchandise mix optimization and procurement to vending machine restocking
and maintenance. Leveraging data analytics and proprietary algorithms, our
operation system can automatically evaluate the performance of vending machines,
identify optimal sites for Ubox POSs, recommend the most popular and profitable
merchandise at each machine in real time, constantly adjust merchandise mix
recommendation, monitor machine inventory level, generating restocking alerts,
generate maintenance requests to our operation staff, formulate the optimal
restocking schedules and routing plans, enabling efficient restocking without
manual intervention or reconciliation, and reducing our overall operation cost, in
particular, stock-out losses and labor cost.
 Visual recognition. We use built-in visual recognition cameras in our pick-and-go
cabinets to detect the movement of merchandise, and enable uniform and
standardized management of machine inventory. Our visual recognition function
also enables consumers to open the door of our pick-and-go cabinets with biometric
authentication and simply pick up merchandise and leave, creating a new,
hassle-free consumption experience.
 IoT technologies. We utilize IoT technologies, which enable our machines to connect
and exchange data with other machines and our system, to create an inter-connected
network of our vending machines. Each of our vending machines is embedded with
sensors and software for the purpose of connecting with our centralized operation
system over the internet. Our IoT network can connect up to a million POSs and
support up to 1,000 consumer requests per second. The inter-connection among
machines allows us to monitor and manage multiple machines at the same time.
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Our Business Operation
We employ various technologies to empower key components of our business operations:
 POS Site Selection and Optimization. We use our proprietary site selection algorithm
to aid strategic site selection for Ubox POSs. We leverage our wealth of data and
strong analytical ability to select consumption scenarios and, within these scenarios,
pinpoint specific POS sites. Our operation system enables us to continuously
monitor and evaluate the performance of existing vending machines in different
consumption scenarios and identify the optimal sites for Ubox POSs. The algorithm
takes into account parameters such as availability of consumption scenarios,
features of different types of machines, foot traffic, consumers’ spending power,
operating results at similar sites and distance from our warehouses and other POSs.
We also use smart heat maps offered by third-party service providers to visualize
foot traffic, facilitating more intuitive decision-making. See “— Our POS Network”
for our site selection criteria. We continuously evaluate the effectiveness of our site
selection strategy by analyzing the operational performance of existing vending
machines.
 Merchandise Mix Optimization and Procurement. Our centralized operation system
collects and analyzes transaction data from our POS network to facilitate
merchandise mix optimization and procurement decision-making. Leveraging our
wealth of data, our system designs the initial merchandise mix for the specific
consumption scenarios. By utilizing multi-dimensional data, our centralized
operation system can recommend the most popular and profitable merchandise at
each machine in real time, and constantly adjust the merchandise mix
recommendation accordingly. Our system is also able to monitor the inventory level
of each POS and automatically generate restocking alerts without manual
intervention or reconciliation of transaction data at the operation system level,
facilitating the optimization of restocking scheduling and operational efficiency.
The screenshot below sets forth an example of real-time data and analytics of a
given item of merchandise on our operation system:
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 Payment Processing. Our vending machines are also equipped with payment devices
that can accept a wide variety of payment methods, including major payment
methods such as Alipay and WeChat Pay, advanced technologies such as biometric
authentication payment, and customized scenario-specific payment methods such as
student card, staff card payment and cash. Electronic payment and biometric
authentication are widely used in mainland China. In the rare cases where customers
do not have electronic wallets and/or registration of biometric authentication, they
can pay with cash at some of our vending machines. As of June 30, 2023,
approximately 1.9% of our vending machines supported cash payment. Below is a
picture of our pick-and-go cabinet supporting biometric authentication:
 V ending Machine Restocking. With data collected from each vending machine in our
network, our operation system uses algorithms to enable centralized restocking
scheduling and route planning, recommending the optimized time and sequence for
restocking and most efficient route for delivery. It takes into account parameters
including stock level, road traffic, type of merchandise and delivery capacity. It then
sends notifications to our operation team to ensure efficient utilization of our
transportation capacity, thereby minimizing transportation and labor costs and
maximizing potential sales. The screenshots below set forth an example of
restocking schedule and route recommendation generated by our operation system:
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 Warehouse Inventory Management. Our centralized operation system allows us to
establish our nation-wide warehouse network. Our operation system facilitates
seamless communications across the retail platform, and in real time feeds
restocking requests from the POSs to the warehouse inventory management module,
which in turn arranges for procurement and restocking via our operation network.
For details, see “— Logistics and Inventory Management — Inventory
Management.” The screenshot below sets forth an example of real-time warehouse
inventory information on our operation system:
 Machine Maintenance. We leverage our centralized operation system to closely
track and monitor the operation status of our vending machines in real time. In case
any malfunction is identified, our operation system will send notifications to the
responsible operation staff, who will timely repair the vending machines. This is
able to reduce sales loss during the malfunction hours by accelerating maintenance.
The screenshot below sets forth a maintenance request generated on our operation
system:
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Machine-level Operation
Premised on data analytics and IoT technologies, we have established a data-driven
machine-level operation and management module. Leveraging our wealth of data and deep
understanding of consumer behavior, we create the initial merchandise mix by categorizing
consumption scenarios into finer subsets through multi-level classification. Based on the initial
merchandise mix, our centralized operation system then constantly uses multi-dimensional data
collected from the vending machines to optimize the accuracy of our algorithms, SKU
recommendation algorithm and SKU replacement algorithm, and recommend the most popular
and profitable merchandise for the vending machines in real time.
We further develop customized promotion strategies for different vending machines. For
example, based on specific needs of a particular scenario, our centralized operation system
allows swift configuration of the relevant vending machines to apply discounts to certain
categories of merchandise. The screenshot below sets forth the interface for customizing
promotion strategy on our operation system:
Our operation system customizes each machine with individualized features. For
example, in addition to customizing the content shown on the screens of each of the vending
machines, we can customize the merchandise displayed on machine racks based on the
merchandise mix recommendation generated by our centralized operation system. Our
machines can also be customized for the consumption scenario and/or marketing campaign at
any particular time and location, such as providing discount to staff members who purchase
merchandise with staff cards after office hours at our machines located in their office. We
constantly upgrade our system and adjust technical parameters so that our system is adaptable
to all vending machines in our network.
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We monitor the sales and stock level status of each POS in real time. We actively analyze
these operating data and have developed multi-dimensional standards to evaluate the
performance of each machine. The screenshot below sets forth real-time status of a POS as
shown in our operation system:
OUR POS NETWORK
Our vast network of POSs is the bedrock of our retail platform. It comprises the
following:
 Ubox POSs, which are POSs operated by us under the direct operation and the
partner models. We source and establish POSs ourselves under the direct operation
model, and engage POS partners to do so under the partner model. Through Ubox
POSs, we sell merchandise to consumers through vending machines in our
unmanned retail business. See “— Our Product and Service Offerings — Unmanned
Retail Business.”
 Non-Ubox POSs, which are POSs connected to our operation system and operated
by Non-Ubox POS operators. We provide our vending machines, the related
hardware support services and operation system support to Non-Ubox POS
operators. We also supply vending merchandise to some of them on a wholesale
basis. See “— Our Product and Service Offerings — Merchandise Wholesale”,
“— Our Product and Service Offerings — V ending Machine Sales and Leases” and
“— Our Product and Service Offerings — Advertising and System Support Services
— Operation System Support.”
In addition, we provide digital advertising services through both Ubox POSs and
Non-Ubox POSs. See “— Our Product and Service Offerings — Advertising and System
Support Services — Digital Advertising Services.”
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As of June 30, 2023, we had a POS network of 61,888 Ubox POSs, covering 157 cities
and 28 provincial-level administrative regions across mainland China. The map below
illustrates the geographical distribution of these POSs as of the same date:
The table below sets forth the breakdown of our Ubox POS coverage by city tier as of the
dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Ubox POSs by city tier
Tier one cities 16,625 26.2 15,836 27.1 21,572 25.3 19,929 30.1 20,281 28.0 19,611 31.7
New tier one cities 21,462 33.8 17,725 30.3 30,580 35.9 23,077 34.8 24,335 33.6 21,365 34.5
Tier two cities 15,838 25.0 15,228 26.0 22,097 26.0 14,405 21.7 18,052 25.0 13,031 21.1
Tier three cities 6,420 10.1 5,718 9.8 7,042 8.3 5,820 8.8 6,419 8.9 5,177 8.4
Others 3,106 4.9 3,960 6.8 3,848 4.5 3,001 4.6 3,232 4.5 2,704 4.3
Total 63,451 100.0 58,467 100.0 85,139 100.0 66,232 100.0 72,319 100.0 61,888 100.0
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During the Track Record Period, our POSs were mainly located in relatively developed
regions in mainland China, including the Y angtze River Delta Region, Pearl River Delta
Region, Beijing-Tianjin-Hebei Region and provincial capitals. In particular, as of December
31, 2019, 2020, 2021, 2022 and June 30, 2023, 26.2%, 27.1%, 25.3%, 30.1% and 31.7% of our
POSs were located in tier one cities, and 33.8%, 30.3%, 35.9%, 34.8% and 34.5% were located
in new tier one cities, respectively. With denser population, higher level of income and greater
mobility, cities of higher tiers generally generate higher sales per vending machine. Also, due
to the higher density of POSs in cities of higher tiers, we are able to conduct more efficient
restocking and therefore achieve higher operating efficiency.
Our POS network covers a wide range of consumption scenarios. The following table sets
forth the distribution of our Ubox POSs by consumption scenario as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Ubox POS by
consumption scenario
Schools 14,611 23.0 18,195 31.1 19,738 23.2 18,706 28.2 19,372 26.8 17,572 28.4
Factories 16,197 25.5 13,528 23.1 17,695 20.8 16,998 25.7 17,401 24.1 16,493 26.6
Office premises 12,797 20.2 11,059 18.9 14,113 16.6 13,876 21.0 14,453 20.0 13,342 21.6
Public venues
(1) 11,321 17.8 9,063 15.5 9,877 11.6 8,751 13.2 9,818 13.6 8,122 13.1
Transportation hubs 3,884 6.1 3,773 6.5 3,587 4.2 2,265 3.4 3,099 4.3 2,281 3.7
Restaurants
(2) 183 0.3 129 0.2 16,490 19.4 1,636 2.5 4,308 6.0 829 1.3
Others (3) 4,458 7.0 2,720 4.7 3,639 4.3 4,000 6.0 3,868 5.3 3,249 5.2
Total 63,451 100.0 58,467 100.0 85,139 100.0 66,232 100.0 72,319 100.0 61,888 100.0
Notes:
1. Public venues include, among others, tourist attractions, parks, hospitals, shopping centers and sports
venues.
2. We actively enhanced our collaborations with restaurant model partners to deploy pick-and-go cabinets
to restaurant premises in 2021 and achieved substantial scale during that year. The number of POSs in
restaurants decreased in 2022 primarily due to the regional resurgence of COVID-19 in mainland China
in the same period that affected consumer traffic in certain consumption scenarios, especially
restaurants.
3. Others primarily include hotels, local communities and residential apartments.
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Substantially all of our POSs are located at high foot traffic sites including schools,
factories, restaurants, office premises, public venues and transportation hubs. We deploy
different machines based on the requirements and characteristics of the specific consumption
scenarios. For instance, our pick-and-go cabinet can accommodate merchandise of various
dimensions, and is designed for indoor locations with more diversified consumption scenarios.
Similarly, we typically place our vending machines, which are designed to be more durable, at
sites with high demand for beverages and high transaction frequency. Also, most of our freshly
brewed beverage vending machines are placed on office premises where there is higher demand
for freshly brewed coffee or other freshly brewed beverages.
The table below sets forth the movement of our Ubox POSs for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
Number of Ubox POSs at the
beginning of the period (A)
Ubox POS 27,744 63,451 58,467 85,139 85,139 66,232
– Direct operation model 26,931 52,562 18,393 13,659 13,659 12,472
– Partner model 813 10,889 40,074 71,480 71,480 53,760
Number of Ubox POSs opened
during the period (B1)
Ubox POS 41,413 10,629 40,847 17,460 10,826 7,262
– Direct operation model 34,226 6,822 3,329 2,387 1,979 903
– Partner model 7,187 3,807 37,518 15,073 8,847 6,359
Number of Ubox POSs closed
during the period (B2)
Ubox POS (8,897) (15,784) (14,040) (36,035) (23,631) (11,252)
– Direct operation model (8,754) (12,350) (5,099) (4,041) (2,215) (2,293)
– Partner model (143) (3,434) (8,941) (31,994) (21,416) (8,959)
Net increase/(decrease) in the
number of Ubox POSs during
the period (B1+B2)
Ubox POS 32,516 (5,155) 26,807 (18,575) (12,805) (3,990)
– Direct operation model 25,472 (5,528) (1,770) (1,654) (236) (1,390)
– Partner model 7,044 373 28,577 (16,921) (12,569) (2,600)
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For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
Net increase/(decrease) in the
number of Ubox POSs due to
change in operation model (C)
Ubox POS 3,191 171 (135) (332) (15) (354)
– Direct operation model 159 (28,641) (2,964) 467 60 107
– Partner model 3,032 28,812 2,829 (799) (75) (461)
Number of Ubox POSs at the
end of the period
(A+B1+B2+C)
Ubox POS 63,451 58,467 85,139 66,232 72,319 61,888
– Direct operation model 52,562 18,393 13,659 12,472 13,483 11,189
– Partner model 10,889 40,074 71,480 53,760 58,836 50,699
Our POS network rapidly expanded in 2019, and slightly shrank in 2020 primarily as a
result of the COVID-19 pandemic. Our POS network resumed rapid expansion in 2021
primarily due to the increase in the number of POSs placed at restaurants in the second half
of 2021. Since 2020, we have shifted our focus from the direct operation model to the partner
model, which led to the net decrease in the number of POSs under the direct operation model
and net increase in the number of POSs under the partner model for 2020 and 2021. The
number of POSs, especially those under the partner model, decreased in 2022 primarily due to
the regional resurgence of COVID-19 in mainland China in the same period that affected
consumer traffic and sales activities in certain consumption scenarios. In particular, the
restrictive measures taken by local governments significantly reduced opening hours and
consumer traffic of restaurants. Despite that most travel restrictions and quarantine
requirements were lifted in December 2022 which has led to the overall recovery of consumer
traffic and business activities in the first half of 2023, the number of our Ubox POSs slightly
decreased during the same period. This was mainly because the Company, POS partners and
some other business partners such as site owners adopted a prudent approach towards the pace
of recovery in the macro-environment under the prolonged impact of the pandemic and slowed
down the expansion of the POS network in the same period.
We continuously monitor the performance, and adjust the location, of our Ubox POSs to
optimize operational efficiency. In particular, we identify Ubox POSs that require optimization,
and consider improving or redeploying these POSs by taking into account a range of factors.
See “Our Product and Service Offerings — Unmanned Retail Business — Our V ending
Machines” for details.
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In addition, to increase the flexibility in POS operation management, commencing from
2020, we have actively increased the use of the partner model. During the Track Record Period,
we increased the use of POS partners to source and establish new POSs. For better business
efficiency, we converted certain POSs under the direct operation model to the partner model,
as these POSs were historically sourced and managed by POS partners who used to be our
employees. See “— Our POS Partners” for details of our arrangement with POS partners.
Sourcing and Establishing Ubox POSs
We source Ubox POS sites directly from site owners under our direct operation model,
and we source POS sites through POS partners under our partner model. Some of our POS
partners, such as restaurant model partners, also own the sites. Where our POS partners do not
own the sites, we or our POS partners enter into cooperation with the site owners to place our
vending machines on their premises, typically for a monthly occupancy fee plus utility cost.
Cooperation agreements with site owners generally have terms that range from one year to
three years, and are generally automatically renewable unless either party objects. Such
cooperation does not constitute property leasing under the PRC Law.
Under the direct operation model, we enter into cooperation agreements with site owners,
under which we are responsible for the provision and daily operation of vending machines,
including restocking and maintenance, for terms of one to two years in general. We are entitled
to the revenue generated by the machines. We pay site owners a fixed or variable occupancy
fee per POS and utility cost on a monthly, quarterly or yearly basis. V ariable occupancy fee is
generally calculated with reference to the transaction GMV of the POSs. In general, we pay
occupancy fees of approximately RMB8,000-RMB20,000 per year for each POS at schools,
RMB6,000-RMB15,000 per year for each POS at factories, RMB1,200-RMB3,000 per year for
each POS at office premises, RMB1,200-RMB3,000 per year for each POS at public venues,
and RMB20,000-RMB50,000 per year for each POS at transportation hubs, respectively. We
are generally not required to pay occupancy fee for POSs at restaurants. Subject to the
agreements with the site owners, the occupancy fees are typically settled on a monthly,
quarterly or yearly basis. The occupancy fees and utility costs were recognized as our selling
and marketing expenses. The cooperation agreements can generally be terminated upon mutual
agreement or unilaterally when any site owner is in material breach of the agreement. Under
the direct operation model, we own the vending machines.
Under the partner model, regardless of whether we or our POS partners enter into
cooperation agreements with the site owners, the POS partners are responsible for the
occupancy fee plus utility cost. As of June 30, 2023, we had entered into approximately 16,800
cooperation agreements with site owners for the use of POS sites for all the POSs under the
direct operation model and a part of the POSs under the partner model (excluding restaurant
model partners, who we directly engage as our POS partners). Some of the POSs under the
cooperation agreements signed by us were operated under the partner model. In the event that
we decide to change a POS from direct operation model to partner model, we generally allow
our POS partner to maintain that POS and bear the occupancy fees and utility costs without
terminating the existing cooperation agreement with the site owner. We monitor the expiry
dates of the agreements and arrange communication and negotiation for renewal in advance.
Upon expiration of the cooperation agreements between us and site owners, we usually renew
the agreements with the site owners even if the POSs have been changed from direct operation
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model to partner model, subject to any specific requirement of the site owners. We continue to
sign cooperation agreements with site owners for POSs that have been shifted from direct
operation model to partner model and do not actively terminate the same primarily because (i)
such POSs were developed with our resources, brand influence and qualifications, (ii) some of
the site owners adopt stringent selection criteria for their business partners, where our
established brand recognition and presence in the market have made us a preferred signing
party in their cooperation agreements, and (iii) the operation risks of such POSs in respect of
deployment of machines and restocking of merchandise remain with the Group. For the POSs
operated under the partner model with the cooperation agreements signed by us, the occupancy
fees for such POSs are settled either by the POS partners themselves or by us with the site
owners directly where we deduct such amounts in the POS partners’ share of transaction GMV .
We have not entered into tripartite agreement with our POS partners and the respective site
owners in such circumstances. If the cooperation agreements with site owners are entered into
by the POS partners, they will settle the occupancy fees directly with site owners. Under the
partner model, save for some of the POS partners who own and use their own vending
machines, we own the majority of the vending machines.
We generally consider types of consumption scenarios, background of site owners and
concentration level of potential POSs in the locations in determining whether the POSs will be
directly operated by us or by our POS partners. Direct operation model is generally adopted for
POSs at sites which we consider strategically important, such as certain schools and premises
of KAs, which tend to have a large number of potential POS locations at a single site.
The table below sets forth the number of POSs by type of vending machines under the
direct operation model as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Type of vending machines
Direct operation model
Pick-and-go cabinets 27,420 8,122 6,430 6,992 7,074 6,233
Beverage vending machines 21,258 8,142 5,548 4,028 4,848 3,525
Beverage and snack vending
machines 1,327 748 615 415 577 396
Freshly brewed beverage vending
machines 2,201 1,228 954 972 892 972
Others
(1) 356 153 112 65 92 63
Total 52,562 18,393 13,659 12,472 13,483 11,189
Note:
(1) Others include other types of machines such as orange juice machines and coconut juice machines.
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During the Track Record Period, there was an overall decreasing trend of the number of
POSs under the direct operation model due to our shift of business focus from the direct
operation model to the partner model. The number of POSs of pick-and-go cabinets under the
direct operation model increased in 2022 primarily due to the expansion our POS network in
office premises of KAs primarily involving pick-and-go cabinets.
The table below sets forth the average monthly GMV per POS of each type of our vending
machines under the direct operation model for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB RMB RMB RMB RMB RMB
Average monthly GMV
per POS by type of
vending machines
under the direct
operation model
Pick-and-go cabinets 1,366 1,014 2,122 2,375 2,122 2,754
Beverage vending
machines 4,265 2,521 3,592 2,875 2,476 3,962
Beverage and snack
vending machines 3,296 4,227 6,035 4,297 3,735 8,096
Freshly brewed beverage
vending machines 903 806 1,431 898 719 1,103
Others
(1) 1,255 130 99 58 83 11
Overall 3,310 1,723 2,902 2,506 2,211 3,162
Note:
(1) Others include other types of machines such as orange juice machines and coconut juice machines.
The average monthly GMV per POS under the direct operation model decreased in 2020
as compared to 2019 primarily due to the impact of COVID-19 in 2020. During a partial
recovery from COVID-19 in 2021, the average monthly GMV per POS under the direct
operation model increased in 2021. The average monthly GMV per POS under the direct
operation model was lower in 2022 as compared to 2021 primarily due to the regional
resurgence of COVID-19 in mainland China in 2022 which affected our sales. The average
monthly GMV per POS of beverage and snack vending machines under the direct operation
model was lower in 2022 as compared to 2021 primarily because beverage and snack vending
machines were mainly deployed at transportation hubs, which were heavily affected by the
resurgence of COVID-19. The average monthly GMV per POS of beverage vending machines
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and freshly brewed beverage vending machines under the direct operation model decreased in
2022 as compared to 2021, primarily due to the reduction of sales activities amid the regional
resurgence of COVID-19. The average monthly GMV per POS of pick-and-go cabinets under
the direct operation model was higher in 2022 as compared to 2021 primarily due to (i) the
relatively higher GMV generated by the newly developed POSs of pick-and-go cabinets, and
(ii) the optimization of the POSs of pick-and-go cabinets including the removal or relocation
of some of such POSs that were heavily affected by the regional resurgence of COVID-19. The
average monthly GMV per POS under the direct operation model, in particular, the POSs of
beverage and snack vending machines, which were mainly deployed at transportation hubs,
was higher in the first half of 2023 as compared to the same period in 2022 primarily due to
the recovery of consumer traffic and sales in the first half of 2023 following the relaxation of
COVID-19 policies and our strategic closure of some under-performing POSs.
The table below sets forth the number of POSs by the term of our cooperation agreements
with site owners under the direct operation model as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Term of our cooperation
agreements with site
owners under the
direct operation
model
Less than one year/
no fixed term 23,406 5,457 4,092 7,526 5,134 7,559
Between one and three
years 17,995 9,985 7,892 4,124 6,896 3,090
More than three years 11,161 2,951 1,675 822 1,453 540
Total 52,562 18,393 13,659 12,472 13,483 11,189
In 2022 and the first half of 2023, the number of our POSs under direct operation model
with a term of cooperation with the site owners for more than one year decreased whereas those
for less than one year or no fixed term increased primarily because we adopted a prudent
approach towards the selection of sites for deployment of POSs under the prolonged impact of
the pandemic. Cooperation agreements with relatively shorter terms offer more flexibility to
us.
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Our POS Partners
To efficiently expand our footprint nation-wide, we have actively enhanced the use of
POS partners since 2020 to form an extensive and effective network to help us expand more
efficiently. We engage POS partners to assist with sourcing and establishing, while we manage
the operation, of POSs. The partner model aligns our interest with those of our POS partners.
While we remain entitled to the revenue generated by the machines, the POS partners are
typically entitled to a share of the transaction GMV , subject to deduction of their responsible
fees and costs. Under the partner model, the POS partners are primarily responsible for
sourcing, establishing and bearing the costs in relation to POSs, such as the costs for
development of POSs, occupancy fees and utility costs, which are typically borne by us under
the direct operation model. With the POS partners being responsible for the costs in relation
to POSs, they are motivated to actively negotiate with the site owners on the occupancy fees
to better manage their costs and expenses associated with the POS sites. As such, we are
insulated, to a certain extent and as compared to the direct operation model, from the risk that
revenue from POSs is insufficient to cover such costs and expenses. By leveraging the
resources of POS partners, who have more local sources to develop POSs and maintain the
relationship with site owners, and sharing the POSs’ transaction GMV with the POS partners,
we can relatively stabilize our profitability at machine level and incentivize our partners to
generate more sales at the POSs.
The POS partners are not required to bear the daily operation costs of POSs, such as costs
of procurement, restocking and maintenance. They are not responsible for the capital
expenditure in relation to purchase of vending machines. The POS partners are incentivized to
cooperate with us as they have the opportunity to tap into the unmanned retail business without
incurring substantial upfront costs, capitalize on their POS resources and local expertise while
reaping the benefits of our digitalization and operation capabilities. Being responsible for the
occupancy fees and entitled to a share of transaction GMV , some of the POS partners had
successfully negotiated with the site owners for reduction of occupancy fees to lower their
costs and/or better locations to place the vending machines to increase sales as well as their
share of transaction GMV . As of June 30, 2023, for unmanned retail business, we had a total
of 2,830 POS partners, including 1,922 POS partners (excluding restaurant model partners)
assisting with the operation of 49,350 POSs and 908 restaurant model partners assisting with
the operation of 1,349 POSs. Revenue from POSs operated under the partner model amounted
to 9.2%, 40.1%, 55.3%, 64.0%, 66.0% and 64.1% of our total revenue in 2019, 2020, 2021,
2022 and the six months ended June 30, 2022 and 2023, respectively.
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The table below sets forth the number of POSs by type of vending machines under the
partner model as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Type of vending machines
Partner model
Pick-and-go cabinets 1,023 21,719 45,503 30,668 34,006 29,148
Beverage vending machines 8,634 16,552 23,210 19,732 21,961 16,850
Beverage and snack
vending machines 1,072 953 1,331 1,641 1,287 2,917
Freshly brewed beverage
vending machines – 603 1,100 1,381 1,242 1,449
Others
(1) 160 247 336 338 340 335
Total 10,889 40,074 71,480 53,760 58,836 50,699
Note:
(1) Others include other types of machines such as orange juice machines and coconut juice machines.
During the Track Record Period, there was an overall increasing trend of the number of
POSs under the partner model due to our shift of business focus from the direct operation
model to the partner model. The number of POSs under the partner model decreased in 2022
primarily due to the regional resurgence of COVID-19 in mainland China in the same period
as consumer traffic of certain consumption scenarios including restaurants were heavily
affected by COVID-19. Despite that most travel restrictions and quarantine requirements were
lifted in December 2022, which has led to the overall recovery of consumer traffic and business
activities in the first half of 2023, the number of our Ubox POSs slightly decreased during the
same period. This was mainly because the Company, POS partners and some other business
partners such as site owners adopted a prudent approach towards the pace of recovery in the
macro-environment under the prolonged impact of the pandemic and slowed down the
expansion of the POS network in the same period.
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The table below sets forth our POS partners’ (excluding restaurant model partners)
average monthly GMV per POS of each type of our vending machines for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB RMB RMB RMB RMB RMB
POS partners’ average
monthly GMV per
POS by type of
vending machines
Pick-and-go cabinets 2,159 1,872 2,048 2,146 1,885 2,600
Beverage vending
machines 4,152 3,624 4,344 3,772 3,505 3,817
Beverage and snack
vending machines 1,592 1,502 1,956 1,642 1,380 2,166
Freshly brewed beverage
vending machines – 2,107 1,330 963 998 798
Others
(1) 590 – (2) –(2) –(2) –(2) –(2)
Overall 3,850 2,729 2,933 2,749 2,512 2,953
Notes:
(1) Others include other types of machines such as orange juice machines and coconut juice machines.
(2) The average monthly GMV for the years ended December 31, 2020, 2021, 2022 and the six months
ended June 30, 2022 and 2023 of other machines under the partner model were nil because the machines
were used for free distribution of samples products, mainly infant products.
Our POS partners’ (excluding restaurant model partners) average monthly GMV per POS
decreased in 2020 as compared to 2019 primarily due to the impact of COVID-19. During a
partial recovery from COVID-19 in 2021, their average monthly GMV per POS increased in
2021. Our POS partners’ (excluding restaurant model partners) average monthly GMV per POS
was lower in 2022 as compared to 2021 primarily due to the regional resurgence of COVID-19
in mainland China in 2022 which affected consumer traffic and sales. Our POS partners’
(excluding restaurant model partners) average monthly GMV per POS of pick-and-go cabinets
was higher in 2022 as compared to 2021 primarily due to (i) the relatively higher GMV
generated by the newly developed POSs of pick-and-go cabinets, and (ii) the optimization of
the POSs of pick-and-go cabinets including the removal or relocation of some of such POSs
that were heavily affected by the regional resurgence of COVID-19. Our POS partners’
(excluding restaurant model partners) average monthly GMV per POS increased in the first half
of 2023 as compared to the same period in 2022 primarily due to the recovery of consumer
traffic and sales in the first half of 2023 following the relaxation of COVID-19 policies and our
POS partners’ strategic closure of some under-performing POSs.
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The number of POS partners (excluding restaurant model partners) increased in 2021,
2022 and the six months ended June 30, 2023 primarily due to our focus on the partner model
since 2020. The table below sets forth the movement in the number of our POS partners
(excluding restaurant model partners) for the periods indicated:
For the year ended December 31,
For the six
months ended
June 30,
2019 2020 2021 2022 2022 2023
Number of POS partners
At the beginning of the period 222 993 1,089 1,684 1,684 1,875
Joined during the period 803 379 817 651 405 115
Terminated during the period (32) (283) (222) (460)
(1) (344) (68)
At the end of the period 993 1,089 1,684 1,875 (2) 1,745 1,922
Notes:
(1) There was an increasing trend of the number of POS partners terminated during the Track Record Period
primarily due to the reduction of such POS partners’ revenue as a result of lockdowns, standstills and
other restrictive measures adopted by PRC government authorities in containing COVID-19 since 2020.
The number of POS partners terminated during 2022 was higher as compared to 2021 primarily because
some of the POS partners did not renew the cooperation agreements with us upon expiry. For example,
some of the POS partners were unable to renew their cooperation agreements with the site owners upon
expiry primarily because the site owners changed their business plans and use of the premises or the
POS partners lost their POSs to other successful bidders; some of them closed their unmanned retail
business amid the resurgence of COVID-19; and some of them changed their business development
plans. The termination of the 460 POS partners during 2022 did not materially nor adversely affect our
business operations as there were only 1,436 POSs operated under such POS partners as of December
31, 2021.
(2) There was a decrease in the number of POSs under the partner model in 2022 despite the increase in
the number of our POS partners (excluding restaurant model partners) in the same period primarily
because the existing and new POS partners’ development and maintenance of POSs was adversely
affected by the resurgence of COVID-19, during which their expansion of POS network was limited and
some of their POSs were closed.
Upon expiry or termination of the cooperation agreements with the POS partners where
the occupancy agreements with site owners are entered into by the Group, we will typically
evaluate the quality of the POSs under such POS partners and may (i) negotiate with other POS
partners and transfer such POSs to them, (ii) operate such POSs temporarily under the direct
operation model pending negotiation with other POS partners for the transfer of such POSs,
(iii) convert such POSs to be operated under the direct operation model, or (iv) close such
POSs upon expiry of the occupancy agreements.
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As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, we cooperated with nil,
nil, 15,663, 1,620 and 908 restaurant model partners, respectively. The table below sets forth
the movement in the number of our restaurant model partners for the periods indicated:
For the year ended December 31,
For the
six months ended
June 30,
2019 2020 2021 2022 2022 2023
Number of restaurant model partners
At the beginning of the period – – – 15,663 15,663 1,620
Joined during the period – – 15,663 666 1,210 29
Terminated during the period – – – (14,709) (12,609) (741)
At the end of the period – – 15,663 1,620 4,264 908
Note: The numbers of restaurant model partners do not include those restaurant model partners who had
contracted with us to become our POS partners but had not yet deployed any vending machines on their
premises.
The number of our restaurant model partners decreased in 2022 primarily because some
of our restaurant model partners did not renew their cooperation agreements with us upon
expiry in the fourth quarter of 2022 as their POSs in restaurants that were heavily affected by
the resurgence of COVID-19 in 2022 were removed. The effect of the movement of restaurant
model partners’ POSs was insignificant as their transaction GMV only amounted to RMB9.1
million, RMB46.2 million and RMB10.3 million, representing 0.4%, 2.1% and 0.9% of the
total transaction GMV , in 2021, 2022 and the six months ended June 30, 2023, respectively. As
of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, there were nil, nil, 16,962, 2,238
and 1,349 POSs operated under the restaurant model partners, respectively. As of December 31,
2021, 2022 and June 30, 2023, approximately 99.5%, 98.1% and 96.6% of the POSs operated
under the restaurant model partners were located in restaurants or public venues such as gyms
and cinemas, respectively. Some of the POS partners who assist with the operation of POSs at
venues other than restaurants are categorized as restaurant model partners primarily because
they can set the selling prices for the merchandise at their premises and are entitled to keep the
difference between the transaction GMV and a predetermined merchandise price agreed with
us, which is different from our profit sharing and fees arrangement with other POS partners.
Our POS partners primarily consist of individuals and enterprises with previous
experience and industry knowledge in vending machine business and some of them are our
former employees. Their business scope covers a wide range of industries, including but not
limited to operation of vending machines, vending machine sales and leases, merchandise
wholesale and retail, software technology, environmental protection technology, information
security technology development, computer system services, information technology
consulting services, supply chain management services, warehousing services, operation of
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restaurants, etc. Considering the business opportunity of the unmanned retail industry given its
high growth rate and low market penetration rate, our POS partners of different background are
willing to cooperate with us to capitalize on their POS resources and local expertise to tap into
the unmanned retail industry, while leveraging our outstanding operational capabilities.
Generally, our POS partners, including our former employees who typically had long service
time in the Group with strong management skills and good performance records, have
established business and social network in the local areas through their existing businesses, job
positions and/or recommendations from acquaintances, which allow them to have access to
more potential site owners and source more suitable POSs. For example, an information
technology service provider providing software and hardware support to corporate customers
typically has access to information of these customers, such as their office addresses, office
settings and operation scale such as number of employees. The service provider is well-
positioned to explore the possibility of placing vending machines at the office premises of its
customers. Through cooperating with us under the partner model and becoming our POS
partner, the service provider can strengthen its business relationship with its existing customers
and further diversify its sources of income without substantial capital investment. We also have
a number of individual POS partners who are able to locate potential POS sites leveraging their
resources. For example, a staff member in school or hospital can also make use of his/her
personal connection within his/her work place to source suitable locations and develop POSs
inside or in the vicinity of his/her work place. A person who is acquainted with staff members
working at locations with high consumer traffic can also get in touch with the relevant site
owners through their acquaintances to consider the feasibility of setting up POSs at the
premises. Our partner model allows such individuals to earn additional income with their
existing connection and resources through becoming our POS partners.
The table below sets forth the respective total number of our POS partners (excluding
restaurant model partners) who were individuals, sole proprietorships and corporate entities as
of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Individuals 708 635 1,029 969 1,042 923
Sole proprietorships 42 231 343 460 347 522
Corporate entities 243 223 312 446 356 477
Total 993 1,089 1,684 1,875 1,745 1,922
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The table below sets forth the respective total number of our restaurant model partners
who were individuals, sole proprietorships and corporate entities as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Individuals – – 15,570 1,560 4,186 870
Sole proprietorships – – 38 6 10 3
Corporate entities – – 55 54 68 35
Total – – 15,663 1,620 4,264 908
During the Track Record Period, 198 POS partners were our former employees. Since
2020, we have invited our then employees to become POS partners with the aim of instilling
a sense of ownership among the then employees through allowing them to assist with the
management of and share the transaction GMV of our POSs. The majority of the former
employees who became POS partners were former executive staff from the Group’s sales and
marketing department with long working experience in the industry. The transition provided
our former employees with stronger incentives to source and develop more and better POSs.
It also optimized our management structure and reduced our staff costs, especially in light of
the impact of COVID-19. There was no sharing of resources between our Group and our former
employees during the operation and management of the relevant POSs. In 2019, 2020, 2021,
2022 and the six months ended June 30, 2023, the POSs that we operated with the assistance
of such POS partners who were our former employees contributed to nil, RMB595.4 million,
RMB1,199.2 million, RMB1,070.6 million and RMB528.6 million (or nil, 38.9%, 56.2%,
49.5% and 47.4%) of our transaction GMV
(Note 1) generated from our
unmanned retail business, respectively, and such GMV corresponded to,
after deducting value-added tax, nil, RMB526.9 million, RMB1,061.2 million, RMB947.4
million and RMB467.8 million (or nil, 39.4%, 55.4%, 48.0% and 47.4%) of our revenue in the
corresponding periods generated from our unmanned retail business, respectively. As of
December 31, 2019, 2020, 2021, 2022 and June 30, 2023, these POS partners assisted with the
management of nil, 30,753, 33,777, 30,877 and 29,352 POSs, representing nil, 52.6%, 49.5%,
48.2% and 48.5% of our Ubox POSs
(Note 1) , respectively. The proportions of these POS
partners’ transaction GMV and revenue contribution in 2020 were significantly lower than the
proportion of their number of POSs as of December 31, 2020 primarily because most of our
then employees had become our POS partners since mid-2020 and their POSs did not
contribute to our transaction GMV and revenue for the whole year. In 2021 and 2022, the
increased proportions of these POS partners’ transaction GMV and revenue contribution were
consistent with the proportion of their number of POSs as of December 31, 2021 and 2022,
respectively. We do not expect the number of POS partners who were our former employees
to increase in the future. To the best knowledge of our Directors, all of our POS partners,
including our former employees, were Independent Third Parties as of the Latest Practicable
Date
(Note 2) .
Notes:
1. Excluding POSs of restaurant model partners, who have become our POS partners gradually since August
2021.
2. As of the Latest Practicable Date, among our over 2,700 POS partners, seven of them were relatives of the
directors, supervisors or chief executives of our insignificant subsidiaries. These POS partners do not
constitute connected persons of our Company, and our transactions with them will not constitute continuing
connected transactions under Chapter 14A of the Listing Rules. POSs managed by these individuals amounted
to 354 as of the Latest Practicable Date, representing 0.6% of our Ubox POSs as of June 30, 2023, and
contributed to nil, 0.5%, 0.8%, 0.6% and 0.6% of our transaction GMV in 2019, 2020, 2021, 2022 and June
30, 2023, respectively.
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Other than the POS partners who were our former employees, we generally recruit POS
partners through presentations and sharing sessions in industry exhibitions and conferences,
where we can be acquainted with individuals and companies in the payment services sector and
local retail markets and explore opportunities of cooperation with them. For example, during
the Track Record Period, we hosted the Ubox Open Day Salon (ਗ) in 2019
and attended the 2020 INCLUSION — Bund Conference & Alipay Partner Summit (2020
INCLUSION —ึ) in 2020, the 2021 CCLE China Education
Logistics Exhibition forum (2021 CCLEਗ), the Alipay Jiangxi
Ecological Partner Development Conference (ɽึ), and the
Alipay IoT Service Provider Conference ( ˕˹ᘒIoTਕਠɽึ) in 2021. Our sales and
marketing team also sources POS partners through referrals. We have formed a comprehensive
set of methods for sourcing suitable POS partners in the long run and engaged 115 new POS
partners in the six months ended June 30, 2023 through such measures. See “Financial
Information — Business Sustainability — Further Expanding Our POS Network.” To ensure
the high quality of our POS partners, we have in place formalized and detailed selection
criteria, which mainly include value compatibility, industrial knowledge, marketing resources
and credit status. We serve and manage our POS partners in various aspects including machine
trainings and supports and brand management. In order to maintain the existing POS partners
in the long run, we typically assist and encourage our existing POS partners to fully utilize
their POS resources and expand their POS network through the provision of case studies and
experience sharing. We also support the POS partners in the continuous adjustment and
optimization of their POS network through the provision of machine relocation and installation
services. We facilitate communication between the Group and the existing POS partners by
assigning personnel in each geographical region as the contact points.
During the Track Record Period, for POS partners who were our former employees, we
entered into cooperation agreements directly with site owners with respect to their initial POSs.
We typically prohibit POS partners who were our former employees from cooperating with our
competitors, and require them to maintain a certain number of POS sites. Save for the above,
we implemented the same management measures over all of our POS partners and did not grant
any preferential terms to any POS partners that were our former employees. Salient terms of
our agreements with POS partners are as follows:
 Scope of cooperation. POS partners are primarily responsible for sourcing,
establishing and bearing the costs in relation to POSs. They may help us secure sites
for machines we operate and are responsible for costs for development of POSs,
occupancy fees and utility costs. POS partners typically enter into cooperation
agreement directly with site owners, or procure the site owners to enter into
cooperation agreements with us. For POS partners who are restaurant model
partners, they are generally the site owners and we enter into cooperation agreement
with them directly. See “— Sourcing and Establishing Ubox POSs.”
 Term. The agreements we enter into with the POS partners typically have a term of
one year to three years.
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 Fees. Regardless of whether we or POS partners enter into the cooperation
agreement with site owners, POS partners are responsible for the occupancy fees and
utility costs. We also generally charge POS partners a monthly rental for deploying
each machine to POSs secured by them, one-off installation fee for each machine
deployed and transaction fees charged by third-party payment service providers for
purchases on each machine. These fees and costs are deducted from their share of
transaction GMV .
 Settlement. We settle payments by bank transfer on a monthly basis.
 Termination. We have the right to unilaterally terminate the agreement when the
POS partner is in material breach of the agreement, such as using the machines as
debt security, and altering the system software or the machines’ payment collection
settings.
 Profit sharing and settlement. For our unmanned retail business, POS partners, other
than restaurant model partners, are typically entitled to a share of approximately
20% to 30% of the transaction GMV , depending on the type and number of machines
installed and the monthly transaction GMV , subject to deductions of their
responsible costs and expenses, which typically include, among others, rent for
vending machines determined with reference to the types and depreciation of the
relevant vending machines and the actual amounts of occupancy fees paid by the
Group (if any) and third-party payment service providers’ charges. Based on our
experience in the operation of the Ubox POSs under direct operation model, we
estimate that, in the absence of the impact of external factors such as regional
resurgence of COVID-19 and pandemic control measures taken by local
governments, the POS partners’ costs of maintaining POSs, including their staff
costs, occupancy fees (save for POSs in locations with relatively higher occupancy
fees such as transportation hubs) and utility costs, would generally account for less
than approximately 20% of the transaction GMV . As such, we consider that a share
of 20% to 30% of the transaction GMV is generally sufficient for the POS partners
to retain some profit and cover their costs.
For POS partners who are restaurant model partners, they only deploy pick-and-go
cabinets in their premises and are generally entitled to keep the difference between
the transaction GMV and the predetermined merchandise price they agreed with us.
The profit sharing and fees arrangement with the restaurant model partners is
different than the other POS partners, as the retail price for beverages in the
restaurant scenario is much higher than in other scenarios. While we provide
merchandise with competitive supply price along with restocking and other services,
the restaurant model partners share profit for difference between the price set by
them at their premises and the supply price charged by us. This arrangement is
attractive for restaurant model partners primarily because (i) we generally offer a
competitive supply price as we usually purchase in bulk from merchandise suppliers
and distributors and (ii) our pick-and-go cabinets allow consumers to directly
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purchase and pick up beverages without any assistance from restaurant staff which
further reduces the restaurant model partners’ staff costs. The deployment of our
machines does not compete with the restaurant model partners’ business as they are
entitled to the entire profit generated from the machines. Such arrangement is also
favorable to the expansion of our POS network.
 Marketing activities and discounts of merchandise prices. POS partners may provide
discounts for merchandise sold at their POSs in marketing events co-organized with
the site owners or in their marketing campaign. For example, one of our POS
partners cooperated with a site owner, which is a large-scale internet company, to
provide discounted merchandise at the POSs located in the premises of the internet
company as part of the company’s employee welfare activities. Upon the POS
partners’ requests, the prices of merchandise at the POSs can be adjusted. The
discounted amounts are borne by the POS partners and are deducted from their share
of GMV .
 Subsidies. We provide subsidies to POS partners for, among others, POSs at
transportation hubs and scenic spots where the occupancy fees are relatively higher
and POSs at schools with reduced consumer traffic and sales activities amid the
COVID-19 pandemic. In 2019, 2020, 2021, 2022 and the six months ended June 30,
2022 and 2023, we provided subsidies in the amount of nil, RMB14.2 million,
RMB14.3 million, RMB10.3 million, RMB4.7 million and RMB4.7 million to our
POS partners, respectively.
For POS partners using their own vending machines, we provide merchandise
procurement and restocking services and share transaction GMV with them while they develop
and maintain their POS resources. Despite their experience and ability to operate their own
vending machines, such POS partners have relatively small scale of operation and operation
capabilities as compared to our Group. Through cooperating with us and integrating their POSs
into our operation system, such POS partners can take advantage of our digitalization and
operation capabilities and reduce their operation costs. It is also more favorable for such POS
partners to focus on the improvement of their POS resources and business network.
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Non-Ubox POS Operators
Our Non-Ubox POS operators primarily consist of individuals and SMEs which operate
vending machines that are connected to our operation system. Their business scope includes
vending machine sales and leases, merchandise sales, software development services,
technology consulting services, computer software and hardware manufacturing, etc. All the
vending machines operated by the Non-Ubox POS operators are operated under our operation
system. Not all the vending machines operated by the Non-Ubox POS operators bear our brand
name, depending on the ownership of the vending machines and site owners’ requirements. In
general, for the vending machines that are owned by us, the Non-Ubox POS operators are not
allowed to make any changes to our brand name or logo on the vending machines, while for
the vending machines that are owned by the Non-Ubox POS operators, they are not required
to keep or display our brand name or logo on the vending machines. In addition, our brand
name or logo on vending machines may be covered subject to specific requirements of the site
owners. Non-Ubox POS operators may choose to purchase or rent our vending machines, or use
their own vending machines to sell the merchandise. Since the Non-Ubox POS operators are
the operators of these vending machines, they are entitled to the revenue generated in these
POSs. Such model is commonly used in the vending machine industry in mainland China,
according to Frost & Sullivan. By collaborating with Non-Ubox POS operators, we can
leverage their resources to establish our market presence.
As of June 30, 2023, we had 1,153 Non-Ubox POS operators and we had 17,554
Non-Ubox POSs connected to our operation system. The table below sets forth the movement
of the Non-Ubox POSs for the periods indicated:
For the year ended December 31,
For the
six months ended
June 30,
2019 2020 2021 2022 2022 2023
Number of Non-Ubox POSs at the
beginning of the period (A) 20,038 17,410 17,159 17,600 17,600 17,272
Number of Non-Ubox POSs opened
during the period (B1) 4,584 2,917 2,240 2,680 2,155 1,278
Number of Non-Ubox POSs closed
during the period (B2) (4,021) (2,997) (1,934) (3,340) (1,760) (1,350)
Net increase/(decrease) in the
number of Non-Ubox POSs
during the period (B1+B2) 563 (80) 306 (660) 395 (72)
Net increase/(decrease) in the
number of Non-Ubox POSs due
to change in operation model (C) (3,191) (171) 135 332 15 354
Number of Non-Ubox POSs at the
end of the period (A+B1+B2+C) 17,410 17,159 17,600 17,272 18,010 17,554
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The table below sets forth the breakdown of our Non-Ubox POS coverage by city tier as
of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Non-Ubox POS by city
tier
Tier one cities 1,715 9.9 1,462 8.5 1,418 8.0 1,386 8.0 1,372 7.6 1,404 8.0
New tier one cities 3,661 21.0 3,525 20.5 3,593 20.4 3,575 20.7 3,773 20.9 3,740 21.3
Tier two cities 4,232 24.3 4,105 23.9 4,220 24.0 4,359 25.2 4,530 25.2 4,559 26.0
Tier three cities 4,168 23.9 4,367 25.5 4,501 25.6 4,128 23.9 4,472 24.8 4,090 23.3
Others 3,634 20.9 3,700 21.6 3,868 22.0 3,824 22.1 3,863 21.4 3,761 21.4
Total 17,410 100.0 17,159 100.0 17,600 100.0 17,272 100.0 18,010 100.0 17,554 100.0
The table below sets forth the number of Non-Ubox POSs by consumption scenario as of
the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Non-Ubox POS by
consumption scenario
Schools 5,013 28.8 4,965 28.9 5,208 29.6 5,152 29.8 5,311 29.5 5,469 31.2
Factories 6,676 38.3 6,602 38.5 6,369 36.2 6,164 35.7 6,473 35.9 6,063 34.5
Office premises 373 2.1 609 3.5 1,098 6.2 1,149 6.7 1,149 6.4 1,232 7.0
Public venues
(1) 3,292 18.9 3,130 18.2 3,014 17.1 2,986 17.3 3,169 17.6 3,050 17.4
Transportation hubs 777 4.5 742 4.3 679 3.9 711 4.1 630 3.5 671 3.8
Restaurants 37 0.2 32 0.2 34 0.2 29 0.2 43 0.2 34 0.2
Others
(2) 1,242 7.1 1,079 6.3 1,198 6.8 1,081 6.3 1,235 6.9 1,035 5.9
Total 17,410 100.0 17,159 100.0 17,600 100.0 17,272 100.0 18,010 100.0 17,554 100.0
Notes:
1. Public venues include, among others, tourist attractions, parks, hospitals, shopping centers and sports
venues.
2. Others primarily include hotels, local communities and residential apartments.
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The table below sets forth the number of Non-Ubox POSs by type of vending machines
for the periods indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Number of Non-Ubox POSs
by type of vending
machines
Pick-and-go cabinets 17 112 1,526 2,331 2,328 3,071
Beverage vending machines 14,167 14,000 13,112 12,094 12,778 11,798
Beverage and snack vending
machines 2,421 2,536 2,472 2,248 2,332 2,092
Others
(1) 805 511 490 599 572 593
Total 17,410 17,159 17,600 17,272 18,010 17,554
Note:
(1) Others include other types of machines such as orange juice machines and coconut juice machines.
During the Track Record Period, the total number of our Non-Ubox POSs remained stable
with an increasing proportion of pick-and-go cabinets. Our Non-Ubox POS operators
prioritized launching of POSs of pick-and-go cabinets primarily due to the relatively low
purchase and setting up costs of pick-and-go cabinets and the flexible compartment of
pick-and-go cabinets which can accommodate a wide range of merchandise of different
dimensions.
The table below sets forth the movement in the number of our Non-Ubox POS operators
that had entered into cooperation agreements with us for the periods indicated:
For the year ended December 31,
For the
six months ended
June 30,
2019 2020 2021 2022 2022 2023
Number of Non-Ubox POS
operators
At the beginning of the
period 1,470 2,046 2,049 1,665 1,665 1,292
Joined during the period 746 335 247 445 176 161
Expired or terminated during
the period (170) (332) (631) (818) (416) (300)
At the end of the period 2,046 2,049 1,665 1,292 1,425 1,153
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During the Track Record Period, there was an increasing trend of the reduction in the
number of Non-Ubox POS operators especially since 2021, which were primarily due to the
shift of our business strategy from collaborating with Non-Ubox POS operators to engaging
POS partners. With the strategic shift of our business focus, we did not take the initiative to
renew the existing cooperation agreements with Non-Ubox POS operators upon expiry or
pursue new Non-Ubox POS operators except for merchandise wholesale customers. In order to
ensure a smooth transition, generally, we did not actively terminate our existing cooperation
agreements with Non-Ubox POS operators during the Track Record Period. In addition, some
of our Non-Ubox POS operators had small scales of operation with less than five vending
machines connected to our operation system. Those small-scale operations were much
impacted by the prolonged COVID-19 pandemic when schools, transportation hubs and office
premises were temporarily closed. Therefore, some small-scale Non-Ubox POS operators did
not renew their cooperation agreements with us upon expiry and the number of our Non-Ubox
POS operators significantly decreased in 2021 and 2022. The number of newly joined
Non-Ubox POS operators increased in 2022 primarily because some of our merchandise
wholesale customers using our shared warehouses entered into cooperation agreements with us
to become our Non-Ubox POS operators. In 2019, 2020, 2021, 2022 and the six months ended
June 30, 2023, there were 4, 3, 3, 174 and 70 merchandise wholesale customers that had
become our Non-Ubox POS operators, respectively. The number of merchandise wholesale
customers increased in 2022 primarily because we actively expanded our shared warehouse
business and some of these merchandise wholesale customers would like to use our operating
system, which could potentially help them save operation costs and improve operational
efficiency, and became our Non-Ubox POS operators during the same period.
The table below sets forth the respective total number of our Non-Ubox POS operators
who were individuals, sole proprietorships and corporate entities as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Individuals 1,293 1,361 1,127 834 934 746
Sole proprietorships 86 80 62 52 57 57
Corporate entities 667 608 476 406 434 350
Total 2,046 2,049 1,665 1,292 1,425 1,153
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The table below sets forth our Non-Ubox POS operators’ average monthly GMV per POS
of each type of our vending machines for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB RMB RMB RMB RMB RMB
Non-Ubox POS operators’
average monthly GMV
per POS by type of
vending machines
Pick-and-go cabinets 695 1,563 1,410 1,371 1,261 1,617
Beverage vending machines 4,141 2,870 3,349 2,524 2,460 2,427
Beverage and snack
vending machines 2,643 2,225 2,570 1,844 1,930 1,890
Others
(1) 3 1 2 1 1 57 22 0 1 9 1 7
Overall 3,786 2,671 3,087 2,212 2,177 2,152
Note:
(1) Others include other types of machines such as orange juice machines and coconut juice machines.
Our Non-Ubox POS operators’ average monthly GMV per POS decreased in 2020 as
compared to 2019 primarily due to the impact of COVID-19 in 2020. During a partial recovery
from COVID-19 in 2021, their average monthly GMV per POS increased in 2021. Our
Non-Ubox POS operators’ average monthly GMV per POS was lower in 2022 as compared to
2021 primarily due to the regional resurgence of COVID-19 in mainland China in 2022 which
affected consumer traffic and sales.
The table below sets forth the revenue and cost/expenses recognition (in relation to the
respective revenue generation) for Non-Ubox POSs with respect to our different business
segments:
Type of services Revenue recognition Cost/expenses recognition
Non-Ubox POSs V ending machine sales
and leases and/or
hardware support
services (optional)
V ending machine sales
and leases
Cost of sales
Merchandise wholesale
(optional)
Merchandise wholesale Cost of sales
Operation system support Advertising and system
support services
Sales and marketing
expenses, general and
administrative expenses
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The principal terms of the cooperation agreements are summarized as follows:
Term of agreement : One year to five years in general.
Renewal of
agreement
: Automatic renewal upon expiration unless either party
objects in general.
Ownership of
vending machines
: Non-Ubox POS operators may choose to buy or lease
vending machines from us or use their own machines. For
machines sales and leases from us, see “— Our Product and
Service Offerings — V ending Machine Sales and Leases.”
Services provided
by us
: We provide hardware support services and operation system
support to Non-Ubox POS operators per their requests. For
revenue generated from advertising and system support
services, such as merchandise displayed on machine racks,
advertising on machine screen, we do not share such
revenue with Non-Ubox POS operators. See “— Our
Product and Service Offerings — V ending Machine Sales
and Leases” and “— Our Product and Service Offerings —
Advertising and System Support Services — Operation
System Support.”
Non-Ubox POS
operators’
responsibilities
: Operation of vending machines, participating in our
marketing campaigns during their operation.
Supply of
merchandise
: Non-Ubox POS operators may choose to:
(i) purchase merchandise from us (as our buyers rather
than agents) at favorable prices for selling in vending
machines; or
(ii) source and sell merchandise from third parties,
including beverages and food manufacturers or their
distributors.
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Restrictions on
SKUs sold in
vending machines
: Non-Ubox POS operators may be required to undertake that
for the vending machines they purchased or rented from us,
(i) a proportion of machine racks will be used to sell
designated SKUs which shall be displayed in the manner we
require; (ii) a proportion of machine racks will be used to
sell SKUs as listed in our internally recommended product
catalogue; and (iii) the remaining machine racks can be used
to place self-selected products determined by Non-Ubox
POS operators. The Non-Ubox POS operators are not
required to purchase the designated or recommended SKUs
from us under the cooperation agreements but we offer
competitive merchandise wholesale prices.
Sales target and
minimum
purchase amount
: If they choose to procure merchandise from us, Non-Ubox
POS operators are required to purchase a minimum amount
of merchandise from us on a monthly basis. If the actual
purchase amount falls below the minimum purchase
amount, the relevant Non-Ubox POS operators shall pay us
certain percentage of the shortfall as service fees.
Termination : The agreement with Non-Ubox POS operators shall be
terminated in the following manner:
(i) If they rent or have outstanding installments for
machines they purchased, the Non-Ubox POS
operators shall notify us in writing 30 days in advance,
and shall return our vending machines and settle all
payments including transportation fees and
maintenance fees;
(ii) We have the right to unilaterally terminate the
agreement when any Non-Ubox POS operator is in
material breach of the agreement; and
(iii) The agreement may be terminated upon mutual
agreement.
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Management of Our Non-Ubox POS Operators
During the Track Record Period, all of our Non-Ubox POS operators were Independent
Third Parties, and most of them purchased or rented vending machines from us.
To ensure sufficient control over our Non-Ubox POS operators which purchase or rent our
vending machines, we have introduced the following measures:
 Selection of Non-Ubox POS operators. We carefully select our Non-Ubox POS
operators considering, among others, the following factors: (i) availability of
suitable sites; (ii) financial conditions; (iii) commitment to our corporate culture and
brand concept; and (iv) local knowledge and resources.
 Training. We provide guidelines and training in respect of the operation of vending
machines to our Non-Ubox POS operators.
 V ending machine operation. The Non-Ubox POS operators should follow our
operating standards and their vending machines should be connected to our
operation system. We do not provide recommended prices, nor do we accept
merchandise return or refund from our Non-Ubox POS operators.
 Marketing. Pursuant to our agreements with Non-Ubox POS operators, they are
obliged to participate in our promotional activities to ensure consistent
implementation of our marketing strategies.
 Non-competition. We only cooperate with a limited number of Non-Ubox POS
operators in a geographical area to avoid cannibalization.
 Ongoing supervision. We closely supervise our Non-Ubox POS operators via our
operation system and conduct spot checks on the quality of products sold through
their vending machines regularly.
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The table below sets forth a comparison of our arrangements with restaurant model
partners and Non-Ubox POS operators:
Restaurant model partners Non-Ubox POS operators
Ownership of the
vending
machines
The vending machines, placed at
the POSs of the restaurant
model partners, are properties
that belong to the Group.
Non-Ubox POS operators may
choose to purchase or rent our
vending machines, or use their
own vending machines to sell
the merchandise.
Scope of
cooperation
The POSs are operated by the
Group, including maintenance
of the machines, restocking of
merchandise and providing
customer services. The
restaurant model partners, as the
site owners, are responsible for
providing spaces for the
deposition of vending machines
and bearing utility costs.
The Non-Ubox POS operators
operate their POSs that are
connected to our operation
system, which (i) allows them to
monitor their machines’
operating status in real time, (ii)
generates restocking alerts and
(iii) recommends restocking
schedules and routing plans.
Profit sharing
arrangements
The restaurant model partners
keep the difference between the
price set by them at their
premises and the supply price
charged by the Group as profit.
The Non-Ubox POS operators
are entitled to all the revenue
generated by their POSs and
recognize the purchase prices of
merchandise supplied by the
Group, if any, as costs.
Type(s) of
merchandise
sold by the
machines
Beverages only. To be determined by the Non-
Ubox POS operators and may
include a wide range of
merchandise, such as food,
snacks and beverages.
Sourcing and
restocking of
merchandise
The Group procures the
beverages, manages the
inventory level and is
responsible for restocking the
POSs.
The Non-Ubox POS operators
are responsible for procurement
of merchandise and restocking
of their POSs. They can procure
merchandise from the Group or
any other suppliers.
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Our revenue generated from the arrangement with restaurant model partners is recorded
under our unmanned retail business instead of merchandise wholesale primarily because
(i) such revenue is generated from our direct sales of the merchandise to the consumers who
purchase the merchandise from our pick-and-go cabinets, which does not involve sales to the
restaurant model partners for the purpose of reselling to the consumers, (ii) we control the
merchandise and undertake the inventory risk before the merchandise is transferred to the
consumers, (iii) we are primarily responsible for fulfilling the obligation to provide the
merchandise to the consumers through the vending machines, collect the payment from the
consumers, and pay the differences between the merchandise prices and our supply prices to
the restaurant model partners subsequently, and (iv) the supply prices of our merchandise sold
to the restaurant model partners are generally higher than those to the Non-Ubox POS operators
and we can control and monitor the restaurant model partners’ share of profit by adjusting our
supply prices.
OUR PRODUCT AND SERVICE OFFERINGS
Unmanned Retail Business
Our unmanned retail business comprises sales of FMCG through vending machines at
Ubox POSs. It is based on our vast network of Ubox POSs across mainland China, supported
by our data-driven operation system. By installing our vending machines at each of our Ubox
POSs, we offer consumers swift and convenient access to a broad selection of FMCG,
including bottled beverages, snacks and freshly brewed coffee and other beverages. In 2019,
2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, our unmanned retail
business accounted for 56.5%, 70.3%, 71.6%, 78.4%, 79.9% and 78.8% of our revenue,
respectively.
Machines installed at each of our Ubox POSs serve as our touch points with consumers,
and are integral to our nation-wide retail platform. To facilitate our nation-wide expansion,
commencing from 2020, we have actively enhanced the use of POS partners to assist us with
sourcing and establishing POSs. We have since started to adopt the partner model in addition
to the direct operation model as we believe this allows more flexible and efficient network
expansion. See “— Our POS Network — Our POS Partners” for details of our cooperation with
POS partners. We generally adopt a direct operation model for POSs at strategically important
sites, such as schools and premises of KAs, which tend to have a large number of potential POS
locations at a single site. See “— Our POS Network — Sourcing and Establishing Ubox POSs”
for details of factors we take into consideration in deciding whether to operate a POS under the
direct operation model or partner model. As of June 30, 2023, we had entered into strategic
cooperation with various leading internet companies, logistics service providers, automobile
manufacturers and companies from other industries, including Deppon Logistics and Xiaomi,
to deploy over 6,100 POSs to their premises nationally. Under our cooperation agreements with
the companies for deploying POSs to their premises, we generally set out the numbers and
types of vending machines to be deployed, with the companies being responsible for providing
spaces for the deposition of vending machines and bearing utility costs, and we being
responsible for operating the vending machines, including maintenance of the machines,
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restocking of merchandise and providing customer services. The companies are generally
entitled to a fixed occupancy fee or a share of the transaction GMV of the vending machines
pursuant to the cooperation agreements. At other locations, we generally adopt a partner model,
where we engage POS partners to assist us with sourcing and establishing POSs. As of
December 31, 2019, 2020, 2021, 2022 and June 30, 2023, we had over 63,400, 58,400, 85,100,
66,200 and 61,800 Ubox POSs across mainland China, respectively, of which approximately
17.2%, 68.5%, 84.0%, 81.2% and 81.9% were operated under the partner model, respectively.
Our operation system is the backbone of our retail platform. Equipped with advanced
telecommunication technology, each of the machines in our network is connected to our
centralized operation system over the cloud operated by third-party cloud service providers,
which enables our machines to instantly transmit data across our retail platform, and allows
operators to constantly monitor its operating status in real time. Our operation system and
vending machines have formed an inter-connected network that is able to operate without
manual intervention or reconciliation of transaction data in certain material aspects, such as
monitoring and evaluating the performance of existing vending machines, identifying the
optimal sites for Ubox POSs, recommending the most popular and profitable merchandise at
each machine in real time, constantly adjusting the merchandise mix recommendation,
monitoring machine inventory level, generating restocking alerts, formulating restocking
schedules and routing plans, and generating maintenance requests to our operation staff. See
“— Our Technology-based Retail Platform — Our Technologies” for details.
Our data-driven operation network, comprising our suppliers, storage facilities and
operation team, is closely knitted with our operation. With real-time update on the machine and
inventory status, restocking and delivery route recommendation, our operation network is able
to maintain a sufficient and efficient supply flow. See “— Logistics and Inventory
Management.”
Our V ending Machines
We install vending machines at each of our Ubox POSs across mainland China. The table
below sets forth the breakdown of our Ubox POSs by city tier as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Ubox POSs by city tier
Tier one cities 16,625 26.2 15,836 27.1 21,572 25.3 19,929 30.1 20,281 28.0 19,611 31.7
New tier one cities 21,462 33.8 17,725 30.3 30,580 35.9 23,077 34.8 24,335 33.6 21,365 34.5
Tier two cities 15,838 25.0 15,228 26.0 22,097 26.0 14,405 21.7 18,052 25.0 13,031 21.1
Tier three cities 6,420 10.1 5,718 9.8 7,042 8.3 5,820 8.8 6,419 8.9 5,177 8.4
Others 3,106 4.9 3,960 6.8 3,848 4.5 3,001 4.6 3,232 4.5 2,704 4.3
Total 63,451 100.0 58,467 100.0 85,139 100.0 66,232 100.0 72,319 100.0 61,888 100.0
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The following table sets forth the GMV of vending machines at our Ubox POSs by city
tier for the periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
GMV of vending
machines by
city tier
Tier one cities 522,209 30.3 417,198 27.3 589,227 27.5 611,496 27.7 265,081 26.0 343,470 30.5
New tier one cities 528,202 30.6 489,341 32.0 695,158 32.5 815,417 36.9 384,091 37.6 397,514 35.3
Tier two cities 406,841 23.6 391,448 25.6 522,134 24.4 493,713 22.3 224,277 22.0 232,436 20.6
Tier three cities 181,903 10.6 166,219 10.9 216,450 10.1 193,836 8.8 98,610 9.7 94,258 8.4
Others 84,419 4.9 64,982 4.2 118,852 5.5 96,010 4.3 48,186 4.7 58,231 5.2
Total 1,723,574 100.0 1,529,188 100.0 2,141,821 100.0 2,210,473 100.0 1,020,245 100.0 1,125,909 100.0
Based on the specific needs of different scenarios, we design and develop, and engage
third-party manufacturers to produce, a range of vending machines. During the Track Record
Period, we acquired machines mainly through direct purchases, and to a lesser extent, through
finance lease arrangements, with third-party manufacturers. Our major vending machines
include pick-and-go cabinets, beverage vending machines, beverage and snack vending
machines and freshly brewed beverage vending machines. The table below sets forth the
number of Ubox POSs by type of vending machines as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Vending machines
by type
Pick-and-go cabinets 28,443 44.8 29,841 51.1 51,933 61.0 37,660 56.9 41,080 56.8 35,381 57.2
Beverage vending
machines 29,892 47.1 24,694 42.2 28,758 33.8 23,760 35.9 26,809 37.1 20,375 32.9
Beverage and snack
vending machines 2,399 3.8 1,701 2.9 1,946 2.3 2,056 3.1 1,864 2.6 3,313 5.4
Freshly brewed beverage
vending machines 2,201 3.5 1,831 3.1 2,054 2.4 2,353 3.6 2,134 3.0 2,421 3.9
Others
(1) 516 0.8 400 0.7 448 0.5 403 0.6 432 0.6 398 0.6
Total 63,451 100.0 58,467 100.0 85,139 100.0 66,232 100.0 72,319 100.0 61,888 100.0
Note:
(1) Others include other types of machines such as orange juice machines and coconut juice machines.
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The number of our vending machines increased from 2019 to 2021, which was generally
in line with growth of our POS network. Both the number and percentage of pick-and-go
cabinets rapidly increased from 2019 to 2021, primarily as a result of its advantages in terms
of cost and versatility, rendering them suitable for a wide range of scenarios. The total number
of our vending machines decreased in 2022 primarily due to the regional resurgence of
COVID-19 in mainland China in the same period that affected consumer traffic in certain
consumption scenarios, including restaurants. The proportion of Ubox POSs of pick-and-go
cabinets slightly decreased in 2022 primarily because some of the POSs of pick-and-go
cabinets located in restaurants that were heavily affected by the regional resurgence of
COVID-19 were removed. The number of our Ubox POSs of pick-and-go cabinets excluding
POSs of restaurant model partners increased from 34,971 as of December 31, 2021 to 35,422
as of December 31, 2022. Despite that most travel restrictions and quarantine requirements
were lifted in December 2022 which has led to the overall recovery of consumer traffic and
business activities in the first half of 2023, the number of our Ubox POSs slightly decreased
during the same period. This was mainly because the Company, POS partners and some other
business partners such as site owners adopted a prudent approach towards the pace of recovery
in the macro-environment under the prolonged impact of the pandemic and slowed down the
expansion of the POS network in the same period.
The table below sets forth average monthly GMV of each type of our vending machines
at Ubox POSs, excluding POSs of POS partners who are restaurant model partners, for the
periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
(RMB per machine per month)
Monthly GMV by type of
vending machines
Pick-and-go cabinets 1,382 1,383 2,062 2,192 1,933 2,628
Beverage vending machines 4,246 3,076 4,150 3,608 3,308 3,841
Beverage and snack vending
machines 2,720 2,812 3,720 2,365 2,026 3,036
Freshly brewed beverage
vending machines 903 885 1,381 934 873 928
Others
(1) 1,222 72 29 12 19 2
Overall 3,382 2,180 2,926 2,700 2,449 2,992
Note:
(1) Others include other types of machines such as orange juice machines and coconut juice machines.
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The average monthly GMV of our pick-and-go cabinets, beverage and snack vending
machines and freshly brewed beverage vending machines generally increased from 2019 to
2021. The overall average monthly GMV of all our vending machines decreased during the
same period primarily due to the increase in the number of pick-and-go cabinets, which
individually has lower average monthly GMV in general as compared to beverage vending
machines and beverage and snack vending machines. The average monthly GMV of our
vending machines was generally lower in 2022 as compared to 2021 primarily due to the
regional resurgence of COVID-19 in mainland China in 2022 which affected consumer traffic
and sales. The average monthly GMV of our vending machines at Ubox POSs was higher in
the first half of 2023 as compared to the same period in 2022 primarily due to the recovery of
consumer traffic and sales in the first half of 2023 following the relaxation of COVID-19
policies and the strategic closure of some under-performing POSs.
The table below sets forth the number of Ubox POSs by consumption scenario as of the
dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Ubox POS by
consumption scenario
Schools 14,611 23.0 18,195 31.1 19,738 23.2 18,706 28.2 19,372 26.8 17,572 28.4
Factories 16,197 25.5 13,528 23.1 17,695 20.8 16,998 25.7 17,401 24.1 16,493 26.6
Office premises 12,797 20.2 11,059 18.9 14,113 16.6 13,876 21.0 14,453 20.0 13,342 21.6
Public venues
(1) 11,321 17.8 9,063 15.5 9,877 11.6 8,751 13.2 9,818 13.6 8,122 13.1
Transportation hubs 3,884 6.1 3,773 6.5 3,587 4.2 2,265 3.4 3,099 4.3 2,281 3.7
Restaurants
(2) 183 0.3 129 0.2 16,490 19.4 1,636 2.5 4,308 6.0 829 1.3
Others (3) 4,458 7.0 2,720 4.7 3,639 4.3 4,000 6.0 3,868 5.3 3,249 5.2
Total 63,451 100.0 58,467 100.0 85,139 100.0 66,232 100.0 72,319 100.0 61,888 100.0
Notes:
1. Public venues include, among others, tourist attractions, parks, hospitals, shopping centers and sports
venues.
2. We actively enhanced our collaborations with restaurant model partners to deploy pick-and-go cabinets
to restaurant premises in 2021 and achieved substantial scale during that year. The number of POSs in
restaurants decreased in 2022 primarily due to the regional resurgence of COVID-19 in mainland China
in the same period that affected consumer traffic in certain consumption scenarios, especially
restaurants.
3. Others primarily include hotels, local communities and residential apartments.
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We continuously monitor and evaluate the performance of Ubox POSs. We define POS
“pending optimization” as Ubox POSs with monthly average GMV in the respective year
falling below the monthly average cost of sales and operating expenses during the same year.
The concept of “pending optimization” was originated from the Group’s point of view for
reference of making operation and management decisions, based on the Group’s estimate of
operation cost of a typical POS. As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023,
approximately 25.6%, 15.2%, 13.5%, 8.2% and 8.6% of Ubox POSs were classified as pending
optimization, respectively. The table below sets out the number of Ubox POSs that were
pending optimization as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Ubox POSs pending optimization
Direct operation model 15,196 6,508 3,224 3,179 5,018 2,679
Partner model
(1) 1,053 2,368 8,241 2,249 6,462 2,631
Total 16,249 8,876 11,465 5,428 11,480 5,310
Note:
(1) The number of POSs pending optimization under the partner model increased in 2021 primarily due to
the expansion of POSs placed at restaurants under the partner model in the second half of 2021, which
generated relatively lower monthly average GMV per POS as a result of the restrictive measures taken
by local governments amid the resurgence of COVID-19 which significantly reduced opening hours and
consumer traffic of restaurants.
POSs are categorized as “pending optimization” primarily due to their revenue falling
short of expectation caused by the changes of surrounding business environment that affect
consumer traffic in the particular locations, such as the regional development of the COVID-19
pandemic, restrictive measures taken by local governments and relocation of local businesses.
POSs in their early stage of development may also record less revenue than expected and fall
within the categorization of “pending optimization.” For the POSs pending optimization under
the direct operation model, we would consider such POS to be loss-making from the
management perspective. For the POSs under the partner model, we only take into account the
portion of GMV that the Group is entitled to when we determine whether such POSs should
be categorized as “pending optimization.” We generally consider the POSs pending
optimization under partner model to have the tendency of loss-making from the Group’s
perspective, primarily because we have limited access to the financial information or cost
structures of the POS partners and we do not share their loss (if any).
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For Ubox POSs that require optimization, we will consider the need for improving or
redeploying them, and accordingly formulate optimization plans by taking into account a range
of factors. These factors include, among others, changes in foot traffic due to local
circumstances and the expected duration of impact, the level of competition in the locations,
availability of POS sites, and relationship with site owners. We will then directly, or through
POS partners, implement the optimization plans. If a POS partner suffers loss in its POSs
where the aggregate of its costs for development of POSs, occupancy fees and utility costs is
higher than its share of the monthly GMV , it will typically take the initiative to negotiate with
the site owners for better locations to place the vending machines, which will also facilitate the
optimization of our POS network and the sustainability of the partner model. During the
COVID-19 pandemic, some of our POS partners successfully negotiated with the site owners
for reduction of occupancy fees and/or relocations of POSs.
The table below sets out the key specifications of our vending machines:
Pick-and-go
cabinet
Beverage vending
machine
Beverage and
snack vending
machine
Freshly brewed
beverage vending
machine
Major consumption
scenarios
Schools,
restaurants, and
office premises
Schools, factories,
public venues,
and
transportation
hubs
Schools, factories,
public venues,
and
transportation
hubs
Schools and office
premises
Type of merchandise Beverages, casual
snacks and
others
Bottled beverages Beverages,
casual snacks
Freshly brewed
beverages
Maximum number of
SKUs per machine
(1)
N/A(2) 23 60 18
Capacity (maximum) 398 liters (2) 360 units 300 units 198 cups
Floor space occupied
(sq.m)
0.43 0.90 1.10 0.50
Support advertising
and system support
services
Ye s Ye s Ye s Ye s
Notes:
(1) Maximum number of SKUs means the maximum number of merchandise that can be displayed and sold
in the particular type of machine.
(2) Pick-and-go cabinet has flexible compartments and can accommodate a wide range of merchandise of
different dimensions. Therefore, it does not have a maximum number of SKUs, and its capacity is
measured by liter.
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The major categories of our vending machines are as follows:
Pick-and-go Cabinet ( у፯у՟஬ᓞ)
Pick-and-go cabinet is our latest vending machine model. Equipped with the latest
hardware technologies, structural design and lighting, and the combined use of biometric
authentication, credit assessment algorithm and IoT technologies, pick-and-go cabinets
poise to revolutionize unmanned retail by allowing consumers to open the door with
facial recognition or scanning the on-screen QR code with electronic payment
applications on their mobile phones and simply pick up merchandise and leave, leaving
authentication and payment to technology. In contrast to traditional vending machines,
which require a consumer to pay before picking up merchandise, the pick-and-go cabinet
allows a biometrically authenticated consumer to open the cabinet door to directly pick
up multiple merchandise in a single transaction. The pick-and-go cabinet automatically
detects merchandise removed from it and check out when the consumer closes the door,
simplifying the transaction process and creating a new, hassle-free consumption
experience. The built-in biometric authentication device in our pick-and-go cabinet
allows it to interact with the consumers’ electronic wallets which support biometric
authentication. Payment for merchandise is made through the consumer’s electronic
wallet after the door of pick-and-go cabinet is closed. Since our pick-and-go cabinet is
featured by its application of electronic payment and biometric authentication, which are
widely used in mainland China, cash payment is not supported in this model of vending
machine. Coupled with IoT technologies, our pick-and-go cabinets can connect and
exchange data with other machines and our system, which can automatically monitor their
performance and machine inventory level. The inter-connection among machines allows
us to monitor and manage multiple machines at the same time.
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Pick-and-go cabinet has numerous advantages over traditional vending machines.
The production cost of a pick-and-go cabinet is only approximately one-third that of a
traditional vending machine primarily because the internal design of a pick-and-go
cabinet is relatively simple and reduces the use of mechanic parts and components. In
contrast to traditional vending machines, pick-and-go cabinets do not require complex
internal mechanical systems, such as structures of motors and movable components, that
pick up or push the selected merchandise towards the dispenser. See “Industry Overview
— Cost Analysis.” It is also significantly smaller in size, rendering it suitable for a wide
range of indoor scenarios. Further, with flexible compartment, it can accommodate a
wider range of merchandise, thereby adaptable to a broader range of scenarios. Below are
pictures of our pick-and-go cabinet:
Pick-and-go Cabinet
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Beverage V ending Machine (ਯ஬ዚ)
Our beverage vending machine is seamlessly connected to our operation system.
Equipped with a touch screen and biometric authentication device, it is designed to offer
consumers an optimal experience in purchasing canned and bottled beverages. Consumers
can authenticate their identities and make payment with their electronic wallets at our
beverage vending machines through facial recognition. The built-in biometric
authentication device in our beverage vending machine allows it to interact with the
consumers’ electronic wallets which support biometric authentication. It supports
operation and automatic malfunctioning alert, thereby significantly enhancing the
automation and digitalization of machine management. It also has a dynamic energy
saving system that is capable of heating and cooling the merchandise, which allows
operators to adjust the category of merchandise based on seasonal needs. For each
transaction, the consumer selects and pays for a merchandise at the interactive display
screen, and collects the merchandise at the dispenser. In addition to electronic payment
such as Alipay and WeChat Pay, as of June 30, 2023, approximately 5.8% of our POSs
of beverage vending machine support cash payment. Below are pictures of our beverage
vending machine:
Beverage V ending Machine
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Beverage and snack V ending Machine (ਯ஬ዚ)
Our beverage and snack vending machine suits various consumption scenarios. With
expandable inner cabinet volume, the beverage and snack vending machine can
accommodate a broad range of merchandise, including fragile items and merchandise
with irregular packaging. With adjustable shelf and rack spaces, and the capability of
cooling the merchandise, it has the versatility to adapt to a wide range of scenarios,
allowing operators to adjust the category of merchandise based on a range of factors,
including seasonal needs. For each transaction, a consumer selects and pays for a
merchandise at the interactive display screen, and collects the merchandise at the
dispenser. In addition to electronic payment such as Alipay and WeChat Pay, as of
June 30, 2023, approximately 0.1% of our POSs of beverage and snack vending machine
support cash payment. Below are pictures of our beverage and snack vending machine:
Beverage and Snack V ending Machine
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Freshly brewed Beverage V ending Machine (ਯ஬ዚ)
With the growing health consciousness in mainland China, there has been an
increasing demand for healthy beverages and food. We have therefore developed the
freshly brewed beverage vending machine, which can serve consumers with a wide
selection of freshly brewed beverages on demand. This includes freshly ground and
capsule coffee, tea, juice, chocolate and other special drinks such as milk tea and Chinese
sweet soup. Since October 2022, we have been authorized by a well-known international
capsule coffee brand to be its first capsule coffee agent for self-service coffee machines
in mainland China to brew and sell its coffee capsules in our freshly brewed beverage
vending machines. For each transaction, a consumer selects and pays for a beverage at the
interactive display screen, and the freshly brewed beverage vending machine will
automatically prepare the selected beverage with the integrated beverage maker. Our
freshly brewed beverage vending machine only accepts electronic payment such as Alipay
and WeChat Pay. Below are pictures of our freshly brewed beverage vending machine:
Freshly Brewed Beverage V ending Machine
Others
We also have a small number of other types of machines, such as orange juice
machines and coconut juice machines. They are currently not the focus of our business
and we do not expect to increase the use of such machines in the future.
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Our Merchandise
The table below sets forth the major categories of products offered at our Ubox POSs as
of June 30, 2023:
Product Category Description Price Range
(RMB)
Beverages Include bottled and canned water, tea,
functional beverages, carbonated
beverages and juice
2.5 to 8.0
Freshly brewed beverages Include freshly brewed coffee and tea 5.0 to 13.0
Snacks Include pastries, instant food, casual
snacks, and puffed and crispy
snacks
3.0 to 10.0
We seek to continuously expand and optimize the category of merchandise offered at
Ubox POSs, while maintaining cost efficiency. We source our merchandise from selected
suppliers across mainland China, who are generally sizable and are typically able to offer a
wide range of merchandise. See “— Our Suppliers.”
Pricing
Prices of our merchandise typically follow suppliers’ recommended retail prices and are
generally in line with prices of similar merchandise sold at their vicinity, but we are allowed
to determine retail prices based on the actual circumstances. We adopt location-based tiered
pricing for our merchandise, and adjust prices according to factors including cost of
merchandise, competition, consumption power of consumers and inventory turnover at a
particular site. With reference to these factors, during the Track Record Period, we had made
both upward and downward price adjustments on the suppliers’ recommended retail prices of
our merchandise. We leverage our scale and data-driven inventory and operation system to
lower the procurement costs of our merchandise. See “— Logistics and Inventory
Management” for details.
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Advertising and System Support Services
Leveraging our expansive network of POSs and our deep understanding of consumer
behaviours, we offer (i) digital advertising services to advertisers, such as brand owners and
merchandise suppliers and (ii) operation system support to Non-Ubox POS operators. In 2019,
2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, advertising and system
support services contributed 19.8%, 11.5%, 9.1%, 7.7%, 8.8% and 4.5% of our total revenue,
respectively.
Digital Advertising Services
We leverage our technology and data analytics capabilities, as well as the sheer volume
of non-personal transaction data we collect in our course of operation to enhance advertising
results. For example, we use a data tagging technique to segment transaction data of each of
our vending machines, thereby depicting the profiles of consumers that make purchases at that
particular machine, with attributes including each consumer’s spending power, purchasing
frequency and preferences. We also provide data analytics reports to advertisers to aid their
advertisement placement decisions.
Our retail platform allows us to provide advertisers with extensive reach across the
country. With our platform’s ability to physically interact with consumers, it allows advertisers
to deliver engaging advertising experience to consumers. It is further complemented by our
ability to precisely push advertising content to consumers’ mobile devices to provide optimal
marketing results. As of June 30, 2023, we had 90 digital advertising service customers.
Our digital advertising platform consists primarily of (i) display screen advertising
services, (ii) after-payment advertising services, (iii) merchandise display advertising services
and (iv) machine body advertising services. We offer them as stand-alone services or as
customized solution packages to customers, who bear the production costs of their
advertisements. During the Track Record Period, we also received service fees from Alipay
China for the advertising and promotion of its payment service products. For details, see
“Connected Transactions — Partially-exempt Continuing Connected Transactions —
Advertising Cooperation Framework Agreement.” Save for the above, during the Track Record
Period, all of our digital advertising services customers were Independent Third Parties.
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Display screen advertising services
The touch screens of our vending machines allow advertisers to place customized
interactive or still advertising content, including posters and videos. Placed usually at area with
high traffic, our display screen advertising services allow advertisers to reach and interact with
specific sub-segment of the community, thereby enhancing engagement and provide consumers
with unique advertising experience. In 2019, 2020, 2021, 2022 and the six months ended June
30, 2022 and 2023, the proportions of new customers to the total number of customers of our
display screen advertising services were 37.5%, nil, 33.3%, 50.0%, 50.0% and nil, respectively.
We do not incur substantial costs in displaying advertisements and changing advertising
content on the screens of our vending machines. In 2019, 2020, 2021, 2022 and the six months
ended June 30, 2023, the total cost for this service line, which only comprises taxes and
surcharges, amounted to approximately RMB0.2 million, RMB3,000, RMB0.02 million,
RMB9,000 and RMB300, respectively. The pictures below illustrate examples of our display
screen advertising services:
Interactive media advertisement
 Static poster advertisement
After-payment advertising services
Each time a consumer completes a mobile payment transaction, we have the opportunity
to push advertising content to their mobile devices through third-party payment applications
such as Alipay and WeChat Pay. Leveraging such opportunity, we enable advertisers to
effectively reach and engage their targeted consumers. For instance, in completion messages
we deliver to consumers through third-party payment applications upon successful payment,
we allow advertisers to build in customized advertising contents, which may, among others,
include links that redirect consumers to advertisers’ designated portals. We do not have any
profit sharing arrangement with third-party payment service providers in relation to our
after-payment advertising services. In 2019, 2020, 2021, 2022 and the six months ended June
30, 2022 and 2023, the proportions of new customers to the total number of customers of our
after-payment advertising services were 43.3%, 16.2%, 7.7%, 27.9%, 40.0% and 37.5%,
respectively.
We may from time to time engage advertisement agencies as our subcontractors in the
provision of our after-payment advertising services where some advertisers target to generate
new consumers/users of their products/services. We cooperated with a wide range of
advertisement agencies during the Track Record Period. In 2019, 2020, 2021, 2022 and the six
months ended June 30, 2022 and 2023, we cooperated with 102, 59, 19, 52, 38 and 13
advertisement agencies for the provision of our after-payment advertising services,
respectively. Leveraging their abundant advertising resources including access to media
channels and potential consumers, such as through mobile applications, WeChat groups and
offline digital screens, such subcontractors enhance the exposure of our advertisements and
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help generate new customers for our advertisers. We typically pay such subcontractors based
on advertising performance. The expenses paid to such subcontractors are recorded as
subcontractor cost of advertising resources. In 2019, 2020, 2021, 2022 and the six months
ended June 30, 2023, the total cost for our after-payment advertising services, which only
comprises subcontractor cost of advertising resources, taxes and surcharges, amounted to
approximately RMB50.8 million, RMB0.5 million, RMB57.9 million, RMB33.6 million and
RMB0.5 million, respectively.
Merchandise display advertising services
The racks of our vending machines present an effective and direct medium for
advertising. Increasing the units of a certain item of merchandise on display in a machine
increases its exposure to, and chances of being purchased by, consumers. Our merchandise
display advertising services allow advertisers to purchase additional rack spaces for key or
newly introduced products. In determining the rack spaces of a particular vending machine for
merchandise display advertising services, we take into account factors including the expected
impact on the overall sales as well as the sales of other merchandise in the same vending
machine. In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, the
average fees we charged to each advertiser for the provision of our merchandise display
advertising services were RMB1.1 million, RMB0.8 million, RMB0.7 million, RMB0.8
million, RMB0.7 million and RMB0.5 million, respectively. In 2019, 2020, 2021, 2022 and the
six months ended June 30, 2022 and 2023, the proportions of new customers to the total
number of customers of our merchandise display advertising services were 9.4%, 17.4%,
32.5%, 1.5%, 7.4% and 6.0%, respectively. We do not incur substantial costs in displaying
merchandise on the racks of our vending machines. In 2019, 2020, 2021, 2022 and the six
months ended June 30, 2023, the total cost for this service line, which only comprises taxes and
surcharges, amounted to approximately RMB0.6 million, RMB0.1 million, RMB0.2 million,
RMB0.3 million and RMB0.2 million, respectively. The picture below illustrates an example
of our merchandise display advertisement:
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Machine body advertising services
The bodies of our wide range of machines represent effective medium which can be
custom-designed according to advertisers’ specific requirements. Furthermore, both sides of
the body of the machines, tags of the merchandise display position and merchandise dispensers
are media that allow advertisers to appeal to consumers. Pop-up extensions can also be added
to increase the prominence of appearance. In 2019, 2020, 2021, 2022 and the six months ended
June 30, 2022 and 2023, the average fees we charged to each advertiser for the provision of
our machine body advertising services were RMB2.2 million, RMB1.1 million, RMB1.7
million, RMB0.3 million, RMB0.2 million and nil, respectively. Our average fees for the
provision of our machine body advertising services decreased in 2022 and we did not provide
any machine body advertising services in the first half of 2023 primarily due to the resurgence
of COVID-19, which reduced consumer traffic and market demand of advertising services. In
2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, the proportions of
new customers to the total number of customers of our machine body advertising services were
58.3%, 17.6%, 44.4%, 40.0%, 66.7% and nil, respectively. We do not incur substantial costs
in displaying merchandise on the bodies of our vending machines. In 2019, 2020, 2021, 2022
and the six months ended June 30, 2023, the total cost for this service line, which only
comprises taxes and surcharges, amounted to approximately RMB0.1 million, RMB0.02
million, RMB0.04 million, RMB4,000 and nil, respectively. The picture below illustrates an
example of our machine body advertisements:
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2022 and 2023, approximately
11.0%, 4.2%, 2.0%, 3.6%, 2.5% and 0.5% of our Ubox POSs are used for the provision of
machine body advertising services, respectively. The utilization rate of our Ubox POSs for the
provision of machine body advertising services decreased during the Track Record Period
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primarily due to the outbreak of COVID-19 and control measures such as travel restrictions and
lockdowns during the same period, which had a temporary adverse impact on consumer traffic
and market demand of advertising services.
Key terms of agreements and pricing policy. Our advertising service agreements with
advertisers typically have terms of less than one year. The agreements typically specify the
type of advertising service, and the number and region of the machines to be deployed. We are
primarily responsible for distributing advertising content of advertisers through a designated
quantity of agreed medium, and the advertisers are required to ensure that the advertisement
content does not breach any applicable laws and regulations. We charge advertisers unit rates
for digital advertising services based on the location and type of advertising medium. In
particular, we typically charge advertisers for the provision of our after-payment advertising
services on a CPM, or cost per mille, basis, where advertisers are charged on the basis of the
number of impressions of their advertisements (expressed in thousands) viewed by end-
consumers. For key terms of our agreement with Alipay China for the advertising and
promotion of its payment service products, see “Connected Transactions — Partially-exempt
Continuing Connected Transactions — Advertising Cooperation Framework Agreement.”
Operation System Support
We provide operation system support to Non-Ubox POS operators by allowing them to
connect their machines to our operation system. By connecting their machines to our operation
system, our customers can access a range of functionalities, including monitoring their
machines’ operating status in real time. Our system provides restocking alerts, and restocking
routes and schedule recommendations to guide the operation of the Non-Ubox POS operators.
Minimal costs, which primarily comprise taxes and surcharges, are allocated to this service line
primarily because we do not incur substantial costs in allowing Non-Ubox POS operators to
connect their machines to our operation system. Costs that are directly related to Non-Ubox
POS operators connecting to the Group’s operating system were recorded as cost of revenue.
In 2019, 2020, 2021, 2022 and the six months ended June 30, 2023, the total cost for this
service line amounted to RMB0.1 million, RMB0.02 million, RMB0.4 million, RMB0.1
million and RMB0.03 million, respectively, which were not material to the Group.
Pricing policy and settlement. We charge fees in relation to monthly system access and
service for each machine based on the relevant costs. These fees are recognized when the
related services are rendered. System access and service fees are typically settled on a monthly
basis.
Merchandise Wholesale
In addition to selling directly to consumers through our retail platform, we also sell
merchandise to customers (who are typically vending machine operators) on a wholesale basis
as our buyers rather than agents. Some of these merchandise wholesale customers are also our
Non-Ubox POS operators, who operate vending machines that are connected to our operation
system. See “— Our POS Network — Non-Ubox POS Operators.”
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Our data-driven operation network is valuable to our merchandise wholesale customers
due to our procurement cost advantage resulting from bulk purchase, and availability of storage
facilities. Additionally, due to their relatively small scale of operation, it is not cost-efficient
for our merchandise wholesale customers to establish and maintain their own operation
network. Our wholesale merchandise primarily comprise beverages and snacks. Ownership of
wholesale merchandise is transferred to our merchandise wholesale customers upon collection
or delivery. Customers are typically responsible for collecting the ordered merchandise from
our storage facilities.
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, we had 1,188, 811, 335,
496 and 730 merchandise wholesale customers, respectively. We do not restrict the
appointment of, nor do we mandate selling price to, sub-wholesale customers, provided that the
merchandise may only be sold in vending machines. As of December 31, 2019, 2020, 2021,
2022 and June 30, 2023, 755, 600, 163, 216 and 193 of our merchandise wholesale customers
were also our Non-Ubox POS operators, respectively. See “— Our POS Network — Non-Ubox
POS Operators” for details. Our other merchandise wholesale customers are primarily small
vending machine operators that purchase merchandise from us on a wholesale basis. We
generally only allow our merchandise wholesale customers to purchase the quantity of
merchandise needed to restock their vending machines for each order, thereby preventing them
from selling the merchandise to consumers other than in vending machines. According to Frost
& Sullivan, the arrangement between merchandise wholesale customers and us is in line with
the industry norm in mainland China. During the Track Record Period, all of our merchandise
wholesale customers were Independent Third Parties.
The table below sets forth the movement of our merchandise wholesale customers for the
periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
Number of merchandise wholesale
customers
At the beginning of the period 1,759 1,188 811 335 335 496
Increase during the period 430 185 174 286 115 384
Decrease during the period (1,001) (562) (650) (125) (132) (150)
At the end of the period 1,188 811 335 496 318 730
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The number of our merchandise wholesale customers decreased from 2019 to 2021
primarily due to (i) business transformation or closure of some of the merchandise wholesale
customers and (ii) our strategic shift of focus to unmanned retail business and the partner
model with an aim to reduce our management costs in respect of merchandise wholesale
customers and alleviate the impact of interruption caused by the COVID-19 pandemic in the
same period. In the process of our strategic shift to unmanned retail business and the partner
model, while we terminated cooperation with some merchandise wholesale customers, we
launched the shared warehouse initiative, which, on top of merchandise wholesale, introduced
more comprehensive services offered by us, such as warehousing, operation system
management, and hardware and software support services, to the merchandise wholesale
customers with a view to gradually converting them into our POS partners. Using the shared
warehouse initiative as a starting point to introduce our capabilities and services to the
merchandise wholesale customers, we target to deepen the business cooperation with our
merchandise wholesale customers and extend the scope of our services provided to them. For
example, we may assist with the operation of their POSs, provide hardware upgrades to their
vending machines and replace their existing vending machines with our vending machines. In
2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, merchandise
wholesale contributed 10.9%, 6.1%, 1.5%, 5.2%, 4.7% and 8.8% of our total revenue,
respectively. The increase in revenue contribution in 2022 was in line with the increase in the
number of our merchandise wholesale customers in the same period. We will further promote
our partner model and encourage our merchandise wholesale customers to become our POS
partners through the implementation of the shared warehouse initiative and provision of our
comprehensive services on top of the original merchandise wholesale business model. In 2019,
2020, 2021, 2022 and the six months ended June 30, 2023, there were 166, 16, 34, 73 and 4
merchandise wholesale customers that had become our POS partners, respectively.
The principal terms of our agreements with merchandise wholesale customers are as
follows:
Terms of agreement : Three months to one year in general.
Merchandise wholesale
customers’ responsibilities
: Merchandise wholesale customers may only sell the
merchandise at vending machines in general, and
typically need to follow merchandise suppliers’
recommended retail price. We do not prohibit
merchandise wholesale customers from sourcing
from other suppliers.
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Return policy : The merchandise wholesale customers are required to
inspect the quantity, appearance, shelf life and
quality of the merchandise upon delivery of the
merchandise. We do not accept return of merchandise
after they are accepted by the merchandise wholesale
customers, upon which the risk of damage and loss of
merchandise is transferred to the merchandise
wholesale customers.
Sales target and minimum
purchase amount
: There is no sales target or minimum purchase
amount.
Termination : The agreement with merchandise wholesale
customers may generally be terminated in the
following manner:
(i) unilateral termination where such merchandise
wholesale customer is in material breach of the
relevant agreement including selling the
merchandise to consumers directly other than in
vending machines;
(ii) by notice; or
(iii) upon mutual agreement.
Pricing Policy and Payment Terms
We typically charge a premium to our procurement costs. For Non-Ubox POS operators,
full payment is typically required before delivery, and typically no credit period is granted for
sale of merchandise. For other merchandise wholesale customers, we typically grant credit
based on the scale of their vending machine retail sales, and the payments are settled on a
monthly basis. We recognize revenue upon the transfer of control over the merchandise.
Vending Machine Sales and Leases
We sell, lease and/or provide hardware support services for vending machines to our
Non-Ubox POS operator. We provide hardware support services including machine installation
and maintenance services. In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022
and 2023, vending machine sales and leases, and/or provision of hardware support services
contributed 3.4%, 2.5%, 1.7%, 1.3%, 1.4% and 0.9% of our total revenue, respectively.
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Non-Ubox POS operators which purchase the machines are required to pay in full or by
installment. Ownership of machines will be transferred to customers upon delivery, followed
by a seven-day acceptance period and a twelve-month warranty period from the delivery date.
For customers who rent our vending machines, ownership of vending machines will not be
transferred. Customers are responsible for machine delivery, while we provide them with the
relevant hardware support services.
Pricing Policy and Payment Terms
For each machine, we typically charge our customers a one-off selling price, or monthly
rental. We determine the price and rent of our machines mainly on a cost-plus basis. For
machine sales, we take into account factors such as procurement costs and the level of
customization required. In addition, we also consider the type of vending machines, purchase
amount and year of manufacture when setting the selling prices of vending machines. For
machine leasing, we take into account factors including the monthly depreciation amount. The
sales consideration is recognized when the control of the machine is transferred, and the rental
income is recognized over the rental period. We also charge a one-off installation fee for each
machine sold, and monthly maintenance service fees for each machine. The service fees for
installation and maintenance services are recognized when the related services are rendered.
Customers who purchased our machines are required to (i) pay in full, by lump-sum
payment within five days after the date of the relevant agreements or (ii) pay by installments,
with a portion of the total purchase price paid within five days after the date of the relevant
agreements plus monthly instalments for the remaining sum for a period of one year to five
years. Customers who rented our vending machine are required to pay (i) upfront rental
deposits and (ii) monthly or quarterly rentals. One-off delivery service fees and deposits upon
delivery of machines and maintenance service fees are settled on a monthly basis.
In 2019, 2020, 2021, 2022 and the six months ended June 30, 2023, the average selling
price of vending machines sold was RMB12,071, RMB9,739, RMB7,749, RMB7,130 and
RMB5,286, respectively. The average selling price of vending machines in 2020 was lower as
compared to 2019 primarily because the beverage vending machines and the beverage and
snack vending machines sold in 2020 were mainly old version machines with discounted
prices. The average selling price of vending machines in 2021 was lower as compared to 2020
primarily because (i) the proportion of pick-and-go cabinets with relatively lower selling prices
among the vending machines sold increased in 2021, and (ii) the beverage vending machines
sold in 2021 were mainly old version machines with discounted prices. The average selling
price of vending machines sold was relatively lower in 2022 primarily because the vending
machines sold in the same period were mainly old version machines with discounted prices.
The average selling price of vending machines sold further decreased in the first half of 2023
primarily because (i) the proportion of pick-and-go cabinets with relatively lower selling prices
among the vending machines sold increased in the same period, and (ii) the vending machines
sold in the same period were mainly old version machines with discounted prices.
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Others
During the Track Record Period, we also offered other services, which mainly comprised
mobile device distribution services, karaoke booth services, karaoke booth sales and leases,
and karaoke booth operation system support. These are currently not the focus of our business,
and we do not expect significant growth in these business segments.
Mobile Device Distribution Services
Leveraging our digitalization capabilities and our extensive experience in vending
machine operations, we enter into non-exclusive distribution arrangement with mobile phone
manufacturers and offer unmanned mobile phones and accessories retail solutions to authorized
resellers of major mobile phone manufacturers. We digitalize the delivery of mobile phones
and accessories from mobile device resellers to consumers with our customized mobile device
cabinets, namely (i) U-Buy Cloud Cabinet (ֳwhich is designed for the sales of
mobile phones and accessories, and (ii) U-Buy Cloud Warehouse (ࡑwhich is
designed for storage of mobile phones and accessories. Our U-Buy Cloud Cabinet and U-Buy
Cloud Warehouse are customised mobile device cabinets and are not categorized under any
type of vending machines under our unmanned retail business. Our mobile device distribution
services were launched in 2018. In 2019, 2020, 2021, 2022 and the six months ended June 30,
2022 and 2023, mobile device distribution services contributed 2.2%, 7.3%, 14.5%, 6.4%,
4.0% and 5.6% of our total revenue, respectively. The decrease in revenue contribution of our
mobile device distribution services in 2022 as compared to 2021 was primarily because the
downstream mobile device market in mainland China was negatively affected by macro market
conditions and consumer demands.
U-Buy Cloud Cabinet
 U-Buy Cloud Warehouse
The U-Buy Cloud Cabinets and U-Buy Cloud Warehouses are mainly located in offline
stores operated by authorized resellers of major mobile phone manufacturers. Our U-Buy
Cloud Cabinets and U-Buy Cloud Warehouses are equipped with 24-hour video surveillance
and visual identification technologies to avoid damage or loss of merchandise. As of June 30,
2023, we had launched three U-Buy Cloud Cabinets and 628 U-Buy Cloud Warehouses in 507
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offline stores operated by authorized resellers of major mobile phone manufacturers across
mainland China. Our U-Buy Cloud Cabinets with adjustable shelf and rack spaces, interactive
display screen and built-in payment system are designed for retail of mobile devices to
consumers, whereas our U-Buy Cloud Warehouses with built-in QR code scanner, storage
cabinets and doors are designed as a means of delivery for sale of mobile devices to resellers.
Mobile device resellers place orders with us instead of sourcing devices directly from
manufacturers primarily because (i) we usually purchase in bulk from manufacturers, which
leads to competitive pricing in general, and (ii) our strong logistics network provides hassle
free delivery and warehousing services to mobile device resellers and effectively reduces their
inventory risk as they can keep a lower level of stock. In the traditional sales model of mobile
devices, mobile device resellers are required to order mobile devices from manufacturers’
reselling agents in the respective provinces, which typically require mobile device resellers to
pay in full when they place orders. Using our U-Buy Cloud Cabinets and U-Buy Cloud
Warehouses, mobile device resellers can order mobile devices from us instead of
manufacturers’ reselling agents with a 20% deposit at the time of ordering, with the remaining
amount payable upon delivery. Mobile device resellers do not have to order mobile devices
through the Group in order to use the U-Buy Cloud Cabinets and U-Buy Cloud Warehouses.
Upon receiving orders from mobile device resellers, we purchase mobile phones or
accessories from mobile phone manufacturers, and then sell them to the resellers. Revenue
from mobile device distribution service is recognized upon transfer of control. The mobile
devices sold to the resellers may be placed in our U-Buy Cloud Cabinets, which allow
consumers to purchase and pick up the mobile devices on the spot when the product ownership
and control are transferred to the consumers for recognizing revenue from mobile device
distribution services. Apart from the U-Buy Cloud Cabinets, we deliver the products in
different ways:
 Self pick-up. The mobile devices purchased by the resellers may be placed in our
U-Buy Cloud Warehouses or in other designated third-party warehouses. After end
consumers have ordered and purchased the products from the resellers, they may
authorize end-consumers to pick up the products in our U-Buy Cloud Warehouses
with automatically generated pick-up code or in other designated warehouses. The
product ownership is transferred to the resellers once they sign on the receipt
confirmations upon delivery of the mobile devices to the U-Buy Cloud Warehouses
or designated third-party warehouses. Control is transferred and revenue is
recognized from mobile device distribution services when the resellers or their
authorized personnel, including their employees and the end-customers, pick up the
mobile devices at the U-Buy Cloud Warehouses or designated third-party
warehouses. Mobile devices delivered through this model contributed 97.5%, 100%,
99.8%, 99.9% and 100% of the total revenue of our mobile device distribution
services in 2019, 2020, 2021, 2022 and the six months ended June 30, 2023,
respectively;
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 Door-to-door logistics. We deliver products to the consignee at the location
designated by resellers. Mobile devices delivered through this model do not use the
Group’s vending machines. The product ownership and control is transferred to the
resellers for recognising revenue from mobile device distribution services once the
mobile devices are dispatched from our warehouses. Such mobile devices did not
generate material revenue during the Track Record Period;
 Drop shipping. We send the products by courier to the consignee on behalf of the
resellers who resell the products through online retail platforms. Mobile devices
delivered through this model do not use the Group’s vending machines. The product
ownership and control is transferred to the resellers for recognising revenue from
mobile device distribution services once the mobile devices are dispatched from our
warehouses. Such mobile devices did not generate material revenue during the Track
Record Period.
Key terms of agreements. We enter into framework agreements with authorized resellers,
pursuant to which the authorized resellers, acting as our buyers rather than agents, purchase
mobile phones or accessories from us while we deliver the products. Our purchase and sales
framework agreements with authorized resellers typically have terms of one year,
automatically renewable unless either party objects. We do not accept merchandise return or
refund from resellers, nor do we require minimum purchase amounts, minimum sales targets
or mandatory reselling prices from resellers. In addition, we do not prohibit authorized
resellers from sourcing from other suppliers. Agreements with authorized reseller are generally
terminable by (i) unilateral termination, where the authorized reseller is in material breach of
the relevant agreement; (ii) notice; and (iii) mutual agreement. Resellers may only sell the
mobile phones or accessories at designated areas in mainland China.
Pricing policy and payment terms. We typically charge a premium to our procurement
costs. Resellers are required to make lump-sum payments or pay by instalments. We require
resellers to pay a 20% deposit at the time of ordering, with the remaining sum payable upon
delivery. We typically grant a credit period of 15 to 30 days to resellers. We had not
experienced any delays or defaults in payments by the mobile device resellers during the Track
Record Period.
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The table below sets forth the revenue, gross profit and gross profit margin attributable
to mobile device distribution services during the Track Record Period.
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
(RMB in thousands, except percentages)
Revenue 60,556 139,472 388,045 160,867 45,446 69,808
Gross profit 227 1,313 2,165 1,309 344 615
Gross profit
margin 0.4% 0.9% 0.6% 0.8% 0.8% 0.9%
During the Track Record Period, the gross profit margin of our mobile device distribution
services slightly fluctuated due to the changes in market price of the mobile devices. The
revenue of our mobile device distribution services decreased in 2022 as compared to 2021
primarily because the downstream mobile device market in mainland China was negatively
affected by macro market conditions and consumer demands.
In respect of mobile devices sold under our mobile device distribution services, we do not
accept return of products from mobile device resellers. In the event that the mobile devices are
defective in quality, the mobile device resellers shall send the defective products to the
after-sales service centers or authorized repair centers designated by the mobile devices
manufacturers.
The following table sets forth movement in the number of resellers during the periods
indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
Number of resellers:
At the beginning of the period – 8 7 12 12 19
Increase during the period 8 7 8 13 3 2
Decrease during the period –8368 1 2
Net increase/(decrease) during the
period 8 (1) 5 7 (5) (10)
At the end of the period 8 7 12 19 7 9
Note: Based on the number of resellers who entered into agreements with us for sale and purchase of mobile
phones during the relevant period.
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Our Directors confirmed that, as of the Latest Practicable Date, all resellers we
cooperated with were Independent Third Parties. Our mobile device distribution services
enable us to diversify our revenue streams and improve resellers’ operational efficiency, thus
achieving mutual benefits for both parties. According to Frost & Sullivan, the arrangement
between resellers and us in the distribution of mobile phones and accessories is in line with the
industry norm in mainland China.
Karaoke Booth Services
Our karaoke booth is a small, soundproof and air-conditioned booth where a maximum of
two patrons can sing along to music from our extensive collection. We have three charging
plans for our karaoke session. Patrons may choose to pay (i) by the song, (ii) purchase an
all-you-can-sing session of 15, 30 or 60 minutes, or (iii) for karaoke booths outside Beijing and
Shanghai, purchase a monthly pass for up to 30 minutes’ daily access to the karaoke booths for
one month. Below is picture of our M-Bar self-service karaoke booth:
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M-Bar self-service karaoke booth
Leveraging our outstanding operational capabilities, we have established an extensive
network of karaoke booths. As of June 30, 2023, we had a total of 1,706 karaoke booths under
the direct operation model and 1,650 karaoke booths under franchising model, situated in 278
cities in mainland China. The following table sets forth the distribution of all karaoke booths
operated by us and franchisees by type of sites as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Coverage by type of sites
Shopping centers 2,884 1,787 1,648 1,399 1,492 1,300
Cinemas 1,496 1,195 1,087 983 1,052 914
Bathhouses 492 412 346 290 325 267
Amusement parks 383 279 301 297 279 285
Others
(1) 1,155 875 715 623 670 590
Total 6,410 4,548 4,097 3,592 3,818 3,356
Note:
1. Others include karaoke lounges, office premises, factories, airports, hotels, local communities and
schools.
As of June 30, 2023, our music library consisted of more than 28,000 songs in different
categories. We enter into copyright licensing agreements with the China Audio-video
Copyright Association, the designated association approved by the National Copyright
Administration for the management of the intellectual property rights in video and audio works
in mainland China, whereby we are licensed to play the video and audio works from its library
in our karaoke booth for a fixed annual fee.
Operation Models
Our karaoke booths are operated either through a direct operation model or a franchising
model. Under the direct operation model, we enter into cooperation agreement with the site
owner. The site owner will place our karaoke booth in a designated location for (i) monthly
occupancy fee together with utility cost, or (ii) a share of its monthly transaction GMV
(typically 50%). In each case we will be responsible for the installation and maintenance of the
karaoke booth. The terms of our agreements with site owners are typically one year. In 2019,
2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, the direct operation model
contributed 94.9%, 86.7%, 94.7%, 93.2%, 93.1% and 98.5% of our revenue from our karaoke
booth services, respectively.
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Under the franchising model, our karaoke booths were operated by two types of
franchisees during the Track Record Period, namely revenue-sharing franchisees and
franchisees which purchase or rent our karaoke booths. We believe that engaging franchisees
has the following benefits: (i) faster penetration into new and prime regions and locations; (ii)
effective utilization of the franchisees’ resources, local expertise and business network; and
(iii) reducing our cost and operation risk. According to Frost & Sullivan, it is an industry norm
to engage franchisees in the operation of karaoke booths in mainland China. In 2019, 2020,
2021, 2022 and the six months ended June 30, 2022 and 2023, revenue-sharing franchisees
contributed 5.1%, 13.3%, 5.3%, 6.8%, 6.9% and 1.5% of our revenue from our karaoke booth
services, respectively.
Principal terms of the two types of franchise arrangements are summarized as follows:
 Revenue-sharing franchisees. Under the revenue-sharing model, we enter into
cooperation agreement with the franchisee. The franchisee (as our buyers rather than
agents) may place our karaoke booths in any site owned or managed by it. The
franchisee shall pay us a deposit and the installation and delivery fees for the
karaoke booths. We are responsible for the operation and maintenance of the karaoke
booths. The franchisee is generally entitled to 80% of the karaoke booths’ revenue,
depending on the monthly sales. Our revenue is recognized when the services are
rendered.
 Franchisees which purchase or rent our karaoke booths. Under this model, we only
sell or rent our karaoke booths to franchisees and provide the related hardware
support services. The franchisee is entitled to all the revenue generated from the
karaoke booths, and is responsible for the installation, operation and maintenance of
the karaoke booths. We charge the franchisee (i) purchase price or rental for our
machines and (ii) a monthly service fee for using our operation system support. The
revenue from sales and leases of our karaoke booths is recorded under machine sales
and leases, and/or provision of hardware support services. See “— Our Product and
Service Offerings — Others — Karaoke Booth Sales and Leases” and “— Our
Product and Service Offerings — Others — Karaoke Booth Operation System
Support.”
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The following table sets out the number of karaoke booths operated under each model as
of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Karaoke booths by operation model
Direct operation model 4,719 2,862 2,333 1,943 2,063 1,706
Franchising model where franchisees 1,691 1,686 1,764 1,649 1,755 1,650
– share part of the operating revenue 298 144 109 – 102 –
– purchase our karaoke booths 1,390 1,460 1,605 1,649 1,610 1,650
– rent our karaoke booths 3 82 50 – 43 –
Total 6,410 4,548 4,097 3,592 3,818 3,356
The following table sets out the movement in the number of our franchisees and
franchised karaoke booths for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
Number of franchisees:
At the beginning of the period 808 751 728 699 699 595
Increase during the period 137 104 46 32 22 8
Decrease during the period (194) (127) (75) (136) (42) (12)
Net increase/(decrease) (57) (23) (29) (104) (20) (4)
At the end of the period 751 728 699 595 679 591
Number of franchised karaoke
booths:
At the beginning of the period 1,678 1,691 1,686 1,764 1,764 1,649
Newly opened during the period 384 329 271 174 76 60
Closed during the period (371) (334) (193) (289) (85) (59)
Net increase/(decrease) 13 (5) 78 (115) (9) 1
At the end of the period 1,691 1,686 1,764 1,649 1,755 1,650
The number of karaoke booths and karaoke booth franchisees decreased during the Track
Record Period primarily due to the impact of the COVID-19 pandemic. Currently, with the
decrease in popularity of karaoke booths amid the COVID-19 pandemic, we plan to refocus
resources to our other business segments. As a result, we do not expect the number of our
karaoke booths or the number of our karaoke booth franchisees to significantly increase in the
near future.
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To the best knowledge of our Directors, each franchisee we engaged during the Track
Record Period was an Independent Third Party.
To maintain the quality of our karaoke booths services across franchisees, we have
established comprehensive policies for managing our franchisees:
 Non-competition. To avoid cannibalization, the franchisees are typically assigned a
geographical area where they are allowed to exclusively deal with site owners to
place our karaoke booths.
 No minimum number of karaoke booths to be established. We do not set
requirements for minimum number of karaoke booths to be established, or minimum
investment amount in our franchise arrangements.
 Quality control. Franchisees are required to adhere to our operating standards and
practices. We assess their performance on a regular basis against our key
performance indicators, such as revenue achieved and record of customer
complaints. Should any franchisee consistently fall below our performance
standards, we may terminate our cooperation with that franchisee. During the Track
Record Period, no franchise arrangements was terminated for such reason.
Karaoke Booth Sales and Leases
We sell, lease and/or provide hardware support services for karaoke booths to karaoke
booth franchisees. We provide hardware support services including machine installation and
maintenance services. In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and
2023, karaoke booth sales and leases, and/or provision of hardware support services for
karaoke booths contributed 0.3%, 0.2%, 0.3%, 0.1%, 0.1% and 0.5% of our total revenue,
respectively.
Pricing Policy and Payment Terms
For each karaoke booth, we typically charge our karaoke booth franchisees a one-off
selling price, or monthly rental. We determine the price and rent of our machines mainly on a
cost-plus basis. For machine sales, we take into account factors such as procurement costs and
the level of customization required. In addition, we also consider the type of karaoke booths,
purchase amount and year of manufacture when setting the selling prices of karaoke booths.
For karaoke booth leasing, we take into account factors including the monthly depreciation
amount. Karaoke booth franchisees are responsible for machine delivery, while we provide
them with the relevant hardware support services. The sales consideration is recognized when
the control of the machine is transferred, and the rental income is recognized over the rental
period. We also charge a one-off installation fee for each machine sold, and monthly
maintenance service fees for each machine. The service fees for installation and maintenance
services are recognized when the related services are rendered.
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Karaoke booth franchisees who purchased our machines are required to (i) pay in full, by
lump-sum payment within five days after the date of the relevant agreements or (ii) pay by
installments, with a portion of the total purchase price paid within five days after the date of
the relevant agreements plus monthly instalments for the remaining sum for a period of one
year to five years. Ownership of machines will be transferred to the karaoke booth franchisees
upon delivery, followed by a seven-day acceptance period and a twelve-month warranty period
from the delivery date. Karaoke booth franchisees who rented our vending machine are
required to pay (i) upfront rental deposits and (ii) monthly or quarterly rentals. One-off
delivery service fees and deposits upon delivery of machines and maintenance service fees are
settled on a monthly basis. For karaoke booth franchisees who rent karaoke booths, ownership
of the machines will not be transferred.
Karaoke Booth Operation System Support
We provide operation system support to karaoke booth franchisees by allowing them to
connect their machines to our operation system. In 2019, 2020, 2021, 2022 and the six months
ended June 30, 2022 and 2023, karaoke booth operation system support contributed 0.3%,
0.2%, 0.2%, 0.1%, 0.1% and 0.1% of our total revenue, respectively.
The karaoke booth franchisers can access our music library over the cloud operated by
third-party cloud service providers and entertainment system that supports interactive
functions such as ordering songs and scoring. Minimal costs, which primarily comprise taxes
and surcharges, are allocated to this service line primarily because we do not incur substantial
costs in allowing karaoke booth franchisees to connect their machines to our operation system.
Costs that are directly related to karaoke booth franchisees connecting to the Group’s operating
system were recorded as cost of revenue. In 2019, 2020, 2021, 2022 and the six months ended
June 30, 2023, the total cost for this service line amounted to RMB0.03 million, RMB0.01
million, RMB0.01 million, RMB0.01 million and RMB4,000, respectively, which were not
material to the Group.
Pricing policy and settlement
We charge fees in relation to monthly system access and service for each machine based
on the relevant costs. These fees are recognized when the related services are rendered. System
access and service fees are typically settled on a monthly basis.
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OUR CUSTOMERS
Customers for our unmanned retail business consist of consumers who purchase
merchandise from our Ubox vending machines. Customers for our advertising and system
support services mainly comprise advertisers, such as brand owners and merchandise suppliers
which engage our advertising services, and Non-Ubox POS operators that connect their
machines to our operation system. Customers for our merchandise wholesale and vending
machine sales and leases mainly consist of merchandise wholesale customers and Non-Ubox
POS operators. Customers for mobile device distribution services mainly consist of mobile
device resellers. Customers for our karaoke booth services, karaoke booths sales and leases and
karaoke booth operation system support mainly consist of patrons of karaoke booths under our
direct operation and karaoke booth franchisees.
Major Customers
We have cultivated solid relationships with our major customers. As of June 30, 2023, we
had an average of over 2 years of business relationship with our top five customers in 2019,
2020, 2021, 2022 and the six months ended June 30, 2023, all of whom were customers of our
advertising and system support services, merchandise wholesale and/or mobile device
distribution services categorized under others. Our top five customers in 2019, 2020, 2021,
2022 and the six months ended June 30, 2023 are primarily online payment services providers,
beverages and food manufacturers and digital product sellers in mainland China. In each of
2019, 2020, 2021, 2022 and the six months ended June 30, 2023, our five largest customers in
each year/period generated RMB288.8 million, RMB163.2 million, RMB408.4 million,
RMB153.7 million and RMB68.0 million of revenue, accounting for 10.6%, 8.6%, 15.3%,
6.1% and 5.4% of our total revenue for the same periods, respectively. For the same periods,
our largest customer in each year/period generated RMB159.2 million, RMB80.4 million,
RMB120.2 million, RMB47.3 million and RMB27.1 million of revenue, respectively,
accounting for 5.8%, 4.2%, 4.5%, 1.9% and 2.2% of our total revenue, respectively.
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The information of our top five customers in each year during the Track Record Period
is set forth below:
For the Y ear Ended December 31, 2019
Ranking Customer
Products/
services
provided by us
Principal
business
Commencement
of business
relationship
Sales
amount
Percentage
of total
revenue Credit terms
Settlement
method Business scale
RMB’000 %
1 Customer A Advertising and
system
support
services
Online
payment
2018 159,199 5.9 Pay monthly,
prepayment of 70%
after issuance of
billing, the rest of
30% will be paid
after issuance of
invoice
Bank
Transfer
With a registered
capital of
RMB1.5 billion
2 Customer B Advertising and
system
support
services
Brand
marketing
2017 38,733 1.4 Prepayment of 10%
within 90 days after
signing purchase
order, full amount
must be paid before
June 9, 2020
Bank
Transfer
With a registered
capital of
RMB10.0
million
3 Customer C Advertising and
system
support
services
Internet
information
services
2015 31,351 1.2 Monthly payment
within 15 days after
receiving invoice
Bank
Transfer
With a registered
capital of
RMB1.0 billion
4 Customer D Mobile device
distribution
services
categorized
under others
Digital product
sales
2019 31,164 1.1 No credit term Bank
Transfer
With a registered
capital of
RMB10.0
million
5 Customer E Advertising and
system
support
services
Food wholesale 2018 28,332 1.0 30 days Bank
Transfer
With a registered
capital of
USD8.2 million
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For the Y ear Ended December 31, 2020
Ranking Customer
Products/
services
provided by us
Principal
business
Commencement
of business
relationship
Sales
amount
Percentage
of total
revenue Credit terms
Settlement
method Business scale
RMB’000 %
1 Customer F Mobile device
distribution
services
categorized
under others
Digital product
sales
2020 80,378 4.2 No credit term Bank
Transfer
With a registered
capital of
RMB10.0
million
2 Customer A Advertising and
system
support
services
Online
payment
2018 30,288 1.6 Pay monthly,
prepayment of 70%
after issuance of
billing, the rest of
30% will be paid
after issuance of
invoice
Bank
Transfer
With a registered
capital of
RMB1.5 billion
3 Customer G Mobile device
distribution
services
categorized
under others
Digital product
sales
2020 18,234 1.0 No credit term Bank
Transfer
N/A
4 Customer H Advertising and
system
support
services
Food
production
and sales
2016 17,497 0.9 Payment in three
instalments within
one year
Bank
Transfer
With a registered
capital of
RMB550.0
million
5 Customer I Advertising and
system
support
services
Food
production
and sales
2016 16,764 0.9 Semi-annually Payment Bank
Transfer
With a registered
capital of
RMB650.0
million
BUSINESS
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For the Y ear Ended December 31, 2021
Ranking Customer
Products/
services
provided by us
Principal
business
Commencement
of business
relationship
Sales
amount
Percentage
of total
revenue Credit terms
Settlement
method Business scale
RMB’000 %
1 Customer J Mobile device
distribution
services
categorized
under others
Digital product
sales
2020 120,234 4.5 No credit term Bank
Transfer
With a registered
capital of
RMB10.0
million
2 Customer K Mobile device
distribution
services
categorized
under others
Digital product
sales
2021 98,407 3.7 No credit term or 15
days if agreed by the
Group
Bank
Transfer
With a registered
capital of
RMB2.0 million
3 Customer L Mobile device
distribution
services
categorized
under others
Digital product
sales
2021 91,059 3.4 No credit term Bank
Transfer
With a registered
capital of
RMB5.0 million
4 Customer M Advertising and
system
support
services
Advertising
design and
agency
2019 63,744 2.4 Monthly payment Bank
Transfer
With a registered
capital of
RMB10.0
million
5 Customer N Mobile device
distribution
services
categorized
under others
Digital product
sales
2020 34,969 1.3 No credit term Bank
Transfer
With a registered
capital of
RMB5.0 million
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For the Y ear Ended December 31, 2022
Ranking Customer
Products/
services
provided by us
Principal
business
Commencement
of business
relationship
Sales
amount
Percentage
of total
revenue Credit terms
Settlement
method Business scale
RMB’000 %
1 Customer K Mobile device
distribution
services
categorized
under others
Digital product
sales
2021 47,290 1.9 No credit term or 15
days if agreed by the
Group
Bank
Transfer
With a registered
capital of
RMB2.0 million
2 Customer L Mobile device
Distribution
services
categorized
under others
Digital product
sales
2021 31,560 1.3 No credit term Bank
Transfer
With a registered
capital of
RMB10.0
million
3 Customer A Advertising and
system
support
services
Online
payment
2018 29,930 1.2 Pay monthly,
prepayment of 70%
after issuance of
billing, the rest of
30% will be paid
after issuance of
invoice
Bank
Transfer
With a registered
capital of
RMB1.5 billion
4 Customer O Advertising and
system
support
services
Advertising
design and
agency
2022 22,696 0.9 Monthly payment Bank
Transfer
With a registered
capital of
RMB2.0 million
5 Customer P Mobile device
Distribution
services
categorized
under others
Digital product
sales
2022 22,226 0.9 30 days after shipment Bank
Transfer
N/A
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For the Six Months Ended June 30, 2023
Ranking Customer
Products/
services
provided by us
Principal
business
Commencement
of business
relationship
Sales
amount
Percentage
of total
revenue Credit terms
Settlement
method Business scale
RMB’000 %
1 Customer K Mobile device
distribution
services
categorized
under others
Digital product
sales
2021 27,144 2.2 1 day after delivery Bank
Transfer
With a registered
capital of
RMB2.0 million
2 Customer L Mobile device
distribution
services
categorized
under others
Digital product
sales
2021 18,703 1.5 3 days after delivery Bank
Transfer
With a registered
capital of
RMB10.0
million
3 Customer Q Advertising and
system
support
services
Food sales 2014 9,309 0.7 No credit term Bank
Transfer
With a registered
capital of
USD10.0 million
4 Customer R Mobile device
distribution
services
categorized
under others
Digital product
sales
2023 6,523 0.5 1 day after delivery Bank
Transfer
With a registered
capital of
RMB1.0 million
5 Customer S Merchandise
wholesale
Food sales 2021 6,331 0.5 Monthly payment
within 30 days
Bank
Transfer
With a registered
capital of
RMB19.1
million
In 2019, 2020 and 2022, Alipay China was one of our five largest customers, from whom
we received service fees for the advertising and promotion of its payment service products. For
details, see “Connected Transactions — Partially-exempt Continuing Connected Transactions
— Advertising Cooperation Framework Agreement.” During the Track Record Period, we also
procured payment services through Alipay China’s payment channels so as to enable our
customers to conduct online transactions via our vending machines. However, such payment
services were not considered as our cost of sales but our expenses, and Alipay China was
accordingly not regarded as our supplier. For details, see “Connected Transactions —
Partially-exempt Continuing Connected Transactions — Payment Services Framework
Agreement.” As of the Latest Practicable Date, save for Alipay China, none of our Directors,
their close associates or any of our Shareholder which to the best knowledge of our Directors
owned more than 5% of the issued share capital of our Company, had any interest in our top
five customers. To the best knowledge of our Directors, save for Alipay China, each of our top
five customers during the Track Record Period was an Independent Third Party.
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Customer Service
We strive to optimize our customers’ experience by offering high-quality customer
services. We have invested significant management, financial and human resources to offer our
customers personalized services across our various lines of business. We have a dedicated
customer service department to handle customer queries and complaint, and provide
comprehensive training to our customer service representatives to ensure consistent and
high-quality service.
We maintain a 24/7 hotline, WeChat public account and Alipay mini-program to answer
questions and complaints from our customers. Upon receiving feedbacks from a customer, our
system will assign a customer service representative to follow up until the issue is resolved.
During the Track Record Period and up to the Latest Practicable Date, we did not receive any
material complaint from our customers.
SALES AND MARKETING
We have dedicated marketing teams for each of our business segments. Our marketing
team is primarily responsible for acquiring, developing and maintaining our existing and
prospective customers. With respect to unmanned retail business, we primarily expand through
our direct force and POS partners.
Our direct force is mainly responsible for the development of POS partners and securing
new sites for machines under the direct operation model primarily in tier one, new tier one and
tier two cities. As of June 30, 2023, Ubox POS under the direct operation model covered 86
cities and 28 provincial-level administrative regions across mainland China. As of June 30,
2023, our direct force consisted of 123 employees with in-depth industrial knowledge and
professional experience, who are deployed to each region based on the needs of different
geographic area to maximize efficiency of POS partner development and site acquisition.
Commencing from 2020, we started to shift our marketing efforts to our partner model.
We believe this model would better accommodate the nature of our business operations, as it
facilitates site acquisitions and enhances our efficiency with simplified business process. See
“— Our POS Network.”
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OUR SUPPLIERS
Our major suppliers are primarily beverages and food manufacturers, distributors and
machine manufacturers in mainland China. Purchases from our top five suppliers in each
year/period accounted for 22.5%, 27.7%, 32.5%, 24.5% and 27.2% of our total purchases in
each of 2019, 2020, 2021, 2022 and the six months ended June 30, 2023, and purchases from
our largest supplier in each year/period accounted for 6.3%, 7.9%, 7.7%, 9.7% and 9.4% of our
total purchases in the same periods, respectively. In 2019, 2020, 2021, 2022 and the six months
ended June 30, 2023, we had 558, 588, 539, 531 and 458 suppliers, respectively. The number
of our suppliers decreased in 2022 primarily due to our termination of cooperation with some
suppliers with smaller procurements to increase the level of centralized procurement with
larger suppliers. The table below sets forth the details of our top five suppliers in each year
during the Track Record Period:
For the Y ear Ended December 31, 2019
Ranking Supplier
Products/
services
purchased Principal business
Commencement
of business
relationship
Purchase
amount
Percentage
of total
purchase Credit terms
Settlement
method Business scale
RMB’000 %
1 Supplier A Machines R&D and sales of
machines
2017 109,121 6.3 Payment within
one year
Bank
Transfer
With a registered
capital of
RMB13.0 million
2 Supplier B Beverages and
food
Food production
and sales
2014 94,342 5.4 Monthly payment
within 60 days
Bank
Transfer
With a registered
capital of
USD52.0 million
3 Supplier C Beverages and
food
Food production
and sales
2015 72,493 4.2 Monthly payment
within 65 days
Bank
Transfer
With a registered
capital of
RMB1.5 billion
4 Supplier D Machines R&D, production
and sales of cold
chain storage and
transportation
equipment
2018 66,240 3.8 Monthly payment
within 30 days
Bank
Transfer
With a registered
capital of
RMB483.9
million
5 Supplier E Beverages and
food
Food production
and sales
2014 48,088 2.8 Monthly payment
within 60 days
Bank
Transfer
With a registered
capital of
RMB510.7
million
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For the Y ear Ended December 31, 2020
Ranking Supplier
Products/
services
purchased Principal business
Commencement
of business
relationship
Purchase
amount
Percentage
of total
purchase Credit terms
Settlement
method Business scale
RMB’000 %
1 Supplier F Beverages and
food
Food sales 2014 94,729 7.9 No credit term Bank
Transfer
With a registered
capital of
USD10.0 million
2 Supplier B Beverages and
food
Food production
and sales
2014 76,730 6.4 Monthly payment
within 60 days
Bank
Transfer
With a registered
capital of
USD52.0 million
3 Supplier G Mobile
devices
Technical
development and
sales of
communication
equipment
2020 74,038 6.1 Payment within
one or two
days
Bank
Transfer
With a registered
capital of
RMB500.0
million
4 Supplier C Beverages and
food
Food production
and sales
2015 53,760 4.5 Monthly payment
within 65 days
Bank
Transfer
With a registered
capital of
RMB1.5 billion
5 Supplier A Machines R&D and sales of
machines
2017 34,888 2.9 Payment within
one year
Bank
Transfer
With a registered
capital of
RMB13.0 million
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For the Y ear Ended December 31, 2021
Ranking Supplier
Products/
services
purchased Principal business
Commencement
of business
relationship
Purchase
amount
Percentage
of total
purchase Credit terms
Settlement
method Business scale
RMB’000 %
1 Supplier A Machines and
food
R&D, production
and sales of
machines
2017 139,873 7.7 Payment within
one year
Bank
Transfer
With a registered
capital of
RMB13.0 million
2 Supplier F Beverages and
food
Food sales 2014 136,006 7.5 No credit term Bank
Transfer
With a registered
capital of
USD10.0 million
3 Supplier H Mobile
devices
Digital product
sales
2021 126,121 6.9 Payment within
one or two
days
Bank
Transfer
With a registered
capital of
RMB5.0 million
4 Supplier I Mobile
devices
Technical
development and
sales of
communication
equipment
2021 99,867 5.5 No credit term Bank
Transfer
With a registered
capital of
USD320.0
million
5 Supplier B Beverages and
food
Food production
and sales
2014 89,202 4.9 Monthly payment
within 60 days
Bank
Transfer
With a registered
capital of
USD52.0 million
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For the Y ear Ended December 31, 2022
Ranking Supplier
Products/
services
purchased Principal business
Commencement
of business
relationship
Purchase
amount
Percentage
of total
purchase Credit terms
Settlement
method Business scale
RMB’000 %
1 Supplier F Beverages and
food
Food sales 2014 137,862 9.7 No credit term Bank
Transfer
With a registered
capital of
USD10.0 million
2 Supplier B Beverages and
food
Food production
and sales
2014 81,531 5.8 Monthly payment
within 60 days
Bank
Transfer
With a registered
capital of
USD52.0 million
3 Supplier C Beverages and
food
Food production
and sales
2015 48,763 3.4 Monthly payment
within 65 days
Bank
Transfer
With a registered
capital of
RMB1.5 billion
4 Supplier I Mobile
devices
Technical
development
and sales of
communication
equipment
2021 40,468 2.9 No credit term Bank
Transfer
With a registered
capital of
USD320.0
million
5 Supplier J Beverages and
food
Beverage
production
and sales
2016 39,312 2.8 Monthly payment
within 45 days
Bank
Transfer
With a registered
capital of
RMB8.0 million
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For the Six Months Ended June 30, 2023
Ranking Supplier
Products/
services
purchased Principal business
Commencement
of business
relationship
Purchase
amount
Percentage
of total
purchase Credit terms
Settlement
method Business scale
RMB’000 %
1 Supplier F Beverages and
food
Food sales 2014 68,456 9.4 No credit term Bank
Transfer
With a registered
capital of
USD10.0 million
2 Supplier B Beverages and
food
Food production
and sales
2014 42,800 5.9 Monthly payment
within 60 days
Bank
Transfer
With a registered
capital of
USD52.0 million
3 Supplier K Beverages and
food
Food sales 2020 31,714 4.4 Monthly payment
within 30 days
Bank
Transfer
With a registered
capital of
RMB5.0 million
4 Supplier C Beverages and
food
Food production
and sales
2015 28,241 3.9 Monthly payment
within 65 days
Bank
Transfer
With a registered
capital of
RMB1.5 billion
5 Supplier I Mobile
devices
Technical
development and
sales of
communication
equipment
2021 26,872 3.7 No credit term Bank
Transfer
With a registered
capital of
USD320.0
million
As of the Latest Practicable Date, none of our Directors, their close associates or any of
our Shareholder which to the best knowledge of our Directors owned more than 5% of the
issued share capital of our Company, had any interest in our top five suppliers. To the best
knowledge of our Directors, each of our top five suppliers during the Track Record Period was
an Independent Third Party.
Manufacturers and Distributors of Beverages, Food and Other Merchandise
We have adopted a series of measures to effectively control our procurement costs,
including among others, entering into framework agreements with merchandise suppliers to
ensure stable prices for our merchandise. We also typically procure merchandise at a discount
to the recommended prices set by merchandise suppliers. Therefore, we believe we are not
prone to fluctuations in procurement costs. See “Financial Information — Major Factors
Affecting Our Results of Operations — Our Ability to Establish and Maintain Relationships
with Our Merchandise Suppliers and Enhance Our Bargaining Power.”
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We have formulated a comprehensive set of criteria for selecting beverages and food
manufacturers, and distributors, including their brand popularity, order service, delivery
service, after-sale service, and credit terms. As of June 30, 2023, we had entered into strategic
cooperation with 13 well-known international FMCG brands. Taking into account the
comprehensive capabilities of these FMCG brands in terms of, among other things, their brand
recognition, product quality, competitive prices, delivery time and financial status, the
cooperation with these FMCG brands are strategically important to our business. Our
cooperation agreements with FMCG brands typically have terms of one year and cover the
supply of merchandise across mainland China. The agreements typically specify description,
brand names, packaging, prices and shelf life of the merchandise to be supplied. In general, the
FMCG brands would guarantee the merchandise prices are the most competitive among similar
supply channels. The cooperation agreements with FMCG brands are generally terminable by
(i) unilateral termination, where the FMCG brand is in material breach of the relevant
agreement; (ii) notice; and (iii) mutual agreement. The terms in respect of suppliers’
qualifications, placing orders, delivery of merchandise, product return policies and payment
terms are similar to our agreements with other merchandise suppliers. Our merchandise
suppliers are required to possess necessary qualifications for the provision of the relevant
merchandise and/or services. Our agreements with merchandise suppliers typically require
them to (i) deliver ordered merchandise in accordance with the specification set out in the
agreements within a specified time and compensate us for failure to deliver to specified
destination on schedule; and (ii) accept return of obsolete, slow-moving, out-of-season and
defective merchandise. We typically settle the payment by bank transfer on a monthly basis.
Machine Manufacturers
We engage machine manufacturers to produce customized machines to our specifications.
For example, apart from the type and size of machines, we may also specify the design of their
internal compartments, payment modules and display screen, based on the intended application
scenarios. We select machine manufacturers based on a range of factors, including product
quality, price, after-sale services, and payment terms. During the Track Record Period, we
acquired machines mainly through direct purchases, and to a lesser extent, through finance
lease arrangements with machine manufacturers.
Under our agreements with machine manufacturers, they are typically required to (i)
deliver ordered machines within a specified time and take mitigation measures if they fail to
deliver to specified destination on schedule; (ii) conduct full inspection before delivery
according to our inspection standards; (iii) accept return of machines that do not meet our
quality standards; (iv) compensate for our losses incurred due to seriously defective machines,
and (v) provide after-sale services, typically with a three-year warranty period. Under direct
purchase arrangement, we are typically required to pay the purchase price within 30 days upon
delivery. Under finance lease arrangement, we are typically required to pay monthly rental for
a term of 36 months. We typically enter into confidentiality agreements with machine
manufacturers at the outset of our cooperation and rely on confidentiality provision in our
procurement agreements with machine suppliers to protect our intellectual properties.
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Overlapping of Major Customers and Suppliers
During the Track Record Period, ten of our major customers were also our suppliers, or
vice versa. All of them were our merchandise suppliers who also procured advertising and
system support services from us. According to Frost & Sullivan, it is common in the vending
machine retail industry that merchandise suppliers engage vending machine operators to
advertise their products.
The table below sets out our total sales to and purchases from these merchandise suppliers
for the periods indicated:
Products/
services
procured
from us as
our customer
Products/
services to us
as our
supplier
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2023
Sales Purchases Sales Purchases Sales Purchases Sales Purchases Sales Purchases
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Customer E Advertising
and system
support
services
Beverages and
food
28,332 46,989 – 27,244 770 27,753 486 19,580 – 7,129
Customer H Advertising
and system
support
services
Beverages and
food
12,365 25,620 17,497 28,123 1,543 1,02 2––––
Customer I Advertising
and system
support
services
Beverages and
food
20,816 28,001 16,764 11,801 16,428 11,650 2,690 6,743 2,500 6,783
Supplier B Advertising
and system
support
services
Beverages and
food
4,593 94,342 6,568 76,730 7,980 89,202 4,256 81,531 5,081 42,800
Supplier C Advertising
and system
support
services
Beverages and
food
1,138 72,493 399 53,760 – 57,545 291 48,797 – 28,241
Supplier E Advertising
and system
support
services
Beverages and
food
1,384 48,088 1,807 34,466 1,627 32,282 1,465 32,189 1,217 14,592
Supplier F Advertising
and system
support
services
Beverages and
food
1,677 47,725 4,843 94,729 8,060 136,006 16,035 137,862 9,309 68,456
Supplier J Advertising
and system
support
services
Beverage and
food
1,412 2,794 10,851 32,399 2,205 47,314 17,406 39,312 5,660 19,350
Customer S Advertising
and system
support
services
Beverage and
food
–––––– 8 4 9 15,217 4 13,475
Supplier K Advertising
and system
support
services
Beverage and
food
– – – 1,143 – 9,782 1,548 28,200 1,377 31,714
71,717 366,052 58,729 360,395 38,613 412,556 45,026 409,431 25,148 232,540
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--- page 302 ---
In 2019, 2020, 2021, 2022 and the six months ended June 30, 2023, revenue from the
provision of advertising and system support services to these merchandise suppliers
contributed approximately 2.6%, 3.1%, 1.4%, 1.8% and 2.0% of our total revenue,
respectively, and purchases from them contributed approximately 21.1%, 29.9%, 22.7%, 28.9%
and 32.0% of our total purchase, respectively. During the Track Record Period, our sales and
purchases with the overlapping customers and suppliers were not inter-conditional with each
other.
Our Directors have confirmed that all of our sales to and purchases from these
merchandise suppliers were conducted in the ordinary course of business under normal
commercial terms. The terms of our agreements with these merchandise suppliers are
substantially the same as those with our other merchandise suppliers and advertising and
system support services customers. As of the Latest Practicable Date, to the best information
and knowledge of our Directors, all of these merchandise suppliers were Independent Third
Parties.
LOGISTICS AND INVENTORY MANAGEMENT
Logistics
As of June 30, 2023, our fleet had 372 operational vehicles and approximately 900
operation personnel, among whom approximately 190 were our employees and 710 were
third-party contractors. Our third-party contractors are primarily responsible for delivery of
merchandise, restocking and conducting regular check on the physical condition of the vending
machines and merchandise. As of June 30, 2023, we operated 106 warehouses and 212 sorting
centers across 121 cities and 28 provincial-level administrative regions in mainland China. Our
nation-wide logistics and warehousing network helps us minimize transportation costs as it
consolidates the delivery of merchandise for logistics routes in proximity and gives more room
to logistics routes optimization. Our algorithms calculate optimal logistics routes based on
factors such as stock level, road traffic, type of merchandise and delivery capacity, and timely
adjust the logistics routes to enable centralized restocking scheduling and route planning. For
further details of formulation of logistics routes, see “— Our Technology-based Retail
Platform.”
Inventory Management
Through our operation system, we are able to monitor information such as inventory
level, movement of our SKUs and stock description on a real time basis. We place orders with
our suppliers based on the results generated from our operation system. We continuously
monitor our inventory levels to ensure that our inventories are optimized by adopting
sales-based procurement policy for all our merchandise. In practice, we maintain data for
merchandise, procurement and inventory in our centralized operation system, based on which
we get daily average sales and inventory level of each SKU in each warehouse. Then we
calculate the number of days of stock available for sale and determine whether to proceed to
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--- page 303 ---
the next round of procurement, with reference to safety stock quantity and procurement-in-
transit quantity. We manage the inventory level and arrange the restocking for our Ubox POSs,
but not for Non-Ubox POSs. For Non-Ubox POSs connected to our centralized operation
system, the operation system constantly monitors machine inventory level and generates
restocking alerts to the Non-Ubox POS operators. Particularly, we pay close attention to food
products. Our system will automatically alert us when the remaining shelf life is less than a
third. Merchandise with shelf life of less than that as prescribed by relevant laws and
regulations will be disposed of promptly. It generally takes one to five days to execute orders,
from the point of placing the order to delivery. We conduct monthly and semi-annual audit to
ensure the accuracy and safety of our inventory. During the Track Record Period, our inventory
shrinkage rate, being the percentage of inventory lost between the point when it was received
and sold, was less than 0.3%. We strive to keep our inventory turnover days for all products
to an optimal level.
Operation and Maintenance Support
As of June 30, 2023, we had a team of 145 maintenance engineers nation-wide, who are
responsible for ensuring the smooth operation of our POSs. We are devoted to continuously
enhance our operation and maintenance support by, among others, optimizing management,
providing operational skill training and incentivizing of talents. In addition, our centralized
operation system sends notification to the responsible operation staff upon identification of any
malfunction, which ensures timely repair of any malfunctional vending machines.
QUALITY CONTROL
We place great emphasis on the quality of the merchandise provided through our
machines. Led by experienced procurement team, when evaluating our suppliers, we have
established stringent screening procedures for potential suppliers. We take into account factors
including industry reputation, product quality, production scale and price. We also verify all
required licenses and permits before we enter into supply agreements and continuously monitor
the validity of such licenses and permits of suppliers.
To ensure the high quality and safety of products offered by us, all products we procured
must strictly comply with applicable standards in all respects. In the event we receive
complaints from consumers or become aware of product quality issues, we will conduct a
thorough inspection of various stages along the supply chain to identify issues impacting
product quality and food safety. We will perform immediate risk analysis, formulating relevant
measures and stringently oversee their implementation.
As a result of our stringent quality control procedures, we did not experience any material
product liability or other legal claims during the Track Record Period. See “Risk Factors —
Risks Relating to Our Business and Industry — Our reputation, performance and financial
condition could be adversely affected by any failure to maintain effective quality control
mechanism and food safety monitoring system.”
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RESEARCH AND DEVELOPMENT
Our retail platform hinges on two of our proprietary technologies – the mechanical
structure of our vending machines and the method of communication between our vending
machines and operation system. Therefore, continuous research and development to improve
our core technologies is critical to our future growth and our ability to remain competitive. As
of the Latest Practicable Date, we had 197 registered patents and led the technological
developments of the industry in areas such as structural designs and components of vending
machines, and communication technologies between vending machines and operation system.
As of June 30, 2023, we had a dedicated team of 75 personnel in our research and
development team, the majority of whom had joined our Group for more than three years and
held a bachelor’s degree or above. Our research and development team are responsible for the
design, development, maintenance and optimization of our proprietary technologies and
infrastructure, including our operation system and our enterprise resource planning system. In
2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, our research and
development expenses amounted to RMB57.3 million, RMB41.5 million, RMB36.8 million,
RMB31.6 million, RMB17.7 million and RMB15.1 million, respectively, accounting for 2.1%,
2.2%, 1.4%, 1.3%, 1.5% and 1.2% of our total revenue in the same periods.
We have sought to collaborate with leading technology companies to explore industry
application of technologies. For example, in 2018, we collaborated with Ant Group to enhance
the development of our service offerings. According to our cooperation agreement with Ant
Group, the research and development focus was centered around biometric authentication and
merchandise recognition technologies for our pick-and-go cabinets. The technology developed
was based on Ant Group’s biometric authentication and merchandise recognition solutions.
Currently, we are allowed to use the solutions for free, and there is no cost/profit/loss sharing
arrangement between Ant Group and us. However, the terms of cooperation may be subject to
changes in the future. While ownership of intellectual property rights relating to the
abovementioned solutions remained with the Ant Group, we are entitled to ownership of
patents with respect to the application of these underlying technologies in the context of
vending machine retail.
Going forward, we will focus our research and development efforts on improving services
related technologies through enhancing the capabilities of our data platform, optimizing and
acquiring algorithms and expanding data applications. We will develop and introduce AI
recognition technology and algorithms related to the services provided by vending machines to
improve customer experience and expand business scope. We may also recruit technological
talents with a view to optimize our operation system for business partners, consumers and
internal control, and improve overall operating efficiency through simultaneous hardware and
software upgrades.
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DATA PRIV ACY
In order to better serve our unmanned retail business customers, we collect transaction
data including purchase orders and payment results. In the ordinary course of our business, we
collect, process and store different types of data concerning our customers (primarily include
consumers of merchandise sold at our POSs and end-users of our karaoke booths), business
partners and employees. In particular, when end-consumers purchase merchandise at our POSs
with Alipay or WeChat Pay, we collect their (i) Alipay or WeChat Pay encrypted user
identification number generated by the payment applications and (ii) transaction information,
such as transaction time, location of the POS, the merchandise purchased and the purchase
amount. Such information collected is primarily used for our internal reconciliation and
analysis of transaction data to facilitate merchandise mix optimization and procurement
decision-making. To a lesser extent, where a consumer uses our customer services on our
WeChat public account and Alipay mini-program, we will collect his/her mobile phone number,
avatar, nickname, gender and region. Such information collected is primarily used for
providing follow-up customer services. For our business partners and employees, we mainly
collect their mobile phone number, location, corporate registration information and bank
account number for business cooperation and employment purposes.
We have in place a comprehensive data protection policy to ensure our compliance with
the applicable laws and regulations. Internally, we have formulated and adopted, among others,
a Data Security Management Policy, a Data Classification and Management Policy, an
Information Security Training Policy and a Network and Information System Incident
Response Plan. Our internal policy provides, among others, that (i) all employees who may
have access to any personal information through our systems or networks are required to
observe and follow (a) our Information System Account and Authority Management Policy,
which stipulates, among other things, user account registration and approval procedures for our
employees to access our internal network and information system and (b) our Data Security
Management Policy in handling customers information, including non-disclosure of the
information to any other person other than for necessary work purposes and through proper and
designated work communication channels; (ii) any customer information collected by us shall
be organized and stored in accordance with our policies and guidelines that prevent unintended
leakage, damage or theft; (iii) we have designated personnel to handle any data-related concern
or complaints and monitor and address data security protection issues internally to safeguard
the security of customer information and to ensure that we comply with the relevant PRC laws
and regulations relating to data privacy; and (iv) we delete data in accordance with our
established policies regarding the deletion and destruction of data. We require all of our
employees and business partners to strictly adhere to our internal policies governing data
privacy and security. We only collect information as necessary for our operation. In addition,
we communicate with our users in an easy-to-understand manner to help them understand their
rights under applicable laws and regulations. Our policies on cybersecurity and data privacy
cover data protection for data transmitted on our centralized operation system over the cloud
operated by third-party cloud service providers. Our third-party cloud service providers are
equipped with firewall to protect against attacks or unauthorized access of our data, and they
monitor the visits of the data regularly and generate reports on any suspicious or unauthorized
access or attacks to us and we regularly monitor our server operations. Once we discover
security issues with the server systems, we will promptly upgrade such systems to ensure the
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security of our server systems and applications. We also stipulate our data privacy and security
requirements in the service agreements entered into with such service providers. In addition,
we generally include the relevant clause in our contracts to require our contractual
counterparties to comply with our policies and relevant laws and regulations on data protection
and privacy.
We have put in place a comprehensive auditing mechanism across our business, to keep
track of the data privacy and data security actions taken throughout the lifecycle of our
products and services. To ensure the security and integrity of our data, we have adopted
technical solutions such as data encryption, data backup, access control, system intrusion
monitoring, and storing data under the protection of firewall to prevent unauthorized access
and malicious attacks. Additionally, we update our firewall and other security systems from
time to time.
With regards to the organizational and technical safeguards in place, we provide
employees with trainings for data-related matters and privacy practice on a regular basis. We
also have clear and strict authorization and authentication procedures for data decryption and
access. Employees are required to obtain authorization for access of data, which would only be
granted for data that are directly relevant and necessary to the employee’s job responsibilities.
Account identifications and passwords are required for our employees to sign into the data
system and such account identifications and passwords are required to be updated periodically.
We maintain system records for employees’ access to sensitive data and our systems generate
alerts for abnormal behaviors. Limited authorization is also provided to our employees holding
specific positions at specific levels to access and process customer data on a need-to-know
basis, who shall use such data strictly for the purposes of performing their work duty. In
addition, employees are generally required to sign a confidentiality agreement with us, which
prohibits them from disclosing any confidential information relating to their work and
customers without our consent. We have adopted policies relating to administration of
customer data, such as Alipay and WeChat Pay user identities, phone numbers and location, and
personal information for employees with such access to comply with and conduct regular
review to ensure compliance.
In addition, we utilize a complete set of data privacy and data security management
systems that allow us to continuously review and improve our data protection control and
procedures.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material information leakage or loss of user data in mainland China or any
overseas market. As advised by our PRC Legal Advisor, during the Track Record Period and
up to the Latest Practicable Date, we had complied with all applicable data privacy laws and
regulations in mainland China in all material respects, including the China Personal
Information Protection Law. See “Risk Factors — Any failure to protect our customer data, or
the improper collection, use or disclosure of such data, as well as the uncertainties surrounding
the cybersecurity review may subject us to the liabilities imposed by data privacy and
protection laws and regulations, which may negatively impact our reputation and business” and
“Regulatory Overview — Regulations Relating to Information Security and Privacy
Protection.”
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INTELLECTUAL PROPERTY
As our service offerings are based on technology, intellectual property rights are essential
to protect our business operations. As of the Latest Practicable Date, we held 197 patents,
which covered key aspects of our operation, including structural designs and components of
vending machines, and communication technologies between vending machines and operation
system. As of the Latest Practicable Date, we also had 337 trademarks, 138 software
copyrights, 18 domain names, 19 pending patent applications and 1 pending trademark
applications in mainland China. For details about our material intellectual property rights, see
“Statutory and General Information — B. Further Information about our Business — 2. Our
Material Intellectual Property Rights” in Appendix IV to this prospectus. We also entered into
non-competition and confidentiality agreement with our key employees in the research and
development team to protect the outcome of our research and development efforts. We have
formulated operation guidelines for different stages of intellectual property application,
including patent proposal, patent application, patent examination and settlement, among others,
which have standardized our intellectual property application process and management of our
intellectual properties. Our legal department is primarily responsible for the application,
management and monitoring of our intellectual property rights.
We actively defend our material intellectual property rights where possible. During the
Track Record Period and up to the Latest Practicable Date, we had not experienced any
occasion of unauthorized use of our intellectual property rights by third parties which would
have a material impact to our business or operation. See “Risk Factors — Risks Relating to Our
Business and Industry — We may not be able to adequately protect our intellectual property
rights, which could harm the value of our brand and adversely affect our business” for details.
During the Track Record Period and up to the Latest Practicable Date, we did not have any
material disputes or pending legal proceedings or claims for infringement upon third parties’
intellectual property rights.
SEASONALITY
Our business is subject to seasonal fluctuations depending on the location of our POSs
and the relevant time of a year. In general, we experience weaker performance in the first
quarter of each year due to lower level of consumer foot traffic and consumption from vending
machines, especially outdoor ones, during winter. We typically record higher level of revenue
from the second to fourth quarters of each year due to the warmer weather and relatively
stronger demand for vending machine retail of beverages. We are also subject to seasonal
fluctuation in demand from particular scenarios. For example, POSs at schools typically record
lower level of revenue during summer and winter vacations. See “Financial Information —
Seasonality.”
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COMPETITION
The vending machine retail industry in mainland China is fragmented and has witnessed
rapid growth in the past few years. According to Frost & Sullivan, the size of the unmanned
retail market in mainland China in terms of retail sales value contributed by vending machines
increased from approximately RMB13.1 billion in 2017 to approximately RMB28.9 billion in
2022, representing a CAGR of approximately 17.1%. See “Industry Overview — Size of
Mainland China’s V ending Machine Retail Market.”
Our major competitors include other vending machine operators, integrated logistics
companies and beverage companies that are tapping into the vending machine retail industry.
We believe we are competitively positioned because of our advantages in scale, digitalization
and operation capabilities, multiple operation models, extensive POS network and R&D
capabilities. See “— Our Strengths.”
RISK MANAGEMENT AND INTERNAL CONTROL
We are subject to various risks in our operations, see “Risk Factors — Risks Relating to
Our Business and Industry.” We have established and currently maintain a comprehensive risk
management and internal control system comprising policies, procedures, and reporting
mechanisms in essential aspects of our business operations to identify, assess, evaluate and
monitor key risks associated with our strategic objectives on an ongoing basis. We also have
dedicated risk control specialists in our securities department to handle our risk management
and internal control affairs. We embed a culture of compliance in the daily work routine of our
employees through compliance trainings, and set various expectations for our employees’ work
performances in terms of compliance.
Our Board is responsible for establishing and monitoring our risk management and
internal control systems, while our senior management oversees the daily implementation of
the procedures and measures of each department. We review our risk management and internal
control systems on a regular basis to adapt to the changes in market conditions and the
regulatory environment and their impact on our product and service offerings. To prevent
oversight, our Board has established an audit committee to make recommendations to our
Directors on the appointment and removal of external auditors, review the financial statements
and render advice in respect of financial reporting and internal controls, and oversee our risk
management and internal control systems and any significant risks. The audit committee
comprises three members, namely Ms. Guo Wei, Mr. Wang Xiaochuan and Ms. An Y ufang, our
independent non-executive Directors, with Ms. Guo Wei (possessing the appropriate
professional qualifications) as chair. For the professional qualifications and experiences of the
members of our audit committee, see “Directors, Supervisors and Senior Management.”
In order to manage our compliance and legal risk exposures effectively, we have designed
and adopted strict internal procedures to ensure the compliance of our business operations with
the relevant rules and regulations. In particular, as we and our employees deal with a variety
of third parties in our operations, we have implemented internal procedures with respect to
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anti-bribery, anti-corruption and conflict of interest matters. Firstly, as part of our risk
management and internal control measures, we have adopted a series of internal regulations
against corrupt and fraudulent activities, which include measures against receiving bribes and
kickbacks, and misappropriation of company assets. Secondly, employees and parties outside
our Company are encouraged to provide information and report violations of professional
ethics by our employees or suspected corruption cases via email. Thirdly, we carefully evaluate
risk events and conduct investigations when necessary. Fourthly, we have implemented clear
and strict policies and guidelines that prohibit the acceptance of gifts, hospitality and other
offers by interested third parties. Lastly, we conduct internal control inspections regularly.
Employees are required to acknowledge and accept our internal code of conduct that lists in
detail relevant policies and regulations, including but not limited to clear definitions of bribery
and corruption. We impose on directors, senior management and employees penalties, and
require compensation, for any losses incurred as a result of any activities concerning bribery
and corruption.
Information System Risk Management
Our objectives for information system management are to identify, assess, monitor and
control information technology risks by establishing an effective mechanism to operate our
business in a safe, continuous, stable and compliant environment. We have implemented
policies and procedures to (i) monitor the key operation indicators of our operation system and
give an alarm if such indicators go beyond the security thresholds; (ii) manage the authorities
of our employees to access certain functions of our operation system; (iii) manage the network
and hard drive capacities; and (iv) categorize system malfunctions and accidents into four
levels according to their seriousness and urgency, and implement different mechanisms to fix
them.
We experienced a total of six incidents where our vending machines and operation
systems were out of service during the Track Record Period. In each of 2019 and 2021, there
were one instance where our vending machines and operation systems were temporarily out of
service for approximately 15 minutes and 4 minutes, respectively, due to system failures of
third-party payment platforms as a result of such platform’s own technical glitch affecting a
small portion of our vending machines equipped with that third-party payment platform only,
and our loss arising from each incident was estimated to be approximately RMB0.1 million. In
2022, there was one similar instance due to system failure of third-party payment platform and
our estimated loss was estimated to be approximately RMB0.05 million. There was also one
instance in 2019 where our vending machines and operation systems were temporarily out of
service during our system upgrade affecting restocking for all of our vending machines
resulting in an estimated loss of approximately RMB0.03 million. In each of 2021 and 2022,
there was one instance where our database for restocking of merchandise was temporarily out
of service, for approximately 1.6 hours and 50 minutes with an estimated loss of approximately
RMB0.03 million and RMB0.03 million, respectively. Save as disclosed above, we had not
experienced any material system failure or malfunctioning of our operation systems or our
vending machines during the Track Record Period and up to the Latest Practicable Date.
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When the incidents occurred, the abnormal drop in transaction amount triggered our
alarm system and the personnel on duty immediately reported the malfunction to our
maintenance team, who then located the malfunction in our system and/or communicated with
third-party payment platforms to resolve the problems in time. To prevent the recurrence of
similar incidents, we have taken the following preventive measures:
 Regular system inspection. We regularly inspect, among others, (i) the operation
status, storage space and memory utilization of our system and database; (ii) the
operation status of network equipment, utilization rate and load of network
resources; and (iii) the status of our application services and the execution of the
application task to prevent and detect potential system faults in advance.
 Real-time monitoring of operation parameters. In order to ensure the stable
operation of our system and vending machines, we monitor the key operation
parameters in real time and set the corresponding alarm value for each group of
parameters. When a certain parameter reaches the alarm value, the alarm system will
immediately notify the personnel on duty, which allows the problems to be solved
in a timely manner.
 System failure response mechanism. We have established a system failure response
mechanism through issuing “Ubox Network and Information Emergency Plan” and
“Ubox System Failure Reporting and Handling Mechanism” in order to streamline
the system failure reporting and handling procedure as well as minimize the harm
of system failure to our business. Our Ubox Network and Information Emergency
Plan and Ubox System Failure Reporting and Handling Mechanism set out
emergency response measures for, among others, telecommunication failures,
computer viruses, interruptions in access to our platform, hacking or other attempts
to harm our platform. We defined four levels of incidents according to their nature
and severity and set out the corresponding reporting protocol. We established an
emergency response group for handling network and information system security
incidents. Security incidents are reported to the emergency response group, which
will verify the incidents and report to the management of our Group. We carried out
annual system failure response drill with the relevant personnel.
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EMPLOYEES
As of June 30, 2023, we had 1,135 full-time employees, all located in mainland China.
The following table sets forth the number of our employees by function:
Function
Number of
Employees % of Total
Customer service and operation 833 73.4
Sales and marketing 123 10.8
General and administration 75 6.6
Research and development 104 9.2
Total 1,135 100.0
We primarily recruit our employees through a third-party recruitment platform. After
collecting and approving the recruitment plans from each department on our office
administration system, we will submit our recruitment plans to the recruitment platform, which
will then publish them through various recruitment channels. The portfolios of candidates will
be screened and assessed by our human resources department and the relevant department
heads.
Our success depends on our ability to attract, retain and motivate qualified employees. We
offer our employees a competitive remuneration package which includes salary, benefits, bonus
and incentives. Our compensation programs are designed to remunerate our employees based
on their performance, measured against specified objective criteria. As required by PRC Law,
we have made contributions to the various mandatory social security funds, including funds for
basic pension insurance, unemployment insurance, basic medical insurance, occupational
injury insurance and maternity leave insurance, and to mandatory housing provident funds, for
or on behalf of our employees. In addition, we provide our employees with a diverse work
environment and a wide range of career development opportunities. We also organize various
training programs on a regular basis for our employees to enhance their professional
knowledge, improve time management skills and communications skills, and strengthen their
team spirit.
As of the Latest Practicable Date, other than Guangzhou Weiji and Shanghai Huilin,
which had established labor unions for its employees, our employees were not represented by
any labor union. We believe that we maintain good working relationship with our employees
and we had not experienced any strikes or labor disputes that had any material adverse effect
to our operations during the Track Record Period and up to the Latest Practicable Date. As of
the Latest Practicable Date, we did not have any material non-compliance with statutory social
security insurance fund and housing provident fund obligations under applicable laws. See “—
Legal Proceedings and Compliance.”
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A W ARDS AND RECOGNITIONS
The following table sets forth some of our major awards and recognitions during the
Track Record Period and up to the Latest Practicable Date.
Award/Recognition Issuing Entity Time of Receipt
Beverage Creative Marketing
Silver Award, Technical
Marketing Silver Award and
Media Creative Category
Bronze Award, and Tiger Roar
Awards (௴จᐄቖვᆤe
Ҧஔᐄቖᗳვᆤʿదʧ௴จᗳ
ᄟᆤ)
China Advertising Association
of Commerce ( ʕ਷ਠਕᄿѓ
՘ึ)
May 2019
2019 (Industry) Influential Brand
Award (2019( Бุ)೐
ᆤ)
China Finance Summit ( ʕ਷ৌ
ึ)
July 2019
2019 Excellent Operator (2019 ϋ
ᎴӸ༶ᐄਠ)
Asia-Pacific Self-service
V ending Industry
Association ( ԭ˄Іпਯ஬
БุᑌΥึ)
November 2019
ONE Payment Business
Transformation Award (ONE ˕
ᆤ)
Alibaba Group (Ԣˋˋණྠ) December 2019
WISE 2020 King of New
Economy – Most Influential
Enterprise in the New Retail
Field ( อཧਯჯਹ2020 ϋʕ
਷อ຾᏶ʘˮ௰Ոᅂᚤɢ
Άุ)
36Kr (36Ӻ৫) December 2020
2021 Edge Awards – New
Consumption Ecological
Service Provider of the Y ear
(2021อ
ਕਠ)
TMT Post ( ⌹ద᜗) December 2021
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INSURANCE
We maintain standard benefit plans required by PRC Law, including medical insurance,
maternity insurance, pension insurance, unemployment insurance and work-related injury
insurance. We obtain such insurance from reputable insurance carriers in accordance with
commercially reasonable standards. In line with general market practice, we do not maintain
business interruption insurance or key man life insurance, which are not mandatory under the
applicable laws. For a discussion of risks relating to our insurance coverage, see “Risk Factors
— Risks Relating to Our Business and Industry — We have limited insurance coverage, which
could expose us to significant costs and business disruption.”
Our Directors believe that our insurance coverage is adequate and in line with industry
norm. We periodically review our insurance coverage to ensure that it remains to be sufficient.
PROPERTIES
We are headquartered in Beijing, China. As of the Latest Practicable Date, we did not own
any properties, and we operated our business through 151 leased properties in mainland China.
Our leased properties had a total GFA of approximately 84,665 sq.m., which were primarily
used as office premises, warehouses and staff dormitories. The duration of these leases vary
from 3 months to six years. Rents under our leases are generally in fixed sum.
Leased Properties Pending Building Ownership Certificates (Ϟᛆᗇ)
As of the Latest Practicable Date, with respect to 106 of our leased properties with an
aggregate GFA of approximately 61,196 sq.m, representing approximately 72.3% of our total
leased GFA, the lessors of such leased properties had not been able to obtain or provide us with
sufficient and valid building ownership certificates that evidence their rights to lease the
properties or proof of authorization from property owners to sublease the properties to us.
Among the leased properties without sufficient and valid building ownership certificates, in
respect of 35 of such leased properties with an aggregate GFA of approximately 24,742 sq.m
representing approximately 29.2% of our total leased GFA, we had obtained confirmations for
approval of use from the relevant government authorities, neighborhood committees, village
committees, owners or lessors. Such leased properties are used for storage, office and
residential purposes.
As advised by our PRC Legal Advisor, without ownership certificates or proof of
authorizations from the property owners, our use of these defective leased properties may be
affected by third parties’ claims or challenges against the lease or our land use rights. Pursuant
to the applicable PRC Law, if the lessors do not have the requisite rights to lease these
properties, the relevant lease agreements may be deemed invalid and we may be required to
vacate these properties. However, in the event that we are unable to continue using such
properties due to third parties’ claims or challenges against the leases or our land use rights,
based on the advice of our PRC Legal Advisor, we, as the tenant, will have the right to claim
compensation from the lessors.
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In view of the foregoing, our Directors are of the view that the abovementioned title
defects will not materially and adversely affect our business and results of operations on the
grounds that: (i) to the best of our Directors’ knowledge, our leases with respect to these
defective leased properties had not been subject to claims or disputes in connection with rights
to lease and use such leased properties during the Track Record Period and up to the Latest
Practicable Date, (ii) we believe that we would be able to relocate to a different site relatively
easy on comparable commercial terms and at similar prices with immaterial relocation costs
should we be required to do so; and (iii) considering these defective leased properties are
geographically dispersed across mainland China under the jurisdiction of different local
governmental authorities, we believe it is unlikely that we would be at the same time subject
to claims of rights from various third parties or required by the governmental authorities to
relocate with respect to a significant number of these defective leased properties.
Leased Properties with Usage Defects
As of the Latest Practicable Date, the actual use of 9 of our leased properties with an
aggregate GFA of 3,895 sq.m., representing approximately 4.6% of our total leased GFA, did
not fit into the prescribed scope of usage shown on the relevant ownership certificates.
Our PRC Legal Advisor advised us that, administrative penalties may be imposed on the
lessors if the properties are leased for the usage incompatible with the prescribed scope, and
our usage of such leased properties with usage defects may be interrupted. As advised by our
PRC Legal Advisor, if we are not able to continue to use the relevant leased properties because
the lessors failed to lease the properties according to the stipulated uses, we have the right to
claim compensation from the lessors in accordance with the applicable laws and regulations
and/or the relevant lease agreements.
In view of the foregoing, our Directors are of the view that the abovementioned usage
defects will not materially and adversely affect our business and results of operations on the
grounds that: (i) to the best of our Directors’ knowledge, our leases with respect to these
defective leased properties had not been subject to claims or disputes in connection with the
actual use of such leased properties during the Track Record Period and up to the Latest
Practicable Date and (ii) we believe that we would be able to relocate to a different site
relatively easy on comparable commercial terms and at similar prices with immaterial
relocation costs should we be required to do so.
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Lack of Requisite Approval for Certain Leased Properties
As of the Latest Practicable Date, with respect to 13 of our leased properties built on
collective land ( ණ᜗͜ή) or allocated land ( ྌᅡ͜ή) with an aggregate GFA of 5,944 sq.m,
representing approximately 7.0% of our total leased GFA, the lessors could not provide
documents proving that the corresponding approval procedures for such properties leased to us
had been completed.
As advised by our PRC Legal Advisor, properties on collective land or allocated land
shall not be leased without authorization from relevant authorities. There is no guarantee that
the lessors had obtained authorizations from the relevant collective economic organizations or
land administration departments to lease the properties. If the lessors did not obtain the
requisite approval for leasing such properties in accordance with the relevant laws and
regulations, the validity of the relevant leasing contracts may be uncertain. In the event that we
are not able to continue to use the leased properties, we consider that the leased properties can
be replaced by other suitable properties on comparable commercial terms and at similar prices
with immaterial relocation costs. In view of the foregoing, our Directors are of the view that
such property defects do not have any material adverse impact on the operation of the Group.
Lease Registration
Pursuant to the applicable PRC Law, property lease contracts must be registered with the
local branch of the Ministry of Housing and Urban-Rural Development of the PRC. As of the
Latest Practicable Date, 150 of our lease agreements with landlords were not registered with
the relevant government authorities in mainland China. This was primarily due to the difficulty
in procuring our lessors’ cooperation in registering such leases.
Our PRC Legal Advisor advised us that, according to the applicable PRC Law, the
non-registration would not affect the validity of these lease agreements, but we, as the lessee,
may be required by the relevant authorities in mainland China to register the relevant lease
agreements within a prescribed time limit. If we fail to do so, we may be subject to fines
ranging from RMB1,000 to RMB10,000 for each non-registered lease agreement. The
estimated total maximum penalty was RMB1.5 million as of the Latest Practicable Date.
However, as of the Latest Practicable Date, we had not been ordered to register our lease
agreements or fined by the relevant authorities in mainland China with respect to these lease
agreements. In view of the foregoing, our Directors are of the view that non-registration of
these lease agreements will not materially and adversely affect our business operations.
For further details on the risks associated with our leased properties, see “Risk Factors —
Risks Relating to Legal, Compliance, and Regulatory Matters — Our leased property interests
may be defective and our lease agreements may not be registered, our right to lease the
properties affected by such defects may be challenged, which could cause significant
disruption to our business.”
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Internal Control Measures
To prevent recurrence of these potential defects in our leased properties, we have taken
the following measures:
 Proactive approach and communication with our lessors. We designate our staff to
proactively reach out to and communicate with lessors to obtain the relevant
ownership certificates or proof of authorizations from property owners.
 Internal policies. We require all our lessors to provide the necessary documentation
and valid title certificates before we enter into lease agreements with them and we
will not enter into lease agreements for properties with title defects. Moreover, as
part of our enhanced internal policies, our lease agreements are required to be
registered with relevant authorities. Upon expiry of lease agreements, we will assess
the legal risks and will not renew a lease agreement if the risk is too high.
As of June 30, 2023, none of the properties held or leased by us has a carrying amount
of 15% or more of our consolidated total assets. Therefore, according to section 6(2) of the
Companies (Exemption of Companies and Prospectuses from Compliance with Provisions)
Notice (Chapter 32L of the Laws of Hong Kong), this prospectus is exempted from compliance
with the requirements of section 342(1)(b) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance in relation to paragraph 34(2) of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance which requires a valuation report with
respect to all our interests in land or buildings.
LEGAL PROCEEDINGS AND COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, no member of our
Group had been involved in any legal, arbitration or administrative proceedings, including
bankruptcy or receivership proceedings, whether actual or threatened, that we believe would
have a material adverse effect to our business, results of operations, financial condition or
reputation. Also, our Directors had not been involved in any actual or threatened claims or
litigations of material impact. However, we may from time to time become a party to various
legal, arbitration or administrative proceedings arising in the ordinary course of business.
Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely
to result in substantial cost and diversion of our resources, including our management’s time
and attention.
As confirmed by our PRC Legal Advisor, during the Track Record Period and up to the
Latest Practicable Date, we had complied with all applicable laws and regulations in all
material respects, except as disclosed below.
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Social Insurance and Housing Provident Funds
Background and Reasons for Non-compliance
According to the relevant PRC Law, we are required to make contributions to social
insurance and housing provident fund for the benefit of our employees in mainland China.
During the Track Record Period and as of the Latest Practicable Date, some of our subsidiaries
in mainland China did not make full contribution to the social insurance and housing provident
funds for some of our employees in accordance with the relevant PRC Law. We estimate that
the shortfall of social insurance payments in 2019, 2020, 2021, 2022 and the six months ended
June 30, 2023 amounted to approximately RMB6.3 million, RMB2.0 million, RMB5.9 million,
RMB2.6 million and RMB1.6 million, respectively, and the shortfall of housing provident fund
contributions in 2019, 2020, 2021, 2022 and the six months ended June 30, 2023 amounted to
approximately RMB0.5 million, RMB1.8 million, RMB1.6 million, RMB0.8 million and
RMB0.4 million, respectively.
We were unable to make full social insurance and housing provident funds contributions
for such employees primarily because (i) a certain number of our employees were not
cooperative and refused to make full contributions to social insurance and/or housing provident
funds mainly for personal reasons; and (ii) a certain number of our employees are migrant
workers who were not willing to make full contributions to the social welfare schemes of the
city where they temporarily reside as such contributions cannot be easily transferred among
cities.
Potential Legal Consequences
As advised by our PRC Legal Advisor, pursuant to relevant PRC Law, (i) the
under-contribution of social insurance within a prescribed period may be subject to an overdue
charge of 0.05% of the delayed payment amount per day and the competent authority may
further impose a fine of one to three times of the overdue amount if such payment is not made
within the stipulated period; and (ii) in respect of outstanding housing provident fund
contributions, we may be ordered to pay the outstanding housing provident fund contributions
within a prescribed time period. An application may be made to a people’s court for
compulsory enforcement if the payment of the outstanding housing provident fund
contributions is not made after the expiration of the time limit. As advised by our PRC Legal
Advisor, there is no expressed legal provision or regulation that imposes a penalty on the Group
for such non-payment of housing provident fund contributions but we may be ordered to pay
the outstanding amount of our housing provident fund within the prescribed period. As of the
Latest Practicable Date, no administrative action, fine or penalty had been imposed by the
relevant regulatory authorities with respect to our social insurance contributions and housing
provident funds, nor had we received any order or been informed to settle the deficit amount.
The provisions we made on our financial statements in respect of contributions to the social
insurance and housing provident funds were RMB4.3 million, RMB1.8 million, RMB4.0
million, RMB2.4 million and RMB1.4 million, respectively, in 2019, 2020, 2021, 2022 and the
six months ended June 30, 2023.
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Remedial Measures
We have implemented our policy on the payment of social insurance and housing
provident fund contribution for employees in compliance with relevant PRC Law. We actively
encourage and make such contributions for our employees. Despite our efforts, we were unable
to pay in full the outstanding social insurance contributions and housing provident fund
contributions for some of our employees due to their reluctance to participate in the relevant
schemes. As soon as they agree that we make the relevant social security insurance and housing
provident fund contributions for them, we will make such contributions for them accordingly
from that point of time onwards. Moreover, we have taken the following rectification measures
to mitigate future occurrence of such non-compliances:
 Training and Advice. Consult our PRC Legal Advisor for advice on relevant PRC
Law, and strengthen legal compliance training to our personnel, including by
engaging our PRC Legal Advisor to provide training to our personnel to keep us
abreast of latest development of the relevant regulations;
 Policy. Enhance our human resources management policies, which explicitly
requires social insurance and housing provident fund contributions to be made in
full in accordance with applicable laws and regulations;
 Review and record-keeping. Designate our human resources staff to review and
monitor the reporting and contributions of social insurance and housing provident
fund on a monthly basis; and
 Increasing awareness of developments in the law. Regularly keep abreast of latest
developments in PRC Law in relation to social insurance and housing provident
funds.
We made provisions in the total amount of RMB4.3 million, RMB1.8 million, RMB4.0
million, RMB2.4 million and RMB1.4 million, respectively, on our financial statements in
respect of such potential liabilities in 2019, 2020, 2021, 2022 and the six months ended June
30, 2023. Our PRC Legal Advisor has advised us that, according to the interviews with the
relevant regulatory authorities, the risk of being ordered by the government authorities on their
own initiative to pay the outstanding amount of (1) the social insurance contributions for our
Shenzhen, Wuhan and Hangzhou subsidiaries/branches and (2) the housing provident fund
contributions for our Shenzhen, Shenyang and Quanzhou subsidiaries/branches is remote.
Accordingly, we did not make provisions for contributions to the social insurance and housing
provident funds for employees in the above cities. For employees of other
subsidiaries/branches, provision has been made for the shortfall of social insurance and
housing provident funds contributions. Taking into consideration the advice of our PRC Legal
Advisor, our Directors are of the view that the provision is adequate and sufficient. We
undertake to make timely payments for the deficient amount and overdue charges as soon as
requested by the competent governmental authorities.
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Pursuant to the Urgent Notice on Enforcing the Requirement of the General Meeting of
the State Council and Stabilizing the Levy of Social Insurance Payment (஫࿏ໝྼ਷ਕ
) promulgated on September 21,
2018 by the Ministry of Human Resources & Social Security, administrative enforcement
authorities are prohibited from organizing and conducting centralized collection of enterprises’
historical social insurance arrears without permission.
In view of the above, our Directors are of the view that such non-compliance did not and
will not have a material adverse impact on our Group and our provisions for the shortfall
related to social insurance and housing provident funds are adequate on the grounds that: (i)
there were no material disputes between our employees and us regarding the social insurance
or housing provident fund contributions during the Track Record Period; (ii) we had not been
subject to any material administrative penalties during the Track Record Period and up to the
Latest Practicable Date; (iii) as of the Latest Practicable Date, we had not received any
notification from the relevant authorities in mainland China requiring us to pay shortfalls or the
penalties with respect to social insurance and housing provident funds; and (iv) as of the Latest
Practicable Date, we had neither experienced any disagreement from relevant social insurance
or housing provident fund authorities with respect to such contributions, nor received any
enquiries from local tax authorities regarding social security tax payments in light of the
reform plan recently promulgated in mainland China.
LICENSES, PERMITS AND REGULATORY APPROV ALS
As advised by our PRC Legal Advisor, as of the Latest Practicable Date, we had obtained
all requisite licenses, permits and approvals from relevant government authorities that are
material to our business operations in mainland China. Such licenses, permits and approvals
remained in full effect, and no circumstances existed that would render their revocation or
cancelation.
The following table sets forth the material licenses and permits currently held by us:
No. Licenses/Permits Holder Issuing Authority
Issuance
Date Expiry Date
1. Food business
license (຾ᐄ
஢̙ᗇ)
Guangzhou Weiji
Trading Co., Ltd.
(Ϟ
ʮ̡)
Guangzhou Haizhu
District Market
Supervision
Administration
(ᄿψ̹ऎमਜ̹
ఙ္ຖ၍ଣ҅)
June 8, 2021 June 7, 2026
2. Food business
license (຾ᐄ
஢̙ᗇ)
Beijing Taihe
Ruitong Cloud
Business
Technology Co.,
Ltd. ( ̏ԯइձ๿
ࠢ
ʮ̡)
Beijing Shunyi
District Food
and Drug
Administration
(࠮
္ຖ၍ଣ
҅)
January 7,
2022
January 6,
2027
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RECENT REGULATORY DEVELOPMENT IN MAINLAND CHINA
Recent Development on Regulations Relating to Information Security and Privacy
Protection
On November 14, 2021, the CAC released the Administration Governing the Cyber Data
Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋจԈᇃ)) (the “ Draft Cyber
Data Security Regulations ”), and accepted public comments until December 13, 2021. The
Draft Cyber Data Security Regulations define data processors as individuals or organizations
that autonomously determine the purpose and the manner of processing data. If a data processor
who is in possession of personal data of more than one million users would like to listing in
a foreign country, it shall apply for a cybersecurity review according to the Draft Cyber Data
Security Regulations. Besides, data processors that are listed overseas shall carry out annual
data security assessment. Public consultation for the Draft Cyber Data Security Regulations
ended on December 13, 2021. The final version and effective date of such regulations are
subject to change with substantial uncertainty.
Having consulted with our PRC Legal Advisor, we believe that the Measures for
Cybersecurity Review and Draft Cyber Data Security Regulations (if formally issued in the
current form) would apply to us given that in the ordinary course of our business, we collect,
process and store different types of data concerning our customers (primarily include
consumers of merchandise sold at our POSs and end-users of our karaoke booths), business
partners and employees, all of which would be considered as data processing activities under
applicable PRC Law. In particular, when consumers purchase merchandise at our POSs with
Alipay or WeChat Pay, we collect their (i) Alipay or WeChat Pay encrypted user identification
number generated by the payment applications and (ii) transaction information, such as
transaction time, location of the POS, the merchandise purchased and the purchase amount.
Such information collected is primarily used for our internal reconciliation and analysis of
transaction data to facilitate merchandise mix optimization and procurement decision-making.
To a lesser extent, where a consumer uses our customer services on our WeChat public account
and Alipay mini-program, we will collect his/her mobile phone number, avatar, nickname,
gender and region. Such information collected is primarily used for providing follow-up
customer services. We do not share any other data or information with Alipay and WeChat Pay.
For our business partners and employees, we mainly collect their mobile phone number,
location, corporate registration information and bank account number for business cooperation
and employment purposes.
On December 28, 2021, the CAC and certain other regulatory authorities in mainland
China published the Measures for Cybersecurity Review (), which
reiterates and expands the applicable scope of the cybersecurity review. Pursuant to the new
measures, critical information infrastructure operators that purchase network products and
services and network platform operators engaging in data processing activities that affect or
may affect national security must be subject to the cybersecurity review. A network platform
operator that has personal information of more than one million users must apply for a
cybersecurity review when it seeks to list in a foreign country. As of the Latest Practicable
Date, the Group was in possession of personal data of more than one million users.
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On April 20, 2022, our PRC Legal Advisor conducted a phone consultation with the China
Cybersecurity Review Technology and Certification Center (ҦஔၾႩᗇʕ
ː) (the “ CCRC ”), which is a competent authority according to our PRC Legal Advisor. The
CCRC confirmed that (i) the Company is not required to submit cybersecurity review
application for the proposed Listing in Hong Kong; and (ii) the Company is not bound by the
requirements on cybersecurity review for Hong Kong listing under the Draft Cyber Data
Security Regulations as such regulations have not come into effect. The CCRC also confirmed
that the Company is not required to notify the CAC of its proposed listing in Hong Kong for
reasons that (i) the Company’s current application for listing in Hong Kong is not listing in a
foreign country, and (ii) the Draft Cyber Data Security Regulations, which requires data
processors to apply for cybersecurity review if its listing in Hong Kong will affect or may
affect national security, have not taken into effect, and such requirement is not included in the
Measures for Cybersecurity Review.
Our PRC Legal Advisor is of the view that we will be able to comply with the Measures
for Cybersecurity Review and Draft Cyber Data Security Regulations (if formally issued in the
current form) in all material aspects on the basis that (i) we only collect the personal
information necessary for provision of the relevant services and have obtained customers’
informed consent for processing such information, (ii) we have not been informed by any
governmental authority in mainland China of any requirement on submission for cybersecurity
review when we filed to CSRC for approval for this Listing; (iii) we have not been subject to
any material fines or administrative penalties, mandatory rectifications, or other sanctions by
any competent regulatory authorities in relation to the infringement of cybersecurity and data
protection laws and regulations; (iv) there is no material leakage of data or personal
information or violation of cybersecurity and data protection and privacy laws and regulations
by us which will have a material adverse impact on the Group’s business operations; (v) there
have been no material cybersecurity and data protection incidents or infringement upon the
rights of any third parties, or other legal proceedings, administrative or governmental
proceedings, pending or, to the best of the knowledge of the Company, threatened against or
relating to the Company; (vi) we have implemented comprehensive cybersecurity and data
protection policies, procedures, and measures to ensure secured storage and transmission of
data and prevent unauthorized access or use of data; and (vii) we will closely monitor the
legislative and regulatory development in connection with cybersecurity and data protection,
including the Draft Cyber Data Security Regulations and the interpretation or implementation
rules of laws and regulations of cybersecurity and data protection, and adjust and enhance the
Group’s data protection measures as appropriate.
As of the Latest Practicable Date, we had not been involved in any product, service or
data processing activities that might give rise to national security risks based on the factors set
out in Article 10 of the Measures for Cybersecurity Review and have not been inquired,
investigated, warned or penalized by any authorities in mainland China in this respect. In
particular, (1) the Group has not been designated by any regulatory authority as a critical
information infrastructure operator (“ CIIO ”) and does not provide network products and
services to CIIO, thus the Group will not pose (i) any risk that the use of its products and
services could bring about the illegal control of, interference with, or destruction of critical
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information infrastructure (“ CII”), (ii) any risk to CII business continuity of product and
service supply disruptions, (iii) any risk to security, openness, transparency, and diversity of
sources of products and services used by any CIIO; or (iv) the reliability of supply channels
of any CIIO, as well as the risk of supply disruptions due to political, diplomatic, and trade
factors, and (2) the Group does not process any important data or core data, thus it will not pose
any risk (i) that core data or important data are stolen, leaked, damaged, or illegally used or
illegally exported, or (ii) risk existing that due to listing, CII, core data or important data are
affected, controlled, or maliciously used by foreign governments, as well as cybersecurity
risks.
On July 7, 2022, the CAC promulgated the Measures on Security Assessment of
Cross-border Data Transfer () (the “ Data Export Measures ”),
which became effective on September 1, 2022. The Data Export Measures stipulates that any
data processor who processes or exports personal information exceeding a certain volume
threshold shall apply for a security assessment by the CAC before transferring any personal
information abroad. The security assessment requirement also applies to any transfer of
important data outside of mainland China. As of the Latest Practicable Date, (i) we had not
received any notification from relevant regulatory authorities identifying us as a critical
information infrastructure operator, (ii) the identification of important data and the
implementation are still subject to elaboration by relevant government authorities, and (iii) the
data collected and generated in our daily business operation are kept within mainland China
and not transmitted overseas. Therefore, our Directors and our PRC Legal Advisor are of the
view that the Measures on Security Assessment of Cross-border Data Transfer do not apply to
us.
On September 14, 2022, the CAC released the Notice of Public Consultation on the
Decision on Amending the Cybersecurity Law of the People’s Republic of China (Draft for
Comments) (ҷ<ج>֛(ᅄӋจԈᇃ)จ
ٝor the Draft Amendment of Cybersecurity Law. The Draft Amendment of
Cybersecurity Law mainly increases the legal liability for violations under the current
Cybersecurity Law, integrates and unifies the penalties for violation of network operation
security protection obligations, violation of critical information infrastructure security
protection obligations and violation of personal information protection obligations.
For further details, see “Regulatory Overview — Regulations Relating to Information
Security and Privacy Protection” and “Risk Factors — Risks Relating to Legal, Compliance
and Regulatory Matters — Any failure to protect our customer data, or the improper collection,
use or disclosure of such data, as well as the uncertainties surrounding the cybersecurity review
may subject us to the liabilities imposed by data privacy and protection laws and regulations,
which may negatively impact our reputation and business.”
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Recent Development on Regulations relating to Overseas Listing
On February 17, 2023, the CSRC promulgated the Trial Measures for Administration of
the Overseas Securities Offering and Listing by Domestic Enterprises ( ྤʫΆุྤ̮೯Бᗇ
) and five supporting guidelines (the “ Trial Measures ”), which took
effect on March 31, 2023. The Trial Measures comprehensively improve and reform the
existing regulatory regime for overseas offering and listing of securities of mainland
China-based companies and regulate both direct and indirect overseas offering and listing of
securities of mainland China-based companies by adopting a filing-based regulatory regime.
According to the Trial Measures, a domestic company seeking direct overseas offering
and listing shall file with the CSRC, submit the filing report, legal opinions and other relevant
materials as required under the Trial Measures, and state the shareholders’ information and
other matters in a truthful, accurate and complete manner. Where a domestic company submits
an application for initial public offering to the competent overseas regulators, such domestic
company shall file with the CSRC within three business days after such application is
submitted. The Trial Measures also require subsequent reports to be filed with the CSRC on
material events, such as a change of control event, or voluntary or forced delisting of the issuer
who has completed the overseas offering and listing. If the issuer fails to complete the filing
procedure, conceals any material fact or falsifies any major content in its filing documents, it
may be subject to administrative penalties, such as order to rectify, warnings, fines, and its
controlling shareholders, actual controllers, the person directly in charge and other directly
liable persons may also be subject to administrative penalties, such as warnings and fines.
However, since the Trial Measures were newly promulgated, the interpretation, application and
enforcement of the Trial Measures remain unclear.
According to the Guidelines for Application of Regulatory Rules – Overseas Offering and
Listing No. 1, a domestic company seeking directly listing overseas shall formulate the
company’s articles of association referring to the Guidelines for the Articles of Association of
Listed Companies latest amended on January 5, 2022 by the CSRC (the “ Guidelines for
Articles of Association ”).
As advised by the PRC legal advisor, the Company’s Articles of Association has been
approved by the general meeting of the Shareholders held on April 8, 2022 and the Board of
Directors held on April 3, 2023, which shall become effective on the Listing Date.
Furthermore, the contents of the Company’s Articles of Association complies with the
requirements under the PRC Company Law, the Trial Measures and the Guidelines for Articles
of Association.
On February 24, 2023, the CSRC, jointly with other relevant governmental authorities,
promulgated the Provisions on Strengthening Confidentiality and Archives Management of
Overseas Securities Issuance and Listing by Domestic Enterprises (̋੶ྤʫΆุྤ̮
) (the “ Confidentiality and Archives
Management Provisions ”), which took effect on March 31, 2023. The Confidentiality and
Archives Management Provisions outline obligations of issuers listed in overseas markets with
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operations in mainland China when they provide information involving state secrets or
sensitive information to their securities service providers (such as auditors) and overseas
regulators. In addition, under the Confidentiality and Archives Management Provisions, such
issuers will also be required to obtain approval from the CSRC and other authorities in
mainland China before accepting any investigation or inspection by overseas regulators. As the
Confidentiality and Archives Management Provisions were recently promulgated, there are
uncertainties with respect to their interpretation and implementation. For further details, see
“Regulatory Overview — Regulations Relating to Overseas Listing.”
ENVIRONMENTAL, HEALTH AND SAFETY MATTERS
We do not operate any production facilities. Therefore, we are not subject to significant
health, safety or environmental risks. In respect of inventory management and logistics works,
we have in place a comprehensive set of internal policies and guidance to ensure the safety of
our operation team in the maintenance of warehouses and operation of vehicles. To comply
with applicable laws and regulations, our human resources department would, if necessary and
after consultation with our legal advisors, adjust our human resources policies to accommodate
material changes to relevant labor and safety laws and regulations. During the Track Record
Period and up to the Latest Practicable Date, we had not been subject to any fines or other
penalties due to non-compliance with health, safety or environmental regulations. As advised
by our PRC Legal Advisor, during the Track Record Period and up to the Latest Practicable
Date, the Company was in compliance with the relevant environmental and occupational health
and safety laws and regulations in mainland China in all material aspects.
Policy on Environmental, Social and Corporate Governance
We are committed to promoting corporate social responsibility and sustainable
development, and integrating them into all major aspects of our business operations.
Accordingly, our Board has adopted a comprehensive policy on environmental, social and
corporate governance responsibilities (the “ ESG Policy ”) in accordance with the Listing Rules,
which sets forth, among others, (i) the appropriate risk governance on environmental, social
and governance (“ ESG”) matters, including ESG-related risks and opportunities; (ii)
identification of key stakeholders and the communication channels to engage with them; (iii)
ESG governing structure, (iv) ESG strategy formation procedures; and (v) ESG risk
management and monitoring.
Governance
We believe that it requires collective effort from our Board of Directors to evaluate and
manage material ESG issues, therefore we have not established any sub-committee for ESG
issues. Our Directors have overall responsibility for our ESG strategy and reporting, ensuring
that our ESG policies are duly implemented and have continuous updates for full compliance
with the latest standards. Our Directors also support our commitment to fulfilling our
environmental and social responsibility, for which they are responsible for identification,
assessment and management of our ESG-related risks, and ensuring that appropriate and
effective ESG risk management and internal control systems are in place.
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Our Directors’ principal duties and responsibilities in respect of ESG include: (i) keeping
abreast of the latest ESG-related laws and regulations, including the applicable sections of the
Listing Rules, and keeping the Board informed of any changes in such laws and regulations and
updating our ESG Policy in accordance with the latest regulatory updates; (ii) identifying our
key stakeholders based on our business operations and understanding such stakeholders’
influences and dependence with respect to ESG matters; (iii) assessing ESG-related risks on a
regular basis according to applicable laws, regulations and policies, especially risks in relation
to climate changes, to ensure our responsibilities with respect to ESG matters are met; (iv)
monitoring the effectiveness and ensuring the implementation of our ESG Policy; and (v)
reporting to our management on an annual basis on the implementation of our ESG Policy and
preparing the ESG report.
Impacts of ESG-related Risks
We have identified the following ESG-related risks which may have an impact on our
business, strategy or financial performance:
(i) Product quality and food safety. Our quality control mechanisms, food safety
monitoring system and procurement procedures, among others, may not be adequate.
For more details on our quality control systems, se e “ — Quality Control.” The
quality of the merchandise provided by our suppliers are subject to factors beyond
our control. We may be subject to risks of complaints or even food safety incidents
as well, and our financial condition, performance and goodwill will therefore be
seriously affected.
(ii) Supply chain management. Responsible sourcing and sound supply chain
management are essential for us to ensure reliable product quality and sustainability
along our supply chain. It is crucial for us, as an unmanned retail operator, to have
the ability to manage our inventory and logistics for merchandise across the country.
If we are unable to select quality third-party suppliers or monitor, audit and manage
different parties in the supply chain, we may be exposed to risks of suppliers’
non-compliance with applicable laws and regulations and unethical practices, which
could diminish our competitiveness and harm our reputation.
(iii) Climate change adaption. Floods, typhoons, storms, and other extreme weather
conditions and natural disasters may cause price volatility of merchandise,
fluctuation in supply and physical damage to our machines, warehouses and offices,
pose safety risks to our staff, among other consequences.
(iv) Environmental compliance. We are subject to relevant environmental laws and
regulations, such as the Energy Conservation Law (ঐ๕
). For example, energy-consuming entities shall strengthen energy conservation
management, formulate and implement energy conservation plans and technical
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measures of energy conservation, and reduce energy consumption in accordance
with the principle of rational energy utilisation. Regulators may impose more
stringent environmental requirements and standards on us, which may increase our
operating costs.
Identification, assessment, management and mitigation of ESG-related risks
Our Directors are responsible for identifying and evaluating ESG-related risks, and
formulating and assessing strategic plans and mitigating measures. We have adopted the
following measures to identify, assess, manage and mitigate ESG-related risks.
Product quality and food safety
We comply with relevant laws and regulations regarding food safety in all material
respects and are prudent in the processes of procurement, storage, transportation and
distribution of merchandise. For details of the food safety laws and regulations that apply to
us, please see “Regulatory Overview — Regulations Relating to Food Sale and Safety.” We
deploy our procurement team to stringently evaluate our suppliers.
Supply chain management
We have established a supplier approval process, through which suppliers must provide
relevant qualifications or certifications, such as their business licenses or food production and
operation licenses. If the suppliers are not compliant with the applicable laws and regulations
regarding food safety and quality or commit misconducts, we may terminate our contracts with
them. We place great emphasis on supply chain sustainability and have been promoting a
responsible and low-carbon paradigm along our value chain.
Climate change adaptation
We are committed to conserving energy and water and reducing our carbon footprint. We
primarily consume electricity and petroleum in our operational activities, which are the main
sources of our greenhouse gas emissions. To reduce our greenhouse gas emissions and conserve
energy and water, we have adopted the following targets and measures:
A. Energy and Water Consumption at our Office Premises and Warehouses
Metrics and targets. We evaluate our energy consumption using the metric of average
annual power usage per sq.m and water consumption using the metric of average annual water
usage per sq.m at our office premises and warehouses. In 2021, 2022 and the six months ended
June 30, 2023, our estimated average power usage per sq.m was 14.0 kWh, 13.4 kWh and
7.3 kWh and average water usage per sq.m was 139.9 liters, 131.2 liters and 68.4 liters,
respectively. We will seek to reduce the level of our average annual energy and water
consumption by 3% over the next three years.
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Measures leading to the targets. We have taken various measures, including replacing
high energy consuming equipment at offices and warehouses to reduce energy consumption.
For instance, we continuously monitor the energy consumption at our office premises and
warehouses and repair timely when malfunction of relevant facilities resulting in abnormal
power consumptions. We have also taken various initiative to conserve water. We regularly
inspect our water tanks to prevent water leakage. We also seek to raise energy and water
consumption awareness among our employees.
B. Energy Consumption of our V ehicles
Metrics and targets. We seek to continuously reduce energy consumption of our
self-owned vehicles. We evaluate the energy consumption of our self-owned vehicles using the
metrics of average annual petroleum used per vehicle. In 2019, 2020, 2021, 2022 and the six
months ended June 30, 2023, our estimated average petroleum used per vehicle was 2.67 tons,
2.62 tons, 2.57 tons, 2.57 tons and 0.99 tons, respectively. We will seek to reduce the level of
our average annual petroleum used per vehicle by approximately 16% over the next three years.
Measures leading to the targets. We will gradually replace the existing vehicles that run
on petroleum with electric vehicles. We will also continue to optimize our operation system to
reduce the energy consumption. More efficient restocking schedule and route planning will
reduce the energy consumption in the course of merchandise transportation.
C. Energy Consumption of our Machines
The table below sets out the energy consumption of our vending machines during the
Track Record Period:
Pick-and-go
cabinet
Beverage vending
machine
Beverage and
snack vending
machine
Freshly brewed
beverage vending
machine
Energy consumption (Wh per unit) 120 to 500 100 to 881 111 to 406 100 to 1,700
Metrics and targets. We endeavor to proactively conserve energy in response to the
government’s initiatives. We evaluate the level of energy consumption of our machines with the
metric of average annual power usage per POS. In 2019, 2020, 2021, 2022 and the six months
ended June 30, 2023, our estimated average power usage per POS was 1,992 kWh, 1,960 kWh,
1,945 kWh, 1,936 kWh and 956 kWh, respectively. We will seek to reduce the level of our
average annual power usage per machine by approximately 1.3% over the next two years.
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Measures leading to the targets. We have continuously optimized our machine design to
reduce energy consumption. We place our machines at indoor and shaded areas, and adjust the
cabinet temperature in accordance with the change of seasons to reduce energy needed for
cooling and/or heating of merchandise. The refrigeration units of our machines are regularly
cleaned to remove the dusts and enhance energy efficiency. We also switch our machines to
energy-saving mode during time with low consumer traffic to reduce energy consumption for
lighting and cooling.
Resource Consumption
We endeavor to reduce negative impact on the environment by optimizing resources
consumption across our operations. In relation to our procurement and warehouses
management, we adopt a “just-in-time” procurement strategy to reduce overstocks and wastes.
We also seek to source from suppliers with sustainable production and operation. Packaging
materials of the merchandise and machines received from the manufacturers, such as used
carton boxes will either be sent to recycling companies or factories upon unboxing or passed
on to the site owners together with such merchandise and machines.
In relation to resource utilization management of our offices, we adopt a document
management system and a paper management system with the aim to reduce the amount of
paper waste used for record keeping and avoid unnecessary printing. To reduce plastic wastes,
we have also installed water dispenser at our offices.
Internal Control Measures
To achieve our targets, our legal department will execute the ESG-related policies and
measures, and our management team will review the execution process on a regular basis. We
also plan to implement the following internal control measures, including, (a) encouraging staff
to switch off unused office equipment, such as computers, lights, and air-conditioners; (b)
imposing temperature controls for air conditioning and keeping indoor air-conditioning
temperature at 26°C at all times; (c) reducing the use of paper documents and promoting
printing on both sides and using recycled paper if necessary; (d) actively using online office
and video conference technologies to reduce on-site meetings; (e) encouraging the use of
online system for internal administrative procedures; (f) conducting waste classification
training; (g) placing waste sorting bins at our venue; and (h) recycling the packaging materials.
Our in-house legal staff are responsible for keeping abreast of the regulatory development
in relation to our business and operations. In addition, we also provide opportunities to our
employees to attend forums, workshops and external trainings on these related topics.
BUSINESS
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Employees
We believe that employees are an important driver of our corporate development. As an
equal employment opportunity employer, we also focus on embracing diversity within our
organization and equal and respectful treatment of all of our employees in their hiring, training,
wellness and professional and personal development. As of June 30, 2023, the gender
distribution of our employees were approximately 70.7% male and 29.3% female. We
recognize and embrace the benefits of having a diverse Board of Directors to enhance the
quality of its performance. To this end, we have adopted a board diversity policy which
requires all board appointments to be based on meritocracy, and candidates to be considered
against objective criteria. See “Directors, Supervisors and Senior Management — Board
Diversity.”
BUSINESS
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OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
Pursuant to the Previous Deed of AIC entered into between Mr. Wang, the principal
founder of our Group, our executive Director, chief executive officer and chairman of the
Board, and Mr. Chen, our executive Director (together the “ Concerted Parties ”) on July 20,
2015, which upon expiry was succeeded by the First Renewal Deed of AIC and the Deed of AIC
entered into between Mr. Wang and Mr. Chen with a consecutive term until December 31, 2024
(all such deeds together, the “ Deeds of AIC ”), (i) Mr. Wang and Mr. Chen had agreed to consult
each other and reach a unanimous consensus between themselves on the subject matters of any
shareholders’ resolutions or board resolutions of our Company to be passed pursuant to
applicable constitutional documents or applicable laws and regulations during the period each
party remains a shareholder of our Company, and (ii) where a consensus cannot be reached, the
matter shall be decided by the individual who holds more Shares. For more details of the Deeds
of AIC, see “History and Development — Information on Our Group — Our Company.”
As at the Latest Practicable Date, the Concerted Parties collectively held and controlled
the voting rights attached to approximately 21.99% of our Company’s total number of issued
Shares. Immediately after the completion of the Global Offering (without taking into account
the Unlisted Shares which may be issued upon the exercise of the options which were granted
under the Pre-IPO Incentive Scheme), the Concerted Parties will collectively hold and control
the voting rights attached to approximately 21.35% of our Company’s total number of issued
Shares. Accordingly, the Concerted Parties will be our Single Largest Group of Shareholders
upon Listing, and our Company will not have any controlling shareholder as defined under the
Listing Rules upon Listing.
For details of Mr. Wang and Mr. Chen, please refer to “Directors, Supervisors and Senior
Management — Directors.”
COMPETING INTERESTS
Each of our Single Largest Group of Shareholders and Directors confirms that he/she or
his/her respective close associates do not have any interest in a business, apart from the
business of our Group, which competes or is likely to compete, directly or indirectly, with our
business, which would require disclosure under Rule 8.10 of the Listing Rules.
INDEPENDENCE FROM OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that we are capable
of carrying on our business independently of our Single Largest Group of Shareholders and
their respective close associates after the Listing.
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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Management Independence
The day-to-day management of the business of our Group rested primarily with our Board
and our senior management as of the Latest Practicable Date. Our Board comprises four
executive Directors, two non-executive Directors and three independent non-executive
Directors, and our Group has two senior management (who are not Directors). Although Mr.
Wang is the chairman of the Board, our chief executive officer, executive Director and also a
member of the Single Largest Group of Shareholders, and Mr. Chen is our executive Director
and also a member of the Single Largest Group of Shareholders, our management and
operational decisions are made by all our executive Directors and senior management, all of
whom have substantial experience in the industries in which we are engaged and/or in their
respective fields of expertise. The balance of power and authority is ensured by the operation
of the senior management and our Board. See “Directors, Supervisors and Senior Management”
for further details.
Each of our Directors is aware of his/her fiduciary duties as a Director which require,
among others, that he/she must act for the benefit of and in the best interests of our Company
and not allow any conflict between his/her duties as a Director and his/her personal interests.
Further, we believe our independent non-executive Directors will bring independent judgment
to the decision-making process of our Board and provide independent advice to our Board
committees. In addition, our Directors shall not vote in any Board resolution approving any
contract or arrangement or any other proposal in which he/she or any of his/her close associates
have a material interest and shall not be counted in the quorum present at the particular Board
meeting. Any connected transactions between our Group and our Single Largest Group of
Shareholders or their respective associates will be subject to the requirements under Chapter
14A of the Listing Rules, including the requirements of reporting, announcement and
independent Shareholders’ approval (if applicable) for a connected transaction as appropriate.
We have established an internal control mechanism to identify connected transactions to ensure
that our Shareholders or Directors with conflicting interests in a proposed transaction will
abstain from voting on the relevant resolutions.
Based on the above, our Directors are satisfied that our Board as a whole together with
our senior management team are able to perform the managerial role in our Group
independently.
Operational Independence
Despite that the Concerted Parties will continue to hold a substantial interest in our
Company and will be our Single Largest Group of Shareholders after the Listing, we have full
rights to make all decisions regarding, and to carry out, our own business operations
independently from our Single Largest Group of Shareholders. Our Company (through our
subsidiaries) holds or enjoys the benefit of all relevant licenses necessary to carry out our
businesses, and has sufficient capital, technology, equipment, accesses to customers and
suppliers, and employees to operate our business independently from our Single Largest Group
of Shareholders. In addition, our organizational structure is made up of individual departments,
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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each with specific areas of responsibilities. None of our company secretary, operational
personnel or administrative personnel is under the employment of our Single Largest Group of
Shareholders or their respective close associates. We have also established a set of internal
control measures to facilitate the effective operation of our business. For details of our Group’s
risk management and internal control systems, please refer to “Business — Risk Management
and Internal Control.”
Our Directors do not expect that there will be any other significant transactions between
our Group and our Single Largest Group of Shareholders upon or shortly after the Listing.
Based on the above, our Directors are satisfied that we have been operating independently
from our Single Largest Group of Shareholders and their close associates during the Track
Record Period and will continue to operate independently.
Financial Independence
During the Track Record Period and up to the Latest Practicable Date, our Group has our
own internal control, accounting and financial management system and we make financial
decisions independently according to our own business needs. We have independent bank
accounts and do not share any of our bank accounts, loan facilities or credit facilities with our
Single Largest Group of Shareholders or their close associates. In addition, our Group has
sufficient capital and credit facilities to operate our business independently, and has adequate
internal resources and credit profile to support our daily operations. We do not rely on our
Single Largest Group of Shareholders and/or their close associates by virtue of their provision
of financial assistance.
Our Directors confirm that all non-trade amounts due to or from, and loans or guarantees
provided by our Single Largest Group of Shareholders and their respective close associates,
will be fully repaid or released before the Listing. As at the Latest Practicable Date, none of
borrowings and lease liabilities of our Group involved guarantees from our Single Largest
Group of Shareholders. For further details of guarantees provided by our Single Largest Group
of Shareholders during the Track Record Period, see Note 36 to the Accountant’s Report as set
out in Appendix I. Our Directors believe that we are capable of obtaining financing from
external sources without reliance on our Single Largest Group of Shareholders.
With respect to any future financial assistance to be provided to, or received from, our
connected persons, including our Single Largest Group of Shareholders, our Group shall
comply with the requirements under Chapter 14A of the Listing Rules, including the
requirements of reporting, announcement and independent Shareholders’ approval as
appropriate, and undertake to provide or receive such financial assistance on normal
commercial terms or better.
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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Based on the above, our Directors believe that we have the ability to operate
independently from our Single Largest Group of Shareholders and their respective close
associates from a financial perspective and are able to maintain financial independence from
our Single Largest Group of Shareholders and their respective close associates.
CORPORATE GOVERNANCE MEASURES
Each of the members of our Single Largest Group of Shareholders has confirmed that he
fully comprehends his obligations to act in our Shareholders’ and our best interests as a whole.
Our Directors believe that there are adequate corporate governance measures in place to
manage existing and potential conflicts of interest. In order to further avoid potential conflicts
of interest, we have implemented the following measures:
(a) as part of our preparation for the Global Offering, we have amended our Articles of
Association to comply with the Listing Rules. In particular, our Articles of
Association provides that, unless otherwise provided, a Director shall not vote on
any resolution approving any contract or arrangement or any other proposal in which
such Director or any of his/her close associates have a material interest nor shall
such Director be counted in the quorum present at the meeting;
(b) a Director with material interests shall make full disclosure in respect of matters that
conflict or potentially conflict with our interest and absent himself/herself from the
board meetings on matters in which such Director or his/her close associates have
a material interest, unless the attendance or participation of such Director at such
meeting of the Board is specifically requested by a majority of the independent
non-executive Directors;
(c) we are committed that our Board should include a balanced composition of
executive and non-executive Directors (including independent non-executive
Directors). We have appointed three independent non-executive Directors and we
believe our independent non-executive Directors possess sufficient experience and
they are free of any business or other relationship which could interfere in any
material manner with the exercise of their independent judgment and will be able to
provide an impartial and external opinion to protect the interests of our public
Shareholders. Details of our independent non-executive Directors are set out in
“Directors, Supervisors and Senior Management — Directors — Independent
Non-executive Directors”;
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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(d) in the event that the independent non-executive Directors are requested to review
any conflicts of interests circumstances between our Group on the one hand and our
Single Largest Group of Shareholders and/or our Directors on the other hand, our
Single Largest Group of Shareholders and/or our Directors shall provide the
independent non-executive Directors with all necessary information and our
Company shall disclose the decisions of the independent non-executive Directors
either through our annual report or by way of announcements;
(e) pursuant to the Corporate Governance Code as set out in Appendix 14 to the Hong
Kong Listing Rules, our Directors, including the independent non-executive
Directors, will be able to seek independent professional advice from external parties
in appropriate circumstances at our Company’s expense; and
(f) we have appointed China Securities (International) Corporate Finance Company
Limited as our compliance adviser, which will provide advice and guidance to us in
respect of compliance with the applicable laws and the Listing Rules including
various requirements relating to directors’ duties and corporate governance.
RELATIONSHIP WITH OUR SINGLE LARGEST GROUP OF SHAREHOLDERS
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OVERVIEW
We have entered into a number of continuing connected transactions with Alipay China
(as defined below) in our ordinary and usual course of business. The transactions disclosed
under this section will constitute continuing connected transactions under Chapter 14A of the
Listing Rules upon completion of the Global Offering.
The historical amounts disclosed in 2019, 2020, 2021 and 2022 and the six months ended
June 30, 2023 in respect of the continuing connected transactions in this section constitute only
a portion of the amounts disclosed in respect of our Group’s related party transactions in 2019,
2020, 2021 and 2022 and the six months ended June 30, 2023 as set out in Note 36(b) to the
Accountant’s Report set forth in Appendix I. The related party transactions which do not
constitute continuing connected transactions requiring disclosure in this section include (i) the
transaction entered into with Ant Future (Hainan) Information Technology Co., Ltd. (formerly
known as Ant Financial Services (Hainan) Digital Technology Co., Ltd.) (“ Ant Hainan ”), a
wholly-owned subsidiary of Ant Group, as detailed below; and (ii) transactions between our
Group and our Group’s associates and joint ventures and do not constitute connected
transactions requiring disclosure in this section.
On December 9, 2021, as part of our continuous efforts to expand our unmanned retail
business, our Group entered into a one-off sales agreement to purchase equipment parts from
Ant Hainan that form part of the screen display components in our pick-and-go cabinet. The
transaction between our Group and Ant Hainan amounted to approximately RMB12.4 million
in 2021. Our Directors consider that the transaction was arrived at after arm’s length
negotiation and that the transaction was fair and reasonable and in the interest of our Company
and our Shareholders as a whole. Our Company will comply with Chapter 14A and other
applicable Listing Rules after the Listing when necessary.
RELATIONSHIP WITH ALIPAY CHINA
Name Connected relationship
Alipay.com Co., Ltd. ( ˕˹ᘒ
(ʕ਷)ʮ̡)
(“Alipay China ”)
Shanghai Y unxin, one of our Pre-IPO Investors, which is a
wholly-owned subsidiary of Ant Group, will hold
approximately 16.20% of the issued Shares upon Listing and
will therefore be a substantial Shareholder.
Alipay China is a wholly-owned subsidiary of Ant Group and
therefore a fellow subsidiary of Shanghai Y unxin.
Alipay China is therefore an associate of Shanghai Y unxin
and a connected person of our Company.
CONNECTED TRANSACTIONS
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SUMMARY OF OUR CONTINUING CONNECTED TRANSACTIONS
Set out below is a brief summary of our continuing connected transactions and the
relevant waivers sought:
Transactions
Applicable
Listing Rule
Waiver
sought
Proposed annual cap for the years
ending December 31,
2023 2024 2025
(RMB in millions)
Partially-exempt continuing connected transactions
Payment
Services
Framework
Agreement
Rule 14A.35
Rule 14A.76(2)
Rule 14A.105
Announcement 15.0 18.0 22.0
Advertising
Cooperation
Framework
Agreement
Rule 14A.35
Rule 14A.76(2)
Rule 14A.105
Announcement 9.0 33.0 35.0
PARTIALLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS
We set out below details of the continuing connected transactions which are exempt from
circular (including independent financial advice) and independent shareholders’ approval
requirements but subject to the annual reporting and announcement requirements under
Rule 14A.76(2) of the Listing Rules.
Payment Services Framework Agreement
Description of the Transactions
On October 17, 2023, our Company (for itself and on behalf of other members of our
Group) entered into a framework agreement with Alipay China, pursuant to which Alipay
China agreed to provide us with payment services through its payment channels so as to enable
our customers to conduct online transactions via our vending machines (the “ Payment
Services Framework Agreement ”). We shall, in return, pay a payment service fee to Alipay
China. The precise scope of service, service fee rate, the applicable payment channel and other
details of the arrangement shall be agreed between the relevant parties.
CONNECTED TRANSACTIONS
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Term
The term of the Payment Services Framework Agreement shall commence on the Listing
Date and expire on December 31, 2025. The Payment Services Framework Agreement is
automatically renewable upon expiry for additional three-year periods, unless terminated by
written notice by either party. Our Company will re-comply with the applicable requirements
under Chapter 14A of the Listing Rules when the Payment Services Framework Agreement is
renewed.
Pricing Policy
The service fees will be determined on an arm’s length basis based on the standard service
fee rates multiplied by the transaction amount paid through Alipay via our Group’s vending
machines. The fee rates and calculation method shall be determined separately from time to
time. In particular, Alipay China has prescribed for standard service fee rates depending on the
industry of the using entity (the “ Service Fee Rate ”), all of which are published on the website
operated by Alipay China. As of the Latest Practicable Date, the prevailing Service Fee Rate
charged by Alipay China to our Group for Alipay is 0.6% of the transaction amount. During
the Track Record Period and up to the Latest Practicable Date, the Service Fee Rate has
remained at 0.6%.
Before entering into any payment agreement pursuant to the Payment Service Framework
Agreement, we will take into account a number of factors, including but not limited to (i) the
efficiency of payment channels operated by different online payment service providers; (ii) our
consumers’ preference among different online payment service providers; and (iii) the Service
Fee Rate, and we will only enter into a payment service agreement with Alipay China if (a) the
terms of the agreement and quality of the payment services provided by Alipay China are no
less favorable than those from other independent third party online payment service providers;
and (b) it is in the best interests of our Company and the Shareholders as a whole. Further, we
shall solicit one to two other online payment service providers for comparable services to
determine if the price and terms offered by Alipay China are fair and reasonable, and our
independent non-executive Directors will review and assess the amounts of payment service
fee payable by our Group to Alipay China on an annual basis.
Historical Amounts
In 2019, 2020, 2021 and 2022 and the six months ended June 30, 2023, the aggregate
amounts of payment service fee payable by our Group to Alipay China were approximately
RMB3.8 million, approximately RMB9.3 million, approximately RMB12.0 million,
approximately RMB11.6 million and approximately RMB6.1 million, respectively.
CONNECTED TRANSACTIONS
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Annual Caps and Basis of Annual Caps
For the years ending December 31, 2023, 2024 and 2025, the relevant annual caps are
expected to be RMB15.0 million, RMB18.0 million and RMB22.0 million, respectively. The
annual caps for the years ending December 31, 2023, 2024 and 2025 are derived with reference
to (i) the historical amounts of payment service fee paid by our Group to Alipay China; (ii)
given our continuous collaboration with Ant Group in the unmanned retail market, an expected
upward adjustment in transaction amount with reference to an expected increase in the number
of our Group’s transactions; and (iii) the estimated Service Fee Rate to be charged by Alipay
China with reference to the Service Fee Rate charged by Alipay China during the Track Record
Period. Taking into account the stable Service Fee Rate charged by Alipay China during the
Track Record Period, our Directors have assumed such Service Fee Rate to remain stable as
compared to that charged during the Track Record Period in calculating the annual caps for the
service fees under the Payment Services Framework Agreement. Our Directors therefore
consider that the proposed annual caps are fair and reasonable.
Reasons for the Transactions
Our Directors consider that, given that (i) Alipay China is one of the leading players in
the PRC online payment service industry and many of our customers use Alipay China’s online
payment services; and (ii) we have been continuously collaborating with Ant Group, such as
enabling biometric authentication on our vending machines, and using Alipay China’s online
payment services would continue to enhance our development as an innovative technology-
based retail platform and strengthen our position in the unmanned retail market, entering into
the Payment Services Framework Agreement will enable us to provide our customers with the
best available payment methods and therefore enhance our customers’ satisfaction with our
services.
Implications under the Listing Rules
Since the highest applicable percentage ratio (other than the profits ratio) under the
Listing Rules in respect of the transactions contemplated under the Payment Services
Framework Agreement is expected to exceed 0.1% but be less than 5%, the transactions will
be exempt from the circular and independent Shareholders’ approval requirements but subject
to the annual reporting and announcement requirements under Chapter 14A of the Listing
Rules.
Advertising Cooperation Framework Agreement
Description of the Transactions
On October 17, 2023, our Company (for itself and on behalf of other members of our
Group) entered into a framework agreement with Alipay China, pursuant to which our Group
and Alipay China (for itself and on behalf of other members of Ant Group) agreed to cooperate
on, including, but not limited to, advertising and promotion of payment service products of
CONNECTED TRANSACTIONS
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Alipay China (for example, biometric authentication payment services and merchandise
recognition services) on our vending machines (the “ Advertising Cooperation Framework
Agreement ”). In return for these advertising and promotion efforts, Alipay China shall pay
service fees to our Group. It is envisaged that from time to time and as required, members of
our Group will enter into individual agreements with Alipay China which will set out specific
terms and conditions such as the precise scope of service, service fee calculation, method of
payment and other details of the service arrangement.
Term
The term of the Advertising Cooperation Framework Agreement shall commence on the
Listing Date and expire on December 31, 2025. The Advertising Cooperation Framework
Agreement is automatically renewable upon expiry for additional three-year periods, unless
terminated by written notice by either party. Our Company will re-comply with the applicable
requirements under Chapter 14A of the Listing Rules when the Advertising Cooperation
Framework Agreement is renewed.
Pricing Policy
The service fees will be determined on an arm’s length basis with reference to, among
others, (i) the quantity of our vending machines with the relevant payment service products
installed; and (ii) the number of transactions generated via the relevant payment service
products on our vending machines. The fee rates and calculation method shall be determined
separately from time to time. In particular, Alipay China has prescribed for standard calculation
of service fees depending on the relevant payment service products and scope of service
provided to them, all of which are published on the website operated by Alipay China.
Before entering into any individual agreement pursuant to the Advertising Cooperation
Framework Agreement, we will take into account a number of factors, including but not limited
to (i) the amount of service fees offered from Alipay China associated with installing the
relevant payment service products on our vending machines (for example, biometric
authentication payment services and merchandise motion sensing); (ii) the expected number of
transactions generated from the relevant payment service products; and (iii) prevailing market
rates from other independent third-party online payment service providers, when available,
which requests for similar services. We will only enter into a service agreement with Alipay
China if it is in the best interests of our Company and the Shareholders as a whole. Given that
such cooperation model is not prevalent amongst other online payment service providers, we
shall solicit other online payment service providers for comparable services when available to
determine if the price and terms offered by Alipay China are fair and reasonable, and our
independent non-executive Directors will review and assess the amounts of service fee payable
by Alipay China to our Group on an annual basis.
CONNECTED TRANSACTIONS
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Historical Amounts
In 2019, 2020, 2021 and 2022 and the six months ended June 30, 2023, the aggregate
amounts of the service fees paid by Alipay China and its associates to our Group were
approximately RMB159.2 million, approximately RMB30.3 million, approximately RMB35.0
million, approximately RMB30.7 million and approximately RMB0.47 million, respectively.
After our Group collaborated with Ant Group to enhance the development of our service
offerings in 2018, we began the mass installation of biometric authentication devices on our
existing vending machines. The relatively high service fees recorded in 2019 was primarily due
to the mass installation of biometric authentication devices on our existing vending machines,
in which our Group received one-off service fees for transactions generated from such vending
machines newly installed with biometric authentication devices. The service fees received in
2020, 2021, 2022 and the six months ended June 30, 2023 were considerably lower because our
Group had lowered its pace of installing new vending machines with biometric authentication
devices during the relevant period due to the then market conditions, resulting in lower one-off
service fees received by our Group as mentioned above.
Annual Caps and Basis of Annual Caps
For the years ending December 31, 2023, 2024 and 2025, the relevant annual caps are
expected to be RMB9.0 million, RMB33.0 million and RMB35.0 million, respectively. The
annual caps for the years ending December 31, 2023, 2024 and 2025 are derived with reference
to (i) the historical service fees paid by Alipay China to our Group; (ii) the expected increase
in the number of vending machines of our Group which will install the relevant payment
service products of Alipay China; and (iii) the standard calculation of service fees as offered
by Alipay China. As we receive a one-off service fee whenever we install a new vending
machine with the payment service products of Alipay China, the total service fees we receive
from Alipay China and its associates during a given period is significantly dependent on the
number of new vending machines installed. As the number of new vending machines installed
during the six months ended June 30, 2023 was minimal, the service fees we received during
such period, i.e. approximately RMB0.47 million, was also relatively low. However, we expect
that with the gradual recovery of the economy from the negative impacts of COVID-19, market
conditions will improve for the rest of the year up to 2025, and our Group will increase its pace
of installing new vending machines. The significant increase in the relevant annual cap from
RMB9.0 million for the year ending December 31, 2023 to RMB33.0 million for the year
ending December 31, 2024 is mainly due to an expected significant increase in the number of
new vending machines of our Group, from about 5,000 in 2023 to about 18,000 in 2024. Our
Directors therefore consider that the proposed annual caps are fair and reasonable.
CONNECTED TRANSACTIONS
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Reasons for the Transactions
We are a vending machine operator in China. The arrangements contemplated under the
Advertising Cooperation Framework Agreement help facilitate our Group to continue to
leverage Ant Group’s expertise in internet technologies and digital infrastructure to further
expand its retail channel and maximize the revenue of our Group. The continuous alliance with
Alipay China will enable our Group’s activities to benefit from Alipay China’s digital
ecosystem and further promote our Group as an innovative technology-based retail platform,
thereby strengthening our position in the unmanned retail market.
Implications under the Listing Rules
Since the highest applicable percentage ratio (other than the profits ratio) under the
Listing Rules in respect of the transactions contemplated under the Advertising Cooperation
Framework Agreement is expected to exceed 0.1% but be less than 5%, the transactions will
be exempt from the circular and independent Shareholders’ approval requirements but subject
to the annual reporting and announcement requirements under Chapter 14A of the Listing
Rules.
APPLICATION FOR W AIVER
As we expect the transactions as contemplated under the Payment Services Framework
Agreement to be carried out on a continuing basis and to extend over a period of time, our
Directors therefore consider that strict compliance with the announcement requirement under
the Listing Rules would be impractical and unduly burdensome and would impose unnecessary
administrative costs upon us. Accordingly, pursuant to Rule 14A.105 of the Listing Rules, we
have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from
strict compliance with the announcement requirement under the Listing Rules relating to the
transactions as contemplated under the Payment Services Framework Agreement, subject to the
condition that the aggregate amounts of the transactions as contemplated under the Payment
Services Framework Agreement for each financial year shall not exceed the relevant amounts
set forth in the proposed annual caps.
Further, as we expect the transactions as contemplated under the Advertising Cooperation
Framework Agreement to be carried out on a continuing basis and to extend over a period of
time, our Directors consider that strict compliance with the announcement requirement under
the Listing Rules would be impractical and unduly burdensome and would impose unnecessary
administrative costs upon us. Accordingly, pursuant to Rule 14A.105 of the Listing Rules, we
have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver from
strict compliance with the announcement requirement under the Listing Rules relating to the
transactions as contemplated under the Advertising Cooperation Framework Agreement,
subject to the condition that the aggregate amounts of the transactions as contemplated under
the Advertising Cooperation Framework Agreement for each financial year shall not exceed the
relevant amounts set forth in the proposed annual caps.
CONNECTED TRANSACTIONS
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We will comply at all times with the applicable requirements under the Listing Rules. In
the event of any future amendments to the Listing Rules imposing more stringent requirements
than those as of the date of this prospectus on the continuing connected transactions referred
to in this section, we will take immediate steps to ensure compliance with such new
requirements.
DIRECTORS’ VIEW
Our Directors (including our independent non-executive Directors) are of the view that
the abovementioned continuing connected transactions have been and shall be entered into in
the ordinary and usual course of business of our Company, are on normal commercial terms or
better to our Group, and are fair and reasonable and in the interests of our Company and our
Shareholders as a whole. Our Directors (including our independent non-executive Directors)
are also of the view that the proposed annual caps for the abovementioned continuing
connected transactions as described above are fair and reasonable and in the interests of our
Company and our Shareholders as a whole. The conflicted Directors (if any) shall be required
to abstain from participation and abstain from voting in the Board meetings at which
resolutions in relation to the abovementioned continuing connected transactions are discussed.
THE JOINT SPONSORS’ VIEW
The Joint Sponsors are of the view (i) that the continuing connected transactions
described in “— Partially-exempt Continuing Connected Transactions” above in this section
have been and shall be entered into in the ordinary and usual course of business of our
Company, are on normal commercial terms or better to our Group, and are fair and reasonable
and in the interests of our Company and our Shareholders as a whole; and (ii) that the proposed
annual caps of such continuing connected transactions are fair and reasonable and in the
interests of our Company and our Shareholders as a whole.
CONNECTED TRANSACTIONS
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--- page 343 ---
DIRECTORS
Our Board currently consists of nine Directors, comprising four executive Directors, two
non-executive Directors and three independent non-executive Directors. The functions and
duties of our Board include convening general meetings, implementing the resolutions passed
at general meetings, determining business and investment plans, formulating our annual
financial budget and financial accounts, and formulating our proposals for profit distributions
as well as exercising other powers, functions and duties as conferred by the Articles of
Association.
The following table sets forth certain information regarding our Directors:
Name Age Position(s)
Date of
joining our
Group
Date of
appointment
as Director
Roles and
responsibilities
Relationship
with other
Directors,
Supervisors
or senior
management
members
Mr. Wang Bin 58 Chairman of our
Board, executive
Director and
chief executive
officer
January 2011 March 2012 Formulating the
overall development
strategies and
overseeing the
operation of our
Group
Acting in
concert
with Mr.
Chen
Mr. Chen
Kunrong
46 Executive Director
and president
April 2011 May 2015 Overseeing the overall
management and
operation of our
Group
Acting in
concert
with Mr.
Wang
Mr. Y u Lizhi 56 Executive Director
and vice
president
November
2017
October
2020
Overseeing the
development of
POS partners
None
Ms. Cui Y an 42 Executive Director,
deputy general
manager and
a joint company
secretary
January 2011 June 2017 Managing the
operation of the
Board
None
Mr. Zhu Chao 43 Non-executive
Director
May 2021 May 2021 Providing advice and
making
recommendations to
our Board
None
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 344 ---
Name Age Position(s)
Date of
joining our
Group
Date of
appointment
as Director
Roles and
responsibilities
Relationship
with other
Directors,
Supervisors
or senior
management
members
Ms. An Y ufang 52 Non-executive
Director
October 2017 October
2017
Providing advice
and making
recommendations
to our Board
None
Mr. Wang
Xiaochuan
45 Independent
non-executive
Director
May 2021 May 2021 Providing independent
advice and
judgment to our
Board
None
Ms. Guo Wei 50 Independent
non-executive
Director
May 2021 May 2021 Providing independent
advice and
judgment to our
Board
None
Mr. Zhang
Chen
39 Independent
non-executive
Director
May 2021 May 2021 Providing independent
advice and
judgment to our
Board
None
Executive Directors
Mr. Wang Bin ( ˮᏵ), aged 58, was appointed as our Director in March 2012 and was
redesignated as our executive Director in May 2021. He is also currently the chairman of our
Board and the chief executive officer of our Company. He is primarily responsible for
formulating the overall development strategies and overseeing the operation of our Group. Mr.
Wang is a member of the Single Largest Group of Shareholders and founded our Group in 2011.
As at the Latest Practicable Date, by virtue of the Deed of AIC, Mr. Wang and Mr. Chen
collectively held and controlled 166,522,406 Shares, representing approximately 21.99% of
our total number of issued Shares.
Mr. Wang has over 20 years of experience in the research and development of software
and retail platform. Prior to establishing our Group, from April 2002 to July 2004, Mr. Wang
was the general manager of Shenzhen Wangxing Science and Technology Co., Ltd. ( ଉέ̹ၣ
ʮ̡), a company primarily engaged in the research and development of software,
where he was primarily responsible for the overall management of the company. From July
2004 to February 2010, he served as a senior vice president of SINA.com Technology (China)
Co., Ltd., a wholly-owned subsidiary of Sina Corporation, a company whose shares were
previously listed on the Nasdaq Stock Market (delisted in March 2021, previous ticker symbol:
SINA), where he was primarily responsible for the overall operation of the wireless business
department of the company.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Mr. Wang graduated from Sichuan Police College ( ̬ʇᙆ࿀ኪ৫) in the PRC majoring in
public security in July 1994.
Mr. Chen Kunrong (Ꮜ), aged 46, was appointed as our Director in May 2015 and
was redesignated as our executive Director in May 2021. He is primarily responsible for
overseeing the overall management and operation of our Group. Mr. Chen is a member of the
Single Largest Group of Shareholders. As at the Latest Practicable Date, by virtue of the Deed
of AIC, Mr. Wang and Mr. Chen collectively held and controlled 166,522,406 Shares,
representing approximately 21.99% of our total number of issued Shares.
Mr. Chen has over 23 years of experience in the telecommunication and retail services
industry. Prior to joining our Group, from July 1999 to December 2010, Mr. Chen worked at
China Mobile Communications Group Co., Ltd., a company whose shares are listed on the
Stock Exchange (stock code: 0941.hk) and the Shanghai Stock Exchange (stock code: 600941),
with his last position being the assistant to the general manager of the Fuzhou branch of the
group, primarily responsible for the management of each of the marketing, customer
relationship and data business departments. He joined our Company in April 2011 as the
general manager of Eastern China district. He was then promoted to chief operating officer in
October 2014 and has been the president of our Company since May 2019.
Mr. Chen obtained his bachelor’s degree in engineering from Shanghai Jiaotong
University ( ɪऎʹஷɽኪ) in the PRC in July 1998. He obtained his master’s degree in
business administration from the University at Buffalo, the State University of New Y ork in
May 2005. Mr. Chen was awarded as the 2020 Shenzhen Industry Development and Innovative
Talents (2020ʿ௴อɛʑᆤ).
Mr. Yu Lizhi ( Яͭқ), aged 56, was appointed as our Director in October 2020 and was
redesignated as our executive Director in May 2021. He is primarily responsible for overseeing
the development of POS partners.
Mr. Y u has over 23 years of experience in the information technology industry. Prior to
joining our Group, from May 2000 to October 2017, Mr. Y u worked at Chengdu Santai
Electronic Industry Co., Ltd. (ʮ̡, now known as Sichuan
Development Lomon Co., Ltd. (ʮ̡)), a company whose shares are
listed on the Shenzhen Stock Exchange (stock code: 002312), where he had served as the
general manager of Shenzhen and Guangzhou branches of the company, a supervisor and a
director of the company and various management positions within the group, where he was
primarily responsible for managing financial IT self-service terminal system and the
outsourcing of non-core banking services. He joined our Company in November 2017 as the
vice president and the general manager of community development business department.
Mr. Y u obtained his associate degree in enterprise management from the Hunan
University of Technology and Business (ʈਠɽኪ, previously known as Hunan College of
Business (ਠኪ৫) in the PRC in June 1988. He obtained his master’s degree in business
administration from the Hong Kong Baptist University in November 2009.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Ms. Cui Y an ( ੦ᜮ), aged 42, was appointed as our Director in June 2017 and was
redesignated as our executive Director in May 2021. She is primarily responsible for managing
the operation of the Board. As at the Latest Practicable Date, Ms. Cui held 3,000,000 Shares,
representing approximately 0.40% of our total number of issued Shares.
Ms. Cui has over 17 years of experience in financial and accounting. Prior to joining our
Group, from July 2006 to September 2011, Ms. Cui served as a certified public accountant and
asset appraiser of Grant Thornton International Ltd., an accounting firm, where she was
primarily responsible for auditing, capital verification and other related matters. She joined our
Company in January 2011 as a financial director, and has been the secretary of our Board and
one of our deputy general managers since February 2016.
Ms. Cui obtained her bachelor’s degree in accounting from the China University of
Petroleum, Beijing (ɽኪ(̏ԯ), previously known as the University of Petroleum,
Beijing (ɽኪ(̏ԯ))) in the PRC in June 2003. She obtained her master’s degree in
enterprise management from the China University of Petroleum, Beijing in July 2006. Ms. Cui
has been a member of the Beijing Institute of Certified Public Accountants since October 2006.
Non-executive Directors
Mr. Zhu Chao ( ϡ൴), aged 43, was appointed as our non-executive Director in May
2021. He is primarily responsible for providing advice and making recommendation to our
Board.
Mr. Zhu has over 17 years of experience in investment and corporate development. From
July 2006 to April 2014, he worked at the investment banking department of China
International Capital Corporation Limited, a company whose shares are listed on the Stock
Exchange (stock code: 3908.hk) and the Shanghai Stock Exchange (stock code: 601995), with
his last position being an executive general manager. Since April 2014, he has been a senior
director of Ant Group, where he was primarily responsible for managing the investment and
corporate development department of the company.
Mr. Zhu has been a director of Y ouon Technology Co., Ltd., a company whose shares are
listed on the Shanghai Stock Exchange (stock code: 603776), since October 2016, a director
of Hundsun Technologies Inc., a company whose shares are listed on the Shanghai Stock
Exchange (stock code: 600570), since April 2019, and a director of Meinian Onehealth
Healthcare Holdings Co., Ltd. (ʮ̡), a company whose shares
are listed on the Shenzhen Stock Exchange (stock code: 002044), since January 2022. From
July 2018 to August 2021, he was a director of Jiangsu Hoperun Software Co., Ltd., a company
whose shares are listed on the Shenzhen Stock Exchange (stock code: 300339). From August
2019 to June 2020, he was a director of 36Kr Holdings Inc., a company whose shares are listed
on NASDAQ (ticker symbol: KRKR).
Mr. Zhu obtained his master’s degree and bachelor’s degree in global economics from
Fudan University ( ూ͇ɽኪ) in the PRC in June 2006 and July 2002, respectively.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 347 ---
Ms. An Yufang (ٹ)aged 52, was appointed as our Director in October 2017 and
was redesignated as our non-executive Director in May 2021. She is primarily responsible for
providing advice and making recommendation to our Board.
Ms. An has over 13 years of experience in corporate management. From January 2008 to
June 2013, she worked as a vice president of Beijing Taimei Activity Culture Communication
Co., Ltd. (ʮ̡), a company primarily engaged in organizing
cultural exchange activities and corporate consulting. From August 2015 to June 2021, she
worked as the vice chairman of the board of Shenzhen Congbi Qiushi Investment Management
Co., Ltd. (ʮ̡), a company primarily engaged in investment
management. Since July 2021, she has been the vice president of China Yintai Holding Co.,
Ltd. (ʮ̡), a company primarily engaged in asset management.
Ms. An obtained her bachelor’s degree in accounting from Inner Mongolia University of
Finance and Economics ( ʫႆ̚ৌ຾ኪ৫) in the PRC in July 1993.
Independent Non-executive Directors
Mr. Wang Xiaochuan ( ˮʃʇ), aged 45, was appointed as our independent non-
executive Director in May 2021. He is primarily responsible for providing independent advice
and judgment to our Board.
Mr. Wang Xiaochuan has over 20 years of experience in the internet and related services
industry. From July 2003 to October 2012, Mr. Wang Xiaochuan worked at Sohu.com Limited,
a company whose shares are listed on the Nasdaq Stock Market (ticker symbol: SOHU), with
his last position being the chief technology officer of the company. From October 2010 to
October 2021, Mr. Wang Xiaochuan was a director and the chief executive officer of Sogou Inc.
a company whose shares were previously listed on the New Y ork Stock Exchange (delisted in
September 2021, previous stock code: SOGO). Mr. Wang Xiaochuan has been an independent
director of Jiangsu Yitong High-tech Co., Ltd., a company whose shares are listed on the
Shenzhen Stock Exchange (stock code: 300211) since February 2021, and an independent
director of Navinfo Co., Ltd., a company whose shares are listed on the Shenzhen Stock
Exchange (stock code: 002405) since October 2021. Mr. Wang Xiaochuan served as an
independent director of the Sunlands Technology Group, a company whose shares are listed on
the New Y ork Stock Exchange (stock code: STG), from March 2018 to March 2021. From
December 2020 to May 2021, he was also a supervisor of Beijing Airdoc Technology Co., Ltd.,
a company whose shares are listed on the Stock Exchange (stock code: 2251.hk). In March
2023, he co-founded Beijing Baichuan Intelligent Technology Co., Ltd. (ҦϞ
ʮ̡), a company engaged in the development of large language models, and has been its
chief executive officer since its establishment.
Mr. Wang Xiaochuan obtained his bachelor’s degree in computer science and technology
in July 2000, his master’s degree in computer science and technology in July 2003, and his
master’s degree in business administration in July 2011, all from Tsinghua University ( ૶ശɽ
ኪ) in the PRC.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 348 ---
In May 2019, Beijing Senior Professional Technology Review Committee ( ̏ԯ̹৷ॴਖ਼
ึ) recognized Mr. Wang Xiaochuan as a senior engineer (ࢪi n
the specialty of computer science. Further, Mr. Wang Xiaochuan was awarded the First Prize
of Qian Weichang Chinese Information Processing Science and Technology in 2020 (2020 ϋ
ኪҦஔɓഃᆤ), the First Prize of Science and Technology Progress
Award of China Institute of Electronics in 2019 (2019ҦආӉ
ᆤɓഃᆤ), the Computer Entrepreneur Award of China Computer Society in 2017 (2017ܓ
ᆤ) and the First Prize of Beijing Science and Technology Award
in 2015 (2015ኪҦஔɓഃᆤ).
Ms. Guo Wei ( ெ㎪), aged 50, was appointed as our independent non-executive Director
in May 2021. She is primarily responsible for providing independent advice and judgment to
our Board.
Ms. Guo has over 25 years of experience in accounting, auditing and finance
management. From June 1996 to February 2001, she was an auditor of Beijing Huasong
Accountant Firm Co., Ltd. (ʮ̡), where she was primarily
responsible for accounting audit. From January 2001 to December 2010 and March 2012 to
November 2015, she worked as an auditing manager and senior auditing manager, respectively,
of Grant Thornton International Ltd. (ה(౷ஷΥྫ), formerly known as
Jingdu Tianhua Accountant Firm (Special General Partnership) (ה(ࣿ
౷ஷΥྫ)), an accounting firm, where she was primarily responsible for auditing listed
companies. She is currently the chief financial officer of Beijing Mygenostics Co., Ltd. ( ̏ԯ
ʮ̡), a company whose shares were formerly quoted on the NEEQ
from December 2016 to July 2018 (stock code: 870103), which is engaged in research and
development of capture DNA test, where she was primarily responsible for the accounting and
finance management of the company.
Ms. Guo graduated from Central University of Finance and Economics ( ʕ̯ৌ຾ɽኪ)i n
accounting in July 1996, and is currently a member of The Chinese Institute of Certified Public
Accountants.
Mr. Zhang Chen ( ੵԕ), aged 39, was appointed as our independent non-executive
Director in May 2021. He is primarily responsible for providing independent advice and
judgment to our Board.
Mr. Zhang has over 9 years of experience in business management through the
establishment and operation of his self-owned clinic, namely Zhang Chen Doctor Dental
Clinic, since 2014. From June 2010 to 2014, he was a dental associate at Dental World Ltd.
Mr. Zhang obtained his master’s degree in dental surgery in periodontology from The
University of Hong Kong in Hong Kong in November 2012. He has been a registered dentist
in Hong Kong since August 2008. Mr. Zhang is also currently a chairman or member of various
committees under the Hong Kong Dental Association.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 349 ---
SUPERVISORY COMMITTEE
Our Supervisory Committee consists of three Supervisors. The following table sets forth
certain information regarding our Supervisors:
Name Age Position(s)
Date of
joining our
Group
Date of
appointment
as Supervisor
Roles and
responsibilities
Relationship
with other
Directors,
Supervisors
or senior
management
members
Ms. Qin Yi 52 Chairman of the
Supervisory
Committee
May 2021 May 2021 Supervising the
performance of our
Board and members
of the senior
management in
performing their
duties to the
Company
None
Mr. Huang
Ronghui
54 Supervisor October 2011 September
2015
Supervising the
performance of our
Board and members
of the senior
management in
performing their
duties to the
Company
None
Mr. Qi
Rupeng
43 Employee
representative
Supervisor
May 2013 April 2020 Supervising the
performance of our
Board and members
of the senior
management in
performing their
duties to the
Company
None
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 350 ---
Ms. Qin Yi ( ॢ❙), aged 52, was appointed as the chairman of our Supervisory Committee
in May 2021. She is primarily responsible for supervising the performance of our Board and
members of the senior management in performing their duties to the Company.
Ms. Qin has over 29 years of experience in corporate management and enterprise
investment. From July 1992 to February 1994, Ms. Qin worked as a reporter, editor and host
of Wuxi Radio and TV Station ( ೌ፼ᄿᅧཥൖ҅). From March 1994 to November 1998, Ms.
Qin worked at Shenzhen Yitong Industrial Co. Ltd. (ʮ̡), a company
primarily engaged in telecommunication value-added service, with her last position being the
general manager of business department, primarily responsible for the telecommunication
value-added services and product technical operation of the company. From December 1998 to
September 2001, Ms. Qin worked as the general manager of business department of Guangdong
95arthome Information Tech. Co., Ltd (ʮ̡), a company primarily
engaged in telecommunication value-added service, where she was primarily responsible for
the development of product technology of internet business and market operation of the
company. From October 2001 to December 2006, Ms. Qin worked as a director and the general
manager of Shenzhen Xintong Bada Network Technology Co., Ltd (ҦϞ
ʮ̡, previously known as Shenzhen Honglian High-tech Technology Co., Ltd ( ଉέᒿᑌ৷
ʮ̡)), a company primarily engaged in internet services, where she was primarily
responsible for the business development and merger and acquisition of the company. From
June 2007 to October 2014, Ms. Qin worked at Rock Mobile Group, a company primarily
engaged in mobile internet service, with her last position being the executive president,
primarily responsible for the overall business operation, investment, merger and acquisition
and capital operation of the company. Since December 2015, Ms. Qin has been a partner of
Guojin Capital, a company primarily engaged in private equity investment.
Ms. Qin obtained her master’s degree in business administration from the City University
of Hong Kong in Hong Kong in November 2003.
Mr. Huang Ronghui ( ර࿲ሾ), aged 54, was appointed as our Supervisor in September
2015. He is primarily responsible for supervising the performance of our Board and members
of the senior management in performing their duties to the Company.
Mr. Huang has over 19 years of experience in machinery rental and operation. Prior to
joining our Group, from August 1995 to May 1998, Mr. Huang worked at the office of
academic affairs of Liaoning University of Traditional Chinese Medicine ( ፱ྐྵʕᔼᖹɽኪ,
previously known as Liaoning College of Traditional Chinese Medicine, ( ፱ྐྵʕᔼኪ৫). From
March 2004 to June 2009, Mr. Huang served as the general manager at Shanghai Miyuan
Beverage Co. Ltd. (ʮ̡), a company primarily engaged in operating
vending machine, where he was primarily responsible for formulating business strategy and
overseeing the overall operation of the company. From June 2009 to June 2010, Mr. Huang
worked as the general manager at Shanghai Jinheyuan Equipment Rental Co., Ltd (ձ
ʮ̡), a company primarily engaged in construction machinery rental, where
he was primarily responsible for formulating business strategy and overseeing the overall
operation of the company. From July 2010 to September 2011, Mr. Huang worked as the
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 351 ---
general manager of the operation management department of Dingding Technology
Development Co., Ltd (ʮ̡), a company primarily engaged in operating
vending machine, where he was primarily responsible for formulating business strategy and
overseeing the overall operation of the company. He joined our Group in October 2011 and has
successively served as the general manager of operation management department, the director
of product department and is currently the principal of our management office.
Mr. Huang obtained his master’s degree in acupuncture from Liaoning University of
Traditional Chinese Medicine ( ፱ྐྵʕᔼᖹɽኪ, previously known as Liaoning College of
Traditional Chinese Medicine ( ፱ྐྵʕᔼኪ৫)) in the PRC in July 1995.
Mr. Qi Rupeng ( ગϧᘄ), aged 43, was appointed as our employee representative
Supervisor in April 2020. He is primarily responsible for supervising the performance of our
Board and members of the senior management in performing their duties to the Company.
Mr. Qi has over 17 years of experience in software development. Prior to joining our
Group, from July 2004 to September 2005, he was a java software engineer of AISINO CO.
LTD. (ʮ̡), a company whose shares are listed on the Shanghai Stock
Exchange (stock code: 600271), where he was responsible for the research and development of
the MES system module. He became a senior software engineer of Access (Beijing) Co., Ltd.
(ڦ(̏ԯ)ʮ̡), a company primarily engaged in the design, development and
production of internet and telecommunication software, where he was responsible for the
research and development of mobile music playing platform, from January 2007 to January
2009. Mr. Qi then worked as the director of technology of Link Motion (Beijing) Technology
Co., Ltd. (ਗ౽Б(̏ԯ)ʮ̡, formerly known as Wangqin (Beijing) Technology
Co., Ltd. ( ၣॢ(̏ԯ)ʮ̡)), a company primarily engaged in research and
development of computer software, where he was responsible for research and development of
the cloud platform of the company, from January 2009 to April 2013. Mr. Qi joined our Group
in May 2013 as the director of research and development, responsible for research and
development and the technological support of our retail platforms.
Mr. Qi obtained his bachelor’s degree in computer software engineering from Tsinghua
University ( ૶ശɽኪ) in the PRC in July 2004.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 352 ---
Other disclosure pursuant to Rule 13.51(2) of the Listing Rules
Mr. Wang, our executive Director, the chairman of our Board and chief executive officer,
was a director or general manager of the following companies which were either incorporated
in Hong Kong or established in the PRC prior to their deregistration:
Name of the relevant company
Principal
business activity
Status of
company
Reason for
dissolution
Date of
dissolution
Shenzhen Lingxiu Clothing Co.,
Ltd. (ʮ̡)
Design and sales
of clothes
V oluntarily
deregistered
Termination
of business
operation
November 22,
2010
Shenzhen Xunlian Jingwei
Network Technology Co., Ltd.
(ࠢ
ʮ̡)
Software
development
V oluntarily
deregistered
Termination
of business
operation
November 13,
2015
Box Lease Limited (ࠢ
ʮ̡)
Investment
holding
Dissolved by
deregistration
Not in
operation
May 6, 2016
Tianjin Lianxianbao Technology
Co., Ltd. (ࠢ
ʮ̡)
Technology
consulting
V oluntarily
deregistered
Not in
operation
December 16,
2016
Beijing Caibao Century
Technology Co, Ltd. ( ̏ԯ੹ᘒ
ʮ̡)
Technology
promotional
services
V oluntarily
deregistered
Termination
of business
operation
August 23,
2017
OnlineBox Technology Company
Limited (ʮ̡)
Investment
holding
Dissolved by
deregistration
Dissolved
after the
unwinding
of our
Group’s
offshore
structure
October 6,
2017
Ubox (Hong Kong) Company
Limited (ʮ̡)
Investment
holding
Dissolved by
deregistration
Dissolved
after the
unwinding
of our
Group’s
offshore
structure
December 29,
2017
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 353 ---
Name of the relevant company
Principal
business activity
Status of
company
Reason for
dissolution
Date of
dissolution
Hangzhou Y oubaili City Trading
Co., Ltd. (Ϟ
ʮ̡)
Internet
technology
services
V oluntarily
deregistered
Not in
operation
January 11,
2018
Beijing Gaole Online Information
Technology Co., Ltd. ( ̏ԯ৷ᆀ
ʮ̡)
Technology
promotional
services
V oluntarily
deregistered
Termination
of business
operation
April 9, 2019
Shenzhen Xunlian Weiye Network
(ʮ̡)
Internet
technology
development
V oluntarily
deregistered
Termination
of business
operation
April 30,
2019
Hangzhou Lianxianbao
Technology Co., Ltd. (ψᑌᇞ
ʮ̡)
Internet
technology
development
V oluntarily
deregistered
Termination
of business
operation
September 22,
2020
Mr. Wang confirmed that, to the best of his knowledge, (i) each of the deregistered
companies above was solvent immediately prior to its deregistration and had no outstanding
claim or liabilities arising from any material non-compliance incidents; (ii) he has not received
any notification in respect of penalty, action or proceeding from the PRC authorities as a result
of the deregistration; and (iii) he is not aware of any actual or potential claim which has been
or will be made against him as a result of the deregistration.
Mr. Chen, our executive Director, was a director of the following company which was
established in the PRC prior to its deregistration:
Name of the relevant company
Principal
business activity
Status of
company
Reason for
dissolution
Date of
dissolution
Hainan Green Coconut Food Co.,
Ltd. (ʮ̡)
Food production V oluntarily
deregistered
Not in
operation
July 11, 2019
Mr. Chen confirmed that, to the best of his knowledge, (i) the deregistered company
above was solvent immediately prior to its deregistration and had no outstanding claim or
liabilities arising from any material non-compliance incidents; (ii) he has not received any
notification in respect of penalty, action or proceeding from the PRC authorities as a result of
the deregistration; and (iii) he is not aware of any actual or potential claim which has been or
will be made against him as a result of the deregistration.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 354 ---
Ms. Cui Y an, our executive Director, was a director or supervisor of the following
companies which were established in the PRC prior to their deregistration:
Name of the relevant company
Principal
business activity
Status of
company
Reason for
dissolution
Date of
dissolution
Shanghai Y oushi Marketing
Planning Co., Ltd. ( ɪऎʾ༊̹
ʮ̡)
Marketing
services
V oluntarily
deregistered
Not in
operation
March 13,
2017
Beijing Caibao Century
Technology Co., Ltd. ( ̏ԯ੹ᘒ
ʮ̡)
Technology
promotional
services
V oluntarily
deregistered
Termination
of business
operation
August 23,
2017
Shenzhen Shrimp Keqing Catering
Management Co., Ltd. ( ଉέሃ
ʮ̡)
Restaurant
management
services
V oluntarily
deregistered
Termination
of business
operation
August 22,
2019
Ms. Cui Y an confirmed that, to the best of her knowledge, (i) each of the deregistered
companies above was solvent immediately prior to its deregistration and had no outstanding
claim or liabilities arising from any material non-compliance incidents; (ii) she has not
received any notification in respect of penalty, action or proceeding from the PRC authorities
as a result of the deregistration; and (iii) she is not aware of any actual or potential claim which
has been or will be made against her as a result of the deregistration.
Ms. An Y ufang, our non-executive Director, was a director or general manager of the
following companies which were established in the PRC prior to their deregistration or
revocation of business license:
Name of the relevant company
Principal business
activity
Status of
company
Reason for
dissolution or
revocation
Date of
dissolution or
revocation
Nanchang Chinatown Catering and
Entertainment Co., Ltd. (ɛ
ʮ̡)
Food and beverage Business
license
revoked
The company
was inactive
with no
substantial
business
operation
June 25, 2017
Beijing Zhengdao Tianhe Investment
Consulting Co., Ltd. ( ̏ԯ͍༸˂
ப΂ʮ̡)
Investment holding V oluntarily
deregistered
Note March 4, 2019
Beijing Times Mingjia Culture
Communication Co., Ltd. (ࣛ
ʮ̡)
Tea services V oluntarily
deregistered
Note June 16, 2020
Note: The companies were deregistered as they were inactive with no substantial business operations. Prior to their
respective deregistration, the business license of each company had been revoked as the companies had no
substantial business operations and had omitted the requirement of annual inspection.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Ms. An Y ufang confirmed that, to the best of her knowledge, (i) there was no wrongful
act on her part leading to the revocation of business licenses; (ii) each of the above companies
was solvent immediately prior to its revocation of business license or deregistration and had
no outstanding claim or liabilities arising from any material non-compliance incidents; (iii) she
has not received any notification in respect of penalty, action or proceeding from the PRC
authorities as a result of the revocation of business license or deregistration; and (iv) she is not
aware of any actual or potential claim which has been or will be made against her as a result
of the revocation of business license or deregistration.
Mr. Zhu Chao, our non-executive Director, was a director of the following company
which was established in the PRC prior to its deregistration:
Name of the relevant company
Principal business
activity
Status of
company
Reason for
dissolution
Date of
dissolution
Ganzhou Quxiaoyuan Technology
Development Co., Ltd.
(ʮ̡)
Operates computer
services, advisory
and online
merchandise services
V oluntary
deregistered
Termination of
business
operation
August 24,
2021
Mr. Zhu Chao confirmed that, to the best of his knowledge, (i) the deregistered company
above was solvent immediately prior to its deregistration and had no outstanding claim or
liabilities arising from any material non-compliance incidents; (ii) he has not received
notification in respect of penalty, action or proceeding from the PRC authorities as a result of
the deregistration; and (iii) he is not aware of actual or potential claim which has been or will
be made against him as a result of the deregistration.
Mr. Wang Xiaochuan, our independent non-executive Director, was a director and general
manager of the following companies which were established in the PRC prior to their
deregistration or revocation of business license:
Name of the relevant company
Principal business
activity
Status of
company
Reason for
dissolution or
revocation
Date of
dissolution or
revocation
Beijing Qingtian Huayuan
Information Technology Co., Ltd.
(ʮ̡)
Investment holding Business
license
revoked
The company
was inactive
with no
substantial
business
operation
January 10,
2007
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Name of the relevant company
Principal business
activity
Status of
company
Reason for
dissolution or
revocation
Date of
dissolution or
revocation
Xintuxingtianxia Software (Beijing)
Co., Ltd. ( อྡБ˂ɨழ΁(̏ԯ)
ʮ̡)
Development of
computer
software and
hardware
V oluntarily
deregistered
Termination of
business
operation
May 21, 2015
Beijing Multiworld Technology Co.,
Ltd. (ʮ̡)
Software and
information
technology
services
V oluntarily
deregistered
Termination of
business
operation
February 13,
2019
Mr. Wang Xiaochuan confirmed that, to the best of his knowledge, (i) there was no
wrongful act on his part leading to the revocation of business license; (ii) each of the above
companies was solvent immediately prior to its revocation of business license or deregistration
and had no outstanding claim or liabilities arising from any material non-compliance incidents;
(iii) he has not received any notification in respect of penalty, action or proceeding from the
PRC authorities as a result of the revocation of business license or deregistration; and (iv) he
is not aware of any actual or potential claim which has been or will be made against him as
a result of the revocation of business license or deregistration.
Ms. Qin Yi, one of our Supervisors, was a director or a general manager of the following
companies which were established in the PRC prior to their deregistration:
Name of the relevant company
Principal
business activity
Status of
company
Reason for
dissolution
Date of
dissolution
Guangzhou Junzhi Computer
Technology Co., Ltd. ( ᄿψ̹ё
ʮ̡)
Provision of
software and
information
technology
services
V oluntarily
deregistered
Termination
of business
operation
October 30,
2009
Guangzhou Majestic Qingcheng
Network Technology Co., Ltd.
(ʮ
̡)
Software
development
V oluntarily
deregistered
Termination
of business
operation
August 2,
2018
Ms. Qin Yi confirmed that, to the best of her knowledge, (i) each of deregistered
companies above was solvent immediately prior to its deregistration and had no outstanding
claim or liabilities arising from any material non-compliance incidents; (ii) she has not
received any notification in respect of penalty, action or proceeding from the PRC authorities
as a result of the deregistration; and (iii) she is not aware of any actual or potential claim which
has been or will be made against her as a result of the deregistration.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Mr. Huang Ronghui, one of our Supervisors, was a supervisor of the following company
which was established in the PRC prior to its deregistration:
Name of the relevant company
Principal
business activity
Status of
company
Reason for
dissolution
Date of
dissolution
Shenzhen Y oujiubao Technology
Co., Ltd. (ࠢ
ʮ̡)
Software
development
and technical
services
V oluntarily
deregistered
Not in
operation
June 6, 2022
Mr. Huang Ronghui confirmed that, to the best of his knowledge, (i) the deregistered
company above was solvent immediately prior to its deregistration and had no outstanding
claim or liabilities arising from any material non-compliance incidents; (ii) he has not received
any notification in respect of penalty, action or proceeding from the PRC authorities as a result
of the deregistration; and (iii) he is not aware of any actual or potential claim which has been
or will be made against him as a result of the deregistration.
Save as disclosed above and in the section headed “Substantial Shareholders” in this
prospectus and “Statutory and General Information — C. Further Information about Our
Directors, Supervisors and Substantial Shareholders — 1. Disclosure of Interests” in Appendix
IV , each of our Directors and Supervisors confirms with respect to himself or herself that he
or she (1) did not hold other long positions or short positions in the Shares, underlying Shares,
debentures of our Company or any associated corporation (within the meaning of Part XV of
the SFO) as of the Latest Practicable Date; (2) had no other relationship with any Directors,
Supervisors, senior management or substantial shareholders of our Company as of the Latest
Practicable Date; (3) did not hold any other directorships in the three years prior to the Latest
Practicable Date in any public companies of which the securities are listed on any securities
market in Hong Kong and/or overseas; and (4) there are no other matters concerning our
Director’s appointment that need to be brought to the attention of our Shareholders and the
Stock Exchange or shall be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing Rules.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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SENIOR MANAGEMENT
Our executive Directors and senior management are responsible for the day-to-day
management and operation of our business. For information concerning our executive
Directors see “— Directors — Executive Directors.” The table below sets out certain
information regarding our senior management:
Name Age Position(s)
Date of
joining our
Group
Date of
appointment
as Director/
senior
management
Roles and
responsibilities
Relationship
with other
Directors,
Supervisors
or senior
management
members
Mr. Wang
Bin
58 Chairman of our
Board, executive
Director and
chief executive
officer
January 2011 March 2012 Formulating the
overall development
strategies and
overseeing the
operation of our
Group
Acting in
concert
with Mr.
Chen
Mr. Chen
Kunrong
46 Executive Director
and president
April 2011 May 2015 Overseeing the overall
management and
operation of our
Group
Acting in
concert
with Mr.
Wang
Ms. Cui Y an 42 Executive Director,
deputy general
manager and
a joint company
secretary
January 2011 June 2017 Managing the
operation of the
Board
None
Mr. Wang
Ge
45 Chief financial
officer
December
2016
December
2016
Managing the
financial functions
of the Company
None
Mr. Chao
Hua
45 Deputy general
manager
May 2017 October 2021 Formulating and
implementing the
information
technology
development
strategy of the
Company
None
Mr. Wang Bin ( ˮᏵ), aged 58, is the chief executive officer of our Company. For further
details, see “Directors — Executive Directors.”
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Mr. Chen Kunrong (Ꮜ), aged 46, is the president of our Company. For further
details, see “Directors — Executive Directors.”
Ms. Cui Y an ( ੦ᜮ), aged 42, is the deputy general manager of our Company. For further
details, see “Directors — Executive Directors.”
Mr. Wang Ge ( ˮဂ), aged 45, was appointed as our chief financial officer in September
2016. He is primarily responsible for managing the financial functions of the company. As at
the Latest Practicable Date, Mr. Wang held 3,000,000 Shares, representing approximately
0.40% of our total number of issued Shares.
Mr. Wang Ge has over 11 years of experience in finance and corporate management. He
joined our Company in December 2016 as the chief financial officer. Prior to joining our
Group, from June 2011 to March 2013, Mr. Wang Ge worked at Maoye International Holdings
Limited, a company whose shares are listed on the Stock Exchange (stock code: 0848.hk), with
his last position being the chief financial officer and a deputy general manager of the southern
China district of the company, where he was primarily responsible for project development and
managing the financial functions of the company. From March 2013 to June 2016, Mr. Wang
Ge worked as the chief financial officer of ZJBC Information Technology Co. Ltd. ( ʕྗ௹௴
ʮ̡, previously known as Qinhuangdao Bohai Logistics Holdings Co. Ltd.
(ʮ̡), a company whose shares are listed on the Shenzhen
Stock Exchange (stock code: 000889), where he was primarily responsible for managing the
financial functions of the company. Since September 2016, Mr. Wang Ge has been the chief
financial officer of our Company and is primarily responsible for the financial management,
budget planning and banking and tax related matters of our Company.
He obtained his master’s degree in business administration from Shanxi University of
Finance and Economics ( ʆГৌ຾ɽኪ) in the PRC in June 2016.
Mr. Chao Hua (ശ), aged 45, was appointed as our deputy general manager in October
2021. He is primarily responsible for formulating and implementing the information
technology development strategy of the Company.
Mr. Chao has over 22 years of experience in information technology development. From
July 2000 to August 2001, he worked as a CAM supervisor at Broad Technology (Guangzhou)
Inc. ( ᄿɽ(ᄿψ)ʮ̡), a company engaged in software development, where he was
primarily responsible for managing the computer aided manufacturing function of the
company. From August 2001 to September 2015, he worked at Maoye International Holdings
Limited, a company whose shares are listed on the Stock Exchange (stock code: 0848.hk), and
its subsidiaries, where he was primarily responsible for the management and development of
information technology system, with his last position as the general manager of information
management center. From September 2015 to March 2016, he was the director of the
information department of Heilongjiang Grand Shopping Center Co., Ltd. (ʕ
ʮ̡), a company engaged in sales of daily necessities, where he was primarily
responsible for the management and development of information technology system. From
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 360 ---
March 2016 to May 2017, he was the general manager of Shenzhen Lianhe Zhiyun Technology
Co., Ltd. (ʮ̡), a company engaged in computer technology
development, where he was primarily responsible for the daily management of the company.
Mr. Chao joined our Group in May 2017 as the general manager of internet product
development center at Shenzhen Y oubaokesi and is currently the chief technology officer of
Shenzhen Y oubaokesi.
Mr. Chao obtained his bachelor’s degree in machinery production and equipment from
Tiangong University (ʈุɽኪ) in the PRC in July 2000.
JOINT COMPANY SECRETARIES
Ms. Cui Y an ( ੦ᜮ) has been appointed as one of our joint company secretaries with
effect from March 17, 2022. See “— Directors — Executive Directors” above for her
information.
Ms. Hui Yin Shan (ޙ)has been appointed as one of our joint company secretaries
with effect from September 7, 2023. Ms. Hui is a senior manager of corporate services of Tricor
Services Limited and has been providing corporate secretarial and compliance services to Hong
Kong listed companies as well as multinational, private and offshore companies.
Ms. Hui is currently the company secretary of OneForce Holdings Limited, a company
whose shares are listed on the Stock Exchange (stock code: 1933), one of the joint company
secretaries of Honliv Healthcare Management Group Company Limited, a company whose
shares are listed on the Stock Exchange (stock code: 9906), the company secretary of Shanghai
MicroPort MedBot (Group) Co., Ltd., a company whose shares are listed on the Stock
Exchange (stock code: 2252), and the company secretary of MicroPort NeuroTech Limited, a
company whose shares are listed on the Stock Exchange (stock code: 2172).
Ms. Hui obtained a bachelor’s degree in applied mathematics from The Hong Kong
Polytechnic University in Hong Kong in November 1994, a master’s degree in finance from
Curtin University of Technology in Australia in December 2002, and a bachelor’s degree in law
from University of London in the United Kingdom in August 2017. She has been an associate
member of The Hong Kong Chartered Governance Institute (formerly known as the Hong Kong
Institute of Chartered Secretaries) and The Chartered Governance Institute since September
2016.
BOARD COMMITTEES
In accordance with the relevant PRC Law, the Articles and the corporate governance
practice prescribed in the Listing Rules, we have formed three board committees, namely, the
audit committee of the Board (the “ Audit Committee ”), the remuneration committee of the
Board (the “ Remuneration Committee ”), and the nomination committee of the Board (the
“Nomination Committee ”).
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Audit Committee
Our Company established an Audit Committee with written terms of reference in
compliance with Rule 3.21 of the Listing Rules and the Corporate Governance Code as set out
in Appendix 14 to the Listing Rules (the “ CG Code ”). The Audit Committee consists of three
members, namely Ms. Guo Wei, Mr. Wang Xiaochuan and Mr. Zhang Chen, our independent
non-executive Directors. Ms. Guo Wei has been appointed as the chairman of the Audit
Committee, and is our independent non-executive Director possessing the appropriate
professional qualifications. The primary duties of the Audit Committee are to review and
supervise the financial reporting process and internal control system of our Group, oversee the
audit process, review and oversee the existing and potential risks of our Group and perform
other duties and responsibilities as assigned by our Board.
Remuneration Committee
Our Company established a Remuneration Committee with written terms of reference in
compliance with Rule 3.25 of the Listing Rules and the CG Code. The Remuneration
Committee consists of two independent non-executive Directors, namely Mr. Wang Xiaochuan
and Ms. Guo Wei, and one executive Director, namely Mr. Y u Lizhi. Mr. Wang Xiaochuan, our
independent non-executive Director, has been appointed as the chairman of the Remuneration
Committee. The primary duties of the Remuneration Committee are to establish and review the
policy and structure of the remuneration for our Directors and senior management and make
recommendations on employee benefit arrangement.
Nomination Committee
Our Company established a Nomination Committee with written terms of reference in
compliance with Rule 3.27A of the Listing Rules and the CG Code. The Nomination
Committee consists of two independent non-executive Directors, namely Ms. Guo Wei and Mr.
Wang Xiaochuan, and one executive Director, namely Mr. Wang, who is the chairman of the
Nomination Committee. The primary duties of the Nomination Committee are to make
recommendations to our Board on the appointment and removal of Directors of our Company.
BOARD DIVERSITY
We have adopted our Board diversity policy (the “ Board Diversity Policy ”) which sets
out the objective and approach to achieve and maintain diversity on our Board in order to
enhance the effectiveness of our Board. Our Board Diversity Policy provides that our Company
should endeavour to ensure that our Board members have the appropriate balance of skills,
experience and diversity of perspectives that are required to support the execution of its
business strategy.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Pursuant to our Board Diversity Policy, we seek to achieve Board diversity through the
consideration of a number of factors, including but not limited to professional experience,
skills, knowledge, gender, age, cultural and education background, ethnicity and length of
service. Our Nomination Committee is delegated by our Board to be responsible for
compliance with relevant code governing board diversity under the Corporate Governance
Code. After Listing, our Nomination Committee will review our Board Diversity Policy from
time to time to ensure its continued effectiveness and we will disclose in our corporate
governance report about the implementation of our Board Diversity Policy on annual basis.
Our Board comprises nine members, including four executive Directors, two non-
executive Directors and three independent non-executive Directors. Our Directors have a
balanced mix of experiences, including overall management and strategic development,
business and risk management, and finance and accounting experiences. Our Directors, with
three females and six males, range from 39 years old to 58 years old and are able to bring a
balance of diversity perspectives to our Board. We will take steps to promote gender diversity
at all levels of our Company, including but without limitation at the Board and senior
management levels. After due consideration, our Board believes that based on the meritocracy
of our Directors, the composition of our Board satisfies our Board Diversity Policy.
W AIVER GRANTED BY THE STOCK EXCHANGE
We have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver
from strict compliance with the requirement of Rules 8.12 and 19A.15 of the Listing Rules in
relation to the requirement of management presence in Hong Kong. For details of the waiver,
see “Waivers from Strict Compliance with the Hong Kong Listing Rules — Waiver in Relation
to Management Presence in Hong Kong.”
We have applied to the Stock Exchange for, and the Stock Exchange has granted, a waiver
from strict compliance with the requirement of Rules 3.28 and 8.17 of the Listing Rules in
relation to the academic or professional qualifications of our Company’s joint company
secretaries. For details of the waiver, see “Waivers from Strict Compliance with the Hong Kong
Listing Rules — Waiver in Relation to Joint Company Secretaries.”
CORPORATE GOVERNANCE
Our Directors recognise the importance of good corporate governance in management and
internal procedures so as to achieve effective accountability. Our Group will comply with the
CG Code, except for the deviation from the code provision C.2.1 of the CG Code. Mr. Wang
is the chairman of our Board and the chief executive officer of our Company and he has been
managing our Group’s business and supervising the overall operations of our Group since its
foundation in 2011. Our Directors consider that vesting the roles of the chairman of our Board
and the chief executive officer of our Company in Mr. Wang is beneficial to the management
and business development of our Group and will provide a strong and consistent leadership to
our Group. Our Board will continue to review and consider splitting the roles of the chairman
of our Board and the chief executive officer at a time when it is appropriate and suitable by
taking into account the circumstances of our Group as a whole.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Save as disclosed in this section, our Group is in compliance with all the code provisions
of the CG Code.
COMPENSATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Our Directors, Supervisors and members of our senior management receive compensation
from our Company in the form of fees, salaries, contributions to pension schemes,
discretionary bonuses, allowances and other benefits in kind.
The aggregate amount of remuneration our Directors and Supervisors have received
(including fees, salaries, contributions to pension schemes, discretionary bonuses, share based
compensation, allowances and other benefits in kind) for the four years ended December 31,
2022 and the six months ended June 30, 2023 was approximately RMB5.5 million, RMB162.9
million, RMB4.6 million, RMB4.2 million and RMB36.2 million, respectively.
The aggregate amount of fees, salaries, contributions to pension schemes, discretionary
bonuses, share based compensation, allowances and other benefits in kind paid to our five
highest paid individuals of our Company, including Directors, Supervisors and senior
management, during the four years ended December 31, 2022 and the six months ended
June 30, 2023 was approximately RMB5.3 million, RMB189.5 million, RMB4.9 million,
RMB4.5 million and RMB43.0 million, respectively.
Under the arrangements currently in force, save as the options in relation to not more than
37,862,946 Unlisted Shares our Company expects to grant under the Pre-IPO Incentive
Scheme, it is estimated that the aggregate remuneration, excluding discretionary bonus, of our
Directors and Supervisors for the year ending December 31, 2023 to be approximately RMB4.5
million.
No remuneration was paid by us to our Directors, Supervisors or the five highest paid
individuals as an inducement to join or upon joining us or as a compensation for loss of office
in respect of the four years ended December 31, 2022 and the six months ended June 30, 2023.
Further, none of our Directors had waived any remuneration during the same period.
Save as disclosed above, no other payments have been made or are payable in respect of
the four years ended December 31, 2022 and the six months ended June 30, 2023 by our Group
to the Directors or Supervisors.
Our Board will review and determine the remuneration and compensation packages of our
Directors and senior management which, following the Listing, will receive recommendation
from the Remuneration Committee which will take into account salaries paid by comparable
companies, time commitment and responsibilities of the Directors and Supervisors and
performance of our Group.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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COMPLIANCE ADVISER
We have appointed China Securities (International) Corporate Finance Company Limited
as our compliance adviser (“ Compliance Adviser ”) upon listing of our Shares on the Stock
Exchange in compliance with Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the
Listing Rules, the Compliance Adviser will provide advice to us when consulted by us in the
following circumstances:
 the publication of any regulatory announcement, circular or financial report;
 where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues and share repurchases;
 where we propose to use the proceeds of the Global Offering in a manner different
from that detailed in this prospectus or where our business activities, developments
or results deviate from any forecast, estimate, or other information in this
prospectus; and
 where the Stock Exchange makes an inquiry of our Company regarding unusual
movements in the price or trading volume of the H Shares of our Company.
The term of the appointment shall commence on the Listing Date and end on the date on
which our Company distributes its annual report in respect of its financial results for the first
full financial year commencing after the Listing Date and this appointment may be subject to
extension by mutual agreement.
SHARE INCENTIVE SCHEME
We have adopted the 2020 Incentive Scheme and Pre-IPO Incentive Scheme. The
principal terms of the Pre-IPO Incentive Scheme are summarized in “Statutory and General
Information – D. Share Incentive Scheme” in Appendix IV .
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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So far as our Directors are aware, immediately following the completion of the Global
Offering and Conversion of Unlisted Shares into H Shares and without taking into account any
Shares that may be issued pursuant to the exercise of options which were granted under the
Pre-IPO Incentive Scheme, the following persons will have an interest or a short position in
Shares or underlying Shares of our Company which will be required to be disclosed to our
Company and the Hong Kong Stock Exchange pursuant to the provisions of Divisions 2 and
3 of Part XV of the SFO or will be, directly or indirectly, interested in 10% or more of the
nominal value of any class of share capital carrying rights to vote in all circumstances at
general meetings of our Company:
As at the Latest Practicable
Date
Immediately following the completion of
the Global Offering and Conversion of
Unlisted Shares into H Shares
Name of
shareholder Nature of Interest Class of Shares
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital (2)
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding in
the Relevant
Class of Shares
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital (3)
Mr. Wang 4, 7 Beneficial owner and
interests held jointly
with another person
Unlisted Shares 187,522,406 24.76% 61,671,930 43.06% 7.91%
Beneficial owner and
interests held jointly
with another person
H Shares – – 125,850,476 19.77% 16.14%
Mr. Chen
4, 7 Beneficial owner and
interests held jointly
with another person
Unlisted Shares 187,522,406 24.76% 61,671,930 43.06% 7.91%
Beneficial owner and
interests held jointly
with another person
H Shares – – 125,850,476 19.77% 16.14%
Ms. Wei Lin
4, 7 Interest of spouse Unlisted Shares 187,522,406 24.76% 61,671,930 43.06% 7.91%
Interest of spouse H Shares – – 125,850,476 19.77% 16.14%
Shanghai Y unxin 5 Beneficial owner Unlisted Shares 126,315,789 16.68% – – –
Beneficial owner H Shares – – 126,315,789 19.84% 16.20%
Ant Group
5 Interest held by
controlled
corporation
Unlisted Shares 126,315,789 16.68% – – –
Interest held by
controlled
corporation
H Shares – – 126,315,789 19.84% 16.20%
SUBSTANTIAL SHAREHOLDERS
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As at the Latest Practicable
Date
Immediately following the completion of
the Global Offering and Conversion of
Unlisted Shares into H Shares
Name of
shareholder Nature of Interest Class of Shares
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital (2)
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding in
the Relevant
Class of Shares
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital (3)
Hangzhou Y unbo
Investment
Consulting Co,
Ltd. (ψථཔҳ
ʮ̡)
(“Hangzhou
Yunbo”)
5
Interest held by
controlled
corporation
Unlisted Shares 126,315,789 16.68% – – –
Interest held by
controlled
corporation
H Shares – – 126,315,789 19.84% 16.20%
Mr. Ma Y un
(৵ථ)
5
Interest held by
controlled
corporation
Unlisted Shares 126,315,789 16.68% – – –
Interest held by
controlled
corporation
H Shares – – 126,315,789 19.84% 16.20%
Mr. Eric Xiandong
Jing ( ʜሬಊ)
5
A concert party to an
agreement to buy
shares described in
s.317(1)(a)
Unlisted Shares 126,315,789 16.68% – – –
A concert party to an
agreement to buy
shares described in
s.317(1)(a)
H Shares – – 126,315,789 19.84% 16.20%
Ms. Fang Jiang
(ٹ)
5
A concert party to an
agreement to buy
shares described in
s.317(1)(a)
Unlisted Shares 126,315,789 16.68% – – –
A concert party to an
agreement to buy
shares described in
s.317(1)(a)
H Shares – – 126,315,789 19.84% 16.20%
SUBSTANTIAL SHAREHOLDERS
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As at the Latest Practicable
Date
Immediately following the completion of
the Global Offering and Conversion of
Unlisted Shares into H Shares
Name of
shareholder Nature of Interest Class of Shares
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital (2)
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding in
the Relevant
Class of Shares
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital (3)
Mr. Simon Xiaoming
Hu (׼5
A concert party to an
agreement to buy
shares described in
s.317(1)(a)
Unlisted Shares 126,315,789 16.68% – – –
A concert party to an
agreement to buy
shares described in
s.317(1)(a)
H Shares – – 126,315,789 19.84% 16.20%
Mr. Shen Beneficial owner Unlisted Shares 49,356,900 6.52% 49,356,900 34.46% 6.33%
Chunhua Rongshun
6 Beneficial owner Unlisted Shares 42,104,884 5.56% – – –
Beneficial owner H Shares – – 42,104,884 6.61% 5.40%
Chunhua Qiushi
(Tianjin) Equity
Investment
Management Co.,
Ltd. (ྼ(˂
ݵ)༟ପҳ༟၍ଣ
ʮ̡)
(“Chunhua
Qiushi ”)
6
Interest held by
controlled
corporation
Unlisted Shares 42,104,884 5.56% – – –
Interest held by
controlled
corporation
H Shares – – 42,104,884 6.61% 5.40%
Chunhua Xingkang
(Tianjin)
Investment Centre
(Limited
Partnership) (ശ
ጳੰ(ݵ)ҳ༟ʕ
ː(Υྫ))
(“Chunhua
Xinkang ”)
6
Interest held by
controlled
corporation
Unlisted Shares 42,104,884 5.56% – – –
Interest held by
controlled
corporation
H Shares – – 42,104,884 6.61% 5.40%
SUBSTANTIAL SHAREHOLDERS
– 357 –


--- page 368 ---
As at the Latest Practicable
Date
Immediately following the completion of
the Global Offering and Conversion of
Unlisted Shares into H Shares
Name of
shareholder Nature of Interest Class of Shares
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital (2)
Number of
Shares Held
or Interested
Approximate
Percentage of
Shareholding in
the Relevant
Class of Shares
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital (3)
Mr. Hu Y uanman
(ʩတ)6
Interest held by
controlled
corporation
Unlisted Shares 42,104,884 5.56% – – –
Interest held by
controlled
corporation
H Shares – – 42,104,884 6.61% 5.40%
M r .X uG e
(஢ˑ)
Beneficial owner Unlisted Shares 35,647,744 4.71% 35,647,744 24.89% 4.57%
Notes:
1. All interests stated are long positions.
2. The calculation is based on the total number of 757,258,933 Shares in issue as at the Latest Practicable Date.
3. The calculation is based on the total number of 779,835,433 Shares in issue immediately following the
completion of the Global Offering and Conversion of Unlisted Shares into H Shares and without taking into
account any Shares that may be issued pursuant to the exercise of options which were granted under the
Pre-IPO Incentive Scheme.
4. Pursuant to the Deed of AIC, Mr. Wang and Mr. Chen are parties acting in concert. Ms. Wei Lin is spouse of
Mr. Chen and is therefore deemed to be interested in the Shares held by Mr. Chen.
5. Shanghai Y unxin is a company established under the PRC Law, which is wholly-owned by Ant Group. Ant
Group was owned as to approximately 22% by Hangzhou Junao Equity Investment Partnership (Limited
Partnership) and approximately 31% by Hangzhou Junhan Equity Investment Partnership (Limited
Partnership), which were controlled by Hangzhou Y unbo as the general partners in the form of partnership,
which is owned by Mr. Ma Y un ( ৵ථ), Mr. Eric Xiandong Jing ( ʜሬಊ), Mr. Simon Xiaoming Hu (׼)
and Ms. Fang Jiang (ٹMr. Ma Y un ( ৵ථ), Mr. Eric Xiandong Jing ( ʜሬಊ), Ms. Fang Jiang (ٹand
Mr. Simon Xiaoming Hu (׼entered into an agreement which governs, among others, the exercise of
voting rights and the disposal of equity interests in Hangzhou Y unbo. Therefore, each of Ant Group, Hangzhou
Y unbo, Mr. Ma Y un (৵ථ), Mr. Eric Xiandong Jing ( ʜሬಊ), Ms. Fang Jiang (ٹand Mr. Simon Xiaoming
Hu (׼is deemed to be interested in the Shares held by Shanghai Y unxin.
Pursuant to certain agreements entered into by Mr. Ma Y un, Hangzhou Y unbo and others on January 7, 2023,
subject to certain conditions (including obtaining regulatory approvals) being satisfied, among other things, the
concert party agreement among shareholders of Hangzhou Y unbo will be terminated, Hangzhou Y unbo will
cease to be Hangzhou Junhan’s general partner, Mr. Ma Y un will cease to hold any interests in Hangzhou
Y unbo. The implementation of the said agreements were made to further enhance the stability of corporate
structure and sustainability of long-term development of Ant Group without any change to the economic
interests of any shareholders of Ant Group and their beneficiaries. When these steps are effected, Mr. Ma Y un,
Mr. Jing Eric Xiandong, Ms. Jiang Fang, Mr. Hu Simon Xiaoming and Hangzhou Y unbo will cease to have a
notifiable interest. As of the Latest Practicable Date, completion of such agreements has not taken place and
is subject to approval of or filing with relevant government authorities, which is currently processing.
SUBSTANTIAL SHAREHOLDERS
– 358 –


--- page 369 ---
6. Chunhua Rongshun is a company established under the PRC Law, which is owned as to 67.67% by its limited
partner Chunhua Xingkang and is managed by Chunhua Qiushi, which is in turn ultimately controlled by Mr.
Hu Y uanman, an Independent Third Party. Therefore, Chunhua Xingkang, Chunhua Qiushi and Mr. Hu
Y uanman is deemed to be interested in the Shares held by Chunhua Rongshun.
7. Mr. Wang and Mr. Chen are entitled to receive up to 15,000,000 and 6,000,000 Unlisted Shares, respectively,
pursuant to the share options granted to them under the Pre-IPO Incentive Scheme, subject to the conditions
(including vesting conditions) of those options. For details of the Pre-IPO Incentive Scheme, see “Statutory
and General Information — D. Share Incentive Scheme — 1. Pre-IPO Incentive Scheme” in Appendix IV .
Save as disclosed above and in “Statutory and General Information – C. Further
Information about Our Directors, Supervisors and Substantial Shareholders – 1. Disclosure of
Interests” in Appendix IV , our Directors are not aware of any person who will, immediately
following the completion of the Global Offering and Conversion of Unlisted Shares into
H Shares and without taking into account any Shares that may be issued pursuant to the
exercise of options which were granted under the Pre-IPO Incentive Scheme, have an interest
or a short position in the Shares or underlying Shares which will be required to be disclosed
to our Company and the Hong Kong Stock Exchange under the provisions of Divisions 2 and
3 of Part XV of the SFO or will be, directly or indirectly, interested in 10% or more of the
nominal value of any class of share capital carrying rights to vote in all circumstances at
general meetings of any other member of our Group.
SUBSTANTIAL SHAREHOLDERS
– 359 –


--- page 370 ---
SHARE CAPITAL
Immediately before the Global Offering
As of the Latest Practicable Date, the registered share capital of the Company was
RMB757,258,933, comprising 757,258,933 Unlisted Shares with a nominal value of RMB1.00
each.
Upon the Completion of the Global Offering
Immediately after the Global Offering and Conversion of Unlisted Shares into H Shares
(assuming that no Shares were issued pursuant to the exercise of options which were granted
under the Pre-IPO Incentive Scheme), the share capital of the Company will be as follows.
Description of Shares
Number of
Shares
Approximate %
of the enlarged
issued share
capital after the
Global Offering
Unlisted Shares in issue 143,219,624 18.37%
H Shares to be converted from
Unlisted Shares Note 614,039,309 78.74%
H Shares to be issued pursuant to
the Global Offering 22,576,500 2.90%
Total 779,835,433 100%
Note: Please refer to “Corporate Structure Immediately Following the Global Offering” in “History and
Development” for details of the identities of the shareholders whose Shares will be converted into H
Shares upon Listing.
CLASS OF SHARES
Upon the completion of the Global Offering and Conversion of Unlisted Shares into
H Shares, the Shares will consist of Unlisted Shares and H Shares, both are ordinary Shares in
our share capital. However, the H Shares generally may not be subscribed for by, or traded
between, legal or natural persons of mainland China, apart from certain qualified domestic
institutional investors in mainland China, the qualified investors in mainland China under the
Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, and other
persons who are entitled to hold the H Shares pursuant to relevant PRC Law or upon approval
by any competent authorities.
SHARE CAPITAL
– 360 –


--- page 371 ---
Save as disclosed above, Unlisted Shares and H Shares shall rank pari passu with each
other in all other respects and, in particular, will rank equally for dividends or distributions
declared, paid or made. All dividends for H Shares will be denominated and declared in
Renminbi, and paid in Hong Kong dollars. Other than cash, dividends could also be paid in the
form of shares.
CONVERSION OF UNLISTED SHARES INTO H SHARES
If any of the Unlisted Shares are to be converted, listed and traded as H Shares on the
Hong Kong Stock Exchange, such conversion, listing and trading will need the approval of the
relevant regulatory authorities in mainland China, including the CSRC, and the approval of the
Hong Kong Stock Exchange.
Filing with the CSRC
In accordance with the Trial Measures, if a domestic company directly offers and lists its
securities overseas, its shareholders holding the domestic unlisted shares who seek to convert
such domestic unlisted shares to overseas listed shares and trade such overseas listed shares on
a foreign exchange must comply with relevant regulations of the CSRC and authorize the
domestic company to file with the CSRC.
CSRC issued the notification on completion of the filing procedures on July 3, 2023 in
relation to the filing of the overseas listing and “Full Circulation”, pursuant to which, (1) the
Company was approved to issue no more than 252,420,000 H Shares with a nominal value of
RMB1.00 each, which are all ordinary shares, and upon this issuance the Company may be
listed on the Main Board of the Hong Kong Stock Exchange; (2) a total of 614,039,309
Unlisted Shares held by the 210 Shareholders of the Company (the “ Domestic Participating
Shareholders ”) were approved to be converted into H Shares, and the relevant Shares may be
listed on the Hong Kong Stock Exchange upon completion of the conversion. The aforesaid
shall remain effective within 12 months from July 3, 2023.
Listing Approval by the Hong Kong Stock Exchange
We have applied to the Hong Kong Stock Exchange for the granting of listing of, and
permission to deal in, our H Shares to be issued pursuant to the Global Offering and the H
Shares to be converted from 614,039,309 Unlisted Shares on the Hong Kong Stock Exchange,
which is subject to the approval by the Hong Kong Stock Exchange.
We will perform the follow procedures for the conversion of domestic unlisted shares into
H Shares after receiving the approval of the Hong Kong Stock Exchange: (1) giving
instructions to our H Share Registrar regarding relevant H Share certificates of the converted
H Shares; and (2) enabling the converted H Shares to be accepted as eligible securities by
HKSCC for deposit, clearance and settlement in the CCASS. The Domestic Participating
Shareholders may only deal in the Shares upon completion of following domestic procedures.
SHARE CAPITAL
– 361 –


--- page 372 ---
Domestic Procedures
The Domestic Participating Shareholders may only deal in the Shares upon completion of
the below arrangement procedures for the registration, deposit and transaction settlement in
relation to the conversion and listing:
(a) We will appoint CSDC as the nominal holder to deposit the relevant securities at
CSDC (Hong Kong), which will then deposit the securities at HKSCC in its own
name. CSDC, as the nominal holder of the Domestic Participating Shareholders,
shall handle all custody, maintenance of detailed records, cross-broader settlement
and corporate actions, etc. relating to the converted H Shares for the Domestic
Participating Shareholders;
(b) We will engage a domestic securities company (the “ Domestic Securities
Company ”) to provide services such as the transmission of sell orders and trading
messages in respect of the converted H Shares. The Domestic Securities Company
will engage a Hong Kong securities company (the “ Hong Kong Securities
Company ”) for settlement of share transactions. We will make an application to
CSDC, Shenzhen Branch for the maintenance of a detailed record of the initial
holding of the converted H Shares held by our Shareholders. Meanwhile, we will
submit applications for a domestic transaction commission code and abbreviation,
which shall be confirmed by CSDC, Shenzhen Branch as authorized by SZSE;
(c) The SZSE shall authorize Shenzhen Securities Communication Co., Ltd. to provide
services relating to transmission of trading orders and trading messages in respect
of the converted H Shares between the Domestic Securities Company and the Hong
Kong Securities Company, and the real-time market forwarding services of the H
Shares;
(d) According to the Notice of the SAFE on Issues Concerning the Foreign Exchange
Administration of Overseas Listing (ྤ̮ɪ̹̮ි၍ଣϞᗫ
), the Domestic Participating Shareholders shall complete the overseas
shareholding registration with the local foreign exchange administration bureau
before the Shares are sold, and after the overseas shareholding registration, open a
specified bank account for the holding of overseas shares by domestic investors at
a domestic bank with relevant qualifications and open a fund account for the
H Share “Full Circulation” at the Domestic Securities Company. The Domestic
Securities Company shall open a securities trading account for the H Share “Full
Circulation” at the Hong Kong Securities Company; and
SHARE CAPITAL
– 362 –


--- page 373 ---
(e) The Domestic Participating Shareholders shall submit trading orders of the
converted H Shares through the Domestic Securities Company. Trading orders of the
Domestic Participating Shareholders for the relevant Shares will be submitted to the
Hong Kong Stock Exchange through the securities trading account opened by the
Domestic Securities Company at the Hong Kong Securities Company. Upon
completion of the transaction, settlements between each of the Hong Kong
Securities Company and CSDC (Hong Kong), CSDC (Hong Kong) and CSDC,
CSDC and the Domestic Securities Company, and the Domestic Securities Company
and the Domestic Participating Shareholders, will all be conducted separately.
As a result of the conversion, the shareholding of the relevant Domestic Participating
Shareholders in our Domestic Share capital registered shall be reduced by the number of
Unlisted Shares converted and the number of H Shares shall be increased by the number of
converted H Shares.
Domestic Shareholders can work with the Company according to the Articles of
Association and follow the procedures set out in this prospectus to convert the Unlisted Shares
into H Shares after the Listing if they want, provided that such conversion of Unlisted Shares
into and listing and trading of H Shares will be subject to the approval or filing of the relevant
regulatory authorities in mainland China, including the CSRC, the approval of the Hong Kong
Stock Exchange and the satisfaction of the public float requirement under the Hong Kong
Listing Rules by the Company.
TRANSFER OF SHARES ISSUED PRIOR TO THE GLOBAL OFFERING
According to the Company Law, the Shares issued by the Company prior to the Global
Offering (including a total of 614,039,309 H Shares to be converted from Unlisted Shares held
by 210 Shareholders of the Company) are restricted from trading within one year from the
Listing Date.
The Company will work with the Domestic Securities Company to be engaged by the
Company to restrict the trading of the H Shares converted from Unlisted Shares technically
within one year after the Listing. In the unlikely event that any Domestic Participating
Shareholders trades their H Shares during such restriction period, as advised by our PRC Legal
Advisor, there will be no administrative penalty on the Company under the PRC Law but there
is risk that the underlying agreement for the transfer of such H Shares may be declared void
pursuant to the Contract Law of the People’s Republic of China.
SHARE CAPITAL
– 363 –


--- page 374 ---
INCREASE IN SHARE CAPITAL
As advised by our PRC Legal Advisor, pursuant to the Articles of Association and subject
to the requirements of relevant PRC Law, our Company, upon the Listing of our H Shares, is
eligible to enlarge its share capital by issuing either new H Shares or new Unlisted Shares on
condition that such proposed issuance shall be approved by a special resolution of Shareholders
in general meeting and that such issuance is filed with the CSRC in a timely manner and
complies with the Listing Rules and other relevant laws and regulations of Hong Kong (unless
otherwise provided in the Articles of Association). To adopt a special resolution of
Shareholders in general meeting, more than the two thirds votes represented by the
Shareholders (including proxies) present at the general meeting must be exercised in favor of
the resolution.
SHAREHOLDERS’ GENERAL MEETINGS
For details of circumstances under which our Shareholders’ general meeting are required,
see “Appendix III — Summary of Articles of Association.”
REGISTRATION OF SHARES NOT LISTED ON AN OVERSEAS STOCK EXCHANGE
According to the Notice of Centralized Registration and Deposit of Non-overseas Listed
Shares of Companies Listed on an Overseas Stock Exchange (ྤ̮ɪ̹
) issued by the CSRC, the Company is required to register
the Unlisted Shares with the CSDC within 15 business days upon the Listing and provide a
written report to the CSRC regarding the results of centralized registration and deposit of the
Unlisted Shares as well as the offering and listing of the H Shares.
SHAREHOLDERS’ APPROV AL FOR THE GLOBAL OFFERING
Approval from holders of the Shares is required for the Company to issue H Shares and
seek the listing of H Shares on the Hong Kong Stock Exchange. The Company has obtained
such approval at the Shareholders’ general meeting held on April 8, 2022.
SHARE INCENTIVE SCHEME
We have adopted the 2020 Incentive Scheme and Pre-IPO Incentive Scheme. The
principal terms of the Pre-IPO Incentive Scheme are summarized in “Statutory and General
Information — D. Share Incentive Scheme” in Appendix IV .
SHARE CAPITAL
– 364 –


--- page 375 ---
THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (the “ Cornerstone Investment
Agreements ”, each a “ Cornerstone Investment Agreement ”) with the cornerstone investors
set out below (the “ Cornerstone Investors ”, each a “ Cornerstone Investor ”), pursuant to
which the Cornerstone Investors have agreed to, subject to certain conditions, subscribe, or
cause their designated entities (including qualified domestic institutional investor(s))
(“QDII(s) ”) to subscribe, at the Offer Price for a certain number of Offer Shares (the
“Cornerstone Placing ”).
Assuming an Offer Price of HK$9.40, being the low-end of the indicative Offer Price
range set out in this prospectus, the total number of Offer Shares to be subscribed by the
Cornerstone Investors would be 12,291,000 Offer Shares, representing approximately 54.44%
of the Offer Shares pursuant to the Global Offering and approximately 1.58% of the total
Shares in issue immediately upon completion of the Global Offering and Conversion of
Unlisted Shares into H Shares (without taking into account any Shares which may be issued
pursuant to the exercise of options which were granted under the Pre-IPO Incentive Scheme).
Assuming an Offer Price of HK$10.40, being the mid-point of the indicative Offer Price
range set out in this prospectus, the total number of Offer Shares to be subscribed by the
cornerstone Investors would be 11,108,500 Offer Shares, representing approximately 49.20%
of the Offer Shares pursuant to the Global Offering and approximately 1.42% of the total
Shares in issue immediately upon completion of the Global Offering and Conversion of
Unlisted Shares into H Shares (without taking into account any Shares which may be issued
pursuant to the exercise of options which were granted under the Pre-IPO Incentive Scheme).
Assuming an Offer Price of HK$11.40, being the high-end of the indicative Offer Price
range set out in this prospectus, the total number of Offer Shares to be subscribed by the
Cornerstone Investors would be 10,134,000 Offer Shares, representing approximately 44.89%
of the Offer Shares pursuant to the Global Offering and approximately 1.30% of the total
Shares in issue immediately upon completion of the Global Offering and Conversion of
Unlisted Shares into H Shares (without taking into account any Shares which may be issued
pursuant to the exercise of options which were granted under the Pre-IPO Incentive Scheme).
Our Company is of the view that, the Cornerstone Placing will help to raise the profile
of our Company and to signify that such investors have confidence in the business and prospect
of our Group.
The Cornerstone Placing will form part of the International Offering and the Cornerstone
Investors will not subscribe for any Offer Shares under the Global Offering (other than
pursuant to the Cornerstone Investment Agreements). The Offer Shares to be subscribed by the
Cornerstone Investors will rank pari passu in all respect with the fully paid Offer Shares in
issue and will be counted towards the public float of our Company under Rule 8.08 of the
Listing Rules.
CORNERSTONE INVESTORS
– 365 –


--- page 376 ---
Immediately following the completion of the Global Offering, the Cornerstone Investors
will not become a substantial shareholder of our Company, and the Cornerstone Investors will
not have any Board representation in our Company. Other than a guaranteed allocation of the
relevant Offer Shares at the final Offer Price, the Cornerstone Investors do not have any
preferential rights in the Cornerstone Investment Agreements compared with other public
Shareholders.
To the best knowledge of our Company and after making reasonable enquiries, save as
disclosed in this section below, (i) each Cornerstone Investor (and, for Cornerstone Investor
who will subscribe for our Offer Shares through a QDII, such QDII and the Cornerstone
Investor) is independent from our Company, our connected persons and their respective
associates and they are not our existing Shareholders; (ii) the Cornerstone Investors are
independent from each other; (iii) the Cornerstone Investors are not accustomed to taking
instructions from our Company, our subsidiaries, our Directors, chief executive of our
Company, our Single Largest Group of Shareholders, our substantial Shareholders, our existing
Shareholders or any of their respective close associates in relation to the acquisition, disposal,
voting or other disposition of the Offer Shares registered in its name or otherwise held by it;
and (iv) the subscription of Offer Shares pursuant to the Cornerstone Investment Agreements
is not directly or indirectly financed by our Company, our Directors, chief executive of our
Company, our Single Largest Group of Shareholders, our substantial Shareholders, our existing
Shareholders or any of their respective subsidiaries or close associate.
To the extent that any Cornerstone Investor has engaged a QDII to subscribe for the
relevant Offer Shares on its behalf, such Cornerstone Investor will procure such QDII to
comply with the terms of its Cornerstone Investment Agreement in order to ensure the
compliance of such Cornerstone Investor with its obligations under its Cornerstone Investment
Agreement.
As confirmed by the Cornerstone Investors, their subscription under the Cornerstone
Placing would be financed by their internal resources. There are no side agreements or side
arrangements between our Company and the Cornerstone Investors or any benefit, direct or
indirect, conferred on the Cornerstone Investors by virtue of or in relation to the Cornerstone
Placing. We became acquainted with each of the Cornerstone Investors in its ordinary course
of business or through introduction by certain underwriters in the Global Offering.
The Cornerstone Investors have agreed to pay for the relevant Offer Shares that they have
subscribed before dealings in the H Shares commence on the Stock Exchange. There will be
no delayed delivery or delayed settlement of the Offer Shares to be subscribed by the
Cornerstone Investors.
To the best knowledge of our Company and as confirmed by each Cornerstone Investors,
save as disclosed in this section below, none of the Cornerstone Investors nor their respective
shareholders are listed on any stock exchanges. Each of the Cornerstone Investors has
confirmed that all necessary approvals have been obtained with respect to the Cornerstone
Placing and that no specific approval from any stock exchange (if relevant) or its shareholders
is required for the relevant cornerstone investment.
CORNERSTONE INVESTORS
– 366 –


--- page 377 ---
The total number of Offer Shares to be subscribed by the Cornerstone Investors pursuant
to the Cornerstone Placing may be affected by reallocation of the Offer Shares between the
International Offering and the Hong Kong Public Offering in the event of over-subscription
under the Hong Kong Public Offering as described in “Structure of the Global Offering — The
Hong Kong Public Offering — Reallocation and clawback.” Each of the Cornerstone Investors
has agreed that, in the event that the requirement pursuant to Rule 8.08(3) of the Listing Rules,
which provides that no more than 50% of our Shares in public hands on the Listing Date can
be beneficially owned by the three largest public Shareholders, cannot be satisfied, our
Company, the Overall Coordinators and the Joint Sponsors have the right to adjust the
allocation of the number of Offer Shares to be subscribed by the Cornerstone Investors in their
respective absolute discretion, to satisfy the requirement pursuant to Rule 8.08(3) of the Listing
Rules. Details of the actual number of the Offer Shares to be allocated to the Cornerstone
Investors will be disclosed in the allotment results announcement to be issued by our Company
on November 2, 2023.
THE CORNERSTONE INVESTORS
Set out below is the aggregate number of Offer Shares, and the corresponding percentage
to our Company’s total issued Shares under the Cornerstone Placing.
Based on the Offer Price of HK$9.40 (being the low-end of the Offer Price range)
Cornerstone Investor (1) Investment amount (2, 3)
Number of
Offer Shares (4)
Approximate %
of total number
of Offer Shares
Approximate %
of total Shares
in issue
immediately
following the
completion of
Global Offering
and Conversion
of Unlisted
Shares into H
Shares
(HK$ in million)
Nayuki 61.91 6,586,000 29.17% 0.84%
SensePower 27.22 2,895,500 12.83% 0.37%
Mr. Wei 15.63 1,663,000 7.37% 0.21%
MLJ 10.78 1,146,500 5.08% 0.15%
Total 12,291,000 54.44% 1.58%
CORNERSTONE INVESTORS
– 367 –


--- page 378 ---
Notes:
# All share numbers and amounts are for illustrative purpose only.
1. As defined below.
2. The investment amounts of each of Nayuki and MLJ is inclusive of brokerage, the SFC transaction levy,
the Stock Exchange trading fee, the AFRC transaction levy in connection with their respective
subscription of Offer Shares under the Cornerstone Placing. Save as the aforesaid, all other investment
amounts are exclusive of brokerage, the SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy.
3. Each of the investment amount is calculated based on the exchange rate as disclosed in “Information
about this Prospectus and the Global Offering — Exchange Rate Conversion.” The actual investment
amount in Hong Kong dollars may change due to the actual exchange rate to be used as prescribed in
the relevant Cornerstone Investment Agreement.
4. Rounded down to the nearest whole board lot of 500 Offer Shares and based on the exchange rate as
disclosed in “Information about this Prospectus and the Global Offering — Exchange Rate Conversion.”
The actual number of Offer Shares to be subscribed by the relevant Cornerstone Investor may change
due to the actual exchange rate to be used as prescribed in the relevant Cornerstone Investment
Agreement.
Based on the Offer Price of HK$10.40 (being the mid-point of the Offer Price range)
Cornerstone Investor (1) Investment amount (2, 3)
Number of
Offer Shares (4)
Approximate %
of total number
of Offer Shares
Approximate %
of total Shares
in issue
immediately
following the
completion of
Global Offering
and Conversion
of Unlisted
Shares into H
Shares
(HK$ in million)
Nayuki 61.91 5,952,500 26.37% 0.76%
SensePower 27.22 2,617,000 11.59% 0.34%
Mr. Wei 15.63 1,503,000 6.66% 0.19%
MLJ 10.78 1,036,000 4.59% 0.13%
Total 11,108,500 49.20% 1.42%
Notes:
# All share numbers and amounts are for illustrative purpose only.
For notes (1) to (4), see “— The Cornerstone Investors — Based on the Offer Price of HK$9.40 (being
the low-end of the Offer Price range)” above.
CORNERSTONE INVESTORS
– 368 –


--- page 379 ---
Based on the Offer Price of HK$11.40 (being the high-end of the Offer Price range)
Cornerstone Investor (1) Investment amount (2, 3)
Number of
Offer Shares (4)
Approximate %
of total number
of Offer Shares
Approximate %
of total Shares
in issue
immediately
following the
completion of
Global Offering
and Conversion
of Unlisted
Shares into H
Shares
(HK$ in million)
Nayuki 61.91 5,430,500 24.05% 0.70%
SensePower 27.22 2,387,500 10.58% 0.31%
Mr. Wei 15.63 1,371,000 6.07% 0.18%
MLJ 10.78 945,000 4.19% 0.12%
Total 10,134,000 44.89% 1.30%
Notes:
# All share numbers and amounts are for illustrative purpose only.
For notes (1) to (4), see “— The Cornerstone Investors — Based on the Offer Price of HK$9.40 (being
the low-end of the Offer Price range)” above.
The following information about the Cornerstone Investors was provided to our Company
by the Cornerstone Investors in relation to the Cornerstone Placing.
Nayuki Holdings Limited
Nayuki Holdings Limited (“ Nayuki ”) is a company incorporated in the Cayman Islands
and its shares are listed on the Stock Exchange (stock code: 2150). Nayuki and its subsidiaries
are principally engaged in the sales of freshly-made tea products, baked goods and other tea
products and services in the PRC. Nayuki is ultimately controlled by Mr. Zhao Lin (؍)
“(Mr. Zhao ”) and Ms. Peng Xin ( ుː)( “ Ms. Peng ”). As of the Latest Practicable Date, Mr.
Zhao and Ms. Peng, being spouses, together controlled approximately 58.73% of the total
issued share capital of Nayuki.
CORNERSTONE INVESTORS
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SensePower Management Limited
SensePower Management Limited (“ SensePower ”) was incorporated in the British Virgin
Islands and is principally engaged in investment holding. It is an indirect wholly-owned
subsidiary of SenseTime Group Inc. (“ SenseTime ”), a company whose Class B shares are
listed on the Stock Exchange (stock code: 0020), and the ultimate beneficial owner of which
is an individual, Dr. Tang Xiao’ou, a professor at the Department of Information Engineering
of the Chinese University of Hong Kong. SenseTime is primarily engaged in developing
innovative AI technologies, including deep learning platform and supercomputing center. It has
launched a series of artificial intelligence technologies, including face recognition, image
recognition, text recognition, medical image recognition, video analysis, driverless and remote
sensing.
Mr. Wei Jinbing
Mr. Wei Jinbing (ж)( “Mr. Wei”) has over 10 years of experience in agency services
for medical electric equipment. Mr. Wei is a director of DigCom Equipment Company Limited
(previously known as Ustars Equipment Company Limited) (“ DigCom ”), a company
incorporated in the BVI and is principally engaged in medical electric equipment industry, and
is responsible for the daily operations and management of DigCom. Mr. Wei also has over 20
years of experience in equity investments with experiences in investing onshore and offshore
markets. To the best knowledge of our Directors, Mr. Wei decided to invest in our Company
as he is confident in the unmanned retail market and the long term development of our Group.
Shenzhen Maliujia Network Technology Co., Ltd. (ʮ̡)
Shenzhen Maliujia Network Technology Co., Ltd. (ʮ̡)
(“MLJ”) is a company established in the PRC on February 10, 2017 and is principally engaged
in the provision of information technology and e-commerce marketing services. As of the
Latest Practicable Date, MLJ was owned as to approximately (i) 30% by Shenzhen Maxiaoqi
Network Technology Co., Ltd. (ப΂ʮ̡), which was owned as to
40.53% by Mr. Xu Jincan (ᐆ), 24.66% by Mr. Chen Shaofei (࠭21.55% by Mr.
Chen Y uanyong (ۇand 13.26% by Mr. Y u Qingping ( Яᅅ̻); (ii) 28.37% by Mr. Xu
Jincan (ᐆ); (iii) 17.26% by Mr. Chen Shaofei (࠭iv) 15.09% by Mr. Chen
Y uanyong (ۇand (v) 9.28% by Mr. Y u Qingping ( Яᅅ̻). For the purpose of this
cornerstone investment, MLJ has engaged Caitong Fund Management Co., Ltd. (၍ଣ
ʮ̡)( “Caitong ”), an asset manager which is a QDII, to subscribe for and hold such Offer
Shares on its behalf. Caitong is independent from our Company, our connected persons and
their respective associates and is not our existing Shareholder.
CORNERSTONE INVESTORS
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CLOSING CONDITIONS
The obligation of the Cornerstone Investors to acquire the Offer Shares under the
Cornerstone Investment Agreements is subject to, among other things, the following closing
conditions:
(a) the Hong Kong Underwriting Agreement and the International Underwriting
Agreement being entered into and having become effective and unconditional (in
accordance with their respective original terms or as subsequently waived or varied
by agreement of the parties thereto) by no later than the time and date as specified
in the Hong Kong Underwriting Agreement and the International Underwriting
Agreement, and neither the Hong Kong Underwriting Agreement nor the
International Underwriting Agreement having been terminated;
(b) the Offer Price having been agreed upon between our Company and the Overall
Coordinators (for themselves and on behalf of the Underwriters);
(c) the Hong Kong Stock Exchange having granted the listing of, and permission to deal
in, the H Shares (including the H Shares under the Cornerstone Placing) as well as
other applicable waivers and approvals and such approval, permission or waiver
having not been revoked prior to the commencement of dealings in the H Shares on
the Stock Exchange;
(d) no laws shall have been enacted or promulgated by any governmental authority
which prohibits the consummation of the transactions contemplated in the Global
Offering or the Cornerstone Investment Agreements and there shall be no orders or
injunctions from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions; and
(e) the respective representations, warranties, undertakings and confirmations of the
Cornerstone Investors under the Cornerstone Investment Agreements are accurate
and true in all respects and not misleading and that there is no breach of the
Cornerstone Investment Agreements on the part of the Cornerstone Investors.
RESTRICTIONS ON THE CORNERSTONE INVESTORS
Each of the Cornerstone Investors has agreed that it will not, whether directly or
indirectly, at any time during the period of twelve months from and inclusive of the Listing
Date (the “ Lock-up Period ”), dispose of any of the Offer Shares it has subscribed pursuant to
the Cornerstone Investment Agreements, save for certain limited circumstances, such as
transfers to any of its wholly-owned subsidiaries who will be bound by the same obligations
of such Cornerstone Investors, including the Lock-up Period restriction.
CORNERSTONE INVESTORS
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You should read the following discussion and analysis of our financial condition and
results of operations together with our consolidated financial statements as of and for
each of the years ended December 31, 2019, 2020, 2021, 2022 and as of and for the six
months ended June 30, 2023 and the accompanying notes included in the Accountant’s
Report set out in Appendix I. Our consolidated financial statements have been prepared
in accordance with HKFRSs. Potential investors should read the whole of the
Accountant’s Report set out in Appendix I and not rely merely on the information
contained in this section. The following discussion and analysis contain forward-looking
statements that involve risks and uncertainties. For additional information regarding
these risks and uncertainties, see “Risk Factors.”
OVERVIEW
We are a vending machine operator in mainland China, with strong operation and
digitalization capabilities. According to Frost & Sullivan, we ranked first in terms of both total
transaction GMV and network scale in the unmanned retail industry, primarily consisting of
vending machines, unmanned stores and unmanned shelves, in mainland China for each of
2019, 2020, 2021 and 2022.
For over a decade since our founding, we have endeavored to cultivate the unmanned
retail industry, a sub-segment of the retail industry, in mainland China and developed
digitalization and operation capabilities, covering merchandise procurement, logistics and
inventory management. Leveraging these core capabilities, we have rapidly established an
extensive point-of-sale, or POS, network covering a wide range of consumption scenarios,
including schools, factories, office premises, public venues, transportation hubs and
restaurants. Through our expansive POS network, we are able to provide services to a variety
of participants along the unmanned retail industry value chain. As of June 30, 2023, we had a
network of 61,888 Ubox POSs across 157 cities and 28 provincial-level administrative regions
in mainland China, 87.3% of which were concentrated in tier one, new tier one and tier two
cities. As of June 30, 2023, we had cumulatively 354.5 million distinguishable transacting
users, with approximately 5.4 billion transactions completed.
According to Frost & Sullivan, the unmanned retail market in mainland China is
underpenetrated, with an average of 0.8 vending machine per thousand population in 2022. As
of December 31, 2022, the vending machines in mainland China covered only 8.8% of the
country’s potentially available sites, and such penetration rate of offline sites covered by
vending machines is expected to increase to 15.6% by 2027, indicating a vast development
prospect for vending machines in offline retail scenarios. Accordingly, the size of the vending
machine retail market in mainland China is expected to grow from RMB28.9 billion in 2022
to RMB73.9 billion in 2027, with a CAGR of 20.7%. We therefore believe our industry-leading
position and strong ability to digitalize operations will enable us to further increase our market
penetration and to expand into new consumption scenarios.
FINANCIAL INFORMATION
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During the Track Record Period, we generated revenue from the following business
segments:
 Unmanned retail business. We leverage our nation-wide POS network and data-
driven operation system to digitalize and automate retail sales of FMCG in a wide
range of consumption scenarios through vending machines only. We derive revenue
from this segment primarily from retail sales of merchandise, including bottled
beverages, snacks, freshly brewed coffee and other beverages, through vending
machines at Ubox POSs. Our vending machines primarily include pick-and-go
cabinets, beverage vending machines, beverage and snack vending machines and
freshly brewed beverage vending machines;
 Advertising and system support services. We leverage our extensive and unique
consumer touch points to offer advertisers with digital advertising services that
drive consumer traffic and sales, primarily consisting of (i) display screen
advertising services, (ii) after-payment advertising services, (iii) merchandise
display advertising services and (iv) machine body advertising services. We derive
revenue from service fees charged to our advertising customers for digital
advertising services. In addition, we also provide operation system support to
Non-Ubox POS operators by allowing them to connect their machines to our
operation system, which enable them to access a range of functionalities, including
monitoring their machines’ operating status in real time and receiving restocking
alerts, restocking routes and schedule recommendations. We derive revenue from
fees charged to our Non-Ubox POS operators for using our operation system. During
the Track Record Period, our revenue from digital advertising services was generally
determined by demand for such services from advertisers, which was impacted by
macro-economic conditions, and the expansiveness of our POS network, which
represents our capacity to reach consumers. During the Track Record Period,
revenue from digital advertising services also relates to the number of new POSs
opened which affects the amount of services fees we may receive from Alipay China
for the advertising and promotion of its payment service products. For details of
service fees from Alipay China, see “Connected Transactions – Partially-exempt
Continuing Connected Transactions – Advertising Cooperation Framework
Agreement”;
 Merchandise wholesale. We offer merchandise wholesale primarily to merchandise
wholesale customers and certain Non-Ubox POS operators. We derive revenue from
this segment primarily from wholesale of merchandise;
 V ending machine sales and leases. We sell, lease and/or provide hardware support
services for vending machine to our Non-Ubox POS operators. We provide hardware
support services including machine installation and maintenance services. We derive
revenue from this segment primarily from sales and leases of vending machine
and/or fee charged for related hardware support services; and
 Others. We also offer other services, which mainly comprise mobile device
distribution services, karaoke booth services, karaoke booth sales and leases and
karaoke booth operation system support across mainland China.
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We generate most of our revenue from our unmanned retail business. In 2019, 2020, 2021,
2022 and the six months ended June 30, 2022 and 2023, revenue generated from our unmanned
retail business accounted for 56.5%, 70.3%, 71.6%, 78.4%, 79.9% and 78.8% of our total
revenue, respectively. We have two operating models for our unmanned retail business, the
direct operation model and the partner model, to achieve efficient and rapid business
expansion. We generally adopt a direct operation model for POSs at strategically important
sites, such as transportation hubs and premises of KAs, including Deppon Logistics
and Xiaomi, which tend to have a large number of potential POS locations at a single site. In
other locations, we engage POS partners to assist with sourcing and establishing POSs. Our
POS partners are generally responsible for sourcing potential sites, the costs for developing
POSs, occupancy fees and utility costs. In 2020, we started to shift our marketing efforts to our
partner model as we believe this model would better accommodate the nature of our business
operations since it facilitates site acquisitions and enhances our efficiency with simplified
business process. As a result, revenue contribution of our partner model continued to increase
from 9.2% in 2019 to 40.1%, 55.3% and 64.0% in 2020, 2021 and 2022, respectively, and
remained relatively stable at 66.0% and 64.1% for the six months ended June 30, 2022 and
2023, respectively. While we remain entitled to the revenue generated by the machines, the
POS partners are typically entitled to a share of the transaction GMV generated from the
vending machines, subject to deduction of their responsible costs and expenses. From an
accounting perspective, under both models we recognize retail sales revenue when control of
the merchandise has been transferred to the end customer. In terms of costs and expenses, we
record procurement costs of merchandise under both models under cost of sales, and incur
expenses for sourcing, developing and maintaining Ubox POSs under the direct operation
model and the share of transaction GMV paid to POS partners (as they bear the costs for
developing POSs, occupancy fees and utility costs) under the partner model to selling and
marketing expenses. Therefore, there is no difference in terms of revenue recognition, cost
accounting and inventory management under the direct operation model and the partner model.
Nevertheless, since the shift of focus to the partner model only started in 2020, we have limited
experience with respect to operating the partner model and may not be able to realize the
anticipated benefits of such business model. We will also be subject to risks and uncertainties
related to this business model. For details, see “Risk Factors — Risks Relating to Our Business
and Industry — We face certain risks associated with the shift from the direct operation model
to the partner model.”
Due to the COVID-19 pandemic, our revenue decreased from RMB2.7 billion in 2019 to
RMB1.9 billion in 2020. As the impact of COVID-19 relented and our new business operations
developed, our revenue in 2021 rebounded to RMB2.7 billion. Our revenue then decreased to
RMB2.5 billion in 2022, primarily due to the decrease in our revenue from mobile device
distribution services under our others segment as the downstream mobile device retail market
and the demand for our mobile device distribution services were negatively affected by
macro-economic conditions and consumer demand during the same year, partially offset by (i)
the increase in revenue from our unmanned retail business by 3.1% as compared to 2021
despite the impact of COVID-19 and (ii) the increase of RMB91.3 million in revenue from our
merchandise wholesale as a result of the initiation of our shared warehouse initiative since the
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second half of 2021. Following the relaxation of COVID-19 policies and overall recovery of
consumer traffic and business activities, our revenue increased by 9.6% from RMB1.1 billion
for the six months ended June 30, 2022 to RMB1.3 billion for the same period in 2023.
MAJOR FACTORS AFFECTING OUR RESULTS OF OPERATIONS
The principal factors that directly or indirectly affect our business, financial conditions,
results of operations and prospects include:
 Our ability to expand our POS network;
 Our ability to effectively maintain our technical edge, achieve breakthroughs in
technology and innovation, and further digitalize our operations;
 Our ability to establish and maintain relationships with our merchandise suppliers
and enhance our bargaining power; and
 Our ability to manage operating expenses and improve operational expenses.
Our Ability to Expand Our POS Network
Our revenue is largely affected by the number and coverage of our POSs, and our future
revenue growth depends on our ability to open new POSs and expand our POS network. During
the Track Record Period, our POSs were mainly located in relatively developed regions in
mainland China, including the Y angtze River Delta Region, Pearl River Delta Region,
Beijing-Tianjin-Hebei Region and provincial capitals. As of June 30, 2023, 87.3% of our Ubox
POSs and Non-Ubox POSs were concentrated in tier one, new tier one and tier two cities. The
table below sets forth the breakdown of our Ubox POSs coverage by city tier as of the dates
indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
%%%%%%
Ubox POSs by city tier
Tier one cities 16,625 26.2 15,836 27.1 21,572 25.3 19,929 30.1 20,281 28.0 19,611 31.7
New tier one cities 21,462 33.8 17,725 30.3 30,580 35.9 23,077 34.8 24,335 33.6 21,365 34.5
Tier two cities 15,838 25.0 15,228 26.0 22,097 26.0 14,405 21.7 18,052 25.0 13,031 21.1
Tier three cities 6,420 10.1 5,718 9.8 7,042 8.3 5,820 8.8 6,419 8.9 5,177 8.4
Others 3,106 4.9 3,960 6.8 3,848 4.5 3,001 4.6 3,232 4.5 2,704 4.3
Total 63,451 100.0 58,467 100.0 85,139 100.0 66,232 100.0 72,319 100.0 61,888 100.0
FINANCIAL INFORMATION
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Our POS network slightly shrank in 2020 primarily as a result of the COVID-19
pandemic. It resumed rapid expansion in 2021 primarily due to the increase in the number of
POSs placed at restaurants in the second half of 2021. The number of POSs decreased in 2022,
primarily due to regional resurgence of COVID-19 in mainland China in 2022 that affected
consumer traffic in certain consumption scenarios, including restaurants. The number of our
Ubox POSs slightly decreased during the first half of 2023. This was because the Company,
POS partners and some other business partners such as site owners adopted a prudent approach
towards the pace of recovery in the macro-environment under the prolonged impact of the
pandemic and slowed down the expansion of the POS network in the same period. Going
forward, we intend to select more resilient venues to deploy our vending machines.
For different consumption scenarios, we have strategically adopted different POS
management and development strategies to achieve efficient and rapid expansion. We generally
adopt a direct operation model for POSs at strategically important sites, such as schools and
premises of KAs, which tend to have a large number of potential POS locations at a single site.
By directly operating POSs in such premium locations, we not only achieve a stable source of
income, but also promote our brand awareness and presence. As of December 31, 2022, our
POS network covered 45% of mainland China’s top 40 airports by passenger traffic, 22% of
all university and college campuses, and 29% of top 80 shopping malls in terms of sales.
During the Track Record Period, we entered into strategic cooperation with various leading
internet companies, logistics service providers, automobile manufacturers and companies from
other industries, and have deployed over 6,100 POSs to their premises nationally as of June 30,
2023. In other locations, we deploy the partner model and engage POS partners to assist us with
sourcing and establishing POSs, while we manage the daily operation of our vending machines.
The partner model has allowed us to rapidly expand our POS network at relatively low costs
and risks associated with establishment and operation of POSs. It aligns our interest with those
of our POS partners, who are typically entitled to a share of the POSs’ transaction GMV ,
subject to deduction of their responsible fees and costs, and therefore incentivized to mobilize
resources to set up vending machines at the best POSs. Since 2020, we have actively enhanced
the use of POS partners to assist us with sourcing and establishing POSs. As of June 30, 2023,
we had a network of 61,888 Ubox POSs across 157 cities and 28 provincial-level
administrative regions in mainland China. See “Business — Our POS Network” for details on
the movement of our Ubox and Non-Ubox POSs during the Track Record Period.
Going forward, we plan to continue to expand our POS network to support the growth of
our business and strengthen our market-leading position.
Our Ability to Effectively Maintain Our Technical Edge, Achieve Breakthroughs in
Technology and Innovation, and Further Digitalize Our Operations
Our results of operations partly depend on our ability to maintain our technical edge,
achieve breakthroughs in technology and further digitalize our operations to cost-effectively
keep up with the technological upgrade and meet the demands of our anticipated growth. The
vending machine retail industry is characterized by rapid technological evolution, continual
shifts in customer demands and preferences, frequent introductions of new features and
FINANCIAL INFORMATION
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services. Our ability to expand is affected by the breadth and depth of our customer insights,
our technology capabilities to develop our platform, and our ability to timely adapt to the
rapidly evolving industry trends and preferences of our customers and business partners. We
have continuously invested in research and development to further improve our technological
capabilities. Poised to revolutionize unmanned retail, we have developed pick-and-go cabinets
equipped with advanced hardware technologies, structural design and lighting, and the
combined use of biometric authentication, credit assessment algorithm and IoT technologies.
We have developed an operation system, which connects our vending machines to our
centralized operation system over the cloud operated by third-party cloud service providers.
We have also developed a data-driven operation system to digitalize our back-end supply flow.
We will continue to invest in resources to enhance our technology capabilities. In particular,
we will continue to develop new features and functionality and invest in data analytical
capabilities, IoT technologies and back-end algorithms to enhance the level of standardization
across our business operations, hence improving customer experience and our ability to
manage our merchandise and an increasingly scalable business structure. Our ability to
effectively maintain our technical edge, invest in relevant technologies may optimize our cost
structure and lower our operating expenses as a percentage of our total revenues in the long
run, but require upfront capital investments and expenditures in the short run, both of which
would affect our financial positions.
Our Ability to Establish and Maintain Relationships with Our Merchandise Suppliers and
Enhance Our Bargaining Power
Our ability to manage and control our cost of inventories sold and our ability to maintain
mutually beneficial relationships with our merchandise suppliers are essential to our success.
We procure merchandise from suppliers, including manufacturers and distributors of food and
beverages, and sell them to our customers through our vending machines. Our ability to
provide a broad selection of merchandise through our vending machines and POS network
depends on our ability to develop mutually beneficial relationships with our suppliers. Revenue
generated from our unmanned retail business (whose cost of sales are related to merchandise
procurement) accounted for 56.5%, 70.3%, 71.6%, 78.4%, 79.9% and 78.8%, of our total
revenue in 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023,
respectively. We also generate revenue from merchandise wholesale. We therefore depend on
merchandise suppliers to provide us with merchandise of quality for sale via our POS network
or for wholesales, although, during the Track Record Period, we did not rely heavily on any
single merchandise supplier.
FINANCIAL INFORMATION
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The following sensitivity analysis illustrates the effects of hypothetical fluctuations in our
cost of inventories sold on our gross profit for the periods indicated, assuming all other factors
affecting our profitability had remained unchanged:
- 20% - 10% - 5% 0% + 5% + 10% + 20%
Hypothetical change
in gross profit
(RMB’000)
2019 251,242 125,621 62,811 – (62,811) (125,621) (251,242)
2020 211,728 105,864 52,932 – (52,932) (105,864) (211,728)
2021 293,278 146,639 73,319 – (73,319) (146,639) (293,278)
2022 273,695 136,847 68,424 – (68,424) (136,847) (273,695)
Six months ended
June 30, 2022 119,497 59,748 29,874 – (29,874) (59,748) (119,497)
Six months ended
June 30, 2023 144,145 72,073 36,036 – (36,036) (72,073) (144,145)
Moreover, prices of our merchandise typically follow suppliers’ recommended retail
prices and are generally in line with prices of similar merchandise sold at their vicinity, but we
are allowed to determine retail prices based on the actual circumstances. The mix of
merchandise sold through our POS network also affects our financial performance as different
merchandise generate different gross profit margins. For example, in 2021, we sold a higher
portion of food products, which recorded higher gross profit margin than beverages sold during
the year, as a result of our efforts in merchandise management in early 2021 to refine our
merchandise mix, partially contributing to the increase in gross profit margin of our unmanned
retail business from 41.7% in 2020 to 46.4% in 2021. Therefore, our ability to increase our
gross profit margin will in part depend on the mix of merchandise sourced from suppliers and
our ability to increase our bargaining power with suppliers. We leverage our scale and
data-driven inventory and operation system to lower the procurement costs of our merchandise.
See “Business — Logistics and Inventory Management” for details. We have also been
engaging original equipment manufacturing contractors for customized merchandise that have
better gross profit margin advantage over branded merchandise.
Our Ability to Manage Operating Expenses and Improve Operational Efficiency
Our ability to manage and control our operating expenses is critical to the success of our
business. Expenses of our operations mainly consist of selling and marketing expenses, general
and administrative expenses and research and development expenses. The aggregated amount
of such expenses accounted for 45.4%, 86.0%, 46.2%, 52.2%, 54.1% and 52.3%, respectively,
of our revenue in 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023.
Such expenses accounted for a greater proportion of our revenue in 2020 primarily due to
impairment loss recognized as a result of the COVID-19 outbreak and share incentives granted
to management and core employees in 2020. Going forward, as we continue to rapidly expand
our business network, our profitability will depend on our ability to effectively control our
FINANCIAL INFORMATION
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operating expenses by implementing various measures. For example, we put technologies
including data analytics, visual recognition and IoT technologies into industry applications,
digitalizing, automating and refining our operation, and thereby significantly enhancing our
operational efficiency. We adopt a partner model to cost-effectively expand our POS network
while reducing the need for maintaining large scale sales teams internally. We have introduced
shared warehouses to provide more efficient and flexible services to Non-Ubox POS operators
or merchandise wholesale customers and help them reduce warehousing costs while
simultaneously helping us to further improve our inventory management and operation
capabilities. We will also continuously increase the level of digitalization and automation of
shared warehouses to enable more operation, including automatic placing of procurement
orders. We expect our operating expenses to increase in absolute amount as we grow our
business while decreasing as a percentage of our revenue as we continue to improve
operational efficiency and achieve economies of scale.
SEASONALITY
Our business is subject to seasonal fluctuations depending on the location of our POSs
and the relevant time of a year. In general, we experienced weaker performance in the first
quarter of each year due to lower level of customer foot traffic and consumption from vending
machines, especially outdoor ones, during winter. We typically record higher level of revenue
from the second to fourth quarters of each year due to the warmer weather and relatively
stronger demand for vending machine retail of beverages. We are also subject to seasonal
fluctuation in demand from particular scenarios. For example, POSs at schools typically record
lower level of revenue during summer and winter vacations. For further details, see “Risk
Factors — Risks Relating to Our Business and Industry — Our results of operation depend on
the level of traffic and consumption and are thus subject to seasonal fluctuations.”
IMPACT OF COVID-19
In December 2019, a novel strain of coronavirus named COVID-19 emerged and has
spread globally since then. The COVID-19 pandemic disrupted the normal life and daily
routine of the world population and restrictive measures were introduced by governments to
curb the outbreak. Due to social distancing, lock-down, temporary shut-down and other
disruptions, the COVID-19 pandemic has significantly impacted our business. To protect the
health and well-being of our employees in support of efforts to control the spread of the
COVID-19 outbreak, we closed, or reduced, working hours at our headquarters and offices and
made remote working arrangements in early 2020. Our headquarters and offices had been
reopened in an orderly manner by February 2020. The emergence of COVID-19 in mainland
China has also adversely impacted the operations at our POSs because a number of public
venues where our vending machines were located were required to be closed and consumer
traffic and sales activities were adversely affected. For the two months of February and March
2020, approximately 27.9% of our Ubox POSs as of March 31, 2020 did not generate any sales,
and our Non-Ubox POSs also experienced similar disruptions of varying degrees depending on
their locations. In addition, the operations of our internal logistics functions and our logistics
and transportation service providers were also negatively impacted, thereby affecting
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restocking of our machines. Moreover, due to closure of public venues and reduced consumer
traffic, demand for our advertising and system support services and sales and leases of
machines also decreased. Furthermore, during the outbreak of COVID-19 in mainland China,
many of our karaoke booths, especially those located in shopping malls, were shut down since
early 2020 until October 2020. As a result, our total revenue decreased by 30.3% from
RMB2,727.5 million in 2019 to RMB1,902.0 million in 2020, and we recorded a loss of
RMB1,184.2 million in 2020.
Following a partial recovery from COVID-19 in 2021, although we recorded a loss of
RMB188.2 million in 2021, our adjusted net loss (non-HKFRS measure) decreased from
RMB973.3 million in 2020 to RMB170.3 million in 2021 and our adjusted EBITDA
(non-HKFRS measure) improved from negative RMB634.0 million in 2020 to positive
RMB66.6 million in 2021. In addition, our operating cash flow improved from net cash used
in operating activities of RMB31.9 million in 2020 to net cash generated from operating
activities of RMB178.9 million in 2021.
In 2022, primarily related to the Delta and Omicron variants, COVID-19 resurged in
various locations in mainland China, with particularly stringent counter-resurgence measures
being taken in certain regions, including but not limited to, Beijing and Shanghai, resulting in
closure of, and reduced consumer traffic and sales activities at, public venues where our
vending machines are placed. Due to the resurgence and control measures, including the
lock-down of Shanghai, approximately 40.0% of our Ubox POSs as of December 31, 2022 (not
taking into account the sales of POSs located in schools in July and August as they generally
have limited or no sales during summer holiday) did not generate any sales for at least 60 days
in 2022. In addition, our POSs located at restaurants were also severely affected as the regional
resurgences of COVID-19 in mainland China had a negative impact on the catering industry in
mainland China. Similarly, Non-Ubox POSs also experienced disruptions of varying degrees
depending on their locations. Moreover, revenue from our mobile device distribution services
under our others segment decreased in 2022 as the downstream mobile device retail market and
the demand for our mobile device distribution services were negatively affected by macro-
economic conditions and consumer demand during the same year. As a result, our revenue
decreased by 5.9% from RMB2,676.2 million in 2021 to RMB2,519.2 million in 2022.
We took a series of actions to mitigate the impact of COVID-19 on us. For example, we
set up mandatory screening at the entrance of our offices and premises, checked health code
(਄ੰᇁ) and travel code ( Б೻ᇁ) of our employees and visitors from 2020 to 2022, and
complied with the guidelines of health authorities if any of our employees show infection
symptoms. During the Track Record Period, we also shifted our marketing efforts to the partner
model by engaging more POS partners for our unmanned retail business with an aim to
stabilize profit margin and alleviate the impact of interruption. Our POS partners under the
partner model, while typically entitled to a share of the POSs’ transaction GMV (subject to
deduction of their responsible costs and expenses), are responsible for sourcing potential sites
and bear the costs for developing POSs, occupancy fees and utility costs. As such, we are
insulated, to a certain extent and as compared to the direct operation model, from the risk that
revenue from POSs is insufficient to cover such costs and expenses, especially in light of the
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negative impact of COVID-19. To this end, during the period when our POSs operation was
heavily impacted by COVID-19, we believe our POS partners, who maintained their POSs on
site and bore the costs of developing POSs and occupancy fees, were motivated to actively
negotiate with the site owners on the occupancy fees to better manage their costs and expenses
associated with the POS sites. The partner model therefore helped make us more resilient to the
uncertainties of overall business environment. In addition, we have become less susceptible, in
terms of sourcing and developing potential POSs, to travel restrictions and quarantine measures
by collaborating with a larger number of POS partners located across the country, instead of
relying on a small number of internal marketing staff. See “Business — Our POS Network” for
details. Moreover, our vending machines offer consumers with contactless purchase. With no
human interaction required in the process, unmanned retail also represents a safer and more
hygienic way of purchasing, which helps it gain an advantage at the time of the COVID-19
pandemic. According to Frost & Sullivan, in light of the fact that various social distancing
measures being implemented in China are increasingly being regarded as normative behavior
that guides consumers’ daily activities, consumers are becoming increasingly adapted to
unmanned retail which offers a contactless and time-saving shopping experience, where
consumers may keep social distance and avoid spending time in crowded places. Consumers
have also gradually embraced a variety of digital technologies, such as biometric
authentication payment, that facilitate unmanned retail. Furthermore, we have entered into
cooperation with a number of our customers, including merchandise wholesale customers as
part of our shared warehouse initiative, under which we would share our warehouses with each
other or we jointly establish new warehouses to save rental costs. In certain cases, we were able
to leverage our customers’ warehouses to shorten the re-stocking distance for our POSs. In
addition, we also expanded our POS partner recruitment channels to include online recruitment
with a view to attracting POS partners from different industries, and actively discussed and
negotiated with site owners for rent deduction.
In general, our Directors are of the view that, as our business operations strongly rely on
stable offline consumer traffic, the COVID-19 pandemic and the emergence of new COVID-19
variants which led to regional resurgences and certain pandemic control measures such as
travel restrictions, mass testing and lockdowns, have had temporary adverse impact on our
business operations and financial performance. Nevertheless, partially due to our promotion of
the partner model, our business demonstrated resilience against the pandemic as evidenced by
the significant increase in revenue by 40.7% from RMB1,902.0 million in 2020 to RMB2,676.2
million in 2021, approximately 98.1% of our revenue in 2019 before the outbreak of
COVID-19. Since December 2022, the PRC government has relaxed its zero-COVID policy,
including removing mass testing and central quarantine requirements and lifting travel
restrictions. Many regions were facing a surge in cases following such relaxation until early
February 2023. We also implemented various measures in light of such relaxation and surge in
cases to mitigate their impact on our business operations:
– we adjusted our procurement plans and placed order in advance to avoid potential
disruption to supply chains caused by the recent surge in cases;
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– we flexibly adjusted work arrangement of our employees and adopted shifts to
ensure that we could maintain sufficient number of employees to maintain our daily
operation and, especially, to avoid logistics and transportation paralysis; and
– we increased supply and replenishment of merchandise in our vending machines that
are currently in strong demand, such as electrolyte beverages and drinks that contain
Vitamin C.
Driven by the pivot in COVID-19 policies and the early Chinese New Y ear holiday
season, many offline business operations and consumer traffic across mainland China have
started to recover in 2023. According to government statistics, railways, highways, waterways,
and civil aviation in mainland China transported a total of 226 million passengers during the
seven-day Chinese New Y ear holiday in early 2023, representing an increase of over 70%
year-on-year over the same period in 2022. Performance of our POSs at many transportation
hubs and public venues also experienced improvement. For instance, for our POSs at airports
that were in operation in both January 2022 and January 2023, transaction GMV increased by
approximately 23.0% from January 2022 to January 2023. Following the end of the Chinese
New Y ear holiday, consumer traffic at and performance of our POSs at other consumption
scenarios, such as schools, factories and office premises started to normalize and improve in
2023. As a result, transaction GMV of Ubox POSs and our revenue from unmanned retail
increased by approximately 10.4% and 8.0%, respectively, from the six months ended June 30,
2022 to the same period in 2023. According to Frost & Sullivan, as people move more
frequently and economic activities resume, the demand for and consumption of consumer
goods are expected to recover in 2023. Our Directors believe that our business operations and
financial performance will steadily improve following the change in COVID-19 policies as
well as the improvement in consumer sentiment and overall business environment. For further
details of risks associated with COVID-19, see “Risk Factors — Risks Relating to Our
Business and Industry — We face risks related to natural disasters, epidemics and other public
health emergencies, which could significantly disrupt our operations and financial condition.”
BUSINESS SUSTAINABILITY
We had retained earnings of RMB54.2 million and RMB99.3 million as of January 1,
2019 (i.e. the beginning of the Track Record Period) and December 31, 2019, respectively. We
incurred net losses of RMB1,184.2 million, RMB188.2 million, RMB283.1 million and
RMB147.4 million in 2020, 2021, 2022 and the six months ended June 30, 2023, respectively.
As a result, we had accumulated losses of RMB1,073.2 million, RMB1,258.2 million,
RMB1,542.7 million and RMB1,695.2 million as of December 31, 2020, 2021, 2022 and June
30, 2023, respectively. We also experienced negative operating cash flow in 2020.
We incurred a net loss of RMB1,184.2 million in 2020, primarily due to (i) a decrease in
revenue from each of our business lines, primarily attributable to (a) the decrease in revenue
from our unmanned retail business primarily due to the significant decrease in overall outdoor
consumer traffic as a result of COVID-19 leading to a decrease in monthly average GMV per
POS despite the increase in average monthly number of POSs, and (b) the decrease in revenue
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from our advertising and system support services primarily due to the decrease in demand for
such services from advertisers and their budgets and expenditures owing to the decrease in
outdoor consumer traffic in light of COVID-19, while we incurred POS operation and
development expenses when maintaining our Ubox POS network and other operating expenses,
(ii) an increase in general and administrative expenses, which was mainly attributable to (a)
share-based payments in relation to share incentives granted to management and core
employees in 2020 and (b) impairment loss of goodwill as the COVID-19 outbreak negatively
affected the business and expansion of our freshly brewed beverage vending machine business
and karaoke booth service business, and (iii) an increase in impairment loss of inventories,
property and equipment and right-of-use assets, primarily attributable to non-core types of
machines such as karaoke booths and orange juice machines and coconut juice machines as a
result of the negative impacts of COVID-19. For similar reasons, we incurred a net operating
cash outflow of RMB31.9 million in 2020.
During a partial recovery from COVID-19, we experienced a significant increase in our
revenue from RMB1,902.0 million in 2020 to RMB2,676.2 million in 2021, mainly attributable
to the increase in revenue from our unmanned retail business as a result of partial resumption
of outdoor consumer traffic. Accordingly, our net loss narrowed significantly from
RMB1,184.2 million in 2020 to RMB188.2 million in 2021, primarily due to (i) a significant
increase in revenue from unmanned retail business and others segment, which also led to the
increase of our gross profit by 97.1% from RMB558.6 million in 2020 to RMB1,101.1 million
in 2021 and (ii) the decrease in selling and marketing expenses and general and administrative
expenses. Our operating cash flow also improved from a net operating cash outflow of
RMB31.9 million in 2020 to a net operating cash inflow of RMB178.9 million in 2021.
Notwithstanding the aforesaid improvements, we incurred a loss in 2021 and our accumulated
loss increased primarily because average monthly GMV per POS for unmanned retail business,
and our revenue and gross profit margin from advertising and system support services, had not
recovered to pre-COVID-19 levels in 2019 as business activities and general market sentiment
recovered only to a limited extent from the impacts from COVID-19.
We incurred a net loss of RMB283.1 million in 2022, primarily due to (i) an increase in
selling and marketing expenses incurred, in terms of both absolute amount and a percentage of
our total revenue, primarily due to an increase in depreciation of our machines, logistics and
transportation expenses and employee benefit expenses in relation to the expansion and
optimization of our POS network, and (ii) a decrease in revenue and, in turn our gross profit,
mainly from (a) a decrease in revenue from our others segment primarily because the
downstream mobile device retail market and the demand for our mobile device distribution
services were negatively affected by macro-economic conditions and consumer demand in
2022, and (b) a decrease in revenue from advertising and system support services primarily due
to the decrease in consumer traffic as a result of the negative impact of COVID-19, which was
partially offset by (c) an increase of RMB91.3 million in revenue from our merchandise
wholesale as a result of the initiation of our shared warehouse initiative since the second half
of 2021 and (d) an increase in revenue from our unmanned retail business primarily due to the
expansion and optimization of our POS network. Specifically, the monthly average number of
Ubox POSs in 2022 increased as compared to that of 2021 (despite the decrease in number of
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Ubox POSs from 85,139 to 66,232 as of December 31, 2021 and 2022, respectively, mainly due
to the regional resurgence of COVID-19 in mainland China which significantly affected
consumer traffic in certain scenarios, especially restaurants).
Our net loss increased from RMB128.4 million for the six months ended June 30, 2022
to RMB147.4 million for the same period in 2023. Such increase was primarily due to the
increase in general and administrative expenses mainly attributable to an increase in
share-based payments recognized in 2023 in relation to share incentives granted to our
employees. Nevertheless, our net cash generated from operating activities increased by 19.3%
from RMB155.9 million for the six months ended June 30, 2022 to RMB186.0 million for the
same period in 2023.
We have adopted various measures to better manage our costs and expenses, including
leveraging our data-driven inventory and operation system to lower procurement costs of
merchandise, leveraging shared warehouses and further digitalizing and automating our
operations to lower operating expenses. Nevertheless, we may still incur net losses and net
operating cash outflow in the near future as the recovery of the economy from the negative
impacts of COVID-19 is expected to be a gradual process especially in light of current
macro-economic conditions.
We had operated profitably prior to the COVID-19 outbreak and intend to re-achieve
profitability primarily by (i) further expanding our POS network especially under the partner
model by increasing the density of our POSs with a strategic focus on tier one and tier two
cities in the PRC, which will enable us to manage our logistics and operational costs more
efficiently and to better benefit from economies of scale, (ii) further developing our advertising
and system support services alongside the expansion of our POS network, and (iii) effectively
managing our costs and expenses and improving our operating leverage as, other than
share-based payments and certain impairment losses incurred in certain periods during the
Track Record Period, a majority of our general and administrative expenses are relatively fixed
or increasing at a slower pace compared to our business scale, which will enable us to benefit
from economies of scale and our business expansion.
Since December 2022, the PRC government has relaxed its zero-COVID policy, including
removing mass testing and central quarantine requirements and lifting travel restrictions. Many
regions were facing a surge in cases following such relaxation until early February 2023.
Driven by the pivot in COVID-19 policies and the early Chinese New Y ear holiday season,
many offline business operations and consumer traffic across mainland China have started to
recover. Performance at many of our POSs has also started to normalize and improve in 2023.
As a result, we witnessed an increase in average monthly GMV of our vending machines from
RMB2,700 per machine per month in 2022 to RMB2,992 per machine per month for the six
months ended June 30, 2023 and our revenue increased by 9.6% from RMB1,143.1 million for
the six months ended June 30, 2022 to RMB1,252.7 million for the same period in 2023. For
further details, see “— Impact of COVID-19” above.
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Further Expanding Our POS Network
Our POS network rapidly expanded in 2019, and slightly shrank in 2020 primarily as a
result of the COVID-19 pandemic. Our POS network resumed rapid expansion in 2021
primarily due to our promotion of the partner model since 2020. The number of POSs
decreased in 2022 primarily due to regional resurgence of COVID-19 in China in 2022 that
affected consumer traffic in certain consumption scenarios, including restaurants. During the
Track Record Period, a large portion of our gross profit was derived from our unmanned retail
business. In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, gross
profit of our unmanned retail business amounted to RMB683.5 million, RMB557.5 million,
RMB888.1 million, RMB891.4 million, RMB413.5 million and RMB444.5 million,
respectively. The table below sets forth a breakdown of our gross profit per Ubox POS, which
is calculated by dividing gross profit of unmanned retail business by the corresponding number
of monthly Ubox POSs for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
Gross profit per
Ubox POS
(RMB’000) 16.1 9.5 13.9 12.0 5.2 7.0
The significant decrease of our gross profit per Ubox POS from 2019 to 2020 was
primarily due to the COVID-19 pandemic. Going forward, we intend to select more resilient
venues to deploy our vending machines.
To drive our overall revenue growth and achieve long-term profitability at scale, we plan
to increase the number of POSs in different consumption scenarios including schools, factories,
office premises, public places and other types of high-quality sites in tier one, new tier one, tier
two and tier three cities in the PRC. We plan to open approximately 18,000 new POSs over the
two years following the Global Offering, with a strategic focus on tier one and tier two cities
in the PRC, by utilizing our partner model. See “Future Plans and Use of Proceeds.”
To this end, we plan to continue expanding our POS network by further promoting our
partner model in the long run. We will further explore the potential of existing POS partners
and promote their POS development capabilities through studying and sharing successful
examples. We have formed a comprehensive set of methods for sourcing suitable new POS
partners including quality POS partners with ready access to large numbers of POSs. For
example, for office premises, we plan to recruit suppliers of office supplies, air conditioning
equipment or drinking water purification equipment as our POS partners, who already have
prior business relationships with the specific office premises, offering them an additional
monetization channel and opportunities to strengthen their connections. In response to the
impacts of COVID-19, we have been extending our POS partners recruitment through online
means, including arranging live streaming on catching topics such as, POS development skills
coupled with Q&A sessions, questionnaires and follow-up communications, on major social
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media platforms such as Douyin and WeChat, and further standardizing our POS partners’
operations through providing online trainings. In addition, we plan to further promote our
shared warehouse initiative and leverage our operation capabilities with an aim to convert
business customers, such as merchandise wholesale customers to become our POS partners. As
of June 30, 2023, among our merchandise wholesale customers, over 660 were also our shared
warehouse customers, which we intend to further convert into POS partners in the future.
Through the abovementioned measures, we engaged 115 new POS partners in the six months
ended June 30, 2023. Furthermore, with respect to consumption scenarios with more consumer
traffic, airports and subway stations where passenger traffic have been recovering following
the governments’ relaxation of pandemic control measures, we have refocused our business
development resources and restarted negotiations with relevant site owners and POS partners
to redeploy and increase the number of our POSs. Typically some site owners of major
transportation hubs, hospitals, parks, schools or universities arrange biddings for the potential
POSs they hold. As compared to the measures described above to expand our POS network, to
a lessor extent, we attended such biddings or assisted our POS partners in attending such
biddings.
The table below sets forth certain information regarding our POSs obtained through
bidding as of the dates indicated:
As of December 31, As of June 30,
2019 2020 2021 2022 2022 2023
Direct operation model
POSs obtained through bidding 5,234 3,740 4,434 6,093 6,355 4,861
Bidding rate
1 (%) 10.0 20.3 32.5 48.9 47.1 43.4
Partner model
POSs obtained through bidding N/A 6,881 8,531 7,456 8,266 7,053
Bidding rate
1 (%) N/A 17.2 11.9 13.9 14.0 13.9
Note:
1. Bidding rate is calculated using the number of POSs obtained through bidding divided by the number
of Ubox POSs at the end of each period in the Track Record Period under the respective model.
We recorded an overall increase in bidding rate under the direct operation model during
the Track Record Period. We believe this is primarily attributable to our shift from direct
operation model to partner model. POSs under direct operation model are usually considered
strategically important such as schools and transportation hubs, and therefore more frequently
were obtained through bidding. Meanwhile, our POSs under the direct operation model that
were obtained through bidding as a percentage of total number of Ubox POSs as of the same
date remained relatively stable. As of June 30, 2023, 43.4% of our POSs under the direct
operation model (accounting for only 7.9% of the total number of our Ubox POSs as of the
same date) were obtained through bidding.
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As of June 30, 2023, we have assigned a designated team for business development of
transportation hubs. This team actively collects information of new opportunities through
various sources, including the Internet, social media, industry referrals, industry associations
and forums. In addition, this team tracks major airports, railway stations and subway projects
in major cities across the country, especially the bidding timetable of such projects. For
existing transportation hub POSs, our team maintains regular communications with and pays
revisits on a monthly basis to relevant site owners and partners to understand their demands so
as to enhance their satisfaction and negotiates renewal of contracts near the end of each
contract term. Besides transportation hubs, we have also established a team of approximately
60 members from various departments at our headquarters, which is dedicated to supporting
our bidding efforts including project information collection, bidding scheme evaluation and
material preparation. During the Track Record Period, we won over 240 biddings out of
approximately 590 biddings we attended, with a success rate of 51.3%, 42.1%, 40.0%, 33.7%
and 39.5% in 2019, 2020, 2021, 2022 and the six months ended June 30, 2023, respectively,
in terms of number of bidding projects we attended. While the success rate decreased during
the Track Record Period, primarily due to our adjustment of our optimistic bidding strategies
adopted in 2019 in light of the relatively challenging business environment since the
COVID-19 outbreak, we believe our bidding strategies remained effective and there was no
material fluctuation of the number of POSs obtained through biddings attended or assisted by
us. For instance, the number of POSs obtained through bidding with our assistance under the
partner model increased by 24% from 2020 to 2021. In 2023, we plan to participate in not less
than 20 transportation project biddings.
In view of the foregoing, we expect to achieve growth of approximately 3,900 POSs in
the second half of 2023. We started to shift our marketing efforts to our partner model from
2020 after the outbreak of COVID-19 and consider such a shift to the partner model as a
long-term development strategy, instead of an interim measure. We intend to further promote
in the aftermath of COVID-19. Overall, considering the net increase of over 35,000 Ubox POSs
in 2019 before the COVID-19 outbreak, we are confident in our POS development strategies.
Furthermore, we will continue to increase the number of POSs under the direct operation
model through strengthening our cooperation with KAs, which tend to have large number of
POSs at a single site, and turning leading enterprises in industries with growth prospects into
our KAs. We have conducted analysis on leading or influential enterprises in various industries
and formulated plans for developing and maintaining KA customers with cross-city and
multi-POS characteristics such as universities, hotels and apartments as well as those in the
Internet and manufacturing industries. Leveraging our knowledge on operational management
of large number of POSs and the convenience of our pick-and-go cabinets and freshly brewed
beverage vending machines, we are able to identify and assist our KAs deal with pain points
in maintaining large number of POSs. Especially, we are able to promote KA customers to use
our machines and services across all of their offices and premises by leveraging our
cross-regional operation advantages and directly cooperating with their headquarters to address
their demands for lowering costs, increasing efficiency, unifying management across multiple
offices and freeing up management resources. We are also able to leverage our existing
back-end operation system to assist major KA customers in their employee welfare and
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holiday/overtime caring programs (such as adjusting prices of merchandise when KA
customers plan to offer their employees discounts during holidays or when working overtime)
and help them analyze data of such programs and other sales data of their POSs, which we
believe has led to improved customer satisfaction and increased customer stickiness. The
number of POSs at KAs increased by 38.4% from 4,408 as of December 31, 2021 to 6,102 as
of June 30, 2023. Going forward, we will keep our efforts to cooperate with our existing KAs
and identify new potential KAs with an aim to achieve growth of 1,100 POSs in the second half
of 2023. We also maintain close communication with our existing KA customers to explore and
convert their suppliers and customers to become our KA customers. Recently we have
increased our business development efforts and are currently focusing on engaging leading
enterprises in industries with growth prospects to become our KA customers.
According to Frost & Sullivan, the unmanned retail market in mainland China is
underpenetrated, with an average of 0.8 vending machine per thousand population in 2022. As
of December 31, 2022, vending machines in mainland China covered only 8.8% of the
country’s potentially available offline sites, and such penetration rate of offline sites covered
by vending machines is expected to increase to 15.6% by 2027, indicating a vast development
prospect for vending machines in offline retail scenarios. Accordingly, the size of the vending
machine retail market in mainland China is expected to grow from RMB28.9 billion in 2022
to RMB73.9 billion in 2027, with a CAGR of 20.7%. As such, we believe our POS network
expansion plan is supported by strong industry potential and consumer demand. By increasing
the density of our POSs in our POS network, we expect to be able to better manage the
restocking and operation of our POSs, thereby enabling us to save and manage logistics and
operational costs more efficiently and benefit from economies of scale. Besides, we believe the
expansion of our POS network can create synergy that favours the growth of our advertising
and system support services, which generally has a higher gross profit margin. See “— Further
Developing Our Advertising And System Support Services” below for details.
We have taken timely actions in response to the governmental policies and measures to
combat against COVID-19. For instance, we entered into cooperation with certain merchandise
wholesale customers as part of our shared warehouse initiative, under which we would share
our warehouses with each other or we jointly establish new warehouses to save rental costs.
Pursuant to relevant agreements with customers, we may rent a certain area of the customers’
warehouses and pay rent either in cash and/or through merchandise coupons (with which
customers can purchase merchandise from us). The customers are required to ensure clear and
reasonable segmentation of their warehouses based on the nature of merchandise, maintain
sanitation of their warehouses and, based on our orders, load, unload, package and deliver our
merchandise on a first-in-first-out basis and in accordance with the warehouse management
standards agreed by both parties. The customers are responsible for any losses of merchandise
at their warehouses. In certain cases, we were able to leverage our customers’ warehouses to
shorten our re-stocking distance for our POSs. In addition, we also expanded our POS partner
recruitment channels to include online recruitment with a view to attracting POS partners from
different industries, and actively discussed and negotiated with site owners for rent deduction.
In our daily operations, we adhered to our supplier selection policy by working with reliable
suppliers and monitored our stock level using our own internal logistics functions. Since
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December 2022, the PRC government has relaxed its zero-COVID policy, including removing
mass testing and central quarantine requirements and lifting travel restrictions. We will monitor
the effects and after-effects of COVID-19 in light of such change in policies closely and refine
our business expansion plans in response to market conditions in a timely manner.
Having considered (i) the size of the vending machine retail market in mainland China is
expected to grow from RMB28.9 billion in 2022 to RMB73.9 billion in 2027, with a CAGR
of 20.7%, according to Frost & Sullivan, (ii) the increase in the revenue from unmanned retail
business under the partner model during the Track Record Period which evidences the
effectiveness of our partner model, and (iii) our effective measures adopted to navigate the
impact of the COVID-19 outbreak and the recovery of consumer traffic since the relaxation of
COVID-19 policies which is expected to benefit our unmanned retail business and businesses
of POS partners, our Directors are of the view, and the Joint Sponsors concur, that the
aforementioned plans to further expand our POS network are feasible.
Further Developing Our Advertising And System Support Services
Revenue from our advertising and system support services decreased from RMB540.6
million in 2019 to RMB219.6 million in 2020 and further decreased from RMB243.1 million
in 2021 to RMB194.3 million in 2022. Such decrease was primarily due to the decrease in
demand for such services from advertisers owing to the decrease in outdoor consumer traffic
in light of COVID-19 and its resurgence in 2022. Furthermore, revenue from our advertising
and system support services decreased from RMB100.1 million for the six months ended June
30, 2022 to RMB56.5 million for the six months ended June 30, 2023. Average monthly GMV
of our vending machines at Ubox POSs (excluding POSs of POS partners who are restaurant
model partners) in 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023
decreased by 35.5%, 13.5%, 20.2%, 27.6% and 11.5%, respectively, as compared to the level
in 2019. The table below sets forth average monthly GMV of vending machines at Ubox POSs,
excluding POSs of POS partners who are restaurant model partners, and their respective rate
of decrease compared to the level in 2019, for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
Monthly GMV at Ubox
POSs (RMB per machine
per month) 3,382 2,180 2,926 2,700 2,449 2,992
Percentage of decrease
compared to the level in
2019 (%) N/A 35.5 13.5 20.2 27.6 11.5
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However, our advertising and system support services was our most profitable business
line with the highest gross profit margin among our business lines, amounting to 90.3%, 99.7%,
75.9%, 82.5%, 87.9% and 98.8% in 2019, 2020, 2021, 2022 and the six months ended June 30,
2022 and 2023, respectively. In addition, according to Frost & Sullivan, the vending machine
advertising market in mainland China is expected to experience strong growth going forward.
Subsequent to the outbreak of COVID-19, the market size partially recovered in 2022 and is
expected to reach RMB2.2 billion in 2027, representing a CAGR of 34.5% from 2022 to 2027.
In light of the historical high levels of gross profit margin of this segment and the expected
market growth, we intend to further promote our advertising and system support services
alongside the recovery from the outbreak of COVID-19. Specifically, we are actively
monitoring the level of market recovery by assessing the performance of Ubox POSs and
Non-Ubox POSs and will continue to attract more advertisers to use and increase their
spending on our digital advertising services. For merchandise suppliers to whom we provided
merchandise display advertising services, on top of deepening our procurement cooperation
with them, we plan to offer limited discounts for our merchandise display advertising services
before advertisers regain confidence in the market and while their businesses recover. The
discounts to be offered will be determined after arm’s length negotiations taking into account
factors including the type of merchandise display advertising services required and shall be fair
and reasonable. We have entered into framework agreements with some of our major
merchandise suppliers which stipulate that in case we procure their merchandise for our
unmanned retail business, they shall procure our advertising services. With respect to other
types of advertisers, we also plan to offer them certain discounts before they regain confidence
in the market, and actively promote our advertising services to companies in the finance and
the Internet sectors. In light of the recent relaxation of pandemic control measures, we expect
the demand for our advertising services from advertisers in the year ending December 31, 2023
to gradually recover.
Due to the nature of our advertising and system support services, which mainly utilize the
racks, machine bodies and display screens of our machines whose costs were mainly accounted
for under our unmanned retail business, the aforementioned offering of discounts would not
have a material impact on the gross profit margin of our advertising and system support
services. The gross profit margin of our advertising and system support services mainly
fluctuates to the extent we incur subcontractor cost when we acquire online traffic and offline
promotion services from subcontractors (which are mainly advertising agencies) in order to
provide specific advertising services to customers. Other than such subcontractor cost of
advertising resources, only minimal costs for taxes and surcharges are allocated to our
advertising services. See “— Consolidated Statements of Comprehensive Income — Cost of
Sales” for details. We expect the gross profit margin of our advertising and system support
services going forward would experience similar fluctuations to the extent we incur
subcontractor cost but remain high as the trends we observed during the Track Record Period.
FINANCIAL INFORMATION
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--- page 401 ---
In addition, we intend to take advantage of the synergies created by our expanded POS
network and our presence in various consumption scenarios to further monetize the machine
bodies, racks and display screens of our vending machines, including at subway stations,
airports, parks and shopping malls which generated higher level of advertising income before
the COVID-19 outbreak.
Effectively Managing Our Cost and Expenses and Enhancing Operating Leverage
Our ability to manage and control our costs and operating expenses is critical to the
success of our business and our profitability.
Cost of inventories sold constituted the largest component of our cost of sales. The table
below sets forth our cost of inventories sold in absolute amounts and as a percentage of our
total revenue for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
(unaudited)
Cost of inventories
sold (RMB’000) 1,256,210 1,058,640 1,466,389 1,368,474 597,483 720,726
Cost of inventories
sold as a
percentage of
total revenue (%) 46.1 55.7 54.8 54.3 52.3 57.5
As we continue to expand our POS network, we believe we will be able to efficiently
manage cost of inventories sold as a percentage of revenue by implementing a number of
measures, including (i) leveraging our industry leading position and increasing centralized
procurement to secure competitive pricing from our merchandise suppliers, (ii) further
leveraging our data-driven operation system for demand and sales forecast and effective
inventory management to reduce stock-out losses, and (iii) constantly monitoring the sales
performance of merchandise and corresponding costs to timely optimize merchandise mixes
and inventory levels.
FINANCIAL INFORMATION
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--- page 402 ---
Our operating expenses primarily comprise selling and marketing expenses and general
and administrative expenses. Selling and marketing expenses primarily relate to POSs
operation and development expenses. The table below sets forth certain information regarding
our selling and marketing expenses and POSs operation and development expenses for the
periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
(unaudited)
Selling and
marketing
expenses
(RMB’000) 1,023,716 1,083,735 1,077,412 1,155,720 546,736 545,133
Selling and
marketing
expenses as a
percentage of total
revenue (%) 37.5 57.0 40.3 45.9 47.8 43.5
POSs operation and
development
expenses
(RMB’000) 574,570 553,170 585,920 587,354 263,936 261,155
POSs operation and
development
expenses as a
percentage of
selling and
marketing
expenses (%) 56.1 51.0 54.4 50.8 48.3 47.9
POSs operation and
development
expenses as a
percentage of total
revenue (%) 21.1 29.1 21.9 23.3 23.1 20.8
We expect our selling and marketing expenses to grow in absolute amounts as we expand
our POS network. However, we expect selling and marketing expenses as a percentage of
revenue to decrease as our partner model matures which would enable us to benefit from the
operating leverage effect.
FINANCIAL INFORMATION
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--- page 403 ---
Our general and administrative expenses (excluding listing expenses, share-based
payment and impairment loss of goodwill) accounted for 5.7%, 7.5%, 4.0%, 4.2%, 4.4% and
3.1% of our total revenue in 2019, 2020, 2021, 2022 and the six months ended June 30, 2022
and 2023, respectively. We expect that our general and administrative expenses as a percentage
of total revenue will generally decrease in the long term as a result of economies of scale.
During the Track Record Period, we adopted various measures to control costs and
expenses and to improve our operating leverage. Since 2020, we have been actively developing
the partner model to drive the expansion of our POS network and believe this effort allows us
to benefit from operating leverage effect as our POS partners are generally responsible for
sourcing potential sites, the costs for developing POSs, occupancy fees and utility costs. As
such, certain managerial costs and operating expenses do not need to increase in line with
revenue generated from the partner model as it does not require a proportional increase in the
scale of POSs directly operated by us or our own workforce.
In addition, we leverage our technology-based retail platform and algorithms to optimize
our restocking scheduling and route planning to minimize transportation and logistics costs. As
our POS network expands and its density increases, we also expect to be able to further
optimize our restocking scheduling and route planning and thereby more effectively manage
our transportation and logistics. During the Track Record Period, we also rolled out our
pick-and-go cabinets with lower purchase costs (given their smaller size and less complex
internal mechanical system) as compared to beverage vending machines. Being smaller in size
and requiring lower capital investment, our pick-and-go cabinets allow us to expand our
network to a wider range of consumptions scenarios and increases the number of potential sites
for us and our POS partners to deploy our machines. As they are designed to accommodate a
larger variety of merchandise, they also help us seize more sales opportunities.
We have a track record of achieving operating leverage effect as evidenced by the
decrease in general and administrative expenses as a percentage of our revenue from 5.7% in
2019 to 5.1% in 2022. Without considering share-based payments of RMB43.8 million
recognized under general and administrative expenses in the six months ended June 30, 2023
in relation to share incentives granted to our employees, general and administrative expenses
as a percentage of our revenue decreased from 4.8% for the six months ended June 30, 2023
to 4.1% for the same period in 2023. However, we were loss making during the Track Record
Period, primarily because aspects of our business operations and network expansion was
hampered by the COVID-19 outbreak and our monthly GMV per POS decreased. We believe
our operating leverage effect to continue as the negative impact of COVID-19 is alleviated and
the economy gradually recovers.
Based on the foregoing, our Directors believe, and the Joint Sponsors concur, that our
Group’s business is sustainable in the long run. Since December 2022, the restrictive measures
to contain COVID-19 adopted by the PRC government began to be relaxed, such as gradual lift
of travel restrictions. Assuming that the negative effects of COVID-19 will be gradually
alleviated following such relaxation and overall consumer traffic will recover to the
pre-COVID-19 level in the foreseeable future, we expect to remain loss-making in 2023 but
FINANCIAL INFORMATION
– 393 –


--- page 404 ---
achieve a turnaround in 2025. The foregoing forward-looking statements are based on
numerous assumptions regarding our present and future business strategies and the
environment in which we will operate in the future. These forward-looking statements involve
known and unknown risks, uncertainties and other factors, some of which are beyond our
control, and may cause the actual results, performance or achievements, or industry results, to
be materially different from any future results, performance or achievements expressed or
implied by the forward-looking statements. See “Risk Factors — Risks Relating to our
Business and Industry — If we are not able to effectively manage our businesses, our
expansion and growth in new geographical areas, our business and prospects may be materially
and adversely affected” and “Risk Factors — Risks Relating to our Business and Industry —
We are subject to risks and uncertainties faced by companies in a rapidly evolving industry.”
Working Capital Sufficiency
Our Directors are of the opinion that we possess sufficient working capital, including
sufficient cash and liquidity assets, and for at least the next 12 months from the date of this
prospectus, taking into account RMB269.5 million of cash and cash equivalents on hand as of
June 30, 2023, internally generated funds, RMB411.0 million of unutilized banking facilities
as of the Latest Practicable Date and HK$155.9 million of estimated net proceeds from the
Global Offering, assuming an Offer Price of HK$10.40 per Offer Share, being the mid-point
of the Offer Price range of HK$9.40 to HK$11.40 per Offer Share. In addition, as evidenced
by our Pre-IPO Investments and other historical fund-raising activities, we have a good track
record in being able to raise funds from renowned investors to finance our business growth and
expansion. See “History and Development — Pre-IPO Investments.” We believe that the
Global Offering and other potential external financing sources, including those to which we
will gain access after Listing, will provide additional funding for our business expansion
operations.
BASIS OF PREPARATION
The historical financial information has been prepared in accordance with HKFRS issued
by the HKICPA. The historical financial information has been prepared under the historical
cost convention, except for certain financial assets at fair value through profit or loss.
The preparation of the historical financial information in conformity with HKFRS
requires the use of certain critical accounting estimates. It also requires management to
exercise its judgment in the process of applying our accounting policies. The areas involving
a higher degree of judgment or complexity, or areas where assumptions and estimates are
significant to the historical financial information are disclosed in Note 4 to the Accountant’s
Report as set out in Appendix I.
In preparing the historical financial information, we consistently adopted all applicable
new and amended HKFRSs throughout the Track Record Period except for any new
interpretation that were not yet effective.
FINANCIAL INFORMATION
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--- page 405 ---
MATERIAL ACCOUNTING POLICY INFORMATION
We have identified certain accounting policies and estimates that are material to the
preparation of our financial statements in accordance with HKFRS. Some of our accounting
policies involve subjective assumptions, estimates and judgments that affected the application
of policies and reported amounts of assets, liabilities, revenues and expenses, as well as their
accompanying disclosures and the disclosure of contingent liabilities. Uncertainty about these
assumptions and estimates could, in the future, result in outcomes that require a material
adjustment to the carrying amounts of the assets and liabilities affected. When reviewing our
financial statements, the following factors should be considered: (i) our selection of critical
accounting policies, (ii) the judgment and other uncertainties affecting the application of such
policies, and (iii) the sensitivity of reported results to changes in conditions and assumptions.
Our material accounting policy information, estimates, assumptions and judgment made
by our management which have material effect on our financial condition and results of
operations are set forth in detail in Note 2 and Note 4 to the Accountant’s Report as set out in
Appendix I. Estimates, assumptions and judgments are continually re-evaluated and are based
on historical experience and other factors, including expectations of future events that may
have a financial impact on the entity and that are believed to be reasonable under the
circumstances. We set forth below the accounting policies, estimates and judgments that we
believe are critical to the preparation of our financial statements.
Revenue Recognition
We recognize revenue when or as the control of the goods or services is transferred to a
customer. Depending on the terms of the contract and the laws that apply to the contract,
control of the goods and services may be transferred over time or at a point in time. Control
of the goods and services is transferred over time if our performance:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates and enhances an asset that the customer controls as we perform; or
 does not create an asset with an alternative use to us and we have an enforceable
right to payment for performance completed to date.
If control of the goods and services transfers over time, revenue is recognized over the
period of the contract by reference to the progress towards complete satisfaction of that
performance obligation. Otherwise, revenue is recognized at a point in time when the customer
obtains control of the goods and services.
FINANCIAL INFORMATION
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--- page 406 ---
Contracts with customers may include multiple performance obligations. For such
arrangements, we allocate revenue to each performance obligation based on its relative
standalone selling price. We generally determine standalone selling prices based on the prices
charged to customers. If the standalone selling price is not directly observable, it is estimated
using expected cost plus a margin or adjusted market assessment approach, depending on the
availability of observable information. Assumptions and estimations have been made in
estimating the relative selling price of each distinct performance obligation, and changes in
judgements on these assumptions and estimates may impact the revenue recognition.
Under our direct operation model, revenue from unmanned retail business arises from the
end customers that buy merchandise through the vending machines operated by us. Revenue
under the direct operation model is recognized when the control of goods have been transferred
from the vending machines to the customers. Under our partner model, in addition to the
revenue recognized when control of the goods is transferred to the end customers, commissions
shared to POS partners are determined based on certain percentage of the transaction GMV
agreed between us and the POS partners and charged to “selling and marketing expenses.”
We recognize revenue when we satisfy a performance obligation by transferring a
promised good or service to a customer. We shall determine at contract inception whether we
satisfy the performance obligation over time or at a point in time. If control of the goods and
services transfers over time, revenue is recognized over the period of the contract by reference
to the progress towards complete satisfaction of that performance obligation. Otherwise,
revenue is recognized at a point in time when the customer obtains control of the goods and
services.
For displaying advertising services, merchandise display advertising services, machine
body advertising services and operation system services, since the customer receives and
consumes the benefits of our performance as we perform, the performance obligation is
satisfied over the contract period, and the revenue should be recognized over time.
Accordingly, we recognized revenues derived from the above mentioned services ratably over
the contracted period in which the advertisements are displayed or services are provided.
For after-payment advertising services, since the performance obligation is satisfied at a
point in time, the revenue should be recognized at a point in time when the services are
delivered to the customers. Accordingly, revenue derived from after-payment advertising
services is recognized based on actual performance measurement. We recognize the revenue
from the delivery of pay-for click or pay-for instant display advertisements for advertisers to
our users based on the relevant performance measures.
For details, see Note 2.21 to the Accountant’s Report as set out in Appendix I.
FINANCIAL INFORMATION
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--- page 407 ---
Leases
The Group as lessor under operating leases
Lease income from operating leases where we are a lessor is recognized as income on a
straight-line basis over the lease term. Initial direct costs incurred in obtaining an operating
lease are added to the carrying amount of the underlying asset and recognized as expense over
the lease term on the same basis as lease income. The respective leased assets are included in
the balance sheet based on their nature.
The Group as lessee
We enter into contracts for lease of certain offices, warehouses, cars and machinery.
Where the contracts contain both lease and non-lease components, we allocate the
consideration in the contract to the lease and non-lease components based on their relative
stand-alone prices.
At the lease commencement date, we recognize leases as a right-of-use asset and a
corresponding liability, except for short-term leases with lease term of less than 12 months and
leases of low-value assets. When we enter into a lease in respect of low-value assets, we
recognize the lease on a straight-line basis as an expense in profit or loss.
The lease liability is initially recognised on a present value basis of the lease payments.
After initial recognition, the lease payments are discounted using interest rate implicit in the
lease, or if that rate cannot be readily determined, the lessee’s incremental borrowing rate.
Lease liabilities include the net present value of the following lease payments:
 fixed payments (including in-substance fixed payments), less any lease incentives
receivable;
 variable lease payment that are based on an index or a rate, initially measured using
the index or rate as at the commencement date;
 amounts expected to be payable by us under residual value guarantees;
 the exercise price of a purchase option if we are reasonably certain to exercise that
option; and
 payments of penalties for terminating the lease, if the lease term reflects we
exercising that option.
FINANCIAL INFORMATION
– 397 –


--- page 408 ---
Right-of-use assets are recognized initially at cost, comprising the amount of the initial
measurement of lease liability, any lease payments made at or before the commencement date
less any lease incentives received, any initial direct costs and restoration costs. The
right-of-use asset is subsequently stated at cost less accumulated depreciation and impairment
losses.
Share-based benefits
Share-based compensation benefits are provided to employees via the employee option
plan. Information relating to the scheme is set out in Note 28 to the Accountant’s Report as set
out in Appendix I. The fair value of the employee service received in exchange for the grant
of equity instruments is recognized as an expense. The total amount to be expensed is
determined by reference to the fair value of the equity instruments granted:
 including any market performance conditions (e.g., our share price);
 excluding the impact of any service and non-market performance vesting conditions
(e.g., profitability, sales growth targets and remaining an employee of the entity over
a specified time period); and
 including the impact of any non-vesting conditions (e.g., the requirement for
employees to save or holdings shares for a specific period of time).
The total expense is recognized over the vesting period, which is the period over which
all of the specified vesting conditions are to be satisfied. At the end of each period, we revise
our estimates of the number of options that are expected to vest based on the non-market
vesting and service conditions. We recognize the impact of the revision to original estimates,
if any, in profit or loss, with a corresponding adjustment to equity.
Intangible assets
(i) Goodwill
Goodwill is measured as described in Note 2.2.6 to the Accountant’s Report as set out in
Appendix I. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill
is not amortized but it is tested for impairment annually, or more frequently if events or
changes in circumstances indicate that it might be impaired, and is carried at cost less
accumulated impairment losses. Gains and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the goodwill arose. The units or
groups of units are identified at the lowest level at which goodwill is monitored for internal
management purposes, being the operating segments.
FINANCIAL INFORMATION
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--- page 409 ---
(ii) Software
Acquired computer software licenses are capitalized on the basis of the costs incurred to
acquire and bring to use the specific software.
Costs associated with maintaining software are recognized as expenses as incurred.
Development costs that are directly attributable to the design and testing of identifiable and
unique software controlled by us are recognized as intangible assets when the following criteria
are met:
 it is technically feasible to complete the software or database so that it will be
available for use;
 management intends to complete the software or database, and use or sell it;
 there is an ability to use or sell the software or database;
 it can be demonstrated how the software or database will generate probable future
economic benefits;
 adequate technical, financial and other resources to complete the development and
to use or sell the software or database are available; and
 the expenditure attributable to the software or database during its development can
be reliably measured.
Directly attributable costs that are capitalized as part of the software or database include
employee costs and an appropriate portion of relevant overheads.
Capitalized development costs are recorded as intangible assets and amortized from the
point at which the asset is ready for use.
(iii) Research and development expenditures
Research and development expenditures that do not meet the criteria in (ii) above are
recognized as expenses as incurred. Development costs previously recognized as expenses are
not recognized as assets in subsequent period.
(iv) Amortisation method and period
We amortize software licenses using the straight-line method over 3-10 years which is the
best estimation under current business needs.
FINANCIAL INFORMATION
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--- page 410 ---
Property and Equipment
Property and equipment are stated at historical costs less depreciation. Historical costs
include expenditure that are directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate
asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to our Group and the cost of the item can be measured reliably. All other repairs
and maintenance are charged to profit or loss during the financial period in which they are
incurred.
Depreciation is calculated using the straight-line method to allocate their cost, net of their
residual values, over their estimated useful lives or, in the case of leasehold improvements, the
shorter lease term as follows:
Useful lives
Residual
values
V ending Machines 5-10 years 5%
Electronic equipment 5 years 5%
Motor vehicles 5 years 5%
Office equipment and others 5 years 5%
Leasehold improvements Shorter of estimated useful lives
and remaining lease terms
–
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at
the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the
asset’s carrying amount is greater than its estimated recoverable amount (see Note 2.7 to the
Accountant’s Report as set out in Appendix I).
Gains and losses on disposals are determined by comparing the proceeds with the carrying
amount and are recognized in “other gains/(losses), net” in the consolidated statement of
comprehensive income.
Critical Accounting Estimates and Judgments
The preparation of financial statements requires the use of accounting estimates which,
by definition, will seldom equal the actual results. Our management also needs to exercise
judgment in applying our accounting policies.
Estimates and judgments are continually evaluated. They are based on historical
experience and other factors, including expectations of future events that may have a financial
impact on the entity and that are believed to be reasonable under the circumstances.
FINANCIAL INFORMATION
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--- page 411 ---
Impairment of Goodwill
We test annually whether goodwill has suffered any impairment in accordance with the
accounting policy stated in Note 2.6(a) to the Accountant’s Report as set out in Appendix I. In
determining where goodwill is impaired requires an estimation of the recoverable amount of
cash-generating units (“ CGU”) to which goodwill has been allocated. The recoverable amount
of a CGU is determined based on value-in-use calculations which require the use of
assumptions. The calculations use cash flow projections based on financial budgets approved
by management covering a five-year period.
Cash flows beyond the five-year period are extrapolated using the estimated growth rates
stated in Note 18 to the Accountant’s Report as set out in Appendix I. These growth rates are
consistent with forecasts included in industry reports specific to the industry in which each
CGU operates.
The goodwill of our Group mainly arose from the acquisition of Shenzhen Y ouka for its
freshly brewed beverage vending machine business in 2019 as mentioned in Note 18(a) and
Note 33 to the Accountant’s Report as set out in Appendix I, and acquisition of karaoke booth
service business and other vending machine business in previous years. We carry out our
annual impairment test on goodwill by comparing the recoverable amounts of CGU to the
carrying amounts. We consider that the freshly brewed beverage vending machine business,
karaoke booth service business and the other vending machine business represent the smallest
identifiable group of assets that generate cash inflows and are largely independent of the cash
inflows from other assets. The following is a summary of goodwill allocated by us for each
CGU:
Freshly
brewed
beverage
vending
machine
business
Karaoke
booth service
business
Other
vending
machine
business
RMB’000 RMB’000 RMB’000
Y ear ended December 31, 2019
Opening – 10,813 15,454
Additions 168,348 – 567
Closing 168,348 10,813 16,021
Y ear ended December 31, 2020
Opening 168,348 10,813 16,021
Impairment (147,573) (10,813) –
Closing 20,775 – 16,021
FINANCIAL INFORMATION
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--- page 412 ---
Freshly
brewed
beverage
vending
machine
business
Karaoke
booth service
business
Other
vending
machine
business
RMB’000 RMB’000 RMB’000
Y ear ended December 31, 2021
Opening 20,775 – 16,021
Closing 20,775 – 16,021
Y ear ended December 31, 2022
Opening 20,775 – 16,021
Closing 20,775 – 16,021
(Unaudited)
Six months ended June 30, 2022
Opening 20,775 – 16,021
Closing 20,775 – 16,021
Six months ended June 30, 2023
Opening 20,775 – 16,021
Closing 20,775 – 16,021
Impairment review on goodwill has been conducted by our management as of December
31, 2019, 2020, 2021, 2022 and June 30, 2023 according to HKAS 36 “Impairment of assets.”
We carried out our impairment test on goodwill by comparing the recoverable amounts of each
CGU to their carrying amounts. For the purpose of goodwill impairment review, the
recoverable amount of a CGU (or group of CGUs) is the higher of its fair value less cost of
disposal (“ FVLCOD ”) and its value in use (“ VIU”). We have engaged an independent external
valuer for performing the goodwill impairment assessments as of December 31, 2019, 2020,
2021, 2022 and June 30, 2023. FVLCOD was determined using discounted cash flow
projections of which the accuracy and reliability of the information is reasonably assured by
the appropriate budgeting, forecast and control process established by us. We leveraged our
experiences in the industries and prepared the cash flow projections from the perspective of
other market participants. The discount rates adopted were derived from the analysis of
valuer’s interpretation of time value and specific risk of prevailing market participants adjusted
for the difference in the marketability. VIU was determined using the cash flow projections
FINANCIAL INFORMATION
– 402 –


--- page 413 ---
based on business projection covering a five-year period. We leveraged our extensive
experiences in the industries and prepared the forecast based on the past performance and our
expectation of future business projection and market developments. The discount rates adopted
were derived from the analysis of our time value and specific risk.
As of December 31, 2019, the recoverable amount of each of the freshly brewed beverage
vending machine business and karaoke booth service business CGUs was based on FVLCOD,
which is measured using discounted cash flow projections. Based on the results of the
impairment assessments, no impairment loss on the goodwill relating to freshly brewed
beverage vending machine business or karaoke booth service business was recognized as of
December 31, 2019.
During the year ended December 31, 2020, goodwill impairment arose in our freshly
brewed beverage vending machine business due to the outbreak of COVID-19 epidemic. Our
freshly brewed beverage vending machine business operation was suffered substantially, the
promotion of freshly brewed beverage vending machine in mainland China was experiencing
a decline in the number, as well as lower-than-expected profits from certain individual projects.
As of December 31, 2020, the recoverable amount of the freshly brewed beverage vending
machine business CGU was based on FVLCOD, which is measured using discounted cash flow
projections prepared from market participants perspective. Based on the results of the
impairment assessments, we recognized an impairment provision of approximately RMB147.6
million against the carrying amount of goodwill relating to the acquired freshly brewed
beverage vending machine business.
During the year ended December 31, 2020, goodwill impairment arose in the Group’s
karaoke booth service business because people were afraid to sing in a confined space after the
outbreak of COVID-19. As of December 31, 2020, the recoverable amount of the CGU was
determined based on VIU. Based on the results of the impairment assessments, we recognized
full impairment provision of goodwill, as well as property and equipment intangible assets and
right-of-use assets relating to the acquired karaoke booth service business.
FINANCIAL INFORMATION
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--- page 414 ---
The impairment losses for the year ended December 31, 2020 related to unmanned retail
business segment and other services segment are the impairment losses of the freshly brewed
beverage vending machine business CGU and the impairment losses of the karaoke booth
service business, respectively. Details are below:
Karaoke
booth service
business/
Others
Freshly
brewed
beverage
vending
machine
business/
Unmanned
retail business
RMB’000 RMB’000
Impairment losses of goodwill 10,813 147,573
Impairment losses of property and equipment 120,136 –
Impairment losses of intangible assets 1,153 –
Impairment losses of right-of-use assets 44,302 –
176,404 147,573
During the years ended December 31, 2021, 2022 and the six months ended June 30,
2023, the recoverable amount of the freshly brewed beverage vending machine business CGU
was based on FVLCOD, which was measured using discounted cash flow projections and
higher than the carrying amount, thus no impairment loss on the goodwill relating to freshly
brewed beverage vending machine business was recognized. The cash flow projections was
prepared from market participants’ perspective for the purpose of impairment reviews.
During the years ended December 31, 2019, 2020, 2021, 2022 and the six months ended
June 30, 2023, the recoverable amount of the other vending machine business CGU was based
on FVLCOD, which is measured using discounted cash flow projections. Based on the results
of the impairment assessments, no impairment loss on the goodwill relating to other vending
machine business CGU was recognized as of December 31, 2019, 2020, 2021, 2022 and June
30, 2023.
FINANCIAL INFORMATION
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--- page 415 ---
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, based on management’s
assessment on the recoverable amounts, the headroom of the freshly brewed beverage vending
machine business, karaoke booth service business and other vending machine business were as
below:
Freshly
brewed
beverage
vending
machine
business
Karaoke
booth service
business
Other
vending
machine
business
RMB’000 RMB’000 RMB’000
As of December 31, 2019 1,005* 33,509 4,641,435
As of December 31, 2020 Nil Nil 5,484,316
As of December 31, 2021 19,079 N/A 4,183,346
As of December 31, 2022 16,763 N/A 3,352,186
As of June 30, 2023 16,978 N/A 3,446,245
* Freshly brewed beverage vending machine business was consolidated by our Group on December 19,
2019 due to our further acquisition of 46% equity interest of Shenzhen Y ouka from other shareholders
and the recoverable amount approximates to its carrying value as of December 31, 2019.
The following table sets out the level-3 key assumptions for those CGUs that have
goodwill allocated to them:
Freshly
brewed
beverage
vending
machine
business
Karaoke
booth service
business
Other
vending
machine
business
As of December 31, 2019
Revenue growth rate during the
projection period
41.7% to
351.3%
3.0% to
17.9%
9.7% to
28.8%
Terminal value growth rate 3.0% 3.0% 3.0%
Gross margin during the
projection period
66.2% to
67.2%
62.9% to
77.9%
46.3% to
47.0%
Post-tax discount rates 16.5% 17.0% 16.5%
Discount for lack of marketability 20.0% 20.0% 20.0%
FINANCIAL INFORMATION
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--- page 416 ---
Freshly
brewed
beverage
vending
machine
business
Karaoke
booth service
business
Other
vending
machine
business
As of December 31, 2020
Revenue growth rate during the
projection period
54.0% to
67.6%
-23.2% to
3.0%
36.3% to
59.4%
Terminal value growth rate 3.0% N/A 3.0%
Gross margin during the
projection period
37.7% to
51.2%
-41.6% to
1.2%
33.5% to
36.3%
Post-tax discount rate/Pre-tax
discount rate (karaoke booth
service business) 17.0% 17.5% 15.0%
Discount for lack of marketability 20.0% N/A 20.0%
As of December 31, 2021
Revenue growth rate during the
projection period
18.4% to
79.0% N/A
22.6% to
42.1%
Terminal value growth rate 3.0% N/A 3.0%
Gross margin during the
projection period 58.5% N/A
42.0% to
43.3%
Post-tax discount rates 17.5% N/A 15.0%
Discount for lack of marketability 20.0% N/A 15.0%
As of December 31, 2022
Revenue growth rate during the
projection period
16.4% to
97.7% N/A
5.0% to
44.6%
Terminal value growth rate 2.5% N/A 2.5%
Gross margin during the
projection period 67.5% N/A
43.2% to
44.2%
Post-tax discount rates 17.5% N/A 15.0%
Discount for lack of marketability 15.0% N/A 10.0%
As of June 30, 2023
Revenue growth rate during the
projection period
14.7% to
86.9% N/A
9.2% to
38.7%
Terminal value growth rate 2.5% N/A 2.5%
Gross margin during the
projection period 69.0% N/A
43.5% to
45.5%
Post tax discount rates 17.0% N/A 15.0%
Discount for lack of marketability 15.0% N/A 10.0%
FINANCIAL INFORMATION
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--- page 417 ---
Our management considers the impact of possible changes in a number of key
assumptions, including revenue growth rate during the projection period, terminal value
growth rate, gross margin during the projection period, and post tax discount rates and discount
for lack of marketability. Further details of the level-3 key assumptions for those for our
freshly brewed beverage vending machine business, karaoke booth service business and other
vending machine business are set out in Note 18(b) to the Accountant’s Report as set out in
Appendix I. Revenue growth rates and gross profit margins were determined by our
management based on past performance and the future business plan of the cash-generating
unit expected to be achieved. The expansion of freshly brewed beverage vending machine
business was adversely impacted by COVID-19 and the revenue generated by the freshly
brewed beverage vending business was lower than our management’s expectations, so the
revenue growth rate during the projection period was adjusted from the year ended December
31, 2020 and afterward. Discount rates reflect market assessments of the time value and the
specific risks relating to the industry. The post-tax discount rates adopted are based on the
weighted average cost of capital (“ W ACC”) of each of the two cash-generating units, mainly
involving four key parameters: (i) cost of equity estimated from the capital asset pricing model,
(ii) small size risk premium, (iii) company-specific risk premium and (iv) capital structure. As
above mentioned key parameters only had immaterial changes between December 31, 2021 and
2022, the adopted W ACC did not change as of December 31, 2022. The terminal value growth
rates were based on the expected inflation rates, which have been applied to the terminal year’s
cash flows. The discount for lack of marketability was determined by the independent external
valuer by use the Black-Scholes model.
Further details of the impairment review are set out in Note 18(b) to the Accountant’s
Report as set out in Appendix I.
The following table sets out the sensitivity analysis of the negative impact of variation in
each of the key assumptions for goodwill impairment that make the recoverable amount equal
to the carrying amount for the freshly brewed beverage vending machine business, karaoke
booth services business and other vending machine business.
FINANCIAL INFORMATION
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--- page 418 ---
Freshly brewed
beverage vending
machine business
Karaoke booth
services business
Other vending
machine business
As of December 31, 2019
Decrease in revenue growth rate
p.a. during the projection period
0.05% 4.58% 39.51%
Decrease in terminal value growth
rate
0.01% 2.82% 3% decrease in terminal
value growth rate will
decrease the headroom
of other vending
machine business by
approximately
RMB981,945,000
Decrease gross margin p.a. during
the projection period
0.02% 3.1% 10.0%
Increase post-tax discount rate 0.01% 1.79% 25.80%
Increase discount lack of
marketability
0.16% 8.28% 64.51%
As of December 31, 2020
Decrease in revenue growth rate
p.a. during the projection period
N/A N/A 50.23%
Decrease in terminal value growth
rate
N/A N/A 3% decrease in terminal
value growth rate will
decrease the headroom
of other vending
machine business by
approximately
RMB1,182,681,000
Decrease gross margin p.a. during
the projection period
N/A N/A 10.53%
Increase post-tax discount rate N/A N/A 35.92%
Increase discount lack of
marketability
N/A N/A 68.91%
As of December 31, 2021
Decrease in revenue growth rate
p.a. during the projection period
6.23% N/A 40.86%
Decrease in terminal value growth
rate
3% decrease in terminal
value growth rate will
decrease the headroom
of freshly brewed
beverage vending
machine business by
approximately
RMB15,648,000
N/A 3% decrease in terminal
value growth rate will
decrease the headroom
of other vending
machine business by
approximately
RMB845,491,000
Decrease gross margin p.a. during
the projection period
2.70% N/A 9.62%
Increase post-tax discount rate 2.45% N/A 33.02%
Increase discount lack of
marketability
16.68% N/A 69.33%
FINANCIAL INFORMATION
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--- page 419 ---
Freshly brewed
beverage vending
machine business
Karaoke booth
services business
Other vending
machine business
As of December 31, 2022
Decrease in revenue growth rate
p.a. during the projection period
5.80% N/A 39.51%
Decrease in terminal value growth
rate
2.5% decrease in
terminal value growth
rate will decrease the
headroom of freshly
brewed beverage
vending machine
business by
approximately
RMB11,665,000
N/A 2.5% decrease in
terminal value growth
rate will decrease the
headroom of other
vending machine
business by
approximately
RMB560,174,000
Decrease gross margin p.a. during
the projection period
2.99% N/A 9.07%
Increase post-tax discount rate 2.38% N/A 33.35%
Increase discount lack of
marketability
18.23% N/A 73.71%
As of June 30, 2023
Decrease in revenue growth rate
p.a. during the projection period
5.31% N/A 42.17%
Decrease in terminal value growth
rate
2.5% decrease in
terminal value growth
rate will decrease the
headroom of other
vending machine
business by
approximately
RMB12,496,000
N/A 2.5% decrease in
terminal value growth
rate will decrease the
headroom of other
vending machine
business by
approximately
RMB555,194,000
Decrease gross margin p.a. during
the projection period
3.02% N/A 9.11%
Increase post-tax discount rate 2.34% N/A 44.87%
Increase discount lack of
marketability
17.01% N/A 76.58%
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, our management believes
that any reasonably possible change in key assumptions of the fair value less cost of disposals
would not cause the carrying amount to exceed the recoverable amount of the other vending
machine business CGU. As of December 31, 2019, 2021, 2022 and June 30, 2023, adverse
changes in key assumptions applied in the sensitivity analysis would cause impairment loss of
the freshly brewed beverage vending machine business CGU. As of December 31, 2019,
adverse changes in key assumptions applied in the sensitivity analysis would cause impairment
loss of the karaoke booth services business CGU.
FINANCIAL INFORMATION
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For further details of impairment charge, key assumptions which are made by our
management and third-party valuer and impact of possible changes in key assumptions see
Note 18 to the Accountant’s Report as set out in Appendix I.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
The following table sets forth our consolidated statements of comprehensive income in
absolute amounts and as percentages of revenue for the periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Revenue 2,727,461 100.0 1,902,010 100.0 2,676,237 100.0 2,519,224 100.0 1,143,090 100.0 1,252,678 100.0
Cost of sales (1,398,265) (51.3) (1,343,449) (70.6) (1,575,113) (58.9) (1,442,488) (57.3) (632,853) (55.4) (734,702) (58.7)
Gross profit 1,329,196 48.7 558,561 29.4 1,101,124 41.1 1,076,736 42.7 510,237 44.6 517,976 41.3
Selling and marketing expenses (1,023,716) (37.5) (1,083,735) (57.0) (1,077,412) (40.3) (1,155,720) (45.9) (546,736) (47.8) (545,133) (43.5)
General and administrative
expenses (156,075) (5.7) (511,016) (26.9) (123,347) (4.6) (127,405) (5.1) (54,306) (4.8) (95,146) (7.6)
Research and development
expenses (57,301) (2.1) (41,484) (2.2) (36,761) (1.4) (31,556) (1.3) (17,668) (1.5) (15,098) (1.2)
Net impairment losses on
financial assets (10,858) (0.4) (58,389) (3.1) (28,224) (1.1) (9,264) (0.4) (6,904) (0.6) (842) (0.1)
Other income 17,112 0.6 20,199 1.1 12,269 0.5 12,027 0.5 4,140 0.4 2,923 0.2
Other gains/(losses), net 11,344 0.4 (19,844) (1.0) (14,655) (0.5) (8,488) (0.3) 821 0.1 (2,920) (0.2)
Operating profit/(loss) 109,702 4.0 (1,135,708) (59.7) (167,006) (6.3) (243,670) (9.7) (110,416) (9.7) (138,240) (11.0)
Finance costs (58,688) (2.2) (32,344) (1.7) (13,517) (0.5) (13,331) (0.5) (7,260) (0.6) (4,584) (0.4)
Share of results of investments
accounted for using the
equity method (7,169) (0.3) (3,472) (0.2) (4,092) (0.2) (15,255) (0.6) (4,786) (0.4) (3,821) (0.3)
Profit/(loss) before
income tax 43,845 1.6 (1,171,524) (61.6) (184,615) (6.9) (272,256) (10.8) (122,462) (10.7) (146,645) (11.7)
Income tax expense (4,196) (0.1) (12,672) (0.7) (3,579) (0.1) (10,813) (0.4) (5,937) (0.5) (744) (0.1)
Profit/(loss) for the
year/period 39,649 1.5 (1,184,196) (62.3) (188,194) (7.0) (283,069) (11.2) (128,399) (11.2) (147,389) (11.8)
FINANCIAL INFORMATION
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For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Other comprehensive
income/(loss), net of tax 1 0.0 2 0.0 – – – – – – – –
Total comprehensive
income/loss for the
year/period 39,650 1.5 (1,184,194) (62.3) (188,194) (7.0) (283,069) (11.2) (128,399) (11.2) (147,389) (11.8)
Profit/(loss) for the year/period
attributable to:
– Owners of the Company 45,142 1.7 (1,172,461) (61.6) (185,000) (6.9) (284,529) (11.3) (127,479) (11.2) (152,480) (12.2)
– Non-controlling interests (5,493) (0.2) (11,735) (0.6) (3,194) (0.1) 1,460 0.1 (920) (0.1) 5,091 0.4
39,649 1.5 (1,184,196) (62.3) (188,194) (7.0) (283,069) (11.2) (128,399) (11.2) (147,389) (11.8)
Non-HKFRS Measures
To supplement our financial information which are presented in accordance with HKFRS,
we use non-HKFRS measures, namely, adjusted EBITDA and adjusted net profit or loss, as
additional financial measures, which are not required by, or presented in accordance with,
HKFRS. We believe that such non-HKFRS measures facilitate comparisons of operating
performance from period to period and company to company by eliminating potential impacts
of certain items. We believe that such measures provide useful information to investors and
others in understanding and evaluating our consolidated results of operations in the same
manner as they help our management. However, our presentation of adjusted EBITDA and
adjusted net profit or loss may not be comparable to similarly titled financial measures
presented by other companies. The use of such non-HKFRS measures have limitations as
analytical tools, and you should not consider them in isolation from, or as substitute for
analysis of, our results of operations or financial condition as reported under HKFRS.
We define adjusted EBITDA (non-HKFRS measure) as EBITDA (which is profit/(loss)
for the year/period plus depreciation of property and equipment and right-of-use assets,
amortization of intangible assets, income tax expenses and interest expenses on borrowings and
lease liabilities) for the year/period adjusted by adding (i) share-based payment and (ii) listing
expenses.
We define adjusted net profit/(loss) (non-HKFRS measure) as profit/(loss) for the
year/period adjusted for (i) share-based payment and (ii) listing expenses.
FINANCIAL INFORMATION
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Share-based payment consisted of non-cash expenses arising from granting options to
eligible individuals under the 2020 Incentive Scheme and the Pre-IPO Incentive Scheme and
does not result in cash outflow. Listing expenses are expenses related to the Global Offering
and added back because they were incurred for the purpose of the Listing.
The following table sets out adjusted EBITDA (non-HKFRS measure) and adjusted net
profit/(loss) (non-HKFRS measure), and a reconciliation from profit/(loss) for the year/period
to adjusted EBITDA (non-HKFRS measure) and adjusted net profit/(loss) (non-HKFRS
measure) for the periods indicated.
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit/(loss) for the
year/period 39,649 (1,184,196) (188,194) (283,069) (128,399) (147,389)
Add
Depreciation of
property and
equipment, right-
of-use assets 203,669 276,669 202,364 242,030 122,329 121,837
Amortization of
intangible assets 13,167 17,545 17,423 15,842 8,045 7,675
Income tax expenses 4,196 12,672 3,579 10,813 5,937 744
Interest expenses on
borrowings and
lease liabilities 58,688 32,344 13,517 13,331 7,260 4,584
EBITDA 319,369 (844,966) 48,689 (1,053) 15,172 (12,549)
Add
Share-based payment – 210,918 1,500 – – 49,527
Listing expenses – – 16,411 22,077 3,790 6,581
Adjusted EBITDA
(non-HKFRS
measure) 319,369 (634,048) 66,600 21,024 18,962 43,559
Profit/(loss) for the
year/period 39,649 (1,184,196) (188,194) (283,069) (128,399) (147,389)
Add
Share-based payment – 210,918 1,500 – – 49,527
Listing expenses – – 16,411 22,077 3,790 6,581
Adjusted net
profit/(loss)
(non-HKFRS
measure) 39,649 (973,278) (170,283) (260,992) (124,609) (91,281)
FINANCIAL INFORMATION
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SELECTED ITEMS FROM CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
Revenue
Revenue by business segment
During the Track Record Period, we generated revenue from (i) unmanned retail business,
(ii) advertising and system support services, (iii) merchandise wholesale, (iv) vending machine
sales and leases, and (v) others. The following table sets forth our revenue by business segment
for the periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Unmanned retail business 1,539,891 56.5 1,336,763 70.3 1,915,116 71.6 1,974,657 78.4 913,388 79.9 986,795 78.8
– Direct operation model 1,289,146 47.3 574,339 30.2 435,917 16.3 362,309 14.4 158,849 13.9 183,752 14.7
– Partner model 250,745 9.2 762,424 40.1 1,479,199 55.3 1,612,348 64.0 754,539 66.0 803,043 64.1
Advertising and system support
services 540,600 19.8 219,561 11.5 243,120 9.1 194,271 7.7 100,074 8.8 56,450 4.5
– Digital advertising services 518,874 19.0 203,095 10.6 224,706 8.4 176,216 7.0 91,314 8.0 50,415 4.0
– Operation system support 21,726 0.8 16,466 0.9 18,414 0.7 18,055 0.7 8,760 0.8 6,035 0.5
Merchandise wholesale 297,900 10.9 115,485 6.1 40,516 1.5 131,795 5.2 54,103 4.7 110,685 8.8
V ending machine sales and
leases 91,485 3.4 47,040 2.5 44,241 1.7 33,840 1.3 16,149 1.4 11,712 0.9
Others 257,585 9.4 183,161 9.6 433,244 16.1 184,661 7.4 59,376 5.2 87,036 7.0
Total 2,727,461 100.0 1,902,010 100.0 2,676,237 100.0 2,519,224 100.0 1,143,090 100.0 1,252,678 100.0
Unmanned retail business
Under our unmanned retail business, we offer consumers swift and convenient access to
a broad selection of FMCG, including bottled beverages, snacks, freshly brewed coffee and
other beverages, and generate revenue from selling them to consumers through our vast
network of vending machines. Revenue generated from our unmanned retail business was
calculated based on GMV of vending machines deducted by value-added tax and discounts in
promotional campaigns. In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and
2023, revenue generated from unmanned retail business amounted to approximately
RMB1,539.9 million, RMB1,336.8 million, RMB1,915.1 million, RMB1,974.7 million,
RMB913.4 million and RMB986.8 million, respectively, representing 56.5%, 70.3%, 71.6%,
78.4%, 79.9% and 78.8% of our total revenue in the same periods, respectively.
FINANCIAL INFORMATION
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--- page 424 ---
We expand our unmanned retail business primarily through our sales force and POS
partners. Commencing from 2020, we have started to adopt the partner model in addition to the
direct operation model as we believe this allows more flexible and efficient network expansion,
where the partner model facilitates site acquisitions and enhances our efficiency with
simplified POS sourcing and development. We generally adopt the direct operation model for
POSs at strategically important sites where we source POS sites directly, and engage POS
partners to assist us with sourcing and establishing other POSs, where POS partners are
responsible for the occupancy fee plus utility cost. As of December 31, 2019, 2020, 2021, 2022
and June 30, 2023, 17.2%, 68.5%, 84.0%, 81.2% and 81.9% of our Ubox POSs were operated
under the partner model, respectively. As a result, revenue generated from POSs operated by
POS partners increased from RMB250.7 million in 2019 to RMB762.4 million in 2020,
RMB1,479.2 million in 2021 and RMB1,612.3 million in 2022, and further increased from
RMB754.5 million for the six months ended June 30, 2022 to RMB803.0 million for the same
period in 2023, accounting for 16.3%, 57.0%, 77.2%, 81.7%, 82.6% and 81.4% of revenue
generated from our unmanned retail business for the same periods, respectively.
Advertising and system support services
During the Track Record Period, leveraging our expansive network of POSs and our deep
understanding of consumer behaviors, we offer digital advertising services to brand owners,
merchandise suppliers, payment platforms and other advertising agencies by displaying their
advertisements, images or brands on the touchscreens or bodies of our vending machines, or
through the provision of after-payment advertising services and merchandise display
advertising services. During the Track Record Period, our revenue from digital advertising
services was generally determined by demand for such services from advertisers, which was
impacted by macro-economic conditions, and the expansiveness of our POS network, which
represents our capacity to reach consumers. During the Track Record Period, revenue from
digital advertising services also relates to the number of new POSs opened which affects the
amount of services fees we may receive from Alipay China for the advertising and promotion
of its payment service products. For details of service fees from Alipay China, see “Connected
Transactions – Partially-exempt Continuing Connected Transactions – Advertising Cooperation
Framework Agreement.” In addition, we provide operation system support to Non-Ubox POS
operators by allowing them to connect their machines to our operation system.
In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, revenue
generated from the provision of advertising and system support services amounted to
RMB540.6 million, RMB219.6 million, RMB243.1 million, RMB194.3 million, RMB100.1
million and RMB56.5 million, respectively, representing 19.8%, 11.5%, 9.1%, 7.7%, 8.8% and
4.5% of our total revenue for the same periods, respectively.
FINANCIAL INFORMATION
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Merchandise wholesale
During the Track Record Period, in order to leverage our operation and digitalization
capabilities, we offer merchandise wholesale services to wholesale customers and certain
non-Ubox POS operators who already operate vending machines and empower them to improve
operational efficiency.
Revenue from merchandise wholesale amounted to RMB297.9 million, RMB115.5
million, RMB40.5 million, RMB131.8 million, RMB54.1 million and RMB110.7 million,
respectively in 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023,
representing 10.9%, 6.1%, 1.5%, 5.2%, 4.7% and 8.8% of our total revenue for the same
periods, respectively.
V ending machine sales and leases
During the Track Record Period, we offer vending machine sales and leases to our
Non-Ubox POS operators. In addition, we provide hardware support services including
machine installation and maintenance services.
Revenue from vending machine sales and leases amounted to RMB91.5 million,
RMB47.0 million, RMB44.2 million, RMB33.8 million, RMB16.1 million and RMB11.7
million, respectively in 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and
2023, representing 3.4%, 2.5%, 1.7%, 1.3%, 1.4% and 0.9% of our total revenue for the same
periods, respectively.
Others
During the Track Record Period, our revenue from others segment primarily consisted of
revenue generated from (i) mobile device distribution services, which comprise unmanned
mobile phones and accessories retail solutions, (ii) operating M-Bar self-service karaoke
booths, in which customers generally pay by number of songs or by the time spent in our
karaoke booths or to a lesser extent, customers (outside Beijing and Shanghai) may purchase
a monthly pass for access to our karaoke booths, (iii) karaoke booths sales and leases, and (iv)
karaoke booth operation system support. Revenue from others segment amounted to RMB257.6
million, RMB183.2 million, RMB433.2 million, RMB184.7 million, RMB59.4 million and
RMB87.0 million, respectively, in 2019, 2020, 2021, 2022 and the six months ended June 30,
2022 and 2023, representing 9.4%, 9.6%, 16.1%, 7.4%, 5.2% and 7.0% of our total revenue for
the same periods, respectively. We have decided that karaoke booth services will no longer be
our Group’s development focus and we currently are only maintaining our operation of existing
karaoke booths while cutting down some under-performing machines in light of the negative
impact of COVID-19 on this business segment.
FINANCIAL INFORMATION
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Cost of Sales
Our cost of sales comprises (i) cost of inventories sold, (ii) subcontractor cost of
advertising resources, (iii) depreciation of property and equipment, (iv) depreciation of
right-of-use assets, (v) taxes and surcharges, (vi) impairment loss of inventories, and (vii)
impairment loss of property and equipment and right-of-use assets. The following table sets
forth a breakdown of our cost of sales by nature for the periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Cost of inventories sold 1,256,210 89.8 1,058,640 78.8 1,466,389 93.1 1,368,474 94.9 597,483 94.4 720,726 98.1
Subcontractor cost of
advertising resources 50,315 3.6 499 0.0 58,095 3.7 33,507 2.3 11,908 1.9 478 0.1
Depreciation of property and
equipment 45,241 3.2 37,780 2.8 19,055 1.2 15,428 1.1 9,527 1.5 2,852 0.4
Depreciation of right-of-use
assets 33,853 2.4 26,014 1.9 24,810 1.6 18,095 1.3 11,104 1.8 6,144 0.8
Taxes and surcharges 10,116 0.7 2,166 0.2 6,764 0.4 6,984 0.4 2,831 0.4 4,502 0.6
Impairment loss of
inventories 2,530 0.3 53,912 4.0 – – – – – – – –
Impairment loss of
property and equipment and
right-of-use assets – – 164,438 12.3 – – – – – – – –
Total 1,398,265 100.0 1,343,449 100.0 1,575,113 100.0 1,442,488 100.0 632,853 100.0 734,702 100.0
Cost of inventories sold represents costs relating to the procurement of (i) FMCG such as
food and beverages sold through our vending machines, (ii) mobile phones and accessories in
connection with our mobile device distribution services under our others segment, and (iii)
machines sold.
Subcontractor cost of advertising resources relate to our provision of after-payment
advertising services to customers. See “Business — Our Product and Service Offerings —
Advertising and System Support Services — Digital Advertising Services” for details. In order
to provide such advertising services to customers, we may from time to time acquire online
traffic and offline promotion services from subcontractors. Such subcontractors mainly include
advertisement agencies which have abundant advertising resources including access to media
channels and potential consumers, such as through mobile applications, WeChat groups and
offline digital screens.
FINANCIAL INFORMATION
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Depreciation of right-of-use assets represents depreciation of our machines, primarily
karaoke booths and leased out vending machines purchased by us under finance lease
arrangement and leased to Non-Ubox POS operators. For further details of our finance lease
arrangements with machine manufacturers, see “Business — Our Suppliers — Machine
Manufacturers.”
Depreciation of property and equipment represents depreciation of our machines,
primarily karaoke booths and leased out vending machines leased to Non-Ubox POS operators.
Depreciation of property and equipment decreased from 2019 to 2020 primarily due to the
decrease in number of karaoke booths and impairment recognised for karaoke booths as a result
of the COVID-19 outbreak.
Taxes and surcharges represent maintenance and construction tax and educational surtax
and other miscellaneous taxes. The decrease in taxes and surcharges from 2019 to 2020 was
primarily due to the decrease in value-added tax resulting from the decrease in our revenue as
a result of COVID-19. The increase in taxes and surcharges from 2020 to 2021 was generally
in line with the growth of our business as COVID-19 had been largely contained in
China in 2021. Taxes and surcharges remained relatively stable in 2021 and 2022. The increase
in taxes and surcharges for the six months ended June 30, 2023 as compared to the same period
in 2022 was primarily due to the increase in value-added tax resulting from the increase in sales
following the relaxation of COVID-19 policies and overall recovery of consumer traffic and
business activities.
Impairment loss of inventories represents impairment loss on our non-core types of
machines such as orange juice machines, coconut juice machines and karaoke booths held for
sale. We recognized RMB53.9 million of impairment loss of inventories in 2020 primarily
because we were unable to put them into operation or sell them as a result of the COVID-19
pandemic with reduced foot traffic.
Impairment loss of property and equipment and right-of-use assets represents impairment
loss on karaoke booths in operation. We recognized RMB164.4 million in impairment loss of
property and equipment and right-of-use assets in 2020 primarily because our karaoke booth
business was adversely affected by COVID-19 in 2020.
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Gross Profit and Gross Profit Margin
The following table sets forth our gross profit and gross profit margin by business
segment for the periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Unmanned retail
business 683,467 44.4 557,516 41.7 888,056 46.4 891,398 45.1 413,543 45.3 444,458 45.0
Advertising and system
support services 488,280 90.3 218,812 99.7 184,411 75.9 160,225 82.5 87,918 87.9 55,769 98.8
– Digital advertising
services 466,634 89.9 202,365 99.6 166,431 74.1 142,233 80.7 79,180 86.7 49,764 98.7
– Operation system
support 21,646 99.6 16,447 99.9 17,980 97.6 17,992 99.7 8,738 99.7 6,005 99.5
Merchandise wholesale 14,669 4.9 4,029 3.5 2,965 7.3 5,225 4.0 2,834 5.2 3,990 3.6
V ending machine sales
and leases 15,147 16.6 (32,224) (68.5) 13,887 31.4 10,792 31.9 2,981 18.5 3,165 27.0
Others 127,633 49.5 (189,572) (103.5) 11,805 2.7 9,096 4.9 2,961 5.0 10,594 12.2
Total 1,329,196 48.7 558,561 29.4 1,101,124 41.1 1,076,736 42.7 510,237 44.6 517,976 41.3
Our gross profit was RMB1,329.2 million, RMB558.6 million, RMB1,101.1 million,
RMB1,076.7 million, RMB510.2 million and RMB518.0 million in 2019, 2020, 2021, 2022
and the six months ended June 30, 2022 and 2023, respectively. The decrease in gross profit
from RMB1,329.2 million in 2019 to RMB558.6 million in 2020 was mainly attributable to (i)
the decrease in our revenue as a result of the COVID-19 outbreak, and (ii) the increase in our
impairment losses of inventories, and property and equipment and right-of-use assets primarily
attributable to our non-core types of machines such as karaoke booths in operation and orange
juice machines, coconut juice machines and karaoke booths held for sale as a result of the
COVID-19 outbreak. Specifically, vending machine sales and leases and others segment
recorded gross losses in 2020 primarily due to the increase in impairment losses attributable
to our non-core types of machines held for sale and karaoke booths in operation as a result of
the COVID-19 outbreak. The increase in gross profit from RMB558.6 million in 2020 to
RMB1,101.1 million in 2021 was mainly attributable to the increase in revenue from our
unmanned retail business. The decrease in gross profit from RMB1,101.1 million in 2021 to
RMB1,076.7 million in 2022 was mainly attributable to the decrease in revenue from
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advertising and system support services. The increase in gross profit from RMB510.2 million
for the six months ended June 30, 2022 to RMB518.0 million for the six months ended June
30, 2023 was mainly attributable to the increase in revenue from unmanned retail business
partially offset by the decrease in revenue from advertising and system support services.
Our gross profit margin was 48.7%, 29.4%, 41.1%, 42.7%, 44.6% and 41.3% in 2019,
2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, respectively. The decrease
in gross profit margin from 2019 to 2020 was primarily due to (i) the decrease in revenue
generated from high gross margin consumption scenarios such as transportation hubs, public
venues and schools as a result of COVID-19, (ii) the decrease in revenue generated from
advertising and system support services (primarily due to the decrease in demand for such
services from advertisers and their budgets and expenditures owing to the decrease in outdoor
consumer traffic in light of COVID-19) which typically records higher gross profit margin than
other business segments, and (iii) impairment losses recognized in 2020.
Our gross profit margin increased from 29.4% in 2020 to 41.1% in 2021 primarily due to
(i) the increase in revenue generated from unmanned retail business as a percentage of total
revenue, while gross profit margin of this business segment also improved due to the higher
portion of food products with higher gross profit margin sold in 2021, as a result of our efforts
in merchandise management in early 2021 to refine our merchandise mix, (ii) the recovery of
consumer traffic at consumption scenarios or POSs with higher gross profit margin, such as
public venues, transportation hubs and schools, and (iii) significant amounts of impairment
losses, primarily attributable to karaoke booths in operation and orange juice machines and
coconut juice machines recognized in 2020.
Our gross profit margin increased from 41.1% in 2021 to 42.7% in 2022 primarily due to
(i) the increase in revenue from unmanned retail business as a percentage of our total revenue
from 71.6% in 2021 to 78.4% in 2022, which has relatively higher gross profit margin, (ii) the
increase in gross profit margin of advertising and system support services from 75.9% in 2021
to 82.5% in 2022, and (iii) the decrease in revenue from others segment as a percentage of our
total revenue from 16.1% in 2021 to 7.4% in 2022, primarily due to the downstream mobile
device retail market and the demand for our mobile device distribution services under our
others segment were negatively affected by macro-economic conditions and consumer demand
in 2022.
Our gross profit margin decreased from 44.6% for the six months ended June 30, 2022 to
41.3% for the six months ended June 30, 2023, primarily due to a decrease in revenue
contribution from advertising and system support services which typically records higher gross
profit margin than other business segments and an increase in revenue contribution from
merchandise wholesale and mobile device distribution services which typically record lower
gross profit margin than other business segments.
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Selling and Marketing Expenses
Our selling and marketing expenses primarily consist of (i) POSs operation and
development expenses, (ii) employee benefit expenses, (iii) logistics and transportation
expenses, (iv) depreciation, (v) office and lease expenses, (vi) impairment loss of property and
equipment and right-of-use assets, (vii) share-based payments and (viii) others. In 2019, 2020,
2021, 2022 and the six months ended June 30, 2022 and 2023, our selling and marketing
expenses amounted to RMB1,023.7 million, RMB1,083.7 million, RMB1,077.4 million,
RMB1,155.7 million, RMB546.7 million and RMB545.1 million, respectively, representing
37.5%, 57.0%, 40.3%, 45.9%, 47.8% and 43.5% of our total revenue for the same periods,
respectively.
The following table sets forth a breakdown of our selling and marketing expenses for the
periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
POSs operation and
development expenses 574,570 56.1 553,170 51.0 585,920 54.4 587,354 50.8 263,936 48.3 261,155 47.9
Employee benefit expenses 172,563 16.9 168,206 15.5 151,386 14.1 170,190 14.7 84,073 15.4 63,303 11.6
Logistics and transportation
expenses 108,480 10.6 97,243 9.0 138,277 12.8 156,637 13.6 77,222 14.1 88,642 16.3
Depreciation 98,564 9.6 177,787 16.4 137,068 12.7 186,927 16.2 90,150 16.5 102,693 18.8
Office and lease expenses 34,452 3.4 29,804 2.8 29,125 2.7 29,470 2.5 15,082 2.8 8,310 1.5
Impairment loss of
property and equipment and
right-of-use assets 1,240 0.1 27,573 2.5 1,449 0.1 – – – – – –
Share-based payments – – – – – – – – – – 4,723 0.9
Others
(1) 33,847 3.3 29,952 2.8 34,187 3.2 25,142 2.2 16,273 2.9 16,307 3.0
Total 1,023,716 100.0 1,083,735 100.0 1,077,412 100.0 1,155,720 100.0 546,736 100.0 545,133 100.0
Note:
1. Others primarily include promotional fees, traveling and entertainment expenses.
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POSs operation and development expenses constituted the largest component of our
selling and marketing expenses during the Track Record Period. POSs operation and
development expenses primarily represented expenses paid or payable to POS site owners and
POS partners for maintaining and expanding our Ubox POS network. The following table sets
forth a breakdown of our POSs operation and development expenses by recipient for the
periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Unmanned retail
business 461,014 496,185 558,062 566,788 248,709 254,925
Site owners 369,936 279,010 141,651 105,874 48,153 37,630
POS partners 91,078 217,175 416,411 460,914 200,556 217,295
Others
(1) 113,556 56,985 27,858 20,566 15,227 6,230
Total 574,570 553,170 585,920 587,354 263,936 261,155
Note:
1. In relation to karaoke booth operations.
POSs operation and development expenses for POSs under the direct operation model
were either a fixed amount or determined based on certain percentages of the transaction GMV
generated by the corresponding machine as agreed between us and individual POS site owners.
POSs operation and development expenses for POSs under the partner model were typically
determined based on certain percentages of the transaction GMV generated by the
corresponding machine with other costs responsible by POS partners deducted. POSs operation
and development expenses for POSs under the direct operation model as a percentage of the
transaction GMV generated under the direct operation model amounted to 25.3%, 42.3%,
28.4%, 26.0%, 25.6% and 17.3% in 2019, 2020, 2021, 2022 and the six months ended June 30,
2022 and 2023, respectively. POSs operation and development expenses for POSs under the
partner model as a percentage of the transaction GMV under the partner model amounted to
34.7%, 25.0%, 25.3%, 25.6%, 24.1% and 23.9%, in 2019, 2020, 2021, 2022 and the six months
ended June 30, 2022 and 2023, respectively. The higher level under the partner model in 2019
was primarily because we offered POS partners a relatively higher share of the POSs’
transaction GMV in the early stage of promoting the partner model. The higher level under the
direct operation model in 2020 was primarily due to the decrease in transaction GMV per
machine due to the impact of COVID-19 while POSs operation and development expenses with
respect to certain POSs under the direct operation model were fixed.
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In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, POSs
operation and development expenses accounted for 56.1%, 51.0%, 54.4%, 50.8%, 48.3% and
47.9% of our total selling and marketing expenses, respectively. The decrease in POSs
operation and development expenses from 2019 to 2020 was primarily attributable to decrease
in the number of Ubox POSs due to the negative impact of COVID-19 in 2020. The increase
in POSs operation and development expenses from 2020 to 2021 was primarily attributable to
the expansion of our POS network in 2021. The increase in POSs operation and development
expenses from 2021 to 2022 was primarily due to the expansion of our POS network in 2022,
in terms of monthly average number of Ubox POSs in 2022 as compared to that of 2021,
despite the decrease in number of Ubox POSs from 85,139 to 66,232 as of December 31, 2021
and 2022, respectively. The decrease in POSs operation and development expenses for the six
months ended June 30, 2023 as compared to the same period in 2022 was primarily due to the
decrease in the number of our Ubox POSs. This was because the Company, POS partners and
some other business partners such as site owners adopted a prudent approach towards the pace
of recovery in the macro-environment under the prolonged impact of the pandemic and slowed
down the expansion of the POS network in the same period.
Employee benefit expenses under selling and marketing expenses primarily consist of
salaries, wages, bonus, social security costs and housing benefits for our sales and marketing
personnel.
Logistics and transportation expenses primarily represents logistics expenses incurred for
establishment of POSs, restocking of merchandise across our network and maintenance and
movement of our machines.
Depreciation represents depreciation of right-of-use assets and property and equipment in
relation to our vending machines for our unmanned retail business. The increase in
depreciation from 2019 to 2020 was primarily attributable to our larger number of vending
machines at the end of 2019 to fuel our POS network expansion while our number of vending
machines decreased in 2020 as a result of the impact of COVID-19.
Office and lease expenses represent short-term leases expenses for our office and
warehouses and office expenses.
Impairment loss of property and equipment and right-of-use assets primarily represents
the impairment loss of non-core types of machines such as orange juice machines and coconut
juice machines in operation.
Share-based payments primarily represents expenses arising from granting options to
eligible individuals under the Pre-IPO Incentive Scheme.
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General and Administrative Expenses
Our administrative expenses primarily consist of (i) employee benefit expenses, (ii)
depreciation and amortisation, (iii) bank and payment charges, (iv) listing expenses, (v) office
and lease expenses, (vi) travelling and transportation expenses, (vii) audit and consultation
expenses, (viii) share-based payments, (ix) impairment loss of goodwill, (x) impairment loss
of prepayments and intangible assets, and (xi) others. In 2019, 2020, 2021, 2022 and the six
months ended June 30, 2022 and 2023, our general and administrative expenses amounted to
RMB156.1 million, RMB511.0 million, RMB123.3 million, RMB127.4 million, RMB54.3
million and RMB95.1 million, respectively, representing 5.7%, 26.9%, 4.6%, 5.1%, 4.8% and
7.6% of our total revenue for the same periods, respectively.
The following table sets forth a breakdown of our general and administrative expenses for
the periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Employee benefit expenses 81,746 52.4 56,895 11.1 40,747 33.0 42,258 33.2 23,004 42.4 15,725 16.5
Depreciation and amortisation 29,357 18.8 43,927 8.6 30,542 24.8 30,161 23.7 15,943 29.4 14,190 14.9
Bank and payment charges 12,582 8.1 10,855 2.1 17,116 13.9 13,340 10.5 6,541 12.0 7,252 7.6
Listing expenses – – – – 16,411 13.3 22,077 17.3 3,790 7.0 6,581 6.9
Office and lease expenses 11,249 7.2 7,714 1.5 8,531 6.9 7,337 5.8 2,999 5.5 5,167 5.4
Travelling and transportation
expenses 6,730 4.3 4,041 0.8 3,729 3.0 3,664 2.9 1,069 2.0 1,306 1.4
Audit and consultation
expenses 7,349 4.7 6,621 1.3 2,804 2.3 5,264 4.1 619 1.1 862 0.9
Share-based payments – – 210,918 41.3 1,500 1.2 – – – – 43,754 46.0
Impairment loss of goodwill – – 158,386 31.0 – – – – – – – –
Impairment loss of
prepayments and intangible
assets 6,063 3.8 9,728 1.9 – – – – – – – –
Others 999 0.7 1,931 0.4 1,967 1.6 3,304 2.5 341 0.6 309 0.4
Total 156,075 100.0 511,016 100.0 123,347 100.0 127,405 100.0 54,306 100.0 95,146 100.0
The significant increase in our general and administrative expenses from RMB156.1
million in 2019 to RMB511.0 million in 2020 was primarily due to (i) an increase of
RMB210.9 million in share-based payments primarily in relation to the share incentives
granted to management and core employees in 2020, and (ii) impairment loss of goodwill of
RMB158.4 million due to the COVID-19 outbreak which negatively affected the business and
expansion of the freshly brewed beverage vending machine business and karaoke booth service
business. See “— Selected Items from Consolidated Statements of Financial Position —
Intangible Assets” for further details. The decrease in our general and administrative expenses
from RMB511.0 million in 2020 to RMB123.3 million in 2021 was primarily due to one-off
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share-based payments and impairment loss of goodwill in 2020. The increase in our general and
administrative expenses from RMB123.3 million in 2021 to RMB127.4 million in 2022 was
primarily due to (i) the increase in listing expenses of RMB5.7 million and (ii) the increase in
audit and consultation expenses of RMB2.5 million. The increase in general and administrative
expenses from RMB54.3 million for the six months ended June 30, 2022 to RMB95.1 million
for the same period in 2023 was primarily due to an increase in share-based payments of
RMB43.8 million recognized in the six months ended June 30, 2023 in relation to share
incentives granted to our employees.
Research and Development Expenses
Our research and development expenses primarily consist of (i) employee benefit
expenses for research and development personnel, (ii) outsourced research consulting service
expenses, (iii) amortization of intangible assets allocated to research and development
activities, (iv) office expenses in connection with research and development activities, (v)
travelling expenses, and (vi) others. In 2019, 2020, 2021, 2022 and the six months ended June
30, 2022 and 2023, our research and development expenses amounted to RMB57.3 million,
RMB41.5 million, RMB36.8 million, RMB31.6 million, RMB17.7 million and RMB15.1
million, respectively, representing 2.1%, 2.2%, 1.4%, 1.3%, 1.5% and 1.2% of our total
revenue for the same periods, respectively.
The following table sets forth a breakdown of our research and development expenses for
the periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Employee benefit expenses 19,363 33.8 29,727 71.7 15,782 42.9 23,057 73.1 13,384 75.8 9,948 65.9
Outsourced research consulting
service expenses 25,665 44.8 599 1.4 10,714 29.1 – – – – – –
Amortization of intangible
assets 9,821 17.1 8,706 21.0 8,312 22.6 7,261 23.0 3,650 20.7 3,633 24.1
Office expenses 901 1.6 702 1.7 – – 820 2.6 499 2.8 437 2.9
Travelling expenses 32 0.1 16 – 2 – – – – – – –
Share-based payments – – – – – – – – – – 1,050 7.0
Others
(1) 1,519 2.6 1,734 4.2 1,951 5.4 418 1.3 135 0.7 30 0.1
Total 57,301 100.0 41,484 100.0 36,761 100.0 31,556 100.0 17,668 100.0 15,098 100.0
Note:
1. Others primarily include material costs, testing fees and service fees.
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Our research and development expenses were higher in 2019 as compared to 2020
primarily due to outsourced research consulting service expenses of RMB25.7 million in 2019
in connection with our research and development projects including the application or
development of biometric authentication on vending machines, customer service platform and
advertisement platform. The decrease in research and development expenses from 2020 to 2021
was primarily due to the decrease of RMB13.9 million in employee benefit expenses due to the
one-off employee benefit expenses incurred in 2020 to optimize our research and development
personnel structure and the decrease in average headcount in 2021 as we outsourced certain
research and development projects in 2021, partially offset by an increase of RMB10.1 million
in outsourced research consulting service expenses in relation to outsourced research and
development projects. See “Business — Research and Development.” Our research and
development expenses decreased from RMB36.8 million in 2021 to RMB31.6 million in 2022,
primarily due to the decrease in outsourced research consulting service expenses of RMB10.7
million as there were no outsourced research and development projects in 2022. Our research
and development expenses decreased from RMB17.7 million for the six months ended June 30,
2022 to RMB15.1 million for the same period in 2023, primarily due to the decrease of
RMB3.4 million in employee benefit expenses as a result of the decrease in average headcount
and number of research projects in the first half of 2023.
Net Impairment Losses on Financial Assets
Our net impairment losses on financial assets primarily comprised impairment losses on
trade and other receivables, amounting to RMB10.9 million, RMB58.4 million, RMB28.2
million, RMB9.3 million, RMB6.9 million and RMB0.8 million in 2019, 2020, 2021, 2022 and
the six months ended June 30, 2022 and 2023, respectively. The significantly higher level of
net impairment losses of financial assets in 2020 was primarily due to impairment losses
recognized for trade and other receivables as a result of the COVID-19 outbreak and relevant
concerns of collectability of receivables from our customers and business partners for
advertising and system support services. The decrease in net impairment losses on financial
assets from 2020 to 2021 was primarily due to the decrease in the balance of trade receivables
as a result of our collection efforts, including communication with relevant customers and
monitoring of credit terms in 2021. See “— Selected Items from Consolidated Statements of
Financial Position — Trade Receivables.” The decrease in impairment losses on financial
assets from 2021 to 2022 was primarily because (i) we recorded impairment loss on financial
assets in relation to other receivables of RMB20.8 million due from Beijing Y ouyang
Technology Co., Ltd. (ʮ̡)( “ Beijing Y ouyang ”) in 2021 and (ii) we only
made provision of impairment of approximately RMB9.3 million in 2022, primarily due to the
decrease in balances of trade receivables and other receivables.
Other Income
Our other income consists of (i) additional deduction of input value-added tax, (ii)
interest income arising from trade receivables and bank deposits, (iii) government grants, (iv)
interest income from wealth management products, and (v) others. Additional deduction of
input value-added tax represented the deduction policy that was effective from April 1, 2019
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to December 31, 2021, where a taxpayer engaged in production or livelihood services is
allowed to have a 10% weighted deduction of creditable input value-added tax in the current
period from the tax amount payable. The government grants mainly represented value-added
tax levied immediately returned and subsidies granted by local governments in relation to
industry support policies and COVID-19. Such government grants were unconditional and
were generally non-recurring in nature. While certain government grants, such as value-added
tax refund and government grants for high-tech companies, were recurring in nature, there is
no assurance that the PRC government will continue to provide such grants to us in the future.
See “Risk Factors — We may not receive further government grants and the loss of which may
affect our financial performance.” Interest income arising from trade receivables and bank
deposits primarily represented interest income derived from installment payments in relation
to our machine sales. During the Track Record Period, we invested in certain wealth
management products from which we derived interest income. See “— Selected Items from
Consolidated Statements of Financial Position — Financial Assets at Fair V alue through Profit
or Loss” for details of our investments in wealth management products.
The following table sets forth the breakdown of our other income for the periods
indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Additional deduction of input
value-added tax 599 3.5 3,023 15.0 5,949 48.5 4,795 39.9 530 12.8 418 14.3
Interest income arising from
trade receivables and bank
deposits 8,016 46.8 5,272 26.1 3,001 24.5 1,854 15.4 946 22.9 1,176 40.2
Government grants 3,322 19.4 5,392 26.7 1,701 13.9 5,117 42.5 2,532 61.2 1,166 39.9
Interest income from wealth
management products 5,135 30.0 6,298 31.2 1,242 10.1 173 1.4 44 1.1 69 2.4
Others 40 0.3 214 1.0 376 3.0 88 0.8 88 2.0 94 3.2
Total 17,112 100.0 20,199 100.0 12,269 100.0 12,027 100.0 4,140 100.0 2,923 100.0
Other Gains/Losses, Net
Our other net gains/(losses) consists of (i) net losses on disposal of property and
equipment, (ii) net gains/(losses) on disposal/deregistration of subsidiaries, (iii) fair value
change on financial assets at fair value through profit or loss, (iv) net gains on disposal of
investments accounted for using the equity method, and (v) others.
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The following table sets forth the breakdown of our other net gains/(losses) for the
periods indicated:
For the year ended December 31, For the six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(unaudited)
Net losses on disposal of
property and equipment (2,059) (18.2) (7,216) 36.3 (5,418) 37.0 (5,408) 63.7 (421) (51.3) (395) 13.5
Net gains/(losses) on
disposal/deregistration
of subsidiaries – – 5,603 (28.2) (2,315) 15.8 (199) 2.3 151 18.4 – –
Fair value change on financial
assets at
fair value through
profit or loss (852) (7.5) (18,258) 92.0 (1,940) 13.2 3,300 (38.9) 3,400 414.1 (1,600) 54.8
Net gains on disposal of
investments accounted for
using the equity method 14,141 124.7 – – – – – – – – – –
Others
(1) 114 1.0 27 (0.1) (4,982) 34.0 (6,181) 72.9 (2,309) (281.2) (925) 31.7
Total 11,344 100.0 (19,844) 100.0 (14,655) 100.0 (8,488) 100.0 821 100.0 (2,920) 100.0
Notes:
1. Others primarily include fines, late fees and liquidated damages.
Finance Costs
Our finance costs consist of (i) interest expenses on lease liabilities and (ii) interest
expenses on borrowings. In 2019, 2020, 2021, 2022 and the six months ended June 30, 2022
and 2023, we recorded finance costs of RMB58.7 million, RMB32.3 million, RMB13.5
million, RMB13.3 million, RMB7.3 million and RMB4.6 million, respectively. The following
table sets forth the breakdown of our finance costs for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest expenses on lease
liabilities 36,170 29,883 10,619 7,085 4,242 1,973
Interest expenses on
borrowings 22,518 2,461 2,898 6,246 3,018 2,611
Total 58,688 32,344 13,517 13,331 7,260 4,584
FINANCIAL INFORMATION
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Share of Results of Investments Accounted for Using the Equity Method
We have invested in a number of companies such as operators of different types of
vending machines and other FMCG retail businesses, and developers of relevant software and
hardware, that could potentially be expanded through our POS network or create synergies. Our
share of losses in investments accounted for using the equity method were RMB7.2 million,
RMB3.5 million, RMB4.1 million, RMB15.3 million, RMB4.8 million and RMB3.8 million in
2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, respectively. None
of our joint ventures and associates was individually material to our Group in 2019, 2020,
2021, 2022 and the six months ended June 30, 2023. We expect that our share of results of
investments accounted for using the equity method will not have a significant impact on our
results of operations. See Note 20 to the Accountant’s Report as set out in Appendix I for
details.
Income Tax Expenses
Our income tax expenses comprised current tax expense and deferred tax expense. We had
income tax expenses of RMB4.2 million, RMB12.7 million, RMB3.6 million, RMB10.8
million, RMB5.9 million and RMB0.7 million in 2019, 2020, 2021, 2022 and the six months
ended June 30, 2022 and 2023, respectively. Our effective tax rate, calculated by income tax
expenses divided by profit before income tax, were approximately 9.6% in 2019, and were not
applicable in 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023 as we
recognized loss before income tax in these periods.
Pursuant to the PRC Corporate Income Tax Law and respective regulations (the “ CIT
Law”), the general corporate income tax rate in the PRC is 25%. We were approved as High
and New Technology Enterprise in the PRC in 2017 and have renewed such qualification in
2020, and was therefore entitled to a preferential income tax rate of 15% in 2019, 2020, 2021,
2022 and the six months ended June 30, 2022 and 2023. Two of our subsidiaries, namely
Y oubao Anglai and Shenzhen Y oubaokesi, were approved as High and New Technology
Enterprise in the PRC in 2016 and have renewed such qualification in 2019. As a result, Y oubao
Anglai and Shenzhen Y oubaokesi were entitled to a preferential income tax rate of 15% in
2019, 2020, 2021 and the six months ended June 30, 2022. Shenzhen Y oubaokesi has renewed
the qualification as High and New Technology Enterprise in December 2022 and is entitled for
a preferential income tax rate of 15% for 2022 and the six months ended June 30, 2023. Y oubao
Anglai has not applied for renewal of such qualification and thus was subject to general
corporate income tax of 25% for 2022 and the six months ended June 30, 2023.
According to the relevant laws and regulations promulgated by the State Administration
of Taxation of the PRC that was effective from 2019 to 2022 onwards, enterprises engaging in
research and development activities are entitled to claim 175% and 200% of their research and
development expenses as deductible expenses from assessable profits from January 1, 2019 to
September 30, 2022 and from October 1, 2022 to June 30, 2023, respectively. In addition, for
those companies which qualified as Small and Medium-Sized Sci-tech Enterprise during the
financial years from 2019 to 2021 could claim 175% of their research and development
FINANCIAL INFORMATION
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expenses so incurred as tax deductible expenses when determining their assessable profits
during the Track Record Period. We and some of our subsidiaries that engage in research and
development activities, such as Y oubao Anglai and Shenzhen Y oubaokesi, were entitled to such
arrangements during the Track Record Period.
For risks relating to our preferential tax treatments, see “Risk Factors — Risks Relating
to Our Business and Industry — If our preferential tax treatment becomes unavailable, our
results of operations may be adversely affected.” During the Track Record Period and up to the
Latest Practicable Date, we had fulfilled all of our tax obligations and did not have any
unresolved tax disputes.
Profit/Loss for the Y ear/Period
As a result of the foregoing, we recorded a net profit of RMB39.6 million in 2019, and
recorded net losses of RMB1,184.2 million, RMB188.2 million, RMB283.1 million,
RMB128.4 million and RMB147.4 million in 2020, 2021, 2022 and the six months ended June
30, 2022 and 2023, respectively.
KEY FINANCIAL RATIOS
The following table sets forth our key financial ratios for the periods or as of the dates
indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
(unaudited)
Gross profit margin (1) 48.7% 29.4% 41.1% 42.7% 44.6% 41.3%
Net profit/(loss) margin (2) 1.5% (62.3)% (7.0)% (11.2)% (11.2)% (11.8)%
Adjusted net profit/(loss)
margin (non-HKFRS
measure)
(3) 1.5% (51.2)% (6.4)% (10.4)% (10.9)% (7.3)%
Adjusted EBITDA margin
(non-HKFRS measure) (4) 11.7% (33.3)% 2.5% 0.8% 1.7% 3.5%
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
Current ratio (5) 2.4 1.7 1.3 1.0 1.0
Quick ratio (6) 2.1 1.4 1.0 0.8 0.8
Gearing ratio (7) 16.6% 22.4% 14.0% 12.9% 14.7%
FINANCIAL INFORMATION
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Notes:
1. Gross profit margin equals gross profit for the year/period divided by revenue for the year/period and
multiplied by 100%.
2. Net profit/(loss) margin equals profit/(loss) for the year/period divided by revenue for the year/period
and multiplied by 100%.
3. Adjusted net profit/(loss) margin (non-HKFRS measure) equals adjusted net profit/(loss) for the
year/period divided by revenue for the year/period and multiplied by 100%. See “— Consolidated
Statements of Comprehensive Income — Non-HKFRS measures” for further details.
4. Adjusted EBITDA (non-HKFRS measure) margin equals adjusted EBITDA divided by revenue for the
year/period and multiplied by 100%. See “— Consolidated Statements of Comprehensive Income —
Non-HKFRS measures” for further details.
5. Current ratio is calculated by dividing current assets by current liabilities as of the year/period end date.
6. Quick ratio is calculated using total currents assets less inventories divided by total current liabilities
as of the year/period end date.
7. Gearing ratio is calculated using total debt divided by total equity and multiplied by 100%.
For a discussion of factors affecting our gross profit margin, net profit/(loss) margin and
non-HKFRS measures during the respective periods, see “— Period-to-Period Comparison of
Results of Operations.” Our current ratio and quick ratio continued to decrease during the
Track Record Period, primarily due to the continued decrease in our current assets mainly
attributable to our results of operations being negatively affected by COVID-19. See “—
Period-to-Period Comparison of Results of Operations” and “— Selected Items from
Consolidated Statements of Financial Position” for details.
PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS
Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Revenue
Our revenue increased by 9.6% from RMB1,143.1 million for the six months ended June
30, 2022 to RMB1,252.7 million for the six months ended June 30, 2023, primarily due to the
movements of our operating results from the following lines of business:
 Unmanned retail business. Revenue from unmanned retail business increased by 8.0%
from RMB913.4 million for the six months ended June 30, 2022 to RMB986.8 million for
the six months ended June 30, 2023, primarily due to the increase in our sales of FMCG
through our POS network as a result of the overall recovery of consumer traffic and
business activities following the relaxation of COVID-19 policies since December 2022.
Specifically, excluding POSs of POS partners who are restaurant model partners, average
monthly GMV of our vending machines increased from RMB2,449 per machine per
month for the six months ended June 30, 2022 to RMB2,992 per machine per month for
the same period in 2023.
FINANCIAL INFORMATION
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 Advertising and system support services. Revenue from advertising and system
support services decreased by 43.6% from RMB100.1 million for the six months
ended June 30, 2022 to RMB56.5 million for the six months ended June 30, 2023,
which was primarily attributable to the decrease in service fees from Alipay China
for the advertising and promotion of its payment service products as the number of
POSs opened during the six months ended June 30, 2023 was relatively lower as
compared to the same period in 2022. For details of services fees from Alipay China,
see “Connected Transactions — Partially-exempt Continuing Connected
Transactions — Advertising Cooperation Framework Agreement.” The decrease was
also attributable to the fact that demand for our digital advertising services from
advertisers has not fully recovered despite the relaxation of COVID-19 policies.
 Merchandise wholesale. Revenue from merchandise wholesale increased by 104.6%
from RMB54.1 million for the six months ended June 30, 2022 to RMB110.7 million
for the six months ended June 30, 2023, primarily due to the significant increase in the
number of merchandise wholesale customers as a result of the initiation of our shared
warehouse initiative since the second half of 2021 coupled with the increase in
procurement from merchandise wholesale customers following the relaxation of
COVID-19 policies in late 2022.
 V ending machine sales and leases. Revenue from vending machine sales and leases
decreased by 27.5% from RMB16.1 million for the six months ended June 30, 2022
to RMB11.7 million for the six months ended June 30, 2023, primarily due to the
decrease in number of vending machines sold or leased as the number of Non-Ubox
POSs opened during the six months ended June 30, 2023 was relatively lower as
compared to the same period in 2022.
 Others. Revenue from others segment increased by 46.6% from RMB59.4 million
for the six months ended June 30, 2022 to RMB87.0 million for the six months
ended June 30, 2023, primarily due to the increase in revenue of our mobile phones
distribution service following the recovery of the downstream mobile device retail
market in the six months ended June 30, 2023.
Cost of sales
Our cost of sales increased by 16.1% from RMB632.9 million for the six months ended
June 30, 2022 to RMB734.7 million for the six months ended June 30, 2023, primarily due to
the increase in of RMB123.2 million in cost of inventories sold, which was in line with the
increase in our revenue from unmanned retail business, merchandise wholesale and mobile
device distribution services.
FINANCIAL INFORMATION
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Gross profit and gross profit margin
As a result of the changes in our revenue and cost of sales described above, our gross
profit increased by 1.5% from RMB510.2 million for the six months ended June 30, 2022 to
RMB518.0 million for the six months ended June 30, 2023. Our gross profit margin decreased
from 44.6% for the six months ended June 30, 2022 to 41.3% for the six months ended June
30, 2023, primarily due to a decrease in revenue contribution from advertising and system
support services which typically records higher gross profit margin than other business
segments and an increase in revenue contribution from merchandise wholesale and mobile
device distribution services which typically record lower gross profit margin than other
business segments.
Our gross profit generated from unmanned retail business increased by 7.5% from
RMB413.5 million for the six months ended June 30, 2022 to RMB444.5 million for the six
months ended June 30, 2023. Our gross profit margin generated from unmanned retail business
remained relatively stable at 45.3% and 45.0% for the six months ended June 30, 2022 and
2023, respectively.
Our gross profit generated from advertising and system support services decreased by 36.6%
from RMB87.9 million for the six months ended June 30, 2022 to RMB55.8 million for the six
months ended June 30, 2023. Our gross profit margin generated from advertising and system support
services increased from 87.9% for the six months ended June 30, 2022 to 98.8% for the six months
ended June 30, 2023, primarily attributable to the relatively higher subcontractor cost of advertising
resources recorded in the six months ended June 30, 2022 and we required less subcontracted
advertising services from third parties for the provision of advertising services in the six months
ended June 30, 2023.
Our gross profit generated from merchandise wholesale increased by 40.8% from
RMB2.8 million for the six months ended June 30, 2022 to RMB4.0 million for the six months
ended June 30, 2023. Our gross profit margin generated from merchandise wholesale decreased
from 5.2% for the six months ended June 30, 2022 to 3.6% for the six months ended June 30,
2023, primarily due to the increase in revenue contribution from our shared warehouse
customers, which has a relatively lower gross profit margin.
Our gross profit generated from vending machine sales and leases remained relatively
stable at RMB3.0 million and RMB3.2 million for the six months ended June 30, 2022 and
2023, respectively. Our gross profit margin generated from vending machine sales and leases
increased from 18.5% for the six months ended June 30, 2022 to 27.0% for the six months
ended June 30, 2023, primarily because we offered rent-free period to some of our POS
partners in the six months ended June 30, 2022 to support their operations and maintain our
POS network in light of the resurgence of COVID-19 in 2022.
FINANCIAL INFORMATION
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Our gross profit generated from others segment increased by 257.8% from RMB3.0
million for the six months ended June 30, 2022 to RMB10.6 million for the six months ended
June 30, 2023. Our gross profit margin generated from others segment increased from 5.0% for
the six months ended June 30, 2022 to 12.2% for the six months ended June 30, 2023, mainly
due to the decrease in depreciation of property and equipment from our karaoke booth business.
Selling and marketing expenses
Our selling and marketing expenses remained relatively stable at RMB546.7 million for
the six months ended June 30, 2022 and RMB545.1 million for the six months ended June 30,
2023. Our selling and marketing expenses accounted for 47.8% and 43.5% of our revenue for
the six months ended June 30, 2022 and 2023, respectively. The decrease in selling and
marketing expenses as a percentage of total revenue from the six months ended June 30, 2022
to the same period in 2023 was primarily due to the decrease of RMB20.8 million in employee
benefit expenses as we downsized our internal sales team.
General and administrative expenses
Our general and administrative expenses increased by 75.2% from RMB54.3 million for
the six months ended June 30, 2022 to RMB95.1 million for the six months ended June 30,
2023, primarily due to share-based payments of RMB43.8 million recognized in 2023 in
relation to share incentives granted to our employees. As a result of the foregoing, our general
and administrative expenses as a percentage of total revenue increased from 4.8% for the six
months ended June 30, 2022 to 7.6% for the same period in 2023.
Research and development expenses
Our research and development expenses decreased by 14.5% from RMB17.7 million for
the six months ended June 30, 2022 to RMB15.1 million for the six months ended June 30,
2023, primarily due to the decrease of RMB3.4 million in employee benefit expenses as a result
of the decrease in average headcount and number of research projects in the first half of 2023.
Net impairment losses on financial assets
Our net impairment losses on financial assets decreased from RMB6.9 million for the six
months ended June 30, 2022 to RMB0.8 million for the six months ended June 30, 2023,
primarily due to the decrease in expected loss rate for trade receivables with aging 0-12 months
and other receivables attributable to a more optimistic outlook on macro-economic conditions
as compared to that in the six months ended June 30, 2022.
Other income
Our other income decreased by 29.4% from RMB4.1 million for the six months ended
June 30, 2022 to RMB2.9 million for the six months ended June 30, 2023, primarily due to the
decrease of RMB1.4 million in government grants.
FINANCIAL INFORMATION
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Other gains/(losses), net
We recorded net other gains of RMB0.8 million for the six months ended June 30, 2022
and net other losses of RMB2.9 million for the six months ended June 30, 2023, primarily due
to the change in fair value on financial assets at fair value through profit or loss from RMB3.4
million for the six months ended June 30, 2022 to negative RMB1.6 million for the same period
in 2023 in relation to our investments in unlisted equity securities.
Finance costs
Our finance costs decreased by 36.9% from RMB7.3 million for the six months ended
June 30, 2022 to RMB4.6 million for the six months ended June 30, 2023, primarily due to a
decrease of RMB2.3 million in interest expense on lease liabilities.
Share of results of investments accounted for using the equity method
Our share of losses of investments accounted for using the equity method decreased by
20.2% from RMB4.8 million for the six months ended June 30, 2022 to RMB3.8 million for
the six months ended June 30, 2023, primarily due to the decrease in loss suffered by JR
V ending Pte. Ltd. and Hangzhou Penguin Technology Co., Ltd.
Profit/Loss before income tax
As a result of the foregoing, we recorded a loss before income tax of RMB122.5 million
and RMB146.6 million for the six months ended June 30, 2022 and 2023, respectively.
Income tax expenses
We recorded income tax expenses of RMB5.9 million and RMB0.7 million for the six
months ended June 30, 2022 and 2023, respectively. The decrease in income tax expenses was
primarily because we recognized RMB2.9 million of deferred income tax expenses for the six
months ended June 30, 2022 while we recognized RMB3.5 million of deferred income tax
credit for the same period in 2023 as a result of the increase in deferred income tax assets for
unrealized profit resulting from intragroup transactions.
Profit/Loss for the period
As a result of the foregoing, we recorded a loss of RMB128.4 million and RMB147.4
million for the six months ended June 30, 2022 and 2023, respectively.
FINANCIAL INFORMATION
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Y ear Ended December 31, 2022 Compared to Y ear Ended December 31, 2021
Revenue
Our revenue decreased by 5.9% from RMB2,676.2 million in 2021 to RMB2,519.2
million in 2022, primarily due to the movements of our operating results from the following
lines of business:
 Unmanned retail business. Revenue from unmanned retail business increased by
3.1% from RMB1,915.1 million in 2021 to RMB1,974.7 million in 2022 primarily
due to the expansion and optimization of our POS network, in terms of monthly
average number of Ubox POSs in 2022 as compared to that of 2021, despite the
decrease in number of Ubox POSs from 85,139 to 66,232 as of December 31, 2021
and 2022, respectively, mainly due to the regional resurgence of COVID-19 in
mainland China which significantly affected consumer traffic in certain scenarios,
especially restaurants.
 Advertising and system support services. Revenue from advertising and system
support services decreased by 20.1% from RMB243.1 million in 2021 to RMB194.3
million in 2022, which was primarily attributable to the decrease in demand for such
services from advertisers owing to the decrease in outdoor consumer traffic in light
of the resurgence of COVID-19 in mainland China in 2022.
 Merchandise wholesale. Revenue from merchandise wholesale increased
significantly by 225.3% from RMB40.5 million in 2021 to RMB131.8 million in
2022, primarily due to the significant increase in the number of shared warehouse
customers as a result of the initiation of our shared warehouse initiative since the
second half of 2021.
 V ending machine sales and leases. Revenue from vending machine sales and leases
decreased by 23.5% from RMB44.2 million in 2021 to RMB33.8 million in 2022,
primarily due to (i) the decrease in number of vending machines sold as a result of
the development of our partner model and (ii) the decrease in revenue from machine
leases as we offered rent-free period to some of our POS partners to support their
operations and maintain our POS network in light of the resurgence of COVID-19
in 2022.
 Others. Revenue from others segment decreased by 57.4% from RMB433.2 million
in 2021 to RMB184.7 million in 2022, primarily due to the decrease of RMB227.2
million in revenue from mobile device distribution services as the downstream
mobile device retail market and the demand for our mobile device distribution
services were negatively affected by macro-economic conditions and consumer
demand in 2022.
FINANCIAL INFORMATION
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Cost of sales
Our cost of sales decreased by 8.4% from RMB1,575.1 million in 2021 to RMB1,442.5
million in 2022, primarily due to (i) the decrease of RMB97.9 million in cost of inventories
sold mainly in relation to the decrease in number of mobile devices sold as the downstream
mobile device retail market and the demand for our mobile device distribution services under
others segment were negatively affected by macro-economic conditions and consumer demand
in 2022 and (ii) the decrease of RMB24.6 million in subcontractor cost of advertising resources
as a result of the decrease in demand for advertising services from advertisers owing to the
decrease in outdoor consumer traffic in light of the resurgence of COVID-19 in mainland China
in 2022.
Gross profit and gross profit margin
As a result of the changes in our revenue and cost of sales described above, our gross
profit decreased by 2.2% from RMB1,101.1 million in 2021 to RMB1,076.7 million in 2022
and our gross profit margin increased from 41.1% in 2021 to 42.7% in 2022, primarily due to
the increased revenue contribution of our unmanned retail business, which has a relatively high
gross profit margin.
Our gross profit generated from unmanned retail business remained relatively stable at
RMB888.1 million in 2021 and RMB891.4 million in 2022. Our gross profit margin generated
from unmanned retail business remained relatively stable at 46.4% in 2021 and 45.1% in 2022.
Our gross profit generated from advertising and system support services decreased by
13.1% from RMB184.4 million in 2021 to RMB160.2 million in 2022, primarily due to the
decrease in revenue from advertising and system support services. Our gross profit margin
generated from advertising and system support services increased from 75.9% in 2021 to
82.5% in 2022, mainly because the decrease in subcontractor cost of advertising resources was
larger than the decrease in revenue from advertising and system support services as the
advertising services provided in 2022 required less subcontracted advertising services from
third parties.
Our gross profit generated from merchandise wholesale increased by 76.2% from
RMB3.0 million in 2021 to RMB5.2 million in 2022, primarily due to the increase in revenue
from merchandise wholesale as a result of the initiation of our shared warehouse initiative
since the second half of 2021. Our gross profit margin generated from merchandise wholesale
decreased from 7.3% in 2021 to 4.0% in 2022, primarily due to the increase in revenue
contribution from our shared warehouse customers, which has a relatively lower gross profit
margin.
Our gross profit generated from vending machine sales and leases decreased by 22.3%
from RMB13.9 million in 2021 to RMB10.8 million in 2022. Our gross profit margin generated
from vending machine sales and leases remained stable at 31.4% in 2021 and 31.9% in 2022.
FINANCIAL INFORMATION
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Our gross profit generated from others segment decreased by 22.9% from RMB11.8
million in 2021 to RMB9.1 million in 2022. Our gross profit margin generated from others
segment increased from 2.7% in 2021 to 4.9% in 2022, mainly due to the decrease in revenue
generated from mobile device distribution services, which has a substantially lower gross profit
margin level.
Selling and marketing expenses
Our selling and marketing expenses increased by 7.3% from RMB1,077.4 million in 2021
to RMB1,155.7 million in 2022, primarily due to (i) the increase in depreciation of RMB49.9
million primarily attributable to newly purchased machines and warehouses in the fourth
quarter of 2021 and in 2022, (ii) the increase in employee benefit expenses of RMB18.8 million
primarily due to the increase in the headcount of our sales and marketing personnel, and (iii)
the increase in logistics and transportation expenses of RMB18.4 million. As a result of the
foregoing and the decrease in our revenue, our selling and marketing expenses accounted for
40.3% and 45.9% of our revenue in 2021 and 2022, respectively.
General and administrative expenses
Our general and administrative expenses increased by 3.3% from RMB123.3 million in
2021 to RMB127.4 million in 2022, primarily due to (i) the increase in listing expenses of
RMB5.7 million and (ii) the increase in audit and consultation expenses of RMB2.5 million.
As a result of the foregoing, our general and administrative expenses as a percentage of total
revenue remained relatively stable at 4.6% and 5.1% in 2021 and 2022, respectively.
Research and development expenses
Our research and development expenses decreased by 14.2% from RMB36.8 million in
2021 to RMB31.6 million in 2022, primarily due to the decrease in outsourced research
consulting service expenses of RMB10.7 million as there were no outsourced research and
development projects in 2022.
Net impairment losses on financial assets
Our net impairment losses on financial assets decreased by 67.2% from RMB28.2 million
in 2021 to RMB9.3 million in 2022, primarily because (i) we recorded impairment loss on
financial assets in relation to other receivables of RMB20.8 million due from Beijing Y ouyang
in 2021 and (ii) we only made provision of impairment of approximately RMB9.3 million in
2022, primarily due to the decrease in balances of trade receivables and other receivables.
Other income
Our other income remained relatively stable at RMB12.3 million and RMB12.0 million
in 2021 and 2022, respectively.
FINANCIAL INFORMATION
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Other gains/(losses), net
Our net other losses decreased by 42.1% from RMB14.7 million in 2021 to RMB8.5
million in 2022, primarily because we recognized positive fair value change from our
investments in certain unlisted equity securities as their performance improved. See also “—
Selected Items from Consolidated Statements of Financial Position — Financial Assets at Fair
V alue through Profit or Loss.”
Finance costs
Our finance costs remained stable at RMB13.5 million and RMB13.3 million in 2021 and
2022, respectively.
Share of results of investments accounted for using the equity method
Our share of losses of investments accounted for using the equity method increased by
272.8% from RMB4.1 million in 2021 to RMB15.3 million in 2022, primarily due to the
increase in loss suffered by JR V ending Pte. Ltd. and Hangzhou Penguin Technology Co., Ltd
in 2022.
Profit/Loss before income tax
As a result of the foregoing, we recorded a loss before income tax of RMB184.6 million
and RMB272.3 million in 2021 and 2022, respectively.
Income tax expenses
We recorded income tax expenses of RMB3.6 million and RMB10.8 million in 2021 and
2022, respectively. The increase in income tax expenses was primarily due to (i) the increase
in deferred income tax of RMB4.3 million as a result of the reversal of deferred tax assets and
(ii) the increase in current income tax of RMB2.9 million due to increase in taxable income of
our principal subsidiaries in the PRC with an applicable tax rate of 25%.
Profit/Loss for the year
As a result of the foregoing, we recorded a loss of RMB188.2 million and RMB283.1
million in 2021 and 2022, respectively.
FINANCIAL INFORMATION
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Y ear Ended December 31, 2021 Compared to Y ear Ended December 31, 2020
Revenue
Our revenue increased by 40.7% from RMB1,902.0 million in 2020 to RMB2,676.2
million in 2021, primarily due to the movements of our operating results from the following
lines of business:
 Unmanned retail business. Revenue from unmanned retail business increased by
43.3% from RMB1,336.8 million in 2020 to RMB1,915.1 million in 2021 primarily
due to (i) the significant expansion of our POS network, particularly the net increase
of our POSs from 75,626 in 2020 to 102,739 in 2021, and (ii) the increase in our
sales of FMCG through our POS network as a result of the recovery of consumer
traffic from the negative impact of the COVID-19 outbreak in 2021.
 Advertising and system support services. Revenue from advertising and system
support services increased by 10.7% from RMB219.6 million in 2020 to RMB243.1
million in 2021, which was primarily attributable to the increase in demand for
advertising services by advertisers, following mainland China’s recovery from the
negative impact of COVID-19 outbreak in 2021.
 Merchandise wholesale. Revenue from merchandise wholesale decreased by 64.9%
from RMB115.5 million in 2020 to RMB40.5 million in 2021 as we strategically
shifted focus to our unmanned retail business and the partner model.
 V ending machine sales and leases. Revenue from vending machine sales and leases
decreased by 6.0% from RMB47.0 million in 2020 to RMB44.2 million in 2021,
primarily due to (i) the decrease in number of vending machines sold as a result of
the development of our partner model and (ii) the decrease in revenue from machine
leases as we offered rent-free period to some of our POS partners to support our POS
network expansion during the COVID-19 outbreak.
 Others. Revenue from others segment increased by 136.5% from RMB183.2 million
in 2020 to RMB433.2 million in 2021 primarily due to our promotion of our mobile
phones distribution service as a result of expansion of our customer base from seven
mobile device resellers in 2020 to twelve in 2021 and the increase in transaction
amounts with certain existing customers.
Cost of sales
Our cost of sales increased by 17.2% from RMB1,343.4 million in 2020 to RMB1,575.1
million in 2021, which reflected the growth of our business and was in line with the increase
in our revenue. The increase was primarily due to (i) the increase of RMB407.7 million in cost
of inventory sold, which was mainly due to our increased sales, and (ii) the increase of
RMB57.6 million in subcontractor cost of advertising resources mainly due to our cooperation
with third-party advertising service providers, partially offset by the decrease of RMB218.4
million in impairment loss we recognized in 2020.
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Gross profit and gross profit margin
As a result of the changes in our revenue and cost of sales described above, our gross
profit increased by 97.1% from RMB558.6 million in 2020 to RMB1,101.1 million in 2021 and
our gross profit margin increased from 29.4% in 2020 to 41.1% in 2021, primarily attributable
to the increase in gross profit margin of our unmanned retail business, merchandise wholesale,
vending machine sales and leases, and others segment.
Our gross profit generated from unmanned retail business increased by 59.3% from
RMB557.5 million in 2020 to RMB888.1 million in 2021. Our gross profit margin of unmanned
retail business increased from 41.7% in 2020 to 46.4% in 2021 mainly due to (i) our efforts in
merchandise management in early 2021 to refine our merchandise mix leading to higher
portion of food products with higher gross profit margin sold during the year, and (ii) the
increase in sales from high gross margin consumption scenarios such as public venues,
transportation hubs and schools as COVID-19 had been largely contained in China in 2021 and
foot traffic was gradually recovering.
Our gross profit generated from advertising and system support services decreased by
15.7% from RMB218.8 million in 2020 to RMB184.4 million in 2021. Our gross profit margin
generated from advertising and system support services decreased from 99.7% in 2020 to
75.9% in 2021, primarily due to the increase in subcontractor cost of advertising resources
from RMB0.5 million in 2020 to RMB58.1 million in 2021 as we engaged more subcontracted
advertising services from third parties.
Our gross profit generated from merchandise wholesale decreased by 26.4% from
RMB4.0 million in 2020 to RMB3.0 million in 2021 primarily due to the decrease in revenue
from merchandise wholesale as we strategically shifted focus to our unmanned retail business
and the partner model. Our gross profit margin generated from merchandise wholesale
increased from 3.5% in 2020 to 7.3% in 2021 as a result of our improved management over
wholesale prices.
We recorded negative gross profit of RMB32.2 million in 2020 and gross profit of
RMB13.9 million in 2021 for vending machine sales and leases. Such change was primarily
because we recognized impairment loss of inventories in 2020 as an impact of COVID-19
while no further impairment losses was recognized in 2021. Gross profit margin of vending
machine sales and leases increased from negative 68.5% in 2020 to 31.4% in 2021, primarily
due to the absence of impairment loss of inventories which was significant in 2020.
We recorded negative gross profit of RMB189.6 million in 2020 and gross profit of
RMB11.8 million in 2021 for our others segment. We recorded negative gross profit margin for
others segment of 103.5% in 2020 and gross profit margin of 2.7% for others segment in 2021.
Such change was primarily due to (i) the decrease in depreciation of property and equipment
and right-of-use assets attributable to our karaoke booth business, and (ii) the impairment loss
of property and equipment and right-of-use assets recognized on karaoke booths in operation
in 2020 in response to COVID-19. Gross profit from others segment in 2021 did not recuperate
FINANCIAL INFORMATION
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to the same level as in 2019 primarily because revenue from karaoke booths reduced as we
believe people had became more cautious about contracting COVID-19 and would generally
avoid confined public spaces, such as karaoke booths, while we continued to bear relevant
overhead costs such as depreciation of property and equipment.
Selling and marketing expenses
Our selling and marketing expenses slightly decreased by 0.6% from RMB1,083.7 million
in 2020 to RMB1,077.4 million in 2021, primarily due to (i) the decrease of RMB40.7 million
in depreciation in 2021 as compared with 2020, primarily because impairment losses were
recognized on non-core types of vending machines in 2020, which reduce carrying amount of
the property and equipment and right-of-use assets leading to further decrease in depreciation,
(ii) the decrease of RMB26.1 million in impairment loss of property and equipment and
right-of-use assets as we recognized significant amounts of impairment loss for our non-core
types of vending machines in 2020 in response to the COVID-19 pandemic, and (iii) the
decrease of RMB16.8 million in employee benefit expenses as we shifted our marketing efforts
to the partner model and downsized our internal sales team, partially offset by (i) the increase
of RMB32.7 million in POSs operation and development expenses attributable to the expansion
of our POS network, including the increase in the number of POSs under our partner model,
(ii) the increase of RMB41.0 million in logistics and transportation expenses also due to our
network expansion. Our selling and marketing expenses accounted for 57.0% and 40.3% of our
revenue in 2020 and 2021, respectively. The decrease in selling and marketing expenses as a
percentage of total revenue from 2020 to 2021 was primarily due to (i) the significant increase
in average monthly GMV of each of our vending machines from RMB2,180 per machine per
month for 2020 to RMB2,926 per machine per month for 2021 as the impact of COVID-19
wanes and (ii) the absence of impairment loss in 2021 which was recorded in 2020 as a result
of COVID-19.
General and administrative expenses
Our general and administrative expenses decreased by 75.9% from RMB511.0 million in
2020 to RMB123.3 million in 2021 and general and administrative expenses as a percentage
of revenue decreased from 26.9% in 2020 to 4.6% in 2021, primarily due to (i) the decrease
of RMB209.4 million in share-based payment in relation to share incentives granted to
management and core employees in 2020, while the corresponding amount in 2021 was
RMB1.5 million, and (ii) the decrease of RMB158.4 million in impairment loss of goodwill we
recognized in 2020 in response to the COVID-19 pandemic.
Research and development expenses
Our research and development expenses decreased by 11.4% from RMB41.5 million in
2020 to RMB36.8 million in 2021, primarily due to the one-off employee benefit expenses
incurred in 2020 to optimize our research and development personnel structure and the
decrease in average headcount in 2021 as we outsourced certain research and development
FINANCIAL INFORMATION
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projects to third-parties in 2021, partially offset by an increase of RMB10.1 million in
outsourced research consulting service expenses in relation to research and development
projects including our collaborations with Ant Group. See “Business — Research and
Development.”
Net impairment losses on financial assets
Net impairment losses on financial assets decreased by 51.7% from RMB58.4 million in
2020 to RMB28.2 million in 2021, primarily due to the decrease in the balance of trade
receivables as a result of our collection efforts around the end of 2021.
Other income
Our other income decreased by 39.3% from RMB20.2 million in 2020 to RMB12.3
million in 2021, primarily due to (i) the decrease of RMB5.1 million in interest income from
wealth management products, and (ii) the decrease of RMB3.7 million in government grants
primarily in relation to COVID-19.
Other gains/(losses), net
We recorded net other losses of RMB19.8 million in 2020, as compared to net other losses
of RMB14.7 million in 2021. The aforesaid change is primarily due to the decrease of
RMB16.3 million in fair value loss on financial assets at fair value through profit or loss
derived from the change of fair value of our investments in unlisted equity securities and
wealth management products, partially offset by (i) the decrease in net gains on
disposal/deregistration of subsidiaries of RMB7.9 million, primarily attributable to the losses
recognized from deregistration of certain subsidiaries in 2021, while we recorded net gains in
2020 as a result of disposal of subsidiary, and (ii) a loss of RMB5.0 million in 2020 mainly
attributable to fines and late fees.
Finance costs
Our finance costs decreased by 58.2% from RMB32.3 million in 2020 to RMB13.5
million in 2021, primarily due to a decrease in interest expenses on lease liabilities of
RMB19.3 million as a result of decreased lease liabilities in relation to finance leases of
vending machines and leases of warehouses and cars. In 2020 and 2021, the expansion of our
POS network was primarily supported by our direct procurement of machines instead of using
finance lease arrangements. Considering its flexibility, going forward, we still intend to
leverage available finance lease arrangements to support our POS network expansion. For
further details of our finance lease arrangements with machine manufacturers, see “Business
— Our Suppliers — Machine Manufacturers.”
FINANCIAL INFORMATION
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Share of results of investments accounted for using the equity method
Our share of losses of investments accounted for using the equity method increased by
17.9% from RMB3.5 million in 2020 to RMB4.1 million in 2021 primarily because our equity
interest in JR V ending Pte. Ltd., which suffered loss, increased from 43.5% to 60.6%, partially
offset by profit recognized from our interest in Hangzhou Penguin Technology Co., Ltd.
Profit/Loss before income tax
As a result of the foregoing, we recorded a loss before income tax of RMB1,171.5 million
in 2020 and a loss before income tax of RMB184.6 million in 2021.
Income tax expenses
We recorded income tax expenses of RMB12.7 million and RMB3.6 million in 2020 and
2021, respectively. The decrease in income tax expenses was primarily due to (i) the reversal
of deferred tax assets recognized in 2019, (ii) no recognition of new deferred income tax assets
related to certain temporary differences such as impairment and share-based compensation
expenses in 2020 as our management expected that taxable profits would be less than expected
due to the negative impact of COVID-19, while there were no such items in 2021 and resulting
to the decrease in deferred income tax expense, and (iii) the decrease in current income tax
expenses due to utilization of deductible tax losses incurred in 2020 due to the negative impact
of COVID-19.
Profit/Loss for the year
As a result of the foregoing, we recorded a loss of RMB1,184.2 million and RMB188.2
million in 2020 and 2021, respectively.
Y ear Ended December 31, 2020 Compared to Y ear Ended December 31, 2019
Revenue
Our revenue decreased by 30.3% from RMB2,727.5 million in 2019 to RMB1,902.0
million in 2020, primarily due to the movements of our operating results from the following
lines of business:
 Unmanned retail business. Revenue from unmanned retail business decreased by
13.2% from RMB1,539.9 million in 2019 to RMB1,336.8 million in 2020 primarily
due to significant decrease in overall outdoor consumer traffic as a result of the
COVID-19 outbreak, leading to the decrease in both the aggregate number of our
POSs in our POS network and average GMV per POS. Specifically, the number of
Ubox POSs decreased from 63,451 as of December 31, 2019 to 58,467 as of
December 31, 2020 and monthly average GMV per Ubox POS (excluding POSs of
POS partners who are restaurant model partners) decreased from RMB3,382 in 2019
to RMB2,180 in 2020.
FINANCIAL INFORMATION
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 Advertising and system support services. Revenue from advertising and system
support services decreased significantly by 59.4% from RMB540.6 million in 2019
to RMB219.6 million in 2020, which was primarily attributable to (i) the decrease
in revenue generated from operation system support from RMB21.7 million in 2019
to RMB16.5 million in 2020 due to the decrease in number of Non-Ubox POSs from
20,038 as of January 1, 2019 to 17,159 as of December 31, 2020 as a result of the
COVID-19 outbreak, and (ii) the decrease in revenue generated from digital
advertising services from RMB518.9 million in 2019 to RMB203.1 million in 2020
as a result of the decrease in demand for advertising services by advertisers due to
the significant decrease in overall outdoor consumer traffic as a result of the
COVID-19 outbreak.
 Merchandise wholesale. Revenue from merchandise wholesale decreased by 61.2%
from RMB297.9 million in 2019 to RMB115.5 million in 2020, primarily
attributable to a decrease in demand in 2020 as a result of the decrease in number
of merchandise wholesale customers as we strategically shifted focus to our
unmanned retail business and the partner model.
 V ending machine sales and leases. Revenue from vending machine sales and leases
decreased by 48.6% from RMB91.5 million in 2019 to RMB47.0 million in 2020,
primarily due to the decrease in number of machines sold or leased owing to the
negative impact of COVID-19.
 Others. Revenue from others segment decreased by 28.9% from RMB257.6 million
in 2019 to RMB183.2 million in 2020 primarily due to the impact of the COVID-19
outbreak.
Cost of sales
Our cost of sales decreased by 3.9% from RMB1,398.3 million in 2019 to RMB1,343.4
million in 2020, primarily due to (i) the decrease of RMB197.6 million in cost of inventory
sold primarily because we procured less merchandise for sale during the COVID-19 outbreak,
and (ii) the decrease of RMB49.8 million in subcontractor cost of advertising resources as we
incurred additional advertising costs with third-party advertising service provider, which did
not reoccur in 2020, partially offset by an increase of RMB215.8 million in impairment loss
of inventories, property and equipment and right-of-use assets primarily attributable to
non-core types of machines such as karaoke booths in operation and orange juice machines,
coconut juice machines and karaoke booths held for sale as a result of the COVID-19 outbreak.
FINANCIAL INFORMATION
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Gross profit and gross profit margin
As a result of the changes in our revenue and cost of sales described above, our gross
profit decreased by 58.0% from RMB1,329.2 million in 2019 to RMB558.6 million in 2020 and
our gross profit margin decreased from 48.7% in 2019 to 29.4% in 2020.
Our gross profit generated from unmanned retail business decreased by 18.4% from
RMB683.5 million in 2019 to RMB557.5 million in 2020. Our gross profit margin of unmanned
retail business slightly decreased from 44.4% in 2019 to 41.7% in 2020 primarily due to a
decrease in revenue generated from high gross margin consumption scenarios such as
transportation hubs, public venues and schools as such locations were particularly affected by
lockdowns, standstills and other restrictive measures adopted by PRC government authorities
in combating COVID-19.
Our gross profit generated from advertising and system support services decreased by
55.2% from RMB488.3 million in 2019 to RMB218.8 million in 2020. Our gross profit margin
generated from advertising and system support services increased from 90.3% in 2019 to
99.7% in 2020, primarily attributable to the relatively higher subcontractor cost of advertising
resources recorded in 2019 because we engaged subcontracted advertising services from third
parties in 2019 in connection with our services provided to some of our customers.
Our gross profit generated from merchandise wholesale decreased by 72.5% from
RMB14.7 million in 2019 to RMB4.0 million in 2020. Our gross profit margin generated from
merchandise wholesale decreased from 4.9% in 2019 to 3.5% in 2020, primarily attributable
to the increase in procurement costs of merchandise as a result of COVID-19.
We recorded gross profit of RMB15.1 million in 2019 and negative gross profit of
RMB32.2 million in 2020 for vending machine sales and leases. Such change was primarily
due to the increase in impairment losses of non-core types of machines held for sale such as
orange juice machines, coconut juice machines and karaoke booths as a result of the COVID-19
outbreak. In addition, gross profit margin of vending machine sales and leases decreased from
16.6% in 2019 to negative 68.5% in 2020 primarily due to the increase in impairment losses
non-core types of machines held for sale and karaoke booths in operation as a result of the
COVID-19 outbreak.
We recorded gross profit of RMB127.6 million in 2019 and negative gross profit of
RMB189.6 million in 2020 for others segment. Such change was primarily due to (i)
impairment loss of property and equipment and right-of-use assets primarily attributable to our
karaoke booths in operation as an impact of the COVID-19 outbreak, and (ii) the decrease in
revenue generated from others segment, as a result of closure of our karaoke booths due to the
outbreak COVID-19, while we still incurred costs in connection with karaoke booth services,
including depreciation and amortization of karaoke booths. As a result, gross profit margin for
others segment was 49.5% in 2019 and we recorded negative gross profit margin of 103.5% for
others segment in 2020.
FINANCIAL INFORMATION
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Selling and marketing expenses
Our selling and marketing expenses increased by 5.9% from RMB1,023.7 million in 2019
to RMB1,083.7 million in 2020, primarily due to an increase of RMB79.2 million in
depreciation, including depreciation of property and equipment and right-of-use assets in
relation to new vending machines purchased at the end of 2019, partially offset by a decrease
of RMB21.4 million in POSs operation and development expenses primarily as a result of the
number of POSs closed due to the negative impact of COVID-19 in 2020.
General and administrative expenses
Our general and administrative expenses increased from RMB156.1 million in 2019 to
RMB511.0 million in 2020 and general and administrative expenses as a percentage of revenue
increased significantly from 5.7% in 2019 to 26.9% in 2020, primarily due to (i) an increase
of RMB210.9 million in share-based payments recognized in 2020 in relation to share
incentives granted to our employees, and (ii) an increase of RMB158.4 million in impairment
loss of goodwill due to the COVID-19 outbreak which negatively affected the business and
expansion of the freshly brewed beverage vending machine business and karaoke booth service
business we acquired. See “— Selected Items from Consolidated Statements of Financial
Position — Intangible Assets” for further details.
Research and development expenses
Our research and development expenses decreased by 27.6% from RMB57.3 million in
2019 to RMB41.5 million in 2020, primarily due to (i) a decrease of RMB25.1 million in
outsourced research consulting service expenses to RMB0.6 million in 2020, while we incurred
RMB25.7 million in 2019 in connection with our research and development projects including
biometric authentication, merchant service platform and advertisement platform, and (ii) a
decrease of RMB1.1 million in amortisation of intangible assets in 2020 as certain intangible
assets were fully amortized in 2019, partially offset by an increase of RMB10.4 million in
employee benefit expenses mainly attributable to the one-off employee benefit expenses
incurred in 2020 to optimize our research and development personnel structure.
Net impairment losses on financial assets
Net impairment losses on financial assets increased from RMB10.9 million in 2019 to
RMB58.4 million in 2020, primarily due to impairment losses recognized for our trade and
other receivables due from advertisers whose businesses were significantly affected by the
outbreak of COVID-19 in 2020.
FINANCIAL INFORMATION
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Other income
Our other income increased by 18.0% from RMB17.1 million in 2019 to RMB20.2
million in 2020, primarily due to (i) the increase of RMB2.4 million in additional deduction
of input value-added tax, and (ii) the increase of RMB2.1 million in government grants,
partially offset by a decrease of RMB2.7 million in interest income arising from trade
receivables and bank deposits primarily attributable to interest income derived from
installment payments in relation to our machine sales.
Other gains/(losses), net
We recorded net other gains of RMB11.3 million in 2019, as compared to net other losses
of RMB19.8 million in 2020, primarily due to (i) the increase of RMB17.4 million in fair value
loss on financial assets at fair value through profit or loss derived from the change of fair value
of our investments in unlisted equity securities and wealth management products, (ii) we
recorded RMB14.1 million of net gains on disposal of investments accounted for using equity
method in 2019 as a result of our acquisition of additional equity interest in Shenzhen Y ouka,
upon completion of which, Shenzhen Y ouka become a subsidiary of our Company, while we
did not record any such gains in 2020, and (iii) the increase of RMB5.2 million of the net losses
on disposal of property and equipment as a result of the negative impact of COVID-19, which
was not prevailing in 2019.
Finance costs
Our finance costs decreased by 44.9% from RMB58.7 million in 2019 to RMB32.3
million in 2020, primarily due to (i) a decrease of RMB20.1 million in interest expenses on
borrowings as a result of repayment of borrowings and lower effective interest rate in 2020,
and (ii) a decrease of RMB6.3 million in interest expenses on lease liabilities in relation to
expiration of lease terms for certain machines leased by us.
Share of results of investments accounted for using the equity method
Our share of losses of investments accounted for using the equity method decreased by
51.6% from RMB7.2 million in 2019 to RMB3.5 million in 2020 primarily because we did not
record share of results of investments accounted for using the equity method in respect of
Shenzhen Y ouka in 2020 as it became our subsidiary after we acquired 46.0% equity interest
in Shenzhen Y ouka in December 2019. Upon completion of the acquisition, we held
approximately 70.3% equity interest in Shenzhen Y ouka. Share of losses of investments
accounted for using equity method of RMB3.5 million in 2020 was primarily attributable to the
recognition of losses from our investments in joint ventures and associates which were in the
early stage of their development.
FINANCIAL INFORMATION
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Profit/Loss before income tax
As a result of the foregoing, we recorded profit before income tax of RMB43.8 million
in 2019 and a loss before income tax of RMB1,171.5 million in 2020.
Income tax expenses
We recorded income tax expenses of RMB4.2 million and RMB12.7 million in 2019 and
2020, respectively. The increase in income tax expenses was primarily due to (i) the reversal
of deferred tax assets recognized in 2019, (ii) no recognition of new deferred income tax assets
related to certain temporary differences such as impairment and share-based compensation
expenses in 2020 as our management expected that taxable profits would be less than expected
due to the negative impact of COVID-19, both resulting to the increase of deferred income tax
expense, partially offset by (iii) the decrease in current income tax expenses as we recorded
less taxable profits in 2020 due to the negative impact of COVID-19.
Profit/Loss for the year
As a result of the foregoing, we recorded a profit of RMB39.6 million in 2019 and
recorded a loss of RMB1,184.2 million in 2020.
SELECTED ITEMS FROM CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
The following table sets forth selected information from our consolidated statements of
financial position as of the dates indicated, which have been extracted from our Group’s
audited consolidated financial statements included in Appendix I.
As of December 31, As of June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property and equipment 589,483 305,242 398,795 296,338 223,570
Right-of-use assets 570,852 446,249 359,487 289,070 247,138
Intangible assets 318,366 136,156 118,580 102,881 95,206
Investments accounted for
using the equity method 54,573 61,023 76,457 62,702 58,881
Financial assets at fair
value through profit or
loss 95,852 34,740 32,800 36,100 34,500
Prepayments, deposits and
other receivables 79,317 135,551 123,285 177,106 196,143
Trade receivables 26,754 4,499 49 – –
FINANCIAL INFORMATION
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As of December 31, As of June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Deferred income tax assets 50,168 42,346 41,761 36,665 40,495
Total non-current assets 1,785,365 1,165,806 1,151,214 1,000,862 895,933
Current assets
Inventories 231,158 150,163 186,779 143,887 126,834
Trade receivables 303,634 156,675 120,284 54,693 64,144
Prepayments, deposits and
other receivables 799,901 402,987 303,447 188,514 174,269
Financial assets at fair
value through profit or
loss 286,634 132,078 – – –
Restricted cash – – 2,500 2,735 3,126
Cash and cash equivalents 222,347 191,015 172,386 128,178 269,485
Total current assets 1,843,674 1,032,918 785,396 518,007 637,858
Total assets 3,629,039 2,198,724 1,936,610 1,518,869 1,533,791
EQUITY
Share capital 757,259 757,259 757,259 757,259 757,259
Reserves 1,765,801 1,767,571 1,765,917 1,765,917 1,815,444
Retained earnings/
(Accumulated losses) 99,297 (1,073,164) (1,258,164) (1,542,693) (1,695,173)
Equity attributable to
owners of the Company 2,622,357 1,451,666 1,265,012 980,483 877,530
Non-controlling interests 28,987 17,252 19,154 21,453 26,544
Total equity 2,651,344 1,468,918 1,284,166 1,001,936 904,074
LIABILITIES
Non-current liabilities
Lease liabilities 194,274 112,359 41,025 21,287 14,759
Other payables and
accruals 1,279 451 7 – –
Deferred income tax
liabilities 1,846 1,596 1,925 2,050 2,450
Total non-current
liabilities 197,399 114,406 42,957 23,337 17,209
FINANCIAL INFORMATION
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As of December 31, As of June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Current liabilities
Lease liabilities 214,675 126,199 77,543 38,390 29,481
Trade payables 261,297 168,523 250,093 214,666 234,585
Other payables and
accruals 247,858 218,071 210,386 159,475 217,899
Contract liabilities 14,747 10,421 8,592 7,496 37,575
Current income tax
liabilities 10,719 1,342 1,893 3,569 3,918
Borrowings 31,000 90,844 60,980 70,000 89,050
Total current liabilities 780,296 615,400 609,487 493,596 612,508
Total liabilities 977,695 729,806 652,444 516,933 629,717
Total equity and
liabilities 3,629,039 2,198,724 1,936,610 1,518,869 1,533,791
Inventories
Our inventories include merchandise and machines held for sale and raw materials such
as components for vending machines. To minimize the risk of inventory build-up, we review
our inventory levels on a regular basis. The value of our inventories accounted for 12.5%,
14.5%, 23.8%, 27.8% and 19.9% of our total current assets as of December 31, 2019, 2020,
2021, 2022 and June 30, 2023, respectively. The following table sets forth the details of our
inventories as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Raw materials 55,838 57,865 61,294 52,753 43,987
Merchandise 95,516 75,135 117,730 92,366 83,025
Machines held for sale 82,334 73,605 53,509 43,253 37,545
Less: provision of impairment on
raw materials – (8,258) (8,258) (8,214) (8,211)
provision of impairment on
machines held for sale (2,530) (48,184) (37,496) (36,271) (29,512)
Total 231,158 150,163 186,779 143,887 126,834
FINANCIAL INFORMATION
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Our inventories decreased by 35.0% from RMB231.2 million as of December 31, 2019 to
RMB150.2 million as of December 31, 2020, primarily due to (i) the significant increase in
provision of impairment from RMB2.5 million as of December 31, 2019 to RMB56.4 million
as of December 31, 2020, primarily attributable to provision of impairment recognized for
inventories in relation to orange juice machines, coconut juice machines and karaoke booths
as these machines became less desired as a result of the COVID-19 outbreak and (ii) the
decrease in merchandise resulting from the decrease in demand and drop in foot traffic as a
result of the COVID-19 outbreak. Our inventories increased by 24.4% from RMB150.2 million
as of December 31, 2020 to RMB186.8 million as of December 31, 2021. The increase was
primarily attributable to the increase in merchandise of RMB42.6 million resulting from the
increase in demands as a result of our POS network expansion and the gradual alleviation of
COVID-19 in mainland China, partially offset by the decrease in machines held for sale of
RMB20.1 million due to disposal or impairment of machines such as karaoke booths. Our
inventories decreased by 23.0% from RMB186.8 million as of December 31, 2021 to
RMB143.9 million as of December 31, 2022 as a result of (i) a decrease in merchandise
primarily due to the reduced procurement as sales of merchandise were negatively affected in
by the regional resurgences of COVID-19 in mainland China in December 2022, (ii) a decrease
in raw materials due to natural wear and tear and (iii) a decrease in machines held for sale as
we ceased promoting sales of machines in 2021. Our inventories decreased by 11.9% from
RMB143.9 million as of December 31, 2022 to RMB126.8 million as of June 30, 2023,
primarily due to (i) the decrease of RMB9.3 million in merchandise as a result of increased
sales at our POSs during the six months ended June 30, 2023 and (ii) a decrease of RMB8.8
million in raw materials as we consumed in the normal course of business.
The following table sets forth our inventory turnover days for the Track Record Period:
For the years ended December 31,
For the six
months ended
June 30,
2019 2020 2021 2022 2023
(days)
Inventory turnover days (1) 55 60 51 53 43
Note:
1. Inventory turnover days for a period are calculated using the average of open balance and closing
balance of the inventories for such period divided by cost of sales for the relevant period and multiplied
by 365 days for 2019, 2020, 2021 and 2022 and by 180 days for the six months ended June 30, 2023.
FINANCIAL INFORMATION
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Our inventory turnover days remained relatively stable during the Track Record Period.
The decrease in our inventory turnover days from 53 days in 2022 to 43 days for the six months
ended June 30, 2023, was primarily due to the increase in sales following the relaxation of
COVID-19 policies in late 2022 and overall recovery of consumer traffic and business
activities. Our inventory turnover days remained stable at 51 days in 2021 and 53 days in 2022.
The slight decrease from 60 days in 2020 to 51 days in 2021 was primarily due to the gradual
alleviation of the COVID-19 outbreak in mainland China which led to increased foot traffic and
increased sales. The slight increase in inventory turnover days from 55 days in 2019 to 60 days
in 2020 was due to reduction in cost of sales as a result of the temporary decline in consumer
demand and drop in foot traffic during the COVID-19 outbreak.
The following table sets forth an aging analysis of our inventories, based on invoice date,
as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1 month 119,599 69,655 96,647 79,690 78,094
1 to 3 months 34,136 14,919 11,735 19,972 9,121
4 to 12 months 21,642 44,255 36,936 17,612 6,686
Over 12 months
(1) 55,781 21,334 41,461 26,613 32,933
231,158 150,163 186,779 143,887 126,834
Note:
(1) Inventories aged over twelve months include raw materials and machines held for sale.
As of June 30, 2023, all the inventories aged over one year as of December 31, 2019, 2020
and 2021 had been subsequently sold or utilized. As of June 30, 2023, for the inventories aged
over one year as of December 31, 2022, approximately RMB8.0 million, or 11.3%, had been
subsequently sold or utilized. The majority of such remaining inventories were spare parts used
in the regular repair and maintenance of our machines which do not have an expiry date and
are expected to be used in due course in our ordinary course of business. As such, based on our
assessment, we believe there is no recoverability issue for inventories aged over one year. We
assessed the net realisable value of the inventories as of each balance sheet date in order to
determine whether any impairment provision is required to be made. Based on our best
estimate, as of each balance sheet date, the net realisable value of the inventories should exceed
the carrying values. Thus, we believe we have recorded sufficient provision for inventories
aged over one year to account for any future liabilities, write-offs or contingencies consistent
with HKFRS.
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As of the Latest Practicable Date, RMB83.4 million, or 50.7%, of our inventories as of
June 30, 2023 had been subsequently sold or utilized.
Trade Receivables
Trade receivables represent outstanding amounts receivable by us from customers
primarily in connection with the provision of advertising and system support services,
merchandise wholesale and vending machine sales and leases in the ordinary course of
business. The following table sets forth the details of our trade receivables as of the dates
indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 361,990 200,654 144,477 77,443 75,918
Less: allowance for
impairment (31,602) (39,480) (24,144) (22,750) (11,774)
Total 330,388 161,174 120,333 54,693 64,144
Our trade receivables, before considering allowance for impairment, decreased from
RMB362.0 million as of December 31, 2019 to RMB200.7 million as of December 31, 2020,
and to RMB144.5 million as of December 31, 2021 and further decreased to RMB77.4 million
as of December 31, 2022 and RMB75.9 million as as of June 30, 2023. The decrease from 2019
to 2020 was primarily due to (i) trade receivables in connection with sales of vending machines
being gradually settled and the decrease in number of vending machines sold as a result of the
development of our partner model, and (ii) decrease in trade receivables in connection with the
provision of advertising and system support services to advertisers in 2020 attributable to the
decrease in demand for such services as a result of the COVID-19 outbreak. The decrease in
2021 was primarily attributable to the decrease in sales of machines in 2021, coupled with our
enhanced collection efforts in 2021, including reviewing status of our trade receivables on a
monthly basis and proactive communication with relevant customers, monitoring of credit
terms, seek legal advice and take legal actions if necessary and appropriate. The decrease from
2021 to 2022 was primarily due to (i) the decrease in trade receivables in connection with the
provision of advertising and system support services to advertisers in 2022 attributable to the
decrease in demand for such services as a result of the COVID-19 and (ii) the decrease in trade
receivables as we recovered certain trade receivables with long ages and improved trade
receivables management. The slight decrease from December 31, 2022 to June 30, 2023 was
primarily because we recovered certain trade receivables in relation to our advertising and
system support services as a result of our improved trade receivables management.
FINANCIAL INFORMATION
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Allowance for impairment increased from RMB31.6 million as of December 31, 2019 to
RMB39.5 million as of December 31, 2020, which was primarily attributable to the COVID-19
outbreak and relevant concerns of collectability of trade receivables due from our customers.
Allowance for impairment subsequently decreased to RMB24.1 million as of December 31,
2021, RMB22.8 million as of December 31, 2022 and further to RMB11.8 million as of June
30, 2023, primarily because we wrote-off uncollectible receivables of RMB19.2 million in
2021, RMB6.0 million in 2022 and RMB13.3 million in the six months ended June 30, 2023.
See Note 3.1(b) to the Accountant’s Report as set out in Appendix I and “Risk Factors — Risks
Relating to Our Business and Industry — We are exposed to credit risk of our customers and
we may experience delays or defaults in settling our trade and other receivables.”
The following table sets forth our trade receivables turnover days for the Track Record
Period:
For the years ended December 31,
For the six
months ended
June 30,
2019 2020 2021 2022 2023
(days)
Trade receivables turnover
days (1) 108 183 85 77 54
Note:
1. Trade receivables turnover days for a period are calculated using the average of open balance and
closing balance of the trade receivables for such period divided by revenue from advertising and system
support services, merchandise wholesale and vending machine sales and leases as well as relevant
revenue from our others segment for the relevant period and multiplied by 365 days for 2019, 2020,
2021 and 2022 and by 180 days for the six months ended June 30, 2023.
During the Track Record Period, we generally grant our customers a credit term of 30 to
180 days. Our trade receivable turnover days increased from 108 days in 2019 to 183 days in
2020, primarily due to the impact of the COVID-19 outbreak, especially the impact on trade
receivables due from customers of our advertising and system support services, whose
businesses were negatively affected, which accounted for a larger portion of our trade
receivables in 2020. Our trade receivables turnover days decreased to 85 days in 2021,
primarily due to recovery of trade receivables and our enhanced collection efforts in 2021. Our
trade receivables turnover days decreased to 77 days in 2022, primarily due to the decrease in
trade receivables due from customers of our advertising and system support services. Our trade
receivables turnover days decreased to 54 days for the six months ended June 30, 2023,
primarily due to the decrease in long-term trade receivables and recovery of certain trade
receivables in relation to our advertising and system support services.
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The following table sets forth an aging analysis of our trade receivables, based on invoice
date, as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
0 to 3 months 166,164 72,803 77,047 31,530 39,947
3 to 6 months 17,532 15,063 3,352 9,377 7,690
6 to 12 months 80,441 46,092 11,276 10,721 9,976
1 to 2 years 52,384 32,921 37,120 7,059 9,370
Over 2 years 45,469 33,775 15,682 18,756 8,935
361,990 200,654 144,477 77,433 75,918
We have policies in place to ensure that sale of goods and service are made to customers
with a good credit history. We also have other monitoring procedures to ensure that follow-up
action is taken to recover overdue debts. During the Track Record Period, a portion of our trade
receivables were longer than the credit terms we typically offered to customers, which were
mainly receivables due from our customers from vending machine sales and leases. We have
further implemented certain procedures to strengthen our credit control. For instance, we are
actively monitoring the credit terms given to our customers and follow up on collection of our
trade receivables regularly. As such, barring any unforeseen circumstances, we do not expect
to experience any material recoverability issues for trade receivables.
During the Track Record Period, to determine the recoverability and amount of
impairment for our trade receivables, we assess expected credit losses of our trade receivables
on individual basis or grouped based on shared credit risk characteristics and the days past due.
See Note 3.1(b) to the Accountant’s Report as set out in Appendix I for the determination of
loss allowance provision. As a result, as of December 31, 2019, 2020, 2021, 2022 and June 30,
2023, we had allowance for impairment of trade receivables of RMB31.6 million, RMB39.5
million, RMB24.1 million, RMB22.8 million and RMB11.8 million, respectively. Our
Directors are of the view that we had recorded sufficient allowance for impairment of trade
receivables during the Track Record Period.
Our trade receivables aged over one year primarily comprise of receivables from POS
partners and non-Ubox POS operators with on-going business cooperations with our Group in
connection with machine sales and leases, sales of merchandise and provision of operation
support services. Based on the aforementioned policies and credit control procedures we have
in place, the continuous decrease in trade receivables aged over one year throughout the Track
Record Period, as well as our historical experience and on-going cooperation with the relevant
customers, we do not believe there is a material recoverability issue for trade receivables aged
over one year. As our POS partners and non-Ubox POS operators were directly affected by the
negative impacts of COVID-19 and recovery from negative impacts of COVID-19 is a gradual
FINANCIAL INFORMATION
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process, we will gradually enhance our collection efforts in 2023 while maintaining amicable
business relationships with POS partners and non-Ubox POS operators. As of June 30, 2023,
RMB16.7 million, or 64.7%, of our trade receivables aged over one year as of December 31,
2022 had been subsequently settled. In addition, we believe we have recorded sufficient
allowance for impairment of trade receivables for trade receivable aged over one year to
account for any future liabilities, write-offs or contingencies consistent with HKFRS.
As of the Latest Practicable Date, RMB51.6 million, or 68.0%, of our trade receivables
as of June 30, 2023 had been subsequently settled.
Prepayments, Deposits and Other Receivables
Our prepayments, deposits and other receivables comprise (i) prepayments for purchase
of machines, (ii) prepayments for purchase of inventories, (iii) prepayments for POSs
expenses, (iv) prepayments for listing expenses, (v) deposits, (vi) amount due from POS
partners, (vii) deductible input value-added tax, (viii) advances to a shareholder, (ix) advances
to and receivables from business partners, (x) advances to staffs, and (xi) others. The following
table sets forth details of our prepayments, deposits and other receivables as of the dates
indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Prepayments
Prepayments for purchase of machines 68,578 96,642 100,105 167,106 196,143
Prepayments for purchase of
inventories 56,368 55,801 65,589 38,802 26,525
Prepayments for POSs expenses 111,846 25,416 31,298 26,242 22,606
Prepayments for listing expenses – – 1,548 2,497 4,423
Others 17,631 10,741 16,225 15,293 4,281
254,423 188,600 214,765 249,940 253,978
Deposits and other receivables
Deposits
(1) 136,654 107,335 68,618 49,934 49,833
Amount due from POS partners (2) 19,814 39,663 71,289 36,135 26,152
Deductible input value-added tax 97,611 66,416 34,505 26,453 23,438
Advances to a shareholder
(3) 246,010 46,435 – – –
Advances to and receivables from
business partners 80,017 103,055 78,594 59,268 68,723
Advances to staffs 60,192 37,170 25,131 5,404 4,348
Others 8,563 5,769 14,043 10,461 8,415
Less: allowance for impairment of
deposits and other receivables
(4) (24,066) (55,905) (80,213) (71,975) (64,475)
Deposits and other receivables, net 624,795 349,938 211,967 115,680 116,434
FINANCIAL INFORMATION
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As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Prepayments, deposits and other
receivables 879,218 538,538 426,732 365,620 370,412
Less: non-current portion
– Prepayment, deposits and other
receivables (79,317) (135,551) (123,285) (177,106) (196,143)
Current portion 799,901 402,987 303,447 188,514 174,269
Notes:
1. Represent security deposits paid under finance lease arrangements in connection with certain of our
machines, and security deposits paid to POS site owners for our POSs.
2 Represent advances to POS partners for payment of POSs occupancy fees, which would be deducted
from their share of transaction GMV and are typically settled on a monthly basis.
3. Represent the advances provided to a then shareholder with respect to the repurchase of our Shares in
connection with our delisting from NEEQ. See Note 24 to the Accountant’s Report as set out in
Appendix I and “History and Development – Information on our Group – Our Company” for further
details.
4. Allowance for impairment of deposits and other receivables were allocated as follows:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Deposits 4,861 4,309 946 895 543
Amount due from POS
partners 2,284 5,098 11,975 10,636 3,751
Advances to and
receivables from
business partners 9,868 41,288 62,576 59,268 59,309
Advances to staffs 6,429 4,796 4,206 803 545
Others 624 414 510 373 327
Total 24,066 55,905 80,213 71,975 64,475
Our prepayments, deposits and other receivables slightly increased by 1.3% from
RMB365.6 million as of December 31, 2022 to RMB370.4 million as of June 30, 2023,
primarily due to (i) an increase in prepayments for purchase of machines of RMB29.0 million,
as we made prepayments for new machines and upgrading of old machines during the six
month ended June 30, 2023, (ii) an increase in advances to and receivables from business
partners of RMB9.5 million, partially offset by (iii) a decrease in prepayments for purchase of
inventories of RMB12.3 million, (iv) a decrease in others prepayments of RMB11.0 million,
and (v) a decrease in amount due from POS partners of RMB10.0 million.
FINANCIAL INFORMATION
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Our prepayments, deposits and other receivables decreased by 14.3% from RMB426.7
million as of December 31, 2021 to RMB365.6 million as of December 31, 2022, primarily due
to a decrease of RMB96.3 million in deposits and other receivables, net which primarily
comprised (i) a decrease in amount due from POS partners of RMB35.2 million, primarily
because we recovered amounts due from POS partners as we enhanced our collection efforts,
(ii) a decrease in advances to staffs of RMB19.7 million, primarily due to the development of
our partner model, and (iii) a decrease in advances to and receivables from business partners
of RMB19.3 million, primarily because we recovered outstanding loan and receivables,
partially offset by an increase of RMB35.2 million in prepayments which primarily comprised
an increase in prepayments for purchase of machines of RMB67.0 million, primarily because
we made prepayments for new machines in 2022 which we preordered in 2021 and did not
deploy in 2022 considering the overall business environment and negative impact of
COVID-19 during the year.
Our prepayments, deposits and other receivables decreased by 20.8% from RMB538.5
million as of December 31, 2020 to RMB426.7 million as of December 31, 2021, primarily due
to a decrease of RMB138.0 million in deposits and other receivables, net which primarily
comprised (i) a decrease in advance to a shareholder of RMB46.4 million, primarily due to the
settlement of advances provided to a then shareholder with respect to repurchase of our Shares
in connection with our delisting from NEEQ, (ii) a decrease in deposits of RMB38.7 million,
primarily due to the recovery of the security deposit upon expiry of finance lease arrangements,
and (iii) an increase in allowance for impairment of deposits and other receivables of RMB24.3
million, primarily due to allowance recognized for impairment of receivables from a business
partner, partially offset by an increase of RMB26.2 million in prepayments which primarily
comprised (iv) an increase in prepayments for purchase of inventories of RMB9.8 million,
primarily due to change of settlement terms with certain merchandise suppliers as they required
prepayment, (v) an increase in prepayments for POSs expenses of RMB5.9 million, primarily
due to arrangements with certain new POS site owners which required prepayment on a yearly
basis, and (vi) an increase of RMB3.5 million in prepayments for purchase of machines,
primarily comprise of prepayments for purchase of freshly brewed beverage vending machines.
Our prepayments, deposits and other receivables decreased by 38.7% from RMB879.2
million as of December 31, 2019 to RMB538.5 million as of December 31, 2020, primarily due
to (i) a decrease in advance to a shareholder of RMB199.6 million mainly attributable to the
settlement of the advance provided to a then shareholder in 2020 in connection with our
delisting from NEEQ, (ii) a decrease in prepayments for POSs expenses of RMB86.4 million,
primarily due to the development of our partner model in 2020 under which our POS partners
are typically responsible for occupancy fees and utility costs, (iii) an increase in allowance for
impairment of deposits and other receivables of RMB31.8 million, primarily due to allowance
recognized for impairment of receivables from a business partner, partially offset by (iv) an
increase in prepayments for purchase of machines of RMB28.1 million.
FINANCIAL INFORMATION
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Our prepayments comprise (i) prepayments for purchase of machines, (ii) prepayments
for purchase of inventories, (iii) prepayments for POSs expenses, (iv) prepayments for listing
expenses, and (v) others. Prepayments for purchase of machines arise from the contractual
obligation with our suppliers when we procure new machines from them. Prepayments for
purchase of inventories arise from the contractual obligation with merchandise suppliers as we
submit estimated demands for merchandise for the next month to them and deposit the
corresponding purchase price to suppliers’ accounts in full or in part in accordance with the
terms of the relevant contract in advance as prepayment. Prepayments for POSs expenses arise
from the contractual obligations with site owners, pursuant to which we shall pay in advance
the POSs operation expenses, which primarily include occupancy fees and utility costs,
monthly, quarterly or semi-annually. Prepayment for listing expenses relate to prepaid fees and
expenses to legal advisors, accountant and the industry consultant pursuant to the relevant
agreements. Others mainly comprise prepayments for logistics expenses, network expenses and
rental expenses pursuant to relevant agreements with third parties while certain prepayments
such as prepaid fuel cards could be discretionary.
As of the Latest Practicable Date, RMB101.0 million, or 23.2%, of our prepayments,
deposits and other receivables as of June 30, 2023 had been subsequently settled.
Amount due from POS partners
Amount due from POS partners increased from RMB19.8 million in 2019 to RMB39.7
million in 2020 and further to RMB71.3 million in 2021 primarily due to the increase in total
number of POS partners following our promotion of the partner model. Amount due from POS
partners decreased from RMB71.3 million in 2021 to RMB36.1 million as of December 31,
2022 and further decreased to RMB26.2 million as of June 30, 2023, primarily due to collection
of amounts due from POS partners as we enhanced our collection efforts. As of the Latest
Practicable Date, RMB13.9 million, or 53.3%, of amount due from POS partners as of June 30,
2023 had been subsequently settled.
The following table sets forth an aging analysis of our amount due from POS partners as
of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 15,350 31,976 53,571 23,273 16,016
1 to 2 years 3,973 3,835 11,742 5,787 3,910
2 to 3 years 477 3,693 3,495 4,280 2,738
3 to 4 years 14 145 2,409 2,507 1,277
4 to 5 years – 14 58 124 1,977
Over 5 years – – 14 164 234
19,814 39,663 71,289 36,135 26,152
FINANCIAL INFORMATION
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As of June 30, 2023, RMB5.6 million, or 15.5%, of our amount due from POS partners
aged over one year as of December 31, 2022 had been subsequently settled. We have ongoing
business relationship and cooperation with our POS partners. Considering the historical
relationship with our POS partners, our Directors believe there is no material recoverability
issue in respect of our amounts due from POS partners aged over one year as of June 30, 2023.
In addition, we believe we have recorded sufficient allowance for impairment of amount due
from POS partners aged over one year to account for any future liabilities, write-offs or
contingencies, which is consistent with HKFRS.
Advances to and receivables from business partners
Advances to and receivables from business partners primarily relate to (i) other
receivables from Beijing Y ouyang, a former subsidiary of the Company, which amounted to nil,
RMB78.3 million, RMB59.4 million, RMB59.3 million and RMB59.3 million as of December
31, 2019, 2020, 2021, 2022 and June 30, 2023, respectively, (ii) other receivables from
Hangzhou Penguin Technology Co., Ltd., which amounted to RMB9.5 million as of June 30,
2023, for further details, see “— Related Party Transactions”, and (iii) other advances to or
receivables from five potential vendors, each an Independent Third Party in relation to four
potential acquisitions of equity interests, machines and/or operating rights with a view to
support our business expansion, which amounted to RMB78.9 million, RMB23.5 million,
RMB18.0 million, nil and nil as of December 31, 2019, 2020, 2021, 2022 and June 30, 2023,
respectively.
The other receivables from Beijing Y ouyang arose from the provision of advertising and
system support services through Beijing Y ouyang to customers. For details of the disposal of
Beijing Y ouyang, see “History — Evolution of Our Group — 5. Disposals and Deregistration
during the Track Record Period and up to the Latest Practicable Date.” We recorded allowance
for impairment of such receivables of RMB38.5 million, RMB59.4 million, RMB59.3 million
and RMB59.3 million in view of the recoverability as business of Beijing Y ouyang deteriorated
in 2020, 2021, 2022 and the six months ended June 30, 2023, respectively, due to the
COVID-19 outbreak.
Save as the other receivables from Beijing Y ouyang, for which impairment provisions has
been made in full for the six months ended June 30, 2023, and the RMB9.5 million other
receivables from Hangzhou Penguin Technology Co., Ltd. as of June 30, 2023, all other
advances and receivables from business partners as of June 30, 2023 had been subsequently
settled.
FINANCIAL INFORMATION
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The following table sets forth an aging analysis of our advances to and receivables from
business partners as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 7,610 81,888 – – 9,455
1 to 2 years 49,557 609 59,427 – –
2 to 3 years 22,850 20,558 479 59,268 59,268
3 to 4 years – – 18,688 – –
80,017 103,055 78,594 59,268 68,723
Movements in advances to and receivables from business partners were as follows:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of
the year/period 72,966 80,017 103,055 78,594 59,268
Increase in the
year/period 7,610 81,888 – – 9,455
Decrease in the
year/period (559) (58,850) (24,461) (19,326) –
At the end of the
year/period 80,017 103,055 78,594 59,268 68,723
Advances to staff
Advances to staff represent the amounts advanced to sales staffs which draw down for
payment of POS operation and development expenses as they source POSs under our direct
operation model. Such advances are generally short-term and interest-free. Pursuant to our
internal policies, relevant staffs are required to settle utilized amounts by repayment in full
within one month from the date of utilisation or otherwise report to our finance department
within one week of consummation of the relevant business. The time between utilisation and
consummation of business depends on a number of factors, such as the number of POSs
involved, negotiations with site owners and delays caused by COVID-19, and could take
months. Our finance department will review the repayment status of advances to staff on a
monthly basis. For advances that had not been repaid within three months, a portion of the
relevant staff’s monthly salary will be withheld, and will only be released to the relevant staff
until the advance has been repaid in full. Although certain amounts aged beyond our normal
FINANCIAL INFORMATION
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settlement period, such amounts mainly related to advances for ongoing POS development
projects coupled with the impacts of COVID-19 on some of our POS partners. We plan to
conduct an overall review over those projects that were affected by COVID-19 before the end
of 2022 and ask relevant staffs to settle outstanding advances of those that cannot continue. The
overall decrease in advances to staffs during the Track Record Period was primarily due to the
development of our partner model. In view of the continuing decrease in advances to staff
during the Track Record Period, our Directors consider that the internal control policies of our
Group are effective. Going forward, we will closely monitor the repayment status of our
advances to staff and implement necessary measures to safeguard the interest of our Group and
Shareholders as and when appropriate. As of the Latest Practicable Date, RMB3.8 million, or
86.9%, of advances to staff as of June 30, 2023 had been subsequently settled.
The following table sets forth an aging analysis of our advances to sales staff as of the
dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 49,943 30,775 17,381 4,740 3,757
1 to 2 years 4,108 4,625 3,472 490 234
2 to 3 years 3,409 282 2,977 90 227
3 to 4 years 2,732 1,488 279 38 46
Over 4 years – – 1,022 46 84
60,192 37,170 25,131 5,404 4,348
Movements in advances to and receivables from staffs were as follows:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of
the year/period 63,768 60,192 37,170 25,131 5,404
Increase in the
year/period 49,943 30,775 17,381 4,740 1,893
Decrease in the
year/period (53,519) (53,797) (29,420) (24,467) (2,949)
At the end of the
year/period 60,192 37,170 25,131 5,404 4,348
FINANCIAL INFORMATION
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Financial Assets at Fair Value through Profit or Loss
During the Track Record Period, our financial assets at fair value through profit or loss
consist of wealth management products and unlisted equity securities. The movement of our
financial assets at fair value through profit or loss was primarily due to the purchase or disposal
of our investment in wealth management products. For details of fair value estimation, see Note
3.3 to the Accountant’s Report as set out in Appendix I. The following table sets forth details
of our financial assets at fair value through profit or loss as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Investments in wealth
management products 336,866 132,078 – – –
Investments in unlisted
equity securities 45,620 34,740 32,800 36,100 34,500
382,486 166,818 32,800 36,100 34,500
Less: non-current portion
– Investments in wealth
management products 50,232 – – – –
– Investments in unlisted
equity securities 45,620 34,740 32,800 36,100 34,500
Current portion 286,634 132,078 – – –
During the Track Record Period, we purchased wealth management products from
reputable licensed commercial banks in China. During the Track Record Period, we purchased
wealth management products with low level of risk as part of our cash management. Our
finance managers are responsible for managing our investments in wealth management
products. In accordance with our treasury management policy, our finance managers formulate
and execute plans for cash allocation among different wealth management products within the
approved scope of our investment structure and select the relevant banks and products. The
proposed investment must not interfere with our daily operational and investment activities.
Pursuant to our internal policies, the wealth management products invested by us shall
typically be limited to those with low risks and high liquidity offered by large scale, reputable
and licensed banks. The expected return rate should be higher than the bank deposit interest
rate for the same period and the term of such products shall generally be less than one year.
In addition, any investment less than RMB10.0 million must be approved by our chief financial
officer, any investment exceeding RMB10.0 million but less than RMB50.0 million must be
FINANCIAL INFORMATION
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--- page 474 ---
approved by our chief executive officer and Chairman of our Board, and any investment
exceeding RMB50.0 million must be approved by our Board. Our management is primarily
responsible for approving revisions of our treasury management policy and adjusting our
investment structure and our Board is responsible for reviewing our treasury management
policy each year. When investing in wealth management products, we aim to (i) maintain the
principal balance of cash and investments, (ii) maintain sufficient liquidity and minimize risks,
and (iii) achieve reasonable yield. We make investment decisions related to wealth
management products on a case-by-case basis after due and careful consideration of a number
of factors, including our overall financial condition, market and investment conditions,
investment costs, duration of investment, and the expected returns and potential risks of such
investment.
During the Track Record Period we invested in substantial amounts of wealth
management products. As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, our
investments in wealth management products amounted to RMB336.9 million, RMB132.1
million, nil, nil and nil, respectively. During the Track Record Period, the net realized gains
generated from such wealth management products was RMB5.1 million in 2019, RMB6.3
million in 2020, RMB1.2 million in 2021, RMB0.2 million in 2022 and RMB0.07 million for
the six months ended June 30, 2023, and the net unrealized gains of such wealth management
products was RMB2.3 million in 2019, RMB4.6 million in 2020, nil in 2021, nil in 2022 and
nil for the six months ended June 30, 2023. The returns on all of these wealth management
products are not guaranteed, and therefore we designated them as financial assets at fair value
through profit or loss. Fair value of our financial assets at fair value through profit or loss is
estimated by using valuation techniques and on the basis of market observable and
unobservable inputs. The use of unobservable inputs renders valuation uncertain, as changes of
unobservable inputs such as expected return rate may change the fair value of wealth
management products we purchased. The fluctuation of our financial assets at fair value
through profit or loss may continue to affect our results of operations in the future. See “Risk
Factors — Our financial assets at fair value through profit or loss are subject to fair value
fluctuations and the valuation of such assets is subject to uncertainties due to the use of
valuation techniques and market observable and unobservable inputs, which may in turn
adversely affect our financial performance.”
After the Listing, we intend to continue our investments in wealth management products
strictly in accordance with our internal polices, Articles of Association, and the requirements
under Chapter 14 of the Listing Rules.
FINANCIAL INFORMATION
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We have been in the past, and expect to continue, prudently evaluating and considering
a wide array of potential investments in emerging businesses that are complementary to our
business to implement our long-term growth strategy. We invest in targets whose principal
businesses are complementary to our Group’s core business segments which we consider will
provide considerable investment returns to our Shareholders and be conducive to the
sustainable growth and development of our Group. During the Track Record Period, we made
minority equity investments in certain private companies, which are measured as financial
assets at fair value through profit or loss. As of June 30, 2023, we had investments in two
unlisted PRC companies and the following table sets forth select details of such investments:
Place of
incorporation
and business
Particulars
of issued
capital
Proportion of ownership interests and
voting rights held by the Group as of
Fair value of
investment as
of June 30,
2023
December 31,
2019
December 31,
2020
December 31,
2021
December 31,
2022
June 30,
2023 Principal activities
(RMB million)
Shenzhen Daozhong
Innovation
Technology Co.,
Ltd. ( ଉέ̹༸ʕ
ʮ
̡)
PRC RMB13.0
million
10.00% 10.00% 19.2857% 19.29% 19.29% 22.9 Research and
development of
artificial intelligence
technology; research,
development and sales
of robots; technology
development of IoT
and internet
technology
Fuzhou Y ouxi
Intelligent
Internet of Things
Co., Ltd. ( ၅ψʾ
Ҧ
ʮ̡)
PRC RMB1.3
million
10.00% 10.00% 9.90% 9.70% 9.70% 11.6 V ehicle cleaning
services with IoT
technology deployed
Level 3 of fair value measurement
Our level 3 financial instruments included investments in wealth management products
and unlisted equity securities measured at fair value through profit or loss. As these instruments
are not traded in an active market, their fair values have been determined by using various
applicable valuation techniques, including discounted cash flow model and market approach
etc.
FINANCIAL INFORMATION
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In relation to the valuation of our level 3 financial instruments, our Directors adopted the
following procedures: (i) created the annual budget for wealth management products; (ii)
engaged an independent qualified third-party valuer to appraise the fair value of unlisted equity
securities, and performed valuation assessments for wealth management products based on
their expected returns; (iii) considered and discussed with valuers the financial and operating
data, as well as the development and the business plans of the investees; (iv) reviewed and
agreed on the valuation approaches adopted and key assumptions and inputs used, including
equity value/revenue ratio and discount rate for lack of marketability etc.; and (v) reviewed the
valuation working papers and results prepared by the independent valuer. Based on the above
procedures, our Directors are of the view that the valuation analysis performed by us is fair,
reasonable and adequate with reference to the “Guidance note on directors’ duties in the
context of valuations in corporate transactions” issued by the SFC, and our financial statements
are properly prepared.
Details of the fair value measurement of level 3 financial instruments, particularly the fair
value hierarchy, the valuation techniques and key inputs, including significant unobservable
inputs and the relationship of unobservable inputs to fair value, are disclosed in Note 3.3 to the
Accountant’s Report set forth in Appendix I prepared by the Reporting Accountant in
accordance with Hong Kong Standard on Investment Circular Reporting Engagement 200
issued by the Hong Kong Institute of Certified Public Accountants. The Reporting
Accountant’s opinion on the Historical Financial Information of our Group for the Track
Record Period as a whole is set out on I-1 to I-3 of Appendix I.
In relation to the valuation of our level 3 financial instruments, the Joint Sponsors have
conducted relevant due diligence work, including but not limited to, (i) review of the terms of
wealth management products and terms of investment agreements; (ii) review of relevant notes
in the Accountant’s Report set forth in Appendix I; (iii) discussed with us to understand (a) the
procedures performed for such valuation, (b) the key factors, valuation methodologies, and key
assumptions taken into account by us as advised by the independent valuer with respect to our
investments in unlisted equity securities, and (c) the internal control process undertaken by us
for reviewing the relevant valuation; (iv) review of the professional qualification of the
independent valuer engaged by us through desktop search; and (v) discussed with the
Reporting Accountant on its work performed in this regard. Having considered the work done
by the Directors and Reporting Accountant and the relevant due diligence done as stated above,
nothing has come to the attention of the Joint Sponsors that would reasonably cause them to
disagree with the views of the Directors and the Reporting Accountant in respect of the
valuation of level 3 financial instruments.
FINANCIAL INFORMATION
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Trade Payables
Our trade payables mainly represent payables to our suppliers for our machines and
merchandise. Our trade payables decreased by 35.5% from RMB261.3 million as of December
31, 2019 to RMB168.5 million as of December 31, 2020, primarily due to the decrease in
procurement of merchandise and machines as a result of the impact of the COVID-19 outbreak.
Our trade payables increased by 48.4% from RMB168.5 million as of December 31, 2020 to
RMB250.1 million as of December 31, 2021 in line with the expansion and recovery of our
business. Our trade payables decreased by 14.2% from RMB250.1 million as of December 31,
2021 to RMB214.7 million as of December 31, 2022 primarily due to the decrease in
procurement of merchandise which was mainly attributable to slower sales at our POSs in
December 2022 as compared to December 2021 as a result of the resurgence of COVID-19 in
2022. Our trade payables increased by 9.3% from RMB214.7 million as of December 31, 2022
to RMB234.6 million as of June 30, 2023, primarily due to the increase in procurement of
merchandise in line with the recovery of our business following the relaxation of COVID-19
policies and also in anticipation of the peak season in summer.
The following table sets forth an aging analysis of our trade payables, based on the
invoice date, as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
0 to 3 months 195,289 112,349 198,278 196,264 214,136
3 to 6 months 20,447 19,551 2,097 10,938 490
6 to 12 months 37,195 27,654 44,648 1,494 14,633
1 to 2 years 5,108 4,544 938 4,543 3,915
Over 2 years 3,258 4,425 4,132 1,427 1,411
261,297 168,523 250,093 214,666 234,585
FINANCIAL INFORMATION
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The following table sets forth our trade payables turnover days for the Track Record
Period:
For the years ended December 31,
For the six
months ended
June 30,
2019 2020 2021 2022 2023
(days)
Trade payables
turnover days (1) 55 58 49 59 55
Note:
1. Trade payables turnover days for a period are calculated using the average of open balance and closing
balance of the trade payables for such period divided by cost of sales for the relevant period and
multiplied by 365 days for 2019, 2020, 2021 and 2022 and by 180 days for the six months ended June
30, 2023.
Our trade payables turnover days remained stable at 55 days in 2019 and 58 days in 2020.
Our trade payables turnover days decreased to 49 days in 2021, primarily due to the change of
settlement terms with certain suppliers as we agreed to their requests for prepayment in
exchange for favourable pricing terms, which were determined after arm’s length negotiations
between our Group and the relevant suppliers. Our trade payables turnover days increased to
59 days in 2022, primarily due to a decrease in our cost of sales which was generally in line
with a decrease in our revenue. Our trade payables turnover days remained stable at 59 days
in 2022 and 55 days for the six months ended June 30, 2023.
As of the Latest Practicable Date, RMB194.1 million, or 82.7% of our trade payables
outstanding as of June 30, 2023 had been settled.
FINANCIAL INFORMATION
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--- page 479 ---
Other Payables and Accruals
Other payables and accruals comprise (i) accrued and payments of POSs operation
expenses, (ii) salaries, wages, and bonuses payables, (iii) deposits, (iv) other taxes payables,
(v) listing expenses payables, and (vi) others. The following table sets forth a breakdown of our
other payables and accruals as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Accrued and payments of
POSs operation expenses 167,872 139,613 112,719 55,932 97,140
Salaries, wages, and bonuses
payables 26,665 28,704 35,814 33,956 32,138
Deposits (1) 26,030 30,139 31,966 31,007 31,484
Other taxes payables 12,616 10,040 9,612 9,683 28,672
Listing expenses payables – – 5,738 11,811 9,432
Others
(2) 15,954 10,026 14,544 17,086 19,033
249,137 218,522 210,393 159,475 217,899
Less: non-current portion
Others (1,279) (451) (7) – –
Total 247,858 218,071 210,386 159,475 217,899
Notes:
1. The amounts of deposits mainly represent various deposits received from POS partners and Non-Ubox
POS operators in relation to vending machine business cooperation.
2. Represent short term rental payable and reimbursements payable to employees.
Other payables and accruals increased by 36.6% from RMB159.5 million as of December
31, 2022 to RMB217.9 million as of June 30, 2023, primarily due to the increase in accrued
and payments of POSs operation expenses of RMB41.2 million as a result of the increase in
sales at our POSs during the six months ended June 30, 2023.
Our other payables and accruals decreased by 24.2% from RMB210.4 million as of
December 31, 2021 to RMB159.5 million as of December 31, 2022, primarily due to the
decrease in accrued and payments of POSs operation expenses of RMB56.8 million as a result
of slower sales at our POSs in December 2022 as compared to December 2021.
Other payables and accruals remained stable at RMB218.1 million as of December 31,
2020 and RMB210.4 million as of December 31, 2021.
FINANCIAL INFORMATION
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--- page 480 ---
Other payables and accruals decreased by 12.0% from RMB247.9 million as of December
31, 2019 to RMB218.1 million as of December 31, 2020, primarily due to a decrease of
RMB28.3 million in accrued and payments of POSs operation expenses, which was due to our
reduced selling and marketing activities amidst the COVID-19 outbreak.
Property and Equipment
Our property and equipment consist of (i) vending machines, (ii) motor vehicles, (iii)
leasehold improvements, (iv) electronic equipment, and (v) office equipment and others. The
following table sets forth a breakdown of the net book amount of our property and equipment
as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
V ending machines 535,914 258,034 363,589 274,071 208,130
Motor vehicles 32,873 29,143 21,988 13,857 8,803
Leasehold improvements 10,628 10,098 6,786 3,466 2,192
Electronic equipment 5,966 4,918 4,115 3,213 3,095
Office equipment and
others 4,102 3,049 2,317 1,731 1,350
Total 589,483 305,242 398,795 296,338 223,570
Our property and equipment decreased by 24.6% from RMB296.3 million as of December
31, 2022 to RMB223.6 million as of June 30, 2023, primarily due to the decrease of RMB65.9
million in vending machines as a result of depreciation charges on vending machines during the
period.
Our property and equipment decreased by 25.7% from RMB398.8 million as of
December 31, 2021 to RMB296.3 million as of December 31, 2022, primarily due to the
decrease of RMB89.5 million in vending machines as a result of depreciation charges on
vending machines during the year.
Our property and equipment increased by 30.6% from RMB305.2 million as of December
31, 2020 to RMB398.8 million as of December 31, 2021, primarily due to an increase of
RMB77.6 million in vending machines, as we procured more vending machines to
accommodate our business expansion.
FINANCIAL INFORMATION
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--- page 481 ---
Our property and equipment decreased by 48.2% from RMB589.5 million as of December
31, 2019 to RMB305.2 million as of December 31, 2020, primarily due to a decrease in vending
machines of RMB277.9 million as a result of impairment recognized for certain types of our
machines, such as karaoke booths, orange juice machines and coconut juice machines. See
Note 16 to the Accountant’s Report as set out in Appendix I for details of recognizing
impairment on property and equipment.
Right-of-use Assets
Our right-of-use assets comprise the initial measurement of the corresponding lease
liability in relation to our vending machines, properties used as offices and warehouses, and
vehicles.
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, our right-of-use assets
were RMB570.9 million, RMB446.2 million, RMB359.5 million, RMB289.1 million and
RMB247.1 million, respectively. The decrease in our right-of-use assets during the Track
Record Period was primarily due to the expiry of lease terms for our leased machines and direct
procurement of machines without finance lease arrangement. For further details of our finance
lease arrangements with machine manufacturers, see “Business — Our Suppliers — Machine
Manufacturers.”
Intangible Assets
Our intangible assets consist of (i) goodwill, (ii) internally generated software, and (iii)
purchased software.
Our intangible assets decreased from RMB318.4 million as of December 31, 2019 to
RMB136.2 million as of December 31, 2020, primarily due to a decrease in goodwill. Goodwill
of our Group mainly arose from the acquisition of Shenzhen Y ouka for its freshly brewed
beverage vending machine business in 2019 and acquisition of karaoke booth service business
and other vending machine businesses prior to the Track Record Period. See Note 33 to the
Accountant’s Report as set out in Appendix I for details of the acquisition of Shenzhen Y ouka.
During the Track Record Period, we performed impairment review for goodwill annually
or more frequently if events or changes in circumstances indicate that it might be impaired.
Impairment review on goodwill has been conducted by the management as of December 31,
2019, 2020, 2021, 2022 and June 30, 2023. For the purpose of goodwill impairment review, the
recoverable amount of a cash-generation unit (or groups of cash-generating units) is the higher
of its fair value less cost of disposal and its value in use.
In 2020, goodwill impairment arose with respect to our freshly brewed beverage vending
machine business and karaoke booth service business primarily due to the COVID-19
pandemic. Based on the result of impairment testing for such businesses, impairment provision
of goodwill of RMB147.6 million and RMB10.8 million was recognized for the freshly brewed
beverage vending machine business and karaoke booth service business, respectively, in 2020.
FINANCIAL INFORMATION
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Our intangible assets decreased from RMB136.2 million as of December 31, 2020 to
RMB118.6 million as of December 31, 2021 and further decreased to RMB102.9 million as of
December 31, 2022 and to RMB95.2 million as of June 30, 2023, primarily due to amortization
charges on software.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity and Working Capital
During the Track Record Period and up to the Latest Practicable Date, we have funded our
working capital principally from cash generated from our business operations, bank borrowings
and capital contributions from our shareholders. After the Global Offering, we intend to
finance our future capital requirements through similar sources of funds, together with the net
proceeds to be received from the Global Offering. We do not anticipate any changes to the
availability of financing to fund our operations in the future. We currently do not expect any
significant changes in the mix and the relative costs of our capital resources.
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, we had cash and cash
equivalents and restricted cash of RMB222.3 million, RMB191.0 million, RMB174.9 million,
RMB130.9 million and RMB272.6 million, respectively. Our cash and cash equivalents consist
of cash at bank and cash on hand.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Operating cash flows before
movements in working
capital 328,978 (145,904) 90,556 23,919 23,057 42,867
Movements in working
capital 305,800 127,106 88,678 132,234 132,639 146,269
Interest received 1,885 1,327 1,829 1,681 631 700
Income taxes paid (23,270) (14,477) (2,114) (3,916) (469) (3,825)
FINANCIAL INFORMATION
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--- page 483 ---
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash generated
from/(used in) operating
activities 613,393 (31,948) 178,949 153,918 155,858 186,011
Net cash (used in)/
generated from investing
activities (717,349) 189,171 (22,742) (105,250) (89,799) (36,022)
Net cash generated
from/(used in) financing
activities 20,908 (188,557) (174,836) (92,876) (13,683) (8,682)
Net (decrease)/
increase in cash and
cash equivalents (83,048) (31,334) (18,629) (44,208) 52,376 141,307
Cash and cash equivalents
at the beginning of
the year/period 305,394 222,347 191,015 172,386 172,386 128,178
Effects of exchange rate
changes on cash and cash
equivalents 12–– ––
Cash and cash equivalents
at the end of the
year/period 222,347 191,015 172,386 128,178 224,762 269,485
Net cash generated from/(used in) operating activities
For the six months ended June 30, 2023, our net cash generated from operating activities
amounted to RMB186.0 million, which was primarily attributable to our loss before income tax
of RMB146.6 million, as adjusted by (i) positive movement of operating cash flow before
movements in working capital, which primarily comprised depreciation of property and
equipment of RMB74.1 million, share-based compensation expenses of RMB49.5 million and
depreciation of right-of-use assets of RMB47.7 million, (ii) changes in working capital, (iii)
interest received, and (iv) income taxes paid of RMB3.8 million. Positive changes in working
capital primarily consisted of (i) an increase in other payables and accruals of RMB58.4
million, primarily due to an increase in accrued and payments of POS operation expenses as
a result of the increase in sales at our POSs during the six months ended June 30, 2023, (ii)
an increase in contract liabilities of RMB30.1 million, primarily due to the advancement from
FINANCIAL INFORMATION
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--- page 484 ---
Hangzhou Huanxu Information Technology Co., Ltd., for advertising and promotion of its
payment service products (iii) an increase in trade payables of RMB26.3 million, primarily due
to the increase in procurement of merchandise in line with the recovery of our business
following the relaxation of COVID-19 policies and also in anticipation of the peak season in
summer, and (iv) a decrease in inventories of RMB23.8 million, primarily due to the decrease
in merchandise mainly attributable to increased sales at our POSs.
In 2022, our net cash generated from operating activities amounted to RMB153.9 million,
which was primarily attributable to our loss before income tax of RMB272.3 million, as
adjusted by (i) positive movement of operating cash flow before movements in working capital,
which primarily comprised depreciation of property and equipment of RMB144.1 million and
depreciation of right-of-use assets of RMB98.0 million, (ii) changes in working capital, (iii)
interest received, and (iv) income taxes paid of RMB3.9 million. Positive changes in working
capital primarily consisted of (i) a decrease in prepayments and deposits and other receivables
of RMB105.1 million primarily due to the decrease in prepayment for purchase of inventories
and the decrease in amount due from POS partners, and (ii) a decrease in trade receivables of
RMB61.0 million as we recovered certain trade receivables with long ages and improved trade
receivables management, partially offset by a decrease in other payables and accruals of
RMB50.9 million, primarily due to a decrease in accrued and payments of POSs operation
expenses as a result of slower sales at our POSs in December 2022 as compared to December
2021.
In 2021, our net cash generated from operating activities amounted to RMB178.9 million,
which was primarily attributable to our loss before income tax of RMB184.6 million, as
adjusted by (i) positive movement of operating cash flow before movements in working capital,
which primarily comprised depreciation of property and equipment of RMB102.0 million,
depreciation of right-of-use assets of RMB100.3 million and net impairment losses on financial
assets of RMB28.2 million, (ii) changes in working capital, (iii) interest received, and (iv)
income taxes paid of RMB2.1 million. Positive changes in working capital primarily consisted
of (i) an increase in trade payables of RMB81.6 million in line with the expansion of our
business, and (ii) a decrease in trade receivables of RMB36.9 million primarily due to our
enhanced collection efforts including communication with relevant customers and monitoring
of credit terms, partially offset by an increase in inventories of RMB26.9 million primarily due
to an increase in demands for merchandise sold through our POS network as COVID-19 had
been largely contained in China.
In 2020, our net cash used in operating activities amounted to RMB31.9 million, which
was primarily attributable to our loss before income tax of RMB1,171.5 million, as adjusted
by (i) positive movement of operating cash flow before movements in working capital, which
primarily comprised impairment of non-financial assets of RMB414.0 million, share-based
compensation expenses of RMB210.9 million, depreciation of property and equipment of
RMB158.1 million, depreciation of right-of-use assets of RMB118.5 million, and net
impairment losses on financial assets of RMB58.4 million, (ii) changes in working capital, (iii)
interest received, and (iv) income taxes paid of RMB14.5 million. Positive changes in working
capital primarily consisted of (i) a decrease in trade receivables of RMB147.1 million,
FINANCIAL INFORMATION
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--- page 485 ---
primarily due to trade receivables in connection with sales of vending machines being
gradually settled and the decrease in number of vending machines sold as a result of the
development of our partner model, and decrease in demand for advertising and system support
services as a result of the COVID-19 outbreak, (ii) a decrease in prepayments and deposits and
other receivables of RMB80.7 million, primarily due to decrease in prepayments for POSs
expenses, and (iii) a decrease in inventories of RMB27.1 million, primarily due to the decrease
in procurement of merchandise and machines as a result of COVID-19, partially offset by (iv)
a decrease in trade payables of RMB92.8 million, primarily due to the decrease in procurement
of merchandise and machines as a result of the impact of the COVID-19 outbreak, and (v) a
decrease in other payables and accruals of RMB30.6 million, primarily due to our reduced
selling and marketing activities amidst the COVID-19 outbreak.
In 2019, our net cash generated from operating activities amounted to RMB613.4 million,
which was primarily attributable to our profit before income tax of RMB43.8 million, as
adjusted by (i) positive movement of operating cash flow before movements in working capital,
which primarily comprised depreciation of property and equipment of RMB101.9 million and
depreciation of right-of-use assets of RMB101.8 million, (ii) changes in working capital, (iii)
interest received, and (iv) income taxes paid of RMB23.3 million. Positive changes in working
capital primarily consisted of (i) a decrease in prepayments and deposits and other receivables
of RMB238.5 million, primarily due to the use of deductible input value-added tax resulting
in the decrease in the deductible input-value added tax, and (ii) an increase in trade payables
of RMB89.1 million due to the increase in payables due to suppliers for our purchase of
machines, partially offset by (iii) an increase in inventories of RMB50.6 million primarily due
to the increase in procurement of raw materials, including biometric authentication modules,
for enhancement of our vending machines procurement of merchandise in anticipation of
favorable market conditions.
Net cash (used in)/generated from investing activities
For the six months ended June 30, 2023, our net cash used in investing activities
amounted to RMB36.0 million, which was primarily attributable to (i) payments for purchase
of property and equipment of RMB45.7 million in relation to the purchase of machines, which
mainly comprise pick-and-go cabinets, (ii) payments for purchase of financial assets at fair
value through profit or loss of RMB20.0 million in relation to our purchase of wealth
management products, and as adjusted by (iii) proceeds from disposal of financial assets at fair
value through profit or loss of RMB20.0 million in relation to our disposal of wealth
management products.
In 2022, our net cash used in investing activities amounted to RMB105.3 million, which
was primarily attributable to (i) payments for purchase of property and equipment of
RMB145.7 million in relation to the purchase of machines to support our network expansion,
(ii) payments for purchase of financial assets at fair value through profit or loss of RMB70.0
million in relation to our purchase of wealth management products, and as adjusted by (iii)
proceeds from disposal of financial assets at fair value through profit or loss of RMB70.0
million in relation to our disposal of wealth management products.
FINANCIAL INFORMATION
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In 2021, our net cash flows used in investing activities amounted to RMB22.7 million,
which was primarily attributable to (i) payments for purchase of financial assets at fair value
through profit or loss of RMB240.0 million in relation to our investments in wealth
management products, (ii) payments for purchase of property and equipment of RMB223.8
million, primarily as a result of the expansion of our POS network, and as adjusted by (iii)
proceeds from disposal of financial assets at fair value through profit or loss of RMB372.1
million in relation to our disposal of wealth management products, and (iv) proceeds from
repayment of advances to a shareholder and business partners of RMB83.1 million mainly in
relation to the advances provided to a then shareholder with respect to purchase of our Shares
in connection with our delisting from NEEQ. For further details of the advances to a then
shareholder in connection with our delisting from NEEQ, see Note 24 to the Accountant’s
Report as set out in Appendix I and “History and Development — Information on our Group
— Our Company.”
In 2020, our net cash flows generated from investing activities amounted to RMB189.2
million, which was primarily attributable to (i) proceeds from disposal of financial assets at fair
value through profit or loss of RMB635.4 million in relation to our disposal of wealth
management products, and (ii) proceeds from repayment of advances to a shareholder and
business partners of RMB58.3 million mainly in relation to the advances provided to a then
shareholder with respect to purchase of our Shares in connection with our delisting from
NEEQ, as adjusted by (iii) payments for purchase of financial assets at fair value through profit
or loss of RMB438.0 million in relation to our investments in wealth management products,
and (iv) payments for purchase of property and equipment of RMB76.7 million primarily as a
result of the expansion of our POS network to support our business growth, and (v) payments
for investment in associates in the amount of RMB40.0 million.
In 2019, our net cash flows used in investing activities amounted to RMB717.3 million,
which was primarily attributable to (i) payments for purchase of financial assets at fair value
through profit or loss of RMB2,508.0 million primarily in relation to our investments in wealth
management products, (ii) payments for purchase of property and equipment of RMB420.6
million, primarily as a result of the expansion of our POS network, (iii) advances to a
shareholder and business partners of RMB416.0 million mainly in relation to the advances
provided to a then shareholder with respect to purchase of our Shares in connection with our
delisting from NEEQ, (iv) payments for acquisition of subsidiaries, net of cash received of
RMB112.8 million, (v) payments for purchase of intangible assets of RMB59.7 million in
relation to our purchase of software for our pick-and-go cabinets, as adjusted by (vi) proceeds
from disposal of financial assets at fair value through profit or loss of RMB2,540.5 million in
relation to disposal of wealth management products, (vii) proceeds from repayment of
advances to a shareholder and business partners of RMB162.4 million, and (viii) proceeds from
disposal of property and equipment of RMB116.0 million.
FINANCIAL INFORMATION
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--- page 487 ---
Net cash generated from/(used in) financing activities
For the six months ended June 30, 2023, our net cash used in financing activities
amounted to RMB8.7 million, which was primarily attributable to (i) repayments of borrowings
of RMB40.0 million, and (ii) principal elements and interest element of lease payments of
RMB23.2 million, as adjusted by proceeds from borrowings of RMB59.1 million.
In 2022, our net cash flows used in financing activities amounted to RMB92.9 million,
which was primarily attributable to (i) principal elements and interest element of lease
payments of RMB93.5 million, and (ii) repayments of borrowings of RMB71.9 million, as
adjusted by proceeds from borrowings of RMB80.9 million.
In 2021, our net cash flows used in financing activities amounted to RMB174.8 million,
which was primarily attributable to (i) principal elements and interest element of lease
payments of RMB144.2 million, and (ii) repayments of borrowings of RMB94.9 million, as
adjusted by proceeds from borrowings of RMB65.0 million.
In 2020, our net cash flows used in financing activities amounted to RMB188.6 million,
which was primarily attributable to (i) principal elements and interest element of lease
payments of RMB245.9 million and (ii) repayments of borrowings of RMB37.4 million, as
adjusted by proceeds from borrowings of RMB97.2 million.
In 2019, our net cash flows generated from financing activities amounted to RMB20.9
million, which was primarily attributable to (i) proceeds from issuance of new shares of
RMB1,200.0 million in relation to the 2019 Capital Increase, (ii) proceeds from transfer of
repurchased shares of RMB150.0 million in connection with our delisting from NEEQ, as
adjusted by (iii) repayment of loans from non-financial institutions of RMB700.0 million and
(iv) principal elements and interest element of lease payments of RMB584.1 million.
Current Assets and Current Liabilities
The following table sets forth the components of our current assets and current liabilities
as of the dates indicated:
As of December 31,
As of
June 30,
As of
August 31
2019 2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current Assets
Prepayments, deposits and
other receivables 799,901 402,987 303,447 188,514 174,269 202,315
Inventories 231,158 150,163 186,779 143,887 126,834 152,078
Cash and cash equivalents 222,347 191,015 172,386 128,178 269,485 164,957
FINANCIAL INFORMATION
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--- page 488 ---
As of December 31,
As of
June 30,
As of
August 31
2019 2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Trade receivables 303,634 156,675 120,284 54,693 64,144 54,445
Restricted cash – – 2,500 2,735 3,126 622
Financial assets at
fair value through
profit or loss 286,634 132,078 – – – 20,001
Total current assets 1,843,674 1,032,918 785,396 518,007 637,858 594,418
Current Liabilities
Trade payables 261,297 168,523 250,093 214,666 234,585 212,050
Other payables and accruals 247,858 218,071 210,386 159,475 217,899 186,952
Lease liabilities 214,675 126,199 77,543 38,390 29,481 26,121
Borrowings 31,000 90,844 60,980 70,000 89,050 109,050
Contract liabilities 14,747 10,421 8,592 7,496 37,575 36,110
Current income tax
liabilities 10,719 1,342 1,893 3,569 3,918 2,558
Total current liabilities 780,296 615,400 609,487 493,596 612,508 572,841
Net current assets 1,063,378 417,518 175,909 24,411 25,350 21,577
Our net current assets remained relatively stable at RMB25.4 million as of June 30, 2023
and RMB21.6 million as of August 31, 2023.
Our net current assets remained relatively stable at RMB24.4 million as of December 31,
2022 and RMB25.4 million as of June 30, 2023.
Our net current assets decreased from RMB175.9 million as of December 31, 2021 to
RMB24.4 million as of December 31, 2022, primarily due to (i) a decrease in prepayments,
deposits and other receivables of RMB114.9 million primarily due to the decrease in
prepayment for purchase of inventories and the decrease in amount due from POS partners, (ii)
a decrease in trade receivables of RMB65.6 million primarily due to recovery of certain trade
receivables with long ages and our improved trade receivables management generally, (iii) a
decrease in cash and cash equivalents of RMB44.2 million, and (iv) a decrease in inventories
of RMB42.9 million primarily due to a decrease in merchandise as a result of reduced
procurement as sales were negatively affected in December 2022 by regional resurgences of
COVID-19, partially offset by (v) a decrease in other payables and accruals of RMB50.9
FINANCIAL INFORMATION
– 478 –


--- page 489 ---
million primarily due to the decrease in accrued and payments of POSs operation expenses, (vi)
a decrease in lease liabilities of RMB39.2 million primarily due to the expiration of our leases
for vending machines in 2021 under finance lease agreement as there were no new finance
lease of machinery and equipment in 2021 and 2022, respectively, and (vii) a decrease in trade
payables of RMB35.4 million primarily due to the decrease in procurement of merchandise and
machines.
Our net current assets decreased from RMB417.5 million as of December 31, 2020 to
RMB175.9 million as of December 31, 2021, primarily due to (i) a decrease in financial assets
at fair value through profit or loss of RMB132.1 million, primarily due to disposal of our
investment in wealth management products, (ii) a decrease in prepayments, deposits and other
receivables of RMB99.5 million primarily due to the further development of our partner model
since 2020 under which our POS partners typically bear the occupancy fee for machine spaces,
(iii) an increase in trade payables of RMB81.6 million in line with the expansion of our
business, and (iv) a decrease in trade receivables of RMB36.4 million due to our enhanced
collection efforts, partially offset by (v) an increase in inventories of RMB36.6 million,
primarily due to increased demands for our merchandise, and (vi) a decrease in lease liabilities
of RMB48.7 million, primarily due to the expiration of our leases for vending machines in
2021 under finance lease agreements.
Our net current assets decreased by 60.7% from RMB1,063.4 million as of December 31,
2019 to RMB417.5 million as of December 31, 2020, primarily due to (i) a decrease in
prepayments, deposits and other receivables of RMB396.9 million, primarily due to the
development of our partner model in 2020 under which our POS partners typically bear the
occupancy fee for machine spaces, (ii) a decrease in financial assets at fair value through profit
or loss of RMB154.6 million, primarily due to disposal of our investment in wealth
management products, (iii) a decrease in trade receivables of RMB147.0 million, primarily due
to the decrease in trade receivables from third-parties including advertisers for our advertising
and system support services and Non-Ubox POS operators in connection with our sale of
vending machines, and (iv) a decrease in inventories of RMB81.0 million, primarily because
we reduced the stock of merchandise in light of the COVID-19 outbreak, partially offset by (v)
a decrease in trade payables of RMB92.8 million, primarily due to the decrease in procurement
needs as a result of the impact of COVID-19 outbreak, and (vi) a decrease in lease liabilities
of RMB88.5 million, primarily due to the expiration of our leases for vending machines in
2020 under finance lease agreements.
Working Capital Statement
Taking into account the estimated net proceeds from the Global Offering and the financial
resources presently available to us, including our cash and cash equivalents, cash flows from
operating activities and our available banking facilities, our Directors are of the opinion that
we have sufficient funds to meet our working capital requirements for at least the next 12
months from the date of this prospectus.
FINANCIAL INFORMATION
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--- page 490 ---
INDEBTEDNESS
The following table sets forth a breakdown of our indebtedness as of the dates indicated:
As of December 31,
As of
June 30,
As of
August 31,
2019 2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Non-current
Lease liabilities 194,274 112,359 41,025 21,287 14,759 11,632
Current
Lease liabilities 214,675 126,199 77,543 38,390 29,481 26,121
Bank borrowings 31,000 90,844 40,980 50,000 69,050 89,050
Other borrowings – – 20,000 20,000 20,000 20,000
Total 439,949 329,402 179,548 129,677 133,290 146,803
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, our bank and other
borrowings amounted to RMB31.0 million, RMB90.8 million, RMB61.0 million, RMB70.0
million and RMB89.1 million, respectively. Such bank and other borrowings were all
denominated in RMB and bore a weighted average interest rate of 5.2475%, 4.7699%,
4.6758%, 5.6691% and 5.5795% respectively and were guaranteed by certain parties, including
our Company, Mr. Wang, the chairman of the Board and a member of the Single Largest Group
of Shareholders, companies within our Group and Mr. Y ang Ling, a substantial shareholder and
legal representative of Shenzhen Y oubao Online Technology Co., Ltd. (ҦϞ
ʮ̡), a subsidiary of our Group. For further details, see Note 32 to the Accountant’s Report
as set out in Appendix I. The guarantees provided by Mr. Wang and Mr. Y ang Ling are expected
to be released prior to Listing. Our other borrowings represent a borrowing from a non-bank
financial institution, wholly-owned by a financial services institution established by the
Shenzhen government and an Independent Third Party, in 2021, which is secured by a charge
over certain intellectual property rights of Shenzhen Y oubaokesi. The borrowing is interest-
bearing at a fixed rate of 4.9% per annum, and has been repaid as it fell due in July 2022. The
borrowing was entered into by our Group having considered that pursuant to relevant policies
promulgated by the Shenzhen government, by taking out such a loan from this financial
institution, we could benefit from a certain loan interest subsidy from the Shenzhen
government which renders the actual interest rate of such loan lower than the average interest
rate of our bank borrowings.
As of the Latest Practicable Date, we had unutilized banking facilities of RMB411.0
million.
FINANCIAL INFORMATION
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--- page 491 ---
We recognized total lease liabilities of RMB408.9 million, RMB238.6 million,
RMB118.6 million, RMB59.7 million and RMB44.2 million as of December 31, 2019, 2020,
2021, 2022 and June 30, 2023, respectively. For further information regarding our lease
liabilities, see Note 17 to the Accountant’s Report as set out in Appendix I. Among our total
lease liabilities, RMB393.1 million, RMB209.5 million, RMB57.2 million, RMB6.5 million
and RMB1.6 million as of December 31, 2019, 2020, 2021, 2022 and June 30, 2023,
respectively, were guaranteed by Mr. Wang. Such guarantees provided by Mr. Wang are
expected to be released prior to Listing. See Note 36(d) to the Accountant’s Report as set out
in Appendix I.
Except for our indebtedness as disclosed above, as of August 31, 2023, being the latest
practicable date for determining our indebtedness, we did not have any outstanding mortgages,
charges, debentures or other loan capital (issued or agreed to issue), bank overdrafts, loans,
liabilities under acceptance or acceptance credits, or other similar indebtedness, finance lease
commitments, hire purchase commitments, any guarantees or other material contingent
liabilities.
Our Directors confirm that as of the Latest Practicable Date, the agreements for our bank
borrowings or other borrowings did not contain any covenant that would have a material
adverse effect on our ability to make additional borrowings or issue debt or equity securities
in the future. Our Directors further confirm that we had no material defaults in payment of our
liabilities, and/or breaches of financial covenants during the Track Record Period, and there is
no material change in our indebtedness since August 31, 2023 up to the Latest Practicable Date.
We currently do not have any plans for material additional external financing other than the
Global Offering.
CONTINGENT LIABILITIES
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, we did not have any
material contingent liabilities.
FINANCIAL INFORMATION
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--- page 492 ---
CAPITAL EXPENDITURES AND COMMITMENTS
Capital Expenditures
Our capital expenditures primarily consist of payments for purchase of property and
equipment, payments for purchase of intangible assets. The following table sets forth our
capital expenditures for the periods indicated:
For the year ended December 31,
For the six
months ended
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Payments for purchase of
property and equipment 420,628 76,655 223,847 145,749 45,720
Payments for purchase of
intangible assets 59,742 4,625 – 143 –
Total 480,370 81,280 223,847 145,892 45,720
During the Track Record Period and up to the Latest Practicable Date, we had funded our
capital expenditures principally from cash generated from our business operations, bank
borrowings and capital contributions from our shareholders. We plan to fund our planned
capital expenditures using cash generated from operating activities and net proceeds received
from the Global Offering. See “Future Plans and Use of Proceeds” for further details. We may
reallocate the fund to be utilized on capital expenditures based on our ongoing business needs.
Capital Commitments
The following table sets forth our capital commitments contracted for but not yet incurred
as of the dates indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Equity investment 30,000 19,52 6–––
FINANCIAL INFORMATION
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--- page 493 ---
RELATED PARTY TRANSACTIONS
During the Track Record Period, we entered into a number of related party transactions
in relation to sales and purchase of goods and services. See Note 36 to the Accountant’s Report
as set out in Appendix I for details.
The following table sets forth our major related party transactions by nature for the
periods indicated:
For the year ended December 31,
For the six months
ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Sales of goods
Associates of the Group 2,365 7,099 7,576 6,664 2,979 2,837
Provision of services
Alipay China 89,358 30,288 34,957 29,930 23,939 25
Associates of the Group 735 2,208 1,489 2,579 1,341 496
Joint ventures of the
Group – 15 3––––
Hangzhou Huanxu
Information
Technology Co., Ltd. – – – 786 – 445
Ant Hainan – – – 25 25 –
90,093 32,649 36,446 33,320 25,305 966
Purchase of goods
Associates of the Group 2,59 5–––––
Ant Hainan – – 12,37 2–––
Joint ventures of the
Group –––––2
2,595 – 12,37 2––2
Purchase of services
Alipay China 3,378 9,262 11,996 11,638 5,022 6,091
Interest income
Associates of the Group ––––– 5 0 2
FINANCIAL INFORMATION
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--- page 494 ---
The following table sets forth the outstanding balances with related parties as of the dates
indicated:
As of December 31,
As of
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade in nature and
included in:
Trade receivables
Alipay China 20,355 739 27,268 9 –
Associates of the Group 2,777 9,962 3,532 4,060 4,989
23,132 10,701 30,800 4,069 4,989
Other receivables
Alipay China 1 46 46 – –
Associates of the Group – 700 703 700 700
1 746 749 700 700
Trade payables
Ant Hainan – – 8,178 9,786 9,786
Contract liabilities
Hangzhou Huanxu
Information Technology
Co., Ltd.
(i) –––– 27,833
Other payables
Associates of the Group 957 6,024 – 157 770
Non-trade in nature and
included in:
Prepayments
Associates of the Group
(ii) – – 10,000 10,000 –
Other receivables
Associates of the Group (ii) –––– 9,455
Notes:
(i) The balance represents advancement from Hangzhou Huanxu Information Technology Co., Ltd. for
advertising and promotion of its payment service products (for example, biometric authentication
payment services and merchandise recognition services) on our vending machines.
FINANCIAL INFORMATION
– 484 –


--- page 495 ---
(ii) The balance represents prepayment made to Hangzhou Penguin Technology Co., Ltd. to subscribe for
its further 5.88% equity interest. As relevant closing conditions under the investment agreement had not
been met, the Group entered into a supplemental agreement to the investment agreement with Hangzhou
Penguin Technology Co., Ltd. on June 6, 2023, pursuant to which the parties have agreed not to proceed
with closing under the investment agreement and Hangzhou Penguin Technology Co., Ltd. shall repay
the prepayments of RMB10.0 million, together with an utilisation fee calculated with reference to the
bank deposit interest rate for the same period, in six instalments based on the schedule agreed by both
parties before December 31, 2023. As a result, the balance and accrued interest was reclassified to other
receivables as of June 30, 2023.
Our Directors believe that our transactions with related parties during the Track Record
Period were conducted on an arm’s length basis, and they did not distort our results of
operations or make our historical results not reflective of our future performance. Our
Directors confirm that all loans or guarantees provided by or to our related parties, if any, will
be fully repaid or released before the Listing. The non-trade balances with related parties,
which represent prepayments of RMB10.0 million made to Hangzhou Penguin Technology Co.,
Ltd. to subscribe for its further 5.88% equity interest. Pursuant to the investment agreement,
we agreed to subscribe for, in aggregate, 20% equity interests in Hangzhou Penguin
Technology Co., Ltd. in three tranches at a total cash consideration of RMB60,000,000 subject
to the terms and conditions set out therein. As of the Latest Practicable Date, the subscription
of 14.12% equity interests in Hangzhou Penguin Technology Co., Ltd. has completed and we
held 14.12% of its equity interests. As relevant closing conditions under the investment
agreement had not been met, we entered into a supplemental agreement to the investment
agreement with Hangzhou Penguin Technology Co., Ltd. on June 6, 2023, pursuant to which
the parties have agreed not to proceed with closing to subscribe for the remaining 5.88% equity
interests in Hangzhou Penguin Technology Co., Ltd under the investment agreement and
Hangzhou Penguin Technology Co., Ltd. shall repay the prepayments of RMB10.0 million,
together with an utilisation fee calculated with reference to the bank deposit interest rate for
the same period, in six instalments based on the schedule agreed by both parties before
December 31, 2023. As of the Latest Practicable Date, three instalments had been settled. As
a result, the balance and accrued interest was reclassified to other receivables as of June 30,
2023.
OFF-BALANCE SHEET ARRANGEMENTS
During the Track Record Period and as of the Latest Practicable Date, we had not entered
into any off-balance sheet arrangements.
FINANCIAL INFORMATION
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--- page 496 ---
FINANCIAL RISK DISCLOSURE
The main risks arising from our financial instruments are market risk, credit risk and
liquidity risk. Our Board of Directors reviews and agrees policies for managing each of these
risks which are summarized below.
Market Risk
We are exposed to the risk of changes in foreign exchange and fair value interest rate.
Our businesses are principally conducted in RMB, which is exposed to foreign currency
risk with respect to transactions denominated in currencies other than RMB.
Our income and operating cash flows are substantially independent of changes in market
interest rates and we have no significant interest-bearing assets except for cash and cash
equivalents and restricted cash. Our exposure to changes in interest rates is mainly attributable
to our borrowings. Borrowings carried at floating rates are subject to cash flow interest rate
risk whereas those carried at fixed rates are subject to fair value interest rate risk. All of our
borrowings were carried at fixed rates which does not expose us to cash flow interest rate risk.
As of December 31, 2019, 2020, 2021, 2022 and June 30, 2023, our borrowings which were
bearing at fixed rates amounted to approximately RMB31.0 million, RMB90.8 million,
RMB61.0 million, RMB70.0 million and RMB89.1 million, respectively.
Credit Risk
We are exposed to credit risk primarily in relation to our cash and cash equivalents and
restricted cash, trade receivables and other receivables.
For cash and cash equivalents and restricted cash, our management manage the credit risk
by placing deposits in state-owned financial institutions in the PRC or reputable banks and
financial institutions having high-credit-quality in the PRC.
For trade and other receivables, we have policies in place to ensure that sale of goods and
service are made to customers with an appropriate credit history. We also have other
monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In
addition, we review regularly the recoverable amount of each individual receivable to ensure
that adequate impairment losses are made for irrecoverable amounts.
The carrying amounts of cash and cash equivalents and restricted cash, trade and other
receivables and contract assets represent our maximum exposure to credit risk in relation to the
assets.
FINANCIAL INFORMATION
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--- page 497 ---
We consider the probability of default upon initial recognition of asset and whether there
has been significant increase in credit risk on an ongoing basis during the Track Record Period.
A default on financial asset is when the counterparty fails to make contractual payments when
they fall due. To assess whether there is a significant increase in credit risk, we compare risk
of a default occurring on the assets as at the reporting date with the risk of default as at the
date of initial recognition. Especially the following indicators are incorporated:
 actual or expected significant adverse changes in business, financial economic
conditions that are expected to cause a significant change to the third-party debtor’s
ability to meet its obligations;
 actual or expected significant changes in the operating results of the customers;
 significant changes in the expected performance and behavior of the debtor,
including changes in the payment status of debtor.
For further details of our exposure to credit risk, see Note 3.1(b) to the Accountant’s
Report as set out in Appendix I.
Liquidity Risk
To manage the liquidity risk, we monitor and maintain a level of cash and cash
equivalents deemed adequate by our senior management to finance our operations and mitigate
the effects of fluctuations in cash flows.
The table below analyzes our financial liabilities into relevant maturity grouping based on
the remaining period at the end of each reporting period to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
Less than
1 year
Between
1 and
5 years
Total
contractual
cash flows
Carrying
amount
Total
RMB’000 RMB’000 RMB’000 RMB’000
As of December 31, 2019
Trade payables 261,297 – 261,297 261,297
Other payables and accruals
(excluding salaries, wages,
and bonuses payables and
other taxes payables) 208,577 1,279 209,856 209,856
Lease liabilities 291,024 199,779 490,803 408,949
Borrowings 31,742 – 31,742 31,000
792,640 201,058 993,698 911,102
FINANCIAL INFORMATION
– 487 –


--- page 498 ---
Less than
1 year
Between
1 and
5 years
Total
contractual
cash flows
Carrying
amount
Total
RMB’000 RMB’000 RMB’000 RMB’000
As of December 31, 2020
Trade payables 168,523 – 168,523 168,523
Other payables and accruals
(excluding salaries, wages,
and bonuses payables and
other taxes payables) 179,327 451 179,778 179,778
Lease liabilities 145,446 117,680 263,126 238,558
Borrowings 92,124 – 92,124 90,844
585,420 118,131 703,551 677,703
As of December 31, 2021
Trade payables 250,093 – 250,093 250,093
Other payables and accruals
(excluding salaries, wages,
and bonuses payables and
other taxes payables) 164,960 7 164,967 164,967
Lease liabilities 83,903 41,346 125,249 118,568
Borrowings 63,708 – 63,708 60,980
562,664 41,353 604,017 594,608
As of December 31, 2022
Trade payables 214,666 – 214,666 214,666
Other payables and accruals
(excluding salaries, wages,
and bonuses payables and
other taxes payables) 115,836 – 115,836 115,836
Lease liabilities 40,048 20,984 61,032 59,677
Borrowings 71,708 – 71,708 70,000
442,258 20,984 463,242 460,179
FINANCIAL INFORMATION
– 488 –


--- page 499 ---
Less than
1 year
Between
1 and
5 years
Total
contractual
cash flows
Carrying
amount
Total
RMB’000 RMB’000 RMB’000 RMB’000
As of June 30, 2023
Trade payables 234,585 – 234,585 234,585
Other payables and accruals
(excluding salaries, wages,
and bonuses payables and
other taxes payables) 157,089 – 157,089 157,089
Lease liabilities 31,086 14,873 45,959 44,240
Borrowings 91,646 – 91,646 89,050
514,406 14,873 529,279 524,964
DIVIDEND
We do not currently have a fixed dividend policy and may declare dividends from time
to time as our Board considers appropriate in compliance with our Articles of Association and
the applicable laws and regulations. Distribution of dividends will be formulated by our Board
at is discretion and will be subject to shareholders’ approval. Under the PRC Company Law and
our Articles of Association, all of our Shareholders holding the same class of shares have equal
rights to dividends and other distributions proportionate to their shareholding.
A decision to declare or pay any dividends in the future, and the amount of any dividend,
will depend on, a number of factors including, our results of operations, cash flows and
financial condition, operating and capital expenditure requirements, distributable profits as
determined under PRC GAAP or HKFRS (whichever is lower), our Articles of Association, the
PRC Company Law and any other applicable PRC Law and other factors that our Directors may
consider relevant. In any event, we will pay dividends out of our profit after tax only after we
made the following allocations:
 recovery of accumulated losses, if any;
 allocation to the PRC statutory reserve an amount equivalent to 10% of our profit
after tax, as determined under PRC GAAP; and
 allocation, if any, to a discretionary common reserve fund an amount approved by
the shareholders in a shareholders’ meeting.
FINANCIAL INFORMATION
– 489 –


--- page 500 ---
The minimum allocation to the PRC statutory reserve is 10% of our profit after tax, as
determined under PRC GAAP . When the statutory common reserve fund reaches and is
maintained at or above 50% of our registered capital, no further allocation to this PRC statutory
reserve will be required. Any distributable profits that are not satisfied in any given year will
be retained and become available for distribution in subsequent years.
As confirmed by our PRC Legal Advisor, according to relevant PRC Law, we cannot pay
any dividends considering our accumulated losses position. No dividends were paid to the
shareholders of the Company during the Track Record Period. Any future declaration of
dividends may or may not reflect our prior declarations of dividends.
DISTRIBUTABLE RESERVES
As of June 30, 2023, our Group did not have any distributable reserves.
UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS
The following unaudited pro forma adjusted consolidated net tangible assets of our Group
prepared in accordance with Rule 4.29 of the Listing Rules is for illustrative purposes only, and
is set out below to illustrate the effect of the Global Offering on the consolidated net tangible
assets of the Group attributable to the owners of the Company as of June 30, 2023 as if the
Global Offering had taken place on that date.
The unaudited pro forma adjusted consolidated net tangible assets has been prepared for
illustrative purposes only, and because of its hypothetical nature, it may not give a true picture
of the financial position of the Group had the Global Offering been completed as of June 30,
2023 or any future dates.
Audited
consolidated net
tangible assets
of the Group
attributable to
owners of the
Company as of
June 30, 2023
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
the owners of
the Company
as of June 30,
2023
Unaudited pro forma adjusted
consolidated net tangible assets
per Share
(Note 1) (Note 2) (Note 3) (Note 4)
RMB’000 RMB’000 RMB’000 RMB HK$
Based on an Offer Price
of HK$9.4 per Share 782,324 168,402 950,726 1.22 1.33
Based on an Offer Price
of HK$11.4 per Share 782,324 208,213 990,537 1.27 1.38
FINANCIAL INFORMATION
– 490 –


--- page 501 ---
Notes:
(1) Our audited consolidated net tangible assets of the Group attributable to the owners of our Company as of June
30, 2023 is extracted from the Accountant’s Report set out in Appendix I, which is based on the audited
consolidated net assets of the Group attributable to the owners of the Company as of June 30, 2023 of
RMB877,530,000 with an adjustment for the intangible assets of RMB95,206,000.
(2) The estimated net proceeds from the Global Offering are based on the indicative Offer Price of HK$9.4 and
HK$11.4 per Share, respectively, after deduction of the underwriting fees and other related expenses
(excluding listing expenses of approximately RMB45,069,000 which have been accounted for during the Track
Record Period) paid or payable by our Company and takes no account of any Shares which may be issued upon
the exercise of options granted under the Pre-IPO Incentive Scheme or any Shares which may be issued or
repurchased by our Company pursuant to the general mandates.
(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the adjustments
referred to in the preceding paragraphs and on the basis that 779,835,433 Shares were in issue assuming that
the Global Offering have been completed on June 30, 2023 but takes no account of any Shares which may be
issued upon the exercise of options granted under the Pre-IPO Incentive Scheme or any Shares which may be
issued or repurchased by our Company pursuant to the general mandates.
During the six months ended June 30, 2023, the Group granted share options to 27 grantees in accordance with
the Pre-IPO Incentive Scheme to subscribe for a total of 37,750,000 shares of the Company at a price of
RMB1.99 per share. The grantees will be entitled to exercise the share options by batch after the Global
Offering subject to satisfaction of the relevant conditions of exercise. However, had such 37,750,000 shares
issued per the exercise of the share options granted been taken into account, such that 817,585,433 shares are
in issue following the completion of the Global Offering, the unaudited pro forma adjusted net tangible assets
per Share would have been RMB1.25 (equivalent to HK$1.37) and RMB1.30 (equivalent to HK$1.42) based
on the Offer Price of HK$9.4 per Share and HK$11.4 per Share, respectively.
(4) For the purpose of this unaudited pro forma adjusted consolidated net tangible assets per Share, the amounts
stated in Renminbi are converted into Hong Kong dollars at the rate of RMB0.9185 to HK$1.00. No
representation is made that Renminbi has been, could have been or may be converted to Hong Kong dollars,
or vice versa, at that rate.
(5) Except as disclosed above, no adjustment has been made to reflect any trading results or other transactions of
the Group entered into subsequent to June 30, 2023.
DISCLOSURE REQUIRED UNDER THE LISTING RULES
As of the Latest Practicable Date, our Directors confirm that there are no circumstances
that would give rise to a disclosure requirement under Rule 13.13 to Rule 13.19 of the Listing
Rules.
FINANCIAL INFORMATION
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--- page 502 ---
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, as of the date of this prospectus, there has been no material
adverse change in our financial and trading positions or prospects since June 30, 2023, being
the end of the period reported on in the Accountant’s Report as set out in Appendix I.
LISTING EXPENSES
The listing expenses in connection with the Global Offering are estimated to be RMB72.4
million (including underwriting-related expenses of approximately RMB8.6 million, and
non-underwriting related expenses of approximately RMB63.8 million, which consists of fees
and expenses of legal advisors and accountant of approximately RMB50.6 million and other
fees and expenses of approximately RMB13.2 million, based on an Offer Price of HK$10.40
per Offer Share, being the mid-point of the proposed Offer Price range), representing 33.6%
of the gross proceeds from the Global Offering of RMB215.7 million based on the Offer Price
of HK$10.40 per Share, being the mid-point of the proposed Offer Price range. During the
Track Record Period, we incurred listing expenses of RMB46.4 million, of which RMB45.1
million was recognized in the consolidated statement of comprehensive income and RMB1.3
million was recognized as prepayments in the consolidated statement of financial position
which will be accounted for as a deduction from equity upon Listing. Subsequent to the Track
Record Period, we expect to further incur listing expenses of RMB26.0 million prior to and
upon completion of the Global Offering, of which (i) RMB22.4 million is expected to be
recognized as expenses in our consolidated statement of comprehensive income; and (ii)
RMB3.6 million is expected to be accounted for as a deduction from equity upon Listing under
the relevant accounting standard.
FINANCIAL INFORMATION
– 492 –


--- page 503 ---
FUTURE PLANS
See “Business — Our Strategies” for a detailed discussion of our future plans.
USE OF PROCEEDS
Assuming an Offer Price of HK$10.40 per Offer Share, being the mid-point of the Offer
Price range of HK$9.40 to HK$11.40 per Offer Share, we estimate that we will receive net
proceeds from the Global Offering of approximately HK$155.9 million (after deducting the
underwriting commissions and other estimated expenses paid and payable by us in relation to
the Global Offering). We intend to use the net proceeds from the Global Offering for the
purposes and in the amounts set forth below:
(i) approximately 80.0%, or HK$124.8 million, for expanding the coverage and
penetration of our POS network. We plan to increase the number of POSs in
different consumption scenarios including schools, factories, restaurants, office
premises, public places and other high-quality types of sites in tier one, new tier one,
tier two and tier three cities in mainland China. We plan to open a total of
approximately 18,000 new POSs over the two years following the Global Offering,
with approximately 3,000 and 15,000 new POSs in the second half of 2023 and
2024, respectively. We plan to place pick-and-go cabinets in more than 80% of the
new POSs. We estimate the costs of setting up a new POS with pick-and-go cabinet
will be approximately RMB7,000 to RMB9,000, whereas the costs of a new POS
with other kinds of machines, i.e. beverage vending machine, beverage and snack
vending machine and freshly brewed beverage vending machine, will range from
RMB18,000 to RMB26,000. Our beverage vending machines, beverage and snack
vending machines and freshly brewed beverage vending machines deliver the
merchandise or beverages to the customers with their internal mechanical systems,
such as structures of motors and sensors, which are more complex than that of the
pick-and-go cabinets and lead to the relatively higher production costs and setting
up costs. We plan to supplement any shortfall in the estimated expenses with our
internal resources and/or bank borrowings;
Set forth below is a breakdown of the proportion of new POSs expected to be opened
by city tier for each of 2023 and 2024:
City Tiers For each of 2023 and 2024
Tier one Cities 25-30%
New Tier one Cities 40-45%
Tier two Cities 25-30%
Tier three Cities 5-10%
FUTURE PLANS AND USE OF PROCEEDS
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--- page 504 ---
According to Frost & Sullivan, vending machines in mainland China covered only
8.8% of the country’s potentially available offline sites in 2022. It is expected that
there will be sufficient sites available for the Group to expand its POS network from
2023 to 2026 primarily because, according to Frost & Sullivan, there are more than
ten million potentially available sites in mainland China for the placement of
vending machines. We believe that there will be sufficient demand to support our
expansion plan since, according to Frost & Sullivan, (i) the market size of retail
sales of consumer goods market, which was RMB44.0 trillion in 2022, is expected
to grow with a CAGR of approximately 5.9% from 2022 to 2027; (ii) the market size
of unmanned retail market, which was RMB29,916.5 million in 2022, is expected to
grow with a CAGR of approximately 20.4% from 2022 to 2027; and (iii) the market
size of vending machine retail market, which was RMB28,908.1 million in 2022, is
expected to grow with a CAGR of approximately 20.7% from 2022 to 2027.
Leveraging our well-established brand recognition and position in the market, we
believe that we will be able to further expand our market presence and deepen our
market penetration.
(ii) approximately 5.0%, or HK$7.8 million, for further developing our operation
capabilities and enhancing our warehouse inventory management capabilities by
building or upgrading our warehouses and/or logistics systems across mainland
China. In particular, we will lease more premises of various sizes for warehousing
to establish a more comprehensive operation network in mainland China at regional,
city and front operation levels. We plan to open a total of approximately 15-30 new
warehouses over the two years following the Global Offering, with approximately
5-10 and 10-20 new warehouses in 2023 and 2024, respectively. We expect the costs
of opening new warehouses will mainly consist of rental expenses, renovation costs
and staff costs. We plan to supplement any shortfall in the estimated expenses with
our internal resources and/or bank borrowings;
(iii) approximately 7.0%, or HK$10.8 million, for further developing our R&D
capabilities and enhancing the technologies in our operation systems and vending
machines, among which:
 approximately 1.5%, or HK$2.3 million, for hardware upgrade. We will expand
the capacity of our servers and infrastructure, as well as leasing more cloud
servers to support our platform;
 approximately 4.0%, or HK$6.2 million, for software enhancement. We plan to
upgrade our technology capabilities to better support our services, including
technologies relating to, among others, visual identification, inventory
management and operations scheduling, as well as data analytics; and
FUTURE PLANS AND USE OF PROCEEDS
– 494 –


--- page 505 ---
 approximately 1.5%, or HK$2.3 million, for recruiting talents. To enhance our
research and development capabilities, we will hire, among others, around 20
engineers with suitable experience in relevant algorithm, software and
hardware development in the two financial years ending December 31, 2024.
We plan to hire engineers with 2 to 5 years of relevant industry experience at
the monthly salary in the range of RMB20,000 to RMB50,000. Our total
spending in this connection will depend on our business development and
revenue growth, among others, in the event that the actual amount of net
proceeds available for this use is insufficient to cover our total spending, the
shortfall will be met by our internal resources and/or bank borrowings; and
(iv) approximately 8.0%, or HK$12.5 million, for working capital and other general
corporate purposes.
We estimate that we will receive from the Global Offering net proceeds, after deducting
the underwriting fees and estimated expenses payable by us in connection with the Global
Offering, in the amount set forth in the following table:
Based on the low-end
of the proposed
Offer Price range of
HK$9.40
Based on the mid-point
of the proposed
Offer Price range of
HK$10.40
Based on the high-end
of the proposed
Offer Price range of
HK$11.40
Approximately
HK$134.3 million
Approximately
HK$155.9 million
Approximately
HK$177.6 million
The allocation of the proceeds as set out above will be adjusted on a pro rata basis in the
event that the Offer Price is fixed below or above the midpoint of the indicative price range.
If the net proceeds of the Global Offering are not immediately applied to the above
purposes, we will only deposit those net proceeds into short-term interest-bearing accounts at
licensed commercial banks and/or other authorised financial institutions in Hong Kong and
mainland China (as defined under the SFO, the Law of the People’s Republic of China on
Commercial Banks (جand other relevant PRC Law).
If any part of our development plan does not proceed as planned for reasons such as the
occurrence of force majeure events, we will carefully evaluate the situation and may reallocate
the net proceeds from the Global Offering. We will issue announcements, where required, if
there is any material change in the use of proceeds mentioned above.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 506 ---
IMPLEMENTATION TIMELINE
The table below sets forth the expected implementation timetable of our planned use of
proceeds:
For the year ending
December 31,
2023 2024 Total
%o f
Total
(HK$ in millions, except for percentages)
Implementing our expansion initiatives 31.5 93.2 124.8 80.0
Further developing our operation network 2.1 5.7 7.8 5.0
Enhancing our technologies 2.5 8.2 10.8 7.0
Hardware upgrade 0.7 1.6 2.3 1.5
Software enhancement 1.6 4.6 6.2 4.0
Recruiting talents 0.3 2.0 2.3 1.5
Working capital and other general corporate
purposes 6.3 6.3 12.5 8.0
Total 42.4 113.5 155.9 100.0
Note: Our strategies in 2024 will be partially funded by the net proceeds from the Global Offering. The
remainder will be funded by our internal resources and/or bank borrowings.
FUTURE PLANS AND USE OF PROCEEDS
– 496 –


--- page 507 ---
HONG KONG UNDERWRITERS
Huatai Financial Holdings (Hong Kong) Limited
China Securities (International) Corporate Finance Company Limited
V aluable Capital Limited
ABCI Securities Company Limited
CCB International Capital Limited
China Galaxy International Securities (Hong Kong) Co., Limited
CMB International Capital Limited
ICBC International Securities Limited
Livermore Holdings Limited
UNDERWRITING
This prospectus is published solely in connection with the Hong Kong Public Offering.
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on a
conditional basis. The International Offering is expected to be fully underwritten by the
International Underwriters subject to the terms and conditions of the International
Underwriting Agreement. If, for any reason, the Offer Price is not agreed between the Overall
Coordinators (for themselves and on behalf of the other Underwriters) and our Company, the
Global Offering will not proceed and will lapse.
The Global Offering comprises the Hong Kong Public Offering of initially 2,258,000
Hong Kong Offer Shares and the International Offering of initially 20,318,500 International
Offer Shares, subject, in each case, to reallocation on the basis as described in the section
headed “Structure of the Global Offering” in this prospectus.
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, we are offering the Hong Kong
Offer Shares for subscription by the public in Hong Kong in accordance with the terms and
conditions of this prospectus and the GREEN Application Form relating thereto.
Subject to the Stock Exchange granting approval for the listing of, and permission to deal
in, the H Shares to be offered as mentioned in this prospectus, and certain other conditions set
forth in the Hong Kong Underwriting Agreement being satisfied (or, as the case may be,
waived), the Hong Kong Underwriters have agreed to subscribe or procure subscribers for their
respective applicable proportions of the Hong Kong Offer Shares in aggregate, now being
offered which are not taken up under the Hong Kong Public Offering on the terms and
conditions of this prospectus, the GREEN Application Form relating thereto and the Hong
Kong Underwriting Agreement.
UNDERWRITING
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--- page 508 ---
The Hong Kong Underwriting Agreement is conditional on and subject to, among other
things, the International Underwriting Agreement having been executed and becoming
unconditional and not having been terminated in accordance with its terms or otherwise, prior
to 8:00 a.m. on the Listing Date.
Grounds for Termination
The obligations of the Hong Kong Underwriters to subscribe or procure subscribers for
the Hong Kong Offer Shares are subject to termination by notice from the Overall Coordinators
(for themselves and on behalf of the other Hong Kong Underwriters), at any time prior to 8:00
a.m. on the Listing Date if:
(1) there shall develop, occur, exist or come into effect:
(a) any event, or series of events, in the nature of force majeure (including,
without limitation, any acts of government, declaration of a regional, national
or international emergency or war, calamity, crisis, epidemic, pandemic, large
scale outbreaks of diseases (including, without limitation, SARS, swine or
avian flu, H5N1, H1N1, H7N9, contagious coronavirus (COVID-19) and such
related/mutated forms), economic sanctions, strikes, labour disputes, lock-
outs, fire, explosion, flooding, tsunami, earthquake, volcanic eruption, civil
commotion, riots, rebellion, public disorder, acts of war, outbreak or escalation
of hostilities (whether or not war is declared), acts of God or acts of terrorism
(whether or not responsibility has been claimed)) in or affecting Hong Kong,
Singapore, Japan, the PRC, the United States, the United Kingdom or the
European Union (or any member thereof) (collectively, the “ Relevant
Jurisdictions ”);
(b) any change or development involving a prospective change, or any event or
circumstances or series of events may result in any change or development
involving a prospective change, in any local, national, regional or international
financial, economic, political, military, industrial, legal, fiscal, regulatory,
currency, credit or market matters or conditions, equity securities or exchange
control or any monetary or trading settlement system or other financial markets
(including, without limitation, conditions in the stock and bond markets,
money and foreign exchange markets, the interbank markets and credit
markets), in or affecting any of the Relevant Jurisdictions;
(c) any moratorium, suspension or restriction (including, without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) in or on trading in securities generally on the Stock Exchange, the New
Y ork Stock Exchange, the NASDAQ Global Market, the London Stock
Exchange, the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the
Singapore Stock Exchange or the Tokyo Stock Exchange;
UNDERWRITING
– 498 –


--- page 509 ---
(d) any general moratorium on commercial banking activities in Hong Kong
(imposed by the Financial Secretary or the Hong Kong Monetary Authority or
other competent authority), New Y ork (imposed at the U.S. Federal or New
Y ork State level or by any other competent authority), London, the PRC, the
European Union (or any member thereof), Japan, Singapore or any of the other
Relevant Jurisdictions (declared by the relevant authorities) or any disruption
in commercial banking or foreign exchange trading or securities settlement or
clearance services, procedures or matters in or affecting any of the Relevant
Jurisdictions;
(e) any new law or regulation or any change or any development involving a
prospective change or any event or circumstance may result in a change or a
development involving a prospective change in existing laws or regulations or
any change or development involving a prospective change in the
interpretation or application thereof by any court or any governmental or
regulatory authority in or affecting any of the Relevant Jurisdictions;
(f) the imposition of economic sanctions, in whatever form, directly or indirectly,
by, or for, any of the Relevant Jurisdictions in respect of any jurisdiction
relevant to the business operations of any member of our Group;
(g) any change or development involving a prospective change or amendment in
or affecting taxation or foreign exchange control, currency exchange rates or
foreign investment regulations (including, without limitation, a material
devaluation of the Hong Kong dollar or RMB against any foreign currencies,
a change in the system under which the value of the Hong Kong dollar is linked
to that of the United States dollar or RMB is linked to any foreign currency or
currencies), or the implementation of any exchange control, in any of the
Relevant Jurisdictions or adversely affecting an investment in the Offer Shares;
(h) a Director, a Supervisor being charged with an indictable offence or prohibited
by operation of Law or otherwise disqualified from taking part in the
management or taking directorship of a company or is prohibited by operation
of law or otherwise disqualified from taking part in the management of a
company or there is the commencement by any governmental, political or
regulatory body of any investigation or other action against any Director or
Supervisor in his or her capacity as such or any member of our Group or an
announcement by any governmental, political or regulatory body that it intends
to commence any such investigation or take any such action;
(i) the issue or requirement to issue by our Company of a supplement or
amendment to the Prospectus or other documents in connection with the offer
and sale of the Offer Shares pursuant to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance or the Listing Rules or upon any
UNDERWRITING
– 499 –


--- page 510 ---
requirement or request of the Stock Exchange and/or the SFC unless such
supplement, amendment or documents have been issued with the prior consent
of the Joint Sponsors and the Overall Coordinators;
(j) a valid demand by any creditor for repayment or payment of any indebtedness
of any member of our Group or in respect of which any member of our Group
is liable prior to its stated maturity;
(k) any change or development involving a prospective change in, or a
materialization of, any of the risks set out in the section headed “Risk Factors”
of the Prospectus;
(l) any litigation, dispute, legal action or claim being contemplated, threatened or
instigated against any member of our Group, any Single Largest Group of
Shareholders, any Directors or Supervisors;
(m) commencement by any government regulatory or political body of any action
against any member of our Group, any Single Largest Group of Shareholders,
Directors, Supervisors or announcement of any intention of such action;
(n) the chairman of the Board, chief executive officer, chief financial officer, any
Director, Supervisor or a member of our Group’s senior management as named
in the Prospectus vacating his/her office;
(o) any contravention by our Company or any member of our Group, any
Directors, any Supervisors or any Single Largest Group of Shareholders of any
applicable laws and regulations including the Listing Rules; or
(p) any non-compliance of the Offering Documents (as defined in the Hong Kong
Underwriting Agreement) (or any other documents used in connection with the
contemplated subscription and sale of the Offer Shares) or any aspect of the
Global Offering with the Listing Rules or any other applicable laws and
regulations,
which, individually or in the aggregate, in the sole and absolute opinion of the Overall
Coordinators (for themselves and on behalf of the Hong Kong Underwriters):
(A) has or will or may have a material adverse effect on the assets, liabilities,
general affairs, business, management, prospects, shareholders’ equity, profit,
losses, earnings, results of operations, performance, position or condition,
financial or otherwise, of our Group as a whole; or
UNDERWRITING
– 500 –


--- page 511 ---
(B) has or will have or may have a material adverse effect on the success or
marketability of the Global Offering or the level of applications or the
distribution of the Offer Shares under the Hong Kong Public Offering or the
level of interest under the International Offering; or
(C) makes or will make or may make it inadvisable, inexpedient, impracticable or
incapable for the Hong Kong Public Offering and/or the International Offering
to proceed or to market the Global Offering or the delivery or distribution of
the Offer Shares on the terms and in the manner contemplated by the
Prospectus; or
(D) has or will or may have the effect of making any material part of the Hong
Kong Underwriting Agreement (including underwriting) incapable of
performance in accordance with its terms or preventing the processing of
applications and/or payments pursuant to the Global Offering or pursuant to
the underwriting thereof; or
(2) here has come to the notice of the Overall Coordinators that:
(a) any statement contained in the Offering Documents, the Operative Documents,
the Preliminary Offering Circular (each as defined in the Hong Kong
Underwriting Agreement), and/or any notices, announcements, advertisements,
communications or other documents (including any announcement, circular,
document or other communication pursuant to the Hong Kong Underwriting
Agreement) issued or used by or on behalf of our Company in connection with
the Hong Kong Public Offering and the International Offering (including any
supplement or amendment thereto (the “ Offer-Related Documents ”)) was,
when it was issued, or has become, untrue, incorrect, inaccurate, incomplete in
any material respects or misleading or deceptive, or that any estimate, forecast,
expression of opinion, intention or expectation contained in any of such
documents is not fair and honest and based on reasonable grounds or
reasonable assumptions when taken as a whole;
(b) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of the Prospectus, constitute a material
omission from, or misstatement in, any of the Offer-Related Documents;
(c) there is a breach of any of the obligations imposed upon our Company or the
Single Largest Group of Shareholders under the Hong Kong Underwriting
Agreement or the International Underwriting Agreement, as applicable;
(d) there is an event, act or omission which gives or may give rise to any material
liability of our Company or the Single Largest Group of Shareholders pursuant
to the indemnities given by any of them under the Hong Kong Underwriting
Agreement or the International Underwriting Agreement, as applicable;
UNDERWRITING
– 501 –


--- page 512 ---
(e) there is a material adverse effect, or any development involving a prospective
material adverse effect or change, whether directly or indirectly, on or
affecting the assets, liabilities, business, general affairs, management,
prospects, shareholders’ equity, revenue, profits, losses, results of operations,
position or condition, financial or otherwise, or performance of our Company
and the other members of our Group, taken as a whole;
(f) there is a breach of, or any event or circumstance rendering untrue, incorrect,
incomplete or misleading in any respect, any of the warranties given by our
Company and the Single Largest Group of Shareholders in the Hong Kong
Underwriting Agreement or the International Underwriting Agreement, as
applicable;
(g) the approval of the Stock Exchange of the listing of, and permission to deal in,
the H Shares in issue and the H Shares to be issued pursuant to the Global
Offering is refused or not granted, other than subject to customary conditions,
on or before the date of the Listing, or if granted, the approval is subsequently
withdrawn, cancelled, qualified (other than by customary conditions), revoked
or withheld;
(h) any person (other than the Joint Sponsors) has withdrawn its consent to the
issue of the Prospectus with the inclusion of its reports, letters and/or legal
opinions (as the case may be) and references to its name included in the form
and context in which it respectively appears;
(i) our Company withdraws the Offering Documents (and/or any other documents
issued or used in connection with the Global Offering) or the Global Offering;
(j) that a portion of the orders placed or confirmed in the bookbuilding process,
or of the investment commitments made by any cornerstone investors under
agreements signed with such cornerstone investors, have been withdrawn,
terminated or cancelled;
(k) there is a prohibition on our Company for whatever reason from offering,
allotting, issuing or selling any of the Offer Shares pursuant to the terms of the
Global Offering; or
(l) there is any order or petition presented for the winding-up or liquidation of any
member of our Group or any composition or arrangement made by any member
of our Group with its creditors or a scheme of arrangement entered into by any
member of our Group or any resolution for the winding-up or liquidation of
any member of our Group or the appointment of a provisional liquidator,
receiver or manager over all or part of the assets or undertaking of any member
of our Group or anything analogous thereto occurring in respect of any member
of our Group.
UNDERWRITING
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--- page 513 ---
Undertakings to the Stock Exchange Pursuant to the Listing Rules
Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, our Company has undertaken to the
Stock Exchange, that within six months from the Listing Date no further Shares or
securities convertible into equity securities of our Company (whether or not of a class
already listed) shall be issued by our Company or form the subject of any agreement to
such issue (whether or not such issue of Shares or securities of our Company will be
completed within six months from the Listing Date), except pursuant to the Global
Offering, the Conversion of Unlisted Shares into H Shares upon completion of the Global
Offering or in certain circumstances prescribed by Rule 10.08 of the Listing Rules
(including any additional Shares that may be issued pursuant to the Pre-IPO Incentive
Scheme).
Undertakings pursuant to the Hong Kong Underwriting Agreement
(A) Undertakings by our Company
Our Company has undertaken to each of the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Hong Kong Underwriters and the Capital Market Intermediaries, that
except for the issue, offer or sale of the Offer Shares by our Company pursuant to the
Global Offering, the Conversion of Unlisted Shares into H Shares upon completion of the
Global Offering and the issue of any Shares pursuant to the Pre-IPO Incentive Scheme,
during the period commencing on the date of the Hong Kong Underwriting Agreement
and ending on, and including the date that is six months after the Listing Date (the “ First
Six-Month Period ”), our Company will not, without the prior written consent of the Joint
Sponsors and the Overall Coordinators (for themselves and on behalf of the Hong Kong
Underwriters) and unless in compliance with the requirements of the Listing Rules:
(i) offer, allot, issue, sell, accept subscription for, contract to allot, issue or sell,
contract, offer or agree to allot, issue or sell, assign, mortgage, charge, pledge,
hypothecate, hedge, lend, grant or sell any option, warrant, right or contract to
purchase, purchase any option or contract to sell, grant or agree to grant any
option, right or warrant to purchase or subscribe for, or otherwise transfer or
dispose of or create an encumbrance over, or agree to transfer or dispose of or
create an encumbrance over, either directly or indirectly, conditionally or
unconditionally, or repurchase, any legal or beneficial interest in any Shares or
other securities of our Company, or any interests in any of the foregoing
(including, but not limited to, any securities that are convertible into or
exercisable or exchangeable for, or that represent the right to receive, or any
warrants or other rights to purchase, any Shares), or deposit any Shares or other
securities of our Company, with a depositary in connection with the issue of
depositary receipts; or
UNDERWRITING
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(ii) enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of subscription or ownership (legal
or beneficial) of any Shares or other securities of our Company or any interest
therein (including, without limitation, any securities of which are convertible
into or exchangeable or exercisable for, or represent the right to receive, or any
warrants or other rights to purchase, any Shares); or
(iii) enter into any transaction with the same economic effect as any transaction
specified in (i) or (ii) above; or
(iv) offer to or contract to or agree to announce, or publicly disclose that the
Company will or may enter into any transaction specified in (i), (ii) or (iii)
above,
in each case, whether any of the transactions specified in (i), (ii) or (iii) above is to be
settled by delivery of Shares or other securities of our Company, in cash or otherwise
(whether or not the issue of such Shares or other securities will be completed within the
First Six-month Period).
In the event that, during the period of six months commencing on the date on which
the First Six-Month Period expires (the “ Second Six-Month Period ”), our Company
enters into any of the transactions specified in (i), (ii) or (iii) above or offers to or agrees
to or contracts to or announces, or publicly discloses, any intention to, enter into any such
transactions, our Company shall take all reasonable steps to ensure that it will not create
a disorderly or false market in the securities of our Company. Each of the Single Largest
Group of Shareholders jointly and severally undertakes to each of the Joint Sponsors, the
Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint
Lead Managers, the Hong Kong Underwriters and the Capital Market Intermediaries to
procure our Company to comply with the undertakings above.
(B) Undertakings by our Single Largest Group of Shareholders
Each of our Single Largest Group of Shareholders jointly and severally agrees and
undertakes to each of the Company, the Joint Sponsors, the Overall Coordinators, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong
Kong Underwriters and the Capital Market Intermediaries that, without the prior written
consent of the Joint Sponsors and the Overall Coordinators (for themselves and on behalf
of the Hong Kong Underwriters) and unless in compliance with the requirements of the
Listing Rules:
(i) he will not, at any time on and after the date of the Hong Kong Underwriting
Agreement and up to and including the date falling twelve months after the
Listing Date (the “ Lock-up Period ”),
UNDERWRITING
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--- page 515 ---
(a) sell, offer to sell, contract or agree to sell, mortgage, charge, pledge,
hypothecate, lend, grant or sell any option, warrant, contract or right to
purchase, grant or purchase any option, warrant, contract or right to sell,
grant or agree to grant any option, right or warrant to purchase or
subscribe for, lend or otherwise transfer or dispose of or create an
encumbrance over, or agree to transfer or dispose of or create an
encumbrance over, either directly or indirectly, conditionally or
unconditionally, any Shares or other securities of our Company or any
interest therein (including, but not limited to, any securities that are
convertible into or exchangeable or exercisable for or that represent the
right to receive, or any warrants or other rights to purchase, any Shares
or other securities of our Company) beneficially owned by him (the
“Locked-up Securities ”), or deposit any Locked-up Securities with a
depositary in connection with the issue of depositary receipts, or
(b) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of any
Locked-up Securities, or
(c) enter into any transaction with the same economic effect as any
transaction specified in (a) or (b) above, or
(d) offer to or contract to or agree to or publicly disclose that it will or may
enter into any transaction specified in (a), (b) or (c) above, in each case,
whether any such transactions specified in (a), (b) or (c) above is to be
settled by delivery of such Shares or other securities of our Company, in
cash or otherwise (whether or not the issue of such Shares or other
securities will be completed within the Lock-up Period); and
(ii) until the expiry of the Lock-up Period, in the event that he enters into any of
the transactions specified in (a), (b) or (c) above or offers to or agrees to or
contracts to, or publicly announces an intention to enter into any such
transactions, he will take all reasonable steps to ensure that it will not create
a disorderly or false market in the securities of our Company.
Indemnity
We and our Single Largest Group of Shareholders have agreed to indemnify, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers, the Hong Kong Underwriters and the Capital Market Intermediaries for
certain losses which they may suffer, including, amongst others, losses arising from the
performance of their obligations under the Hong Kong Underwriting Agreement and any
breach or alleged breach by our Company or the covenantors of the Hong Kong Underwriting
Agreement, as the case may be.
UNDERWRITING
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The International Offering
International Underwriting Agreement
In connection with the International Offering, it is expected that our Company, our
executive Directors and our Single Largest Group of Shareholders will enter into the
International Underwriting Agreement with, the Overall Coordinators and the International
Underwriters. Under the International Underwriting Agreement, subject to the conditions set
forth therein, the International Underwriters would severally and not jointly agree to purchase,
or procure purchasers to purchase, the Offer Shares being offered pursuant to the International
Offering (subject to, any reallocation between the International Offering and the Hong Kong
Public Offering). It is expected that the International Underwriting Agreement may be
terminated on similar grounds as the Hong Kong Underwriting Agreement. Potential investors
are reminded that in the event that the International Underwriting Agreement is not entered
into, the Global Offering will not proceed.
It is expected that each member of our Single Largest Group of Shareholders will
undertake to the International Underwriters not to dispose of, or enter into any agreement to
dispose of, or otherwise create any options, rights, interest or encumbrances in respect of any
of the Shares held by them in our Company for a period similar to such undertakings given by
them pursuant to the Hong Kong Underwriting Agreement, which is described in “—
Underwriting Arrangements and Expenses — Hong Kong Public Offering — Undertakings by
our Single Largest Group of Shareholders” above.
Commissions and Expenses
The Underwriters and the Capital Market Intermediaries will receive an underwriting
commission equal to 3.0% of the aggregate Offer Price payable for the Offer Shares (the
“Fixed Fees ”). Our Company may, at our sole and absolute discretion, pay to one or more
Underwriters or Capital Market Intermediaries an incentive fee of up to 1.0% of the Offer Price
payable for the Offer Shares (the “ Discretionary Fees ”). Assuming the Discretionary Fees are
paid in full, the ratio of Fixed Fees and Discretionary Fees payable to all Underwriters and
Capital Market Intermediaries is therefore 75:25. For unsubscribed Hong Kong Offer Shares
reallocated to the International Offering, we will pay an underwriting commission at the rate
applicable to the International Offering and such commission will be paid to the relevant
International Underwriters and not the Hong Kong Underwriters.
The aggregate commissions and fees, together with Stock Exchange listing fees, SFC
transaction levy of 0.0027%, the AFRC transaction levy of 0.00015% and Stock Exchange
trading fee of 0.00565%, legal and other professional fees and printing and all other expenses
relating to the Global Offering, which are currently estimated to amount in aggregate to
approximately HK$78.8 million (assuming an Offer Price of HK$10.40 per Offer Share, being
the mid-point of the indicative Offer Price range stated in this prospectus), are payable and
borne by our Company.
UNDERWRITING
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INDEPENDENCE OF THE JOINT SPONSORS
Each of the Joint Sponsors satisfies the independence criteria applicable set out in
Rule 3A.07 of the Listing Rules. For further details, please refer to the section headed
“Statutory and General Information — E. Other Information — 3. Joint Sponsors” in
Appendix IV to this prospectus.
UNDERWRITERS’ INTERESTS IN OUR COMPANY
The Overall Coordinators and other Underwriters will receive an underwriting
commission. Particulars of these underwriting commission and expenses are set out in the
paragraph headed “Underwriting Arrangements and Expenses — Commissions and Expenses”
in this section for further details.
As of the Latest Practicable Date, Hefei Zhong’an Runxin Fund Investment Partnership
(Limited Partnership) (ҳ༟ΥྫΆุ(Υྫ)) (“ Hefei Zhong’an ”) was
interested in approximately 0.26% of the issued share capital of our Company. Hefei
Zhong’an’s general partner is China Capital Management Co., Ltd. (ʮ
̡), which is an affiliate of China Securities (International) Corporate Finance Company
Limited, one of the Joint Sponsors and the underwriters.
Save as the above and other than pursuant to the Hong Kong Underwriting Agreement,
none of the Hong Kong Underwriters has any shareholding in any member of our Group or any
right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe
for securities in any member of our Group.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the Shares as a result of fulfilling their
obligations under the Hong Kong Underwriting Agreement.
MINIMUM PUBLIC FLOAT
Our Directors and the Overall Coordinators will ensure that there will be a minimum 25%
of the total issued Shares held in public hands in accordance with Rule 8.08 of the Listing
Rules after completion of the Global Offering.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering
(together, the “ Syndicate Members ”) and their affiliates may each individually undertake a
variety of activities (as further described below) which do not form part of the underwriting.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, brokerage, funds management, trading, hedging,
UNDERWRITING
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--- page 518 ---
investing and other activities for their own account and for the account of others. In relation
to our Shares, those activities could include acting as agent for buyers and sellers of our Shares,
entering into transactions with those buyers and sellers in a principal capacity, proprietary
trading in our Shares, and entering into over the counter or listed derivative transactions or
listed and unlisted securities transactions (including issuing securities such as derivative
warrants listed on a stock exchange) which have as their underlying assets, assets including our
Shares. Those activities may require hedging activity by those entities involving, directly or
indirectly, the buying and selling of our Shares. All such activity could occur in Hong Kong
and elsewhere in the world and may result in the Syndicate Members and their affiliates
holding long and/or short positions in our Shares, in baskets of securities or indices including
our Shares, in units of funds that may purchase our Shares, or in derivatives related to any of
the foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities
having our Shares as their underlying securities, whether on the Stock Exchange or on any
other stock exchange, the rules of the exchange may require the issuer of those securities (or
one of its affiliates or agents) to act as a market maker or liquidity provider in the security, and
this will also result in hedging activity in our Shares in most cases.
Such activities may affect the market price or value of our Shares, the liquidity or trading
volume in our Shares and the volatility of the price of our Shares, and the extent to which this
occurs from day to day cannot be estimated.
It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the following:
(a) the Syndicate Members must not, in connection with the distribution of the Offer
Shares, effect any transactions (including issuing or entering into any option or other
derivative transactions relating to the Offer Shares), whether in the open market or
otherwise, with a view to stabilizing or maintaining the market price of any of the
Offer Shares at levels other than those which might otherwise prevail in the open
market; and
(b) the Syndicate Members must comply with all applicable laws and regulations,
including the market misconduct provisions of the SFO, including the provisions
prohibiting insider dealing, false trading, price rigging and stock market
manipulation.
No stabilizing manager will be appointed, and it is anticipated that no stabilization
activities will be carried out in relation to the Global Offering.
UNDERWRITING
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--- page 519 ---
THE GLOBAL OFFERING
The listing of our H Shares on the Stock Exchange is sponsored by the Joint Sponsors.
The Joint Sponsors have made an application on our behalf to the Stock Exchange for the
listing of, and permission to deal in, the H Shares in issue and to be issued pursuant to the
Global Offering on the Main Board of the Stock Exchange as described in this prospectus.
22,576,500 Offer Shares will be made available under the Global Offering comprise:
(a) the Hong Kong Public Offering of 2,258,000 H Shares (subject to reallocation) in
Hong Kong as described under the paragraph headed “The Hong Kong Public
Offering” in this section below; and
(b) the International Offering of 20,318,500 H Shares (subject to reallocation) outside
the United States in offshore transactions in accordance with Regulation S as
described under the paragraph headed “The International Offering” in this section
below.
Investors may either apply for the Offer Shares under the Hong Kong Public Offering, or
indicate an interest, if qualified to do so, for the Offer Shares under the International Offering,
but may not do both. The Hong Kong Public Offering is open to members of the public in Hong
Kong as well as to institutional and professional investors in Hong Kong. The International
Offering will involve selective marketing of the Offer Shares to institutional and professional
investors and other investors anticipated to have a sizeable demand for such Offer Shares in
Hong Kong and other jurisdictions outside the United States in reliance on Regulation S of the
U.S. Securities Act. The International Underwriters are soliciting from prospective investors
indications of interest in acquiring the Offer Shares in the International Offering. Prospective
investors will be required to specify the number of Offer Shares under the International
Offering they would be prepared to acquire either at different prices or at a particular price.
The number of Offer Shares to be offered under the Hong Kong Public Offering and the
International Offering, respectively, may be subject to reallocation as described in the
paragraph headed “The Hong Kong Public Offering – Reallocation and Clawback” in this
section below.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 520 ---
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
Our Company is initially offering 2,258,000 Offer Shares for subscription by the public
in Hong Kong at the Offer Price, representing approximately 10% of the total number of Offer
Shares initially available under the Global Offering. The number of Shares offered under the
Hong Kong Public Offering, subject to any reallocation of Offer Shares between the
International Offering and the Hong Kong Public Offering, will represent approximately 0.3%
of the total Shares in issue immediately following the completion of the Global Offering,
without taking into account any exercise of options which were granted under the Pre-IPO
Incentive Scheme.
The Hong Kong Public Offering is open to members of the public in Hong Kong as well
as to institutional and professional investors. Professional investors generally include brokers,
dealers, companies (including fund managers) whose ordinary business involves dealing in
shares and other securities and corporate entities which regularly invest in shares and other
securities.
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on
a several basis under the terms of the Hong Kong Underwriting Agreement and is subject to
our Company and the Overall Coordinators (for themselves and on behalf of the other
Underwriters) agreeing on the Offer Price. Completion of the Hong Kong Public Offering is
subject to the conditions as set out in the paragraph headed “Conditions of the Global Offering”
in this section below.
Allocation
Allocation of the Offer Shares to investors under the Hong Kong Public Offering will be
based solely on the level of valid applications received under the Hong Kong Public Offering.
The basis of allocation may vary, depending on the number of Hong Kong Offer Shares validly
applied for by applicants. Such allocation could, where appropriate, consist of balloting, which
would mean that some applicants may receive a higher allocation than others who have applied
for the same number of Hong Kong Offer Shares, and those applicants who are not successful
in the ballot may not receive any Hong Kong Offer Shares.
For allocation purposes only, the total number of the Offer Shares initially available under
the Hong Kong Public Offering (after taking account of any reallocation in the number of Offer
Shares allocated between the Hong Kong Public Offering and the International Offering
referred to below) will be divided into two pools (with any odd lot being allocated to Pool A):
pool A and pool B.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 521 ---
Pool A will comprise 1,129,000 Hong Kong Offer Shares and pool B will comprise
1,129,000 Hong Kong Offer Shares, both of which are available on an equitable basis to
successful applicants. All valid applications that have been received for Hong Kong Offer
Shares with a total amount (excluding brokerage of 1.0%, the SFC transaction levy of 0.0027%,
the AFRC transaction levy of 0.00015% and the Stock Exchange trading fee of 0.00565%) of
HK$5 million or below will fall into pool A and all valid applications that have been received
for Hong Kong Offer Shares with a total amount (excluding brokerage of 1.0%, the SFC
transaction levy of 0.0027%, the AFRC transaction levy of 0.00015% and the Stock Exchange
trading fee of 0.00565%) of over HK$5 million and up to the total value of pool B will fall into
pool B.
Investors should be aware that applications in pool A and applications in pool B may
receive different allocation ratios. If the Hong Kong Offer Shares in one (but not both) of the
pools are undersubscribed, the surplus Hong Kong Offer Shares will be transferred to the other
pool to satisfy demand in that other pool and be allocated accordingly. Applicants can only
apply for Hong Kong Offer Shares from either pool A or pool B but not from both pools and
can only receive Hong Kong Offer Shares from either pool A or pool B but not from both pools.
Multiple or suspected multiple applications within either pool or between pools will be
rejected.
Multiple applications or suspected multiple applications and any application for more
than 1,129,000 Hong Kong Offer Shares (being 50% of the initial number of Hong Kong Offer
Shares) are liable to be rejected.
Reallocation and clawback
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation on the following basis:
(a) if both the Hong Kong Offer Shares and the International Offer Shares are
undersubscribed, the Global Offering shall not proceed unless the Underwriters
would subscribe or procure subscribers for their respective applicable proportions of
the Offer Shares being offered which are not taken up under the Global Offering on
the terms and conditions of this prospectus, the GREEN Application Form and the
Underwriting Agreements;
(b) if the Hong Kong Offer Shares are undersubscribed and the International Offer
Shares are oversubscribed, the Overall Coordinators (for themselves and on behalf
of the other Underwriters) have the authority to reallocate all or any unsubscribed
Hong Kong Offer Shares to the International Offering, in such proportions as the
Overall Coordinators deem appropriate;
STRUCTURE OF THE GLOBAL OFFERING
–5 1 1–


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(c) if the International Offer Shares are fully subscribed or oversubscribed, and:
(i) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 15 times or more but less than 50 times the number of the
Offer Shares initially available for subscription under the Hong Kong Public
Offering, then 4,515,000 Offer Shares will be reallocated to the Hong Kong
Public Offering from the International Offering, so that the total number of the
Offer Shares available under the Hong Kong Public Offering will be increased
to 6,773,000 Offer Shares, representing approximately 30% of the number of
the Offer Shares initially available under the Global Offering;
(ii) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 50 times or more but less than 100 times the number of the
Offer Shares initially available for subscription under the Hong Kong Public
Offering, then 6,773,000 Offer Shares will be reallocated to the Hong Kong
Public Offering from the International Offering, so that the number of the Offer
Shares available under the Hong Kong Public Offering will be increased to
9,031,000 Offer Shares, representing approximately 40% of the number of the
Offer Shares initially available under the Global Offering; and
(iii) if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 100 times or more the number of the Offer Shares initially
available for subscription under the Hong Kong Public Offering, then
9,031,000 Offer Shares will be reallocated to the Hong Kong Public Offering
from the International Offering, so that the number of the Offer Shares
available under the Hong Kong Public Offering will be increased to 11,289,000
Offer Shares, representing approximately 50% of the number of the Offer
Shares initially available under the Global Offering,
in each case the additional Offer Shares reallocated to the Hong Kong Public
Offering will be allocated between Pool A and Pool B and the number of Offer
Shares allocated to the International Offering will be correspondingly reduced in
such manner as the Overall Coordinators (for themselves and on behalf of the other
Underwriters) deems appropriate.
(d) pursuant to the Stock Exchange’s Guidance Letter HKEX-GL91-18:
(i) if the International Offer Shares are undersubscribed and if the Hong Kong
Offer Shares are oversubscribed, irrespective of the number of times the
number of Offer Shares initially available for subscription under the Hong
Kong Public Offering in such circumstances; or
STRUCTURE OF THE GLOBAL OFFERING
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--- page 523 ---
(ii) if the International Offer Shares are fully subscribed or oversubscribed, and if
the Hong Kong Offer Shares are fully subscribed or oversubscribed but the
number of Shares validly applied for under the Hong Kong Public Offering
represents less than 15 times of the initial number of the Hong Kong Offer
Shares,
then, provided that the final Offer Price is fixed at the low-end of the indicative
Offer Price range (i.e. HK$9.40 per Offer Share) stated in this prospectus, in
accordance with Guidance Letter HKEX-GL91-18 issued by the Stock Exchange, up
to 2,258,000 Offer Shares may be reallocated from the International Offering to
satisfy valid applications in Pool A and Pool B under the Hong Kong Public
Offering, so that the total number of Offer Shares available for subscription under
the Hong Kong Public Offering will be increased up to 4,516,000 Shares, and such
limit represents approximately 20% of the number of the Offer Shares initially
available under the Global Offering.
References in this prospectus to applications, the GREEN Application Form and
application monies or to the procedure for application relate solely to the Hong Kong Public
Offering.
Applications
The Overall Coordinators (for themselves and on behalf of the other Underwriters) may
require any investor who has been offered Shares under the International Offering, and who has
made an application under the Hong Kong Public Offering, to provide sufficient information
to the Overall Coordinators so as to allow them to identify the relevant applications under the
Hong Kong Public Offering and to ensure that it is excluded from any application for Shares
under the Hong Kong Public Offering.
Each applicant under the Hong Kong Public Offering will also be required to give an
undertaking and confirmation in the application submitted by him that he and any person(s) for
whose benefit he is making the application have not applied for or taken up, or indicated an
interest for, and will not apply for or take up, or indicate an interest for, any International Offer
Shares under the International Offering. Such applicant’s application is liable to be rejected if
such undertaking and/or confirmation is/are breached and/or untrue (as the case may be) or it
has been or will be placed or allocated (including conditionally and/or provisionally)
International Offer Shares under the International Offering.
The listing of the H Shares on the Stock Exchange is sponsored by the Joint Sponsors.
Applicants under the Hong Kong Public Offering are required to pay, on application, the
maximum Offer Price of HK$11.40 per Offer Share in addition to the brokerage, SFC
transaction levy, the AFRC transaction levy and Stock Exchange trading fee payable on each
Offer Share. If the Offer Price, as finally determined in the manner described in the paragraph
headed “Pricing of the Global Offering” in this section below, is less than the maximum Offer
Price of HK$11.40 per Offer Share, appropriate refund payments (including the brokerage,
STRUCTURE OF THE GLOBAL OFFERING
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--- page 524 ---
SFC transaction levy, the AFRC transaction levy and Stock Exchange trading fee attributable
to the surplus application monies) will be made to successful applicants, without interest.
Further details are set out below in the section headed “How to Apply for Hong Kong Offer
Shares” in this prospectus.
References in this prospectus to applications, the GREEN Application Form, application
or subscription monies or the procedure for application relate solely to the Hong Kong Public
Offering.
THE INTERNATIONAL OFFERING
Number of Offer Shares offered
Subject to reallocation as described above, the International Offering will consist of an
offering of initially 20,318,500 Offer Shares, representing approximately 90% of the total
number of Offer Shares initially available under the Global Offering. The International
Offering is subject to the Hong Kong Public Offering becoming unconditional.
Allocation
The International Offering will include selective marketing of Offer Shares to
institutional and professional investors and other investors anticipated to have a sizeable
demand for such Offer Shares in Hong Kong and other jurisdictions outside the United States
in offshore transactions in reliance on Regulation S. Professional investors generally include
brokers, dealers, companies (including fund managers) whose ordinary business involves
dealing in shares and other securities and corporate entities which regularly invest in shares
and other securities. Allocation of Offer Shares pursuant to the International Offering will be
effected in accordance with the “bookbuilding” process described in the paragraph headed
“Pricing of the Global Offering” in this section below and based on a number of factors,
including the level and timing of demand, the total size of the relevant investor’s invested
assets or equity assets in the relevant sector and whether or not it is expected that the relevant
investor is likely to buy further Offer Shares, and/or hold or sell its Offer Shares, after the
Listing. Such allocation is intended to result in a distribution of the Offer Shares on a basis
which would lead to the establishment of a solid professional and institutional shareholder base
to the benefit of our Company and the Shareholders as a whole.
The Overall Coordinators (for themselves and on behalf of the other Underwriters) may
require any investor who has been offered Offer Shares under the International Offering, and
who has made an application under the Hong Kong Public Offering to provide sufficient
information to the Overall Coordinators so as to allow them to identify the relevant application
under the Hong Kong Public Offering and to ensure that it is excluded from any application of
Offer Shares under the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 525 ---
Reallocation
The total number of Offer Shares to be issued or sold pursuant to the International
Offering may change as a result of the reallocation arrangement described in the paragraph
headed “The Hong Kong Public Offering” in this section above, and/or any reallocation of
unsubscribed Offer Shares originally included in the Hong Kong Public Offering.
PRICING OF THE GLOBAL OFFERING
The International Underwriters will be soliciting from prospective investors indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building”, is expected to continue up to, and to
cease on or around, the last day for lodging applications under the Hong Kong Public Offering.
The Offer Price is expected to be fixed on the Price Determination Date, which is
expected to be on or around Friday, October 27, 2023, and in any event on or before Monday,
October 30, 2023, by agreement between the Overall Coordinators (for themselves and on
behalf of the other Underwriters) and our Company and the number of Offer Shares to be
allocated under various offerings will be determined shortly thereafter.
The Offer Price will not be more than HK$11.40 per Share and is expected to be not less
than HK$9.4 per Share unless otherwise announced, as further explained below, not later than
the morning of the last day for lodging applications under the Hong Kong Public Offering.
Prospective investors should be aware that the Offer Price to be determined on the Price
Determination Date may be, but is not expected to be, lower than the minimum Offer
Price stated in this prospectus.
Reduction in the Offer Price range and number of Offer Shares
The Overall Coordinators, for themselves and on behalf of the other Underwriters, may,
where they consider appropriate, based on the level of indications of interest expressed by
prospective professional and institutional investors during the book-building process, and with
the consent of our Company, reduce the number of Offer Shares offered in the Global Offering
and/or the indicative Offer Price range below that stated in this prospectus at any time on or
prior to the morning of the last day for lodging applications under the Hong Kong Public
Offering. In such a case, our Company will, as soon as practicable following the decision to
make such reduction, and in any event not later than the morning of the day which is the last
day for lodging applications under the Hong Kong Public Offering, cause to be published on
the website of the Stock Exchange ( www.hkexnews.hk ) and on the website of our Company
(www.uboxol.com) notices of the reduction. Such notice will also include confirmation or
revision, as appropriate, of the working capital statement and the offering statistics as currently
set out in this document and any other financial information which may change as a result of
STRUCTURE OF THE GLOBAL OFFERING
– 515 –


--- page 526 ---
such reduction. We will also, as soon as practicable following the decision to make any such
reduction, and in any event not later than the morning of the last day for lodging applications
under the Hong Kong Public Offering:
(a) issue a supplemental prospectus, as the relevant laws or government authority or
regulatory authorities may require as soon as practicable following the decision to
make the change, updating investors of such reduction together with an update of all
financial and other information in connection with such change;
(b) where appropriate, extend the period under which the Global Offering was open for
acceptance to allow potential investors the sufficient time to consider their
subscriptions or reconsider their existing subscriptions; and
(c) give potential investors who had applied for the Offer Shares the right to withdraw
their applications given the change in circumstances unless positive confirmations
from the applicants received.
Upon issue of such a notice, the number of Offer Shares offered in the Global Offering
and/or the revised Offer Price range will be final and conclusive and the Offer Price, if agreed
upon by the Overall Coordinators (for themselves and on behalf of the other Underwriters) and
our Company, will be fixed within such revised Offer Price range. Applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
being offered under the Global Offering and/or the indicative Offer Price Range may not be
made until the day which is the last day for lodging applications under the Hong Kong Public
Offering. Such notice will also include confirmation or revision, as appropriate, of the Global
Offering statistics as currently set out in this prospectus, and any other financial information
which may change as a result of such reduction. In the absence of any such notice so published,
the number of Offer Shares will not be reduced and the Offer Price, if agreed upon with our
Company and the Overall Coordinators (for themselves and on behalf of the other
Underwriters), will under no circumstances be set outside the Offer Price range as stated in this
prospectus.
If applications for the Offer Shares have been submitted prior to the day which is the last
day for lodging applications under the Hong Kong Public Offering, such applications can be
subsequently withdrawn if the number of Offer Shares and/or the indicative Offer Price range
is so reduced.
In the event of a reduction in the number of Offer Shares being offered under the Global
Offering, the Overall Coordinators may at their discretion reallocate the number of Offer
Shares to be offered under the Hong Kong Public Offering and the International Offering,
provided that the number of Shares comprised in the Hong Kong Public Offering shall not be
less than 10% of the total number of Offer Shares in the Global Offering. The Offer Shares to
be offered in the International Offering and the Offer Shares to be offered in the Hong Kong
Public Offering may, in certain circumstances, be reallocated as between these offerings at the
discretion of the Overall Coordinators as described in the paragraph headed “The Hong Kong
Public Offering — Reallocation and Clawback” in this section above.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 527 ---
The final Offer Price, the level of indications of interest in the International Offering, the
level of applications in the Hong Kong Public Offering, the basis of allocations of the Hong
Kong Offer Shares and the results of allocation in the Hong Kong Public Offering are expected
to be announced on Thursday, November 2, 2023, through a variety of channels in the manner
described in “How to apply for Hong Kong Offer Shares — 11. Publication of results” in this
prospectus.
HONG KONG UNDERWRITING AGREEMENT
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement and is subject to our Company and
the Overall Coordinators (for themselves and on behalf of the other Underwriters) agreeing on
the Offer Price.
We expect to enter into the International Underwriting Agreement relating to the
International Offering on or around the Price Determination Date.
The underwriting arrangements under the Hong Kong Underwriting Agreement and the
International Underwriting Agreement are summarized in the section headed “Underwriting” in
this prospectus.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares will be conditional on:
(i) the Stock Exchange granting approval for the listing of, and permission to deal in,
the H Shares to be offered pursuant to the Global Offering as mentioned herein and
such approval not having been withdrawn;
(ii) the Offer Price having been duly agreed between our Company and the Overall
Coordinators (for themselves and on behalf of the other Underwriters) on the Price
Determination Date;
(iii) the execution and delivery of the International Underwriting Agreement on or
around the Price Determination Date; and
(iv) the obligations of the Underwriters under each of the respective Underwriting
Agreements becoming and remaining unconditional and not having been terminated
in accordance with the terms of the respective agreements.
In each case on or before the dates and times specified in the respective Underwriting
Agreements (unless and to the extent such conditions are validly waived on or before such
dates and times) and, in any event, not later than the date which is 30 days after the date of
this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 528 ---
If, for any reason, the Offer Price is not agreed between our Company and the Overall
Coordinators (for themselves and on behalf of the other Underwriters) on or before Monday,
October 30, 2023, the Global Offering will not proceed and will lapse.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, the other offering becoming unconditional
and not having been terminated in accordance with its terms.
If the above conditions are not fulfilled or waived prior to the times and dates specified,
the Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of
the lapse of the Hong Kong Public Offering will be published by our Company on the website
of the Stock Exchange ( www.hkexnews.hk ) and the website of our Company
(www.uboxol.com) on the next day following such lapse. In such event, all application monies
will be returned, without interest, on the terms set out in section entitled “How to apply for
Hong Kong Offer Shares” in this prospectus. In the meantime, all application monies will be
held in (a) separate bank account(s) with the receiving bank or other licensed bank(s) in Hong
Kong licensed under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong) (as
amended).
H Share certificates for the Offer Shares are expected to be issued on Thursday,
November 2, 2023, but will only become valid evidence of title at 8:00 a.m. on Friday,
November 3, 2023 provided that (i) the Global Offering has become unconditional in all
respects and (ii) the right of termination as described in “Underwriting — Grounds for
termination” in this prospectus has not been exercised at or before that time.
ADMISSION OF THE H SHARES INTO CCASS
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares and
the Company complies with the stock admission requirements of HKSCC, the H Shares will be
accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with
effect from the date of commencement of dealings in the H Shares on the Stock Exchange or
any other date HKSCC chooses. Settlement of transactions between participants of the Stock
Exchange is required to take place in CCASS on the second settlement day after any trading
day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before
8:00 a.m. in Hong Kong on Friday, November 3, 2023, it is expected that dealings in H Shares
on the Stock Exchange will commence at 9:00 a.m. on Friday, November 3, 2023. The H Shares
will be traded in board lots of 500 H Shares. The stock code of the H Shares will be 2429.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 529 ---
IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. We will not provide any printed copies of this prospectus or any
printed copies of any application forms for use by the public.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing
Information” section, and our website at www.uboxol.com. If you require a printed
copy of the prospectus, you may download and print from the website addresses
above.
The contents of the electronic version of this prospectus are identical to the printed
prospectus as registered with the Registrar of Companies in Hong Kong pursuant to
Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
Set out below are procedures through which you can apply for the Hong Kong Offer
Shares electronically. We will not provide any physical channels to accept any application
for the Hong Kong Offer Shares by the public.
If you are an intermediary , broker or agent , please remind your customers, clients
or principals, as applicable, that this prospectus is available online at the website
addresses above.
1. HOW TO APPLY
We will not provide any printed application forms for use by the public.
If you apply for Hong Kong Offer Shares, then you may not apply for or indicate an
interest for International Offer Shares.
To apply for Hong Kong Offer Shares, you may:
(1) apply online via the HK eIPO White Form service in the IPO App (which can be
downloaded by searching “ IPO App ” in App Store or Google Play or downloaded
at www.hkeipo.hk/IPOApp or www.tricorglobal.com/IPOApp )o ra t
www.hkeipo.hk ;o r
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 530 ---
(2) apply through the CCASS EIPO service to electronically cause HKSCC Nominees
to apply on your behalf, including by:
(i) instructing your broker or custodian who is a CCASS Clearing Participant or
a CCASS Custodian Participant to give electronic application instructions
via CCASS terminals to apply for the Hong Kong Offer Shares on your behalf;
or
(ii) (if you are an existing CCASS Investor Participant) giving electronic
application instructions through the CCASS Internet System
(https://ip.ccass.com ) or through the CCASS Phone System by calling +852
2979 7888 (using the procedures in HKSCC’s “An Operating Guide for
Investor Participants” in effect from time to time). HKSCC can also input
electronic application instructions for CCASS Investor Participants through
HKSCC’s Customer Service Centre at 1/F, One & Two Exchange Square, 8
Connaught Place, Central, Hong Kong by completing an input request.
If you apply through channel (1) above, the Hong Kong Offer Shares successfully applied
for will be issued in your own name.
If you apply through channel (2)(i) or 2(ii) above, the Hong Kong Offer Shares
successfully applied for will be issued in the name of HKSCC Nominees and deposited directly
into CCASS to be credited to your or a designated CCASS Participant’s stock account.
None of you or your joint applicant(s) may make more than one application, except where
you are a nominee and provide the required information in your application.
Our Company, the Overall Coordinators, the HK eIPO White Form Service Provider and
their respective agents may reject or accept any application in full or in part for any reason at
their discretion.
2. WHO CAN APPLY
Y ou can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying:
 are 18 years of age or older;
 are outside the United States, and are not a United States Person (as defined in
Regulation S under the U.S. Securities Act); and
 are not a legal or natural person of the PRC.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 531 ---
If you apply online through the HK eIPO White Form service, in addition to the above,
you must also: (i) have a valid Hong Kong identity card number/passport number (for
individual applicant) or Hong Kong business registration number/certificate of incorporation
number (for body corporate applicant); (ii) have a Hong Kong address; and (iii) provide a valid
e-mail address and a contact telephone number.
If you are applying for the Hong Kong Offer Shares online by instructing your broker or
custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to give
electronic application instructions via CCASS terminals, please contact them for the items
required for the application.
If you are a firm, the application must be in the individual members’ names.
The number of joint applicants may not exceed four.
Unless permitted by the Listing Rules, you cannot apply for any Hong Kong Offer Shares
if you:
 are an existing beneficial owner of Shares in our Company and/or any its
subsidiaries;
 are a director, supervisor or chief executive officer of our Company and/or any of
its subsidiaries;
 are a close associate (as defined in the Listing Rules) of any of the above; or
 have been allocated or have applied for or indicated an interest in any International
Offer Shares or otherwise participate in the International Offering.
3. TERMS AND CONDITIONS OF AN APPLICATION
By applying through the application channels specified in this prospectus, among other
things, you:
(i) undertake to execute all relevant documents and instruct and authorize our Company
and/or the Overall Coordinators (or their respective agents or nominees), as agents
of our Company, to execute any documents for you and to do on your behalf all
things necessary to register any Hong Kong Offer Shares allocated to you in your
name or in the name of HKSCC Nominees as required by the Articles of Association;
(ii) agree to comply with the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, the Companies Ordinance and the Articles of Association;
(iii) confirm that you have read the terms and conditions and application procedures set
out in this prospectus and agree to be bound by them;
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 521 –


--- page 532 ---
(iv) confirm that you have received and read this prospectus and have only relied on the
information and representations contained in this prospectus in making your
application and will not rely on any other information or representations except
those in any supplement to this prospectus;
(v) confirm that you are aware of the restrictions on the Global Offering in this
prospectus;
(vi) agree that none of our Company, the Joint Sponsors, the Overall Coordinators, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, the Capital Market Intermediaries, their respective directors, officers,
employees, partners, agents, advisers and any other parties involved in the Global
Offering is or will be liable for any information and representations not in this
prospectus (and any supplement to it);
(vii) undertake and confirm that you or the person(s) for whose benefit you have made
the application have not applied for or taken up, or indicated an interest for, and will
not apply for or take up, or indicate an interest for, any Offer Shares under the
International Offering nor participated in the International Offering;
(viii) agree to disclose to our Company, our H Share Registrar, receiving bank, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters, the Capital Market
Intermediaries and/or their respective advisers and agents any personal data which
they may require about you and the person(s) for whose benefit you have made the
application;
(ix) if the laws of any place outside Hong Kong apply to your application, agree and
warrant that you have complied with all such laws and none of our Company, the
Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters and the Capital Market
Intermediaries nor any of their respective officers or advisers will breach any law
outside Hong Kong as a result of the acceptance of your offer to purchase, or any
action arising from your rights and obligations under the terms and conditions
contained in this prospectus;
(x) agree that once your application has been accepted, you may not rescind it because
of an innocent misrepresentation;
(xi) agree that your application will be governed by the laws of Hong Kong;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 533 ---
(xii) represent, warrant and undertake that (a) you understand that the Hong Kong Offer
Shares have not been and will not be registered under the U.S. Securities Act; and
(b) you and any person for whose benefit you are applying for the Hong Kong Offer
Shares are outside the United States (as defined in Regulation S) or are a person
described in paragraph (h)(3) of Rule 902 of Regulation S;
(xiii) warrant that the information you have provided is true and accurate;
(xiv) agree to accept the Hong Kong Offer Shares applied for, or any lesser number
allocated to you under the application;
(xv) authorize our Company to place your name(s) or the name of the HKSCC Nominees,
on our Company’s register of members as the holder(s) of any Hong Kong Offer
Shares allocated to you, and our Company and/or its agents to send any H Share
certificate(s) and/or any e-Auto Refund payment instructions and/or any refund
check(s) to you or the first-named applicant for joint application by ordinary post at
your own risk to the address stated on the application, unless you are eligible to
collect the H Share certificate(s) and/or refund check(s) in person;
(xvi) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(xvii) understand that our Company and the Overall Coordinators will rely on your
declarations and representations in deciding whether or not to make any allotment
of any of the Hong Kong Offer Shares to you and that you may be prosecuted for
making a false declaration;
(xviii) (if the application is made for your own benefit) warrant that no other application
has been or will be made for your benefit by giving electronic application
instructions to HKSCC or to the HK eIPO White Form Service Provider by you
or by any one as your agent or by any other person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (a) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC or to the
HK eIPO White Form Service Provider; and (b) you have due authority to give
electronic application instructions on behalf of that other person as their agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 534 ---
4. MINIMUM APPLICATION AMOUNT AND PERMITTED NUMBERS
Y our application through the HK eIPO White Form service or the CCASS EIPO service
must be for a minimum of 500 Hong Kong Offer Shares and in one of the numbers set out in
the table below. Y ou are required to pay the amount next to the number you select.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
500 5,757.48 6,000 69,089.81 40,000 460,598.75 400,000 4,605,987.60
1,000 11,514.97 7,000 80,604.78 45,000 518,173.60 500,000 5,757,484.50
1,500 17,272.46 8,000 92,119.75 50,000 575,748.46 600,000 6,908,981.40
2,000 23,029.94 9,000 103,634.72 60,000 690,898.15 700,000 8,060,478.30
2,500 28,787.42 10,000 115,149.69 70,000 806,047.84 800,000 9,211,975.20
3,000 34,544.90 15,000 172,724.54 80,000 921,197.52 900,000 10,363,472.10
3,500 40,302.39 20,000 230,299.38 90,000 1,036,347.21 1,000,000 11,514,969.00
4,000 46,059.88 25,000 287,874.23 100,000 1,151,496.90 1,129,000
(1) 13,000,400.01
4,500 51,817.37 30,000 345,449.06 200,000 2,302,993.80
5,000 57,574.85 35,000 403,023.91 300,000 3,454,490.70
(1) Maximum number of Hong Kong Offer Shares you may apply for.
No application for any other number of Hong Kong Offer Shares will be considered and
any such application is liable to be rejected.
5. APPLYING THROUGH THE HK eIPO WHITE FORM SERVICE
General
Applicants who meet the criteria in the paragraph headed “2. Who can apply” in this
section may apply through the HK eIPO White Form service for the Offer Shares to be
allotted and registered in their own names in the IPO App or on the designated website at
www.hkeipo.hk .
Detailed instructions for application through the HK eIPO White Form service are in the
IPO App or on the designated website. If you do not follow the instructions, your application
may be rejected and may not be submitted to our Company. If you apply through the IPO App
or the designated website, you authorise the HK eIPO White Form Service Provider to apply
on the terms and conditions in this prospectus, as supplemented and amended by the terms and
conditions of the HK eIPO White Form service.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 535 ---
Time for submitting applications under the HK eIPO White Form service
Y ou may submit your application through the HK eIPO White Form service in the IPO
App or at www.hkeipo.hk (24 hours daily, except on the last application day) from 9:00 a.m.
on Tuesday, October 24, 2023 until 11:30 a.m. on Friday, October 27, 2023 and the latest time
for completing full payment of application monies in respect of such applications will be 12:00
noon on Friday, October 27, 2023 or such later time under the paragraph headed “10. Effect
of bad weather and/or Extreme Conditions on the opening of the application lists” in this
section.
No multiple applications
If you apply by means of the HK eIPO White Form service, once you complete payment
in respect of any electronic application instruction given by you or for your benefit through
the HK eIPO White Form service to make an application for Hong Kong Offer Shares, an
actual application shall be deemed to have been made. For the avoidance of doubt, giving an
electronic application instruction under the HK eIPO White Form service more than once
and obtaining different application reference numbers without effecting full payment in respect
of a particular reference number will not constitute an actual application.
If you are suspected of submitting more than one application through the HK eIPO White
Form service or by any other means, all of your applications are liable to be rejected.
Section 40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
For the avoidance of doubt, our Company and all other parties involved in the preparation
of this prospectus acknowledge that each applicant who gives or causes to give electronic
application instructions is a person who may be entitled to compensation under section 40 of
the Companies (Winding Up and Miscellaneous Provisions) Ordinance (as applied by section
342E of the Companies (Winding Up and Miscellaneous Provisions) Ordinance).
6. APPLYING THROUGH THE CCASS EIPO SERVICE
General
CCASS Participants may give electronic application instructions to apply for the Hong
Kong Offer Shares and to arrange payment of the money due on application and payment of
refunds under their participant agreements with HKSCC and the General Rules of CCASS and
the CCASS Operational Procedures.
If you are a CCASS Investor Participant, you may give these electronic application
instructions through the CCASS Phone System by calling 2979 7888 or through the CCASS
Internet System ( https://ip.ccass.com ) (using the procedures in HKSCC’s “An Operating
Guide for Investor Participants” in effect from time to time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 536 ---
HKSCC can also input electronic application instructions for you if you go to:
Hong Kong Securities Clearing Company Limited
Customer Service Centre
1/F, One & Two Exchange Square 8 Connaught Place
Hong Kong
and complete an input request form.
If you are not a CCASS Investor Participant, you may instruct your broker or custodian
who is a CCASS Clearing Participant or a CCASS Custodian Participant to give electronic
application instructions via CCASS terminals to apply for the Hong Kong Offer Shares on
your behalf.
Y ou will be deemed to have authorized HKSCC and/or HKSCC Nominees to transfer the
details of your application to our Company, the Overall Coordinators and our H Share
Registrar.
Applying through the CCASS EIPO service
Where you have applied through the CCASS EIPO service (either indirectly through a
broker or custodian or directly) and an application is made by HKSCC Nominees on your
behalf:
(i) HKSCC Nominees will only be acting as a nominee for you and is not liable for any
breach of the terms and conditions of this prospectus;
(ii) HKSCC Nominees will do the following things on your behalf:
 agree that the Hong Kong Offer Shares to be allotted shall be issued in the
name of HKSCC Nominees and deposited directly into CCASS for the credit
of the CCASS Participant’s stock account on your behalf or your CCASS
Investor Participant’s stock account;
 agree to accept the Hong Kong Offer Shares applied for or any lesser number
allocated;
 undertake and confirm that you have not applied for or taken up, will not apply
for or take up, or indicate an interest for, any Offer Shares under the
International Offering nor participated in the International Offering;
 (if the electronic application instructions are given for your benefit) declare
that only one set of electronic application instructions has been given for
your benefit;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 537 ---
 (if you are an agent for another person) declare that you have only given one
set of electronic application instructions for the other person’s benefit and
are duly authorized to give those instructions as their agent;
 confirm that you understand that our Company, our Directors and the Overall
Coordinators will rely on your declarations and representations in deciding
whether or not to make any allotment of any of the Hong Kong Offer Shares
to you and that you may be prosecuted if you make a false declaration;
 authorize our Company to place HKSCC Nominees’ name on our Company’s
H Share register of members as the holder of the Hong Kong Offer Shares
allocated to you and to send H Share certificate(s) and/or refund monies under
the arrangements separately agreed between us and HKSCC;
 confirm that you have read the terms and conditions and application procedures
set out in this prospectus and agree to be bound by them;
 confirm that you have received and/or read a copy of this prospectus and have
relied only on the information and representations in this prospectus in causing
the application to be made, save as set out in any supplement to this
prospectus;
 agree that none of our Company, the Joint Sponsors, the Overall Coordinators,
the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers,
the Underwriters, the Capital Market Intermediaries, their respective directors,
officers, employees, partners, agents, advisers and any other parties involved
in the Global Offering, is or will be liable for any information and
representations not contained in this prospectus (and any supplement to it);
 agree to disclose your personal data to our Company, our H Share Registrar,
receiving bank, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, the Capital Market Intermediaries and/or their respective
advisers and agents;
 agree (without prejudice to any other rights which you may have) that once
HKSCC Nominees’ application has been accepted, it cannot be rescinded for
innocent misrepresentation;
 agree that any application made by HKSCC Nominees on your behalf is
irrevocable before the fifth day after the time of the opening of the application
lists (excluding any day which is Saturday, Sunday or public holiday in Hong
Kong), such agreement to take effect as a collateral contract with us and to
become binding when you give the instructions and such collateral contract to
be in consideration of our Company agreeing that it will not offer any Hong
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 538 ---
Kong Offer Shares to any person before the fifth day after the time of the
opening of the application lists (excluding any day which is Saturday, Sunday
or public holiday in Hong Kong), except by means of one of the procedures
referred to in this prospectus. However, HKSCC Nominees may revoke the
application before the fifth day after the time of the opening of the Application
Lists (excluding for this purpose any day which is a Saturday, Sunday or public
holiday in Hong Kong) if a person responsible for this prospectus under
Section 40 of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance gives a public notice under that section which excludes or limits that
person’s responsibility for this prospectus;
 agree that once HKSCC Nominees’ application is accepted, neither that
application nor your electronic application instructions can be revoked, and
that acceptance of that application will be evidenced by our Company’s
announcement of the Hong Kong Public Offering results;
 agree to the arrangements, undertakings and warranties under the participant
agreement between you and HKSCC, read with the General Rules of CCASS
and the CCASS Operational Procedures, for the giving electronic application
instructions to apply for Hong Kong Offer Shares;
 agree with our Company, for itself and for the benefit of each Shareholder (and
so that our Company will be deemed by its acceptance in whole or in part of
the application by HKSCC Nominees to have agreed, for itself and on behalf
of each of the Shareholders, with each CCASS Participant giving electronic
application instructions ) to observe and comply with the Companies
(Winding Up and Miscellaneous Provisions) Ordinance, the Companies
Ordinance and the Articles of Association;
 agree with our Company, for itself and for the benefit of each of the
Shareholder and each director, supervisor, manager and other senior officer of
our Company (and so that our Company will be deemed by its acceptance in
whole or in part of this application to have agreed, for itself and on behalf of
each of the Shareholder and each director, supervisor, manager and other senior
officer of our Company, with each CCASS Participant giving electronic
application instructions ):
(a) to refer all differences and claims arising from the Articles of Association
or any rights or obligations conferred or imposed by the PRC Company
Law or other relevant laws and administrative regulations concerning the
affairs of our Company to arbitration in accordance with the Articles of
Association;
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(b) that any award made in such arbitration shall be final and conclusive; and
(c) that the arbitration tribunal may conduct hearings in open sessions and
publish its award;
 agree with our Company (for our Company itself and for the benefit of each
shareholder of our Company) that the H Shares are freely transferable by their
holders;
 authorize our Company to enter into a contract on its behalf with each director
and officer of our Company whereby each such director and officer undertakes
to observe and comply with his obligations to shareholders stipulated in the
Articles of Association; and
 agree that your application, any acceptance of it and the resulting contract will
be governed by the laws of Hong Kong.
Effect of applying through the CCASS EIPO service
By applying through the CCASS EIPO service, you (and, if you are joint applicants, each
of you jointly and severally) are deemed to have done the following things. Neither HKSCC
nor HKSCC Nominees shall be liable to our Company or any other person in respect of the
things mentioned below:
 instructed and authorized HKSCC to cause HKSCC Nominees (acting as nominee
for the relevant CCASS Participants) to apply for the Hong Kong Offer Shares on
your behalf;
 instructed and authorized HKSCC to arrange payment of the maximum Offer Price,
brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock
Exchange trading fee by debiting your designated bank account and, in the case of
a wholly or partially unsuccessful application and/or if the Offer Price is less than
the maximum Offer Price per Offer Share initially paid on application, refund of the
application monies (including brokerage, the SFC transaction levy, the AFRC
transaction levy and the Stock Exchange trading fee) by crediting your designated
bank account; and
 instructed and authorized HKSCC to cause HKSCC Nominees to do on your behalf
all the things stated in this prospectus.
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Time for inputting electronic application instructions (1)
CCASS Clearing/Custodian Participants can input electronic application instructions at
the following times on the following dates:
 Tuesday, October 24, 2023 – 9:00 a.m. to 8:30 p.m.
 Wednesday, October 25, 2023 – 8:00 a.m. to 8:30 p.m.
 Thursday, October 26, 2023 – 8:00 a.m. to 8:30 p.m.
 Friday, October 27, 2023 – 8:00 a.m. to 12:00 noon
CCASS Investor Participants can input electronic application instructions from 9:00
a.m. on Tuesday, October 24, 2023 until 12:00 noon on Friday, October 27, 2023 (24 hours
daily, except on Friday, October 27, 2023, the last application day).
The latest time for inputting your electronic application instructions will be 12:00 noon
on Friday, October 27, 2023, the last application day or such later time as described in the
paragraph headed “10. Effect of bad weather and/or Extreme Conditions on the opening of the
application lists” in this section.
Note:
(1) The times in this sub-section are subject to change as HKSCC may determine from time to time with prior
notification to CCASS Clearing/Custodian Participants and/or CCASS Investor Participants.
No multiple applications
If you are suspected of having made multiple applications or if more than one application
is made for your benefit, the number of Hong Kong Offer Shares applied for by HKSCC
Nominees will be automatically reduced by the number of Hong Kong Offer Shares for which
you have given such instructions and/or for which such instructions have been given for your
benefit. Any electronic application instructions to make an application for the Hong Kong
Offer Shares given by you or for your benefit to HKSCC shall be deemed to be an actual
application for the purposes of considering whether multiple applications have been made.
Section 40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
For the avoidance of doubt, our Company and all other parties involved in the preparation
of this prospectus acknowledge that each CCASS Participant who gives or causes to give
electronic application instructions is a person who may be entitled to compensation under
section 40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (as
applied by section 342E of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance).
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Personal data
The following Personal Information Collection Statement applies to any personal data
held by our Company, the H Share Registrar, the receiving bankers, the Overall Coordinators,
the Underwriters and any of their respective advisors and agents about you in the same way as
it applies to personal data about applicants other than HKSCC Nominees. By applying through
the CCASS EIPO service, you agree to all of the terms of the Personal Information Collection
Statement below.
Personal Information Collection Statement
This Personal Information Collection Statement informs applicant for, and holder of, the
Hong Kong Offer Shares, of the policies and practices of our Company and its H Share
Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486
of the Laws of Hong Kong).
Reasons for the collection of your personal data
It is necessary for applicants and registered holders of the Hong Kong Offer Share to
supply correct personal data to our Company or its agents and the H Share Registrar when
applying for the Hong Kong Offer Shares or transferring the Hong Kong Offer Shares into or
out of their names or in procuring the services of the H Share Registrar.
Failure to supply the requested data may result in your application for the Hong Kong
Offer Shares being rejected, or in delay or the inability of our Company or its H Share Registrar
to effect transfers or otherwise render their services. It may also prevent or delay registration
or transfers of the Hong Kong Offer Shares which you have successfully applied for and/or the
dispatch of H Share certificate(s) to which you are entitled.
It is important that the holders of the Hong Kong Offer Shares inform our Company and
the H Share Registrar immediately of any inaccuracies in the personal data supplied.
Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund check, where applicable, verification of
compliance with the terms and application procedures set out in this prospectus and
announcing results of allocation of the Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of our
Company’s Shares including, where applicable, HKSCC Nominees;
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 maintaining or updating our Company’s Register of Member;
 verifying identities of the holders of our Company’s Shares;
 establishing benefit entitlements of holders of our Company’s Shares, such as
dividends, rights issues, bonus issues, etc.;
 distributing communications from our Company and its subsidiaries;
 compiling statistical information and profiles of the holder of our Company’s
Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable our
Company and the H Share Registrar to discharge their obligations to holders of our
Company’s Shares and/or regulators and/or any other purposes to which the
securities’ holder may from time to time agree.
Transfer of personal data
Personal data held by our Company and its H Share Registrar relating to the holders of
the Hong Kong Offer Shares will be kept confidential but our Company and its H Share
Registrar may, to the extent necessary for achieving any of the above purposes, disclose, obtain
or transfer (whether within or outside Hong Kong) the personal data, to from or with any of
the following:
 our Company’s appointed agents such as financial advisers, receiving bankers and
overseas principal share registrar;
 where applicants for the Hong Kong Offer Shares request a deposit into CCASS,
HKSCC or HKSCC Nominees, who will use the personal data for the purposes of
operating CCASS;
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to our Company or the H
Share Registrar in connection with their respective business operation;
 the Stock Exchange, the SFC and any other statutory, regulatory or governmental
bodies or otherwise as required by laws, rules or regulations; and
 any persons or institutions with which the holders of the Hong Kong Offer Shares
have or purpose to have dealings, such as their bankers, solicitors, accountants or
stockbrokers etc.
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Retention of personal data
The Company and its H Share Registrar will keep the personal data of the applicants and
holders of the Hong Kong Offer Shares for as long as necessary to fulfill the purposes for
which the personal data were collected. Personal data which is no longer required will be
destroyed or dealt with in accordance with the Personal Data (Privacy) Ordinance.
Access to and correction of personal data
Holders of the Hong Kong Offer Shares have the right to ascertain whether our Company
or the H Share Registrar hold their personal data, to obtain a copy of that data, and to correct
any data that is inaccurate. The Company and the H Share Registrar have the right to charge
a reasonable fee for the processing of such requests. All requests for access to data or
correction of data should be addressed to our Company, at our Company’s registered address
disclosed in the section headed “Corporate Information” in this prospectus or as notified from
time to time, for the attention of the secretary, or our Company’s H Share Registrar for the
attention of the privacy compliance officer.
7. W ARNING FOR ELECTRONIC APPLICATIONS
The subscription of the Hong Kong Offer Shares by giving electronic application
instructions to HKSCC is only a facility provided to CCASS Participants. Similarly, the
application for Hong Kong Offer Shares through the HK eIPO White Form service is also
only a facility provided by the HK eIPO White Form Service Provider to public investors.
Such facilities are subject to capacity limitations and potential service interruptions and you
are advised not to wait until the last application day in making your electronic applications.
Our Company, our Directors, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters and the
Capital Market Intermediaries take no responsibility for such applications and provide no
assurance that any CCASS Participant or person applying through the HK eIPO White Form
service will be allotted any Hong Kong Offer Shares.
To ensure that CCASS Investor Participants can give their electronic application
instructions , they are advised not to wait until the last minute to input their instructions to the
systems. In the event that CCASS Investor Participants have problems in the connection to
CCASS Phone System/CCASS Internet System for submission of electronic application
instructions , they should go to HKSCC’s Customer Service Centre to complete an input
request form for electronic application instructions before 12:00 noon on Friday, October 27,
2023.
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8. HOW MANY APPLICATIONS CAN YOU MAKE
Multiple applications for the Hong Kong Offer Shares are not allowed except by
nominees. If you are a nominee and apply through the HK eIPO White Form service, in the
box marked “For Nominees”, you must include an account number or some other identification
code for each beneficial owner or, in the case of joint beneficial owners, for each joint
beneficial owner when you fill in the application details. If you do not include this information,
the application will be treated as being made for your own benefit.
All of your applications will be rejected if more than one application by giving electronic
application instructions to HKSCC or through the HK eIPO White Form service is made for
your benefit (including the part of the application made by HKSCC Nominees acting on
electronic application instructions ), and the number of the Hong Kong Offer Shares for
which you have given such instructions and/or for which such instructions have been given for
your behalf.
For the avoidance of doubt, giving an electronic application instruction under the HK
eIPO White Form service more than once and obtaining different application reference
number without effecting full payment in respect of a particular reference number will not
constitute an actual application. However, any electronic application instructions to make an
application for the Hong Kong Offer Shares given by you or for your benefit to HKSCC will
be deemed to be an actual application for the purposes of considering whether multiple
applications have been made.
The H Share Registrar would record all applications into its system and identify suspected
multiple applications with identical names, identification document numbers and reference
numbers according to the Best Practice Note on Treatment of Multiple/Suspected Multiple
Applications (“ Best Practice Note ”) issued by the Federation of Share Registrars Limited.
With regard to the announcement of results of allocations under the section headed
“Results of Applications Made by Giving Electronic Application Instructions to HKSCC via
CCASS”, the list of identification document number(s) may not be a complete list of successful
applicants, only successful applicants whose identification document numbers are provided to
HKSCC by CCASS Participants are disclosed. Applicants who applied for the Offer Shares
through their brokers can consult their brokers to enquire about their application results.
Since applications are subject to personal information collection statements, beneficial
owner identification codes displayed are redacted. Applicants with beneficial names only but
not identification document numbers are not disclosed due to personal privacy issue.
If an application is made by an unlisted company and:
 the principal business of that company is dealing in securities; and
 you exercise statutory control over that company,
then the application will be treated as being for your benefit.
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“Unlisted company” means a company with no equity securities listed on the Stock
Exchange. “Statutory control” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part
of it which carries no right to participate beyond a specified amount in a distribution
of either profits or capital).
9. HOW MUCH ARE THE HONG KONG OFFER SHARES
Y ou must pay the maximum Offer Price, brokerage, the SFC transaction levy, the AFRC
transaction levy and the Stock Exchange trading fee in full upon application for Shares.
Y ou may submit an application through the HK eIPO White Form service or the CCASS
EIPO service in respect of a minimum of 500 Hong Kong Offer Shares. Each application or
electronic application instruction in respect of more than 500 Hong Kong Offer Shares must
be in one of the numbers set out in the table in the table in “4. MINIMUM APPLICA TION
AMOUNT AND PERMITTED NUMBERS” in this section, or as otherwise specified in the
IPO App or on the designated website at www.hkeipo.hk .
If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules), and the SFC transaction levy, the AFRC transaction levy and the
Stock Exchange trading fee are paid to the Stock Exchange (in the case of the SFC transaction
levy, collected by the Stock Exchange on behalf of the SFC and in the case of the AFRC
transaction levy, collected by the Stock Exchange on behalf of the AFRC).
For further details on the Offer Price, please refer to the section headed “Structure of the
Global Offering — Pricing of the Global Offering” in this prospectus.
10. EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE
OPENING OF THE APPLICATION LISTS
The application lists will not open if there is:
 a tropical cyclone warning signal number 8 or above;
 a “black” rainstorm warning; and/or
 Extreme Conditions,
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in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Friday, October 27,
2023. Instead they will open between 11:45 a.m. and 12:00 noon on the next business day
which does not have either of those warnings and/or Extreme Conditions in Hong Kong in
force at any time between 9:00 a.m. and 12:00 noon.
If the application lists do not open and close on Friday, October 27, 2023 or if there is
a tropical cyclone warning signal number 8 or above or a “black” rainstorm warning signal
and/or Extreme Conditions in force in Hong Kong that may affect the dates mentioned in the
section headed “Expected timetable” in this prospectus, an announcement will be made in such
event.
11. PUBLICATION OF RESULTS
Our Company expects to announce the final Offer Price, the level of indications of
interest in the International Offering, the level of applications in the Hong Kong Public
Offering and the basis of allocation of the Hong Kong Offer Shares on Thursday, November
2, 2023 on our Company’s website at www.uboxol.com and the website of the Stock Exchange
at www.hkexnews.hk .
The results of allocations and the Hong Kong identity card/passport/Hong Kong business
registration/certificate of incorporation numbers of successful applicants under the Hong Kong
Public Offering will be available at the times and date and in the manner specified below:
 in the announcement to be posted on our Company’s website at www.uboxol.com
and the Stock Exchange’s website at www.hkexnews.hk by no later than 8:00 a.m.
on Thursday, November 2, 2023;
 from the “IPO Results” function in the IPO App or the designated results of
allocations website at www.hkeipo.hk/IPOResult (or
www.tricor.com.hk/ipo/result ) with a “search by ID” function on a 24-hour basis
from 8:00 a.m. on Thursday, November 2, 2023 to 12:00 mid-night on Wednesday,
November 8, 2023; and
 by results allocation telephone enquiry line by calling +852 3691 8488 between 9:00
a.m. and 6:00 p.m. from Thursday, November 2, 2023 to Tuesday, November 7, 2023
(excluding Saturday, Sunday and public holiday in Hong Kong).
If our Company accepts your offer to purchase (in whole or in part), which it may do by
announcing the basis of allocations and/or making available the results of allocations publicly,
there will be a binding contract under which you will be required to purchase the Hong Kong
Offer Shares if the conditions of the Global Offering are satisfied and the Global Offering is
not otherwise terminated. Further details are contained in the section headed “Structure of the
Global Offering” in this prospectus.
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Y ou will not be entitled to exercise any remedy of rescission for innocent
misrepresentation at any time after acceptance of your application. This does not affect any
other right you may have.
12. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOTTED HONG KONG
OFFER SHARES
Y ou should note the following situations in which the Hong Kong Offer shares will not
be allotted to you:
(i) If your application is revoked:
By applying through the CCASS EIPO service or to the HK eIPO White Form service,
you agree that your application or the application made by HKSCC Nominees on your behalf
cannot be revoked on or before the fifth day after the time of the opening of the application
lists (excluding for this purpose any day which is Saturday, Sunday or public holiday in Hong
Kong). This agreement will take effect as a collateral contract with our Company.
Y our application or the application made by HKSCC Nominees on your behalf may only
be revoked on or before such fifth day if a person responsible for this prospectus under section
40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (as applied by
section 342E of the Companies (Winding Up and Miscellaneous Provisions) Ordinance) gives
a public notice under that section which excludes or limits that person’s responsibility for this
prospectus.
If any supplement to this prospectus is issued, applicants who have already submitted an
application will be notified that they are required to confirm their applications. If applicants
have been so notified but have not confirmed their applications in accordance with the
procedure to be notified, all unconfirmed applications will be deemed revoked.
If your application or the application made by HKSCC Nominees on your behalf has been
accepted, it cannot be revoked. For this purpose, acceptance of applications which are not
rejected will be constituted by notification in the press of the results of allocation, and where
such basis of allocation is subject to certain conditions or provides for allocation by ballot,
such acceptance will be subject to the satisfaction of such conditions or results of the ballot
respectively.
(ii) If our Company or its agents exercise their discretion to reject your application:
Our Company, the Overall Coordinators, the HK eIPO White Form Service Provider and
their respective agents and nominees have full discretion to reject or accept any application, or
to accept only part of any application, without giving any reasons.
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(iii) If the allotment of Hong Kong Offer Shares is void:
The allotment of Hong Kong Offer Shares will be void if the Stock Exchange does not
grant permission to list our Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Stock Exchange notifies our
Company of that longer period within three weeks of the closing date of the
application lists.
(iv) If:
 you make multiple applications or suspected multiple applications;
 you or the person for whose benefit you are applying have applied for or taken up,
or indicated an interest for, or have been or will be placed or allocated (including
conditionally and/or provisionally) Hong Kong Offer Shares and International Offer
Shares;
 your electronic application instructions through the HK eIPO White Form
service are not completed in accordance with the instructions, terms and conditions
in the IPO App or on the designated website at www.hkeipo.hk ;
 your payment is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 our Company or the Overall Coordinators believe that by accepting your application,
it or they would violate applicable securities or other laws, rules or regulations; or
 your application is for more than 50% of the Hong Kong Offer Shares initially
offered under the Hong Kong Public Offering.
13. REFUND OF APPLICATION MONIES
If an application is rejected, not accepted or accepted in part only, or if the Offer Price
as finally determined is less than the maximum offer price of HK$11.40 per Offer Share
(excluding brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock
Exchange trading fee thereon), or if the conditions of the Hong Kong Public Offering are not
fulfilled in accordance with “Structure of the Global Offering – Conditions of the Global
Offering” in this prospectus or if any application is revoked, the application monies, or the
appropriate portion thereof, together with the related brokerage, the SFC transaction levy, the
AFRC transaction levy and the Stock Exchange trading fee, will be refunded, without interest.
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Any refund of your application monies will be made on or before Thursday, November
2, 2023.
14. DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND
MONIES
Y ou will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
CCASS EIPO service where the H Share certificates will be deposited into CCASS as
described below).
No temporary document of title will be issued in respect of our Shares. No receipt will
be issued for sums paid on application.
Subject to arrangement on dispatch/collection of H Share certificates and refund monies
as mentioned below, any refund checks and H Share certificates are expected to be posted on
or before Thursday, November 2, 2023. The right is reserved to retain any H Share certificate(s)
and any surplus application monies pending clearance of check(s) or banker’s cashier’s
order(s).
H Share certificates will only become valid at 8:00 a.m. on Friday, November 3, 2023
provided that the Global Offering has become unconditional and the right of termination
described in the section headed “Underwriting” in this prospectus has not been exercised.
Investors who trade H Shares prior to the receipt of H Share certificates or the H Share
certificates becoming valid do so at their own risk.
Personal collection
(i) If you apply through the HK eIPO White Form service
If you apply for 1,000,000 Hong Kong Offer Shares or more and your application
is wholly or partially successful, you may collect your H Share certificate(s) from Tricor
Investor Services Limited, at 17/F, Far East Financial Centre, 16 Harcourt Road, Hong
Kong, from 9:00 a.m. to 1:00 p.m. on Thursday, November 2, 2023, or such other date as
notified by our Company in the newspapers as the date of dispatch/collection of H Share
certificates/e-Auto Refund payment instructions/refund checks.
If you are an individual who is eligible for personal collection, you must not
authorise any other person to collect for you. If you are a corporate applicant which is
eligible for personal collection, your authorised representative must bear a letter of
authorization from your corporation stamped with your corporation’s chop. Both
individuals and authorized representatives must produce, at the time of collection,
evidence of identity acceptable to the H Share Registrar.
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If you do not collect your H Share certificate(s) personally within the time specified
for collection, they will be sent to the address specified in your application instructions
by ordinary post at your own risk.
If you apply for less than 1,000,000 Hong Kong Offer Shares, your H Share
certificate(s) (where applicable) will be sent to the address specified in your application
instructions on or before Thursday, November 2, 2023 by ordinary post at your own risk.
If you apply and pay the application monies from a single bank account, any refund
monies will be dispatched to that bank account in the form of e-Auto Refund payment
instructions. If you apply and pay the application monies from multiple bank accounts,
any refund monies will be dispatched to the address as specified in your application
instructions in the form of refund check(s) in favour of the applicant (or, in the case of
joint applications, the first-named applicant) by ordinary post at your own risk.
(ii) If you apply through the CCASS EIPO service
Allocation of Hong Kong Offer Shares
For the purposes of allocating Hong Kong Offer Shares, HKSCC Nominees
will not be treated as an applicant. Instead, each CCASS Participant who gives
electronic application instructions or each person for whose benefit instructions
are given will be treated as an applicant.
Deposit of H Share certificates into CCASS and refund of application monies
 If your application is wholly or partially successful, your H Share certificate(s)
will be issued in the name of HKSCC Nominees and deposited into CCASS for
the credit of your designated CCASS Participant’s stock account or your
CCASS Investor Participant stock account on Thursday, November 2, 2023, or,
on any other date determined by HKSCC or HKSCC Nominees.
 Our Company expects to publish the application results of CCASS Participants
(and where the CCASS Participant is a broker or custodian , our Company will
include information relating to the relevant beneficial owner), your Hong Kong
identity card number/passport number or other identification code (Hong Kong
business registration number for corporations) and the basis of allotment of the
Hong Kong Public Offering in the manner specified in the paragraph headed
“11. Publication of results” above on Thursday, November 2, 2023. Y ou should
check the announcement published by our Company and report any
discrepancies to HKSCC before 5:00 p.m. on Thursday, November 2, 2023 or
such other date as determined by HKSCC or HKSCC Nominees.
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 If you have instructed your broker or custodian to give electronic
application instructions on your behalf, you can also check the number of
Hong Kong Offer Shares allotted to you and the amount of refund monies (if
any) payable to you with that broker or custodian .
 If you have applied as a CCASS Investor Participant, you can also check the
number of Hong Kong Offer Shares allotted to you and the amount of refund
monies (if any) payable to you via the CCASS Phone System and the CCASS
Internet System (under the procedures contained in HKSCC’s “An Operating
Guide for Investor Participants” in effect from time to time) on Thursday,
November 2, 2023. Immediately following the credit of the Hong Kong Offer
Shares to your stock account and the credit of refund monies to your bank
account, HKSCC will also make available to you an activity statement showing
the number of Hong Kong Offer Shares credited to your CCASS Investor
Participant stock account and the amount of refund monies (if any) credited to
your designated bank account.
 Refund of your application monies (if any) in respect of wholly and partially
unsuccessful applications and/or difference between the Offer Price and the
maximum Offer Price per Offer Share initially paid on application (including
brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock
Exchange trading fee but without interest) will be credited to your designated
bank account or the designated bank account of your broker or custodian on
Thursday, November 2, 2023.
15. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, H Shares and we
comply with the stock admission requirements of HKSCC, the H Shares will be accepted as
eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from
the date of commencement of dealings in the H Shares or any other date HKSCC chooses.
Settlement of transactions between Exchange Participants (as defined in the Listing Rules) is
required to take place in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional adviser for
details of the settlement arrangement as such arrangements may affect their rights and interests.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
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The following is the text of a report set out on pages I-1 to I-3, received from the
Company’ s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus. It is prepared and addressed
to the directors of the Company and to the Joint Sponsors pursuant to the requirements of
HKSIR 200 Accountants’ Reports on Historical Financial Information in Investment Circulars
issued by the Hong Kong Institute of Certified Public Accountants.
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO
THE DIRECTORS OF BEIJING UBOX ONLINE TECHNOLOGY CORP. ( ̏ԯʾᘒίᇞ
ʮ̡), CHINA SECURITIES (INTERNATIONAL) CORPORATE FINANCE
COMPANY LIMITED AND HUATAI FINANCIAL HOLDINGS (HONG KONG)
LIMITED
Introduction
We report on the historical financial information of Beijing UBOX Online Technology
Corp. (ʮ̡) (the “Company”) and its subsidiaries (together, the
“Group”) set out on pages I-4 to I-133, which comprises the consolidated statements of
financial position as at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, the
Company’s statements of financial position as at December 31, 2019, 2020, 2021 and 2022 and
June 30, 2023, and the consolidated statements of comprehensive income, the consolidated
statements of changes in equity and the consolidated statements of cash flows for each of the
years ended December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30, 2023
(the “Track Record Period”) and material accounting policy information and other explanatory
information (together, the “Historical Financial Information”). The Historical Financial
Information set out on pages I-4 to I-133 forms an integral part of this report, which has been
prepared for inclusion in the prospectus of the Company dated October 24, 2023 (the
“Prospectus”) in connection with the initial listing of shares of the Company on the Main Board
of The Stock Exchange of Hong Kong Limited.
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation set out
in Note 2.1 to the Historical Financial Information, and for such internal control as the
directors determine is necessary to enable the preparation of Historical Financial Information
that is free from material misstatement, whether due to fraud or error.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 553 ---
Reporting accountant’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200, Accountants’ Reports on Historical
Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified
Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards
and plan and perform our work to obtain reasonable assurance about whether the Historical
Financial Information is free from material misstatement.
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountant’s judgment, including the assessment of risks of material misstatement of
the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountant considers internal control relevant to the entity’s
preparation of Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation set out in Note 2.1 to the Historical Financial Information in order
to design procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Our work also
included evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of
the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountant’s report, a true and fair view of the financial position of the Company as at
December 31, 2019, 2020, 2021 and 2022 and June 30, 2023 and the consolidated financial
position of the Group as at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023 and
of its consolidated financial performance and its consolidated cash flows for the Track Record
Period in accordance with the basis of preparation set out in Note 2.1 to the Historical Financial
Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated statement of comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the six months ended June
30, 2022 and other explanatory information (the “Stub Period Comparative Financial
Information”). The directors of the Company are responsible for the preparation of the Stub
Period Comparative Financial Information in accordance with the basis of preparation set out
in Note 2.1 to the Historical Financial Information. Our responsibility is to express a
APPENDIX I ACCOUNTANT’S REPORT
– I-2 –


--- page 554 ---
conclusion on the Stub Period Comparative Financial Information based on our review. We
conducted our review in accordance with Hong Kong Standard on Review Engagements 2410,
Review of Interim Financial Information Performed by the Independent Auditor of the Entity
issued by the HKICPA. A review consists of making inquiries, primarily of persons responsible
for financial and accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with Hong Kong
Standards on Auditing and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion. Based on our review, nothing has come to our attention that
causes us to believe that the Stub Period Comparative Financial Information, for the purposes
of the accountant’s report, is not prepared, in all material respects, in accordance with the basis
of preparation set out in Note 2.1 to the Historical Financial Information.
Report on matters under the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Up
and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to Note 15 to the Historical Financial Information which states that no dividends
have been paid by the Company in respect of the Track Record Period.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
October 24, 2023
APPENDIX I ACCOUNTANT’S REPORT
– I-3 –


--- page 555 ---
I. HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Set out below is the Historical Financial Information which forms an integral part of this
accountant’s report.
The consolidated financial statements of the Group for the Track Record Period, on which
the Historical Financial Information is based, were audited by PricewaterhouseCoopers in
accordance with Hong Kong Standards on Auditing issued by the HKICPA (“Underlying
Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values
are rounded to the nearest thousand (RMB’000), unless otherwise stated.
APPENDIX I ACCOUNTANT’S REPORT
– I-4 –


--- page 556 ---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Y ear ended December 31,
Six months ended
June 30,
Note 2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenues 6 2,727,461 1,902,010 2,676,237 2,519,224 1,143,090 1,252,678
Cost of sales 7 (1,398,265) (1,343,449) (1,575,113) (1,442,488) (632,853) (734,702)
Gross profit 1,329,196 558,561 1,101,124 1,076,736 510,237 517,976
Selling and marketing
expenses 7 (1,023,716) (1,083,735) (1,077,412) (1,155,720) (546,736) (545,133)
General and
administrative
expenses 7 (156,075) (511,016) (123,347) (127,405) (54,306) (95,146)
Research and
development
expenses 7 (57,301) (41,484) (36,761) (31,556) (17,668) (15,098)
Net impairment losses
on financial assets
3.1(b),
24 (10,858) (58,389) (28,224) (9,264) (6,904) (842)
Other income 8 17,112 20,199 12,269 12,027 4,140 2,923
Other gains/(losses), net 9 11,344 (19,844) (14,655) (8,488) 821 (2,920)
Operating profit/(loss) 109,702 (1,135,708) (167,006) (243,670) (110,416) (138,240)
Finance costs 11 (58,688) (32,344) (13,517) (13,331) (7,260) (4,584)
Share of results of
investments
accounted for using
the equity method 20 (7,169) (3,472) (4,092) (15,255) (4,786) (3,821)
Profit/(loss) before
income tax 43,845 (1,171,524) (184,615) (272,256) (122,462) (146,645)
Income tax expense 12 (4,196) (12,672) (3,579) (10,813) (5,937) (744)
Profit/(loss) for the
year/period 39,649 (1,184,196) (188,194) (283,069) (128,399) (147,389)
APPENDIX I ACCOUNTANT’S REPORT
– I-5 –


--- page 557 ---
Y ear ended December 31,
Six months ended
June 30,
Note 2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit/(loss) for the
year/period
attributable to:
– Owners of the
Company 45,142 (1,172,461) (185,000) (284,529) (127,479) (152,480)
– Non-controlling
interests (5,493) (11,735) (3,194) 1,460 (920) 5,091
39,649 (1,184,196) (188,194) (283,069) (128,399) (147,389)
Earnings/(losses) per
share for
profit/(loss)
attributable to
owners of the
Company
(expressed in
RMB per share)
Basic and diluted 13 0.07 (1.55) (0.24) (0.38) (0.17) (0.20)
Other comprehensive
income,
net of tax
Items that may be
reclassified
to profit or loss
Exchange differences
arising on
translation of
foreign operations 12––––
Total comprehensive
income/(loss) for the
year/period 39,650 (1,184,194) (188,194) (283,069) (128,399) (147,389)
APPENDIX I ACCOUNTANT’S REPORT
– I-6 –


--- page 558 ---
Y ear ended December 31,
Six months ended
June 30,
Note 2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Total comprehensive
income/(loss) for the
year/period
attributable to:
– Owners of the
Company 45,143 (1,172,459) (185,000) (284,529) (127,479) (152,480)
– Non-controlling
interests (5,493) (11,735) (3,194) 1,460 (920) 5,091
39,650 (1,184,194) (188,194) (283,069) (128,399) (147,389)
APPENDIX I ACCOUNTANT’S REPORT
– I-7 –


--- page 559 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31,
As at
June 30,
Note 2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property and equipment 16 589,483 305,242 398,795 296,338 223,570
Right-of-use assets 17 570,852 446,249 359,487 289,070 247,138
Intangible assets 18 318,366 136,156 118,580 102,881 95,206
Investments accounted for
using the equity method 20 54,573 61,023 76,457 62,702 58,881
Financial assets at fair value
through profit or loss 22 95,852 34,740 32,800 36,100 34,500
Prepayments, deposits and
other receivables 24 79,317 135,551 123,285 177,106 196,143
Trade receivables 24 26,754 4,499 49 – –
Deferred income tax assets 29 50,168 42,346 41,761 36,665 40,495
Total non-current assets 1,785,365 1,165,806 1,151,214 1,000,862 895,933
Current assets
Inventories 23 231,158 150,163 186,779 143,887 126,834
Trade receivables 24 303,634 156,675 120,284 54,693 64,144
Prepayments, deposits and
other receivables 24 799,901 402,987 303,447 188,514 174,269
Financial assets at fair value
through profit or loss 22 286,634 132,07 8–––
Restricted cash 25 – – 2,500 2,735 3,126
Cash and cash equivalents 25 222,347 191,015 172,386 128,178 269,485
Total current assets 1,843,674 1,032,918 785,396 518,007 637,858
Total assets 3,629,039 2,198,724 1,936,610 1,518,869 1,533,791
EQUITY
Share capital 26 757,259 757,259 757,259 757,259 757,259
Reserves 27 1,765,801 1,767,571 1,765,917 1,765,917 1,815,444
Retained earnings/
(Accumulated losses) 99,297 (1,073,164) (1,258,164) (1,542,693) (1,695,173)
Equity attributable to
owners of the Company 2,622,357 1,451,666 1,265,012 980,483 877,530
Non-controlling interests 28,987 17,252 19,154 21,453 26,544
Total equity 2,651,344 1,468,918 1,284,166 1,001,936 904,074
APPENDIX I ACCOUNTANT’S REPORT
– I-8 –


--- page 560 ---
As at December 31,
As at
June 30,
Note 2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
LIABILITIES
Non-current liabilities
Lease liabilities 17 194,274 112,359 41,025 21,287 14,759
Other payables and accruals 31 1,279 45 17––
Deferred income tax
liabilities 29 1,846 1,596 1,925 2,050 2,450
Total non-current
liabilities 197,399 114,406 42,957 23,337 17,209
Current liabilities
Lease liabilities 17 214,675 126,199 77,543 38,390 29,481
Trade payables 30 261,297 168,523 250,093 214,666 234,585
Other payables and accruals 31 247,858 218,071 210,386 159,475 217,899
Contract liabilities 6 14,747 10,421 8,592 7,496 37,575
Current income tax
liabilities 10,719 1,342 1,893 3,569 3,918
Borrowings 32 31,000 90,844 60,980 70,000 89,050
Total current liabilities 780,296 615,400 609,487 493,596 612,508
Total liabilities 977,695 729,806 652,444 516,933 629,717
Total equity and liabilities 3,629,039 2,198,724 1,936,610 1,518,869 1,533,791
APPENDIX I ACCOUNTANT’S REPORT
– I-9 –


--- page 561 ---
STATEMENT OF FINANCIAL POSITION OF THE COMPANY
As at December 31,
As at
June 30,
Note 2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property and equipment 16 166,062 92,698 192,112 68,463 32,376
Right-of-use assets 17 468,074 273,591 200,887 132,569 105,456
Intangible assets 18 37,163 29,056 25,934 23,064 21,679
Investments in subsidiaries 19 432,864 338,731 388,731 398,731 420,378
Investments accounted for
using the equity method 20 24,495 21,229 36,517 34,289 31,867
Financial assets at fair value
through profit or loss 22 5 9 0––––
Prepayments, deposits and
other receivables 24 65,674 127,979 116,733 167,105 196,088
Trade receivables 24 9 1––––
Deferred income tax assets 8,60 8––––
Total non-current assets 1,203,621 883,284 960,914 824,221 807,844
Current assets
Inventories 23 103,250 65,875 63,380 45,512 38,888
Trade receivables 24 549,118 642,549 906,274 1,275,951 1,417,588
Prepayments, deposits and
other receivables 24 1,668,874 1,132,859 770,030 627,566 581,580
Financial assets at fair value
through profit or loss 22 186,584 88,11 4–––
Cash and cash equivalents 25 80,692 45,491 39,103 1,982 11,228
Total current assets 2,588,518 1,974,888 1,778,787 1,951,011 2,049,284
Total assets 3,792,139 2,858,172 2,739,701 2,775,232 2,857,128
EQUITY
Share capital 26 757,259 757,259 757,259 757,259 757,259
Reserves 27 2,096,193 2,097,961 2,096,193 2,096,193 2,145,720
Accumulated losses (12,407) (464,294) (463,550) (456,365) (463,014)
Total equity 2,841,045 2,390,926 2,389,902 2,397,087 2,439,965
APPENDIX I ACCOUNTANT’S REPORT
– I-10 –


--- page 562 ---
As at December 31,
As at
June 30,
Note 2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
LIABILITIES
Non-current liabilities
Lease liabilities 17 151,481 82,539 17,732 3,872 644
Other payables and accruals 31 2,12 1––––
Deferred income tax
liabilities 238 52 7–––
Total non-current
liabilities 153,840 83,066 17,732 3,872 644
Current liabilities
Lease liabilities 17 184,338 105,962 59,116 11,420 7,415
Trade payables 30 89,159 6,862 79,339 136,652 153,964
Other payables and accruals 31 522,004 271,356 193,612 226,201 255,140
Current income tax
liabilities 1,75 3––––
Total current liabilities 797,254 384,180 332,067 374,273 416,519
Total liabilities 951,094 467,246 349,799 378,145 417,163
Total equity and liabilities 3,792,139 2,858,172 2,739,701 2,775,232 2,857,128
APPENDIX I ACCOUNTANT’S REPORT
– I-11 –


--- page 563 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the Company
Note
Share
capital Reserves
Retained
earnings/
(Accumulated
losses) Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2019 630,943 545,672 54,155 1,230,770 36,412 1,267,182
Profit/(loss) for the year – – 45,142 45,142 (5,493) 39,649
Currency translation differences – 1 – 1 – 1
Total comprehensive income/(loss) for the year – 1 45,142 45,143 (5,493) 39,650
Transactions with owners of the Company
Issuance of new shares 26 126,316 1,069,242 – 1,195,558 – 1,195,558
Acquisitions of non-controlling interests 27 – 886 – 886 (2,438) (1,552)
Transfer of repurchased shares 27 – 150,000 – 150,000 – 150,000
Acquisition of subsidiaries – – – – 506 506
Total transactions with owners of
the Company 126,316 1,220,128 – 1,346,444 (1,932) 1,344,512
As at December 31, 2019 757,259 1,765,801 99,297 2,622,357 28,987 2,651,344
As at January 1, 2020 757,259 1,765,801 99,297 2,622,357 28,987 2,651,344
Loss for the year – – (1,172,461) (1,172,461) (11,735) (1,184,196)
Currency translation differences – 2 – 2 – 2
Total comprehensive income/(loss) for the year – 2 (1,172,461) (1,172,459) (11,735) (1,184,194)
Transactions with owners of
the Company
Share-based compensation expenses 28 – 210,918 – 210,918 – 210,918
Exercise of share options of the Company 28 – (209,150) – (209,150) – (209,150)
Total transactions with owners of
the Company – 1,768 – 1,768 – 1,768
As at December 31, 2020 757,259 1,767,571 (1,073,164) 1,451,666 17,252 1,468,918
APPENDIX I ACCOUNTANT’S REPORT
– I-12 –


--- page 564 ---
Attributable to owners of the Company
Note
Share
capital Reserves
Accumulated
losses Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021 757,259 1,767,571 (1,073,164) 1,451,666 17,252 1,468,918
Loss for the year – – (185,000) (185,000) (3,194) (188,194)
Total comprehensive loss
for the year – – (185,000) (185,000) (3,194) (188,194)
Transactions with owners of the Company
Exercise of the share options of the Company 28 – (1,768) – (1,768) – (1,768)
Transactions with non-controlling interests 27 – (1,386) – (1,386) 1,726 340
Capital injection by non-controlling interests – – – – 3,370 3,370
Share-based compensation expenses due to equity
transactions 14(f) – 1,500 – 1,500 – 1,500
Total transactions with owners of
the Company – (1,654) – (1,654) 5,096 3,442
As at December 31, 2021 757,259 1,765,917 (1,258,164) 1,265,012 19,154 1,284,166
As at January 1, 2022 757,259 1,765,917 (1,258,164) 1,265,012 19,154 1,284,166
(Loss)/profit for the year – – (284,529) (284,529) 1,460 (283,069)
Total comprehensive (loss)/income for the year – – (284,529) (284,529) 1,460 (283,069)
Transactions with owners of the Company
Disposal of a subsidiary 14(e) – – – – 459 459
Capital injection by non-controlling interests – – – – 380 380
Total transactions with owners of the Company – – – – 839 839
As at December 31, 2022 757,259 1,765,917 (1,542,693) 980,483 21,453 1,001,936
APPENDIX I ACCOUNTANT’S REPORT
– I-13 –


--- page 565 ---
Attributable to owners of the Company
Note
Share
capital Reserves
Accumulated
losses Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2023 757,259 1,765,917 (1,542,693) 980,483 21,453 1,001,936
(Loss)/profit for the period – – (152,480) (152,480) 5,091 (147,389)
Total comprehensive (loss)/income for the
period – – (152,480) (152,480) 5,091 (147,389)
Transactions with owners of the Company
Share-based compensation expenses 28 – 49,527 – 49,527 – 49,527
Total transactions with owners of the Company – 49,527 – 49,527 – 49,527
As at June 30, 2023 757,259 1,815,444 (1,695,173) 877,530 26,544 904,074
(Unaudited)
As at January 1, 2022 757,259 1,765,917 (1,258,164) 1,265,012 19,154 1,284,166
Loss for the period – – (127,479) (127,479) (920) (128,399)
Total comprehensive loss for the period – – (127,479) (127,479) (920) (128,399)
Transactions with owners of the Company
Disposal of a subsidiary 14(e) – – – – 459 459
Capital injection by non-controlling interests – – – – 380 380
Total transactions with owners of the Company – – – – 839 839
As at June 30, 2022 757,259 1,765,917 (1,385,643) 1,137,533 19,073 1,156,606
APPENDIX I ACCOUNTANT’S REPORT
– I-14 –


--- page 566 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended December 31,
Six months ended
June 30,
Note 2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from
operating activities
Cash generated
from/(used in)
operations 34 634,778 (18,798) 179,234 156,153 155,696 189,136
Interest received 1,885 1,327 1,829 1,681 631 700
Income taxes paid (23,270) (14,477) (2,114) (3,916) (469) (3,825)
Net cash generated
from/
(used in) operating
activities 613,393 (31,948) 178,949 153,918 155,858 186,011
Cash flows from
investing activities
Payments for acquisition
of subsidiaries, net of
cash received 33, 14(f) (112,806) –––––
Proceeds from disposal
of a subsidiary – – – 500 500 –
Payments for investment
in a joint venture 20 (4,000) – – (1,500) (1,500) –
Payments for investment
in associates 20 (20,822) (40,000) (19,526) – – –
Prepayments for
investment in
an associate 35 (3,000) –––––
Return of prepayments
for investment in an
associate 35 – 3,00 0––––
Proceeds from disposal
of investment in
associates 20 3,700 30,07 8––––
Proceeds from disposal
of property and
equipment 34 115,955 27,206 17,929 22,143 6,090 8,582
APPENDIX I ACCOUNTANT’S REPORT
– I-15 –


--- page 567 ---
Y ear ended December 31,
Six months ended
June 30,
Note 2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Payments for purchase of
financial assets at fair
value through profit or
loss 22 (2,508,000) (438,000) (240,000) (70,000) (40,000) (20,000)
Proceeds from disposal
of financial assets at
fair value through
profit or loss 22 2,540,478 635,410 372,078 70,000 40,000 20,000
Payments for purchase of
property and
equipment (420,628) (76,655) (223,847) (145,749) (114,104) (45,720)
Payments for purchase of
intangible assets (59,742) (4,625) – (143) (68) –
Advances to a
shareholder and
business partners (416,019) (11,872) (13,701) – – –
Proceeds from repayment
of advances to a
shareholder and
business partners 162,400 58,331 83,083 19,326 19,239 1,047
Interest received from
wealth management
products 22 5,135 6,298 1,242 173 44 69
Net cash (used
in)/generated from
investing activities (717,349) 189,171 (22,742) (105,250) (89,799) (36,022)
Cash flows from
financing activities
Proceeds from issuance
of new shares 26 1,200,000 –––––
Payments of issuance
cost for issuance of
new shares 26 (4,442) –––––
Proceeds from transfer of
repurchased shares 27 150,00 0–––––
Payments for acquisition
of non-controlling
interests (1,552) –––––
APPENDIX I ACCOUNTANT’S REPORT
– I-16 –


--- page 568 ---
Y ear ended December 31,
Six months ended
June 30,
Note 2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Proceeds from
borrowings 210,998 97,244 64,990 80,920 44,920 59,050
Repayments of
borrowings (227,498) (37,400) (94,854) (71,900) (5,900) (40,000)
Principal elements and
interest element of
lease payments 17 (584,080) (245,940) (144,176) (93,519) (47,862) (23,195)
Repayment of loans from
non-financial
institutions (700,000) –––––
Transaction with non-
controlling interests 27 –– 2 8 0–––
Capital injection by
non-controlling
interests – – 3,370 380 380 –
Listing expenses
payments – – (1,548) (2,511) (2,203) (1,926)
Interest paid 11 (22,518) (2,461) (2,898) (6,246) (3,018) (2,611)
Net cash generated
from/
(used in) financing
activities 20,908 (188,557) (174,836) (92,876) (13,683) (8,682)
Net (decrease)/increase
in cash and
cash equivalents (83,048) (31,334) (18,629) (44,208) 52,376 141,307
Cash and cash
equivalents at
beginning of the
year/period 305,394 222,347 191,015 172,386 172,386 128,178
Effects of exchange rate
changes on cash and
cash equivalents 12––––
Cash and cash
equivalents at the end
of the year/period 222,347 191,015 172,386 128,178 224,762 269,485
APPENDIX I ACCOUNTANT’S REPORT
– I-17 –


--- page 569 ---
II. NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1 GENERAL INFORMATION
Beijing UBOX Online Technology Corp. (ʮ̡) (the “Company”), formerly known
as Beijing UBOX Technology & Trade Company Limited (ʮ̡), was incorporated in the
People’s Republic of China (the “PRC”) as a wholly foreign-owned limited liability company on March 1, 2012 and
converted into a joint stock company with limited liability on September 10, 2015. On February 24, 2016, the shares
of the Company was listed on the National Equities Exchange and Quotation (“NEEQ”). On March 12, 2019, the shares
of the Company was delisted from the NEEQ. The address of the Company’s registered office is Room 128, Y unkai Real
Estate Office Building, No. 8 Kangbao Road, Economic Development Zone, Miyun District, Beijing, the PRC.
The Company and its subsidiaries (collectively the “Group”) are primarily engaged in the unmanned retail business,
advertising and system support services , merchandise wholesale, vending machine sales and leases and others.
2 SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION
The principal accounting policies applied in the preparation of the Historical Financial Information are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The Historical Financial Information of the Group has been prepared in accordance with principal accounting
policies as set out below which are in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”) issued
by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The Historical Financial Information has
been prepared under the historical cost convention, as modified by the revaluation of certain financial assets at fair
value through profit or loss.
The preparation of the Historical Financial Information in conformity with HKFRSs requires the use of certain
critical accounting estimates. It also requires management to exercise its judgment in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the Historical Financial Information are disclosed in Note 4.
In preparing the Historical Financial Information, the Group has consistently adopted all applicable new and
amended HKFRSs throughout all the years presented except for any new or interpretation that are not yet effective.
New standards, amendments to standards and interpretations not yet adopted.
The following new standards, amendments to existing standards and interpretation to existing standards that
have not been early adopted by the Group:
Effective for annual
periods beginning
on or after
Amendments to HKFRS 16 Lease liability in a sales and leaseback January 1, 2024
Amendments to HKAS 1 Classification of Liabilities as Current or
Non-Current
January 1, 2024
Amendments to HKAS 1 Non-current liabilities with covenants January 1, 2024
Amendments to HKAS 7 and
HKFRS 7
Supplier Finance Arrangements January 1, 2024
Amendments to HKFRS 10 and
HKAS 28
Sale or Contribution of Assets between
an Investor and its Associate or Joint
V enture
To be determined
Amendments to HKAS 12 International Tax Reform – Pillar Two
Model Rules
Note
HK Interpretation 5 (2020) Presentation of financial statement –
classification by the borrower of a term
loan that contains a repayment on
demand clause
Applied when an
entity applies
Amendments to
HKAS 1
APPENDIX I ACCOUNTANT’S REPORT
– I-18 –


--- page 570 ---
Note:
Entities are required to apply the amendments immediately upon the issuance and to provide the new
disclosures for annual reporting periods beginning on or after 1 January 2023. An entity is not required to
disclose the information for any interim period ending on or before 31 December 2023.
The management is in the process of assessing the impact of these new and amended standards, and has
concluded on a preliminary basis that the adoption of these new and amended standards is not expected to have a
significant impact on the Group in the current or future reporting periods and on foreseeable future transactions.
2.2 Principles of consolidation and equity accounting
2.2.1 Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability
to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are deconsolidated from the date that control
ceases.
The acquisition method of accounting is used to account for business combinations by the Group (see
Note 2.2.6).
Intercompany transactions, balances and unrealized gains on transactions between group companies are
eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of
the transferred asset. When necessary, amounts reported by subsidiaries have been adjusted to conform to the
Group’s accounting policies.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the
consolidated statement of comprehensive income, statement of changes in equity and balance sheet
respectively.
2.2.2 Joint arrangements
Investments in joint arrangements are classified as either joint operations or joint ventures. The
classification depends on the contractual rights and obligations of each investor, rather than the legal structure
of the joint arrangement. The Group has assessed the nature of its joint arrangements and determined them to
be joint ventures.
Interests in joint ventures are accounted for using the equity method (see Note 2.2.4 below), after
initially being recognized at cost in the consolidated statements of financial position.
2.2.3 Associates
An associate is an entity over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method (see Note 2.2.4 below), after
initially being recognized at cost in the consolidated statements of financial position. The Group’s investments
in these associates include goodwill identified on acquisition, net of any accumulated impairment loss. Upon
the acquisition of the ownership interest in an associate, any difference between the cost of the associate and
the Group’s share of the net fair value of the associate’s identifiable assets and liabilities is accounted for as
goodwill.
If the ownership interest in an associate is reduced but significant influence is retained, only a
proportionate share of the amounts previously recognized in other comprehensive income or loss is reclassified
to consolidated statement of comprehensive income or loss where appropriate.
APPENDIX I ACCOUNTANT’S REPORT
– I-19 –


--- page 571 ---
2.2.4 Equity method
Under the equity method of accounting, the investments are initially recognized at cost and adjusted
thereafter to recognize the Group’s share of the post-acquisition profits or losses of the investee in profit or
loss, and the Group’s share of movements in other comprehensive income of the investee in other
comprehensive income. Dividends received or receivable from associates and joint ventures are recognized as
a reduction in the carrying amount of the investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in
the entity, including any other unsecured long-term receivables, the Group does not recognize further losses,
unless it has incurred obligations or made payments on behalf of the other entity.
Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent
of the Group’s interest in these entities. Unrealized losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have
been changed where necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the
policy described in Note 2.7.
2.2.5 Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as
transactions with equity owners of the Group. A change in ownership interest results in an adjustment between
the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the
subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any
consideration paid or received is recognized in a separate reserve within equity attributable to owners of the
Company.
When the Group ceases to consolidate or equity account for an investment because of a loss of control,
joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the
change in carrying amount recognized in profit or loss. This fair value becomes the initial carrying amount for
the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity
are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that
amounts previously recognized in other comprehensive income are reclassified to profit or loss or transferred
to another category of equity as specified/permitted by applicable HKFRSs.
If the ownership interest in a joint venture or an associate is reduced but joint control or significant
influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive
income are reclassified to profit or loss where appropriate.
2.2.6 Business Combination
The acquisition method of accounting is used to account for all business combinations, regardless of
whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a
subsidiary comprises the:
 fair values of the assets transferred
 liabilities incurred to the former owners of the acquired business
 equity interests issued by the Group
 fair value of any asset or liability resulting from a contingent consideration arrangement, and
 fair value of any preexisting equity interest in the subsidiary.
APPENDIX I ACCOUNTANT’S REPORT
– I-20 –


--- page 572 ---
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination
are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling
interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the
non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the
 consideration transferred,
 amount of any non-controlling interest in the acquired entity, and
 acquisition-date fair value of any previous equity interest in the acquired entity over the fair value
of the net identifiable assets acquired is recorded as goodwill.
If those amounts are less than the fair value of the net identifiable assets of the business acquired, the
difference is recognized directly in profit or loss as a bargain purchase.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a
financial liability are subsequently remeasured to fair value with changes in fair value recognized in profit or
loss.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental
borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier
under comparable terms and conditions. Contingent consideration is classified either as equity or a financial
liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in
fair value recognized in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s
previously held equity interest in the acquiree is remeasured to fair value at the acquisition date. Any gains
or losses arising from such remeasurement are recognized in profit or loss.
2.2.7 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable
costs of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend
received and receivable.
Impairment testing of the investments in subsidiaries is required upon receiving dividends from these
investments if the dividends exceed the total comprehensive income of the subsidiaries in the period the
dividends are declared or if the carrying amount of the investment in the separate financial statements exceeds
the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker (“CODM”). The CODM, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive directors of the Group.
2.4 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the
currency of the primary economic environment in which the entity operates (“the functional currency”). The
functional currency of the Company is RMB. The Company’s primary subsidiaries were incorporated in the
PRC and these subsidiaries considered RMB as their functional currency. As the major operations of the Group
are within the PRC, the Group has determined RMB as its presentation currency and presented its Historical
Financial Information in RMB (unless otherwise stated).
APPENDIX I ACCOUNTANT’S REPORT
– I-21 –


--- page 573 ---
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies
at year-end exchange rates are generally recognized in profit or loss.
Foreign exchange gains and losses that relate to borrowings are presented in the consolidated statement
of comprehensive income, within finance costs. All other foreign exchange gains and losses impacting profit
or loss are presented in the consolidated statement of comprehensive income within “other gains/(losses), net.”
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value
through profit or loss (“FVPL”), are recognized in the consolidated statements of financial position as part of
the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified
as financial assets at fair value through other comprehensive income (“FVOCI”), are included in other
comprehensive income (“OCI”).
(c) Group companies
The results and financial position of foreign operations (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
 assets and liabilities for each balance sheet presented are translated at the closing rate at the date
of that balance sheet
 income and expenses for each statement of profit or loss and statement of comprehensive income
are translated at average exchange rates (unless this is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions), and
 all resulting exchange differences are recognized in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign
entities, and of borrowings and other financial instruments designated as hedges of such investments, are
recognized in other comprehensive income. When a foreign operation is sold or any borrowings forming part
of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part
of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at the closing rate.
2.5 Property and equipment
Property and equipment are stated at historical costs less depreciation. Historical costs includes expenditure
that are directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. All other repairs and maintenance costs are charged to profit or loss during the
financial period in which they are incurred.
APPENDIX I ACCOUNTANT’S REPORT
– I-22 –


--- page 574 ---
Depreciation is calculated using the straight-line method to allocate their cost, net of their residual values, over
their estimated useful lives or, in the case of leasehold improvements, the shorter lease term as follows:
Useful lives Residual values
 V ending Machines 5-10 years 5%
 Electronic equipment 5 years 5%
 Motor vehicles 5 years 5%
 Office equipment and others 5 years 5%
 Leasehold improvements Shorter of estimated useful lives and
remaining lease terms
–
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount (Note 2.7).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognized in “other gains/(losses), net” in the consolidated statement of comprehensive income.
2.6 Intangible assets
(a) Goodwill
Goodwill is measured as described in Note 2.2.6. Goodwill on acquisitions of subsidiaries is included
in intangible assets. Goodwill is not amortized but it is tested for impairment annually, or more frequently if
events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is
made to those cash-generating units or groups of cash-generating units that are expected to benefit from the
business combination in which the goodwill arose. The units or groups of units are identified at the lowest level
at which goodwill is monitored for internal management purposes, being the operating segments (Note 5).
(b) Software
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and
bring to use the specific software.
Costs associated with maintaining software are recognized as expenses as incurred. Development costs
that are directly attributable to the design and testing of identifiable and unique software controlled by the
Group are recognized as intangible assets when the following criteria are met:
 it is technically feasible to complete the software or database so that it will be available for use;
 management intends to complete the software or database, and use or sell it;
 there is an ability to use or sell the software or database;
 it can be demonstrated how the software or database will generate probable future economic
benefits;
 adequate technical, financial and other resources to complete the development and to use or sell
the software or database are available, and
 the expenditure attributable to the software or database during its development can be reliably
measured.
APPENDIX I ACCOUNTANT’S REPORT
– I-23 –


--- page 575 ---
Directly attributable costs that are capitalized as part of the software or database include employee costs
and an appropriate portion of relevant overheads.
Capitalized development costs are recorded as intangible assets and amortized from the point at which
the asset is ready for use. There was RMB3,430,000 development costs capitalized as intangible assets for the
year ended December 31, 2019, and there were no development costs meeting these criteria and capitalized as
intangible assets for the years ended December 31, 2020, 2021 and 2022 and the six months ended June 30,
2022 and 2023.
(c) Research and development expenditures
Research and development expenditures that do not meet the criteria in (b) above are recognized as
expenses as incurred. Development costs previously recognized as expenses are not recognized as assets in
subsequent period.
(d) Amortization method and period
The Group amortizes software licenses using the straight-line method over 3-10 years. The Group can
use the software as long as it can meet the Group’s business needs. Based on the current functionalities
equipped by software licenses and the daily operation needs, the Group considers a useful life of 3-10 years
is the best estimation under current business needs.
2.7 Impairment of non-financial assets
Intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for
impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other
assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value
in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash inflows, which are largely independent of the cash inflows from other assets or groups of assets
(cash-generating units or “CGU”). Non-financial assets (other than goodwill) that suffered an impairment are
reviewed for possible reversal of the impairment at the end of each reporting period.
2.8 Investment and other financial assets
(a) Classification
The Group classifies its financial assets in the following measurement categories:
 those to be measured subsequently at fair value (either through other comprehensive income
(“OCI”) or through profit or loss), and
 those to be measured at amortized cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For
investments in debt instruments, this will depend on the business model in which the investment is held. For
investments in equity instruments, this will depend on whether the Group has made an irrevocable election at
the time of initial recognition to account for the equity investment at fair value through other comprehensive
income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those
assets changes.
APPENDIX I ACCOUNTANT’S REPORT
– I-24 –


--- page 576 ---
(b) Recognition and derecognition
Regular way purchases and sales of financial assets are recognized on trade-date, the date on which the
Group commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash
flows from the financial assets have expired or have been transferred and the Group has transferred
substantially all the risks and rewards of ownership.
(c) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit
or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether
their cash flows are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the
asset and the cash flow characteristics of the asset. There are three measurement categories into which the
Group classifies its debt instruments:
 Amortized cost: Assets that are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured at amortized cost. A gain
or loss on a debt investment that is subsequently measured at amortized cost and is not part of
a hedging relationship is recognized in profit or loss when the asset is derecognized or impaired.
Interest income from these financial assets is included in finance income using the effective
interest rate method. Any gain or loss arising on derecognition is recognized directly in profit or
loss and presented in “other gains/(losses), net” together with foreign exchange gains and losses.
Impairment losses are presented as separate line item in the consolidated statement of
comprehensive income.
 FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign exchange gains and losses
which are recognized in profit or loss. When the financial asset is derecognized, the cumulative
gain or loss previously recognized in OCI is reclassified from equity to profit or loss and
recognized in “other gains/(losses), net.” Interest income from these financial assets is included
in finance income using the effective interest rate method. Foreign exchange gains and losses are
presented in “other gains/(losses), net” and impairment expenses are presented as separate line
item in the consolidated statement of comprehensive income.
 FVPL: Assets that do not meet the criteria for amortized cost or financial assets at FVOCI are
measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL
is recognized in profit or loss and presented net within “other gains/(losses), net” in the period
in which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management
has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent
reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognized in profit or loss as “other income” when the
Group’s right to receive payments is established.
Changes in the fair value of financial assets at FVPL are recognized in “other gains/(losses), net” in the
consolidated statement of comprehensive income as applicable. Impairment losses (and reversal of impairment
losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.
APPENDIX I ACCOUNTANT’S REPORT
– I-25 –


--- page 577 ---
(d) Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt
instruments carried at amortized cost and FVOCI. The impairment methodology applied depends on whether
there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by HKFRS 9, which requires
expected lifetime losses to be recognized from initial recognition of the receivables, see Note 3.1 for further
details.
Impairment on other financial assets at amortized cost are measured as either 12-month expected credit
losses or lifetime expected credit loss, depending on whether there has been a significant increase in credit risk
since initial recognition. If a significant increase in credit risk of a receivable has occurred since initial
recognition, then impairment is measured as lifetime expected credit losses.
2.9 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of
financial position when the Group currently has a legally enforceable right to offset the recognized amounts and there
is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
2.10 Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted
average method. Cost of purchased inventory are determined after deducting rebates and discounts. Net realizable
value is the estimated selling price in the ordinary course of business less applicable selling expenses.
2.11 Trade and other receivables
Trade receivables are amounts due from customers for advertising and system support services, merchandise
wholesale or vending machine sales and leases in the ordinary course of business. They are generally due for
settlement within one year and therefore all classified as current assets. If not, they are presented as non-current
assets.
Trade receivables are recognized initially at the amount of consideration that is unconditional unless they
contain significant financing components, when they are recognized at fair value. Other receivables are recognized
initially at fair value. The Group holds the trade and other receivables with the objective of collecting the contractual
cash flows and therefore measures them subsequently at amortized cost using the effective interest method. See Note
24 for further information about the Group’s accounting for trade and other receivables and Note 3.1(b)(ii) for a
description of the Group’s impairment policies.
2.12 Cash and cash equivalents
For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand,
deposits held at call with financial institutions and other short-term highly liquid investments with original maturities
of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value. Bank overdrafts are shown within borrowings in current liabilities in the statement of
financial position.
2.13 Share capital
Ordinary shares are classified as equity (Note 26).
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction,
net of tax, from the proceeds.
Where any group company purchases the Company’s equity instruments, for example as the result of a share
repurchase or a share-based payment plan, the consideration paid, including any directly attributable incremental
costs (net of income taxes) is deducted from equity attributable to the owners of the Company as treasury shares until
the shares are canceled.
APPENDIX I ACCOUNTANT’S REPORT
– I-26 –


--- page 578 ---
2.14 Trade and other payables
These amounts represent liabilities for products and services provided to the Group prior to the end of each
reporting period which are unpaid. The amounts are unsecured and are usually paid within 90 days of recognition.
Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the
reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using
the effective interest method.
2.15 Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the
redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest
method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement
of the liability for at least 12 months after the reporting period.
2.16 Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production
of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for
its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready
for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending
their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Other
borrowing costs are expensed in the period in which they are incurred.
2.17 Current and deferred income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred income tax assets and
liabilities attributable to temporary differences and to unused tax losses.
(a) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted
at the end of each reporting period in the countries where the Company and its subsidiaries and associates
operate and generate taxable income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions
where appropriate on the basis of amounts expected to be paid to the tax authorities.
(b) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial
statements. However, deferred income tax liabilities are not recognized if they arise from the initial recognition
of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or
liability in a transaction other than a business combination that at the time of the transaction affects neither
accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have
been enacted or substantially enacted by the end of each reporting period and are expected to apply when the
related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only if it is probable that future taxable amounts will be
available to utilize those temporary differences and losses.
Deferred income tax liabilities and assets are not recognized for temporary differences between the
carrying amount and tax bases of investments in foreign operations where the Company is able to control the
timing of the reversal of the temporary differences and it is probable that the differences will not reverse in
the foreseeable future.
APPENDIX I ACCOUNTANT’S REPORT
– I-27 –


--- page 579 ---
Deferred income tax assets and liabilities are offset where there is a legally enforceable right to offset
current tax assets and liabilities and where the deferred income tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current and deferred income tax is recognized in profit or loss, except to the extent that it relates to
items recognized in OCI or directly in equity. In this case, the tax is also recognized in OCI or directly in
equity, respectively.
2.18 Employee benefits
(a) Pension obligations
The Group contributes on a monthly basis to various defined contribution plans organized by the
relevant governmental authorities. The Group’s liability in respect of these plans is limited to the contributions
payable in each period. Contributions to these plans are expensed as incurred. Assets of the plans are held and
managed by government authorities and are separated from those of the Group.
(b) Housing funds, medical insurances and other social insurances
Employees of the Group in the PRC are entitled to participate in various government-supervised housing
funds, medical insurances and other social insurance plan. The Group contributes on a monthly basis to these
funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The Group’s
liability in respect of these funds is limited to the contributions payable in each year. Contributions to the
housing funds, medical insurances and other social insurances are expensed as incurred.
2.19 Share-based benefits
Share-based compensation benefits are provided to employees via the employee option plan. Information
relating to the scheme is set out in Note 28. The fair value of the employee service received in exchange for the grant
of equity instruments is recognized as an expense. The total amount to be expensed is determined by reference to the
fair value of the equity instruments granted:
 including any market performance conditions (e.g., the entity’s share price);
 excluding the impact of any service and non-market performance vesting conditions (e.g., profitability,
sales growth targets and remaining an employee of the entity over a specified time period); and
 including the impact of any non-vesting conditions (e.g., the requirement for employees to save or
holdings shares for a specific period of time).
The total expense is recognized over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of
options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact
of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
2.20 Provisions
Provisions for legal claims, service warranties and make good obligations are recognized when: the Group has
a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will
be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognized for future
operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognized even if the likelihood of
an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present value
is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
liability. The increase in the provision due to the passage of time is recognized as interest expense.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 580 ---
2.21 Revenue recognition
Revenue are recognized when or as the control of the goods or services is transferred to a customer. Depending
on the terms of the contract and the laws that apply to the contract, control of the goods and services may be
transferred over time or at a point in time. Control of the goods and services is transferred over time if the Group’s
performance:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates and enhances an asset that the customer controls as the Group performs; or
 does not create an asset with an alternative use to the Group and the Group has an enforceable right to
payment for performance completed to date.
If control of the goods and services transfers over time, revenue is recognized over the period of the contract
by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is
recognized at a point in time when the customer obtains control of the goods and services.
Contracts with customers may include multiple performance obligations. For such arrangements, the Group
allocates revenue to each performance obligation based on its relative standalone selling price. The Group generally
determines standalone selling prices based on the prices charged to customers. If the standalone selling price is not
directly observable, it is estimated using expected cost plus a margin or adjusted market assessment approach,
depending on the availability of observable information. Assumptions and estimations have been made in estimating
the relative selling price of each distinct performance obligation, and changes in judgments on these assumptions and
estimates may impact the revenue recognition.
When either party to a contract has performed, the Group presents the contract in the statement of financial
position as a contract assets or a contract liability, depending on the relationship between the entity’s performance
and the customer’s payment.
A contract asset is the Group’s right to consideration in exchange for goods and services that the Group has
transferred to a customer. A receivable is recorded when the Group has an unconditional right to consideration. A
right to consideration is unconditional if only the passage of time is required before payment of the consideration is
due.
If a customer pays consideration or the Group has a right to an amount of consideration that is unconditional,
before the Group transfers a good or service to the customer, the Group presents the contract liability when the
payment is made or a receivable is recorded (whichever is earlier). A contract liability is the Group’s obligation to
transfer goods or services to a customer for which the Group has received consideration (or an amount of
consideration is due from the customer).
Where the contract contains a financing component which provides a significant financing benefit to the
customer for more than 12 months, revenue is measured at the present value of the amount receivable, discounted
using the discount rate that would be reflected in a separate financing transaction with the customer, and interest
income is accrued separately under the effective interest method. Where the contract contains a financing component
which provides a significant financing benefit to the Group, revenue recognized under that contract includes the
interest expense accreted on the contract liability under the effective interest method. The Group takes advantage of
the practical expedient in paragraph 63 of HKFRS 15 and does not adjust the consideration for any effects of a
significant financing component if the period of financing is 12 months or less.
Revenue from unmanned retail business
The Group operates a network of vending machines which located the points of sale (“POS”) for selling
fast-moving consumer goods such as food and beverage. Revenue from unmanned retail business arises from the end
customers buy the fast-moving consumer goods through the vending machines operated by the Group. Revenue is
recognized when the control of the goods have been transferred by the vending machines to the customers. There was
no right of return for the sales to the end customers. The consideration of the goods are usually due immediately paid
by the end customers through online payment platforms before the goods delivered.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 581 ---
The Group sources POS sites directly from site owners under the direct operation model and sources POS sites
through POS partners under our partner model. Under the direct operation model, the Group is responsible for
sourcing potential sites, the development cost of the POS, the cost of the occupancy fee, utility cost and vending
machines by itself. Under the partner model, the POS partners are responsible for sourcing potential sites, the costs
for developing POSs, occupancy fees, utility costs and sometimes providing vending machines, and are entitled to
a share of the income generated from the vending machines.
Under the partner model, the Group evaluates agreements with the POS partners in order to determine whether
or not the Group acts as principal or as an agent in the arrangement, which it considers in determining if relevant
revenues should be reported gross or net of the predetermined amount of the commission shared with POS partners.
The Group considers it controls the goods before they are transferred to the customer and acts as a principal because
it: (1) is primarily responsible for fulfilling the promise to provide the goods to the customers, including provision
of vending machines, procurement and cash collection through different payment channels, (2) has general inventory
risk, (3) has latitude in establishing the merchandises’ selling price, and (4) has involvement in the determination of
product or services specifications. Accordingly, the POS partners act as the agent of the Group rather than the
principal in the transaction and the Group records the revenue on a gross basis. Revenue is recognized when control
of the goods has been transferred to the customer, and the commission shared to POS partners is determined based
on certain percentage of the revenue agreed between the Group and the POS partners and charged to “selling and
marketing expenses.”
Revenue from advertising and system support services
The Group offers advertising and system support services to brand owners and merchandise suppliers, payment
platform companies, other advertising agencies and the Group’s Non-Ubox POSs operators through the Group’s
digital platform and network of vending machines with the aid of its data of consumer behavior.
Since these services are separate identifiable services and the Group has the ability to determine the pricing
of the services and has taken responsibility for monitoring the quality of services provided and to negotiate the
service terms, the Group is regarded as the primary obligor and recognizes revenue from advertising and system
support services on a gross basis.
These revenues comprise (i) revenues derived from display screen advertising services, (ii) revenues derived
from after-payment advertising services, (iii) revenue derived from merchandise display advertising services, (iv)
revenues derived from machine body advertising services, and (v) revenue derived from fees charged to the Group’s
Non-Ubox POSs operators for using its operation system, etc.
The Group should recognize revenue when it satisfies a performance obligation by transferring a promised
good or service to a customer. The Group shall determine at contract inception whether it satisfies the performance
obligation over time or at a point in time. If control of the goods and services transfers over time, revenue is
recognized over the period of the contract by reference to the progress towards complete satisfaction of that
performance obligation. Otherwise, revenue is recognized at a point in time when the customer obtains control of the
goods and services.
For displaying advertising services, merchandise display advertising services, machine body advertising
services and operation system services, since the customer receives and consumes the benefits of the Group’s
performance as it performs, the performance obligation is satisfied over the contract period, and the revenue should
be recognized over time. Accordingly, the Group recognized revenues derived from above mentioned services ratably
over the contracted period in which the advertisements are displayed or services are provided.
For after-payment advertising services, since the performance obligation is satisfied at a point in time, the
revenue should be recognized at a point in time when the services are delivered to the customers. Accordingly,
revenue derived from after-payment advertising services is recognized based on actual performance measurement.
The Group recognizes the revenue from the delivery of pay-for click or pay-for instant display advertisements for
advertizers to users of the Group based on the relevant performance measures.
The excess of cumulative revenue recognized in consolidated statement of comprehensive income over the
cumulative payments made by customers is recognized as contract assets.
APPENDIX I ACCOUNTANT’S REPORT
– I-30 –


--- page 582 ---
The contract assets are recognized as a receivable when the Group’s right to consideration is unconditional.
Some contracts include multiple performance obligations and do not include any integration services. They are
therefore accounted for as separate performance obligations. Revenue from each of the performance obligations is
recognized by allocating the transaction price based on the stand-alone service price.
When the Group involves other parties to provide the advertising service, it does not arrange other parties to
provide services directly to the customers of the Group. Instead, those subcontractors are responsible to the Group
and acts under its direction only. The Group control the specified service before the services are transferred to
customers, and it satisfies the performance obligation by itself or engage another party (for example, a subcontractor)
to satisfy some of the performance obligations on its behalf, at its sole discretion.
Revenue from merchandise wholesale
Revenue are recognized when control of the goods have been transferred, being when goods are delivered to
the customers.
Receivable is recognized when the merchandises are delivered, which is the point in time that the consideration
is unconditional because only the passage of time is required before the payment is due.
Revenue from vending machine sales and leases
The vending machine sales and leases primarily comprise (i) vending machine sales, (ii) vending machine
leases, and (iii) provision of hardware support services.
Sale of goods – vending machines sales
The Group sells vending machines to third party customers, which are mainly another vending machines
operators. Revenue is recognized when control over the vending machines has been transferred to the third party
customers, being when legally binding unconditional sales contracts were entered, the machines have been shipped
to the designated location and the control of the machines have been transferred to the third party customers.
Receivable is recognized when the vending machines are delivered, which is the point in time that the
consideration is unconditional because only the passage of time is required before the payment is due.
Lease income from vending machines
Lease income from vending machines leasing under operating leases is recognized on a straight-line basis over
the lease terms.
Hardware support services
The Group also provides hardware support services to customers. Revenue from hardware support services is
recognized over the period of the contract or at a point in time when the customer obtains control of the services.
Revenue from others
Others primarily comprise (i) mobile device distribution services, (ii) karaoke booth services, (iii) karaoke
booth sales and leases, and (iv) karaoke booth operation system support.
Mobile device distribution services
The Group provides mobile devices to mobile device retailers where the Group acquires mobile devices from
manufacturers and resells them to the mobile device retailers. The Group places the mobile devices to vending
machines after the receipt of order and deposit from retailers. Retailers take the mobile devices from the vending
machines with designated code provided by the Group when the end customers confirm the purchase or at anytime
agreed by the retailers. Taking in to consideration that the Group enters into contracts with manufacturers in its own
name, which gives the Group the legal title and control to the mobile devices provided by the manufacturers before
passing them to retailers. Furthermore, the Group is responsible for fulfilling the promise to provide the mobile
devices to the retailers, takes inventory risk before delivering to the retailers and has pricing latitude with the
retailers. Therefore, the Group is the principal to the sales and recognizes revenue at a point in time when control
APPENDIX I ACCOUNTANT’S REPORT
– I-31 –


--- page 583 ---
of the mobile devices has been transferred to retailers, being when retailers get the mobile devices from the vending
machines, and there is no unfulfilled obligation that could affect the mobile device retailers’ acceptance of the mobile
devices and the enforceable right to payment is established.
Receivable is recognized when the mobile devices are delivered, which is the point in time that the
consideration is unconditional because only the passage of time is required before the payment is due.
Karaoke booth services
Karaoke booth services income are recognized in the period in which the performance obligation is satisfied
by transferring control of a promised service.
Karaoke booth sales and leases
For Karaoke booths sales, revenue is recognized when control over the Karaoke booths has been transferred
to the third party customers, being when the Karaoke booths have been shipped to the designated location. Receivable
is recognized when the Karaoke booths are delivered, which is the point in time that the consideration is
unconditional because only the passage of time is required before the payment is due.
Lease income from Karaoke booths leasing under operating leases is recognized on a straight-line basis over
the lease terms.
Revenue from hardware support services is recognized over the period of the contract or at a point in time
when the customer obtains control of the services.
Karaoke booth operation system support
Revenue from operation system support to the Group’s karaoke booth franchisees for using its operation
system is recognized over the period of the contract or at a point in time when the customer obtains control of the
services.
2.22 Dividend income
Dividends are received from financial assets measured at FVPL and at FVOCI. Dividends are recognized as
other income in profit or loss when the right to receive payment is established. This applies even if they are paid out
of pre-acquisition profits, unless the dividend clearly represents a recovery of part of the cost of an investment. In
this case, the dividend is recognized in OCI if it relates to an investment measured at FVOCI. However, the
investment may need to be tested for impairment as a consequence.
2.23 Leases
The Group as lessor under operating leases
Lease income from operating leases where the Group is a lessor is recognized as income on a straight-line basis
over the lease term (Note 17). Initial direct costs incurred in obtaining an operating lease are added to the carrying
amount of the underlying asset and recognized as expense over the lease term on the same basis as lease income. The
respective leased assets are included in the balance sheet based on their nature.
The Group as lessee
The Group leases certain offices, warehouses, cars and machinery. Lease terms are negotiated on an individual
basis and contain various terms and conditions.
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the
contract to the lease and non-lease components based on their relative stand-alone prices.
APPENDIX I ACCOUNTANT’S REPORT
– I-32 –


--- page 584 ---
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
 fixed payments (including in-substance fixed payments), less any lease incentives receivable
 variable lease payment that are based on an index or a rate, initially measured using the index or rate
as at the commencement date
 amounts expected to be payable by the Group under residual value guarantees
 the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
 payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group:
 where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received
 uses a buildup approach that starts with a risk-free interest rate adjusted for credit risk for leases held
by the Group, which does not have recent third-party financing, and
 makes adjustments specific to the lease, eg. term, country, currency and security.
If a readily observable amortizing loan rate is available to the individual lessee (through recent financing or
market data) which has a similar payment profile to the lease, then the Group entities use that rate as a starting point
to determine the incremental borrowing rate.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are measured at cost comprising the following:
 the amount of the initial measurement of lease liability
 any lease payments made at or before the commencement date less any lease incentives received
 any initial direct costs, and
 restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful lives and the lease terms on
a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line
basis as an expense in profit or loss. Short-term leases are leases with a lease term of less than 12 months. Low-value
assets comprise machineries with value below RMB35,000.
2.24 Dividend distribution
Provision is made for the amount of any dividend declared, being appropriately authorized and no longer at
the discretion of the entity, on or before the end of the reporting period but not distributed at the end of each reporting
period.
APPENDIX I ACCOUNTANT’S REPORT
– I-33 –


--- page 585 ---
2.25 Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that the
grant will be received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognized in profit or loss over the period necessary to
match them with the costs that they are intended to compensate.
Government grants relating to the purchase of property and equipment are included in non-current liabilities
as deferred government grants and are credited to profit or loss on a straight-line basis over the expected lives of the
related assets.
2.26 Interest income
Interest income is presented as finance income where it is earned from financial assets that are held for cash
management purposes. Any other interest income is included in other income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial
asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the
effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss
allowance).
3 FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, cash flow
and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management procedures focus
on the unpredictability of financial markets and seek to minimize potential adverse effects on the Group’s financial
performance.
(a) Market risk
(i) Currency risk
The Group’s businesses are principally conducted in RMB, which is exposed to foreign currency
risk with respect to transactions denominated in currencies other than RMB. Foreign exchange risk
arises from future commercial transactions and recognized assets and liabilities denominated in a
currency that is not the functional currency of the relevant group entity. During the Track Record Period,
the Group has not entered into any derivative instruments to hedge its foreign exchange exposures.
(ii) Cash flow and fair value interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market
interest rates and the Group has no significant interest-bearing assets except for cash and cash
equivalents and restricted cash, details of which have been disclosed in Note 25.
The Group’s exposure to changes in interest rates is mainly attributable to its borrowings, details
of which have been disclosed in Note 32. Borrowings carried at floating rates expose the Group to cash
flow interest rate risk whereas those carried at fixed rates expose the Group to fair value interest rate
risk. All of the Group’s borrowings were carried at fixed rates which does not expose the Group to cash
flow interest rate risk. As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, borrowings
of the Group which were bearing at fixed rates amounted to approximately RMB31,000,000,
RMB90,844,000, RMB60,980,000, RMB70,000,000 and RMB89,050,000 respectively. For the years
ended December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30, 2023, if the fixed
interest rate on borrowings had been higher/lower by 100 basis points with all other variables held
constant, the finance costs would be approximately RMB310,000, RMB908,000, RMB610,000,
RMB700,000 and RMB445,000 higher/lower respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-34 –


--- page 586 ---
(b) Credit risk
The Group is exposed to credit risk primarily in relation to its cash and cash equivalents, restricted cash,
trade receivables and other receivables.
(i) Risk management
For cash and cash equivalents and restricted cash, management manages the credit risk by placing
deposits in state-owned financial institutions in the PRC or reputable banks and financial institutions
having high-credit-quality in the PRC.
For trade and other receivables, the Group has policies in place to ensure that sale of goods
service are made to customers with an appropriate credit history. It also has other monitoring procedures
to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews
regularly the recoverable amount of each individual receivable to ensure that adequate impairment
losses are made for irrecoverable amounts.
The carrying amounts of cash and cash equivalents and restricted cash, trade and other
receivables and contract assets represent the Group’s maximum exposure to credit risk in relation to the
assets.
(ii) Impairment of financial assets
The Group has three types of assets that are subject to the expected credit loss model:
 Trade receivables;
 Deposits and other receivables;
 Cash and cash equivalents and restricted cash.
While cash and cash equivalents and restricted cash is also subject to the impairment
requirements of HKFRS 9, the identified impairment loss was immaterial as at December 31, 2019,
2020, 2021 and 2022 and June 30, 2023.
The directors of the Company consider the probability of default upon initial recognition of asset
and whether there has been significant increase in credit risk on an ongoing basis during the Track
Record Period. A default on a financial asset is when the counterparty fails to make contractual
payments when they fall due. To assess whether there is a significant increase in credit risk, the Group
compares risk of a default occurring on the assets as at the reporting date with the risk of default as at
the date of initial recognition. Especially the following indicators are incorporated:
 actual or expected significant adverse changes in business, financial and economic
conditions that are expected to cause a significant change to the third party debtor’s ability
to meet its obligations;
 actual or expected significant changes in the operating results of the customers;
 significant changes in the expected performance and behavior of the debtor, including
changes in the payment status of debtor.
Trade receivables
The Group applies the HKFRS 9 simplified approach to measuring expected credit losses which
uses a lifetime expected loss allowance for trade receivables.
To measure the expected credit losses, trade receivables have been assessed on individual basis
or grouped based on shared credit risk characteristics and the days past due.
APPENDIX I ACCOUNTANT’S REPORT
– I-35 –


--- page 587 ---
The historical loss rates are determined by reference to the credit rating analysis of respective
customers and external data or based on the payment profiles of sales over a period before the respective
period ends and the corresponding historical credit losses experienced within these periods. The
historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic
factors affecting the ability of the customers to settle the receivables. The Group has identified the Total
Retail Sales of Consumer goods and the Gross Domestic Product (“GDP”) of the countries in which it
sells its goods and services to be the most relevant factors, and accordingly adjusts the historical loss
rates based on expected changes in these factors.
On that basis, the loss allowance as at December 31, 2019, 2020, 2021 and 2022 and June 30,
2023 were determined as follows for trade receivables:
The Group
As at December 31, 2019
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 5.2% 5.2% 5.2% 8.4% 20.3% 48.7% 100.0% 8.6%
Gross carrying amount
(RMB’000) 154,977 6,345 58,068 32,349 22,731 6,308 2,355 283,133
Loss allowance (RMB’000) 8,112 332 3,040 2,732 4,607 3,069 2,355 24,247
On individual basis
Expected loss rate – – – 100.0% 100.0% 100.0% 100.0% 100.0%
Gross carrying amount
(RMB’000) – – – 657 1,580 3,915 1,203 7,355
Loss allowance (RMB’000) – – – 657 1,580 3,915 1,203 7,355
On individual basis (with
pledged machines)*
Expected loss rate – – ––––––
Gross carrying amount
(RMB’000) 11,187 11,187 22,373 19,378 4,733 2,641 3 71,502
Loss allowance (RMB’000) – – ––––––
As at December 31, 2020
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 5.2% 5.2% 5.2% 11.0% 27.8% 48.8% 100.0% 12.7%
Gross carrying amount
(RMB’000) 68,542 10,802 24,522 29,141 18,345 3,893 4,611 159,856
Loss allowance (RMB’000) 3,577 564 1,280 3,201 5,092 1,899 4,611 20,224
On individual basis
Expected loss rate – – 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross carrying amount
(RMB’000) – – 13,049 52 443 1,373 4,339 19,256
Loss allowance (RMB’000) – – 13,049 52 443 1,373 4,339 19,256
On individual basis (with
pledged machines)*
Expected loss rate – – ––––––
Gross carrying amount
(RMB’000) 4,261 4,261 8,521 3,728 283 218 270 21,542
Loss allowance (RMB’000) – – ––––––
APPENDIX I ACCOUNTANT’S REPORT
– I-36 –


--- page 588 ---
As at December 31, 2021
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 6.5% 6.5% 6.5% 20.5% 27.8% 51.0% 100.0% 13.3%
Gross carrying amount
(RMB’000) 76,365 2,670 5,409 37,104 10,731 2,777 528 135,584
Loss allowance (RMB’000) 4,974 174 352 7,598 2,985 1,417 528 18,028
On individual basis
Expected loss rate – – 100.0% – – 100.0% 100.0% 100.0%
Gross carrying amount
(RMB’000) – – 4,503 – – 59 1,554 6,116
Loss allowance (RMB’000) – – 4,503 – – 59 1,554 6,116
On individual basis (with
pledged machines)*
Expected loss rate – – ––––––
Gross carrying amount
(RMB’000) 682 682 1,364 16 33 – – 2,777
Loss allowance (RMB’000) – – ––––––
As at December 31, 2022
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 6.5% 6.5% 6.5% 20.0% 33.4% 61.4% 100.0% 13.3%
Gross carrying amount
(RMB’000) 31,041 8,823 9,947 3,902 3,092 3,865 725 61,395
Loss allowance (RMB’000) 2,014 573 646 782 1,033 2,373 725 8,146
On individual basis
Expected loss rate 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross carrying amount
(RMB’000) 128 193 52 3,157 6,553 2,025 2,496 14,604
Loss allowance (RMB’000) 128 193 52 3,157 6,553 2,025 2,496 14,604
On individual basis (with
pledged machines)*
Expected loss rate – – ––––––
Gross carrying amount
(RMB’000) 361 361 72 2–––– 1,444
Loss allowance (RMB’000) – – ––––––
As at June 30, 2023
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 4.8% 4.8% 4.8% 22.6% 42.3% 79.4% 100.0% 13.1%
Gross carrying amount
(RMB’000) 39,837 7,690 9,960 9,326 2,747 2,984 1,270 73,814
Loss allowance (RMB’000) 1,911 369 478 2,111 1,161 2,370 1,270 9,670
On individual basis
Expected loss rate 100.0% – 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross carrying amount
(RMB’000) 110 – 16 44 159 400 1,375 2,104
Loss allowance (RMB’000) 110 – 16 44 159 400 1,375 2,104
APPENDIX I ACCOUNTANT’S REPORT
– I-37 –


--- page 589 ---
The Company
As at December 31, 2019
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 0.2% 0.2% 0.2% 1.6% 6.0% – – 1.1%
Gross carrying amount
(RMB’000) 109,007 27,437 62,933 351,275 3,553 – – 554,205
Loss allowance
(RMB’000) 201 51 116 5,532 214 – – 6,114
On individual basis
Expected loss rate – – – – – 100.0% – 100.0%
Gross carrying amount
(RMB’000) – – – – – 1,238 – 1,238
Loss allowance
(RMB’000) – – – – – 1,238 – 1,238
On individual basis (with
pledged machines)*
Expected loss rate – – ––––– –
Gross carrying amount
(RMB’000) 212 212 425 26 81–– 1 , 1 1 8
Loss allowance
(RMB’000) – – ––––– –
As at December 31, 2020
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 0.2% 0.2% 0.2% 1.9% – – – 0.2%
Gross carrying amount
(RMB’000) 129,949 175,945 337,927 26 6––– 644,087
Loss allowance
(RMB’000) 309 419 80 55––– 1,538
On individual basis
Expected loss rate – – 100.0% – – – 100.0% 100.0%
Gross carrying amount
(RMB’000) – – 4,68 6––– 1,238 5,924
Loss allowance
(RMB’000) – – 4,68 6––– 1,238 5,924
APPENDIX I ACCOUNTANT’S REPORT
– I-38 –


--- page 590 ---
As at December 31, 2021
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 0.2% 0.2% 0.2% 1.9% 5.6% – – 0.2%
Gross carrying amount
(RMB’000) 186,445 220,670 500,301 52 266 – – 907,734
Loss allowance
(RMB’000) 297 351 796 1 15 – – 1,460
On individual basis
Expected loss rate – – –––– 100.0% 100.0%
Gross carrying amount
(RMB’000) – – –––– 1,238 1,238
Loss allowance
(RMB’000) – – –––– 1,238 1,238
As at December 31, 2022
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 0.3% 0.3% 0.3% 16.7% 21.2% 60.4% – 0.3%
Gross carrying amount
(RMB’000) 294,509 327,258 657,579 6 52 265 – 1,279,669
Loss allowance
(RMB’000) 816 907 1,823 1 11 160 – 3,718
As at June 30, 2023
0-3
months
3-6
months
6-12
months
1t o
2 years
2t o
3 years
3t o
4 years
Over
4 years Total
On collective basis
Expected loss rate 0.3% 0.3% 0.3% 3.5% 16.7% 55.8% 100.0% 1.0%
Gross carrying amount
(RMB’000) 290,129 249,405 594,640 296,941 6 52 265 1,431,438
Loss allowance
(RMB’000) 839 722 1,720 10,274 1 29 265 13,850
* These trade receivables were pledged by the certain vending machines of customers, considering
the fair value of the pledged machines can cover the carrying amount of the receivables, the
directors of the Company consider the impairment amount is minimal.
Considering there were no significant differences in the credit risk characteristics for trade
receivables with aging of “0-3 months”, “3-6 months” and “6-12 months”, the Group uses same
expected loss rate to measure the expected credit losses for these trade receivables as at December 31,
2019, 2020, 2021 and 2022 and June 30, 2023.
APPENDIX I ACCOUNTANT’S REPORT
– I-39 –


--- page 591 ---
The loss allowances for trade receivables as at December 31, 2019, 2020, 2021 and 2022 and June
30, 2022 and 2023 reconcile to the opening loss allowances as follows:
The Group
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of
the year/period 21,509 31,602 39,480 24,144 24,144 22,750
Increase in loss
allowance
recognized in
profit or loss 11,806 22,129 3,916 4,604 4,761 2,371
Receivables written
off during the
year/period as
uncollectible (1,713) (6,649) (19,247) (5,962) (3,263) (13,347)
Disposal of
subsidiaries – (7,602) (5) (36) (36) –
At the end of the
year/period 31,602 39,480 24,144 22,750 25,606 11,774
The Company
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of
the year/period 3,147 7,352 7,462 2,698 2,698 3,718
Increase/(decrease)
in loss allowance
recognized in
profit or loss 4,205 110 (78) 4,455 3,207 10,132
Receivables written
off during the
year/period as
uncollectible – – (4,686) (3,435) (3,235) –
At the end of the
year/period 7,352 7,462 2,698 3,718 2,670 13,850
Impairment losses on trade receivables are presented as net impairment losses within operating
profit. Subsequent recoveries of amounts previously written off are credited against the same line item.
Deposits and other receivables
Deposits and other receivables primarily comprise advances to a shareholder, advances to and
receivable from business partners, deposits, advances to staffs, amount due from POS partners and
others. The Group formulates the credit losses of deposits and other receivables using ECL models
according to HKFRS 9 requirements.
APPENDIX I ACCOUNTANT’S REPORT
– I-40 –


--- page 592 ---
Parameters of ECL model
The parameters and assumptions involved in ECL model are described below:
The Group considers the credit risk characteristics of different financial instruments when
determining if there is significant increase in credit risk. For financial instruments with or without
significant increase in credit risk, 12-month or lifetime ECL are provided respectively. The ECL is the
result of discounting the product of Exposure at Default (EAD), Probability of Default (PD) and Loss
given Default (LGD).
EAD is based on the amounts the Group expects to be owed at the time of default, over the next
12 months or over the remaining lifetime. The PD represents the likelihood of a borrower defaulting on
its financial obligation, either over the next 12 months (12M PD), or over the remaining lifetime
(Lifetime PD) of the obligation. LGD represents the Group’s expectation of the extent of loss on a
defaulted exposure. LGD varies by type of counterparty, type and seniority of claim and availability of
collateral or other credit support.
The Lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity
profile looks at how defaults develop on a portfolio from the point of initial recognition throughout the
Lifetime. The maturity profile is based on historical observed data and is assumed to be the same across
all assets within a portfolio and credit grading band. This is supported by historical analysis.
The Group uses three stages for deposits and other receivables which reflect their credit risk and
how the credit loss provision is determined for each of those categories. A summary of the assumptions
underpinning the company’s expected credit loss model is as follows:
Category Company definition of category
Basis for recognition of
expected credit loss
provision
Stag e 1 – performing Deposits and other receivables whose
credit risk is in line with original
expectations
12 month expected losses.
Where the expected
lifetime of an asset is
less than 12 months,
expected losses are
measured at its expected
lifetime.
Stage 2 –
underperforming
Deposits and other receivables for
which a significant increase in
credit risk has occurred compared
to original expectations; a
significant increase in credit risk is
presumed if interest and/or
principal repayments are 30 days
past due or adverse changes in
solvency and operational
capabilities. (see below in more
detail)
Lifetime expected losses.
Stage 3 –
Non-performing
(credit impaired)
Interest and/or principal repayments
are 90 days past due or it becomes
probable a customer will enter
bankruptcy
Lifetime expected losses.
APPENDIX I ACCOUNTANT’S REPORT
– I-41 –


--- page 593 ---
Judgment of significant increase in credit risk (“SICR”)
Under HKFRS 9, when considering the impairment stages for financial assets, the Group
evaluates the credit risk at initial recognition and also whether there is any significant increase in credit
risk for each reporting period. The Group considers various reasonable supporting information to judge
if there is significant increase in credit risk when determining the ECL staging for financial assets.
Major factor being considered include overdue status, solvency and operational capabilities. The Group
could base on individual financial instruments or portfolios of financial instruments with similar credit
risk characteristics to determine ECL staging by comparing the credit risks of the financial instruments
at the reporting date with those at initial recognition.
The Group set quantitative and qualitative criteria to judge whether the credit risk has SICR after
initial recognition. The judgment criteria mainly include the PD changes of the debtors, changes of
credit risk categories and other indicators of SICR, etc.
The definition of credit-impaired assets
Under HKFRS 9, in order to determine whether credit impairment occurs, the defined standards
adopted by the Group are consistent with the internal credit risk management objectives for relevant
financial assets, while considering quantitative and qualitative indicators. When the Group assesses
whether the debtor has credit impairment, the following factors are mainly considered:
 The debt has overdue after the contract payment date.
 The lender gives the debtor concessions for economic or contractual reasons due to the
debtor’s financial difficulties, where such concessions are normally reluctant to be made
by the lender.
 The debtor has significant financial difficulties.
 The debtor is likely to go bankrupt or needs other financial restructuring.
 The credit impairment of financial assets may be caused by the joint effects of multiple
events, and may not be caused by separately identifiable events.
Forward-looking information
The determinations of 12-month and the lifetime EAD, PD and LGD also incorporates
forward-looking information. The Group has performed historical data analysis and identified the key
macro-economic variables associated with credit risk and ECL for each portfolio.
The Group established the values used for different scenarios. In addition to the base economic
scenario, the Group also considers other possible scenarios and relative weightings. The Group regularly
reassess the number of scenarios and their attributes. The Group combined statistical analysis results to
determine the weights of different scenarios, and also considered the range of possible outcomes
represented by each scenario, to determine the final macro-economic assumptions and weights for
measuring the relevant ECL.
The Group comprehensively considers internal and external data, expert forecasts and statistical
analysis to determine the relationship between economic indicators with PD and LGD. The Group
evaluates and forecasts these economic indicators at least annually, provides the best estimates for the
future, and regularly evaluates the results.
Similar to other economic forecasts, the estimates of economic indicators have high inherent
uncertainties, actual results may have significant difference with estimates. The Group considered the
estimates above represented the optimal estimation of possible outcomes.
APPENDIX I ACCOUNTANT’S REPORT
– I-42 –


--- page 594 ---
Credit exposure
Without considering the impact of collateral and other credit enhancements, for on-balance sheet
assets, the maximum exposures are based on net carrying amounts as reported in the consolidated
financial statements.
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, the loss allowance provision
for deposits and other receivables was determined as follows:
As at December 31, 2019
Other receivable
Average
expected
credit loss
rate Stage
Gross
amount
Impairment
provision
Carrying
amount
(net of
impairment
provision)
RMB’000 RMB’000 RMB’000
Individual 11.52% Stage 1 85,326 (9,833) 75,493
Individual – underperforming 16.33% Stage 2 22,850 (3,731) 19,119
Individual – equity interest
pledged (Note 24)
– Stage 1 246,010 – 246,010
Corporate entities with
credit rating
0.21% Stage 1 61,478 (131) 61,347
Corporate entities without
credit rating
7.52% Stage 1 133,528 (10,035) 123,493
Corporate entities –
underperforming
16.33% Stage 2 2,058 (336) 1,722
551,250 (24,066) 527,184
As at December 31, 2020
Other receivable
Average
expected
credit loss
rate Stage
Gross
amount
Impairment
provision
Carrying
amount
(net of
impairment
provision)
RMB’000 RMB’000 RMB’000
Individual 12.86% Stage 1 38,536 (4,957) 33,579
Individual – equity interest
pledged (Note 24)
– Stage 1 46,435 – 46,435
Corporate entities with
credit rating
0.41% Stage 1 50,759 (207) 50,552
Corporate entities without
credit rating
9.73% Stage 1 125,373 (12,198) 113,175
Corporate entities –
underperforming
12.50% Stage 2 8 (1) 7
Corporate entities –
Non-performing
49.21% Stage 3 78,316 (38,542) 39,774
339,427 (55,905) 283,522
APPENDIX I ACCOUNTANT’S REPORT
– I-43 –


--- page 595 ---
As at December 31, 2021
Other receivable
Average
expected
credit loss
rate Stage
Gross
amount
Impairment
provision
Carrying
amount
(net of
impairment
provision)
RMB’000 RMB’000 RMB’000
Individual 16.73% Stage 1 33,658 (5,630) 28,028
Individual – underperforming 23.02% Stage 2 669 (154) 515
Corporate entities with credit
rating
0.77% Stage 1 21,923 (169) 21,754
Corporate entities without
credit rating
10.49% Stage 1 142,029 (14,896) 127,133
Corporate entities –
underperforming
21.95% Stage 2 41 (9) 32
Corporate entities –
Non-performing
100.00% Stage 3 59,355 (59,355) –
257,675 (80,213) 177,462
As at December 31, 2022
Other receivable
Average
expected
credit loss
rate Stage
Gross
amount
Impairment
provision
Carrying
amount
(net of
impairment
provision)
RMB’000 RMB’000 RMB’000
Individual 14.86% Stage 1 22,479 (3,340) 19,139
Individual – underperforming 20.57% Stage 2 661 (136) 525
Corporate entities with credit
rating
0.43% Stage 1 11,726 (50) 11,676
Corporate entities without
credit rating
4.57% Stage 1 60,661 (2,774) 57,887
Corporate entities –
Non-performing
100.00% Stage 3 65,675 (65,675) –
161,202 (71,975) 89,227
APPENDIX I ACCOUNTANT’S REPORT
– I-44 –


--- page 596 ---
As at June 30, 2023
Other receivable
Average
expected
credit loss
rate Stage
Gross
amount
Impairment
provision
Carrying
amount
(net of
impairment
provision)
RMB’000 RMB’000 RMB’000
Individual 12.17% Stage 1 18,073 (2,199) 15,874
Individual – underperforming 17.12% Stage 2 660 (113) 547
Corporate entities with credit
rating
0.38% Stage 1 25,532 (97) 25,435
Corporate entities without
credit rating
3.64% Stage 1 53,074 (1,934) 51,140
Corporate entities –
Non-performing
100.00% Stage 3 60,132 (60,132) –
157,471 (64,475) 92,996
(c) Liquidity risk
To manage the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents
deemed adequate by the senior management to finance the Group’s operations and mitigate the effects of
fluctuations in cash flows.
The table below analyzes the Group’s financial liabilities into relevant maturity grouping based on the
remaining period at the end of each reporting period to the contractual maturity date. The amounts disclosed
in the table are the contractual undiscounted cash flows.
Less than
1 year
Between
1 and 5
years
Total
contractual
cash flows
Carrying
amount
Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2019
Trade payables 261,297 – 261,297 261,297
Other payables and accruals
(excluding salaries, wages, and
bonuses payables and other taxes
payables) 208,577 1,279 209,856 209,856
Lease liabilities 291,024 199,779 490,803 408,949
Borrowings 31,742 – 31,742 31,000
792,640 201,058 993,698 911,102
APPENDIX I ACCOUNTANT’S REPORT
– I-45 –


--- page 597 ---
Less than
1 year
Between
1 and 5
years
Total
contractual
cash flows
Carrying
amount
Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2020
Trade payables 168,523 – 168,523 168,523
Other payables and accruals
(excluding salaries, wages, and
bonuses payables and other taxes
payables) 179,327 451 179,778 179,778
Lease liabilities 145,446 117,680 263,126 238,558
Borrowings 92,124 – 92,124 90,844
585,420 118,131 703,551 677,703
Less than
1 year
Between
1 and 5
years
Total
contractual
cash flows
Carrying
amount
Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2021
Trade payables 250,093 – 250,093 250,093
Other payables and accruals
(excluding salaries, wages, and
bonuses payables and other taxes
payables) 164,960 7 164,967 164,967
Lease liabilities 83,903 41,346 125,249 118,568
Borrowings 63,708 – 63,708 60,980
562,664 41,353 604,017 594,608
Less than
1 year
Between
1 and 5
years
Total
contractual
cash flows
Carrying
amount
Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2022
Trade payables 214,666 – 214,666 214,666
Other payables and accruals
(excluding salaries, wages, and
bonuses payables and other taxes
payables) 115,836 – 115,836 115,836
Lease liabilities 40,048 20,984 61,032 59,677
Borrowings 71,708 – 71,708 70,000
442,258 20,984 463,242 460,179
APPENDIX I ACCOUNTANT’S REPORT
– I-46 –


--- page 598 ---
Less than
1 year
Between
1 and 5
years
Total
contractual
cash flows
Carrying
amount
Total
RMB’000 RMB’000 RMB’000 RMB’000
As at June 30, 2023
Trade payables 234,585 – 234,585 234,585
Other payables and accruals
(excluding salaries, wages, and
bonuses payables and other taxes
payables) 157,089 – 157,089 157,089
Lease liabilities 31,086 14,873 45,959 44,240
Borrowings 91,646 – 91,646 89,050
514,406 14,873 529,279 524,964
3.2 Capital management
The Group’s objectives on managing capital are to safeguard the Group’s ability to continue as a going concern
and support the sustainable growth of the Group in order to provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to enhance equity holders’ value in the long term.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to
shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on basis of the gearing ratio.
This ratio is calculated as net debts divided by total equity. Net debts include borrowings and lease liabilities, less
cash and cash equivalents and restricted cash. Total capital is calculated as “equity” as shown in the consolidated
statements of financial position.
The calculation of net debts and gearing ratio as at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023
were as follows:
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Borrowings 31,000 90,844 60,980 70,000 89,050
Lease liabilities 408,949 238,558 118,568 59,677 44,240
Total 439,949 329,402 179,548 129,677 133,290
Less: Cash and cash
equivalents and restricted
cash (222,347) (191,015) (174,886) (130,913) (272,611)
Net debts/(cash) 217,602 138,387 4,662 (1,236) (139,321)
Total equity 2,651,344 1,468,918 1,284,166 1,001,936 904,074
Gearing ratio 8.21% 9.42% 0.36% N/A N/A
APPENDIX I ACCOUNTANT’S REPORT
– I-47 –


--- page 599 ---
3.3 Fair value measurements of financial instruments
This section explains the judgments and estimates made in determining the fair values of the financial
instruments that are recognized and measured at fair value in the financial statements. To provide an indication about
the reliability of the inputs used in determining fair value, the Group has classified its financial instruments into the
three levels prescribed under the accounting standards.
The tables below analyze the Group’s financial instruments carried at fair value as at December 31, 2019,
2020, 2021 and 2022 and June 30, 2023 by level of the inputs to valuation techniques used to measure fair value.
Such inputs are categorized into three levels within a fair value hierarchy as follows:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
 Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs)
(level 3).
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2019
Financial assets at FVPL
Investments in wealth management
products (Note 22(a)) – – 336,866 336,866
Investments in unlisted equity
securities (Note 22(b)) – – 45,620 45,620
– – 382,486 382,486
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2020
Financial assets at FVPL
Investments in wealth management
products (Note 22(a)) – – 132,078 132,078
Investments in unlisted equity
securities (Note 22(b)) – – 34,740 34,740
– – 166,818 166,818
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2021
Financial assets at FVPL
Investments in unlisted equity
securities (Note 22(b)) – – 32,800 32,800
APPENDIX I ACCOUNTANT’S REPORT
– I-48 –


--- page 600 ---
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2022
Financial assets at FVPL
Investments in unlisted equity
securities (Note 22(b)) – – 36,100 36,100
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at June 30, 2023
Financial assets at FVPL
Investments in unlisted equity
securities (Note 22(b)) – – 34,500 34,500
The Group’s policy is to recognize transfers into and transfers out of fair value hierarchy levels as at the end
of the reporting period.
3.3.1 V aluation techniques used to determine fair values
Specific valuation techniques used to value financial instruments include:
 The use of quoted market prices or dealer quotes for similar instruments;
 The discounted cash flow model and unobservable inputs mainly including assumptions of
expected future cash flows and discount rate;
 The latest round financing, i.e. the prior transaction price or the third-party pricing information;
and
 A combination of observable and unobservable inputs, including risk-free rate, expected
volatility, discount rate for lack of marketability, market multiples, etc.
There were no changes to valuation techniques during the Track Record Period.
All of the resulting fair value estimates are included in level 3, where the fair values have been determined
based on present values and the discount rates used were adjusted for counterparty or own credit risk.
3.3.2 Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 items including investments in wealth management
products, investments in unlisted equity securities for the years ended December 31, 2019, 2020, 2021 and
2022 and the six months ended June 30, 2022 and 2023.
Investments
in wealth
management
products
Investments in
unlisted equity
securities
RMB’000 RMB’000
As at January 1, 2019 400,066 15,750
Acquisitions 2,475,000 33,000
Disposals (2,540,478) –
Interest received (5,135) –
Unrealized changes in fair value 2,278 (3,130)
Realized interest income 5,135 –
As at December 31, 2019 336,866 45,620
APPENDIX I ACCOUNTANT’S REPORT
– I-49 –


--- page 601 ---
Investments
in wealth
management
products
Investments in
unlisted equity
securities
RMB’000 RMB’000
As at January 1, 2020 336,866 45,620
Acquisitions 423,000 15,000
Disposals (632,407) (3,003)
Interest received (6,298) –
Unrealized changes in fair value 4,619 (22,877)
Realized interest income 6,298 –
As at December 31, 2020 132,078 34,740
As at January 1, 2021 132,078 34,740
Acquisitions 240,000 –
Disposals (372,078) –
Interest received (1,242) –
Unrealized changes in fair value – (1,940)
Realized interest income 1,242 –
As at December 31, 2021 – 32,800
As at January 1, 2022 – 32,800
Acquisitions 70,000 –
Disposals (70,000) –
Interest received (173) –
Unrealized changes in fair value – 3,300
Realized interest income 173 –
As at December 31, 2022 – 36,100
(Unaudited)
As at January 1, 2022 – 32,800
Acquisitions 40,000 –
Disposals (40,000) –
Interest received (44) –
Unrealized changes in fair value – 3,400
Realized interest income 44 –
As at June 30, 2022 – 36,200
As at January 1, 2023 – 36,100
Acquisitions 20,000 –
Disposals (20,000) –
Interest received (69) –
Unrealized changes in fair value – (1,600)
Realized interest income 69 –
As at June 30, 2023 – 34,500
APPENDIX I ACCOUNTANT’S REPORT
– I-50 –


--- page 602 ---
3.3.3 V aluation process, inputs and relationships to fair value
A team in the finance department of the Group performs the valuations of financial instruments required
for financial reporting purposes, including the Level 3 fair values. This team reports directly to the Chief
Financial Officer (“CFO”). Discussions of valuation processes and results are held between the CFO and the
valuation team at least once year. External valuation experts will be involved when necessary.
At each financial year end the finance department:
 verifies all major inputs to the valuation report;
 assesses valuation movements when compared to the prior year valuation report; and
 holds discussions with the independent valuer.
Changes in Level 3 fair values are analyzed at each reporting date during the yearly valuation
discussions between the CFO and the valuation team. As part of this discussion, the team presents a report that
explains the reasons for the fair value movements.
The valuation of the level 3 instruments mainly included investments in wealth management products
(Note 22(a)) and investments in unlisted equity securities (Note 22(b)). As these instruments are not traded in
an active market, their fair values have been determined by using various applicable valuation techniques,
including discounted cash flow model and market approach etc.
The following table summarizes the quantitative information about the significant unobservable inputs
used in recurring level 3 fair value measurements:
Fair value
Unobservable
inputs
Range of inputs Relationship of
unobservable
inputs to fair
value
As at December 31,
As at
June 30, As at December 31,
As at
June 30,
Description 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Investment in
wealth
management
products
336,866 132,078 – – – Expected rate
of return
1.43%~
6.50%
4.15%~
6.50%
N/A N/A N/A The higher the
expected
rate of
return, the
higher the
fair value
Investments in
unlisted
equity
securities
included in
financial
assets at
FVPL
45,620 34,740 32,800 36,100 34,500 Equity value/
Revenue
ratio
0.2x-
129.4x
2.9x-
51.8x
1.2x-
51.8x
2.0x-
42.7x
2.1x-
39.9x
The higher the
equity value/
revenue
ratio, the
higher the
fair value
Discounts for
lack of
marketability
(“DLOM”)
15% N/A N/A N/A N/A The higher the
DLOM, the
lower
the fair value
If the fair values of financial assets at FVPL held by the Group had been 10% higher/lower, the profit
before income tax for the year ended December 31, 2019 would have been approximately RMB38,249,000
higher/lower.
If the fair values of financial assets at FVPL held by the Group had been 10% higher/lower, the loss
before income tax for the years ended December 31, 2020, 2021 and 2022 and the six months ended June 30,
2023, would have been approximately RMB16,682,000, RMB3,280,000, RMB3,610,000 and RMB3,450,000
lower/higher, respectively.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 603 ---
There were no transfers between level 1, 2 and 3 of fair value hierarchy classifications during the years
ended December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30, 2023.
The carrying amount of the Group’s other financial assets, including cash and cash equivalents,
restricted cash, trade receivables, deposits and other receivables, and the Group’s financial liabilities,
including trade payables, other payables and accruals and lease liabilities, approximate their fair values.
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise judgment in applying the Group’s accounting
policies.
Estimates and judgments are continually evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
(a) Estimation of the fair value of certain financial assets
The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based
on market conditions existing at the end of each reporting period. For details of the key assumptions used and the
impact of changes to these assumptions see Note 3.3.
(b) Impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting
policy stated in Note 2.6(a). In determining where goodwill is impaired requires an estimation of the recoverable
amount of CGU to which goodwill has been allocated. The recoverable amount of a CGU is determined based on
value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on
financial budgets approved by management covering a five-year period.
Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated in Note 18.
These growth rates are consistent with forecasts included in industry reports specific to the industry in which each
CGU operates.
Details of impairment charge, key assumptions which are made by the management and third-party valuer and
impact of possible changes in key assumptions are disclosed in Note 18.
(c) Impairment of other non-current assets
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. The recoverable amounts have been determined based on
value-in-use calculations or fair value less costs to sell. These calculations require the use of judgments and
estimates.
Judgment is required to evaluate, among other factors, the duration and extent to which the recoverable amount
of assets is less than their carrying balance, including factors such as the industry performance and changes in
operational and financing cash flows. For the purpose of assessing impairment, assets are grouped at the lowest level
for which there are separately identifiable cash flows. The recoverable amount of the CGU has been determined based
on value-in-use calculations or fair value less cost to sell, whichever is higher. These calculations require the use of
estimates, including operating results, income and expenses of the business, future economic conditions on growth
rates and future returns. Significant changes in the key assumptions on which the recoverable amount of the assets
is based could significantly affect the Group’s financial position and results of operations. Details of management’s
assessment have been disclosed in Note 16.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 604 ---
(d) Measurement of the expected credit loss
The measurement of the expected credit losses for financial assets measured at amortized cost is an area that
requires the use of complex models and significant assumptions about future economic conditions and credit
behavior. Explanation of the inputs, assumptions and estimation techniques used in measuring expected credit loss
is further detailed in Note 3.1(b).
A number of judgments are also required in applying the accounting requirements for measuring expected
credit loss, such as:
 Determining criteria for significant increase in credit risk;
 Choosing appropriate models and assumptions for the measurement of expected credit loss; and
 Establishing the number and relative weightings for forward-looking scenarios and the associated
expected credit loss.
(e) Recognition of share-based compensation expenses
The fair value of options is determined by the binomial option pricing model at the grant date, and is expected
to be expensed over the respective vesting period. Significant estimate on assumptions, including underlying equity
value, risk-free interest rate, expected volatility, dividend yield, and terms, are made by the directors and third-party
valuer.
(f) Useful lives, residual values and depreciation charges of property and equipment
The Group’s management determines the estimated useful lives, residual values and related depreciation
charges for the Group’s property and equipment with reference to the estimated periods that the Group intends to
derive future economic benefits from the use of these assets. Management will revise the depreciation charges where
useful lives are different to that of previously estimated, or it will write-off or write-down technically obsolete or
non-strategic assets that have been abandoned or sold. Actual economic lives may differ from estimated useful lives
and actual residual values may differ from estimated residual values. Periodic review could result in a change in
depreciable lives and residual values and therefore depreciation expense in future periods. The current estimated
useful lives are stated in Note 2.5.
If the estimated useful lives of vending machines had been increased/decreased by 10%, the depreciation
expenses of property and equipment would have been decreased/increased by approximately
RMB6,891,000, RMB10,836,000, RMB5,316,000, RMB9,865,000 and RMB5,163,000 for the years ended December
31, 2019, 2020, 2021 and 2022 and the six months ended June 30, 2023.
(g) Useful lives and amortization charges of intangible assets
The Group’s management determines the estimated useful lives and related amortization charges for the
Group’s intangible assets with reference to the estimated periods that the Group intends to derive future economic
benefits from the use of these assets. Management will revise the amortization charges where useful lives are
different to that of previously estimated, or it will write-off or write-down technically obsolete or non-strategic assets
that have been abandoned or sold. Actual economic lives may differ from estimated useful lives. Periodic review
could result in a change in amortizable lives and therefore amortization expense in future periods. The current
estimated useful lives are stated in Note 2.6.
If the estimated amortization lives of internally generated software and purchased software had been
increased/decreased by 10%, the amortization expenses of intangible assets would have been decreased/increased by
approximately RMB988,000, RMB1,316,000, RMB1,307,000, RMB1,188,000 and RMB576,000 for the years ended
December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30, 2023.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 605 ---
(h) Current and deferred income taxes
The Group is subject to income taxes in the PRC and other jurisdictions. Judgment is required in determining
the provision for income taxes in each of these jurisdictions. There are transactions and calculations during the
ordinary course of business for which the ultimate tax determination is uncertain. Where the final tax outcome of
these matters is different from the amounts that were initially recorded, such differences will impact the income tax
and deferred income tax provisions in the period in which such determination is made.
The Group considers whether it is probable that the relevant authority will accept each tax treatment, or group
of tax treatments, that it used or plans to use in its income tax filing, by assuming taxation authority will examine
those amounts and will have full knowledge of all relevant information. When the Group concludes that it is probable
that a particular tax treatment is accepted, the Group determines taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits or tax rates consistently with the tax treatment included in its income tax filings. If the Group
concludes that it is not probable that a particular tax treatment is accepted, the Group uses the most likely amount
or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses,
unused tax credits and tax rates. The Group assesses its judgments and estimates if facts and circumstances change.
Deferred income tax assets relating to certain temporary differences and tax losses are recognized when
management considers it is probable that future taxable profits will be available against which the temporary
differences or tax losses can be utilized. When the expectation is different from the original estimate, such differences
will impact the recognition of deferred income tax assets and taxation charges in the period in which such estimate
is changed.
5 SEGMENT INFORMATION
The CODM has been identified as executive directors of the Company. The executive directors review the
Group’s internal reporting which is prepared based on a number of factors, including but not limited to customer base,
homogeneity of products and technology, in order to assess performance and allocate resources. Management has
determined the operating segments based on these reports. The Group has identified the following operating
segments:
 Unmanned retail business consists of sales of fast-moving consumer goods such as food
and beverage to end customers through a network of vending
machines located at the POSs developed by the Group or POS
partners.
 Advertising and system support services consist of provision of (i) display screen advertising services,
(ii) after-payment advertising services, (iii) merchandise display
advertising services, (iv) machine body advertising services to
customers, and (v) revenue derived from fees charged to the
Group’s Non-Ubox POSs operators for using its operation
system.
 Merchandise wholesale consist of merchandise wholesale to the customers.
 V ending machine sales and leases consist of vending machine sales and leases and provision of
hardware support services.
 Others consist of provision of (i) mobile device distribution services,
(ii) karaoke booth services, (iii) karaoke booth sales and leases,
and (iv) karaoke booth operation system support.
The CODM assesses the performance of the operating segments based on the revenue and gross profit of each
segment. The selling and marketing expenses, general and administrative expenses, research and development
expenses and net impairment losses on financial assets are not included in the measure of the segments’ performance
which is used by CODM as the basis for the purpose of resource allocation and assessment of segment performance.
Other income, other gains/(losses), net, finance costs and share of results of investments accounted for using the
APPENDIX I ACCOUNTANT’S REPORT
– I-54 –


--- page 606 ---
equity method and income tax expense are also not allocated to individual operating segment. There were no separate
segment assets and segment liabilities information provided to the CODM, as CODM does not use this information
to allocate resources or to evaluate the performance of the operating segments.
Substantially all of the businesses of the Group are carried out in the PRC. Accordingly, no geographic
information is presented.
There were no material inter-segment sales during the years ended December 31, 2019, 2020, 2021 and 2022
and the six months ended June 30, 2022 and 2023. The revenue for external customers report to the CODM are
measured in a manner consistent with that applied in the consolidated income statements.
The segment information for the year ended December 31, 2019 is as follows:
Unmanned
retail
business
Advertising
and system
support
services
Merchandise
wholesale
Vending
machine
sales and
leases Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenues from
external customer 1,539,891 540,600 297,900 91,485 257,585 2,727,461
Cost of sales (856,424) (52,320) (283,231) (76,338) (129,952) (1,398,265)
Gross profit 683,467 488,280 14,669 15,147 127,633 1,329,196
The segment information for the year ended December 31, 2020 is as follows:
Unmanned
retail
business
Advertising
and system
support
services
Merchandise
wholesale
Vending
machine
sales and
leases Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenues from
external customer 1,336,763 219,561 115,485 47,040 183,161 1,902,010
Cost of sales (779,247) (749) (111,456) (79,264) (372,733) (1,343,449)
Gross profit 557,516 218,812 4,029 (32,224) (189,572) 558,561
The segment information for the year ended December 31, 2021 is as follows:
Unmanned
retail
business
Advertising
and system
support
services
Merchandise
wholesale
Vending
machine
sales and
leases Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenues from
external customer 1,915,116 243,120 40,516 44,241 433,244 2,676,237
Cost of sales (1,027,060) (58,709) (37,551) (30,354) (421,439) (1,575,113)
Gross profit 888,056 184,411 2,965 13,887 11,805 1,101,124
APPENDIX I ACCOUNTANT’S REPORT
– I-55 –


--- page 607 ---
The segment information for the year ended December 31, 2022 is as follows:
Unmanned
retail
business
Advertising
and system
support
services
Merchandise
wholesale
Vending
machine
sales and
leases Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenues from
external customer 1,974,657 194,271 131,795 33,840 184,661 2,519,224
Cost of sales (1,083,259) (34,046) (126,570) (23,048) (175,565) (1,442,488)
Gross profit 891,398 160,225 5,225 10,792 9,096 1,076,736
The segment information for the six months ended June 30, 2022 is as follows:
(Unaudited)
Unmanned
retail
business
Advertising
and system
support
services
Merchandise
wholesale
Vending
machine
sales and
leases Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenues from
external customer 913,388 100,074 54,103 16,149 59,376 1,143,090
Cost of sales (499,845) (12,156) (51,269) (13,168) (56,415) (632,853)
Gross profit 413,543 87,918 2,834 2,981 2,961 510,237
The segment information for the six months ended June 30, 2023 is as follows:
Unmanned
retail
business
Advertising
and system
support
services
Merchandise
wholesale
Vending
machine
sales and
leases Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Revenues from
external customer 986,795 56,450 110,685 11,712 87,036 1,252,678
Cost of sales (542,337) (681) (106,695) (8,547) (76,442) (734,702)
Gross profit 444,458 55,769 3,990 3,165 10,594 517,976
APPENDIX I ACCOUNTANT’S REPORT
– I-56 –


--- page 608 ---
6 REVENUES
The Group’s revenue includes revenues from unmanned retail business, advertising and system support
services, merchandise wholesale, vending machine sales and leases and others. Revenue is stated net of value-added
tax (“V A T”) in the PRC and comprises the following:
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue from contract with
customers
Revenue from unmanned retail
business 1,539,891 1,336,763 1,915,116 1,974,657 913,388 986,795
– Direct operation model (a) 1,289,146 574,339 435,917 362,309 158,849 183,752
– Partner model (b) 250,745 762,424 1,479,199 1,612,348 754,539 803,043
Revenue from advertising and system
support services 540,600 219,561 243,120 194,271 100,074 56,450
Revenue from merchandise wholesale 297,900 115,485 40,516 131,795 54,103 110,685
Revenue from vending machine sales
and leases 91,485 47,040 44,241 33,840 16,149 11,712
Revenue from others 257,585 183,161 433,244 184,661 59,376 87,036
2,727,461 1,902,010 2,676,237 2,519,224 1,143,090 1,252,678
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Timing of revenue recognition
At a point in time
– Unmanned retail business 1,539,891 1,336,763 1,915,116 1,974,657 913,388 986,795
– Advertising and system support
services 300,294 71,674 135,493 86,444 47,567 4,575
– Merchandise wholesale 297,900 115,485 40,516 131,795 54,103 110,685
– V ending machine sales 63,117 28,254 28,243 18,141 7,377 5,998
– Others 76,982 146,752 399,452 165,031 47,937 75,669
Over time
– Advertising and system support
services 240,306 147,887 107,627 107,827 52,507 51,875
– Others 180,555 36,198 33,654 19,524 11,419 11,350
Lease income from vending machine
leases 28,368 18,786 15,998 15,699 8,772 5,714
Lease income from others 48 211 138 106 20 17
2,727,461 1,902,010 2,676,237 2,519,224 1,143,090 1,252,678
APPENDIX I ACCOUNTANT’S REPORT
– I-57 –


--- page 609 ---
(a) Revenue from direct operation model represents the revenue generated from the selling of fast-moving
consumer goods on the vending machines which are located at the POSs sourced and developed by the
Group.
(b) Revenue from partner model represents the revenue generated from the selling of fast-moving consumer
goods on the vending machines which are located at the POSs sourced and developed by the network
partners which are entitled to a share of the income generated from the vending machines that is
accounted for as POSs operation and development expenses (Note 7).
(c) Performance obligations for contracts with customers
Revenue is recognized when the Group satisfy a performance obligation by transferring a promised
goods or service to a customer. Control of the goods or service refers to the ability to direct the use of,
and obtain substantially all of the remaining benefits from, the goods or services.
(d) Liabilities related to contracts with customers
The Group has recognized the following liabilities related to contracts with customers:
As at
January 1, As at December 31,
As at
June 30,
2019 2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Contract liabilities 15,997 14,747 10,421 8,592 7,496 37,575
Contract liabilities of the Group mainly arise from the non-refundable advance payments made by
customers while the underlying services or goods are yet to be provided or delivered.
(e) Revenue recognized in relation to contract liabilities
The following table shows how much of the revenue is recognized during the Track Record Period
relates to carried-forward contract liabilities.
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue recognized
that was included
in the balance of
contract liabilities
at the beginning
of the year/period 13,771 9,843 8,777 5,411 3,413 3,801
All contracts are for periods of one year or less or are billed based on time incurred. As permitted under
HKFRS15, the transaction price allocated to these unsatisfied contracts is not disclosed.
(f) There were no individual customer contributing over 10% of the total revenue for the years ended
December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 610 ---
7 EXPENSES BY NATURES
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cost of inventories sold 1,256,210 1,058,640 1,466,389 1,368,474 597,483 720,726
POSs operation and development
expenses (a) 574,570 553,170 585,920 587,354 263,936 261,155
Subcontractor cost of the advertising resources 50,315 499 58,095 33,507 11,908 478
Employee benefit expenses excluding share-based
compensation (Note 10) 273,672 254,828 207,915 235,505 120,461 88,976
Share-based compensation (Note 28) – 210,918 1,500 – – 49,527
Depreciation of property and equipment (Note 16) 101,900 158,130 102,035 144,070 70,525 74,120
Depreciation of right-of-use assets (Note 17) 101,769 118,539 100,329 97,960 51,804 47,717
Amortization of intangible assets (Note 18) 13,167 17,545 17,423 15,842 8,045 7,675
Traveling and entertainment expenses 26,097 15,261 11,037 7,382 2,966 2,637
Logistics and transportation expenses 109,092 97,755 138,543 156,786 77,317 88,846
Outsourced research consulting service expenses 25,665 599 10,714 – – –
Warehouse and short-term and low-value leases
expenses 8,022 14,147 17,913 20,884 10,420 7,528
Office expenses 38,580 24,073 19,743 16,743 8,160 6,386
Consultation expenses 6,499 5,261 2,804 5,064 619 862
Impairment loss of prepayments 3,907 –––––
Impairment loss of inventories (Note 23) 2,530 53,912 ––––
Impairment loss of intangible assets (Note 18) (c) 2,155 9,728 ––––
Impairment loss of property and equipment
(Note 16) (c) 1,240 140,281 1,449 – – –
Impairment loss of right-of-use assets (Note 17) (c) – 51,730 ––––
Impairment loss of goodwill
(Note 18) (c) – 158,386 ––––
Taxes and surcharges 10,116 2,166 6,764 6,984 2,831 4,502
Bank and payment charges 12,582 10,855 17,116 13,340 6,541 7,252
Auditor’s remuneration
– Audit services 600 1,360 – 200 – –
– Other services 25 0–––––
Listing expenses – – 16,411 22,077 3,790 6,581
Others 16,419 21,901 30,533 24,997 14,757 15,111
Total cost of sales, selling and marketing
expenses, general and administrative expenses
and research and development expenses 2,635,357 2,979,684 2,812,633 2,757,169 1,251,563 1,390,079
(a) POSs operation and development expenses mainly represented fixed or variable expenses paid or
payables to POS providers and POS partners for maintaining and exploring the Group’s POS network.
V ariable POSs operation and development expenses were determined based on certain percentage of the
income generated by the corresponding vending machines as agreed between the Group and individual
POSs providers and POS partners.
(b) During the years ended December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30,
2022 and 2023, the Group incurred expenses for the purpose of research and development of
approximately RMB57,301,000, RMB41,484,000, RMB36,761,000, RMB31,556,000, RMB17,668,000
and RMB15,098,000 respectively, which included employee benefits expenses of RMB19,363,000,
RMB29,727,000, RMB15,782,000, RMB23,057,000, RMB13,384,000 and RMB10,997,000
APPENDIX I ACCOUNTANT’S REPORT
– I-59 –


--- page 611 ---
respectively. During the years ended December 31, 2019, 2020, 2021 and 2022 and the six months ended
June 30, 2022 and 2023, research and development expenses of RMB3,430,000, RMB nil, RMB nil,
RMB nil, RMB nil and RMB nil had been capitalized as intangible assets respectively (Note 18).
(c) During the years ended December 31, 2019 and 2020, the impairment loss of intangible assets and
impairment loss of goodwill were recognized as “general and administrative expenses”. During the year
ended December 31, 2020, the impairment loss amounting to RMB120,136,000 of property and
equipment and the impairment loss amounting to RMB44,302,000 of right-of-use assets, which were
related to the karaoke booth services were recognized as “cost of sales”. During the years ended
December 31, 2019, 2020 and 2021, the impairment loss amounting to RMB1,240,000, RMB20,145,000
and RMB1,449,000 of property and equipment, which were related to the vending machines were
recognized as “selling and marketing expenses”. During the year ended December 31, 2020, the
impairment loss amounting to RMB7,428,000 of right-of-use assets, which were related to the vending
machines were recognized as “selling and marketing expenses”.
8 OTHER INCOME
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Government grants (a) 3,322 5,392 1,701 5,117 2,532 1,166
Interest income arising from trade receivables and
bank deposits 8,016 5,272 3,001 1,854 946 1,176
Interest income from wealth management products
(Note 22) 5,135 6,298 1,242 173 44 69
Additional deduction of input
value-added tax 599 3,023 5,949 4,795 530 418
Others 40 214 376 88 88 94
17,112 20,199 12,269 12,027 4,140 2,923
(a) During the years ended December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30,
2022 and 2023, the government grants mainly consist of value-added tax levied immediately returned
and subsidies received from the local government due to industry support policies.
9 OTHER GAINS/(LOSSES), NET
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Fair value change on financial assets at fair value
through profit or loss (Note 22) (852) (18,258) (1,940) 3,300 3,400 (1,600)
Net gains on disposal of investments accounted for
using the equity method 14,141 –––––
Net gains/(losses) on disposal/deregistration of
subsidiaries (Note 14(e)) – 5,603 (2,315) (199) 151 –
Net losses on disposal of property and equipment (2,059) (7,216) (5,418) (5,408) (421) (395)
Others 114 27 (4,982) (6,181) (2,309) (925)
11,344 (19,844) (14,655) (8,488) 821 (2,920)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 612 ---
10 EMPLOYEE BENEFIT EXPENSES (INCLUDING DIRECTORS’ EMOLUMENTS
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, wages, and bonuses 222,998 214,104 168,996 186,122 94,717 69,065
Pension costs – defined contribution plans (a) 23,046 6,645 18,416 21,638 11,081 8,895
Other social security costs, housing benefits and
other employee benefits (a) 27,628 34,079 20,503 27,745 14,663 11,016
Share-based compensation
(Note 28) – 210,918 1,500 – – 49,527
273,672 465,746 209,415 235,505 120,461 138,503
(a) Pension costs – defined contribution plans
Employees of the Group companies in the PRC are required to participate in a defined contribution retirement
scheme administered and operated by the local municipal government. The Group contributes partnerships which are
calculated on fixed percentage of the employees’ salary (subject to a floor and cap) as set by local municipal
governments to each scheme locally to fund the retirement benefits of the employees.
Other than the monthly contributions, the Group has no further obligation for the payment of retirement and
other post-retirement benefits of its employees.
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, the Group was not entitled to any forfeited
contributions to reduce the Group’s future contributions.
Pension costs were decreased during the year ended December 31, 2020 as the government has implemented
a policy to reduce the impact of Coronavirus Disease 2019 (the “COVID-19”) to companies in the PRC.
(b) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the Track Record Period include 3,
4, 2, 2, 2 and 3 directors for the years ended December 31, 2019, 2020, 2021 and 2022 and the six months ended
June 30, 2022 and 2023 respectively, and their emoluments are reflected in the analysis shown in Note 10(c). The
emoluments payable to the remaining 2, 1, 3, 3, 3 and 2 individuals for the Track Record Period are as follows:
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, wages, and bonuses 1,088 418 2,039 2,097 1,042 740
Pension costs – defined contribution plans 78 19 144 159 79 45
Other social security costs, housing benefits and
other employee benefits 366 41 144 161 82 50
Share-based compensation – 28,20 0––– 7,216
1,532 28,678 2,327 2,417 1,203 8,051
APPENDIX I ACCOUNTANT’S REPORT
– I-61 –


--- page 613 ---
The emoluments fell within the following bands:
Number of individuals
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
(Unaudited)
Emoluments bands:
HKD500,001 to HKD1,000,000 2–223–
HKD1,000,001 to HKD1,500,000 ––11––
HKD1,500,001 to HKD2,000,000 –––––1
HKD7,000,001 to HKD7,500,000 –––––1
HKD30,000,001 to HKD35,000,000 –1––––
213332
No incentive payment for joining the Group or compensation for loss of office was paid or payable to any of
the five highest paid individuals for the years ended December 31, 2019, 2020, 2021 and 2022 and the six months
ended June 30, 2022 and 2023.
(c) Directors’ and chief executive’s emoluments
Remuneration of every director and the chief executive’s is set out below:
Director’s
fee
Salaries,
wages
and
bonus
Pension
cost-defined
contribution
plan
Other social
security costs,
housing
benefits and
other employee
benefits
Share-based
compensation Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
For the year ended
December 31, 2019
Chairman and executive
director:
Mr. Wang Bin (i) – 2,140 50 61 – 2,251
Directors:
Mr. Chen Kunrong (ii) – 786 35 56 – 877
Mr. Huang Heming (iii) – 491 50 60 – 601
Ms. Cui Y an (iv) – 563 – 20 – 583
Ms. An Y ufang (v) –– – – – –
– 3,980 135 197 – 4,312
APPENDIX I ACCOUNTANT’S REPORT
– I-62 –


--- page 614 ---
Director’s
fee
Salaries,
wages
and
bonus
Pension
cost-defined
contribution
plan
Other social
security costs,
housing
benefits and
other employee
benefits
Share-based
compensation Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
For the year ended
December 31, 2020
Chairman and executive
director:
Mr. Wang Bin (i) – 1,688 4 44 65,800 67,536
Directors:
Mr. Chen Kunrong (ii) – 512 26 44 37,600 38,182
Mr. Huang Heming (iii) – 323 4 44 26,092 26,463
Ms. Cui Y an (iv) – 385 – 33 28,200 28,618
Mr. Y u Lizhi (vi) – 139 14 20 – 173
Ms. An Y ufang (v) –– – – – –
– 3,047 48 185 157,692 160,972
Director’s
fee
Salaries,
wages
and
bonus
Pension
cost-defined
contribution
plan
Other social
security costs,
housing
benefits and
other employee
benefits
Share-based
compensation Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
For the year ended
December 31, 2021
Chairman and executive
director:
Mr. Wang Bin (i) – 1,801 53 55 – 1,909
Executive directors:
Mr. Chen Kunrong (ii) – 605 39 40 – 684
Ms. Cui Y an (iv) – 433 48 50 – 531
Mr. Y u Lizhi (vi) – 149 29 22 – 200
Non-executive directors:
Ms. An Y ufang (v) –– – – – –
Mr. Zhu Chao (vii) –– – – – –
Independent
non-executive
directors:
Mr. Zhang Chen (viii) –– – – – –
Mr. Wang Xiaochuan (ix) –– – – – –
Ms. Guo Wei (x) –– – – – –
– 2,988 169 167 – 3,324
APPENDIX I ACCOUNTANT’S REPORT
– I-63 –


--- page 615 ---
Director’s
fee
Salaries,
wages
and
bonus
Pension
cost-defined
contribution
plan
Other social
security costs,
housing
benefits and
other employee
benefits
Share-based
compensation Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
For the year ended
December 31, 2022
Chairman and executive
director:
Mr. Wang Bin (i) – 1,275 54 53 – 1,382
Executive directors:
Mr. Chen Kunrong (ii) – 605 45 48 – 698
Ms. Cui Y an (iv) – 432 54 53 – 539
Mr. Y u Lizhi (vi) – 148 41 30 – 219
Non-executive directors:
Ms. An Y ufang (v) –– – – – –
Mr. Zhu Chao (vii) –– – – – –
Independent
non-executive
directors:
Mr. Zhang Chen (viii) –– – – – –
Mr. Wang Xiaochuan (ix) –– – – – –
Ms. Guo Wei (x) –– – – – –
– 2,460 194 184 – 2,838
Director’s
fee
Salaries,
wages
and
bonus
Pension
cost-defined
contribution
plan
Other social
security costs,
housing
benefits and
other employee
benefits
Share-based
compensation Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
For the six months ended
June 30, 2022
Chairman and executive
director:
Mr. Wang Bin (i) – 800 27 27 – 854
Executive directors:
Mr. Chen Kunrong (ii) – 303 22 24 – 349
Ms. Cui Y an (iv) – 216 27 27 – 270
Mr. Y u Lizhi (vi) – 74 19 15 – 108
APPENDIX I ACCOUNTANT’S REPORT
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--- page 616 ---
Director’s
fee
Salaries,
wages
and
bonus
Pension
cost-defined
contribution
plan
Other social
security costs,
housing
benefits and
other employee
benefits
Share-based
compensation Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Non-executive directors:
Ms. An Y ufang (v) –– – – – –
Mr. Zhu Chao (vii) –– – – – –
Independent
non-executive
directors:
Mr. Zhang Chen (viii) –– – – – –
Mr. Wang Xiaochuan (ix) –– – – – –
Ms. Guo Wei (x) –– – – – –
– 1,393 95 93 – 1,581Director’s
fee
Salaries,
wages
and
bonus
Pension
cost-defined
contribution
plan
Other social
security costs,
housing
benefits and
other employee
benefits
Share-based
compensation Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
For the six months ended
June 30, 2023
Chairman and executive
director:
Mr. Wang Bin (i) – 450 27 27 19,680 20,184
Executive directors:
Mr. Chen Kunrong (ii) – 387 22 25 7,872 8,306
Ms. Cui Y an (iv) – 216 27 27 6,166 6,436
Mr. Y u Lizhi (vi) – 74 21 16 – 111
Non-executive directors:
Ms. An Y ufang (v) –– – – – –
Mr. Zhu Chao (vii) –– – – – –
Independent
non-executive
directors:
Mr. Zhang Chen (viii) –– – – – –
Mr. Wang Xiaochuan (ix) –– – – – –
Ms. Guo Wei (x) –– – – – –
– 1,127 97 95 33,718 35,037
APPENDIX I ACCOUNTANT’S REPORT
– I-65 –


--- page 617 ---
Notes:
(i) Mr. Wang Bin was appointed as the Company’s director, chief executive officer and chairman of the
board of directors in February 2016.
(ii) Mr. Chen Kunrong was appointed as the Company’s director in February 2016 and appointed as
executive director in May 2021.
(iii) Mr. Huang Heming was appointed as the Company’s director in January 2018, and resigned as director
in October 2020.
(iv) Ms. Cui Y an was appointed as the Company’s director in June 2017 and appointed as executive director
in May 2021.
(v) Ms. An Y ufang was appointed as the Company’s director in November 2017 and appointed as
non-executive director in May 2021.
(vi) Mr. Y u Lizhi was appointed as the Company’s director in October 2020 and appointed as executive
director in May 2021.
(vii) Mr. Zhu Chao was appointed as the Company’s non-executive director in May 2021.
(viii) Mr. Zhang Chen was appointed as the Company’s independent non-executive director in May 2021.
(ix) Mr. Wang Xiaochuan was appointed as the Company’s independent non-executive director in May 2021.
(x) Ms. Guo Wei was appointed as the Company’s independent non-executive director in May 2021.
(d) Directors’ retirement and termination benefits
No retirement and termination benefits were paid to the directors of the Company by the Group in respect of
the director’s services as a director of the Company and its subsidiaries or other services in connection with the
management of the affairs of the Company or its subsidiaries during the Track Record Period.
(e) Consideration provided to third parties for making available directors’ services
No consideration provided to third parties for making available Directors’ services subsisted at the end of each
reporting period or at any time during the Track Record Period.
(f) Information about loans, quasi-loans and other dealings in favor of directors, controlled bodies
corporate by and connected entities with such directors
Save as disclosed in Note 36, there was no loans, quasi-loans or other dealings are entered into in favor of
directors, controlled bodies corporate by and connected entities with such directors during the Track Record Period.
(g) Directors’ material interests in transactions, arrangements or contract
Save as disclosed in Note 36, there was no significant transactions, arrangements and contracts in relation to
the Group’s Business to which the Company was a party and in which a director of the Company had a material
interest, whether directly or indirectly, subsisted during the Track Record Period.
APPENDIX I ACCOUNTANT’S REPORT
– I-66 –


--- page 618 ---
11 FINANCE COSTS
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interest expenses on
lease liabilities 36,170 29,883 10,619 7,085 4,242 1,973
Interest expenses on borrowings 22,518 2,461 2,898 6,246 3,018 2,611
58,688 32,344 13,517 13,331 7,260 4,584
12 INCOME TAX EXPENSE
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current income tax 8,363 5,100 2,665 5,592 3,024 4,174
Deferred income tax (Note 29) (4,167) 7,572 914 5,221 2,913 (3,430)
Income tax expense 4,196 12,672 3,579 10,813 5,937 744
The tax on the Group’s profit/(loss) before income tax differs from the theoretical amount that would arise
using the tax rate of 25% for the years ended December 31, 2019, 2020, 2021 and 2022 and the six months ended
June 30, 2022 and 2023, being the standard income tax rate in the PRC. The differences are analyzed as follows:
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit/(loss) before income tax expense 43,845 (1,171,524) (184,615) (272,256) (122,462) (146,645)
Tax calculated at the tax rate of 25% 10,961 (292,881) (46,154) (68,064) (30,616) (36,661)
Effects of different tax rates of the subsidiaries (23,231) 57,091 3,722 1,739 1,454 4,691
Effects of share of post-tax results of
investments accounted for using
the equity method 1,792 868 1,023 3,814 1,197 955
Super deduction for research and development
expenses (3,421) (3,847) (3,329) (4,930) (2,718) (2,312)
Expenses not deductible for tax purpose (i) 2,338 49,027 5,285 6,259 954 1,829
Utilization of tax losses and temporary
differences previously not recognized (7,882) (35) (1,725) (386) (1,615) (7,273)
Tax losses and temporary differences not
recognized as deferred income tax assets
or liabilities 23,639 202,449 44,757 72,381 37,281 39,515
Income tax expense 4,196 12,672 3,579 10,813 5,937 744
(i) Expenses not deductible for tax purpose mainly comprise impairment of goodwill (Note 18) for the year
ended December 31, 2020.
APPENDIX I ACCOUNTANT’S REPORT
– I-67 –


--- page 619 ---
(a) PRC corporate income tax (“CIT”)
CIT provision was made on the estimated assessable profits of entities within the Group incorporated in the
PRC and was calculated in accordance with the relevant regulations of the PRC after considering the available tax
benefits from refunds and allowances. The general PRC CIT rate is 25% for the years ended December 31, 2019,
2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023.
The Company had applied to the relevant tax bureau and was granted the qualification as “High and New
Technology Enterprise” (“HNTE”) in December 2017, and the Company has renewed the qualification as HNTE in
December 2020. As a result, it is subject to a preferential CIT rate of 15% for the years ended December 31, 2019,
2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023.
Beijing Y oubao Anglai Technology Co., Ltd. (“Y oubao Anglai”) and Shenzhen Y oubaokesi Technology Co.,
Ltd. (“Shenzhen Y oubaokesi”), two subsidiaries of the Company, had also applied to the relevant tax bureau and were
granted the HNTE in December 2016, and they have renewed the qualification as HNTE in December 2019. As a
result, they are subject to a preferential CIT rate of 15% for the years ended December 31, 2019, 2020 and 2021 and
the six months ended June 30, 2022.
Shenzhen Y oubaokesi has renewed the qualification as HNTE in December 2022 and thus it is subject to CIT
rate of 15% for the year ended December 31, 2022 and the six months ended June 30, 2023. Y oubao Anglai has not
continued to apply for the qualification as HNTE and it is subject to CIT rate of 25% for the year ended December
31, 2022 and the six months ended June 30, 2023.
Save as aforesaid, the Company and other major subsidiaries were subject to CIT at a rate of 25%.
(b) Research and development super deduction
According to the relevant laws and regulations promulgated by the State Administration of Taxation of the PRC
that was effective from 2019 to 2022 onwards, enterprises engaging in research and development activities are
entitled to claim 175% and 200% of their research and development expenses from January 1, 2019 to September 30,
2022 and from October 1, 2022 to June 30, 2023, respectively.
For those companies which were granted the qualification as “Small and Medium-sized Sci-tech Enterprise”
during the financial years from 2019 to 2021, they could claim 175% of their research and development expenses so
incurred as tax deductible expenses when determining their assessable profits during the Track Record Period.
13 EARNINGS/(LOSSES) PER SHARE
(a) Basic earnings/(losses) per share
Basic earnings/(losses) per share is calculated by dividing the profit/(loss) attributable to owners of the
Company by the weighted average number of ordinary shares outstanding during the Track Record Period, excluding
treasury shares.
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
(Unaudited)
Profit/(loss) attributable to owners of the Company
(RMB’000) 45,142 (1,172,461) (185,000) (284,529) (127,479) (152,480)
Weighted average number of ordinary shares
outstanding (thousand) 670,049 757,259 757,259 757,259 757,259 757,259
Basic earnings/(losses) per share (RMB) 0.07 (1.55) (0.24) (0.38) (0.17) (0.20)
APPENDIX I ACCOUNTANT’S REPORT
– I-68 –


--- page 620 ---
(b) Diluted earnings/(losses) per share
Diluted earnings/(losses) per share is calculated by adjusting the weighted average number of shares
outstanding to assume conversion of all dilutive potential ordinary shares.
For the years ended December 31, 2019, 2021 and 2022 and the six months ended June 30, 2022, the Company
had no dilutive potential shares in issue, thus the diluted earnings/(losses) per share was the same as the basic
earnings/(losses) per share.
For the year ended December 31, 2020, the Company had share options. Diluted loss per share presented is
the same as the basic loss per share as the share options will be exercised by repurchase shares from the existing
shareholder.
For the six months ended June 30, 2023, the Company granted shares options and are not included in the
calculation of diluted earnings per share because they are antidilutive.
14 PARTICULARS OF PRINCIPAL SUBSIDIARIES
As at the date of this report, the Company had direct or indirect interests in the following subsidiaries. Unless
otherwise stated, they have share capital consisting solely of ordinary shares/registered capital that are held directly
by the Group, and the proportion of ownership interests held equals the voting rights held by the Group. The country
of incorporation or registration is also their principal place of business.
Name of subsidiary
Place and
date of
incorporation and
form of legal
entity
Principal activities
and place of
operation
Particulars of
issued or
registered
share capital
Attributable equity interest
As at December 31,
As at June
30,
As at the
date of this
report2019 2020 2021 2022 2023
(RMB’000)
Directly held by
the Company:
Guangzhou Weiji
Trading Co., Ltd.
(ʮ
̡) (b)
The PRC,
January 20,
2012, limited
liability company
Operation of
unmanned retail
machine in the
PRC
50,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Chengdu Y oubao
Trading Co., Ltd.
(ʮ
̡)
The PRC,
September 26,
2012, limited
liability company
Operation of
freight
transportation
and retail in the
PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Wuhan Y oubaokesi
Trading Co., Ltd
(൱Ϟ
ʮ̡)
The PRC,
January 10,
2012, limited
liability company
Operation of
unmanned retail
machine in the
PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Beijing Beiguo Y oubang
Electronics Co., Ltd
(൱Ϟ
ʮ̡)
The PRC,
September 28,
2012, limited
liability company
Operation of
unmanned retail
machine in the
PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Henan Y oubao Trading
Co., Ltd. (ʾᘒਠ
ʮ̡)
The PRC,
November 21,
2012, limited
liability company
Operation of
unmanned retail
machine in the
PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Dalian Y oubao Trading
Co., Ltd. ( ɽஹʾᘒਠ
ʮ̡)
The PRC,
February 26,
2014, limited
liability company
Operation of
wholesale and
retail in the PRC
3,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
APPENDIX I ACCOUNTANT’S REPORT
– I-69 –


--- page 621 ---
Name of subsidiary
Place and
date of
incorporation and
form of legal
entity
Principal activities
and place of
operation
Particulars of
issued or
registered
share capital
Attributable equity interest
As at December 31,
As at June
30,
As at the
date of this
report2019 2020 2021 2022 2023
(RMB’000)
Shanghai Huilin Trading
Co., Ltd. ( ɪऎිᑗ൱
ʮ̡)
The PRC,
February 28,
2013, limited
liability company
Operation of
unmanned retail
machine in the
PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Shenzhen Y oubaokesi
Technology Co., Ltd
(ҦϞ
ʮ̡) (b)
The PRC,
July 22, 2014,
limited liability
company
Software
development and
technical services
in the PRC
150,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Beijing Y oubao Anglai
Technology Co., Ltd.
(ҦϞ
ʮ̡)
The PRC,
September 26,
2012, limited
liability company
Operation of
wholesale and
retail in the PRC
20,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Hangzhou Lianxianbao
Technology Co., Ltd
(ࠢ
ʮ̡) (e)
The PRC,
March 27, 2013,
limited liability
company
Operation of
wholesale and
retail in the PRC
6,148 100.00% N/A N/A N/A N/A N/A
Suzhou Y oubao Online
Trading Co., Ltd
(Ϟ
ʮ̡)
The PRC,
March 21, 2019,
limited liability
company
Operation of
wholesale and
retail in the PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Indirectly held by
the Company:
Tianjin Y oubao Trading
Co., Ltd. (ʾᘒਠ
ʮ̡)
The PRC,
August 2, 2012,
limited liability
company
Operation of
wholesale and
retail in the PRC
5,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Changchun Y oubao
Trading Co., Ltd. (ڗ
ʮ̡)
The PRC,
November 28,
2013, limited
liability company
Operation of
unmanned retail
machine in the
PRC
3,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Qinghuangdao UBOX
Intelligent
Technology Co., Ltd
(ʾᘒ౽ঐҦஔ
ʮ̡) (e)
The PRC,
December 10,
2014, limited
liability company
Software
development and
technical services
in the PRC
1,000 100.00% 100.00% N/A N/A N/A N/A
Beijing Taihe Ruitong
Cloud Business
Technology Co., Ltd
(߅
ʮ̡) (b)
The PRC,
January 16,
2014, limited
liability company
Operation of
wholesale and
retail in the PRC
30,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Beijing Taihe Ruitong
Y unshang Technology
Nanjing Co., Ltd ( ̏
Ҧ
ʮ̡) (e)
The PRC,
June 21, 2017,
limited liability
company
Software
development and
technical services
in the PRC
3,000 100.00% 100.00% N/A N/A N/A N/A
Beijing Y ouyang
Technology Co., Ltd
(ʮ
̡) (e)
The PRC,
July 11, 2013,
limited liability
company
Operation of
advertising and
system support
services in the
PRC
50,000 100.00% N/A N/A N/A N/A N/A
APPENDIX I ACCOUNTANT’S REPORT
– I-70 –


--- page 622 ---
Name of subsidiary
Place and
date of
incorporation and
form of legal
entity
Principal activities
and place of
operation
Particulars of
issued or
registered
share capital
Attributable equity interest
As at December 31,
As at June
30,
As at the
date of this
report2019 2020 2021 2022 2023
(RMB’000)
Beijing Y oubei Media
Technology Co., Ltd
(ҦϞ
ʮ̡)
The PRC,
April 01, 2016,
limited liability
company
Provision of
advertising
services in the
PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Beijing Qile Jiujiu
Technology Co., Ltd
(ҦϞ
ʮ̡)
The PRC,
November 14,
2013, limited
liability company
Provision of
advertising
services in the
PRC
2,500 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Mianyang Y oubao
Intelligent
Technology Co., Ltd
(ҦϞ
ʮ̡)
The PRC,
June 16, 2014,
limited liability
company
Operation of
unmanned retail
machine in the
PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Chongqing Y oubaokesi
Trading Co., Ltd
(౶ਠ൱Ϟ
ʮ̡)
The PRC,
December 24,
2012, limited
liability company
Operation of
unmanned retail
machine in the
PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Xichang UBOX Trading
Co., Ltd. (ʾᘒਠ
ʮ̡) (e)
The PRC,
January 05,
2017, limited
liability company
Operation of
freight
transportation
and retail in the
PRC
1,000 N/A N/A N/A N/A N/A N/A
Shenyang Y oubaokesi
Trading Co., Ltd. ( ᓨ
ࠢ
ʮ̡)
The PRC,
August 20, 2012,
limited liability
company
Operation of
wholesale and
retail in the PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Hainan Y oubaokesi
Trading Co., Ltd. ( ऎ
ࠢ
ʮ̡)
The PRC,
May 22, 2012,
limited liability
company
Operation of
wholesale and
retail in the PRC
5,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Hunan Y oubaokesi
Technology And
Trade Co., Ltd
(ʮ
̡)
The PRC,
June 27, 2012,
limited liability
company
Operation of
wholesale and
retail in the PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Jiangxi Y oubaokesi
Technology And
Trade Co., Ltd
(ʮ
̡)
The PRC,
October 31,
2012, limited
liability company
Operation of
wholesale and
retail in the PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Shantou Y oubaokesi
Trading Co., Ltd. ( ϭ
ʮ
̡)
The PRC,
February 28,
2012, limited
liability company
Operation of
wholesale and
retail in the PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Nanjing UBOX
Intelligent
Technology Co., Ltd
(߅
ʮ̡)
The PRC,
August 1, 2012,
limited liability
company
Software
development and
technical services
in the PRC
5,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Fuzhou Y oubaokesi
Trading Co., Ltd. ( ၅
ࠢ
ʮ̡)
The PRC,
August 29, 2012,
limited liability
company
Operation of
unmanned retail
machine in the
PRC
5,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
APPENDIX I ACCOUNTANT’S REPORT
– I-71 –


--- page 623 ---
Name of subsidiary
Place and
date of
incorporation and
form of legal
entity
Principal activities
and place of
operation
Particulars of
issued or
registered
share capital
Attributable equity interest
As at December 31,
As at June
30,
As at the
date of this
report2019 2020 2021 2022 2023
(RMB’000)
Hangzhou Y oubao
Technology Co., Ltd
(ʮ
̡)
The PRC,
March 13, 2014,
limited liability
company
Operation of
wholesale and
retail and
software
development in
the PRC
2,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Xi’an Y oubao
Intelligent
Technology Co., Ltd
(ҦϞ
ʮ̡)
The PRC,
May 11, 2012,
limited liability
company
Operation of
unmanned retail
machine in the
PRC
12,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Hefei Y oubao Trading
Co., Ltd. (ʾᘒਠ
ʮ̡)
The PRC,
August 3, 2012,
limited liability
company
Operation of
unmanned retail
machine in the
PRC
1,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Tianjin Y ouchuangbao
Technology Co., Ltd
(ࠢ
ʮ̡) (e)
The PRC,
May 19, 2017,
limited liability
company
Software
development and
technical services
in the PRC
36,500 100.00% 100.00% 100.00% N/A N/A N/A
Xiamen Qianyan
Technology
Development Co., Ltd
(Ҧක೯
ʮ̡)
The PRC,
April 10, 1998,
limited liability
company
Software
development and
selling unmanned
retail machine in
the PRC
30,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Xianmen Frontier
Systems Engineering
Co., Ltd (ӻ
ʮ̡) (e)
The PRC,
January 15,
2010, limited
liability company
Software
development and
technical services
in the PRC
500 N/A N/A N/A N/A N/A N/A
Xiamen ViewSonic
Arena Entertainment
Co., Ltd (̶
ʮ̡)
The PRC,
July 14, 2015,
limited liability
company
Operation of
singing machine
in the PRC
30,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Shenzhen Y ousuan
Technology Co., Ltd
(ʮ
̡) (b)
The PRC,
June 13, 2016,
limited liability
company
Operation of
Wholesale and
retail in the PRC
10,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Shenzhen Y ouka
Technology Co., Ltd
(ࠢ
ʮ̡) (c) (Note 33)
The PRC,
February 15,
2017, limited
liability company
Software
development and
technical services
in the PRC
9,867 70.32% 70.32% 70.32% 70.32% 70.32% 70.32%
Y ou Coffee Technology
(Beijing) Co., Ltd ( ʾ
Ҧ(̏ԯ)ʮ
̡) (c)
The PRC,
July 18, 2017,
limited liability
company
Software
development and
technical services
in the PRC
1,000 70.32% 70.32% 70.32% 70.32% 70.32% 70.32%
Shenzhen Y oubaohui
Advertising Media
Co., Ltd ( ଉέʾᘒ౉
ʮ̡)
The PRC,
June 13, 2016,
limited liability
company
Provision of
advertising
services in the
PRC
20,000 70.00% 70.00% 70.00% 70.00% 70.00% 70.00%
Shenzhen Y oujiubao
Technology Co, Ltd.
(ࠢ
ʮ̡) (e)
The PRC,
October 23,
2020, limited
liability company
Software
development and
technical services
in the PRC
1,000 NA 55.00% 55.00% N/A N/A N/A
APPENDIX I ACCOUNTANT’S REPORT
– I-72 –


--- page 624 ---
Name of subsidiary
Place and
date of
incorporation and
form of legal
entity
Principal activities
and place of
operation
Particulars of
issued or
registered
share capital
Attributable equity interest
As at December 31,
As at June
30,
As at the
date of this
report2019 2020 2021 2022 2023
(RMB’000)
Shenzhen Y oufu Sharing
Trading Co., Ltd (. ଉ
ࠢ
ʮ̡) (d)
The PRC,
July 19, 2021,
limited liability
company
Operation of
unmanned retail
machine in the
PRC
5,000 N/A N/A 51.00% 51.00% 51.00% 51.00%
Foshan Y ouhemei
Technology Co., Ltd.
(ҦϞ
ʮ̡) (d)
The PRC,
October 11,
2021, limited
liability company
Software
development and
technical services
in the PRC
2,000 N/A N/A 51.00% 51.00% 51.00% 51.00%
Sichuan Y oulin Kesi
Technology Co., Ltd.
(ҦϞ
ʮ̡) (d)
The PRC,
August 4, 2021,
limited liability
company
Operation of
unmanned retail
machine in the
PRC
2,000 N/A N/A 51.00% 51.00% 51.00% 51.00%
Shenzhen Y oubao
Innovation
Technology Co., Ltd.
(ଉέʾᘒ௴อҦஔϞ
ʮ̡) (d)
The PRC,
November 12,
2021, limited
liability company
Software
development and
technical services
in the PRC
10,000 N/A N/A 100.00% 100.00% 100.00% 100.00%
Shenzhen Y oubao
Online Technology
Co., Ltd (“Y oubao
Online”, ଉέ̹Ꮄᘒ
ʮ̡)
(f)(g)
The PRC,
December 8,
2017, limited
liability company
Operation of
selling mobile
device in the
PRC
5,000 52.00% 52.00% 35.00% 35.00% 35.00% 35.00%
Shenzhen Y ouye
Technology Co., Ltd
(“Y ouye”,߅
ʮ̡) (g)
The PRC,
June 8, 2017,
limited liability
company
Software
development and
technical services
in the PRC
10,000 30.00% 30.00% 30.00% 30.00% 30.00% 30.00%
Shenzhen Y ouguo
Technology Co., Ltd
(ʮ
̡) (e)
The PRC,
September 22,
2017, limited
liability company
Software
development and
technical services
in the PRC
5,000 81.80% 81.80% N/A N/A N/A N/A
Hainan Green Coconut
Food Co. Ltd
(ʮ
̡) (e)
The PRC,
January 2, 2018,
limited liability
company
Operation of
wholesale and
retail in the PRC
1,000 N/A N/A N/A N/A N/A N/A
Beijing Y oubaokesi
Trading Co., Ltd ( ̏
ࠢ
ʮ̡) (e)
The PRC,
January 20, 2011,
limited liability
company
Software
development and
technical services
in the PRC
100,000 100.00% 100.00% N/A N/A N/A N/A
Shenzhen Mibao New
Retail Technology
Co., Ltd. ( ଉέ႓ᘒอ
ʮ̡)
(e)
The PRC,
March 29, 2018,
limited liability
company
Operation of
unmanned retail
machine in the
PRC
5,000 56.00% 56.00% 56.00% N/A N/A N/A
Ubox Japan Investment
Limited ( ˚͉ʾᘒҳ
ٟ)e)
Japan, May 19,
2016, limited
liability company
Operation of
unmanned retail
machine in Japan
JPY3,000 100.00% N/A N/A N/A N/A N/A
* English names are translated for identification purpose only.
APPENDIX I ACCOUNTANT’S REPORT
– I-73 –


--- page 625 ---
(a) All companies comprising the Group have adopted December 31, as their financial year end date.
(b) All of above subsidiaries are limited liability companies and not subject to statutory audit requirement under
the relevant rules and regulations in the jurisdiction of incorporation. The PRC financial statements of the
Company for the years ended December 31, 2019 and 2020 were audited by PricewaterhouseCoopers Zhong
Tian LLP (ה(౷ஷΥྫ)). The PRC financial statements of the Company,
Shenzhen Y oubaokesi, Beijing Taihe Ruitong Cloud Business Technology Co., Ltd, Guangzhou Weiji Trading
Co., Ltd and Shenzhen Y ousuan Technology Co., Ltd for the year ended December 31, 2021 were audited by
Shenzhen LeiNuo LP (ה(౷ஷΥྫ)). The PRC financial statements of Shenzhen
Y oubaokesi and Beijing Taihe Ruitong Cloud Business Technology Co., Ltd for the year ended December 31,
2022 were audited by Shenzhen LeiNuo LP (ה(౷ஷΥྫ)).
(c) In December 2019, the Group acquired additional 46% equity interest in Shenzhen Y ouka Technology Co., Ltd.
(“Y ouka”). After the acquisition, Y ouka became a subsidiary of the Group.The details was disclosed in Note
33.
(d) These subsidiaries were newly established by the Group during the Track Record Period.
(e) Disposal and deregistration of subsidiaries:
(i) In September 2020, Hangzhou Lianxianbao Technology Co., Ltd. was deregistered and loss of
RMB165,000 has been recognized in “other gains/(losses), net.”
(ii) In June 2020, the Group disposed 100% equity interest in Beijing Y ouyang Technology Co., Ltd. and
recognized a gain of RMB5,768,000 in “other gains/(losses), net.”
(iii) In January 2021, Qinghuangdao UBOX Intelligent Technology Co., Ltd. was deregistered and loss of
RMB629,000 has been recognized in “other gains/(losses), net.”
(iv) In July 2021, the Group disposed 100% equity interest in Beijing Y oubaokesi Trading Co., Ltd. and
recognized a loss of RMB1,686,000 in “other gains/(losses), net.”
(v) Xichang UBOX Trading Co., Ltd, Xianmen Frontier Systems Engineering Co., Ltd and Hainan Green
Coconut Food Co. Ltd. were deregistered during the year ended December 31, 2019.
(vi) Ubox Japan Investment Limited was deregistered during the year ended December 31, 2020.
(vii) Beijing Taihe Ruitong Y unshang Technology Nanjing Co., Ltd and Shenzhen Y ouguo Technology Co.,
Ltd were deregistered during the year ended December 31, 2021.
(viii) Shenzhen Y oujiubao Technology Co, Ltd was newly incorporated in 2020 and was deregistered during
the year ended December 31, 2022.
(ix) In January 2022, the Group disposed 56% equity interest in Shenzhen Mibao New Retail Technology
Co., Ltd. and recognized a gain of RMB151,000 in “other gains/(losses), net.”
(x) In August 2022, Tianjin Y ouchuangbao Technology Co., Ltd was deregistered and loss of RMB350,000
has been recognized in “other gains/(losses), net.”
(f) Before August 2019, the Group held 30% equity interest in Y oubao Online which accounted for as associate.
In August 2019, the Group acquired additional 22% equity interest of Y oubao Online from other shareholders
for a consideration of RMB440,000. As a result, the Group obtained control on Ubox Online. The transaction
was treated as a business combination of subsidiary. The difference of RMB327,000 between the fair value and
the carrying amount of previous 30% equity interest held by the Group was recognized in other gains during
the year ended December 31, 2019.
APPENDIX I ACCOUNTANT’S REPORT
– I-74 –


--- page 626 ---
In September 2021, in order to motivate the management of the subsidiary, Y oubao Online, the Group
transferred 4% and 13% equity interest in Y oubao Online to Mr. Wu Mingjie and Mr. Y ang Ling, who are the
management of Y oubao Online, respectively at a consideration of RMB340,000. The consideration was
determined by reference to the paid-in capital of Y oubao Online and below the fair value of the transferred
equity interests. As a result, the Group recognized RMB1,500,000 as share-based compensation expense based
on the valuation performed by valuer engaged by the management.
(g) For Y oubao Online and Y ouye with equity interest below 50%, as according to the shareholders agreements of
Y oubao Online and Y ouye, the Group has the rights to variable returns from its involvement, and has the ability
to affect those returns through its majority voting rights at the meetings of the shareholder and board of
directors of Y oubao Online and Y ouye and the power to determine the budget, pricing and promotion strategies
of these companies. The Group thus has control over these subsidiaries.
(h) The directors of the Company consider that none of the non-controlling interests of the individual subsidiaries
were significant to the Group and thus the individual financial information of these subsidiaries is not
disclosed.
15 DIVIDENDS
No dividends have been paid or declared to the shareholders of the Company for the years ended December 31,
2019, 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023 respectively.
16 PROPERTY AND EQUIPMENT
The Group
Vending
machines
Electronic
equipment
Motor
vehicles
Office
equipment
and others
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2019
Cost 477,322 12,757 30,860 5,919 1,331 528,189
Accumulated depreciation (163,747) (6,088) (22,382) (2,658) (751) (195,626)
Accumulated impairment (2,067) – – – – (2,067)
Net book amount 311,508 6,669 8,478 3,261 580 330,496
Y ear ended December 31, 2019
Opening net book amount 311,508 6,669 8,478 3,261 580 330,496
Additions 434,680 608 31,775 2,155 10,923 480,141
Disposal (117,155) (61) (772) (26) – (118,014)
Depreciation charge (a) (91,879) (1,250) (6,608) (1,288) (875) (101,900)
Impairment provision (1,240) – – – – (1,240)
Closing net book amount 535,914 5,966 32,873 4,102 10,628 589,483
As at December 31, 2019
Cost 757,802 13,244 58,604 7,987 12,254 849,891
Accumulated depreciation (218,581) (7,278) (25,731) (3,885) (1,626) (257,101)
Accumulated impairment (3,307) – – – – (3,307)
Net book amount 535,914 5,966 32,873 4,102 10,628 589,483
APPENDIX I ACCOUNTANT’S REPORT
– I-75 –


--- page 627 ---
Vending
machines
Electronic
equipment
Motor
vehicles
Office
equipment
and others
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended December 31, 2020
Opening net book amount 535,914 5,966 32,873 4,102 10,628 589,483
Additions 36,353 193 8,049 1,247 2,750 48,592
Disposal (29,474) (22) (3,841) (1,085) – (34,422)
Depreciation charge (a) (144,478) (1,219) (7,938) (1,215) (3,280) (158,130)
Impairment provision (b) (140,281) – – – – (140,281)
Closing net book amount 258,034 4,918 29,143 3,049 10,098 305,242
As at December 31, 2020
Cost 531,599 13,337 54,901 8,130 15,004 622,971
Accumulated depreciation (129,977) (8,419) (25,758) (5,081) (4,906) (174,141)
Accumulated impairment (143,588) – – – – (143,588)
Net book amount 258,034 4,918 29,143 3,049 10,098 305,242
Y ear ended December 31, 2021
Opening net book amount 258,034 4,918 29,143 3,049 10,098 305,242
Additions 217,023 362 2,564 357 78 220,384
Disposal (21,132) (38) (2,177) – – (23,347)
Depreciation charge (a) (88,887) (1,127) (7,542) (1,089) (3,390) (102,035)
Impairment provision (1,449) – – – – (1,449)
Closing net book amount 363,589 4,115 21,988 2,317 6,786 398,795
As at December 31, 2021
Cost 662,882 13,456 48,791 8,463 15,151 748,743
Accumulated depreciation (182,328) (9,341) (26,803) (6,146) (8,365) (232,983)
Accumulated impairment (116,965) – – – – (116,965)
Net book amount 363,589 4,115 21,988 2,317 6,786 398,795
Y ear ended December 31, 2022
Opening net book amount 363,589 4,115 21,988 2,317 6,786 398,795
Additions 67,956 178 431 432 167 69,164
Disposal (25,947) – (1,604) – – (27,551)
Depreciation charge (a) (131,527) (1,080) (6,958) (1,018) (3,487) (144,070)
Closing net book amount 274,071 3,213 13,857 1,731 3,466 296,338
As at December 31, 2022
Cost 460,325 13,608 42,617 8,895 15,318 540,763
Accumulated depreciation (146,136) (10,395) (28,760) (7,164) (11,852) (204,307)
Accumulated impairment (40,118) – – – – (40,118)
Net book amount 274,071 3,213 13,857 1,731 3,466 296,338
APPENDIX I ACCOUNTANT’S REPORT
– I-76 –


--- page 628 ---
Vending
machines
Electronic
equipment
Motor
vehicles
Office
equipment
and others
Leasehold
improvements Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Six months ended June 30,
2022
Opening net book amount 363,589 4,115 21,988 2,317 6,786 398,795
Additions 30,475 119 272 342 141 31,349
Disposal (5,872) – (639) – – (6,511)
Depreciation charge (a) (64,019) (533) (3,575) (515) (1,883) (70,525)
Closing net book amount 324,173 3,701 18,046 2,144 5,044 353,108
As at June 30, 2022
Cost 593,754 13,549 46,099 8,806 15,292 677,500
Accumulated depreciation (176,145) (9,848) (28,053) (6,662) (10,248) (230,956)
Accumulated impairment (93,436) – – – – (93,436)
Net book amount 324,173 3,701 18,046 2,144 5,044 353,108
Six months ended June 30,
2023
Opening net book amount 274,071 3,213 13,857 1,731 3,466 296,338
Additions 9,641 424 187 67 10 10,329
Disposal (6,736) (6) (2,233) (2) – (8,977)
Depreciation charge (a) (68,846) (536) (3,008) (446) (1,284) (74,120)
Closing net book amount 208,130 3,095 8,803 1,350 2,192 223,570
As at June 30, 2023
Cost 433,604 13,974 31,806 8,953 15,328 503,665
Accumulated depreciation (199,597) (10,879) (23,003) (7,603) (13,136) (254,218)
Accumulated impairment (25,877) – – – – (25,877)
Net book amount 208,130 3,095 8,803 1,350 2,192 223,570
(a) Depreciation of the Group’s property and equipment has been recognized as follows:
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cost of sales 45,241 37,780 19,055 15,428 9,527 2,852
Selling and marketing
expenses 42,395 98,361 72,689 117,182 54,594 66,113
General and
administrative
expenses 14,264 21,989 10,291 11,460 6,404 5,155
101,900 158,130 102,035 144,070 70,525 74,120
APPENDIX I ACCOUNTANT’S REPORT
– I-77 –


--- page 629 ---
(b) Impairment loss of the Group’s property and equipment for the year ended December 31, 2020
As the result of the continuous adverse impact of COVID-19, the Group’s unmanned retail business and
karaoke booth services were adversely affected. Management carried out an impairment review on the
non-financial assets within these two segments, which mainly include goodwill, plant and equipment,
right-of-use assets and intangible assets.
Considering that the management faded out the sales of orange and coconut product, the recoverable amounts
of orange juice machine and coconut juice machine CGU within unmanned retail business segment was close
to zero. Accordingly, the impairment losses of RMB20,145,000 on property and equipment, RMB7,428,000 on
right-of-use assets (Note 17(f)) and RMB8,575,000 on intangible assets (Note 18) have been recognized in the
consolidated statement of comprehensive income related to unmanned retail business segment for the year
ended December 31, 2020.
Karaoke booth services mainly includes goodwill, plant and equipment, right-of-use assets and intangible
assets. The Group regards karaoke booth services as a separately identifiable CGU and performed impairment
assessment. See details of the key inputs and assessment in Note 18. The recoverable amount of this CGU was
determined to be less than the carrying amount of its non-financial assets. Accordingly, the impairment losses
of RMB120,136,000 on property and equipment, RMB44,302,000 on right-of-use assets (Note 17(f)),
RMB10,813,000 on goodwill (Note 18), and RMB1,153,000 on intangible assets (Note 18) have been
recognized in the consolidated statement of comprehensive income related to others segment for the year ended
December 31, 2020. Key inputs to the determination of the recoverable amount over the remaining useful life
of plant and equipment of karaoke booth services includes revenue growth rate, gross margin, terminal value
growth and pre-tax discount rate, see the details disclosed in Note 18.
The Company
Vending
machines
Electronic
equipment
Office
equipment
and others Total
RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2019
Cost 184,343 899 302 185,544
Accumulated depreciation (22,937) (780) (270) (23,987)
Accumulated impairment (2,006) – – (2,006)
Net book amount 159,400 119 32 159,551
Y ear ended December 31, 2019
Opening net book amount 159,400 119 32 159,551
Additions 60,833 – – 60,833
Disposal (19,432) – – (19,432)
Depreciation charge (33,593) (50) (17) (33,660)
Impairment provision (1,230) – – (1,230)
Closing net book amount 165,978 69 15 166,062
As at December 31, 2019
Cost 199,537 899 302 200,738
Accumulated depreciation (30,323) (830) (287) (31,440)
Accumulated impairment (3,236) – – (3,236)
Net book amount 165,978 69 15 166,062
APPENDIX I ACCOUNTANT’S REPORT
– I-78 –


--- page 630 ---
Vending
machines
Electronic
equipment
Office
equipment
and others Total
RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended December 31, 2020
Opening net book amount 165,978 69 15 166,062
Additions 34,138 – – 34,138
Disposal (49,342) – – (49,342)
Depreciation charge (47,196) (23) – (47,219)
Impairment provision (10,941) – – (10,941)
Closing net book amount 92,637 46 15 92,698
As at December 31, 2020
Cost 135,632 899 302 136,833
Accumulated depreciation (28,817) (853) (287) (29,957)
Accumulated impairment (14,178) – – (14,178)
Net book amount 92,637 46 15 92,698
Y ear ended December 31, 2021
Opening net book amount 92,637 46 15 92,698
Additions 186,115 – – 186,115
Disposal (64,117) (9) – (64,126)
Depreciation charge (21,126) (1) – (21,127)
Impairment provision (1,448) – – (1,448)
Closing net book amount 192,061 36 15 192,112
As at December 31, 2021
Cost 236,819 727 302 237,848
Accumulated depreciation (31,676) (691) (287) (32,654)
Accumulated impairment (13,082) – – (13,082)
Net book amount 192,061 36 15 192,112
Y ear ended December 31, 2022
Opening net book amount 192,061 36 15 192,112
Additions 37,173 – – 37,173
Disposal (120,973) – – (120,973)
Depreciation charge (39,849) – – (39,849)
Closing net book amount 68,412 36 15 68,463
As at December 31, 2022
Cost 109,541 727 302 110,570
Accumulated depreciation (35,798) (691) (287) (36,776)
Accumulated impairment (5,331) – – (5,331)
Net book amount 68,412 36 15 68,463
APPENDIX I ACCOUNTANT’S REPORT
– I-79 –


--- page 631 ---
Vending
machines
Electronic
equipment
Office
equipment
and others Total
RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Six months ended June 30, 2022
Opening net book amount 192,061 36 15 192,112
Additions 30,124 – – 30,124
Disposal (75,198) – – (75,198)
Depreciation charge (22,398) – – (22,398)
Closing net book amount 124,589 36 15 124,640
As at June 30, 2022
Cost 174,358 727 302 175,387
Accumulated depreciation (37,624) (691) (287) (38,602)
Accumulated impairment (12,145) – – (12,145)
Net book amount 124,589 36 15 124,640
Six months ended June 30, 2023
Opening net book amount 68,412 36 15 68,463
Additions 1,321 – – 1,321
Disposal (14,323) – – (14,323)
Depreciation charge (23,085) – – (23,085)
Closing net book amount 32,325 36 15 32,376
As at June 30, 2023
Cost 65,226 727 302 66,255
Accumulated depreciation (30,743) (691) (287) (31,721)
Accumulated impairment (2,158) – – (2,158)
Net book amount 32,325 36 15 32,376
APPENDIX I ACCOUNTANT’S REPORT
– I-80 –


--- page 632 ---
17 LEASES
The statements of financial position shows the following amounts relating to leases:
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use assets
– V ending machines 508,394 399,452 321,437 248,652 214,875
– Buildings 42,101 30,498 20,730 13,727 8,733
– Warehouse 18,601 14,482 15,957 25,958 22,988
– Cars 1,756 1,817 1,363 733 542
570,852 446,249 359,487 289,070 247,138
Lease liabilities
– Current 214,675 126,199 77,543 38,390 29,481
– Non-current 194,274 112,359 41,025 21,287 14,759
408,949 238,558 118,568 59,677 44,240
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use assets
– V ending machines 467,823 273,591 200,546 132,404 105,343
– Buildings 251 – – – –
– Warehouse – – 341 165 113
468,074 273,591 200,887 132,569 105,456
Lease liabilities
– Current 184,338 105,962 59,116 11,420 7,415
– Non-current 151,481 82,539 17,732 3,872 644
335,819 188,501 76,848 15,292 8,059
APPENDIX I ACCOUNTANT’S REPORT
– I-81 –


--- page 633 ---
The Group
Vending
machines Buildings Warehouse Cars Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2019
Cost 701,351 18,893 15,537 2,511 738,292
Accumulated depreciation (185,902) (9,726) (5,778) (566) (201,972)
Net book amount 515,449 9,167 9,759 1,945 536,320
Y ear ended December 31,
2019
Opening net book amount 515,449 9,167 9,759 1,945 536,320
Additions 73,548 44,680 17,268 805 136,301
Depreciation charge (a) (80,603) (11,746) (8,426) (994) (101,769)
Closing net book amount 508,394 42,101 18,601 1,756 570,852
As at December 31, 2019
Cost 774,899 63,573 32,805 3,316 874,593
Accumulated depreciation (266,505) (21,472) (14,204) (1,560) (303,741)
Net book amount 508,394 42,101 18,601 1,756 570,852
Y ear ended December 31,
2020
Opening net book amount 508,394 42,101 18,601 1,756 570,852
Additions 35,696 1,495 7,162 1,313 45,666
Depreciation charge (a) (92,908) (13,098) (11,281) (1,252) (118,539)
Impairment provision (f) (51,730) – – – (51,730)
Closing net book amount 399,452 30,498 14,482 1,817 446,249
As at December 31, 2020
Cost 810,595 65,067 39,967 4,629 920,258
Accumulated depreciation (359,413) (34,569) (25,485) (2,812) (422,279)
Accumulated impairment (51,730) – – – (51,730)
Net book amount 399,452 30,498 14,482 1,817 446,249
Y ear ended December 31,
2021
Opening net book amount 399,452 30,498 14,482 1,817 446,249
Additions – 1,374 11,298 895 13,567
Depreciation charge (78,015) (11,142) (9,823) (1,349) (100,329)
Closing net book amount 321,437 20,730 15,957 1,363 359,487
As at December 31, 2021
Cost 810,595 66,442 51,265 5,524 933,826
Accumulated depreciation (437,428) (45,712) (35,308) (4,161) (522,609)
Accumulated impairment (51,730) – – – (51,730)
Net book amount 321,437 20,730 15,957 1,363 359,487
APPENDIX I ACCOUNTANT’S REPORT
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--- page 634 ---
Vending
machines Buildings Warehouse Cars Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended December 31,
2022
Opening net book amount 321,437 20,730 15,957 1,363 359,487
Additions – 3,118 24,199 226 27,543
Depreciation charge (72,785) (10,121) (14,198) (856) (97,960)
Closing net book amount 248,652 13,727 25,958 733 289,070
As at December 31, 2022
Cost 810,595 48,024 48,136 1,746 908,501
Accumulated depreciation (510,213) (34,297) (22,178) (1,013) (567,701)
Accumulated impairment (51,730) – – – (51,730)
Net book amount 248,652 13,727 25,958 733 289,070
(Unaudited)
Six months ended June
30, 2022
Opening net book amount 321,437 20,730 15,957 1,363 359,487
Additions – 1,033 14,415 – 15,448
Depreciation charge (39,007) (5,144) (7,184) (469) (51,804)
Closing net book amount 282,430 16,619 23,188 894 323,131
As at June 30, 2022
Cost 810,595 67,475 65,681 5,523 949,274
Accumulated depreciation (476,435) (50,856) (42,493) (4,629) (574,413)
Accumulated impairment (51,730) – – – (51,730)
Net book amount 282,430 16,619 23,188 894 323,131
Six months ended June
30, 2023
Opening net book amount 248,652 13,727 25,958 733 289,070
Additions – – 5,728 57 5,785
Depreciation charge (33,777) (4,994) (8,698) (248) (47,717)
Closing net book amount 214,875 8,733 22,988 542 247,138
As at June 30, 2023
Cost 810,595 44,012 44,551 1,085 900,243
Accumulated depreciation (543,990) (35,279) (21,563) (543) (601,375)
Accumulated impairment (51,730) – – – (51,730)
Net book amount 214,875 8,733 22,988 542 247,138
APPENDIX I ACCOUNTANT’S REPORT
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--- page 635 ---
(a) The consolidated statements of comprehensive income shows the following amounts relating to leases:
Y ear ended December 31, Six months ended June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Depreciation
charge
of right-of-use
assets 101,769 118,539 100,329 97,960 51,804 47,717
Interest expense
(included in
finance costs) 36,170 29,883 10,619 7,085 4,242 1,973
Expense relating to
short-term leases
(included in
expenses) 6,167 11,694 15,460 15,564 8,576 6,444
Expense relating to
low-value leases
(included in
expenses) 1,855 2,453 2,453 5,320 1,844 1,084
Impairment loss – 51,73 0––––
The total cash outflow from financing activities for leases for the years ended December 31, 2019, 2020,
2021 and 2022 and the six months ended June 30, 2022 and 2023 were RMB584,080,000,
RMB245,940,000, RMB144,176,000, RMB93,519,000, RMB47,862,000 and RMB23,195,000
respectively. The total cash outflow from operating activities for the short-term leases and low-value
leases for the year ended December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30,
2022 and 2023 were RMB8,022,000, RMB14,147,000, RMB17,913,000, RMB20,884,000,
RMB10,420,000 and RMB7,528,000 respectively.
(b) V ariable lease payments
During the Track Record Period, the Group leases the offices buildings, warehouses, cars and vending
machines with fixed lease payments.
(c) Extension and termination options
Lease payments to be made under reasonably certain extension options are included in the measurement.
No termination options are included in building leases across the Group.
(d) Residual value guarantees
No residual value guarantees are provided in relation to leases.
(e) The Group’s leasing activities and how these are accounted for
The Group leases certain offices buildings, warehouses, cars and vending machines. Rental contracts for
offices buildings are typically made for fixed periods of 1 months to 60 months. Rental contracts for
warehouse are typically made for fixed periods of 1 months to 62 months. Rental contracts for cars are
typically made for fixed periods of 1 months to 65 months. Rental contracts for vending machines are
typically made for fixed periods of 36 months to 60 months.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants other than the security interests in the
leased assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
(f) Impairment loss of the Group’s right-of-use assets for the year ended December 31, 2020
As disclosed in note 16(b), impairment loss of RMB7,428,000 on right-of-use assets of orange juice
machine and coconut juice machine CGU and impairment loss of RMB44,302,000 on right-of-use assets
of karaoke booths CGU have also been recognized in the consolidated statement of comprehensive
income for the year ended December 31, 2020. See details of the key inputs and assessment in Note 18.
APPENDIX I ACCOUNTANT’S REPORT
– I-84 –


--- page 636 ---
The Company
Vending
machines Buildings Warehouse Total
RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2019
Cost 675,854 853 – 676,707
Accumulated depreciation (185,902) (301) – (186,203)
Net book amount 489,952 552 – 490,504
Y ear ended December 31, 2019
Opening net book amount 489,952 552 – 490,504
Additions 99,045 – – 99,045
Disposal (40,571) – – (40,571)
Depreciation charge (80,603) (301) – (80,904)
Closing net book amount 467,823 251 – 468,074
As at December 31, 2019
Cost 728,297 853 – 729,150
Accumulated depreciation (260,474) (602) – (261,076)
Net book amount 467,823 251 – 468,074
Y ear ended December 31, 2020
Opening net book amount 467,823 251 – 468,074
Additions 35,696 – – 35,696
Disposal (129,342) – – (129,342)
Depreciation charge (85,475) (251) – (85,726)
Impairment provision (15,111) – – (15,111)
Closing net book amount 273,591 – – 273,591
As at December 31, 2020
Cost 589,695 853 – 590,548
Accumulated depreciation (300,993) (853) – (301,846)
Accumulated impairment (15,111) – – (15,111)
Net book amount 273,591 – – 273,591
Y ear ended December 31, 2021
Opening net book amount 273,591 – – 273,591
Additions – – 396 396
Disposal (6,649) – – (6,649)
Depreciation charge (66,396) – (55) (66,451)
Closing net book amount 200,546 – 341 200,887
APPENDIX I ACCOUNTANT’S REPORT
– I-85 –


--- page 637 ---
Vending
machines Buildings Warehouse Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2021
Cost 553,297 853 396 554,546
Accumulated depreciation (339,989) (853) (55) (340,897)
Accumulated impairment (12,762) – – (12,762)
Net book amount 200,546 – 341 200,887
Y ear ended December 31, 2022
Opening net book amount 200,546 – 341 200,887
Additions 63 – – 63
Disposal (7,702) – – (7,702)
Depreciation charge (60,503) – (176) (60,679)
Closing net book amount 132,404 – 165 132,569
As at December 31, 2022
Cost 517,491 – 396 517,887
Accumulated depreciation (372,325) – (231) (372,556)
Accumulated impairment (12,762) – – (12,762)
Net book amount 132,404 – 165 132,569
(Unaudited)
Six months ended June 30, 2022
Opening net book amount 200,546 – 341 200,887
Additions 63 – – 63
Disposal (3,358) – – (3,358)
Depreciation charge (33,073) – (132) (33,205)
Closing net book amount 164,178 – 209 164,387
As at June 30, 2022
Cost 546,832 853 396 548,081
Accumulated depreciation (369,892) (853) (187) (370,932)
Accumulated impairment (12,762) – – (12,762)
Net book amount 164,178 – 209 164,387
Six months ended June 30, 2023
Opening net book amount 132,404 – 165 132,569
Additions 17 – – 17
Disposal (4,926) – – (4,926)
Depreciation charge (22,152) – (52) (22,204)
Closing net book amount 105,343 – 113 105,456
APPENDIX I ACCOUNTANT’S REPORT
– I-86 –


--- page 638 ---
Vending
machines Buildings Warehouse Total
RMB’000 RMB’000 RMB’000 RMB’000
As at June 30, 2023
Cost 506,672 – 396 507,068
Accumulated depreciation (388,567) – (283) (388,850)
Accumulated impairment (12,762) – – (12,762)
Net book amount 105,343 – 113 105,456
18 INTANGIBLE ASSETS
The Group
Goodwill
Internally
generated
software
Purchased
software Total
RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2019
Cost 26,267 98,291 25,667 150,225
Accumulated amortization – (29,109) (9,352) (38,461)
Accumulated impairment – (3,809) – (3,809)
Net book amount 26,267 65,373 16,315 107,955
Y ear ended December 31, 2019
Opening net book amount 26,267 65,373 16,315 107,955
Addition (a) 168,915 3,430 55,745 228,090
Disposal – (445) (1,912) (2,357)
Amortization charge – (9,821) (3,346) (13,167)
Impairment provision – (2,155) – (2,155)
Closing net book amount 195,182 56,382 66,802 318,366
As at December 31, 2019
Cost 195,182 97,707 79,306 372,195
Accumulated amortization – (35,361) (12,504) (47,865)
Accumulated impairment – (5,964) – (5,964)
Net book amount 195,182 56,382 66,802 318,366
Y ear ended December 31, 2020
Opening net book amount 195,182 56,382 66,802 318,366
Addition – – 4,625 4,625
Disposal – (1,176) – (1,176)
Amortization charge – (8,707) (8,838) (17,545)
Impairment provision (b) (158,386) (9,728) – (168,114)
Closing net book amount 36,796 36,771 62,589 136,156
APPENDIX I ACCOUNTANT’S REPORT
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--- page 639 ---
Goodwill
Internally
generated
software
Purchased
software Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2020
Cost 195,182 93,833 83,932 372,947
Accumulated amortization – (42,115) (21,343) (63,458)
Accumulated impairment (158,386) (14,947) – (173,333)
Net book amount 36,796 36,771 62,589 136,156
Y ear ended December 31, 2021
Opening net book amount 36,796 36,771 62,589 136,156
Disposal – (153) – (153)
Amortization charge – (8,312) (9,111) (17,423)
Closing net book amount 36,796 28,306 53,478 118,580
As at December 31, 2021
Cost 195,182 91,622 83,932 370,736
Accumulated amortization – (48,369) (30,454) (78,823)
Accumulated impairment (158,386) (14,947) – (173,333)
Net book amount 36,796 28,306 53,478 118,580
Y ear ended December 31, 2022
Opening net book amount 36,796 28,306 53,478 118,580
Addition – – 143 143
Amortization charge – (7,261) (8,581) (15,842)
Closing net book amount 36,796 21,045 45,040 102,881
As at December 31, 2022
Cost 195,182 91,622 84,075 370,879
Accumulated amortization – (55,630) (39,035) (94,665)
Accumulated impairment (158,386) (14,947) – (173,333)
Net book amount 36,796 21,045 45,040 102,881
(Unaudited)
Six months ended June 30, 2022
Opening net book amount 36,796 28,306 53,478 118,580
Addition – – 68 68
Amortization charge – (3,650) (4,395) (8,045)
Closing net book amount 36,796 24,656 49,151 110,603
APPENDIX I ACCOUNTANT’S REPORT
– I-88 –


--- page 640 ---
Goodwill
Internally
generated
software
Purchased
software Total
RMB’000 RMB’000 RMB’000 RMB’000
As at June 30, 2022
Cost 195,182 91,622 84,000 370,804
Accumulated amortization – (52,019) (34,849) (86,868)
Accumulated impairment (158,386) (14,947) – (173,333)
Net book amount 36,796 24,656 49,151 110,603
Six months ended June 30, 2023
Opening net book amount 36,796 21,045 45,040 102,881
Amortization charge – (3,632) (4,043) (7,675)
Closing net book amount 36,796 17,413 40,997 95,206
As at June 30, 2023
Cost 195,182 91,622 84,075 370,879
Accumulated amortization – (59,262) (43,078) (102,340)
Accumulated impairment (158,386) (14,947) – (173,333)
Net book amount 36,796 17,413 40,997 95,206
Amortization of the Group’s intangible assets has been recognized as follows:
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB;000
(Unaudited)
Research and
development expenses 9,821 8,707 8,312 7,261 3,650 1,646
General and
administrative
expenses 3,346 8,838 9,111 8,581 4,395 6,029
13,167 17,545 17,423 15,842 8,045 7,675
(a) During the year ended December 31, 2019, the addition to goodwill was mainly arose from the
acquisition of Shenzhen Y ouka for its freshly brewed beverage vending machine business. The details
was disclosed in Note 33. The purchased software was mainly the use right of the software system,
which was purchased from Beijing Sensetime Technology Development Co., Ltd. (“Ҧක
ʮ̡”).
(b) Impairment assessment of goodwill
The goodwill of the Group mainly arose from the acquisition of Shenzhen Y ouka for its freshly brewed
beverage vending machine business in 2019 as mentioned in note(a) above and Note 33, and acquisition
of karaoke booth service business and other vending machine business in previous years.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 641 ---
The Group carries out its annual impairment test on goodwill by comparing the recoverable amounts of
CGU to the carrying amounts. The management considers that the freshly brewed beverage vending
machine business, karaoke booth service business and the other vending machine business represent the
smallest identifiable group of assets that generate cash inflows and are largely independent of the cash
inflows from other assets. The following is a summary of goodwill allocated by the management of the
Group for each CGU:
Freshly brewed
beverage vending
machine business
Karaoke booth
service business
Other vending
machine business
RMB’000 RMB’000 RMB’000
Y ear ended December 31, 2019
Opening – 10,813 15,454
Additions (Note 33) 168,348 – 567
Closing 168,348 10,813 16,021
Y ear ended December 31, 2020
Opening 168,348 10,813 16,021
Impairment (147,573) (10,813) –
Closing 20,775 – 16,021
Y ear ended December 31, 2021
Opening 20,775 – 16,021
Closing 20,775 – 16,021
Y ear ended December 31, 2022
Opening 20,775 – 16,021
Closing 20,775 – 16,021
(Unaudited)
Six months ended June 30, 2022
Opening 20,775 – 16,021
Closing 20,775 – 16,021
Six months ended June 30, 2023
Opening 20,775 – 16,021
Closing 20,775 – 16,021
Impairment review on the goodwill has been conducted by the management as at December 31, 2019,
2020, 2021 and 2022 and June 30, 2023 according to HKAS 36 “Impairment of assets”. The Group
carried out its impairment test on goodwill by comparing the recoverable amounts of each CGU to their
carrying amounts. For the purpose of goodwill impairment review, the recoverable amount of a CGU (or
group of CGUs) is the higher of its fair value less cost of disposal (“FVLCOD”) and its value in use
(“VIU”). The Group has engaged an independent external valuer for performing the goodwill
impairment assessments as at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023. FVLCOD
APPENDIX I ACCOUNTANT’S REPORT
– I-90 –


--- page 642 ---
was determined using discounted cash flow projections of which the accuracy and reliability of the
information is reasonably assured by the appropriate budgeting, forecast and control process established
by the Group. The management leveraged their experiences in the industries and prepared the cash flow
projections from the perspective of other market participants. The discount rates adopted were derived
from the analysis of valuer’s interpretation of time value and specific risk of prevailing market
participants adjusted for the difference in the marketability. VIU was determined using the cash flow
projections based on business projection covering a five-year period. The management leveraged their
extensive experiences in the industries and prepared the forecast based on the past performance and their
expectation of future business projection and market developments. The discount rates adopted were
derived from the analysis of the Group’s time value and specific risk.
Freshly brewed beverage vending machine, karaoke booth service and other vending machine business
As at December 31, 2019, the recoverable amount of each of the freshly brewed beverage vending machine
business and karaoke booth service business CGUs was based on FVLCOD, which is measured using
discounted cash flow projections. Based on the results of the impairment assessments, no impairment loss on
the goodwill relating to freshly brewed beverage vending machine business or karaoke booth service business
was recognized as at December 31, 2019.
During the year ended December 31, 2020, goodwill impairment arose in the Group’s freshly brewed beverage
vending machine business due to the outbreak of COVID-19 epidemic. The Group’s freshly brewed beverage
vending machine business operation was suffered substantially, the promotion of freshly brewed beverage
vending machine in mainland China was experiencing a decline in the number, as well as lower-than-expected
profits from certain individual projects. As at December 31, 2020, the recoverable amount of the freshly
brewed beverage vending machine business CGU was based on FVLCOD, which is measured using discounted
cash flow projections prepared from market participants perspective. Based on the results of the impairment
assessments, the Group recognized an impairment provision of approximately RMB147,573,000 against the
carrying amount of goodwill relating to acquired freshly brewed beverage vending machine business.
During the year ended December 31, 2020, Goodwill impairment arose in the Group’s karaoke booth service
business due to people are afraid to sing in a confined space after the out-break of COVID-19. As at December
31, 2020, the recoverable amount of the CGU was determined based on VIU. Based on the results of the
impairment assessments, the Group recognized full impairment provision of goodwill, as well as property and
equipment intangible assets and right-of-use assets relating to acquired karaoke booth service business.
The impairment losses for the year ended December 31, 2020 related to unmanned retail business segment and
others segment are the impairment losses of the freshly brewed beverage vending machine business CGU and
the impairment losses of the karaoke booth service business, respectively. Details are below:
Karaoke booth
service business/
Others
Freshly brewed
beverage vending
machine business/
Unmanned retail
business
RMB’000 RMB’000
Impairment losses of goodwill 10,813 147,573
Impairment losses of property and equipment 120,136 –
Impairment losses of intangible assets 1,153 –
Impairment losses of right-of-use assets 44,302 –
176,404 147,573
During the years ended December 31, 2021 and 2022 and the six months ended June 30, 2023, the recoverable
amount of the freshly brewed beverage vending machine business CGU was based on FVLCOD, which was
measured using discounted cash flow projections and higher than the carrying amount, thus no impairment loss
on the goodwill relating to freshly brewed beverage vending machine business was recognized. The cash flow
projections was prepared from market participants’ perspective for the purpose of impairment reviews.
APPENDIX I ACCOUNTANT’S REPORT
– I-91 –


--- page 643 ---
During the years ended December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30, 2023,
the recoverable amount of the other vending machine business CGU was based on FVLCOD, which is
measured using discounted cash flow projections. Based on the results of the impairment assessments, no
impairment loss on the goodwill relating to other vending machine business CGU was recognized as at
December 31, 2019, 2020, 2021 and 2022 and June 30, 2023.
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, based on management’s assessment on the
recoverable amounts, the headroom of the freshly brewed beverage vending machine business, karaoke booth
service business and other vending machine business were as below:
Freshly brewed
beverage vending
machine business
Karaoke booth
service business
Other vending
machine business
RMB’000 RMB’000 RMB’000
As at December 31, 2019 1,005* 33,509 4,641,435
As at December 31, 2020 Nil Nil 5,484,316
As at December 31, 2021 19,079 N/A 4,183,346
As at December 31, 2022 16,763 N/A 3,352,186
As at June 30, 2023 16,978 N/A 3,446,245
* Freshly brewed beverage vending machine business was consolidated by the Group on December 19,
2019 due to the Group acquired another 46% equity interest of Shenzhen Y ouka from other shareholders
and the recoverable amount approximates to its carrying value as at December 31, 2019.
The following table sets out the level-3 key assumptions for those CGUs that have goodwill allocated to them:
Freshly brewed
beverage vending
machine business
Karaoke booth
service business
Other vending
machine business
As at December 31, 2019
Revenue growth rate during the projection
period 41.7% to 351.3% 3.0% to 17.9% 9.7% to 28.8%
Terminal value growth rate 3.0% 3.0% 3.0%
Gross margin during the projection period 66.2% to 67.2% 62.9% to 77.9% 46.3% to 47.0%
Post-tax discount rates 16.5% 17.0% 16.5%
Discount for lack of marketability 20.0% 20.0% 20.0%
As at December 31, 2020
Revenue growth rate during the projection
period 54.0% to 67.6% -23.2% to 3.0% 36.3% to 59.4%
Terminal value growth rate 3.0% N/A 3.0%
Gross margin during the projection period 37.7% to 51.2% -41.6% to 1.2% 33.5% to 36.3%
Post-tax discount rate/Pre-tax discount
rate (karaoke booth service business) 17.0% 17.5% 15.0%
Discount for lack of marketability 20.0% N/A 20.0%
As at December 31, 2021
Revenue growth rate during the projection
period 18.4% to 79.0% N/A 22.6% to 42.1%
Terminal value growth rate 3.0% N/A 3.0%
Gross margin during the projection period 58.5% N/A 42.0% to 43.3%
Post-tax discount rates 17.5% N/A 15.0%
Discount for lack of marketability 20.0% N/A 15.0%
APPENDIX I ACCOUNTANT’S REPORT
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--- page 644 ---
Freshly brewed
beverage vending
machine business
Karaoke booth
service business
Other vending
machine business
As at December 31, 2022
Revenue growth rate during the projection
period 16.4% to 97.7% N/A 5.0% to 44.6%
Terminal value growth rate 2.5% N/A 2.5%
Gross margin during the projection period 67.5% N/A 43.2% to 44.2%
Post-tax discount rates 17.5% N/A 15.0%
Discount for lack of marketability 15.0% N/A 10.0%
As at June 30, 2023
Revenue growth rate during the projection
period 14.7% to 86.9% N/A 9.2% to 38.7%
Terminal value growth rate 2.5% N/A 2.5%
Gross margin during the projection period 69.0% N/A 43.5% to 45.5%
Post tax discount rates 17.0% N/A 15.0%
Discount for lack of marketability 15.0% N/A 10.0%
Revenue growth rates and gross profit margins were determined by management of the Company based on past
performance and the future business plan of the CGUs expected to be achieved. The expansion of freshly
brewed beverage vending machine business was adversely impacted by COVID-19 pandemic and the revenue
generated by the freshly brewed beverage vending machine business was lower than management’s
expectations, so the revenue growth rate during the projection period was adjusted from the year ended
December 31, 2020 and afterward. Discount rates reflect market assessments of the time value and the specific
risks relating to the industry. The post-tax discount rates adopted are based on the weighted average cost of
capital (“W ACC”) of each of the two cash-generating units, mainly involving four key parameters: (i) cost of
equity estimated from the capital asset pricing model, (ii) small size risk premium, (iii) company-specific risk
premium and (iv) capital structure. As above mentioned key parameters only had immaterial changes between
December 31, 2022 and 2021, the adopted W ACC did not change as at December 31, 2022. The terminal value
growth rates were based on the expected inflation rates, which have been applied to the terminal year’s cash
flows. The discount for lack of marketability was determined by the independent external valuer by use the
Black-Scholes model.
The following table sets out the sensitivity analysis of the negative impact of variation in each of the key
assumptions for goodwill impairment that make the recoverable amount equal to the carrying amount for the
freshly brewed beverage vending machine business, karaoke booth services business and other vending
machine business were as below:
Freshly brewed
beverage vending
machine business
Karaoke booth
services business
Other vending
machine business
As at December 31, 2019
Decrease in revenue growth rate p.a.
during the projection period 0.05% 4.58% 39.51%
Decrease in terminal value growth rate 0.01% 2.82%
3% decrease in
terminal value
growth rate will
decrease the
headroom of
other vending
machine
business by
approximately
RMB981,945,000
Decrease gross margin p.a. during the
projection period 0.02% 3.1% 10.0%
APPENDIX I ACCOUNTANT’S REPORT
– I-93 –


--- page 645 ---
Freshly brewed
beverage vending
machine business
Karaoke booth
services business
Other vending
machine business
Increase post-tax discount rate 0.01% 1.79% 25.80%
Increase discount lack of marketability 0.16% 8.28% 64.51%
As at December 31, 2020
Decrease in revenue growth rate p.a.
during the projection period N/A N/A 50.23%
Decrease in terminal value growth rate N/A N/A
3% decrease in
terminal value
growth rate will
decrease the
headroom of
other vending
machine
business by
approximately
RMB1,182,681,000
Decrease gross margin p.a. during the
projection period N/A N/A 10.53%
Increase post-tax discount rate N/A N/A 35.92%
Increase discount lack of marketability N/A N/A 68.91%
As at December 31, 2021
Decrease in revenue growth rate p.a.
during the projection period 6.23% N/A 40.86%
Decrease in terminal value growth rate
3% decrease in
terminal value
growth rate will
decrease the
headroom of
freshly brewed
beverage vending
machine business
by approximately
RMB15,648,000 N/A
3% decrease in
terminal value
growth rate will
decrease the
headroom of
other vending
machine
business by
approximately
RMB845,491,000
Decrease gross margin p.a. during the
projection period 2.70% N/A 9.62%
Increase post-tax discount rate 2.45% N/A 33.02%
Increase discount lack of marketability 16.68% N/A 69.33%
As at December 31, 2022
Decrease in revenue growth rate p.a.
during the projection period 5.80% N/A 39.51%
Decrease in terminal value growth rate
2.5% decrease in
terminal value
growth rate will
decrease the
headroom of
freshly brewed
beverage vending
machine business
by approximately
RMB11,665,000 N/A
2.5% decrease in
terminal value
growth rate will
decrease the
headroom of
other vending
machine
business by
approximately
RMB560,174,000
Decrease gross margin p.a. during the
projection period 2.99% N/A 9.07%
Increase post-tax discount rate 2.38% N/A 33.35%
APPENDIX I ACCOUNTANT’S REPORT
– I-94 –


--- page 646 ---
Freshly brewed
beverage vending
machine business
Karaoke booth
services business
Other vending
machine business
Increase discount lack of marketability 18.23% N/A 73.71%
As at June 30, 2023
Decrease in revenue growth rate p.a.
during the projection period 5.31% N/A 42.17%
Decrease in terminal value growth rate
2.5% decrease in
terminal value
growth rate will
decrease the
headroom of
other vending
machine
business by
approximately
RMB12,496,000 N/A
2.5% decrease in
terminal value
growth rate will
decrease the
headroom of
other vending
machine
business by
approximately
RMB555,194,000
Decrease gross margin p.a. during the
projection period 3.02% N/A 9.11%
Increase post-tax discount rate 2.34% N/A 44.87%
Increase discount lack of marketability 17.01% N/A 76.58%
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, management of the Group believes that
any reasonably possible change in key assumptions of the fair value less cost of disposals would not cause the
carrying amount to exceed the recoverable amount of the other vending machine business CGU. As at
December 31, 2019, 2021 and 2022 and June 30, 2023, adverse changes in key assumptions applied in the
sensitivity analysis would cause impairment loss of the freshly brewed beverage vending machine business
CGU. As at December 31, 2019, adverse changes in key assumptions applied in the sensitivity analysis would
cause impairment loss of the karaoke booth services business CGU.
The Company
Goodwill
Internally
generated
software
Purchased
software Total
RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2019
Cost 11,476 34,594 6,510 52,580
Accumulated amortization – (7,203) (5,640) (12,843)
Net book amount 11,476 27,391 870 39,737
Y ear ended December 31, 2019
Opening net book amount 11,476 27,391 870 39,737
Addition – – 1,838 1,838
Amortization charge – (3,429) (392) (3,821)
Impairment provision – (591) – (591)
Closing net book amount 11,476 23,371 2,316 37,163
APPENDIX I ACCOUNTANT’S REPORT
– I-95 –


--- page 647 ---
Goodwill
Internally
generated
software
Purchased
software Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2019
Cost 11,476 34,594 8,348 54,418
Accumulated amortization – (10,632) (6,032) (16,664)
Accumulated impairment – (591) – (591)
Net book amount 11,476 23,371 2,316 37,163
Y ear ended December 31, 2020
Opening net book amount 11,476 23,371 2,316 37,163
Addition – – 3,679 3,679
Amortization charge – (3,115) (957) (4,072)
Impairment provision – (7,714) – (7,714)
Closing net book amount 11,476 12,542 5,038 29,056
As at December 31, 2020
Cost 11,476 34,594 12,027 58,097
Accumulated amortization – (13,746) (6,989) (20,735)
Accumulated impairment – (8,306) – (8,306)
Net book amount 11,476 12,542 5,038 29,056
Y ear ended December 31, 2021
Opening net book amount 11,476 12,542 5,038 29,056
Amortization charge – (2,043) (1,079) (3,122)
Closing net book amount 11,476 10,499 3,959 25,934
As at December 31, 2021
Cost 11,476 34,594 12,027 58,097
Accumulated amortization – (15,789) (8,068) (23,857)
Accumulated impairment – (8,306) – (8,306)
Net book amount 11,476 10,499 3,959 25,934
Y ear ended December 31, 2022
Opening net book amount 11,476 10,499 3,959 25,934
Amortization charge – (1,820) (1,050) (2,870)
Closing net book amount 11,476 8,679 2,909 23,064
APPENDIX I ACCOUNTANT’S REPORT
– I-96 –


--- page 648 ---
Goodwill
Internally
generated
software
Purchased
software Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2022
Cost 11,476 34,594 12,027 58,097
Accumulated amortization – (17,609) (9,118) (26,727)
Accumulated impairment – (8,306) – (8,306)
Net book amount 11,476 8,679 2,909 23,064
(Unaudited)
Six months ended June 30, 2022
Opening net book amount 11,476 10,499 3,959 25,934
Amortisation charge – (910) (525) (1,435)
Closing net book amount 11,476 9,589 3,434 24,499
As at June 30, 2022
Cost 11,476 34,594 12,027 58,097
Accumulated amortization – (16,699) (8,593) (25,292)
Accumulated impairment – (8,306) – (8,306)
Net book amount 11,476 9,589 3,434 24,499
Six months ended June 30, 2023
Opening net book amount 11,476 8,679 2,909 23,064
Amortisation charge – (910) (475) (1,385)
Closing net book amount 11,476 7,769 2,434 21,679
As at June 30, 2023
Cost 11,476 34,594 12,027 58,097
Accumulated amortization – (18,519) (9,593) (28,112)
Accumulated impairment – (8,306) – (8,306)
Net book amount 11,476 7,769 2,434 21,679
APPENDIX I ACCOUNTANT’S REPORT
– I-97 –


--- page 649 ---
19 INVESTMENTS IN SUBSIDIARIES
The Company
As at December 31, As at June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Investment in
subsidiaries 432,864 519,428 569,428 579,428 601,075
Less: provision for
impairment – (180,697) (180,697) (180,697) (180,697)
432,864 338,731 388,731 398,731 420,378
As at December 31, 2020, 2021 and 2022 and June 30, 2023, the Company recognized impairment of
RMB180,697,000 on investment in a subsidiary which holds the subsidiaries that operate freshly brewed
beverage vending machine and karaoke booth service business.
20 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Investment in a joint venture (a) 3,918 2,755 1,404 2,615 2,595
Investment in associates (b) 50,655 58,268 75,053 60,087 56,286
54,573 61,023 76,457 62,702 58,881
(a) Investments in a joint venture
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of
the year/period – 3,918 2,755 1,404 1,404 2,615
Addition 4,000 – – 1,500 1,500 –
Share of loss of a
joint venture (82) (1,163) (1,351) (289) (257) (20)
At the end of the year/period 3,918 2,755 1,404 2,615 2,647 2,595
APPENDIX I ACCOUNTANT’S REPORT
– I-98 –


--- page 650 ---
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, the joint venture of the Group, which was
accounted for using equity method, was as follows:
Proportion of equity interests
held by the Group
Company Name
Place of
incorporation
and operation Principal activities
As at December 31,
As at
June 30,
As at
the date
of this
report2019 2020 2021 2022 2023
Shijia Y ouchang Technology
Co., Ltd. (“Shijia Y ouchang”) PRC
Computer software and
hardware developer 40% 40% 40% 40% 40% 40%
In August 2019, the Group signed a joint venture agreement with Yishiteng Technology Co., Ltd. (“Yishiteng”)
and Wuxi shijiayouchang enterprise management partnership (limited partnership) (“Wuxi shijiayouchang”), which
is jointly managed by the Group and Yishiteng with each shareholder holds 40%, 40% and 20% equity interest,
respectively. The Group, Yishiteng and Wuxi shijiayouchang designated 2 directors, 2 directors and 1 director
respectively. Shijia Y ouchang is regarded as joint venture, jointly controlled by the Group and Yishiteng and
accounted for using the equity method because, according to the articles of association and joint venture agreements,
the relevant business decisions shall be approved by more than two thirds of all directors which must include the
approval from at least one director designated from the Group and one director designated from Yishiteng.
Based on the impairment assessment performed by the Group, the recoverable amount of investment in Shijia
Y ouchang as at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023 was higher than the respective carrying
amount of the investment, and the directors of the Company accordingly considered that there was no impairment in
the carrying values of the Group’s investments in Shijia Y ouchang.
The directors of the Company considered that the joint venture was insignificant to the Group.
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, there were no material contingent liabilities
relating to the Group’s interests in the joint venture.
(b) Investments in associates
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of the year/period 81,818 51,881 59,494 76,279 76,279 61,313
Additions (i) 20,822 40,000 19,52 6–––
Disposals (ii) (6,905) (30,078) ––––
Share of loss of associates (7,087) (2,309) (2,741) (14,966) (4,529) (3,801)
Transfer to investment in
subsidiaries (Note 33) (36,767) –––––
At the end of the year/period 51,881 59,494 76,279 61,313 71,750 57,512
Impairment (iii) (1,226) (1,226) (1,226) (1,226) (1,226) (1,226)
50,655 58,268 75,053 60,087 70,524 56,286
APPENDIX I ACCOUNTANT’S REPORT
– I-99 –


--- page 651 ---
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, the associates of the Group, which were
accounted for using equity method, were as follows:
Proportion of equity interests
held by the Group
Company Name
Place of
incorporation
and operation Principal activities
Registered/
issued
capital
As at December 31,
As at
June 30,
As at
the date
of this
report2019 2020 2021 2022 2023
(’000)
Hainan Y ouyou
Coconut (ii)
PRC Operation of
unmanned
retail machine
RMB75,000 40.00% N/A N/A N/A N/A N/A
Chengdu Piaoxiang
Wine Shopkeeper
Technology Co., Ltd
PRC Software
development and
technical services
RMB5,000 30.00% 30.00% 30.00% N/A N/A N/A
Shenzhen Y ouyiku
Network Technology
Co., Ltd
PRC Internet and related
services
RMB5,000 25.00% N/A N/A N/A N/A N/A
Beijing Ugobao
Technology Co., Ltd
PRC Software
development and
technical services
RMB5,000 20.00% 20.00% 20.00% 20.00% 20.00% 20.00%
Shenzhen Jiejie
Umbrella
Technology Co., Ltd
(iii)
PRC Umbrella-sharing RMB1,000 33.33% 33.33% 33.33% 33.33% 33.33% 33.33%
JR V ending Pte. Ltd.
(i)
Singapore Operation of
unmanned
retail machine
SGD4,643 43.48% 43.48% 60.61% 60.61% 60.61% 60.61%
Hangzhou Penguin
Technology Co.,
Ltd. (i)
PRC Operation of
unmanned
retail machine
RMB14,556 N/A 14.12% 14.12% 14.12% 14.12% 14.12%
(i) In September 2019, the Group entered into an agreement with the shareholders of JR V ending Pte. Ltd
(“JR V ending”) to subscribe for 43.48% of its equity interest at a cash consideration of SGD4,000,000
(equivalent to approximately RMB20,822,000). JR V ending is accounted as an associate due to having
one board representative out of four as at December 31, 2019 and 2020. In March 2021, the Group made
an additional investment in JR V ending at a cash consideration of approximately SGD4,000,000
(equivalent to approximately RMB19,526,000). Upon completion of this additional investment, the
Group’s equity interest in JR V ending increased from 43.48% to 60.61%, and the Group had right to
assign two board representatives out of five, JR V ending was accounted for using the equity method as
an associate of the Group as at December 31, 2021.
In November 2020, the Group entered into an agreement with Hangzhou Penguin Technology Co., Ltd.
(“Hangzhou Penguin”) to subscribe for 14.12% of its equity interest at a cash consideration of
RMB40,000,000. It is accounted as an associate due to representation in the board of directors.
(ii) In July 2019, the Group disposed the equity interest of Wuhan Shenbang V ending Machine Co., Ltd, an
associate of the Group, at a cash consideration of RMB3,700,000, which caused a disposal loss of
RMB3,205,000.
In September 2020, Hainan Y ouyou Coconut was deregistered and the Group received the return of the
investment cost of RMB30,000,000.
In December 2020, Shenzhen Y ouyiku Network Technology Co., Ltd was deregistered and the Group
received the return of the investment cost of RMB78,000.
(iii) Prior to the Track Record Period, the management of the Group made full impairment of RMB1,226,000
on the investment in Shenzhen Jiejie Umbrella Technology Co., Ltd, due to the deterioration of
operation performance.
APPENDIX I ACCOUNTANT’S REPORT
– I-100 –


--- page 652 ---
The Group performed impairment assessments on all investments in associates except for the investment in
Shenzhen Jiejie Umbrella Technology Co., Ltd, which was fully impaired prior to the Track Record Period. Based
on the assessment, the recoverable amount of investments in associates as at December 31, 2019, 2020, 2021 and
2022 and June 30, 2023 were higher than the respective carrying amounts of the investments, and the directors of
the Company accordingly considered that there were no further impairment in the carrying values of the Group’s
investments in associates.
The directors of the Company considered that none of the associates was significant to the Group and the
aggregate financial information of the associates was disclosed as follows:
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Aggregate carrying amount of
individually immaterial associates 50,655 58,268 75,053 60,087 70,524 56,286
Aggregate amounts of the Group’s
share of:
Loss for the year/period (7,087) (2,309) (2,741) (14,966) (4,529) (3,801)
Total comprehensive income (7,087) (2,309) (2,741) (14,966) (4,529) (3,801)
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, there were no material contingent liabilities
relating to the Group’s interests in the associates.
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Investments in a joint venture 3,918 2,755 1,404 2,615 2,595
Investments in an associate 20,577 18,474 35,113 31,674 29,272
24,495 21,229 36,517 34,289 31,867
APPENDIX I ACCOUNTANT’S REPORT
– I-101 –


--- page 653 ---
21 FINANCIAL INSTRUMENTS BY CATEGORY
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at amortized cost
Trade receivables (Note 24) 330,388 161,174 120,333 54,693 64,144
Deposits and other receivables
(excluding deductible input
value-added tax) (Note 24) 527,184 283,522 177,462 89,227 92,996
Cash and cash equivalents and
restricted cash (Note 25) 222,347 191,015 174,886 130,913 272,611
1,079,919 635,711 472,681 274,833 429,751
Financial assets at FVPL (Note
22) 382,486 166,818 32,800 36,100 34,500
1,462,405 802,529 505,481 310,933 464,251
Financial liabilities
Financial liabilities at amortized
cost
Trade payables (Note 30) 261,297 168,523 250,093 214,666 234,585
Other payables and accruals
(excluding salaries payables,
other taxes payables) (Note
31) 209,856 179,778 164,967 115,836 157,089
Borrowings (Note 32) 31,000 90,844 60,980 70,000 89,050
Lease liabilities (Note 17) 408,949 238,558 118,568 59,677 44,240
911,102 677,703 594,608 460,179 524,964
The Group’s exposure to various risks associated with the financial instruments is discussed in Note 3. The
maximum exposure to credit risk at the end of each reporting period is the carrying amount of each class of financial
assets mentioned above.
APPENDIX I ACCOUNTANT’S REPORT
– I-102 –


--- page 654 ---
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at amortized cost
Trade receivables (Note 24) 549,209 642,549 906,274 1,275,951 1,417,588
Deposits and other receivables
(excluding deductible input
value-added tax) (Note 24) 1,617,183 1,128,773 771,621 611,852 565,877
Cash and cash equivalents
(Note 25) 80,692 45,491 39,103 1,982 11,228
2,247,084 1,816,813 1,716,998 1,889,785 1,994,693
Financial assets at FVPL (Note 22) 187,174 88,11 4–––
2,434,258 1,904,927 1,716,998 1,889,785 1,994,693
Financial liabilities
Financial liabilities at amortized
cost
Trade payables (Note 30) 89,159 6,862 79,339 136,652 153,964
Other payables and accruals
(excluding salaries payables,
other taxes payables) (Note 31) 523,153 270,213 193,072 225,611 250,916
Lease liabilities (Note 17) 335,819 188,501 76,848 15,292 8,059
948,131 465,576 349,259 377,555 412,939
22 FINANCIAL ASSETS AT FAIR V ALUE THROUGH PROFIT OR LOSS
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Investments in wealth management
products (a) 336,866 132,07 8–––
Investments in unlisted equity
securities (b) 45,620 34,740 32,800 36,100 34,500
382,486 166,818 32,800 36,100 34,500
Less: non-current portion
Investments in wealth management
products (a) 50,23 2––––
Investments in unlisted equity
securities (b) 45,620 34,740 32,800 36,100 34,500
286,634 132,07 8–––
APPENDIX I ACCOUNTANT’S REPORT
– I-103 –


--- page 655 ---
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Investments in wealth
management products (a) 186,584 88,11 4–––
Investments in unlisted equity
securities (b) 5 9 0––––
187,174 88,11 4–––
Less: non-current portion
Investments in unlisted equity
securities (b) 5 9 0––––
186,584 88,11 4–––
(a) Investment in wealth management products
Movements in investment in wealth management products were as follows:
The Group
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of the year/period 400,066 336,866 132,07 8–––
Acquisitions 2,475,000 423,000 240,000 70,000 40,000 20,000
Disposals (2,540,478) (632,407) (372,078) (70,000) (40,000) (20,000)
Interest received (5,135) (6,298) (1,242) (173) (44) (69)
Interest income 5,135 6,298 1,242 173 44 69
Changes in fair value (Note 9) 2,278 4,61 9––––
At the end of the year/period 336,866 132,07 8––––
The Company
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of
the year/period 200,032 186,584 88,11 4–––
Acquisitions 1,170,000 230,000 130,00 0–––
Disposals (1,185,032) (331,985) (218,114) – – –
Interest received (2,939) (916) (1,242) – – –
Interest income 2,939 916 1,24 2–––
Changes in fair value 1,584 3,51 5––––
At the end of the year/period 186,584 88,11 4––––
APPENDIX I ACCOUNTANT’S REPORT
– I-104 –


--- page 656 ---
The returns on all of these wealth management products are not guaranteed, and therefore the Group designated
them as financial assets at FVPL. Changes in fair value of these financial assets are recognized in “other gains” in
the consolidated statements of comprehensive income. The fair value estimation is disclosed in Note 3.3 for details.
(b) Investments in unlisted equity securities
The Group’s and the Company’s investments in unlisted equity securities included in financial assets at FVPL
represent the investment in certain privately owned companies. The fair value estimation is disclosed in Note 3.3 for
details.
Movements of investments in unlisted equity securities included in financial assets at FVPL were as follows:
The Group
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of
the year/period 15,750 45,620 34,740 32,800 32,800 36,100
Acquisitions 33,000 15,00 0––––
Disposals – (3,003) ––––
Changes in fair value (Note 9) (3,130) (22,877) (1,940) 3,300 3,400 (1,600)
At the end of the year/period 45,620 34,740 32,800 36,100 36,200 34,500
The Company
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of
the year/period 600 59 0––––
Changes in fair value (Note 9) (10) (590) ––––
At the end of the year/period 59 0–––––
APPENDIX I ACCOUNTANT’S REPORT
– I-105 –


--- page 657 ---
23 INVENTORIES
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Raw materials 55,838 57,865 61,294 52,753 43,987
Merchandise 95,516 75,135 117,730 92,366 83,025
Machines held for sale 82,334 73,605 53,509 43,253 37,545
Less: provision for impairment on
raw materials – (8,258) (8,258) (8,214) (8,211)
provision for impairment on
machines held
for sale (a) (2,530) (48,184) (37,496) (36,271) (29,512)
231,158 150,163 186,779 143,887 126,834
(a) During the year ended December 31, 2020, the Group made impairment on inventories related to
karaoke booths, orange juice machines, coconut juice machines and other vending machines held for
sale due to the out-break of COVID-19 epidemic.
The analysis of the amount of inventories recognized as cost and included in profit or loss of the Group is as
follows:
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cost of inventories sold (Note 7) 1,256,210 1,058,640 1,466,389 1,368,474 597,483 720,726
Provision of impairment 2,530 53,91 2––––
1,258,740 1,112,552 1,466,389 1,368,474 597,483 720,726
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Raw materials 46,590 49,221 53,952 44,877 41,325
Merchandise 1,392 1,672 1,558 1,544 22
Machines held for sale 57,798 55,338 48,226 39,422 29,479
Less: provision for impairment on
raw materials (a) – (6,085) (6,085) (6,085) (6,085)
provision for impairment on
machines held
for sale (a) (2,530) (34,271) (34,271) (34,246) (25,853)
103,250 65,875 63,380 45,512 38,888
APPENDIX I ACCOUNTANT’S REPORT
– I-106 –


--- page 658 ---
(a) During the year ended December 31, 2020, the Company made impairment on inventories related to
karaoke booths, orange juice machines, coconut juice machines and other vending machines held for
sale due to the out-break of COVID-19 epidemic.
24 TRADE RECEIV ABLES, PREPAYMENTS, DEPOSITS AND OTHER RECEIV ABLES
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 361,990 200,654 144,477 77,443 75,918
Less: Allowance for impairment
(Note 3.1(b)) (31,602) (39,480) (24,144) (22,750) (11,774)
Trade receivables – net (a) 330,388 161,174 120,333 54,693 64,144
Prepayments for purchase of
machines 68,578 96,642 100,105 167,106 196,143
Prepayments for POSs expenses 111,846 25,416 31,298 26,242 22,606
Prepayments for purchase of
inventories 56,368 55,801 65,589 38,802 26,525
Prepayments for listing expenses – – 1,548 2,497 4,423
Others 17,631 10,741 16,225 15,293 4,281
Prepayments 254,423 188,600 214,765 249,940 253,978
Advances to a shareholder (i) 246,010 46,43 5–––
Advances to and receivables from
business partners (ii) 80,017 103,055 78,594 59,268 68,723
Deposits (iii) 136,654 107,335 68,618 49,934 49,833
Advances to staffs 60,192 37,170 25,131 5,404 4,348
Deductible input value-added tax 97,611 66,416 34,505 26,453 23,438
Amount due from POS partners (iv) 19,814 39,663 71,289 36,135 26,152
Others 8,563 5,769 14,043 10,461 8,415
Less: Allowance for impairment
of deposits and other
receivables (b) (24,066) (55,905) (80,213) (71,975) (64,475)
Deposits and other receivables – net 624,795 349,938 211,967 115,680 116,434
Trade receivables, prepayments,
deposits and other receivables 1,209,606 699,712 547,065 420,313 434,556
Less: Non-current portion
– Trade receivables (26,754) (4,499) (49) – –
– Prepayment and other
receivables (79,317) (135,551) (123,285) (177,106) (196,143)
Current portion 1,103,535 559,662 423,731 243,207 238,413
APPENDIX I ACCOUNTANT’S REPORT
– I-107 –


--- page 659 ---
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables
– Amounts due from subsidiaries 545,661 643,512 907,416 1,279,347 1,431,078
– Amounts due from third parties 10,900 6,499 1,556 322 360
Total 556,561 650,011 908,972 1,279,669 1,431,438
Less: Allowance for impairment (7,352) (7,462) (2,698) (3,718) (13,850)
Trade receivables – net (a) 549,209 642,549 906,274 1,275,951 1,417,588
Prepayments for purchase of machines 52,865 90,302 97,436 167,105 196,088
Prepayments for purchase of inventories 13,315 209 30 – –
Prepayments for POSs expenses – 39 3,452 – –
Prepayments for listing expenses – – 1,548 2,497 4,423
Others 2,453 3,562 4,520 90 83
Prepayments 68,633 94,112 106,986 169,692 200,594
Amount due from subsidiaries 1,309,265 1,057,271 755,440 607,906 562,909
Advances to a shareholder (i) 246,010 46,435 – – –
Deposits (iii) 52,560 22,200 16,305 4,223 3,190
Advances to staffs 3,424 4,654 295 133 175
Deductible input value-added tax 48,732 37,953 8,156 13,127 11,197
Amount due from POS partners (iv) 8,547 1,251 375 129 130
Others 66 448 268 139 88
Less: Allowance for impairment of
deposits and other receivables (2,689) (3,486) (1,062) (678) (615)
Deposits and other receivables – net (b) 1,665,915 1,166,726 779,777 624,979 577,074
Trade receivables, prepayments, deposits
and other receivables 2,283,757 1,903,387 1,793,037 2,070,622 2,195,256
Less: Non-current portion
– Trade receivables (91) ––––
– Prepayment and other receivables (65,674) (127,979) (116,733) (167,105) (196,088)
Current portion 2,217,992 1,775,408 1,676,304 1,903,517 1,999,168
(i) During the years ended December 31, 2019, 2020 and 2021, the Company entered into agreements with
a shareholder to advance RMB408,410,000, RMB11,800,000 and RMB13,701,000 respectively to this
shareholder for the purpose of facilitating her purchase of the shares of the Company, which is
interest-free and repayable on demand, and received a repayment of RMB162,400,000, RMB2,225,000
and RMB58,368,000 respectively from this shareholder.
The balance of advances to this shareholder amounted to RMB246,010,000, RMB46,435,000 and nil,
and were pledged by numbers of approximated 14,318,000, 188,000 and nil shares of the Company held
by this shareholder respectively as at December 31, 2019, 2020 and 2021.
APPENDIX I ACCOUNTANT’S REPORT
– I-108 –


--- page 660 ---
During the years ended December 31, 2020 and 2021, for exercising the share options of the Company,
this shareholder transferred total 22,438,106 shares to the Participants or their employee shareholder
platforms and received the consideration of RMB2,225,000 and RMB19,000 respectively from the
Participants or their employee shareholder platforms, the remaining consideration of RMB209,150,000
and RMB1,768,000 respectively were subsequently settled by deducting the balance of advances to this
shareholder (Note 28).
(ii) As at December 31, 2019, 2020, 2021 and 2022, advances to and receivables from business partners
were interest-free, unsecured and repayable on demand. As at June 30, 2023, except for an advance to
an associate amounting to RMB9,000,000 was interest-bearing at interest rate of 2.25% and due within
one year, other advances to and receivables from business partners were interest-free, unsecured and
repayable on demand.
(iii) Deposits mainly include the deposits paid to the POSs providers for the vending machines according to
the relevant contracts, and the rental deposits for the rental of machines and others assets, which will
be refunded to the Group upon the completion of the relevant contracts.
(iv) Amount due from POS partners represent advanced costs for developing POSs paid by the Group, which
would be deducted from their share of income and typically to be settled on a monthly basis.
(a) Trade receivables
Trade receivables mainly arise from wholesales, sales of vending machines and advertising and system support
services and others. Customers are generally granted credit terms of 30 to 180 days. The aging analysis of trade
receivables based on merchandise and services delivery date or invoice date is as follows:
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
0 to 3 months 166,164 72,803 77,047 31,530 39,947
3 to 6 months 17,532 15,063 3,352 9,377 7,690
6 to 12 months 80,441 46,092 11,276 10,721 9,976
1 to 2 years 52,384 32,921 37,120 7,059 9,370
2 to 3 years 29,044 19,071 10,764 9,645 2,906
3 to 4 years 12,864 5,484 2,836 5,890 3,384
Over 4 years 3,561 9,220 2,082 3,221 2,645
361,990 200,654 144,477 77,443 75,918
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
0 to 3 months 109,219 129,949 186,445 294,509 290,129
3 to 6 months 27,649 175,945 220,670 327,258 249,405
6 to 12 months 63,358 342,613 500,301 657,579 594,640
1 to 2 years 351,543 266 52 6 296,941
2 to 3 years 3,554 – 266 52 6
3 to 4 years 1,238 – – 265 52
Over 4 years – 1,238 1,238 – 265
556,561 650,011 908,972 1,279,669 1,431,438
APPENDIX I ACCOUNTANT’S REPORT
– I-109 –


--- page 661 ---
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, trade receivables were mainly denominated
in RMB.
There is no concentration of credit risk with respect to trade receivables as the Group has a large number of
customers.
The Group applies the simplified approach to provide for ECL on trade receivables (Note 3.1).The movements
on the Group’s and Company’s allowance for impairment of trade receivables are disclosed in Note 3.1.
(b) Movements on the Group’s allowance for impairment of other receivables are as follows:
The Group
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of the year/period 26,840 24,066 55,905 80,213 80,213 71,975
Impairment provision – 36,260 24,308 4,660 5,364 –
Reversal of impairment provision (948) – – – (3,221) (1,529)
Write-off of uncollectable debts (1,826) (4,145) – (12,890) – (5,971)
Disposal of subsidiaries – (276) – (8) (8) –
At the end of the year/period 24,066 55,905 80,213 71,975 82,348 64,475
The Company
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
At the beginning of the year/period 3,281 2,689 3,486 1,062 1,062 678
Impairment provision – 1,342 – 1,079 1,208 –
Reversal of impairment provision (592) – (2,424) (1,463) (419) (63)
Write-off of impairment – (545) ––––
At the end of the year/period 2,689 3,486 1,062 678 1,851 615
APPENDIX I ACCOUNTANT’S REPORT
– I-110 –


--- page 662 ---
25 CASH AND CASH EQUIV ALENTS AND RESTRICTED CASH
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cash at bank and on hand (a) 222,347 191,015 174,886 130,913 272,611
Less: Restricted cash – – (2,500) (2,735) (3,126)
Cash and cash equivalents 222,347 191,015 172,386 128,178 269,485
As at December 31, 2021, RMB2,500,000 restricted deposits were held at bank as guarantee for letters of
credit. As at December 31, 2022, RMB2,500,000 restricted deposits were held at bank as guarantee for letters of
credit and RMB235,000 restricted deposits were held at bank as guarantee for a pending litigation. As at June 30,
2023, RMB2,500,000 restricted deposits were held at bank as guarantee for letters of credit and RMB626,000
restricted deposits were held at bank as guarantee for a pending litigation and due to other administrative reason.
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cash at bank and on hand (a) 80,692 45,491 39,103 1,982 11,228
(a) Cash at bank and on hand was denominated in the following currencies:
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
RMB 222,330 191,015 174,886 130,913 272,611
U S D 1 7––––
222,347 191,015 174,886 130,913 272,611
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
RMB 80,692 45,491 39,103 1,982 11,228
APPENDIX I ACCOUNTANT’S REPORT
– I-111 –


--- page 663 ---
26 SHARE CAPITAL
Number of
ordinary shares Share capital
RMB’000
Issued and fully paid
As at January 1, 2019 630,943,144 630,943
Issuance of new ordinary shares (a) 126,315,789 126,316
As at December 31, 2019 757,258,933 757,259
As at January 1, 2020 and December 31, 2020 757,258,933 757,259
As at January 1, 2021 and December 31, 2021 757,258,933 757,259
As at January 1, 2022 and December 31, 2022 757,258,933 757,259
As at January 1, 2023 and June 30, 2023 757,258,933 757,259
(a) In August 2019, the Company issued 126,315,789 new shares at the price of RMB9.5 per share to
Shanghai Y unxin V enture Capital Co., Ltd (“Shanghai Y unxin”), and raised a total subscription price of
approximately RMB1,200,000,000 in which RMB126,316,000 was included in the share capital, and
RMB1,069,242,000 was included in the capital reserves after deducting the issuance cost.
27 RESERVES
The Group
Share
premium
Exchange
reserves
Other
reserves
Total
reserves
RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2019 654,321 (3) (108,646) 545,672
Issuance of new ordinary shares
(Note 26) 1,069,242 – – 1,069,242
Acquisitions of non-controlling
interests (a) – – 886 886
Transfer of repurchased shares (b) – – 150,000 150,000
Currency translation differences –1–1
As at December 31, 2019 1,723,563 (2) 42,240 1,765,801
As at January 1, 2020 1,723,563 (2) 42,240 1,765,801
Share-based compensation expenses
(Note 28) – – 210,918 210,918
Exercise of the share options of the
Company (Note 28) – – (209,150) (209,150)
Currency translation differences –2–2
As at December 31, 2020 1,723,563 – 44,008 1,767,571
APPENDIX I ACCOUNTANT’S REPORT
– I-112 –


--- page 664 ---
Share
premium
Exchange
reserves
Other
reserves
Total
reserves
RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021 1,723,563 – 44,008 1,767,571
Share-based compensation expenses
due to equity transactions
(Note 14(f)) – – 1,500 1,500
Exercise of the share options of the
Company (Note 28) – – (1,768) (1,768)
Transaction with non-controlling
interests (c) – – (1,386) (1,386)
As at December 31, 2021 1,723,563 – 42,354 1,765,917
As at January 1, 2022 and
December 31, 2022 1,723,563 – 42,354 1,765,917
(Unaudited)
As at January 1, 2022 and
June 30, 2022 1,723,563 – 42,354 1,765,917
As at January 1, 2023 1,723,563 – 42,354 1,765,917
Share-based compensation
expenses (Note 28) – – 49,527 49,527
As at June 30, 2023 1,723,563 – 91,881 1,815,444
(a) In June 2019, the Group acquired 28.49% equity interests of a subsidiary, Tianjin Y ouchuangbao
Technology Co., Ltd, from a non-controlling interests. The difference of RMB886,000 between the
consideration and the carrying amount of the non-controlling interests was recognized as reserve.
(b) In November 2018, the shareholder meeting of the Company approved the Company delist on the
NEEQ. In December 2018, the Company paid RMB150,000,000 at the price of RMB9.5 per share for
the purpose of repurchase 15,798,474 shares from a then shareholder, Beijing Kaibao Investment Center
(L.P .) (“Beijing Kaibao”). In June 2019, the Company, Beijing Kaibao and a third party Chunhua
Rongshun (Tianjin) Equity Investment Fund Partnership (Limited Partnership) (“Chunhua capital”)
entered into an agreement, pursuant to which the above 15,798,474 shares were transferred to Chunhua
capital at the same price of RMB9.5 per share.
(c) In July 2021, the Group transferred 4% and 13% equity interest in Y oubao Online to Mr. Wu Mingjie
and Mr Y ang Ling respectively at a consideration of RMB340,000, of which RMB280,000 has been
received as of December 31, 2021. The difference of RMB1,386,000 between the consideration and the
carrying amount of the non-controlling interests was recognized as reserve.
APPENDIX I ACCOUNTANT’S REPORT
– I-113 –


--- page 665 ---
The Company
Share
premium Other reserves Total reserves
RMB’000 RMB’000 RMB’000
As at January 1, 2019 654,321 222,630 876,951
Issuance of new ordinary shares 1,069,242 – 1,069,242
Transfer of repurchased shares – 150,000 150,000
As at December 31, 2019 1,723,563 372,630 2,096,193
As at January 1, 2020 1,723,563 372,630 2,096,193
Exercise of the share options of the Company
(Note 28) – (209,150) (209,150)
Share-based compensation expenses (Note 28) – 210,918 210,918
As at December 31, 2020 1,723,563 374,398 2,097,961
As at January 1, 2021 1,723,563 374,398 2,097,961
Exercise of the share options of the Company
(Note 28) – (1,768) (1,768)
As at December 31, 2021 1,723,563 372,630 2,096,193
As at January 1, 2022 and December 31, 2022 1,723,563 372,630 2,096,193
(Unaudited)
As at January 1, 2022 and June 30, 2022 1,723,563 372,630 2,096,193
As at January 1, 2023 1,723,563 372,630 2,096,193
Share-based compensation expenses (Note 28) – 49,527 49,527
As at June 30, 2023 1,723,563 422,157 2,145,720
28 SHARE-BASED COMPENSATION
(a) Employee share option plan (“2020 Incentive Scheme”)
During the year ended December 31, 2020, the directors of the Company approved the establishment of an
employee share option plan (“2020 Incentive Scheme”) with the purpose of incentivizing the management members
and core employees (the “Participants”) of the Group to further promote the development and in recognition of their
contributions. Under the 2020 Incentive Scheme, the Group granted options to the Participants on January 23, 2020
(the “Grant Date”) to acquire up to 22,438,106 shares of the Company at a price of RMB0.10 per share.
The share options have single vesting term and are vested from the Grant Date over eleven months on the
condition that the Participants remain in service. The options are exercised at RMB0.1 within one month from
December 23, 2020.
Participation in the plan is at the board’s discretion and the options are granted under the plan for no
consideration and carry no dividend or voting rights. When exercised, each option is convertible into one ordinary
share. Total expenses amounted to RMB210,918,000 arising from these share-based payment transactions was
recognized as part of employee benefit expenses for the year ended December 31, 2020.
APPENDIX I ACCOUNTANT’S REPORT
– I-114 –


--- page 666 ---
Fair value of options granted
The valuation of share options granted was undertaken by Yinxin Appraisal Company Limited, an independent
qualified professional valuer. The valuer has appropriate professional qualifications and recent experience in the
valuation of similar share option plan. The fair value of the share of the Company for the share-based payment
transactions was determined by the reference on the recent transaction price of RMB9.5 per share when the Company
was invested by Shanghai Y unxin (Note 26). The price of RMB9.5 per share was a fair share price given Shanghai
Y unxin is an independent third party before the investment.
The assessed fair value at Grant Date of the options under the 2020 Incentive Scheme granted was RMB9.40
per option. The fair value of the options at the Grant Date is independently determined using an adjusted form of the
Binomial pricing model that takes into account the share price at grant date, the exercise price, the term of the
options, risk free interest rate for the term of the options, expected price volatility of the underlying share, expected
dividend yield, early exercise multiple, the impact of dilution (where material).
The model inputs for options granted under 2020 Incentive Scheme included:
(a) options are granted at the exercise price of RMB0.1 each option and vest after 11 months from the Grant
Date;
(b) share price at Grant Date: RMB9.5;
(c) exercise price: RMB0.1;
(d) Grant Date: January 23, 2020;
(e) expiry date: December 23, 2021;
(f) risk-free interest rate: 2.51%;
(g) expected price volatility of the Company’s shares: 49.57%;
(h) expected dividend yield: 0.00%;
(i) early exercise multiple: 2.8x.
The expected price volatility is based on the historic volatility (based on the remaining life of the options),
adjusted for any expected changes to future volatility due to publicly available information.
In December 2020, to exercise the options, the Company, a shareholder of the Company and the Participants
or their employee shareholder platforms entered into a series of equity transfer agreements pursuant to which the
shareholder transferred total 22,438,106 shares to Participants or their employee shareholder platforms at a
consideration of RMB9.5 per share, of which RMB0.1 per share would be paid by the Participants or their employee
shareholder platforms, while the remaining RMB9.4 per share was undertaken and settled by the Company, which
would be settled by deducting from the Company’s balance of advances to the shareholder. All of the 22,438,106
options were vested as at December 31, 2020, of which 22,250,000 options and 188,106 options were exercised and
same amount of shares were transferred to the Participants or their employee shareholder platforms during the years
ended December 31, 2020 and 2021 respectively. The Participants or their employee shareholder platform paid to the
shareholder of RMB2,225,000 and RMB19,000 during the years ended December 31, 2020 and 2021 respectively.
When the options were exercised, the amounts undertaken by the Company of RMB209,150,000 and RMB1,768,000
were recognized as reserves during the years ended December 31, 2020 and 2021 and total amounts of
RMB210,918,000 was settled by the Company’s balance of advances to the shareholder subsequently (Note 34).
(b) Employee share option plan (“Pre-IPO Incentive Scheme”)
During the six months ended June 30, 2023, the directors of the Company approved the establishment of an
employee share option plan (“Pre-IPO Incentive Scheme”) with the purpose of incentivizing the management
members and core employees (the “Participants”) of the Group to further promote the development and in recognition
of their contributions. Under the Pre-IPO Incentive Scheme, the Group granted options to the Participants on January
10, 2023 (the “Grant Date”) to acquire up to 37,750,000 shares of the Company at a price of RMB1.99 per share.
APPENDIX I ACCOUNTANT’S REPORT
– I-115 –


--- page 667 ---
Subject to satisfaction of the relevant conditions of exercise, the Options shall be exercisable after the Listing
Date in three batches, arrangement and valuation results set out as below:
Exercise period Duration
Proportion of
exercisable
Share Options
to the total
number of
Share Options
granted
Number
of share
options
Exercise
price
Fair value
per option
(in RMB) (in RMB)
Exercise period in
respect of the first
batch of the Options
For a period of 12 months
commencing on the
later of: (i) first trading
day after the expiration
of the 12-month period
from the date of grant
and (ii) the Listing
Date (the “First
Exercise Date”)
40% 15,100,000 1.99 4.24
Exercise period in
respect of the second
batch of the Options
Commencing on the first
trading day after the
expiration of the 12-
month period from the
First Exercise Date and
ending on the last
trading day of the 24-
month period from the
First Exercise Date
30% 11,325,000 1.99 4.38
Exercise period in
respect of the third
batch of the Options
Commencing on the first
trading day after the
expiration of the 24-
month period from the
First Exercise Date and
ending on the last
trading day of the 36-
month period from the
First Exercise Date
30% 11,325,000 1.99 4.49
The shares to be issued to the Participants pursuant to the exercise of the options are subject to below lock-up
restrictions where the Participants is a director, supervisor or a member of the senior management of the Company:
(i) the number of shares which may be transferred by the Participants each year during his/her tenure of office shall
not exceed 25% of the total number of the shares held by him/her, and (ii) the Participants shall not transfer any
shares held by him/her within (a) one year from the Listing Date and (b) six months after his/her resignation from
the positions held in the Group.
The fair value of the employee service received in exchange for the grant of equity instruments is recognized
as an expense. The total amount to be expensed is determined by reference to the fair value of the equity instruments
granted:
 including any market performance conditions (e.g., the entity’s share price);
 excluding the impact of any service and non-market performance vesting conditions (e.g., profitability,
sales growth targets and remaining an employee of the entity over a specified time period); and
 including the impact of any non-vesting conditions (e.g., the requirement for employees to save or
holdings shares for a specific period of time).
APPENDIX I ACCOUNTANT’S REPORT
– I-116 –


--- page 668 ---
The total expense is recognized over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of
options that are expected to vest based on the non-market vesting and service conditions. It recognizes the impact
of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.
Fair value of options granted
The valuation of share options granted was undertaken by Kroll (HK) Limited, an independent qualified
professional valuer. The valuer has appropriate professional qualifications and recent experience in the valuation of
similar share option plan.
The fair value of the options at the Grant Date is independently determined using the discounted cash flow
method. Significant judgement on parameters, such as risk free rate, dividend yield and expected volatility, are
required to be made by the directors in applying the binomial model, which are summarized as below.
The expected volatility, measured as the standard deviation of expected share price returns, is determined
based on the historical share price movement of comparable companies.
The model inputs for options granted under the Pre-IPO Incentive Scheme included:
(a) exercise price of the option: RMB1.99;
(b) grant date: January 10, 2023;
(c) number of options granted: 37,750,000 shares (15,100,000 shares are the first batch, 11,325,000 shares
are the second batch and 11,325,000 shares are the third batch);
(d) vesting date: the later of January 10, 2024 and the Listing Date for the first batch, and the first trading
day after the expiration of the 12-month period and 24-month period from the First Exercise Date for
the second and third batch respectively;
(e) expiry date: 12 months after vesting date of each batch;
(f) life of the option: 2, 3 and 4 years for the first, second and third batch respectively;
(g) risk-free interest rate: 2.3%-2.6%;
(h) dividend yield: 0.0%;
(i) expected volatility: 45.0%-50.0%.
29 DEFERRED INCOME TAX
The analysis of deferred income tax assets and deferred income tax liabilities is as follows:
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Deferred income tax assets:
– To be recovered after more
than 12 months 26,354 23,673 16,865 17,097 22,213
– To be recovered within 12
months 23,814 18,673 24,896 19,568 18,282
Net deferred income tax assets 50,168 42,346 41,761 36,665 40,495
APPENDIX I ACCOUNTANT’S REPORT
– I-117 –


--- page 669 ---
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Deferred income tax liabilities:
– To be recovered after more
than 12 months (1,715) – (1,925) (2,050) (2,450)
– To be recovered within 12
months (131) (1,596) – – –
Net deferred income tax liabilities (1,846) (1,596) (1,925) (2,050) (2,450)
The movement in deferred income tax assets and liabilities during the Track Record Period, without taking into
consideration the offsetting of balances within the same tax jurisdiction, is as follows:
As at
January 1,
2019
Credited/
(Charged) to
profit or loss
As at
December 31,
2019
RMB’000 RMB’000 RMB’000
The balance comprises temporary differences
attributable to:
Deferred income tax assets
– Impairment provisions 21,992 (2,379) 19,613
– Unrealized profit resulting from intragroup
transactions 19,405 1,783 21,188
– Tax losses 2,421 4,701 7,122
– Lease liabilities 5,348 10,728 16,076
– Accumulated fair value loss of financial
assets at FVPL 235 1,365 1,600
– Others – 183 183
49,401 16,381 65,782
Set-off of deferred tax assets pursuant to
set-off provisions (5,219) (10,395) (15,614)
Net deferred tax assets 44,182 5,986 50,168
Deferred income tax liabilities
– Right-of-use assets (5,219) (10,395) (15,614)
– Financial assets at FVPL (27) (1,819) (1,846)
(5,246) (12,214) (17,460)
Set-off of deferred tax assets pursuant to
set-off provisions (5,219) (10,395) (15,614)
Net deferred tax liabilities (27) (1,819) (1,846)
APPENDIX I ACCOUNTANT’S REPORT
– I-118 –


--- page 670 ---
As at
January 1,
2020
Credited/
(Charged) to
profit or loss
As at
December 31,
2020
RMB’000 RMB’000 RMB’000
The balance comprises temporary differences
attributable to:
Deferred income tax assets
– Impairment provisions 19,613 (4,782) 14,831
– Unrealized profit resulting from intragroup
transactions 21,188 (2,365) 18,823
– Tax losses 7,122 465 7,587
– Lease liabilities 16,076 (3,562) 12,514
– Accumulated fair value loss of financial
assets at FVPL 1,600 (1,310) 290
– Others 183 (183) –
65,782 (11,737) 54,045
Set-off of deferred tax assets pursuant to
set-off provisions (15,614) 3,915 (11,699)
Net deferred tax assets 50,168 (7,822) 42,346
Deferred income tax liabilities
– Right-of-use assets (15,614) 3,915 (11,699)
– Financial assets at FVPL (1,846) 250 (1,596)
(17,460) 4,165 (13,295)
Set-off of deferred tax assets pursuant to
set-off provisions (15,614) 3,915 (11,699)
Net deferred tax liabilities (1,846) 250 (1,596)
As at
January 1,
2021
Credited/
(Charged) to
profit or loss
As at
December 31,
2021
RMB’000 RMB’000 RMB’000
The balance comprises temporary differences
attributable to:
Deferred income tax assets
– Impairment provisions 14,831 2,115 16,946
– Unrealized profit resulting from intragroup
transactions 18,823 595 19,418
– Tax losses 7,587 (4,605) 2,982
– Lease liabilities 12,514 (2,061) 10,453
– Accumulated fair value loss of financial
assets at FVPL 290 1,185 1,475
54,045 (2,771) 51,274
Set-off of deferred tax assets pursuant to
set-off provisions (11,699) 2,186 (9,513)
APPENDIX I ACCOUNTANT’S REPORT
– I-119 –


--- page 671 ---
As at
January 1,
2021
Credited/
(Charged) to
profit or loss
As at
December 31,
2021
RMB’000 RMB’000 RMB’000
Net deferred tax assets 42,346 (585) 41,761
Deferred income tax liabilities
– Right-of-use assets (11,699) 2,186 (9,513)
– Financial assets at FVPL (1,596) (329) (1,925)
(13,295) 1,857 (11,438)
Set-off of deferred tax assets pursuant to
set-off provisions (11,699) 2,186 (9,513)
Net deferred tax liabilities (1,596) (329) (1,925)
As at
January 1,
2022
Credited/
(Charged) to
profit or loss
As at
December 31,
2022
RMB’000 RMB’000 RMB’000
The balance comprises temporary differences
attributable to:
Deferred income tax assets
– Impairment provisions 16,946 (2,105) 14,841
– Unrealized profit resulting from intragroup
transactions 19,418 (2,057) 17,361
– Tax losses 2,982 (142) 2,840
– Lease liabilities 10,453 649 11,102
– Accumulated fair value loss of financial assets
at FVPL 1,475 (850) 625
51,274 (4,505) 46,769
Set-off of deferred tax assets pursuant to
set-off provisions (9,513) (591) (10,104)
Net deferred tax assets 41,761 (5,096) 36,665
Deferred income tax liabilities
– Right-of-use assets (9,513) (591) (10,104)
– Financial assets at FVPL (1,925) (125) (2,050)
(11,438) (716) (12,154)
Set-off of deferred tax assets pursuant to
set-off provisions (9,513) (591) (10,104)
Net deferred tax liabilities (1,925) (125) (2,050)
APPENDIX I ACCOUNTANT’S REPORT
– I-120 –


--- page 672 ---
As at
January 1,
2022
Credited/
(Charged) to
profit or loss
As at
June 30,
2022
RMB’000 RMB’000 RMB’000
(Unaudited)
The balance comprises temporary differences
attributable to:
Deferred income tax assets
– Impairment provisions 16,946 (1,454) 15,492
– Unrealized profit resulting from intragroup
transactions 19,418 (871) 18,547
– Tax losses 2,982 384 3,366
– Lease liabilities 10,453 690 11,143
– Accumulated fair value loss of financial assets
at FVPL 1,475 (575) 900
51,274 (1,826) 49,448
Set-off of deferred tax assets pursuant to
set-off provisions (9,513) (662) (10,175)
Net deferred tax assets 41,761 (2,488) 39,273
Deferred income tax liabilities
– Right-of-use assets (9,513) (662) (10,175)
– Financial assets at FVPL (1,925) (425) (2,350)
(11,438) (1,087) (12,525)
Set-off of deferred tax assets pursuant to
set-off provisions (9,513) (662) (10,175)
Net deferred tax liabilities (1,925) (425) (2,350)
As at
January 1,
2023
Credited/
(Charged) to
profit or loss
As at
June 30,
2023
RMB’000 RMB’000 RMB’000
The balance comprises temporary differences
attributable to:
Deferred income tax assets
– Impairment provisions 14,841 (464) 14,377
– Unrealized profit resulting from intragroup
transactions 17,361 3,452 20,813
– Tax losses 2,840 57 2,897
– Lease liabilities 11,102 (2,053) 9,049
APPENDIX I ACCOUNTANT’S REPORT
– I-121 –


--- page 673 ---
As at
January 1,
2023
Credited/
(Charged) to
profit or loss
As at
June 30,
2023
RMB’000 RMB’000 RMB’000
– Accumulated fair value loss of financial assets
at FVPL 625 800 1,425
46,769 1,792 48,561
Set-off of deferred tax assets pursuant to
set-off provisions (10,104) 2,038 (8,066)
Net deferred tax assets 36,665 3,830 40,495
Deferred income tax liabilities
– Right-of-use assets (10,104) 2,038 (8,066)
– Financial assets at FVPL (2,050) (400) (2,450)
(12,154) 1,638 (10,516)
Set-off of deferred tax assets pursuant to
set-off provisions (10,104) 2,038 (8,066)
Net deferred tax liabilities (2,050) (400) (2,450)
Deferred income tax assets are recognized for tax loss carry-forwards to the extent that the recognition of the
related tax benefits through the future taxable profits is probable. Management will continue to assess the recognition
of deferred income tax assets in future reporting periods. The Group did not recognize deferred income tax assets of
RMB21,740,000, RMB172,666,000, RMB218,301,000, RMB265,051,000 and RMB283,371,000, as at December 31,
2019, 2020, 2021 and 2022 and June 30, 2023 in respect of tax losses amounting to RMB86,959,000,
RMB690,664,000, RMB873,206,000, RMB1,130,352,000 and RMB1,204,935,000 as at December 31, 2019, 2020,
2021 and 2022 and June 30, 2023, which can be carried forward to offset against future taxable income, all of which
will expire in 2023 to 2028 respectively.
30 TRADE PAYABLES
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 261,297 168,523 250,093 214,666 234,585
APPENDIX I ACCOUNTANT’S REPORT
– I-122 –


--- page 674 ---
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, the aging analysis of the trade
payables based on invoice date were as follows:
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
0 to 3 months 195,289 112,349 198,278 196,264 214,136
3 to 6 months 20,447 19,551 2,097 10,938 490
6 to 12 months 37,195 27,654 44,648 1,494 14,633
1 to 2 years 5,108 4,544 938 4,543 3,915
2 to 3 years 1,388 1,461 891 623 860
Over 3 years 1,870 2,964 3,241 804 551
261,297 168,523 250,093 214,666 234,585
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 89,159 6,862 79,339 136,652 153,964
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, the aging analysis of the trade payables
based on invoice date were are follows:
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
0 to 3 months 78,581 232 64,750 73,494 91,613
3 to 6 months 2,534 51 936 25,503 12,220
6 to 12 months 6,483 5,018 12,586 11,267 22,747
1 to 2 years 3 – 203 26,152 20,102
2 to 3 years – 3 – 236 7,282
Over 3 years 1,558 1,558 864 – –
89,159 6,862 79,339 136,652 153,964
APPENDIX I ACCOUNTANT’S REPORT
– I-123 –


--- page 675 ---
31 OTHER PAYABLES AND ACCRUALS
The Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Accrued and payments of POSs
operation expenses 167,872 139,613 112,719 55,932 97,140
Deposits (a) 26,030 30,139 31,966 31,007 31,484
Other taxes payables 12,616 10,040 9,612 9,683 28,672
Salaries, wages, and bonuses
payables 26,665 28,704 35,814 33,956 32,138
Listing expenses payables – – 5,738 11,811 9,432
Others 15,954 10,026 14,544 17,086 19,033
249,137 218,522 210,393 159,475 217,899
Less: Non-current portion
– Others (1,279) (451) (7) – –
247,858 218,071 210,386 159,475 217,899
(a) The amounts of deposits mainly represent various deposits received from POS partners in relation to
vending machine business cooperation.
The Company
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Amount due to subsidiaries 516,400 266,593 186,777 211,797 238,274
Other taxes payables 175 123 156 71 3,745
Salaries, wages and bonuses
payables 797 1,020 384 519 479
Listing expenses payables – – 5,738 11,811 9,432
Others 6,753 3,620 557 2,003 3,210
524,125 271,356 193,612 226,201 255,140
Less: Non-current portion
– Others (2,121) ––––
522,004 271,356 193,612 226,201 255,140
APPENDIX I ACCOUNTANT’S REPORT
– I-124 –


--- page 676 ---
32 BORROWINGS
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Bank borrowings
Secured with guarantee (a) 31,000 90,844 40,980 50,000 69,050
Other Borrowings
Secured with guarantee (a) – – 20,000 20,000 20,000
31,000 90,844 60,980 70,000 89,050
(a) These loans were guaranteed by:
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Mr. Wang Bin and Beijing
Shouchuang Financing Guarantee
Co., Ltd. (jointly) 30,00 0––––
Mr. Wang Bin and Shenzhen
Shendan Zengxin Financing
Guarantee Co., Ltd. (jointly) – – 20,000 20,000 20,000
Mr. Wang Bin, the Company and
subsidiaries within the Group
(jointly) 1,000 16,000 40,000 50,000 69,050
Mr. Wang Bin and the Company
(jointly) – 74,84 4–––
Mr. Y ang Ling – – 980 – –
31,000 90,844 60,980 70,000 89,050
The guarantee provided by Mr. Wang Bin is expected to be released prior to Listing.
As at December 31, 2019, 2020, 2021 and 2022 and June 30, 2023, the weighted average interest rate of
borrowings was 5.2475%, 4.7699%, 4.6758%, 5.6691% and 5.5795% respectively. The fair values of the respective
borrowings approximated their carrying amounts. All the carrying amounts of the borrowings were denominated in
RMB.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 677 ---
33 SIGNIFICANT BUSINESS COMBINATION
Before December 2019, the Group held 24.32% equity interest in Shenzhen Y ouka which accounted as an
associate. In December 2019, the Group acquired another 46% equity interest of Shenzhen Y ouka from other
shareholders. As a result, the Group obtained control on Shenzhen Y ouka. The transaction was treated as a business
combination. The completion date of this transaction is December 19, 2019 as the Group actually obtained the control
right of Shenzhen Y ouka.
Details of the consideration and the financial information of Shenzhen Y ouka on the acquisition date are
summarized as follows:
RMB’000
Consideration:
Cash paid 115,000
Fair value of the investment in Shenzhen Y ouka held by the Group before
business combination 53,513
Total 168,513
Total recognized amounts of identifiable assets acquired and liabilities assumed:
RMB’000
Cash and cash equivalents 2,634
Trade receivables 5,852
Prepayments, deposits and other receivables 26,369
Inventories 1,364
Property and equipment 22,593
Trade payables (13,690)
Other payables and accruals (44,887)
Non-controlling interests (70)
Net identifiable assets acquired 165
Goodwill 168,348
The Group has chosen the proportionate share of net assets method to recognize the non-controlling interests.
The goodwill is attributable to the entrance of the freshly brewed beverage vending machine business market
through Shenzhen Y ouka. It was subsequently impaired in the year ended December 31, 2020 (Note 18) and the
amount is not deductible for tax purposes.
The Group’s revenue for the year would be increased by not more than 5% and results for the year would not
be materially different should this business combination has occurred on January 1, 2019.
The related transaction costs of this business combination were not material to the Group’s consolidated
financial statements.
Upon completion of the transaction, the difference of RMB17,019,000 between the fair value and the carrying
amount of investment in Shenzhen Y ouka was recognized in other gains.
APPENDIX I ACCOUNTANT’S REPORT
– I-126 –


--- page 678 ---
34 CASH FLOW INFORMATION
(a) Cash generated from operations
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit/(Loss) before income tax 43,845 (1,171,524) (184,615) (272,256) (122,462) (146,645)
Adjustments for:
Depreciation of right-of-use
assets 101,769 118,539 100,329 97,960 51,804 47,717
Depreciation of property and
equipment 101,900 158,130 102,035 144,070 70,525 74,120
Amortization of intangible
assets 13,167 17,545 17,423 15,842 8,045 7,675
Net impairment losses on
financial assets 10,858 58,389 28,224 9,264 6,904 842
Impairment of non-financial
assets 9,832 414,037 1,449 – – –
Share of results of investments
accounted for using the
equity method 7,169 3,472 4,092 15,255 4,786 3,821
Net gains on disposal of
investments accounted for
using the equity method (14,141) –––––
Fair value losses/(gains) on
financial assets at FVPL 852 18,258 1,940 (3,300) (3,400) 1,600
Net losses/(gains) on disposals
of property and equipment 2,059 7,216 5,418 5,408 421 395
Net (gains)/losses on disposal of
subsidiaries (Note 14(e)) – (5,603) 2,315 199 (151) –
Finance costs-net 58,688 32,344 13,517 13,331 7,260 4,584
Interest received from bank
deposits (1,885) (1,327) (1,829) (1,681) (631) (700)
Interest income from wealth
management products (5,135) (6,298) (1,242) (173) (44) (69)
Share-based compensation – 210,918 1,500 – – 49,527
Change in working capital:
Decrease/(increase) in trade
receivables 15,112 147,085 36,925 61,036 22,651 (11,822)
Decrease in prepayments and
deposits and other receivables 238,522 80,653 9,515 105,129 93,918 19,891
(Increase)/decrease in
inventories (50,550) 27,083 (26,874) 44,161 37,100 23,815
Increase/(decrease) in trade
payables 89,097 (92,774) 81,570 (25,843) (13,807) 26,273
(Decrease)/increase in contract
liabilities (13,411) (4,326) (1,829) (1,096) 200 30,079
Increase/(decrease) in other
payables and accruals 27,030 (30,615) (8,129) (50,918) (7,238) 58,424
Increase in restricted cash – – (2,500) (235) (185) (391)
Cash generated from/(used in)
operations 634,778 (18,798) 179,234 156,153 155,696 189,136
APPENDIX I ACCOUNTANT’S REPORT
– I-127 –


--- page 679 ---
(b) Non-cash investing and financing activities
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Settlement of the balance of
advances to a shareholder upon
the exercise of share options of
the Company (Note 28) – 209,150 1,76 8–––
Non-cash investing and financing activities for acquisition of right-of-use assets is disclosed in Note 17.
(c) Proceeds from disposal of property and equipment
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Net book amount (Note 16) 118,014 34,422 23,347 27,551 6,511 8,977
Net losses on disposal of
property and equipment (Note 9) (2,059) (7,216) (5,418) (5,408) (421) (395)
Proceeds from disposal of
property and equipment 115,955 27,206 17,929 22,143 6,090 8,582
(d) Net debt/(cash) reconciliation
This section sets out an analysis of net debt/(cash) and the movements in net debt for the years ended
December 31, 2019, 2020, 2021 and 2022 and the six months ended June 30, 2022 and 2023 presented.
As at December 31,
As at
June 30,
Net debt/(cash) 2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Borrowings 31,000 90,844 60,980 70,000 89,050
Lease liabilities 408,949 238,558 118,568 59,677 44,240
Cash and cash equivalents (222,347) (191,015) (172,386) (128,178) (269,485)
Restricted cash – – (2,500) (2,735) (3,126)
Net debt/(cash) 217,602 138,387 4,662 (1,236) (139,321)
APPENDIX I ACCOUNTANT’S REPORT
– I-128 –


--- page 680 ---
Cash and
cash
equivalent
Restricted
cash Borrowings
Lease
liabilities
Borrowing
from non-
financial
institutions Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Net debt as at
January 1, 2019 (305,394) – 47,500 820,558 700,000 1,262,664
Cash flows 83,047 – (16,500) (584,080) (700,000) (1,217,533)
New leases – – – 136,301 – 136,301
Interest expenses as
the lessee – – – 36,170 – 36,170
Net debt as at
December 31, 2019 (222,347) – 31,000 408,949 – 217,602
Net debt as at
January 1, 2020 (222,347) – 31,000 408,949 – 217,602
Cash flows 31,332 – 59,844 (245,940) – (154,764)
New leases – – – 45,666 – 45,666
Interest expenses as
the lessee – – – 29,883 – 29,883
Net debt as at
December 31, 2020 (191,015) – 90,844 238,558 – 138,387
Net debt as at
January 1, 2021 (191,015) – 90,844 238,558 – 138,387
Cash flows 18,629 (2,500) (29,864) (144,176) – (157,911)
New leases – – – 13,567 – 13,567
Interest expenses as
the lessee – – – 10,619 – 10,619
Net debt as at
December 31, 2021 (172,386) (2,500) 60,980 118,568 – 4,662
Net debt as at
January 1, 2022 (172,386) (2,500) 60,980 118,568 – 4,662
Cash flows 44,208 (235) 9,020 (93,519) – (40,526)
New leases – – – 27,543 – 27,543
Interest expenses as
the lessee – – – 7,085 – 7,085
Net cash as at
December 31, 2022 (128,178) (2,735) 70,000 59,677 – (1,236)
(Unaudited)
Net debt as at
January 1, 2022 (172,386) (2,500) 60,980 118,568 – 4,662
Cash flows (52,376) (185) 39,020 (47,862) – (61,403)
New leases – – – 15,448 – 15,448
Interest expenses as
the lessee – – – 4,242 – 4,242
Net cash as at June
30, 2022 (224,762) (2,685) 100,000 90,396 – (37,051)
Net cash as at
January 1, 2023 (128,178) (2,735) 70,000 59,677 - (1,236)
Cash flows (141,307) (391) 19,050 (23,195) – (145,843)
New leases – – – 5,785 – 5,785
Interest expenses as
the lessee – – – 1,973 – 1,973
Net cash as at June
30, 2023 (269,485) (3,126) 89,050 44,240 – (139,321)
APPENDIX I ACCOUNTANT’S REPORT
– I-129 –


--- page 681 ---
35 CAPITAL COMMITMENTS
Significant capital expenditure contracted for at the end of the reporting period but not recognized as liabilities
is as follows:
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Equity investments 30,000 19,52 6–––
In November 2019, the Group entered an agreement with Xinyu Lingyun Investment Management Co., Ltd.
(“Lingyun Investment”) to acquire 22.75% equity interest of Shenzhen Y unchong Bar Technology Co., Ltd from
Lingyun Investment at the consideration of RMB33,000,000. As at December 31, 2019, the Group has paid
RMB3,000,000 and the remaining RMB30,000,000 was not paid. In October 2020, as agreed by the Group and
Lingyun Investment, the transaction was canceled and Lingyun Investment returned the paid consideration of
RMB3,000,000.
In April 2020, the Group entered an agreement with JR Group Holdings Pte. Ltd to invest SGD4,000,000
(equivalent to RMB19,526,000) to JR V ending. The investment was paid during the year ended December 31, 2021.
36 SIGNIFICANT RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability, directly or indirectly, control the other party
or exercise significant influence over the other party in making financial and operation decisions. Parties are also
considered to be related if they are subject to common control. Members of key management and their close family
members of the Group are also considered as related parties.
Save as disclosed in Note 10 and 20 about the chairman, directors, associate and joint ventures, the directors
of the Company are of the view that the following parties were related parties that had transactions or balances with
the Group for the years ended December 31, 2019, 2020 and 2021 and 2022 and the six months ended June 30, 2022
and 2023:
(a) Names and relationships with related parties
Company Relationship
Alipay.com Co., Ltd. (“Alipay China”) Entity controlled by the same group of a
shareholder, which has significant influence on
the Group
Ant Future (Hainan) Information Technology Co.,
Ltd. (formerly known as Ant Financial Services
(Hainan) Digital Technology Co., Ltd) (“Ant
Hainan”)
Entity controlled by the same group of a
shareholder, which has significant influence on
the Group
Hangzhou Huanxu Information Technology Co.,
Ltd. (“Hangzhou Huanxu”)
Entity controlled by the same group of a
shareholder, which has significant influence on
the Group
APPENDIX I ACCOUNTANT’S REPORT
– I-130 –


--- page 682 ---
(b) Significant Related party transactions
All the transactions with related parties below were on terms mutually agreed by both parties.
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Sales of goods
Associates of the Group 2,365 7,099 7,576 6,664 2,979 2,837
Provision of services
Alipay China 89,358 30,288 34,957 29,930 23,939 25
Associates of the Group 735 2,208 1,489 2,579 1,341 496
Joint ventures of the Group – 15 3––––
Hangzhou Huanxu – – – 786 445
Ant Hainan – – – 25 25 –
90,093 32,649 36,446 33,320 25,305 966
Purchase of goods
Associates of the Group 2,59 5–––––
Ant Hainan – – 12,372 – – –
Joint ventures of the Group –––––2
2,595 – 12,372 – – 2
Purchase of services
Alipay China 3,378 9,262 11,996 11,638 5,022 6,091
Interest income
Associates of the Group ––––– 5 0 2
(c) Key management personnel compensation
Y ear ended December 31,
Six months ended
June 30,
2019 2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, wages, and bonuses 5,584 3,955 5,867 5,038 2,675 2,439
Pension costs – defined contribution
plans 220 69 402 398 196 199
Other social security costs, housing
benefits and other employee
benefits 376 251 402 395 200 200
Share-based compensation – 163,53 4––– 41,458
6,180 167,809 6,671 5,831 3,071 44,296
APPENDIX I ACCOUNTANT’S REPORT
– I-131 –


--- page 683 ---
(d) Provide guarantees to the Group
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Mr. Wang Bin
– Borrowings 31,000 90,844 60,000 70,000 89,050
– Leasing liabilities 393,135 209,474 57,217 6,505 1,598
424,135 300,318 117,217 76,505 90,648
The guarantee provided by Mr. Wang Bin is expected to be released prior to Listing.
(e) Significant year end balances with related parties
All the balances with related parties below were unsecured and repayable within one year.
As at December 31,
As at
June 30,
2019 2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade in nature and included in:
Trade receivables
Alipay China 20,355 739 27,268 9 –
Associates of the Group 2,777 9,962 3,532 4,060 4,989
23,132 10,701 30,800 4,069 4,989
Other receivables
Alipay China 1 46 46 – –
Associates of the Group – 700 703 700 700
1 746 749 700 700
Trade payables
Ant Hainan – – 8,178 9,786 9,786
Contract liabilities
Hangzhou Huanxu (i) –––– 27,833
Other payables
Associates of the Group 957 6,024 – 157 770
Non-trade in nature and
included in:
Prepayments
Associates of the Group (ii) – – 10,000 10,000 –
Other receivables
Associates of the Group (ii) –––– 9,455
APPENDIX I ACCOUNTANT’S REPORT
– I-132 –


--- page 684 ---
(i) The balance represents advancement from Hangzhou Huanxu for advertising and promotion of its
payment service products (for example, biometric authentication payment services and merchandise
recognition services) on our vending machines.
(ii) The balance represents prepayment made to Hangzhou Penguin to subscribe for its further 5.88% equity
interest. As relevant closing conditions under the investment agreement had not been met, the Group
entered into a supplemental agreement to the investment agreement with Hangzhou Penguin on June 6,
2023, pursuant to which the parties have agreed not to proceed with closing under the investment
agreement and Hangzhou Penguin shall repay the prepayments of RMB10.0 million, together with an
utilisation fee calculated with reference to the bank deposit interest rate for the same period, in six
instalments based on the schedule agreed by both parties before December 31, 2023. As a result, the
balance and accrued interest was reclassified to other receivables as at June 30, 2023.
37 CONTINGENT LIABILITIES
The Group had no material contingent liabilities outstanding as at December 31, 2019, 2020, 2021 and, 2022
and June 30, 2023.
38 SUBSEQUENT EVENTS
There is no material subsequent event happened after June 30, 2023.
III. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of the
companies now comprising the Group in respect of any period subsequent to June 30, 2023 and
up to the date of this report. No dividend or distribution has been declared or made by the
Company or other companies now comprising the Group in respect of any period subsequent
to June 30, 2023.
APPENDIX I ACCOUNTANT’S REPORT
– I-133 –


--- page 685 ---
The information set out in this Appendix does not form part of the Accountant’ s Report
from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, the reporting
accountant of the Company, as set out in Appendix I in this prospectus, and is included herein
for illustrative purposes only.
The unaudited pro forma financial information should be read in conjunction with the
section headed “Financial Information” in this prospectus and the Accountant’ s Report set out
in Appendix I to this prospectus.
A. UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE
ASSETS
The following unaudited pro forma adjusted consolidated net tangible assets prepared in
accordance with Rule 4.29 of the Listing Rules are set out below to illustrate the effect of the
Global Offering on the consolidated net tangible assets of the Group attributable to the owners
of the Company as at June 30, 2023 as if the Global Offering had taken place on that date.
The unaudited pro forma adjusted consolidated net tangible assets has been prepared for
illustrative purposes only and, because of its hypothetical nature, it may not give a true picture
of the consolidated net tangible assets of the Group had the Global Offering been completed
as at June 30, 2023 or at any future dates. The unaudited pro forma statement of adjusted
consolidated net tangible assets of the Group is based on the consolidated net tangible assets
of the Group attributable to the owners of the Company as at June 30, 2023 as set out in the
Accountant’s Report of the Company, the text of which is set out in Appendix I to this
prospectus, and adjusted as described below.
Audited
consolidated net
tangible assets
of the Group
attributable to
owners of the
Company as at
June 30, 2023
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
the owners of the
Company as at
June 30, 2023
Unaudited
pro forma adjusted
consolidated
net tangible assets
per Share
(Note 1) (Note 2) (Note 3) (Note 4)
RMB’000 RMB’000 RMB’000 RMB HK$
Based on an Offer Price of
HK$9.4 per share 782,324 168,402 950,726 1.22 1.33
Based on an Offer Price of
HK$11.4 per share 782,324 208,213 995,537 1.27 1.38
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 686 ---
Notes:
(1) The audited consolidated net tangible assets of the Group attributable to the owners of the Company as
at June 30, 2023 is extracted from the Accountant’s Report set out in Appendix I to this prospectus,
which is based on the audited consolidated net assets of the Group attributable to the owners of the
Company as at June 30, 2023 of RMB877,530,000 with an adjustment for the intangible assets of
RMB95,206,000.
(2) The estimated net proceeds from the Global Offering are based on the indicative Offer Price of HKD9.4
and HKD11.4 per share, respectively, after deduction of the underwriting fees and other related expenses
(excluding listing expenses of approximately RMB45,069,000 which have been accounted for during the
Track Record Period) paid/payable by the Company takes no account of any Shares which may be issued
upon the exercise of options granted under the Pre-IPO Incentive Scheme or any Shares which may be
issued or repurchased by the Company pursuant to the general mandates.
(3) The unaudited pro forma adjusted consolidated net tangible assets per Share is arrived at after the
adjustments referred to in the preceding paragraphs and on the basis that 779,835,433 Shares were in
issue assuming that the Global Offering have been completed on June 30, 2023 but takes no account of
any Shares which may be issued upon the exercise of options granted under the Pre-IPO Incentive
Scheme or any Shares which may be issued or repurchased by the Company pursuant to the general
mandates.
During the six months ended June 30, 2023, the Group granted share options to 27 grantees in
accordance with the Pre-IPO Incentive Scheme to subscribe for a total of 37,750,000 shares of the
Company at a price of RMB1.99 per share. The grantees will be entitled to exercise the share options
by batch after the Global Offering subject to satisfaction of the relevant conditions of exercise.
However, had such 37,750,000 shares issued per the exercise of the share options granted been taken
into account, such that 817,585,433 shares are in issue following the completion of the Global Offering,
the unaudited pro forma adjusted net tangible assets per Share would have been RMB1.25 (equivalent
to HK$1.37) and RMB1.30 (equivalent to HK$1.42) based on the Offer Price of HK$9.4 per Share and
HK$11.4 per Share, respectively.
(4) For the purpose of this unaudited pro forma adjusted consolidated net tangible assets per share, the
amounts stated in Renminbi are converted into Hong Kong dollars at the rate of RMB0.9185 to
HK$1.00. No representation is made that Renminbi has been, could have been or may be converted to
Hong Kong dollars, or vice versa, at that rate.
(5) Except as disclosed above, no adjustment has been made to reflect any trading results or other
transactions of the Group entered into subsequent to June 30, 2023.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 687 ---
The following is the text of a report received from PricewaterhouseCoopers, Certified
Public Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of Beijing UBOX Online Technology Corp.
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of Beijing UBOX Online Technology Corp. (the “Company”)
and its subsidiaries (collectively the “Group”) by the directors of the Company (the
“Directors”) for illustrative purposes only. The unaudited pro forma financial information
consists of the unaudited pro forma statement of adjusted consolidated net tangible assets of
the Group as at June 30, 2023, and related notes (the “Unaudited Pro Forma Financial
Information”) as set out on pages II-1 to II-2 of the Company’s prospectus dated October 24,
2023, in connection with the proposed initial public offering of the shares of the Company (the
“Prospectus”). The applicable criteria on the basis of which the Directors have compiled the
Unaudited Pro Forma Financial Information are described on pages II-1 to II-2 of the
Prospectus.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact of the proposed initial public offering on the Group’s financial position as
at June 30, 2023 as if the proposed initial public offering had taken place at June 30, 2023. As
part of this process, information about the Group’s financial position has been extracted by the
Directors from the Group’s financial information for the six months ended June 30, 2023, on
which an accountant’s report has been published.
Directors’ Responsibility for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the Unaudited Pro Forma Financial
Information in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to
Accounting Guideline 7, Preparation of Pro Forma Financial Information for Inclusion in
Investment Circulars (“AG 7”) issued by the Hong Kong Institute of Certified Public
Accountants (“HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 688 ---
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, Quality
Management for Firms that Perform Audits or Reviews of Financial Statements, or Other
Assurance or Related Services Engagements , issued by the HKICPA, which requires the firm
to design, implement and operate a system of quality management including policies or
procedures regarding compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Reporting Accountant’s Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the Unaudited Pro Forma Financial Information and to report our opinion to
you. We do not accept any responsibility for any reports previously given by us on any
financial information used in the compilation of the Unaudited Pro Forma Financial
Information beyond that owed to those to whom those reports were addressed by us at the dates
of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus , issued by the HKICPA. This standard requires
that the reporting accountant plans and performs procedures to obtain reasonable assurance
about whether the Directors have compiled the Unaudited Pro Forma Financial Information in
accordance with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the Unaudited Pro
Forma Financial Information, nor have we, in the course of this engagement, performed an
audit or review of the financial information used in compiling the Unaudited Pro Forma
Financial Information.
The purpose of unaudited pro forma financial information included in a prospectus is
solely to illustrate the impact of a significant event or transaction on unadjusted financial
information of the entity as if the event had occurred or the transaction had been undertaken
at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any
assurance that the actual outcome of the proposed initial public offering at June 30, 2023 would
have been as presented.
A reasonable assurance engagement to report on whether the unaudited pro forma
financial information has been properly compiled on the basis of the applicable criteria
involves performing procedures to assess whether the applicable criteria used by the directors
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 689 ---
in the compilation of the unaudited pro forma financial information provide a reasonable basis
for presenting the significant effects directly attributable to the event or transaction, and to
obtain sufficient appropriate evidence about whether:
 The related pro forma adjustments give appropriate effect to those criteria; and
 The unaudited pro forma financial information reflects the proper application of
those adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountant’s judgment, having regard to
the reporting accountant’s understanding of the nature of the company, the event or transaction
in respect of which the unaudited pro forma financial information has been compiled, and other
relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro
forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Our work has not been carried out in accordance with auditing standards or other
standards and practices generally accepted in the United States of America or auditing
standards of the Public Company Accounting Oversight Board (United States) or standards and
practices of any professional body in any other overseas jurisdiction and accordingly should
not be relied upon as if it had been carried out in accordance with those standards and practices.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled by the
Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma
Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing
Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, October 24, 2023
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 690 ---
This Appendix contains the summary of the principal provisions of the Articles of
Association adopted by our Company on April 3, 2023. The Articles of Association of the
Company shall take effect on the date of the H Shares being listed on the Stock Exchange. The
main purpose of this Appendix is to provide an overview of the Company’s Articles of
Association for potential investors, so it may not contain all the information that is important.
1. SHARES, REGISTERED CAPITAL AND TRANSFER OF SHARES
The shares of the Company shall take the form of share certificates. All the shares issued
by the Company shall have a par value, which shall be RMB1 for each share.
The shares of the Company shall be issued in accordance with the principles of open,
fairness and justice. Each share of the same class shall carry the same rights.
Shares of the same class and in the same issue shall be issued on the same conditions and
at the same price. Any entity or individual shall pay the same price for each of the Shares
it/he/she subscribes for.
Unless otherwise specified in the laws, administrative regulations and by the securities
regulatory authorities in the place where the shares of the Company are listed, the paid up
shares of the Company can be freely transferred in accordance with the laws and are not subject
to any lien. The transfer of shares shall be registered with the local stock registration institution
entrusted by the Company.
2. INCREASE AND REDUCTION OF SHARES AND REPURCHASE
(1) Capital Increase
In light of the Company’s operational and developmental needs, the Company may
increase its capital in accordance with the laws and regulations and subject to relevant
requirements of the Article of Association and a resolution of the general meeting, by any of
the following methods:
(i) a non-public issuance of shares;
(ii) a public offering of shares;
(iii) allotment of bonus shares to existing shareholders;
(iv) conversion of reserve to share capital; or
(v) other methods permitted by laws and administrative regulations and approved by
relevant regulatory authorities.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-1 –


--- page 691 ---
(2) Reduction of Capital
The Company may reduce its registered capital. If the Company reduces its registered
capital, it shall do so by the procedures set forth in the Company Law, other relevant
regulations and the Articles of Association.
If the Company is to reduce its registered capital, it must prepare a balance sheet and a
list of its property.
The Company shall notify its creditors to reduce its registered capital and publish a public
announcement in accordance with the Company Law, and pay its debts or provide a
corresponding security for repayment as required by the creditors.
(3) Repurchase of Shares
The Company shall not acquire its shares. However, the Company may, in the following
circumstances, buy back its own outstanding shares by the procedures provided for in laws and
the Articles of Association, and reporting them to the relevant competent authorities for
approval:
(i) to reduce the registered capital of the Company;
(ii) to merge with other companies that hold shares in the Company;
(iii) to use the shares for employee shareholding schemes or as share incentives;
(iv) to acquire the shares of shareholders (upon their request) who vote against any
resolution adopted at any general meetings on the merger or division of the
Company;
(v) to use the shares to satisfy the conversion of those corporate bonds convertible into
shares issued by the Company;
(vi) to safeguard corporate value and shareholders’ equity as the Company deems
necessary; or
(vii) other methods permitted by laws and administrative regulations and approved by the
listing rules of the stock exchange on which the shares of the listed company are
listed.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-2 –


--- page 692 ---
3. REGISTER OF MEMBERS
The Company establishes a register of members based on the certificates provided by the
securities registration authority, and the register of members shall be the sufficient evidence of
the shareholders’ shareholding in the Company. A shareholder shall enjoy relevant rights and
assume relevant obligations in accordance with the class and number of shares he/she holds.
Shareholders holding the same class of shares shall have the same rights and assume the same
obligations.
The Company may, in accordance with the mutual understanding and agreements made
between the CSRC and overseas securities regulatory authorities, keep its register of holders
of overseas-listed foreign shares outside of the PRC and appoint overseas agent(s) to manage
such register. The original copy of the register of holders of overseas-listed foreign shares
listed in Hong Kong shall be kept in Hong Kong.
The Company shall ensure the register of holders of overseas-listed foreign shares be
made available to shareholders free of charge within business hours at office of the authorized
overseas agency. Upon publish of notice through advertisement in designated newspapers or
any other newspapers designated by any designated stock exchange, or through any electronic
media by any means acceptable to the designated stock exchange, the register of holders of
overseas-listed foreign shares may be closed at such times or for such periods not exceeding
in the whole 30 days in each year as the board of directors may determine, either generally or
in respect of any class of shares.
The Company shall maintain a complete register of members. The register of members
shall include the following parts:
(i) the register of members which is maintained at the Company’s place of domicile
(other than those share registers which are described in paragraphs (ii) and (iii) of
this Article);
(ii) the register of members in respect of the holders of overseas-listed foreign shares of
the Company which is maintained at the place where the overseas stock exchange
on which the shares are listed is located;
(iii) the register of members which is maintained in such other place as the Board of
Directors may consider necessary for the purpose of listing of the Company’s shares.
All H Shares shall be transferred by an instrument in writing in any usual or common
form or any other form which the board of directors accepts (including the prescribed form or
transfer form as required by the Hong Kong Stock Exchange from time to time), and the
instrument of transfer may only be executed by hand or (if the transferor or the transferee is
a company) affixed with the Company’s effective seal. If the transferor or the transferee is a
recognized clearing house as defined by the relevant regulations of the laws of Hong Kong in
effect from time to time or the agent thereof, the instrument of transfer may be executed by
hand or by machine imprinted signatures. All transfer instruments shall be kept at the legal
address of the Company or any address specified by the board of directors from time to time.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-3 –


--- page 693 ---
Within 20 days before general meetings or within 5 days before the Company decides to
distribute dividends, no changes to the register of members due to share transfers shall be
registered. Requirements on the closure of register of members before general meetings or
record dates for determining the entitlement to dividends prescribed by laws, regulations or
relevant stock exchanges or securities regulatory authorities of the regions where shares of the
Company are listed shall be observed.
When the Company intends to convene a general meeting, distribute dividends, enter into
liquidation and engage in other activities that require determination of shareholdings, the
Board of Directors or the convenor of a general meeting shall determine a specific date as
equity determination date, registered shareholders at the end of which shall be the shareholders
entitled to the relevant rights and interests.
Any shareholder who is registered in, or any person who requests to have his/her name
entered in, the register of members may apply to the Company for issue of a replacement share
certificate in respect of such shares (the “Relevant Shares”) if his/her share certificate (the
“Original Certificate”) is lost. If a shareholder who has lost his/her share certificate of domestic
shares applies for a replacement share certificate, it shall be dealt with in accordance with the
relevant provisions of the Company Law. If a shareholder who has lost his/her share certificate
of overseas-listed foreign shares applies for a replacement share certificate, it shall be dealt
with in accordance with the laws, rules of the stock exchange(s) or other relevant provisions
of the place where the original register of holders of overseas-listed shares is kept.
4. RIGHTS AND OBLIGATIONS OF THE SHAREHOLDERS
Shareholders of ordinary shares of the Company shall enjoy the following rights:
(i) the right to receive dividends and other forms of benefit distributions in proportion
to their shareholdings;
(ii) the right to request, call, preside over, attend or appoint proxies to attend general
meetings and to exercise the corresponding voting right in accordance with the laws;
(iii) the right to supervise, present proposals or raise enquiries in respect of the
Company’s business operations;
(iv) the right to transfer, give as a gift or pledge the shares it holds in accordance with
laws, administrative regulations, the listing rules of the Stock Exchange, and the
Articles of Association;
(v) the right to inspect the Articles of Association and registers of members;
(vi) the right to inspect the record of company bonds, the minutes of shareholders’
general meetings, resolutions of the meetings of the Board of Directors, resolutions
of the meetings of the Board of Supervisors and the financial and accounting reports;
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--- page 694 ---
(vii) to participate in, upon the Company’s termination or liquidation, the distribution of
the Company’s remaining assets according to the quantity of shares held; and
(viii) other rights granted in laws, administrative regulations, departmental rules, listing
rules of the Stock Exchange, and the Company’s Articles of Association.
Shareholders of ordinary shares of the Company shall have the following obligations:
(i) to abide by laws, administrative regulations, listing rules of the Stock Exchange, and
the Articles of Association;
(ii) to pay the share subscription price based on the shares subscribed for by them and
the method of acquiring such shares;
(iii) not to return shares unless prescribed otherwise in laws and administrative
regulations;
(iv) not to abuse shareholders’ rights to infringe upon the interests of the Company or
other shareholders; not to abuse the Company’s status as an independent legal entity
or the limited liability of shareholders to harm the interests of the Company’s
creditors;
Any shareholder who abuses shareholders’ rights and causes the Company or other
Shareholders to suffer a loss shall be liable for making compensation in accordance
with the law;
Any shareholder who abuses the status of the Company as an independent legal
entity or the limited liability of shareholders to evade debts and severely harm the
interests of the Company’s creditors shall assume joint and several liability for the
Company’s debts.
(v) to assume other obligations required by laws, administrative regulations, listing
rules of the Stock Exchange, and the Articles of Association.
Shareholders shall not be liable to make any further contributions to the share capital
other than according to the terms agreed by the subscribers at the time of share subscription.
In respect of the joint shareholder of any shares, only the joint shareholder whose name
stands first in the register of members has the rights to receive certificates of the relevant
shares from the Company or receive notices of the Company. Any notice which is delivered to
the aforementioned shareholder shall be deemed to have been delivered to all the joint
shareholders of the relevant shares. Any of the joint shareholders may sign a proxy form,
provided that if more than one joint shareholders attend a meeting in person or by proxy, the
vote of the senior joint shareholder who tenders a vote will be accepted to the exclusion of the
vote(s) of the other joint shareholder(s). For this purpose, seniority will be determined by the
order in which the names stand in the register of members in respect of the relevant share.
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--- page 695 ---
5. GENERAL MEETING
(1) General Rules for Convening a General Meeting
The general meeting is the organ of the highest authority of the Company and shall
exercise the following functions and powers:
(i) to decide on the operating policies and investment plans of the Company;
(ii) to elect and replace directors or supervisors respectively other than a director or
supervisor who is an employee representative; and to decide on matters relating to
their remuneration;
(iii) to review and approve reports of the Board of Directors;
(iv) to review and approve reports of the Board of Supervisors;
(v) to review and approve the annual financial budgets and final accounts of the
Company;
(vi) to review and approve the profit distribution plans and loss recovery plans of the
Company;
(vii) to adopt resolutions on increasing or reducing the registered capital of the Company;
(viii) to adopt resolutions on the merger, division, dissolution, liquidation or change in
corporate form of the Company;
(ix) to adopt resolutions on the issuance of corporate bonds, other securities and their
listing;
(x) to adopt resolutions on the engagement, renewal or non-renewal, or dismissal of the
engagement of accounting firms by the Company;
(xi) to amend the Articles of Association;
(xii) to review and approve the guarantees as stipulated in Article 51 of the Articles of
Association;
(xiii) to review and approve the purchase or the sale of assets by the Company within one
year, the amount of which exceeds 30% of the latest audited total assets of the
Company;
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--- page 696 ---
(xiv) to consider and approve the changes in the use of proceeds;
(xv) to consider and approve the equity incentive schemes and employee stock ownership
schemes;
(xvi) to view other matters that required to be resolved by the general meeting as
prescribed by the law, administrative regulations, departmental rules, the listing
rules of the Stock Exchange, and the Articles of Association.
The following external guarantees of the Company are subject to review and approval of
the general meeting:
(i) any external guarantee by the Company or its subsidiary and any subsequent
guarantee, whose total amount exceeds 50% of the Company’s audited net assets;
(ii) any external guarantee by the Company and any subsequent guarantee, whose total
amount exceeds 30% of the Company’s latest audited total assets;
(iii) any guarantee by the Company whose amount within one year exceeds 30% of the
Company’s latest audited total assets;
(iv) guarantee to be provided to entities with more than 70% debt equity ratio;
(v) a single guarantee whose amount exceeds 10% of the latest audited net assets;
(vi) guarantee to be provided to shareholders, actual controller and its related parties.
The Company shall not conclude any contract with any person other than a director, a
supervisor, senior management whereby such person is put in charge of the management of all
or a substantial part of the Company’s business without the approval of the general meeting.
General meetings include annual general meetings and extraordinary general meetings. In
general, general meetings shall be convened by the Board of Directors. Annual general
meetings shall be convened once a year and within six months after the end of the preceding
fiscal year.
The Company shall convene an extraordinary general meeting within two months from
the date of the occurrence of any of the following circumstances:
(i) the number of directors is less than the number provided for in the Company Law
or less than two-thirds of the number prescribed in the Articles of Association;
(ii) the losses of the Company that have not been made up reach one-third of its total
paid in share capital;
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--- page 697 ---
(iii) such is requested in writing by a shareholder alone or shareholders jointly holding
no less than 10% of the Company’s outstanding voting shares;
(iv) the Board of Directors considers it necessary;
(v) the Board of Supervisors proposes that such a meeting shall be held;
(vi) two or more independent non-executive directors proposes that such a meeting shall
be held;
(vii) other circumstances as specified by laws, administrative regulations, the rules and
regulations of the departments under the State Council, and the listing rules of the
Stock Exchange and the Articles of Association.
A shareholder alone or shareholders jointly holding no less than 10% of the Company’s
shares shall have the right to make a request to the Board of Directors in writing to convene
an extraordinary general meeting. Pursuant to the laws, administrative regulations and the
Articles of Association, the Board of Directors shall provide written feedback on whether to
agree or not to convene an extraordinary general meeting within 10 days after receiving the
request. If the Board of Directors agrees to hold an extraordinary general meeting, it shall issue
a notice of convening the general meeting within 5 days after the resolution of the Board of
Directors is made, and any changes to the original request in the notice shall be subject to the
consent of the relevant shareholders. If the Board of Directors does not agree to convene an
extraordinary general meeting, or fails to give a response within 10 days after the receipt of the
request, the shareholder alone or shareholders jointly holding no less than 10% of the
Company’s shares shall have the right to propose to the Board of Supervisors in writing to
convene an extraordinary general meeting. If the Board of Supervisors fails to issue a notice
calling the general meeting by the prescribed deadline, a shareholder who alone or shareholders
who jointly holding no less than 10% of the shares of the Company for at least 90 days in
succession may himself/herself/themselves convene and preside over such meeting.
If the Board of Supervisors or the shareholders convene a meeting on its/their own
initiative as provided in this section, the Board of Directors and the secretary to the Board of
Directors shall offer cooperation for the meeting, and the Board of Directors shall provide a
register of members as of the record date. Before the announcement of the resolutions of the
general meeting, the shareholding ratio of the convening shareholders shall not be less than
10%. The Company shall bear the reasonable expenses incurred in the general meeting
convened by the Board of Supervisors or the shareholders themselves.
(2) Proposals of General Meetings
When the Company holds a general meeting, the Board of Directors, the board of
supervisors and shareholders individually or jointly holding no less than 3% of the voting
shares of the Company shall have the right to put proposals to the Company.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 698 ---
A shareholder alone or shareholders jointly holding no less than 3% of the voting shares
of the Company may submit extempore proposals in writing to the convenor 10 days prior to
the date of general meeting. The convenor shall issue a supplemental notice of general meeting
and make a public announcement of the contents of such extempore proposals within 2 days
after receipt of the proposals, and submit such extempore proposals to the general meeting for
consideration. The contents of such an extempore proposals shall fall within the authority of
general meetings, with definite topics to discuss and specific matters to resolve.
Except as provided in the preceding paragraph, the convenor, after issuing the notice of
the general meeting, shall neither modify the proposals stated in the notice of general meetings
nor add new proposals.
(3) Notices of General Meetings
Where a general meeting is convened by the Company, it shall issue a notice 20 days prior
to the convening of the annual general meeting or 15 days prior to the convening of the
extraordinary general meeting to notify shareholders. When calculating the starting date, the
date of the meeting shall be excluded. The written notice shall include the date, time and venue
of the meeting as well as the matters and proposals to be considered at the meeting, and a clear
explanation indicating that all ordinary shareholders are entitled to attend the general meeting
and appoint proxies in writing to attend the meeting on their behalf, the record date of
shareholders entitled to attend the general meeting, the name and telephone number of the
permanent contact person for the meeting affairs, and voting time and voting procedures (if
any) on the Internet or in other ways.
Notice of general meeting shall be served to any shareholder (whether has voting right on
general meeting or not) either by hand or by post in a prepaid mail, addressed to such
shareholder at his/her/its registered address as shown in the register of members, or by
publication on the Company’s website or other website designated by stock exchange where the
Company’s shares are listed. Once the notice is published, all holders of overseas-listed foreign
shares shall be deemed to have received the notice of the relevant general meeting. For holders
of domestic shares, the notice of a general meeting may also be given by public announcement.
(4) Convening of General Meetings
All the shareholders registered on the date of equity registration or their agents shall be
entitled to attend the general meeting and exercise his/her voting right in accordance with the
law, regulations, and the Company’s Articles of Association. Any shareholder entitled to attend
and vote at a general meeting shall have the right to appoint one or more persons (whether or
not such persons are shareholders) as his/her proxies to attend and vote on his/her behalf.
Shareholders shall appoint their proxies in writing, which shall be signed by the
principals or their agents appointed in writing. If the principal is a legal person, the instrument
shall be under the seal of the legal person or signed by its director(s) or duly authorised
agent(s).
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--- page 699 ---
The chairman of the Board of Directors shall serve as the chairman of the meeting. If the
chairman of the Board of Directors fails or is unable to perform his or her duties, the meeting
shall be convened and presided by the vice chairman (or if the Company has two or more
vice-chairmen, the one jointly elected by more than half of directors shall preside) of the board
of directors, if the Company does not have a vice chairman or the vice chairman of the Board
of Directors fails or is unable to perform his or her duties, the meeting shall be presided over
by a director jointly elected by more than half of directors.
(5) Voting and Resolutions of General Meeting
Resolutions of the general meeting include ordinary resolutions and special resolutions.
Ordinary resolution at a general meeting shall be adopted by more than half of the voting rights
of the shareholders (including proxies) present at the meeting. Special resolution at a general
meeting shall be adopted by no less than two-thirds of the voting rights of the shareholders
(including proxies) present at the meeting.
Shareholders (including proxies) shall exercise their voting rights according to the
number of voting shares they represent, with one vote for each share. On a poll taken at a
meeting, a shareholder (including his/her proxies) entitled to two or more votes need not cast
all votes in the same way. Shares in the Company which are held by the Company do not carry
any voting rights, and shall not be counted in the total number of voting shares represented by
shareholders present at a general meeting.
The following matters shall be resolved by an ordinary resolution at a general meeting:
(i) work reports of the board of directors and the supervisory committee;
(ii) profit distribution plan and loss recovery plan formulated by the board of directors;
(iii) election and removal of members of the board of directors and members of the
supervisory committee not being representatives of the employees;
(iv) remuneration of and manner of payment to members of the board of directors and
members of the supervisory committee;
(v) annual budget and final accounts report of the Company;
(vi) annual report of the Company;
(vii) such matters other than those required to be passed by special resolutions under the
laws and administrative regulations and the listing rules of the stock exchange where
the Company’s shares are listed or the Articles of Association.
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--- page 700 ---
Decisions of the general meeting on any of the following matters shall be adopted by
special resolution:
(i) the increase or reduction of the registered capital by the Company;
(ii) the division, spin-off, merger, dissolution, and liquidation or change in the corporate
form of the Company;
(iii) the amendment to the Articles of Association;
(iv) the purchases or sales of any material assets and guarantee amount of the Company
within a year in excess of 30% of the Company’s latest total audited assets;
(v) the equity incentive schemes;
(vi) the compulsory winding up or voluntary winding up of the Company;
(vii) other matters which the laws, administrative regulations, the listing rules of the
Stock Exchange or the Articles of Association require to be adopted by special
resolutions and which the general meeting considers will have a material impact on
the Company and therefore require, by an ordinary resolution, to be adopted by
special resolution.
6. DIRECTORS AND BOARD OF DIRECTORS
(1) Directors
Directors shall be elected or replaced at the general meeting. Every term of a director is
three (3) years, and upon expiry of the term, a director shall be eligible for re-election and
re-appointment.
The term of office of the Directors shall be counted from the date of appointment until
the expiration of the term of the current Board of Directors. When the Directors’ term expires
and re-election not be held in time, or where the resignation of a director during his term of
office causes the number of board members to be less than the quorum, the original Directors
shall still perform their duties as Directors in accordance with laws, administrative regulations,
departmental rules, the listing rules of the Stock Exchange, or the Articles of Association
before the re-elected Directors take office.
A Director is not required to hold any share in our Company.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 701 ---
(2) Board of Directors
The Company shall set up a board of directors which shall be accountable to the general
meetings. The Board of Directors shall consist of nine (9) to eleven (11) directors. At least
one-third of member of the Board of Directors of the Company shall be the independent
non-executive Directors and the amount shall not be less than three (3).
The Board of Directors exercise the following functions and powers:
(i) to convene general meetings and report to the general meetings;
(ii) to implement resolutions of the general meetings;
(iii) to decide on the Company’s business plans and investment plans;
(iv) to formulate the annual financial budgets and final accounts of the Company;
(v) to formulate the Company’s profit distribution plans and plans on making up losses;
(vi) to formulate proposals for the increase or reduction of the Company’s registered
capital, the issuance of bonds or other securities of the Company and listing of
shares of the Company;
(vii) to formulate plans for the Company’s merger, division, dissolution or change of
corporate form;
(viii) to formulate plans for the Company’s substantial acquisitions and sale, and
repurchase of shares of the Company;
(ix) within the scope authorised by the general meeting, to decide on such matters as the
Company’s external investments, acquisition and disposal of assets, provision of
security on the Company’s assets, provision of guarantee, wealth management
entrustment, connected transactions and external donations etc.;
(x) to create, incur, or authorize the creation of any debt or to provide any loans or
prepayments to any person or entity other than a wholly-owned subsidiary of the
company, except for those already covered by purchase and sales accounts or
approved annual budgets generated in the normal course of business;
(xi) to decide on establishment of internal management organs of the Company;
(xii) to decide the establishment of special committees of the Board of Directors; appoint
or dismiss chairman (convenor) of the special committees of the Board of Directors;
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--- page 702 ---
(xiii) to determine the appointment or dismissal of the Company’s general manager,
secretary to the Board of Directors and other senior management; to appoint or
dismiss senior management including deputy general manager(s) and the chief
financial officer of the Company in accordance with the nominations by general
manager, and to decide on their remunerations, rewards and punishment;
(xiv) to formulate the basic management system of the Company;
(xv) to formulate proposals to amend the Articles of Association;
(xvi) to formulate proposals to adopt share incentive plan of the Company;
(xvii) to manage information disclosure of the Company;
(xviii) to propose to the general meeting the appointment or replacement of the accounting
firm that provides audit service to the Company;
(xix) to listen to work reports submitted by the general manager of the Company and
review his/her work;
(xx) to decide material matters and administrative matters and the entering into of other
material agreements other than those matters required to be decided by the general
meeting of the Company in accordance with laws, administrative regulations,
department regulations, the Article of Association and the listing rules of the stock
exchange on which the shares of the Company are listed;
(xxi) other functions and powers provided for in laws, administrative regulations,
department regulations, listing rules of the Stock Exchange and the Articles of
Association, and conferred at general meetings.
Meetings of the Board of Directors may be held only if more than one half of the directors
are present. V ote on Board of Directors resolution shall be carried out on the basis of one
person one vote.
If any director is associated with the enterprises that are involved in the matters to be
resolved at the meeting of the Board of Directors, he or she shall not exercise his or her voting
rights for such matters, nor shall such director exercise voting rights on behalf of other
directors. Such meeting of the Board of Directors may be held only if more than one half of
the directors without a connected relationship are present, and the resolutions made at such a
meeting of the Board of Directors shall be passed by more than one half of the directors without
a connected relationship. If the number of non-connected directors present at such meeting is
less than three, the matter shall be submitted to the general meeting for consideration.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 703 ---
7. SECRETARY OF THE BOARD
The Company shall have a secretary to the Board of Directors. The secretary to the Board
of Directors is a member of the senior management of the Company.
The secretary to the Board of Directors of the Company shall be a natural person with the
requisite professional knowledge and experience and shall be appointed by the Board of
Directors.
A director or any other senior officer of the company may hold the post of secretary of
the Board of Directors concurrently. Any accountant from the accounting firm engaged by the
Company shall not concurrently serve as the secretary to the Board of Directors of the
Company.
8. GENERAL MANAGER AND OTHER SENIOR MANAGEMENT
The Company has one general manager, several deputy general managers, and one chief
financial officer, and they shall serve terms of three years and may serve consecutive terms if
reappointed by the Board of Directors.
Directors may concurrently serve as general manager or other senior management
personnel.
The general manager shall be accountable to the Board of Directors and exercise the
following functions and powers:
(i) to be in charge of the production, operation and management of the Company, and
to report his/her works to the Board of Directors;
(ii) to organise the implementation of the resolutions of the Board of Directors;
(iii) to organise the implementation of the Company’s annual business plans and
investment plans;
(iv) to draft plans for the establishment of the Company’s internal management
organisation;
(v) to draft plans for the establishment of the Company’s branches;
(vi) to draft the Company’s basic management system;
(vii) to formulate the Company’s basic regulations;
(viii) to propose the appointment or dismissal of the Company’s deputy general manager,
chief financial officer or other senior management personnel;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 704 ---
(ix) to determine the appointment or dismissal of management personnel other than those
required to be appointed or dismissed by the Board of Directors;
(x) such other functions and powers conferred by the Articles of Association or the
Board of Directors.
9. BOARD OF SUPERVISORS
The Company shall establish a Board of Supervisors. The Board of Supervisors shall
consist of three (3) supervisors, one of which shall be the chairman. The term of office of each
supervisor shall be a period of three (3) years, renewable upon re-election. Any directors,
general managers and other senior management shall not act concurrently as supervisors.
Shareholders’ representative supervisors shall be elected and removed by the general
meeting, the employee representative supervisor shall be elected and removed by the
employees of the Company democratically and which shall not be less than one-third of the
members of the Board of Supervisors.
The Board of Supervisors shall be accountable to the general meeting and exercise the
following functions and powers in accordance with law:
(i) to review the Company’s regular reports prepared by the Board of Directors and
provide written review opinions;
(ii) to examine the Company’s financial matters;
(iii) to supervise the performance by the directors and senior management of their duties
to the Company to ensure that there is no violation of laws, administrative
regulations, listing rules of the Stock Exchange, and the Articles of Association of
the Company during their performance of the duties to the Company; to propose the
dismissal of the directors and senior management who violates laws, administrative
regulations, listing rules of the Stock Exchange, the Articles of Association of the
Company or the resolutions of the general meeting;
(iv) to demand rectification from the directors and senior management when the acts of
such persons are harmful to the Company’s interests;
(v) to propose the convening of extraordinary general meetings; to convene and preside
the general meetings in the event that the Board of Directors fails to perform its
duties to convene and preside the general meetings as stipulated by the Company
Law;
(vi) to submit motion to the general meetings;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-15 –


--- page 705 ---
(vii) to communicate or sue directors and senior management on behalf of the Company
in accordance with Article 151 of the Company Law;
(viii) to investigate any identified abnormal matters during the business operation of the
Company; if necessary, to engage professionals such as accounting firms or law
firms to assist it in exercising its functions and powers with expenses being borne
by the Company;
(ix) other functions and powers provided by the Articles of Association.
Supervisors may attend the meeting of the Board of Directors, and may raise questions
or put forward suggestions about matters to be decided by the Board of Directors.
Resolutions of Board of Supervisors shall be passed by more than half of the Supervisors.
10. FINANCIAL AND ACCOUNTING SYSTEMS
(1) Financial and Accounting Systems
The Company shall formulate its financial and accounting systems in accordance with the
laws, administrative regulations, listing rules of the Stock Exchange, and the PRC accounting
standards formulated by relevant state authorities.
The Company shall prepare financial reports at the end of each fiscal year. Such reports
shall be audited by an accounting firm in accordance with the law.
The Company shall implement an internal audit system which shall be equipped with
dedicated audit personnel to conduct internal audit supervision of the Company’s financial
revenue and expenditure and economic activities.
The Company’s internal audit system and the responsibilities of audit personnel are
subject to approval by the Board of Directors. The person in charge of audit is accountable and
reports to the Board of Directors.
(2) Profit Distributions
Where the Company distributes its after-tax profits for a given year, it shall allocate 10%
of the profits to its statutory reserve.
The Company shall no longer be required to make allocations to its statutory reserve once
the aggregate amount of such reserve reaches at least 50% of its registered capital.
If the Company’s statutory reserve is insufficient to make up losses from previous years,
the Company shall use its profits from the current year to make up such losses before making
the allocation to its statutory reserve in accordance with the preceding paragraph.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 706 ---
After making the allocation from its after-tax profits to its statutory reserve, the Company
may, subject to a resolution of the general meeting, make an allocation from its after-tax profits
to the discretionary reserve.
After the Company has made up its losses and made allocations to its reserves, the
remaining profits of the Company shall be distributed in proportion to the shareholdings of its
shareholders, unless the Articles of Association provide that distributions are to be made
otherwise than proportionally. If the general meeting or the Board of Directors breaches the
provisions of the preceding paragraphs by distributing profits to shareholders before the
Company has made up its losses and made allocations to the statutory reserve, the shareholders
must return to the Company the profits that were distributed in breach of the said provisions.
Shares of the Company that are held by the Company itself shall not participate in the
distribution of profits.
The reserve of the Company is used to make up the Company’s losses, expand the
production operation of the Company or increase the Company’s capital. However, capital
common reserve shall not be used to make up the Company’s losses.
When statutory common reserve is converted into capital, the remaining balance of that
reserve shall not fall below 25% of the registered capital of the Company before the
conversion.
The Company shall appoint receiving agents for holders of overseas-listed foreign shares
to collect on behalf of the relevant shareholders the dividends distributed and other amount
payable by the Company in respect of overseas-listed foreign shares.
The receiving agents appointed by the Company shall meet the requirements of the laws
of the place or the relevant regulations of the stock exchange where the Company’s shares are
listed.
(3) Appointment of Accounting Firm
The Company shall appoint a qualified independent accounting firm to audit the
Company’s annual financial reports and to examine and verify other financial reports.
The term of office of an accounting firm employed by the Company shall be from the end
of the current annual general meeting of the Company until the end of the next annual general
meeting.
The Company’s appointment of an accounting firm must be determined by the general
meeting, and the Board of Directors shall not appoint an accounting firm prior to the decision
of the general meeting.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 707 ---
Before the convening of the general meeting, the Board of Directors may fill any casual
vacancy in the office of the accounting firm but while there is still any such vacancy, any other
accounting firm appointed by the Company may continue to act.
The Company’s appointment of an accounting firm must be determined by the general
meeting, and the Board of Directors shall not appoint an accounting firm prior to the decision
of the general meeting, except for the circumstance as prescribed above.
11. DISSOLUTION AND LIQUIDATION OF THE COMPANY
The Company shall be dissolved in accordance with the law under any of the following
circumstances:
(i) the term of its operations set down in its articles of association has expired or events
of dissolution specified in its articles of association have occurred;
(ii) the general meeting resolves to dissolve the Company;
(iii) dissolution is necessary as a result of the merger or division of the Company;
(iv) the Company’s business license is revoked or it is ordered to close down or it is
deregistered according to laws;
(v) serious difficulties arise in the operation and management of the Company and its
continued existence would cause material loss to the interests of the shareholders
and such difficulties cannot be resolved through other means, in which case
shareholders holding at least 10% of all shareholders’ voting rights of the Company
may petition a People’s Court to dissolve the Company.
Where the Company is dissolved according to the provisions of sub-paragraphs (i), (ii),
(v) and (vi) of the preceding Article, it shall establish a liquidation committee and liquidation
shall commence within 15 days from the date on which the cause for dissolution arose. The
liquidation committee shall be composed of Directors or persons determined by a general
meeting. If the Company fails to establish the liquidation committee and carry out the
liquidation within the time limit, its creditors may petition a People’s Court to designate
relevant persons to form a liquidation committee and carry out the liquidation.
The liquidation committee shall notify creditors within 10 days of its establishment, and
make announcements on the newspapers designated by the stock exchange where the
Company’s shares are listed within 60 days of its establishment. Creditors shall declare their
claims to the liquidation committee within 30 days from the date of receipt of the written notice
or, if they did not receive a written notice, within 45 days from the date of the announcement.
When declaring their claims, creditors shall explain the particulars relevant to their claims and
submit supporting documentation. The liquidation committee shall register the claims.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 708 ---
After the liquidation committee has liquidated the Company’s property and prepared a
balance sheet and property list, it shall formulate a liquidation plan and submit such plan to the
general meeting or the People’s Court for confirmation. The Company’s property remaining
after payment of the liquidation expenses, the wages, social insurance premiums and statutory
compensation of the employees, the taxes owed and all the Company’s debts shall be
distributed by the Company to the shareholders in proportion to the shares they hold.
During liquidation, the Company shall continue to exist but may not engage in any
business activities unrelated to the liquidation. The Company’s property will not be distributed
to the shareholders until repayment of its debts in accordance with the preceding paragraph.
If the liquidation committee, having liquidated the Company’s property and prepared a
balance sheet and property list, discovers that the Company’s property is insufficient to pay its
debts in full, it shall apply to the People’s Court for a declaration of bankruptcy in accordance
with the law. After the People’s Court has ruled to declare the Company bankrupt, the
liquidation committee shall turn over the liquidation matters to the People’s Court.
Following the completion of liquidation of the Company, the liquidation committee shall
formulate a liquidation report and submit the same to the general meeting or the People’s Court
for confirmation and to the company registration authority to apply for company deregistration,
and announce the Company’s termination.
Liquidation of a company declared bankrupt according to laws shall be processed in
accordance with the laws on corporate bankruptcy.
12. AMENDMENT TO THE ARTICLES OF ASSOCIATION
The Company shall amend the Articles of Association in accordance with the laws,
administrative regulations, listing rules of the Stock Exchange, and the Articles of Association.
If an amendment to the Articles of Association involves matters requires the approval from the
competent regulatory authority to become effective, it shall be submitted to the competent
regulatory authority for approval. If an amendment to the Articles of Association involves a
registered item of the Company, registration of the change shall be carried out in accordance
with the law.
13. BORROWING POWER
The Articles of Association do not contain any specific provision regarding the manner
in which the Directors may exercise the right to borrow money or the manner in which such
a right is given provided that the Board of Directors shall be entitled to develop proposals for
the Company to issue bonds and to list its shares, and that such bond issues must be approved
by the shareholders by a special resolution at the general meeting.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-19 –


--- page 709 ---
A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation of Our Company
We were a company incorporated in the PRC on March 1, 2012. Our Company was
converted from a limited liability company into a joint stock company with limited liability on
September 10, 2015 and was listed on the NEEQ on February 24, 2016. We have established
a principal place of business in Hong Kong at 5/F, Manulife Place, 348 Kwun Tong Road,
Kowloon, Hong Kong and have been registered with the Registrar of Companies in Hong Kong
as a non-Hong Kong company under Part 16 of the Companies Ordinance on April 19, 2022.
Ms. Hui Yin Shan and Ms. Y uen Wing Y an, Winnie have been appointed as the authorized
representatives of our Company for the acceptance of service of process and notices in Hong
Kong under Part 16 of the Companies Ordinance.
The Company has applied for the Conversion of Unlisted Shares into H Shares,
comprising conversion of 614,039,309 Unlisted Shares into H Shares. The Conversion of
Unlisted Shares into H shares has been filed with the CSRC with the notification issued by the
CSRC on completion of the filing procedures published on July 3, 2023 and the listing of our
H Shares is still subject to approval by the Hong Kong Stock Exchange.
As we were incorporated in the PRC, our corporate structure and Articles of Association
are subject to the PRC Law. A summary of the relevant PRC Law and of the Articles of
Association is set out in “Regulatory Overview” and Appendix III, respectively.
2. Changes in the Share Capital of Our Company
There has been no alteration in the share capital of the Company within two years
immediately preceding the date of this prospectus.
3. The Resolutions of the Shareholders of Our Company Passed on April 8, 2022 and
September 22, 2023
At the extraordinary general meeting of the Shareholders held on April 8, 2022 and
September 22, 2023, the following resolutions, among other things, were duly passed:
(i) the issue by the Company of H Shares with a nominal value of RMB1.00 each and
such H Shares be listed on the Hong Kong Stock Exchange;
(ii) the number of H shares to be issued shall be up to 252,420,000;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-1 –


--- page 710 ---
(iii) subjects to the CSRC’s filing result, upon completion of the Global Offering,
614,039,309 Unlisted Shares held by 210 Shareholders will be converted into H
Shares on a one-for-one basis;
(iv) authorization of the Board or its authorized individual to handle all matters relating
to, among other things, the Global Offering, the issue and listing of H Shares on the
Hong Kong Stock Exchange; and
(v) subject to the completion of the Global Offering, the revised Articles of Association
be approved and adopted, which shall become effective on the Listing Date and the
Board has been authorized to amend the Articles of Association in accordance with
any legal, statutory requirements or any comments from any governmental or
regulatory authorities.
4. Changes in the Share Capital of Our Subsidiaries
Our subsidiaries are referred to in the Accountant’s Report, the text of which is set out
in Appendix I. Save for the subsidiaries mentioned in the Accountant’s Report, we do not have
any other subsidiaries.
The following subsidiary has been incorporated within two years immediately preceding
the date of this prospectus:
Name of Subsidiary
Place of
Incorporation
Date of
Incorporation
Shenzhen Y oubao Creative Technology
Co., Ltd. (ʮ̡)
PRC November 12, 2021
The following alterations in the share capital of our subsidiaries have taken place within
the two years immediately preceding the date of this prospectus:
Shenzhen Y oubaokesi
On December 24, 2021, the registered capital of Shenzhen Y oubaokesi increased from
RMB100,000,000 to RMB150,000,000.
Tianjin Y oubao
On April 21, 2022, the registered capital of Tianjin Y oubao increased from
RMB3,000,000 to RMB5,000,000.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-2 –


--- page 711 ---
Shenzhen Mibao New Retail Technology Co., Ltd
On January 4, 2022, Shenzhen Y oubaokesi disposed 56% equity interest in Shenzhen
Mibao New Retail Technology Co., Ltd. to Shenzhen Shengshi Aicai Internet Technology Co.,
Ltd (ʮ̡) at an aggregate consideration of RMB250,000.
Foshan Y ouhemei Technology Co., Ltd.
On April 26, 2022, Zhou Qinghua ( մᅅശ) transferred 19% equity interest in Foshan
Y ouhemei Technology Co., Ltd. (ʮ̡) to Shao Lin (؍ڑa ta
consideration of RMB380,000.
Save as disclosed above, there have been no alterations in the share capital of our
subsidiaries within the two years immediately preceding the date of this prospectus.
So far as is known to any Director or chief executive of the Company, save as disclosed
in “C. Further Information about our Directors, Supervisors and Substantial Shareholders – 1.
Disclosure of Interests – (c) Interests in Other Members of our Group” of this Appendix IV of
this prospectus, as at the Latest Practicable Date, no person is directly or indirectly interested
in 10% or more of the issued voting shares of the subsidiaries of the Company.
B. FURTHER INFORMATION ABOUT OUR BUSINESS
1. Summary of Material Contracts
The following contracts (not being contracts entered into in the ordinary course of
business) were entered into by our Company or its subsidiaries within the two years preceding
the date of this prospectus and are or may be material:
(a) the Hong Kong Underwriting Agreement;
(b) a cornerstone investment agreement ( ਿͩҳ༟՘ᙄ) dated October 19, 2023,
entered into among our Company, Nayuki Holdings Limited (“ Nayuki ”), China
Securities (International) Corporate Finance Company Limited and Huatai Financial
Holdings (Hong Kong) Limited, pursuant to which, Nayuki agreed to subscribe for
Offer Shares at the Offer Price in the aggregate amount of the Hong Kong dollar
equivalent of USD8,000,000;
(c) a cornerstone investment agreement ( ਿͩҳ༟՘ᙄ) dated October 18, 2023,
entered into among our Company, SensePower Management Limited
(“SensePower ”), China Securities (International) Corporate Finance Company
Limited and Huatai Financial Holdings (Hong Kong) Limited, pursuant to which,
SensePower agreed to subscribe for Offer Shares at the Offer Price in the aggregate
amount of the Hong Kong dollar equivalent of RMB25,000,000;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-3 –


--- page 712 ---
(d) a cornerstone investment agreement ( ਿͩҳ༟՘ᙄ) dated October 18, 2023,
entered into among our Company, Mr. Wei Jinbing (ж)( “ Mr. Wei ”), China
Securities (International) Corporate Finance Company Limited, Huatai Financial
Holdings (Hong Kong) Limited and V aluable Capital Limited, pursuant to which,
Mr. Wei agreed to subscribe for Offer Shares at the Offer Price in the aggregate
amount of the Hong Kong dollar equivalent of USD2,000,000;
(e) a cornerstone investment agreement ( ਿͩҳ༟՘ᙄ) dated October 18, 2023,
entered into among our Company, Shenzhen Maliujia Network Technology Co., Ltd.
(ʮ̡)( “ MLJ”), China Securities (International)
Corporate Finance Company Limited, Huatai Financial Holdings (Hong Kong)
Limited and V aluable Capital Limited, pursuant to which, MLJ agreed to subscribe
for Offer Shares at the Offer Price in the aggregate amount of the Hong Kong dollar
equivalent of RMB10,000,000;
(f) the supplemental agreement ( ໾̂՘ᙄ) dated June 6, 2023 entered into between
Hangzhou Penguin Technology Co., Ltd. (ʮ̡)( “ Hangzhou
Penguin ”), Shenzhen Y oubaokesi Technology Co., Ltd. (ʮ
̡), Shanghai Y unxin V enture Capital Co., Ltd. (ʮ̡), Xu
Guanglei ( ஢Έᆾ), Hangzhou Mifan Investment Joint V enture (Limited Partnership)
(ψϷᇍҳ༟ΥྫΆุ(Υྫ)), Hangzhou Redianchang Investment Co., Ltd.
(ʮ̡), Shanghai Xiaoji Internet Technology Co., Ltd. ( ɪऎʃ
ʮ̡), Chen Jianqiang (੶), Lei Huazeng ( ཤശᄣ), Wang
Chengkuan (ᄱ) and Zhang Zhigu ( ੵʘո) to amend certain terms of the
original investment agreement and original shareholders agreement, pursuant to
which parties have agreed not to proceed with closing under the original investment
agreement and Hangzhou Penguin shall repay the prepayments of RMB10.0 million
together with an utilisation fee in six instalments on the schedule specified therein;
and
(g) the equity transfer agreement (ࣣdated December 29, 2021 entered
into between Shenzhen Y oubaokesi Technology Co., Ltd. (ʮ
̡) as transferor and Shenzhen Shengshi Aicai Network Technology Co., Ltd. ( ଉέ
ʮ̡) as transferee in relation to the transfer of 56% equity
interest in Shenzhen Mibao New Retail Technology Co., Ltd. (Ҧ
ʮ̡) at a consideration of RMB250,000.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-4 –


--- page 713 ---
2. Our Material Intellectual Property Rights
As of the Latest Practicable Date, we have registered the following intellectual property
rights which are material in relation to our business.
(a) Trademarks
As of the Latest Practicable Date, we have registered the following trademarks
which are material to our business:
No. Trademark Class
Registered
owner
Place of
registration
Registration
number Expiry date
1.
 9 Our Company PRC 9165111 March 6, 2032
2.
 42 Our Company PRC 9165148 March 6, 2032
3.
 30 Our Company PRC 9772350 November 27, 2032
4.
 32 Our Company PRC 9772446 September 20, 2032
5.
 30 Our Company PRC 11588085 April 13, 2024
6.
 29 Our Company PRC 11588086 April 13, 2024
7.
 9 Our Company PRC 11588087 April 13, 2024
8.
 7 Our Company PRC 11588088 March 13, 2024
9.
 41 Our Company PRC 11588089 March 13, 2024
10.
 38 Our Company PRC 11588090 March 13, 2024
11.
 36 Our Company PRC 11588091 July 13, 2024
12.
 35 Our Company PRC 11588092 April 13, 2025
13.
 9 Our Company PRC 11588093 May 20, 2024
14.
 42 Our Company PRC 11588094 March 13, 2024
15.
 41 Our Company PRC 11588095 March 13, 2024
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-5 –


--- page 714 ---
No. Trademark Class
Registered
owner
Place of
registration
Registration
number Expiry date
16.
 38 Our Company PRC 11588096 March 13, 2024
17.
 36 Our Company PRC 11588097 March 13, 2024
18.
 35 Our Company PRC 11588098 March 13, 2024
19.
 30 Our Company PRC 11588176 March 13, 2024
20.
 29 Our Company PRC 11588177 March 13, 2024
21.
 9 Our Company PRC 11588178 April 27, 2024
22.
 7 Our Company PRC 11588179 April 27, 2024
23.
 41 Our Company PRC 11588180 August 20, 2024
24.
 36 Our Company PRC 11588182 July 13, 2024
25.
 35 Our Company PRC 11588183 September 6, 2025
26.
 43 Our Company PRC 12269700 March 20, 2025
27.
 39 Our Company PRC 12269701 August 20, 2024
28.
 34 Our Company PRC 12269702 March 20, 2025
29.
 28 Our Company PRC 12269703 August 20, 2024
30.
 27 Our Company PRC 12269704 August 20, 2024
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-6 –


--- page 715 ---
No. Trademark Class
Registered
owner
Place of
registration
Registration
number Expiry date
31.
 26 Our Company PRC 12269705 March 20, 2025
32.
 25 Our Company PRC 12269706 March 20, 2025
33.
 24 Our Company PRC 12269707 March 20, 2025
34.
 23 Our Company PRC 12269708 August 20, 2024
35.
 22 Our Company PRC 12269709 August 20, 2024
36.
 21 Our Company PRC 12269710 March 20, 2025
37.
 20 Our Company PRC 12269711 August 20, 2024
38.
 18 Our Company PRC 12269712 August 27, 2024
39.
 16 Our Company PRC 12269713 March 20, 2025
40.
 3 Our Company PRC 12269715 August 20, 2024
41.
 43 Our Company PRC 12269716 August 20, 2024
42.
 39 Our Company PRC 12269717 August 20, 2024
43.
 34 Our Company PRC 12269718 August 20, 2024
44.
 28 Our Company PRC 12269719 March 20, 2025
45.
 27 Our Company PRC 12269720 August 20, 2024
46.
 26 Our Company PRC 12269721 August 20, 2024
47.
 25 Our Company PRC 12269722 March 20, 2025
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-7 –


--- page 716 ---
No. Trademark Class
Registered
owner
Place of
registration
Registration
number Expiry date
48.
 24 Our Company PRC 12269723 August 20, 2024
49.
 23 Our Company PRC 12269724 August 20, 2024
50.
 22 Our Company PRC 12269725 August 20, 2024
51.
 21 Our Company PRC 12269726 March 20, 2025
52.
 20 Our Company PRC 12269727 March 20, 2025
53.
 16 Our Company PRC 12269728 August 20, 2024
54.
 3 Our Company PRC 12269729 August 20, 2024
55.
 14 Our Company PRC 12269730 August 20, 2024
56.
 43 Our Company PRC 12269731 August 20, 2024
57.
 39 Our Company PRC 12269732 August 20, 2024
58.
 34 Our Company PRC 12269733 August 20, 2024
59.
 27 Our Company PRC 12269734 August 20, 2024
60.
 26 Our Company PRC 12269735 August 20, 2024
61.
 24 Our Company PRC 12269736 August 20, 2024
62.
 23 Our Company PRC 12269737 August 20, 2024
63.
 22 Our Company PRC 12269738 August 20, 2024
64.
 14 Our Company PRC 12269739 August 20, 2024
65.
 9 Our Company PRC 26563773 September 6, 2028
66.
 11 Our Company PRC 29038378 January 6, 2029
67.
 43 Our Company PRC 32302200 April 6, 2029
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-8 –


--- page 717 ---
No. Trademark Class
Registered
owner
Place of
registration
Registration
number Expiry date
68.
 40 Our Company PRC 32617014 June 13, 2029
69.
 40 Our Company PRC 32622608 April 6, 2029
70.
 40 Our Company PRC 32625784 April 6, 2029
71.
 40 Our Company PRC 32637194 April 6, 2029
72.
 33 Our Company PRC 37195636 November 20, 2029
73.
 9 Our Company PRC 39611489 November 6, 2030
74.
 38 Our Company PRC 39626799 February 27, 2030
75.
 41 Our Company PRC 39633359 May 6, 2030
76.
 9 Our Company PRC 40887664 July 6, 2030
77.
 42 Our Company PRC 40896429 July 6, 2030
78.
 35 Our Company PRC 45000614 January 27, 2031
79.
 35 Our Company PRC 45000630 January 27, 2031
80.
 7 Our Company PRC 45009102 January 27, 2031
81.
 7 Our Company PRC 45013931 November 27, 2030
82.
 9 Our Company PRC 45014277 January 27, 2031
83.
 9 Our Company PRC 45015386 November 27, 2030
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-9 –


--- page 718 ---
No. Trademark Class
Registered
owner
Place of
registration
Registration
number Expiry date
84.
 7 Our Company PRC 45024184 February 13, 2031
85.
 9 Our Company PRC 45030746 February 20, 2031
86.
 11 Shenzhen
Y ouka
PRC 33093116 May 20, 2029
87.
 32 Shenzhen
Y ouka
PRC 33093254 May 13, 2029
88.
 30 Shenzhen
Y ouka
PRC 33097428 May 13, 2029
89.
 43 Shenzhen
Y ouka
PRC 33109535 June 6, 2029
90.
 11 Shenzhen
Y ouka
PRC 33111454 June 20, 2029
91.
 35 Shenzhen
Y ouka
PRC 33111466 May 13, 2029
92.
 32 Shenzhen
Y ouka
PRC 33112938 July 27, 2030
93.
 35 Shenzhen
Y ouka
PRC 33112939 May 27, 2029
94.
 30 Shenzhen
Y ouka
PRC 33112942 July 27, 2029
95.
 7 Shenzhen
Y ouka
PRC 33129199 July 20, 2029
96.
 7 Shenzhen
Y ouka
PRC 33172693 June 6, 2029
97.
 9 Xiamen
Technology
PRC 20047595 July 13, 2027
98.
 41 Xiamen
Technology
PRC 20047656 July 13, 2027
99.
 9 Xiamen
Technology
PRC 20109151 July 13, 2027
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 719 ---
No. Trademark Class
Registered
owner
Place of
registration
Registration
number Expiry date
100.
 28 Xiamen
Technology
PRC 20446334 August 13, 2027
101.
 28 Xiamen
Technology
PRC 20446455 August 13, 2027
102.
 35 Xiamen
Technology
PRC 20446504 August 13, 2027
103.
 38 Xiamen
Technology
PRC 20446525 August 13, 2027
104.
 35 Xiamen
Technology
PRC 20446557 August 13, 2027
105.
 38 Xiamen
Technology
PRC 20446636 August 13, 2027
106.
 9 Xiamen
Technology
PRC 22452504 February 6, 2028
107.
 28 Xiamen
Technology
PRC 22452657 February 6, 2028
108.
 35 Our Company PRC 37518832 November 20, 2031
109.
 35 Our Company PRC 41344421 November 20, 2031
110.
 35 Our Company PRC 41350533 January 13, 2032
111.
 9 Xiamen
Technology
PRC 53150547 August 27, 2031
112.
 7, 9, 11,
35
Shenzhen
Y oubaokesi
Hong Kong 304459753 March 14, 2028
113.
 7, 9, 11,
35
Shenzhen
Y oubaokesi
Hong Kong 304459744 March 14, 2028
114.
 7, 9, 11,
35
Shenzhen
Y oubaokesi
Hong Kong 304459762 March 14, 2028
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-11 –


--- page 720 ---
(b) Patents
As of the Latest Practicable Date, we have registered the following patents which
are material in relation to our business:
No. Patent name
Registered
owner
Place of
registration
Registration
number
Registration
date Expiry date
1.ࠇ
ج
Our Company PRC ZL 2012 1
0103693.8
April 10, 2012 April 10, 2032
2.Іਗϗ஬ᓞၾʈ
ج
Our Company PRC ZL 2013 1
0495741.7
October 21,
2013
October 21, 2033
3.ٙ
Іਗਯ஬ዚ
Our Company PRC ZL 2013 2
0853667.7
December 23,
2013
December 23,
2023
4. Іਗਯ஬ዚ Our Company PRC ZL 2013 3
0594549.4
December 3,
2013
December 3,
2023
5. Іਗਯ஬ዚ Our Company PRC ZL 2013 3
0595408.4
December 3,
2013
December 3,
2023
6. Іਗਯ஬ዚ Our Company PRC ZL 2013 3
0595624.9
December 3,
2013
December 3,
2023
7.Іਗ
ਯ஬ዚ
Our Company PRC ZL 2014 2
0205912.8
April 25, 2014 April 25, 2024
8. Іਗਯ஬ዚ(5) Our Company PRC ZL 2014 3
0128727.9
May 13, 2014 May 13, 2024
9. Іਗਯ஬ዚ(6) Our Company PRC ZL 2014 3
0128728.3
May 13, 2014 May 13, 2024
10. Іਗਯ஬ዚ(7) Our Company PRC ZL 2014 3
0128829.0
May 13, 2014 May 13, 2024
11. Іਗਯ஬ዚ(2) Our Company PRC ZL 2014 3
0129079.9
May 13, 2014 May 13, 2024
12. Іਗਯ஬ዚ(8) Our Company PRC ZL 2014 3
0460722.6
November 20,
2014
November 20,
2024
13. Іਗਯርዚ(64ۨژY oubao
Anglai
PRC ZL 2014 3
0460623.8
November 20,
2014
November 20,
2024
14. Іਗਯርዚ(40ۨژY oubao
Anglai
PRC ZL 2014 3
0460656.2
November 20,
2014
November 20,
2024
15. ɓ၇ՈϞɚၪᇁᜑͪༀໄ
Іਗਯ஬ዚ
Our Company PRC ZL 2015 2
0040662.1
January 21,
2015
January 21, 2025
16.лᓞ Shenzhen
Y oubaokesi
PRC ZL 2015 1
1028164.6
December 31,
2015
December 31,
2035
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-12 –


--- page 721 ---
No. Patent name
Registered
owner
Place of
registration
Registration
number
Registration
date Expiry date
17. ˓ዚ౽ঐΫϗዚ Our Company PRC ZL 2016 2
1491524.6
December 29,
2016
December 29,
2026
18. ˓ዚ౽ঐΫϗዚ Our Company PRC ZL 2016 3
0662214.5
December 31,
2016
December 31,
2026
19. ɓ၇஛ό࿯͒ዚʿՉ࿯͒
ج
Our Company PRC ZL 2017 1
0058672.1
January 23,
2017
January 23, 2037
20.ٙ
ձ˓ዚІਗΫ
ϗ୞၌
Shenzhen
Y oubaokesi
PRC ZL 2017 1
0115734.8
February 28,
2017
February 28,
2037
21.ၾ˓
ዚІਗΫϗ୞၌
Shenzhen
Y oubaokesi
PRC ZL 2017 1
0115861.8
February 28,
2017
February 28,
2037
22. Іਗਯ஬ༀໄ Our Company PRC ZL 2017 2
0558908.3
May 18, 2017 May 18, 2027
23. ՟஬ༀໄʿІп฾ɿዚ Shenzhen
Y oubaokesi
PRC ZL 2017 2
0840676.0
July 11, 2017 July 11, 2027
24. Іਗਯ஬ዚ Shenzhen
Y oubaokesi
PRC ZL 2017 3
0556584.5
November 13,
2017
November 13,
2027
25. Іਗਯ஬ዚ Shenzhen
Y oubaokesi
PRC ZL 2017 3
0556583.0
November 13,
2017
November 13,
2027
26.e
ၑ
ዚண௪
Shenzhen
Y oubaokesi
PRC ZL 2017 1
1491745.2
December 30,
2017
December 30,
2037
27. ɓ၇Іਗਯርዚ Our Company
and
Shenzhen
Shidaozhong
Chuangxin
Technology
Co., Ltd.
PRC ZL 2018 2
0438810.9
March 29,
2018
March 29, 2028
28. Іਗਯርዚ Our Company PRC ZL 2018 2
1293706.1
August 10,
2018
August 10, 2028
29. Іਗਯርዚ Shenzhen
Y oubaokesi
PRC ZL 2018 2
14174089
August 30,
2018
August 30, 2028
30. Іਗਯርዚ Shenzhen
Y oubaokesi
PRC ZL 2018 2
16213105
September 30,
2018
September 30,
2028
31.ගଡ଼΁ձІਗਯ
஬ዚ
Shenzhen
Y oubaokesi
PRC ZL 2018 2
16239618
September 30,
2018
September 30,
2028
32.ගձ
Іਗਯ஬ዚ
Shenzhen
Y oubaokesi
PRC ZL 2018 2
16240437
September 30,
2018
September 30,
2028
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-13 –


--- page 722 ---
No. Patent name
Registered
owner
Place of
registration
Registration
number
Registration
date Expiry date
33. Տᑕᅼ෯(ɚ˾) Our Company PRC ZL 2018 3
0721888.7
December 12,
2018
December 12,
2028
34. ᙲ྅ᅼଡ଼ഐ࿴ Our Company PRC ZL 2019 2
0290956.8
March 7, 2019 March 7, 2029
35. Տᑕ˕˹౽ঐ஬ᓞ Our Company PRC ZL 2019 3
0198268.4
April 26, 2019 April 26, 2029
36. Іਗਯ஬ᓞ Our Company PRC ZL 2019 2
09476986
June 21, 2019 June 21, 2029
37. ɓ၇஬ᓞ Shenzhen
Y oubaokesi
PRC ZL 2019 2
16676402
September 30,
2019
September 30,
2029
38. ਯ஬ዚ௪஬ӻ୕ Our Company PRC ZL 2019 2
20813794
November 27,
2019
November 27,
2029
39.e஬ᓞձਯ஬ዚ Our Company PRC ZL 2020 2
01366622
January 21,
2020
January 21, 2030
40.ձ஬ᓞ Our Company PRC ZL 2020 2
01366618
January 21,
2020
January 21, 2030
41.ݖ࣪(ᆀዚ) Xiamen
Technology
PRC ZL 2016 3
0445787.2
August 30,
2016
August 30, 2026
42.ᓃਨዚ
(ʾਨMBAR)
Xiamen
Technology
PRC ZL 2016 3
0556678.8
November 16,
2016
November 16,
2026
43.ᇖဂы(ʾਨ2.0) Xiamen
Technology
PRC ZL 2017 3
0017666.2
January 17,
2017
January 17, 2027
44.ᓃᅧӻ୕ Xiamen
Technology
PRC ZL 2017 2
0937852.2
July 31, 2017 July 31, 2027
45. ᇭᚾդਥዚ(U0) Shenzhen
Y ouka
PRC ZL 2018 3
0533485.X
September 21,
2018
September 21,
2028
46. Іпᇭᚾդਥዚ(U1) Shenzhen
Y ouka
PRC ZL 2019 3
0127390.2
March 26,
2019
March 26, 2029
47.ʿண௪
ၑዚ̙ᛘπᎷʧሯ
Shenzhen
Y oubaokesi
PRC ZL 2019 1
0853541.1
September 10,
2019
September 10,
2039
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-14 –


--- page 723 ---
(c) Copyrights
As of the Latest Practicable Date, we have registered the following copyrights which
are material in relation to our business:
(i) Software ( ழ΁)
No. Copyright Version Owner
Registration
number Registration date
Place of
registration
1. CRM˒၍ଣӻ୕ 1.0 Our Company 2013SR065687 July 15, 2013 PRC
2.ගዚ၌ӻ୕ 1.0 Our Company 2019SR0276160 March 25, 2019 PRC
3.ழ΁ 1.0 Our Company 2015SR260195 December 15, 2015 PRC
4. ʾᘒਯ஬ዚɛᑕᗆйӻ୕ 1.0 Our Company 2016SR350232 December 2, 2016 PRC
5. ʾᘒਯ஬ዚ୞၌ᒅ൯ӻ୕ 1.0 Our Company 2016SR350228 December 2, 2016 PRC
6.ਕ̨̻ 1.0 Our Company 2019SR0852984 August 16, 2019 PRC
7.ᑌஹટ၍ଣ̨̻ 1.0 Our Company 2019SR1147712 November 13, 2019 PRC
8. εద᜗ᄿѓ၍ଣ̨̻ӻ୕ 1.0 Our Company 2018SR218893 March 29, 2018 PRC
9. ஬ᓞᅰኽ༶ᐄ̨̻ 1.0 Our Company 2021SR0820302 June 2, 2021 PRC
10.ਕ̨̻ 2.0 Our Company 2021SR0815174 June 2, 2021 PRC
11.પᑥӻ୕ 1.0 Our Company 2018SR218923 March 29, 2018 PRC
12. ʾᘒ˕˹၍ଣӻ୕ 1.0 Y oubao Anglai 2013SR069967 July 20, 2013 PRC
13. ਯ஬ዚછՓழ΁ 1.0 Y oubao Anglai 2013SR071517 July 23, 2013 PRC
14.ਯ஬ዚӻ୕ 1.0 Y oubao Anglai 2013SR071915 July 23, 2013 PRC
15.̨၍ଣӻ୕ 1.1 Y oubao Anglai 2014SR150307 October 11, 2014 PRC
16.˒၌၍ଣӻ୕ 1.0 Y oubao Anglai 2014SR150840 October 11, 2014 PRC
17.˒၌ழ΁ 1.0 Y oubao Anglai 2014SR150856 October 11, 2014 PRC
18.ਕ̨̻ 2.0 Y oubao Anglai 2015SR237225 November 30, 2015 PRC
19. ਯ஬ዚ၍ଣ̨̻ 2.0 Y oubao Anglai 2015SR236804 November 30, 2015 PRC
20.׵ARMІਗਯ஬ዚ
ʈછӻ୕
2.0 Y oubao Anglai 2015SR236809 November 30, 2015 PRC
21. ίᇞᏐ̨̻͜ 1.0 Y oubao Anglai 2017SR334512 June 30, 2017 PRC
22. ዹͭᓞછՓӻ୕ 1.0 Y oubao Anglai 2017SR080986 March 16, 2017 PRC
23. ˕˹ʕːӻ୕ 1.0 Y oubao Anglai 2018SR218901 March 29, 2018 PRC
24. ˕˹ʕːӻ୕ 2.0 Y oubao Anglai 2019SR0840253 August 13, 2019 PRC
25. ዹͭᓞછՓӻ୕ 2.0 Y oubao Anglai 2019SR0840241 August 13, 2019 PRC
26. IPVOD 3.0 Xiamen
Technology
2000SR2398 November 20, 2000 PRC
27.ضۃIPVODਕӻ୕ 4.0 Xiamen
Technology
2005SR12067 October 12, 2005 PRC
28.ضۃIPVODਕӻ୕ 5.0 Xiamen
Technology
2009SR052089 November 9, 2009 PRC
29.ᆀ၍ଣӻ୕ 1.0 Xiamen
Technology
2009SR052088 November 9, 2009 PRC
30.ਕኜӻ୕ 1.32 Shenzhen Y ouka 2018SR762139 September 19, 2018 PRC
31. դਥዚ၍ଣӻ୕ 1.19 Shenzhen Y ouka 2018SR759573 September 18, 2018 PRC
32. դਥዚ༶ၪʈఊӻ୕ 1.8 Shenzhen Y ouka 2018SR811360 October 11, 2018 PRC
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-15 –


--- page 724 ---
No. Copyright Version Owner
Registration
number Registration date
Place of
registration
33. ౽ঐତጋդਥዚႡЪਯርழ
΁
1.1.1.2 Shenzhen Y ouka 2018SR579135 July 24, 2018 PRC
34.лᓞ၍ଣӻ୕
(ᔊ၈:лᓞ၍ଣӻ୕)
2.1 Shenzhen
Y oubaokesi
2016SR147413 June 20, 2016 PRC
35. ਯ஬ዚᓃЗ၍ଣӻ୕
(ᔊ၈:ᓃЗ၍ଣӻ୕)
2.1 Shenzhen
Y oubaokesi
2016SR147391 June 20, 2016 PRC
36.˒၍ଣӻ୕
(ᔊ၈:˒၍ଣӻ୕)
2.2 Shenzhen
Y oubaokesi
2016SR147400 June 20, 2016 PRC
37. ਯ஬ዚ၍ଣӻ୕ 1.0 Shenzhen
Y oubaokesi
2017SR429243 August 7, 2017 PRC
38.Σ၍ଣӻ୕
(ᔊ၈:Σ၍ଣ)
1.0 Shenzhen
Y oubaokesi
2018SR218116 March 29, 2018 PRC
39. ʾᘒᅰኽ̨̻ 1.0 Shenzhen
Y oubaokesi
2019SR0308343 April 8, 2019 PRC
40.܄APPӻ୕ 1.0 Shenzhen
Y oubaokesi
2019SR1104119 October 31, 2019 PRC
41. ౽ঐண௪୞၌̨̻ӻ୕
(ᔊ၈:౽ঐ୞၌̨̻)
1.0 Shenzhen
Y oubaokesi
2021SR0803013 May 31, 2021 PRC
(d) Domain Names
As of the Latest Practicable Date, we have registered the following domain names
which are material in relation to our business:
No. Domain name Registrant Registration date Expiry date
1. ipktv.com Our Company June 20, 2003 June 20, 2024
2. uboxol.com Our Company July 12, 2011 July 12, 2026
3. uparty.cn Our Company August 6, 2014 August 6, 2027
4. uboxcdn.cn Shenzhen Y oubaokesi June 24, 2015 June 24, 2028
5. uboxcdn.com Shenzhen Y oubaokesi February 26, 2015 February 26, 2027
6. uboxwx.com Shenzhen Y oubaokesi February 26, 2015 February 26, 2027
7. ubox-wx.com Shenzhen Y oubaokesi February 26, 2015 February 26, 2027
8. 3woa.cn Xiamen Technology February 4, 2013 February 4, 2028
9. 3woa.com Xiamen Technology February 4, 2013 February 4, 2028
10. ipktv-promotions.cn Xiamen Technology November 4, 2020 November 4, 2023
11. ipvod.com Xiamen Technology October 5, 1999 October 5, 2031
12. qy-music.cn Xiamen Technology April 5, 2017 April 5, 2027
13. ucmbar.com Xiamen Technology August 26, 2016 August 26, 2027
14. youcoffee.com.cn Shenzhen Y ouka March 6, 2017 March 6, 2030
15. Ubox360buy.com Y oubao Anglai August 23, 2021 August 23, 2031
Save as aforesaid, as at the Latest Practicable Date, there were no other intellectual
property rights which were material in relation to our Group’s business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-16 –


--- page 725 ---
C. FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS AND
SUBSTANTIAL SHAREHOLDERS
1. Disclosure of Interests
(a) Interests of our Directors, Supervisors and the Chief Executive of Our Company
Immediately following the completion of the Global Offering and Conversion of
Unlisted Shares into H Shares, the interests and/or short positions (as applicable) of the
Directors, Supervisors and the chief executive of the Company (other than Mr. Wang and
Mr. Chen, whose interests in the Company have been disclosed in the “Substantial
Shareholders” section) in the Shares, underlying Shares and debentures of the Company
and any interests and/or short positions (as applicable) in shares, underlying Shares or
debentures of any of the Company’s associated corporations (within the meaning of Part
XV of the SFO) which (1) will have to be notified to the Company and the Hong Kong
Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests
and/or short positions (as applicable) which they are taken or deemed to have under such
provisions of the SFO), (2) will be required, pursuant to Section 352 of the SFO, to be
entered in the register referred to therein or (3) will be required, pursuant to the Model
Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10
to the Hong Kong Listing Rules, to be notified to the Company and the Hong Kong Stock
Exchange, in each case once the Shares are listed on the Hong Kong Stock Exchange, will
be as follows:
(i) Interest in our Company
Name of
Director,
Supervisor or
Chief Executive Nature of Interest
Class
of Shares
Number of
Shares Held
or Interested
Number of
Shares under
outstanding
options
granted
Approximate
Percentage of
Shareholding
in the
Relevant Class
of Shares
Approximate
Percentage of
Shareholding
in the Total
Issued Share
Capital
(Note 2)
Ms. Cui Y an Beneficial owner H Shares 3,000,000 – 0.47% 0.38%
Beneficial owner Unlisted
Shares
– 4,700,000 3.28% 0.60%
Mr. Huang
Ronghui
Beneficial owner H Shares – – – –
Beneficial owner Unlisted
Shares
– 400,000 0.28% 0.05%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-17 –


--- page 726 ---
Notes:
1. All interests stated are long positions.
2. The calculation is based on the total number of 779,835,433 Shares in issue immediately
following the completion of the Conversion of Unlisted Shares into H Shares and the Global
Offering and without taking into account any Shares that may be issued pursuant to the exercise
of options which were granted under the Pre-IPO Incentive Scheme.
(b) Interests of the Substantial Shareholders
For information on the persons who will, immediately following the completion of
the Global Offering and Conversion of Unlisted Shares into H Shares without taking into
account any Shares which may be issued pursuant to the exercise of any options which
may be granted pursuant to the Pre-IPO Incentive Scheme, have interests or short
positions in our Shares or underlying Shares which would be required to be disclosed to
us and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part
XV of the SFO, or who will directly and/or indirectly, be interested in 10% or more of
the nominal value of any class of share capital carrying the rights to vote in all
circumstances at general meetings of our Company, see “Substantial Shareholders.”
(c) Interests in Other Members of our Group
So far as our Directors are aware, as of the Latest Practicable Date, the following
persons (excluding us) are directly or indirectly interested in 10% or more of the nominal
value of any class of share capital carrying rights to vote in all circumstances at general
meetings of our Company or any of our subsidiaries:
Name of subsidiary Name of shareholder
Approximate %
of interest
Shenzhen Y oubaohui
Advertising Media
Co., Ltd. ( ଉέʾᘒ౉ᄿѓ
ʮ̡)
Diao Duanlin (؍30%
Shenzhen Y ouka Technology
Co., Ltd. (Ҧ
ʮ̡)
Ji Bin (ⅳ֙16.7567%
Sichuan Y oulin Kesi
Technology Co., Ltd.
(ʮ
̡)
Chengdu Lancaixuri Trading
Co., Ltd. ( ϓே̹ᚆ੹ϛ˚
ʮ̡)
49%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-18 –


--- page 727 ---
Name of subsidiary Name of shareholder
Approximate %
of interest
Shenzhen Y oufu Sharing
Trading Co., Ltd.
(ʮ
̡)
Guangzhou Fuyu Intelligent
Technology Co., Ltd
(ʮ
̡)
49%
Foshan Y ouhemei Technology
Co., Ltd. (߅ߕ
ʮ̡)
Foshan Hemeizhike
Technology Co., Ltd.
(ʮ̡)
30%
Foshan Y ouhemei Technology
Co., Ltd. (߅ߕ
ʮ̡)
Shao Lin (؍ڑ19%
Shenzhen Y oubao Online
Technology Co., Ltd.
(ࠢ
ʮ̡)
Gongqingcheng Tongyao
Industrial Partnership
(Limited Partnership)
(ஷᘴྼุΥྫΆุ
(Υྫ))
16%
Shenzhen Y oubao Online
Technology Co., Ltd.
(ࠢ
ʮ̡)
Wu Mingjie ( юΤ௫) 14%
Shenzhen Y oubao Online
Technology Co., Ltd.
(ࠢ
ʮ̡)
Y ang Ling ( เὋ) 13%
Shenzhen Y oubao Online
Technology Co., Ltd.
(ࠢ
ʮ̡)
Cao Shuang ( ૎ଗ) 12%
Shenzhen Y oubao Online
Technology Co., Ltd.
(ࠢ
ʮ̡)
Guangdong Y ouyou Internet
Technology Co., Ltd.
(ʮ
̡)
10%
Shenzhen Y ouye Technology
Co., Ltd (ҦϞ
ʮ̡)
Lai Hang ( ፠ঘ) 41%
Shenzhen Y ouye Technology
Co., Ltd (ҦϞ
ʮ̡)
Shenzhen Baihang
Management Advisory
Partnership (Limited
Partnership) ( ଉέ̹Ժঘ၍
ଣፔ༔ΥྫΆุ(Υྫ))
14.8%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-19 –


--- page 728 ---
2. Directors’ and Supervisors’ Service Contracts and Letters of Appointment
We have entered into a contract with each of our Directors and Supervisors. The principal
particulars of these service contracts include (i) the term of service, and (ii) are subject to
termination in accordance with their respective term. The service contracts may be renewed in
accordance with our Articles of Association and the applicable Listing Rules.
Save as disclosed above, none of the Directors or Supervisors has entered into any service
contracts as a director or supervisor with any member of the Group (excluding contracts
expiring or determinable by the employer within one year without payment of compensation
(other than statutory compensation)).
3. Remuneration of Directors and Supervisors
The aggregate remuneration (including fees, salaries, contributions to pension schemes,
housing allowances and other allowances and benefits in kind and discretionary bonuses) paid
to our Directors and Supervisors in 2019, 2020, 2021, 2022 and the six months ended June 30,
2023 was approximately RMB5.5 million, RMB162.9 million, RMB4.6 million, RMB4.2
million and RMB36.2 million, respectively.
Save as disclosed above, no other payments have been made or are payable, in 2019,
2020, 2021, 2022 and the six months ended June 30, 2023, by any of member of the Group to
any of our Directors or Supervisors.
Under the arrangements currently in force, save as the options in relation to not more than
37,862,946 Domestics Shares the Company expect to grant under the Pre-IPO Incentive
Scheme, we estimate the aggregate remuneration, excluding discretionary bonus, of our
Directors and Supervisors for the year ending December 31, 2023 to be approximately RMB4.5
million.
4. Directors’ Competing Interests
None of our Directors are interested in any business apart from our Group’s business
which competes or is likely to compete, directly or indirectly, with the business of our Group.
5. Disclaimers
Save as disclosed in this Appendix and in sections headed “Directors, Supervisors and
Senior Management” and “Substantial Shareholders” in this prospectus:
(a) none of our Directors or Supervisors or chief executive of our Company has any
interests or short positions in the shares, underlying shares and debentures of our
Company or our associated corporations (within the meaning of Part XV of the SFO)
which will be required to be notified to our Company and the Hong Kong Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-20 –


--- page 729 ---
or short positions which he is taken or deemed to have taken under such provisions
of the SFO) or which will be required, pursuant to Section 352 of the SFO, to be
entered in the register referred to in that section, or which will be required, pursuant
to the Model Code for Securities Transactions by Directors of Listed Issuers, to be
notified to our Company and the Hong Kong Stock Exchange, once the Shares are
listed on the Hong Kong Stock Exchange. For this purpose, the relevant provisions
of the SFO will be interpreted as if they applied to the Supervisors;
(b) so far as is known to any Director or Supervisors or chief executive of our Company,
no person has an interest or short position in the Shares and underlying Shares which
would fall to be disclosed to our Company and the Hong Kong Stock Exchange
under the provisions of Divisions 2 and 3 of Part XV of the SFO, or is, directly or
indirectly, interested in 10% or more of the nominal value of any class of share
capital carrying rights to vote in all circumstances at general meetings of any other
member of our Group;
(c) none of our Directors or Supervisors nor any of the persons listed in “Other
Information – Qualification of Experts” below is interested in the promotion of, or
in any assets which have been, within the two years immediately preceding the issue
of this prospectus, acquired or disposed of by or leased to any member of our Group,
or are proposed to be acquired or disposed of by or leased to any member of our
Group;
(d) none of our Directors or Supervisors nor any of the persons listed in “Other
Information – Qualification of Experts” below is materially interested in any
contract or arrangement with our Group subsisting at the date of this prospectus
which is unusual in its nature or conditions or which is significant in relation to the
business of our Group as a whole;
(e) save in connection with Underwriting Agreements, none of the persons listed in “–
E. Other Information – 5. Qualification of Experts” below has any shareholding in
any member of our Group or the right (whether legally enforceable or not) to
subscribe for or to nominate persons to subscribe for securities in any member of our
Group;
(f) none of our Directors or Supervisors has entered or has proposed to enter into any
service agreements with our Company or any member of our Group (other than
contracts expiring or determinable by the employer within one year without payment
of compensation other than statutory compensation); and
(g) save as contemplated under the Underwriting Agreements, none of our Directors or
Supervisors or their respective associates (as defined under the Hong Kong Listing
Rules), or Shareholders who are interested in more than 5% of the issued share
capital of our Company has any interest in our Company’s five largest customers and
five largest suppliers.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-21 –


--- page 730 ---
D. SHARE INCENTIVE SCHEME
1. Pre-IPO Incentive Scheme
The following is a summary of the principal terms of the Pre-IPO Incentive Scheme
approved and adopted by our then Shareholders on May 31, 2021 (the “ Adoption Date ”). The
purpose of the Pre-IPO Incentive Scheme is to further refine the incentive system of our
Company by linking the personal interests of our officers, directors and employees, and to
attract technical and managerial talents in the industry to join our Company.
(a) Who may participate
The scope of the eligible participants (“ Eligible Participants ”) is determined,
having taken into account the actual situation of the Company, in accordance with the
PRC Company Law, the PRC Securities Law, other relevant laws, regulations and
regulatory documents and the Articles of Association.
The Participants include senior management, key technical personnel, other
personnel of our Company approved by the Board, or other personnel who have direct
impact on the overall results and continuous development of our Company and our
subsidiaries, and the aforesaid Participants shall have worked for our Company or our
subsidiaries or branches for at least three years and shall not include independent
directors and supervisors of our Company.
(b) Grant of Options
An option (“ Option ”) shall be granted to an Eligible Participant by signing an
option award agreement (the “ Option Agreement ”) with the Company, specifying the
number of shares and any other terms and conditions (including, without limitation, any
attainment of performance milestones upon which the exercise of the option shall be
conditional) on which it is granted. The Option Agreement shall serve as evidence of the
grant of the Option to the Eligible Participant (the “ Grantee ”), and all Options shall be
granted and vested in accordance with the terms of the rules of the Pre-IPO Incentive
Scheme.
(c) Maximum number of Shares in respect of which Options may be granted
The maximum aggregate number of underlying Shares which may be issued upon
exercise of all Options is 37,862,946 Unlisted Shares. Such maximum number of Shares
will be adjusted in the event of any alteration in the capital structure of our Company
whilst any Option remains exercisable, to proportionally reflect any capitalization of
profits or reserves, rights issue, sub-division, or consolidation of shares or reduction of
share capital of our Company.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-22 –


--- page 731 ---
(d) Exercise price
Subject to the rules of the Pre-IPO Incentive Scheme, the exercise price in respect
of any Options granted shall be RMB1.99.
(e) Duration of the Pre-IPO Incentive Scheme
The Pre-IPO Incentive Scheme shall be valid and effective for the period of time
commencing from the date of grant of Options (the “ Effective Date ”) and expiring on the
day when all Options granted under the Pre-IPO Incentive Scheme is exercised or
cancelled, and shall in any event no later than the date which is ten years after the
Effective Date. No Options may be granted from the Listing Date.
(f) V esting and Exercise of Options
The Options shall not be exercised before the Listing Date. Subject to satisfaction
of the relevant conditions of exercise, the Options shall be exercisable after the Listing
Date in three batches and in accordance with the following arrangement:
Exercise period Duration
Proportion of
exercisable Share
Options to the
total number of
Share Options
granted
Exercise period in respect
of the first batch of the
Options
For a period of 12 months
commencing on the later of:
(i) first trading day after the
expiration of the 12-month
period from the date of grant
and (ii) the Listing Date (the
“First Exercise Date ”)
40%
Exercise period in respect
of the second batch of
the Options
Commencing on the first trading
day after the expiration of the
12-month period from the First
Exercise Date and ending on
the last trading day of the
24-month period from the First
Exercise Date
30%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-23 –


--- page 732 ---
Exercise period Duration
Proportion of
exercisable Share
Options to the
total number of
Share Options
granted
Exercise period in respect
of the third batch of
the Options
Commencing on the first trading
day after the expiration of the
24-month period from the First
Exercise Date and ending on
the last trading day of the
36-month period from the First
Exercise Date
30%
If the relevant conditions of exercise in respect of the relevant exercise period are
not fulfilled, the relevant batch of the Options shall not be exercised or become
exercisable in the next exercise period, and shall be cancelled by the Company.
(g) Lock-up
The Unlisted Shares to be issued to the Grantees pursuant to the exercise of the
Options are subject to lock-up restrictions in accordance with PRC Company Law, the
PRC Securities Law and other relevant laws and regulations and the Articles of
Association, in particular, where the Grantee is a Director, supervisor or a member of the
senior management of our Company, the number of Shares which may be transferred by
the Grantee each year during his/her tenure of office shall not exceed 25% of the total
number of the Shares held by him/her, and the Grantee shall not transfer any Shares held
by him/her within (x) one year from the Listing Date and (y) six months after his/her
resignation from the positions held in our Group.
(h) Ranking of the Shares
The Unlisted Shares to be allotted and issued upon the exercise of an Option will be
subject to the provisions of the Articles of Association and will entitle the holders to
participate in all dividends or other distributions paid or made on or after the date of
exercise of the Option subject to the rules of the Pre-IPO Incentive Scheme.
(i) Transfer of Options
After exercising the right and subscribing the shares of the Company after the
Listing, the Grantee can obtain the proceeds through secondary market reduction after the
expiration of the lock-up period, which is subject to the prerequisites stipulated the
Pre-IPO Incentive Scheme.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-24 –


--- page 733 ---
(j) Arrangements for Special Circumstances the Pre-IPO Incentive Scheme
In the event that the Grantee retires, dies (naturally or due to injuries sustained from
work) or became incapacitated, all his/her Options which are exercisable but not yet
exercised shall remain exercisable and shall be exercised within three months after the
occurrence of such circumstance(s), and his/her Share Options which are not exercisable
shall be cancelled.
(k) Alteration of the Pre-IPO Incentive Scheme
The Board may in special circumstances amend the Pre-IPO Incentive Scheme
provided, however, that our Company shall comply with all necessary approval,
registration and filing requirements and make relevant disclosures in accordance with all
applicable laws and regulations.
(l) Outstanding Options granted under the Pre-IPO Incentive Scheme
As of the Latest Practicable Date, Options to subscribe for a total of 37,750,000
Unlisted Shares, representing approximately 4.74% of the total issued share capital of our
Company immediately after completion of the Conversion of Unlisted Shares into
H Shares and the Global Offering (assuming the Options granted have not been exercised
and remain outstanding) have been granted to 27 Grantees under the Pre-IPO Incentive
Scheme. Assuming full vesting and exercise of the outstanding Options, the shareholding
percentage of our Shareholders immediately following the Listing would be diluted by
approximately 4.84% as calculated based on 779,835,433 Shares then in issue. The
Company will not grant further Options under the Pre-IPO Incentive Scheme after the
Listing.
The table below sets out the details of options granted to the connected persons and
key employees of our Group under the Pre-IPO Incentive Scheme:
Name of
Grantee Address
Relationship with the
Group/Positions Held in
Our Company
Date of
Grant
Total Number
of Shares
Underlying
the Options
Granted
Vesting
Period
(Note 1)
Exercise
Price
(RMB)
Approximate
Percentage of
Shareholding in
the Total
Issued Share
Capital (Note 2)
Connected person
Mr. Wang
Bin
Unit C15, Chunshui’an
Townhouse, Oversea
Chinese Town,
Nanshan District,
Shenzhen, PRC
Chairman of our Board,
chief executive officer
and executive Director
of our Company and
director and general
manager of our
subsidiary
January 10,
2023
15,000,000 3 years from
the First
Exercise Date
1.99 per
Share
1.92%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-25 –


--- page 734 ---
Name of
Grantee Address
Relationship with the
Group/Positions Held in
Our Company
Date of
Grant
Total Number
of Shares
Underlying
the Options
Granted
Vesting
Period
(Note 1)
Exercise
Price
(RMB)
Approximate
Percentage of
Shareholding in
the Total
Issued Share
Capital (Note 2)
Mr. Chen
Kunrong
Unit 8B, 2nd Floor,
Block 4, Bolin
Tianrui, No. 4088
Liuxian Avenue,
Shenzhen, PRC
President and executive
Director of our
Company and director,
general manager and
supervisor of our
subsidiaries
January 10,
2023
6,000,000 3 years from
the First
Exercise Date
1.99 per
Share
0.77%
Ms. Cui Y an Room 1912, Block C,
Building 1, Fanhai
City Plaza, Nanshan
District, Shenzhen,
PRC
Executive Director, deputy
general manager and a
joint company secretary
of our Company and
supervisor of our
subsidiaries
January 10,
2023
4,700,000 3 years from
the First
Exercise Date
1.99 per
Share
0.60%
Mr. Huang
Heming
Room 301, Unit B1,
Building 314, District
3, Wangjing West
Park, Chaoyang
District, Beijing
Vice president of our
Company and director,
general manager and
supervisor of our
subsidiaries
January 10,
2023
1,550,000 3 years from
the First
Exercise Date
1.99 per
Share
0.20%
Mr. Huang
Ronghui
No. 17-601, Moon Bay
Park, Lane 288
Chengfeng Road,
Chuansha Town,
Pudong New Area,
Shanghai, PRC
Assistant to chief
operating officer and
supervisor of our
Company and director
and general manager of
our subsidiary
January 10,
2023
400,000 3 years from
the First
Exercise Date
1.99 per
Share
0.05%
Ms. Cheng
Ling
Room 11A, Building 4,
Phase I, Haiyin Great
Wall, Nanshan
District, Shenzhen
Chief officer of our
Company and supervisor
of our subsidiaries
January 10,
2023
300,000 3 years from
the First
Exercise Date
1.99 per
Share
0.04%
Mr. Y ou
Dong
Room 402, No. 12
Hengshan Yili, Houxi
Town, Jimei District,
Xiamen, Fujian
Province
Regional marketing
manager of our
Company and director
and general manager of
our subsidiary
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Mr. Ou
Zuoqiang
Room 202, Floor 2,
Building 8, Times
Bund, No. 400, Shaxi
Avenue, Panyu
District, Guangzhou
Regional marketing
manager of our
Company and director
and general manager of
our subsidiary
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-26 –


--- page 735 ---
Name of
Grantee Address
Relationship with the
Group/Positions Held in
Our Company
Date of
Grant
Total Number
of Shares
Underlying
the Options
Granted
Vesting
Period
(Note 1)
Exercise
Price
(RMB)
Approximate
Percentage of
Shareholding in
the Total
Issued Share
Capital (Note 2)
Mr. Zhu Ji Room 302, No. 35
Lane 111, West Guilin
Street, Xuhui District,
Shanghai
Vice president of our
Company and supervisor
of our subsidiary
January 10,
2023
200,000 3 years from
the First
Exercise Date
1.99 per
Share
0.03%
Ms. Lai
Xianmei
Room 403, No. 69,
Lane 645, Fengshun
Road, Minhang
District, Shanghai
General manager of our
Company and director
and supervisor of our
subsidiaries
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Ms. Li
Shuhua
Room 2001, No. 18
Yihe Shengshi Fifth
Street, Huadou
District, Guangzhou
General manager of our
Company and supervisor
of our subsidiaries
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Ms. Shen
Xuebin
Room 19-3103, Lijing
Harbour, No. 88
Tongxing East Road,
Y ongquan, Wenjiang
District, Chengdu
General manager of our
Company and director,
general manager and
supervisor of our
subsidiaries
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Mr. He
Bensheng
Room 1001, Unit 2,
Flat 30, Mingjing
Mansion, Capital
City, Xinzhuang
Town, Jinnan District,
Tianjin
General manager of our
Company and director
and general manager of
our subsidiary
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Ms. Zhou
Hongxing
Room 1703, Block 41,
Phase 1, Xinchengzhi
Plaza, Jimei District,
Xiamen
General manager of our
Company and supervisor
of our subsidiary
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Key Employee
Mr. Wang
Ge
E1003, Meijia Plaza,
Nanshan District,
Shenzhen
Chief financial officer of
our Company and a
member of our senior
management
January 10,
2023
4,700,000 3 years from
the First
Exercise Date
1.99 per
Share
0.60%
Mr. Chao
Hua
Room 405, Building C,
Xinghe Zhihui, No. 1
Yinhai Street,
Y uanshan Street,
Longgang District,
Shenzhen
deputy general manager of
our Group and a
member of our senior
management
January 10,
2023
800,000 3 years from
the First
Exercise Date
1.99 per
Share
0.10%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-27 –


--- page 736 ---
Name of
Grantee Address
Relationship with the
Group/Positions Held in
Our Company
Date of
Grant
Total Number
of Shares
Underlying
the Options
Granted
Vesting
Period
(Note 1)
Exercise
Price
(RMB)
Approximate
Percentage of
Shareholding in
the Total
Issued Share
Capital (Note 2)
Mr. Li
Xuebing
Room 27A, Block 6,
Phase 1, The
Peninsula, No. 1,
Jinshiji Road, Shekou
Street, Nanshan
District, Shenzhen
Chief officer and
marketing manager of
our Group
January 10,
2023
800,000 3 years from
the First
Exercise Date
1.99 per
Share
0.10%
Mr. Li Ping Room 18A, Building J,
Baoneng City Garden,
Tanglang Community,
Taoyuan Street,
Nanshan District,
Shenzhen
General manager of our
Group
January 10,
2023
800,000 3 years from
the First
Exercise Date
1.99 per
Share
0.10%
Mr. Guo
Y onglin
Room 27B, Building 2,
Bolin Tianrui,
Nanshan District,
Shenzhen
General manager of our
Group
January 10,
2023
700,000 3 years from
the First
Exercise Date
1.99 per
Share
0.09%
Ms. Qi
Bailing
Room 1706, Building B,
Fengjingju,
Guifangyuan, Nanwan
Street, Longgang
District, Shenzhen
Chief officer of our Group January 10,
2023
300,000 3 years from
the First
Exercise Date
1.99 per
Share
0.04%
Ms. Zhou
Chuanjiao
C802, Xicheng Y azhu,
Xincheng Street,
Baoan District,
Shenzhen
Chief officer of our Group
and general partner of
Shenzhen Y ouhui
January 10,
2023
400,000 3 years from
the First
Exercise Date
1.99 per
Share
0.05%
Mr. Y ao
Sida
Room 1305, Block B,
Hongzhou Xindu,
Nanshan District,
Shenzhen
Deputy chief officer of our
Group
January 10,
2023
500,000 3 years from
the First
Exercise Date
1.99 per
Share
0.06%
Mr. Gu
Xiufu
Room 1003, Building
10, Hefeng Xihua
Y ayuan, No. 33,
Qunli Road, Loufeng
Street, Suzhou
Industrial Park
Regional marketing
manager of our Group
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-28 –


--- page 737 ---
Name of
Grantee Address
Relationship with the
Group/Positions Held in
Our Company
Date of
Grant
Total Number
of Shares
Underlying
the Options
Granted
Vesting
Period
(Note 1)
Exercise
Price
(RMB)
Approximate
Percentage of
Shareholding in
the Total
Issued Share
Capital (Note 2)
Mr. Du
Jinning
Room 1103, Unit 2,
Building 2, Phase I,
Jinxiu Mansion, No.
19 East Paotai Street,
Nanjing City, Jiangsu
Province
Regional marketing
manager of our Group
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Mr. Long
Xiangxin
Room 104, Unit 2,
Building 3, Qinghe
New Town, Haidian
District, Beijing
Regional marketing
manager of our Group
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Mr. Wan Yi Room 1801, No. 2515,
Pudong Avenue,
Shanghai
Regional marketing
manager of our Group
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Mr. Zong
Jun
Room 1907, Building
24, Zhangpuyu
Garden, Zhangpu
Town
General manager of our
Group
January 10,
2023
50,000 3 years from
the First
Exercise Date
1.99 per
Share
0.01%
Total 37,750,000 4.84%
Notes:
1. 40%, 30% and 30% of the total numbers of the Options granted shall vest on the first, second, and third
anniversary of the date commencing on the later of (i) first trading day after the expiration of the
12-month period from the date of grant and (ii) the Listing Date (the “ First Exercise Date ”). For further
details, see “— D. Share Incentive Scheme — 1. Pre-IPO Incentive Scheme — (f) V esting and Exercise
of Options” in this section.
2. The calculation on the total number of 779,835,433 Shares in issue immediately following the
completion of the Conversion of Unlisted Shares into H Shares and the Global Offering and without
taking into account any Shares that may be issued pursuant to the exercise of options which have been
granted under the Pre-IPO Incentive Scheme.
(m) General
The Pre-IPO Incentive Scheme is not subject to the provisions of Chapter 17 of the
Listing Rules as it will not involve grant of options by us after Listing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-29 –


--- page 738 ---
2. 2020 Incentive Scheme
In 2020, our Company adopted the 2020 Incentive Scheme and established Shenzhen
Y ouhui as platform to hold Shares for the option grantees under 2020 Incentive Scheme. The
terms of the 2020 Incentive Scheme are not subject to the provisions of Chapter 17 of the
Listing Rules as there are no outstanding options under the 2020 Incentive Scheme and no
options will be granted by our Company after Listing. Given that all the underlying Shares had
already been issued, there will not be any dilution effect to the issued Shares upon the vesting
of the options under the 2020 Incentive Scheme. No further awards will be granted after
Listing.
The purpose of 2020 Incentive Scheme was to incentivize our management members and
core employees to further promote our development and in recognition of their contributions.
Eligible participants of the 2020 Incentive Scheme include senior management, mid-level
management and core business personnel of our Company. The number of option grantees
under 2020 Incentive Scheme should not exceed 10% of the total number of employees of our
Company.
The maximum number of Shares may be granted to option grantees shall be 22,438,106
Shares. Upon grant of the options, option grantees shall exercise their options during the
one-month period from December 23, 2020. The grant price of such options was RMB0.10 per
Share.
As of the Latest Practicable Date, options to acquire a total of 22,438,106 Shares were
granted, pursuant to which each of Mr. Wang, Mr. Chen, Ms. Cui Y an (an executive Director)
and Mr. Wang Ge (a senior management of our Group) was granted options to directly acquire
7,000,000 Shares, 4,000,000 Shares, 3,000,000 Shares and 3,000,000 Shares, respectively,
while the remaining 5,438,106 Shares were held by Shenzhen Y ouhui. As at the Latest
Practicable Date, there was no outstanding option granted under the 2020 Incentive Scheme
and all options which were granted had been exercised.
Zhou Chuanjiao is currently the sole general partner of Shenzhen Y ouhui, and Shenzhen
Y ouhui had 23 limited partners, all of whom were employees of our Group who had obtained
their respective limited partnership interests as a result of exercising their options granted
under the 2020 Incentive Scheme.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-30 –


--- page 739 ---
The option grantees are not permitted to sell any Shares granted under the 2020 Incentive
Scheme until the Listing Date and be further subject to the following lock-up periods
depending on the rank of the employee in our Company:
(a) For senior management option grantees:
Lock-up Duration
Proportion of
Shares granted to
the total number
of Share granted
One year after Listing 40%
Two years after Listing 30%
Three years after Listing 30%
(b) For mid-level management option grantees:
Lock-up Duration
Proportion of
Shares granted to
the total number
of Share granted
One year after Listing 50%
Two years after Listing 50%
(c) Shares held by core business personnel will not be subject to lock-up after Listing.
E. OTHER INFORMATION
1. Estate duty
Our Directors have been advised that no material liability for estate duty is likely to fall
on our Group.
2. Litigation
As of the Latest Practicable Date, no member of our Group was engaged in any litigation,
arbitration or claim of material importance, and no litigation, arbitration or claim of material
importance was known to our Directors to be pending or threatened by or against our Group,
that would have a material adverse effect on its business, financial condition or results of
operations.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-31 –


--- page 740 ---
3. Joint Sponsors
The Joint Sponsors have made an application on behalf of our Company to the Hong Kong
Stock Exchange for the listing of, and permission to deal in, the H Shares to be issued pursuant
to the Global Offering and the H Shares to be converted from the Unlisted Shares upon
completion of the Global Offering. All necessary arrangements have been made to enable our
H Shares to be admitted into CCASS.
Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors set
out in Rule 3A.07 of the Hong Kong Listing Rules.
The Joint Sponsors will receive an aggregate fee of US$0.8 million for acting as the
sponsors for the Listing.
4. No Material Adverse Change
Our Directors confirm that there has been no material adverse change in the financial or
trading position or prospects of our Group since June 30, 2023 (being the date to which the
latest audited consolidated financial statements of our Group were prepared).
5. Qualification of Experts
The following are the qualifications of the experts (as defined under the Hong Kong
Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance) who
have given opinions or advice which are contained in this prospectus:
Name Qualification
China Securities (International)
Corporate Finance Company Limited
Licensed corporation under the SFO to
conduct type 1 (dealing in securities) and
type 6 (advising on corporate finance) as
defined under the SFO
Huatai Financial Holdings
(Hong Kong) Limited
Licensed corporation under the SFO to
conduct type 1 (dealing in securities),
type 2 (dealing in future contracts), type
4 (advising on securities), type 6
(advising on corporate finance), type 7
(providing automated trading services)
and type 9 (asset management) as defined
under the SFO
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-32 –


--- page 741 ---
Name Qualification
PricewaterhouseCoopers Certified Public Accountants under
Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong)
Registered Public Interest Entity Auditor
under Accounting and Financial Reporting
Council Ordinance (Chapter 588 of the
Laws of Hong Kong)
Han Kun Law Offices Legal advisors as to PRC Law
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Industry consultant
6. Consents of Experts
Each of the experts as referred to in “E. Other Information – 5. Qualification of Experts”
in this Appendix has given and has not withdrawn their respective written consents to the issue
of this prospectus with the inclusion of their reports and/or letters and/or legal opinion (as the
case may be) and references to their names included in the form and context in which it
respectively appears.
None of the experts named above has any shareholding interests in our Company or any
of our subsidiaries or the right (whether legally enforceable or not) to subscribe for or to
nominate persons to subscribe for securities in our Company or any of our subsidiaries.
7. Promoter
Our Company has no promoter for the purpose of the Hong Kong Listing Rules. Within
the two years immediately preceding the date of this prospectus, no cash, securities or other
benefit has been paid, allotted or given nor are any proposed to be paid, allotted or given to
any promoters in connection with the Global Offering and the related transactions described in
this prospectus.
8. Preliminary Expenses
The Company did not incur any preliminary expenses for the purpose of the Hong Kong
Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-33 –


--- page 742 ---
9. Agency Fees or Commissions Paid or Payable
Save as disclosed in this prospectus, no commissions, discounts, brokerages or other
special terms have been granted in connection with the issue or sale of any capital of any
member of our Group within two years immediately preceding the date of this prospectus.
10. Binding Effect
This prospectus shall have the effect, if an application is made in pursuance of this
prospectus, of rendering all persons concerned bound by all of the provisions (other than the
penal provisions) of Sections 44A and 44B of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance insofar as applicable.
11. Bilingual Prospectus
The English language and Chinese language versions of this prospectus are being
published separately, in reliance upon the exemption provided by Section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
This prospectus is written in the English language and contains a Chinese translation for
information purpose only. Should there be any discrepancy between the English language of this
prospectus and the Chinese translation, the English language version of this prospectus shall prevail.
12. Miscellaneous
(a) Within the two years immediately preceding the date of this prospectus:
(i) save as disclosed in “– Changes in the Share Capital of Our Company” and
“– Changes in the Share Capital of Our Subsidiaries”, neither we nor any of our
subsidiaries has issued or agreed to issue any share or loan capital fully or
partly paid up either for cash or for a consideration other than cash;
(ii) save as disclosed in “– D. SHARE INCENTIVE SCHEME”, no share or loan
capital of our Company or any of our subsidiaries is under option or is agreed
conditionally or unconditionally to be put under option;
(iii) save as in connection with the Underwriting Agreements, no commissions,
discounts, brokerage or other special terms have been granted in connection
with the issue or sale of any shares or loan capital of any member of our Group;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-34 –


--- page 743 ---
(iv) no commission has been paid or payable (except commission to
sub-underwriters) to any persons for subscription, agreeing to subscribe,
procuring subscription or agreeing to procure subscription of any shares of our
Company or any of our subsidiaries;
(v) no founder, management or deferred shares of our Company or any of our
subsidiaries have been issued or agreed to be issued; and
(vi) there is no arrangement under which future dividends are waived or agreed to
be waived.
(b) Our Directors confirm that:
(i) since June 30, 2023 (being the date on which the latest audited consolidated
financial statements of our Group were made up), there has been no material
adverse change in our financial or trading position or prospects;
(ii) there has not been any interruption in the business of our Company which may
have or have had a material adverse effect on the financial position of our
Company in the 12 months immediately preceding the date of this prospectus;
and
(iii) our Company has no outstanding convertible debt securities or debentures.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-35 –


--- page 744 ---
1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to a copy of this prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) a copy of the GREEN Application Form;
(b) copies of each of the material contracts referred to in “Statutory and General
Information – B. Further Information About Our Business – 1. Summary of Material
Contracts” in Appendix IV; and
(c) the written consents referred to in “Statutory and General Information – E. Other
Information – 6. Consents of Experts” in Appendix IV .
2. DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be published on the websites of the Hong Kong
Stock Exchange at www.hkexnews.hk and our Company at www.uboxol.com up to and
including the date which is 14 days from the date of this prospectus:
(a) the Articles of Association;
(b) the Accountant’s Report and the report on the unaudited pro forma financial
information of the Group prepared by PricewaterhouseCoopers, the texts of which
are set out in Appendices I and II, respectively;
(c) the audited consolidated financial statements of our Company for the Track Record
Period;
(d) the legal opinions issued by Han Kun Law Offices, our PRC legal advisor in respect
of certain aspects of our Group;
(e) Frost & Sullivan Report;
(f) the PRC Company Law, the PRC Securities Law, the Trial Measures together with
their unofficial English translations;
(g) the material contracts referred to in “Statutory and General Information – B. Further
Information About Our Business – 1. Summary of Material Contracts” in Appendix
IV;
(h) the written consents referred to in “Statutory and General Information – E. Other
Information – 6. Consents of Experts” in Appendix IV;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND DOCUMENTS A V AILABLE ON DISPLAY
– V-1 –


--- page 745 ---
(i) service contracts and letters of appointment referred to in “Statutory and General
Information – C. Further Information about Our Directors, Supervisors and
Substantial Shareholders – 2. Directors’ and Supervisors’ Service Contracts and
Letters of Appointment” in Appendix IV; and
(j) the rules of the Pre-IPO Incentive Scheme.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND DOCUMENTS A V AILABLE ON DISPLAY
– V-2 –


--- page 746 ---
GLOBALGLOBAL
OFFERINGOFFERING
(A joint stock company incorporated in the People’s Republic of China with limited liability)
Stock Code: 2429
北京友寶在線科技股份有限公司
Beijing UBOX Online Technology Corp.
北京友寶在線科技股份有限公司
Beijing UBOX Online Technology Corp.
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Sponsors
Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager
Joint Bookrunners and Joint Lead Managers  (in alphabetical order)
